HF 2032

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 03/14/2012 04:42pm

A bill for an act
relating to taxation; sales and use; modifying definition of retail sale; clarifying
use of motor vehicle lease sales tax revenue; amending Minnesota Statutes 2010,
sections 297A.61, subdivision 4; 297A.815, subdivision 3.

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

Section 1.

Minnesota Statutes 2010, section 297A.61, subdivision 4, is amended to
read:

Subd. 4.

Retail sale.

(a) A "retail sale" means any sale, lease, or rental for any
purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
course of business as defined in subdivision 21.

(b) A sale of property used by the owner only by leasing it to others or by holding it
in an effort to lease it, and put to no use by the owner other than resale after the lease or
effort to lease, is a sale of property for resale.

(c) A sale of master computer software that is purchased and used to make copies for
sale or lease is a sale of property for resale.

(d) A sale of building materials, supplies, and equipment to owners, contractors,
subcontractors, or builders for the erection of buildings or the alteration, repair, or
improvement of real property is a retail sale in whatever quantity sold, whether the sale is
for purposes of resale in the form of real property or otherwise.

(e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
for installation of the floor covering is a retail sale and not a sale for resale since a sale
of floor covering which includes installation is a contract for the improvement of real
property.

(f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
for installation of the items is a retail sale and not a sale for resale since a sale of
shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
the improvement of real property.

(g) A sale of tangible personal property that is awarded as prizes is a retail sale and
is not considered a sale of property for resale.

(h) A sale of tangible personal property utilized or employed in the furnishing or
providing of services under subdivision 3, paragraph (g), clause (1), including, but not
limited to, property given as promotional items, is a retail sale and is not considered a
sale of property for resale.

(i) A sale of tangible personal property used in conducting lawful gambling under
chapter 349 or the State Lottery under chapter 349A, including, but not limited to,
property given as promotional items, is a retail sale and is not considered a sale of
property for resale.

(j) A sale of machines, equipment, or devices that are used to furnish, provide, or
dispense goods or services, including, but not limited to, coin-operated devices, is a retail
sale and is not considered a sale of property for resale.

(k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
payment becomes due under the terms of the agreement or the trade practices of the lessor
deleted text begin or deleted text end new text begin ; new text end (2) in the case of a lease of a motor vehicle, as defined in section 297B.01, subdivision
11, but excluding vehicles with a manufacturer's gross vehicle weight rating greater than
10,000 pounds and rentals of vehicles for not more than 28 days, at the time the lease is
executed new text begin ; or (3) for rent-to-own or lease-to-own used vehicles where the lessee may
purchase or return the vehicle at any time without penalty, at the time each payment is
made under the terms of the agreement new text end .

(l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
title or possession of the tangible personal property.

(m) A sale of a bundled transaction in which one or more of the products included
in the bundle is a taxable product is a retail sale, except that if one of the products
is a telecommunication service, ancillary service, Internet access, or audio or video
programming service, and the seller has maintained books and records identifying through
reasonable and verifiable standards the portions of the price that are attributable to the
distinct and separately identifiable products, then the products are not considered part of a
bundled transaction. For purposes of this paragraph:

(1) the books and records maintained by the seller must be maintained in the regular
course of business, and do not include books and records created and maintained by the
seller primarily for tax purposes;

(2) books and records maintained in the regular course of business include, but are
not limited to, financial statements, general ledgers, invoicing and billing systems and
reports, and reports for regulatory tariffs and other regulatory matters; and

(3) books and records are maintained primarily for tax purposes when the books
and records identify taxable and nontaxable portions of the price, but the seller maintains
other books and records that identify different prices attributable to the distinct products
included in the same bundled transaction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for leases entered into after June
30, 2012.
new text end

Sec. 2.

Minnesota Statutes 2010, section 297A.815, subdivision 3, is amended to read:

Subd. 3.

Motor vehicle lease sales tax revenue.

(a) For purposes of this
subdivision, "net revenue" means an amount equal to:

(1) the revenues, including interest and penalties, collected under this section new text begin and
on the leases under section 297A.61, subdivision 4, paragraph (k), clause (3) new text end , during
the fiscal year; less

(2) in fiscal year 2011, $30,100,000; in fiscal year 2012, $31,100,000; and in fiscal
year 2013 and following fiscal years, $32,000,000.

(b) On or before June 30 of each fiscal year, the commissioner of revenue shall
estimate the amount of the revenues and subtraction under paragraph (a) for the current
fiscal year.

(c) On or after July 1 of the subsequent fiscal year, the commissioner of management
and budget shall transfer the net revenue as estimated in paragraph (b) from the general
fund, as follows:

(1) 50 percent to the greater Minnesota transit account; and

(2) 50 percent to the county state-aid highway fund. Notwithstanding any other law
to the contrary, the commissioner of transportation shall allocate the funds transferred
under this clause to the counties in the metropolitan area, as defined in section 473.121,
subdivision 4, excluding the counties of Hennepin and Ramsey, so that each county shall
receive of such amount the percentage that its population, as defined in section 477A.011,
subdivision 3, estimated or established by July 15 of the year prior to the current calendar
year, bears to the total population of the counties receiving funds under this clause.

(d) For fiscal years 2010 and 2011, the amount under paragraph (a), clause (1), must
be calculated using the following percentages of the total revenues:

(1) for fiscal year 2010, 83.75 percent; and

(2) for fiscal year 2011, 93.75 percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for leases entered into after June
30, 2012.
new text end