Idaho, Sales Tax, Internet and Nexus
- Oct 5, 2011 | Susan McLain
This past legislative year was very busy for most states. Idaho is no exception. Included in the actions taken by Idaho were efforts to implement the Streamlined Sales Tax Project* and pass legislation clarifying retailer nexus for the purpose of sales tax collection.
The Idaho Chamber Alliance reports that “the streamlined sales tax idea was introduced early in the session, but died a quick and quiet death.” However, House Bill 36 was introduced to “…require any retailer with a substantial nexus within the state to collect sales tax from internet and catalog sales as well as storefront.”
According to the text of House Bill 36, “Any retailer with substantial nexus in this state within the meaning of section 63-3615A, Idaho Code” is now required to collect and remit sales tax on Internet sales to residents of Idaho. This particular statute clearly states that a company with the following traits qualifies as having nexus: The retailer and an in-state business maintain one or more locations within the state and use an identical or substantially similar name, trade name, trademark or goodwill to develop sales.
It further defines what being related means: Taxpayer relationship—for example, if a contractor is receiving payment from the parent company that results in income tax due. Partnerships, trusts, estate relationships plus ownership of stock or value also qualify as a relationship determining nexus as well as affiliates who receive payments from an Internet retailer such as Amazon or Overstock.
In addition to redefining nexus, Idaho has been considering giving local jurisdictions the right to establish and impose local sales taxes. North Idaho County was allowed to pursue a limited local option sales tax of 0.5 percent. The funds are intended to be used for public safety.
*This project is funded under an agreement with the Streamlined Sales Tax Governing Board, Inc.