HF 2692

as introduced - 91st Legislature (2019 - 2020) Posted on 03/25/2019 02:37pm

A bill for an act
relating to taxation; sales and use; expanding the exemption to certain purchases
by nonprofit organizations; amending Minnesota Statutes 2018, section 297A.70,
subdivision 4.

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

Section 1.

Minnesota Statutes 2018, section 297A.70, subdivision 4, is amended to read:

Subd. 4.

Sales to nonprofit groups.

(a) All sales, except those listed in paragraph deleted text begin (b) deleted text end new text begin
(c) new text end , to deleted text begin the following deleted text end "nonprofit organizations" are exempt new text begin if the item purchased is used in
the performance of the organization's exempt function. The exemptions under this paragraph
do not apply to new text end :

(1) deleted text begin a corporation, society, association, foundation, or institution organized and operated
exclusively for charitable, religious, or educational purposes if the item purchased is used
in the performance of charitable, religious, or educational functions deleted text end new text begin veterans groups under
subdivision 5 new text end ;

(2) deleted text begin any senior citizen group or association of groups that: deleted text end new text begin hospitals, outpatient surgical
centers, and critical access dental providers under subdivision 7, paragraphs (a) to (c), (e),
and (f);
new text end

deleted text begin (i) in general limits membership to persons who are either age 55 or older, or physically
disabled;
deleted text end

deleted text begin (ii) is organized and operated exclusively for pleasure, recreation, and other nonprofit
purposes, not including housing, no part of the net earnings of which inures to the benefit
of any private shareholders; and
deleted text end

deleted text begin (iii) is an exempt organization under section 501(c) of the Internal Revenue Code; and
deleted text end

new text begin (3) products and services under subdivision 7, paragraph (d);
new text end

new text begin (4) nursing homes and boarding care homes under subdivision 18; or
new text end

deleted text begin (3) deleted text end new text begin (5) new text end an organization that qualifies for an exemption for memberships under subdivision
12 if the item is purchased and used in the performance of the organization's mission.

new text begin (b) new text end For purposes of this subdivision, deleted text begin charitable purpose includes the maintenance of a
cemetery owned by a religious organization. deleted text end new text begin "nonprofit organization" means:
new text end

new text begin (1) an organization that has:
new text end

new text begin (i) a current federal determination letter stating that the nonprofit organization qualifies
as an exempt organization under section 501(c)(3) of the Internal Revenue Code; and
new text end

new text begin (ii) obtained a Minnesota tax identification number from the Department of Revenue
under section 297A.83; or
new text end

new text begin (2) any senior citizen group or association of groups that:
new text end

new text begin (i) in general, limits membership to persons who are either age 55 or older or physically
disabled;
new text end

new text begin (ii) is organized and operated exclusively for pleasure, recreation, and other nonprofit
purposes, not including housing, no part of the net earnings of which insures to the benefit
of any private shareholders; and
new text end

new text begin (iii) is an exempt organization under section 501(c) of the Internal Revenue Code.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end This exemption does not apply to the following sales:

(1) building, construction, or reconstruction materials purchased by a contractor or a
subcontractor as a 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;

(2) construction materials purchased by tax-exempt entities or their contractors to be
used in constructing buildings or facilities that will not be used principally by the tax-exempt
entities;

(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause (2),
and prepared food, candy, soft drinks, and alcoholic beverages as defined in section 297A.67,
subdivision 2, except wine purchased by an established religious organization for sacramental
purposes or as allowed under subdivision 9a; and

(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except as
provided in paragraph deleted text begin (c) deleted text end new text begin (d) new text end .

deleted text begin (c) deleted text end new text begin (d) new text end This exemption applies to the leasing of a motor vehicle as defined in section
297B.01, subdivision 11, only if the vehicle is:

(1) 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

(2) 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.

deleted text begin (d) deleted text end new text begin (e) new text end A limited liability company also qualifies for exemption under this subdivision
if (1) it consists of a sole member that would qualify for the exemption, and (2) the items
purchased qualify for the exemption.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019.
new text end