Idaho Administrative Code
Title IDAPA 35 - Tax Commission, State
Rule 35.01.02 - IDAHO SALES AND USE TAX ADMINISTRATIVE RULES
Section 35.01.02.108 - VEHICLE MANUFACTURER'S, RENTAL COMPANY'S, AND DEALER'S PURCHASE OR USE OF VEHICLES

01. Buying for Resale. Licensed vehicle dealers, vehicle rental companies, and manufacturers of vehicles may purchase vehicles tax exempt when the vehicles are held for resale or rental and are used for no purpose other than retention, demonstration, or display while holding the vehicles for sale or rental in the regular course of business. Purchases of parts that will be installed on vehicles held in a resale inventory are exempt from sales tax.

02. Titling a Vehicle. Under the Sales Tax Act, no vehicle may be titled without documentation establishing that any sales or use taxes which may be due have been paid. However, certain vehicles may be titled by dealers and rental companies with no tax applying.

03. Dealer Plates. Any vehicle upon which a dealer's plate may be lawfully displayed, as provided by Sections 49-1627 and 49-1628, Idaho Code, is, for purposes of the Sales Tax Act, inventory held for sale and not taxable. If any use of a vehicle displaying a dealer plate requires that the dealer provide the user with a compensation form for federal income tax purposes, the amount so reported is subject to use tax. The use tax will be paid by the dealer in the month immediately following the issuance of the compensation form. The unauthorized use or display of a dealer's plate on the vehicle which is otherwise required to be titled or licensed under the laws of the state of Idaho subjects the dealer to a use tax liability.

04. Service Vehicles. Vehicles, such as work or service vehicles, which are not held in stock for sale or rental are taxable at the time of their purchase. The use tax will be reported and paid on the sales tax return relating to the period during which the vehicle was purchased. In titling the vehicle, the vehicle dealer may report his seller's permit number to the county assessor or Department of Transportation as evidence that sales or use tax has been paid.

05. Inventory Withdrawals by Dealers. Dealers may withdraw vehicles from inventory and put them to a use for which a dealer's plate is not authorized, creating a requirement for the vehicles to be titled and licensed. Vehicles required to be titled and licensed are taxable. The taxpayer may choose one (1) of two (2) methods for reporting the tax:

06. Inventory Withdrawals by Rental Companies. Rental companies that withdraw vehicles from their rental inventory and put them to a use subject to use tax may elect either method of reporting tax discussed in Subsection 108.05 of this rule.

07. Applicability of Rule 108 . The provisions of this rule apply only to vehicle dealers or manufacturers licensed as such by the Department of Transportation, and to companies engaged in the business of renting vehicles without operators.