HF 2230

as introduced - 93rd Legislature (2023 - 2024) Posted on 05/11/2023 09:43pm

A bill for an act
relating to taxation; sales and use; modifying exemptions for suite licenses and
privilege of admission; amending Minnesota Statutes 2022, sections 297A.61,
subdivision 4; 297A.67, subdivisions 35, 38; 297A.68, by adding a subdivision;
297A.79.

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

Section 1.

Minnesota Statutes 2022, section 297A.61, subdivision 4, is amended to read:

Subd. 4.

Retail sale.

(a) A "retail sale" means:

(1) any sale, lease, or rental of tangible personal property for any purpose, other than
resale, sublease, or subrent of items by the purchaser in the normal course of business as
defined in subdivision 21; and

(2) any sale of a service enumerated in subdivision 3, for any purpose other than resale
by the purchaser in the normal course of business as defined in subdivision 21.

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

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

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

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

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

(g) A sale of tangible personal property that is awarded as prizes is a retail sale and is
not considered a sale of property for resale.

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

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

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

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

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

(m) A sale of a bundled transaction in which one or more of the products included in
the bundle is a taxable product is a retail sale, except that if one of the products is a
telecommunication service, ancillary service, Internet access, deleted text begin or deleted text end audio or video programming
service, new text begin a suite license exempt under section 297A.67, subdivision 35, or a right to purchase
season tickets to collegiate events exempt under section 297A.67, subdivision 38, new text end and the
seller has maintained books and records identifying through reasonable and verifiable
standards the portions of the price that are attributable to the distinct and separately
identifiable products, then the products are not considered part of a bundled transaction.
For purposes of this paragraph:

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

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

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

(n) A sale of motor vehicle repair paint and materials by a motor vehicle repair or body
shop business is a retail sale and the sales tax is imposed on the gross receipts from the retail
sale of the paint and materials. The motor vehicle repair or body shop that purchases motor
vehicle repair paint and motor vehicle repair materials for resale must either:

(1) separately state each item of paint and each item of materials, and the sales price of
each, on the invoice to the purchaser; or

(2) in order to calculate the sales price of the paint and materials, use a method which
estimates the amount and monetary value of the paint and materials used in the repair of
the motor vehicle by multiplying the number of labor hours by a rate of consideration for
the paint and materials used in the repair of the motor vehicle following industry standard
practices that fairly calculate the gross receipts from the retail sale of the motor vehicle
repair paint and motor vehicle repair materials. An industry standard practice fairly calculates
the gross receipts if the sales price of the paint and materials used or consumed in the repair
of a motor vehicle equals or exceeds the purchase price paid by the motor vehicle repair or
body shop business. Under this clause, the invoice must either separately state the "paint
and materials" as a single taxable item, or separately state "paint" as a taxable item and
"materials" as a taxable item. This clause does not apply to wholesale transactions at an
auto auction facility.

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

(p) A payment made to a cooperative electric association or public utility as a contribution
in aid of construction is a contract for improvement to real property and is not a retail sale.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after June 30, 2022.
new text end

Sec. 2.

Minnesota Statutes 2022, section 297A.67, subdivision 35, is amended to read:

Subd. 35.

Suite licenses.

The sale of the privilege of admission under section 297A.61,
subdivision 3, paragraph (g), clause (1), to a place of amusement or athletic event does not
include consideration paid for a license to use a private suite, private skybox, or private box
seat, and the sale of the license is exempt provided that: (1) the lessee may use the private
suite, private skybox, or private box seat by mutual arrangement with the lessor on days
when there is no amusement or athletic event; and (2) the sales price for the privilege of
admission deleted text begin is separately stated and deleted text end is equal to or greater than the highest priced general
admission ticket for the closest seat not in the private suite, private skybox, or private box
seat.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after June 30, 2022.
new text end

Sec. 3.

Minnesota Statutes 2022, section 297A.67, subdivision 38, is amended to read:

Subd. 38.

Season ticket purchasing rights to collegiate events.

The sale of a right to
purchase the privilege of admission to a college or university athletic event in a preferred
viewing location for a season of a particular athletic event is exempt provided that:

(1) the consideration paid for the right to purchase is used entirely to support student
scholarships, wellness, and academic costs; new text begin and
new text end

deleted text begin (2) the consideration paid for the right to purchase is separately stated from the admission
price; and
deleted text end

deleted text begin (3) deleted text end new text begin (2) new text end the admission price is equal to or greater than the highest priced general admission
ticket for the closest seat not in the preferred viewing location.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after June 30, 2022.
new text end

Sec. 4.

Minnesota Statutes 2022, section 297A.68, is amended by adding a subdivision to
read:

new text begin Subd. 46. new text end

new text begin Amenities included with the privilege of admission. new text end

new text begin (a) The sale of amenities,
including but not limited to food and beverages, parking services, and promotional items,
that are included in the sales price of the privilege of admission to athletic events and places
of amusement under section 297A.61, subdivision 3, paragraph (m), are exempt when sold
by a seller of the privilege of admission.
new text end

new text begin (b) Under this subdivision, the exempt portion of the sale of the privilege of admission
is equal to the purchase price of the amenity if sales or use tax was paid on the amenity
when purchased by the seller.
new text end

new text begin (c) The seller must retain records documenting the price and tax paid by the seller when
purchasing the amenities and the price and tax collected when the seller sells the privilege
of admission.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after June 30, 2022.
new text end

Sec. 5.

Minnesota Statutes 2022, section 297A.79, is amended to read:

297A.79 REPORTING OF GROSS RECEIPTS.

At the option of the taxpayer, gross receipts from sales may be reported on the cash basis
as the consideration is received or on the accrual basis as sales are made. new text begin For taxpayers
reporting on the accrual basis, in the case of receipts from the sale of the privilege of
admission to places of amusement and athletic events, the sale is made and accrual occurs
at the time the event occurs.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after June 30, 2022.
new text end