Search Category: Producers
Mining: Production Exemption
Do you own or operate a mine that removes minerals from the earth and processes those minerals for sale? Or are you a custom miner that performs qualifying services for a miner? If so, you might qualify for the production exemption.
If you qualify for the production exemption, you can buy some equipment and supplies without paying sales or use tax.
Sales by Miners
Or vendors selling to them
Businesses That Qualify
For the production exemption
Purchases That Qualify
For the production exemption
Change Use
Of an exempt item
Buyer’s Responsibility
To keep records, pay use tax
Taxable Items
Even with a production exemption
Lumber Manufacturing: Production Exemption
Do you manufacture rough or finished lumber that you’ll sell? If so, you might qualify for the production exemption.
If you qualify for the production exemption, you can buy some equipment and supplies without paying sales or use tax. This guide talks about sales and use tax issues that are unique to lumber manufacturers.
Are you logging instead of producing lumber? See Logging.
Sales
Selling lumber you manufacture or vendors selling to you
Businesses That Qualify
Purchases That Qualify
Change Use
Of an exempt item
Taxable Items
Even with a production exemption
Buyer’s Responsibility
To keep records, pay use tax
Production Exemption – General
Sales by Producers
Or vendors selling to them
Businesses That Qualify
For the production exemption
Purchases That Qualify
For the production exemption
Change Use
Of an exempt item
Taxable Items
Even with a production exemption
Buyer’s Responsibility
To keep records, pay use tax
Laws and Rules for Logging
Learn more about loggers:
- Idaho Code section 63-3605C — Logging
- Idaho Code section 63-3622HH — Production Exemption Shall Not Apply to Recreation-Related Vehicles
- Idaho Code section 63-3622JJ — Logging Exemption
- Sales Tax Rule 102 — Logging
- Certificates for Resale and Other Exemption Claims
- Application and Payment of Use Tax
Sales by or to Loggers
Selling the timber you harvest
Wholesalers
If you only sell goods to a customer who will resell them, you may be a wholesaler. Read more in our Wholesalers guide.
Retailers
If you sell to a final consumer, you might be a retailer. Read more in our Retailers guide.
Examples of sales you must collect tax on if you’re a retailer:
- Selling logs to a contractor or employee
- Selling logs to buyers who don’t resell them
- Selling firewood for bonfires or campfires
- Selling office equipment, used logging equipment, or promotional items to buyers who don’t resell them
Don’t charge tax if the goods you’re selling are:
- Sold for resale, and the buyer gave you a completed
Form ST-101 – Sales Tax Resale or Exemption Certificate), or - Never taxed in Idaho
Example: Firewood burned to provide heat to a building or for domestic home use isn’t taxable in Idaho. You might not need an Idaho seller’s permit if you only sell firewood for these purposes.
Vendors that sell to loggers
- If you sell to loggers, don’t charge sales tax on exempt items if the buyer gives you a completed exemption certificate (e.g., ST-101).
- If you have a completed certificate on file, don’t collect sales tax on exempt sales to the logger in the future.
Note: Not everything is exempt for loggers. You must charge tax on items that aren’t exempt from sales tax. Read more on making sales in our Retailers guide.
Change Use of Exempt Item – Logging
If you change the primary use of an item
If you buy an item exempt to use in a logging activity, it becomes taxable if you stop using it in a logging activity. You must then pay tax on the fair market value of the item.
Note: The opposite isn’t true. If you pay tax on an item because you use it in a non-logging activity, you can’t claim a tax credit if you begin to use it in a logging activity.
Certificates for Logging Exemption
To buy an item exempt from sales tax, give the seller a completed exemption certificate.
ST-101, Idaho Resale or Exemption Certificate
Form ST-101 – Sales Tax Resale or Exemption Certificate
Fill in the form:
- Write the name and address of both the seller and your business at the top.
- In section 2 “Producer Exemptions,” check the box for the producer exemption(s) you qualify for.
- List any products you produce on the line at the bottom of section 2.
- Under “Buyer,” at the bottom of the page, sign the form. Fill in the rest of the fields (name, title, EIN or driver’s license information, and date).
- The seller should keep the form and not charge you tax on exempt items in the future.
Optional short version of ST-101
- Retailers can print or stamp a short version of the ST-101 on sales invoices, or
- Buyers can print the short version on their purchase orders.
- This shorter version must be completed for each sale. The wording must be:
I certify that the property I’ve purchased will be used by me directly and primarily in the process of producing tangible personal property by mining, manufacturing, processing, fabricating, logging, or farming, or as a repair part for equipment used primarily as described above. This tax exemption qualifies if this statement is signed by the buyer and the name, address, and nature of the buyer’s business are shown on the invoice. Any person who signs this certification with the intention of evading payment of tax is guilty of a misdemeanor.
[Indicate spaces for NATURE OF BUSINESS and SIGNATURE OF BUYER]
Retailers should keep a copy of the sales invoice showing the stamped or printed exemption.
Multijurisdictional
You can use the Uniform Sales and Use Tax Certificate – Multijurisdiction when you buy from out-of-state businesses that are registered Idaho retailers instead of Form ST-101 if:
- You’re a multi-state taxpayer, and
- You’ll resell the goods you buy
Instructions:
- Write the name and address of both the seller and your business at the top.
- Check the box for “Retailer” if you sell to end users or “Wholesaler” if you sell to buyers who’ll resell the goods.
- Write your Idaho seller’s permit number in the ID section.
- Sign and fill in the bottom of the form.
- The seller should keep the form and not charge you tax in the future.
Note: Everything you buy using the Multijurisdiction exemption certificate is exempt because you can use it only for goods you’ll resell.
Remember: Even if you buy from a seller that has your exemption certificate, not everything is exempt.
- Some items are always taxable.
- Some items are taxable if they’re not used in qualifying activities.
Buyer’s Responsibility for Logging Exemption
Buyer’s responsibility when making exempt purchases
You must keep records of all your purchases, and show whether you paid tax on them.
- Records must show what you bought, when you bought it, how much you paid for the goods, and how much tax you paid.
- Your accounting records must include the standard books and records maintained in a business.
- Keep all your records for at least four years. (You may need to keep them for seven years if you don’t file sales tax returns).
Use tax
When you buy, use, or store taxable goods in Idaho, but didn’t pay sales tax when you bought them, you owe use tax.
You may owe use tax if:
- You buy goods from an internet retailer that doesn’t collect tax
- You buy a taxable item from a seller that didn’t charge sales tax because the seller has your exemption certificate on file
- You buy an item in a state that doesn’t have sales tax, then bring the item to Idaho
- You change how you use an exempt item (See If you change the primary use of an item.)
- You take lumber from your resale inventory and use it in your business.
Learn more about use tax.
Taxable items – Logging
Even if you qualify for the logging exemption, some items are still taxable. The following commonly used items are taxable to loggers:
Safety equipment and supplies, regardless of use
Examples
- Fire suppression equipment, including fire trucks and extinguishers
- Hard hats, helmets, gloves, shoulder pads, ear plugs, calk boots, safety chaps
Equipment and supplies used for slash disposal or brush piling and clearing
Examples
- Brush rakes and clearing machines, including tractors and tractor parts and supplies
- Fuel used in slash disposal equipment
Equipment and supplies used in reforestation activities
Equipment and materials used for road construction
Examples
- Dozers, road graders, loaders, excavators – including parts and supplies
- Fuel used in road construction equipment
- Materials used to build culverts, bridges, gates, fences, guardrails, or anything else that becomes part of real property. This includes fill materials.
- Dust suppression products
- Explosives
Recreational vehicles and aircraft, regardless of use
Examples
- Snowmobiles, ATVs, SOHVs
- Helicopters, airplanes – including any parts and supplies
- Fuel used off-road if tax wasn’t paid
Licensed motor vehicles and trailers
Except trucks and trailers licensed under the International Registration Plan (IRP) or similar pro rata plan and part of a fleet used at least 10% of the time outside Idaho
Examples
- Log trucks and trailers – including parts and supplies
- Log loaders and jammers – if licensed
- Tie downs and slings
Items and supplies for personal use
Examples
- Shirts, pants, suspenders, boots
Office, maintenance, or janitorial equipment and supplies
Marketing, promotional, sales, or transportation equipment and supplies
Equipment and supplies to analyze or model financial results
Motor vehicles
Motor vehicles that are for use on public roads are taxable.
Purchases that Qualify for Logging Exemption
Purchase Requirements
An item qualifies for the exemption, if it meets all of the following requirements:
- Primarily used in the logging process.
See Idaho Code section 63-3607A. - Necessary or essential – you can’t harvest trees without it.
- Directly used in or consumed during logging – after the beginning and before the end of the process:
- The logging process begins when you first handle forest trees at the site of the activity.
- The process ends when the logs are placed on transportation vehicles at the loading site, ready to be shipped.
- Tangible personal property – must not become real property.
- Allowable by law – must not be specifically excluded from the logging exemption by law or rule.
Exempt Purchases — Logging
Qualifying loggers can buy the following items exempt:
Equipment used for harvesting forest trees for resale
Examples:
- Chain saws and chain saw parts and supplies – including chains, saw parts, oil mix, bar oil, and bar covers
- Skidders, tree harvesters, feller bunchers, log processors, unlicensed log loaders and jammers, and parts for qualifying equipment
Supplies used in harvesting forest trees
- Fuel, oil, and antifreeze for qualifying equipment
- Chokers, skidder cable, and yarders
- Radio Signal System (Talkie Tooters)
- Tree marking paint