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H0265..................................................by REVENUE AND TAXATION
HEAT PRODUCING MATTER - Repeals and amends existing law to delete the sales
tax exemption for the purchase of any matter used to produce heat by burning.
02/14 House intro - 1st rdg - to printing
02/17 Rpt prt - to Rev/Tax
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 265
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO SALES TAXATION; REPEALING SECTION 63-3622G, IDAHO CODE, RELATING
3 TO AN EXEMPTION FROM SALES TAXATION FOR THE PURCHASE OF ANY MATTER USED TO
4 PRODUCE HEAT BY BURNING; AMENDING SECTION 63-3622D, IDAHO CODE, TO DELETE
5 REFERENCE TO THE SALES TAX EXEMPTION FOR HEATING MATERIALS AND TO MAKE
6 TECHNICAL CORRECTIONS; AMENDING SECTION 63-3622JJ, IDAHO CODE, TO DELETE
7 REFERENCE TO THE SALES TAX EXEMPTION FOR HEATING MATERIALS; AND DECLARING
8 AN EMERGENCY.
9 Be It Enacted by the Legislature of the State of Idaho:
10 SECTION 1. That Section 63-3622G, Idaho Code, be, and the same is hereby
11 repealed.
12 SECTION 2. That Section 63-3622D, Idaho Code, be, and the same is hereby
13 amended to read as follows:
14 63-3622D. PRODUCTION EXEMPTION. There are exempted from the taxes imposed
15 by this chapter:
16 (a) The sale at retail, storage, use or other consumption in this state
17 of:
18 (1) Tangible personal property which will enter into and become an ingre-
19 dient or component part of tangible personal property manufactured, proc-
20 essed, mined, produced or fabricated for sale.
21 (2) Tangible personal property primarily and directly used or consumed in
22 or during a manufacturing, processing, mining, farming, or fabricating
23 operation, including, but not limited to, repair parts, lubricants,
24 hydraulic oil, and coolants, which become a component part of such tangi-
25 ble personal property; provided that the use or consumption of such tangi-
26 ble personal property is necessary or essential to the performance of such
27 operation.
28 (3) Chemicals, catalysts, and other materials which are used for the pur-
29 pose of producing or inducing a chemical or physical change in the product
30 or for removing impurities from the product or otherwise placing the prod-
31 uct in a more marketable condition as part of an operation described in
32 subsection (a)(2) of this section, and chemicals and equipment used in
33 clean-in-place systems in the food processing and food manufacturing
34 industries.
35 (4) Safety equipment and supplies required to meet a safety standard of a
36 state or federal agency when such safety equipment and supplies are used
37 as part of an operation described in subsection (a)(2) of this section.
38 (5) Plants to be used as part of a farming operation.
39 (b) Other than as provided in subsection (c) of this section, the exemp-
40 tions allowed in subsections (a)(1), (a)(2), (a)(3) and (a)(4) of this section
41 are available only to a business or separately operated segment of a business
42 which is primarily devoted to producing tangible personal property which that
2
1 business will sell and which is intended for ultimate sale at retail within or
2 without this state. A contractor providing services to a business entitled to
3 an exemption under this section is not exempt as to any property owned,
4 leased, rented or used by it unless, as a result of the terms of the contract,
5 the use of the property is exempt under section 63-3615(b), Idaho Code.
6 (c) The exemptions allowed in subsections (a)(1), (a)(2), (a)(3) and
7 (a)(4) of this section shall also be available to a business, or separately
8 operated segment of a business, engaged in farming or mining, whether as a
9 subcontractor, contractor, contractee or subcontractee, when such business or
10 segment of a business is primarily devoted to producing tangible personal
11 property which is intended for ultimate sale at retail within or without this
12 state, without regard to the ownership of the product being produced.
13 (d) As used in this section, the term "directly used or consumed in or
14 during" a farming operation means the performance of a function reasonably
15 necessary to the operation of the total farming business, including, the
16 planting, growing, harvesting and initial storage of crops and other agricul-
17 tural products and movement of crops and produce from the place of harvest to
18 the place of initial storage. It includes disinfectants used in the dairy
19 industry to clean cow udders or to clean pipes, vats or other milking equip-
20 ment.
21 (e) The exemptions allowed in this section do not include machinery,
22 equipment, materials and supplies used in a manner that is incidental to the
23 manufacturing, processing, mining, farming or fabricating operations such as
24 maintenance and janitorial equipment and supplies.
25 (f) Without regard to the use of such property, this section does not
26 exempt:
27 (1) Hand tools with a unit purchase price not in excess of one hundred
28 dollars ($100). A hand tool is an instrument used or worked by hand.
29 (2) Tangible personal property used in any activities other than the
30 actual manufacturing, processing, mining, farming or fabricating opera-
31 tions such as office equipment and supplies, and equipment and supplies
32 used in selling or distributing activities.
33 (3) Property used in research or development.
34 (4) Property used in transportation activities.
35 (5) Machinery, equipment, tools or other property used to make repairs.
36 This subsection does not include repair parts that become a component part
37 of tangible property exempt from tax under this section or lubricants,
38 hydraulic oil, or coolants used in the operation of tangible personal
39 property exempt under this section.
40 (6) Machinery, equipment, tools or other property used to manufacture,
41 fabricate, assemble or install tangible personal property which is:
42 (i) Not held for resale in the regular course of business; and
43 (ii) Owned by the manufacturer, processor, miner, farmer or fabrica-
44 tor;
45 provided, however, this subsection does not prevent exemption of machin-
46 ery, equipment, tools or other property exempted from tax under subsection
47 (a)(2) or (a)(3) of this section.
48 (7) Any improvement to real property or fixture thereto or any tangible
49 personal property which becomes or is intended to become a component of
50 any real property or any improvement or fixture thereto.
51 (8) Motor vehicles and aircraft.
52 (9) Tangible personal property used or consumed in processing, producing
53 or fabricating tangible personal property exempted from tax under this
54 chapter in sections 63-3622F, 63-3622G and 63-3622I, Idaho Code.
55 (10) Tangible personal property described in section 63-3622HH, Idaho
3
1 Code.
2 (g) Any tangible personal property exempt under this section which ceases
3 to qualify for this exemption, and does not qualify for any other exemption or
4 exclusion of the taxes imposed by this chapter, shall be subject to use tax
5 based upon its value at the time it ceases to qualify for exemption. Any tan-
6 gible personal property taxed under this chapter which later qualifies for
7 this exemption shall not entitle the owner of it to any claim for refund.
8 SECTION 3. That Section 63-3622JJ, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 63-3622JJ. LOGGING EXEMPTION. There are exempted from the taxes imposed
11 by this chapter:
12 (1) The sale at retail, storage, use or other consumption in this state
13 of tangible personal property which is primarily and directly used or consumed
14 in logging including, but not limited to, log loaders, log jammers, log
15 skidders and fuel used in logging trucks, provided that the use or consumption
16 of such tangible personal property is necessary or essential to logging.
17 (2) The exemption allowed by subsection (1) of this section does not
18 include machinery, equipment, materials and supplies used in a manner that is
19 incidental to logging such as maintenance and janitorial equipment and sup-
20 plies, and hand tools with a unit purchase price not in excess of one hundred
21 dollars ($100); nor does it include tangible personal property used in any
22 activities other than the actual logging, such as office equipment and sup-
23 plies, equipment and supplies used in selling or distributing activities, in
24 research, or, except for fuel used in logging trucks, in transportation activ-
25 ities; nor shall this exemption include motor vehicles or aircraft, without
26 regard to the use to which such motor vehicles or aircraft are put; nor shall
27 this exemption apply to vehicles or equipment described in section 63-3622HH,
28 Idaho Code; nor shall this exemption include tangible personal property used
29 to produce tangible personal property exempted from the tax under this chapter
30 by section 63-3622G, Idaho Code.
31 SECTION 4. An emergency existing therefor, which emergency is hereby
32 declared to exist, this act shall be in full force and effect on and after its
33 passage and approval.
STATEMENT OF PURPOSE
RS 12847
Removes Section 63-3622G, Idaho Code, which prevents certain
industries from the production exemption. There are five wood
pellet manufacturing companies located in Idaho that are
prohibited from fully participating in the State's sales and use
tax exemption afforded to all other manufacturing companies.
FISCAL IMPACT
The Tax Commission estimates a reduction of $120,000 to the
general fund.
Contact
Name: Rep. George Eskridge, Sen. Shawn Keough
Phone: 332-1270
332-1349
STATEMENT OF PURPOSE/FISCAL NOTE H 265