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HF 1807

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/14/2005

Current Version - as introduced

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A bill for an act
relating to taxation; making the capital equipment
exemption an up front exemption in two phases;
amending Minnesota Statutes 2004, sections 297A.68,
subdivision 5; 297A.75, subdivisions 1, 3.

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

Section 1.

Minnesota Statutes 2004, section 297A.68,
subdivision 5, is amended to read:


Subd. 5.

Capital equipment.

(a) Capital equipment is
exemptdeleted text begin .deleted text end new text begin as follows:
new text end

new text begin (1) For sales and purchases of repair and replacement parts
under paragraph (b), clause (5), the tax is not imposed.
new text end

new text begin (2) For all other sales and purchases of capital equipment
(i) if the sales are made before July 1, 2007,
new text end the tax must be
imposed and collected as if the rate under section 297A.62,
subdivision 1, applied, and then refunded in the manner provided
in section 297A.75new text begin , and (ii) if the sales are made on or after
July 1, 2007, the tax is not imposed
new text end .

"Capital equipment" means machinery and equipment purchased
or leased, and used in this state by the purchaser or lessee
primarily for manufacturing, fabricating, mining, or refining
tangible personal property to be sold ultimately at retail if
the machinery and equipment are essential to the integrated
production process of manufacturing, fabricating, mining, or
refining. Capital equipment also includes machinery and
equipment used to electronically transmit results retrieved by a
customer of an on-line computerized data retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or
regulate the production equipment;

(2) machinery and equipment used for research and
development, design, quality control, and testing activities;

(3) environmental control devices that are used to maintain
conditions such as temperature, humidity, light, or air pressure
when those conditions are essential to and are part of the
production process;

(4) materials and supplies used to construct and install
machinery or equipment;

(5) repair and replacement parts, including accessories,
whether purchased as spare parts, repair parts, or as upgrades
or modifications to machinery or equipment;

(6) materials used for foundations that support machinery
or equipment;

(7) materials used to construct and install special purpose
buildings used in the production process;

(8) ready-mixed concrete equipment in which the ready-mixed
concrete is mixed as part of the delivery process regardless if
mounted on a chassis and leases of ready-mixed concrete trucks;
and

(9) machinery or equipment used for research, development,
design, or production of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw
materials;

(3) building materials, except for materials included in
paragraph (b), clauses (6) and (7);

(4) machinery or equipment used for nonproduction purposes,
including, but not limited to, the following: plant security,
fire prevention, first aid, and hospital stations; support
operations or administration; pollution control; and plant
cleaning, disposal of scrap and waste, plant communications,
space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as
defined by section 297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a
contractor as part of an improvement to real property; or

(7) any other item that is not essential to the integrated
process of manufacturing, fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate
from machinery but essential to an integrated production
process, including computers and computer software, used in
operating, controlling, or regulating machinery and equipment;
and any subunit or assembly comprising a component of any
machinery or accessory or attachment parts of machinery, such as
tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or
assemble components or property to work in a new or different
manner.

(3) "Integrated production process" means a process or
series of operations through which tangible personal property is
manufactured, fabricated, mined, or refined. For purposes of
this clause, (i) manufacturing begins with the removal of raw
materials from inventory and ends when the last process prior to
loading for shipment has been completed; (ii) fabricating begins
with the removal from storage or inventory of the property to be
assembled, processed, altered, or modified and ends with the
creation or production of the new or changed product; (iii)
mining begins with the removal of overburden from the site of
the ores, minerals, stone, peat deposit, or surface materials
and ends when the last process before stockpiling is completed;
and (iv) refining begins with the removal from inventory or
storage of a natural resource and ends with the conversion of
the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical
devices, including computers and computer software, that are
purchased or constructed to be used for the activities set forth
in paragraph (a), beginning with the removal of raw materials
from inventory through completion of the product, including
packaging of the product.

(5) "Machinery and equipment used for pollution control"
means machinery and equipment used solely to eliminate, prevent,
or reduce pollution resulting from an activity described in
paragraph (a).

(6) "Manufacturing" means an operation or series of
operations where raw materials are changed in form, composition,
or condition by machinery and equipment and which results in the
production of a new article of tangible personal property. For
purposes of this subdivision, "manufacturing" includes the
generation of electricity or steam to be sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone,
or peat.

(8) "On-line data retrieval system" means a system whose
cumulation of information is equally available and accessible to
all its customers.

(9) "Primarily" means machinery and equipment used 50
percent or more of the time in an activity described in
paragraph (a).

(10) "Refining" means the process of converting a natural
resource to an intermediate or finished product, including the
treatment of water to be sold at retail.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and
purchases made after June 30, 2005.
new text end

Sec. 2.

Minnesota Statutes 2004, section 297A.75,
subdivision 1, is amended to read:


Subdivision 1.

Tax collected.

The tax on the gross
receipts from the sale of the following exempt items must be
imposed and collected as if the sale were taxable and the rate
under section 297A.62, subdivision 1, applied. The exempt items
include:

(1) capital equipment deleted text begin exempt deleted text end new text begin on which the tax is imposed
and collected
new text end under section 297A.68, subdivision 5;

(2) building materials for an agricultural processing
facility exempt under section 297A.71, subdivision 13;

(3) building materials for mineral production facilities
exempt under section 297A.71, subdivision 14;

(4) building materials for correctional facilities under
section 297A.71, subdivision 3;

(5) building materials used in a residence for disabled
veterans exempt under section 297A.71, subdivision 11;

(6) chair lifts, ramps, elevators, and associated building
materials exempt under section 297A.71, subdivision 12;

(7) building materials for the Long Lake Conservation
Center exempt under section 297A.71, subdivision 17;

(8) materials, supplies, fixtures, furnishings, and
equipment for a county law enforcement and family service center
under section 297A.71, subdivision 26; and

(9) materials and supplies for qualified low-income housing
under section 297A.71, subdivision 23.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and
purchases made after June 30, 2005.
new text end

Sec. 3.

Minnesota Statutes 2004, section 297A.75,
subdivision 3, is amended to read:


Subd. 3.

Application.

(a) The application must include
sufficient information to permit the commissioner to verify the
tax paid. If the tax was paid by a contractor, subcontractor,
or builder, under subdivision 1, clause (4), (5), (6), (7), (8),
or (9), the contractor, subcontractor, or builder must furnish
to the refund applicant a statement including the cost of the
exempt items and the taxes paid on the items unless otherwise
specifically provided by this subdivision. The provisions of
sections 289A.40 and 289A.50 apply to refunds under this section.

(b) An applicant may not file more than two applications
per calendar year for refunds for taxes paid on capital
equipment deleted text begin exempt deleted text end new text begin on which the tax is imposed and collected new text end under
section 297A.68, subdivision 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and
purchases made after June 30, 2005.
new text end