SF 1325

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to tax administration; providing for 
  1.3             electronic filing and paying of taxes; providing for 
  1.4             uniform sales and use tax administration; 
  1.5             appropriating money; amending Minnesota Statutes 2000, 
  1.6             sections 115B.24, subdivision 2; 270.271, subdivisions 
  1.7             1 and 3; 270.771; 270.78; 287.12; 289A.02, by adding a 
  1.8             subdivision; 289A.18, subdivision 4; 289A.20, 
  1.9             subdivisions 1, 2, and 4; 289A.26, subdivision 2a; 
  1.10            289A.40, subdivision 2, and by adding a subdivision; 
  1.11            289A.60, subdivision 21; 295.55, subdivision 4; 
  1.12            296A.15, subdivision 7; 297A.61, subdivisions 3, 4, 7, 
  1.13            9, and by adding subdivisions; 297A.67, subdivisions 
  1.14            2, 8, and by adding a subdivision; 297A.72, 
  1.15            subdivision 1; 297A.81; 297A.99, subdivision 9; 
  1.16            297E.02, subdivision 4; 297F.09, subdivision 7; 
  1.17            297G.09, subdivision 6; 297I.35, subdivision 2; 
  1.18            297I.85, subdivision 7; and 473.843, subdivision 3; 
  1.19            proposing coding for new law in Minnesota Statutes, 
  1.20            chapter 297A. 
  1.21  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.22                             ARTICLE 1 
  1.23               ELECTRONIC FILING AND PAYING OF TAXES 
  1.24     Section 1.  Minnesota Statutes 2000, section 115B.24, 
  1.25  subdivision 2, is amended to read: 
  1.26     Subd. 2.  [DECLARATIONS OF ESTIMATED TAX.] For 1983, every 
  1.27  generator of hazardous waste required to pay a tax pursuant to 
  1.28  section 115B.22 shall make a declaration of estimated hazardous 
  1.29  waste generated for the last six months of calendar year 1983 if 
  1.30  the tax can reasonably be estimated to exceed $500.  The 
  1.31  declaration of the estimated tax shall be filed by October 15, 
  1.32  1983.  The amount of estimated tax with respect to which a 
  1.33  declaration is required shall be paid in two equal installments 
  2.1   by October 15, 1983 and January 15, 1984.  For 1984 and 
  2.3   subsequent years, every generator of hazardous waste required to 
  2.4   pay a tax pursuant to section 115B.22 shall make a declaration 
  2.5   of estimated hazardous waste generated for the calendar year if 
  2.6   the tax can reasonably be expected to be in excess of $1,000.  
  2.7   The declaration of estimated tax shall be filed by March 15.  
  2.8   The amount of estimated tax with respect to which a declaration 
  2.9   is required shall be paid in four equal installments on or 
  2.10  before the 15th day of March, June, September, and December.  
  2.11     An amendment of a declaration may be filed in any interval 
  2.12  between installment dates prescribed above but only one 
  2.13  amendment may be filed in each interval.  If an amendment of a 
  2.14  declaration is filed, the amount of each remaining installment 
  2.15  shall be the amount which would have been payable if the new 
  2.16  estimate had been made when the first estimate for the calendar 
  2.17  year was made, increased or decreased, as the case may be, by 
  2.18  the amount computed by dividing 
  2.19     (1) the difference between (A) the amount of estimated tax 
  2.20  required to be paid before the date on which the amendment was 
  2.21  made, and (B) the amount of estimated tax which would have been 
  2.22  required to be paid before that date if the new estimate had 
  2.23  been made when the first estimate was made, by 
  2.24     (2) the number of installments remaining to be paid on or 
  2.25  after the date on which the amendment is made.  
  2.26     The commissioner of revenue may grant a reasonable 
  2.27  extension of time for filing any declaration but the extension 
  2.28  shall not be for more than six months.  
  2.29     If the aggregate amount of estimated tax payments made 
  2.30  during a the fiscal year ending June 30, 2001, is equal to or 
  2.31  exceeds $80,000, or $40,000 for the fiscal year ending June 30, 
  2.32  2002, $20,000 for the fiscal year ending June 30, 2003, and 
  2.33  $10,000 for the fiscal year ending June 30, 2004, and each 
  2.34  fiscal year ending June 30 thereafter, all estimated tax 
  2.35  payments in the subsequent calendar year must be paid 
  2.36  by electronic means of a funds transfer as defined in section 
  2.37  336.4A-104, paragraph (a).  The funds transfer payment date, as 
  3.1   defined in section 336.4A-401, must be on or before the date the 
  3.2   estimated tax payment is due.  If the date the estimated tax 
  3.3   payment is due is not a funds transfer business day, as defined 
  3.4   in section 336.4A-105, paragraph (a), clause (4), the payment 
  3.5   date must be on or before the funds transfer business day next 
  3.6   following the date the estimated tax payment is due. 
  3.7      [EFFECTIVE DATE.] This section is effective for payments 
  3.8   due on or after July 1, 2001. 
  3.9      Sec. 2.  Minnesota Statutes 2000, section 270.271, 
  3.10  subdivision 1, is amended to read: 
  3.11     Subdivision 1.  [DATE OF DELIVERY.] When a document, 
  3.12  including a return, claim, or statement, is required to be 
  3.13  filed, or a payment is required to be made to the commissioner 
  3.14  within a prescribed period, or on or before a prescribed date, 
  3.15  and if the document or payment is delivered by electronic means 
  3.16  or by United States mail after the period or the date to the 
  3.17  place prescribed for filing or payment, then the date of 
  3.18  delivery or of payment is the date of the confirmation 
  3.19  time-and-date stamp of the transaction, if delivered by 
  3.20  electronic means, or the date of the United States postmark 
  3.21  stamped on the cover in which the document or payment is mailed, 
  3.22  if delivered by United States mail shall be considered the date 
  3.23  of delivery or of payment, as the case may be. 
  3.24     [EFFECTIVE DATE.] This section is effective for returns and 
  3.25  payments due on or after July 1, 2001. 
  3.26     Sec. 3.  Minnesota Statutes 2000, section 270.271, 
  3.27  subdivision 3, is amended to read: 
  3.28     Subd. 3.  [CONFIRMATION OF ELECTRONIC FILING AND PAYMENT 
  3.29  AND UNITED STATES POSTAL SERVICE POSTMARK.] The confirmation 
  3.30  numbers and confirmation time-and-date stamps received by the 
  3.31  taxpayer following electronic payment or filing is proof of the 
  3.32  payment authorization and filing dates.  Only the postmark of 
  3.33  the United States Postal Service, rather than those of private 
  3.34  postage meters, qualifies as proof of timely mailing under this 
  3.35  section.  If the document or payment is sent by United States 
  3.36  registered mail, the date of registration shall be treated as 
  4.1   the postmark date.  If the document or payment is sent by United 
  4.2   States certified mail and the sender's receipt is postmarked by 
  4.3   the postal employee to whom the envelope containing such 
  4.4   document or payment is presented, the date of the United States 
  4.5   postmark on the receipt shall be treated as the postmark date of 
  4.6   the document or payment. 
  4.7      [EFFECTIVE DATE.] This section is effective for returns and 
  4.8   payments due on or after July 1, 2001. 
  4.9      Sec. 4.  Minnesota Statutes 2000, section 270.771, is 
  4.10  amended to read: 
  4.11     270.771 [PAYMENTS REQUIRED TO BE MADE BY ELECTRONIC FUNDS 
  4.12  TRANSFER ELECTRONICALLY.] 
  4.13     (a) If a taxpayer is required to make payment of a tax to 
  4.14  the commissioner by electronic means of electronic funds 
  4.15  transfer as defined in section 336.4A-104, paragraph (a), the 
  4.16  taxpayer shall make all payments of all taxes and fees paid to 
  4.17  the commissioner by electronic means of electronic funds 
  4.18  transfer. 
  4.19     (b) Paragraph (a) does not apply to payments required to be 
  4.20  made for individual income taxes under section 289A.20, 
  4.21  subdivision 1, paragraph (a), or 289A.25.  
  4.22     [EFFECTIVE DATE.] This section is effective the day 
  4.23  following final enactment. 
  4.24     Sec. 5.  Minnesota Statutes 2000, section 270.78, is 
  4.25  amended to read: 
  4.26     270.78 [PENALTY FOR FAILURE TO MAKE PAYMENT BY ELECTRONIC 
  4.27  FUNDS TRANSFER PAY ELECTRONICALLY.] 
  4.28     In addition to other applicable penalties imposed by law, 
  4.29  after notification from the commissioner of revenue to the 
  4.30  taxpayer that payments for a tax administered by the 
  4.31  commissioner are required to be made by electronic means of 
  4.32  electronic funds transfer, and the payments are remitted by some 
  4.33  other means, there is a penalty in the amount of five percent of 
  4.34  each payment that should have been remitted 
  4.35  electronically.  After the commissioner's initial notification 
  4.36  to the taxpayer that payments are required to be made by 
  5.1   electronic means, the commissioner is not required to notify the 
  5.2   taxpayer in subsequent periods if the initial notification 
  5.3   specified the amount of tax liability at which a taxpayer is 
  5.4   required to remit payments by electronic means.  The penalty can 
  5.5   be abated under the abatement procedures prescribed in section 
  5.6   270.07, subdivision 6, if the failure to remit the payment 
  5.7   electronically is due to reasonable cause.  The penalty bears 
  5.8   interest at the rate specified in section 270.75 from the due 
  5.9   date of the payment of the tax to the date of payment of the 
  5.10  penalty. 
  5.11     [EFFECTIVE DATE.] This section is effective the day 
  5.12  following final enactment. 
  5.13     Sec. 6.  Minnesota Statutes 2000, section 287.12, is 
  5.14  amended to read: 
  5.15     287.12 [TAXES, HOW APPORTIONED.] 
  5.16     (a) All taxes paid to the county treasurer under the 
  5.17  provisions of sections 287.01 to 287.12 must be apportioned, 97 
  5.18  percent to the general fund of the state, and three percent to 
  5.19  the county revenue fund. 
  5.20     (b) On or before the 20th day of each month the county 
  5.21  treasurer shall determine and pay to the commissioner of revenue 
  5.22  for deposit in the state treasury and credit to the general fund 
  5.23  the state's portion of the receipts from the mortgage registry 
  5.24  tax during the preceding month subject to the electronic funds 
  5.25  transfer payment requirements of section 270.771.  The county 
  5.26  treasurer shall provide any related reports requested by the 
  5.27  commissioner of revenue. 
  5.28     [EFFECTIVE DATE.] This section is effective the day 
  5.29  following final enactment. 
  5.30     Sec. 7.  Minnesota Statutes 2000, section 289A.02, is 
  5.31  amended by adding a subdivision to read: 
  5.32     Subd. 8.  [ELECTRONIC MEANS.] "Electronic means" refers to 
  5.33  a method that is electronic, as defined in section 325L.02, 
  5.34  paragraph (e), and that is prescribed by the commissioner. 
  5.35     [EFFECTIVE DATE.] This section is effective the day 
  5.36  following final enactment. 
  6.1      Sec. 8.  Minnesota Statutes 2000, section 289A.18, 
  6.2   subdivision 4, is amended to read: 
  6.3      Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
  6.4   tax returns must be filed on or before the 20th day of the month 
  6.5   following the close of the preceding reporting period, except 
  6.6   that annual use tax returns provided for under section 289A.11, 
  6.7   subdivision 1, must be filed by April 15 following the close of 
  6.8   the calendar year, in the case of individuals.  Annual use tax 
  6.9   returns of businesses, including sole proprietorships, and 
  6.10  annual sales tax returns must be filed by February 5 following 
  6.11  the close of the calendar year.  
  6.12     (b) Except for the return for the June reporting period, 
  6.13  which is due on the following August 25, Returns for the June 
  6.14  reporting period filed by retailers required to remit 
  6.15  liabilities by means of funds transfer their June liability 
  6.16  under section 289A.20, subdivision 4, paragraph (d) (b), are due 
  6.17  on or before the 25th day of the month following the close of 
  6.18  the preceding reporting period August 20.  
  6.19     (c) If a retailer has an average sales and use tax 
  6.20  liability, including local sales and use taxes administered by 
  6.21  the commissioner, equal to or less than $500 per month in any 
  6.22  quarter of a calendar year, and has substantially complied with 
  6.23  the tax laws during the preceding four calendar quarters, the 
  6.24  retailer may request authorization to file and pay the taxes 
  6.25  quarterly in subsequent calendar quarters.  The authorization 
  6.26  remains in effect during the period in which the retailer's 
  6.27  quarterly returns reflect sales and use tax liabilities of less 
  6.28  than $1,500 and there is continued compliance with state tax 
  6.29  laws. 
  6.30     (d) If a retailer has an average sales and use tax 
  6.31  liability, including local sales and use taxes administered by 
  6.32  the commissioner, equal to or less than $100 per month during a 
  6.33  calendar year, and has substantially complied with the tax laws 
  6.34  during that period, the retailer may request authorization to 
  6.35  file and pay the taxes annually in subsequent years.  The 
  6.36  authorization remains in effect during the period in which the 
  7.1   retailer's annual returns reflect sales and use tax liabilities 
  7.2   of less than $1,200 and there is continued compliance with state 
  7.3   tax laws. 
  7.4      (e) The commissioner may also grant quarterly or annual 
  7.5   filing and payment authorizations to retailers if the 
  7.6   commissioner concludes that the retailers' future tax 
  7.7   liabilities will be less than the monthly totals identified in 
  7.8   paragraphs (c) and (d).  An authorization granted under this 
  7.9   paragraph is subject to the same conditions as an authorization 
  7.10  granted under paragraphs (c) and (d). 
  7.11     (f) A taxpayer who is a materials supplier may report gross 
  7.12  receipts either on: 
  7.13     (1) the cash basis as the consideration is received; or 
  7.14     (2) the accrual basis as sales are made.  
  7.15  As used in this paragraph, "materials supplier" means a person 
  7.16  who provides materials for the improvement of real property; who 
  7.17  is primarily engaged in the sale of lumber and building 
  7.18  materials-related products to owners, contractors, 
  7.19  subcontractors, repairers, or consumers; who is authorized to 
  7.20  file a mechanics lien upon real property and improvements under 
  7.21  chapter 514; and who files with the commissioner an election to 
  7.22  file sales and use tax returns on the basis of this paragraph. 
  7.23     [EFFECTIVE DATE.] This section is effective for returns due 
  7.24  on or after July 1, 2001. 
  7.25     Sec. 9.  Minnesota Statutes 2000, section 289A.20, 
  7.26  subdivision 1, is amended to read: 
  7.27     Subdivision 1.  [INDIVIDUAL INCOME, FIDUCIARY INCOME, 
  7.28  MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.] 
  7.29  (a) Individual income, fiduciary, mining company, and corporate 
  7.30  franchise taxes must be paid to the commissioner on or before 
  7.31  the date the return must be filed under section 289A.18, 
  7.32  subdivision 1, or the extended due date as provided in section 
  7.33  289A.19, unless an earlier date for payment is provided.  
  7.34     Notwithstanding any other law, a taxpayer whose unpaid 
  7.35  liability for income or corporate franchise taxes, as reflected 
  7.36  upon the return, is $1 or less need not pay the tax.  
  8.1      (b) Entertainment taxes must be paid on or before the date 
  8.2   the return must be filed under section 289A.18, subdivision 1. 
  8.3      (c) If a fiduciary administers 100 or more trusts, 
  8.4   fiduciary income taxes for all trusts administered by the 
  8.5   fiduciary must be paid by funds transfer as defined in section 
  8.6   336.4A-104, paragraph (a).  The funds transfer payment date, as 
  8.7   defined in section 336.4A-401, must be on or before the date the 
  8.8   tax payment is due.  If the date the payment is due is not a 
  8.9   funds transfer business day, as defined in section 336.4A-105, 
  8.10  paragraph (a), clause (4), the payment date must be on or before 
  8.11  the funds transfer business day next following the date the 
  8.12  payment is due electronic means.  
  8.13     [EFFECTIVE DATE.] This section is effective the day 
  8.14  following final enactment. 
  8.15     Sec. 10.  Minnesota Statutes 2000, section 289A.20, 
  8.16  subdivision 2, is amended to read: 
  8.17     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
  8.18  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
  8.19  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
  8.20  (a) A tax required to be deducted and withheld during the 
  8.21  quarterly period must be paid on or before the last day of the 
  8.22  month following the close of the quarterly period, unless an 
  8.23  earlier time for payment is provided.  A tax required to be 
  8.24  deducted and withheld from compensation of an entertainer and 
  8.25  from a payment to an out-of-state contractor must be paid on or 
  8.26  before the date the return for such tax must be filed under 
  8.27  section 289A.18, subdivision 2.  Taxes required to be deducted 
  8.28  and withheld by partnerships and S corporations must be paid on 
  8.29  or before the date the return must be filed under section 
  8.30  289A.18, subdivision 2. 
  8.31     (b) An employer who, during the previous quarter, withheld 
  8.32  more than $1,500 of tax under section 290.92, subdivision 2a or 
  8.33  3, or 290.923, subdivision 2, must deposit tax withheld under 
  8.34  those sections with the commissioner within the time allowed to 
  8.35  deposit the employer's federal withheld employment taxes under 
  8.36  Treasury Regulation, section 31.6302-1, without regard to the 
  9.1   safe harbor or de minimis rules in subparagraph (f) or the 
  9.2   one-day rule in subsection (c), clause (3).  Taxpayers must 
  9.3   submit a copy of their federal notice of deposit status to the 
  9.4   commissioner upon request by the commissioner. 
  9.5      (c) The commissioner may prescribe by rule other return 
  9.6   periods or deposit requirements.  In prescribing the reporting 
  9.7   period, the commissioner may classify payors according to the 
  9.8   amount of their tax liability and may adopt an appropriate 
  9.9   reporting period for the class that the commissioner judges to 
  9.10  be consistent with efficient tax collection.  In no event will 
  9.11  the duration of the reporting period be more than one year. 
  9.12     (d) If less than the correct amount of tax is paid to the 
  9.13  commissioner, proper adjustments with respect to both the tax 
  9.14  and the amount to be deducted must be made, without interest, in 
  9.15  the manner and at the times the commissioner prescribes.  If the 
  9.16  underpayment cannot be adjusted, the amount of the underpayment 
  9.17  will be assessed and collected in the manner and at the times 
  9.18  the commissioner prescribes. 
  9.19     (e) If the aggregate amount of the tax withheld during a 
  9.20  the fiscal year ending June 30, 2001, under section 290.92, 
  9.21  subdivision 2a or 3, is equal to or exceeds the amounts 
  9.22  established for remitting federal withheld taxes pursuant to the 
  9.23  regulations promulgated under section 6302(h) of the Internal 
  9.24  Revenue Code $25,000, or $10,000 for the fiscal year ending June 
  9.25  30, 2002, and each fiscal year ending June 30 thereafter, the 
  9.26  employer must remit each required deposit for wages paid in the 
  9.27  subsequent calendar year by electronic means of a funds transfer 
  9.28  as defined in section 336.4A-104, paragraph (a).  The funds 
  9.29  transfer payment date, as defined in section 336.4A-401, must be 
  9.30  on or before the date the deposit is due.  If the date the 
  9.31  deposit is due is not a funds transfer business day, as defined 
  9.32  in section 336.4A-105, paragraph (a), clause (4), the payment 
  9.33  date must be on or before the funds transfer business day next 
  9.34  following the date the deposit is due. 
  9.35     (f) A third-party bulk filer as defined in section 290.92, 
  9.36  subdivision 30, paragraph (a), clause (2), who remits 
 10.1   withholding deposits must remit all deposits by electronic means 
 10.2   of a funds transfer as provided in paragraph (e), regardless of 
 10.3   the aggregate amount of tax withheld during a fiscal year for 
 10.4   all of the employers.  
 10.5      [EFFECTIVE DATE.] This section is effective for payments 
 10.6   due on or after July 1, 2001. 
 10.7      Sec. 11.  Minnesota Statutes 2000, section 289A.20, 
 10.8   subdivision 4, is amended to read: 
 10.9      Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
 10.10  chapter 297A are due and payable to the commissioner monthly on 
 10.11  or before the 20th day of the month following the month in which 
 10.12  the taxable event occurred, or following another reporting 
 10.13  period as the commissioner prescribes or as allowed under 
 10.14  section 289A.18, subdivision 4, paragraph (f), except that use 
 10.15  taxes due on an annual use tax return as provided under section 
 10.16  289A.11, subdivision 1, are payable by April 15 following the 
 10.17  close of the calendar year. 
 10.18     (b) A vendor having a liability of $120,000 or more during 
 10.19  a fiscal year ending June 30 must remit the June liability for 
 10.20  the next year in the following manner: 
 10.21     (1) Two business days before June 30 of the year, the 
 10.22  vendor must remit 62 percent of the estimated June liability to 
 10.23  the commissioner.  
 10.24     (2) On or before August 14 20 of the year, the vendor must 
 10.25  pay any additional amount of tax not remitted in June. 
 10.26     (c) A vendor having a liability of $120,000 $80,000 or more 
 10.27  during a the fiscal year ending June 30, 2001, or at least 
 10.28  $40,000 for the fiscal year ending June 30, 2002, $20,000 for 
 10.29  the fiscal year ending June 30, 2003, and $10,000 for the fiscal 
 10.30  year ending June 30, 2004, and each fiscal year ending June 30 
 10.31  thereafter, must remit all liabilities on returns due for 
 10.32  periods beginning in the subsequent calendar year by electronic 
 10.33  means of a funds transfer as defined in section 336.4A-104, 
 10.34  paragraph (a).  The funds transfer payment date, as defined in 
 10.35  section 336.4A-401, must be on or before the 14th 20th day of 
 10.36  the month following the month in which the taxable event 
 11.1   occurred, or on or before the 14th 20th day of the month 
 11.2   following the month in which the sale is reported under section 
 11.3   289A.18, subdivision 4, except for 62 percent of the estimated 
 11.4   June liability, which is due two business days before June 30.  
 11.5   The remaining amount of the June liability is due on August 14 
 11.6   20.  If the date the tax is due is not a funds transfer business 
 11.7   day, as defined in section 336.4A-105, paragraph (a), clause 
 11.8   (4), the payment date must be on or before the funds transfer 
 11.9   business day next following the date the tax is due. 
 11.10     (d) If the vendor required to remit by electronic funds 
 11.11  transfer as provided in paragraph (c) is unable due to 
 11.12  reasonable cause to determine the actual sales and use tax due 
 11.13  on or before the due date for payment, the vendor may remit an 
 11.14  estimate of the tax owed using one of the following options: 
 11.15     (1) 100 percent of the tax reported on the previous month's 
 11.16  sales and use tax return; 
 11.17     (2) 100 percent of the tax reported on the sales and use 
 11.18  tax return for the same month in the previous calendar year; or 
 11.19     (3) 95 percent of the actual tax due. 
 11.20     Any additional amount of tax that is not remitted on or 
 11.21  before the due date for payment, must be remitted with the 
 11.22  return.  If a vendor fails to remit the actual liability or does 
 11.23  not remit using one of the estimate options by the due date for 
 11.24  payment, the vendor must remit actual liability as provided in 
 11.25  paragraph (c) in all subsequent periods.  This paragraph does 
 11.26  not apply to the June sales and use tax liability. 
 11.27     [EFFECTIVE DATE.] This section is effective for payments 
 11.28  due on or after July 1, 2001. 
 11.29     Sec. 12.  Minnesota Statutes 2000, section 289A.26, 
 11.30  subdivision 2a, is amended to read: 
 11.31     Subd. 2a.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the 
 11.32  aggregate amount of estimated tax payments made during a 
 11.33  calendar year is equal to or exceeds $20,000, or $10,000 for the 
 11.34  calendar year 2004, and each calendar year thereafter, all 
 11.35  estimated tax payments in the subsequent calendar year must be 
 11.36  paid by electronic means of a funds transfer as defined in 
 12.1   section 336.4A-104, paragraph (a).  The funds transfer payment 
 12.2   date, as defined in section 336.4A-401, must be on or before the 
 12.3   date the estimated tax payment is due.  If the date the 
 12.4   estimated tax payment is due is not a funds transfer business 
 12.5   day, as defined in section 336.4A-105, paragraph (a), clause 
 12.6   (4), the payment date must be on or before the funds transfer 
 12.7   business day next following the date the estimated tax payment 
 12.8   is due. 
 12.9      [EFFECTIVE DATE.] This section is effective for payments 
 12.10  due on or after July 1, 2001. 
 12.11     Sec. 13.  Minnesota Statutes 2000, section 289A.60, 
 12.12  subdivision 21, is amended to read: 
 12.13     Subd. 21.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
 12.14  ELECTRONIC FUNDS TRANSFER MEANS.] In addition to other 
 12.15  applicable penalties imposed by this section, after notification 
 12.16  from the commissioner to the taxpayer that payments are required 
 12.17  to be made by electronic means of electronic funds transfer 
 12.18  under section 289A.20, subdivision 2, paragraph (e), or 4, 
 12.19  paragraph (d) (c), or 289A.26, subdivision 2a, and the payments 
 12.20  are remitted by some other means, there is a penalty in the 
 12.21  amount of five percent of each payment that should have been 
 12.22  remitted electronically.  After the commissioner's initial 
 12.23  notification to the taxpayer that payments are required to be 
 12.24  made by electronic means, the commissioner is not required to 
 12.25  notify the taxpayer in subsequent periods if the initial 
 12.26  notification specified the amount of tax liability at which a 
 12.27  taxpayer is required to remit payments by electronic means.  The 
 12.28  penalty can be abated under the abatement procedures prescribed 
 12.29  in section 270.07, subdivision 6, if the failure to remit the 
 12.30  payment electronically is due to reasonable cause. 
 12.31     [EFFECTIVE DATE.] This section is effective the day 
 12.32  following final enactment. 
 12.33     Sec. 14.  Minnesota Statutes 2000, section 295.55, 
 12.34  subdivision 4, is amended to read: 
 12.35     Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
 12.36  with an aggregate tax liability of $120,000 $80,000 or more 
 13.1   during a the fiscal year ending June 30, 2001, or at least 
 13.2   $40,000 for the fiscal year ending June 30, 2002, $20,000 for 
 13.3   the fiscal year ending June 30, 2003, and $10,000 for the fiscal 
 13.4   year ending June 30, 2004, and each fiscal year ending June 30 
 13.5   thereafter, must remit all liabilities by electronic means of a 
 13.6   funds transfer as defined in section 336.4A-104, paragraph (a), 
 13.7   in the subsequent calendar year.  The funds transfer payment 
 13.8   date, as defined in section 336.4A-401, is on or before the date 
 13.9   the tax is due.  If the date the tax is due is not a 
 13.10  funds-transfer business day, as defined in section 336.4A-105, 
 13.11  paragraph (a), clause (4), the payment date is on or before the 
 13.12  first funds-transfer business day after the date the tax is due. 
 13.13     [EFFECTIVE DATE.] This section is effective for payments 
 13.14  due on or after July 1, 2001. 
 13.15     Sec. 15.  Minnesota Statutes 2000, section 296A.15, 
 13.16  subdivision 7, is amended to read: 
 13.17     Subd. 7.  [ELECTRONIC FUNDS TRANSFER PAYMENT REQUIRED.] All 
 13.18  remittances must be made by electronic means of electronic funds 
 13.19  transfer as defined in section 336.4A-104, paragraph (a).  The 
 13.20  funds transfer payment date, as defined in section 336.4A-401, 
 13.21  must be on or before the date the remittance is due.  If the 
 13.22  date the remittance is due is not a funds transfer business day, 
 13.23  as defined in section 336.4A-105, paragraph (a), clause (4), the 
 13.24  payment date must be on or before the funds transfer business 
 13.25  day next following the date the remittance is due.  
 13.26     [EFFECTIVE DATE.] This section is effective the day 
 13.27  following final enactment. 
 13.28     Sec. 16.  Minnesota Statutes 2000, section 297E.02, 
 13.29  subdivision 4, is amended to read: 
 13.30     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
 13.31  on the sale of each deal of pull-tabs and tipboards sold by a 
 13.32  distributor.  The rate of the tax is 1.7 percent of the ideal 
 13.33  gross of the pull-tab or tipboard deal.  The sales tax imposed 
 13.34  by chapter 297A on the sale of the pull-tabs and tipboards by 
 13.35  the distributor is imposed on the retail sales price less the 
 13.36  tax imposed by this subdivision.  The retail sale of pull-tabs 
 14.1   or tipboards by the organization is exempt from taxes imposed by 
 14.2   chapter 297A and is exempt from all local taxes and license fees 
 14.3   except a fee authorized under section 349.16, subdivision 8.  
 14.4      (b) The liability for the tax imposed by this section is 
 14.5   incurred when the pull-tabs and tipboards are delivered by the 
 14.6   distributor to the customer or to a common or contract carrier 
 14.7   for delivery to the customer, or when received by the customer's 
 14.8   authorized representative at the distributor's place of 
 14.9   business, regardless of the distributor's method of accounting 
 14.10  or the terms of the sale.  
 14.11     The tax imposed by this subdivision is imposed on all sales 
 14.12  of pull-tabs and tipboards, except the following:  
 14.13     (1) sales to the governing body of an Indian tribal 
 14.14  organization for use on an Indian reservation; 
 14.15     (2) sales to distributors licensed under the laws of 
 14.16  another state or of a province of Canada, as long as all 
 14.17  statutory and regulatory requirements are met in the other state 
 14.18  or province; 
 14.19     (3) sales of promotional tickets as defined in section 
 14.20  349.12; and 
 14.21     (4) pull-tabs and tipboards sold to an organization that 
 14.22  sells pull-tabs and tipboards under the exemption from licensing 
 14.23  in section 349.166, subdivision 2.  A distributor shall require 
 14.24  an organization conducting exempt gambling to show proof of its 
 14.25  exempt status before making a tax-exempt sale of pull-tabs or 
 14.26  tipboards to the organization.  A distributor shall identify, on 
 14.27  all reports submitted to the commissioner, all sales of 
 14.28  pull-tabs and tipboards that are exempt from tax under this 
 14.29  subdivision.  
 14.30     (c) A distributor having a liability of $120,000 $80,000 or 
 14.31  more during a the fiscal year ending June 30, 2001, or at least 
 14.32  $40,000 for the fiscal year ending June 30, 2002, $20,000 for 
 14.33  the fiscal year ending June 30, 2003, and $10,000 for the fiscal 
 14.34  year ending June 30, 2004, and each fiscal year ending June 30 
 14.35  thereafter, must remit all liabilities in the subsequent 
 14.36  calendar year by a funds transfer as defined in section 
 15.1   336.4A-104, paragraph (a).  The funds transfer payment date, as 
 15.2   defined in section 336.4A-401, must be on or before the date the 
 15.3   tax is due.  If the date the tax is due is not a funds transfer 
 15.4   business day, as defined in section 336.4A-105, paragraph (a), 
 15.5   clause (4), the payment date must be on or before the funds 
 15.6   transfer business day next following the date the tax is 
 15.7   due electronic means. 
 15.8      (d) Any customer who purchases deals of pull-tabs or 
 15.9   tipboards from a distributor may file an annual claim for a 
 15.10  refund or credit of taxes paid pursuant to this subdivision for 
 15.11  unsold pull-tab and tipboard tickets.  The claim must be filed 
 15.12  with the commissioner on a form prescribed by the commissioner 
 15.13  by March 20 of the year following the calendar year for which 
 15.14  the refund is claimed.  The refund must be filed as part of the 
 15.15  customer's February monthly return.  The refund or credit is 
 15.16  equal to 1.7 percent of the face value of the unsold pull-tab or 
 15.17  tipboard tickets, provided that the refund or credit will be 
 15.18  1.75 percent of the face value of the unsold pull-tab or 
 15.19  tipboard tickets for claims for a refund or credit of taxes 
 15.20  filed on the February 2001 monthly return.  The refund claimed 
 15.21  will be applied as a credit against tax owing under this chapter 
 15.22  on the February monthly return.  If the refund claimed exceeds 
 15.23  the tax owing on the February monthly return, that amount will 
 15.24  be refunded.  The amount refunded will bear interest pursuant to 
 15.25  section 270.76 from 90 days after the claim is filed.  
 15.26     [EFFECTIVE DATE.] This section is effective for payments 
 15.27  due on or after July 1, 2001. 
 15.28     Sec. 17.  Minnesota Statutes 2000, section 297F.09, 
 15.29  subdivision 7, is amended to read: 
 15.30     Subd. 7.  [ELECTRONIC FUNDS TRANSFER PAYMENT.] A cigarette 
 15.31  or tobacco products distributor having a liability 
 15.32  of $120,000 $80,000 or more during a the fiscal year ending June 
 15.33  30, 2001, or at least $40,000 for the fiscal year ending June 
 15.34  30, 2002, $20,000 for the fiscal year ending June 30, 2003, and 
 15.35  $10,000 for the fiscal year ending June 30, 2004, and each 
 15.36  fiscal year ending June 30 thereafter, must remit all 
 16.1   liabilities in the subsequent calendar year by electronic means 
 16.2   of a fund transfer as defined in section 336.4A-104, paragraph 
 16.3   (a).  The funds transfer payment date, as defined in section 
 16.4   336.4A-401, must be on or before the date the tax is due.  If 
 16.5   the date the tax is due is not a funds transfer business day, as 
 16.6   defined in section 336.4A-105, paragraph (a), clause (4), the 
 16.7   payment date must be on or before the funds transfer day 
 16.8   immediately following the date the tax is due. 
 16.9      [EFFECTIVE DATE.] This section is effective for payments 
 16.10  due on or after July 1, 2001. 
 16.11     Sec. 18.  Minnesota Statutes 2000, section 297G.09, 
 16.12  subdivision 6, is amended to read: 
 16.13     Subd. 6.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A licensed 
 16.14  brewer, importer, or wholesaler having an excise tax liability 
 16.15  of $120,000 $80,000 or more during a the fiscal year ending June 
 16.16  30, 2001, or at least $40,000 for the fiscal year ending June 
 16.17  30, 2002, $20,000 for the fiscal year ending June 30, 2003, and 
 16.18  $10,000 for the fiscal year ending June 30, 2004, and each 
 16.19  fiscal year ending June 30 thereafter, must remit all excise tax 
 16.20  liabilities in the subsequent calendar year by electronic means 
 16.21  of a funds transfer as defined in section 336.4A-104, paragraph 
 16.22  (a).  The funds transfer payment date, as defined in section 
 16.23  336.4A-401, must be on or before the date the excise tax is 
 16.24  due.  If the date the excise tax is due is not a funds transfer 
 16.25  business day, as defined in section 336.4A-105, paragraph (a), 
 16.26  clause (4), the payment date must be on or before the funds 
 16.27  transfer business day next following the date the excise tax is 
 16.28  due. 
 16.29     [EFFECTIVE DATE.] This section is effective for payments 
 16.30  due on or after July 1, 2001. 
 16.31     Sec. 19.  Minnesota Statutes 2000, section 297I.35, 
 16.32  subdivision 2, is amended to read: 
 16.33     Subd. 2.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the 
 16.34  aggregate amount of tax and surcharges due under this chapter 
 16.35  during a the calendar year ending December 31, 2001, is equal to 
 16.36  or exceeds $120,000 $80,000, or $40,000 for the calendar year 
 17.1   ending December 31, 2002, $20,000 for the calendar year ending 
 17.2   December 31, 2003, and $10,000 for the calendar year ending 
 17.3   December 31, 2004, and each calendar year thereafter, or if the 
 17.4   taxpayer is required to make payment of any other tax to the 
 17.5   commissioner by electronic means of electronic funds transfer as 
 17.6   defined in section 336.4A-104, paragraph (a), then all tax and 
 17.7   surcharge payments in the subsequent calendar year must be paid 
 17.8   by electronic means of a funds transfer as defined in section 
 17.9   336.4A-104, paragraph (a).  The funds transfer payment date, as 
 17.10  defined in section 336.4A-104, must be on or before the date the 
 17.11  payment is due.  If the date the payment is due is not a funds 
 17.12  transfer business day, as defined in section 336.4A-105, 
 17.13  paragraph (a), clause (4), the payment date must be on or before 
 17.14  the funds transfer business day next following the date the 
 17.15  payment is due. 
 17.16     [EFFECTIVE DATE.] This section is effective for payments 
 17.17  due on or after January 1, 2002. 
 17.18     Sec. 20.  Minnesota Statutes 2000, section 297I.85, 
 17.19  subdivision 7, is amended to read: 
 17.20     Subd. 7.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
 17.21  ELECTRONIC FUNDS TRANSFER PAY ELECTRONICALLY.] In addition to 
 17.22  other applicable penalties imposed by this section, if the 
 17.23  commissioner notifies the taxpayer that payments are required to 
 17.24  be made by electronic means of electronic funds transfer, and 
 17.25  the payments are made by some other means, a penalty is 
 17.26  imposed.  The amount of the penalty is equal to five percent of 
 17.27  each payment that should have been paid electronically.  The 
 17.28  penalty may be abated under the abatement procedures prescribed 
 17.29  in section 270.07, subdivision 6, if the failure to pay 
 17.30  electronically is due to reasonable cause. 
 17.31     [EFFECTIVE DATE.] This section is effective the day 
 17.32  following final enactment. 
 17.33     Sec. 21.  Minnesota Statutes 2000, section 473.843, 
 17.34  subdivision 3, is amended to read: 
 17.35     Subd. 3.  [PAYMENT OF FEE.] On or before the 20th day of 
 17.36  each month each operator shall pay the fee due under this 
 18.1   section for the previous month, using a form provided by the 
 18.2   commissioner of revenue.  
 18.3      An operator having a fee of $120,000 $80,000 or more during 
 18.4   a the fiscal year ending June 30, 2001, or at least $40,000 for 
 18.5   the fiscal year ending June 30, 2002, $20,000 for the fiscal 
 18.6   year ending June 30, 2003, and $10,000 for the fiscal year 
 18.7   ending June 30, 2004, and each fiscal year ending June 30 
 18.8   thereafter, must pay all fees in the subsequent calendar year by 
 18.9   electronic means of a funds transfer as defined in section 
 18.10  336.4A-104, paragraph (a).  The funds transfer payment date, as 
 18.11  defined in section 336.4A-401, must be on or before the date the 
 18.12  fee is due.  If the date the fee is due is not a funds transfer 
 18.13  business day, as defined in section 336.4A-105, paragraph (a), 
 18.14  clause (4), the payment date must be on or before the funds 
 18.15  transfer business day next following the date the fee is due. 
 18.16     [EFFECTIVE DATE.] This section is effective for payments 
 18.17  due on or after July 1, 2001. 
 18.18                             ARTICLE 2 
 18.19              UNIFORM SALES AND USE TAX ADMINISTRATION 
 18.20     Section 1.  Minnesota Statutes 2000, section 289A.40, 
 18.21  subdivision 2, is amended to read: 
 18.22     Subd. 2.  [BAD DEBT LOSS.] If a claim relates to an 
 18.23  overpayment because of a failure to deduct a loss due to a bad 
 18.24  debt or to a security becoming worthless, the claim is 
 18.25  considered timely if filed within seven years from the date 
 18.26  prescribed for the filing of the return.  A claim relating to an 
 18.27  overpayment of taxes under chapter 297A must be filed within 
 18.28  3-1/2 years from the date prescribed for filing the return, plus 
 18.29  any extensions granted for filing the return, but only if filed 
 18.30  within the extended time, or within one year from the date the 
 18.31  taxpayer's federal income tax return is timely filed claiming 
 18.32  the bad debt deduction, whichever period expires later.  The 
 18.33  refund or credit is limited to the amount of overpayment 
 18.34  attributable to the loss. 
 18.35     [EFFECTIVE DATE.] This section is effective for bad debt 
 18.36  losses claimed after December 31, 2001. 
 19.1      Sec. 2.  Minnesota Statutes 2000, section 289A.40, is 
 19.2   amended by adding a subdivision to read: 
 19.3      Subd. 4.  [SALES TAX; BAD DEBTS.] A claim relating to an 
 19.4   overpayment of taxes under chapter 297A resulting from a bad 
 19.5   debt loss must be deducted within 12 months following the month 
 19.6   in which the bad debt has been charged off for federal income 
 19.7   tax purposes.  For purposes of this subdivision, "charged off 
 19.8   for federal income tax purposes" includes the charging off of 
 19.9   unpaid balances due on accounts as uncollectible, or declaring 
 19.10  as uncollectible the unpaid balance due on accounts in the 
 19.11  instance of a seller who is not required to file federal income 
 19.12  tax returns.  If a deduction is taken for a bad debt and the 
 19.13  seller subsequently collects the debt in whole or in part, the 
 19.14  tax on the amount so collected must be paid and reported on the 
 19.15  return filed for the period in which the collection is made.  A 
 19.16  seller may obtain a refund of tax on any amount of bad debt that 
 19.17  exceeds the amount of taxable sales within a 12-month period 
 19.18  defined by that bad debt.  If a seller's filing responsibilities 
 19.19  have been assumed by a certified service provider, the service 
 19.20  provider may claim, on behalf of the seller, any bad debt 
 19.21  allowance provided by this section.  The certified service 
 19.22  provider must credit or refund to the seller the full amount of 
 19.23  any bad debt allowance or refund received.  For the purposes of 
 19.24  computing a bad debt deduction or reporting a payment received 
 19.25  on a previously claimed bad debt, any payments made on a debt or 
 19.26  account are applied first to the price of the property or 
 19.27  service and sales tax on it, proportionally, and secondly to 
 19.28  interest, service charges, and any other charges. 
 19.29     [EFFECTIVE DATE.] This section is effective for bad debt 
 19.30  losses claimed after December 31, 2001. 
 19.31     Sec. 3.  Minnesota Statutes 2000, section 297A.61, 
 19.32  subdivision 3, is amended to read: 
 19.33     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
 19.34  include, but are not limited to, each of the transactions listed 
 19.35  in this subdivision. 
 19.36     (b) Sale and purchase include any transfer of title or 
 20.1   possession, or both, of tangible personal property, whether 
 20.2   absolutely or conditionally, and the leasing of or the granting 
 20.3   of a license to use or consume, for a consideration, tangible 
 20.4   personal property, other than a manufactured home used for 
 20.5   residential purposes for a continuous period of 30 days or more. 
 20.6      (c) Sale and purchase include the production, fabrication, 
 20.7   printing, or processing of tangible personal property for a 
 20.8   consideration for consumers who furnish either directly or 
 20.9   indirectly the materials used in the production, fabrication, 
 20.10  printing, or processing. 
 20.11     (d) Sale and purchase include the furnishing, preparing, or 
 20.12  serving for a consideration of food or drinks.  Notwithstanding 
 20.13  section 297A.67, subdivision 2, taxable food or drinks 
 20.14  include includes, but are is not limited to, the following: 
 20.15     (1) prepared food or drinks sold by the retailer for 
 20.16  immediate consumption on the retailer's premises.  Food and 
 20.17  drinks sold within a building or grounds that require an 
 20.18  admission charge for entrance are presumed to be sold for 
 20.19  consumption on the premises; 
 20.20     (2) food or drinks prepared by the retailer for immediate 
 20.21  consumption either on or off the retailer's premises.  For 
 20.22  purposes of this subdivision, "food or drinks prepared for 
 20.23  immediate consumption" means any food product upon which an act 
 20.24  of preparation including, but not limited to, cooking, mixing, 
 20.25  sandwich making, blending, heating, or pouring has been 
 20.26  performed by the retailer so the food product may be immediately 
 20.27  consumed by the purchaser; 
 20.28     (3) ice cream, ice milk, frozen yogurt products, or frozen 
 20.29  novelties sold in single or individual servings including, but 
 20.30  not limited to, cones, sundaes, and snow cones; 
 20.31     (4) (2) soft drinks and other beverages, including all 
 20.32  carbonated and noncarbonated beverages or drinks sold in liquid 
 20.33  form, but not including beverages or drinks which contain milk 
 20.34  or milk products, beverages or drinks containing 15 or more 
 20.35  percent fruit juice, and noncarbonated and noneffervescent 
 20.36  bottled water sold in individual containers of one-half gallon 
 21.1   or more in size; 
 21.2      (5) gum, (3) candy, and candy products; and 
 21.3      (6) ice; 
 21.4      (7) (4) all food sold from through vending machines;.  
 21.5      (8) all food for immediate consumption sold from concession 
 21.6   stands and vehicles; 
 21.7      (9) party trays; 
 21.8      (10) all meals and single servings of packaged snack food 
 21.9   sold in restaurants and bars; and 
 21.10     (11) bakery products that are: 
 21.11     (i) prepared by the retailer for consumption on the 
 21.12  retailer's premises; 
 21.13     (ii) sold at a place that charges admission; 
 21.14     (iii) sold from vending machines; or 
 21.15     (iv) sold in single or individual servings from concession 
 21.16  stands, vehicles, bars, and restaurants.  
 21.17     For purposes of this paragraph, "single or individual 
 21.18  servings" does not include products when sold in bulk containers 
 21.19  or bulk packaging.  
 21.20     For purposes of this paragraph, "premises" means the total 
 21.21  space and facilities, including buildings, grounds, and parking 
 21.22  lots that are made available or that are available for use by 
 21.23  the retailer or customer for the purpose of sale or consumption 
 21.24  of prepared food and drinks.  The premises of a caterer is the 
 21.25  place where the catered food or drinks are served. 
 21.26     (e) A sale and a purchase includes the furnishing for a 
 21.27  consideration of electricity, gas, water, or steam for use or 
 21.28  consumption within this state or local exchange telephone 
 21.29  service, intrastate toll service, and interstate toll service, 
 21.30  if that service originates from and is charged to a telephone 
 21.31  located in this state.  Telephone service includes (1) paging 
 21.32  services, and (2) private communication service, as defined in 
 21.33  United States Code, title 26, section 4252(d), except for 
 21.34  private communication service purchased by an agent acting on 
 21.35  behalf of the state lottery.  Telephone service does not include 
 21.36  services purchased with a prepaid telephone calling card.  The 
 22.1   furnishing for a consideration of access to telephone services 
 22.2   by a hotel to its guests is a sale.  The furnishing for a 
 22.3   consideration of items listed in this paragraph by a municipal 
 22.4   corporation is a sale. 
 22.5      (f) A sale and a purchase includes the transfer for a 
 22.6   consideration of computer software.  
 22.7      (g) A sale and a purchase includes the furnishing for a 
 22.8   consideration of taxable services as defined in subdivision 16. 
 22.9      (h) A sale and a purchase includes the furnishing for a 
 22.10  consideration of tangible personal property or taxable services 
 22.11  by the United States or any of its agencies or 
 22.12  instrumentalities, or the state of Minnesota, its agencies, 
 22.13  instrumentalities, or political subdivisions. 
 22.14     [EFFECTIVE DATE.] This section is effective for sales and 
 22.15  purchases occurring after December 31, 2001. 
 22.16     Sec. 4.  Minnesota Statutes 2000, section 297A.61, 
 22.17  subdivision 4, is amended to read: 
 22.18     Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a any 
 22.19  sale, lease, or rental for any purpose other than resale in the 
 22.20  regular course of business, sublease, or subrent.  
 22.21     (b) A sale of property used by the owner only by leasing it 
 22.22  to others or by holding it in an effort to lease it, and put to 
 22.23  no use by the owner other than resale after the lease or effort 
 22.24  to lease, is a sale of property for resale.  
 22.25     (c) A sale of master computer software that is purchased 
 22.26  and used to make copies for sale or lease is a sale of property 
 22.27  for resale.  
 22.28     (d) A sale of building materials, supplies, and equipment 
 22.29  to owners, contractors, subcontractors, or builders for the 
 22.30  erection of buildings or the alteration, repair, or improvement 
 22.31  of real property is a retail sale in whatever quantity sold, 
 22.32  whether the sale is for purposes of resale in the form of real 
 22.33  property or otherwise.  
 22.34     (e) A sale of carpeting, linoleum, or similar floor 
 22.35  covering to a person who provides for installation of the floor 
 22.36  covering is a retail sale and not a sale for resale since a sale 
 23.1   of floor covering which includes installation is a contract for 
 23.2   the improvement of real property. 
 23.3      (f) A sale of shrubbery, plants, sod, trees, and similar 
 23.4   items to a person who provides for installation of the items is 
 23.5   a retail sale and not a sale for resale since a sale of 
 23.6   shrubbery, plants, sod, trees, and similar items that includes 
 23.7   installation is a contract for the improvement of real property. 
 23.8      (g) A sale of tangible personal property that is awarded as 
 23.9   prizes is a retail sale and is not considered a sale of property 
 23.10  for resale. 
 23.11     (h) A sale of tangible personal property utilized or 
 23.12  employed in the furnishing or providing of services under 
 23.13  subdivision 16, paragraph (b), including, but not limited to, 
 23.14  property given as promotional items, is a retail sale and is not 
 23.15  considered a sale of property for resale. 
 23.16     (i) A sale of tangible personal property used in conducting 
 23.17  lawful gambling under chapter 349 or the state lottery under 
 23.18  chapter 349A, including, but not limited to, property given as 
 23.19  promotional items, is a retail sale and is not considered a sale 
 23.20  of property for resale. 
 23.21     (j) A sale of machines, equipment, or devices that are used 
 23.22  to furnish, provide, or dispense goods or services, including, 
 23.23  but not limited to, coin-operated devices, is a retail sale and 
 23.24  is not considered a sale of property for resale. 
 23.25     (k) In the case of a lease, a retail sale occurs when an 
 23.26  obligation to make a lease payment becomes due under the terms 
 23.27  of the agreement or the trade practices of the lessor. 
 23.28     (l) In the case of a conditional sales contract, a retail 
 23.29  sale occurs upon the transfer of title or possession of the 
 23.30  tangible personal property. 
 23.31     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 23.32     Sec. 5.  Minnesota Statutes 2000, section 297A.61, 
 23.33  subdivision 7, is amended to read: 
 23.34     Subd. 7.  [SALES PRICE.] (a) "Sales price" means the total 
 23.35  consideration for a retail sale, valued in money, whether paid 
 23.36  in money or by barter or exchange. the measure subject to sales 
 24.1   tax, and means the total amount of consideration, including 
 24.2   cash, credit, property, and services, for which personal 
 24.3   property or services are sold, leased, or rented, valued in 
 24.4   money, whether received in money or otherwise, without any 
 24.5   deduction for the following: 
 24.6      (1) the seller's cost of the property sold; 
 24.7      (2) the cost of materials used, labor or service cost, 
 24.8   interest, losses, all costs of transportation to the seller, all 
 24.9   taxes imposed on the seller, and any other expenses of the 
 24.10  seller; 
 24.11     (3) charges by the seller for any services necessary to 
 24.12  complete the sale, other than delivery and installation charges; 
 24.13     (4) delivery charges; 
 24.14     (5) installation charges; and 
 24.15     (6) the value of exempt property given to the purchaser 
 24.16  when taxable and exempt personal property have been bundled 
 24.17  together and sold by the seller as a single product or piece of 
 24.18  merchandise. 
 24.19     (b) Sales price includes: 
 24.20     (1) the cost of the property sold, cost of materials used, 
 24.21  labor or service cost, interest, or discount allowed after the 
 24.22  sale is consummated; 
 24.23     (2) the cost of transportation incurred prior to the time 
 24.24  of sale; 
 24.25     (3) any amount for which credit is given by the seller to 
 24.26  the purchaser; 
 24.27     (4) charges for services that are part of a sale; or 
 24.28     (5) any other expense whatsoever. 
 24.29     (c) (b) Sales price does not include the following: 
 24.30     (1) an amount allowed as credit for tangible personal 
 24.31  property taken in trade for resale discounts, including cash, 
 24.32  terms, or coupons that are not reimbursed by a third party and 
 24.33  that are allowed by the seller and taken by a purchaser on a 
 24.34  sale; 
 24.35     (2) charges of up to 15 percent in lieu of tips if the 
 24.36  charges are separately stated interest, financing, and carrying 
 25.1   charges from credit extended on the sale of personal property or 
 25.2   services, if the amount is separately stated on the invoice, 
 25.3   bill of sale, or similar document given to the purchaser; and 
 25.4      (3) interest, financing, or carrying charges if the charges 
 25.5   are separately stated; any taxes legally imposed directly on the 
 25.6   consumer that are separately stated on the invoice, bill of 
 25.7   sale, or similar document given to the purchaser. 
 25.8      (4) charges for labor or services used in installing or 
 25.9   applying the property sold if the charges are separately stated; 
 25.10     (5) transportation charges if the transportation occurs 
 25.11  after the retail sale of the property if the charges are 
 25.12  separately stated; 
 25.13     (6) cash discounts allowed and taken on sales or the amount 
 25.14  refunded either in cash or in credit for property returned by 
 25.15  purchasers; 
 25.16     (7) the rental motor vehicle tax imposed under section 
 25.17  297A.64; or 
 25.18     (8) the amount of any tax imposed by the United States on 
 25.19  communications services under United States Code, title 26, 
 25.20  section 4251(a). 
 25.21     (d) Notwithstanding paragraph (c), "sales price," for 
 25.22  purposes of sales of ready-mixed concrete sold from a 
 25.23  ready-mixed concrete truck, includes any transportation, 
 25.24  delivery, or other service charges, and no deduction is allowed 
 25.25  for those charges, whether or not the charges are separately 
 25.26  stated.  
 25.27     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 25.28     Sec. 6.  Minnesota Statutes 2000, section 297A.61, 
 25.29  subdivision 9, is amended to read: 
 25.30     Subd. 9.  [RETAILER AND SELLER.] "Retailer" and "seller" 
 25.31  means every any person engaged in making retail sales, leases, 
 25.32  or rentals of personal property or services. 
 25.33     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 25.34     Sec. 7.  Minnesota Statutes 2000, section 297A.61, is 
 25.35  amended by adding a subdivision to read: 
 25.36     Subd. 24.  [PURCHASE PRICE.] "Purchase price" means the 
 26.1   measure subject to the use tax and has the same meaning as 
 26.2   "sales price." 
 26.3      [EFFECTIVE DATE.] This section is effective January 1, 2002.
 26.4      Sec. 8.  Minnesota Statutes 2000, section 297A.61, is 
 26.5   amended by adding a subdivision to read: 
 26.6      Subd. 25.  [STATE.] Unless specifically provided otherwise, 
 26.7   "state" means any state of the United States and the District of 
 26.8   Columbia. 
 26.9      [EFFECTIVE DATE.] This section is effective January 1, 2002.
 26.10     Sec. 9.  Minnesota Statutes 2000, section 297A.61, is 
 26.11  amended by adding a subdivision to read: 
 26.12     Subd. 26.  [DELIVERY CHARGES.] "Delivery charges" means 
 26.13  charges by the seller for preparation and delivery to a location 
 26.14  designated by the purchaser of personal property or services 
 26.15  including, but not limited to, transportation, shipping, 
 26.16  postage, handling, crating, and packing. 
 26.17     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 26.18     Sec. 10.  Minnesota Statutes 2000, section 297A.61, is 
 26.19  amended by adding a subdivision to read: 
 26.20     Subd. 27.  [PREPARED FOOD.] "Prepared food" means (i) food 
 26.21  sold in a heated state or heated by the seller; (ii) two or more 
 26.22  food ingredients mixed or combined by the seller for sale as a 
 26.23  single item; or (iii) food sold with eating utensils provided by 
 26.24  the seller, including plates, knives, forks, spoons, glasses, 
 26.25  cups, napkins, or straws.  Prepared food does not include food 
 26.26  that is sliced, repackaged, or pasteurized by the seller. 
 26.27     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 26.28     Sec. 11.  Minnesota Statutes 2000, section 297A.61, is 
 26.29  amended by adding a subdivision to read: 
 26.30     Subd. 28.  [SOFT DRINKS.] "Soft drinks" means nonalcoholic 
 26.31  beverages that contain natural or artificial sweeteners.  Soft 
 26.32  drinks do not include beverages that contain milk or milk 
 26.33  products; soy, rice, or similar milk substitutes; or greater 
 26.34  than 50 percent vegetable or fruit juice by volume. 
 26.35     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 26.36     Sec. 12.  Minnesota Statutes 2000, section 297A.61, is 
 27.1   amended by adding a subdivision to read:  
 27.2      Subd. 29.  [CANDY.] "Candy" means a preparation of sugar, 
 27.3   honey, or other natural or artificial sweeteners in combination 
 27.4   with chocolate, fruits, nuts, or other ingredients or flavorings 
 27.5   in the form of bars, drops, or pieces.  Candy does not include 
 27.6   any preparation containing flour and must require no 
 27.7   refrigeration. 
 27.8      [EFFECTIVE DATE.] This section is effective January 1, 2002.
 27.9      Sec. 13.  Minnesota Statutes 2000, section 297A.61, is 
 27.10  amended by adding a subdivision to read: 
 27.11     Subd. 30.  [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 
 27.12  through vending machines" means food dispensed from a machine or 
 27.13  other mechanical device that accepts payment. 
 27.14     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 27.15     Sec. 14.  [297A.668] [SOURCING OF SALE; SITUS IN THIS 
 27.16  STATE.] 
 27.17     Subdivision 1.  [SOURCING RULES.] (a) The following 
 27.18  provisions apply regardless of the characterization of a product 
 27.19  as tangible personal property, a digital good, or a service; but 
 27.20  do not apply to telecommunications services, or the sales of 
 27.21  motor vehicles, watercraft, aircraft, modular homes, 
 27.22  manufactured homes, or mobile homes.  These provisions only 
 27.23  apply to determine a seller's obligation to pay or collect and 
 27.24  remit a sales or use tax with respect to the seller's sale of a 
 27.25  product.  These provisions do not affect the obligation of a 
 27.26  seller as purchaser to remit tax on the use of the product. 
 27.27     (b) When the product is received by the purchaser at a 
 27.28  business location of the seller, the sale is sourced to that 
 27.29  business location. 
 27.30     (c) When the product is not received by the purchaser at a 
 27.31  business location of the seller, the sale is sourced to the 
 27.32  location where receipt by the purchaser or the donee designated 
 27.33  by the purchaser occurs, including the location indicated by 
 27.34  instructions for delivery to the purchasers or the purchaser's 
 27.35  donee, known to the seller. 
 27.36     (d) When paragraphs (b) and (c) do not apply, the sale is 
 28.1   sourced to the location indicated by an address for the 
 28.2   purchaser that is available from the business records of the 
 28.3   seller that are maintained in the ordinary course of the 
 28.4   seller's business, when use of this address does not constitute 
 28.5   bad faith. 
 28.6      (e) When paragraphs (b), (c), and (d) do not apply, the 
 28.7   sale is sourced to the location indicated by an address for the 
 28.8   purchaser obtained during the consummation of the sale, 
 28.9   including the address of a purchaser's payment instrument if no 
 28.10  other address is available, when use of this address does not 
 28.11  constitute bad faith. 
 28.12     (f) When paragraphs (b), (c), (d), and (e) do not apply, 
 28.13  including the circumstance where the seller is without 
 28.14  sufficient information to apply the previous paragraphs, then 
 28.15  the location is determined by the address from which tangible 
 28.16  personal property was shipped, from which the digital good was 
 28.17  first available for transmission by the seller, or from which 
 28.18  the service was provided. 
 28.19     Subd. 2.  [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 
 28.20  provisions of subdivision 1, a business purchaser that is not a 
 28.21  holder of a direct pay permit that knows at the time of its 
 28.22  purchase of a digital good or service that the digital good or 
 28.23  service will be concurrently available for use in more than 
 28.24  taxing jurisdiction shall deliver to the seller in conjunction 
 28.25  with its purchase a multiple points of use exemption certificate 
 28.26  disclosing this fact. 
 28.27     (b) Upon receipt of the multiple points of use exemption 
 28.28  certificate, the seller is relieved of the obligation to 
 28.29  collect, pay, or remit the applicable tax and the purchaser is 
 28.30  obligated to collect, pay, or remit the applicable tax on a 
 28.31  direct pay basis. 
 28.32     (c) A purchaser delivering the multiple points of use 
 28.33  exemption certificate may use any reasonable, but consistent and 
 28.34  uniform, method of apportionment that is supported by the 
 28.35  purchaser's business records as they exist at the time of the 
 28.36  consummation of the sale. 
 29.1      (d) The multiple points of use exemption certificate 
 29.2   remains in effect for all future sales by the seller to the 
 29.3   purchaser until it is revoked in writing. 
 29.4      (e) A holder of a direct pay permit is not required to 
 29.5   deliver a multiple points or use exemption certificate to the 
 29.6   seller.  A direct pay permit holder shall follow the provisions 
 29.7   of paragraph (c) in apportioning the tax due on a digital good 
 29.8   or a service that will be concurrently available for use in more 
 29.9   than one taxing jurisdiction. 
 29.10     Subd. 3.  [DEFINITION OF TERMS.] For purposes of this 
 29.11  section, the terms "receive" and "receipt" mean taking 
 29.12  possession of tangible personal property, making first use of 
 29.13  services, or taking possession of making first use of digital 
 29.14  goods, whichever occurs first.  The terms receive and receipt do 
 29.15  not include possession by a carrier for hire on behalf of the 
 29.16  purchaser. 
 29.17     [EFFECTIVE DATE.] This section is effective for sales and 
 29.18  purchases occurring after December 31, 2001. 
 29.19     Sec. 15.  Minnesota Statutes 2000, section 297A.67, 
 29.20  subdivision 2, is amended to read: 
 29.21     Subd. 2.  [FOOD PRODUCTS AND FOOD INGREDIENTS.] 
 29.22  Food products including, but not limited to, cereal and cereal 
 29.23  products, butter, cheese, milk and milk products, oleomargarine, 
 29.24  meat and meat products, fish and fish products, eggs and egg 
 29.25  products, vegetables and vegetable products, fruit and fruit 
 29.26  products, spices and salt, sugar and sugar products, coffee and 
 29.27  coffee substitutes, tea, and cocoa and cocoa products and food 
 29.28  ingredients are exempt.  For purposes of this subdivision, 
 29.29  "food" and "food ingredients" mean substances, whether in 
 29.30  liquid, concentrated, solid, frozen, dried, or dehydrated form, 
 29.31  that are sold for ingestion or chewing by humans and are 
 29.32  consumed for their taste or nutritional value.  Food and food 
 29.33  ingredients do not include candy, soft drinks, food sold through 
 29.34  vending machines, and prepared foods.  Food and food ingredients 
 29.35  do not include alcoholic beverages, dietary supplements, and 
 29.36  tobacco.  For purposes of this subdivision, "alcoholic 
 30.1   beverages" means beverages that are suitable for human 
 30.2   consumption and contain one-half of one percent or more of 
 30.3   alcohol by volume.  For purposes of this subdivision, "tobacco" 
 30.4   means cigarettes, cigars, chewing or pipe tobacco, or any other 
 30.5   item that contains tobacco.  For purposes of this subdivision, 
 30.6   "dietary supplements" means any product, other than tobacco, 
 30.7   intended to supplement the diet that: 
 30.8      (1) contains one or more of the following dietary 
 30.9   ingredients: 
 30.10     (i) a vitamin; 
 30.11     (ii) a mineral; 
 30.12     (iii) an herb or other botanical; 
 30.13     (iv) an amino acid; 
 30.14     (v) a dietary substance for use by humans to supplement the 
 30.15  diet by increasing the total dietary intake; and 
 30.16     (vi) a concentrate, metabolite, constituent, extract, or 
 30.17  combination of any ingredient described in items (i) to (v); 
 30.18     (2) is intended for ingestion in tablet, capsule, powder, 
 30.19  softgel, gelcap, or liquid form, or if not intended for 
 30.20  ingestion in such form, is not represented as conventional food 
 30.21  and is not represented for use as a sole item of a meal or of 
 30.22  the diet; and 
 30.23     (3) is required to be labeled as a dietary supplement, 
 30.24  identifiable by the supplement facts box found on the label and 
 30.25  as required pursuant to Code of Federal Regulations, title 21, 
 30.26  section 101.36. 
 30.27     [EFFECTIVE DATE.] This section is effective for sales and 
 30.28  purchases occurring after December 31, 2001. 
 30.29     Sec. 16.  Minnesota Statutes 2000, section 297A.67, 
 30.30  subdivision 8, is amended to read: 
 30.31     Subd. 8.  [CLOTHING.] (a) Clothing and wearing apparel, 
 30.32  including sewing materials to be directly incorporated into 
 30.33  wearing apparel, are is exempt.  For purposes of this 
 30.34  subdivision, clothing and wearing apparel do not include the 
 30.35  following: 
 30.36     (1) articles designed primarily for use while engaging in a 
 31.1   specific sport or recreational activity that are not also worn 
 31.2   for general use; 
 31.3      (2) articles designed primarily to provide safety or 
 31.4   protection against injury while the user is engaged in 
 31.5   industrial or general job activities; 
 31.6      (3) all articles commonly or commercially known as jewelry 
 31.7   including, but not limited to, watches; 
 31.8      (4) nonprescription optical glasses of any sort; 
 31.9      (5) articles made entirely of fur on the hide or pelt, or 
 31.10  partially of such fur if the value of the fur is more than three 
 31.11  times the value of the next most valuable component material; 
 31.12     (6) perfume, lotions, creams, dyes, or other substances 
 31.13  that are applied to the skin or the hair; and 
 31.14     (7) luggage, bags, purses, wallets, or cases of any 
 31.15  sort. "clothing" means all human wearing apparel suitable for 
 31.16  general use. 
 31.17     (b) Clothing includes, but is not limited to, aprons, 
 31.18  household and shop; athletic supporters; baby receiving 
 31.19  blankets; bathing suits and caps; beach capes and coats; belts 
 31.20  and suspenders; boots; coats and jackets; costumes; children and 
 31.21  adult diapers, including disposable; ear muffs; footlets; formal 
 31.22  wear; garters and garter belts; girdles; gloves and mittens for 
 31.23  general use; hats and caps; hosiery; insoles for shoes; lab 
 31.24  coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 
 31.25  sandals; scarves; shoes and shoe laces; slippers; sneakers; 
 31.26  socks and stockings; steel-toed boots; underwear; uniforms, 
 31.27  athletic and nonathletic; and wedding apparel. 
 31.28     (c) Clothing does not include the following: 
 31.29     (1) belt buckles sold separately; 
 31.30     (2) costume masks sold separately; 
 31.31     (3) patches and emblems sold separately; 
 31.32     (4) sewing equipment and supplies, including but not 
 31.33  limited to, knitting needles, patterns, pins, scissors, sewing 
 31.34  machines, sewing needles, tape measures, and thimbles; 
 31.35     (5) sewing materials that become part of clothing, 
 31.36  including but not limited to, buttons, fabric, lace, thread, 
 32.1   yarn, and zippers; 
 32.2      (6) clothing accessories or equipment; 
 32.3      (7) sports or recreational equipment; and 
 32.4      (8) protective equipment. 
 32.5      For purposes of this subdivision, "clothing accessories or 
 32.6   equipment" means incidental items worn on the person or in 
 32.7   conjunction with clothing.  Clothing accessories include, but 
 32.8   are not limited to, briefcases; cosmetics; hair notions, 
 32.9   including barrettes, hair bows, and hairnets; handbags; 
 32.10  handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 
 32.11  wallets; watches; and wigs and hairpieces.  "Sports or 
 32.12  recreational equipment" means items designed for human use and 
 32.13  worn in conjunction with an athletic or recreational activity 
 32.14  that are not suitable for general use.  Sports and recreational 
 32.15  equipment, includes but is not limited to, ballet and tap shoes; 
 32.16  cleated or spiked athletic shoes; baseball, bowling, boxing, 
 32.17  hockey, and golf gloves; goggles; hand and elbow guards; life 
 32.18  preservers and vests; mouth guards; roller and ice skates; shin 
 32.19  guards; shoulder pads; ski boots; waders; and wetsuits and 
 32.20  fins.  "Protective equipment" means items for human wear and 
 32.21  designed as protection of the wearer against injury or disease 
 32.22  or as protection against damage or injury of other persons or 
 32.23  property but not suitable for general use.  Protective 
 32.24  equipment, includes but is not limited to, breathing masks; 
 32.25  clean room apparel and equipment; ear and hearing protectors; 
 32.26  face shields; finger guards; hard hats; helmets; paint or dust 
 32.27  respirators; protective gloves; safety glasses and goggles; 
 32.28  safety belts; tool belts; and welders gloves and masks. 
 32.29     [EFFECTIVE DATE.] This section is effective for sales and 
 32.30  purchases occurring after December 31, 2001. 
 32.31     Sec. 17.  Minnesota Statutes 2000, section 297A.67, is 
 32.32  amended by adding a subdivision to read: 
 32.33     Subd. 26.  [TRADE ALLOWANCE.] The amount allowed as a 
 32.34  credit against the sales price for tangible personal property 
 32.35  taken in trade for resale is exempt. 
 32.36     [EFFECTIVE DATE.] This section is effective for sales and 
 33.1   purchases occurring after December 31, 2001. 
 33.2      Sec. 18.  Minnesota Statutes 2000, section 297A.72, 
 33.3   subdivision 1, is amended to read: 
 33.4      Subdivision 1.  [DUTY OF RETAILER.] An A fully completed 
 33.5   exemption certificate conclusively relieves the retailer from 
 33.6   collecting and remitting the tax only if taken in good faith 
 33.7   from the purchaser at the time of sale. 
 33.8      [EFFECTIVE DATE.] This section is effective for sales and 
 33.9   purchases occurring after December 31, 2001. 
 33.10     Sec. 19.  Minnesota Statutes 2000, section 297A.81, is 
 33.11  amended to read: 
 33.12     297A.81 [UNCOLLECTIBLE DEBTS; OFFSET AGAINST OTHER TAXES 
 33.13  DEDUCTION.] 
 33.14     The taxpayer may offset against the taxes payable for any 
 33.15  reporting period the amount of taxes imposed by this chapter 
 33.16  previously paid as a result of any transaction the consideration 
 33.17  for which became a debt owed to the taxpayer that became 
 33.18  uncollectible during the reporting period, but only in 
 33.19  proportion to the portion of the debt that became 
 33.20  uncollectible.  In computing the amount of tax due, a seller may 
 33.21  deduct bad debts from the total amount upon which the tax is 
 33.22  calculated for any return.  Any deduction taken or refund paid 
 33.23  which is attributed to bad debts must not include interest.  For 
 33.24  purposes of this section, "bad debt" means any portion of the 
 33.25  purchase price of a transaction that a seller has reported as 
 33.26  taxable and for which the seller legally claims as a bad debt 
 33.27  deduction for federal income tax purposes.  Bad debts include, 
 33.28  but are not limited to, worthless checks, worthless credit card 
 33.29  payments, and uncollectible credit accounts.  Bad debts do not 
 33.30  include financing charges or interest, sales or use taxes 
 33.31  charged on the purchase price, uncollectible amounts on property 
 33.32  that remain in the possession of the seller until the full 
 33.33  purchase price is paid, expenses incurred in attempting to 
 33.34  collect any debt, debts sold or assigned to third parties for 
 33.35  collection, and repossessed property.  Section 289A.40, 
 33.36  subdivision 2 4, applies to an offset a deduction under this 
 34.1   section. 
 34.2      [EFFECTIVE DATE.] This section is effective for bad debt 
 34.3   losses claimed after December 31, 2001. 
 34.4      Sec. 20.  Minnesota Statutes 2000, section 297A.99, 
 34.5   subdivision 9, is amended to read: 
 34.6      Subd. 9.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 
 34.7   (a) The commissioner of revenue shall collect the taxes subject 
 34.8   to this section.  The commissioner may collect the tax with the 
 34.9   state sales and use tax.  All taxes under this section are 
 34.10  subject to the same penalties, interest, and enforcement 
 34.11  provisions as apply to the state sales and use tax. 
 34.12     (b) A request for a refund of state sales tax paid in 
 34.13  excess of the amount of tax legally due includes a request for a 
 34.14  refund of the political subdivision taxes paid on the goods or 
 34.15  services.  The commissioner shall refund to the taxpayer the 
 34.16  full amount of the political subdivision taxes paid on exempt 
 34.17  sales or use. 
 34.18     (c) A political subdivision that is collecting and 
 34.19  administering its own sales and use tax before January 1, 1998, 
 34.20  may elect to be exempt from this subdivision and subdivision 11. 
 34.21     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 34.22     Sec. 21.  [297A.995] [UNIFORM SALES AND USE TAX 
 34.23  ADMINISTRATION ACT.] 
 34.24     Subdivision 1.  [TITLE.] This section may be cited as the 
 34.25  Uniform Sales and Use Tax Administration Act. 
 34.26     Subd. 2.  [DEFINITIONS.] As used in this section: 
 34.27     (a) "Agreement" means the Streamlined Sales and Use Tax 
 34.28  Agreement. 
 34.29     (b) "Certified automated system" means software certified 
 34.30  jointly by the states that are signatories to the agreement to 
 34.31  calculate the tax imposed by each jurisdiction on a transaction, 
 34.32  determine the amount of tax to remit to the appropriate state, 
 34.33  and maintain a record of the transaction. 
 34.34     (c) "Certified service provider" means an agent certified 
 34.35  jointly by the states that are signatories to the agreement to 
 34.36  perform all of the seller's sales tax functions. 
 35.1      Subd. 3.  [LEGISLATIVE FINDING.] The legislature finds that 
 35.2   this state should enter into an agreement with one or more 
 35.3   states to simplify and modernize sales and use tax 
 35.4   administration in order to substantially reduce the burden of 
 35.5   tax compliance for all sellers and for all types of commerce. 
 35.6      Subd. 4.  [AUTHORITY TO ENTER AGREEMENT.] The commissioner 
 35.7   of revenue is authorized and directed to enter into the 
 35.8   agreement with one or more states to simplify and modernize 
 35.9   sales and use tax administration in order to substantially 
 35.10  reduce the burden of tax compliance for all sellers and for all 
 35.11  types of commerce.  In furtherance of the agreement, the 
 35.12  commissioner is authorized to act jointly with other states that 
 35.13  are members of the agreement to establish standards for 
 35.14  certification of a certified service provider and certified 
 35.15  automated system and establish performance standards for 
 35.16  multistate sellers. 
 35.17     The commissioner is further authorized to take other 
 35.18  actions reasonably required to implement the provisions set 
 35.19  forth in this article.  Other actions authorized by this section 
 35.20  include, but are not limited to, the adoption of rules and 
 35.21  regulations and the joint procurement, with other member states, 
 35.22  of goods and services in furtherance of the cooperative 
 35.23  agreement. 
 35.24     The commissioner or the commissioner's designee is 
 35.25  authorized to represent this state before the other states that 
 35.26  are signatories to the agreement. 
 35.27     Subd. 5.  [RELATIONSHIP TO STATE LAW.] No provision of the 
 35.28  agreement authorized by this article in whole or part 
 35.29  invalidates or amends any provision of the law of this state.  
 35.30  Adoption of the agreement by this state does not amend or modify 
 35.31  any law of this state.  Implementation of any condition of the 
 35.32  agreement in this state, whether adopted before, at, or after 
 35.33  membership of this state in the agreement, must be by the action 
 35.34  of this state. 
 35.35     Subd. 6.  [AGREEMENT REQUIREMENTS.] The commissioner of 
 35.36  revenue shall not enter into the agreement unless the agreement 
 36.1   requires each state to abide by the following requirements: 
 36.2      (a) [UNIFORM STATE RATE.] The agreement must set 
 36.3   restrictions to achieve more uniform state rates through the 
 36.4   following: 
 36.5      (1) limiting the number of state rates; 
 36.6      (2) eliminating maximums on the amount of state tax that is 
 36.7   due on a transaction; and 
 36.8      (3) eliminating thresholds on the application of state tax. 
 36.9      (b) [UNIFORM STANDARDS.] The agreement must establish 
 36.10  uniform standards for the following: 
 36.11     (1) the sourcing of transactions to taxing jurisdictions; 
 36.12     (2) the administration of exempt sales; 
 36.13     (3) the allowances a seller can take for bad debts; and 
 36.14     (4) sales and use tax returns and remittances. 
 36.15     (c)  [UNIFORM DEFINITIONS.] The agreement must require 
 36.16  states to develop and adopt uniform definitions of sales and use 
 36.17  tax terms.  The definitions must enable a state to preserve its 
 36.18  ability to make policy choices not inconsistent with the uniform 
 36.19  definitions. 
 36.20     (d) [CENTRAL REGISTRATION.] The agreement must provide a 
 36.21  central, electronic registration system that allows a seller to 
 36.22  register to collect and remit sales and use taxes for all 
 36.23  signatory states. 
 36.24     (e) [NO NEXUS ATTRIBUTION.] The agreement must provide that 
 36.25  registration with the central registration system and the 
 36.26  collection of sales and use taxes in the signatory states will 
 36.27  not be used as a factor in determining whether the seller has 
 36.28  nexus with a state for any tax. 
 36.29     (f) [LOCAL SALES AND USE TAXES.] The agreement must provide 
 36.30  for reduction of the burdens of complying with local sales and 
 36.31  use taxes through the following: 
 36.32     (1) restricting and eliminating variances between the state 
 36.33  and local tax bases; 
 36.34     (2) requiring states to administer any sales and use taxes 
 36.35  levied by local jurisdictions within the state so that sellers 
 36.36  collecting and remitting these taxes will not have to register 
 37.1   or file returns with, remit funds to, or be subject to 
 37.2   independent audits from local taxing jurisdictions; 
 37.3      (3) restricting the frequency of changes in the local sales 
 37.4   and use tax rates and setting effective dates for the 
 37.5   application of local jurisdictional boundary changes to local 
 37.6   sales and use taxes; and 
 37.7      (4) providing notice of changes in local sales and use tax 
 37.8   rates and of changes in the boundaries of local taxing 
 37.9   jurisdictions. 
 37.10     (g) [MONETARY ALLOWANCES.] The agreement must outline any 
 37.11  monetary allowances that are to be provided by the states to 
 37.12  sellers or certified service providers. 
 37.13     (h) [STATE COMPLIANCE.] The agreement must require each 
 37.14  state to certify compliance with the terms of the agreement 
 37.15  prior to joining and to maintain compliance, under the laws of 
 37.16  the member state, with all provisions of the agreement while a 
 37.17  member. 
 37.18     (i) [CONSUMER PRIVACY.] The agreement must require each 
 37.19  state to adopt a uniform policy for certified service providers 
 37.20  that protects the privacy of consumers and maintains the 
 37.21  confidentiality of tax information. 
 37.22     (j) [ADVISORY COUNCILS.] The agreement must provide for the 
 37.23  appointment of an advisory council of private sector 
 37.24  representatives and an advisory council of nonmember state 
 37.25  representatives to consult with in the administration of the 
 37.26  agreement. 
 37.27     Subd. 7.  [COOPERATING SOVEREIGNS.] The agreement 
 37.28  authorized by this article is an accord among individual 
 37.29  cooperating sovereigns in furtherance of their governmental 
 37.30  functions.  The agreement provides a mechanism among the member 
 37.31  states to establish and maintain a cooperative, simplified 
 37.32  system for the application and administration of sales and use 
 37.33  taxes under the duly adopted law of each member state. 
 37.34     Subd. 8.  [LIMITED BINDING AND BENEFICIAL EFFECT.] (a) The 
 37.35  agreement authorized by this article binds and inures only to 
 37.36  the benefit of this state and the other member states.  No 
 38.1   person, other than a member state, is an intended beneficiary of 
 38.2   the agreement.  Any benefit to a person other than a state is 
 38.3   established by the law of this state and the other member states 
 38.4   and not by the terms of the agreement. 
 38.5      (b) Consistent with paragraph (a), no person shall have any 
 38.6   cause of action or defense under the agreement or by virtue of 
 38.7   this state's approval of the agreement.  No person may 
 38.8   challenge, in any action brought under any provision of law, any 
 38.9   action or inaction by any department, agency, or other 
 38.10  instrumentality of this state, or any political subdivision of 
 38.11  this state, on the ground that the action or inaction is 
 38.12  inconsistent with the agreement. 
 38.13     (c) No law of this state, or its application, may be 
 38.14  declared invalid as to any person or circumstance on the ground 
 38.15  that the provision or application is inconsistent with the 
 38.16  agreement. 
 38.17     Subd. 9.  [SELLER AND THIRD PARTY LIABILITY.] (a) A 
 38.18  certified service provider is the agent of a seller, with whom 
 38.19  the certified service provider has contracted, for the 
 38.20  collection and remittance of sales and use taxes.  As the 
 38.21  seller's agent, the certified service provider is liable for 
 38.22  sales and use tax due each member state on all sales 
 38.23  transactions it processes for the seller except as set out in 
 38.24  this section. 
 38.25     A seller that contracts with a certified service provider 
 38.26  is not liable to the state for sales or use tax due on 
 38.27  transactions processed by the certified service provider unless 
 38.28  the seller misrepresented the type of items it sells or 
 38.29  committed fraud.  In the absence of probable cause to believe 
 38.30  that the seller has committed fraud or made a material 
 38.31  misrepresentation, the seller is not subject to audit on the 
 38.32  transactions processed by the certified service provider.  A 
 38.33  seller is subject to audit for transactions not processed by the 
 38.34  certified service provider.  The member states acting jointly 
 38.35  may perform a system check of the seller and review the seller's 
 38.36  procedures to determine if the certified service provider's 
 39.1   system is functioning properly and the extent to which the 
 39.2   seller's transactions are being processed by the certified 
 39.3   service provider. 
 39.4      (b) A person that provides a certified automated system is 
 39.5   responsible for the proper functioning of that system and is 
 39.6   liable to the state for underpayments of tax attributable to 
 39.7   errors in the functioning of the certified automated system.  A 
 39.8   seller that uses a certified automated system remains 
 39.9   responsible and is liable to the state for reporting and 
 39.10  remitting tax. 
 39.11     (c) A seller that has a proprietary system for determining 
 39.12  the amount of tax due on transactions and has signed an 
 39.13  agreement establishing a performance standard for that system is 
 39.14  liable for the failure of the system to meet the performance 
 39.15  standard. 
 39.16     [EFFECTIVE DATE.] This section is effective the day 
 39.17  following enactment. 
 39.18     Sec. 22.  [APPROPRIATIONS.] 
 39.19     $....... is appropriated from the general fund to the 
 39.20  commissioner of revenue for fiscal year 2002 to administer this 
 39.21  article, and $....... is appropriated from the general fund to 
 39.22  the commissioner of revenue for fiscal year 2003 to administer 
 39.23  this article.  The appropriations are available until June 30, 
 39.24  2003. 
 39.25     [EFFECTIVE DATE.] This section is effective July 1, 2001.