2001 Minnesota Statutes

CHAPTER 295. Companies subject to gross earnings taxes

  295.01 Repealed, 1996 c 310 s 1 

  295.02 Repealed, 1979 c 303 art 7 s 15 

  295.021 Repealed, 1969 c 399 s 51 

  295.03 Repealed, 1979 c 303 art 7 s 15 

  295.04 Repealed, 1979 c 303 art 7 s 15 

  295.05 Repealed, 1979 c 303 art 7 s 15 

  295.06 Repealed, 1969 c 9 s 101; 1969 c 1147 s 22 

  295.07 Repealed, 1969 c 9 s 101; 1969 c 1147 s 22 

  295.08 Repealed, 1969 c 9 s 101; 1969 c 1147 s 22 

  295.09 Repealed, 1969 c 9 s 101; 1969 c 1147 s 22 

  295.10 Repealed, 1969 c 9 s 101; 1969 c 1147 s 22 

  295.11 Repealed, 1969 c 1147 s 22 

  295.12 Repealed, 1979 c 303 art 7 s 15 

  295.13 Repealed, 1979 c 303 art 7 s 15 

  295.14 Repealed, 1979 c 303 art 7 s 15 

  295.15 Repealed, 1989 c 277 art 1 s 35 

  295.16 Repealed, 1969 c 1147 s 22 

  295.17 Repealed, 1969 c 1147 s 22 

  295.18 Repealed, 1969 c 1147 s 22 

  295.19 Repealed, 1969 c 1147 s 22 

  295.20 Repealed, 1969 c 1147 s 22 

  295.21 Repealed, 1989 c 277 art 1 s 35 

  295.22 Repealed, 1969 c 1147 s 22 

  295.23 Repealed, 1989 c 277 art 1 s 35 

  295.24 Repealed, 1989 c 277 art 1 s 35 

  295.25 Repealed, 1989 c 277 art 1 s 35 

  295.26 Repealed, 1969 c 1147 s 22 

  295.27 Repealed, 1989 c 277 art 1 s 35 

  295.29 Repealed, 1989 c 277 art 1 s 35 

  295.30 Repealed, 1989 c 277 art 1 s 35 

  295.31 Repealed, 1989 c 277 art 1 s 35 

  295.32 Repealed, 1987 c 268 art 11 s 11 clause (b) 

  295.33 Repealed, 1987 c 268 art 11 s 11 clause (b) 

  295.34 Repealed, 1987 c 268 art 11 s 11 clause (b) 

  295.35 Repealed, 1969 c 1147 s 22 

  295.36 Repealed, 1987 c 268 art 11 s 11 clause (b) 

  295.361 Repealed, 1969 c 399 s 51 

  295.365 Repealed, 1987 c 268 art 11 s 11 clause (b) 

  295.366 Repealed, 1987 c 268 art 11 s 11 clause (b) 

  295.367 Repealed, 1992 c 511 art 8 s 38 

  295.37 Repealed, 1996 c 471 art 9 s 16 

  295.38 Repealed, 1973 c 650 art 27 s 1 

  295.39 Repealed, 1996 c 471 art 9 s 16 

  295.40 Repealed, 1996 c 471 art 9 s 16 

  295.41 Repealed, 1996 c 471 art 9 s 16 

  295.42 Repealed, 1996 c 471 art 9 s 16 

  295.43 Repealed, 1996 c 471 art 9 s 16 

     295.44 Hydropower facilities; exemption; taxation in 
  lieu of property taxation. 

    Subdivision 1.    Exemption.  Notwithstanding the 
 provisions of sections 272.01, subdivision 2, 272.02, 
 subdivision 39, and 273.19, subdivision 1, real or personal 
 property used or to be used primarily for the production of 
 hydroelectric or hydromechanical power on a site owned by the 
 federal government, the state, or a local governmental unit and 
 developed and operated pursuant to section 103G.535 may be 
 exempt from property taxation for all years during which the 
 site is developed and operated under the terms of a lease or 
 agreement authorized by section 103G.535. 

    Subd. 2. Repealed, 1984 c 502 art 3 s 36 

    Subd. 3. Repealed, 1984 c 502 art 3 s 36 

    Subd. 4. Repealed, 1984 c 502 art 3 s 36 

    HIST: 1982 c 523 art 27 s 5; 1984 c 502 art 3 s 24; 1990 c 391 
 art 8 s 35; 1997 c 191 art 1 s 10 

     295.50 Definitions. 

    Subdivision 1.    Definitions.  For purposes of sections 
 295.50 to 295.59, the following terms have the meanings given. 

    Subd. 2.    Commissioner.  "Commissioner" is the 
 commissioner of revenue. 

    Subd. 2a.    Delivered outside of Minnesota.  "Delivered 
 outside of Minnesota" means property which the seller delivers 
 to a common carrier for delivery outside Minnesota, places in 
 the United States mail or parcel post directed to the purchaser 
 outside Minnesota, or delivers to the purchaser outside 
 Minnesota by means of the seller's own delivery vehicles, and 
 which is not later returned to a point within Minnesota, except 
 in the course of interstate commerce. 

    Subd. 3.    Gross revenues.  "Gross revenues" are total 
 amounts received in money or otherwise by: 

    (1) a hospital for patient services; 

    (2) a surgical center for patient services; 

    (3) a health care provider, other than a staff model health 
 carrier, for patient services; 

    (4) a wholesale drug distributor for sale or distribution 
 of legend drugs that are delivered in Minnesota by the wholesale 
 drug distributor, by common carrier, or by mail, unless the 
 legend drugs are delivered to another wholesale drug distributor 
 who sells legend drugs exclusively at wholesale.  Legend drugs 
 do not include nutritional products as defined in Minnesota 
 Rules, part 9505.0325; and 

    (5) a staff model health plan company as gross premiums for 
 enrollees, copayments, deductibles, coinsurance, and fees for 
 patient services. 

    Subd. 4.    Health care provider.  (a) "Health care 
 provider" means: 

    (1) a person whose health care occupation is regulated or 
 required to be regulated by the state of Minnesota furnishing 
 any or all of the following goods or services directly to a 
 patient or consumer:  medical, surgical, optical, visual, 
 dental, hearing, nursing services, drugs, laboratory, diagnostic 
 or therapeutic services; 

    (2) a person who provides goods and services not listed in 
 clause (1) that qualify for reimbursement under the medical 
 assistance program provided under chapter 256B; 

    (3) a staff model health plan company; 

    (4) an ambulance service required to be licensed; or 

    (5) a person who sells or repairs hearing aids and related 
 equipment or prescription eyewear. 

    (b) Health care provider does not include: 

    (1) hospitals; medical supplies distributors, except as 
 specified under paragraph (a), clause (5); nursing homes 
 licensed under chapter 144A or licensed in any other 
 jurisdiction; pharmacies; surgical centers; bus and taxicab 
 transportation, or any other providers of transportation 
 services other than ambulance services required to be licensed; 
 supervised living facilities for persons with mental retardation 
 or related conditions, licensed under Minnesota Rules, parts 
 4665.0100 to 4665.9900; residential care homes licensed under 
 chapter 144B; board and lodging establishments providing only 
 custodial services that are licensed under chapter 157 and 
 registered under section 157.17 to provide supportive services 
 or health supervision services; adult foster homes as defined in 
 Minnesota Rules, part 9555.5105; day training and habilitation 
 services for adults with mental retardation and related 
 conditions as defined in section 252.41, subdivision 3; boarding 
 care homes, as defined in Minnesota Rules, part 4655.0100; and 
 adult day care centers as defined in Minnesota Rules, part 
 9555.9600; 

    (2) home health agencies as defined in Minnesota Rules, 
 part 9505.0175, subpart 15; a person providing personal care 
 services and supervision of personal care services as defined in 
 Minnesota Rules, part 9505.0335; a person providing private duty 
 nursing services as defined in Minnesota Rules, part 9505.0360; 
 and home care providers required to be licensed under chapter 
 144A; 

    (3) a person who employs health care providers solely for 
 the purpose of providing patient services to its employees; and 

    (4) an educational institution that employs health care 
 providers solely for the purpose of providing patient services 
 to its students if the institution does not receive fee for 
 service payments or payments for extended coverage. 

    Subd. 5. Repealed, 1993 c 345 art 13 s 24 

    Subd. 6.    Home health care services.  "Home health 
 care services" are services: 

    (1) defined under the state medical assistance program as 
 home health agency services provided by a home health agency, 
 personal care services and supervision of personal care 
 services, private duty nursing services, and waivered services 
 or services by home care providers required to be licensed under 
 chapter 144A; and 

    (2) provided at a recipient's residence, if the recipient 
 does not live in a hospital, nursing facility, as defined in 
 section 62A.46, subdivision 3, or intermediate care facility for 
 persons with mental retardation as defined in section 256B.055, 
 subdivision 12, paragraph (d). 

    Subd. 6a.    Hospice care services.  "Hospice care 
 services" are services: 

    (1) as defined in Minnesota Rules, part 9505.0297; and 

    (2) provided at a recipient's residence, if the recipient 
 does not live in a hospital, nursing facility as defined in 
 section 62A.46, subdivision 3, or intermediate care facility for 
 persons with mental retardation as defined in section 256B.055, 
 subdivision 12, paragraph (d). 

    Subd. 7.    Hospital.  "Hospital" means a hospital 
 licensed under chapter 144, or a hospital licensed by any other 
 jurisdiction. 

    Subd. 8. Repealed, 1996 c 471 art 6 s 13 

    Subd. 9. Repealed, 1996 c 471 art 6 s 13 

    Subd. 9a. Repealed, 1996 c 471 art 6 s 13 

    Subd. 9b.    Patient services.  (a) "Patient services" 
 means inpatient and outpatient services and other goods and 
 services provided by hospitals, surgical centers, or health care 
 providers.  They include the following health care goods and 
 services provided to a patient or consumer: 

    (1) bed and board; 

    (2) nursing services and other related services; 

    (3) use of hospitals, surgical centers, or health care 
 provider facilities; 

    (4) medical social services; 

    (5) drugs, biologicals, supplies, appliances, and 
 equipment; 

    (6) other diagnostic or therapeutic items or services; 

    (7) medical or surgical services; 

    (8) items and services furnished to ambulatory patients not 
 requiring emergency care; 

    (9) emergency services; and 

    (10) covered services listed in section 256B.0625 and in 
 Minnesota Rules, parts 9505.0170 to 9505.0475. 

    (b) "Patient services" does not include:  

    (1) services provided to nursing homes licensed under 
 chapter 144A; and 

    (2) examinations for purposes of utilization reviews, 
 insurance claims or eligibility, litigation, and employment, 
 including reviews of medical records for those purposes. 

    Subd. 9c.    Person.  "Person" means an individual, 
 partnership, limited liability company, corporation, 
 association, governmental unit or agency, or public or private 
 organization of any kind. 

    Subd. 10. Repealed, 1993 c 345 art 13 s 24 

    Subd. 10a.    Pharmacy.  "Pharmacy" means a pharmacy 
 required to be licensed under chapter 151, or a pharmacy 
 required to be licensed by any other jurisdiction. 

    Subd. 10b.    Regional treatment center.  "Regional 
 treatment center" means a regional center as defined in section 
 253B.02, subdivision 18, and named in sections 252.025, 
 subdivision 1; 253.015, subdivision 1; 253.201; and 254.05. 

    Subd. 11. Repealed, 1996 c 471 art 6 s 13 

    Subd. 12. Repealed, 1996 c 471 art 6 s 13 

    Subd. 12a. Repealed, 1996 c 471 art 6 s 13 

    Subd. 12b.    Staff model health plan company.  "Staff 
 model health plan company" means a health plan company as 
 defined in section 62Q.01, subdivision 4, which employs one or 
 more types of health care provider to deliver health care 
 services to the health plan company's enrollees. 

    Subd. 13.    Surgical center.  "Surgical center" is an 
 outpatient surgical center as defined in Minnesota Rules, 
 chapter 4675, or a similar facility located in any other 
 jurisdiction. 

    Subd. 14.    Wholesale drug distributor.  "Wholesale 
 drug distributor" means a wholesale drug distributor required to 
 be licensed under sections 151.42 to 151.51. 

    Subd. 15.    Legend drug.  "Legend drug" means a drug 
 that is required by federal law to bear one of the following 
 statements:  "Caution:  Federal law prohibits dispensing without 
 prescription" or "Rx only". 

    HIST: 1992 c 549 art 9 s 5; 1993 c 345 art 13 s 3-10; 1Sp1993 
 c 6 s 19-23; 1994 c 625 art 8 s 64,65; art 13 s 6-9; 1995 c 234 
 art 9 s 4-6; 1995 c 264 art 18 s 1,2; 1996 c 305 art 1 s 65; 
 1996 c 471 art 6 s 1-3; 1997 c 31 art 4 s 1-5; 1997 c 84 art 4 s 
 1,2; 1997 c 225 art 3 s 4-9,23; 1997 c 251 s 28; 1999 c 243 art 
 8 s 1; 2000 c 490 art 9 s 2; 1Sp2001 c 5 art 14 s 2-4 

     295.51 Minimum contacts required for jurisdiction to tax 
  gross revenue. 

    Subdivision 1.    Business transactions in Minnesota.  A 
 hospital, surgical center, or health care provider is subject to 
 tax under sections 295.50 to 295.59 if it is "transacting 
 business in Minnesota."  A hospital, surgical center, or health 
 care provider is transacting business in Minnesota if it 
 maintains contacts with or presence in the state of Minnesota 
 sufficient to permit taxation of gross revenues received for 
 patient services under the United States Constitution. 

    Subd. 1a.    Nexus in Minnesota.  A wholesale drug 
 distributor has nexus in Minnesota if its contacts with or 
 presence in Minnesota is sufficient to satisfy the requirements 
 of the United States Constitution. 

    Subd. 2. Repealed, 1993 c 345 art 13 s 24 

    HIST: 1992 c 549 art 9 s 6; 1993 c 345 art 13 s 11; 1Sp1993 c 
 6 s 24; 1996 c 471 art 6 s 4,5; 1997 c 31 art 4 s 6; 1997 c 225 
 art 3 s 10,23; 1997 c 251 s 28 

     295.52 Taxes imposed. 

    Subdivision 1.    Hospital tax.  A tax is imposed on 
 each hospital equal to two percent of its gross revenues. 

    Subd. 1a.    Surgical center tax.  A tax is imposed on 
 each surgical center equal to two percent of its gross revenues. 

    Subd. 1b. Repealed, 1997 c 225 art 3 s 23 

    Subd. 2.    Provider tax.  A tax is imposed on each 
 health care provider equal to two percent of its gross revenues. 

    Subd. 3.    Wholesale drug distributor tax.  A tax is 
 imposed on each wholesale drug distributor equal to two percent 
 of its gross revenues.  

    Subd. 4.    Use tax; prescription drugs.  (a) A person 
 that receives prescription drugs for resale or use in Minnesota, 
 other than from a wholesale drug distributor that is subject to 
 tax under subdivision 3, is subject to a tax equal to the price 
 paid to the wholesale drug distributor multiplied by the tax 
 percentage specified in this section.  Liability for the tax is 
 incurred when prescription drugs are received or delivered in 
 Minnesota by the person. 

    (b) A person that receives prescription drugs for use in 
 Minnesota from a nonresident pharmacy required to be registered 
 under section 151.19 is subject to a tax equal to the price paid 
 by the nonresident pharmacy to the wholesale drug distributor or 
 the price received by the nonresident pharmacy, whichever is 
 lower, multiplied by the tax percentage specified in this 
 section.  Liability for the tax is incurred when prescription 
 drugs are received in Minnesota by the person.  

    Subd. 4a.    Tax collection.  A wholesale drug 
 distributor with nexus in Minnesota, who is not subject to tax 
 under subdivision 3, on all or a particular transaction or a 
 nonresident pharmacy with nexus in Minnesota, is required to 
 collect the tax imposed under subdivision 4, from the purchaser 
 of the drugs and give the purchaser a receipt for the tax paid.  
 The tax collected shall be remitted to the commissioner in the 
 manner prescribed by section 295.55, subdivision 3. 

    Subd. 5.    Volunteer ambulance services.  Volunteer 
 ambulance services are not subject to the tax under this 
 section.  For purposes of this requirement, "volunteer ambulance 
 service" means an ambulance service in which all of the 
 individuals whose primary responsibility is direct patient care 
 meet the definition of volunteer under section 144E.001, 
 subdivision 15.  The ambulance service may employ administrative 
 and support staff, and remain eligible for this exemption, if 
 the primary responsibility of these staff is not direct patient 
 care. 

    Subd. 6.    Hearing aids and prescription eyewear.  The 
 tax liability of a person who meets the definition of a health 
 care provider solely because the person sells or repairs hearing 
 aids and related equipment or prescription eyewear is limited to 
 the gross revenues received from the sale or repair of these 
 items. 

    Subd. 7.    Tax reduction.  Notwithstanding subdivisions 
 1, 1a, 2, 3, and 4, the tax imposed under this section equals 
 for calendar years 1998 to 2003, 1.5 percent of the gross 
 revenues received on or after January 1, 1998, and before 
 January 1, 2004. 

    HIST: 1992 c 549 art 9 s 7; 1993 c 345 art 13 s 12,13; 1Sp1993 
 c 6 s 25; 1994 c 625 art 13 s 10; 1996 c 471 art 6 s 6; 1997 c 
 31 art 4 s 7; 1997 c 84 art 4 s 3; 1997 c 199 s 14; 1997 c 225 
 art 3 s 11-13,23; 1997 c 251 s 27,28; 1998 c 389 art 16 s 13,14; 
 1999 c 8 s 5; 1999 c 243 art 8 s 2; 1Sp2001 c 5 art 14 s 5,6 

     295.53 Exemptions; special rules. 

    Subdivision 1.    Exemptions.  (a) The following 
 payments are excluded from the gross revenues subject to the 
 hospital, surgical center, or health care provider taxes under 
 sections 295.50 to 295.57: 

    (1) payments received for services provided under the 
 Medicare program, including payments received from the 
 government, and organizations governed by sections 1833 and 1876 
 of title XVIII of the federal Social Security Act, United States 
 Code, title 42, section 1395, and enrollee deductibles, 
 coinsurance, and copayments, whether paid by the Medicare 
 enrollee or by a Medicare supplemental coverage as defined in 
 section 62A.011, subdivision 3, clause (10).  Payments for 
 services not covered by Medicare are taxable; 

    (2) medical assistance payments including payments received 
 directly from the government or from a prepaid plan; 

    (3) payments received for home health care services; 

    (4) payments received from hospitals or surgical centers 
 for goods and services on which liability for tax is imposed 
 under section 295.52 or the source of funds for the payment is 
 exempt under clause (1), (2), (7), (8), (10), (13), or (20); 

    (5) payments received from health care providers for goods 
 and services on which liability for tax is imposed under this 
 chapter or the source of funds for the payment is exempt under 
 clause (1), (2), (7), (8), (10), (13), or (20); 

    (6) amounts paid for legend drugs, other than nutritional 
 products, to a wholesale drug distributor who is subject to tax 
 under section 295.52, subdivision 3, reduced by reimbursements 
 received for legend drugs under clauses (1), (2), (7), and (8); 

    (7) payments received under the general assistance medical 
 care program including payments received directly from the 
 government or from a prepaid plan; 

    (8) payments received for providing services under the 
 MinnesotaCare program including payments received directly from 
 the government or from a prepaid plan and enrollee deductibles, 
 coinsurance, and copayments.  For purposes of this clause, 
 coinsurance means the portion of payment that the enrollee is 
 required to pay for the covered service; 

    (9) payments received by a health care provider or the 
 wholly owned subsidiary of a health care provider for care 
 provided outside Minnesota; 

    (10) payments received from the chemical dependency fund 
 under chapter 254B; 

    (11) payments received in the nature of charitable 
 donations that are not designated for providing patient services 
 to a specific individual or group; 

    (12) payments received for providing patient services 
 incurred through a formal program of health care research 
 conducted in conformity with federal regulations governing 
 research on human subjects.  Payments received from patients or 
 from other persons paying on behalf of the patients are subject 
 to tax; 

    (13) payments received from any governmental agency for 
 services benefiting the public, not including payments made by 
 the government in its capacity as an employer or insurer; 

    (14) payments received for services provided by community 
 residential mental health facilities licensed under Minnesota 
 Rules, parts 9520.0500 to 9520.0690, community support programs 
 and family community support programs approved under Minnesota 
 Rules, parts 9535.1700 to 9535.1760, and community mental health 
 centers as defined in section 245.62, subdivision 2; 

    (15) government payments received by a regional treatment 
 center; 

    (16) payments received for hospice care services; 

    (17) payments received by a health care provider for 
 hearing aids and related equipment or prescription eyewear 
 delivered outside of Minnesota; 

    (18) payments received by an educational institution from 
 student tuition, student activity fees, health care service 
 fees, government appropriations, donations, or grants.  Fee for 
 service payments and payments for extended coverage are taxable; 

    (19) payments received for services provided by:  assisted 
 living programs and congregate housing programs; and 

    (20) payments received under the federal Employees Health 
 Benefits Act, United States Code, title 5, section 8909(f), as 
 amended by the Omnibus Reconciliation Act of 1990. 

    (b) Payments received by wholesale drug distributors for 
 legend drugs sold directly to veterinarians or veterinary bulk 
 purchasing organizations are excluded from the gross revenues 
 subject to the wholesale drug distributor tax under sections 
 295.50 to 295.59. 

    Subd. 2.    Deductions for staff model health plan 
 company.  In addition to the exemptions allowed under 
 subdivision 1, a staff model health plan company may deduct from 
 its gross revenues for the year: 

    (1) amounts paid to hospitals, surgical centers, and health 
 care providers that are not employees of the staff model health 
 plan company for services on which liability for the tax is 
 imposed under section 295.52; 

    (2) net amounts added to reserves, to the extent that the 
 amounts added do not cause total reserves to exceed 200 percent 
 of the statutory net worth requirement, the calculation of which 
 may be determined on a consolidated basis, taking into account 
 the amounts held in reserve by affiliated staff model health 
 plan companies; 

    (3) assessments for the comprehensive health insurance plan 
 under section 62E.11; and 

    (4) amounts spent for administration as reported as total 
 administration to the department of health in the statement of 
 revenues, expenses, and net worth pursuant to section 62D.08, 
 subdivision 3, clause (a). 

    Subd. 3.    Separate statement of tax.  A hospital, 
 surgical center, or health care provider must not state the tax 
 obligation under section 295.52 in a deceptive or misleading 
 manner.  It must not separately state tax obligations on bills 
 provided to patients, consumers, or other payers when the amount 
 received for the services or goods is not subject to tax.  

    Pharmacies that separately state the tax obligations on 
 bills provided to consumers or to other payers who purchase 
 legend drugs may state the tax obligation as the wholesale price 
 of the legend drugs multiplied by the tax percentage specified 
 in section 295.52.  Pharmacies must not state the tax obligation 
 based on the retail price.  

    Whenever the commissioner determines that a person has 
 engaged in any act or practice constituting a violation of this 
 subdivision, the commissioner may bring an action in the name of 
 the state in the district court of the appropriate county to 
 enjoin the act or practice and to enforce compliance with this 
 subdivision, or the commissioner may refer the matter to the 
 attorney general or the county attorney of the appropriate 
 county.  Upon a proper showing, a permanent or temporary 
 injunction, restraining order, or other appropriate relief must 
 be granted.  

    Subd. 4.  Expired 

    Subd. 4a.    Credit for research.  (a) In addition to 
 the exemptions allowed under subdivision 1, a hospital or health 
 care provider may claim an annual credit against the total 
 amount of tax, if any, the hospital or health care provider owes 
 for that calendar year under sections 295.50 to 295.57.  The 
 credit shall equal 2.5 percent of revenues for patient services 
 used to fund expenditures for qualifying research conducted by 
 an allowable research program.  The amount of the credit shall 
 not exceed the tax liability of the hospital or health care 
 provider under sections 295.50 to 295.57. 

    (b) For purposes of this subdivision, the following 
 requirements apply: 

    (1) expenditures must be for program costs of qualifying 
 research conducted by an allowable research program; 

    (2) an allowable research program must be a formal program 
 of medical and health care research conducted by an entity which 
 is exempt under section 501(c)(3) of the Internal Revenue Code 
 of 1986 or is owned and operated under authority of a 
 governmental unit; 

    (3) qualifying research must:  

    (A) be approved in writing by the governing body of the 
 hospital or health care provider which is taking the deduction 
 under this subdivision; 

    (B) have as its purpose the development of new knowledge in 
 basic or applied science relating to the diagnosis and treatment 
 of conditions affecting the human body; 

    (C) be subject to review by individuals with expertise in 
 the subject matter of the proposed study but who have no 
 financial interest in the proposed study and are not involved in 
 the conduct of the proposed study; and 

    (D) be subject to review and supervision by an 
 institutional review board operating in conformity with federal 
 regulations if the research involves human subjects or an 
 institutional animal care and use committee operating in 
 conformity with federal regulations if the research involves 
 animal subjects.  Research expenses are not exempt if the study 
 is a routine evaluation of health care methods or products used 
 in a particular setting conducted for the purpose of making a 
 management decision.  Costs of clinical research activities paid 
 directly for the benefit of an individual patient are excluded 
 from this exemption.  Basic research in fields including 
 biochemistry, molecular biology, and physiology are also 
 included if such programs are subject to a peer review process. 

    (c) No credit shall be allowed under this subdivision for 
 any revenue received by the hospital or health care provider in 
 the form of a grant, gift, or otherwise, whether from a 
 government or nongovernment source, on which the tax liability 
 under section 295.52 is not imposed. 

    (d) The taxpayer shall apply for the credit under this 
 section on the annual return under section 295.55, subdivision 5.

    (e) Beginning September 1, 2001, if the actual or estimated 
 amount paid under this section for the calendar year exceeds 
 $2,500,000, the commissioner of finance shall determine the rate 
 of the research credit for the following calendar year to the 
 nearest one-half percent so that refunds paid under this section 
 will most closely equal $2,500,000.  The commissioner of finance 
 shall publish in the State Register by October 1 of each year 
 the rate of the credit for the following calendar year.  A 
 determination under this section is not subject to the 
 rulemaking provisions of chapter 14. 

    Subd. 5. Repealed, 1997 c 225 art 3 s 23 

    HIST: 1992 c 549 art 9 s 8; 1993 c 345 art 13 s 14-17; 1Sp1993 
 c 6 s 26,27; 1994 c 625 art 13 s 11-13; 1995 c 234 art 9 s 7-9; 
 1995 c 264 art 14 s 2; art 18 s 3,4; 1996 c 471 art 6 s 7,8; 
 1997 c 31 art 4 s 8-10; 1997 c 84 art 4 s 4; 1997 c 225 art 3 s 
 14-17,23; 1997 c 251 s 28; 1998 c 300 art 3 s 8; 1999 c 243 art 
 8 s 3; 2000 c 490 art 9 s 3 

     295.54 Credit for taxes paid. 

    Subdivision 1.    Taxes paid to another state.  A 
 hospital, surgical center, or health care provider that has paid 
 taxes to another jurisdiction measured by gross revenues and is 
 subject to tax under sections 295.52 to 295.59 on the same gross 
 revenues is entitled to a credit for the tax legally due and 
 paid to another jurisdiction to the extent of the lesser of (1) 
 the tax actually paid to the other jurisdiction, or (2) the 
 amount of tax imposed by Minnesota on the gross revenues subject 
 to tax in the other taxing jurisdictions. 

    Subd. 2.    Pharmacy refund.  A pharmacy may claim an 
 annual refund against the total amount of tax, if any, the 
 pharmacy owes during that calendar year under section 295.52, 
 subdivision 2.  The refund shall equal the amount paid by the 
 pharmacy to a wholesale drug distributor subject to tax under 
 section 295.52, subdivision 3, for legend drugs delivered by the 
 pharmacy outside of Minnesota, multiplied by the tax percentage 
 specified in section 295.52.  If the amount of the refund 
 exceeds the tax liability of the pharmacy under section 295.52, 
 subdivision 1b, the commissioner shall provide the pharmacy with 
 a refund equal to the excess amount.  Each qualifying pharmacy 
 must apply for the refund on the annual return as provided under 
 section 295.55, subdivision 5.  The refund must be claimed 
 within one year of the due date of the return.  Interest on 
 refunds paid under this subdivision will begin to accrue 60 days 
 after the date a claim for refund is filed.  For purposes of 
 this subdivision, the date a claim is filed is the due date of 
 the return or the date of the actual claim for refund, whichever 
 is later.  

    Subd. 3.    Wholesale drug distributor credit.  A 
 wholesale drug distributor who has paid taxes to another state 
 or province or territory of Canada measured by gross revenues or 
 sales and is subject to tax under sections 295.52 to 295.59 on 
 the same gross revenues or sales is entitled to a credit for the 
 tax legally due and paid to another state or province or 
 territory of Canada to the extent of the lesser of (1) the tax 
 actually paid to the other state or province or territory of 
 Canada or (2) the amount of tax imposed by Minnesota on the 
 gross revenues or sales subject to tax in the other taxing 
 jurisdictions. 

    HIST: 1992 c 549 art 9 s 9; 1993 c 345 art 13 s 18; 1Sp1993 c 
 6 s 28; 1994 c 625 art 13 s 14; 1996 c 471 art 6 s 9-11; 1997 c 
 31 art 4 s 11; 1997 c 225 art 3 s 18,19,23; 1997 c 251 s 28 

     295.55 Payment of tax. 

    Subdivision 1.    Scope.  The provisions of this section 
 apply to the taxes imposed under sections 295.50 to 295.58. 

    Subd. 2.    Estimated tax; hospitals; surgical centers.  
 (a) Each hospital or surgical center must make estimated 
 payments of the taxes for the calendar year in monthly 
 installments to the commissioner within 15 days after the end of 
 the month. 

    (b) Estimated tax payments are not required of hospitals or 
 surgical centers if:  (1) the tax for the current calendar year 
 is less than $500; or (2) the tax for the previous calendar year 
 is less than $500, if the taxpayer had a tax liability and was 
 doing business the entire year; or (3) if a hospital has been 
 allowed a grant under section 144.1484, subdivision 2, for the 
 year. 

    (c) Underpayment of estimated installments bear interest at 
 the rate specified in section 270.75, from the due date of the 
 payment until paid or until the due date of the annual return 
 whichever comes first.  An underpayment of an estimated 
 installment is the difference between the amount paid and the 
 lesser of (1) 90 percent of one-twelfth of the tax for the 
 calendar year or (2) one-twelfth of the total tax for the 
 previous calendar year if the taxpayer had a tax liability and 
 was doing business the entire year. 

    Subd. 3.    Estimated tax; other taxpayers.  (a) Each 
 taxpayer, other than a hospital or surgical center, must make 
 estimated payments of the taxes for the calendar year in 
 quarterly installments to the commissioner by April 15, July 15, 
 October 15, and January 15 of the following calendar year. 

    (b) Estimated tax payments are not required if:  (1) the 
 tax for the current calendar year is less than $500; or (2) the 
 tax for the previous calendar year is less than $500, if the 
 taxpayer had a tax liability and was doing business the entire 
 year. 

    (c) Underpayment of estimated installments bear interest at 
 the rate specified in section 270.75, from the due date of the 
 payment until paid or until the due date of the annual return 
 whichever comes first.  An underpayment of an estimated 
 installment is the difference between the amount paid and the 
 lesser of (1) 90 percent of one-quarter of the tax for the 
 calendar year or (2) one-quarter of the total tax for the 
 previous calendar year if the taxpayer had a tax liability and 
 was doing business the entire year. 

    Subd. 4.    Electronic payments.  A taxpayer with an 
 aggregate tax liability of $120,000 or more during a fiscal year 
 ending June 30 must remit all liabilities by electronic means in 
 the subsequent calendar year.  

    Subd. 5.    Annual return.  The taxpayer must file an 
 annual return reconciling the estimated payments by March 15 of 
 the following calendar year. 

    Subd. 6.    Form of returns.  The estimated payments and 
 annual return must contain the information and be in the form 
 prescribed by the commissioner. 

    Subd. 7.    Extensions for filing returns.  If good 
 cause exists, the commissioner may extend the time for filing 
 MinnesotaCare tax returns for not more than 60 days. 

    HIST: 1992 c 549 art 9 s 10; 1993 c 345 art 13 s 19; 1994 c 
 625 art 13 s 15,16; 1995 c 234 art 9 s 10; 1995 c 264 art 18 s 
 5; 1997 c 84 art 4 s 5; 1997 c 225 art 3 s 20,23; 1997 c 251 s 
 28; 1999 c 243 art 8 s 4,5; 1Sp2001 c 5 art 17 s 14 

     295.56 Transfer of accounts receivable. 

    When a hospital or health care provider transfers, assigns, 
 or sells accounts receivable to another person who is subject to 
 tax under this chapter, liability for the tax on the accounts 
 receivable is imposed on the transferee, assignee, or buyer of 
 the accounts receivable.  No liability for these accounts 
 receivable is imposed on the transferor, assignor, or seller of 
 the accounts receivable.  

    HIST: 1995 c 234 art 9 s 11 

     295.57 Collection and enforcement; refunds; rulemaking; 
  application of other chapters; access to records; interest on 
  overpayments. 

    Subdivision 1.    Application of other chapters.  Unless 
 specifically provided otherwise by sections 295.50 to 295.59, 
 the enforcement, interest, appeal, criminal penalties, and 
 refunds provisions in chapter 289A, civil penalty provisions 
 applicable to withholding and sales taxes under section 289A.60, 
 and collection and rulemaking provisions under chapter 270, 
 apply to taxes imposed under sections 295.50 to 295.59. 

    Subd. 2.    Access to records.  For purposes of 
 administering the taxes imposed by sections 295.50 to 295.59, 
 the commissioner may access patients' records that contain 
 billing or other financial information without prior consent 
 from the patients.  The data collected is classified as private 
 or nonpublic data. 

    Subd. 3.    Interest on overpayments.  Interest must be 
 paid on an overpayment refunded or credited to the taxpayer from 
 the date of payment of the tax until the date the refund is paid 
 or credited.  For purposes of this subdivision, the date of 
 payment is the due date of the return or the date of actual 
 payment of the tax, whichever is later. 

    Subd. 4.    Sampling techniques.  The commissioner may 
 use statistical or other sampling techniques consistent with 
 generally accepted auditing standards in examining returns or 
 records and making assessments. 

    HIST: 1992 c 549 art 9 s 11; 1993 c 345 art 13 s 20; 1995 c 
 234 art 9 s 12; 1995 c 264 art 18 s 6; 1999 c 243 art 8 s 6; 
 1Sp2001 c 5 art 14 s 7 

     295.58 Deposit of revenues and payment of refunds. 

    The commissioner shall deposit all revenues, including 
 penalties and interest, derived from the taxes imposed by 
 sections 295.50 to 295.57 and from the insurance premiums tax 
 imposed by section 297I.05, subdivision 5, on health maintenance 
 organizations, community integrated service networks, and 
 nonprofit health service plan corporations in the health care 
 access fund.  There is annually appropriated from the health 
 care access fund to the commissioner of revenue the amount 
 necessary to make refunds under this chapter. 

    HIST: 1992 c 549 art 9 s 12; 1993 c 345 art 13 s 21; 1994 c 
 625 art 13 s 17; 1997 c 225 art 2 s 62; 2000 c 394 art 2 s 26; 
 2000 c 490 art 9 s 4 

     295.581 Prohibition on non-MinnesotaCare transfers from 
  fund. 

    Notwithstanding any law to the contrary, and 
 notwithstanding section 645.33, money in the health care access 
 fund shall be appropriated only for purposes that are consistent 
 with past and current MinnesotaCare appropriations in Laws 1992, 
 chapter 549; Laws 1993, chapter 345; Laws 1994, chapter 625; and 
 Laws 1995, chapter 234, or for initiatives that are part of the 
 section 1115 of the Social Security Act health care reform 
 waiver submitted to the federal health care financing 
 administration by the commissioner of human services as 
 appropriated in Laws 1995, chapter 234. 

    HIST: 1995 c 234 art 9 s 13 

     295.582 Authority. 

    (a) A hospital, surgical center, or health care provider 
 that is subject to a tax under section 295.52, or a pharmacy 
 that has paid additional expense transferred under this section 
 by a wholesale drug distributor, may transfer additional expense 
 generated by section 295.52 obligations on to all third-party 
 contracts for the purchase of health care services on behalf of 
 a patient or consumer.  The additional expense transferred to 
 the third-party purchaser must not exceed the tax percentage 
 specified in section 295.52 multiplied against the gross 
 revenues received under the third-party contract, and the tax 
 percentage specified in section 295.52 multiplied against 
 copayments and deductibles paid by the individual patient or 
 consumer.  The expense must not be generated on revenues derived 
 from payments that are excluded from the tax under section 
 295.53.  All third-party purchasers of health care services 
 including, but not limited to, third-party purchasers regulated 
 under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, 
 or 79A, or under section 471.61 or 471.617, must pay the 
 transferred expense in addition to any payments due under 
 existing contracts with the hospital, surgical center, pharmacy, 
 or health care provider, to the extent allowed under federal 
 law.  A third-party purchaser of health care services includes, 
 but is not limited to, a health carrier or community integrated 
 service network that pays for health care services on behalf of 
 patients or that reimburses, indemnifies, compensates, or 
 otherwise insures patients for health care services.  A 
 third-party purchaser shall comply with this section regardless 
 of whether the third-party purchaser is a for-profit, 
 not-for-profit, or nonprofit entity.  A wholesale drug 
 distributor may transfer additional expense generated by section 
 295.52 obligations to entities that purchase from the 
 wholesaler, and the entities must pay the additional expense.  
 Nothing in this section limits the ability of a hospital, 
 surgical center, pharmacy, wholesale drug distributor, or health 
 care provider to recover all or part of the section 295.52 
 obligation by other methods, including increasing fees or 
 charges. 

    (b) Each third-party purchaser regulated under any chapter 
 cited in paragraph (a) shall include with its annual renewal for 
 certification of authority or licensure documentation indicating 
 compliance with paragraph (a).  

    (c) Any hospital, surgical center, or health care provider 
 subject to a tax under section 295.52 or a pharmacy that has 
 paid additional expense transferred under this section by a 
 wholesale drug distributor may file a complaint with the 
 commissioner responsible for regulating the third-party 
 purchaser if at any time the third-party purchaser fails to 
 comply with paragraph (a).  

    (d) If the commissioner responsible for regulating the 
 third-party purchaser finds at any time that the third-party 
 purchaser has not complied with paragraph (a), the commissioner 
 may take enforcement action against a third-party purchaser 
 which is subject to the commissioner's regulatory jurisdiction 
 and which does not allow a hospital, surgical center, pharmacy, 
 or provider to pass-through the tax.  The commissioner may by 
 order fine or censure the third-party purchaser or revoke or 
 suspend the certificate of authority or license of the 
 third-party purchaser to do business in this state if the 
 commissioner finds that the third-party purchaser has not 
 complied with this section.  The third-party purchaser may 
 appeal the commissioner's order through a contested case hearing 
 in accordance with chapter 14. 

    HIST: 1993 c 345 art 13 s 22; 1Sp1993 c 6 s 29; 1994 c 625 art 
 13 s 18; 1995 c 234 art 9 s 14; 1997 c 31 art 4 s 12; 1997 c 225 
 art 3 s 21,23; 1997 c 251 s 28 

     295.59 Severability. 

    If any section, subdivision, clause, or phrase of sections 
 295.50 to 295.582 is for any reason held to be unconstitutional 
 or in violation of federal law, the decision shall not affect 
 the validity of the remaining portions of sections 295.50 to 
 295.582.  The legislature declares that it would have passed 
 sections 295.50 to 295.582 and each section, subdivision, 
 sentence, clause, and phrase thereof, irrespective of the fact 
 that any one or more sections, subdivisions, sentences, clauses, 
 or phrases is declared unconstitutional. 

    HIST: 1992 c 549 art 9 s 13; 1993 c 345 art 13 s 23 

     295.60 Special fur clothing tax. 

    Subdivision 1.    Imposition.  If clothing made of fur 
 is not subject to the sales tax under chapter 297A, a tax is 
 imposed on each furrier equal to 6.5 percent of gross revenues 
 from retail sales in Minnesota of clothing made from fur. 

    Subd. 2.    Definitions.  (a) For purposes of this 
 section, the following terms have the meanings given. 

    (b) "Commissioner" means the commissioner of revenue. 

    (c) "Furrier" means a retailer that sells clothing made of 
 fur. 

    (d) "Clothing made of fur" means articles of clothing made 
 of fur on the hide or pelt, and articles of clothing of which 
 such fur is the component material of chief value, but only if 
 such value is more than three times the value of the next most 
 valuable material.  

    (e) "Retail sale" has the meaning given in section 297A.61, 
 subdivision 4. 

    Subd. 3.    Payment.  (a) Each furrier shall make 
 estimated payments of the taxes for the calendar year in 
 quarterly installments to the commissioner by April 15, July 15, 
 October 15, and January 15 of the following calendar year. 

    (b) Estimated tax payments are not required if: 

    (1) the tax for the current calendar year is less than 
 $500; or 

    (2) the tax for the previous calendar year is less than 
 $500, if the taxpayer had a tax liability and was doing business 
 the entire year. 

    (c) Underpayment of estimated installments bear interest at 
 the rate specified in section 270.75, from the due date of the 
 payment until paid or until the due date of the annual return, 
 whichever comes first.  An underpayment of an estimated 
 installment is the difference between the amount paid and the 
 lesser of (1) 90 percent of one-quarter of the tax for the 
 calendar year, or (2) one-quarter of the total tax for the 
 previous calendar year if the taxpayer had a tax liability and 
 was doing business the entire year. 

    Subd. 4.    Electronic funds transfer payments.  A 
 taxpayer with an aggregate tax liability of $120,000 or more 
 during a fiscal year ending June 30 must remit all liabilities 
 by electronic means. 

    Subd. 5.    Annual return.  The taxpayer must file an 
 annual return reconciling the estimated payments by March 15 of 
 the following calendar year. 

    Subd. 6.    Form of returns.  The estimated payments and 
 annual return must contain the information and be in the form 
 prescribed by the commissioner. 

    Subd. 7.    Application of other chapters.  Unless 
 specifically provided otherwise by this section, the 
 enforcement, interest, and penalty provisions under chapter 294, 
 appeal provisions in sections 289A.43 and 289A.65, criminal 
 penalties in section 289A.63, refunds provisions in section 
 289A.50, and collection and rulemaking provisions under chapter 
 270, apply to a liability for the taxes imposed under this 
 section. 

    Subd. 8.    Interest on overpayments.  Interest must be 
 paid on an overpayment refunded or credited to the taxpayer from 
 the date of payment of the tax until the date the refund is paid 
 or credited.  For purposes of this subdivision, the date of 
 payment is the due date of the return or the date of actual 
 payment of the tax, whichever is later. 

    Subd. 9.    Deposit of revenues.  The commissioner shall 
 deposit all revenues, including penalties and interest, derived 
 from the tax imposed by this section in the general fund. 

    HIST: 1Sp2001 c 5 art 12 s 4