HF 3687

as introduced - 86th Legislature (2009 - 2010) Posted on 03/17/2010 10:42am

A bill for an act
relating to taxation; sales; clarifying that lodging includes certain services;
clarifying nexus standards; amending Minnesota Statutes 2008, sections
297A.61, subdivisions 3, 7, by adding subdivisions; 297A.66, by adding a
subdivision; 297A.68, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2008, section 297A.61, subdivision 3, is amended to
read:

Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include, but are not limited
to, each of the transactions listed in this subdivision.

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of tangible personal property, whether
absolutely or conditionally, for a consideration in money or by exchange or barter; and

(2) the leasing of or the granting of a license to use or consume, for a consideration
in money or by exchange or barter, tangible personal property, other than a manufactured
home used for residential purposes for a continuous period of 30 days or more.

(c) Sale and purchase include the production, fabrication, printing, or processing of
tangible personal property for a consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication, printing, or processing.

(d) Sale and purchase include the preparing for a consideration of food.
Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
to, the following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy;

(4) dietary supplements; and

(5) all food sold through vending machines.

(e) A sale and a purchase includes the furnishing for a consideration of electricity,
gas, water, or steam for use or consumption within this state.

(f) A sale and a purchase includes the transfer for a consideration of prewritten
computer software whether delivered electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a consideration of the following
services:

(1) the privilege of admission to places of amusement, recreational areas, or athletic
events, and the making available of amusement devices, tanning facilities, reducing
salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities;

(2) lodging and related services by a hotel, rooming house, resort, campground,
motel, or trailer camp, including furnishing the guest of the facility with access to
telecommunication services, and the granting of any similar license to use real property in
a specific facility, other than the renting or leasing of it for a continuous period of 30 days
or more under an enforceable written agreement that may not be terminated without prior
notice new text begin and including accommodations intermediary services provided in connection with
other services provided under this clause new text end ;

(3) nonresidential parking services, whether on a contractual, hourly, or other
periodic basis, except for parking at a meter;

(4) the granting of membership in a club, association, or other organization if:

(i) the club, association, or other organization makes available for the use of its
members sports and athletic facilities, without regard to whether a separate charge is
assessed for use of the facilities; and

(ii) use of the sports and athletic facility is not made available to the general public
on the same basis as it is made available to members.

Granting of membership means both onetime initiation fees and periodic membership
dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
swimming pools; and other similar athletic or sports facilities;

(5) delivery of aggregate materials by a third party, excluding delivery of aggregate
material used in road construction, and delivery of concrete block by a third party if
the delivery would be subject to the sales tax if provided by the seller of the concrete
block; and

(6) services as provided in this clause:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services
provided by coin operated facilities operated by the customer, and rustproofing,
undercoating, and towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting services and
pest control and exterminating services;

(iv) detective, security, burglar, fire alarm, and armored car services; but not
including services performed within the jurisdiction they serve by off-duty licensed peace
officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
organization for monitoring and electronic surveillance of persons placed on in-home
detention pursuant to court order or under the direction of the Minnesota Department
of Corrections;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
public utility lines. Services performed under a construction contract for the installation of
shrubbery, plants, sod, trees, bushes, and similar items are not taxable;

(vii) massages, except when provided by a licensed health care facility or
professional or upon written referral from a licensed health care facility or professional for
treatment of illness, injury, or disease; and

(viii) the furnishing of lodging, board, and care services for animals in kennels and
other similar arrangements, but excluding veterinary and horse boarding services.

In applying the provisions of this chapter, the terms "tangible personal property"
and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
and the provision of these taxable services, unless specifically provided otherwise.
Services performed by an employee for an employer are not taxable. Services performed
by a partnership or association for another partnership or association are not taxable if
one of the entities owns or controls more than 80 percent of the voting power of the
equity interest in the other entity. Services performed between members of an affiliated
group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
group of corporations" means those entities that would be classified as members of an
affiliated group as defined under United States Code, title 26, section 1504, disregarding
the exclusions in section 1504(b).

For purposes of clause (5), "road construction" means construction of (1) public
roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
metropolitan area up to the point of the emergency response location sign.

(h) A sale and a purchase includes the furnishing for a consideration of tangible
personal property or taxable services by the United States or any of its agencies or
instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
subdivisions.

(i) A sale and a purchase includes the furnishing for a consideration of
telecommunications services, ancillary services associated with telecommunication
services, cable television services, direct satellite services, and ring tones.
Telecommunication services include, but are not limited to, the following services,
as defined in section 297A.669: air-to-ground radiotelephone service, mobile
telecommunication service, postpaid calling service, prepaid calling service, prepaid
wireless calling service, and private communication services. The services in this
paragraph are taxed to the extent allowed under federal law.

(j) A sale and a purchase includes the furnishing for a consideration of installation if
the installation charges would be subject to the sales tax if the installation were provided
by the seller of the item being installed.

(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
65B.29, subdivision 1, clause (1).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and confirms the interpretation of the legislature that the original legislative intent of
the tax on lodging and related services applied to the full price and charges paid by the
final consumer for the occupancy, including any reservation or similar ancillary services
that are part of the transaction.
new text end

Sec. 2.

Minnesota Statutes 2008, section 297A.61, subdivision 7, is amended to read:

Subd. 7.

Sales price.

(a) "Sales price" means the measure subject to sales tax, and
means the total amount of consideration, including cash, credit, personal property, and
services, for which personal property or services are sold, leased, or rented, valued in
money, whether received in money or otherwise, without any deduction for the following:

(1) the seller's cost of the property sold;

(2) the cost of materials used, labor or service cost, interest, losses, all costs of
transportation to the seller, all taxes imposed on the seller, and any other expenses of
the seller;

(3) charges by the seller for any services necessary to complete the sale, other than
delivery and installation charges;

(4) delivery charges, except the percentage of the delivery charge allocated to
delivery of tax exempt property, when the delivery charge is allocated by using either (i) a
percentage based on the total sales price of the taxable property compared to the total sales
price of all property in the shipment, or (ii) a percentage based on the total weight of the
taxable property compared to the total weight of all property in the shipment; and

(5) installation charges.

(b) Sales price does not include:

(1) discounts, including cash, terms, or coupons, that are not reimbursed by a third
party and that are allowed by the seller and taken by a purchaser on a sale;

(2) interest, financing, and carrying charges from credit extended on the sale of
personal property or services, if the amount is separately stated on the invoice, bill of sale,
or similar document given to the purchaser; and

(3) any taxes legally imposed directly on the consumer that are separately stated on
the invoice, bill of sale, or similar document given to the purchaser.

(c) Sales price includes consideration received by the seller from third parties if:

(1) the seller actually receives consideration from a party other than the purchaser
and the consideration is directly related to a price reduction or discount on the sale;

(2) the seller has an obligation to pass the price reduction or discount through to
the purchaser;

(3) the amount of the consideration attributable to the sale is fixed and determinable
by the seller at the time of the sale of the item to the purchaser; and

(4) one of the following criteria is met:

(i) the purchaser presents a coupon, certificate, or other documentation to the seller
to claim a price reduction or discount when the coupon, certificate, or documentation is
authorized, distributed, or granted by a third party with the understanding that the third
party will reimburse any seller to whom the coupon, certificate, or documentation is
presented;

(ii) the purchaser identifies himself or herself to the seller as a member of a group or
organization entitled to a price reduction or discount. A "preferred customer" card that is
available to any customer does not constitute membership in such a group; or

(iii) the price reduction or discount is identified as a third-party price reduction or
discount on the invoice received by the purchaser or on a coupon, certificate, or other
documentation presented by the purchaser.

new text begin (d) For services as defined in subdivision 3, paragraph (g), clause (2), sales price
includes amounts charged for services provided by an accommodations intermediary
delivered or provided in connection with services defined in subdivision 3, paragraph
(g), clause (2).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and confirms the interpretation of the legislature that the original legislative intent of
the tax on lodging and related services applied to the full price and charges paid by the
final consumer for the occupancy, including any reservation or similar ancillary services
that are part of the transaction.
new text end

Sec. 3.

Minnesota Statutes 2008, section 297A.61, is amended by adding a subdivision
to read:

new text begin Subd. 47. new text end

new text begin Accommodations intermediary. new text end

new text begin "Accommodations intermediary"
means any person or entity, other than an accommodations provider, that facilitates the
sale of lodging as defined in section 297A.61, subdivision 3, paragraph (g), clause (2),
and that charges a room charge to the customer. The term "facilitates the sale" includes
brokering, coordinating, or in any way arranging for the purchase of or the right to use
accommodations by a customer.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2008, section 297A.61, is amended by adding a subdivision
to read:

new text begin Subd. 48. new text end

new text begin Accommodations provider. new text end

new text begin "Accommodations provider" means any
person or entity that furnishes lodging as defined in section 297A.61, subdivision 3,
paragraph (g), clause (2), to the general public for compensation. The term "furnishes"
includes the sale of use or possession, or the sale of the right to use or possess.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2008, section 297A.66, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Lodging services. new text end

new text begin An accommodations intermediary shall collect sales
and use tax and remit them to the commissioner under section 297A.77 for services
provided in connection with or for lodging located in this state. The accommodation
provider is deemed to be the agent of the accommodations intermediary for purposes of
establishing the intermediary's obligation to collect.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for lodging and related services
provided after June 30, 2010.
new text end

Sec. 6.

Minnesota Statutes 2008, section 297A.68, is amended by adding a subdivision
to read:

new text begin Subd. 42. new text end

new text begin Lodging services purchased for resale. new text end

new text begin Services purchased from an
accommodations provider for resale by an accommodations intermediary are exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2010.
new text end

Sec. 7. new text begin TRANSITION PROVISION.
new text end

new text begin (a) This section applies to sales and use tax imposed on accommodations
intermediaries for sales made before July 1, 2010, if the lodging was purchased by the
accommodations intermediary for resale and the accommodations provider imposed tax
under Minnesota Statutes, chapter 297A, on the sale. In computing the sales price for
the tax to be collected from the accommodations intermediary, the amount paid by the
accommodations intermediary to the accommodations provider is excluded.
new text end

new text begin (b) The provisions of this section apply to local taxes imposed under Minnesota
Statutes, section 469.190, or any special law.
new text end

new text begin (c) For purposes of this section, the terms defined under Minnesota Statutes, chapter
297A, apply.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made before
July 1, 2010.
new text end