Sections
63-3622,
63-3622D,
63-3622HH, Idaho Code This rule is
intended to illustrate the application of the production exemption to the
lumber manufacturing industry. The provisions of this rule are based upon the
usual methods of doing business used in the industry generally. Factual
differences in the manner in which a specific taxpayer may conduct its business
can result in determinations different from those stated in this rule. In cases
not covered by this rule, the general principles stated in Rule
079 of these rules will control.
Some equipment may be used for more than one purpose. Determinations of
taxability will be based upon the equipment's primary use. This rule is limited
in application to the manufacturing of rough and finished lumber and does not
encompass the manufacturing of plywood, particleboard, veneer, or paper
products. (3-31-22)
01.
Nontaxable Activities. Generally considered as nontaxable
activities are the following: (3-31-22)
a.
Log receiving including log loaders, cranes, and front end loaders.
(3-31-22)
b. Log deck/log pond
including log loading equipment and boats moving logs from the storage area to
the debarker; sprinkler equipment when used for prevention of product
deterioration; and devices used to detect metal in logs. (3-31-22)
c. Debarking equipment used to strip bark
from logs including conveyor equipment for moving debarked logs further into
the mill or for conveying bark when bark is used as boiler fuel or when
conveying bark to a further processing stage. (3-31-22)
d. Chipper, used to produce chips including
chip storage bins and pneumatic conveyors. (3-31-22)
e. Mill deck, as used for grading and cutting
to length. (3-31-22)
f.
Headrig/shotgun, as used for sawing logs. (3-31-22)
g. Edger, as used for edging rough lumber.
(3-31-22)
h. Trimmer, as used for
trimming to length. (3-31-22)
i.
Resaw, as used for producing the proper thickness. (3-31-22)
j. Green chain, as used to determine
according to size and species the amount of time required in the dry kiln.
(3-31-22)
k. Dry kiln, as used to
reduce moisture content. This exemption encompasses fire brick, steam pipe and
fans inside the kiln but does not include improvements to real property.
(3-31-22)
l. Unstackers.
(3-31-22)
m. Planers, as used for
finishing, grading and grade stamping of specialty products.
(3-31-22)
n. Boiler when used for
the generation of steam used to operate production equipment.
(3-31-22)
o. Powerhouse when used
to generate power used to operate production equipment. (3-31-22)
p. Waste collection, as used for the
collection of waste products for use as fuel for the boiler, generally referred
to as hog fuel. (3-31-22)
q. Lumber
wrap and steel strapping used for packaging material. (3-31-22)
r. Pollution control equipment when required
by a state or federal agency. (3-31-22)
s. Equipment used primarily to install exempt
equipment. (3-31-22)
t. Equipment
used primarily to fabricate exempt equipment. (3-31-22)
u. Safety equipment and supplies required by
a state or federal agency and used in a production area. (3-31-22)
v. 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 Activities.
Generally considered as taxable activities are the following: (3-31-22)
a. Saw filing activities using saw filing
equipment and saw filing supplies. (3-31-22)
b. Shipping, including loading equipment and
strapping, seals, and binders used in shipping activities to secure lumber on
railroad cars, trucks, etc. (3-31-22)
c. Cleanup. (3-31-22)
d. Equipment used to repair or maintain
production equipment. (3-31-22)
e.
Equipment used primarily to construct, improve, alter or repair real property.
(3-31-22)
f. Safety equipment and
supplies used in an area where no manufacturing occurs such as an office, or
which are not required by a state or federal agency even if used in a
production area. (3-31-22)
g. Other
items specifically identified as taxable in Rule
079 of these rules.
(3-31-22)
03.
Exemption Certificate. Persons engaged in lumber manufacturing who
wish to purchase goods that qualify for this exemption without paying sales tax
complete an exemption certificate. See Rule
128 of these rules.
(3-31-22)
