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S.B. 51
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SALES AND USE TAX EXEMPTION -
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CERTAIN PURCHASES OR LEASES BY A
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MANUFACTURER
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2000 GENERAL SESSION
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STATE OF UTAH
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Sponsor: Howard A. Stephenson
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AN ACT RELATING TO THE SALES AND USE TAX ACT; EXPANDING THE SALES AND
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USE TAX EXEMPTION FOR CERTAIN PURCHASES OR LEASES BY A
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MANUFACTURER; MODIFYING THE REQUIREMENTS FOR THE UTAH STATE TAX
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COMMISSION TO STUDY THE SALES AND USE TAX EXEMPTION; AND MAKING
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TECHNICAL CHANGES.
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This act affects sections of Utah Code Annotated 1953 as follows:
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AMENDS:
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59-12-104, as last amended by Chapters 63, 155, 195, 306, 313 and 362, Laws of Utah
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1999
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
59-12-104
is amended to read:
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59-12-104. Exemptions.
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The following sales and uses are exempt from the taxes imposed by this chapter:
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(1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
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under Title 59, Chapter 13, Motor and Special Fuel Tax Act;
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(2) sales to the state, its institutions, and its political subdivisions; however, this exemption
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does not apply to sales of construction materials except:
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(a) construction materials purchased by or on behalf of institutions of the public education
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system as defined in Utah Constitution Article X, Section 2, provided the construction materials
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are clearly identified and segregated and installed or converted to real property which is owned by
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institutions of the public education system; and
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(b) construction materials purchased by the state, its institutions, or its political
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subdivisions which are installed or converted to real property by employees of the state, its
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institutions, or its political subdivisions;
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(3) sales of food, beverage, and dairy products from vending machines in which the
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proceeds of each sale do not exceed $1 if the vendor or operator of the vending machine reports
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an amount equal to 150% of the cost of items as goods consumed;
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(4) sales of food, beverage, dairy products, similar confections, and related services to
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commercial airline carriers for in-flight consumption;
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(5) sales of parts and equipment installed in aircraft operated by common carriers in
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interstate or foreign commerce;
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(6) sales of commercials, motion picture films, prerecorded audio program tapes or
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records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
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exhibitor, distributor, or commercial television or radio broadcaster;
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(7) sales of cleaning or washing of tangible personal property by a coin-operated laundry
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or dry cleaning machine;
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(8) (a) except as provided in Subsection (8)(b), sales made to or by religious or charitable
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institutions in the conduct of their regular religious or charitable functions and activities, if the
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requirements of Section
59-12-104.1
are fulfilled;
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(b) the exemption provided for in Subsection (8)(a) does not apply to the following sales,
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uses, leases, or rentals relating to the Olympic Winter Games of 2002 made to or by an
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organization exempt from federal income taxation under Section 501(c)(3), Internal Revenue
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Code:
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(i) retail sales of Olympic merchandise;
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(ii) admissions or user fees described in Subsection
59-12-103
(1)(f);
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(iii) sales of accommodations and services as provided in Subsection
59-12-103
(1)(i),
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except for accommodations and services:
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(A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
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of 2002;
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(B) exclusively used by:
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(I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
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Olympic Winter Games of 2002; or
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(II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
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Games of 2002; and
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(C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
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does not receive reimbursement; or
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(iv) a lease or rental of a vehicle as defined in Section
41-1a-102
, except for a lease or
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rental of a vehicle:
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(A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
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of 2002;
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(B) exclusively used by:
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(I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
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Olympic Winter Games of 2002; or
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(II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
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Games of 2002; and
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(C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
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does not receive reimbursement;
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(9) sales of vehicles of a type required to be registered under the motor vehicle laws of this
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state which are made to bona fide nonresidents of this state and are not afterwards registered or
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used in this state except as necessary to transport them to the borders of this state;
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(10) sales of medicine;
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(11) sales or use of property, materials, or services used in the construction of or
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incorporated in pollution control facilities allowed by Sections
19-2-123
through
19-2-127
;
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(12) sales of meals served by:
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(a) churches, charitable institutions, and institutions of higher education, if the meals are
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not available to the general public; and
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(b) inpatient meals provided at medical or nursing facilities;
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(13) isolated or occasional sales by persons not regularly engaged in business, except the
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sale of vehicles or vessels required to be titled or registered under the laws of this state in which
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case the tax is based upon:
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(a) the bill of sale or other written evidence of value of the vehicle or vessel being sold;
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or
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(b) in the absence of a bill of sale or other written evidence of value, the then existing fair
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market value of the vehicle or vessel being sold as determined by the commission;
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(14) (a) the following purchases or leases by a manufacturer [on or after July 1, 1995]:
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(i) machinery [and] or equipment purchased or leased on or after July 1, 1995, if the
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machinery or equipment:
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(A) is used in the manufacturing process;
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(B) [having] has an economic life of three or more years; and
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(C) is used:
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(I) to manufacture an item sold as tangible personal property; and
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(II) in new or expanding operations in a manufacturing facility in the state; [and]
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(ii) [subject to the provisions of Subsection (14)(b),] normal operating replacements
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purchased or leased on or after July 1, 1998, that:
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(A) have an economic life of three or more years;
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(B) are used in the manufacturing process in a manufacturing facility in the state;
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(C) are used to replace or adapt an existing machine to extend the normal estimated useful
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life of the machine; and
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(D) do not include:
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(I) repairs [and]; or
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(II) maintenance; or
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(iii) subject to Subsection (14)(b), purchases or leases:
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(A) used in the manufacturing process;
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(B) having an economic life of less than three years: and
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(C) of:
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(I) machinery;
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(II) equipment;
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(III) normal operating replacements;
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(IV) repairs; or
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(V) maintenance;
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(b) [the rates for the exemption under] the following percentages of a sale or lease
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described in Subsection (14)(a)[(ii)] (iii) are [as follows] exempt:
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(i) beginning on July 1, [1996] 2001, through June 30, [1997] 2002, 30% of the sale or
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lease described in Subsection (14)(a)[(ii)] (iii) is exempt;
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(ii) beginning on July 1, [1997] 2002, through June 30, [1998] 2003, 60% of the sale or
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lease described in Subsection (14)(a)[(ii)] (iii) is exempt; and
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(iii) beginning on July 1, [1998] 2004, 100% of the sale or lease described in Subsection
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(14)(a)[(ii)] (iii) is exempt;
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(c) for purposes of this Subsection (14), in accordance with Title 63, Chapter 46a, Utah
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Administrative Rulemaking Act, the commission shall by rule define the terms "new or expanding
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operations" and "establishment"; and
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(d) on or before October 1, [1991] 2004, and every five years after October 1, [1991] 2004,
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the commission shall:
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(i) review the exemptions described in Subsection (14)(a) and make recommendations to
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the Revenue and Taxation Interim Committee concerning whether the exemptions should be
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continued, modified, or repealed; and
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(ii) include in its report:
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(A) the cost of the exemptions;
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(B) the purpose and effectiveness of the exemptions; and
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(C) the benefits of the exemptions to the state;
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(15) sales of tooling, special tooling, support equipment, and special test equipment used
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or consumed exclusively in the performance of any aerospace or electronics industry contract with
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the United States government or any subcontract under that contract, but only if, under the terms
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of that contract or subcontract, title to the tooling and equipment is vested in the United States
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government as evidenced by a government identification tag placed on the tooling and equipment
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or by listing on a government-approved property record if a tag is impractical;
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(16) intrastate movements of:
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(a) freight by common carriers; and
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(b) passengers:
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(i) by taxicabs as described in SIC Code 4121 of the 1987 Standard Industrial
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Classification Manual of the federal Executive Office of the President, Office of Management and
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Budget; or
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(ii) transported by an establishment described in SIC Code 4111 of the 1987 Standard
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Industrial Classification Manual of the federal Executive Office of the President, Office of
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Management and Budget, if the transportation originates and terminates within a county of the
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first, second, or third class;
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(17) sales of newspapers or newspaper subscriptions;
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(18) tangible personal property, other than money, traded in as full or part payment of the
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purchase price, except that for purposes of calculating sales or use tax upon vehicles not sold by
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a vehicle dealer, trade-ins are limited to other vehicles only, and the tax is based upon:
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(a) the bill of sale or other written evidence of value of the vehicle being sold and the
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vehicle being traded in; or
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(b) in the absence of a bill of sale or other written evidence of value, the then existing fair
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market value of the vehicle being sold and the vehicle being traded in, as determined by the
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commission;
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(19) sprays and insecticides used to control insects, diseases, and weeds for commercial
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production of fruits, vegetables, feeds, seeds, and animal products, but not those sprays and
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insecticides used in the processing of the products;
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(20) (a) sales of tangible personal property used or consumed primarily and directly in
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farming operations, including sales of irrigation equipment and supplies used for agricultural
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production purposes, whether or not they become part of real estate and whether or not installed
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by farmer, contractor, or subcontractor, but not sales of:
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(i) machinery, equipment, materials, and supplies used in a manner that is incidental to
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farming, such as hand tools with a unit purchase price not in excess of $250, and maintenance and
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janitorial equipment and supplies;
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(ii) tangible personal property used in any activities other than farming, such as office
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equipment and supplies, equipment and supplies used in sales or distribution of farm products, in
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research, or in transportation; or
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(iii) any vehicle required to be registered by the laws of this state, without regard to the use
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to which the vehicle is put;
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(b) sales of hay;
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(21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or
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other agricultural produce if sold by a producer during the harvest season;
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(22) purchases of food as defined in 7 U.S.C. Sec. 2012(g) under the Food Stamp
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Program, 7 U.S.C. Sec. 2011 et seq.;
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(23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
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nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor, wholesaler,
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or retailer for use in packaging tangible personal property to be sold by that manufacturer,
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processor, wholesaler, or retailer;
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(24) property stored in the state for resale;
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(25) property brought into the state by a nonresident for his or her own personal use or
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enjoyment while within the state, except property purchased for use in Utah by a nonresident living
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and working in Utah at the time of purchase;
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(26) property purchased for resale in this state, in the regular course of business, either in
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its original form or as an ingredient or component part of a manufactured or compounded product;
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(27) property upon which a sales or use tax was paid to some other state, or one of its
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subdivisions, except that the state shall be paid any difference between the tax paid and the tax
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imposed by this part and Part 2, and no adjustment is allowed if the tax paid was greater than the
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tax imposed by this part and Part 2;
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(28) any sale of a service described in Subsections
59-12-103
(1)(b), (c), and (d) to a person
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for use in compounding a service taxable under the subsections;
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(29) purchases of supplemental foods as defined in 42 U.S.C. Sec. 1786(b)(14) under the
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special supplemental nutrition program for women, infants, and children established in 42 U.S.C.
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Sec. 1786;
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(30) beginning on July 1, 1999, through June 30, 2004, sales or leases of rolls, rollers,
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refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
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of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification Manual
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of the federal Executive Office of the President, Office of Management and Budget;
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(31) sales of boats of a type required to be registered under Title 73, Chapter 18, State
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Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of this
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state and are not thereafter registered or used in this state except as necessary to transport them to
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the borders of this state;
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(32) sales of tangible personal property to persons within this state that is subsequently
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shipped outside the state and incorporated pursuant to contract into and becomes a part of real
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property located outside of this state, except to the extent that the other state or political entity
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imposes a sales, use, gross receipts, or other similar transaction excise tax on it against which the
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other state or political entity allows a credit for taxes imposed by this chapter;
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(33) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah where
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a sales or use tax is not imposed, even if the title is passed in Utah;
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(34) amounts paid for the purchase of telephone service for purposes of providing
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telephone service;
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(35) fares charged to persons transported directly by a public transit district created under
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the authority of Title 17A, Chapter 2, Part 10, Utah Public Transit District Act;
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(36) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
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(37) (a) 45% of the sales price of any new manufactured home; and
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(b) 100% of the sales price of any used manufactured home;
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(38) sales relating to schools and fundraising sales;
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(39) sales or rentals of home medical equipment and supplies;
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(40) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
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Section
72-11-102
; and
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(b) the commission shall by rule determine the method for calculating sales exempt under
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Subsection (40)(a) that are not separately metered and accounted for in utility billings;
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(41) sales to a ski resort of:
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(a) snowmaking equipment;
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(b) ski slope grooming equipment; and
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(c) passenger ropeways as defined in Section
72-11-102
;
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(42) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
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(43) sales or rentals of the right to use or operate for amusement, entertainment, or
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recreation a coin-operated amusement device as defined in Section
59-12-102
;
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(44) sales of cleaning or washing of tangible personal property by a coin-operated car wash
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machine;
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(45) sales by the state or a political subdivision of the state, except state institutions of
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higher education as defined in Section
53B-3-102
, of:
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(a) photocopies; or
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(b) other copies of records held or maintained by the state or a political subdivision of the
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state; and
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(46) (a) amounts paid:
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(i) to a person providing intrastate transportation to an employer's employee to or from the
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employee's primary place of employment;
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(ii) by an:
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(A) employee; or
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(B) employer; and
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(iii) pursuant to a written contract between:
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(A) the employer; and
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(B) (I) the employee; or
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(II) a person providing transportation to the employer's employee; and
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(b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
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commission may for purposes of Subsection (46)(a) make rules defining what constitutes an
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employee's primary place of employment;
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(47) amounts paid for admission to an athletic event at an institution of higher education
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that is subject to the provisions of Title IX of the Education Amendments of 1972, 20 U.S.C. Sec.
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1681 et seq.;
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(48) sales of telephone service charged to a prepaid telephone calling card;
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(49) (a) sales of hearing aids; and
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(b) sales of hearing aid accessories; and
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(50) (a) sales made to or by:
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(i) an area agency on aging; or
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(ii) a senior citizen center owned by a county, city, or town; or
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(b) sales made by a senior citizen center that contracts with an area agency on aging.
Legislative Review Note
as of 1-13-00 2:33 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.