This guide explains sales and use tax laws for grocers. Grocers are retailers who are primarily involved in selling food for home preparation and consumption.
Grocers must have a valid seller's permit, collect sales tax, file a sales tax return, and forward the tax to the Tax Commission. See our Retailers guide for information about getting an Idaho seller's permit, doing business in Idaho, and much more. If you operate a café, please read our Food, Meals and Drink guide.
You must charge tax on most sales, including:
- Retail sales of food, drink, cosmetics, and household supplies to the final consumer
- Newspapers and magazines sold over a store counter
- Reusable grocery bags
- Sales through vending machines (see our Vending Machines guide)
- Rentals of items such as DVDs, video players and carpet shampooers
Some nontaxable sales include:
- Sales to customers who are buying with food stamps; with electronic benefits transfer cards; or with Women, Infants and Children (WIC) checks.
- Sales of prescription drugs and prescription drug refills. (See our Medical Products and Prescriptions Exemption guide.)
- Items customers are buying for resale. (See Retailers: Purchases by retailers.)
- Sales to exempt organizations. (See Exemptions: Organizations and entities who can buy exempt from sales tax.)
- Sales of lottery tickets.
- Deposits paid on returnable bottles.
- Cylinder sales of liquified propane in units of 15 gallons or less can be sold without getting an exemption certificate. Sales of any other type of heating fuels require a completed exemption certificate from the buyer (e.g., compressed fireplace logs).
Note: You must keep records of all untaxed sales and document why you didn't charge tax. (See Keeping records.)
Coupons, vouchers and gift cards
Customers often use coupons, vouchers or gift cards to pay for all or part of the bill. Tax these payment types as follows.
|Does a third party reimburse you?||Charge sales tax on:||Example|
|Yes||Total sales price before you subtract the discount amount||Manufacturer's coupon|
|No||Sales price after you subtract the discount amount||Coupon you distribute in a newspaper or online|
Vouchers are something that a customer can use for a discount on a product or service, such as a two-for-one dinner or a manicure at a reduced price. The customer buys the voucher in advance from a third-party provider, such as Groupon.
|Do you know how much the customer paid for the voucher?||Charge sales tax on:|
|Yes||Amount the customer paid for the voucher|
|No||Face value of the voucher|
Keep documentation to support the tax calculation on all discounted sales.
Gift cards and certificates
Don't charge tax when a customer buys gift cards or certificates because they're a form of payment. Charge sales tax on the price of the goods that someone buys using the gift cards or certificates.
You can't treat a gift card redemption like it's a retailer's discount coupon, even if you sold the gift card or certificate at less than its face value.
You sell $50 gift cards for $30. A customer buys $50 worth of goods. You must charge sales tax on $50 even though the customer only paid $30 for the gift card.