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H.B. 291

             1     

SALES AND USE TAX EXEMPTION - SCRAP

             2     
RECYCLERS

             3     
2000 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Susan J. Koehn

             6      AN ACT RELATING TO THE SALES AND USE TAX ACT; EXEMPTING FROM THE
             7      SALES AND USE TAX SALES OF INDUSTRIAL FUEL TO SCRAP RECYCLERS; MAKING
             8      TECHNICAL CHANGES; AND PROVIDING AN EFFECTIVE DATE.
             9      This act affects sections of Utah Code Annotated 1953 as follows:
             10      AMENDS:
             11          59-12-102, as last amended by Chapters 63 and 362, Laws of Utah 1999
             12      Be it enacted by the Legislature of the state of Utah:
             13          Section 1. Section 59-12-102 is amended to read:
             14           59-12-102. Definitions.
             15          As used in this chapter:
             16          (1) (a) "Admission or user fees" includes season passes.
             17          (b) "Admission or user fees" does not include annual membership dues to private
             18      organizations.
             19          (2) "Area agency on aging" is as defined in Section 62A-3-101 .
             20          (3) "Authorized carrier" means:
             21          (a) in the case of vehicles operated over public highways, the holder of credentials
             22      indicating that the vehicle is or will be operated pursuant to both the International Registration
             23      Plan (IRP) and the International Fuel Tax Agreement (IFTA);
             24          (b) in the case of aircraft, the holder of a Federal Aviation Administration (FAA) operating
             25      certificate or air carrier's operating certificate; or
             26          (c) in the case of locomotives, freight cars, railroad work equipment, or other rolling stock,
             27      the holder of a certificate issued by the United States Interstate Commerce Commission.


             28          (4) (a) For purposes of Subsection 59-12-104 (43), "coin-operated amusement device"
             29      means:
             30          (i) a coin-operated amusement, skill, or ride device;
             31          (ii) that is not controlled through vendor-assisted, over-the-counter, sales of tokens; and
             32          (iii) includes a music machine, pinball machine, billiard machine, video game machine,
             33      arcade machine, and a mechanical or electronic skill game or ride.
             34          (b) For purposes of Subsection 59-12-104 (43), "coin-operated amusement device" does
             35      not mean a coin-operated amusement device possessing a coinage mechanism that:
             36          (i) accepts and registers multiple denominations of coins; and
             37          (ii) allows the vendor to collect the sales and use tax at the time an amusement device is
             38      activated and operated by a person inserting coins into the device.
             39          (5) "Commercial use" means the use of gas, electricity, heat, coal, fuel oil, or other fuels
             40      that does not constitute industrial use under Subsection (13) or residential use under Subsection
             41      (21).
             42          (6) (a) "Common carrier" means a person engaged in or transacting the business of
             43      transporting passengers, freight, merchandise, or other property for hire within this state.
             44          (b) (i) "Common carrier" does not include a person who, at the time the person is traveling
             45      to or from that person's place of employment, transports a passenger to or from the passenger's
             46      place of employment.
             47          (ii) For purposes of Subsection (6)(b)(i), in accordance with Title 63, Chapter 46a, Utah
             48      Administrative Rulemaking Act, the commission may make rules defining what constitutes a
             49      person's place of employment.
             50          (7) "Component part" includes:
             51          (a) poultry, dairy, and other livestock feed, and their components;
             52          (b) baling ties and twine used in the baling of hay and straw;
             53          (c) fuel used for providing temperature control of orchards and commercial greenhouses
             54      doing a majority of their business in wholesale sales, and for providing power for off-highway type
             55      farm machinery; and
             56          (d) feed, seeds, and seedlings.
             57          (8) "Construction materials" means any tangible personal property that will be converted
             58      into real property.


             59          (9) (a) "Fundraising sales" means sales:
             60          (i) (A) made by a public or private elementary or secondary school; or
             61          (B) made by a public or private elementary or secondary school student, grades
             62      kindergarten through 12;
             63          (ii) that are for the purpose of raising funds for the school to purchase equipment,
             64      materials, or provide transportation; and
             65          (iii) that are part of an officially sanctioned school activity.
             66          (b) For purposes of Subsection (9)(a)(iii), "officially sanctioned school activity" means a
             67      school activity:
             68          (i) that is conducted in accordance with a formal policy adopted by the school or school
             69      district governing the authorization and supervision of fundraising activities;
             70          (ii) that does not directly or indirectly compensate an individual teacher or other
             71      educational personnel by direct payment, commissions, or payment in kind; and
             72          (iii) the net or gross revenues from which are deposited in a dedicated account controlled
             73      by the school or school district.
             74          (10) (a) "Hearing aid" means:
             75          (i) an instrument or device having an electronic component that is designed to:
             76          (A) (I) improve impaired human hearing; or
             77          (II) correct impaired human hearing; and
             78          (B) (I) be worn in the human ear; or
             79          (II) affixed behind the human ear;
             80          (ii) an instrument or device that is surgically implanted into the cochlea; or
             81          (iii) a telephone amplifying device.
             82          (b) "Hearing aid" does not include:
             83          (i) except as provided in Subsection (10)(a)(i)(B) or (10)(a)(ii), an instrument or device
             84      having an electronic component that is designed to be worn on the body;
             85          (ii) except as provided in Subsection (10)(a)(iii), an assistive listening device or system
             86      designed to be used by one individual, including:
             87          (A) a personal amplifying system;
             88          (B) a personal FM system;
             89          (C) a television listening system; or


             90          (D) a device or system similar to a device or system described in Subsections
             91      (10)(b)(ii)(A) through (C); or
             92          (iii) an assistive listening device or system designed to be used by more than one
             93      individual, including:
             94          (A) a device or system installed in:
             95          (I) an auditorium;
             96          (II) a church;
             97          (III) a conference room;
             98          (IV) a synagogue; or
             99          (V) a theater; or
             100          (B) a device or system similar to a device or system described in Subsections
             101      (10)(b)(iii)(A)(I) through (V).
             102          (11) (a) "Hearing aid accessory" means a hearing aid:
             103          (i) component;
             104          (ii) attachment; or
             105          (iii) accessory.
             106          (b) "Hearing aid accessory" includes:
             107          (i) a hearing aid neck loop;
             108          (ii) a hearing aid cord;
             109          (iii) a hearing aid ear mold;
             110          (iv) hearing aid tubing;
             111          (v) a hearing aid ear hook; or
             112          (vi) a hearing aid remote control.
             113          (c) "Hearing aid accessory" does not include:
             114          (i) a component, attachment, or accessory designed to be used only with an:
             115          (A) instrument or device described in Subsection (10)(b)(i); or
             116          (B) assistive listening device or system described in Subsection (10)(b)(ii) or (iii); or
             117          (ii) a hearing aid battery.
             118          (12) (a) "Home medical equipment and supplies" means equipment and supplies that:
             119          (i) a licensed physician prescribes or authorizes in writing as necessary for the treatment
             120      of a medical illness or injury or as necessary to mitigate an impairment resulting from illness or


             121      injury;
             122          (ii) are used exclusively by the person for whom they are prescribed to serve a medical
             123      purpose; and
             124          (iii) are listed as eligible for payment under Title 18 of the federal Social Security Act or
             125      under the state plan for medical assistance under Title 19 of the federal Social Security Act.
             126          (b) "Home medical equipment and supplies" does not include:
             127          (i) equipment and supplies purchased by, for, or on behalf of any health care facility, as
             128      defined in Subsection (12)(c), doctor, nurse, or other health care provider for use in their
             129      professional practice;
             130          (ii) eyeglasses, contact lenses, or equipment to correct impaired vision; or
             131          (iii) hearing aids or hearing aid accessories.
             132          (c) For purposes of Subsection (12)(b)(i), "health care facility" includes:
             133          (i) a clinic;
             134          (ii) a doctor's office; and
             135          (iii) a health care facility as defined in Section 26-21-2 .
             136          (13) "Industrial use" means the use of natural gas, electricity, heat, coal, fuel oil, or other
             137      fuels [in]:
             138          (a) in mining or extraction of minerals;
             139          (b) in agricultural operations to produce an agricultural product up to the time of harvest
             140      or placing the agricultural product into a storage facility, including:
             141          (i) commercial greenhouses;
             142          (ii) irrigation pumps;
             143          (iii) farm machinery;
             144          (iv) implements of husbandry as defined in Subsection 41-1a-102 (23) that are not
             145      registered under Title 41, Chapter 1a, Part 2, Registration; and
             146          (v) other farming activities; [and]
             147          (c) in manufacturing tangible personal property at an establishment described in SIC Codes
             148      2000 to 3999 of the 1987 Standard Industrial Classification Manual of the federal Executive Office
             149      of the President, Office of Management and Budget[.]; or
             150          (d) by a scrap recycler if:
             151          (i) from a fixed location, the scrap recycler utilizes machinery or equipment to process one


             152      or more of the following items into prepared grades of processed materials for use in new products:
             153          (A) iron;
             154          (B) steel;
             155          (C) nonferrous metal;
             156          (D) paper;
             157          (E) glass;
             158          (F) plastic;
             159          (G) textile; or
             160          (H) rubber; and
             161          (ii) the new products under Subsection (13)(d)(i) would otherwise be made with
             162      nonrecycled materials.
             163          (14) "Manufactured home" means any manufactured home or mobile home as defined in
             164      Title 58, Chapter 56, Utah Uniform Building Standards Act.
             165          (15) For purposes of Subsection 59-12-104 (14), "manufacturing facility" means:
             166          (a) an establishment described in SIC Codes 2000 to 3999 of the 1987 Standard Industrial
             167      Classification Manual of the federal Executive Office of the President, Office of Management and
             168      Budget; or
             169          (b) a scrap recycler if:
             170          (i) from a fixed location, the scrap recycler utilizes machinery or equipment to process one
             171      or more of the following items into prepared grades of processed materials for use in new products:
             172          (A) iron;
             173          (B) steel;
             174          (C) nonferrous metal;
             175          (D) paper;
             176          (E) glass;
             177          (F) plastic;
             178          (G) textile; or
             179          (H) rubber; and
             180          (ii) the new products under Subsection (15)(b)(i) would otherwise be made with
             181      nonrecycled materials.
             182          (16) (a) "Medicine" means:


             183          (i) insulin, syringes, and any medicine prescribed for the treatment of human ailments by
             184      a person authorized to prescribe treatments and dispensed on prescription filled by a registered
             185      pharmacist, or supplied to patients by a physician, surgeon, or podiatric physician;
             186          (ii) any medicine dispensed to patients in a county or other licensed hospital if prescribed
             187      for that patient and dispensed by a registered pharmacist or administered under the direction of a
             188      physician; and
             189          (iii) any oxygen or stoma supplies prescribed by a physician or administered under the
             190      direction of a physician or paramedic.
             191          (b) "Medicine" does not include:
             192          (i) any auditory, prosthetic, ophthalmic, or ocular device or appliance; or
             193          (ii) any alcoholic beverage.
             194          (17) "Olympic merchandise" means tangible personal property bearing an Olympic
             195      designation, emblem, insignia, mark, logo, service mark, symbol, terminology, trademark, or other
             196      copyrighted or protected material, including:
             197          (a) one or more of the following terms:
             198          (i) "Olympic;"
             199          (ii) "Olympiad;" or
             200          (iii) "Citius Altius Fortius;"
             201          (b) the symbol of the International Olympic Committee, consisting of five interlocking
             202      rings;
             203          (c) the emblem of the International Olympic Committee Corporation;
             204          (d) a United States Olympic Committee designation, emblem, insignia, mark, logo, service
             205      mark, symbol, terminology, trademark, or other copyrighted or protected material;
             206          (e) any emblem of the Winter Olympic Games of 2002 that is officially designated by the
             207      Salt Lake Organizing Committee of the Winter Olympic Games of 2002; or
             208          (f) the mascot of the Winter Olympic Games of 2002.
             209          (18) (a) "Other fuels" means products that burn independently to produce heat or energy.
             210          (b) "Other fuels" includes oxygen when it is used in the manufacturing of tangible personal
             211      property.
             212          (19) "Person" includes any individual, firm, partnership, joint venture, association,
             213      corporation, estate, trust, business trust, receiver, syndicate, this state, any county, city,


             214      municipality, district, or other local governmental entity of the state, or any group or combination
             215      acting as a unit.
             216          (20) "Purchase price" means the amount paid or charged for tangible personal property or
             217      any other taxable item or service under Subsection 59-12-103 (1), excluding only cash discounts
             218      taken or any excise tax imposed on the purchase price by the federal government.
             219          (21) "Residential use" means the use in or around a home, apartment building, sleeping
             220      quarters, and similar facilities or accommodations.
             221          (22) (a) "Retail sale" means any sale within the state of tangible personal property or any
             222      other taxable item or service under Subsection 59-12-103 (1), other than resale of such property,
             223      item, or service by a retailer or wholesaler to a user or consumer.
             224          (b) "Retail sale" includes sales by any farmer or other agricultural producer of poultry,
             225      eggs, or dairy products to consumers if the sales have an average monthly sales value of $125 or
             226      more.
             227          (c) "Retail sale" does not include, and no additional sales or use tax shall be assessed
             228      against, those transactions where a purchaser of tangible personal property pays applicable sales
             229      or use taxes on its initial nonexempt purchases of property and then enters into a sale-leaseback
             230      transaction by which title to such property is transferred by the purchaser-lessee to a lessor for
             231      consideration, provided:
             232          (i) the transaction is intended as a form of financing for the property to the
             233      purchaser-lessee; and
             234          (ii) pursuant to generally accepted accounting principles, the purchaser-lessee is required
             235      to capitalize the subject property for financial reporting purposes, and account for the lease
             236      payments as payments made under a financing arrangement.
             237          (23) (a) "Retailer" means any person engaged in a regularly organized retail business in
             238      tangible personal property or any other taxable item or service under Subsection 59-12-103 (1), and
             239      who is selling to the user or consumer and not for resale.
             240          (b) "Retailer" includes commission merchants, auctioneers, and any person regularly
             241      engaged in the business of selling to users or consumers within the state.
             242          (c) "Retailer" includes any person who engages in regular or systematic solicitation of a
             243      consumer market in this state by the distribution of catalogs, periodicals, advertising flyers, or
             244      other advertising, or by means of print, radio or television media, by mail, telegraphy, telephone,


             245      computer data base, cable, optic, microwave, or other communication system.
             246          (d) "Retailer" does not include farmers, gardeners, stockmen, poultrymen, or other growers
             247      or agricultural producers producing and doing business on their own premises, except those who
             248      are regularly engaged in the business of buying or selling for a profit.
             249          (e) For purposes of this chapter the commission may regard as retailers the following if
             250      they determine it is necessary for the efficient administration of this chapter: salesmen,
             251      representatives, peddlers, or canvassers as the agents of the dealers, distributors, supervisors, or
             252      employers under whom they operate or from whom they obtain the tangible personal property sold
             253      by them, irrespective of whether they are making sales on their own behalf or on behalf of these
             254      dealers, distributors, supervisors, or employers, except that:
             255          (i) a printer's facility with which a retailer has contracted for printing shall not be
             256      considered to be a salesman, representative, peddler, canvasser, or agent of the retailer; and
             257          (ii) the ownership of property that is located at the premises of a printer's facility with
             258      which the retailer has contracted for printing and that consists of the final printed product, property
             259      that becomes a part of the final printed product, or copy from which the printed product is
             260      produced, shall not result in the retailer being deemed to have or maintain an office, distribution
             261      house, sales house, warehouse, service enterprise, or other place of business, or to maintain a stock
             262      of goods, within this state.
             263          (24) "Sale" means any transfer of title, exchange, or barter, conditional or otherwise, in any
             264      manner, of tangible personal property or any other taxable item or service under Subsection
             265      59-12-103 (1), for a consideration. It includes:
             266          (a) installment and credit sales;
             267          (b) any closed transaction constituting a sale;
             268          (c) any sale of electrical energy, gas, services, or entertainment taxable under this chapter;
             269          (d) any transaction if the possession of property is transferred but the seller retains the title
             270      as security for the payment of the price; and
             271          (e) any transaction under which right to possession, operation, or use of any article of
             272      tangible personal property is granted under a lease or contract and the transfer of possession would
             273      be taxable if an outright sale were made.
             274          (25) (a) "Sales relating to schools" means sales by a public school district or public or
             275      private elementary or secondary school, grades kindergarten through 12, that are directly related


             276      to the school's or school district's educational functions or activities and include:
             277          (i) the sale of textbooks, textbook fees, laboratory fees, laboratory supplies, and safety
             278      equipment;
             279          (ii) the sale of clothing that:
             280          (A) a student is specifically required to wear as a condition of participation in a
             281      school-related event or activity; and
             282          (B) is not readily adaptable to general or continued usage to the extent that it takes the
             283      place of ordinary clothing;
             284          (iii) sales of food if the net or gross revenues generated by the food sales are deposited into
             285      a school district fund or school fund dedicated to school meals; and
             286          (iv) transportation charges for official school activities.
             287          (b) "Sales relating to schools" does not include:
             288          (i) gate receipts;
             289          (ii) special event admission fees;
             290          (iii) bookstore sales of items that are not educational materials or supplies; and
             291          (iv) except as provided in Subsection (25)(a)(ii), clothing.
             292          (26) "Senior citizen center" means a facility having the primary purpose of providing
             293      services to the aged as defined in Section 62A-3-101 .
             294          (27) "State" means the state of Utah, its departments, and agencies.
             295          (28) "Storage" means any keeping or retention of tangible personal property or any other
             296      taxable item or service under Subsection 59-12-103 (1), in this state for any purpose except sale
             297      in the regular course of business.
             298          (29) (a) "Tangible personal property" means:
             299          (i) all goods, wares, merchandise, produce, and commodities;
             300          (ii) all tangible or corporeal things and substances which are dealt in or capable of being
             301      possessed or exchanged;
             302          (iii) water in bottles, tanks, or other containers; and
             303          (iv) all other physically existing articles or things, including property severed from real
             304      estate.
             305          (b) "Tangible personal property" does not include:
             306          (i) real estate or any interest or improvements in real estate;


             307          (ii) bank accounts, stocks, bonds, mortgages, notes, and other evidence of debt;
             308          (iii) insurance certificates or policies;
             309          (iv) personal or governmental licenses;
             310          (v) water in pipes, conduits, ditches, or reservoirs;
             311          (vi) currency and coinage constituting legal tender of the United States or of a foreign
             312      nation; and
             313          (vii) all gold, silver, or platinum ingots, bars, medallions, or decorative coins, not
             314      constituting legal tender of any nation, with a gold, silver, or platinum content of not less than
             315      80%.
             316          (30) (a) "Use" means the exercise of any right or power over tangible personal property
             317      under Subsection 59-12-103 (1), incident to the ownership or the leasing of that property, item, or
             318      service.
             319          (b) "Use" does not include the sale, display, demonstration, or trial of that property in the
             320      regular course of business and held for resale.
             321          (31) "Vehicle" means any aircraft, as defined in Section 72-10-102 ; any vehicle, as defined
             322      in Section 41-1a-102 ; any off-highway vehicle, as defined in Section 41-22-2 ; and any vessel, as
             323      defined in Section 41-1a-102 ; that is required to be titled, registered, or both. "Vehicle" for
             324      purposes of Subsection 59-12-104 (36) only, also includes any locomotive, freight car, railroad
             325      work equipment, or other railroad rolling stock.
             326          (32) "Vehicle dealer" means a person engaged in the business of buying, selling, or
             327      exchanging vehicles as defined in Subsection (31).
             328          (33) (a) "Vendor" means:
             329          (i) any person receiving any payment or consideration upon a sale of tangible personal
             330      property or any other taxable item or service under Subsection 59-12-103 (1), or to whom such
             331      payment or consideration is payable; and
             332          (ii) any person who engages in regular or systematic solicitation of a consumer market in
             333      this state by the distribution of catalogs, periodicals, advertising flyers, or other advertising, or by
             334      means of print, radio or television media, by mail, telegraphy, telephone, computer data base,
             335      cable, optic, microwave, or other communication system.
             336          (b) "Vendor" does not mean a printer's facility described in Subsection (23)(e).
             337          Section 2. Effective date.


             338          This act takes effect on July 1, 2000.




Legislative Review Note
    as of 1-28-00 4:38 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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