Florida Senate - 2013                        COMMITTEE AMENDMENT
       Bill No. SB 518
       
       
       
       
       
       
                                Barcode 233250                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  04/01/2013           .                                
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       The Committee on Commerce and Tourism (Hukill) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Paragraphs (e) through (q) of subsection (5) of
    6  section 212.08, Florida Statutes, are redesignated as paragraphs
    7  (d) through (p), respectively, and paragraphs (b), (d), and (h)
    8  of that subsection and paragraph (f) of subsection (15) of that
    9  section are amended, to read:
   10         212.08 Sales, rental, use, consumption, distribution, and
   11  storage tax; specified exemptions.—The sale at retail, the
   12  rental, the use, the consumption, the distribution, and the
   13  storage to be used or consumed in this state of the following
   14  are hereby specifically exempt from the tax imposed by this
   15  chapter.
   16         (5) EXEMPTIONS; ACCOUNT OF USE.—
   17         (b) Machinery and equipment used by manufacturers to
   18  increase productive output.—
   19         1. Industrial machinery and equipment purchased for
   20  exclusive use in this state by a new business in spaceport
   21  activities as defined by s. 212.02 or for use in new businesses
   22  that manufacture, process, compound, or produce for sale items
   23  of tangible personal property at fixed locations are exempt from
   24  the tax imposed by this chapter if, at the time of purchase, the
   25  purchaser furnishes the seller with a signed certificate stating
   26  that the items to be exempted are for exclusive use as provided
   27  in this paragraph. The certificate relieves the seller of the
   28  responsibility of collecting the tax on the sale of such items
   29  and the department shall look solely to the purchaser for
   30  recovery of the tax if it determines that the purchaser was not
   31  entitled to the exemption upon an affirmative showing by the
   32  taxpayer to the satisfaction of the department that such items
   33  are used in a new business in this state. Such purchases must be
   34  made before the date the business first begins its productive
   35  operations, and delivery of the purchased item must be made
   36  within 12 months after that date.
   37         2. Industrial machinery and equipment purchased for
   38  exclusive use by an expanding facility which is engaged in
   39  spaceport activities as defined by s. 212.02 or for use in
   40  expanding manufacturing facilities or plant units which
   41  manufacture, process, compound, or produce for sale items of
   42  tangible personal property at fixed locations in this state are
   43  exempt from any amount of tax imposed by this chapter upon an
   44  affirmative showing by the taxpayer to the satisfaction of the
   45  department that such items are used to increase the productive
   46  output of such expanded facility or business by not less than 5
   47  percent.
   48         3.a. To receive an exemption provided by subparagraph 1. or
   49  subparagraph 2., a qualifying business entity shall apply to the
   50  department for a temporary tax exemption permit. The application
   51  shall state that a new business exemption or expanded business
   52  exemption is being sought. Upon a tentative affirmative
   53  determination by the department pursuant to subparagraph 1. or
   54  subparagraph 2., the department shall issue such permit.
   55         b. The applicant shall maintain all necessary books and
   56  records to support the exemption. Upon completion of purchases
   57  of qualified machinery and equipment pursuant to subparagraph 1.
   58  or subparagraph 2., the temporary tax permit shall be delivered
   59  to the department or returned to the department by certified or
   60  registered mail.
   61         c. If, in a subsequent audit conducted by the department,
   62  it is determined that the machinery and equipment purchased as
   63  exempt under subparagraph 1. or subparagraph 2. did not meet the
   64  criteria mandated by this paragraph or if commencement of
   65  production did not occur, the amount of taxes exempted at the
   66  time of purchase shall immediately be due and payable to the
   67  department by the business entity, together with the appropriate
   68  interest and penalty, computed from the date of purchase, in the
   69  manner prescribed by this chapter.
   70         d. If a qualifying business entity fails to apply for a
   71  temporary exemption permit or if the tentative determination by
   72  the department required to obtain a temporary exemption permit
   73  is negative, a qualifying business entity shall receive the
   74  exemption provided in subparagraph 1. or subparagraph 2. through
   75  a refund of previously paid taxes. No refund may be made for
   76  such taxes unless the criteria mandated by subparagraph 1. or
   77  subparagraph 2. have been met and commencement of production has
   78  occurred.
   79         4. The department shall adopt rules governing applications
   80  for, issuance of, and the form of temporary tax exemption
   81  permits; provisions for recapture of taxes; and the manner and
   82  form of refund applications, and may establish guidelines as to
   83  the requisites for an affirmative showing of increased
   84  productive output, commencement of production, and qualification
   85  for exemption.
   86         2.5. The exemption does exemptions provided in
   87  subparagraphs 1. and 2. do not apply to machinery or equipment
   88  purchased or used by electric utility companies, communications
   89  companies, oil or gas exploration or production operations,
   90  publishing firms that do not export at least 50 percent of their
   91  finished product out of the state, any firm subject to
   92  regulation by the Division of Hotels and Restaurants of the
   93  Department of Business and Professional Regulation, or any firm
   94  that does not manufacture, process, compound, or produce for
   95  sale items of tangible personal property or that does not use
   96  such machinery and equipment in spaceport activities as required
   97  by this paragraph. The exemption applies exemptions provided in
   98  subparagraphs 1. and 2. shall apply to machinery and equipment
   99  purchased for use in phosphate or other solid minerals
  100  severance, mining, or processing operations.
  101         3.6. For the purposes of the exemption, the term exemptions
  102  provided in subparagraphs 1. and 2., these terms have the
  103  following meanings:
  104         a. “Industrial machinery and equipment” means tangible
  105  personal property or other property that has a depreciable life
  106  of 3 years or more and that is used as an integral part in the
  107  manufacturing, processing, compounding, or production of
  108  tangible personal property for sale or is exclusively used in
  109  spaceport activities. A building and its structural components
  110  are not industrial machinery and equipment unless the building
  111  or structural component is so closely related to the industrial
  112  machinery and equipment that it houses or supports that the
  113  building or structural component can be expected to be replaced
  114  when the machinery and equipment are replaced. Heating and air
  115  conditioning systems are not industrial machinery and equipment
  116  unless the sole justification for their installation is to meet
  117  the requirements of the production process, even though the
  118  system may provide incidental comfort to employees or serve, to
  119  an insubstantial degree, nonproduction activities. The term
  120  includes parts and accessories for industrial machinery and
  121  equipment only to the extent that the exemption thereof is
  122  consistent with the provisions of this paragraph.
  123         b. “Productive output” means the number of units actually
  124  produced by a single plant, operation, or product line in a
  125  single continuous 12-month period, irrespective of sales.
  126  Increases in productive output shall be measured by the output
  127  for 12 continuous months selected by the expanding business
  128  after completion of the installation of such machinery or
  129  equipment over the output for the 12 continuous months
  130  immediately preceding such installation. However, in no case may
  131  such time period begin later than 2 years after completion of
  132  the installation of the new machinery and equipment. The units
  133  used to measure productive output shall be physically comparable
  134  between the two periods, irrespective of sales.
  135         (d) Machinery and equipment used under federal procurement
  136  contract.
  137         1. Industrial machinery and equipment purchased by an
  138  expanding business which manufactures tangible personal property
  139  pursuant to federal procurement regulations at fixed locations
  140  in this state are exempt from the tax imposed in this chapter
  141  upon an affirmative showing by the taxpayer to the satisfaction
  142  of the department that such items are used to increase the
  143  implicit productive output of the expanded business by not less
  144  than 10 percent. The percentage of increase is measured as
  145  deflated implicit productive output for the calendar year during
  146  which the installation of the machinery or equipment is
  147  completed or during which commencement of production utilizing
  148  such items is begun divided by the implicit productive output
  149  for the preceding calendar year. In no case may the commencement
  150  of production begin later than 2 years following completion of
  151  installation of the machinery or equipment.
  152         2. The amount of the exemption allowed shall equal the
  153  taxes otherwise imposed by this chapter on qualifying industrial
  154  machinery or equipment reduced by the percentage of gross
  155  receipts from cost-reimbursement type contracts attributable to
  156  the plant or operation to total gross receipts so attributable,
  157  accrued for the year of completion or commencement.
  158         3. The exemption provided by this paragraph shall inure to
  159  the taxpayer only through refund of previously paid taxes. Such
  160  refund shall be made within 30 days of formal approval by the
  161  department of the taxpayer’s application, which application may
  162  be made on an annual basis following installation of the
  163  machinery or equipment.
  164         4. For the purposes of this paragraph, the term:
  165         a. “Cost-reimbursement type contracts” has the same meaning
  166  as in 32 C.F.R. s. 3-405.
  167         b. “Deflated implicit productive output” means the product
  168  of implicit productive output times the quotient of the national
  169  defense implicit price deflator for the preceding calendar year
  170  divided by the deflator for the year of completion or
  171  commencement.
  172         c. “Eligible costs” means the total direct and indirect
  173  costs, as defined in 32 C.F.R. ss. 15-202 and 15-203, excluding
  174  general and administrative costs, selling expenses, and profit,
  175  defined by the uniform cost-accounting standards adopted by the
  176  Cost-Accounting Standards Board created pursuant to 50 U.S.C. s.
  177  2168.
  178         d. “Implicit productive output” means the annual eligible
  179  costs attributable to all contracts or subcontracts subject to
  180  federal procurement regulations of the single plant or operation
  181  at which the machinery or equipment is used.
  182         e. “Industrial machinery and equipment” means tangible
  183  personal property or other property that has a depreciable life
  184  of 3 years or more, that qualifies as an eligible cost under
  185  federal procurement regulations, and that is used as an integral
  186  part of the process of production of tangible personal property.
  187  A building and its structural components are not industrial
  188  machinery and equipment unless the building or structural
  189  component is so closely related to the industrial machinery and
  190  equipment that it houses or supports that the building or
  191  structural component can be expected to be replaced when the
  192  machinery and equipment are replaced. Heating and air
  193  conditioning systems are not industrial machinery and equipment
  194  unless the sole justification for their installation is to meet
  195  the requirements of the production process, even though the
  196  system may provide incidental comfort to employees or serve, to
  197  an insubstantial degree, nonproduction activities. The term
  198  includes parts and accessories only to the extent that the
  199  exemption of such parts and accessories is consistent with the
  200  provisions of this paragraph.
  201         f. “National defense implicit price deflator” means the
  202  national defense implicit price deflator for the gross national
  203  product as determined by the Bureau of Economic Analysis of the
  204  United States Department of Commerce.
  205         5. The exclusions provided in subparagraph (b)5. apply to
  206  this exemption. This exemption applies only to machinery or
  207  equipment purchased pursuant to production contracts with the
  208  United States Department of Defense and Armed Forces, the
  209  National Aeronautics and Space Administration, and other federal
  210  agencies for which the contracts are classified for national
  211  security reasons. In no event shall the provisions of this
  212  paragraph apply to any expanding business the increase in
  213  productive output of which could be measured under the
  214  provisions of sub-subparagraph (b)6.b. as physically comparable
  215  between the two periods.
  216         (g)(h)Business property used in an enterprise zone.—
  217         1. Business property purchased for use by businesses
  218  located in an enterprise zone which is subsequently used in an
  219  enterprise zone is shall be exempt from the tax imposed by this
  220  chapter. This exemption inures to the business only through a
  221  refund of previously paid taxes. A refund shall be authorized
  222  upon an affirmative showing by the taxpayer, to the satisfaction
  223  of the department, that the requirements of this paragraph have
  224  been met.
  225         2. To receive a refund, the business must file under oath
  226  with the governing body or enterprise zone development agency
  227  that has having jurisdiction over the enterprise zone where the
  228  business is located, as applicable, an application, under oath,
  229  which includes:
  230         a. The name and address of the business claiming the
  231  refund.
  232         b. The identifying number assigned pursuant to s. 290.0065
  233  to the enterprise zone in which the business is located.
  234         c. A specific description of the property for which a
  235  refund is sought, including its serial number or other permanent
  236  identification number.
  237         d. The location of the property.
  238         e. The sales invoice or other proof of purchase of the
  239  property, showing the amount of sales tax paid, the date of
  240  purchase, and the name and address of the sales tax dealer from
  241  whom the property was purchased.
  242         f. Whether the business is a small business as defined by
  243  s. 288.703.
  244         g. If applicable, the name and address of each permanent
  245  employee of the business, including, for each employee who is a
  246  resident of an enterprise zone, the identifying number assigned
  247  pursuant to s. 290.0065 to the enterprise zone in which the
  248  employee resides.
  249         3. Within 10 working days after receipt of an application,
  250  the governing body or enterprise zone development agency shall
  251  review the application to determine if it contains all the
  252  information required pursuant to subparagraph 2. and meets the
  253  criteria set out in this paragraph. The governing body or agency
  254  shall certify all applications that contain the information
  255  required pursuant to subparagraph 2. and meet the criteria set
  256  out in this paragraph as eligible to receive a refund. If
  257  applicable, the governing body or agency shall also certify if
  258  20 percent of the employees of the business are residents of an
  259  enterprise zone, excluding temporary and part-time employees.
  260  The certification must shall be in writing, and a copy of the
  261  certification must shall be transmitted to the executive
  262  director of the Department of Revenue. The business is shall be
  263  responsible for forwarding a certified application to the
  264  department within the time specified in subparagraph 4.
  265         4. An application for a refund pursuant to this paragraph
  266  must be submitted to the department within 6 months after the
  267  tax is due on the business property that is purchased.
  268         5. The amount refunded on purchases of business property
  269  under this paragraph shall be the lesser of 97 percent of the
  270  sales tax paid on such business property or $5,000, or, if no
  271  less than 20 percent or more of the employees of the business
  272  are residents of an enterprise zone, excluding temporary and
  273  part-time employees, the amount refunded on purchases of
  274  business property under this paragraph shall be the lesser of 97
  275  percent of the sales tax paid on such business property or
  276  $10,000. A refund must approved pursuant to this paragraph shall
  277  be made within 30 days after formal approval by the department
  278  of the application for the refund. A refund may not be granted
  279  under this paragraph unless the amount to be refunded exceeds
  280  $100 in sales tax paid on purchases made within a 60-day time
  281  period.
  282         6. The department shall adopt rules governing the manner
  283  and form of refund applications and may establish guidelines as
  284  to the requisites for an affirmative showing of qualification
  285  for exemption under this paragraph.
  286         7. If the department determines that the business property
  287  is used outside an enterprise zone within 3 years after from the
  288  date of purchase, the amount of taxes refunded to the business
  289  purchasing such business property is shall immediately be due
  290  and payable to the department by the business, together with the
  291  appropriate interest and penalty, computed from the date of
  292  purchase, in the manner provided by this chapter.
  293  Notwithstanding this subparagraph, business property used
  294  exclusively in:
  295         a. Licensed commercial fishing vessels,
  296         b. Fishing guide boats, or
  297         c. Ecotourism guide boats
  298  
  299  that leave and return to a fixed location within an area
  300  designated under s. 379.2353, Florida Statutes 2010, are
  301  eligible for the exemption provided under this paragraph if all
  302  requirements of this paragraph are met. Such vessels and boats
  303  must be owned by a business that is eligible to receive the
  304  exemption provided under this paragraph. This exemption does not
  305  apply to the purchase of a vessel or boat.
  306         8. The department shall deduct an amount equal to 10
  307  percent of each refund granted under this paragraph from the
  308  amount transferred into the Local Government Half-cent Sales Tax
  309  Clearing Trust Fund pursuant to s. 212.20 for the county area in
  310  which the business property is located and shall transfer that
  311  amount to the General Revenue Fund.
  312         9. For the purposes of this exemption, the term “business
  313  property” means new or used property defined as “recovery
  314  property” in s. 168(c) of the Internal Revenue Code of 1954, as
  315  amended, except:
  316         a. Property classified as 3-year property under s.
  317  168(c)(2)(A) of the Internal Revenue Code of 1954, as amended;
  318         b. Industrial machinery and equipment as defined in
  319  subparagraph (b)3. sub-subparagraph (b)6.a. and eligible for
  320  exemption under paragraph (b);
  321         c. Building materials as defined in sub-subparagraph
  322  (g)8.a.; and
  323         d. Business property having a sales price of under $5,000
  324  per unit.
  325         10. This paragraph expires on the date specified in s.
  326  290.016 for the expiration of the Florida Enterprise Zone Act.
  327         (15) ELECTRICAL ENERGY USED IN AN ENTERPRISE ZONE.—
  328         (f) For the purpose of the exemption provided in this
  329  subsection, the term “qualified business” means a business that
  330  which is:
  331         1. First occupying a new structure to which electrical
  332  service, other than that used for construction purposes, has not
  333  been previously provided or furnished;
  334         2. Newly occupying an existing, remodeled, renovated, or
  335  rehabilitated structure to which electrical service, other than
  336  that used for remodeling, renovation, or rehabilitation of the
  337  structure, has not been provided or furnished in the three
  338  preceding billing periods; or
  339         3. Occupying a new, remodeled, rebuilt, renovated, or
  340  rehabilitated structure for which a refund has been granted
  341  pursuant to paragraph (5)(f) (5)(g).
  342         Section 2. Effective July 1, 2013, paragraph (c) of
  343  subsection (2) of section 288.1045, Florida Statutes, is
  344  amended, and present paragraphs (d) through (h) of that
  345  subsection are redesignated as paragraphs (c) through (g),
  346  respectively, to read:
  347         288.1045 Qualified defense contractor and space flight
  348  business tax refund program.—
  349         (2) GRANTING OF A TAX REFUND; ELIGIBLE AMOUNTS.—
  350         (c)A qualified applicant may not receive more than $7
  351  million in tax refunds pursuant to this section in all fiscal
  352  years.
  353         Section 3. Effective July 1, 2013, paragraph (c) of
  354  subsection (3) of section 288.106, Florida Statutes, is amended
  355  to read:
  356         288.106 Tax refund program for qualified target industry
  357  businesses.—
  358         (3) TAX REFUND; ELIGIBLE AMOUNTS.—
  359         (c) A qualified target industry business may not receive
  360  refund payments of more than 25 percent of the total tax refunds
  361  specified in the tax refund agreement under subparagraph
  362  (5)(a)1. in any fiscal year. Further, a qualified target
  363  industry business may not receive more than $1.5 million in
  364  refunds under this section in any single fiscal year, or more
  365  than $2.5 million in any single fiscal year if the project is
  366  located in an enterprise zone. A qualified target industry
  367  business may not receive more than $7 million in refund payments
  368  under this section in all fiscal years, or more than $7.5
  369  million if the project is located in an enterprise zone.
  370         Section 4. Section 212.0602, Florida Statutes, is amended
  371  to read:
  372         212.0602 Education; limited exemption.—To facilitate
  373  investment in education and job training, there is also exempt
  374  from the taxes levied under this chapter, subject to the
  375  provisions of this section, the purchase or lease of materials,
  376  equipment, and other items or the license in or lease of real
  377  property by any entity, institution, or organization that is
  378  primarily engaged in teaching students to perform any of the
  379  activities or services described in s. 212.031(1)(a)9., that
  380  conducts classes at a fixed location located in this state, that
  381  is licensed under chapter 1005, and that has at least 500
  382  enrolled students. Any entity, institution, or organization
  383  meeting the requirements of this section shall be deemed to
  384  qualify for the exemptions under in ss. 212.031(1)(a)9. and
  385  212.08(5)(e) 212.08(5)(f) and (12), and to qualify for an
  386  exemption for its purchase or lease of materials, equipment, and
  387  other items used for education or demonstration of the school’s
  388  curriculum, including supporting operations. Nothing in This
  389  section does not shall preclude an entity described in this
  390  section from qualifying for any other exemption provided under
  391  for in this chapter.
  392         Section 5. Paragraph (c) of subsection (1) of section
  393  220.183, Florida Statutes, is amended to read:
  394         220.183 Community contribution tax credit.—
  395         (1) AUTHORIZATION TO GRANT COMMUNITY CONTRIBUTION TAX
  396  CREDITS; LIMITATIONS ON INDIVIDUAL CREDITS AND PROGRAM
  397  SPENDING.—
  398         (c) The total amount of tax credit which may be granted for
  399  all programs approved under this section, s. 212.08(5)(o)
  400  212.08(5)(p), and s. 624.5105 is $10.5 million annually for
  401  projects that provide homeownership opportunities for low-income
  402  households or very-low-income households as those terms are
  403  defined in s. 420.9071(19) and (28) and $3.5 million annually
  404  for all other projects.
  405         Section 6. Paragraph (a) of subsection (9) of section
  406  290.0056, Florida Statutes, is amended to read:
  407         290.0056 Enterprise zone development agency.—
  408         (9) The following powers and responsibilities shall be
  409  performed by the governing body creating the enterprise zone
  410  development agency acting as the managing agent of the
  411  enterprise zone development agency, or, contingent upon approval
  412  by such governing body, such powers and responsibilities shall
  413  be performed by the enterprise zone development agency:
  414         (a) To review, process, and certify applications for state
  415  enterprise zone tax incentives pursuant to ss. 212.08(5)(f), (g)
  416  212.08(5)(g), (h), and (15); 212.096; 220.181; and 220.182.
  417         Section 7. Subsections (4) and (5) of section 290.007,
  418  Florida Statutes, are amended to read:
  419         290.007 State incentives available in enterprise zones.—The
  420  following incentives are provided by the state to encourage the
  421  revitalization of enterprise zones:
  422         (4) The sales tax exemption for building materials used in
  423  the rehabilitation of real property in enterprise zones provided
  424  in s. 212.08(5)(f) 212.08(5)(g).
  425         (5) The sales tax exemption for business equipment used in
  426  an enterprise zone provided in s. 212.08(5)(g) 212.08(5)(h).
  427         Section 8. Paragraph (c) of subsection (1) of section
  428  624.5105, Florida Statutes, is amended to read:
  429         624.5105 Community contribution tax credit; authorization;
  430  limitations; eligibility and application requirements;
  431  administration; definitions; expiration.—
  432         (1) AUTHORIZATION TO GRANT TAX CREDITS; LIMITATIONS.—
  433         (c) The total amount of tax credit which may be granted for
  434  all programs approved under this section and ss. 212.08(5)(o)
  435  212.08(5)(p) and 220.183 is $10.5 million annually for projects
  436  that provide homeownership opportunities for low-income
  437  households or very-low-income households as those terms are
  438  defined in s. 420.9071(19) and (28) and $3.5 million annually
  439  for all other projects.
  440         Section 9. Subsection (1) of section 1011.94, Florida
  441  Statutes, is amended to read:
  442         1011.94 University Major Gifts Program.—
  443         (1) The There is established a University Major Gifts
  444  Program is established. The purpose of the program is to enable
  445  each university to provide donors with an incentive in the form
  446  of matching grants for donations for the establishment of
  447  permanent endowments and sales tax exemption matching funds
  448  received pursuant to s. 212.08(5)(i) 212.08(5)(j), which must be
  449  invested, with the proceeds of the investment used to support
  450  libraries and instruction and research programs, as defined by
  451  the Board of Governors.
  452         Section 10. Except as otherwise expressly provided in this
  453  act, and except for this section which shall take effect upon
  454  becoming law, this act shall take effect January 1, 2014.
  455  
  456  ================= T I T L E  A M E N D M E N T ================
  457         And the title is amended as follows:
  458         Delete everything before the enacting clause
  459  and insert:
  460                        A bill to be entitled                      
  461         An act relating to economic business incentives;
  462         amending s. 212.08, F.S.; revising the sales tax
  463         exemption for certain business purchases of industrial
  464         machinery and equipment; deleting certain limitations
  465         on, and procedural requirements relating to, the
  466         exemption; deleting the sales tax exemption for
  467         machinery and equipment used for certain federal
  468         procurement contracts; conforming cross-references;
  469         amending s. 288.1045, F.S.; deleting the limitation on
  470         the maximum amount of tax refunds a business may
  471         receive under the qualified defense contractor and
  472         space flight business tax refund program; amending s.
  473         288.106, F.S.; deleting the limitation on the maximum
  474         amount of tax refunds a business may receive under the
  475         tax refund program for qualified target industry
  476         businesses; amending ss. 212.0602, 220.183, 290.0056,
  477         290.007, 627.5105, and 1011.94, F.S.; conforming
  478         cross-references; providing effective dates.