Senate Bill sb2362c2
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Florida Senate - 2005 CS for CS for SB 2362
By the Committees on Education; Commerce and Consumer
Services; and Senators Smith, Fasano and Crist
581-2166-05
1 A bill to be entitled
2 An act relating to the tax on sales, use, and
3 other transactions; amending s. 212.052, F.S.;
4 deleting an exception to an exemption from the
5 tax for research or development costs; amending
6 s. 212.08, F.S.; providing an exemption for
7 machinery and equipment used in semiconductor,
8 defense, or space technology research and
9 development activities; providing definitions;
10 providing for the adoption of rules pertaining
11 to procedures to claim exemptions and revising
12 guidelines relating to such procedures;
13 providing for a review of the exemption by the
14 Office of Program Policy Analysis and
15 Government Accountability and Enterprise
16 Florida, Inc.; requiring a report; providing an
17 effective date.
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19 Be It Enacted by the Legislature of the State of Florida:
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21 Section 1. Subsection (2) of section 212.052, Florida
22 Statutes, is amended to read:
23 212.052 Research or development costs; exemption.--
24 (2) Notwithstanding any provision of this chapter to
25 the contrary, any person, including an affiliated group as
26 defined in s. 1504 of the Internal Revenue Code of 1954, as
27 amended, who manufactures, produces, compounds, processes, or
28 fabricates in any manner tangible personal property for such
29 taxpayer's own use directly and solely in research or
30 development shall not be subject to the tax imposed by this
31 chapter upon the cost of the product so manufactured,
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Florida Senate - 2005 CS for CS for SB 2362
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1 produced, compounded, processed, or fabricated. However, the
2 tax imposed by this chapter shall be due on the purchase,
3 rental, or repair of real property or tangible personal
4 property employed in research or development which is subject
5 to the tax imposed by this chapter at the time of purchase or
6 rental.
7 Section 2. Paragraph (j) of subsection (5) of section
8 212.08, Florida Statutes, is amended to read:
9 212.08 Sales, rental, use, consumption, distribution,
10 and storage tax; specified exemptions.--The sale at retail,
11 the rental, the use, the consumption, the distribution, and
12 the storage to be used or consumed in this state of the
13 following are hereby specifically exempt from the tax imposed
14 by this chapter.
15 (5) EXEMPTIONS; ACCOUNT OF USE.--
16 (j) Machinery and equipment used in semiconductor,
17 defense, or space technology production and research and
18 development.--
19 1.a. Industrial machinery and equipment used in
20 semiconductor technology facilities certified by the Office of
21 Tourism, Trade, and Economic Development under subparagraph 6.
22 to manufacture, process, compound, or produce semiconductor
23 technology products for sale or for use by these facilities
24 are exempt from the tax imposed by this chapter. For purposes
25 of this paragraph, industrial machinery and equipment includes
26 molds, dies, machine tooling, other appurtenances or
27 accessories to machinery and equipment, testing equipment,
28 test beds, computers, and software, whether purchased or
29 self-fabricated, and, if self-fabricated, includes materials
30 and labor for design, fabrication, and assembly.
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Florida Senate - 2005 CS for CS for SB 2362
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1 b. Building materials purchased for use in
2 manufacturing or expanding clean rooms in
3 semiconductor-manufacturing facilities are exempt from the tax
4 imposed by this chapter.
5 c.b. Industrial machinery and equipment used in
6 defense or space technology facilities certified by the Office
7 of Tourism, Trade, and Economic Development under subparagraph
8 6. to manufacture, process, compound, or produce defense
9 technology products or space technology products for sale or
10 for use by these facilities are exempt from 25 percent of the
11 tax imposed by this chapter.
12 d. Machinery and equipment used predominantly for
13 research and development as defined in s. 212.052 are exempt
14 from the tax imposed by this chapter.
15 2.a. Machinery and equipment are exempt from the tax
16 imposed by this chapter if used predominately in semiconductor
17 wafer research and development activities in a semiconductor
18 technology research and development facility certified under
19 subparagraph 6. For purposes of this paragraph, machinery and
20 equipment includes molds, dies, machine tooling, other
21 appurtenances or accessories to machinery and equipment,
22 testing equipment, test beds, computers, and software, whether
23 purchased or self-fabricated, and, if self-fabricated,
24 includes materials and labor for design, fabrication, and
25 assembly.
26 b. Machinery and equipment are exempt from 25 percent
27 of the tax imposed by this chapter if used predominately in
28 defense or space research and development activities in a
29 defense or space technology research and development facility
30 certified under subparagraph 6.
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Florida Senate - 2005 CS for CS for SB 2362
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1 3. Building materials purchased for use in
2 manufacturing or expanding clean rooms in
3 semiconductor-manufacturing facilities are exempt from the tax
4 imposed by this chapter.
5 4. In addition to meeting the criteria mandated by
6 subparagraph 1., subparagraph 2., or subparagraph 3., a
7 business must be certified by the Office of Tourism, Trade,
8 and Economic Development as authorized in this paragraph in
9 order to qualify for exemption under this paragraph.
10 5. For items purchased tax exempt pursuant to this
11 paragraph, possession of a written certification from the
12 purchaser, certifying the purchaser's entitlement to exemption
13 pursuant to this paragraph, relieves the seller of the
14 responsibility of collecting the tax on the sale of such
15 items, and the department shall look solely to the purchaser
16 for recovery of tax if it determines that the purchaser was
17 not entitled to the exemption.
18 6.a. To be eligible to receive the exemption provided
19 by subparagraph 1., subparagraph 2., or subparagraph 3., a
20 qualifying business entity shall apply to Enterprise Florida,
21 Inc. The application shall be developed by the Office of
22 Tourism, Trade, and Economic Development in consultation with
23 Enterprise Florida, Inc.
24 b. Enterprise Florida, Inc., shall review each
25 submitted application and information and determine whether or
26 not the application is complete within 5 working days. Once an
27 application is complete, Enterprise Florida, Inc., shall,
28 within 10 working days, evaluate the application and recommend
29 approval or disapproval of the application to the Office of
30 Tourism, Trade, and Economic Development.
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1 c. Upon receipt of the application and recommendation
2 from Enterprise Florida, Inc., the Office of Tourism, Trade,
3 and Economic Development shall certify within 5 working days
4 those applicants who are found to meet the requirements of
5 this section and notify the applicant, Enterprise Florida,
6 Inc., and the department of the certification. If the Office
7 of Tourism, Trade, and Economic Development finds that the
8 applicant does not meet the requirements of this section, it
9 shall notify the applicant and Enterprise Florida, Inc.,
10 within 10 working days that the application for certification
11 has been denied and the reasons for denial. The Office of
12 Tourism, Trade, and Economic Development has final approval
13 authority for certification under this section.
14 7.a. A business may apply once each year for the
15 exemption.
16 b. The application must indicate, for program
17 evaluation purposes only, the average number of full-time
18 equivalent employees at the facility over the preceding
19 calendar year, the average wage and benefits paid to those
20 employees over the preceding calendar year, the total
21 investment made in real and tangible personal property over
22 the preceding calendar year, and the total value of tax-exempt
23 purchases and taxes exempted during the previous year. The
24 department shall assist the Office of Tourism, Trade, and
25 Economic Development in evaluating and verifying information
26 provided in the application for exemption.
27 c. The Office of Tourism, Trade, and Economic
28 Development may use the information reported on the
29 application for evaluation purposes only and shall prepare an
30 annual report on the exemption program and its cost and
31 impact. The annual report for the preceding fiscal year shall
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1 be submitted to the Governor, the President of the Senate, and
2 the Speaker of the House of Representatives by September 30 of
3 each fiscal year.
4 2.8. A business receiving an certified to receive this
5 exemption under this paragraph may elect to designate one or
6 more state universities or community colleges as recipients of
7 up to 100 percent of the amount of the exemption for which
8 they may qualify. To receive these funds, the institution must
9 agree to match the funds so earned with equivalent cash,
10 programs, services, or other in-kind support on a one-to-one
11 basis in the pursuit of research and development projects as
12 requested by the certified business. The rights to any
13 patents, royalties, or real or intellectual property must be
14 vested in the business unless otherwise agreed to by the
15 business and the university or community college.
16 3. The department may adopt rules to implement this
17 exemption and for assumption of self-accrual authority that is
18 authorized by this paragraph. Persons or entities claiming
19 such exemptions shall furnish the vendor of the machinery and
20 equipment, including the vendor of the materials and labor
21 used in self-fabrication of the machinery and equipment, an
22 affidavit stating that the items for which an exemption is
23 claimed are machinery and equipment that will be used for the
24 purposes required by this paragraph. A purchaser who claims
25 the exemption by refund shall include the affidavit with the
26 refund application. The affidavit must contain the purchaser's
27 name, address, sales and use tax registration number, and, if
28 applicable, federal employer identification number. Any person
29 fraudulently furnishing an affidavit to the vendor for the
30 purpose of evading payment of any tax imposed under this
31 chapter shall be subject to the penalty in s. 212.085 and as
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1 otherwise provided by law. Purchasers shall maintain all
2 documentation necessary to prove the exempt status of
3 purchases and fabrication activity and make such documentation
4 available for inspection pursuant to s. 212.13(2). In lieu of
5 furnishing an affidavit, a purchaser claiming the exemption in
6 this paragraph who has a direct pay permit may give the vendor
7 a copy of the direct pay permit and shall maintain all
8 documentation necessary to prove the exempt status of the
9 purchases and fabrication activity and make such documentation
10 available for inspection pursuant to s. 212.13(2).
11 4.9. As used in this paragraph, the term:
12 a. "Predominately" means at least 50 percent of the
13 time in qualifying research and development.
14 b. "Research and development" means basic and applied
15 research in the science or engineering, as well as the design,
16 development, and testing of prototypes or processes of new or
17 improved products. Research and development does not include
18 market research, routine consumer product testing, sales
19 research, research in the social sciences or psychology,
20 nontechnological activities, or technical services.
21 b.c. "Semiconductor technology products" means raw
22 semiconductor wafers or semiconductor thin films that are
23 transformed into semiconductor memory or logic wafers,
24 including wafers containing mixed memory and logic circuits;
25 related assembly and test operations; active-matrix flat panel
26 displays; semiconductor chips; semiconductor lasers;
27 optoelectronic elements; and related semiconductor technology
28 products as determined by the Office of Tourism, Trade, and
29 Economic Development.
30 c.d. "Clean rooms" means manufacturing facilities
31 enclosed in a manner that meets the clean manufacturing
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Florida Senate - 2005 CS for CS for SB 2362
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1 requirements necessary for high-technology
2 semiconductor-manufacturing environments.
3 d.e. "Defense technology products" means products that
4 have a military application, including, but not limited to,
5 weapons, weapons systems, guidance systems, surveillance
6 systems, communications or information systems, munitions,
7 aircraft, vessels, or boats, or components thereof, which are
8 intended for military use and manufactured in performance of a
9 contract with the United States Department of Defense or the
10 military branch of a recognized foreign government or a
11 subcontract thereunder which relates to matters of national
12 defense.
13 e.f. "Space technology products" means products that
14 are specifically designed or manufactured for application in
15 space activities, including, but not limited to, space launch
16 vehicles, missiles, satellites or research payloads, avionics,
17 and associated control systems and processing systems. The
18 term does not include products that are designed or
19 manufactured for general commercial aviation or other uses
20 even though those products may also serve an incidental use in
21 space applications.
22 f. "Industrial machinery and equipment" includes
23 molds, dies, machine tooling, other appurtenances or
24 accessories to machinery and equipment, testing equipment,
25 test beds, computers, and software, whether purchased or
26 self-fabricated, and, if self-fabricated, includes materials
27 and labor for design, fabrication, and assembly.
28 5. The exemption in this paragraph is subject to
29 review by the Legislature no later than July 1, 2015. The
30 Office of Program Policy Analysis and Government
31 Accountability and Enterprise Florida, Inc., shall study this
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1 exemption to determine the impact of the exemption on the
2 promotion of research and development activities in this
3 state. Enterprise Florida, Inc., may contract with an
4 independent research organization to perform the assessment.
5 The study shall include the estimated annual cost of the
6 exemption and an estimate of any economic impact of increased
7 research and development activities. By January 1, 2015, the
8 Office of Program Policy Analysis and Enterprise Florida,
9 Inc., shall submit reports to the Governor, the President of
10 the Senate, and the Speaker of the House of Representatives
11 which provide findings and recommendations as to whether the
12 exemption should be re-enacted by the Legislature.
13 Section 3. This act shall take effect July 1, 2005.
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15 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
16 CS for Senate Bill 2362
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18 The committee substitute revises the sales and use tax
exemption to include certain research and development costs
19 and authorizes a state match for eligible gifts or pledges
from the semiconductor account located in the Trust Fund for
20 University Major Gifts.
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