Idaho Sales Tax Handbook

RATE OF SALES TAX:

6.00%

LOCAL & COUNTY MAXIMUM RATES:

3.00%

What Are the Taxable Goods and Services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Idaho.

Traditional Products and Services

Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Idaho.

Both medicine and fuel are tax-free.

In Idaho, certain services are subject to sales tax. View the Idaho State Tax Division’s website for a complete list of taxable services.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Idaho requires companies to collect sales tax when selling digital items or when purchasing a product and transferring the rights to the client.

How to Apply for Idaho Sales Tax

If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

Data on personal identity (Name, SSN, etc.)
Identification information for businesses (business name, owner(s), address, date of incorporation, EIN, and so on).
Type of business entity
The reason for applying
Idaho’s first date for collecting sales tax

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Sales Tax Collection

After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.

When computing sales tax, consider the following types of transactions:

Store Sales Shipping Within-State Sales Outside-State Sales

Retail Sales

For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.

Here’s an illustration of how this situation may look:

Mary is the owner and manager of a bookshop in Stanley, Idaho. Because books are taxed in the state of Idaho, Mary charges a flat 8.5% sales tax on all purchases. This includes Idaho’s 6.0% state sales tax and Stanley’s 2.5% local tax.

Sales inside the state

Idaho adheres to what is known as a destination-based approach.

Consider the following scenario:

Steve operates his own eBay electronics company from his home in Boise, Idaho. A buyer from Sun Valley, Idaho discovers Steve’s eBay website and buys a $350 set of headphones. Steve uses the Idaho state tax rate of 6.0% plus the Sun Valley local tax rate of 3.0% when computing the sales tax for this transaction. The entire cost is $281.50 ($31.50 sales tax) at a total sales tax rate of 9.0%.

Out-of-State Purchases

Idaho firms must only pay sales tax on out-of-state sales if they have a presence in other states.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Idaho seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Idaho are required to file sales tax forms and make sales tax payments online.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.

Annual filing: If your firm includes seasonal activity, such as booths at recurring fairs or a Christmas tree company, you may choose to submit returns on an annual basis.
Quarterly filing: If your company receives less than $187.50 in sales tax each month, you should submit returns on a quarterly basis.
Monthly filing: If your company receives more than $187.50 in sales tax each month, you must submit returns on a monthly basis unless the Idaho state tax commission assigns you an alternative filing schedule.

Deadlines for Filing

The deadline for all Idaho sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day. The following are the filing deadlines for this year:

Penalties for Filing Late

Idaho has a late filing penalty of 5% every month or partial month, with a maximum penalty of 25% of the tax stated on the tax return. A penalty might be as little as $10.00.

For any unpaid tax or penalty, the state levies an interest rate of 3% per year or 0.25% each month or partial month.