Senate Bill sb0616
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Florida Senate - 2005 SB 616
By Senator Bullard
39-645-05 See HB 27
1 A bill to be entitled
2 An act relating to the sales tax exemption for
3 machinery and equipment used to increase
4 productive output; amending s. 212.08, F.S.;
5 deleting a limitation on an exemption from the
6 sales tax for such machinery and equipment each
7 year; deleting an exemption for such machinery
8 and equipment used to expand certain printing
9 manufacturing facilities or plant units;
10 providing an effective date.
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12 Be It Enacted by the Legislature of the State of Florida:
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14 Section 1. Paragraph (b) of subsection (5) of section
15 212.08, Florida Statutes, is amended to read:
16 212.08 Sales, rental, use, consumption, distribution,
17 and storage tax; specified exemptions.--The sale at retail,
18 the rental, the use, the consumption, the distribution, and
19 the storage to be used or consumed in this state of the
20 following are hereby specifically exempt from the tax imposed
21 by this chapter.
22 (5) EXEMPTIONS; ACCOUNT OF USE.--
23 (b) Machinery and equipment used to increase
24 productive output.--
25 1. Industrial machinery and equipment purchased for
26 exclusive use by a new business in spaceport activities as
27 defined by s. 212.02 or for use in new businesses which
28 manufacture, process, compound, or produce for sale items of
29 tangible personal property at fixed locations are exempt from
30 the tax imposed by this chapter upon an affirmative showing by
31 the taxpayer to the satisfaction of the department that such
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Florida Senate - 2005 SB 616
39-645-05 See HB 27
1 items are used in a new business in this state. Such purchases
2 must be made prior to the date the business first begins its
3 productive operations, and delivery of the purchased item must
4 be made within 12 months of that date.
5 2.a. Industrial machinery and equipment purchased for
6 exclusive use by an expanding facility which is engaged in
7 spaceport activities as defined by s. 212.02 or for use in
8 expanding manufacturing facilities or plant units which
9 manufacture, process, compound, or produce for sale items of
10 tangible personal property at fixed locations in this state
11 are exempt from any amount of tax imposed by this chapter in
12 excess of $50,000 per calendar year upon an affirmative
13 showing by the taxpayer to the satisfaction of the department
14 that such items are used to increase the productive output of
15 such expanded facility or business by not less than 10
16 percent.
17 b. Notwithstanding any other provision of this
18 section, industrial machinery and equipment purchased for use
19 in expanding printing manufacturing facilities or plant units
20 that manufacture, process, compound, or produce for sale items
21 of tangible personal property at fixed locations in this state
22 are exempt from any amount of tax imposed by this chapter upon
23 an affirmative showing by the taxpayer to the satisfaction of
24 the department that such items are used to increase the
25 productive output of such an expanded business by not less
26 than 10 percent.
27 3.a. To receive an exemption provided by subparagraph
28 1. or subparagraph 2., a qualifying business entity shall
29 apply to the department for a temporary tax exemption permit.
30 The application shall state that a new business exemption or
31 expanded business exemption is being sought. Upon a tentative
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Florida Senate - 2005 SB 616
39-645-05 See HB 27
1 affirmative determination by the department pursuant to
2 subparagraph 1. or subparagraph 2., the department shall issue
3 such permit.
4 b. The applicant shall be required to maintain all
5 necessary books and records to support the exemption. Upon
6 completion of purchases of qualified machinery and equipment
7 pursuant to subparagraph 1. or subparagraph 2., the temporary
8 tax permit shall be delivered to the department or returned to
9 the department by certified or registered mail.
10 c. If, in a subsequent audit conducted by the
11 department, it is determined that the machinery and equipment
12 purchased as exempt under subparagraph 1. or subparagraph 2.
13 did not meet the criteria mandated by this paragraph or if
14 commencement of production did not occur, the amount of taxes
15 exempted at the time of purchase shall immediately be due and
16 payable to the department by the business entity, together
17 with the appropriate interest and penalty, computed from the
18 date of purchase, in the manner prescribed by this chapter.
19 d. In the event a qualifying business entity fails to
20 apply for a temporary exemption permit or if the tentative
21 determination by the department required to obtain a temporary
22 exemption permit is negative, a qualifying business entity
23 shall receive the exemption provided in subparagraph 1. or
24 subparagraph 2. through a refund of previously paid taxes. No
25 refund may be made for such taxes unless the criteria mandated
26 by subparagraph 1. or subparagraph 2. have been met and
27 commencement of production has occurred.
28 4. The department shall adopt rules governing
29 applications for, issuance of, and the form of temporary tax
30 exemption permits; provisions for recapture of taxes; and the
31 manner and form of refund applications and may establish
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Florida Senate - 2005 SB 616
39-645-05 See HB 27
1 guidelines as to the requisites for an affirmative showing of
2 increased productive output, commencement of production, and
3 qualification for exemption.
4 5. The exemptions provided in subparagraphs 1. and 2.
5 do not apply to machinery or equipment purchased or used by
6 electric utility companies, communications companies, oil or
7 gas exploration or production operations, publishing firms
8 that do not export at least 50 percent of their finished
9 product out of the state, any firm subject to regulation by
10 the Division of Hotels and Restaurants of the Department of
11 Business and Professional Regulation, or any firm which does
12 not manufacture, process, compound, or produce for sale items
13 of tangible personal property or which does not use such
14 machinery and equipment in spaceport activities as required by
15 this paragraph. The exemptions provided in subparagraphs 1.
16 and 2. shall apply to machinery and equipment purchased for
17 use in phosphate or other solid minerals severance, mining, or
18 processing operations only by way of a prospective credit
19 against taxes due under chapter 211 for taxes paid under this
20 chapter on such machinery and equipment.
21 6. For the purposes of the exemptions provided in
22 subparagraphs 1. and 2., these terms have the following
23 meanings:
24 a. "Industrial machinery and equipment" means tangible
25 personal property or other property that has a depreciable
26 life of 3 years or more and that is used as an integral part
27 in the manufacturing, processing, compounding, or production
28 of tangible personal property for sale or is exclusively used
29 in spaceport activities. A building and its structural
30 components are not industrial machinery and equipment unless
31 the building or structural component is so closely related to
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Florida Senate - 2005 SB 616
39-645-05 See HB 27
1 the industrial machinery and equipment that it houses or
2 supports that the building or structural component can be
3 expected to be replaced when the machinery and equipment are
4 replaced. Heating and air-conditioning systems are not
5 industrial machinery and equipment unless the sole
6 justification for their installation is to meet the
7 requirements of the production process, even though the system
8 may provide incidental comfort to employees or serve, to an
9 insubstantial degree, nonproduction activities. The term
10 includes parts and accessories only to the extent that the
11 exemption thereof is consistent with the provisions of this
12 paragraph.
13 b. "Productive output" means the number of units
14 actually produced by a single plant or operation in a single
15 continuous 12-month period, irrespective of sales. Increases
16 in productive output shall be measured by the output for 12
17 continuous months immediately following the completion of
18 installation of such machinery or equipment over the output
19 for the 12 continuous months immediately preceding such
20 installation. However, if a different 12-month continuous
21 period of time would more accurately reflect the increase in
22 productive output of machinery and equipment purchased to
23 facilitate an expansion, the increase in productive output may
24 be measured during that 12-month continuous period of time if
25 such time period is mutually agreed upon by the Department of
26 Revenue and the expanding business prior to the commencement
27 of production; provided, however, in no case may such time
28 period begin later than 2 years following the completion of
29 installation of the new machinery and equipment. The units
30 used to measure productive output shall be physically
31 comparable between the two periods, irrespective of sales.
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Florida Senate - 2005 SB 616
39-645-05 See HB 27
1 Section 2. This act shall take effect July 1, 2005.
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