Search Category: Sellers/Vending
Auctioneers
An auction is the buying and selling of goods through a bidding system. An auctioneer is a person who manages an auction by offering items for bid, taking bids, and then selling the items to the highest bidder. Auctioneers are retailers in the business of selling tangible personal property. Auctioneers act as intermediaries between buyers and sellers; they might not have the title to the goods sold.
When a buyer purchases goods at an auction, the sale is between the buyer and the auctioneer. The buyer makes payment to the auctioneer. If there’s a problem with the sale, the buyer will contact the auctioneer to resolve the issue.
Idaho state law requires auctioneers, agents, brokers, distributors, and factors who facilitate the sale of tangible personal property to collect and remit tax on retail sales unless a valid exemption exists. They must collect sales tax even if Idaho law wouldn’t require the property owner to collect the tax.
- Example: An auctioneer sells a vehicle owned by the federal government. The federal government is exempt from collecting tax. Idaho law still requires the auctioneer to collect tax because the auctioneer is making the sale.
Most auctioneers charge a buyer’s fee (generally 10% – 15% of the sale). Buyers pay this fee to get the tangible personal property they purchased in the auction. Buyer’s fees are taxable.
Out-of-state sales
Sales tax doesn’t apply to sales of tangible personal property that the seller delivers outside Idaho using a common carrier, U.S. mail, or seller’s delivery service.
The seller must keep records to support the sales tax exemption. This includes shipping bills of lading, postal receipts, or invoices that show the out-of-state destination with supporting documents.
If the buyer picks up the tangible personal property in Idaho or pays a third party to pick up the property and deliver it outside Idaho, the sale is subject to Idaho sales tax. That’s because the transfer of title has occurred in Idaho.
Out-of-state purchases
Use tax applies when an Idaho buyer purchases goods outside of Idaho that they use or store in Idaho. Learn more on our Use Tax page.
Online Sellers Take These Steps
Steps
- Register for an Idaho seller’s permit. You can do that online at tax.idaho.gov/ibr.
- Forward the tax to the Tax Commission. Collect Idaho sales tax and file a sales tax return. See Filing and Paying.
- Register for a free Taxpayer Access Point (TAP) account after you get your Idaho seller’s permit in the mail.
- You can file and pay online through TAP.
- Keep records of all purchases and sales your business makes. See the Retailers Recordkeeping section for more information.
Third-Party Sellers
As of June 1, 2019, Idaho law requires marketplace facilitators to collect and forward Idaho sales tax on third-party sales in Idaho. Have your marketplace facilitator provide written verification of the sales tax they’re reporting. If your marketplace facilitator isn’t collecting and forwarding tax on your sales, please include it on your own seller’s permit.
Trading In – Renting and Leasing Tangible Personal Property
Trading in property to rent or lease other property
Lessees of property can trade in other property as partial payment for property they’ll lease. Retailers can reduce the taxable sales price by a trade-in allowance. Trade-in allowances can’t reduce the taxable sales price on rentals or leases between anyone else, such as private parties.
There are three methods to apply the trade-in allowance and calculate tax due.
- Option A: Subtract the trade-in allowance from the cost of the leased or rented property to reduce all monthly payments. The retailer charges tax on each payment.
- Option B: Use the trade-in allowance as the initial payments for the leased or rented property until the unapplied trade-in allowance is zero. The retailer doesn’t charge tax on those payments.
- Option C: A combination of these two methods.
Calculate tax on the three methods described above as follows:
Option A
Reducing all monthly payments. Kelly and OK Vans use the trade-in allowance to reduce the lease value from $12,000 to $8,000. The payments are $222.22 per month for 36 months. OK Vans charges sales tax on each $222.22 payment.
| Value of van | Trade-in allowance | Financed amount | Lease term in months | Payment amount subject to tax |
|---|---|---|---|---|
| $12,000 | $4,000 | $8,000 | 36 | $222.22 |
Option B
Eliminating initial payments. Kelly and OK Vans apply the $4,000 trade-in allowance as full payment for the first 12 months of the lease. OK Vans doesn’t charge tax on the $0 payments. At the end of 12 months, the remaining lease value is $8,000. Kelly pays $333 per month plus tax for the final 24 months of the lease.
| Value of van | Trade-in allowance | Financed amount | Lease term in months | Number of months with $0 payment | Remaining months subject to tax | Payment amount subject to tax (for remaining 24 months) |
|---|---|---|---|---|---|---|
| $12,000 | $4,000 | $12,000 | 36 | 12 | 24 | $333.33 |
Option C
Combining the two methods. Kelly and OK Vans apply $3,000 of the trade-in allowance as a down payment to reduce the lease value to $9,000. The payments are $250 per month for 36 months. They apply the remaining $1,000 of the trade-in allowance to the first four monthly payments of $250. OK Vans charges tax on each $250 payment for the remaining 32 months.
| Value of van | Trade-in allowance taken initially | Financed amount | Lease term in months | Number of months with $0 payment | Remaining months subject to tax | Payment amount subject to tax (for remaining 32 months) |
|---|---|---|---|---|---|---|
| $12,000 | $3,000 | $9,000 | 36 | 4 | 32 | $250 |
Trading in leased property to buy other property
Lessees of property can assign the residual buyout amount of the property as a trade-in allowance on property they buy. Retailers can reduce the taxable sales price by a trade-in allowance if the residual buyout value is more than the trade-in allowance:
- If the residual buyout amount of the leased property is more than the trade-in allowance the retailer offers, the taxable sales price is reduced by the difference.
- If the residual buyout amount of the leased property is equal to or less than the trade-in allowance the retailer offers, the trade-in allowance doesn’t reduce the taxable sales price.
- The first retailer offers a trade-in allowance of $11,000 for the console. In this situation, the console’s trade-in allowance is $1,000 more than the residual buyout amount. This reduces the taxable sales price by $1,000. The retailer charges tax on $14,000.
- The second retailer offers a trade-in allowance of $9,000 for the console. In this situation, the trade-in allowance is $1,000 less than the residual buyout amount, so the trade-in doesn’t reduce the taxable sales price. The retailer charges tax on $15,000.
Note: Trade-in allowances can’t reduce the taxable sales price on rentals or leases between anyone else, such as private parties.
Leasing and renting – specific issues
See the following guides for leasing and renting information on specific issues.
- Renting out or leasing out real property: “Hotels, Motels and Short-Term Rentals“
- Renting out or leasing out vehicles or aircraft:
Buying Tangible Personal Property for Renting and Leasing
This section covers buying property that you’ll rent out or lease out.
Bare rentals
Any entity that makes bare rentals can buy the property exempt for resale using 
Form ST-101 – Sales Tax Resale or Exemption Certificate.
Fully operated rentals
Owners that make fully operated rentals are the users of the property. They must pay sales tax on the property when they buy it.
Used in both bare and fully operated rentals
You’ll need to determine how you’ll primarily be renting out your property when you buy it. You must pay sales tax on the property based on your primary rental activity.
- Property you buy primarily for bare equipment rentals isn’t taxable.
- Property you buy primarily for fully operated rentals is taxable.
If you buy property primarily for bare rentals
You could owe use tax if you buy property for bare rental then use it in a fully operated rental. You’ll owe use tax on the fair market rental value of the property purchased for resale for the period you use it to provide a fully operated rental service.
Occasionally, a customer asks you to provide an operator along with the tractor. This is a fully operated rental service, and you owe use tax on the property’s use. You didn’t pay sales tax on the property, so you owe use tax on the amount you charge DIY customers for the rental period your operator uses it.
If you buy property primarily for fully operated rentals
You can’t apply for a refund of sales tax if you pay tax on property to use in fully operated equipment rentals, but you then rent it out as bare equipment.
Renting Out Tangible Personal Property
For tax purposes, rental of tangible personal property is considered a sale. There are two types of rentals:
- Bare equipment rentals. These are taxable.
- Fully operated equipment rentals. These aren’t taxable.
Bare equipment rentals
A bare equipment rental is when the owner rents out only the property, and the person who rents that property will operate it. The owner charges tax on:
- The rental charge, no matter how it’s determined (e.g., by the hour, by the week, by mileage)
- Any charges related to using the property
Examples:
- Tire wear
- Blade sharpening
- Mandatory damage waiver
- Mandatory warranty
- Supplies provided with the rental
- Cleaning charges agreed to as part of the rental
- Labor charges to prepare the equipment for the customer’s specifications
- Environmental fees, except those a federal government agency imposes
- Fuel sold to the customer when motor vehicle tax is not paid on the fuel (e.g., dyed diesel)
- Damage charges when the customer returns the property
Owners sometimes add personal property tax to the rental or lease fee. It’s taxable unless all of the following apply:
- The owner separately stated the property tax in the charge to the lessee.
- The lease agreement is for an initial period of one year or more.
- The amount the owner charged isn’t more than the property tax the lessor pays.
Bare rental with service fee
Some rentals include both a bare rental charge and a nontaxable service fee. In these rentals, tax is due on the personal property. The services might not be taxable if they’re a significant portion of the cost of the rental contract and are separately stated. Nontaxable services must be personal or professional, and not related to creating or altering the property rented.
Examples
- Renting out a garbage container and providing a service to empty the container
- Renting out portable toilets and providing a service to clean the units
In these situations, the customer uses the property between servicing, so it’s a bare rental of the property. Owners shouldn’t charge tax on service charges if they’re separately stated on the invoice.
Collecting tax
You’re a retailer if you make bare rentals. You must collect tax unless your customer qualifies for an exemption and provides a completed Form ST-101 – Sales Tax Resale or Exemption Certificate. Read more about requirements in our Retailers guide.
Fully operated equipment rentals
With fully operated equipment rentals, the owner of the property rents the equipment out and supplies someone to operate it throughout the rental period. This is a service and isn’t taxable.
Examples
- A crane and operator to lift wood into place
- A calibrator and technician to perform the calibration
Leasing Out Tangible Personal Property
Leases of tangible personal property are considered taxable sales. The person leasing out the property (lessor) is a retailer. The lessor must collect tax unless the customer qualifies for an exemption and provides a completed Form ST-101 – Sales Tax Resale or Exemption Certificate. Lessees of qualifying interstate commerce vehicles can rent tax exempt if they provide a completed Form ST-104IC – Sales Tax Exemption Certificate – Interstate Commerce Vehicles.
If lessors don’t charge sales tax when they rent out or lease out property used in Idaho, the customer owes use tax unless an exemption applies. See “Use Tax – How to report, file and pay use tax.”
Lessors can buy property exempt for resale if they’ll lease it out. They must give the vendor a completed Form ST-101.
There are three types of leases of tangible personal property.
Basic Lease
The customer returns the property to the lessor at the end of the lease term.
The lessor charges sales tax on each lease payment.
Lease with Option to Buy
The customer has the option of buying the property during the lease term or at the end of the lease term at fair market value.
The lessor charges sales tax on each lease payment and on the price the customer pays when buying the property.
Lease-Purchase
The customer makes regular payments during the lease term. At the end of the term, title to the property passes to the customer for $0 or an amount that’s less than fair market value.
The customer owns the property at the end of the lease term, so this is a sale and a financing arrangement. Collect sales tax at the beginning of the lease term on all the payments the customer will make during the lease term. At the end of the lease term, collect sales tax on any additional amount you charge then for the purchase of the property.
Out-of-state companies leasing out property in Idaho
Out-of-state companies that lease out property to others in Idaho must follow all these requirements:
- Get an Idaho seller’s permit before leasing property in the state. Learn more about getting an Idaho seller’s permit.
- Collect and forward sales tax on the leased property to us. Any entity that can lease the property tax exempt must give you a completed Form ST-101 – Sales Tax Resale or Exemption Certificate.
- Report income from Idaho leases on your Idaho income tax return.
Idaho companies that lease out property in another state
Lessors collect Idaho tax on the first month’s lease payment for property used outside Idaho if the customer receives the property in Idaho.
- No Idaho tax: The lessor delivers the property to the customer outside of Idaho and the customer doesn’t use it in Idaho during the lease term.
- Idaho tax on the first lease payment only: The lessor delivers the property to the customer in Idaho and the customer uses it outside the state for the remainder of the lease term.
Note: When lessors don’t collect and forward Idaho tax, they must keep records documenting the point of delivery and place of use during the lease term.
Renting and Leasing Tangible Personal Property: Recordkeeping
You must keep records of all your rentals, leases and purchases for at least four years. The 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:- Bills
- Receipts
- Invoices
- Credits granted
- Lease contracts
- All schedules or working papers used to prepare your tax returns
- Copies of sales tax resale or exemption certificates
Keep resale or exemption certificates for as long as the company does 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 to tax exempt. - Tax returns
- Tax payments
What the records must show
- Gross receipts from sales and services made in Idaho, even sales that you or your customer might consider exempt from tax. If you deliver the product or service somewhere other than your place of business, you also must keep records that prove where delivery took place.
- The identity of customers claiming an exemption, the type of exemption, and what you sold them tax 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 and exemption certificates for at least four years. You should keep them for seven years if you don’t file returns.
Laws and Rules for Renting and Leasing Tangible Personal Property
Learn more about renting and leasing tangible personal property:
- Rentals or Leases of Tangible Personal Property — Sales Tax Rule 024
- Retailer — Idaho Code section 63-3610, Sales Tax Rules 018 and 068
- Sale — Idaho Code section 63-3612
- Retail Sale – Sale at Retail — Idaho Code section 63-3609, Sales Tax Rule 011
- Tangible Personal Property — Idaho Code section 63-3616
- Promoter Sponsored Events — Idaho Code section 63-3620C, Sales Tax Rule 130
- Certificates for Resale and Other Exemption Claims — Idaho Code section 63-3622, Sales Tax Rule 128
- Returns and Payments — Idaho Code section 63-3623
- Sales Price — Idaho Code section 63-3613, Sales Tax Rules 043 and 049
- Trade-Ins, Trade-Downs and Barter — Sales Tax Rule 044
- Exemptions On Purchases By Political Subdivisions, Sales By The State Of Idaho, Its Departements, Institutions, And All Other Political Subdivisions — Sales Tax Rule 094
Renting and Leasing Tangible Personal Property: Basics Guide
This guide explains sales and use tax requirements for anyone who rents out or leases out their tangible personal property in Idaho to others.
Tangible personal property
“Tangible personal property” means personal property that can be seen, weighed, measured, felt or touched, or perceived in any way by the senses. See Idaho Code section 63-3616.
Tangible personal property includes vehicles, boats, equipment, clothing and many other things. You can rent out or lease out most tangible personal property for a specific period.
Laws and Rules for Wholesalers
Learn more about wholesalers:
- Retail Sale – Sale at Retail — Idaho Code section 63-3609; Sales Tax Rule 011
- Retailer — Idaho Code section 63-3610; Sales Tax Rules 018 and 068
- Retailer Engaged in Business in this State — Idaho Code section 63-3611
- Substantial Nexus — Idaho Code section 63-3615A
- Permits – Issuance – Revocation – Penalties — Idaho Code section 63-3620; Sales Tax Rules 070, 122, and 123
- Exemptions – Exemption and Resale Certificates – Penalties — Idaho Code section 63-3622; Sales Tax Rule 128
- Returns and Payments — Idaho Code section 63-3623
- Taxes as State Money — Idaho Code section 63-3623A
- Responsibility for Tax — Idaho Code section 63-3627; Sales Tax Rule 118
- Administration — Idaho Code section 63-3624; Sales Tax Rule 111