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HF 2019

as introduced - 89th Legislature (2015 - 2016) Posted on 04/08/2015 08:02am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; sales and use tax; providing an exemption for an annual city
celebration; amending Minnesota Statutes 2014, section 297A.70, by adding a
subdivision.

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

Section 1.

Minnesota Statutes 2014, section 297A.70, is amended by adding a
subdivision to read:


new text begin Subd. 20. new text end

new text begin City celebrations. new text end

new text begin (a) Sales of tangible personal property or services and
admissions charges to a city-designated annual city celebration designed to promote
community spirit and cooperation are exempt. Exempt sales include the sale of prepared
food, candy, soft drinks, malt liquor and wine as defined in section 340.101, subdivision
19, at the event. The governing board of a statutory or home rule charter city with a
population of less than 10,000 may designate one event in each calendar year as the annual
city celebration that qualifies for the exemption under this subdivision. For a celebration
to qualify, it must meet the following requirements:
new text end

new text begin (1) the event must be held on consecutive days, not to exceed five days in total;
new text end

new text begin (2) the event must be run either by the city or by a nonprofit organization designated
by the city;
new text end

new text begin (3) all gross receipts of the event are recorded as such, in accordance with generally
accepted accounting practice on the books of the city or the designated nonprofit
organization; and
new text end

new text begin (4) the entire proceeds, less the necessary expenses, will be distributed to one or
more of the following for charitable, educational, civic, or governmental purposes:
new text end

new text begin (i) the city's general fund;
new text end

new text begin (ii) a nonprofit 501(c)(3) organization to promote its primary mission; or
new text end

new text begin (iii) a nonprofit 501(c)(4) organization to promote its primary mission, however, no
revenues from this event may be used by the organization for lobbying or political activities.
new text end

new text begin (b) This exemption is limited in the following manner:
new text end

new text begin (1) it does not apply to admission charges for events involving bingo or other
gambling activities or to charges for use of amusement devices involving bingo or other
gambling activities;
new text end

new text begin (2) all gross receipts are taxable if the profits are not used solely and exclusively for
charitable, educational, civic, or governmental purposes; and
new text end

new text begin (3) it does not apply unless the city or designated nonprofit organization keeps a
separate accounting record, including receipts and disbursements for all events included
in the celebration that documents all deductions from gross receipts with receipts and
other records.
new text end

new text begin
(c) For purposes of this subdivision, "nonprofit organization" means any unit of
government, corporation, society, association, foundation, or institution organized and
operated for charitable, religious, educational, civic, fraternal, and senior citizens' or
veterans' purposes, no part of the net earnings of which inures to the benefit of a private
individual.
new text end

new text begin (d) For purposes of this subdivision, "city celebration" means any of the following
activities or combination of activities of limited duration, not regularly carried out in the
normal course of business, that attract patrons for community, social, and entertainment
purposes, such as parades, auctions, bake sales, ice cream socials, block parties, carnivals,
competitions, concerts, concession stands, craft sales, bazaars, dinners, dances, fairs,
fashion shows, festivals, galas, special event workshops, sporting activities such as
marathons and tournaments, and similar events. A city celebration does not include the
operation of a regular place of business in which services are provided or sales are made
during regular hours such as bookstores, thrift stores, gift shops, restaurants, ongoing
Internet sales, or regularly scheduled activities carried out in the normal course of business.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2015.
new text end

Sec. 2. new text beginAMNESTY; CERTAIN LOCAL FESTIVALS.
new text end

new text begin A nonprofit organization that organized and ran a city celebration on behalf of
a group of nonprofit organizations, of which all of the net proceeds were distributed to
a combination of 501(c)(3) and 501(c)(4) nonprofit organizations that use the proceeds
primarily for charitable, educational, civic, or governmental purposes shall not be liable
for any state or local uncollected and unpaid sales and use tax, penalties, or interest
incurred in running the city celebration, for celebrations held before January 1, 2015. The
amnesty in this section does not apply to sales and use taxes already paid or remitted to the
state or to sales taxes already collected by the organization. The amnesty does apply to an
audit of an organization as long as the audit is not finally resolved.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end