Idaho Admin. Code r. 35.01.02.102 - LOGGING
Section 63-3605C, 63-3622HH, 63-3622JJ, Idaho Code
01.
In General. The Sales Tax
Act provides an exemption from sales and use taxes for certain tangible
personal property used in logging activities. The provisions of this rule are
based on the usual methods of doing business in this industry. Specific factual
differences in the way a specific taxpayer may conduct his business can result
in determinations different from those stated in this rule. Since some
equipment may be used for more than one (1) purpose, determinations of
taxability will be made based upon the primary use of the equipment.
(3-31-22)
02.
Real
Property. The logging exemption applies only to tangible personal
property. It does not apply to real property or to tangible personal property
purchased for the purpose of becoming an improvement or fixture to real
property. See Rules 010 and
067 of these rules for a definition
of real property. (3-31-22)
03.
Property Used in Logging Operations. The logging exemption applies
to tangible personal property primarily used in a logging activity without
regard to the primary business activity of the person performing the logging.
For example, a contractor building a road for the Forest Service may claim the
logging exemption when purchasing equipment and supplies primarily used to
remove the timber from the right-of-way if the timber is resold, even though
logging is not the contractor's primary activity. (3-31-22)
04.
Logging Process Begins and
Ends. The logging process begins when forest trees are first handled by
the logger at the site where such an operation occurs. The logging process ends
when the product is placed on transportation vehicles at the loading site,
ready for shipment. (3-31-22)
05.
Equipment and Supplies. Equipment and supplies used or consumed
primarily and directly in the logging process and which are necessary or
essential to perform the operation. To qualify, the logging use must be the
primary use of the equipment and supplies. Examples include: (3-31-22)
a. Chain saws and tree harvesters.
(3-31-22)
b. Skidders,
tower-skidders, skidding cables, or chokers. (3-31-22)
c. Log loaders and log jammers which are not
licensed motor equipment. (3-31-22)
d. Repair parts, lubricants, hydraulic oil,
and coolants which become a component part of logging equipment.
(3-31-22)
e. Fuel, such as diesel,
gasoline, and propane consumed by equipment while performing exempt logging
activities. (3-31-22)
06.
Directly Used. Directly used, as applied to logging, means the
performance of any of the following functions when such functions occur between
the point at which the logging operation begins and the point at which the
operation ends, as defined in Subsection
102.04 of this rule: (3-31-22)
a. The performance of a function in the
logging process that effects a physical change in the property being logged so
as to render the property more marketable. (3-31-22)
b. The performance of a function which occurs
simultaneously with and which is an integral part of and necessary to a
function which effects a physical change in the property being logged rendering
it more marketable. (3-31-22)
c.
The performance of a function which is an integral and necessary step in a
continuous series of functions which effect a physical change in the property
being logged rendering it more marketable. (3-31-22)
d. The performance of a quality control
function which is an integral and necessary step in maintaining specific
product standards. (3-31-22)
07.
Not Included in Logging
Exemption. Generally, the logging exemption does not include the
following activities and equipment: (3-31-22)
a. Road construction equipment and supplies
such as tractors, road graders, rollers, water trucks, whether licensed or
unlicensed, explosives, gravel, fill material, dust suppression products,
culverts, and bridge material. (3-31-22)
b. Slash disposal or brush piling and
clearing equipment and supplies, such as brush clearing machines, brush rakes,
and tractors, except when part of the operation of a tree farm.
(3-31-22)
c. Reforestation
equipment and supplies, except when part of the operation of a tree farm.
(3-31-22)
d. Safety equipment and
supplies, including hard hats and earplugs. (3-31-22)
e. Transportation equipment and supplies
including vehicles to transport logs from the loading site to the mill, whether
the vehicles are licensed or unlicensed, and cable and tie-downs used to fasten
logs to the vehicle. (3-31-22)
f.
Machinery, equipment, materials, repair parts, and supplies used in a manner
that is incidental to logging such as: office equipment and supplies; selling
and distribution equipment and supplies; janitorial equipment and supplies;
maintenance equipment and supplies which do not become component parts of
logging equipment, such as welders, welding gas, and shop equipment; and paint,
plastic coatings, and all other similar products used to protect and maintain
equipment, whether applied to logging equipment or other equipment.
(3-31-22)
g. Recreation-related
vehicles, as defined in Section
63-3622HH, Idaho Code, regardless
of use, such as All Terrain Vehicles (ATV), snowmobiles, and off-highway
motorbikes. (3-31-22)
h. Aircraft
or motor vehicles licensed or required to be licensed by the laws of this
state, regardless of the use to which such motor vehicles or aircraft are put.
A motor vehicle not required to be licensed is exempt under the logging
exemption only if it meets the tests established elsewhere in this rule.
(3-31-22)
i. Harvesting timber for
firewood. (3-31-22)
08.
Election to Pay Sales Tax. The owner of a log loader, log jammer,
or similar fixed load motor equipment used in logging, not normally licensed
for use on public roads, may elect to license and pay sales tax on the motor
equipment rather than placing it on the personal property tax rolls, if the
motor equipment may be legally operated on a public road as a commercial
vehicle. (3-31-22)
a. Motor equipment licensed
at the time of purchase. Sales tax applies to the total purchase price of the
motor equipment. (3-31-22)
b. Motor
equipment licensed after the date of purchase. Use tax applies to the fair
market value of motor equipment on which no sales or use tax has been paid and
which was not licensed at the time of purchase, if acquired within the last
seven (7) years. See Section
63-3633, Idaho Code. Fair market
value may be determined from the personal property tax records of the county
assessor. (3-31-22)
Notes
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