H.B. 74

1

EXTENSION OF SALES AND USE TAX
2 EXEMPTION FOR STEEL INDUSTRY
3 2004 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Ben C. Ferry
6 Douglas C. Aagard
7 J. Stuart Adams
8 Jeff Alexander
9 Sheryl L. Allen
10 Eli H. Anderson
11 Chad E. Bennion
12 DeMar Bud Bowman
13 Katherine M. Bryson
14 Don E. Bush
15 Craig W. Buttars
16 D. Gregg Buxton
17 Stephen D. Clark
18 Greg J. CurtisBrad L. Dee
Glenn A. Donnelson
John Dougall
Neil A. Hansen
Wayne A. Harper
David L. Hogue
Kory M. Holdaway
Eric K. Hutchings
Bradley G. Last
Rebecca D. Lockhart
Dana C. Love
Michael T. MorleyJoseph G. Murray
Darin G. Peterson
J. Morgan Philpot
Jack A. Seitz
Gordon E. Snow
Martin R. Stephens
Michael R. Styler
Mike Thompson
David Ure
Stephen H. Urquhart
Peggy Wallace
R. Curt Webb 19
20 LONG TITLE
21 General Description:
22 This bill modifies the Sales and Use Tax Act to amend sales and use tax exemption
23 provisions.
24 Highlighted Provisions:
25 This bill:
26 . extends the sunset date by ten years for the sales and use tax exemption for sales or
27 leases of rolls, rollers, refractory brick, electric motors, or other replacement parts
28 used in the furnaces, mills, or ovens of certain steel mills.
29 Monies Appropriated in this Bill:
30 None
31 Other Special Clauses:

32 This bill takes effect on July 1, 2004.
33 Utah Code Sections Affected:
34 AMENDS:
35 59-12-104 (Effective 07/01/04), as last amended by Chapter 312, Laws of Utah 2003
36
37 Be it enacted by the Legislature of the state of Utah:
38 Section 1. Section 59-12-104 (Effective 07/01/04) is amended to read:
39 59-12-104 (Effective 07/01/04). Exemptions.
40 The following sales and uses are exempt from the taxes imposed by this chapter:
41 (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
42 under Chapter 13, Motor and Special Fuel Tax Act;
43 (2) sales to the state, its institutions, and its political subdivisions; however, this
44 exemption does not apply to sales of:
45 (a) construction materials except:
46 (i) construction materials purchased by or on behalf of institutions of the public
47 education system as defined in Utah Constitution Article X, Section 2, provided the
48 construction materials are clearly identified and segregated and installed or converted to real
49 property which is owned by institutions of the public education system; and
50 (ii) construction materials purchased by the state, its institutions, or its political
51 subdivisions which are installed or converted to real property by employees of the state, its
52 institutions, or its political subdivisions; or
53 (b) tangible personal property in connection with the construction, operation,
54 maintenance, repair, or replacement of a project, as defined in Section 11-13-103 , or facilities
55 providing additional project capacity, as defined in Section 11-13-103 ;
56 (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
57 (i) the proceeds of each sale do not exceed $1; and
58 (ii) the seller or operator of the vending machine reports an amount equal to 150% of
59 the cost of the item described in Subsection (3)(a) as goods consumed; and
60 (b) Subsection (3)(a) applies to:
61 (i) food and food ingredients; or
62 (ii) prepared food;

63 (4) sales of the following to a commercial airline carrier for in-flight consumption:
64 (a) food and food ingredients;
65 (b) prepared food; or
66 (c) services related to Subsection (4)(a) or (b);
67 (5) sales of parts and equipment for installation in aircraft operated by common carriers
68 in interstate or foreign commerce;
69 (6) sales of commercials, motion picture films, prerecorded audio program tapes or
70 records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
71 exhibitor, distributor, or commercial television or radio broadcaster;
72 (7) sales of cleaning or washing of tangible personal property by a coin-operated
73 laundry or dry cleaning machine;
74 (8) (a) except as provided in Subsection (8)(b), sales made to or by religious or
75 charitable institutions in the conduct of their regular religious or charitable functions and
76 activities, if the requirements of Section 59-12-104.1 are fulfilled;
77 (b) the exemption provided for in Subsection (8)(a) does not apply to the following
78 sales, uses, leases, or rentals relating to the Olympic Winter Games of 2002 made to or by an
79 organization exempt from federal income taxation under Section 501(c)(3), Internal Revenue
80 Code:
81 (i) retail sales of Olympic merchandise;
82 (ii) except as provided in Subsection (50), admissions or user fees described in
83 Subsection 59-12-103 (1)(f);
84 (iii) sales of accommodations and services as provided in Subsection 59-12-103 (1)(i),
85 except for accommodations and services:
86 (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter
87 Games of 2002;
88 (B) exclusively used by:
89 (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
90 Olympic Winter Games of 2002; or
91 (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic
92 Winter Games of 2002; and
93 (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of

94 2002 does not receive reimbursement; or
95 (iv) a lease or rental of a vehicle as defined in Section 41-1a-102 , except for a lease or
96 rental of a vehicle:
97 (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter
98 Games of 2002;
99 (B) exclusively used by:
100 (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
101 Olympic Winter Games of 2002; or
102 (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic
103 Winter Games of 2002; and
104 (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of
105 2002 does not receive reimbursement;
106 (9) sales of vehicles of a type required to be registered under the motor vehicle laws of
107 this state which are made to bona fide nonresidents of this state and are not afterwards
108 registered or used in this state except as necessary to transport them to the borders of this state;
109 (10) (a) amounts paid for an item described in Subsection (10)(b) if:
110 (i) the item is intended for human use; and
111 (ii) the purchaser presents a prescription for the item; and
112 (b) (i) Subsection (10)(a) applies to:
113 (A) a drug;
114 (B) a syringe; or
115 (C) a stoma supply; and
116 (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
117 commission may by rule define the terms:
118 (A) "syringe"; or
119 (B) "stoma supply";
120 (11) sales or use of property, materials, or services used in the construction of or
121 incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
122 (12) (a) sales of an item described in Subsection (12)(c) served by:
123 (i) the following if the item described in Subsection (12)(c) is not available to the
124 general public:

125 (A) a church; or
126 (B) a charitable institution;
127 (ii) an institution of higher education if:
128 (A) the item described in Subsection (12)(c) is not available to the general public; or
129 (B) the item described in Subsection (12)(c) is prepaid as part of a student meal plan
130 offered by the institution of higher education; or
131 (b) sales of an item described in Subsection (12)(c) provided at:
132 (i) a medical facility; or
133 (ii) a nursing facility; and
134 (c) Subsections (12)(a) and (b) apply to:
135 (i) food and food ingredients;
136 (ii) prepared food; or
137 (iii) alcoholic beverages;
138 (13) isolated or occasional sales by persons not regularly engaged in business, except
139 the sale of vehicles or vessels required to be titled or registered under the laws of this state in
140 which case the tax is based upon:
141 (a) the bill of sale or other written evidence of value of the vehicle or vessel being sold;
142 or
143 (b) in the absence of a bill of sale or other written evidence of value, the then existing
144 fair market value of the vehicle or vessel being sold as determined by the commission;
145 (14) (a) the following purchases or leases by a manufacturer on or after July 1, 1995:
146 (i) machinery and equipment:
147 (A) used in the manufacturing process;
148 (B) having an economic life of three or more years; and
149 (C) used:
150 (I) to manufacture an item sold as tangible personal property; and
151 (II) in new or expanding operations in a manufacturing facility in the state; and
152 (ii) subject to the provisions of Subsection (14)(b), normal operating replacements that:
153 (A) have an economic life of three or more years;
154 (B) are used in the manufacturing process in a manufacturing facility in the state;
155 (C) are used to replace or adapt an existing machine to extend the normal estimated

156 useful life of the machine; and
157 (D) do not include repairs and maintenance;
158 (b) the rates for the exemption under Subsection (14)(a)(ii) are as follows:
159 (i) beginning July 1, 1996, through June 30, 1997, 30% of the sale or lease described in
160 Subsection (14)(a)(ii) is exempt;
161 (ii) beginning July 1, 1997, through June 30, 1998, 60% of the sale or lease described
162 in Subsection (14)(a)(ii) is exempt; and
163 (iii) beginning July 1, 1998, 100% of the sale or lease described in Subsection
164 (14)(a)(ii) is exempt;
165 (c) for purposes of this Subsection (14), the commission shall by rule define the terms
166 "new or expanding operations" and "establishment"; and
167 (d) on or before October 1, 1991, and every five years after October 1, 1991, the
168 commission shall:
169 (i) review the exemptions described in Subsection (14)(a) and make recommendations
170 to the Revenue and Taxation Interim Committee concerning whether the exemptions should be
171 continued, modified, or repealed; and
172 (ii) include in its report:
173 (A) the cost of the exemptions;
174 (B) the purpose and effectiveness of the exemptions; and
175 (C) the benefits of the exemptions to the state;
176 (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
177 (i) tooling;
178 (ii) special tooling;
179 (iii) support equipment;
180 (iv) special test equipment; or
181 (v) parts used in the repairs or renovations of tooling or equipment described in
182 Subsections (15)(a)(i) through (iv); and
183 (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
184 (i) the tooling, equipment, or parts are used or consumed exclusively in the
185 performance of any aerospace or electronics industry contract with the United States
186 government or any subcontract under that contract; and

187 (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),
188 title to the tooling, equipment, or parts is vested in the United States government as evidenced
189 by:
190 (A) a government identification tag placed on the tooling, equipment, or parts; or
191 (B) listing on a government-approved property record if placing a government
192 identification tag on the tooling, equipment, or parts is impractical;
193 (16) intrastate movements of:
194 (a) freight by common carriers; or
195 (b) passengers:
196 (i) by taxicabs as described in SIC Code 4121 of the 1987 Standard Industrial
197 Classification Manual of the federal Executive Office of the President, Office of Management
198 and Budget;
199 (ii) transported by an establishment described in SIC Code 4111 of the 1987 Standard
200 Industrial Classification Manual of the federal Executive Office of the President, Office of
201 Management and Budget, if the transportation originates and terminates within a county of the
202 first, second, or third class; or
203 (iii) transported by the following described in SIC Code 4789 of the 1987 Standard
204 Industrial Classification Manual of the federal Executive Office of the President, Office of
205 Management and Budget:
206 (A) a horse-drawn cab; or
207 (B) a horse-drawn carriage;
208 (17) sales of newspapers or newspaper subscriptions;
209 (18) (a) except as provided in Subsection (18)(b), tangible personal property traded in
210 as full or part payment of the purchase price, except that for purposes of calculating sales or use
211 tax upon vehicles not sold by a vehicle dealer, trade-ins are limited to other vehicles only, and
212 the tax is based upon:
213 (i) the bill of sale or other written evidence of value of the vehicle being sold and the
214 vehicle being traded in; or
215 (ii) in the absence of a bill of sale or other written evidence of value, the then existing
216 fair market value of the vehicle being sold and the vehicle being traded in, as determined by the
217 commission; and

218 (b) notwithstanding Subsection (18)(a), Subsection (18)(a) does not apply to the
219 following items of tangible personal property traded in as full or part payment of the purchase
220 price:
221 (i) money;
222 (ii) electricity;
223 (iii) water;
224 (iv) gas; or
225 (v) steam;
226 (19) sprays and insecticides used to control insects, diseases, and weeds for
227 commercial production of fruits, vegetables, feeds, seeds, and animal products, but not those
228 sprays and insecticides used in the processing of the products;
229 (20) (a) (i) sales of tangible personal property used or consumed primarily and directly
230 in farming operations, including sales of irrigation equipment and supplies used for agricultural
231 production purposes, whether or not they become part of real estate and whether or not
232 installed by farmer, contractor, or subcontractor, but not sales of:
233 (A) machinery, equipment, materials, and supplies used in a manner that is incidental
234 to farming, such as hand tools and maintenance and janitorial equipment and supplies;
235 (B) tangible personal property used in any activities other than farming, such as office
236 equipment and supplies, equipment and supplies used in sales or distribution of farm products,
237 in research, or in transportation; or
238 (C) any vehicle required to be registered by the laws of this state, without regard to the
239 use to which the vehicle is put; or
240 (ii) sales of parts used in the repairs or renovations of tangible personal property if the
241 tangible personal property is exempt under Subsection (20)(a); or
242 (b) sales of hay;
243 (21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or
244 other agricultural produce if sold by a producer during the harvest season;
245 (22) purchases made using a coupon as defined in 7 U.S.C. Sec. 2012 that is issued
246 under the Food Stamp Program, 7 U.S.C. Sec. 2011 et seq.;
247 (23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
248 nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor,

249 wholesaler, or retailer for use in packaging tangible personal property to be sold by that
250 manufacturer, processor, wholesaler, or retailer;
251 (24) property stored in the state for resale;
252 (25) property brought into the state by a nonresident for his or her own personal use or
253 enjoyment while within the state, except property purchased for use in Utah by a nonresident
254 living and working in Utah at the time of purchase;
255 (26) property purchased for resale in this state, in the regular course of business, either
256 in its original form or as an ingredient or component part of a manufactured or compounded
257 product;
258 (27) property upon which a sales or use tax was paid to some other state, or one of its
259 subdivisions, except that the state shall be paid any difference between the tax paid and the tax
260 imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if
261 the tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax
262 Act;
263 (28) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a
264 person for use in compounding a service taxable under the subsections;
265 (29) purchases made in accordance with the special supplemental nutrition program for
266 women, infants, and children established in 42 U.S.C. Sec. 1786;
267 (30) beginning on July 1, 1999, through June 30, [2004] 2014, sales or leases of rolls,
268 rollers, refractory brick, electric motors, or other replacement parts used in the furnaces, mills,
269 or ovens of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial
270 Classification Manual of the federal Executive Office of the President, Office of Management
271 and Budget;
272 (31) sales of boats of a type required to be registered under Title 73, Chapter 18, State
273 Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of
274 this state and are not thereafter registered or used in this state except as necessary to transport
275 them to the borders of this state;
276 (32) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah
277 where a sales or use tax is not imposed, even if the title is passed in Utah;
278 (33) amounts paid for the purchase of telephone service for purposes of providing
279 telephone service;

280 (34) fares charged to persons transported directly by a public transit district created
281 under the authority of Title 17A, Chapter 2, Part 10, Utah Public Transit District Act;
282 (35) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
283 (36) (a) 45% of the sales price of any new manufactured home; and
284 (b) 100% of the sales price of any used manufactured home;
285 (37) sales relating to schools and fundraising sales;
286 (38) sales or rentals of durable medical equipment if a person presents a prescription
287 for the durable medical equipment;
288 (39) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
289 Section 72-11-102 ; and
290 (b) the commission shall by rule determine the method for calculating sales exempt
291 under Subsection (39)(a) that are not separately metered and accounted for in utility billings;
292 (40) sales to a ski resort of:
293 (a) snowmaking equipment;
294 (b) ski slope grooming equipment;
295 (c) passenger ropeways as defined in Section 72-11-102 ; or
296 (d) parts used in the repairs or renovations of equipment or passenger ropeways
297 described in Subsections (40)(a) through (c);
298 (41) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
299 (42) sales or rentals of the right to use or operate for amusement, entertainment, or
300 recreation a coin-operated amusement device as defined in Section 59-12-102 ;
301 (43) sales of cleaning or washing of tangible personal property by a coin-operated car
302 wash machine;
303 (44) sales by the state or a political subdivision of the state, except state institutions of
304 higher education as defined in Section 53B-3-102 , of:
305 (a) photocopies; or
306 (b) other copies of records held or maintained by the state or a political subdivision of
307 the state;
308 (45) (a) amounts paid:
309 (i) to a person providing intrastate transportation to an employer's employee to or from
310 the employee's primary place of employment;

311 (ii) by an:
312 (A) employee; or
313 (B) employer; and
314 (iii) pursuant to a written contract between:
315 (A) the employer; and
316 (B) (I) the employee; or
317 (II) a person providing transportation to the employer's employee; and
318 (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
319 commission may for purposes of Subsection (45)(a) make rules defining what constitutes an
320 employee's primary place of employment;
321 (46) amounts paid for admission to an athletic event at an institution of higher
322 education that is subject to the provisions of Title IX of the Education Amendments of 1972,
323 20 U.S.C. Sec. 1681 et seq.;
324 (47) sales of telephone service charged to a prepaid telephone calling card;
325 (48) (a) sales of:
326 (i) hearing aids;
327 (ii) hearing aid accessories; or
328 (iii) except as provided in Subsection (48)(b), parts used in the repairs or renovations
329 of hearing aids or hearing aid accessories; and
330 (b) for purposes of this Subsection (48), notwithstanding Subsection (48)(a)(iii),
331 "parts" does not include batteries;
332 (49) (a) sales made to or by:
333 (i) an area agency on aging; or
334 (ii) a senior citizen center owned by a county, city, or town; or
335 (b) sales made by a senior citizen center that contracts with an area agency on aging;
336 (50) (a) beginning on July 1, 2000, through June 30, 2002, amounts paid or charged as
337 admission or user fees described in Subsection 59-12-103 (1)(f) relating to the Olympic Winter
338 Games of 2002 if the amounts paid or charged are established by the Salt Lake Organizing
339 Committee for the Olympic Winter Games of 2002 in accordance with requirements of the
340 International Olympic Committee; and
341 (b) the State Olympic Officer and the Salt Lake Organizing Committee for the Olympic

342 Winter Games of 2002 shall make at least two reports during the 2000 interim:
343 (i) to the:
344 (A) Olympic Coordination Committee; and
345 (B) Revenue and Taxation Interim Committee; and
346 (ii) regarding the status of:
347 (A) agreements relating to the funding of public safety services for the Olympic Winter
348 Games of 2002;
349 (B) agreements relating to the funding of services, other than public safety services, for
350 the Olympic Winter Games of 2002;
351 (C) other agreements relating to the Olympic Winter Games of 2002 as requested by
352 the Olympic Coordination Committee or the Revenue and Taxation Interim Committee;
353 (D) other issues as requested by the Olympic Coordination Committee or the Revenue
354 and Taxation Interim Committee; or
355 (E) a combination of Subsections (50)(b)(ii)(A) through (D);
356 (51) (a) beginning on July 1, 2001, through June 30, 2007, and subject to Subsection
357 (51)(b), a sale or lease of semiconductor fabricating or processing materials regardless of
358 whether the semiconductor fabricating or processing materials:
359 (i) actually come into contact with a semiconductor; or
360 (ii) ultimately become incorporated into real property;
361 (b) (i) beginning on July 1, 2001, through June 30, 2002, 10% of the sale or lease
362 described in Subsection (51)(a) is exempt;
363 (ii) beginning on July 1, 2002, through June 30, 2003, 50% of the sale or lease
364 described in Subsection (51)(a) is exempt; and
365 (iii) beginning on July 1, 2003, through June 30, 2007, the entire amount of the sale or
366 lease described in Subsection (51)(a) is exempt; and
367 (c) each year on or before the November interim meeting, the Revenue and Taxation
368 Interim Committee shall:
369 (i) review the exemption described in this Subsection (51) and make recommendations
370 concerning whether the exemption should be continued, modified, or repealed; and
371 (ii) include in the review under this Subsection (51)(c):
372 (A) the cost of the exemption;

373 (B) the purpose and effectiveness of the exemption; and
374 (C) the benefits of the exemption to the state;
375 (52) an amount paid by or charged to a purchaser for accommodations and services
376 described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
377 59-12-104.2 ;
378 (53) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary
379 sports event registration certificate in accordance with Section 41-3-306 for the event period
380 specified on the temporary sports event registration certificate;
381 (54) sales or uses of electricity, if the sales or uses are:
382 (a) made under a tariff adopted by the Public Service Commission of Utah only for
383 purchase of electricity produced from a new wind, geothermal, biomass, or solar power energy
384 source, as designated in the tariff by the Public Service Commission of Utah; and
385 (b) for an amount of electricity that is:
386 (i) unrelated to the amount of electricity used by the person purchasing the electricity
387 under the tariff described in Subsection (54)(a); and
388 (ii) equivalent to the number of kilowatthours specified in the tariff described in
389 Subsection (54)(a) that may be purchased under the tariff described in Subsection (54)(a);
390 (55) sales or rentals of mobility enhancing equipment if a person presents a
391 prescription for the mobility enhancing equipment;
392 (56) sales of water in a:
393 (a) pipe;
394 (b) conduit;
395 (c) ditch; or
396 (d) reservoir;
397 (57) sales of currency or coinage that constitute legal tender of the United States or of a
398 foreign nation;
399 (58) (a) sales of an item described in Subsection (58)(b) if the item:
400 (i) does not constitute legal tender of any nation; and
401 (ii) has a gold, silver, or platinum content of 80% or more; and
402 (b) Subsection (58)(a) applies to a gold, silver, or platinum:
403 (i) ingot;

404 (ii) bar;
405 (iii) medallion; or
406 (iv) decorative coin;
407 (59) amounts paid on a sale-leaseback transaction; and
408 (60) sales of a prosthetic device:
409 (a) for use on or in a human;
410 (b) for which a prescription is issued; and
411 (c) to a person that presents a prescription for the prosthetic device.
412 Section 2. Effective date.
413 This bill takes effect on July 1, 2004.




Legislative Review Note
as of 11-20-03 11:49 AM

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

Office of Legislative Research and General Counsel