Senate Bill 1458c1
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Florida Senate - 2000 CS for SB 1458
By the Committee on Fiscal Resource and Senator King
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1 A bill to be entitled
2 An act relating to tax on sales, use, and other
3 transactions; providing legislative intent;
4 amending s. 212.08, F.S.; revising the amount
5 of the exemption for industrial machinery and
6 equipment used in an expanding business;
7 providing for application of the exemption for
8 repair and labor charges for industrial
9 machinery and equipment to machinery and
10 equipment used to prepare tangible personal
11 property for shipment; providing for such
12 exemption to apply to additional industries;
13 providing for a refund of certain taxes paid;
14 providing an effective date.
15
16 Be It Enacted by the Legislature of the State of Florida:
17
18 Section 1. It is the intent of the Legislature that
19 the manufacturing sector of Florida's economy be viable and
20 competitive in the world marketplace. Furthermore, it is
21 equally important to construct tax policy that both retains
22 manufacturers and recruits them. In that regard, it is the
23 intent of the Legislature to address manufacturing tax issues
24 systematically each year until such equity and parity are
25 accomplished.
26 Section 2. Paragraph (b) of subsection (5) and
27 paragraph (eee) of subsection (7) of section 212.08, Florida
28 Statutes, are amended to read:
29 212.08 Sales, rental, use, consumption, distribution,
30 and storage tax; specified exemptions.--The sale at retail,
31 the rental, the use, the consumption, the distribution, and
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Florida Senate - 2000 CS for SB 1458
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1 the storage to be used or consumed in this state of the
2 following are hereby specifically exempt from the tax imposed
3 by this chapter.
4 (5) EXEMPTIONS; ACCOUNT OF USE.--
5 (b) Machinery and equipment used to increase
6 productive output.--
7 1. Industrial machinery and equipment purchased for
8 exclusive use by a new business in spaceport activities as
9 defined by s. 212.02 or for use in new businesses which
10 manufacture, process, compound, or produce for sale items of
11 tangible personal property at fixed locations are exempt from
12 the tax imposed by this chapter upon an affirmative showing by
13 the taxpayer to the satisfaction of the department that such
14 items are used in a new business in this state. Such purchases
15 must be made prior to the date the business first begins its
16 productive operations, and delivery of the purchased item must
17 be made within 12 months of that date.
18 2.a. Industrial machinery and equipment purchased for
19 exclusive use by an expanding facility which is engaged in
20 spaceport activities as defined by s. 212.02 or for use in
21 expanding manufacturing facilities or plant units which
22 manufacture, process, compound, or produce for sale items of
23 tangible personal property at fixed locations in this state
24 are exempt from any amount of tax imposed by this chapter in
25 excess of $15,000 $50,000 per calendar year upon an
26 affirmative showing by the taxpayer to the satisfaction of the
27 department that such items are used to increase the productive
28 output of such expanded facility or business by not less than
29 10 percent.
30 b. Notwithstanding any other provision of this
31 section, industrial machinery and equipment purchased for use
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Florida Senate - 2000 CS for SB 1458
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1 in expanding printing manufacturing facilities or plant units
2 that manufacture, process, compound, or produce for sale items
3 of tangible personal property at fixed locations in this state
4 are exempt from any amount of tax imposed by this chapter upon
5 an affirmative showing by the taxpayer to the satisfaction of
6 the department that such items are used to increase the
7 productive output of such an expanded business by not less
8 than 10 percent.
9 3.a. To receive an exemption provided by subparagraph
10 1. or subparagraph 2., a qualifying business entity shall
11 apply to the department for a temporary tax exemption permit.
12 The application shall state that a new business exemption or
13 expanded business exemption is being sought. Upon a tentative
14 affirmative determination by the department pursuant to
15 subparagraph 1. or subparagraph 2., the department shall issue
16 such permit.
17 b. The applicant shall be required to maintain all
18 necessary books and records to support the exemption. Upon
19 completion of purchases of qualified machinery and equipment
20 pursuant to subparagraph 1. or subparagraph 2., the temporary
21 tax permit shall be delivered to the department or returned to
22 the department by certified or registered mail.
23 c. If, in a subsequent audit conducted by the
24 department, it is determined that the machinery and equipment
25 purchased as exempt under subparagraph 1. or subparagraph 2.
26 did not meet the criteria mandated by this paragraph or if
27 commencement of production did not occur, the amount of taxes
28 exempted at the time of purchase shall immediately be due and
29 payable to the department by the business entity, together
30 with the appropriate interest and penalty, computed from the
31 date of purchase, in the manner prescribed by this chapter.
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Florida Senate - 2000 CS for SB 1458
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1 d. In the event a qualifying business entity fails to
2 apply for a temporary exemption permit or if the tentative
3 determination by the department required to obtain a temporary
4 exemption permit is negative, a qualifying business entity
5 shall receive the exemption provided in subparagraph 1. or
6 subparagraph 2. through a refund of previously paid taxes. No
7 refund may be made for such taxes unless the criteria mandated
8 by subparagraph 1. or subparagraph 2. have been met and
9 commencement of production has occurred.
10 4. The department shall promulgate rules governing
11 applications for, issuance of, and the form of temporary tax
12 exemption permits; provisions for recapture of taxes; and the
13 manner and form of refund applications and may establish
14 guidelines as to the requisites for an affirmative showing of
15 increased productive output, commencement of production, and
16 qualification for exemption.
17 5. The exemptions provided in subparagraphs 1. and 2.
18 do not apply to machinery or equipment purchased or used by
19 electric utility companies, communications companies, oil or
20 gas exploration or production operations, publishing firms
21 that do not export at least 50 percent of their finished
22 product out of the state, any firm subject to regulation by
23 the Division of Hotels and Restaurants of the Department of
24 Business and Professional Regulation, or any firm which does
25 not manufacture, process, compound, or produce for sale items
26 of tangible personal property or which does not use such
27 machinery and equipment in spaceport activities as required by
28 this paragraph. The exemptions provided in subparagraphs 1.
29 and 2. shall apply to machinery and equipment purchased for
30 use in phosphate or other solid minerals severance, mining, or
31 processing operations only by way of a prospective credit
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1 against taxes due under chapter 211 for taxes paid under this
2 chapter on such machinery and equipment.
3 6. For the purposes of the exemptions provided in
4 subparagraphs 1. and 2., these terms have the following
5 meanings:
6 a. "Industrial machinery and equipment" means "section
7 38 property" as defined in s. 48(a)(1)(A) and (B)(i) of the
8 Internal Revenue Code, provided "industrial machinery and
9 equipment" shall be construed by regulations adopted by the
10 Department of Revenue to mean tangible property used as an
11 integral part of spaceport activities or of the manufacturing,
12 processing, compounding, or producing for sale of items of
13 tangible personal property. Such term includes parts and
14 accessories only to the extent that the exemption thereof is
15 consistent with the provisions of this paragraph.
16 b. "Productive output" means the number of units
17 actually produced by a single plant or operation in a single
18 continuous 12-month period, irrespective of sales. Increases
19 in productive output shall be measured by the output for 12
20 continuous months immediately following the completion of
21 installation of such machinery or equipment over the output
22 for the 12 continuous months immediately preceding such
23 installation. However, if a different 12-month continuous
24 period of time would more accurately reflect the increase in
25 productive output of machinery and equipment purchased to
26 facilitate an expansion, the increase in productive output may
27 be measured during that 12-month continuous period of time if
28 such time period is mutually agreed upon by the Department of
29 Revenue and the expanding business prior to the commencement
30 of production; provided, however, in no case may such time
31 period begin later than 2 years following the completion of
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1 installation of the new machinery and equipment. The units
2 used to measure productive output shall be physically
3 comparable between the two periods, irrespective of sales.
4 7. Notwithstanding any other provision in this
5 paragraph to the contrary, in order to receive the exemption
6 provided in this paragraph a taxpayer must register with the
7 WAGES Program Business Registry established by the local WAGES
8 coalition for the area in which the taxpayer is located. Such
9 registration establishes a commitment on the part of the
10 taxpayer to hire WAGES program participants to the maximum
11 extent possible consistent with the nature of their business.
12 (7) MISCELLANEOUS EXEMPTIONS.--
13 (eee) Certain repair and labor charges.--
14 1. Subject to the provisions of subparagraphs 2. and
15 3., there is exempt from the tax imposed by this chapter all
16 labor charges for the repair of, and parts and materials used
17 in the repair of and incorporated into, industrial machinery
18 and equipment which is used for the manufacture, processing,
19 compounding, or production, or preparation for shipment of
20 items of tangible personal property at a fixed location within
21 this state.
22 2. This exemption applies only to industries
23 classified under SIC Industry Major Group Numbers 10, 12, 13,
24 14, 20, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34,
25 35, 36, 37, 38, and 39 and Industry Group Number 212. As used
26 in this subparagraph, "SIC" means those classifications
27 contained in the Standard Industrial Classification Manual,
28 1987, as published by the Office of Management and Budget,
29 Executive Office of the President.
30 3. This exemption shall be applied as follows:
31
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1 a. Beginning July 1, 1999, 25 percent of such charges
2 for repair parts and labor shall be exempt.
3 b. Beginning July 1, 2000, 50 percent of such charges
4 for repair parts and labor shall be exempt.
5 c. Beginning July 1, 2001, 75 percent of such charges
6 for repair parts and labor shall be exempt.
7 d. Beginning July 1, 2002, 100 percent of such charges
8 for repair parts and labor shall be exempt.
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10 Exemptions provided to any entity by this subsection shall not
11 inure to any transaction otherwise taxable under this chapter
12 when payment is made by a representative or employee of such
13 entity by any means, including, but not limited to, cash,
14 check, or credit card even when that representative or
15 employee is subsequently reimbursed by such entity.
16 Section 3. For the period July 1, 1998, through June
17 30, 1999, every business classified under Industry Group
18 Number 212, which has collected and paid tax imposed by
19 chapter 212 on charges for steam or electrical energy used in
20 the manner provided by section 212.08(7)(ii), Florida
21 Statutes, shall qualify for a refund of said taxes pursuant to
22 sections 213.255 and 215.26, Florida Statutes, or shall be
23 relieved of the requirement to pay such taxes if those taxes
24 have not been collected and paid. It is the intent of the
25 Legislature that this provision shall be applied as if
26 Industry Group Number 212 had never been excluded from this
27 exemption. As used in this paragraph "SIC" means those
28 classifications contained in the Standard Industrial
29 Classification Manual, 1987, as published by the Office of
30 Management and Budget, Executive Office of the President.
31 Section 4. This act shall take effect July 1, 2000.
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Florida Senate - 2000 CS for SB 1458
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1 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
2 SB 1458
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4 1) Lowers the $50,000 threshold for expanding businesses to
$15,000
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2) Includes in the sales tax exemption for repair and labor
6 charges, M&E used for the preparation for shipment of
items of TPP.
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3) Includes SIC code 35 in the exemption, which is
8 clarifying language
9 4) Provides a refund of taxes paid for the period of July
1, 1998, through June 30, 1999, on charges for steam or
10 electrical energy used by Industry Group Number 212, or
if taxes were not collected, such business does not have
11 to pay such taxes. The 1998 Legislature inadvertently
left out Industry Group 212, cigar manufacturers, from
12 the exemption for steam or electricity used in
manufacturing.
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