Contractors/Retailers

Sections 63-3609(a), 63-3610, 63-3619, 63-3620, 63-3621, Idaho Code 01. In General. This section illustrates the application of Idaho sales and use tax to contractors who are also retailers. The general principles stated in Section 012 also apply to these contractors. (7-1-26) 02. Sales of Both Tangible Personal Property and Improvements to Real Property. If a contractor makes retail sales of tangible personal property and improvements to real property, the contractor collects sales tax on the retail portion of the contract.The contractor pays sales or use tax on the materials used to perform the real property improvement. (7-1-26) 03. Tangible Personal Property vs. Improvements to Real Property. Built-in appliances and related items become fixtures to realty when installed in buildings. Such built-in appliances include dishwashers, microwave ovens, stove tops, refrigerators, stove hoods, central vacuum systems, waste disposal units, trash compactors, water softeners, water purification systems, and garage door openers. Some appliances retain the character of tangible personal property such as microwave ovens that are not built-in, such as free-standing stoves, refrigerators, washers, and dryers. See Section 067 for application of the three-factor test. (7-1-26) 04. Sales with Agreement to Install. An over-the-counter sale of a complete unit with an agreement to install it isn’t a contract to improve real property if the item doesn’t become affixed to reality. This applies to sales of free-standing stoves, refrigerators, washing machines, dryers, and other appliances. The seller collects sales tax from the buyer on the retail sales price of the item. If the installation charges are properly separated, sales tax is due only on the cost of the unit. (7-1-26) 05. Record Keeping. A contractor can follow any consistent procedure to account for inventory and job materials purchases. (7-1-26) a. When a contractor is primarily performing contracts to improve real property, that contractor can choose to pay tax on all purchases. When tangible personal property is sold at retail in Idaho, the contractor collects and remits sales tax and requests a refund for the Idaho sales tax originally paid. See Section 117 for refund instructions. (7-1-26) b. When a contractor is primarily making retail sales, they can choose to purchase all inventory IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 015 Page 8 without paying tax by giving suppliers a properly completed resale certificate. When tangible personal property is sold at retain in Idaho, the contractor collects and remits sales tax. When the contractor removes materials from nontaxed inventory to improve real property, they pay Idaho use tax on the value of those materials. (7-1-26) 06. Inventory Withdrawals. When any withdrawal is made from nontaxed inventory, use tax is due to the state when the material is delivered to the job site, regardless of when it is used in performing a contract. (7-1-26) a. When a contractor fabricates tangible personal property, puts it into inventory, and later withdraws it for a job, tax applies to the fully fabricated value. This is true regardless of whether the fabricator installs the property themself or through an agent or subcontractor. (7-1-26) 07. Examples. Available at Sales and Use Tax Examples. (7-1-26)