Coatings On Tangible Personal Property

Sections 63-3612, 63-3613, 63-3622OO, Idaho Code 01. Coatings Generally. A coating is a substance covering the surface of tangible personal property usually intended to improve the durability or aesthetic appeal of the tangible personal property to which it is applied. There are a variety of coatings including paint, powder coating, chrome plating, spray-on bedliners, and anodized coatings. This section doesn’t apply to coatings applied directly to real property. (7-1-26) 02. Coatings are Tangible Personal Property. The materials applied to tangible personal property to produce a coating are tangible personal property both before and after the application process. Unless an exemption applies, the sale of a coating is taxable. (7-1-26) 03. Material Charges. Unless an exemption applies, the materials portion of a sale of a coating is taxable. If the seller is unable to measure the exact amount of material used, a reasonable method of estimation is acceptable. (3-31-22) 04. Nontaxable Labor Charges. In any of the following circumstances, the labor to apply a coating will be nontaxable labor: (3-31-22) a. A previous coating is removed and replaced with a new coating, regardless of any differences in quality between the two (2) coatings. (3-31-22) b. A coating is applied to used tangible personal property on top of an already existing coating. (3-31-22) 05. Taxable Labor Charges. In any of the following circumstances, the labor to apply a coating will be taxable labor: (3-31-22) a. A coating is applied to new tangible personal property, regardless of whether the tangible personal property already has a coating except those exempted in Section 63-3622OO, Idaho Code. (3-31-22) b. A coating is applied to new or used tangible personal property that has never been previously coated. (3-31-22) 06. Separate Statement. When the labor portion of the transaction is exempt, both materials and labor are to be separately stated on the customer’s billing statement. If there is no separate statement of materials and labor, IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 047 Page 24 the entire transaction is taxable. (7-1-26) 07. Used Tangible Personal Property. For purposes of this section, tangible personal property is used if the tangible personal property has been previously put to the use for which it was intended. If a contractor hires someone to apply a coating to tangible personal property that the contractor intends to incorporate into real property, the tangible personal property has not been put to the use for which it was intended and is considered new tangible personal property. (7-1-26) 08. Tangible Personal Property Held for Resale. For new or used tangible personal property held by a seller as part of its inventory, any labor costs incurred to apply a coating to the tangible personal property and charged to the end consumer are taxable services agreed to be rendered as part of the sale of the tangible personal property. The labor charges are exempt only if the sale of the tangible personal property is exempt or if the labor is exempted by Section 63-3622OO, Idaho Code. If the seller pays a third party to apply a coating to tangible personal property in its inventory, the seller may claim a resale exemption on the transaction. (3-31-22) 09. Exemptions. Like any sale of tangible personal property, if the customer provides a properly executed exemption certificate to the seller claiming an exemption that applies to the transaction, the seller has no obligation to collect sales tax on the transaction. The seller maintains a copy of the exemption certificate on file. (7-1-26) 10. Examples. Available at Sales and Use Tax Examples. (7-1-26)