HF 1715

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; sales and use; making the 
  1.3             capital equipment exemption an up-front exemption; 
  1.4             amending Minnesota Statutes 2002, section 297A.75, 
  1.5             subdivisions 1, 2, 3; Minnesota Statutes 2003 
  1.6             Supplement, sections 289A.50, subdivision 2a; 297A.68, 
  1.7             subdivision 5. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 2003 Supplement, section 
  1.10  289A.50, subdivision 2a, is amended to read: 
  1.11     Subd. 2a.  [REFUND OF SALES TAX TO PURCHASERS.] (a) If a 
  1.12  vendor has collected from a purchaser a tax on a transaction 
  1.13  that is not subject to the tax imposed by chapter 297A, the 
  1.14  purchaser may apply directly to the commissioner for a refund 
  1.15  under this section if: 
  1.16     (1) the purchaser is currently registered or was registered 
  1.17  during the period of the claim, to collect and remit the sales 
  1.18  tax or to remit the use tax; and 
  1.19     (2) either 
  1.20     (i) the amount of the refund to be applied for exceeds 
  1.21  $500, or 
  1.22     (ii) the amount of the refund to be applied for does not 
  1.23  exceed $500, but the purchaser also applies for a capital 
  1.24  equipment claim at the same time, and the total of the two 
  1.25  refunds exceeds $500. 
  1.26     (b) The purchaser may not file more than two applications 
  2.1   for refund under this subdivision in a calendar year. 
  2.2      [EFFECTIVE DATE.] This section is effective for sales and 
  2.3   purchases made after June 30, 2004. 
  2.4      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  2.5   297A.68, subdivision 5, is amended to read: 
  2.6      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
  2.7   exempt.  The tax must be imposed and collected as if the rate 
  2.8   under section 297A.62, subdivision 1, applied, and then refunded 
  2.9   in the manner provided in section 297A.75. 
  2.10     "Capital equipment" means machinery and equipment purchased 
  2.11  or leased, and used in this state by the purchaser or lessee 
  2.12  primarily for manufacturing, fabricating, mining, or refining 
  2.13  tangible personal property to be sold ultimately at retail if 
  2.14  the machinery and equipment are essential to the integrated 
  2.15  production process of manufacturing, fabricating, mining, or 
  2.16  refining.  Capital equipment also includes machinery and 
  2.17  equipment used to electronically transmit results retrieved by a 
  2.18  customer of an on-line computerized data retrieval system. 
  2.19     (b) Capital equipment includes, but is not limited to: 
  2.20     (1) machinery and equipment used to operate, control, or 
  2.21  regulate the production equipment; 
  2.22     (2) machinery and equipment used for research and 
  2.23  development, design, quality control, and testing activities; 
  2.24     (3) environmental control devices that are used to maintain 
  2.25  conditions such as temperature, humidity, light, or air pressure 
  2.26  when those conditions are essential to and are part of the 
  2.27  production process; 
  2.28     (4) materials and supplies used to construct and install 
  2.29  machinery or equipment; 
  2.30     (5) repair and replacement parts, including accessories, 
  2.31  whether purchased as spare parts, repair parts, or as upgrades 
  2.32  or modifications to machinery or equipment; 
  2.33     (6) materials used for foundations that support machinery 
  2.34  or equipment; 
  2.35     (7) materials used to construct and install special purpose 
  2.36  buildings used in the production process; 
  3.1      (8) ready-mixed concrete equipment in which the ready-mixed 
  3.2   concrete is mixed as part of the delivery process regardless if 
  3.3   mounted on a chassis and leases of ready-mixed concrete trucks; 
  3.4   and 
  3.5      (9) machinery or equipment used for research, development, 
  3.6   design, or production of computer software.  
  3.7      (c) Capital equipment does not include the following: 
  3.8      (1) motor vehicles taxed under chapter 297B; 
  3.9      (2) machinery or equipment used to receive or store raw 
  3.10  materials; 
  3.11     (3) building materials, except for materials included in 
  3.12  paragraph (b), clauses (6) and (7); 
  3.13     (4) machinery or equipment used for nonproduction purposes, 
  3.14  including, but not limited to, the following:  plant security, 
  3.15  fire prevention, first aid, and hospital stations; support 
  3.16  operations or administration; pollution control; and plant 
  3.17  cleaning, disposal of scrap and waste, plant communications, 
  3.18  space heating, cooling, lighting, or safety; 
  3.19     (5) farm machinery and aquaculture production equipment as 
  3.20  defined by section 297A.61, subdivisions 12 and 13; 
  3.21     (6) machinery or equipment purchased and installed by a 
  3.22  contractor as part of an improvement to real property; or 
  3.23     (7) any other item that is not essential to the integrated 
  3.24  process of manufacturing, fabricating, mining, or refining. 
  3.25     (d) For purposes of this subdivision: 
  3.26     (1) "Equipment" means independent devices or tools separate 
  3.27  from machinery but essential to an integrated production 
  3.28  process, including computers and computer software, used in 
  3.29  operating, controlling, or regulating machinery and equipment; 
  3.30  and any subunit or assembly comprising a component of any 
  3.31  machinery or accessory or attachment parts of machinery, such as 
  3.32  tools, dies, jigs, patterns, and molds.  
  3.33     (2) "Fabricating" means to make, build, create, produce, or 
  3.34  assemble components or property to work in a new or different 
  3.35  manner. 
  3.36     (3) "Integrated production process" means a process or 
  4.1   series of operations through which tangible personal property is 
  4.2   manufactured, fabricated, mined, or refined.  For purposes of 
  4.3   this clause, (i) manufacturing begins with the removal of raw 
  4.4   materials from inventory and ends when the last process prior to 
  4.5   loading for shipment has been completed; (ii) fabricating begins 
  4.6   with the removal from storage or inventory of the property to be 
  4.7   assembled, processed, altered, or modified and ends with the 
  4.8   creation or production of the new or changed product; (iii) 
  4.9   mining begins with the removal of overburden from the site of 
  4.10  the ores, minerals, stone, peat deposit, or surface materials 
  4.11  and ends when the last process before stockpiling is completed; 
  4.12  and (iv) refining begins with the removal from inventory or 
  4.13  storage of a natural resource and ends with the conversion of 
  4.14  the item to its completed form. 
  4.15     (4) "Machinery" means mechanical, electronic, or electrical 
  4.16  devices, including computers and computer software, that are 
  4.17  purchased or constructed to be used for the activities set forth 
  4.18  in paragraph (a), beginning with the removal of raw materials 
  4.19  from inventory through completion of the product, including 
  4.20  packaging of the product. 
  4.21     (5) "Machinery and equipment used for pollution control" 
  4.22  means machinery and equipment used solely to eliminate, prevent, 
  4.23  or reduce pollution resulting from an activity described in 
  4.24  paragraph (a).  
  4.25     (6) "Manufacturing" means an operation or series of 
  4.26  operations where raw materials are changed in form, composition, 
  4.27  or condition by machinery and equipment and which results in the 
  4.28  production of a new article of tangible personal property.  For 
  4.29  purposes of this subdivision, "manufacturing" includes the 
  4.30  generation of electricity or steam to be sold at retail. 
  4.31     (7) "Mining" means the extraction of minerals, ores, stone, 
  4.32  or peat. 
  4.33     (8) "On-line data retrieval system" means a system whose 
  4.34  cumulation of information is equally available and accessible to 
  4.35  all its customers. 
  4.36     (9) "Primarily" means machinery and equipment used 50 
  5.1   percent or more of the time in an activity described in 
  5.2   paragraph (a). 
  5.3      (10) "Refining" means the process of converting a natural 
  5.4   resource to an intermediate or finished product, including the 
  5.5   treatment of water to be sold at retail. 
  5.6      [EFFECTIVE DATE.] This section is effective for sales and 
  5.7   purchases made after June 30, 2004. 
  5.8      Sec. 3.  Minnesota Statutes 2002, section 297A.75, 
  5.9   subdivision 1, is amended to read: 
  5.10     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
  5.11  receipts from the sale of the following exempt items must be 
  5.12  imposed and collected as if the sale were taxable and the rate 
  5.13  under section 297A.62, subdivision 1, applied.  The exempt items 
  5.14  include: 
  5.15     (1) capital equipment exempt under section 297A.68, 
  5.16  subdivision 5; 
  5.17     (2) building materials for an agricultural processing 
  5.18  facility exempt under section 297A.71, subdivision 13; 
  5.19     (3) (2) building materials for mineral production 
  5.20  facilities exempt under section 297A.71, subdivision 14; 
  5.21     (4) (3) building materials for correctional facilities 
  5.22  under section 297A.71, subdivision 3; 
  5.23     (5) (4) building materials used in a residence for disabled 
  5.24  veterans exempt under section 297A.71, subdivision 11; 
  5.25     (6) (5) chair lifts, ramps, elevators, and associated 
  5.26  building materials exempt under section 297A.71, subdivision 12; 
  5.27     (7) (6) building materials for the Long Lake Conservation 
  5.28  Center exempt under section 297A.71, subdivision 17; 
  5.29     (8) (7) materials, supplies, fixtures, furnishings, and 
  5.30  equipment for a county law enforcement and family service center 
  5.31  under section 297A.71, subdivision 26; and 
  5.32     (9) (8) materials and supplies for qualified low-income 
  5.33  housing under section 297A.71, subdivision 23. 
  5.34     [EFFECTIVE DATE.] This section is effective for sales and 
  5.35  purchases made after June 30, 2004. 
  5.36     Sec. 4.  Minnesota Statutes 2002, section 297A.75, 
  6.1   subdivision 2, is amended to read: 
  6.2      Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
  6.3   forms prescribed by the commissioner, a refund equal to the tax 
  6.4   paid on the gross receipts of the exempt items must be paid to 
  6.5   the applicant.  Only the following persons may apply for the 
  6.6   refund: 
  6.7      (1) for subdivision 1, clauses (1) to (3) and (2), the 
  6.8   applicant must be the purchaser; 
  6.9      (2) for subdivision 1, clauses (4) (3), (7) (6), 
  6.10  and (8) (7), the applicant must be the governmental subdivision; 
  6.11     (3) for subdivision 1, clause (5) (4), the applicant must 
  6.12  be the recipient of the benefits provided in United States Code, 
  6.13  title 38, chapter 21; 
  6.14     (4) for subdivision 1, clause (6) (5), the applicant must 
  6.15  be the owner of the homestead property; and 
  6.16     (5) for subdivision 1, clause (9) (8), the owner of the 
  6.17  qualified low-income housing project. 
  6.18     [EFFECTIVE DATE.] This section is effective for sales and 
  6.19  purchases made after June 30, 2004. 
  6.20     Sec. 5.  Minnesota Statutes 2002, section 297A.75, 
  6.21  subdivision 3, is amended to read: 
  6.22     Subd. 3.  [APPLICATION.] (a) The application must include 
  6.23  sufficient information to permit the commissioner to verify the 
  6.24  tax paid.  If the tax was paid by a contractor, subcontractor, 
  6.25  or builder, under subdivision 1, clause (3), (4), (5), (6), (7), 
  6.26  or (8), or (9), the contractor, subcontractor, or builder must 
  6.27  furnish to the refund applicant a statement including the cost 
  6.28  of the exempt items and the taxes paid on the items unless 
  6.29  otherwise specifically provided by this subdivision.  The 
  6.30  provisions of sections 289A.40 and 289A.50 apply to refunds 
  6.31  under this section. 
  6.32     (b) An applicant may not file more than two applications 
  6.33  per calendar year for refunds for taxes paid on capital 
  6.34  equipment exempt under section 297A.68, subdivision 5.  
  6.35     [EFFECTIVE DATE.] This section is effective for sales and 
  6.36  purchases made after June 30, 2004.