Current through August 31, 2023
Sections
63-3610,
63-3620,
63-3622K,
63-3622HH, Idaho Code
01.
Occasional Seller. Sales of
tangible personal property by an occasional seller are exempt from sales and
use tax. In order to qualify as an occasional sale, the seller cannot make more
than two (2) sales of tangible personal property in a twelve (12) month period,
nor hold himself out as engaged in the business of selling tangible personal
property. (3-31-22)
a. If the sale does not
qualify as an occasional sale, the seller is a retailer and will collect and
remit sales tax in the same manner as any other seller. See Section
63-3610, Idaho Code.
(3-31-22)
b. Proof of occasional
sale. An occasional seller of tangible personal property will provide a written
statement to the buyer if requested. An occasional seller of a transport
trailer or office trailer may use Form ST-108TR to document his occasional sale
claim. For occasional sales of other tangible personal property, the buyer
obtains a written statement that has the seller's name, address, date, and
signature from the seller verifying that the seller is not a retailer and has
made no more than one (1) other sale of tangible personal property within the
last twelve (12) months. The buyer will retain the occasional sale statement
provided by the seller as evidence that the purchase of the tangible personal
property is not subject to use tax. (3-31-22)
c. Sales arranged by a third party are
taxable. If any sales agent, licensed or unlicensed, participates in the sale
of tangible personal property, the sale is taxable. See Rule
020 of these rules.
(3-31-22)
02.
Change in the Form of Doing Business. A change in the form of
doing business qualifies for an occasional sale exemption when the ultimate
ownership of the property is substantially unchanged. Example: The
incorporation of a partnership qualifies for an occasional sale exemption when
substantially all of the property owned by the partnership is transferred to
the corporation, and the stockholders of the corporation own substantially the
same proportion of the corporation's stock as they owned in the partnership
interest as partners. (3-31-22)
03.
Bulk Sale -- Sale of an On-Going Business. The sale of
substantially all of the operating assets of a business or of a separate
division, branch, or identifiable segment of a business qualifies for the
occasional sale exemption if: (3-31-22)
a. The
buyer continues the same type of business operation; and (3-31-22)
b. Prior to the sale the income and expenses
attributable to the separate division, branch, or identifiable segment can be
determined from the accounting records and books. (3-31-22)
c. Example: Corporation X sells its entire
wood products division to Corporation Y, which continues to operate it in
substantially the same form. The transaction qualifies for an occasional sale
exemption. (3-31-22)
04.
Sale of a Motor Vehicle Between Family Members. Sales of motor
vehicles between family members related within the second degree of
consanguinity, blood relationship, qualify for the occasional sale exemption
but only if the seller paid a sales or use tax when the motor vehicle was
acquired. (3-31-22)
a. Example 1: A brother
sells his automobile to his sister. The brother purchased the car from an Idaho
dealer and paid Idaho sales tax on the original purchase. No tax applies to the
sale of the vehicle to the sister. (3-31-22)
b. Example 2: A mother sells her automobile
to her son for five thousand dollars ($5,000). The mother is an Oregon resident
and did not pay a sales or use tax when she purchased the automobile. The son,
who is a resident of Idaho, pays Idaho use tax on the five thousand dollar
($5,000) purchase price of the automobile. (3-31-22)
05.
Transfers Between Related
Parties. The transfer of capital assets between related parties
qualifies for an occasional sale exemption, but only if the person transferring
the asset has paid a sales or use tax when the asset was acquired. Exempt
transfers between related parties include: capital assets transferred in and
out of businesses by owners, partners, shareholders stockholders, when the
transfer is made only in exchange for equity in the business, and capital
assets transferred between a parent corporation and its subsidiary, if the
parent owns at least eighty percent (80%) of the subsidiary, and transfers
between subsidiary corporations with a common parent, if the parent owns at
least eighty percent (80%) of both, and if the transfers are made only in
exchange for stock or securities. (3-31-22)
a.
Example: Two (2) individuals form a partnership. Each contributes a car in
exchange for a percentage of ownership in the business. If each partner paid
sales tax when he purchased his vehicle, no sales tax applies to the transfer
of the vehicle into the partnership. (3-31-22)
b. Example: Three (3) individuals are equal
partners in a construction business. They dissolve the partnership, and each
person takes one-third (1/3) of the capital assets as his share of the equity
in the business. If tax was paid on the assets when they were purchased by the
partnership, sales tax does not apply to the transfer of the assets from the
partnership to the co-owners. (3-31-22)
c. Example: A corporation-owned car is given
to a shareholder as a bonus for special accomplishments. There is no change in
the recipient's shareholdings. The shareholder pays tax on the bonus based on
the value of the car, regardless of whether the corporation paid tax when the
car was purchased. The exemption does not apply because the transfer of the car
did not change the shareholder's equity. (3-31-22)
06.
Sales and Rentals to Related
Parties. The sale of a capital asset to a related party qualifies for
the occasional sale exemption, but only if the seller has paid sales or use tax
when the asset was acquired or if the seller acquired the asset from a related
party who paid sales tax on acquisition of the asset. Rentals and leases of
capital assets between related parties will also qualify for the occasional
sale exemption, but only if the initial related party paid sales tax upon
acquisition of the asset. If the initial buyer does not pay sales or use tax
upon the purchase of a capital asset and then leases the asset to a related
party, the lessor will collect and remit sales tax on the lease payments. The
lease payments will also represent a reasonable rental value for the asset.
Exempt transactions between related parties include sales, rentals, and leases
of capital assets other than aircraft, boats and vessels, snowmobiles,
off-highway motorbikes, and recreational vehicles, as defined by Section,
63-3622HH, Idaho Code, such as the following: (3-31-22)
a. Sales to family members, but only if all
parties to the sale are related within the second degree of consanguinity,
relationship by blood, or affinity, relationship by marriage, i.e., spouses,
children, parents, brothers, sisters, or grandparents. Example: A father and
son are the stockholders of Corporation A. This corporation sells a business
asset to Proprietorship B, which is owned by the son's grandfather. This sale
is exempt as long as Corporation A paid sales tax when the asset was acquired.
(3-31-22)
b. Sales in which the new
owners are identical to the prior owners. Example: Corporation B owns one
hundred percent (100%) of Corporation A. If the initial buyer paid tax when it
acquired an asset, it may sell the asset to the other without tax. Example:
John Doe owns one hundred percent (100%) of a corporation. He buys a truck and
pays sales tax. He later sells the truck to his corporation. No tax applies to
the sale of the truck to the corporation. Example: A and B each own fifty
percent (50%) of a partnership. The partnership buys a capital asset and pays
sales tax to the vendor. The partnership immediately leases the asset to
Corporation C. A owns ten percent (10%) of Corporation C and B owns ninety
percent (90%) of Corporation C. Since the percentages of ownership of the
partnership and the corporation are not identical, the lease transaction does
not qualify for the occasional sale exemption. The partnership seeks a refund
of the sales tax paid on acquisition of the asset and collects and remits sales
tax on the lease payments. (3-31-22)
07.
Motor Vehicles. Sales of
licensed motor vehicles are not considered occasional sales and are taxable,
except under the provisions of Subsections
099.02 through
099.06 of this rule. If a motor
vehicle transfer qualifies for an exemption under Subsections
099.02 through
099.06 of this rule, the buyer
completes an appropriate exemption claim form prior to applying for an Idaho
motor vehicle title. See Rule
107 of these rules regarding sales
of licensed motor vehicles that do not qualify as occasional sales and the
appropriate exemption claim form. (3-31-22)
08.
Sales of Business Assets.
Also excluded from the category of occasional sales, other than as provided by
Subsection 099.06 of this rule, are sales
of assets or other items of tangible personal property used in an activity
requiring a seller's permit. Even though the item sold is not of the type
normally sold by the seller in his regular course of business, the sale is
taxable. Example: A construction equipment dealership sells its office
computer. Even though the seller does not normally sell computers, it collects
sales tax on the sale of the computer as the computer is used in a business
requiring a seller's permit. (3-31-22)
09.
Taxable Sales of Aircraft, Boats,
and Recreation Related Vehicles. The occasional sale exemptions defined
in Subsections 099.01 and
099.06 of this rule do not apply
to the sale or purchase of the following: (3-31-22)
a. Snowmobiles, including those required to
be numbered as provided by Section
67-7102, Idaho Code.
(3-31-22)
b. Off-highway motorbikes
and dual purpose motorcycles. A dual purpose motorcycle is designed for use off
developed roadways and highways, but is also equipped to be legally operated on
public roadways and highways. (3-31-22)
c. All-terrain vehicles, ATVs, but not
including tractors. A tractor is a motorized vehicle designed and used
primarily as a farm implement for drawing plows, mowing machines, and other
farm implements. (3-31-22)
d.
Portable truck campers designed for temporary living quarters, but not
including pickup shells or canopies that do not have a floor.
(3-31-22)
e. Camping, travel,
fifth-wheel travel-type trailers and park model recreational vehicles designed
to provide temporary living quarters. (3-31-22)
f. Motor homes. (3-31-22)
g. Buses and van-type vehicles when converted
to recreational use as temporary living quarters and providing at least four
(4) of the following facilities: cooking; refrigeration or icebox;
self-contained toilet; heating or air conditioning; a portable water supply
system including a faucet and sink; and separate one hundred ten to one hundred
twenty-five (110-125) volt electrical power supply or LP gas supply.
(3-31-22)
h. Aircraft, meaning any
device which is designed or used for navigation of or flight in the air, except
a parachute or other device designed for such navigation but used primarily as
safety equipment. See Rule
037 of these rules regarding other
exemption provided for aircraft. (3-31-22)
i. Boats or vessels, meaning every
description of watercraft used or capable of being used as a means of
transportation on water. Example: A nonretailer sells a boat and boat trailer
to an Idaho resident. The sale of the boat does not qualify for the occasional
sale exemption and is taxable. The sale of the boat trailer may qualify for the
occasional sale exemption if the sales price of the boat trailer is separately
stated on the bill of sale and an occasional sale affidavit is provided by the
seller. (3-31-22)
10.
Exempt Sales of Aircraft, Boats, and Recreation-Related Vehicles.
Sales of aircraft, boats, or recreation-related vehicles under the provisions
of Subsections 099.02 or
099.03 of this rule are exempted
from the tax. Transfers of aircraft, boats, or recreation-related vehicles
under the provision of Subsection
099.05 of this rule are exempted
from the tax. The provisions of Subsection
099.04 of this rule apply to the
sale of motorized, on-highway recreation-related vehicles. (3-31-22)
11.
Exclusion from the Occasional Sale
Exemption. Section
63-3622K, Idaho Code, excludes
from the occasional sale exemption the use of tangible personal property used
to improve real property when such property is obtained, directly or
indirectly, from a person in the business of making like or similar
improvements to real property. This exclusion applies only to building
materials and fixtures that will be incorporated into real property. Sales of
construction equipment such as loaders, backhoes, and excavators may still be
included within the definition of "occasional sale" if the seller meets all the
other requirements of the exemption. (3-31-22)
a. Example. A contractor enters into a
contract to fabricate and install a wrought iron gate. The contractor
fabricates the gate but prior to installation the building owner decides to
install the gate himself and buys it from the contractor. The building owner's
purchase does not qualify for the occasional sale exemption.
(3-31-22)
b. Example. A contractor
has a backhoe that he uses in his contracting business. He sells the backhoe to
another contractor. If the seller is not a retailer, as defined by statute, the
sale can still qualify as an exempt occasional sale.
(3-31-22)
