Drop Shipments (Rule 022)

Sections 63-3615A, 63-3619, 63-3620, 63-3621, 63-3622, Idaho Code 01. In General. Drop shipping is an order fulfillment method where a business can’t have the products it sells in stock. The seller bills the buyer and has a third party (generally a manufacturer or distributor) fulfill the order by shipping the goods to the buyer. (7-1-26) 02. Parties to the Contract. There are two (2) sales contracts in a drop shipment. One (1) is between IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 024 Page 10 the seller and the buyer. The other is between the seller and the third-party shipper. (7-1-26) a. The seller collects Idaho sales tax from the buyer, if mandated. Since there is no sales transaction between the third-party shipper and the buyer, the shipper isn’t mandated to collect sales tax. (7-1-26) b. If the third-party shipper is mandated to have an Idaho Seller’s Permit, the shipper documents the exempt sale between the shipper and the seller with a properly executed resale/exemption certificate. (7-1-26) c. The matrix below outlines the sales tax responsibilities of the shipper: (7-1-26) d. The matrix below outlines the sales tax responsibilities of the seller: (7-1-26) 03. Examples. Available at Sales and Use Tax Examples. (7-1-26) 023. (RESERVED)