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HF 884

as introduced - 90th Legislature (2017 - 2018) Posted on 03/07/2017 01:26pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; gross revenues and gross receipts; exempting certain massage
therapy from sales taxation; imposing the health care provider tax on certain
massage therapy; amending Minnesota Statutes 2016, sections 295.50, subdivisions
4, 9b, by adding subdivisions; 297A.61, subdivision 3; 297A.67, by adding a
subdivision.

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

Section 1.

Minnesota Statutes 2016, section 295.50, subdivision 4, is amended to read:


Subd. 4.

Health care provider.

(a) "Health care provider" means:

(1) a person whose health care occupation is regulated or required to be regulated by
the state of Minnesota furnishing any or all of the following goods or services directly to a
patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services,
drugs, laboratory, diagnostic or therapeutic services;

(2) a person who provides goods and services not listed in clause (1) that qualify for
reimbursement under the medical assistance program provided under chapter 256B;

(3) a staff model health plan company;

(4) an ambulance service required to be licensed; deleted text begin or
deleted text end

(5) a person who sells or repairs hearing aids and related equipment or prescription
eyewearnew text begin ; or
new text end

new text begin (6) a massage therapistnew text end .

(b) Health care provider does not include:

(1) hospitals; medical supplies distributors, except as specified under paragraph (a),
clause (5); nursing homes licensed under chapter 144A or licensed in any other jurisdiction;
wholesale drug distributors; pharmacies; surgical centers; bus and taxicab transportation,
or any other providers of transportation services other than ambulance services required to
be licensed; supervised living facilities for persons with developmental disabilities, licensed
under Minnesota Rules, parts 4665.0100 to 4665.9900; housing with services establishments
required to be registered under chapter 144D; board and lodging establishments providing
only custodial services that are licensed under chapter 157 and registered under section
157.17 to provide supportive services or health supervision services; adult foster homes as
defined in Minnesota Rules, part 9555.5105; day training and habilitation services for adults
with developmental disabilities as defined in section 252.41, subdivision 3; boarding care
homes, as defined in Minnesota Rules, part 4655.0100; and adult day care centers as defined
in Minnesota Rules, part 9555.9600;

(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15; a
person providing personal care services and supervision of personal care services as defined
in Minnesota Rules, part 9505.0335; a person providing home care nursing services as
defined in Minnesota Rules, part 9505.0360; and home care providers required to be licensed
under chapter 144A;

(3) a person who employs health care providers solely for the purpose of providing
patient services to its employees;

(4) an educational institution that employs health care providers solely for the purpose
of providing patient services to its students if the institution does not receive fee for service
payments or payments for extended coverage; and

(5) a person who receives all payments for patient services from health care providers,
surgical centers, or hospitals for goods and services that are taxable to the paying health
care providers, surgical centers, or hospitals, as provided under section 295.53, subdivision
1
, clause (3) or (4), or from a source of funds that is exempt from tax under this chapter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after June
30, 2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 295.50, is amended by adding a subdivision to
read:


new text begin Subd. 8a. new text end

new text begin Massage therapist. new text end

new text begin "Massage therapist" means a person providing massage
therapy services who registers with the commissioner to pay the tax imposed under section
295.52 prior to the calendar quarter in which the massage therapy services are provided.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after June
30, 2017.
new text end

Sec. 3.

Minnesota Statutes 2016, section 295.50, is amended by adding a subdivision to
read:


new text begin Subd. 8b. new text end

new text begin Massage therapy services. new text end

new text begin (a) "Massage therapy services" or "massage
therapy" means a health care service provided by a massage therapist that involves systematic
and structured touch and palpation and pressure and movement of the muscles, tendons,
ligaments, and fascia, in order to reduce muscle tension, relieve soft tissue pain, improve
circulation, increase flexibility, increase activity of the parasympathetic branch of the
autonomic nervous system, or promote general wellness, by:
new text end

new text begin (1) use of any or all of the following techniques using the hands, forearms, elbows,
knees, or feet, or handheld, nonpuncturing, mechanical, or electrical devices that mimic or
enhance the actions of the human hands: effleurage or gliding; petrissage or kneading;
vibration and jostling; friction; tapotement or percussion; compression; fascial manipulation;
or passive stretching within the normal anatomical range of motion; or
new text end

new text begin (2) application and use of any of the following: oils, lotions, gels, rubbing alcohol, or
powders for the purpose of lubricating the skin to be massaged; creams, with the exception
of prescription medicinal creams; hot or cold stones; essential oils as used in aromatherapy
for inhalation or diluted for topical application; salt glows and wraps; or heat or ice.
new text end

new text begin (b) Massage therapy services or massage therapy excludes services described in paragraph
(a) that are provided by a licensed health care facility or professional or upon written referral
from a licensed health care facility or professional for treatment of illness, injury, or disease.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after June
30, 2017.
new text end

Sec. 4.

Minnesota Statutes 2016, section 295.50, subdivision 9b, is amended to read:


Subd. 9b.

Patient services.

(a) "Patient services" means inpatient and outpatient services
and other goods and services provided by hospitals, surgical centers, or health care providers.
They include the following health care goods and services provided to a patient or consumer:

(1) bed and board;

(2) nursing services and other related services;

(3) use of hospitals, surgical centers, or health care provider facilities;

(4) medical social services;

(5) drugs, biologicals, supplies, appliances, and equipment;

(6) other diagnostic or therapeutic items or services;

(7) medical or surgical services;

(8) items and services furnished to ambulatory patients not requiring emergency care;
deleted text begin and
deleted text end

(9) emergency servicesnew text begin ; and
new text end

new text begin (10) massage therapy servicesnew text end .

(b) "Patient services" does not include:

(1) services provided to nursing homes licensed under chapter 144A;

(2) examinations for purposes of utilization reviews, insurance claims or eligibility,
litigation, and employment, including reviews of medical records for those purposes;

(3) services provided to and by community residential mental health facilities licensed
under Minnesota Rules, parts 9520.0500 to 9520.0670, and to and by residential treatment
programs for children with severe emotional disturbance licensed or certified under chapter
245A;

(4) services provided to and by community support programs and family community
support programs approved under Minnesota Rules, parts 9535.1700 to 9535.1760, or
certified as mental health rehabilitative services under chapter 256B;

(5) services provided to and by community mental health centers as defined in section
245.62, subdivision 2;

(6) services provided to and by assisted living programs and congregate housing
programs;

(7) hospice care services;

(8) home and community-based waivered services under sections 256B.0915, 256B.49,
and 256B.501;

(9) targeted case management services under sections 256B.0621; 256B.0625,
subdivisions 20, 20a, 33, and 44
; and 256B.094; and

(10) services provided to the following: supervised living facilities for persons with
developmental disabilities licensed under Minnesota Rules, parts 4665.0100 to 4665.9900;
housing with services establishments required to be registered under chapter 144D; board
and lodging establishments providing only custodial services that are licensed under chapter
157 and registered under section 157.17 to provide supportive services or health supervision
services; adult foster homes as defined in Minnesota Rules, part 9555.5105; day training
and habilitation services for adults with developmental disabilities as defined in section
252.41, subdivision 3; boarding care homes as defined in Minnesota Rules, part 4655.0100;
adult day care services as defined in section 245A.02, subdivision 2a; and home health
agencies as defined in Minnesota Rules, part 9505.0175, subpart 15, or licensed under
chapter 144A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after June
30, 2017.
new text end

Sec. 5.

Minnesota Statutes 2016, section 297A.61, subdivision 3, is amended to read:


Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include, but are not limited to,
each of the transactions listed in this subdivision. In applying the provisions of this chapter,
the terms "tangible personal property" and "retail sale" include the taxable services listed
in paragraph (g), clause (6), items (i) to (vi) and (viii), and the provision of these taxable
services, unless specifically provided otherwise. Services performed by an employee for
an employer are not taxable. Services performed by a partnership or association for another
partnership or association are not taxable if one of the entities owns or controls more than
80 percent of the voting power of the equity interest in the other entity. Services performed
between members of an affiliated group of corporations are not taxable. For purposes of
the preceding sentence, "affiliated group of corporations" means those entities that would
be classified as members of an affiliated group as defined under United States Code, title
26, section 1504, disregarding the exclusions in section 1504(b).

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of tangible personal property, whether
absolutely or conditionally, for a consideration in money or by exchange or barter; and

(2) the leasing of or the granting of a license to use or consume, for a consideration in
money or by exchange or barter, tangible personal property, other than a manufactured
home used for residential purposes for a continuous period of 30 days or more.

(c) Sale and purchase include the production, fabrication, printing, or processing of
tangible personal property for a consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication, printing, or processing.

(d) Sale and purchase include the preparing for a consideration of food. Notwithstanding
section 297A.67, subdivision 2, taxable food includes, but is not limited to, the following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy;

(4) dietary supplements; and

(5) all food sold through vending machines.

(e) A sale and a purchase includes the furnishing for a consideration of electricity, gas,
water, or steam for use or consumption within this state.

(f) A sale and a purchase includes the transfer for a consideration of prewritten computer
software whether delivered electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a consideration of the following
services:

(1) the privilege of admission to places of amusement, recreational areas, or athletic
events, and the making available of amusement devices, tanning facilities, reducing salons,
steam baths, health clubs, and spas or athletic facilities;

(2) lodging and related services by a hotel, rooming house, resort, campground, motel,
or trailer camp, including furnishing the guest of the facility with access to telecommunication
services, and the granting of any similar license to use real property in a specific facility,
other than the renting or leasing of it for a continuous period of 30 days or more under an
enforceable written agreement that may not be terminated without prior notice and including
accommodations intermediary services provided in connection with other services provided
under this clause;

(3) nonresidential parking services, whether on a contractual, hourly, or other periodic
basis, except for parking at a meter;

(4) the granting of membership in a club, association, or other organization if:

(i) the club, association, or other organization makes available for the use of its members
sports and athletic facilities, without regard to whether a separate charge is assessed for use
of the facilities; and

(ii) use of the sports and athletic facility is not made available to the general public on
the same basis as it is made available to members.

Granting of membership means both onetime initiation fees and periodic membership dues.
Sports and athletic facilities include golf courses; tennis, racquetball, handball, and squash
courts; basketball and volleyball facilities; running tracks; exercise equipment; swimming
pools; and other similar athletic or sports facilities;

(5) delivery of aggregate materials by a third party, excluding delivery of aggregate
material used in road construction; and delivery of concrete block by a third party if the
delivery would be subject to the sales tax if provided by the seller of the concrete block.
For purposes of this clause, "road construction" means construction of:

(i) public roads;

(ii) cartways; and

(iii) private roads in townships located outside of the seven-county metropolitan area
up to the point of the emergency response location sign; and

(6) services as provided in this clause:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services provided
by coin operated facilities operated by the customer, and rustproofing, undercoating, and
towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting services and pest
control and exterminating services;

(iv) detective, security, burglar, fire alarm, and armored car services; but not including
services performed within the jurisdiction they serve by off-duty licensed peace officers as
defined in section 626.84, subdivision 1, or services provided by a nonprofit organization
or any organization at the direction of a county for monitoring and electronic surveillance
of persons placed on in-home detention pursuant to court order or under the direction of the
Minnesota Department of Corrections;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor plant
care; tree, bush, shrub, and stump removal, except when performed as part of a land clearing
contract as defined in section 297A.68, subdivision 40; and tree trimming for public utility
lines. Services performed under a construction contract for the installation of shrubbery,
plants, sod, trees, bushes, and similar items are not taxable;

(vii) massagesdeleted text begin , except when provided by a licensed health care facility or professional
or upon written referral from a licensed health care facility or professional for treatment of
illness, injury, or disease
deleted text end ; and

(viii) the furnishing of lodging, board, and care services for animals in kennels and other
similar arrangements, but excluding veterinary and horse boarding services.

(h) A sale and a purchase includes the furnishing for a consideration of tangible personal
property or taxable services by the United States or any of its agencies or instrumentalities,
or the state of Minnesota, its agencies, instrumentalities, or political subdivisions.

(i) A sale and a purchase includes the furnishing for a consideration of
telecommunications services, ancillary services associated with telecommunication services,
and pay television services. Telecommunication services include, but are not limited to, the
following services, as defined in section 297A.669: air-to-ground radiotelephone service,
mobile telecommunication service, postpaid calling service, prepaid calling service, prepaid
wireless calling service, and private communication services. The services in this paragraph
are taxed to the extent allowed under federal law.

(j) A sale and a purchase includes the furnishing for a consideration of installation if the
installation charges would be subject to the sales tax if the installation were provided by
the seller of the item being installed.

(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer to a
customer when (1) the vehicle is rented by the customer for a consideration, or (2) the motor
vehicle dealer is reimbursed pursuant to a service contract as defined in section 59B.02,
subdivision
11.

(l) A sale and a purchase includes furnishing for a consideration of specified digital
products or other digital products or granting the right for a consideration to use specified
digital products or other digital products on a temporary or permanent basis and regardless
of whether the purchaser is required to make continued payments for such right. Wherever
the term "tangible personal property" is used in this chapter, other than in subdivisions 10
and 38, the provisions also apply to specified digital products, or other digital products,
unless specifically provided otherwise or the context indicates otherwise.

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. 6.

Minnesota Statutes 2016, section 297A.67, is amended by adding a subdivision to
read:


new text begin Subd. 34. new text end

new text begin Massage therapy. new text end

new text begin Massage therapy services subject to tax under section
295.52 or provided upon referral from a professional or licensed health care facility for
treatment of illness, injury, or disease are exempt.
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