2012 -- S 2971

=======

LC02605

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

____________

A N A C T

RELATING TO TAXATION - PROPERTY SUBJECT TO TAXATION

     Introduced By: Senator Maryellen Goodwin

     Date Introduced: May 17, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Section 44-3-3 of the General Laws in Chapter 44-3 entitled "Property

1-2

Subject to Taxation" is hereby amended to read as follows:

1-3

     44-3-3. Property exempt. -- The following property is exempt from taxation.

1-4

      (1) Property belonging to the state except as provided in section 44-4-4.1;

1-5

      (2) Lands ceded or belonging to the United States;

1-6

      (3) Bonds and other securities issued and exempted from taxation by the government of

1-7

the United States, or of this state;

1-8

      (4) Real estate, used exclusively for military purposes, owned by chartered or

1-9

incorporated organizations approved by the adjutant general, and composed of members of the

1-10

national guard, the naval militia, or the independent chartered military organizations;

1-11

      (5) Buildings for free public schools, buildings for religious worship, and the land upon

1-12

which they stand and immediately surrounding them, to an extent not exceeding five (5) acres so

1-13

far as the buildings and land are occupied and used exclusively for religious or educational

1-14

purposes;

1-15

      (6) Dwellings houses and the land on which they stand, not exceeding one acre in size,

1-16

or the minimum lot size for zone in which the dwelling house is located, whichever is the greater,

1-17

owned by or held in trust for any religious organization and actually used by its officiating clergy;

1-18

provided, further that in the town of Charlestown, where the property previously described in this

1-19

paragraph is exempt in total, along with dwelling houses and the land on which they stand in

1-20

Charlestown, not exceeding one acre in size, or the minimum lot size for zone in which the

2-1

dwelling house is located, whichever is the greater, owned by or held in trust for any religious

2-2

organization and actually used by its officiating clergy, or used as a convent, nunnery, or retreat

2-3

center by its religious order.

2-4

      (7) Intangible personal property owned by, or held in trust for, any religious or charitable

2-5

organization, if the principal or income is used or appropriated for religious or charitable

2-6

purposes;

2-7

      (8) Buildings and personal estate owned by any corporation used for a school, academy,

2-8

or seminary of learning, and of any incorporated public charitable institution, and the land upon

2-9

which the buildings stand and immediately surrounding them to an extent not exceeding one acre,

2-10

so far as they are used exclusively for educational purposes, but no property or estate whatever is

2-11

hereafter exempt from taxation in any case where any part of its income or profits or of the

2-12

business carried on there is divided among its owners or stockholders;

2-13

      (9) Estates, persons, and families of the president and professors for the time being of

2-14

Brown University for not more than ten thousand dollars ($ 10,000) for each officer, the officer's

2-15

estate, person, and family included, but only to the extent that any person had claimed and

2-16

utilized the exemption prior to, and for a period ending either on or after December 31, 1996;

2-17

      (10) Property especially exempt by charter unless the exemption has been waived in

2-18

whole or in part.

2-19

      (11) Lots of land exclusively for burial grounds;

2-20

      (12) Property, real and personal, held for or by an incorporated library, society, or any

2-21

free public library, or any free public library society, so far as the property is held exclusively for

2-22

library purposes, or for the aid or support of the aged poor, or poor friendless children, or the poor

2-23

generally, or for a hospital for the sick or disabled;

2-24

      (13) Real or personal estate belonging to or held in trust for the benefit of incorporated

2-25

organizations of veterans of any war in which the United States has been engaged, the parent

2-26

body of which has been incorporated by act of congress, to the extent of four hundred thousand

2-27

dollars ($ 400,000) if actually used and occupied by the association; provided, that the city

2-28

council of the city of Cranston may by ordinance exempt the real or personal estate as previously

2-29

described in this subdivision located within the city of Cranston to the extent of five hundred

2-30

thousand dollars ($500,000);

2-31

      (14) Property, real and personal, held for or by the fraternal corporation, association, or

2-32

body created to build and maintain a building or buildings for its meetings or the meetings of the

2-33

general assembly of its members, or subordinate bodies of the fraternity, and for the

2-34

accommodation of other fraternal bodies or associations, the entire net income of which real and

3-1

personal property is exclusively applied or to be used to build, furnish, and maintain an asylum or

3-2

asylums, a home or homes, a school or schools, for the free education or relief of the members of

3-3

the fraternity, or the relief, support, and care of worthy and indigent members of the fraternity,

3-4

their wives, widows, or orphans, and any fund given or held for the purpose of public education,

3-5

almshouses, and the land and buildings used in connection therewith;

3-6

      (15) Real estate and personal property of any incorporated volunteer fire engine

3-7

company or incorporated volunteer ambulance or rescue corps in active service;

3-8

      (16) The estate of any person who in the judgment of the assessors is unable from

3-9

infirmity or poverty to pay the tax; providing, that in the town of Burrillville the tax shall

3-10

constitute a lien for five (5) years on the property where the owner is entitled to the exemption. At

3-11

the expiration of five (5) years, the lien shall be abated in full. Provided, if the property is sold or

3-12

conveyed or if debt secured by the property is refinanced during the five (5) year period, the lien

3-13

immediately becomes due and payable; any person claiming the exemption aggrieved by an

3-14

adverse decision of an assessor shall appeal the decision to the local board of tax review, and

3-15

thereafter according to the provisions of section 44-5-26;

3-16

      (17) Household furniture and family stores of a housekeeper in the whole, including

3-17

clothing, bedding, and other white goods, books, and all other tangible personal property items

3-18

which are common to the normal household;

3-19

      (18) Improvements made to any real property to provide a shelter and fallout protection

3-20

from nuclear radiation, to the amount of one thousand five hundred dollars ($ 1,500); provided,

3-21

that the improvements meet applicable standards for shelter construction established from time to

3-22

time by the Rhode Island emergency management agency. The improvements are deemed to

3-23

comply with the provisions of any building code or ordinance with respect to the materials or the

3-24

methods of construction used and any shelter or its establishment is deemed to comply with the

3-25

provisions of any zoning code or ordinance;

3-26

      (19) Aircraft for which the fee required by section 1-4-6 has been paid to the tax

3-27

administrator;

3-28

      (20) Manufacturer's inventory

3-29

      (i) For the purposes of sections 44-4-10, 44-5-3, 44-5-20, and 44-5-38, a person is

3-30

deemed to be a manufacturer within a city or town within this state if that person uses any

3-31

premises, room, or place in it primarily for the purpose of transforming raw materials into a

3-32

finished product for trade through any or all of the following operations: adapting, altering,

3-33

finishing, making, and ornamenting; provided, that public utilities, non-regulated power

3-34

producers commencing commercial operation by selling electricity at retail or taking title to

4-1

generating facilities on or after July 1, 1997, building and construction contractors, warehousing

4-2

operations including distribution bases or outlets of out-of-state manufacturers, and fabricating

4-3

processes incidental to warehousing or distribution of raw materials such as alteration of stock for

4-4

the convenience of a customer, are excluded from this definition.

4-5

      (ii) For the purposes of sections 44-3-3, 44-4-10, and 44-5-38, the term "manufacturer's

4-6

inventory" or any similar term means and includes the manufacturer's raw materials, the

4-7

manufacturer's work in process, and finished products manufactured by the manufacturer in this

4-8

state, and not sold, leased, or traded by the manufacturer or its title or right to possession

4-9

divested; provided, that the term does not include any finished products held by the manufacturer

4-10

in any retail store or other similar selling place operated by the manufacturer whether or not the

4-11

retail establishment is located in the same building in which the manufacturer operates the

4-12

manufacturing plant.

4-13

      (iii) For the purpose of section 44-11-2, a "manufacturer" is a person whose principal

4-14

business in this state consists of transforming raw materials into a finished product for trade

4-15

through any or all of the operations described in paragraph (i) of this subdivision. A person will

4-16

be deemed to be principally engaged if the gross receipts which that person derived from the

4-17

manufacturing operations in this state during the calendar year or fiscal year mentioned in section

4-18

44-11-1 amounted to more than fifty percent (50%) of the total gross receipts which that person

4-19

derived from all the business activities in which that person engaged in this state during the

4-20

taxable year. For the purpose of computing the percentage, gross receipts derived by a

4-21

manufacturer from the sale, lease, or rental of finished products manufactured by the

4-22

manufacturer in this state, even though the manufacturer's store or other selling place may be at a

4-23

different location from the location of the manufacturer's manufacturing plant in this state, are

4-24

deemed to have been derived from manufacturing.

4-25

      (iv) Within the meaning of the preceding paragraphs of this subdivision, the term

4-26

"manufacturer" also includes persons who are principally engaged in any of the general activities

4-27

coded and listed as establishments engaged in manufacturing in the standard industrial

4-28

classification manual prepared by the technical committee on industrial classification, office of

4-29

statistical standards, executive office of the president, United States bureau of the budget, as

4-30

revised from time to time, but eliminating as manufacturers those persons, who, because of their

4-31

limited type of manufacturing activities, are classified in the manual as falling within the trade

4-32

rather than an industrial classification of manufacturers. Among those thus eliminated, and

4-33

accordingly also excluded as manufacturers within the meaning of this paragraph, are persons

4-34

primarily engaged in selling, to the general public, products produced on the premises from which

5-1

they are sold, such as neighborhood bakeries, candy stores, ice cream parlors, shade shops, and

5-2

custom tailors, except, that a person who manufactures bakery products for sale primarily for

5-3

home delivery, or through one or more non-baking retail outlets, and whether or not retail outlets

5-4

are operated by person, is a manufacturer within the meaning of this paragraph.

5-5

      (v) The term "Person" means and includes, as appropriate, a person, partnership, or

5-6

corporation.

5-7

      (vi) The department of revenue shall provide to the local assessors any assistance that is

5-8

necessary in determining the proper application of the definitions in this subdivision.

5-9

      (21) Real and tangible personal property acquired to provide a treatment facility used

5-10

primarily to control the pollution or contamination of the waters or the air of the state, as defined

5-11

in chapter 12 of title 46 and chapter 25 of title 23, respectively, the facility having been

5-12

constructed, reconstructed, erected, installed, or acquired in furtherance of federal or state

5-13

requirements or standards for the control of water or air pollution or contamination, and certified

5-14

as approved in an order entered by the director of environmental management. The property is

5-15

exempt as long as it is operated properly in compliance with the order of approval of the director

5-16

of environmental management; provided, that any grant of the exemption by the director of

5-17

environmental management in excess of ten (10) years is approved by the city or town in which

5-18

the property is situated. This provision applies only to water and air pollution control properties

5-19

and facilities installed for the treatment of waste waters and air contaminants resulting from

5-20

industrial processing; furthermore, it applies only to water or air pollution control properties and

5-21

facilities placed in operation for the first time after April 13, 1970;

5-22

      (22) New manufacturing machinery and equipment acquired or used by a manufacturer

5-23

and purchased after December 31, 1974. Manufacturing machinery and equipment is defined as:

5-24

      (i) Machinery and equipment used exclusively in the actual manufacture or conversion

5-25

of raw materials or goods in the process of manufacture by a manufacturer as defined in

5-26

subdivision (20) of this section, and machinery, fixtures, and equipment used exclusively by a

5-27

manufacturer for research and development or for quality assurance of its manufactured products;

5-28

      (ii) Machinery and equipment which is partially used in the actual manufacture or

5-29

conversion of raw materials or goods in process of manufacture by a manufacturer as defined in

5-30

subdivision (20) of this section, and machinery, fixtures, and equipment used by a manufacturer

5-31

for research and development or for quality assurance of its manufactured products, to the extent

5-32

to which the machinery and equipment is used for the manufacturing processes, research and

5-33

development or quality assurance. In the instances where machinery and equipment is used in

5-34

both manufacturing and/or research, and development, and/or quality assurance activities and

6-1

non-manufacturing activities, the assessment on machinery and equipment is prorated by

6-2

applying the percentage of usage of the equipment for the manufacturing, research, and

6-3

development and quality assurance activity to the value of the machinery and equipment for

6-4

purposes of taxation, and the portion of the value used for manufacturing, research, and

6-5

development, and quality assurance is exempt from taxation. The burden of demonstrating this

6-6

percentage usage of machinery and equipment for manufacturing and for research, and

6-7

development and/or quality assurance of its manufactured products rests with the manufacturer;

6-8

and

6-9

      (iii) Machinery and equipment described in section 44-18-30(7) and (22) that was

6-10

purchased after July 1, 1997; provided that the city or town council of the city or town in which

6-11

the machinery and equipment is located adopts an ordinance exempting the machinery and

6-12

equipment from taxation. For purposes of this subsection, city councils and town councils of any

6-13

municipality may by ordinance wholly or partially exempt from taxation the machinery and

6-14

equipment discussed in this subsection for the period of time established in the ordinance and

6-15

may by ordinance establish the procedures for taxpayers to avail themselves of the benefit of any

6-16

exemption permitted under this section; provided, that the ordinance does not apply to any

6-17

machinery or equipment of a business, subsidiary or any affiliated business which locates or

6-18

relocates from a city or town in this state to another city or town in the state.

6-19

      (23) Precious metal bullion, meaning any elementary metal which has been put through a

6-20

process of melting or refining, and which is in a state or condition that its value depends upon its

6-21

content and not its form. The term does not include fabricated precious metal which has been

6-22

processed or manufactured for some one or more specific and customary industrial, professional,

6-23

or artistic uses;

6-24

      (24) Hydroelectric power generation equipment, which includes, but is not limited to,

6-25

turbines, generators, switchgear, controls, monitoring equipment, circuit breakers, transformers,

6-26

protective relaying, bus bars, cables, connections, trash racks, headgates, and conduits. The

6-27

hydroelectric power generation equipment must have been purchased after July 1, 1979, and

6-28

acquired or used by a person or corporation who owns or leases a dam and utilizes the equipment

6-29

to generate hydroelectric power;

6-30

      (25) Subject to authorization by formal action of the council of any city or town, any real

6-31

or personal property owned by, held in trust for, or leased to an organization incorporated under

6-32

chapter 6 of title 7, as amended, or an organization meeting the definition of "charitable trust" set

6-33

out in section 18-9-4, as amended, or an organization incorporated under the not for profits

6-34

statutes of another state or the District of Columbia, the purpose of which is the conserving of

7-1

open space, as that term is defined in chapter 36 of title 45, as amended, provided the property is

7-2

used exclusively for the purposes of the organization;

7-3

      (26) Tangible personal property, the primary function of which is the recycling, reuse, or

7-4

recovery of materials (other than precious metals, as defined in section 44-18-30(24)(ii) and (iii)),

7-5

from or the treatment of "hazardous wastes", as defined in section 23-19.1-4, where the

7-6

"hazardous wastes" are generated primarily by the same taxpayer and where the personal property

7-7

is located at, in, or adjacent to a generating facility of the taxpayer. The taxpayer may, but need

7-8

not, procure an order from the director of the department of environmental management

7-9

certifying that the tangible personal property has this function, which order effects a conclusive

7-10

presumption that the tangible personal property qualifies for the exemption under this

7-11

subdivision. If any information relating to secret processes or methods of manufacture,

7-12

production, or treatment is disclosed to the department of environmental management only to

7-13

procure an order, and is a "trade secret" as defined in section 28-21-10(b), it shall not be open to

7-14

public inspection or publicly disclosed unless disclosure is otherwise required under chapter 21 of

7-15

title 28 or chapter 24.4 of title 23;

7-16

      (27) Motorboats as defined in section 46-22-2 for which the annual fee required in

7-17

section 46-22-4 has been paid;

7-18

      (28) Real and personal property of the Providence performing arts center, a non-business

7-19

corporation as of December 31, 1986;

7-20

      (29) Tangible personal property owned by, and used exclusively for the purposes of, any

7-21

religious organization located in the city of Cranston;

7-22

      (30) Real and personal property of the Travelers Aid Society of Rhode Island, a

7-23

nonprofit corporation, the Union Mall Real Estate Corporation, and any limited partnership or

7-24

limited liability company which is formed in connection with, or to facilitate the acquisition of,

7-25

the Providence YMCA Building; and

7-26

      (31) Real and personal property of Meeting Street Center or MSC Realty, Inc., both not-

7-27

for-profit Rhode Island corporations, and any other corporation, limited partnership, or limited

7-28

liability company which is formed in connection with, or to facilitate the acquisition of, the

7-29

properties designated as the Meeting Street National Center of Excellence on Eddy Street in

7-30

Providence, Rhode Island.

7-31

      (32) The buildings, personal property and land upon which the buildings stand, located

7-32

on Pomham Island, East Providence, currently identified as Assessor's Map 211, Block 01, Parcel

7-33

001.00, which consists of approximately twenty-one thousand three hundred (21,300) square feet

7-34

and is located approximately eight hundred sixty feet (860'), more or less, from the shore, and

8-1

limited exclusively to these said buildings personal estate and land, provided that said property is

8-2

owned by a qualified 501(c)(3) organization, such as the American Lighthouse Foundation, and is

8-3

used exclusively for a lighthouse.

8-4

     (33) Real and personal property of non-profit performing and visual arts organizations,

8-5

including, without limitation, musical, theatrical, dance, museum and visual arts organizations,

8-6

provided that the organization is qualified as a tax exempt corporation under section 501(c)(3) of

8-7

the United States Internal Revenue Code.

8-8

     SECTION 2. This act shall take effect upon passage.

=======

LC02605

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - PROPERTY SUBJECT TO TAXATION

***

9-1

     This act would provide that the real and personal property of non-profit performing and

9-2

visual arts organizations that are qualified as a tax exempt corporation under section 501(c)(3) of

9-3

the United States internal revenue code would be exempt from state taxation.

9-4

     This act would take effect upon passage.

=======

LC02605

=======