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HomeMy WebLinkAbout151 - 10/17/2006 - CONTINUING AND MODIFYING A MANUFACTURING EQUIPMENT USE TAX REBATE PROGRAM FOR FORT COLLINS MANUFACT ORDINANCE NO. 151, 2006 OF THE COUNCIL OF THE CITY OF FORT COLLINS CONTINUING AND MODIFYING A MANUFACTURING EQUIPMENT USE TAX REBATE PROGRAM FOR FORT COLLINS MANUFACTURERS WHEREAS, by the passage of Ordinance No. 029, 1996, the City Council authorized a Temporary Manufacturing Equipment Use Tax Rebate Program (the "Rebate Program"); and WHEREAS, the Rebate Program was subsequently renewed for each succeeding calendar year through 2001; and WHEREAS, the Rebate Program was not in effect for the year 2002, so that there was no 2003 rebate of taxes received by the City in 2002; and WHEREAS, the Rebate Program was re-authorized for calendar years 2003 and 2004; and WHEREAS, it is the intent of the City Council to modify the Rebate Program for taxes received by the City in 2005 in order to incorporate administrative and program scope changes that have been recommended by City staff, and to continue said program as described in Exhibit "A", attached hereto and incorporated herein by this reference; and WHEREAS, Council seeks to continue the Rebate Program as an ongoing program as a means of encouraging business, and particularly manufacturing businesses, within the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City of Fort Collins Manufacturing Equipment Use Tax Rebate Program, as described and previously approved by the Council by Ordinance No. 029, 1996, and as modified by the Council by Ordinance No. 030, 1999, is in the best interests of the City. Section 2. That the Council hereby approves the Rebate Program as shown on Exhibit "A" for taxes paid in calendar year 2005 (for rebates to be paid in 2006). Section 3. That the City Manager shall bring before Council in 2007 an amendment to the Code of the City of Fort Collins codifying the Rebate Program. Introduced, considered favorably on first reading, and ordered published this 3rd day of October, A.D. 2006, and to be presented for final passage on th day of October, A.D. 2006. Mayor ATTEST: City Clerk Passed and adopted on final reading on the 17th day of ober, A.D. 2006. W��;� Mayo ATTEST: o City Clerk EXHIBIT"A" A GUIDE TO THE MANUFACTURING EQUIPMENT USE TAX REBATE PROGRAM City of Fort Collins purchasers of qualifying manufacturing equipment can apply directly to the City of Fort Collins Finance Department for a refund of use tax paid to the City. The 3% use tax must have been paid in full to the City of Fort Collins prior to the request for the refund. The taxpayer will be responsible for providing proof that the use tax was paid. Sales taxes paid directly to vendors are not eligible for the rebate. Sales or use taxes paid to another taxing jurisdiction for purchases of manufacturing equipment are not eligible for the rebate. Companies licensed with the City of Fort Collins and classified as"manufacturers"under the Standard Industrial Code (SIC) will be notified of the rebate program. This program is temporary and may be terminated at anytime by the City Council. WHO QUALIFIES? Manufacturers, anu acturers, who in an industrial setting, produce a new product, article, substance or commodity that is different from and has a distinctive name, character or use from the raw or prepared materials used to manufacture the product. WHO DOES NOT QUALIFY? Companies that do not directly manufacture new products will not qualify for the rebate program. Examples of such companies include: publishers, ready-mix concrete producers, loggers, mining operations,farmers, construction contractors and wood preservers. Additionally, the following processing is not considered to be manufacturing for the purposes of this program: electroplating, plating, metal heat treating or polishing, lapidary work, fabrication of signs and advertising displays, milk bottling and pasteurizing, typesetting, engraving, plate printing, preparing electrotyping and stereotype plates. Manufacturing shall not include product research, development and testing. ADDITIONAL QUALIFICATIONS: Only purchases of manufacturing machinery to be used in the City of Fort Collins directly and exclusively in the manufacture of tangible personal property, for sale or profit, are eligible for the rebate. The firm applying for the rebate must certify compliance with all Federal, State and local laws and regulations for the manufacturing facility located in Fort Collins. Firms must be current with all payments to the City of Fort Collins and in compliance with any contractual agreements with the City. WHAT QUALIFIES AS MANUFACTURING EQUIPMENT? Machinery and equipment that qualifies for the manufacturing use tax rebate must meet all of the following criteria: • Be tangible personal property when purchased. • Be necessary, essential, and used directly in the manufacturing of tangible personal property to be sold. 1 WHAT DOES NOT QUALIFY? Tangible personal property will not qualify for the manufacturing rebate if it meets these conditions: • Taxable items used in any activity other than the actual manufacturing process; • Items that are merely useful or incidental to the operation. • Any items that are discovered during the course of a sales and use tax audit that may have been eligible for the rebate at the time of purchase, are not eligible for the rebate. Examples of items that do not quality for the rebate(not all inclusive): • Machinery and equipment used in intraplant transportation (i.e. forklift, conveyors, and overhead cranes). • Machinery and equipment used to repair tangible personal property belonging to the taxpayer's customer. • Repair labor. • Leased or rented machinery. • Improvements to real property. • Special foundations needed for machinery. • Electrical wiring, electrical switches or plumbing that is incorporated into real property. • Office equipment and supplies. • Climate control equipment. • Research and development equipment. • Equipment or supplies used in sales or distribution activities. • Equipment used to maintain equipment and other manufacturing support items. • Hand tools. • Used manufacturing equipment purchased when a business is acquired through sale or transfer of title or possession. HOW DOES THE REBATE WORK? The following tiered rebate schedule will be used to determine the amount of rebate to be granted: Cost of Manufacturing Use Tax Rate Use Tax Rebate Maximum Equipment Paid Percentage Cumulative Rebate $0 to $5,000,000 3.00% 1.50% $75,000 $5,000,001 to $15,000,000 3.00% 1.00% $175,000 $15,000,001 to $50,000,000 3.00% 1.00% $525,000 $50,000,001 and over 3.00% 1.00% $2,400,000 Total Maximum Rebate $2 400 000 The maximum rebate given to any one company for purchases of manufacturing equipment will be $2,400,000. 2 HOW DOES A COMPANY APPLY FOR THE REBATE? The City's Finance Department will notify companies who are listed as "manufacturer's" under the SIC classification. Once notified, companies must do the following: 1. Complete and submit a Manufacturing Equipment Use Tax Rebate Application. 2. Submit a listing of manufacturing equipment purchased that includes the following information: a. Invoice number b. Invoice date c. Vendor name d. Description of machinery purchased e. Intended use of the machinery I. Date use tax was paid to the City of Fort Collins 3. Companies are not required to submit copies of the invoices for which the rebate is requested. However, in the event that there are questions regarding the eligibility of equipment, supporting documentation, including invoice copies, will be required. Forequipment urchased in 2005 rebate applications n p and supporting documentation are due no later than December 31, 2006. The right of any company to apply for a rebate under this program is not assignable. An application for rebate must be made by the company that paid the tax to the City of Fort Collins. Applications may be subject to audit as provided in Chapter 25 of the Code of the City of Fort Collins. WHERE DO I SEND THE REBATE APPLICATION? Send rebate applications to: City of Fort Collins Finance Department Attn: Jeremy Reese P.O. Box 580 Fort Collins, CO 80522-0580 WHAT IF A REBATE IS DENIED? If a rebate is reduced or denied, the applicant may petition the Financial Officer for an administrative hearing. Appeals must be submitted within twenty (20) days after the City's decision. The Financial Officer will notify the applicant of the time and location of the hearing. All hearings will be held in Fort Collins. WHERE DO I CALL WITH QUESTIONS? Call Jeremy Reese at(970)221-6626 with specific questions regarding the Temporary Manufacturing Use Tax Rebate Program. For general questions regarding sales and use tax, please call the Sales Tax Office at(970) 221-6780. 3