First Regular Session Seventieth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 15-0275.01 Gregg Fraser x4325 HOUSE BILL 15-1206 HOUSE SPONSORSHIP Singer, SENATE SPONSORSHIP (None), House Committees Senate Committees Business Affairs and Labor Finance A BILL FOR AN ACT Concerning a refund of state sales and use taxes paid upon machinery or equipment used in the recycling process. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) For each of the calendar years 2015 through 2019, the bill allows a taxpayer to apply for a refund of any state sales tax or use tax paid for machinery or equipment used directly and primarily in the recycling or reprocessing of waste products. The bill specifies the types of machinery or equipment to which the refund applies and specifies procedures for applying to the department of revenue to receive the refund. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. (1) The general assembly hereby finds and declares that: (a) Most machinery and equipment used in the traditional manufacturing process is currently exempt from the state sales and use tax; (b) Because recycling and reprocessing waste products use different methods to acquire, process, and transport needed materials, much of the machinery and equipment used in the recycling and reprocessing industry does not receive the same sales and use tax treatment as other equipment used in traditional manufacturing; and (c) The intended purpose of the tax refund created in this section is to: (I) Treat machinery and equipment used in the recycling and reprocessing of waste products the same as machinery and equipment used in the traditional manufacturing process for state sales and use tax purposes; (II) Preserve and create new jobs in Colorado in the recycling and reprocessing industries; (III) Secure a robust and reliable source of local materials and supplies for recycled materials processors and manufacturers in the state; (IV) Ensure that recyclable materials are recycled in the state rather than shipped to other states or countries for remanufacturing; (V) Develop the recycled materials processing and manufacturing industries in the state to provide additional economic benefits to the state that are currently being lost to other states; and (VI) Encourage the diversion of additional useful recyclable materials from landfill sites in the state. SECTION 2. In Colorado Revised Statutes, add 39-26-729 as follows: 39-26-729. Refund for recycling or reprocessing of waste products - definition - repeal. (1) For each calendar year commencing on or after January 1, 2015, but prior to January 1, 2020, a taxpayer engaged in the business of recycling or reprocessing waste products is allowed to claim a refund of all state sales and use taxes the taxpayer pays pursuant to parts 1 and 2 of this article upon the storage, use, consumption, rental, or sale of any machinery or equipment used directly and primarily in the recycling or reprocessing of waste products in the state. (2) To claim the refund allowed by subsection (1) of this section, a taxpayer must submit a refund application to the department of revenue, on a form provided by the department, no earlier than January 1 and no later than April 1 of the calendar year following the calendar year in which the tax is paid. Along with the application, the taxpayer must provide proof of the state sales and use taxes paid by the taxpayer in the immediately preceding calendar year. A taxpayer must also provide any additional information with the application that the department of revenue requires by rule, which may include, without limitation, a detailed list of the machinery or equipment and uses thereof that support a claim for a refund, the name and addresses of an individual who maintains records of such information, and a statement that the taxpayer agrees to furnish records confirming such information to the department of revenue upon request. The department shall not refund any moneys to a taxpayer unless the taxpayer has complied with this subsection (2). (3) As used in this section, unless the context otherwise requires: (a) "Machinery or equipment" includes, but is not limited to, compactors, grinders, forklifts, balers, cutters, trucks, crushers, shears, end loaders, moving devices, computers, and replacement parts. "Machinery or equipment" does not include a motor vehicle as defined in section 42-1-102 (58), C.R.S. (b) (I) "Recycling" means any process by which waste or materials that would otherwise become waste are collected, separated, or processed and revised or returned for use in the form of raw materials or products, including composting. (II) "Recycling" does not mean: (A) Any form of energy reprocessing or energy recycling; (B) The use or production of alternative daily cover used at a landfill site; (C) The beneficial use of solid wastes, including the processing of biosolids and activities regulated under section 25-8-205 (1) (e), C.R.S.; (D) Waste grease recycling; (E) Waste tire collection or processing; (F) A process that consists primarily of collecting and processing scrap automobiles, scrap appliances, or other processed scrap metal, unprocessed home scrap metal, unprocessed prompt scrap metal, and obsolete scrap metal; (G) The collection and processing of shredded circuit boards; (H) Recycling hazardous waste and household hazardous waste; (I) Household hazardous waste roundup events, community cleanup events, and other one-time or occasional collection events where yard waste and other recyclable materials are accepted for drop-off by private citizens for cleanup events; or (J) Industrial recycling operations. (4) This section is repealed, effective January 1, 2021. SECTION 3. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 5, 2015, if adjournment sine die is on May 6, 2015); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2016 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.