as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to tax administration; providing for 1.3 electronic filing and paying of taxes; providing for 1.4 uniform sales and use tax administration; 1.5 appropriating money; amending Minnesota Statutes 2000, 1.6 sections 115B.24, subdivision 2; 270.271, subdivisions 1.7 1 and 3; 270.771; 270.78; 287.12; 289A.02, by adding a 1.8 subdivision; 289A.18, subdivision 4; 289A.20, 1.9 subdivisions 1, 2, and 4; 289A.26, subdivision 2a; 1.10 289A.40, subdivision 2, and by adding a subdivision; 1.11 289A.60, subdivision 21; 295.55, subdivision 4; 1.12 296A.15, subdivision 7; 297A.61, subdivisions 3, 4, 7, 1.13 9, and by adding subdivisions; 297A.67, subdivisions 1.14 2, 8, and by adding a subdivision; 297A.72, 1.15 subdivision 1; 297A.81; 297A.99, subdivision 9; 1.16 297E.02, subdivision 4; 297F.09, subdivision 7; 1.17 297G.09, subdivision 6; 297I.35, subdivision 2; 1.18 297I.85, subdivision 7; and 473.843, subdivision 3; 1.19 proposing coding for new law in Minnesota Statutes, 1.20 chapter 297A. 1.21 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.22 ARTICLE 1 1.23 ELECTRONIC FILING AND PAYING OF TAXES 1.24 Section 1. Minnesota Statutes 2000, section 115B.24, 1.25 subdivision 2, is amended to read: 1.26 Subd. 2. [DECLARATIONS OF ESTIMATED TAX.]For 1983, every1.27generator of hazardous waste required to pay a tax pursuant to1.28section 115B.22 shall make a declaration of estimated hazardous1.29waste generated for the last six months of calendar year 1983 if1.30the tax can reasonably be estimated to exceed $500. The1.31declaration of the estimated tax shall be filed by October 15,1.321983. The amount of estimated tax with respect to which a1.33declaration is required shall be paid in two equal installments2.1by October 15, 1983 and January 15, 1984.For 1984 and 2.3 subsequent years, every generator of hazardous waste required to 2.4 pay a tax pursuant to section 115B.22 shall make a declaration 2.5 of estimated hazardous waste generated for the calendar year if 2.6 the tax can reasonably be expected to be in excess of $1,000. 2.7 The declaration of estimated tax shall be filed by March 15. 2.8 The amount of estimated tax with respect to which a declaration 2.9 is required shall be paid in four equal installments on or 2.10 before the 15th day of March, June, September, and December. 2.11 An amendment of a declaration may be filed in any interval 2.12 between installment dates prescribed above but only one 2.13 amendment may be filed in each interval. If an amendment of a 2.14 declaration is filed, the amount of each remaining installment 2.15 shall be the amount which would have been payable if the new 2.16 estimate had been made when the first estimate for the calendar 2.17 year was made, increased or decreased, as the case may be, by 2.18 the amount computed by dividing 2.19 (1) the difference between (A) the amount of estimated tax 2.20 required to be paid before the date on which the amendment was 2.21 made, and (B) the amount of estimated tax which would have been 2.22 required to be paid before that date if the new estimate had 2.23 been made when the first estimate was made, by 2.24 (2) the number of installments remaining to be paid on or 2.25 after the date on which the amendment is made. 2.26 The commissioner of revenue may grant a reasonable 2.27 extension of time for filing any declaration but the extension 2.28 shall not be for more than six months. 2.29 If the aggregate amount of estimated tax payments made 2.30 duringathe fiscal year ending June 30, 2001, is equal to or 2.31 exceeds $80,000, or $40,000 for the fiscal year ending June 30, 2.32 2002, $20,000 for the fiscal year ending June 30, 2003, and 2.33 $10,000 for the fiscal year ending June 30, 2004, and each 2.34 fiscal year ending June 30 thereafter, all estimated tax 2.35 payments in the subsequent calendar year must be paid 2.36 by electronic meansof a funds transfer as defined in section2.37336.4A-104, paragraph (a). The funds transfer payment date, as3.1defined in section 336.4A-401, must be on or before the date the3.2estimated tax payment is due. If the date the estimated tax3.3payment is due is not a funds transfer business day, as defined3.4in section 336.4A-105, paragraph (a), clause (4), the payment3.5date must be on or before the funds transfer business day next3.6following the date the estimated tax payment is due. 3.7 [EFFECTIVE DATE.] This section is effective for payments 3.8 due on or after July 1, 2001. 3.9 Sec. 2. Minnesota Statutes 2000, section 270.271, 3.10 subdivision 1, is amended to read: 3.11 Subdivision 1. [DATE OF DELIVERY.] When a document, 3.12 including a return, claim, or statement, is required to be 3.13 filed, or a payment is required to be made to the commissioner 3.14 within a prescribed period, or on or before a prescribed date, 3.15 and if the document or payment is delivered by electronic means 3.16 or by United States mail after the period or the date to the 3.17 place prescribed for filing or payment, then the date of 3.18 delivery or of payment is the date of the confirmation 3.19 time-and-date stamp of the transaction, if delivered by 3.20 electronic means, or the date of the United States postmark 3.21 stamped on the cover in which the document or payment is mailed, 3.22 if delivered by United States mailshall be considered the date3.23of delivery or of payment, as the case may be. 3.24 [EFFECTIVE DATE.] This section is effective for returns and 3.25 payments due on or after July 1, 2001. 3.26 Sec. 3. Minnesota Statutes 2000, section 270.271, 3.27 subdivision 3, is amended to read: 3.28 Subd. 3. [CONFIRMATION OF ELECTRONIC FILING AND PAYMENT 3.29 AND UNITED STATES POSTAL SERVICE POSTMARK.] The confirmation 3.30 numbers and confirmation time-and-date stamps received by the 3.31 taxpayer following electronic payment or filing is proof of the 3.32 payment authorization and filing dates. Only the postmark of 3.33 the United States Postal Service, rather than those of private 3.34 postage meters, qualifies as proof of timely mailing under this 3.35 section. If the document or payment is sent by United States 3.36 registered mail, the date of registration shall be treated as 4.1 the postmark date. If the document or payment is sent by United 4.2 States certified mail and the sender's receipt is postmarked by 4.3 the postal employee to whom the envelope containing such 4.4 document or payment is presented, the date of the United States 4.5 postmark on the receipt shall be treated as the postmark date of 4.6 the document or payment. 4.7 [EFFECTIVE DATE.] This section is effective for returns and 4.8 payments due on or after July 1, 2001. 4.9 Sec. 4. Minnesota Statutes 2000, section 270.771, is 4.10 amended to read: 4.11 270.771 [PAYMENTS REQUIRED TO BE MADEBY ELECTRONIC FUNDS4.12TRANSFERELECTRONICALLY.] 4.13 (a) If a taxpayer is required to make payment of a tax to 4.14 the commissioner by electronic meansof electronic funds4.15transfer as defined in section 336.4A-104, paragraph (a), the 4.16 taxpayer shall make all payments of all taxes and fees paid to 4.17 the commissioner by electronic meansof electronic funds4.18transfer. 4.19 (b) Paragraph (a) does not apply to payments required to be 4.20 made for individual income taxes under section 289A.20, 4.21 subdivision 1, paragraph (a), or 289A.25. 4.22 [EFFECTIVE DATE.] This section is effective the day 4.23 following final enactment. 4.24 Sec. 5. Minnesota Statutes 2000, section 270.78, is 4.25 amended to read: 4.26 270.78 [PENALTY FOR FAILURE TOMAKE PAYMENT BY ELECTRONIC4.27FUNDS TRANSFERPAY ELECTRONICALLY.] 4.28 In addition to other applicable penalties imposed by law, 4.29 after notification from the commissioner of revenue to the 4.30 taxpayer that payments for a tax administered by the 4.31 commissioner are required to be made by electronic meansof4.32electronic funds transfer, and the payments are remitted by some 4.33 other means, there is a penalty in the amount of five percent of 4.34 each payment that should have been remitted 4.35 electronically. After the commissioner's initial notification 4.36 to the taxpayer that payments are required to be made by 5.1 electronic means, the commissioner is not required to notify the 5.2 taxpayer in subsequent periods if the initial notification 5.3 specified the amount of tax liability at which a taxpayer is 5.4 required to remit payments by electronic means. The penalty can 5.5 be abated under the abatement procedures prescribed in section 5.6 270.07, subdivision 6, if the failure to remit the payment 5.7 electronically is due to reasonable cause. The penalty bears 5.8 interest at the rate specified in section 270.75 from the due 5.9 date of the payment of the tax to the date of payment of the 5.10 penalty. 5.11 [EFFECTIVE DATE.] This section is effective the day 5.12 following final enactment. 5.13 Sec. 6. Minnesota Statutes 2000, section 287.12, is 5.14 amended to read: 5.15 287.12 [TAXES, HOW APPORTIONED.] 5.16 (a) All taxes paid to the county treasurer under the 5.17 provisions of sections 287.01 to 287.12 must be apportioned, 97 5.18 percent to the general fund of the state, and three percent to 5.19 the county revenue fund. 5.20 (b) On or before the 20th day of each month the county 5.21 treasurer shall determine and pay to the commissioner of revenue 5.22 for deposit in the state treasury and credit to the general fund 5.23 the state's portion of the receipts from the mortgage registry 5.24 tax during the preceding month subject to the electronicfunds5.25transferpayment requirements of section 270.771. The county 5.26 treasurer shall provide any related reports requested by the 5.27 commissioner of revenue. 5.28 [EFFECTIVE DATE.] This section is effective the day 5.29 following final enactment. 5.30 Sec. 7. Minnesota Statutes 2000, section 289A.02, is 5.31 amended by adding a subdivision to read: 5.32 Subd. 8. [ELECTRONIC MEANS.] "Electronic means" refers to 5.33 a method that is electronic, as defined in section 325L.02, 5.34 paragraph (e), and that is prescribed by the commissioner. 5.35 [EFFECTIVE DATE.] This section is effective the day 5.36 following final enactment. 6.1 Sec. 8. Minnesota Statutes 2000, section 289A.18, 6.2 subdivision 4, is amended to read: 6.3 Subd. 4. [SALES AND USE TAX RETURNS.] (a) Sales and use 6.4 tax returns must be filed on or before the 20th day of the month 6.5 following the close of the preceding reporting period, except 6.6 that annual use tax returns provided for under section 289A.11, 6.7 subdivision 1, must be filed by April 15 following the close of 6.8 the calendar year, in the case of individuals. Annual use tax 6.9 returns of businesses, including sole proprietorships, and 6.10 annual sales tax returns must be filed by February 5 following 6.11 the close of the calendar year. 6.12 (b)Except for the return for the June reporting period,6.13which is due on the following August 25,Returns for the June 6.14 reporting period filed by retailers required to remit 6.15liabilities by means of funds transfertheir June liability 6.16 under section 289A.20, subdivision 4, paragraph(d)(b), are due 6.17 on or beforethe 25th day of the month following the close of6.18the preceding reporting periodAugust 20. 6.19 (c) If a retailer has an average sales and use tax 6.20 liability, including local sales and use taxes administered by 6.21 the commissioner, equal to or less than $500 per month in any 6.22 quarter of a calendar year, and has substantially complied with 6.23 the tax laws during the preceding four calendar quarters, the 6.24 retailer may request authorization to file and pay the taxes 6.25 quarterly in subsequent calendar quarters. The authorization 6.26 remains in effect during the period in which the retailer's 6.27 quarterly returns reflect sales and use tax liabilities of less 6.28 than $1,500 and there is continued compliance with state tax 6.29 laws. 6.30 (d) If a retailer has an average sales and use tax 6.31 liability, including local sales and use taxes administered by 6.32 the commissioner, equal to or less than $100 per month during a 6.33 calendar year, and has substantially complied with the tax laws 6.34 during that period, the retailer may request authorization to 6.35 file and pay the taxes annually in subsequent years. The 6.36 authorization remains in effect during the period in which the 7.1 retailer's annual returns reflect sales and use tax liabilities 7.2 of less than $1,200 and there is continued compliance with state 7.3 tax laws. 7.4 (e) The commissioner may also grant quarterly or annual 7.5 filing and payment authorizations to retailers if the 7.6 commissioner concludes that the retailers' future tax 7.7 liabilities will be less than the monthly totals identified in 7.8 paragraphs (c) and (d). An authorization granted under this 7.9 paragraph is subject to the same conditions as an authorization 7.10 granted under paragraphs (c) and (d). 7.11 (f) A taxpayer who is a materials supplier may report gross 7.12 receipts either on: 7.13 (1) the cash basis as the consideration is received; or 7.14 (2) the accrual basis as sales are made. 7.15 As used in this paragraph, "materials supplier" means a person 7.16 who provides materials for the improvement of real property; who 7.17 is primarily engaged in the sale of lumber and building 7.18 materials-related products to owners, contractors, 7.19 subcontractors, repairers, or consumers; who is authorized to 7.20 file a mechanics lien upon real property and improvements under 7.21 chapter 514; and who files with the commissioner an election to 7.22 file sales and use tax returns on the basis of this paragraph. 7.23 [EFFECTIVE DATE.] This section is effective for returns due 7.24 on or after July 1, 2001. 7.25 Sec. 9. Minnesota Statutes 2000, section 289A.20, 7.26 subdivision 1, is amended to read: 7.27 Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME, 7.28 MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.] 7.29 (a) Individual income, fiduciary, mining company, and corporate 7.30 franchise taxes must be paid to the commissioner on or before 7.31 the date the return must be filed under section 289A.18, 7.32 subdivision 1, or the extended due date as provided in section 7.33 289A.19, unless an earlier date for payment is provided. 7.34 Notwithstanding any other law, a taxpayer whose unpaid 7.35 liability for income or corporate franchise taxes, as reflected 7.36 upon the return, is $1 or less need not pay the tax. 8.1 (b) Entertainment taxes must be paid on or before the date 8.2 the return must be filed under section 289A.18, subdivision 1. 8.3 (c) If a fiduciary administers 100 or more trusts, 8.4 fiduciary income taxes for all trusts administered by the 8.5 fiduciary must be paid byfunds transfer as defined in section8.6336.4A-104, paragraph (a). The funds transfer payment date, as8.7defined in section 336.4A-401, must be on or before the date the8.8tax payment is due. If the date the payment is due is not a8.9funds transfer business day, as defined in section 336.4A-105,8.10paragraph (a), clause (4), the payment date must be on or before8.11the funds transfer business day next following the date the8.12payment is dueelectronic means. 8.13 [EFFECTIVE DATE.] This section is effective the day 8.14 following final enactment. 8.15 Sec. 10. Minnesota Statutes 2000, section 289A.20, 8.16 subdivision 2, is amended to read: 8.17 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 8.18 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 8.19 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 8.20 (a) A tax required to be deducted and withheld during the 8.21 quarterly period must be paid on or before the last day of the 8.22 month following the close of the quarterly period, unless an 8.23 earlier time for payment is provided. A tax required to be 8.24 deducted and withheld from compensation of an entertainer and 8.25 from a payment to an out-of-state contractor must be paid on or 8.26 before the date the return for such tax must be filed under 8.27 section 289A.18, subdivision 2. Taxes required to be deducted 8.28 and withheld by partnerships and S corporations must be paid on 8.29 or before the date the return must be filed under section 8.30 289A.18, subdivision 2. 8.31 (b) An employer who, during the previous quarter, withheld 8.32 more than $1,500 of tax under section 290.92, subdivision 2a or 8.33 3, or 290.923, subdivision 2, must deposit tax withheld under 8.34 those sections with the commissioner within the time allowed to 8.35 deposit the employer's federal withheld employment taxes under 8.36 Treasury Regulation, section 31.6302-1, without regard to the 9.1 safe harbor or de minimis rules in subparagraph (f) or the 9.2 one-day rule in subsection (c), clause (3). Taxpayers must 9.3 submit a copy of their federal notice of deposit status to the 9.4 commissioner upon request by the commissioner. 9.5 (c) The commissioner may prescribe by rule other return 9.6 periods or deposit requirements. In prescribing the reporting 9.7 period, the commissioner may classify payors according to the 9.8 amount of their tax liability and may adopt an appropriate 9.9 reporting period for the class that the commissioner judges to 9.10 be consistent with efficient tax collection. In no event will 9.11 the duration of the reporting period be more than one year. 9.12 (d) If less than the correct amount of tax is paid to the 9.13 commissioner, proper adjustments with respect to both the tax 9.14 and the amount to be deducted must be made, without interest, in 9.15 the manner and at the times the commissioner prescribes. If the 9.16 underpayment cannot be adjusted, the amount of the underpayment 9.17 will be assessed and collected in the manner and at the times 9.18 the commissioner prescribes. 9.19 (e) If the aggregate amount of the tax withheld duringa9.20 the fiscal year ending June 30, 2001, under section 290.92, 9.21 subdivision 2a or 3, is equal to or exceedsthe amounts9.22established for remitting federal withheld taxes pursuant to the9.23regulations promulgated under section 6302(h) of the Internal9.24Revenue Code$25,000, or $10,000 for the fiscal year ending June 9.25 30, 2002, and each fiscal year ending June 30 thereafter, the 9.26 employer must remit each required deposit for wages paid in the 9.27 subsequent calendar year by electronic meansof a funds transfer9.28as defined in section 336.4A-104, paragraph (a). The funds9.29transfer payment date, as defined in section 336.4A-401, must be9.30on or before the date the deposit is due. If the date the9.31deposit is due is not a funds transfer business day, as defined9.32in section 336.4A-105, paragraph (a), clause (4), the payment9.33date must be on or before the funds transfer business day next9.34following the date the deposit is due. 9.35 (f) A third-party bulk filer as defined in section 290.92, 9.36 subdivision 30, paragraph (a), clause (2), who remits 10.1 withholding deposits must remit all deposits by electronic means 10.2of a funds transferas provided in paragraph (e), regardless of 10.3 the aggregate amount of tax withheld during a fiscal year for 10.4 all of the employers. 10.5 [EFFECTIVE DATE.] This section is effective for payments 10.6 due on or after July 1, 2001. 10.7 Sec. 11. Minnesota Statutes 2000, section 289A.20, 10.8 subdivision 4, is amended to read: 10.9 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 10.10 chapter 297A are due and payable to the commissioner monthly on 10.11 or before the 20th day of the month following the month in which 10.12 the taxable event occurred, or following another reporting 10.13 period as the commissioner prescribes or as allowed under 10.14 section 289A.18, subdivision 4, paragraph (f), except that use 10.15 taxes due on an annual use tax return as provided under section 10.16 289A.11, subdivision 1, are payable by April 15 following the 10.17 close of the calendar year. 10.18 (b) A vendor having a liability of $120,000 or more during 10.19 a fiscal year ending June 30 must remit the June liability for 10.20 the next year in the following manner: 10.21 (1) Two business days before June 30 of the year, the 10.22 vendor must remit 62 percent of the estimated June liability to 10.23 the commissioner. 10.24 (2) On or before August1420 of the year, the vendor must 10.25 pay any additional amount of tax not remitted in June. 10.26 (c) A vendor having a liability of$120,000$80,000 or more 10.27 duringathe fiscal year ending June 30, 2001, or at least 10.28 $40,000 for the fiscal year ending June 30, 2002, $20,000 for 10.29 the fiscal year ending June 30, 2003, and $10,000 for the fiscal 10.30 year ending June 30, 2004, and each fiscal year ending June 30 10.31 thereafter, must remit all liabilities on returns due for 10.32 periods beginning in the subsequent calendar year by electronic 10.33 meansof a funds transfer as defined in section 336.4A-104,10.34paragraph (a). The funds transfer payment date, as defined in10.35section 336.4A-401, must beon or before the14th20th day of 10.36 the month following the month in which the taxable event 11.1 occurred, or on or before the14th20th day of the month 11.2 following the month in which the sale is reported under section 11.3 289A.18, subdivision 4, except for 62 percent of the estimated 11.4 June liability, which is due two business days before June 30. 11.5 The remaining amount of the June liability is due on August1411.6 20.If the date the tax is due is not a funds transfer business11.7day, as defined in section 336.4A-105, paragraph (a), clause11.8(4), the payment date must be on or before the funds transfer11.9business day next following the date the tax is due.11.10(d) If the vendor required to remit by electronic funds11.11transfer as provided in paragraph (c) is unable due to11.12reasonable cause to determine the actual sales and use tax due11.13on or before the due date for payment, the vendor may remit an11.14estimate of the tax owed using one of the following options:11.15(1) 100 percent of the tax reported on the previous month's11.16sales and use tax return;11.17(2) 100 percent of the tax reported on the sales and use11.18tax return for the same month in the previous calendar year; or11.19(3) 95 percent of the actual tax due.11.20Any additional amount of tax that is not remitted on or11.21before the due date for payment, must be remitted with the11.22return. If a vendor fails to remit the actual liability or does11.23not remit using one of the estimate options by the due date for11.24payment, the vendor must remit actual liability as provided in11.25paragraph (c) in all subsequent periods. This paragraph does11.26not apply to the June sales and use tax liability.11.27 [EFFECTIVE DATE.] This section is effective for payments 11.28 due on or after July 1, 2001. 11.29 Sec. 12. Minnesota Statutes 2000, section 289A.26, 11.30 subdivision 2a, is amended to read: 11.31 Subd. 2a. [ELECTRONICFUNDS TRANSFERPAYMENTS.] If the 11.32 aggregate amount of estimated tax payments made during a 11.33 calendar year is equal to or exceeds $20,000, or $10,000 for the 11.34 calendar year 2004, and each calendar year thereafter, all 11.35 estimated tax payments in the subsequent calendar year must be 11.36 paid by electronic meansof a funds transfer as defined in12.1section 336.4A-104, paragraph (a). The funds transfer payment12.2date, as defined in section 336.4A-401, must be on or before the12.3date the estimated tax payment is due. If the date the12.4estimated tax payment is due is not a funds transfer business12.5day, as defined in section 336.4A-105, paragraph (a), clause12.6(4), the payment date must be on or before the funds transfer12.7business day next following the date the estimated tax payment12.8is due. 12.9 [EFFECTIVE DATE.] This section is effective for payments 12.10 due on or after July 1, 2001. 12.11 Sec. 13. Minnesota Statutes 2000, section 289A.60, 12.12 subdivision 21, is amended to read: 12.13 Subd. 21. [PENALTY FOR FAILURE TO MAKE PAYMENT BY 12.14 ELECTRONICFUNDS TRANSFERMEANS.] In addition to other 12.15 applicable penalties imposed by this section, after notification 12.16 from the commissioner to the taxpayer that payments are required 12.17 to be made by electronic meansof electronic funds transfer12.18 under section 289A.20, subdivision 2, paragraph (e), or 4, 12.19 paragraph(d)(c), or 289A.26, subdivision 2a, and the payments 12.20 are remitted by some other means, there is a penalty in the 12.21 amount of five percent of each payment that should have been 12.22 remitted electronically. After the commissioner's initial 12.23 notification to the taxpayer that payments are required to be 12.24 made by electronic means, the commissioner is not required to 12.25 notify the taxpayer in subsequent periods if the initial 12.26 notification specified the amount of tax liability at which a 12.27 taxpayer is required to remit payments by electronic means. The 12.28 penalty can be abated under the abatement procedures prescribed 12.29 in section 270.07, subdivision 6, if the failure to remit the 12.30 payment electronically is due to reasonable cause. 12.31 [EFFECTIVE DATE.] This section is effective the day 12.32 following final enactment. 12.33 Sec. 14. Minnesota Statutes 2000, section 295.55, 12.34 subdivision 4, is amended to read: 12.35 Subd. 4. [ELECTRONICFUNDS TRANSFERPAYMENTS.] A taxpayer 12.36 with an aggregate tax liability of$120,000$80,000 or more 13.1 duringathe fiscal year ending June 30, 2001, or at least 13.2 $40,000 for the fiscal year ending June 30, 2002, $20,000 for 13.3 the fiscal year ending June 30, 2003, and $10,000 for the fiscal 13.4 year ending June 30, 2004, and each fiscal year ending June 30 13.5 thereafter, must remit all liabilities by electronic meansof a13.6funds transfer as defined in section 336.4A-104, paragraph (a),13.7 in the subsequent calendar year.The funds transfer payment13.8date, as defined in section 336.4A-401, is on or before the date13.9the tax is due. If the date the tax is due is not a13.10funds-transfer business day, as defined in section 336.4A-105,13.11paragraph (a), clause (4), the payment date is on or before the13.12first funds-transfer business day after the date the tax is due.13.13 [EFFECTIVE DATE.] This section is effective for payments 13.14 due on or after July 1, 2001. 13.15 Sec. 15. Minnesota Statutes 2000, section 296A.15, 13.16 subdivision 7, is amended to read: 13.17 Subd. 7. [ELECTRONICFUNDS TRANSFERPAYMENT REQUIRED.] All 13.18 remittances must be made by electronic meansof electronic funds13.19transfer as defined in section 336.4A-104, paragraph (a). The13.20funds transfer payment date, as defined in section 336.4A-401,13.21must be on or before the date the remittance is due. If the13.22date the remittance is due is not a funds transfer business day,13.23as defined in section 336.4A-105, paragraph (a), clause (4), the13.24payment date must be on or before the funds transfer business13.25day next following the date the remittance is due. 13.26 [EFFECTIVE DATE.] This section is effective the day 13.27 following final enactment. 13.28 Sec. 16. Minnesota Statutes 2000, section 297E.02, 13.29 subdivision 4, is amended to read: 13.30 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 13.31 on the sale of each deal of pull-tabs and tipboards sold by a 13.32 distributor. The rate of the tax is 1.7 percent of the ideal 13.33 gross of the pull-tab or tipboard deal. The sales tax imposed 13.34 by chapter 297A on the sale of the pull-tabs and tipboards by 13.35 the distributor is imposed on the retail sales price less the 13.36 tax imposed by this subdivision. The retail sale of pull-tabs 14.1 or tipboards by the organization is exempt from taxes imposed by 14.2 chapter 297A and is exempt from all local taxes and license fees 14.3 except a fee authorized under section 349.16, subdivision 8. 14.4 (b) The liability for the tax imposed by this section is 14.5 incurred when the pull-tabs and tipboards are delivered by the 14.6 distributor to the customer or to a common or contract carrier 14.7 for delivery to the customer, or when received by the customer's 14.8 authorized representative at the distributor's place of 14.9 business, regardless of the distributor's method of accounting 14.10 or the terms of the sale. 14.11 The tax imposed by this subdivision is imposed on all sales 14.12 of pull-tabs and tipboards, except the following: 14.13 (1) sales to the governing body of an Indian tribal 14.14 organization for use on an Indian reservation; 14.15 (2) sales to distributors licensed under the laws of 14.16 another state or of a province of Canada, as long as all 14.17 statutory and regulatory requirements are met in the other state 14.18 or province; 14.19 (3) sales of promotional tickets as defined in section 14.20 349.12; and 14.21 (4) pull-tabs and tipboards sold to an organization that 14.22 sells pull-tabs and tipboards under the exemption from licensing 14.23 in section 349.166, subdivision 2. A distributor shall require 14.24 an organization conducting exempt gambling to show proof of its 14.25 exempt status before making a tax-exempt sale of pull-tabs or 14.26 tipboards to the organization. A distributor shall identify, on 14.27 all reports submitted to the commissioner, all sales of 14.28 pull-tabs and tipboards that are exempt from tax under this 14.29 subdivision. 14.30 (c) A distributor having a liability of$120,000$80,000 or 14.31 more duringathe fiscal year ending June 30, 2001, or at least 14.32 $40,000 for the fiscal year ending June 30, 2002, $20,000 for 14.33 the fiscal year ending June 30, 2003, and $10,000 for the fiscal 14.34 year ending June 30, 2004, and each fiscal year ending June 30 14.35 thereafter, must remit all liabilities in the subsequent 14.36 calendar year bya funds transfer as defined in section15.1336.4A-104, paragraph (a). The funds transfer payment date, as15.2defined in section 336.4A-401, must be on or before the date the15.3tax is due. If the date the tax is due is not a funds transfer15.4business day, as defined in section 336.4A-105, paragraph (a),15.5clause (4), the payment date must be on or before the funds15.6transfer business day next following the date the tax is15.7dueelectronic means. 15.8 (d) Any customer who purchases deals of pull-tabs or 15.9 tipboards from a distributor may file an annual claim for a 15.10 refund or credit of taxes paid pursuant to this subdivision for 15.11 unsold pull-tab and tipboard tickets. The claim must be filed 15.12 with the commissioner on a form prescribed by the commissioner 15.13 by March 20 of the year following the calendar year for which 15.14 the refund is claimed. The refund must be filed as part of the 15.15 customer's February monthly return. The refund or credit is 15.16 equal to 1.7 percent of the face value of the unsold pull-tab or 15.17 tipboard tickets, provided that the refund or credit will be 15.18 1.75 percent of the face value of the unsold pull-tab or 15.19 tipboard tickets for claims for a refund or credit of taxes 15.20 filed on the February 2001 monthly return. The refund claimed 15.21 will be applied as a credit against tax owing under this chapter 15.22 on the February monthly return. If the refund claimed exceeds 15.23 the tax owing on the February monthly return, that amount will 15.24 be refunded. The amount refunded will bear interest pursuant to 15.25 section 270.76 from 90 days after the claim is filed. 15.26 [EFFECTIVE DATE.] This section is effective for payments 15.27 due on or after July 1, 2001. 15.28 Sec. 17. Minnesota Statutes 2000, section 297F.09, 15.29 subdivision 7, is amended to read: 15.30 Subd. 7. [ELECTRONICFUNDS TRANSFERPAYMENT.] A cigarette 15.31 or tobacco products distributor having a liability 15.32 of$120,000$80,000 or more duringathe fiscal year ending June 15.33 30, 2001, or at least $40,000 for the fiscal year ending June 15.34 30, 2002, $20,000 for the fiscal year ending June 30, 2003, and 15.35 $10,000 for the fiscal year ending June 30, 2004, and each 15.36 fiscal year ending June 30 thereafter, must remit all 16.1 liabilities in the subsequent calendar year by electronic means 16.2of a fund transfer as defined in section 336.4A-104, paragraph16.3(a). The funds transfer payment date, as defined in section16.4336.4A-401, must be on or before the date the tax is due. If16.5the date the tax is due is not a funds transfer business day, as16.6defined in section 336.4A-105, paragraph (a), clause (4), the16.7payment date must be on or before the funds transfer day16.8immediately following the date the tax is due. 16.9 [EFFECTIVE DATE.] This section is effective for payments 16.10 due on or after July 1, 2001. 16.11 Sec. 18. Minnesota Statutes 2000, section 297G.09, 16.12 subdivision 6, is amended to read: 16.13 Subd. 6. [ELECTRONICFUNDS TRANSFERPAYMENTS.] A licensed 16.14 brewer, importer, or wholesaler having an excise tax liability 16.15 of$120,000$80,000 or more duringathe fiscal year ending June 16.16 30, 2001, or at least $40,000 for the fiscal year ending June 16.17 30, 2002, $20,000 for the fiscal year ending June 30, 2003, and 16.18 $10,000 for the fiscal year ending June 30, 2004, and each 16.19 fiscal year ending June 30 thereafter, must remit all excise tax 16.20 liabilities in the subsequent calendar year by electronic means 16.21of a funds transfer as defined in section 336.4A-104, paragraph16.22(a). The funds transfer payment date, as defined in section16.23336.4A-401, must be on or before the date the excise tax is16.24due. If the date the excise tax is due is not a funds transfer16.25business day, as defined in section 336.4A-105, paragraph (a),16.26clause (4), the payment date must be on or before the funds16.27transfer business day next following the date the excise tax is16.28due. 16.29 [EFFECTIVE DATE.] This section is effective for payments 16.30 due on or after July 1, 2001. 16.31 Sec. 19. Minnesota Statutes 2000, section 297I.35, 16.32 subdivision 2, is amended to read: 16.33 Subd. 2. [ELECTRONICFUNDS TRANSFERPAYMENTS.] If the 16.34 aggregate amount of tax and surcharges due under this chapter 16.35 duringathe calendar year ending December 31, 2001, is equal to 16.36 or exceeds$120,000$80,000, or $40,000 for the calendar year 17.1 ending December 31, 2002, $20,000 for the calendar year ending 17.2 December 31, 2003, and $10,000 for the calendar year ending 17.3 December 31, 2004, and each calendar year thereafter, or if the 17.4 taxpayer is required to make payment of any other tax to the 17.5 commissioner by electronic meansof electronic funds transfer as17.6defined in section 336.4A-104, paragraph (a), then all tax and 17.7 surcharge payments in the subsequent calendar year must be paid 17.8 by electronic meansof a funds transfer as defined in section17.9336.4A-104, paragraph (a). The funds transfer payment date, as17.10defined in section 336.4A-104, must be on or before the date the17.11payment is due. If the date the payment is due is not a funds17.12transfer business day, as defined in section 336.4A-105,17.13paragraph (a), clause (4), the payment date must be on or before17.14the funds transfer business day next following the date the17.15payment is due. 17.16 [EFFECTIVE DATE.] This section is effective for payments 17.17 due on or after January 1, 2002. 17.18 Sec. 20. Minnesota Statutes 2000, section 297I.85, 17.19 subdivision 7, is amended to read: 17.20 Subd. 7. [PENALTY FOR FAILURE TOMAKE PAYMENT BY17.21ELECTRONIC FUNDS TRANSFERPAY ELECTRONICALLY.] In addition to 17.22 other applicable penalties imposed by this section, if the 17.23 commissioner notifies the taxpayer that payments are required to 17.24 be made by electronic meansof electronic funds transfer, and 17.25 the payments are made by some other means, a penalty is 17.26 imposed. The amount of the penalty is equal to five percent of 17.27 each payment that should have been paid electronically. The 17.28 penalty may be abated under the abatement procedures prescribed 17.29 in section 270.07, subdivision 6, if the failure to pay 17.30 electronically is due to reasonable cause. 17.31 [EFFECTIVE DATE.] This section is effective the day 17.32 following final enactment. 17.33 Sec. 21. Minnesota Statutes 2000, section 473.843, 17.34 subdivision 3, is amended to read: 17.35 Subd. 3. [PAYMENT OF FEE.] On or before the 20th day of 17.36 each month each operator shall pay the fee due under this 18.1 section for the previous month, using a form provided by the 18.2 commissioner of revenue. 18.3 An operator having a fee of$120,000$80,000 or more during 18.4athe fiscal year ending June 30, 2001, or at least $40,000 for 18.5 the fiscal year ending June 30, 2002, $20,000 for the fiscal 18.6 year ending June 30, 2003, and $10,000 for the fiscal year 18.7 ending June 30, 2004, and each fiscal year ending June 30 18.8 thereafter, must pay all fees in the subsequent calendar year by 18.9 electronic meansof a funds transfer as defined in section18.10336.4A-104, paragraph (a). The funds transfer payment date, as18.11defined in section 336.4A-401, must be on or before the date the18.12fee is due. If the date the fee is due is not a funds transfer18.13business day, as defined in section 336.4A-105, paragraph (a),18.14clause (4), the payment date must be on or before the funds18.15transfer business day next following the date the fee is due. 18.16 [EFFECTIVE DATE.] This section is effective for payments 18.17 due on or after July 1, 2001. 18.18 ARTICLE 2 18.19 UNIFORM SALES AND USE TAX ADMINISTRATION 18.20 Section 1. Minnesota Statutes 2000, section 289A.40, 18.21 subdivision 2, is amended to read: 18.22 Subd. 2. [BAD DEBT LOSS.] If a claim relates to an 18.23 overpayment because of a failure to deduct a loss due to a bad 18.24 debt or to a security becoming worthless, the claim is 18.25 considered timely if filed within seven years from the date 18.26 prescribed for the filing of the return.A claim relating to an18.27overpayment of taxes under chapter 297A must be filed within18.283-1/2 years from the date prescribed for filing the return, plus18.29any extensions granted for filing the return, but only if filed18.30within the extended time, or within one year from the date the18.31taxpayer's federal income tax return is timely filed claiming18.32the bad debt deduction, whichever period expires later. The18.33refund or credit is limited to the amount of overpayment18.34attributable to the loss.18.35 [EFFECTIVE DATE.] This section is effective for bad debt 18.36 losses claimed after December 31, 2001. 19.1 Sec. 2. Minnesota Statutes 2000, section 289A.40, is 19.2 amended by adding a subdivision to read: 19.3 Subd. 4. [SALES TAX; BAD DEBTS.] A claim relating to an 19.4 overpayment of taxes under chapter 297A resulting from a bad 19.5 debt loss must be deducted within 12 months following the month 19.6 in which the bad debt has been charged off for federal income 19.7 tax purposes. For purposes of this subdivision, "charged off 19.8 for federal income tax purposes" includes the charging off of 19.9 unpaid balances due on accounts as uncollectible, or declaring 19.10 as uncollectible the unpaid balance due on accounts in the 19.11 instance of a seller who is not required to file federal income 19.12 tax returns. If a deduction is taken for a bad debt and the 19.13 seller subsequently collects the debt in whole or in part, the 19.14 tax on the amount so collected must be paid and reported on the 19.15 return filed for the period in which the collection is made. A 19.16 seller may obtain a refund of tax on any amount of bad debt that 19.17 exceeds the amount of taxable sales within a 12-month period 19.18 defined by that bad debt. If a seller's filing responsibilities 19.19 have been assumed by a certified service provider, the service 19.20 provider may claim, on behalf of the seller, any bad debt 19.21 allowance provided by this section. The certified service 19.22 provider must credit or refund to the seller the full amount of 19.23 any bad debt allowance or refund received. For the purposes of 19.24 computing a bad debt deduction or reporting a payment received 19.25 on a previously claimed bad debt, any payments made on a debt or 19.26 account are applied first to the price of the property or 19.27 service and sales tax on it, proportionally, and secondly to 19.28 interest, service charges, and any other charges. 19.29 [EFFECTIVE DATE.] This section is effective for bad debt 19.30 losses claimed after December 31, 2001. 19.31 Sec. 3. Minnesota Statutes 2000, section 297A.61, 19.32 subdivision 3, is amended to read: 19.33 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 19.34 include, but are not limited to, each of the transactions listed 19.35 in this subdivision. 19.36 (b) Sale and purchase include any transfer of title or 20.1 possession, or both, of tangible personal property, whether 20.2 absolutely or conditionally, and the leasing of or the granting 20.3 of a license to use or consume, for a consideration, tangible 20.4 personal property, other than a manufactured home used for 20.5 residential purposes for a continuous period of 30 days or more. 20.6 (c) Sale and purchase include the production, fabrication, 20.7 printing, or processing of tangible personal property for a 20.8 consideration for consumers who furnish either directly or 20.9 indirectly the materials used in the production, fabrication, 20.10 printing, or processing. 20.11 (d) Sale and purchase include thefurnishing,preparing, or20.12servingfor a consideration of foodor drinks. Notwithstanding 20.13 section 297A.67, subdivision 2, taxable foodor drinks20.14includeincludes, butareis not limited to, the following: 20.15 (1) prepared foodor drinkssold by the retailerfor20.16immediate consumption on the retailer's premises. Food and20.17drinks sold within a building or grounds that require an20.18admission charge for entrance are presumed to be sold for20.19consumption on the premises; 20.20(2) food or drinks prepared by the retailer for immediate20.21consumption either on or off the retailer's premises. For20.22purposes of this subdivision, "food or drinks prepared for20.23immediate consumption" means any food product upon which an act20.24of preparation including, but not limited to, cooking, mixing,20.25sandwich making, blending, heating, or pouring has been20.26performed by the retailer so the food product may be immediately20.27consumed by the purchaser;20.28(3) ice cream, ice milk, frozen yogurt products, or frozen20.29novelties sold in single or individual servings including, but20.30not limited to, cones, sundaes, and snow cones;20.31(4)(2) soft drinksand other beverages, including all20.32carbonated and noncarbonated beverages or drinks sold in liquid20.33form, but not including beverages or drinks which contain milk20.34or milk products, beverages or drinks containing 15 or more20.35percent fruit juice, and noncarbonated and noneffervescent20.36bottled water sold in individual containers of one-half gallon21.1or more in size; 21.2(5) gum,(3) candy, and candy products; and 21.3(6) ice;21.4(7)(4) all food soldfromthrough vending machines;. 21.5(8) all food for immediate consumption sold from concession21.6stands and vehicles;21.7(9) party trays;21.8(10) all meals and single servings of packaged snack food21.9sold in restaurants and bars; and21.10(11) bakery products that are:21.11(i) prepared by the retailer for consumption on the21.12retailer's premises;21.13(ii) sold at a place that charges admission;21.14(iii) sold from vending machines; or21.15(iv) sold in single or individual servings from concession21.16stands, vehicles, bars, and restaurants.21.17For purposes of this paragraph, "single or individual21.18servings" does not include products when sold in bulk containers21.19or bulk packaging.21.20For purposes of this paragraph, "premises" means the total21.21space and facilities, including buildings, grounds, and parking21.22lots that are made available or that are available for use by21.23the retailer or customer for the purpose of sale or consumption21.24of prepared food and drinks. The premises of a caterer is the21.25place where the catered food or drinks are served.21.26 (e) A sale and a purchase includes the furnishing for a 21.27 consideration of electricity, gas, water, or steam for use or 21.28 consumption within this state or local exchange telephone 21.29 service, intrastate toll service, and interstate toll service, 21.30 if that service originates from and is charged to a telephone 21.31 located in this state. Telephone service includes (1) paging 21.32 services, and (2) private communication service, as defined in 21.33 United States Code, title 26, section 4252(d), except for 21.34 private communication service purchased by an agent acting on 21.35 behalf of the state lottery. Telephone service does not include 21.36 services purchased with a prepaid telephone calling card. The 22.1 furnishing for a consideration of access to telephone services 22.2 by a hotel to its guests is a sale. The furnishing for a 22.3 consideration of items listed in this paragraph by a municipal 22.4 corporation is a sale. 22.5 (f) A sale and a purchase includes the transfer for a 22.6 consideration of computer software. 22.7 (g) A sale and a purchase includes the furnishing for a 22.8 consideration of taxable services as defined in subdivision 16. 22.9 (h) A sale and a purchase includes the furnishing for a 22.10 consideration of tangible personal property or taxable services 22.11 by the United States or any of its agencies or 22.12 instrumentalities, or the state of Minnesota, its agencies, 22.13 instrumentalities, or political subdivisions. 22.14 [EFFECTIVE DATE.] This section is effective for sales and 22.15 purchases occurring after December 31, 2001. 22.16 Sec. 4. Minnesota Statutes 2000, section 297A.61, 22.17 subdivision 4, is amended to read: 22.18 Subd. 4. [RETAIL SALE.] (a) A "retail sale" meansaany 22.19 sale, lease, or rental for any purpose other than resalein the22.20regular course of business, sublease, or subrent. 22.21 (b) A sale of property used by the owner only by leasing it 22.22 to others or by holding it in an effort to lease it, and put to 22.23 no use by the owner other than resale after the lease or effort 22.24 to lease, is a sale of property for resale. 22.25 (c) A sale of master computer software that is purchased 22.26 and used to make copies for sale or lease is a sale of property 22.27 for resale. 22.28 (d) A sale of building materials, supplies, and equipment 22.29 to owners, contractors, subcontractors, or builders for the 22.30 erection of buildings or the alteration, repair, or improvement 22.31 of real property is a retail sale in whatever quantity sold, 22.32 whether the sale is for purposes of resale in the form of real 22.33 property or otherwise. 22.34 (e) A sale of carpeting, linoleum, or similar floor 22.35 covering to a person who provides for installation of the floor 22.36 covering is a retail sale and not a sale for resale since a sale 23.1 of floor covering which includes installation is a contract for 23.2 the improvement of real property. 23.3 (f) A sale of shrubbery, plants, sod, trees, and similar 23.4 items to a person who provides for installation of the items is 23.5 a retail sale and not a sale for resale since a sale of 23.6 shrubbery, plants, sod, trees, and similar items that includes 23.7 installation is a contract for the improvement of real property. 23.8 (g) A sale of tangible personal property that is awarded as 23.9 prizes is a retail sale and is not considered a sale of property 23.10 for resale. 23.11 (h) A sale of tangible personal property utilized or 23.12 employed in the furnishing or providing of services under 23.13 subdivision 16, paragraph (b), including, but not limited to, 23.14 property given as promotional items, is a retail sale and is not 23.15 considered a sale of property for resale. 23.16 (i) A sale of tangible personal property used in conducting 23.17 lawful gambling under chapter 349 or the state lottery under 23.18 chapter 349A, including, but not limited to, property given as 23.19 promotional items, is a retail sale and is not considered a sale 23.20 of property for resale. 23.21 (j) A sale of machines, equipment, or devices that are used 23.22 to furnish, provide, or dispense goods or services, including, 23.23 but not limited to, coin-operated devices, is a retail sale and 23.24 is not considered a sale of property for resale. 23.25 (k) In the case of a lease, a retail sale occurs when an 23.26 obligation to make a lease payment becomes due under the terms 23.27 of the agreement or the trade practices of the lessor. 23.28 (l) In the case of a conditional sales contract, a retail 23.29 sale occurs upon the transfer of title or possession of the 23.30 tangible personal property. 23.31 [EFFECTIVE DATE.] This section is effective January 1, 2002. 23.32 Sec. 5. Minnesota Statutes 2000, section 297A.61, 23.33 subdivision 7, is amended to read: 23.34 Subd. 7. [SALES PRICE.] (a) "Sales price" meansthe total23.35consideration for a retail sale, valued in money, whether paid23.36in money or by barter or exchange.the measure subject to sales 24.1 tax, and means the total amount of consideration, including 24.2 cash, credit, property, and services, for which personal 24.3 property or services are sold, leased, or rented, valued in 24.4 money, whether received in money or otherwise, without any 24.5 deduction for the following: 24.6 (1) the seller's cost of the property sold; 24.7 (2) the cost of materials used, labor or service cost, 24.8 interest, losses, all costs of transportation to the seller, all 24.9 taxes imposed on the seller, and any other expenses of the 24.10 seller; 24.11 (3) charges by the seller for any services necessary to 24.12 complete the sale, other than delivery and installation charges; 24.13 (4) delivery charges; 24.14 (5) installation charges; and 24.15 (6) the value of exempt property given to the purchaser 24.16 when taxable and exempt personal property have been bundled 24.17 together and sold by the seller as a single product or piece of 24.18 merchandise. 24.19(b) Sales price includes:24.20(1) the cost of the property sold, cost of materials used,24.21labor or service cost, interest, or discount allowed after the24.22sale is consummated;24.23(2) the cost of transportation incurred prior to the time24.24of sale;24.25(3) any amount for which credit is given by the seller to24.26the purchaser;24.27(4) charges for services that are part of a sale; or24.28(5) any other expense whatsoever.24.29(c)(b) Sales price does not includethe following: 24.30 (1)an amount allowed as credit for tangible personal24.31property taken in trade for resalediscounts, including cash, 24.32 terms, or coupons that are not reimbursed by a third party and 24.33 that are allowed by the seller and taken by a purchaser on a 24.34 sale; 24.35 (2)charges of up to 15 percent in lieu of tips if the24.36charges are separately statedinterest, financing, and carrying 25.1 charges from credit extended on the sale of personal property or 25.2 services, if the amount is separately stated on the invoice, 25.3 bill of sale, or similar document given to the purchaser; and 25.4 (3)interest, financing, or carrying charges if the charges25.5are separately stated;any taxes legally imposed directly on the 25.6 consumer that are separately stated on the invoice, bill of 25.7 sale, or similar document given to the purchaser. 25.8(4) charges for labor or services used in installing or25.9applying the property sold if the charges are separately stated;25.10(5) transportation charges if the transportation occurs25.11after the retail sale of the property if the charges are25.12separately stated;25.13(6) cash discounts allowed and taken on sales or the amount25.14refunded either in cash or in credit for property returned by25.15purchasers;25.16(7) the rental motor vehicle tax imposed under section25.17297A.64; or25.18(8) the amount of any tax imposed by the United States on25.19communications services under United States Code, title 26,25.20section 4251(a).25.21(d) Notwithstanding paragraph (c), "sales price," for25.22purposes of sales of ready-mixed concrete sold from a25.23ready-mixed concrete truck, includes any transportation,25.24delivery, or other service charges, and no deduction is allowed25.25for those charges, whether or not the charges are separately25.26stated.25.27 [EFFECTIVE DATE.] This section is effective January 1, 2002. 25.28 Sec. 6. Minnesota Statutes 2000, section 297A.61, 25.29 subdivision 9, is amended to read: 25.30 Subd. 9. [RETAILER AND SELLER.] "Retailer" and "seller" 25.31 meanseveryany personengaged inmakingretailsales, leases, 25.32 or rentals of personal property or services. 25.33 [EFFECTIVE DATE.] This section is effective January 1, 2002. 25.34 Sec. 7. Minnesota Statutes 2000, section 297A.61, is 25.35 amended by adding a subdivision to read: 25.36 Subd. 24. [PURCHASE PRICE.] "Purchase price" means the 26.1 measure subject to the use tax and has the same meaning as 26.2 "sales price." 26.3 [EFFECTIVE DATE.] This section is effective January 1, 2002. 26.4 Sec. 8. Minnesota Statutes 2000, section 297A.61, is 26.5 amended by adding a subdivision to read: 26.6 Subd. 25. [STATE.] Unless specifically provided otherwise, 26.7 "state" means any state of the United States and the District of 26.8 Columbia. 26.9 [EFFECTIVE DATE.] This section is effective January 1, 2002. 26.10 Sec. 9. Minnesota Statutes 2000, section 297A.61, is 26.11 amended by adding a subdivision to read: 26.12 Subd. 26. [DELIVERY CHARGES.] "Delivery charges" means 26.13 charges by the seller for preparation and delivery to a location 26.14 designated by the purchaser of personal property or services 26.15 including, but not limited to, transportation, shipping, 26.16 postage, handling, crating, and packing. 26.17 [EFFECTIVE DATE.] This section is effective January 1, 2002. 26.18 Sec. 10. Minnesota Statutes 2000, section 297A.61, is 26.19 amended by adding a subdivision to read: 26.20 Subd. 27. [PREPARED FOOD.] "Prepared food" means (i) food 26.21 sold in a heated state or heated by the seller; (ii) two or more 26.22 food ingredients mixed or combined by the seller for sale as a 26.23 single item; or (iii) food sold with eating utensils provided by 26.24 the seller, including plates, knives, forks, spoons, glasses, 26.25 cups, napkins, or straws. Prepared food does not include food 26.26 that is sliced, repackaged, or pasteurized by the seller. 26.27 [EFFECTIVE DATE.] This section is effective January 1, 2002. 26.28 Sec. 11. Minnesota Statutes 2000, section 297A.61, is 26.29 amended by adding a subdivision to read: 26.30 Subd. 28. [SOFT DRINKS.] "Soft drinks" means nonalcoholic 26.31 beverages that contain natural or artificial sweeteners. Soft 26.32 drinks do not include beverages that contain milk or milk 26.33 products; soy, rice, or similar milk substitutes; or greater 26.34 than 50 percent vegetable or fruit juice by volume. 26.35 [EFFECTIVE DATE.] This section is effective January 1, 2002. 26.36 Sec. 12. Minnesota Statutes 2000, section 297A.61, is 27.1 amended by adding a subdivision to read: 27.2 Subd. 29. [CANDY.] "Candy" means a preparation of sugar, 27.3 honey, or other natural or artificial sweeteners in combination 27.4 with chocolate, fruits, nuts, or other ingredients or flavorings 27.5 in the form of bars, drops, or pieces. Candy does not include 27.6 any preparation containing flour and must require no 27.7 refrigeration. 27.8 [EFFECTIVE DATE.] This section is effective January 1, 2002. 27.9 Sec. 13. Minnesota Statutes 2000, section 297A.61, is 27.10 amended by adding a subdivision to read: 27.11 Subd. 30. [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 27.12 through vending machines" means food dispensed from a machine or 27.13 other mechanical device that accepts payment. 27.14 [EFFECTIVE DATE.] This section is effective January 1, 2002. 27.15 Sec. 14. [297A.668] [SOURCING OF SALE; SITUS IN THIS 27.16 STATE.] 27.17 Subdivision 1. [SOURCING RULES.] (a) The following 27.18 provisions apply regardless of the characterization of a product 27.19 as tangible personal property, a digital good, or a service; but 27.20 do not apply to telecommunications services, or the sales of 27.21 motor vehicles, watercraft, aircraft, modular homes, 27.22 manufactured homes, or mobile homes. These provisions only 27.23 apply to determine a seller's obligation to pay or collect and 27.24 remit a sales or use tax with respect to the seller's sale of a 27.25 product. These provisions do not affect the obligation of a 27.26 seller as purchaser to remit tax on the use of the product. 27.27 (b) When the product is received by the purchaser at a 27.28 business location of the seller, the sale is sourced to that 27.29 business location. 27.30 (c) When the product is not received by the purchaser at a 27.31 business location of the seller, the sale is sourced to the 27.32 location where receipt by the purchaser or the donee designated 27.33 by the purchaser occurs, including the location indicated by 27.34 instructions for delivery to the purchasers or the purchaser's 27.35 donee, known to the seller. 27.36 (d) When paragraphs (b) and (c) do not apply, the sale is 28.1 sourced to the location indicated by an address for the 28.2 purchaser that is available from the business records of the 28.3 seller that are maintained in the ordinary course of the 28.4 seller's business, when use of this address does not constitute 28.5 bad faith. 28.6 (e) When paragraphs (b), (c), and (d) do not apply, the 28.7 sale is sourced to the location indicated by an address for the 28.8 purchaser obtained during the consummation of the sale, 28.9 including the address of a purchaser's payment instrument if no 28.10 other address is available, when use of this address does not 28.11 constitute bad faith. 28.12 (f) When paragraphs (b), (c), (d), and (e) do not apply, 28.13 including the circumstance where the seller is without 28.14 sufficient information to apply the previous paragraphs, then 28.15 the location is determined by the address from which tangible 28.16 personal property was shipped, from which the digital good was 28.17 first available for transmission by the seller, or from which 28.18 the service was provided. 28.19 Subd. 2. [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 28.20 provisions of subdivision 1, a business purchaser that is not a 28.21 holder of a direct pay permit that knows at the time of its 28.22 purchase of a digital good or service that the digital good or 28.23 service will be concurrently available for use in more than 28.24 taxing jurisdiction shall deliver to the seller in conjunction 28.25 with its purchase a multiple points of use exemption certificate 28.26 disclosing this fact. 28.27 (b) Upon receipt of the multiple points of use exemption 28.28 certificate, the seller is relieved of the obligation to 28.29 collect, pay, or remit the applicable tax and the purchaser is 28.30 obligated to collect, pay, or remit the applicable tax on a 28.31 direct pay basis. 28.32 (c) A purchaser delivering the multiple points of use 28.33 exemption certificate may use any reasonable, but consistent and 28.34 uniform, method of apportionment that is supported by the 28.35 purchaser's business records as they exist at the time of the 28.36 consummation of the sale. 29.1 (d) The multiple points of use exemption certificate 29.2 remains in effect for all future sales by the seller to the 29.3 purchaser until it is revoked in writing. 29.4 (e) A holder of a direct pay permit is not required to 29.5 deliver a multiple points or use exemption certificate to the 29.6 seller. A direct pay permit holder shall follow the provisions 29.7 of paragraph (c) in apportioning the tax due on a digital good 29.8 or a service that will be concurrently available for use in more 29.9 than one taxing jurisdiction. 29.10 Subd. 3. [DEFINITION OF TERMS.] For purposes of this 29.11 section, the terms "receive" and "receipt" mean taking 29.12 possession of tangible personal property, making first use of 29.13 services, or taking possession of making first use of digital 29.14 goods, whichever occurs first. The terms receive and receipt do 29.15 not include possession by a carrier for hire on behalf of the 29.16 purchaser. 29.17 [EFFECTIVE DATE.] This section is effective for sales and 29.18 purchases occurring after December 31, 2001. 29.19 Sec. 15. Minnesota Statutes 2000, section 297A.67, 29.20 subdivision 2, is amended to read: 29.21 Subd. 2. [FOODPRODUCTSAND FOOD INGREDIENTS.] 29.22 Foodproducts including, but not limited to, cereal and cereal29.23products, butter, cheese, milk and milk products, oleomargarine,29.24meat and meat products, fish and fish products, eggs and egg29.25products, vegetables and vegetable products, fruit and fruit29.26products, spices and salt, sugar and sugar products, coffee and29.27coffee substitutes, tea, and cocoa and cocoa productsand food 29.28 ingredients are exempt. For purposes of this subdivision, 29.29 "food" and "food ingredients" mean substances, whether in 29.30 liquid, concentrated, solid, frozen, dried, or dehydrated form, 29.31 that are sold for ingestion or chewing by humans and are 29.32 consumed for their taste or nutritional value. Food and food 29.33 ingredients do not include candy, soft drinks, food sold through 29.34 vending machines, and prepared foods. Food and food ingredients 29.35 do not include alcoholic beverages, dietary supplements, and 29.36 tobacco. For purposes of this subdivision, "alcoholic 30.1 beverages" means beverages that are suitable for human 30.2 consumption and contain one-half of one percent or more of 30.3 alcohol by volume. For purposes of this subdivision, "tobacco" 30.4 means cigarettes, cigars, chewing or pipe tobacco, or any other 30.5 item that contains tobacco. For purposes of this subdivision, 30.6 "dietary supplements" means any product, other than tobacco, 30.7 intended to supplement the diet that: 30.8 (1) contains one or more of the following dietary 30.9 ingredients: 30.10 (i) a vitamin; 30.11 (ii) a mineral; 30.12 (iii) an herb or other botanical; 30.13 (iv) an amino acid; 30.14 (v) a dietary substance for use by humans to supplement the 30.15 diet by increasing the total dietary intake; and 30.16 (vi) a concentrate, metabolite, constituent, extract, or 30.17 combination of any ingredient described in items (i) to (v); 30.18 (2) is intended for ingestion in tablet, capsule, powder, 30.19 softgel, gelcap, or liquid form, or if not intended for 30.20 ingestion in such form, is not represented as conventional food 30.21 and is not represented for use as a sole item of a meal or of 30.22 the diet; and 30.23 (3) is required to be labeled as a dietary supplement, 30.24 identifiable by the supplement facts box found on the label and 30.25 as required pursuant to Code of Federal Regulations, title 21, 30.26 section 101.36. 30.27 [EFFECTIVE DATE.] This section is effective for sales and 30.28 purchases occurring after December 31, 2001. 30.29 Sec. 16. Minnesota Statutes 2000, section 297A.67, 30.30 subdivision 8, is amended to read: 30.31 Subd. 8. [CLOTHING.] (a) Clothingand wearing apparel,30.32including sewing materials to be directly incorporated into30.33wearing apparel, areis exempt. For purposes of this 30.34 subdivision,clothing and wearing apparel do not include the30.35following:30.36(1) articles designed primarily for use while engaging in a31.1specific sport or recreational activity that are not also worn31.2for general use;31.3(2) articles designed primarily to provide safety or31.4protection against injury while the user is engaged in31.5industrial or general job activities;31.6(3) all articles commonly or commercially known as jewelry31.7including, but not limited to, watches;31.8(4) nonprescription optical glasses of any sort;31.9(5) articles made entirely of fur on the hide or pelt, or31.10partially of such fur if the value of the fur is more than three31.11times the value of the next most valuable component material;31.12(6) perfume, lotions, creams, dyes, or other substances31.13that are applied to the skin or the hair; and31.14(7) luggage, bags, purses, wallets, or cases of any31.15sort."clothing" means all human wearing apparel suitable for 31.16 general use. 31.17 (b) Clothing includes, but is not limited to, aprons, 31.18 household and shop; athletic supporters; baby receiving 31.19 blankets; bathing suits and caps; beach capes and coats; belts 31.20 and suspenders; boots; coats and jackets; costumes; children and 31.21 adult diapers, including disposable; ear muffs; footlets; formal 31.22 wear; garters and garter belts; girdles; gloves and mittens for 31.23 general use; hats and caps; hosiery; insoles for shoes; lab 31.24 coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 31.25 sandals; scarves; shoes and shoe laces; slippers; sneakers; 31.26 socks and stockings; steel-toed boots; underwear; uniforms, 31.27 athletic and nonathletic; and wedding apparel. 31.28 (c) Clothing does not include the following: 31.29 (1) belt buckles sold separately; 31.30 (2) costume masks sold separately; 31.31 (3) patches and emblems sold separately; 31.32 (4) sewing equipment and supplies, including but not 31.33 limited to, knitting needles, patterns, pins, scissors, sewing 31.34 machines, sewing needles, tape measures, and thimbles; 31.35 (5) sewing materials that become part of clothing, 31.36 including but not limited to, buttons, fabric, lace, thread, 32.1 yarn, and zippers; 32.2 (6) clothing accessories or equipment; 32.3 (7) sports or recreational equipment; and 32.4 (8) protective equipment. 32.5 For purposes of this subdivision, "clothing accessories or 32.6 equipment" means incidental items worn on the person or in 32.7 conjunction with clothing. Clothing accessories include, but 32.8 are not limited to, briefcases; cosmetics; hair notions, 32.9 including barrettes, hair bows, and hairnets; handbags; 32.10 handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 32.11 wallets; watches; and wigs and hairpieces. "Sports or 32.12 recreational equipment" means items designed for human use and 32.13 worn in conjunction with an athletic or recreational activity 32.14 that are not suitable for general use. Sports and recreational 32.15 equipment, includes but is not limited to, ballet and tap shoes; 32.16 cleated or spiked athletic shoes; baseball, bowling, boxing, 32.17 hockey, and golf gloves; goggles; hand and elbow guards; life 32.18 preservers and vests; mouth guards; roller and ice skates; shin 32.19 guards; shoulder pads; ski boots; waders; and wetsuits and 32.20 fins. "Protective equipment" means items for human wear and 32.21 designed as protection of the wearer against injury or disease 32.22 or as protection against damage or injury of other persons or 32.23 property but not suitable for general use. Protective 32.24 equipment, includes but is not limited to, breathing masks; 32.25 clean room apparel and equipment; ear and hearing protectors; 32.26 face shields; finger guards; hard hats; helmets; paint or dust 32.27 respirators; protective gloves; safety glasses and goggles; 32.28 safety belts; tool belts; and welders gloves and masks. 32.29 [EFFECTIVE DATE.] This section is effective for sales and 32.30 purchases occurring after December 31, 2001. 32.31 Sec. 17. Minnesota Statutes 2000, section 297A.67, is 32.32 amended by adding a subdivision to read: 32.33 Subd. 26. [TRADE ALLOWANCE.] The amount allowed as a 32.34 credit against the sales price for tangible personal property 32.35 taken in trade for resale is exempt. 32.36 [EFFECTIVE DATE.] This section is effective for sales and 33.1 purchases occurring after December 31, 2001. 33.2 Sec. 18. Minnesota Statutes 2000, section 297A.72, 33.3 subdivision 1, is amended to read: 33.4 Subdivision 1. [DUTY OF RETAILER.]AnA fully completed 33.5 exemption certificate conclusively relieves the retailer from 33.6 collecting and remitting the taxonlyif takenin good faith33.7 from the purchaser at the time of sale. 33.8 [EFFECTIVE DATE.] This section is effective for sales and 33.9 purchases occurring after December 31, 2001. 33.10 Sec. 19. Minnesota Statutes 2000, section 297A.81, is 33.11 amended to read: 33.12 297A.81 [UNCOLLECTIBLE DEBTS;OFFSET AGAINST OTHER TAXES33.13 DEDUCTION.] 33.14The taxpayer may offset against the taxes payable for any33.15reporting period the amount of taxes imposed by this chapter33.16previously paid as a result of any transaction the consideration33.17for which became a debt owed to the taxpayer that became33.18uncollectible during the reporting period, but only in33.19proportion to the portion of the debt that became33.20uncollectible.In computing the amount of tax due, a seller may 33.21 deduct bad debts from the total amount upon which the tax is 33.22 calculated for any return. Any deduction taken or refund paid 33.23 which is attributed to bad debts must not include interest. For 33.24 purposes of this section, "bad debt" means any portion of the 33.25 purchase price of a transaction that a seller has reported as 33.26 taxable and for which the seller legally claims as a bad debt 33.27 deduction for federal income tax purposes. Bad debts include, 33.28 but are not limited to, worthless checks, worthless credit card 33.29 payments, and uncollectible credit accounts. Bad debts do not 33.30 include financing charges or interest, sales or use taxes 33.31 charged on the purchase price, uncollectible amounts on property 33.32 that remain in the possession of the seller until the full 33.33 purchase price is paid, expenses incurred in attempting to 33.34 collect any debt, debts sold or assigned to third parties for 33.35 collection, and repossessed property. Section 289A.40, 33.36 subdivision24, applies toan offseta deduction under this 34.1 section. 34.2 [EFFECTIVE DATE.] This section is effective for bad debt 34.3 losses claimed after December 31, 2001. 34.4 Sec. 20. Minnesota Statutes 2000, section 297A.99, 34.5 subdivision 9, is amended to read: 34.6 Subd. 9. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 34.7 (a) The commissioner of revenue shall collect the taxes subject 34.8 to this section. The commissioner may collect the tax with the 34.9 state sales and use tax. All taxes under this section are 34.10 subject to the same penalties, interest, and enforcement 34.11 provisions as apply to the state sales and use tax. 34.12 (b) A request for a refund of state sales tax paid in 34.13 excess of the amount of tax legally due includes a request for a 34.14 refund of the political subdivision taxes paid on the goods or 34.15 services. The commissioner shall refund to the taxpayer the 34.16 full amount of the political subdivision taxes paid on exempt 34.17 sales or use. 34.18(c) A political subdivision that is collecting and34.19administering its own sales and use tax before January 1, 1998,34.20may elect to be exempt from this subdivision and subdivision 11.34.21 [EFFECTIVE DATE.] This section is effective January 1, 2002. 34.22 Sec. 21. [297A.995] [UNIFORM SALES AND USE TAX 34.23 ADMINISTRATION ACT.] 34.24 Subdivision 1. [TITLE.] This section may be cited as the 34.25 Uniform Sales and Use Tax Administration Act. 34.26 Subd. 2. [DEFINITIONS.] As used in this section: 34.27 (a) "Agreement" means the Streamlined Sales and Use Tax 34.28 Agreement. 34.29 (b) "Certified automated system" means software certified 34.30 jointly by the states that are signatories to the agreement to 34.31 calculate the tax imposed by each jurisdiction on a transaction, 34.32 determine the amount of tax to remit to the appropriate state, 34.33 and maintain a record of the transaction. 34.34 (c) "Certified service provider" means an agent certified 34.35 jointly by the states that are signatories to the agreement to 34.36 perform all of the seller's sales tax functions. 35.1 Subd. 3. [LEGISLATIVE FINDING.] The legislature finds that 35.2 this state should enter into an agreement with one or more 35.3 states to simplify and modernize sales and use tax 35.4 administration in order to substantially reduce the burden of 35.5 tax compliance for all sellers and for all types of commerce. 35.6 Subd. 4. [AUTHORITY TO ENTER AGREEMENT.] The commissioner 35.7 of revenue is authorized and directed to enter into the 35.8 agreement with one or more states to simplify and modernize 35.9 sales and use tax administration in order to substantially 35.10 reduce the burden of tax compliance for all sellers and for all 35.11 types of commerce. In furtherance of the agreement, the 35.12 commissioner is authorized to act jointly with other states that 35.13 are members of the agreement to establish standards for 35.14 certification of a certified service provider and certified 35.15 automated system and establish performance standards for 35.16 multistate sellers. 35.17 The commissioner is further authorized to take other 35.18 actions reasonably required to implement the provisions set 35.19 forth in this article. Other actions authorized by this section 35.20 include, but are not limited to, the adoption of rules and 35.21 regulations and the joint procurement, with other member states, 35.22 of goods and services in furtherance of the cooperative 35.23 agreement. 35.24 The commissioner or the commissioner's designee is 35.25 authorized to represent this state before the other states that 35.26 are signatories to the agreement. 35.27 Subd. 5. [RELATIONSHIP TO STATE LAW.] No provision of the 35.28 agreement authorized by this article in whole or part 35.29 invalidates or amends any provision of the law of this state. 35.30 Adoption of the agreement by this state does not amend or modify 35.31 any law of this state. Implementation of any condition of the 35.32 agreement in this state, whether adopted before, at, or after 35.33 membership of this state in the agreement, must be by the action 35.34 of this state. 35.35 Subd. 6. [AGREEMENT REQUIREMENTS.] The commissioner of 35.36 revenue shall not enter into the agreement unless the agreement 36.1 requires each state to abide by the following requirements: 36.2 (a) [UNIFORM STATE RATE.] The agreement must set 36.3 restrictions to achieve more uniform state rates through the 36.4 following: 36.5 (1) limiting the number of state rates; 36.6 (2) eliminating maximums on the amount of state tax that is 36.7 due on a transaction; and 36.8 (3) eliminating thresholds on the application of state tax. 36.9 (b) [UNIFORM STANDARDS.] The agreement must establish 36.10 uniform standards for the following: 36.11 (1) the sourcing of transactions to taxing jurisdictions; 36.12 (2) the administration of exempt sales; 36.13 (3) the allowances a seller can take for bad debts; and 36.14 (4) sales and use tax returns and remittances. 36.15 (c) [UNIFORM DEFINITIONS.] The agreement must require 36.16 states to develop and adopt uniform definitions of sales and use 36.17 tax terms. The definitions must enable a state to preserve its 36.18 ability to make policy choices not inconsistent with the uniform 36.19 definitions. 36.20 (d) [CENTRAL REGISTRATION.] The agreement must provide a 36.21 central, electronic registration system that allows a seller to 36.22 register to collect and remit sales and use taxes for all 36.23 signatory states. 36.24 (e) [NO NEXUS ATTRIBUTION.] The agreement must provide that 36.25 registration with the central registration system and the 36.26 collection of sales and use taxes in the signatory states will 36.27 not be used as a factor in determining whether the seller has 36.28 nexus with a state for any tax. 36.29 (f) [LOCAL SALES AND USE TAXES.] The agreement must provide 36.30 for reduction of the burdens of complying with local sales and 36.31 use taxes through the following: 36.32 (1) restricting and eliminating variances between the state 36.33 and local tax bases; 36.34 (2) requiring states to administer any sales and use taxes 36.35 levied by local jurisdictions within the state so that sellers 36.36 collecting and remitting these taxes will not have to register 37.1 or file returns with, remit funds to, or be subject to 37.2 independent audits from local taxing jurisdictions; 37.3 (3) restricting the frequency of changes in the local sales 37.4 and use tax rates and setting effective dates for the 37.5 application of local jurisdictional boundary changes to local 37.6 sales and use taxes; and 37.7 (4) providing notice of changes in local sales and use tax 37.8 rates and of changes in the boundaries of local taxing 37.9 jurisdictions. 37.10 (g) [MONETARY ALLOWANCES.] The agreement must outline any 37.11 monetary allowances that are to be provided by the states to 37.12 sellers or certified service providers. 37.13 (h) [STATE COMPLIANCE.] The agreement must require each 37.14 state to certify compliance with the terms of the agreement 37.15 prior to joining and to maintain compliance, under the laws of 37.16 the member state, with all provisions of the agreement while a 37.17 member. 37.18 (i) [CONSUMER PRIVACY.] The agreement must require each 37.19 state to adopt a uniform policy for certified service providers 37.20 that protects the privacy of consumers and maintains the 37.21 confidentiality of tax information. 37.22 (j) [ADVISORY COUNCILS.] The agreement must provide for the 37.23 appointment of an advisory council of private sector 37.24 representatives and an advisory council of nonmember state 37.25 representatives to consult with in the administration of the 37.26 agreement. 37.27 Subd. 7. [COOPERATING SOVEREIGNS.] The agreement 37.28 authorized by this article is an accord among individual 37.29 cooperating sovereigns in furtherance of their governmental 37.30 functions. The agreement provides a mechanism among the member 37.31 states to establish and maintain a cooperative, simplified 37.32 system for the application and administration of sales and use 37.33 taxes under the duly adopted law of each member state. 37.34 Subd. 8. [LIMITED BINDING AND BENEFICIAL EFFECT.] (a) The 37.35 agreement authorized by this article binds and inures only to 37.36 the benefit of this state and the other member states. No 38.1 person, other than a member state, is an intended beneficiary of 38.2 the agreement. Any benefit to a person other than a state is 38.3 established by the law of this state and the other member states 38.4 and not by the terms of the agreement. 38.5 (b) Consistent with paragraph (a), no person shall have any 38.6 cause of action or defense under the agreement or by virtue of 38.7 this state's approval of the agreement. No person may 38.8 challenge, in any action brought under any provision of law, any 38.9 action or inaction by any department, agency, or other 38.10 instrumentality of this state, or any political subdivision of 38.11 this state, on the ground that the action or inaction is 38.12 inconsistent with the agreement. 38.13 (c) No law of this state, or its application, may be 38.14 declared invalid as to any person or circumstance on the ground 38.15 that the provision or application is inconsistent with the 38.16 agreement. 38.17 Subd. 9. [SELLER AND THIRD PARTY LIABILITY.] (a) A 38.18 certified service provider is the agent of a seller, with whom 38.19 the certified service provider has contracted, for the 38.20 collection and remittance of sales and use taxes. As the 38.21 seller's agent, the certified service provider is liable for 38.22 sales and use tax due each member state on all sales 38.23 transactions it processes for the seller except as set out in 38.24 this section. 38.25 A seller that contracts with a certified service provider 38.26 is not liable to the state for sales or use tax due on 38.27 transactions processed by the certified service provider unless 38.28 the seller misrepresented the type of items it sells or 38.29 committed fraud. In the absence of probable cause to believe 38.30 that the seller has committed fraud or made a material 38.31 misrepresentation, the seller is not subject to audit on the 38.32 transactions processed by the certified service provider. A 38.33 seller is subject to audit for transactions not processed by the 38.34 certified service provider. The member states acting jointly 38.35 may perform a system check of the seller and review the seller's 38.36 procedures to determine if the certified service provider's 39.1 system is functioning properly and the extent to which the 39.2 seller's transactions are being processed by the certified 39.3 service provider. 39.4 (b) A person that provides a certified automated system is 39.5 responsible for the proper functioning of that system and is 39.6 liable to the state for underpayments of tax attributable to 39.7 errors in the functioning of the certified automated system. A 39.8 seller that uses a certified automated system remains 39.9 responsible and is liable to the state for reporting and 39.10 remitting tax. 39.11 (c) A seller that has a proprietary system for determining 39.12 the amount of tax due on transactions and has signed an 39.13 agreement establishing a performance standard for that system is 39.14 liable for the failure of the system to meet the performance 39.15 standard. 39.16 [EFFECTIVE DATE.] This section is effective the day 39.17 following enactment. 39.18 Sec. 22. [APPROPRIATIONS.] 39.19 $....... is appropriated from the general fund to the 39.20 commissioner of revenue for fiscal year 2002 to administer this 39.21 article, and $....... is appropriated from the general fund to 39.22 the commissioner of revenue for fiscal year 2003 to administer 39.23 this article. The appropriations are available until June 30, 39.24 2003. 39.25 [EFFECTIVE DATE.] This section is effective July 1, 2001.