HF 5401

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/18/2024 02:53pm

A bill for an act
relating to taxation; sales and use; providing an exemption for certain nonprofit
outpatient rehabilitation clinics; amending Minnesota Statutes 2023 Supplement,
section 297A.70, subdivision 7.

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

Section 1.

Minnesota Statutes 2023 Supplement, section 297A.70, subdivision 7, is
amended to read:

Subd. 7.

Hospitals, outpatient surgical centers, critical access dental providers, and
blood centers.

(a) Sales, except for those listed in paragraph deleted text begin (f) deleted text end new text begin (g) new text end , to a hospital are exempt,
if the items purchased are used in providing hospital services. For purposes of this
subdivision, "hospital" means a hospital organized and operated for charitable purposes
within the meaning of section 501(c)(3) of the Internal Revenue Code, and licensed under
chapter 144 or by any other jurisdiction, and "hospital services" are services authorized or
required to be performed by a "hospital" under chapter 144.

(b) Sales, except for those listed in paragraph deleted text begin (f) deleted text end new text begin (g) new text end , to an outpatient surgical center are
exempt, if the items purchased are used in providing outpatient surgical services. For purposes
of this subdivision, "outpatient surgical center" means an outpatient surgical center organized
and operated for charitable purposes within the meaning of section 501(c)(3) of the Internal
Revenue Code, and licensed under chapter 144 or by any other jurisdiction. For the purposes
of this subdivision, "outpatient surgical services" means: (1) services authorized or required
to be performed by an outpatient surgical center under chapter 144; and (2) urgent care. For
purposes of this subdivision, "urgent care" means health services furnished to a person
whose medical condition is sufficiently acute to require treatment unavailable through, or
inappropriate to be provided by, a clinic or physician's office, but not so acute as to require
treatment in a hospital emergency room.

(c) Sales, except for those listed in paragraph deleted text begin (f) deleted text end new text begin (g) new text end , to a critical access dental provider
are exempt, if the items purchased are used in providing critical access dental care services.
For the purposes of this subdivision, "critical access dental provider" means a dentist or
dental clinic that qualifies under section 256B.76, subdivision 4, paragraph (b), and, in the
previous calendar year, had no more than 15 percent of its patients covered by private dental
insurance.

(d) Sales, except for those listed in paragraph deleted text begin (f) deleted text end new text begin (g) new text end , to a blood center are exempt, if the
items purchased are used in providing blood collection and distribution services.
Notwithstanding paragraph deleted text begin (f) deleted text end new text begin (g) new text end , leases by a blood center of a truck, as defined in section
168.002; a bus, as defined in section 168.002; or a passenger automobile, as defined in
section 168.002, if the truck, bus, or automobile is used for carrying out the purposes of the
blood center, including the collection of blood from donors, setting up of blood drives, and
delivering blood to hospitals are exempt. For purposes of this subdivision, "blood center"
means an entity organized and operated for charitable purposes under section 501(c)(3) of
the Internal Revenue Code that is:

(1) registered as a blood establishment pursuant to Code of Federal Regulations, title
21, part 607;

(2) a human cells, tissues, and cellular and tissue-based products establishment under
Code of Federal Regulations, title 21, part 1271, subpart B; or

(3) a clinical lab that performs infectious disease testing, blood typing, and other
laboratory testing services in connection with blood processing for transfusion into humans
under Code of Federal Regulations, title 42, part 493.

(e) new text begin Sales, except those listed in paragraph (g), to a nonprofit physical rehabilitation clinic
are exempt if the items are used in providing outpatient rehabilitation services. For the
purposes of this paragraph, "nonprofit physical rehabilitation clinic" means a clinic:
new text end

new text begin (1) organized and operated for charitable purposes within the meaning of section 501(c)(3)
of the Internal Revenue Code;
new text end

new text begin (2) providing physical therapy, occupational therapy, or speech therapy;
new text end

new text begin (3) whose patients covered by ..... comprise at least 50 percent of all patients served in
the most recent calendar year;
new text end

new text begin (4) providing at least 10,000 patient encounters with patients who are uninsured or
qualify to be covered by medical assistance, MinnesotaCare, or a home and community-based
services program;
new text end

new text begin (5) offering a sliding scale for payment for services; and
new text end

new text begin (6) had no more than 15 percent of its patients covered by private health insurance in
the most recent calendar year.
new text end

new text begin (f) new text end The exemption provided under paragraph (d) expires January 1, 2028.

deleted text begin (f) deleted text end new text begin (g) new text end This exemption does not apply to the following products and services:

(1) purchases made by a clinic, physician's office, or any other medical facility not
operating as a hospital, outpatient surgical center, critical access dental provider, or blood
center, even though the clinic, office, or facility may be owned and operated by a hospital,
outpatient surgical center, critical access dental provider, or blood center;

(2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and prepared
food, candy, and soft drinks;

(3) building and construction materials used in constructing buildings or facilities that
will not be used principally by the hospital, outpatient surgical center, critical access dental
provider, or blood center;

(4) building, construction, or reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
maximum price covering both labor and materials for use in the construction, alteration, or
repair of a hospital, outpatient surgical center, critical access dental provider, or blood center;
or

(5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11.

deleted text begin (g) deleted text end new text begin (h) new text end A limited liability company also qualifies for exemption under this subdivision
if (1) it consists of a sole member that would qualify for the exemption, and (2) the items
purchased qualify for the exemption.

deleted text begin (h) deleted text end new text begin (i) new text end An entity that contains both a hospital and a nonprofit unit may claim this
exemption on purchases made for both the hospital and nonprofit unit provided that:

(1) the nonprofit unit would have qualified for exemption under subdivision 4; and

(2) the items purchased would have qualified for the exemption.

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