Idaho State Tax Commission

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Contractors and sales tax

If you’re a contractor improving real property, remember: You shouldn’t charge sales tax to your customers for materials used to improve real property. You should either pay sales tax to your vendor or pay a use tax to Idaho on all purchases of materials used in these projects. Your contract bid should be high enough to cover any sales or use tax you paid without itemizing these taxes on the bid or the billing for the work done.

If you charge sales tax on the bill, your customer can refuse to pay it or request a refund for it later. If you charge sales tax in error and your customer pays it, you must still report and pay the sales tax collected to the state. In addition, since you improperly charged a sales tax to your customer, you’re still required by law to pay a use tax to the state on the materials installed during the real property project.

Please share this important information with your bookkeeper or accountant! 

For more information, visit the Tax Commission’s Contractors Working in Idaho Web page.

 

Posted 10-05-2015
tax pros general

This information is for general guidance only. Tax laws are complex and change regularly. We can't cover every circumstance in our guides. This guidance may not apply to your situation. Please contact us with any questions. We work to provide current and accurate information. But some information could have technical inaccuracies or typographical errors. If there's a conflict between current tax law and this information, current tax law will govern.