Idaho Sales Tax Guide
Chapter 8: Understanding Idaho sales tax rules for shipping & handling
Follow a few simple rules and you will find that complying with Idaho’s rules for sales taxes on shipping is a breeze.Is Shipping and Handling Taxable in Idaho?
Idaho treats charges for shipping and for handling the same way — that is, if you state shipping and handling on a separate line on your customer invoices, the charges are not taxable. However, if you include shipping or handling in your sales price, then Idaho sales tax applies to the whole amount.
If your goods are tax-exempt, shipping and handling are, of course, tax exempt as well. If part of your order is taxable and part is tax exempt, simply invoice your shipping and handling charges on a separate line and the entirety of the shipping and handling are tax-exempt.Taxability of Personal Delivery
For retailers who charge for delivery of goods using their own vehicles rather than a third-party freight service, some states have complex rules about taxability that depend on when the purchase took place. Not Idaho. Whether you deliver FOB or COD, your personal delivery charge is nontaxable in Idaho, as long as it’s itemized on a separate line on the invoice.
For example, if a furniture store uses its van to deliver a sofa to a customer and charges for that service, the business would not charge sales tax on that charge as long as it’s noted separately on the bill.Distinguishing Freight In
As in most states, Idaho treats freight in (the cost of shipping goods to the seller) differently from freight out (the cost to ship to the end customer). Freight in is considered a cost of goods sold and is included in the taxable price, even if you pass the cost on to your customer and bill it as a separate item on your invoice.
While this seems pretty straightforward, the Idaho Department of Revenue (IDOR) website highlights an example where this could be murky: A customer orders through a catalog and wants the item delivered to a store where the customer can come pick it up. In that case, even if the seller charges the buyer for the cost to ship the item to the store, that shipping charge is considered freight in and is taxable.
The IDOR points to code section 63-3613, where the term “sales price” is defined to include “[t]he cost of transportation of the property prior to its sale,” a.k.a. freight in.Simplicity Is the Rule In Idaho
Some states have regulations regarding sales taxes on shipping and handling that would make even a tax lawyer’s head spin. If you have sales tax nexus in Idaho, you can be grateful that the rules about what part of the sales price of your merchandise is taxable and what part is nontaxable (shipping and handling) are clear and straightforward.
Just make sure not to assume that Idaho’s simple and logical regulations regarding sales tax on shipping are followed by other states. If you have nexus in multiple states, you will need to research the sales tax laws in each one, since there is great variation from state to state.