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Old 07-13-2012, 12:42 AM   #1
taxcurious
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Online Download Software Delivery Tax

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Hello,

I tried to searched through the idaho tax commission website, but could not find anything concerning digital software tax. I am hoping someone could assist me in finding the right code or page, or just flat out tell me, if Idaho charges business tax for purchased digital software distributed through a website as a download?

A sincerely appreciate any help.

Thanks you in advanced.
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Old 07-13-2012, 02:01 AM   #2
skier_j
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no idea, but here is a thought.

Amazon or some other large retailer on line----even sears or say best buy---wait, how about Cabelas, they have a HUGE store in Coeur D'alene--and they have some good game software that may be downloadable--go online and go through the process of ordering software to an ID address and see if there is a slaes tax charged. Should be able to get to far enpugh in the process to get shipping and tax without actually having to purchase.
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Old 07-13-2012, 02:28 AM   #3
taxcurious
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According to this: http://tax.idaho.gov/i-1018.cfm and http://tax.idaho.gov/i-1050.cfm

Anything ordered online AND SHIPPED, are subject to sales tax. I am assuming "shipped" means the shipment of tangible goods.

Will the faking an order to ascertain whether or not Idaho charges tax on downloadable digital software really work? If so, please explain.

Last edited by taxcurious; 07-13-2012 at 02:39 AM.. Reason: On 3rd thought.
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Old 07-13-2012, 12:21 PM   #4
skier_j
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Quote:
Originally Posted by taxcurious View Post
According to this: http://tax.idaho.gov/i-1018.cfm and http://tax.idaho.gov/i-1050.cfm

Anything ordered online AND SHIPPED, are subject to sales tax. I am assuming "shipped" means the shipment of tangible goods.

Will the faking an order to ascertain whether or not Idaho charges tax on downloadable digital software really work? If so, please explain.
Internet sales are an odd lot these days with respect to sales taxes so take that thought as just that a thought.....

However, when I was an actively practicing CPA, I managed my fair share of sales tax audits for clients and had a pretty good relationship with a couple of the state tax auditors because I would interact on my clients behalf with them fairly regularily. The main thrust of these audits in those days was mail ordered supplies that shipped without sales tax. Vendors have to have whats called "Nexus" (a presence in the state) to charge sales taxes. No nexus, no responsibility to collect (on the vendors part). The buyer is expected to self charge (use tax) on out of state purchases. One of the ways the state guys determine taxability was pretty simple. If I can go to the local office supply store and have to pay tax, then your client owes the Commonwealth a sales (use) tax on the same item ordered from say Quill.

Using that analogy and Cabela's as my example did, since Cabela's has nexus in ID (a retail store in CD), going through an ordering drill online for an item that fits your description would be a pretty good indicator of whether or not Idaho charges sales tax on a download. Not fool proof of course, but probably pretty accurate.

The tangible personal property (or however ID describes items subject to sales tax in ID) still has to be shipped to an ID address to incur the ID sales tax. Since Cabela's is a national retailer, and presumably registered to collect the appropriate taxes in any state it has nexus, you could expand the test and try a delivery address in a state they don;t have a store and see what happens.

Last edited by skier_j; 07-13-2012 at 12:29 PM..
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Old 07-13-2012, 04:12 PM   #5
taxcurious
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Hey Skier_j,

Thank you very much for your informative reply. I think I understand now, and I will give that a shot. And thank you for clarifying "tangible" goods to me as well!

Thanks again!

Last edited by taxcurious; 07-13-2012 at 04:14 PM.. Reason: deserves decent spelling
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Old 03-09-2013, 11:13 AM   #6
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Hi, skier_j.
Thanks for sharing such an informative post this will be helpful to all other users also.


http://howladerandco.com
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