as introduced - 92nd Legislature (2021 - 2022) Posted on 03/26/2021 01:54pm
A bill for an act
relating to taxation; sales and use; expanding the sales tax exemption for certain
capital equipment purchases; amending Minnesota Statutes 2020, section 297A.68,
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Minnesota Statutes 2020, section 297A.68, subdivision 5, is amended to read:
(a) Capital equipment is exempt.
"Capital equipment" means machinery and equipment purchased or leased, and used in
this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, or
refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment used primarily
to electronically transmit results retrieved by a customer of an online computerized data
retrieval systemnew text beginnew text end.
(b) Capital equipment includes, but is not limited to:
(1) machinery and equipment used to operate, control, or regulate the production
(2) machinery and equipment used for research and development, design, quality control,
and testing activities;
(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;
(4) materials and supplies used to construct and install machinery or equipment;
(5) repair and replacement parts, including accessories, whether purchased as spare parts,
repair parts, or as upgrades or modifications to machinery or equipment;
(6) materials used for foundations that support machinery or equipment;
(7) materials used to construct and install special purpose buildings used in the production
(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed as part
of the delivery process regardless if mounted on a chassis, repair parts for ready-mixed
concrete trucks, and leases of ready-mixed concrete trucks; and
(9) machinery or equipment used for research, development, design, or production of
(c) Capital equipment does not include the following:
(1) motor vehicles taxed under chapter 297B;
(2) machinery or equipment used to receive or store raw materials;
(3) building materials, except for materials included in paragraph (b), clauses (6) and
(4) machinery or equipment used for nonproduction purposes, including, but not limited
to, the following: plant security, fire prevention, first aid, and hospital stations; support
operations or administration; pollution control; and plant cleaning, disposal of scrap and
waste, plant communications, space heating, cooling, lighting, or safety;
(5) farm machinery and aquaculture production equipment as defined by section 297A.61,
subdivisions 12 and 13;
(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;
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(7) machinery and equipment used by restaurants in the furnishing, preparing, or serving
of prepared foods as defined in section 297A.61, subdivision 31;
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deleted text begin (8)deleted text endnew text beginnew text end machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii);
deleted text begin (9)deleted text endnew text beginnew text end machinery or equipment used in the transportation, transmission, or distribution
of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
tanks, mains, or other means of transporting those products. This clause does not apply to
machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
deleted text begin (10)deleted text endnew text beginnew text end any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.
(d) For purposes of this subdivision:
(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.
(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.
(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For purposes
of this clause, (i) manufacturing begins with the removal of raw materials from inventory
and ends when the last process prior to loading for shipment has been completed; (ii)
fabricating begins with the removal from storage or inventory of the property to be assembled,
processed, altered, or modified and ends with the creation or production of the new or
changed product; (iii) mining begins with the removal of overburden from the site of the
ores, minerals, stone, peat deposit, or surface materials and ends when the last process before
stockpiling is completed; and (iv) refining begins with the removal from inventory or storage
of a natural resource and ends with the conversion of the item to its completed form.
(4) "Machinery" means mechanical, electronic, or electrical devices, including computers
and computer software, that are purchased or constructed to be used for the activities set
forth in paragraph (a), beginning with the removal of raw materials from inventory through
completion of the product, including packaging of the product.
(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).
(6) "Manufacturing" means an operation or series of operations where raw materials are
changed in form, composition, or condition by machinery and equipment and which results
in the production of a new article of tangible personal property. For purposes of this
subdivision, "manufacturing" includes the generation of electricity or steam to be sold at
(7) "Mining" means the extraction of minerals, ores, stone, or peat.
(8) "Online data retrieval system" means a system whose cumulation of information is
equally available and accessible to all its customers.
(9) "Primarily" means machinery and equipment used 50 percent or more of the time in
an activity described in paragraph (a).
(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.
(11) This subdivision does not apply to telecommunications equipment as provided in
subdivision 35a, and does not apply to wire, cable, or poles for telecommunications services.
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