A. If a person engaged in manufacturing is directly engaged in the manufacture of tangible personal property using machinery, equipment, or a combination, and the machinery or equipment is: 1) directly and exclusively located in the City; and 2) used directly and exclusively for the manufacture of tangible personal property only, then when that machinery or equipment is sold to a buyer engaged in manufacturing, the buyer shall be exempt from taxation on the purchase price if:
1. The purchased machinery or equipment remains directly and exclusively located in the City and in direct and exclusive use for the manufacture of tangible personal property for a period of two (2) years (730 days) from the purchase date, and
2. The purchase and use of the machinery or equipment does not result in a reduction in the number of full time equivalent (FTE) employment positions in the City as stated in subsection A3 of this section during the two (2) year period defined in subsection A1 of this section, and
3. The buyer files a notice of intent to claim the exemption with the City on or before the twentieth day of the month following the purchase, which shall include the following information:
a. The number of FTE employment positions in the City provided by the seller on the date of sale of the machinery or equipment, and
b. The proposed use and location of the machinery or equipment, and
c. The sale price and list of the machinery and equipment including a brief description of the machinery or equipment purchased, and
d. The amount of Sales or Use Tax which would be due and payable but for the exemption of this section.
4. At the conclusion of the two (2) year period stated in subsection A1 of this section, the buyer must file a notice of exemption compliance. This notice must be filed on or before the twentieth day of the month following the conclusion of the two (2) year period and must disclose:
a. The use and location of the machinery or equipment, and
b. The number of filled FTE employment positions in the City provided by the buyer in compliance with subsection A2 of this section, and
c. Certification that the number of filled FTE employment positions has remained throughout the two (2) year period at or above the number defined by subsection A3a of this section.
B. Upon failure to comply with any provision of this section, the purchase price paid for the machinery or equipment shall be subject to taxation. In addition penalties and interest accrue from the date of purchase until the time the tax is paid.
C. 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.
D. 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 exemption for the purchase of machinery or equipment located directly exclusively in the City under this section.
E. 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 these exemptions under this section.
2. Test equipment that tests on a sample basis does not qualify for these exemptions under this section. (Ord. 88-162; Ord. 98-255; Ord. 01-42)