Florida Senate - 2013 SB 518
By Senator Hukill
8-00747-13 2013518__
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 from the sales tax for certain business
5 purchases of industrial machinery and equipment and
6 spaceport activities; deleting certain limitations on,
7 and procedural requirements relating to, the
8 exemption; conforming cross-references; amending s.
9 288.1045, F.S.; deleting the limitation on the maximum
10 amount of tax refunds a business may receive under the
11 qualified defense contractor and space flight business
12 tax refund program; amending s. 288.106, F.S.;
13 deleting the limitation on the maximum amount of tax
14 refunds a business may receive under the tax refund
15 program for qualified target industry businesses;
16 amending s. 288.1089, F.S.; revising requirements
17 relating to the review, approval, and award of funds
18 under the Innovation Incentive Program; providing an
19 effective date.
20
21 Be It Enacted by the Legislature of the State of Florida:
22
23 Section 1. Paragraphs (b), (d), and (h) of subsection (5)
24 of section 212.08, Florida Statutes, are amended to read:
25 212.08 Sales, rental, use, consumption, distribution, and
26 storage tax; specified exemptions.—The sale at retail, the
27 rental, the use, the consumption, the distribution, and the
28 storage to be used or consumed in this state of the following
29 are hereby specifically exempt from the tax imposed by this
30 chapter.
31 (5) EXEMPTIONS; ACCOUNT OF USE.—
32 (b) Industrial machinery and equipment used by
33 manufacturers or used exclusively in spaceport activities to
34 increase productive output.—
35 1. Industrial machinery and equipment purchased for
36 exclusive use in businesses that manufacture, process, compound,
37 or produce for sale items of tangible personal property at fixed
38 locations or for exclusive use by a new business in spaceport
39 activities as defined by s. 212.02 or for use in new businesses
40 that manufacture, process, compound, or produce for sale items
41 of tangible personal property at fixed locations are exempt from
42 the tax imposed by this chapter if, at the time of purchase, the
43 purchaser furnishes the seller with a signed certificate stating
44 that the items to be exempted are for exclusive use as provided
45 in this paragraph. The certificate relieves the seller of the
46 responsibility of collecting the tax on the sale of such items
47 and the department shall look solely to the purchaser for
48 recovery of the tax if it determines that the purchaser was not
49 entitled to the exemption upon an affirmative showing by the
50 taxpayer to the satisfaction of the department that such items
51 are used in a new business in this state. Such purchases must be
52 made before the date the business first begins its productive
53 operations, and delivery of the purchased item must be made
54 within 12 months after that date.
55 2. Industrial machinery and equipment purchased for
56 exclusive use by an expanding facility which is engaged in
57 spaceport activities as defined by s. 212.02 or for use in
58 expanding manufacturing facilities or plant units which
59 manufacture, process, compound, or produce for sale items of
60 tangible personal property at fixed locations in this state are
61 exempt from any amount of tax imposed by this chapter upon an
62 affirmative showing by the taxpayer to the satisfaction of the
63 department that such items are used to increase the productive
64 output of such expanded facility or business by not less than 5
65 percent.
66 3.a. To receive an exemption provided by subparagraph 1. or
67 subparagraph 2., a qualifying business entity shall apply to the
68 department for a temporary tax exemption permit. The application
69 shall state that a new business exemption or expanded business
70 exemption is being sought. Upon a tentative affirmative
71 determination by the department pursuant to subparagraph 1. or
72 subparagraph 2., the department shall issue such permit.
73 b. The applicant shall maintain all necessary books and
74 records to support the exemption. Upon completion of purchases
75 of qualified machinery and equipment pursuant to subparagraph 1.
76 or subparagraph 2., the temporary tax permit shall be delivered
77 to the department or returned to the department by certified or
78 registered mail.
79 c. If, in a subsequent audit conducted by the department,
80 it is determined that the machinery and equipment purchased as
81 exempt under subparagraph 1. or subparagraph 2. did not meet the
82 criteria mandated by this paragraph or if commencement of
83 production did not occur, the amount of taxes exempted at the
84 time of purchase shall immediately be due and payable to the
85 department by the business entity, together with the appropriate
86 interest and penalty, computed from the date of purchase, in the
87 manner prescribed by this chapter.
88 d. If a qualifying business entity fails to apply for a
89 temporary exemption permit or if the tentative determination by
90 the department required to obtain a temporary exemption permit
91 is negative, a qualifying business entity shall receive the
92 exemption provided in subparagraph 1. or subparagraph 2. through
93 a refund of previously paid taxes. No refund may be made for
94 such taxes unless the criteria mandated by subparagraph 1. or
95 subparagraph 2. have been met and commencement of production has
96 occurred.
97 4. The department shall adopt rules governing applications
98 for, issuance of, and the form of temporary tax exemption
99 permits; provisions for recapture of taxes; and the manner and
100 form of refund applications, and may establish guidelines as to
101 the requisites for an affirmative showing of increased
102 productive output, commencement of production, and qualification
103 for exemption.
104 2.5. The exemption does exemptions provided in
105 subparagraphs 1. and 2. do not apply to machinery or equipment
106 purchased or used by electric utility companies, communications
107 companies, oil or gas exploration or production operations,
108 publishing firms that do not export at least 50 percent of their
109 finished product out of the state, any firm subject to
110 regulation by the Division of Hotels and Restaurants of the
111 Department of Business and Professional Regulation, or any firm
112 that does not manufacture, process, compound, or produce for
113 sale items of tangible personal property or that does not use
114 such machinery and equipment in spaceport activities as required
115 by this paragraph. The exemption does apply exemptions provided
116 in subparagraphs 1. and 2. shall apply to machinery and
117 equipment purchased for use in phosphate or other solid minerals
118 severance, mining, or processing operations.
119 3.6. For the purposes of the exemption, the term exemptions
120 provided in subparagraphs 1. and 2., these terms have the
121 following meanings:
122 a. “industrial machinery and equipment” means tangible
123 personal property or other property that has a depreciable life
124 of 3 years or more and that is used as an integral part in the
125 manufacturing, processing, compounding, or production of
126 tangible personal property for sale or is exclusively used in
127 spaceport activities. A building and its structural components
128 are not industrial machinery and equipment unless the building
129 or structural component is so closely related to the industrial
130 machinery and equipment that it houses or supports that the
131 building or structural component can be expected to be replaced
132 when the machinery and equipment are replaced. Heating and air
133 conditioning systems are not industrial machinery and equipment
134 unless the sole justification for their installation is to meet
135 the requirements of the production process, even though the
136 system may provide incidental comfort to employees or serve, to
137 an insubstantial degree, nonproduction activities. The term
138 includes parts and accessories for industrial machinery and
139 equipment only to the extent that the exemption thereof is
140 consistent with the provisions of this paragraph.
141 b. “Productive output” means the number of units actually
142 produced by a single plant, operation, or product line in a
143 single continuous 12-month period, irrespective of sales.
144 Increases in productive output shall be measured by the output
145 for 12 continuous months selected by the expanding business
146 after completion of the installation of such machinery or
147 equipment over the output for the 12 continuous months
148 immediately preceding such installation. However, in no case may
149 such time period begin later than 2 years after completion of
150 the installation of the new machinery and equipment. The units
151 used to measure productive output shall be physically comparable
152 between the two periods, irrespective of sales.
153 (d) Machinery and equipment used under federal procurement
154 contract.—
155 1. Industrial machinery and equipment purchased by an
156 expanding business that which manufactures tangible personal
157 property pursuant to federal procurement regulations at fixed
158 locations in this state are exempt from the tax imposed in this
159 chapter upon an affirmative showing by the taxpayer to the
160 satisfaction of the department that such items are used to
161 increase the implicit productive output of the expanded business
162 by not less than 10 percent. The percentage of increase is
163 measured as deflated implicit productive output for the calendar
164 year during which the installation of the machinery or equipment
165 is completed or during which commencement of production
166 utilizing such items is begun divided by the implicit productive
167 output for the preceding calendar year. In no case may The
168 commencement of production may not begin later than 2 years
169 after completing following completion of installation of the
170 machinery or equipment.
171 2. The amount of the exemption allowed must shall equal the
172 taxes otherwise imposed by this chapter on qualifying industrial
173 machinery or equipment reduced by the percentage of gross
174 receipts from cost-reimbursement type contracts attributable to
175 the plant or operation to total gross receipts so attributable,
176 accrued for the year of completion or commencement.
177 3. The exemption provided by this paragraph shall inure to
178 the taxpayer only through a refund of previously paid taxes.
179 Such refund shall be made within 30 days after of formal
180 approval by the department of the taxpayer’s application, which
181 application may be made on an annual basis following
182 installation of the machinery or equipment.
183 4. For the purposes of this paragraph, the term:
184 a. “Cost-reimbursement type contracts” has the same meaning
185 as in 32 C.F.R. s. 3-405.
186 b. “Deflated implicit productive output” means the product
187 of implicit productive output times the quotient of the national
188 defense implicit price deflator for the preceding calendar year
189 divided by the deflator for the year of completion or
190 commencement.
191 c. “Eligible costs” means the total direct and indirect
192 costs, as defined in 32 C.F.R. ss. 15-202 and 15-203, excluding
193 general and administrative costs, selling expenses, and profit,
194 defined by the uniform cost-accounting standards adopted by the
195 Cost-Accounting Standards Board created pursuant to 50 U.S.C. s.
196 2168.
197 d. “Implicit productive output” means the annual eligible
198 costs attributable to all contracts or subcontracts subject to
199 federal procurement regulations of the single plant or operation
200 at which the machinery or equipment is used.
201 e. “Industrial machinery and equipment” means tangible
202 personal property or other property that has a depreciable life
203 of 3 years or more, that qualifies as an eligible cost under
204 federal procurement regulations, and that is used as an integral
205 part of the process of production of tangible personal property.
206 A building and its structural components are not industrial
207 machinery and equipment unless the building or structural
208 component is so closely related to the industrial machinery and
209 equipment that it houses or supports that the building or
210 structural component can be expected to be replaced when the
211 machinery and equipment are replaced. Heating and air
212 conditioning systems are not industrial machinery and equipment
213 unless the sole justification for their installation is to meet
214 the requirements of the production process, even though the
215 system may provide incidental comfort to employees or serve, to
216 an insubstantial degree, nonproduction activities. The term
217 includes parts and accessories only to the extent that the
218 exemption of such parts and accessories is consistent with the
219 provisions of this paragraph.
220 f. “National defense implicit price deflator” means the
221 national defense implicit price deflator for the gross national
222 product as determined by the Bureau of Economic Analysis of the
223 United States Department of Commerce.
224 5. The exclusions provided in subparagraph (b)2. (b)5.
225 apply to this exemption. This exemption applies only to
226 machinery or equipment purchased pursuant to production
227 contracts with the United States Department of Defense and Armed
228 Forces, the National Aeronautics and Space Administration, and
229 other federal agencies for which the contracts are classified
230 for national security reasons. In no event shall The provisions
231 of this paragraph do not apply to an any expanding business
232 whose the increase in productive output is measurable of which
233 could be measured under the provisions of sub-subparagraph
234 (b)6.b. as physically comparable between the two periods. As
235 used in this subparagraph, the term “productive output” means
236 the number of units actually produced by a single plant,
237 operation, or product line in a single continuous 12-month
238 period, irrespective of sales. Increases in productive output
239 shall be measured by dividing the output for 12 continuous
240 months selected by the expanding business after completing the
241 installation of machinery or equipment by the output for the 12
242 continuous months immediately preceding such installation.
243 However, such time period may not commence 2 years after
244 completing the installation. The units used to measure
245 productive output must be physically comparable between the two
246 periods, irrespective of sales.
247 (h) Business property used in an enterprise zone.—
248 1. Business property purchased for use by businesses
249 located in an enterprise zone which is subsequently used in an
250 enterprise zone is shall be exempt from the tax imposed by this
251 chapter. This exemption inures to the business only through a
252 refund of previously paid taxes. A refund shall be authorized
253 upon an affirmative showing by the taxpayer, to the satisfaction
254 of the department, that the requirements of this paragraph have
255 been met.
256 2. To receive a refund, the business must file under oath
257 with the governing body or enterprise zone development agency
258 having jurisdiction over the enterprise zone where the business
259 is located, as applicable, an application, under oath, which
260 includes:
261 a. The name and address of the business claiming the
262 refund.
263 b. The identifying number assigned pursuant to s. 290.0065
264 to the enterprise zone in which the business is located.
265 c. A specific description of the property for which a
266 refund is sought, including its serial number or other permanent
267 identification number.
268 d. The location of the property.
269 e. The sales invoice or other proof of purchase of the
270 property, showing the amount of sales tax paid, the date of
271 purchase, and the name and address of the sales tax dealer from
272 whom the property was purchased.
273 f. Whether the business is a small business as defined in
274 by s. 288.703.
275 g. If applicable, the name and address of each permanent
276 employee of the business, including, for each employee who is a
277 resident of an enterprise zone, the identifying number assigned
278 pursuant to s. 290.0065 to the enterprise zone in which the
279 employee resides.
280 3. Within 10 working days after receipt of an application,
281 the governing body or enterprise zone development agency shall
282 review the application to determine if it contains all the
283 information required pursuant to subparagraph 2. and meets the
284 criteria set out in this paragraph. The governing body or agency
285 shall certify all applications that contain the information
286 required pursuant to subparagraph 2. and meet the criteria set
287 out in this paragraph as eligible to receive a refund. If
288 applicable, the governing body or agency shall also certify if
289 20 percent of the employees of the business are residents of an
290 enterprise zone, excluding temporary and part-time employees.
291 The certification must shall be in writing, and a copy of the
292 certification shall be transmitted to the executive director of
293 the Department of Revenue. The business is shall be responsible
294 for forwarding a certified application to the department within
295 the time specified in subparagraph 4.
296 4. An application for a refund pursuant to this paragraph
297 must be submitted to the department within 6 months after the
298 tax is due on the business property that is purchased.
299 5. The amount refunded on purchases of business property
300 under this paragraph shall be the lesser of 97 percent of the
301 sales tax paid on such business property or $5,000, or, if up to
302 no less than 20 percent of the employees of the business are
303 residents of an enterprise zone, excluding temporary and part
304 time employees, the amount refunded on purchases of business
305 property under this paragraph shall be the lesser of 97 percent
306 of the sales tax paid on such business property or $10,000. A
307 refund must approved pursuant to this paragraph shall be made
308 within 30 days after formal approval by the department of the
309 application for the refund. A refund may not be granted under
310 this paragraph unless the amount to be refunded exceeds $100 in
311 sales tax paid on purchases made within a 60-day time period.
312 6. The department shall adopt rules governing the manner
313 and form of refund applications and may establish guidelines as
314 to the requisites for an affirmative showing of qualification
315 for exemption under this paragraph.
316 7. If the department determines that the business property
317 is used outside an enterprise zone within 3 years after from the
318 date of purchase, the amount of taxes refunded to the business
319 purchasing such business property is shall immediately be due
320 and payable to the department by the business, together with the
321 appropriate interest and penalty, computed from the date of
322 purchase, in the manner provided by this chapter.
323 Notwithstanding this subparagraph, business property used
324 exclusively in:
325 a. Licensed commercial fishing vessels,
326 b. Fishing guide boats, or
327 c. Ecotourism guide boats
328
329 that leave and return to a fixed location within an area
330 designated under s. 379.2353, Florida Statutes 2010, are
331 eligible for the exemption provided under this paragraph if all
332 requirements of this paragraph are met. Such vessels and boats
333 must be owned by a business that is eligible to receive the
334 exemption provided under this paragraph. This exemption does not
335 apply to the purchase of a vessel or boat.
336 8. The department shall deduct an amount equal to 10
337 percent of each refund granted under this paragraph from the
338 amount transferred into the Local Government Half-cent Sales Tax
339 Clearing Trust Fund pursuant to s. 212.20 for the county area in
340 which the business property is located and shall transfer that
341 amount to the General Revenue Fund.
342 9. For the purposes of this exemption, the term “business
343 property” means new or used property defined as “recovery
344 property” in s. 168(c) of the Internal Revenue Code of 1954, as
345 amended, except:
346 a. Property classified as 3-year property under s.
347 168(c)(2)(A) of the Internal Revenue Code of 1954, as amended;
348 b. Industrial machinery and equipment as defined in
349 subparagraph (b)3. sub-subparagraph (b)6.a. and eligible for
350 exemption under paragraph (b);
351 c. Building materials as defined in sub-subparagraph
352 (g)8.a.; and
353 d. Business property having a sales price of under $5,000
354 per unit.
355 10. This paragraph expires on the date specified in s.
356 290.016 for the expiration of the Florida Enterprise Zone Act.
357 Section 2. Effective July 1, 2013, paragraph (c) of
358 subsection (2) of section 288.1045, Florida Statutes, is
359 amended, and present paragraphs (d) through (h) of that
360 subsection are redesignated as paragraphs (c) through (g),
361 respectively, to read:
362 288.1045 Qualified defense contractor and space flight
363 business tax refund program.—
364 (2) GRANTING OF A TAX REFUND; ELIGIBLE AMOUNTS.—
365 (c) A qualified applicant may not receive more than $7
366 million in tax refunds pursuant to this section in all fiscal
367 years.
368 Section 3. Effective July 1, 2013, paragraph (c) of
369 subsection (3) of section 288.106, Florida Statutes, is amended
370 to read:
371 288.106 Tax refund program for qualified target industry
372 businesses.—
373 (3) TAX REFUND; ELIGIBLE AMOUNTS.—
374 (c) A qualified target industry business may not receive
375 refund payments of more than 25 percent of the total tax refunds
376 specified in the tax refund agreement under subparagraph
377 (5)(a)1. in any fiscal year. Further, a qualified target
378 industry business may not receive more than $1.5 million in
379 refunds under this section in any single fiscal year, or more
380 than $2.5 million in any single fiscal year if the project is
381 located in an enterprise zone. A qualified target industry
382 business may not receive more than $7 million in refund payments
383 under this section in all fiscal years, or more than $7.5
384 million if the project is located in an enterprise zone.
385 Section 4. Effective July 1, 2013, paragraph (d) of
386 subsection (2) and subsection (7) of section 288.1089, Florida
387 Statutes, are amended to read:
388 288.1089 Innovation Incentive Program.—
389 (2) As used in this section, the term:
390 (d) “Cumulative investment” means cumulative capital
391 investment and all eligible capital costs, as defined in s.
392 220.191.
393 (7) Upon receipt of the evaluation and recommendation from
394 the department, the Governor shall approve or deny an award. In
395 recommending approval of an award, the department shall include
396 proposed performance conditions that the applicant must meet in
397 order to obtain incentive funds and any other conditions that
398 must be met before the receipt of any incentive funds. However,
399 if the award:
400 (a) Exceeds $5 million, the department may not release the
401 funds until the award is reviewed and approved by the
402 Legislative Budget Commission. The Governor shall consult with
403 the President of the Senate and the Speaker of the House of
404 Representatives before giving approval for an award. Upon review
405 and approval of the an award by the Legislative Budget
406 commission, the department Executive Office of the Governor
407 shall release the funds.
408 (b) Exceeds $2 million but does not exceed $5 million, at
409 least 10 days before the funds are released, the Governor shall
410 submit a written description and evaluation of the award to the
411 chair and vice chair of the Legislative Budget Commission. If
412 the chair or vice chair of the Legislative Budget Commission,
413 the President of the Senate, or the Speaker of the House of
414 Representatives timely advises the Executive Office of the
415 Governor in writing that such action or proposed action exceeds
416 the delegated authority of the Executive office of the Governor
417 or is contrary to legislative policy or intent, the Executive
418 Office of the Governor shall void the release of funds and
419 instruct the department to immediately change such action or
420 proposed action until the commission or the Legislature
421 addresses the issue.
422 (c) Does not exceed $2 million, the Governor may approve
423 the award and the department may release the funds without
424 legislative notice or review.
425 Section 5. Except as otherwise expressly provided in this
426 act, and except for this section which shall take effect upon
427 becoming law, this act shall take effect July 1, 2014.