Florida Senate - 2015 SB 316
By Senator Hukill
8-00066-15 2015316__
1 A bill to be entitled
2 An act relating to economic business incentives;
3 amending s. 212.08, F.S.; revising the sales tax
4 exemption for certain business purchases of industrial
5 machinery and equipment; deleting certain limitations
6 on the exemption; revising procedural requirements for
7 the exemption; deleting the sales tax exemption for
8 machinery and equipment used for certain federal
9 procurement contracts; conforming cross-references;
10 amending ss. 212.0602, 220.183, 288.0001, 290.0056,
11 290.007, 624.5105, and 1011.94, F.S.; conforming
12 cross-references; providing an effective date.
13
14 Be It Enacted by the Legislature of the State of Florida:
15
16 Section 1. Paragraphs (b), (d), and (h) of subsection (5)
17 of section 212.08, Florida Statutes, are amended, present
18 paragraphs (e) through (q) of that subsection are redesignated
19 as paragraphs (d) through (p), respectively, and paragraph (f)
20 of subsection (15) of that section is amended, to read:
21 212.08 Sales, rental, use, consumption, distribution, and
22 storage tax; specified exemptions.—The sale at retail, the
23 rental, the use, the consumption, the distribution, and the
24 storage to be used or consumed in this state of the following
25 are hereby specifically exempt from the tax imposed by this
26 chapter.
27 (5) EXEMPTIONS; ACCOUNT OF USE.—
28 (b) Machinery and equipment used by manufacturers to
29 increase productive output.—
30 1. Industrial machinery and equipment purchased for
31 exclusive use in this state by a new business in spaceport
32 activities as defined by s. 212.02 or for use in new businesses
33 that manufactures, processes, compounds, or produces
34 manufacture, process, compound, or produce for sale items of
35 tangible personal property for sale at fixed locations is are
36 exempt from the tax imposed by this chapter if, at the time of
37 the purchase, the purchaser furnishes the seller with a signed
38 certificate stating that the items to be exempted are for
39 exclusive use as provided in this paragraph. The certificate
40 relieves the seller of the responsibility of collecting the tax
41 on the sale of such items, and the department shall look solely
42 to the purchaser for recovery of the tax if it determines that
43 the purchaser was not entitled to the exemption upon an
44 affirmative showing by the taxpayer to the satisfaction of the
45 department that such items are used in a new business in this
46 state. Such purchases must be made before the date the business
47 first begins its productive operations, and delivery of the
48 purchased item must be made within 12 months after that date.
49 2. Industrial machinery and equipment purchased for
50 exclusive use by an expanding facility which is engaged in
51 spaceport activities as defined by s. 212.02 or for use in
52 expanding manufacturing facilities or plant units which
53 manufacture, process, compound, or produce for sale items of
54 tangible personal property at fixed locations in this state are
55 exempt from any amount of tax imposed by this chapter upon an
56 affirmative showing by the taxpayer to the satisfaction of the
57 department that such items are used to increase the productive
58 output of such expanded facility or business by not less than 5
59 percent.
60 3.a. To receive an exemption provided by subparagraph 1. or
61 subparagraph 2., a qualifying business entity shall apply to the
62 department for a temporary tax exemption permit. The application
63 shall state that a new business exemption or expanded business
64 exemption is being sought. Upon a tentative affirmative
65 determination by the department pursuant to subparagraph 1. or
66 subparagraph 2., the department shall issue such permit.
67 b. The applicant shall maintain all necessary books and
68 records to support the exemption. Upon completion of purchases
69 of qualified machinery and equipment pursuant to subparagraph 1.
70 or subparagraph 2., the temporary tax permit shall be delivered
71 to the department or returned to the department by certified or
72 registered mail.
73 c. If, in a subsequent audit conducted by the department,
74 it is determined that the machinery and equipment purchased as
75 exempt under subparagraph 1. or subparagraph 2. did not meet the
76 criteria mandated by this paragraph or if commencement of
77 production did not occur, the amount of taxes exempted at the
78 time of purchase shall immediately be due and payable to the
79 department by the business entity, together with the appropriate
80 interest and penalty, computed from the date of purchase, in the
81 manner prescribed by this chapter.
82 d. If a qualifying business entity fails to apply for a
83 temporary exemption permit or if the tentative determination by
84 the department required to obtain a temporary exemption permit
85 is negative, a qualifying business entity shall receive the
86 exemption provided in subparagraph 1. or subparagraph 2. through
87 a refund of previously paid taxes. No refund may be made for
88 such taxes unless the criteria mandated by subparagraph 1. or
89 subparagraph 2. have been met and commencement of production has
90 occurred.
91 4. The department shall adopt rules governing applications
92 for, issuance of, and the form of temporary tax exemption
93 permits; provisions for recapture of taxes; and the manner and
94 form of refund applications, and may establish guidelines as to
95 the requisites for an affirmative showing of increased
96 productive output, commencement of production, and qualification
97 for exemption.
98 2.5. The exemption does exemptions provided in
99 subparagraphs 1. and 2. do not apply to industrial machinery or
100 equipment purchased or used by an electric utility company
101 companies, a communications company companies, an oil or gas
102 exploration or production operation operations, a publishing
103 firm firms that does do not export at least 50 percent of its
104 their finished product out of the state, a any firm subject to
105 regulation by the Division of Hotels and Restaurants of the
106 Department of Business and Professional Regulation, or a any
107 firm that does not manufacture, process, compound, or produce
108 for sale items of tangible personal property or that does not
109 use such machinery and equipment in spaceport activities as
110 required by this paragraph. The exemption applies exemptions
111 provided in subparagraphs 1. and 2. shall apply to industrial
112 machinery and equipment purchased for use in phosphate or other
113 solid minerals severance, mining, or processing operations.
114 3.6. For the purposes of the exemption, the term exemptions
115 provided in subparagraphs 1. and 2., these terms have the
116 following meanings:
117 a. “industrial machinery and equipment” means tangible
118 personal property or other property that has a depreciable life
119 of 3 years or more and that is used as an integral part in the
120 manufacturing, processing, compounding, or production of
121 tangible personal property for sale or is exclusively used in
122 spaceport activities. A building and its structural components
123 are not industrial machinery and equipment unless the building
124 or structural component is so closely related to the industrial
125 machinery and equipment which that it houses or supports that
126 the building or structural component can be expected to be
127 replaced when the machinery and equipment are replaced. Heating
128 and air-conditioning systems are not industrial machinery and
129 equipment unless the sole justification for their installation
130 is to meet the requirements of the production process, even
131 though the system may provide incidental comfort to employees or
132 serve, to an insubstantial degree, nonproduction activities. The
133 term includes parts and accessories for industrial machinery and
134 equipment only to the extent that the exemption thereof is
135 consistent with the provisions of this paragraph.
136 b. “Productive output” means the number of units actually
137 produced by a single plant, operation, or product line in a
138 single continuous 12-month period, irrespective of sales.
139 Increases in productive output shall be measured by the output
140 for 12 continuous months selected by the expanding business
141 after completion of the installation of such machinery or
142 equipment over the output for the 12 continuous months
143 immediately preceding such installation. However, in no case may
144 such time period begin later than 2 years after completion of
145 the installation of the new machinery and equipment. The units
146 used to measure productive output shall be physically comparable
147 between the two periods, irrespective of sales.
148 (d) Machinery and equipment used under federal procurement
149 contract.—
150 1. Industrial machinery and equipment purchased by an
151 expanding business which manufactures tangible personal property
152 pursuant to federal procurement regulations at fixed locations
153 in this state are exempt from the tax imposed in this chapter
154 upon an affirmative showing by the taxpayer to the satisfaction
155 of the department that such items are used to increase the
156 implicit productive output of the expanded business by not less
157 than 10 percent. The percentage of increase is measured as
158 deflated implicit productive output for the calendar year during
159 which the installation of the machinery or equipment is
160 completed or during which commencement of production utilizing
161 such items is begun divided by the implicit productive output
162 for the preceding calendar year. In no case may the commencement
163 of production begin later than 2 years following completion of
164 installation of the machinery or equipment.
165 2. The amount of the exemption allowed shall equal the
166 taxes otherwise imposed by this chapter on qualifying industrial
167 machinery or equipment reduced by the percentage of gross
168 receipts from cost-reimbursement type contracts attributable to
169 the plant or operation to total gross receipts so attributable,
170 accrued for the year of completion or commencement.
171 3. The exemption provided by this paragraph shall inure to
172 the taxpayer only through refund of previously paid taxes. Such
173 refund shall be made within 30 days of formal approval by the
174 department of the taxpayer’s application, which application may
175 be made on an annual basis following installation of the
176 machinery or equipment.
177 4. For the purposes of this paragraph, the term:
178 a. “Cost-reimbursement type contracts” has the same meaning
179 as in 32 C.F.R. s. 3-405.
180 b. “Deflated implicit productive output” means the product
181 of implicit productive output times the quotient of the national
182 defense implicit price deflator for the preceding calendar year
183 divided by the deflator for the year of completion or
184 commencement.
185 c. “Eligible costs” means the total direct and indirect
186 costs, as defined in 32 C.F.R. ss. 15-202 and 15-203, excluding
187 general and administrative costs, selling expenses, and profit,
188 defined by the uniform cost-accounting standards adopted by the
189 Cost-Accounting Standards Board created pursuant to 50 U.S.C. s.
190 2168.
191 d. “Implicit productive output” means the annual eligible
192 costs attributable to all contracts or subcontracts subject to
193 federal procurement regulations of the single plant or operation
194 at which the machinery or equipment is used.
195 e. “Industrial machinery and equipment” means tangible
196 personal property or other property that has a depreciable life
197 of 3 years or more, that qualifies as an eligible cost under
198 federal procurement regulations, and that is used as an integral
199 part of the process of production of tangible personal property.
200 A building and its structural components are not industrial
201 machinery and equipment unless the building or structural
202 component is so closely related to the industrial machinery and
203 equipment that it houses or supports that the building or
204 structural component can be expected to be replaced when the
205 machinery and equipment are replaced. Heating and air
206 conditioning systems are not industrial machinery and equipment
207 unless the sole justification for their installation is to meet
208 the requirements of the production process, even though the
209 system may provide incidental comfort to employees or serve, to
210 an insubstantial degree, nonproduction activities. The term
211 includes parts and accessories only to the extent that the
212 exemption of such parts and accessories is consistent with the
213 provisions of this paragraph.
214 f. “National defense implicit price deflator” means the
215 national defense implicit price deflator for the gross national
216 product as determined by the Bureau of Economic Analysis of the
217 United States Department of Commerce.
218 5. The exclusions provided in subparagraph (b)5. apply to
219 this exemption. This exemption applies only to machinery or
220 equipment purchased pursuant to production contracts with the
221 United States Department of Defense and Armed Forces, the
222 National Aeronautics and Space Administration, and other federal
223 agencies for which the contracts are classified for national
224 security reasons. In no event shall the provisions of this
225 paragraph apply to any expanding business the increase in
226 productive output of which could be measured under the
227 provisions of sub-subparagraph (b)6.b. as physically comparable
228 between the two periods.
229 (g)(h) Business property used in an enterprise zone.—
230 1. Business property purchased for use by a business
231 businesses located in an enterprise zone which is subsequently
232 used in an enterprise zone is shall be exempt from the tax
233 imposed by this chapter. This exemption inures to the business
234 only through a refund of previously paid taxes. A refund shall
235 be authorized upon an affirmative showing by the taxpayer, to
236 the satisfaction of the department, that the requirements of
237 this paragraph have been met.
238 2. To receive a refund, the business must file under oath
239 with the governing body or enterprise zone development agency
240 that has having jurisdiction over the enterprise zone where the
241 business is located, as applicable, an application, under oath,
242 which includes:
243 a. The name and address of the business claiming the
244 refund.
245 b. The identifying number assigned pursuant to s. 290.0065
246 to the enterprise zone in which the business is located.
247 c. A specific description of the property for which a
248 refund is sought, including its serial number or other permanent
249 identification number.
250 d. The location of the property.
251 e. The sales invoice or other proof of purchase of the
252 property, showing the amount of sales tax paid, the date of
253 purchase, and the name and address of the sales tax dealer from
254 whom the property was purchased.
255 f. Whether the business is a small business as defined by
256 s. 288.703.
257 g. If applicable, the name and address of each permanent
258 employee of the business, including, for each employee who is a
259 resident of an enterprise zone, the identifying number assigned
260 pursuant to s. 290.0065 to the enterprise zone in which the
261 employee resides.
262 3. Within 10 working days after receipt of an application,
263 the governing body or enterprise zone development agency shall
264 review the application to determine if it contains all the
265 information required under pursuant to subparagraph 2. and meets
266 the criteria specified set out in this paragraph. The governing
267 body or agency shall certify all applications that contain the
268 information required under pursuant to subparagraph 2. and meet
269 the criteria specified set out in this paragraph as eligible to
270 receive a refund. If applicable, the governing body or agency
271 shall also certify if 20 percent of the employees of the
272 business are residents of an enterprise zone, excluding
273 temporary and part-time employees. The certification must shall
274 be in writing, and a copy of the certification must shall be
275 transmitted to the executive director of the department of
276 Revenue. The business is shall be responsible for forwarding a
277 certified application to the department within the time
278 specified in subparagraph 4.
279 4. An application for a refund pursuant to this paragraph
280 must be submitted to the department within 6 months after the
281 tax is due on the business property that is purchased.
282 5. The amount refunded on purchases of business property
283 under this paragraph must shall be the lesser of 97 percent of
284 the sales tax paid on such business property or $5,000, or, if
285 no less than 20 percent or more of the employees of the business
286 are residents of an enterprise zone, excluding temporary and
287 part-time employees, the amount must refunded on purchases of
288 business property under this paragraph shall be the lesser of 97
289 percent of the sales tax paid on such business property or
290 $10,000. A refund must approved pursuant to this paragraph shall
291 be made within 30 days after formal approval by the department
292 of the application for the refund. A refund may not be granted
293 under this paragraph unless the amount to be refunded exceeds
294 $100 in sales tax paid on purchases made within a 60-day time
295 period.
296 6. The department shall adopt rules governing the manner
297 and form of refund applications and may establish guidelines as
298 to the requisites for an affirmative showing of qualification
299 for exemption under this paragraph.
300 7. If the department determines that the business property
301 is used outside an enterprise zone within 3 years after from the
302 date of purchase, the amount of taxes refunded to the business
303 purchasing such business property is shall immediately be due
304 and payable to the department by the business, together with the
305 appropriate interest and penalty, computed from the date of
306 purchase, in the manner provided by this chapter.
307 Notwithstanding this subparagraph, business property used
308 exclusively in:
309 a. Licensed commercial fishing vessels,
310 b. Fishing guide boats, or
311 c. Ecotourism guide boats
312
313 that leave and return to a fixed location within an area
314 designated under s. 379.2353, Florida Statutes 2010, are
315 eligible for the exemption provided under this paragraph if the
316 all requirements of this paragraph are met. The Such vessels and
317 boats must be owned by a business that is eligible to receive
318 the exemption provided under this paragraph. This exemption does
319 not apply to the purchase of a vessel or boat.
320 8. The department shall deduct an amount equal to 10
321 percent of each refund granted under this paragraph from the
322 amount transferred into the Local Government Half-cent Sales Tax
323 Clearing Trust Fund pursuant to s. 212.20 for the county area in
324 which the business property is located and shall transfer that
325 amount to the General Revenue Fund.
326 9. For the purposes of this exemption, the term “business
327 property” means new or used property defined as “recovery
328 property” in s. 168(c) of the Internal Revenue Code of 1954, as
329 amended, except:
330 a. Property classified as 3-year property under s.
331 168(c)(2)(A) of the Internal Revenue Code of 1954, as amended;
332 b. Industrial machinery and equipment as defined in
333 subparagraph (b)3. sub-subparagraph (b)6.a. and eligible for
334 exemption under paragraph (b);
335 c. Building materials as defined in sub-subparagraph
336 (f)8.a.(g)8.a.; and
337 d. Business property having a sales price of under $5,000
338 per unit.
339 10. This paragraph expires on the date specified in s.
340 290.016 for the expiration of the Florida Enterprise Zone Act.
341 (15) ELECTRICAL ENERGY USED IN AN ENTERPRISE ZONE.—
342 (f) For the purpose of the exemption provided in this
343 subsection, the term “qualified business” means a business that
344 which is:
345 1. First occupying a new structure to which electrical
346 service, other than that used for construction purposes, has not
347 been previously provided or furnished;
348 2. Newly occupying an existing, remodeled, renovated, or
349 rehabilitated structure to which electrical service, other than
350 that used for remodeling, renovation, or rehabilitation of the
351 structure, has not been provided or furnished in the three
352 preceding billing periods; or
353 3. Occupying a new, remodeled, rebuilt, renovated, or
354 rehabilitated structure for which a refund has been granted
355 pursuant to paragraph (5)(f) (5)(g).
356 Section 2. Section 212.0602, Florida Statutes, is amended
357 to read:
358 212.0602 Education; limited exemption.—To facilitate
359 investment in education and job training, there is also exempt
360 from the taxes levied under this chapter, subject to the
361 provisions of this section, the purchase or lease of materials,
362 equipment, and other items or the license in or lease of real
363 property by an any entity, institution, or organization that is
364 primarily engaged in teaching students to perform any of the
365 activities or services described in s. 212.031(1)(a)9., that
366 conducts classes at a fixed location located in this state, that
367 is licensed under chapter 1005, and that has at least 500
368 enrolled students is exempt from the taxes levied under this
369 chapter. An Any entity, institution, or organization meeting the
370 requirements of this section shall be deemed to qualify for the
371 exemptions under in ss. 212.031(1)(a)9. and 212.08(5)(e)
372 212.08(5)(f) and (12), and to qualify for an exemption for its
373 purchase or lease of materials, equipment, and other items used
374 for education or demonstration of the school’s curriculum,
375 including supporting operations. Nothing in This section does
376 not shall preclude an entity described in this section from
377 qualifying for any other exemption provided under for in this
378 chapter.
379 Section 3. Paragraph (c) of subsection (1) of section
380 220.183, Florida Statutes, is amended to read:
381 220.183 Community contribution tax credit.—
382 (1) AUTHORIZATION TO GRANT COMMUNITY CONTRIBUTION TAX
383 CREDITS; LIMITATIONS ON INDIVIDUAL CREDITS AND PROGRAM
384 SPENDING.—
385 (c) The total amount of tax credit which may be granted for
386 all programs approved under this section, s. 212.08(5)(o) s.
387 212.08(5)(p), and s. 624.5105 is $18.4 million annually for
388 projects that provide homeownership opportunities for low-income
389 households or very-low-income households as those terms are
390 defined in s. 420.9071 and $3.5 million annually for all other
391 projects.
392 Section 4. Paragraph (c) of subsection (2) of section
393 288.0001, Florida Statutes, is amended to read:
394 288.0001 Economic Development Programs Evaluation.—The
395 Office of Economic and Demographic Research and the Office of
396 Program Policy Analysis and Government Accountability (OPPAGA)
397 shall develop and present to the Governor, the President of the
398 Senate, the Speaker of the House of Representatives, and the
399 chairs of the legislative appropriations committees the Economic
400 Development Programs Evaluation.
401 (2) The Office of Economic and Demographic Research and
402 OPPAGA shall provide a detailed analysis of economic development
403 programs as provided in the following schedule:
404 (c) By January 1, 2016, and every 3 years thereafter, an
405 analysis of the following:
406 1. The qualified defense contractor and space flight
407 business tax refund program established under s. 288.1045.
408 2. The tax exemption for semiconductor, defense, or space
409 technology sales established under s. 212.08(5)(i) s.
410 212.08(5)(j).
411 3. The Military Base Protection Program established under
412 s. 288.980.
413 4. The Manufacturing and Spaceport Investment Incentive
414 Program formerly established under s. 288.1083.
415 5. The Quick Response Training Program established under s.
416 288.047.
417 6. The Incumbent Worker Training Program established under
418 s. 445.003.
419 7. International trade and business development programs
420 established or funded under s. 288.826.
421 Section 5. Paragraph (a) of subsection (9) of section
422 290.0056, Florida Statutes, is amended to read:
423 290.0056 Enterprise zone development agency.—
424 (9) The following powers and responsibilities shall be
425 performed by the governing body creating the enterprise zone
426 development agency acting as the managing agent of the
427 enterprise zone development agency, or, contingent upon approval
428 by such governing body, such powers and responsibilities shall
429 be performed by the enterprise zone development agency:
430 (a) To review, process, and certify applications for state
431 enterprise zone tax incentives pursuant to ss. 212.08(5)(f) and
432 (g) ss. 212.08(5)(g), (h), and (15); 212.096; 220.181; and
433 220.182.
434 Section 6. Subsections (4) and (5) of section 290.007,
435 Florida Statutes, are amended to read:
436 290.007 State incentives available in enterprise zones.—The
437 following incentives are provided by the state to encourage the
438 revitalization of enterprise zones:
439 (4) The sales tax exemption for building materials used in
440 the rehabilitation of real property in enterprise zones provided
441 in s. 212.08(5)(f) s. 212.08(5)(g).
442 (5) The sales tax exemption for business equipment used in
443 an enterprise zone provided in s. 212.08(5)(g) s. 212.08(5)(h).
444 Section 7. Paragraph (c) of subsection (1) of section
445 624.5105, Florida Statutes, is amended to read:
446 624.5105 Community contribution tax credit; authorization;
447 limitations; eligibility and application requirements;
448 administration; definitions; expiration.—
449 (1) AUTHORIZATION TO GRANT TAX CREDITS; LIMITATIONS.—
450 (c) The total amount of tax credit which may be granted for
451 all programs approved under this section and ss. 212.08(5)(o)
452 ss. 212.08(5)(p) and 220.183 is $18.4 million annually for
453 projects that provide homeownership opportunities for low-income
454 households or very-low-income households as those terms are
455 defined in s. 420.9071 and $3.5 million annually for all other
456 projects.
457 Section 8. Subsection (1) of section 1011.94, Florida
458 Statutes, is amended to read:
459 1011.94 University Major Gifts Program.—
460 (1) The There is established a University Major Gifts
461 Program is established. The purpose of the program is to enable
462 each university to provide donors with an incentive in the form
463 of matching grants for donations for the establishment of
464 permanent endowments and sales tax exemption matching funds
465 received pursuant to s. 212.08(5)(i) s. 212.08(5)(j), which must
466 be invested, with the proceeds of the investment used to support
467 libraries and instruction and research programs, as defined by
468 the Board of Governors.
469 Section 9. This act shall take effect January 1, 2016.