HF 183

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxes; sales and use taxes; making the 
  1.3             capital equipment exemption an up-front exemption; 
  1.4             amending Minnesota Statutes 2000, sections 297A.68, 
  1.5             subdivision 5; and 297A.75. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2000, section 297A.68, 
  1.8   subdivision 5, is amended to read: 
  1.9      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
  1.10  exempt.  The tax must be imposed and collected as if the rate 
  1.11  under section 297A.62, subdivision 1, applied, and then refunded 
  1.12  in the manner provided in section 297A.75. 
  1.13     "Capital equipment" means machinery and equipment purchased 
  1.14  or leased and used in this state by the purchaser or lessee 
  1.15  primarily for manufacturing, fabricating, mining, or refining 
  1.16  tangible personal property to be sold ultimately at retail. 
  1.17     Capital equipment means machinery and equipment essential 
  1.18  to the integrated production process.  Capital equipment also 
  1.19  includes machinery and equipment used to electronically transmit 
  1.20  results retrieved by a customer of an online computerized data 
  1.21  retrieval system. 
  1.22     (b) Capital equipment includes, but is not limited to: 
  1.23     (1) machinery and equipment used to operate, control, or 
  1.24  regulate the production equipment; 
  1.25     (2) machinery and equipment used for research and 
  2.1   development, design, quality control, and testing activities; 
  2.2      (3) environmental control devices that are used to maintain 
  2.3   conditions such as temperature, humidity, light, or air pressure 
  2.4   when those conditions are essential to and are part of the 
  2.5   production process; 
  2.6      (4) materials and supplies used to construct and install 
  2.7   machinery or equipment; 
  2.8      (5) repair and replacement parts, including accessories, 
  2.9   whether purchased as spare parts, repair parts, or as upgrades 
  2.10  or modifications to machinery or equipment; 
  2.11     (6) materials used for foundations that support machinery 
  2.12  or equipment; 
  2.13     (7) materials used to construct and install special purpose 
  2.14  buildings used in the production process; and 
  2.15     (8) ready-mixed concrete trucks in which the ready-mixed 
  2.16  concrete is mixed as part of the delivery process.  
  2.17     (c) Capital equipment does not include the following: 
  2.18     (1) motor vehicles taxed under chapter 297B; 
  2.19     (2) machinery or equipment used to receive or store raw 
  2.20  materials; 
  2.21     (3) building materials, except for materials included in 
  2.22  paragraph (b), clauses (6) and (7); 
  2.23     (4) machinery or equipment used for nonproduction purposes, 
  2.24  including, but not limited to, the following:  plant security, 
  2.25  fire prevention, first aid, and hospital stations; support 
  2.26  operations or administration; pollution control; and plant 
  2.27  cleaning, disposal of scrap and waste, plant communications, 
  2.28  space heating, lighting, or safety; 
  2.29     (5) farm machinery and aquaculture production equipment as 
  2.30  defined by section 297A.61, subdivisions 12 and 13; 
  2.31     (6) machinery or equipment purchased and installed by a 
  2.32  contractor as part of an improvement to real property; or 
  2.33     (7) any other item that is not essential to the integrated 
  2.34  process of manufacturing, fabricating, mining, or refining. 
  2.35     (d) For purposes of this subdivision: 
  2.36     (1) "Machinery" means mechanical, electronic, or electrical 
  3.1   devices, including computers and computer software, that are 
  3.2   purchased or constructed to be used for the activities set forth 
  3.3   in paragraph (a). 
  3.4      (2) "Equipment" means independent devices or tools separate 
  3.5   from machinery, including computers and computer software, used 
  3.6   in operating, controlling, or regulating machinery and 
  3.7   equipment; and any subunit or assembly comprising a component of 
  3.8   any machinery or accessory or attachment parts of machinery, 
  3.9   such as tools, dies, jigs, patterns, and molds.  
  3.10     (3) "Primarily" means machinery and equipment used 50 
  3.11  percent or more of the time in an activity described in 
  3.12  paragraph (a). 
  3.13     (4) "Manufacturing" means an operation or series of 
  3.14  operations where raw materials are changed in form, composition, 
  3.15  or condition by machinery and equipment and which results in the 
  3.16  production of a new article of tangible personal property.  For 
  3.17  purposes of this subdivision, "manufacturing" includes the 
  3.18  generation of electricity or steam to be sold at retail. 
  3.19     (5) "Fabricating" means to make, build, create, produce, or 
  3.20  assemble components or property to work in a new or different 
  3.21  manner. 
  3.22     (6) "Mining" means the extraction of minerals, ores, stone, 
  3.23  or peat. 
  3.24     (7) "Refining" means the process of converting a natural 
  3.25  resource to a product, including the treatment of water to be 
  3.26  sold at retail. 
  3.27     (8) "Integrated production process" means a process 
  3.28  beginning with the removal of raw materials from inventory 
  3.29  through the completion of the product, including packaging of 
  3.30  the product. 
  3.31     (9) "Online data retrieval system" means a system whose 
  3.32  cumulation of information is equally available and accessible to 
  3.33  all its customers. 
  3.34     (10) "Machinery and equipment used for pollution control" 
  3.35  means machinery and equipment used solely to eliminate, prevent, 
  3.36  or reduce pollution resulting from an activity described in 
  4.1   paragraph (a).  
  4.2      [EFFECTIVE DATE.] This section is effective for purchases 
  4.3   made after June 30, 2001. 
  4.4      Sec. 2.  Minnesota Statutes 2000, section 297A.75, is 
  4.5   amended to read: 
  4.6      297A.75 [REFUND; APPROPRIATION.] 
  4.7      Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
  4.8   receipts from the sale of the following exempt items must be 
  4.9   imposed and collected as if the sale were taxable and the rate 
  4.10  under section 297A.62, subdivision 1, applied.  The exempt items 
  4.11  include: 
  4.12     (1) capital equipment exempt under section 297A.68, 
  4.13  subdivision 5; 
  4.14     (2) building materials for an agricultural processing 
  4.15  facility exempt under section 297A.71, subdivision 13; 
  4.16     (3) (2) building materials for mineral production 
  4.17  facilities exempt under section 297A.71, subdivision 14; 
  4.18     (4) (3) building materials for correctional facilities 
  4.19  under section 297A.71, subdivision 3; 
  4.20     (5) (4) building materials used in a residence for disabled 
  4.21  veterans exempt under section 297A.71, subdivision 11; and 
  4.22     (6) (5) chair lifts, ramps, elevators, and associated 
  4.23  building materials exempt under section 297A.71, subdivision 12. 
  4.24     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
  4.25  forms prescribed by the commissioner, a refund equal to the tax 
  4.26  paid on the gross receipts of the exempt items must be paid to 
  4.27  the applicant.  Only the following persons may apply for the 
  4.28  refund: 
  4.29     (1) for subdivision 1, clauses (1) to (3) and (2), the 
  4.30  applicant must be the purchaser; 
  4.31     (2) for subdivision 1, clause (4) (3), the applicant must 
  4.32  be the governmental subdivision; 
  4.33     (3) for subdivision 1, clause (5) (4), the applicant must 
  4.34  be the recipient of the benefits provided in United States Code, 
  4.35  title 38, chapter 21; and 
  4.36     (4) for subdivision 1, clause (6) (5), the applicant must 
  5.1   be the owner of the homestead property. 
  5.2      Subd. 3.  [APPLICATION.] (a) The application must include 
  5.3   sufficient information to permit the commissioner to verify the 
  5.4   tax paid.  If the tax was paid by a contractor, subcontractor, 
  5.5   or builder, under subdivision 1, clause (3), (4), or (5), or 
  5.6   (6), the contractor, subcontractor, or builder must furnish to 
  5.7   the refund applicant a statement including the cost of the 
  5.8   exempt items and the taxes paid on the items unless otherwise 
  5.9   specifically provided by this subdivision.  The provisions of 
  5.10  sections 289A.40 and 289A.50 apply to refunds under this section.
  5.11     (b) An applicant may not file more than two applications 
  5.12  per calendar year for refunds for taxes paid on capital 
  5.13  equipment exempt under section 297A.68, subdivision 5.  
  5.14     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
  5.15  at the rate in section 270.76 from the date the refund claim is 
  5.16  filed for taxes paid under subdivision 1, clauses (1) to 
  5.17  (3), (2) and (5) (4), and from 60 days after the date the refund 
  5.18  claim is filed with the commissioner for claims filed under 
  5.19  subdivision 1, clauses (4) (3) and (6) (5). 
  5.20     Subd. 5.  [APPROPRIATION.] The amount required to make the 
  5.21  refunds is annually appropriated to the commissioner. 
  5.22     [EFFECTIVE DATE.] This section is effective for purchases 
  5.23  made after June 30, 2001.