Form 18518 - The Tax Commission Of The State Of Idaho (Page 2 of 5) in pdf

Form 18518 - The Tax Commission Of The State Of Idaho Page 2

by the main engine that is also used to propel the vehicle.

Idaho Code § 63-3621 imposes a use tax on the storage, use, or other consumption of

tangible personal property in Idaho. The use tax is a complementary tax to the sales tax imposed by

Idaho Code § 63-3619. When a person buys goods and pays sales tax to the retailer, the use tax

liability is extinguished. Untaxed purchases are subject to use tax unless a specific exemption

applies to the use.

Idaho Code § 63-3622C states the following:

63-3622C. MOTOR FUELS SUBJECT TO TAX -- There

are exempted from the taxes imposed by this chapter purchases which

are subject to the motor fuels tax imposed by chapter 24, title 63,

Idaho Code, and purchases upon which motor fuels taxes have

actually been paid and the sale or use of any fuel which is

subsequently transported outside the state for use thereafter outside

the state. Nothing in this chapter shall be construed to authorize the

imposition of a tax on fuel brought into this state in the fuel tanks of

motor vehicles or railroad locomotives in interstate commerce.

Since fuel used on public highways is subject to the fuels tax imposed by Chapter 24, Title

63, Idaho Code, its use is not subject to the use tax imposed by Idaho Code § 63-3621. When a

truck is used off the public highways, the fuel it consumes is not subject to the fuels tax. The use of

such fuel becomes subject to use tax unless another sales or use tax exemption applies.

Idaho Fuels Tax Rule 292 (IDAPA 35.01.05.292) allows operators of concrete trucks to

claim 30% of their fuel purchases for off-road use. Pursuant to that rule, the taxpayer applied for

and received a refund of the fuels tax it paid on fuel used off-road. The Tax Commission then issued

a deficiency for use tax based on the estimated purchase price of the off-road fuel.

The taxpayer in this case argues that Idaho Code § 63-3622D, commonly known as the

production exemption, applies to the fuel in question. The production exemption provides an

exemption for sales and purchases of equipment and supplies primarily and directly used by a

DECISION - 2

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Form 18518 - The Tax Commission Of The State Of Idaho Page 2