Senate Bill sb1180
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Florida Senate - 2006 SB 1180
By Senator Wise
5-827-06 See HB 69
1 A bill to be entitled
2 An act relating to exemptions from the tax on
3 sales, use, and other transactions; amending s.
4 212.08, F.S.; deleting an annual limitation on
5 an exemption from the sales tax for certain
6 machinery and equipment used to increase
7 productive output; deleting an exemption for
8 machinery and equipment used to expand certain
9 printing manufacturing facilities or plant
10 units; deleting a limitation on application of
11 the exemption for machinery and equipment
12 purchased for use in phosphate or other solid
13 minerals severance, mining, or processing
14 operations by way of a prospective credit;
15 deleting an annual limitation on an exemption
16 from the sales tax for certain machinery and
17 equipment purchased under a federal procurement
18 contract; repealing s. 212.0805, F.S., relating
19 to qualifications for the exemption and credit
20 for machinery and equipment purchased by an
21 expanding business for use in phosphate or
22 other solid minerals severance, mining, or
23 processing operations; providing an
24 appropriation; providing an effective date.
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26 Be It Enacted by the Legislature of the State of Florida:
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28 Section 1. Paragraphs (b) and (d) of subsection (5) of
29 section 212.08, Florida Statutes, are amended to read:
30 212.08 Sales, rental, use, consumption, distribution,
31 and storage tax; specified exemptions.--The sale at retail,
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Florida Senate - 2006 SB 1180
5-827-06 See HB 69
1 the rental, the use, the consumption, the distribution, and
2 the storage to be used or consumed in this state of the
3 following are hereby specifically exempt from the tax imposed
4 by this chapter.
5 (5) EXEMPTIONS; ACCOUNT OF USE.--
6 (b) Machinery and equipment used to increase
7 productive output.--
8 1. Industrial machinery and equipment purchased for
9 exclusive use by a new business in spaceport activities as
10 defined by s. 212.02 or for use in new businesses which
11 manufacture, process, compound, or produce for sale items of
12 tangible personal property at fixed locations are exempt from
13 the tax imposed by this chapter upon an affirmative showing by
14 the taxpayer to the satisfaction of the department that such
15 items are used in a new business in this state. Such purchases
16 must be made prior to the date the business first begins its
17 productive operations, and delivery of the purchased item must
18 be made within 12 months of that date.
19 2.a. Industrial machinery and equipment purchased for
20 exclusive use by an expanding facility which is engaged in
21 spaceport activities as defined by s. 212.02 or for use in
22 expanding manufacturing facilities or plant units which
23 manufacture, process, compound, or produce for sale items of
24 tangible personal property at fixed locations in this state
25 are exempt from any amount of tax imposed by this chapter in
26 excess of $50,000 per calendar year upon an affirmative
27 showing by the taxpayer to the satisfaction of the department
28 that such items are used to increase the productive output of
29 such expanded facility or business by not less than 10
30 percent.
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Florida Senate - 2006 SB 1180
5-827-06 See HB 69
1 b. Notwithstanding any other provision of this
2 section, industrial machinery and equipment purchased for use
3 in expanding printing manufacturing facilities or plant units
4 that manufacture, process, compound, or produce for sale items
5 of tangible personal property at fixed locations in this state
6 are exempt from any amount of tax imposed by this chapter upon
7 an affirmative showing by the taxpayer to the satisfaction of
8 the department that such items are used to increase the
9 productive output of such an expanded business by not less
10 than 10 percent.
11 3.a. To receive an exemption provided by subparagraph
12 1. or subparagraph 2., a qualifying business entity shall
13 apply to the department for a temporary tax exemption permit.
14 The application shall state that a new business exemption or
15 expanded business exemption is being sought. Upon a tentative
16 affirmative determination by the department pursuant to
17 subparagraph 1. or subparagraph 2., the department shall issue
18 such permit.
19 b. The applicant shall be required to maintain all
20 necessary books and records to support the exemption. Upon
21 completion of purchases of qualified machinery and equipment
22 pursuant to subparagraph 1. or subparagraph 2., the temporary
23 tax permit shall be delivered to the department or returned to
24 the department by certified or registered mail.
25 c. If, in a subsequent audit conducted by the
26 department, it is determined that the machinery and equipment
27 purchased as exempt under subparagraph 1. or subparagraph 2.
28 did not meet the criteria mandated by this paragraph or if
29 commencement of production did not occur, the amount of taxes
30 exempted at the time of purchase shall immediately be due and
31 payable to the department by the business entity, together
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Florida Senate - 2006 SB 1180
5-827-06 See HB 69
1 with the appropriate interest and penalty, computed from the
2 date of purchase, in the manner prescribed by this chapter.
3 d. In the event a qualifying business entity fails to
4 apply for a temporary exemption permit or if the tentative
5 determination by the department required to obtain a temporary
6 exemption permit is negative, a qualifying business entity
7 shall receive the exemption provided in subparagraph 1. or
8 subparagraph 2. through a refund of previously paid taxes. No
9 refund may be made for such taxes unless the criteria mandated
10 by subparagraph 1. or subparagraph 2. have been met and
11 commencement of production has occurred.
12 4. The department shall adopt rules governing
13 applications for, issuance of, and the form of temporary tax
14 exemption permits; provisions for recapture of taxes; and the
15 manner and form of refund applications and may establish
16 guidelines as to the requisites for an affirmative showing of
17 increased productive output, commencement of production, and
18 qualification for exemption.
19 5. The exemptions provided in subparagraphs 1. and 2.
20 do not apply to machinery or equipment purchased or used by
21 electric utility companies, communications companies, oil or
22 gas exploration or production operations, publishing firms
23 that do not export at least 50 percent of their finished
24 product out of the state, any firm subject to regulation by
25 the Division of Hotels and Restaurants of the Department of
26 Business and Professional Regulation, or any firm which does
27 not manufacture, process, compound, or produce for sale items
28 of tangible personal property or which does not use such
29 machinery and equipment in spaceport activities as required by
30 this paragraph. The exemptions provided in subparagraphs 1.
31 and 2. shall apply to machinery and equipment purchased for
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Florida Senate - 2006 SB 1180
5-827-06 See HB 69
1 use in phosphate or other solid minerals severance, mining, or
2 processing operations only by way of a prospective credit
3 against taxes due under chapter 211 for taxes paid under this
4 chapter on such machinery and equipment.
5 6. For the purposes of the exemptions provided in
6 subparagraphs 1. and 2., these terms have the following
7 meanings:
8 a. "Industrial machinery and equipment" means tangible
9 personal property or other property that has a depreciable
10 life of 3 years or more and that is used as an integral part
11 in the manufacturing, processing, compounding, or production
12 of tangible personal property for sale or is exclusively used
13 in spaceport activities. A building and its structural
14 components are not industrial machinery and equipment unless
15 the building or structural component is so closely related to
16 the industrial machinery and equipment that it houses or
17 supports that the building or structural component can be
18 expected to be replaced when the machinery and equipment are
19 replaced. Heating and air-conditioning systems are not
20 industrial machinery and equipment unless the sole
21 justification for their installation is to meet the
22 requirements of the production process, even though the system
23 may provide incidental comfort to employees or serve, to an
24 insubstantial degree, nonproduction activities. The term
25 includes parts and accessories only to the extent that the
26 exemption thereof is consistent with the provisions of this
27 paragraph.
28 b. "Productive output" means the number of units
29 actually produced by a single plant or operation in a single
30 continuous 12-month period, irrespective of sales. Increases
31 in productive output shall be measured by the output for 12
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Florida Senate - 2006 SB 1180
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1 continuous months immediately following the completion of
2 installation of such machinery or equipment over the output
3 for the 12 continuous months immediately preceding such
4 installation. However, if a different 12-month continuous
5 period of time would more accurately reflect the increase in
6 productive output of machinery and equipment purchased to
7 facilitate an expansion, the increase in productive output may
8 be measured during that 12-month continuous period of time if
9 such time period is mutually agreed upon by the Department of
10 Revenue and the expanding business prior to the commencement
11 of production; provided, however, in no case may such time
12 period begin later than 2 years following the completion of
13 installation of the new machinery and equipment. The units
14 used to measure productive output shall be physically
15 comparable between the two periods, irrespective of sales.
16 (d) Machinery and equipment used under federal
17 procurement contract.--
18 1. Industrial machinery and equipment purchased by an
19 expanding business that which manufactures tangible personal
20 property pursuant to federal procurement regulations at fixed
21 locations in this state are partially exempt from the tax
22 imposed in this chapter on that portion of the tax which is in
23 excess of $100,000 per calendar year upon an affirmative
24 showing by the taxpayer to the satisfaction of the department
25 that such items are used to increase the implicit productive
26 output of the expanded business by not less than 10 percent.
27 The percentage of increase is measured as deflated implicit
28 productive output for the calendar year during which the
29 installation of the machinery or equipment is completed or
30 during which commencement of production utilizing such items
31 is begun divided by the implicit productive output for the
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Florida Senate - 2006 SB 1180
5-827-06 See HB 69
1 preceding calendar year. In no case may the commencement of
2 production begin later than 2 years following completion of
3 installation of the machinery or equipment.
4 2. The amount of the exemption allowed shall equal the
5 taxes otherwise imposed by this chapter in excess of $100,000
6 per calendar year on qualifying industrial machinery or
7 equipment reduced by the percentage of gross receipts from
8 cost-reimbursement type contracts attributable to the plant or
9 operation to total gross receipts so attributable, accrued for
10 the year of completion or commencement.
11 3. The exemption provided by this paragraph shall
12 inure to the taxpayer only through refund of previously paid
13 taxes. Such refund shall be made within 30 days of formal
14 approval by the department of the taxpayer's application,
15 which application may be made on an annual basis following
16 installation of the machinery or equipment.
17 4. For the purposes of this paragraph, the term:
18 a. "Cost-reimbursement type contracts" has the same
19 meaning as in 32 C.F.R. s. 3-405.
20 b. "Deflated implicit productive output" means the
21 product of implicit productive output times the quotient of
22 the national defense implicit price deflator for the preceding
23 calendar year divided by the deflator for the year of
24 completion or commencement.
25 c. "Eligible costs" means the total direct and
26 indirect costs, as defined in 32 C.F.R. ss. 15-202 and 15-203,
27 excluding general and administrative costs, selling expenses,
28 and profit, defined by the uniform cost-accounting standards
29 adopted by the Cost-Accounting Standards Board created
30 pursuant to 50 U.S.C. s. 2168.
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Florida Senate - 2006 SB 1180
5-827-06 See HB 69
1 d. "Implicit productive output" means the annual
2 eligible costs attributable to all contracts or subcontracts
3 subject to federal procurement regulations of the single plant
4 or operation at which the machinery or equipment is used.
5 e. "Industrial machinery and equipment" means tangible
6 personal property or other property that has a depreciable
7 life of 3 years or more, that qualifies as an eligible cost
8 under federal procurement regulations, and that is used as an
9 integral part of the process of production of tangible
10 personal property. A building and its structural components
11 are not industrial machinery and equipment unless the building
12 or structural component is so closely related to the
13 industrial machinery and equipment that it houses or supports
14 that the building or structural component can be expected to
15 be replaced when the machinery and equipment are replaced.
16 Heating and air-conditioning systems are not industrial
17 machinery and equipment unless the sole justification for
18 their installation is to meet the requirements of the
19 production process, even though the system may provide
20 incidental comfort to employees or serve, to an insubstantial
21 degree, nonproduction activities. The term includes parts and
22 accessories only to the extent that the exemption of such
23 parts and accessories is consistent with the provisions of
24 this paragraph.
25 f. "National defense implicit price deflator" means
26 the national defense implicit price deflator for the gross
27 national product as determined by the Bureau of Economic
28 Analysis of the United States Department of Commerce.
29 5. The exclusions provided in subparagraph (b)5. apply
30 to this exemption. This exemption applies only to machinery or
31 equipment purchased pursuant to production contracts with the
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Florida Senate - 2006 SB 1180
5-827-06 See HB 69
1 United States Department of Defense and Armed Forces, the
2 National Aeronautics and Space Administration, and other
3 federal agencies for which the contracts are classified for
4 national security reasons. In no event shall the provisions of
5 this paragraph apply to any expanding business the increase in
6 productive output of which could be measured under the
7 provisions of sub-subparagraph (b)6.b. as physically
8 comparable between the two periods.
9 Section 2. Section 212.0805, Florida Statutes, is
10 repealed.
11 Section 3. For the 2006-2007 fiscal year, the sum of
12 $210,069 is appropriated from the General Revenue Fund and
13 four positions are authorized to the Department of Revenue for
14 the purpose of implementing the provisions of this act. Of the
15 funds provided, $191,825 are recurring and $18,244 are
16 nonrecurring funds.
17 Section 4. This act shall take effect July 1, 2006.
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