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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 418-S.F.No. 3091 
                  An act relating to taxation; recodifying the sales and 
                  use tax laws; making style and form and clarifying 
                  changes; amending Minnesota Statutes 1998, sections 
                  37.13; 115A.69, subdivision 6; 116A.25; 289A.31, 
                  subdivision 7; 360.035; 458A.09; 458A.30; 458D.23; 
                  469.127; 473.448; 473.545; and 473.608, subdivision 2; 
                  Minnesota Statutes 1999 Supplement, section 469.101, 
                  subdivision 2; proposing coding for new law in 
                  Minnesota Statutes, chapter 297A; repealing Minnesota 
                  Statutes 1998, sections 297A.01; 297A.02; 297A.022; 
                  297A.023; 297A.03; 297A.04; 297A.041; 297A.06; 
                  297A.065; 297A.07; 297A.09; 297A.10; 297A.11; 297A.12; 
                  297A.13; 297A.135; 297A.14; 297A.141; 297A.15; 
                  297A.16; 297A.17; 297A.18; 297A.21; 297A.211; 
                  297A.213; 297A.22; 297A.23; 297A.24; 297A.25; 
                  297A.2531; 297A.2545; 297A.255; 297A.256; 297A.2571; 
                  297A.2572; 297A.2573; 297A.259; 297A.26; 297A.28; 
                  297A.33, subdivision 2; 297A.44, subdivision 1; 
                  297A.46; 297A.47; and 297A.48. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1
                                 RECODIFICATION
           Section 1.  [PURPOSE AND EFFECT.] 
           Subdivision 1.  [PURPOSE.] It is the intent of the 
        legislature to recodify Minnesota Statutes, chapter 297A, by 
        removing archaic, obsolete, and redundant language, and by 
        improving the organization and readability of the chapter.  The 
        provisions of this act may not be used to determine the law in 
        effect prior to this act's effective date. 
           Subd. 2.  [EFFECT.] Due to the complexity of the 
        recodification, prior provisions are repealed on the effective 
        date of the new provisions.  The repealed provisions, however, 
        continue to remain in effect until superseded by the analogous 
        provision in the new law. 
           Sec. 2.  Minnesota Statutes 1998, section 37.13, is amended 
        to read: 
           37.13 [TITLE TO PROPERTY VESTED IN STATE.] 
           Subdivision 1.  [USE OF MONEY.] The state owns all money 
        and other property of the society in the name of the society and 
        there may be no division of its assets among society members.  
        Money received by the society must be used for holding its 
        annual fair and for other exhibitions or expositions the society 
        holds, for the improvement of the fairgrounds, for the payment 
        of expenses, premiums, and purses, for the acquisition of real 
        and personal property, for the use and benefit of the society, 
        and for furnishing attractions and amusements the board of 
        managers considers necessary for the success of its fairs and 
        other exhibitions and expositions. 
           Subd. 2.  [CAPITAL IMPROVEMENTS.] The society shall spend 
        the amount of sales tax retained under section 289A.31, 
        subdivision 7, paragraph (f), exclusively to make capital 
        improvements to state-owned buildings and facilities on the 
        state fairgrounds.  The society shall match the amount retained 
        with an equal amount from proceeds from special assessments 
        levied against commercial exhibits, concessions and rentals, and 
        from other special user fees specifically designated for capital 
        improvements. 
           Sec. 3.  Minnesota Statutes 1998, section 289A.31, 
        subdivision 7, is amended to read: 
           Subd. 7.  [SALES AND USE TAX.] (a) The sales and use tax 
        required to be collected by the retailer under chapter 297A 
        constitutes a debt owed by the retailer to Minnesota, and the 
        sums collected must be held as a special fund in trust for the 
        state of Minnesota. 
           A retailer who does not maintain a place of business within 
        this state as defined by section 297A.21, subdivision 1, shall 
        not be indebted to Minnesota for amounts of tax that it was 
        required to collect but did not collect unless the retailer knew 
        or had been advised by the commissioner of its obligation to 
        collect the tax.  
           (b) The use tax required to be paid by a purchaser is a 
        debt owed by the purchaser to Minnesota. 
           (c) The tax imposed by sections 297A.01 to 297A.44 chapter 
        297A, and interest and penalties, is a personal debt of the 
        individual required to file a return from the time the liability 
        arises, irrespective of when the time for payment of that 
        liability occurs.  The debt is, in the case of the executor or 
        administrator of the estate of a decedent and in the case of a 
        fiduciary, that of the individual in an official or fiduciary 
        capacity unless the individual has voluntarily distributed the 
        assets held in that capacity without reserving sufficient assets 
        to pay the tax, interest, and penalties, in which case the 
        individual is personally liable for the deficiency. 
           (d) Liability for payment of sales and use taxes includes 
        any responsible person or entity described in the personal 
        liability provisions of section 270.101. 
           (e) Any amounts collected, even if erroneously or illegally 
        collected, from a purchaser under a representation that they are 
        taxes imposed under chapter 297A are state funds from the time 
        of collection and must be reported on a return filed with the 
        commissioner.  The amounts collected are not subject to refund 
        unless the seller submits written evidence to the commissioner 
        that the tax and any interest earned on the tax has been or will 
        be refunded or credited to the purchaser by the seller. 
           (f) The tax imposed under chapter 297A on sales of tickets 
        to the premises of or events sponsored by the state agricultural 
        society and conducted on the state fairgrounds during the period 
        of the annual state fair may be retained by the state 
        agricultural society if the funds are used and matched as 
        required under section 37.13, subdivision 2. 
                                  DEFINITIONS
           Sec. 4.  [297A.61] [DEFINITIONS.] 
           Subdivision 1.  [APPLICABILITY.] The following words, 
        terms, and phrases when used in this chapter have the meanings 
        given them in this section, unless the context clearly indicates 
        a different meaning. 
           Subd. 2.  [PERSON.] "Person" includes any individual, and 
        any group or combination of individuals acting as a unit, and 
        the plural as well as the singular number.  Person includes a 
        firm, partnership, joint venture, limited liability company, 
        association, cooperative, social club, fraternal organization, 
        municipal or private corporation whether or not organized for 
        profit, estates, trusts, business trusts, receiver, trustee, 
        syndicate, the United States, and a state and its political 
        subdivisions.  Person includes, but is not limited to, directors 
        and officers of corporations, governors and managers of a 
        limited liability company, or members of partnerships who, 
        either individually or jointly with others, have the control, 
        supervision, or responsibility of filing returns and making 
        payment of the amount of tax imposed by this chapter.  Person 
        also includes any agent or consignee of any individual or 
        organization enumerated in this subdivision. 
           Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
        include, but are not limited to, each of the transactions listed 
        in this subdivision. 
           (b) Sale and purchase include any transfer of title or 
        possession, or both, of tangible personal property, whether 
        absolutely or conditionally, and the leasing of or the granting 
        of a license to use or consume, for a consideration, tangible 
        personal property, other than a manufactured home used for 
        residential purposes for a continuous period of 30 days or more. 
           (c) Sale and purchase include the production, fabrication, 
        printing, or processing of tangible personal property for a 
        consideration for consumers who furnish either directly or 
        indirectly the materials used in the production, fabrication, 
        printing, or processing. 
           (d) Sale and purchase include the furnishing, preparing, or 
        serving for a consideration of food or drinks.  Notwithstanding 
        section 297A.67, subdivision 2, taxable food or drinks include, 
        but are not limited to, the following: 
           (1) food or drinks sold by the retailer for immediate 
        consumption on the retailer's premises.  Food and drinks sold 
        within a building or grounds that require an admission charge 
        for entrance are presumed to be sold for consumption on the 
        premises; 
           (2) food or drinks prepared by the retailer for immediate 
        consumption either on or off the retailer's premises.  For 
        purposes of this subdivision, "food or drinks prepared for 
        immediate consumption" means any food product upon which an act 
        of preparation including, but not limited to, cooking, mixing, 
        sandwich making, blending, heating, or pouring has been 
        performed by the retailer so the food product may be immediately 
        consumed by the purchaser; 
           (3) ice cream, ice milk, frozen yogurt products, or frozen 
        novelties sold in single or individual servings including, but 
        not limited to, cones, sundaes, and snow cones; 
           (4) soft drinks and other beverages, including all 
        carbonated and noncarbonated beverages or drinks sold in liquid 
        form, but not including beverages or drinks which contain milk 
        or milk products, beverages or drinks containing 15 or more 
        percent fruit juice, and noncarbonated and noneffervescent 
        bottled water sold in individual containers of one-half gallon 
        or more in size; 
           (5) gum, candy, and candy products; 
           (6) ice; 
           (7) all food sold from vending machines; 
           (8) all food for immediate consumption sold from concession 
        stands and vehicles; 
           (9) party trays; 
           (10) all meals and single servings of packaged snack food 
        sold in restaurants and bars; and 
           (11) bakery products that are: 
           (i) prepared by the retailer for consumption on the 
        retailer's premises; 
           (ii) sold at a place that charges admission; 
           (iii) sold from vending machines; or 
           (iv) sold in single or individual servings from concession 
        stands, vehicles, bars, and restaurants.  
           For purposes of this paragraph, "single or individual 
        servings" does not include products when sold in bulk containers 
        or bulk packaging.  
           For purposes of this paragraph, "premises" means the total 
        space and facilities, including buildings, grounds, and parking 
        lots that are made available or that are available for use by 
        the retailer or customer for the purpose of sale or consumption 
        of prepared food and drinks.  The premises of a caterer is the 
        place where the catered food or drinks are served. 
           (e) A sale and a purchase includes the furnishing for a 
        consideration of electricity, gas, water, or steam for use or 
        consumption within this state or local exchange telephone 
        service, intrastate toll service, and interstate toll service, 
        if that service originates from and is charged to a telephone 
        located in this state.  Telephone service includes (1) paging 
        services, and (2) private communication service, as defined in 
        United States Code, title 26, section 4252(d), except for 
        private communication service purchased by an agent acting on 
        behalf of the state lottery.  Telephone service does not include 
        services purchased with a prepaid telephone calling card.  The 
        furnishing for a consideration of access to telephone services 
        by a hotel to its guests is a sale.  The furnishing for a 
        consideration of items listed in this paragraph by a municipal 
        corporation is a sale. 
           (f) A sale and a purchase includes the transfer for a 
        consideration of computer software.  
           (g) A sale and a purchase includes the furnishing for a 
        consideration of taxable services as defined in subdivision 16. 
           (h) A sale and a purchase includes the furnishing for a 
        consideration of tangible personal property or taxable services 
        by the United States or any of its agencies or 
        instrumentalities, or the state of Minnesota, its agencies, 
        instrumentalities, or political subdivisions. 
           Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a sale 
        for any purpose other than resale in the regular course of 
        business.  
           (b) A sale of property used by the owner only by leasing it 
        to others or by holding it in an effort to lease it, and put to 
        no use by the owner other than resale after the lease or effort 
        to lease, is a sale of property for resale.  
           (c) A sale of master computer software that is purchased 
        and used to make copies for sale or lease is a sale of property 
        for resale.  
           (d) A sale of building materials, supplies and equipment to 
        owners, contractors, subcontractors or builders for the erection 
        of buildings or the alteration, repair, or improvement of real 
        property is a retail sale in whatever quantity sold, whether the 
        sale is for purposes of resale in the form of real property or 
        otherwise.  
           (e) A sale of carpeting, linoleum, or similar floor 
        covering to a person who provides for installation of the floor 
        covering is a retail sale and not a sale for resale since a sale 
        of floor covering which includes installation is a contract for 
        the improvement of real property. 
           (f) A sale of shrubbery, plants, sod, trees, and similar 
        items to a person who provides for installation of the items is 
        a retail sale and not a sale for resale since a sale of 
        shrubbery, plants, sod, trees, and similar items that includes 
        installation is a contract for the improvement of real property. 
           (g) A sale of tangible personal property that is awarded as 
        prizes is a retail sale and is not considered a sale of property 
        for resale. 
           (h) A sale of tangible personal property utilized or 
        employed in the furnishing or providing of services under 
        subdivision 16, paragraph (b), including, but not limited to, 
        property given as promotional items, is a retail sale and is not 
        considered a sale of property for resale. 
           (i) A sale of tangible personal property used in conducting 
        lawful gambling under chapter 349 or the state lottery under 
        chapter 349A, including, but not limited to, property given as 
        promotional items, is a retail sale and is not considered a sale 
        of property for resale. 
           (j) A sale of machines, equipment, or devices that are used 
        to furnish, provide, or dispense goods or services, including, 
        but not limited to, coin-operated devices, is a retail sale and 
        is not considered a sale of property for resale. 
           (k) In the case of a lease, a retail sale occurs when an 
        obligation to make a lease payment becomes due under the terms 
        of the agreement or the trade practices of the lessor. 
           (l) In the case of a conditional sales contract, a retail 
        sale occurs upon the transfer of title or possession of the 
        tangible personal property. 
           Subd. 5.  [STORAGE.] "Storage" includes keeping or 
        retaining tangible personal property in Minnesota for any 
        purpose except sale in the regular course of business or 
        subsequent use solely outside Minnesota of tangible personal 
        property. 
           Subd. 6.  [USE.] (a) "Use" includes the exercise of a right 
        or power incident to the ownership of any interest in tangible 
        personal property, or taxable services, purchased from a 
        retailer, other than the sale of that property in the regular 
        course of business.  
           (b) Use includes the consumption of printed materials in 
        the creation of nontaxable advertising that is distributed, 
        either directly or indirectly, within Minnesota. 
           Subd. 7.  [SALES PRICE.] (a) "Sales price" means the total 
        consideration for a retail sale, valued in money, whether paid 
        in money or by barter or exchange.  
           (b) Sales price includes: 
           (1) the cost of the property sold, cost of materials used, 
        labor or service cost, interest, or discount allowed after the 
        sale is consummated; 
           (2) the cost of transportation incurred prior to the time 
        of sale; 
           (3) any amount for which credit is given by the seller to 
        the purchaser; 
           (4) charges for services that are part of a sale; or 
           (5) any other expense whatsoever. 
           (c) Sales price does not include the following: 
           (1) an amount allowed as credit for tangible personal 
        property taken in trade for resale; 
           (2) charges of up to 15 percent in lieu of tips if the 
        charges are separately stated; 
           (3) interest, financing, or carrying charges if the charges 
        are separately stated; 
           (4) charges for labor or services used in installing or 
        applying the property sold if the charges are separately stated; 
           (5) transportation charges if the transportation occurs 
        after the retail sale of the property if the charges are 
        separately stated; 
           (6) cash discounts allowed and taken on sales or the amount 
        refunded either in cash or in credit for property returned by 
        purchasers; 
           (7) the rental motor vehicle tax imposed under section 
        297A.64; or 
           (8) the amount of any tax imposed by the United States on 
        communications services under United States Code, title 26, 
        section 4251(a). 
           (d) Notwithstanding paragraph (c), "sales price," for 
        purposes of sales of ready-mixed concrete sold from a 
        ready-mixed concrete truck, includes any transportation, 
        delivery, or other service charges, and no deduction is allowed 
        for those charges, whether or not the charges are separately 
        stated.  
           Subd. 8.  [GROSS RECEIPTS.] "Gross receipts" means the 
        total amount received, in money or by barter or exchange, for 
        all sales at retail as measured by the sales price. 
           Subd. 9.  [RETAILER.] "Retailer" means every person engaged 
        in making retail sales. 
           Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
        personal property" means corporeal personal property of any 
        kind, including property that is to become real property as a 
        result of incorporation, attachment, or installation following 
        its acquisition. 
           (b) Tangible personal property includes, but is not limited 
        to: 
           (1) computer software, whether contained on tape, discs, 
        cards, or other devices; and 
           (2) prepaid telephone calling cards.  
           (c) Personal property does not include: 
           (1) large ponderous machinery and equipment used in a 
        business or production activity which at common law would be 
        considered to be real property; 
           (2) property which is subject to an ad valorem property 
        tax; 
           (3) property described in section 272.02, subdivision 9, 
        clauses (a) to (d); and 
           (4) property described in section 272.03, subdivision 2, 
        clauses (3) and (5). 
           Subd. 11.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of revenue of the state of Minnesota. 
           Subd. 12.  [FARM MACHINERY.] (a) "Farm machinery" means new 
        or used machinery, equipment, implements, accessories, and 
        contrivances used directly and principally in the production for 
        sale, but not including the processing, of livestock, dairy 
        animals, dairy products, poultry and poultry products, fruits, 
        vegetables, forage, grains, and bees and apiary products.  
           (b) Farm machinery includes: 
           (1) machinery for the preparation, seeding, or cultivation 
        of soil for growing agricultural crops and sod, for the 
        harvesting and threshing of agricultural products, or for the 
        harvesting or mowing of sod; 
           (2) barn cleaners, milking systems, grain dryers, automatic 
        feeding systems, and similar installations, whether or not the 
        equipment is installed by the seller and becomes part of the 
        real property; 
           (3) irrigation equipment sold for exclusively agricultural 
        use, including pumps, pipe fittings, valves, sprinklers, and 
        other equipment necessary to the operation of an irrigation 
        system when sold as part of an irrigation system, whether or not 
        the equipment is installed by the seller and becomes part of the 
        real property; 
           (4) logging equipment, including chain saws used for 
        commercial logging; 
           (5) fencing used for the containment of farmed cervidae, as 
        defined in section 17.451, subdivision 2; 
           (6) primary and backup generator units used to generate 
        electricity for the purpose of operating farm machinery, as 
        defined in this subdivision, or providing light or space heating 
        necessary for the production of livestock, dairy animals, dairy 
        products, or poultry and poultry products; and 
           (7) aquaculture production equipment as defined in 
        subdivision 13.  
           (c) Farm machinery does not include: 
           (1) repair or replacement parts; 
           (2) tools, shop equipment, grain bins, feed bunks, fencing 
        material except fencing material covered by paragraph (b), 
        clause (5), communication equipment and other farm supplies; 
           (3) motor vehicles taxed under chapter 297B; 
           (4) snowmobiles or snow blowers; or 
           (5) lawn mowers except those used in the production of sod 
        for sale, or garden-type tractors or garden tillers. 
           Subd. 13.  [AQUACULTURE PRODUCTION EQUIPMENT.] (a) 
        "Aquaculture production equipment" means new or used machinery, 
        equipment, implements, accessories, and contrivances used 
        directly and principally in aquaculture production.  
           (b) Aquaculture production equipment includes augers and 
        blowers, automatic feed systems, manual feeding equipment, 
        shockers, gill nets, trap nets, seines, box traps, round nets 
        and traps, net pens, dip nets, net washers, floating net 
        supports, floating access walkways, net supports and walkways, 
        growing tanks, holding tanks, troughs, raceways, transport 
        tanks, egg taking equipment, egg hatcheries, egg incubators, egg 
        baskets and troughs, egg graders, egg counting equipment, fish 
        counting equipment, fish graders, fish pumps and loaders, fish 
        elevators, air blowers, air compressors, oxygen generators, 
        oxygen regulators, diffusers and injectors, air supply 
        equipment, oxygenation columns, water coolers and heaters, heat 
        exchangers, water filter systems, water purification systems, 
        waste collection equipment, feed mills, portable scales, feed 
        grinders, feed mixers, feed carts and trucks, power feed wagons, 
        fertilizer spreaders, fertilizer tanks, forage collection 
        equipment, land levelers, loaders, post hole diggers, disc, 
        harrow, plow, and water diversion devices.  
           (c) Aquaculture production equipment does not include 
        repair or replacement parts for aquaculture production equipment.
           Subd. 14.  [LEASING; LEASE.] "Leasing" includes all 
        transfers of possession or the use of tangible personal property 
        by the lessee for a consideration, if title remains with the 
        lessor at the end of the lease.  For purposes of this chapter, a 
        lease of tangible personal property is a series of sales 
        transactions that impose upon the lessee multiple payment 
        obligations. "Leasing" does not include a transaction defined 
        under subdivision 15.  
           Subd. 15.  [CONDITIONAL SALES CONTRACT.] A "conditional 
        sales contract" means a contract, whether or not the contract is 
        designated as a lease, that provides that the purchaser or 
        lessee is to obtain title to the property at the end of the term 
        of the contract or has the option to purchase the property at 
        the end of the term of the contract for a nominal amount.  For 
        purposes of this paragraph, "nominal amount" means an amount so 
        small, slight, or negligible that it is not economically 
        significant and bears no relation to the real value of the item 
        being purchased. 
           Subd. 16.  [TAXABLE SERVICES.] (a) "Taxable services" means 
        the services listed in this subdivision and other services 
        listed in subdivision 3. 
           (b) Taxable services includes the granting of the privilege 
        of admission to places of amusement, recreational areas, or 
        athletic events, and the making available of amusement devices, 
        tanning facilities, reducing salons, steam baths, turkish baths, 
        health clubs, and spas or athletic facilities. 
           (c) Taxable services includes the furnishing of lodging and 
        related services by a hotel, rooming house, resort, campground, 
        motel, or trailer camp and the granting of any similar license 
        to use real property other than the renting or leasing thereof 
        for a continuous period of 30 days or more. 
           (d) Taxable services includes the furnishing of cable 
        television services or similar television services, including, 
        but not limited to, charges for basic, premium, pay-per-view, 
        and any other similar service. 
           (e) Taxable services includes the furnishing of parking 
        services, whether on a contractual, hourly, or other periodic 
        basis, except for parking at a meter. 
           (f) Taxable services includes the granting of membership in 
        a club, association, or other organization if: 
           (1) the club, association, or other organization makes 
        available for the use of its members sports and athletic 
        facilities, without regard to whether a separate charge is 
        assessed for use of the facilities; and 
           (2) use of the sports and athletic facility is not made 
        available to the general public on the same basis as it is made 
        available to members.  
        Granting of membership means both one-time initiation fees and 
        periodic membership dues.  Sports and athletic facilities 
        include golf courses; tennis, racquetball, handball, and squash 
        courts; basketball and volleyball facilities; running tracks; 
        exercise equipment; swimming pools; and other similar athletic 
        or sports facilities. 
           (g) Taxable services includes the furnishing of the 
        following services as provided in this paragraph: 
           (1) laundry and dry cleaning services including cleaning, 
        pressing, repairing, altering, and storing clothes, linen 
        services and supply, cleaning and blocking hats, and carpet, 
        drapery, upholstery, and industrial cleaning.  Laundry and dry 
        cleaning services do not include services provided by coin 
        operated facilities operated by the customer; 
           (2) motor vehicle washing, waxing, and cleaning services, 
        including services provided by coin operated facilities operated 
        by the customer, and rustproofing, undercoating, and towing of 
        motor vehicles; 
           (3) building and residential cleaning, maintenance, and 
        disinfecting and exterminating services; 
           (4) detective, security, burglar, fire alarm, and armored 
        car services; but not including services performed within the 
        jurisdiction they serve by off-duty licensed peace officers as 
        defined in section 626.84, subdivision 1, or services provided 
        by a nonprofit organization for monitoring and electronic 
        surveillance of persons placed on in-home detention pursuant to 
        court order or under the direction of the Minnesota department 
        of corrections; 
           (5) pet grooming services; 
           (6) lawn care, fertilizing, mowing, spraying and sprigging 
        services; garden planting and maintenance; tree, bush, and shrub 
        pruning, bracing, spraying, and surgery; indoor plant care; 
        tree, bush, shrub, and stump removal; and tree trimming for 
        public utility lines.  Services performed under a construction 
        contract for the installation of shrubbery, plants, sod, trees, 
        bushes, and similar items are not taxable; 
           (7) massages, except when provided by a licensed health 
        care facility or professional or upon written referral from a 
        licensed health care facility or professional for treatment of 
        illness, injury, or disease; and 
           (8) the furnishing of lodging, board, and care services for 
        animals in kennels and other similar arrangements, but excluding 
        veterinary and horse boarding services. 
           The services listed in this paragraph are taxable under 
        section 297A.62 if the service is performed wholly within 
        Minnesota or if the service is performed partly within and 
        partly outside Minnesota and the greater proportion of the 
        service is performed in Minnesota, based on the cost of 
        performance.  In applying the provisions of this chapter, the 
        terms "tangible personal property" and "sales at retail" include 
        taxable services and the provision of taxable services, unless 
        specifically provided otherwise.  Services performed by an 
        employee for an employer are not taxable.  Services performed by 
        a partnership or association for another partnership or 
        association are not taxable if one of the entities owns or 
        controls more than 80 percent of the voting power of the equity 
        interest in the other entity.  Services performed between 
        members of an affiliated group of corporations are not taxable.  
        For purposes of this section, "affiliated group of corporations" 
        includes those entities that would be classified as members of 
        an affiliated group under United States Code, title 26, section 
        1504, and that are eligible to file a consolidated tax return 
        for federal income tax purposes. 
           Subd. 17.  [COMPUTER SOFTWARE.] "Computer software" means a 
        computer program, either in the form of written procedures or in 
        the form of storage media on which, or in which, the program is 
        recorded, or any required documentation or manuals designed to 
        facilitate the use of the computer program.  For purposes of 
        this subdivision: 
           (1) "Storage media" includes punched cards, tapes, discs, 
        diskettes, or drums on which computer programs may be embodied 
        or stored; 
           (2) "Computer" does not include tape-controlled automatic 
        drilling, milling, or other manufacturing machinery or 
        equipment; and 
           (3) "Computer program" means information and directions 
        that dictate the function performed by data processing 
        equipment.  It includes the complete plan for the solution of a 
        problem, such as the complete sequence of automatic data 
        processing equipment instructions necessary to solve a problem 
        and includes both systems and application programs and 
        subdivisions, such as assemblers, compilers, routines, 
        generators, and utility programs.  Computer program includes a 
        "canned" or prewritten computer program that is held or existing 
        for general or repeated sale or lease, even if the prewritten or 
        "canned" program was initially developed on a custom basis or 
        for in-house use. 
           Subd. 18.  [HANDICAPPED.] "Handicapped" means an individual 
        who has a permanent and total disability as defined in section 
        273.13, subdivision 22. 
           Subd. 19.  [COMMON CARRIER.] "Common carrier" means a 
        person engaged in transportation for hire of tangible personal 
        property by motor vehicle, if the person: 
           (1) has a certificate or permit or has completed a 
        registration process that authorizes for-hire transportation of 
        property from the United States Department of Transportation, 
        the transportation regulation board, or the department of 
        transportation; 
           (2) is transporting commodities defined as "exempt" in 
        for-hire transportation; or 
           (3) transports tangible personal property pursuant to a 
        contract with a person described in clause (1) or (2). 
           Subd. 20.  [PREPAID TELEPHONE CALLING CARD.] "Prepaid 
        telephone calling card" means any card or other similar 
        arrangement, including a prepaid authorization number, that 
        permits its holder to obtain telephone services and pay for such 
        services in advance. 
           Subd. 21.  [NORMAL COURSE OF BUSINESS.] "Normal course of 
        business" means activities that demonstrate a commercial 
        continuity or consistency of making sales or performing services 
        for the purposes of attaining profit or producing income.  
        Factors that indicate that a person is acting in the normal 
        course of business include: 
           (1) systematic solicitation of sales through advertising 
        media; 
           (2) entering into contracts to perform services or provide 
        tangible personal property; 
           (3) maintaining a place of business; or 
           (4) use of exemption certificates to purchase items exempt 
        from the sales tax. 
           Subd. 22.  [INTERNAL REVENUE CODE.] Unless specifically 
        provided otherwise, "Internal Revenue Code" means the Internal 
        Revenue Code of 1986, as amended through December 31, 1999.  
           Subd. 23.  [UNITED STATES CODE.] Unless specifically 
        provided otherwise, "United States Code" means the United States 
        Code as amended through December 31, 1999. 
                                  TAXES; RATES
           Sec. 5.  [297A.62] [SALES TAX IMPOSED; RATES.] 
           Subdivision 1.  [GENERALLY.] Except as otherwise provided 
        in subdivision 2 or 3 or in this chapter, a sales tax of 6.5 
        percent is imposed on the gross receipts from retail sales as 
        defined in section 297A.61, subdivision 4, made in this state or 
        to a destination in this state by a person who is required to 
        have or voluntarily obtains a permit under section 297A.83, 
        subdivision 1.  
           Subd. 2.  [LIQUOR AND BEER SALES.] The rate of the sales 
        tax imposed is nine percent on the gross receipts from retail 
        sales of: 
           (1) intoxicating liquor, as defined in section 340A.101, 
        subdivision 14; and 
           (2) 3.2 percent malt liquor, as defined in section 
        340A.101, subdivision 19, when sold at an on-sale or off-sale 
        municipal liquor store or other establishment licensed to sell 
        any type of intoxicating liquor.  
           Subd. 3.  [MANUFACTURED HOUSING AND PARK TRAILERS.] For 
        retail sales of manufactured homes as defined in section 327.31, 
        subdivision 6, for residential uses, the sales tax under 
        subdivision 1 is imposed on 65 percent of the dealer's cost of 
        the manufactured home.  For retail sales of new or used park 
        trailers, as defined in section 168.011, subdivision 8, 
        paragraph (b), the sales tax under subdivision 1 is imposed on 
        65 percent of the sales price of the park trailer.  
           Sec. 6.  [297A.63] [USE TAXES IMPOSED; RATES.] 
           Subdivision 1.  [USE OF TANGIBLE PERSONAL PROPERTY OR 
        TAXABLE SERVICES.] (a) For the privilege of using, storing, 
        distributing, or consuming in Minnesota tangible personal 
        property or taxable services purchased for use, storage, 
        distribution, or consumption in this state, a use tax is imposed 
        on a person in Minnesota.  The tax is imposed on the sales price 
        of retail sales of the tangible personal property or taxable 
        services at the rate of tax imposed under section 297A.62. 
           (b) No tax is imposed under paragraph (a) if the tax 
        imposed by section 297A.62 was paid on the sales price of the 
        tangible personal property or taxable services. 
           (c) No tax is imposed under paragraph (a) if the purchase 
        meets the requirements for exemption under section 297A.67, 
        subdivision 21. 
           Subd. 2.  [USE OF TANGIBLE PERSONAL PROPERTY MADE FROM 
        MATERIALS.] (a) A use tax is imposed on a person who 
        manufactures, fabricates, or assembles tangible personal 
        property from materials, either within or outside this state and 
        who uses, stores, distributes, or consumes the tangible personal 
        property in Minnesota.  The tax is imposed on the sales price of 
        retail sales of the materials contained in the tangible personal 
        property at the rate of tax imposed under section 297A.62. 
           (b) No tax is imposed under paragraph (a) if the tax 
        imposed by section 297A.62 was paid on the sales price of 
        materials contained in the tangible personal property.  
           Sec. 7.  [297A.64] [RENTAL MOTOR VEHICLE TAX IMPOSED; 
        RATE.] 
           Subdivision 1.  [TAX IMPOSED.] A tax is imposed on the 
        lease or rental in this state for not more than 28 days of a 
        passenger automobile as defined in section 168.011, subdivision 
        7, a van as defined in section 168.011, subdivision 28, or a 
        pickup truck as defined in section 168.011, subdivision 29.  The 
        rate of tax is 6.2 percent of the sales price.  The tax applies 
        whether or not the vehicle is licensed in the state. 
           Subd. 2.  [FEE IMPOSED.] A fee equal to three percent of 
        the sales price is imposed on leases or rentals of vehicles 
        subject to the tax under subdivision 1.  The lessor on the 
        invoice to the customer may designate the fee as "a fee imposed 
        by the State of Minnesota for the registration of rental cars." 
           Subd. 3.  [ADMINISTRATION.] The retailer shall report and 
        pay the tax imposed in subdivision 1 to the commissioner of 
        revenue with the taxes imposed in this chapter.  The tax imposed 
        in subdivision 1 and the fee imposed in subdivision 2 are 
        subject to the same interest, penalty, and other provisions 
        provided for sales and use taxes under chapter 289A and this 
        chapter.  The commissioner has the same powers to assess and 
        collect the tax and fee that are given the commissioner in 
        chapters 270 and 289A and this chapter to assess and collect 
        sales and use tax. 
           Subd. 4.  [EXEMPTIONS.] (a) The tax and the fee imposed by 
        this section do not apply to a lease or rental of (1) a vehicle 
        to be used by the lessee to provide a licensed taxi service; (2) 
        a hearse or limousine used in connection with a burial or 
        funeral service; or (3) a van designed or adapted primarily for 
        transporting property rather than passengers. 
           (b) The lessor may elect not to charge the fee imposed in 
        subdivision 2 if in the previous calendar year the lessor had no 
        more than 20 vehicles available for lease that would have been 
        subject to tax under this section, or no more than $50,000 in 
        gross receipts that would have been subject to tax under this 
        section.  
           Subd. 5.  [PAYMENT OF EXCESS FEES.] On the first sales tax 
        return due following the end of a calendar year during which a 
        lessor has imposed a fee under subdivision 2, the lessor shall 
        report to the commissioner of revenue, in the form required by 
        the commissioner, the amount of the fee collected during the 
        previous year and the amount of motor vehicle registration taxes 
        paid during the previous year by the lessor under chapter 168 on 
        vehicles subject to the fee under this section.  If the amount 
        of the fees collected exceeds the amount of motor vehicle 
        registration taxes paid, the lessor shall remit the excess to 
        the commissioner of revenue at the time the report is submitted. 
           Sec. 8.  [297A.65] [LOTTERY TICKETS; IN-LIEU TAX.] 
           Sales of state lottery tickets are exempt from the tax 
        imposed under section 297A.62.  The state lottery must on or 
        before the 20th day of each month transmit to the commissioner 
        of revenue an amount equal to the gross receipts from the sale 
        of lottery tickets for the previous month multiplied by the tax 
        rate under section 297A.62, subdivision 1.  The resulting 
        payment is in lieu of the sales tax that otherwise would be 
        imposed by this chapter.  The commissioner shall deposit the 
        money transmitted as provided by section 297A.94 and the money 
        must be treated as other proceeds of the sales tax.  For 
        purposes of this section, "gross receipts" means the proceeds of 
        the sale of tickets before deduction of a commission or other 
        compensation paid to the vendor or retailer for selling tickets. 
                        REQUIREMENT TO COLLECT AND REMIT 
           Sec. 9.  [297A.66] [JURISDICTION TO REQUIRE COLLECTION AND 
        REMITTANCE OF TAX BY RETAILER.] 
           Subdivision 1.  [DEFINITIONS.] (a) "Retailer maintaining a 
        place of business in this state," or a similar term, means a 
        retailer: 
           (1) having or maintaining within this state, directly or by 
        a subsidiary, an office, place of distribution, sales or sample 
        room or place, warehouse, or other place of business; or 
           (2) having a representative, agent, salesperson, canvasser, 
        or solicitor operating in this state under the authority of the 
        retailer or its subsidiary, for any purpose, including the 
        repairing, selling, delivering, installing, or soliciting of 
        orders for the retailer's goods or services, or the leasing of 
        tangible personal property located in this state, whether the 
        place of business or agent, representative, salesperson, 
        canvasser, or solicitor is located in the state permanently or 
        temporarily, or whether or not the retailer or subsidiary is 
        authorized to do business in this state. 
           (b) "Destination of a sale" means the location to which the 
        retailer makes delivery of the property sold, or causes the 
        property to be delivered, to the purchaser of the property, or 
        to the agent or designee of the purchaser.  The delivery may be 
        made by any means, including the United States Postal Service, a 
        common carrier, or a contract carrier. 
           Subd. 2.  [RETAILER MAINTAINING A PLACE OF BUSINESS IN THIS 
        STATE.] (a) A retailer maintaining a place of business in this 
        state who makes retail sales in Minnesota or to a destination in 
        Minnesota shall collect sales and use taxes and remit them to 
        the commissioner under section 297A.77.  
           Subd. 3.  [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 
        THIS STATE.] (a) To the extent allowed by the United States 
        Constitution and the laws of the United States, a retailer 
        making retail sales from outside this state to a destination 
        within this state and not maintaining a place of business in 
        this state shall collect sales and use taxes and remit them to 
        the commissioner under section 297A.77, if the retailer engages 
        in the regular or systematic soliciting of sales from potential 
        customers in this state by: 
           (1) distribution, by mail or otherwise, of catalogs, 
        periodicals, advertising flyers, or other written solicitations 
        of business to customers in this state; 
           (2) display of advertisements on billboards or other 
        outdoor advertising in this state; 
           (3) advertisements in newspapers published in this state; 
           (4) advertisements in trade journals or other periodicals 
        the circulation of which is primarily within this state; 
           (5) advertisements in a Minnesota edition of a national or 
        regional publication or a limited regional edition in which this 
        state is included as part of a broader regional or national 
        publication which are not placed in other geographically defined 
        editions of the same issue of the same publication; 
           (6) advertisements in regional or national publications in 
        an edition which is not by its contents geographically targeted 
        to Minnesota but which is sold over the counter in Minnesota or 
        by subscription to Minnesota residents; 
           (7) advertisements broadcast on a radio or television 
        station located in Minnesota; or 
           (8) any other solicitation by telegraphy, telephone, 
        computer database, cable, optic, microwave, or other 
        communication system. 
           This paragraph (a) must be construed without regard to the 
        state from which distribution of the materials originated or in 
        which they were prepared.  
           (b) The location of vendors independent of the retailer 
        that provide products or services to the retailer in connection 
        with its solicitation of customers within this state, including 
        such products and services as creation of copy, printing, 
        distribution, and recording, is not considered in determining 
        whether the retailer is required to collect tax.  
           (c) A retailer not maintaining a place of business in this 
        state is presumed, subject to rebuttal, to be engaged in regular 
        solicitation within this state if it engages in any of the 
        activities in paragraph (a) and: 
           (1) makes 100 or more retail sales from outside this state 
        to destinations in this state during a period of 12 consecutive 
        months; or 
           (2) makes ten or more retail sales totaling more than 
        $100,000 from outside this state to destinations in this state 
        during a period of 12 consecutive months. 
           Sec. 10.  [297A.665] [PRESUMPTION OF TAX; BURDEN OF PROOF.] 
           (a) For the purpose of the proper administration of this 
        chapter and to prevent evasion of the tax, until the contrary is 
        established, it is presumed that:  
           (1) all gross receipts are subject to the tax; and 
           (2) all retail sales for delivery in Minnesota are for 
        storage, use, or other consumption in Minnesota.  
           (b) The burden of proving that a sale is not a retail sale 
        is on the seller.  However, the seller may take from the 
        purchaser at the time of the sale an exemption certificate 
        claiming that the property purchased is for resale or that the 
        sale is otherwise exempt from the tax imposed by this chapter.  
        A seller claiming that certain sales are exempt, who does not 
        possess the required exemption certificates, must acquire the 
        certificates within 60 days after receiving written notice from 
        the commissioner that the certificates are required.  If the 
        certificates are not obtained within the 60-day period, the 
        sales are considered taxable sales under this chapter. 
           (c) A purchaser of tangible personal property or any items 
        listed in section 297A.63 that are shipped or brought to 
        Minnesota by the purchaser has the burden of proving that the 
        property was not purchased from a retailer for storage, use, or 
        consumption in Minnesota.  
                                   EXEMPTIONS
           Sec. 11.  [297A.67] [GENERAL EXEMPTIONS.] 
           Subdivision 1.  [SCOPE.] The gross receipts from the sale 
        and purchase of, and storage, distribution, use, or consumption 
        of the items contained in this section are specifically exempted 
        from the taxes imposed by this chapter. 
           Subd. 2.  [FOOD PRODUCTS.] Food products including, but not 
        limited to, cereal and cereal products, butter, cheese, milk and 
        milk products, oleomargarine, meat and meat products, fish and 
        fish products, eggs and egg products, vegetables and vegetable 
        products, fruit and fruit products, spices and salt, sugar and 
        sugar products, coffee and coffee substitutes, tea, and cocoa 
        and cocoa products are exempt.  
           Subd. 3.  [FOOD STAMPS.] Tangible personal property 
        purchased with food stamps, coupons, or vouchers issued by the 
        federal government under the Food Stamp Program is exempt.  This 
        exemption also applies to food purchased under the Special 
        Supplemental Food Program for Women, Infants, and Children.  The 
        exemption provided by this subdivision is effective and applies 
        only to the extent required by federal law. 
           Subd. 4.  [EXEMPT MEALS AT RESIDENTIAL FACILITIES.] Meals 
        or drinks served to patients, inmates, or persons residing at 
        hospitals, sanitariums, nursing homes, senior citizen homes, and 
        correctional, detention, and detoxification facilities are 
        exempt.  
           Subd. 5.  [EXEMPT MEALS AT SCHOOLS.] Meals and lunches 
        served at public and private schools, universities, or colleges 
        are exempt. 
           Subd. 6.  [OTHER EXEMPT MEALS.] Meals or drinks purchased 
        for and served exclusively to individuals who are 60 years of 
        age or over and their spouses or to handicapped persons and 
        their spouses by governmental agencies, nonprofit organizations, 
        or churches, or pursuant to any program funded in whole or in 
        part through United States Code, title 42, sections 3001 through 
        3045, wherever delivered, prepared, or served, are exempt.  
           Subd. 7.  [MEDICINES; MEDICAL DEVICES.] (a) Prescribed 
        drugs and medicine, and insulin, intended for internal or 
        external use, in the cure, mitigation, treatment, or prevention 
        of illness or disease in human beings are exempt.  "Prescribed 
        drugs and medicine" includes over-the-counter drugs or medicine 
        prescribed by a licensed physician. 
           (b) Nonprescription medicines consisting principally 
        (determined by the weight of all ingredients) of analgesics that 
        are approved by the United States Food and Drug Administration 
        for internal use by human beings are exempt.  For purposes of 
        this subdivision, "principally" means greater than 50 percent 
        analgesics by weight.  
           (c) Prescription glasses, hospital beds, fever 
        thermometers, reusable finger-pricking devices for the 
        extraction of blood, blood glucose monitoring machines, and 
        other diagnostic agents used in diagnosing, monitoring, or 
        treating diabetes, and therapeutic and prosthetic devices are 
        exempt.  "Therapeutic devices" means devices that are attached 
        or applied to the human body to cure, heal, or alleviate injury, 
        illness, or disease, either directly or by administering a 
        curative agent.  "Prosthetic devices" means devices that replace 
        injured, diseased, or missing parts of the human body, either 
        temporarily or permanently.  
           Subd. 8.  [CLOTHING.] Clothing and wearing apparel, 
        including sewing materials to be directly incorporated into 
        wearing apparel, are exempt.  For purposes of this subdivision, 
        clothing and wearing apparel do not include the following: 
           (1) articles designed primarily for use while engaging in a 
        specific sport or recreational activity that are not also worn 
        for general use; 
           (2) articles designed primarily to provide safety or 
        protection against injury while the user is engaged in 
        industrial or general job activities; 
           (3) all articles commonly or commercially known as jewelry 
        including, but not limited to, watches; 
           (4) nonprescription optical glasses of any sort; 
           (5) articles made entirely of fur on the hide or pelt, or 
        partially of such fur if the value of the fur is more than three 
        times the value of the next most valuable component material; 
           (6) perfume, lotions, creams, dyes, or other substances 
        that are applied to the skin or the hair; and 
           (7) luggage, bags, purses, wallets, or cases of any sort. 
           Subd. 9.  [BABY PRODUCTS.] (a) Products, such as lotion, 
        creams, ointments, oil, powder, or shampoo, and other articles 
        designed for application to the hair or skin of babies are 
        exempt. 
           (b) Baby bottles and nipples, pacifiers, teething rings, 
        thumb sucking preventatives, and infant syringes are exempt. 
           Subd. 10.  [CASKETS; VAULTS.] Caskets and burial vaults for 
        human burial are exempt.  
           Subd. 11.  [AUTOMOBILES; DISABLED VETERANS.] Automobiles or 
        other conveyances are exempt if the purchaser is assisted by a 
        grant from the United States in accordance with United States 
        Code, title 38, section 3902. 
           Subd. 12.  [PARTS AND ACCESSORIES USED TO MAKE A MOTOR 
        VEHICLE HANDICAPPED ACCESSIBLE.] Parts, accessories, and labor 
        charges that are used solely to modify a motor vehicle to make 
        it handicapped accessible are exempt. 
           Subd. 13.  [TEXTBOOKS.] Textbooks that are prescribed for 
        use in conjunction with a course of study in a school, college, 
        university, and private career school to students who are 
        regularly enrolled at such institutions are exempt.  For 
        purposes of this subdivision (1) a "school" is as defined in 
        section 120A.22, subdivision 4; and (2) "private career school" 
        means a school licensed under section 141.25. 
           Subd. 14.  [PERSONAL COMPUTERS PRESCRIBED FOR USE BY 
        SCHOOL.] Personal computers and related computer software sold 
        by a school, college, university, or private career school to 
        students who are enrolled at the institutions are exempt if: 
           (1) the use of the personal computer, or of a substantially 
        similar model of computer, and the related computer software is 
        prescribed by the institution in conjunction with a course of 
        study; and 
           (2) each student of the institution, or of a unit of the 
        institution in which the student is enrolled, is required by the 
        institution to have such a personal computer and related 
        software as a condition of enrollment.  
           For the purposes of this subdivision, "school" and "private 
        career school" have the meanings given in subdivision 13. 
           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; 
           (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 
        heat; and 
           (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.
           Subd. 16.  [RESIDENTIAL WATER SERVICES.] Water services for 
        residential use are exempt regardless of how the services are 
        billed. 
           Subd. 17.  [FEMININE HYGIENE PRODUCTS.] Sanitary napkins, 
        tampons, or similar items used for feminine hygiene are exempt.  
           Subd. 18.  [USED MOTOR OILS.] Used motor oils are exempt. 
           Subd. 19.  [CROSS-COUNTRY SKI PASSES.] Cross-country ski 
        passes issued under sections 85.40 to 85.43 are exempt. 
           Subd. 20.  [MANUFACTURED HOMES.] Manufactured homes, as 
        defined in section 327.31, subdivision 6, to be used by the 
        purchaser for residential purposes are exempt, unless the sale 
        is the first retail sale of the manufactured home in this state. 
           Subd. 21.  [DE MINIMIS EXEMPTION.] A purchase subject to 
        use tax under section 297A.63 is exempt if (1) the purchase is 
        made by an individual for personal use, and (2) the total 
        purchases that are subject to the use tax do not exceed $770 in 
        the calendar year.  For purposes of this subdivision, "personal 
        use" includes purchases for gifts.  If an individual makes 
        purchases subject to use tax of more than $770 in the calendar 
        year, the individual must pay the use tax on the entire amount.  
        This exemption does not apply to purchases made from retailers 
        who are required or registered to collect taxes under this 
        chapter. 
           Subd. 22.  [PROPERTY BROUGHT INTO MINNESOTA BY 
        NONRESIDENT.] All articles of tangible personal property brought 
        into Minnesota by a person who was a nonresident of this state 
        immediately prior to bringing such property into this state for 
        the person's use, storage, or consumption are exempt from the 
        use tax imposed by section 297A.63. 
           Subd. 23.  [OCCASIONAL SALES.] Isolated and occasional 
        sales in Minnesota not made in the normal course of business, 
        and the storage, use, or consumption of property or services 
        resulting from such sales, are exempt. 
           Subd. 24.  [CONSTITUTIONAL PROHIBITIONS.] The gross 
        receipts from the sale of and the storage, use, or other 
        consumption in Minnesota of tangible personal property, tickets, 
        or admissions, electricity, gas, or local exchange telephone 
        service, that the state of Minnesota is prohibited from taxing 
        under the Constitution or laws of the United States or under the 
        Constitution of Minnesota, are exempt. 
           Sec. 12.  [297A.68] [BUSINESS EXEMPTIONS.] 
           Subdivision 1.  [SCOPE.] The gross receipts from the sale 
        of, and storage, distribution, use, or consumption of the items 
        contained in this section are specifically exempted from the 
        taxes imposed by this chapter.  
           Subd. 2.  [MATERIALS CONSUMED IN PRODUCTION.] (a) Materials 
        stored, used, or consumed in industrial production of 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 electricity, gas, or steam 
        used for space heating or lighting is exempt only if it is 
        necessary to produce that particular industrial 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 
        metalcasting:  crucibles, thermocouple protection sheaths and 
        tubes, stalk tubes, refractory materials, molten metal filters 
        and filter boxes, and degassing lances. 
           (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 and the production of road 
        building materials.  Industrial production does not include 
        painting, cleaning, repairing or similar processing of property 
        except as part of the original manufacturing process.  
           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 16, 
        paragraph (g), 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 electricity, gas, or steam 
        used for space heating or lighting is exempt only if it is 
        necessary to produce that particular taxable service. 
           (c) This exemption does not include machinery, equipment, 
        implements, tools, accessories, appliances, contrivances, 
        furniture, and fixtures used in providing the taxable service. 
           Subd. 4.  [TACONITE PRODUCTION MATERIALS.] Mill liners, 
        grinding rods, and grinding balls that are substantially 
        consumed in the production of taconite are exempt when sold to 
        or stored, used, or consumed by persons taxed under the in-lieu 
        provisions of chapter 298.  
           Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
        exempt.  The tax must be imposed and collected as if the rate 
        under section 297A.62, subdivision 1, applied, and then refunded 
        in the manner provided in section 297A.75. 
           "Capital equipment" means machinery and equipment purchased 
        or leased and used in this state by the purchaser or lessee 
        primarily for manufacturing, fabricating, mining, or refining 
        tangible personal property to be sold ultimately at retail. 
           Capital equipment means machinery and equipment essential 
        to the integrated production process.  Capital equipment also 
        includes machinery and equipment used to electronically transmit 
        results retrieved by a customer of an online computerized data 
        retrieval system. 
           (b) Capital equipment includes, but is not limited to: 
           (1) machinery and equipment used to operate, control, or 
        regulate the production equipment; 
           (2) machinery and equipment used for research and 
        development, design, quality control, and testing activities; 
           (3) environmental control devices that are used to maintain 
        conditions such as temperature, humidity, light, or air pressure 
        when those conditions are essential to and are part of the 
        production process; 
           (4) materials and supplies used to construct and install 
        machinery or equipment; 
           (5) repair and replacement parts, including accessories, 
        whether purchased as spare parts, repair parts, or as upgrades 
        or modifications to machinery or equipment; 
           (6) materials used for foundations that support machinery 
        or equipment; 
           (7) materials used to construct and install special purpose 
        buildings used in the production process; and 
           (8) ready-mixed concrete trucks in which the ready-mixed 
        concrete is mixed as part of the delivery process.  
           (c) Capital equipment does not include the following: 
           (1) motor vehicles taxed under chapter 297B; 
           (2) machinery or equipment used to receive or store raw 
        materials; 
           (3) building materials, except for materials included in 
        paragraph (b), clauses (6) and (7); 
           (4) machinery or equipment used for nonproduction purposes, 
        including, but not limited to, the following:  plant security, 
        fire prevention, first aid, and hospital stations; support 
        operations or administration; pollution control; and plant 
        cleaning, disposal of scrap and waste, plant communications, 
        space heating, lighting, or safety; 
           (5) farm machinery and aquaculture production equipment as 
        defined by section 297A.61, subdivisions 12 and 13; 
           (6) machinery or equipment purchased and installed by a 
        contractor as part of an improvement to real property; or 
           (7) any other item that is not essential to the integrated 
        process of manufacturing, fabricating, mining, or refining. 
           (d) For purposes of this subdivision: 
           (1) "Machinery" means mechanical, electronic, or electrical 
        devices, including computers and computer software, that are 
        purchased or constructed to be used for the activities set forth 
        in paragraph (a). 
           (2) "Equipment" means independent devices or tools separate 
        from machinery, including computers and computer software, used 
        in operating, controlling, or regulating machinery and 
        equipment; and any subunit or assembly comprising a component of 
        any machinery or accessory or attachment parts of machinery, 
        such as tools, dies, jigs, patterns, and molds.  
           (3) "Primarily" means machinery and equipment used 50 
        percent or more of the time in an activity described in 
        paragraph (a). 
           (4) "Manufacturing" means an operation or series of 
        operations where raw materials are changed in form, composition, 
        or condition by machinery and equipment and which results in the 
        production of a new article of tangible personal property.  For 
        purposes of this subdivision, "manufacturing" includes the 
        generation of electricity or steam to be sold at retail. 
           (5) "Fabricating" means to make, build, create, produce, or 
        assemble components or property to work in a new or different 
        manner. 
           (6) "Mining" means the extraction of minerals, ores, stone, 
        or peat. 
           (7) "Refining" means the process of converting a natural 
        resource to a product, including the treatment of water to be 
        sold at retail. 
           (8) "Integrated production process" means a process 
        beginning with the removal of raw materials from inventory 
        through the completion of the product, including packaging of 
        the product. 
           (9) "Online data retrieval system" means a system whose 
        cumulation of information is equally available and accessible to 
        all its customers. 
           (10) "Machinery and equipment used for pollution control" 
        means machinery and equipment used solely to eliminate, prevent, 
        or reduce pollution resulting from an activity described in 
        paragraph (a).  
           Subd. 6.  [SPECIAL TOOLING.] Special tooling is exempt.  
        "Special tooling" means tools, dies, jigs, patterns, gauges, and 
        other special tools that have value and use only for the buyer 
        and for the use for which they are made.  An item has value and 
        use only to the buyer if the item is not standard enough to be 
        stocked or ordered from a catalog or other sales literature, but 
        must be produced in accordance with special requirements 
        peculiar to the buyer and not common to someone else whose 
        conditions for possible use of the material are reasonably 
        similar to the buyer's.  
           Subd. 7.  [AIR COOLING EQUIPMENT.] Equipment used for air 
        cooling is exempt, if the equipment is purchased for conversion 
        or replacement of an existing groundwater-based once-through 
        cooling system as required under section 103G.271, subdivision 5.
           Subd. 8.  [POLLUTION CONTROL EQUIPMENT.] Pollution control 
        equipment purchased by a steel reprocessing firm is exempt if 
        the equipment is necessary to meet state or federal emission 
        standards.  For purposes of this subdivision: 
           (1) "pollution control equipment" means equipment used for 
        the purpose of eliminating, preventing, or reducing air, land, 
        or water pollution during or as a result of the manufacturing 
        process; and 
           (2) "steel reprocessing firm" means a firm whose primary 
        business is the recovery of steel from automobiles, appliances, 
        and other steel products and the rerefining of this recovered 
        metal into new steel products. 
           Subd. 9.  [SUPER BOWL ADMISSIONS.] The granting of the 
        privilege of admission to a world championship football game 
        sponsored by the national football league is exempt. 
           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, electricity, 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.  
           Subd. 11.  [ADVERTISING MATERIALS.] Material designed to 
        advertise and promote the sale of merchandise or services is 
        exempt if the material is purchased and stored for the purpose 
        of subsequently shipping or otherwise transferring outside the 
        state by the purchaser for later use solely outside the state of 
        Minnesota.  Mailing and reply envelopes and cards used 
        exclusively in connection with these advertising and promotional 
        materials are included in this exemption regardless of where the 
        mailing occurs. 
           Subd. 12.  [WIND ENERGY CONVERSION SYSTEMS.] Wind energy 
        conversion systems, as defined in section 216C.06, subdivision 
        12, that are used as an electric power source are exempt, and 
        the materials used to manufacture, install, construct, repair, 
        or replace them are exempt. 
           Subd. 13.  [OUTSTATE TRANSPORT OR DELIVERY.] (a) Tangible 
        personal property is exempt if the property, without 
        intermediate use, is:  
           (1) shipped or transported outside Minnesota by the 
        purchaser or is stored, processed, fabricated or manufactured 
        into, attached to or incorporated into other tangible personal 
        property that is transported or shipped outside Minnesota; and 
           (2) used in a trade or business outside Minnesota after 
        being shipped or transported outside of Minnesota, and is not 
        returned to Minnesota, except in the course of interstate 
        commerce; and 
           (3) either (i) not subject to tax in the state or country 
        to which it is transported for storage or use, or (ii) to be 
        used in other states or countries as part of a maintenance 
        contract. 
           (b) For purposes of this subdivision, storage or 
        processing, fabricating, manufacturing, attaching to, or 
        incorporating into other property is not intermediate use. 
           Subd. 14.  [TEMPORARY STORAGE.] Tangible personal property 
        is exempt if all of the following conditions are met: 
           (1) it is shipped or brought into Minnesota by a common 
        carrier; 
           (2) without intermediate use, it is kept in a public 
        warehouse; 
           (3) it is kept for the purpose of being later transported 
        outside Minnesota; and 
           (4) after storage, it is used solely outside Minnesota, 
        except in the course of interstate commerce. 
           Subd. 15.  [OUTSTATE DELIVERY BY SELLER.] Property is 
        exempt if:  
           (1) it is delivered in one of the following ways: 
           (i) delivery by the seller to a common carrier for delivery 
        outside Minnesota; 
           (ii) placement in the United States mail or parcel post 
        directed to the purchaser outside Minnesota; or 
           (iii) delivery to the purchaser outside Minnesota by means 
        of the seller's own delivery vehicles; and 
           (2) it is not later returned to a point within Minnesota, 
        except in the course of interstate commerce. 
           Subd. 16.  [PACKING MATERIALS.] Packing materials used to 
        pack and ship household goods are exempt if the ultimate 
        destination of the goods is outside Minnesota and if the goods 
        are not later returned to a point within Minnesota, except in 
        the course of interstate commerce.  
           Subd. 17.  [SHIPS USED IN INTERSTATE COMMERCE.] Repair, 
        replacement, and rebuilding parts and materials, and lubricants, 
        for ships or vessels used or to be used principally in 
        interstate or foreign commerce are exempt.  Vessels with a gross 
        registered tonnage of at least 3,000 tons are exempt. 
           Subd. 18.  [CUSTOM COMPUTER SOFTWARE.] The design, 
        development, writing, translation, fabrication, lease, or 
        transfer for a consideration of title or possession of a custom 
        computer program is exempt.  "Custom computer program" means a 
        computer program prepared to the special order of the customer, 
        either in the form of written procedures or in the form of 
        storage media on which, or in which, the program is recorded, or 
        any required documentation or manuals designed to facilitate the 
        use of the custom computer program transferred.  It includes 
        those services represented by separately stated charges for 
        modifications to an existing prewritten program that are 
        prepared to the special order of the customer.  It does not 
        include a "canned" or prewritten computer program that is held 
        or existing for general or repeated sale or lease, even if the 
        prewritten or "canned" program was initially developed on a 
        custom basis or for in-house use.  Modification to an existing 
        prewritten program to meet the customer's needs is custom 
        computer programming only to the extent of the modification.  
           Subd. 19.  [PETROLEUM PRODUCTS.] The following petroleum 
        products are exempt: 
           (1) products upon which a tax has been imposed and paid 
        under chapter 296A, and for which no refund has been or will be 
        allowed because the buyer used the fuel for nonhighway use; 
           (2) products that are used in the improvement of 
        agricultural land by constructing, maintaining, and repairing 
        drainage ditches, tile drainage systems, grass waterways, water 
        impoundment, and other erosion control structures; 
           (3) products purchased by a transit system receiving 
        financial assistance under section 174.24 or 473.384; 
           (4) products used in a passenger snowmobile, as defined in 
        section 296A.01, subdivision 39, for off-highway business use as 
        part of the operations of a resort as provided under section 
        296A.16, subdivision 2, clause (2); or 
           (5) products purchased by a state or a political 
        subdivision of a state for use in motor vehicles exempt from 
        registration under section 168.012, subdivision 1, paragraph (b).
           Subd. 20.  [NATURAL GAS IN VEHICLES.] Natural gas to be 
        used as a fuel in vehicles propelled by natural gas is exempt. 
           Subd. 21.  [SNOWMAKING.] Electricity used to make snow for 
        outdoor use for ski hills, ski slopes, or ski trails is exempt. 
           Subd. 22.  [COPIES OF COURT REPORTER DOCUMENTS.] 
        Transcripts or copies of transcripts of verbatim testimony are 
        exempt if produced and sold by court reporters or other 
        transcribers of legal proceedings to individuals or entities 
        that are parties to or representatives of parties to the 
        proceeding to which the transcript relates. 
           Subd. 23.  [AUTOMATIC FIRE-SAFETY SPRINKLER SYSTEMS.] 
        Automatic fire-safety sprinkler systems described in section 
        273.11, subdivision 6a, are exempt. 
           Subd. 24.  [WASTE PROCESSING EQUIPMENT.] Equipment used for 
        processing solid or hazardous waste at a resource recovery 
        facility, as defined in section 115A.03, subdivision 28, is 
        exempt, including pollution control equipment at a resource 
        recovery facility that burns refuse-derived fuel or mixed 
        municipal solid waste as its primary fuel. 
           Subd. 25.  [OCCASIONAL SALES.] (a) Isolated or occasional 
        sales of tangible personal property in Minnesota not made in the 
        normal course of business of selling that kind of property are 
        exempt.  The storage, use, or consumption of property acquired 
        as a result of such a sale is exempt.  
           (b) This exemption applies to a sale of tangible personal 
        property primarily used in a trade or business only if one of 
        the following conditions are 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; or (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. 
           (c) 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 (b), clause (5). 
           Subd. 26.  [INTERSTATE WATS LINES.] Long distance telephone 
        services are exempt if the service (1) consists of a wide area 
        telephone line that permits a long distance call to an 
        individual or business located in Minnesota to be made from a 
        location outside of Minnesota at no toll charge to the person 
        placing the call; or (2) entitles a customer, upon payment of a 
        periodic charge that is determined either as a flat amount or 
        upon the basis of total elapsed transmission time, to the 
        privilege of an unlimited number of long distance calls made 
        from a location in Minnesota to a location outside of Minnesota 
        if the customer is a qualified provider of telemarketing 
        services.  As used in this subdivision, a "qualified provider of 
        telemarketing services" is a telemarketing firm that derives at 
        least 80 percent of its revenues from one or more of the 
        following activities:  soliciting or providing information, 
        soliciting sales or receiving orders, and conducting research by 
        means of telegraph, telephone, computer database, fiber optic, 
        microwave, or other communication system. 
           Subd. 27.  [MOTOR VEHICLES.] Motor vehicles taxable under 
        the provisions of chapter 297B are exempt. 
           Subd. 28.  [MEDICAL SUPPLIES.] Medical supplies purchased 
        by a licensed health care facility or licensed health care 
        professional to provide medical treatment to residents or 
        patients are exempt.  The exemption does not apply to medical 
        equipment or components of medical equipment, laboratory 
        supplies, radiological supplies, and other items used in 
        providing medical services.  For purposes of this subdivision, 
        "medical supplies" means adhesive and nonadhesive bandages, 
        gauze pads and strips, cotton applicators, antiseptics, 
        nonprescription drugs, eye solution, and other similar supplies 
        used directly on the resident or patient in providing medical 
        services. 
           Subd. 29.  [PRIZES.] Tangible personal property that will 
        be given as prizes to players in games of skill or chance is 
        exempt if the games are conducted at events such as community 
        festivals, fairs, and carnivals and if the events last less than 
        six days.  This exemption does not apply to property awarded as 
        prizes in connection with lawful gambling as defined in section 
        349.12 or the state lottery. 
           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, electricity, gas, or steam 
        used for space heating or lighting are not exempt under this 
        subdivision. 
           Subd. 31.  [WASTE MANAGEMENT CONTAINERS AND 
        COMPACTORS.] Compactors and waste collection containers are 
        exempt if they are purchased by a waste management service 
        provider and are used in providing waste management services as 
        defined in section 297H.01, subdivision 12.  A waste management 
        service provider that does not remit tax on customer charges or 
        lease or rental payments for compactors and waste collection 
        containers under chapter 297H is ineligible for this exemption.  
           Subd. 32.  [EVENTS LOCATED OUTSIDE MINNESOTA.] Tickets or 
        admissions to places of amusement located outside Minnesota or 
        to athletic events to be held outside Minnesota are exempt. 
           Sec. 13.  [297A.69] [AGRICULTURAL EXEMPTIONS.] 
           Subdivision 1.  [SCOPE.] The gross receipts from the sale 
        of, and storage, distribution, use, or consumption of the items 
        contained in this section are specifically exempted from the 
        taxes imposed by this chapter.  
           Subd. 2.  [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 
        (a) Materials stored, used, or consumed in agricultural 
        production of personal property intended to be sold ultimately 
        at retail are exempt, whether or not the item 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) feeds, seeds, trees, fertilizers, and herbicides, 
        including when purchased for use by farmers in a federal or 
        state farm or conservation program; 
           (2) materials sold to a veterinarian to be used or consumed 
        in the care, medication, and treatment of agricultural 
        production animals and horses; 
           (3) chemicals, including chemicals used for cleaning food 
        processing machinery and equipment; 
           (4) materials, including chemicals, fuels, and electricity 
        purchased by persons engaged in agricultural production to treat 
        waste generated as a result of the production process; 
           (5) fuels, electricity, gas, and steam used or consumed in 
        the production process, except that electricity, gas, or steam 
        used for space heating or lighting is exempt only if it is 
        necessary to produce that particular agricultural product; 
           (6) petroleum products and lubricants; 
           (7) packaging materials, including returnable containers 
        used in packaging food and beverage products; and 
           (8) accessory tools and equipment that are separate 
        detachable units with an ordinary useful life of less than 12 
        months used in producing a direct effect upon the product. 
        Machinery, equipment, implements, tools, accessories, 
        appliances, contrivances, and furniture and fixtures, except 
        those listed in this clause are not included within this 
        exemption. 
           (b) For purposes of this subdivision, "agricultural 
        production" includes, but is not limited to, horticulture, 
        floriculture, and the raising of pets, fur-bearing animals, 
        research animals, horses, farmed cervidae as defined in section 
        17.451, subdivision 2, llamas as defined in section 17.455, 
        subdivision 2, and ratitae as defined in section 17.453, 
        subdivision 3. 
           Subd. 3.  [FARM MACHINERY REPAIR PARTS.] Repair and 
        replacement parts, except tires, used for maintenance or repair 
        of farm machinery are exempt, if the part replaces a farm 
        machinery part assigned a specific or generic part number by the 
        manufacturer of the farm machinery.  
           Subd. 4.  [FARM MACHINERY.] Farm machinery is exempt. 
           Subd. 5.  [USED FARM TIRES.] The first $5,000 of gross 
        receipts from the sales of used, remanufactured, or repaired 
        tires for farm machinery, by a sole proprietor, in a calendar 
        year are exempt if: 
           (1) the seller had gross receipts from all sales of less 
        than $10,000 in the previous year; and 
           (2) the tires are not retreaded. 
           Subd. 6.  [HORSES; RELATED MATERIALS.] (a) Horses, 
        including racehorses, are exempt. 
           (b) Materials, including feed and bedding, used or consumed 
        in the breeding, raising, owning, boarding, and keeping of 
        horses are exempt.  Machinery, equipment, implements, tools, 
        appliances, furniture, and fixtures used in the breeding, 
        raising, owning, boarding, and keeping of horses are not 
        included within this exemption. 
           Sec. 14.  [297A.70] [EXEMPTIONS FOR GOVERNMENTS AND 
        NONPROFIT GROUPS.] 
           Subdivision 1.  [SCOPE.] (a) The gross receipts from sales 
        of items to or by, and storage, distribution, use, or 
        consumption of items by the organizations listed in this section 
        are specifically exempted from the taxes imposed by this chapter.
           (b) Notwithstanding any law to the contrary enacted before 
        1992, only sales to governments and political subdivisions 
        listed in this section are exempt from the taxes imposed by this 
        chapter.  
           (c) "Sales" includes purchases under an installment 
        contract or lease purchase agreement under section 465.71. 
           Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
        those listed in paragraph (b), to the following governments and 
        political subdivisions, or to the listed agencies or 
        instrumentalities of governments and political subdivisions, are 
        exempt: 
           (1) the United States and its agencies and 
        instrumentalities; 
           (2) school districts, the University of Minnesota, state 
        universities, community colleges, technical colleges, state 
        academies, the Perpich Minnesota center for arts education, and 
        an instrumentality of a political subdivision that is accredited 
        as an optional/special function school by the North Central 
        Association of Colleges and Schools; 
           (3) hospitals and nursing homes owned and operated by 
        political subdivisions of the state; 
           (4) other states or political subdivisions of other states, 
        if the sale would be exempt from taxation if it occurred in that 
        state; and 
           (5) sales to public libraries, public library systems, 
        multicounty, multitype library systems as defined in section 
        134.001, county law libraries under chapter 134A, the state 
        library under section 480.09, and the legislative reference 
        library.  
           (b) This exemption does not apply to the sales of the 
        following products and services: 
           (1) building, construction, or reconstruction materials 
        purchased by a contractor or a subcontractor as a part of a 
        lump-sum contract or similar type of contract with a guaranteed 
        maximum price covering both labor and materials for use in the 
        construction, alteration, or repair of a building or facility; 
           (2) construction materials purchased by tax exempt entities 
        or their contractors to be used in constructing buildings or 
        facilities which will not be used principally by the tax exempt 
        entities; 
           (3) the leasing of a motor vehicle as defined in section 
        297B.01, subdivision 5, except for leases entered into by the 
        United States or its agencies or instrumentalities; or 
           (4) meals and lodging as defined under section 297A.61, 
        subdivisions 3, paragraph (d), and 16, paragraph (c), except for 
        meals and lodging purchased directly by the United States or its 
        agencies or instrumentalities. 
           (c) As used in this subdivision, "school districts" means 
        public school entities and districts of every kind and nature 
        organized under the laws of the state of Minnesota, and any 
        instrumentality of a school district, as defined in section 
        471.59. 
           Subd. 3.  [SALES OF CERTAIN GOODS AND SERVICES TO 
        GOVERNMENT.] (a) The following sales to or use by the specified 
        governments and political subdivisions of the state are exempt: 
           (1) supplies and equipment used to provide medical care in 
        the operation of an ambulance service owned and operated by a 
        political subdivision of the state; 
           (2) repair and replacement parts for emergency rescue 
        vehicles, fire trucks, and fire apparatus to a political 
        subdivision; 
           (3) machinery and equipment, except for motor vehicles, 
        used directly for mixed municipal solid waste management 
        services at a solid waste disposal facility as defined in 
        section 115A.03, subdivision 10; 
           (4) chore and homemaking services to a political 
        subdivision of the state to be provided to elderly or disabled 
        individuals; 
           (5) telephone services to the department of administration 
        that are used to provide telecommunications services through the 
        intertechnologies revolving fund; 
           (6) firefighter personal protective equipment as defined in 
        paragraph (b), if purchased or authorized by and for the use of 
        an organized fire department, fire protection district, or fire 
        company regularly charged with the responsibility of providing 
        fire protection to the state or a political subdivision; 
           (7) bullet-resistant body armor that provides the wearer 
        with ballistic and trauma protection, if purchased by a law 
        enforcement agency of the state or a political subdivision of 
        the state, or a licensed peace officer, as defined in section 
        626.84, subdivision 1; 
           (8) motor vehicles purchased or leased by political 
        subdivisions of the state if the vehicles are exempt from 
        registration under section 168.012, subdivision 1, paragraph 
        (b); 
           (9) equipment designed to process, dewater, and recycle 
        biosolids for wastewater treatment facilities of political 
        subdivisions, and materials incidental to installation of that 
        equipment; and materials used to construct buildings to house 
        the equipment, if the materials are purchased after June 30, 
        1998, and before July 1, 2001; and 
           (10) sales to a town of gravel and of machinery, equipment, 
        and accessories, except motor vehicles, used exclusively for 
        road and bridge maintenance, and leases by a town of motor 
        vehicles exempt from tax under section 297B.03, clause (10). 
           (b) For purposes of this subdivision, "firefighters 
        personal protective equipment" means helmets, including face 
        shields, chin straps, and neck liners; bunker coats and pants, 
        including pant suspenders; boots; gloves; head covers or hoods; 
        wildfire jackets; protective coveralls; goggles; self-contained 
        breathing apparatus; canister filter masks; personal alert 
        safety systems; spanner belts; optical or thermal imaging search 
        devices; and all safety equipment required by the Occupational 
        Safety and Health Administration. 
           Subd. 4.  [SALES TO NONPROFIT GROUPS.] (a) All sales, 
        except those listed in paragraph (b), to the following 
        "nonprofit organizations" are exempt: 
           (1) an entity organized and operated exclusively for 
        charitable, religious, or educational purposes if the item 
        purchased is used in the performance of charitable, religious, 
        or educational functions; 
           (2) any senior citizen group or association of groups that: 
           (i) in general limits membership to persons who are either 
        age 55 or older, or physically disabled; and 
           (ii) is organized and operated exclusively for pleasure, 
        recreation, and other nonprofit purposes, no part of the net 
        earnings of which inures to the benefit of any private 
        shareholders; and 
           (3) an entity organized and operated exclusively to 
        maintain a cemetery owned by a religious organization. 
           (b) This exemption does not apply to the following sales: 
           (1) building, construction, or reconstruction materials 
        purchased by a contractor or a subcontractor as a part of a 
        lump-sum contract or similar type of contract with a guaranteed 
        maximum price covering both labor and materials for use in the 
        construction, alteration, or repair of a building or facility; 
           (2) construction materials purchased by tax-exempt entities 
        or their contractors to be used in constructing buildings or 
        facilities that will not be used principally by the tax-exempt 
        entities; and 
           (3) meals and lodging as defined under section 297A.61, 
        subdivisions 3, paragraph (d), and 16, paragraph (c); and 
           (4) leasing of a motor vehicle as defined in section 
        297B.01, subdivision 5. 
           Subd. 5.  [VETERANS GROUPS.] Sales to an organization of 
        military service veterans or an auxiliary unit of an 
        organization of military service veterans are exempt if: 
           (1) the organization or auxiliary unit is organized within 
        the state of Minnesota and is exempt from federal taxation under 
        section 501(c), clause (19), of the Internal Revenue Code; and 
           (2) the tangible personal property is for charitable, 
        civic, educational, or nonprofit uses and not for social, 
        recreational, pleasure, or profit uses. 
           Subd. 6.  [AMBULANCES.] The lease of a motor vehicle for 
        use as an ambulance by an ambulance service licensed under 
        section 144E.10 is exempt. 
           Subd. 7.  [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 
        Sales, except for those listed in paragraph (c), to a hospital 
        are exempt, if the items purchased are used in providing 
        hospital services.  For purposes of this subdivision, "hospital" 
        means a hospital organized and operated for charitable purposes 
        within the meaning of section 501(c)(3) of the Internal Revenue 
        Code, and licensed under chapter 144 or by any other 
        jurisdiction, and "hospital services" are services authorized or 
        required to be performed by a "hospital" under chapter 144. 
           (b) Sales, except for those listed in paragraph (c), to an 
        outpatient surgical center are exempt, if the items purchased 
        are used in providing outpatient surgical services.  For 
        purposes of this subdivision, "outpatient surgical center" means 
        an outpatient surgical center organized and operated for 
        charitable purposes within the meaning or section 501(c)(3) of 
        the Internal Revenue Code, and licensed under chapter 144 or by 
        any other jurisdiction.  For the purposes of this subdivision, 
        "outpatient surgical services" means:  (1) services authorized 
        or required to be performed by an outpatient surgical center 
        under chapter 144 or under the applicable licensure law of any 
        other jurisdiction; and (2) urgent care.  For purposes of this 
        subdivision, "urgent care" means health services furnished to a 
        person whose medical condition is sufficiently acute to require 
        treatment unavailable through, or inappropriate to be provided 
        by, a clinic or physician's office, but not so acute as to 
        require treatment in a hospital emergency room.  
           (c) This exemption does not apply to the following products 
        and services: 
           (1) purchases made by a clinic, physician's office, or any 
        other medical facility not operating as a hospital or outpatient 
        surgical center, even though the clinic, office, or facility may 
        be owned and operated by a hospital or outpatient surgical 
        center; 
           (2) sales under section 297A.61, subdivisions 3, paragraph 
        (d), and 16, paragraph (c); 
           (3) building and construction materials used in 
        constructing buildings or facilities that will not be used 
        principally by the hospital or outpatient surgical center; 
           (4) building, construction, or reconstruction materials 
        purchased by a contractor or a subcontractor as a part of a 
        lump-sum contract or similar type of contract with a guaranteed 
        maximum price covering both labor and materials for use in the 
        construction, alteration, or repair of a hospital or outpatient 
        surgical center; or 
           (5) the leasing of a motor vehicle as defined in section 
        297B.01, subdivision 5. 
           Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
        SYSTEM; PRODUCT AND SERVICES.] Products and services including, 
        but not limited to, end user equipment used for construction, 
        ownership, operation, maintenance, and enhancement of the 
        backbone system of the regionwide public safety radio 
        communication system established under sections 473.891 to 
        473.905, are exempt.  For purposes of this subdivision, backbone 
        system is defined in section 473.891, subdivision 9.  This 
        subdivision is effective for purchases, sales, storage, use, or 
        consumption occurring before August 1, 2003. 
           Subd. 9.  [SACRAMENTAL WINE.] Wine for sacramental purposes 
        in religious ceremonies, as described in section 340A.316, is 
        exempt if the wine is purchased from a nonprofit religious 
        organization meeting the requirements of subdivision 4 or from a 
        person authorized to import sacramental wine without a license 
        as provided in section 340A.316. 
           Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 
        admissions to the premises of or events sponsored by an 
        organization that provides an opportunity for citizens of the 
        state to participate in the creation, performance, or 
        appreciation of the arts are exempt if the organization is 
        either (1) a tax-exempt organization within the meaning of 
        Minnesota Statutes 1980, section 290.05, subdivision 1, clause 
        (i), or (2) a municipal board that promotes cultural and arts 
        activities.  The exemption provided with respect to a municipal 
        board applies only to tickets and admissions to events sponsored 
        by the board. 
           Subd. 11.  [SCHOOL TICKETS OR ADMISSIONS.] Tickets or 
        admissions to regular season school games, events, and 
        activities are exempt.  For purposes of this subdivision, 
        "school" has the meaning given it in section 120A.22, 
        subdivision 4. 
           Subd. 12.  [YMCA, YWCA, AND JCC MEMBERSHIPS.] The sale of 
        memberships, meaning both one-time initiation fees and periodic 
        membership dues, to an association incorporated under section 
        315.44 or an organization defined under section 315.51, are 
        exempt.  However, all separate charges made for the privilege of 
        having access to and the use of the association's sports and 
        athletic facilities are taxable. 
           Subd. 13.  [FUNDRAISING SALES BY OR FOR NONPROFIT 
        GROUPS.] (a) The following sales by the specified organizations 
        for fundraising purposes are exempt, subject to the limitations 
        listed in paragraph (b): 
           (1) all sales made by an organization that exists solely 
        for the purpose of providing educational or social activities 
        for young people primarily age 18 and under; 
           (2) all sales made by an organization that is a senior 
        citizen group or association of groups if (i) in general it 
        limits membership to persons age 55 or older; (ii) it is 
        organized and operated exclusively for pleasure, recreation, and 
        other nonprofit purposes; and (iii) no part of its net earnings 
        inures to the benefit of any private shareholders; 
           (3) the sale or use of tickets or admissions to a golf 
        tournament held in Minnesota if the beneficiary of the 
        tournament's net proceeds qualifies as a tax-exempt organization 
        under section 501(c)(3) of the Internal Revenue Code; and 
           (4) sales of gum, candy, and candy products sold for 
        fundraising purposes by a nonprofit organization that provides 
        educational and social activities primarily for young people 18 
        years of age and under. 
           (b) The exemptions listed in paragraph (a) are limited in 
        the following manner: 
           (1) the exemption under paragraph (a), clauses (1) and (2), 
        applies only if the gross annual receipts of the organization 
        from fundraising do not exceed $10,000; and 
           (2) the exemption under paragraph (a), clause (1), does not 
        apply if the sales are derived from admission charges or from 
        activities for which the money must be deposited with the school 
        district treasurer under section 123B.49, subdivision 2, or be 
        recorded in the same manner as other revenues or expenditures of 
        the school district under section 123B.49, subdivision 4. 
           (c) For purposes of this subdivision, a club, association, 
        or other organization of elementary or secondary school students 
        organized for the purpose of carrying on sports, educational, or 
        other extracurricular activities is a separate organization from 
        the school district or school for purposes of applying the 
        $10,000 limit. 
           Subd. 14.  [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 
        GROUPS.] (a) Sales of tangible personal property at, and 
        admission charges for fundraising events sponsored by, a 
        nonprofit organization are exempt if the entire proceeds, less 
        the necessary expenses for the event, will be used solely and 
        exclusively for charitable, religious, or educational purposes.  
        Exempt sales include the sale of food, meals, drinks, and 
        taxable services at the fundraising event. 
           (b) This exemption is limited in the following manner: 
           (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; 
           (2) all gross receipts are taxable if the profits are not 
        used solely and exclusively for charitable, religious, or 
        educational purposes; 
           (3) it does not apply unless the organization keeps a 
        separate accounting record, including receipts and disbursements 
        from each fundraising event that documents all deductions from 
        gross receipts with receipts and other records; 
           (4) it does not apply to any sale made by or in the name of 
        a nonprofit corporation as the active or passive agent of a 
        person that is not a nonprofit corporation; 
           (5) all gross receipts are taxable if fundraising events 
        exceed 24 days per year; and 
           (6) it does not apply to fundraising events conducted on 
        premises leased for more than five days but less than 30 days. 
           (c) For purposes of this subdivision, a "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. 
           Subd. 15.  [STATEWIDE AMATEUR ATHLETIC GAMES.] 
        Notwithstanding section 297A.61, subdivision 3, or any other 
        provision of this chapter, the gross receipts from the following 
        sales made to or by a nonprofit corporation designated by the 
        Minnesota amateur sports commission to conduct a series of 
        statewide amateur athletic games and related events, workshops, 
        and clinics are exempt: 
           (1) sales of tangible personal property to or the storage, 
        use, or other consumption of tangible personal property by the 
        nonprofit corporation; and 
           (2) sales of tangible personal property, admission charges, 
        and sales of food, meals, and drinks by the nonprofit 
        corporation at fundraising events, athletic events, or athletic 
        facilities. 
           Subd. 16.  [CAMP FEES.] Camp fees to camps or other 
        recreation facilities owned and operated by an exempt 
        organization under section 501(c)(3) of the Internal Revenue 
        Code are exempt if the camps or facilities provide educational 
        and social activities for young people primarily age 18 and 
        under. 
           Sec. 15.  [297A.71] [CONSTRUCTION EXEMPTIONS.] 
           Subdivision 1.  [SCOPE.] The gross receipts from the sale 
        of, and storage, distribution, use, or consumption of the 
        tangible personal property contained in this section are 
        specifically exempted from the taxes imposed by this chapter.  
        Building materials, equipment, and supplies and other items 
        exempt under this section are exempt regardless of whether 
        purchased by the owner or a contractor, subcontractor, or 
        builder. 
           Subd. 2.  [STATE CONVENTION CENTER.] Building materials and 
        supplies for constructing improvements to a state convention 
        center located in a city located outside the metropolitan area 
        as defined in section 473.121, subdivision 2, and governed by an 
        11-person board of which four are appointed by the governor are 
        exempt if the improvements are financed in whole or in part by 
        nonstate resources including, but not limited to, revenue or 
        general obligations issued by the state convention center board 
        of the city in which the center is located. 
           Subd. 3.  [CORRECTIONAL FACILITIES.] Building materials and 
        supplies for constructing or improving an adult or juvenile 
        correctional facility by a county, home rule charter city, or 
        statutory city are exempt if the project is mandated by state or 
        federal law, rule, or regulation.  The tax must be imposed and 
        collected as if the rate under section 297A.62, subdivision 1, 
        applied and then refunded in the manner provided in section 
        297A.75. 
           Subd. 4.  [LAKE SUPERIOR CENTER.] Building materials and 
        supplies for construction of the Lake Superior Center are exempt.
           Subd. 5.  [SCIENCE MUSEUM.] Building materials and supplies 
        for construction of the Science Museum of Minnesota are exempt. 
           Subd. 6.  [BUSINESS INCUBATOR AND INDUSTRIAL PARK.] 
        Building materials and supplies for construction of a facility 
        that includes a business incubator and industrial park are 
        exempt if the facility: 
           (1) is owned and operated by a nonprofit charitable 
        organization that qualifies for tax exemption under section 
        501(c)(3) of the Internal Revenue Code; 
           (2) is used for the development of nonretail businesses, 
        offering access to equipment, space, services, and advice to the 
        tenant businesses, for the purpose of encouraging economic 
        development and job creation in the area served by the 
        organization, and emphasizes development of businesses that 
        manufacture products from materials found in the waste stream, 
        or manufacture alternative energy and conservation systems, or 
        make use of emerging environmental technologies; 
           (3) includes in its structure systems of material and 
        energy exchanges that use waste products from one industrial 
        process as sources of energy and material for other processes; 
        and 
           (4) makes use of solar and wind energy technology and 
        incorporates salvaged materials in its construction. 
           Subd. 7.  [ALFALFA PROCESSING FACILITY.] Building materials 
        and supplies for constructing a facility that either develops 
        market-value agricultural products made from alfalfa leaf 
        material, or produces biomass energy fuel or electricity from 
        alfalfa stems in accordance with the biomass mandate imposed 
        under section 216B.2424 are exempt if the total capital 
        investment made in the value-added agricultural products and 
        biomass electric generation facilities is at least $50,000,000. 
           Subd. 8.  [WOOD WASTE COGENERATION FACILITY.] Building 
        materials and supplies for constructing, equipping, or modifying 
        a district heating and cooling system cogeneration facility are 
        exempt if the facility: 
           (1) utilizes wood waste as a primary fuel source; and 
           (2) satisfies the requirements of the biomass mandate in 
        section 216B.2424, subdivision 5. 
           Subd. 9.  [DIRECT SATELLITE BROADCASTING FACILITY.] 
        Building materials and supplies for constructing a new facility 
        in Minnesota for providing federal communications commission 
        licensed direct satellite broadcasting services using direct 
        broadcast satellites operating in the 12-GHz. band or fixed 
        satellite regional or national program services, as defined in 
        section 272.02, subdivision 16, are exempt if construction of 
        the facility was commenced after June 30, 1993.  All machinery, 
        equipment, tools, accessories, appliances, contrivances, 
        furniture, fixtures, and all technical equipment or tangible 
        personal property of any other nature or description necessary 
        to the construction and equipping of that facility in order to 
        provide those services are also exempt. 
           Subd. 10.  [AIRCRAFT HEAVY MAINTENANCE FACILITY.] 
        Materials, equipment, and supplies used or consumed in 
        constructing a heavy maintenance facility for aircraft that is 
        to be owned by the state of Minnesota or one of its political 
        subdivisions and leased by an airline company, or an aircraft 
        engine repair facility described in section 116R.02, subdivision 
        6, are exempt.  Except for equipment owned or leased by a 
        contractor, all machinery, equipment, and tools necessary to the 
        construction and equipping of that facility in order to provide 
        those services are also exempt. 
           Subd. 11.  [BUILDING MATERIALS; DISABLED VETERANS.] 
        Building materials to be used in the construction or remodeling 
        of a residence are exempt when the construction or remodeling is 
        financed in whole or in part by the United States in accordance 
        with United States Code, title 38, sections 2101 to 2105.  The 
        tax must be imposed and collected as if the rate under section 
        297A.62, subdivision 1, applied and then refunded in the manner 
        provided in section 297A.75. 
           Subd. 12.  [CHAIR LIFTS, RAMPS, ELEVATORS.] Chair lifts, 
        ramps, and elevators and building materials used to install or 
        construct them are exempt, if they are authorized by a physician 
        and installed in or attached to the owner's homestead.  The tax 
        must be imposed and collected as if the rate under section 
        297A.62, subdivision 1, applied and then refunded in the manner 
        provided in section 297A.75. 
           Subd. 13.  [AGRICULTURE PROCESSING FACILITY MATERIALS.] 
        Building materials and supplies for constructing an agriculture 
        processing facility as defined in section 469.1811 in which the 
        total capital investment in the processing facility is expected 
        to exceed $100,000,000 are exempt.  The tax must be imposed and 
        collected as if the rate under section 297A.62, subdivision 1, 
        applied, and then refunded in the manner provided in section 
        297A.75. 
           Subd. 14.  [MINERAL PRODUCTION FACILITIES.] Building 
        materials, equipment, and supplies used for the construction of 
        the following mineral production facilities are exempt. 
           The mineral production facilities that qualify for this 
        exemption are: 
           (1) a value added iron products plant, which may be either 
        a new plant or a facility incorporated into an existing plant 
        that produces iron upgraded to a minimum of 75 percent iron 
        content or any iron alloy with a total minimum metallic content 
        of 90 percent; 
           (2) a facility used for the manufacture of fluxed taconite 
        pellets as defined in section 298.24; 
           (3) a new capital project that has a total cost of over 
        $40,000,000 that is directly related to production, cost, or 
        quality at an existing taconite facility that does not qualify 
        under clause (1) or (2); and 
           (4) a new mine or minerals processing plant for any mineral 
        subject to the net proceeds tax imposed under section 298.015. 
           The tax must be imposed and collected as if the rate under 
        section 297A.62, subdivision 1, applied, and then refunded in 
        the manner provided in section 297A.75. 
           Subd. 15.  [MINNEAPOLIS CONVENTION CENTER.] Materials, 
        supplies, or equipment used or consumed in the construction, 
        equipment, improvement, or expansion of the Minneapolis 
        convention center are exempt. 
           Subd. 16.  [RIVERCENTRE ARENA.] Materials, supplies, or 
        equipment used or consumed in the construction, equipment, 
        improvement, or expansion of the RiverCentre arena complex in 
        the city of St. Paul are exempt. 
           Subd. 17.  [ENVIRONMENTAL LEARNING CENTER.] Construction 
        materials and supplies are exempt if they are used or consumed 
        in constructing or improving the Long Lake Conservation Center 
        pursuant to the funding provided under Laws 1994, chapter 643, 
        section 23, subdivision 28, as amended by Laws 1995, First 
        Special Session chapter 2, article 1, section 48; Laws 1996, 
        chapter 463, section 7, subdivision 26; and Laws 1997, chapter 
        246, section 24.  The tax must be calculated and paid as if the 
        rate in section 297A.62, subdivision 1, was in effect and a 
        refund applied for in the manner prescribed in section 297A.75. 
           Subd. 18.  [SOYBEAN OILSEED PROCESSING AND REFINING 
        FACILITY.] Construction materials and supplies are exempt if: 
           (1) the materials and supplies are used or consumed in 
        constructing a facility for soybean oilseed processing and 
        refining; 
           (2) the total capital investment made in the facility is at 
        least $60,000,000; and 
           (3) the facility is constructed by a Minnesota-based 
        cooperative, organized under chapter 308A. 
           Subd. 19.  [EARLE BROWN HERITAGE CENTER.] Materials and 
        supplies used or consumed in and equipment incorporated into the 
        construction, improvement, or expansion of the Earle Brown 
        Heritage Center in Brooklyn Center are exempt.  This subdivision 
        is effective for purchases made before July 1, 2003. 
           Subd. 20.  [CONSTRUCTION MATERIALS AND SUPPLIES; BEEF 
        PROCESSING FACILITY.] Materials and supplies used or consumed 
        in, and equipment incorporated into, the expansion, remodeling, 
        or improvement of a facility used for cattle slaughtering are 
        exempt if:  
           (1) the cost of the project is expected to exceed 
        $15,000,000; 
           (2) the expansion, remodeling, or improvement of the 
        facility will be used to fabricate beef; 
           (3) the number of jobs at the facility is expected to 
        increase by at least 150 when the project is completed; and 
           (4) the project is expected to be completed by December 31, 
        2001.  
           Subd. 21.  [CONSTRUCTION MATERIALS AND EQUIPMENT; BIOMASS 
        ELECTRICAL GENERATING FACILITY.] Materials and supplies used or 
        consumed in, and equipment incorporated into, the construction, 
        improvement, or expansion of a facility using biomass to 
        generate electricity are exempt if: 
           (1) the facility exclusively utilizes residue wood, 
        sawdust, bark, chipped wood, or brush to generate electricity; 
           (2) the facility utilizes a reciprocated grate combination 
        system; and 
           (3) the total gross capacity of the facility is 15 to 21 
        megawatts.  
                             EXEMPTION CERTIFICATES  
           Sec. 16.  [297A.72] [EXEMPTION CERTIFICATES.] 
           Subdivision 1.  [DUTY OF RETAILER.] An exemption 
        certificate conclusively relieves the retailer from collecting 
        and remitting the tax only if taken in good faith from the 
        purchaser. 
           Subd. 2.  [CONTENT AND FORM OF EXEMPTION CERTIFICATE.] An 
        exemption certificate must be substantially in the form 
        prescribed by the commissioner and: 
           (1) be signed by the purchaser or meet the requirements of 
        section 289A.07; 
           (2) bear the name and address of the purchaser; 
           (3) indicate the sales tax account number, if any, issued 
        to the purchaser; 
           (4) indicate the general character of the property sold by 
        the purchaser in the regular course of business or the 
        activities carried on by the organization; and 
           (5) identify the property purchased.  
           Sec. 17.  [297A.73] [IMPROPER USE OF ITEM OBTAINED WITH 
        EXEMPTION CERTIFICATE.] 
           If a purchaser who gives an exemption certificate makes any 
        use of the item that is not for a purpose exempted under this 
        chapter, that use is considered a retail sale by the purchaser 
        and the sales price to the purchaser is considered the gross 
        receipts.  If the sole use is rental while holding for sale, the 
        purchaser shall include in the purchaser's gross receipts the 
        amount of the rental charged.  Upon subsequent sale of the item, 
        the seller shall include the entire amount of gross receipts 
        received from the sale without deduction of amounts previously 
        received as rentals. 
           Sec. 18.  [297A.74] [COMMINGLING EXEMPTION CERTIFICATE 
        ITEMS.] 
           If a purchaser gives an exemption certificate for the 
        purchase of fungible items and later commingles the items with 
        similar fungible items not purchased exempt, sales from the 
        commingled items are considered sales of items purchased exempt 
        until a quantity has been sold that equals the quantity 
        purchased exempt. 
                               EXEMPTION REFUNDS
           Sec. 19.  [297A.75] [REFUND; APPROPRIATION.] 
           Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
        receipts from the sale of following exempt items must be imposed 
        and collected as if the sale were taxable and the rate under 
        section 297A.62, subdivision 1, applied.  The exempt items 
        include: 
           (1) capital equipment exempt under section 297A.68, 
        subdivision 5; 
           (2) building materials for an agricultural processing 
        facility exempt under section 297A.71, subdivision 13; 
           (3) building materials for mineral production facilities 
        exempt under section 297A.71, subdivision 14; 
           (4) building materials for correctional facilities under 
        section 297A.71, subdivision 3; 
           (5) building materials used in a residence for disabled 
        veterans exempt under section 297A.71, subdivision 11; and 
           (6) chair lifts, ramps, elevators, and associated building 
        materials exempt under section 297A.71, subdivision 12. 
           Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
        forms prescribed by the commissioner, a refund equal to the tax 
        paid on the gross receipts of the exempt items must be paid to 
        the applicant.  Only the following persons may apply for the 
        refund: 
           (1) for subdivision 1, clauses (1) to (3), the applicant 
        must be the purchaser; 
           (2) for subdivision 1, clause (4), the applicant must be 
        the governmental subdivision; 
           (3) for subdivision 1, clause (5), the applicant must be 
        the recipient of the benefits provided in United States Code, 
        title 38, chapter 21; and 
           (4) for subdivision 1, clause (6), the applicant must be 
        the owner of the homestead property.  
           Subd. 3.  [APPLICATION.] (a) The application must include 
        sufficient information to permit the commissioner to verify the 
        tax paid.  If the tax was paid by a contractor, subcontractor, 
        or builder, under subdivision 1, clause (4), (5), or (6), the 
        contractor, subcontractor, or builder must furnish to the refund 
        applicant a statement including the cost of the exempt items and 
        the taxes paid on the items unless otherwise specifically 
        provided by this subdivision.  The provisions of sections 
        289A.40 and 289A.50 apply to refunds under this section. 
           (b) An applicant may not file more than two applications 
        per calendar year for refunds for taxes paid on capital 
        equipment exempt under section 297A.68, subdivision 5.  
           Subd. 4.  [INTEREST.] Interest must be paid on the refund 
        at the rate in section 270.76 from the date the refund claim is 
        filed for taxes paid under subdivision 1, clauses (1) to (3), 
        and (5), and from 60 days after the date the refund claim is 
        filed with the commissioner for claims filed under subdivision 
        1, clauses (4) and (6). 
           Subd. 5.  [APPROPRIATION.] The amount required to make the 
        refunds is annually appropriated to the commissioner. 
                      COMPUTATION AND COLLECTION OF TAXES
           Sec. 20.  [297A.76] [COMPUTATION OF SALES AND USE TAXES.] 
           Subdivision 1.  [ROUNDING UP OR DOWN.] In computing the 
        sales or use tax to be collected or remitted as the result of a 
        transaction, amounts of tax less than one-half of one cent must 
        be disregarded and amounts of tax of one-half cent or more must 
        be considered an additional cent.  
           Subd. 2.  [UNIFORM TAX COLLECTION METHODS; RULES.] 
        Agreements between competitive retailers or the adoption of 
        appropriate rules or regulations by organizations or 
        associations of retailers to provide uniform methods for adding 
        the sales tax or its average equivalent, which do not involve 
        otherwise unlawful price fixing agreements, are expressly 
        authorized and are not in violation of any Minnesota laws 
        prohibiting such agreements.  The commissioner may prescribe 
        rules for such agreements.  
           Sec. 21.  [297A.77] [COLLECTION OF SALES AND USE TAXES.] 
           Subdivision 1.  [COLLECTION OF TAX AT TIME OF SALE.] The 
        tax must be stated and charged separately from the sales price 
        or charge for service insofar as practicable and must be 
        collected by the seller from the purchaser.  
           Subd. 2.  [RECEIPT.] For use tax, the retailer shall give 
        the purchaser a tax receipt.  The receipt must indicate the tax 
        in the form of a notation on the sales slip or receipt for the 
        sales price or in another form as prescribed by the commissioner.
           Subd. 3.  [TAX MUST BE REMITTED.] The tax collected by a 
        retailer under this section must be remitted to the commissioner 
        as provided in chapter 289A and this chapter. 
           Subd. 4.  [STATUS OF SALES AND USE TAXES AS DEBT.] Sales 
        and use taxes that are required to be collected by a retailer 
        are debts from the purchaser to the retailer recoverable at law 
        in the same manner as other debts.  
           Sec. 22.  [297A.78] [LIABILITY FOR USE TAX; RECEIPT AS 
        EVIDENCE.] 
           Liability for the payment of the use tax is not 
        extinguished until the tax has been paid to Minnesota.  However, 
        a receipt from a retailer given to the purchaser under section 
        297A.77, subdivision 2, relieves the purchaser of further 
        liability for the tax to which the receipt refers, unless the 
        purchaser knows or has reason to know that the retailer did not 
        have a permit to collect the tax. 
           Sec. 23.  [297A.79] [REPORTING OF GROSS RECEIPTS.] 
           At the option of the taxpayer, gross receipts from sales 
        may be reported on the cash basis as the consideration is 
        received or on the accrual basis as sales are made. 
           Sec. 24.  [297A.80] [TAXES IN OTHER STATES; OFFSET AGAINST 
        USE TAX.] 
           If an article of tangible personal property or an item 
        listed in section 297A.63 has already been taxed by another 
        state for its sale, storage, use, or other consumption in an 
        amount less than the tax imposed by this chapter, then as to the 
        person who paid the tax in the other state, section 297A.63 
        applies only at a rate measured by the difference between the 
        rate imposed under section 297A.62 and the rate by which the 
        previous tax was computed.  If the tax imposed in the other 
        state is equal to or greater than the tax imposed in this state, 
        then no tax is due from that person under section 297A.63. 
           Sec. 25.  [297A.81] [UNCOLLECTIBLE DEBTS; OFFSET AGAINST 
        OTHER TAXES.] 
           The taxpayer may offset against the taxes payable for any 
        reporting period the amount of taxes imposed by this chapter 
        previously paid as a result of any transaction the consideration 
        for which became a debt owed to the taxpayer that became 
        uncollectible during the reporting period, but only in 
        proportion to the portion of the debt that became 
        uncollectible.  Section 289A.40, subdivision 2, applies to an 
        offset under this section. 
           Sec. 26.  [297A.82] [AIRCRAFT; FLIGHT EQUIPMENT; PAYMENT OF 
        TAXES; EXEMPTIONS.] 
           Subdivision 1.  [REQUIREMENTS FOR REGISTRATION.] An 
        aircraft must not be registered or licensed in this state unless 
        the applicant presents proof that the sales or use tax imposed 
        by this chapter has been paid or that the transaction is exempt 
        from the sales and use tax.  The exemption for an occasional 
        sale under section 297A.67, subdivision 23, or 297A.68, 
        subdivision 25, does not apply to the sale or purchase of an 
        aircraft.  
           Subd. 2.  [PAYMENT OF TAX TO DEALER.] If an aircraft is 
        purchased from a dealer holding a valid sales and use tax permit 
        under this chapter, the applicant shall present proof that the 
        tax has been paid to the dealer.  
           Subd. 3.  [PAYMENT OF TAX TO COMMISSIONER.] If the aircraft 
        is purchased from a person who is not the holder of a valid 
        sales and use tax permit under this chapter, the purchaser shall 
        pay the tax to the commissioner of revenue prior to registering 
        or licensing the aircraft in this state.  The commissioner of 
        revenue shall issue a certificate stating that the sales and use 
        tax in respect to the transaction has been paid.  
           Subd. 4.  [EXEMPTIONS.] (a) The following transactions are 
        exempt from the tax imposed in this chapter to the extent 
        provided. 
           (b) The purchase or use of aircraft previously registered 
        in Minnesota by a corporation or partnership is exempt if the 
        transfer constitutes a transfer within the meaning of section 
        351 or 721 of the Internal Revenue Code. 
           (c) The sale to or purchase, storage, use, or consumption 
        by a licensed aircraft dealer of an aircraft for which a 
        commercial use permit has been issued pursuant to section 
        360.654 is exempt, if the aircraft is resold while the permit is 
        in effect. 
           (d) Airflight equipment when sold to, or purchased, stored, 
        used, or consumed by airline companies, as defined in section 
        270.071, subdivision 4, is exempt.  For purposes of this 
        subdivision, "airflight equipment" includes airplanes and parts 
        necessary for the repair and maintenance of such airflight 
        equipment, and flight simulators, but does not include airplanes 
        with a gross weight of less than 30,000 pounds that are used on 
        intermittent or irregularly timed flights. 
           Subd. 5.  [EXEMPT PURCHASE CERTIFICATE.] If the purchase of 
        an aircraft is exempt under this chapter, the commissioner shall 
        issue a certificate that no sales or use tax is due and owing in 
        respect to the transaction.  
           Subd. 6.  [SALES AND LEASES; TAX TREATMENT.] (a) A sale of 
        aircraft and parts for the repair of aircraft purchased by a 
        nonprofit, incorporated flying club or association utilized 
        solely by the corporation by leasing the aircraft to 
        shareholders of the corporation is exempt as property purchased 
        for resale.  The leasing of the aircraft to the shareholders by 
        the flying club or association is taxable as a retail sale. 
           (b) A lease of aircraft utilized by a lessee for leasing to 
        others, whether or not the lessee also utilizes the aircraft for 
        charter service or for flight instruction if no separate charge 
        is made for aircraft rental, is exempt as a purchase for resale. 
        However, a proportionate share of the lease payment reflecting 
        use for flight instruction or charter service is taxable under 
        section 297A.63. 
                                    PERMITS
           Sec. 27.  [297A.83] [APPLICATION FOR PERMIT.] 
           Subdivision 1.  [PERSONS APPLYING.] (a) A retailer required 
        to collect and remit sales taxes under section 297A.66 shall 
        file with the commissioner an application for a permit. 
           (b) A retailer making retail sales from outside this state 
        to a destination within this state who is not required to obtain 
        a permit under paragraph (a) may nevertheless voluntarily file 
        an application for a permit. 
           (c) The commissioner may require any person or class of 
        persons obligated to file a use tax return under section 
        289A.11, subdivision 3, to file an application for a permit.  
           Subd. 2.  [APPLICATION REQUIREMENTS.] The application must 
        be made on a form prescribed by the commissioner and indicate 
        the name under which the applicant intends to transact business, 
        the location of the applicant's place or places of business, and 
        other information the commissioner may require.  The application 
        must be filed by the owner, if a natural person; by a member or 
        partner, if the owner is an association or partnership; or by a 
        person authorized to file the application, if the owner is a 
        corporation.  
           Subd. 3.  [COMMISSIONER'S DISCRETION.] (a) The commissioner 
        may decline to issue a permit to a retailer not maintaining a 
        place of business in this state, or may cancel a permit 
        previously issued to the retailer, if the commissioner believes 
        that the tax can be collected more effectively from the persons 
        using the property in this state.  A refusal to issue or 
        cancellation of a permit on such grounds does not affect the 
        retailer's right to make retail sales from outside this state to 
        destinations within this state. 
           (b) If the commissioner considers it necessary for the 
        efficient administration of the tax to regard a salesperson, 
        representative, trucker, peddler, or canvasser as the agent of 
        the dealer, distributor, supervisor, employer, or other person 
        under whom that person operates or from whom the person obtains 
        the tangible personal property sold, whether making sales 
        personally or in behalf of that dealer, distributor, supervisor, 
        employer, or other person, the commissioner may regard the 
        salesperson, representative, trucker, peddler, or canvasser as 
        such agent, and may regard the dealer, distributor, supervisor, 
        employer, or other person as a retailer for the purposes of 
        collecting the tax. 
           Sec. 28.  [297A.84] [PERMITS ISSUED.] 
           The commissioner shall issue a permit to each applicant who 
        has complied with section 297A.83, and with section 297A.92 if 
        security is required.  A person is considered to have a permit 
        if the person has a Minnesota tax identification number issued 
        by the department that is currently active for taxes imposed by 
        this chapter.  A permit is valid until canceled or revoked.  It 
        is not assignable and is valid only for the person in whose name 
        it is granted and for the transaction of business at the places 
        designated on the permit.  
           Sec. 29.  [297A.85] [CANCELLATION OF PERMITS.] 
           The commissioner may cancel a permit if one of the 
        following conditions occurs: 
           (1) the permit holder has not filed a sales or use tax 
        return for at least one year; 
           (2) the permit holder has not reported any sales or use tax 
        liability on the permit holder's returns for at least two years; 
        or 
           (3) the permit holder requests cancellation of the permit. 
           Sec. 30.  [297A.86] [REVOCATION OF PERMITS.] 
           Subdivision 1.  [NOTICE OF REVOCATION; HEARINGS.] (a) If a 
        person fails to comply with this chapter or the sales and use 
        tax provisions of chapter 289A or the rules adopted under either 
        chapter, without reasonable cause, the commissioner may give the 
        person 30 days' notice in writing, specifying the violations, 
        and stating that based on the violations the commissioner 
        intends to revoke the person's permit.  The notice must also 
        advise the person of the right to contest the revocation under 
        this subdivision.  It must also explain the general procedures 
        for a contested case hearing under chapter 14.  The notice may 
        be served personally or by mail in the manner prescribed for 
        service of an order of assessment. 
           (b) If the person does not request a hearing within 30 days 
        after the date of the notice of intent, the commissioner may 
        serve a notice of revocation of permit upon the person, and the 
        permit is revoked.  If a hearing is timely requested, and held, 
        the permit is revoked after the commissioner serves an order of 
        revocation of permit under section 14.62, subdivision 1. 
           Subd. 2.  [NEW PERMITS AFTER REVOCATION.] (a) The 
        commissioner shall not issue a new permit after revocation or 
        reinstate a revoked permit unless the taxpayer applies for a 
        permit and provides reasonable evidence of intention to comply 
        with the sales and use tax laws and rules.  The commissioner may 
        require the applicant to provide security, in addition to that 
        authorized by section 297A.92, in an amount reasonably necessary 
        to ensure compliance with the sales and use tax laws and rules. 
           (b) If a taxpayer has had a permit or permits revoked three 
        times in a five-year period, the commissioner shall not issue a 
        new permit or reinstate the revoked permit until 24 months have 
        elapsed after revocation and the taxpayer has satisfied the 
        conditions for reinstatement of a revoked permit or issuance of 
        a new permit imposed by this section and rules adopted under 
        this section. 
           (c) For purposes of this subdivision, "taxpayer" means: 
           (1) an individual, if a revoked permit was issued to or in 
        the name of an individual, or a corporation or partnership, if a 
        revoked permit was issued to or in the name of a corporation or 
        partnership; and 
           (2) an officer of a corporation, a member of a partnership, 
        or an individual who is liable for delinquent sales taxes, 
        either for the entity for which the new or reinstated permit is 
        at issue, or for another entity for which a permit was 
        previously revoked, or personally as a permit holder. 
           Sec. 31.  [297A.87] [FLEA MARKETS, SHOWS, AND OTHER SELLING 
        EVENTS.] 
           Subdivision 1.  [EVENTS AFFECTED.] (a) This section applies 
        to a flea market, craft show, antique show, coin show, stamp 
        show, comic book show, convention exhibit area, or similar 
        selling event. 
           (b) To be subject to this section, the operator of an event 
        described in paragraph (a) must rent or lease space on the sale 
        premises to the seller, charge the seller a registration or 
        participation fee, or receive a percentage of sales or other 
        consideration from a seller as a condition to participation by a 
        seller in the event.  
           Subd. 2.  [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 
        operator of an event under subdivision 1 shall obtain one of the 
        following from a person who wishes to do business as a seller at 
        the event: 
           (1) evidence that the person holds a valid seller's permit 
        under section 297A.84; or 
           (2) a written statement that the person is not offering for 
        sale any item that is taxable under this chapter. 
           (b) The operator shall require the evidence or statement as 
        a prerequisite to participating in the event as a seller. 
           Subd. 3.  [OCCASIONAL SALE PROVISIONS NOT APPLICABLE.] The 
        isolated and occasional sale provisions under section 297A.67, 
        subdivision 23, or under section 297A.68, subdivision 25, do not 
        apply to a seller at an event under this section. 
                                   DIRECT PAY 
           Sec. 32.  [297A.89] [DIRECT PAYMENT BY PURCHASERS 
        PERMITTED.] 
           Subdivision 1.  [COMMISSIONER MAY PERMIT.] The commissioner 
        may permit purchasers to pay taxes imposed by this chapter 
        directly to the commissioner.  Any taxes paid by purchasers 
        under this section are considered use taxes, except for local 
        sales taxes when no corresponding local use tax is imposed.  
           Subd. 2.  [RETAILER DOES NOT COLLECT.] The retailer shall 
        not collect the tax from a purchaser who furnishes to the 
        retailer a copy of a certificate issued by the commissioner 
        authorizing the purchaser to pay any sales or use tax due on 
        purchases made by the purchaser directly to the commissioner 
        under subdivision 1. 
           Sec. 33.  [297A.90] [INTERSTATE MOTOR CARRIERS AS 
        RETAILERS.] 
           Subdivision 1.  [REGISTRATION; RECORDS.] (a) A person who 
        is engaged in interstate for-hire transportation of tangible 
        personal property or passengers by motor vehicle may, under 
        rules prescribed by the commissioner, register as a retailer and 
        pay the taxes imposed by this chapter in accordance with this 
        section.  Any taxes paid under this section are use taxes, 
        except local sales taxes when no corresponding local use tax is 
        imposed. 
           (b) As used in this section, "person" means:  (1) one who 
        possesses a certificate or permit or has completed a 
        registration process that authorizes for-hire transportation of 
        property or passengers from the United States Department of 
        Transportation, the transportation regulation board, or the 
        department of transportation; (2) one who transports commodities 
        defined as "exempt" in for-hire transportation in interstate 
        commerce; or (3) one who transports tangible personal property 
        in interstate commerce, pursuant to contracts with persons 
        described in clause (1) or (2).  Persons qualifying under clause 
        (2) or (3) must maintain on a current basis the same type of 
        mileage records that are required by persons specified in clause 
        (1) by the United States Department of Transportation.  
           (c) Persons who in the course of their business are 
        transporting solely their own goods in interstate commerce may 
        also register as retailers under rules prescribed by the 
        commissioner and pay the taxes imposed by this chapter in 
        accordance with this section.  
           Subd. 2.  [PAYMENT OF TAX.] (a) Persons who are registered 
        as retailers may make purchases in this state or import property 
        into this state without payment of the sales or use taxes 
        imposed by this chapter at the time of purchase or importation, 
        if the purchases or importations come within the provisions of 
        this section and are made in strict compliance with the rules of 
        the commissioner. 
           (b) A person described in subdivision 1 may elect to pay 
        directly to the commissioner any sales or use tax that may be 
        due under this chapter for the acquisition of mobile 
        transportation equipment and parts and accessories attached or 
        to be attached to such equipment registered under section 
        168.187. 
           (c) The total cost of such equipment and parts and 
        accessories attached or to be attached to such equipment must be 
        multiplied by a fraction.  The numerator of the fraction is the 
        Minnesota mileage as reported on the current pro rata 
        application provided for in section 168.187 and the denominator 
        of the fraction is the total mileage reported on the current pro 
        rata registration application.  The amount so determined must be 
        multiplied by the tax rate to obtain the tax due. 
        In computing the tax under this section "sales price" does not 
        include the amount of any tax, except any manufacturer's or 
        importer's excise tax, imposed by the United States upon or with 
        respect to retail sales, whether imposed on the retailer or the 
        consumer.  
           (d) A retailer covered by this section shall make a return 
        and remit to the commissioner the tax due for the preceding 
        calendar month in accordance with sections 289A.11 and 289A.20, 
        subdivision 4. 
           Subd. 3.  [REGISTRATION SUBSEQUENT TO PAYMENT OF TAX.] A 
        person who has paid the tax under this chapter or chapter 297B 
        and who meets the requirements of this section at the time of 
        the sale, but was not registered under this section at the time 
        of the sale, may register as a retailer, make a return, and file 
        for a refund of the difference between the tax calculated under 
        this chapter or chapter 297B and the tax calculated under 
        subdivision 2.  
           Subd. 4.  [AGREEMENT WITH COMMISSIONER OF PUBLIC SAFETY.] 
        Notwithstanding subdivisions 1 to 3, the commissioner may enter 
        into an agreement with the commissioner of public safety 
        whereby, upon approval of both commissioners, the commissioner 
        of public safety shall collect the sales tax on motor vehicles 
        from persons defined in subdivision 1.  For the purpose of 
        collecting the tax, the commissioner of public safety shall act 
        as the agent of the commissioner of revenue and shall be subject 
        to all rules consistent with this chapter that may be prescribed 
        by the commissioner. 
                                  ENFORCEMENT
           Sec. 34.  [297A.91] [SEIZURE; COURT REVIEW.] 
           Subdivision 1.  [SEIZURE OF PROPERTY USED IN ILLEGAL 
        TRANSPORT.] (a) If the retailer does not have a sales or use tax 
        permit and has been engaging in transporting personal property 
        into the state without payment of the tax, the commissioner of 
        revenue or the commissioner's agents may seize in the name of 
        the state any truck, automobile, or means of transportation not 
        owned or operated by a common carrier, used in the illegal 
        importation and transportation of any tangible personal property 
        by a retailer or the retailer's agent or employee.  The 
        commissioner may demand the forfeiture and sale of the truck, 
        automobile, or other means of transportation together with the 
        property being transported illegally, unless the owner 
        establishes to the satisfaction of the commissioner or the court 
        that the owner had no notice or knowledge or reason to believe 
        that the vehicle was used or intended to be used in any such 
        violation. 
           (b) Within two days after the seizure, the person making 
        the seizure shall deliver an inventory of the vehicle and 
        property seized to the person from whom the seizure was made, if 
        known, and to any person known or believed to have any right, 
        title, interest or lien on the vehicle or property.  The person 
        making the seizure shall also file a copy of the inventory with 
        the commissioner.  
           Subd. 2.  [COURT REVIEW OF FORFEITURE.] (a) Within ten days 
        after the date of service of the inventory, the person from whom 
        the vehicle and property were seized or any person claiming an 
        interest in the vehicle or property may file with the 
        commissioner a demand for a judicial determination of the 
        question of whether the vehicle or property was lawfully subject 
        to seizure and forfeiture.  The commissioner, within 30 days, 
        shall institute an action in the district court of the county 
        where the seizure was made to determine the issue of forfeiture. 
           (b) The action must be brought in the name of the state and 
        prosecuted by the county attorney or the attorney general.  The 
        court shall hear the action without a jury and shall determine 
        the issues of fact and law involved.  If a judgment of 
        forfeiture is entered and is not stayed pending an appeal, the 
        commissioner may have the forfeited vehicle and property sold at 
        public auction as provided by law.  
           Subd. 3.  [TREATMENT OF SEIZED PROPERTY.] If a demand for 
        judicial determination is made and no action is commenced as 
        provided in this subdivision, the vehicle and property must be 
        released by the commissioner and redelivered to the person 
        entitled to it.  If no demand is made, the vehicle and property 
        seized are considered forfeited to the state by operation of law 
        and may be disposed of by the commissioner as if there was a 
        judgment of forfeiture.  The forfeiture and sale of the 
        automobile, truck, or other means of transportation, and of the 
        property being transported illegally in it, are a penalty for 
        the violation of this chapter.  After deducting the expense of 
        keeping the vehicle and property, the fee for seizure, and the 
        costs of the sale, the commissioner shall pay liens from the 
        funds collected.  The commissioner shall pay all liens, 
        according to their priority, that are established at the hearing 
        as being bona fide and as existing without the lienor having any 
        notice or knowledge that the vehicle or property was being used 
        or was intended to be used for or in connection with any such 
        violation as specified in the order of the court.  The 
        commissioner shall pay the balance of the proceeds into the 
        state treasury to be credited to the general fund.  The state is 
        not liable for any liens in excess of the proceeds from the sale 
        after allowable deductions.  A sale under this section frees the 
        vehicle and property sold from all liens.  The order of the 
        district court may be appealed as in other civil cases.  
           Sec. 35.  [297A.92] [SECURITY.] 
           Subdivision 1.  [AMOUNT OF SECURITY.] To ensure compliance 
        with the taxes imposed by this chapter, the commissioner may 
        require a retailer subject to this chapter to deposit security 
        with the commissioner.  The security must be in the form and 
        amount the commissioner requires, but not more than twice the 
        retailer's estimated average liability for the period for which 
        the returns are required to be filed, or $10,000, whichever is 
        less.  The amount of security may be increased or decreased by 
        the commissioner, subject to the limitations in this section.  
           Subd. 2.  [AUCTIONS OF SECURITY.] The commissioner may sell 
        property deposited as security at public auction if necessary to 
        recover the amount required to be collected, including any 
        interest and penalties.  Notice of the sale must be served upon 
        the person who deposited the security.  It must be served 
        personally, or by mail as prescribed for the service of a notice 
        of a deficiency.  After a sale any surplus above the amount due 
        not required as security under this section must be returned to 
        the person who deposited the security.  
           Subd. 3.  [BOND.] In lieu of security, the commissioner may 
        require a retailer to file a bond.  The bond must be issued by a 
        surety company authorized to transact business in this state and 
        approved by the commissioner of commerce as to solvency and 
        responsibility.  
           Sec. 36.  [297A.93] [JEOPARDY ASSESSMENT AND COLLECTION.] 
           (a) If the commissioner has reason to believe that the 
        person required to file the return is about to leave the state 
        or remove the person's property from this state with the purpose 
        of evading the tax and penalties imposed by this chapter, or 
        that the collection of the tax will be jeopardized by delays 
        incident to other methods of collection, the commissioner may 
        immediately declare the person's reporting period at an end and 
        assess a tax on the basis of the commissioner's own knowledge or 
        information available.  The commissioner may then demand 
        immediate payment of the tax, and, if payment is not immediately 
        made, collect the tax by any method prescribed in chapter 270. 
           (b) It is not a defense to an assessment made under this 
        section that the tax period has not terminated, that the time 
        otherwise allowed by law for filing a return has not expired, 
        that the notices otherwise required by law for making an 
        assessment have not been given, or that the time otherwise 
        allowed by law for taking or prosecuting an appeal or for paying 
        the tax has not expired. 
                              DEPOSIT OF REVENUES
           Sec. 37.  [297A.94] [DEPOSIT OF REVENUES.] 
           (a) Except as provided in this section, the commissioner 
        shall deposit the revenues, including interest and penalties, 
        derived from the taxes imposed by this chapter in the state 
        treasury and credit them to the general fund.  
           (b) The commissioner shall deposit taxes in the Minnesota 
        agricultural and economic account in the special revenue fund if:
           (1) the taxes are derived from sales and use of property 
        and services purchased for the construction and operation of an 
        agricultural resource project; and 
           (2) the purchase was made on or after the date on which a 
        conditional commitment was made for a loan guaranty for the 
        project under section 41A.04, subdivision 3. 
        The commissioner of finance shall certify to the commissioner 
        the date on which the project received the conditional 
        commitment.  The amount deposited in the loan guaranty account 
        must be reduced by any refunds and by the costs incurred by the 
        department of revenue to administer and enforce the assessment 
        and collection of the taxes.  
           (c) The commissioner shall deposit the revenues, including 
        interest and penalties, derived from the taxes imposed on sales 
        and purchases included in section 297A.61, subdivision 16, 
        paragraphs (b) and (f), in the state treasury, and credit them 
        as follows: 
           (1) first to the general obligation special tax bond debt 
        service account in each fiscal year the amount required by 
        section 16A.661, subdivision 3, paragraph (b); and 
           (2) after the requirements of clause (1) have been met, the 
        balance to the general fund. 
           (d) The commissioner shall deposit the revenues, including 
        interest and penalties, collected under section 297A.64, 
        subdivision 5, in the state treasury and credit them to the 
        general fund.  By July 15 of each year the commissioner shall 
        transfer to the highway user tax distribution fund an amount 
        equal to the excess fees collected under section 297A.64, 
        subdivision 5, for the previous calendar year. 
                           LOCAL SALES AND USE TAXES
           Sec. 38.  [297A.95] [COORDINATION OF STATE AND LOCAL SALES 
        TAX RATES.] 
           In preparing and distributing a sales tax schedule for use 
        within a local jurisdiction with a separate general sales tax, 
        the state department of revenue shall coordinate the state and 
        local sales tax so that a sale of $1 reflects a tax equal to the 
        combination of the state and local sales tax rates.  The 
        combined sales tax on other sales amounts must also reflect the 
        coordinated rather than the separate effects of the state and 
        local sales taxes.  The schedule must be coordinated as long as 
        the local sales tax is in effect.  If the sales tax percentage 
        is changed for either of the taxes, the schedule must be 
        adjusted to reflect the change. 
           Sec. 39.  [297A.96] [LOCAL ADMISSIONS AND AMUSEMENT TAXES; 
        EXEMPTION FOR ARTS ORGANIZATIONS.] 
           If an event is sponsored by a nonprofit arts organization, 
        then amounts charged for admission to the event or to the 
        organization's premises are not subject to a tax imposed by a 
        local unit of government or imposed on sales taking place in a 
        single named local unit of government on sales of admissions or 
        amusements, under a law other than a general sales tax law. 
           Sec. 40.  [297A.97] [OUTSTATE RETAILERS; LOCAL TAX 
        COLLECTION NOT REQUIRED.] 
           A retailer not maintaining a place of business in this 
        state is not required to collect taxes imposed by a political 
        subdivision of this state.  
           Sec. 41.  [297A.98] [LOCAL GOVERNMENTS EXEMPT FROM LOCAL 
        SALES TAXES.] 
           Notwithstanding any other law, ordinance, or charter 
        provision, a political subdivision of the state is not required 
        to pay any general sales tax imposed by a political subdivision 
        of the state.  
           Sec. 42.  [297A.99] [LOCAL SALES TAXES.] 
           Subdivision 1.  [AUTHORIZATION; SCOPE.] (a) A political 
        subdivision of this state may impose a general sales tax if 
        permitted by special law or if the political subdivision enacted 
        and imposed the tax before the effective date of section 
        477A.016 and its predecessor provision. 
           (b) This section governs the imposition of a general sales 
        tax by the political subdivision.  The provisions of this 
        section preempt the provisions of any special law: 
           (1) enacted before June 2, 1997, or 
           (2) enacted on or after June 2, 1997, that does not 
        explicitly exempt the special law provision from this section's 
        rules by reference. 
           (c) This section does not apply to or preempt a sales tax 
        on motor vehicles or a special excise tax on motor vehicles. 
           Subd. 2.  [LOCAL RESOLUTION BEFORE APPLICATION FOR 
        AUTHORITY.] Before the governing body of a political subdivision 
        requests legislative approval of a special law for a local sales 
        tax that is administered under this section, it shall adopt a 
        resolution indicating its approval of the tax.  The resolution 
        must include, at a minimum, information on the proposed tax 
        rate, how the revenues will be used, the total revenue that will 
        be raised before the tax expires, and the estimated length of 
        time that the tax will be in effect.  This subdivision applies 
        to local laws enacted after June 30, 1998.  
           Subd. 3.  [REQUIREMENTS FOR ADOPTION, USE, TERMINATION.] (a)
        Imposition of a local sales tax is subject to approval by voters 
        of the political subdivision at a general election.  
           (b) The proceeds of the tax must be dedicated exclusively 
        to payment of the cost of a specific capital improvement which 
        is designated at least 90 days before the referendum on 
        imposition of the tax is conducted. 
           (c) The tax must terminate after the improvement designated 
        under paragraph (b) has been completed. 
           (d) After a sales tax imposed by a political subdivision 
        has expired or been terminated, the political subdivision is 
        prohibited from imposing a local sales tax for a period of one 
        year.  Notwithstanding subdivision 13, this paragraph applies to 
        all local sales taxes in effect at the time of or imposed after 
        the date of enactment of this section.  
           Subd. 4.  [TAX BASE.] (a) The tax applies to sales taxable 
        under this chapter that occur within the political subdivision. 
           (b) Taxable services are subject to a political 
        subdivision's sales tax, if they are performed either: 
           (1) within the political subdivision, or 
           (2) partly within and partly without the political 
        subdivision and more of the service is performed within the 
        political subdivision, based on the cost of performance. 
           Subd. 5.  [TAX RATE.] (a) The tax rate is as specified in 
        the special law authorization and as imposed by the political 
        subdivision. 
           (b) The full political subdivision rate applies to any 
        sales that are taxed at a state rate less than or more than the 
        state general sales and use tax rate. 
           Subd. 6.  [USE TAX.] A compensating use tax applies, at the 
        same rate as the sales tax, on the use, storage, distribution, 
        or consumption of tangible personal property or taxable services.
           Subd. 7.  [EXEMPTIONS.] (a) All goods or services that are 
        otherwise exempt from taxation under this chapter are exempt 
        from a political subdivision's tax. 
           (b) The gross receipts from the sale of tangible personal 
        property that meets the requirement of section 297A.68, 
        subdivision 13 or 14, are exempt, except the qualification test 
        applies based on the boundaries of the political subdivision 
        instead of the state of Minnesota. 
           (c) All mobile transportation equipment, and parts and 
        accessories attached to or to be attached to the equipment are 
        exempt, if purchased by a holder of a motor carrier direct pay 
        permit under section 297A.90.  
           Subd. 8.  [CREDIT FOR OTHER LOCAL TAXES.] If a person paid 
        sales or use tax to another political subdivision of this state 
        on an item subject to tax under this section, a credit applies 
        against the tax imposed under this section.  The credit equals 
        the tax the person paid to the other political subdivision for 
        the item.  
           Subd. 9.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 
        (a) The commissioner of revenue shall collect the taxes subject 
        to this section.  The commissioner may collect the tax with the 
        state sales and use tax.  All taxes under this section are 
        subject to the same penalties, interest, and enforcement 
        provisions as apply to the state sales and use tax. 
           (b) A request for a refund of state sales tax paid in 
        excess of the amount of tax legally due includes a request for a 
        refund of the political subdivision taxes paid on the goods or 
        services.  The commissioner shall refund to the taxpayer the 
        full amount of the political subdivision taxes paid on exempt 
        sales or use. 
           (c) A political subdivision that is collecting and 
        administering its own sales and use tax before January 1, 1998, 
        may elect to be exempt from this subdivision and subdivision 11. 
           Subd. 10.  [USE OF ZIP CODE IN DETERMINING LOCATION OF 
        SALE.] To determine whether to impose the local tax, the 
        retailer may use zip codes if the zip code area is entirely 
        within the political subdivision.  When a zip code area is not 
        entirely within a political subdivision, the retailer shall not 
        collect the local tax if the purchaser notifies the retailer 
        that the purchaser's delivery address is outside of the 
        political subdivision, unless the retailer verifies that the 
        delivery address is in the political subdivision using a means 
        other than the zip code.  Notwithstanding subdivision 13, this 
        subdivision applies to all local sales taxes without regard to 
        the date of authorization.  
           Subd. 11.  [REVENUES; COST OF COLLECTION.] The commissioner 
        shall remit the proceeds of the tax, less refunds and a 
        proportionate share of the cost of collection, at least 
        quarterly, to the political subdivision.  The commissioner shall 
        deduct from the proceeds remitted an amount that equals 
           (1) the direct and indirect costs of the department to 
        administer, audit, and collect the political subdivision's tax, 
        plus 
           (2) the political subdivision's proportionate share of the 
        indirect cost of administering all taxes under this section. 
           Subd. 12.  [EFFECTIVE DATES; NOTIFICATION.] (a) A political 
        subdivision may impose a tax under this section starting only on 
        the first day of a calendar quarter.  A political subdivision 
        may repeal a tax under this section stopping only on the last 
        day of a calendar quarter. 
           (b) The political subdivision shall notify the commissioner 
        of revenue at least 90 days before imposing or repealing a tax 
        under this section. 
           Subd. 13.  [APPLICATION.] This section applies to all local 
        sales taxes that were authorized before, on, or after June 2, 
        1997. 
           Sec. 43.  [297A.991] [REPORTING OF SALES TAX ON MINNESOTA 
        GOVERNMENTS.] 
           Subdivision 1.  [COMMISSIONER OF REVENUE TO REPORT.] For 
        each fiscal year, the commissioner shall estimate the amount of 
        revenues derived from imposing the tax under this chapter and 
        chapter 297B on state agencies and political subdivisions.  The 
        commissioner shall report this amount to the commissioner of 
        finance before the time for filing reports for the fiscal year 
        with the United States Department of Commerce. 
           Subd. 2.  [COMMISSIONER OF FINANCE TO REPORT.] In reporting 
        the sales tax and sales tax on motor vehicles collections to the 
        United States Department of Commerce, the commissioner of 
        finance shall exclude the estimated amount from the sales and 
        motor vehicle collections.  Sales tax and sales tax on motor 
        vehicles revenues received from political subdivisions must be 
        reported as intergovernmental grants or similar 
        intergovernmental revenue.  The amount of the sales tax and 
        sales tax on motor vehicles paid by state agencies must be 
        reported as reduced state expenditures. 
           Sec. 44.  [REVISOR'S INSTRUCTIONS.] 
           Subdivision 1.  [CODIFICATION OF LOCAL LAWS.] In the next 
        edition of Minnesota Statutes, after consultation with the 
        chairs of the house and senate tax committees and with the 
        commissioner of revenue, the revisor of statutes may codify 
        local laws authorizing the imposition of a general sales or 
        general sales and use tax. 
           Subd. 2.  [INTERNAL REFERENCES.] In the next edition of 
        Minnesota Statutes, the revisor of statutes shall change any 
        references to a repealed section in Minnesota Statutes, chapter 
        297A, to the appropriate recodified section. 
           Subd. 3.  [AMENDMENTS TO REPEALED 
        SECTIONS.] Notwithstanding any law to the contrary, if a 
        provision of a section of Minnesota Statutes repealed by this 
        article is amended or repealed during the same legislative 
        session, the amendment or repealer shall supersede the 
        provisions of this article, and the revisor shall codify the 
        amendment or repealer consistent with the recodification of the 
        affected section by this article. 
           Sec. 45.  [REPEALER.] 
           Minnesota Statutes 1998, sections 297A.01; 297A.02; 
        297A.022; 297A.023; 297A.03; 297A.04; 297A.041; 297A.06; 
        297A.065; 297A.07; 297A.09; 297A.10; 297A.11; 297A.12; 297A.13; 
        297A.135; 297A.14; 297A.141; 297A.15; 297A.16; 297A.17; 297A.18; 
        297A.21; 297A.211; 297A.213; 297A.22; 297A.23; 297A.24; 297A.25; 
        297A.2531; 297A.2545; 297A.255; 297A.256; 297A.2571; 297A.2572; 
        297A.2573; 297A.259; 297A.26; 297A.28; 297A.33, subdivision 2; 
        297A.44, subdivision 1; 297A.46; 297A.47; and 297A.48, are 
        repealed. 
           Sec. 46.  [EFFECTIVE DATE.] 
           Sections 1 and 44, subdivisions 1 and 3, are effective the 
        day following final enactment. 
           Sections 2 and 3, paragraph (f), are effective for sales 
        taxes retained after June 30, 2001. 
           Section 3, paragraph (e), is effective for amounts 
        collected after June 30, 2001. 
           Sections 4 to 21 are effective for sales and purchases 
        occurring after June 30, 2001. 
           Section 22 is effective for use tax liabilities incurred 
        after June 30, 2001. 
           Section 23 is effective for gross receipts reported after 
        June 30, 2001. 
           Sections 24 and 25 are effective for offsets against taxes 
        after June 30, 2001. 
           Section 26 is effective for aircraft registered or licensed 
        and for sales or purchases of aircraft after June 30, 2001. 
           Sections 27 to 30 are effective for permits applied for, 
        issued, canceled, or revoked after June 30, 2001. 
           Section 31 is effective for selling events held after June 
        30, 2001. 
           Section 32 is effective for direct payment by purchasers 
        after June 30, 2001. 
           Section 33 is effective for registered motor carriers after 
        June 30, 2001. 
           Section 34 is effective for seizures after June 30, 2001. 
           Section 35 is effective for security required, security 
        auctions held, and security bonds required after June 30, 2001. 
           Section 36 is effective for assessments after June 30, 2001.
           Section 37 is effective for revenues deposited after June 
        30, 2001. 
           Section 38 is effective for sales tax schedules distributed 
        after June 30, 2001. 
           Sections 39 to 42 are effective for local sales taxes 
        collected after June 30, 2001. 
           Section 43 is effective for sales taxes reported after June 
        30, 2001. 
           Sections 44, subdivision 2, and 45 are effective July 1, 
        2001. 

                                   ARTICLE 2 
                               CONFORMING CHANGES 
           Section 1.  Minnesota Statutes 1998, section 115A.69, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PROPERTY EXEMPT FROM TAXATION.] Any real or 
        personal property owned, used, or occupied by the district for 
        any authorized purpose is declared to be acquired, owned, used 
        and occupied for public and governmental purposes, and shall be 
        exempted from taxation by the state or any political subdivision 
        of the state, except to the extent that the property is subject 
        to the sales and use tax under chapter 297A, provided that those 
        properties shall be subject to special assessments levied by a 
        political subdivision for a local improvement in amounts 
        proportionate to and not exceeding the special benefit received 
        by the properties from the improvement.  No possible use of the 
        properties in any manner different from their use for solid 
        waste management at the time shall be considered in determining 
        the special benefit received by the properties.  
           Sec. 2.  Minnesota Statutes 1998, section 116A.25, is 
        amended to read: 
           116A.25 [PROPERTY EXEMPT FROM TAXATION.] 
           Any properties, real or personal, owned, leased, 
        controlled, used, or occupied by a water or sewer or water and 
        sewer commission or board for any purpose referred to in 
        sections 116A.01 to 116A.26 are declared to be acquired, owned, 
        leased, controlled, used and occupied for public, governmental, 
        and municipal purposes, and shall be exempt from taxation by the 
        state or any political subdivision of the state, except to the 
        extent that the property is subject to the sales and use tax 
        under chapter 297A, provided that such properties shall be 
        subject to special assessments levied by a political subdivision 
        for a local improvement in amounts proportionate to and not 
        exceeding the special benefit received by the properties from 
        such improvement.  No possible use of any such properties in any 
        manner different from their use as part of a distribution or 
        disposal system at the time shall be considered in determining 
        the special benefit received by such properties.  All such 
        assessments shall be subject to final confirmation by the county 
        board or boards in whose jurisdiction the system is constructed 
        and whose determination of the benefits shall be conclusive upon 
        the political subdivision levying the assessment.  
           Sec. 3.  Minnesota Statutes 1998, section 360.035, is 
        amended to read: 
           360.035 [EXEMPTION FROM TAXATION.] 
           Any properties, real or personal, acquired, owned, leased, 
        controlled, used, or occupied by a municipality for any of the 
        purposes of sections 360.011 to 360.076, are declared to be 
        acquired, owned, leased, controlled, used, or occupied for 
        public, governmental, and municipal purposes, and shall be 
        exempt from taxation by the state or any of its political 
        subdivisions, except to the extent that the property is subject 
        to the sales and use tax under chapter 297A.  Nothing contained 
        in sections 360.011 to 360.076 shall be construed as exempting 
        properties, real or personal, leased from the municipality to a 
        tenant or lessee who is a private person, association, or 
        corporation from assessments or taxes.  Leased municipal airport 
        property that is not located at the airport operated by the 
        metropolitan airports commission shall not be subject to payment 
        of any portion of rentals under section 272.68, subdivision 3. 
           Sec. 4.  Minnesota Statutes 1998, section 458A.09, is 
        amended to read: 
           458A.09 [EXEMPTION FROM TAXATION.] 
           Notwithstanding any other provision of law to the contrary, 
        the properties, moneys, and other assets of the commission, and 
        all revenues or other income of the commission shall be exempt 
        from all taxation, licenses, fees, or charges of any kind 
        imposed by the state or by any county, municipality, political 
        subdivision, taxing district, or other public agency or body of 
        the state, except to the extent that the property is subject to 
        the sales and use tax under chapter 297A. 
           Sec. 5.  Minnesota Statutes 1998, section 458A.30, is 
        amended to read: 
           458A.30 [TAX EXEMPTION.] 
           Notwithstanding any other provisions of law to the 
        contrary, the property, moneys, and other assets of the 
        authority, or revenues or other income of the authority, and all 
        bonds, certificates of indebtedness, or other obligations issued 
        by the authority, with the approval of the city council, and the 
        interest thereon, shall be exempt from all taxation, licenses, 
        fees, or charges of any kind imposed by the state of Minnesota, 
        or by any county, municipality, political subdivision, taxing 
        district, or other public agency or body of the state, including 
        but not limited to the excise tax on gasoline or special fuel 
        under chapter 296A, except to the extent that the property is 
        subject to the sales and use tax under chapter 297A. 
           Sec. 6.  Minnesota Statutes 1998, section 458D.23, is 
        amended to read: 
           458D.23 [PROPERTY EXEMPT FROM TAXATION.] 
           Any properties, real or personal, owned, leased, 
        controlled, used, or occupied by the sanitary sewer board for 
        any purpose under sections 458D.01 to 458D.24 are declared to be 
        acquired, owned, leased, controlled, used and occupied for 
        public, governmental, and municipal purposes, and shall be 
        exempt from taxation by the state or any political subdivision 
        of the state, except to the extent that the property is subject 
        to the sales and use tax under chapter 297A, provided that such 
        properties shall be subject to special assessments levied by a 
        political subdivision for a local improvement in amounts 
        proportionate to and not exceeding the special benefit received 
        by the properties from such improvement.  No possible use of any 
        such properties in any manner different from their use as part 
        of a disposal system at the time shall be considered in 
        determining the special benefit received by such properties.  
        All such assessments shall be subject to final approval by the 
        board, whose determination of the benefits shall be conclusive 
        upon the political subdivision levying the assessment.  All 
        bonds, certificates of indebtedness or other obligations of the 
        board, and the interest thereon, shall be exempt from taxation 
        by the state or any political subdivision of the state. 
           Sec. 7.  Minnesota Statutes 1999 Supplement, section 
        469.101, subdivision 2, is amended to read: 
           Subd. 2.  [ACQUIRE PROPERTY.] The economic development 
        authority may acquire by lease, purchase, gift, devise, or 
        condemnation proceedings the needed right, title, and interest 
        in property to create economic development districts.  It shall 
        pay for the property out of money it receives under sections 
        469.090 to 469.108.  It may hold and dispose of the property 
        subject to the limits and conditions in sections 469.090 to 
        469.108.  The title to property acquired by condemnation or 
        purchase must be in fee simple, absolute.  The authority may 
        accept an interest in property acquired in another way subject 
        to any condition of the grantor or donor.  The condition must be 
        consistent with the proper use of the property under sections 
        469.090 to 469.108.  Property acquired, owned, leased, 
        controlled, used, or occupied by the authority for any of the 
        purposes of this section is for public governmental and 
        municipal purposes and is exempt from taxation by the state or 
        by its political subdivisions, except to the extent that the 
        property is subject to the sales and use tax under chapter 
        297A.  The exemption applies only while the authority holds 
        property for its own purpose.  The exemption is subject to the 
        provisions of section 272.02, subdivision 39.  When the property 
        is sold it becomes subject to taxation. 
           Sec. 8.  Minnesota Statutes 1998, section 469.127, is 
        amended to read: 
           469.127 [TAX STATUS.] 
           The pedestrian skyway system, underground pedestrian 
        concourse, the people mover system, and publicly owned parking 
        structures are declared to be public property to be used for 
        essential public and governmental purposes.  They are exempt 
        from all taxes and special assessments of the city, county, 
        state, or any political subdivision thereof, except to the 
        extent that the property is subject to the sales and use tax 
        under chapter 297A.  Taxes do not include charges for utilities 
        and special services such as heat, water, electricity, gas, 
        sewage disposal, or garbage removal.  
           Sec. 9.  Minnesota Statutes 1998, section 473.448, is 
        amended to read: 
           473.448 [TRANSIT ASSETS EXEMPT FROM TAX BUT MUST PAY 
        ASSESSMENTS.] 
           (a) Notwithstanding any other provision of law to the 
        contrary, the properties, moneys, and other assets of the 
        council used for transit operations or for special 
        transportation services and all revenues or other income from 
        the council's transit operations or special transportation 
        services are exempt from all taxation, licenses, or fees imposed 
        by the state or by any county, municipality, political 
        subdivision, taxing district, or other public agency or body of 
        the state, except to the extent that the property is subject to 
        the sales and use tax under chapter 297A. 
           (b) Notwithstanding paragraph (a), the council's transit 
        properties are subject to special assessments levied by a 
        political subdivision for a local improvement in amounts 
        proportionate to and not exceeding the special benefit received 
        by the properties from the improvement.  
           Sec. 10.  Minnesota Statutes 1998, section 473.545, is 
        amended to read: 
           473.545 [PROPERTY EXEMPT FROM TAXATION.] 
           Any properties, real or personal, owned, leased, 
        controlled, used, or occupied by the council for any purpose 
        referred to in Minnesota Statutes 1984, section 473.502, are 
        declared to be acquired, owned, leased, controlled, used and 
        occupied for public, governmental, and municipal purposes, and 
        shall be exempt from taxation by the state or any political 
        subdivision of the state, except to the extent that the property 
        is subject to the sales and use tax under chapter 297A, provided 
        that such properties shall be subject to special assessments 
        levied by a political subdivision for a local improvement in 
        amounts proportionate to and not exceeding the special benefit 
        received by the properties from such improvement.  No possible 
        use of any such properties in any manner different from their 
        use as part of the metropolitan disposal system at the time 
        shall be considered in determining the special benefit received 
        by such properties.  All such assessments shall be subject to 
        final confirmation by the metropolitan council, whose 
        determination of the benefits shall be conclusive upon the 
        political subdivision levying the assessment.  
           Sec. 11.  Minnesota Statutes 1998, section 473.608, 
        subdivision 2, is amended to read: 
           Subd. 2.  [GETTING AIRPORT PROPERTY.] It may acquire by 
        lease, purchase, gift, devise, or condemnation proceedings all 
        necessary right, title, and interest in and to lands and 
        personal property required for airports and all other real or 
        personal property required for the purposes contemplated by 
        sections 473.601 to 473.679, within the metropolitan area, pay 
        therefor out of funds obtained as hereinafter provided, and hold 
        and dispose of the same, subject to the limitations and 
        conditions herein prescribed except that the corporation may not 
        acquire by any means lands or personal property for a major new 
        airport.  Title to any such property acquired by condemnation or 
        purchase shall be in fee simple, absolute, unqualified in any 
        way, but any such real or personal property or interest therein 
        otherwise acquired may be so acquired or accepted subject to any 
        condition which may be imposed thereon by the grantor or donor 
        and agreed to by the corporation, not inconsistent with the 
        proper use of the property by the corporation for the purposes 
        herein provided.  Any properties, real or personal, acquired, 
        owned, leased, controlled, used, and occupied by the corporation 
        for any of the purposes of sections 473.601 to 473.679, are 
        declared to be acquired, owned, leased, controlled, used, and 
        occupied for public, governmental, and municipal purposes, and 
        shall be exempt from taxation by the state or any of its 
        political subdivisions, except to the extent that the property 
        is subject to the sales and use tax under chapter 297A.  Nothing 
        contained in sections 473.601 to 473.679, shall be construed as 
        exempting properties, real or personal, leased from the 
        metropolitan airports commission to a tenant or lessee who is a 
        private person, association, or corporation from assessments or 
        taxes. 
           Presented to the governor April 14, 2000 
           Signed by the governor April 18, 2000, 10:34 a.m.