RULE NO: RULE TITLE
12A-1.0011: Schools Offering Grades K through 12; Parent-Teacher Associations; and Parent-Teacher Organizations
12A-1.096: Industrial Machinery and Equipment for Use in a New or Expanding Business
12A-1.097: Public Use Forms
PURPOSE AND EFFECT: The purpose of the proposed amendments to Rule 12A-1.096, F.A.C. (Industrial Machinery and Equipment for Use in a New or Expanding Business), is to: (1) incorporate the provisions of Chapter 2006-56, L.O.F., which amends s. 212.08(5)(b), F.S. (Machinery and equipment used to increase productive output); and (2) revise the requirements for the administration of the exemption provided for industrial machinery and equipment used in a new or expanding business consistent with Section 212.08(5)(b), F.S., as amended.
Chapter 2006-56, L.O.F., deletes the $50,000 tax threshold per calendar year on the purchase of industrial machinery and equipment used to increase productive output by certain industries. All industries will no longer be required to meet the $50,000 tax threshold per calendar year. This law also revises the exemption for machinery and equipment used in mining operations by removing the requirement that the exemption is only available by taking a credit against severance taxes and removing the requirement that mining operations must show an increase in the creation of new jobs. The proposed amendments remove these obsolete requirements.
The proposed amendments to Rule 12A-1.097, F.A.C. (Public Use Forms), adopt, by reference, changes to Form DR-1214, Application for Temporary Tax Exemption Permit.
SUMMARY: The proposed amendments to Rule 12A-1.096, F.A.C. (Industrial Machinery and Equipment for Use in a New or Expanding Business), clarify that a “fixed location” is a location or plant site that is used, or intended to be used, for an extended or indefinite period of time for spaceport activities or for manufacturing, processing, compounding, or producing items of tangible personal property for sale. The definition of “mining activities,” rendered obsolete by Chapter 2006-56, L.O.F., is removed. Examples are added to the definition of the term “physically comparable,” for clarity. The term “production process” is clarified to mean that the production process may include quality control activities after the items have been packaged, such as good manufacturing practices as mandated by the Federal Food and Drug Administration to detect adulterated food or food that has been prepared, packaged, or held under insanitary conditions. Additional provisions are added to clarify that the production process does not include product design activities. The proposed amendments define the terms “purchase” and “purchase agreement” for purposes of the exemption.
The proposed amendments revise the provisions describing the terms “new business” and “expanding business.” Pursuant to these proposed amendments, businesses that purchase additional machinery and equipment to begin manufacturing component parts for existing lines of products that were previously purchased from vendors will be classified as an “expanding business” and will be required to meet the statutory requirement to increase productive output. For these expanding businesses, that statutory requirement will be met when the first component part is manufactured for existing lines of products, as the production of that first component part represents a 100 percent increase in productive output of that component part. In addition, the proposed amendments clarify that the physical productive output measurement must be based on physical production data that is directly relevant to the business and/or product(s) being produced. Examples are added to the provisions for a “new business” and for an “expanding business” to clarify this classification.
The proposed amendments revise the provisions describing the term “expanding business,” removing provisions regarding the $50,000 tax threshold per calendar year on the purchase of industrial machinery and equipment used to increase the productive output of tangible personal property. This tax threshold requirement was repealed by Chapter 2006-56, L.O.F. The proposed amendments also remove provisions regarding mining activities rendered obsolete by Chapter 2006-56, L.O.F.
The proposed amendments provide that existing products that merely incorporate newer technology are not considered to be a distinct and separate economic activity.
The proposed amendments clarify that an application for refund must meet the requirements of Section 213.255(2) and (3), F.S., and Rule 12-26.003, F.A.C., to be considered complete.
The proposed amendments provide additional examples of types of industrial machinery and equipment to clarify whether post-production machinery and equipment used for refrigerated, frozen, or heated storage of finished goods inventory qualifies for the exemption. Provisions are added to clarify that conveyors used to transport work-in-process within the production line at the fixed location will qualify for exemption. Additional examples are provided, and obsolete provisions are removed, to clarify whether computers and related equipment will be considered a part of the production process and qualify for exemption. Obsolete provisions regarding agricultural equipment, which became fully exempt under the provisions of Section 212.08(3), F.S., as amended in 2005, are removed. Additional provisions are included to clarify whether monitoring equipment, office equipment, security systems, motor vehicles, and locomotives or railroad cars will qualify for the exemption.
The proposed amendments consolidate and clarify provisions for the application of the exemption to leases of machinery and equipment for new and expanding businesses.
The proposed amendments to Rule 12A-1.097, F.A.C. (Public Use Forms), adopt, by reference, changes to Form DR-1214, Application for Temporary Tax Exemption Permit.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 201.11, 202.17(3)(a), 202.22(6), 202.26(3), 212.0515(7), 212.07(1)(b), 212.08(5)(b)4., (7), 212.11(5)(b), 212.12(1)(b)2., 212.17(6), 212.18(2), (3), 213.06(1), 376.70(6)(b), 376.75(9)(b), 403.718(3)(b), 403.7185(3)(b), 443.171(2), (7) FS.
LAW IMPLEMENTED: 92.525(1)(b), (3), 95.091, 125.0104, 125.0108, 201.01, 201.08(1)(a), 201.133, 201.17(1)-(5), 202.11(2), (3), (6), (16), (24), 202.17, 202.22(3)-(6), 202.28(1), 203.01, 212.02, 212.03, 212.0305, 212.031, 212.04, 212.05, 212.0501, 212.0515, 212.054, 212.055, 212.06, 212.0606, 212.07(1), (8), (9), 212.08, 212.084(3), 212.085, 212.09, 212.096, 212.11(1), (4), (5), 212.12(1), (2), (9), (13), 212.13, 212.14(5), 212.17, 212.18(2), (3), 213.235, 213.255(2), (3), 213.29, 213.37, 215.26, 219.07, 288.1258, 376.70, 376.75, 403.717, 403.718, 403.7185, 443.036, 443.121(1), (3), 443.131, 443.1315, 443.1316, 443.171(2), (7) FS.
A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: 1:30 p.m., September 5, 2007.
PLACE: Room 118, Carlton Building, 501 S. Calhoun Street, Tallahassee, Florida.
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Larry Green at (850)922-4830. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Jeffery L. Soff, Tax Law Specialist, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone 850-922-4719.
THE FULL TEXT OF THE PROPOSED RULE IS: