Idaho Income Tax Filers: Remember Use Tax
- Mar 14, 2014 | Gail Cole
The deadline for filing state and federal income tax returns is fast approaching. In an effort to enhance use tax compliance in Idaho State Tax Commission has issued a reminder, “Use tax payment required on Internet, other untaxed purchases.”
In a nutshell, if sales tax wasn’t collected at the time of sale, use tax is due on the following purchases:
- Internet purchases (including digital music, movies, books, games, etc);
- Magazine subscriptions;
- Book and record clubs;
- Catalog purchases; and
- Purchases made in states without sales tax.
As Idaho shares borders with both Oregon and Montana—two states without sales tax—that last point is particularly important.
Don’t limit use tax to annual income tax returns!
If you’re the type who hates having outstanding taxes, consider reporting use tax on Form 850-U, Idaho’s Self-Assessed Use Tax Worksheet and Return. It can be submitted any time, multiple times each year.
Why pay use tax?
Many taxpayers may wonder what this use tax is, anyway. Use tax is the correlation to sales tax that is remitted by the buyer rather than the seller when the seller does not collect sales tax on a taxable good or service. All states with sales tax have a corresponding use tax.
Unpaid use tax costs the State of Idaho approximately $46.4 million each year. That’s revenue the state could use.
Businesses as well as individuals owe use tax. How does your business handle consumer use tax?