SF 850

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; sales and use; making the 
  1.3             exemption for used farm machinery permanent; exempting 
  1.4             repair and replacement parts for capital equipment; 
  1.5             exempting materials used in providing taxable 
  1.6             services; amending Minnesota Statutes 1996, sections 
  1.7             297A.01, subdivision 16; and 297A.25, subdivision 59, 
  1.8             and by adding a subdivision; repealing Minnesota 
  1.9             Statutes 1996, sections 297A.01, subdivision 20; 
  1.10            297A.02, subdivision 5; and 297A.15, subdivision 5. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1996, section 297A.01, 
  1.13  subdivision 16, is amended to read: 
  1.14     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
  1.15  machinery and equipment purchased or leased for use in this 
  1.16  state and used by the purchaser or lessee primarily for 
  1.17  manufacturing, fabricating, mining, or refining tangible 
  1.18  personal property to be sold ultimately at retail and for 
  1.19  electronically transmitting results retrieved by a customer of 
  1.20  an on-line computerized data retrieval system.  
  1.21     (b) Capital equipment includes all machinery and equipment 
  1.22  that is essential to the integrated production process.  Capital 
  1.23  equipment includes, but is not limited to: 
  1.24     (1) machinery and equipment used or required to operate, 
  1.25  control, or regulate the production equipment; 
  1.26     (2) machinery and equipment used for research and 
  1.27  development, design, quality control, and testing activities; 
  1.28     (3) environmental control devices that are used to maintain 
  2.1   conditions such as temperature, humidity, light, or air pressure 
  2.2   when those conditions are essential to and are part of the 
  2.3   production process; or 
  2.4      (4) materials and supplies necessary to construct and 
  2.5   install machinery or equipment; 
  2.6      (5) repair and replacement parts, including accessories, 
  2.7   whether purchased as spare parts, repair parts, or as upgrades 
  2.8   or modifications to machinery or equipment; 
  2.9      (6) materials used for foundations that support machinery 
  2.10  or equipment; or 
  2.11     (7) materials used to construct and install special purpose 
  2.12  buildings used in the production process. 
  2.13     (c) Capital equipment does not include the following: 
  2.14     (1) repair or replacement parts, including accessories, 
  2.15  whether purchased as spare parts, repair parts, or as upgrades 
  2.16  or modifications, and whether purchased before or after the 
  2.17  machinery or equipment is placed into service.  Parts or 
  2.18  accessories are treated as capital equipment only to the extent 
  2.19  that they are a part of and are essential to the operation of 
  2.20  the machinery or equipment as initially purchased; 
  2.21     (2) motor vehicles taxed under chapter 297B; 
  2.22     (3) (2) machinery or equipment used to receive or store raw 
  2.23  materials; 
  2.24     (4) (3) building materials; 
  2.25     (5) (4) machinery or equipment used for nonproduction 
  2.26  purposes, including, but not limited to, the following:  
  2.27  machinery and equipment used for plant security, fire 
  2.28  prevention, first aid, and hospital stations; machinery and 
  2.29  equipment used in support operations or for administrative 
  2.30  purposes; machinery and equipment used solely for pollution 
  2.31  control, prevention, or abatement; and machinery and equipment 
  2.32  used in plant cleaning, disposal of scrap and waste, plant 
  2.33  communications, space heating, lighting, or safety; 
  2.34     (6) (5) "farm machinery" as defined by subdivision 15, and 
  2.35  "aquaculture production equipment" as defined by subdivision 19, 
  2.36  and "replacement capital equipment" as defined by subdivision 
  3.1   20; or 
  3.2      (7) (6) any other item that is not essential to the 
  3.3   integrated process of manufacturing, fabricating, mining, or 
  3.4   refining. 
  3.5      (d) For purposes of this subdivision: 
  3.6      (1) "Equipment" means independent devices or tools separate 
  3.7   from machinery but essential to an integrated production 
  3.8   process, including computers and software, used in operating, 
  3.9   controlling, or regulating machinery and equipment; and any 
  3.10  subunit or assembly comprising a component of any machinery or 
  3.11  accessory or attachment parts of machinery, such as tools, dies, 
  3.12  jigs, patterns, and molds. 
  3.13     (2) "Fabricating" means to make, build, create, produce, or 
  3.14  assemble components or property to work in a new or different 
  3.15  manner. 
  3.16     (3) "Machinery" means mechanical, electronic, or electrical 
  3.17  devices, including computers and software, that are purchased or 
  3.18  constructed to be used for the activities set forth in paragraph 
  3.19  (a), beginning with the removal of raw materials from inventory 
  3.20  through the completion of the product, including packaging of 
  3.21  the product. 
  3.22     (4) "Manufacturing" means an operation or series of 
  3.23  operations where raw materials are changed in form, composition, 
  3.24  or condition by machinery and equipment and which results in the 
  3.25  production of a new article of tangible personal property.  For 
  3.26  purposes of this subdivision, "manufacturing" includes the 
  3.27  generation of electricity or steam to be sold at retail. 
  3.28     (5) "Mining" means the extraction of minerals, ores, stone, 
  3.29  and peat. 
  3.30     (6) "On-line data retrieval system" means a system whose 
  3.31  cumulation of information is equally available and accessible to 
  3.32  all its customers. 
  3.33     (7) "Pollution control equipment" means machinery and 
  3.34  equipment used to eliminate, prevent, or reduce pollution 
  3.35  resulting from an activity described in paragraph (a). 
  3.36     (8) "Primarily" means machinery and equipment used 50 
  4.1   percent or more of the time in an activity described in 
  4.2   paragraph (a). 
  4.3      (9) "Refining" means the process of converting a natural 
  4.4   resource to a product, including the treatment of water to be 
  4.5   sold at retail. 
  4.6      (e) For purposes of this subdivision the requirement that 
  4.7   the machinery or equipment "must be used by the purchaser or 
  4.8   lessee" means that the person who purchases or leases the 
  4.9   machinery or equipment must be the one who uses it for the 
  4.10  qualifying purpose.  When a contractor buys and installs 
  4.11  machinery or equipment as part of an improvement to real 
  4.12  property, only the contractor is considered the purchaser. 
  4.13     (f) Notwithstanding prior provisions of this subdivision, 
  4.14  machinery and equipment purchased or leased to replace machinery 
  4.15  and equipment used in the mining or production of taconite shall 
  4.16  qualify as capital equipment. 
  4.17     Sec. 2.  Minnesota Statutes 1996, section 297A.25, 
  4.18  subdivision 59, is amended to read: 
  4.19     Subd. 59.  [FARM MACHINERY.] From July 1, 1994, until June 
  4.20  30, 1997, The gross receipts from the sale of used farm 
  4.21  machinery are exempt. 
  4.22     Sec. 3.  Minnesota Statutes 1996, section 297A.25, is 
  4.23  amended by adding a subdivision to read: 
  4.24     Subd. 62.  [MATERIALS USED IN PROVIDING TAXABLE 
  4.25  SERVICES.] The gross receipts from the sale of and the storage, 
  4.26  use, or consumption of all materials, including chemicals, 
  4.27  fuels, petroleum products, lubricants, packaging materials, 
  4.28  seeds, trees, fertilizers, herbicides, electricity, gas, and 
  4.29  steam, used or consumed in the provision of a taxable service 
  4.30  intended to be sold ultimately at retail, are exempt.  
  4.31  Materials, including chemicals, fuels, and electricity purchased 
  4.32  by persons engaged in providing a taxable service to treat waste 
  4.33  generated as a result of providing the service, are included in 
  4.34  this exemption.  Machinery, equipment, implements, tools, 
  4.35  accessories, appliances, contrivances, furniture, and fixtures, 
  4.36  used in such production and fuel, electricity, gas, or steam 
  5.1   used for space heating or lighting, are not included within this 
  5.2   exemption; however, accessory tools, equipment, and other 
  5.3   short-lived items, which are separate detachable units used in 
  5.4   providing the service, where such items have an ordinary useful 
  5.5   life of less than 12 months, are included within the exemption. 
  5.6      For purposes of this subdivision, "taxable service" means 
  5.7   the services listed in section 297A.01, subdivision 3, paragraph 
  5.8   (i), except for solid waste management services as described in 
  5.9   section 297A.45. 
  5.10     Sec. 4.  [REPEALER.] 
  5.11     Minnesota Statutes 1996, sections 297A.01, subdivision 20; 
  5.12  297A.02, subdivision 5; and 297A.15, subdivision 5, are repealed.
  5.13     Sec. 5.  [EFFECTIVE DATE.] 
  5.14     Sections 1 to 4 are effective for sales and purchases after 
  5.15  June 30, 1997.