Bill Summary – FastDemocracy

Enrolled Copy                                                                           S.B. 235
                                       TAX AMENDMENTS
                                      2023 GENERAL SESSION
                                           STATE OF UTAH
                               Chief Sponsor: Curtis S. Bramble
                                  House Sponsor: Steve Eliason
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 LONG TITLE
 General Description:
        This bill amends the sales and use tax exemptions.
 Highlighted Provisions:
        This bill:
        < exempts certain sales of rolling stock; and
        < exempts purchases of sand, gravel, rock aggregate, cement products, or construction
 materials between certain companies with common ownership or control.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        This bill provides a special effective date.
 Utah Code Sections Affected:
 AMENDS:
        59-12-104, as last amended by Laws of Utah 2022, Chapters 228, 275, 280, and 373
22
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 59-12-104 is amended to read:
        59-12-104. Exemptions.
        Exemptions from the taxes imposed by this chapter are as follows:
        (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
 under Chapter 13, Motor and Special Fuel Tax Act;
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         (2) subject to Section 59-12-104.6, sales to the state, its institutions, and its political
 subdivisions; however, this exemption does not apply to sales of:
         (a) construction materials except:
         (i) 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
         (ii) 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; or
         (b) tangible personal property in connection with the construction, operation,
 maintenance, repair, or replacement of a project, as defined in Section 11-13-103, or facilities
 providing additional project capacity, as defined in Section 11-13-103;
         (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
         (i) the proceeds of each sale do not exceed $1; and
         (ii) the seller or operator of the vending machine reports an amount equal to 150% of
 the cost of the item described in Subsection (3)(b) as goods consumed; and
         (b) Subsection (3)(a) applies to:
         (i) food and food ingredients; or
         (ii) prepared food;
         (4) (a) sales of the following to a commercial airline carrier for in-flight consumption:
         (i) alcoholic beverages;
         (ii) food and food ingredients; or
         (iii) prepared food;
         (b) sales of tangible personal property or a product transferred electronically:
         (i) to a passenger;
         (ii) by a commercial airline carrier; and
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         (iii) during a flight for in-flight consumption or in-flight use by the passenger; or
         (c) services related to Subsection (4)(a) or (b);
         (5) sales of parts and equipment for installation in an aircraft operated by a common
 carrier in interstate or foreign commerce;
         (6) 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;
         (7) (a) except as provided in Subsection (85) and subject to Subsection (7)(b), sales of
 cleaning or washing of tangible personal property if the cleaning or washing of the tangible
 personal property is not assisted cleaning or washing of tangible personal property;
         (b) if a seller that sells at the same business location assisted cleaning or washing of
 tangible personal property and cleaning or washing of tangible personal property that is not
 assisted cleaning or washing of tangible personal property, the exemption described in
 Subsection (7)(a) applies if the seller separately accounts for the sales of the assisted cleaning
 or washing of the tangible personal property; and
         (c) for purposes of Subsection (7)(b) and in accordance with Title 63G, Chapter 3,
 Utah Administrative Rulemaking Act, the commission may make rules:
         (i) governing the circumstances under which sales are at the same business location;
 and
         (ii) establishing the procedures and requirements for a seller to separately account for
 sales of assisted cleaning or washing of tangible personal property;
         (8) 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
 fulfilled;
         (9) sales of a vehicle of a type required to be registered under the motor vehicle laws of
 this state if the vehicle is:
         (a) not registered in this state; and
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         (b) (i) not used in this state; or
         (ii) used in this state:
         (A) if the vehicle is not used to conduct business, for a time period that does not
 exceed the longer of:
         (I) 30 days in any calendar year; or
         (II) the time period necessary to transport the vehicle to the borders of this state; or
         (B) if the vehicle is used to conduct business, for the time period necessary to transport
 the vehicle to the borders of this state;
         (10) (a) amounts paid for an item described in Subsection (10)(b) if:
         (i) the item is intended for human use; and
         (ii) (A) a prescription was issued for the item; or
         (B) the item was purchased by a hospital or other medical facility; and
         (b) (i) Subsection (10)(a) applies to:
         (A) a drug;
         (B) a syringe; or
         (C) a stoma supply; and
         (ii) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
 commission may by rule define the terms:
         (A) "syringe"; or
         (B) "stoma supply";
         (11) purchases or leases exempt under Section 19-12-201;
         (12) (a) sales of an item described in Subsection (12)(c) served by:
         (i) the following if the item described in Subsection (12)(c) is not available to the
 general public:
         (A) a church; or
         (B) a charitable institution; or
         (ii) an institution of higher education if:
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        (A) the item described in Subsection (12)(c) is not available to the general public; or
        (B) the item described in Subsection (12)(c) is prepaid as part of a student meal plan
 offered by the institution of higher education; or
        (b) sales of an item described in Subsection (12)(c) provided for a patient by:
        (i) a medical facility; or
        (ii) a nursing facility; and
        (c) Subsections (12)(a) and (b) apply to:
        (i) food and food ingredients;
        (ii) prepared food; or
        (iii) alcoholic beverages;
        (13) (a) except as provided in Subsection (13)(b), the sale of tangible personal property
 or a product transferred electronically by a person:
        (i) regardless of the number of transactions involving the sale of that tangible personal
 property or product transferred electronically by that person; and
        (ii) not regularly engaged in the business of selling that type of tangible personal
 property or product transferred electronically;
        (b) this Subsection (13) does not apply if:
        (i) the sale is one of a series of sales of a character to indicate that the person is
 regularly engaged in the business of selling that type of tangible personal property or product
 transferred electronically;
        (ii) the person holds that person out as regularly engaged in the business of selling that
 type of tangible personal property or product transferred electronically;
        (iii) the person sells an item of tangible personal property or product transferred
 electronically that the person purchased as a sale that is exempt under Subsection (25); or
        (iv) the sale is of a vehicle or vessel 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
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 sold; or
        (B) in the absence of a bill of sale or other written evidence of value, the fair market
 value of the vehicle or vessel being sold at the time of the sale as determined by the
 commission; and
        (c) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
 commission shall make rules establishing the circumstances under which:
        (i) a person is regularly engaged in the business of selling a type of tangible personal
 property or product transferred electronically;
        (ii) a sale of tangible personal property or a product transferred electronically is one of
 a series of sales of a character to indicate that a person is regularly engaged in the business of
 selling that type of tangible personal property or product transferred electronically; or
        (iii) a person holds that person out as regularly engaged in the business of selling a type
 of tangible personal property or product transferred electronically;
        (14) amounts paid or charged for a purchase or lease of machinery, equipment, normal
 operating repair or replacement parts, or materials, except for office equipment or office
 supplies, by:
        (a) a manufacturing facility that:
        (i) is located in the state; and
        (ii) uses or consumes the machinery, equipment, normal operating repair or
 replacement parts, or materials:
        (A) in the manufacturing process to manufacture an item sold as tangible personal
 property, as the commission may define that phrase in accordance with Title 63G, Chapter 3,
 Utah Administrative Rulemaking Act; or
        (B) for a scrap recycler, to process an item sold as tangible personal property, as the
 commission may define that phrase in accordance with Title 63G, Chapter 3, Utah
 Administrative Rulemaking Act;
        (b) an establishment, as the commission defines that term in accordance with Title
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        Enrolled Copy                                                                        S.B. 235
 63G, Chapter 3, Utah Administrative Rulemaking Act, that:
        (i) is described in NAICS Subsector 212, Mining (except Oil and Gas), or NAICS
 Code 213113, Support Activities for Coal Mining, 213114, Support Activities for Metal
 Mining, or 213115, Support Activities for Nonmetallic Minerals (except Fuels) Mining, of the
 2002 North American Industry Classification System of the federal Executive Office of the
 President, Office of Management and Budget;
        (ii) is located in the state; and
        (iii) uses or consumes the machinery, equipment, normal operating repair or
 replacement parts, or materials in:
        (A) the production process to produce an item sold as tangible personal property, as the
 commission may define that phrase in accordance with Title 63G, Chapter 3, Utah
 Administrative Rulemaking Act;
        (B) research and development, as the commission may define that phrase in accordance
 with Title 63G, Chapter 3, Utah Administrative Rulemaking Act;
        (C) transporting, storing, or managing tailings, overburden, or similar waste materials
 produced from mining;
        (D) developing or maintaining a road, tunnel, excavation, or similar feature used in
 mining; or
        (E) preventing, controlling, or reducing dust or other pollutants from mining; or
        (c) an establishment, as the commission defines that term in accordance with Title
 63G, Chapter 3, Utah Administrative Rulemaking Act, that:
        (i) is described in NAICS Code 518112, Web Search Portals, of the 2002 North
 American Industry Classification System of the federal Executive Office of the President,
 Office of Management and Budget;
        (ii) is located in the state; and
        (iii) uses or consumes the machinery, equipment, normal operating repair or
 replacement parts, or materials in the operation of the web search portal;
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        (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
        (i) tooling;
        (ii) special tooling;
        (iii) support equipment;
        (iv) special test equipment; or
        (v) parts used in the repairs or renovations of tooling or equipment described in
 Subsections (15)(a)(i) through (iv); and
        (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
        (i) the tooling, equipment, or parts are 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; and
        (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),
 title to the tooling, equipment, or parts is vested in the United States government as evidenced
 by:
        (A) a government identification tag placed on the tooling, equipment, or parts; or
        (B) listing on a government-approved property record if placing a government
 identification tag on the tooling, equipment, or parts is impractical;
        (16) sales of newspapers or newspaper subscriptions;
        (17) (a) except as provided in Subsection (17)(b), tangible personal property or a
 product transferred electronically 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:
        (i) the bill of sale or other written evidence of value of the vehicle being sold and the
 vehicle being traded in; or
        (ii) 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
 commission; and
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          (b) Subsection (17)(a) does not apply to the following items of tangible personal
 property or products transferred electronically traded in as full or part payment of the purchase
 price:
          (i) money;
          (ii) electricity;
          (iii) water;
          (iv) gas; or
          (v) steam;
          (18) (a) (i) except as provided in Subsection (18)(b), sales of tangible personal property
 or a product transferred electronically used or consumed primarily and directly in farming
 operations, regardless of whether the tangible personal property or product transferred
 electronically:
          (A) becomes part of real estate; or
          (B) is installed by a farmer, contractor, or subcontractor; or
          (ii) sales of parts used in the repairs or renovations of tangible personal property or a
 product transferred electronically if the tangible personal property or product transferred
 electronically is exempt under Subsection (18)(a)(i); and
          (b) amounts paid or charged for the following are subject to the taxes imposed by this
 chapter:
          (i) (A) subject to Subsection (18)(b)(i)(B), machinery, equipment, materials, or
 supplies if used in a manner that is incidental to farming; and
          (B) tangible personal property that is considered to be used in a manner that is
 incidental to farming includes:
          (I) hand tools; or
          (II) maintenance and janitorial equipment and supplies;
          (ii) (A) subject to Subsection (18)(b)(ii)(B), tangible personal property or a product
 transferred electronically if the tangible personal p