Logging

Sections 63-3605C, 63-3622D, 63-3622HH, 63-3622JJ, 63-3622KK (1)(d), 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 section are based on the usual methods of doing business in the logging industry. Specific factual differences in the way a specific taxpayer conducts business can result in determinations different from those stated in this section. 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. (7-1-26) 02. Real Property. The logging exemption applies only to tangible personal property. It doesn’t apply to real property or to tangible personal property purchased for the purpose of becoming an improvement or fixture to real property. See Section 067 for a definition of real property. (7-1-26) IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 102 Page 56 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. (7-1-26) 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. 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: (7-1-26) 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) 06. Not Included in Logging Exemption. Along with tangible personal property referenced in Idaho Code, the logging exemption doesn’t include the following activities and equipment: (7-1-26) 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. (7-1-26) 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. Paint, plastic coatings, and all other similar products used to protect and maintain equipment, whether applied to logging equipment or other equipment. (7-1-26) g. Harvesting timber for firewood. (3-31-22) 07. 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) IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 104 Page 57 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) 08. Examples. Available at Sales and Use Tax Rules Examples. (7-1-26) 103. (RESERVED)