SB 13: Sales and use taxes: exemption: manufacturing and research.

Existing sales and use tax laws impose taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. Those laws partially exempt from those taxes, for a specified period, the gross receipts from the sale of, and the storage, use, or other consumption of, specified tangible personal property purchased for use by a qualified person, as defined, to be used primarily in manufacturing or other processes, and in research and development. Consumables On and after July 1, 2014, tangible personal property with a useful life of less than one year do not qualify for exemption, and useful life is one or more years, as defined by reference to state income or franchise taxes. taxes, is deemed to have a useful life of one or more years for purposes of the exemption. Existing law exempts from the definition of qualified person a trade or business that is required to apportion its business income under a specified section of law, which includes, among others, a trade or business that derives more than 50% of its gross business receipts, as defined, from conducting agricultural business activities.

This bill, on and after January 1, 2018, would expand the definition of a qualified person to include software publishers, as specified, and otherwise qualified persons that conduct a person that conducts a trade or business that is required to apportion its business income because it derives 50% of more of its gross business receipts, as defined, from conducting agricultural business activities, as specified, thereby expanding the exemption. specified. The bill, on and after January 1, 2018, additionally would deem tangible personal property as having a useful life of one or more years for state income or franchise tax purposes if the property includes a warranty for a period of one or more years, thereby expanding the exemption. would define useful life to also include tangible personal property that is expensed for state income or franchise tax purposes and that has a physical useful life of one or more years.

This bill would take effect immediately as a tax levy.