Idaho Admin. Code r. 35.01.02.043

Current through September 2, 2024

Section 35.01.02.043 - SALES PRICE OR PURCHASE PRICE DEFINED

Sections 63-3612 and 63-3613, Idaho Code

01.Sales Price and Purchase Price. The term sales price and purchase price may be used interchangeably. Both mean the price paid by the customer or user to the seller including:

a. The cost of transporting goods to the seller. See Rule 061 of these rules.

b. Manufacturer's or importer's excise tax. See Rule 060 of these rules.

c. Services agreed to be rendered as part of the sale.

d. Separately stated labor charges to produce or fabricate made to order goods. See Rule 029 of these rules.

02.Services Agreed to Be Rendered as a Part of the Sale. The sales and use tax is computed on the sales price of a transaction. The term "sales price" is defined by Section 63-3613, Idaho Code, to include "services agreed to be rendered as a part of the sale." The following items are among those that are part of the sales price and, therefore, may not be deducted before computation of the sales price. This is not intended to be an exclusive list of such items:

a. Any charges for any services to bring the subject of a sale to its finished state ready for delivery and in the condition specified by the buyer, including charges for assembly, fabrication, alteration, lubrication, engraving, monogramming, cleaning, or any other servicing, customizing or dealer preparation except those exempted in Section 63-3622OO, Idaho Code.

b. Any charge based on the amount or frequency of a purchase, such as a small order charge or the nature of the item sold, such as a slow-moving charge for an item not frequently sold.

c. Any commission or other form of compensation for the services of an agent, consultant, broker, or similar person.

d. Any charges for warranties, service agreements, insurance coverage, or other services required by the vendor to be taken as a condition of the sale. If the sale could be consummated without the payment of these charges, the charges are not part of the sales price if separately stated. Also, see Rule 049 of these rules.

e. Any fuel surcharges except those charges which the vendor can document are related only to delivery of the property to the end customer.

f. Any environmental or disposal fee except those fees directly imposed by a governmental agency.

03.Charges Not Included. Sales price does not include charges for interest, carrying charges, amounts charged for optional insurance on the property sold, or any financing charge. These various charges may be deducted from the total sales price if they are separately stated in the contract. In the absence of a separate statement, it will be presumed that the amount charged is part of the total sales price.

04.Gratuities. When a gratuity is paid in addition to the price of a meal, no sales tax applies to the gratuity. A gratuity can be paid voluntarily by the customer or be required by the seller. A gratuity is also commonly known as a tip.

a. If a gratuity does not meet all of the following requirements, the gratuity will be taxable:

i. It is paid to the service provider of the meal as additional income to the base wages of the service provider;

ii. It is separately stated on the receipt or be voluntarily paid by the customer; and

iii. It is not used to avoid sales tax on the actual price of the meal.

b. For the purposes of Subsection 043.04 of this rule, the following definitions apply:

i. Meal. Food or drink prepared for or provided to a customer.

ii. Service provider. An individual directly involved in preparing or providing a meal to a customer. This includes, but is not limited to, the server, the busser, the cook and the bartender. This does not include individuals who manage or own the company if they are not directly involved in preparing and providing a meal.

05.Service Charges. Amounts designated as service charges, added to the price of meals or drinks, are a part of the selling price of the meals or drinks and accordingly, are included in the taxable sales price, even if the service charges are made in lieu of tips and paid over by the retailer to his employees.

Idaho Admin. Code r. 35.01.02.043

Effective March 31, 2022