HF 4575

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/04/2024 02:28pm

A bill for an act
relating to taxation; creating a coin-operated amusement device gross receipts tax;
removing coin-operated amusement devices from the definition of sale and purchase
for the sales and use tax; making technical changes; amending Minnesota Statutes
2022, section 297A.68, subdivisions 3a, 45; Minnesota Statutes 2023 Supplement,
section 297A.61, subdivision 3; proposing coding for new law in Minnesota
Statutes, chapter 295.

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

Section 1.

new text begin [295.85] COIN-OPERATED AMUSEMENT DEVICE TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Amusement device" means any electronic or mechanical machine or device that
operates to provide entertainment or amusement, including but not limited to bowling alleys,
fortune-telling machines, cranes, foosball tables, pool tables, video games, pinball machines,
batting cages, rides, photo or video booths, shuffleboard tables, air hockey tables, arcade
games, shooting gallery games, dart boards, and jukeboxes. An amusement device does not
include vending machines, lottery devices, or gaming devices as described in chapters 297E
and 349.
new text end

new text begin (c) "Coin-operated" means a device that is activated and operated by the purchaser upon
providing the device with a payment or payment indicator by inserting a coin, paper currency,
or token; swiping a card; entering a code; or using an electronic payment method.
new text end

new text begin (d) "Commissioner" means the commissioner of revenue.
new text end

new text begin (e) "Gross receipts" means the total amount received in money or by barter or exchange
for sales derived from the making available of amusement devices for play as measured by
the sales price.
new text end

new text begin Subd. 2. new text end

new text begin Tax imposed. new text end

new text begin A tax equal to 6.875 percent of gross receipts from making
available any coin-operated amusement device for play is imposed on the owners of each
device operated in Minnesota. The tax imposed by this section is in lieu of the taxes imposed
by chapter 297A.
new text end

new text begin Subd. 3. new text end

new text begin Administration. new text end

new text begin Unless specifically provided otherwise, the audit, assessment,
refund, penalty, interest, enforcement, collection remedies, appeal, and administrative
provisions of chapters 270C and 289A that are applicable to taxes imposed under chapter
297A apply to the tax imposed under this section.
new text end

new text begin Subd. 4. new text end

new text begin Returns; payment of tax. new text end

new text begin (a) An owner of a coin-operated amusement device
must report the tax on a return prescribed by the commissioner and must remit the tax in a
form and manner prescribed by the commissioner. The return and the tax must be filed and
paid using the filing cycle and due dates provided for taxes imposed under section 289A.20,
subdivision 4, and chapter 297A.
new text end

new text begin (b) Interest must be paid on an overpayment refunded or credited to the taxpayer from
the date of payment of the tax until the date the refund is paid or credited. For purposes of
this subdivision, the date of payment is the due date of the return or the date of actual
payment of the tax, whichever is later.
new text end

new text begin Subd. 5. new text end

new text begin Deposit of revenues. new text end

new text begin The commissioner must deposit the revenues, including
penalties and interest, derived from the tax imposed by this section as follows:
new text end

new text begin (1) The revenue derived from the portion of the tax equal to 6.5 percent must be deposited
into the general fund; and
new text end

new text begin (2) The revenue derived from the portion of the tax equal to 0.375 percent must be
deposited pursuant to Minnesota Constitution, article XI, section 15.
new text end

new text begin Subd. 6. new text end

new text begin Personal debt. new text end

new text begin The tax imposed by this section, and interest and penalties
imposed with respect to the tax, are a personal debt of the person required to file a return
from the time that the liability for the tax arises, irrespective of when the time for payment
of the liability occurs. The debt must, in the case of the executor or administrator of the
estate of a decedent and in the case of a fiduciary, be that of the person in the person's official
or fiduciary capacity only, unless the person has voluntarily distributed the assets held in
that capacity without reserving sufficient assets to pay the tax, interest, and penalties, in
which event the person is personally liable for any deficiency.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2024.
new text end

Sec. 2.

Minnesota Statutes 2023 Supplement, section 297A.61, subdivision 3, is amended
to read:

Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include deleted text begin , deleted text end but are not limited to deleted text begin , deleted text end
each of the transactions listed in this subdivision. In applying the provisions of this chapter,
the terms "tangible personal property" and "retail sale" include the taxable services listed
in paragraph (g), 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).

(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; and

(4) dietary supplements.

(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 deleted text begin amusement devices, deleted text end tanning facilities, reducing salons,
steam 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 and including
accommodations intermediary services provided in connection with other services provided
under this clause;

(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.
For purposes of this clause, "road construction" means construction of:

(i) public roads;

(ii) cartways; and

(iii) private roads in townships located outside of the seven-county metropolitan area
up to the point of the emergency response location sign; 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
or any organization at the direction of a county 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.

(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,
and pay television services. 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 59B.02,
subdivision 11.

(l) A sale and a purchase includes furnishing for a consideration of specified digital
products or other digital products or granting the right for a consideration to use specified
digital products or other digital products on a temporary or permanent basis and regardless
of whether the purchaser is required to make continued payments for such right. Wherever
the term "tangible personal property" is used in this chapter, other than in subdivisions 10
and 38, the provisions also apply to specified digital products, or other digital products,
unless specifically provided otherwise or the context indicates otherwise.

(m) The sale of the privilege of admission under section 297A.61, subdivision 3,
paragraph (g), clause (1), to a place of amusement, recreational area, or athletic event
includes all charges included in the privilege of admission's sales price, without deduction
for amenities that may be provided, unless the amenities are separately stated and the
purchaser of the privilege of admission is entitled to add or decline the amenities, and the
amenities are not otherwise taxable.

(n) A sale and purchase includes the transfer for consideration of a taxable cannabis
product as defined in section 295.81, subdivision 1, paragraph (r).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2024.
new text end

Sec. 3.

Minnesota Statutes 2022, section 297A.68, subdivision 3a, is amended to read:

Subd. 3a.

Coin-operated entertainment and amusement devices.

Coin-operated
entertainment and amusement devices including, but not limited to, fortune-telling machines,
cranes, foosball and pool tables, video and pinball games, batting cages, rides, photo or
video booths, and jukeboxes are exempt when purchased by retailers selling admission to
places of amusement and making available amusement devices as provided in section
deleted text begin 297A.61, subdivision 3, paragraph (g), clause (1) deleted text end new text begin 295.85 new text end . Coin-operated entertainment and
amusement devices do not include vending machines, lottery devices, or gaming devices
as described in chapters 297E and 349.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2024.
new text end

Sec. 4.

Minnesota Statutes 2022, section 297A.68, subdivision 45, is amended to read:

Subd. 45.

Jukebox music.

The purchase of music, either as a digital audio work or in
tangible form such as a record or compact disc, by operators that provide the service of
making available jukeboxes as amusement devices, as provided in section deleted text begin 297A.61,
subdivision 3, paragraph (g), clause (1) deleted text end new text begin 295.85 new text end , is exempt if the music is used exclusively
for the jukebox.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2024.
new text end