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H.B. 129 Enrolled

                 

SALES AND USE TAXES - EXEMPTION FOR

                 
CERTAIN SALES OF ELECTRICITY

                 
2002 GENERAL SESSION

                 
STATE OF UTAH

                 
Sponsor: LaWanna Lou Shurtliff

                  This act modifies the Sales and Use Tax Act and the Municipal Energy Sales and Use Tax
                  Act to exempt from taxation certain sales of electricity generated by a new wind, geothermal,
                  biomass, or solar power energy source, and to make technical changes. This act takes effect
                  on July 1, 2002.
                  This act affects sections of Utah Code Annotated 1953 as follows:
                  AMENDS:
                      10-1-304, as last amended by Chapter 319, Laws of Utah 2000
                      59-12-104, as last amended by Chapter 12, Laws of Utah 2001, First Special Session
                  Be it enacted by the Legislature of the state of Utah:
                      Section 1. Section 10-1-304 is amended to read:
                       10-1-304. Municipality may levy tax -- Rate -- Imposition or repeal of tax -- Tax rate
                  change -- Effective date -- Notice requirements -- Exemptions.
                      (1) [By ordinance as provided in Section 10-1-305 ,] Except as provided in Subsection (4),
                  a municipality may levy a municipal energy sales and use tax on the sale or use of taxable energy
                  within the municipality:
                      (a) by ordinance as provided in Section 10-1-305 ; and
                      (b) of up to 6% of the delivered value of the taxable energy.
                      (2) A municipal energy sales and use tax imposed under this part may be in addition to any
                  local option sales and use tax imposed by the municipality as provided in Title 59, Chapter 12, Part
                  2, [The] Local Sales and Use Tax Act.
                      (3) (a) For purposes of this Subsection (3):
                      (i) "Annexation" means an annexation to a city or town under Title 10, Chapter 2, Part 4,
                  Annexation.
                      (ii) "Annexing area" means an area that is annexed into a city or town.


                      (b) (i) If, on or after May 1, 2000, a city or town enacts or repeals a tax or changes the rate
                  of a tax under this part, the enactment, repeal, or change shall take effect:
                      (A) on the first day of a calendar quarter; and
                      (B) after a 75-day period beginning on the date the commission receives notice meeting the
                  requirements of Subsection (3)(b)(ii) from the city or town.
                      (ii) The notice described in Subsection (3)(b)(i)(B) shall state:
                      (A) that the city or town will enact or repeal a tax or change the rate of a tax under this part;
                      (B) the statutory authority for the tax described in Subsection (3)(b)(ii)(A);
                      (C) the effective date of the tax described in Subsection (3)(b)(ii)(A); and
                      (D) if the city or town enacts the tax or changes the rate of the tax described in Subsection
                  (3)(b)(ii)(A), the new rate of the tax.
                      (c) (i) If, for an annexation that occurs on or after May 1, 2000, the annexation will result
                  in a change in the rate of a tax under this part for an annexing area, the change shall take effect:
                      (A) on the first day of a calendar quarter; and
                      (B) after a 75-day period beginning on the date the commission receives notice meeting the
                  requirements of Subsection (3)(c)(ii) from the city or town that annexes the annexing area.
                      (ii) The notice described in Subsection (3)(c)(i)(B) shall state:
                      (A) that the annexation described in Subsection (3)(c)(i) will result in a change in the rate
                  of a tax under this part for the annexing area;
                      (B) the statutory authority for the tax described in Subsection (3)(c)(ii)(A);
                      (C) the effective date of the tax described in Subsection (3)(c)(ii)(A); and
                      (D) the new rate of the tax described in Subsection (3)(c)(ii)(A).
                      (4) Notwithstanding Subsection (1), a sale or use of electricity within a municipality is
                  exempt from the tax authorized by this section if the sale or use is:
                      (a) made under a tariff adopted by the Public Service Commission of Utah only for purchase
                  of electricity produced from a new wind, geothermal, biomass, or solar power energy source, as
                  designated in the tariff by the Public Service Commission of Utah; and
                      (b) for an amount of electricity that is:

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                      (i) unrelated to the amount of electricity used by the person purchasing the electricity under
                  the tariff described in Subsection (4)(a); and
                      (ii) equivalent to the number of kilowatthours specified in the tariff described in Subsection
                  (4)(a) that may be purchased under the tariff described in Subsection (4)(a).
                      Section 2. Section 59-12-104 is amended to read:
                       59-12-104. Exemptions.
                      The following sales and uses are exempt from the taxes imposed by this chapter:
                      (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax under
                  Chapter 13, Motor and Special Fuel Tax Act;
                      (2) sales to the state, its institutions, and its political subdivisions; however, this exemption
                  does not apply to sales of construction materials except:
                      (a) construction materials purchased by or on behalf of institutions of the public education
                  system as defined in Utah Constitution Article X, Section 2, provided the construction materials are
                  clearly identified and segregated and installed or converted to real property which is owned by
                  institutions of the public education system; and
                      (b) construction materials purchased by the state, its institutions, or its political subdivisions
                  which are installed or converted to real property by employees of the state, its institutions, or its
                  political subdivisions;
                      (3) sales of food, beverage, and dairy products from vending machines in which the proceeds
                  of each sale do not exceed $1 if the vendor or operator of the vending machine reports an amount
                  equal to 150% of the cost of items as goods consumed;
                      (4) sales of food, beverage, dairy products, similar confections, and related services to
                  commercial airline carriers for in-flight consumption;
                      (5) sales of parts and equipment installed in aircraft operated by common carriers in
                  interstate or foreign commerce;
                      (6) sales of commercials, motion picture films, prerecorded audio program tapes or records,
                  and prerecorded video tapes by a producer, distributor, or studio to a motion picture exhibitor,
                  distributor, or commercial television or radio broadcaster;

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                      (7) sales of cleaning or washing of tangible personal property by a coin-operated laundry or
                  dry cleaning machine;
                      (8) (a) except as provided in Subsection (8)(b), sales made to or by religious or charitable
                  institutions in the conduct of their regular religious or charitable functions and activities, if the
                  requirements of Section 59-12-104.1 are fulfilled;
                      (b) the exemption provided for in Subsection (8)(a) does not apply to the following sales,
                  uses, leases, or rentals relating to the Olympic Winter Games of 2002 made to or by an organization
                  exempt from federal income taxation under Section 501(c)(3), Internal Revenue Code:
                      (i) retail sales of Olympic merchandise;
                      (ii) except as provided in Subsection (51), admissions or user fees described in Subsection
                  59-12-103 (1)(f);
                      (iii) sales of accommodations and services as provided in Subsection 59-12-103 (1)(i), except
                  for accommodations and services:
                      (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
                  of 2002;
                      (B) exclusively used by:
                      (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
                  Olympic Winter Games of 2002; or
                      (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
                  Games of 2002; and
                      (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
                  does not receive reimbursement; or
                      (iv) a lease or rental of a vehicle as defined in Section 41-1a-102 , except for a lease or rental
                  of a vehicle:
                      (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
                  of 2002;
                      (B) exclusively used by:
                      (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the

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                  Olympic Winter Games of 2002; or
                      (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
                  Games of 2002; and
                      (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
                  does not receive reimbursement;
                      (9) sales of vehicles of a type required to be registered under the motor vehicle laws of this
                  state which are made to bona fide nonresidents of this state and are not afterwards registered or used
                  in this state except as necessary to transport them to the borders of this state;
                      (10) sales of medicine;
                      (11) sales or use of property, materials, or services used in the construction of or
                  incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
                      (12) (a) sales of meals served by:
                      (i) the following if the meals are not available to the general public:
                      (A) a church; or
                      (B) a charitable institution;
                      (ii) an institution of higher education if:
                      (A) the meals are not available to the general public; or
                      (B) the meals are prepaid as part of a student meal plan offered by the institution of higher
                  education; or
                      (b) inpatient meals provided at:
                      (i) a medical facility; or
                      (ii) a nursing facility;
                      (13) isolated or occasional sales by persons not regularly engaged in business, except the sale
                  of vehicles or vessels required to be titled or registered under the laws of this state in which case the
                  tax is based upon:
                      (a) the bill of sale or other written evidence of value of the vehicle or vessel being sold; or
                      (b) in the absence of a bill of sale or other written evidence of value, the then existing fair
                  market value of the vehicle or vessel being sold as determined by the commission;

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                      (14) (a) the following purchases or leases by a manufacturer on or after July 1, 1995:
                      (i) machinery and equipment:
                      (A) used in the manufacturing process;
                      (B) having an economic life of three or more years; and
                      (C) used:
                      (I) to manufacture an item sold as tangible personal property; and
                      (II) in new or expanding operations in a manufacturing facility in the state; and
                      (ii) subject to the provisions of Subsection (14)(b), normal operating replacements that:
                      (A) have an economic life of three or more years;
                      (B) are used in the manufacturing process in a manufacturing facility in the state;
                      (C) are used to replace or adapt an existing machine to extend the normal estimated useful
                  life of the machine; and
                      (D) do not include repairs and maintenance;
                      (b) the rates for the exemption under Subsection (14)(a)(ii) are as follows:
                      (i) beginning July 1, 1996, through June 30, 1997, 30% of the sale or lease described in
                  Subsection (14)(a)(ii) is exempt;
                      (ii) beginning July 1, 1997, through June 30, 1998, 60% of the sale or lease described in
                  Subsection (14)(a)(ii) is exempt; and
                      (iii) beginning July 1, 1998, 100% of the sale or lease described in Subsection (14)(a)(ii) is
                  exempt;
                      (c) for purposes of this Subsection (14), the commission shall by rule define the terms "new
                  or expanding operations" and "establishment"; and
                      (d) on or before October 1, 1991, and every five years after October 1, 1991, the commission
                  shall:
                      (i) review the exemptions described in Subsection (14)(a) and make recommendations to the
                  Revenue and Taxation Interim Committee concerning whether the exemptions should be continued,
                  modified, or repealed; and
                      (ii) include in its report:

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                      (A) the cost of the exemptions;
                      (B) the purpose and effectiveness of the exemptions; and
                      (C) the benefits of the exemptions to the state;
                      (15) sales of tooling, special tooling, support equipment, and special test equipment used or
                  consumed exclusively in the performance of any aerospace or electronics industry contract with the
                  United States government or any subcontract under that contract, but only if, under the terms of that
                  contract or subcontract, title to the tooling and equipment is vested in the United States government
                  as evidenced by a government identification tag placed on the tooling and equipment or by listing
                  on a government-approved property record if a tag is impractical;
                      (16) intrastate movements of:
                      (a) freight by common carriers; and
                      (b) passengers:
                      (i) by taxicabs as described in SIC Code 4121 of the 1987 Standard Industrial Classification
                  Manual of the federal Executive Office of the President, Office of Management and Budget; or
                      (ii) transported by an establishment described in SIC Code 4111 of the 1987 Standard
                  Industrial Classification Manual of the federal Executive Office of the President, Office of
                  Management and Budget, if the transportation originates and terminates within a county of the first,
                  second, or third class;
                      (17) sales of newspapers or newspaper subscriptions;
                      (18) tangible personal property, other than money, traded in as full or part payment of the
                  purchase price, except that for purposes of calculating sales or use tax upon vehicles not sold by a
                  vehicle dealer, trade-ins are limited to other vehicles only, and the tax is based upon:
                      (a) the bill of sale or other written evidence of value of the vehicle being sold and the vehicle
                  being traded in; or
                      (b) in the absence of a bill of sale or other written evidence of value, the then existing fair
                  market value of the vehicle being sold and the vehicle being traded in, as determined by the
                  commission;
                      (19) sprays and insecticides used to control insects, diseases, and weeds for commercial

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                  production of fruits, vegetables, feeds, seeds, and animal products, but not those sprays and
                  insecticides used in the processing of the products;
                      (20) (a) sales of tangible personal property used or consumed primarily and directly in
                  farming operations, including sales of irrigation equipment and supplies used for agricultural
                  production purposes, whether or not they become part of real estate and whether or not installed by
                  farmer, contractor, or subcontractor, but not sales of:
                      (i) machinery, equipment, materials, and supplies used in a manner that is incidental to
                  farming, such as hand tools with a unit purchase price not in excess of $250, and maintenance and
                  janitorial equipment and supplies;
                      (ii) tangible personal property used in any activities other than farming, such as office
                  equipment and supplies, equipment and supplies used in sales or distribution of farm products, in
                  research, or in transportation; or
                      (iii) any vehicle required to be registered by the laws of this state, without regard to the use
                  to which the vehicle is put;
                      (b) sales of hay;
                      (21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or other
                  agricultural produce if sold by a producer during the harvest season;
                      (22) purchases of food as defined in 7 U.S.C. Sec. 2012(g) under the Food Stamp Program,
                  7 U.S.C. Sec. 2011 et seq.;
                      (23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
                  nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor, wholesaler,
                  or retailer for use in packaging tangible personal property to be sold by that manufacturer, processor,
                  wholesaler, or retailer;
                      (24) property stored in the state for resale;
                      (25) property brought into the state by a nonresident for his or her own personal use or
                  enjoyment while within the state, except property purchased for use in Utah by a nonresident living
                  and working in Utah at the time of purchase;
                      (26) property purchased for resale in this state, in the regular course of business, either in

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                  its original form or as an ingredient or component part of a manufactured or compounded product;
                      (27) property upon which a sales or use tax was paid to some other state, or one of its
                  subdivisions, except that the state shall be paid any difference between the tax paid and the tax
                  imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if the
                  tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax Act;
                      (28) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a person
                  for use in compounding a service taxable under the subsections;
                      (29) purchases of supplemental foods as defined in 42 U.S.C. Sec. 1786(b)(14) under the
                  special supplemental nutrition program for women, infants, and children established in 42 U.S.C.
                  Sec. 1786;
                      (30) beginning on July 1, 1999, through June 30, 2004, sales or leases of rolls, rollers,
                  refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens of
                  a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification Manual of the
                  federal Executive Office of the President, Office of Management and Budget;
                      (31) sales of boats of a type required to be registered under Title 73, Chapter 18, State
                  Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of this
                  state and are not thereafter registered or used in this state except as necessary to transport them to
                  the borders of this state;
                      (32) sales of tangible personal property to persons within this state that is subsequently
                  shipped outside the state and incorporated pursuant to contract into and becomes a part of real
                  property located outside of this state, except to the extent that the other state or political entity
                  imposes a sales, use, gross receipts, or other similar transaction excise tax on it against which the
                  other state or political entity allows a credit for taxes imposed by this chapter;
                      (33) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah where
                  a sales or use tax is not imposed, even if the title is passed in Utah;
                      (34) amounts paid for the purchase of telephone service for purposes of providing telephone
                  service;
                      (35) fares charged to persons transported directly by a public transit district created under

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                  the authority of Title 17A, Chapter 2, Part 10, Utah Public Transit District Act;
                      (36) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
                      (37) (a) 45% of the sales price of any new manufactured home; and
                      (b) 100% of the sales price of any used manufactured home;
                      (38) sales relating to schools and fundraising sales;
                      (39) sales or rentals of home medical equipment and supplies;
                      (40) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
                  Section 72-11-102 ; and
                      (b) the commission shall by rule determine the method for calculating sales exempt under
                  Subsection (40)(a) that are not separately metered and accounted for in utility billings;
                      (41) sales to a ski resort of:
                      (a) snowmaking equipment;
                      (b) ski slope grooming equipment; and
                      (c) passenger ropeways as defined in Section 72-11-102 ;
                      (42) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
                      (43) sales or rentals of the right to use or operate for amusement, entertainment, or recreation
                  a coin-operated amusement device as defined in Section 59-12-102 ;
                      (44) sales of cleaning or washing of tangible personal property by a coin-operated car wash
                  machine;
                      (45) sales by the state or a political subdivision of the state, except state institutions of higher
                  education as defined in Section 53B-3-102 , of:
                      (a) photocopies; or
                      (b) other copies of records held or maintained by the state or a political subdivision of the
                  state; and
                      (46) (a) amounts paid:
                      (i) to a person providing intrastate transportation to an employer's employee to or from the
                  employee's primary place of employment;
                      (ii) by an:

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                      (A) employee; or
                      (B) employer; and
                      (iii) pursuant to a written contract between:
                      (A) the employer; and
                      (B) (I) the employee; or
                      (II) a person providing transportation to the employer's employee; and
                      (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
                  commission may for purposes of Subsection (46)(a) make rules defining what constitutes an
                  employee's primary place of employment;
                      (47) amounts paid for admission to an athletic event at an institution of higher education that
                  is subject to the provisions of Title IX of the Education Amendments of 1972, 20 U.S.C. Sec. 1681
                  et seq.;
                      (48) sales of telephone service charged to a prepaid telephone calling card;
                      (49) (a) sales of hearing aids; and
                      (b) sales of hearing aid accessories;
                      (50) (a) sales made to or by:
                      (i) an area agency on aging; or
                      (ii) a senior citizen center owned by a county, city, or town; or
                      (b) sales made by a senior citizen center that contracts with an area agency on aging;
                      (51) (a) beginning on July 1, 2000, through June 30, 2002, amounts paid or charged as
                  admission or user fees described in Subsection 59-12-103 (1)(f) relating to the Olympic Winter
                  Games of 2002 if the amounts paid or charged are established by the Salt Lake Organizing
                  Committee for the Olympic Winter Games of 2002 in accordance with requirements of the
                  International Olympic Committee; and
                      (b) the State Olympic Officer and the Salt Lake Organizing Committee for the Olympic
                  Winter Games of 2002 shall make at least two reports during the 2000 interim:
                      (i) to the:
                      (A) Olympic Coordination Committee; and

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                      (B) Revenue and Taxation Interim Committee; and
                      (ii) regarding the status of:
                      (A) agreements relating to the funding of public safety services for the Olympic Winter
                  Games of 2002;
                      (B) agreements relating to the funding of services, other than public safety services, for the
                  Olympic Winter Games of 2002;
                      (C) other agreements relating to the Olympic Winter Games of 2002 as requested by the
                  Olympic Coordination Committee or the Revenue and Taxation Interim Committee;
                      (D) other issues as requested by the Olympic Coordination Committee or the Revenue and
                  Taxation Interim Committee; or
                      (E) a combination of Subsections (51)(b)(ii)(A) through (D);
                      (52) (a) beginning on July 1, 2001, through June 30, 2004, and subject to Subsection (52)(b),
                  a sale or lease of semiconductor fabricating or processing materials regardless of whether the
                  semiconductor fabricating or processing materials:
                      (i) actually come into contact with a semiconductor; or
                      (ii) ultimately become incorporated into real property;
                      (b) (i) beginning on July 1, 2001, through June 30, 2002, 10% of the sale or lease described
                  in Subsection (52)(a) is exempt;
                      (ii) beginning on July 1, 2002, through June 30, 2003, 50% of the sale or lease described in
                  Subsection (52)(a) is exempt; and
                      (iii) beginning on July 1, 2003, through June 30, 2004, the entire amount of the sale or lease
                  described in Subsection (52)(a) is exempt; and
                      (c) each year on or before the November interim meeting, the Revenue and Taxation Interim
                  Committee shall:
                      (i) review the exemption described in this Subsection (52) and make recommendations
                  concerning whether the exemption should be continued, modified, or repealed; and
                      (ii) include in the review under this Subsection (52)(c):
                      (A) the cost of the exemption;

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                      (B) the purpose and effectiveness of the exemption; and
                      (C) the benefits of the exemption to the state;
                      (53) an amount paid by or charged to a purchaser for accommodations and services described
                  in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section 59-12-104.2 ; [or]
                      (54) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary sports
                  event registration certificate in accordance with Section 41-3-306 for the event period specified on
                  the temporary sports event registration certificate[.]; or
                      (55) sales or uses of electricity, if the sales or uses are:
                      (a) made under a tariff adopted by the Public Service Commission of Utah only for purchase
                  of electricity produced from a new wind, geothermal, biomass, or solar power energy source, as
                  designated in the tariff by the Public Service Commission of Utah; and
                      (b) for an amount of electricity that is:
                      (i) unrelated to the amount of electricity used by the person purchasing the electricity under
                  the tariff described in Subsection (55)(a); and
                      (ii) equivalent to the number of kilowatthours specified in the tariff described in Subsection
                  (55)(a) that may be purchased under the tariff described in Subsection (55)(a).
                      Section 3. Effective date.
                      This act takes effect on July 1, 2002.

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