AB 541

Current law provides a sales and use tax exemption for machines and specific

processing equipment used by a manufacturer in manufacturing tangible personal

property. The exemption, however, does not apply, generally, to tangible personal

property that is fastened to, connected to, or built into real property. Under current

law, the sale of machines and specific processing equipment used to manufacture

feed is exempt from the sales and use tax unless such items become part of real

property.

Current law also provides a sales and use tax exemption for tangible personal

property and equipment used in farming. That exemption applies to certain tangible

personal property such as conveyors, feed elevators and augers, and grain dryers and

grinders, regardless of the extent to which such property is fastened to, connected to,

or built into real property. Under current law, a feed manufacturer is not considered

to be engaged in the business of farming.

This bill provides a sales and use tax exemption for the sale of specific

processing equipment used in a fertilizer blending, feed milling, or grain drying

operation, including holding structures used for weighing and dropping feed or

fertilizer ingredients into a mixer, wet corn holding bins, mixers, conveying

equipment, and grinding, mixing, and saturation bins, regardless of whether such

items become an addition to, a component of, or a capital improvement of real

property. The exemption also applies to building materials used to construct or

repair certain holding structures used in the fertilizer blending, feed milling, or grain

drying operation.

Because this bill relates to an exemption from state or local taxes, it may be

referred to the Joint Survey Committee on Tax Exemptions for a report to be printed

as an appendix to the bill.