"Use tax" the state's way of taxing donations

Imagine having to pay taxes on items you donate to charity. Couldn't happen, right? Well, it no only could, but did happen for the Great Harvest in Rexburg.

"I got a call from the state tax commission, they indicated that there was a "use tax" that we needed to be paying it," said Tom Herbert, owner of the Great Harvest in Rexburg.

The "use tax" is a complementary law to "sales tax," designed to tax items purchased from other states - like when you buy something off Ebay. Most people have never heard of the law, and practically no one follows it. That's why the Great Harvest Bakery in Rexburg was rather surprised to be audited and told they had to pay taxes on bread they've been giving to the homeless shelter.

"if we're going to donate anything we have to pay tax on anything we donate. That we thought was pretty frustrating in that we donate homeless shelters, the family crisis center, and individuals in need," continued Herbert.

And Great Harvest customers agree.

"It doesn't make any sense to me that you would waste food rather than give it to the Homeless Shelter. Where I don't understand how you could tax someone for doing a good cause," said customer Marilyn Anderson.

Businesses are throwing excess goods now instead of donating them to a good cause. And as a bread lover myself, it's kind of hard to watch the bread being thrown away.

"This stuff is perfectly good. Otherwise we wouldn't be using it for our clients. I hate seeing things going into the trash, it's a shame. There's a lot of people out there that need help with food budgets." said Anne Johnson, with The Haven Homeless Shelter.

"The law should allow for charity donations and not impose a tax on those donations," said Herbert.

Taking action for Tom and other businesses, I called the Idaho Tax Commission.

"If the homeless shelter is giving away food, then I don't think they should have been taxed and it's an error in the law. We're kind of stuck with the law we have. It's up to the legislators to make the laws," said Jim Husted, with the Idaho State Tax Commission.

Husted later clarified he meant this, "I said that if the homeless shelter is giving regularly giving away food then the tax was imposed in error. The law is not in error."

"We very much appreciate businesses that donate to the Shelter," said Johnson.

So if you would like to see this "use tax" law changed, contact your State legislators.

Husted also directed me to the state law code and mentioned that "All donations to the Idaho Food Bank Warehouse are already exempt under Idaho Code Sec. 63-3622O(1)(b). Donations of food to nonprofit organizations are exempt under Idaho Code Sec. 63-3622O(1)(c)."

But this doesn't explain why the Great Harvest was forced to pay back taxes on donations to non profit organizations like homeless shelters.

If you've been put in this same situation, where you've been taxed for items you've donated to charity, we want to hear about it.

Category:

News & Politics

Tags:

• use
• tax
• dumb
• law
• idaho

[eastidahoonline]

Not very friendly to tax people who are helping, great piece, time to dumpster dive.