HF 449

as introduced - 91st Legislature (2019 - 2020) Posted on 01/28/2019 01:58pm

A bill for an act
relating to taxation; exempting medical facilities in underserved areas from certain
sales and property taxes; amending Minnesota Statutes 2018, sections 275.025,
by adding a subdivision; 297A.70, subdivision 7; 297A.71, by adding a subdivision;
469.1812, subdivision 1, by adding subdivisions; proposing coding for new law
in Minnesota Statutes, chapter 469.

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

Section 1.

Minnesota Statutes 2018, section 275.025, is amended by adding a subdivision
to read:

Subd. 6.

Medical facility in underserved areas; abatement of tax.

The state general
levy for any property qualifying under section 469.1817 is abated as provided in that section.
The net tax capacity of the property is included in the definition of commercial-industrial
tax capacity for the purposes of determining the state general levy tax rate under subdivision
4.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2020.

Sec. 2.

Minnesota Statutes 2018, section 297A.70, subdivision 7, is amended to read:

Subd. 7.

Hospitals, outpatient surgical centers, and critical access dental
providers.

(a) Sales, except for those listed in paragraph (d), to a hospital are exempt, if
the items purchased are used in providing hospital services. For purposes of this subdivision,
"hospital" means a hospital organized and operated for charitable purposes within the
meaning of section 501(c)(3) of the Internal Revenue Code, and licensed under chapter 144
or by any other jurisdiction, and "hospital services" are services authorized or required to
be performed by a "hospital" under chapter 144.

(b) Sales, except for those listed in paragraph (d), to an outpatient surgical center are
exempt, if the items purchased are used in providing outpatient surgical services. For purposes
of this subdivision, "outpatient surgical center" means an outpatient surgical center organized
and operated for charitable purposes within the meaning of section 501(c)(3) of the Internal
Revenue Code, and licensed under chapter 144 or by any other jurisdiction. For the purposes
of this subdivision, "outpatient surgical services" means: (1) services authorized or required
to be performed by an outpatient surgical center under chapter 144; and (2) urgent care. For
purposes of this subdivision, "urgent care" means health services furnished to a person
whose medical condition is sufficiently acute to require treatment unavailable through, or
inappropriate to be provided by, a clinic or physician's office, but not so acute as to require
treatment in a hospital emergency room.

(c) Sales, except for those listed in paragraph (d), to a critical access dental provider are
exempt, if the items purchased are used in providing critical access dental care services.
For the purposes of this subdivision, "critical access dental provider" means a dentist or
dental clinic that qualifies under section 256B.76, subdivision 4, paragraph (b), and, in the
previous calendar year, had no more than 15 percent of its patients covered by private dental
insurance.

(d) This exemption does not apply to the following products and services:

(1) purchases made by a clinic, physician's office, or any other medical facility not
operating as a hospital, outpatient surgical center, qualifying medical facility, or critical
access dental provider, even though the clinic, office, or facility may be owned and operated
by a hospital, outpatient surgical center, qualifying medical facility, or critical access dental
provider;

(2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and prepared
food, candy, and soft drinks;

(3) building and construction materials used in constructing buildings or facilities that
will not be used principally by the hospital, outpatient surgical center, qualifying medical
facility, or critical access dental provider;

(4) 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 hospital, outpatient surgical center, qualifying medical facility, or critical access
dental provider; or

(5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11.

(e) 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.

(f) An entity that contains both a hospital and a nonprofit unit may claim this exemption
on purchases made for both the hospital and nonprofit unit provided that:

(1) the nonprofit unit would have qualified for exemption under subdivision 4; and

(2) the items purchased would have qualified for the exemption.

(g) Sales, except for those listed in paragraph (d), to a qualifying medical facility are
exempt, if the items are purchased or used in providing medical services. For purposes of
this subdivision, "qualifying medical facility" means a medical facility as defined in section
144.561, subdivision 1, that has been granted an abatement of the state general tax under
section 469.1817.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2019.

Sec. 3.

Minnesota Statutes 2018, section 297A.71, is amended by adding a subdivision to
read:

Subd. 51.

Medical facility in underserved areas.

Materials and supplies used or
consumed in, and equipment incorporated into, the construction or improvement of real
property that has been granted an abatement of the state general tax under section 469.1817
are exempt.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2019.

Sec. 4.

Minnesota Statutes 2018, section 469.1812, subdivision 1, is amended to read:

Subdivision 1.

Scope.

For purposes of sections 469.1812 to , the
following terms have the meanings given.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2020.

Sec. 5.

Minnesota Statutes 2018, section 469.1812, is amended by adding a subdivision
to read:

Subd. 2a.

Medical facility.

"Medical facility" has the meaning given in section 144.561,
subdivision 1.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2020.

Sec. 6.

Minnesota Statutes 2018, section 469.1812, is amended by adding a subdivision
to read:

Subd. 2b.

Medically underserved county.

"Medically underserved county" means a
county, any portion of which is designated by the federal secretary of health and human
services as a health professional shortage area as defined under section 151.01, subdivision
34. By December 15 of each year, for assessments in the following year, the commissioner
of health must certify to the commissioner of revenue the counties that are medically
underserved. By December 31 of each year, for assessments in the following year, the
commissioner of revenue must certify the list of medically underserved counties to county
assessors.

EFFECTIVE DATE; SPECIAL REQUIREMENTS.

(a) This section is effective
beginning with taxes payable in 2020.

(b) For taxes payable in 2020, the certification required to be made by the commissioner
of health must be made by June 1, 2019, and the certification required to be made by the
commissioner of revenue must be made by June 15, 2019.

Sec. 7.

[469.1817] MEDICALLY UNDERSERVED AREAS.

Subdivision 1.

Qualification for abatement.

The state general tax under section 275.025
must be abated for any property or portion thereof containing a medical facility that has
been granted an abatement under section 469.1813, provided that:

(1) the facility is located in a medically underserved county at the time the abatement
resolution is adopted;

(2) the facility is not located in a metropolitan county as defined under section 473.121,
subdivision 4;

(3) the resolution of one or more governing bodies granting the abatement specifies that
the facility addresses an underserved need for medical services in the area; and

(4) both the county and the city or town are abating all taxes on the property containing
the facility for at least 15 years.

Subd. 2.

Abatement of state general tax; duration.

For property qualifying under
subdivision 1, the state general tax is abated for 15 years.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2020.