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H0369aa.............................................by REVENUE AND TAXATION
SALES TAX EXEMPTION - HEATING MATERIALS - Amends existing law to clarify
that heating materials qualifying for the sales tax exemption are further
exempt under the production and logging exemptions.
03/22 House intro - 1st rdg - to printing
03/23 Rpt prt - to Rev/Tax
03/24 Rpt out - to Gen Ord
Rpt out amen - to engros
03/28 Rpt engros - 1st rdg - to 2nd rdg as amen
03/29 2nd rdg - to 3rd rdg as amen
Rls susp - PASSED - 58-11-1
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Bolz, Bradford, Chadderdon,
Collins, Crow, Denney, Edmunson, Ellsworth, Eskridge, Field(18),
Field(23), Garrett, Hart, Harwood, Henderson, Jaquet, Jones, Kemp,
Loertscher, Martinez, Mathews, McGeachin, McKague, Miller, Moyle,
Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo,
Roberts, Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8),
Shirley, Skippen, Smylie, Stevenson, Trail, Wills, Wood, Mr. Speaker
NAYS -- Boe, Cannon, Clark, Deal, Henbest, Lake, LeFavour, Mitchell,
Rusche, Smith(30), Snodgrass
Absent and excused -- Smith(24)
Floor Sponsors - Eskridge & Anderson
Title apvd - to Senate
03/29 Senate intro - 1st rdg - to Loc Gov
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 369
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO SALES AND USE TAXATION; AMENDING SECTION 63-3622D, IDAHO CODE, TO
3 DELETE REFERENCE TO THE SALES TAX EXEMPTION FOR HEATING MATERIALS AND TO
4 MAKE TECHNICAL CORRECTIONS; REPEALING SECTION 63-3622G, IDAHO CODE, RELAT-
5 ING TO AN EXEMPTION FOR SALES AND USE TAXATION FOR THE PURCHASE OF ANY
6 MATTER USED TO PRODUCE HEAT BY BURNING; AND AMENDING SECTION 63-3622JJ,
7 IDAHO CODE, TO DELETE REFERENCE TO THE SALES TAX EXEMPTION FOR HEATING
8 MATERIALS.
9 Be It Enacted by the Legislature of the State of Idaho:
10 SECTION 1. That Section 63-3622D, Idaho Code, be, and the same is hereby
11 amended to read as follows:
12 63-3622D. PRODUCTION EXEMPTION. There are exempted from the taxes imposed
13 by this chapter:
14 (a) The sale at retail, storage, use or other consumption in this state
15 of:
16 (1) Tangible personal property which will enter into and become an ingre-
17 dient or component part of tangible personal property manufactured, proc-
18 essed, mined, produced or fabricated for sale.
19 (2) Tangible personal property primarily and directly used or consumed in
20 or during a manufacturing, processing, mining, farming, or fabricating
21 operation, including, but not limited to, repair parts, lubricants,
22 hydraulic oil, and coolants, which become a component part of such tangi-
23 ble personal property; provided that the use or consumption of such tangi-
24 ble personal property is necessary or essential to the performance of such
25 operation.
26 (3) Chemicals, catalysts, and other materials which are used for the pur-
27 pose of producing or inducing a chemical or physical change in the product
28 or for removing impurities from the product or otherwise placing the prod-
29 uct in a more marketable condition as part of an operation described in
30 subsection (a)(2) of this section, and chemicals and equipment used in
31 clean-in-place systems in the food processing and food manufacturing
32 industries.
33 (4) Safety equipment and supplies required to meet a safety standard of a
34 state or federal agency when such safety equipment and supplies are used
35 as part of an operation described in subsection (a)(2) of this section.
36 (5) Plants to be used as part of a farming operation.
37 (b) Other than as provided in subsection (c) of this section, the exemp-
38 tions allowed in subsections (a)(1), (a)(2), (a)(3) and (a)(4) of this section
39 are available only to a business or separately operated segment of a business
40 which is primarily devoted to producing tangible personal property which that
41 business will sell and which is intended for ultimate sale at retail within or
42 without this state. A contractor providing services to a business entitled to
43 an exemption under this section is not exempt as to any property owned,
2
1 leased, rented or used by it unless, as a result of the terms of the contract,
2 the use of the property is exempt under section 63-3615(b), Idaho Code.
3 (c) The exemptions allowed in subsections (a)(1), (a)(2), (a)(3) and
4 (a)(4) of this section shall also be available to a business, or separately
5 operated segment of a business, engaged in farming or mining, whether as a
6 subcontractor, contractor, contractee or subcontractee, when such business or
7 segment of a business is primarily devoted to producing tangible personal
8 property which is intended for ultimate sale at retail within or without this
9 state, without regard to the ownership of the product being produced.
10 (d) As used in this section, the term "directly used or consumed in or
11 during" a farming operation means the performance of a function reasonably
12 necessary to the operation of the total farming business, including, the
13 planting, growing, harvesting and initial storage of crops and other agricul-
14 tural products and movement of crops and produce from the place of harvest to
15 the place of initial storage. It includes disinfectants used in the dairy
16 industry to clean cow udders or to clean pipes, vats or other milking equip-
17 ment.
18 (e) The exemptions allowed in this section do not include machinery,
19 equipment, materials and supplies used in a manner that is incidental to the
20 manufacturing, processing, mining, farming or fabricating operations such as
21 maintenance and janitorial equipment and supplies.
22 (f) Without regard to the use of such property, this section does not
23 exempt:
24 (1) Hand tools with a unit purchase price not in excess of one hundred
25 dollars ($100). A hand tool is an instrument used or worked by hand.
26 (2) Tangible personal property used in any activities other than the
27 actual manufacturing, processing, mining, farming or fabricating opera-
28 tions such as office equipment and supplies, and equipment and supplies
29 used in selling or distributing activities.
30 (3) Property used in research or development.
31 (4) Property used in transportation activities.
32 (5) Machinery, equipment, tools or other property used to make repairs.
33 This subsection does not include repair parts that become a component part
34 of tangible property exempt from tax under this section or lubricants,
35 hydraulic oil, or coolants used in the operation of tangible personal
36 property exempt under this section.
37 (6) Machinery, equipment, tools or other property used to manufacture,
38 fabricate, assemble or install tangible personal property which is:
39 (i) Not held for resale in the regular course of business; and
40 (ii) Owned by the manufacturer, processor, miner, farmer or fabrica-
41 tor;
42 provided, however, this subsection does not prevent exemption of machin-
43 ery, equipment, tools or other property exempted from tax under subsection
44 (a)(2) or (a)(3) of this section.
45 (7) Any improvement to real property or fixture thereto or any tangible
46 personal property which becomes or is intended to become a component of
47 any real property or any improvement or fixture thereto.
48 (8) Motor vehicles and aircraft.
49 (9) Tangible personal property used or consumed in processing, producing
50 or fabricating tangible personal property exempted from tax under this
51 chapter in sections 63-3622F, 63-3622G and 63-3622I, Idaho Code.
52 (10) Tangible personal property described in section 63-3622HH, Idaho
53 Code.
54 (g) Any tangible personal property exempt under this section which ceases
55 to qualify for this exemption, and does not qualify for any other exemption or
3
1 exclusion of the taxes imposed by this chapter, shall be subject to use tax
2 based upon its value at the time it ceases to qualify for exemption. Any tan-
3 gible personal property taxed under this chapter which later qualifies for
4 this exemption shall not entitle the owner of it to any claim for refund.
5 SECTION 2. That Section 63-3622G, Idaho Code, be, and the same is hereby
6 repealed.
7 SECTION 3. That Section 63-3622JJ, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 63-3622JJ. LOGGING EXEMPTION. There are exempted from the taxes imposed
10 by this chapter:
11 (1) The sale at retail, storage, use or other consumption in this state
12 of tangible personal property which is primarily and directly used or consumed
13 in logging including, but not limited to, log loaders, log jammers, log
14 skidders and fuel used in logging trucks, provided that the use or consumption
15 of such tangible personal property is necessary or essential to logging.
16 (2) The exemption allowed by subsection (1) of this section does not
17 include machinery, equipment, materials and supplies used in a manner that is
18 incidental to logging such as maintenance and janitorial equipment and sup-
19 plies, and hand tools with a unit purchase price not in excess of one hundred
20 dollars ($100); nor does it include tangible personal property used in any
21 activities other than the actual logging, such as office equipment and sup-
22 plies, equipment and supplies used in selling or distributing activities, in
23 research, or, except for fuel used in logging trucks, in transportation activ-
24 ities; nor shall this exemption include motor vehicles or aircraft, without
25 regard to the use to which such motor vehicles or aircraft are put; nor shall
26 this exemption apply to vehicles or equipment described in section 63-3622HH,
27 Idaho Code; nor shall this exemption include tangible personal property used
28 to produce tangible personal property exempted from the tax under this chapter
29 by section 63-3622G, Idaho Code.
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
Moved by Wood
Seconded by Crow
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 369
1 AMENDMENT TO THE BILL
2 On page 3 of the printed bill, delete lines 5 and 6; and in line 7, delete
3 "SECTION 3" and insert: "SECTION 2".
4 CORRECTION TO TITLE
5 On page 1, delete lines 4 through 6 and insert: "MAKE TECHNICAL CORREC-
6 TIONS; AND AMENDING SECTION 63-3622JJ,".
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 369, As Amended
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO SALES AND USE TAXATION; AMENDING SECTION 63-3622D, IDAHO CODE, TO
3 DELETE REFERENCE TO THE SALES TAX EXEMPTION FOR HEATING MATERIALS AND TO
4 MAKE TECHNICAL CORRECTIONS; AND AMENDING SECTION 63-3622JJ, IDAHO CODE, TO
5 DELETE REFERENCE TO THE SALES TAX EXEMPTION FOR HEATING MATERIALS.
6 Be It Enacted by the Legislature of the State of Idaho:
7 SECTION 1. That Section 63-3622D, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 63-3622D. PRODUCTION EXEMPTION. There are exempted from the taxes imposed
10 by this chapter:
11 (a) The sale at retail, storage, use or other consumption in this state
12 of:
13 (1) Tangible personal property which will enter into and become an ingre-
14 dient or component part of tangible personal property manufactured, proc-
15 essed, mined, produced or fabricated for sale.
16 (2) Tangible personal property primarily and directly used or consumed in
17 or during a manufacturing, processing, mining, farming, or fabricating
18 operation, including, but not limited to, repair parts, lubricants,
19 hydraulic oil, and coolants, which become a component part of such tangi-
20 ble personal property; provided that the use or consumption of such tangi-
21 ble personal property is necessary or essential to the performance of such
22 operation.
23 (3) Chemicals, catalysts, and other materials which are used for the pur-
24 pose of producing or inducing a chemical or physical change in the product
25 or for removing impurities from the product or otherwise placing the prod-
26 uct in a more marketable condition as part of an operation described in
27 subsection (a)(2) of this section, and chemicals and equipment used in
28 clean-in-place systems in the food processing and food manufacturing
29 industries.
30 (4) Safety equipment and supplies required to meet a safety standard of a
31 state or federal agency when such safety equipment and supplies are used
32 as part of an operation described in subsection (a)(2) of this section.
33 (5) Plants to be used as part of a farming operation.
34 (b) Other than as provided in subsection (c) of this section, the exemp-
35 tions allowed in subsections (a)(1), (a)(2), (a)(3) and (a)(4) of this section
36 are available only to a business or separately operated segment of a business
37 which is primarily devoted to producing tangible personal property which that
38 business will sell and which is intended for ultimate sale at retail within or
39 without this state. A contractor providing services to a business entitled to
40 an exemption under this section is not exempt as to any property owned,
41 leased, rented or used by it unless, as a result of the terms of the contract,
42 the use of the property is exempt under section 63-3615(b), Idaho Code.
43 (c) The exemptions allowed in subsections (a)(1), (a)(2), (a)(3) and
2
1 (a)(4) of this section shall also be available to a business, or separately
2 operated segment of a business, engaged in farming or mining, whether as a
3 subcontractor, contractor, contractee or subcontractee, when such business or
4 segment of a business is primarily devoted to producing tangible personal
5 property which is intended for ultimate sale at retail within or without this
6 state, without regard to the ownership of the product being produced.
7 (d) As used in this section, the term "directly used or consumed in or
8 during" a farming operation means the performance of a function reasonably
9 necessary to the operation of the total farming business, including, the
10 planting, growing, harvesting and initial storage of crops and other agricul-
11 tural products and movement of crops and produce from the place of harvest to
12 the place of initial storage. It includes disinfectants used in the dairy
13 industry to clean cow udders or to clean pipes, vats or other milking equip-
14 ment.
15 (e) The exemptions allowed in this section do not include machinery,
16 equipment, materials and supplies used in a manner that is incidental to the
17 manufacturing, processing, mining, farming or fabricating operations such as
18 maintenance and janitorial equipment and supplies.
19 (f) Without regard to the use of such property, this section does not
20 exempt:
21 (1) Hand tools with a unit purchase price not in excess of one hundred
22 dollars ($100). A hand tool is an instrument used or worked by hand.
23 (2) Tangible personal property used in any activities other than the
24 actual manufacturing, processing, mining, farming or fabricating opera-
25 tions such as office equipment and supplies, and equipment and supplies
26 used in selling or distributing activities.
27 (3) Property used in research or development.
28 (4) Property used in transportation activities.
29 (5) Machinery, equipment, tools or other property used to make repairs.
30 This subsection does not include repair parts that become a component part
31 of tangible property exempt from tax under this section or lubricants,
32 hydraulic oil, or coolants used in the operation of tangible personal
33 property exempt under this section.
34 (6) Machinery, equipment, tools or other property used to manufacture,
35 fabricate, assemble or install tangible personal property which is:
36 (i) Not held for resale in the regular course of business; and
37 (ii) Owned by the manufacturer, processor, miner, farmer or fabrica-
38 tor;
39 provided, however, this subsection does not prevent exemption of machin-
40 ery, equipment, tools or other property exempted from tax under subsection
41 (a)(2) or (a)(3) of this section.
42 (7) Any improvement to real property or fixture thereto or any tangible
43 personal property which becomes or is intended to become a component of
44 any real property or any improvement or fixture thereto.
45 (8) Motor vehicles and aircraft.
46 (9) Tangible personal property used or consumed in processing, producing
47 or fabricating tangible personal property exempted from tax under this
48 chapter in sections 63-3622F, 63-3622G and 63-3622I, Idaho Code.
49 (10) Tangible personal property described in section 63-3622HH, Idaho
50 Code.
51 (g) Any tangible personal property exempt under this section which ceases
52 to qualify for this exemption, and does not qualify for any other exemption or
53 exclusion of the taxes imposed by this chapter, shall be subject to use tax
54 based upon its value at the time it ceases to qualify for exemption. Any tan-
55 gible personal property taxed under this chapter which later qualifies for
3
1 this exemption shall not entitle the owner of it to any claim for refund.
2 SECTION 2. That Section 63-3622JJ, Idaho Code, be, and the same is hereby
3 amended to read as follows:
4 63-3622JJ. LOGGING EXEMPTION. There are exempted from the taxes imposed
5 by this chapter:
6 (1) The sale at retail, storage, use or other consumption in this state
7 of tangible personal property which is primarily and directly used or consumed
8 in logging including, but not limited to, log loaders, log jammers, log
9 skidders and fuel used in logging trucks, provided that the use or consumption
10 of such tangible personal property is necessary or essential to logging.
11 (2) The exemption allowed by subsection (1) of this section does not
12 include machinery, equipment, materials and supplies used in a manner that is
13 incidental to logging such as maintenance and janitorial equipment and sup-
14 plies, and hand tools with a unit purchase price not in excess of one hundred
15 dollars ($100); nor does it include tangible personal property used in any
16 activities other than the actual logging, such as office equipment and sup-
17 plies, equipment and supplies used in selling or distributing activities, in
18 research, or, except for fuel used in logging trucks, in transportation activ-
19 ities; nor shall this exemption include motor vehicles or aircraft, without
20 regard to the use to which such motor vehicles or aircraft are put; nor shall
21 this exemption apply to vehicles or equipment described in section 63-3622HH,
22 Idaho Code; nor shall this exemption include tangible personal property used
23 to produce tangible personal property exempted from the tax under this chapter
24 by section 63-3622G, Idaho Code.
STATEMENT OF PURPOSE
RS 15169
Removes Section 63-3622G, Idaho Code, which prevents certain
industries from receiving the production exemption. There are
four 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 $150,000 to the
general fund.
Contact
Name: Rep. George Eskridge
Phone: 332-1270
Rep. Eric Anderson
Phone: 332-1232
Senator Shawn Keough
Phone: 332-1349
STATEMENT OF PURPOSE/FISCAL NOTE H 369