HF 2309

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; sales and use; exempting certain 
  1.3             items from tax; amending Minnesota Statutes 1998, 
  1.4             sections 16A.661, subdivision 3; 297A.01, subdivisions 
  1.5             3 and 8; 297A.25, subdivisions 3, 26, and by adding 
  1.6             subdivisions; and 297A.44, subdivision 1; repealing 
  1.7             Minnesota Statutes 1998, section 297A.25, subdivision 
  1.8             21. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1998, section 16A.661, 
  1.11  subdivision 3, is amended to read: 
  1.12     Subd. 3.  [ESTABLISHMENT OF DEBT SERVICE FUND; 
  1.13  APPROPRIATION OF DEBT SERVICE FUND MONEY.] (a) There is 
  1.14  established within the state bond fund a separate and special 
  1.15  account designated as a general obligation special tax bond debt 
  1.16  service account.  There must be credited to this debt service 
  1.17  account in each fiscal year from the tobacco tax revenue fund 
  1.18  established in section 297F.10 an amount sufficient to increase 
  1.19  the balance on hand in the debt service account on each December 
  1.20  1 to an amount equal to the full amount of principal and 
  1.21  interest to come due on all outstanding bonds whose debt service 
  1.22  is payable primarily from proceeds of the tax to and including 
  1.23  the second following July 1.  The money on hand in the debt 
  1.24  service account must be used solely for the payment of the 
  1.25  principal of, and interest on, the bonds, and is appropriated 
  1.26  for this purpose.  This appropriation does not cancel as long as 
  1.27  any of the bonds remain outstanding. 
  2.1      (b) There is established within the state bond fund a 
  2.2   separate and special account designated as a general obligation 
  2.3   special tax bond debt service account.  There must be credited 
  2.4   to this debt service account in each fiscal year from the sports 
  2.5   and health club sales tax revenue fund established in section 
  2.6   297A.44 an amount sufficient to increase the balance on hand in 
  2.7   the debt service account on each December 1 to an amount equal 
  2.8   to the full amount of principal and interest to come due on all 
  2.9   outstanding bonds whose debt service is payable primarily from 
  2.10  proceeds of the tax to and including the second following July 
  2.11  1.  The money on hand in the debt service account must be used 
  2.12  solely for the payment of the principal of, and interest on, the 
  2.13  bonds, and is appropriated for this purpose.  This appropriation 
  2.14  does not cancel as long as any of the bonds remain outstanding. 
  2.15     Sec. 2.  Minnesota Statutes 1998, section 297A.01, 
  2.16  subdivision 3, is amended to read: 
  2.17     Subd. 3.  A "sale" and a "purchase" includes, but is not 
  2.18  limited to, each of the following transactions: 
  2.19     (a) Any transfer of title or possession, or both, of 
  2.20  tangible personal property, whether absolutely or conditionally, 
  2.21  and the leasing of or the granting of a license to use or 
  2.22  consume tangible personal property other than manufactured homes 
  2.23  used for residential purposes for a continuous period of 30 days 
  2.24  or more, for a consideration in money or by exchange or barter; 
  2.25     (b) The production, fabrication, printing, or processing of 
  2.26  tangible personal property for a consideration for consumers who 
  2.27  furnish either directly or indirectly the materials used in the 
  2.28  production, fabrication, printing, or processing; 
  2.29     (c) The furnishing, preparing, or serving for a 
  2.30  consideration of food, meals, or drinks.  "Sale" or "purchase" 
  2.31  does not include: 
  2.32     (1) meals or drinks served to patients, inmates, or persons 
  2.33  residing at hospitals, sanitariums, nursing homes, senior 
  2.34  citizens homes, and correctional, detention, and detoxification 
  2.35  facilities; 
  2.36     (2) meals or drinks purchased for and served exclusively to 
  3.1   individuals who are 60 years of age or over and their spouses or 
  3.2   to the handicapped and their spouses by governmental agencies, 
  3.3   nonprofit organizations, agencies, or churches or pursuant to 
  3.4   any program funded in whole or part through 42 USCA sections 
  3.5   3001 through 3045, wherever delivered, prepared or served; or 
  3.6      (3) meals and lunches served at public and private schools, 
  3.7   universities, or colleges. 
  3.8   Notwithstanding section 297A.25, subdivision 2, taxable food or 
  3.9   meals include, but are not limited to, the following:  
  3.10     (i) food or drinks sold by the retailer for immediate 
  3.11  consumption on the retailer's premises.  Food and drinks sold 
  3.12  within a building or grounds which require an admission charge 
  3.13  for entrance are presumed to be sold for consumption on the 
  3.14  premises; 
  3.15     (ii) food or drinks prepared by the retailer for immediate 
  3.16  consumption either on or off the retailer's premises.  For 
  3.17  purposes of this subdivision, "food or drinks prepared for 
  3.18  immediate consumption" includes any food product upon which an 
  3.19  act of preparation including, but not limited to, cooking, 
  3.20  mixing, sandwich making, blending, heating, or pouring has been 
  3.21  performed by the retailer so the food product may be immediately 
  3.22  consumed by the purchaser; 
  3.23     (iii) ice cream, ice milk, frozen yogurt products, or 
  3.24  frozen novelties sold in single or individual servings including 
  3.25  cones, sundaes, and snow cones.  For purposes of this 
  3.26  subdivision, "single or individual servings" does not include 
  3.27  products when sold in bulk containers or bulk packaging; 
  3.28     (iv) soft drinks and other beverages including all 
  3.29  carbonated and noncarbonated beverages or drinks sold in liquid 
  3.30  form except beverages or drinks which contain milk or milk 
  3.31  products, beverages or drinks containing 15 or more percent 
  3.32  fruit juice, and noncarbonated and noneffervescent bottled water 
  3.33  sold in individual containers of one-half gallon or more in 
  3.34  size; 
  3.35     (v) gum, candy, and candy products, except when sold for 
  3.36  fundraising purposes by a nonprofit organization that provides 
  4.1   educational and social activities primarily for young people 18 
  4.2   years of age and under; 
  4.3      (vi) ice; 
  4.4      (vii) all food sold from vending machines; 
  4.5      (viii) all food for immediate consumption sold from 
  4.6   concession stands and vehicles; 
  4.7      (ix) party trays; 
  4.8      (x) all meals and single servings of packaged snack food 
  4.9   sold in restaurants and bars; and 
  4.10     (xi) bakery products: 
  4.11     (A) prepared by the retailer for consumption on the 
  4.12  retailer's premises; 
  4.13     (B) sold at a place that charges admission; 
  4.14     (C) sold from vending machines; or 
  4.15     (D) sold in single or individual servings from concession 
  4.16  stands, vehicles, bars, and restaurants.  For purposes of this 
  4.17  subdivision, "single or individual servings" does not include 
  4.18  products when sold in bulk containers or bulk packaging.  
  4.19     For purposes of this subdivision, "premises" means the 
  4.20  total space and facilities, including buildings, grounds, and 
  4.21  parking lots that are made available or that are available for 
  4.22  use by the retailer or customer for the purpose of sale or 
  4.23  consumption of prepared food and drinks.  The premises of a 
  4.24  caterer is the place where the catered food or drinks are 
  4.25  served; 
  4.26     (d) The granting of the privilege of admission to places of 
  4.27  amusement, recreational areas, or athletic events, except a 
  4.28  world championship football game sponsored by the national 
  4.29  football league, and the privilege of having access to and the 
  4.30  use of amusement devices, tanning facilities, reducing salons, 
  4.31  steam baths, turkish baths, health clubs, and spas or athletic 
  4.32  facilities; 
  4.33     (e) The furnishing for a consideration of lodging and 
  4.34  related services by a hotel, rooming house, tourist court, motel 
  4.35  or trailer camp and of the granting of any similar license to 
  4.36  use real property other than the renting or leasing thereof for 
  5.1   a continuous period of 30 days or more; 
  5.2      (f) The furnishing for a consideration of electricity, gas, 
  5.3   water, or steam for use or consumption within this state, or 
  5.4   local exchange telephone service, and intrastate toll service, 
  5.5   and interstate toll service, if that service originates from and 
  5.6   is charged to a telephone located in this state.  Telephone 
  5.7   service does not include services purchased with prepaid 
  5.8   telephone calling cards.  Telephone service includes paging 
  5.9   services and private communication service, as defined in United 
  5.10  States Code, title 26, section 4252(d), as amended through 
  5.11  December 31, 1991, except for private communication service 
  5.12  purchased by an agent acting on behalf of the state lottery.  
  5.13  The furnishing for a consideration of access to telephone 
  5.14  services by a hotel to its guests is a sale under this clause.  
  5.15  Sales by municipal corporations in a proprietary capacity are 
  5.16  included in the provisions of this clause.  The furnishing of 
  5.17  water and sewer services for residential use shall not be 
  5.18  considered a sale.  The sale of natural gas to be used as a fuel 
  5.19  in vehicles propelled by natural gas shall not be considered a 
  5.20  sale for the purposes of this section; 
  5.21     (g) The furnishing for a consideration of cable television 
  5.22  services, including charges for basic service, charges for 
  5.23  premium service, and any other charges for any other 
  5.24  pay-per-view, monthly, or similar television services; 
  5.25     (h) The furnishing for a consideration of parking services, 
  5.26  whether on a contractual, hourly, or other periodic basis, 
  5.27  except for parking at a meter; 
  5.28     (i) The furnishing for a consideration of services listed 
  5.29  in this paragraph: 
  5.30     (i) laundry and dry cleaning services including cleaning, 
  5.31  pressing, repairing, altering, and storing clothes, linen 
  5.32  services and supply, cleaning and blocking hats, and carpet, 
  5.33  drapery, upholstery, and industrial cleaning.  Laundry and dry 
  5.34  cleaning services do not include services provided by coin 
  5.35  operated facilities operated by the customer; 
  5.36     (ii) motor vehicle washing, waxing, and cleaning services, 
  6.1   including services provided by coin-operated facilities operated 
  6.2   by the customer, and rustproofing, undercoating, and towing of 
  6.3   motor vehicles; 
  6.4      (iii) building and residential cleaning, maintenance, and 
  6.5   disinfecting and exterminating services; 
  6.6      (iv) detective services, security services, burglar, fire 
  6.7   alarm, and armored car services; but not including services 
  6.8   performed within the jurisdiction they serve by off-duty 
  6.9   licensed peace officers as defined in section 626.84, 
  6.10  subdivision 1, or services provided by a nonprofit organization 
  6.11  for monitoring and electronic surveillance of persons placed on 
  6.12  in-home detention pursuant to court order or under the direction 
  6.13  of the Minnesota department of corrections; 
  6.14     (v) pet grooming services; 
  6.15     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
  6.16  services; garden planting and maintenance; tree, bush, and shrub 
  6.17  pruning, bracing, spraying, and surgery; indoor plant care; 
  6.18  tree, bush, shrub and stump removal; and tree trimming for 
  6.19  public utility lines.  Services performed under a construction 
  6.20  contract for the installation of shrubbery, plants, sod, trees, 
  6.21  bushes, and similar items are not taxable; 
  6.22     (vii) massages, except when provided by a licensed health 
  6.23  care facility or professional or upon written referral from a 
  6.24  licensed health care facility or professional for treatment of 
  6.25  illness, injury, or disease; and 
  6.26     (viii) the furnishing for consideration of lodging, board 
  6.27  and care services for animals in kennels and other similar 
  6.28  arrangements, but excluding veterinary and horse boarding 
  6.29  services. 
  6.30  The services listed in this paragraph are taxable under section 
  6.31  297A.02 if the service is performed wholly within Minnesota or 
  6.32  if the service is performed partly within and partly without 
  6.33  Minnesota and the greater proportion of the service is performed 
  6.34  in Minnesota, based on the cost of performance.  In applying the 
  6.35  provisions of this chapter, the terms "tangible personal 
  6.36  property" and "sales at retail" include taxable services and the 
  7.1   provision of taxable services, unless specifically provided 
  7.2   otherwise.  Services performed by an employee for an employer 
  7.3   are not taxable under this paragraph.  Services performed by a 
  7.4   partnership or association for another partnership or 
  7.5   association are not taxable under this paragraph if one of the 
  7.6   entities owns or controls more than 80 percent of the voting 
  7.7   power of the equity interest in the other entity.  Services 
  7.8   performed between members of an affiliated group of corporations 
  7.9   are not taxable.  For purposes of this section, "affiliated 
  7.10  group of corporations" includes those entities that would be 
  7.11  classified as a member of an affiliated group under United 
  7.12  States Code, title 26, section 1504, as amended through December 
  7.13  31, 1987, and who are eligible to file a consolidated tax return 
  7.14  for federal income tax purposes; and 
  7.15     (j) A "sale" and a "purchase" includes the transfer of 
  7.16  computer software, meaning information and directions that 
  7.17  dictate the function performed by data processing equipment.  A 
  7.18  "sale" and a "purchase" does not include the design, 
  7.19  development, writing, translation, fabrication, lease, or 
  7.20  transfer for a consideration of title or possession of a custom 
  7.21  computer program; and. 
  7.22     (k) The granting of membership in a club, association, or 
  7.23  other organization if: 
  7.24     (1) the club, association, or other organization makes 
  7.25  available for the use of its members sports and athletic 
  7.26  facilities (without regard to whether a separate charge is 
  7.27  assessed for use of the facilities); and 
  7.28     (2) use of the sports and athletic facilities is not made 
  7.29  available to the general public on the same basis as it is made 
  7.30  available to members.  
  7.31  Granting of membership includes both one-time initiation fees 
  7.32  and periodic membership dues.  Sports and athletic facilities 
  7.33  include golf courses, tennis, racquetball, handball and squash 
  7.34  courts, basketball and volleyball facilities, running tracks, 
  7.35  exercise equipment, swimming pools, and other similar athletic 
  7.36  or sports facilities.  The provisions of this paragraph do not 
  8.1   apply to camps or other recreation facilities owned and operated 
  8.2   by an exempt organization under section 501(c)(3) of the 
  8.3   Internal Revenue Code of 1986, as amended through December 31, 
  8.4   1992, for educational and social activities for young people 
  8.5   primarily age 18 and under.  
  8.6      Sec. 3.  Minnesota Statutes 1998, section 297A.01, 
  8.7   subdivision 8, is amended to read: 
  8.8      Subd. 8.  "Sales price" means the total consideration 
  8.9   valued in money, for a retail sale whether paid in money or 
  8.10  otherwise, excluding therefrom any amount allowed as credit for 
  8.11  tangible personal property taken in trade for resale, without 
  8.12  deduction for the cost of the property sold, cost of materials 
  8.13  used, labor or service cost, interest, or discount allowed after 
  8.14  the sale is consummated, the cost of transportation incurred 
  8.15  prior to the time of sale, any amount for which credit is given 
  8.16  to the purchaser by the seller, or any other expense 
  8.17  whatsoever.  A deduction may be made for charges of up to 15 
  8.18  percent in lieu of tips, if the consideration for such charges 
  8.19  is separately stated.  No deduction shall be allowed for charges 
  8.20  for services that are part of a sale.  Except as otherwise 
  8.21  provided in this subdivision, a deduction may also be made for 
  8.22  interest, financing, or carrying charges, charges for labor or 
  8.23  services used in installing or applying the property sold or 
  8.24  transportation charges if the transportation occurs after the 
  8.25  retail sale of the property only if the consideration for such 
  8.26  charges is separately stated.  "Sales price," for purposes of 
  8.27  sales of ready-mixed concrete sold from a ready-mixed concrete 
  8.28  truck, includes any transportation, delivery, or other service 
  8.29  charges, and no deduction is allowed for those charges, whether 
  8.30  or not the charges are separately stated.  There shall not be 
  8.31  included in "sales price" cash discounts allowed and taken on 
  8.32  sales or, the amount refunded either in cash or in credit for 
  8.33  property returned by purchasers, or the amount of any tax (not 
  8.34  including, however, any manufacturers' or importers' excise tax) 
  8.35  imposed by the United States on or with respect to retail sales, 
  8.36  whether imposed upon the retailer or the consumer. 
  9.1      Sec. 4.  Minnesota Statutes 1998, section 297A.25, 
  9.2   subdivision 3, is amended to read: 
  9.3      Subd. 3.  [MEDICINES; MEDICAL DEVICES.] The gross receipts 
  9.4   from the sale of and storage, use, or consumption of prescribed 
  9.5   drugs, prescribed medicine and insulin, intended for use, 
  9.6   internal or external, in the cure, mitigation, treatment or 
  9.7   prevention of illness or disease in human beings and products 
  9.8   consumed by humans for the preservation of human health are 
  9.9   exempt, together with prescription glasses, fever thermometers, 
  9.10  therapeutic, and prosthetic devices.  "Prescribed Drugs" or 
  9.11  "prescribed medicine" includes over-the-counter drugs or 
  9.12  medicine prescribed by a licensed physician.  "Therapeutic 
  9.13  devices" includes reusable finger pricking devices for the 
  9.14  extraction of blood, blood glucose monitoring machines, and 
  9.15  other diagnostic agents used in diagnosing, monitoring, or 
  9.16  treating diabetes.  Nonprescription analgesics consisting 
  9.17  principally (determined by the weight of all ingredients) of 
  9.18  acetaminophen, acetylsalicylic acid, ibuprofen, ketoprofen, 
  9.19  naproxen, and other nonprescription analgesics that are approved 
  9.20  by the United States Food and Drug Administration for internal 
  9.21  use by human beings, or a combination thereof, are exempt. 
  9.22     Medical supplies purchased by a licensed health care 
  9.23  facility or licensed health care professional to provide medical 
  9.24  treatment to residents or patients are exempt.  The exemption 
  9.25  does not apply to medical equipment or components of medical 
  9.26  equipment, laboratory supplies, radiological supplies, and other 
  9.27  items used in providing medical services.  For purposes of this 
  9.28  subdivision, "medical supplies" means adhesive and nonadhesive 
  9.29  bandages, gauze pads and strips, cotton applicators, 
  9.30  antiseptics, nonprescription drugs, eye solution, and other 
  9.31  similar supplies used directly on the resident or patient in 
  9.32  providing medical services. 
  9.33     Sec. 5.  Minnesota Statutes 1998, section 297A.25, 
  9.34  subdivision 26, is amended to read: 
  9.35     Subd. 26.  [FEMININE PERSONAL HYGIENE PRODUCTS.] The gross 
  9.36  receipts from the sale of and storage, use, or consumption 
 10.1   of items used for personal hygiene of human beings including, 
 10.2   but not limited to, soap, laundry detergent, hand and body 
 10.3   lotions or creams, toilet paper, facial tissues, sanitary 
 10.4   napkins, tampons, or and similar items used for feminine 
 10.5   hygiene, but not including cosmetics, are exempt.  
 10.6      Sec. 6.  Minnesota Statutes 1998, section 297A.25, is 
 10.7   amended by adding a subdivision to read: 
 10.8      Subd. 79.  [BOOKS.] The gross receipts from the sale of 
 10.9   books and sheet music are exempt.  For purposes of this 
 10.10  subdivision, "book" means a bound, printed version of either a 
 10.11  long literary composition or a compilation of shorter literary 
 10.12  works, and "sheet music" means a bound compilation or single 
 10.13  sheet of printed music. 
 10.14     Sec. 7.  Minnesota Statutes 1998, section 297A.25, is 
 10.15  amended by adding a subdivision to read: 
 10.16     Subd. 80.  [VETERINARY PRESCRIPTION DRUGS.] The gross 
 10.17  receipts from the sale of prescription drugs prescribed by a 
 10.18  veterinarian for the care of pets, horses, and agricultural 
 10.19  production animals are exempt. 
 10.20     Sec. 8.  Minnesota Statutes 1998, section 297A.44, 
 10.21  subdivision 1, is amended to read: 
 10.22     Subdivision 1.  (a) Except as provided in paragraphs (b) to 
 10.23  (d), all revenues, including interest and penalties, derived 
 10.24  from the excise and use taxes imposed by sections 297A.01 to 
 10.25  297A.44 shall be deposited by the commissioner in the state 
 10.26  treasury and credited to the general fund.  
 10.27     (b) All excise and use taxes derived from sales and use of 
 10.28  property and services purchased for the construction and 
 10.29  operation of an agricultural resource project, from and after 
 10.30  the date on which a conditional commitment for a loan guaranty 
 10.31  for the project is made pursuant to section 41A.04, subdivision 
 10.32  3, shall be deposited in the Minnesota agricultural and economic 
 10.33  account in the special revenue fund.  The commissioner of 
 10.34  finance shall certify to the commissioner the date on which the 
 10.35  project received the conditional commitment.  The amount 
 10.36  deposited in the loan guaranty account shall be reduced by any 
 11.1   refunds and by the costs incurred by the department of revenue 
 11.2   to administer and enforce the assessment and collection of the 
 11.3   taxes.  
 11.4      (c) All revenues, including interest and penalties, derived 
 11.5   from the excise and use taxes imposed on sales and purchases 
 11.6   included in section 297A.01, subdivision 3, paragraphs 
 11.7   paragraph (d) and (k), clauses (1) and (2), must be deposited by 
 11.8   the commissioner in the state treasury, and credited as follows: 
 11.9      (1) first to the general obligation special tax bond debt 
 11.10  service account in each fiscal year the amount required by 
 11.11  section 16A.661, subdivision 3, paragraph (b); and 
 11.12     (2) after the requirements of clause (1) have been met, the 
 11.13  balance must be credited to the general fund. 
 11.14     (d) The revenues, including interest and penalties, 
 11.15  collected under section 297A.135, subdivision 5, shall be 
 11.16  deposited by the commissioner in the state treasury and credited 
 11.17  to the general fund.  By July 15 of each year the commissioner 
 11.18  shall transfer to the highway user tax distribution fund an 
 11.19  amount equal to the excess fees collected under section 
 11.20  297A.135, subdivision 5, for the previous calendar year. 
 11.21     Sec. 9.  [REPEALER.] 
 11.22     Minnesota Statutes 1998, section 297A.25, subdivision 21, 
 11.23  is repealed. 
 11.24     Sec. 10.  [EFFECTIVE DATE.] 
 11.25     Sections 1 to 9 are effective for sales made after June 30, 
 11.26  1999.