HF 1129

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

  1.1                          A bill for an act 
  1.2             relating to taxation; making clarifying and technical 
  1.3             changes to sales and use taxes; amending Minnesota 
  1.4             Statutes 2000, sections 289A.31, subdivision 7; 
  1.5             289A.50, subdivision 2; 297A.61, subdivisions 2, 3, 4, 
  1.6             6, 10, 14, 17, 19, 22, and 23; 297A.66, subdivisions 1 
  1.7             and 3; 297A.67, subdivisions 8, 23, 24, and 25; 
  1.8             297A.68, subdivisions 2, 3, 5, 11, 13, 14, 18, and 25; 
  1.9             297A.69, subdivision 2; 297A.70, subdivisions 1, 2, 4, 
  1.10            7, 8, 10, 13, and 14; 297A.75; 297A.77, subdivision 1; 
  1.11            297A.80; 297A.82, subdivision 3; 297A.89, subdivision 
  1.12            1; 297A.90, subdivision 1; 297A.91, subdivision 1; 
  1.13            297A.92, subdivision 2; 297A.94; and 297A.99, 
  1.14            subdivision 7; repealing Minnesota Statutes 2000, 
  1.15            sections 297A.61, subdivision 16; 297A.68, subdivision 
  1.16            21; and 297A.71, subdivision 21. 
  1.17  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.18     Section 1.  Minnesota Statutes 2000, section 289A.31, 
  1.19  subdivision 7, is amended to read: 
  1.20     Subd. 7.  [SALES AND USE TAX.] (a) The sales and use tax 
  1.21  required to be collected by the retailer under chapter 297A 
  1.22  constitutes a debt owed by the retailer to Minnesota, and the 
  1.23  sums collected must be held as a special fund in trust for the 
  1.24  state of Minnesota. 
  1.25     A retailer who does not maintain a place of business within 
  1.26  this state as defined by section 297A.21, subdivision 1, shall 
  1.27  not be indebted to Minnesota for amounts of tax that it was 
  1.28  required to collect but did not collect unless the retailer knew 
  1.29  or had been advised by the commissioner of its obligation to 
  1.30  collect the tax.  
  1.31     (b) The use tax required to be paid by a purchaser is a 
  2.1   debt owed by the purchaser to Minnesota. 
  2.2      (c) The tax imposed by chapter 297A, and interest and 
  2.3   penalties, is a personal debt of the individual required to file 
  2.4   a return from the time the liability arises, irrespective of 
  2.5   when the time for payment of that liability occurs.  The debt 
  2.6   is, in the case of the executor or administrator of the estate 
  2.7   of a decedent and in the case of a fiduciary, that of the 
  2.8   individual in an official or fiduciary capacity unless the 
  2.9   individual has voluntarily distributed the assets held in that 
  2.10  capacity without reserving sufficient assets to pay the tax, 
  2.11  interest, and penalties, in which case the individual is 
  2.12  personally liable for the deficiency. 
  2.13     (d) Liability for payment of sales and use taxes includes 
  2.14  any responsible person or entity described in the personal 
  2.15  liability provisions of section 270.101. 
  2.16     (e) Any amounts collected, even if erroneously or illegally 
  2.17  collected, from a purchaser under a representation that they are 
  2.18  taxes imposed under chapter 297A are state funds from the time 
  2.19  of collection and must be reported on a return filed with the 
  2.20  commissioner.  The amounts collected are not subject to refund 
  2.21  unless the seller submits written evidence to the commissioner 
  2.22  that the tax and any interest earned on the tax has been or will 
  2.23  be refunded or credited to the purchaser by the seller. 
  2.24     (f) The tax imposed under chapter 297A on sales of tickets 
  2.25  to the premises of or events sponsored by the state agricultural 
  2.26  society and conducted on the state fairgrounds during the period 
  2.27  of the annual state fair may be retained by the state 
  2.28  agricultural society if the funds are used and matched as 
  2.29  required under section 37.13, subdivision 2. 
  2.30     Sec. 2.  Minnesota Statutes 2000, section 289A.50, 
  2.31  subdivision 2, is amended to read: 
  2.32     Subd. 2.  [REFUND OF SALES TAX TO VENDORS; LIMITATION.] If 
  2.33  a vendor has collected from a purchaser and remitted to the 
  2.34  state a tax on a transaction that is not subject to the tax 
  2.35  imposed by chapter 297A, the tax is refundable to the vendor 
  2.36  only if and to the extent that it the tax and any interest 
  3.1   earned on the tax is credited to amounts due to the vendor by 
  3.2   the purchaser or returned to the purchaser by the vendor.  In 
  3.3   addition to the requirements of subdivision 1, a claim for 
  3.4   refund under this subdivision must state in writing that the tax 
  3.5   and interest earned on the tax has been or will be refunded or 
  3.6   credited to the purchaser by the vendor. 
  3.7      Sec. 3.  Minnesota Statutes 2000, section 297A.61, 
  3.8   subdivision 2, is amended to read: 
  3.9      Subd. 2.  [PERSON.] (a) "Person" includes any individual, 
  3.10  and any or group or and any combination of individuals, 
  3.11  groups, or individuals and groups acting as a unit, and the 
  3.12  plural as well as the singular number.  
  3.13     (b) Person includes a firm, partnership, joint venture, 
  3.14  limited liability company, association, cooperative, social 
  3.15  club, fraternal organization, municipal or private corporation 
  3.16  whether or not organized for profit, estates, trusts, business 
  3.17  trusts estate, trust, business trust, receiver, trustee, 
  3.18  syndicate, the United States, and a state and its political 
  3.19  subdivisions.  
  3.20     (c) Person includes, but is not limited to, directors and 
  3.21  officers of corporations, governors and managers of a limited 
  3.22  liability company, or members of partnerships who, either 
  3.23  individually or jointly with others, have the control, 
  3.24  supervision, or responsibility of filing returns and making 
  3.25  payment of the amount of tax imposed by this chapter. 
  3.26     (d) Person also includes any agent or consignee of any 
  3.27  individual or organization enumerated listed in this subdivision.
  3.28     Sec. 4.  Minnesota Statutes 2000, section 297A.61, 
  3.29  subdivision 3, is amended to read: 
  3.30     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
  3.31  include, but are not limited to, each of the transactions listed 
  3.32  in this subdivision. 
  3.33     (b) Sale and purchase include: 
  3.34     (1) any transfer of title or possession, or both, of 
  3.35  tangible personal property, whether absolutely or conditionally, 
  3.36  for a consideration in money or by exchange or barter; and 
  4.1      (2) the leasing of or the granting of a license to use or 
  4.2   consume, for a consideration in money or by exchange or barter, 
  4.3   tangible personal property, other than a manufactured home used 
  4.4   for residential purposes for a continuous period of 30 days or 
  4.5   more. 
  4.6      (c) Sale and purchase include the production, fabrication, 
  4.7   printing, or processing of tangible personal property for a 
  4.8   consideration for consumers who furnish either directly or 
  4.9   indirectly the materials used in the production, fabrication, 
  4.10  printing, or processing. 
  4.11     (d) Sale and purchase include the furnishing, preparing, or 
  4.12  serving for a consideration of food or drinks.  Notwithstanding 
  4.13  section 297A.67, subdivision 2, taxable food or drinks include, 
  4.14  but are not limited to, the following: 
  4.15     (1) food or drinks sold by the retailer for immediate 
  4.16  consumption on the retailer's premises.  Food and drinks sold 
  4.17  within a building or grounds that require an admission charge 
  4.18  for entrance are presumed to be sold for consumption on the 
  4.19  premises; 
  4.20     (2) food or drinks prepared by the retailer for immediate 
  4.21  consumption either on or off the retailer's premises.  For 
  4.22  purposes of this subdivision, "food or drinks prepared for 
  4.23  immediate consumption" means any food product upon which an act 
  4.24  of preparation including, but not limited to, cooking, mixing, 
  4.25  sandwich making, blending, heating, or pouring has been 
  4.26  performed by the retailer so the food product may be immediately 
  4.27  consumed by the purchaser; 
  4.28     (3) ice cream, ice milk, frozen yogurt products, or frozen 
  4.29  novelties sold in single or individual servings including, but 
  4.30  not limited to, cones, sundaes, and snow cones; 
  4.31     (4) soft drinks and other beverages, including all 
  4.32  carbonated and noncarbonated beverages or drinks sold in liquid 
  4.33  form, but not including beverages or drinks which contain milk 
  4.34  or milk products, beverages or drinks containing 15 or more 
  4.35  percent fruit juice, and noncarbonated and noneffervescent 
  4.36  bottled water sold in individual containers of one-half gallon 
  5.1   or more in size; 
  5.2      (5) gum, candy, and candy products; 
  5.3      (6) ice; 
  5.4      (7) all food sold from vending machines; 
  5.5      (8) all food for immediate consumption sold from concession 
  5.6   stands and vehicles; 
  5.7      (9) party trays; 
  5.8      (10) all meals and single servings of packaged snack food 
  5.9   sold in restaurants and bars; and 
  5.10     (11) bakery products that are: 
  5.11     (i) prepared by the retailer for consumption on the 
  5.12  retailer's premises; 
  5.13     (ii) sold at a place that charges admission; 
  5.14     (iii) sold from vending machines; or 
  5.15     (iv) sold in single or individual servings from concession 
  5.16  stands, vehicles, bars, and restaurants.  
  5.17     For purposes of this paragraph, "single or individual 
  5.18  servings" does not include products when sold in bulk containers 
  5.19  or bulk packaging.  
  5.20     For purposes of this paragraph, "premises" means the total 
  5.21  space and facilities, including buildings, grounds, and parking 
  5.22  lots that are made available or that are available for use by 
  5.23  the retailer or customer for the purpose of sale or consumption 
  5.24  of prepared food and drinks.  The premises of a caterer is the 
  5.25  place where the catered food or drinks are served. 
  5.26     (e) A sale and a purchase includes the furnishing for a 
  5.27  consideration of electricity, gas, water, or steam for use or 
  5.28  consumption within this state or local exchange telephone 
  5.29  service, intrastate toll service, and interstate toll service, 
  5.30  if that service originates from and is charged to a telephone 
  5.31  located in this state.  Telephone service includes (1) paging 
  5.32  services, and (2) private communication service, as defined in 
  5.33  United States Code, title 26, section 4252(d), except for 
  5.34  private communication service purchased by an agent acting on 
  5.35  behalf of the state lottery.  Telephone service does not include 
  5.36  services purchased with a prepaid telephone calling card.  The 
  6.1   furnishing for a consideration of access to telephone services 
  6.2   by a hotel to its guests is a sale.  The furnishing for a 
  6.3   consideration of items listed in this paragraph by a municipal 
  6.4   corporation is a sale. 
  6.5      (f) A sale and a purchase includes the transfer for a 
  6.6   consideration of computer software.  
  6.7      (g) A sale and a purchase includes the furnishing for a 
  6.8   consideration of taxable services as defined in subdivision 
  6.9   16. the following services: 
  6.10     (1) the privilege of admission to places of amusement, 
  6.11  recreational areas, or athletic events, and the making available 
  6.12  of amusement devices, tanning facilities, reducing salons, steam 
  6.13  baths, turkish baths, health clubs, and spas or athletic 
  6.14  facilities; 
  6.15     (2) lodging and related services by a hotel, rooming house, 
  6.16  resort, campground, motel, or trailer camp and the granting of 
  6.17  any similar license to use real property other than the renting 
  6.18  or leasing of it for a continuous period of 30 days or more; 
  6.19     (3) cable television services or similar television 
  6.20  services, including, but not limited to, charges for basic, 
  6.21  premium, pay-per-view, and any other similar service; 
  6.22     (4) parking services, whether on a contractual, hourly, or 
  6.23  other periodic basis, except for parking at a meter; 
  6.24     (5) the granting of membership in a club, association, or 
  6.25  other organization if: 
  6.26     (i) the club, association, or other organization makes 
  6.27  available for the use of its members sports and athletic 
  6.28  facilities, without regard to whether a separate charge is 
  6.29  assessed for use of the facilities; and 
  6.30     (ii) use of the sports and athletic facility is not made 
  6.31  available to the general public on the same basis as it is made 
  6.32  available to members.  
  6.33  Granting of membership means both one-time initiation fees and 
  6.34  periodic membership dues.  Sports and athletic facilities 
  6.35  include golf courses; tennis, racquetball, handball, and squash 
  6.36  courts; basketball and volleyball facilities; running tracks; 
  7.1   exercise equipment; swimming pools; and other similar athletic 
  7.2   or sports facilities; and 
  7.3      (6) services as provided in this clause: 
  7.4      (i) laundry and dry cleaning services including cleaning, 
  7.5   pressing, repairing, altering, and storing clothes, linen 
  7.6   services and supply, cleaning and blocking hats, and carpet, 
  7.7   drapery, upholstery, and industrial cleaning.  Laundry and dry 
  7.8   cleaning services do not include services provided by coin 
  7.9   operated facilities operated by the customer; 
  7.10     (ii) motor vehicle washing, waxing, and cleaning services, 
  7.11  including services provided by coin operated facilities operated 
  7.12  by the customer, and rustproofing, undercoating, and towing of 
  7.13  motor vehicles; 
  7.14     (iii) building and residential cleaning, maintenance, and 
  7.15  disinfecting and exterminating services; 
  7.16     (iv) detective, security, burglar, fire alarm, and armored 
  7.17  car services; but not including services performed within the 
  7.18  jurisdiction they serve by off-duty licensed peace officers as 
  7.19  defined in section 626.84, subdivision 1, or services provided 
  7.20  by a nonprofit organization for monitoring and electronic 
  7.21  surveillance of persons placed on in-home detention pursuant to 
  7.22  court order or under the direction of the Minnesota department 
  7.23  of corrections; 
  7.24     (v) pet grooming services; 
  7.25     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
  7.26  services; garden planting and maintenance; tree, bush, and shrub 
  7.27  pruning, bracing, spraying, and surgery; indoor plant care; 
  7.28  tree, bush, shrub, and stump removal; and tree trimming for 
  7.29  public utility lines.  Services performed under a construction 
  7.30  contract for the installation of shrubbery, plants, sod, trees, 
  7.31  bushes, and similar items are not taxable; 
  7.32     (vii) massages, except when provided by a licensed health 
  7.33  care facility or professional or upon written referral from a 
  7.34  licensed health care facility or professional for treatment of 
  7.35  illness, injury, or disease; and 
  7.36     (viii) the furnishing of lodging, board, and care services 
  8.1   for animals in kennels and other similar arrangements, but 
  8.2   excluding veterinary and horse boarding services. 
  8.3      The services listed in this clause (6) are taxable under 
  8.4   section 297A.62 if the service is performed wholly within 
  8.5   Minnesota or if the service is performed partly within and 
  8.6   partly outside Minnesota and the greater proportion of the 
  8.7   service is performed in Minnesota, based on the cost of 
  8.8   performance.  In applying the provisions of this chapter, the 
  8.9   terms "tangible personal property" and "sales at retail" include 
  8.10  taxable services and the provision of taxable services, unless 
  8.11  specifically provided otherwise.  Services performed by an 
  8.12  employee for an employer are not taxable.  Services performed by 
  8.13  a partnership or association for another partnership or 
  8.14  association are not taxable if one of the entities owns or 
  8.15  controls more than 80 percent of the voting power of the equity 
  8.16  interest in the other entity.  Services performed between 
  8.17  members of an affiliated group of corporations are not taxable.  
  8.18  For purposes of this section, "affiliated group of corporations" 
  8.19  includes those entities that would be classified as members of 
  8.20  an affiliated group under United States Code, title 26, section 
  8.21  1504, and that are eligible to file a consolidated tax return 
  8.22  for federal income tax purposes. 
  8.23     (h) A sale and a purchase includes the furnishing for a 
  8.24  consideration of tangible personal property or taxable services 
  8.25  by the United States or any of its agencies or 
  8.26  instrumentalities, or the state of Minnesota, its agencies, 
  8.27  instrumentalities, or political subdivisions. 
  8.28     Sec. 5.  Minnesota Statutes 2000, section 297A.61, 
  8.29  subdivision 4, is amended to read: 
  8.30     Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a sale 
  8.31  for any purpose other than resale in the regular course of 
  8.32  business.  
  8.33     (b) A sale of property used by the owner only by leasing it 
  8.34  to others or by holding it in an effort to lease it, and put to 
  8.35  no use by the owner other than resale after the lease or effort 
  8.36  to lease, is a sale of property for resale.  
  9.1      (c) A sale of master computer software that is purchased 
  9.2   and used to make copies for sale or lease is a sale of property 
  9.3   for resale.  
  9.4      (d) A sale of building materials, supplies, and equipment 
  9.5   to owners, contractors, subcontractors, or builders for the 
  9.6   erection of buildings or the alteration, repair, or improvement 
  9.7   of real property is a retail sale in whatever quantity sold, 
  9.8   whether the sale is for purposes of resale in the form of real 
  9.9   property or otherwise.  
  9.10     (e) A sale of carpeting, linoleum, or similar floor 
  9.11  covering to a person who provides for installation of the floor 
  9.12  covering is a retail sale and not a sale for resale since a sale 
  9.13  of floor covering which includes installation is a contract for 
  9.14  the improvement of real property. 
  9.15     (f) A sale of shrubbery, plants, sod, trees, and similar 
  9.16  items to a person who provides for installation of the items is 
  9.17  a retail sale and not a sale for resale since a sale of 
  9.18  shrubbery, plants, sod, trees, and similar items that includes 
  9.19  installation is a contract for the improvement of real property. 
  9.20     (g) A sale of tangible personal property that is awarded as 
  9.21  prizes is a retail sale and is not considered a sale of property 
  9.22  for resale. 
  9.23     (h) A sale of tangible personal property utilized or 
  9.24  employed in the furnishing or providing of services under 
  9.25  subdivision 16 3, paragraph (b) (g), clause (1), including, but 
  9.26  not limited to, property given as promotional items, is a retail 
  9.27  sale and is not considered a sale of property for resale. 
  9.28     (i) A sale of tangible personal property used in conducting 
  9.29  lawful gambling under chapter 349 or the state lottery under 
  9.30  chapter 349A, including, but not limited to, property given as 
  9.31  promotional items, is a retail sale and is not considered a sale 
  9.32  of property for resale. 
  9.33     (j) A sale of machines, equipment, or devices that are used 
  9.34  to furnish, provide, or dispense goods or services, including, 
  9.35  but not limited to, coin-operated devices, is a retail sale and 
  9.36  is not considered a sale of property for resale. 
 10.1      (k) In the case of a lease, a retail sale occurs when an 
 10.2   obligation to make a lease payment becomes due under the terms 
 10.3   of the agreement or the trade practices of the lessor. 
 10.4      (l) In the case of a conditional sales contract, a retail 
 10.5   sale occurs upon the transfer of title or possession of the 
 10.6   tangible personal property. 
 10.7      Sec. 6.  Minnesota Statutes 2000, section 297A.61, 
 10.8   subdivision 6, is amended to read: 
 10.9      Subd. 6.  [USE.] (a) "Use" includes the exercise of a right 
 10.10  or power incident to the ownership of any interest in tangible 
 10.11  personal property, or taxable services, purchased from a 
 10.12  retailer, other than the sale of that property in the regular 
 10.13  course of business.  
 10.14     (b) Use includes the consumption of printed materials in 
 10.15  the creation of nontaxable advertising that is distributed, 
 10.16  either directly or indirectly, within Minnesota. 
 10.17     Sec. 7.  Minnesota Statutes 2000, section 297A.61, 
 10.18  subdivision 10, is amended to read: 
 10.19     Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
 10.20  personal property" means corporeal personal property of any 
 10.21  kind, including property that is to become real property as a 
 10.22  result of incorporation, attachment, or installation following 
 10.23  its acquisition. 
 10.24     (b) Tangible personal property includes, but is not limited 
 10.25  to: 
 10.26     (1) computer software, whether contained on tape, discs, 
 10.27  cards, or other devices; and 
 10.28     (2) prepaid telephone calling cards.  
 10.29     (c) Tangible personal property does not include: 
 10.30     (1) large ponderous machinery and equipment used in a 
 10.31  business or production activity which at common law would be 
 10.32  considered to be real property; 
 10.33     (2) property which is subject to an ad valorem property 
 10.34  tax; 
 10.35     (3) property described in section 272.02, subdivision 9, 
 10.36  clauses (a) to (d); and 
 11.1      (4) property described in section 272.03, subdivision 2, 
 11.2   clauses (3) and (5). 
 11.3      Sec. 8.  Minnesota Statutes 2000, section 297A.61, 
 11.4   subdivision 14, is amended to read: 
 11.5      Subd. 14.  [LEASING; LEASE.] "Leasing" includes all 
 11.6   transfers of possession or the use of tangible personal property 
 11.7   by the lessee for a consideration, if title remains with the 
 11.8   lessor at the end of the lease.  For purposes of this chapter, A 
 11.9   lease of tangible personal property is a series of sales 
 11.10  transactions that impose upon the lessee multiple payment 
 11.11  obligations.  "Leasing" does not include a transaction defined 
 11.12  under subdivision 15.  
 11.13     Sec. 9.  Minnesota Statutes 2000, section 297A.61, 
 11.14  subdivision 17, is amended to read: 
 11.15     Subd. 17.  [COMPUTER SOFTWARE.] "Computer software" means a 
 11.16  computer program, either in the form of written procedures or in 
 11.17  the form of storage media on which, or in which, the program is 
 11.18  recorded contained on tapes, discs, cards, or another device, or 
 11.19  any required documentation or manuals designed to facilitate the 
 11.20  use of the computer program.  For purposes of this subdivision: 
 11.21     (1) "Storage media" includes punched cards, tapes, discs, 
 11.22  diskettes, or drums on which computer programs may be embodied 
 11.23  or stored; 
 11.24     (2) "Computer" does not include tape-controlled automatic 
 11.25  drilling, milling, or other manufacturing machinery or 
 11.26  equipment; and 
 11.27     (3) (2) "Computer program" means information and directions 
 11.28  that dictate the function performed by data processing 
 11.29  equipment.  It includes the complete plan for the solution of a 
 11.30  problem, such as the complete sequence of automatic data 
 11.31  processing equipment instructions necessary to solve a problem 
 11.32  and includes both systems and application programs and 
 11.33  subdivisions, such as assemblers, compilers, routines, 
 11.34  generators, and utility programs.  Computer program includes a 
 11.35  "canned" or prewritten computer program that is held or existing 
 11.36  for general or repeated sale or lease, even if the prewritten or 
 12.1   "canned" program was initially developed on a custom basis or 
 12.2   for in-house use. 
 12.3      Sec. 10.  Minnesota Statutes 2000, section 297A.61, 
 12.4   subdivision 19, is amended to read: 
 12.5      Subd. 19.  [COMMON FOR-HIRE CARRIER.] "Common For-hire 
 12.6   carrier" means a person engaged in transportation for hire of 
 12.7   tangible personal property by motor vehicle, if the person:. 
 12.8      (1) has a certificate or permit or has completed a 
 12.9   registration process that authorizes for-hire transportation of 
 12.10  property from the United States Department of Transportation, 
 12.11  the transportation regulation board, or the department of 
 12.12  transportation; 
 12.13     (2) is transporting commodities defined as "exempt" in 
 12.14  for-hire transportation; or 
 12.15     (3) transports tangible personal property pursuant to a 
 12.16  contract with a person described in clause (1) or (2). 
 12.17     Sec. 11.  Minnesota Statutes 2000, section 297A.61, 
 12.18  subdivision 22, is amended to read: 
 12.19     Subd. 22.  [INTERNAL REVENUE CODE.] Unless specifically 
 12.20  provided otherwise, "Internal Revenue Code" means the Internal 
 12.21  Revenue Code of 1986, as amended through December 31, 1999 2000. 
 12.22     Sec. 12.  Minnesota Statutes 2000, section 297A.61, 
 12.23  subdivision 23, is amended to read: 
 12.24     Subd. 23.  [UNITED STATES CODE.] Unless specifically 
 12.25  provided otherwise, "United States Code" means the United States 
 12.26  Code as amended through December 31, 1999 2000. 
 12.27     Sec. 13.  Minnesota Statutes 2000, section 297A.66, 
 12.28  subdivision 1, is amended to read: 
 12.29     Subdivision 1.  [DEFINITIONS.] (a) "Retailer maintaining a 
 12.30  place of business in this state," or a similar term, means a 
 12.31  retailer: 
 12.32     (1) having or maintaining within this state, directly or by 
 12.33  a subsidiary, an office, place of distribution, sales or sample 
 12.34  room or place, warehouse, or other place of business; or 
 12.35     (2) having a representative, agent, salesperson, canvasser, 
 12.36  or solicitor operating in this state under the authority of the 
 13.1   retailer or its subsidiary, for any purpose, including the 
 13.2   repairing, selling, delivering, installing, or soliciting of 
 13.3   orders for the retailer's goods or services, or the leasing of 
 13.4   tangible personal property located in this state, whether the 
 13.5   place of business or agent, representative, salesperson, 
 13.6   canvasser, or solicitor is located in the state permanently or 
 13.7   temporarily, or whether or not the retailer or subsidiary is 
 13.8   authorized to do business in this state. 
 13.9      (b) "Destination of a sale" means the location to which the 
 13.10  retailer makes delivery of the property sold, or causes the 
 13.11  property to be delivered, to the purchaser of the property, or 
 13.12  to the agent or designee of the purchaser.  The delivery may be 
 13.13  made by any means, including the United States Postal Service, a 
 13.14  common carrier, or a contract for-hire carrier. 
 13.15     Sec. 14.  Minnesota Statutes 2000, section 297A.66, 
 13.16  subdivision 3, is amended to read: 
 13.17     Subd. 3.  [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 
 13.18  THIS STATE.] (a) To the extent allowed by the United States 
 13.19  Constitution and the laws of the United States, a retailer 
 13.20  making retail sales from outside this state to a destination 
 13.21  within this state and not maintaining a place of business in 
 13.22  this state shall collect sales and use taxes and remit them to 
 13.23  the commissioner under section 297A.77, if the retailer engages 
 13.24  in the regular or systematic soliciting of sales from potential 
 13.25  customers in this state by: 
 13.26     (1) distribution, by mail or otherwise, of catalogs, 
 13.27  periodicals, advertising flyers, or other written solicitations 
 13.28  of business to customers in this state; 
 13.29     (2) display of advertisements on billboards or other 
 13.30  outdoor advertising in this state; 
 13.31     (3) advertisements in newspapers published in this state; 
 13.32     (4) advertisements in trade journals or other periodicals 
 13.33  the circulation of which is primarily within this state; 
 13.34     (5) advertisements in a Minnesota edition of a national or 
 13.35  regional publication or a limited regional edition in which this 
 13.36  state is included as part of a broader regional or national 
 14.1   publication which are not placed in other geographically defined 
 14.2   editions of the same issue of the same publication; 
 14.3      (6) advertisements in regional or national publications in 
 14.4   an edition which is not by its contents geographically targeted 
 14.5   to Minnesota but which is sold over the counter in Minnesota or 
 14.6   by subscription to Minnesota residents; 
 14.7      (7) advertisements broadcast on a radio or television 
 14.8   station located in Minnesota; or 
 14.9      (8) any other solicitation by telegraphy, telephone, 
 14.10  computer database, cable, optic, microwave, or other 
 14.11  communication system. 
 14.12     This paragraph (a) must be construed without regard to the 
 14.13  state from which distribution of the materials originated or in 
 14.14  which they were prepared.  
 14.15     (b) The location within or without this state of 
 14.16  independent vendors independent of the retailer that provide 
 14.17  products or services to the retailer in connection with its 
 14.18  solicitation of customers within this state, including such 
 14.19  products and services as creation of copy, printing, 
 14.20  distribution, and recording, is not considered in determining 
 14.21  whether the retailer is required to collect tax.  
 14.22     (c) A retailer not maintaining a place of business in this 
 14.23  state is presumed, subject to rebuttal, to be engaged in regular 
 14.24  solicitation within this state if it engages in any of the 
 14.25  activities in paragraph (a) and: 
 14.26     (1) makes 100 or more retail sales from outside this state 
 14.27  to destinations in this state during a period of 12 consecutive 
 14.28  months; or 
 14.29     (2) makes ten or more retail sales totaling more than 
 14.30  $100,000 from outside this state to destinations in this state 
 14.31  during a period of 12 consecutive months. 
 14.32     Sec. 15.  Minnesota Statutes 2000, section 297A.67, 
 14.33  subdivision 8, is amended to read: 
 14.34     Subd. 8.  [CLOTHING.] Clothing and wearing apparel, 
 14.35  including sewing materials to be directly incorporated into 
 14.36  wearing apparel, are exempt.  For purposes of this subdivision, 
 15.1   clothing and wearing apparel do not include the following: 
 15.2      (1) articles designed primarily for use while engaging in a 
 15.3   specific sport or recreational activity that are not also worn 
 15.4   for general use; 
 15.5      (2) articles designed primarily to provide safety or 
 15.6   protection against injury while the user is engaged in 
 15.7   industrial or general job activities; 
 15.8      (3) all articles commonly or commercially known as jewelry 
 15.9   including, but not limited to, watches; 
 15.10     (4) nonprescription optical glasses of any sort; 
 15.11     (5) articles made entirely of fur on the hide or pelt, or 
 15.12  partially of such fur if the value of the fur is more than three 
 15.13  times the value of the next most valuable component material; 
 15.14     (6) perfume, lotions, creams, dyes, or other substances 
 15.15  that are applied to the skin, nails, or the hair; and 
 15.16     (7) luggage, bags, purses, wallets, or cases of any sort. 
 15.17     Sec. 16.  Minnesota Statutes 2000, section 297A.67, 
 15.18  subdivision 23, is amended to read: 
 15.19     Subd. 23.  [OCCASIONAL SALES.] Isolated and occasional 
 15.20  sales in Minnesota not made in the normal course of business, 
 15.21  and of selling that kind of property or service are exempt.  The 
 15.22  storage, use, or consumption of property or services resulting 
 15.23  from such sales, are acquired as a result of such a sale is 
 15.24  exempt.  This exemption does not apply to sales of tangible 
 15.25  personal property primarily used in a trade or business. 
 15.26     Sec. 17.  Minnesota Statutes 2000, section 297A.67, 
 15.27  subdivision 24, is amended to read: 
 15.28     Subd. 24.  [CONSTITUTIONAL PROHIBITIONS.] The gross 
 15.29  receipts from The sale of and the storage, use, or other 
 15.30  consumption in Minnesota of tangible personal property, tickets, 
 15.31  or admissions, electricity, gas, or local exchange telephone 
 15.32  service or services, that the state of Minnesota is prohibited 
 15.33  from taxing under the Constitution or laws of the United States 
 15.34  or under the Constitution of Minnesota, are exempt. 
 15.35     Sec. 18.  Minnesota Statutes 2000, section 297A.67, 
 15.36  subdivision 25, is amended to read: 
 16.1      Subd. 25.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
 16.2   related services used in the maintenance of cemetery grounds are 
 16.3   exempt.  For purposes of this subdivision, "lawn care and 
 16.4   related services" means the services listed in section 297A.61, 
 16.5   subdivision 16 3, paragraph (g), clause (6), item (vi), and 
 16.6   "cemetery" means a cemetery for human burial. 
 16.7      Sec. 19.  Minnesota Statutes 2000, section 297A.68, 
 16.8   subdivision 2, is amended to read: 
 16.9      Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
 16.10  (a) Materials stored, used, or consumed in industrial production 
 16.11  of personal property intended to be sold ultimately at retail 
 16.12  are exempt, whether or not the item so used becomes an 
 16.13  ingredient or constituent part of the property produced.  
 16.14  Materials that qualify for this exemption include, but are not 
 16.15  limited to, the following: 
 16.16     (1) chemicals, including chemicals used for cleaning food 
 16.17  processing machinery and equipment; 
 16.18     (2) materials, including chemicals, fuels, and electricity 
 16.19  purchased by persons engaged in industrial production to treat 
 16.20  waste generated as a result of the production process; 
 16.21     (3) fuels, electricity, gas, and steam used or consumed in 
 16.22  the production process, except that electricity, gas, or steam 
 16.23  used for space heating, cooling, or lighting is exempt only if 
 16.24  (i) it is in excess of the average climate control or lighting 
 16.25  for the production area, and (ii) it is necessary to produce 
 16.26  that particular industrial product; 
 16.27     (4) petroleum products and lubricants; 
 16.28     (5) packaging materials, including returnable containers 
 16.29  used in packaging food and beverage products; 
 16.30     (6) accessory tools, equipment, and other items that are 
 16.31  separate detachable units with an ordinary useful life of less 
 16.32  than 12 months used in producing a direct effect upon the 
 16.33  product; and 
 16.34     (7) the following materials, tools, and equipment used in 
 16.35  metalcasting:  crucibles, thermocouple protection sheaths and 
 16.36  tubes, stalk tubes, refractory materials, molten metal filters 
 17.1   and filter boxes, degassing lances, and base blocks. 
 17.2      (b) This exemption does not include: 
 17.3      (1) machinery, equipment, implements, tools, accessories, 
 17.4   appliances, contrivances and furniture and fixtures, except 
 17.5   those listed in paragraph (a), clause (6); and 
 17.6      (2) petroleum and special fuels used in producing or 
 17.7   generating power for propelling ready-mixed concrete trucks on 
 17.8   the public highways of this state. 
 17.9      (c) Industrial production includes, but is not limited to, 
 17.10  research, development, design or production of any tangible 
 17.11  personal property, manufacturing, processing (other than by 
 17.12  restaurants and consumers) of agricultural products (whether 
 17.13  vegetable or animal), commercial fishing, refining, smelting, 
 17.14  reducing, brewing, distilling, printing, mining, quarrying, 
 17.15  lumbering, generating electricity and the production of road 
 17.16  building materials.  Industrial production does not include 
 17.17  painting, cleaning, repairing or similar processing of property 
 17.18  except as part of the original manufacturing process.  
 17.19     Sec. 20.  Minnesota Statutes 2000, section 297A.68, 
 17.20  subdivision 3, is amended to read: 
 17.21     Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
 17.22  SERVICES.] (a) Materials stored, used, or consumed in providing 
 17.23  a taxable service listed in section 297A.61, subdivision 16 3, 
 17.24  paragraph (g), clause (6), intended to be sold ultimately at 
 17.25  retail are exempt. 
 17.26     (b) This exemption includes, but is not limited to: 
 17.27     (1) chemicals, lubricants, packaging materials, seeds, 
 17.28  trees, fertilizers, and herbicides, if these items are used or 
 17.29  consumed in providing the taxable service; 
 17.30     (2) chemicals used to treat waste generated as a result of 
 17.31  providing the taxable service; 
 17.32     (3) accessory tools, equipment, and other items that are 
 17.33  separate detachable units used in providing the service and that 
 17.34  have an ordinary useful life of less than 12 months; and 
 17.35     (4) fuel, electricity, gas, and steam used or consumed in 
 17.36  the production process, except that electricity, gas, or steam 
 18.1   used for space heating, cooling, or lighting is exempt only if 
 18.2   (i) it is in excess of average climate control or lighting, and 
 18.3   (ii) it is necessary to produce that particular taxable service. 
 18.4      (c) This exemption does not include machinery, equipment, 
 18.5   implements, tools, accessories, appliances, contrivances, 
 18.6   furniture, and fixtures used in providing the taxable service. 
 18.7      Sec. 21.  Minnesota Statutes 2000, section 297A.68, 
 18.8   subdivision 5, is amended to read: 
 18.9      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
 18.10  exempt.  The tax must be imposed and collected as if the rate 
 18.11  under section 297A.62, subdivision 1, applied, and then refunded 
 18.12  in the manner provided in section 297A.75. 
 18.13     "Capital equipment" means machinery and equipment purchased 
 18.14  or leased, and used in this state by the purchaser or lessee 
 18.15  primarily for manufacturing, fabricating, mining, or refining 
 18.16  tangible personal property to be sold ultimately at retail. 
 18.17     Capital equipment means if the machinery and equipment is 
 18.18  essential to the integrated production process of manufacturing, 
 18.19  fabricating, mining, or refining.  Capital equipment also 
 18.20  includes machinery and equipment used to electronically transmit 
 18.21  results retrieved by a customer of an online computerized data 
 18.22  retrieval system. 
 18.23     (b) Capital equipment includes, but is not limited to: 
 18.24     (1) machinery and equipment used to operate, control, or 
 18.25  regulate the production equipment; 
 18.26     (2) machinery and equipment used for research and 
 18.27  development, design, quality control, and testing activities; 
 18.28     (3) environmental control devices that are used to maintain 
 18.29  conditions such as temperature, humidity, light, or air pressure 
 18.30  when those conditions are essential to and are part of the 
 18.31  production process; 
 18.32     (4) materials and supplies used to construct and install 
 18.33  machinery or equipment; 
 18.34     (5) repair and replacement parts, including accessories, 
 18.35  whether purchased as spare parts, repair parts, or as upgrades 
 18.36  or modifications to machinery or equipment; 
 19.1      (6) materials used for foundations that support machinery 
 19.2   or equipment; 
 19.3      (7) materials used to construct and install special purpose 
 19.4   buildings used in the production process; and 
 19.5      (8) ready-mixed concrete trucks in which the ready-mixed 
 19.6   concrete is mixed as part of the delivery process.  
 19.7      (c) Capital equipment does not include the following: 
 19.8      (1) motor vehicles taxed under chapter 297B; 
 19.9      (2) machinery or equipment used to receive or store raw 
 19.10  materials; 
 19.11     (3) building materials, except for materials included in 
 19.12  paragraph (b), clauses (6) and (7); 
 19.13     (4) machinery or equipment used for nonproduction purposes, 
 19.14  including, but not limited to, the following:  plant security, 
 19.15  fire prevention, first aid, and hospital stations; support 
 19.16  operations or administration; pollution control; and plant 
 19.17  cleaning, disposal of scrap and waste, plant communications, 
 19.18  space heating, cooling, lighting, or safety; 
 19.19     (5) farm machinery and aquaculture production equipment as 
 19.20  defined by section 297A.61, subdivisions 12 and 13; 
 19.21     (6) machinery or equipment purchased and installed by a 
 19.22  contractor as part of an improvement to real property; or 
 19.23     (7) any other item that is not essential to the integrated 
 19.24  process of manufacturing, fabricating, mining, or refining. 
 19.25     (d) For purposes of this subdivision: 
 19.26     (1) "Machinery" means mechanical, electronic, or electrical 
 19.27  devices, including computers and computer software, that are 
 19.28  purchased or constructed to be used for the activities set forth 
 19.29  in paragraph (a), beginning with the removal of raw materials 
 19.30  from inventory through completion of the product, including 
 19.31  packaging of the product. 
 19.32     (2) "Equipment" means independent devices or tools separate 
 19.33  from machinery but essential to an integrated production 
 19.34  process, including computers and computer software, used in 
 19.35  operating, controlling, or regulating machinery and equipment; 
 19.36  and any subunit or assembly comprising a component of any 
 20.1   machinery or accessory or attachment parts of machinery, such as 
 20.2   tools, dies, jigs, patterns, and molds.  
 20.3      (3) "Primarily" means machinery and equipment used 50 
 20.4   percent or more of the time in an activity described in 
 20.5   paragraph (a). 
 20.6      (4) "Manufacturing" means an operation or series of 
 20.7   operations where raw materials are changed in form, composition, 
 20.8   or condition by machinery and equipment and which results in the 
 20.9   production of a new article of tangible personal property.  For 
 20.10  purposes of this subdivision, "manufacturing" includes the 
 20.11  generation of electricity or steam to be sold at retail. 
 20.12     (5) "Fabricating" means to make, build, create, produce, or 
 20.13  assemble components or property to work in a new or different 
 20.14  manner. 
 20.15     (6) "Mining" means the extraction of minerals, ores, stone, 
 20.16  or peat. 
 20.17     (7) "Refining" means the process of converting a natural 
 20.18  resource to a product, including the treatment of water to be 
 20.19  sold at retail. 
 20.20     (8) "Integrated production process" means a process 
 20.21  beginning with the removal of raw materials from inventory 
 20.22  through the completion of the product, including packaging of 
 20.23  the product. 
 20.24     (9) "Online data retrieval system" means a system whose 
 20.25  cumulation of information is equally available and accessible to 
 20.26  all its customers. 
 20.27     (10) (9) "Machinery and equipment used for pollution 
 20.28  control" means machinery and equipment used solely to eliminate, 
 20.29  prevent, or reduce pollution resulting from an activity 
 20.30  described in paragraph (a).  
 20.31     Sec. 22.  Minnesota Statutes 2000, section 297A.68, 
 20.32  subdivision 11, is amended to read: 
 20.33     Subd. 11.  [ADVERTISING MATERIALS.] Material Materials 
 20.34  designed to advertise and promote the sale of merchandise or 
 20.35  services is are exempt if the material is purchased and stored 
 20.36  for the purpose of subsequently shipping or otherwise 
 21.1   transferring outside the state by the purchaser for later these 
 21.2   materials are mailed or transferred to a person outside the 
 21.3   state for use solely outside the state of Minnesota.  Mailing 
 21.4   and reply envelopes and cards used exclusively in connection 
 21.5   with these advertising and promotional materials are included in 
 21.6   this exemption.  The exemption applies regardless of where the 
 21.7   mailing occurs.  The storage of these materials in the state for 
 21.8   the purpose of subsequently shipping or otherwise transferring 
 21.9   the material out of state is also exempt if the other conditions 
 21.10  in this subdivision are met. 
 21.11     Sec. 23.  Minnesota Statutes 2000, section 297A.68, 
 21.12  subdivision 13, is amended to read: 
 21.13     Subd. 13.  [OUTSTATE TRANSPORT OR DELIVERY.] (a) Tangible 
 21.14  personal property is exempt if the property, without 
 21.15  intermediate use, is all of the following conditions are met:  
 21.16     (1) the property, without intermediate use, is shipped or 
 21.17  transported outside Minnesota by the purchaser or is stored, 
 21.18  processed, fabricated or manufactured into, attached to or 
 21.19  incorporated into other tangible personal property that is 
 21.20  transported or shipped outside Minnesota; and 
 21.21     (2) the property is used in a trade or business outside 
 21.22  Minnesota after being shipped or transported outside of 
 21.23  Minnesota, and is not returned to Minnesota, except in the 
 21.24  course of interstate commerce; and 
 21.25     (3) the property is either (i) not subject to tax in the 
 21.26  state or country to which it is transported for storage or use, 
 21.27  or (ii) to be used in other states or countries as part of a 
 21.28  maintenance contract. 
 21.29     (b) For purposes of this subdivision, storage or 
 21.30  processing, fabricating, manufacturing, attaching to, or 
 21.31  incorporating into other property is not intermediate use. 
 21.32     Sec. 24.  Minnesota Statutes 2000, section 297A.68, 
 21.33  subdivision 14, is amended to read: 
 21.34     Subd. 14.  [TEMPORARY STORAGE PROPERTY IN TRANSIT.] 
 21.35  Tangible personal property is exempt if all of the following 
 21.36  conditions are met: 
 22.1      (1) it is shipped or brought into Minnesota by a common 
 22.2   for-hire carrier; 
 22.3      (2) without intermediate use, it is kept in a public 
 22.4   warehouse; 
 22.5      (3) it is kept for the purpose of being later transported 
 22.6   outside Minnesota; and 
 22.7      (4) after storage, it is used solely outside Minnesota, 
 22.8   except in the course of interstate commerce. 
 22.9      Sec. 25.  Minnesota Statutes 2000, section 297A.68, 
 22.10  subdivision 18, is amended to read: 
 22.11     Subd. 18.  [CUSTOM COMPUTER SOFTWARE.] The design, 
 22.12  development, writing, translation, fabrication, lease, or 
 22.13  transfer for a consideration of title or possession of a custom 
 22.14  computer program is exempt.  "Custom computer program" means a 
 22.15  computer program prepared to the special order of the customer, 
 22.16  either in the form of written procedures or in the form of 
 22.17  storage media on which, or in which, the program is 
 22.18  recorded contained on tapes, discs, cards, or another device, or 
 22.19  any required documentation or manuals designed to facilitate the 
 22.20  use of the custom computer program transferred.  It includes 
 22.21  those services represented by separately stated charges for 
 22.22  modifications to an existing prewritten program that are 
 22.23  prepared to the special order of the customer.  It does not 
 22.24  include a "canned" or prewritten computer program that is held 
 22.25  or existing for general or repeated sale or lease, even if the 
 22.26  prewritten or "canned" program was initially developed on a 
 22.27  custom basis or for in-house use.  Modification to an existing 
 22.28  prewritten program to meet the customer's needs is custom 
 22.29  computer programming only to the extent of the modification.  
 22.30     Sec. 26.  Minnesota Statutes 2000, section 297A.68, 
 22.31  subdivision 25, is amended to read: 
 22.32     Subd. 25.  [OCCASIONAL SALES SALE OF PROPERTY USED IN A 
 22.33  TRADE OR BUSINESS.] (a) Isolated or occasional sales of The sale 
 22.34  of tangible personal property in Minnesota primarily used in a 
 22.35  trade or business is exempt if the sale is not made in the 
 22.36  normal course of business of selling that kind of property are 
 23.1   exempt.  The storage, use, or consumption of property acquired 
 23.2   as a result of such a sale is exempt. 
 23.3      (b) This exemption applies to a sale of tangible personal 
 23.4   property primarily used in a trade or business only and if one 
 23.5   of the following conditions is satisfied:  
 23.6      (1) the sale occurs in a transaction subject to or 
 23.7   described in section 118, 331, 332, 336, 337, 338, 351, 355, 
 23.8   368, 721, 731, 1031, or 1033 of the Internal Revenue Code; 
 23.9      (2) the sale is between members of a controlled group as 
 23.10  defined in section 1563(a) of the Internal Revenue Code; 
 23.11     (3) the sale is a sale of farm machinery; 
 23.12     (4) the sale is a farm auction sale; 
 23.13     (5) the sale is a sale of substantially all of the assets 
 23.14  of a trade or business; or 
 23.15     (6) the total amount of gross receipts from the sale of 
 23.16  trade or business property made during the calendar month of the 
 23.17  sale and the preceding 11 calendar months does not exceed $1,000.
 23.18     The use, storage, distribution, or consumption of tangible 
 23.19  personal property acquired as a result of a sale exempt under 
 23.20  this subdivision is also exempt. 
 23.21     (c) (b) For purposes of this subdivision, the following 
 23.22  terms have the meanings given.  
 23.23     (1) A "farm auction" is a public auction conducted by a 
 23.24  licensed auctioneer if substantially all of the property sold 
 23.25  consists of property used in the trade or business of farming 
 23.26  and property not used primarily in a trade or business. 
 23.27     (2) "Trade or business" includes the assets of a separate 
 23.28  division, branch, or identifiable segment of a trade or business 
 23.29  if, before the sale, the income and expenses attributable to the 
 23.30  separate division, branch, or identifiable segment could be 
 23.31  separately ascertained from the books of account or record (the 
 23.32  lease or rental of an identifiable segment does not qualify for 
 23.33  the exemption). 
 23.34     (3) A "sale of substantially all of the assets of a trade 
 23.35  or business" must occur as a single transaction or a series of 
 23.36  related transactions within the 12-month period beginning on the 
 24.1   date of the first sale of assets intended to qualify for the 
 24.2   exemption provided in paragraph (b) (a), clause (5). 
 24.3      Sec. 27.  Minnesota Statutes 2000, section 297A.69, 
 24.4   subdivision 2, is amended to read: 
 24.5      Subd. 2.  [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 
 24.6   (a) Materials stored, used, or consumed in agricultural 
 24.7   production of personal property intended to be sold ultimately 
 24.8   at retail are exempt, whether or not the item becomes an 
 24.9   ingredient or constituent part of the property produced.  
 24.10  Materials that qualify for this exemption include, but are not 
 24.11  limited to, the following: 
 24.12     (1) feeds, seeds, trees, fertilizers, and herbicides, 
 24.13  including when purchased for use by farmers in a federal or 
 24.14  state farm or conservation program; 
 24.15     (2) materials sold to a veterinarian to be used or consumed 
 24.16  in the care, medication, and treatment of agricultural 
 24.17  production animals and horses; 
 24.18     (3) chemicals, including chemicals used for cleaning food 
 24.19  processing machinery and equipment; 
 24.20     (4) materials, including chemicals, fuels, and electricity 
 24.21  purchased by persons engaged in agricultural production to treat 
 24.22  waste generated as a result of the production process; 
 24.23     (5) fuels, electricity, gas, and steam used or consumed in 
 24.24  the production process, except that electricity, gas, or steam 
 24.25  used for space heating, cooling, or lighting is exempt only if 
 24.26  (i) it is in excess of the average climate control or lighting 
 24.27  for the production area, and (ii) it is necessary to produce 
 24.28  that particular agricultural product; 
 24.29     (6) petroleum products and lubricants; 
 24.30     (7) packaging materials, including returnable containers 
 24.31  used in packaging food and beverage products; and 
 24.32     (8) accessory tools and equipment that are separate 
 24.33  detachable units with an ordinary useful life of less than 12 
 24.34  months used in producing a direct effect upon the product. 
 24.35  Machinery, equipment, implements, tools, accessories, 
 24.36  appliances, contrivances, and furniture and fixtures, except 
 25.1   those listed in this clause are not included within this 
 25.2   exemption. 
 25.3      (b) For purposes of this subdivision, "agricultural 
 25.4   production" includes, but is not limited to, horticulture, 
 25.5   floriculture, maple syrup harvesting, and the raising of pets, 
 25.6   fur-bearing animals, research animals, horses, farmed cervidae 
 25.7   as defined in section 17.451, subdivision 2, llamas as defined 
 25.8   in section 17.455, subdivision 2, and ratitae as defined in 
 25.9   section 17.453, subdivision 3. 
 25.10     Sec. 28.  Minnesota Statutes 2000, section 297A.70, 
 25.11  subdivision 1, is amended to read: 
 25.12     Subdivision 1.  [SCOPE.] (a) To the extent provided in this 
 25.13  section, the gross receipts from sales of items to or by, and 
 25.14  storage, distribution, use, or consumption of items by the 
 25.15  organizations listed in this section are specifically exempted 
 25.16  from the taxes imposed by this chapter. 
 25.17     (b) Notwithstanding any law to the contrary enacted before 
 25.18  1992, only sales to governments and political subdivisions 
 25.19  listed in this section are exempt from the taxes imposed by this 
 25.20  chapter.  
 25.21     (c) "Sales" includes purchases under an installment 
 25.22  contract or lease purchase agreement under section 465.71. 
 25.23     Sec. 29.  Minnesota Statutes 2000, section 297A.70, 
 25.24  subdivision 2, is amended to read: 
 25.25     Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
 25.26  those listed in paragraph (b), to the following governments and 
 25.27  political subdivisions, or to the listed agencies or 
 25.28  instrumentalities of governments and political subdivisions, are 
 25.29  exempt: 
 25.30     (1) the United States and its agencies and 
 25.31  instrumentalities; 
 25.32     (2) school districts, the University of Minnesota, state 
 25.33  universities, community colleges, technical colleges, state 
 25.34  academies, the Perpich Minnesota center for arts education, and 
 25.35  an instrumentality of a political subdivision that is accredited 
 25.36  as an optional/special function school by the North Central 
 26.1   Association of Colleges and Schools; 
 26.2      (3) hospitals and nursing homes owned and operated by 
 26.3   political subdivisions of the state; 
 26.4      (4) other states or political subdivisions of other states, 
 26.5   if the sale would be exempt from taxation if it occurred in that 
 26.6   state; and 
 26.7      (5) sales to public libraries, public library systems, 
 26.8   multicounty, multitype library systems as defined in section 
 26.9   134.001, county law libraries under chapter 134A, state agency 
 26.10  libraries, the state library under section 480.09, and the 
 26.11  legislative reference library.  
 26.12     (b) This exemption does not apply to the sales of the 
 26.13  following products and services: 
 26.14     (1) building, construction, or reconstruction materials 
 26.15  purchased by a contractor or a subcontractor as a part of a 
 26.16  lump-sum contract or similar type of contract with a guaranteed 
 26.17  maximum price covering both labor and materials for use in the 
 26.18  construction, alteration, or repair of a building or facility; 
 26.19     (2) construction materials purchased by tax exempt entities 
 26.20  or their contractors to be used in constructing buildings or 
 26.21  facilities which will not be used principally by the tax exempt 
 26.22  entities; 
 26.23     (3) the leasing of a motor vehicle as defined in section 
 26.24  297B.01, subdivision 5, except for leases entered into by the 
 26.25  United States or its agencies or instrumentalities; or 
 26.26     (4) meals and lodging as defined under section 297A.61, 
 26.27  subdivisions subdivision 3, paragraph paragraphs (d), and 16 
 26.28  (g), paragraph (c) clause (2), except for meals and lodging 
 26.29  purchased directly by the United States or its agencies or 
 26.30  instrumentalities. 
 26.31     (c) As used in this subdivision, "school districts" means 
 26.32  public school entities and districts of every kind and nature 
 26.33  organized under the laws of the state of Minnesota, and any 
 26.34  instrumentality of a school district, as defined in section 
 26.35  471.59. 
 26.36     Sec. 30.  Minnesota Statutes 2000, section 297A.70, 
 27.1   subdivision 4, is amended to read: 
 27.2      Subd. 4.  [SALES TO NONPROFIT GROUPS.] (a) All sales, 
 27.3   except those listed in paragraph (b), to the following 
 27.4   "nonprofit organizations" are exempt: 
 27.5      (1) an entity a corporation, society, association, 
 27.6   foundation, or institution organized and operated exclusively 
 27.7   for charitable, religious, or educational purposes if the item 
 27.8   purchased is used in the performance of charitable, religious, 
 27.9   or educational functions; and 
 27.10     (2) any senior citizen group or association of groups that: 
 27.11     (i) in general limits membership to persons who are either 
 27.12  age 55 or older, or physically disabled; and 
 27.13     (ii) is organized and operated exclusively for pleasure, 
 27.14  recreation, and other nonprofit purposes, no part of the net 
 27.15  earnings of which inures to the benefit of any private 
 27.16  shareholders; and. 
 27.17     (3) an entity organized and operated exclusively to 
 27.18  maintain 
 27.19  For purposes of this subdivision, charitable purpose includes 
 27.20  the maintenance of a cemetery owned by a religious organization. 
 27.21     (b) This exemption does not apply to the following sales: 
 27.22     (1) building, construction, or reconstruction materials 
 27.23  purchased by a contractor or a subcontractor as a part of a 
 27.24  lump-sum contract or similar type of contract with a guaranteed 
 27.25  maximum price covering both labor and materials for use in the 
 27.26  construction, alteration, or repair of a building or facility; 
 27.27     (2) construction materials purchased by tax-exempt entities 
 27.28  or their contractors to be used in constructing buildings or 
 27.29  facilities that will not be used principally by the tax-exempt 
 27.30  entities; and 
 27.31     (3) meals and lodging as defined under section 297A.61, 
 27.32  subdivisions subdivision 3, paragraph paragraphs (d), and 
 27.33  16 (g), paragraph (c) clause (2); and 
 27.34     (4) leasing of a motor vehicle as defined in section 
 27.35  297B.01, subdivision 5, except as provided in paragraph (c). 
 27.36     (c) This exemption applies to the leasing of a motor 
 28.1   vehicle as defined in section 297B.01, subdivision 5, only if 
 28.2   the vehicle is: 
 28.3      (1) a truck, as defined in section 168.011, a bus, as 
 28.4   defined in section 168.011, or a passenger automobile, as 
 28.5   defined in section 168.011, if the automobile is designed and 
 28.6   used for carrying more than nine persons including the driver; 
 28.7   and 
 28.8      (2) intended to be used primarily to transport tangible 
 28.9   personal property or individuals, other than employees, to whom 
 28.10  the organization provides service in performing its charitable, 
 28.11  religious, or educational purpose. 
 28.12     Sec. 31.  Minnesota Statutes 2000, section 297A.70, 
 28.13  subdivision 7, is amended to read: 
 28.14     Subd. 7.  [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 
 28.15  Sales, except for those listed in paragraph (c), to a hospital 
 28.16  are exempt, if the items purchased are used in providing 
 28.17  hospital services.  For purposes of this subdivision, "hospital" 
 28.18  means a hospital organized and operated for charitable purposes 
 28.19  within the meaning of section 501(c)(3) of the Internal Revenue 
 28.20  Code, and licensed under chapter 144 or by any other 
 28.21  jurisdiction, and "hospital services" are services authorized or 
 28.22  required to be performed by a "hospital" under chapter 144. 
 28.23     (b) Sales, except for those listed in paragraph (c), to an 
 28.24  outpatient surgical center are exempt, if the items purchased 
 28.25  are used in providing outpatient surgical services.  For 
 28.26  purposes of this subdivision, "outpatient surgical center" means 
 28.27  an outpatient surgical center organized and operated for 
 28.28  charitable purposes within the meaning of section 501(c)(3) of 
 28.29  the Internal Revenue Code, and licensed under chapter 144 or by 
 28.30  any other jurisdiction.  For the purposes of this subdivision, 
 28.31  "outpatient surgical services" means:  (1) services authorized 
 28.32  or required to be performed by an outpatient surgical center 
 28.33  under chapter 144 or under the applicable licensure law of any 
 28.34  other jurisdiction; and (2) urgent care.  For purposes of this 
 28.35  subdivision, "urgent care" means health services furnished to a 
 28.36  person whose medical condition is sufficiently acute to require 
 29.1   treatment unavailable through, or inappropriate to be provided 
 29.2   by, a clinic or physician's office, but not so acute as to 
 29.3   require treatment in a hospital emergency room.  
 29.4      (c) This exemption does not apply to the following products 
 29.5   and services: 
 29.6      (1) purchases made by a clinic, physician's office, or any 
 29.7   other medical facility not operating as a hospital or outpatient 
 29.8   surgical center, even though the clinic, office, or facility may 
 29.9   be owned and operated by a hospital or outpatient surgical 
 29.10  center; 
 29.11     (2) sales under section 297A.61, subdivisions 3, paragraph 
 29.12  (d), and 16, paragraph (c); 
 29.13     (3) building and construction materials used in 
 29.14  constructing buildings or facilities that will not be used 
 29.15  principally by the hospital or outpatient surgical center; 
 29.16     (4) building, construction, or reconstruction materials 
 29.17  purchased by a contractor or a subcontractor as a part of a 
 29.18  lump-sum contract or similar type of contract with a guaranteed 
 29.19  maximum price covering both labor and materials for use in the 
 29.20  construction, alteration, or repair of a hospital or outpatient 
 29.21  surgical center; or 
 29.22     (5) the leasing of a motor vehicle as defined in section 
 29.23  297B.01, subdivision 5. 
 29.24     Sec. 32.  Minnesota Statutes 2000, section 297A.70, 
 29.25  subdivision 8, is amended to read: 
 29.26     Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
 29.27  SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 
 29.28  but not limited to, end user equipment used for construction, 
 29.29  ownership, operation, maintenance, and enhancement of the 
 29.30  backbone system of the regionwide public safety radio 
 29.31  communication system established under sections 473.891 to 
 29.32  473.905, are exempt.  For purposes of this subdivision, backbone 
 29.33  system is defined in section 473.891, subdivision 9.  This 
 29.34  subdivision is effective for purchases, sales, storage, use, or 
 29.35  consumption occurring before August 1, 2003, in the counties of 
 29.36  Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
 30.1      Sec. 33.  Minnesota Statutes 2000, section 297A.70, 
 30.2   subdivision 10, is amended to read: 
 30.3      Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 
 30.4   admissions to the premises of or events sponsored by an 
 30.5   organization that provides an opportunity for citizens of the 
 30.6   state to participate in the creation, performance, or 
 30.7   appreciation of the arts are exempt if the organization is 
 30.8   either: 
 30.9      (1) a tax-exempt organization within the meaning of 
 30.10  Minnesota Statutes 1980, section 290.05, subdivision 1, clause 
 30.11  (i), a corporation, fund, foundation, trust, or association if 
 30.12  (i) it is organized for exclusively scientific, literary, 
 30.13  religious, charitable, educational, or artistic purposes, or for 
 30.14  the purpose of making contributions to or for the use of the 
 30.15  United States of America, the state of Minnesota or any of its 
 30.16  political subdivisions for exclusively public purposes, or for 
 30.17  any combination of the purposes listed in this clause, and (ii) 
 30.18  no part of the net income of the corporation, fund, foundation, 
 30.19  trust, or association inures to the benefit of any private 
 30.20  member, stockholder, or individual; or 
 30.21     (2) a municipal board that promotes cultural and arts 
 30.22  activities. 
 30.23  The exemption provided with respect to a municipal board applies 
 30.24  only to tickets and admissions to events sponsored by the board. 
 30.25     Sec. 34.  Minnesota Statutes 2000, section 297A.70, 
 30.26  subdivision 13, is amended to read: 
 30.27     Subd. 13.  [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 
 30.28  (a) The following sales by the specified organizations for 
 30.29  fundraising purposes are exempt, subject to the limitations 
 30.30  listed in paragraph (b): 
 30.31     (1) all sales made by an organization that exists solely 
 30.32  for the purpose of providing educational or social activities 
 30.33  for young people primarily age 18 and under; 
 30.34     (2) all sales made by an organization that is a senior 
 30.35  citizen group or association of groups if (i) in general it 
 30.36  limits membership to persons age 55 or older; (ii) it is 
 31.1   organized and operated exclusively for pleasure, recreation, and 
 31.2   other nonprofit purposes; and (iii) no part of its net earnings 
 31.3   inures to the benefit of any private shareholders; 
 31.4      (3) the sale or use of tickets or admissions to a golf 
 31.5   tournament held in Minnesota if the beneficiary of the 
 31.6   tournament's net proceeds qualifies as a tax-exempt organization 
 31.7   under section 501(c)(3) of the Internal Revenue Code; and 
 31.8      (4) sales of gum, candy, and candy products sold for 
 31.9   fundraising purposes by a nonprofit organization that provides 
 31.10  educational and social activities primarily for young people age 
 31.11  18 years of age and under. 
 31.12     (b) The exemptions listed in paragraph (a) are limited in 
 31.13  the following manner: 
 31.14     (1) the exemption under paragraph (a), clauses (1) and (2), 
 31.15  applies only if the gross annual receipts of the organization 
 31.16  from fundraising do not exceed $10,000; and 
 31.17     (2) the exemption under paragraph (a), clause (1), does not 
 31.18  apply if the sales are derived from admission charges or from 
 31.19  activities for which the money must be deposited with the school 
 31.20  district treasurer under section 123B.49, subdivision 2, or be 
 31.21  recorded in the same manner as other revenues or expenditures of 
 31.22  the school district under section 123B.49, subdivision 4. 
 31.23     (c) For purposes of this subdivision, a club, association, 
 31.24  or other organization of elementary or secondary school students 
 31.25  organized for the purpose of carrying on sports, educational, or 
 31.26  other extracurricular activities is a separate organization from 
 31.27  the school district or school for purposes of applying the 
 31.28  $10,000 limit. 
 31.29     Sec. 35.  Minnesota Statutes 2000, section 297A.70, 
 31.30  subdivision 14, is amended to read: 
 31.31     Subd. 14.  [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 
 31.32  GROUPS.] (a) Sales of tangible personal property at, and 
 31.33  admission charges for fundraising events sponsored by, a 
 31.34  nonprofit organization are exempt if the entire proceeds, less 
 31.35  the necessary expenses for the event, will be used solely and 
 31.36  exclusively for charitable, religious, or educational purposes.  
 32.1   Exempt sales include the sale of food, meals, and drinks, and 
 32.2   taxable services at the fundraising event. 
 32.3      (b) This exemption is limited in the following manner: 
 32.4      (1) it does not apply to admission charges for events 
 32.5   involving bingo or other gambling activities or to charges for 
 32.6   use of amusement devices involving bingo or other gambling 
 32.7   activities; 
 32.8      (2) all gross receipts are taxable if the profits are not 
 32.9   used solely and exclusively for charitable, religious, or 
 32.10  educational purposes; 
 32.11     (3) it does not apply unless the organization keeps a 
 32.12  separate accounting record, including receipts and disbursements 
 32.13  from each fundraising event that documents all deductions from 
 32.14  gross receipts with receipts and other records; 
 32.15     (4) it does not apply to any sale made by or in the name of 
 32.16  a nonprofit corporation as the active or passive agent of a 
 32.17  person that is not a nonprofit corporation; 
 32.18     (5) all gross receipts are taxable if fundraising events 
 32.19  exceed 24 days per year; and 
 32.20     (6) it does not apply to fundraising events conducted on 
 32.21  premises leased for more than five days but less than 30 days. 
 32.22     (c) For purposes of this subdivision, a "nonprofit 
 32.23  organization" means any unit of government, corporation, 
 32.24  society, association, foundation, or institution organized and 
 32.25  operated for charitable, religious, educational, civic, 
 32.26  fraternal, and senior citizens' or veterans' purposes, no part 
 32.27  of the net earnings of which inures to the benefit of a private 
 32.28  individual. 
 32.29     Sec. 36.  Minnesota Statutes 2000, section 297A.75, is 
 32.30  amended to read: 
 32.31     297A.75 [REFUND; APPROPRIATION.] 
 32.32     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
 32.33  receipts from the sale of the following exempt items must be 
 32.34  imposed and collected as if the sale were taxable and the rate 
 32.35  under section 297A.62, subdivision 1, applied.  The exempt items 
 32.36  include: 
 33.1      (1) capital equipment exempt under section 297A.68, 
 33.2   subdivision 5; 
 33.3      (2) building materials for an agricultural processing 
 33.4   facility exempt under section 297A.71, subdivision 13; 
 33.5      (3) building materials for mineral production facilities 
 33.6   exempt under section 297A.71, subdivision 14; 
 33.7      (4) building materials for correctional facilities under 
 33.8   section 297A.71, subdivision 3; 
 33.9      (5) building materials used in a residence for disabled 
 33.10  veterans exempt under section 297A.71, subdivision 11; and 
 33.11     (6) chair lifts, ramps, elevators, and associated building 
 33.12  materials exempt under section 297A.71, subdivision 12; and 
 33.13     (7) building materials for the Long Lake Conservation 
 33.14  Center exempt under section 297A.71, subdivision 17. 
 33.15     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
 33.16  forms prescribed by the commissioner, a refund equal to the tax 
 33.17  paid on the gross receipts of the exempt items must be paid to 
 33.18  the applicant.  Only the following persons may apply for the 
 33.19  refund: 
 33.20     (1) for subdivision 1, clauses (1) to (3), the applicant 
 33.21  must be the purchaser; 
 33.22     (2) for subdivision 1, clause clauses (4) and (7), the 
 33.23  applicant must be the governmental subdivision; 
 33.24     (3) for subdivision 1, clause (5), the applicant must be 
 33.25  the recipient of the benefits provided in United States Code, 
 33.26  title 38, chapter 21; and 
 33.27     (4) for subdivision 1, clause (6), the applicant must be 
 33.28  the owner of the homestead property. 
 33.29     Subd. 3.  [APPLICATION.] (a) The application must include 
 33.30  sufficient information to permit the commissioner to verify the 
 33.31  tax paid.  If the tax was paid by a contractor, subcontractor, 
 33.32  or builder, under subdivision 1, clause (4), (5), or (6), or 
 33.33  (7), the contractor, subcontractor, or builder must furnish to 
 33.34  the refund applicant a statement including the cost of the 
 33.35  exempt items and the taxes paid on the items unless otherwise 
 33.36  specifically provided by this subdivision.  The provisions of 
 34.1   sections 289A.40 and 289A.50 apply to refunds under this section.
 34.2      (b) An applicant may not file more than two applications 
 34.3   per calendar year for refunds for taxes paid on capital 
 34.4   equipment exempt under section 297A.68, subdivision 5.  
 34.5      Subd. 4.  [INTEREST.] Interest must be paid on the refund 
 34.6   at the rate in section 270.76 from the date the refund claim is 
 34.7   filed for taxes paid under subdivision 1, clauses (1) to (3), 
 34.8   and (5), and from 60 days after the date the refund claim is 
 34.9   filed with the commissioner for claims filed under subdivision 
 34.10  1, clauses (4) and, (6), and (7). 
 34.11     Subd. 5.  [APPROPRIATION.] The amount required to make the 
 34.12  refunds is annually appropriated to the commissioner. 
 34.13     Sec. 37.  Minnesota Statutes 2000, section 297A.77, 
 34.14  subdivision 1, is amended to read: 
 34.15     Subdivision 1.  [COLLECTION OF TAX AT TIME OF SALE.] The 
 34.16  tax must be stated and charged separately from the sales 
 34.17  price or charge for service insofar as practicable and must be 
 34.18  collected by the seller from the purchaser.  
 34.19     Sec. 38.  Minnesota Statutes 2000, section 297A.80, is 
 34.20  amended to read: 
 34.21     297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE 
 34.22  TAX CREDIT.] 
 34.23     Subdivision 1.  [MULTISTATE TAX COMPACT STATES.] If an 
 34.24  article of tangible personal property or an item listed in 
 34.25  section 297A.63 has already been taxed for its sale, 
 34.26  distribution, storage, use, or other consumption by another 
 34.27  state, or a subdivision of another state, that is a member of 
 34.28  the multistate tax compact, a tax credit is allowed to the 
 34.29  person who paid the tax in the other state or subdivision of the 
 34.30  other state under the provisions of section 290.171, article V. 
 34.31     Subd. 2.  [OTHER STATES; GENERALLY.] If an article of 
 34.32  tangible personal property or an item listed in section 297A.63 
 34.33  has already been taxed by another state for its sale, 
 34.34  distribution, storage, use, or other consumption in an amount 
 34.35  less than the tax imposed by this chapter, then as to the person 
 34.36  who paid the tax in the other state, section 297A.63 applies 
 35.1   only at a rate measured by the difference between the rate 
 35.2   imposed under section 297A.62 and the rate by which the previous 
 35.3   tax was computed by another state not included in subdivision 1, 
 35.4   a tax credit is allowed against the tax imposed in section 
 35.5   297A.63 to the person who paid the tax in the amount of tax paid 
 35.6   to the other state.  If the tax imposed in the other state is 
 35.7   equal to or greater than The credit cannot exceed the tax 
 35.8   imposed in this state, then no tax is due from that person under 
 35.9   section 297A.63. 
 35.10     Sec. 39.  Minnesota Statutes 2000, section 297A.82, 
 35.11  subdivision 3, is amended to read: 
 35.12     Subd. 3.  [PAYMENT OF TAX TO COMMISSIONER.] If the an 
 35.13  aircraft is purchased from a person who is not the holder of a 
 35.14  valid sales and use tax permit under this chapter, the purchaser 
 35.15  shall pay the tax to the commissioner of revenue prior to 
 35.16  registering or licensing the aircraft in this state.  The 
 35.17  commissioner of revenue shall issue a certificate stating that 
 35.18  the sales and use tax in respect to the transaction has been 
 35.19  paid.  
 35.20     Sec. 40.  Minnesota Statutes 2000, section 297A.89, 
 35.21  subdivision 1, is amended to read: 
 35.22     Subdivision 1.  [COMMISSIONER MAY PERMIT.] The commissioner 
 35.23  may permit purchasers to pay taxes imposed by this chapter 
 35.24  directly to the commissioner.  Any taxes paid by purchasers 
 35.25  under this section are considered use taxes, except for local 
 35.26  sales taxes when no corresponding local use tax is imposed.  
 35.27     Sec. 41.  Minnesota Statutes 2000, section 297A.90, 
 35.28  subdivision 1, is amended to read: 
 35.29     Subdivision 1.  [REGISTRATION; RECORDS.] (a) A person who 
 35.30  is engaged in interstate for-hire transportation of tangible 
 35.31  personal property or passengers by motor vehicle may, under 
 35.32  rules prescribed by the commissioner, register as a retailer and 
 35.33  pay the taxes imposed by this chapter in accordance with this 
 35.34  section.  Any taxes paid under this section are use taxes, 
 35.35  except local sales taxes when no corresponding local use tax is 
 35.36  imposed. 
 36.1      (b) As used in this section, "person" means:  
 36.2      (1) one who possesses a certificate or permit or has 
 36.3   completed a registration process that authorizes for-hire 
 36.4   transportation of property or passengers from the United States 
 36.5   Department of Transportation, the transportation regulation 
 36.6   board, or the department of transportation; 
 36.7      (2) one who transports commodities defined as "exempt" in 
 36.8   for-hire transportation in interstate commerce; or 
 36.9      (3) one who transports tangible personal property in 
 36.10  interstate commerce, pursuant to contracts with persons 
 36.11  described in clause (1) or (2).  
 36.12  Persons qualifying under clause (2) or (3) must maintain on a 
 36.13  current basis the same type of mileage records that are required 
 36.14  by persons specified in clause (1) by the United States 
 36.15  Department of Transportation.  
 36.16     (c) Persons who in the course of their business are 
 36.17  transporting solely their own goods in interstate commerce may 
 36.18  also register as retailers under rules prescribed by the 
 36.19  commissioner and pay the taxes imposed by this chapter in 
 36.20  accordance with this section.  
 36.21     Sec. 42.  Minnesota Statutes 2000, section 297A.91, 
 36.22  subdivision 1, is amended to read: 
 36.23     Subdivision 1.  [SEIZURE OF PROPERTY USED IN ILLEGAL 
 36.24  TRANSPORT.] (a) If the retailer does not have a sales or use tax 
 36.25  permit and has been engaging in transporting personal property 
 36.26  into the state without payment of the tax, the commissioner of 
 36.27  revenue or the commissioner's agents may seize in the name of 
 36.28  the state any truck, automobile, or means of transportation not 
 36.29  owned or operated by a common for-hire carrier, used in the 
 36.30  illegal importation and transportation of any tangible personal 
 36.31  property by a retailer or the retailer's agent or employee.  The 
 36.32  commissioner may demand the forfeiture and sale of the truck, 
 36.33  automobile, or other means of transportation together with the 
 36.34  property being transported illegally, unless the owner 
 36.35  establishes to the satisfaction of the commissioner or the court 
 36.36  that the owner had no notice or knowledge or reason to believe 
 37.1   that the vehicle was used or intended to be used in any such 
 37.2   violation. 
 37.3      (b) Within two days after the seizure, the person making 
 37.4   the seizure shall deliver an inventory of the vehicle and 
 37.5   property seized to the person from whom the seizure was made, if 
 37.6   known, and to any person known or believed to have any right, 
 37.7   title, interest, or lien on the vehicle or property.  The person 
 37.8   making the seizure shall also file a copy of the inventory with 
 37.9   the commissioner.  
 37.10     Sec. 43.  Minnesota Statutes 2000, section 297A.92, 
 37.11  subdivision 2, is amended to read: 
 37.12     Subd. 2.  [AUCTIONS OF SECURITY.] The commissioner may sell 
 37.13  property deposited as security at public auction if necessary to 
 37.14  recover the amount required to be collected, including any 
 37.15  interest and penalties.  Notice of the sale must be served upon 
 37.16  the person who deposited the security.  It must be served 
 37.17  personally, or by mail as prescribed for the service of a notice 
 37.18  of a deficiency an order of assessment under section 289A.37, 
 37.19  subdivision 5.  After a sale any surplus above the amount due 
 37.20  not required as security under this section must be returned to 
 37.21  the person who deposited the security. 
 37.22     Sec. 44.  Minnesota Statutes 2000, section 297A.94, is 
 37.23  amended to read: 
 37.24     297A.94 [DEPOSIT OF REVENUES.] 
 37.25     (a) Except as provided in this section, the commissioner 
 37.26  shall deposit the revenues, including interest and penalties, 
 37.27  derived from the taxes imposed by this chapter in the state 
 37.28  treasury and credit them to the general fund.  
 37.29     (b) The commissioner shall deposit taxes in the Minnesota 
 37.30  agricultural and economic account in the special revenue fund if:
 37.31     (1) the taxes are derived from sales and use of property 
 37.32  and services purchased for the construction and operation of an 
 37.33  agricultural resource project; and 
 37.34     (2) the purchase was made on or after the date on which a 
 37.35  conditional commitment was made for a loan guaranty for the 
 37.36  project under section 41A.04, subdivision 3. 
 38.1   The commissioner of finance shall certify to the commissioner 
 38.2   the date on which the project received the conditional 
 38.3   commitment.  The amount deposited in the loan guaranty account 
 38.4   must be reduced by any refunds and by the costs incurred by the 
 38.5   department of revenue to administer and enforce the assessment 
 38.6   and collection of the taxes.  
 38.7      (c) The commissioner shall deposit the revenues, including 
 38.8   interest and penalties, derived from the taxes imposed on sales 
 38.9   and purchases included in section 297A.61, subdivision 16, 
 38.10  paragraphs (b) and (f) 3, paragraph (g), clauses (1) and (5), in 
 38.11  the state treasury, and credit them as follows: 
 38.12     (1) first to the general obligation special tax bond debt 
 38.13  service account in each fiscal year the amount required by 
 38.14  section 16A.661, subdivision 3, paragraph (b); and 
 38.15     (2) after the requirements of clause (1) have been met, the 
 38.16  balance to the general fund. 
 38.17     (d) The commissioner shall deposit the revenues, including 
 38.18  interest and penalties, collected under section 297A.64, 
 38.19  subdivision 5, in the state treasury and credit them to the 
 38.20  general fund.  By July 15 of each year the commissioner shall 
 38.21  transfer to the highway user tax distribution fund an amount 
 38.22  equal to the excess fees collected under section 297A.64, 
 38.23  subdivision 5, for the previous calendar year. 
 38.24     (e) For fiscal year 2001, 97 percent, and for fiscal year 
 38.25  2002 and thereafter, 87 percent of the revenues, including 
 38.26  interest and penalties, transmitted to the commissioner under 
 38.27  section 297A.65, must be deposited by the commissioner in the 
 38.28  state treasury as follows: 
 38.29     (1) 50 percent of the receipts must be deposited in the 
 38.30  heritage enhancement account in the game and fish fund, and may 
 38.31  be spent only on activities that improve, enhance, or protect 
 38.32  fish and wildlife resources, including conservation, 
 38.33  restoration, and enhancement of land, water, and other natural 
 38.34  resources of the state; 
 38.35     (2) 22.5 percent of the receipts must be deposited in the 
 38.36  natural resources fund, and may be spent only for state parks 
 39.1   and trails; 
 39.2      (3) 22.5 percent of the receipts must be deposited in the 
 39.3   natural resources fund, and may be spent only on metropolitan 
 39.4   park and trail grants; 
 39.5      (4) three percent of the receipts must be deposited in the 
 39.6   natural resources fund, and may be spent only on local trail 
 39.7   grants; and 
 39.8      (5) two percent of the receipts must be deposited in the 
 39.9   natural resources fund, and may be spent only for the Minnesota 
 39.10  zoological garden, the Como park zoo and conservatory, and the 
 39.11  Duluth zoo. 
 39.12     (f) The revenue dedicated under paragraph (e) may not be 
 39.13  used as a substitute for traditional sources of funding for the 
 39.14  purposes specified, but the dedicated revenue shall supplement 
 39.15  traditional sources of funding for those purposes.  Land 
 39.16  acquired with money deposited in the game and fish fund under 
 39.17  paragraph (e) must be open to public hunting and fishing during 
 39.18  the open season.  At least 87 percent of the money deposited in 
 39.19  the game and fish fund for improvement, enhancement, or 
 39.20  protection of fish and wildlife resources under paragraph (e) 
 39.21  must be allocated for field operations. 
 39.22     Sec. 45.  Minnesota Statutes 2000, section 297A.99, 
 39.23  subdivision 7, is amended to read: 
 39.24     Subd. 7.  [EXEMPTIONS.] (a) All goods or services that are 
 39.25  otherwise exempt from taxation under this chapter are exempt 
 39.26  from a political subdivision's tax. 
 39.27     (b) The gross receipts from the sale of tangible personal 
 39.28  property that meets the requirement of section 297A.68, 
 39.29  subdivision 13 or 14 15, are exempt, except the qualification 
 39.30  test applies based on the boundaries of the political 
 39.31  subdivision instead of the state of Minnesota. 
 39.32     (c) All mobile transportation equipment, and parts and 
 39.33  accessories attached to or to be attached to the equipment are 
 39.34  exempt, if purchased by a holder of a motor carrier direct pay 
 39.35  permit under section 297A.90.  
 39.36     Sec. 46.  [INSTRUCTIONS TO REVISOR.] 
 40.1      (a) In the next edition of Minnesota Statutes, the revisor 
 40.2   of statutes shall put the definitions in section 297A.68, 
 40.3   subdivision 5, paragraph (d), in alphabetical order and correct 
 40.4   any references to the reordered definitions. 
 40.5      (b) In the next edition of Minnesota Statutes, the revisor 
 40.6   of statutes shall renumber section 297A.68, subdivision 27, as 
 40.7   297A.67, subdivision 25, and correct any references to the 
 40.8   renumbered section. 
 40.9      Sec. 47.  [REPEALER.] 
 40.10     Minnesota Statutes 2000, sections 297A.61, subdivision 16; 
 40.11  297A.68, subdivision 21; and 297A.71, subdivision 21, are 
 40.12  repealed. 
 40.13     Sec. 48.  [EFFECTIVE DATE.] 
 40.14     Each section of this act takes effect at the time the 
 40.15  section it amends is effective under Laws 2000, chapter 418, 
 40.16  article 1, section 46.