HOUSE BILL No. 5736 February 21, 2002, Introduced by Reps. Julian, Gilbert, Vear and Stallworth and referred to the Committee on Transportation. A bill to amend 1937 PA 94, entitled "Use tax act," by amending sections 2, 3, 4, and 4k (MCL 205.92, 205.93, 205.94, and 205.94k), section 2 as amended by 2000 PA 391, section 3 as amended by 1999 PA 117, section 4 as amended by 2001 PA 39, and section 4k as amended by 2000 PA 200. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 2. As used in this act: 2 (a) "Person" means an individual, firm, partnership, joint 3 venture, association, social club, fraternal organization, munic- 4 ipal or private corporation whether or not organized for profit, 5 company, estate, trust, receiver, trustee, syndicate, the United 6 States, this state, county, or any other group or combination 7 acting as a unit, and the plural as well as the singular number, 04929'01 MRM 2 1 unless the intention to give a more limited meaning is disclosed 2 by the context. 3 (b) "Use" means the exercise of a right or power over tangi- 4 ble personal property incident to the ownership of that property 5 including transfer of the property in a transaction where posses- 6 sion is given. 7 (c) "Storage" means a keeping or retention of property in 8 this state for any purpose after the property loses its inter- 9 state character. 10 (d) "Seller" means the person from whom a purchase is made 11 and includes every person selling tangible personal property or 12 services for storage, use, or other consumption in this state. 13 If, in the opinion of the department, it is necessary for the 14 efficient administration of this act to regard a salesperson, 15 representative, peddler, or canvasser as the agent of a dealer, 16 distributor, supervisor, or employer under whom the person oper- 17 ates or from whom he or she obtains tangible personal property or 18 services sold by him or her for storage, use, or other consump- 19 tion in this state, irrespective of whether or not he or she is 20 making the sales on his or her own behalf or on behalf of the 21 dealer, distributor, supervisor, or employer, the department may 22 so consider him or her, and may consider the dealer, distributor, 23 supervisor, or employer as the seller for the purpose of this 24 act. 25 (e) "Purchase" means to acquire for a consideration, whether 26 the acquisition is effected by a transfer of title, of 27 possession, or of both, or a license to use or consume; whether 04929'01 3 1 the transfer is absolute or conditional, and by whatever means 2 the transfer is effected; and whether consideration is a price or 3 rental in money, or by way of exchange or barter. 4 (f) "Price" means the aggregate value in money of anything 5 paid or delivered, or promised to be paid or delivered, by a con- 6 sumer to a seller in the consummation and complete performance of 7 the transaction by which tangible personal property or services 8 are purchased or rented for storage, use, or other consumption in 9 this state, without a deduction for the cost of the property 10 sold, cost of materials used, labor or service cost, interest or 11 discount paid, or any other expense. The price of tangible per- 12 sonal property, for affixation to real estate, withdrawn by a 13 construction contractor from inventory available for sale to 14 others or made available by publication or price list as a fin- 15 ished product for sale to others is the finished goods inventory 16 value of the property. If a construction contractor manufac- 17 tures, fabricates, or assembles tangible personal property before 18 affixing it to real estate, the price of the property is equal to 19 the sum of the materials cost of the property and the cost of 20 labor to manufacture, fabricate, or assemble the property but 21 does not include the cost of labor to cut, bend, assemble, or 22 attach property at the site of affixation to real estate. For 23 the purposes of the preceding sentence, for property withdrawn by 24 a construction contractor from inventory available for sale to 25 others or made available by publication or price list as a fin- 26 ished product for sale to others, the materials cost of the 27 property means the finished goods inventory value of the 04929'01 4 1 property. For purposes of this subdivision, "manufacture" means 2 to convert or condition tangible personal property by changing 3 the form, composition, quality, combination, or character of the 4 property and "fabricate" means to modify or prepare tangible per- 5 sonal property for affixation or assembly. The price of a motor 6 vehicle, trailer coach, or titled watercraft is the full retail 7 price of the motor vehicle, trailer coach, or titled watercraft 8 being purchased. The tax collected by the seller from the con- 9 sumer or lessee under this act is not considered part of the 10 price, but is a tax collection for the benefit of the state, and 11 a person other than the state shall not derive a benefit from the 12 collection or payment of this tax. A price does not include an 13 assessment imposed under the convention and tourism marketing 14 act, 1980 PA 383, MCL 141.881 to 141.889, 1974 PA 263, 15 MCL 141.861 to 141.867, the state convention facility development 16 act, 1985 PA 106, MCL 207.621 to 207.640, the regional tourism 17 marketing act, 1989 PA 244, MCL 141.891 to 141.900, 1991 PA 180, 18 MCL 207.751 to 207.759, or the community convention or tourism 19 marketing act, 1980 PA 395, MCL 141.871 to 141.880, that was 20 added to charges for rooms or lodging otherwise subject, pursuant 21 to section 3a, to tax under this act. Price does not include 22 specific charges for technical support or for adapting or modify- 23 ing prewritten, standard, or canned computer software programs to 24 a purchaser's needs or equipment if the charges are separately 25 stated and identified. The tax imposed under this act shall not 26 be computed or collected on rental receipts if the tangible 04929'01 5 1 personal property rented or leased has previously been subjected 2 to a Michigan sales or use tax when purchased by the lessor. 3 (g) "Consumer" means the person who has purchased tangible 4 personal property or services for storage, use, or other consump- 5 tion in this state and includes a person acquiring tangible per- 6 sonal property if engaged in the business of constructing, alter- 7 ing, repairing, or improving the real estate of others. 8 (h) "Business" means all activities engaged in by a person 9 or caused to be engaged in by a person with the object of gain, 10 benefit, or advantage, either direct or indirect. 11 (i) "Department" means the revenue division of the depart- 12 ment of treasury. 13 (j) "Tax" includes all taxes, interest, or penalties levied 14 under this act. 15 (k) "Tangible personal property" includes computer software 16 offered for general use by the public or software modified or 17 adapted to the user's needs or equipment by the seller, only if 18 the software is available from a seller of software on an as is 19 basis or as an end product without modification or adaptation. 20 Tangible personal property does not include computer software 21 originally designed for the exclusive use and special needs of 22 the purchaser. As used in this subdivision, "computer software" 23 means a set of statements or instructions that when incorporated 24 in a machine usable medium is capable of causing a machine or 25 device having information processing capabilities to indicate, 26 perform, or achieve a particular function, task, or result. 04929'01 6 1 (l) "Tangible personal property" beginning September 20, 2 1999, includes electricity, natural or artificial gas, or steam 3 and also the transmission and distribution of electricity used by 4 the consumer or user of the electricity, whether the electricity 5 is purchased from the delivering utility or from another 6 provider. 7 (m) "Tangible personal property" does not include a commer- 8 cial advertising element if the commercial advertising element is 9 used to create or develop a print, radio, television, or other 10 advertisement, the commercial advertising element is discarded or 11 returned to the provider after the advertising message is com- 12 pleted, and the commercial advertising element is custom devel- 13 oped by the provider for the purchaser. As used in this subdivi- 14 sion, "commercial advertising element" means a negative or posi- 15 tive photographic image, an audiotape or videotape master, a 16 layout, a manuscript, writing of copy, a design, artwork, an 17 illustration, retouching, and mechanical or keyline 18 instructions. "Tangible personal property" includes black and 19 white or full color process separation elements, an audiotape 20 reproduction, or a videotape reproduction. 21 (n) "Textiles" means goods that are made of or incorporate 22 woven or nonwoven fabric, including, but not limited to, cloth- 23 ing, shoes, hats, gloves, handkerchiefs, curtains, towels, 24 sheets, pillows, pillowcases, tablecloths, napkins, aprons, 25 linens, floor mops, floor mats, and thread. Textiles also 26 include materials used to repair or construct textiles, or other 27 goods used in the rental, sale, or cleaning of textiles. 04929'01 7 1 (O) "INTERSTATE MOTOR CARRIER" MEANS A PERSON WHO OPERATES 2 OR CAUSES TO BE OPERATED A QUALIFIED COMMERCIAL MOTOR VEHICLE ON 3 A PUBLIC ROAD OR HIGHWAY IN THIS STATE AND AT LEAST 1 OTHER STATE 4 OR CANADIAN PROVINCE. 5 (P) "QUALIFIED COMMERCIAL MOTOR VEHICLE" MEANS THAT TERM AS 6 DEFINED IN SUBDIVISIONS (I), (J), AND (K) OF SECTION 1 OF THE 7 MOTOR CARRIER FUEL TAX ACT, 1980 PA 119, MCL 207.211. 8 (Q) "DIESEL FUEL" MEANS THAT TERM AS DEFINED IN SUBSECTION 9 (2)(P) OF THE MOTOR FUEL TAX ACT, 2000 PA 403, MCL 207.1002. 10 Sec. 3. (1) There is levied upon and there shall be col- 11 lected from every person in this state a specific tax for the 12 privilege of using, storing, or consuming tangible personal prop- 13 erty in this state at a rate equal to 6% of the price of the 14 property or services specified in section 3a. Penalties and 15 interest shall be added to the tax if applicable as provided in 16 this act. For the purpose of the proper administration of this 17 act and to prevent the evasion of the tax, it is presumed that 18 tangible personal property purchased is subject to the tax if 19 brought into the state within 90 days of the purchase date and is 20 considered as acquired for storage, use, or other consumption in 21 this state. BEGINNING OCTOBER 1, 2002, AS USED IN THIS SUBSEC- 22 TION AND SECTION 4(1)(A), THE TERM "PRICE" MEANS, WITH RESPECT TO 23 DIESEL FUEL USED BY INTERSTATE MOTOR CARRIERS IN A QUALIFIED COM- 24 MERCIAL MOTOR VEHICLE, THE STATEWIDE AVERAGE RETAIL PRICE OF A 25 GALLON OF SELF-SERVE DIESEL FUEL AS DETERMINED AND CERTIFIED 26 QUARTERLY BY THE DEPARTMENT, ROUNDED UP TO THE NEAREST 1/10 OF A 27 CENT. THIS USE TAX ON DIESEL FUEL USED BY INTERSTATE MOTOR 04929'01 8 1 CARRIERS IN A QUALIFIED COMMERCIAL MOTOR VEHICLE SHALL BE 2 COLLECTED UNDER THE INTERNATIONAL FUEL TAX AGREEMENT. 3 (2) The tax imposed by this section for the privilege of 4 using, storing, or consuming a vehicle, ORV, mobile home, air- 5 craft, snowmobile, or watercraft shall be collected before the 6 transfer of the vehicle, ORV, mobile home, aircraft, snowmobile, 7 or watercraft, except a transfer to a licensed dealer or retailer 8 for purposes of resale that arises by reason of a transaction 9 made by a person who does not transfer vehicles, ORVs, mobile 10 homes, aircraft, snowmobiles, or watercraft in the ordinary 11 course of his or her business done in this state. The tax on a 12 vehicle, ORV, snowmobile, and watercraft shall be collected by 13 the secretary of state before the transfer of the vehicle, ORV, 14 snowmobile, or watercraft registration. The tax on a mobile home 15 shall be collected by the department of consumer and industry 16 services, mobile home commission, or its agent before the trans- 17 fer of the certificate of title. The tax on an aircraft shall be 18 collected by the department of treasury. Notwithstanding any 19 limitation contained in section 2, the price tax base of any 20 vehicle, ORV, mobile home, aircraft, snowmobile, or watercraft 21 subject to taxation under this act shall be not less than its 22 retail dollar value at the time of acquisition as fixed pursuant 23 to rules promulgated by the department. 24 (3) The following transfers or purchases are not subject to 25 use tax: 26 (a) A transaction or a portion of a transaction if the 27 transferee or purchaser is the spouse, mother, father, brother, 04929'01 9 1 sister, child, stepparent, stepchild, stepbrother, stepsister, 2 grandparent, grandchild, legal ward, or a legally appointed 3 guardian with a certified letter of guardianship, of the 4 transferor. 5 (b) A transaction or a portion of a transaction if the 6 transfer is a gift to a beneficiary in the administration of an 7 estate. 8 (c) If a vehicle, ORV, mobile home, aircraft, snowmobile, or 9 watercraft that has once been subjected to the Michigan sales or 10 use tax is transferred in connection with the organization, reor- 11 ganization, dissolution, or partial liquidation of an incorpo- 12 rated or unincorporated business and the beneficial ownership is 13 not changed. 14 (d) If an insurance company licensed to conduct business in 15 this state acquires ownership of a late model distressed vehicle 16 as defined in section 12a of the Michigan vehicle code, 1949 PA 17 300, MCL 257.12a, through payment of damages in response to a 18 claim or when the person who owned the vehicle before the insur- 19 ance company reacquires ownership from the company as part of the 20 settlement of a claim. 21 (4) The department may utilize the services, information, or 22 records of any other department or agency of state government in 23 the performance of its duties under this act, and other depart- 24 ments or agencies of state government are required to furnish 25 those services, information, or records upon the request of the 26 department. 04929'01 10 1 Sec. 4. (1) The tax levied under this act does not apply to 2 the following, subject to subsection (2): 3 (a) Property sold in this state on which transaction a tax 4 is paid under the general sales tax act, 1933 PA 167, MCL 205.51 5 to 205.78, if the tax was due and paid on the retail sale to a 6 consumer. BEGINNING OCTOBER 1, 2002, IN LIEU OF THE EXCLUSION IN 7 THIS SUBDIVISION, AN INTERSTATE MOTOR CARRIER SHALL BE ENTITLED 8 TO A CREDIT UNDER THIS ACT FOR 6% OF THE PRICE OF DIESEL FUEL 9 PURCHASED IN THIS STATE AND USED IN A QUALIFIED COMMERCIAL MOTOR 10 VEHICLE. THIS CREDIT SHALL BE CLAIMED ON THE RETURNS FILED UNDER 11 THE INTERNATIONAL FUEL TAX AGREEMENT. 12 (b) Property, the storage, use, or other consumption of 13 which this state is prohibited from taxing under the constitution 14 or laws of the United States, or under the constitution of this 15 state. 16 (c) Property purchased for resale, demonstration purposes, 17 or lending or leasing to a public or parochial school offering a 18 course in automobile driving except that a vehicle purchased by 19 the school shall be certified for driving education and shall not 20 be reassigned for personal use by the school's administrative 21 personnel. For a dealer selling a new car or truck, exemption 22 for demonstration purposes shall be determined by the number of 23 new cars and trucks sold during the current calendar year or the 24 immediately preceding year without regard to specific make or 25 style according to the following schedule of 0 to 25, 2 units; 26 26 to 100, 7 units; 101 to 500, 20 units; 501 or more, 25 units; but 27 not to exceed 25 cars and trucks in 1 calendar year for 04929'01 11 1 demonstration purposes. Property purchased for resale includes 2 promotional merchandise transferred pursuant to a redemption 3 offer to a person located outside this state or any packaging 4 material, other than promotional merchandise, acquired for use in 5 fulfilling a redemption offer or rebate to a person located out- 6 side this state. 7 (d) Property that is brought into this state by a nonresi- 8 dent person for storage, use, or consumption while temporarily 9 within this state, except if the property is used in this state 10 in a nontransitory business activity for a period exceeding 15 11 days. BEGINNING OCTOBER 1, 2002, THIS SUBDIVISION DOES NOT APPLY 12 TO DIESEL FUEL THAT IS USED, STORED, OR CONSUMED IN THIS STATE BY 13 INTERSTATE MOTOR CARRIERS IN QUALIFIED COMMERCIAL VEHICLES. 14 (e) Property the sale or use of which was already subjected 15 to a sales tax or use tax equal to, or in excess of, that imposed 16 by this act under the law of any other state or a local govern- 17 mental unit within a state if the tax was due and paid on the 18 retail sale to the consumer and the state or local governmental 19 unit within a state in which the tax was imposed accords like or 20 complete exemption on property the sale or use of which was sub- 21 jected to the sales or use tax of this state. If the sale or use 22 of property was already subjected to a tax under the law of any 23 other state or local governmental unit within a state in an 24 amount less than the tax imposed by this act, this act shall 25 apply, but at a rate measured by the difference between the rate 26 provided in this act and the rate by which the previous tax was 27 computed. BEGINNING OCTOBER 1, 2002, THIS SUBDIVISION DOES NOT 04929'01 12 1 APPLY TO DIESEL FUEL THAT IS USED, STORED, OR CONSUMED IN THIS 2 STATE BY INTERSTATE MOTOR CARRIERS IN QUALIFIED MOTOR VEHICLES. 3 (f) Property sold to a person engaged in a business enter- 4 prise and using and consuming the property in the tilling, plant- 5 ing, caring for, or harvesting of the things of the soil or in 6 the breeding, raising, or caring for livestock, poultry, or 7 horticultural products, including transfers of livestock, poul- 8 try, or horticultural products for further growth. At the time 9 of the transfer of that tangible personal property, the trans- 10 feree shall sign a statement, in a form approved by the depart- 11 ment, stating that the property is to be used or consumed in con- 12 nection with the production of horticultural or agricultural pro- 13 ducts as a business enterprise. The statement shall be accepted 14 by the courts as prima facie evidence of the exemption. This 15 exemption includes agricultural land tile, which means fired clay 16 or perforated plastic tubing used as part of a subsurface drain- 17 age system for land used in the production of agricultural pro- 18 ducts as a business enterprise and includes a portable grain bin, 19 which means a structure that is used or is to be used to shelter 20 grain and that is designed to be disassembled without significant 21 damage to its component parts. This exemption does not include 22 transfers of food, fuel, clothing, or similar tangible personal 23 property for personal living or human consumption. This exemp- 24 tion does not include tangible personal property permanently 25 affixed and becoming a structural part of real estate. 26 (g) Property or services sold to the United States, an 27 unincorporated agency or instrumentality of the United States, an 04929'01 13 1 incorporated agency or instrumentality of the United States 2 wholly owned by the United States or by a corporation wholly 3 owned by the United States, the American red cross and its chap- 4 ters or branches, this state, a department or institution of this 5 state, or a political subdivision of this state. 6 (h) Property or services sold to a school, hospital, or home 7 for the care and maintenance of children or aged persons, oper- 8 ated by an entity of government, a regularly organized church, 9 religious, or fraternal organization, a veterans' organization, 10 or a corporation incorporated under the laws of this state, if 11 not operated for profit, and if the income or benefit from the 12 operation does not inure, in whole or in part, to an individual 13 or private shareholder, directly or indirectly, and if the activ- 14 ities of the entity or agency are carried on exclusively for the 15 benefit of the public at large and are not limited to the advan- 16 tage, interests, and benefits of its members or a restricted 17 group. The tax levied does not apply to property or services 18 sold to a parent cooperative preschool. As used in this subdivi- 19 sion, "parent cooperative preschool" means a nonprofit, nondis- 20 criminatory educational institution, maintained as a community 21 service and administered by parents of children currently 22 enrolled in the preschool that provides an educational and devel- 23 opmental program for children younger than compulsory school age, 24 that provides an educational program for parents, including 25 active participation with children in preschool activities, that 26 is directed by qualified preschool personnel, and that is 04929'01 14 1 licensed by the department of consumer and industry services 2 pursuant to 1973 PA 116, MCL 722.111 to 722.128. 3 (i) Property or services sold to a regularly organized 4 church or house of religious worship except the following: 5 (i) Sales in which the property is used in activities that 6 are mainly commercial enterprises. 7 (ii) Sales of vehicles licensed for use on the public high- 8 ways other than a passenger van or bus with a manufacturer's 9 rated seating capacity of 10 or more that is used primarily for 10 the transportation of persons for religious purposes. 11 (j) A vessel designed for commercial use of registered ton- 12 nage of 500 tons or more, if produced upon special order of the 13 purchaser, and bunker and galley fuel, provisions, supplies, 14 maintenance, and repairs for the exclusive use of a vessel of 500 15 tons or more engaged in interstate commerce. 16 (k) Property purchased for use in this state where actual 17 personal possession is obtained outside this state, the purchase 18 price or actual value of which does not exceed $10.00 during 1 19 calendar month. 20 (l) A newspaper or periodical classified under federal 21 postal laws and regulations effective September 1, 1985 as 22 second-class mail matter or as a controlled circulation publica- 23 tion or qualified to accept legal notices for publication in this 24 state, as defined by law, or any other newspaper or periodical of 25 general circulation, established at least 2 years, and published 26 at least once a week, and a copyrighted motion picture film. 27 Tangible personal property used or consumed in producing a 04929'01 15 1 copyrighted motion picture film, a newspaper published more than 2 14 times per year, or a periodical published more than 14 times 3 per year, and not becoming a component part of that film, newspa- 4 per, or periodical is subject to the tax. After December 31, 5 1993, tangible personal property used or consumed in producing a 6 newspaper published 14 times or less per year or a periodical 7 published 14 times or less per year and that portion or percen- 8 tage of tangible personal property used or consumed in producing 9 an advertising supplement that becomes a component part of a 10 newspaper or periodical is exempt from the tax under this 11 subdivision. A claim for a refund for taxes paid before January 12 1, 1999 under this subdivision shall be made before June 30, 13 1999. For purposes of this subdivision, tangible personal prop- 14 erty that becomes a component part of a newspaper or periodical 15 and consequently not subject to tax, includes an advertising sup- 16 plement inserted into and circulated with a newspaper or periodi- 17 cal that is otherwise exempt from tax under this subdivision, if 18 the advertising supplement is delivered directly to the newspaper 19 or periodical by a person other than the advertiser, or the 20 advertising supplement is printed by the newspaper or 21 periodical. 22 (m) Property purchased by persons licensed to operate a com- 23 mercial radio or television station if the property is used in 24 the origination or integration of the various sources of program 25 material for commercial radio or television transmission. This 26 subdivision does not include a vehicle licensed and titled for 04929'01 16 1 use on public highways or property used in the transmitting to or 2 receiving from an artificial satellite. 3 (n) A person who is a resident of this state who purchases 4 an automobile in another state while in the military service of 5 the United States and who pays a sales tax in the state where the 6 automobile is purchased. 7 (o) A vehicle for which a special registration is secured in 8 accordance with section 226(12) of the Michigan vehicle code, 9 1949 PA 300, MCL 257.226. 10 (p) A hearing aid, contact lenses if prescribed for a spe- 11 cific disease that precludes the use of eyeglasses, or any other 12 apparatus, device, or equipment used to replace or substitute for 13 any part of the human body, or used to assist the disabled person 14 to lead a reasonably normal life when the tangible personal prop- 15 erty is purchased on a written prescription or order issued by a 16 health professional as defined by section 4 of former 1974 17 PA 264, or section 3501 of the insurance code of 1956, 1956 18 PA 218, MCL 500.3501, or eyeglasses prescribed or dispensed to 19 correct the person's vision by an ophthalmologist, optometrist, 20 or optician. 21 (q) Water when delivered through water mains or in bulk 22 tanks in quantities of not less than 500 gallons. 23 (r) A vehicle not for resale used by a nonprofit corporation 24 organized exclusively to provide a community with ambulance or 25 fire department services. 26 (s) Tangible personal property purchased and installed as a 27 component part of a water pollution control facility for which a 04929'01 17 1 tax exemption certificate is issued pursuant to part 37 of the 2 natural resources and environmental protection act, 1994 PA 451, 3 MCL 324.3701 to 324.3708, or an air pollution control facility 4 for which a tax exemption certificate is issued pursuant to part 5 59 of the natural resources and environmental protection act, 6 1994 PA 451, MCL 324.5901 to 324.5908. 7 (t) Tangible real or personal property donated by a manufac- 8 turer, wholesaler, or retailer to an organization or entity 9 exempt pursuant to subdivision (h) or (i) or section 4a(a) or (b) 10 of the general sales tax act, 1933 PA 167, MCL 205.54a. 11 (u) The storage, use, or consumption by a domestic air car- 12 rier of an aircraft purchased after December 31, 1992 but before 13 October 1, 1996 for use solely in the transport of air cargo that 14 has a maximum certificated takeoff weight of at least 12,500 15 pounds. For purposes of this subdivision, the term "domestic air 16 carrier" is limited to entities engaged in the commercial trans- 17 port for hire of cargo or entities engaged in the commercial 18 transport of passengers as a business activity. 19 (v) The storage, use, or consumption by a domestic air car- 20 rier of an aircraft purchased after June 30, 1994 but before 21 October 1, 1996 that is used solely in the regularly scheduled 22 transport of passengers. For purposes of this subdivision, the 23 term "domestic air carrier" is limited to entities engaged in the 24 commercial transport for hire of cargo or entities engaged in the 25 commercial transport of passengers as a business activity. 26 (w) The storage, use, or consumption by a domestic air 27 carrier of an aircraft, other than an aircraft described under 04929'01 18 1 subdivision (v), purchased after December 31, 1994 but before 2 October 1, 1996, that has a maximum certificated takeoff weight 3 of at least 12,500 pounds and that is designed to have a maximum 4 passenger seating configuration of more than 30 seats and used 5 solely in the transport of passengers. For purposes of this sub- 6 division, the term "domestic air carrier" is limited to entities 7 engaged in the commercial transport for hire of cargo or entities 8 engaged in the commercial transport of passengers as a business 9 activity. 10 (x) The storage, use, or consumption of an aircraft by a 11 domestic air carrier after September 30, 1996 for use solely in 12 the transport of air cargo, passengers, or a combination of air 13 cargo and passengers, that has a maximum certificated takeoff 14 weight of at least 6,000 pounds. For purposes of this subdivi- 15 sion, the term "domestic air carrier" is limited to a person 16 engaged primarily in the commercial transport for hire of air 17 cargo, passengers, or a combination of air cargo and passengers 18 as a business activity. The state treasurer shall estimate on 19 January 1 each year the revenue lost by this act from the school 20 aid fund and deposit that amount into the school aid fund from 21 the general fund. 22 (y) The storage, use, or consumption of an aircraft by a 23 person who purchases the aircraft for subsequent lease to a 24 domestic air carrier operating under a certificate issued by the 25 federal aviation administration under 14 C.F.R. 121, for use 26 solely in the regularly scheduled transport of passengers. 04929'01 19 1 (z) Property or services sold to an organization not 2 operated for profit and exempt from federal income tax under 3 section 501(c)(3) or 501(c)(4) of the internal revenue code of 4 1986, 26 U.S.C. 501; or to a health, welfare, educational, cul- 5 tural arts, charitable, or benevolent organization not operated 6 for profit that has been issued before June 13, 1994 an exemption 7 ruling letter to purchase items exempt from tax signed by the 8 administrator of the sales, use, and withholding taxes division 9 of the department. The department shall reissue an exemption 10 letter after June 13, 1994 to each of those organizations that 11 had an exemption letter that shall remain in effect unless the 12 organization fails to meet the requirements that originally enti- 13 tled it to this exemption. The exemption does not apply to sales 14 of tangible personal property and sales of vehicles licensed for 15 use on public highways, that are not used primarily to carry out 16 the purposes of the organization as stated in the bylaws or arti- 17 cles of incorporation of the exempt organization. 18 (aa) The use or consumption of services described in 19 section 3a(a) or (c) by means of a prepaid telephone calling 20 card, a prepaid authorization number for telephone use, or a 21 charge for internet access. 22 (bb) The purchase, lease, use, or consumption of the follow- 23 ing by an industrial laundry after December 31, 1997: 24 (i) Textiles and disposable products including, but not 25 limited to, soap, paper, chemicals, tissues, deodorizers and dis- 26 pensers, and all related items such as packaging, supplies, 27 hangers, name tags, and identification tags. 04929'01 20 1 (ii) Equipment, whether owned or leased, used to repair and 2 dispense textiles including, but not limited to, roll towel cabi- 3 nets, slings, hardware, lockers, mop handles and frames, and 4 carts. 5 (iii) Machinery, equipment, parts, lubricants, and repair 6 services used to clean, process, and package textiles and related 7 items, whether owned or leased. 8 (iv) Utilities such as electric, gas, water, or oil. 9 (v) Production washroom equipment and mending and packaging 10 supplies and equipment. 11 (vi) Material handling equipment including, but not limited 12 to, conveyors, racks, and elevators and related control 13 equipment. 14 (vii) Wastewater pretreatment equipment and supplies and 15 related maintenance and repair services. 16 (2) The property or services under subsection (1) are exempt 17 only to the extent that the property or services are used for the 18 exempt purposes if one is stated in subsection (1). The exemp- 19 tion is limited to the percentage of exempt use to total use 20 determined by a reasonable formula or method approved by the 21 department. 22 Sec. 4k. (1) The tax levied under this act does not apply 23 to parts and materials, excluding shop equipment or fuel, affixed 24 to or to be affixed to an aircraft owned or used by a domestic 25 air carrier that is any of the following: 26 (a) An aircraft for use solely in the transport of air cargo 27 or a combination of air cargo and passengers that has a maximum 04929'01 21 1 certificated takeoff weight of at least 12,500 pounds for taxes 2 levied before January 1, 1997 and at least 6,000 pounds for taxes 3 levied after December 31, 1996. 4 (b) An aircraft that is used solely in the regularly sched- 5 uled transport of passengers. 6 (c) An aircraft other than an aircraft described in subdivi- 7 sion (b), that has a maximum certificated takeoff weight of at 8 least 12,500 pounds for taxes levied before January 1, 1997 and 9 at least 6,000 pounds for taxes levied after December 31, 1996, 10 and that is designed to have a maximum passenger seating configu- 11 ration of more than 30 seats and is used solely in the transport 12 of passengers. 13 (2) For taxes levied after December 31, 1992, the tax levied 14 under this act does not apply to the storage, use, or consumption 15 of rolling stock used in interstate commerce and purchased, 16 rented, or leased by an interstate FLEET motor carrier. A refund 17 for taxes paid before January 1, 1997 shall not be paid under 18 this subsection if the refund claim is made after June 30, 1997. 19 (3) For taxes levied after December 31, 1996 and before 20 May 1, 1999, the tax levied under this act does not apply to the 21 product of the out-of-state usage percentage and the price other- 22 wise taxable under this act of a qualified truck or a trailer 23 designed to be drawn behind a qualified truck, purchased, rented, 24 or leased in this state by an interstate FLEET motor carrier and 25 used in interstate commerce. 26 (4) As used in this section: 04929'01 22 1 (a) "Domestic air carrier" means a person engaged primarily 2 in the commercial transport for hire of air cargo, passengers, or 3 a combination of air cargo and passengers as a business 4 activity. 5 (b) "Interstate FLEET motor carrier" means a person engaged 6 in the business of carrying persons or property, other than them- 7 selves, their employees, or their own property, for hire across 8 state lines, whose fleet mileage was driven at least 10% outside 9 of this state in the immediately preceding tax year. 10 (c) "Out-of-state usage percentage" is a fraction, the 11 numerator of which is the number of miles driven outside of this 12 state in the immediately preceding tax year by qualified trucks 13 used by the taxpayer and the denominator of which is the total 14 miles driven in the immediately preceding tax year by qualified 15 trucks used by the taxpayer. Miles driven by qualified trucks 16 used solely in intrastate commerce shall not be included in cal- 17 culating the out-of-state usage percentage. 18 (d) "Qualified truck" means a commercial motor vehicle power 19 unit that has 2 axles and a gross vehicle weight rating in excess 20 of 10,000 pounds or a commercial motor vehicle power unit that 21 has 3 or more axles. 22 (e) "Rolling stock" means a qualified truck, a trailer 23 designed to be drawn behind a qualified truck, and parts affixed 24 to either a qualified truck or a trailer designed to be drawn 25 behind a qualified truck. 04929'01 23 1 Enacting section 1. This amendatory act does not take 2 effect unless all of the following bills of the 91st Legislature 3 are enacted into law: 4 (a) Senate Bill No. _____ or House Bill No. 5734 (request 5 no. 02672'01 *). 6 (b) Senate Bill No. _____ or House Bill No. 5735 (request 7 no. 02672'01 a *). 8 (c) Senate Bill No. _____ or House Bill No. 5733 (request 9 no. 05318'01 *). 04929'01 Final page. MRM