HF 5333

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/09/2024 11:05am

A bill for an act
relating to taxation; sales and use; modifying sales price for the tax on motor
vehicle leases for certain leases; amending Minnesota Statutes 2022, section
297A.815, subdivision 1, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2022, section 297A.815, subdivision 1, is amended to read:

Subdivision 1.

Motor vehicle lease price; payment.

(a) In the case of a lease of a motor
vehicle as provided in section 297A.61, subdivision 4, paragraph (k), clause (2), new text begin except as
provided in subdivision 1a, new text end the tax is imposed on the total amount to be paid by the lessee
under the lease agreement. The lessor shall collect the tax in full at the time the lease is
executed or, if the tax is included in the lease and the lease is assigned, the tax is due from
the original lessor at the time the lease is assigned. The total amount to be paid by the lessee
under the lease agreement equals the agreed-upon value of the vehicle less manufacturer's
rebates, the stated residual value of the leased vehicle, and the total value allowed for a
vehicle owned by the lessee taken in trade by the lessor, plus the price of any taxable goods
and services included in the lease and the rent charge as provided by Code of Federal
Regulations, title 12, section 213.4, excluding any rent charge related to the capitalization
of the tax.

(b) new text begin Except as provided in subdivision 1a, new text end if the total amount paid by the lessee for use
of the leased vehicle includes amounts that are not calculated at the time the lease is executed,
the tax is imposed and must be collected by the lessor at the time the amounts are paid by
the lessee. In the case of a lease which by its terms may be renewed, the sales tax is due
and payable on the total amount to be paid during the initial term of the lease, and then for
each subsequent renewal period on the total amount to be paid during the renewal period.

(c) If a lease is canceled or rescinded on or before 90 days of its execution or if a vehicle
is returned to the manufacturer under section 325F.665, the lessor may file a claim for a
refund of the total tax paid minus the amount of tax due for the period the vehicle is used
by the lessee.

(d) If a lessee's obligation to make payments on a lease is canceled more than 90 days
after its execution, a credit is allowed against sales tax or motor vehicles sales tax due on
a subsequent lease or purchase of a motor vehicle if that lease or purchase is consummated
within 30 days of the date the prior lease was canceled. The amount of the credit is equal
to (1) the sales tax paid at the inception of the lease, multiplied by (2) the ratio of the number
of full months remaining in the lease at the time of termination compared to the term of the
lease used in calculating sales tax paid at the inception of the lease. The credit or any part
of it cannot be assigned or transferred to another person.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end

Sec. 2.

Minnesota Statutes 2022, section 297A.815, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Motor vehicle lease price; commercial motor vehicle leases. new text end

new text begin (a)
Notwithstanding section 297A.61, subdivision 4, paragraph (k), in the case of a lease of a
motor vehicle to the lessee for use primarily in the lessee's trade or business and for which
the lease agreement contains a provision for the adjustment of the consideration as described
in section 297A.61, subdivision 14a, paragraph (c), the lessor may elect that (1) the tax is
imposed on the purchase price, as defined in section 297B.01, subdivision 14, of the motor
vehicle and collected in full at the time the lease is executed, or (2) the tax is imposed and
the lessor must collect the tax pursuant to subdivision 1.
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, 2024.
new text end