SF 3141

as introduced - 89th Legislature (2015 - 2016) Posted on 03/24/2016 09:20am

A bill for an act
relating to taxation; sales and use; providing an exemption for transfers of goods
and services and motor vehicles between certain entities; amending Minnesota
Statutes 2014, sections 297A.68, subdivision 25; 297B.03; repealing Minnesota
Rules, part 8130.5800, subpart 3a, item B.

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

Section 1.

Minnesota Statutes 2014, section 297A.68, subdivision 25, is amended to
read:

Subd. 25.

Sale of property used in a trade or business.

(a) The sale of tangible
personal property primarily used in a trade or business is exempt if the sale is not made in
the normal course of business of selling that kind of property and if one of the following
conditions is satisfied:

(1) the sale occurs in a transaction subject to or described in section 118, 331, 332,
336, 337, 338, 351, 355, 368, 721, 731, 1031, or 1033 of the Internal Revenue Code;

(2) the sale is between members of a controlled group as defined in section 1563(a)
of the Internal Revenue Code;

(3) the sale is a sale of farm machinery;

(4) the sale is a farm auction sale;

(5) the sale is a sale of substantially all of the assets of a trade or business; deleted text begin or
deleted text end

(6) the total amount of gross receipts from the sale of trade or business property
made during the calendar month of the sale and the preceding 11 calendar months does not
exceed $1,000 deleted text begin . deleted text end new text begin ; or
new text end

new text begin (7) the sale occurs in a transaction between a single member limited liability
company and its owner. For purposes of this clause, the single member limited liability
company must be:
new text end

new text begin (i) disregarded for federal income tax purposes; and
new text end

new text begin (ii) organized for a business purpose.
new text end

The use, storage, distribution, or consumption of tangible personal property acquired
as a result of a sale exempt under this subdivision is also exempt.

(b) For purposes of this subdivision, the following terms have the meanings given.

(1) A "farm auction" is a public auction conducted by a licensed auctioneer if
substantially all of the property sold consists of property used in the trade or business of
farming and property not used primarily in a trade or business.

(2) "Trade or business" includes the assets of a separate division, branch, or
identifiable segment of a trade or business if, before the sale, the income and expenses
attributable to the separate division, branch, or identifiable segment could be separately
ascertained from the books of account or record (the lease or rental of an identifiable
segment does not qualify for the exemption).

(3) A "sale of substantially all of the assets of a trade or business" must occur as a
single transaction or a series of related transactions within the 12-month period beginning
on the date of the first sale of assets intended to qualify for the exemption provided in
paragraph (a), clause (5).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2016.
new text end

Sec. 2.

Minnesota Statutes 2014, section 297B.03, is amended to read:

297B.03 EXEMPTIONS.

There is specifically exempted from the provisions of this chapter and from
computation of the amount of tax imposed by it the following:

(1) purchase or use, including use under a lease purchase agreement or installment
sales contract made pursuant to section 465.71, of any motor vehicle by the United States
and its agencies and instrumentalities and by any person described in and subject to the
conditions provided in section 297A.67, subdivision 11;

(2) purchase or use of any motor vehicle by any person who was a resident of
another state or country at the time of the purchase and who subsequently becomes a
resident of Minnesota, provided the purchase occurred more than 60 days prior to the date
such person began residing in the state of Minnesota and the motor vehicle was registered
in the person's name in the other state or country;

(3) purchase or use of any motor vehicle by any person making a valid election to be
taxed under the provisions of section 297A.90;

(4) purchase or use of any motor vehicle previously registered in the state of
Minnesota when such transfer constitutes a transfer within the meaning of section 118,
331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal
Revenue Code;

(5) purchase or use of any vehicle owned by a resident of another state and leased
to a Minnesota-based private or for-hire carrier for regular use in the transportation of
persons or property in interstate commerce provided the vehicle is titled in the state of
the owner or secured party, and that state does not impose a sales tax or sales tax on
motor vehicles used in interstate commerce;

(6) purchase or use of a motor vehicle by a private nonprofit or public educational
institution for use as an instructional aid in automotive training programs operated by the
institution. "Automotive training programs" includes motor vehicle body and mechanical
repair courses but does not include driver education programs;

(7) purchase of a motor vehicle by an ambulance service licensed under section
144E.10 when that vehicle is equipped and specifically intended for emergency response
or for providing ambulance service;

(8) purchase of a motor vehicle by or for a public library, as defined in section
134.001, subdivision 2, as a bookmobile or library delivery vehicle;

(9) purchase of a ready-mixed concrete truck;

(10) purchase or use of a motor vehicle by a town for use exclusively for road
maintenance, including snowplows and dump trucks, but not including automobiles,
vans, or pickup trucks;

(11) purchase or use of a motor vehicle by a corporation, society, association,
foundation, or institution organized and operated exclusively for charitable, religious, or
educational purposes, except a public school, university, or library, but only if the vehicle is:

(i) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and
used for carrying more than nine persons including the driver; and

(ii) intended to be used primarily to transport tangible personal property or
individuals, other than employees, to whom the organization provides service in
performing its charitable, religious, or educational purpose;

(12) purchase of a motor vehicle for use by a transit provider exclusively to provide
transit service is exempt if the transit provider is either (i) receiving financial assistance or
reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29,
473.388, or 473.405;

(13) purchase or use of a motor vehicle by a qualified business, as defined in section
469.310, located in a job opportunity building zone, if the motor vehicle is principally
garaged in the job opportunity building zone and is primarily used as part of or in direct
support of the person's operations carried on in the job opportunity building zone. The
exemption under this clause applies to sales, if the purchase was made and delivery
received during the duration of the job opportunity building zone. The exemption under
this clause also applies to any local sales and use tax;

(14) purchase of a leased vehicle by the lessee who was a participant in a
lease-to-own program from a charitable organization that is:

(i) described in section 501(c)(3) of the Internal Revenue Code; and

(ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4; deleted text begin and
deleted text end

(15) purchase of a motor vehicle used exclusively as a mobile medical unit for the
provision of medical or dental services by a federally qualified health center, as defined
under title 19 of the Social Security Act, as amended by Section 4161 of the Omnibus
Budget Reconciliation Act of 1990 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (16) purchase or use of a motor vehicle previously registered in the state of
Minnesota in a transaction between a single member limited liability company and its
owner. For purposes of this clause, the single member limited liability company must be:
new text end

new text begin (i) disregarded for federal income tax purposes; and
new text end

new text begin (ii) organized for a business purpose.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2016.
new text end

Sec. 3. new text begin REPEALER.
new text end

new text begin Minnesota Rules, part 8130.5800, subpart 3a, item B, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2016.
new text end