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;
(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, trees and shrubs, 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;
(7) aquaculture production equipment as defined in subdivision 13; and
(8) equipment used for maple syrup harvesting.
(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 subdivision, "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.
* NOTE: This section, as added by Laws 2000, chapter 418, *article 1, section 4, is effective for sales and purchases *occurring after June 30, 2001. Laws 2000, chapter 418, article *1, section 46.
Official Publication of the State of Minnesota
Revisor of Statutes