HF 1394

as introduced - 88th Legislature (2013 - 2014) Posted on 03/11/2013 02:32pm

A bill for an act
relating to taxation; expanding the sales tax base and reducing the rate; providing
a low-income tax credit; appropriating money; amending Minnesota Statutes
2012, sections 295.53, subdivision 1; 295.58; 297A.61, subdivisions 3, 4, 5, 6,
10, 14a, 21, 25, 27, 38, by adding subdivisions; 297A.62, subdivision 1; 297A.63;
297A.66, subdivision 1, by adding a subdivision; 297A.67, subdivisions 5, 23;
297A.68, subdivisions 10, 19, by adding a subdivision; 297A.69, subdivision
2; 297A.70, subdivision 13; 297A.83, subdivision 3; 297A.94; 297A.99,
subdivision 6; proposing coding for new law in Minnesota Statutes, chapter
290; repealing Minnesota Statutes 2012, sections 297A.61, subdivision 45;
297A.67, subdivisions 2, 7, 8, 9, 10, 11, 12, 13, 13a, 14, 15, 16, 17, 19, 21, 27,
29; 297A.70, subdivisions 10, 14, 16; 297A.71, subdivisions 12, 22.

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

Section 1.

new text begin [290.0682] LOW-INCOME SALES TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms
have the meaning given.
new text end

new text begin (b) "Dependent" means any person who is considered a dependent under sections
151 and 152 of the Internal Revenue Code.
new text end

new text begin (c) "Income" has the meaning given in section 290.067, subdivision 2a.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin An individual is allowed a credit against the tax imposed
under this chapter. The credit equals $....... for a married couple filing a joint return and
$....... for all other filers, plus $....... for each dependent.
new text end

new text begin Subd. 3. new text end

new text begin Limitations. new text end

new text begin (a) The credit allowed in this section is reduced by one
percent of income in excess of a threshold. For married couples filing joint returns, the
threshold equals $.......; for single and head of household filers, the threshold equals $.......;
and for married individuals filing separate returns, the threshold equals $........
new text end

new text begin (b) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin Subd. 4. new text end

new text begin Credit refundable. new text end

new text begin If the amount of credit which the claimant is eligible
to receive under this section exceeds the claimant's tax liability under this chapter, the
commissioner shall refund the excess to the claimant.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds required by this
section is appropriated to the commissioner from the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2012.
new text end

Sec. 2.

Minnesota Statutes 2012, section 295.53, subdivision 1, is amended to read:

Subdivision 1.

Exemptions.

(a) The following payments are excluded from the
gross revenues subject to the hospital, surgical center, or health care provider taxes under
sections 295.50 to 295.59:

(1) payments received for services provided under the Medicare program, including
payments received from the government, and organizations governed by sections 1833
and 1876 of title XVIII of the federal Social Security Act, United States Code, title 42,
section 1395, and enrollee deductibles, coinsurance, and co-payments, whether paid by the
Medicare enrollee or by a Medicare supplemental coverage as defined in section 62A.011,
subdivision 3, clause (10), or by Medicaid payments under title XIX of the federal Social
Security Act. Payments for services not covered by Medicare are taxable;

(2) payments received for home health care services;

(3) payments received from hospitals or surgical centers for goods and services on
which liability for tax is imposed under section 295.52 or the source of funds for the
payment is exempt under clause (1), (7), (10), or (14);

(4) payments received from health care providers for goods and services on which
liability for tax is imposed under this chapter or the source of funds for the payment is
exempt under clause (1), (7), (10), or (14);

(5) amounts paid for legend drugs, other than nutritional products and blood and
blood components, to a wholesale drug distributor who is subject to tax under section
295.52, subdivision 3, reduced by reimbursements received for legend drugs otherwise
exempt under this chapter;

(6) payments received by a health care provider or the wholly owned subsidiary of a
health care provider for care provided outside Minnesota;

(7) payments received from the chemical dependency fund under chapter 254B;

(8) payments received in the nature of charitable donations that are not designated
for providing patient services to a specific individual or group;

(9) payments received for providing patient services incurred through a formal
program of health care research conducted in conformity with federal regulations
governing research on human subjects. Payments received from patients or from other
persons paying on behalf of the patients are subject to tax;

(10) payments received from any governmental agency for services benefiting the
public, not including payments made by the government in its capacity as an employer
or insurer or payments made by the government for services provided under general
assistance medical care, the MinnesotaCare program, or the medical assistance program
governed by title XIX of the federal Social Security Act, United States Code, title 42,
sections 1396 to 1396v;

(11) government payments received by the commissioner of human services for
state-operated services;

(12) payments received by a health care provider for hearing aids and related
equipment or prescription eyewear delivered outside of Minnesota;

(13) payments received by an educational institution from student tuition, student
activity fees, health care service fees, government appropriations, donations, or grants,
and for services identified in and provided under an individualized education program
as defined in section 256B.0625 or Code of Federal Regulations, chapter 34, section
300.340(a). Fee for service payments and payments for extended coverage are taxable;

(14) payments received under the federal Employees Health Benefits Act, United
States Code, title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of
1990. Enrollee deductibles, coinsurance, and co-payments are subject to tax; deleted text begin and
deleted text end

(15) payments received under the federal Tricare program, Code of Federal
Regulations, title 32, section 199.17(a)(7). Enrollee deductibles, coinsurance, and
co-payments are subject to tax deleted text begin . deleted text end new text begin ; and
new text end

new text begin (16) payments received for prosthetic devices, durable medical equipment for home
use only, mobility-enhancing equipment, and prescription eyeglasses subject to the general
sales taxes under chapter 297A and defined in section 297A.61, subdivision 49.
new text end

new text begin (b) For purposes of clause (16), the following terms have the meanings given in
this paragraph:
new text end

new text begin (1) "prosthetic device" means a replacement, corrective, or supportive device,
including repair and replacement parts, except corrective eyeglasses, worn on or in the
body to:
new text end

new text begin (i) artificially replace a missing portion of the body;
new text end

new text begin (ii) prevent or correct physical deformity or malfunction; or
new text end

new text begin (iii) support a weak or deformed portion of the body;
new text end

new text begin (2) "durable medical equipment" means equipment, including repair and replacement
parts, but not including mobility-enhancing equipment, for human use that:
new text end

new text begin (i) can withstand repeated use;
new text end

new text begin (ii) is primarily and customarily used to serve a medical purpose;
new text end

new text begin (iii) generally is not useful to a person in the absence of illness or injury; and
new text end

new text begin (iv) is not worn in or on the body; and
new text end

new text begin (3) "mobility-enhancing equipment" means equipment, including repair and
replacement parts, but not including durable medical equipment, that:
new text end

new text begin (i) is primarily and customarily used to provide or increase the ability to move from
one place to another and that is appropriate for use either in a home or a motor vehicle;
new text end

new text begin (ii) is not generally used by persons with normal mobility; and
new text end

new text begin (iii) does not include any motor vehicle or equipment on a motor vehicle normally
provided by a motor vehicle manufacturer.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end Payments received by wholesale drug distributors for legend drugs sold
directly to veterinarians or veterinary bulk purchasing organizations are excluded from the
gross revenues subject to the wholesale drug distributor tax under sections 295.50 to 295.59.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenues received for sales made
after June 30, 2013.
new text end

Sec. 3.

Minnesota Statutes 2012, section 295.58, is amended to read:

295.58 DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.

new text begin (a) new text end The commissioner shall deposit new text begin in the health care access fund new text end all revenues,
including penalties and interest, derived new text begin : new text end

new text begin (1) new text end from the taxes imposed by sections 295.50 to 295.57 deleted text begin and deleted text end new text begin ; new text end

new text begin (2) new text end from the insurance premiums tax imposed by section 297I.05, subdivision 5, on
health maintenance organizations, community integrated service networks, and nonprofit
health service plan corporations in the health care access fund deleted text begin . deleted text end new text begin ; and new text end

new text begin (3) an amount of revenue from the sales tax under chapter 297A equal to the loss
of revenue, including penalties and interest, resulting from the exemption under section
295.53, subdivision 1, paragraph (a), clause (16).
new text end

new text begin (b) new text end There is annually appropriated from the health care access fund to the
commissioner of revenue the amount necessary to make refunds under this chapter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 4.

Minnesota Statutes 2012, section 297A.61, subdivision 3, is amended to read:

Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include, but are not limited
to, each of the transactions listed in this subdivision.

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of tangible personal property,
new text begin specified digital products, or other digital products, new text end whether absolutely or conditionally,
for a consideration in money or by exchange or barter; and

(2) the leasing of or the granting of a license to use or consume, for a consideration
in money or by exchange or barter, tangible personal property, other than a manufactured
home used for residential purposes for a continuous period of 30 days or more.

(c) Sale and purchase include the production, fabrication, printing, or processing
of tangible personal property new text begin , specified digital products, or other digital products, new text end for a
consideration for consumers who furnish either directly or indirectly the materials used
in the production, fabrication, printing, or processing. new text begin It also includes the production or
processing of specified digital products or other digital products for a consideration for
consumers who furnish either directly or indirectly materials or other inputs used in the
production or processing.
new text end

(d) Sale and purchase include the preparing for a consideration of food.
Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
to, the following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy;

(4) dietary supplements; and

(5) all food sold through vending machines.

(e) A sale and a purchase includes the furnishing for a consideration of new text begin sewer
services, new text end electricity, gas, water, or steam for use or consumption within this state.

(f) A sale and a purchase includes the transfer for a consideration of prewritten
computer software whether delivered electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a consideration of the following
services:

(1) the privilege of admission to places of amusement, new text begin amusement events,
exhibitions, selling events, new text end recreational areas, or athletic events, new text begin including the rental of
box seats and suites, new text end and the making available of amusement devices, tanning facilities,
reducing salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities new text begin .
"Exhibitions" include but are not limited to: trade shows, boat shows, home shows, garden
shows, and other similar events. "Selling events" include but are not limited to: flea
markets, estate sales, auctions, and other similar events new text end ;

(2) lodging and related services by a hotel, rooming house, resort, campground,
motel, or trailer camp, including furnishing the guest of the facility with access to
telecommunication services, and the granting of any similar license to use real property in
a specific facility, other than the renting or leasing of it for a continuous period of 30 days
or more under an enforceable written agreement that may not be terminated without prior
notice and including accommodations intermediary services provided in connection with
other services provided under this clause;

(3) nonresidential parking services, whether on a contractual, hourly, or other
periodic basis, except for parking at a meter;

(4) the granting of membership in a club, association, or other organization deleted text begin if: deleted text end new text begin where
"granting of membership" means both onetime initiation fees and periodic membership;
new text end

deleted text begin (i) the club, association, or other organization makes available for the use of its
members sports and athletic facilities, without regard to whether a separate charge is
assessed for use of the facilities; and
deleted text end

deleted text begin (ii) use of the sports and athletic facility is not made available to the general public
on the same basis as it is made available to members.
deleted text end

deleted text begin granting of membership means both onetime initiation fees and periodic membership
dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
swimming pools; and other similar athletic or sports facilities;
deleted text end

(5) delivery of aggregate materials by a third party, excluding delivery of aggregate
material used in road construction; and delivery of concrete block by a third party if the
delivery would be subject to the sales tax if provided by the seller of the concrete block; and

(6) services as provided in this clause:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services
provided by coin operated facilities operated by the customer, and rustproofing,
undercoating, and towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting services and
pest control and exterminating services;

(iv) detective, security, burglar, fire alarm, and armored car services; but not including
services performed within the jurisdiction they serve by off-duty licensed peace officers as
defined in section 626.84, subdivision 1, or services provided by a nonprofit organization
for monitoring and electronic surveillance of persons placed on in-home detention
pursuant to court order or under the direction of the Minnesota Department of Corrections;

(v) pet grooming new text begin and veterinary new text end services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
public utility lines. Services performed under a construction contract for the installation of
shrubbery, plants, sod, trees, bushes, and similar items are not taxable;

(vii) massages, except when provided by a licensed health care facility or
professional or upon written referral from a licensed health care facility or professional for
treatment of illness, injury, or disease; deleted text begin and
deleted text end

(viii) the furnishing of lodging, board, and care services for animals in kennels and
other similar arrangements, but excluding veterinary and horse boarding services new text begin ;
new text end

new text begin (ix) car repair services;
new text end

new text begin (x) general repair services;
new text end

new text begin (xi) legal services;
new text end

new text begin (xii) accounting, financial planning, and brokerage services;
new text end

new text begin (xiii) tattoos and body piercing;
new text end

new text begin (xiv) personal grooming and salon services, including, but not limited to: haircuts,
hair styling, and hair dyeing; hair extensions; shaving and waxing; manicures; pedicures;
facials; body wraps; makeup application; and tanning services;
new text end

new text begin (xv) personal shopping and wedding and event-planning services;
new text end

new text begin (xvi) residential architectural and interior design services;
new text end

new text begin (xvii) shoe shining;
new text end

new text begin (xviii) personal lessons and instructions in athletics, music and other art, and other
areas, except for tutoring in academic subjects other than art and music; and
new text end

new text begin (xix) funeral services new text end .

In applying the provisions of this chapter, the terms "tangible personal property"
and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
and the provision of these taxable services, unless specifically provided otherwise.
Services performed by an employee for an employer are not taxable. Services performed
by a partnership or association for another partnership or association are not taxable if
one of the entities owns or controls more than 80 percent of the voting power of the
equity interest in the other entity. Services performed between members of an affiliated
group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
group of corporations" means those entities that would be classified as members of an
affiliated group as defined under United States Code, title 26, section 1504, disregarding
the exclusions in section 1504(b).

For purposes of clause (5), "road construction" means construction of (1) public
roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
metropolitan area up to the point of the emergency response location sign.

(h) A sale and a purchase includes the furnishing for a consideration of tangible
personal property or taxable services by the United States or any of its agencies or
instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
subdivisions.

(i) A sale and a purchase includes the furnishing for a consideration of
telecommunications services, ancillary services associated with telecommunication
services, cable television services, and direct satellite services. Telecommunication
services include, but are not limited to, the following services, as defined in section
297A.669: air-to-ground radiotelephone service, mobile telecommunication service,
postpaid calling service, prepaid calling service, prepaid wireless calling service, and
private communication services. The services in this paragraph are taxed to the extent
allowed under federal law.

(j) A sale and a purchase includes the furnishing for a consideration of installation if
the installation charges would be subject to the sales tax if the installation were provided
by the seller of the item being installed.

(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
59B.02, subdivision 11.

new text begin (l) A sale and a purchase include the furnishing for a consideration of specified
digital products and other digital products and granting the right for a consideration to use
specified digital products and other digital products on a temporary or permanent basis and
regardless of whether the purchaser is required to make continued payments for such right.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 5.

Minnesota Statutes 2012, section 297A.61, subdivision 4, is amended to read:

Subd. 4.

Retail sale.

(a) A "retail sale" means any sale, lease, or rental for any
purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
course of business as defined in subdivision 21.

(b) A sale of property used by the owner only by leasing it to others or by holding it
in an effort to lease it, and put to no use by the owner other than resale after the lease or
effort to lease, is a sale of property for resale.

(c) A sale of master computer software that is purchased and used to make copies for
sale or lease is a sale of property for resale.

(d) A sale of building materials, supplies, and equipment to owners, contractors,
subcontractors, or builders for the erection of buildings or the alteration, repair, or
improvement of real property is a retail sale in whatever quantity sold, whether the sale is
for purposes of resale in the form of real property or otherwise.

(e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
for installation of the floor covering is a retail sale and not a sale for resale since a sale of
floor covering which includes installation is a contract for the improvement of real property.

(f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
for installation of the items is a retail sale and not a sale for resale since a sale of
shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
the improvement of real property.

(g) A sale of tangible personal property new text begin , specified digital products, or other digital
products new text end that deleted text begin is deleted text end new text begin are new text end awarded as prizes is a retail sale and deleted text begin is deleted text end new text begin are new text end not considered a sale of
property for resale.

(h) A sale of tangible personal property new text begin , specified digital products, or other digital
products new text end utilized or employed in the furnishing or providing of services under subdivision
3, paragraph (g), clause (1), including, but not limited to, property given as promotional
items, is a retail sale and is not considered a sale of property for resale.

(i) A sale of tangible personal property new text begin , specified digital products, or other digital
products new text end used in conducting lawful gambling under chapter 349 or the State Lottery under
chapter 349A, including, but not limited to, property given as promotional items, is a retail
sale and is not considered a sale of property for resale.

(j) A sale of machines, equipment, or devices that are used to furnish, provide, or
dispense goods or services, including, but not limited to, coin-operated devices, is a retail
sale and is not considered a sale of property for resale.

(k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
payment becomes due under the terms of the agreement or the trade practices of the
lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01,
subdivision 11, but excluding vehicles with a manufacturer's gross vehicle weight rating
greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time
the lease is executed.

(l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
title or possession of the tangible personal property.

(m) A sale of a bundled transaction in which one or more of the products included
in the bundle is a taxable product is a retail sale, except that if one of the products
is a telecommunication service, ancillary service, Internet access, or audio or video
programming service, and the seller has maintained books and records identifying through
reasonable and verifiable standards the portions of the price that are attributable to the
distinct and separately identifiable products, then the products are not considered part of a
bundled transaction. For purposes of this paragraph:

(1) the books and records maintained by the seller must be maintained in the regular
course of business, and do not include books and records created and maintained by the
seller primarily for tax purposes;

(2) books and records maintained in the regular course of business include, but are
not limited to, financial statements, general ledgers, invoicing and billing systems and
reports, and reports for regulatory tariffs and other regulatory matters; and

(3) books and records are maintained primarily for tax purposes when the books
and records identify taxable and nontaxable portions of the price, but the seller maintains
other books and records that identify different prices attributable to the distinct products
included in the same bundled transaction.

new text begin (n) A sale of specified digital products or other digital products to an end user with
or without rights of permanent use and regardless of whether rights of use are conditioned
upon continued payment by the purchaser. When a digital code has been purchased that
relates to specified digital products or other digital products, the subsequent receipt of or
access to the related specified digital products or other digital products is not a retail sale.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 6.

Minnesota Statutes 2012, section 297A.61, subdivision 5, is amended to read:

Subd. 5.

Storage.

"Storage" includes keeping or retaining tangible personal
property new text begin , specified digital products, or other digital products new text end in Minnesota for any purpose
except sale in the regular course of business.

Sec. 7.

Minnesota Statutes 2012, section 297A.61, subdivision 6, is amended to read:

Subd. 6.

Use.

(a) "Use" includes the exercise of a right or power incident to the
ownership of any interest in tangible personal property, new text begin specified digital products, other
digital products, new text end or services, purchased from a retailer, other than the sale of that property
in the regular course of business.

(b) Use includes the consumption of printed materials in the creation of nontaxable
advertising that is distributed, either directly or indirectly, within Minnesota.

Sec. 8.

Minnesota Statutes 2012, section 297A.61, subdivision 10, is amended to read:

Subd. 10.

Tangible personal property.

(a) "Tangible personal property" means
personal property that can be seen, weighed, measured, felt, or touched, or that is in any
other manner perceptible to the senses. "Tangible personal property" includes, but is not
limited to, electricity, water, gas, steam, and prewritten computer software.

(b) Tangible personal property does not include:

(1) large ponderous machinery and equipment used in a business or production
activity which at common law would be considered to be real property;

(2) property which is subject to an ad valorem property tax;

(3) property described in section 272.02, subdivision 9, clauses (a) to (d); deleted text begin and
deleted text end

(4) property described in section 272.03, subdivision 2, clauses (3) and (5) new text begin ; and
new text end

new text begin (5) specified digital products or other digital products transferred electronically,
except prewritten computer software delivered electronically, is tangible personal property new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 9.

Minnesota Statutes 2012, section 297A.61, subdivision 14a, is amended to read:

Subd. 14a.

Lease or rental.

(a) "Lease or rental" means any transfer of possession
or control of tangible personal property new text begin , specified digital products, or other digital
products new text end for a fixed or indeterminate term for consideration. A lease or rental may include
future options to purchase or extend.

(b) Lease or rental does not include:

(1) a transfer of possession or control of property under a security agreement or
deferred payment plan that requires the transfer of title upon completion of the required
payments;

(2) a transfer of possession or control of property under an agreement that requires
the transfer of title upon completion of required payments and payment of an option price
does not exceed the greater of $100 or one percent of the total required payments; or

(3) providing tangible personal property along with an operator for a fixed or
indeterminate period of time. A condition of this exclusion is that the operator is necessary
for the equipment to perform as designed. For the purpose of this subdivision, an operator
must do more than maintain, inspect, or set up the tangible personal property.

(c) Lease or rental does include agreements covering motor vehicles and trailers
where the amount of consideration may be increased or decreased by reference to the
amount realized upon sale or disposition of the property as defined in United States Code,
title 26, section 7701(h)(l).

(d) This definition must be used for sales and use tax purposes regardless if a
transaction is characterized as a lease or rental under generally accepted accounting
principles, the Internal Revenue Code, chapter 336, or other provisions of federal, state, or
local law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 10.

Minnesota Statutes 2012, section 297A.61, subdivision 21, is amended to read:

Subd. 21.

Normal course of business.

"Normal course of business" means
activities that demonstrate a commercial continuity or consistency of making sales or
performing services for the purposes of attaining profit or producing income. Factors that
indicate that a person is acting in the normal course of business include:

(1) systematic solicitation of sales through advertising media;

(2) entering into contracts to perform services or provide tangible personal property new text begin ,
specified digital products, or other digital products new text end ;

(3) maintaining a place of business; or

(4) use of exemption certificates to purchase items exempt from the sales tax.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 11.

Minnesota Statutes 2012, section 297A.61, subdivision 25, is amended to read:

Subd. 25.

Cable television service.

"Cable television service" means the
transmission of video, audio, or other programming service to purchasers, and the
subscriber interaction, if any, required for the selection or use of the programming service,
regardless of whether the programming is transmitted over facilities owned or operated by
the cable service provider or over facilities owned or operated by one or more dealers of
communications services. The term includes point-to-multipoint distribution services by
which programming is transmitted or broadcast by microwave or other equipment directly
to the subscriber's premises. The term includes basic, extended, premium, pay-per-view,
deleted text begin digital, deleted text end and music services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 12.

Minnesota Statutes 2012, section 297A.61, subdivision 27, is amended to read:

Subd. 27.

Direct satellite service.

"Direct satellite service" means new text begin the transmission
of video, audio, or other new text end programming transmitted or broadcast by satellite directly to
the deleted text begin subscriber's premises deleted text end new text begin subscriber new text end without the use of ground receiving or distribution
equipment, except at the subscriber's deleted text begin premises deleted text end new text begin location new text end or in the uplink process to the
satellite. new text begin The term also includes any subscriber interaction, if any, required for the
selection or use of programming services as well as any point-to-multipoint distribution
services transmitted or broadcast by satellite or other equipment directly to the subscriber.
The term includes any and all service packages and formats as well as pay-per-view,
digital video recorder, and music services.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 13.

Minnesota Statutes 2012, section 297A.61, subdivision 38, is amended to read:

Subd. 38.

Bundled transaction.

(a) "Bundled transaction" means the retail sale
of two or more products when the products are otherwise distinct and identifiable, and
the products are sold for one nonitemized price. As used in this subdivision, "product"
includes tangible personal property, services, intangibles, and digital goods, new text begin including
specified digital products, or other digital products, new text end but does not include real property or
services to real property. A bundled transaction does not include the sale of any products
in which the sales price varies, or is negotiable, based on the selection by the purchaser of
the products included in the transaction.

(b) For purposes of this subdivision, "distinct and identifiable" products does not
include:

(1) packaging and other materials, such as containers, boxes, sacks, bags, and
bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the
products and are incidental or immaterial to the retail sale. Examples of packaging that are
incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags,
and express delivery envelopes and boxes;

(2) a promotional product provided free of charge with the required purchase of
another product. A promotional product is provided free of charge if the sales price of
another product, which is required to be purchased in order to receive the promotional
product, does not vary depending on the inclusion of the promotional product; and

(3) items included in the definition of sales price.

(c) For purposes of this subdivision, the term "one nonitemized price" does not
include a price that is separately identified by product on binding sales or other supporting
sales-related documentation made available to the customer in paper or electronic form
including but not limited to an invoice, bill of sale, receipt, contract, service agreement,
lease agreement, periodic notice of rates and services, rate card, or price list.

(d) A transaction that otherwise meets the definition of a bundled transaction is
not a bundled transaction if it is:

(1) the retail sale of tangible personal property and a service and the tangible
personal property is essential to the use of the service, and is provided exclusively in
connection with the service, and the true object of the transaction is the service;

(2) the retail sale of services if one service is provided that is essential to the use or
receipt of a second service and the first service is provided exclusively in connection with
the second service and the true object of the transaction is the second service;

(3) a transaction that includes taxable products and nontaxable products and the
purchase price or sales price of the taxable products is de minimis; or

(4) the retail sale of exempt tangible personal property and taxable tangible personal
property if:

(i) the transaction includes food and food ingredients, drugs, durable medical
equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices,
or medical supplies; and

(ii) the seller's purchase price or sales price of the taxable tangible personal property is
50 percent or less of the total purchase price or sales price of the bundled tangible personal
property. Sellers must not use a combination of the purchase price and sales price of the
tangible personal property when making the 50 percent determination for a transaction.

(e) For purposes of this subdivision, "purchase price" means the measure subject to
use tax on purchases made by the seller, and "de minimis" means that the seller's purchase
price or sales price of the taxable products is ten percent or less of the total purchase
price or sales price of the bundled products. Sellers shall use either the purchase price
or the sales price of the products to determine if the taxable products are de minimis.
Sellers must not use a combination of the purchase price and sales price of the products
to determine if the taxable products are de minimis. Sellers shall use the full term of a
service contract to determine if the taxable products are de minimis.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 14.

Minnesota Statutes 2012, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 49. new text end

new text begin Digital audio-visual works. new text end

new text begin "Digital audio-visual works" mean a series
of related images which, when shown in succession, impart an impression of motion,
together with accompanying sounds, if any, that are transferred electronically. Digital
audio-visual works include such items as motion pictures, movies, musical videos, news
and entertainment programs, and live events. Digital audio-visual works do not include
video greeting cards sent by electronic mail. Unless the context provides otherwise, digital
audio-visual works include the digital code or a subscription to or access to a digital code
for receiving, accessing, or otherwise obtaining digital audio-visual works.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 15.

Minnesota Statutes 2012, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 50. new text end

new text begin Digital audio works. new text end

new text begin "Digital audio works" mean works that result
from the fixation of a series of musical, spoken, or other sounds, that are transferred
electronically. Digital audio works, whether prerecorded or live, include: songs, music,
readings of books or other written materials, speeches, ring tones, or other sound
recordings. Digital audio works do not include audio greeting cards sent by electronic
mail. Unless the context provides otherwise, digital audio works include the digital code
or a subscription to or access to a digital code for receiving, accessing, or otherwise
obtaining digital audio works. For purposes of this subdivision, "ring tone" means a
digitized sound file that is downloaded onto a device and that may be used to alert the
customer with respect to a communication. A ring tone does not include ring back tones
or other digital audio files that are not stored on the customer's communication device.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 16.

Minnesota Statutes 2012, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 51. new text end

new text begin Digital books. new text end

new text begin "Digital books" mean works that are literary works, other
than digital audio-visual works or digital audio works, expressed in words, numbers, or
numerical symbols or indicia so long as the product is generally recognized in the ordinary
and usual sense as "books" and are transferred electronically. It includes works of fiction,
nonfiction, and short stories. It does not include periodicals, magazines, newspapers, or
other news and information products, chat rooms, or weblogs. Unless the context provides
otherwise, digital books include the digital code or a subscription to or access to a digital
code for receiving, accessing, or otherwise obtaining digital books.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 17.

Minnesota Statutes 2012, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 52. new text end

new text begin Digital code. new text end

new text begin "Digital code" means a code that provides a purchaser with
a right to obtain one or more of the specified digital products or other digital products.
A digital code may be transferred electronically such as through e-mail, or it may be
transferred on a tangible medium, such as a plastic card, a piece of paper or invoice, or
imprint on another product. A digital code is not a code that represents stored monetary
value that is deducted from a total as it is used by the purchaser, and it is not a code that
represents a redeemable card, gift card, or gift certificate that entitles the holder to select
a specified digital product or other digital product of an indicated cash value. The end
user of the digital code is any purchaser except one who receives the contractual right to
redistribute the specified digital product or other digital product which is the subject
of the transaction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 18.

Minnesota Statutes 2012, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 53. new text end

new text begin Specified digital products. new text end

new text begin "Specified digital products" means
digital audio-visual works, digital audio works, and digital books that are transferred
electronically to a customer.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 19.

Minnesota Statutes 2012, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 54. new text end

new text begin Transferred electronically. new text end

new text begin "Transferred electronically" means obtained
by the purchaser by means other than tangible storage media and, unless the context
indicates otherwise, applies to the delivery of specified digital products and other digital
products. For purposes of this subdivision, it is not necessary that a copy of the product
be physically transferred to the purchaser. A product shall be considered to have been
transferred electronically to a purchaser if the purchaser has access to the product.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 20.

Minnesota Statutes 2012, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 55. new text end

new text begin Other digital products. new text end

new text begin "Other digital products" means the following
items when transferred electronically:
new text end

new text begin (1) greeting cards;
new text end

new text begin (2) artwork available for reproduction or display purposes; and
new text end

new text begin (3) video or electronic games.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 21.

Minnesota Statutes 2012, section 297A.62, subdivision 1, is amended to read:

Subdivision 1.

Generally.

Except as otherwise provided in subdivision 3 or in this
chapter, a sales tax of deleted text begin 6.5 deleted text end new text begin ... new text end percent is imposed on the gross receipts from retail sales as
defined in section 297A.61, subdivision 4, made in this state or to a destination in this
state by a person who is required to have or voluntarily obtains a permit under section
297A.83, subdivision 1.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 22.

Minnesota Statutes 2012, section 297A.63, is amended to read:

297A.63 USE TAXES IMPOSED; RATES.

Subdivision 1.

Use of tangible personal property new text begin , specified digital products,
other digital products, new text end or taxable services.

(a) For the privilege of using, storing,
distributing, or consuming in Minnesota tangible personal property new text begin , specified digital
products, other digital products, new text end or taxable services purchased for use, storage, distribution,
or consumption in this state, a use tax is imposed on a person in Minnesota. The tax is
imposed on the purchase price of retail sales of the tangible personal property new text begin , specified
digital products, other digital products, new text end or taxable services at the rate of tax imposed under
section 297A.62. A person that purchases property from a Minnesota retailer and returns
the tangible personal property new text begin , specified digital products, or other digital products, new text end to a
point within Minnesota, except in the course of interstate commerce, after it was delivered
outside of Minnesota, is subject to the use tax.

(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
was paid on the sales price of the tangible personal property or taxable services.

(c) No tax is imposed under paragraph (a) if the purchase meets the requirements for
exemption under section 297A.67, subdivision 21.

(d) When a transaction otherwise meets the definition of a bundled transaction, but
is not a bundled transaction under section 297A.61, subdivision 38, paragraph (d), and
the seller's purchase price of the taxable product or taxable tangible personal property is
equal to or greater than $100, then use tax is imposed on the purchase price of the taxable
product or taxable personal property. For purposes of this paragraph, "purchase price"
means the measure subject to use tax on purchases made by the seller.

Subd. 2.

Use of tangible personal property new text begin , specified digital products, or
other digital products, new text end made from materials.

(a) A use tax is imposed on a person
who manufactures, fabricates, or assembles tangible personal property new text begin , specified digital
products, or other digital products new text end from materials, either within or outside this state and
who uses, stores, distributes, or consumes the tangible personal property new text begin , specified digital
products, or other digital products new text end in Minnesota. The tax is imposed on the purchase price
of retail sales of the materials contained in the tangible personal property new text begin , specified digital
products, or other digital products, new text end at the rate of tax imposed under section 297A.62.

(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62 was
paid on the sales price of materials contained in the tangible personal property new text begin , specified
digital products, or other digital products new text end .

Subd. 3.

Transitional period for services.

When there is a change in the rate of
tax imposed by this section, the following transitional period shall apply to the taxable
services purchased for use, storage, distribution, or consumption in this state when the
service purchased covers a billing period starting before and ending after the statutory
effective date of the rate change:

(1) for a rate increase, the new rate shall apply to the first billing period starting
on or after the effective date; and

(2) for a rate decrease, the new rate shall apply to bills rendered on or after the
effective date.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 23.

Minnesota Statutes 2012, section 297A.66, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) To the extent allowed by the United States
Constitution and the laws of the United States, "retailer maintaining a place of business in
this state," or a similar term, means a retailer:

(1) having or maintaining within this state, directly or by a subsidiary or an affiliate,
an office, place of distribution, sales or sample room or place, warehouse, or other place
of business; or

(2) having a representative, including, but not limited to, an affiliate, agent,
salesperson, canvasser, or solicitor operating in this state under the authority of the retailer
or its subsidiary, for any purpose, including the repairing, selling, delivering, installing, or
soliciting of orders for the retailer's goods or services, or the leasing of tangible personal
property new text begin , specified digital products, or other digital products, new text end located in this state, whether
the place of business or agent, representative, affiliate, salesperson, canvasser, or solicitor
is located in the state permanently or temporarily, or whether or not the retailer, subsidiary,
or affiliate is authorized to do business in this state.

(b) "Destination of a sale" means the location to which the retailer makes delivery of
the property sold, or causes the property to be delivered, to the purchaser of the property,
or to the agent or designee of the purchaser. The delivery may be made by any means,
including the United States Postal Service or a for-hire carrier.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 24.

Minnesota Statutes 2012, section 297A.66, is amended by adding a
subdivision to read:

new text begin Subd. 4a. new text end

new text begin Solicitor. new text end

new text begin (a) A retailer is presumed to have a solicitor in this state if it
enters into an agreement with a resident under which the resident, for a commission or
other consideration, directly or indirectly refers potential customers, whether by a link
on an Internet Web site, or otherwise, to the seller. This paragraph only applies if the
total gross receipts from sales to customers located in the state who were referred to the
retailer by all residents with this type of agreement with the retailer is at least $10,000 in
the 12-month period ending on the last day of the most recent calendar quarter before the
calendar quarter in which the sale is made.
new text end

new text begin (b) The presumption under paragraph (a) may be rebutted by proof that the resident
with whom the retailer has an agreement did not engage in any solicitation in the state
on behalf of the retailer that would satisfy the nexus requirements of the United States
Constitution during the 12-month period in question. Nothing in this section shall be
construed to narrow the scope of the terms affiliate, agent, salesperson, canvasser, or other
representative for purposes of subdivision 1, paragraph (a).
new text end

new text begin (c) For purposes of this subdivision, "resident" includes an individual who is a
resident of this state, as defined in section 290.01, a business that owns tangible personal
property located in this state, or a business that has one or more employees providing
services for the business in this state.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 25.

Minnesota Statutes 2012, section 297A.67, subdivision 5, is amended to read:

Subd. 5.

Exempt meals at schools.

Prepared food, candy, and soft drinks served
at public and private elementary, middle, or secondary schools as defined in section
120A.05 are exempt. deleted text begin Prepared food, candy, and soft drinks served to students at a college,
university, or private career school under a board contract are exempt. deleted text end Food sold through
vending machines is not exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2013.
new text end

Sec. 26.

Minnesota Statutes 2012, section 297A.67, subdivision 23, is amended to read:

Subd. 23.

Occasional sales.

Isolated and occasional sales in Minnesota not made
in the normal course of business of selling that kind of property or service are exempt.
The storage, use, or consumption of property new text begin , specified digital products, other digital
products, new text end or services acquired as a result of such a sale is exempt. This exemption does
not apply to sales of tangible personal property new text begin , specified digital products, or other digital
products new text end primarily used in a trade or business.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 27.

Minnesota Statutes 2012, section 297A.68, subdivision 10, is amended to read:

Subd. 10.

Publications; publication materials.

Tangible personal property that
is used or consumed in producing any publication regularly issued at average intervals
not exceeding three months is exempt deleted text begin , and any such publication is exempt deleted text end . "Publication"
includes, but is not limited to, a qualified newspaper as defined by section 331A.02,
together with any supplements or enclosures. "Publication" does not include magazines
and periodicals sold over the counter. Tangible personal property that is used or consumed
in producing a publication does not include machinery, equipment, implements, tools,
accessories, appliances, contrivances, furniture, and fixtures used in the publication, or
fuel, electricity, gas, or steam used for space heating or lighting.

Advertising contained in a publication is a nontaxable service and is exempt.
Persons who publish or sell newspapers are engaging in a nontaxable service with
respect to gross receipts realized from such news-gathering or news-publishing activities,
including the sale of advertising.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 28.

Minnesota Statutes 2012, section 297A.68, subdivision 19, is amended to read:

Subd. 19.

Petroleum products.

The following petroleum products are exempt:

(1) deleted text begin products upon which a tax has been imposed and paid under chapter 296A,
and for which no refund has been or will be allowed because the buyer used the fuel
for nonhighway use;
deleted text end

deleted text begin (2) deleted text end products that are used in the improvement of agricultural land by constructing,
maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water
impoundment, and other erosion control structures;

deleted text begin (3) deleted text end new text begin (2) new text end products purchased by a transit system receiving financial assistance under
section 174.24, 256B.0625, subdivision 17, or 473.384;

deleted text begin (4) deleted text end new text begin (3) new text end products purchased by an ambulance service licensed under chapter 144E;

deleted text begin (5) deleted text end new text begin (4) new text end products used in a passenger snowmobile, as defined in section 296A.01,
subdivision 39, for off-highway business use as part of the operations of a resort as
provided under section 296A.16, subdivision 2, clause (2);

deleted text begin (6) deleted text end new text begin (5) new text end products purchased by a state or a political subdivision of a state for use in
motor vehicles exempt from registration under section 168.012, subdivision 1, paragraph
(b);

deleted text begin (7) deleted text end new text begin (6) new text end products purchased by providers of transportation to recipients of medical
assistance home and community-based services waivers enrolled in day programs,
including adult day care, family adult day care, day treatment and habilitation,
prevocational services, and structured day services; or

deleted text begin (8) deleted text end new text begin (7) new text end products used in 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 federal 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
December 31, 2013.
new text end

Sec. 29.

Minnesota Statutes 2012, section 297A.68, is amended by adding a
subdivision to read:

new text begin Subd. 44. new text end

new text begin Legal and accounting services. new text end

new text begin The sales of legal, accounting, financial
planning, and brokerage services are exempt if used in a trade or business.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 30.

Minnesota Statutes 2012, section 297A.69, subdivision 2, is amended to read:

Subd. 2.

Materials consumed in agricultural production.

Materials stored, used,
or consumed in agricultural production of personal property intended to be sold ultimately
at retail are exempt, whether or not the item becomes an ingredient or constituent part
of the property produced. Materials that qualify for this exemption include, but are not
limited to, the following:

(1) feeds, seeds, trees, fertilizers, and herbicides, including when purchased for use
by farmers in a federal or state farm or conservation program;

(2) new text begin veterinary services and new text end materials sold to a veterinarian to be used or consumed in
the care, medication, and treatment of agricultural production animals and horses;

(3) chemicals, including chemicals used for cleaning food processing machinery
and equipment;

(4) materials, including chemicals, fuels, and electricity purchased by persons
engaged in agricultural production to treat waste generated as a result of the production
process;

(5) fuels, electricity, gas, and steam used or consumed in the production process,
including electricity, gas, or steam used for space heating, cooling, or lighting of facilities
housing agricultural animals;

(6) petroleum products and lubricants;

(7) packaging materials, including returnable containers used in packaging food and
beverage products; and

(8) accessory tools and equipment that are separate detachable units with an ordinary
useful life of less than 12 months used in producing a direct effect upon the product.

Machinery, equipment, implements, tools, accessories, appliances, contrivances, and
furniture and fixtures, except those listed in this clause are not included within this
exemption.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 31.

Minnesota Statutes 2012, section 297A.70, subdivision 13, is amended to read:

Subd. 13.

Fund-raising sales by or for nonprofit groups.

(a) The following
sales by the specified organizations for fund-raising purposes are exempt, subject to the
limitations listed in paragraph (b):

(1) all sales made by a nonprofit organization that exists solely for the purpose of
providing educational or social activities for young people primarily age 18 and under;

(2) all sales made by an organization that is a senior citizen group or association of
groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii)
no part of its net earnings inures to the benefit of any private shareholders; new text begin and
new text end

deleted text begin (3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if
the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization
under section 501(c)(3) of the Internal Revenue Code; and
deleted text end

deleted text begin (4) deleted text end new text begin (3) new text end sales of candy sold for fund-raising purposes by a nonprofit organization that
provides educational and social activities primarily for young people age 18 and under.

(b) The exemptions listed in paragraph (a) are limited in the following manner:

(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross
annual receipts of the organization from fund-raising do not exceed $10,000; and

(2) the exemption under paragraph (a), clause (1), does not apply if the sales are
derived from admission charges or from activities for which the money must be deposited
with the school district treasurer under section 123B.49, subdivision 2, or be recorded in
the same manner as other revenues or expenditures of the school district under section
123B.49, subdivision 4.

deleted text begin (c) Sales of tangible personal property are exempt if the entire proceeds, less the
necessary expenses for obtaining the property, will be contributed to a registered combined
charitable organization described in section 43A.50, to be used exclusively for charitable,
religious, or educational purposes, and the registered combined charitable organization
has given its written permission for the sale. Sales that occur over a period of more than
24 days per year are not exempt under this paragraph.
deleted text end

deleted text begin (d) deleted text end new text begin (c) new text end For purposes of this subdivision, a club, association, or other organization of
elementary or secondary school students organized for the purpose of carrying on sports,
educational, or other extracurricular activities is a separate organization from the school
district or school for purposes of applying the $10,000 limit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 32.

Minnesota Statutes 2012, section 297A.83, subdivision 3, is amended to read:

Subd. 3.

Commissioner's discretion.

(a) The commissioner may decline to issue a
permit to a retailer not maintaining a place of business in this state, or may cancel a permit
previously issued to the retailer, if the commissioner believes that the tax can be collected
more effectively from the persons using the property in this state. A refusal to issue or
cancellation of a permit on such grounds does not affect the retailer's right to make retail
sales from outside this state to destinations within this state.

(b) If the commissioner considers it necessary for the efficient administration of the
tax to regard a salesperson, representative, trucker, peddler, or canvasser as the agent of
the dealer, distributor, supervisor, employer, or other person under whom that person
operates or from whom the person obtains the tangible personal property new text begin , specified digital
products, or other digital products new text end sold, whether making sales personally or in behalf of
that dealer, distributor, supervisor, employer, or other person, the commissioner may
regard the salesperson, representative, trucker, peddler, or canvasser as such agent, and
may regard the dealer, distributor, supervisor, employer, or other person as a retailer for
the purposes of collecting the tax.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 33.

Minnesota Statutes 2012, section 297A.94, is amended to read:

297A.94 DEPOSIT OF REVENUES.

(a) Except as provided in this section, the commissioner shall deposit the revenues,
including interest and penalties, derived from the taxes imposed by this chapter in the state
treasury and credit them to the general fund.

(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic
account in the special revenue fund if:

(1) the taxes are derived from sales and use of property and services purchased for
the construction and operation of an agricultural resource project; and

(2) the purchase was made on or after the date on which a conditional commitment
was made for a loan guaranty for the project under section 41A.04, subdivision 3.

The commissioner of management and budget shall certify to the commissioner the date
on which the project received the conditional commitment. The amount deposited in
the loan guaranty account must be reduced by any refunds and by the costs incurred by
the Department of Revenue to administer and enforce the assessment and collection of
the taxes.

(c) The commissioner shall deposit the revenues, including interest and penalties,
derived from the taxes imposed on sales and purchases included in section 297A.61,
subdivision 3, paragraph (g), clauses (1) and (4), in the state treasury, and credit them
as follows:

(1) first to the general obligation special tax bond debt service account in each fiscal
year the amount required by section 16A.661, subdivision 3, paragraph (b); and

(2) after the requirements of clause (1) have been met, the balance to the general fund.

(d) The commissioner shall deposit the revenues, including interest and penalties,
collected under section 297A.64, subdivision 5, in the state treasury and credit them to the
general fund. By July 15 of each year the commissioner shall transfer to the highway user
tax distribution fund an amount equal to the excess fees collected under section 297A.64,
subdivision 5, for the previous calendar year.

(e) For fiscal year 2001, 97 percent; for fiscal years 2002 and 2003, 87 percent; and
for fiscal year 2004 and thereafter, 72.43 percent of the revenues, including interest and
penalties, transmitted to the commissioner under section 297A.65, must be deposited by
the commissioner in the state treasury as follows:

(1) 50 percent of the receipts must be deposited in the heritage enhancement account
in the game and fish fund, and may be spent only on activities that improve, enhance, or
protect fish and wildlife resources, including conservation, restoration, and enhancement
of land, water, and other natural resources of the state;

(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and
may be spent only for state parks and trails;

(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and
may be spent only on metropolitan park and trail grants;

(4) three percent of the receipts must be deposited in the natural resources fund, and
may be spent only on local trail grants; and

(5) two percent of the receipts must be deposited in the natural resources fund,
and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and
Conservatory, and the Duluth Zoo.

(f) The revenue dedicated under paragraph (e) may not be used as a substitute
for traditional sources of funding for the purposes specified, but the dedicated revenue
shall supplement traditional sources of funding for those purposes. Land acquired with
money deposited in the game and fish fund under paragraph (e) must be open to public
hunting and fishing during the open season, except that in aquatic management areas or
on lands where angling easements have been acquired, fishing may be prohibited during
certain times of the year and hunting may be prohibited. At least 87 percent of the money
deposited in the game and fish fund for improvement, enhancement, or protection of fish
and wildlife resources under paragraph (e) must be allocated for field operations.

(g) The revenues deposited under paragraphs (a) to (f) do not include the revenues,
including interest and penalties, generated by the sales tax imposed under section
297A.62, subdivision 1a, which must be deposited as provided under the Minnesota
Constitution, article XI, section 15.

new text begin (h) The commissioner shall deposit revenues in the health care access fund as
provided under section 295.58, paragraph (a), clause (3).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end

Sec. 34.

Minnesota Statutes 2012, section 297A.99, subdivision 6, is amended to read:

Subd. 6.

Use tax.

A compensating use tax applies, at the same rate as the sales tax,
on the use, storage, distribution, or consumption of tangible personal property new text begin , specified
digital products, other digital products, new text end or taxable services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 35. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin In Minnesota Rules, part 8130.9700, the revisor of statutes shall remove the last
sentence in subpart 3, item B, that reads "Use of equipment on a time-sharing basis,
where access to the equipment is only by means of remote access facilities, is not taxable
leasing of such equipment."
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end

Sec. 36. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2012, sections 297A.61, subdivision 45; 297A.67, subdivisions
2, 7, 8, 9, 10, 11, 12, 13, 13a, 14, 15, 16, 17, 19, 21, 27, and 29; 297A.70, subdivisions 10,
14, and 16; and 297A.71, subdivisions 12 and 22, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2013.
new text end