PRIOR PRINTER'S NO. 1546
PRINTER'S NO. 1696
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1041
Session of
2020
INTRODUCED BY K. WARD, LANGERHOLC, PITTMAN, REGAN, BARTOLOTTA,
SCAVELLO, MASTRIANO, J. WARD, STEFANO, ARGALL, BAKER AND
AUMENT, FEBRUARY 19, 2020
SENATOR HUTCHINSON, FINANCE, AS AMENDED, MAY 11, 2020
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in sales and use tax, further providing for
definitions EXCLUSIONS FROM TAX.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 201(k)(8) and (o)(4) of the act of March
4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, are
amended to read:
Section 201. Definitions.--The following words, terms and
phrases when used in this Article II shall have the meaning
ascribed to them in this section, except where the context
clearly indicates a different meaning:
* * *
(k) "Sale at retail."
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(8) Any retention of possession, custody or a license to use
or consume tangible personal property or any further obtaining
of services described in subclauses (2), (3) and (4) of this
clause pursuant to a rental or service contract or other
arrangement (other than as security).
The term "sale at retail" shall not include (i) any such
transfer of tangible personal property or rendition of services
for the purpose of resale, or (ii) such rendition of services or
the transfer of tangible personal property including, but not
limited to, machinery and equipment and parts therefor and
supplies to be used or consumed by the purchaser directly in the
operations of--
(A) The manufacture of tangible personal property.
(B) Farming, dairying, agriculture, timbering, horticulture
or floriculture when engaged in as a business enterprise. The
term "farming" shall include the propagation and raising of
ranch raised fur-bearing animals and the propagation of game
birds for commercial purposes by holders of propagation permits
issued under 34 Pa.C.S. (relating to game) and the propagation
and raising of horses to be used exclusively for commercial
racing activities. The term "farming" shall further include the
direct or incidental use of a "multipurpose agricultural
vehicle," as defined in 75 Pa.C.S. § 102 (relating to
definitions), in accordance with the provisions of 75 Pa.C.S. §
1302(17) (relating to vehicles exempt from registration)
operated for the benefit of or pursuant to the operation of a
farm owned or operated by the owner of the vehicle or a business
whose enterprises and activities are considered part of farming
under this subclause. For the purpose of this subclause, the
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"direct use" of a multipurpose agricultural vehicle shall
include repairing and maintaining buildings (including houses,
garages, barns, stables, greenhouses, mushroom houses and
storehouses), fences and stanchions permanently affixed to real
estate, as well as prefarming and postfarming activities as
defined in 61 Pa. Code § 32.33(a)(3)(iii) (relating to farming).
The term "timbering" shall include:
(1) The business of producing or harvesting trees from
forests, woodlots or tree farms for the purpose of the
commercial production of wood, paper or energy products derived
from wood by a company primarily engaged in the business of
harvesting trees.
(2) All operations prior to the transport of the harvested
product necessary for the removal of timber or forest products
from the site, in-field processing of trees into logs or chips,
complying with environmental protection and safety requirements
applicable to the harvesting of forest products, loading of
forest products onto highway vehicles for transport to storage
or processing facilities and postharvesting site reclamation,
including those activities necessary to improve timber growth or
ensure natural or direct reforestation of the site. The term
shall not include the harvesting of trees for clearing land for
access roads.
(C) The producing, delivering or rendering of a public
utility service, or in constructing, reconstructing, remodeling,
repairing or maintaining the facilities which are directly used
in producing, delivering or rendering such service.
(D) Processing as defined in clause (d) of this section.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to any vehicle required to be registered under
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The Vehicle Code, except those vehicles used directly by a
public utility engaged in business as a common carrier; to
maintenance facilities; or to materials, supplies or equipment
to be used or consumed in the construction, reconstruction,
remodeling, repair or maintenance of real estate other than
directly used machinery, equipment, parts or foundations
therefor that may be affixed to such real estate.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to tangible personal property or services to be
used or consumed in managerial sales or other nonoperational
activities, nor to the purchase or use of tangible personal
property or services by any person other than the person
directly using the same in the operations described in
paragraphs (A), (B), (C) and (D) herein.
The exclusion provided in paragraph (C) shall not apply to
(i) construction materials, supplies or equipment used to
construct, reconstruct, remodel, repair or maintain facilities
not used directly by the purchaser in the production, delivering
or rendition of public utility service, (ii) construction
materials, supplies or equipment used to construct, reconstruct,
remodel, repair or maintain a building, road or similar
structure, or (iii) tools and equipment used but not installed
in the maintenance of facilities used directly in the
production, delivering or rendition of a public utility service.
The exclusions provided in paragraphs (A), (B), (C) and (D)
shall not apply to the services enumerated in clauses (k)(11)
through (18) and (w) through (kk), except that the exclusion
provided in this subclause for farming, dairying and agriculture
shall apply to the service enumerated in clause (z).
* * *
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(o) "Use."
* * *
(4) The obtaining by a purchaser of the service of
repairing, altering, mending, pressing, fitting, dyeing,
laundering, drycleaning or cleaning tangible personal property
other than wearing apparel or shoes or applying or installing
tangible personal property as a repair or replacement part of
other tangible personal property other than wearing apparel or
shoes, whether or not the services are performed directly or by
any means other than by means of coin-operated self-service
laundry equipment for wearing apparel or household goods, and
whether or not any tangible personal property is transferred to
the purchaser in conjunction therewith, except such services as
are obtained in the construction, reconstruction, remodeling,
repair or maintenance of real estate: Provided, however, That
this subclause shall not be deemed to impose tax upon such
services in the preparation for sale of new items which are
excluded from the tax under clause (26) of section 204, or upon
diaper service: And provided further, That the term "use" shall
not include--
* * *
(B) The use or consumption of tangible personal property,
including but not limited to machinery and equipment and parts
therefor, and supplies or the obtaining of the services
described in subclauses (2), (3) and (4) of this clause directly
in the operations of--
(i) The manufacture of tangible personal property.
(ii) Farming, dairying, agriculture, timbering, horticulture
or floriculture when engaged in as a business enterprise. The
term "farming" shall include the propagation and raising of
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ranch-raised furbearing animals and the propagation of game
birds for commercial purposes by holders of propagation permits
issued under 34 Pa.C.S. (relating to game) and the propagation
and raising of horses to be used exclusively for commercial
racing activities. The term "farming" shall further include the
direct or incidental use of a "multipurpose agricultural
vehicle," as defined in 75 Pa.C.S. § 102, in accordance with the
provisions of 75 Pa.C.S. § 1302(17) operated for the benefit of
or pursuant to the operation of a farm owned or operated by the
owner of the vehicle or a business whose enterprises and
activities are considered part of farming under this subclause.
For the purpose of this subclause, the "direct use" of a
multipurpose agricultural vehicle shall include repairing and
maintaining buildings (including houses, garages, barns,
stables, greenhouses, mushroom houses and storehouses), fences
and stanchions permanently affixed to real estate, as well as
prefarming and postfarming activities as defined in 61 Pa. Code
§ 32.33(a)(3)(iii). The term "timbering" shall include:
(1) The business of producing or harvesting trees from
forests, woodlots or tree farms for the purpose of the
commercial production of wood, paper or energy products derived
from wood by a company primarily engaged in the business of
harvesting trees.
(2) All operations prior to the transport of the harvested
product necessary for the removal of timber or forest products
from the site, in-field processing of trees into logs or chips,
complying with environmental protection and safety requirements
applicable to the harvesting of forest products, loading of
forest products onto highway vehicles for transport to storage
or processing facilities and postharvesting site reclamation,
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including those activities necessary to improve timber growth or
ensure natural or direct reforestation of the site. The term
shall not include the harvesting of trees for clearing land for
access roads.
(iii) The producing, delivering or rendering of a public
utility service, or in constructing, reconstructing, remodeling,
repairing or maintaining the facilities which are directly used
in producing, delivering or rendering such service.
(iv) Processing as defined in subclause (d) of this section.
The exclusions provided in subparagraphs (i), (ii), (iii) and
(iv) shall not apply to any vehicle required to be registered
under The Vehicle Code except those vehicles directly used by a
public utility engaged in the business as a common carrier; to
maintenance facilities; or to materials, supplies or equipment
to be used or consumed in the construction, reconstruction,
remodeling, repair or maintenance of real estate other than
directly used machinery, equipment, parts or foundations
therefor that may be affixed to such real estate. The exclusions
provided in subparagraphs (i), (ii), (iii) and (iv) shall not
apply to tangible personal property or services to be used or
consumed in managerial sales or other nonoperational activities,
nor to the purchase or use of tangible personal property or
services by any person other than the person directly using the
same in the operations described in subparagraphs (i), (ii),
(iii) and (iv).
The exclusion provided in subparagraph (iii) shall not apply
to (A) construction materials, supplies or equipment used to
construct, reconstruct, remodel, repair or maintain facilities
not used directly by the purchaser in the production, delivering
or rendition of public utility service or (B) tools and
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equipment used but not installed in the maintenance of
facilities used directly in the production, delivering or
rendition of a public utility service.
The exclusion provided in subparagraphs (i), (ii), (iii) and
(iv) shall not apply to the services enumerated in clauses (o)
(9) through (16) and (w) through (kk), except that the exclusion
provided in subparagraph (ii) for farming, dairying and
agriculture shall apply to the service enumerated in clause (z).
* * *
SECTION 1. SECTION 204 OF THE ACT OF MARCH 4, 1971 (P.L.6,
NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED BY
ADDING A PARAGRAPH TO READ:
SECTION 204. EXCLUSIONS FROM TAX.--THE TAX IMPOSED BY
SECTION 202 SHALL NOT BE IMPOSED UPON ANY OF THE FOLLOWING:
* * *
(74) THE SALE AT RETAIL OR USE OF A "MULTIPURPOSE
AGRICULTURAL VEHICLE," AS DEFINED IN 75 PA.C.S. § 102 (RELATING
TO DEFINITIONS), IN ACCORDANCE WITH 75 PA.C.S. § 1302(17)
(RELATING TO VEHICLES EXEMPT FROM REGISTRATION) OPERATED FOR THE
BENEFIT OF OR PURSUANT TO THE OPERATION OF A FARM OWNED OR
OPERATED BY THE OWNER OF THE VEHICLE OR A BUSINESS WHOSE
ENTERPRISES AND ACTIVITIES ARE CONSIDERED PART OF FARMING. FOR
THE PURPOSE OF THIS SUBSECTION, THE USE OF A MULTIPURPOSE
AGRICULTURAL VEHICLE IN FARMING INCLUDES REPAIRING AND
MAINTAINING BUILDINGS, INCLUDING HOUSES, GARAGES, BARNS,
STABLES, GREENHOUSES, MUSHROOM HOUSES AND STOREHOUSES, FENCES
AND STANCHIONS PERMANENTLY AFFIXED TO REAL ESTATE, AS WELL AS
TRANSPORTING FARMING PERSONNEL, COLLECTING, CONVEYING OR
TRANSPORTING PROPERTY TO BE USED IN FARMING, AND TRANSPORTING OR
CONVEYING THE FARM PRODUCT AFTER THE FINAL FARMING OPERATION
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WHICH INCLUDES BUT DOES NOT EXTEND BEYOND THE OPERATION OF
PACKAGING FOR THE ULTIMATE CONSUMER AND STORAGE.
Section 2. This act shall take effect in 60 days.
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