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H.B. 126

             1     

AMENDMENTS TO SALES AND USE TAX

             2     
EXEMPTION FOR MEALS

             3     
2001 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Afton B. Bradshaw

             6      This act modifies the Sales and Use Tax Act by amending the sales and use tax exemption
             7      for sales of meals served by an institution of higher education to exempt certain meals that
             8      are prepaid as part of a meal plan, and making technical changes. This act takes effect on
             9      July 1, 2001.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             12          59-12-104, as last amended by Chapter 325, Laws of Utah 2000
             13      Be it enacted by the Legislature of the state of Utah:
             14          Section 1. Section 59-12-104 is amended to read:
             15           59-12-104. Exemptions.
             16          The following sales and uses are exempt from the taxes imposed by this chapter:
             17          (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
             18      under Title 59, Chapter 13, Motor and Special Fuel Tax Act;
             19          (2) sales to the state, its institutions, and its political subdivisions; however, this exemption
             20      does not apply to sales of construction materials except:
             21          (a) construction materials purchased by or on behalf of institutions of the public education
             22      system as defined in Utah Constitution Article X, Section 2, provided the construction materials
             23      are clearly identified and segregated and installed or converted to real property which is owned by
             24      institutions of the public education system; and
             25          (b) construction materials purchased by the state, its institutions, or its political
             26      subdivisions which are installed or converted to real property by employees of the state, its
             27      institutions, or its political subdivisions;


             28          (3) sales of food, beverage, and dairy products from vending machines in which the
             29      proceeds of each sale do not exceed $1 if the vendor or operator of the vending machine reports
             30      an amount equal to 150% of the cost of items as goods consumed;
             31          (4) sales of food, beverage, dairy products, similar confections, and related services to
             32      commercial airline carriers for in-flight consumption;
             33          (5) sales of parts and equipment installed in aircraft operated by common carriers in
             34      interstate or foreign commerce;
             35          (6) sales of commercials, motion picture films, prerecorded audio program tapes or
             36      records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
             37      exhibitor, distributor, or commercial television or radio broadcaster;
             38          (7) sales of cleaning or washing of tangible personal property by a coin-operated laundry
             39      or dry cleaning machine;
             40          (8) (a) except as provided in Subsection (8)(b), sales made to or by religious or charitable
             41      institutions in the conduct of their regular religious or charitable functions and activities, if the
             42      requirements of Section 59-12-104.1 are fulfilled;
             43          (b) the exemption provided for in Subsection (8)(a) does not apply to the following sales,
             44      uses, leases, or rentals relating to the Olympic Winter Games of 2002 made to or by an
             45      organization exempt from federal income taxation under Section 501(c)(3), Internal Revenue
             46      Code:
             47          (i) retail sales of Olympic merchandise;
             48          (ii) except as provided in Subsection (51), admissions or user fees described in Subsection
             49      59-12-103 (1)(f);
             50          (iii) sales of accommodations and services as provided in Subsection 59-12-103 (1)(i),
             51      except for accommodations and services:
             52          (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
             53      of 2002;
             54          (B) exclusively used by:
             55          (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
             56      Olympic Winter Games of 2002; or
             57          (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
             58      Games of 2002; and


             59          (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
             60      does not receive reimbursement; or
             61          (iv) a lease or rental of a vehicle as defined in Section 41-1a-102 , except for a lease or
             62      rental of a vehicle:
             63          (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
             64      of 2002;
             65          (B) exclusively used by:
             66          (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
             67      Olympic Winter Games of 2002; or
             68          (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
             69      Games of 2002; and
             70          (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
             71      does not receive reimbursement;
             72          (9) sales of vehicles of a type required to be registered under the motor vehicle laws of this
             73      state which are made to bona fide nonresidents of this state and are not afterwards registered or
             74      used in this state except as necessary to transport them to the borders of this state;
             75          (10) sales of medicine;
             76          (11) sales or use of property, materials, or services used in the construction of or
             77      incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
             78          (12) sales of meals served by:
             79          (a) [churches, charitable institutions, and institutions of higher education,] the following
             80      if the meals are not available to the general public[; and]:
             81          (i) a church; or
             82          (ii) a charitable institution;
             83          (b) an institution of higher education if:
             84          (i) the meals are not available to the general public; or
             85          (ii) the meals are prepaid as part of a meal plan available only to:
             86          (A) a student of the institution of higher education;
             87          (B) faculty of the institution of higher education; or
             88          (C) staff of the institution of higher education; or
             89          [(b)] (c) inpatient meals provided at:


             90          (i) a medical facility; or
             91          (ii) a nursing [facilities] facility;
             92          (13) isolated or occasional sales by persons not regularly engaged in business, except the
             93      sale of vehicles or vessels required to be titled or registered under the laws of this state in which
             94      case the tax is based upon:
             95          (a) the bill of sale or other written evidence of value of the vehicle or vessel being sold;
             96      or
             97          (b) in the absence of a bill of sale or other written evidence of value, the then existing fair
             98      market value of the vehicle or vessel being sold as determined by the commission;
             99          (14) (a) the following purchases or leases by a manufacturer on or after July 1, 1995:
             100          (i) machinery and equipment:
             101          (A) used in the manufacturing process;
             102          (B) having an economic life of three or more years; and
             103          (C) used:
             104          (I) to manufacture an item sold as tangible personal property; and
             105          (II) in new or expanding operations in a manufacturing facility in the state; and
             106          (ii) subject to the provisions of Subsection (14)(b), normal operating replacements that:
             107          (A) have an economic life of three or more years;
             108          (B) are used in the manufacturing process in a manufacturing facility in the state;
             109          (C) are used to replace or adapt an existing machine to extend the normal estimated useful
             110      life of the machine; and
             111          (D) do not include repairs and maintenance;
             112          (b) the rates for the exemption under Subsection (14)(a)(ii) are as follows:
             113          (i) beginning July 1, 1996, through June 30, 1997, 30% of the sale or lease described in
             114      Subsection (14)(a)(ii) is exempt;
             115          (ii) beginning July 1, 1997, through June 30, 1998, 60% of the sale or lease described in
             116      Subsection (14)(a)(ii) is exempt; and
             117          (iii) beginning July 1, 1998, 100% of the sale or lease described in Subsection (14)(a)(ii)
             118      is exempt;
             119          (c) for purposes of this Subsection (14), the commission shall by rule define the terms
             120      "new or expanding operations" and "establishment"; and


             121          (d) on or before October 1, 1991, and every five years after October 1, 1991, the
             122      commission shall:
             123          (i) review the exemptions described in Subsection (14)(a) and make recommendations to
             124      the Revenue and Taxation Interim Committee concerning whether the exemptions should be
             125      continued, modified, or repealed; and
             126          (ii) include in its report:
             127          (A) the cost of the exemptions;
             128          (B) the purpose and effectiveness of the exemptions; and
             129          (C) the benefits of the exemptions to the state;
             130          (15) sales of tooling, special tooling, support equipment, and special test equipment used
             131      or consumed exclusively in the performance of any aerospace or electronics industry contract with
             132      the United States government or any subcontract under that contract, but only if, under the terms
             133      of that contract or subcontract, title to the tooling and equipment is vested in the United States
             134      government as evidenced by a government identification tag placed on the tooling and equipment
             135      or by listing on a government-approved property record if a tag is impractical;
             136          (16) intrastate movements of:
             137          (a) freight by common carriers; and
             138          (b) passengers:
             139          (i) by taxicabs as described in SIC Code 4121 of the 1987 Standard Industrial
             140      Classification Manual of the federal Executive Office of the President, Office of Management and
             141      Budget; or
             142          (ii) transported by an establishment described in SIC Code 4111 of the 1987 Standard
             143      Industrial Classification Manual of the federal Executive Office of the President, Office of
             144      Management and Budget, if the transportation originates and terminates within a county of the
             145      first, second, or third class;
             146          (17) sales of newspapers or newspaper subscriptions;
             147          (18) tangible personal property, other than money, traded in as full or part payment of the
             148      purchase price, except that for purposes of calculating sales or use tax upon vehicles not sold by
             149      a vehicle dealer, trade-ins are limited to other vehicles only, and the tax is based upon:
             150          (a) the bill of sale or other written evidence of value of the vehicle being sold and the
             151      vehicle being traded in; or


             152          (b) in the absence of a bill of sale or other written evidence of value, the then existing fair
             153      market value of the vehicle being sold and the vehicle being traded in, as determined by the
             154      commission;
             155          (19) sprays and insecticides used to control insects, diseases, and weeds for commercial
             156      production of fruits, vegetables, feeds, seeds, and animal products, but not those sprays and
             157      insecticides used in the processing of the products;
             158          (20) (a) sales of tangible personal property used or consumed primarily and directly in
             159      farming operations, including sales of irrigation equipment and supplies used for agricultural
             160      production purposes, whether or not they become part of real estate and whether or not installed
             161      by farmer, contractor, or subcontractor, but not sales of:
             162          (i) machinery, equipment, materials, and supplies used in a manner that is incidental to
             163      farming, such as hand tools with a unit purchase price not in excess of $250, and maintenance and
             164      janitorial equipment and supplies;
             165          (ii) tangible personal property used in any activities other than farming, such as office
             166      equipment and supplies, equipment and supplies used in sales or distribution of farm products, in
             167      research, or in transportation; or
             168          (iii) any vehicle required to be registered by the laws of this state, without regard to the use
             169      to which the vehicle is put;
             170          (b) sales of hay;
             171          (21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or
             172      other agricultural produce if sold by a producer during the harvest season;
             173          (22) purchases of food as defined in 7 U.S.C. Sec. 2012(g) under the Food Stamp Program,
             174      7 U.S.C. Sec. 2011 et seq.;
             175          (23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
             176      nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor, wholesaler,
             177      or retailer for use in packaging tangible personal property to be sold by that manufacturer,
             178      processor, wholesaler, or retailer;
             179          (24) property stored in the state for resale;
             180          (25) property brought into the state by a nonresident for his or her own personal use or
             181      enjoyment while within the state, except property purchased for use in Utah by a nonresident living
             182      and working in Utah at the time of purchase;


             183          (26) property purchased for resale in this state, in the regular course of business, either in
             184      its original form or as an ingredient or component part of a manufactured or compounded product;
             185          (27) property upon which a sales or use tax was paid to some other state, or one of its
             186      subdivisions, except that the state shall be paid any difference between the tax paid and the tax
             187      imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if the
             188      tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax Act;
             189          (28) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a person
             190      for use in compounding a service taxable under the subsections;
             191          (29) purchases of supplemental foods as defined in 42 U.S.C. Sec. 1786(b)(14) under the
             192      special supplemental nutrition program for women, infants, and children established in 42 U.S.C.
             193      Sec. 1786;
             194          (30) beginning on July 1, 1999, through June 30, 2004, sales or leases of rolls, rollers,
             195      refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
             196      of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification Manual
             197      of the federal Executive Office of the President, Office of Management and Budget;
             198          (31) sales of boats of a type required to be registered under Title 73, Chapter 18, State
             199      Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of this
             200      state and are not thereafter registered or used in this state except as necessary to transport them to
             201      the borders of this state;
             202          (32) sales of tangible personal property to persons within this state that is subsequently
             203      shipped outside the state and incorporated pursuant to contract into and becomes a part of real
             204      property located outside of this state, except to the extent that the other state or political entity
             205      imposes a sales, use, gross receipts, or other similar transaction excise tax on it against which the
             206      other state or political entity allows a credit for taxes imposed by this chapter;
             207          (33) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah where
             208      a sales or use tax is not imposed, even if the title is passed in Utah;
             209          (34) amounts paid for the purchase of telephone service for purposes of providing
             210      telephone service;
             211          (35) fares charged to persons transported directly by a public transit district created under
             212      the authority of Title 17A, Chapter 2, Part 10, Utah Public Transit District Act;
             213          (36) sales or leases of vehicles to, or use of vehicles by an authorized carrier;


             214          (37) (a) 45% of the sales price of any new manufactured home; and
             215          (b) 100% of the sales price of any used manufactured home;
             216          (38) sales relating to schools and fundraising sales;
             217          (39) sales or rentals of home medical equipment and supplies;
             218          (40) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
             219      Section 72-11-102 ; and
             220          (b) the commission shall by rule determine the method for calculating sales exempt under
             221      Subsection (40)(a) that are not separately metered and accounted for in utility billings;
             222          (41) sales to a ski resort of:
             223          (a) snowmaking equipment;
             224          (b) ski slope grooming equipment; and
             225          (c) passenger ropeways as defined in Section 72-11-102 ;
             226          (42) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
             227          (43) sales or rentals of the right to use or operate for amusement, entertainment, or
             228      recreation a coin-operated amusement device as defined in Section 59-12-102 ;
             229          (44) sales of cleaning or washing of tangible personal property by a coin-operated car wash
             230      machine;
             231          (45) sales by the state or a political subdivision of the state, except state institutions of
             232      higher education as defined in Section 53B-3-102 , of:
             233          (a) photocopies; or
             234          (b) other copies of records held or maintained by the state or a political subdivision of the
             235      state; and
             236          (46) (a) amounts paid:
             237          (i) to a person providing intrastate transportation to an employer's employee to or from the
             238      employee's primary place of employment;
             239          (ii) by an:
             240          (A) employee; or
             241          (B) employer; and
             242          (iii) pursuant to a written contract between:
             243          (A) the employer; and
             244          (B) (I) the employee; or


             245          (II) a person providing transportation to the employer's employee; and
             246          (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             247      commission may for purposes of Subsection (46)(a) make rules defining what constitutes an
             248      employee's primary place of employment;
             249          (47) amounts paid for admission to an athletic event at an institution of higher education
             250      that is subject to the provisions of Title IX of the Education Amendments of 1972, 20 U.S.C. Sec.
             251      1681 et seq.;
             252          (48) sales of telephone service charged to a prepaid telephone calling card;
             253          (49) (a) sales of hearing aids; and
             254          (b) sales of hearing aid accessories;
             255          (50) (a) sales made to or by:
             256          (i) an area agency on aging; or
             257          (ii) a senior citizen center owned by a county, city, or town; or
             258          (b) sales made by a senior citizen center that contracts with an area agency on aging; and
             259          (51) (a) beginning on July 1, 2000, through June 30, 2002, amounts paid or charged as
             260      admission or user fees described in Subsection 59-12-103 (1)(f) relating to the Olympic Winter
             261      Games of 2002 if the amounts paid or charged are established by the Salt Lake Organizing
             262      Committee for the Olympic Winter Games of 2002 in accordance with requirements of the
             263      International Olympic Committee; and
             264          (b) the State Olympic Officer and the Salt Lake Organizing Committee for the Olympic
             265      Winter Games of 2002 shall make at least two reports during the 2000 interim:
             266          (i) to the:
             267          (A) Olympic Coordination Committee; and
             268          (B) Revenue and Taxation Interim Committee; and
             269          (ii) regarding the status of:
             270          (A) agreements relating to the funding of public safety services for the Olympic Winter
             271      Games of 2002;
             272          (B) agreements relating to the funding of services, other than public safety services, for
             273      the Olympic Winter Games of 2002;
             274          (C) other agreements relating to the Olympic Winter Games of 2002 as requested by the
             275      Olympic Coordination Committee or the Revenue and Taxation Interim Committee;


             276          (D) other issues as requested by the Olympic Coordination Committee or the Revenue and
             277      Taxation Interim Committee; or
             278          (E) a combination of Subsections (51)(b)(ii)(A) through (D).
             279          Section 2. Effective date.
             280          This act takes effect on July 1, 2001.




Legislative Review Note
    as of 1-23-01 3:05 PM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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