H.B. 209

             1     

EXTENSION OF SALES AND USE TAX EXEMPTION

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Ryan D. Wilcox

             5     
Senate Sponsor: Peter C. Knudson

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends a sales and use tax exemption.
             10      Highlighted Provisions:
             11          This bill:
             12          .    extends a sales and use tax exemption related to a steel mill.
             13      Money Appropriated in this Bill:
             14          None
             15      Other Special Clauses:
             16          None
             17      Utah Code Sections Affected:
             18      AMENDS:
             19           59-12-104 , as last amended by Laws of Utah 2013, Chapters 82, 223, 229, 234, and 441
             20     
             21      Be it enacted by the Legislature of the state of Utah:
             22          Section 1. Section 59-12-104 is amended to read:
             23           59-12-104. Exemptions.
             24          The following sales and uses are exempt from the taxes imposed by this chapter:
             25          (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
             26      under Chapter 13, Motor and Special Fuel Tax Act;
             27          (2) subject to Section 59-12-104.6 , sales to the state, its institutions, and its political


             28      subdivisions; however, this exemption does not apply to sales of:
             29          (a) construction materials except:
             30          (i) construction materials purchased by or on behalf of institutions of the public
             31      education system as defined in Utah Constitution Article X, Section 2, provided the
             32      construction materials are clearly identified and segregated and installed or converted to real
             33      property which is owned by institutions of the public education system; and
             34          (ii) construction materials purchased by the state, its institutions, or its political
             35      subdivisions which are installed or converted to real property by employees of the state, its
             36      institutions, or its political subdivisions; or
             37          (b) tangible personal property in connection with the construction, operation,
             38      maintenance, repair, or replacement of a project, as defined in Section 11-13-103 , or facilities
             39      providing additional project capacity, as defined in Section 11-13-103 ;
             40          (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
             41          (i) the proceeds of each sale do not exceed $1; and
             42          (ii) the seller or operator of the vending machine reports an amount equal to 150% of
             43      the cost of the item described in Subsection (3)(b) as goods consumed; and
             44          (b) Subsection (3)(a) applies to:
             45          (i) food and food ingredients; or
             46          (ii) prepared food;
             47          (4) (a) sales of the following to a commercial airline carrier for in-flight consumption:
             48          (i) alcoholic beverages;
             49          (ii) food and food ingredients; or
             50          (iii) prepared food;
             51          (b) sales of tangible personal property or a product transferred electronically:
             52          (i) to a passenger;
             53          (ii) by a commercial airline carrier; and
             54          (iii) during a flight for in-flight consumption or in-flight use by the passenger; or
             55          (c) services related to Subsection (4)(a) or (b);
             56          (5) (a) (i) beginning on July 1, 2008, and ending on September 30, 2008, sales of parts
             57      and equipment:
             58          (A) (I) by an establishment described in NAICS Code 336411 or 336412 of the 2002


             59      North American Industry Classification System of the federal Executive Office of the
             60      President, Office of Management and Budget; and
             61          (II) for:
             62          (Aa) installation in an aircraft, including services relating to the installation of parts or
             63      equipment in the aircraft;
             64          (Bb) renovation of an aircraft; or
             65          (Cc) repair of an aircraft; or
             66          (B) for installation in an aircraft operated by a common carrier in interstate or foreign
             67      commerce; or
             68          (ii) beginning on October 1, 2008, sales of parts and equipment for installation in an
             69      aircraft operated by a common carrier in interstate or foreign commerce; and
             70          (b) notwithstanding the time period of Subsection 59-1-1410 (8) for filing for a refund,
             71      a person may claim the exemption allowed by Subsection (5)(a)(i)(B) for a sale by filing for a
             72      refund:
             73          (i) if the sale is made on or after July 1, 2008, but on or before September 30, 2008;
             74          (ii) as if Subsection (5)(a)(i)(B) were in effect on the day on which the sale is made;
             75          (iii) if the person did not claim the exemption allowed by Subsection (5)(a)(i)(B) for
             76      the sale prior to filing for the refund;
             77          (iv) for sales and use taxes paid under this chapter on the sale;
             78          (v) in accordance with Section 59-1-1410 ; and
             79          (vi) subject to any extension allowed for filing for a refund under Section 59-1-1410 , if
             80      the person files for the refund on or before September 30, 2011;
             81          (6) sales of commercials, motion picture films, prerecorded audio program tapes or
             82      records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
             83      exhibitor, distributor, or commercial television or radio broadcaster;
             84          (7) (a) subject to Subsection (7)(b), sales of cleaning or washing of tangible personal
             85      property if the cleaning or washing of the tangible personal property is not assisted cleaning or
             86      washing of tangible personal property;
             87          (b) if a seller that sells at the same business location assisted cleaning or washing of
             88      tangible personal property and cleaning or washing of tangible personal property that is not
             89      assisted cleaning or washing of tangible personal property, the exemption described in


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


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


             152          (ii) the person holds that person out as regularly engaged in the business of selling that
             153      type of tangible personal property or product transferred electronically;
             154          (iii) the person sells an item of tangible personal property or product transferred
             155      electronically that the person purchased as a sale that is exempt under Subsection (25); or
             156          (iv) the sale is of a vehicle or vessel required to be titled or registered under the laws of
             157      this state in which case the tax is based upon:
             158          (A) the bill of sale or other written evidence of value of the vehicle or vessel being
             159      sold; or
             160          (B) in the absence of a bill of sale or other written evidence of value, the fair market
             161      value of the vehicle or vessel being sold at the time of the sale as determined by the
             162      commission; and
             163          (c) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             164      commission shall make rules establishing the circumstances under which:
             165          (i) a person is regularly engaged in the business of selling a type of tangible personal
             166      property or product transferred electronically;
             167          (ii) a sale of tangible personal property or a product transferred electronically is one of
             168      a series of sales of a character to indicate that a person is regularly engaged in the business of
             169      selling that type of tangible personal property or product transferred electronically; or
             170          (iii) a person holds that person out as regularly engaged in the business of selling a type
             171      of tangible personal property or product transferred electronically;
             172          (14) (a) except as provided in Subsection (14)(b), amounts paid or charged on or after
             173      July 1, 2006, for a purchase or lease by a manufacturing facility except for a cogeneration
             174      facility, of the following:
             175          (i) machinery and equipment that:
             176          (A) are used:
             177          (I) for a manufacturing facility except for a manufacturing facility that is a scrap
             178      recycler described in Subsection 59-12-102 (64)(b):
             179          (Aa) in the manufacturing process;
             180          (Bb) to manufacture an item sold as tangible personal property; and
             181          (Cc) beginning on July 1, 2009, in a manufacturing facility described in this Subsection
             182      (14)(a)(i)(A)(I) in the state; or


             183          (II) for a manufacturing facility that is a scrap recycler described in Subsection
             184      59-12-102 (64)(b):
             185          (Aa) to process an item sold as tangible personal property; and
             186          (Bb) beginning on July 1, 2009, in a manufacturing facility described in this Subsection
             187      (14)(a)(i)(A)(II) in the state; and
             188          (B) have an economic life of three or more years; and
             189          (ii) normal operating repair or replacement parts that:
             190          (A) have an economic life of three or more years; and
             191          (B) are used:
             192          (I) for a manufacturing facility except for a manufacturing facility that is a scrap
             193      recycler described in Subsection 59-12-102 (64)(b):
             194          (Aa) in the manufacturing process; and
             195          (Bb) in a manufacturing facility described in this Subsection (14)(a)(ii)(B)(I) in the
             196      state; or
             197          (II) for a manufacturing facility that is a scrap recycler described in Subsection
             198      59-12-102 (64)(b):
             199          (Aa) to process an item sold as tangible personal property; and
             200          (Bb) in a manufacturing facility described in this Subsection (14)(a)(ii)(B)(II) in the
             201      state;
             202          (b) amounts paid or charged on or after July 1, 2005, for a purchase or lease by a
             203      manufacturing facility that is a cogeneration facility placed in service on or after May 1, 2006,
             204      of the following:
             205          (i) machinery and equipment that:
             206          (A) are used:
             207          (I) in the manufacturing process;
             208          (II) to manufacture an item sold as tangible personal property; and
             209          (III) beginning on July 1, 2009, in a manufacturing facility described in this Subsection
             210      (14)(b) in the state; and
             211          (B) have an economic life of three or more years; and
             212          (ii) normal operating repair or replacement parts that:
             213          (A) are used:


             214          (I) in the manufacturing process; and
             215          (II) in a manufacturing facility described in this Subsection (14)(b) in the state; and
             216          (B) have an economic life of three or more years;
             217          (c) amounts paid or charged for a purchase or lease made on or after January 1, 2008,
             218      by an establishment described in NAICS Subsector 212, Mining (except Oil and Gas), or
             219      NAICS Code 213113, Support Activities for Coal Mining, 213114, Support Activities for
             220      Metal Mining, or 213115, Support Activities for Nonmetallic Minerals (except Fuels) Mining,
             221      of the 2002 North American Industry Classification System of the federal Executive Office of
             222      the President, Office of Management and Budget, of the following:
             223          (i) machinery and equipment that:
             224          (A) are used:
             225          (I) (Aa) in the production process, other than the production of real property; or
             226          (Bb) in research and development; and
             227          (II) beginning on July 1, 2009, in an establishment described in this Subsection (14)(c)
             228      in the state; and
             229          (B) have an economic life of three or more years; and
             230          (ii) normal operating repair or replacement parts that:
             231          (A) have an economic life of three or more years; and
             232          (B) are used in:
             233          (I) (Aa) the production process, except for the production of real property; and
             234          (Bb) an establishment described in this Subsection (14)(c) in the state; or
             235          (II) (Aa) research and development; and
             236          (Bb) in an establishment described in this Subsection (14)(c) in the state;
             237          (d) (i) amounts paid or charged for a purchase or lease made on or after July 1, 2010,
             238      but on or before June 30, 2014, by an establishment described in NAICS Code 518112, Web
             239      Search Portals, of the 2002 North American Industry Classification System of the federal
             240      Executive Office of the President, Office of Management and Budget, of the following:
             241          (A) machinery and equipment that:
             242          (I) are used in the operation of the web search portal;
             243          (II) have an economic life of three or more years; and
             244          (III) are used in a new or expanding establishment described in this Subsection (14)(d)


             245      in the state; and
             246          (B) normal operating repair or replacement parts that:
             247          (I) are used in the operation of the web search portal;
             248          (II) have an economic life of three or more years; and
             249          (III) are used in a new or expanding establishment described in this Subsection (14)(d)
             250      in the state; or
             251          (ii) amounts paid or charged for a purchase or lease made on or after July 1, 2014, by
             252      an establishment described in NAICS Code 518112, Web Search Portals, of the 2002 North
             253      American Industry Classification System of the federal Executive Office of the President,
             254      Office of Management and Budget, of the following:
             255          (A) machinery and equipment that:
             256          (I) are used in the operation of the web search portal; and
             257          (II) have an economic life of three or more years; and
             258          (B) normal operating repair or replacement parts that:
             259          (I) are used in the operation of the web search portal; and
             260          (II) have an economic life of three or more years;
             261          (e) for purposes of this Subsection (14) and in accordance with Title 63G, Chapter 3,
             262      Utah Administrative Rulemaking Act, the commission:
             263          (i) shall by rule define the term "establishment"; and
             264          (ii) may by rule define what constitutes:
             265          (A) processing an item sold as tangible personal property;
             266          (B) the production process, except for the production of real property;
             267          (C) research and development; or
             268          (D) a new or expanding establishment described in Subsection (14)(d) in the state; and
             269          (f) on or before October 1, 2011, and every five years after October 1, 2011, the
             270      commission shall:
             271          (i) review the exemptions described in this Subsection (14) and make
             272      recommendations to the Revenue and Taxation Interim Committee concerning whether the
             273      exemptions should be continued, modified, or repealed; and
             274          (ii) include in its report:
             275          (A) an estimate of the cost of the exemptions;


             276          (B) the purpose and effectiveness of the exemptions; and
             277          (C) the benefits of the exemptions to the state;
             278          (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
             279          (i) tooling;
             280          (ii) special tooling;
             281          (iii) support equipment;
             282          (iv) special test equipment; or
             283          (v) parts used in the repairs or renovations of tooling or equipment described in
             284      Subsections (15)(a)(i) through (iv); and
             285          (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
             286          (i) the tooling, equipment, or parts are used or consumed exclusively in the
             287      performance of any aerospace or electronics industry contract with the United States
             288      government or any subcontract under that contract; and
             289          (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),
             290      title to the tooling, equipment, or parts is vested in the United States government as evidenced
             291      by:
             292          (A) a government identification tag placed on the tooling, equipment, or parts; or
             293          (B) listing on a government-approved property record if placing a government
             294      identification tag on the tooling, equipment, or parts is impractical;
             295          (16) sales of newspapers or newspaper subscriptions;
             296          (17) (a) except as provided in Subsection (17)(b), tangible personal property or a
             297      product transferred electronically traded in as full or part payment of the purchase price, except
             298      that for purposes of calculating sales or use tax upon vehicles not sold by a vehicle dealer,
             299      trade-ins are limited to other vehicles only, and the tax is based upon:
             300          (i) the bill of sale or other written evidence of value of the vehicle being sold and the
             301      vehicle being traded in; or
             302          (ii) in the absence of a bill of sale or other written evidence of value, the then existing
             303      fair market value of the vehicle being sold and the vehicle being traded in, as determined by the
             304      commission; and
             305          (b) Subsection (17)(a) does not apply to the following items of tangible personal
             306      property or products transferred electronically traded in as full or part payment of the purchase


             307      price:
             308          (i) money;
             309          (ii) electricity;
             310          (iii) water;
             311          (iv) gas; or
             312          (v) steam;
             313          (18) (a) (i) except as provided in Subsection (18)(b), sales of tangible personal property
             314      or a product transferred electronically used or consumed primarily and directly in farming
             315      operations, regardless of whether the tangible personal property or product transferred
             316      electronically:
             317          (A) becomes part of real estate; or
             318          (B) is installed by a:
             319          (I) farmer;
             320          (II) contractor; or
             321          (III) subcontractor; or
             322          (ii) sales of parts used in the repairs or renovations of tangible personal property or a
             323      product transferred electronically if the tangible personal property or product transferred
             324      electronically is exempt under Subsection (18)(a)(i); and
             325          (b) amounts paid or charged for the following are subject to the taxes imposed by this
             326      chapter:
             327          (i) (A) subject to Subsection (18)(b)(i)(B), the following if used in a manner that is
             328      incidental to farming:
             329          (I) machinery;
             330          (II) equipment;
             331          (III) materials; or
             332          (IV) supplies; and
             333          (B) tangible personal property that is considered to be used in a manner that is
             334      incidental to farming includes:
             335          (I) hand tools; or
             336          (II) maintenance and janitorial equipment and supplies;
             337          (ii) (A) subject to Subsection (18)(b)(ii)(B), tangible personal property or a product


             338      transferred electronically if the tangible personal property or product transferred electronically
             339      is used in an activity other than farming; and
             340          (B) tangible personal property or a product transferred electronically that is considered
             341      to be used in an activity other than farming includes:
             342          (I) office equipment and supplies; or
             343          (II) equipment and supplies used in:
             344          (Aa) the sale or distribution of farm products;
             345          (Bb) research; or
             346          (Cc) transportation; or
             347          (iii) a vehicle required to be registered by the laws of this state during the period
             348      ending two years after the date of the vehicle's purchase;
             349          (19) sales of hay;
             350          (20) exclusive sale during the harvest season of seasonal crops, seedling plants, or
             351      garden, farm, or other agricultural produce if the seasonal crops are, seedling plants are, or
             352      garden, farm, or other agricultural produce is sold by:
             353          (a) the producer of the seasonal crops, seedling plants, or garden, farm, or other
             354      agricultural produce;
             355          (b) an employee of the producer described in Subsection (20)(a); or
             356          (c) a member of the immediate family of the producer described in Subsection (20)(a);
             357          (21) purchases made using a coupon as defined in 7 U.S.C. Sec. 2012 that is issued
             358      under the Food Stamp Program, 7 U.S.C. Sec. 2011 et seq.;
             359          (22) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
             360      nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor,
             361      wholesaler, or retailer for use in packaging tangible personal property to be sold by that
             362      manufacturer, processor, wholesaler, or retailer;
             363          (23) a product stored in the state for resale;
             364          (24) (a) purchases of a product if:
             365          (i) the product is:
             366          (A) purchased outside of this state;
             367          (B) brought into this state:
             368          (I) at any time after the purchase described in Subsection (24)(a)(i)(A); and


             369          (II) by a nonresident person who is not living or working in this state at the time of the
             370      purchase;
             371          (C) used for the personal use or enjoyment of the nonresident person described in
             372      Subsection (24)(a)(i)(B)(II) while that nonresident person is within the state; and
             373          (D) not used in conducting business in this state; and
             374          (ii) for:
             375          (A) a product other than a boat described in Subsection (24)(a)(ii)(B), the first use of
             376      the product for a purpose for which the product is designed occurs outside of this state;
             377          (B) a boat, the boat is registered outside of this state; or
             378          (C) a vehicle other than a vehicle sold to an authorized carrier, the vehicle is registered
             379      outside of this state;
             380          (b) the exemption provided for in Subsection (24)(a) does not apply to:
             381          (i) a lease or rental of a product; or
             382          (ii) a sale of a vehicle exempt under Subsection (33); and
             383          (c) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for
             384      purposes of Subsection (24)(a), the commission may by rule define what constitutes the
             385      following:
             386          (i) conducting business in this state if that phrase has the same meaning in this
             387      Subsection (24) as in Subsection (63);
             388          (ii) the first use of a product if that phrase has the same meaning in this Subsection (24)
             389      as in Subsection (63); or
             390          (iii) a purpose for which a product is designed if that phrase has the same meaning in
             391      this Subsection (24) as in Subsection (63);
             392          (25) a product purchased for resale in this state, in the regular course of business, either
             393      in its original form or as an ingredient or component part of a manufactured or compounded
             394      product;
             395          (26) a product upon which a sales or use tax was paid to some other state, or one of its
             396      subdivisions, except that the state shall be paid any difference between the tax paid and the tax
             397      imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if
             398      the tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax
             399      Act;


             400          (27) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a
             401      person for use in compounding a service taxable under the subsections;
             402          (28) purchases made in accordance with the special supplemental nutrition program for
             403      women, infants, and children established in 42 U.S.C. Sec. 1786;
             404          (29) beginning on July 1, 1999, through June 30, [2014] 2029, sales or leases of rolls,
             405      rollers, refractory brick, electric motors, or other replacement parts used in the furnaces, mills,
             406      or ovens of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial
             407      Classification Manual of the federal Executive Office of the President, Office of Management
             408      and Budget;
             409          (30) sales of a boat of a type required to be registered under Title 73, Chapter 18, State
             410      Boating Act, a boat trailer, or an outboard motor if the boat, boat trailer, or outboard motor is:
             411          (a) not registered in this state; and
             412          (b) (i) not used in this state; or
             413          (ii) used in this state:
             414          (A) if the boat, boat trailer, or outboard motor is not used to conduct business, for a
             415      time period that does not exceed the longer of:
             416          (I) 30 days in any calendar year; or
             417          (II) the time period necessary to transport the boat, boat trailer, or outboard motor to
             418      the borders of this state; or
             419          (B) if the boat, boat trailer, or outboard motor is used to conduct business, for the time
             420      period necessary to transport the boat, boat trailer, or outboard motor to the borders of this
             421      state;
             422          (31) sales of aircraft manufactured in Utah;
             423          (32) amounts paid for the purchase of telecommunications service for purposes of
             424      providing telecommunications service;
             425          (33) sales, leases, or uses of the following:
             426          (a) a vehicle by an authorized carrier; or
             427          (b) tangible personal property that is installed on a vehicle:
             428          (i) sold or leased to or used by an authorized carrier; and
             429          (ii) before the vehicle is placed in service for the first time;
             430          (34) (a) 45% of the sales price of any new manufactured home; and


             431          (b) 100% of the sales price of any used manufactured home;
             432          (35) sales relating to schools and fundraising sales;
             433          (36) sales or rentals of durable medical equipment if:
             434          (a) a person presents a prescription for the durable medical equipment; and
             435          (b) the durable medical equipment is used for home use only;
             436          (37) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
             437      Section 72-11-102 ; and
             438          (b) the commission shall by rule determine the method for calculating sales exempt
             439      under Subsection (37)(a) that are not separately metered and accounted for in utility billings;
             440          (38) sales to a ski resort of:
             441          (a) snowmaking equipment;
             442          (b) ski slope grooming equipment;
             443          (c) passenger ropeways as defined in Section 72-11-102 ; or
             444          (d) parts used in the repairs or renovations of equipment or passenger ropeways
             445      described in Subsections (38)(a) through (c);
             446          (39) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
             447          (40) (a) subject to Subsection (40)(b), sales or rentals of the right to use or operate for
             448      amusement, entertainment, or recreation an unassisted amusement device as defined in Section
             449      59-12-102 ;
             450          (b) if a seller that sells or rents at the same business location the right to use or operate
             451      for amusement, entertainment, or recreation one or more unassisted amusement devices and
             452      one or more assisted amusement devices, the exemption described in Subsection (40)(a)
             453      applies if the seller separately accounts for the sales or rentals of the right to use or operate for
             454      amusement, entertainment, or recreation for the assisted amusement devices; and
             455          (c) for purposes of Subsection (40)(b) and in accordance with Title 63G, Chapter 3,
             456      Utah Administrative Rulemaking Act, the commission may make rules:
             457          (i) governing the circumstances under which sales are at the same business location;
             458      and
             459          (ii) establishing the procedures and requirements for a seller to separately account for
             460      the sales or rentals of the right to use or operate for amusement, entertainment, or recreation for
             461      assisted amusement devices;


             462          (41) (a) sales of photocopies by:
             463          (i) a governmental entity; or
             464          (ii) an entity within the state system of public education, including:
             465          (A) a school; or
             466          (B) the State Board of Education; or
             467          (b) sales of publications by a governmental entity;
             468          (42) amounts paid for admission to an athletic event at an institution of higher
             469      education that is subject to the provisions of Title IX of the Education Amendments of 1972,
             470      20 U.S.C. Sec. 1681 et seq.;
             471          (43) (a) sales made to or by:
             472          (i) an area agency on aging; or
             473          (ii) a senior citizen center owned by a county, city, or town; or
             474          (b) sales made by a senior citizen center that contracts with an area agency on aging;
             475          (44) sales or leases of semiconductor fabricating, processing, research, or development
             476      materials regardless of whether the semiconductor fabricating, processing, research, or
             477      development materials:
             478          (a) actually come into contact with a semiconductor; or
             479          (b) ultimately become incorporated into real property;
             480          (45) an amount paid by or charged to a purchaser for accommodations and services
             481      described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
             482      59-12-104.2 ;
             483          (46) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary
             484      sports event registration certificate in accordance with Section 41-3-306 for the event period
             485      specified on the temporary sports event registration certificate;
             486          (47) (a) sales or uses of electricity, if the sales or uses are made under a tariff adopted
             487      by the Public Service Commission of Utah only for purchase of electricity produced from a
             488      new alternative energy source, as designated in the tariff by the Public Service Commission of
             489      Utah; and
             490          (b) the exemption under Subsection (47)(a) applies to the portion of the tariff rate a
             491      customer pays under the tariff described in Subsection (47)(a) that exceeds the tariff rate under
             492      the tariff described in Subsection (47)(a) that the customer would have paid absent the tariff;


             493          (48) sales or rentals of mobility enhancing equipment if a person presents a
             494      prescription for the mobility enhancing equipment;
             495          (49) sales of water in a:
             496          (a) pipe;
             497          (b) conduit;
             498          (c) ditch; or
             499          (d) reservoir;
             500          (50) sales of currency or coins that constitute legal tender of a state, the United States,
             501      or a foreign nation;
             502          (51) (a) sales of an item described in Subsection (51)(b) if the item:
             503          (i) does not constitute legal tender of a state, the United States, or a foreign nation; and
             504          (ii) has a gold, silver, or platinum content of 50% or more; and
             505          (b) Subsection (51)(a) applies to a gold, silver, or platinum:
             506          (i) ingot;
             507          (ii) bar;
             508          (iii) medallion; or
             509          (iv) decorative coin;
             510          (52) amounts paid on a sale-leaseback transaction;
             511          (53) sales of a prosthetic device:
             512          (a) for use on or in a human; and
             513          (b) (i) for which a prescription is required; or
             514          (ii) if the prosthetic device is purchased by a hospital or other medical facility;
             515          (54) (a) except as provided in Subsection (54)(b), purchases, leases, or rentals of
             516      machinery or equipment by an establishment described in Subsection (54)(c) if the machinery
             517      or equipment is primarily used in the production or postproduction of the following media for
             518      commercial distribution:
             519          (i) a motion picture;
             520          (ii) a television program;
             521          (iii) a movie made for television;
             522          (iv) a music video;
             523          (v) a commercial;


             524          (vi) a documentary; or
             525          (vii) a medium similar to Subsections (54)(a)(i) through (vi) as determined by the
             526      commission by administrative rule made in accordance with Subsection (54)(d); or
             527          (b) purchases, leases, or rentals of machinery or equipment by an establishment
             528      described in Subsection (54)(c) that is used for the production or postproduction of the
             529      following are subject to the taxes imposed by this chapter:
             530          (i) a live musical performance;
             531          (ii) a live news program; or
             532          (iii) a live sporting event;
             533          (c) the following establishments listed in the 1997 North American Industry
             534      Classification System of the federal Executive Office of the President, Office of Management
             535      and Budget, apply to Subsections (54)(a) and (b):
             536          (i) NAICS Code 512110; or
             537          (ii) NAICS Code 51219; and
             538          (d) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             539      commission may by rule:
             540          (i) prescribe what constitutes a medium similar to Subsections (54)(a)(i) through (vi);
             541      or
             542          (ii) define:
             543          (A) "commercial distribution";
             544          (B) "live musical performance";
             545          (C) "live news program"; or
             546          (D) "live sporting event";
             547          (55) (a) leases of seven or more years or purchases made on or after July 1, 2004, but
             548      on or before June 30, 2027, of tangible personal property that:
             549          (i) is leased or purchased for or by a facility that:
             550          (A) is an alternative energy electricity production facility;
             551          (B) is located in the state; and
             552          (C) (I) becomes operational on or after July 1, 2004; or
             553          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             554      2004, as a result of the use of the tangible personal property;


             555          (ii) has an economic life of five or more years; and
             556          (iii) is used to make the facility or the increase in capacity of the facility described in
             557      Subsection (55)(a)(i) operational up to the point of interconnection with an existing
             558      transmission grid including:
             559          (A) a wind turbine;
             560          (B) generating equipment;
             561          (C) a control and monitoring system;
             562          (D) a power line;
             563          (E) substation equipment;
             564          (F) lighting;
             565          (G) fencing;
             566          (H) pipes; or
             567          (I) other equipment used for locating a power line or pole; and
             568          (b) this Subsection (55) does not apply to:
             569          (i) tangible personal property used in construction of:
             570          (A) a new alternative energy electricity production facility; or
             571          (B) the increase in the capacity of an alternative energy electricity production facility;
             572          (ii) contracted services required for construction and routine maintenance activities;
             573      and
             574          (iii) unless the tangible personal property is used or acquired for an increase in capacity
             575      of the facility described in Subsection (55)(a)(i)(C)(II), tangible personal property used or
             576      acquired after:
             577          (A) the alternative energy electricity production facility described in Subsection
             578      (55)(a)(i) is operational as described in Subsection (55)(a)(iii); or
             579          (B) the increased capacity described in Subsection (55)(a)(i) is operational as described
             580      in Subsection (55)(a)(iii);
             581          (56) (a) leases of seven or more years or purchases made on or after July 1, 2004, but
             582      on or before June 30, 2027, of tangible personal property that:
             583          (i) is leased or purchased for or by a facility that:
             584          (A) is a waste energy production facility;
             585          (B) is located in the state; and


             586          (C) (I) becomes operational on or after July 1, 2004; or
             587          (II) has its generation capacity increased by one or more megawatts on or after July 1,
             588      2004, as a result of the use of the tangible personal property;
             589          (ii) has an economic life of five or more years; and
             590          (iii) is used to make the facility or the increase in capacity of the facility described in
             591      Subsection (56)(a)(i) operational up to the point of interconnection with an existing
             592      transmission grid including:
             593          (A) generating equipment;
             594          (B) a control and monitoring system;
             595          (C) a power line;
             596          (D) substation equipment;
             597          (E) lighting;
             598          (F) fencing;
             599          (G) pipes; or
             600          (H) other equipment used for locating a power line or pole; and
             601          (b) this Subsection (56) does not apply to:
             602          (i) tangible personal property used in construction of:
             603          (A) a new waste energy facility; or
             604          (B) the increase in the capacity of a waste energy facility;
             605          (ii) contracted services required for construction and routine maintenance activities;
             606      and
             607          (iii) unless the tangible personal property is used or acquired for an increase in capacity
             608      described in Subsection (56)(a)(i)(C)(II), tangible personal property used or acquired after:
             609          (A) the waste energy facility described in Subsection (56)(a)(i) is operational as
             610      described in Subsection (56)(a)(iii); or
             611          (B) the increased capacity described in Subsection (56)(a)(i) is operational as described
             612      in Subsection (56)(a)(iii);
             613          (57) (a) leases of five or more years or purchases made on or after July 1, 2004 but on
             614      or before June 30, 2027, of tangible personal property that:
             615          (i) is leased or purchased for or by a facility that:
             616          (A) is located in the state;


             617          (B) produces fuel from alternative energy, including:
             618          (I) methanol; or
             619          (II) ethanol; and
             620          (C) (I) becomes operational on or after July 1, 2004; or
             621          (II) has its capacity to produce fuel increase by 25% or more on or after July 1, 2004, as
             622      a result of the installation of the tangible personal property;
             623          (ii) has an economic life of five or more years; and
             624          (iii) is installed on the facility described in Subsection (57)(a)(i);
             625          (b) this Subsection (57) does not apply to:
             626          (i) tangible personal property used in construction of:
             627          (A) a new facility described in Subsection (57)(a)(i); or
             628          (B) the increase in capacity of the facility described in Subsection (57)(a)(i); or
             629          (ii) contracted services required for construction and routine maintenance activities;
             630      and
             631          (iii) unless the tangible personal property is used or acquired for an increase in capacity
             632      described in Subsection (57)(a)(i)(C)(II), tangible personal property used or acquired after:
             633          (A) the facility described in Subsection (57)(a)(i) is operational; or
             634          (B) the increased capacity described in Subsection (57)(a)(i) is operational;
             635          (58) (a) subject to Subsection (58)(b) or (c), sales of tangible personal property or a
             636      product transferred electronically to a person within this state if that tangible personal property
             637      or product transferred electronically is subsequently shipped outside the state and incorporated
             638      pursuant to contract into and becomes a part of real property located outside of this state;
             639          (b) the exemption under Subsection (58)(a) is not allowed to the extent that the other
             640      state or political entity to which the tangible personal property is shipped imposes a sales, use,
             641      gross receipts, or other similar transaction excise tax on the transaction against which the other
             642      state or political entity allows a credit for sales and use taxes imposed by this chapter; and
             643          (c) notwithstanding the time period of Subsection 59-1-1410 (8) for filing for a refund,
             644      a person may claim the exemption allowed by this Subsection (58) for a sale by filing for a
             645      refund:
             646          (i) if the sale is made on or after July 1, 2004, but on or before June 30, 2008;
             647          (ii) as if this Subsection (58) as in effect on July 1, 2008, were in effect on the day on


             648      which the sale is made;
             649          (iii) if the person did not claim the exemption allowed by this Subsection (58) for the
             650      sale prior to filing for the refund;
             651          (iv) for sales and use taxes paid under this chapter on the sale;
             652          (v) in accordance with Section 59-1-1410 ; and
             653          (vi) subject to any extension allowed for filing for a refund under Section 59-1-1410 , if
             654      the person files for the refund on or before June 30, 2011;
             655          (59) purchases:
             656          (a) of one or more of the following items in printed or electronic format:
             657          (i) a list containing information that includes one or more:
             658          (A) names; or
             659          (B) addresses; or
             660          (ii) a database containing information that includes one or more:
             661          (A) names; or
             662          (B) addresses; and
             663          (b) used to send direct mail;
             664          (60) redemptions or repurchases of a product by a person if that product was:
             665          (a) delivered to a pawnbroker as part of a pawn transaction; and
             666          (b) redeemed or repurchased within the time period established in a written agreement
             667      between the person and the pawnbroker for redeeming or repurchasing the product;
             668          (61) (a) purchases or leases of an item described in Subsection (61)(b) if the item:
             669          (i) is purchased or leased by, or on behalf of, a telecommunications service provider;
             670      and
             671          (ii) has a useful economic life of one or more years; and
             672          (b) the following apply to Subsection (61)(a):
             673          (i) telecommunications enabling or facilitating equipment, machinery, or software;
             674          (ii) telecommunications equipment, machinery, or software required for 911 service;
             675          (iii) telecommunications maintenance or repair equipment, machinery, or software;
             676          (iv) telecommunications switching or routing equipment, machinery, or software; or
             677          (v) telecommunications transmission equipment, machinery, or software;
             678          (62) (a) beginning on July 1, 2006, and ending on June 30, 2027, purchases of tangible


             679      personal property or a product transferred electronically that are used in the research and
             680      development of alternative energy technology; and
             681          (b) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             682      commission may, for purposes of Subsection (62)(a), make rules defining what constitutes
             683      purchases of tangible personal property or a product transferred electronically that are used in
             684      the research and development of alternative energy technology;
             685          (63) (a) purchases of tangible personal property or a product transferred electronically
             686      if:
             687          (i) the tangible personal property or product transferred electronically is:
             688          (A) purchased outside of this state;
             689          (B) brought into this state at any time after the purchase described in Subsection
             690      (63)(a)(i)(A); and
             691          (C) used in conducting business in this state; and
             692          (ii) for:
             693          (A) tangible personal property or a product transferred electronically other than the
             694      tangible personal property described in Subsection (63)(a)(ii)(B), the first use of the property
             695      for a purpose for which the property is designed occurs outside of this state; or
             696          (B) a vehicle other than a vehicle sold to an authorized carrier, the vehicle is registered
             697      outside of this state;
             698          (b) the exemption provided for in Subsection (63)(a) does not apply to:
             699          (i) a lease or rental of tangible personal property or a product transferred electronically;
             700      or
             701          (ii) a sale of a vehicle exempt under Subsection (33); and
             702          (c) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for
             703      purposes of Subsection (63)(a), the commission may by rule define what constitutes the
             704      following:
             705          (i) conducting business in this state if that phrase has the same meaning in this
             706      Subsection (63) as in Subsection (24);
             707          (ii) the first use of tangible personal property or a product transferred electronically if
             708      that phrase has the same meaning in this Subsection (63) as in Subsection (24); or
             709          (iii) a purpose for which tangible personal property or a product transferred


             710      electronically is designed if that phrase has the same meaning in this Subsection (63) as in
             711      Subsection (24);
             712          (64) sales of disposable home medical equipment or supplies if:
             713          (a) a person presents a prescription for the disposable home medical equipment or
             714      supplies;
             715          (b) the disposable home medical equipment or supplies are used exclusively by the
             716      person to whom the prescription described in Subsection (64)(a) is issued; and
             717          (c) the disposable home medical equipment and supplies are listed as eligible for
             718      payment under:
             719          (i) Title XVIII, federal Social Security Act; or
             720          (ii) the state plan for medical assistance under Title XIX, federal Social Security Act;
             721          (65) sales:
             722          (a) to a public transit district under Title 17B, Chapter 2a, Part 8, Public Transit
             723      District Act; or
             724          (b) of tangible personal property to a subcontractor of a public transit district, if the
             725      tangible personal property is:
             726          (i) clearly identified; and
             727          (ii) installed or converted to real property owned by the public transit district;
             728          (66) sales of construction materials:
             729          (a) purchased on or after July 1, 2010;
             730          (b) purchased by, on behalf of, or for the benefit of an international airport:
             731          (i) located within a county of the first class; and
             732          (ii) that has a United States customs office on its premises; 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 international airport described in Subsection (66)(b); and
             738          (B) located at the international airport described in Subsection (66)(b);
             739          (67) sales of construction materials:
             740          (a) purchased on or after July 1, 2008;


             741          (b) purchased by, on behalf of, or for the benefit of a new airport:
             742          (i) located within a county of the second class; and
             743          (ii) that is owned or operated by a city in which an airline as defined in Section
             744      59-2-102 is headquartered; and
             745          (c) if the construction materials are:
             746          (i) clearly identified;
             747          (ii) segregated; and
             748          (iii) installed or converted to real property:
             749          (A) owned or operated by the new airport described in Subsection (67)(b);
             750          (B) located at the new airport described in Subsection (67)(b); and
             751          (C) as part of the construction of the new airport described in Subsection (67)(b);
             752          (68) sales of fuel to a common carrier that is a railroad for use in a locomotive engine;
             753          (69) purchases and sales described in Section 63H-4-111 ;
             754          (70) (a) sales of tangible personal property to an aircraft maintenance, repair, and
             755      overhaul provider for use in the maintenance, repair, overhaul, or refurbishment in this state of
             756      a fixed wing turbine powered aircraft if that fixed wing turbine powered aircraft's registration
             757      lists a state or country other than this state as the location of registry of the fixed wing turbine
             758      powered aircraft; or
             759          (b) sales of tangible personal property by an aircraft maintenance, repair, and overhaul
             760      provider in connection with the maintenance, repair, overhaul, or refurbishment in this state of
             761      a fixed wing turbine powered aircraft if that fixed wing turbine powered aircraft's registration
             762      lists a state or country other than this state as the location of registry of the fixed wing turbine
             763      powered aircraft;
             764          (71) subject to Section 59-12-104.4 , sales of a textbook for a higher education course:
             765          (a) to a person admitted to an institution of higher education; and
             766          (b) by a seller, other than a bookstore owned by an institution of higher education, if
             767      51% or more of that seller's sales revenue for the previous calendar quarter are sales of a
             768      textbook for a higher education course;
             769          (72) a license fee or tax a municipality imposes in accordance with Subsection
             770      10-1-203 (5) on a purchaser from a business for which the municipality provides an enhanced
             771      level of municipal services;


             772          (73) amounts paid or charged for construction materials used in the construction of a
             773      new or expanding life science research and development facility in the state, if the construction
             774      materials are:
             775          (a) clearly identified;
             776          (b) segregated; and
             777          (c) installed or converted to real property;
             778          (74) amounts paid or charged for:
             779          (a) a purchase or lease of machinery and equipment that:
             780          (i) are used in performing qualified research:
             781          (A) as defined in Section 59-7-612 ;
             782          (B) in the state; and
             783          (C) with respect to which the purchaser pays or incurs a qualified research expense as
             784      defined in Section 59-7-612 ; and
             785          (ii) have an economic life of three or more years; and
             786          (b) normal operating repair or replacement parts:
             787          (i) for the machinery and equipment described in Subsection (74)(a); and
             788          (ii) that have an economic life of three or more years;
             789          (75) a sale or lease of tangible personal property used in the preparation of prepared
             790      food if:
             791          (a) for a sale:
             792          (i) the ownership of the seller and the ownership of the purchaser are identical; and
             793          (ii) the seller or the purchaser paid a tax under this chapter on the purchase of that
             794      tangible personal property prior to making the sale; or
             795          (b) for a lease:
             796          (i) the ownership of the lessor and the ownership of the lessee are identical; and
             797          (ii) the lessor or the lessee paid a tax under this chapter on the purchase of that tangible
             798      personal property prior to making the lease;
             799          (76) (a) purchases of machinery or equipment if:
             800          (i) the purchaser is an establishment described in NAICS Subsector 713, Amusement,
             801      Gambling, and Recreation Industries, of the 2012 North American Industry Classification
             802      System of the federal Executive Office of the President, Office of Management and Budget;


             803          (ii) the machinery or equipment:
             804          (A) has an economic life of three or more years; and
             805          (B) is used by one or more persons who pay admission or user fees described in
             806      Subsection 59-12-103 (1)(f) to the purchaser of the machinery and equipment; and
             807          (iii) 51% or more of the purchaser's sales revenue for the previous calendar quarter is:
             808          (A) amounts paid or charged as admission or user fees described in Subsection
             809      59-12-103 (1)(f); and
             810          (B) subject to taxation under this chapter;
             811          (b) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             812      commission may make rules for verifying that 51% of a purchaser's sales revenue for the
             813      previous calendar quarter is:
             814          (i) amounts paid or charged as admission or user fees described in Subsection
             815      59-12-103 (1)(f); and
             816          (ii) subject to taxation under this chapter; and
             817          (c) on or before the November 2018 interim meeting, and every five years after the
             818      November 2018 interim meeting, the commission shall review the exemption provided in this
             819      Subsection (76) and report to the Revenue and Taxation Interim Committee on:
             820          (i) the revenue lost to the state and local taxing jurisdictions as a result of the
             821      exemption;
             822          (ii) the purpose and effectiveness of the exemption; and
             823          (iii) whether the exemption benefits the state;
             824          (77) purchases of a short-term lodging consumable by a business that provides
             825      accommodations and services described in Subsection 59-12-103 (1)(i);
             826          (78) amounts paid or charged to access a database:
             827          (a) if the primary purpose for accessing the database is to view or retrieve information
             828      from the database; and
             829          (b) not including amounts paid or charged for a:
             830          (i) digital audiowork;
             831          (ii) digital audio-visual work; or
             832          (iii) digital book;
             833          (79) amounts paid or charged for a purchase or lease made by an electronic financial


             834      payment service, of:
             835          (a) machinery and equipment that:
             836          (i) are used in the operation of the electronic financial payment service; and
             837          (ii) have an economic life of three or more years; and
             838          (b) normal operating repair or replacement parts that:
             839          (i) are used in the operation of the electronic financial payment service; and
             840          (ii) have an economic life of three or more years; and
             841          (80) beginning on April 1, 2013, sales of a fuel cell as defined in Section 54-15-102 .




Legislative Review Note
    as of 1-20-14 10:11 AM


Office of Legislative Research and General Counsel


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