TIP # 99A01-26
Machinery and Equipment Exemption for Spaceport Activities
Effective July 1, 1999, the sales and use tax exemption available to new and expanding businesses on purchases of qualifying machinery and equipment used in manufacturing is available to businesses that purchase qualifying machinery and equipment for exclusive use in non-manufacturing spaceport activities. The exemption is contingent upon approval by the Department of Revenue.
To qualify for the new business exemption, the machinery and equipment must have been purchased, or a purchase agreement made, prior to the date the business first begins its spaceport activities. If a purchase agreement was made prior to the beginning of spaceport activities, such machinery and equipment must be received within twelve months of the date that spaceport activities began. Purchases made after the start of spaceport activities will not qualify for the new business exemption. The determination whether such purchases qualify will be based on the date of the purchase agreement or, in the absence of a purchase agreement, the date of the invoice.
This exemption is limited to that amount of sales and use tax paid in excess of $50,000 per calendar year on purchases of qualifying machinery and equipment. Qualifying businesses may elect to pay the entire $50,000 in tax to the Department of Revenue at the beginning of the calendar year and then make all machinery and equipment purchases tax exempt by providing a copy of their Temporary Tax Exemption Permit to the vendor. Alternately, the businesses may elect to pay tax to their vendors on all machinery and equipment purchases for the calendar year until they have paid $50,000 in tax and then make the remaining purchases tax exempt by providing a copy of their Temporary Tax Exemption Permit to the vendor. Machinery and equipment purchased for exclusive use in spaceport activities is not subject to the productive output increase requirement, which is applicable to manufacturing businesses.