HB 69

1	A bill to be entitled
2	An act relating to exemptions from the tax on sales, use,
3	and other transactions; providing a short title; providing
4	legislative findings and purpose; amending s. 212.08,
5	F.S.; deleting an annual limitation on an exemption from
6	the sales tax for certain machinery and equipment used to
7	increase productive output; deleting an exemption for
8	machinery and equipment used to expand certain printing
9	manufacturing facilities or plant units; deleting a
10	limitation on application of the exemption for machinery
11	and equipment purchased for use in phosphate or other
12	solid minerals severance, mining, or processing operations
13	by way of a prospective credit; deleting an annual
14	limitation on an exemption from the sales tax for certain
15	machinery and equipment purchased under a federal
16	procurement contract; repealing s. 212.0805, F.S.,
17	relating to qualifications for the exemption and credit
18	for machinery and equipment purchased by an expanding
19	business for use in phosphate or other solid minerals
20	severance, mining, or processing operations; providing an
21	appropriation; providing an effective date.
22
23	Be It Enacted by the Legislature of the State of Florida:
24
25	Section 1.  Short title.--This act may be cited as the
26	"Florida Manufacturing Global Competitiveness Act."
27	Section 2.  Legislative findings and purpose.--The
28	Legislature finds that a competitive manufacturing business
29	climate is important given that the manufacturing sector
30	contributes significantly to the economy of this state, helping
31	the state to weather natural and manmade disasters; that the
32	development of free trade agreements with the Americas will
33	allow the state to be the gateway to increased international
34	trade that will expand the opportunities for manufacturing
35	exports, potentially add thousands of well-paying jobs in the
36	state, and secure this state's place in emerging markets in the
37	world marketplace; and that with the potential for increasing
38	exports, an investment in manufacturing today will mean
39	significant long-term positive economic benefits to the state
40	tomorrow.
41	Section 3.  Paragraphs (b) and (d) of subsection (5) of
42	section 212.08, Florida Statutes, are amended to read:
43	212.08  Sales, rental, use, consumption, distribution, and
44	storage tax; specified exemptions.--The sale at retail, the
45	rental, the use, the consumption, the distribution, and the
46	storage to be used or consumed in this state of the following
47	are hereby specifically exempt from the tax imposed by this
48	chapter.
49	(5)  EXEMPTIONS; ACCOUNT OF USE.--
50	(b)  Machinery and equipment used to increase productive
51	output.--
52	1.  Industrial machinery and equipment purchased for
53	exclusive use by a new business in spaceport activities as
54	defined by s. 212.02 or for use in new businesses which
55	manufacture, process, compound, or produce for sale items of
56	tangible personal property at fixed locations are exempt from
57	the tax imposed by this chapter upon an affirmative showing by
58	the taxpayer to the satisfaction of the department that such
59	items are used in a new business in this state. Such purchases
60	must be made prior to the date the business first begins its
61	productive operations, and delivery of the purchased item must
62	be made within 12 months of that date.
63	2.a.  Industrial machinery and equipment purchased for
64	exclusive use by an expanding facility which is engaged in
65	spaceport activities as defined by s. 212.02 or for use in
66	expanding manufacturing facilities or plant units which
67	manufacture, process, compound, or produce for sale items of
68	tangible personal property at fixed locations in this state are
69	exempt from any amount of tax imposed by this chapter in excess
70	of $50,000 per calendar year upon an affirmative showing by the
71	taxpayer to the satisfaction of the department that such items
72	are used to increase the productive output of such expanded
73	facility or business by not less than 10 percent.
74	b.  Notwithstanding any other provision of this section,
75	industrial machinery and equipment purchased for use in
76	expanding printing manufacturing facilities or plant units that
77	manufacture, process, compound, or produce for sale items of
78	tangible personal property at fixed locations in this state are
79	exempt from any amount of tax imposed by this chapter upon an
80	affirmative showing by the taxpayer to the satisfaction of the
81	department that such items are used to increase the productive
82	output of such an expanded business by not less than 10 percent.
83	3.a.  To receive an exemption provided by subparagraph 1.
84	or subparagraph 2., a qualifying business entity shall apply to
85	the department for a temporary tax exemption permit. The
86	application shall state that a new business exemption or
87	expanded business exemption is being sought. Upon a tentative
88	affirmative determination by the department pursuant to
89	subparagraph 1. or subparagraph 2., the department shall issue
90	such permit.
91	b.  The applicant shall be required to maintain all
92	necessary books and records to support the exemption. Upon
93	completion of purchases of qualified machinery and equipment
94	pursuant to subparagraph 1. or subparagraph 2., the temporary
95	tax permit shall be delivered to the department or returned to
96	the department by certified or registered mail.
97	c.  If, in a subsequent audit conducted by the department,
98	it is determined that the machinery and equipment purchased as
99	exempt under subparagraph 1. or subparagraph 2. did not meet the
100	criteria mandated by this paragraph or if commencement of
101	production did not occur, the amount of taxes exempted at the
102	time of purchase shall immediately be due and payable to the
103	department by the business entity, together with the appropriate
104	interest and penalty, computed from the date of purchase, in the
105	manner prescribed by this chapter.
106	d.  In the event a qualifying business entity fails to
107	apply for a temporary exemption permit or if the tentative
108	determination by the department required to obtain a temporary
109	exemption permit is negative, a qualifying business entity shall
110	receive the exemption provided in subparagraph 1. or
111	subparagraph 2. through a refund of previously paid taxes. No
112	refund may be made for such taxes unless the criteria mandated
113	by subparagraph 1. or subparagraph 2. have been met and
114	commencement of production has occurred.
115	4.  The department shall adopt rules governing applications
116	for, issuance of, and the form of temporary tax exemption
117	permits; provisions for recapture of taxes; and the manner and
118	form of refund applications and may establish guidelines as to
119	the requisites for an affirmative showing of increased
120	productive output, commencement of production, and qualification
121	for exemption.
122	5.  The exemptions provided in subparagraphs 1. and 2. do
123	not apply to machinery or equipment purchased or used by
124	electric utility companies, communications companies, oil or gas
125	exploration or production operations, publishing firms that do
126	not export at least 50 percent of their finished product out of
127	the state, any firm subject to regulation by the Division of
128	Hotels and Restaurants of the Department of Business and
129	Professional Regulation, or any firm which does not manufacture,
130	process, compound, or produce for sale items of tangible
131	personal property or which does not use such machinery and
132	equipment in spaceport activities as required by this paragraph.
133	The exemptions provided in subparagraphs 1. and 2. shall apply
134	to machinery and equipment purchased for use in phosphate or
135	other solid minerals severance, mining, or processing operations
136	only by way of a prospective credit against taxes due under
137	chapter 211 for taxes paid under this chapter on such machinery
138	and equipment.
139	6.  For the purposes of the exemptions provided in
140	subparagraphs 1. and 2., these terms have the following
141	meanings:
142	a.  "Industrial machinery and equipment" means tangible
143	personal property or other property that has a depreciable life
144	of 3 years or more and that is used as an integral part in the
145	manufacturing, processing, compounding, or production of
146	tangible personal property for sale or is exclusively used in
147	spaceport activities. A building and its structural components
148	are not industrial machinery and equipment unless the building
149	or structural component is so closely related to the industrial
150	machinery and equipment that it houses or supports that the
151	building or structural component can be expected to be replaced
152	when the machinery and equipment are replaced. Heating and air-
153	conditioning systems are not industrial machinery and equipment
154	unless the sole justification for their installation is to meet
155	the requirements of the production process, even though the
156	system may provide incidental comfort to employees or serve, to
157	an insubstantial degree, nonproduction activities. The term
158	includes parts and accessories only to the extent that the
159	exemption thereof is consistent with the provisions of this
160	paragraph.
161	b.  "Productive output" means the number of units actually
162	produced by a single plant or operation in a single continuous
163	12-month period, irrespective of sales. Increases in productive
164	output shall be measured by the output for 12 continuous months
165	immediately following the completion of installation of such
166	machinery or equipment over the output for the 12 continuous
167	months immediately preceding such installation. However, if a
168	different 12-month continuous period of time would more
169	accurately reflect the increase in productive output of
170	machinery and equipment purchased to facilitate an expansion,
171	the increase in productive output may be measured during that
172	12-month continuous period of time if such time period is
173	mutually agreed upon by the Department of Revenue and the
174	expanding business prior to the commencement of production;
175	provided, however, in no case may such time period begin later
176	than 2 years following the completion of installation of the new
177	machinery and equipment. The units used to measure productive
178	output shall be physically comparable between the two periods,
179	irrespective of sales.
180	(d)  Machinery and equipment used under federal procurement
181	contract.--
182	1.  Industrial machinery and equipment purchased by an
183	expanding business which manufactures tangible personal property
184	pursuant to federal procurement regulations at fixed locations
185	in this state are partially exempt from the tax imposed in this
186	chapter on that portion of the tax which is in excess of
187	$100,000 per calendar year upon an affirmative showing by the
188	taxpayer to the satisfaction of the department that such items
189	are used to increase the implicit productive output of the
190	expanded business by not less than 10 percent. The percentage of
191	increase is measured as deflated implicit productive output for
192	the calendar year during which the installation of the machinery
193	or equipment is completed or during which commencement of
194	production utilizing such items is begun divided by the implicit
195	productive output for the preceding calendar year. In no case
196	may the commencement of production begin later than 2 years
197	following completion of installation of the machinery or
198	equipment.
199	2.  The amount of the exemption allowed shall equal the
200	taxes otherwise imposed by this chapter in excess of $100,000
201	per calendar year on qualifying industrial machinery or
202	equipment reduced by the percentage of gross receipts from cost-
203	reimbursement type contracts attributable to the plant or
204	operation to total gross receipts so attributable, accrued for
205	the year of completion or commencement.
206	3.  The exemption provided by this paragraph shall inure to
207	the taxpayer only through refund of previously paid taxes. Such
208	refund shall be made within 30 days of formal approval by the
209	department of the taxpayer's application, which application may
210	be made on an annual basis following installation of the
211	machinery or equipment.
212	4.  For the purposes of this paragraph, the term:
213	a.  "Cost-reimbursement type contracts" has the same
214	meaning as in 32 C.F.R. s. 3-405.
215	b.  "Deflated implicit productive output" means the product
216	of implicit productive output times the quotient of the national
217	defense implicit price deflator for the preceding calendar year
218	divided by the deflator for the year of completion or
219	commencement.
220	c.  "Eligible costs" means the total direct and indirect
221	costs, as defined in 32 C.F.R. ss. 15-202 and 15-203, excluding
222	general and administrative costs, selling expenses, and profit,
223	defined by the uniform cost-accounting standards adopted by the
224	Cost-Accounting Standards Board created pursuant to 50 U.S.C. s.
225	2168.
226	d.  "Implicit productive output" means the annual eligible
227	costs attributable to all contracts or subcontracts subject to
228	federal procurement regulations of the single plant or operation
229	at which the machinery or equipment is used.
230	e.  "Industrial machinery and equipment" means tangible
231	personal property or other property that has a depreciable life
232	of 3 years or more, that qualifies as an eligible cost under
233	federal procurement regulations, and that is used as an integral
234	part of the process of production of tangible personal property.
235	A building and its structural components are not industrial
236	machinery and equipment unless the building or structural
237	component is so closely related to the industrial machinery and
238	equipment that it houses or supports that the building or
239	structural component can be expected to be replaced when the
240	machinery and equipment are replaced. Heating and air-
241	conditioning systems are not industrial machinery and equipment
242	unless the sole justification for their installation is to meet
243	the requirements of the production process, even though the
244	system may provide incidental comfort to employees or serve, to
245	an insubstantial degree, nonproduction activities. The term
246	includes parts and accessories only to the extent that the
247	exemption of such parts and accessories is consistent with the
248	provisions of this paragraph.
249	f.  "National defense implicit price deflator" means the
250	national defense implicit price deflator for the gross national
251	product as determined by the Bureau of Economic Analysis of the
252	United States Department of Commerce.
253	5.  The exclusions provided in subparagraph (b)5. apply to
254	this exemption. This exemption applies only to machinery or
255	equipment purchased pursuant to production contracts with the
256	United States Department of Defense and Armed Forces, the
257	National Aeronautics and Space Administration, and other federal
258	agencies for which the contracts are classified for national
259	security reasons. In no event shall the provisions of this
260	paragraph apply to any expanding business the increase in
261	productive output of which could be measured under the
262	provisions of sub-subparagraph (b)6.b. as physically comparable
263	between the two periods.
264	Section 4.  Section 212.0805, Florida Statutes, is
265	repealed.
266	Section 5.  For the 2006-2007 fiscal year, the sum of
267	$203,574 in recurring funds and the sum of $19,372 in
268	nonrecurring funds are appropriated from the General Revenue
269	Fund to the Department of Revenue and four full-time equivalent
270	positions and associated salary rate of 137,955 are authorized
271	for the purpose of implementing this act.
272	Section 6.  This act shall take effect July 1, 2006.

CODING: Words stricken are deletions; words underlined are additions.