HF 1570

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; making changes to sales and use 
  1.3             tax provisions to conform to streamlined sales tax 
  1.4             project; amending Minnesota Statutes 2002, sections 
  1.5             289A.18, subdivision 4; 289A.20, subdivision 4; 
  1.6             289A.40, subdivision 2; 289A.50, by adding 
  1.7             subdivisions; 297A.61, subdivisions 3, 7, 10, 17, 30, 
  1.8             31, by adding subdivisions; 297A.66, by adding a 
  1.9             subdivision; 297A.668; 297A.67, subdivisions 7, 8; 
  1.10            297A.68, subdivisions 2, 5, 36; 297A.72, subdivision 
  1.11            1; 297A.81; 297A.99, subdivisions 5, 10, 12; 297A.995, 
  1.12            by adding a subdivision; proposing coding for new law 
  1.13            in Minnesota Statutes, chapter 297A; repealing 
  1.14            Minnesota Statutes 2002, sections 297A.61, 
  1.15            subdivisions 14, 15; 297A.69, subdivision 5. 
  1.16  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.17     Section 1.  Minnesota Statutes 2002, section 289A.18, 
  1.18  subdivision 4, is amended to read: 
  1.19     Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
  1.20  tax returns must be filed on or before the 20th day of the month 
  1.21  following the close of the preceding reporting period, except 
  1.22  that annual use tax returns provided for under section 289A.11, 
  1.23  subdivision 1, must be filed by April 15 following the close of 
  1.24  the calendar year, in the case of individuals.  Annual use tax 
  1.25  returns of businesses, including sole proprietorships, and 
  1.26  annual sales tax returns must be filed by February 5 following 
  1.27  the close of the calendar year.  
  1.28     (b) Returns for the June reporting period filed by 
  1.29  retailers required to remit their June liability under section 
  1.30  289A.20, subdivision 4, paragraph (b), are due on or before 
  2.1   August 20.  
  2.2      (c) If a retailer has an average sales and use tax 
  2.3   liability, including local sales and use taxes administered by 
  2.4   the commissioner, equal to or less than $500 per month in any 
  2.5   quarter of a calendar year, and has substantially complied with 
  2.6   the tax laws during the preceding four calendar quarters, the 
  2.7   retailer may request authorization to file and pay the taxes 
  2.8   quarterly in subsequent calendar quarters.  The authorization 
  2.9   remains in effect during the period in which the retailer's 
  2.10  quarterly returns reflect sales and use tax liabilities of less 
  2.11  than $1,500 and there is continued compliance with state tax 
  2.12  laws. 
  2.13     (d) If a retailer has an average sales and use tax 
  2.14  liability, including local sales and use taxes administered by 
  2.15  the commissioner, equal to or less than $100 per month during a 
  2.16  calendar year, and has substantially complied with the tax laws 
  2.17  during that period, the retailer may request authorization to 
  2.18  file and pay the taxes annually in subsequent years.  The 
  2.19  authorization remains in effect during the period in which the 
  2.20  retailer's annual returns reflect sales and use tax liabilities 
  2.21  of less than $1,200 and there is continued compliance with state 
  2.22  tax laws. 
  2.23     (e) The commissioner may also grant quarterly or annual 
  2.24  filing and payment authorizations to retailers if the 
  2.25  commissioner concludes that the retailers' future tax 
  2.26  liabilities will be less than the monthly totals identified in 
  2.27  paragraphs (c) and (d).  An authorization granted under this 
  2.28  paragraph is subject to the same conditions as an authorization 
  2.29  granted under paragraphs (c) and (d). 
  2.30     (f) A taxpayer who is a materials supplier may report gross 
  2.31  receipts either on: 
  2.32     (1) the cash basis as the consideration is received; or 
  2.33     (2) the accrual basis as sales are made.  
  2.34  As used in this paragraph, "materials supplier" means a person 
  2.35  who provides materials for the improvement of real property; who 
  2.36  is primarily engaged in the sale of lumber and building 
  3.1   materials-related products to owners, contractors, 
  3.2   subcontractors, repairers, or consumers; who is authorized to 
  3.3   file a mechanics lien upon real property and improvements under 
  3.4   chapter 514; and who files with the commissioner an election to 
  3.5   file sales and use tax returns on the basis of this paragraph.  
  3.6      (g) Notwithstanding paragraphs (a) to (f), a seller that is 
  3.7   not a Model 1, 2, or 3 seller, as those terms are used in the 
  3.8   Streamlined Sales and Use Tax Agreement, that does not have a 
  3.9   legal requirement to register in Minnesota, and that is 
  3.10  registered under the agreement, must file a return by February 5 
  3.11  following the close of the calendar year in which the seller 
  3.12  initially registers, and must file subsequent returns on 
  3.13  February 5 on an annual basis in succeeding years.  
  3.14  Additionally, a return must be submitted on or before the 20th 
  3.15  day of the month following any month by which sellers have 
  3.16  accumulated state and local tax funds for the state in the 
  3.17  amount of $1,000 or more.  
  3.18     Sec. 2.  Minnesota Statutes 2002, section 289A.20, 
  3.19  subdivision 4, is amended to read: 
  3.20     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
  3.21  chapter 297A are due and payable to the commissioner monthly on 
  3.22  or before the 20th day of the month following the month in which 
  3.23  the taxable event occurred, or following another reporting 
  3.24  period as the commissioner prescribes or as allowed under 
  3.25  section 289A.18, subdivision 4, paragraph (f) or (g), except 
  3.26  that use taxes due on an annual use tax return as provided under 
  3.27  section 289A.11, subdivision 1, are payable by April 15 
  3.28  following the close of the calendar year. 
  3.29     (b) For a fiscal year ending before July 1, 2002, a vendor 
  3.30  having a liability of $120,000 or more during a fiscal year 
  3.31  ending June 30 must remit the June liability for the next year 
  3.32  in the following manner: 
  3.33     (1) Two business days before June 30 of the year, the 
  3.34  vendor must remit 75 percent of the estimated June liability to 
  3.35  the commissioner.  
  3.36     (2) On or before August 20 of the year, the vendor must pay 
  4.1   any additional amount of tax not remitted in June. 
  4.2      (c) A vendor having a liability of $120,000 or more during 
  4.3   a fiscal year ending June 30 must remit all liabilities on 
  4.4   returns due for periods beginning in the subsequent calendar 
  4.5   year by electronic means on or before the 20th day of the month 
  4.6   following the month in which the taxable event occurred, or on 
  4.7   or before the 20th day of the month following the month in which 
  4.8   the sale is reported under section 289A.18, subdivision 4, 
  4.9   except for 75 percent of the estimated June liability, which is 
  4.10  due two business days before June 30.  The remaining amount of 
  4.11  the June liability is due on August 20.  
  4.12     Sec. 3.  Minnesota Statutes 2002, section 289A.40, 
  4.13  subdivision 2, is amended to read: 
  4.14     Subd. 2.  [BAD DEBT LOSS.] If a claim relates to an 
  4.15  overpayment because of a failure to deduct a loss due to a bad 
  4.16  debt or to a security becoming worthless, the claim is 
  4.17  considered timely if filed within seven years from the date 
  4.18  prescribed for the filing of the return.  A claim relating to an 
  4.19  overpayment of taxes under chapter 297A must be filed within 
  4.20  3-1/2 years from the date prescribed for filing the return, plus 
  4.21  any extensions granted for filing the return, but only if filed 
  4.22  within the extended time, or within one year from the date the 
  4.23  taxpayer's federal income tax return is timely filed claiming 
  4.24  the bad debt deduction, whichever period expires later.  The 
  4.25  refund or credit is limited to the amount of overpayment 
  4.26  attributable to the loss.  "Bad debt" for purposes of this 
  4.27  subdivision, has the same meaning as that term is used in United 
  4.28  States Code, title 26, section 166, except that the following 
  4.29  are excluded from the calculation of bad debt:  financing 
  4.30  charges or interest; sales or use taxes charged on the purchase 
  4.31  price; uncollectible amounts on property that remain in the 
  4.32  possession of the seller until the full purchase price is paid; 
  4.33  expenses incurred in attempting to collect any debt; and 
  4.34  repossessed property. 
  4.35     Sec. 4.  Minnesota Statutes 2002, section 289A.50, is 
  4.36  amended by adding a subdivision to read: 
  5.1      Subd. 2b.  [CERTIFIED SERVICE PROVIDER; BAD DEBT CLAIM.] A 
  5.2   certified service provider, as defined in section 297A.995, 
  5.3   subdivision 2, may claim on behalf of a taxpayer that is its 
  5.4   client any bad debt allowance provided by section 297A.81.  The 
  5.5   certified service provider must credit or refund to its client 
  5.6   the full amount of any bad debt allowance or refund received. 
  5.7      Sec. 5.  Minnesota Statutes 2002, section 289A.50, is 
  5.8   amended by adding a subdivision to read: 
  5.9      Subd. 2c.  [NOTICE FROM PURCHASER TO VENDOR REQUESTING 
  5.10  REFUND.] (a) If a vendor has collected from a purchaser a tax on 
  5.11  a transaction that is not subject to the tax imposed by chapter 
  5.12  297A, the purchaser may seek from the vendor a return of 
  5.13  over-collected sales or use taxes as follows: 
  5.14     (1) the purchaser must provide written notice to the 
  5.15  vendor; 
  5.16     (2) the notice to the vendor must contain the information 
  5.17  necessary to determine the validity of the request; and 
  5.18     (3) no cause of action against the vendor accrues until the 
  5.19  vendor has had 60 days to respond to the written notice. 
  5.20     (b) In connection with a purchaser's request from a vendor 
  5.21  of over-collected sales or use taxes, a vendor is presumed to 
  5.22  have a reasonable business practice, if in the collection of 
  5.23  such sales or use taxes, the vendor:  (1) uses either a provider 
  5.24  or a system, including a proprietary system, that is certified 
  5.25  by the state; and (2) has remitted to the state all taxes 
  5.26  collected less any deductions, credits, or collection allowances.
  5.27     Sec. 6.  Minnesota Statutes 2002, section 297A.61, 
  5.28  subdivision 3, is amended to read: 
  5.29     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
  5.30  include, but are not limited to, each of the transactions listed 
  5.31  in this subdivision. 
  5.32     (b) Sale and purchase include: 
  5.33     (1) any transfer of title or possession, or both, of 
  5.34  tangible personal property, whether absolutely or conditionally, 
  5.35  for a consideration in money or by exchange or barter; and 
  5.36     (2) the leasing of or the granting of a license to use or 
  6.1   consume, for a consideration in money or by exchange or barter, 
  6.2   tangible personal property, other than a manufactured home used 
  6.3   for residential purposes for a continuous period of 30 days or 
  6.4   more. 
  6.5      (c) Sale and purchase include the production, fabrication, 
  6.6   printing, or processing of tangible personal property for a 
  6.7   consideration for consumers who furnish either directly or 
  6.8   indirectly the materials used in the production, fabrication, 
  6.9   printing, or processing. 
  6.10     (d) Sale and purchase include the preparing for a 
  6.11  consideration of food.  Notwithstanding section 297A.67, 
  6.12  subdivision 2, taxable food includes, but is not limited to, the 
  6.13  following: 
  6.14     (1) prepared food sold by the retailer; 
  6.15     (2) soft drinks; 
  6.16     (3) candy; and 
  6.17     (4) all food sold through vending machines. 
  6.18     (e) A sale and a purchase includes the furnishing for a 
  6.19  consideration of electricity, gas, water, or steam for use or 
  6.20  consumption within this state. 
  6.21     (f) A sale and a purchase includes the transfer for a 
  6.22  consideration of prewritten computer software whether delivered 
  6.23  electronically, by load and leave, or otherwise.  
  6.24     (g) A sale and a purchase includes the furnishing for a 
  6.25  consideration of the following services: 
  6.26     (1) the privilege of admission to places of amusement, 
  6.27  recreational areas, or athletic events, and the making available 
  6.28  of amusement devices, tanning facilities, reducing salons, steam 
  6.29  baths, turkish baths, health clubs, and spas or athletic 
  6.30  facilities; 
  6.31     (2) lodging and related services by a hotel, rooming house, 
  6.32  resort, campground, motel, or trailer camp and the granting of 
  6.33  any similar license to use real property other than the renting 
  6.34  or leasing of it for a continuous period of 30 days or more; 
  6.35     (3) parking services, whether on a contractual, hourly, or 
  6.36  other periodic basis, except for parking at a meter; 
  7.1      (4) the granting of membership in a club, association, or 
  7.2   other organization if: 
  7.3      (i) the club, association, or other organization makes 
  7.4   available for the use of its members sports and athletic 
  7.5   facilities, without regard to whether a separate charge is 
  7.6   assessed for use of the facilities; and 
  7.7      (ii) use of the sports and athletic facility is not made 
  7.8   available to the general public on the same basis as it is made 
  7.9   available to members.  
  7.10  Granting of membership means both onetime initiation fees and 
  7.11  periodic membership dues.  Sports and athletic facilities 
  7.12  include golf courses; tennis, racquetball, handball, and squash 
  7.13  courts; basketball and volleyball facilities; running tracks; 
  7.14  exercise equipment; swimming pools; and other similar athletic 
  7.15  or sports facilities; 
  7.16     (5) delivery of aggregate materials and concrete block by a 
  7.17  third party if the delivery would be subject to the sales tax if 
  7.18  provided by the seller of the aggregate material or concrete 
  7.19  block; and 
  7.20     (6) services as provided in this clause: 
  7.21     (i) laundry and dry cleaning services including cleaning, 
  7.22  pressing, repairing, altering, and storing clothes, linen 
  7.23  services and supply, cleaning and blocking hats, and carpet, 
  7.24  drapery, upholstery, and industrial cleaning.  Laundry and dry 
  7.25  cleaning services do not include services provided by coin 
  7.26  operated facilities operated by the customer; 
  7.27     (ii) motor vehicle washing, waxing, and cleaning services, 
  7.28  including services provided by coin operated facilities operated 
  7.29  by the customer, and rustproofing, undercoating, and towing of 
  7.30  motor vehicles; 
  7.31     (iii) building and residential cleaning, maintenance, and 
  7.32  disinfecting and exterminating services; 
  7.33     (iv) detective, security, burglar, fire alarm, and armored 
  7.34  car services; but not including services performed within the 
  7.35  jurisdiction they serve by off-duty licensed peace officers as 
  7.36  defined in section 626.84, subdivision 1, or services provided 
  8.1   by a nonprofit organization for monitoring and electronic 
  8.2   surveillance of persons placed on in-home detention pursuant to 
  8.3   court order or under the direction of the Minnesota department 
  8.4   of corrections; 
  8.5      (v) pet grooming services; 
  8.6      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
  8.7   services; garden planting and maintenance; tree, bush, and shrub 
  8.8   pruning, bracing, spraying, and surgery; indoor plant care; 
  8.9   tree, bush, shrub, and stump removal; and tree trimming for 
  8.10  public utility lines.  Services performed under a construction 
  8.11  contract for the installation of shrubbery, plants, sod, trees, 
  8.12  bushes, and similar items are not taxable; 
  8.13     (vii) massages, except when provided by a licensed health 
  8.14  care facility or professional or upon written referral from a 
  8.15  licensed health care facility or professional for treatment of 
  8.16  illness, injury, or disease; and 
  8.17     (viii) the furnishing of lodging, board, and care services 
  8.18  for animals in kennels and other similar arrangements, but 
  8.19  excluding veterinary and horse boarding services. 
  8.20     In applying the provisions of this chapter, the terms 
  8.21  "tangible personal property" and "sales at retail" include 
  8.22  taxable services and the provision of taxable services, unless 
  8.23  specifically provided otherwise.  Services performed by an 
  8.24  employee for an employer are not taxable.  Services performed by 
  8.25  a partnership or association for another partnership or 
  8.26  association are not taxable if one of the entities owns or 
  8.27  controls more than 80 percent of the voting power of the equity 
  8.28  interest in the other entity.  Services performed between 
  8.29  members of an affiliated group of corporations are not taxable.  
  8.30  For purposes of this section, "affiliated group of corporations" 
  8.31  includes those entities that would be classified as members of 
  8.32  an affiliated group under United States Code, title 26, section 
  8.33  1504, and that are eligible to file a consolidated tax return 
  8.34  for federal income tax purposes. 
  8.35     (h) A sale and a purchase includes the furnishing for a 
  8.36  consideration of tangible personal property or taxable services 
  9.1   by the United States or any of its agencies or 
  9.2   instrumentalities, or the state of Minnesota, its agencies, 
  9.3   instrumentalities, or political subdivisions. 
  9.4      (i) A sale and a purchase includes the furnishing for a 
  9.5   consideration of telecommunications services, including cable 
  9.6   television services and direct satellite services.  
  9.7   Telecommunications services are taxed to the extent allowed 
  9.8   under federal law if those services:. 
  9.9      (1) either (i) originate and terminate in this state; or 
  9.10  (ii) originate in this state and terminate outside the state and 
  9.11  the service is charged to a telephone number customer located in 
  9.12  this state or to the account of any transmission instrument in 
  9.13  this state; or (iii) originate outside this state and terminate 
  9.14  in this state and the service is charged to a telephone number 
  9.15  customer located in this state or to the account of any 
  9.16  transmission instrument in this state; or 
  9.17     (2) are rendered by providing a private communications 
  9.18  service for which the customer has one or more locations within 
  9.19  Minnesota connected to the service and the service is charged to 
  9.20  a telephone number customer located in this state or to the 
  9.21  account of any transmission instrument in this state. 
  9.22     All charges for mobile telecommunications services, as 
  9.23  defined in United States Code, title 4, section 124, are deemed 
  9.24  to be provided by the customer's home service provider and 
  9.25  sourced to the customer's place of primary use and are subject 
  9.26  to tax based upon the customer's place of primary use in 
  9.27  accordance with the Mobile Telecommunications Sourcing Act, 
  9.28  United States Code, title 4, sections 116 to 126.  All other 
  9.29  definitions and provisions of the Mobile Telecommunications 
  9.30  Sourcing Act as provided in United States Code, title 4, are 
  9.31  hereby adopted. 
  9.32     (j) A sale and a purchase includes the furnishing for a 
  9.33  consideration of installation if the installation charges would 
  9.34  be subject to the sales tax if the installation were provided by 
  9.35  the seller of the item being installed. 
  9.36     Sec. 7.  Minnesota Statutes 2002, section 297A.61, 
 10.1   subdivision 7, is amended to read: 
 10.2      Subd. 7.  [SALES PRICE.] (a) "Sales price" means the 
 10.3   measure subject to sales tax, and means the total amount of 
 10.4   consideration, including cash, credit, personal property, and 
 10.5   services, for which personal property or services are sold, 
 10.6   leased, or rented, valued in money, whether received in money or 
 10.7   otherwise, without any deduction for the following: 
 10.8      (1) the seller's cost of the property sold; 
 10.9      (2) the cost of materials used, labor or service cost, 
 10.10  interest, losses, all costs of transportation to the seller, all 
 10.11  taxes imposed on the seller, and any other expenses of the 
 10.12  seller; 
 10.13     (3) charges by the seller for any services necessary to 
 10.14  complete the sale, other than delivery and installation charges; 
 10.15     (4) delivery charges; 
 10.16     (5) installation charges; and 
 10.17     (6) the value of exempt property given to the purchaser 
 10.18  when taxable and exempt personal property have been bundled 
 10.19  together and sold by the seller as a single product or piece of 
 10.20  merchandise. 
 10.21     (b) Sales price does not include: 
 10.22     (1) discounts, including cash, terms, or coupons that are 
 10.23  not reimbursed by a third party and that are allowed by the 
 10.24  seller and taken by a purchaser on a sale; 
 10.25     (2) interest, financing, and carrying charges from credit 
 10.26  extended on the sale of personal property or services, if the 
 10.27  amount is separately stated on the invoice, bill of sale, or 
 10.28  similar document given to the purchaser; and 
 10.29     (3) any taxes legally imposed directly on the consumer that 
 10.30  are separately stated on the invoice, bill of sale, or similar 
 10.31  document given to the purchaser. 
 10.32     Sec. 8.  Minnesota Statutes 2002, section 297A.61, 
 10.33  subdivision 10, is amended to read: 
 10.34     Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
 10.35  personal property" means corporeal personal property of any 
 10.36  kind, including property that is to become real property as a 
 11.1   result of incorporation, attachment, or installation following 
 11.2   its acquisition. 
 11.3      (b) Tangible personal property includes, but is not limited 
 11.4   to: 
 11.5      (1) computer software, whether contained on tape, discs, 
 11.6   cards, or other devices; and 
 11.7      (2) prepaid telephone calling cards.  
 11.8      (c) personal property that can be seen, weighed, measured, 
 11.9   felt, or touched, or that is in any other manner perceptible to 
 11.10  the senses.  "Tangible personal property" includes, but is not 
 11.11  limited to, electricity, water, gas, steam, prewritten computer 
 11.12  software, and prepaid calling cards. 
 11.13     (b) Tangible personal property does not include: 
 11.14     (1) large ponderous machinery and equipment used in a 
 11.15  business or production activity which at common law would be 
 11.16  considered to be real property; 
 11.17     (2) property which is subject to an ad valorem property 
 11.18  tax; 
 11.19     (3) property described in section 272.02, subdivision 9, 
 11.20  clauses (a) to (d); and 
 11.21     (4) property described in section 272.03, subdivision 2, 
 11.22  clauses (3) and (5). 
 11.23     Sec. 9.  Minnesota Statutes 2002, section 297A.61, is 
 11.24  amended by adding a subdivision to read: 
 11.25     Subd. 14a.  [LEASE OR RENTAL.] (a) "Lease or rental" means 
 11.26  any transfer of possession or control of tangible personal 
 11.27  property for a fixed or indeterminate term for consideration.  A 
 11.28  lease or rental may include future options to purchase or extend.
 11.29     (b) Lease or rental does not include: 
 11.30     (1) a transfer of possession or control of property under a 
 11.31  security agreement or deferred payment plan that requires the 
 11.32  transfer of title upon completion of the required payments; 
 11.33     (2) a transfer of possession or control of property under 
 11.34  an agreement that requires the transfer of title upon completion 
 11.35  of required payments and payment of an option price does not 
 11.36  exceed the greater of $100 or one percent of the total required 
 12.1   payments; or 
 12.2      (3) providing tangible personal property along with an 
 12.3   operator for a fixed or indeterminate period of time.  A 
 12.4   condition of this exclusion is that the operator is necessary 
 12.5   for the equipment to perform as designed.  For the purpose of 
 12.6   this subdivision, an operator must do more than maintain, 
 12.7   inspect, or set up the tangible personal property. 
 12.8      (c) Lease or rental does include agreements covering motor 
 12.9   vehicles and trailers where the amount of consideration may be 
 12.10  increased or decreased by reference to the amount realized upon 
 12.11  sale or disposition of the property as defined in United States 
 12.12  Code, title 26, section 7701(h)(l). 
 12.13     (d) This definition must be used for sales and use tax 
 12.14  purposes regardless if a transaction is characterized as a lease 
 12.15  or rental under generally accepted accounting principles, the 
 12.16  Internal Revenue Code, chapter 336, or other provisions of 
 12.17  federal, state, or local law. 
 12.18     Sec. 10.  Minnesota Statutes 2002, section 297A.61, 
 12.19  subdivision 17, is amended to read: 
 12.20     Subd. 17.  [PREWRITTEN COMPUTER SOFTWARE.] "Prewritten 
 12.21  computer software" means a computer program, either in the form 
 12.22  of written procedures or contained on tapes, discs, cards, or 
 12.23  another device, or any required documentation or manuals 
 12.24  designed to facilitate the use of the computer program. computer 
 12.25  software, including prewritten upgrades, that is not designed 
 12.26  and developed by the author or other creator to the 
 12.27  specifications of a specific purchaser.  The combining of two or 
 12.28  more "prewritten computer software" programs or prewritten 
 12.29  portions of the programs does not cause the combination to be 
 12.30  other than "prewritten computer software."  "Prewritten computer 
 12.31  software" includes software designed and developed by the author 
 12.32  or other creator to the specifications of a specific purchaser 
 12.33  when it is sold to a person other than the purchaser.  If a 
 12.34  person modifies or enhances computer software of which the 
 12.35  person is not the author or creator, the person is deemed to be 
 12.36  the author or creator only of such person's modifications or 
 13.1   enhancements.  "Prewritten computer software" or a prewritten 
 13.2   portion of it that is modified or enhanced to any degree, if the 
 13.3   modification or enhancement is designed and developed to the 
 13.4   specifications of a specific purchaser, remains "prewritten 
 13.5   computer software"; provided, however, that if there is a 
 13.6   reasonable, separately stated charge or an invoice or other 
 13.7   statement of the price given to the purchaser for such 
 13.8   modification or enhancement, the modification or enhancement 
 13.9   does not constitute "prewritten computer software."  For 
 13.10  purposes of this subdivision: 
 13.11     (1) "computer" does not include tape-controlled automatic 
 13.12  drilling, milling, or other manufacturing machinery or equipment 
 13.13  means an electronic device that accepts information in digital 
 13.14  or similar form and manipulates it for a result based on a 
 13.15  sequence of instructions; and 
 13.16     (2) "computer program" means information and directions 
 13.17  that dictate the function performed by data processing 
 13.18  equipment.  It includes the complete plan for the solution of a 
 13.19  problem, such as the complete sequence of automatic data 
 13.20  processing equipment instructions necessary to solve a problem 
 13.21  and includes both systems and application programs and 
 13.22  subdivisions, such as assemblers, compilers, routines, 
 13.23  generators, and utility programs.  Computer program includes a 
 13.24  "canned" or prewritten computer program that is held or existing 
 13.25  for general or repeated sale or lease, even if the prewritten or 
 13.26  "canned" program was initially developed on a custom basis or 
 13.27  for in-house use. "electronic" means relating to technology 
 13.28  having electrical, digital, magnetic, wireless, optical, 
 13.29  electromagnetic, or similar capabilities; and 
 13.30     (3) "computer software" means a set of coded instructions 
 13.31  designed to cause a "computer" or automatic data processing 
 13.32  equipment to perform a task. 
 13.33     Sec. 11.  Minnesota Statutes 2002, section 297A.61, is 
 13.34  amended by adding a subdivision to read: 
 13.35     Subd. 17a.  [DELIVERED ELECTRONICALLY.] "Delivered 
 13.36  electronically" means delivered to the purchaser by means other 
 14.1   than tangible storage media. 
 14.2      Sec. 12.  Minnesota Statutes 2002, section 297A.61, is 
 14.3   amended by adding a subdivision to read: 
 14.4      Subd. 17b.  [LOAD AND LEAVE.] "Load and leave" means 
 14.5   delivered to the purchaser by use of a tangible storage media 
 14.6   where the tangible storage media is not physically transferred 
 14.7   to the purchaser. 
 14.8      Sec. 13.  Minnesota Statutes 2002, section 297A.61, 
 14.9   subdivision 30, is amended to read: 
 14.10     Subd. 30.  [DELIVERY CHARGES.] "Delivery charges" means 
 14.11  charges by the seller of personal property or services for 
 14.12  preparation and delivery to a location designated by the 
 14.13  purchaser of personal property or services including, but not 
 14.14  limited to, transportation, shipping, postage, handling, 
 14.15  crating, and packing. 
 14.16     Sec. 14.  Minnesota Statutes 2002, section 297A.61, 
 14.17  subdivision 31, is amended to read: 
 14.18     Subd. 31.  [PREPARED FOOD.] "Prepared food" means food that 
 14.19  meets either of the following conditions: 
 14.20     (1) the food is sold with eating utensils provided by the 
 14.21  seller, including plates, knives, forks, spoons, glasses, cups, 
 14.22  napkins, or straws; or 
 14.23     (2) the food is sold in a heated state or heated by the 
 14.24  seller; or 
 14.25     (3) two or more food ingredients are mixed or combined by 
 14.26  the seller for sale as a single item, except for: 
 14.27     (i) bakery items, including, but not limited to, bread, 
 14.28  rolls, buns, biscuits, bagels, croissants, pastries, donuts, 
 14.29  danish, cakes, tortes, pies, tarts, muffins, bars, cookies, 
 14.30  tortillas; 
 14.31     (ii) ready-to-eat meat and seafood food sold in an unheated 
 14.32  state sold by weight or volume as a single item; 
 14.33     (iii) eggs, fish, meat, poultry, and foods containing these 
 14.34  raw animal foods requiring cooking by the consumer as 
 14.35  recommended by the Food and Drug Administration in chapter 3, 
 14.36  part 401.11 of its food code so as to prevent food borne 
 15.1   illnesses; or 
 15.2      (iv) food that is only sliced, repackaged, or pasteurized 
 15.3   by the seller. 
 15.4   For purposes of this subdivision, "plate" does not mean a 
 15.5   container or packaging used to transport the food. 
 15.6      Sec. 15.  Minnesota Statutes 2002, section 297A.61, is 
 15.7   amended by adding a subdivision to read: 
 15.8      Subd. 35.  [DIRECT MAIL.] "Direct mail" means printed 
 15.9   material delivered or distributed by United States mail or other 
 15.10  delivery service to a mass audience or to addressees on a 
 15.11  mailing list provided by the purchaser or at the direction of 
 15.12  the purchaser when the cost of the items are not billed directly 
 15.13  to the recipients.  "Direct mail" includes tangible personal 
 15.14  property supplied directly or indirectly by the purchaser to the 
 15.15  direct mail seller for inclusion in the package containing 
 15.16  printed material.  "Direct mail" does not include multiple items 
 15.17  of printed material delivered to a single address. 
 15.18     Sec. 16.  Minnesota Statutes 2002, section 297A.66, is 
 15.19  amended by adding a subdivision to read: 
 15.20     Subd. 5.  [WITHDRAWAL FROM STREAMLINED SALES AND USE TAX 
 15.21  AGREEMENT.] If the state has withdrawn its membership or been 
 15.22  expelled from the streamlined sales and use tax agreement, it 
 15.23  shall not use a seller's registration with the central 
 15.24  registration system and the collection of sales and use taxes in 
 15.25  the state as a factor in determining whether the seller has 
 15.26  nexus with that state for any tax at any time. 
 15.27     Sec. 17.  [297A.666] [AMNESTY FOR REGISTRATION.] 
 15.28     Subdivision 1.  [AMNESTY PROVISIONS.] Subject to the 
 15.29  limitations of subdivision 2: 
 15.30     (1) this state shall provide amnesty for uncollected or 
 15.31  unpaid sales or use tax to a seller who registers to pay or to 
 15.32  collect and remit applicable sales or use tax on sales made to 
 15.33  purchasers in this state in accordance with the terms of the 
 15.34  streamlined sales and use tax agreement, provided that the 
 15.35  seller was not so registered in this state in the 12-month 
 15.36  period preceding the effective date of the state's participation 
 16.1   in the agreement; and 
 16.2      (2) the amnesty shall preclude assessment for uncollected 
 16.3   or unpaid sales or use tax together with penalty or interest for 
 16.4   sales made during the period the seller was not registered in 
 16.5   this state, provided registration occurs within 12 months of the 
 16.6   effective date of the state's participation in the agreement. 
 16.7      Subd. 2.  [LIMITATIONS.] (a) The amnesty is not available 
 16.8   to a seller with respect to any matter or matters for which the 
 16.9   seller received notice of the commencement of an audit and the 
 16.10  audit is not yet finally resolved, including any related 
 16.11  administrative and judicial processes. 
 16.12     (b) The amnesty is not available for sales or use taxes 
 16.13  already paid or remitted to this state or to taxes collected by 
 16.14  the seller. 
 16.15     (c) The amnesty is fully effective, absent the seller's 
 16.16  fraud or intentional misrepresentation of a material fact, as 
 16.17  long as the seller continues registration and continues payment 
 16.18  or collection and remittance of applicable sales or use taxes 
 16.19  for a period of at least 36 months.  The statute of limitations 
 16.20  provisions of chapter 289A applicable to asserting a sales or 
 16.21  use tax liability must be tolled during this 36-month period. 
 16.22     (d) The amnesty is applicable only to sales or use taxes 
 16.23  due from a seller in its capacity as a seller and not to sales 
 16.24  or use taxes due from a seller in its capacity as a buyer. 
 16.25     Sec. 18.  Minnesota Statutes 2002, section 297A.668, is 
 16.26  amended to read: 
 16.27     297A.668 [SOURCING OF SALE; SITUS IN THIS STATE.] 
 16.28     Subdivision 1.  [SOURCING RULES.] (a) The following 
 16.29  provisions apply regardless of the characterization of a product 
 16.30  as tangible personal property, a digital good, or a service; but 
 16.31  do not apply to telecommunications services, or the sales of 
 16.32  motor vehicles, watercraft, aircraft, modular homes, 
 16.33  manufactured homes, or mobile homes.  These provisions only 
 16.34  apply to determine a seller's obligation to pay or collect and 
 16.35  remit a sales or use tax with respect to the seller's sale of a 
 16.36  product.  These provisions do not affect the obligation of a 
 17.1   seller as purchaser to remit tax on the use of the 
 17.2   product.  This subdivision does not apply to the lease or rental 
 17.3   of a product.  
 17.4      (b) When the product is received by the purchaser at a 
 17.5   business location of the seller, the sale is sourced to that 
 17.6   business location. 
 17.7      (c) When the product is not received by the purchaser at a 
 17.8   business location of the seller, the sale is sourced to the 
 17.9   location where receipt by the purchaser or the donee designated 
 17.10  by the purchaser occurs, including the location indicated by 
 17.11  instructions for delivery to the purchasers or the purchaser's 
 17.12  donee, known to the seller. 
 17.13     (d) When paragraphs (b) and (c) do not apply, the sale is 
 17.14  sourced to the location indicated by an address for the 
 17.15  purchaser that is available from the business records of the 
 17.16  seller that are maintained in the ordinary course of the 
 17.17  seller's business, when use of this address does not constitute 
 17.18  bad faith. 
 17.19     (e) When paragraphs (b), (c), and (d) do not apply, the 
 17.20  sale is sourced to the location indicated by an address for the 
 17.21  purchaser obtained during the consummation of the sale, 
 17.22  including the address of a purchaser's payment instrument if no 
 17.23  other address is available, when use of this address does not 
 17.24  constitute bad faith. 
 17.25     (f) When paragraphs (b), (c), (d), and (e) do not apply, 
 17.26  including the circumstance where the seller is without 
 17.27  sufficient information to apply the previous paragraphs, then 
 17.28  the location is determined by the address from which tangible 
 17.29  personal property was shipped, from which the digital good or 
 17.30  the computer software delivered electronically was first 
 17.31  available for transmission by the seller, or from which the 
 17.32  service was provided.  For purposes of this paragraph, the 
 17.33  seller must disregard any location that merely provided the 
 17.34  digital transfer of the product sold. 
 17.35     (g) For purposes of this subdivision, the terms "receive" 
 17.36  and "receipt" mean taking possession of tangible personal 
 18.1   property, making first use of services, or taking possession or 
 18.2   making first use of digital goods or the computer software 
 18.3   delivered electronically, whichever occurs first.  The terms 
 18.4   receive and receipt do not include possession by a carrier for 
 18.5   hire on behalf of the purchaser. 
 18.6      Subd. 2.  [LEASE OR RENTAL OF TANGIBLE PERSONAL 
 18.7   PROPERTY.] The lease or rental of tangible personal property, 
 18.8   other than property identified in subdivision 3 or 4, shall be 
 18.9   sourced as required in paragraphs (a) to (c). 
 18.10     (a) For a lease or rental that requires recurring periodic 
 18.11  payments, the first periodic payment is sourced the same as a 
 18.12  retail sale in accordance with the provisions of subdivision 2.  
 18.13  Periodic payments made subsequent to the first payment are 
 18.14  sourced to the primary property location for each period covered 
 18.15  by the payment.  The primary property location must be as 
 18.16  indicated by an address for the property provided by the lessee 
 18.17  that is available to the lessor from its records maintained in 
 18.18  the ordinary course of business, when use of this address does 
 18.19  not constitute bad faith.  The property location must not be 
 18.20  altered by intermittent use at different locations, such as use 
 18.21  of business property that accompanies employees on business 
 18.22  trips and service calls. 
 18.23     (b) For a lease or rental that does not require recurring 
 18.24  periodic payments, the payment is sourced the same as a retail 
 18.25  sale in accordance with the provisions of subdivision 1. 
 18.26     (c) This subdivision does not affect the imposition or 
 18.27  computation of sales or use tax on leases or rentals based on a 
 18.28  lump sum or accelerated basis, or on the acquisition of property 
 18.29  for lease. 
 18.30     Subd. 3.  [LEASE OR RENTAL OF MOTOR VEHICLES, TRAILERS, 
 18.31  SEMITRAILERS, OR AIRCRAFT THAT DO NOT QUALIFY AS TRANSPORTATION 
 18.32  EQUIPMENT.] The lease or rental of motor vehicles, trailers, 
 18.33  semitrailers, or aircraft that do not qualify as transportation 
 18.34  equipment, as defined in subdivision 4, shall be sourced as 
 18.35  required in paragraphs (a) to (c). 
 18.36     (a) For a lease or rental that requires recurring periodic 
 19.1   payments, each periodic payment is sourced to the primary 
 19.2   property location.  The primary property location must be as 
 19.3   indicated by an address for the property provided by the lessee 
 19.4   that is available to the lessor from its records maintained in 
 19.5   the ordinary course of business, when use of this address does 
 19.6   not constitute bad faith.  This location must not be altered by 
 19.7   intermittent use at different locations. 
 19.8      (b) For a lease or rental that does not require recurring 
 19.9   periodic payments, the payment is sourced the same as a retail 
 19.10  sale in accordance with the provisions of subdivision 1. 
 19.11     (c) This subdivision does not affect the imposition or 
 19.12  computation of sales or use tax on leases or rentals based on a 
 19.13  lump sum or accelerated basis, or on the acquisition of property 
 19.14  for lease. 
 19.15     Subd. 4.  [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 
 19.16  including lease or rental, of transportation equipment shall be 
 19.17  sourced the same as a retail sale in accordance with the 
 19.18  provisions of subdivision 1, notwithstanding the exclusion of 
 19.19  lease or rental in subdivision 1. 
 19.20     (b) "Transportation equipment" means any of the following: 
 19.21     (1) locomotives and railcars that are utilized for the 
 19.22  carriage of persons or property in interstate commerce; and/or 
 19.23     (2) trucks and truck-tractors with a gross vehicle weight 
 19.24  rating (GVWR) of 10,001 pounds or greater, trailers, 
 19.25  semitrailers, or passenger buses that are: 
 19.26     (i) registered through the international registration plan; 
 19.27  and 
 19.28     (ii) operated under authority of a carrier authorized and 
 19.29  certified by the United States Department of Transportation or 
 19.30  another federal authority to engage in the carriage of persons 
 19.31  or property in interstate commerce.  
 19.32     Subd. 2. 5.  [MULTIPLE POINTS OF USE.] (a) Notwithstanding 
 19.33  the provisions of subdivision subdivisions 1 to 4, a business 
 19.34  purchaser that is not a holder of a direct pay permit that knows 
 19.35  at the time of its purchase of a digital good, computer software 
 19.36  delivered electronically, or a service that the digital good, 
 20.1   computer software delivered electronically, or service will be 
 20.2   concurrently available for use in more than one taxing 
 20.3   jurisdiction shall deliver to the seller in conjunction with its 
 20.4   purchase a multiple points of use exemption certificate 
 20.5   disclosing this fact.  
 20.6      (b) Upon receipt of the multiple points of use exemption 
 20.7   certificate, the seller is relieved of the obligation to 
 20.8   collect, pay, or remit the applicable tax and the purchaser is 
 20.9   obligated to collect, pay, or remit the applicable tax on a 
 20.10  direct pay basis. 
 20.11     (c) A purchaser delivering the multiple points of use 
 20.12  exemption certificate may use any reasonable, but consistent and 
 20.13  uniform, method of apportionment that is supported by the 
 20.14  purchaser's business records as they exist at the time of the 
 20.15  consummation of the sale. 
 20.16     (d) The multiple points of use exemption certificate 
 20.17  remains in effect for all future sales by the seller to the 
 20.18  purchaser until it is revoked in writing, except as to the 
 20.19  subsequent sale's specific apportionment that is governed by the 
 20.20  principle of subdivision 3 and the facts existing at the time of 
 20.21  the sale. 
 20.22     (e) A holder of a direct pay permit is not required to 
 20.23  deliver a multiple points or use exemption certificate to the 
 20.24  seller.  A direct pay permit holder shall follow the provisions 
 20.25  of paragraph (c) in apportioning the tax due on a digital good, 
 20.26  computer software delivered electronically, or a service that 
 20.27  will be concurrently available for use in more than one taxing 
 20.28  jurisdiction. 
 20.29     Subd. 3.  [DEFINITION OF TERMS.] For purposes of this 
 20.30  section, the terms "receive" and "receipt" mean taking 
 20.31  possession of tangible personal property, making first use of 
 20.32  services, or taking possession or making first use of digital 
 20.33  goods, whichever occurs first.  The terms receive and receipt do 
 20.34  not include possession by a carrier for hire on behalf of the 
 20.35  purchaser. 
 20.36     Subd. 6.  [DIRECT MAIL.] (a) Notwithstanding other 
 21.1   subdivisions of this section, a purchaser of direct mail that is 
 21.2   not a holder of a direct pay permit shall provide to the seller, 
 21.3   in conjunction with the purchase, either a direct mail form or 
 21.4   information to show the jurisdictions to which the direct mail 
 21.5   is delivered to recipients. 
 21.6      (1) Upon receipt of the direct mail form, the seller is 
 21.7   relieved of all obligations to collect, pay, or remit the 
 21.8   applicable tax and the purchaser is obligated to pay or remit 
 21.9   the applicable tax on a direct pay basis.  A direct mail form 
 21.10  remains in effect for all future sales of direct mail by the 
 21.11  seller to the purchaser until it is revoked in writing.  
 21.12     (2) Upon receipt of information from the purchaser showing 
 21.13  the jurisdictions to which the direct mail is delivered to 
 21.14  recipients, the seller shall collect the tax according to the 
 21.15  delivery information provided by the purchaser.  In the absence 
 21.16  of bad faith, the seller is relieved of any further obligation 
 21.17  to collect tax on any transaction for which the seller has 
 21.18  collected tax pursuant to the delivery information provided by 
 21.19  the purchaser. 
 21.20     (b) If the purchaser of direct mail does not have a direct 
 21.21  pay permit and does not provide the seller with either a direct 
 21.22  mail form or delivery information, as required by paragraph (a), 
 21.23  the seller shall collect the tax according to subdivision 1, 
 21.24  paragraph (f).  Nothing in this paragraph limits a purchaser's 
 21.25  obligation for sales or use tax to any state to which the direct 
 21.26  mail is delivered. 
 21.27     (c) If a purchaser of direct mail provides the seller with 
 21.28  documentation of direct pay authority, the purchaser is not 
 21.29  required to provide a direct mail form or delivery information 
 21.30  to the seller. 
 21.31     Sec. 19.  [297A.669] [TELECOMMUNICATION SOURCING.] 
 21.32     Subdivision 1.  [CALL-BY-CALL BASIS SOURCING.] Except for 
 21.33  the defined telecommunication services in subdivision 3, the 
 21.34  sale of telecommunication service sold on a call-by-call basis 
 21.35  shall be sourced to (1) each level of taxing jurisdiction where 
 21.36  the call originates and terminates in that jurisdiction; or (2) 
 22.1   each level of taxing jurisdiction where the call either 
 22.2   originates or terminates and in which the service address is 
 22.3   also located. 
 22.4      Subd. 2.  [OTHER THAN CALL-BY-CALL BASIS SOURCING.] Except 
 22.5   for the defined telecommunication services in subdivision 3, a 
 22.6   sale of telecommunications services sold on a basis other than a 
 22.7   call-by-call basis is sourced to the customer's place of primary 
 22.8   use. 
 22.9      Subd. 3.  [DEFINED TELECOMMUNICATIONS SERVICES 
 22.10  SOURCING.] The sale of the following telecommunication services 
 22.11  shall be sourced to each level of taxing jurisdiction in 
 22.12  paragraphs (a) to (d). 
 22.13     (a) A sale of mobile telecommunications services, other 
 22.14  than air-to-ground radiotelephone service and prepaid calling 
 22.15  service, is sourced to the customer's place of primary use as 
 22.16  required by the Mobile Telecommunications Sourcing Act. 
 22.17     (b) A sale of postpaid calling service is sourced to the 
 22.18  origination point of the telecommunications signal as first 
 22.19  identified by either: 
 22.20     (1) the seller's telecommunications system; or 
 22.21     (2) information received by the seller from its service 
 22.22  provider, where the system used to transport such signals is not 
 22.23  that of the seller. 
 22.24     (c) A sale of prepaid calling service is sourced in 
 22.25  accordance with section 297A.668, subdivision 1.  However, in 
 22.26  the case of a sale of mobile telecommunications service that is 
 22.27  a prepaid telecommunications service, the rule provided in 
 22.28  section 297A.668, subdivision 1, paragraph (f), shall include as 
 22.29  an option the location associated with the mobile telephone 
 22.30  number. 
 22.31     (d) A sale of a private communication service is sourced as 
 22.32  follows: 
 22.33     (1) service for a separate charge related to a customer 
 22.34  channel termination point is sourced to each level of 
 22.35  jurisdiction in which the customer channel termination point is 
 22.36  located; 
 23.1      (2) service where all customer termination points are 
 23.2   located entirely within one jurisdiction or levels of 
 23.3   jurisdiction is sourced in such jurisdiction in which the 
 23.4   customer channel termination points are located; 
 23.5      (3) service for segments of a channel between two customer 
 23.6   channel termination points located in different jurisdictions 
 23.7   and which segment of channel are separately charged is sourced 
 23.8   50 percent in each level of jurisdiction in which the customer 
 23.9   channel termination points are located; and 
 23.10     (4) service for segments of a channel located in more than 
 23.11  one jurisdiction or levels of jurisdiction and which segments 
 23.12  are not separately billed is sourced in each jurisdiction based 
 23.13  on the percentage determined by dividing the number of customer 
 23.14  channel termination points in the jurisdiction by the total 
 23.15  number of customer channel termination points. 
 23.16     Subd. 4.  [AIR-TO-GROUND RADIOTELEPHONE 
 23.17  SERVICE.] "Air-to-ground radiotelephone service," for purposes 
 23.18  of this section, means a radio service, as that term is defined 
 23.19  in Code of Federal Regulations, title 47, section 22.99, in 
 23.20  which common carriers are authorized to offer and provide radio 
 23.21  telecommunications service for hire to subscribers in aircraft. 
 23.22     Subd. 5.  [CALL-BY-CALL BASIS.] "Call-by-call basis," for 
 23.23  purposes of this section, means any method of charging for 
 23.24  telecommunications services where the price is measured by 
 23.25  individual calls. 
 23.26     Subd. 6.  [COMMUNICATIONS CHANNEL.] "Communications 
 23.27  channel," for purposes of this section, means a physical or 
 23.28  virtual path of communications over which signals are 
 23.29  transmitted between or among customer channel termination points.
 23.30     Subd. 7.  [CUSTOMER.] "Customer," for purposes of this 
 23.31  section, means the person or entity that contracts with the 
 23.32  seller of telecommunications services.  If the end user of 
 23.33  telecommunications services is not the contracting party, the 
 23.34  end user of the telecommunications service is the customer of 
 23.35  the telecommunication service, but this sentence applies only 
 23.36  for the purpose of sourcing sales of telecommunications services 
 24.1   under this section.  Customer does not include a reseller of 
 24.2   telecommunications service or for mobile telecommunications 
 24.3   service of a serving carrier under an agreement to serve the 
 24.4   customer outside the home service provider's licensed service 
 24.5   area. 
 24.6      Subd. 8.  [CUSTOMER CHANNEL TERMINATION POINT.] "Customer 
 24.7   channel termination point," for purposes of this section, means 
 24.8   the location where the customer either inputs or receives the 
 24.9   communications. 
 24.10     Subd. 9.  [END USER.] "End user," for purposes of this 
 24.11  section, means the person who utilizes the telecommunication 
 24.12  service.  In the case of an entity, end user means the 
 24.13  individual who utilizes the service on behalf of the entity. 
 24.14     Subd. 10.  [HOME SERVICE PROVIDER.] "Home service provider,"
 24.15  for purposes of this section, means the same as that term is 
 24.16  defined in Section 124(5) of Public Law 106-252 (Mobile 
 24.17  Telecommunications Sourcing Act). 
 24.18     Subd. 11.  [MOBILE TELECOMMUNICATIONS SERVICE.] "Mobile 
 24.19  telecommunications service," for purposes of this section, means 
 24.20  the same as that term is defined in Section 124(1) of Public Law 
 24.21  106-252 (Mobile Telecommunications Sourcing Act). 
 24.22     Subd. 12.  [PLACE OF PRIMARY USE.] "Place of primary use," 
 24.23  for purposes of this section, means the street address 
 24.24  representative of where the customer's use of the 
 24.25  telecommunications service primarily occurs, which must be the 
 24.26  residential street address or the primary business street 
 24.27  address of the customer.  In the case of mobile 
 24.28  telecommunications services, place of primary use must be within 
 24.29  the licensed service area of the home service provider. 
 24.30     Subd. 13.  [POSTPAID CALLING SERVICE.] "Postpaid calling 
 24.31  service," for purposes of this section, means the 
 24.32  telecommunications service obtained by making a payment on a 
 24.33  call-by-call basis either through the use of a credit card or 
 24.34  payment mechanism such as a bank card, travel card, credit card, 
 24.35  or debit card, or by a charge made to a telephone number that is 
 24.36  not associated with the origination or termination of the 
 25.1   telecommunications service.  A postpaid calling service includes 
 25.2   a telecommunications service that would be a prepaid calling 
 25.3   service except it is not exclusively a telecommunication service.
 25.4      Subd. 14.  [PREPAID CALLING SERVICE.] "Prepaid calling 
 25.5   service," for purposes of this section, means the right to 
 25.6   access exclusively telecommunications services, which must be 
 25.7   paid for in advance and which enables the origination of calls 
 25.8   using an access number or authorization code, whether manually 
 25.9   or electronically dialed, and that is sold in predetermined 
 25.10  units or dollars of which the number declines with use in a 
 25.11  known amount. 
 25.12     Subd. 15.  [PRIVATE COMMUNICATION SERVICES.] "Private 
 25.13  communication services," for purposes of this section, means the 
 25.14  same as that term is defined in section 297A.61, subdivision 26. 
 25.15     Subd. 16.  [SERVICE ADDRESS.] "Service address," for 
 25.16  purposes of this section, means: 
 25.17     (1) the location of the telecommunications equipment to 
 25.18  which a customer's call is charged and from which the call 
 25.19  originates or terminates, regardless of where the call is billed 
 25.20  or paid; 
 25.21     (2) if the location in paragraph (a) is not known, service 
 25.22  address means the origination point of the signal of the 
 25.23  telecommunications services first identified by either the 
 25.24  seller's telecommunications system or in information received by 
 25.25  the seller from its service provider, where the system used to 
 25.26  transport the signals is not that of the seller; or 
 25.27     (3) if the location in paragraphs (a) and (b) is not known, 
 25.28  the service address means the location of the customer's place 
 25.29  of primary use. 
 25.30     Sec. 20.  Minnesota Statutes 2002, section 297A.67, 
 25.31  subdivision 7, is amended to read: 
 25.32     Subd. 7.  [MEDICINES; MEDICAL DEVICES.] (a) Sales of the 
 25.33  following medicines and medical devices are exempt: 
 25.34     (1) Prescribed drugs and medicine, and insulin, intended 
 25.35  for internal or external use, in the cure, mitigation, 
 25.36  treatment, or prevention of illness or disease in human beings 
 26.1   are exempt.  "Prescribed drugs and medicine" includes use, 
 26.2   including over-the-counter drugs or medicine prescribed by a 
 26.3   licensed health care professional. 
 26.4      (b) Nonprescription medicines consisting principally 
 26.5   (determined by the weight of all ingredients) of analgesics that 
 26.6   are approved by the United States Food and Drug Administration 
 26.7   for internal use by human beings are exempt.  For purposes of 
 26.8   this subdivision, "principally" means greater than 50 percent 
 26.9   analgesics by weight.  
 26.10     (c) Prescription glasses, hospital beds, fever 
 26.11  thermometers, reusable (2) single use finger-pricking devices 
 26.12  for the extraction of blood, blood glucose monitoring machines, 
 26.13  and other single use devices and diagnostic agents used in 
 26.14  diagnosing, monitoring, or treating diabetes, and therapeutic 
 26.15  and; 
 26.16     (3) insulin and medical oxygen for human use are also 
 26.17  exempt, regardless of whether it is prescribed or sold 
 26.18  over-the-counter; 
 26.19     (4) prosthetic devices are exempt.  "Therapeutic devices" 
 26.20  means devices that are attached or applied to the human body to 
 26.21  cure, heal, or alleviate injury, illness, or disease, either 
 26.22  directly or by administering a curative agent.  "Prosthetic 
 26.23  devices" means devices that replace injured, diseased, or 
 26.24  missing parts of the human body, either temporarily or 
 26.25  permanently., if prescribed by a licensed health care 
 26.26  professional, or paid for by Medicare or Medicaid; 
 26.27     (5) durable medical equipment for home use only; and 
 26.28     (6) mobility enhancing equipment.  
 26.29     (b) For purposes of this subdivision: 
 26.30     (1) "Drug" means a compound, substance, or preparation, and 
 26.31  any component of a compound, substance, or preparation, other 
 26.32  than food and food ingredients, dietary supplements, or 
 26.33  alcoholic beverages that is: 
 26.34     (i) recognized in the official United States Pharmacopoeia, 
 26.35  official Homeopathic Pharmacopoeia of the United States, or 
 26.36  official National Formulary, and supplement to any of them; 
 27.1      (ii) intended for use in the diagnosis, cure, mitigation, 
 27.2   treatment, or prevention of disease; or 
 27.3      (iii) intended to affect the structure or any function of 
 27.4   the body. 
 27.5      (2) "Durable medical equipment" means equipment, including 
 27.6   repair and replacement parts, but not including mobility 
 27.7   enhancing equipment, that: 
 27.8      (i) can withstand repeated use; 
 27.9      (ii) is primarily and customarily used to serve a medical 
 27.10  purpose; 
 27.11     (iii) generally is not useful to a person in the absence of 
 27.12  illness or injury; and 
 27.13     (iv) is not worn in or on the body. 
 27.14     (3) "Mobility enhancing equipment" means equipment, 
 27.15  including repair and replacement parts, but not including 
 27.16  durable medical equipment, that: 
 27.17     (i) is primarily and customarily used to provide or 
 27.18  increase the ability to move from one place to another and that 
 27.19  is appropriate for use either in a home or a motor vehicle; 
 27.20     (ii) is not generally used by persons with normal mobility; 
 27.21  and 
 27.22     (iii) does not include any motor vehicle or equipment on a 
 27.23  motor vehicle normally provided by a motor vehicle manufacturer. 
 27.24     (4) "Over-the-counter drug" means a drug that contains a 
 27.25  label that identifies the product as a drug as required by Code 
 27.26  of Federal Regulations, title 21, section 201.66.  The label 
 27.27  must include a "drug facts" panel or a statement of the active 
 27.28  ingredients with a list of those ingredients contained in the 
 27.29  compound, substance, or preparation.  Grooming and hygiene 
 27.30  products such as soaps, cleaning solutions, shampoo, toothpaste, 
 27.31  mouthwash, antiperspirants, and suntan lotions and sunscreens 
 27.32  are not "over-the-counter drugs," regardless of whether they 
 27.33  otherwise meet the definition. 
 27.34     (5) "Prescribed" means a direction in the form of an order, 
 27.35  formula, or recipe issued in any form of oral, written, 
 27.36  electronic, or other means of transmission by a duly licensed 
 28.1   health care professional. 
 28.2      (6) "Prosthetic device" means a replacement, corrective, or 
 28.3   supportive device, including repair and replacement parts, worn 
 28.4   on or in the body to: 
 28.5      (i) artificially replace a missing portion of the body; 
 28.6      (ii) prevent or correct physical deformity or malfunction; 
 28.7   or 
 28.8      (iii) support a weak or deformed portion of the body. 
 28.9      Sec. 21.  Minnesota Statutes 2002, section 297A.67, 
 28.10  subdivision 8, is amended to read: 
 28.11     Subd. 8.  [CLOTHING.] (a) Clothing is exempt.  For purposes 
 28.12  of this subdivision, "clothing" means all human wearing apparel 
 28.13  suitable for general use. 
 28.14     (b) Clothing includes, but is not limited to, aprons, 
 28.15  household and shop; athletic supporters; baby receiving 
 28.16  blankets; bathing suits and caps; beach capes and coats; belts 
 28.17  and suspenders; boots; coats and jackets; costumes; children and 
 28.18  adult diapers, including disposable; ear muffs; footlets; formal 
 28.19  wear; garters and garter belts; girdles; gloves and mittens for 
 28.20  general use; hats and caps; hosiery; insoles for shoes; lab 
 28.21  coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 
 28.22  sandals; scarves; shoes and shoe laces; slippers; sneakers; 
 28.23  socks and stockings; steel-toed boots; underwear; uniforms, 
 28.24  athletic and nonathletic; and wedding apparel. 
 28.25     (c) Clothing does not include the following: 
 28.26     (1) belt buckles sold separately; 
 28.27     (2) costume masks sold separately; 
 28.28     (3) patches and emblems sold separately; 
 28.29     (4) sewing equipment and supplies, including but not 
 28.30  limited to, knitting needles, patterns, pins, scissors, sewing 
 28.31  machines, sewing needles, tape measures, and thimbles; 
 28.32     (5) sewing materials that become part of clothing, 
 28.33  including but not limited to, buttons, fabric, lace, thread, 
 28.34  yarn, and zippers; 
 28.35     (6) clothing accessories or equipment; 
 28.36     (7) sports or recreational equipment; and 
 29.1      (8) protective equipment. 
 29.2   Clothing also does not include apparel made from fur if a 
 29.3   uniform definition of "apparel made from fur" is developed by 
 29.4   the member states of the Streamlined Sales and Use Tax Agreement.
 29.5      For purposes of this subdivision, "clothing accessories or 
 29.6   equipment" means incidental items worn on the person or in 
 29.7   conjunction with clothing.  Clothing accessories and equipment 
 29.8   include, but are not limited to, briefcases; cosmetics; hair 
 29.9   notions, including barrettes, hair bows, and hairnets; handbags; 
 29.10  handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 
 29.11  wallets; watches; and wigs and hairpieces.  "Sports or 
 29.12  recreational equipment" means items designed for human use and 
 29.13  worn in conjunction with an athletic or recreational activity 
 29.14  that are not suitable for general use.  Sports and recreational 
 29.15  equipment includes, but is not limited to, ballet and tap shoes; 
 29.16  cleated or spiked athletic shoes; gloves, including, but not 
 29.17  limited to, baseball, bowling, boxing, hockey, and golf gloves; 
 29.18  goggles; hand and elbow guards; life preservers and vests; mouth 
 29.19  guards; roller and ice skates; shin guards; shoulder pads; ski 
 29.20  boots; waders; and wetsuits and fins.  "Protective equipment" 
 29.21  means items for human wear and designed as protection of the 
 29.22  wearer against injury or disease or as protection against damage 
 29.23  or injury of other persons or property but not suitable for 
 29.24  general use.  Protective equipment includes, but is not limited 
 29.25  to, breathing masks; clean room apparel and equipment; ear and 
 29.26  hearing protectors; face shields; finger guards; hard hats; 
 29.27  helmets; paint or dust respirators; protective gloves; safety 
 29.28  glasses and goggles; safety belts; tool belts; and welders 
 29.29  gloves and masks. 
 29.30     Sec. 22.  Minnesota Statutes 2002, section 297A.68, 
 29.31  subdivision 2, is amended to read: 
 29.32     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
 29.33  (a) Materials stored, used, or consumed in industrial production 
 29.34  of personal property intended to be sold ultimately at retail 
 29.35  are exempt, whether or not the item so used becomes an 
 29.36  ingredient or constituent part of the property produced.  
 30.1   Materials that qualify for this exemption include, but are not 
 30.2   limited to, the following: 
 30.3      (1) chemicals, including chemicals used for cleaning food 
 30.4   processing machinery and equipment; 
 30.5      (2) materials, including chemicals, fuels, and electricity 
 30.6   purchased by persons engaged in industrial production to treat 
 30.7   waste generated as a result of the production process; 
 30.8      (3) fuels, electricity, gas, and steam used or consumed in 
 30.9   the production process, except that electricity, gas, or steam 
 30.10  used for space heating, cooling, or lighting is exempt if (i) it 
 30.11  is in excess of the average climate control or lighting for the 
 30.12  production area, and (ii) it is necessary to produce that 
 30.13  particular product; 
 30.14     (4) petroleum products and lubricants; 
 30.15     (5) packaging materials, including returnable containers 
 30.16  used in packaging food and beverage products; 
 30.17     (6) accessory tools, equipment, and other items that are 
 30.18  separate detachable units with an ordinary useful life of less 
 30.19  than 12 months used in producing a direct effect upon the 
 30.20  product; and 
 30.21     (7) the following materials, tools, and equipment used in 
 30.22  metalcasting:  crucibles, thermocouple protection sheaths and 
 30.23  tubes, stalk tubes, refractory materials, molten metal filters 
 30.24  and filter boxes, degassing lances, and base blocks. 
 30.25     (b) This exemption does not include: 
 30.26     (1) machinery, equipment, implements, tools, accessories, 
 30.27  appliances, contrivances and furniture and fixtures, except 
 30.28  those listed in paragraph (a), clause (6); and 
 30.29     (2) petroleum and special fuels used in producing or 
 30.30  generating power for propelling ready-mixed concrete trucks on 
 30.31  the public highways of this state. 
 30.32     (c) Industrial production includes, but is not limited to, 
 30.33  research, development, design or production of any tangible 
 30.34  personal property, manufacturing, processing (other than by 
 30.35  restaurants and consumers) of agricultural products (whether 
 30.36  vegetable or animal), commercial fishing, refining, smelting, 
 31.1   reducing, brewing, distilling, printing, mining, quarrying, 
 31.2   lumbering, generating electricity and, the production of road 
 31.3   building materials, and the research, development, design, or 
 31.4   production of computer software.  Industrial production does not 
 31.5   include painting, cleaning, repairing or similar processing of 
 31.6   property except as part of the original manufacturing process.  
 31.7      Sec. 23.  Minnesota Statutes 2002, section 297A.68, 
 31.8   subdivision 5, is amended to read: 
 31.9      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
 31.10  exempt.  The tax must be imposed and collected as if the rate 
 31.11  under section 297A.62, subdivision 1, applied, and then refunded 
 31.12  in the manner provided in section 297A.75. 
 31.13     "Capital equipment" means machinery and equipment purchased 
 31.14  or leased, and used in this state by the purchaser or lessee 
 31.15  primarily for manufacturing, fabricating, mining, or refining 
 31.16  tangible personal property to be sold ultimately at retail if 
 31.17  the machinery and equipment are essential to the integrated 
 31.18  production process of manufacturing, fabricating, mining, or 
 31.19  refining.  Capital equipment also includes machinery and 
 31.20  equipment used to electronically transmit results retrieved by a 
 31.21  customer of an online computerized data retrieval system. 
 31.22     (b) Capital equipment includes, but is not limited to: 
 31.23     (1) machinery and equipment used to operate, control, or 
 31.24  regulate the production equipment; 
 31.25     (2) machinery and equipment used for research and 
 31.26  development, design, quality control, and testing activities; 
 31.27     (3) environmental control devices that are used to maintain 
 31.28  conditions such as temperature, humidity, light, or air pressure 
 31.29  when those conditions are essential to and are part of the 
 31.30  production process; 
 31.31     (4) materials and supplies used to construct and install 
 31.32  machinery or equipment; 
 31.33     (5) repair and replacement parts, including accessories, 
 31.34  whether purchased as spare parts, repair parts, or as upgrades 
 31.35  or modifications to machinery or equipment; 
 31.36     (6) materials used for foundations that support machinery 
 32.1   or equipment; 
 32.2      (7) materials used to construct and install special purpose 
 32.3   buildings used in the production process; and 
 32.4      (8) ready-mixed concrete trucks in which the ready-mixed 
 32.5   concrete is mixed as part of the delivery process; and 
 32.6      (9) machinery or equipment used for research, development, 
 32.7   design, or production of computer software.  
 32.8      (c) Capital equipment does not include the following: 
 32.9      (1) motor vehicles taxed under chapter 297B; 
 32.10     (2) machinery or equipment used to receive or store raw 
 32.11  materials; 
 32.12     (3) building materials, except for materials included in 
 32.13  paragraph (b), clauses (6) and (7); 
 32.14     (4) machinery or equipment used for nonproduction purposes, 
 32.15  including, but not limited to, the following:  plant security, 
 32.16  fire prevention, first aid, and hospital stations; support 
 32.17  operations or administration; pollution control; and plant 
 32.18  cleaning, disposal of scrap and waste, plant communications, 
 32.19  space heating, cooling, lighting, or safety; 
 32.20     (5) farm machinery and aquaculture production equipment as 
 32.21  defined by section 297A.61, subdivisions 12 and 13; 
 32.22     (6) machinery or equipment purchased and installed by a 
 32.23  contractor as part of an improvement to real property; or 
 32.24     (7) any other item that is not essential to the integrated 
 32.25  process of manufacturing, fabricating, mining, or refining. 
 32.26     (d) For purposes of this subdivision: 
 32.27     (1) "Equipment" means independent devices or tools separate 
 32.28  from machinery but essential to an integrated production 
 32.29  process, including computers and computer software, used in 
 32.30  operating, controlling, or regulating machinery and equipment; 
 32.31  and any subunit or assembly comprising a component of any 
 32.32  machinery or accessory or attachment parts of machinery, such as 
 32.33  tools, dies, jigs, patterns, and molds.  
 32.34     (2) "Fabricating" means to make, build, create, produce, or 
 32.35  assemble components or property to work in a new or different 
 32.36  manner. 
 33.1      (3) "Machinery" means mechanical, electronic, or electrical 
 33.2   devices, including computers and computer software, that are 
 33.3   purchased or constructed to be used for the activities set forth 
 33.4   in paragraph (a), beginning with the removal of raw materials 
 33.5   from inventory through completion of the product, including 
 33.6   packaging of the product. 
 33.7      (4) "Machinery and equipment used for pollution control" 
 33.8   means machinery and equipment used solely to eliminate, prevent, 
 33.9   or reduce pollution resulting from an activity described in 
 33.10  paragraph (a).  
 33.11     (5) "Manufacturing" means an operation or series of 
 33.12  operations where raw materials are changed in form, composition, 
 33.13  or condition by machinery and equipment and which results in the 
 33.14  production of a new article of tangible personal property.  For 
 33.15  purposes of this subdivision, "manufacturing" includes the 
 33.16  generation of electricity or steam to be sold at retail. 
 33.17     (6) "Mining" means the extraction of minerals, ores, stone, 
 33.18  or peat. 
 33.19     (7) "Online data retrieval system" means a system whose 
 33.20  cumulation of information is equally available and accessible to 
 33.21  all its customers. 
 33.22     (8) "Primarily" means machinery and equipment used 50 
 33.23  percent or more of the time in an activity described in 
 33.24  paragraph (a). 
 33.25     (9) "Refining" means the process of converting a natural 
 33.26  resource to a product, including the treatment of water to be 
 33.27  sold at retail. 
 33.28     Sec. 24.  Minnesota Statutes 2002, section 297A.68, 
 33.29  subdivision 36, is amended to read: 
 33.30     Subd. 36.  [DELIVERY OR DISTRIBUTION CHARGES; PRINTED 
 33.31  MATERIALS DIRECT MAIL.] Charges for the delivery or distribution 
 33.32  of printed materials, including individual account 
 33.33  information, direct mail are exempt if (1) the charges are 
 33.34  separately stated, (2) the delivery or distribution is to a mass 
 33.35  audience or to a mailing list provided at the direction of the 
 33.36  customer, and (3) the cost of the materials is not billed 
 34.1   directly to the recipients. 
 34.2      Sec. 25.  Minnesota Statutes 2002, section 297A.72, 
 34.3   subdivision 1, is amended to read: 
 34.4      Subdivision 1.  [DUTY OF RETAILER.] A fully completed 
 34.5   exemption certificate conclusively relieves the retailer from 
 34.6   collecting and remitting the tax if taken from the purchaser at 
 34.7   the time of sale.  This relief from liability does not apply to 
 34.8   a seller who fraudulently fails to collect the tax or solicits 
 34.9   purchasers to participate in the unlawful claim of an exemption. 
 34.10     Sec. 26.  Minnesota Statutes 2002, section 297A.81, is 
 34.11  amended to read: 
 34.12     297A.81 [UNCOLLECTIBLE DEBTS; OFFSET AGAINST OTHER TAXES.] 
 34.13     Subdivision 1.  [GENERAL.] The taxpayer may offset against 
 34.14  the taxes payable for any reporting period the amount of taxes 
 34.15  imposed by this chapter previously paid as a result of any 
 34.16  transaction the consideration for which became a debt owed to 
 34.17  the taxpayer that became uncollectible during the reporting 
 34.18  period, but only in proportion to the portion of the debt that 
 34.19  became uncollectible.  Section 289A.40, subdivision 2, applies 
 34.20  to an offset under this section. 
 34.21     Subd. 2.  [MANNER OF ALLOWING DEDUCTION FOR UNCOLLECTIBLE 
 34.22  DEBT.] (a) Uncollectible debt is allowed as a deduction in the 
 34.23  manner provided in this subdivision. 
 34.24     (b) If the uncollectible debt arose with respect to a sale 
 34.25  required to be included in gross receipts, subject to a tax 
 34.26  imposed under chapter 297A, the entire amount of the debt 
 34.27  remaining uncollected is allowed as a deduction. 
 34.28     (c) If the uncollectible debt arose with respect to a sale 
 34.29  partly subject to the tax imposed under chapter 297A and partly 
 34.30  exempt, the amount of the uncollectible debt allowed as a 
 34.31  deduction is the amount derived by multiplying the uncollectible 
 34.32  debt by the percentage that the taxable sale bears to the total 
 34.33  sales. 
 34.34     (d) If the uncollectible debt arose with respect to two or 
 34.35  more sales made at successive intervals, payments made before 
 34.36  the date the debt became uncollectible must be applied first to 
 35.1   the earliest sale upon which there is an unpaid balance, and to 
 35.2   following sales in successive order. 
 35.3      (e) If the books and records of the taxpayer claiming the 
 35.4   bad debt allowance support an allocation of the bad debts among 
 35.5   the member states of the streamlined sales and use tax 
 35.6   agreement, such an allocation shall be allowed. 
 35.7      Subd. 3.  [CERTIFIED SERVICE PROVIDER.] A certified service 
 35.8   provider, as defined in section 297A.995, subdivision 2, on 
 35.9   behalf of a taxpayer who is its client, may offset against taxes 
 35.10  as provided by this section. 
 35.11     Sec. 27.  Minnesota Statutes 2002, section 297A.99, 
 35.12  subdivision 5, is amended to read: 
 35.13     Subd. 5.  [TAX RATE.] (a) The tax rate is as specified in 
 35.14  the special law authorization and as imposed by the political 
 35.15  subdivision. 
 35.16     (b) The full political subdivision rate applies to any 
 35.17  sales that are taxed at a state rate less than or more than the 
 35.18  state general sales and use tax rate., and the political 
 35.19  subdivision must not have more than one local sales tax rate or 
 35.20  more than one local use tax rate.  This paragraph does not apply 
 35.21  to sales or use taxes imposed on electricity, piped natural or 
 35.22  artificial gas, or other heating fuels delivered by the seller, 
 35.23  or the retail sale or transfer of motor vehicles, aircraft, 
 35.24  watercraft, modular homes, manufactured homes, or mobile homes. 
 35.25     Sec. 28.  Minnesota Statutes 2002, section 297A.99, 
 35.26  subdivision 10, is amended to read: 
 35.27     Subd. 10.  [USE OF ZIP CODE IN DETERMINING LOCATION OF 
 35.28  SALE.] To determine whether to impose the local tax, the 
 35.29  retailer may use zip codes if the zip code area is entirely 
 35.30  within the political subdivision.  When a zip code area is not 
 35.31  entirely within a political subdivision, the retailer shall not 
 35.32  collect the local tax if the purchaser notifies the retailer 
 35.33  that the purchaser's delivery address is outside of the 
 35.34  political subdivision, unless the retailer verifies that the 
 35.35  delivery address is in the political subdivision using a means 
 35.36  other than the zip code.  The lowest combined tax rate imposed 
 36.1   in the zip code area applies if the area includes more than one 
 36.2   tax rate in any level of taxing jurisdictions.  If a nine-digit 
 36.3   zip code designation is not available for a street address or if 
 36.4   a seller is unable to determine the nine-digit zip code 
 36.5   designation of a purchaser after exercising due diligence to 
 36.6   determine the designation, the seller may apply the rate for the 
 36.7   five-digit zip code area.  For the purposes of this subdivision, 
 36.8   there is a rebuttable presumption that a seller has exercised 
 36.9   due diligence if the seller has attempted to determine the 
 36.10  nine-digit zip code designation by utilizing software approved 
 36.11  by the governing board that makes this designation from the 
 36.12  street address and the five-digit zip code of the purchaser. 
 36.13  Notwithstanding subdivision 13, this subdivision applies to all 
 36.14  local sales taxes without regard to the date of 
 36.15  authorization.  This subdivision does not apply when the 
 36.16  purchased product is received by the purchaser at the business 
 36.17  location of the seller. 
 36.18     Sec. 29.  Minnesota Statutes 2002, section 297A.99, 
 36.19  subdivision 12, is amended to read: 
 36.20     Subd. 12.  [EFFECTIVE DATES; NOTIFICATION.] (a) A political 
 36.21  subdivision may impose a tax under this section starting only on 
 36.22  the first day of a calendar quarter.  A political subdivision 
 36.23  may repeal a tax under this section stopping only on the last 
 36.24  day of a calendar quarter. 
 36.25     (b) The political subdivision shall notify the commissioner 
 36.26  of revenue at least 90 days before imposing, changing the rate 
 36.27  of, or repealing a tax under this section. 
 36.28     (c) The political subdivision shall change the rate of tax 
 36.29  imposed under this section starting only on the first day of a 
 36.30  calendar quarter, and only after the commissioner has notified 
 36.31  sellers at least 60 days prior to the change. 
 36.32     (d) The political subdivision shall apply the rate change 
 36.33  for sales tax imposed under this section to purchases from 
 36.34  printed catalogs, wherein the purchaser computed the tax based 
 36.35  upon local tax rates published in the catalog, starting only on 
 36.36  the first day of a calendar quarter, and only after the 
 37.1   commissioner has notified sellers at least 120 days prior to the 
 37.2   change. 
 37.3      (e) The political subdivision shall apply local 
 37.4   jurisdiction boundary changes to taxes imposed under this 
 37.5   section starting only on the first day of a calendar quarter, 
 37.6   and only after the commissioner has notified sellers at least 60 
 37.7   days prior to the change. 
 37.8      Sec. 30.  Minnesota Statutes 2002, section 297A.995, is 
 37.9   amended by adding a subdivision to read: 
 37.10     Subd. 10.  [RELIEF FROM CERTAIN LIABILITY.] Notwithstanding 
 37.11  subdivision 9, sellers and certified service providers are 
 37.12  relieved from liability to the state for having charged and 
 37.13  collected the incorrect amount of sales or use tax resulting 
 37.14  from the seller or certified service provider (1) relying on 
 37.15  erroneous data provided by this state on tax rates, boundaries, 
 37.16  or taxing jurisdiction assignments, or (2) relying on erroneous 
 37.17  data provided by the state in its taxability matrix concerning 
 37.18  the taxability of products and services. 
 37.19     Sec. 31.  [REPEALER.] 
 37.20     (a) Minnesota Statutes 2002, section 297A.61, subdivisions 
 37.21  14 and 15, are repealed. 
 37.22     (b) Minnesota Statutes 2002, section 297A.69, subdivision 
 37.23  5, is repealed effective January 1, 2006. 
 37.24     Sec. 32.  [EFFECTIVE DATE.] 
 37.25     Sections 1 to 8, and sections 10 to 31, paragraph (a), are 
 37.26  effective for sales and purchases made on or after January 1, 
 37.27  2004.  Section 9 is effective for leases or rentals entered into 
 37.28  on or after January 1, 2004.