To be tax exempt, the sale must be billed to and paid directly by the qualified government agency.
Billed to government
A sale is billed to qualified federal and Idaho government agencies if any of the following applies:
- The government agency has a contract with the seller.
- The seller will bill the government agency for the sale.
- The buyer pays with a qualifying credit card issued to the government agency.
Qualifying credit card
Qualifying credit cards include:
- Federal government – GSA SmartPay cards
- Idaho state government – Visa cards issued by US Bank labeled “Tax Exempt”
- Idaho local government – Credit card bills the agency pays directly. Charges that an employee is responsible for or reimbursed for don’t qualify.
Paid directly by government
A sale is paid directly by a government if the seller receives payment directly from the government agency. These payment types include:
- A check from the government agency
- Electronic payment from the government agency
- Payment of charges on a qualifying credit card the government agency provides
- A government agency’s purchase order to the seller (only for cash sales)
Charges to credit cards issued to employees of government agencies don’t qualify if the agency will reimburse the employee. In such cases, the seller isn’t billing the sale directly to the government because the employee is responsible for paying the credit card company.
Documenting sales to governments
The buyer must properly complete the appropriate exemption certificate and give it to the seller:
Buyers complete Form ST-104HM – Sales Tax Exemption on Lodging Accommodations and Instructions, for hotel and other lodging purchases when the buyer pays with a qualifying credit card that’s both billed to and paid by the government agency.
Buyers complete Form ST-104G – Sales Tax Exemption Claim – for Cash Purchases by Government Agencies, for cash purchases.
- The buyer must complete and give the seller a separate Form ST-104G for each cash transaction.
- This form can’t be used for a traveling government employee’s lodging, meals or private car expenses.
- Other states’ governments can’t use this form.
Sellers can accept a government purchase order in place of a completed Form ST-104G to prove the sale is both billed to and paid by the government agency.
Buyers should complete Form ST-101 – Sales Tax Resale or Exemption Certificate, for most other exempt purchases of goods or services. In section 3, the seller should check the box for “Government Entity (U.S./Idaho).”