Idaho Administrative Code › Title IDAPA 35 - Tax Commission, State › Rule 35.01.10 - IDAHO CIGARETTE AND TOBACCO PRODUCTS TAXES ADMINISTRATIVE RULES › Section 35.01.10.019 - TOBACCO MANUFACTURERS AND DISTRIBUTORS

Current through August 31, 2023
01.
Shipments to Retailers/Distributors
. In the case where a person
			 who is not a registered Idaho tobacco dealer ships tobacco products to a person
			 who is both a retailer, as defined in Section
			 63-2551(5), Idaho
			 Code, and a distributor, as defined in Section
			 63-2551(3)(b),
			 Idaho Code, and Rule 010 of these
			 rules, the shipper will be considered a manufacturer for purposes of all
			 shipments of products intended for blending and/or repackaging and the receiver
			 will be primarily liable for the tax. In the case where shipments are made to a
			 person who is both a retailer and a distributor and products are prepackaged
			 for retail sale, the shipper will be considered a distributor, Section
			 63-2551(3)(c),
			 Idaho Code, and held primarily liable for the tax. (3-31-22)
02.
Nontaxed Tobacco Purchases from
			 Outside the State
. Any person purchasing tobacco products from without
			 this state and making any type of sale, as defined in Section
			 63-2551(6), Idaho
			 Code, will be deemed to be the distributor and held liable for the unpaid tax
			 on said tobacco products not otherwise taxed. (3-31-22)
03.
Determining Wholesale Sales
			 Price
. Any time a distributor makes a purchase of tobacco products from
			 a manufacturer or any person upon which the tax has not been paid, and the
			 documents pertaining to that purchase do not clearly indicate the wholesale
			 sales price, as defined by Section
			 63-2551(7), Idaho
			 Code, wholesale sales price will be determined to be the purchase price of that
			 product, or the wholesale sales price of that same or a like product in the
			 course of normal commerce whichever is greater. It is the responsibility of the
			 distributor to provide the accuracy of the wholesale sales price of any product
			 it may be held liable for. (3-31-22)
a.
			 Separately Stated Nontaxable Charges. Separately stated nontaxable charges for
			 shipping, handling, transportation, and delivery may not be used to avoid tax
			 on the wholesale sales price of tobacco products. If the allocation of the
			 wholesale sales price is unreasonable, the Tax Commission may adjust it.
			 (3-31-22)
b. An out-of-state
			 distributor with nexus in the state of Idaho must use the same method in
			 determining "wholesale sales price" as other distributors that distribute
			 tobacco products in Idaho. If an out-of-state distributor without nexus in
			 Idaho applies for and receives a tobacco tax permit voluntarily, that
			 distributor must also use the same method in determining "wholesale sales
			 price" as other distributors that distribute tobacco products in Idaho.
			 (3-31-22)
i. Example 1. An out-of-state
			 tobacco manufacturer manufactures tobacco and acts as its own distributor. The
			 manufacturer distributes its products to Idaho distributors, retailers, and end
			 users. In this case, the manufacturer is acting as both manufacturer and
			 distributor. The wholesale sales price will be the price at which it sells to
			 the Idaho distributor, retailer or end user. (3-31-22)
ii. Example 2: An out-of-state importer
			 (Company X) purchases tobacco products. Company X sells its product to its
			 sister company (Company Y) which then acts as the distributor. The dollar
			 amount for which Company X sells its product to Company Y is not disclosed.
			 Company Y then ships the product into Idaho to Idaho distributors and
			 retailers. In this case, the purchase price from the manufacturer to Company X
			 is unknown. Additionally, there are no records provided to show the sales price
			 between Company X and Company Y. There are records showing the price between
			 Company Y and the Idaho distributors and retailers. Under this subsection,
			 where the wholesale sales price is unknown, the wholesale sales price will be
			 the greater of the purchase price of that product or the wholesale sales price
			 of that same or a like product in the course of normal commerce. The "purchase
			 price of the product" is the price the Idaho distributor or retailer actually
			 paid Company Y to purchase the product. The wholesale sales price of the same
			 or similar product in the normal course of commerce could be interpreted as the
			 price a manufacturer would sell the same or similar product to a distributor.
			 (3-31-22)
iii. Example 3: An
			 out-of-state distributor buys tobacco products from a manufacturer that is not
			 a related party as defined in IRC Section
			 267. The distributor ships its
			 products to Idaho distributors and retailers. If the wholesale sales price (the
			 price paid by the distributor to the manufacturer for the product) is known,
			 then that is the wholesale sales price. If the distributor does not know the
			 wholesale sales price paid to the manufacturer, then this subsection requires
			 the wholesale sales price to be the price paid by the Idaho distributors and
			 retailers for the product OR the wholesale sales price of the same or similar
			 products, whichever is greater. (3-31-22)