Sections
47-701,
47-701A,
63-3605H,
63-3622,
63-3622D,
63-3622X, Idaho Code This rule is
meant to show how the production exemption applies to the aboveground, open
pit, mining industry. This rule is based on the usual methods of doing business
in the industry. Differences in the way a specific taxpayer conducts his
business can result in determinations different than those stated in this rule.
In cases not covered by this rule, the general principles stated in Rule
079 of these rules apply.
Determinations of taxability are made based on primary use of the equipment.
This rule applies only to aboveground mining activities commonly referred to as
open pit mining. Mining does not include soil extraction. (3-31-22)
01.
Exempt Purchases. The
following are generally considered nontaxable: (3-31-22)
a. Drilling and blasting, to loosen
overburden for removal or, to define limits of existing ore bodies using track
drills, rotary drills, and compressors to operate them, drill rods, drill bits,
explosives, caps, fuses, etc., for this purpose. (3-31-22)
b. Ore and overburden extraction and removal
using front end loaders, track loaders, power shovels, backhoes, scoop loaders,
and similar equipment used to extract and load ore or strip and load
overburden. (3-31-22)
c. Hauling of
ore and overburden to stockpiles, loading sites, or disposal sites on the mine
site using scrapers, carryalls, and off-highway trucks and trailers.
(3-31-22)
d. Ore sorting, grading,
sizing, and crushing operations, including unloading from transport devices
using bulldozers, front end loaders, crushers, conveyors, and similar
equipment. (3-31-22)
e. Pollution
control equipment required by a state or federal agency. See Section
63-3622X, Idaho Code.
(3-31-22)
f. Safety equipment and
supplies required by a state or federal agency when directly used in a mining
area. (3-31-22)
g. Equipment used
primarily to fabricate or install production equipment. (3-31-22)
h. Equipment such as cranes, manlifts, and
scissorlifts, used primarily to install production equipment.
(3-31-22)
i. Equipment and supplies
used in the performance of a quality control function which is an integral and
necessary step in maintaining specific product standards.
(3-31-22)
02.
Taxable Purchases. The following are generally considered taxable:
(3-31-22)
a. Exploration, where the primary
purpose is to discover new ore bodies using equipment, including rotary drills,
drill rigs, blasting equipment, seismic equipment, cats, bulldozers, and other
materials and supplies, primarily used for such activities. (3-31-22)
b. Real property improvements, construction,
and maintenance activities, including materials and equipment used primarily
for constructing or maintaining buildings, fences, railroads, concrete pads and
footings, and roads. Equipment, including cranes, concrete equipment, and post
hole diggers primarily used for such purposes. Materials and supplies,
including lumber, steel, roofing, trusses, fence posts, gates, and wire; and
concrete, rebar, and remesh. (3-31-22)
c. Maintenance and cleanup activities,
including those where the primary purpose is to maintain equipment and
facilities or cleanup grounds and roads, except where cleanup activities are
done primarily to recover ore. Shop or other equipment used primarily to
repair, clean, or maintain production equipment, including welders, lathes,
shop tools, hoists, cranes, mechanics' trucks, oiling trucks and trailers,
steam cleaners, and testing equipment. Shop and other materials and supplies
which will not become a component part of production equipment.
(3-31-22)
d. Land reclamation
activities, including activities where mined ore pits or panels are filled in,
shaped, and reseeded, including seed or seedlings, fertilizers, soil
conditioners, soil, and bulldozers, scrapers, and seed drills primarily used
for this purpose; however, equipment primarily used for ore and overburden
extraction and loading is exempt, even though this equipment is also used in
land reclamation. (3-31-22)
e.
Transportation of personnel and materials, including transportation to and from
worksites or about the mine in general using buses, people movers, trailers,
trucks, or similar equipment. (3-31-22)
f. Equipment and supplies used in
transportation activities where ore or overburden is moved between
geographically separated mine sites, processing plants or disposal sites, if 1)
a substantial break in the production activities occurs, and 2) the activity
does not sort, grade, size, crush, or in some other way further process the
ore. Transportation activities include loading, transporting, unloading, and
stockpiling. A substantial break in the production activities occurs when the
product is transported between geographically separated production sites by
means of public roads, waterways, airways, railways, or any other public means.
The production facility to which the product is transported is a separate
processing facility, and the equipment and supplies used to transport the
product taxable. Examples of taxable equipment include: trucks and trailers,
whether licensed or unlicensed; railroad equipment; barges and other
watercraft; pipelines; conveyors; front end loaders; and bulldozers. If the
means of transport to processing plants, smelters, etc., does not constitute a
substantial break in the process, such as a slurry line directly from the mine
to the plant, then the loading and unloading activities are not taxable.
(3-31-22)
g. Personnel support
activities, including facilities, equipment, and supplies for eating, sleeping,
and recreation. Examples include eating trailers, utensils and food, clothing
provided to employees at no charge, and pool tables, beds, and linen.
(3-31-22)
h. Other items
specifically identified as taxable in Rule
079 of these rules.
(3-31-22)
03.
Exemption Certificate. To claim the production exemption, above
ground miners will complete an exemption certificate for the seller's records.
See Rule
128 of these rules.
(3-31-22)