Sandpoint's local option tax is not a use tax

There have been some questions raised recently regarding Sandpoint’s local option tax and we have been made aware that this has been a point of discussion at a recent Ponderay City Council meeting.

Sandpoint’s local option tax is a 1-percent sales tax that was approved overwhelmingly by voters in November 2015 to support much needed improvements at War Memorial Field and Barlow Stadium. Construction of a new stadium is currently underway.

Prior to and after the implementation of the Sandpoint local option tax in January, 2016 the city had extensive discussions with the Idaho State Tax Commission. A workshop was also held for area businesses and additional outreach occurred. Ongoing assistance is provided to individuals and businesses with questions regarding the sales tax.

Nothing in what the city has enacted constitutes a use tax.

The following is an email excerpt from Mr. Johnny Ketner, Tax Auditor IV, Idaho State Tax Commission, Sales/Use Tax Audit when asked to clarify their opinion of the city of Sandpoint local option tax (emphasis mine):

“You are correct, Idaho Code section 50-1046 (see below) only gives cities the authority to collect local-option non property taxes on: occupancy, liquor by the drink, and sales tax.

For sales tax purposes, we deem that the point of sale occurs at the location at which the purchaser takes possession of the items purchased.”

As an example, if I (a Sandpoint resident) purchase a refrigerator from The Home Depot and they load it into my truck, as the purchaser, I take delivery in Ponderay and 6 percent sales tax will be charged. If I purchase a refrigerator from The Home Depot and they deliver it to Sandpoint, as the purchaser, even though I paid for it in Ponderay, I take delivery in Sandpoint and 7 percent sales tax will be due and collected by The Home Depot.

If the point of delivery for goods is in Sandpoint, then the company is doing business in Sandpoint — regardless of where the home office is located. In an April 20, 2017, Daily Bee article, it was stated that the Idaho State Tax Commission is looking into Sandpoint’s requirements for business licenses. We have had no discussions with the Tax Commission on our businesses licenses and they are not the proper agency to determine whether or not you are required to have a business license in the city.

While it is true that a Ponderay business is not required to obtain a Sandpoint business license for doing business in Ponderay, they are required to obtain a business license if the Ponderay business is also doing business in Sandpoint.

We have a frequently asked questions sheet on the local option tax on our city website at www.sandpointidaho.gov. City staff are also available to answer additional questions on the local option tax or business license requirements in Sandpoint.

The local option tax continues to provide the revenue needed to complete the War Memorial Field renovations and it will sunset December 31, 2020. If you haven’t been by War Memorial lately, I encourage you to drive by and take a look at the new stadium as it is taking shape.

Shelby Rognstad is the mayor of Sandpoint