HF 3064

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; defining the sale and purchase 
  1.3             of food and drink; defining food products; providing 
  1.4             direction to the commissioner; amending Minnesota 
  1.5             Statutes 2001 Supplement, sections 297A.61, 
  1.6             subdivision 3; 297A.67, subdivision 2; 297A.995, 
  1.7             subdivisions 3, 4; repealing Minnesota Statutes 2001 
  1.8             Supplement, section 297A.61, subdivision 31. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2001 Supplement, section 
  1.11  297A.61, subdivision 3, is amended to read: 
  1.12     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
  1.13  include, but are not limited to, each of the transactions listed 
  1.14  in this subdivision. 
  1.15     (b) Sale and purchase include: 
  1.16     (1) any transfer of title or possession, or both, of 
  1.17  tangible personal property, whether absolutely or conditionally, 
  1.18  for a consideration in money or by exchange or barter; and 
  1.19     (2) the leasing of or the granting of a license to use or 
  1.20  consume, for a consideration in money or by exchange or barter, 
  1.21  tangible personal property, other than a manufactured home used 
  1.22  for residential purposes for a continuous period of 30 days or 
  1.23  more. 
  1.24     (c) Sale and purchase include the production, fabrication, 
  1.25  printing, or processing of tangible personal property for a 
  1.26  consideration for consumers who furnish either directly or 
  1.27  indirectly the materials used in the production, fabrication, 
  2.1   printing, or processing. 
  2.2      (d) Sale and purchase include the furnishing, preparing, or 
  2.3   serving for a consideration of food or drinks.  Notwithstanding 
  2.4   section 297A.67, subdivision 2, taxable food includes or drinks 
  2.5   include, but is are not limited to, the following: 
  2.6      (1) prepared food sold by the retailer food or drinks sold 
  2.7   by the retailer for immediate consumption on the retailer's 
  2.8   premises.  Food and drinks sold within a building or grounds 
  2.9   that require an admission charge for entrance are presumed to be 
  2.10  sold for consumption on the premises; 
  2.11     (2) soft drinks food or drinks prepared by the retailer for 
  2.12  immediate consumption either on or off the retailer's premises.  
  2.13  For purposes of this subdivision, "food or drinks prepared for 
  2.14  immediate consumption" means any food product upon which an act 
  2.15  of preparation, including, but not limited to, cooking, mixing, 
  2.16  sandwich making, blending, heating, or pouring has been 
  2.17  performed by the retailer so the food product may be immediately 
  2.18  consumed by the purchaser; 
  2.19     (3) candy ice cream, ice milk, frozen yogurt products, or 
  2.20  frozen novelties sold in single or individual servings, 
  2.21  including, but not limited to, cones, sundaes, and snow 
  2.22  cones; and 
  2.23     (4) all food sold through vending machines soft drinks and 
  2.24  other beverages, including all carbonated and noncarbonated 
  2.25  beverages or drinks sold in liquid form, but not including 
  2.26  beverages or drinks which contain milk or milk products, 
  2.27  beverages or drinks containing 15 or more percent fruit juice, 
  2.28  and noncarbonated and noneffervescent bottled water sold in 
  2.29  individual containers of one-half gallon or more in size; 
  2.30     (5) gum, candy, and candy products; 
  2.31     (6) ice; 
  2.32     (7) all food sold from vending machines; 
  2.33     (8) all food for immediate consumption sold from concession 
  2.34  stands and vehicles; 
  2.35     (9) party trays; 
  2.36     (10) all meals and single servings of packaged snack food 
  3.1   sold in restaurants and bars; and 
  3.2      (11) bakery products that are: 
  3.3      (i) prepared by the retailer for consumption on the 
  3.4   retailer's premises; 
  3.5      (ii) sold at a place that charges admission; 
  3.6      (iii) sold from vending machines; or 
  3.7      (iv) sold in single or individual servings from concession 
  3.8   stands, vehicles, bars, and restaurants. 
  3.9      For purposes of this paragraph, "single or individual 
  3.10  servings" does not include products when sold in bulk containers 
  3.11  or bulk packaging. 
  3.12     For purposes of this paragraph, "premises" means the total 
  3.13  space and facilities, including buildings, grounds, and parking 
  3.14  lots that are made available or that are available for use by 
  3.15  the retailer or customer for the purpose of sale or consumption 
  3.16  of prepared food and drinks.  The premises of a caterer is the 
  3.17  place where the catered food or drinks are served. 
  3.18     (e) A sale and a purchase includes the furnishing for a 
  3.19  consideration of electricity, gas, water, or steam for use or 
  3.20  consumption within this state. 
  3.21     (f) A sale and a purchase includes the transfer for a 
  3.22  consideration of computer software.  
  3.23     (g) A sale and a purchase includes the furnishing for a 
  3.24  consideration of the following services: 
  3.25     (1) the privilege of admission to places of amusement, 
  3.26  recreational areas, or athletic events, and the making available 
  3.27  of amusement devices, tanning facilities, reducing salons, steam 
  3.28  baths, turkish baths, health clubs, and spas or athletic 
  3.29  facilities; 
  3.30     (2) lodging and related services by a hotel, rooming house, 
  3.31  resort, campground, motel, or trailer camp and the granting of 
  3.32  any similar license to use real property other than the renting 
  3.33  or leasing of it for a continuous period of 30 days or more; 
  3.34     (3) parking services, whether on a contractual, hourly, or 
  3.35  other periodic basis, except for parking at a meter; 
  3.36     (4) the granting of membership in a club, association, or 
  4.1   other organization if: 
  4.2      (i) the club, association, or other organization makes 
  4.3   available for the use of its members sports and athletic 
  4.4   facilities, without regard to whether a separate charge is 
  4.5   assessed for use of the facilities; and 
  4.6      (ii) use of the sports and athletic facility is not made 
  4.7   available to the general public on the same basis as it is made 
  4.8   available to members.  
  4.9   Granting of membership means both one-time initiation fees and 
  4.10  periodic membership dues.  Sports and athletic facilities 
  4.11  include golf courses; tennis, racquetball, handball, and squash 
  4.12  courts; basketball and volleyball facilities; running tracks; 
  4.13  exercise equipment; swimming pools; and other similar athletic 
  4.14  or sports facilities; and 
  4.15     (5) services as provided in this clause: 
  4.16     (i) laundry and dry cleaning services including cleaning, 
  4.17  pressing, repairing, altering, and storing clothes, linen 
  4.18  services and supply, cleaning and blocking hats, and carpet, 
  4.19  drapery, upholstery, and industrial cleaning.  Laundry and dry 
  4.20  cleaning services do not include services provided by coin 
  4.21  operated facilities operated by the customer; 
  4.22     (ii) motor vehicle washing, waxing, and cleaning services, 
  4.23  including services provided by coin operated facilities operated 
  4.24  by the customer, and rustproofing, undercoating, and towing of 
  4.25  motor vehicles; 
  4.26     (iii) building and residential cleaning, maintenance, and 
  4.27  disinfecting and exterminating services; 
  4.28     (iv) detective, security, burglar, fire alarm, and armored 
  4.29  car services; but not including services performed within the 
  4.30  jurisdiction they serve by off-duty licensed peace officers as 
  4.31  defined in section 626.84, subdivision 1, or services provided 
  4.32  by a nonprofit organization for monitoring and electronic 
  4.33  surveillance of persons placed on in-home detention pursuant to 
  4.34  court order or under the direction of the Minnesota department 
  4.35  of corrections; 
  4.36     (v) pet grooming services; 
  5.1      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
  5.2   services; garden planting and maintenance; tree, bush, and shrub 
  5.3   pruning, bracing, spraying, and surgery; indoor plant care; 
  5.4   tree, bush, shrub, and stump removal; and tree trimming for 
  5.5   public utility lines.  Services performed under a construction 
  5.6   contract for the installation of shrubbery, plants, sod, trees, 
  5.7   bushes, and similar items are not taxable; 
  5.8      (vii) massages, except when provided by a licensed health 
  5.9   care facility or professional or upon written referral from a 
  5.10  licensed health care facility or professional for treatment of 
  5.11  illness, injury, or disease; and 
  5.12     (viii) the furnishing of lodging, board, and care services 
  5.13  for animals in kennels and other similar arrangements, but 
  5.14  excluding veterinary and horse boarding services. 
  5.15     In applying the provisions of this chapter, the terms 
  5.16  "tangible personal property" and "sales at retail" include 
  5.17  taxable services and the provision of taxable services, unless 
  5.18  specifically provided otherwise.  Services performed by an 
  5.19  employee for an employer are not taxable.  Services performed by 
  5.20  a partnership or association for another partnership or 
  5.21  association are not taxable if one of the entities owns or 
  5.22  controls more than 80 percent of the voting power of the equity 
  5.23  interest in the other entity.  Services performed between 
  5.24  members of an affiliated group of corporations are not taxable.  
  5.25  For purposes of this section, "affiliated group of corporations" 
  5.26  includes those entities that would be classified as members of 
  5.27  an affiliated group under United States Code, title 26, section 
  5.28  1504, and that are eligible to file a consolidated tax return 
  5.29  for federal income tax purposes. 
  5.30     (h) A sale and a purchase includes the furnishing for a 
  5.31  consideration of tangible personal property or taxable services 
  5.32  by the United States or any of its agencies or 
  5.33  instrumentalities, or the state of Minnesota, its agencies, 
  5.34  instrumentalities, or political subdivisions. 
  5.35     (i) A sale and a purchase includes the furnishing for a 
  5.36  consideration of telecommunications services, including cable 
  6.1   television services and direct satellite services.  
  6.2   Telecommunications services are taxed to the extent allowed 
  6.3   under federal law if those services: 
  6.4      (1) either (i) originate and terminate in this state; or 
  6.5   (ii) originate in this state and terminate outside the state and 
  6.6   the service is charged to a telephone number customer located in 
  6.7   this state or to the account of any transmission instrument in 
  6.8   this state; or (iii) originate outside this state and terminate 
  6.9   in this state and the service is charged to a telephone number 
  6.10  customer located in this state or to the account of any 
  6.11  transmission instrument in this state; or 
  6.12     (2) are rendered by providing a private communications 
  6.13  service for which the customer has one or more locations within 
  6.14  Minnesota connected to the service and the service is charged to 
  6.15  a telephone number customer located in this state or to the 
  6.16  account of any transmission instrument in this state. 
  6.17     All charges for mobile telecommunications services, as 
  6.18  defined in United States Code, title 4, section 124, are deemed 
  6.19  to be provided by the customer's home service provider and 
  6.20  sourced to the customer's place of primary use and are subject 
  6.21  to tax based upon the customer's place of primary use in 
  6.22  accordance with the Mobile Telecommunications Sourcing Act, 
  6.23  United States Code, title 4, sections 116 to 126.  All other 
  6.24  definitions and provisions of the Mobile Telecommunications 
  6.25  Sourcing Act as provided in United States Code, title 4, are 
  6.26  hereby adopted. 
  6.27     [EFFECTIVE DATE.] This section is effective for sales and 
  6.28  purchases made on or after July 1, 2002. 
  6.29     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
  6.30  297A.67, subdivision 2, is amended to read: 
  6.31     Subd. 2.  [FOOD AND FOOD INGREDIENTS PRODUCTS.] Food and 
  6.32  food ingredients are exempt.  For purposes of this subdivision, 
  6.33  "food" and "food ingredients" mean substances, whether in 
  6.34  liquid, concentrated, solid, frozen, dried, or dehydrated form, 
  6.35  that are sold for ingestion or chewing by humans and are 
  6.36  consumed for their taste or nutritional value.  Food and food 
  7.1   ingredients do not include candy, soft drinks, food sold through 
  7.2   vending machines, and prepared foods.  Food and food ingredients 
  7.3   do not include alcoholic beverages, dietary supplements, and 
  7.4   tobacco.  For purposes of this subdivision, "alcoholic 
  7.5   beverages" means beverages that are suitable for human 
  7.6   consumption and contain one-half of one percent or more of 
  7.7   alcohol by volume.  For purposes of this subdivision, "tobacco" 
  7.8   means cigarettes, cigars, chewing or pipe tobacco, or any other 
  7.9   item that contains tobacco.  For purposes of this subdivision, 
  7.10  "dietary supplements" means any product, other than tobacco, 
  7.11  intended to supplement the diet that: 
  7.12     (1) contains one or more of the following dietary 
  7.13  ingredients: 
  7.14     (i) a vitamin; 
  7.15     (ii) a mineral; 
  7.16     (iii) an herb or other botanical; 
  7.17     (iv) an amino acid; 
  7.18     (v) a dietary substance for use by humans to supplement the 
  7.19  diet by increasing the total dietary intake; and 
  7.20     (vi) a concentrate, metabolite, constituent, extract, or 
  7.21  combination of any ingredient described in items (i) to (v); 
  7.22     (2) is intended for ingestion in tablet, capsule, powder, 
  7.23  softgel, gelcap, or liquid form, or if not intended for 
  7.24  ingestion in such form, is not represented as conventional food 
  7.25  and is not represented for use as a sole item of a meal or of 
  7.26  the diet; and 
  7.27     (3) is required to be labeled as a dietary supplement, 
  7.28  identifiable by the supplement facts box found on the label and 
  7.29  as required pursuant to Code of Federal Regulations, title 21, 
  7.30  section 101.36. 
  7.31     Food products, including, but not limited to, cereal and 
  7.32  cereal products, butter, cheese, milk and milk products, 
  7.33  oleomargarine, meat and meat products, fish and fish products, 
  7.34  eggs and egg products, vegetables and vegetable products, fruit 
  7.35  and fruit products, spices and salt, sugar and sugar products, 
  7.36  coffee and coffee substitutes, tea, and cocoa and cocoa products 
  8.1   are exempt. 
  8.2      [EFFECTIVE DATE.] This section is effective for sales or 
  8.3   purchases made on or after July 1, 2002. 
  8.4      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
  8.5   297A.995, subdivision 3, is amended to read: 
  8.6      Subd. 3.  [LEGISLATIVE FINDING.] The legislature finds that 
  8.7   this state should enter into an agreement with one or more 
  8.8   states to simplify and modernize sales and use tax 
  8.9   administration in order to substantially reduce the burden of 
  8.10  tax compliance for all sellers and for all types of commerce. 
  8.11  The agreement shall ensure uniform sales and use taxation as 
  8.12  applied to sellers and food products.  To the fullest extent 
  8.13  possible, uniform application of the sales and use tax on food 
  8.14  products shall not be classified on the basis of whether or not 
  8.15  the seller is the preparer of bread, baked goods, and other 
  8.16  prepared food. 
  8.17     [EFFECTIVE DATE.] This section is effective the day 
  8.18  following final enactment. 
  8.19     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
  8.20  297A.995, subdivision 4, is amended to read: 
  8.21     Subd. 4.  [AUTHORITY TO ENTER AGREEMENT.] The commissioner 
  8.22  of revenue is authorized and directed to enter into the 
  8.23  agreement with one or more states to simplify and modernize 
  8.24  sales and use tax administration in order to substantially 
  8.25  reduce the burden of tax compliance for all sellers and for all 
  8.26  types of commerce.  In furtherance of the agreement, the 
  8.27  commissioner is authorized to act jointly with other states that 
  8.28  are members of the agreement to establish standards for 
  8.29  certification of a certified service provider and certified 
  8.30  automated system and establish performance standards for 
  8.31  multistate sellers. 
  8.32     The commissioner of revenue is further directed to 
  8.33  negotiate the agreement with the express intention of ensuring 
  8.34  uniform sales and use taxation as applied to sellers and food 
  8.35  products, and not classified on the basis of whether or not the 
  8.36  seller is the food preparer.  In the event that the commissioner 
  9.1   of revenue is unsuccessful in negotiating a timely and 
  9.2   reasonable cooperative agreement, as defined in this section, 
  9.3   with one or more states in the pursuit of uniform sales and use 
  9.4   tax administration, the commissioner is directed to withdraw 
  9.5   from the streamlined sales and use tax agreement process. 
  9.6      The commissioner is further authorized to take other 
  9.7   actions reasonably required to implement the provisions set 
  9.8   forth in this article.  Other actions authorized by this section 
  9.9   include, but are not limited to, the adoption of rules and 
  9.10  regulations and the joint procurement, with other member states, 
  9.11  of goods and services in furtherance of the cooperative 
  9.12  agreement. 
  9.13     The commissioner or the commissioner's designee is 
  9.14  authorized to represent this state before the other states that 
  9.15  are signatories to the agreement. 
  9.16     [EFFECTIVE DATE.] This section is effective the day 
  9.17  following final enactment. 
  9.18     Sec. 5.  [REPEALER.] 
  9.19     Minnesota Statutes 2001 Supplement, section 297A.61, 
  9.20  subdivision 31, is repealed, effective July 1, 2002.