1.1                          A bill for an act 
  1.2             relating to taxation; expanding the sales and use tax 
  1.3             exemption for the sale of horses; amending Minnesota 
  1.4             Statutes 1994, sections 297A.01, subdivision 3; and 
  1.5             297A.25, subdivision 57. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1994, section 297A.01, 
  1.8   subdivision 3, is amended to read: 
  1.9      Subd. 3.  A "sale" and a "purchase" includes, but is not 
  1.10  limited to, each of the following transactions: 
  1.11     (a) Any transfer of title or possession, or both, of 
  1.12  tangible personal property, whether absolutely or conditionally, 
  1.13  and the leasing of or the granting of a license to use or 
  1.14  consume tangible personal property other than manufactured homes 
  1.15  used for residential purposes for a continuous period of 30 days 
  1.16  or more, for a consideration in money or by exchange or barter; 
  1.17     (b) The production, fabrication, printing, or processing of 
  1.18  tangible personal property for a consideration for consumers who 
  1.19  furnish either directly or indirectly the materials used in the 
  1.20  production, fabrication, printing, or processing; 
  1.21     (c) The furnishing, preparing, or serving for a 
  1.22  consideration of food, meals, or drinks.  "Sale" does not 
  1.23  include: 
  1.24     (1) meals or drinks served to patients, inmates, or persons 
  1.25  residing at hospitals, sanitariums, nursing homes, senior 
  2.1   citizens homes, and correctional, detention, and detoxification 
  2.2   facilities; 
  2.3      (2) meals or drinks purchased for and served exclusively to 
  2.4   individuals who are 60 years of age or over and their spouses or 
  2.5   to the handicapped and their spouses by governmental agencies, 
  2.6   nonprofit organizations, agencies, or churches or pursuant to 
  2.7   any program funded in whole or part through 42 USCA sections 
  2.8   3001 through 3045, wherever delivered, prepared or served; or 
  2.9      (3) meals and lunches served at public and private schools, 
  2.10  universities, or colleges.  Notwithstanding section 297A.25, 
  2.11  subdivision 2, taxable food or meals include, but are not 
  2.12  limited to, the following:  
  2.13     (i) heated food or drinks; 
  2.14     (ii) sandwiches prepared by the retailer; 
  2.15     (iii) single sales of prepackaged ice cream or ice milk 
  2.16  novelties prepared by the retailer; 
  2.17     (iv) hand-prepared or dispensed ice cream or ice milk 
  2.18  products including cones, sundaes, and snow cones; 
  2.19     (v) soft drinks and other beverages prepared or served by 
  2.20  the retailer; 
  2.21     (vi) gum; 
  2.22     (vii) ice; 
  2.23     (viii) all food sold in vending machines; 
  2.24     (ix) party trays prepared by the retailers; and 
  2.25     (x) all meals and single servings of packaged snack food, 
  2.26  single cans or bottles of pop, sold in restaurants and bars; 
  2.27     (d) The granting of the privilege of admission to places of 
  2.28  amusement, recreational areas, or athletic events, except a 
  2.29  world championship football game sponsored by the national 
  2.30  football league, and the privilege of having access to and the 
  2.31  use of amusement devices, tanning facilities, reducing salons, 
  2.32  steam baths, turkish baths, health clubs, and spas or athletic 
  2.33  facilities; 
  2.34     (e) The furnishing for a consideration of lodging and 
  2.35  related services by a hotel, rooming house, tourist court, motel 
  2.36  or trailer camp and of the granting of any similar license to 
  3.1   use real property other than the renting or leasing thereof for 
  3.2   a continuous period of 30 days or more; 
  3.3      (f) The furnishing for a consideration of electricity, gas, 
  3.4   water, or steam for use or consumption within this state, or 
  3.5   local exchange telephone service, intrastate toll service, and 
  3.6   interstate toll service, if that service originates from and is 
  3.7   charged to a telephone located in this state.  Telephone service 
  3.8   includes paging services and private communication service, as 
  3.9   defined in United States Code, title 26, section 4252(d), except 
  3.10  for private communication service purchased by an agent acting 
  3.11  on behalf of the state lottery.  The furnishing for a 
  3.12  consideration of access to telephone services by a hotel to its 
  3.13  guests is a sale under this clause.  Sales by municipal 
  3.14  corporations in a proprietary capacity are included in the 
  3.15  provisions of this clause.  The furnishing of water and sewer 
  3.16  services for residential use shall not be considered a sale.  
  3.17  The sale of natural gas to be used as a fuel in vehicles 
  3.18  propelled by natural gas shall not be considered a sale for the 
  3.19  purposes of this section; 
  3.20     (g) The furnishing for a consideration of cable television 
  3.21  services, including charges for basic service, charges for 
  3.22  premium service, and any other charges for any other 
  3.23  pay-per-view, monthly, or similar television services; 
  3.24     (h) ~~Notwithstanding section 297A.25, subdivisions 9 and 12,~~ 
  3.25  ~~the sales of racehorses including claiming sales and fees paid~~ 
  3.26  ~~for breeding racehorses or horses previously used for racing~~ 
  3.27  ~~shall be considered a "sale" and a "purchase."  "Racehorse"~~ 
  3.28  ~~means a horse that is or is intended to be used for racing and~~ 
  3.29  ~~whose birth has been recorded by the Jockey Club or the United~~ 
  3.30  ~~States Trotting Association or the American Quarter Horse~~ 
  3.31  ~~Association.  "Sale" does not include fees paid for breeding~~ 
  3.32  ~~horses that are not racehorses;~~ 
  3.33     ~~(i)~~ The furnishing for a consideration of parking services, 
  3.34  whether on a contractual, hourly, or other periodic basis, 
  3.35  except for parking at a meter; 
  3.36     ~~(j)~~ (i) The furnishing for a consideration of services 
  4.1   listed in this paragraph: 
  4.2      (i) laundry and dry cleaning services including cleaning, 
  4.3   pressing, repairing, altering, and storing clothes, linen 
  4.4   services and supply, cleaning and blocking hats, and carpet, 
  4.5   drapery, upholstery, and industrial cleaning.  Laundry and dry 
  4.6   cleaning services do not include services provided by coin 
  4.7   operated facilities operated by the customer; 
  4.8      (ii) motor vehicle washing, waxing, and cleaning services, 
  4.9   including services provided by coin-operated facilities operated 
  4.10  by the customer, and rustproofing, undercoating, and towing of 
  4.11  motor vehicles; 
  4.12     (iii) building and residential cleaning, maintenance, and 
  4.13  disinfecting and exterminating services; 
  4.14     (iv) services provided by detective agencies, security 
  4.15  services, burglar, fire alarm, and armored car services not 
  4.16  including services performed within the jurisdiction they serve 
  4.17  by off-duty licensed peace officers as defined in section 
  4.18  626.84, subdivision 1; 
  4.19     (v) pet grooming services; 
  4.20     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
  4.21  services; garden planting and maintenance; tree, bush, and shrub 
  4.22  pruning, bracing, spraying, and surgery; tree, bush, shrub and 
  4.23  stump removal; and tree trimming for public utility lines.  
  4.24  Services performed under a construction contract for the 
  4.25  installation of shrubbery, plants, sod, trees, bushes, and 
  4.26  similar items are not taxable; 
  4.27     (vii) solid waste collection and disposal services as 
  4.28  described in section 297A.45; 
  4.29     (viii) massages, except when provided by a licensed health 
  4.30  care facility or professional or upon written referral from a 
  4.31  licensed health care facility or professional for treatment of 
  4.32  illness, injury, or disease; and 
  4.33     (ix) the furnishing for consideration of lodging, board and 
  4.34  care services for animals in kennels and other similar 
  4.35  arrangements, but excluding veterinary and horse boarding 
  4.36  services. 
  5.1   The services listed in this paragraph are taxable under section 
  5.2   297A.02 if the service is performed wholly within Minnesota or 
  5.3   if the service is performed partly within and partly without 
  5.4   Minnesota and the greater proportion of the service is performed 
  5.5   in Minnesota, based on the cost of performance.  In applying the 
  5.6   provisions of this chapter, the terms "tangible personal 
  5.7   property" and "sales at retail" include taxable services and the 
  5.8   provision of taxable services, unless specifically provided 
  5.9   otherwise.  Services performed by an employee for an employer 
  5.10  are not taxable under this paragraph.  Services performed by a 
  5.11  partnership or association for another partnership or 
  5.12  association are not taxable under this paragraph if one of the 
  5.13  entities owns or controls more than 80 percent of the voting 
  5.14  power of the equity interest in the other entity.  Services 
  5.15  performed between members of an affiliated group of corporations 
  5.16  are not taxable.  For purposes of this section, "affiliated 
  5.17  group of corporations" includes those entities that would be 
  5.18  classified as a member of an affiliated group under United 
  5.19  States Code, title 26, section 1504, and who are eligible to 
  5.20  file a consolidated tax return for federal income tax purposes; 
  5.21     ~~(k)~~ (j) A "sale" and a "purchase" includes the transfer of 
  5.22  computer software, meaning information and directions that 
  5.23  dictate the function performed by data processing equipment.  A 
  5.24  "sale" and a "purchase" does not include the design, 
  5.25  development, writing, translation, fabrication, lease, or 
  5.26  transfer for a consideration of title or possession of a custom 
  5.27  computer program; and 
  5.28     ~~(l)~~ (k) The granting of membership in a club, association, 
  5.29  or other organization if: 
  5.30     (1) the club, association, or other organization makes 
  5.31  available for the use of its members sports and athletic 
  5.32  facilities (without regard to whether a separate charge is 
  5.33  assessed for use of the facilities); and 
  5.34     (2) use of the sports and athletic facilities is not made 
  5.35  available to the general public on the same basis as it is made 
  5.36  available to members.  
  6.1   Granting of membership includes both one-time initiation fees 
  6.2   and periodic membership dues.  Sports and athletic facilities 
  6.3   include golf courses, tennis, racquetball, handball and squash 
  6.4   courts, basketball and volleyball facilities, running tracks, 
  6.5   exercise equipment, swimming pools, and other similar athletic 
  6.6   or sports facilities.  The provisions of this paragraph do not 
  6.7   apply to camps or other recreation facilities owned and operated 
  6.8   by an exempt organization under section 501(c)(3) of the 
  6.9   Internal Revenue Code of 1986, as amended through December 31, 
  6.10  1992, for educational and social activities for young people 
  6.11  primarily age 18 and under.  
  6.12  Granting of membership includes both one-time initiation fees 
  6.13  and periodic membership dues.  Sports and athletic facilities 
  6.14  include golf courses, tennis, racquetball, handball and squash 
  6.15  courts, basketball and volleyball facilities, running tracks, 
  6.16  exercise equipment, swimming pools, and other similar athletic 
  6.17  or sports facilities.  The provisions of this paragraph do not 
  6.18  apply to camps or other recreation facilities owned and operated 
  6.19  by an exempt organization under section 501(c)(3) of the 
  6.20  Internal Revenue Code of 1986, as amended through December 31, 
  6.21  1992, for educational and social activities for young people 
  6.22  primarily age 18 and under.  
  6.23     Sec. 2.  Minnesota Statutes 1994, section 297A.25, 
  6.24  subdivision 57, is amended to read: 
  6.25     Subd. 57.  [HORSES.] The gross receipts from the sale of 
  6.26  horses ~~other than~~, including racehorses ~~taxable under section~~ 
  6.27  ~~297A.01, subdivision 3, paragraph (h)~~, and all materials 
  6.28  including feed and bedding used or consumed in connection with 
  6.29  the breeding and raising of horses, are exempt. 
  6.30     Sec. 3.  [EFFECTIVE DATE.] 
  6.31     Sections 1 and 2 are effective for sales after June 30, 
  6.32  1995.