Sales and use tax- Idaho

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moparrob66

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Posting in hopes that someone else can share their experience with this. Bought a plane from a licensed dealer in July 2024. We negotiated a price "out-the-door". I understood this to include all taxes and fees necessary to effect a sale. June of 2025, State of Idaho demands sales taxes along with penalties and interest. Dealer says "I'll have my accountant look into it" and then goes no contact. Escrow docs do not indicate that taxes were paid, so I pay the sales tax to the state but I'm contesting the penalties and interest of approximately $950 as I think its ...inappropriate.

Their tax guy is offering to settle before any hearing takes place but I'm not having it. Is it worth hiring an attorney or will that cost more than the state wants? Anyone else had to deal with this?
 
Me? I'd hire the atty and fight just out of pinciple. And then I'd have the atty take a good, long look at the seller. I'd be tempted to make the seller's life a bit uncomfortable given the oral agreement. You may not have a leg to stand on in either situation but I would not go down without a fight.
 
Dealer and I agreed to a price out the door to include an annual. With all the car purchases I've made, all parties know what "out the door" means. I paid the taxes without reservation (slight irritation) but it was meant to be in the sale price as negotiated "out the door".

The penalties and interest is what really made me mad. Why wait a year after the fact? To make the punishment worse? If I was trying to evade sales tax, I probably wouldnt have registered the plane with Idaho Department of Aeronautics (DOT) as required.
 
yeah the fight is almost never worth it. just in how it prolongs the emotional upset.
 
Was the sale made in Idaho, and I am sure you have a copy of the sales receipt/contract - not the final escrow settlement notice, is there a line item for taxes?

If no to both the start working with the tax man to find an inexpensive way out of this before they put a lien your plane... then go after the "licensed dealer."

My dad always said "when it comes to money, people get funny - get it in writing..."

My question to the group.. do aircraft brokers/dealers need to be licensed?
 
If I’m reading this correctly, the escrow does NOT indicate sales taxes being paid. Does the purchase agreement have a sales tax line item? If so, did it show the sales tax and was the total price paid the same as the sales agreement? IF the dealer charged sales tax and didn’t submit it to the state, that should be sales tax fraud. I’m not sure if the state would pursue such a small amount, but, you could make his life uncomfortable.
If there isn’t a line item specifying sales tax, just pay it and try to negotiate the penalty.
 
Yeah, no documentation that sales tax was paid or collected, so I paid the tax as soon as it was brought to my attention. Its my mistake for assuming "out-the-door" included sales tax that a LICENSED DEALER is supposed to collect. I know if the seller was an owner I'd be obligated to arrange for payment on my own, but the one year surprise along with penalties and interest really chaps my hide.
 
Like a used car dealer, the state issues a license and requires them to report transfers and collect sales tax. If you buy and sell a certain number of cars or airplanes, or any other items of value, you are required to get a dealers license. Dealers arent obligated to pay sales tax upon acquisition, but they collect it at sale and pay that to the state.
 
Then I don't understand why the state isn't going after the dealer. But I've dealt with enough taxing authorities to know that all they care is about getting their money, whether they are right or wrong.
 
Was the dealer Idaho-based? Most dealers don’t memorize sales tax rules in all 50 states.

Also, was this a new plane? If used; there might be a loophole to avoid the tax, depending on Idaho’s rules.
 
Write a negative post and out the seller by name as unscrupulous.

Not worth an adversarial legal fight for $950. Money and time wasted. Use that time to go fly your new plane.
 
moparrob66 said:
The penalties and interest is what really made me mad. Why wait a year after the fact? To make the punishment worse? If I was trying to evade sales tax, I probably wouldnt have registered the plane with Idaho Department of Aeronautics (DOT) as required.
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The state didn’t “wait” to notify you. It just took that long before they figured it out. I’ve had airplanes in two different states and it always takes a year or two before they figure out I have an airplane and want money (even when they aren’t due any).

Your beef isn’t with the state, it’s with the dealer.
 
Sorry this happened, it sounds like the licensed dealer just didn't pay the taxes. Pragmatic approach? Somedays you get the bear, somedays bear gets you. You paid the taxes. See if the nice Idaho tax guy will discount the late fees, and then pay. This will stop even more late fees.

You'll never get the licensed dealer nailed down. If you can ever find him, he'll say anything and do nothing. If you pay a ton of money to hire a lawyer, dealer will delay proceedings or just not show up. If he's found guilty, he'll never pay. Take action on his license, and he'll move states.

If there is a next time buying a plane, just use an independent escrow service.
 
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Surprised, the Idaho State Tax Commission contacted me within days after my aircraft purchases. Back in 2017 you had the option of paying the tax with your income tax return. IDK if that's still the case, but if it is perhaps amend the return and avoid some penalties/interest? Going the attorney route will cost you more than $950, I would just take the settlement and chalk it up as a learning experience. Good luck with it.
 
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Thanks for all the input. I'll update the post after the telephone penalty hearing, if they schedule one. I get a sense that they were hoping I'd settle.
 
Did you submit a request for adjudication of the penalties? I did when something similar happened to me (different issue, but I was still late in making tax payment to Idaho) and they dropped the penalty.
 
I wrote a letter to the tax board explaining my position and I have a telephone hearing scheduled. I think i have a pretty reasonable position. We'll see if they think so.
 
Does the land of the potato not have Fly-Away State Tax Exemptions?
 
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decalogue said:
Does the land of the potato not have Fly-Away State Tax Exemptions?
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I’m not a tax professional but AFAIK we do have flyaway but you have to actually fly it away and keep it away (for the most part)

OP: I gathered from your post that you are an ID resident - am I mistaken?
 
So I met with the appeals board and they basically related that no matter what, I have to either offer a settlement or pay the whole thing. Im tempted to offer $20 and tell them off, but i need this to go away. Is a 1/3 offer likely to be accepted? I'd hate to learn after the fact that they would have taken 1/10th.
 
Offer 25% for settlement in full. Why? Sounds like enough not to be insulting and it takes this off their plate. Just an uninformed guess.
 
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