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S.B. 6

             1     

SALES AND USE TAX AGRICULTURE

             2     
EXEMPTIONS

             3     
2005 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Ron Allen

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends sales and use tax exemptions relating to agriculture.
             10      Highlighted Provisions:
             11          This bill:
             12          .    repeals a sales and use tax exemption for certain sprays and insecticides because
             13      those sprays and insecticides are exempt from sales and use taxation under a
             14      provision exempting certain sales of tangible personal property used or consumed
             15      primarily and directly in farming operations;
             16          .    repeals a provision exempting sales of irrigation equipment and supplies used for
             17      agricultural production purposes because those sales are exempt from sales and use
             18      taxation under the provision exempting certain sales of tangible personal property
             19      used or consumed primarily and directly in farming operations; and
             20          .    makes technical changes.
             21      Monies Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          This bill takes effect on July 1, 2005.
             25      Utah Code Sections Affected:
             26      AMENDS:
             27          59-12-104, as last amended by Chapters 1, 156, 255, 298 and 320, Laws of Utah 2004


             28     
             29      Be it enacted by the Legislature of the state of Utah:
             30          Section 1. Section 59-12-104 is amended to read:
             31           59-12-104. Exemptions.
             32          The following sales and uses are exempt from the taxes imposed by this chapter:
             33          (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
             34      under Chapter 13, Motor and Special Fuel Tax Act;
             35          (2) sales to the state, its institutions, and its political subdivisions; however, this
             36      exemption does not apply to sales of:
             37          (a) construction materials except:
             38          (i) construction materials purchased by or on behalf of institutions of the public
             39      education system as defined in Utah Constitution Article X, Section 2, provided the
             40      construction materials are clearly identified and segregated and installed or converted to real
             41      property which is owned by institutions of the public education system; and
             42          (ii) construction materials purchased by the state, its institutions, or its political
             43      subdivisions which are installed or converted to real property by employees of the state, its
             44      institutions, or its political subdivisions; or
             45          (b) tangible personal property in connection with the construction, operation,
             46      maintenance, repair, or replacement of a project, as defined in Section 11-13-103 , or facilities
             47      providing additional project capacity, as defined in Section 11-13-103 ;
             48          (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
             49          (i) the proceeds of each sale do not exceed $1; and
             50          (ii) the seller or operator of the vending machine reports an amount equal to 150% of
             51      the cost of the item described in Subsection (3)[(a)](b) as goods consumed; and
             52          (b) Subsection (3)(a) applies to:
             53          (i) food and food ingredients; or
             54          (ii) prepared food;
             55          (4) sales of the following to a commercial airline carrier for in-flight consumption:
             56          (a) food and food ingredients;
             57          (b) prepared food; or
             58          (c) services related to Subsection (4)(a) or (b);


             59          (5) sales of parts and equipment for installation in aircraft operated by common carriers
             60      in interstate or foreign commerce;
             61          (6) sales of commercials, motion picture films, prerecorded audio program tapes or
             62      records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
             63      exhibitor, distributor, or commercial television or radio broadcaster;
             64          (7) sales of cleaning or washing of tangible personal property by a coin-operated
             65      laundry or dry cleaning machine;
             66          (8) sales made to or by religious or charitable institutions in the conduct of their regular
             67      religious or charitable functions and activities, if the requirements of Section 59-12-104.1 are
             68      fulfilled;
             69          (9) sales of vehicles of a type required to be registered under the motor vehicle laws of
             70      this state which are made to bona fide nonresidents of this state and are not afterwards
             71      registered or used in this state except as necessary to transport them to the borders of this state;
             72          (10) (a) amounts paid for an item described in Subsection (10)(b) if:
             73          (i) the item is intended for human use; and
             74          (ii) (A) a prescription was issued for the item; or
             75          (B) the item was purchased by a hospital or other medical facility; and
             76          (b) (i) Subsection (10)(a) applies to:
             77          (A) a drug;
             78          (B) a syringe; or
             79          (C) a stoma supply; and
             80          (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             81      commission may by rule define the terms:
             82          (A) "syringe"; or
             83          (B) "stoma supply";
             84          (11) sales or use of property, materials, or services used in the construction of or
             85      incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
             86          (12) (a) sales of an item described in Subsection (12)(c) served by:
             87          (i) the following if the item described in Subsection (12)(c) is not available to the
             88      general public:
             89          (A) a church; or


             90          (B) a charitable institution;
             91          (ii) an institution of higher education if:
             92          (A) the item described in Subsection (12)(c) is not available to the general public; or
             93          (B) the item described in Subsection (12)(c) is prepaid as part of a student meal plan
             94      offered by the institution of higher education; or
             95          (b) sales of an item described in Subsection (12)(c) provided at:
             96          (i) a medical facility; or
             97          (ii) a nursing facility; and
             98          (c) Subsections (12)(a) and (b) apply to:
             99          (i) food and food ingredients;
             100          (ii) prepared food; or
             101          (iii) alcoholic beverages;
             102          (13) isolated or occasional sales by persons not regularly engaged in business, except
             103      the sale of vehicles or vessels required to be titled or registered under the laws of this state in
             104      which case the tax is based upon:
             105          (a) the bill of sale or other written evidence of value of the vehicle or vessel being sold;
             106      or
             107          (b) in the absence of a bill of sale or other written evidence of value, the then existing
             108      fair market value of the vehicle or vessel being sold as determined by the commission;
             109          (14) (a) the following purchases or leases by a manufacturer on or after July 1, 1995:
             110          (i) machinery and equipment:
             111          (A) used in the manufacturing process;
             112          (B) having an economic life of three or more years; and
             113          (C) used:
             114          (I) to manufacture an item sold as tangible personal property; and
             115          (II) in new or expanding operations in a manufacturing facility in the state; and
             116          (ii) subject to the provisions of Subsection (14)(b), normal operating replacements that:
             117          (A) have an economic life of three or more years;
             118          (B) are used in the manufacturing process in a manufacturing facility in the state;
             119          (C) are used to replace or adapt an existing machine to extend the normal estimated
             120      useful life of the machine; and


             121          (D) do not include repairs and maintenance;
             122          (b) the rates for the exemption under Subsection (14)(a)(ii) are as follows:
             123          (i) beginning July 1, 1996, through June 30, 1997, 30% of the sale or lease described in
             124      Subsection (14)(a)(ii) is exempt;
             125          (ii) beginning July 1, 1997, through June 30, 1998, 60% of the sale or lease described
             126      in Subsection (14)(a)(ii) is exempt; and
             127          (iii) beginning July 1, 1998, 100% of the sale or lease described in Subsection
             128      (14)(a)(ii) is exempt;
             129          (c) for purposes of this Subsection (14), the commission shall by rule define the terms
             130      "new or expanding operations" and "establishment"; and
             131          (d) on or before October 1, 1991, and every five years after October 1, 1991, the
             132      commission shall:
             133          (i) review the exemptions described in Subsection (14)(a) and make recommendations
             134      to the Revenue and Taxation Interim Committee concerning whether the exemptions should be
             135      continued, modified, or repealed; and
             136          (ii) include in its report:
             137          (A) the cost of the exemptions;
             138          (B) the purpose and effectiveness of the exemptions; and
             139          (C) the benefits of the exemptions to the state;
             140          (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
             141          (i) tooling;
             142          (ii) special tooling;
             143          (iii) support equipment;
             144          (iv) special test equipment; or
             145          (v) parts used in the repairs or renovations of tooling or equipment described in
             146      Subsections (15)(a)(i) through (iv); and
             147          (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
             148          (i) the tooling, equipment, or parts are used or consumed exclusively in the
             149      performance of any aerospace or electronics industry contract with the United States
             150      government or any subcontract under that contract; and
             151          (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),


             152      title to the tooling, equipment, or parts is vested in the United States government as evidenced
             153      by:
             154          (A) a government identification tag placed on the tooling, equipment, or parts; or
             155          (B) listing on a government-approved property record if placing a government
             156      identification tag on the tooling, equipment, or parts is impractical;
             157          (16) intrastate movements of:
             158          (a) freight by common carriers; or
             159          (b) passengers:
             160          (i) by taxicabs as described in SIC Code 4121 of the 1987 Standard Industrial
             161      Classification Manual of the federal Executive Office of the President, Office of Management
             162      and Budget;
             163          (ii) transported by an establishment described in SIC Code 4111 of the 1987 Standard
             164      Industrial Classification Manual of the federal Executive Office of the President, Office of
             165      Management and Budget, if the transportation originates and terminates within a county of the
             166      first, second, or third class; or
             167          (iii) transported by the following described in SIC Code 4789 of the 1987 Standard
             168      Industrial Classification Manual of the federal Executive Office of the President, Office of
             169      Management and Budget:
             170          (A) a horse-drawn cab; or
             171          (B) a horse-drawn carriage;
             172          (17) sales of newspapers or newspaper subscriptions;
             173          (18) (a) except as provided in Subsection (18)(b), tangible personal property traded in
             174      as full or part payment of the purchase price, except that for purposes of calculating sales or use
             175      tax upon vehicles not sold by a vehicle dealer, trade-ins are limited to other vehicles only, and
             176      the tax is based upon:
             177          (i) the bill of sale or other written evidence of value of the vehicle being sold and the
             178      vehicle being traded in; or
             179          (ii) in the absence of a bill of sale or other written evidence of value, the then existing
             180      fair market value of the vehicle being sold and the vehicle being traded in, as determined by the
             181      commission; and
             182          (b) notwithstanding Subsection (18)(a), Subsection (18)(a) does not apply to the


             183      following items of tangible personal property traded in as full or part payment of the purchase
             184      price:
             185          (i) money;
             186          (ii) electricity;
             187          (iii) water;
             188          (iv) gas; or
             189          (v) steam;
             190          [(19) sprays and insecticides used to control insects, diseases, and weeds for
             191      commercial production of fruits, vegetables, feeds, seeds, and animal products, but not those
             192      sprays and insecticides used in the processing of the products;]
             193          [(20)] (19) (a) (i) except as provided in Subsection (19)(b), sales of tangible personal
             194      property used or consumed primarily and directly in farming operations, [including sales of
             195      irrigation equipment and supplies used for agricultural production purposes,] regardless of
             196      whether [or not they become] the tangible personal property:
             197          (A) becomes part of real estate [and whether or not]; or
             198          (B) is installed by a:
             199          (I) farmer[,];
             200          (II) contractor[,]; or
             201          (III) subcontractor[, but not sales of:]; or
             202          [(A) machinery, equipment, materials, and supplies]
             203          (ii) sales of parts used in the repairs or renovations of tangible personal property if the
             204      tangible personal property is exempt under Subsection (19)(a)(i); and
             205          (b) notwithstanding Subsection (19)(a), amounts paid or charged for the following
             206      tangible personal property are subject to the taxes imposed by this chapter:
             207          (i) (A) subject to Subsection (19)(b)(i)(B), the following tangible personal property if
             208      the tangible personal property is used in a manner that is incidental to farming[, such as]:
             209          (I) machinery;
             210          (II) equipment;
             211          (III) materials; or
             212          (IV) supplies; and
             213          (B) tangible personal property that is considered to be used in a manner that is


             214      incidental to farming includes:
             215          (I) hand tools [and] ; or
             216          (II) maintenance and janitorial equipment and supplies;
             217          [(B)] (ii) (A) subject to Subsection (19)(b)(ii)(B), tangible personal property if the
             218      tangible personal property is used in [any activities] an activity other than farming[, such as];
             219      and
             220          (B) tangible personal property that is considered to be used in an activity other than
             221      farming includes:
             222          (I) office equipment and supplies[,]; or
             223          (II) equipment and supplies used in [sales]:
             224          (Aa) the sale or distribution of farm products[, in];
             225          (Bb) research[,]; or [in]
             226          (Cc) transportation; or
             227          [(C)] (iii) any vehicle required to be registered by the laws of this state, without regard
             228      to the use to which the vehicle is put; [or]
             229          [(ii) sales of parts used in the repairs or renovations of tangible personal property if the
             230      tangible personal property is exempt under Subsection (20)(a); or]
             231          [(b)] (20) sales of hay;
             232          (21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or
             233      other agricultural produce if sold by a producer during the harvest season;
             234          (22) purchases made using a coupon as defined in 7 U.S.C. Sec. 2012 that is issued
             235      under the Food Stamp Program, 7 U.S.C. Sec. 2011 et seq.;
             236          (23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
             237      nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor,
             238      wholesaler, or retailer for use in packaging tangible personal property to be sold by that
             239      manufacturer, processor, wholesaler, or retailer;
             240          (24) property stored in the state for resale;
             241          (25) property brought into the state by a nonresident for his or her own personal use or
             242      enjoyment while within the state, except property purchased for use in Utah by a nonresident
             243      living and working in Utah at the time of purchase;
             244          (26) property purchased for resale in this state, in the regular course of business, either


             245      in its original form or as an ingredient or component part of a manufactured or compounded
             246      product;
             247          (27) property upon which a sales or use tax was paid to some other state, or one of its
             248      subdivisions, except that the state shall be paid any difference between the tax paid and the tax
             249      imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if
             250      the tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax
             251      Act;
             252          (28) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a
             253      person for use in compounding a service taxable under the subsections;
             254          (29) purchases made in accordance with the special supplemental nutrition program for
             255      women, infants, and children established in 42 U.S.C. Sec. 1786;
             256          (30) beginning on July 1, 1999, through June 30, 2014, sales or leases of rolls, rollers,
             257      refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
             258      of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification
             259      Manual of the federal Executive Office of the President, Office of Management and Budget;
             260          (31) sales of boats of a type required to be registered under Title 73, Chapter 18, State
             261      Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of
             262      this state and are not thereafter registered or used in this state except as necessary to transport
             263      them to the borders of this state;
             264          (32) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah
             265      where a sales or use tax is not imposed, even if the title is passed in Utah;
             266          (33) amounts paid for the purchase of telephone service for purposes of providing
             267      telephone service;
             268          (34) fares charged to persons transported directly by a public transit district created
             269      under the authority of Title 17A, Chapter 2, Part 10, Utah Public Transit District Act;
             270          (35) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
             271          (36) (a) 45% of the sales price of any new manufactured home; and
             272          (b) 100% of the sales price of any used manufactured home;
             273          (37) sales relating to schools and fundraising sales;
             274          (38) sales or rentals of durable medical equipment if a person presents a prescription
             275      for the durable medical equipment;


             276          (39) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
             277      Section 72-11-102 ; and
             278          (b) the commission shall by rule determine the method for calculating sales exempt
             279      under Subsection (39)(a) that are not separately metered and accounted for in utility billings;
             280          (40) sales to a ski resort of:
             281          (a) snowmaking equipment;
             282          (b) ski slope grooming equipment;
             283          (c) passenger ropeways as defined in Section 72-11-102 ; or
             284          (d) parts used in the repairs or renovations of equipment or passenger ropeways
             285      described in Subsections (40)(a) through (c);
             286          (41) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
             287          (42) sales or rentals of the right to use or operate for amusement, entertainment, or
             288      recreation a coin-operated amusement device as defined in Section 59-12-102 ;
             289          (43) sales of cleaning or washing of tangible personal property by a coin-operated car
             290      wash machine;
             291          (44) sales by the state or a political subdivision of the state, except state institutions of
             292      higher education as defined in Section 53B-3-102 , of:
             293          (a) photocopies; or
             294          (b) other copies of records held or maintained by the state or a political subdivision of
             295      the state;
             296          (45) (a) amounts paid:
             297          (i) to a person providing intrastate transportation to an employer's employee to or from
             298      the employee's primary place of employment;
             299          (ii) by an:
             300          (A) employee; or
             301          (B) employer; and
             302          (iii) pursuant to a written contract between:
             303          (A) the employer; and
             304          (B) (I) the employee; or
             305          (II) a person providing transportation to the employer's employee; and
             306          (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the


             307      commission may for purposes of Subsection (45)(a) make rules defining what constitutes an
             308      employee's primary place of employment;
             309          (46) amounts paid for admission to an athletic event at an institution of higher
             310      education that is subject to the provisions of Title IX of the Education Amendments of 1972,
             311      20 U.S.C. Sec. 1681 et seq.;
             312          (47) sales of telephone service charged to a prepaid telephone calling card;
             313          (48) (a) sales of:
             314          (i) hearing aids;
             315          (ii) hearing aid accessories; or
             316          (iii) except as provided in Subsection (48)(b), parts used in the repairs or renovations
             317      of hearing aids or hearing aid accessories; and
             318          (b) for purposes of this Subsection (48) , notwithstanding Subsection (48)(a)(iii),
             319      "parts" does not include batteries;
             320          (49) (a) sales made to or by:
             321          (i) an area agency on aging; or
             322          (ii) a senior citizen center owned by a county, city, or town; or
             323          (b) sales made by a senior citizen center that contracts with an area agency on aging;
             324          (50) (a) beginning on July 1, 2001, through June 30, 2007, and subject to Subsection
             325      (50)(b), a sale or lease of semiconductor fabricating or processing materials regardless of
             326      whether the semiconductor fabricating or processing materials:
             327          (i) actually come into contact with a semiconductor; or
             328          (ii) ultimately become incorporated into real property;
             329          (b) (i) beginning on July 1, 2001, through June 30, 2002, 10% of the sale or lease
             330      described in Subsection (50)(a) is exempt;
             331          (ii) beginning on July 1, 2002, through June 30, 2003, 50% of the sale or lease
             332      described in Subsection (50)(a) is exempt; and
             333          (iii) beginning on July 1, 2003, through June 30, 2007, the entire amount of the sale or
             334      lease described in Subsection (50)(a) is exempt; and
             335          (c) each year on or before the November interim meeting, the Revenue and Taxation
             336      Interim Committee shall:
             337          (i) review the exemption described in this Subsection (50) and make recommendations


             338      concerning whether the exemption should be continued, modified, or repealed; and
             339          (ii) include in the review under this Subsection (50)(c):
             340          (A) the cost of the exemption;
             341          (B) the purpose and effectiveness of the exemption; and
             342          (C) the benefits of the exemption to the state;
             343          (51) an amount paid by or charged to a purchaser for accommodations and services
             344      described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
             345      59-12-104.2 ;
             346          (52) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary
             347      sports event registration certificate in accordance with Section 41-3-306 for the event period
             348      specified on the temporary sports event registration certificate;
             349          (53) sales or uses of electricity, if the sales or uses are:
             350          (a) made under a tariff adopted by the Public Service Commission of Utah only for
             351      purchase of electricity produced from a new wind, geothermal, biomass, or solar power energy
             352      source, as designated in the tariff by the Public Service Commission of Utah; and
             353          (b) for an amount of electricity that is:
             354          (i) unrelated to the amount of electricity used by the person purchasing the electricity
             355      under the tariff described in Subsection (53)(a); and
             356          (ii) equivalent to the number of kilowatthours specified in the tariff described in
             357      Subsection (53)(a) that may be purchased under the tariff described in Subsection (53)(a);
             358          (54) sales or rentals of mobility enhancing equipment if a person presents a
             359      prescription for the mobility enhancing equipment;
             360          (55) sales of water in a:
             361          (a) pipe;
             362          (b) conduit;
             363          (c) ditch; or
             364          (d) reservoir;
             365          (56) sales of currency or coinage that constitute legal tender of the United States or of a
             366      foreign nation;
             367          (57) (a) sales of an item described in Subsection (57)(b) if the item:
             368          (i) does not constitute legal tender of any nation; and


             369          (ii) has a gold, silver, or platinum content of 80% or more; and
             370          (b) Subsection (57)(a) applies to a gold, silver, or platinum:
             371          (i) ingot;
             372          (ii) bar;
             373          (iii) medallion; or
             374          (iv) decorative coin;
             375          (58) amounts paid on a sale-leaseback transaction;
             376          (59) sales of a prosthetic device:
             377          (a) for use on or in a human;
             378          (b) for which a prescription is issued; and
             379          (c) to a person that presents a prescription for the prosthetic device;
             380          (60) (a) except as provided in Subsection (60)(b), purchases, leases, or rentals of
             381      machinery or equipment by an establishment described in Subsection (60)(c) if the machinery
             382      or equipment is primarily used in the production or postproduction of the following media for
             383      commercial distribution:
             384          (i) a motion picture;
             385          (ii) a television program;
             386          (iii) a movie made for television;
             387          (iv) a music video;
             388          (v) a commercial;
             389          (vi) a documentary; or
             390          (vii) a medium similar to Subsections (60)(a)(i) through (vi) as determined by the
             391      commission by administrative rule made in accordance with Subsection (60)(d); or
             392          (b) notwithstanding Subsection (60)(a), purchases, leases, or rentals of machinery or
             393      equipment by an establishment described in Subsection (60)(c) that is used for the production
             394      or postproduction of the following are subject to the taxes imposed by this chapter:
             395          (i) a live musical performance;
             396          (ii) a live news program; or
             397          (iii) a live sporting event;
             398          (c) the following establishments listed in the 1997 North American Industry
             399      Classification System of the federal Executive Office of the President, Office of Management


             400      and Budget, apply to Subsections (60)(a) and (b):
             401          (i) NAICS Code 512110; or
             402          (ii) NAICS Code 51219; and
             403          (d) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             404      commission may by rule:
             405          (i) prescribe what constitutes a medium similar to Subsections (60)(a)(i) through (vi);
             406      or
             407          (ii) define:
             408          (A) "commercial distribution";
             409          (B) "live musical performance";
             410          (C) "live news program"; or
             411          (D) "live sporting event";
             412          (61) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
             413      or before June 30, 2009, of machinery or equipment that:
             414          (i) is leased or purchased for or by a facility that:
             415          (A) is a renewable energy production facility;
             416          (B) is located in the state; and
             417          (C) (I) becomes operational on or after July 1, 2004; or
             418          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             419      2004 as a result of the use of the machinery or equipment;
             420          (ii) has an economic life of five or more years; and
             421          (iii) is used to make the facility or the increase in capacity of the facility described in
             422      Subsection (61)(a)(i) operational up to the point of interconnection with an existing
             423      transmission grid including:
             424          (A) a wind turbine;
             425          (B) generating equipment;
             426          (C) a control and monitoring system;
             427          (D) a power line;
             428          (E) substation equipment;
             429          (F) lighting;
             430          (G) fencing;


             431          (H) pipes; or
             432          (I) other equipment used for locating a power line or pole; and
             433          (b) this Subsection (61) does not apply to:
             434          (i) machinery or equipment used in construction of:
             435          (A) a new renewable energy production facility; or
             436          (B) the increase in the capacity of a renewable energy production facility;
             437          (ii) contracted services required for construction and routine maintenance activities;
             438      and
             439          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             440      of the facility described in Subsection (61)(a)(i)(C)(II), machinery or equipment used or
             441      acquired after:
             442          (A) the renewable energy production facility described in Subsection (61)(a)(i) is
             443      operational as described in Subsection (61)(a)(iii); or
             444          (B) the increased capacity described in Subsection (61)(a)(i) is operational as described
             445      in Subsection (61)(a)(iii);
             446          (62) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
             447      or before June 30, 2009, of machinery or equipment that:
             448          (i) is leased or purchased for or by a facility that:
             449          (A) is a waste energy production facility;
             450          (B) is located in the state; and
             451          (C) (I) becomes operational on or after July 1, 2004; or
             452          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             453      2004 as a result of the use of the machinery or equipment;
             454          (ii) has an economic life of five or more years; and
             455          (iii) is used to make the facility or the increase in capacity of the facility described in
             456      Subsection (62)(a)(i) operational up to the point of interconnection with an existing
             457      transmission grid including:
             458          (A) generating equipment;
             459          (B) a control and monitoring system;
             460          (C) a power line;
             461          (D) substation equipment;


             462          (E) lighting;
             463          (F) fencing;
             464          (G) pipes; or
             465          (H) other equipment used for locating a power line or pole; and
             466          (b) this Subsection (62) does not apply to:
             467          (i) machinery or equipment used in construction of:
             468          (A) a new waste energy facility; or
             469          (B) the increase in the capacity of a waste energy facility;
             470          (ii) contracted services required for construction and routine maintenance activities;
             471      and
             472          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             473      described in Subsection (62)(a)(i)(C)(II), machinery or equipment used or acquired after:
             474          (A) the waste energy facility described in Subsection (62)(a)(i) is operational as
             475      described in Subsection (62)(a)(iii); or
             476          (B) the increased capacity described in Subsection (62)(a)(i) is operational as described
             477      in Subsection (62)(a)(iii); and
             478          (63) (a) leases of five or more years or purchases made on or after July 1, 2004 but on
             479      or before June 30, 2009, of machinery or equipment that:
             480          (i) is leased or purchased for or by a facility that:
             481          (A) is located in the state;
             482          (B) produces fuel from biomass energy including:
             483          (I) methanol; or
             484          (II) ethanol; and
             485          (C) (I) becomes operational on or after July 1, 2004; or
             486          (II) has its capacity to produce fuel increase by 25% or more on or after July 1, 2004 as
             487      a result of the installation of the machinery or equipment;
             488          (ii) has an economic life of five or more years; and
             489          (iii) is installed on the facility described in Subsection (63)(a)(i);
             490          (b) this Subsection (63) does not apply to:
             491          (i) machinery or equipment used in construction of:
             492          (A) a new facility described in Subsection (63)(a)(i); or


             493          (B) the increase in capacity of the facility described in Subsection (63)(a)(i); or
             494          (ii) contracted services required for construction and routine maintenance activities;
             495      and
             496          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             497      described in Subsection (63)(a)(i)(C)(II), machinery or equipment used or acquired after:
             498          (A) the facility described in Subsection (63)(a)(i) is operational; or
             499          (B) the increased capacity described in Subsection (63)(a)(i) is operational.
             500          Section 2. Effective date.
             501          This bill takes effect on July 1, 2005.




Legislative Review Note
    as of 12-7-04 8:41 AM


Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel


Interim Committee Note
    as of 12-09-04 12:02 PM


The Revenue and Taxation Interim Committee recommended this bill.

Mixed Membership Committee Note
    as of 12-09-04 12:02 PM


The Tax Review Commission recommended this bill.
    Membership:        4 legislators    10 non-legislators
    Legislative Vote:    3 voting for    0 voting against    1 absent


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