House Bill 4689

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    Florida House of Representatives - 1998                HB 4689

        By Representative Putnam






  1                      A bill to be entitled

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

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

  4         providing that the exemptions for machinery and

  5         equipment used to increase productive output

  6         shall apply to machinery and equipment used in

  7         phosphate or other solid mineral severance,

  8         mining, or processing as a credit against taxes

  9         due under ch. 211, F.S., relating to tax on the

10         severance and production of minerals; providing

11         an effective date.

12

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

14

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

16  212.08, Florida Statutes, is amended to read:

17         212.08  Sales, rental, use, consumption, distribution,

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

19  the rental, the use, the consumption, the distribution, and

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

21  following are hereby specifically exempt from the tax imposed

22  by this chapter.

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

24         (b)  Machinery and equipment used to increase

25  productive output.--

26         1.  Industrial machinery and equipment purchased for

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

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

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

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

31  chapter upon an affirmative showing by the taxpayer to the

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    Florida House of Representatives - 1998                HB 4689

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

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

  3  to the date the business first begins its productive

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

  5  within 12 months of that date.

  6         2.  Industrial machinery and equipment purchased for

  7  use in expanding manufacturing facilities or plant units which

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

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

10  items of tangible personal property at fixed locations in this

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

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

13  affirmative showing by the taxpayer to the satisfaction of the

14  department that such items are used to increase the productive

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

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

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

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

19  The application shall state that a new business exemption or

20  expanded business exemption is being sought. Upon a tentative

21  affirmative determination by the department pursuant to

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

23  such permit.

24         b.  The applicant shall be required to maintain all

25  necessary books and records to support the exemption. Upon

26  completion of purchases of qualified machinery and equipment

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

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

29  the department by certified or registered mail.

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

31  department, it is determined that the machinery and equipment

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    Florida House of Representatives - 1998                HB 4689

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

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

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

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

  5  payable to the department by the business entity, together

  6  with the appropriate interest and penalty, computed from the

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

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

  9  apply for a temporary exemption permit or if the tentative

10  determination by the department required to obtain a temporary

11  exemption permit is negative, a qualifying business entity

12  shall receive the exemption provided in subparagraph 1. or

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

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

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

16  commencement of production has occurred.

17         4.  The department shall promulgate rules governing

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

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

20  manner and form of refund applications and may establish

21  guidelines as to the requisites for an affirmative showing of

22  increased productive output, commencement of production, and

23  qualification for exemption.

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

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

26  electric utility companies, communications companies,

27  phosphate or other solid minerals severance, mining, or

28  processing operations, oil or gas exploration or production

29  operations, publishing firms that do not export at least 50

30  percent of their finished product out of the state, any firm

31  subject to regulation by the Division of Hotels and

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    Florida House of Representatives - 1998                HB 4689

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  1  Restaurants of the Department of Business and Professional

  2  Regulation, or any firm which does not manufacture, process,

  3  compound, or produce for sale, or for exclusive use in

  4  spaceport activities as defined in s. 212.02, items of

  5  tangible personal property. The exemptions provided in

  6  subparagraphs 1. and 2. shall apply to machinery and equipment

  7  purchased for use in phosphate or other solid minerals

  8  severance, mining, or processing operations only by way of a

  9  prospective credit against taxes due under chapter 211 for

10  taxes paid under this chapter on such machinery and equipment.

11         6.  For the purposes of the exemptions provided in

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

13  meanings:

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

15  38 property" as defined in s. 48(a)(1)(A) and (B)(i) of the

16  Internal Revenue Code, provided "industrial machinery and

17  equipment" shall be construed by regulations adopted by the

18  Department of Revenue to mean tangible property used as an

19  integral part of the manufacturing, processing, compounding,

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

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

22  personal property. Such term includes parts and accessories

23  only to the extent that the exemption thereof is consistent

24  with the provisions of this paragraph.

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

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

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

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

29  continuous months immediately following the completion of

30  installation of such machinery or equipment over the output

31  for the 12 continuous months immediately preceding such

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    Florida House of Representatives - 1998                HB 4689

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

  2  period of time would more accurately reflect the increase in

  3  productive output of machinery and equipment purchased to

  4  facilitate an expansion, the increase in productive output may

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

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

  7  Revenue and the expanding business prior to the commencement

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

  9  period begin later than 2 years following the completion of

10  installation of the new machinery and equipment. The units

11  used to measure productive output shall be physically

12  comparable between the two periods, irrespective of sales.

13         7.  Notwithstanding any other provision in this

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

15  provided in this paragraph a taxpayer must register with the

16  WAGES Program Business Registry established by the local WAGES

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

18  registration establishes a commitment on the part of the

19  taxpayer to hire WAGES program participants to the maximum

20  extent possible consistent with the nature of their business.

21         Section 2.  This act shall take effect July 1 of the

22  year in which enacted.

23

24            *****************************************

25                          HOUSE SUMMARY

26
      Provides that the sales tax exemptions for machinery and
27    equipment used to increase productive output shall apply
      to machinery and equipment used in phosphate or other
28    solid mineral severance, mining, or processing as a
      credit against taxes due under ch. 211, F.S., relating to
29    tax on the severance and production of minerals.

30

31

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