Do you shop on the Internet, by telephone, or through mail-order catalogs? If you do, you probably owe use tax to the state of Idaho.

Use tax is a tax on goods that you put to use or store in Idaho. If you haven't paid sales tax on these goods, you owe use tax (unless the items are held for resale or an Idaho exemption applies). The use tax rate is the same as the sales tax rate.

If you know you owe use tax, go to our new online Form 850-U [PDF] and instructions. To learn more about use tax for individuals and businesses, read on.

Q: What kinds of purchases require me to pay Idaho use tax?

A: Many types of purchases qualify. Some examples include:

• Magazine subscriptions. Most subscriptions are sold untaxed because the publisher has no business location or employees in Idaho. Check your bill or statement to determine if you were charged tax.
• Book, CD, or any item "of the month" club memberships. Check your statements, since many of these companies do not charge Idaho sales tax.
• Clothing, electronic, and novelty items bought over the Internet. Again, check your billing statements to determine if you were charged Idaho sales tax. If you were not charged sales tax, you owe use tax.

Q: What is the difference between sales tax and use tax?

A: When you buy goods in Idaho, the retailer should charge sales tax. When you buy goods over the Internet, by telephone, or from a mail-order catalog, the retailer will not charge sales tax if he is not also an Idaho retailer. In that case, you owe use tax.

Q: How long has use tax been part of Idaho tax law?

A: The Idaho sales and use tax law has been in effect since 1965. Every state with sales tax also has use tax. Since Idaho retailers must charge sales tax, your use tax payment on Internet, subscription, and catalog purchases makes your local retailers competitive with those who don't charge tax.

Q: Why do some Internet and catalog companies charge Idaho sales tax, while others don't?

A: Internet and catalog companies that charge Idaho sales tax have a business location or employees in Idaho. This requires them to collect sales tax. A few businesses without an Idaho presence voluntarily collect tax for Idaho.

Q: Can I add sales tax to my bill from a retailer if no tax is shown?

A: No, never add tax to a bill and pay it to a retailer. The retailer might not be registered in Idaho and might not pay the tax to the state. The best evidence that tax was charged and paid is an invoice from the retailer that shows the tax. Contact us if you question whether a retailer who is billing tax is registered with Idaho to collect it.

Q: What if another state's sales tax is on the receipt for goods I bought?

A: Idaho allows credit for sales tax correctly* paid to another state up to the amount you would owe in Idaho. For example, if you bought a computer while you were in Washington State and paid tax to the retailer, you would not owe any Idaho tax because the Washington State and local sales tax will equal or exceed what you would owe in Idaho. If you bought something while in another state and were charged less than the Idaho rate, you would owe Idaho the difference in use tax. Idaho does not allow credit for sales tax paid to other countries, regardless of the amount.

* Some retailers mistakenly believe they should collect their state's sales tax when they ship or deliver items to locations outside of their state. If you see another state's tax on an invoice for items you bought over the Internet or through a mail-order catalog, don't pay the tax. If Idaho sales tax is not paid, you owe Idaho use tax. You owe another state's sales tax only if you pick up your items in that state.

Q: What special rules apply to the purchase of "big ticket" items like boats, motorized vehicles, and aircraft?

A: Generally, if you are an Idaho resident and you buy a car or an RV from a dealer outside of Idaho, you will not be charged Idaho sales tax. Also, private parties who sell these vehicles do not collect tax. When you register a vehicle in Idaho, you pay the sales tax to the county assessor. However, you need to pay use tax directly to the state for other types of motorized vehicles, some boats, and aircraft that you buy out of state or from individuals. Be sure to make your use tax payment soon after you buy these items.

Q: Can I pay my Idaho use tax when I fill out my individual income tax return?

A: Yes, you can make your payment with Idaho Form 40 or Form 40EZ. Check the tax return instructions to find the appropriate line. Please use this method if you have minimal use tax due annually, or use Form 850-U [PDF] as an alternative. If you have frequent or large purchases subject to use tax, please use Form 850-U [PDF] periodically rather than wait until income tax filing time.

Q: How do I pay use tax to the state if I own a business?

A: If you make retail sales, you should contact us to apply for a permit so you can pay the sales tax you collect from your customers. The reporting forms for the permit can also be used to pay your use tax.

If you own a business that does not make taxable sales, you can use our Form 850-U [PDF], print, and mail it with your payment to the state. Or you can report and pay use tax with your Idaho Form 41 or Form 41S. Check the tax return instructions to find the appropriate line. If you have frequent or large purchases subject to tax, use Form 850-U [PDF] periodically rather than wait until income tax filing time. Business owners who are not retailers, and who owe use tax month to month, should contact us to get a use tax filing number.

If you would like help in determining whether you owe Idaho use tax, please contact us.