Purchases of machinery by a person engaged in manufacturing to be used in the City directly and exclusively by the person in the manufacture of tangible personal property, for sale or profit, are exempt from taxation in accord with the alternative rate of tax set forth below. In addition, purchases of equipment by a person engaged in manufacturing to be used in the City directly and exclusively by the person in the manufacture of tangible personal property, for sale or profit, are exempt from taxation in accord with the alternative rate of tax set forth below. The alternative rate of tax shall be computed upon the total cumulative calendar year purchases based upon the purchase price paid by the taxpayer for the machinery used in manufacturing and equipment used in manufacturing and qualifying for this exemption as follows:
Rate Of Tax
| ||
A. | Purchases of $0.01 to and including $4,999,999.99 | 3.07 percent |
Purchases of $5,000,000.00 to and including $7,500,000.00 |
2.57
percent | |
Purchases of $7,500,000.01 to and including $10,000,000.00 |
2.07
percent | |
Purchases of $10,000,000.01 to and including $15,000,000.00 |
1.57
percent | |
Purchases of $15,000,000.01 to and including $20,000,000.00 |
1.07
percent | |
Purchases in excess of $20,000,000.00 | No tax |
B. Notwithstanding this alternative rate of tax exemption, a retailer licensed for the collection of tax shall collect and remit to the City the amount of tax as provided in sections 2.7.202 and 2.7.203 of this article from a taxpayer who qualifies under the provisions of this section. The taxpayer shall not be entitled to the exemption upon purchase but shall claim the exemption only as provided in subsections C and D of this section.
C. A taxpayer qualifying for an alternative rate of tax exemption as provided in this section shall be entitled to refund or credit, as provided in section 2.7.810 of this article.
D. A taxpayer qualifying for an alternative rate of tax under this section may reduce the amount of tax remitted as provided in section 2.7.811 of this article.
E. Once a taxpayer has reached twenty million dollars ($20,000,000.00) in purchases of qualifying machinery and equipment in a calendar year or expects to exceed this amount, the taxpayer may apply to the Director for a Sales Tax exemption for the purchase of machinery or equipment. The certificate of exemption is only in effect for the remaining part of the year and must be renewed the following year if purchases of machinery or equipment exceed the twenty million dollars ($20,000,000.00).
F. To qualify for the exemption provided in this section, a purchase must also qualify for the Investment Tax credit against Federal Income Tax provided by section 38 of the "Internal Revenue Code of 1986", as amended.
G. For equipment to be exempt under this section, the equipment must be used directly and exclusively to produce an article of tangible personal property. Auxiliary equipment is taxable.
H. Machinery and equipment used in accounting, engineering, design, research and development or other nonmanufacturing functions are not considered manufacturing machinery or equipment and therefore do not qualify for the alternate rate of tax exemption under this section.
I. For the purpose of the machinery exemption in this section "Test Machinery and Equipment" must test one hundred percent (100%) of the tangible personal property for sale within the manufacturing operation.
1. Test equipment used before the first change in the raw material and after the last change in the product does not qualify for this exemption.
Notes
| 1 | 1. January 1, 2016, is the effective date of Ordinance 15-97. |
| 2 | 2. January 1, 2021 is the effective date of Ordinance 20-61. |