PRINTER'S NO. 349
No. 336 Session of 1999
INTRODUCED BY MAITLAND, NICKOL, S. MILLER, E. Z. TAYLOR, SATHER,
SEMMEL, SEYFERT, STEELMAN AND SAYLOR, FEBRUARY 8, 1999
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 8, 1999
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further providing for the definition of "sale at
11 retail" and "use"; exempting horses, interests in horses and
12 certain services relating to horses in certain circumstances
13 from the sales and use tax; and exempting feed and certain
14 other equipment from the sales and use tax.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. Section 201(k)(8) and (o)(4) of the act of March
18 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971,
19 amended April 23, 1998 (P.L.239, No.45), are amended and the
20 section is amended by adding a clause to read:
21 Section 201. Definitions.--The following words, terms and
22 phrases when used in this Article II shall have the meaning
23 ascribed to them in this section, except where the context
24 clearly indicates a different meaning:
1 * * *
2 (k) "Sale at retail."
3 * * *
4 (8) Any retention [of] or possession, custody or a license
5 to use or consume tangible personal property or any further
6 obtaining of services described in subclauses (2), (3) and (4)
7 of this clause pursuant to a rental or service contract or other
8 arrangement (other than as security).
9 The term "sale at retail" shall not include (i) any such
10 transfer of tangible personal property or rendition of services
11 for the purpose of resale, or (ii) such rendition of services or
12 the transfer of tangible personal property including, but not
13 limited to, machinery and equipment and parts therefor and
14 supplies to be used or consumed by the purchaser directly in the
15 operations of--
16 (A) The manufacture of tangible personal property.
17 (B) Farming[, dairying, agriculture, horticulture or
18 floriculture when engaged in as a business enterprise. The term
19 "farming" shall include the propagation and raising of ranch
20 raised fur-bearing animals and the propagation of game birds for
21 commercial purposes by holders of propagation permits issued
22 under 34 Pa.C.S. (relating to game) and the propagation and
23 raising of horses to be used exclusively for commercial racing
24 activities].
25 (C) The producing, delivering or rendering of a public
26 utility service, or in constructing, reconstructing, remodeling,
27 repairing or maintaining the facilities which are directly used
28 in producing, delivering or rendering such service.
29 (D) Processing as defined in clause (d) of this section.
30 The exclusions provided in paragraphs (A), (B), (C) and (D)
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1 shall not apply to any vehicle required to be registered under
2 The Vehicle Code, except those vehicles used directly by a
3 public utility engaged in business as a common carrier; to
4 maintenance facilities; or to materials, supplies or equipment
5 to be used or consumed in the construction, reconstruction,
6 remodeling, repair or maintenance of real estate other than
7 directly used machinery, equipment, parts or foundations
8 therefor that may be affixed to such real estate.
9 The exclusions provided in paragraphs (A), (B), (C) and (D)
10 shall not apply to tangible personal property or services to be
11 used or consumed in managerial sales or other nonoperational
12 activities, nor to the purchase or use of tangible personal
13 property or services by any person other than the person
14 directly using the same in the operations described in
15 paragraphs (A), (B), (C) and (D) herein.
16 The exclusion provided in paragraph (C) shall not apply to
17 (i) construction materials, supplies or equipment used to
18 construct, reconstruct, remodel, repair or maintain facilities
19 not used directly by the purchaser in the production, delivering
20 or rendition of public utility service, (ii) construction
21 materials, supplies or equipment used to construct, reconstruct,
22 remodel, repair or maintain a building, road or similar
23 structure, or (iii) tools and equipment used but not installed
24 in the maintenance of facilities used directly in the
25 production, delivering or rendition of a public utility service.
26 The exclusions provided in paragraphs (A), (B), (C) and (D)
27 shall not apply to the services enumerated in clauses (k)(11)
28 through (18) and (w) through (kk), except that the exclusion
29 provided in this subclause for farming[, dairying and
30 agriculture shall apply to the service enumerated in clause (z).
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1 * * *
2 (o) "Use."
3 * * *
4 (4) The obtaining by a purchaser of the service of
5 repairing, altering, mending, pressing, fitting, dyeing,
6 laundering, drycleaning or cleaning tangible personal property
7 other than wearing apparel or shoes or applying or installing
8 tangible personal property as a repair or replacement part of
9 other tangible personal property other than wearing apparel or
10 shoes, whether or not the services are performed directly or by
11 any means other than by means of coin-operated self-service
12 laundry equipment for wearing apparel or household goods, and
13 whether or not any tangible personal property is transferred to
14 the purchaser in conjunction therewith, except such services as
15 are obtained in the construction, reconstruction, remodeling,
16 repair or maintenance of real estate: Provided, however, That
17 this subclause shall not be deemed to impose tax upon such
18 services in the preparation for sale of new items which are
19 excluded from the tax under clause (26) of section 204, or upon
20 diaper service: And provided further, That the term "use" shall
21 not include--
22 (A) Any tangible personal property acquired and kept,
23 retained or over which power is exercised within this
24 Commonwealth on which the taxing of the storage, use or other
25 consumption thereof is expressly prohibited by the Constitution
26 of the United States or which is excluded from tax under other
27 provisions of this article.
28 (B) The use or consumption of tangible personal property,
29 including but not limited to machinery and equipment and parts
30 therefor, and supplies or the obtaining of the services
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1 described in subclauses (2), (3) and (4) of this clause directly
2 in the operations of--
3 (i) The manufacture of tangible personal property.
4 (ii) Farming[, dairying, agriculture, horticulture or
5 floriculture when engaged in as a business enterprise. The term
6 "farming" shall include the propagation and raising of ranch-
7 raised furbearing animals and the propagation of game birds for
8 commercial purposes by holders of propagation permits issued
9 under 34 Pa.C.S. (relating to game) and the propagation and
10 raising of horses to be used exclusively for commercial racing
11 activities].
12 (iii) The producing, delivering or rendering of a public
13 utility service, or in constructing, reconstructing, remodeling,
14 repairing or maintaining the facilities which are directly used
15 in producing, delivering or rendering such service.
16 (iv) Processing as defined in subclause (d) of this section.
17 The exclusions provided in subparagraphs (i), (ii), (iii) and
18 (iv) shall not apply to any vehicle required to be registered
19 under The Vehicle Code except those vehicles directly used by a
20 public utility engaged in the business as a common carrier; to
21 maintenance facilities; or to materials, supplies or equipment
22 to be used or consumed in the construction, reconstruction,
23 remodeling, repair or maintenance of real estate other than
24 directly used machinery, equipment, parts or foundations
25 therefor that may be affixed to such real estate. The exclusions
26 provided in subparagraphs (i), (ii), (iii) and (iv) shall not
27 apply to tangible personal property or services to be used or
28 consumed in managerial sales or other nonoperational activities,
29 nor to the purchase or use of tangible personal property or
30 services by any person other than the person directly using the
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1 same in the operations described in subparagraphs (i), (ii),
2 (iii) and (iv).
3 The exclusion provided in subparagraph (iii) shall not apply
4 to (A) construction materials, supplies or equipment used to
5 construct, reconstruct, remodel, repair or maintain facilities
6 not used directly by the purchaser in the production, delivering
7 or rendition of public utility service or (B) tools and
8 equipment used but not installed in the maintenance of
9 facilities used directly in the production, delivering or
10 rendition of a public utility service.
11 The exclusion provided in subparagraphs (i), (ii), (iii) and
12 (iv) shall not apply to the services enumerated in clauses
13 (o)(9) through (16) and (w) through (kk), except that the
14 exclusion provided in subparagraph (ii) for farming, dairying
15 and agriculture shall apply to the service enumerated in clause
16 (z).
17 * * *
18 (uu) "Farming." The science or art of cultivating the soil,
19 producing crops and raising livestock and, in varying degrees,
20 the preparing of these products for man's use and their disposal
21 (as by marketing). The term shall include: (i) dairying,
22 agriculture, horticulture or floriculture when engaged in as a
23 business enterprise, (ii) the breeding or raising of horses for
24 commercial purposes, including, but not limited to, pleasure
25 riding, drafting and racing, (iii) the propagation and raising
26 of ranch-raised fur bearing animals and (iv) the propagation of
27 game birds for commercial purposes by holders of propagation
28 permits issued under 34 Pa.C.S. (relating to game).
29 Section 2. Section 204 of the act is amended by adding
30 clauses to read:
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1 Section 204. Exclusions from Tax.--The tax imposed by
2 section 202 shall not be imposed upon
3 * * *
4 (55.1) The sale at retail or use of horses, or interests in
5 horses, by the purchaser or user for breeding, commercial or
6 investment purposes.
7 (55.2) The sale at retail or use of stallion services.
8 (55.3) The sale at retail or use of feed, tack, harnesses,
9 supplies, equipment, farming implements and farming equipment
10 used or consumed in the care, feeding, breeding, raising and
11 selling of all horses and mules.
12 * * *
13 Section 3. This act shall take effect in 60 days.
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