Laws and Rules for Motor Vehicle Dealers

Learn more about motor vehicle dealers:

Sale — Idaho Code section 63-3612; Sales Tax Rule 044, 046, 106 and 107
Sales Price — Idaho Code section 63-3613; Sales Tax Rules 043, 044, 049, 051, 060, 061, 062, and 065
Production Exemption — Idaho Code section 63-3622D; Sales Tax Rules 079 and 083
Exempt Private and Public Organizations — Idaho Code section 63-3622O; Sales Tax Rules 085, 091, 093, 094, and 101
Motor Vehicles, Used Manufactured Homes, Vessels, All-Terrain Vehicles, Trailers, Utility Type Vehicles, Specialty Off-Highway Vehicles, Off-Road Motorcycles, Snowmobiles and Glider Kits — Idaho Code section 63-3622R; Sales Tax Rules 101, 106, 107, 108
Exemption for Official Documents — Idaho Code section 63-3622AA
Production Exemption Shall Not Apply to Sales Regarding Recreation-Related Vehicles — Idaho Code section 63-3622HH; Sales Tax Rule 079
Refunds, Limitations, Interest — Idaho Code section 63-3626; Sales Tax Rules 045, 063, and 117
Records Required and Auditing of Records — Sales Tax Rule 111
Certificates for Resale and Other Exemption Claims — Sales Tax Rule 128
Bad Debt – Sales Tax Refund Claims in the Auto Industry
Labor for new vehicle accessories – Idaho Code section 63-3622OO

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.

We’ll bill you for the tax due if you don’t keep records to explain why sales weren’t taxed.

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

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.

Examples

Office equipment and supplies
Documentation forms
Advertising brochures, inserts, mailers, and flyers
Merchandise or advertising racks
Repair parts used in optional warranties (see chart above)
Promotional giveaway items
Shop supplies (cleaners, rags, solvents, etc.); if you bill your customers a fee for shop supplies, you can’t charge them sales tax.

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: 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 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.

Write the name and address of both the seller and your business at the top of the form.
In section 1, “Buying for Resale,” line 1 – write the nature of your business and describe the products you sell.
On line b – check the first box and write your Idaho seller’s permit number.
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.

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

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.

What is and isn’t included in the calculation of taxable sales price

Vehicles and Vessels: Taxable Sales Price

Leasing or Renting a Motor Vehicle – Dealers

Leasing or renting a motor vehicle is a taxable sale in Idaho.

Type of lease/rental	How the lease/rental works	When to collect sales tax
Basic lease or rental	The 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 buy	The 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 purchase	The 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).

You calculate the taxable sales price for a lease of a motor vehicle the same as the sale of a motor vehicle. See Sales price.

Out-of-state leasing companies

Out-of-state companies that lease motor vehicles in Idaho must follow all these requirements:

Get an Idaho sales tax permit before the motor vehicle can be registered in Idaho.
Collect and forward sales tax on the leased motor vehicle to Idaho.
Report income from Idaho leases on their Idaho income tax return.

Exemptions – Motor Vehicles – Dealers

The following groups can buy a motor vehicle exempt from Idaho sales tax under certain conditions.

Nonresident buyers

A nonresident can be an individual, a company, or an organization.

A nonresident that buys a motor vehicle for use outside of Idaho might qualify for exemption if all of the following apply:

The motor vehicle is intended for use outside of Idaho and won’t require titling in Idaho.
It will be taken out of Idaho and immediately registered and titled (if required) in another state or foreign country.
It won’t be used in Idaho for more than 90 days in any consecutive 12-month period. (A day of use in Idaho is 16 hours during any 24-hour period.)

More information for nonresidents

A military member who buys a motor vehicle to use in Idaho must pay tax even if Idaho isn’t the member’s state of residence.
An Idaho resident who forms a business entity in another state to buy one or more motor vehicles doesn’t qualify for this exemption.
A resident of another state who buys a motor vehicle in Idaho for an Idaho resident who will use the motor vehicle in Idaho doesn’t qualify for the exemption.
A nonresident that buys a motor vehicle to take out of state doesn’t qualify for the exemption if an Idaho resident is included as one of the following:
- Co-buyer on the sales invoice or retail purchase agreement
- Co-borrower on loan applications
- Co-applicant for title or registration
- Party on any other sales documents

Buyers likely don’t qualify for the exemption if they provide an Idaho driver’s license, Idaho address or Idaho contact information. You could be held liable for the sales tax if you don’t collect it.

The nonresident buyer must give you a completed Form ST-104NR – Sales Tax Exemption Certificate – Nonresident Vehicle/Vessel. Keep a copy of the form for your records, and forward a copy to the Tax Commission:

Scan and email to: vehicles@tax.idaho.gov
Mail to: Idaho State Tax Commission – Tax Discovery Bureau, PO Box 36, Boise ID 83722-0410

Government agencies, schools, some nonprofit organizations, and American Indian tribes

Buyers listed below are exempt from sales tax on everything they buy, including motor vehicles.

U.S. federal government agencies
Idaho state and political subdivisions (such as cities and counties)
Public schools
Some nonprofit schools
Certain nonprofit and health organizations specifically exempted by Idaho law. Examples:
- Nonprofit hospitals
- Qualified health organizations
American Indian tribes

These agencies and organizations must give you a completed Form ST-101 – Sales Tax Resale or Exemption Certificate. Keep a copy of the exemption certificate for your records. The exemption doesn’t apply to buyers who are employees purchasing an item for personal use and not on behalf of the exempt agency. You could be held liable for the sales tax if you don’t collect it.

Note: For a complete list of exempt agencies and organizations, see our Exemptions guide.

Members of American Indian tribes

The laws for buying a motor vehicle tax free are different for individual members of American Indian tribes than for the tribes themselves. Tribal members must take delivery of the motor vehicle on a reservation for the sale to be exempt from sales tax.

The buyer must give you a completed Form ST-133 – Sales Tax Exemption Certificate – Family or American Indian Sales. Keep a copy of the form for your records. Your records must clearly show that you delivered the motor vehicle to the reservation. Otherwise, you could be held liable for the sales tax.

Interstate commerce

You can sell trucks, buses, and other vehicles that are registered as weighing over 26,000 pounds, as well as trailers exempt when all of the following apply:

They must be immediately registered and used in the International Registration Plan (IRP) pro rata plan.
At least 10 percent of the fleet mileage for any reporting period must be outside Idaho.
For a long-term lease, the vehicle must be titled and registered in the customer’s name. A short-term lease doesn’t qualify for a sales tax exemption when the title remains in the name of the lessor.

Glider kits attached to IRP-registered vehicles are exempt.

Repair parts for exempt IRP vehicles and trailers are taxable.

The buyer must give you a completed Form ST-104IC – Sales Tax Exemption Certificate – Interstate Commerce Vehicles. Keep a copy of the form for your records.

The certificate requires buyers to verify that they’ll use the vehicle in a fleet with at least 10 percent of its mileage outside of Idaho.

Use tax is due on the vehicle’s value on the last day of the registration period if the mileage is less than 10 percent of the fleet mileage.
The buyer should evaluate each fleet separately for the IRP exemption If the customer has more than one IRP fleet.

Producers, farmers, and ranchers

The motor vehicle must meet all these requirements to be exempt:

It can’t be registered.
It can’t be used on public roads and highways.
It must be used exclusively in qualifying production activities (including farming and ranching).
Examples:
- Pickups used only to feed cattle in a pasture
- Pickups used to transfer work-in-process goods between work sites in a manufacturing company’s yard or factory

Note: Most recreational vehicles are never eligible for the production exemption. For more information, see the Farming and Ranching: Production Exemption guide.

The producer, farmer, or rancher must give you a completed Form ST-101, Idaho Resale or Exemption Certificate.

This chart lists all available vehicle and vessel sales/use tax exemptions:

Vehicles & Vessels: Exemption Certificates.

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 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 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 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 Bad Debt white paper.

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

Both the seller and buyer in a rescinded sale must be in the same positions they were in before the sale.

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.

Examples of calculating use tax due for the period of the loan

The fair market rental value of a motor vehicle is $300/month, and you loan it to a performing arts company for three months’ use by its resident artists. Use tax is due on $900.
The fair market rental value of a motor vehicle is $500/month, and you loan it to a sports organization for use during a two-week event. Use tax is due on $250 (1/2 of a month).

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 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:

Retailers
Any other type of business and individuals who aren’t dealers

Motor vehicle defined

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

Cars
Buses
Trucks
On-highway motorcycles
Recreational vehicles, such as
- Motor homes
- Fold-down camping trailers
- Fifth-wheel trailers
- Travel trailers
- Park model recreational vehicles (new and used)
  Read more about PMRVs on Form ST-108PM – Park Model Recreational Vehicle – Modification Affidavit

Motor vehicles don’t include:

Snowmobiles
Boats
Aircraft
All-terrain vehicles, utility type vehicles, and specialty off-highway vehicles
Specialty off-highway motorcycles when not used on public roads
Modified park model recreational vehicles