HB 415

1	A bill to be entitled
2	An act relating to the tax on sales, use, and other
3	transactions; amending s. 212.052, F.S.; deleting an
4	exception to an exemption from the tax for research or
5	development costs; amending s. 212.08, F.S.; exempting
6	machinery and equipment used predominantly for research
7	and development activities or by a space flight business;
8	providing definitions; authorizing the Department of
9	Revenue to adopt rules administering and implementing the
10	exemption; providing requirements and procedures for
11	claiming the exemption; requiring an affidavit to be given
12	by a taxpayer claiming entitlement to the exemption;
13	providing penalties for fraudulently claiming the
14	exemption; providing recordkeeping requirements; providing
15	an effective date.
16
17	Be It Enacted by the Legislature of the State of Florida:
18
19	Section 1.  Subsection (2) of section 212.052, Florida
20	Statutes, is amended to read:
21	212.052  Research or development costs; exemption.--
22	(2)  Notwithstanding any provision of this chapter to the
23	contrary, any person, including an affiliated group as defined
24	in s. 1504 of the Internal Revenue Code of 1954, as amended, who
25	manufactures, produces, compounds, processes, or fabricates in
26	any manner tangible personal property for such taxpayer's own
27	use directly and solely in research or development shall not be
28	subject to the tax imposed by this chapter upon the cost of the
29	product so manufactured, produced, compounded, processed, or
30	fabricated. However, the tax imposed by this chapter shall be
31	due on the purchase, rental, or repair of real property or
32	tangible personal property employed in research or development
33	which is subject to the tax imposed by this chapter at the time
34	of purchase or rental.
35	Section 2.  Paragraph (r) is added to subsection (5) of
36	section 212.08, Florida Statutes, to read:
37	212.08  Sales, rental, use, consumption, distribution, and
38	storage tax; specified exemptions.--The sale at retail, the
39	rental, the use, the consumption, the distribution, and the
40	storage to be used or consumed in this state of the following
41	are hereby specifically exempt from the tax imposed by this
42	chapter.
43	(5)  EXEMPTIONS; ACCOUNT OF USE.--
44	(r)  Machinery and equipment used predominantly for
45	research and development or by a space flight business.--
46	1.  Machinery and equipment used predominantly for research
47	and development or by a space flight business as defined in s.
48	212.031(1)(a)13. in designing or creating a space flight vehicle
49	or components of a space flight vehicle are exempt from the tax
50	imposed by this chapter.
51	2.  For purposes of this paragraph:
52	a.  "Machinery and equipment" includes, but is not limited
53	to, molds, dies, machine tooling, other appurtenances or
54	accessories to machinery and equipment, testing and measuring
55	equipment, test beds, computers, and software, whether purchased
56	or self-fabricated, and, if self-fabricated, includes materials
57	and labor for design, fabrication, and assembly.
58	b.  "Predominantly" means at least 50 percent of the time.
59	c.  "Research and development" means research that has one
60	of the following as its ultimate goal:
61	(I)  Basic research in a scientific field of endeavor;
62	(II)  Advancing knowledge or technology in a scientific or
63	technical field of endeavor;
64	(III)  The development of a new product, whether or not the
65	new product is offered for sale;
66	(IV)  The improvement of an existing product, whether or
67	not the improved product is offered for sale;
68	(V)  The development of new uses of an existing product,
69	whether or not a new use is offered as a rationale to purchase
70	the product; or
71	(VI)  The design and development of prototypes, whether or
72	not a resulting product is offered for sale.
73
74	The term "research and development" does not include ordinary
75	testing or inspection of materials or products used for quality
76	control, market research, efficiency surveys, consumer surveys,
77	advertising and promotions, management studies, or research in
78	connection with literary, historical, social science,
79	psychological, or other similar nontechnical activities.
80	3.  The department may adopt rules that provide for
81	administering and implementing this exemption.
82	4.  A person who claims the exemption provided in this
83	paragraph shall furnish the vendor of the machinery or
84	equipment, including the vendor of materials and labor used in
85	self-fabrication of the machinery or equipment, an affidavit
86	stating that the item or items for which an exemption is claimed
87	are machinery and equipment that will be used predominantly for
88	research and development or by a space flight business as
89	required by this paragraph. A purchaser who claims the exemption
90	by refund shall include the affidavit with the refund
91	application. The affidavit must contain the purchaser's name,
92	address, sales and use tax registration number, and, if
93	applicable, federal employer's identification number. Any person
94	fraudulently furnishing an affidavit to the vendor for the
95	purpose of evading payment of any tax imposed under this chapter
96	shall be subject to the penalty set forth in s. 212.085 and as
97	otherwise provided by law.
98	5.  In lieu of furnishing an affidavit, a purchaser
99	claiming the exemption provided in this paragraph who has a
100	direct-pay permit may furnish the vendor with a copy of the
101	direct-pay permit and shall maintain all documentation necessary
102	to prove the exempt status of the purchases and fabrication
103	activity.
104	6.  Purchasers shall maintain all documentation necessary
105	to prove the exempt status of purchases and fabrication activity
106	and make such documentation available for inspection pursuant to
107	the requirements of s. 212.13(2).
108	Section 3.  This act shall take effect July 1, 2006.

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