§ 54-26. Exempt sales; enumeration of exempt items of sales and service.

The following shall be exempt from taxation under the provisions of this article except that such exemptions shall not be increased by implication or similarity and the burden of proof that any person is exempt from payment of any sales tax is upon the person asserting the exemption:

(1)

United States . All direct sales to the United States government, to the state, its departments and institutions, and the political subdivisions thereof in their governmental capacities as evidenced by payment via such governmental entities' funds.

(2)

Charitable organizations . All direct sales to, but not sales by, charitable organizations in the conduct of their regular religious, charitable, and eleemosynary functions and activities. Any exempt organization which makes sales of tangible personal property to the public and which otherwise meets the definition of a retailer must have a sales tax license and collect and remit tax in the same manner as any other retailer. The fact that the merchandise sold may have been acquired by gift or donation, or that the proceeds are to be used for charitable purposes, does not make the sales exempt from tax.

(3)

Prohibited taxes . All sales that the city is prohibited from taxing under the United States or state constitution or laws.

(4)

Cigarettes . All sales of cigarettes, excluding tobacco products.

(5)

Food stamps . Food purchased with food stamps or WIC (Women, Infant & Children) vouchers.

(6)

Fuel . Motor fuel upon which there has been accrued or has been paid either the gasoline tax or special fuel tax required by state statute and which is not subject to refund.

(7)

Labor . Consideration received for labor or services sold, except those specific services defined as taxable, if such services are separately stated from the tangible personal property sold. Manufacturing or fabrication labor is not exempt.

(8)

Legal publications . The sale of legal publications as defined in state statute.

(9)

Certain construction materials . The sale of construction materials, if the purchaser of such materials presents to the retailer a building permit or other documentation acceptable to the city demonstrating that use tax on such materials has been paid or is required to be paid to the city or another municipality.

(10)

Previously taxed services . Tangible personal property or the furnishing of services, if the transaction was previously subjected to a sales or use tax, lawfully imposed on the purchaser or user by another municipality, equal to or in excess of the city's established rate. A credit shall be granted against the city's sales tax with respect to such transaction equal to the lawfully imposed local sales or use tax previously paid by the purchaser or user to the previous municipality. The amount of the credit shall not exceed the city's rate.

(11)

Returned property . The sale price of property returned by the purchaser when the full sale price including the tax levied is refunded, either in cash or by credit.

(12)

Discounts . Discounts from the original selling price, if such discount and the corresponding decrease in sales tax due are actually passed on to the consumer. An anticipated cash discount to be allowed for payment on or before a given date is not an allowable adjustment to the selling price in determining gross taxable sales on any vendor's return prior to the date when the customer actually receives the discount. Any adjustments in sale price such as allowable discounts, rebates, and credits cannot be anticipated and the tax must be based upon the original selling price unless such adjustments have actually been made prior to the filing of the return wherein such sale is reported; except that, if the price upon which the tax was computed and paid to the city by the vendor is subsequently readjusted, prior to the payment of the tax by the purchaser, a proper credit may be taken against the tax due on the next subsequent return.

(13)

Exempt sales . All sales of tangible personal property, if the following conditions exist:

a.

The sales are to persons who reside or to businesses located outside the city; and

b.

The goods are delivered to such persons at locations outside the city by common carrier or by the conveyance of the seller or by mail and such goods are used outside the city.

(14)

Public utilities . All sales of tangible personal property to a public utility doing business both within and outside the city, for use in its business outside the city, even though sale and/or delivery thereof is made within the city.

(15)

Farm equipment . All sales of farm machinery, machinery parts, livestock, poultry, and livestock and poultry feed and drugs, seeds and fertilizers to purchaser for agricultural use outside the city even though sale and/or delivery is made within the city, except that trucks of one-ton manufacturer-rated capacity or less and lawn and garden tillers, mowers and aerators are not to be considered farm machinery.

(16)

Permits . All permits, licenses, service charges, fines and assessments, for benefit or penalty, charged by and in accordance with this Code.

(17)

Personal property-residential sales . All sales of personal property, where the sale occurs at the residence of the owner, and where the property to be sold was originally purchased for use by members of the household (i.e., garage sales, yard sales); provided, however, that such sales shall not be exempt, if the owner conducts more than four two-day consecutive-day sales in any 12-month period.

(18)

Wholesales . All whole sales or sales of tangible personal property purchased for resale; provided, however, that the purchaser has a valid state or city sales and use tax license.

(19)

Manufacturing . Sales of tangible personal property to a person engaged in manufacturing or compounding for sale shall be deemed a wholesale sale when it meets all of the following conditions:

a.

The property is transformed in fact by the process of manufacture.

b.

The property becomes, by the manufacturing processes, a necessary and recognized ingredient, component and constituent part of the finished product.

c.

The physical presence of the property in the finished product is essential to the use thereof in the possession of the ultimate consumer.

d.

Additional factors to be considered are: the nature of the purchaser's contractual obligations, if any, to use, alter or consume the property to produce goods or perform services; the degree to which the items in question are essential to the purchaser's performance of those obligations; the degree to which the purchaser controls the manner in which the items are used, altered or consumed prior to their transfer to third parties; and the degree to which the form, character or composition of the items when transferred to third parties differs from the form, character or composition of the items at the time of their initial purchases.

(20)

Containers . Sales of tangible personal property for use as containers, labels and shipping cases to a person engaged in manufacturing or compounding for sale shall be deemed a wholesale sale when it meets all of the following conditions:

a.

The property is used by the manufacturer or compounded to contain or label the finished product so manufactured or compounded;

b.

The property is sold by the manufacturer or compounder along with and as a part of the finished product; and

c.

The property is not returnable to the manufacturer.

(21)

Exchanges/trade-ins . The fair market value of any exchanged or traded-in property which is to be resold thereafter in the usual course of the retailer's business, if included in the full resale price of an article sold.

(22)

Gas/electricity . Natural gas and/or electricity used for industrial purposes in the processing or manufacturing of good or commodities or substances.

(23)

Drugs . All sales of prescription drugs for humans and animals, all sales of insulin in all its forms dispensed pursuant to the direction of a licensed physician, and all sales of prosthetic devices for humans and animals.

(24)

Certain medical supplies . Medical supplies and medical equipment including all medical supplies and medical equipment which are purchased by, or for use and/or consumption within, a charitable or not-for-profit health care facility.

(25)

Nonresident supplies . Sales of automotive vehicles to nonresidents of the city for registration outside of the city.

(26)

Returns . Exemptions allowed on return. Retailers or vendors shall not have to remit sales tax reported on their returns for deductions from gross sales. If included in reported gross sales, the following are deductible from gross sales:

a.

Refunds . The price of tangible personal property or taxable services returned by a purchaser when the price and the sales tax collected are refunded in cash or by credit.

b.

Bad debts . Amounts previously included in gross sales and related sales tax remitted to the city, which are determined to be uncollectible amounts by the vendor, may be included as bad debts. Only vendors using the accrual basis of accounting from gross sales may claim a bad debt deduction.

c.

Interest and finance charges . The amount of interest or finance charges on credit extended in connection with any sale, if the interest or finance charges are separately stated from the price and included in gross sales on previously filed returns.

(27)

Certain tools. Sales of manufacturing equipment, machine tools and specific processing equipment and repair parts and replacements in excess of $500.00, where such equipment is used to manufacture or process tangible personal property.

(Code 1985, § 3-3-40; Ord. No. 18-10, § 2, 7-17-2018)