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S.B. 22

             1     

SALES AND USE TAX EXEMPTIONS FOR

             2     
CERTAIN GOVERNMENTAL ENTITIES AND

             3     
ENTITIES WITHIN THE STATE SYSTEMS

             4     
OF PUBLIC AND HIGHER EDUCATION

             5     
2007 GENERAL SESSION

             6     
STATE OF UTAH

             7     
Chief Sponsor: Howard A. Stephenson

             8     
House Sponsor: Wayne A. Harper

             9     
             10      LONG TITLE
             11      General Description:
             12          This bill amends the Sales and Use Tax Act relating to sales and use tax exemptions for
             13      certain governmental entities and entities within the state systems of public and higher
             14      education.
             15      Highlighted Provisions:
             16          This bill:
             17          .    defines:
             18              .    "governmental entity"; and
             19              .    "publication";
             20          .    clarifies the definition of "school" to include the Electronic High School for
             21      purposes of the sales and use tax exemptions for sales relating to schools and
             22      fundraising sales;
             23          .    modifies the sales and use tax exemption for photocopies to provide an exemption
             24      for sales of photocopies by a governmental entity or an entity within the state
             25      system of public education;
             26          .    provides a sales and use tax exemption for sales of publications by a governmental
             27      entity;



             28          .    grants rulemaking authority to the State Tax Commission to define the term
             29      "photocopy"; and
             30          .     makes technical changes.
             31      Monies Appropriated in this Bill:
             32          None
             33      Other Special Clauses:
             34          This bill takes effect on July 1, 2007.
             35      Utah Code Sections Affected:
             36      AMENDS:
             37          59-12-102, as last amended by Chapter 1, Laws of Utah 2006, Fourth Special Session
             38          59-12-104, as last amended by Chapters 181, 182, 217, 218, 219, 220, 246, 268 and
             39      346, Laws of Utah 2006
             40     
             41      Be it enacted by the Legislature of the state of Utah:
             42          Section 1. Section 59-12-102 is amended to read:
             43           59-12-102. Definitions.
             44          As used in this chapter:
             45          (1) (a) "Admission or user fees" includes season passes.
             46          (b) "Admission or user fees" does not include annual membership dues to private
             47      organizations.
             48          (2) "Agreement" means the Streamlined Sales and Use Tax Agreement described in
             49      Section 59-12-102.1 .
             50          (3) "Agreement combined tax rate" means the sum of the tax rates:
             51          (a) listed under Subsection (4); and
             52          (b) that are imposed within a local taxing jurisdiction.
             53          (4) "Agreement sales and use tax" means a tax imposed under:
             54          (a) Subsection 59-12-103 (2)(a)(i) or (2)(b)(iii)(A);
             55          (b) Section 59-12-204 ;
             56          (c) Section 59-12-401 ;
             57          (d) Section 59-12-402 ;
             58          (e) Section 59-12-501 ;


             59          (f) Section 59-12-502 ;
             60          (g) Section 59-12-703 ;
             61          (h) Section 59-12-802 ;
             62          (i) Section 59-12-804 ;
             63          (j) Section 59-12-1001 ;
             64          (k) Section 59-12-1102 ;
             65          (l) Section 59-12-1302 ;
             66          (m) Section 59-12-1402 ; or
             67          (n) Section 59-12-1503 .
             68          (5) "Aircraft" is as defined in Section 72-10-102 .
             69          (6) "Alcoholic beverage" means a beverage that:
             70          (a) is suitable for human consumption; and
             71          (b) contains .5% or more alcohol by volume.
             72          (7) "Area agency on aging" is as defined in Section 62A-3-101 .
             73          (8) "Assisted amusement device" means an amusement device, skill device, or ride
             74      device that is started and stopped by an individual:
             75          (a) who is not the purchaser or renter of the right to use or operate the amusement
             76      device, skill device, or ride device; and
             77          (b) at the direction of the seller of the right to use the amusement device, skill device,
             78      or ride device.
             79          (9) "Assisted cleaning or washing of tangible personal property" means cleaning or
             80      washing of tangible personal property if the cleaning or washing labor is primarily performed
             81      by an individual:
             82          (a) who is not the purchaser of the cleaning or washing of the tangible personal
             83      property; and
             84          (b) at the direction of the seller of the cleaning or washing of the tangible personal
             85      property.
             86          (10) "Authorized carrier" means:
             87          (a) in the case of vehicles operated over public highways, the holder of credentials
             88      indicating that the vehicle is or will be operated pursuant to both the International Registration
             89      Plan and the International Fuel Tax Agreement;


             90          (b) in the case of aircraft, the holder of a Federal Aviation Administration operating
             91      certificate or air carrier's operating certificate; or
             92          (c) in the case of locomotives, freight cars, railroad work equipment, or other rolling
             93      stock, the holder of a certificate issued by the United States Surface Transportation Board.
             94          (11) (a) Except as provided in Subsection (11)(b), "biomass energy" means any of the
             95      following that is used as the primary source of energy to produce fuel or electricity:
             96          (i) material from a plant or tree; or
             97          (ii) other organic matter that is available on a renewable basis, including:
             98          (A) slash and brush from forests and woodlands;
             99          (B) animal waste;
             100          (C) methane produced:
             101          (I) at landfills; or
             102          (II) as a byproduct of the treatment of wastewater residuals;
             103          (D) aquatic plants; and
             104          (E) agricultural products.
             105          (b) "Biomass energy" does not include:
             106          (i) black liquor;
             107          (ii) treated woods; or
             108          (iii) biomass from municipal solid waste other than methane produced:
             109          (A) at landfills; or
             110          (B) as a byproduct of the treatment of wastewater residuals.
             111          (12) (a) "Bundled transaction" means the sale of two or more items of tangible personal
             112      property if:
             113          (i) one or more of the items of tangible personal property is food and food ingredients;
             114      and
             115          (ii) the items of tangible personal property are:
             116          (A) distinct and identifiable; and
             117          (B) sold for one price that is not itemized.
             118          (b) "Bundled transaction" does not include the sale of tangible personal property if the
             119      sales price varies, or is negotiable, on the basis of the selection by the purchaser of the items of
             120      tangible personal property included in the transaction.


             121          (c) For purposes of Subsection (12)(a)(ii)(A), tangible personal property that is distinct
             122      and identifiable does not include:
             123          (i) packaging that:
             124          (A) accompanies the sale of the tangible personal property; and
             125          (B) is incidental or immaterial to the sale of the tangible personal property;
             126          (ii) tangible personal property provided free of charge with the purchase of another
             127      item of tangible personal property; or
             128          (iii) an item of tangible personal property included in the definition of "purchase
             129      price."
             130          (d) For purposes of Subsection (12)(c)(ii), an item of tangible personal property is
             131      provided free of charge with the purchase of another item of tangible personal property if the
             132      sales price of the purchased item of tangible personal property does not vary depending on the
             133      inclusion of the tangible personal property provided free of charge.
             134          (13) "Certified automated system" means software certified by the governing board of
             135      the agreement in accordance with Section 59-12-102.1 that:
             136          (a) calculates the agreement sales and use tax imposed within a local taxing
             137      jurisdiction:
             138          (i) on a transaction; and
             139          (ii) in the states that are members of the agreement;
             140          (b) determines the amount of agreement sales and use tax to remit to a state that is a
             141      member of the agreement; and
             142          (c) maintains a record of the transaction described in Subsection (13)(a)(i).
             143          (14) "Certified service provider" means an agent certified:
             144          (a) by the governing board of the agreement in accordance with Section 59-12-102.1 ;
             145      and
             146          (b) to perform all of a seller's sales and use tax functions for an agreement sales and
             147      use tax other than the seller's obligation under Section 59-12-107.4 to remit a tax on the seller's
             148      own purchases.
             149          (15) (a) Subject to Subsection (15)(b), "clothing" means all human wearing apparel
             150      suitable for general use.
             151          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the


             152      commission shall make rules:
             153          (i) listing the items that constitute "clothing"; and
             154          (ii) that are consistent with the list of items that constitute "clothing" under the
             155      agreement.
             156          (16) "Coal-to-liquid" means the process of converting coal into a liquid synthetic fuel.
             157          (17) "Commercial use" means the use of gas, electricity, heat, coal, fuel oil, or other
             158      fuels that does not constitute industrial use under Subsection [(39)] (40) or residential use
             159      under Subsection (76).
             160          (18) (a) "Common carrier" means a person engaged in or transacting the business of
             161      transporting passengers, freight, merchandise, or other property for hire within this state.
             162          (b) (i) "Common carrier" does not include a person who, at the time the person is
             163      traveling to or from that person's place of employment, transports a passenger to or from the
             164      passenger's place of employment.
             165          (ii) For purposes of Subsection (18)(b)(i), in accordance with Title 63, Chapter 46a,
             166      Utah Administrative Rulemaking Act, the commission may make rules defining what
             167      constitutes a person's place of employment.
             168          (19) "Component part" includes:
             169          (a) poultry, dairy, and other livestock feed, and their components;
             170          (b) baling ties and twine used in the baling of hay and straw;
             171          (c) fuel used for providing temperature control of orchards and commercial
             172      greenhouses doing a majority of their business in wholesale sales, and for providing power for
             173      off-highway type farm machinery; and
             174          (d) feed, seeds, and seedlings.
             175          (20) "Computer" means an electronic device that accepts information:
             176          (a) (i) in digital form; or
             177          (ii) in a form similar to digital form; and
             178          (b) manipulates that information for a result based on a sequence of instructions.
             179          (21) "Computer software" means a set of coded instructions designed to cause:
             180          (a) a computer to perform a task; or
             181          (b) automatic data processing equipment to perform a task.
             182          (22) "Construction materials" means any tangible personal property that will be


             183      converted into real property.
             184          (23) "Delivered electronically" means delivered to a purchaser by means other than
             185      tangible storage media.
             186          (24) (a) "Delivery charge" means a charge:
             187          (i) by a seller of:
             188          (A) tangible personal property; or
             189          (B) services; and
             190          (ii) for preparation and delivery of the tangible personal property or services described
             191      in Subsection (24)(a)(i) to a location designated by the purchaser.
             192          (b) "Delivery charge" includes a charge for the following:
             193          (i) transportation;
             194          (ii) shipping;
             195          (iii) postage;
             196          (iv) handling;
             197          (v) crating; or
             198          (vi) packing.
             199          (25) "Dietary supplement" means a product, other than tobacco, that:
             200          (a) is intended to supplement the diet;
             201          (b) contains one or more of the following dietary ingredients:
             202          (i) a vitamin;
             203          (ii) a mineral;
             204          (iii) an herb or other botanical;
             205          (iv) an amino acid;
             206          (v) a dietary substance for use by humans to supplement the diet by increasing the total
             207      dietary intake; or
             208          (vi) a concentrate, metabolite, constituent, extract, or combination of any ingredient
             209      described in Subsections (25)(b)(i) through (v);
             210          (c) (i) except as provided in Subsection (25)(c)(ii), is intended for ingestion in:
             211          (A) tablet form;
             212          (B) capsule form;
             213          (C) powder form;


             214          (D) softgel form;
             215          (E) gelcap form; or
             216          (F) liquid form; or
             217          (ii) notwithstanding Subsection (25)(c)(i), if the product is not intended for ingestion in
             218      a form described in Subsections (25)(c)(i)(A) through (F), is not represented:
             219          (A) as conventional food; and
             220          (B) for use as a sole item of:
             221          (I) a meal; or
             222          (II) the diet; and
             223          (d) is required to be labeled as a dietary supplement:
             224          (i) identifiable by the "Supplemental Facts" box found on the label; and
             225          (ii) as required by 21 C.F.R. Sec. 101.36.
             226          (26) (a) "Direct mail" means printed material delivered or distributed by United States
             227      mail or other delivery service:
             228          (i) to:
             229          (A) a mass audience; or
             230          (B) addressees on a mailing list provided by a purchaser of the mailing list; and
             231          (ii) if the cost of the printed material is not billed directly to the recipients.
             232          (b) "Direct mail" includes tangible personal property supplied directly or indirectly by a
             233      purchaser to a seller of direct mail for inclusion in a package containing the printed material.
             234          (c) "Direct mail" does not include multiple items of printed material delivered to a
             235      single address.
             236          (27) (a) "Drug" means a compound, substance, or preparation, or a component of a
             237      compound, substance, or preparation that is:
             238          (i) recognized in:
             239          (A) the official United States Pharmacopoeia;
             240          (B) the official Homeopathic Pharmacopoeia of the United States;
             241          (C) the official National Formulary; or
             242          (D) a supplement to a publication listed in Subsections (27)(a)(i)(A) through (C);
             243          (ii) intended for use in the:
             244          (A) diagnosis of disease;


             245          (B) cure of disease;
             246          (C) mitigation of disease;
             247          (D) treatment of disease; or
             248          (E) prevention of disease; or
             249          (iii) intended to affect:
             250          (A) the structure of the body; or
             251          (B) any function of the body.
             252          (b) "Drug" does not include:
             253          (i) food and food ingredients;
             254          (ii) a dietary supplement;
             255          (iii) an alcoholic beverage; or
             256          (iv) a prosthetic device.
             257          (28) (a) Except as provided in Subsection (28)(c), "durable medical equipment" means
             258      equipment that:
             259          (i) can withstand repeated use;
             260          (ii) is primarily and customarily used to serve a medical purpose;
             261          (iii) generally is not useful to a person in the absence of illness or injury; and
             262          (iv) is not worn in or on the body.
             263          (b) "Durable medical equipment" includes parts used in the repair or replacement of the
             264      equipment described in Subsection (28)(a).
             265          (c) Notwithstanding Subsection (28)(a), "durable medical equipment" does not include
             266      mobility enhancing equipment.
             267          (29) "Electronic" means:
             268          (a) relating to technology; and
             269          (b) having:
             270          (i) electrical capabilities;
             271          (ii) digital capabilities;
             272          (iii) magnetic capabilities;
             273          (iv) wireless capabilities;
             274          (v) optical capabilities;
             275          (vi) electromagnetic capabilities; or


             276          (vii) capabilities similar to Subsections (29)(b)(i) through (vi).
             277          (30) "Employee" is as defined in Section 59-10-401 .
             278          (31) "Fixed guideway" means a public transit facility that uses and occupies:
             279          (a) rail for the use of public transit; or
             280          (b) a separate right-of-way for the use of public transit.
             281          (32) (a) "Food and food ingredients" means substances:
             282          (i) regardless of whether the substances are in:
             283          (A) liquid form;
             284          (B) concentrated form;
             285          (C) solid form;
             286          (D) frozen form;
             287          (E) dried form; or
             288          (F) dehydrated form; and
             289          (ii) that are:
             290          (A) sold for:
             291          (I) ingestion by humans; or
             292          (II) chewing by humans; and
             293          (B) consumed for the substance's:
             294          (I) taste; or
             295          (II) nutritional value.
             296          (b) "Food and food ingredients" includes an item described in Subsection [(63)]
             297      (64)(b)(iii).
             298          (c) "Food and food ingredients" does not include:
             299          (i) an alcoholic beverage;
             300          (ii) tobacco; or
             301          (iii) prepared food.
             302          (33) (a) "Fundraising sales" means sales:
             303          (i) (A) made by a school; or
             304          (B) made by a school student;
             305          (ii) that are for the purpose of raising funds for the school to purchase equipment,
             306      materials, or provide transportation; and


             307          (iii) that are part of an officially sanctioned school activity.
             308          (b) For purposes of Subsection (33)(a)(iii), "officially sanctioned school activity"
             309      means a school activity:
             310          (i) that is conducted in accordance with a formal policy adopted by the school or school
             311      district governing the authorization and supervision of fundraising activities;
             312          (ii) that does not directly or indirectly compensate an individual teacher or other
             313      educational personnel by direct payment, commissions, or payment in kind; and
             314          (iii) the net or gross revenues from which are deposited in a dedicated account
             315      controlled by the school or school district.
             316          (34) "Geothermal energy" means energy contained in heat that continuously flows
             317      outward from the earth that is used as the sole source of energy to produce electricity.
             318          (35) "Governing board of the agreement" means the governing board of the agreement
             319      that is:
             320          (a) authorized to administer the agreement; and
             321          (b) established in accordance with the agreement.
             322          (36) (a) For purposes of Subsection 59-12-104 (41), "governmental entity" means:
             323          (i) the executive branch of the state, including all departments, institutions, boards,
             324      divisions, bureaus, offices, commissions, and committees;
             325          (ii) the judicial branch of the state, including the courts, the Judicial Council, the
             326      Office of the Court Administrator, and similar administrative units in the judicial branch;
             327          (iii) the legislative branch of the state, including the House of Representatives, the
             328      Senate, the Legislative Printing Office, the Office of Legislative Research and General
             329      Counsel, the Office of the Legislative Auditor General, and the Office of the Legislative Fiscal
             330      Analyst;
             331          (iv) the National Guard;
             332          (v) an independent entity as defined in Section 63E-1-102 ; or
             333          (vi) a political subdivision as defined in Section 17B-2-101 .
             334          (b) "Governmental entity" does not include the state systems of public and higher
             335      education, including:
             336          (i) a college campus of the Utah College of Applied Technology;
             337          (ii) a school;


             338          (iii) the State Board of Education;
             339          (iv) the State Board of Regents; or
             340          (v) a state institution of higher education as defined in Section 53B-3-102 .
             341          [(36)] (37) (a) "Hearing aid" means:
             342          (i) an instrument or device having an electronic component that is designed to:
             343          (A) (I) improve impaired human hearing; or
             344          (II) correct impaired human hearing; and
             345          (B) (I) be worn in the human ear; or
             346          (II) affixed behind the human ear;
             347          (ii) an instrument or device that is surgically implanted into the cochlea; or
             348          (iii) a telephone amplifying device.
             349          (b) "Hearing aid" does not include:
             350          (i) except as provided in Subsection [(36)] (37)(a)(i)(B) or [(36)] (37)(a)(ii), an
             351      instrument or device having an electronic component that is designed to be worn on the body;
             352          (ii) except as provided in Subsection [(36)] (37)(a)(iii), an assistive listening device or
             353      system designed to be used by one individual, including:
             354          (A) a personal amplifying system;
             355          (B) a personal FM system;
             356          (C) a television listening system; or
             357          (D) a device or system similar to a device or system described in Subsections [(36)]
             358      (37)(b)(ii)(A) through (C); or
             359          (iii) an assistive listening device or system designed to be used by more than one
             360      individual, including:
             361          (A) a device or system installed in:
             362          (I) an auditorium;
             363          (II) a church;
             364          (III) a conference room;
             365          (IV) a synagogue; or
             366          (V) a theater; or
             367          (B) a device or system similar to a device or system described in Subsections [(36)]
             368      (37)(b)(iii)(A)(I) through (V).


             369          [(37)] (38) (a) "Hearing aid accessory" means a hearing aid:
             370          (i) component;
             371          (ii) attachment; or
             372          (iii) accessory.
             373          (b) "Hearing aid accessory" includes:
             374          (i) a hearing aid neck loop;
             375          (ii) a hearing aid cord;
             376          (iii) a hearing aid ear mold;
             377          (iv) hearing aid tubing;
             378          (v) a hearing aid ear hook; or
             379          (vi) a hearing aid remote control.
             380          (c) "Hearing aid accessory" does not include:
             381          (i) a component, attachment, or accessory designed to be used only with an:
             382          (A) instrument or device described in Subsection [(36)] (37)(b)(i); or
             383          (B) assistive listening device or system described in Subsection [(36)] (37)(b)(ii) or
             384      (iii); or
             385          (ii) a hearing aid battery.
             386          [(38)] (39) "Hydroelectric energy" means water used as the sole source of energy to
             387      produce electricity.
             388          [(39)] (40) "Industrial use" means the use of natural gas, electricity, heat, coal, fuel oil,
             389      or other fuels:
             390          (a) in mining or extraction of minerals;
             391          (b) in agricultural operations to produce an agricultural product up to the time of
             392      harvest or placing the agricultural product into a storage facility, including:
             393          (i) commercial greenhouses;
             394          (ii) irrigation pumps;
             395          (iii) farm machinery;
             396          (iv) implements of husbandry as defined in Subsection 41-1a-102 (23) that are not
             397      registered under Title 41, Chapter 1a, Part 2, Registration; and
             398          (v) other farming activities;
             399          (c) in manufacturing tangible personal property at an establishment described in SIC


             400      Codes 2000 to 3999 of the 1987 Standard Industrial Classification Manual of the federal
             401      Executive Office of the President, Office of Management and Budget;
             402          (d) by a scrap recycler if:
             403          (i) from a fixed location, the scrap recycler utilizes machinery or equipment to process
             404      one or more of the following items into prepared grades of processed materials for use in new
             405      products:
             406          (A) iron;
             407          (B) steel;
             408          (C) nonferrous metal;
             409          (D) paper;
             410          (E) glass;
             411          (F) plastic;
             412          (G) textile; or
             413          (H) rubber; and
             414          (ii) the new products under Subsection [(39)] (40)(d)(i) would otherwise be made with
             415      nonrecycled materials; or
             416          (e) in producing a form of energy or steam described in Subsection 54-2-1 (2)(a) by a
             417      cogeneration facility as defined in Section 54-2-1 .
             418          [(40)] (41) (a) Except as provided in Subsection [(40)] (41)(b), "installation charge"
             419      means a charge for installing tangible personal property.
             420          (b) Notwithstanding Subsection [(40)] (41)(a), "installation charge" does not include a
             421      charge for repairs or renovations of tangible personal property.
             422          [(41)] (42) (a) "Lease" or "rental" means a transfer of possession or control of tangible
             423      personal property for:
             424          (i) (A) a fixed term; or
             425          (B) an indeterminate term; and
             426          (ii) consideration.
             427          (b) "Lease" or "rental" includes an agreement covering a motor vehicle and trailer if the
             428      amount of consideration may be increased or decreased by reference to the amount realized
             429      upon sale or disposition of the property as defined in Section 7701(h)(1), Internal Revenue
             430      Code.


             431          (c) "Lease" or "rental" does not include:
             432          (i) a transfer of possession or control of property under a security agreement or
             433      deferred payment plan that requires the transfer of title upon completion of the required
             434      payments;
             435          (ii) a transfer of possession or control of property under an agreement that requires the
             436      transfer of title:
             437          (A) upon completion of required payments; and
             438          (B) if the payment of an option price does not exceed the greater of:
             439          (I) $100; or
             440          (II) 1% of the total required payments; or
             441          (iii) providing tangible personal property along with an operator for a fixed period of
             442      time or an indeterminate period of time if the operator is necessary for equipment to perform as
             443      designed.
             444          (d) For purposes of Subsection [(41)] (42)(c)(iii), an operator is necessary for
             445      equipment to perform as designed if the operator's duties exceed the:
             446          (i) set-up of tangible personal property;
             447          (ii) maintenance of tangible personal property; or
             448          (iii) inspection of tangible personal property.
             449          [(42)] (43) "Load and leave" means delivery to a purchaser by use of a tangible storage
             450      media if the tangible storage media is not physically transferred to the purchaser.
             451          [(43)] (44) "Local taxing jurisdiction" means a:
             452          (a) county that is authorized to impose an agreement sales and use tax;
             453          (b) city that is authorized to impose an agreement sales and use tax; or
             454          (c) town that is authorized to impose an agreement sales and use tax.
             455          [(44)] (45) "Manufactured home" is as defined in Section 58-56-3 .
             456          [(45)] (46) For purposes of Section 59-12-104 , "manufacturing facility" means:
             457          (a) an establishment described in SIC Codes 2000 to 3999 of the 1987 Standard
             458      Industrial Classification Manual of the federal Executive Office of the President, Office of
             459      Management and Budget;
             460          (b) a scrap recycler if:
             461          (i) from a fixed location, the scrap recycler utilizes machinery or equipment to process


             462      one or more of the following items into prepared grades of processed materials for use in new
             463      products:
             464          (A) iron;
             465          (B) steel;
             466          (C) nonferrous metal;
             467          (D) paper;
             468          (E) glass;
             469          (F) plastic;
             470          (G) textile; or
             471          (H) rubber; and
             472          (ii) the new products under Subsection [(45)] (46)(b)(i) would otherwise be made with
             473      nonrecycled materials; or
             474          (c) a cogeneration facility as defined in Section 54-2-1 .
             475          [(46)] (47) "Member of the immediate family of the producer" means a person who is
             476      related to a producer described in Subsection 59-12-104 (20)(a) as a:
             477          (a) child or stepchild, regardless of whether the child or stepchild is:
             478          (i) an adopted child or adopted stepchild; or
             479          (ii) a foster child or foster stepchild;
             480          (b) grandchild or stepgrandchild;
             481          (c) grandparent or stepgrandparent;
             482          (d) nephew or stepnephew;
             483          (e) niece or stepniece;
             484          (f) parent or stepparent;
             485          (g) sibling or stepsibling;
             486          (h) spouse;
             487          (i) person who is the spouse of a person described in Subsections [(46)] (47)(a) through
             488      (g); or
             489          (j) person similar to a person described in Subsections [(46)] (47)(a) through (i) as
             490      determined by the commission by rule made in accordance with Title 63, Chapter 46a, Utah
             491      Administrative Rulemaking Act.
             492          [(47)] (48) "Mobile home" is as defined in Section 58-56-3 .


             493          [(48)] (49) "Mobile telecommunications service" is as defined in the Mobile
             494      Telecommunications Sourcing Act, 4 U.S.C. Sec. 124.
             495          [(49)] (50) (a) Except as provided in Subsection [(49)] (50)(c), "mobility enhancing
             496      equipment" means equipment that is:
             497          (i) primarily and customarily used to provide or increase the ability to move from one
             498      place to another;
             499          (ii) appropriate for use in a:
             500          (A) home; or
             501          (B) motor vehicle; and
             502          (iii) not generally used by persons with normal mobility.
             503          (b) "Mobility enhancing equipment" includes parts used in the repair or replacement of
             504      the equipment described in Subsection [(49)] (50)(a).
             505          (c) Notwithstanding Subsection [(49)] (50)(a), "mobility enhancing equipment" does
             506      not include:
             507          (i) a motor vehicle;
             508          (ii) equipment on a motor vehicle if that equipment is normally provided by the motor
             509      vehicle manufacturer;
             510          (iii) durable medical equipment; or
             511          (iv) a prosthetic device.
             512          [(50)] (51) "Model 1 seller" means a seller that has selected a certified service provider
             513      as the seller's agent to perform all of the seller's sales and use tax functions for agreement sales
             514      and use taxes other than the seller's obligation under Section 59-12-107.4 to remit a tax on the
             515      seller's own purchases.
             516          [(51)] (52) "Model 2 seller" means a seller that:
             517          (a) except as provided in Subsection [(51)] (52)(b), has selected a certified automated
             518      system to perform the seller's sales tax functions for agreement sales and use taxes; and
             519          (b) notwithstanding Subsection [(51)] (52)(a), retains responsibility for remitting all of
             520      the sales tax:
             521          (i) collected by the seller; and
             522          (ii) to the appropriate local taxing jurisdiction.
             523          [(52)] (53) (a) Subject to Subsection [(52)] (53)(b), "model 3 seller" means a seller that


             524      has:
             525          (i) sales in at least five states that are members of the agreement;
             526          (ii) total annual sales revenues of at least $500,000,000;
             527          (iii) a proprietary system that calculates the amount of tax:
             528          (A) for an agreement sales and use tax; and
             529          (B) due to each local taxing jurisdiction; and
             530          (iv) entered into a performance agreement with the governing board of the agreement.
             531          (b) For purposes of Subsection [(52)] (53)(a), "model 3 seller" includes an affiliated
             532      group of sellers using the same proprietary system.
             533          [(53)] (54) "Modular home" means a modular unit as defined in Section 58-56-3 .
             534          [(54)] (55) "Motor vehicle" is as defined in Section 41-1a-102 .
             535          [(55)] (56) "Oil shale" means a group of fine black to dark brown shales containing
             536      bituminous material that yields petroleum upon distillation.
             537          [(56)] (57) (a) "Other fuels" means products that burn independently to produce heat or
             538      energy.
             539          (b) "Other fuels" includes oxygen when it is used in the manufacturing of tangible
             540      personal property.
             541          [(57)] (58) "Pawnbroker" is as defined in Section 13-32a-102 .
             542          [(58)] (59) "Pawn transaction" is as defined in Section 13-32a-102 .
             543          [(59)] (60) (a) "Permanently attached to real property" means that for tangible personal
             544      property attached to real property:
             545          (i) the attachment of the tangible personal property to the real property:
             546          (A) is essential to the use of the tangible personal property; and
             547          (B) suggests that the tangible personal property will remain attached to the real
             548      property in the same place over the useful life of the tangible personal property; or
             549          (ii) if the tangible personal property is detached from the real property, the detachment
             550      would:
             551          (A) cause substantial damage to the tangible personal property; or
             552          (B) require substantial alteration or repair of the real property to which the tangible
             553      personal property is attached.
             554          (b) "Permanently attached to real property" includes:


             555          (i) the attachment of an accessory to the tangible personal property if the accessory is:
             556          (A) essential to the operation of the tangible personal property; and
             557          (B) attached only to facilitate the operation of the tangible personal property;
             558          (ii) a temporary detachment of tangible personal property from real property for a
             559      repair or renovation if the repair or renovation is performed where the tangible personal
             560      property and real property are located; or
             561          (iii) an attachment of the following tangible personal property to real property,
             562      regardless of whether the attachment to real property is only through a line that supplies water,
             563      electricity, gas, telephone, cable, or supplies a similar item as determined by the commission by
             564      rule made in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act:
             565          (A) property attached to oil, gas, or water pipelines, other than the property listed in
             566      Subsection [(59)] (60)(c)(iii);
             567          (B) a hot water heater;
             568          (C) a water softener system; or
             569          (D) a water filtration system, other than a water filtration system manufactured as part
             570      of a refrigerator.
             571          (c) "Permanently attached to real property" does not include:
             572          (i) the attachment of portable or movable tangible personal property to real property if
             573      that portable or movable tangible personal property is attached to real property only for:
             574          (A) convenience;
             575          (B) stability; or
             576          (C) for an obvious temporary purpose;
             577          (ii) the detachment of tangible personal property from real property other than the
             578      detachment described in Subsection [(59)] (60)(b)(ii); or
             579          (iii) an attachment of the following tangible personal property to real property if the
             580      attachment to real property is only through a line that supplies water, electricity, gas, telephone,
             581      cable, or supplies a similar item as determined by the commission by rule made in accordance
             582      with Title 63, Chapter 46a, Utah Administrative Rulemaking Act:
             583          (A) a refrigerator;
             584          (B) a washer;
             585          (C) a dryer;


             586          (D) a stove;
             587          (E) a television;
             588          (F) a computer;
             589          (G) a telephone; or
             590          (H) tangible personal property similar to Subsections [(59)] (60)(c)(iii)(A) through (G)
             591      as determined by the commission by rule made in accordance with Title 63, Chapter 46a, Utah
             592      Administrative Rulemaking Act.
             593          [(60)] (61) "Person" includes any individual, firm, partnership, joint venture,
             594      association, corporation, estate, trust, business trust, receiver, syndicate, this state, any county,
             595      city, municipality, district, or other local governmental entity of the state, or any group or
             596      combination acting as a unit.
             597          [(61)] (62) "Place of primary use":
             598          (a) for telephone service other than mobile telecommunications service, means the
             599      street address representative of where the purchaser's use of the telephone service primarily
             600      occurs, which shall be:
             601          (i) the residential street address of the purchaser; or
             602          (ii) the primary business street address of the purchaser; or
             603          (b) for mobile telecommunications service, is as defined in the Mobile
             604      Telecommunications Sourcing Act, 4 U.S.C. Sec. 124.
             605          [(62)] (63) "Postproduction" means an activity related to the finishing or duplication of
             606      a medium described in Subsection 59-12-104 (56)(a).
             607          [(63)] (64) (a) "Prepared food" means:
             608          (i) food:
             609          (A) sold in a heated state; or
             610          (B) heated by a seller;
             611          (ii) two or more food ingredients mixed or combined by the seller for sale as a single
             612      item; or
             613          (iii) except as provided in Subsection [(63)] (64)(c), food sold with an eating utensil
             614      provided by the seller, including a:
             615          (A) plate;
             616          (B) knife;


             617          (C) fork;
             618          (D) spoon;
             619          (E) glass;
             620          (F) cup;
             621          (G) napkin; or
             622          (H) straw.
             623          (b) "Prepared food" does not include:
             624          (i) food that a seller only:
             625          (A) cuts;
             626          (B) repackages; or
             627          (C) pasteurizes; or
             628          (ii) (A) the following:
             629          (I) raw egg;
             630          (II) raw fish;
             631          (III) raw meat;
             632          (IV) raw poultry; or
             633          (V) a food containing an item described in Subsections [(63)] (64)(b)(ii)(A)(I) through
             634      (IV); and
             635          (B) if the Food and Drug Administration recommends in Chapter 3, Part 401.11 of the
             636      Food and Drug Administration's Food Code that a consumer cook the items described in
             637      Subsection [(63)] (64)(b)(ii)(A) to prevent food borne illness; or
             638          (iii) the following if sold without eating utensils provided by the seller:
             639          (A) food and food ingredients sold by a seller if the seller's proper primary
             640      classification under the 2002 North American Industry Classification System of the federal
             641      Executive Office of the President, Office of Management and Budget, is manufacturing in
             642      Sector 311, Food Manufacturing, except for Subsector 3118, Bakeries and Tortilla
             643      Manufacturing;
             644          (B) food and food ingredients sold in an unheated state:
             645          (I) by weight or volume; and
             646          (II) as a single item; or
             647          (C) a bakery item, including:


             648          (I) a bagel;
             649          (II) a bar;
             650          (III) a biscuit;
             651          (IV) bread;
             652          (V) a bun;
             653          (VI) a cake;
             654          (VII) a cookie;
             655          (VIII) a croissant;
             656          (IX) a danish;
             657          (X) a donut;
             658          (XI) a muffin;
             659          (XII) a pastry;
             660          (XIII) a pie;
             661          (XIV) a roll;
             662          (XV) a tart;
             663          (XVI) a torte; or
             664          (XVII) a tortilla.
             665          (c) Notwithstanding Subsection [(63)] (64)(a)(iii), an eating utensil provided by the
             666      seller does not include the following used to transport the food:
             667          (i) a container; or
             668          (ii) packaging.
             669          [(64)] (65) "Prescription" means an order, formula, or recipe that is issued:
             670          (a) (i) orally;
             671          (ii) in writing;
             672          (iii) electronically; or
             673          (iv) by any other manner of transmission; and
             674          (b) by a licensed practitioner authorized by the laws of a state.
             675          [(65)] (66) (a) Except as provided in Subsection [(65)] (66)(b)(ii) or (iii), "prewritten
             676      computer software" means computer software that is not designed and developed:
             677          (i) by the author or other creator of the computer software; and
             678          (ii) to the specifications of a specific purchaser.


             679          (b) "Prewritten computer software" includes:
             680          (i) a prewritten upgrade to computer software if the prewritten upgrade to the computer
             681      software is not designed and developed:
             682          (A) by the author or other creator of the computer software; and
             683          (B) to the specifications of a specific purchaser;
             684          (ii) notwithstanding Subsection [(65)] (66)(a), computer software designed and
             685      developed by the author or other creator of the computer software to the specifications of a
             686      specific purchaser if the computer software is sold to a person other than the purchaser; or
             687          (iii) notwithstanding Subsection [(65)] (66)(a) and except as provided in Subsection
             688      [(65)] (66)(c), prewritten computer software or a prewritten portion of prewritten computer
             689      software:
             690          (A) that is modified or enhanced to any degree; and
             691          (B) if the modification or enhancement described in Subsection [(65)] (66)(b)(iii)(A) is
             692      designed and developed to the specifications of a specific purchaser.
             693          (c) Notwithstanding Subsection [(65)] (66)(b)(iii), "prewritten computer software"
             694      does not include a modification or enhancement described in Subsection [(65)] (66)(b)(iii) if
             695      the charges for the modification or enhancement are:
             696          (i) reasonable; and
             697          (ii) separately stated on the invoice or other statement of price provided to the
             698      purchaser.
             699          [(66)] (67) (a) "Prosthetic device" means a device that is worn on or in the body to:
             700          (i) artificially replace a missing portion of the body;
             701          (ii) prevent or correct a physical deformity or physical malfunction; or
             702          (iii) support a weak or deformed portion of the body.
             703          (b) "Prosthetic device" includes:
             704          (i) parts used in the repairs or renovation of a prosthetic device; or
             705          (ii) replacement parts for a prosthetic device.
             706          (c) "Prosthetic device" does not include:
             707          (i) corrective eyeglasses;
             708          (ii) contact lenses;
             709          (iii) hearing aids; or


             710          (iv) dental prostheses.
             711          [(67)] (68) (a) "Protective equipment" means an item:
             712          (i) for human wear; and
             713          (ii) that is:
             714          (A) designed as protection:
             715          (I) to the wearer against injury or disease; or
             716          (II) against damage or injury of other persons or property; and
             717          (B) not suitable for general use.
             718          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             719      commission shall make rules:
             720          (i) listing the items that constitute "protective equipment"; and
             721          (ii) that are consistent with the list of items that constitute "protective equipment"
             722      under the agreement.
             723          (69) (a) For purposes of Subsection 59-12-104 (41), "publication" means any written or
             724      printed matter, other than a photocopy:
             725          (i) regardless of:
             726          (A) characteristics;
             727          (B) copyright;
             728          (C) form;
             729          (D) format;
             730          (E) method of reproduction; or
             731          (F) source; and
             732          (ii) made available in printed or electronic format.
             733          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             734      commission may by rule define the term "photocopy."
             735          [(68)] (70) (a) "Purchase price" and "sales price" mean the total amount of
             736      consideration:
             737          (i) valued in money; and
             738          (ii) for which tangible personal property or services are:
             739          (A) sold;
             740          (B) leased; or


             741          (C) rented.
             742          (b) "Purchase price" and "sales price" include:
             743          (i) the seller's cost of the tangible personal property or services sold;
             744          (ii) expenses of the seller, including:
             745          (A) the cost of materials used;
             746          (B) a labor cost;
             747          (C) a service cost;
             748          (D) interest;
             749          (E) a loss;
             750          (F) the cost of transportation to the seller; or
             751          (G) a tax imposed on the seller; or
             752          (iii) a charge by the seller for any service necessary to complete the sale.
             753          (c) "Purchase price" and "sales price" do not include:
             754          (i) a discount:
             755          (A) in a form including:
             756          (I) cash;
             757          (II) term; or
             758          (III) coupon;
             759          (B) that is allowed by a seller;
             760          (C) taken by a purchaser on a sale; and
             761          (D) that is not reimbursed by a third party; or
             762          (ii) the following if separately stated on an invoice, bill of sale, or similar document
             763      provided to the purchaser:
             764          (A) the amount of a trade-in;
             765          (B) the following from credit extended on the sale of tangible personal property or
             766      services:
             767          (I) interest charges;
             768          (II) financing charges; or
             769          (III) carrying charges;
             770          (C) a tax or fee legally imposed directly on the consumer;
             771          (D) a delivery charge; or


             772          (E) an installation charge.
             773          [(69)] (71) "Purchaser" means a person to whom:
             774          (a) a sale of tangible personal property is made; or
             775          (b) a service is furnished.
             776          [(70)] (72) "Regularly rented" means:
             777          (a) rented to a guest for value three or more times during a calendar year; or
             778          (b) advertised or held out to the public as a place that is regularly rented to guests for
             779      value.
             780          [(71)] (73) "Renewable energy" means:
             781          (a) biomass energy;
             782          (b) hydroelectric energy;
             783          (c) geothermal energy;
             784          (d) solar energy; or
             785          (e) wind energy.
             786          [(72)] (74) (a) "Renewable energy production facility" means a facility that:
             787          (i) uses renewable energy to produce electricity; and
             788          (ii) has a production capacity of 20 kilowatts or greater.
             789          (b) A facility is a renewable energy production facility regardless of whether the
             790      facility is:
             791          (i) connected to an electric grid; or
             792          (ii) located on the premises of an electricity consumer.
             793          [(73)] (75) "Rental" is as defined in Subsection [(41)] (42).
             794          [(74)] (76) "Repairs or renovations of tangible personal property" means:
             795          (a) a repair or renovation of tangible personal property that is not permanently attached
             796      to real property; or
             797          (b) attaching tangible personal property to other tangible personal property if the other
             798      tangible personal property to which the tangible personal property is attached is not
             799      permanently attached to real property.
             800          [(75)] (77) "Research and development" means the process of inquiry or
             801      experimentation aimed at the discovery of facts, devices, technologies, or applications and the
             802      process of preparing those devices, technologies, or applications for marketing.


             803          [(76)] (78) "Residential use" means the use in or around a home, apartment building,
             804      sleeping quarters, and similar facilities or accommodations.
             805          [(77)] (79) "Retail sale" or "sale at retail" means a sale, lease, or rental for a purpose
             806      other than:
             807          (a) resale;
             808          (b) sublease; or
             809          (c) subrent.
             810          [(78)] (80) (a) "Retailer" means any person engaged in a regularly organized business
             811      in tangible personal property or any other taxable transaction under Subsection 59-12-103 (1),
             812      and who is selling to the user or consumer and not for resale.
             813          (b) "Retailer" includes commission merchants, auctioneers, and any person regularly
             814      engaged in the business of selling to users or consumers within the state.
             815          [(79)] (81) (a) "Sale" means any transfer of title, exchange, or barter, conditional or
             816      otherwise, in any manner, of tangible personal property or any other taxable transaction under
             817      Subsection 59-12-103 (1), for consideration.
             818          (b) "Sale" includes:
             819          (i) installment and credit sales;
             820          (ii) any closed transaction constituting a sale;
             821          (iii) any sale of electrical energy, gas, services, or entertainment taxable under this
             822      chapter;
             823          (iv) any transaction if the possession of property is transferred but the seller retains the
             824      title as security for the payment of the price; and
             825          (v) any transaction under which right to possession, operation, or use of any article of
             826      tangible personal property is granted under a lease or contract and the transfer of possession
             827      would be taxable if an outright sale were made.
             828          [(80)] (82) "Sale at retail" is as defined in Subsection [(77)] (79).
             829          [(81)] (83) "Sale-leaseback transaction" means a transaction by which title to tangible
             830      personal property that is subject to a tax under this chapter is transferred:
             831          (a) by a purchaser-lessee;
             832          (b) to a lessor;
             833          (c) for consideration; and


             834          (d) if:
             835          (i) the purchaser-lessee paid sales and use tax on the purchaser-lessee's initial purchase
             836      of the tangible personal property;
             837          (ii) the sale of the tangible personal property to the lessor is intended as a form of
             838      financing:
             839          (A) for the property; and
             840          (B) to the purchaser-lessee; and
             841          (iii) in accordance with generally accepted accounting principles, the purchaser-lessee
             842      is required to:
             843          (A) capitalize the property for financial reporting purposes; and
             844          (B) account for the lease payments as payments made under a financing arrangement.
             845          [(82)] (84) "Sales price" is as defined in Subsection [(68)] (70).
             846          [(83)] (85) (a) "Sales relating to schools" means the following sales by, amounts paid
             847      to, or amounts charged by a school:
             848          (i) sales that are directly related to the school's educational functions or activities,
             849      including:
             850          (A) the sale of:
             851          (I) textbooks;
             852          (II) textbook fees;
             853          (III) laboratory fees;
             854          (IV) laboratory supplies; or
             855          (V) safety equipment;
             856          (B) the sale of a uniform, protective equipment, or sports or recreational equipment
             857      that:
             858          (I) a student is specifically required to wear as a condition of participation in a
             859      school-related event or school-related activity; and
             860          (II) is not readily adaptable to general or continued usage to the extent that it takes the
             861      place of ordinary clothing;
             862          (C) sales of the following if the net or gross revenues generated by the sales are
             863      deposited into a school district fund or school fund dedicated to school meals:
             864          (I) food and food ingredients; or


             865          (II) prepared food; or
             866          (D) transportation charges for official school activities; or
             867          (ii) amounts paid to or amounts charged by a school for admission to a school-related
             868      event or school-related activity.
             869          (b) "Sales relating to schools" does not include:
             870          (i) bookstore sales of items that are not educational materials or supplies;
             871          (ii) except as provided in Subsection [(83)] (85)(a)(i)(B):
             872          (A) clothing;
             873          (B) clothing accessories or equipment;
             874          (C) protective equipment; or
             875          (D) sports or recreational equipment; or
             876          (iii) amounts paid to or amounts charged by a school for admission to a school-related
             877      event or school-related activity if the amounts paid or charged are passed through to a person:
             878          (A) other than a:
             879          (I) school;
             880          (II) nonprofit organization authorized by a school board or a governing body of a
             881      private school to organize and direct a competitive secondary school activity; or
             882          (III) nonprofit association authorized by a school board or a governing body of a
             883      private school to organize and direct a competitive secondary school activity; and
             884          (B) that is required to collect sales and use taxes under this chapter.
             885          (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             886      commission may make rules defining the term "passed through."
             887          [(84)] (86) For purposes of this section and Section 59-12-104 , "school":
             888          (a) means:
             889          [(a)] (i) an elementary school or a secondary school that:
             890          [(i)] (A) is a:
             891          [(A)] (I) public school; or
             892          [(B)] (II) private school; and
             893          [(ii)] (B) provides instruction for one or more grades kindergarten through 12; or
             894          [(b)] (ii) a public school district[.]; and
             895          (b) includes the Electronic High School as defined in Section 53A-15-1002 .


             896          [(85)] (87) "Seller" means a person that makes a sale, lease, or rental of:
             897          (a) tangible personal property; or
             898          (b) a service.
             899          [(86)] (88) (a) "Semiconductor fabricating, processing, research, or development
             900      materials" means tangible personal property:
             901          (i) used primarily in the process of:
             902          (A) (I) manufacturing a semiconductor;
             903          (II) fabricating a semiconductor; or
             904          (III) research or development of a:
             905          (Aa) semiconductor; or
             906          (Bb) semiconductor manufacturing process; or
             907          (B) maintaining an environment suitable for a semiconductor; or
             908          (ii) consumed primarily in the process of:
             909          (A) (I) manufacturing a semiconductor;
             910          (II) fabricating a semiconductor; or
             911          (III) research or development of a:
             912          (Aa) semiconductor; or
             913          (Bb) semiconductor manufacturing process; or
             914          (B) maintaining an environment suitable for a semiconductor.
             915          (b) "Semiconductor fabricating, processing, research, or development materials"
             916      includes:
             917          (i) parts used in the repairs or renovations of tangible personal property described in
             918      Subsection [(86)] (88)(a); or
             919          (ii) a chemical, catalyst, or other material used to:
             920          (A) produce or induce in a semiconductor a:
             921          (I) chemical change; or
             922          (II) physical change;
             923          (B) remove impurities from a semiconductor; or
             924          (C) improve the marketable condition of a semiconductor.
             925          [(87)] (89) "Senior citizen center" means a facility having the primary purpose of
             926      providing services to the aged as defined in Section 62A-3-101 .


             927          [(88)] (90) "Simplified electronic return" means the electronic return:
             928          (a) described in Section 318(C) of the agreement; and
             929          (b) approved by the governing board of the agreement.
             930          [(89)] (91) "Solar energy" means the sun used as the sole source of energy for
             931      producing electricity.
             932          [(90)] (92) (a) "Sports or recreational equipment" means an item:
             933          (i) designed for human use; and
             934          (ii) that is:
             935          (A) worn in conjunction with:
             936          (I) an athletic activity; or
             937          (II) a recreational activity; and
             938          (B) not suitable for general use.
             939          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             940      commission shall make rules:
             941          (i) listing the items that constitute "sports or recreational equipment"; and
             942          (ii) that are consistent with the list of items that constitute "sports or recreational
             943      equipment" under the agreement.
             944          [(91)] (93) "State" means the state of Utah, its departments, and agencies.
             945          [(92)] (94) "Storage" means any keeping or retention of tangible personal property or
             946      any other taxable transaction under Subsection 59-12-103 (1), in this state for any purpose
             947      except sale in the regular course of business.
             948          [(93)] (95) (a) "Tangible personal property" means personal property that:
             949          (i) may be:
             950          (A) seen;
             951          (B) weighed;
             952          (C) measured;
             953          (D) felt; or
             954          (E) touched; or
             955          (ii) is in any manner perceptible to the senses.
             956          (b) "Tangible personal property" includes:
             957          (i) electricity;


             958          (ii) water;
             959          (iii) gas;
             960          (iv) steam; or
             961          (v) prewritten computer software.
             962          [(94)] (96) "Tar sands" means impregnated sands that yield mixtures of liquid
             963      hydrocarbon and require further processing other than mechanical blending before becoming
             964      finished petroleum products.
             965          [(95)] (97) (a) "Telecommunications enabling or facilitating equipment, machinery, or
             966      software" means an item listed in Subsection [(95)] (97)(b) if that item is purchased or leased
             967      primarily to enable or facilitate one or more of the following to function:
             968          (i) telecommunications switching or routing equipment, machinery, or software; or
             969          (ii) telecommunications transmission equipment, machinery, or software.
             970          (b) The following apply to Subsection [(95)] (97)(a):
             971          (i) a pole;
             972          (ii) software;
             973          (iii) a supplementary power supply;
             974          (iv) temperature or environmental equipment or machinery;
             975          (v) test equipment;
             976          (vi) a tower; or
             977          (vii) equipment, machinery, or software that functions similarly to an item listed in
             978      Subsections [(95)] (97)(b)(i) through (vi) as determined by the commission by rule made in
             979      accordance with Subsection [(95)] (97)(c).
             980          (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             981      commission may by rule define what constitutes equipment, machinery, or software that
             982      functions similarly to an item listed in Subsections [(95)] (97)(b)(i) through (vi).
             983          [(96)] (98) "Telecommunications equipment, machinery, or software required for 911
             984      service" means equipment, machinery, or software that is required to comply with 47 C.F.R.
             985      Sec. 20.18.
             986          [(97)] (99) "Telecommunications maintenance or repair equipment, machinery, or
             987      software" means equipment, machinery, or software purchased or leased primarily to maintain
             988      or repair one or more of the following, regardless of whether the equipment, machinery, or


             989      software is purchased or leased as a spare part or as an upgrade or modification to one or more
             990      of the following:
             991          (a) telecommunications enabling or facilitating equipment, machinery, or software;
             992          (b) telecommunications switching or routing equipment, machinery, or software; or
             993          (c) telecommunications transmission equipment, machinery, or software.
             994          [(98)] (100) (a) "Telecommunications switching or routing equipment, machinery, or
             995      software" means an item listed in Subsection [(98)] (100)(b) if that item is purchased or leased
             996      primarily for switching or routing:
             997          (i) voice communications;
             998          (ii) data communications; or
             999          (iii) telephone service.
             1000          (b) The following apply to Subsection [(98)] (100)(a):
             1001          (i) a bridge;
             1002          (ii) a computer;
             1003          (iii) a cross connect;
             1004          (iv) a modem;
             1005          (v) a multiplexer;
             1006          (vi) plug in circuitry;
             1007          (vii) a router;
             1008          (viii) software;
             1009          (ix) a switch; or
             1010          (x) equipment, machinery, or software that functions similarly to an item listed in
             1011      Subsections [(98)] (100)(b)(i) through (ix) as determined by the commission by rule made in
             1012      accordance with Subsection [(98)] (100)(c).
             1013          (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1014      commission may by rule define what constitutes equipment, machinery, or software that
             1015      functions similarly to an item listed in Subsections [(98)] (100)(b)(i) through (ix).
             1016          [(99)] (101) (a) "Telecommunications transmission equipment, machinery, or
             1017      software" means an item listed in Subsection [(99)] (101)(b) if that item is purchased or leased
             1018      primarily for sending, receiving, or transporting:
             1019          (i) voice communications;


             1020          (ii) data communications; or
             1021          (iii) telephone service.
             1022          (b) The following apply to Subsection [(99)] (101)(a):
             1023          (i) an amplifier;
             1024          (ii) a cable;
             1025          (iii) a closure;
             1026          (iv) a conduit;
             1027          (v) a controller;
             1028          (vi) a duplexer;
             1029          (vii) a filter;
             1030          (viii) an input device;
             1031          (ix) an input/output device;
             1032          (x) an insulator;
             1033          (xi) microwave machinery or equipment;
             1034          (xii) an oscillator;
             1035          (xiii) an output device;
             1036          (xiv) a pedestal;
             1037          (xv) a power converter;
             1038          (xvi) a power supply;
             1039          (xvii) a radio channel;
             1040          (xviii) a radio receiver;
             1041          (xix) a radio transmitter;
             1042          (xx) a repeater;
             1043          (xxi) software;
             1044          (xxii) a terminal;
             1045          (xxiii) a timing unit;
             1046          (xxiv) a transformer;
             1047          (xxv) a wire; or
             1048          (xxvi) equipment, machinery, or software that functions similarly to an item listed in
             1049      Subsections [(99)] (101)(b)(i) through (xxv) as determined by the commission by rule made in
             1050      accordance with Subsection [(99)] (101)(c).


             1051          (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1052      commission may by rule define what constitutes equipment, machinery, or software that
             1053      functions similarly to an item listed in Subsections [(99)] (101)(b)(i) through (xxv).
             1054          [(100)] (102) (a) "Telephone service" means a two-way transmission:
             1055          (i) by:
             1056          (A) wire;
             1057          (B) radio;
             1058          (C) lightwave; or
             1059          (D) other electromagnetic means; and
             1060          (ii) of one or more of the following:
             1061          (A) a sign;
             1062          (B) a signal;
             1063          (C) writing;
             1064          (D) an image;
             1065          (E) sound;
             1066          (F) a message;
             1067          (G) data; or
             1068          (H) other information of any nature.
             1069          (b) "Telephone service" includes:
             1070          (i) mobile telecommunications service;
             1071          (ii) private communications service; or
             1072          (iii) automated digital telephone answering service.
             1073          (c) "Telephone service" does not include a service or a transaction that a state or a
             1074      political subdivision of a state is prohibited from taxing as of July 1, 2001, under the Internet
             1075      Tax Freedom Act, Pub. L. No. 105-277.
             1076          [(101)] (103) Notwithstanding where a call is billed or paid, "telephone service
             1077      address" means:
             1078          (a) if the location described in this Subsection [(101)] (103)(a) is known, the location
             1079      of the telephone service equipment:
             1080          (i) to which a call is charged; and
             1081          (ii) from which the call originates or terminates;


             1082          (b) if the location described in Subsection [(101)] (103)(a) is not known but the
             1083      location described in this Subsection [(101)] (103)(b) is known, the location of the origination
             1084      point of the signal of the telephone service first identified by:
             1085          (i) the telecommunications system of the seller; or
             1086          (ii) if the system used to transport the signal is not that of the seller, information
             1087      received by the seller from its service provider; or
             1088          (c) if the locations described in Subsection [(101)] (103)(a) or (b) are not known, the
             1089      location of a purchaser's primary place of use.
             1090          [(102)] (104) (a) "Telephone service provider" means a person that:
             1091          (i) owns, controls, operates, or manages a telephone service; and
             1092          (ii) engages in an activity described in Subsection [(102)] (104)(a)(i) for the shared use
             1093      with or resale to any person of the telephone service.
             1094          (b) A person described in Subsection [(102)] (104)(a) is a telephone service provider
             1095      whether or not the Public Service Commission of Utah regulates:
             1096          (i) that person; or
             1097          (ii) the telephone service that the person owns, controls, operates, or manages.
             1098          [(103)] (105) "Tobacco" means:
             1099          (a) a cigarette;
             1100          (b) a cigar;
             1101          (c) chewing tobacco;
             1102          (d) pipe tobacco; or
             1103          (e) any other item that contains tobacco.
             1104          [(104)] (106) "Unassisted amusement device" means an amusement device, skill
             1105      device, or ride device that is started and stopped by the purchaser or renter of the right to use or
             1106      operate the amusement device, skill device, or ride device.
             1107          [(105)] (107) (a) "Use" means the exercise of any right or power over tangible personal
             1108      property under Subsection 59-12-103 (1), incident to the ownership or the leasing of that
             1109      property, item, or service.
             1110          (b) "Use" does not include the sale, display, demonstration, or trial of that property in
             1111      the regular course of business and held for resale.
             1112          [(106)] (108) (a) Subject to Subsection [(106)] (108)(b), "vehicle" means the following


             1113      that are required to be titled, registered, or titled and registered:
             1114          (i) an aircraft as defined in Section 72-10-102 ;
             1115          (ii) a vehicle as defined in Section 41-1a-102 ;
             1116          (iii) an off-highway vehicle as defined in Section 41-22-2 ; or
             1117          (iv) a vessel as defined in Section 41-1a-102 .
             1118          (b) For purposes of Subsection 59-12-104 (33) only, "vehicle" includes:
             1119          (i) a vehicle described in Subsection [(106)] (108)(a); or
             1120          (ii) (A) a locomotive;
             1121          (B) a freight car;
             1122          (C) railroad work equipment; or
             1123          (D) other railroad rolling stock.
             1124          [(107)] (109) "Vehicle dealer" means a person engaged in the business of buying,
             1125      selling, or exchanging a vehicle as defined in Subsection [(106)] (108).
             1126          [(108)] (110) (a) Except as provided in Subsection [(108)] (110)(b), "waste energy
             1127      facility" means a facility that generates electricity:
             1128          (i) using as the primary source of energy waste materials that would be placed in a
             1129      landfill or refuse pit if it were not used to generate electricity, including:
             1130          (A) tires;
             1131          (B) waste coal; or
             1132          (C) oil shale; and
             1133          (ii) in amounts greater than actually required for the operation of the facility.
             1134          (b) "Waste energy facility" does not include a facility that incinerates:
             1135          (i) municipal solid waste;
             1136          (ii) hospital waste as defined in 40 C.F.R. 60.51c; or
             1137          (iii) medical/infectious waste as defined in 40 C.F.R. 60.51c.
             1138          [(109)] (111) "Watercraft" means a vessel as defined in Section 73-18-2 .
             1139          [(110)] (112) "Wind energy" means wind used as the sole source of energy to produce
             1140      electricity.
             1141          [(111)] (113) "ZIP Code" means a Zoning Improvement Plan Code assigned to a
             1142      geographic location by the United States Postal Service.
             1143          Section 2. Section 59-12-104 is amended to read:


             1144           59-12-104. Exemptions.
             1145          The following sales and uses are exempt from the taxes imposed by this chapter:
             1146          (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
             1147      under Chapter 13, Motor and Special Fuel Tax Act;
             1148          (2) sales to the state, its institutions, and its political subdivisions; however, this
             1149      exemption does not apply to sales of:
             1150          (a) construction materials except:
             1151          (i) construction materials purchased by or on behalf of institutions of the public
             1152      education system as defined in Utah Constitution Article X, Section 2, provided the
             1153      construction materials are clearly identified and segregated and installed or converted to real
             1154      property which is owned by institutions of the public education system; and
             1155          (ii) construction materials purchased by the state, its institutions, or its political
             1156      subdivisions which are installed or converted to real property by employees of the state, its
             1157      institutions, or its political subdivisions; or
             1158          (b) tangible personal property in connection with the construction, operation,
             1159      maintenance, repair, or replacement of a project, as defined in Section 11-13-103 , or facilities
             1160      providing additional project capacity, as defined in Section 11-13-103 ;
             1161          (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
             1162          (i) the proceeds of each sale do not exceed $1; and
             1163          (ii) the seller or operator of the vending machine reports an amount equal to 150% of
             1164      the cost of the item described in Subsection (3)(b) as goods consumed; and
             1165          (b) Subsection (3)(a) applies to:
             1166          (i) food and food ingredients; or
             1167          (ii) prepared food;
             1168          (4) sales of the following to a commercial airline carrier for in-flight consumption:
             1169          (a) food and food ingredients;
             1170          (b) prepared food; or
             1171          (c) services related to Subsection (4)(a) or (b);
             1172          (5) sales of parts and equipment for installation in aircraft operated by common carriers
             1173      in interstate or foreign commerce;
             1174          (6) sales of commercials, motion picture films, prerecorded audio program tapes or


             1175      records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
             1176      exhibitor, distributor, or commercial television or radio broadcaster;
             1177          (7) (a) subject to Subsection (7)(b), sales of cleaning or washing of tangible personal
             1178      property if the cleaning or washing of the tangible personal property is not assisted cleaning or
             1179      washing of tangible personal property;
             1180          (b) if a seller that sells at the same business location assisted cleaning or washing of
             1181      tangible personal property and cleaning or washing of tangible personal property that is not
             1182      assisted cleaning or washing of tangible personal property, the exemption described in
             1183      Subsection (7)(a) applies if the seller separately accounts for the sales of the assisted cleaning
             1184      or washing of the tangible personal property; and
             1185          (c) for purposes of Subsection (7)(b) and in accordance with Title 63, Chapter 46a,
             1186      Utah Administrative Rulemaking Act, the commission may make rules:
             1187          (i) governing the circumstances under which sales are at the same business location;
             1188      and
             1189          (ii) establishing the procedures and requirements for a seller to separately account for
             1190      sales of assisted cleaning or washing of tangible personal property;
             1191          (8) sales made to or by religious or charitable institutions in the conduct of their regular
             1192      religious or charitable functions and activities, if the requirements of Section 59-12-104.1 are
             1193      fulfilled;
             1194          (9) sales of a vehicle of a type required to be registered under the motor vehicle laws of
             1195      this state if the vehicle is both not:
             1196          (a) registered in this state; and
             1197          (b) used in this state except as necessary to transport the vehicle to the borders of this
             1198      state;
             1199          (10) (a) amounts paid for an item described in Subsection (10)(b) if:
             1200          (i) the item is intended for human use; and
             1201          (ii) (A) a prescription was issued for the item; or
             1202          (B) the item was purchased by a hospital or other medical facility; and
             1203          (b) (i) Subsection (10)(a) applies to:
             1204          (A) a drug;
             1205          (B) a syringe; or


             1206          (C) a stoma supply; and
             1207          (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1208      commission may by rule define the terms:
             1209          (A) "syringe"; or
             1210          (B) "stoma supply";
             1211          (11) sales or use of property, materials, or services used in the construction of or
             1212      incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
             1213          (12) (a) sales of an item described in Subsection (12)(c) served by:
             1214          (i) the following if the item described in Subsection (12)(c) is not available to the
             1215      general public:
             1216          (A) a church; or
             1217          (B) a charitable institution;
             1218          (ii) an institution of higher education if:
             1219          (A) the item described in Subsection (12)(c) is not available to the general public; or
             1220          (B) the item described in Subsection (12)(c) is prepaid as part of a student meal plan
             1221      offered by the institution of higher education; or
             1222          (b) sales of an item described in Subsection (12)(c) provided for a patient by:
             1223          (i) a medical facility; or
             1224          (ii) a nursing facility; and
             1225          (c) Subsections (12)(a) and (b) apply to:
             1226          (i) food and food ingredients;
             1227          (ii) prepared food; or
             1228          (iii) alcoholic beverages;
             1229          (13) (a) except as provided in Subsection (13)(b), the sale of tangible personal property
             1230      by a person:
             1231          (i) regardless of the number of transactions involving the sale of that tangible personal
             1232      property by that person; and
             1233          (ii) not regularly engaged in the business of selling that type of tangible personal
             1234      property;
             1235          (b) this Subsection (13) does not apply if:
             1236          (i) the sale is one of a series of sales of a character to indicate that the person is


             1237      regularly engaged in the business of selling that type of tangible personal property;
             1238          (ii) the person holds that person out as regularly engaged in the business of selling that
             1239      type of tangible personal property;
             1240          (iii) the person sells an item of tangible personal property that the person purchased as
             1241      a sale that is exempt under Subsection (25); or
             1242          (iv) the sale is of a vehicle or vessel required to be titled or registered under the laws of
             1243      this state in which case the tax is based upon:
             1244          (A) the bill of sale or other written evidence of value of the vehicle or vessel being
             1245      sold; or
             1246          (B) in the absence of a bill of sale or other written evidence of value, the fair market
             1247      value of the vehicle or vessel being sold at the time of the sale as determined by the
             1248      commission; and
             1249          (c) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1250      commission shall make rules establishing the circumstances under which:
             1251          (i) a person is regularly engaged in the business of selling a type of tangible personal
             1252      property;
             1253          (ii) a sale of tangible personal property is one of a series of sales of a character to
             1254      indicate that a person is regularly engaged in the business of selling that type of tangible
             1255      personal property; or
             1256          (iii) a person holds that person out as regularly engaged in the business of selling a type
             1257      of tangible personal property;
             1258          (14) (a) except as provided in Subsection (14)(b), amounts paid or charged on or after
             1259      July 1, 2006, for a purchase or lease by a manufacturing facility other than a cogeneration
             1260      facility, for the following:
             1261          (i) machinery and equipment that:
             1262          (A) is used:
             1263          (I) for a manufacturing facility other than a manufacturing facility that is a scrap
             1264      recycler described in Subsection 59-12-102 [(45)](46)(b):
             1265          (Aa) in the manufacturing process; and
             1266          (Bb) to manufacture an item sold as tangible personal property; or
             1267          (II) for a manufacturing facility that is a scrap recycler described in Subsection


             1268      59-12-102 [(45)](46)(b), to process an item sold as tangible personal property; and
             1269          (B) has an economic life of three or more years; and
             1270          (ii) normal operating repair or replacement parts that:
             1271          (A) have an economic life of three or more years; and
             1272          (B) are used:
             1273          (I) for a manufacturing facility in the state other than a manufacturing facility that is a
             1274      scrap recycler described in Subsection 59-12-102 [(45)](46)(b), in the manufacturing process;
             1275      or
             1276          (II) for a manufacturing facility in the state that is a scrap recycler described in
             1277      Subsection 59-12-102 [(45)](46)(b), to process an item sold as tangible personal property;
             1278          (b) (i) amounts paid or charged on or after July 1, 2005, for a purchase or lease by a
             1279      manufacturing facility that is a cogeneration facility placed in service on or after May 1, 2006,
             1280      for the following:
             1281          (A) machinery and equipment that:
             1282          (I) is used:
             1283          (Aa) in the manufacturing process; and
             1284          (Bb) to manufacture an item sold as tangible personal property; and
             1285          (II) has an economic life of three or more years; and
             1286          (B) normal operating repair or replacement parts that:
             1287          (I) are used in the manufacturing process in a manufacturing facility in the state; and
             1288          (II) have an economic life of three or more years; and
             1289          (ii) for amounts paid or charged on or after July 1, 2005, but on or before June 30,
             1290      2006, for a purchase or lease described in Subsection (14)(b)(i), a cogeneration facility may
             1291      claim the exemption allowed by Subsection (14)(b)(i) by filing for a refund:
             1292          (A) for sales and use taxes paid under this chapter on the purchase or lease payment;
             1293      and
             1294          (B) in accordance with Section 59-12-110 ;
             1295          (c) for purposes of this Subsection (14) and in accordance with Title 63, Chapter 46a,
             1296      Utah Administrative Rulemaking Act, the commission:
             1297          (i) shall by rule define the term "establishment"; and
             1298          (ii) may by rule define what constitutes processing an item sold as tangible personal


             1299      property; and
             1300          (d) on or before October 1, 1991, and every five years after October 1, 1991, the
             1301      commission shall:
             1302          (i) review the exemptions described in this Subsection (14) and make
             1303      recommendations to the Revenue and Taxation Interim Committee concerning whether the
             1304      exemptions should be continued, modified, or repealed; and
             1305          (ii) include in its report:
             1306          (A) the cost of the exemptions;
             1307          (B) the purpose and effectiveness of the exemptions; and
             1308          (C) the benefits of the exemptions to the state;
             1309          (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
             1310          (i) tooling;
             1311          (ii) special tooling;
             1312          (iii) support equipment;
             1313          (iv) special test equipment; or
             1314          (v) parts used in the repairs or renovations of tooling or equipment described in
             1315      Subsections (15)(a)(i) through (iv); and
             1316          (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
             1317          (i) the tooling, equipment, or parts are used or consumed exclusively in the
             1318      performance of any aerospace or electronics industry contract with the United States
             1319      government or any subcontract under that contract; and
             1320          (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),
             1321      title to the tooling, equipment, or parts is vested in the United States government as evidenced
             1322      by:
             1323          (A) a government identification tag placed on the tooling, equipment, or parts; or
             1324          (B) listing on a government-approved property record if placing a government
             1325      identification tag on the tooling, equipment, or parts is impractical;
             1326          (16) sales of newspapers or newspaper subscriptions;
             1327          (17) (a) except as provided in Subsection (17)(b), tangible personal property traded in
             1328      as full or part payment of the purchase price, except that for purposes of calculating sales or use
             1329      tax upon vehicles not sold by a vehicle dealer, trade-ins are limited to other vehicles only, and


             1330      the tax is based upon:
             1331          (i) the bill of sale or other written evidence of value of the vehicle being sold and the
             1332      vehicle being traded in; or
             1333          (ii) in the absence of a bill of sale or other written evidence of value, the then existing
             1334      fair market value of the vehicle being sold and the vehicle being traded in, as determined by the
             1335      commission; and
             1336          (b) notwithstanding Subsection (17)(a), Subsection (17)(a) does not apply to the
             1337      following items of tangible personal property traded in as full or part payment of the purchase
             1338      price:
             1339          (i) money;
             1340          (ii) electricity;
             1341          (iii) water;
             1342          (iv) gas; or
             1343          (v) steam;
             1344          (18) (a) (i) except as provided in Subsection (18)(b), sales of tangible personal property
             1345      used or consumed primarily and directly in farming operations, regardless of whether the
             1346      tangible personal property:
             1347          (A) becomes part of real estate; or
             1348          (B) is installed by a:
             1349          (I) farmer;
             1350          (II) contractor; or
             1351          (III) subcontractor; or
             1352          (ii) sales of parts used in the repairs or renovations of tangible personal property if the
             1353      tangible personal property is exempt under Subsection (18)(a)(i); and
             1354          (b) notwithstanding Subsection (18)(a), amounts paid or charged for the following
             1355      tangible personal property are subject to the taxes imposed by this chapter:
             1356          (i) (A) subject to Subsection (18)(b)(i)(B), the following tangible personal property if
             1357      the tangible personal property is used in a manner that is incidental to farming:
             1358          (I) machinery;
             1359          (II) equipment;
             1360          (III) materials; or


             1361          (IV) supplies; and
             1362          (B) tangible personal property that is considered to be used in a manner that is
             1363      incidental to farming includes:
             1364          (I) hand tools; or
             1365          (II) maintenance and janitorial equipment and supplies;
             1366          (ii) (A) subject to Subsection (18)(b)(ii)(B), tangible personal property if the tangible
             1367      personal property is used in an activity other than farming; and
             1368          (B) tangible personal property that is considered to be used in an activity other than
             1369      farming includes:
             1370          (I) office equipment and supplies; or
             1371          (II) equipment and supplies used in:
             1372          (Aa) the sale or distribution of farm products;
             1373          (Bb) research; or
             1374          (Cc) transportation; or
             1375          (iii) a vehicle required to be registered by the laws of this state during the period ending
             1376      two years after the date of the vehicle's purchase;
             1377          (19) sales of hay;
             1378          (20) exclusive sale during the harvest season of seasonal crops, seedling plants, or
             1379      garden, farm, or other agricultural produce if the seasonal crops are, seedling plants are, or
             1380      garden, farm, or other agricultural produce is sold by:
             1381          (a) the producer of the seasonal crops, seedling plants, or garden, farm, or other
             1382      agricultural produce;
             1383          (b) an employee of the producer described in Subsection (20)(a); or
             1384          (c) a member of the immediate family of the producer described in Subsection (20)(a);
             1385          (21) purchases made using a coupon as defined in 7 U.S.C. Sec. 2012 that is issued
             1386      under the Food Stamp Program, 7 U.S.C. Sec. 2011 et seq.;
             1387          (22) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
             1388      nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor,
             1389      wholesaler, or retailer for use in packaging tangible personal property to be sold by that
             1390      manufacturer, processor, wholesaler, or retailer;
             1391          (23) property stored in the state for resale;


             1392          (24) property brought into the state by a nonresident for his or her own personal use or
             1393      enjoyment while within the state, except property purchased for use in Utah by a nonresident
             1394      living and working in Utah at the time of purchase;
             1395          (25) property purchased for resale in this state, in the regular course of business, either
             1396      in its original form or as an ingredient or component part of a manufactured or compounded
             1397      product;
             1398          (26) property upon which a sales or use tax was paid to some other state, or one of its
             1399      subdivisions, except that the state shall be paid any difference between the tax paid and the tax
             1400      imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if
             1401      the tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax
             1402      Act;
             1403          (27) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a
             1404      person for use in compounding a service taxable under the subsections;
             1405          (28) purchases made in accordance with the special supplemental nutrition program for
             1406      women, infants, and children established in 42 U.S.C. Sec. 1786;
             1407          (29) beginning on July 1, 1999, through June 30, 2014, sales or leases of rolls, rollers,
             1408      refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
             1409      of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification
             1410      Manual of the federal Executive Office of the President, Office of Management and Budget;
             1411          (30) sales of a boat of a type required to be registered under Title 73, Chapter 18, State
             1412      Boating Act, a boat trailer, or an outboard motor if the boat, trailer, or outboard motor is both
             1413      not:
             1414          (a) registered in this state; and
             1415          (b) used in this state except as necessary to transport the boat, boat trailer, or outboard
             1416      motor to the borders of this state;
             1417          (31) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah
             1418      where a sales or use tax is not imposed, even if the title is passed in Utah;
             1419          (32) amounts paid for the purchase of telephone service for purposes of providing
             1420      telephone service;
             1421          (33) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
             1422          (34) (a) 45% of the sales price of any new manufactured home; and


             1423          (b) 100% of the sales price of any used manufactured home;
             1424          (35) sales relating to schools and fundraising sales;
             1425          (36) sales or rentals of durable medical equipment if:
             1426          (a) a person presents a prescription for the durable medical equipment; and
             1427          (b) the durable medical equipment is used for home use only;
             1428          (37) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
             1429      Section 72-11-102 ; and
             1430          (b) the commission shall by rule determine the method for calculating sales exempt
             1431      under Subsection (37)(a) that are not separately metered and accounted for in utility billings;
             1432          (38) sales to a ski resort of:
             1433          (a) snowmaking equipment;
             1434          (b) ski slope grooming equipment;
             1435          (c) passenger ropeways as defined in Section 72-11-102 ; or
             1436          (d) parts used in the repairs or renovations of equipment or passenger ropeways
             1437      described in Subsections (38)(a) through (c);
             1438          (39) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
             1439          (40) (a) subject to Subsection (40)(b), sales or rentals of the right to use or operate for
             1440      amusement, entertainment, or recreation an unassisted amusement device as defined in Section
             1441      59-12-102 ;
             1442          (b) if a seller that sells or rents at the same business location the right to use or operate
             1443      for amusement, entertainment, or recreation one or more unassisted amusement devices and
             1444      one or more assisted amusement devices, the exemption described in Subsection (40)(a)
             1445      applies if the seller separately accounts for the sales or rentals of the right to use or operate for
             1446      amusement, entertainment, or recreation for the assisted amusement devices; and
             1447          (c) for purposes of Subsection (40)(b) and in accordance with Title 63, Chapter 46a,
             1448      Utah Administrative Rulemaking Act, the commission may make rules:
             1449          (i) governing the circumstances under which sales are at the same business location;
             1450      and
             1451          (ii) establishing the procedures and requirements for a seller to separately account for
             1452      the sales or rentals of the right to use or operate for amusement, entertainment, or recreation for
             1453      assisted amusement devices;


             1454          [(41) sales by the state or a political subdivision of the state, except state institutions of
             1455      higher education as defined in Section 53B-3-102 , of:]
             1456          [(a) photocopies; or]
             1457          [(b) other copies of records held or maintained by the state or a political subdivision of
             1458      the state;]
             1459          (41) (a) sales of photocopies by:
             1460          (i) a governmental entity; or
             1461          (ii) an entity within the state system of public education, including:
             1462          (A) a school; or
             1463          (B) the State Board of Education; or
             1464          (b) sales of publications by a governmental entity;
             1465          (42) amounts paid for admission to an athletic event at an institution of higher
             1466      education that is subject to the provisions of Title IX of the Education Amendments of 1972,
             1467      20 U.S.C. Sec. 1681 et seq.;
             1468          (43) sales of telephone service charged to a prepaid telephone calling card;
             1469          (44) (a) sales of:
             1470          (i) hearing aids;
             1471          (ii) hearing aid accessories; or
             1472          (iii) except as provided in Subsection (44)(b), parts used in the repairs or renovations
             1473      of hearing aids or hearing aid accessories; and
             1474          (b) for purposes of this Subsection (44), notwithstanding Subsection (44)(a)(iii),
             1475      "parts" does not include batteries;
             1476          (45) (a) sales made to or by:
             1477          (i) an area agency on aging; or
             1478          (ii) a senior citizen center owned by a county, city, or town; or
             1479          (b) sales made by a senior citizen center that contracts with an area agency on aging;
             1480          (46) sales or leases of semiconductor fabricating, processing, research, or development
             1481      materials regardless of whether the semiconductor fabricating, processing, research, or
             1482      development materials:
             1483          (a) actually come into contact with a semiconductor; or
             1484          (b) ultimately become incorporated into real property;


             1485          (47) an amount paid by or charged to a purchaser for accommodations and services
             1486      described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
             1487      59-12-104.2 ;
             1488          (48) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary
             1489      sports event registration certificate in accordance with Section 41-3-306 for the event period
             1490      specified on the temporary sports event registration certificate;
             1491          (49) sales or uses of electricity, if the sales or uses are:
             1492          (a) made under a tariff adopted by the Public Service Commission of Utah only for
             1493      purchase of electricity produced from a new wind, geothermal, biomass, or solar power energy
             1494      source, as designated in the tariff by the Public Service Commission of Utah; and
             1495          (b) for an amount of electricity that is:
             1496          (i) unrelated to the amount of electricity used by the person purchasing the electricity
             1497      under the tariff described in Subsection (49)(a); and
             1498          (ii) equivalent to the number of kilowatthours specified in the tariff described in
             1499      Subsection (49)(a) that may be purchased under the tariff described in Subsection (49)(a);
             1500          (50) sales or rentals of mobility enhancing equipment if a person presents a
             1501      prescription for the mobility enhancing equipment;
             1502          (51) sales of water in a:
             1503          (a) pipe;
             1504          (b) conduit;
             1505          (c) ditch; or
             1506          (d) reservoir;
             1507          (52) sales of currency or coinage that constitute legal tender of the United States or of a
             1508      foreign nation;
             1509          (53) (a) sales of an item described in Subsection (53)(b) if the item:
             1510          (i) does not constitute legal tender of any nation; and
             1511          (ii) has a gold, silver, or platinum content of 80% or more; and
             1512          (b) Subsection (53)(a) applies to a gold, silver, or platinum:
             1513          (i) ingot;
             1514          (ii) bar;
             1515          (iii) medallion; or


             1516          (iv) decorative coin;
             1517          (54) amounts paid on a sale-leaseback transaction;
             1518          (55) sales of a prosthetic device:
             1519          (a) for use on or in a human;
             1520          (b) for which a prescription is issued; and
             1521          (c) to a person that presents a prescription for the prosthetic device;
             1522          (56) (a) except as provided in Subsection (56)(b), purchases, leases, or rentals of
             1523      machinery or equipment by an establishment described in Subsection (56)(c) if the machinery
             1524      or equipment is primarily used in the production or postproduction of the following media for
             1525      commercial distribution:
             1526          (i) a motion picture;
             1527          (ii) a television program;
             1528          (iii) a movie made for television;
             1529          (iv) a music video;
             1530          (v) a commercial;
             1531          (vi) a documentary; or
             1532          (vii) a medium similar to Subsections (56)(a)(i) through (vi) as determined by the
             1533      commission by administrative rule made in accordance with Subsection (56)(d); or
             1534          (b) notwithstanding Subsection (56)(a), purchases, leases, or rentals of machinery or
             1535      equipment by an establishment described in Subsection (56)(c) that is used for the production
             1536      or postproduction of the following are subject to the taxes imposed by this chapter:
             1537          (i) a live musical performance;
             1538          (ii) a live news program; or
             1539          (iii) a live sporting event;
             1540          (c) the following establishments listed in the 1997 North American Industry
             1541      Classification System of the federal Executive Office of the President, Office of Management
             1542      and Budget, apply to Subsections (56)(a) and (b):
             1543          (i) NAICS Code 512110; or
             1544          (ii) NAICS Code 51219; and
             1545          (d) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1546      commission may by rule:


             1547          (i) prescribe what constitutes a medium similar to Subsections (56)(a)(i) through (vi);
             1548      or
             1549          (ii) define:
             1550          (A) "commercial distribution";
             1551          (B) "live musical performance";
             1552          (C) "live news program"; or
             1553          (D) "live sporting event";
             1554          (57) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
             1555      or before June 30, 2009, of machinery or equipment that:
             1556          (i) is leased or purchased for or by a facility that:
             1557          (A) is a renewable energy production facility;
             1558          (B) is located in the state; and
             1559          (C) (I) becomes operational on or after July 1, 2004; or
             1560          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             1561      2004 as a result of the use of the machinery or equipment;
             1562          (ii) has an economic life of five or more years; and
             1563          (iii) is used to make the facility or the increase in capacity of the facility described in
             1564      Subsection (57)(a)(i) operational up to the point of interconnection with an existing
             1565      transmission grid including:
             1566          (A) a wind turbine;
             1567          (B) generating equipment;
             1568          (C) a control and monitoring system;
             1569          (D) a power line;
             1570          (E) substation equipment;
             1571          (F) lighting;
             1572          (G) fencing;
             1573          (H) pipes; or
             1574          (I) other equipment used for locating a power line or pole; and
             1575          (b) this Subsection (57) does not apply to:
             1576          (i) machinery or equipment used in construction of:
             1577          (A) a new renewable energy production facility; or


             1578          (B) the increase in the capacity of a renewable energy production facility;
             1579          (ii) contracted services required for construction and routine maintenance activities;
             1580      and
             1581          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             1582      of the facility described in Subsection (57)(a)(i)(C)(II), machinery or equipment used or
             1583      acquired after:
             1584          (A) the renewable energy production facility described in Subsection (57)(a)(i) is
             1585      operational as described in Subsection (57)(a)(iii); or
             1586          (B) the increased capacity described in Subsection (57)(a)(i) is operational as described
             1587      in Subsection (57)(a)(iii);
             1588          (58) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
             1589      or before June 30, 2009, of machinery or equipment that:
             1590          (i) is leased or purchased for or by a facility that:
             1591          (A) is a waste energy production facility;
             1592          (B) is located in the state; and
             1593          (C) (I) becomes operational on or after July 1, 2004; or
             1594          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             1595      2004 as a result of the use of the machinery or equipment;
             1596          (ii) has an economic life of five or more years; and
             1597          (iii) is used to make the facility or the increase in capacity of the facility described in
             1598      Subsection (58)(a)(i) operational up to the point of interconnection with an existing
             1599      transmission grid including:
             1600          (A) generating equipment;
             1601          (B) a control and monitoring system;
             1602          (C) a power line;
             1603          (D) substation equipment;
             1604          (E) lighting;
             1605          (F) fencing;
             1606          (G) pipes; or
             1607          (H) other equipment used for locating a power line or pole; and
             1608          (b) this Subsection (58) does not apply to:


             1609          (i) machinery or equipment used in construction of:
             1610          (A) a new waste energy facility; or
             1611          (B) the increase in the capacity of a waste energy facility;
             1612          (ii) contracted services required for construction and routine maintenance activities;
             1613      and
             1614          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             1615      described in Subsection (58)(a)(i)(C)(II), machinery or equipment used or acquired after:
             1616          (A) the waste energy facility described in Subsection (58)(a)(i) is operational as
             1617      described in Subsection (58)(a)(iii); or
             1618          (B) the increased capacity described in Subsection (58)(a)(i) is operational as described
             1619      in Subsection (58)(a)(iii);
             1620          (59) (a) leases of five or more years or purchases made on or after July 1, 2004 but on
             1621      or before June 30, 2009, of machinery or equipment that:
             1622          (i) is leased or purchased for or by a facility that:
             1623          (A) is located in the state;
             1624          (B) produces fuel from biomass energy including:
             1625          (I) methanol; or
             1626          (II) ethanol; and
             1627          (C) (I) becomes operational on or after July 1, 2004; or
             1628          (II) has its capacity to produce fuel increase by 25% or more on or after July 1, 2004 as
             1629      a result of the installation of the machinery or equipment;
             1630          (ii) has an economic life of five or more years; and
             1631          (iii) is installed on the facility described in Subsection (59)(a)(i);
             1632          (b) this Subsection (59) does not apply to:
             1633          (i) machinery or equipment used in construction of:
             1634          (A) a new facility described in Subsection (59)(a)(i); or
             1635          (B) the increase in capacity of the facility described in Subsection (59)(a)(i); or
             1636          (ii) contracted services required for construction and routine maintenance activities;
             1637      and
             1638          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             1639      described in Subsection (59)(a)(i)(C)(II), machinery or equipment used or acquired after:


             1640          (A) the facility described in Subsection (59)(a)(i) is operational; or
             1641          (B) the increased capacity described in Subsection (59)(a)(i) is operational;
             1642          (60) amounts paid to a purchaser as a rebate from the manufacturer of a new vehicle
             1643      for purchasing the new vehicle;
             1644          (61) (a) subject to Subsection (61)(b), sales of tangible personal property to persons
             1645      within this state that is subsequently shipped outside the state and incorporated pursuant to
             1646      contract into and becomes a part of real property located outside of this state, except to the
             1647      extent that the other state or political entity imposes a sales, use, gross receipts, or other similar
             1648      transaction excise tax on it against which the other state or political entity allows a credit for
             1649      taxes imposed by this chapter; and
             1650          (b) the exemption provided for in Subsection (61)(a):
             1651          (i) is allowed only if the exemption is applied:
             1652          (A) in calculating the purchase price of the tangible personal property; and
             1653          (B) to a written contract that is in effect on July 1, 2004; and
             1654          (ii) (A) does not apply beginning on the day on which the contract described in
             1655      Subsection (61)(b)(i):
             1656          (I) is substantially modified; or
             1657          (II) terminates; and
             1658          (B) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             1659      the commission may by rule prescribe the circumstances under which a contract is substantially
             1660      modified;
             1661          (62) purchases:
             1662          (a) of one or more of the following items in printed or electronic format:
             1663          (i) a list containing information that includes one or more:
             1664          (A) names; or
             1665          (B) addresses; or
             1666          (ii) a database containing information that includes one or more:
             1667          (A) names; or
             1668          (B) addresses; and
             1669          (b) used to send direct mail;
             1670          (63) redemptions or repurchases of property by a person if that property was:


             1671          (a) delivered to a pawnbroker as part of a pawn transaction; and
             1672          (b) redeemed or repurchased within the time period established in a written agreement
             1673      between the person and the pawnbroker for redeeming or repurchasing the property;
             1674          (64) (a) purchases or leases of an item described in Subsection (64)(b) if the item:
             1675          (i) is purchased or leased by, or on behalf of, a telephone service provider; and
             1676          (ii) has a useful economic life of one or more years; and
             1677          (b) the following apply to Subsection (64)(a):
             1678          (i) telecommunications enabling or facilitating equipment, machinery, or software;
             1679          (ii) telecommunications equipment, machinery, or software required for 911 service;
             1680          (iii) telecommunications maintenance or repair equipment, machinery, or software;
             1681          (iv) telecommunications switching or routing equipment, machinery, or software; or
             1682          (v) telecommunications transmission equipment, machinery, or software; and
             1683          (65) (a) beginning on July 1, 2006 and ending on June 30, 2016, purchases of tangible
             1684      personal property used in the research and development of coal-to-liquids, oil shale, or tar
             1685      sands technology; and
             1686          (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1687      commission may, for purposes of Subsection (65)(a), make rules defining what constitutes
             1688      tangible personal property used in the research and development of coal-to-liquids, oil shale,
             1689      and tar sands technology.
             1690          Section 3. Effective date.
             1691          This bill takes effect on July 1, 2007.




Legislative Review Note
    as of 11-15-06 3:09 PM


Office of Legislative Research and General Counsel


Interim Committee Note
    as of 12-18-06 3:27 PM


The Revenue and Taxation Interim Committee recommended this bill.


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