Idaho Administrative Code › Title IDAPA 35 - Tax Commission, State › Rule 35.01.02 - IDAHO SALES AND USE TAX ADMINISTRATIVE RULES › Section 35.01.02.013 - ROAD AND PAVING CONTRACTORS

Current through August 31, 2023
Sections
				63-3609,
				63-3615, Idaho Code
01.
In General
. This rule
			 illustrates the application of Idaho sales and use tax to specific activities
			 of road and paving contractors. The general principles stated in Rule
			 012 of these rules apply equally to
			 road and paving contractors. (3-31-22)
02.
Road or Paving Contractor
. A
			 road or paving contractor is a contractor improving real property. The use of
			 materials over which he exercises right or power in the course of performing
			 the contract is taxable. This is true even if an exempt entity, such as a
			 government agency, owns the material. It is also true if the contractor does
			 the work under the full or partial supervision of the person for whom the
			 contractor is performing the contract. (3-31-22)
03.
Examples
. Here are some
			 examples of taxable materials contractors use in paving and road contracts:
			 (3-31-22)
a. Example 1: A contractor is hired
			 to pave a road for a city. The materials the contractor will use are taxable,
			 regardless of ownership, and include rock, sand, asphalt oil, chemicals,
			 bonding agents, or any other like materials which become the aggregate
			 pavement. (3-31-22)
b. Example 2: A
			 contractor is hired to chip seal a local road. The chip seal includes a layer
			 of liquid asphalt or similar material applied to the road with an immediate
			 layer of rock chips applied on top of the wet asphalt. A roller sets the rock
			 chips in place. Once this dries, the surface is cleaned and another oil seal or
			 like product is applied. These three items and any other materials used to form
			 the aggregate chip seal are taxable. (3-31-22)
c. Example 3: A contractor is hired to
			 perform landscaping for the barrow pits and shoulders of a new highway. The
			 highway district provides the grass seed and some bushes for the project. The
			 contractor provides labor to sow the seed, plant the bushes, and labor and
			 materials to provide erosion control, land leveling, contouring, etc. The
			 contractor owes sales or use tax on all materials consumed, including those
			 provided by the highway district. (3-31-22)
d. Example 4: A contractor is hired to
			 install a new bridge and provide drainage for a new freeway interchange. The
			 highway district provides the bridge components and culverts needed for the
			 project, and the contractor provided all of the remaining materials and the
			 labor for the project. The contractor will owe sales or use tax on all
			 materials he consumes including the bridge components and culverts provided by
			 the highway district, as well as on the materials the contractor purchased for
			 use on the project. (3-31-22)
e.
			 Example 5: A contractor is hired to install traffic control lights, signage,
			 and roadway illumination for a rebuilt section of roadway. The highway district
			 provides the traffic control signals and the permanent signage for the highway
			 so that all signage will be consistent throughout the highway district. The
			 contractor owes use tax on the value of the traffic signals and signage
			 provided by the highway district as well as on the cost of electrical wiring,
			 signal wiring, and the lights and light poles, etc., purchased and consumed by
			 the contractor. (3-31-22)