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H0756...............................................by REVENUE AND TAXATION
SALES TAX EXEMPTIONS - Amends existing law to delete the reference to the
sales and use tax exemption for heating materials in the production
exemption and in the logging exemption.
03/01 House intro - 1st rdg - to printing
03/02 Rpt prt - to Rev/Tax
03/07 Rpt out - rec d/p - to 2nd rdg
03/08 2nd rdg - to 3rd rdg
03/10 3rd rdg - PASSED - 60-5-5
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Bolz, Brackett, Bradford,
Chadderdon, Clark, Collins, Denney, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Garrett, Hart, Harwood, Henbest, Henderson,
Jaquet, Kemp, LeFavour, Loertscher, Martinez, Mathews, McGeachin,
McKague, Miller, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence,
Raybould, Ring, Ringo, Roberts, Rydalch, Sali, Sayler, Shepherd(2),
Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson,
Trail, Wills, Mr. Speaker
NAYS -- Boe, Cannon, Lake, Mitchell, Rusche
Absent and excused -- Crow, Deal, Schaefer, Shepherd(8), Wood
Floor Sponsor - Eskridge
Title apvd - to Senate
03/13 Senate intro - 1st rdg - to Loc Gov
03/22 Rpt out - rec d/p - to 2nd rdg
03/23 2nd rdg - to 3rd rdg
03/28 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett(Clark),
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough,
Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce,
Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor - Keough
Title apvd - to House
03/29 To enrol
03/30 Rpt enrol - Sp signed
03/31 Pres signed - To Governor
03/31 Governor signed
Session Law Chapter 315
Effective: 07/01/06
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 756
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO THE SALES AND USE TAX; AMENDING SECTION 63-3622D, IDAHO CODE, TO
3 PROVIDE TECHNICAL CORRECTIONS AND TO DELETE REFERENCE TO THE SALES AND USE
4 TAX EXEMPTION FOR HEATING MATERIALS; AND AMENDING SECTION 63-3622JJ, IDAHO
5 CODE, TO DELETE REFERENCE TO THE SALES AND USE TAX EXEMPTION FOR HEATING
6 MATERIALS.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Section 63-3622D, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 63-3622D. PRODUCTION EXEMPTION. There are exempted from the taxes imposed
11 by this chapter:
12 (a) The sale at retail, storage, use or other consumption in this state
13 of:
14 (1) Tangible personal property which will enter into and become an ingre-
15 dient or component part of tangible personal property manufactured, proc-
16 essed, mined, produced or fabricated for sale.
17 (2) Tangible personal property primarily and directly used or consumed in
18 or during a manufacturing, processing, mining, farming, or fabricating
19 operation, including, but not limited to, repair parts, lubricants,
20 hydraulic oil, and coolants, which become a component part of such tangi-
21 ble personal property; provided that the use or consumption of such tangi-
22 ble personal property is necessary or essential to the performance of such
23 operation.
24 (3) Chemicals, catalysts, and other materials which are used for the pur-
25 pose of producing or inducing a chemical or physical change in the product
26 or for removing impurities from the product or otherwise placing the prod-
27 uct in a more marketable condition as part of an operation described in
28 subsection (a)(2) of this section, and chemicals and equipment used in
29 clean-in-place systems in the food processing and food manufacturing
30 industries.
31 (4) Safety equipment and supplies required to meet a safety standard of a
32 state or federal agency when such safety equipment and supplies are used
33 as part of an operation described in subsection (a)(2) of this section.
34 (5) Plants to be used as part of a farming operation.
35 (b) Other than as provided in subsection (c) of this section, the exemp-
36 tions allowed in subsections (a)(1), (a)(2), (a)(3) and (a)(4) of this section
37 are available only to a business or separately operated segment of a business
38 which is primarily devoted to producing tangible personal property which that
39 business will sell and which is intended for ultimate sale at retail within or
40 without this state. A contractor providing services to a business entitled to
41 an exemption under this section is not exempt as to any property owned,
42 leased, rented or used by it unless, as a result of the terms of the contract,
43 the use of the property is exempt under section 63-3615(b), Idaho Code.
2
1 (c) The exemptions allowed in subsections (a)(1), (a)(2), (a)(3) and
2 (a)(4) of this section shall also be available to a business, or separately
3 operated segment of a business, engaged in farming or mining, whether as a
4 subcontractor, contractor, contractee or subcontractee, when such business or
5 segment of a business is primarily devoted to producing tangible personal
6 property which is intended for ultimate sale at retail within or without this
7 state, without regard to the ownership of the product being produced.
8 (d) As used in this section, the term "directly used or consumed in or
9 during" a farming operation means the performance of a function reasonably
10 necessary to the operation of the total farming business, including, the
11 planting, growing, harvesting and initial storage of crops and other agricul-
12 tural products and movement of crops and produce from the place of harvest to
13 the place of initial storage. It includes disinfectants used in the dairy
14 industry to clean cow udders or to clean pipes, vats or other milking equip-
15 ment.
16 (e) The exemptions allowed in this section do not include machinery,
17 equipment, materials and supplies used in a manner that is incidental to the
18 manufacturing, processing, mining, farming or fabricating operations such as
19 maintenance and janitorial equipment and supplies.
20 (f) Without regard to the use of such property, this section does not
21 exempt:
22 (1) Hand tools with a unit purchase price not in excess of one hundred
23 dollars ($100). A hand tool is an instrument used or worked by hand.
24 (2) Tangible personal property used in any activities other than the
25 actual manufacturing, processing, mining, farming or fabricating opera-
26 tions such as office equipment and supplies, and equipment and supplies
27 used in selling or distributing activities.
28 (3) Property used in transportation activities.
29 (4) 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 (5) 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 (6) 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 (7) Motor vehicles and aircraft.
46 (8) 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 (9) 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.
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STATEMENT OF PURPOSE
RS 15738
Changes Sections 63-3622D and 63-3622JJ, 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 NOTE
The tax commission estimates a reduction of $150,000 to the
general fund.
Contact
Name: Rep. George Eskridge
Phone: 332-1270
Rep. Eric Anderson
Senator Shawn Keough
STATEMENT OF PURPOSE/FISCAL NOTE H 756