! The Capitol Complex is closed to the public due to COVID-19. All meetings will be held virtually online. View procedures and guidelines for remote public comment

Download Zipped Introduced WP 8.0 SB0051.ZIP 14,004 Bytes
[Status][Bill Documents][Fiscal Note][Bills Directory]

S.B. 51

             1     

SALES AND USE TAX EXEMPTION -

             2     
CERTAIN PURCHASES OR LEASES BY A

             3     
MANUFACTURER

             4     
2000 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Sponsor: Howard A. Stephenson

             7      AN ACT RELATING TO THE SALES AND USE TAX ACT; EXPANDING THE SALES AND
             8      USE TAX EXEMPTION FOR CERTAIN PURCHASES OR LEASES BY A
             9      MANUFACTURER; MODIFYING THE REQUIREMENTS FOR THE UTAH STATE TAX
             10      COMMISSION TO STUDY THE SALES AND USE TAX EXEMPTION; AND MAKING
             11      TECHNICAL CHANGES.
             12      This act affects sections of Utah Code Annotated 1953 as follows:
             13      AMENDS:
             14          59-12-104, as last amended by Chapters 63, 155, 195, 306, 313 and 362, Laws of Utah
             15      1999
             16      Be it enacted by the Legislature of the state of Utah:
             17          Section 1. Section 59-12-104 is amended to read:
             18           59-12-104. Exemptions.
             19          The following sales and uses are exempt from the taxes imposed by this chapter:
             20          (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
             21      under Title 59, Chapter 13, Motor and Special Fuel Tax Act;
             22          (2) sales to the state, its institutions, and its political subdivisions; however, this exemption
             23      does not apply to sales of construction materials except:
             24          (a) construction materials purchased by or on behalf of institutions of the public education
             25      system as defined in Utah Constitution Article X, Section 2, provided the construction materials
             26      are clearly identified and segregated and installed or converted to real property which is owned by
             27      institutions of the public education system; and


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


             59          (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
             60      Games of 2002; and
             61          (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
             62      does not receive reimbursement; or
             63          (iv) a lease or rental of a vehicle as defined in Section 41-1a-102 , except for a lease or
             64      rental of a vehicle:
             65          (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
             66      of 2002;
             67          (B) exclusively used by:
             68          (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
             69      Olympic Winter Games of 2002; or
             70          (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
             71      Games of 2002; and
             72          (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
             73      does not receive reimbursement;
             74          (9) sales of vehicles of a type required to be registered under the motor vehicle laws of this
             75      state which are made to bona fide nonresidents of this state and are not afterwards registered or
             76      used in this state except as necessary to transport them to the borders of this state;
             77          (10) sales of medicine;
             78          (11) sales or use of property, materials, or services used in the construction of or
             79      incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
             80          (12) sales of meals served by:
             81          (a) churches, charitable institutions, and institutions of higher education, if the meals are
             82      not available to the general public; and
             83          (b) inpatient meals provided at medical or nursing facilities;
             84          (13) isolated or occasional sales by persons not regularly engaged in business, except the
             85      sale of vehicles or vessels required to be titled or registered under the laws of this state in which
             86      case the tax is based upon:
             87          (a) the bill of sale or other written evidence of value of the vehicle or vessel being sold;
             88      or
             89          (b) in the absence of a bill of sale or other written evidence of value, the then existing fair


             90      market value of the vehicle or vessel being sold as determined by the commission;
             91          (14) (a) the following purchases or leases by a manufacturer [on or after July 1, 1995]:
             92          (i) machinery [and] or equipment purchased or leased on or after July 1, 1995, if the
             93      machinery or equipment:
             94          (A) is used in the manufacturing process;
             95          (B) [having] has an economic life of three or more years; and
             96          (C) is used:
             97          (I) to manufacture an item sold as tangible personal property; and
             98          (II) in new or expanding operations in a manufacturing facility in the state; [and]
             99          (ii) [subject to the provisions of Subsection (14)(b),] normal operating replacements
             100      purchased or leased on or after July 1, 1998, that:
             101          (A) have an economic life of three or more years;
             102          (B) are used in the manufacturing process in a manufacturing facility in the state;
             103          (C) are used to replace or adapt an existing machine to extend the normal estimated useful
             104      life of the machine; and
             105          (D) do not include:
             106          (I) repairs [and]; or
             107          (II) maintenance; or
             108          (iii) subject to Subsection (14)(b), purchases or leases:
             109          (A) used in the manufacturing process;
             110          (B) having an economic life of less than three years: and
             111          (C) of:
             112          (I) machinery;
             113          (II) equipment;
             114          (III) normal operating replacements;
             115          (IV) repairs; or
             116          (V) maintenance;
             117          (b) [the rates for the exemption under] the following percentages of a sale or lease
             118      described in Subsection (14)(a)[(ii)] (iii) are [as follows] exempt:
             119          (i) beginning on July 1, [1996] 2001, through June 30, [1997] 2002, 30% of the sale or
             120      lease described in Subsection (14)(a)[(ii)] (iii) is exempt;


             121          (ii) beginning on July 1, [1997] 2002, through June 30, [1998] 2003, 60% of the sale or
             122      lease described in Subsection (14)(a)[(ii)] (iii) is exempt; and
             123          (iii) beginning on July 1, [1998] 2004, 100% of the sale or lease described in Subsection
             124      (14)(a)[(ii)] (iii) is exempt;
             125          (c) for purposes of this Subsection (14), in accordance with Title 63, Chapter 46a, Utah
             126      Administrative Rulemaking Act, the commission shall by rule define the terms "new or expanding
             127      operations" and "establishment"; and
             128          (d) on or before October 1, [1991] 2004, and every five years after October 1, [1991] 2004,
             129      the commission shall:
             130          (i) review the exemptions described in Subsection (14)(a) and make recommendations to
             131      the Revenue and Taxation Interim Committee concerning whether the exemptions should be
             132      continued, modified, or repealed; and
             133          (ii) include in its report:
             134          (A) the cost of the exemptions;
             135          (B) the purpose and effectiveness of the exemptions; and
             136          (C) the benefits of the exemptions to the state;
             137          (15) sales of tooling, special tooling, support equipment, and special test equipment used
             138      or consumed exclusively in the performance of any aerospace or electronics industry contract with
             139      the United States government or any subcontract under that contract, but only if, under the terms
             140      of that contract or subcontract, title to the tooling and equipment is vested in the United States
             141      government as evidenced by a government identification tag placed on the tooling and equipment
             142      or by listing on a government-approved property record if a tag is impractical;
             143          (16) intrastate movements of:
             144          (a) freight by common carriers; and
             145          (b) passengers:
             146          (i) by taxicabs as described in SIC Code 4121 of the 1987 Standard Industrial
             147      Classification Manual of the federal Executive Office of the President, Office of Management and
             148      Budget; or
             149          (ii) transported by an establishment described in SIC Code 4111 of the 1987 Standard
             150      Industrial Classification Manual of the federal Executive Office of the President, Office of
             151      Management and Budget, if the transportation originates and terminates within a county of the


             152      first, second, or third class;
             153          (17) sales of newspapers or newspaper subscriptions;
             154          (18) tangible personal property, other than money, traded in as full or part payment of the
             155      purchase price, except that for purposes of calculating sales or use tax upon vehicles not sold by
             156      a vehicle dealer, trade-ins are limited to other vehicles only, and the tax is based upon:
             157          (a) the bill of sale or other written evidence of value of the vehicle being sold and the
             158      vehicle being traded in; or
             159          (b) in the absence of a bill of sale or other written evidence of value, the then existing fair
             160      market value of the vehicle being sold and the vehicle being traded in, as determined by the
             161      commission;
             162          (19) sprays and insecticides used to control insects, diseases, and weeds for commercial
             163      production of fruits, vegetables, feeds, seeds, and animal products, but not those sprays and
             164      insecticides used in the processing of the products;
             165          (20) (a) sales of tangible personal property used or consumed primarily and directly in
             166      farming operations, including sales of irrigation equipment and supplies used for agricultural
             167      production purposes, whether or not they become part of real estate and whether or not installed
             168      by farmer, contractor, or subcontractor, but not sales of:
             169          (i) machinery, equipment, materials, and supplies used in a manner that is incidental to
             170      farming, such as hand tools with a unit purchase price not in excess of $250, and maintenance and
             171      janitorial equipment and supplies;
             172          (ii) tangible personal property used in any activities other than farming, such as office
             173      equipment and supplies, equipment and supplies used in sales or distribution of farm products, in
             174      research, or in transportation; or
             175          (iii) any vehicle required to be registered by the laws of this state, without regard to the use
             176      to which the vehicle is put;
             177          (b) sales of hay;
             178          (21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or
             179      other agricultural produce if sold by a producer during the harvest season;
             180          (22) purchases of food as defined in 7 U.S.C. Sec. 2012(g) under the Food Stamp
             181      Program, 7 U.S.C. Sec. 2011 et seq.;
             182          (23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,


             183      nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor, wholesaler,
             184      or retailer for use in packaging tangible personal property to be sold by that manufacturer,
             185      processor, wholesaler, or retailer;
             186          (24) property stored in the state for resale;
             187          (25) property brought into the state by a nonresident for his or her own personal use or
             188      enjoyment while within the state, except property purchased for use in Utah by a nonresident living
             189      and working in Utah at the time of purchase;
             190          (26) property purchased for resale in this state, in the regular course of business, either in
             191      its original form or as an ingredient or component part of a manufactured or compounded product;
             192          (27) property upon which a sales or use tax was paid to some other state, or one of its
             193      subdivisions, except that the state shall be paid any difference between the tax paid and the tax
             194      imposed by this part and Part 2, and no adjustment is allowed if the tax paid was greater than the
             195      tax imposed by this part and Part 2;
             196          (28) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a person
             197      for use in compounding a service taxable under the subsections;
             198          (29) purchases of supplemental foods as defined in 42 U.S.C. Sec. 1786(b)(14) under the
             199      special supplemental nutrition program for women, infants, and children established in 42 U.S.C.
             200      Sec. 1786;
             201          (30) beginning on July 1, 1999, through June 30, 2004, sales or leases of rolls, rollers,
             202      refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
             203      of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification Manual
             204      of the federal Executive Office of the President, Office of Management and Budget;
             205          (31) sales of boats of a type required to be registered under Title 73, Chapter 18, State
             206      Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of this
             207      state and are not thereafter registered or used in this state except as necessary to transport them to
             208      the borders of this state;
             209          (32) sales of tangible personal property to persons within this state that is subsequently
             210      shipped outside the state and incorporated pursuant to contract into and becomes a part of real
             211      property located outside of this state, except to the extent that the other state or political entity
             212      imposes a sales, use, gross receipts, or other similar transaction excise tax on it against which the
             213      other state or political entity allows a credit for taxes imposed by this chapter;


             214          (33) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah where
             215      a sales or use tax is not imposed, even if the title is passed in Utah;
             216          (34) amounts paid for the purchase of telephone service for purposes of providing
             217      telephone service;
             218          (35) fares charged to persons transported directly by a public transit district created under
             219      the authority of Title 17A, Chapter 2, Part 10, Utah Public Transit District Act;
             220          (36) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
             221          (37) (a) 45% of the sales price of any new manufactured home; and
             222          (b) 100% of the sales price of any used manufactured home;
             223          (38) sales relating to schools and fundraising sales;
             224          (39) sales or rentals of home medical equipment and supplies;
             225          (40) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
             226      Section 72-11-102 ; and
             227          (b) the commission shall by rule determine the method for calculating sales exempt under
             228      Subsection (40)(a) that are not separately metered and accounted for in utility billings;
             229          (41) sales to a ski resort of:
             230          (a) snowmaking equipment;
             231          (b) ski slope grooming equipment; and
             232          (c) passenger ropeways as defined in Section 72-11-102 ;
             233          (42) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
             234          (43) sales or rentals of the right to use or operate for amusement, entertainment, or
             235      recreation a coin-operated amusement device as defined in Section 59-12-102 ;
             236          (44) sales of cleaning or washing of tangible personal property by a coin-operated car wash
             237      machine;
             238          (45) sales by the state or a political subdivision of the state, except state institutions of
             239      higher education as defined in Section 53B-3-102 , of:
             240          (a) photocopies; or
             241          (b) other copies of records held or maintained by the state or a political subdivision of the
             242      state; and
             243          (46) (a) amounts paid:
             244          (i) to a person providing intrastate transportation to an employer's employee to or from the


             245      employee's primary place of employment;
             246          (ii) by an:
             247          (A) employee; or
             248          (B) employer; and
             249          (iii) pursuant to a written contract between:
             250          (A) the employer; and
             251          (B) (I) the employee; or
             252          (II) a person providing transportation to the employer's employee; and
             253          (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             254      commission may for purposes of Subsection (46)(a) make rules defining what constitutes an
             255      employee's primary place of employment;
             256          (47) amounts paid for admission to an athletic event at an institution of higher education
             257      that is subject to the provisions of Title IX of the Education Amendments of 1972, 20 U.S.C. Sec.
             258      1681 et seq.;
             259          (48) sales of telephone service charged to a prepaid telephone calling card;
             260          (49) (a) sales of hearing aids; and
             261          (b) sales of hearing aid accessories; and
             262          (50) (a) sales made to or by:
             263          (i) an area agency on aging; or
             264          (ii) a senior citizen center owned by a county, city, or town; or
             265          (b) sales made by a senior citizen center that contracts with an area agency on aging.




Legislative Review Note
    as of 1-13-00 2:33 PM


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

Office of Legislative Research and General Counsel


[Bill Documents][Bills Directory]