HB 0027

1	A bill to be entitled
2	An act relating to the sales tax exemption for machinery
3	and equipment used to increase productive output; amending
4	s. 212.08, F.S.; deleting a limitation on an exemption
5	from the sales tax for such machinery and equipment each
6	year; deleting an exemption for such machinery and
7	equipment used to expand certain printing manufacturing
8	facilities or plant units; providing an effective date.
9
10	Be It Enacted by the Legislature of the State of Florida:
11
12	Section 1.  Paragraph (b) of subsection (5) of section
13	212.08, Florida Statutes, is amended to read:
14	212.08  Sales, rental, use, consumption, distribution, and
15	storage tax; specified exemptions.--The sale at retail, the
16	rental, the use, the consumption, the distribution, and the
17	storage to be used or consumed in this state of the following
18	are hereby specifically exempt from the tax imposed by this
19	chapter.
20	(5)  EXEMPTIONS; ACCOUNT OF USE.--
21	(b)  Machinery and equipment used to increase productive
22	output.--
23	1.  Industrial machinery and equipment purchased for
24	exclusive use by a new business in spaceport activities as
25	defined by s. 212.02 or for use in new businesses which
26	manufacture, process, compound, or produce for sale items of
27	tangible personal property at fixed locations are exempt from
28	the tax imposed by this chapter upon an affirmative showing by
29	the taxpayer to the satisfaction of the department that such
30	items are used in a new business in this state. Such purchases
31	must be made prior to the date the business first begins its
32	productive operations, and delivery of the purchased item must
33	be made within 12 months of that date.
34	2.a.  Industrial machinery and equipment purchased for
35	exclusive use by an expanding facility which is engaged in
36	spaceport activities as defined by s. 212.02 or for use in
37	expanding manufacturing facilities or plant units which
38	manufacture, process, compound, or produce for sale items of
39	tangible personal property at fixed locations in this state are
40	exempt from any amount of tax imposed by this chapter in excess
41	of $50,000 per calendar year upon an affirmative showing by the
42	taxpayer to the satisfaction of the department that such items
43	are used to increase the productive output of such expanded
44	facility or business by not less than 10 percent.
45	b.  Notwithstanding any other provision of this section,
46	industrial machinery and equipment purchased for use in
47	expanding printing manufacturing facilities or plant units that
48	manufacture, process, compound, or produce for sale items of
49	tangible personal property at fixed locations in this state are
50	exempt from any amount of tax imposed by this chapter upon an
51	affirmative showing by the taxpayer to the satisfaction of the
52	department that such items are used to increase the productive
53	output of such an expanded business by not less than 10 percent.
54	3.a.  To receive an exemption provided by subparagraph 1.
55	or subparagraph 2., a qualifying business entity shall apply to
56	the department for a temporary tax exemption permit. The
57	application shall state that a new business exemption or
58	expanded business exemption is being sought. Upon a tentative
59	affirmative determination by the department pursuant to
60	subparagraph 1. or subparagraph 2., the department shall issue
61	such permit.
62	b.  The applicant shall be required to maintain all
63	necessary books and records to support the exemption. Upon
64	completion of purchases of qualified machinery and equipment
65	pursuant to subparagraph 1. or subparagraph 2., the temporary
66	tax permit shall be delivered to the department or returned to
67	the department by certified or registered mail.
68	c.  If, in a subsequent audit conducted by the department,
69	it is determined that the machinery and equipment purchased as
70	exempt under subparagraph 1. or subparagraph 2. did not meet the
71	criteria mandated by this paragraph or if commencement of
72	production did not occur, the amount of taxes exempted at the
73	time of purchase shall immediately be due and payable to the
74	department by the business entity, together with the appropriate
75	interest and penalty, computed from the date of purchase, in the
76	manner prescribed by this chapter.
77	d.  In the event a qualifying business entity fails to
78	apply for a temporary exemption permit or if the tentative
79	determination by the department required to obtain a temporary
80	exemption permit is negative, a qualifying business entity shall
81	receive the exemption provided in subparagraph 1. or
82	subparagraph 2. through a refund of previously paid taxes. No
83	refund may be made for such taxes unless the criteria mandated
84	by subparagraph 1. or subparagraph 2. have been met and
85	commencement of production has occurred.
86	4.  The department shall adopt rules governing applications
87	for, issuance of, and the form of temporary tax exemption
88	permits; provisions for recapture of taxes; and the manner and
89	form of refund applications and may establish guidelines as to
90	the requisites for an affirmative showing of increased
91	productive output, commencement of production, and qualification
92	for exemption.
93	5.  The exemptions provided in subparagraphs 1. and 2. do
94	not apply to machinery or equipment purchased or used by
95	electric utility companies, communications companies, oil or gas
96	exploration or production operations, publishing firms that do
97	not export at least 50 percent of their finished product out of
98	the state, any firm subject to regulation by the Division of
99	Hotels and Restaurants of the Department of Business and
100	Professional Regulation, or any firm which does not manufacture,
101	process, compound, or produce for sale items of tangible
102	personal property or which does not use such machinery and
103	equipment in spaceport activities as required by this paragraph.
104	The exemptions provided in subparagraphs 1. and 2. shall apply
105	to machinery and equipment purchased for use in phosphate or
106	other solid minerals severance, mining, or processing operations
107	only by way of a prospective credit against taxes due under
108	chapter 211 for taxes paid under this chapter on such machinery
109	and equipment.
110	6.  For the purposes of the exemptions provided in
111	subparagraphs 1. and 2., these terms have the following
112	meanings:
113	a.  "Industrial machinery and equipment" means tangible
114	personal property or other property that has a depreciable life
115	of 3 years or more and that is used as an integral part in the
116	manufacturing, processing, compounding, or production of
117	tangible personal property for sale or is exclusively used in
118	spaceport activities. A building and its structural components
119	are not industrial machinery and equipment unless the building
120	or structural component is so closely related to the industrial
121	machinery and equipment that it houses or supports that the
122	building or structural component can be expected to be replaced
123	when the machinery and equipment are replaced. Heating and air-
124	conditioning systems are not industrial machinery and equipment
125	unless the sole justification for their installation is to meet
126	the requirements of the production process, even though the
127	system may provide incidental comfort to employees or serve, to
128	an insubstantial degree, nonproduction activities. The term
129	includes parts and accessories only to the extent that the
130	exemption thereof is consistent with the provisions of this
131	paragraph.
132	b.  "Productive output" means the number of units actually
133	produced by a single plant or operation in a single continuous
134	12-month period, irrespective of sales. Increases in productive
135	output shall be measured by the output for 12 continuous months
136	immediately following the completion of installation of such
137	machinery or equipment over the output for the 12 continuous
138	months immediately preceding such installation. However, if a
139	different 12-month continuous period of time would more
140	accurately reflect the increase in productive output of
141	machinery and equipment purchased to facilitate an expansion,
142	the increase in productive output may be measured during that
143	12-month continuous period of time if such time period is
144	mutually agreed upon by the Department of Revenue and the
145	expanding business prior to the commencement of production;
146	provided, however, in no case may such time period begin later
147	than 2 years following the completion of installation of the new
148	machinery and equipment. The units used to measure productive
149	output shall be physically comparable between the two periods,
150	irrespective of sales.
151	Section 2.  This act shall take effect July 1, 2005.

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