(a) General. Commencing on and after
September 1, 2001, section
6356.6
of the Revenue and Taxation Code partially exempts from sales and use tax the
sale of, and the storage, use, or other consumption in this state, of off-road
commercial timber harvesting equipment and machinery, and parts of off-road
commercial timber harvesting equipment and machinery, that are purchased by a
qualified person for use primarily in timber harvesting. The terms "off-road
commercial timber harvesting equipment and machinery," "parts of off-road
commercial timber harvesting equipment and machinery," "qualified person," and
"commercial timber harvesting operations" are defined below.
For the period commencing on September 1, 2001, and ending
on December 31, 2001, the partial exemption applies to the taxes imposed by
sections
6051
and
6201
of the Revenue and Taxation Code (4.75%), but does not apply to the taxes
imposed pursuant to sections
6051.2
and
6201.2
of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use
Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the
California Constitution.
For the period commencing on January 1, 2002, and ending on
June 30, 2004, the partial exemption applies to the taxes imposed by sections
6051,
6051.3,
6201,
and
6201.3
of the Revenue and Taxation Code (5%), but does not apply to the taxes imposed
pursuant to sections
6051.2
and
6201.2
of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use
Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the
California Constitution.
For the period commencing on July 1, 2004 and ending on
March 31, 2009, the partial exemption applies to the taxes imposed by sections
6051,
6051.3,
6051.5,
6201,
6201.3,
and
6201.5
of the Revenue and Taxation Code (5.25%), but does not apply to the taxes
imposed or administered pursuant to sections
6051.2
and
6201.2
of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use
Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the
California Constitution.
For the period commencing on April 1, 2009, and ending on
June 30, 2011, the partial exemption applies to the taxes imposed by sections
6051,
6051.3,
6051.5,
6051.7,
6201,
6201.3,
6201.5,
and
6201.7
of the Revenue and Taxation Code (6.25%), but does not apply to the taxes
imposed or administered pursuant to sections
6051.2
and
6201.2
of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use
Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the
California Constitution.
For the period commencing on July 1, 2011, and ending on
December 31, 2012, the partial exemption applies to the taxes imposed by
sections
6051,
6051.3,
6051.5,
6201,
6201.3,
and
6201.5
of the Revenue and Taxation Code (5.25%), but does not apply to the taxes
imposed or administered pursuant to sections
6051.2
and
6201.2
of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use
Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the
California Constitution.
For the period commencing on January 1, 2013, and ending on
December 31, 2015, the partial exemption applies to the taxes imposed by
section 36 of article XIII of the California Constitution and sections
6051,
6051.3,
6051.5,
6201,
6201.3,
and
6201.5
of the Revenue and Taxation Code (5.50%), but does not apply to the taxes
imposed or administered pursuant to sections
6051.2
and
6201.2
of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use
Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the
California Constitution.
For the period commencing on January 1, 2016, and ending on
December 31, 2016, the partial exemption applies to the taxes imposed by
section 36 of article XIII of the California Constitution and sections
6051,
6051.3,
6201,
and
6201.3
of the Revenue and Taxation Code (5.25%), but does not apply to the taxes
imposed or administered pursuant to sections
6051.2
and
6201.2
of the Revenue and Taxation Code, the Bradley-Bums Uniform Local Sales and Use
Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the
California Constitution.
For the period commencing on January 1, 2017, the partial
exemption applies to the taxes imposed by sections
6051,
6051.3,
6201,
and
6201.3
of the Revenue and Taxation Code (5%), but does not apply to the taxes imposed
or administered pursuant to sections
6051.2
and
6201.2
of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use
Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the
California Constitution.
(b)
Definitions. For purposes of this regulation:
(1) "Commercial timber harvesting operations"
means the cutting or removal or both of timber or other solid wood forest
products, from timberlands for commercial purposes, together with all the work
incidental thereto, including but not limited to, construction and maintenance
of roads, fuel breaks, firebreaks, stream crossings, landings, skid trails,
beds for the falling of trees, fire hazard abatement, reforestation, and site
preparation that involves disturbance of soil or burning of vegetation
following timber harvesting activities. Such activities include, but are not
limited to, bucking, bunching, chipping, debarking, delimbing, felling,
forwarding, loading, piling, skidding, slashing, topping and yarding operations
performed on timber. Commercial timber harvesting operations do not include the
use of timber in processing activities or other activities resulting in the
creation of other commercial wood products for sale to others, including,
without limitation, milling, planing, carving, paper manufacturing, the
treating of wood with creosote or other preservatives to prevent decay or
protect against fire, or the packaging of wood chips for use in preparing
food.
(2) "Off-road commercial
timber harvesting equipment and machinery" means any new or used device, that
may be powered by an internal combustion engine, electric motor, or otherwise,
that is necessary in complying with any operational requirements of federal,
state, or local government laws and regulations and is designed primarily for
use off the highways, to propel, move, draw or cut timber in commercial timber
harvesting operations. Such items include, but are not limited to, chainsaws,
slashers, debarkers, harvesters, forwarders, feller-bunchers, cable yarding
equipment, yarders, loading helicopters, chippers, bulldozers; loading
equipment used to lift and move the equipment; graders; water trucks and
similar logging road building and maintenance equipment; fuel storage
equipment, site preparation equipment; all-terrain vehicles; fire fighting and
safety equipment; timber harvest preparation equipment; reforestation tools and
equipment; loaders; carriages; skidders; mobile metal spars; delimbers;
chokers; steel cables; grapples; front-end loaders, and tractors or rubber tire
skidders and other equipment used to fell, delimb, cross-cut, measure, sort,
bunch, move and load timber for transport to roadside.
Off-road commercial timber harvesting equipment and
machinery does not include junction boxes, switches, conduit and wiring,
valves, pipes, tubing incorporated into fixed works, buildings, or other
structures, whether or not such items are used solely or partially in
connection with the operation of equipment and machinery. Off-road commercial
timber harvesting equipment and machinery also does not include supplies such
as articles of clothing, fuels, real property, materials or fixtures within the
meaning of subdivisions (a)(4) and (a)(5), respectively, of Regulation 1521,
Construction Contractors, including such items set forth in Appendix A and B of
Regulation 1521.
(3) "Parts
of off-road commercial timber harvesting equipment and machinery" means:
(A) All component parts and contrivances
include, but are not limited to, belts, shafts, pipes, hoses and moving parts,
that are parts of off-road commercial timber harvesting equipment and machinery
as defined in subdivision (b)(2) that can be separated from the off-road
commercial timber harvesting equipment and machinery and replaced. Parts of
off-road commercial timber harvesting equipment and machinery do not include
items that are consumed (e.g., burned, evaporate, dissolve, dissipate) through
the regular use of the off-road commercial timber harvesting equipment and
machinery (e.g., gasoline, cleaning agents, solutions, chemicals) which are
ordinarily supplies; however, lubricants and fluids not consumed (e.g., engine
oil not consumed as part of fuel for a two-stroke engine) is regarded as a
component part.
(B) All repair and
replacement parts for off-road commercial timber harvesting equipment and
machinery as defined in subdivision (b)(2) which replace previous parts and can
include parts that are identical to the parts they replace as well as parts
that are different from the ones they replace, such as replacement parts added
for the purpose of improving or modifying the off-road commercial timber
harvesting equipment and machinery, whether purchased separately or in
conjunction with a complete machine and regardless of whether the machine or
component parts are assembled by a qualified person or another person. Parts of
off-road commercial timber harvesting equipment and machinery do not include
tangible personal property used in effectuating the repair of any timber
harvesting equipment and machinery such as a wrench used to replace a spark
plug, except tools used for repair that are designed exclusively for specific
off-road commercial timber harvesting equipment and machinery.
(C) All equipment or devices used or required
to operate, control, regulate, or maintain the machinery including, without
limitation, computers, data processing equipment, and computer software,
including both operating programs and application programs. Parts of off-road
commercial timber harvesting equipment and machinery do not include tangible
personal property used primarily in the administration, management, or
marketing of timber harvesting operations.
(4) "Primarily" means used 50 percent or more
of the time. As used herein, the qualified property has to be designed for use
50 percent or more of the time off-road in commercial timber harvesting
operations and be used 50 percent or more of the time in timber
harvesting.
(5) "Qualified person"
means a person engaged in commercial timber harvesting operations. A qualified
person is not required to be engaged 50 percent or more of the time in
commercial timber harvesting operations.
(6) "Qualified property" means off-road
commercial timber harvesting equipment and machinery, and the parts thereof, as
defined in subdivisions (b)(2) and (b)(3) used primarily in timber
harvesting.
(7) "Timber" means
trees of any species maintained for eventual harvest for forest products or
other forest purposes, whether planted or of natural growth, standing or down,
including Christmas trees, on privately or publicly owned land, but does not
mean nursery stock.
(8)
"Timberland" means privately or publicly owned land which is devoted to and
used for growing or timber harvesting, or for growing and timber harvesting and
compatible uses, and which is capable of growing an average annual volume of
wood fiber of at least 15 cubic feet per acre.
(c) Partial Exemption Certificates.
(1) In General. Qualified persons who
purchase or lease qualified property from an in-state retailer, or an out-of
state retailer obligated to collect use tax, must provide the retailer with a
partial exemption certificate in order for the retailer to claim the partial
exemption. If the retailer takes a partial exemption certificate timely and in
good faith, as defined in subdivision (c)(5), from a qualified person, the
partial exemption certificate relieves the retailer from the liability for the
sales tax subject to exemption under this regulation or the duty of collecting
the use tax subject to exemption under this regulation. A partial exemption
certificate will be considered timely if it is taken any time before the
retailer bills the purchaser for the qualified property, any time within the
retailer's normal billing or payment cycle, any time at or prior to delivery of
the qualified property to the purchaser, or no later than 15 days after the
date of purchase. A partial exemption certificate that is not taken timely will
not relieve the retailer of the liability for tax excluded by the partial
exemption; however the retailer may present satisfactory evidence to the Board
that the retailer sold the specific property to a qualified person and the
property was primarily used in a qualifying manner. A partial exemption from
the sales and use tax under this part shall not be allowed unless the retailer
claims the partial exemption on its sales and use tax return for the reporting
period during which the transaction subject to the partial exemption occurred.
Where the retailer fails to claim the partial exemption as set forth above, the
retailer may file a claim for refund as set forth in subdivision (e).
The partial exemption certificate form set forth in
Appendix A may be used to claim the partial exemption.
(2) Blanket Partial Exemption Certificates.
In lieu of requiring a partial exemption certificate for each transaction, a
qualified person may issue a blanket partial exemption certificate. The partial
exemption certificate form set forth in Appendix A may be used as a blanket
partial exemption certificate. Appendix A may also be used as a specific
partial exemption certificate if the purchaser provides the purchase order or
sales invoice number and a precise description of the property being purchased.
Qualified persons must include in the partial exemption certificate a
description of the qualified property. If purchasing tangible personal property
not qualifying for the partial exemption, the qualified person must clearly
state in documents such as a written purchase order, sales agreement, lease, or
contract that the sale or purchase is not subject to the blanket partial
exemption certificate.
(3) Form of
Partial Exemption Certificate. Any document, such as a letter or purchase
order, timely provided by the purchaser to the seller will be regarded as a
partial exemption certificate with respect to the sale or purchase of the
property described in the document if it contains all of the following
essential elements:
(A) The signature of the
purchaser, purchaser's employee, or authorized representative of the
purchaser.
(B) The name, address
and telephone number of the purchaser.
(C) The number of the seller's permit held by
the purchaser. If the purchaser is not required to hold a permit because the
purchaser sells only property of a kind the retail sale of which is not
taxable, e.g., food products for human consumption, or because the purchaser
makes no sales in this state, the purchaser must include on the certificate a
sufficient explanation as to the reason the purchaser is not required to hold a
California seller's permit in lieu of a seller's permit number.
(D) A statement that the purchaser is engaged
in commercial timber harvesting operations, and that the property purchased is
primarily designed for off-road use in commercial timber harvesting operations
and will be used primarily in timber harvesting.
(E) Description of property
purchased.
(F) Date of execution of
document.
(4) Retention
and Availability of Partial Exemption Certificates. A retailer must retain each
partial exemption certificate received from a qualified person for a period of
not less than four years from the date on which the retailer claims a partial
exemption based on the partial exemption certificate.
While the Board will not normally require the filing of the
partial exemption certificate with a sales and use tax return, when necessary
for the efficient administration of the Sales and Use Tax Law, the Board may on
30 days' written notice, require a retailer to commence filing with its sales
and use tax returns copies of all partial exemption certificates. The Board may
also require, within 45 days of the Board's request, retailers provide the
Board access to any and all partial exemption certificates, or copies thereof,
accepted for the purposes of supporting the partial exemption.
(5) Good Faith. A seller will be presumed to
have taken a partial exemption certificate in good faith in the absence of
evidence to the contrary. A seller, without knowledge to the contrary, may
accept a partial exemption certificate in good faith where a qualified person
states that he or she is engaged in commercial timber harvesting operations and
states that the property purchased is primarily designed for off-road use in
commercial timber harvesting operations and will be used primarily in timber
harvesting. If the qualified person is buying property of a kind not normally
used in timber harvesting, the seller should require a statement as to how the
specific property purchased will be used. However, an exemption certificate
cannot be accepted in good faith where the seller has knowledge that the
property is not subject to a partial exemption, or will not be otherwise used
in a partially exempt manner.
(d) Partial Exemption Certificate for Use
Tax. The partial exemption certificate must be completed by a qualified person
to claim a partial exemption from use tax on purchases of qualified property
from an out-of-state retailer not obligated to collect the use tax. A partial
exemption from the use tax shall not be allowed unless the purchaser or
retailer claims the partial exemption on its individual use tax return, sales
and use tax return, or consumer use tax return for the reporting period during
which the transaction subject to the partial exemption occurred. Where the
purchaser or retailer fails to claim the partial exemption as set forth above,
the purchaser or retailer may file a claim for refund as set forth in
subdivision (e).
The purchaser who files an individual use tax return must
attach a completed partial exemption certificate to the return. The purchaser
who is registered with the Board as a retailer or consumer and files a sales
and use tax return or consumer use tax return must, within 45 days of the
Board's request, provide the Board access to any and all documents that support
the claimed partial exemption.
The partial exemption certificate form set forth in
Appendix A may be used to claim the partial exemption.
(e) Refund of Partial Exemption.
(1) For the period commencing on September 1,
2001, and ending on June 30, 2002, a qualified person may claim the partial
exemption on qualified purchases from an in-state retailer or an out-of-state
retailer obligated to collect the use tax by furnishing the retailer with a
partial exemption certificate on or before September 30, 2002. The retailer
must refund the tax or tax reimbursement directly to the purchaser or, at the
purchaser's sole option, the purchaser may be credited with such
amount.
(2) A retailer who paid
sales tax on a qualified sale or a person who paid use tax on a qualified
purchase and who failed to claim the partial exemption as provided by this
regulation may file a claim for refund equal to the amount of the partial
exemption that he or she could have claimed pursuant to this regulation. The
procedure for filing a claim shall be the same as for other claims for refund
filed pursuant to Revenue and Taxation Code section
6901.
For transactions subject to use tax, a qualified person filing a claim for
refund of the partial exemption has the burden of establishing that he or she
was entitled to claim the partial exemption with respect to the amount of
refund claimed under this part. For transactions subject to sales tax, a person
filing a claim for refund of the partial exemption has the burden of
establishing that the purchaser of the qualified property otherwise met all the
requirements of a qualified person at the time of the purchase subject to the
refund claimed under this part.
(f) Improper Use of Partial Exemption.
(1) Property Used In a Manner Not Qualifying
for the Partial Exemption. Notwithstanding subdivision (a), tax applies to any
sale of, and the storage, use, or other consumption in this state of tangible
personal property that is used in a manner not qualifying for the partial
exemption under this regulation.
(2) Purchases By Non-Qualified Persons.
Notwithstanding subdivision (a), tax applies to any sale of, and the storage,
use, or other consumption in this state of tangible personal property if a
purchaser is not a qualified person.
(g) Purchaser's Liability for the Payment of
Sales Tax.
(1) If a purchaser timely submits a
copy of a partial exemption certificate to the retailer or partial exemption
certificate for use tax to the Board, and then uses that tangible personal
property in a manner not qualifying for the partial exemption, the purchaser
shall be liable for payment of the sales tax, with applicable interest, to the
same extent as if the purchaser were a retailer making a retail sale of the
property at the time the property was so removed, converted, or used.
(2) A purchaser providing a partial exemption
certificate accepted in good faith by the retailer or a partial exemption
certificate for use tax to the Board for tangible personal property that does
not qualify for the partial exemption is liable for payment of the sales tax,
with applicable interest, to the same extent as if the purchaser were a
retailer making a retail sale of the property at the time the property was
purchased.
(h) Leases to
Qualifying Persons.
(1) Leases--In General.
Leases of tangible personal property which are classified as "continuing sales"
and "continuing purchases" of tangible personal property, in accordance with
Regulation 1660, "Leases of Tangible Personal Property - In General," may
qualify for the partial exemption subject to all the limitations and conditions
set forth in this regulation. This partial exemption may apply to rentals
payable paid by a qualified person on or after September 1, 2001 with respect
to a lease of qualified property to the qualified person, which qualified
property is used primarily in timber harvesting, notwithstanding the fact that
the lease was entered into prior to the effective date of this regulation. For
purposes of this subdivision, a non-qualified person may purchase property for
resale and subsequently lease the property to a qualified person subject to the
partial exemption.
(2)
Leases--Acquisition Sale and Leaseback. A qualified person will be regarded as
having paid sales tax reimbursement or use tax with respect to that qualified
person's purchase of property, within the meaning of those words as they are
used in section
6010.65
of the Revenue and Taxation Code, if the qualified person has paid all
applicable taxes with respect to the acquisition of the property,
notwithstanding the fact that the sale and purchase of the property may have
been subject to the partial exemption from tax provided by this
regulation.
(3) Subsequent Lease of
Property Acquired Subject to Partial Exemption. If a qualified person has
acquired property subject to the partial exemption provided by this regulation
and has paid all applicable taxes at that acquisition, the property will be
regarded as property as to which sales tax reimbursement or use tax has been
paid, and the subsequent lease of that property will not be subject to tax
measured by rentals payable.
(i) Records. Adequate and complete records
must be maintained by the qualified person as evidence that the qualified
property purchased was primarily designed for off-road use in commercial timber
harvesting operations and was used by the qualified person primarily in timber
harvesting.
(j) Operative Date.
This regulation is operative as of September 1, 2001.
