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Senate Bill 2362

Senate Bill sb2362c1

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    Florida Senate - 2005                           CS for SB 2362

    By the Committee on Commerce and Consumer Services; and
    Senators Smith, Fasano and Crist


  1                      A bill to be entitled

  2         An act relating to the tax on sales, use, and

  3         other transactions; amending s. 212.052, F.S.;

  4         deleting an exception to an exemption from the

  5         tax for research or development costs; amending

  6         s. 212.08, F.S.; providing an exemption for

  7         machinery and equipment used predominantly for

  8         research and development activities; defining

  9         the terms "predominantly" and "machinery and

10         equipment"; authorizing the Department of

11         Revenue to adopt rules to administer the

12         exemption; providing for an affidavit to be

13         given by a taxpayer claiming entitlement to the

14         exemption; authorizing a business to designate

15         one or more state universities or community

16         colleges as recipients of part or all of the

17         amount of the exemption under specified

18         conditions; providing that the business retains

19         the rights to patents, royalties, or real or

20         intellectual property unless an agreement

21         specifies otherwise; providing for a review of

22         the exemption by the Office of Program Policy

23         Analysis and Government Accountability;

24         amending s. 1011.94, F.S.; adding

25         cross-references and deleting the reference to

26         a requirement for certification of the exempt

27         business; providing an effective date.


29  Be It Enacted by the Legislature of the State of Florida:




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    Florida Senate - 2005                           CS for SB 2362

 1         Section 1.  Subsection (2) of section 212.052, Florida

 2  Statutes, is amended to read:

 3         212.052  Research or development costs; exemption.--

 4         (2)  Notwithstanding any provision of this chapter to

 5  the contrary, any person, including an affiliated group as

 6  defined in s. 1504 of the Internal Revenue Code of 1954, as

 7  amended, who manufactures, produces, compounds, processes, or

 8  fabricates in any manner tangible personal property for such

 9  taxpayer's own use directly and solely in research or

10  development shall not be subject to the tax imposed by this

11  chapter upon the cost of the product so manufactured,

12  produced, compounded, processed, or fabricated. However, the

13  tax imposed by this chapter shall be due on the purchase,

14  rental, or repair of real property or tangible personal

15  property employed in research or development which is subject

16  to the tax imposed by this chapter at the time of purchase or

17  rental.

18         Section 2.  Subsection (18) is added to section 212.08,

19  Florida Statutes, to read:

20         212.08  Sales, rental, use, consumption, distribution,

21  and storage tax; specified exemptions.--The sale at retail,

22  the rental, the use, the consumption, the distribution, and

23  the storage to be used or consumed in this state of the

24  following are hereby specifically exempt from the tax imposed

25  by this chapter.

26         (18)(a)  Machinery and equipment used predominantly for

27  research and development, as defined in s. 212.052, are exempt

28  from the tax imposed by this chapter.  For the purposes of

29  this subsection, the term "predominantly" means at least 50

30  percent of the time.  The term "machinery and equipment"

31  includes, but is not limited to, molds, dies, machine tooling,


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    Florida Senate - 2005                           CS for SB 2362

 1  other appurtenances or accessories to machinery and equipment,

 2  testing and measuring equipment, test beds, computers, and

 3  software, whether purchased or self-fabricated, and, if

 4  self-fabricated, includes materials and labor for design,

 5  fabrication, and assembly.

 6         (b)  The department may adopt rules that provide for

 7  administering this exemption. Persons claiming the exemption

 8  provided in this subsection shall furnish the vendor of the

 9  machinery or equipment, including the vendor of materials and

10  labor used in self-fabrication of the machinery or equipment,

11  an affidavit stating that the item or items for which an

12  exemption is claimed are machinery and equipment that will be

13  used predominantly for research and development as required by

14  this subsection. A purchaser who claims the exemption by

15  refund shall include the affidavit with the refund

16  application.  The affidavit must contain the purchaser's name,

17  address, sales and use tax registration number, and, if

18  applicable, federal employer identification number.  Any

19  person fraudulently furnishing an affidavit to the vendor for

20  the purpose of evading payment of any tax imposed under this

21  chapter shall be subject to the penalty set forth in s.

22  212.085 and as otherwise provided by law. Purchasers shall

23  maintain all documentation necessary to prove the exempt

24  status of purchases and fabrication activity and make such

25  documentation available for inspection pursuant to the

26  requirements of s. 212.13(2).

27         (c)  A business may designate one or more state

28  universities or community colleges as recipients to receive

29  from the business an amount of up to 100 percent of the

30  exemption for which the business qualifies.  To receive these

31  funds, the state university or community college must agree to


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    Florida Senate - 2005                           CS for SB 2362

 1  match the funds so earned with equivalent cash, programs,

 2  services, or other in-kind support on a one-to-one basis in

 3  the pursuit of research and development projects as requested

 4  by the business.  The rights to any patents, royalties, or

 5  real or intellectual property must be vested in the business

 6  unless otherwise agreed to by the business and the state

 7  university or community college.

 8         (d)  The exemption provided for in this subsection

 9  shall be reviewed by the Legislature no later than July 1,

10  2015.  The Office of Program Policy Analysis and Government

11  Accountability and Enterprise Florida, Inc., shall study this

12  exemption to determine the impact of the exemption on the

13  promotion of research and development activities in this

14  state.  Enterprise Florida, Inc., may contract with an

15  independent research organization to perform the assessment.

16  The study must include the estimated annual cost of the

17  exemption and an estimate of the economic impact of increased

18  research and development activities, if any.  By January 1,

19  2015, the Office of Program Policy Analysis and Government

20  Accountability and Enterprise Florida, Inc., shall submit to

21  the Governor, the President of the Senate, and the Speaker of

22  the House of Representatives reports that provide the findings

23  and recommendations as to whether the exemption should be

24  reenacted by the Legislature.

25         Section 3.  Subsection (1) of section 1011.94, Florida

26  Statutes, is amended to read:

27         1011.94  Trust Fund for University Major Gifts.--

28         (1)  There is established a Trust Fund for University

29  Major Gifts. The purpose of the trust fund is to enable each

30  university and New College to provide donors with an incentive

31  in the form of matching grants for donations for the


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    Florida Senate - 2005                           CS for SB 2362

 1  establishment of permanent endowments and sales tax exemption

 2  matching funds received pursuant to s. 212.08(5)(j) or s.

 3  212.08(18), which must be invested, with the proceeds of the

 4  investment used to support libraries and instruction and

 5  research programs, as defined by the State Board of Education.

 6  All funds appropriated for the challenge grants, new donors,

 7  major gifts, sales tax exemption matching funds pursuant to s.

 8  212.08(5)(j) or s. 212.08(18), or eminent scholars program

 9  must be deposited into the trust fund and invested pursuant to

10  s. 17.61 until the State Board of Education allocates the

11  funds to universities to match private donations.

12  Notwithstanding s. 216.301 and pursuant to s. 216.351, any

13  undisbursed balance remaining in the trust fund and interest

14  income accruing to the portion of the trust fund which is not

15  matched and distributed to universities must remain in the

16  trust fund and be used to increase the total funds available

17  for challenge grants. Funds deposited in the trust fund for

18  the sales tax exemption matching program authorized in s.

19  212.08(5)(j) or s. 212.08(18), and interest earnings thereon,

20  shall be maintained in a separate account within the Trust

21  Fund for University Major Gifts, and may be used only to match

22  qualified sales tax exemptions that a certified business

23  designates for use by state universities and community

24  colleges to support research and development projects

25  requested by the certified business. The State Board of

26  Education may authorize any university to encumber the state

27  matching portion of a challenge grant from funds available

28  under s. 1011.45.

29         Section 4.  This act shall take effect July 1, 2005.




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    Florida Senate - 2005                           CS for SB 2362

                       COMMITTEE SUBSTITUTE FOR
 2                         Senate Bill 2362


 4  The committee substitute differs from the bill in the
    following ways:
    --   Transfers the proposed exemption from s. 212.052, F.S.,
 6       to s. 212.08, F.S.;

 7  --   Defines the term "predominately" to mean at least 50
         percent of the time;
    --   Allows the Department of Revenue (DOR) to adopt rules for
 9       implementation of this exemption;

10  --   Provides requirements for documentation of the tax
         exemption, requiring purchasers claiming the exemption to
11       submit an affidavit to the vendor and purchasers claiming
         by refund to submit an affidavit with the application to
12       DOR;

13  --   Provides for a penalty pursuant to s. 212.085, F.S., for
         fraudulent claims of this exemption;
    --   Requires the exemption be reviewed by the Legislature by
15       July 1, 2015;

16  --   Requires OPPAGA and EFI to evaluate the impact of the
         exemption, and to recommend whether the exemption should
17       be re-enacted by the Legislature; and

18  --   Provides that funds from the Trust Fund for University
         Major Gifts may be used as matching funds for donations
19       of exemption proceeds to state universities and community













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