Sales and Use Tax Refund Requests

Documentation must clearly show you’re owed a refund. Documentation varies for different situations. See some common situations described below. We might request records in addition to those listed below.

Sales tax claims

Refund of sales tax you, as the buyer, paid to a retailer

Idaho can’t refund sales tax paid to other states. If you paid Idaho sales tax when you bought something, and the item(s) qualifies for an exemption, provide ALL of the following with Form TCR:

• A list of items on which you paid sales tax in error. The preferred format is an Excel spreadsheet or something similar. At a minimum, the report should contain:
  • Purchase date.
  • Retailer name.
  • Invoice number.
  • Detailed description of the item purchased.
  • Amount paid.
  • Amount of sales tax paid.
  • Reason for exemption. Make explanations as specific as possible. For example, if the item qualifies for the production exemption, explain specifically where you use the item in the production process and how it affects the production process.
• Evidence you attempted to get a refund from the seller but couldn’t (e.g., a letter or email from the seller saying they haven’t, and won’t, refund the tax).
• A copy of each invoice or receipt for all items purchased that you include in your refund request.

Refund of sales tax paid to the Department of Motor Vehicles (DMV) on a vehicle or vessel

Provide ALL of the following with Form TCR:

• Purchase documentation (e.g., purchase invoice or bill of sale).
• Evidence you paid sales tax when titling or registering the vehicle/vessel.
• An explanation of why the vehicle/vessel qualifies for an exemption.
• Any other documentation to help support the claim. For example, if you’re claiming the interstate commerce exemption, you need to provide:
  • For motor vehicles, evidence the vehicle has a maximum gross weight of over twenty-six thousand (26,000) pounds.
  • Evidence the vehicle is registered under the International Registration Plan (IRP) or is a trailer used in an IRP fleet.
  • Evidence the vehicle is part of a fleet of vehicles that travels 10% or more of its miles outside of Idaho.

Refund of sales tax, you, as a retailer, refunded to the buyer

Provide ALL of the following with Form TCR:

• A report of all transactions included in your refund request, if your request contains multiple items.
• A copy of each invoice in your refund request.
• Evidence your customer was owed a tax refund (e.g., a copy of your customer’s exemption certificate).
• Evidence you refunded the tax to your customer (e.g., a canceled check or credit memo).
• Detailed accruals from your sales tax payable account for the month(s) the original sale(s) was made and the month(s) you issued a credit memo. Account data should show a sale date, invoice number, customer name, and amount of tax paid. The tax on the report should reconcile to the amount reported on your sales and use tax return. We need this information to verify you forwarded the tax to the Tax Commission.

Refund of sales tax paid as the result of a bookkeeping error

Provide ALL of the following with Form TCR:

• Sales tax liability reports or other documentation that show how you made the original calculations you reported.
• Details of your sales tax payable account, or similar documentation, that lists all the sales included in the reporting period. Account data should show a sale date, invoice number, customer name, and amount of tax paid. The tax on the report should reconcile to the amount(s) reported on your sales and use tax return(s). We need this information to verify you forwarded the tax to the Tax Commission.
• An explanation of how the bookkeeping error occurred.
• Any other documentation that supports your claim.

Use tax claims

If you’re requesting a refund of use tax paid directly to the Tax Commission, provide ALL of the following with Form TCR:

• A report of all transactions included in your refund request, if your request contains multiple items.
• A copy of each purchase invoice in your refund request.
• An explanation of why you’re owed a use tax refund. If you’re claiming a refund of use tax because you sold the item at retail, provide a copy of the corresponding sale invoice.
  • Example: Contractors who make improvements to real property are the consumers of the materials they install and pay use tax on untaxed purchases. If a contractor pulls taxed materials from inventory and sells the materials at retail (without installation), the contractor can request a credit for the use tax paid.
• Detailed accruals for your use tax payable account that reconcile to the amount reported on your original sales and use tax return(s) to verify you paid the tax to the Tax Commission. Accrual data should show a purchase date, invoice number, vendor name, and amount of tax paid.

Bad debt claims

You must send in sales tax you collect to the Tax Commission on an accrual basis (when you make a sale), regardless of when a customer makes payment. If you paid sales tax to the Tax Commission and later write it off as bad debt, you can claim a refund for the portion of the bad debt that’s sales tax. The sales tax refund amount depends on many factors, including:

• If the sale was secured or unsecured.
• The amount your customer paid.
• Financing arrangements.
• If a secured sale was repossessed and the amount it was resold for.

You can claim a refund in the month you make a bad debt adjustment on your books and records. The Tax Commission will only allow a credit for the portion of the bad debt that’s sales tax. Only one of the following can claim a refund:

• The retailer who made the original sale and paid the sales tax to the State, or
• The financial institution or other third parties who provided financing on behalf of the retailer, if the amount financed includes the sales tax.

You must provide a contract that specifies which party has the right to claim the bad debt.

Unsecured bad debt (no collateral)

Provide information that details the original sale with Idaho tax paid, amounts written off as bad debt, and your customer’s payment history with Form TCR. For example:

• A report listing the sales included in your request.
• Backup details of your sales tax payable account, or similar documentation, for the reporting period(s) in which you paid the tax to the Tax Commission. At a minimum, the report should show a sale date, invoice number, customer name, and amount of tax paid. The tax on the report should reconcile to the amount(s) reported on your sales and use tax return(s). We need these details to verify you paid the tax to the State.
• Documentation showing the write-off in your records.
• Original sale documentation (e.g., invoice) that shows Idaho sales tax.
• Financing contract, if applicable.
• Customer payment history through the current period, including any recoveries received through a third party, such as a collection agency.

Secured bad debt (If collateral can’t be repossessed)

• Calculated the same as “Unsecured Bad Debt (No Collateral)”. Please provide an explanation and supporting documentation for why you can’t repossess it.

Secured bad debt (If collateral was repossessed but not resold)

• The State considers your debt satisfied if you keep the property. You can’t make a refund claim.

Secured bad debt (If collateral was repossessed and resold)

To claim a refund of sales tax after you’ve repossessed and resold the item, provide ALL of the following with Form TCR:

• Documentation showing the write-off in your records.
• A report listing the sales in your refund claim. ContactSalesTaxRefund@tax.idaho.gov to request a copy of the bad debt calculation workpapers, which is the preferred report. Include documentation to support each element of the report:
  • Original sale documentation.
  • Financing contract.
  • Documentation to show you sold the repossessed property (e.g., sale invoice, auction receipt, or salvage yard receipt).
  • Customer payment history through the current period, including refunds of GAP insurance, service contracts, optional warranties, and/or any recoveries received through a third-party, such as a collection agency. If you have these items in electronic format, state that you need to submit electronic data on Form TCR. We’ll contact you when we’re ready to receive it.

25% Sales/Use Tax Rebate – Business Advantage Idaho Small Employer Incentive Act

Until December 31, 2030, you might qualify for a 25% rebate of the Idaho sales/use tax you or your contractor paid on capital assets purchased during the project period, for use at the project site, if the items purchased are used for five years or more continuously. You must meet all the following qualifications:

• Invest at least $500,000 in new buildings or plant facilities.
• Create at least 10 new jobs paying $40,000 of taxable wages annually ($19.23/hour) plus medical benefits.
• The average wage of additional employees hired during the project period must be at least $15.50/hour plus benefits, excluding jobs noted in the Idaho Small Employer Incentive Act.

Visit commerce.idaho.gov for more information. To claim the rebate, you must first file Form 89SE. Then provide the following with Form TCR:

• A report showing all invoices in your refund request, preferably in Excel format. At a minimum, the report should show a purchase date, vendor name, invoice number, detailed description of what you purchased (no general descriptions like “building materials”), amount of tax paid, and description of how you used the goods (e.g., incorporated into building structure).
• A copy of all purchase invoices that show you, or a contractor working on your behalf, paid Idaho sales tax.
• If you paid use tax, backup details of your use tax payable account or similar information that reconciles to amounts reported to the Tax Commission. If a contractor paid use tax, they’ll also need to provide this type of backup that reconciles to amounts they reported (contractors can provide the documentation directly to the Tax Commission after you submit the Form TCR).
• Documentation to show you met hiring requirements.
• A description of the project location and the project period (the date the project started through the date of initial operations).

Other situations

For all other situations, provide ALL of the following with Form TCR:

• A detailed explanation of why you’re claiming the refund.
• Copies of any invoices, receipts, and account data related to the refund claim.
• Any other documentation to support the claim.