H.B. 373

1

SALES TAX EXEMPTION FOR CERTAIN
2 MACHINERY AND PARTS
3 1997 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Steve Barth
6 AN ACT RELATING TO THE SALES AND USE TAX ACT; LIMITING THE SIC CODES
7 FOR THE MANUFACTURING MACHINERY, EQUIPMENT, AND NORMAL
8 OPERATING REPLACEMENTS EXEMPTION; REPEALING THE EXEMPTION FOR
9 CERTAIN TOOLS AND EQUIPMENT USED IN CERTAIN AEROSPACE OR
10 ELECTRONIC INDUSTRY CONTRACTS OR SUBCONTRACTS WITH THE UNITED
11 STATES GOVERNMENT; MAKING TECHNICAL CHANGES; AND PROVIDING AN
12 EFFECTIVE DATE.
13 This act affects sections of Utah Code Annotated 1953 as follows:
14 AMENDS:
15 59-12-102, as last amended by Chapters 126, 170, 232, 274, 287 and 342, Laws of Utah 1996
16 59-12-104, as last amended by Chapter 1, Laws of Utah 1996, Third Special Session
17 59-12-105, as last amended by Chapter 296, Laws of Utah 1996
18 Be it enacted by the Legislature of the state of Utah:
19 Section 1. Section 59-12-102 is amended to read:
20 59-12-102. Definitions.
21 As used in this chapter:
22 (1) (a) "Admission or user fees" includes season passes.
23 (b) "Admission or user fees" does not include annual membership dues to private
24 organizations.
25 (2) "Authorized carrier" means:
26 (a) in the case of vehicles operated over public highways, the holder of credentials
27 indicating that the vehicle is or will be operated pursuant to both the International Registration

1 Plan (IRP) and the International Fuel Tax Agreement (IFTA);
2 (b) in the case of aircraft, the holder of a Federal Aviation Administration (FAA) operating
3 certificate or air carrier's operating certificate; or
4 (c) in the case of locomotives, freight cars, railroad work equipment, or other rolling stock,
5 the holder of a certificate issued by the United States Interstate Commerce Commission.
6 (3) (a) For purposes of Subsection 59-12-104[(44)] (43), "coin-operated amusement
7 device" means:
8 (i) a coin-operated amusement, skill, or ride device;
9 (ii) that is not controlled through vendor-assisted, over-the-counter, sales of tokens; and
10 (iii) includes a music machine, pinball machine, billiard machine, video game machine,
11 arcade machine, and a mechanical or electronic skill game or ride.
12 (b) For purposes of Subsection 59-12-104[(44)] (43), "coin-operated amusement device"
13 does not mean a coin-operated amusement device possessing a coinage mechanism that:
14 (i) accepts and registers multiple denominations of coins; and
15 (ii) allows the vendor to collect the sales and use tax at the time an amusement device is
16 activated and operated by a person inserting coins into the device.
17 (4) "Commercial use" means the use of gas, electricity, heat, coal, fuel oil, or other fuels
18 that does not constitute industrial use under Subsection (10) or residential use under Subsection
19 (16).
20 (5) "Common carrier" means a person engaged in or transacting the business of
21 transporting passengers, freight, merchandise, or other property for hire within this state.
22 (6) "Component part" includes:
23 (a) poultry, dairy, and other livestock feed, and their components;
24 (b) baling ties and twine used in the baling of hay and straw;
25 (c) fuel used for providing temperature control of orchards and commercial greenhouses
26 doing a majority of their business in wholesale sales, and for providing power for off-highway type
27 farm machinery; and
28 (d) feed, seeds, and seedlings.
29 (7) "Construction materials" means any tangible personal property that will be converted
30 into real property.
31 (8) (a) "Fundraising sales" means sales:

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1 (i) (A) made by a public or private elementary or secondary school; or
2 (B) made by a public or private elementary or secondary school student, grades
3 kindergarten through 12;
4 (ii) that are for the purpose of raising funds for the school to purchase equipment,
5 materials, or provide transportation; and
6 (iii) that are part of an officially sanctioned school activity.
7 (b) For purposes of Subsection (8)(a)(iii), "officially sanctioned school activity" means
8 a school activity:
9 (i) that is conducted in accordance with a formal policy adopted by the school or school
10 district governing the authorization and supervision of fundraising activities;
11 (ii) that does not directly or indirectly compensate an individual teacher or other
12 educational personnel by direct payment, commissions, or payment in kind; and
13 (iii) the net or gross revenues from which are deposited in a dedicated account controlled
14 by the school or school district.
15 (9) (a) "Home medical equipment and supplies" means equipment and supplies that:
16 (i) a licensed physician prescribes or authorizes in writing as necessary for the treatment
17 of a medical illness or injury or as necessary to mitigate an impairment resulting from illness or
18 injury;
19 (ii) are used exclusively by the person for whom they are prescribed to serve a medical
20 purpose; and
21 (iii) are listed as eligible for payment under Title 18 of the federal Social Security Act or
22 under the state plan for medical assistance under Title 19 of the federal Social Security Act.
23 (b) "Home medical equipment and supplies" does not include:
24 (i) equipment and supplies purchased by, for, or on behalf of any health care facility, as
25 defined in Subsection (9)(c), doctor, nurse, or other health care provider for use in their
26 professional practice;
27 (ii) eyeglasses, contact lenses, or equipment to correct impaired vision; or
28 (iii) hearing aids or hearing aid accessories.
29 (c) For purposes of Subsection (9)(b)(i), "health care facility" includes:
30 (i) a clinic;
31 (ii) a doctor's office; and

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1 (iii) a health care facility as defined in Subsection 26-21-2(11)(a).
2 (10) "Industrial use" means the use of natural gas, electricity, heat, coal, fuel oil, or other
3 fuels in:
4 (a) mining or extraction of minerals;
5 (b) agricultural operations to produce an agricultural product up to the time of harvest or
6 placing the agricultural product into a storage facility, including:
7 (i) commercial greenhouses;
8 (ii) irrigation pumps;
9 (iii) farm machinery;
10 (iv) implements of husbandry as defined in Subsection 41-1a-102(23) that are not
11 registered under Title 41, Chapter 1a, Part 2, Registration; and
12 (v) other farming activities; and
13 (c) manufacturing tangible personal property at an establishment described in SIC Codes
14 2000 to 3999 of the 1987 Standard Industrial Classification Manual of the federal Executive Office
15 of the President, Office of Management and Budget.
16 (11) "Manufactured home" means any manufactured home or mobile home as defined in
17 Title 58, Chapter 56, Utah Uniform Building Standards Act.
18 (12) (a) "Medicine" means:
19 (i) insulin, syringes, and any medicine prescribed for the treatment of human ailments by
20 a person authorized to prescribe treatments and dispensed on prescription filled by a registered
21 pharmacist, or supplied to patients by a physician, surgeon, or podiatric physician;
22 (ii) any medicine dispensed to patients in a county or other licensed hospital if prescribed
23 for that patient and dispensed by a registered pharmacist or administered under the direction of a
24 physician; and
25 (iii) any oxygen or stoma supplies prescribed by a physician or administered under the
26 direction of a physician or paramedic.
27 (b) "Medicine" does not include:
28 (i) any auditory, prosthetic, ophthalmic, or ocular device or appliance; or
29 (ii) any alcoholic beverage.
30 (13) (a) "Other fuels" means products that burn independently to produce heat or energy.
31 (b) "Other fuels" includes oxygen when it is used in the manufacturing of tangible personal

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1 property.
2 (14) "Person" includes any individual, firm, partnership, joint venture, association,
3 corporation, estate, trust, business trust, receiver, syndicate, this state, any county, city,
4 municipality, district, or other local governmental entity of the state, or any group or combination
5 acting as a unit.
6 (15) "Purchase price" means the amount paid or charged for tangible personal property or
7 any other taxable item or service under Subsection 59-12-103(1), excluding only cash discounts
8 taken or any excise tax imposed on the purchase price by the federal government.
9 (16) "Residential use" means the use in or around a home, apartment building, sleeping
10 quarters, and similar facilities or accommodations.
11 (17) (a) "Retail sale" means any sale within the state of tangible personal property or any
12 other taxable item or service under Subsection 59-12-103(1), other than resale of such property,
13 item, or service by a retailer or wholesaler to a user or consumer.
14 (b) "Retail sale" includes sales by any farmer or other agricultural producer of poultry,
15 eggs, or dairy products to consumers if the sales have an average monthly sales value of $125 or
16 more.
17 (c) "Retail sale" does not include, and no additional sales or use tax shall be assessed
18 against, those transactions where a purchaser of tangible personal property pays applicable sales
19 or use taxes on its initial nonexempt purchases of property and then enters into a sale-leaseback
20 transaction by which title to such property is transferred by the purchaser-lessee to a lessor for
21 consideration, provided:
22 (i) the transaction is intended as a form of financing for the property to the
23 purchaser-lessee; and
24 (ii) pursuant to generally accepted accounting principles, the purchaser-lessee is required
25 to capitalize the subject property for financial reporting purposes, and account for the lease
26 payments as payments made under a financing arrangement.
27 (18) (a) "Retailer" means any person engaged in a regularly organized retail business in
28 tangible personal property or any other taxable item or service under Subsection 59-12-103(1), and
29 who is selling to the user or consumer and not for resale.
30 (b) "Retailer" includes commission merchants, auctioneers, and any person regularly
31 engaged in the business of selling to users or consumers within the state.

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1 (c) "Retailer" includes any person who engages in regular or systematic solicitation of a
2 consumer market in this state by the distribution of catalogs, periodicals, advertising flyers, or
3 other advertising, or by means of print, radio or television media, by mail, telegraphy, telephone,
4 computer data base, cable, optic, microwave, or other communication system.
5 (d) "Retailer" does not include farmers, gardeners, stockmen, poultrymen, or other growers
6 or agricultural producers producing and doing business on their own premises, except those who
7 are regularly engaged in the business of buying or selling for a profit.
8 (e) For purposes of this chapter the commission may regard as retailers the following if
9 they determine it is necessary for the efficient administration of this chapter: salesmen,
10 representatives, peddlers, or canvassers as the agents of the dealers, distributors, supervisors, or
11 employers under whom they operate or from whom they obtain the tangible personal property sold
12 by them, irrespective of whether they are making sales on their own behalf or on behalf of these
13 dealers, distributors, supervisors, or employers, except that:
14 (i) a printer's facility with which a retailer has contracted for printing shall not be
15 considered to be a salesman, representative, peddler, canvasser, or agent of the retailer; and
16 (ii) the ownership of property that is located at the premises of a printer's facility with
17 which the retailer has contracted for printing and that consists of the final printed product, property
18 that becomes a part of the final printed product, or copy from which the printed product is
19 produced, shall not result in the retailer being deemed to have or maintain an office, distribution
20 house, sales house, warehouse, service enterprise, or other place of business, or to maintain a stock
21 of goods, within this state.
22 (19) "Sale" means any transfer of title, exchange, or barter, conditional or otherwise, in
23 any manner, of tangible personal property or any other taxable item or service under Subsection
24 59-12-103(1), for a consideration. It includes:
25 (a) installment and credit sales;
26 (b) any closed transaction constituting a sale;
27 (c) any sale of electrical energy, gas, services, or entertainment taxable under this chapter;
28 (d) any transaction if the possession of property is transferred but the seller retains the title
29 as security for the payment of the price; and
30 (e) any transaction under which right to possession, operation, or use of any article of
31 tangible personal property is granted under a lease or contract and the transfer of possession would

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1 be taxable if an outright sale were made.
2 (20) (a) "Sales relating to schools" means sales by a public school district or public or
3 private elementary or secondary school, grades kindergarten through 12, that are directly related
4 to the school's or school district's educational functions or activities and include:
5 (i) the sale of textbooks, textbook fees, laboratory fees, laboratory supplies, and safety
6 equipment;
7 (ii) the sale of clothing that:
8 (A) a student is specifically required to wear as a condition of participation in a
9 school-related event or activity; and
10 (B) is not readily adaptable to general or continued usage to the extent that it takes the
11 place of ordinary clothing;
12 (iii) sales of food if the net or gross revenues generated by the food sales are deposited into
13 a school district fund or school fund dedicated to school meals; and
14 (iv) transportation charges for official school activities.
15 (b) "Sales relating to schools" does not include:
16 (i) gate receipts;
17 (ii) special event admission fees;
18 (iii) bookstore sales of items that are not educational materials or supplies; and
19 (iv) except as provided in Subsection (20)(a)(ii), clothing.
20 (21) "State" means the state of Utah, its departments, and agencies.
21 (22) "Storage" means any keeping or retention of tangible personal property or any other
22 taxable item or service under Subsection 59-12-103(1), in this state for any purpose except sale
23 in the regular course of business.
24 (23) (a) "Tangible personal property" means:
25 (i) all goods, wares, merchandise, produce, and commodities;
26 (ii) all tangible or corporeal things and substances which are dealt in or capable of being
27 possessed or exchanged;
28 (iii) water in bottles, tanks, or other containers; and
29 (iv) all other physically existing articles or things, including property severed from real
30 estate.
31 (b) "Tangible personal property" does not include:

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1 (i) real estate or any interest or improvements in real estate;
2 (ii) bank accounts, stocks, bonds, mortgages, notes, and other evidence of debt;
3 (iii) insurance certificates or policies;
4 (iv) personal or governmental licenses;
5 (v) water in pipes, conduits, ditches, or reservoirs;
6 (vi) currency and coinage constituting legal tender of the United States or of a foreign
7 nation; and
8 (vii) all gold, silver, or platinum ingots, bars, medallions, or decorative coins, not
9 constituting legal tender of any nation, with a gold, silver, or platinum content of not less than
10 80%.
11 (24) (a) "Use" means the exercise of any right or power over tangible personal property
12 under Subsection 59-12-103(1), incident to the ownership or the leasing of that property, item, or
13 service.
14 (b) "Use" does not include the sale, display, demonstration, or trial of that property in the
15 regular course of business and held for resale.
16 (25) "Vehicle" means any aircraft, as defined in Section 2-1-1; any vehicle, as defined in
17 Section 41-1a-102; any off-highway vehicle, as defined in Section 41-22-2; and any vessel, as
18 defined in Section 41-1a-102; that is required to be titled, registered, or both. "Vehicle" for
19 purposes of Subsection 59-12-104[(37)] (36) only, also includes any locomotive, freight car,
20 railroad work equipment, or other railroad rolling stock.
21 (26) "Vehicle dealer" means a person engaged in the business of buying, selling, or
22 exchanging vehicles as defined in Subsection (25).
23 (27) (a) "Vendor" means:
24 (i) any person receiving any payment or consideration upon a sale of tangible personal
25 property or any other taxable item or service under Subsection 59-12-103(1), or to whom such
26 payment or consideration is payable; and
27 (ii) any person who engages in regular or systematic solicitation of a consumer market in
28 this state by the distribution of catalogs, periodicals, advertising flyers, or other advertising, or by
29 means of print, radio or television media, by mail, telegraphy, telephone, computer data base,
30 cable, optic, microwave, or other communication system.
31 (b) "Vendor" does not mean a printer's facility described in Subsection (18)(e).

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1 Section 2. Section 59-12-104 is amended to read:
2 59-12-104. Exemptions.
3 The following sales and uses are exempt from the taxes imposed by this chapter:
4 (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
5 under Title 59, Chapter 13, Motor and Special Fuel Tax Act;
6 (2) through December 31, 1995, sales to the state, its institutions, and its political
7 subdivisions, except sales of construction materials however, construction materials purchased by
8 the state, its institutions, or its political subdivisions which are installed or converted to real
9 property by employees of the state, its institutions, or its political subdivisions are exempt;
10 (3) beginning January 1, 1996, sales to the state, its institutions, and its political
11 subdivisions; however, this exemption does not apply to sales of construction materials except:
12 (a) construction materials purchased by or on behalf of institutions of the public education
13 system as defined in Utah Constitution Article X, Section 2, provided the construction materials
14 are clearly identified and segregated and installed or converted to real property which is owned by
15 institutions of the public education system; and
16 (b) construction materials purchased by the state, its institutions or its political
17 subdivisions which are installed or converted to real property by employees of the state, its
18 institutions, or its political subdivisions;
19 (4) sales of food, beverage, and dairy products from vending machines in which the
20 proceeds of each sale do not exceed $1 if the vendor or operator of the vending machine reports
21 an amount equal to 150% of the cost of items as goods consumed;
22 (5) sales of food, beverage, dairy products, similar confections, and related services to
23 commercial airline carriers for in-flight consumption;
24 (6) sales of parts and equipment installed in aircraft operated by common carriers in
25 interstate or foreign commerce;
26 (7) sales of commercials, motion picture films, prerecorded audio program tapes or
27 records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
28 exhibitor, distributor, or commercial television or radio broadcaster;
29 (8) sales of cleaning or washing of tangible personal property by a coin-operated laundry
30 or dry cleaning machine;
31 (9) sales made to or by religious or charitable institutions in the conduct of their regular

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1 religious or charitable functions and activities, if the requirements of Section 59-12-104.1 are
2 fulfilled;
3 (10) sales of vehicles of a type required to be registered under the motor vehicle laws of
4 this state which are made to bona fide nonresidents of this state and are not afterwards registered
5 or used in this state except as necessary to transport them to the borders of this state;
6 (11) sales of medicine;
7 (12) sales or use of property, materials, or services used in the construction of or
8 incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127;
9 (13) sales of meals served by:
10 (a) churches, charitable institutions, and institutions of higher education, if the meals are
11 not available to the general public; and
12 (b) inpatient meals provided at medical or nursing facilities;
13 (14) isolated or occasional sales by persons not regularly engaged in business, except the
14 sale of vehicles or vessels required to be titled or registered under the laws of this state in which
15 case the tax is based upon:
16 (a) the bill of sale or other written evidence of value of the vehicle or vessel being sold;
17 or
18 (b) in the absence of a bill of sale or other written evidence of value, the then existing fair
19 market value of the vehicle or vessel being sold as determined by the commission;
20 (15) (a) the following purchases or leases by a manufacturer on or after July 1, 1995:
21 (i) machinery and equipment:
22 (A) used in the manufacturing process;
23 (B) having an economic life of three or more years; and
24 (C) used:
25 (I) to manufacture an item sold as tangible personal property; and
26 (II) in new or expanding operations in a manufacturing facility in the state;
27 (ii) subject to the provisions of Subsection (15)(a)(iii), normal operating replacements that:
28 (A) have an economic life of three or more years;
29 (B) are used in the manufacturing process in a manufacturing facility in the state;
30 (C) are used to replace or adapt an existing machine to extend the normal estimated useful
31 life of the machine; and

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1 (D) do not include repairs and maintenance;
2 (iii) the rates for the exemption under Subsection (15)(a)(ii) are as follows:
3 (A) beginning July 1, 1996, through June 30, 1997, 30% of the sale or lease described in
4 Subsection (15)(a)(ii) is exempt;
5 (B) beginning July 1, 1997, through June 30, 1998, 60% of the sale or lease described in
6 Subsection (15)(a)(ii) is exempt; and
7 (C) beginning July 1, 1998, 100% of the sale or lease described in Subsection (15)(a)(ii)
8 is exempt; and
9 (iv) (A) manufacturing facility means an establishment described in SIC Codes 2000 [to]
10 through 3760 or 3770 through 3999 of the 1987 Standard Industrial Classification Manual of the
11 federal Executive Office of the President, Office of Management and Budget; and
12 (B) for purposes of this subsection, the commission shall by rule define the terms "new
13 or expanding operations" and "establishment"; and
14 (b) on or before October 1, 1991, and every five years after October 1, 1991, the
15 commission shall:
16 (i) review the exemptions described in Subsection (15)(a) and make recommendations to
17 the Revenue and Taxation Interim Committee concerning whether the exemptions should be
18 continued, modified, or repealed; and
19 (ii) include in its report:
20 (A) the cost of the exemptions;
21 (B) the purpose and effectiveness of the exemptions; and
22 (C) the benefits of the exemptions to the state;
23 [(16) sales of tooling, special tooling, support equipment, and special test equipment used
24 or consumed exclusively in the performance of any aerospace or electronics industry contract with
25 the United States government or any subcontract under that contract, but only if, under the terms
26 of that contract or subcontract, title to the tooling and equipment is vested in the United States
27 government as evidenced by a government identification tag placed on the tooling and equipment
28 or by listing on a government-approved property record if a tag is impractical;]
29 [(17)] (16) intrastate movements of:
30 (a) freight by common carriers; and
31 (b) people by taxicabs as described in SIC Code 4121 of the Standard Industrial

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1 Classification Manual of the federal Executive Office of the President, Office of Management and
2 Budget;
3 [(18)] (17) sales of newspapers or newspaper subscriptions;
4 [(19)] (18) tangible personal property, other than money, traded in as full or part payment
5 of the purchase price, except that for purposes of calculating sales or use tax upon vehicles not sold
6 by a vehicle dealer, trade-ins are limited to other vehicles only, and the tax is based upon:
7 (a) the bill of sale or other written evidence of value of the vehicle being sold and the
8 vehicle being traded in; or
9 (b) in the absence of a bill of sale or other written evidence of value, the then existing fair
10 market value of the vehicle being sold and the vehicle being traded in, as determined by the
11 commission;
12 [(20)] (19) sprays and insecticides used to control insects, diseases, and weeds for
13 commercial production of fruits, vegetables, feeds, seeds, and animal products, but not those
14 sprays and insecticides used in the processing of the products;
15 [(21)] (20) (a) sales of tangible personal property used or consumed primarily and directly
16 in farming operations, including sales of irrigation equipment and supplies used for agricultural
17 production purposes, whether or not they become part of real estate and whether or not installed
18 by farmer, contractor, or subcontractor, but not sales of:
19 (i) machinery, equipment, materials, and supplies used in a manner that is incidental to
20 farming, such as hand tools with a unit purchase price not in excess of $250, and maintenance and
21 janitorial equipment and supplies;
22 (ii) tangible personal property used in any activities other than farming, such as office
23 equipment and supplies, equipment and supplies used in sales or distribution of farm products, in
24 research, or in transportation; or
25 (iii) any vehicle required to be registered by the laws of this state, without regard to the
26 use to which the vehicle is put;
27 (b) sales of hay;
28 [(22)] (21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm,
29 or other agricultural produce if sold by a producer during the harvest season;
30 [(23)] (22) purchases of food as defined in 7 U.S.C. Sec. 2012(g) under the Food Stamp
31 Program, 7 U.S.C. Sec. 2011 et seq.;

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1 [(24)] (23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
2 nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor, wholesaler,
3 or retailer for use in packaging tangible personal property to be sold by that manufacturer,
4 processor, wholesaler, or retailer;
5 [(25)] (24) property stored in the state for resale;
6 [(26)] (25) property brought into the state by a nonresident for his or her own personal use
7 or enjoyment while within the state, except property purchased for use in Utah by a nonresident
8 living and working in Utah at the time of purchase;
9 [(27)] (26) property purchased for resale in this state, in the regular course of business,
10 either in its original form or as an ingredient or component part of a manufactured or compounded
11 product;
12 [(28)] (27) property upon which a sales or use tax was paid to some other state, or one of
13 its subdivisions, except that the state shall be paid any difference between the tax paid and the tax
14 imposed by this part and Part 2, and no adjustment is allowed if the tax paid was greater than the
15 tax imposed by this part and Part 2;
16 [(29)] (28) any sale of a service described in Subsections 59-12-103(1)(b), (c), and (d) to
17 a person for use in compounding a service taxable under the subsections;
18 [(30)] (29) purchases of supplemental foods as defined in 42 U.S.C. Sec. 1786(b)(14)
19 under the special supplemental nutrition program for women, infants, and children established in
20 42 U.S.C. Sec. 1786;
21 [(31)] (30) (a) sales or leases made before June 30, 1996, of rolls, rollers, refractory brick,
22 electric motors, and other replacement parts used in the furnaces, mills, and ovens of a steel mill
23 described in SIC Code 3312 of the 1987 Standard Industrial Classification Manual of the federal
24 Executive Office of the President, Office of Management and Budget; or
25 (b) contracts entered into or orders placed on or before January 1, 1996, to purchase or
26 lease an item described in Subsection (31)(a) if the contract or order constitutes a:
27 (i) legal obligation to purchase or lease an item described in Subsection (31)(a); and
28 (ii) sale or lease under Section 59-12-102 on or before June 30, 1997;
29 [(32)] (31) sales of boats of a type required to be registered under Title 73, Chapter 18,
30 State Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents
31 of this state and are not thereafter registered or used in this state except as necessary to transport

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1 them to the borders of this state;
2 [(33)] (32) sales of tangible personal property to persons within this state that is
3 subsequently shipped outside the state and incorporated pursuant to contract into and becomes a
4 part of real property located outside of this state, except to the extent that the other state or political
5 entity imposes a sales, use, gross receipts, or other similar transaction excise tax on it against
6 which the other state or political entity allows a credit for taxes imposed by this chapter;
7 [(34)] (33) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah
8 where a sales or use tax is not imposed, even if the title is passed in Utah;
9 [(35)] (34) until July 1, 1999, amounts paid for purchase of telephone service for purposes
10 of providing telephone service;
11 [(36)] (35) fares charged to persons transported directly by a public transit district created
12 under the authority of Title 17A, Chapter 2, Part 10, Public Transit Districts;
13 [(37)] (36) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
14 [(38)] (37) until July 1, 2000, 45% of the sales price of any new manufactured home and
15 100% of the sales price of any used manufactured home;
16 [(39)] (38) sales relating to schools and fundraising sales;
17 [(40)] (39) sales or rentals of home medical equipment and supplies;
18 [(41)] (40) (a) sales to a ski resort of electricity to operate a passenger tramway as defined
19 in Subsection 63-11-38(8); and
20 (b) the commission shall by rule determine the method for calculating sales exempt under
21 Subsection (41)(a) that are not separately metered and accounted for in utility billings;
22 [(42)] (41) sales to a ski resort of:
23 (a) snowmaking equipment;
24 (b) ski slope grooming equipment; and
25 (c) passenger tramways as defined in Subsection 63-11-38(8);
26 [(43)] (42) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial
27 use;
28 [(44)] (43) sales or rentals of the right to use or operate for amusement, entertainment, or
29 recreation a coin-operated amusement device as defined in Subsection 59-12-102(3); and
30 [(45)] (44) sales of cleaning or washing of tangible personal property by a coin-operated
31 car wash machine.

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1 Section 3. Section 59-12-105 is amended to read:
2 59-12-105. Exempt sales to be reported.
3 The amount of sales or uses exempt under Subsections 59-12-104[(16)] (15), [(22)] (20),
4 [(42)] (41), and [(43)] (42) shall be reported to the commission by the owner, vendor, or purchaser,
5 as the case may be. Upon failure by the owner, vendor, or purchaser to report the full amount of
6 the exemptions granted under Subsections 59-12-104[(16)] (15), [(22)] (20), [(42)] (41), and [(43)]
7 (42) on the original filed return, the commission shall impose a penalty equal to 10% of the sales
8 or use tax that would have been imposed if the exemption had not applied. The penalty shall not
9 be imposed if an amended return containing the amount of the exemption is filed prior to notice
10 of audit by the tax commission to the owner, vendor, or purchaser.
11 Section 4. Effective date.
12 This act takes effect on July 1, 1997.




Legislative Review Note
as of 2-5-97 12:28 PM

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

Office of Legislative Research and General Counsel

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