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HB 309
SALES TAX EXEMPTION FOR CERTAIN
COIN-OPERATED AMUSEMENT DEVICES
1996 GENERAL SESSION
STATE OF UTAH
Sponsor: Raymond W. Short
AN ACT RELATING TO THE SALES AND USE TAX ACT; CREATING A SALES AND USE
TAX EXEMPTION FOR SALES AND RENTALS OF THE RIGHT TO USE OR OPERATE
CERTAIN COIN-OPERATED AMUSEMENT DEVICES; REQUIRING THE TAX REVIEW
COMMISSION TO CONDUCT A PERIODIC REVIEW OF THE COIN-OPERATED
AMUSEMENT DEVICES EXEMPTION; MAKING TECHNICAL CORRECTIONS; AND
PROVIDING AN EFFECTIVE DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
59-12-102 , as last amended by Chapters 3, 100, 190, 279, and 290, Laws of Utah 1995
59-12-103 , as last amended by Chapters 215 and 334, Laws of Utah 1995
59-12-104 , as last amended by Chapters 27, 100, 190, 195, 279, 290, 318, and 327, Laws of
Utah 1995
59-12-104.5 , as last amended by Chapters 100, 190, and 290, Laws of Utah 1995
Be it enacted by the Legislature of the state of Utah:
Section 1.
Section
59-12-102
is amended to read:
59-12-102. Definitions.
As used in this chapter:
(1) (a) "Admission or user fees" includes season passes.
(b) "Admission or user fees" does not include annual membership dues to private
organizations.
(2) "Authorized carrier" means:
(a) in the case of vehicles operated over public highways, the holder of credentials
indicating that the vehicle is or will be operated pursuant to both the International Registration
Plan (IRP) and the International Fuel Tax Agreement (IFTA);
(b) in the case of aircraft, the holder of a Federal Aviation Administration (FAA) operating
certificate or air carrier's operating certificate; or
(c) in the case of locomotives, freight cars, railroad work equipment, or other rolling stock,
the holder of a certificate issued by the United States Interstate Commerce Commission.
(3) (a) For purposes of Subsection
59-12-104
(42), "coin-operated amusement device" means:
(i) a coin-operated amusement, skill, or ride device;
(ii) that is not controlled through vendor-assisted, over-the-counter, sales of tokens; and
(iii) includes a music machine, pinball machine, billiard machine, video game machine,
arcade machine, and a mechanical or electronic skill game or ride.
(b) For purposes of Subsection
59-12-104
(42), "coin-operated amusement device" does not
mean a coin-operated amusement device possessing a coinage mechanism that:
(i) accepts and registers multiple denominations of coins; and
(ii) allows the vendor to collect the sales and use tax at the time an amusement device is
activated and operated by a person inserting coins into the device.
[(3)] (4) "Commercial consumption" means the use connected with trade or commerce and
includes:
(a) the use of services or products by retail establishments, hotels, motels, restaurants,
warehouses, and other commercial establishments;
(b) transportation of property by land, water, or air;
(c) agricultural uses unless specifically exempted under this chapter; and
(d) real property contracting work.
[(4)] (5) "Component part" includes:
(a) poultry, dairy, and other livestock feed, and their components;
(b) baling ties and twine used in the baling of hay and straw;
(c) fuel used for providing temperature control of orchards and commercial greenhouses
doing a majority of their business in wholesale sales, and for providing power for off-highway type
farm machinery; and
(d) feed, seeds, and seedlings.
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[(5)] (6) "Construction materials" means any tangible personal property that will be
converted into real property.
[(6)] (7) "Fundraiser" means any activity, under the direction of a school, school association,
or teacher, which involves the sale of goods or services by public or private school students for the
purpose of raising funds for the purchase of equipment or materials for use in a public or private
school. "Fundraiser" does not include the sale of admissions to athletic events or concerts.
[(7)] (8) (a) "Home medical equipment and supplies" means equipment and supplies that:
(i) a licensed physician prescribes or authorizes in writing as necessary;
(ii) are used exclusively to serve a medical purpose;
(iii) are generally not useful to a person in the absence of illness or injury;
(iv) are appropriate for home use; and
(v) are listed as eligible for payment under Title 18 of the federal Social Security Act or
under the state plan for medical assistance under Title 19 of the federal Social Security Act.
(b) "Home medical equipment and supplies" does not include equipment and supplies
purchased by, for, or on behalf of any hospital, clinic, doctor, nurse, or other health professional for
use in their professional practice.
[(8)] (9) "Manufactured home" means any manufactured home or mobile home as defined
in Title 58, Chapter 56, Utah Uniform Building Standards Act.
[(9)] (10) (a) "Medicine" means:
(i) insulin, syringes, and any medicine prescribed for the treatment of human ailments by
a person authorized to prescribe treatments and dispensed on prescription filled by a registered
pharmacist, or supplied to patients by a physician, surgeon, or podiatrist;
(ii) any medicine dispensed to patients in a county or other licensed hospital if prescribed
for that patient and dispensed by a registered pharmacist or administered under the direction of a
physician; and
(iii) any oxygen or stoma supplies prescribed by a physician or administered under the
direction of a physician or paramedic.
(b) "Medicine" does not include:
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(i) any auditory, prosthetic, ophthalmic, or ocular device or appliance; or
(ii) any alcoholic beverage.
[(10)] (11) "Person" includes any individual, firm, partnership, joint venture, association,
corporation, estate, trust, business trust, receiver, syndicate, this state, any county, city, municipality,
district, or other local governmental entity of the state, or any group or combination acting as a unit.
[(11)] (12) "Purchase price" means the amount paid or charged for tangible personal property
or any other taxable item or service under Subsection
59-12-103
(1), excluding only cash discounts
taken or any excise tax imposed on the purchase price by the federal government.
[(12)] (13) "Residential use" means the use in or around a home, apartment building,
sleeping quarters, and similar facilities or accommodations.
[(13)] (14) (a) "Retail sale" means any sale within the state of tangible personal property or
any other taxable item or service under Subsection
59-12-103
(1), other than resale of such property,
item, or service by a retailer or wholesaler to a user or consumer.
(b) "Retail sale" includes sales by any farmer or other agricultural producer of poultry, eggs,
or dairy products to consumers if the sales have an average monthly sales value of $125 or more.
(c) "Retail sale" does not include, and no additional sales or use tax shall be assessed against,
those transactions where a purchaser of tangible personal property pays applicable sales or use taxes
on its initial nonexempt purchases of property and then enters into a sale-leaseback transaction by
which title to such property is transferred by the purchaser-lessee to a lessor for consideration,
provided:
(i) the transaction is intended as a form of financing for the property to the purchaser-lessee;
and
(ii) pursuant to generally accepted accounting principles, the purchaser-lessee is required to
capitalize the subject property for financial reporting purposes, and account for the lease payments
as payments made under a financing arrangement.
[(14)] (15) (a) "Retailer" means any person engaged in a regularly organized retail business
in tangible personal property or any other taxable item or service under Subsection
59-12-103
(1),
and who is selling to the user or consumer and not for resale.
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(b) "Retailer" includes commission merchants, auctioneers, and any person regularly
engaged in the business of selling to users or consumers within the state.
(c) "Retailer" includes any person who engages in regular or systematic solicitation of a
consumer market in this state by the distribution of catalogs, periodicals, advertising flyers, or other
advertising, or by means of print, radio or television media, by mail, telegraphy, telephone, computer
data base, cable, optic, microwave, or other communication system.
(d) "Retailer" does not include farmers, gardeners, stockmen, poultrymen, or other growers
or agricultural producers producing and doing business on their own premises, except those who are
regularly engaged in the business of buying or selling for a profit.
(e) For purposes of this chapter the commission may regard as retailers the following if they
determine it is necessary for the efficient administration of this chapter: salesmen, representatives,
peddlers, or canvassers as the agents of the dealers, distributors, supervisors, or employers under
whom they operate or from whom they obtain the tangible personal property sold by them,
irrespective of whether they are making sales on their own behalf or on behalf of these dealers,
distributors, supervisors, or employers, except that:
(i) a printer's facility with which a retailer has contracted for printing shall not be considered
to be a salesman, representative, peddler, canvasser, or agent of the retailer; and
(ii) the ownership of property that is located at the premises of a printer's facility with which
the retailer has contracted for printing and that consists of the final printed product, property that
becomes a part of the final printed product, or copy from which the printed product is produced, shall
not result in the retailer being deemed to have or maintain an office, distribution house, sales house,
warehouse, service enterprise, or other place of business, or to maintain a stock of goods, within this
state.
[(15)] (16) "Sale" means any transfer of title, exchange, or barter, conditional or otherwise,
in any manner, of tangible personal property or any other taxable item or service under Subsection
59-12-103
(1), for a consideration. It includes:
(a) installment and credit sales;
(b) any closed transaction constituting a sale;
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(c) any sale of electrical energy, gas, services, or entertainment taxable under this chapter;
(d) any transaction if the possession of property is transferred but the seller retains the title
as security for the payment of the price; and
(e) any transaction under which right to possession, operation, or use of any article of
tangible personal property is granted under a lease or contract and the transfer of possession would
be taxable if an outright sale were made.
[(16)] (17) "State" means the state of Utah, its departments, and agencies.
[(17)] (18) "Storage" means any keeping or retention of tangible personal property or any
other taxable item or service under Subsection
59-12-103
(1), in this state for any purpose except sale
in the regular course of business.
[(18)] (19) (a) "Tangible personal property" means:
(i) all goods, wares, merchandise, produce, and commodities;
(ii) all tangible or corporeal things and substances which are dealt in or capable of being
possessed or exchanged;
(iii) water in bottles, tanks, or other containers; and
(iv) all other physically existing articles or things, including property severed from real
estate.
(b) "Tangible personal property" does not include:
(i) real estate or any interest or improvements in real estate;
(ii) bank accounts, stocks, bonds, mortgages, notes, and other evidence of debt;
(iii) insurance certificates or policies;
(iv) personal or governmental licenses;
(v) water in pipes, conduits, ditches, or reservoirs;
(vi) currency and coinage constituting legal tender of the United States or of a foreign
nation; and
(vii) all gold, silver, or platinum ingots, bars, medallions, or decorative coins, not
constituting legal tender of any nation, with a gold, silver, or platinum content of not less than 80%.
[(19)] (20) (a) "Use" means the exercise of any right or power over tangible personal
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property under Subsection
59-12-103
(1), incident to the ownership or the leasing of that property,
item, or service.
(b) "Use" does not include the sale, display, demonstration, or trial of that property in the
regular course of business and held for resale.
[(20)] (21) "Vehicle" means any aircraft, as defined in Section 2-1-1
; any vehicle, as defined
in Section 41-1a-102
; any off-highway vehicle, as defined in Section 41-22-2
; and any vessel, as
defined in Section 41-1a-102
; that is required to be titled, registered, or both. "Vehicle" for purposes
of Subsection
59-12-104
(37) only, also includes any locomotive, freight car, railroad work
equipment, or other railroad rolling stock.
[(21)] (22) "Vehicle dealer" means a person engaged in the business of buying, selling, or
exchanging vehicles as defined in Subsection (20).
[(22)] (23) (a) "Vendor" means:
(i) any person receiving any payment or consideration upon a sale of tangible personal
property or any other taxable item or service under Subsection
59-12-103
(1), or to whom such
payment or consideration is payable; and
(ii) any person who engages in regular or systematic solicitation of a consumer market in
this state by the distribution of catalogs, periodicals, advertising flyers, or other advertising, or by
means of print, radio or television media, by mail, telegraphy, telephone, computer data base, cable,
optic, microwave, or other communication system.
(b) "Vendor" does not mean a printer's facility described in Subsection (14)(e).
Section 2.
Section
59-12-103
is amended to read:
59-12-103. Sales and use tax base -- Rate.
(1) There is levied a tax on the purchaser for the amount paid or charged for the following:
(a) retail sales of tangible personal property made within the state;
(b) amount paid to common carriers or to telephone or telegraph corporations, whether the
corporations are municipally or privately owned, for:
(i) all transportation;
(ii) intrastate telephone service; or
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(iii) telegraph service;
(c) gas, electricity, heat, coal, fuel oil, or other fuels sold or furnished for commercial
consumption;
(d) gas, electricity, heat, coal, fuel oil, or other fuels sold or furnished for residential use;
(e) meals sold;
(f) (i) admission or user fees for theaters, movies, operas, museums, planetariums, shows
of any type or nature, exhibitions, concerts, carnivals, amusement parks, amusement rides, circuses,
menageries, fairs, races, contests, sporting events, dances, boxing and wrestling matches, closed
circuit television broadcasts, billiard or pool parlors, bowling lanes, golf and miniature golf, golf
driving ranges, batting cages, skating rinks, ski lifts, ski runs, ski trails, snowmobile trails, tennis
courts, swimming pools, water slides, river runs, jeep tours, boat tours, scenic cruises, horseback
rides, sports activities, or any other amusement, entertainment, recreation, exhibition, cultural, or
athletic activity;
(ii) the tax imposed on admission or user fees in Subsection (1)(f)(i) does not affect an
entity's sales tax exempt status under Section 59-12-104.1
;
[(g) (i) use of amusement devices, including music machines, pinball machines, and
mechanical or electronic games, provided that the owner or lessee of these devices is required to
remit only 75% of the sales tax liability imposed under this chapter;]
[(ii) by October 1, 1995, and every five years thereafter, the Tax Review Commission and
the Revenue and Taxation Interim Committee shall review the 25% exclusion from remittance and
determine whether the exclusion from remittance should be continued, modified, or repealed;]
[(h)] (g) (i) use of coin-operated car washes, provided that the owner or lessee of these
devices is required to remit only 75% of the sales tax liability imposed under this chapter;
(ii) by October 1, 1995, and every five years thereafter, the Tax Review Commission and
the Revenue and Taxation Interim Committee shall review the 25% exclusion from remittance and
determine whether the exclusion from remittance should be continued, modified, or repealed;
[(i)] (h) services for repairs or renovations of tangible personal property or services to install
tangible personal property in connection with other tangible personal property;
- 8 -
[(j)] (i) (i) cleaning or washing of tangible personal property, except that the owner or lessee
of coin-operated laundry machines or coin-operated dry cleaning machines is required to remit only
75% of the sales tax liability imposed under this chapter;
(ii) by October 1, 1995, and every five years thereafter, the Tax Review Commission and
the Revenue and Taxation Interim Committee shall review the 25% exclusion from remittance and
determine whether the exclusion from remittance should be continued, modified, or repealed;
[(k)] (j) tourist home, hotel, motel, or trailer court accommodations and services for less than
30 consecutive days;
[(l)] (k) laundry and dry cleaning services;
[(m)] (l) leases and rentals of tangible personal property if the property situs is in this state,
if the lessee took possession in this state, or if the property is stored, used, or otherwise consumed
in this state; and
[(n)] (m) tangible personal property stored, used, or consumed in this state.
(2) Except for Subsection (1)(d), the rates of the tax levied under Subsection (1) shall be:
(a) 5% through June 30, 1994; and
(b) 4.875% from and after July 1, 1994.
(3) The rates of the tax levied under Subsection (1)(d) shall be 2% from and after January
1, 1990.
(4) (a) From January 1, 1990, through December 31, 1999, there shall be deposited in an
Olympics special revenue fund or funds as determined by the Division of Finance under Section
51-5-4
, for the use of the Utah Sports Authority created under Title 63A, Chapter (7), Utah Sports
Authority Act:
(i) the amount of sales and use tax generated by a 1/64% tax rate on the taxable items and
services under Subsection (1);
(ii) the amount of revenue generated by a 1/64% tax rate under Section 59-12-204
on the
taxable items and services under Subsection (1); and
(iii) interest earned on the amounts under Subsections (4)(a)(i) and (ii).
(b) These funds shall be used by the Utah Sports Authority as follows:
- 9 -
(i) to the extent funds are available, to transfer directly to a debt service fund or to otherwise
reimburse to the state of Utah any amount expended on debt service or any other cost of any bonds
issued by the state to construct any public sports facility as defined in Section 63A-7-103
; and
(ii) to pay for the actual and necessary operating, administrative, legal, and other expenses
of the Utah Sports Authority, but not including protocol expenses for seeking and obtaining the right
to host the Winter Olympic Games.
(5) (a) Except as otherwise provided in Subsection (6), from July 1, 1997, through June 30,
2003, the annual amount of sales and use tax generated by a 1/16% tax rate on the taxable items and
services under Subsection (1) shall be used for water and wastewater projects as provided in this
subsection.
(b) Five hundred thousand dollars each year shall be transferred to the Agriculture Resource
Development Fund created in Section 4-18-6
.
(c) Fifty percent of the remaining amount generated by the 1/16% tax rate shall be
transferred to the Water Resources Conservation and Development Fund created in Section 73-10-24
for use by the Division of Water Resources. In addition to the uses allowed of the fund under
Section 73-10-24
, the fund may also be used to:
(i) provide a portion of the local cost share, not to exceed in any fiscal year 50% of the funds
made available to the Division of Water Resources under this section, of potential project features
of the Central Utah Project;
(ii) conduct hydrologic and geotechnical investigations by the Department of Natural
Resources in a cooperative effort with other state, federal, or local entities, for the purpose of
quantifying surface and ground water resources and describing the hydrologic systems of an area in
sufficient detail so as to enable local and state resource managers to plan for and accommodate
growth in water use without jeopardizing the resource;
(iii) fund state required dam safety improvements; and
(iv) protect the state's interest in interstate water compact allocations, including the hiring
of technical and legal staff.
(d) Twenty-five percent of the remaining amount generated by the 1/16% tax rate shall be
- 10 -
transferred to the Utah Wastewater Loan Program Subaccount created in Section 73-10c-5
for use
by the Water Quality Board to fund wastewater projects as defined in Section 73-10b-2
.
(e) Twenty-five percent of the remaining amount generated by the 1/16% tax rate shall be
transferred to the Drinking Water Loan Program Subaccount created in Section 73-10c-5
for use by
the Division of Drinking Water to:
(i) provide for the installation and repair of collection, treatment, storage, and distribution
facilities for any public water system, as defined in Section 19-4-102
;
(ii) develop underground sources of water, including springs and wells; and
(iii) develop surface water sources.
(f) Notwithstanding Subsections (5)(b), (c), (d), and (e), $100,000 of the remaining amount
generated by the 1/16% tax rate each year shall be transferred as dedicated credits to the Division
of Water Rights to cover the costs incurred in hiring legal and other technical staff for the
adjudication of water rights. Any remaining balance at the end of each fiscal year shall lapse back
to the contributing funds on a prorated basis.
(6) (a) Beginning on July 1, 1997, through June 30, 2003, the annual amount of sales and
use tax generated by a 1/16% tax rate on the taxable items and services under Subsection (1) shall
be transferred to the Transportation Fund and Class B and Class C Roads Account in the following
proportions and shall be used for transportation projects:
(i) 70% shall be transferred to the Transportation Fund; and
(ii) 30% shall be transferred to the Class B and Class C Roads Account.
(b) The money transferred to the Transportation Fund in Subsection (6)(a)(i) is not subject
to the appropriation to the Class B and Class C Roads Account provided in Section 27-12-127
.
Section 3.
Section
59-12-104
is amended to read:
59-12-104. Exemptions.
The following sales and uses are exempt from the taxes imposed by this chapter:
(1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax under
Title 59, Chapter 13, Motor and Special Fuel Tax Act;
(2) through December 31, 1995, sales to the state, its institutions, and its political
- 11 -
subdivisions, except sales of construction materials however, construction materials purchased by
the state, its institutions, or its political subdivisions which are installed or converted to real property
by employees of the state, its institutions, or its political subdivisions are exempt;
(3) beginning January 1, 1996, sales to the state, its institutions, and its political
subdivisions; however, this exemption does not apply to sales of construction materials except:
(a) construction materials purchased by or on behalf of institutions of the public education
system as defined in Utah Constitution Article X, Section 2, provided the construction materials are
clearly identified and segregated and installed or converted to real property which is owned by
institutions of the public education system; and
(b) construction materials purchased by the state, its institutions or its political subdivisions
which are installed or converted to real property by employees of the state, its institutions, or its
political subdivisions;
(4) sales of food, beverage, and dairy products from vending machines in which the proceeds
of each sale do not exceed $1 if the vendor or operator of the vending machine reports an amount
equal to 150% of the cost of items as goods consumed;
(5) sales of food, beverage, dairy products, similar confections, and related services to
commercial airline carriers for in-flight consumption;
(6) sales of parts and equipment installed in aircraft operated by common carriers in
interstate or foreign commerce;
(7) sales of commercials, motion picture films, prerecorded audio program tapes or records,
and prerecorded video tapes by a producer, distributor, or studio to a motion picture exhibitor,
distributor, or commercial television or radio broadcaster;
(8) sales made through coin-operated laundry machines that are:
(a) located in multiple dwelling units;
(b) used exclusively for the benefit of tenants; and
(c) not available for use by the general public;
(9) sales made to or by religious or charitable institutions in the conduct of their regular
religious or charitable functions and activities, if the requirements of Section 59-12-104.1
are
- 12 -
fulfilled;
(10) sales of vehicles of a type required to be registered under the motor vehicle laws of this
state which are made to bona fide nonresidents of this state and are not afterwards registered or used
in this state except as necessary to transport them to the borders of this state;
(11) sales of medicine;
(12) sales or use of property, materials, or services used in the construction of or
incorporated in pollution control facilities allowed by Sections
19-2-123
through
19-2-127
;
(13) sales or use of property which the state is prohibited from taxing under the Constitution
or laws of the United States or under the laws of this state;
(14) sales of meals served by:
(a) public elementary and secondary schools;
(b) churches, charitable institutions, and institutions of higher education, if the meals are not
available to the general public; and
(c) inpatient meals provided at medical or nursing facilities;
(15) isolated or occasional sales by persons not regularly engaged in business, except the
sale of vehicles or vessels required to be titled or registered under the laws of this state in which case
the tax is based upon:
(a) the bill of sale or other written evidence of value of the vehicle or vessel being sold; or
(b) in the absence of a bill of sale or other written evidence of value, the then existing fair
market value of the vehicle or vessel being sold as determined by the commission;
(16) (a) sales or leases of machinery and equipment purchased or leased by a manufacturer
on or after July 1, 1995 for:
(i) use in new or expanding operations related to the manufacturing process in any
manufacturing facility in Utah;
(A) manufacturing facility means an establishment described in SIC Codes 2000 to 3999 of
the 1987 Standard Industrial Classification Manual, of the federal Executive Office of the President,
Office of Management and Budget;
(B) for purposes of this subsection, the commission shall by rule define the terms "new or
- 13 -
expanding operations" and "establishment";
(ii) normal operating replacements, which [includes] include replacement machinery and
equipment in any manufacturing facility in Utah, at the following rate:
(A) for taxable years beginning July 1, 1996, 30% of the exemption shall be allowed;
(B) for taxable years beginning July 1, 1997, 60% of the exemption shall be allowed; and
(C) for taxable years beginning July 1, 1998, 100% of the exemption shall be allowed.
(b) by October 1, 1991, and every five years thereafter, the commission shall review these
exemptions and make recommendations to the Revenue and Taxation Interim Committee concerning
whether the exemptions should be continued, modified, or repealed. In its report to the Revenue and
Taxation Interim Committee, the tax commission review shall include at least:
(i) the cost of the exemptions;
(ii) the purpose and effectiveness of the exemptions; and
(iii) the benefits of the exemptions to the state;
(17) sales of tooling, special tooling, support equipment, and special test equipment used or
consumed exclusively in the performance of any aerospace or electronics industry contract with the
United States government or any subcontract under that contract, but only if, under the terms of that
contract or subcontract, title to the tooling and equipment is vested in the United States government
as evidenced by a government identification tag placed on the tooling and equipment or by listing
on a government-approved property record if a tag is impractical;
(18) intrastate movements of freight by common carriers;
(19) sales of newspapers or newspaper subscriptions;
(20) tangible personal property, other than money, traded in as full or part payment of the
purchase price, except that for purposes of calculating sales or use tax upon vehicles not sold by a
vehicle dealer, trade-ins are limited to other vehicles only, and the tax is based upon:
(a) the bill of sale or other written evidence of value of the vehicle being sold and the vehicle
being traded in; or
(b) in the absence of a bill of sale or other written evidence of value, the then existing fair
market value of the vehicle being sold and the vehicle being traded in, as determined by the
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commission;
(21) sprays and insecticides used to control insects, diseases, and weeds for commercial
production of fruits, vegetables, feeds, seeds, and animal products, but not those sprays and
insecticides used in the processing of the products;
(22) (a) sales of tangible personal property used or consumed primarily and directly in
farming operations, including sales of irrigation equipment and supplies used for agricultural
production purposes, whether or not they become part of real estate and whether or not installed by
farmer, contractor, or subcontractor, but not sales of:
(i) machinery, equipment, materials, and supplies used in a manner that is incidental to
farming, such as hand tools with a unit purchase price not in excess of $250, and maintenance and
janitorial equipment and supplies;
(ii) tangible personal property used in any activities other than farming, such as office
equipment and supplies, equipment and supplies used in sales or distribution of farm products, in
research, or in transportation; or
(iii) any vehicle required to be registered by the laws of this state, without regard to the use
to which the vehicle is put;
(b) sales of hay;
(23) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or other
agricultural produce if sold by a producer during the harvest season;
(24) purchases of food made with food stamps;
(25) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor, wholesaler,
or retailer for use in packaging tangible personal property to be sold by that manufacturer, processor,
wholesaler, or retailer;
(26) property stored in the state for resale;
(27) property brought into the state by a nonresident for his or her own personal use or
enjoyment while within the state, except property purchased for use in Utah by a nonresident living
and working in Utah at the time of purchase;
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(28) property purchased for resale in this state, in the regular course of business, either in
its original form or as an ingredient or component part of a manufactured or compounded product;
(29) property upon which a sales or use tax was paid to some other state, or one of its
subdivisions, except that the state shall be paid any difference between the tax paid and the tax
imposed by this part and Part 2, and no adjustment is allowed if the tax paid was greater than the tax
imposed by this part and Part 2;
(30) any sale of a service described in Subsections
59-12-103
(1)(b), (c), and (d) to a person
for use in compounding a service taxable under the subsections;
(31) purchases of food made under the WIC program of the United States Department of
Agriculture;
(32) sales or leases made before June 30, 1996, of rolls, rollers, refractory brick, electric
motors, and other replacement parts used in the furnaces, mills, and ovens of a steel mill described
in SIC Code 3312 of the 1987 Standard Industrial Classification Manual, of the federal Executive
Office of the President, Office of Management and Budget;
(33) sales of boats of a type required to be registered under Title 73, Chapter 18, State
Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of this
state and are not thereafter registered or used in this state except as necessary to transport them to
the borders of this state;
(34) sales of tangible personal property to persons within this state that is subsequently
shipped outside the state and incorporated pursuant to contract into and becomes a part of real
property located outside of this state, except to the extent that the other state or political entity
imposes a sales, use, gross receipts, or other similar transaction excise tax on it against which the
other state or political entity allows a credit for taxes imposed by this chapter;
(35) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah where
a sales or use tax is not imposed, even if the title is passed in Utah;
(36) until July 1, 1999, amounts paid for purchase of telephone service for purposes of
providing telephone service;
(37) 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, Public Transit Districts;
(38) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
(39) until July 1, 2000, 45% of the sales price of any new manufactured home and 100% of
the sales price of any used manufactured home;
(40) sales by fundraisers, as defined in Subsection
59-12-102
[(6)] (7), by public and private
schools, grades K through 12; [and]
(41) sales or rentals of home medical equipment supplies:
(a) purchased or leased by, for, or on behalf of a home patient; and
(b) used personally and exclusively by the patient in the medical treatment of an existing
disease or injury[.]; and
(42) sales or rentals of the right to use or operate for amusement, entertainment, or
recreation a coin-operated amusement device as defined in Subsection
59-12-102
(3).
Section 4.
Section
59-12-104.5
is amended to read:
59-12-104.5. Review of sales tax exemptions.
(1) The Tax Review Commission, in cooperation with the Governor's Office and the State
Tax Commission, shall conduct a review of the following sales tax exemptions and related issues
created in Section 59-12-104
within the following period of time:
(a) Subsections
59-12-104
(4), (7), (8), (12), (16), (18), (25), (32), and (38) before October
1, 1993, and every eight years thereafter;
(b) Subsections
59-12-104
(5), (6), (17), (19), (21), (22), (23), (35), and (36) before October
1, 1994, and every eight years thereafter;
(c) Subsections
59-12-104
(1), (2), (9), (13), (14), (24), (30), (31), [and] (40), and (42) before
October 1, 1995, and every eight years thereafter; and
(d) Subsections
59-12-104
(10), (11), (15), (20), (26), (27), (28), (29), (33), and (34) before
October 1, 1996, and every eight years thereafter.
(2) (a) The Tax Review Commission and the Revenue and Taxation Interim Committee shall
make recommendations to the governor and the Legislature, on or before the October interim
meeting in the year the study is required to be completed under this section, concerning whether the
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exemption listed in Subsection (1) should be continued, modified, or repealed.
(b) In its report to the governor and the Revenue and Taxation Interim Committee, the
commission review shall include at least:
(i) the cost of the exemption;
(ii) the following criteria for granting or extending incentives for businesses:
(A) the business must be willing to make a substantial capital investment in Utah, signaling
that it will be a long-term member of the community;
(B) the business must bring new dollars into the state, which generally means the business
must export goods or services outside of Utah, not just recirculate existing dollars;
(C) the business must pay higher than average wages in the area where it will be located,
increasing Utah's overall household income (average wage calculations are not to include local, state,
or federal government or school district employees);
(D) the same incentives offered the outside business must be available to existing in-state
businesses so as not to discriminate against home-grown businesses; and
(E) the incentives must clearly produce a positive return on investment as determined by
state economic modeling formulas;
(iii) the Legislature's sales and use tax policy positions adopted in H.J.R. 32 of the 1990
General Session;
(iv) the purpose and effectiveness of the exemption; and
(v) the benefits of the exemption to the state.
(3) Item 43, in H.B. 337, enacted during the 1993 General Session, is transferred from the
Tax Commission to the Tax Review Commission to implement this section.
Section 5. Effective date.
This act takes effect on July 1, 1996.
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