ARIZONA HOUSE OF REPRESENTATIVES

HB 2275: TPT exemption; crop production tools

PRIME SPONSOR: Representative Dunn, LD 13

BILL STATUS: Land and Agriculture: DP 5-2-0-0

Ways and Means

Overview

Exempts various propagative materials from transaction privilege tax (TPT), use tax, sales tax and other similar taxes.

History

The sale, storage, use or consumption of seeds, seedlings, roots, bulbs, cuttings and other propagative materials that are used for the commercial production of agricultural, horticultural, viticultural or floricultural crops are currently exempt from TPT and use tax (A.R.S. §§ 42-5061 & 42-5159).

In Wilbur-Ellis Company, et al. v. Arizona Department of Revenue, the Maricopa Superior Court ruled that the interpretation of the term propagative is limited to activities that relate to plant reproduction. For this reason, the Court determined that under current law, fertilizer is not considered a propagative material and is not exempt from TPT or use tax.

Provisions

1. Defines propagative materials, for tax exemption purposes, to include:

a. Seeds;

b. Seedlings;

c. Roots;

d. Bulbs;

e. Liners;

f. Transplants;

g. Cuttings;

h. Soil and plant additives;

i. Agricultural minerals;

j. Auxiliary soil and plant substances;

k. Micronutrients;

l. Fertilizers;

m. Insecticides;

n. Herbicides;

o. Fungicides;

p. Soil fumigants;

q. Desiccants;

r. Rodenticides;

s. Adjuvants;

t. Plant nutrients; and

u. Plant growth regulators. (Sec. 1-5)

2. Expands the list of propagative materials that are exempt from TPT and use taxes. (Sec. 1-3)

o Current law exempts seeds, seedlings, roots, bulbs, cuttings and other propagative materials from TPT and use tax (A.R.S. §§ 42-5061 & 42-5159).

3. Prohibits a city, town or special taxing district from levying a TPT, sales tax, use tax or other similar tax on the gross proceeds or income from sales of propagative materials that are used for the commercial production of agricultural, horticultural, viticultural or floricultural crops. (Sec. 4,5)

4. Specifies that the tax exemptions do not include materials that are used in producing any part of any plant of the genus cannabis, except for the commercial production of industrial hemp. (Sec.1-5)

5. Applies these provisions to taxable periods beginning after June 30, 2019 and prohibits the Arizona Department of Revenue from refunding any taxes paid before the effective date of this legislation. (Sec. 6)

6. Makes technical and conforming changes. (Sec. 1-5,7)

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10. Fifty-fourth Legislature                       HB 2275

11. First Regular Session                            Version 2: Land and Agriculture

12.         Ways and Means

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