1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," in sales and use tax, further providing for
11definitions.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

<-14Section 1. Section 201(k)(8) and (o)(4)(B) of the act of
15March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
161971, amended April 23, 1998 (P.L.239, No.45), are amended to
17read:

<-18Section 1. Section 201(k)(8), (o)(4)(B) and (pp) of the act
19of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
201971, amended or added April 23, 1998 (P.L.239, No.45), are
21amended to read:

1Section 201. Definitions.--The following words, terms and
2phrases when used in this Article II shall have the meaning
3ascribed to them in this section, except where the context
4clearly indicates a different meaning:

5* * *

6(k) "Sale at retail."

7* * *

8(8) Any retention of possession, custody or a license to use
9or consume tangible personal property or any further obtaining
10of services described in subclauses (2), (3) and (4) of this
11clause pursuant to a rental or service contract or other
12arrangement (other than as security).

13The term "sale at retail" shall not include (i) any such
14transfer of tangible personal property or rendition of services
15for the purpose of resale, or (ii) such rendition of services or
16the transfer of tangible personal property including, but not
17limited to, machinery and equipment and parts therefor and
18supplies to be used or consumed by the purchaser directly in the
19operations of--

20(A) The manufacture of tangible personal property.

21(B) Farming, dairying, agriculture, timbering, horticulture
22or floriculture when engaged in as a business enterprise. The
23term "farming" shall include the propagation and raising of
24ranch raised fur-bearing animals and the propagation of game
25birds for commercial purposes by holders of propagation permits
26issued under 34 Pa.C.S. (relating to game) and the propagation
27and raising of horses to be used exclusively for commercial
28racing activities. <-The term "timbering" shall include:

29(1) The business of producing or harvesting trees from
30forests, woodlots or tree farms for the purpose of the

1commercial production of wood, paper or energy products.

2(2) All operations prior to the transport of the harvested
3product necessary for the removal of timber or forest products
4from the site, in-field processing of trees into logs or chips,
5complying with environmental protection and safety requirements
6applicable to the harvest of forest products, creating access to
7the harvest site, loading of forest products onto highway
8vehicles for transport to storage or processing facilities and
9postharvest site reclamation, including those activities
10necessary to improve timber growth or ensure natural or direct
11reforestation of the site.

12(C) The producing, delivering or rendering of a public
13utility service, or in constructing, reconstructing, remodeling,
14repairing or maintaining the facilities which are directly used
15in producing, delivering or rendering such service.

16(D) Processing as defined in clause (d) of this section.

17The exclusions provided in paragraphs (A), (B), (C) and (D)
18shall not apply to any vehicle required to be registered under
19The Vehicle Code, except those vehicles used directly by a
20public utility engaged in business as a common carrier; to
21maintenance facilities; or to materials, supplies or equipment
22to be used or consumed in the construction, reconstruction,
23remodeling, repair or maintenance of real estate other than
24directly used machinery, equipment, parts or foundations
25therefor that may be affixed to such real estate.

26The exclusions provided in paragraphs (A), (B), (C) and (D)
27shall not apply to tangible personal property or services to be
28used or consumed in managerial sales or other nonoperational
29activities, nor to the purchase or use of tangible personal
30property or services by any person other than the person

1directly using the same in the operations described in
2paragraphs (A), (B), (C) and (D) herein.

3The exclusion provided in paragraph (C) shall not apply to
4(i) construction materials, supplies or equipment used to
5construct, reconstruct, remodel, repair or maintain facilities
6not used directly by the purchaser in the production, delivering
7or rendition of public utility service, (ii) construction
8materials, supplies or equipment used to construct, reconstruct,
9remodel, repair or maintain a building, road or similar
10structure, or (iii) tools and equipment used but not installed
11in the maintenance of facilities used directly in the
12production, delivering or rendition of a public utility service.

13The exclusions provided in paragraphs (A), (B), (C) and (D)
14shall not apply to the services enumerated in clauses (k)(11)
15through (18) and (w) through (kk), except that the exclusion
16provided in this subclause for farming, dairying and agriculture
17shall apply to the service enumerated in clause (z).

18* * *

19(o) "Use."

20* * *

21(4) The obtaining by a purchaser of the service of
22repairing, altering, mending, pressing, fitting, dyeing,
23laundering, drycleaning or cleaning tangible personal property
24other than wearing apparel or shoes or applying or installing
25tangible personal property as a repair or replacement part of
26other tangible personal property other than wearing apparel or
27shoes, whether or not the services are performed directly or by
28any means other than by means of coin-operated self-service
29laundry equipment for wearing apparel or household goods, and
30whether or not any tangible personal property is transferred to

1the purchaser in conjunction therewith, except such services as
2are obtained in the construction, reconstruction, remodeling,
3repair or maintenance of real estate: Provided, however, That
4this subclause shall not be deemed to impose tax upon such
5services in the preparation for sale of new items which are
6excluded from the tax under clause (26) of section 204, or upon
7diaper service: And provided further, That the term "use" shall
8not include--

9* * *

10(B) The use or consumption of tangible personal property,
11including but not limited to machinery and equipment and parts
12therefor, and supplies or the obtaining of the services
13described in subclauses (2), (3) and (4) of this clause directly
14in the operations of--

15(i) The manufacture of tangible personal property.

16(ii) Farming, dairying, agriculture, timbering, horticulture
17or floriculture when engaged in as a business enterprise. The
18term "farming" shall include the propagation and raising of
19ranch-raised furbearing animals and the propagation of game
20birds for commercial purposes by holders of propagation permits
21issued under 34 Pa.C.S. (relating to game) and the propagation
22and raising of horses to be used exclusively for commercial
23racing activities. <-The term "timbering" shall include:

24(1) The business of producing or harvesting trees from
25forests, woodlots or tree farms for the purpose of the
26commercial production of wood, paper or energy products.

27(2) All operations prior to the transport of the harvested
28product necessary for the removal of timber or forest products
29from the site, in-field processing of trees into logs or chips,
30complying with environmental protection and safety requirements

1applicable to the harvest of forest products, creating access to
2the harvest site, loading of forest products onto highway
3vehicles for transport to storage or processing facilities and
4postharvest site reclamation, including those activities
5necessary to improve timber growth or ensure natural or direct
6reforestation of the site.

7(iii) The producing, delivering or rendering of a public
8utility service, or in constructing, reconstructing, remodeling,
9repairing or maintaining the facilities which are directly used
10in producing, delivering or rendering such service.

11(iv) Processing as defined in subclause (d) of this section.

12The exclusions provided in subparagraphs (i), (ii), (iii) and
13(iv) shall not apply to any vehicle required to be registered
14under The Vehicle Code except those vehicles directly used by a
15public utility engaged in the business as a common carrier; to
16maintenance facilities; or to materials, supplies or equipment
17to be used or consumed in the construction, reconstruction,
18remodeling, repair or maintenance of real estate other than
19directly used machinery, equipment, parts or foundations
20therefor that may be affixed to such real estate. The exclusions
21provided in subparagraphs (i), (ii), (iii) and (iv) shall not
22apply to tangible personal property or services to be used or
23consumed in managerial sales or other nonoperational activities,
24nor to the purchase or use of tangible personal property or
25services by any person other than the person directly using the
26same in the operations described in subparagraphs (i), (ii),
27(iii) and (iv).

28The exclusion provided in subparagraph (iii) shall not apply
29to (A) construction materials, supplies or equipment used to
30construct, reconstruct, remodel, repair or maintain facilities

1not used directly by the purchaser in the production, delivering
2or rendition of public utility service or (B) tools and
3equipment used but not installed in the maintenance of
4facilities used directly in the production, delivering or
5rendition of a public utility service.

6The exclusion provided in subparagraphs (i), (ii), (iii) and
7(iv) shall not apply to the services enumerated in clauses (o)
8(9) through (16) and (w) through (kk), except that the exclusion
9provided in subparagraph (ii) for farming, dairying and
10agriculture shall apply to the service enumerated in clause (z).

11* * *

<-12(pp) "Building machinery and equipment." Generation
13equipment, storage equipment, conditioning equipment,
14distribution equipment and termination equipment, which shall be
15limited to the following:

16(1) air conditioning limited to heating, cooling,
17purification, humidification, dehumidification and ventilation;

18(2) electrical;

19(3) plumbing;

20(4) communications limited to voice, video, data, sound,
21master clock and noise abatement;

22(5) alarms limited to fire, security and detection;

23(6) control system limited to energy management, traffic and
24parking lot and building access;

25(7) medical system limited to diagnosis and treatment
26equipment, medical gas, nurse call and doctor paging;

27(8) laboratory system;

28(9) cathodic protection system; or

29(10) furniture, cabinetry and kitchen equipment.

30The term shall include boilers, chillers, air cleaners,

1humidifiers, fans, switchgear, pumps, telephones, speakers,
2horns, motion detectors, dampers, actuators, grills, registers,
3traffic signals, traffic signal foundations, poles and mast 
4arms, sensors, card access devices, guardrails, medial devices,
5floor troughs and grates and laundry equipment, together with
6integral coverings and enclosures, whether or not the item
7constitutes a fixture or is otherwise affixed to the real
8estate, whether or not damage would be done to the item or its
9surroundings upon removal or whether or not the item is
10physically located within a real estate structure. The term
11"building machinery and equipment" shall not include guardrail
12posts, pipes, fittings, pipe supports and hangers, valves,
13underground tanks, wire, conduit, receptacle and junction boxes,
14insulation, ductwork and coverings thereof.

15* * *

16Section 2. This act shall take effect in 60 days.