Application And Payment Of Use Tax

Sections 63-3615, 63-3621, 63-3622, Idaho Code 01. Imposition of Use Tax. Use tax is imposed upon the privilege of using, storing, or otherwise consuming tangible personal property within Idaho. The tax is imposed on the value of the tangible personal property. (7-1-26) 02. Use. The term “use” doesn’t include use of tangible personal property incidental to the performance of a contract if the owner of the tangible personal property is a business primarily engaged in producing tangible personal property for resale and the property is exempt in Idaho Code. See Sections 012 and 079. (7-1-26) 03. Receipt Showing Idaho Sales Tax Paid. If the property is purchased from a retailer and Idaho sales tax is charged by and paid to the retailer, then no use tax will apply. A purchase order issued by the buyer advising the retailer to charge or include the Idaho sales tax isn’t sufficient evidence that the tax has been paid. The retailer’s receipt provided to the buyer that displays separate statement of the tax relieves the buyer of the use tax requirements. (7-1-26) 04. Out-of-State Purchases. If the property is purchased outside the state or from a retailer not subject to the Tax Commission’s jurisdiction and is subsequently used, stored, or otherwise consumed in this state, then a use tax will apply. The buyer reports and pays use tax directly to the Tax Commission by filing a use tax return on the forms prescribed by the Tax Commission. (7-1-26) IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 073 Page 43 05. Taxes Paid to Another State. The taxpayer may offset from the use taxes payable to Idaho any amount of general sales or use taxes paid to another state on the purchase or use of the same property if paid by the same taxpayer. A credit can’t be claimed for taxes erroneously paid to another state if no taxable sale or use under the laws of that state occurred. In determining whether a tax is due in the state where paid, the Tax Commission will be bound by the laws, rules, and administrative rulings of the state to which tax is paid. (7-1-26) a. If the amount of tax levied by the state to which it is paid is less than the amount of the Idaho tax due, then the balance will be paid as Idaho tax. (7-1-26) b. If the amount of tax levied by the state to which it is paid is equal to or greater than the Idaho tax, then there will be no taxes due to Idaho regarding the same transaction or subsequent use of the property. (7-1-26) c. If the taxes paid to the other state are greater than the Idaho tax, the amount of offset available is limited to the amount of Idaho tax due on the same transaction or use of the property. (3-31-22) 06. Use Undeterminable at Time of Purchase. In some cases, a buyer may be unable to determine at the time of purchase whether or not the property purchased will be used for a taxable or nontaxable purpose. A buyer engaged in both retailing and contracting business might not know whether an item will be sold at retail or withdrawn from inventory and used while performing a contract to improve real property. In these circumstances the buyer may purchase the goods tax exempt if the buyer presents documentation in Section 128. The buyer will maintain adequate accounting control to ensure that use tax is properly accrued on all taxable property. (7-1-26) 07. Tangible Personal Property Removed From Inventory. A retailer or wholesaler may purchase tangible personal property for resale without paying sales tax. The retailer or wholesaler may use inventory in displaying or demonstrating the inventory for purposes of selling the inventory in the normal course of business. If the retailer or wholesaler uses inventory for any purpose besides display or demonstration in the normal course of selling that inventory, the retailer or wholesaler owes use tax. If inventory is consumed during such a display or demonstration, the retailer or wholesaler owes use tax. The retailer or wholesaler calculates the use tax on the value of the tangible personal property. Use tax doesn’t apply to any use or consumption of tangible personal property where such use is specifically exempted from use tax by Idaho Code. (7-1-26) a. Inventory held for resale becomes subject to use tax at the time the retailer or wholesaler removes the tangible personal property from inventory. If a retailer or wholesaler removes tangible personal property from inventory and then performs additional manufacturing or processing labor, the retailer or wholesaler should calculate use tax on the acquisition cost before the additional labor. However, if a retailer or wholesaler removes tangible personal property after performing additional manufacturing or processing labor, the retailer or wholesaler calculates use tax on the total inventoried cost including the additional labor. (3-31-22) 08. Examples. Available at Sales and Use Tax Rules Examples. (7-1-26)