Sales Tax Guide for Idaho

What Is Taxable in Idaho?

In Idaho, most tangible personal property is subject to sales tax. However, some items are exempt, such as prescription drugs, certain agricultural supplies, and some grocery items.

If your business sells taxable goods or services, it is essential to collect and remit sales tax correctly. Idaho businesses should also be aware of potential use taxes when purchasing items from out-of-state vendors.

Who Needs to Collect Sales Tax?

Entities required to collect sales tax in Idaho include:

• Retailers with a physical presence in Idaho
• Remote sellers if they meet the state’s economic nexus criteria
• Service providers, but only for specific taxable services

Idaho mandates an economic nexus threshold of $100,000 in sales per year. Exceeding this threshold means you must register and collect sales tax, even without a physical presence in Idaho. Failure to comply can result in penalties and back taxes, which is why doola’s Bookkeeping service is crucial for staying on top of these requirements.

How to Register for a Sales Tax Permit in Idaho

Registering for a sales tax permit in Idaho involves:

1. Gathering your business’s EIN, business license, and relevant business information.
2. Accessing the Idaho State Tax Commission’s website.
3. Filling out the online application form.
4. Acquiring your Sales Tax Permit to begin tax collection.

Collecting tax without a permit is illegal, so ensure you register before conducting taxable sales. doola’s expert bookkeeping team can simplify the registration and compliance process, reducing the administrative burden on your business.

How to Calculate Sales Tax in Idaho

Follow these steps to accurately calculate sales tax:

Step 1:
Identify the correct sales tax rate, which is a combination of the Idaho state rate and any applicable local rates.

Step 2:
Collect the right tax amount at the point of sale.

Step 3:
Maintain precise transaction records.

Idaho requires filing sales tax returns on a regular basis, such as monthly, quarterly, or annually, contingent on sales volume. Businesses should be aware of varying sales tax rates in different municipalities to ensure proper calculation and remittance.

Common Sales Tax Exemptions in Idaho

In Idaho, some transactions may be exempt from sales tax, including:

• Purchases for resale (with a valid resale certificate)
• Sales to qualifying nonprofits
• Certain agricultural machinery and equipment purchases

To claim exemptions, businesses must use appropriate exemption certificates and maintain accurate documentation. Improper use can result in audits and penalties.

Remote Seller and Marketplace Sales Tax Rules in Idaho

For remote sellers and marketplace facilitators, Idaho has specific requirements. The economic nexus threshold is set at $100,000 in gross sales, obligating exceeding businesses to comply with Idaho’s sales tax rules.

Marketplace facilitators must collect and remit sales tax on behalf of sellers using their platform, ensuring compliance with Idaho’s tax laws.

What Triggers a Sales Tax Audit

Idaho may audit for several reasons, including incorrect or missing filings, repeated late payments, discrepancies in reported sales, and misuse of exemption certificates.

Maintaining comprehensive and accurate sales, exemption, and tax payment records, as well as performing periodic internal reviews, can mitigate audit risks.

FAQs About Sales Tax in Idaho

Here are common queries about Idaho sales tax:

Do digital products face sales tax in Idaho? 

Certain digital products are taxable, while others may be exempt. It’s important to review state policies.

Must out-of-state vendors collect Idaho sales tax? 

Yes, if they surpass the $100,000 sales threshold.

Consequences of incorrect sales tax charges? 

This can lead to the need for customer refunds or additional state payments. Accurate records help avoid these errors.

Are services subject to sales tax in Idaho? 

Typical services aren’t taxed, with some exceptions needing verification against state laws.

Stay Compliant With doola

Ensure your business remains compliant with Idaho sales tax laws easily by leveraging professional tools and services.

doola offers tools and services to help maintain compliance, guiding businesses through financial, tax, and bookkeeping challenges efficiently.