S.B. 22

1

SALES AND USE TAX EXEMPTIONS FOR
2 CERTAIN GOVERNMENTAL ENTITIES AND
3 ENTITIES WITHIN THE STATE SYSTEMS
4 OF PUBLIC AND HIGHER EDUCATION
5 2007 GENERAL SESSION
6 STATE OF UTAH
7 Chief Sponsor: Howard A. Stephenson
8 House Sponsor: Wayne A. Harper
9
10 LONG TITLE
11 General Description:
12 This bill amends the Sales and Use Tax Act relating to sales and use tax exemptions for
13 certain governmental entities and entities within the state systems of public and higher
14 education.
15 Highlighted Provisions:
16 This bill:
17 . defines:
18 . "governmental entity"; and
19 . "publication";
20 . clarifies the definition of "school" to include the Electronic High School for
21 purposes of the sales and use tax exemptions for sales relating to schools and
22 fundraising sales;
23 . modifies the sales and use tax exemption for photocopies to provide an exemption
24 for sales of photocopies by a governmental entity or an entity within the state
25 system of public education;
26 . provides a sales and use tax exemption for sales of publications by a governmental
27 entity;

28 . grants rulemaking authority to the State Tax Commission to define the term
29 "photocopy"; and
30 . makes technical changes.
31 Monies Appropriated in this Bill:
32 None
33 Other Special Clauses:
34 This bill takes effect on July 1, 2007.
35 Utah Code Sections Affected:
36 AMENDS:
37 59-12-102, as last amended by Chapter 1, Laws of Utah 2006, Fourth Special Session
38 59-12-104, as last amended by Chapters 181, 182, 217, 218, 219, 220, 246, 268 and
39 346, Laws of Utah 2006
40
41 Be it enacted by the Legislature of the state of Utah:
42 Section 1. Section 59-12-102 is amended to read:
43 59-12-102. Definitions.
44 As used in this chapter:
45 (1) (a) "Admission or user fees" includes season passes.
46 (b) "Admission or user fees" does not include annual membership dues to private
47 organizations.
48 (2) "Agreement" means the Streamlined Sales and Use Tax Agreement described in
49 Section 59-12-102.1 .
50 (3) "Agreement combined tax rate" means the sum of the tax rates:
51 (a) listed under Subsection (4); and
52 (b) that are imposed within a local taxing jurisdiction.
53 (4) "Agreement sales and use tax" means a tax imposed under:
54 (a) Subsection 59-12-103 (2)(a)(i) or (2)(b)(iii)(A);
55 (b) Section 59-12-204 ;
56 (c) Section 59-12-401 ;
57 (d) Section 59-12-402 ;
58 (e) Section 59-12-501 ;

59 (f) Section 59-12-502 ;
60 (g) Section 59-12-703 ;
61 (h) Section 59-12-802 ;
62 (i) Section 59-12-804 ;
63 (j) Section 59-12-1001 ;
64 (k) Section 59-12-1102 ;
65 (l) Section 59-12-1302 ;
66 (m) Section 59-12-1402 ; or
67 (n) Section 59-12-1503 .
68 (5) "Aircraft" is as defined in Section 72-10-102 .
69 (6) "Alcoholic beverage" means a beverage that:
70 (a) is suitable for human consumption; and
71 (b) contains .5% or more alcohol by volume.
72 (7) "Area agency on aging" is as defined in Section 62A-3-101 .
73 (8) "Assisted amusement device" means an amusement device, skill device, or ride
74 device that is started and stopped by an individual:
75 (a) who is not the purchaser or renter of the right to use or operate the amusement
76 device, skill device, or ride device; and
77 (b) at the direction of the seller of the right to use the amusement device, skill device,
78 or ride device.
79 (9) "Assisted cleaning or washing of tangible personal property" means cleaning or
80 washing of tangible personal property if the cleaning or washing labor is primarily performed
81 by an individual:
82 (a) who is not the purchaser of the cleaning or washing of the tangible personal
83 property; and
84 (b) at the direction of the seller of the cleaning or washing of the tangible personal
85 property.
86 (10) "Authorized carrier" means:
87 (a) in the case of vehicles operated over public highways, the holder of credentials
88 indicating that the vehicle is or will be operated pursuant to both the International Registration
89 Plan and the International Fuel Tax Agreement;

90 (b) in the case of aircraft, the holder of a Federal Aviation Administration operating
91 certificate or air carrier's operating certificate; or
92 (c) in the case of locomotives, freight cars, railroad work equipment, or other rolling
93 stock, the holder of a certificate issued by the United States Surface Transportation Board.
94 (11) (a) Except as provided in Subsection (11)(b), "biomass energy" means any of the
95 following that is used as the primary source of energy to produce fuel or electricity:
96 (i) material from a plant or tree; or
97 (ii) other organic matter that is available on a renewable basis, including:
98 (A) slash and brush from forests and woodlands;
99 (B) animal waste;
100 (C) methane produced:
101 (I) at landfills; or
102 (II) as a byproduct of the treatment of wastewater residuals;
103 (D) aquatic plants; and
104 (E) agricultural products.
105 (b) "Biomass energy" does not include:
106 (i) black liquor;
107 (ii) treated woods; or
108 (iii) biomass from municipal solid waste other than methane produced:
109 (A) at landfills; or
110 (B) as a byproduct of the treatment of wastewater residuals.
111 (12) (a) "Bundled transaction" means the sale of two or more items of tangible personal
112 property if:
113 (i) one or more of the items of tangible personal property is food and food ingredients;
114 and
115 (ii) the items of tangible personal property are:
116 (A) distinct and identifiable; and
117 (B) sold for one price that is not itemized.
118 (b) "Bundled transaction" does not include the sale of tangible personal property if the
119 sales price varies, or is negotiable, on the basis of the selection by the purchaser of the items of
120 tangible personal property included in the transaction.

121 (c) For purposes of Subsection (12)(a)(ii)(A), tangible personal property that is distinct
122 and identifiable does not include:
123 (i) packaging that:
124 (A) accompanies the sale of the tangible personal property; and
125 (B) is incidental or immaterial to the sale of the tangible personal property;
126 (ii) tangible personal property provided free of charge with the purchase of another
127 item of tangible personal property; or
128 (iii) an item of tangible personal property included in the definition of "purchase
129 price."
130 (d) For purposes of Subsection (12)(c)(ii), an item of tangible personal property is
131 provided free of charge with the purchase of another item of tangible personal property if the
132 sales price of the purchased item of tangible personal property does not vary depending on the
133 inclusion of the tangible personal property provided free of charge.
134 (13) "Certified automated system" means software certified by the governing board of
135 the agreement in accordance with Section 59-12-102.1 that:
136 (a) calculates the agreement sales and use tax imposed within a local taxing
137 jurisdiction:
138 (i) on a transaction; and
139 (ii) in the states that are members of the agreement;
140 (b) determines the amount of agreement sales and use tax to remit to a state that is a
141 member of the agreement; and
142 (c) maintains a record of the transaction described in Subsection (13)(a)(i).
143 (14) "Certified service provider" means an agent certified:
144 (a) by the governing board of the agreement in accordance with Section 59-12-102.1 ;
145 and
146 (b) to perform all of a seller's sales and use tax functions for an agreement sales and
147 use tax other than the seller's obligation under Section 59-12-107.4 to remit a tax on the seller's
148 own purchases.
149 (15) (a) Subject to Subsection (15)(b), "clothing" means all human wearing apparel
150 suitable for general use.
151 (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the

152 commission shall make rules:
153 (i) listing the items that constitute "clothing"; and
154 (ii) that are consistent with the list of items that constitute "clothing" under the
155 agreement.
156 (16) "Coal-to-liquid" means the process of converting coal into a liquid synthetic fuel.
157 (17) "Commercial use" means the use of gas, electricity, heat, coal, fuel oil, or other
158 fuels that does not constitute industrial use under Subsection [(39)] (40) or residential use
159 under Subsection (76).
160 (18) (a) "Common carrier" means a person engaged in or transacting the business of
161 transporting passengers, freight, merchandise, or other property for hire within this state.
162 (b) (i) "Common carrier" does not include a person who, at the time the person is
163 traveling to or from that person's place of employment, transports a passenger to or from the
164 passenger's place of employment.
165 (ii) For purposes of Subsection (18)(b)(i), in accordance with Title 63, Chapter 46a,
166 Utah Administrative Rulemaking Act, the commission may make rules defining what
167 constitutes a person's place of employment.
168 (19) "Component part" includes:
169 (a) poultry, dairy, and other livestock feed, and their components;
170 (b) baling ties and twine used in the baling of hay and straw;
171 (c) fuel used for providing temperature control of orchards and commercial
172 greenhouses doing a majority of their business in wholesale sales, and for providing power for
173 off-highway type farm machinery; and
174 (d) feed, seeds, and seedlings.
175 (20) "Computer" means an electronic device that accepts information:
176 (a) (i) in digital form; or
177 (ii) in a form similar to digital form; and
178 (b) manipulates that information for a result based on a sequence of instructions.
179 (21) "Computer software" means a set of coded instructions designed to cause:
180 (a) a computer to perform a task; or
181 (b) automatic data processing equipment to perform a task.
182 (22) "Construction materials" means any tangible personal property that will be

183 converted into real property.
184 (23) "Delivered electronically" means delivered to a purchaser by means other than
185 tangible storage media.
186 (24) (a) "Delivery charge" means a charge:
187 (i) by a seller of:
188 (A) tangible personal property; or
189 (B) services; and
190 (ii) for preparation and delivery of the tangible personal property or services described
191 in Subsection (24)(a)(i) to a location designated by the purchaser.
192 (b) "Delivery charge" includes a charge for the following:
193 (i) transportation;
194 (ii) shipping;
195 (iii) postage;
196 (iv) handling;
197 (v) crating; or
198 (vi) packing.
199 (25) "Dietary supplement" means a product, other than tobacco, that:
200 (a) is intended to supplement the diet;
201 (b) contains one or more of the following dietary ingredients:
202 (i) a vitamin;
203 (ii) a mineral;
204 (iii) an herb or other botanical;
205 (iv) an amino acid;
206 (v) a dietary substance for use by humans to supplement the diet by increasing the total
207 dietary intake; or
208 (vi) a concentrate, metabolite, constituent, extract, or combination of any ingredient
209 described in Subsections (25)(b)(i) through (v);
210 (c) (i) except as provided in Subsection (25)(c)(ii), is intended for ingestion in:
211 (A) tablet form;
212 (B) capsule form;
213 (C) powder form;

214 (D) softgel form;
215 (E) gelcap form; or
216 (F) liquid form; or
217 (ii) notwithstanding Subsection (25)(c)(i), if the product is not intended for ingestion in
218 a form described in Subsections (25)(c)(i)(A) through (F), is not represented:
219 (A) as conventional food; and
220 (B) for use as a sole item of:
221 (I) a meal; or
222 (II) the diet; and
223 (d) is required to be labeled as a dietary supplement:
224 (i) identifiable by the "Supplemental Facts" box found on the label; and
225 (ii) as required by 21 C.F.R. Sec. 101.36.
226 (26) (a) "Direct mail" means printed material delivered or distributed by United States
227 mail or other delivery service:
228 (i) to:
229 (A) a mass audience; or
230 (B) addressees on a mailing list provided by a purchaser of the mailing list; and
231 (ii) if the cost of the printed material is not billed directly to the recipients.
232 (b) "Direct mail" includes tangible personal property supplied directly or indirectly by a
233 purchaser to a seller of direct mail for inclusion in a package containing the printed material.
234 (c) "Direct mail" does not include multiple items of printed material delivered to a
235 single address.
236 (27) (a) "Drug" means a compound, substance, or preparation, or a component of a
237 compound, substance, or preparation that is:
238 (i) recognized in:
239 (A) the official United States Pharmacopoeia;
240 (B) the official Homeopathic Pharmacopoeia of the United States;
241 (C) the official National Formulary; or
242 (D) a supplement to a publication listed in Subsections (27)(a)(i)(A) through (C);
243 (ii) intended for use in the:
244 (A) diagnosis of disease;

245 (B) cure of disease;
246 (C) mitigation of disease;
247 (D) treatment of disease; or
248 (E) prevention of disease; or
249 (iii) intended to affect:
250 (A) the structure of the body; or
251 (B) any function of the body.
252 (b) "Drug" does not include:
253 (i) food and food ingredients;
254 (ii) a dietary supplement;
255 (iii) an alcoholic beverage; or
256 (iv) a prosthetic device.
257 (28) (a) Except as provided in Subsection (28)(c), "durable medical equipment" means
258 equipment that:
259 (i) can withstand repeated use;
260 (ii) is primarily and customarily used to serve a medical purpose;
261 (iii) generally is not useful to a person in the absence of illness or injury; and
262 (iv) is not worn in or on the body.
263 (b) "Durable medical equipment" includes parts used in the repair or replacement of the
264 equipment described in Subsection (28)(a).
265 (c) Notwithstanding Subsection (28)(a), "durable medical equipment" does not include
266 mobility enhancing equipment.
267 (29) "Electronic" means:
268 (a) relating to technology; and
269 (b) having:
270 (i) electrical capabilities;
271 (ii) digital capabilities;
272 (iii) magnetic capabilities;
273 (iv) wireless capabilities;
274 (v) optical capabilities;
275 (vi) electromagnetic capabilities; or

276 (vii) capabilities similar to Subsections (29)(b)(i) through (vi).
277 (30) "Employee" is as defined in Section 59-10-401 .
278 (31) "Fixed guideway" means a public transit facility that uses and occupies:
279 (a) rail for the use of public transit; or
280 (b) a separate right-of-way for the use of public transit.
281 (32) (a) "Food and food ingredients" means substances:
282 (i) regardless of whether the substances are in:
283 (A) liquid form;
284 (B) concentrated form;
285 (C) solid form;
286 (D) frozen form;
287 (E) dried form; or
288 (F) dehydrated form; and
289 (ii) that are:
290 (A) sold for:
291 (I) ingestion by humans; or
292 (II) chewing by humans; and
293 (B) consumed for the substance's:
294 (I) taste; or
295 (II) nutritional value.
296 (b) "Food and food ingredients" includes an item described in Subsection [(63)]
297 (64)(b)(iii).
298 (c) "Food and food ingredients" does not include:
299 (i) an alcoholic beverage;
300 (ii) tobacco; or
301 (iii) prepared food.
302 (33) (a) "Fundraising sales" means sales:
303 (i) (A) made by a school; or
304 (B) made by a school student;
305 (ii) that are for the purpose of raising funds for the school to purchase equipment,
306 materials, or provide transportation; and

307 (iii) that are part of an officially sanctioned school activity.
308 (b) For purposes of Subsection (33)(a)(iii), "officially sanctioned school activity"
309 means a school activity:
310 (i) that is conducted in accordance with a formal policy adopted by the school or school
311 district governing the authorization and supervision of fundraising activities;
312 (ii) that does not directly or indirectly compensate an individual teacher or other
313 educational personnel by direct payment, commissions, or payment in kind; and
314 (iii) the net or gross revenues from which are deposited in a dedicated account
315 controlled by the school or school district.
316 (34) "Geothermal energy" means energy contained in heat that continuously flows
317 outward from the earth that is used as the sole source of energy to produce electricity.
318 (35) "Governing board of the agreement" means the governing board of the agreement
319 that is:
320 (a) authorized to administer the agreement; and
321 (b) established in accordance with the agreement.
322 (36) (a) For purposes of Subsection 59-12-104 (41), "governmental entity" means:
323 (i) the executive branch of the state, including all departments, institutions, boards,
324 divisions, bureaus, offices, commissions, and committees;
325 (ii) the judicial branch of the state, including the courts, the Judicial Council, the
326 Office of the Court Administrator, and similar administrative units in the judicial branch;
327 (iii) the legislative branch of the state, including the House of Representatives, the
328 Senate, the Legislative Printing Office, the Office of Legislative Research and General
329 Counsel, the Office of the Legislative Auditor General, and the Office of the Legislative Fiscal
330 Analyst;
331 (iv) the National Guard;
332 (v) an independent entity as defined in Section 63E-1-102 ; or
333 (vi) a political subdivision as defined in Section 17B-2-101 .
334 (b) "Governmental entity" does not include the state systems of public and higher
335 education, including:
336 (i) a college campus of the Utah College of Applied Technology;
337 (ii) a school;

338 (iii) the State Board of Education;
339 (iv) the State Board of Regents; or
340 (v) a state institution of higher education as defined in Section 53B-3-102 .
341 [(36)] (37) (a) "Hearing aid" means:
342 (i) an instrument or device having an electronic component that is designed to:
343 (A) (I) improve impaired human hearing; or
344 (II) correct impaired human hearing; and
345 (B) (I) be worn in the human ear; or
346 (II) affixed behind the human ear;
347 (ii) an instrument or device that is surgically implanted into the cochlea; or
348 (iii) a telephone amplifying device.
349 (b) "Hearing aid" does not include:
350 (i) except as provided in Subsection [(36)] (37)(a)(i)(B) or [(36)] (37)(a)(ii), an
351 instrument or device having an electronic component that is designed to be worn on the body;
352 (ii) except as provided in Subsection [(36)] (37)(a)(iii), an assistive listening device or
353 system designed to be used by one individual, including:
354 (A) a personal amplifying system;
355 (B) a personal FM system;
356 (C) a television listening system; or
357 (D) a device or system similar to a device or system described in Subsections [(36)]
358 (37)(b)(ii)(A) through (C); or
359 (iii) an assistive listening device or system designed to be used by more than one
360 individual, including:
361 (A) a device or system installed in:
362 (I) an auditorium;
363 (II) a church;
364 (III) a conference room;
365 (IV) a synagogue; or
366 (V) a theater; or
367 (B) a device or system similar to a device or system described in Subsections [(36)]
368 (37)(b)(iii)(A)(I) through (V).

369 [(37)] (38) (a) "Hearing aid accessory" means a hearing aid:
370 (i) component;
371 (ii) attachment; or
372 (iii) accessory.
373 (b) "Hearing aid accessory" includes:
374 (i) a hearing aid neck loop;
375 (ii) a hearing aid cord;
376 (iii) a hearing aid ear mold;
377 (iv) hearing aid tubing;
378 (v) a hearing aid ear hook; or
379 (vi) a hearing aid remote control.
380 (c) "Hearing aid accessory" does not include:
381 (i) a component, attachment, or accessory designed to be used only with an:
382 (A) instrument or device described in Subsection [(36)] (37)(b)(i); or
383 (B) assistive listening device or system described in Subsection [(36)] (37)(b)(ii) or
384 (iii); or
385 (ii) a hearing aid battery.
386 [(38)] (39) "Hydroelectric energy" means water used as the sole source of energy to
387 produce electricity.
388 [(39)] (40) "Industrial use" means the use of natural gas, electricity, heat, coal, fuel oil,
389 or other fuels:
390 (a) in mining or extraction of minerals;
391 (b) in agricultural operations to produce an agricultural product up to the time of
392 harvest or placing the agricultural product into a storage facility, including:
393 (i) commercial greenhouses;
394 (ii) irrigation pumps;
395 (iii) farm machinery;
396 (iv) implements of husbandry as defined in Subsection 41-1a-102 (23) that are not
397 registered under Title 41, Chapter 1a, Part 2, Registration; and
398 (v) other farming activities;