Senate Bill 1604c1

CODING: Words stricken are deletions; words underlined are additions.



    Florida Senate - 2000                           CS for SB 1604

    By the Committee on Fiscal Resource and Senators Sullivan,
    Webster, Saunders, Bronson and Kurth




    314-2204-00

  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         revising an exemption from taxation for

  5         machinery and equipment used in

  6         silicon-technology production and research and

  7         development; making the exemption applicable to

  8         semiconductor-technology production and

  9         research and development; providing an

10         exemption from taxation for building materials

11         purchased for use in manufacturing or expanding

12         clean rooms for semiconductor-manufacturing

13         facilities; revising definitions; revising

14         criteria and procedures; providing a partial

15         exemption for machinery and equipment for use

16         in defense and space technology research and

17         development and production; providing

18         definitions; providing an effective date.

19

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

21

22         Section 1.  Paragraph (j) of subsection (5) of section

23  212.08, Florida Statutes, is amended to read:

24         212.08  Sales, rental, use, consumption, distribution,

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

26  the rental, the use, the consumption, the distribution, and

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

28  following are hereby specifically exempt from the tax imposed

29  by this chapter.

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

31

                                  1

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                           CS for SB 1604
    314-2204-00




  1         (j)  Machinery and equipment used in semiconductor,

  2  defense, or space silicon technology production and research

  3  and development.--

  4         1.a.  Industrial machinery and equipment used purchased

  5  for use in semiconductor silicon technology facilities

  6  certified under subparagraph 6. 5. to manufacture, process,

  7  compound, or produce semiconductor silicon technology products

  8  for sale or for use by these facilities are exempt from the

  9  tax imposed by this chapter. For purposes of this paragraph,

10  industrial machinery and equipment includes molds, dies,

11  machine tooling, other appurtenances or accessories to

12  machinery and equipment, testing equipment, test beds,

13  computers, and software, whether purchased or self-fabricated,

14  and, if self-fabricated, includes materials and labor for

15  design, fabrication, and assembly.

16         b.  Industrial machinery and equipment used in defense

17  or space technology facilities certified under subparagraph 6.

18  to manufacture, process, compound, or produce defense

19  technology products or space technology products for sale or

20  for use by these facilities are exempt from 25 percent of the

21  tax imposed by this chapter.

22         2.a.  Machinery and equipment are exempt from the tax

23  imposed by this chapter if used purchased for use

24  predominately in semiconductor silicon wafer research and

25  development activities in a semiconductor silicon technology

26  research and development facility certified under subparagraph

27  6. 5. For purposes of this paragraph, machinery and equipment

28  includes molds, dies, machine tooling, other appurtenances or

29  accessories to machinery and equipment, testing equipment,

30  test beds, computers, and software, whether purchased or

31

                                  2

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                           CS for SB 1604
    314-2204-00




  1  self-fabricated, and, if self-fabricated, includes materials

  2  and labor for design, fabrication, and assembly.

  3         b.  Machinery and equipment are exempt from 25 percent

  4  of the tax imposed by this chapter if used predominately in

  5  defense or space research and development activities in a

  6  defense or space technology research and development facility

  7  certified under subparagraph 6.

  8         3.  Building materials purchased for use in

  9  manufacturing or expanding clean rooms in

10  semiconductor-manufacturing facilities are exempt from the tax

11  imposed by this chapter.

12         4.3.  In addition to meeting the criteria mandated by

13  subparagraph 1., or subparagraph 2., or subparagraph 3., a

14  business must be certified by the Office of Tourism, Trade,

15  and Economic Development as authorized in this paragraph in

16  order to qualify for exemption under this paragraph.

17         5.4.  For items purchased tax exempt pursuant to this

18  paragraph, possession of a written certification from the

19  purchaser, certifying the purchaser's entitlement to exemption

20  pursuant to this paragraph, relieves the seller of the

21  responsibility of collecting the tax on the sale of such

22  items, and the department shall look solely to the purchaser

23  for recovery of tax if it determines that the purchaser was

24  not entitled to the exemption.

25         6.5.a.  To be eligible to receive the exemption

26  provided by subparagraph 1., or subparagraph 2., or

27  subparagraph 3., a qualifying business entity shall apply to

28  Enterprise Florida, Inc. The application shall be developed by

29  the Office of Tourism, Trade, and Economic Development in

30  consultation with Enterprise Florida, Inc.

31

                                  3

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                           CS for SB 1604
    314-2204-00




  1         b.  Enterprise Florida, Inc., shall review each

  2  submitted application and information and determine whether or

  3  not the application is complete within 5 working days. Once an

  4  application is complete, Enterprise Florida, Inc., shall,

  5  within 10 working days, evaluate the application and recommend

  6  approval or disapproval of the application to the Office of

  7  Tourism, Trade, and Economic Development.

  8         c.  Upon receipt of the application and recommendation

  9  from Enterprise Florida, Inc., the Office of Tourism, Trade,

10  and Economic Development shall certify within 5 working days

11  those applicants who are found to meet the requirements of

12  this section and notify the applicant, Enterprise Florida,

13  Inc., and the department of the certification. If the Office

14  of Tourism, Trade, and Economic Development finds that the

15  applicant does not meet the requirements of this section, it

16  shall notify the applicant and Enterprise Florida, Inc.,

17  within 10 working days that the application for certification

18  has been denied and the reasons for denial. The Office of

19  Tourism, Trade, and Economic Development has final approval

20  authority for certification under this section.

21         7.6.a.  A business certified to receive this exemption

22  may apply once each year for the exemption.

23         b.  The first claim submitted by a business may include

24  all eligible expenditures made after the date the business was

25  certified.

26         b.c.  To apply for the annual exemption, the business

27  shall submit a claim to the Office of Tourism, Trade, and

28  Economic Development, which claim indicates and documents the

29  sales and use taxes otherwise payable on eligible machinery

30  and equipment. The application claim must also indicate, for

31  program evaluation purposes only, the average number of

                                  4

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                           CS for SB 1604
    314-2204-00




  1  full-time equivalent employees at the facility over the

  2  preceding calendar year, the average wage and benefits paid to

  3  those employees over the preceding calendar year, and the

  4  total investment made in real and tangible personal property

  5  over the preceding calendar year, and the total value of

  6  tax-exempt purchases and taxes exempted during the previous

  7  year or, for the first claim submitted, since the date of

  8  certification. The department shall assist the Office of

  9  Tourism, Trade, and Economic Development in evaluating and

10  verifying information provided in the application for

11  exemption.

12         c.d.  The Office of Tourism, Trade, and Economic

13  Development may use the information reported on the

14  application claims for evaluation purposes only and shall

15  prepare an annual report on the exemption program and its cost

16  and impact. The annual report for the preceding fiscal year

17  shall be submitted to the Governor, the President of the

18  Senate, and the Speaker of the House of Representatives by

19  September 30 of each fiscal year. This report may be submitted

20  in conjunction with the annual report required in s.

21  288.095(3)(c).

22         8.7.  A business certified to receive this exemption

23  may elect to designate one or more state universities or

24  community colleges as recipients of up to 100 percent of the

25  amount of the exemption for which they may qualify. To receive

26  these funds, the institution must agree to match the funds so

27  earned with equivalent cash, programs, services, or other

28  in-kind support on a one-to-one basis in the pursuit of

29  research and development projects as requested by the

30  certified business. The rights to any patents, royalties, or

31  real or intellectual property must be vested in the business

                                  5

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                           CS for SB 1604
    314-2204-00




  1  unless otherwise agreed to by the business and the university

  2  or community college.

  3         9.8.  As used in this paragraph, the term:

  4         a.  "Predominately" means at least 50 percent of the

  5  time in qualifying research and development.

  6         b.  "Research and development" means basic and applied

  7  research in the science or engineering, as well as the design,

  8  development, and testing of prototypes or processes of new or

  9  improved products. Research and development does not include

10  market research, routine consumer product testing, sales

11  research, research in the social sciences or psychology,

12  nontechnological activities, or technical services.

13         c.  "Semiconductor Silicon technology products" means

14  raw semiconductor silicon wafers or semiconductor thin films

15  that are transformed into semiconductor memory or logic

16  wafers, including wafers containing mixed memory and logic

17  circuits; related assembly and test operations; active-matrix

18  flat panel displays; semiconductor chips; semiconductor

19  lasers; optoelectronic elements; and related semiconductor

20  silicon technology products as determined by the Office of

21  Tourism, Trade, and Economic Development.

22         d.  "Clean rooms" means manufacturing facilities

23  enclosed in a manner that meets the clean manufacturing

24  requirements necessary for high-technology

25  semiconductor-manufacturing environments.

26         e.  "Defense technology products" means products that

27  have a military application, including, but not limited to,

28  weapons, weapons systems, guidance systems, surveillance

29  systems, communications or information systems, munitions,

30  aircraft, vessels, or boats, or components thereof, which are

31  intended for military use and manufactured in performance of a

                                  6

CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                           CS for SB 1604
    314-2204-00




  1  contract with the United States Department of Defense or the

  2  military branch of a recognized foreign government or a

  3  subcontract thereunder which relates to matters of national

  4  defense.

  5         f.  "Space technology products" means products that are

  6  specifically designed or manufactured for application in space

  7  activities, including, but not limited to, space launch

  8  vehicles, missiles, satellites or research payloads, avionics,

  9  and associated control systems and processing systems. The

10  term does not include products that are designed or

11  manufactured for general commercial aviation or other uses

12  even though those products may also serve an incidental use in

13  space applications.

14         Section 2.  This act shall take effect January 1, 2001.

15

16          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
17                             SB 1604

18

19  The Committee Substitute made the following changes to SB
    1604:
20
    1)    Reduces the sales tax exemption for M&E used in defense
21        or space technology and R&D to 25%

22  2)    Replaces the term "silicon" with "semiconductor" for the
          sales tax exemption for M&E used in silicon technology
23        production. Semiconductor is the modern term for silicon
          technology. Includes building materials for use in
24        manufacturing or expanding "clean rooms" in the
          exemption. Also cleans up some out dated language in s.
25        212.08(5)(j).

26  3)    Tightens the definitions of "industrial machinery and
          equipment"  for use in silicon, defense, or space
27        technology production.

28  4)    Tightens the definition of "space technology products".

29  5)    Tightens the definitions of "machinery and equipment"
          used predominately in silicon wafer, defense, or space
30        research and development activities.

31

                                  7