Taxation on the Honor System
March 25, 2013
Twin Falls Times-News
If you're an Idaho taxpayer, you may be an Idaho tax scofflaw and not even know it.
Probably few Idahoans know about the use tax, and probably fewer pay all of it that is owed.
The use tax is a kind of counterpart to the much better known sales tax. When you buy a product in Idaho, you are (in most cases) charged a sales tax, which the seller in turn has to forward to the state. Suppose you buy something in Oregon or Montana (or, for that matter, Alaska, Delaware or New Hampshire) - one of the five states that do not charge sales tax - and bring it back to Idaho? That can amount to significant money in the case of something like furniture or a car. That way, you can avoid sales tax and cut 6 percent off your cost, right?
Idaho law has considered this, and it imposes a use tax. If you buy it over the border and bring it back to Idaho to "use," you have to pay the equivalent of the sales tax. The state is fairly rigorous on the car front, since autos used by Idahoans have to be registered in Idaho.
Generally, the use tax has to be "self-assessed," sort of an honor system. Every now and then the Tax Commission, to which it is supposed to be paid, issues a statement on the subject. Last week, for example, it advised (in advance of income tax filings):
"Check your invoices to see whether sales tax was collected on the following purchases, which may require a use tax payment: Magazine subscriptions; Book and record clubs; Out-of-state catalog purchases; Merchandise bought over the Internet (including digital music, movies, books, games, etc.); Purchases in a state where no sales tax is charged; Untaxed purchases of merchandise from Idaho vendors. If sales tax was not collected, Idaho makes it easy for taxpayers to pay their use tax when they file their annual income tax return, which is due by April 15. Simply total your untaxed purchases, multiply that total by .06, and enter that amount, rounded to the nearest dollar, on the appropriate line of your income tax return."
You've done all that, right?
The use tax hasn't gone entirely unnoticed at the Idaho Legislature, but there's been little move in recent years toward any big overhaul; usually, whatever happens to the sales tax is linked to the use tax. One example, House Bill 12 this session (signed into law), which includes some sales tax changes but also "clarifies that use tax shall not be imposed on military members and accompanying spouses if certain articles were purchased prior to receipt of orders transferring to Idaho."
There's also House Bill 13, stuck in the House Revenue and Taxation Committee since early in the session and maybe going no further, which "This bill amends the Sales Tax Act to clarify that every person with a duty to account for and pay over any tax imposed upon or required to be collected by any taxpayer under the act also applies to use tax." Supposedly, that clarification would add $192,500 to the state general fund.
Seems a little doubtful as matters stand.
Randy Stapilus is a former Idaho newspaper reporter and editor, author of The Idaho Political Field Guide and co-author of Idaho 100: The people who most influenced the Gem State, and blogs at www.ridenbaugh.com. He can be reached at firstname.lastname@example.org.
The editorial posted here is provided by permission of its original publisher and does not necessarily reflect the views of Idaho Public Television.
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