Search Category: Sales Tax

Complimentary Items – Ground, Air, and Rail

The transportation company must pay tax on items it gives passengers as part of the ticket price. The company must:

  • Pay Idaho sales or use tax on the sales price of items it buys in Idaho, even if the items aren’t distributed to passengers in Idaho
  • Pay Idaho use tax on the cost of items distributed in Idaho if both of the following apply:
    • The company didn’t pay sales tax in the state where it bought the items
    • Passengers receive the items during trips that begin or end in Idaho

If Idaho use tax is due on complimentary items, it’s calculated in either of these ways:

  • On the actual cost of the items distributed in Idaho
  • If records aren’t accurate, the company should multiply the cost of items it gave passengers by the percentage of Idaho miles in the trip

Recordkeeping for Ground, Air, and Rail

As a transportation provider, you must keep records of all the purchases and sales that your business makes. Your records must show that you properly collected, reported and paid or forwarded taxes to Idaho.

Records to keep

  • Normal books of account
  • Documents that support entries in the books of account

    Examples:

    • Sales records
    • Bills
    • Receipts
    • Invoices
    • Credits granted
    • Job, work orders, or bills of lading
    • Contracts
    • All schedules or working papers used to prepare your tax returns
  • Tax returns; see Filing a return and forwarding tax to the state
  • Copies of sales tax resale or exemption certificates (Form ST-101)

Note: Keep a buyer’s exemption certificate for as long as you do business with that buyer, plus four years. We’ll bill you for tax due if you don’t have completed exemption certificates for buyers you sell exempt to.

What records must show

  • Gross receipts showing sales and services were made or received in Idaho, even those sales that you or your customer think are exempt from tax. If you deliver the product or service somewhere other than your place of business, you must also keep records that prove where delivery took place.
  • Copies of properly completed exemption forms showing the identity of customers claiming an exemption, the type of exemption, and what you sold them 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 at least four years. You should keep records for seven years if you don’t file returns.

Laws and Rules for Ground, Air, and Rail

Learn more about common carriers:

Learn more about Idaho tax statutes 

Learn more about our Rules 

Ground, Air, and Railroad Businesses Basics Guide

This guide explains how Idaho sales and use tax laws apply to the transportation industry. It includes how Idaho taxes apply to sales and purchases that transportation companies make. This guide also covers exemptions, requirements for keeping records for sales and use taxes, and filing returns.

Leases and Rentals of Boats and Trailers by Dealers and Retailers

The sales price for a rental or lease of a boat or trailer is the same as for the sale of a boat or trailer. See the Sales Price section.

Type of leaseHow the lease worksWhen to collect sales tax
Basic lease or rentalThe customer returns the boat or trailer to the dealer or retailer 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 to buy the boat or trailer 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 boat or trailer (if they exercise the buy-out option).
Lease-purchase agreementThe customer makes regular payments during the lease or rental term. At the end of the term, title to the boat or trailer passes to the customer for $0 or an amount that’s less than fair market value.The customer will own the boat or trailer at the end of the lease or rental term, so this is a sale and a financing arrangement. Collect sales tax at the beginning of the lease or rental on all the payments the customer will make during the lease or rental term. (The interest portion of the total lease payments isn’t taxable if it’s separately stated.) At the end of the rental or lease term, collect sales tax on any amount you charge then for the purchase of the boat or trailer.

You calculate the taxable sales price for a lease or rental of a boat or trailer the same as the sale of a boat or trailer. See the Sales Price section.

Note: Out-of-state companies that lease out off-highway vehicles in Idaho must follow all these requirements:

  • Get an Idaho sales tax permit before leasing out boats or trailers registered, used, licensed or stored in Idaho.
  • Collect and forward sales tax to Idaho for the boats or trailers they lease out.
  • Report income from Idaho leases on their Idaho income tax return.

Sales of Boats and Trailers by Private Parties

This section applies to sales, transfers, exempt sales, rentals and leases of boats and trailers between private parties. Private parties are individuals or businesses who aren’t dealers or retailers.

Sales price

  • A sale between private parties must have a bill of sale because it establishes the sale price, and it’s proof of how much the buyer paid.
    • Both the buyer and seller should sign the bill of sale.
    • If the bill of sale is far below the expected fair market value, the buyer must have evidence to show why the price was so low.
  • The county assessor will collect sales tax when the buyer title or registers the boat or trailer.

Note: Trade-in allowances don’t apply to private party sales.

Occasional sales

Utility or transport trailers weighing less than 2,000 pounds might be eligible for the occasional sale exemption. See “Occasional sale of trailers” at the bottom of this page.

Types of Sales

Buying from individuals

You as a buyer owe sales tax on the total sales price of a boat or trailer you buy from an individual unless an exemption applies.

  • The boat or trailer first must be titled or registered in the seller’s name for the sale to take place.
  • The seller must enter the total sales price on the bill of sale and sign the title.
  • The bill of sale establishes the sales price, and it’s proof of how much you paid for the boat or trailer.
  • Both you and the seller must sign the bill of sale. You’ll need to show an original bill of sale as proof of sales price.
  • The county assessor or the Idaho Transportation Department (ITD) will collect sales tax when you as the buyer apply for an Idaho title.

Bartering goods or services

The recipient of a boat or trailer in a barter transaction owes sales or use tax on the full value of the boat or trailer.

  • You must have a bill of sale that states the value of goods and services bartered to get the boat or trailer. You need this to register or title the boat or trailer.
  • When people barter two or more boats or trailers, each boat or trailer must have its own bill of sale that states the value of goods or services bartered to get the boat or trailer.

Exempt sales or transfers of boats and trailers by private parties

Certain sales and transfers of boats and trailers between a business and its owners or related parties are exempt.

Change in the form of a business

Transfer of boats and trailers 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 or titling the boat or trailer.

Sale of an ongoing business (bulk sale)

Boats and trailers 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 existing business has the boats or trailers registered or titled in its name at the time of sale and then the new owner registers or titles them in the new business’ name at the time of purchase.

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 or titling the boats or trailers.

Transfer of capital assets between related parties

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

A transfer of a boat or trailer between corporations that are related parties is exempt if both of the following are true:

  • The corporation transferring the boat or trailer has proof that tax was paid when the boat or trailer 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.

A transfer of a boat or trailer 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 boat or trailer has proof that tax was paid when the boat or trailer was acquired.
  • The parties exchange nothing of value other than an increase or decrease in equity (e.g., stock or securities).

Note: A sale or lease of a boat or trailer between related parties is taxable.

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

Sale of trailers as capital assets between related parties

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

A sale of a trailer that’s a capital asset to a related party might be exempt. To be tax exempt, the buyer must have bought the trailer from a related party, and the related party has proof that sales or use tax was paid when the trailer 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 trailer 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 or titling the trailer.

Occasional sale of trailers

A sale of a trailer is exempt from sales and use tax if all of these apply:

  • The seller doesn’t make more than two sales of tangible personal property in a 12-month period.
  • The seller isn’t required to have a seller’s permit in Idaho.
  • The seller hasn’t obtained a temporary or regular seller’s permit.
  • The price of the trailer is separately stated on the invoice (if bought with a boat).

Note: The seller must give the buyer a pdf Form ST-108TR – Occasional Sale Exemption Certificate – Office Trailer and Transport Trailer or a note stating they aren’t a retailer and haven’t made more than two sales in a 12-month period. The statement must include the seller’s name, address, date of sale and signature.

Leasing Out or Renting Out Your Own Boat or Trailer

Leasing or renting a boat or trailer is a taxable sale in Idaho. You’re renting out or leasing out your boat or trailer if you allow someone to use it and you receive payment (cash, property, or other financial gain). Whether you’re a business owner or an individual, you’re a retailer if you make more than two sales (including boats or trailers) or hold yourself out as being in business.

Retailers must:

  • Get a seller’s permit. (See the Idaho Business Registration guide to learn more.)
  • Collect tax on the full amount you charge for the lease or rent.
  • Forward the tax with the sales tax return that you file with the Tax Commission. (See the Retailers guide.)

Responsibilities

You don’t need to collect tax when you list your boat or trailer with a marketplace facilitator that collects and forwards the tax to the Tax Commission. This table shows tax responsibility in different leasing scenarios.

Scenarios: Leasing or renting an individual’s boat or trailer in IdahoWho’s responsible for collecting and forwarding tax due?
The boat or trailer is in Idaho and both of these apply: (a) The boat or trailer owner leases or rents it out directly to the customer without using a marketplace facilitator; (b) The customer reserves the boat or trailer and pays the owner directly.The owner must register as a retailer to collect, report and forward taxes on the lease or rental price of the boat or trailer.
The boat or trailer is in Idaho and the owner always leases out or rents out the boat or trailer using a marketplace facilitator.The marketplace facilitator must register as a retailer, collect, report and forward taxes on the sales price of the boat or trailer leases or rentals.
The boat or trailer is in Idaho and is: (a) Sometimes leased or rented directly from the owner. (b) Sometimes leased or rented through a marketplace facilitator that arranges the leases or rentals.The owner and the marketplace facilitator are responsible for taxes as follows: (a) The owner must collect, report and forward tax on the sales price of leases or rentals he or she arranges. (b) The marketplace facilitator must collect, report and forward taxes on the sales price of leases or rentals arranged through its platform.

When to collect tax

The type of lease or rental determines when you collect tax. Boat and trailer leases and rentals fall into three general categories:

Type of lease or rentalHow the lease or rental worksWhen to collect sales tax
Basic lease or rentalThe customer returns the boat or trailer 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 to buy the boat or trailer during or at the end of the lease or rental term at fair market value.Collect sales tax on each lease or rent payment and on the buyout price the customer pays when buying the boat or trailer (if they exercise the buyout option).
Lease-purchase agreementThe customer makes regular payments during the lease or rental term. At the end of the term, title to the boat or trailer passes to the customer for $0 or an amount that’s less than fair market value.The customer owns the boat or trailer at the end of the lease or rental term, so this is a sale and a financing arrangement. Collect sales tax at the beginning of the lease or rental on all the payments the customer will make during the lease or rental term. (The interest portion of the total lease payments isn’t taxable if it’s separately stated.) At the end of the rental or lease term, collect sales tax on any buyout amount you charge on the purchase of the boat or trailer.

Donating or Giving Away a Boat or Trailer

Giving a boat or trailer to a person

Transferring ownership of a boat or trailer to another person or entity is generally subject to tax, but certain gifts are exempt. A boat or trailer qualifies as an exempt gift if all of the following apply:

  • You, as the giver, don’t receive services or anything of value for the boat or trailer.
  • Your relationship with the recipient supports the basis for a gift.
  • The recipient doesn’t assume any of your debts or liabilities.
  • Neither you nor the recipient owes money on the boat or trailer.

Notes

  • If you transfer a boat or trailer to someone else and allow them to “take over payments,” the recipient has assumed a debt. The transfer isn’t a gift, and the buyer owes tax on the value of the remaining payments.
  • You might be required to provide more information if you have a business relationship with the recipient.

When you give away a boat or trailer that qualifies as an exempt gift, give the recipient a completed pdf Form ST-133GT – Use Tax Exemption Certificate – Gift Transfer Affidavit, with your signature. The recipient also must sign the form.

Giving a boat or trailer as a donation or prize

You must pay sales or use tax on the purchase of any boat or trailer, even if you intend to give it away. You can’t advertise or require that “the winner is responsible for all taxes.”
  • You must pay sales or use tax if you buy (or remove from inventory) a boat or trailer specifically to donate or give away as a prize.
  • You don’t owe use tax if you donate a boat or trailer you already own and have paid tax on. Examples:
    • You buy a paddleboard from a dealer to donate for a school raffle. You must pay tax when you buy the paddleboard.
    • You buy a boat from your neighbor to donate to a church youth group. Before donating it to the church, you must title the boat in your name and pay use tax on the amount you paid your neighbor.
    • You donate a trailer you already own to a nonprofit group that does wilderness activities. You paid tax when you bought the trailer, so you don’t owe use tax when you donate it.
    • You remove a kayak from your inventory and give it away as a prize for a student’s school achievement. You owe use tax on the cost of the vehicle you provided as a prize. The winner can’t be held responsible for the tax you owe.
Donations like those in the examples above might be a gift if all of the following apply.
  • The recipient isn’t performing any services to get the donation.
  • The recipient isn’t giving you anything of value for the donation.
  • The recipient isn’t assuming any of your debts.

Note: You might be required to provide more information if you have a business relationship with the recipient.

When you give away a boat or trailer that qualifies as an exempt gift:

Receiving a boat or trailer as a gift or prize

You don’t owe use tax when you receive a boat or trailer that qualifies as a gift or is a prize.

You and the donor must complete and sign a pdf Form ST-133GT – Use Tax Exemption Certificate – Gift Transfer Affidavit.

  • Present the completed Form ST-133GT when you register the boat or trailer.
  • If the donor can’t sign the affidavit, you can do one of the following.
    • Provide a signed letter from the donor stating that the boat or trailer is a gift.
    • The donor can sign and mark the title as a gift.

Prize winnings are subject to income tax even if they qualify for a use tax exemption.

Boat Repair and Winterization

The sale of services and property to repair and winterize boats might be taxable, depending on what the seller does to the boat.

  • Parts are taxable. Labor for repair and maintenance isn’t taxable if it’s separately stated on the invoice. Otherwise, everything is taxable.
  • The sale of boat covers is a taxable sale of tangible personal property. This includes the design and fabrication of custom boat covers (e.g., boat shrinkwrapping) for storage, transportation, or winterization.

Sales and Services Provided on Navigable Waters

Federal law prohibits taxing fees charged for traveling on navigable waters. This includes activities such as:

  • Lake cruises
  • Jet boating trips
  • Rafting
  • Fishing excursions
  • Parasailing

Tangible personal property

The sale of tangible personal property separately stated from cruise or trip fees is taxable. Examples include:

  • The portion of a fee for food or beverage sales while on a dinner cruise
  • Sales of tangible personal property that occur while on navigable water (e.g., clothing, souvenirs, food, rental of fishing equipment)

Renting out tangible personal property without supplying an operator is a bare rental, not a travel activity. Collect sales tax on the bare rentals of all watercraft. See Renting and Leasing.

Examples

  • Boats
  • Canoes
  • Kayaks
  • Paddleboards
  • Personal watercraft (e.g., Jet Ski®)
  • Safety equipment
  • Diving equipment