H.B. 42 Enrolled

1

SALES AND USE TAX EXEMPTION FOR
2 AUTHORIZED CARRIERS
3 2007 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Wayne A. Harper
6 Senate Sponsor: Lyle W. Hillyard
7
8 LONG TITLE
9 General Description:
10 This bill amends the Sales and Use Tax Act relating to an exemption for authorized
11 carriers.
12 Highlighted Provisions:
13 This bill:
14 . exempts from sales and use taxation sales, leases, or uses of tangible personal
15 property that is installed on a vehicle:
16 * sold or leased to or used by an authorized carrier; and
17 * before the vehicle is placed in service for the first time; and
18 . makes technical changes.
19 Monies Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 This bill takes effect on July 1, 2007.
23 Utah Code Sections Affected:
24 AMENDS:
25 59-12-104, as last amended by Chapters 181, 182, 217, 218, 219, 220, 246, 268 and
26 346, Laws of Utah 2006
27
28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 59-12-104 is amended to read:

30 59-12-104. Exemptions.
31 The following sales and uses are exempt from the taxes imposed by this chapter:
32 (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
33 under Chapter 13, Motor and Special Fuel Tax Act;
34 (2) sales to the state, its institutions, and its political subdivisions; however, this
35 exemption does not apply to sales of:
36 (a) construction materials except:
37 (i) construction materials purchased by or on behalf of institutions of the public
38 education system as defined in Utah Constitution Article X, Section 2, provided the
39 construction materials are clearly identified and segregated and installed or converted to real
40 property which is owned by institutions of the public education system; and
41 (ii) construction materials purchased by the state, its institutions, or its political
42 subdivisions which are installed or converted to real property by employees of the state, its
43 institutions, or its political subdivisions; or
44 (b) tangible personal property in connection with the construction, operation,
45 maintenance, repair, or replacement of a project, as defined in Section 11-13-103 , or facilities
46 providing additional project capacity, as defined in Section 11-13-103 ;
47 (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
48 (i) the proceeds of each sale do not exceed $1; and
49 (ii) the seller or operator of the vending machine reports an amount equal to 150% of
50 the cost of the item described in Subsection (3)(b) as goods consumed; and
51 (b) Subsection (3)(a) applies to:
52 (i) food and food ingredients; or
53 (ii) prepared food;
54 (4) sales of the following to a commercial airline carrier for in-flight consumption:
55 (a) food and food ingredients;
56 (b) prepared food; or
57 (c) services related to Subsection (4)(a) or (b);

58 (5) sales of parts and equipment for installation in aircraft operated by common carriers
59 in interstate or foreign commerce;
60 (6) sales of commercials, motion picture films, prerecorded audio program tapes or
61 records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
62 exhibitor, distributor, or commercial television or radio broadcaster;
63 (7) (a) subject to Subsection (7)(b), sales of cleaning or washing of tangible personal
64 property if the cleaning or washing of the tangible personal property is not assisted cleaning or
65 washing of tangible personal property;
66 (b) if a seller that sells at the same business location assisted cleaning or washing of
67 tangible personal property and cleaning or washing of tangible personal property that is not
68 assisted cleaning or washing of tangible personal property, the exemption described in
69 Subsection (7)(a) applies if the seller separately accounts for the sales of the assisted cleaning
70 or washing of the tangible personal property; and
71 (c) for purposes of Subsection (7)(b) and in accordance with Title 63, Chapter 46a,
72 Utah Administrative Rulemaking Act, the commission may make rules:
73 (i) governing the circumstances under which sales are at the same business location;
74 and
75 (ii) establishing the procedures and requirements for a seller to separately account for
76 sales of assisted cleaning or washing of tangible personal property;
77 (8) sales made to or by religious or charitable institutions in the conduct of their regular
78 religious or charitable functions and activities, if the requirements of Section 59-12-104.1 are
79 fulfilled;
80 (9) sales of a vehicle of a type required to be registered under the motor vehicle laws of
81 this state if the vehicle is both not:
82 (a) registered in this state; and
83 (b) used in this state except as necessary to transport the vehicle to the borders of this
84 state;
85 (10) (a) amounts paid for an item described in Subsection (10)(b) if:

86 (i) the item is intended for human use; and
87 (ii) (A) a prescription was issued for the item; or
88 (B) the item was purchased by a hospital or other medical facility; and
89 (b) (i) Subsection (10)(a) applies to:
90 (A) a drug;
91 (B) a syringe; or
92 (C) a stoma supply; and
93 (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
94 commission may by rule define the terms:
95 (A) "syringe"; or
96 (B) "stoma supply";
97 (11) sales or use of property, materials, or services used in the construction of or
98 incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
99 (12) (a) sales of an item described in Subsection (12)(c) served by:
100 (i) the following if the item described in Subsection (12)(c) is not available to the
101 general public:
102 (A) a church; or
103 (B) a charitable institution;
104 (ii) an institution of higher education if:
105 (A) the item described in Subsection (12)(c) is not available to the general public; or
106 (B) the item described in Subsection (12)(c) is prepaid as part of a student meal plan
107 offered by the institution of higher education; or
108 (b) sales of an item described in Subsection (12)(c) provided for a patient by:
109 (i) a medical facility; or
110 (ii) a nursing facility; and
111 (c) Subsections (12)(a) and (b) apply to:
112 (i) food and food ingredients;
113 (ii) prepared food; or

114 (iii) alcoholic beverages;
115 (13) (a) except as provided in Subsection (13)(b), the sale of tangible personal property
116 by a person:
117 (i) regardless of the number of transactions involving the sale of that tangible personal
118 property by that person; and
119 (ii) not regularly engaged in the business of selling that type of tangible personal
120 property;
121 (b) this Subsection (13) does not apply if:
122 (i) the sale is one of a series of sales of a character to indicate that the person is
123 regularly engaged in the business of selling that type of tangible personal property;
124 (ii) the person holds that person out as regularly engaged in the business of selling that
125 type of tangible personal property;
126 (iii) the person sells an item of tangible personal property that the person purchased as
127 a sale that is exempt under Subsection (25); or
128 (iv) the sale is of a vehicle or vessel required to be titled or registered under the laws of
129 this state in which case the tax is based upon:
130 (A) the bill of sale or other written evidence of value of the vehicle or vessel being
131 sold; or
132 (B) in the absence of a bill of sale or other written evidence of value, the fair market
133 value of the vehicle or vessel being sold at the time of the sale as determined by the
134 commission; and
135 (c) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
136 commission shall make rules establishing the circumstances under which:
137 (i) a person is regularly engaged in the business of selling a type of tangible personal
138 property;
139 (ii) a sale of tangible personal property is one of a series of sales of a character to
140 indicate that a person is regularly engaged in the business of selling that type of tangible
141 personal property; or

142 (iii) a person holds that person out as regularly engaged in the business of selling a type
143 of tangible personal property;
144 (14) (a) except as provided in Subsection (14)(b), amounts paid or charged on or after
145 July 1, 2006, for a purchase or lease by a manufacturing facility other than a cogeneration
146 facility, for the following:
147 (i) machinery and equipment that:
148 (A) is used:
149 (I) for a manufacturing facility other than a manufacturing facility that is a scrap
150 recycler described in Subsection 59-12-102 (45)(b):
151 (Aa) in the manufacturing process; and
152 (Bb) to manufacture an item sold as tangible personal property; or
153 (II) for a manufacturing facility that is a scrap recycler described in Subsection
154 59-12-102 (45)(b), to process an item sold as tangible personal property; and
155 (B) has an economic life of three or more years; and
156 (ii) normal operating repair or replacement parts that:
157 (A) have an economic life of three or more years; and
158 (B) are used:
159 (I) for a manufacturing facility in the state other than a manufacturing facility that is a
160 scrap recycler described in Subsection 59-12-102 (45)(b), in the manufacturing process; or
161 (II) for a manufacturing facility in the state that is a scrap recycler described in
162 Subsection 59-12-102 (45)(b), to process an item sold as tangible personal property;
163 (b) (i) amounts paid or charged on or after July 1, 2005, for a purchase or lease by a
164 manufacturing facility that is a cogeneration facility placed in service on or after May 1, 2006,
165 for the following:
166 (A) machinery and equipment that:
167 (I) is used:
168 (Aa) in the manufacturing process; and
169 (Bb) to manufacture an item sold as tangible personal property; and

170 (II) has an economic life of three or more years; and
171 (B) normal operating repair or replacement parts that:
172 (I) are used in the manufacturing process in a manufacturing facility in the state; and
173 (II) have an economic life of three or more years; and
174 (ii) for amounts paid or charged on or after July 1, 2005, but on or before June 30,
175 2006, for a purchase or lease described in Subsection (14)(b)(i), a cogeneration facility may
176 claim the exemption allowed by Subsection (14)(b)(i) by filing for a refund:
177 (A) for sales and use taxes paid under this chapter on the purchase or lease payment;
178 and
179 (B) in accordance with Section 59-12-110 ;
180 (c) for purposes of this Subsection (14) and in accordance with Title 63, Chapter 46a,
181 Utah Administrative Rulemaking Act, the commission:
182 (i) shall by rule define the term "establishment"; and
183 (ii) may by rule define what constitutes processing an item sold as tangible personal
184 property; and
185 (d) on or before October 1, 1991, and every five years after October 1, 1991, the
186 commission shall:
187 (i) review the exemptions described in this Subsection (14) and make
188 recommendations to the Revenue and Taxation Interim Committee concerning whether the
189 exemptions should be continued, modified, or repealed; and
190 (ii) include in its report:
191 (A) the cost of the exemptions;
192 (B) the purpose and effectiveness of the exemptions; and
193 (C) the benefits of the exemptions to the state;
194 (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
195 (i) tooling;
196 (ii) special tooling;
197 (iii) support equipment;

198 (iv) special test equipment; or
199 (v) parts used in the repairs or renovations of tooling or equipment described in
200 Subsections (15)(a)(i) through (iv); and
201 (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
202 (i) the tooling, equipment, or parts are used or consumed exclusively in the
203 performance of any aerospace or electronics industry contract with the United States
204 government or any subcontract under that contract; and
205 (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),
206 title to the tooling, equipment, or parts is vested in the United States government as evidenced
207 by:
208 (A) a government identification tag placed on the tooling, equipment, or parts; or
209 (B) listing on a government-approved property record if placing a government
210 identification tag on the tooling, equipment, or parts is impractical;
211 (16) sales of newspapers or newspaper subscriptions;
212 (17) (a) except as provided in Subsection (17)(b), tangible personal property traded in
213 as full or part payment of the purchase price, except that for purposes of calculating sales or use
214 tax upon vehicles not sold by a vehicle dealer, trade-ins are limited to other vehicles only, and
215 the tax is based upon:
216 (i) the bill of sale or other written evidence of value of the vehicle being sold and the
217 vehicle being traded in; or
218 (ii) in the absence of a bill of sale or other written evidence of value, the then existing
219 fair market value of the vehicle being sold and the vehicle being traded in, as determined by the
220 commission; and
221 (b) notwithstanding Subsection (17)(a), Subsection (17)(a) does not apply to the
222 following items of tangible personal property traded in as full or part payment of the purchase
223 price:
224 (i) money;
225 (ii) electricity;

226 (iii) water;
227 (iv) gas; or
228 (v) steam;
229 (18) (a) (i) except as provided in Subsection (18)(b), sales of tangible personal property
230 used or consumed primarily and directly in farming operations, regardless of whether the
231 tangible personal property:
232 (A) becomes part of real estate; or
233 (B) is installed by a:
234 (I) farmer;
235 (II) contractor; or
236 (III) subcontractor; or
237 (ii) sales of parts used in the repairs or renovations of tangible personal property if the
238 tangible personal property is exempt under Subsection (18)(a)(i); and
239 (b) notwithstanding Subsection (18)(a), amounts paid or charged for the following
240 tangible personal property are subject to the taxes imposed by this chapter:
241 (i) (A) subject to Subsection (18)(b)(i)(B), the following tangible personal property if
242 the tangible personal property is used in a manner that is incidental to farming:
243 (I) machinery;
244 (II) equipment;
245 (III) materials; or
246 (IV) supplies; and
247 (B) tangible personal property that is considered to be used in a manner that is
248 incidental to farming includes:
249 (I) hand tools; or
250 (II) maintenance and janitorial equipment and supplies;
251 (ii) (A) subject to Subsection (18)(b)(ii)(B), tangible personal property if the tangible
252 personal property is used in an activity other than farming; and
253 (B) tangible personal property that is considered to be used in an activity other than

254 farming includes:
255 (I) office equipment and supplies; or
256 (II) equipment and supplies used in:
257 (Aa) the sale or distribution of farm products;
258 (Bb) research; or
259 (Cc) transportation; or
260 (iii) a vehicle required to be registered by the laws of this state during the period ending
261 two years after the date of the vehicle's purchase;
262 (19) sales of hay;
263 (20) exclusive sale during the harvest season of seasonal crops, seedling plants, or
264 garden, farm, or other agricultural produce if the seasonal crops are, seedling plants are, or
265 garden, farm, or other agricultural produce is sold by:
266 (a) the producer of the seasonal crops, seedling plants, or garden, farm, or other
267 agricultural produce;
268 (b) an employee of the producer described in Subsection (20)(a); or
269 (c) a member of the immediate family of the producer described in Subsection (20)(a);
270 (21) purchases made using a coupon as defined in 7 U.S.C. Sec. 2012 that is issued
271 under the Food Stamp Program, 7 U.S.C. Sec. 2011 et seq.;
272 (22) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
273 nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor,
274 wholesaler, or retailer for use in packaging tangible personal property to be sold by that
275 manufacturer, processor, wholesaler, or retailer;
276 (23) property stored in the state for resale;
277 (24) property brought into the state by a nonresident for his or her own personal use or
278 enjoyment while within the state, except property purchased for use in Utah by a nonresident
279 living and working in Utah at the time of purchase;
280 (25) property purchased for resale in this state, in the regular course of business, either
281 in its original form or as an ingredient or component part of a manufactured or compounded

282 product;
283 (26) property upon which a sales or use tax was paid to some other state, or one of its
284 subdivisions, except that the state shall be paid any difference between the tax paid and the tax
285 imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if
286 the tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax
287 Act;
288 (27) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a
289 person for use in compounding a service taxable under the subsections;
290 (28) purchases made in accordance with the special supplemental nutrition program for
291 women, infants, and children established in 42 U.S.C. Sec. 1786;
292 (29) beginning on July 1, 1999, through June 30, 2014, sales or leases of rolls, rollers,
293 refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
294 of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification
295 Manual of the federal Executive Office of the President, Office of Management and Budget;
296 (30) sales of a boat of a type required to be registered under Title 73, Chapter 18, State
297 Boating Act, a boat trailer, or an outboard motor if the boat, trailer, or outboard motor is both
298 not:
299 (a) registered in this state; and
300 (b) used in this state except as necessary to transport the boat, boat trailer, or outboard
301 motor to the borders of this state;
302 (31) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah
303 where a sales or use tax is not imposed, even if the title is passed in Utah;
304 (32) amounts paid for the purchase of telephone service for purposes of providing
305 telephone service;
306 (33) sales [or], leases [of vehicles to], or [use] uses of [vehicles by an authorized
307 carrier;] the following:
308 (a) a vehicle by an authorized carrier; or
309 (b) tangible personal property that is installed on a vehicle:

310 (i) sold or leased to or used by an authorized carrier; and
311 (ii) before the vehicle is placed in service for the first time;
312 (34) (a) 45% of the sales price of any new manufactured home; and
313 (b) 100% of the sales price of any used manufactured home;
314 (35) sales relating to schools and fundraising sales;
315 (36) sales or rentals of durable medical equipment if:
316 (a) a person presents a prescription for the durable medical equipment; and
317 (b) the durable medical equipment is used for home use only;
318 (37) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
319 Section 72-11-102 ; and
320 (b) the commission shall by rule determine the method for calculating sales exempt
321 under Subsection (37)(a) that are not separately metered and accounted for in utility billings;
322 (38) sales to a ski resort of:
323 (a) snowmaking equipment;
324 (b) ski slope grooming equipment;
325 (c) passenger ropeways as defined in Section 72-11-102 ; or
326 (d) parts used in the repairs or renovations of equipment or passenger ropeways
327 described in Subsections (38)(a) through (c);
328 (39) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
329 (40) (a) subject to Subsection (40)(b), sales or rentals of the right to use or operate for
330 amusement, entertainment, or recreation an unassisted amusement device as defined in Section
331 59-12-102 ;
332 (b) if a seller that sells or rents at the same business location the right to use or operate
333 for amusement, entertainment, or recreation one or more unassisted amusement devices and
334 one or more assisted amusement devices, the exemption described in Subsection (40)(a)
335 applies if the seller separately accounts for the sales or rentals of the right to use or operate for
336 amusement, entertainment, or recreation for the assisted amusement devices; and
337 (c) for purposes of Subsection (40)(b) and in accordance with Title 63, Chapter 46a,

338 Utah Administrative Rulemaking Act, the commission may make rules:
339 (i) governing the circumstances under which sales are at the same business location;
340 and
341 (ii) establishing the procedures and requirements for a seller to separately account for
342 the sales or rentals of the right to use or operate for amusement, entertainment, or recreation for
343 assisted amusement devices;
344 (41) sales by the state or a political subdivision of the state, except state institutions of
345 higher education as defined in Section 53B-3-102 , of:
346 (a) photocopies; or
347 (b) other copies of records held or maintained by the state or a political subdivision of
348 the state;
349 (42) amounts paid for admission to an athletic event at an institution of higher
350 education that is subject to the provisions of Title IX of the Education Amendments of 1972,
351 20 U.S.C. Sec. 1681 et seq.;
352 (43) sales of telephone service charged to a prepaid telephone calling card;
353 (44) (a) sales of:
354 (i) hearing aids;
355 (ii) hearing aid accessories; or
356 (iii) except as provided in Subsection (44)(b), parts used in the repairs or renovations
357 of hearing aids or hearing aid accessories; and
358 (b) for purposes of this Subsection (44), notwithstanding Subsection (44)(a)(iii),
359 "parts" does not include batteries;
360 (45) (a) sales made to or by:
361 (i) an area agency on aging; or
362 (ii) a senior citizen center owned by a county, city, or town; or
363 (b) sales made by a senior citizen center that contracts with an area agency on aging;
364 (46) sales or leases of semiconductor fabricating, processing, research, or development
365 materials regardless of whether the semiconductor fabricating, processing, research, or

366 development materials:
367 (a) actually come into contact with a semiconductor; or
368 (b) ultimately become incorporated into real property;
369 (47) an amount paid by or charged to a purchaser for accommodations and services
370 described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
371 59-12-104.2 ;
372 (48) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary
373 sports event registration certificate in accordance with Section 41-3-306 for the event period
374 specified on the temporary sports event registration certificate;
375 (49) sales or uses of electricity, if the sales or uses are:
376 (a) made under a tariff adopted by the Public Service Commission of Utah only for
377 purchase of electricity produced from a new wind, geothermal, biomass, or solar power energy
378 source, as designated in the tariff by the Public Service Commission of Utah; and
379 (b) for an amount of electricity that is:
380 (i) unrelated to the amount of electricity used by the person purchasing the electricity
381 under the tariff described in Subsection (49)(a); and
382 (ii) equivalent to the number of kilowatthours specified in the tariff described in
383 Subsection (49)(a) that may be purchased under the tariff described in Subsection (49)(a);
384 (50) sales or rentals of mobility enhancing equipment if a person presents a
385 prescription for the mobility enhancing equipment;
386 (51) sales of water in a:
387 (a) pipe;
388 (b) conduit;
389 (c) ditch; or
390 (d) reservoir;
391 (52) sales of currency or coinage that constitute legal tender of the United States or of a
392 foreign nation;
393 (53) (a) sales of an item described in Subsection (53)(b) if the item:

394 (i) does not constitute legal tender of any nation; and
395 (ii) has a gold, silver, or platinum content of 80% or more; and
396 (b) Subsection (53)(a) applies to a gold, silver, or platinum:
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