Senate Bill sb2412c1

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    Florida Senate - 2004                           CS for SB 2412

    By the Committee on Finance and Taxation; and Senators Sebesta
    and Dockery




    314-2344-04

  1                      A bill to be entitled

  2         An act relating to the Florida High-Speed Rail

  3         Authority; amending s. 341.8203, F.S.;

  4         redefining the terms "authority" and

  5         "high-speed rail system"; amending s. 341.840,

  6         F.S.; revising the tax exemption of the

  7         authority and its agents and contractors;

  8         providing for annual redetermination of

  9         eligibility for exemption; providing for

10         recapture of taxes when an exemption is used

11         inappropriately; providing for rules; providing

12         an effective date.

13  

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

15  

16         Section 1.  Subsections (2) and (6) of section

17  341.8203, Florida Statutes, are amended to read:

18         341.8203  Definitions.--As used in this act, unless the

19  context clearly indicates otherwise, the term:

20         (2)  "Authority" means the Florida High-Speed Rail

21  Authority and its agents. However, for purposes of s. 341.840,

22  the term does not include any agent of the authority except as

23  provided in that section.

24         (6)  "High-speed rail system" means any high-speed

25  fixed guideway system for transporting people or goods, which

26  system is capable of operating at speeds in excess of 120

27  miles per hour, including, but not limited to, a monorail

28  system, dual track rail system, suspended rail system,

29  magnetic levitation system, pneumatic repulsion system, or

30  other system approved by the authority. The term includes a

31  corridor and structures essential to the operation of the

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    Florida Senate - 2004                           CS for SB 2412
    314-2344-04




 1  line, including the land, structures, improvements,

 2  rights-of-way, easements, rail lines, rail beds, guideway

 3  structures, stations, platforms, switches, yards, parking

 4  facilities, power relays, switching houses, and rail stations,

 5  associated development, and also includes any other facilities

 6  or equipment used exclusively or useful for the purposes of

 7  high-speed rail system design, construction, operation,

 8  maintenance, or the financing of the high-speed rail system.

 9         Section 2.  Section 341.840, Florida Statutes, is

10  amended to read:

11         341.840  Tax exemption.--

12         (1)  The exercise of the powers granted by this act

13  will be in all respects for the benefit of the people of this

14  state, for the increase of their commerce, welfare, and

15  prosperity, and for the improvement of their health and living

16  conditions., and as The design, construction building,

17  operation, maintenance, and financing of a high-speed rail

18  system by the authority, or its agent, or the owner or lessee

19  thereof, as herein authorized, constitutes the performance of

20  an essential public function.

21         (2)(a)  For the purposes of this section, the term

22  "authority" does not include agents of the authority other

23  than contractors who qualify as such pursuant to subsection

24  (7).

25         (b)  For the purposes of this section, any item or

26  property that is within the definition of "associated

27  development" in s. 341.8203(1) shall not be considered to be

28  part of the high-speed rail system as defined in s.

29  341.8203(6).

30         (3)(a)  Purchases or leases of tangible personal

31  property or real property by the authority, excluding agents

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    Florida Senate - 2004                           CS for SB 2412
    314-2344-04




 1  of the authority, are exempt from taxes imposed by chapter 212

 2  as provided in s. 212.08(6). Purchases or leases of tangible

 3  personal property that is incorporated into the high-speed

 4  rail system as a component part thereof, as determined by the

 5  authority, by agents of the authority or the owner of the

 6  high-speed rail system are exempt from sales or use taxes

 7  imposed by chapter 212. Leases, rentals, or licenses to use

 8  real property granted to agents of the authority or the owner

 9  of the high-speed rail system are exempt from taxes imposed by

10  s. 212.031 if the real property becomes part of such system.

11  The exemptions granted in this subsection do not apply to

12  sales, leases, or licenses by the authority, agents of the

13  authority, or the owner of the high-speed rail system.

14         (b)  The exemption granted in paragraph (a) to

15  purchases or leases of tangible personal property by agents of

16  the authority or by the owner of the high-speed rail system

17  applies only to property that becomes a component part of such

18  system. It does not apply to items, including, but not limited

19  to, cranes, bulldozers, forklifts, other machinery and

20  equipment, tools and supplies, or other items of tangible

21  personal property used in the construction, operation, or

22  maintenance of the high-speed rail system when such items are

23  not incorporated into the high-speed rail system as a

24  component part thereof.

25         (4)  Any bonds or other, neither the authority, its

26  agent, nor the owner of such system shall be required to pay

27  any taxes or assessments upon or in respect to the system or

28  any property acquired or used by the authority, its agent, or

29  such owner under the provisions of this act or upon the income

30  therefrom, any security, and all notes, mortgages, security

31  agreements, letters of credit, or other instruments that arise

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    Florida Senate - 2004                           CS for SB 2412
    314-2344-04




 1  out of or are given to secure the repayment of bonds or other

 2  security, issued by the authority, or on behalf of the

 3  authority therefor, their transfer, and the income therefrom,

 4  including any profit made on the sale thereof, shall at all

 5  times be free from taxation of every kind by the state, the

 6  counties, and the municipalities and other political

 7  subdivisions in the state. This subsection, however, does not

 8  exempt from taxation or assessment the leasehold interest of a

 9  lessee in any project or any other property or interest owned

10  by the lessee. The exemption granted by this subsection is not

11  applicable to any tax imposed by chapter 220 on interest

12  income or profits on the sale of debt obligations owned by

13  corporations.

14         (5)  When property of the authority is leased to

15  another person or entity, the property shall be exempt from ad

16  valorem taxation only if the use by the lessee qualifies the

17  property for exemption under s. 196.199.

18         (6)  A leasehold interest held by the authority is not

19  subject to intangible tax. However, if a leasehold interest

20  held by the authority is subleased to a nongovernmental

21  lessee, such subleasehold interest shall be deemed to be an

22  interest described in s. 199.023(1)(d), and is subject to the

23  intangible tax.

24         (7)(a)  In order to be considered an agent of the

25  authority for purposes of the exemption from sales and use tax

26  granted by subsection (3) for tangible personal property

27  incorporated into the high-speed rail system, a contractor of

28  the authority that purchases or fabricates such tangible

29  personal property must be certified by the authority as

30  provided in this subsection.

31  

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    Florida Senate - 2004                           CS for SB 2412
    314-2344-04




 1         (b)1.  A contractor must apply for a renewal of the

 2  exemption not later than December 1 of each calendar year.

 3         2.  A contractor must apply to the authority on the

 4  application form adopted by the authority, which shall develop

 5  the form in consultation with the Department of Revenue.

 6         3.  The authority shall review each submitted

 7  application and determine whether it is complete. The

 8  authority shall notify the applicant of any deficiencies in

 9  the application within 30 days. Upon receipt of a completed

10  application, the authority shall evaluate the application for

11  exemption under this subsection and issue a certification that

12  the contractor is qualified to act as an agent of the

13  authority for purposes of this section or a denial of such

14  certification within 30 days. The authority shall provide the

15  Department of Revenue with a copy of each certification issued

16  upon approval of an application. Upon receipt of a

17  certification from the authority, the Department of Revenue

18  shall issue an exemption permit to the contractor.

19         (c)1.  The contractor may extend a copy of its

20  exemption permit to its vendors in lieu of paying sales tax on

21  purchases of tangible personal property qualifying for

22  exemption under this section. Possession of a copy of the

23  exemption permit relieves the seller of the responsibility of

24  collecting tax on the sale, and the Department of Revenue

25  shall look solely to the contractor for recovery of tax upon a

26  determination that the contractor was not entitled to the

27  exemption.

28         2.  The contractor may extend a copy of its exemption

29  permit to real property subcontractors supplying and

30  installing tangible personal property that is exempt under

31  subsection (3). Any such subcontractor is authorized to extend

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    Florida Senate - 2004                           CS for SB 2412
    314-2344-04




 1  a copy of the permit to the subcontractor's vendors in order

 2  to purchase qualifying tangible personal property tax-exempt.

 3  If the subcontractor uses the exemption permit to purchase

 4  tangible personal property that is determined not to qualify

 5  for exemption under subsection (3), the Department of Revenue

 6  may assess and collect any tax, penalties, and interest that

 7  are due from either the contractor holding the exemption

 8  permit or the subcontractor that extended the exemption permit

 9  to the seller.

10         (d)  Any contractor authorized to act as an agent of

11  the authority under this section shall maintain the necessary

12  books and records to document the exempt status of purchases

13  and fabrication costs made or incurred under the permit. In

14  addition, an authorized contractor extending its exemption

15  permit to its subcontractors shall maintain a copy of the

16  subcontractor's books, records, and invoices indicating all

17  purchases made by the subcontractor under the authorized

18  contractor's permit. If, in an audit conducted by the

19  Department of Revenue, it is determined that tangible personal

20  property purchased or fabricated claiming exemption under this

21  section does not meet the criteria for exemption, the amount

22  of taxes not paid at the time of purchase or fabrication shall

23  be immediately due and payable to the Department of Revenue,

24  together with the appropriate interest and penalty, computed

25  from the date of purchase, in the manner prescribed by chapter

26  212.

27         (e)  If a contractor fails to apply for a high-speed

28  rail system exemption permit, or if a contractor initially

29  determined by the authority to not qualify for exemption is

30  subsequently determined to be eligible, the contractor shall

31  receive the benefit of the exemption in this subsection

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    Florida Senate - 2004                           CS for SB 2412
    314-2344-04




 1  through a refund of previously paid taxes for transactions

 2  that otherwise would have been exempt. A refund may not be

 3  made for such taxes without the issuance of a certification by

 4  the authority that the contractor was authorized to make

 5  purchases tax-exempt and a determination by the Department of

 6  Revenue that the purchases qualified for the exemption.

 7         (f)  The authority may adopt rules governing the

 8  application process for exemption of a contractor as an

 9  authorized agent of the authority.

10         (g)  The Department of Revenue may adopt rules

11  governing the issuance and form of high-speed rail system

12  exemption permits, the audit of contractors and subcontractors

13  using such permits, the recapture of taxes on nonqualified

14  purchases, and the manner and form of refund applications.

15         Section 3.  This act shall take effect January 1, 2005.

16  

17          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
18                             SB 2412

19                                 

20  The committee substitute corrected an incorrect cross
    reference in the bill.
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