Retailer with Substantial Nexus in Idaho Defined

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. A retailer has “substantial nexus” with Idaho if both of the following apply: (1) the retailer and an in-state business maintaining one or more locations within Idaho are related parties; and (2) the retailer and the in-state business use an identical or substantially similar name, trade name, trademark, or goodwill to develop, promote, or maintain sales, or the in-state business provides services to, or that inure to the benefit of, the out-of-state business related to developing, promoting, or maintaining the in-state market.

In Summary, the amendment provides that a retailer engaged in business in this state be defined as any retailer with substantial nexus in this state; provides that any retailer having a franchisee or license operating under its trade name or owned by the same entity or corporation in the State of Idaho be required to collect sales and use taxes from its customers. If two entities are related parties, a determination by applying several tests that incorporate provisions from the Internal Revenue Code. (IRC 63-3004). Also, the above provisions do not apply to a retailer that had less than $100,000 in sales in Idaho in the previous year. (2008 ID H 360, Enacted, March 3, 2008).

Posted on March 31, 2008