IDAPA 35.01.02.049 — WARRANTIES AND SERVICE AGREEMENTS (RULE 049)

Sections 63-3612, 63-3613, Idaho Code
01.
Warranties and Service Agreements. Warranties or service agreements may be furnished by the
manufacturer or seller upon the sale, lease, or rental of tangible personal property by any of the following means:
(3-31-22)
a.
Including the price of the warranty or service agreement as part of the sales, lease, or rental price of
the tangible personal property.
(3-31-22)
b.
Separately stating the price of the warranty or service agreement, but requiring the purchase of the
warranty or service agreement as a condition of the sale, lease, or rental of tangible personal property.
(3-31-22)
c.
Allowing the buyer the option of purchasing a separately stated warranty or service agreement.
(3-31-22)
02.
Separate Optional Contract. Service agreements may also be offered as a separate optional
contract on tangible personal property not owned or sold by the seller of the service agreement.
(3-31-22)
03.
Services Agreed to be Rendered. Services agreed to be rendered as a condition of a warranty or
service agreement may be performed by the seller of the warranty or service agreement or by any dealer or repair
facility that the seller may appoint to perform the repair or service.
(3-31-22)
04.
Non-Optional Warranty or Service Agreement. If the warranty or service agreement is required
as a condition of the sale, lease, or rental of tangible personal property, the gross sales price is taxable whether or not
the charge for the warranty or service agreement is separately stated from the sales price of the tangible personal
property.
(3-31-22)
a.
When parts are replaced by the seller of the warranty or service agreement, no tax is imposed on the
purchase of the parts by the seller. The parts replaced are considered to have been taxed at the time the warranty or
service agreement was sold.
(3-31-22)
b.
When a third-party dealer or repair facility performs the repair, the seller of the warranty or service
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.02
State Tax Commission
Idaho Sales & Use Tax Administrative Rules
Section 050
Page 44
agreement may provide the repairer with a resale certificate. See Rule 128 of these rules.
(3-31-22)
05.
Optional Warranty or Service Agreement. If the warranty or service agreement is optional to the
buyer, no sales tax is charged on the sale of the warranty or service agreement. A taxable transaction occurs when the
seller of the warranty or service agreement performs the repair.
(3-31-22)
a.
If the seller of the warranty or service agreement performs the repair and purchases parts for the
repair or uses parts from his inventory, he will pay sales or use tax upon the parts when they are applied by him.
(3-31-22)
b.
When a third-party dealer or repair facility performs the repair and bills the seller of the warranty or
service agreement, the third-party dealer or repair facility will separately state and charge sales tax on the parts to the
seller of the warranty or service agreement.
(3-31-22)
c.
The seller of the warranty or service agreement will pay sales or use tax on parts for the repairs,
even if the buyer qualifies for any exemption under the Idaho Sales and Use Tax Act or rules.
(3-31-22)
06.
Parts in Addition to Warranty Fee. Regardless of any of the above, if the seller of the warranty or
service agreement fee, sales tax is charged to the buyer on the sales price of the parts.
(3-31-22)
07.
Replacement Parts and Maintenance Supplies. As used in this rule, a warranty or service
agreement applies to replacement parts and maintenance supplies that become a part of the tangible personal property
that is being serviced. The sale of other tangible personal property, such as paper for a copy machine, must be
separately stated from any warranty or service agreement fee and sales tax charged to the buyer.
(3-31-22)
08.
Cross-Reference.
(3-31-22)
a.
See Section 037.03 of these rules. Sales of Aircraft Repair Parts to Nonresidents.
(3-31-22)