SENATE BILL NO. 583 May 6, 1999, Introduced by Senator BULLARD and referred to the Committee on Finance. A bill to amend 1933 PA 167, entitled "General sales tax act," by amending section 4a (MCL 205.54a), as amended by 1998 PA 490. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 4a. A person subject to tax under this act may exclude 2 from the amount of the gross proceeds used for the computation of 3 the tax, a sale of tangible personal property: 4 (a) Not for resale to a nonprofit school, nonprofit hospi- 5 tal, or nonprofit home for the care and maintenance of children 6 or aged persons operated by an entity of government, a regularly 7 organized church, religious, or fraternal organization, a 8 veterans' organization, or a corporation incorporated under the 9 laws of the state, if the income or benefit from the operation 10 does not inure, in whole or in part, to an individual or private 11 shareholder, directly or indirectly, and if the activities of the 03443'99 CSC 2 1 entity or agency are carried on exclusively for the benefit of 2 the public at large and are not limited to the advantage, inter- 3 ests, and benefits of its members or any restricted group. At 4 the time of the transfer of this tangible personal property, the 5 transferee shall sign a statement, in a form approved by the 6 department, stating that the property is to be used or consumed 7 in connection with the operation of the institution or agency and 8 that the institution or agency qualifies as an exempt entity 9 under this subdivision. The statement shall be accepted by all 10 courts as prima facie evidence of the exemption and the statement 11 shall provide that if the claim for tax exemption is disallowed 12 the transferee will reimburse the transferor for the amount of 13 tax involved. A sale of tangible personal property to a parent 14 cooperative preschool is exempt from taxation under this act. As 15 used in this subdivision, "parent cooperative preschool" means a 16 nonprofit, nondiscriminatory educational institution, maintained 17 as a community service and administered by parents of children 18 currently enrolled in the preschool, that provides an educational 19 and developmental program for children younger than compulsory 20 school age, that provides an educational program for parents, 21 including active participation with children in preschool activi- 22 ties, that is directed by qualified preschool personnel, and that 23 is licensed by the department of consumer and industry services 24 pursuant to 1973 PA 116, MCL 722.111 to 722.128. 25 (b) Not for resale to a regularly organized church or house 26 of religious worship, except the following: 03443'99 3 1 (i) Sales in activities that are mainly commercial 2 enterprises. 3 (ii) Sales of vehicles licensed for use on public highways 4 other than a passenger van or bus with a manufacturer's rated 5 seating capacity of 10 or more that is used primarily for the 6 transportation of persons for religious purposes. 7 (c) To bona fide enrolled students, of food by a school or 8 other educational institution not operated for profit. 9 (d) Affixed to and made a structural part of real estate 10 excepted from the definition of "sale at retail" under section 11 1(1)(c). 12 (e) That is a vessel designated for commercial use of regis- 13 tered tonnage of 500 tons or more, if produced upon special order 14 of the purchaser, and bunker and galley fuel, provisions, sup- 15 plies, maintenance, and repairs for the exclusive use of the 16 vessel engaged in interstate commerce. 17 (f) To persons engaged in a business enterprise and using or 18 consuming the tangible personal property in the tilling, plant- 19 ing, caring for, or harvesting of the things of the soil; in the 20 breeding, raising, or caring for livestock, poultry, or horticul- 21 tural products, including transfers of livestock, poultry, or 22 horticultural products for further growth; or in the direct gath- 23 ering of fish, by net, line, or otherwise only by an 24 owner-operator of the business enterprise, not including a 25 charter fishing business enterprise. This exemption includes 26 agricultural land tile, which means fired clay or perforated 27 plastic tubing used as part of a subsurface drainage system for 03443'99 4 1 land, and subsurface irrigation pipe, if the land tile or 2 irrigation pipe is used in the production of agricultural pro- 3 ducts as a business enterprise. At the time of the transfer of 4 this tangible personal property, the transferee shall sign a 5 statement, in a form approved by the department, stating that the 6 property is to be used or consumed in connection with the produc- 7 tion of horticultural or agricultural products as a business 8 enterprise, or in connection with fishing as an owner-operator 9 business enterprise. The statement shall be accepted by all 10 courts as prima facie evidence of the exemption. This exemption 11 includes a portable grain bin, which means a structure that is 12 used or is to be used to shelter grain and that is designed to be 13 disassembled without significant damage to its component parts. 14 This exemption also includes grain drying equipment and natural 15 or propane gas used to fuel that equipment for agricultural 16 purposes. This exemption does not include transfers of food, 17 fuel, clothing, or any similar tangible personal property for 18 personal living or human consumption. This exemption does not 19 include tangible personal property permanently affixed and becom- 20 ing a structural part of real estate. 21 (g) To the following: 22 (i) An industrial processor for use or consumption in indus- 23 trial processing. Property used or consumed in industrial pro- 24 cessing does not include tangible personal property permanently 25 affixed and becoming a structural part of real estate; office 26 furniture, office supplies, and administrative office equipment; 27 or vehicles licensed and titled for use on public highways, other 03443'99 5 1 than a specially designed vehicle, together with parts, used to 2 mix and agitate materials added at a plant or jobsite in the con- 3 crete manufacturing process. Industrial processing does not 4 include receiving and storage of raw materials purchased or 5 extracted by the user or consumer; or the preparation of food and 6 beverages by a retailer for retail sale. As used in this subdi- 7 vision, "industrial processor" means a person who transforms, 8 alters, or modifies tangible personal property by changing the 9 form, composition, or character of the property for ultimate sale 10 at retail or sale to another industrial processor to be further 11 processed for ultimate sale at retail. Sales to a person per- 12 forming a service who does not act as an industrial processor 13 while performing this service shall not be excluded under this 14 subdivision except as provided in subparagraph (ii). 15 (ii) A person, whether or not the person is an industrial 16 processor, if the tangible personal property is a computer used 17 in operating industrial processing equipment; equipment used in a 18 computer assisted manufacturing system; equipment used in a com- 19 puter assisted design or engineering system integral to an indus- 20 trial process; a subunit or electronic assembly comprising a com- 21 ponent in a computer integrated industrial processing system; or 22 computer equipment used in connection with the computer assisted 23 production, storage, and transmission of data if the equipment 24 would have been exempt had the data transfer been made using 25 tapes, disks, CD-ROMS, or similar media by a company whose busi- 26 ness includes publishing doctoral dissertations and information 03443'99 6 1 archiving, and that sells the majority of the company's products 2 to nonprofit organizations exempt under section 4q. 3 (h) That is a copyrighted motion picture film or a newspaper 4 or periodical admitted under federal postal laws and regulations 5 effective September 1, 1985 as second-class mail matter or as a 6 controlled circulation publication or qualified to accept legal 7 notices for publication in this state, as defined by law, or any 8 other newspaper or periodical of general circulation, established 9 not less than 2 years, and published not less than once a week. 10 Tangible personal property used or consumed in producing a copy- 11 righted motion picture film, a newspaper published more than 14 12 times per year, or a periodical published more than 14 times per 13 year, and not becoming a component part of that film, newspaper, 14 or periodical is subject to the tax. After December 31, 1993, 15 tangible personal property used or consumed in producing a news- 16 paper published 14 times or less per year or a periodical pub- 17 lished 14 times or less per year and that portion or percentage 18 of tangible personal property used or consumed in producing an 19 advertising supplement that becomes a component part of a newspa- 20 per or periodical is exempt from the tax under this subdivision. 21 A claim for a refund for taxes paid before January 1, 1999, under 22 this subdivision shall be made before June 30, 1999. For pur- 23 poses of this subdivision, tangible personal property that 24 becomes a component part of a newspaper or periodical and conse- 25 quently not subject to tax includes an advertising supplement 26 inserted into and circulated with a newspaper or periodical that 27 is otherwise exempt from tax under this subdivision, if the 03443'99 7 1 advertising supplement is delivered directly to the newspaper or 2 periodical by a person other than the advertiser, or the adver- 3 tising supplement is printed by the newspaper or periodical. 4 (i) To persons licensed BY THE FEDERAL COMMUNICATIONS 5 COMMISSION to operatecommercialA radio or television 6stationsSTATION if the property is usedinDIRECTLY AND PRI- 7 MARILY FOR the origination or integration of the various sources 8 of program material forcommercial radio or television9transmission. This subdivisionBROADCAST OR FOR THE PRODUCTION 10 AND BROADCAST OF A BROADCAST SIGNAL. THIS PROPERTY INCLUDES, BUT 11 IS NOT LIMITED TO, PROPERTY REQUIRED BY THE FEDERAL COMMUNICA- 12 TIONS COMMISSION, PROPERTY USED IN THE TRANSMISSION TO OR RECEP- 13 TION FROM AN ARTIFICIAL SATELLITE, AND ELECTRICITY, BUT does not 14 include a vehicle licensed and titled for use on public highways. 15or property used in the transmission to or receiving from an16artificial satellite.17 (j) That is a hearing aid, contact lenses if prescribed for 18 a specific disease that precludes the use of eyeglasses, or any 19 other apparatus, device, or equipment used to replace or substi- 20 tute for a part of the human body, or used to assist the disabled 21 person to lead a reasonably normal life if the tangible personal 22 property is purchased on a written prescription or order issued 23 by a health professional as defined by section 21005 of the 24 public health code, 1978 PA 368, MCL 333.21005; a hearing aid 25 battery; or eyeglasses prescribed or dispensed to correct the 26 person's vision by an ophthalmologist, optometrist, or optician. 03443'99 8 1 (k) To persons for use or consumption in the rendition of 2 any combination of services, the use or consumption of which is 3 taxable under section 3a(a) or (c) of the use tax act, 1937 PA 4 94, MCL 205.93a, except that this exemption is limited to the 5 tangible personal property located on the premises of the sub- 6 scriber and to central office equipment or wireless equipment, 7 directly used or consumed in transmitting, receiving, or switch- 8 ing or the monitoring of switching of a 2-way interactive 9 communication. As used in this subdivision, central office 10 equipment or wireless equipment does not include distribution 11 equipment including cable or wire facilities. 12 (l) That is a vehicle not for resale to a Michigan nonprofit 13 corporation organized exclusively to provide a community with 14 ambulance or fire department services. 15 (m) To inmates in a penal or correctional institution pur- 16 chased with scrip issued and redeemed by the institution. 17 (n) To or for the use of students enrolled in any part of a 18 kindergarten through twelfth grade program, of textbooks sold by 19 a public or nonpublic school. 20 (o) Installed as a component part of a water pollution con- 21 trol facility for which a tax exemption certificate is issued 22 pursuant to part 37 of the natural resources and environmental 23 protection act, 1994 PA 451, MCL 324.3701 to 324.3708, or an air 24 pollution control facility for which a tax exemption certificate 25 is issued pursuant to part 59 of the natural resources and envi- 26 ronmental protection act, 1994 PA 451, MCL 324.5901 to 324.5908. 03443'99 9 1 (p) To a purchaser of a new motor vehicle purchased before 2 January 1, 1993 if the purchaser qualifies for a special 3 registration under section 226(12) of the Michigan vehicle code, 4 1949 PA 300, MCL 257.226, and the vehicle is purchased through a 5 country determined by the department to be providing a like or 6 complete exemption for the purchase of a new motor vehicle to be 7 removed from that country. 8 (q) That is the following sold or leased to an industrial 9 laundry after December 31, 1997: 10 (i) Textiles and disposable products including, but not 11 limited to, soap, paper, chemicals, tissues, deodorizers and dis- 12 pensers, and all related items such as packaging, supplies, hang- 13 ers, name tags, and identification tags. 14 (ii) Equipment, whether owned or leased, used to repair and 15 dispense textiles including, but not limited to, roll towel cabi- 16 nets, slings, hardware, lockers, mop handles and frames, and 17 carts. 18 (iii) Machinery, equipment, parts, lubricants, and repair 19 services used to clean, process, and package textiles and related 20 items, whether owned or leased. 21 (iv) Utilities such as electric, gas, water, or oil. 22 (v) Production washroom equipment and mending and packaging 23 supplies and equipment. 24 (vi) Material handling equipment including, but not limited 25 to, conveyors, racks, and elevators and related control 26 equipment. 03443'99 10 1 (vii) Wastewater pretreatment equipment and supplies and 2 related maintenance and repair services. 03443'99 Final page. 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