2006 Legislation
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HOUSE BILL NO. 756 – Sales tax exmptn, heating materials

HOUSE BILL NO. 756

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Bill Status



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

Bill Text


                                                                        
                                                                        
  ]]]]              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.

Statement of Purpose / Fiscal Impact


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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