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), (o)(4)(B) and (pp) of the act 
15of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 
161971, amended or added April 23, 1998 (P.L.239, No.45), are 
17amended to read:

18Section 201. Definitions.--The following words, terms and
19phrases when used in this Article II shall have the meaning
20ascribed to them in this section, except where the context
21clearly indicates a different meaning:

1* * *

2(k) "Sale at retail."

3* * *

4(8) Any retention of possession, custody or a license to use
5or consume tangible personal property or any further obtaining
6of services described in subclauses (2), (3) and (4) of this
7clause pursuant to a rental or service contract or other
8arrangement (other than as security).

9The term "sale at retail" shall not include (i) any such
10transfer of tangible personal property or rendition of services
11for the purpose of resale, or (ii) such rendition of services or
12the transfer of tangible personal property including, but not
13limited to, machinery and equipment and parts therefor and
14supplies to be used or consumed by the purchaser directly in the
15operations of--

16(A) The manufacture of tangible personal property.

17(B) Farming, dairying, agriculture, timbering, horticulture
18or floriculture when engaged in as a business enterprise. The
19term "farming" shall include the propagation and raising of
20ranch raised fur-bearing animals and the propagation of game
21birds for commercial purposes by holders of propagation permits
22issued under 34 Pa.C.S. (relating to game) and the propagation
23and raising of horses to be used exclusively for commercial
24racing activities. The term "timbering" shall include:

25(1) The business of producing or harvesting trees from
26forests, woodlots or tree farms for the purpose of the
27commercial production of wood, paper or energy products <-derived 
28from wood.

29(2) All operations prior to the transport of the harvested
30product necessary for the removal of timber or forest products

1from the site, in-field processing of trees into logs or chips,
2complying with environmental protection and safety requirements
3applicable to the harvest of forest products, creating access to
4the harvest site, loading of forest products onto highway
5vehicles for transport to storage or processing facilities and
6postharvest site reclamation, including those activities
7necessary to improve timber growth or ensure natural or direct
8reforestation of the site.

9(C) The producing, delivering or rendering of a public
10utility service, or in constructing, reconstructing, remodeling,
11repairing or maintaining the facilities which are directly used
12in producing, delivering or rendering such service.

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

14The exclusions provided in paragraphs (A), (B), (C) and (D)
15shall not apply to any vehicle required to be registered under
16The Vehicle Code, except those vehicles used directly by a
17public utility engaged in business as a common carrier; to
18maintenance facilities; or to materials, supplies or equipment
19to be used or consumed in the construction, reconstruction,
20remodeling, repair or maintenance of real estate other than
21directly used machinery, equipment, parts or foundations
22therefor that may be affixed to such real estate.

23The exclusions provided in paragraphs (A), (B), (C) and (D)
24shall not apply to tangible personal property or services to be
25used or consumed in managerial sales or other nonoperational
26activities, nor to the purchase or use of tangible personal
27property or services by any person other than the person
28directly using the same in the operations described in
29paragraphs (A), (B), (C) and (D) herein.

30The exclusion provided in paragraph (C) shall not apply to

1(i) construction materials, supplies or equipment used to
2construct, reconstruct, remodel, repair or maintain facilities
3not used directly by the purchaser in the production, delivering
4or rendition of public utility service, (ii) construction
5materials, supplies or equipment used to construct, reconstruct,
6remodel, repair or maintain a building, road or similar
7structure, or (iii) tools and equipment used but not installed
8in the maintenance of facilities used directly in the
9production, delivering or rendition of a public utility service.

10The exclusions provided in paragraphs (A), (B), (C) and (D)
11shall not apply to the services enumerated in clauses (k)(11)
12through (18) and (w) through (kk), except that the exclusion
13provided in this subclause for farming, dairying and agriculture
14shall apply to the service enumerated in clause (z).

15* * *

16(o) "Use."

17* * *

18(4) The obtaining by a purchaser of the service of
19repairing, altering, mending, pressing, fitting, dyeing,
20laundering, drycleaning or cleaning tangible personal property
21other than wearing apparel or shoes or applying or installing
22tangible personal property as a repair or replacement part of
23other tangible personal property other than wearing apparel or
24shoes, whether or not the services are performed directly or by
25any means other than by means of coin-operated self-service
26laundry equipment for wearing apparel or household goods, and
27whether or not any tangible personal property is transferred to
28the purchaser in conjunction therewith, except such services as
29are obtained in the construction, reconstruction, remodeling,
30repair or maintenance of real estate: Provided, however, That

1this subclause shall not be deemed to impose tax upon such
2services in the preparation for sale of new items which are
3excluded from the tax under clause (26) of section 204, or upon
4diaper service: And provided further, That the term "use" shall
5not include--

6* * *

7(B) The use or consumption of tangible personal property,
8including but not limited to machinery and equipment and parts
9therefor, and supplies or the obtaining of the services
10described in subclauses (2), (3) and (4) of this clause directly
11in the operations of--

12(i) The manufacture of tangible personal property.

13(ii) Farming, dairying, agriculture, timbering, horticulture
14or floriculture when engaged in as a business enterprise. The
15term "farming" shall include the propagation and raising of
16ranch-raised furbearing animals and the propagation of game
17birds for commercial purposes by holders of propagation permits
18issued under 34 Pa.C.S. (relating to game) and the propagation
19and raising of horses to be used exclusively for commercial
20racing activities. The term "timbering" shall include:

21(1) The business of producing or harvesting trees from
22forests, woodlots or tree farms for the purpose of the
23commercial production of wood, paper or energy products <-derived 
24from wood.

25(2) All operations prior to the transport of the harvested
26product necessary for the removal of timber or forest products
27from the site, in-field processing of trees into logs or chips,
28complying with environmental protection and safety requirements
29applicable to the harvest of forest products, creating access to
30the harvest site, loading of forest products onto highway

1vehicles for transport to storage or processing facilities and
2postharvest site reclamation, including those activities
3necessary to improve timber growth or ensure natural or direct
4reforestation of the site.

5(iii) The producing, delivering or rendering of a public
6utility service, or in constructing, reconstructing, remodeling,
7repairing or maintaining the facilities which are directly used
8in producing, delivering or rendering such service.

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

10The exclusions provided in subparagraphs (i), (ii), (iii) and
11(iv) shall not apply to any vehicle required to be registered
12under The Vehicle Code except those vehicles directly used by a
13public utility engaged in the business as a common carrier; to
14maintenance facilities; or to materials, supplies or equipment
15to be used or consumed in the construction, reconstruction,
16remodeling, repair or maintenance of real estate other than
17directly used machinery, equipment, parts or foundations
18therefor that may be affixed to such real estate. The exclusions
19provided in subparagraphs (i), (ii), (iii) and (iv) shall not
20apply to tangible personal property or services to be used or
21consumed in managerial sales or other nonoperational activities,
22nor to the purchase or use of tangible personal property or
23services by any person other than the person directly using the
24same in the operations described in subparagraphs (i), (ii),
25(iii) and (iv).

26The exclusion provided in subparagraph (iii) shall not apply
27to (A) construction materials, supplies or equipment used to
28construct, reconstruct, remodel, repair or maintain facilities
29not used directly by the purchaser in the production, delivering
30or rendition of public utility service or (B) tools and

1equipment used but not installed in the maintenance of
2facilities used directly in the production, delivering or
3rendition of a public utility service.

4The exclusion provided in subparagraphs (i), (ii), (iii) and
5(iv) shall not apply to the services enumerated in clauses (o)
6(9) through (16) and (w) through (kk), except that the exclusion
7provided in subparagraph (ii) for farming, dairying and
8agriculture shall apply to the service enumerated in clause (z).

9* * *

10(pp) "Building machinery and equipment." Generation
11equipment, storage equipment, conditioning equipment,
12distribution equipment and termination equipment, which shall be
13limited to the following:

14(1) air conditioning limited to heating, cooling,
15purification, humidification, dehumidification and ventilation;

16(2) electrical;

17(3) plumbing;

18(4) communications limited to voice, video, data, sound,
19master clock and noise abatement;

20(5) alarms limited to fire, security and detection;

21(6) control system limited to energy management, traffic and
22parking lot and building access;

23(7) medical system limited to diagnosis and treatment
24equipment, medical gas, nurse call and doctor paging;

25(8) laboratory system;

26(9) cathodic protection system; or

27(10) furniture, cabinetry and kitchen equipment.

28The term shall include boilers, chillers, air cleaners,
29humidifiers, fans, switchgear, pumps, telephones, speakers,
30horns, motion detectors, dampers, actuators, grills, registers,

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

13* * *

14Section 2. This act shall take effect in 60 days.