IDAPA 35.01.01.540 — SALES FACTOR: SALES OF TANGIBLE PERSONAL PROPERTY IN IDAHO (RULE 540)

Section 63-3027(12), Idaho Code
01.
Gross Receipts. Gross receipts from sales of tangible personal property, except sales to the United
States Government as discussed in Rule 545 of these rules, are in Idaho if:
(4-6-23)
a.
The property is delivered or shipped to a purchaser in Idaho regardless of the f.o.b. point or other
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.01
Idaho State Tax Commission
Income Tax Administrative Rules
Section 540
Page 71
conditions of sale; or
(4-6-23)
b.
The property is shipped from an office, store, warehouse, factory, or other place of storage in Idaho
and the taxpayer is not taxable in the state of the purchaser.
(4-6-23)
02.
Destination Sales.
(4-6-23)
a.
Property is deemed to be delivered or shipped to a purchaser in Idaho if the recipient is in Idaho
even though the property is ordered from outside Idaho. Example: A taxpayer, with inventory in State A, sold one
hundred thousand dollars ($100,000) of its products to a purchaser with branch stores in several states including
Idaho. The order for the purchase was placed by the purchaser's central purchasing department in State B. Twenty-
five thousand dollars ($25,000) of the purchase order was shipped directly to purchaser's branch store in Idaho. The
branch store in Idaho is the purchaser in Idaho with respect to twenty-five thousand dollars ($25,000) of the
taxpayer's sales.
(4-6-23)
b.
Property is delivered or shipped to a purchaser in Idaho if the shipment terminates in Idaho, even if
the property is subsequently transferred to another state by the purchaser. Example: A taxpayer makes a sale to a
purchaser who maintains a central warehouse in Idaho where all merchandise purchases are received. The purchaser
reships the goods to its branch stores in other states for sale. All of the taxpayer's products shipped to the purchaser's
warehouse in Idaho constitute property delivered or shipped to a purchaser in Idaho.
(4-6-23)
03.
Purchaser. The term purchaser in Idaho includes the ultimate recipient of the property if at the
request of the purchaser the taxpayer in Idaho delivers to or has the property shipped to the ultimate recipient in
Idaho. Example: A taxpayer in Idaho sold merchandise to a purchaser in State A. The taxpayer directed the
manufacturer or supplier of the merchandise in State B to ship the merchandise to the purchaser's customer in Idaho
according to the purchaser's instructions. The sale by the taxpayer is in Idaho.
(4-6-23)
04.
Diverted Shipment. If a seller ships property from the state of origin to a consignee in another
state, and the property is diverted while en route to a purchaser in Idaho, the sales are in Idaho. Example: The
taxpayer, a produce grower in State A, begins shipping perishable produce to the purchaser's place of business in
State B. While en route the produce is diverted to the purchaser's place of business in Idaho where the taxpayer is
subject to tax. The sale by the taxpayer is in Idaho.
(4-6-23)
05.
Throwback Sales. If a taxpayer is not taxable in the state of the purchaser, the sale is attributed to
Idaho if the property is shipped from an office, store, warehouse, factory, or other place of storage in Idaho. Example:
A taxpayer has its head office and factory in State A. It has a branch office and inventory in Idaho. The taxpayer's
only activity in State B is the solicitation of orders by a resident salesman. All orders by the State B salesman are sent
to the branch office in Idaho for approval and are filled by shipment from the inventory in Idaho. Since the taxpayer
is immune from tax in State B by Public Law 86-272, all sales of merchandise to purchasers in State B are attributed
to Idaho, the state from which the merchandise was shipped.
(4-6-23)
06.
Third-Party Throwback Sales. If a taxpayer's salesman operating from an office in Idaho makes
a sale to a purchaser in another state where the taxpayer is not taxable and the property is shipped directly by a third
party to the purchaser, the following rules apply:
(4-6-23)
a.
If the taxpayer is taxable in the state from which the third-party ships the property, the sale is in that
state.
(4-6-23)
b.
If the taxpayer is not taxable in the state from which the property is shipped, the sale is in Idaho.
(4-6-23)
c.
Example. A taxpayer in Idaho sold merchandise to a purchaser in State A. The taxpayer is not
taxable in State A. On direction of the taxpayer, the merchandise was shipped directly to the purchaser by the
manufacturer in State B. If the taxpayer is taxable in State B, the sale is in State B. If the taxpayer is not taxable in
State B, the sale is in Idaho.
(4-6-23)
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.01
Idaho State Tax Commission
Income Tax Administrative Rules
Section 545
Page 72