SF 641

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxes; sales and use tax; expanding the 
  1.3             exemptions for the production of water; amending 
  1.4             Minnesota Statutes 1998, sections 297A.01, subdivision 
  1.5             16; and 297A.25, subdivision 9. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1998, section 297A.01, 
  1.8   subdivision 16, is amended to read: 
  1.9      Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
  1.10  machinery and equipment purchased or leased for use in this 
  1.11  state and used by the purchaser or lessee primarily for 
  1.12  manufacturing, fabricating, mining, or refining tangible 
  1.13  personal property to be sold ultimately at retail and for 
  1.14  electronically transmitting results retrieved by a customer of 
  1.15  an on-line computerized data retrieval system.  
  1.16     (b) Capital equipment includes all machinery and equipment 
  1.17  that is essential to the integrated production process.  Capital 
  1.18  equipment includes, but is not limited to: 
  1.19     (1) machinery and equipment used or required to operate, 
  1.20  control, or regulate the production equipment; 
  1.21     (2) machinery and equipment used for research and 
  1.22  development, design, quality control, and testing activities; 
  1.23     (3) environmental control devices that are used to maintain 
  1.24  conditions such as temperature, humidity, light, or air pressure 
  1.25  when those conditions are essential to and are part of the 
  2.1   production process; 
  2.2      (4) materials and supplies necessary to construct and 
  2.3   install machinery or equipment; 
  2.4      (5) repair and replacement parts, including accessories, 
  2.5   whether purchased as spare parts, repair parts, or as upgrades 
  2.6   or modifications to machinery or equipment; 
  2.7      (6) materials used for foundations that support machinery 
  2.8   or equipment; 
  2.9      (7) materials used to construct and install special purpose 
  2.10  buildings used in the production process; or 
  2.11     (8) ready-mixed concrete trucks in which the ready-mixed 
  2.12  concrete is mixed as part of the delivery process. 
  2.13     (c) Capital equipment does not include the following: 
  2.14     (1) motor vehicles taxed under chapter 297B; 
  2.15     (2) machinery or equipment used to receive or store raw 
  2.16  materials; 
  2.17     (3) building materials; 
  2.18     (4) machinery or equipment used for nonproduction purposes, 
  2.19  including, but not limited to, the following:  machinery and 
  2.20  equipment used for plant security, fire prevention, first aid, 
  2.21  and hospital stations; machinery and equipment used in support 
  2.22  operations or for administrative purposes; machinery and 
  2.23  equipment used solely for pollution control, prevention, or 
  2.24  abatement; and machinery and equipment used in plant cleaning, 
  2.25  disposal of scrap and waste, plant communications, space 
  2.26  heating, lighting, or safety; 
  2.27     (5) "farm machinery" as defined by subdivision 15, and 
  2.28  "aquaculture production equipment" as defined by subdivision 19; 
  2.29  or 
  2.30     (6) any other item that is not essential to the integrated 
  2.31  process of manufacturing, fabricating, mining, or refining. 
  2.32     (d) For purposes of this subdivision: 
  2.33     (1) "Equipment" means independent devices or tools separate 
  2.34  from machinery but essential to an integrated production 
  2.35  process, including computers and software, used in operating, 
  2.36  controlling, or regulating machinery and equipment; and any 
  3.1   subunit or assembly comprising a component of any machinery or 
  3.2   accessory or attachment parts of machinery, such as tools, dies, 
  3.3   jigs, patterns, and molds. 
  3.4      (2) "Fabricating" means to make, build, create, produce, or 
  3.5   assemble components or property to work in a new or different 
  3.6   manner. 
  3.7      (3) "Machinery" means mechanical, electronic, or electrical 
  3.8   devices, including computers and software, that are purchased or 
  3.9   constructed to be used for the activities set forth in paragraph 
  3.10  (a), beginning with the removal of raw materials from inventory 
  3.11  through the completion of the product, including packaging of 
  3.12  the product. 
  3.13     (4) "Manufacturing" means an operation or series of 
  3.14  operations where raw materials are changed in form, composition, 
  3.15  or condition by machinery and equipment and which results in the 
  3.16  production of a new article of tangible personal property.  For 
  3.17  purposes of this subdivision, "manufacturing" includes the 
  3.18  generation of electricity or steam to be sold at retail. 
  3.19     (5) "Mining" means the extraction of minerals, ores, stone, 
  3.20  and peat. 
  3.21     (6) "On-line data retrieval system" means a system whose 
  3.22  cumulation of information is equally available and accessible to 
  3.23  all its customers. 
  3.24     (7) "Pollution control equipment" means machinery and 
  3.25  equipment used to eliminate, prevent, or reduce pollution 
  3.26  resulting from an activity described in paragraph (a). 
  3.27     (8) "Primarily" means machinery and equipment used 50 
  3.28  percent or more of the time in an activity described in 
  3.29  paragraph (a). 
  3.30     (9) "Refining" means the process of converting a natural 
  3.31  resource to a product, including the treatment and 
  3.32  pressurization or repressurization of water to be sold at retail 
  3.33  or wholesale. 
  3.34     (e) For purposes of this subdivision the requirement that 
  3.35  the machinery or equipment "must be used by the purchaser or 
  3.36  lessee" means that the person who purchases or leases the 
  4.1   machinery or equipment must be the one who uses it for the 
  4.2   qualifying purpose.  When a contractor buys and installs 
  4.3   machinery or equipment as part of an improvement to real 
  4.4   property, only the contractor is considered the purchaser. 
  4.5      Sec. 2.  Minnesota Statutes 1998, section 297A.25, 
  4.6   subdivision 9, is amended to read: 
  4.7      Subd. 9.  [MATERIALS CONSUMED IN PRODUCTION.] The gross 
  4.8   receipts from the sale of and the storage, use, or consumption 
  4.9   of all materials, including chemicals, fuels, petroleum 
  4.10  products, lubricants, packaging materials, including returnable 
  4.11  containers used in packaging food and beverage products, feeds, 
  4.12  seeds, fertilizers, electricity, gas and steam, used or consumed 
  4.13  in agricultural or industrial production of personal property 
  4.14  intended to be sold ultimately at retail, whether or not the 
  4.15  item so used becomes an ingredient or constituent part of the 
  4.16  property produced are exempt.  Seeds, trees, fertilizers, and 
  4.17  herbicides purchased for use by farmers in the Conservation 
  4.18  Reserve Program under United States Code, title 16, section 
  4.19  590h, as amended through December 31, 1991, the Integrated Farm 
  4.20  Management Program under section 1627 of Public Law Number 
  4.21  101-624, the Wheat and Feed Grain Programs under sections 301 to 
  4.22  305 and 401 to 405 of Public Law Number 101-624, and the 
  4.23  conservation reserve program under sections 103F.505 to 
  4.24  103F.531, are included in this exemption.  Sales to a 
  4.25  veterinarian of materials used or consumed in the care, 
  4.26  medication, and treatment of horses and agricultural production 
  4.27  animals are exempt under this subdivision.  Chemicals used for 
  4.28  cleaning food processing machinery and equipment are included in 
  4.29  this exemption.  Materials, including chemicals, fuels, and 
  4.30  electricity purchased by persons engaged in agricultural or 
  4.31  industrial production to treat waste generated as a result of 
  4.32  the production process are included in this exemption.  Such 
  4.33  production shall include, but is not limited to, research, 
  4.34  development, design or production of any tangible personal 
  4.35  property, manufacturing, processing (other than by restaurants 
  4.36  and consumers) of agricultural products whether vegetable or 
  5.1   animal, commercial fishing, refining, smelting, reducing, 
  5.2   brewing, distilling, printing, mining, quarrying, lumbering, 
  5.3   generating electricity, treating, storing, and pressurizing or 
  5.4   repressurizing water to be sold at retail or wholesale, and the 
  5.5   production of road building materials.  Such production shall 
  5.6   not include painting, cleaning, repairing or similar processing 
  5.7   of property except as part of the original manufacturing 
  5.8   process.  Machinery, equipment, implements, tools, accessories, 
  5.9   appliances, contrivances, furniture and fixtures, used in such 
  5.10  production and fuel, electricity, gas or steam used for space 
  5.11  heating or lighting, are not included within this exemption; 
  5.12  however, accessory tools, equipment and other short lived items, 
  5.13  which are separate detachable units used in producing a direct 
  5.14  effect upon the product, where such items have an ordinary 
  5.15  useful life of less than 12 months, are included within the 
  5.16  exemption provided herein.  Electricity used to make snow for 
  5.17  outdoor use for ski hills, ski slopes, or ski trails is included 
  5.18  in this exemption.  Petroleum and special fuels used in 
  5.19  producing or generating power for propelling ready-mixed 
  5.20  concrete trucks on the public highways of this state are not 
  5.21  included in this exemption. 
  5.22     Sec. 3.  [EFFECTIVE DATE.] 
  5.23     Sections 1 and 2 are effective beginning with sales made 
  5.24  after June 30, 1998.