Nestled in the Pacific Northwest, Idaho, hailed as the “Gem State,” stands as a hub of business and innovation. Renowned for its picturesque landscapes and a booming agricultural sector, the state presents unique opportunities and challenges for businesses operating within its borders. However, mastering the complexities of sales tax in Idaho is crucial for entrepreneurs looking to tap into its market.
This guide breaks down everything you need to know about Idaho’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Idaho’s sales tax with confidence and ease.
Sales Tax Nexus in Idaho
When a business creates either a physical or economic nexus, it is required to collect sales tax in Idaho.
Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in Idaho include:
- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Any retailer who earns income from leasing or renting out tangible personal property located in Idaho.
- Affiliate Nexus or Click-through Nexus: You could trigger a physical nexus if you have affiliates, whether they operate online or in-person, who have collectively sold more than $10,000 worth of products for delivery in Idaho in the preceding 12 months.
- Presence at Trade Show: You must collect sales tax at Idaho trade shows if you are present for more than three (3) trade shows and selling to residents of the state.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus.
Beginning June 1, 2019, the threshold for economic nexus in Idaho is $100,000 in gross revenue in the previous or current calendar year’s sales.
While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing economic sales tax nexus. To access a comprehensive list of these rules, please refer to the
governing laws for sales tax nexus requirements in Idaho.
Idaho Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in Idaho.
Tangible Products
Almost all goods are taxable in Idaho, including:
- Cosmetics
- Electronics
- Clothing – Clothiers who purchase clothes and footwear to provide for the needy may be given an exemption
- Furniture
- Jewelry
- Home Goods
- Groceries – Food products are generally taxable in Idaho. However, residents within the state may earn a $100 credit for purchasing grocery items
- Feminine Hygiene Products – Idaho continues to be one of the states that tax feminine hygiene products
- Newspapers and Magazines
The goods that are exempt from sales tax are:
Services
In Idaho, the majority of service-based transactions, such as professional services, advertising, and cleaning services are not subject to sales tax.
However, there are specific situations where certain services are taxable:
- Food or drink preparation, furnishing, or serving services
- Hotel, motel, campground, or trailer court accommodation services
- Intrastate air transportation services
- Producing, fabricating, processing, printing, imprinting, or engraving services
- Taxidermy services
- Tire services (as part of the sale)
Software-As-A-Service (SaaS)/Digital Products
SaaS is
not taxable in the state of Idaho.
Digital products (digital music, digital books, digital videos, and digital games) where the buyer has a permanent right to use these products are considered tangible personal property, irrespective of their delivery or access method, and so are
taxable. However, leases or rentals of these digital products are not subject to taxation.
Shipping/Handling
Shipping and handling charges in the state of Idaho are
not taxable if listed separately on the invoice, but if you’re a seller who first receives an item from another seller or manufacturer before shipping it to the customer, the shipping costs you pay are taxable and charged to the buyer.
Sales Tax Permits and Licenses in Idaho
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Idaho, the next important step is getting your Idaho Seller’s Permit, also known as a sales tax permit.
Seller’s Permit
You can register for an Idaho sales tax permit online at the Idaho Business Registration System.
Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:
- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale or the expected date to start dates)
Registration fee
There is no fee to register for a sales tax permit.
Renewal
In Idaho, you don’t have to renew your sales tax permit.
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them, as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale.
In Idaho, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items.
You can fill out
Form ST-101 – Sales Tax Resale or Exemption Certificate provided by the Idaho State Tax Commission after you receive your sales tax permit. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.
Streamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. However, Idaho is not a party to this program, meaning it does not follow the uniform rules and definitions established by SST but has its own sales tax regulations.
Check with the Idaho State Tax Commission for the most current information on Idaho’s participation in the Streamlined Sales Tax initiative.
Calculating and Collecting Sales Tax in Idaho
Sales Tax Computation
In Idaho, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs. Use TaxHero’s Idaho Sales Tax Calculator to compute for sales tax.
Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in Idaho and sells to a customer in Boise, ID, with a ZIP code of 83701. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
 |
SALES TAX FORMULA |
RATE |
| State: |
Idaho |
6.00% |
| County: |
Ada |
0.00% |
| District: |
Nineteenth District |
0.00% |
| City: |
Boise |
0.00% |
| Combined Sales Tax Rate = |
6.00% |
|
Origin-based vs. Destination-based
When making in-state sales, it is important to determine if you are located in an origin-based or destination-based state to figure out what rate to charge for sales tax.
Idaho is a
destination-based state, meaning sales tax is determined based on the buyer’s location. That means for an Idaho-based seller, sales tax is generally based on the location of the buyer when selling within the state.
For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from California to a customer in Boise, Idaho, where you have nexus, you’d apply Boise’s sales tax rate to that sale.
To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.
Filing and Remitting Sales Tax Returns in Idaho
The next step after collection is filing and remitting your Idaho sales tax returns. Filing and remittance can vary in frequency, typically monthly, quarterly, semi-annually, or annually. By default, all businesses are required to file sales tax returns monthly. If you have low sales volume and sales tax liability, you can reach out to the Idaho State Tax Commission to request a quarterly or annual filing.
- Quarterly Filing: If you owe less than $750 sales tax per quarter.
- Semi-annual/Annual Filing: If you only have limited sales or are a distributor or wholesaler, you have the option to file and remit sales tax either semi-annually or annually.
It’s crucial to keep accurate records of your sales and tax collections and adhere to the filing schedule set by the state to remain compliant with Idaho’s sales tax regulations.
Due Dates
In Idaho, the due date falls on the 20th day of the following month. For instance, sales tax collected in January is due by February 20th for monthly filers.
However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 20th deadline falls on a holiday or weekend, you’ll have until May 21st, the following business day, to submit.
Filing Sales Tax Returns
To file your sales tax return for Idaho, a few options are available:
- File online through the TAP of Idaho State Tax Commission.
- File by mail or in person – Fill up the form sent to you by the Idaho State Tax Commission and file your returns either through mail or in person.
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly. However, Idaho does not offer a discount.
Sales Tax Holiday
For 2024, there are no planned sales tax holidays in Idaho.
Idaho Sales Tax Penalties
Like in most states, sales tax is a big part of how Idaho generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state.
Here are the specific penalties for non-compliance with sales tax regulations in Idaho:
- Civil penalties amounting to 5% of the total sales tax due for each month the return is late, with a 25% maximum penalty, and 0.5% of the total sales tax due for each month the due is unpaid;
- On the criminal side, offenses can be classified as either misdemeanors or felonies, depending on the severity and specific circumstances.
Related
