2005 Legislation
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HOUSE BILL NO. 369 – Sales tax exmptn, heating materials

HOUSE BILL NO. 369

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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

Bill Text


                                                                        
                                                                        
  ]]]]              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.

Amendment


                                                                        
                                                                        
  ]]]]              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,".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
                                                                        
  ]]]]              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 / Fiscal Impact



                       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