Sales Tax Articles
Sales Tax State Activity Update - July 2008
Idaho Advises Contractors to Covet Retail over Real Property
Starting October, 2008, the rules of taxability for construction contracts will shift from focusing on the type of property for taxability to the cost of the materials being used.
When it comes to the taxability of transactions involving improvements to real property, perennial issues continue to occur. While the character of the property as real or personal is relatively consistent across the states, the definitions of taxability to particular types of property may vary depending on how the states view the installation activities within their jurisdictions.
The Idaho Tax Commission website provides "easy to follow" advice on how contractors should approach the application of sales or use tax to their business transactions.
In their June 2008 Tax Update newsletter, they indicate that contractors should pay attention to the differences between the retail sale of goods as opposed to improvements to real property.
Effective October, 2008, contractors that charge tax on defined real property construction contracts will not be able to offset the billed/collected tax from the contractor's requirement to pay sales taxes or accrue use taxes on their purchases of property used to satisfy construction contracts.
The Tax Commission goes on to point out that while the tax onus is on the contractor for a construction contract, contractors can still pass those tax costs along as elements of the overall price to their customers.
See the Idaho State Tax Commission Web site monthly newsletter for full details on this item.
Also additional guidance for contractors can be found on the Idaho State Tax Commission Web site.
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