ARIZONA HOUSE OF REPRESENTATIVES

HB 2275: TPT exemption; crop production tools

NOW: TPT exemptions; propagative materials

PRIME SPONSOR: Representative Dunn, LD 13

BILL STATUS: Transmitted to Governor

Overview

Exempts various propagative materials from transaction privilege tax (TPT) and use tax.

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. Expands the list of propagative materials that are exempt from TPT and use taxes to include:

a. Liners;

b. Transplants;

c. Soil and plant additives;

d. Agricultural minerals;

e. Auxiliary soil and plant substances;

f. Micronutrients;

g. Fertilizers;

h. Insecticides;

i. Herbicides;

j. Fungicides;

k. Soil fumigants;

l. Desiccants;

m. Rodenticides;

n. Adjuvants;

o. Plant nutrients; and

p. Plant growth regulators. (Sec. 1-3)

2. 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.1-3)

3. Becomes effective on December 1, 2019. (Sec. 4)

4. Makes technical and conforming changes. (Sec. 1-3,5)

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8. Fifty-fourth Legislature                       HB 2275

9. First Regular Session                            Version 6: Transmitted

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