Idaho Admin. Code r. 35.01.02.014 - CONTRACTORS/RETAILERS
Sections 63-3609(a), 63-3610, 63-3620, 63-3621, Idaho Code
01.
In General. This rule shows
how Idaho sales and use tax applies to contractors who are also retailers. The
general principles in Rule
012 of these rules also apply to
contractor/retailers and should be reviewed along with this rule.
(3-31-22)
02.
Contractor/Retailer. Many contractors are also retailers. For
example, plumbers, electricians, carpet layers, cabinet builders, and
mechanical contractors can be both contractors and retailers. They are
contractors when they install materials in the course of a residential or
commercial service call or contract; but when they sell items or materials they
don't install; they are retailers and need to collect sales tax from their
customers. (3-31-22)
03.
Record Keeping Procedure. A contractor/retailer can follow any
consistent procedure to account for inventory and job purchases. (3-31-22)
a. Example: If the majority of a
contractor/retailer's business is performing contracts to improve real
property, The contractor/retailer can pay Idaho tax on all purchases and if an
item is sold at retail, remit Idaho sales tax collected and request a refund
for the tax paid. See Rule
117 of these rules for refund
instructions. (3-31-22)
b. Example:
If the majority of the contractor/retailer's business is making retail sales,
the contractor/ retailer can purchase all inventory without paying tax by
giving suppliers a properly completed resale certificate. The
contractor/retailer would remit sales tax collected on Idaho retail sales and
pay an Idaho use tax on the value of items taken from inventory and used to
improve real property. (3-31-22)
c.
Example: A contractor/retailer can opt to use separate accounting procedures
for the purchase of resale inventory and job materials. Resale inventory
purchases can be made without paying tax by giving suppliers a properly
completed resale certificate and pay tax on the purchase of job materials. See
Rule 128 of these rules.
(3-31-22)
04.
Inventory Withdrawals. When any withdrawal is made from nontaxed
inventory, the use tax is due to the state when the material is delivered to
the job site, regardless of when it is used in performing a contract.
(3-31-22)
05.
Tangible
Personal Property vs. Improvements to Real Property. Built-in appliances
and related items become fixtures to realty when installed in residential
buildings. Such built-in appliances include dishwashers, microwave ovens, stove
tops, refrigerators, stove hoods, central vacuum systems, waste disposal units,
trash compactors, water softeners, water purification systems, and garage door
openers. Some appliances retain the character of personal property such as
microwave ovens that are not built-in, freestanding stoves, refrigerators,
washers, and dryers. Other rules may apply to commercial, industrial, and other
non-residential buildings. See Rule
067 of these rules.
(3-31-22)
06.
Sales with
Agreement to Install. A regular over-the-counter sale of a complete unit
with an agreement to install it is not a contract to improve real property if
the item does not become affixed to realty. This applies to sales of stoves,
refrigerators, washing machines, dryers, and other electrical appliances. In
this case, sales tax is collected from the buyer by the seller on the retail
sales price of the item. If the installation charges are properly separated,
sales tax is due only on the cost of the unit. (3-31-22)
07.
Sales of Both Tangible Personal
Property and Improvements to Real Property. If a contract includes both
retail sales of personal property and improvements to real property, the
contractor/retailer collects sales tax on the retail portion of the contract.
Also, the contractor/retailer does not pay sales tax to their vendor, they pay
use tax on the materials used to perform the real property portion of the
contract. (3-31-22)
a. Example: A cabinet
builder contracts to build and install kitchen cabinets and build a portable,
freestanding china hutch. In the case of the cabinets, the cabinet builder is a
contractor improving real property and pays tax on the material costs. In the
case of the china hutch, the cabinet builder is a retailer and charges his
customer sales tax on the sales price of the hutch, including labor.
(3-31-22)
b. Example: A cabinet
builder is hired by Contractor X to fabricate and deliver cabinets to the job
site. Contractor X will do the installation. In this case, the cabinet builder
is a retailer and charges sales tax to Contractor X on the full sales price,
including labor. (3-31-22)
Notes
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