HF 1211

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; providing that materials and 
  1.3             equipment used for production of water are exempt from 
  1.4             the sales tax; amending Minnesota Statutes 2000, 
  1.5             section 297A.68, subdivisions 2 and 5. 
  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 2, is amended to read: 
  1.9      Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
  1.10  (a) Materials stored, used, or consumed in industrial production 
  1.11  of personal property intended to be sold ultimately at retail 
  1.12  are exempt, whether or not the item so used becomes an 
  1.13  ingredient or constituent part of the property produced.  
  1.14  Materials that qualify for this exemption include, but are not 
  1.15  limited to, the following: 
  1.16     (1) chemicals, including chemicals used for cleaning food 
  1.17  processing machinery and equipment; 
  1.18     (2) materials, including chemicals, fuels, and electricity 
  1.19  purchased by persons engaged in industrial production to treat 
  1.20  waste generated as a result of the production process; 
  1.21     (3) fuels, electricity, gas, and steam used or consumed in 
  1.22  the production process, except that electricity, gas, or steam 
  1.23  used for space heating or lighting is exempt only if it is 
  1.24  necessary to produce that particular industrial product; 
  1.25     (4) petroleum products and lubricants; 
  2.1      (5) packaging materials, including returnable containers 
  2.2   used in packaging food and beverage products; 
  2.3      (6) accessory tools, equipment, and other items that are 
  2.4   separate detachable units with an ordinary useful life of less 
  2.5   than 12 months used in producing a direct effect upon the 
  2.6   product; and 
  2.7      (7) the following materials, tools, and equipment used in 
  2.8   metalcasting:  crucibles, thermocouple protection sheaths and 
  2.9   tubes, stalk tubes, refractory materials, molten metal filters 
  2.10  and filter boxes, degassing lances, and base blocks. 
  2.11     (b) This exemption does not include: 
  2.12     (1) machinery, equipment, implements, tools, accessories, 
  2.13  appliances, contrivances and furniture and fixtures, except 
  2.14  those listed in paragraph (a), clause (6); and 
  2.15     (2) petroleum and special fuels used in producing or 
  2.16  generating power for propelling ready-mixed concrete trucks on 
  2.17  the public highways of this state. 
  2.18     (c) Industrial production includes, but is not limited to, 
  2.19  research, development, design or production of any tangible 
  2.20  personal property, manufacturing, processing (other than by 
  2.21  restaurants and consumers) of agricultural products (whether 
  2.22  vegetable or animal), commercial fishing, refining, smelting, 
  2.23  reducing, brewing, distilling, printing, mining, quarrying, 
  2.24  lumbering, generating electricity, treating and presssurizing 
  2.25  water to be sold at retail, and the production of road building 
  2.26  materials.  Industrial production does not include painting, 
  2.27  cleaning, repairing or similar processing of property except as 
  2.28  part of the original manufacturing process.  
  2.29     [EFFECTIVE DATE.] This section is effective for sales after 
  2.30  June 30, 2001. 
  2.31     Sec. 2.  Minnesota Statutes 2000, section 297A.68, 
  2.32  subdivision 5, is amended to read: 
  2.33     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
  2.34  exempt.  The tax must be imposed and collected as if the rate 
  2.35  under section 297A.62, subdivision 1, applied, and then refunded 
  2.36  in the manner provided in section 297A.75. 
  3.1      "Capital equipment" means machinery and equipment purchased 
  3.2   or leased and used in this state by the purchaser or lessee 
  3.3   primarily for manufacturing, fabricating, mining, or refining 
  3.4   tangible personal property to be sold ultimately at retail. 
  3.5      Capital equipment means machinery and equipment essential 
  3.6   to the integrated production process.  Capital equipment also 
  3.7   includes machinery and equipment used to electronically transmit 
  3.8   results retrieved by a customer of an online computerized data 
  3.9   retrieval system. 
  3.10     (b) Capital equipment includes, but is not limited to: 
  3.11     (1) machinery and equipment used to operate, control, or 
  3.12  regulate the production equipment; 
  3.13     (2) machinery and equipment used for research and 
  3.14  development, design, quality control, and testing activities; 
  3.15     (3) environmental control devices that are used to maintain 
  3.16  conditions such as temperature, humidity, light, or air pressure 
  3.17  when those conditions are essential to and are part of the 
  3.18  production process; 
  3.19     (4) materials and supplies used to construct and install 
  3.20  machinery or equipment; 
  3.21     (5) repair and replacement parts, including accessories, 
  3.22  whether purchased as spare parts, repair parts, or as upgrades 
  3.23  or modifications to machinery or equipment; 
  3.24     (6) materials used for foundations that support machinery 
  3.25  or equipment; 
  3.26     (7) materials used to construct and install special purpose 
  3.27  buildings used in the production process; and 
  3.28     (8) ready-mixed concrete trucks in which the ready-mixed 
  3.29  concrete is mixed as part of the delivery process.  
  3.30     (c) Capital equipment does not include the following: 
  3.31     (1) motor vehicles taxed under chapter 297B; 
  3.32     (2) machinery or equipment used to receive or store raw 
  3.33  materials; 
  3.34     (3) building materials, except for materials included in 
  3.35  paragraph (b), clauses (6) and (7); 
  3.36     (4) machinery or equipment used for nonproduction purposes, 
  4.1   including, but not limited to, the following:  plant security, 
  4.2   fire prevention, first aid, and hospital stations; support 
  4.3   operations or administration; pollution control; and plant 
  4.4   cleaning, disposal of scrap and waste, plant communications, 
  4.5   space heating, lighting, or safety; 
  4.6      (5) farm machinery and aquaculture production equipment as 
  4.7   defined by section 297A.61, subdivisions 12 and 13; 
  4.8      (6) machinery or equipment purchased and installed by a 
  4.9   contractor as part of an improvement to real property; or 
  4.10     (7) any other item that is not essential to the integrated 
  4.11  process of manufacturing, fabricating, mining, or refining. 
  4.12     (d) For purposes of this subdivision: 
  4.13     (1) "Machinery" means mechanical, electronic, or electrical 
  4.14  devices, including computers and computer software, that are 
  4.15  purchased or constructed to be used for the activities set forth 
  4.16  in paragraph (a). 
  4.17     (2) "Equipment" means independent devices or tools separate 
  4.18  from machinery, including computers and computer software, used 
  4.19  in operating, controlling, or regulating machinery and 
  4.20  equipment; and any subunit or assembly comprising a component of 
  4.21  any machinery or accessory or attachment parts of machinery, 
  4.22  such as tools, dies, jigs, patterns, and molds.  
  4.23     (3) "Primarily" means machinery and equipment used 50 
  4.24  percent or more of the time in an activity described in 
  4.25  paragraph (a). 
  4.26     (4) "Manufacturing" means an operation or series of 
  4.27  operations where raw materials are changed in form, composition, 
  4.28  or condition by machinery and equipment and which results in the 
  4.29  production of a new article of tangible personal property.  For 
  4.30  purposes of this subdivision, "manufacturing" includes the 
  4.31  generation of electricity or steam to be sold at retail. 
  4.32     (5) "Fabricating" means to make, build, create, produce, or 
  4.33  assemble components or property to work in a new or different 
  4.34  manner. 
  4.35     (6) "Mining" means the extraction of minerals, ores, stone, 
  4.36  or peat. 
  5.1      (7) "Refining" means the process of converting a natural 
  5.2   resource to a product, including the treatment and 
  5.3   pressurization of water to be sold at retail. 
  5.4      (8) "Integrated production process" means a process 
  5.5   beginning with the removal of raw materials from inventory 
  5.6   through the completion of the product, including packaging of 
  5.7   the product. 
  5.8      (9) "Online data retrieval system" means a system whose 
  5.9   cumulation of information is equally available and accessible to 
  5.10  all its customers. 
  5.11     (10) "Machinery and equipment used for pollution control" 
  5.12  means machinery and equipment used solely to eliminate, prevent, 
  5.13  or reduce pollution resulting from an activity described in 
  5.14  paragraph (a).  
  5.15     [EFFECTIVE DATE.] This section is effective for sales after 
  5.16  June 30, 2001.