1.1                          A bill for an act 
  1.2             relating to taxes; sales and use tax; taxing delivery 
  1.3             charges for aggregate materials and concrete block; 
  1.4             providing transition language for certain contracts 
  1.5             signed prior to a change in sales tax definitions; 
  1.6             amending Minnesota Statutes 2001 Supplement, sections 
  1.7             297A.61, subdivision 3; 297A.67, subdivision 25; 
  1.8             297A.68, subdivision 3; Laws 2001, First Special 
  1.9             Session chapter 5, article 12, section 11. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2001 Supplement, section 
  1.12  297A.61, subdivision 3, is amended to read: 
  1.13     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
  1.14  include, but are not limited to, each of the transactions listed 
  1.15  in this subdivision. 
  1.16     (b) Sale and purchase include: 
  1.17     (1) any transfer of title or possession, or both, of 
  1.18  tangible personal property, whether absolutely or conditionally, 
  1.19  for a consideration in money or by exchange or barter; and 
  1.20     (2) the leasing of or the granting of a license to use or 
  1.21  consume, for a consideration in money or by exchange or barter, 
  1.22  tangible personal property, other than a manufactured home used 
  1.23  for residential purposes for a continuous period of 30 days or 
  1.24  more. 
  1.25     (c) Sale and purchase include the production, fabrication, 
  1.26  printing, or processing of tangible personal property for a 
  1.27  consideration for consumers who furnish either directly or 
  2.1   indirectly the materials used in the production, fabrication, 
  2.2   printing, or processing. 
  2.3      (d) Sale and purchase include the preparing for a 
  2.4   consideration of food.  Notwithstanding section 297A.67, 
  2.5   subdivision 2, taxable food includes, but is not limited to, the 
  2.6   following: 
  2.7      (1) prepared food sold by the retailer; 
  2.8      (2) soft drinks; 
  2.9      (3) candy; and 
  2.10     (4) all food sold through vending machines.  
  2.11     (e) A sale and a purchase includes the furnishing for a 
  2.12  consideration of electricity, gas, water, or steam for use or 
  2.13  consumption within this state. 
  2.14     (f) A sale and a purchase includes the transfer for a 
  2.15  consideration of computer software.  
  2.16     (g) A sale and a purchase includes the furnishing for a 
  2.17  consideration of the following services: 
  2.18     (1) the privilege of admission to places of amusement, 
  2.19  recreational areas, or athletic events, and the making available 
  2.20  of amusement devices, tanning facilities, reducing salons, steam 
  2.21  baths, turkish baths, health clubs, and spas or athletic 
  2.22  facilities; 
  2.23     (2) lodging and related services by a hotel, rooming house, 
  2.24  resort, campground, motel, or trailer camp and the granting of 
  2.25  any similar license to use real property other than the renting 
  2.26  or leasing of it for a continuous period of 30 days or more; 
  2.27     (3) parking services, whether on a contractual, hourly, or 
  2.28  other periodic basis, except for parking at a meter; 
  2.29     (4) the granting of membership in a club, association, or 
  2.30  other organization if: 
  2.31     (i) the club, association, or other organization makes 
  2.32  available for the use of its members sports and athletic 
  2.33  facilities, without regard to whether a separate charge is 
  2.34  assessed for use of the facilities; and 
  2.35     (ii) use of the sports and athletic facility is not made 
  2.36  available to the general public on the same basis as it is made 
  3.1   available to members.  
  3.2   Granting of membership means both one-time initiation fees and 
  3.3   periodic membership dues.  Sports and athletic facilities 
  3.4   include golf courses; tennis, racquetball, handball, and squash 
  3.5   courts; basketball and volleyball facilities; running tracks; 
  3.6   exercise equipment; swimming pools; and other similar athletic 
  3.7   or sports facilities; ~~and~~ 
  3.8      (5) delivery of aggregate materials and concrete block; and 
  3.9      (6) services as provided in this clause: 
  3.10     (i) laundry and dry cleaning services including cleaning, 
  3.11  pressing, repairing, altering, and storing clothes, linen 
  3.12  services and supply, cleaning and blocking hats, and carpet, 
  3.13  drapery, upholstery, and industrial cleaning.  Laundry and dry 
  3.14  cleaning services do not include services provided by coin 
  3.15  operated facilities operated by the customer; 
  3.16     (ii) motor vehicle washing, waxing, and cleaning services, 
  3.17  including services provided by coin operated facilities operated 
  3.18  by the customer, and rustproofing, undercoating, and towing of 
  3.19  motor vehicles; 
  3.20     (iii) building and residential cleaning, maintenance, and 
  3.21  disinfecting and exterminating services; 
  3.22     (iv) detective, security, burglar, fire alarm, and armored 
  3.23  car services; but not including services performed within the 
  3.24  jurisdiction they serve by off-duty licensed peace officers as 
  3.25  defined in section 626.84, subdivision 1, or services provided 
  3.26  by a nonprofit organization for monitoring and electronic 
  3.27  surveillance of persons placed on in-home detention pursuant to 
  3.28  court order or under the direction of the Minnesota department 
  3.29  of corrections; 
  3.30     (v) pet grooming services; 
  3.31     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
  3.32  services; garden planting and maintenance; tree, bush, and shrub 
  3.33  pruning, bracing, spraying, and surgery; indoor plant care; 
  3.34  tree, bush, shrub, and stump removal; and tree trimming for 
  3.35  public utility lines.  Services performed under a construction 
  3.36  contract for the installation of shrubbery, plants, sod, trees, 
  4.1   bushes, and similar items are not taxable; 
  4.2      (vii) massages, except when provided by a licensed health 
  4.3   care facility or professional or upon written referral from a 
  4.4   licensed health care facility or professional for treatment of 
  4.5   illness, injury, or disease; and 
  4.6      (viii) the furnishing of lodging, board, and care services 
  4.7   for animals in kennels and other similar arrangements, but 
  4.8   excluding veterinary and horse boarding services. 
  4.9      In applying the provisions of this chapter, the terms 
  4.10  "tangible personal property" and "sales at retail" include 
  4.11  taxable services and the provision of taxable services, unless 
  4.12  specifically provided otherwise.  Services performed by an 
  4.13  employee for an employer are not taxable.  Services performed by 
  4.14  a partnership or association for another partnership or 
  4.15  association are not taxable if one of the entities owns or 
  4.16  controls more than 80 percent of the voting power of the equity 
  4.17  interest in the other entity.  Services performed between 
  4.18  members of an affiliated group of corporations are not taxable.  
  4.19  For purposes of this section, "affiliated group of corporations" 
  4.20  includes those entities that would be classified as members of 
  4.21  an affiliated group under United States Code, title 26, section 
  4.22  1504, and that are eligible to file a consolidated tax return 
  4.23  for federal income tax purposes. 
  4.24     (h) A sale and a purchase includes the furnishing for a 
  4.25  consideration of tangible personal property or taxable services 
  4.26  by the United States or any of its agencies or 
  4.27  instrumentalities, or the state of Minnesota, its agencies, 
  4.28  instrumentalities, or political subdivisions. 
  4.29     (i) A sale and a purchase includes the furnishing for a 
  4.30  consideration of telecommunications services, including cable 
  4.31  television services and direct satellite services.  
  4.32  Telecommunications services are taxed to the extent allowed 
  4.33  under federal law if those services: 
  4.34     (1) either (i) originate and terminate in this state; or 
  4.35  (ii) originate in this state and terminate outside the state and 
  4.36  the service is charged to a telephone number customer located in 
  5.1   this state or to the account of any transmission instrument in 
  5.2   this state; or (iii) originate outside this state and terminate 
  5.3   in this state and the service is charged to a telephone number 
  5.4   customer located in this state or to the account of any 
  5.5   transmission instrument in this state; or 
  5.6      (2) are rendered by providing a private communications 
  5.7   service for which the customer has one or more locations within 
  5.8   Minnesota connected to the service and the service is charged to 
  5.9   a telephone number customer located in this state or to the 
  5.10  account of any transmission instrument in this state. 
  5.11     All charges for mobile telecommunications services, as 
  5.12  defined in United States Code, title 4, section 124, are deemed 
  5.13  to be provided by the customer's home service provider and 
  5.14  sourced to the customer's place of primary use and are subject 
  5.15  to tax based upon the customer's place of primary use in 
  5.16  accordance with the Mobile Telecommunications Sourcing Act, 
  5.17  United States Code, title 4, sections 116 to 126.  All other 
  5.18  definitions and provisions of the Mobile Telecommunications 
  5.19  Sourcing Act as provided in United States Code, title 4, are 
  5.20  hereby adopted. 
  5.21     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
  5.22  after June 30, 2002. 
  5.23     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
  5.24  297A.67, subdivision 25, is amended to read: 
  5.25     Subd. 25.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
  5.26  related services used in the maintenance of cemetery grounds are 
  5.27  exempt.  For purposes of this subdivision, "lawn care and 
  5.28  related services" means the services listed in section 297A.61, 
  5.29  subdivision 3, paragraph (g), clause ~~(5)~~ (6), item (vi), and 
  5.30  "cemetery" means a cemetery for human burial. 
  5.31     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
  5.32  297A.68, subdivision 3, is amended to read: 
  5.33     Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
  5.34  SERVICES.] (a) Materials stored, used, or consumed in providing 
  5.35  a taxable service listed in section 297A.61, subdivision 3, 
  5.36  paragraph (g), clause ~~(5)~~ (6), intended to be sold ultimately at 
  6.1   retail are exempt. 
  6.2      (b) This exemption includes, but is not limited to: 
  6.3      (1) chemicals, lubricants, packaging materials, seeds, 
  6.4   trees, fertilizers, and herbicides, if these items are used or 
  6.5   consumed in providing the taxable service; 
  6.6      (2) chemicals used to treat waste generated as a result of 
  6.7   providing the taxable service; 
  6.8      (3) accessory tools, equipment, and other items that are 
  6.9   separate detachable units used in providing the service and that 
  6.10  have an ordinary useful life of less than 12 months; and 
  6.11     (4) fuel, electricity, gas, and steam used or consumed in 
  6.12  the production process, except that electricity, gas, or steam 
  6.13  used for space heating, cooling, or lighting is exempt if (i) it 
  6.14  is in excess of average climate control or lighting, and (ii) it 
  6.15  is necessary to produce that particular service. 
  6.16     (c) This exemption does not include machinery, equipment, 
  6.17  implements, tools, accessories, appliances, contrivances, 
  6.18  furniture, and fixtures used in providing the taxable service. 
  6.19     Sec. 4.  Laws 2001, First Special Session chapter 5, 
  6.20  article 12, section 11, the effective date, is amended to read: 
  6.21     <b>[EFFECTIVE DATE.]</b> This section is effective for January 1, 
  6.22  2002, however, for contracts entered into before January 1, 
  6.23  2002, the sale price for aggregate materials and concrete block 
  6.24  does not include delivery charges until January 1, 2005.