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 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.

25(C) The producing, delivering or rendering of a public
26utility service, or in constructing, reconstructing, remodeling,
27repairing or maintaining the facilities which are directly used
28in producing, delivering or rendering such service.

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

30The exclusions provided in paragraphs (A), (B), (C) and (D)

1shall not apply to any vehicle required to be registered under
2The Vehicle Code, except those vehicles used directly by a
3public utility engaged in business as a common carrier; to
4maintenance facilities; or to materials, supplies or equipment
5to be used or consumed in the construction, reconstruction,
6remodeling, repair or maintenance of real estate other than
7directly used machinery, equipment, parts or foundations
8therefor that may be affixed to such real estate.

9The exclusions provided in paragraphs (A), (B), (C) and (D)
10shall not apply to tangible personal property or services to be
11used or consumed in managerial sales or other nonoperational
12activities, nor to the purchase or use of tangible personal
13property or services by any person other than the person
14directly using the same in the operations described in
15paragraphs (A), (B), (C) and (D) herein.

16The exclusion provided in paragraph (C) shall not apply to
17(i) construction materials, supplies or equipment used to
18construct, reconstruct, remodel, repair or maintain facilities
19not used directly by the purchaser in the production, delivering
20or rendition of public utility service, (ii) construction
21materials, supplies or equipment used to construct, reconstruct,
22remodel, repair or maintain a building, road or similar
23structure, or (iii) tools and equipment used but not installed
24in the maintenance of facilities used directly in the
25production, delivering or rendition of a public utility service.

26The exclusions provided in paragraphs (A), (B), (C) and (D)
27shall not apply to the services enumerated in clauses (k)(11)
28through (18) and (w) through (kk), except that the exclusion
29provided in this subclause for farming, dairying and agriculture
30shall apply to the service enumerated in clause (z).

1* * *

2(o) "Use."

3* * *

4(4) The obtaining by a purchaser of the service of
5repairing, altering, mending, pressing, fitting, dyeing,
6laundering, drycleaning or cleaning tangible personal property
7other than wearing apparel or shoes or applying or installing
8tangible personal property as a repair or replacement part of
9other tangible personal property other than wearing apparel or
10shoes, whether or not the services are performed directly or by
11any means other than by means of coin-operated self-service
12laundry equipment for wearing apparel or household goods, and
13whether or not any tangible personal property is transferred to
14the purchaser in conjunction therewith, except such services as
15are obtained in the construction, reconstruction, remodeling,
16repair or maintenance of real estate: Provided, however, That
17this subclause shall not be deemed to impose tax upon such
18services in the preparation for sale of new items which are
19excluded from the tax under clause (26) of section 204, or upon
20diaper service: And provided further, That the term "use" shall
21not include--

22* * *

23(B) The use or consumption of tangible personal property,
24including but not limited to machinery and equipment and parts
25therefor, and supplies or the obtaining of the services
26described in subclauses (2), (3) and (4) of this clause directly
27in the operations of--

28(i) The manufacture of tangible personal property.

29(ii) Farming, dairying, agriculture, timbering, horticulture
30or floriculture when engaged in as a business enterprise. The

1term "farming" shall include the propagation and raising of
2ranch-raised furbearing animals and the propagation of game
3birds for commercial purposes by holders of propagation permits
4issued under 34 Pa.C.S. (relating to game) and the propagation
5and raising of horses to be used exclusively for commercial
6racing activities.

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* * *

12Section 2. This act shall take effect in 60 days.