Lumber Manufacturing

Sections 63-3622, 63-3622D, 63-3622X, 63-3622HH, Idaho Code This sections illustrates the application of the production exemption to the lumber manufacturing industry and is based upon the usual methods of doing business used in the industry In cases not covered by this section, the general principles of the production exemption apply. This section is limited in application to the manufacturing of rough and finished lumber and doesn’t encompass the manufacturing of plywood, particleboard, veneer, or paper products. (7-1-26) 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 de-barker; 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 mandatory time in the dry kiln. (7-1-26) k. Dry kiln, as used to reduce moisture content. This exemption encompasses fire brick, steam pipe, and fans inside the kiln but doesn’t include improvements to real property. (7-1-26) 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) IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 081 Page 47 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) 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) 081. UNDERGROUND MINING Sections 63-3622, 63-3622D, 63-3622X, 63-3622HH, Idaho Code This section illustrates the application of the production exemption to the underground mining industry and is based on the usual methods of doing business in the industry. In cases not covered by this section, the general principles apply. (7-1-26) 01. Nontaxable Purchases. The following are generally considered nontaxable: (3-31-22) a. Development of known ore deposits, including diamond drilling and other activities to develop levels, laterals, crosscuts, drifts, stopes, raises and shafts. (3-31-22) b. Support materials, including, timber, concrete, rock bolts, shotcrete, matting, and equipment used to install them. (3-31-22) c. Drilling of blast holes to facilitate the extraction of ore including pneumatic rock drills and compressors used to supply compressed air to operate pneumatic rock drills. (3-31-22) d. Blasting to facilitate the extraction of ore using explosives, caps, fuses, etc. (3-31-22) e. Slushing/mucking to convey broken ore and waste to passes and chutes using scrapers, slushers, muckers, hoists and loaders, and backhoes used to recover both ore and waste. (3-31-22) f. Hauling, horizontal transportation, to transport ore, waste, men or materials from chutes into cars and the movement of the cars to shaft stations using skips, hoists, hoist cable, shafts, shaft timbers, shaft stations, shaft pockets, shaft guides, concrete, etc. (3-31-22) g. Haulage, vertical transportation, to hoist ore, waste, men or materials in skips, using skips, hoists, hoist cable, shafts, shaft timbers, shaft stations, shaft pockets, shaft guides, concrete, etc. (3-31-22) h. Transportation to the surface to load the ore, waste, men or materials into main haulage cars for transportation using locomotives, haulage cars, track and track spikes, fuel batteries used to power locomotives, and conveyors and conveyor belts. (3-31-22) i. Backfilling to pump tailings back underground as hydraulic sandfill to backfill mined-out areas using, pumps, sumps, pipe, and concrete. (3-31-22) j. Personal equipment including hard hats, miners’ lights, belts, and batteries. (3-31-22) k. Sampling/assaying for quality control purposes. (3-31-22) l. Safety equipment and supplies mandated by a state or federal agency when used directly in a IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 082 Page 48 mining area. (7-1-26) 02. Taxable Purchases. The following are generally considered taxable: (3-31-22) a. Diamond drilling activities used for exploration. (3-31-22) b. Air ventilation and conditioning if an improvement to real property including fans, motors, vent ducts; coolers; and air doors. (3-31-22) c. Water lines and pumps used to remove water from the mine if improvements to real property. (3-31-22) d. Safety equipment and supplies used somewhere other than a mining area, such as an office, or not mandated by a state or federal agency even if used in a mining area. (7-1-26) e. Maintenance and cleanup using backhoes, except when the primary use is to recover ore or waste; equipment used to repair or maintain mining equipment; battery maintenance equipment including battery chargers, and shop supplies and other materials or supplies which don’t become a component part of production exempt equipment. (7-1-26) f. Sampling/assaying for purposes other than quality control. (3-31-22)