Idaho’s Marketplace Facilitator Sales Tax Law, Explained
by July 27, 2021
Good news for marketplace sellers — the state of Idaho now requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Amazon and eBay.
This means that if you sell on a platform like Amazon, then Amazon will collect sales tax from your Idaho buyers on your behalf, and remit it to the state.
But as usual, there are always a few wrinkles here when it comes to e-commerce sales tax.
This post will explain what online sellers need to know about the Idaho marketplace facilitator law, and answer your frequently asked questions.
Overview of the Idaho Marketplace Facilitator Law
Idaho’s marketplace facilitator law states that marketplace facilitators without a physical presence in Idaho, must collect Idaho sales tax when the combined total of their own sales in Idaho and their third-party sales in Idaho exceeds $100,000 in the current or previous year.
They must have separate seller’s permits for their sales in Idaho and their third-party sales. Retailers without a physical presence in Idaho must collect Idaho sales tax when their sales in Idaho exceed $100,000 in the current or previous year.
Quick Facts about the Idaho Marketplace Facilitator Law
- Effective date: June 1, 2019
- Threshold: This law requires marketplace facilitators without a physical presence in Idaho to collect Idaho sales tax when the combined total of their own sales in Idaho and their third-party sales in Idaho exceeds $100,000 in the current or previous year. They must have separate seller’s permits for their sales in Idaho and their third-party sales. Retailers without a physical presence in Idaho must collect Idaho sales tax when their sales in Idaho exceed $100,000 in the current or previous year.
- State law information: Read the full text of the Idaho State Tax Commision
- Marketplaces that have adopted this law:
Frequently asked Questions about Marketplace Facilitator Laws
What exactly is a marketplace facilitator in Idaho?
Idaho law defines marketplace facilitators as a person that provides a marketplace for third-party sellers.
Online sales platforms like Amazon and eBay are considered marketplace facilitators under Idaho law.
Does this mean I can stop collecting Idaho sales tax?
It depends. Every business’s sales tax situation is unique to that business.
Let’s look at a couple of common scenarios for businesses who have sales tax nexus in Idaho.
Example #1: Marketplace facilitators, combined sales under $100,000
This category of sellers means:
- You’re a marketplace facilitator without a physical presence in Idaho.
- You have Idaho sales, Idaho third-party sales, or both.
- The combined total of your own sales in Idaho and your third-party sales in Idaho didn’t exceed $100,000 in the current or previous calendar year.
If you meet all these criteria, you don’t have to get an Idaho seller’s permit.
Review your total sales in Idaho periodically to determine whether that changes.
Example #2: Marketplace facilitators, sales in Idaho exceeding $100,000
This category of sellers means:
- You’re a marketplace facilitator without a physical presence in Idaho.
- You have Idaho sales, Idaho third-party sales, or both.
- The combined total of your own sales in Idaho and your third-party sales in Idaho exceeded $100,000 in the current or previous calendar year.
If you meet all these criteria, as of June 1, 2019, you’re a retailer engaged in business in Idaho.
You need to get an Idaho seller’s permit if you don’t already have one. See “Take these steps.”
Example #3: Idaho retailers who are also marketplace facilitators
This category of sellers means:
- You’re a retailer with a physical presence in Idaho.
- You’re a marketplace facilitator.
- You have Idaho sales, Idaho third-party sales, or both.
If you meet all these criteria, you need a separate permit for any third-party marketplace sales as of June 1, 2019. You can register for another Idaho seller’s permit at tax.idaho.gov/ibr.
Does this mean I can cancel my Idaho sales tax permit?
It depends.
Idaho’s marketplace facilitator law does not affect the sales tax registration requirements for existing sellers. So if you live or otherwise have sales tax nexus in Idaho, then you are still required to hold an Idaho sales tax permit. This also means you are still required to file sales tax returns on due dates set for you by the state.
However, if you are registered to collect sales tax in Idaho and only make marketplace sales in Idaho, you may be able to cancel your sales tax permit.
But first, a word of caution. We recommend checking directly with the state or a sales tax expert before cancelling your sales tax registration. This is because your business is now on the state of Idaho’s books and potentially on their radar should they decide that you still have sales tax obligations in the state of Idaho.
Final note: It’s important to assess your business before making a decision about cancelling sales tax permits. Are you in a growth stage? Do you plan to expand and think you may have Idaho sales tax collection requirements in the future? Then you may want to hang on to your Idaho sales tax permit rather than cancelling it and going through the administrative hassle of registering again in the future. This business decision is up to you.
Do I still need to file an Idaho sales tax return?
If you are registered to collect sales tax in Idaho (i.e. you have an active Idaho sales tax permit) then the state still requires that you file sales tax returns.
If you only make sales via marketplaces, and all of your marketplaces collect sales tax from buyers on your behalf, then you may only be required to file a “zero return.” (This is a return showing that you do not have any sales tax to remit to the state.)
If you no longer have any sales tax to remit to the state of Idaho, we recommend checking directly with the state to determine if you can cancel your sales tax registration.
Be cautious here. If you are registered for a sales tax permit and do not file, the state can assess penalties even though you don’t have any sales tax to remit! We have, unfortunately, talked to too many sellers who have found this out the hard way when a tax penalty bill arrives.
What do I do with any Idaho sales tax I have already collected?
If you have already collected Idaho sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
Example:
Let’s say you sell on Amazon and Idaho requires you to file and remit sales tax quarterly. Though Amazon began collecting sales tax on your behalf on January 1, if you have any sales tax in your bank account that you collected from Q4 2019, you will still need to remit that to Idaho State Tax Commision or face a penalty.
Does TaxJar handle this for me?
Yes.
TaxJar AutoFile Handles Idaho Sales Tax Automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of Idaho wants it filed. For example, many states, Idaho included, want sellers to break down their sales tax collected interstate (sales originating in Idaho sent to another state) and intrastate (sales made from Idaho to Idaho.)
If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations.
If you currently AutoFile your Idaho sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar Reports Give You all the Info You need to File Manually
If you prefer to file manually, your TaxJar Reports also reflect what the Idaho State Tax Commision wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
Further reading on Idaho sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- Idaho Sales Tax Guide for Businesses
