This would free your kids’ lemonade stand, lawn mowing from Idaho sales tax, regulations

BOISE (Idaho Statesman) — Young entrepreneurs and low-income homeowners would see some minor relief under two bills introduced in the Idaho House.

The so-called “Lemonade Stand Freedom” bill, sponsored by Rep. Ron Nate, R-Rexburg, exempts small, youth-run businesses from state sales tax. It also prohibits local governments from requiring licenses, permits or fees for such operations.

“Cities shouldn’t require licenses or permits for youth businesses like lemonade stands or mowing lawns,” Nate said. “We want to encourage young entrepreneurs to dip their toes into the business area. We don’t want to put roadblocks in their way.”

The bill applies to businesses that are “owned and operated exclusively by a person or persons under 18 years of age.”

Nate described it as a “preemptive” measure, saying he wasn’t aware of any instances where this was a problem.

In 2010, however, the Lewiston Tribune reported that the Idaho State Tax Commission told a Lewiston family their 6- and 4-year-old kids needed a permit to operate a Halloween pumpkin stand. The dispute made headlines worldwide and ended up tripling the amount of business at the stand.

Rep. Aaron von Ehlinger, R-Lewiston, also recalled a lemonade stand in Orofino being shut down because it didn’t have a permit.

“It was a real travesty, crushing the spirit of the kids out there trying to make a few bucks,” he said. “I really feel like we should be promoting capitalism among kids, especially now.”

The House Revenue and Taxation Committee introduced the bill on a unanimous voice vote Thursday in the second week of the Idaho Legislature’s 2021 session at the Capitol in Boise.

MEDICAL DEDUCTION FOR PROPERTY-TAX RELIEF

Von Ehlinger also introduced a bill to provide a standard $4,000 medical expense deduction for Idaho’s circuit breaker property tax relief program.

The circuit breaker provides elderly Idahoans, veterans and other homeowners with a small property tax deduction if they meet certain income limits. Medical expenses are one of the deductions allowed when calculating household income.

Von Ehlinger, who introduced the bill at the request of the State Tax Commission, noted that homeowners have to submit subscriptions and detailed receipts to qualify for the medical deduction. Some people object to that as an invasion of privacy.

“The purpose of this bill is to protect privacy,” he said.

The average medical deduction for program beneficiaries historically has been about $4,000. Consequently, the tax commission is proposing to amend state statutes to provide a $4,000 standard deduction. Anyone with higher medical expenses would be able to claim them as an itemized deduction.

The commission estimates the change would result in a $100,000 annual increase in the amount of tax relief provided under the circuit breaker program. The state reimburses counties for the cost of the program, so that’s the expected impact on state revenues.

The committee introduced the bill Thursday on a unanimous voice vote.