Search Category: Sales Tax

Exemptions – Motor Vehicles – Private and Nondealer

Some sales, transfers, and leases between a business and its owners or related parties are exempt.

Change in the form of a business

Transfer of motor vehicles is exempt if a business changes its entity type and the ultimate ownership of the property is substantially the same.

The buyer must provide a completed pdf Form ST-133CATS – Sales Tax Exemption Certificate – Capital Asset Transfer Affidavit and Instructions, when registering the motor vehicle.

Sale of an ongoing business (bulk sale)

Motor vehicles included in the sale are exempt if a business or its separate segment is sold and all of the following apply:

  • Substantially all the operating assets are included in the sale of the business or its separate segment.
  • The new owner will continue to operate the business in the same manner.
  • The motor vehicles are titled and registered in the name of the existing business at the time of sale and then titled and registered in the new business’ name.

Note: The seller must have separate accounting records if it’s a sale of a separate segment.

The buyer must provide a completed pdf Form ST-133CATS – Sales Tax Exemption Certificate – Capital Asset Transfer Affidavit and Instructions, when registering the motor vehicle.

Transfer of capital assets between related parties

Sometimes owners, partners, shareholders and stockholders in related-party businesses transfer title and ownership of motor vehicles.

A transfer of a motor vehicle to a related-party business that isn’t a corporation is exempt from Idaho tax if both of the following are true:

  • The business transferring the motor vehicle has proof tax was paid when the motor vehicle was acquired.
  • The parties exchange nothing of value other than an increase or decrease in equity (e.g., stock or securities).

A transfer of a motor vehicle between corporations that are related parties is exempt if both of the following are true:

  • The corporation transferring the motor vehicle has proof tax was paid when the motor vehicle was acquired.
  • The two corporations exchange nothing of value other than an increase or decrease in equity (e.g., stock or securities).

For this exemption, “related-party” corporation means the transfer is between one of the following:

  • A corporation and its subsidiary, and the parent owns at least 80 percent of the subsidiary.
  • Two subsidiaries that share a common parent, and the parent owns at least 80 percent of both subsidiaries.

The business that owns the motor vehicle after the transfer must provide a completed pdf Form ST-133CATS – Sales Tax Exemption Certificate – Capital Asset Transfer Affidavit and Instructions, when registering the motor vehicle.

Sale of capital assets to related parties

Sometimes owners, partners, shareholders and stockholders of businesses sell or lease motor vehicles to a business that a related party owns.

Sale of a motor vehicle that’s a capital asset to a related party might be exempt if one of these is true:

  • The seller has proof sales or use tax was paid on the motor vehicle when it was acquired.
  • The seller bought the motor vehicle from a related party, and the related party paid tax when the motor vehicle was acquired.

For this exemption, “related party” means one of the following:

  • The selling business has identical ownership as the buying business.
  • At least one owner of the business that sells the motor vehicle has one of the following relationships with the owner of the buying business:
    • Parent and child
    • Grandparent and grandchild
    • Brother or sister

The buyer must provide a completed pdf Form ST-133CATS – Sales Tax Exemption Certificate – Capital Asset Transfer Affidavit and Instructions, when registering the motor vehicle.

Leases or rentals of capital assets to related parties

A lease or rental of motor vehicles to related parties is exempt if the lease or rental is between related parties.

For this exemption, “related party” means one of the following:

  • The lessor business has identical ownership as the lessee business.
  • At least one owner of the business that sells the motor vehicle has one of the following relationships with the owner of the buying business:
    • Parent and child
    • Grandparent and grandchild
    • Brother or sister

Otherwise, the lease or rental is taxable.

  • Tax is due on a reasonable lease or rental value.
  • The lessor must get a seller’s permit, collect Idaho sales tax on each lease or rental payment, and forward the tax as required. (See the Idaho Business Registration guide to learn more.)

The type of lease or rental determines when the lessor collects tax

Motor vehicle leases and rentals fall into three general categories:

Type of lease/rentalHow the lease/rental worksWhen to collect sales tax
Basic lease or rentalThe customer returns the motor vehicle to the lessor at the end of the lease or rental term.Collect sales tax on each lease or rental payment.
Lease or rent with option to buyThe customer has the option of buying the motor vehicle during the lease or rental term or at the end of the term at fair market value.Collect sales tax on each lease or rental payment and on the price the customer pays when buying the motor vehicle.
Lease/rent and purchaseThe customer makes regular payments during the lease or rental term. At the end of the term, title to the motor vehicle passes to the customer for $0 or an amount that’s less than fair market value.The customer will own the motor vehicle at the end of the lease or rental term, so this is a sale and a financing arrangement. Collect sales tax on the sales price of the vehicle at the beginning of the term, when the sale is made (the contract is completed).

Leasing or Renting – Motor Vehicles – Private and Nondealer

Leasing or renting a motor vehicle is a taxable sale in Idaho. You’re renting or leasing your motor vehicle if you allow someone to use it and you receive payment (cash, property, or other financial gain). You’re a retailer, whether you’re a business owner or an individual if you make one or more sales (including motor vehicles) or hold yourself out as being in business.

As a retailer

Note: You don’t need to collect tax when you list your motor vehicle on an internet marketplace and it collects and forwards the tax.

The type of lease or rent determines when you collect tax

Motor vehicle leases and rents fall into three general categories:

Type of lease/rentalHow the lease/rental worksWhen to collect sales tax
Basic lease or rentalThe customer returns the motor vehicle to the lessor at the end of the lease or rental term.Collect sales tax on each lease or rental payment.
Lease or rent with option to buyThe customer has the option of buying the motor vehicle during the lease or rental term or at the end of the term at fair market value.Collect sales tax on each lease or rental payment and on the price the customer pays when buying the motor vehicle.
Lease/rent and purchaseThe customer makes regular payments during the lease or rental term. At the end of the term, title to the motor vehicle passes to the customer for $0 or an amount that’s less than fair market value.The customer will own the motor vehicle at the end of the lease or rental term, so this is a sale and a financing arrangement. Collect sales tax on the sales price of the vehicle at the beginning of the term, when the sale is made (the contract is completed).

Recordkeeping for Motor Vehicle Sales

Retailers that sell or lease motor vehicles

Your records for selling or leasing motor vehicles must be the same as any retailer.

Businesses that sell or transfer a motor vehicle to a related party

Document the sale or transfer. Your records should include all of the following:

Individuals that sell a motor vehicle to a nonfamily member

Document the sale. Your records should include all of the following:

  • Date of sale
  • Identifying information about the motor vehicle (e.g., vehicle identification number, or VIN)
  • Sales price of the motor vehicle
  • Copies of sale documents

Individuals that sell a motor vehicle to a qualifying family member

Document the sale. Your records should include all of the following:

  • Date of sale
  • Identifying information about the motor vehicle (e.g., vehicle identification number, or VIN)
  • Sales price of the motor vehicle
  • Copies of sale documents
  • Registration and title documents that show whether tax was paid when you bought the vehicle

Sign the “Seller’s” section of pdf Form ST-133 – Sales Tax Exemption Certificate – Family or American Indian Sales, and give it to your relative. Your relative needs a completed copy of the form when he or she registers the motor vehicle.

Individuals that give away a motor vehicle (including to a family member)

Document the gift. Your records should include all of the following:

  • Date of gift
  • Identifying information about the motor vehicle (e.g., vehicle identification number, or VIN)
  • Copies of transfer documents

You and the recipient must complete and sign a pdf Form ST-133GT – Use Tax Exemption Certificate Gift Transfer Affidavite. The recipient needs the completed form when he or she registers the motor vehicle.

Laws and Rules for Motor Vehicle Private and Nondealers

Learn more about taxation of motor vehicles by nondealers:

Learn more about Idaho tax statutes 

Learn more about our Rules 

Motor Vehicles In Your Business – Dealers

Motor vehicles used in operating your business

  • Motor vehicles you buy that aren’t for sale or lease (e.g., service trucks you buy specifically for use in operating the business) are taxable.
  • If federal income tax rules require you to give a compensation form (e.g., Form 1099) to someone who uses a demonstrator vehicle, you must pay use tax on the amount shown on the form.
  • You must pay use tax if you take a motor vehicle from resale inventory and use it for any activity that isn’t authorized for a dealer plate. You can pay tax in one of two ways:
    • On the full purchase price of the motor vehicle
    • On the fair market rental value for the time the motor vehicle is used in the activity

Buying business supplies

You must pay tax on items you buy that aren’t for resale to your customers.

Buying, billing, and taxing repairs parts

Repair work for vehicles takes many forms.

This chart explains how to buy, bill and charge tax on parts used in different types of vehicle repairs in Idaho, including repairs under warranty: pdf Vehicles and Vessels: Repairs

Note: You owe tax on the tools and shop supplies you buy for making repairs.

Buying Motor Vehicles for Resale – Dealers

From in-state businesses

If you buy motor vehicles for resale from a seller doing business in Idaho, you must give the seller a completed pdf Form ST-101 – Sales Tax Resale or Exemption Certificate. Sellers should keep this form on file and not charge tax on your future qualifying purchases.

  1. Write the name and address of both the seller and your business at the top of the form.
  2. In section 1, “Buying for Resale,” line 1 – write the nature of your business and describe the products you sell.
  3. On line b – check the first box and write your Idaho seller’s permit number.
  4. Under “Buyer” at the bottom of the page – sign the form. Fill in the rest of the fields (name, title, EIN or driver’s license information, and date).

From out-of-state businesses

If you buy motor vehicles for resale from out-of-state businesses that are registered Idaho retailers, you can complete the Uniform Sales and Use Tax Certificate – Multijurisdiction instead of Form ST-101.

  1. Write the name and address of both the seller and your business at the top of the form.
  2. Check the box for “Retailer.”
  3. Write your Idaho seller’s permit number in the ID section.
  4. Sign and fill out the bottom of the form.

Recordkeeping – Motor Vehicles – Dealers

You must keep records of all the purchases and sales that your business makes. Your records must show that you collected, reported, and forwarded taxes as required.

Records you must keep

  • Normal books of account (books of account can include information stored on computers)
  • Documents that support entries in the books of account
    • Bank statements
    • Sales documents
      • Examples:
        • Invoices, including any credit invoices
        • Rebates
        • Receipts
        • Trade-ins
        • Contracts
    • Purchase documents
      • Examples:
        • Vehicles you bought to sell
        • Items used in the dealership
  • All schedules or working papers used to prepare your sales tax returns
  • Copies of sales tax resale or exemption certificates
  • Tax returns and payments

What your records must show

  • Gross receipts from sales and services made in Idaho — even sales that you or your customer might consider exempt from tax. You must also keep records that prove where delivery took place when you deliver the product or service somewhere other than your place of business.
  • The identity of customers claiming an exemption, the type of exemption, and what you sold exempt.
  • All deductions claimed in filing returns.
  • The total purchase price of anything bought for sale, rental, lease, or your own use.
  • The amount of sales tax collected from your customer or that you paid to a vendor.

You must keep all sales and use tax records for a minimum of four years.

Laws and Rules for Motor Vehicle Dealers

Learn more about motor vehicle dealers:

Learn more about Idaho tax statutes 

Learn more about our Rules 

Motor Vehicles – Dealers Basics Guide

Sales tax is due on the sale, lease, and rental of motor vehicles when they’re sold in Idaho unless a valid exemption applies.

This guide explains sales and use tax requirements for motor vehicle dealers.

See the separate guides for:

Motor vehicle defined

A motor vehicle is a vehicle that is registered or required to be registered for use on public roads. This includes:

Motor vehicles don’t include:

Sales Price – Motor Vehicles – Dealers

You must collect sales tax on the sales price of the motor vehicle at the time of the sale unless an exemption applies. The final amount you charge your customer can include both taxable and nontaxable items. Items that are nontaxable are not part of the sales price.

What sales price includes

Sales price includes the following, even if they aren’t separately stated on the invoice:

  • Freight or shipping charges to transport the motor vehicle to the seller
  • U.S. federal excise tax imposed on the manufacturer, wholesaler or importer before the sale
  • All options and accessories
    • Examples
      • Information, entertainment, GPS systems
      • Upgraded features
      • Running boards
  • Services, including charges for labor, provided by the dealer as part of the sale agreement
    • Examples
      • Painting, coating, rust-proofing
      • Washing, waxing, cleaning
      • Lettering
      • Installing
      • Fabricating
      • Making repairs required by the buyer
  • Mandatory service and warranty agreements
  • Document fees
  • Credit card service fees
  • Theft-deterrent systems
  • Flooring cost interest
  • Auction fees
    • Examples
      • Gate fees
      • Buyer’s fees

You must calculate tax on the sales price before applying:

  • Insurance settlements
  • Down payments

What sales price doesn’t include

Sales price doesn’t include the following if they are separately stated on the invoice:
  • Federal excise taxes imposed at the retail level
    • Examples
      • Heavy trucks
      • Trailers
  • Title and registration fees imposed by a government
  • Optional service and warranty agreements
  • Finance charges
    • Examples
      • Loan origination fees
      • Interest
  • Optional Insurance
You can reduce the amount of the taxable sales price when applying:
  • Trade-in allowances, when items received will be placed into a resale inventory
  • Manufacturers’ rebates that aren’t paid directly to the customer for motor vehicles only
  • Dealer’s discounts or rebates

Note: A customer down payment doesn’t reduce the taxable sales price.

Trade-in allowances

You can accept merchandise as full or partial payment of a motor vehicle you sell. The amount allowed on the traded-in merchandise reduces the sales price, which is the amount you charge tax on.
  • You must put the merchandise you take in trade into your inventory for resale.
  • The trade-in and all documentation must take place at the time of the sale, or the allowance doesn’t reduce the sales price.
  • You can’t accept manufactured homes and modified park model recreational vehicles as trade-ins.
Note: The merchandise you accept on a trade doesn’t have to be a motor vehicle, although that’s most common. For example, you can accept a horse for a car, but you have to put that horse in your selling inventory for it to count as a trade-in and reduce the taxable price. Otherwise, the value of the horse only counts as payment. A leased vehicle you accept as a trade-in for a new purchase or lease reduces the sales price only if both these criteria are met:
  • The customer has paid the lease in full.
  • The customer paid sales tax on the buyout of the lease.

Manufacturer’s rebates

A manufacturer’s rebate reduces the sales price if it’s:
  • Paid directly to the dealer, and
  • Subtracted from the price of the motor vehicle
Don’t subtract the rebate from the sales price if the customer takes the money instead of applying it to the price of the motor vehicle.