Citations Affected: IC 6-2.5.
Synopsis: Sales tax. Provides an exemption from sales and use tax for
research and development equipment and for property and utility
services consumed in research and development. (The introduced
version of this bill was prepared by the interim study committee on
economic development issues.)
Effective: July 1, 2000.
January 10, 2000, read first time and referred to Committee on Finance.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
SECTION 1.
IC 6-2.5-4-5
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2000]: Sec. 5. (a) As used in this
section, a "power subsidiary" means a corporation which is owned or
controlled by one (1) or more public utilities that furnish or sell
electrical energy, natural or artificial gas, water, steam, or steam heat
and which produces power exclusively for the use of those public
utilities.
(b) As used in this section, "research and development" means
experimental or laboratory research and development for new
products, new uses of existing products, or the improvement or
testing of existing products, but does not include efficiency surveys,
management studies, consumer surveys, economic surveys,
advertising or promotion, or research in connection with literary,
history, or similar projects.
(c) A power subsidiary or a person engaged as a public utility is a
retail merchant making a retail transaction when the subsidiary or
person furnishes or sells electrical energy, natural or artificial gas,
water, steam, or steam heating service to a person for commercial or
domestic consumption.
(c) (d) Notwithstanding subsection (b), (c), a power subsidiary or a
person engaged as a public utility is not a retail merchant making a
retail transaction when:
(1) the power subsidiary or person provides, installs, constructs,
services, or removes tangible personal property which is used in
connection with the furnishing of the services or commodities
listed in subsection (b); (c);
(2) the power subsidiary or person sells the services or
commodities listed in subsection (b) (c) to another public utility
or power subsidiary described in this section or a person
described in section 6 of this chapter; or
(3) the power subsidiary or person sells the services or
commodities listed in subsection (b) (c) to a person for use in
manufacturing, mining, production, refining, oil extraction,
mineral extraction, irrigation, agriculture, or horticulture, or
research and development. However, this exclusion for sales of
the services and commodities only applies if the services are
consumed as an essential and integral part of an integrated
process that produces tangible personal property or that
constitutes research and development and those sales are
separately metered for the excepted uses listed in this subdivision,
or if those sales are not separately metered but are predominately
used by the purchaser for the excepted uses listed in this
subdivision.
SECTION 2.
IC 6-2.5-5-3.1
IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2000]: Sec. 3.1. (a) As used in this section, "research and
development" means experimental or laboratory research and
development for new products, new uses of existing products, or
the improvement or testing of existing products, and includes
research and development performed with respect to other
persons' products as well as the person's own products. "Research
and development" does not include efficiency surveys, management
studies, consumer surveys, economic surveys, advertising or
promotion, or research in connection with literary, history, or
similar projects.
(b) As used in this section, "research and development
equipment" means laboratory equipment, research and
development equipment, computers and computer software,
telecommunications equipment, or testing equipment.
(c) Transactions involving research and development equipment
are exempt from the state gross retail tax if the person acquiring
the property acquires it for direct use in direct research and
development.
SECTION 3.
IC 6-2.5-5-5.2
IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2000]: Sec. 5.2. (a) As used in this section, "research and
development" means experimental or laboratory research and
development for new products, new uses of existing products, or
the improvement or testing of existing products, and includes
research and development performed with respect to other
persons' products as well as the person's own product. "Research
and development" does not include efficiency surveys, management
studies, consumer surveys, economic surveys, advertising or
promotion, or research in connection with literary, history, or
similar projects.
(b) As used in this section, "tangible personal property"
includes electrical energy, natural or artificial gas, steam, and
steam heat.
(c) Transactions involving tangible personal property are
exempt from the state gross retail tax if the person acquiring the
property acquires it for direct consumption as a material to be
consumed in direct research and development.