Print Friendly HOUSE BILL NO. 67 – Sales tax, retailer defined
HOUSE BILL NO. 67
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H0067...............................................by REVENUE AND TAXATION
SALES TAX - Adds to and amends existing law to provide that a "retailer
engaged in business in this state" means any retailer with substantial
nexus in this state, within a specified meaning; to provide conditions when
a retailer has substantial nexus with the state of Idaho, with exceptions;
and to provide application of the definition of "Internal Revenue Code."
01/30 House intro - 1st rdg - to printing
01/31 Rpt prt - Held at Desk
02/05 Ref'd to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 67
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO SALES AND USE TAXES; AMENDING SECTION 63-3611, IDAHO CODE, TO PRO-
3 VIDE THAT A "RETAILER ENGAGED IN BUSINESS IN THIS STATE" MEANS ANY
4 RETAILER WITH SUBSTANTIAL NEXUS IN THIS STATE WITHIN A SPECIFIED MEANING;
5 AMENDING CHAPTER 36, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SEC-
6 TION 63-3615A, IDAHO CODE, TO PROVIDE CONDITIONS WHEN A RETAILER HAS SUB-
7 STANTIAL NEXUS WITH THE STATE OF IDAHO, WITH EXCEPTIONS AND TO PROVIDE
8 APPLICATION OF THE DEFINITION OF "INTERNAL REVENUE CODE"; AND DECLARING AN
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. That Section 63-3611, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 63-3611. RETAILER ENGAGED IN BUSINESS IN THIS STATE. "Retailer engaged in
14 business in this state" as used in this chapter means any retailer who:
15 (1) Engages in recurring solicitation of purchases from residents of this
16 state or otherwise purposefully directs its business activities at residents
17 of this state; and
18 (2) Has sufficient contact with this state, in accordance with the con-
19 stitution of the United States, to allow the state to require the seller to
20 collect and remit use tax on sales of tangible personal property or services
21 made to customers in this state.
22 (3) The term includes any of the following:
23 (a) Any retailer maintaining, occupying or using, permanently or tempo-
24 rarily, directly or indirectly, or through a subsidiary or agent, by what-
25 ever name called, an office, place of distribution, sales or sample room
26 or place, warehouse or storage place, or other place of business or main-
27 taining a stock of goods.
28 (b) Any retailer having any representative, agent, salesman, canvasser or
29 solicitor operating in this state under the authority of the retailer or
30 its subsidiary for the purpose of selling, delivering, installing or the
31 taking of orders for any tangible personal property.
32 (c) Any retailer, with respect to a lease or rental, deriving rentals
33 from a lease or rental of tangible personal property situated in this
35 (d) Any retailer engaging in any activity in connection with servicing or
36 installing tangible personal property in this state.
37 (e) Any retailer owned or controlled by the same interests which own or
38 control any retailer engaged in business in the same or a similar line of
39 business in this state with substantial nexus in this state within the
40 meaning of section 63-3615A, Idaho Code.
41 (f) Any retailer having a franchisee or licensee operating under its
42 trade name if the franchisee or licensee is required to collect the tax
43 under the provisions of this section.
1 SECTION 2. That Chapter 36, Title 63, Idaho Code, be, and the same is
2 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
3 ignated as Section 63-3615A, Idaho Code, and to read as follows:
4 63-3615A. SUBSTANTIAL NEXUS. (1) A retailer has substantial nexus with
5 this state if both of the following apply:
6 (a) The retailer and an in-state business maintaining one (1) or more
7 locations within this state are related parties; and
8 (b) The retailer and the in-state business use an identical or substan-
9 tially similar name, tradename, trademark or goodwill to develop, promote
10 or maintain sales, or the in-state business provides services to, or that
11 inure to the benefit of, the out-of-state business related to developing,
12 promoting or maintaining the in-state market.
13 (2) Two (2) entities are related parties under this section if they meet
14 any one (1) of the following tests:
15 (a) Both entities are component members of the same controlled group of
16 corporations under section 1563 of the Internal Revenue Code;
17 (b) One (1) entity is a related taxpayer to the other entity under the
18 provisions of section 267 of the Internal Revenue Code;
19 (c) One (1) entity is a corporation and the other entity and any party,
20 for which section 318 of the Internal Revenue Code requires an attribution
21 of ownership of stock from that party to the entity, own directly, indi-
22 rectly, beneficially, or constructively at least fifty percent (50%) of
23 the value of the outstanding stock of the corporation; or
24 (d) One (1) or both entities is a limited liability company, partnership,
25 estate or trust, none of which is treated as a corporation for federal
26 income tax purposes, and such limited liability company, partnership,
27 estate or trust and its members, partners or beneficiaries own in the
28 aggregate directly, indirectly, beneficially, or constructively at least
29 fifty percent (50%) of the profits, capital, stock or value of the other
30 entity or both entities.
31 (3) The provisions of this section shall not apply to a retailer that had
32 sales in this state in the previous year in an amount of less than one hundred
33 thousand dollars ($100,000).
34 (4) The definition of "Internal Revenue Code" in section 63-3004, Idaho
35 Code, shall apply to this section.
36 SECTION 3. An emergency existing therefor, which emergency is hereby
37 declared to exist, this act shall be in full force and effect on and after its
38 passage and approval.
STATEMENT OF PURPOSE
This legislation amends Section 63-3611 of the Idaho Code to
provide that a "retailer engaged in business in this state" be
defined as any retailer with substantial nexus in this state, and
creates a new Section 63-3615A of the Idaho Code, to define
substantial nexus for any retailer having a franchisee or
licensee operating under its trade name or owned by the same
entity or corporation in the State of Idaho be required to
collect taxes from its customers.
The State Tax Commission's best estimate of the current
revenue gain from passage of RS 16451 is $500,000.
Name: Senator Brad Little
STATEMENT OF PURPOSE/FISCAL NOTE H 67