HF 2061

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 03/08/2017 12:46pm

A bill for an act
relating to taxation; sales and use; providing an exemption for purchases used in
providing transportation and public transit services; amending Minnesota Statutes
2016, sections 297A.70, by adding a subdivision; 297A.71, by adding a subdivision;
297A.75, subdivisions 1, 2, 3; 297B.03.

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

Section 1.

Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision
to read:

new text begin Subd. 3a. new text end

new text begin Sales to the Department of Transportation. new text end

new text begin (a) All sales to the Department
of Transportation are exempt except those listed in paragraph (b).
new text end

new text begin (b) The exemption under this subdivision does not apply to sales of the following products
and services:
new text end

new text begin (1) building construction materials, supplies, and equipment purchased by a contractor
or subcontractor as part of a lump-sum contract or similar type of contract with a guaranteed
maximum price covering both labor and materials for use in the construction, alteration, or
repair of a building or facility; or
new text end

new text begin (2) construction materials purchased by the Department of Transportation or its
contractors to be used in constructing buildings or nontransportation-related facilities that
will not be used principally by the Department of Transportation.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to
read:

new text begin Subd. 49. new text end

new text begin Construction materials purchased by contractors; exemption for certain
public entities. new text end

new text begin (a) Building, construction, or reconstruction materials, supplies, and
equipment purchased by a contractor, subcontractor, or builder and used or consumed in or
incorporated into buildings or facilities used principally by the Department of Transportation
are exempt.
new text end

new text begin (b) Materials, supplies, and equipment purchased by a contractor, subcontractor, or
builder and used in the construction, reconstruction, repair, maintenance, or improvement
of facilities and projects directly used in public transit capital projects or other transportation
capital projects financed in whole or in part by the following public entities are exempt:
new text end

new text begin (1) the Department of Transportation; and
new text end

new text begin (2) local governments, as defined in section 297A.70, subdivision 2, paragraph (d).
new text end

new text begin (c) The tax on purchases exempt under this subdivision must be imposed and collected
as if the rate under section 297A.62, subdivision 1, applied, and then refunded in the manner
provided in section 297A.75. A refund of taxes paid on materials, supplies, and equipment
for a public transit project must be used by the entity receiving the refund for transit purposes.
A refund of taxes paid on materials, supplies, and equipment for other transportation capital
projects must be used by the entity receiving the refund for other transportation capital
projects.
new text end

new text begin (d) For purposes of this subdivision, "public transit capital project" means:
new text end

new text begin (1) a project or procurement of capital equipment eligible for state or federal financing
under section 174.24, subdivision 2a;
new text end

new text begin (2) a rail passenger capital project authorized under sections 174.60 to 174.636;
new text end

new text begin (3) a commuter rail capital project authorized under sections 174.80 to 174.92; or
new text end

new text begin (4) a transit capital project or procurement of capital equipment authorized under sections
473.371 to 473.449.
new text end

new text begin (e) For purposes of this subdivision, "other transportation capital project" means
construction, reconstruction, or maintenance of highways, including trunk highways, county
highways, municipal streets, bridges, and associated facilities owned by the state or local
government and located within the public right-of-way.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2017.
new text end

Sec. 3.

Minnesota Statutes 2016, section 297A.75, subdivision 1, is amended to read:

Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the following
exempt items must be imposed and collected as if the sale were taxable and the rate under
section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section 297A.71,
subdivision 14;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for disabled veterans exempt under section
297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution of
electrical energy and an aerial camera package exempt under section 297A.68, subdivision
37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph
(a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects and
facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion
of:

(i) an aerospace defense manufacturing facility exempt under section 297A.71,
subdivision 42;

(ii) a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision
45;

(iii) a research and development facility exempt under section 297A.71, subdivision 46;
and

(iv) an industrial measurement manufacturing and controls facility exempt under section
297A.71, subdivision 47;

(12) enterprise information technology equipment and computer software for use in a
qualified data center exempt under section 297A.68, subdivision 42;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44;

(14) items purchased for use in providing critical access dental services exempt under
section 297A.70, subdivision 7, paragraph (c); deleted text begin and
deleted text end

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision
44 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (16) materials, supplies, and equipment purchased for public buildings and facilities,
public transit projects, and other transportation capital projects exempt under section 297A.71,
subdivision 49.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2017.
new text end

Sec. 4.

Minnesota Statutes 2016, section 297A.75, subdivision 2, is amended to read:

Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items must
be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1), (2), and (14), the applicant must be the purchaser;

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a
joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying
business; deleted text begin and
deleted text end

(8) for subdivision 1, clauses (9), (10), and (13), the applicant must be the governmental
entity that owns or contracts for the project or facility new text begin ; and
new text end

new text begin (9) for subdivision 1, clause (16), the applicant must be the public entity eligible for the
exemption under section 297A.71, subdivision 49 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2017.
new text end

Sec. 5.

Minnesota Statutes 2016, section 297A.75, subdivision 3, is amended to read:

Subd. 3.

Application.

(a) The application must include sufficient information to permit
the commissioner to verify the tax paid. If the tax was paid by a contractor, subcontractor,
or builder, under subdivision 1, clauses (3) to (13), deleted text begin or deleted text end (15), new text begin or (16), new text end the contractor,
subcontractor, or builder must furnish to the refund applicant a statement including the cost
of the exempt items and the taxes paid on the items unless otherwise specifically provided
by this subdivision. The provisions of sections 289A.40 and 289A.50 apply to refunds under
this section.

(b) An applicant may not file more than two applications per calendar year for refunds
for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2017.
new text end

Sec. 6.

Minnesota Statutes 2016, section 297B.03, is amended to read:

297B.03 EXEMPTIONS.

There is specifically exempted from the provisions of this chapter and from computation
of the amount of tax imposed by it the following:

(1) purchase or use, including use under a lease purchase agreement or installment sales
contract made pursuant to section 465.71, of any motor vehicle by the United States and its
agencies and instrumentalities and by any person described in and subject to the conditions
provided in section 297A.67, subdivision 11;

(2) purchase or use of any motor vehicle by any person who was a resident of another
state or country at the time of the purchase and who subsequently becomes a resident of
Minnesota, provided the purchase occurred more than 60 days prior to the date such person
began residing in the state of Minnesota and the motor vehicle was registered in the person's
name in the other state or country;

(3) purchase or use of any motor vehicle by any person making a valid election to be
taxed under the provisions of section 297A.90;

(4) purchase or use of any motor vehicle previously registered in the state of Minnesota
when such transfer constitutes a transfer within the meaning of section 118, 331, 332, 336,
337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal Revenue Code;

(5) purchase or use of any vehicle owned by a resident of another state and leased to a
Minnesota-based private or for-hire carrier for regular use in the transportation of persons
or property in interstate commerce provided the vehicle is titled in the state of the owner or
secured party, and that state does not impose a sales tax or sales tax on motor vehicles used
in interstate commerce;

(6) purchase or use of a motor vehicle by a private nonprofit or public educational
institution for use as an instructional aid in automotive training programs operated by the
institution. "Automotive training programs" includes motor vehicle body and mechanical
repair courses but does not include driver education programs;

(7) purchase of a motor vehicle by an ambulance service licensed under section 144E.10
when that vehicle is equipped and specifically intended for emergency response or for
providing ambulance service;

(8) purchase of a motor vehicle by or for a public library, as defined in section 134.001,
subdivision 2, as a bookmobile or library delivery vehicle;

(9) purchase of a ready-mixed concrete truck;

(10) purchase or use of a motor vehicle by a town new text begin , the Department of Transportation,
or a local government as defined in section 297A.70, subdivision 2, paragraph (d), new text end for use
exclusively for new text begin highway, new text end road new text begin , and bridge new text end maintenance, including snowplows and dump
trucks, but not including automobiles, vans, or pickup trucks;

(11) purchase or use of a motor vehicle by a corporation, society, association, foundation,
or institution organized and operated exclusively for charitable, religious, or educational
purposes, except a public school, university, or library, but only if the vehicle is:

(i) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and used
for carrying more than nine persons including the driver; and

(ii) intended to be used primarily to transport tangible personal property or individuals,
other than employees, to whom the organization provides service in performing its charitable,
religious, or educational purpose;

(12) purchase of a motor vehicle for use by a transit provider exclusively to provide
transit service is exempt if the transit provider is either (i) receiving financial assistance or
reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29,
473.388, or 473.405;

(13) purchase or use of a motor vehicle by a qualified business, as defined in section
469.310, located in a job opportunity building zone, if the motor vehicle is principally
garaged in the job opportunity building zone and is primarily used as part of or in direct
support of the person's operations carried on in the job opportunity building zone. The
exemption under this clause applies to sales, if the purchase was made and delivery received
during the duration of the job opportunity building zone. The exemption under this clause
also applies to any local sales and use tax;

(14) purchase of a leased vehicle by the lessee who was a participant in a lease-to-own
program from a charitable organization that is:

(i) described in section 501(c)(3) of the Internal Revenue Code; and

(ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4; and

(15) purchase of a motor vehicle used exclusively as a mobile medical unit for the
provision of medical or dental services by a federally qualified health center, as defined
under title 19 of the Social Security Act, as amended by Section 4161 of the Omnibus Budget
Reconciliation Act of 1990.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2017.
new text end