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S.B. 34

             1     

AMENDMENTS TO SALES AND USE TAX

             2     
EXEMPTION FOR CERTAIN MACHINERY,

             3     
EQUIPMENT, OR PARTS

             4     
2009 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Chief Sponsor: Wayne L. Niederhauser

             7     
House Sponsor: ____________

             8     
             9      LONG TITLE
             10      Committee Note:
             11          The Revenue and Taxation Interim Committee recommended this bill.
             12      General Description:
             13          This bill amends the Sales and Use Tax Act relating to a sales and use tax exemption
             14      for certain machinery, equipment, or repair or replacement parts.
             15      Highlighted Provisions:
             16          This bill:
             17          .    provides a requirement that to be eligible for exemption from state and local sales
             18      and use taxes, certain machinery, equipment, or repair or replacement parts be used
             19      in an establishment or facility in the state;
             20          .    repeals obsolete language; and
             21          .    makes technical changes.
             22      Monies Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None
             26      Utah Code Sections Affected:
             27      AMENDS:


             28          59-12-104, as last amended by Laws of Utah 2008, Second Special Session, Chapter 2
             29     
             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 59-12-104 is amended to read:
             32           59-12-104. Exemptions.
             33          The following sales and uses are exempt from the taxes imposed by this chapter:
             34          (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
             35      under Chapter 13, Motor and Special Fuel Tax Act;
             36          (2) sales to the state, its institutions, and its political subdivisions; however, this
             37      exemption does not apply to sales of:
             38          (a) construction materials except:
             39          (i) construction materials purchased by or on behalf of institutions of the public
             40      education system as defined in Utah Constitution Article X, Section 2, provided the
             41      construction materials are clearly identified and segregated and installed or converted to real
             42      property which is owned by institutions of the public education system; and
             43          (ii) construction materials purchased by the state, its institutions, or its political
             44      subdivisions which are installed or converted to real property by employees of the state, its
             45      institutions, or its political subdivisions; or
             46          (b) tangible personal property in connection with the construction, operation,
             47      maintenance, repair, or replacement of a project, as defined in Section 11-13-103 , or facilities
             48      providing additional project capacity, as defined in Section 11-13-103 ;
             49          (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
             50          (i) the proceeds of each sale do not exceed $1; and
             51          (ii) the seller or operator of the vending machine reports an amount equal to 150% of
             52      the cost of the item described in Subsection (3)(b) as goods consumed; and
             53          (b) Subsection (3)(a) applies to:
             54          (i) food and food ingredients; or
             55          (ii) prepared food;
             56          (4) sales of the following to a commercial airline carrier for in-flight consumption:
             57          (a) food and food ingredients;
             58          (b) prepared food; or


             59          (c) services related to Subsection (4)(a) or (b);
             60          (5) (a) (i) beginning on July 1, 2008, and ending on September 30, 2008, sales of parts
             61      and equipment:
             62          (A) (I) by an establishment described in NAICS Code 336411 or 336412 of the 2002
             63      North American Industry Classification System of the federal Executive Office of the
             64      President, Office of Management and Budget; and
             65          (II) for:
             66          (Aa) installation in an aircraft, including services relating to the installation of parts or
             67      equipment in the aircraft;
             68          (Bb) renovation of an aircraft; or
             69          (Cc) repair of an aircraft; or
             70          (B) for installation in an aircraft operated by a common carrier in interstate or foreign
             71      commerce; or
             72          (ii) beginning on October 1, 2008, sales of parts and equipment for installation in an
             73      aircraft operated by a common carrier in interstate or foreign commerce; and
             74          (b) notwithstanding the time period of Subsection 59-12-110 (2) for filing for a refund,
             75      a person may claim the exemption allowed by Subsection (5)(a)(i)(B) for a sale by filing for a
             76      refund:
             77          (i) if the sale is made on or after July 1, 2008, but on or before September 30, 2008;
             78          (ii) as if Subsection (5)(a)(i)(B) were in effect on the day on which the sale is made;
             79          (iii) if the person did not claim the exemption allowed by Subsection (5)(a)(i)(B) for
             80      the sale prior to filing for the refund;
             81          (iv) for sales and use taxes paid under this chapter on the sale;
             82          (v) in accordance with Section 59-12-110 ; and
             83          (vi) subject to any extension allowed for filing for a refund under Section 59-12-110 , if
             84      the person files for the refund on or before September 30, 2011;
             85          (6) sales of commercials, motion picture films, prerecorded audio program tapes or
             86      records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
             87      exhibitor, distributor, or commercial television or radio broadcaster;
             88          (7) (a) subject to Subsection (7)(b), sales of cleaning or washing of tangible personal
             89      property if the cleaning or washing of the tangible personal property is not assisted cleaning or


             90      washing of tangible personal property;
             91          (b) if a seller that sells at the same business location assisted cleaning or washing of
             92      tangible personal property and cleaning or washing of tangible personal property that is not
             93      assisted cleaning or washing of tangible personal property, the exemption described in
             94      Subsection (7)(a) applies if the seller separately accounts for the sales of the assisted cleaning
             95      or washing of the tangible personal property; and
             96          (c) for purposes of Subsection (7)(b) and in accordance with Title 63G, Chapter 3,
             97      Utah Administrative Rulemaking Act, the commission may make rules:
             98          (i) governing the circumstances under which sales are at the same business location;
             99      and
             100          (ii) establishing the procedures and requirements for a seller to separately account for
             101      sales of assisted cleaning or washing of tangible personal property;
             102          (8) sales made to or by religious or charitable institutions in the conduct of their regular
             103      religious or charitable functions and activities, if the requirements of Section 59-12-104.1 are
             104      fulfilled;
             105          (9) sales of a vehicle of a type required to be registered under the motor vehicle laws of
             106      this state if the vehicle is:
             107          (a) not registered in this state; and
             108          (b) (i) not used in this state; or
             109          (ii) used in this state:
             110          (A) if the vehicle is not used to conduct business, for a time period that does not
             111      exceed the longer of:
             112          (I) 30 days in any calendar year; or
             113          (II) the time period necessary to transport the vehicle to the borders of this state; or
             114          (B) if the vehicle is used to conduct business, for the time period necessary to transport
             115      the vehicle to the borders of this state;
             116          (10) (a) amounts paid for an item described in Subsection (10)(b) if:
             117          (i) the item is intended for human use; and
             118          (ii) (A) a prescription was issued for the item; or
             119          (B) the item was purchased by a hospital or other medical facility; and
             120          (b) (i) Subsection (10)(a) applies to:


             121          (A) a drug;
             122          (B) a syringe; or
             123          (C) a stoma supply; and
             124          (ii) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             125      commission may by rule define the terms:
             126          (A) "syringe"; or
             127          (B) "stoma supply";
             128          (11) sales or use of property, materials, or services used in the construction of or
             129      incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
             130          (12) (a) sales of an item described in Subsection (12)(c) served by:
             131          (i) the following if the item described in Subsection (12)(c) is not available to the
             132      general public:
             133          (A) a church; or
             134          (B) a charitable institution;
             135          (ii) an institution of higher education if:
             136          (A) the item described in Subsection (12)(c) is not available to the general public; or
             137          (B) the item described in Subsection (12)(c) is prepaid as part of a student meal plan
             138      offered by the institution of higher education; or
             139          (b) sales of an item described in Subsection (12)(c) provided for a patient by:
             140          (i) a medical facility; or
             141          (ii) a nursing facility; and
             142          (c) Subsections (12)(a) and (b) apply to:
             143          (i) food and food ingredients;
             144          (ii) prepared food; or
             145          (iii) alcoholic beverages;
             146          (13) (a) except as provided in Subsection (13)(b), the sale of tangible personal property
             147      or a product transferred electronically by a person:
             148          (i) regardless of the number of transactions involving the sale of that tangible personal
             149      property or product transferred electronically by that person; and
             150          (ii) not regularly engaged in the business of selling that type of tangible personal
             151      property or product transferred electronically;


             152          (b) this Subsection (13) does not apply if:
             153          (i) the sale is one of a series of sales of a character to indicate that the person is
             154      regularly engaged in the business of selling that type of tangible personal property or product
             155      transferred electronically;
             156          (ii) the person holds that person out as regularly engaged in the business of selling that
             157      type of tangible personal property or product transferred electronically;
             158          (iii) the person sells an item of tangible personal property or product transferred
             159      electronically that the person purchased as a sale that is exempt under Subsection (25); or
             160          (iv) the sale is of a vehicle or vessel required to be titled or registered under the laws of
             161      this state in which case the tax is based upon:
             162          (A) the bill of sale or other written evidence of value of the vehicle or vessel being
             163      sold; or
             164          (B) in the absence of a bill of sale or other written evidence of value, the fair market
             165      value of the vehicle or vessel being sold at the time of the sale as determined by the
             166      commission; and
             167          (c) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             168      commission shall make rules establishing the circumstances under which:
             169          (i) a person is regularly engaged in the business of selling a type of tangible personal
             170      property or product transferred electronically;
             171          (ii) a sale of tangible personal property or a product transferred electronically is one of
             172      a series of sales of a character to indicate that a person is regularly engaged in the business of
             173      selling that type of tangible personal property or product transferred electronically; or
             174          (iii) a person holds that person out as regularly engaged in the business of selling a type
             175      of tangible personal property or product transferred electronically;
             176          (14) (a) except as provided in Subsection (14)(b), amounts paid or charged on or after
             177      July 1, 2006, for a purchase or lease by a manufacturing facility [other than] except for a
             178      cogeneration facility, for the following:
             179          (i) machinery and equipment that:
             180          (A) [is] are used:
             181          (I) for a manufacturing facility [other than] except for a manufacturing facility that is a
             182      scrap recycler described in Subsection 59-12-102 (52)(b):


             183          (Aa) in the manufacturing process; [and]
             184          (Bb) to manufacture an item sold as tangible personal property; and
             185          (Cc) beginning on July 1, 2009, in a manufacturing facility described in this Subsection
             186      (14)(a)(i)(A)(I) in the state; or
             187          (II) for a manufacturing facility that is a scrap recycler described in Subsection
             188      59-12-102 (52)(b)[,]:
             189          (Aa) to process an item sold as tangible personal property; and
             190          (Bb) beginning on July 1, 2009, in a manufacturing facility described in this Subsection
             191      (14)(a)(i)(A)(II) in the state; and
             192          (B) [has] have an economic life of three or more years; and
             193          (ii) normal operating repair or replacement parts that:
             194          (A) have an economic life of three or more years; and
             195          (B) are used:
             196          (I) for a manufacturing facility [in the state other than] except for a manufacturing
             197      facility that is a scrap recycler described in Subsection 59-12-102 (52)(b)[,]:
             198          (Aa) in the manufacturing process; and
             199          (Bb) in a manufacturing facility described in this Subsection (14)(a)(ii)(B)(I) in the
             200      state; or
             201          (II) for a manufacturing facility [in the state] that is a scrap recycler described in
             202      Subsection 59-12-102 (52)(b)[,]:
             203          (Aa) to process an item sold as tangible personal property; and
             204          (Bb) in a manufacturing facility described in this Subsection (14)(a)(ii)(B)(II) in the
             205      state;
             206          (b) [(i)] amounts paid or charged on or after July 1, 2005, for a purchase or lease by a
             207      manufacturing facility that is a cogeneration facility placed in service on or after May 1, 2006,
             208      for the following:
             209          [(A)] (i) machinery and equipment that:
             210          [(I) is] (A) are used:
             211          [(Aa)] (I) in the manufacturing process; [and]
             212          [(Bb)] (II) to manufacture an item sold as tangible personal property; and
             213          (III) beginning on July 1, 2009, in a manufacturing facility described in this Subsection


             214      (14)(b) in the state; and
             215          [(II) has] (B) have an economic life of three or more years; and
             216          [(B)] (ii) normal operating repair or replacement parts that:
             217          [(I)] (A) are used:
             218          (I) in the manufacturing process; and
             219          (II) in a manufacturing facility described in this Subsection (14)(b) in the state; and
             220          [(II)] (B) have an economic life of three or more years; [and]
             221          [(ii) for amounts paid or charged on or after July 1, 2005, but on or before June 30,
             222      2006, for a purchase or lease described in Subsection (14)(b)(i), a cogeneration facility may
             223      claim the exemption allowed by Subsection (14)(b)(i) by filing for a refund:]
             224          [(A) for sales and use taxes paid under this chapter on the purchase or lease payment;
             225      and]
             226          [(B) in accordance with Section 59-12-110 ;]
             227          (c) amounts paid or charged for a purchase or lease made on or after January 1, 2008,
             228      by an establishment described in NAICS Subsector 212, Mining (except Oil and Gas), or
             229      NAICS Code 213113, Support Activities for Coal Mining, 213114, Support Activities for
             230      Metal Mining, or 213115, Support Activities for Nonmetallic Minerals (except Fuels) Mining,
             231      of the 2002 North American Industry Classification System of the federal Executive Office of
             232      the President, Office of Management and Budget:
             233          (i) machinery and equipment that:
             234          (A) are used [in]:
             235          (I) (Aa) in the production process, other than the production of real property; or
             236          [(II)] (Bb) in research and development; and
             237          (II) beginning on July 1, 2009, in an establishment described in this Subsection (14)(c)
             238      in the state; and
             239          (B) have an economic life of three or more years; and
             240          (ii) normal operating repair or replacement parts that:
             241          (A) have an economic life of three or more years; and
             242          (B) are used in:
             243          (I) (Aa) the production process, [other than] except for the production of real property[,
             244      in]; and


             245          (Bb) an establishment described in this Subsection (14)(c) in the state; or
             246          (II) (Aa) research and development; and
             247          (Bb) in an establishment described in this Subsection (14)(c) in the state;
             248          (d) for purposes of this Subsection (14) and in accordance with Title 63G, Chapter 3,
             249      Utah Administrative Rulemaking Act, the commission:
             250          (i) shall by rule define the term "establishment"; and
             251          (ii) may by rule define what constitutes:
             252          (A) processing an item sold as tangible personal property;
             253          (B) the production process, [other than] except for the production of real property; or
             254          (C) research and development; and
             255          (e) on or before October 1, 2011, and every five years after October 1, 2011, the
             256      commission shall:
             257          (i) review the exemptions described in this Subsection (14) and make
             258      recommendations to the Revenue and Taxation Interim Committee concerning whether the
             259      exemptions should be continued, modified, or repealed; and
             260          (ii) include in its report:
             261          (A) the cost of the exemptions;
             262          (B) the purpose and effectiveness of the exemptions; and
             263          (C) the benefits of the exemptions to the state;
             264          (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
             265          (i) tooling;
             266          (ii) special tooling;
             267          (iii) support equipment;
             268          (iv) special test equipment; or
             269          (v) parts used in the repairs or renovations of tooling or equipment described in
             270      Subsections (15)(a)(i) through (iv); and
             271          (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
             272          (i) the tooling, equipment, or parts are used or consumed exclusively in the
             273      performance of any aerospace or electronics industry contract with the United States
             274      government or any subcontract under that contract; and
             275          (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),


             276      title to the tooling, equipment, or parts is vested in the United States government as evidenced
             277      by:
             278          (A) a government identification tag placed on the tooling, equipment, or parts; or
             279          (B) listing on a government-approved property record if placing a government
             280      identification tag on the tooling, equipment, or parts is impractical;
             281          (16) sales of newspapers or newspaper subscriptions;
             282          (17) (a) except as provided in Subsection (17)(b), tangible personal property or a
             283      product transferred electronically traded in as full or part payment of the purchase price, except
             284      that for purposes of calculating sales or use tax upon vehicles not sold by a vehicle dealer,
             285      trade-ins are limited to other vehicles only, and the tax is based upon:
             286          (i) the bill of sale or other written evidence of value of the vehicle being sold and the
             287      vehicle being traded in; or
             288          (ii) in the absence of a bill of sale or other written evidence of value, the then existing
             289      fair market value of the vehicle being sold and the vehicle being traded in, as determined by the
             290      commission; and
             291          (b) notwithstanding Subsection (17)(a), Subsection (17)(a) does not apply to the
             292      following items of tangible personal property or products transferred electronically traded in as
             293      full or part payment of the purchase price:
             294          (i) money;
             295          (ii) electricity;
             296          (iii) water;
             297          (iv) gas; or
             298          (v) steam;
             299          (18) (a) (i) except as provided in Subsection (18)(b), sales of tangible personal property
             300      or a product transferred electronically used or consumed primarily and directly in farming
             301      operations, regardless of whether the tangible personal property or product transferred
             302      electronically:
             303          (A) becomes part of real estate; or
             304          (B) is installed by a:
             305          (I) farmer;
             306          (II) contractor; or


             307          (III) subcontractor; or
             308          (ii) sales of parts used in the repairs or renovations of tangible personal property or a
             309      product transferred electronically if the tangible personal property or product transferred
             310      electronically is exempt under Subsection (18)(a)(i); and
             311          (b) notwithstanding Subsection (18)(a), amounts paid or charged for the following are
             312      subject to the taxes imposed by this chapter:
             313          (i) (A) subject to Subsection (18)(b)(i)(B), the following if used in a manner that is
             314      incidental to farming:
             315          (I) machinery;
             316          (II) equipment;
             317          (III) materials; or
             318          (IV) supplies; and
             319          (B) tangible personal property that is considered to be used in a manner that is
             320      incidental to farming includes:
             321          (I) hand tools; or
             322          (II) maintenance and janitorial equipment and supplies;
             323          (ii) (A) subject to Subsection (18)(b)(ii)(B), tangible personal property or a product
             324      transferred electronically if the tangible personal property or product transferred electronically
             325      is used in an activity other than farming; and
             326          (B) tangible personal property or a product transferred electronically that is considered
             327      to be used in an activity other than farming includes:
             328          (I) office equipment and supplies; or
             329          (II) equipment and supplies used in:
             330          (Aa) the sale or distribution of farm products;
             331          (Bb) research; or
             332          (Cc) transportation; or
             333          (iii) a vehicle required to be registered by the laws of this state during the period
             334      ending two years after the date of the vehicle's purchase;
             335          (19) sales of hay;
             336          (20) exclusive sale during the harvest season of seasonal crops, seedling plants, or
             337      garden, farm, or other agricultural produce if the seasonal crops are, seedling plants are, or


             338      garden, farm, or other agricultural produce is sold by:
             339          (a) the producer of the seasonal crops, seedling plants, or garden, farm, or other
             340      agricultural produce;
             341          (b) an employee of the producer described in Subsection (20)(a); or
             342          (c) a member of the immediate family of the producer described in Subsection (20)(a);
             343          (21) purchases made using a coupon as defined in 7 U.S.C. Sec. 2012 that is issued
             344      under the Food Stamp Program, 7 U.S.C. Sec. 2011 et seq.;
             345          (22) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
             346      nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor,
             347      wholesaler, or retailer for use in packaging tangible personal property to be sold by that
             348      manufacturer, processor, wholesaler, or retailer;
             349          (23) a product stored in the state for resale;
             350          (24) (a) purchases of a product if:
             351          (i) the product is:
             352          (A) purchased outside of this state;
             353          (B) brought into this state:
             354          (I) at any time after the purchase described in Subsection (24)(a)(i)(A); and
             355          (II) by a nonresident person who is not living or working in this state at the time of the
             356      purchase;
             357          (C) used for the personal use or enjoyment of the nonresident person described in
             358      Subsection (24)(a)(i)(B)(II) while that nonresident person is within the state; and
             359          (D) not used in conducting business in this state; and
             360          (ii) for:
             361          (A) a product other than a boat described in Subsection (24)(a)(ii)(B), the first use of
             362      the product for a purpose for which the product is designed occurs outside of this state;
             363          (B) a boat, the boat is registered outside of this state; or
             364          (C) a vehicle other than a vehicle sold to an authorized carrier, the vehicle is registered
             365      outside of this state;
             366          (b) the exemption provided for in Subsection (24)(a) does not apply to:
             367          (i) a lease or rental of a product; or
             368          (ii) a sale of a vehicle exempt under Subsection (33); and


             369          (c) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for
             370      purposes of Subsection (24)(a), the commission may by rule define what constitutes the
             371      following:
             372          (i) conducting business in this state if that phrase has the same meaning in this
             373      Subsection (24) as in Subsection (64);
             374          (ii) the first use of a product if that phrase has the same meaning in this Subsection (24)
             375      as in Subsection (64); or
             376          (iii) a purpose for which a product is designed if that phrase has the same meaning in
             377      this Subsection (24) as in Subsection (64);
             378          (25) a product purchased for resale in this state, in the regular course of business, either
             379      in its original form or as an ingredient or component part of a manufactured or compounded
             380      product;
             381          (26) a product upon which a sales or use tax was paid to some other state, or one of its
             382      subdivisions, except that the state shall be paid any difference between the tax paid and the tax
             383      imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if
             384      the tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax
             385      Act;
             386          (27) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a
             387      person for use in compounding a service taxable under the subsections;
             388          (28) purchases made in accordance with the special supplemental nutrition program for
             389      women, infants, and children established in 42 U.S.C. Sec. 1786;
             390          (29) beginning on July 1, 1999, through June 30, 2014, sales or leases of rolls, rollers,
             391      refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
             392      of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification
             393      Manual of the federal Executive Office of the President, Office of Management and Budget;
             394          (30) sales of a boat of a type required to be registered under Title 73, Chapter 18, State
             395      Boating Act, a boat trailer, or an outboard motor if the boat, boat trailer, or outboard motor is:
             396          (a) not registered in this state; and
             397          (b) (i) not used in this state; or
             398          (ii) used in this state:
             399          (A) if the boat, boat trailer, or outboard motor is not used to conduct business, for a


             400      time period that does not exceed the longer of:
             401          (I) 30 days in any calendar year; or
             402          (II) the time period necessary to transport the boat, boat trailer, or outboard motor to
             403      the borders of this state; or
             404          (B) if the boat, boat trailer, or outboard motor is used to conduct business, for the time
             405      period necessary to transport the boat, boat trailer, or outboard motor to the borders of this
             406      state;
             407          (31) sales of aircraft manufactured in Utah;
             408          (32) amounts paid for the purchase of telecommunications service for purposes of
             409      providing telecommunications service;
             410          (33) sales, leases, or uses of the following:
             411          (a) a vehicle by an authorized carrier; or
             412          (b) tangible personal property that is installed on a vehicle:
             413          (i) sold or leased to or used by an authorized carrier; and
             414          (ii) before the vehicle is placed in service for the first time;
             415          (34) (a) 45% of the sales price of any new manufactured home; and
             416          (b) 100% of the sales price of any used manufactured home;
             417          (35) sales relating to schools and fundraising sales;
             418          (36) sales or rentals of durable medical equipment if:
             419          (a) a person presents a prescription for the durable medical equipment; and
             420          (b) the durable medical equipment is used for home use only;
             421          (37) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
             422      Section 72-11-102 ; and
             423          (b) the commission shall by rule determine the method for calculating sales exempt
             424      under Subsection (37)(a) that are not separately metered and accounted for in utility billings;
             425          (38) sales to a ski resort of:
             426          (a) snowmaking equipment;
             427          (b) ski slope grooming equipment;
             428          (c) passenger ropeways as defined in Section 72-11-102 ; or
             429          (d) parts used in the repairs or renovations of equipment or passenger ropeways
             430      described in Subsections (38)(a) through (c);


             431          (39) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
             432          (40) (a) subject to Subsection (40)(b), sales or rentals of the right to use or operate for
             433      amusement, entertainment, or recreation an unassisted amusement device as defined in Section
             434      59-12-102 ;
             435          (b) if a seller that sells or rents at the same business location the right to use or operate
             436      for amusement, entertainment, or recreation one or more unassisted amusement devices and
             437      one or more assisted amusement devices, the exemption described in Subsection (40)(a)
             438      applies if the seller separately accounts for the sales or rentals of the right to use or operate for
             439      amusement, entertainment, or recreation for the assisted amusement devices; and
             440          (c) for purposes of Subsection (40)(b) and in accordance with Title 63G, Chapter 3,
             441      Utah Administrative Rulemaking Act, the commission may make rules:
             442          (i) governing the circumstances under which sales are at the same business location;
             443      and
             444          (ii) establishing the procedures and requirements for a seller to separately account for
             445      the sales or rentals of the right to use or operate for amusement, entertainment, or recreation for
             446      assisted amusement devices;
             447          (41) (a) sales of photocopies by:
             448          (i) a governmental entity; or
             449          (ii) an entity within the state system of public education, including:
             450          (A) a school; or
             451          (B) the State Board of Education; or
             452          (b) sales of publications by a governmental entity;
             453          (42) amounts paid for admission to an athletic event at an institution of higher
             454      education that is subject to the provisions of Title IX of the Education Amendments of 1972,
             455      20 U.S.C. Sec. 1681 et seq.;
             456          (43) sales of telecommunications service charged to a prepaid telephone calling card;
             457          (44) (a) sales made to or by:
             458          (i) an area agency on aging; or
             459          (ii) a senior citizen center owned by a county, city, or town; or
             460          (b) sales made by a senior citizen center that contracts with an area agency on aging;
             461          (45) sales or leases of semiconductor fabricating, processing, research, or development


             462      materials regardless of whether the semiconductor fabricating, processing, research, or
             463      development materials:
             464          (a) actually come into contact with a semiconductor; or
             465          (b) ultimately become incorporated into real property;
             466          (46) an amount paid by or charged to a purchaser for accommodations and services
             467      described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
             468      59-12-104.2 ;
             469          (47) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary
             470      sports event registration certificate in accordance with Section 41-3-306 for the event period
             471      specified on the temporary sports event registration certificate;
             472          (48) sales or uses of electricity, if the sales or uses are:
             473          (a) made under a tariff adopted by the Public Service Commission of Utah only for
             474      purchase of electricity produced from a new wind, geothermal, biomass, or solar power energy
             475      source, as designated in the tariff by the Public Service Commission of Utah; and
             476          (b) for an amount of electricity that is:
             477          (i) unrelated to the amount of electricity used by the person purchasing the electricity
             478      under the tariff described in Subsection (48)(a); and
             479          (ii) equivalent to the number of kilowatthours specified in the tariff described in
             480      Subsection (48)(a) that may be purchased under the tariff described in Subsection (48)(a);
             481          (49) sales or rentals of mobility enhancing equipment if a person presents a
             482      prescription for the mobility enhancing equipment;
             483          (50) sales of water in a:
             484          (a) pipe;
             485          (b) conduit;
             486          (c) ditch; or
             487          (d) reservoir;
             488          (51) sales of currency or coinage that constitute legal tender of the United States or of a
             489      foreign nation;
             490          (52) (a) sales of an item described in Subsection (52)(b) if the item:
             491          (i) does not constitute legal tender of any nation; and
             492          (ii) has a gold, silver, or platinum content of 80% or more; and


             493          (b) Subsection (52)(a) applies to a gold, silver, or platinum:
             494          (i) ingot;
             495          (ii) bar;
             496          (iii) medallion; or
             497          (iv) decorative coin;
             498          (53) amounts paid on a sale-leaseback transaction;
             499          (54) sales of a prosthetic device:
             500          (a) for use on or in a human; and
             501          (b) (i) for which a prescription is required; or
             502          (ii) if the prosthetic device is purchased by a hospital or other medical facility;
             503          (55) (a) except as provided in Subsection (55)(b), purchases, leases, or rentals of
             504      machinery or equipment by an establishment described in Subsection (55)(c) if the machinery
             505      or equipment is primarily used in the production or postproduction of the following media for
             506      commercial distribution:
             507          (i) a motion picture;
             508          (ii) a television program;
             509          (iii) a movie made for television;
             510          (iv) a music video;
             511          (v) a commercial;
             512          (vi) a documentary; or
             513          (vii) a medium similar to Subsections (55)(a)(i) through (vi) as determined by the
             514      commission by administrative rule made in accordance with Subsection (55)(d); or
             515          (b) notwithstanding Subsection (55)(a), purchases, leases, or rentals of machinery or
             516      equipment by an establishment described in Subsection (55)(c) that is used for the production
             517      or postproduction of the following are subject to the taxes imposed by this chapter:
             518          (i) a live musical performance;
             519          (ii) a live news program; or
             520          (iii) a live sporting event;
             521          (c) the following establishments listed in the 1997 North American Industry
             522      Classification System of the federal Executive Office of the President, Office of Management
             523      and Budget, apply to Subsections (55)(a) and (b):


             524          (i) NAICS Code 512110; or
             525          (ii) NAICS Code 51219; and
             526          (d) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             527      commission may by rule:
             528          (i) prescribe what constitutes a medium similar to Subsections (55)(a)(i) through (vi);
             529      or
             530          (ii) define:
             531          (A) "commercial distribution";
             532          (B) "live musical performance";
             533          (C) "live news program"; or
             534          (D) "live sporting event";
             535          (56) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
             536      or before June 30, 2019, of machinery or equipment that:
             537          (i) is leased or purchased for or by a facility that:
             538          (A) is a renewable energy production facility;
             539          (B) is located in the state; and
             540          (C) (I) becomes operational on or after July 1, 2004; or
             541          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             542      2004 as a result of the use of the machinery or equipment;
             543          (ii) has an economic life of five or more years; and
             544          (iii) is used to make the facility or the increase in capacity of the facility described in
             545      Subsection (56)(a)(i) operational up to the point of interconnection with an existing
             546      transmission grid including:
             547          (A) a wind turbine;
             548          (B) generating equipment;
             549          (C) a control and monitoring system;
             550          (D) a power line;
             551          (E) substation equipment;
             552          (F) lighting;
             553          (G) fencing;
             554          (H) pipes; or


             555          (I) other equipment used for locating a power line or pole; and
             556          (b) this Subsection (56) does not apply to:
             557          (i) machinery or equipment used in construction of:
             558          (A) a new renewable energy production facility; or
             559          (B) the increase in the capacity of a renewable energy production facility;
             560          (ii) contracted services required for construction and routine maintenance activities;
             561      and
             562          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             563      of the facility described in Subsection (56)(a)(i)(C)(II), machinery or equipment used or
             564      acquired after:
             565          (A) the renewable energy production facility described in Subsection (56)(a)(i) is
             566      operational as described in Subsection (56)(a)(iii); or
             567          (B) the increased capacity described in Subsection (56)(a)(i) is operational as described
             568      in Subsection (56)(a)(iii);
             569          (57) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
             570      or before June 30, 2019, of machinery or equipment that:
             571          (i) is leased or purchased for or by a facility that:
             572          (A) is a waste energy production facility;
             573          (B) is located in the state; and
             574          (C) (I) becomes operational on or after July 1, 2004; or
             575          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             576      2004 as a result of the use of the machinery or equipment;
             577          (ii) has an economic life of five or more years; and
             578          (iii) is used to make the facility or the increase in capacity of the facility described in
             579      Subsection (57)(a)(i) operational up to the point of interconnection with an existing
             580      transmission grid including:
             581          (A) generating equipment;
             582          (B) a control and monitoring system;
             583          (C) a power line;
             584          (D) substation equipment;
             585          (E) lighting;


             586          (F) fencing;
             587          (G) pipes; or
             588          (H) other equipment used for locating a power line or pole; and
             589          (b) this Subsection (57) does not apply to:
             590          (i) machinery or equipment used in construction of:
             591          (A) a new waste energy facility; or
             592          (B) the increase in the capacity of a waste energy facility;
             593          (ii) contracted services required for construction and routine maintenance activities;
             594      and
             595          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             596      described in Subsection (57)(a)(i)(C)(II), machinery or equipment used or acquired after:
             597          (A) the waste energy facility described in Subsection (57)(a)(i) is operational as
             598      described in Subsection (57)(a)(iii); or
             599          (B) the increased capacity described in Subsection (57)(a)(i) is operational as described
             600      in Subsection (57)(a)(iii);
             601          (58) (a) leases of five or more years or purchases made on or after July 1, 2004 but on
             602      or before June 30, 2019, of machinery or equipment that:
             603          (i) is leased or purchased for or by a facility that:
             604          (A) is located in the state;
             605          (B) produces fuel from biomass energy including:
             606          (I) methanol; or
             607          (II) ethanol; and
             608          (C) (I) becomes operational on or after July 1, 2004; or
             609          (II) has its capacity to produce fuel increase by 25% or more on or after July 1, 2004 as
             610      a result of the installation of the machinery or equipment;
             611          (ii) has an economic life of five or more years; and
             612          (iii) is installed on the facility described in Subsection (58)(a)(i);
             613          (b) this Subsection (58) does not apply to:
             614          (i) machinery or equipment used in construction of:
             615          (A) a new facility described in Subsection (58)(a)(i); or
             616          (B) the increase in capacity of the facility described in Subsection (58)(a)(i); or


             617          (ii) contracted services required for construction and routine maintenance activities;
             618      and
             619          (iii) unless the machinery or equipment is used or acquired for an increase in capacity
             620      described in Subsection (58)(a)(i)(C)(II), machinery or equipment used or acquired after:
             621          (A) the facility described in Subsection (58)(a)(i) is operational; or
             622          (B) the increased capacity described in Subsection (58)(a)(i) is operational;
             623          (59) (a) subject to Subsection (59)(b) or (c), sales of tangible personal property or a
             624      product transferred electronically to a person within this state if that tangible personal property
             625      or product transferred electronically is subsequently shipped outside the state and incorporated
             626      pursuant to contract into and becomes a part of real property located outside of this state;
             627          (b) the exemption under Subsection (59)(a) is not allowed to the extent that the other
             628      state or political entity to which the tangible personal property is shipped imposes a sales, use,
             629      gross receipts, or other similar transaction excise tax on the transaction against which the other
             630      state or political entity allows a credit for sales and use taxes imposed by this chapter; and
             631          (c) notwithstanding the time period of Subsection 59-12-110 (2)(b) for filing for a
             632      refund, a person may claim the exemption allowed by this Subsection (59) for a sale by filing
             633      for a refund:
             634          (i) if the sale is made on or after July 1, 2004, but on or before June 30, 2008;
             635          (ii) as if this Subsection (59) as in effect on July 1, 2008, were in effect on the day on
             636      which the sale is made;
             637          (iii) if the person did not claim the exemption allowed by this Subsection (59) for the
             638      sale prior to filing for the refund;
             639          (iv) for sales and use taxes paid under this chapter on the sale;
             640          (v) in accordance with Section 59-12-110 ; and
             641          (vi) subject to any extension allowed for filing for a refund under Section 59-12-110 , if
             642      the person files for the refund on or before June 30, 2011;
             643          (60) purchases:
             644          (a) of one or more of the following items in printed or electronic format:
             645          (i) a list containing information that includes one or more:
             646          (A) names; or
             647          (B) addresses; or


             648          (ii) a database containing information that includes one or more:
             649          (A) names; or
             650          (B) addresses; and
             651          (b) used to send direct mail;
             652          (61) redemptions or repurchases of a product by a person if that product was:
             653          (a) delivered to a pawnbroker as part of a pawn transaction; and
             654          (b) redeemed or repurchased within the time period established in a written agreement
             655      between the person and the pawnbroker for redeeming or repurchasing the product;
             656          (62) (a) purchases or leases of an item described in Subsection (62)(b) if the item:
             657          (i) is purchased or leased by, or on behalf of, a telecommunications service provider;
             658      and
             659          (ii) has a useful economic life of one or more years; and
             660          (b) the following apply to Subsection (62)(a):
             661          (i) telecommunications enabling or facilitating equipment, machinery, or software;
             662          (ii) telecommunications equipment, machinery, or software required for 911 service;
             663          (iii) telecommunications maintenance or repair equipment, machinery, or software;
             664          (iv) telecommunications switching or routing equipment, machinery, or software; or
             665          (v) telecommunications transmission equipment, machinery, or software;
             666          (63) (a) beginning on July 1, 2006, and ending on June 30, 2016, purchases of tangible
             667      personal property or a product transferred electronically that are used in the research and
             668      development of coal-to-liquids, oil shale, or tar sands technology; and
             669          (b) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             670      commission may, for purposes of Subsection (63)(a), make rules defining what constitutes
             671      purchases of tangible personal property or a product transferred electronically that are used in
             672      the research and development of coal-to-liquids, oil shale, and tar sands technology;
             673          (64) (a) purchases of tangible personal property or a product transferred electronically
             674      if:
             675          (i) the tangible personal property or product transferred electronically is:
             676          (A) purchased outside of this state;
             677          (B) brought into this state at any time after the purchase described in Subsection
             678      (64)(a)(i)(A); and


             679          (C) used in conducting business in this state; and
             680          (ii) for:
             681          (A) tangible personal property or a product transferred electronically other than the
             682      tangible personal property described in Subsection (64)(a)(ii)(B), the first use of the property
             683      for a purpose for which the property is designed occurs outside of this state; or
             684          (B) a vehicle other than a vehicle sold to an authorized carrier, the vehicle is registered
             685      outside of this state;
             686          (b) the exemption provided for in Subsection (64)(a) does not apply to:
             687          (i) a lease or rental of tangible personal property or a product transferred electronically;
             688      or
             689          (ii) a sale of a vehicle exempt under Subsection (33); and
             690          (c) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for
             691      purposes of Subsection (64)(a), the commission may by rule define what constitutes the
             692      following:
             693          (i) conducting business in this state if that phrase has the same meaning in this
             694      Subsection (64) as in Subsection (24);
             695          (ii) the first use of tangible personal property or a product transferred electronically if
             696      that phrase has the same meaning in this Subsection (64) as in Subsection (24); or
             697          (iii) a purpose for which tangible personal property or a product transferred
             698      electronically is designed if that phrase has the same meaning in this Subsection (64) as in
             699      Subsection (24);
             700          (65) sales of disposable home medical equipment or supplies if:
             701          (a) a person presents a prescription for the disposable home medical equipment or
             702      supplies;
             703          (b) the disposable home medical equipment or supplies are used exclusively by the
             704      person to whom the prescription described in Subsection (65)(a) is issued; and
             705          (c) the disposable home medical equipment and supplies are listed as eligible for
             706      payment under:
             707          (i) Title XVIII, federal Social Security Act; or
             708          (ii) the state plan for medical assistance under Title XIX, federal Social Security Act;
             709          (66) sales:


             710          (a) to a public transit district under Title 17B, Chapter 2a, Part 8, Public Transit
             711      District Act; or
             712          (b) of tangible personal property to a subcontractor of a public transit district, if the
             713      tangible personal property is:
             714          (i) clearly identified; and
             715          (ii) installed or converted to real property owned by the public transit district;
             716          (67) sales of construction materials:
             717          (a) purchased on or after July 1, 2010;
             718          (b) purchased by, on behalf of, or for the benefit of an international airport:
             719          (i) located within a county of the first class; and
             720          (ii) that has a United States customs office on its premises; and
             721          (c) if the construction materials are:
             722          (i) clearly identified;
             723          (ii) segregated; and
             724          (iii) installed or converted to real property:
             725          (A) owned or operated by the international airport described in Subsection (67)(b); and
             726          (B) located at the international airport described in Subsection (67)(b);
             727          (68) sales of construction materials:
             728          (a) purchased on or after July 1, 2008;
             729          (b) purchased by, on behalf of, or for the benefit of a new airport:
             730          (i) located within a county of the second class; and
             731          (ii) that is owned or operated by a city in which an airline as defined in Section
             732      59-2-102 is headquartered; and
             733          (c) if the construction materials are:
             734          (i) clearly identified;
             735          (ii) segregated; and
             736          (iii) installed or converted to real property:
             737          (A) owned or operated by the new airport described in Subsection (68)(b);
             738          (B) located at the new airport described in Subsection (68)(b); and
             739          (C) as part of the construction of the new airport described in Subsection (68)(b); and
             740          (69) sales of fuel to a common carrier that is a railroad for use in a locomotive engine.






Legislative Review Note
    as of 11-25-08 3:37 PM


Office of Legislative Research and General Counsel


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