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Sales Tax Obligations of Sellers in Idaho

April 13, 2006

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Idaho imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. Idaho prescribes forms that are for use as resale certificates. As a seller, you are allowed to accept Form ST-101, Sales Tax Resale or Exemption Certificate, or The Uniform Sales and Use Tax Certificate adopted by the Multistate Tax Commission from the purchaser. Resale certificates must contain the following information:

• the signature of the purchaser or its agent
• the name and address of the purchaser or its agent
• the number of the permit issued to the purchaser or that the purchaser is an out-of-state retailer
• a description of the general character of the tangible personal property sold or rented by the purchaser in the regular course of business

Procedure for accepting blanket certificates. In Idaho you are not required to get a separate claim form from your customer for each exempt sale. For most exemptions, if you have a resale certificate on file for a customer, it covers all exempt sales to that customer for the life of your business relationship. Since businesses change hands and the information on these forms can become outdated quickly, it's a good idea to update your resale and exemption certificate files at least every four years.

Sales and use tax liability for out-of-state mail order and catalogue retailers. Idaho has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within Idaho. To determine if you have physical presence, ask yourself the following:

• Do I have retail facilities, a warehouse, or any office space in Idaho? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
• Do my employees or I enter Idaho for purposes of taking and transmitting orders from Idaho? If your employee or independent contractor goes into Idaho to take or transmit orders, your business may have physical presence in Idaho. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
• Do my delivery vehicles frequently enter Idaho for purposes of delivering property? Frequent deliveries in Idaho by your trucks will give you physical presence in Idaho.

Sales tax "bracket system". The bracket system may be followed by sellers in computing the sales tax. Sales for a total amount of 11 cents or less are exempt from tax. The tax on each whole dollar is six cents plus an amount for each additional fractional dollar as determined by the scheme in the following chart:

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Idaho it is against the law to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.

Claiming refund for excess tax payments. Taxes that have been erroneously collected or computed may be credited by the Idaho Tax Commission on any amount due and payable from that person and the balance refunded. A refund claim must be made in writing and must include a detailed statement of the reason that you believe a refund is due. Form TCR, Sales Tax Refund Claim, is available for use in making a refund claim. If you file a sales or use tax return you may claim a refund as a credit against sales or use taxes due. This return must be accompanied by a written refund claim. No credit or refund is allowed unless a claim is filed within three years from the time payment was made.

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