Current through September 2, 2024
Sections 63-3612, 63-3613, Idaho Code
01.
Adjustments That Apply After Tax Calculation. Tax must be charged before deducting the following:
a. Cash discounts. A cash discount is a discount offered by a retailer to a buyer as an inducement for prompt payment. Sales tax must be computed on the full amount of the purchase price before the cash discount is subtracted. When an invoice or other billing document states that a discount will be allowed if payment is made before a certain date, then the discount is presumed to be a cash discount. Discounts allowed on payments received after the stated date are presumed to be cash discounts unless proven to the contrary by clear and convincing evidence.
b. Manufacturer's rebates. A manufacturer's rebate means a cash payment made by a manufacturer to a consumer who has purchased or is purchasing the manufacturer's product from the retailer. Except as provided by Subsection 051.02 of this rule, sales tax is computed on the full amount of the purchase price without regard to the manufacturer's rebate. Any rebate received by the buyer from the manufacturer, distributor, or any person other than the retailer will not reduce the retail sales price taxable. Rebates paid by a retailer to the consumer will also be included in the taxable price if the retailer has been reimbursed by a third party, such as the manufacturer.
c. Manufacturer's discount. A manufacturer's discount is a price reduction offered by a manufacturer to a consumer for purchasing their product from a retailer who is then reimbursed that amount by that manufacturer. Sales tax is computed on the full amount of the purchase price before subtracting the coupon amount. This includes coupons issued by a manufacturer allowing the buyer to buy one item and get a second item free if the retailer will be reimbursed by the manufacturer.
d. Food Stamps and WIC. Purchases of food with coupons issued under the Federal Food Stamp Program or food checks issued by the Federal Special Supplemental Food Program for Women, Infants, and Children, (WIC), are exempt from sales or use tax. When a buyer uses manufacturer's discount coupons along with food stamps or WIC checks to purchase food items that qualify under these programs, the discount value of the coupon is taxable. For example, a food stamp recipient purchases fifteen dollars ($15) worth of eligible food, surrenders manufacturer's discount coupons valued at two dollars ($2), and pays with thirteen dollars ($13) in food stamps. Sales tax is due on the two dollar ($2) discounted amount. The buyer may not use food stamps or WIC checks to pay sales tax due.
02.
Adjustments That Apply Before Tax Calculation. Tax is charged after the deduction of the following:
a. Trade discounts. A trade discount is a reduction from the posted or listed price offered by a retailer which is not an inducement for prompt payment and which, when applied to the posted or listed price, establishes the true selling price to be paid by the buyer.
b. Retailer's rebates. A retailer's rebate is an amount of money or property paid by a retailer to a buyer which is conditioned upon the recipient making a purchase from the retailer. However, if a retailer is reimbursed by a manufacturer or other third party, the transaction is not a retailer's rebate and the rebate amount is included in the taxable sales price. This would be the case when a buyer sends the rebate claim to the retailer, the retailer sends the rebate amount to the buyer and the manufacturer reimburses the retailer.
c. Retailer discount coupons. Retailer discount coupons are coupons issued by a retailer which entitle the holder to purchase the issuing retailer's products at less than the posted or listed retail price.
d. Manufacturer's motor vehicle rebates. Effective July 1, 1990, a manufacturer's rebate offered to a buyer of a motor vehicle may be deducted from the purchase price of the vehicle before computing the tax if the rebate is used to reduce the retail sales price of the vehicle, or is used as a down payment on the purchase. The dealer's customer invoice shows the manufacturer rebate as a deduction to, or down payment on, the purchase price of the vehicle. Only manufacturer rebates offered on motor vehicles qualify for the exclusion from tax. Manufacturer rebates offered on trailers, off-highway equipment, and other property will be treated as discussed in Subsection 051.01.b. of this rule.
03.
Coupon Books.
a. The sale of a coupon book that contains coupons offering discounts is deemed to be the sale of an intangible and is therefore not taxable.
b. When the buyer of a coupon book redeems one (1) of the coupons, the discount allowed by the coupon is not included in the taxable sales price if the retailer is not reimbursed by a manufacturer or other third party.
04.
Donated Goods. The donor is the consumer of donated goods and must pay sales or use tax on the purchase price of the goods.
05.
Gift Certificates. A gift certificate purchased from a vendor entitles a recipient to tangible personal property or services when presented to the vendor. The purchase of a gift certificate is not a taxable transaction. When the gift certificate is presented for redemption a sale is consummated. If the sale is a transfer of tangible personal property, the vendor collects sales tax at the time of sale. Tax applies to the purchase price of the tangible personal property, irrespective of any cash refunded on any difference between the face value of the gift certificate and the purchase price. If the sale is for services not taxable under the Sales Tax Act, the vendor will not collect sales tax.
06.
Buy One Get One Free Discounts. If a retailer offers a "buy one get one free" discount in which the buyer purchases an item and receives another item of the same kind at no additional charge, the taxable sales price is the actual price paid after the discount is taken. Use tax is not applicable to the item sold at no charge; however, if a manufacturer's discount allows the buyer to receive a free item for which the retailer will be reimbursed by the manufacturer the taxable sales price is the full amount before the discount is calculated.
07.
Complimentary Gift with Purchase of an Item.
a. If a retailer offers a complimentary item to a customer at the time of, and in connection with, the sale of tangible personal property, the gift is considered a part of the sale. The item given away is deemed to be purchased for resale by the retailer; however, if the sale is of an item exempt from tax and the sale of the gift item would have been taxable, the retailer is responsible for use tax on the gift. This subsection applies only to sales of tangible personal property.
i. Example: A retailer advertises that every buyer of a refrigerator will receive a bike at no additional charge. Since both the bike and the refrigerator were purchased for resale, the retailer would not owe tax when it purchases either. When it sells the bike together with the refrigerator, the taxable amount is the sales price of the refrigerator.
ii. Example: A retailer offers to give a free coffee mug to anyone who purchases fifteen (15) gallons of gas. Since the sale of the gasoline is exempt pursuant to Section 63-3622C, Idaho Code, the retailer would not charge any tax to the buyer. The retailer must pay use tax on its purchase price of the coffee mug.
b. If a retailer offers to give away a promotional item to anyone with no purchase required, then the retailer did not purchase the promotional item for resale. The retailer pays sales or use tax on its purchase price of the promotional items given away.
c. This rule applies only to items given away by sellers of tangible personal property. See Rule 028 of these rules for items given away by hotels and motels. See Rule 041 of these rules for items given away by restaurants.
Effective March 31, 2022
