Senate Bill 1360

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    Florida Senate - 1998                                  SB 1360

    By Senator McKay





    26-787-98

  1                      A bill to be entitled

  2         An act relating to the tax on sales, use, and

  3         other transactions; amending s. 212.08, F.S.;

  4         providing that an exemption from the tax

  5         applies to machinery and equipment purchased

  6         for use in phosphate severance, mining, or

  7         processing operations under specified

  8         conditions; providing an effective date.

  9

10  Be It Enacted by the Legislature of the State of Florida:

11

12         Section 1.  Paragraph (b) of subsection (5) of section

13  212.08, Florida Statutes, is amended to read:

14         212.08  Sales, rental, use, consumption, distribution,

15  and storage tax; specified exemptions.--The sale at retail,

16  the rental, the use, the consumption, the distribution, and

17  the storage to be used or consumed in this state of the

18  following are hereby specifically exempt from the tax imposed

19  by this chapter.

20         (5)  EXEMPTIONS; ACCOUNT OF USE.--

21         (b)  Machinery and equipment used to increase

22  productive output.--

23         1.  Industrial machinery and equipment purchased for

24  use in new businesses which manufacture, process, compound, or

25  produce for sale, or for exclusive use in spaceport activities

26  as defined in s. 212.02, items of tangible personal property

27  at fixed locations are exempt from the tax imposed by this

28  chapter upon an affirmative showing by the taxpayer to the

29  satisfaction of the department that such items are used in a

30  new business in this state. Such purchases must be made prior

31  to the date the business first begins its productive

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    Florida Senate - 1998                                  SB 1360
    26-787-98




  1  operations, and delivery of the purchased item must be made

  2  within 12 months of that date.

  3         2.  Industrial machinery and equipment purchased for

  4  use in expanding manufacturing facilities or plant units which

  5  manufacture, process, compound, or produce for sale, or for

  6  exclusive use in spaceport activities as defined in s. 212.02,

  7  items of tangible personal property at fixed locations in this

  8  state are exempt from any amount of tax imposed by this

  9  chapter in excess of $50,000 per calendar year upon an

10  affirmative showing by the taxpayer to the satisfaction of the

11  department that such items are used to increase the productive

12  output of such expanded business by not less than 10 percent.

13         3.a.  To receive an exemption provided by subparagraph

14  1. or subparagraph 2., a qualifying business entity shall

15  apply to the department for a temporary tax exemption permit.

16  The application shall state that a new business exemption or

17  expanded business exemption is being sought. Upon a tentative

18  affirmative determination by the department pursuant to

19  subparagraph 1. or subparagraph 2., the department shall issue

20  such permit.

21         b.  The applicant shall be required to maintain all

22  necessary books and records to support the exemption. Upon

23  completion of purchases of qualified machinery and equipment

24  pursuant to subparagraph 1. or subparagraph 2., the temporary

25  tax permit shall be delivered to the department or returned to

26  the department by certified or registered mail.

27         c.  If, in a subsequent audit conducted by the

28  department, it is determined that the machinery and equipment

29  purchased as exempt under subparagraph 1. or subparagraph 2.

30  did not meet the criteria mandated by this paragraph or if

31  commencement of production did not occur, the amount of taxes

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    Florida Senate - 1998                                  SB 1360
    26-787-98




  1  exempted at the time of purchase shall immediately be due and

  2  payable to the department by the business entity, together

  3  with the appropriate interest and penalty, computed from the

  4  date of purchase, in the manner prescribed by this chapter.

  5         d.  In the event a qualifying business entity fails to

  6  apply for a temporary exemption permit or if the tentative

  7  determination by the department required to obtain a temporary

  8  exemption permit is negative, a qualifying business entity

  9  shall receive the exemption provided in subparagraph 1. or

10  subparagraph 2. through a refund of previously paid taxes. No

11  refund may be made for such taxes unless the criteria mandated

12  by subparagraph 1. or subparagraph 2. have been met and

13  commencement of production has occurred.

14         4.  The department shall promulgate rules governing

15  applications for, issuance of, and the form of temporary tax

16  exemption permits; provisions for recapture of taxes; and the

17  manner and form of refund applications and may establish

18  guidelines as to the requisites for an affirmative showing of

19  increased productive output, commencement of production, and

20  qualification for exemption.

21         5.  The exemptions provided in subparagraphs 1. and 2.

22  do not apply to machinery or equipment purchased or used by

23  electric utility companies, communications companies,

24  phosphate or other solid minerals (not including phosphate)

25  severance, mining, or processing operations, oil or gas

26  exploration or production operations, publishing firms that do

27  not export at least 50 percent of their finished product out

28  of the state, any firm subject to regulation by the Division

29  of Hotels and Restaurants of the Department of Business and

30  Professional Regulation, or any firm which does not

31  manufacture, process, compound, or produce for sale, or for

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    Florida Senate - 1998                                  SB 1360
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  1  exclusive use in spaceport activities as defined in s. 212.02,

  2  items of tangible personal property. The exemptions provided

  3  in subparagraphs 1. and 2. apply to machinery and equipment

  4  purchased for use in phosphate severance, mining, or

  5  processing operations only by way of a prospective credit

  6  against taxes due under chapter 211 for taxes paid under this

  7  chapter on such machinery and equipment.

  8         6.  For the purposes of the exemptions provided in

  9  subparagraphs 1. and 2., these terms have the following

10  meanings:

11         a.  "Industrial machinery and equipment" means "section

12  38 property" as defined in s. 48(a)(1)(A) and (B)(i) of the

13  Internal Revenue Code, provided "industrial machinery and

14  equipment" shall be construed by regulations adopted by the

15  Department of Revenue to mean tangible property used as an

16  integral part of the manufacturing, processing, compounding,

17  or producing for sale, or for exclusive use in spaceport

18  activities as defined in s. 212.02, of items of tangible

19  personal property. Such term includes parts and accessories

20  only to the extent that the exemption thereof is consistent

21  with the provisions of this paragraph.

22         b.  "Productive output" means the number of units

23  actually produced by a single plant or operation in a single

24  continuous 12-month period, irrespective of sales. Increases

25  in productive output shall be measured by the output for 12

26  continuous months immediately following the completion of

27  installation of such machinery or equipment over the output

28  for the 12 continuous months immediately preceding such

29  installation. However, if a different 12-month continuous

30  period of time would more accurately reflect the increase in

31  productive output of machinery and equipment purchased to

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    Florida Senate - 1998                                  SB 1360
    26-787-98




  1  facilitate an expansion, the increase in productive output may

  2  be measured during that 12-month continuous period of time if

  3  such time period is mutually agreed upon by the Department of

  4  Revenue and the expanding business prior to the commencement

  5  of production; provided, however, in no case may such time

  6  period begin later than 2 years following the completion of

  7  installation of the new machinery and equipment. The units

  8  used to measure productive output shall be physically

  9  comparable between the two periods, irrespective of sales.

10         7.  Notwithstanding any other provision in this

11  paragraph to the contrary, in order to receive the exemption

12  provided in this paragraph a taxpayer must register with the

13  WAGES Program Business Registry established by the local WAGES

14  coalition for the area in which the taxpayer is located.  Such

15  registration establishes a commitment on the part of the

16  taxpayer to hire WAGES program participants to the maximum

17  extent possible consistent with the nature of their business.

18         Section 2.  This act shall take effect July 1, 1998.

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21                          SENATE SUMMARY

22    Provides that exemption from the tax on sales, use, and
      other transactions applies to machinery and equipment
23    purchased for use in phosphate severance, mining, or
      processing operations in the form of a credit against
24    taxes due under ch. 211, F.S., for taxes paid under ch.
      212, F.S.
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