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SF 4406

as introduced - 91st Legislature (2019 - 2020) Posted on 03/17/2020 03:00pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; sales and use; exempting certain sales of electricity; amending
Minnesota Statutes 2018, sections 297A.67, subdivision 15, by adding a
subdivision; 297A.68, subdivisions 2, 3, 10, 30.

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

Section 1.

Minnesota Statutes 2018, section 297A.67, subdivision 15, is amended to read:


Subd. 15.

Residential heating fuels.

Residential heating fuels are exempt as follows:

(1) all fuel oil, coal, wood, steam, hot water, propane gas, and L.P. gas sold to residential
customers for residential use;new text begin and
new text end

(2) for the billing months of November, December, January, February, March, and April,
natural gas sold for residential use to customers who are metered and billed as residential
users and who use natural gas for their primary source of residential heatdeleted text begin; anddeleted text endnew text begin.
new text end

deleted text begin (3) for the billing months of November, December, January, February, March, and April,
electricity sold for residential use to customers who are metered and billed as residential
users and who use electricity for their primary source of residential heat.
deleted 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, 2020.
new text end

Sec. 2.

Minnesota Statutes 2018, section 297A.67, is amended by adding a subdivision to
read:


new text begin Subd. 38. new text end

new text begin Electricity services. new text end

new text begin Sales of electricity are exempt.
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, 2020.
new text end

Sec. 3.

Minnesota Statutes 2018, section 297A.68, subdivision 2, is amended to read:


Subd. 2.

Materials consumed in industrial production.

(a) Materials stored, used, or
consumed in industrial production of tangible personal property intended to be sold ultimately
at retail, are exempt, whether or not the item so used becomes an ingredient or constituent
part of the property produced. Materials that qualify for this exemption include, but are not
limited to, the following:

(1) chemicals, including chemicals used for cleaning food processing machinery and
equipment;

(2) materials, including chemicals, fuels, and electricity purchased by persons engaged
in industrial production to treat waste generated as a result of the production process;

(3) fuels, electricity, gas, and steam used or consumed in the production process, except
that deleted text beginelectricity,deleted text end gasdeleted text begin,deleted text end or steam used for space heating, cooling, or lighting is exempt if (i) it
is in excess of the average climate control or lighting for the production area, and (ii) it is
necessary to produce that particular product;

(4) petroleum products and lubricants;

(5) packaging materials, including returnable containers used in packaging food and
beverage products;

(6) accessory tools, equipment, and other items that are separate detachable units with
an ordinary useful life of less than 12 months used in producing a direct effect upon the
product; and

(7) the following materials, tools, and equipment used in metal-casting: crucibles,
thermocouple protection sheaths and tubes, stalk tubes, refractory materials, molten metal
filters and filter boxes, degassing lances, and base blocks.

(b) This exemption does not include:

(1) machinery, equipment, implements, tools, accessories, appliances, contrivances and
furniture and fixtures, except those listed in paragraph (a), clause (6); and

(2) petroleum and special fuels used in producing or generating power for propelling
ready-mixed concrete trucks on the public highways of this state.

(c) Industrial production includes, but is not limited to, research, development, design
or production of any tangible personal property, manufacturing, processing (other than by
restaurants and consumers) of agricultural products (whether vegetable or animal),
commercial fishing, refining, smelting, reducing, brewing, distilling, printing, mining,
quarrying, lumbering, generating electricity, the production of road building materials, and
the research, development, design, or production of computer software. Industrial production
does not include painting, cleaning, repairing or similar processing of property except as
part of the original manufacturing process.

(d) Industrial production does not include:

(1) the furnishing of services listed in section 297A.61, subdivision 3, paragraph (g),
clause (6), items (i) to (vi) and (viii); or

(2) the transportation, transmission, or distribution of petroleum, liquefied gas, natural
gas, water, or steam, in, by, or through pipes, lines, tanks, mains, or other means of
transporting those products. For purposes of this paragraph, "transportation, transmission,
or distribution" does not include blending of petroleum or biodiesel fuel as defined in section
239.77.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2020.
new text end

Sec. 4.

Minnesota Statutes 2018, section 297A.68, subdivision 3, is amended to read:


Subd. 3.

Materials used in providing certain taxable services.

(a) Materials stored,
used, or consumed in providing a taxable service listed in section 297A.61, subdivision 3,
paragraph (g), clause (6), intended to be sold ultimately at retail are exempt.

(b) This exemption includes, but is not limited to:

(1) chemicals, lubricants, packaging materials, seeds, trees, fertilizers, and herbicides,
if these items are used or consumed in providing the taxable service;

(2) chemicals used to treat waste generated as a result of providing the taxable service;

(3) accessory tools, equipment, and other items that are separate detachable units used
in providing the service and that have an ordinary useful life of less than 12 months; and

(4) fuel, electricity, gas, and steam used or consumed in the production process, except
that deleted text beginelectricity,deleted text end gasdeleted text begin,deleted text end or steam used for space heating, cooling, or lighting is exempt if (i) it
is in excess of average climate control or lighting, and (ii) it is necessary to produce that
particular service.

(c) This exemption does not include machinery, equipment, implements, tools,
accessories, appliances, contrivances, furniture, and fixtures used in providing the taxable
service.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2020.
new text end

Sec. 5.

Minnesota Statutes 2018, section 297A.68, subdivision 10, is amended to read:


Subd. 10.

Publications; publication materials.

Tangible personal property that is used
or consumed in producing any publication regularly issued at average intervals not exceeding
three months is exempt, and any such publication is exempt. "Publication" includes, but is
not limited to, a qualified newspaper as defined by section 331A.02, together with any
supplements or enclosures. "Publication" does not include magazines and periodicals sold
over the counter. Tangible personal property that is used or consumed in producing a
publication does not include machinery, equipment, implements, tools, accessories,
appliances, contrivances, furniture, and fixtures used in the publication, or fuel, deleted text beginelectricity,deleted text end
gas, or steam used for space heating or lighting.

Advertising contained in a publication is a nontaxable service and is exempt. Persons
who publish or sell newspapers are engaging in a nontaxable service with respect to gross
receipts realized from such news-gathering or news-publishing activities, including the sale
of advertising.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2020.
new text end

Sec. 6.

Minnesota Statutes 2018, section 297A.68, subdivision 30, is amended to read:


Subd. 30.

Television commercials.

Tangible personal property primarily used or
consumed in the preproduction, production, or postproduction of a television commercial
is exempt. Any such commercial, regardless of the medium in which it is transferred, is
exempt. "Preproduction" and "production" include, but are not limited to, all activities
related to the preparation for shooting and the shooting of television commercials, including
film processing. Equipment rented for the preproduction and production activities is exempt.
"Postproduction" includes, but is not limited to, all activities related to the finishing and
duplication of television commercials. This exemption does not apply to tangible personal
property used primarily in administration, general management, or marketing. Machinery
and equipment purchased for use in producing such commercials and fuel, deleted text beginelectricity,deleted text end gas,
or steam used for space heating or lighting are not exempt under this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2020.
new text end