HF 3575

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; exempting ready-mixed concrete 
  1.3             trucks from the sales tax on motor vehicles; providing 
  1.4             that ready-mixed concrete trucks are capital equipment 
  1.5             for purposes of the sales; defining sales price for 
  1.6             purposes of ready-mixed concrete sales; amending 
  1.7             Minnesota Statutes 1996, section 297A.01, subdivision 
  1.8             8; Minnesota Statutes 1997 Supplement, sections 
  1.9             297A.01, subdivision 16; 297A.25, subdivision 9; and 
  1.10            297B.03. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1996, section 297A.01, 
  1.13  subdivision 8, is amended to read: 
  1.14     Subd. 8.  "Sales price" means the total consideration 
  1.15  valued in money, for a retail sale whether paid in money or 
  1.16  otherwise, excluding therefrom any amount allowed as credit for 
  1.17  tangible personal property taken in trade for resale, without 
  1.18  deduction for the cost of the property sold, cost of materials 
  1.19  used, labor or service cost, interest, or discount allowed after 
  1.20  the sale is consummated, the cost of transportation incurred 
  1.21  prior to the time of sale, any amount for which credit is given 
  1.22  to the purchaser by the seller, or any other expense 
  1.23  whatsoever.  A deduction may be made for charges of up to 15 
  1.24  percent in lieu of tips, if the consideration for such charges 
  1.25  is separately stated.  No deduction shall be allowed for charges 
  1.26  for services that are part of a sale.  Except as otherwise 
  1.27  provided in this subdivision, a deduction may also be made for 
  1.28  interest, financing, or carrying charges, charges for labor or 
  2.1   services used in installing or applying the property sold or 
  2.2   transportation charges if the transportation occurs after the 
  2.3   retail sale of the property only if the consideration for such 
  2.4   charges is separately stated.  "Sales price," for purposes of 
  2.5   sales of ready-mixed concrete sold from a ready-mixed concrete 
  2.6   truck, includes any transportation, delivery, or other service 
  2.7   charges, and no deduction is allowed for those charges, whether 
  2.8   or not the charges are separately stated.  There shall not be 
  2.9   included in "sales price" cash discounts allowed and taken on 
  2.10  sales or the amount refunded either in cash or in credit for 
  2.11  property returned by purchasers. 
  2.12     Sec. 2.  Minnesota Statutes 1997 Supplement, section 
  2.13  297A.01, subdivision 16, is amended to read: 
  2.14     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
  2.15  machinery and equipment purchased or leased for use in this 
  2.16  state and used by the purchaser or lessee primarily for 
  2.17  manufacturing, fabricating, mining, or refining tangible 
  2.18  personal property to be sold ultimately at retail and for 
  2.19  electronically transmitting results retrieved by a customer of 
  2.20  an on-line computerized data retrieval system.  
  2.21     (b) Capital equipment includes all machinery and equipment 
  2.22  that is essential to the integrated production process.  Capital 
  2.23  equipment includes, but is not limited to: 
  2.24     (1) machinery and equipment used or required to operate, 
  2.25  control, or regulate the production equipment; 
  2.26     (2) machinery and equipment used for research and 
  2.27  development, design, quality control, and testing activities; 
  2.28     (3) environmental control devices that are used to maintain 
  2.29  conditions such as temperature, humidity, light, or air pressure 
  2.30  when those conditions are essential to and are part of the 
  2.31  production process; 
  2.32     (4) materials and supplies necessary to construct and 
  2.33  install machinery or equipment; 
  2.34     (5) repair and replacement parts, including accessories, 
  2.35  whether purchased as spare parts, repair parts, or as upgrades 
  2.36  or modifications to machinery or equipment; 
  3.1      (6) materials used for foundations that support machinery 
  3.2   or equipment; or 
  3.3      (7) materials used to construct and install special purpose 
  3.4   buildings used in the production process; or 
  3.5      (8) ready-mixed concrete trucks in which the ready-mixed 
  3.6   concrete is manufactured as part of the delivery process. 
  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; 
  3.12     (4) machinery or equipment used for nonproduction purposes, 
  3.13  including, but not limited to, the following:  machinery and 
  3.14  equipment used for plant security, fire prevention, first aid, 
  3.15  and hospital stations; machinery and equipment used in support 
  3.16  operations or for administrative purposes; machinery and 
  3.17  equipment used solely for pollution control, prevention, or 
  3.18  abatement; and machinery and equipment used in plant cleaning, 
  3.19  disposal of scrap and waste, plant communications, space 
  3.20  heating, lighting, or safety; 
  3.21     (5) "farm machinery" as defined by subdivision 15, and 
  3.22  "aquaculture production equipment" as defined by subdivision 19; 
  3.23  or 
  3.24     (6) any other item that is not essential to the integrated 
  3.25  process of manufacturing, fabricating, mining, or refining. 
  3.26     (d) For purposes of this subdivision: 
  3.27     (1) "Equipment" means independent devices or tools separate 
  3.28  from machinery but essential to an integrated production 
  3.29  process, including computers and software, used in operating, 
  3.30  controlling, or regulating machinery and equipment; and any 
  3.31  subunit or assembly comprising a component of any machinery or 
  3.32  accessory or attachment parts of machinery, such as tools, dies, 
  3.33  jigs, patterns, and molds. 
  3.34     (2) "Fabricating" means to make, build, create, produce, or 
  3.35  assemble components or property to work in a new or different 
  3.36  manner. 
  4.1      (3) "Machinery" means mechanical, electronic, or electrical 
  4.2   devices, including computers and software, that are purchased or 
  4.3   constructed to be used for the activities set forth in paragraph 
  4.4   (a), beginning with the removal of raw materials from inventory 
  4.5   through the completion of the product, including packaging of 
  4.6   the product. 
  4.7      (4) "Manufacturing" means an operation or series of 
  4.8   operations where raw materials are changed in form, composition, 
  4.9   or condition by machinery and equipment and which results in the 
  4.10  production of a new article of tangible personal property.  For 
  4.11  purposes of this subdivision, "manufacturing" includes the 
  4.12  generation of electricity or steam to be sold at retail. 
  4.13     (5) "Mining" means the extraction of minerals, ores, stone, 
  4.14  and peat. 
  4.15     (6) "On-line data retrieval system" means a system whose 
  4.16  cumulation of information is equally available and accessible to 
  4.17  all its customers. 
  4.18     (7) "Pollution control equipment" means machinery and 
  4.19  equipment used to eliminate, prevent, or reduce pollution 
  4.20  resulting from an activity described in paragraph (a). 
  4.21     (8) "Primarily" means machinery and equipment used 50 
  4.22  percent or more of the time in an activity described in 
  4.23  paragraph (a). 
  4.24     (9) "Refining" means the process of converting a natural 
  4.25  resource to a product, including the treatment of water to be 
  4.26  sold at retail. 
  4.27     (e) For purposes of this subdivision the requirement that 
  4.28  the machinery or equipment "must be used by the purchaser or 
  4.29  lessee" means that the person who purchases or leases the 
  4.30  machinery or equipment must be the one who uses it for the 
  4.31  qualifying purpose.  When a contractor buys and installs 
  4.32  machinery or equipment as part of an improvement to real 
  4.33  property, only the contractor is considered the purchaser. 
  4.34     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
  4.35  297A.25, subdivision 9, is amended to read: 
  4.36     Subd. 9.  [MATERIALS CONSUMED IN PRODUCTION.] The gross 
  5.1   receipts from the sale of and the storage, use, or consumption 
  5.2   of all materials, including chemicals, fuels, petroleum 
  5.3   products, lubricants, packaging materials, including returnable 
  5.4   containers used in packaging food and beverage products, feeds, 
  5.5   seeds, fertilizers, electricity, gas and steam, used or consumed 
  5.6   in agricultural or industrial production of personal property 
  5.7   intended to be sold ultimately at retail, whether or not the 
  5.8   item so used becomes an ingredient or constituent part of the 
  5.9   property produced are exempt.  Seeds, trees, fertilizers, and 
  5.10  herbicides purchased for use by farmers in the Conservation 
  5.11  Reserve Program under United States Code, title 16, section 
  5.12  590h, as amended through December 31, 1991, the Integrated Farm 
  5.13  Management Program under section 1627 of Public Law Number 
  5.14  101-624, the Wheat and Feed Grain Programs under sections 301 to 
  5.15  305 and 401 to 405 of Public Law Number 101-624, and the 
  5.16  conservation reserve program under sections 103F.505 to 
  5.17  103F.531, are included in this exemption.  Sales to a 
  5.18  veterinarian of materials used or consumed in the care, 
  5.19  medication, and treatment of horses and agricultural production 
  5.20  animals are exempt under this subdivision.  Chemicals used for 
  5.21  cleaning food processing machinery and equipment are included in 
  5.22  this exemption.  Materials, including chemicals, fuels, and 
  5.23  electricity purchased by persons engaged in agricultural or 
  5.24  industrial production to treat waste generated as a result of 
  5.25  the production process are included in this exemption.  Such 
  5.26  production shall include, but is not limited to, research, 
  5.27  development, design or production of any tangible personal 
  5.28  property, manufacturing, processing (other than by restaurants 
  5.29  and consumers) of agricultural products whether vegetable or 
  5.30  animal, commercial fishing, refining, smelting, reducing, 
  5.31  brewing, distilling, printing, mining, quarrying, lumbering, 
  5.32  generating electricity and the production of road building 
  5.33  materials.  Such production shall not include painting, 
  5.34  cleaning, repairing or similar processing of property except as 
  5.35  part of the original manufacturing process.  Machinery, 
  5.36  equipment, implements, tools, accessories, appliances, 
  6.1   contrivances, furniture and fixtures, used in such production 
  6.2   and fuel, electricity, gas or steam used for space heating or 
  6.3   lighting, are not included within this exemption; however, 
  6.4   accessory tools, equipment and other short lived items, which 
  6.5   are separate detachable units used in producing a direct effect 
  6.6   upon the product, where such items have an ordinary useful life 
  6.7   of less than 12 months, are included within the exemption 
  6.8   provided herein.  Electricity used to make snow for outdoor use 
  6.9   for ski hills, ski slopes, or ski trails is included in this 
  6.10  exemption.  Petroleum and special fuels used in producing or 
  6.11  generating power for propelling ready-mixed concrete trucks on 
  6.12  the public highways of this state are not included in this 
  6.13  exemption. 
  6.14     Sec. 4.  Minnesota Statutes 1997 Supplement, section 
  6.15  297B.03, is amended to read: 
  6.16     297B.03 [EXEMPTIONS.] 
  6.17     There is specifically exempted from the provisions of this 
  6.18  chapter and from computation of the amount of tax imposed by it 
  6.19  the following:  
  6.20     (1) Purchase or use, including use under a lease purchase 
  6.21  agreement or installment sales contract made pursuant to section 
  6.22  465.71, of any motor vehicle by the United States and its 
  6.23  agencies and instrumentalities and by any person described in 
  6.24  and subject to the conditions provided in section 297A.25, 
  6.25  subdivision 18.  
  6.26     (2) Purchase or use of any motor vehicle by any person who 
  6.27  was a resident of another state at the time of the purchase and 
  6.28  who subsequently becomes a resident of Minnesota, provided the 
  6.29  purchase occurred more than 60 days prior to the date such 
  6.30  person began residing in the state of Minnesota.  
  6.31     (3) Purchase or use of any motor vehicle by any person 
  6.32  making a valid election to be taxed under the provisions of 
  6.33  section 297A.211.  
  6.34     (4) Purchase or use of any motor vehicle previously 
  6.35  registered in the state of Minnesota when such transfer 
  6.36  constitutes a transfer within the meaning of section 351 or 721 
  7.1   of the Internal Revenue Code of 1986, as amended through 
  7.2   December 31, 1988.  
  7.3      (5) Purchase or use of any vehicle owned by a resident of 
  7.4   another state and leased to a Minnesota based private or for 
  7.5   hire carrier for regular use in the transportation of persons or 
  7.6   property in interstate commerce provided the vehicle is titled 
  7.7   in the state of the owner or secured party, and that state does 
  7.8   not impose a sales tax or sales tax on motor vehicles used in 
  7.9   interstate commerce.  
  7.10     (6) Purchase or use of a motor vehicle by a private 
  7.11  nonprofit or public educational institution for use as an 
  7.12  instructional aid in automotive training programs operated by 
  7.13  the institution.  "Automotive training programs" includes motor 
  7.14  vehicle body and mechanical repair courses but does not include 
  7.15  driver education programs.  
  7.16     (7) Purchase of a motor vehicle for use as an ambulance by 
  7.17  an ambulance service licensed under section 144E.10. 
  7.18     (8) Purchase of a motor vehicle by or for a public library, 
  7.19  as defined in section 134.001, subdivision 2, as a bookmobile or 
  7.20  library delivery vehicle. 
  7.21     (9) Purchase of a ready-mixed concrete truck. 
  7.22     Sec. 5.  [EFFECTIVE DATE.] 
  7.23     Sections 1 to 4 are effective for sales and purchases 
  7.24  occurring after June 30, 1998.