If you're an Idaho taxpayer, you may be an Idaho tax scofflaw and not even know it.
Probably few Idahoans know about the use tax, and probably fewer pay all of it that is owed.
The use tax is a kind of counterpart to the much better-known sales tax. When you buy a product in Idaho, you are (in most cases) charged a sales tax, which the seller in turn has to forward to the state. Suppose you buy something in Oregon or Montana (or, for that matter, Alaska, Delaware or New Hampshire) – one of the five states that do not charge sales tax – and bring it back to Idaho? That can amount to significant money in the case of something like furniture or a car. That way, you can avoid sales tax and cut six percent off your cost, right?
Idaho law has considered this, and it imposes a use tax. If you buy it over the border and bring it back to Idaho to “use,” you have to pay the equivalent of the sales tax. The state is fairly rigorous on the car front, since autos used by Idahoans have to be registered in Idaho.
Generally, the use tax has to be “self-assessed,” sort of an honor system. Every now and then the Tax Commission, to which it is supposed to be paid, issues a statement on the subject. Last week, for example, it advised (in advance of income tax filings):
“Check your invoices to see whether sales tax was collected on the following purchases, which may require a use tax payment: Magazine subscriptions; Book and record clubs; Out-of-state catalog purchases; Merchandise bought over the Internet (including digital music, movies, books, games, etc.); Purchases in a state where no sales tax is charged; Untaxed purchases of merchandise from Idaho vendors. If sales tax was not collected, Idaho makes it easy for taxpayers to pay their use tax when they file their annual income tax return, which is due by April 15. Simply total your untaxed purchases, multiply that total by .06, and enter that amount, rounded to the nearest dollar, on the appropriate line of your income tax return.” (more…)