HB 0873

CS

CHAMBER ACTION

1	The Committee on Commerce recommends the following:
2
3	Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to the sales tax exemption for machinery
7	and equipment used to increase productive output; amending
8	s. 212.08, F.S.; deleting a limitation on an exemption
9	from the sales tax for such machinery and equipment each
10	year; deleting an exemption for such machinery and
11	equipment used to expand certain printing manufacturing
12	facilities or plant units; providing an effective date.
13
14	Be It Enacted by the Legislature of the State of Florida:
15
16	Section 1.  Paragraph (b) of subsection (5) of section
17	212.08, Florida Statutes, is amended to read:
18	212.08  Sales, rental, use, consumption, distribution, and
19	storage tax; specified exemptions.--The sale at retail, the
20	rental, the use, the consumption, the distribution, and the
21	storage to be used or consumed in this state of the following
22	are hereby specifically exempt from the tax imposed by this
23	chapter.
24	(5)  EXEMPTIONS; ACCOUNT OF USE.--
25	(b)  Machinery and equipment used to increase productive
26	output.--
27	1.  Industrial machinery and equipment purchased for
28	exclusive use by a new business in spaceport activities as
29	defined by s. 212.02 or for use in new businesses which
30	manufacture, process, compound, or produce for sale items of
31	tangible personal property at fixed locations are exempt from
32	the tax imposed by this chapter upon an affirmative showing by
33	the taxpayer to the satisfaction of the department that such
34	items are used in a new business in this state. Such purchases
35	must be made prior to the date the business first begins its
36	productive operations, and delivery of the purchased item must
37	be made within 12 months of that date.
38	2.a.  Industrial machinery and equipment purchased for
39	exclusive use by an expanding facility which is engaged in
40	spaceport activities as defined by s. 212.02 or for use in
41	expanding manufacturing facilities or plant units which
42	manufacture, process, compound, or produce for sale items of
43	tangible personal property at fixed locations in this state are
44	exempt from any amount of tax imposed by this chapter in excess
45	of $50,000 per calendar year upon an affirmative showing by the
46	taxpayer to the satisfaction of the department that such items
47	are used to increase the productive output of such expanded
48	facility or business by not less than 10 percent.
49	b.  Notwithstanding any other provision of this section,
50	industrial machinery and equipment purchased for use in
51	expanding printing manufacturing facilities or plant units that
52	manufacture, process, compound, or produce for sale items of
53	tangible personal property at fixed locations in this state are
54	exempt from any amount of tax imposed by this chapter upon an
55	affirmative showing by the taxpayer to the satisfaction of the
56	department that such items are used to increase the productive
57	output of such an expanded business by not less than 10 percent.
58	3.a.  To receive an exemption provided by subparagraph 1.
59	or subparagraph 2., a qualifying business entity shall apply to
60	the department for a temporary tax exemption permit. The
61	application shall state that a new business exemption or
62	expanded business exemption is being sought. Upon a tentative
63	affirmative determination by the department pursuant to
64	subparagraph 1. or subparagraph 2., the department shall issue
65	such permit.
66	b.  The applicant shall be required to maintain all
67	necessary books and records to support the exemption. Upon
68	completion of purchases of qualified machinery and equipment
69	pursuant to subparagraph 1. or subparagraph 2., the temporary
70	tax permit shall be delivered to the department or returned to
71	the department by certified or registered mail.
72	c.  If, in a subsequent audit conducted by the department,
73	it is determined that the machinery and equipment purchased as
74	exempt under subparagraph 1. or subparagraph 2. did not meet the
75	criteria mandated by this paragraph or if commencement of
76	production did not occur, the amount of taxes exempted at the
77	time of purchase shall immediately be due and payable to the
78	department by the business entity, together with the appropriate
79	interest and penalty, computed from the date of purchase, in the
80	manner prescribed by this chapter.
81	d.  In the event a qualifying business entity fails to
82	apply for a temporary exemption permit or if the tentative
83	determination by the department required to obtain a temporary
84	exemption permit is negative, a qualifying business entity shall
85	receive the exemption provided in subparagraph 1. or
86	subparagraph 2. through a refund of previously paid taxes. No
87	refund may be made for such taxes unless the criteria mandated
88	by subparagraph 1. or subparagraph 2. have been met and
89	commencement of production has occurred.
90	4.  The department shall adopt rules governing applications
91	for, issuance of, and the form of temporary tax exemption
92	permits; provisions for recapture of taxes; and the manner and
93	form of refund applications and may establish guidelines as to
94	the requisites for an affirmative showing of increased
95	productive output, commencement of production, and qualification
96	for exemption.
97	5.  The exemptions provided in subparagraphs 1. and 2. do
98	not apply to machinery or equipment purchased or used by
99	electric utility companies, communications companies, oil or gas
100	exploration or production operations, publishing firms that do
101	not export at least 50 percent of their finished product out of
102	the state, any firm subject to regulation by the Division of
103	Hotels and Restaurants of the Department of Business and
104	Professional Regulation, or any firm which does not manufacture,
105	process, compound, or produce for sale items of tangible
106	personal property or which does not use such machinery and
107	equipment in spaceport activities as required by this paragraph.
108	The exemptions provided in subparagraphs 1. and 2. shall apply
109	to machinery and equipment purchased for use in phosphate or
110	other solid minerals severance, mining, or processing operations
111	only by way of a prospective credit against taxes due under
112	chapter 211 for taxes paid under this chapter on such machinery
113	and equipment.
114	6.  For the purposes of the exemptions provided in
115	subparagraphs 1. and 2., these terms have the following
116	meanings:
117	a.  "Industrial machinery and equipment" means tangible
118	personal property or other property that has a depreciable life
119	of 3 years or more and that is used as an integral part in the
120	manufacturing, processing, compounding, or production of
121	tangible personal property for sale or is exclusively used in
122	spaceport activities. A building and its structural components
123	are not industrial machinery and equipment unless the building
124	or structural component is so closely related to the industrial
125	machinery and equipment that it houses or supports that the
126	building or structural component can be expected to be replaced
127	when the machinery and equipment are replaced. Heating and air-
128	conditioning systems are not industrial machinery and equipment
129	unless the sole justification for their installation is to meet
130	the requirements of the production process, even though the
131	system may provide incidental comfort to employees or serve, to
132	an insubstantial degree, nonproduction activities. The term
133	includes parts and accessories only to the extent that the
134	exemption thereof is consistent with the provisions of this
135	paragraph.
136	b.  "Productive output" means the number of units actually
137	produced by a single plant or operation in a single continuous
138	12-month period, irrespective of sales. Increases in productive
139	output shall be measured by the output for 12 continuous months
140	immediately following the completion of installation of such
141	machinery or equipment over the output for the 12 continuous
142	months immediately preceding such installation. However, if a
143	different 12-month continuous period of time would more
144	accurately reflect the increase in productive output of
145	machinery and equipment purchased to facilitate an expansion,
146	the increase in productive output may be measured during that
147	12-month continuous period of time if such time period is
148	mutually agreed upon by the Department of Revenue and the
149	expanding business prior to the commencement of production;
150	provided, however, in no case may such time period begin later
151	than 2 years following the completion of installation of the new
152	machinery and equipment. The units used to measure productive
153	output shall be physically comparable between the two periods,
154	irrespective of sales.
155	Section 2.  This act shall take effect July 1, 2004.

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