Well Drillers/Pump Installers

Sections 63-3609(a), 63-3621, 63-3615(b), 63-3622D, 63-3622W, Idaho Code 01. In General. This rule illustrates the application of Idaho sales and use tax to contractors who drill wells or install pumps. The general principles stated in Sections 012 and 014 also apply to these contractors. (7-1-26) 02. Types. The types of wells covered by this section include, but are not limited to: (7-1-26) a. Water wells, including those for municipal, domestic, commercial, and industrial purposes, and wells used for agricultural irrigation. (3-31-22) b. Monitor wells used to check for contamination or to find the water table. (3-31-22) c. Anode wells used to ground power or gas lines. (3-31-22) d. Construction wells used for pilings, shoring, and elevator hoists. (3-31-22) e. Natural gas and oil wells. (7-1-26) f. Injection wells. (7-1-26) 03. Well Drilling. A well driller is a contractor improving real property. The contractor should not charge sales tax on materials such as casing, screens, piping, etc., used to construct or repair a well as these materials are consumed by the well driller. (7-1-26) 04. Pump Installation. The three-factor test as discussed in Section 067 is used to determine if a pump is taxable as a real property improvement or as tangible personal property. (7-1-26) a. A pump installed with a well that supplies water to land or a building is presumed to be a real property improvement. (7-1-26) b. A pump that doesn’t supply water to land or a building and is used in commercial or industrial applications is presumed to be tangible personal property unless it is so integrated into the real estate that it is a permanent fixture. (7-1-26) 05. Exemptions. In some cases, exemptions may apply to materials installed by well drillers and pump installers as provided in Idaho Code. Exemptions apply only to project materials and not to construction equipment and supplies, such as drilling rigs and drill bits. (7-1-26) 06. Examples. Available at Sales and Use Tax Examples. (7-1-26) 016. (RESERVED)