Tax Exempt Purchases

Note: This post applies to guesthouses operating in the U.S.

Did you know that there are some purchases on which you don’t need to be paying tax? In Idaho, lodging providers do not need to pay the state’s 6% sales tax on any items that are consumed by their customers in such a way that they can’t be reused.

Examples of items that you do not need to pay sales tax on are facial tissue, toilet paper, napkins, paper towels, soap, lotion, shampoo, and conditioner, coffee, any other beverages or food, newspapers, and notepads. Items that you do need to pay tax on include towels, linens, glassware, silverware, and china, furniture, books, magazines, and any items available to the general public. Click here for more information.

If your state has a sales tax, you will want to look into your state’s sales tax exemption policy, but I’m guessing most, if not all, states have this same policy.

To take advantage of this deal, you need to sign up with each vendor individually. In Idaho, vendors will ask for a Sales Tax Resale or Exemption Certificate or ST-101. After you sign up with your vendors to be tax exempt, I recommend writing down how each vendor wants you to make your tax exempt purchases. For example, one grocery store might require you to provide your sales tax permit number whenever you make a purchase, another store might give you a card that has its own number exclusive to that store, and another might just need you to write your name on a sheet whenever you make a purchase. Even if you only make purchases at a few stores, it’s easy initially to forget how each vendor does it.

Be aware that having a tax exemption on file with a vendor does not mean that you don’t pay sales tax for all of your items purchased, only those that qualify. So you’ll need to pay for your tax exempt items separately from your taxable items.

See you next month!

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