Search Category: Sales Tax

Defaults and Repossessions on Motor Vehicle Loans

Refund allowed

You can request a refund of sales tax when a customer stops making payments on a motor vehicle in certain circumstances.

You must bear the loss on the unpaid amount or amount claimed as worthless and one of the following must apply:

  • You can’t repossess the vehicle.
  • If you repossess it, you must resell the vehicle seasonably in a public or private sale.

Refund not allowed

There are times you can’t request a refund of sales tax when a customer stops making payments. You can’t get a refund in either of these situations:

  • You don’t bear the loss because the buyer financed the vehicle through a third party.
  • You bear the loss and repossess the vehicle but don’t resell it seasonably.

Requesting a refund of the sales tax

Calculate the refund based on how much of the sales price the buyer paid before default. You can read more in our pdf Bad Debt white paper.

You can request a refund in one of two ways:

Form 850

Take a credit on line 7 of Form 850, Idaho Sales and Use Tax Return:

  • Explain the details of the sale, default, repossession, and resale of the vehicle.
  • Provide documentation as described in the pdf Bad Debt white paper.
  • Claim the refund in the month you record the bad debt adjustment in your accounting records or take back the vehicle in a rescinded sale.

Form TCR

You can request a refund on pdf Form TCR – Sales Tax Refund Claim, if you don’t claim the refund in the month you record the bad debt adjustment. You must claim the refund within three years from the date you forwarded tax from the sale to the state.

Note: Companies that finance motor vehicle loans can request a proportionate refund of sales tax paid on those loans if the customer defaults. For detailed information, read our pdf Bad Debt white paper.

Rescinded sale (Taking back a motor vehicle you’ve sold)

You must refund the sales tax to the customer if you take back a motor vehicle and refund all the money.

  • It isn’t a rescinded sale if your customer has started making payments and misses a scheduled payment. In that case, the motor vehicle you take back is treated as a bad debt.
  • It isn’t a rescinded sale if you agree to take back a motor vehicle but require the buyer to buy another motor vehicle. In that case, the motor vehicle you take back is treated as a trade-in. (See “Trade-in allowances” under Sales price.)
    • You must collect sales tax on the difference in the price if the second motor vehicle is more expensive than the motor vehicle you took back.
    • You don’t collect sales tax if the second motor vehicle is less expensive than the motor vehicle you took back. However, you also can’t refund any of the original sales tax.

Donating or Loaning Motor Vehicles – Dealers

Donating motor vehicles

You owe use tax on the cost of the motor vehicle if you remove a motor vehicle from your inventory and donate it to an organization as a gift or prize. Use tax is due on the wholesale book value of the motor vehicle if you can’t determine cost. Write your sales tax permit number on the title transfer to show you’ll pay use tax on the donation. Pay use tax with the return for the period in which you make the donation.

Temporarily loaning or donating motor vehicles

You owe use tax on the motor vehicle if you temporarily loan a motor vehicle from inventory to an individual, government, business, or nonprofit entity. Calculate the use tax you owe in one of two ways:

  • On the full purchase price of the motor vehicle
  • On the fair market rental value for the time you loaned the motor vehicle, whether loaned on an hourly, daily, weekly, monthly, or other basis.

The only exception is when you temporarily donate a motor vehicle to a driver education program sponsored by a qualified nonprofit school.

  • The fair market rental value of a motor vehicle is $300/month, and you loan it to a qualified nonprofit school’s driver education program. No use tax is due. This is the only exemption for motor vehicle donations or loans.

Motor Vehicles – Dealers

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

Basics Guide

Basics Guide

Sales Price

What is the motor vehicle sales price for a dealer?

Sales Price

Leasing

Leasing or renting a motor vehicle

Leasing

Exemptions

Exemptions

Defaults

Defaults and repossessions on motor vehicle loans

Defaults

Donating

Donating or loaning a motor vehicle

Donating

In Your Business

Using motor vehicles in your business

Using

Buying for Resale

Buying motor vehicles for resale

Resale

Recordkeeping

Recordkeeping

Laws and Rules

Laws and Rules

Motor Vehicles – Private Parties and Nondealer Retailers

Sales or use tax is due on the sale, lease, rental, transfer, donation, or use of a motor vehicle in Idaho unless a valid exemption applies.

Basics Guide

Basics Guide

Sales Price

Sales Price

Types of Sales

Types of Sales

Exemptions

Exemptions

Rentals

Leasing out or renting out your own motor vehicle

Rentals

Recordkeeping

Recordkeeping

Laws and Rules

Laws and Rules

Ground Transportation

Ground transportation companies include common carriers such as limousines, bus companies, trucking companies and ride-sharing services that transport people, freight, and other items using roads and highways.

Nontaxable charges

The amount that a ground transportation company charges to move people or property isn’t taxable. These charges include:

  • A trucking company’s freight charges to its customers

    Examples:

    • Moving residential or commercial furnishings
    • Moving packages or commodities
  • A company’s charges to transport people (e.g., bus, taxi, limousine)
  • Ride-sharing services (e.g., Uber, Lyft)

This guide explains sales and use tax that ground transportation companies charge their customers on their purchases. Shipping fees are explained in Retailers – Sales price.

Taxable purchases

Items a ground transportation company buys to operate the business are generally taxable. Taxable items include:

  • Trucks, buses and other motor vehicles except motor vehicles in an International Registration Plan (IRP); see Interstate Commerce Vehicles
  • Vehicle parts and supplies
  • Warehouse tools and supplies
  • Office furniture and supplies
  • Packing and shipping materials
  • Food to give away to passengers; see Complimentary items for more information
  • Logo merchandise and promotional items given away

Exemption for purchases common carriers ship out of state

Goods a customer buys must be shipped directly to a location outside of Idaho to be exempt. For example, when customers buy goods that a common carrier ships directly out of state, those goods aren’t taxable in Idaho. But, when a common carrier buys goods and uses itself as the shipper, the goods are exempt in Idaho only if all of these apply:

  • It uses its own vehicles to ship the goods outside Idaho.
  • It uses the goods outside Idaho in their business as a common carrier.
    Examples:
    • Shipping materials used by common carriers that move household goods
    • Shipping materials used by common carriers that ship packages
  • They have a bill of lading showing delivery outside of Idaho.

Air Transportation

Nontaxable charges

The amount an air transportation company charges to fly people or property isn’t taxable. Nontaxable services include:

  • Transporting freight from one point to another
  • Transporting passengers from one point to another
  • Aerial contracting services (e.g., applying farm chemicals or aerial logging)
  • Air ambulance services

Taxable purchases

Air transportation companies pay tax on items they buy to operate the business. This includes:

  • Sales and leases of aircraft and parts unless an exemption applies. See “Exemptions for air transportation companies” below.
  • Hangar equipment and supplies.
  • Safety equipment and supplies.
  • Food to give away to passengers. See Complimentary items for more information.
  • Logo merchandise and promotional items given away.
  • Office furniture and supplies.
  • Tools and equipment used in aircraft repair, remodeling and maintenance.

Exemptions for air transportation companies

Aircraft and parts are exempt for some transportation companies and aircraft maintenance companies including:

  • Aircraft that transport passengers or freight for hire for more than half their flight hours. The aircraft must:
    • Be operated under authority of Idaho, the United States or a foreign government
    • Be used to provide services to the public without discrimination
    • Transport people or property from one location to another on the ground or water
  • Aircraft used for air ambulance services
  • Fixed-wing aircraft that spend more than half their flight hours as an air tactical group supervisor platform under contract with a governmental entity for wildfire activity
  • Repair or replacement materials and parts installed, affixed or applied to these aircraft in connection with remodeling, repairing or maintaining them
  • Certain materials, parts and components installed on nonresident, privately owned aircraft at an FAA-approved repair station in Idaho

Railroad Transportation

Nontaxable charges

The amount a rail transportation company charges to transport people or property isn’t taxable. This includes:

  • Freight and service fees

    Examples:

    • Freight charges on the rail company’s cars
    • Charges to move a customer’s railroad stock
    • Logistics services
  • Charges to transport people

Taxable purchases

Rail transportation companies must pay tax on items they buy to operate the business. These items include:

  • Motor vehicles and repair parts for motor vehicles
  • Warehouse tools and supplies
  • Safety equipment and supplies
  • Office furniture and supplies
  • Packing and shipping materials
  • Food to give away to passengers; see Complimentary items for more information
  • Logo merchandise and promotional items given away
  • Items that become part of real property
  • Locomotives and other rolling stock
  • Parts used in Idaho to repair rolling stock
  • Fuel, when it’s not necessary to or primarily used in:
    • Testing remanufactured or rebuilding rolling stock engines
    • Equipment in the remanufacturing or rebuilding of rolling stock engines

Exemption for railroad rolling stock

A rail transportation company can buy certain equipment tax exempt.

Qualifying railroad rolling stock

Railroad rolling stock that qualifies for the exemption is property that’s both:

  • Rebuilt or remanufactured in Idaho
  • Used in interstate commerce for at least three consecutive months before being rebuilt or remanufactured in Idaho

    Examples:

    • Flanged-wheel locomotives
    • Railroad cars
    • Maintenance-of-way equipment
    • Other flanged-wheel vehicles designed and manufactured specifically for use on railroad tracks and railroad systems
    • Component parts of these locomotives, cars, equipment and vehicles

Qualifying parts, materials and equipment

Parts, materials and equipment for rebuilding and remanufacturing railroad rolling stock in Idaho that qualify for the exemptions are:

  • Property that becomes:
    • Part of the rolling stock
    • Part of the equipment used in rebuilding or remanufacturing the rolling stock
  • Materials used or consumed in the process of remanufacturing or rebuilding railroad stock
  • Equipment necessary to, and primarily used in, the process of remanufacturing or rebuilding railroad stock
  • Fuel used in:
    • Testing remanufactured or rebuilt railroad stock engines
    • Equipment that’s necessary to, and primarily used in, the process of remanufacturing or rebuilding railroad stock

Sales to Passengers – Ground, Air, and Rail

When transportation companies like buses, airlines or railways sell passengers property that isn’t included in the price of a ticket, the property is taxable.

Transportation companies making taxable sales are retailers who must have an Idaho seller’s permit. They must collect sales tax on items they sell, unless the passenger is exempt. And, they must then forward any sales tax they collect to the Tax Commission. See “Retailers.”

The transportation company can buy the items exempt. They must collect tax when they sell to passengers.

The transportation company must charge Idaho sales tax when it sells products during a trip that starts or ends in Idaho.

  • If the company’s records show where products sold are ordered and delivered during a trip that starts or ends in Idaho, the company must charge Idaho sales tax on 100 percent of the sales price of the products ordered or delivered in the state.
  • If the company’s records don’t show where products were ordered or delivered during a trip that starts or ends in Idaho, it can prorate the sales tax due to Idaho. The company should multiply the total sales in a trip by the percentage of Idaho miles in the trip. The company must charge Idaho sales tax on the proportionate total of sales it made in Idaho during the trip.

Note: Passengers can buy products exempt if they qualify for a valid exemption and give the transportation company a completed pdf Form ST-101 – Sales Tax Resale or Exemption Certificate.

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.