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Connecticut Public Acts 1996

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Substitute House Bill No. 5700

PUBLIC ACT NO. 96-208

AN ACT CONCERNING ELIGIBILITY FOR THE PROPERTY TAX EXEMPTION FOR NEW MACHINERY AND EQUIPMENT.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (72) of section 12-81 of the general statutes, as amended by section 9 of public act 95-283, is repealed and the following is substituted in lieu thereof:

(72) (a) New machinery and equipment, as defined herein, acquired after October 1, 1990, and newly-acquired machinery and equipment, as defined herein, acquired on or after July 1, 1992, by the person claiming exemption under this subdivision, provided this exemption shall only be applicable in the five full assessment years following the assessment year in which such machinery or equipment is acquired, subject to the provisions of subparagraph (b) of this subdivision. For the purposes of this subdivision: (A) "Machinery" and "equipment" mean tangible personal property which is (i) installed in a manufacturing facility operated by a manufacturer, either five-year property or seven-year property, as those terms are defined in Section 168(e) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and the predominant use of which is for manufacturing, processing or fabricating; for research and development, including experimental or laboratory research and development, design or engineering directly related to manufacturing; for the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use or the significant overhauling or rebuilding of other products on a factory basis; for measuring or testing or for metal finishing; or (ii) used in the production of motion pictures, video and sound recordings. "Machinery" means the basic machine itself, including all of its component parts and contrivances such as belts, pulleys, shafts, moving parts, operating structures and all equipment or devices used or required to control, regulate or operate the machinery, including, without limitation, computers and data processing equipment, together with all replacement and repair parts therefor, whether purchased separately or in conjunction with a complete machine, and regardless of whether the machine or component parts thereof are assembled by the taxpayer or another party. "Equipment" means any device separate from machinery but essential to a manufacturing, processing or fabricating process. (B) "Manufacturing facility" means that portion of a plant, building or other real property improvement used for manufacturing, processing or fabricating, for research and development, including experimental or laboratory research and development, design or engineering directly related to manufacturing, for the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use or the significant overhauling or rebuilding of other products on a factory basis, for measuring or testing or for metal finishing. (C) "Manufacturing" means the activity of converting or conditioning tangible personal property by changing the form, composition, quality or character of the property for ultimate sale at retail or use in the manufacturing of a product to be ultimately sold at retail. Changing the quality of property shall include any substantial overhaul of the property that results in a significantly greater service life than such property would have had in the absence of such overhaul or with significantly greater functionality within the original service life of the property, beyond merely restoring the original functionality for the balance of the original service life. (D) "Fabricating" means to make, build, create, produce or assemble components or tangible personal property work in a new or different manner. (E) "Processing" means the physical application of the materials and labor necessary to modify or change the characteristics of tangible personal property. (F) "Measuring or testing" includes both nondestructive and destructive measuring or testing, and the alignment and calibration of machinery, equipment and tools, in the furtherance of the manufacturing, processing or fabricating of tangible personal property;

(b) Any person who on October first in any year holds title to machinery and equipment for which he desires to claim the exemption provided in this subdivision shall file with the assessor or board of assessors in the municipality in which the machinery or equipment is located, on or before the first day of November in such year, a list of such machinery or equipment together with written application claiming such exemption on a form prescribed by the Secretary of the Office of Policy and Management. SUCH APPLICATION SHALL INCLUDE THE TAXPAYER IDENTIFICATION NUMBER ASSIGNED TO THE CLAIMANT BY THE COMMISSIONER OF REVENUE SERVICES AND THE FEDERAL EMPLOYER IDENTIFICATION NUMBER ASSIGNED TO THE CLAIMANT BY THE SECRETARY OF THE TREASURY. If title to such equipment is held by a person other than the person claiming the exemption, the claimant shall include on his application information as to the portion of the total acquisition cost incurred by him, and on or before the first day of November in such year, the person holding title to such machinery and equipment shall file a list of such machinery with the assessor of the municipality in which the manufacturing facility of the claimant is located. Such person shall include on the list information as to the portion of the total acquisition cost incurred by him. Commercial or financial information in any application or list filed under this section shall not be open for public inspection, provided such information is given in confidence and is not available to the public from any other source. The provisions of this subdivision regarding the filing of lists and information shall not supersede the requirements to file tax lists under sections 12-42, 12-43, 12-57a and 12-59. In substantiation of such claim, the claimant and the person holding title to machinery and equipment for which exemption is claimed shall present to the assessor or board of assessors such supporting documentation as said secretary may require, including, but not limited to, invoices, bills of sale, contracts for lease and bills of lading. Failure to file such application in this manner and form within the time limit prescribed shall constitute a waiver of the right to such exemption for such assessment year, unless an extension of time is allowed by the Secretary of the Office of Policy and Management as set forth in section 12-81k AS AMENDED and upon payment of the required fee for late filing. If title to exempt machinery is conveyed subsequent to October first in any assessment year, entitlement to such exemption shall terminate for the next assessment year and there shall be no pro rata application of the exemption unless such machinery or equipment continues to be leased by the manufacturer who claimed and was approved for the exemption in the previous assessment year. Machinery or equipment that was exempt under this subdivision for a five-year term or a portion thereof shall not be eligible for exemption upon transfer to a business organization related to or affiliated with the seller;

(c) Any person claiming the exemption provided under this subdivision for machinery or equipment shall not be eligible to claim the exemption provided under subdivision (60) of this section or subdivision (70) of this section for the same machinery or equipment. The state and the municipality and district shall hold a security interest, as defined in subdivision (37) of section 42a-1-201, in any machinery or equipment which is exempt from taxation pursuant to this subdivision, in an amount equal to the tax revenue reimbursed or lost, as the case may be, which shall be subordinate to any purchase money security interest, as defined in section 42a-9-107. Such security interest shall be enforceable against the claimant for a period of five years after the last assessment year in which such exemption was received in any case in which said manufacturer ceases all manufacturing operations or moves its manufacturing operations entirely out of this state. A public service company, as defined in section 16-1, AS AMENDED shall not be eligible for the exemption provided under this subdivision;

(d) A CLAIM FOR PROPERTY TAX EXEMPTION UNDER THIS SUBDIVISION MAY BE DENIED BY THE ASSESSOR OR BOARD OF ASSESSORS OF A TOWN, CONSOLIDATED TOWN AND CITY OR CONSOLIDATED TOWN AND BOROUGH, WITH THE CONSENT OF THE CHIEF EXECUTIVE OFFICER THEREOF, IF THE CLAIMANT IS DELINQUENT IN A PROPERTY TAX PAYMENT TO SUCH TOWN, CONSOLIDATED TOWN AND CITY OR CONSOLIDATED TOWN AND BOROUGH, PURSUANT TO SECTION 12-146, FOR PROPERTY OWNED BY SUCH CLAIMANT. BEFORE ANY SUCH CLAIM IS DENIED, THE ASSESSOR OR BOARD OF ASSESSORS SHALL SEND WRITTEN NOTICE TO THE CLAIMANT, STATING THAT HE MAY PAY THE AMOUNT OF SUCH DELINQUENT TAX OR ENTER INTO AN AGREEMENT WITH SUCH TOWN, CONSOLIDATED TOWN AND CITY OR CONSOLIDATED TOWN AND BOROUGH FOR THE PAYMENT THEREOF, BY THE DATE SET FORTH IN SAID NOTICE, PROVIDED, SUCH DATE SHALL NOT BE LESS THAN THIRTY DAYS AFTER THE DATE OF SUCH NOTICE. FAILURE ON THE PART OF THE CLAIMANT TO PAY THE AMOUNT OF THE DELINQUENT TAX OR ENTER INTO AN AGREEMENT TO PAY THE AMOUNT THEREOF BY SAID DATE SHALL RESULT IN A DISALLOWANCE OF THE EXEMPTION BEING CLAIMED.

Sec. 2. This act shall take effect from its passage and shall be applicable to assessment years commencing on or after October 1, 1996.

Approved June 4, 1996. Effective June 4, 1996, and applicable as provided in section 2.

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