HF 605

as introduced - 90th Legislature (2017 - 2018) Posted on 02/09/2017 06:05pm

A bill for an act
relating to taxation; sales and use; providing an exemption for an annual city
celebration; modifying the threshold for duration of premises leases for certain
nonprofit fund-raising events; amending Minnesota Statutes 2016, section 297A.70,
subdivision 14, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2016, section 297A.70, subdivision 14, is amended to read:

Subd. 14.

Fund-raising events sponsored by nonprofit groups.

(a) Sales of tangible
personal property or services at, and admission charges for fund-raising events sponsored
by, a nonprofit organization are exempt if:

(1) all gross receipts are recorded as such, in accordance with generally accepted
accounting practices, on the books of the nonprofit organization; and

(2) the entire proceeds, less the necessary expenses for the event, will be used solely
and exclusively for charitable, religious, or educational purposes. Exempt sales include the
sale of prepared food, candy, and soft drinks at the fund-raising event.

(b) This exemption is limited in the following manner:

(1) it does not apply to admission charges for events involving bingo or other gambling
activities or to charges for use of amusement devices involving bingo or other gambling
activities;

(2) all gross receipts are taxable if the profits are not used solely and exclusively for
charitable, religious, or educational purposes;

(3) it does not apply unless the organization keeps a separate accounting record, including
receipts and disbursements from each fund-raising event that documents all deductions from
gross receipts with receipts and other records;

(4) it does not apply to any sale made by or in the name of a nonprofit corporation as
the active or passive agent of a person that is not a nonprofit corporation;

(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;

(6) it does not apply to fund-raising events conducted on premises leased for more than
deleted text begin five deleted text end new text begin 25 new text end days but less than 30 days; and

(7) it does not apply if the risk of the event is not borne by the nonprofit organization
and the benefit to the nonprofit organization is less than the total amount of the state and
local tax revenues forgone by this exemption.

(c) For purposes of this subdivision, a "nonprofit organization" means any unit of
government, corporation, society, association, foundation, or institution organized and
operated for charitable, religious, educational, civic, fraternal, and senior citizens' or veterans'
purposes, no part of the net earnings of which inures to the benefit of a private individual.

(d) For purposes of this subdivision, "fund-raising events" means activities of limited
duration, not regularly carried out in the normal course of business, that attract patrons for
community, social, and entertainment purposes, such as auctions, bake sales, ice cream
socials, block parties, carnivals, competitions, concerts, concession stands, craft sales,
bazaars, dinners, dances, door-to-door sales of merchandise, fairs, fashion shows, festivals,
galas, special event workshops, sporting activities such as marathons and tournaments, and
similar events. Fund-raising events do not include the operation of a regular place of business
in which services are provided or sales are made during regular hours such as bookstores,
thrift stores, gift shops, restaurants, ongoing Internet sales, regularly scheduled classes, or
other activities carried out in the normal course of business.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision to
read:

new text begin Subd. 20. new text end

new text begin City celebrations. new text end

new text begin (a) Sales of tangible personal property or services and
admissions charges to a city-designated annual city celebration designed to promote
community spirit and cooperation are exempt. Exempt sales include the sale of prepared
food, candy, soft drinks, malt liquor and wine as defined in section 340A.101, subdivisions
19 and 27, at the event. The governing board of a statutory or home rule charter city with
a population of less than ....... may designate one event in each calendar year as the annual
city celebration that qualifies for the exemption under this subdivision. For a celebration to
qualify, it must meet the following requirements:
new text end

new text begin (1) the event must be held on consecutive days, not to exceed ten days in total;
new text end

new text begin (2) the event must be run either by the city or by a nonprofit organization designated by
the city;
new text end

new text begin (3) all gross receipts of the event are recorded as such, in accordance with generally
accepted accounting practice on the books of the city or the designated nonprofit organization;
and
new text end

new text begin (4) the entire proceeds, less the necessary expenses, will be distributed to one or more
of the following for charitable, educational, civic, or governmental purposes:
new text end

new text begin (i) the city's general fund;
new text end

new text begin (ii) a nonprofit 501(c)(3) organization to promote its primary mission; or
new text end

new text begin (iii) a nonprofit 501(c)(4) organization to promote its primary mission, however, no
revenues from this event may be used by the organization for lobbying or political activities.
new text end

new text begin (b) This exemption is limited in the following manner:
new text end

new text begin (1) it does not apply to admission charges for events involving bingo or other gambling
activities or to charges for use of amusement devices involving bingo or other gambling
activities;
new text end

new text begin (2) all gross receipts are taxable if the profits are not used solely and exclusively for
charitable, educational, civic, or governmental purposes; and
new text end

new text begin (3) it does not apply unless the city or designated nonprofit organization keeps a separate
accounting record, including receipts and disbursements for all events included in the
celebration that documents all deductions from gross receipts with receipts and other records.
new text end

new text begin (c) For purposes of this subdivision, "nonprofit organization" means any unit of
government, corporation, society, association, foundation, or institution organized and
operated for charitable, religious, educational, civic, fraternal, and senior citizens' or veterans'
purposes, no part of the net earnings of which inures to the benefit of a private individual.
new text end

new text begin (d) For purposes of this subdivision, "city celebration" means any of the following
activities or combination of activities of limited duration, not regularly carried out in the
normal course of business, that attract patrons for community, social, and entertainment
purposes, such as parades, auctions, bake sales, ice cream socials, block parties, carnivals,
competitions, concerts, concession stands, craft sales, bazaars, dinners, dances, fairs, fashion
shows, festivals, galas, special event workshops, sporting activities such as marathons and
tournaments, and similar events. A city celebration does not include the operation of a
regular place of business in which services are provided or sales are made during regular
hours such as bookstores, thrift stores, gift shops, restaurants, ongoing Internet sales, or
regularly scheduled activities carried out in the normal course of business.
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, 2017.
new text end