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S.B. 19

Senator Leonard M. Blackham proposes the following substitute bill:


             1     
SALES AND USE TAXES - EXEMPTION FOR

             2     
ENERGY RELATED EQUIPMENT AND

             3     
MACHINERY

             4     
2004 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Sponsor: Leonard M. Blackham

             7      Gregory S. Bell
             8      Mike DmitrichDan R. Eastman
Ed P. MayneHoward A. Stephenson              9     
             10      LONG TITLE
             11      General Description:
             12          This bill amends the Sales and Use Tax Act to provide an exemption for certain
             13      machinery or equipment used to generate electricity.
             14      Highlighted Provisions:
             15          This bill:
             16          .    provides an exemption for certain machinery or equipment used to make new or
             17      expanding renewable production facilities operational;
             18          .    provides an exemption for certain machinery or equipment used to make new or
             19      expanding waste energy facilities operational;
             20          .    provides an exemption for machinery or equipment installed on new or expanding
             21      facilities that produce fuel from biomass energy; and
             22          .    makes technical changes.
             23      Monies Appropriated in this Bill:
             24          None



             25      Other Special Clauses:
             26          This bill takes effect on July 1, 2004.
             27      Utah Code Sections Affected:
             28      AMENDS:
             29          59-12-102 (Effective 07/01/04), as last amended by Chapter 312, Laws of Utah 2003
             30          59-12-104 (Effective 07/01/04), as last amended by Chapter 312, Laws of Utah 2003
             31     
             32      Be it enacted by the Legislature of the state of Utah:
             33          Section 1. Section 59-12-102 (Effective 07/01/04) is amended to read:
             34           59-12-102 (Effective 07/01/04). Definitions.
             35          As used in this chapter:
             36          (1) (a) "Admission or user fees" includes season passes.
             37          (b) "Admission or user fees" does not include annual membership dues to private
             38      organizations.
             39          (2) "Agreement" means the Streamlined Sales and Use Tax Agreement described in
             40      Section 59-12-102.1 .
             41          (3) "Agreement combined tax rate" means the sum of the tax rates:
             42          (a) listed under Subsection (4); and
             43          (b) that are imposed within a local taxing jurisdiction.
             44          (4) "Agreement sales and use tax" means a tax imposed under:
             45          (a) Subsection 59-12-103 (2)(a)(i);
             46          (b) Section 59-12-204 ;
             47          (c) Section 59-12-401 ;
             48          (d) Section 59-12-402 ;
             49          (e) Section 59-12-501 ;
             50          (f) Section 59-12-502 ;
             51          (g) Section 59-12-703 ;
             52          (h) Section 59-12-802 ;
             53          (i) Section 59-12-804 ;
             54          (j) Section 59-12-1001 ;
             55          (k) Section 59-12-1102 ;



             56          (l) Section 59-12-1302 ; or
             57          (m) Section 59-12-1402 .
             58          (5) "Alcoholic beverage" means a beverage that:
             59          (a) is suitable for human consumption; and
             60          (b) contains .5% or more alcohol by volume.
             61          (6) "Area agency on aging" is as defined in Section 62A-3-101 .
             62          (7) "Authorized carrier" means:
             63          (a) in the case of vehicles operated over public highways, the holder of credentials
             64      indicating that the vehicle is or will be operated pursuant to both the International Registration
             65      Plan and the International Fuel Tax Agreement;
             66          (b) in the case of aircraft, the holder of a Federal Aviation Administration operating
             67      certificate or air carrier's operating certificate; or
             68          (c) in the case of locomotives, freight cars, railroad work equipment, or other rolling
             69      stock, the holder of a certificate issued by the United States Surface Transportation Board.
             70          (8) (a) Except as provided in Subsection (8)(b), "biomass energy" means any of the
             71      following that is used as the primary source of energy to produce fuel or electricity:
             72          (i) material from a plant or tree; or
             73          (ii) other organic matter that is available on a renewable basis, including:
             74          (A) slash and brush from forests and woodlands;
             75          (B) animal waste;
             76          (C) methane produced:
             77          (I) at landfills; or
             78          (II) as a byproduct of the treatment of wastewater residuals;
             79          (D) aquatic plants; and
             80          (E) agricultural products.
             81          (b) "Biomass energy" does not include:
             82          (i) black liquor;
             83          (ii) treated woods; or
             84          (iii) biomass from municipal solid waste other than methane produced:
             85          (A) at landfills; or
             86          (B) as a byproduct of the treatment of wastewater residuals.


             87          [(8)] (9) "Certified automated system" means software certified by the governing board
             88      of the agreement in accordance with Section 59-12-102.1 that:
             89          (a) calculates the agreement sales and use tax imposed within a local taxing
             90      jurisdiction:
             91          (i) on a transaction; and
             92          (ii) in the states that are members of the agreement;
             93          (b) determines the amount of agreement sales and use tax to remit to a state that is a
             94      member of the agreement; and
             95          (c) maintains a record of the transaction described in Subsection [(8)] (9)(a)(i).
             96          [(9)] (10) "Certified service provider" means an agent certified:
             97          (a) by the governing board of the agreement in accordance with Section 59-12-102.1 ;
             98      and
             99          (b) to perform all of a seller's sales and use tax functions for an agreement sales and
             100      use tax.
             101          [(10)] (11) (a) Subject to Subsection [(10)] (11)(b), "clothing" means all human
             102      wearing apparel suitable for general use.
             103          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             104      commission shall make rules:
             105          (i) listing the items that constitute "clothing"; and
             106          (ii) that are consistent with the list of items that constitute "clothing" under the
             107      agreement.
             108          [(11)] (12) (a) For purposes of Subsection 59-12-104 (42), "coin-operated amusement
             109      device" means:
             110          (i) a coin-operated amusement, skill, or ride device;
             111          (ii) that is not controlled through seller-assisted, over-the-counter, sales of tokens; and
             112          (iii) includes a music machine, pinball machine, billiard machine, video game machine,
             113      arcade machine, and a mechanical or electronic skill game or ride.
             114          (b) For purposes of Subsection 59-12-104 (42), "coin-operated amusement device"
             115      does not mean a coin-operated amusement device possessing a coinage mechanism that:
             116          (i) accepts and registers multiple denominations of coins; and
             117          (ii) allows the seller to collect the sales and use tax at the time an amusement device is


             118      activated and operated by a person inserting coins into the device.
             119          [(12)] (13) "Commercial use" means the use of gas, electricity, heat, coal, fuel oil, or
             120      other fuels that does not constitute industrial use under Subsection [(30)] (33) or residential use
             121      under Subsection [(54)] (59).
             122          [(13)] (14) (a) "Common carrier" means a person engaged in or transacting the
             123      business of transporting passengers, freight, merchandise, or other property for hire within this
             124      state.
             125          (b) (i) "Common carrier" does not include a person who, at the time the person is
             126      traveling to or from that person's place of employment, transports a passenger to or from the
             127      passenger's place of employment.
             128          (ii) For purposes of Subsection [(13)] (14)(b)(i), in accordance with Title 63, Chapter
             129      46a, Utah Administrative Rulemaking Act, the commission may make rules defining what
             130      constitutes a person's place of employment.
             131          [(14)] (15) "Component part" includes:
             132          (a) poultry, dairy, and other livestock feed, and their components;
             133          (b) baling ties and twine used in the baling of hay and straw;
             134          (c) fuel used for providing temperature control of orchards and commercial
             135      greenhouses doing a majority of their business in wholesale sales, and for providing power for
             136      off-highway type farm machinery; and
             137          (d) feed, seeds, and seedlings.
             138          [(15)] (16) "Computer" means an electronic device that accepts information:
             139          (a) (i) in digital form; or
             140          (ii) in a form similar to digital form; and
             141          (b) manipulates that information for a result based on a sequence of instructions.
             142          [(16)] (17) "Computer software" means a set of coded instructions designed to cause:
             143          (a) a computer to perform a task; or
             144          (b) automatic data processing equipment to perform a task.
             145          [(17)] (18) "Construction materials" means any tangible personal property that will be
             146      converted into real property.
             147          [(18)] (19) "Delivered electronically" means delivered to a purchaser by means other
             148      than tangible storage media.


             149          [(19)] (20) (a) "Delivery charge" means a charge:
             150          (i) by a seller of:
             151          (A) tangible personal property; or
             152          (B) services; and
             153          (ii) for preparation and delivery of the tangible personal property or services described
             154      in Subsection [(19)] (20)(a)(i) to a location designated by the purchaser.
             155          (b) "Delivery charge" includes a charge for the following:
             156          (i) transportation;
             157          (ii) shipping;
             158          (iii) postage;
             159          (iv) handling;
             160          (v) crating; or
             161          (vi) packing.
             162          [(20)] (21) "Dietary supplement" means a product, other than tobacco, that:
             163          (a) is intended to supplement the diet;
             164          (b) contains one or more of the following dietary ingredients:
             165          (i) a vitamin;
             166          (ii) a mineral;
             167          (iii) an herb or other botanical;
             168          (iv) an amino acid;
             169          (v) a dietary substance for use by humans to supplement the diet by increasing the total
             170      dietary intake; or
             171          (vi) a concentrate, metabolite, constituent, extract, or combination of any ingredient
             172      described in Subsections [(20)] (21)(b)(i) through (v);
             173          (c) (i) except as provided in Subsection [(20)] (21)(c)(ii), is intended for ingestion in:
             174          (A) tablet form;
             175          (B) capsule form;
             176          (C) powder form;
             177          (D) softgel form;
             178          (E) gelcap form; or
             179          (F) liquid form; or


             180          (ii) notwithstanding Subsection [(20)] (21)(c)(i), if the product is not intended for
             181      ingestion in a form described in Subsections [(20)] (21)(c)(i)(A) through (F), is not
             182      represented:
             183          (A) as conventional food; and
             184          (B) for use as a sole item of:
             185          (I) a meal; or
             186          (II) the diet; and
             187          (d) is required to be labeled as a dietary supplement:
             188          (i) identifiable by the "Supplemental Facts" box found on the label; and
             189          (ii) as required by 21 C.F.R. Sec. 101.36.
             190          [(21)] (22) (a) "Direct mail" means printed material delivered or distributed by United
             191      States mail or other delivery service:
             192          (i) to:
             193          (A) a mass audience; or
             194          (B) addressees on a mailing list provided by a purchaser of the mailing list; and
             195          (ii) if the cost of the printed material is not billed directly to the recipients.
             196          (b) "Direct mail" includes tangible personal property supplied directly or indirectly by a
             197      purchaser to a seller of direct mail for inclusion in a package containing the printed material.
             198          (c) "Direct mail" does not include multiple items of printed material delivered to a
             199      single address.
             200          [(22)] (23) (a) "Drug" means a compound, substance, or preparation, or a component of
             201      a compound, substance, or preparation that is:
             202          (i) recognized in:
             203          (A) the official United States Pharmacopoeia;
             204          (B) the official Homeopathic Pharmacopoeia of the United States;
             205          (C) the official National Formulary; or
             206          (D) a supplement to a publication listed in Subsections [(22)] (23)(a)(i)(A) through
             207      (C);
             208          (ii) intended for use in the:
             209          (A) diagnosis of disease;
             210          (B) cure of disease;


             211          (C) mitigation of disease;
             212          (D) treatment of disease; or
             213          (E) prevention of disease; or
             214          (iii) intended to affect:
             215          (A) the structure of the body; or
             216          (B) any function of the body.
             217          (b) "Drug" does not include:
             218          (i) food and food ingredients;
             219          (ii) a dietary supplement;
             220          (iii) an alcoholic beverage; or
             221          (iv) a prosthetic device.
             222          [(23)] (24) (a) Except as provided in Subsection [(23)] (24)(c), "durable medical
             223      equipment" means equipment that:
             224          (i) can withstand repeated use;
             225          (ii) is primarily and customarily used to serve a medical purpose;
             226          (iii) generally is not useful to a person in the absence of illness or injury;
             227          (iv) is not worn in or on the body; and
             228          (v) is listed as eligible for payment under:
             229          (A) Title XVIII of the federal Social Security Act; or
             230          (B) the state plan for medical assistance under Title XIX of the federal Social Security
             231      Act.
             232          (b) "Durable medical equipment" includes parts used in the repair or replacement of the
             233      equipment described in Subsection [(23)] (24)(a).
             234          (c) Notwithstanding Subsection [(23)] (24)(a), "durable medical equipment" does not
             235      include mobility enhancing equipment.
             236          [(24)] (25) "Electronic" means:
             237          (a) relating to technology; and
             238          (b) having:
             239          (i) electrical capabilities;
             240          (ii) digital capabilities;
             241          (iii) magnetic capabilities;


             242          (iv) wireless capabilities;
             243          (v) optical capabilities;
             244          (vi) electromagnetic capabilities; or
             245          (vii) capabilities similar to Subsections [(24)] (25)(b)(i) through (vi).
             246          [(25)] (26) (a) "Food and food ingredients" means substances:
             247          (i) regardless of whether the substances are in:
             248          (A) liquid form;
             249          (B) concentrated form;
             250          (C) solid form;
             251          (D) frozen form;
             252          (E) dried form; or
             253          (F) dehydrated form; and
             254          (ii) that are:
             255          (A) sold for:
             256          (I) ingestion by humans; or
             257          (II) chewing by humans; and
             258          (B) consumed for the substance's:
             259          (I) taste; or
             260          (II) nutritional value.
             261          (b) "Food and food ingredients" does not include:
             262          (i) an alcoholic beverage;
             263          (ii) tobacco; or
             264          (iii) prepared food.
             265          [(26)] (27) (a) "Fundraising sales" means sales:
             266          (i) (A) made by a school; or
             267          (B) made by a school student;
             268          (ii) that are for the purpose of raising funds for the school to purchase equipment,
             269      materials, or provide transportation; and
             270          (iii) that are part of an officially sanctioned school activity.
             271          (b) For purposes of Subsection [(26)] (27)(a)(iii), "officially sanctioned school activity"
             272      means a school activity:


             273          (i) that is conducted in accordance with a formal policy adopted by the school or school
             274      district governing the authorization and supervision of fundraising activities;
             275          (ii) that does not directly or indirectly compensate an individual teacher or other
             276      educational personnel by direct payment, commissions, or payment in kind; and
             277          (iii) the net or gross revenues from which are deposited in a dedicated account
             278      controlled by the school or school district.
             279          (28) "Geothermal energy" means energy contained in heat that continuously flows
             280      outward from the earth that is used as the sole source of energy to produce electricity.
             281          [(27)] (29) "Governing board of the agreement" means the governing board of the
             282      agreement that is:
             283          (a) authorized to administer the agreement; and
             284          (b) established in accordance with the agreement.
             285          [(28)] (30) (a) "Hearing aid" means:
             286          (i) an instrument or device having an electronic component that is designed to:
             287          (A) (I) improve impaired human hearing; or
             288          (II) correct impaired human hearing; and
             289          (B) (I) be worn in the human ear; or
             290          (II) affixed behind the human ear;
             291          (ii) an instrument or device that is surgically implanted into the cochlea; or
             292          (iii) a telephone amplifying device.
             293          (b) "Hearing aid" does not include:
             294          (i) except as provided in Subsection [(28)] (30)(a)(i)(B) or [(28)] (30)(a)(ii), an
             295      instrument or device having an electronic component that is designed to be worn on the body;
             296          (ii) except as provided in Subsection [(28)] (30)(a)(iii), an assistive listening device or
             297      system designed to be used by one individual, including:
             298          (A) a personal amplifying system;
             299          (B) a personal FM system;
             300          (C) a television listening system; or
             301          (D) a device or system similar to a device or system described in Subsections [(28)]
             302      (30)(b)(ii)(A) through (C); or
             303          (iii) an assistive listening device or system designed to be used by more than one


             304      individual, including:
             305          (A) a device or system installed in:
             306          (I) an auditorium;
             307          (II) a church;
             308          (III) a conference room;
             309          (IV) a synagogue; or
             310          (V) a theater; or
             311          (B) a device or system similar to a device or system described in Subsections [(28)]
             312      (30)(b)(iii)(A)(I) through (V).
             313          [(29)] (31) (a) "Hearing aid accessory" means a hearing aid:
             314          (i) component;
             315          (ii) attachment; or
             316          (iii) accessory.
             317          (b) "Hearing aid accessory" includes:
             318          (i) a hearing aid neck loop;
             319          (ii) a hearing aid cord;
             320          (iii) a hearing aid ear mold;
             321          (iv) hearing aid tubing;
             322          (v) a hearing aid ear hook; or
             323          (vi) a hearing aid remote control.
             324          (c) "Hearing aid accessory" does not include:
             325          (i) a component, attachment, or accessory designed to be used only with an:
             326          (A) instrument or device described in Subsection [(28)] (30)(b)(i); or
             327          (B) assistive listening device or system described in Subsection [(28)] (30)(b)(ii) or
             328      (iii); or
             329          (ii) a hearing aid battery.
             330          (32) "Hydroelectric energy" means water used as the sole source of energy to produce
             331      electricity.
             332          [(30)] (33) "Industrial use" means the use of natural gas, electricity, heat, coal, fuel oil,
             333      or other fuels:
             334          (a) in mining or extraction of minerals;


             335          (b) in agricultural operations to produce an agricultural product up to the time of
             336      harvest or placing the agricultural product into a storage facility, including:
             337          (i) commercial greenhouses;
             338          (ii) irrigation pumps;
             339          (iii) farm machinery;
             340          (iv) implements of husbandry as defined in Subsection 41-1a-102 (23) that are not
             341      registered under Title 41, Chapter 1a, Part 2, Registration; and
             342          (v) other farming activities;
             343          (c) in manufacturing tangible personal property at an establishment described in SIC
             344      Codes 2000 to 3999 of the 1987 Standard Industrial Classification Manual of the federal
             345      Executive Office of the President, Office of Management and Budget; or
             346          (d) by a scrap recycler if:
             347          (i) from a fixed location, the scrap recycler utilizes machinery or equipment to process
             348      one or more of the following items into prepared grades of processed materials for use in new
             349      products:
             350          (A) iron;
             351          (B) steel;
             352          (C) nonferrous metal;
             353          (D) paper;
             354          (E) glass;
             355          (F) plastic;
             356          (G) textile; or
             357          (H) rubber; and
             358          (ii) the new products under Subsection [(30)] (33)(d)(i) would otherwise be made with
             359      nonrecycled materials.
             360          [(31)] (34) (a) "Lease" or "rental" means a transfer of possession or control of tangible
             361      personal property for:
             362          (i) (A) a fixed term; or
             363          (B) an indeterminate term; and
             364          (ii) consideration.
             365          (b) "Lease" or "rental" includes an agreement covering a motor vehicle and trailer if the


             366      amount of consideration may be increased or decreased by reference to the amount realized
             367      upon sale or disposition of the property as defined in Section 7701(h)(1), Internal Revenue
             368      Code.
             369          (c) "Lease" or "rental" does not include:
             370          (i) a transfer of possession or control of property under a security agreement or
             371      deferred payment plan that requires the transfer of title upon completion of the required
             372      payments;
             373          (ii) a transfer of possession or control of property under an agreement:
             374          (A) that requires the transfer of title upon completion of required payments; and
             375          (B) in which the payment of an option price does not exceed the greater of:
             376          (I) $100; or
             377          (II) 1% of the total required payments; or
             378          (iii) providing tangible personal property along with an operator for a fixed period of
             379      time or an indeterminate period of time if the operator is necessary for equipment to perform as
             380      designed.
             381          (d) For purposes of Subsection [(31)] (34)(c)(iii), an operator is necessary for
             382      equipment to perform as designed if the operator's duties exceed the:
             383          (i) set-up of tangible personal property;
             384          (ii) maintenance of tangible personal property; or
             385          (iii) inspection of tangible personal property.
             386          [(32)] (35) "Local taxing jurisdiction" means a:
             387          (a) county that is authorized to impose an agreement sales and use tax;
             388          (b) city that is authorized to impose an agreement sales and use tax; or
             389          (c) town that is authorized to impose an agreement sales and use tax.
             390          [(33)] (36) "Manufactured home" means any manufactured home or mobile home as
             391      defined in Title 58, Chapter 56, Utah Uniform Building Standards Act.
             392          [(34)] (37) For purposes of Subsection 59-12-104 (14), "manufacturing facility" means:
             393          (a) an establishment described in SIC Codes 2000 to 3999 of the 1987 Standard
             394      Industrial Classification Manual of the federal Executive Office of the President, Office of
             395      Management and Budget; or
             396          (b) a scrap recycler if:


             397          (i) from a fixed location, the scrap recycler utilizes machinery or equipment to process
             398      one or more of the following items into prepared grades of processed materials for use in new
             399      products:
             400          (A) iron;
             401          (B) steel;
             402          (C) nonferrous metal;
             403          (D) paper;
             404          (E) glass;
             405          (F) plastic;
             406          (G) textile; or
             407          (H) rubber; and
             408          (ii) the new products under Subsection [(34)] (37)(b)(i) would otherwise be made with
             409      nonrecycled materials.
             410          [(35)] (38) "Mobile telecommunications service" is as defined in the Mobile
             411      Telecommunications Sourcing Act, 4 U.S.C. Sec. 124.
             412          [(36)] (39) (a) Except as provided in Subsection [(36)] (39)(c), "mobility enhancing
             413      equipment" means equipment that is:
             414          (i) primarily and customarily used to provide or increase the ability to move from one
             415      place to another;
             416          (ii) appropriate for use in a:
             417          (A) home; or
             418          (B) motor vehicle;
             419          (iii) not generally used by persons with normal mobility; and
             420          (iv) listed as eligible for payment under:
             421          (A) Title XVIII of the federal Social Security Act; or
             422          (B) the state plan for medical assistance under Title XIX of the federal Social Security
             423      Act.
             424          (b) "Mobility enhancing equipment" includes parts used in the repair or replacement of
             425      the equipment described in Subsection [(36)] (39)(a).
             426          (c) Notwithstanding Subsection [(36)] (39)(a), "mobility enhancing equipment" does
             427      not include:


             428          (i) a motor vehicle;
             429          (ii) equipment on a motor vehicle if that equipment is normally provided by the motor
             430      vehicle manufacturer;
             431          (iii) durable medical equipment; or
             432          (iv) a prosthetic device.
             433          [(37)] (40) "Model 1 seller" means a seller that has selected a certified service provider
             434      as the seller's agent to perform all of the seller's sales tax functions for agreement sales and use
             435      taxes.
             436          [(38)] (41) "Model 2 seller" means a seller that:
             437          (a) except as provided in Subsection [(38)] (41)(b), has selected a certified automated
             438      system to perform the seller's sales tax functions for agreement sales and use taxes; and
             439          (b) notwithstanding Subsection [(38)] (41)(a), retains responsibility for remitting all of
             440      the sales tax:
             441          (i) collected by the seller; and
             442          (ii) to the appropriate local taxing jurisdiction.
             443          [(39)] (42) (a) Subject to Subsection [(39)] (42)(b), "model 3 seller" means a seller that
             444      has:
             445          (i) sales in at least five states that are members of the agreement;
             446          (ii) total annual sales revenues of at least $500,000,000;
             447          (iii) a proprietary system that calculates the amount of tax:
             448          (A) for an agreement sales and use tax; and
             449          (B) due to each local taxing jurisdiction; and
             450          (iv) entered into a performance agreement with the governing board of the agreement.
             451          (b) For purposes of Subsection [(39)] (42)(a), "model 3 seller" includes an affiliated
             452      group of sellers using the same proprietary system.
             453          [(40)] (43) (a) "Multi-channel video or audio service provider" means any person or
             454      group of persons that:
             455          (i) provides multi-channel video or audio service and directly or indirectly owns a
             456      significant interest in the multi-channel video or audio service; or
             457          (ii) otherwise controls or is responsible through any arrangement, the management and
             458      operation of the multi-channel video or audio service.


             459          (b) "Multi-channel video or audio service provider" includes the following except as
             460      specifically exempted by state or federal law:
             461          (i) a cable operator;
             462          (ii) a CATV provider;
             463          (iii) a multi-point distribution provider;
             464          (iv) a MMDS provider;
             465          (v) a SMATV operator;
             466          (vi) a direct-to-home satellite service provider; or
             467          (vii) a DBS provider.
             468          [(41)] (44) "Olympic merchandise" means tangible personal property bearing an
             469      Olympic designation, emblem, insignia, mark, logo, service mark, symbol, terminology,
             470      trademark, or other copyrighted or protected material, including:
             471          (a) one or more of the following terms:
             472          (i) "Olympic";
             473          (ii) "Olympiad"; or
             474          (iii) "Citius Altius Fortius";
             475          (b) the symbol of the International Olympic Committee, consisting of five interlocking
             476      rings;
             477          (c) the emblem of the International Olympic Committee Corporation;
             478          (d) a United States Olympic Committee designation, emblem, insignia, mark, logo,
             479      service mark, symbol, terminology, trademark, or other copyrighted or protected material;
             480          (e) any emblem of the Olympic Winter Games of 2002 that is officially designated by
             481      the Salt Lake Organizing Committee of the Olympic Winter Games of 2002; or
             482          (f) the mascot of the Olympic Winter Games of 2002.
             483          [(42)] (45) (a) "Other fuels" means products that burn independently to produce heat or
             484      energy.
             485          (b) "Other fuels" includes oxygen when it is used in the manufacturing of tangible
             486      personal property.
             487          [(43)] (46) "Person" includes any individual, firm, partnership, joint venture,
             488      association, corporation, estate, trust, business trust, receiver, syndicate, this state, any county,
             489      city, municipality, district, or other local governmental entity of the state, or any group or


             490      combination acting as a unit.
             491          [(44)] (47) "Place of primary use":
             492          (a) for telephone service other than mobile telecommunications service, means the
             493      street address representative of where the purchaser's use of the telephone service primarily
             494      occurs, which shall be:
             495          (i) the residential street address of the purchaser; or
             496          (ii) the primary business street address of the purchaser; or
             497          (b) for mobile telecommunications service, is as defined in the Mobile
             498      Telecommunications Sourcing Act, 4 U.S.C. Sec. 124.
             499          [(45)] (48) (a) "Prepared food" means:
             500          (i) food:
             501          (A) sold in a heated state; or
             502          (B) heated by a seller;
             503          (ii) two or more food ingredients mixed or combined by the seller for sale as a single
             504      item; or
             505          (iii) except as provided in Subsection [(45)] (48)(c), food sold with an eating utensil
             506      provided by the seller, including a:
             507          (A) plate;
             508          (B) knife;
             509          (C) fork;
             510          (D) spoon;
             511          (E) glass;
             512          (F) cup;
             513          (G) napkin; or
             514          (H) straw.
             515          (b) "Prepared food" does not include:
             516          (i) food that a seller only:
             517          (A) cuts;
             518          (B) repackages; or
             519          (C) pasteurizes; or
             520          (ii) (A) the following:


             521          (I) raw egg;
             522          (II) raw fish;
             523          (III) raw meat;
             524          (IV) raw poultry; or
             525          (V) a food containing an item described in Subsections [(45)] (48)(b)(ii)(A)(I) through
             526      (IV); and
             527          (B) if the Food and Drug Administration recommends in Chapter 3, Part 401.11 of the
             528      Food and Drug Administration's Food Code that a consumer cook the items described in
             529      Subsection [(45)] (48)(b)(ii)(A) to prevent food borne illness.
             530          (c) Notwithstanding Subsection [(45)] (48)(a)(iii), an eating utensil provided by the
             531      seller does not include the following used to transport the food:
             532          (i) a container; or
             533          (ii) packaging.
             534          [(46)] (49) "Prescription" means an order, formula, or recipe that is issued:
             535          (a) (i) orally;
             536          (ii) in writing;
             537          (iii) electronically; or
             538          (iv) by any other manner of transmission; and
             539          (b) by a licensed practitioner authorized by the laws of a state.
             540          [(47)] (50) (a) Except as provided in Subsection [(47)] (50)(b)(ii) or (iii), "prewritten
             541      computer software" means computer software that is not designed and developed:
             542          (i) by the author or other creator of the computer software; and
             543          (ii) to the specifications of a specific purchaser.
             544          (b) "Prewritten computer software" includes:
             545          (i) a prewritten upgrade to computer software if the prewritten upgrade to the computer
             546      software is not designed and developed:
             547          (A) by the author or other creator of the computer software; and
             548          (B) to the specifications of a specific purchaser;
             549          (ii) notwithstanding Subsection [(47)] (50)(a), computer software designed and
             550      developed by the author or other creator of the computer software to the specifications of a
             551      specific purchaser if the computer software is sold to a person other than the purchaser; or


             552          (iii) notwithstanding Subsection [(47)] (50)(a) and except as provided in Subsection
             553      [(47)] (50)(c), prewritten computer software or a prewritten portion of prewritten computer
             554      software:
             555          (A) that is modified or enhanced to any degree; and
             556          (B) if the modification or enhancement described in Subsection [(47)] (50)(b)(iii)(A) is
             557      designed and developed to the specifications of a specific purchaser.
             558          (c) Notwithstanding Subsection [(47)] (50)(b)(iii), "prewritten computer software"
             559      does not include a modification or enhancement described in Subsection [(47)] (50)(b)(iii) if
             560      the charges for the modification or enhancement are:
             561          (i) reasonable; and
             562          (ii) separately stated on the invoice or other statement of price provided to the
             563      purchaser.
             564          [(48)] (51) (a) "Prosthetic device" means a device that is:
             565          (i) worn on or in the body to:
             566          (A) artificially replace a missing portion of the body;
             567          (B) prevent or correct a physical deformity or physical malfunction; or
             568          (C) support a weak or deformed portion of the body; and
             569          (ii) listed as eligible for payment under:
             570          (A) Title XVIII of the federal Social Security Act; or
             571          (B) the state plan for medical assistance under Title XIX of the federal Social Security
             572      Act.
             573          (b) "Prosthetic device" includes:
             574          (i) parts used in the repairs or renovation of a prosthetic device; or
             575          (ii) replacement parts for a prosthetic device.
             576          (c) "Prosthetic device" does not include:
             577          (i) corrective eyeglasses;
             578          (ii) contact lenses;
             579          (iii) hearing aids; or
             580          (iv) dental prostheses.
             581          [(49)] (52) (a) "Protective equipment" means an item:
             582          (i) for human wear; and


             583          (ii) that is:
             584          (A) designed as protection:
             585          (I) to the wearer against injury or disease; or
             586          (II) against damage or injury of other persons or property; and
             587          (B) not suitable for general use.
             588          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             589      commission shall make rules:
             590          (i) listing the items that constitute "protective equipment"; and
             591          (ii) that are consistent with the list of items that constitute "protective equipment"
             592      under the agreement.
             593          [(50)] (53) (a) "Purchase price" and "sales price" mean the total amount of
             594      consideration:
             595          (i) valued in money; and
             596          (ii) for which tangible personal property or services are:
             597          (A) sold;
             598          (B) leased; or
             599          (C) rented.
             600          (b) "Purchase price" and "sales price" include:
             601          (i) the seller's cost of the tangible personal property or services sold;
             602          (ii) expenses of the seller, including:
             603          (A) the cost of materials used;
             604          (B) a labor cost;
             605          (C) a service cost;
             606          (D) interest;
             607          (E) a loss;
             608          (F) the cost of transportation to the seller; or
             609          (G) a tax imposed on the seller;
             610          (iii) a charge by the seller for any service necessary to complete the sale;
             611          (iv) a delivery charge; or
             612          (v) an installation charge.
             613          (c) "Purchase price" and "sales price" do not include:


             614          (i) a discount:
             615          (A) in a form including:
             616          (I) cash;
             617          (II) term; or
             618          (III) coupon;
             619          (B) that is allowed by a seller;
             620          (C) taken by a purchaser on a sale; and
             621          (D) that is not reimbursed by a third party; or
             622          (ii) the following if separately stated on an invoice, bill of sale, or similar document
             623      provided to the purchaser:
             624          (A) the amount of a trade-in;
             625          (B) the following from credit extended on the sale of tangible personal property or
             626      services:
             627          (I) interest charges;
             628          (II) financing charges; or
             629          (III) carrying charges; or
             630          (C) a tax or fee legally imposed directly on the consumer.
             631          [(51)] (54) "Purchaser" means a person to whom:
             632          (a) a sale of tangible personal property is made; or
             633          (b) a service is furnished.
             634          [(52)] (55) "Regularly rented" means:
             635          (a) rented to a guest for value three or more times during a calendar year; or
             636          (b) advertised or held out to the public as a place that is regularly rented to guests for
             637      value.
             638          (56) "Renewable energy" means:
             639          (a) biomass energy;
             640          (b) hydroelectric energy;
             641          (c) geothermal energy;
             642          (d) solar energy; or
             643          (e) wind energy.
             644          (57) (a) "Renewable energy production facility" means a facility that:


             645          (i) uses renewable energy to produce electricity; and
             646          (ii) has a production capacity of 20 kilowatts or greater.
             647          (b) A facility is a renewable energy production facility regardless of whether the
             648      facility is:
             649          (i) connected to an electric grid; or
             650          (ii) located on the premises of an electricity consumer.
             651          [(53)] (58) "Rental" is as defined in Subsection [(31)] (34).
             652          [(54)] (59) "Residential use" means the use in or around a home, apartment building,
             653      sleeping quarters, and similar facilities or accommodations.
             654          [(55)] (60) "Retail sale" or "sale at retail" means a sale, lease, or rental for a purpose
             655      other than:
             656          (a) resale;
             657          (b) sublease; or
             658          (c) subrent.
             659          [(56)] (61) (a) "Retailer" means any person engaged in a regularly organized business
             660      in tangible personal property or any other taxable transaction under Subsection 59-12-103 (1),
             661      and who is selling to the user or consumer and not for resale.
             662          (b) "Retailer" includes commission merchants, auctioneers, and any person regularly
             663      engaged in the business of selling to users or consumers within the state.
             664          [(57)] (62) (a) "Sale" means any transfer of title, exchange, or barter, conditional or
             665      otherwise, in any manner, of tangible personal property or any other taxable transaction under
             666      Subsection 59-12-103 (1), for consideration.
             667          (b) "Sale" includes:
             668          (i) installment and credit sales;
             669          (ii) any closed transaction constituting a sale;
             670          (iii) any sale of electrical energy, gas, services, or entertainment taxable under this
             671      chapter;
             672          (iv) any transaction if the possession of property is transferred but the seller retains the
             673      title as security for the payment of the price; and
             674          (v) any transaction under which right to possession, operation, or use of any article of
             675      tangible personal property is granted under a lease or contract and the transfer of possession


             676      would be taxable if an outright sale were made.
             677          [(58)] (63) "Sale at retail" is as defined in Subsection [(55)] (60).
             678          [(59)] (64) "Sale-leaseback transaction" means a transaction by which title to tangible
             679      personal property that is subject to a tax under this chapter is transferred:
             680          (a) by a purchaser-lessee;
             681          (b) to a lessor;
             682          (c) for consideration; and
             683          (d) if:
             684          (i) the purchaser-lessee paid sales and use tax on the purchaser-lessee's initial purchase
             685      of the tangible personal property;
             686          (ii) the sale of the tangible personal property to the lessor is intended as a form of
             687      financing:
             688          (A) for the property; and
             689          (B) to the purchaser-lessee; and
             690          (iii) in accordance with generally accepted accounting principles, the purchaser-lessee
             691      is required to:
             692          (A) capitalize the property for financial reporting purposes; and
             693          (B) account for the lease payments as payments made under a financing arrangement.
             694          [(60)] (65) "Sales price" is as defined in Subsection [(50)] (53).
             695          [(61)] (66) (a) "Sales relating to schools" means the following sales by, amounts paid
             696      to, or amounts charged by a school:
             697          (i) sales that are directly related to the school's educational functions or activities
             698      including:
             699          (A) the sale of:
             700          (I) textbooks;
             701          (II) textbook fees;
             702          (III) laboratory fees;
             703          (IV) laboratory supplies; or
             704          (V) safety equipment;
             705          (B) the sale of a uniform, protective equipment, or sports or recreational equipment
             706      that:


             707          (I) a student is specifically required to wear as a condition of participation in a
             708      school-related event or school-related activity; and
             709          (II) is not readily adaptable to general or continued usage to the extent that it takes the
             710      place of ordinary clothing;
             711          (C) sales of the following if the net or gross revenues generated by the sales are
             712      deposited into a school district fund or school fund dedicated to school meals:
             713          (I) food and food ingredients; or
             714          (II) prepared food; or
             715          (D) transportation charges for official school activities; or
             716          (ii) amounts paid to or amounts charged by a school for admission to a school-related
             717      event or school-related activity.
             718          (b) "Sales relating to schools" does not include:
             719          (i) bookstore sales of items that are not educational materials or supplies;
             720          (ii) except as provided in Subsection [(61)] (66)(a)(i)(B):
             721          (A) clothing;
             722          (B) clothing accessories or equipment;
             723          (C) protective equipment; or
             724          (D) sports or recreational equipment; or
             725          (iii) amounts paid to or amounts charged by a school for admission to a school-related
             726      event or school-related activity if the amounts paid or charged are passed through to a person:
             727          (A) other than a:
             728          (I) school;
             729          (II) nonprofit organization authorized by a school board or a governing body of a
             730      private school to organize and direct a competitive secondary school activity; or
             731          (III) nonprofit association authorized by a school board or a governing body of a
             732      private school to organize and direct a competitive secondary school activity; and
             733          (B) that is required to collect sales and use taxes under this chapter.
             734          (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             735      commission may make rules defining the term "passed through."
             736          [(62)] (67) For purposes of this section and Section 59-12-104 , "school" means:
             737          (a) an elementary school or a secondary school that:


             738          (i) is a:
             739          (A) public school; or
             740          (B) private school; and
             741          (ii) provides instruction for one or more grades kindergarten through 12; or
             742          (b) a public school district.
             743          [(63)] (68) "Seller" means a person that makes a sale, lease, or rental of:
             744          (a) tangible personal property; or
             745          (b) a service.
             746          [(64)] (69) (a) "Semiconductor fabricating or processing materials" means tangible
             747      personal property:
             748          (i) used primarily in the process of:
             749          (A) (I) manufacturing a semiconductor; or
             750          (II) fabricating a semiconductor; or
             751          (B) maintaining an environment suitable for a semiconductor; or
             752          (ii) consumed primarily in the process of:
             753          (A) (I) manufacturing a semiconductor; or
             754          (II) fabricating a semiconductor; or
             755          (B) maintaining an environment suitable for a semiconductor.
             756          (b) "Semiconductor fabricating or processing materials" includes:
             757          (i) parts used in the repairs or renovations of tangible personal property described in
             758      Subsection [(64)] (69)(a); or
             759          (ii) a chemical, catalyst, or other material used to:
             760          (A) produce or induce in a semiconductor a:
             761          (I) chemical change; or
             762          (II) physical change;
             763          (B) remove impurities from a semiconductor; or
             764          (C) improve the marketable condition of a semiconductor.
             765          [(65)] (70) "Senior citizen center" means a facility having the primary purpose of
             766      providing services to the aged as defined in Section 62A-3-101 .
             767          (71) "Solar energy" means the sun used as the sole source of energy for producing
             768      electricity.


             769          [(66)] (72) (a) "Sports or recreational equipment" means an item:
             770          (i) designed for human use; and
             771          (ii) that is:
             772          (A) worn in conjunction with:
             773          (I) an athletic activity; or
             774          (II) a recreational activity; and
             775          (B) not suitable for general use.
             776          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             777      commission shall make rules:
             778          (i) listing the items that constitute "sports or recreational equipment"; and
             779          (ii) that are consistent with the list of items that constitute "sports or recreational
             780      equipment" under the agreement.
             781          [(67)] (73) "State" means the state of Utah, its departments, and agencies.
             782          [(68)] (74) "Storage" means any keeping or retention of tangible personal property or
             783      any other taxable transaction under Subsection 59-12-103 (1), in this state for any purpose
             784      except sale in the regular course of business.
             785          [(69)] (75) (a) "Tangible personal property" means personal property that:
             786          (i) may be:
             787          (A) seen;
             788          (B) weighed;
             789          (C) measured;
             790          (D) felt; or
             791          (E) touched; or
             792          (ii) is in any manner perceptible to the senses.
             793          (b) "Tangible personal property" includes:
             794          (i) electricity;
             795          (ii) water;
             796          (iii) gas;
             797          (iv) steam; or
             798          (v) prewritten computer software.
             799          [(70)] (76) (a) "Telephone service" means a two-way transmission:


             800          (i) by:
             801          (A) wire;
             802          (B) radio;
             803          (C) lightwave; or
             804          (D) other electromagnetic means; and
             805          (ii) of one or more of the following:
             806          (A) a sign;
             807          (B) a signal;
             808          (C) writing;
             809          (D) an image;
             810          (E) sound;
             811          (F) a message;
             812          (G) data; or
             813          (H) other information of any nature.
             814          (b) "Telephone service" includes:
             815          (i) mobile telecommunications service;
             816          (ii) private communications service; or
             817          (iii) automated digital telephone answering service.
             818          (c) "Telephone service" does not include a service or a transaction that a state or a
             819      political subdivision of a state is prohibited from taxing as of July 1, 2001, under the Internet
             820      Tax Freedom Act, Pub. L. No. 105-277.
             821          [(71)] (77) Notwithstanding where a call is billed or paid, "telephone service address"
             822      means:
             823          (a) if the location described in this Subsection [(71)] (77)(a) is known, the location of
             824      the telephone service equipment:
             825          (i) to which a call is charged; and
             826          (ii) from which the call originates or terminates;
             827          (b) if the location described in Subsection [(71)] (77)(a) is not known but the location
             828      described in this Subsection [(71)] (77)(b) is known, the location of the origination point of the
             829      signal of the telephone service first identified by:
             830          (i) the telecommunications system of the seller; or


             831          (ii) if the system used to transport the signal is not that of the seller, information
             832      received by the seller from its service provider; or
             833          (c) if the locations described in Subsection [(71)] (77)(a) or (b) are not known, the
             834      location of a purchaser's primary place of use.
             835          [(72)] (78) (a) "Telephone service provider" means a person that:
             836          (i) owns, controls, operates, or manages a telephone service; and
             837          (ii) engages in an activity described in Subsection [(72)] (78)(a)(i) for the shared use
             838      with or resale to any person of the telephone service.
             839          (b) A person described in Subsection [(72)] (78)(a) is a telephone service provider
             840      whether or not the Public Service Commission of Utah regulates:
             841          (i) that person; or
             842          (ii) the telephone service that the person owns, controls, operates, or manages.
             843          [(73)] (79) "Tobacco" means:
             844          (a) a cigarette;
             845          (b) a cigar;
             846          (c) chewing tobacco;
             847          (d) pipe tobacco; or
             848          (e) any other item that contains tobacco.
             849          [(74)] (80) (a) "Use" means the exercise of any right or power over tangible personal
             850      property under Subsection 59-12-103 (1), incident to the ownership or the leasing of that
             851      property, item, or service.
             852          (b) "Use" does not include the sale, display, demonstration, or trial of that property in
             853      the regular course of business and held for resale.
             854          [(75)] (81) "Vehicle" means any aircraft, as defined in Section 72-10-102 ; any vehicle,
             855      as defined in Section 41-1a-102 ; any off-highway vehicle, as defined in Section 41-22-2 ; and
             856      any vessel, as defined in Section 41-1a-102 ; that is required to be titled, registered, or both.
             857      "Vehicle," for purposes of Subsection 59-12-104 (35) only, also includes any locomotive,
             858      freight car, railroad work equipment, or other railroad rolling stock.
             859          [(76)] (82) "Vehicle dealer" means a person engaged in the business of buying, selling,
             860      or exchanging vehicles as defined in Subsection [(75)] (81).
             861          (83) "Waste energy facility" means a facility that generates electricity:


             862          (a) using as the primary source of energy waste materials that would be placed in a
             863      landfill or refuse pit if it were not used to generate electricity, including:
             864          (i) tires;
             865          (ii) waste coal; or
             866          (iii) oil shale; and
             867          (b) in amounts greater than actually required for the operation of the facility.
             868          (84) "Wind energy" means wind used as the sole source of energy to produce
             869      electricity.
             870          Section 2. Section 59-12-104 (Effective 07/01/04) is amended to read:
             871           59-12-104 (Effective 07/01/04). Exemptions.
             872          The following sales and uses are exempt from the taxes imposed by this chapter:
             873          (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
             874      under Chapter 13, Motor and Special Fuel Tax Act;
             875          (2) sales to the state, its institutions, and its political subdivisions; however, this
             876      exemption does not apply to sales of:
             877          (a) construction materials except:
             878          (i) construction materials purchased by or on behalf of institutions of the public
             879      education system as defined in Utah Constitution Article X, Section 2, provided the
             880      construction materials are clearly identified and segregated and installed or converted to real
             881      property which is owned by institutions of the public education system; and
             882          (ii) construction materials purchased by the state, its institutions, or its political
             883      subdivisions which are installed or converted to real property by employees of the state, its
             884      institutions, or its political subdivisions; or
             885          (b) tangible personal property in connection with the construction, operation,
             886      maintenance, repair, or replacement of a project, as defined in Section 11-13-103 , or facilities
             887      providing additional project capacity, as defined in Section 11-13-103 ;
             888          (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
             889          (i) the proceeds of each sale do not exceed $1; and
             890          (ii) the seller or operator of the vending machine reports an amount equal to 150% of
             891      the cost of the item described in this Subsection (3)(a) as goods consumed; and
             892          (b) Subsection (3)(a) applies to:


             893          (i) food and food ingredients; or
             894          (ii) prepared food;
             895          (4) sales of the following to a commercial airline carrier for in-flight consumption:
             896          (a) food and food ingredients;
             897          (b) prepared food; or
             898          (c) services related to Subsection (4)(a) or (b);
             899          (5) sales of parts and equipment for installation in aircraft operated by common carriers
             900      in interstate or foreign commerce;
             901          (6) sales of commercials, motion picture films, prerecorded audio program tapes or
             902      records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
             903      exhibitor, distributor, or commercial television or radio broadcaster;
             904          (7) sales of cleaning or washing of tangible personal property by a coin-operated
             905      laundry or dry cleaning machine;
             906          (8) (a) except as provided in Subsection (8)(b), sales made to or by religious or
             907      charitable institutions in the conduct of their regular religious or charitable functions and
             908      activities, if the requirements of Section 59-12-104.1 are fulfilled;
             909          (b) the exemption provided for in Subsection (8)(a) does not apply to the following
             910      sales, uses, leases, or rentals relating to the Olympic Winter Games of 2002 made to or by an
             911      organization exempt from federal income taxation under Section 501(c)(3), Internal Revenue
             912      Code:
             913          (i) retail sales of Olympic merchandise;
             914          (ii) except as provided in Subsection (50), admissions or user fees described in
             915      Subsection 59-12-103 (1)(f);
             916          (iii) sales of accommodations and services as provided in Subsection 59-12-103 (1)(i),
             917      except for accommodations and services:
             918          (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter
             919      Games of 2002;
             920          (B) exclusively used by:
             921          (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
             922      Olympic Winter Games of 2002; or
             923          (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic


             924      Winter Games of 2002; and
             925          (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of
             926      2002 does not receive reimbursement; or
             927          (iv) a lease or rental of a vehicle as defined in Section 41-1a-102 , except for a lease or
             928      rental of a vehicle:
             929          (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter
             930      Games of 2002;
             931          (B) exclusively used by:
             932          (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
             933      Olympic Winter Games of 2002; or
             934          (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic
             935      Winter Games of 2002; and
             936          (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of
             937      2002 does not receive reimbursement;
             938          (9) sales of vehicles of a type required to be registered under the motor vehicle laws of
             939      this state which are made to bona fide nonresidents of this state and are not afterwards
             940      registered or used in this state except as necessary to transport them to the borders of this state;
             941          (10) (a) amounts paid for an item described in Subsection (10)(b) if:
             942          (i) the item is intended for human use; and
             943          (ii) the purchaser presents a prescription for the item; and
             944          (b) (i) Subsection (10)(a) applies to:
             945          (A) a drug;
             946          (B) a syringe; or
             947          (C) a stoma supply; and
             948          (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             949      commission may by rule define the terms:
             950          (A) "syringe"; or
             951          (B) "stoma supply";
             952          (11) sales or use of property, materials, or services used in the construction of or
             953      incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
             954          (12) (a) sales of an item described in Subsection (12)(c) served by:


             955          (i) the following if the item described in Subsection (12)(c) is not available to the
             956      general public:
             957          (A) a church; or
             958          (B) a charitable institution;
             959          (ii) an institution of higher education if:
             960          (A) the item described in Subsection (12)(c) is not available to the general public; or
             961          (B) the item described in Subsection (12)(c) is prepaid as part of a student meal plan
             962      offered by the institution of higher education; or
             963          (b) sales of an item described in Subsection (12)(c) provided at:
             964          (i) a medical facility; or
             965          (ii) a nursing facility; and
             966          (c) Subsections (12)(a) and (b) apply to:
             967          (i) food and food ingredients;
             968          (ii) prepared food; or
             969          (iii) alcoholic beverages;
             970          (13) isolated or occasional sales by persons not regularly engaged in business, except
             971      the sale of vehicles or vessels required to be titled or registered under the laws of this state in
             972      which case the tax is based upon:
             973          (a) the bill of sale or other written evidence of value of the vehicle or vessel being sold;
             974      or
             975          (b) in the absence of a bill of sale or other written evidence of value, the then existing
             976      fair market value of the vehicle or vessel being sold as determined by the commission;
             977          (14) (a) the following purchases or leases by a manufacturer on or after July 1, 1995:
             978          (i) machinery and equipment:
             979          (A) used in the manufacturing process;
             980          (B) having an economic life of three or more years; and
             981          (C) used:
             982          (I) to manufacture an item sold as tangible personal property; and
             983          (II) in new or expanding operations in a manufacturing facility in the state; and
             984          (ii) subject to the provisions of Subsection (14)(b), normal operating replacements that:
             985          (A) have an economic life of three or more years;


             986          (B) are used in the manufacturing process in a manufacturing facility in the state;
             987          (C) are used to replace or adapt an existing machine to extend the normal estimated
             988      useful life of the machine; and
             989          (D) do not include repairs and maintenance;
             990          (b) the rates for the exemption under Subsection (14)(a)(ii) are as follows:
             991          (i) beginning July 1, 1996, through June 30, 1997, 30% of the sale or lease described in
             992      Subsection (14)(a)(ii) is exempt;
             993          (ii) beginning July 1, 1997, through June 30, 1998, 60% of the sale or lease described
             994      in Subsection (14)(a)(ii) is exempt; and
             995          (iii) beginning July 1, 1998, 100% of the sale or lease described in Subsection
             996      (14)(a)(ii) is exempt;
             997          (c) for purposes of this Subsection (14), the commission shall by rule define the terms
             998      "new or expanding operations" and "establishment"; and
             999          (d) on or before October 1, 1991, and every five years after October 1, 1991, the
             1000      commission shall:
             1001          (i) review the exemptions described in Subsection (14)(a) and make recommendations
             1002      to the Revenue and Taxation Interim Committee concerning whether the exemptions should be
             1003      continued, modified, or repealed; and
             1004          (ii) include in its report:
             1005          (A) the cost of the exemptions;
             1006          (B) the purpose and effectiveness of the exemptions; and
             1007          (C) the benefits of the exemptions to the state;
             1008          (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
             1009          (i) tooling;
             1010          (ii) special tooling;
             1011          (iii) support equipment;
             1012          (iv) special test equipment; or
             1013          (v) parts used in the repairs or renovations of tooling or equipment described in
             1014      Subsections (15)(a)(i) through (iv); and
             1015          (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
             1016          (i) the tooling, equipment, or parts are used or consumed exclusively in the


             1017      performance of any aerospace or electronics industry contract with the United States
             1018      government or any subcontract under that contract; and
             1019          (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),
             1020      title to the tooling, equipment, or parts is vested in the United States government as evidenced
             1021      by:
             1022          (A) a government identification tag placed on the tooling, equipment, or parts; or
             1023          (B) listing on a government-approved property record if placing a government
             1024      identification tag on the tooling, equipment, or parts is impractical;
             1025          (16) intrastate movements of:
             1026          (a) freight by common carriers; or
             1027          (b) passengers:
             1028          (i) by taxicabs as described in SIC Code 4121 of the 1987 Standard Industrial
             1029      Classification Manual of the federal Executive Office of the President, Office of Management
             1030      and Budget;
             1031          (ii) transported by an establishment described in SIC Code 4111 of the 1987 Standard
             1032      Industrial Classification Manual of the federal Executive Office of the President, Office of
             1033      Management and Budget, if the transportation originates and terminates within a county of the
             1034      first, second, or third class; or
             1035          (iii) transported by the following described in SIC Code 4789 of the 1987 Standard
             1036      Industrial Classification Manual of the federal Executive Office of the President, Office of
             1037      Management and Budget:
             1038          (A) a horse-drawn cab; or
             1039          (B) a horse-drawn carriage;
             1040          (17) sales of newspapers or newspaper subscriptions;
             1041          (18) (a) except as provided in Subsection (18)(b), tangible personal property traded in
             1042      as full or part payment of the purchase price, except that for purposes of calculating sales or use
             1043      tax upon vehicles not sold by a vehicle dealer, trade-ins are limited to other vehicles only, and
             1044      the tax is based upon:
             1045          (i) the bill of sale or other written evidence of value of the vehicle being sold and the
             1046      vehicle being traded in; or
             1047          (ii) in the absence of a bill of sale or other written evidence of value, the then existing


             1048      fair market value of the vehicle being sold and the vehicle being traded in, as determined by the
             1049      commission; and
             1050          (b) notwithstanding Subsection (18)(a), Subsection (18)(a) does not apply to the
             1051      following items of tangible personal property traded in as full or part payment of the purchase
             1052      price:
             1053          (i) money;
             1054          (ii) electricity;
             1055          (iii) water;
             1056          (iv) gas; or
             1057          (v) steam;
             1058          (19) sprays and insecticides used to control insects, diseases, and weeds for
             1059      commercial production of fruits, vegetables, feeds, seeds, and animal products, but not those
             1060      sprays and insecticides used in the processing of the products;
             1061          (20) (a) (i) sales of tangible personal property used or consumed primarily and directly
             1062      in farming operations, including sales of irrigation equipment and supplies used for agricultural
             1063      production purposes, whether or not they become part of real estate and whether or not
             1064      installed by farmer, contractor, or subcontractor, but not sales of:
             1065          (A) machinery, equipment, materials, and supplies used in a manner that is incidental
             1066      to farming, such as hand tools and maintenance and janitorial equipment and supplies;
             1067          (B) tangible personal property used in any activities other than farming, such as office
             1068      equipment and supplies, equipment and supplies used in sales or distribution of farm products,
             1069      in research, or in transportation; or
             1070          (C) any vehicle required to be registered by the laws of this state, without regard to the
             1071      use to which the vehicle is put; or
             1072          (ii) sales of parts used in the repairs or renovations of tangible personal property if the
             1073      tangible personal property is exempt under Subsection (20)(a); or
             1074          (b) sales of hay;
             1075          (21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or
             1076      other agricultural produce if sold by a producer during the harvest season;
             1077          (22) purchases made using a coupon as defined in 7 U.S.C. Sec. 2012 that is issued
             1078      under the Food Stamp Program, 7 U.S.C. Sec. 2011 et seq.;


             1079          (23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
             1080      nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor,
             1081      wholesaler, or retailer for use in packaging tangible personal property to be sold by that
             1082      manufacturer, processor, wholesaler, or retailer;
             1083          (24) property stored in the state for resale;
             1084          (25) property brought into the state by a nonresident for his or her own personal use or
             1085      enjoyment while within the state, except property purchased for use in Utah by a nonresident
             1086      living and working in Utah at the time of purchase;
             1087          (26) property purchased for resale in this state, in the regular course of business, either
             1088      in its original form or as an ingredient or component part of a manufactured or compounded
             1089      product;
             1090          (27) property upon which a sales or use tax was paid to some other state, or one of its
             1091      subdivisions, except that the state shall be paid any difference between the tax paid and the tax
             1092      imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if
             1093      the tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax
             1094      Act;
             1095          (28) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a
             1096      person for use in compounding a service taxable under the subsections;
             1097          (29) purchases made in accordance with the special supplemental nutrition program for
             1098      women, infants, and children established in 42 U.S.C. Sec. 1786;
             1099          (30) beginning on July 1, 1999, through June 30, 2004, sales or leases of rolls, rollers,
             1100      refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
             1101      of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification
             1102      Manual of the federal Executive Office of the President, Office of Management and Budget;
             1103          (31) sales of boats of a type required to be registered under Title 73, Chapter 18, State
             1104      Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of
             1105      this state and are not thereafter registered or used in this state except as necessary to transport
             1106      them to the borders of this state;
             1107          (32) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah
             1108      where a sales or use tax is not imposed, even if the title is passed in Utah;
             1109          (33) amounts paid for the purchase of telephone service for purposes of providing


             1110      telephone service;
             1111          (34) fares charged to persons transported directly by a public transit district created
             1112      under the authority of Title 17A, Chapter 2, Part 10, Utah Public Transit District Act;
             1113          (35) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
             1114          (36) (a) 45% of the sales price of any new manufactured home; and
             1115          (b) 100% of the sales price of any used manufactured home;
             1116          (37) sales relating to schools and fundraising sales;
             1117          (38) sales or rentals of durable medical equipment if a person presents a prescription
             1118      for the durable medical equipment;
             1119          (39) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
             1120      Section 72-11-102 ; and
             1121          (b) the commission shall by rule determine the method for calculating sales exempt
             1122      under Subsection (39)(a) that are not separately metered and accounted for in utility billings;
             1123          (40) sales to a ski resort of:
             1124          (a) snowmaking equipment;
             1125          (b) ski slope grooming equipment;
             1126          (c) passenger ropeways as defined in Section 72-11-102 ; or
             1127          (d) parts used in the repairs or renovations of equipment or passenger ropeways
             1128      described in Subsections (40)(a) through (c);
             1129          (41) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
             1130          (42) sales or rentals of the right to use or operate for amusement, entertainment, or
             1131      recreation a coin-operated amusement device as defined in Section 59-12-102 ;
             1132          (43) sales of cleaning or washing of tangible personal property by a coin-operated car
             1133      wash machine;
             1134          (44) sales by the state or a political subdivision of the state, except state institutions of
             1135      higher education as defined in Section 53B-3-102 , of:
             1136          (a) photocopies; or
             1137          (b) other copies of records held or maintained by the state or a political subdivision of
             1138      the state;
             1139          (45) (a) amounts paid:
             1140          (i) to a person providing intrastate transportation to an employer's employee to or from


             1141      the employee's primary place of employment;
             1142          (ii) by an:
             1143          (A) employee; or
             1144          (B) employer; and
             1145          (iii) pursuant to a written contract between:
             1146          (A) the employer; and
             1147          (B) (I) the employee; or
             1148          (II) a person providing transportation to the employer's employee; and
             1149          (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1150      commission may for purposes of Subsection (45)(a) make rules defining what constitutes an
             1151      employee's primary place of employment;
             1152          (46) amounts paid for admission to an athletic event at an institution of higher
             1153      education that is subject to the provisions of Title IX of the Education Amendments of 1972,
             1154      20 U.S.C. Sec. 1681 et seq.;
             1155          (47) sales of telephone service charged to a prepaid telephone calling card;
             1156          (48) (a) sales of:
             1157          (i) hearing aids;
             1158          (ii) hearing aid accessories; or
             1159          (iii) except as provided in Subsection (48)(b), parts used in the repairs or renovations
             1160      of hearing aids or hearing aid accessories; and
             1161          (b) for purposes of this Subsection (48), notwithstanding Subsection (48)(a)(iii),
             1162      "parts" does not include batteries;
             1163          (49) (a) sales made to or by:
             1164          (i) an area agency on aging; or
             1165          (ii) a senior citizen center owned by a county, city, or town; or
             1166          (b) sales made by a senior citizen center that contracts with an area agency on aging;
             1167          (50) (a) beginning on July 1, 2000, through June 30, 2002, amounts paid or charged as
             1168      admission or user fees described in Subsection 59-12-103 (1)(f) relating to the Olympic Winter
             1169      Games of 2002 if the amounts paid or charged are established by the Salt Lake Organizing
             1170      Committee for the Olympic Winter Games of 2002 in accordance with requirements of the
             1171      International Olympic Committee; and


             1172          (b) the State Olympic Officer and the Salt Lake Organizing Committee for the Olympic
             1173      Winter Games of 2002 shall make at least two reports during the 2000 interim:
             1174          (i) to the:
             1175          (A) Olympic Coordination Committee; and
             1176          (B) Revenue and Taxation Interim Committee; and
             1177          (ii) regarding the status of:
             1178          (A) agreements relating to the funding of public safety services for the Olympic Winter
             1179      Games of 2002;
             1180          (B) agreements relating to the funding of services, other than public safety services, for
             1181      the Olympic Winter Games of 2002;
             1182          (C) other agreements relating to the Olympic Winter Games of 2002 as requested by
             1183      the Olympic Coordination Committee or the Revenue and Taxation Interim Committee;
             1184          (D) other issues as requested by the Olympic Coordination Committee or the Revenue
             1185      and Taxation Interim Committee; or
             1186          (E) a combination of Subsections (50)(b)(ii)(A) through (D);
             1187          (51) (a) beginning on July 1, 2001, through June 30, 2007, and subject to Subsection
             1188      (51)(b), a sale or lease of semiconductor fabricating or processing materials regardless of
             1189      whether the semiconductor fabricating or processing materials:
             1190          (i) actually come into contact with a semiconductor; or
             1191          (ii) ultimately become incorporated into real property;
             1192          (b) (i) beginning on July 1, 2001, through June 30, 2002, 10% of the sale or lease
             1193      described in Subsection (51)(a) is exempt;
             1194          (ii) beginning on July 1, 2002, through June 30, 2003, 50% of the sale or lease
             1195      described in Subsection (51)(a) is exempt; and
             1196          (iii) beginning on July 1, 2003, through June 30, 2007, the entire amount of the sale or
             1197      lease described in Subsection (51)(a) is exempt; and
             1198          (c) each year on or before the November interim meeting, the Revenue and Taxation
             1199      Interim Committee shall:
             1200          (i) review the exemption described in this Subsection (51) and make recommendations
             1201      concerning whether the exemption should be continued, modified, or repealed; and
             1202          (ii) include in the review under this Subsection (51)(c):


             1203          (A) the cost of the exemption;
             1204          (B) the purpose and effectiveness of the exemption; and
             1205          (C) the benefits of the exemption to the state;
             1206          (52) an amount paid by or charged to a purchaser for accommodations and services
             1207      described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
             1208      59-12-104.2 ;
             1209          (53) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary
             1210      sports event registration certificate in accordance with Section 41-3-306 for the event period
             1211      specified on the temporary sports event registration certificate;
             1212          (54) sales or uses of electricity, if the sales or uses are:
             1213          (a) made under a tariff adopted by the Public Service Commission of Utah only for
             1214      purchase of electricity produced from a new wind, geothermal, biomass, or solar power energy
             1215      source, as designated in the tariff by the Public Service Commission of Utah; and
             1216          (b) for an amount of electricity that is:
             1217          (i) unrelated to the amount of electricity used by the person purchasing the electricity
             1218      under the tariff described in Subsection (54)(a); and
             1219          (ii) equivalent to the number of kilowatthours specified in the tariff described in
             1220      Subsection (54)(a) that may be purchased under the tariff described in Subsection (54)(a);
             1221          (55) sales or rentals of mobility enhancing equipment if a person presents a
             1222      prescription for the mobility enhancing equipment;
             1223          (56) sales of water in a:
             1224          (a) pipe;
             1225          (b) conduit;
             1226          (c) ditch; or
             1227          (d) reservoir;
             1228          (57) sales of currency or coinage that constitute legal tender of the United States or of a
             1229      foreign nation;
             1230          (58) (a) sales of an item described in Subsection (58)(b) if the item:
             1231          (i) does not constitute legal tender of any nation; and
             1232          (ii) has a gold, silver, or platinum content of 80% or more; and
             1233          (b) Subsection (58)(a) applies to a gold, silver, or platinum:


             1234          (i) ingot;
             1235          (ii) bar;
             1236          (iii) medallion; or
             1237          (iv) decorative coin;
             1238          (59) amounts paid on a sale-leaseback transaction; [and]
             1239          (60) sales of a prosthetic device:
             1240          (a) for use on or in a human;
             1241          (b) for which a prescription is issued; and
             1242          (c) to a person that presents a prescription for the prosthetic device[.];
             1243          (61) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
             1244      or before June 30, 2009, of machinery or equipment that:
             1245          (i) is leased or purchased for or by a facility that:
             1246          (A) is a renewable energy production facility;
             1247          (B) is located in the state; and
             1248          (C) (I) becomes operational on or after July 1, 2004; or
             1249          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             1250      2004 as a result of the use of the machinery or equipment;
             1251          (ii) has an economic life of five or more years; and
             1252          (iii) is used to make the facility or the increase in capacity of the facility described in
             1253      Subsection (61)(a)(i) operational up to the point of interconnection with an existing
             1254      transmission grid including:
             1255          (A) a wind turbine;
             1256          (B) generating equipment;
             1257          (C) a control and monitoring system;
             1258          (D) a power line;
             1259          (E) substation equipment;
             1260          (F) lighting;
             1261          (G) fencing;
             1262          (H) pipes; or
             1263          (I) other equipment used for locating a power line or pole; and
             1264          (b) this Subsection (61) does not apply to:


             1265          (i) machinery or equipment used in construction of:
             1266          (A) a new renewable energy production facility; or
             1267          (B) the increase in the capacity of a renewable energy production facility;
             1268          (ii) contracted services required for construction and routine maintenance activities;
             1269      and
             1270          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             1271      of the facility described in Subsection (61)(a)(i)(C)(II), machinery or equipment used or
             1272      acquired after:
             1273          (A) the renewable energy production facility described in Subsection (61)(a)(i) is
             1274      operational as described in Subsection (61)(a)(iii); or
             1275          (B) the increased capacity described in Subsection (61)(a)(i) is operational as described
             1276      in Subsection (61)(a)(iii);
             1277          (62) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
             1278      or before June 30, 2009, of machinery or equipment that:
             1279          (i) is leased or purchased for or by a facility that:
             1280          (A) is a waste energy production facility;
             1281          (B) is located in the state; and
             1282          (C) (I) becomes operational on or after July 1, 2004; or
             1283          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             1284      2004 as a result of the use of the machinery or equipment;
             1285          (ii) has an economic life of five or more years; and
             1286          (iii) is used to make the facility or the increase in capacity of the facility described in
             1287      Subsection (62)(a)(i) operational up to the point of interconnection with an existing
             1288      transmission grid including:
             1289          (A) generating equipment;
             1290          (B) a control and monitoring system;
             1291          (C) a power line;
             1292          (D) substation equipment;
             1293          (E) lighting;
             1294          (F) fencing;
             1295          (G) pipes; or


             1296          (H) other equipment used for locating a power line or pole; and
             1297          (b) this Subsection (62) does not apply to:
             1298          (i) machinery or equipment used in construction of:
             1299          (A) a new waste energy facility; or
             1300          (B) the increase in the capacity of a waste energy facility;
             1301          (ii) contracted services required for construction and routine maintenance activities;
             1302      and
             1303          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             1304      described in Subsection (62)(a)(i)(C)(II), machinery or equipment used or acquired after:
             1305          (A) the waste energy facility described in Subsection (62)(a)(i) is operational as
             1306      described in Subsection (62)(a)(iii); or
             1307          (B) the increased capacity described in Subsection (62)(a)(i) is operational as described
             1308      in Subsection (62)(a)(iii); and
             1309          (63) (a) leases of five or more years or purchases made on or after July 1, 2004 but on
             1310      or before June 30, 2009, of machinery or equipment that:
             1311          (i) is leased or purchased for or by a facility that:
             1312          (A) is located in the state;
             1313          (B) produces fuel from biomass energy including:
             1314          (I) methanol; or
             1315          (II) ethanol; and
             1316          (C) (I) becomes operational on or after July 1, 2004; or
             1317          (II) has its capacity to produce fuel increase by 25% or more on or after July 1, 2004 as
             1318      a result of the installation of the machinery or equipment;
             1319          (ii) has an economic life of five or more years; and
             1320          (iii) is installed on the facility described in Subsection (63)(a)(i);
             1321          (b) this Subsection (63) does not apply to:
             1322          (i) machinery or equipment used in construction of:
             1323          (A) a new facility described in Subsection (63)(a)(i); or
             1324          (B) the increase in capacity of the facility described in Subsection (63)(a)(i); or
             1325          (ii) contracted services required for construction and routine maintenance activities;
             1326      and


             1327          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             1328      described in Subsection (63)(a)(i)(C)(II), machinery or equipment used or acquired after:
             1329          (A) the facility described in Subsection (63)(a)(i) is operational; or
             1330          (B) the increased capacity described in Subsection (63)(a)(i) is operational.
             1331          Section 3. Effective date.
             1332          This bill takes effect on July 1, 2004.


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