(1) (a) The following
shall be exempt from taxation under the provisions of part 1 of this article:
(I) (Deleted by amendment, L. 2004, p. 1022, � 2, effective July 1, 2004.)
(II) Except as allowed in section 39-30-106, on or after July 1, 1996,
purchases of machinery or machine tools, or parts thereof, in excess of five hundred
dollars to be used in Colorado directly and predominantly in manufacturing tangible
personal property, for sale or profit, including any machinery or machine tools
purchased by a business listed in the inventory prepared by the department of
public health and environment pursuant to section 30-20-122 (1)(a)(V), C.R.S.; and
(III) (Deleted by amendment, L. 2008, p. 1323, � 8, effective May 27, 2008.)
(IV) Purchases of machinery and machine tools, or parts thereof, used in the
production of electricity in a facility for which a long-term power purchase
agreement was fully executed between February 5, 2001, and November 7, 2006,
whether or not such purchases are capitalized or expensed.
(b) A parent corporation and all closely held subsidiary corporations, as
defined in section 39-26-102 (10)(k), shall be considered one person for the
purposes of this section and, as a group, shall be subject to the provisions of
paragraph (a) of this subsection (1).
(c) As used in this subsection (1):
(I) Long-term power purchase agreement means an agreement executed
between one or more independent power producers and a provider of retail electric
service for a term of no less than ten years, pursuant to which the independent
power producer or producers agree to sell all of the production offered for sale
from a particular power generation facility for a specified price over a specified
term.
(II) Machinery means any apparatus consisting of interrelated parts used to
produce an article of tangible personal property. The term includes both the basic
unit and any adjunct or attachment necessary for the basic unit to accomplish its
intended function.
(III) Manufacturing means the operation of producing a new product,
article, substance, or commodity different from and having a distinctive name,
character, or use from raw or prepared materials, including the processing of
recovered materials.
(III.5) (A) Recovered materials means those materials that have been
separated, diverted, or removed from the waste stream for the purpose of
remanufacturing, reuse, or recycling or, as allowed by subsection (1)(c)(III.6) of this
section, those materials that have been derived from scrap metal or end-of-life-cycle metals for remanufacturing, reuse, or recycling into new metal stock that
meets applicable standards for metal commodities sales.
(B) As used in this subsection (1)(c)(III.5), applicable standards means
standards for recycled commodities recognized by the institute of scrap recycling
industries.
(III.6) Scrap metal processor means any person who is engaged in the
business of processing scrap metals who, from a fixed location, utilizes machinery
and equipment for manufacturing ferrous and nonferrous metallic scrap into
prepared grades and whose principal product is metallic scrap. The following items
are exempt when purchased by a scrap metal processor and used in manufacturing
prepared grade recycled metals: Mobile metal shears, stationary metal shears,
metal shredders, conveyors used to move metal scrap or stock, loaders utilized to
load metal scrap or stock, bailers to bundle metal stock, material handlers utilized
for metal scrap or metal stock, excavators, magnets, grapples and torches utilized
to break down metal scrap, and all other equipment directly used predominantly in
the manufacturing of commodity grade recycled metals.
(IV) Specified price means a price set by a long-term power purchase
agreement that is not dependent on either the cost of production or the market
price of electricity; except that a specified price may provide for a percentage
increase over time so long as the percentage increase is specified in the original
long-term power purchase agreement and is also not dependent on either the cost
of production or the market price of electricity.
(d) For purposes of this subsection (1), direct use in manufacturing is deemed
to begin for items normally manufactured from inventoried raw material at the
point at which raw material is moved from plant inventory on a contiguous plant site
and to end at a point at which manufacturing has altered the raw material to its
completed form, including packaging, if required. Machinery used during the
manufacturing process to move material from one direct production step to another
in a continuous flow and machinery used in testing during the manufacturing
process is deemed to be directly used in manufacturing.
(e) In order to qualify for the exemption provided in this subsection (1), a
purchase shall be of such nature that it would have qualified for the investment tax
credit against federal income tax as was provided by section 38 of the federal
Internal Revenue Code of 1954, as amended.
(f) An exemption may not be claimed under this section for sales tax paid in
another state that is credited against Colorado sales tax or use tax or both.
(g) Unless the department of revenue determines pursuant to section 39-26-730 (2) that the declaration can be consolidated with another form or eliminated, to
receive an exemption under this subsection (1), a declaration of entitlement shall be
filed by the purchaser with the vendor of the machinery or machine tools, or parts
thereof, and with the executive director of the department.
(2) Effective July 1, 1979, the storage, use, or consumption of machinery or
machine tools, or parts thereof, exempt from sales tax by subsection (1) of this
section shall be exempt from taxation under the provisions of part 2 of this article.