SF 288

as introduced - 90th Legislature (2017 - 2018) Posted on 01/31/2017 09:43am

A bill for an act
relating to taxation; sales and use; providing an exemption for an annual city
celebration; amending Minnesota Statutes 2016, section 297A.70, by adding a
subdivision.

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

Section 1.

Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision
to read:

new text begin Subd. 20. new text end

new text begin City celebrations. new text end

new text begin (a) Sales of tangible personal property or services and
admissions charges to a city-designated annual city celebration designed to promote
community spirit and cooperation are exempt. Exempt sales include the sale of prepared
food, candy, soft drinks, malt liquor and wine as defined in section 340A.101, subdivisions
19 and 27, at the event. The governing board of a statutory or home rule charter city with
a population of less than 10,000 may designate one event in each calendar year as the annual
city celebration that qualifies for the exemption under this subdivision. For a celebration to
qualify, it must meet the following requirements:
new text end

new text begin (1) the event must be held on consecutive days, not to exceed five days in total;
new text end

new text begin (2) the event must be run either by the city or by a nonprofit organization designated by
the city;
new text end

new text begin (3) all gross receipts of the event are recorded as such, in accordance with generally
accepted accounting practice on the books of the city or the designated nonprofit organization;
and
new text end

new text begin (4) the entire proceeds, less the necessary expenses, will be distributed to one or more
of the following for charitable, educational, civic, or governmental purposes:
new text end

new text begin (i) the city's general fund;
new text end

new text begin (ii) a nonprofit 501(c)(3) organization to promote its primary mission; or
new text end

new text begin (iii) a nonprofit 501(c)(4) organization to promote its primary mission, however, no
revenues from this event may be used by the organization for lobbying or political activities.
new text end

new text begin (b) This exemption is limited in the following manner:
new text end

new text begin (1) it does not apply to admission charges for events involving bingo or other gambling
activities or to charges for use of amusement devices involving bingo or other gambling
activities;
new text end

new text begin (2) all gross receipts are taxable if the profits are not used solely and exclusively for
charitable, educational, civic, or governmental purposes; and
new text end

new text begin (3) it does not apply unless the city or designated nonprofit organization keeps a separate
accounting record, including receipts and disbursements for all events included in the
celebration that documents all deductions from gross receipts with receipts and other records.
new text end

new text begin (c) For purposes of this subdivision, "nonprofit organization" means any unit of
government, corporation, society, association, foundation, or institution organized and
operated for charitable, religious, educational, civic, fraternal, and senior citizens' or veterans'
purposes, no part of the net earnings of which inures to the benefit of a private individual.
new text end

new text begin (d) For purposes of this subdivision, "city celebration" means any of the following
activities or combination of activities of limited duration, not regularly carried out in the
normal course of business, that attract patrons for community, social, and entertainment
purposes, such as parades, auctions, bake sales, ice cream socials, block parties, carnivals,
competitions, concerts, concession stands, craft sales, bazaars, dinners, dances, fairs, fashion
shows, festivals, galas, special event workshops, sporting activities such as marathons and
tournaments, and similar events. A city celebration does not include the operation of a
regular place of business in which services are provided or sales are made during regular
hours such as bookstores, thrift stores, gift shops, restaurants, ongoing Internet sales, or
regularly scheduled activities carried out in the normal course of business.
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, 2017.
new text end

Sec. 2. new text begin AMNESTY; CERTAIN LOCAL FESTIVALS.
new text end

new text begin A nonprofit organization that organized and ran a city celebration on behalf of a group
of nonprofit organizations, of which all of the net proceeds were distributed to a combination
of 501(c)(3) and 501(c)(4) nonprofit organizations that use the proceeds primarily for
charitable, educational, civic, or governmental purposes shall not be liable for any state or
local uncollected and unpaid sales and use tax, penalties, or interest incurred in running the
city celebration, for celebrations held before January 1, 2017. The amnesty in this section
does not apply to sales and use taxes already paid or remitted to the state or to sales taxes
already collected by the organization. The amnesty does apply to an audit of an organization
as long as the audit is not finally resolved.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end