Section 35.01.02.081 - UNDERGROUND MININGSections 63-3605B, 63-3622, 63-3622D, 63-3622HH, Idaho Code
This rule is meant to show how the production exemption applies to the underground mining industry. This rule is based on the usual methods of doing business. Differences in the way a specific taxpayer conducts his business can result in determinations different from those in this rule. In cases not covered by this rule, the general principles in Rule 079 of these rules apply. Determinations of taxability are based on the primary use of equipment.
01.Nontaxable Purchases. The following are generally considered nontaxable: a. Development of known ore deposits, including diamond drilling and other activities to develop levels, laterals, crosscuts, drifts, stopes, raises and shafts.b. Support materials, including, timber, concrete, rock bolts, shotcrete, matting, and equipment used to install them.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.d. Blasting to facilitate the extraction of ore using explosives, caps, fuses, etc.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.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.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.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.i. Backfilling to pump tailings back underground as hydraulic sandfill to backfill mined-out areas using, pumps, sumps, pipe, and concrete.j. Personal equipment including hard hats, miners' lights, belts, and batteries.k. Sampling/assaying for quality control purposes.l. Safety equipment and supplies required by a state or federal agency when used directly in a mining area.m. Equipment used primarily to install production equipment.n. Equipment used primarily to fabricate production equipment.o. Equipment and supplies used in the performance of a quality control function which is an integral and necessary step in maintaining specific product standards.02.Taxable Purchases. The following are generally considered taxable:a. Diamond drilling activities used for exploration.b. Air ventilation and conditioning if an improvement to real property including fans, motors, vent ducts; coolers; and air doors.c. Water lines and pumps used to remove water from the mine if improvements to real property.d. Safety equipment and supplies used somewhere other than a mining area, such as an office, or not required by a state or federal agency even if used in a mining area.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 do not become a component part of production exempt equipment.f. Sampling/assaying for purposes other than quality control.g. Other items specifically identified as taxable in Rule 079 of these rules.03.Exemption Certificate. To claim this exemption underground miners will complete an exemption certificate for the seller's records. See Rule 128 of these rules.Idaho Admin. Code r. 35.01.02.081