Direct Pay Authority

Sections 63-3624, 63-3629, 63-3631, Idaho Code 01. In General. A Direct Pay Authority is granted to certain taxpayers where it is to the mutual convenience of the Tax Commission, the taxpayer, and the taxpayer’s vendors to have the sales and use tax liability upon the taxpayer’s purchases determined by the taxpayer and reported directly to the state in the form of a use tax. This authorization allows vendors to sell all items of tangible personal property to the taxpayer without charging any sales tax. The only effect of this arrangement is to shift the reporting responsibility to the taxpayer holding the IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 113 Page 67 authorization. (7-1-26) 02. Taxable Purchases. If the particular transaction would have been taxable without the authorization, then the taxpayer holding the authorization pays sales tax to the state even if the use of the item isn’t subject to use tax. If the taxpayer holding the authorization buys goods from a retailer holding an Idaho seller’s permit, then the taxpayer pays sales tax on the transaction even if the goods are intended for use solely outside the state. (7-1-26) 03. Documentation. To purchase tangible personal property without paying sales tax to the vendor, the taxpayer holding an authorization provides a copy of that authorization to each vendor. (3-31-22) 04. Holder's Responsibilities. The authorization is granted only to those taxpayers who have demonstrated, to the Tax Commission’s satisfaction, the accounting and technical capability to comply with the Sales Tax Act. Direct pay authority holders make all purchases of tangible personal property tax exempt and all taxes due as mandated by the Idaho Sales Tax Act will be remitted directly to the Tax Commission by the direct pay authority holder. Vendors will be allowed to sell all items of tangible personal property to the direct pay authority holder without charging sales tax provided they obtain and keep on file a copy of the letter granting the direct pay authority. (7-1-26) 05. Revocation. The Tax Commission may revoke authorization if it determines that the taxpayer isn’t complying with this rule or if the taxpayer is allowing contractors or other third parties to make exempt purchases under its authority. Notice of revocation will be given in the manner provided for deficiencies in taxes in Idaho Code and is subject to review as provided in Idaho Code. Should the Tax Commission revoke a taxpayer’s direct pay authority, it will be the taxpayer’s responsibility to notify his vendors of the revocation. (7-1-26) 06. Tax Imposed by Hotel/Motel Room Sales Tax. The authorization can’t be used for taxes imposed on lodging accommodations. State sales tax, Travel and Convention tax, and Auditorium or Community Center District tax, when applicable, is charged by and paid to the retailer by the direct pay permittee. (3-31-22) 07. Valid Only on Purchases of Tangible Personal Property. The authorization is valid only on purchases of tangible personal property. The taxpayer can’t use the authorization when engaging contractors involved in improving real property. (7-1-26) 08. Expiration. Direct Pay Authority is granted for a period of five (5) years. If the authorization isn’t renewed at the end of the expiration period, the authorization will expire automatically. (7-1-26)