2003 Minnesota Statutes

CHAPTER 297A. General sales and use taxes

    297A.01 Subdivision 1. Repealed, 2000 c 418 art 1 s 
 45 

    Subd. 2. Repealed, 2000 c 418 art 1 s 45 

    Subd. 3. Repealed, 2000 c 418 art 1 s 45 

    Subd. 4. Repealed, 2000 c 418 art 1 s 45 

    Subd. 5. Repealed, 2000 c 418 art 1 s 45 

    Subd. 6. Repealed, 2000 c 418 art 1 s 45 

    Subd. 7. Repealed, 2000 c 418 art 1 s 45 

    Subd. 8. Repealed, 2000 c 418 art 1 s 45 

    Subd. 9. Repealed, 2000 c 418 art 1 s 45 

    Subd. 10. Repealed, 2000 c 418 art 1 s 45 

    Subd. 11. Repealed, 2000 c 418 art 1 s 45 

    Subd. 12. Repealed, 2000 c 418 art 1 s 45 

    Subd. 13. Repealed, 2000 c 418 art 1 s 45 

    Subd. 14. Repealed, 2000 c 418 art 1 s 45 

    Subd. 15. Repealed, 2000 c 418 art 1 s 45 

    Subd. 16. Repealed, 2000 c 418 art 1 s 45 

    Subd. 17. Repealed, 2000 c 418 art 1 s 45 

    Subd. 18. Repealed, 2000 c 418 art 1 s 45 

    Subd. 19. Repealed, 2000 c 418 art 1 s 45 

    Subd. 20. Repealed, 1997 c 231 art 7 s 46 

    Subd. 21. Repealed, 1997 c 231 art 13 s 20 

    Subd. 22. Repealed, 2000 c 418 art 1 s 45 

*   NOTE:  The amendment to subdivision 5 by Laws 2001, First 
*Special Session chapter 5, article 12, section 5, was recodified 
*in section 297A.61, subdivision 5.  Laws 2001, First Special 
*Session chapter 5, article 12, section 5, instruction to revisor.

    297A.02 Subdivision 1. Repealed, 2000 c 418 art 1 s 
 45 

    Subd. 2. Repealed, 1998 c 389 art 8 s 47 

    Subd. 3. Repealed, 2000 c 418 art 1 s 45 

    Subd. 4. Repealed, 2000 c 418 art 1 s 45 

    Subd. 5. Repealed, 1997 c 231 art 7 s 46 

  297A.021 Repealed, 1994 c 587 art 2 s 22 

  297A.022 Repealed, 2000 c 418 art 1 s 45 

  297A.023 Repealed, 2000 c 418 art 1 s 45 

  297A.03 Repealed, 2000 c 418 art 1 s 45 

  297A.04 Repealed, 2000 c 418 art 1 s 45 

  297A.041 Repealed, 2000 c 418 art 1 s 45 

  297A.05 Repealed, 1983 c 301 s 235; 1983 c 327 s 16 

  297A.06 Repealed, 2000 c 418 art 1 s 45 

  297A.065 Repealed, 2000 c 418 art 1 s 45 

    297A.07 Subdivision 1.  Repealed, 2000 c 418 art 1 s 
 45 

    Subd. 2. Repealed, 1994 c 510 art 3 s 13 

    Subd. 3. Repealed, 2000 c 418 art 1 s 45 

*   NOTE:  The amendment to subdivision 3 by Laws 2001, First 
*Special Session chapter 5, article 7, section 50, was recodified 
*in section 297A.86, subdivision 2.  Laws 2001, First Special 
*Session chapter 5, article 7, section 50, instruction to revisor.

  297A.08 Repealed, 1990 c 480 art 1 s 45 

  297A.09 Repealed, 2000 c 418 art 1 s 45 

  297A.10 Repealed, 2000 c 418 art 1 s 45 

  297A.11 Repealed, 2000 c 418 art 1 s 45 

  297A.12 Repealed, 2000 c 418 art 1 s 45 

  297A.121 Repealed, 1990 c 480 art 1 s 45 

  297A.13 Repealed, 2000 c 418 art 1 s 45 

  297A.135 Repealed, 2000 c 418 art 1 s 45 

  297A.136 Repealed, 1995 c 264 art 2 s 43 

    297A.14 Subdivision 1. Repealed, 2000 c 418 art 1 s 
 45 

    Subd. 2. Repealed, 2000 c 418 art 1 s 45 

    Subd. 3. Repealed, 1996 c 471 art 9 s 16 

    Subd. 4. Repealed, 2000 c 418 art 1 s 45 

  297A.141 Repealed, 2000 c 418 art 1 s 45 

    297A.15 Subdivision 1. Repealed, 2000 c 418 art 1 s 
 45 

    Subd. 2. Repealed, 1988 c 719 art 10 s 20 

    Subd. 3. Repealed, 1990 c 480 art 1 s 45 

    Subd. 4. Repealed, 2000 c 418 art 1 s 45 

    Subd. 5. Repealed, 2000 c 418 art 1 s 45 

    Subd. 6. Repealed, 2000 c 418 art 1 s 45 

    Subd. 7. Repealed, 2000 c 418 art 1 s 45 

    Subd. 8. Repealed, 2000 c 418 art 1 s 45 

  297A.151 Renumbered 270.73 

  297A.16 Repealed, 2000 c 418 art 1 s 45 

  297A.17 Repealed, 2000 c 418 art 1 s 45 

  297A.18 Repealed, 2000 c 418 art 1 s 45 

  297A.19 Repealed, 1989 c 277 art 1 s 35 

  297A.20 Repealed, 1990 c 480 art 1 s 45 

  297A.21 Repealed, 2000 c 418 art 1 s 45 

  297A.211 Repealed, 2000 c 418 art 1 s 45 

  297A.212 Repealed, 1995 c 264 art 12 s 5 

  297A.213 Repealed, 2000 c 418 art 1 s 45 

  297A.22 Repealed, 2000 c 418 art 1 s 45 

  297A.23 Repealed, 2000 c 418 art 1 s 45 

    297A.24 Subdivision 1. Repealed, 2000 c 418 art 1 s 
 45 

    Subd. 2. Repealed, 1996 c 471 art 9 s 16 

    Subd. 3. Repealed, 2000 c 418 art 1 s 45 

    297A.25 Subdivision 1. Repealed, 2000 c 418 art 1 s 
 45 

    Subd. 2. Repealed, 2000 c 418 art 1 s 45 

    Subd. 3. Repealed, 2000 c 418 art 1 s 45 

    Subd. 4. Repealed, 2000 c 418 art 1 s 45 

    Subd. 5. Repealed, 2000 c 418 art 1 s 45 

    Subd. 6. Repealed, 2000 c 418 art 1 s 45 

    Subd. 7. Repealed, 2000 c 418 art 1 s 45 

    Subd. 8. Repealed, 2000 c 418 art 1 s 45 

    Subd. 9. Repealed, 2000 c 418 art 1 s 45 

    Subd. 10. Repealed, 2000 c 418 art 1 s 45 

    Subd. 11. Repealed, 2000 c 418 art 1 s 45 

    Subd. 12. Repealed, 2000 c 418 art 1 s 45 

    Subd. 13. Repealed, 1987 c 268 art 4 s 25 

    Subd. 14. Repealed, 2000 c 418 art 1 s 45 

    Subd. 15. Repealed, 2000 c 418 art 1 s 45 

    Subd. 16. Repealed, 2000 c 418 art 1 s 45 

    Subd. 17. Repealed, 2000 c 418 art 1 s 45 

    Subd. 18. Repealed, 2000 c 418 art 1 s 45 

    Subd. 19. Repealed, 2000 c 418 art 1 s 45 

    Subd. 20. Repealed, 2000 c 418 art 1 s 45 

    Subd. 21. Repealed, 2000 c 418 art 1 s 45 

    Subd. 22. Repealed, 2000 c 418 art 1 s 45 

    Subd. 23. Repealed, 2000 c 418 art 1 s 45 

    Subd. 24. Repealed, 2000 c 418 art 1 s 45 

    Subd. 25. Repealed, 2000 c 418 art 1 s 45 

    Subd. 26. Repealed, 2000 c 418 art 1 s 45 

    Subd. 27. Repealed, 2000 c 418 art 1 s 45 

    Subd. 28. Repealed, 2000 c 418 art 1 s 45 

    Subd. 29. Repealed, 2000 c 418 art 1 s 45 

    Subd. 30. Repealed, 2000 c 418 art 1 s 45 

    Subd. 31. Repealed, 2000 c 418 art 1 s 45 

    Subd. 32. Repealed, 2000 c 418 art 1 s 45 

    Subd. 33. Repealed, 2000 c 418 art 1 s 45 

    Subd. 34. Repealed, 2000 c 418 art 1 s 45 

    Subd. 35. Repealed, 2000 c 418 art 1 s 45 

    Subd. 36. Repealed, 2000 c 418 art 1 s 45 

    Subd. 37. Repealed, 2000 c 418 art 1 s 45 

    Subd. 38. Repealed, 2000 c 418 art 1 s 45 

    Subd. 39. Repealed, 2000 c 418 art 1 s 45 

    Subd. 40. Repealed, 2000 c 418 art 1 s 45 

    Subd. 41. Repealed, 2000 c 418 art 1 s 45 

    Subd. 42. Repealed, 2000 c 418 art 1 s 45 

    Subd. 43. Repealed, 2000 c 418 art 1 s 45 

    Subd. 44. Repealed, 2000 c 418 art 1 s 45 

    Subd. 45. Repealed, 2000 c 418 art 1 s 45 

    Subd. 46. Repealed, 2000 c 418 art 1 s 45 

    Subd. 47. Expired 

    Subd. 48. Expired 

    Subd. 49. Repealed, 2000 c 418 art 1 s 45 

    Subd. 50. Repealed, 1995 c 186 s 60 

    Subd. 51. Repealed, 2000 c 418 art 1 s 45 

    Subd. 52. Repealed, 2000 c 418 art 1 s 45 

    Subd. 53. Repealed, 2000 c 418 art 1 s 45 

    Subd. 54. Repealed, 2000 c 418 art 1 s 45 

    Subd. 55. Repealed, 2000 c 418 art 1 s 45 

    Subd. 56. Repealed, 2000 c 418 art 1 s 45 

    Subd. 57. Repealed, 2000 c 418 art 1 s 45 

    Subd. 58. Repealed, 2000 c 418 art 1 s 45 

    Subd. 59. Repealed, 2000 c 418 art 1 s 45 

    Subd. 60. Repealed, 2000 c 418 art 1 s 45 

    Subd. 61. Expired 

    Subd. 62. Repealed, 2000 c 418 art 1 s 45 

    Subd. 63. Repealed, 2000 c 418 art 1 s 45 

    Subd. 64. Repealed, 2000 c 418 art 1 s 45 

    Subd. 65. Repealed, 2000 c 418 art 1 s 45 

    Subd. 66. Repealed, 2000 c 418 art 1 s 45 

    Subd. 67. Repealed, 2000 c 418 art 1 s 45 

    Subd. 68. Repealed, 2000 c 418 art 1 s 45 

    Subd. 69. Repealed, 2000 c 418 art 1 s 45 

    Subd. 70. Repealed, 2000 c 418 art 1 s 45 

    Subd. 71. Expired 

    Subd. 72. Repealed, 2000 c 418 art 1 s 45 

    Subd. 73. Repealed, 2000 c 418 art 1 s 45 

    Subd. 74. Repealed, 2000 c 418 art 1 s 45 

    Subd. 75. Repealed, 2000 c 418 art 1 s 45 

    Subd. 76. Repealed, 2000 c 418 art 1 s 45 

    Subd. 77. Repealed, 2000 c 418 art 1 s 45 

    Subd. 78. Repealed, 2000 c 418 art 1 s 45 

    Subd. 79. Repealed, 2000 c 418 art 1 s 45 

    Subd. 80. Repealed, 2000 c 418 art 1 s 45 

    Subd. 81. Repealed, 2000 c 418 art 1 s 45 

    Subd. 82. Repealed, 2000 c 418 art 1 s 45 

    Subd. 83. Repealed, 2000 c 418 art 1 s 45 

    Subd. 84. Repealed, 2000 c 418 art 1 s 45 

    Subd. 85. Repealed, 2000 c 418 art 1 s 45 

    Subd. 86. Repealed, 2000 c 418 art 1 s 45 

    Subd. 87. Expired 

    Subd. 88. Repealed, 2000 c 418 art 1 s 45 

    Subd. 89. Repealed, 2000 c 418 art 1 s 45 

    Subd. 90. Repealed, 2000 c 418 art 1 s 45 

*   NOTE:  The amendments to subdivisions 3, 11, and 28, by 
*Laws 2001, First Special Session chapter 5, article 7, sections 
*51 and 52, and article 12, section 6, were recodified in 
*sections 297A.67, subdivision 7, 297A.70, subdivision 2, and 
*297A.68, subdivision 24, respectively.  Laws 2001, First Special 
*Session chapter 5, article 7, sections 51 and 52, and article 
*12, section 6, instructions to revisor.

  297A.251 Repealed, 1983 c 327 s 16 

  297A.252 Repealed, 1973 c 650 art 13 s 3 

  297A.253 Repealed, 1989 c 277 art 1 s 35 

  297A.2531 Repealed, 2000 c 418 art 1 s 45 

  297A.254 Repealed, 1987 c 268 art 8 s 8 

  297A.2545 Repealed, 2000 c 418 art 1 s 45 

  297A.255 Repealed, 2000 c 418 art 1 s 45 

  297A.256 Repealed, 2000 c 418 art 1 s 45 

  297A.257 Repealed, 1991 c 291 art 8 s 30 

  297A.2571 Repealed, 2000 c 418 art 1 s 45 

  297A.2572 Repealed, 2000 c 418 art 1 s 45 

  297A.2573 Repealed, 2000 c 418 art 1 s 45 

  297A.258 Repealed, 1993 c 375 art 1 s 7 

  297A.259 Repealed, 2000 c 418 art 1 s 45 

    297A.26 Subdivision 1. Repealed, 1990 c 480 art 1 s 
 45 

    Subd. 2. Repealed, 2000 c 418 art 1 s 45 

    Subd. 3. Repealed, 1987 c 268 art 17 s 42 

    Subd. 4. Repealed, 1990 c 480 art 1 s 45 

  297A.27 Repealed, 1990 c 480 art 1 s 45 

  297A.275 Repealed, 1990 c 480 art 1 s 45 

  297A.28 Repealed, 2000 c 418 art 1 s 45 

  297A.29 Repealed, 1990 c 480 art 2 s 18 

  297A.30 Repealed, 1990 c 480 art 1 s 45 

  297A.31 Repealed, 1990 c 480 art 1 s 45 

  297A.32 Repealed, 1990 c 480 art 1 s 45 

    297A.33 Subdivision 1. Repealed, 1990 c 480 art 1 s 
 45 

    Subd. 2. Repealed, 2000 c 418 art 1 s 45 

    Subd. 3. Repealed, 1990 c 480 art 1 s 45 

    Subd. 4. Repealed, 1990 c 480 art 1 s 45 

    Subd. 5. Repealed, 1990 c 480 art 1 s 45 

    Subd. 6. Repealed, 1982 c 523 art 2 s 49 

  297A.34 Repealed, 1990 c 480 art 1 s 45 

  297A.35 Repealed, 1990 c 480 art 1 s 45 

  297A.36 Repealed, 1982 c 523 art 2 s 49 

  297A.37 Repealed, 1990 c 480 art 2 s 18 

  297A.38 Repealed, 1995 c 264 art 13 s 23 

    297A.39 Subdivision 1. Repealed, 1990 c 480 art 1 
 s 45 

    Subd. 2. Repealed, 1990 c 480 art 1 s 45 

    Subd. 2a. Repealed, 1990 c 480 art 1 s 45 

    Subd. 3. Repealed, 1990 c 480 art 1 s 45 

    Subd. 4. Repealed, 1990 c 480 art 1 s 45 

    Subd. 5. Repealed, 1990 c 480 art 2 s 18 

    Subd. 6. Repealed, 1982 c 523 art 2 s 49 

    Subd. 7. Repealed, 1990 c 480 art 1 s 45 

    Subd. 8. Repealed, 1990 c 480 art 1 s 45 

    Subd. 9. Repealed, 1991 c 291 art 16 s 12 

  297A.391 Repealed, 1987 c 268 art 14 s 25 

  297A.40 Repealed, 1990 c 480 art 1 s 45 

  297A.41 Repealed, 1990 c 480 art 1 s 45 

  297A.42 Repealed, 1990 c 480 art 1 s 45 

  297A.43 Repealed, 1989 c 184 art 1 s 20 

  297A.431 Repealed, 1990 c 480 art 10 s 12 

    297A.44 Subdivision 1. Repealed, 2000 c 418 art 1 s 
 45 

    Subd. 2. Repealed, 1990 c 480 art 1 s 45 

    Subd. 3. Repealed, 1969 c 399 s 51 

    Subd. 4. Repealed, 1994 c 587 art 2 s 22 

  297A.45 Repealed, 1997 c 231 art 13 s 20 

  297A.46 Repealed, 2000 c 418 art 1 s 45 

  297A.47 Repealed, 2000 c 418 art 1 s 45 

  297A.48 Repealed, 2000 c 418 art 1 s 45 

  297A.51 Repealed, Ex1971 c 31 art 31 s 1 

  297A.52 Repealed, Ex1971 c 31 art 31 s 1 

  297A.53 Repealed, Ex1971 c 31 art 31 s 1 

  297A.54 Repealed, Ex1971 c 31 art 31 s 1 

  297A.55 Repealed, Ex1971 c 31 art 31 s 1 

  297A.56 Repealed, Ex1971 c 31 art 31 s 1 

  297A.57 Repealed, Ex1971 c 31 art 31 s 1 

  297A.58 Repealed, Ex1971 c 31 art 31 s 1 

  297A.59 Repealed, Ex1971 c 31 art 31 s 1 

  297A.60 Repealed, Ex1971 c 31 art 31 s 1 

DEFINITIONS

     297A.61 Definitions. 

    Subdivision 1.    Applicability.  The following words, 
 terms, and phrases when used in this chapter have the meanings 
 given them in this section, unless the context clearly indicates 
 a different meaning. 

    Subd. 2.    Person.  (a) "Person" includes any 
 individual or group and any combination of individuals, groups, 
 or individuals and groups acting as a unit.  

    (b) 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, estate, trust, business 
 trust, receiver, trustee, syndicate, the United States, and a 
 state and its political subdivisions.  

    (c) 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. 

    (d) Person includes any agent or consignee of any 
 individual or organization listed 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: 

    (1) any transfer of title or possession, or both, of 
 tangible personal property, whether absolutely or conditionally, 
 for a consideration in money or by exchange or barter; and 

    (2) the leasing of or the granting of a license to use or 
 consume, for a consideration in money or by exchange or barter, 
 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 preparing for a 
 consideration of food.  Notwithstanding section 297A.67, 
 subdivision 2, taxable food includes, but is not limited to, the 
 following: 

    (1) prepared food sold by the retailer; 

    (2) soft drinks; 

    (3) candy; and 

    (4) all food sold through vending machines. 

    (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. 

    (f) A sale and a purchase includes the transfer for a 
 consideration of prewritten computer software whether delivered 
 electronically, by load and leave, or otherwise.  

    (g) A sale and a purchase includes the furnishing for a 
 consideration of the following services: 

    (1) 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; 

    (2) 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 of it for a continuous period of 30 days or more; 

    (3) nonresidential parking services, whether on a 
 contractual, hourly, or other periodic basis, except for parking 
 at a meter; 

    (4) the granting of membership in a club, association, or 
 other organization if: 

    (i) 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 

    (ii) 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 onetime 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; 

    (5) delivery of aggregate materials and concrete block by a 
 third party if the delivery would be subject to the sales tax if 
 provided by the seller of the aggregate material or concrete 
 block; and 

    (6) services as provided in this clause: 

    (i) 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; 

    (ii) 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; 

    (iii) building and residential cleaning, maintenance, and 
 disinfecting and exterminating services; 

    (iv) 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; 

    (v) pet grooming services; 

    (vi) 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; 

    (vii) 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 

    (viii) the furnishing of lodging, board, and care services 
 for animals in kennels and other similar arrangements, but 
 excluding veterinary and horse boarding services. 

    In applying the provisions of this chapter, the terms 
 "tangible personal property" and "sales at retail" include 
 taxable services listed in clause (6), items (i) to (vi) and 
 (viii), and the provision of these 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 the preceding sentence, "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. 

    (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. 

    (i) A sale and a purchase includes the furnishing for a 
 consideration of telecommunications services, including cable 
 television services and direct satellite services.  
 Telecommunications services are taxed to the extent allowed 
 under federal law.  

    (j) A sale and a purchase includes the furnishing for a 
 consideration of installation if the installation charges would 
 be subject to the sales tax if the installation were provided by 
 the seller of the item being installed. 

    (k) A sale and a purchase includes the rental of a vehicle 
 by a motor vehicle dealer to a customer when (1) the vehicle is 
 rented by the customer for a consideration, or (2) the motor 
 vehicle dealer is reimbursed pursuant to a service contract as 
 defined in section 65B.29, subdivision 1, clause (1). 

    Subd. 4.    Retail sale.  (a) A "retail sale" means any 
 sale, lease, or rental for any purpose other than resale, 
 sublease, or subrent.  

    (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 3, paragraph (g), clause (1), 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. 

    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 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 
 measure subject to sales tax, and means the total amount of 
 consideration, including cash, credit, personal property, and 
 services, for which personal property or services are sold, 
 leased, or rented, valued in money, whether received in money or 
 otherwise, without any deduction for the following: 

    (1) the seller's cost of the property sold; 

    (2) the cost of materials used, labor or service cost, 
 interest, losses, all costs of transportation to the seller, all 
 taxes imposed on the seller, and any other expenses of the 
 seller; 

    (3) charges by the seller for any services necessary to 
 complete the sale, other than delivery and installation charges; 

    (4) delivery charges; 

    (5) installation charges; and 

    (6) the value of exempt property given to the purchaser 
 when taxable and exempt personal property have been bundled 
 together and sold by the seller as a single product or piece of 
 merchandise. 

    (b) Sales price does not include: 

    (1) discounts, including cash, terms, or coupons, that are 
 not reimbursed by a third party and that are allowed by the 
 seller and taken by a purchaser on a sale; 

    (2) interest, financing, and carrying charges from credit 
 extended on the sale of personal property or services, if the 
 amount is separately stated on the invoice, bill of sale, or 
 similar document given to the purchaser; and 

    (3) any taxes legally imposed directly on the consumer that 
 are separately stated on the invoice, bill of sale, or similar 
 document given to the purchaser. 

    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 and seller.  "Retailer" and "seller"
 means any person making sales, leases, or rentals of personal 
 property or services. 

    Subd. 10.    Tangible personal property.  (a) "Tangible 
 personal property" means personal property that can be seen, 
 weighed, measured, felt, or touched, or that is in any other 
 manner perceptible to the senses.  "Tangible personal property" 
 includes, but is not limited to, electricity, water, gas, steam, 
 prewritten computer software, and prepaid calling cards. 

    (b) Tangible 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 agricultural 
 production including, but not limited to: 

    (1) machinery for the preparation, seeding, or cultivation 
 of soil for growing agricultural crops; 

    (2) barn cleaners, milking systems, grain dryers, feeding 
 systems including stationary feed bunks, and similar 
 installations, whether or not the equipment is installed by the 
 seller and becomes part of the real property; and 

    (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. 

    (b) Farm machinery does not include: 

    (1) repair or replacement parts; 

    (2) tools, shop equipment, grain bins, fencing material, 
 communication equipment, and other farm supplies; 

    (3) motor vehicles taxed under chapter 297B; 

    (4) snowmobiles or snow blowers; 

    (5) lawn mowers except those used in the production of sod 
 for sale, or garden-type tractors or garden tillers; or 

    (6) machinery, equipment, implements, accessories, and 
 contrivances used directly in the production of horses not 
 raised for slaughter, fur-bearing animals, or research animals. 

    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. Repealed, 2003 c 127 art 1 s 34 

    Subd. 14a.    Lease or rental.  (a) "Lease or rental" 
 means any transfer of possession or control of tangible personal 
 property for a fixed or indeterminate term for consideration.  A 
 lease or rental may include future options to purchase or extend.

    (b) Lease or rental does not include: 

    (1) a transfer of possession or control of property under a 
 security agreement or deferred payment plan that requires the 
 transfer of title upon completion of the required payments; 

    (2) a transfer of possession or control of property under 
 an agreement that requires the transfer of title upon completion 
 of required payments and payment of an option price does not 
 exceed the greater of $100 or one percent of the total required 
 payments; or 

    (3) providing tangible personal property along with an 
 operator for a fixed or indeterminate period of time.  A 
 condition of this exclusion is that the operator is necessary 
 for the equipment to perform as designed.  For the purpose of 
 this subdivision, an operator must do more than maintain, 
 inspect, or set up the tangible personal property. 

    (c) Lease or rental does include agreements covering motor 
 vehicles and trailers where the amount of consideration may be 
 increased or decreased by reference to the amount realized upon 
 sale or disposition of the property as defined in United States 
 Code, title 26, section 7701(h)(l). 

    (d) This definition must be used for sales and use tax 
 purposes regardless if a transaction is characterized as a lease 
 or rental under generally accepted accounting principles, the 
 Internal Revenue Code, chapter 336, or other provisions of 
 federal, state, or local law. 

    Subd. 15. Repealed, 2003 c 127 art 1 s 34 

    Subd. 16. Repealed, 1Sp2001 c 5 art 12 s 95 

    Subd. 17.    Prewritten computer software.  "Prewritten 
 computer software" means computer software, including prewritten 
 upgrades, that is not designed and developed by the author or 
 other creator to the specifications of a specific purchaser.  
 The combining of two or more "prewritten computer software" 
 programs or prewritten portions of the programs does not cause 
 the combination to be other than "prewritten computer 
 software."  "Prewritten computer software" includes software 
 designed and developed by the author or other creator to the 
 specifications of a specific purchaser when it is sold to a 
 person other than the purchaser.  If a person modifies or 
 enhances computer software of which the person is not the author 
 or creator, the person is deemed to be the author or creator 
 only of such person's modifications or enhancements.  
 "Prewritten computer software" or a prewritten portion of it 
 that is modified or enhanced to any degree, if the modification 
 or enhancement is designed and developed to the specifications 
 of a specific purchaser, remains "prewritten computer software"; 
 provided, however, that if there is a reasonable, separately 
 stated charge or an invoice or other statement of the price 
 given to the purchaser for such modification or enhancement, the 
 modification or enhancement does not constitute "prewritten 
 computer software."  For purposes of this subdivision: 

    (1) "computer" means an electronic device that accepts 
 information in digital or similar form and manipulates it for a 
 result based on a sequence of instructions; 

    (2) "electronic" means relating to technology having 
 electrical, digital, magnetic, wireless, optical, 
 electromagnetic, or similar capabilities; and 

    (3) "computer software" means a set of coded instructions 
 designed to cause a "computer" or automatic data processing 
 equipment to perform a task. 

    Subd. 17a.    Delivered electronically.  "Delivered 
 electronically" means delivered to the purchaser by means other 
 than tangible storage media. 

    Subd. 17b.    Load and leave.  "Load and leave" means 
 delivered to the purchaser by use of a tangible storage media 
 where the tangible storage media is not physically transferred 
 to the purchaser. 

    Subd. 18.    Handicapped.  "Handicapped" means an 
 individual who has a permanent and total disability as defined 
 in section 273.13, subdivision 22. 

    Subd. 19.    For-hire carrier.  "For-hire carrier" means 
 a person engaged in transportation for hire of tangible personal 
 property. 

    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, 2000. 

    Subd. 23.    United States Code.  Unless specifically 
 provided otherwise, "United States Code" means the United States 
 Code as amended through December 31, 2000. 

    Subd. 24.    Telecommunications services.  (a) 
 "Telecommunications services" means the transmission, 
 conveyance, or routing of voice, data, audio, video, or any 
 other information or signals to a point, or between or among 
 points, by or through any electronic, satellite, optical, 
 microwave, or other medium or method now in existence or 
 hereafter devised, regardless of the protocol used for such 
 transmission, conveyance, or routing.  

    (b) Telecommunications services includes the furnishing for 
 consideration of access to telephone services by a hotel to its 
 guests.  

    (c) Telecommunications services do not include: 

    (1) services purchased with a prepaid telephone calling 
 card; 

    (2) private communication service purchased by an agent 
 acting on behalf of the state lottery; 

    (3) information services; and 

    (4) purchases of telecommunications when the purchaser uses 
 the purchased services as a component part of or integrates such 
 service into another telecommunications service that is sold by 
 the purchaser in the normal course of business.  

    (d) For purposes of this subdivision, "information 
 services" means the offering of the capability for generating, 
 acquiring, storing, transforming, processing, retrieving, 
 utilizing, or making available information. 

    Subd. 25.    Cable television service.  "Cable 
 television service" means the transmission of video, audio, or 
 other programming service to purchasers, and the subscriber 
 interaction, if any, required for the selection or use of the 
 programming service, regardless of whether the programming is 
 transmitted over facilities owned or operated by the cable 
 service provider or over facilities owned or operated by one or 
 more dealers of communications services.  The term includes 
 point-to-multipoint distribution services by which programming 
 is transmitted or broadcast by microwave or other equipment 
 directly to the subscriber's premises.  The term includes basic, 
 extended, premium, pay-per-view, digital, and music services. 

    Subd. 26.    Private communication service.  "Private 
 communication service" means a telecommunication service that 
 entitles the customer to exclusive or priority use of a 
 communication channel or group of channels between or among 
 termination points, regardless of the manner in which the 
 channel or channels are connected, and includes switching 
 capacity, extension lines, stations, and any other associated 
 services that are provided in connection with the use of the 
 channel or channels. 

    Subd. 27.    Direct satellite service.  "Direct 
 satellite service" means programming transmitted or broadcast by 
 satellite directly to the subscriber's premises without the use 
 of ground receiving or distribution equipment, except at the 
 subscriber's premises or in the uplink process to the satellite. 

    Subd. 28.    Purchase price.  "Purchase price" means the 
 measure subject to the use tax and has the same meaning as 
 "sales price." 

    Subd. 29.    State.  Unless specifically provided 
 otherwise, "state" means any state of the United States and the 
 District of Columbia. 

    Subd. 30.    Delivery charges.  "Delivery charges" means 
 charges by the seller of personal property or services for 
 preparation and delivery to a location designated by the 
 purchaser of personal property or services including, but not 
 limited to, transportation, shipping, postage, handling, 
 crating, and packing. 

    Subd. 31.    Prepared food.  "Prepared food" means food 
 that meets either of the following conditions: 

    (1) the food is sold with eating utensils provided by the 
 seller, including plates, knives, forks, spoons, glasses, cups, 
 napkins, or straws; or 

    (2) the food is sold in a heated state or heated by the 
 seller or two or more food ingredients are mixed or combined by 
 the seller for sale as a single item, except for: 

    (i) bakery items, including, but not limited to, bread, 
 rolls, buns, biscuits, bagels, croissants, pastries, donuts, 
 danish, cakes, tortes, pies, tarts, muffins, bars, cookies, 
 tortillas; 

    (ii) ready-to-eat meat and seafood in an unheated state 
 sold by weight; 

    (iii) eggs, fish, meat, poultry, and foods containing these 
 raw animal foods requiring cooking by the consumer as 
 recommended by the Food and Drug Administration in chapter 3, 
 part 401.11 of its food code so as to prevent food borne 
 illnesses; or 

    (iv) food that is only sliced, repackaged, or pasteurized 
 by the seller. 

    Subd. 32.    Soft drinks.  "Soft drinks" means 
 nonalcoholic beverages that contain natural or artificial 
 sweeteners.  Soft drinks do not include beverages that contain 
 milk or milk products; soy, rice, or similar milk substitutes; 
 or greater than 50 percent vegetable or fruit juice by volume. 

    Subd. 33.    Candy.  "Candy" means a preparation of 
 sugar, honey, or other natural or artificial sweeteners in 
 combination with chocolate, fruits, nuts, or other ingredients 
 or flavorings in the form of bars, drops, or pieces.  Candy does 
 not include any preparation containing flour and must require no 
 refrigeration. 

    Subd. 34.    Food sold through vending machines.  "Food 
 sold through vending machines" means food dispensed from a 
 machine or other device that accepts payment including honor 
 payments. 

    Subd. 35.    Direct mail.  "Direct mail" means printed 
 material delivered or distributed by United States Mail or other 
 delivery service to a mass audience or to addressees on a 
 mailing list provided by the purchaser or at the direction of 
 the purchaser when the cost of the items is not billed directly 
 to the recipients.  "Direct mail" includes tangible personal 
 property supplied directly or indirectly by the purchaser to the 
 direct mail seller for inclusion in the package containing the 
 printed material.  "Direct mail" does not include multiple items 
 of printed material delivered to a single address. 

    Subd. 36.    Agricultural production.  "Agricultural 
 production" includes, but is not limited to, horticulture, 
 silviculture, floriculture, maple syrup harvesting, and the 
 raising of pets, livestock as defined in section 17A.03, 
 subdivision 5, poultry, dairy and poultry products, bees and 
 apiary products, the raising and harvesting of agricultural 
 crops, sod, fur-bearing animals, research animals, and horses. 

    HIST: 2000 c 418 art 1 s 4,44 subd 3; 2000 c 490 art 8 s 5; 
 1Sp2001 c 5 art 12 s 5,7-30; 2002 c 377 art 3 s 3,4; art 9 s 11; 
 1Sp2002 c 3 s 1; 2003 c 127 art 1 s 8-16; art 6 s 4-7 

*   NOTE:  The amendments to subdivision 7 by Laws 2001, First 
*Special Session chapter 5, article 12, section 11, are effective 
*January 1, 2002.  However, for contracts entered into before 
*January 1, 2002, the sale price for aggregate materials and 
*concrete block does not include delivery charges until January 
*1, 2005.  Laws 2001, First Special Session chapter 5, article 
*12, section 11, the effective date, as amended by Laws 2002, 
*chapter 377, article 3, section 22. 

*   NOTE:  Subdivision 31, clause (2), item (ii), as added by 
*Laws 2002, chapter 377, article 3, section 4, is effective for 
*sales and purchases made after June 30, 2002, and before January 
*1, 2006.  Laws 2002, chapter 377, article 3, section 4, the 
*effective date.

TAXES; RATES

     297A.62 Sales tax imposed; rates. 

    Subdivision 1.    Generally.  Except as otherwise 
 provided in subdivision 2 or 3 or in this chapter, a sales tax 
 of 6.5 percent is imposed on the gross receipts from retail 
 sales as defined in section 297A.61, subdivision 4, made in this 
 state or to a destination in this state by a person who is 
 required to have or voluntarily obtains a permit under section 
 297A.83, subdivision 1.  

    Subd. 2.    Liquor and beer sales.  The rate of the 
 sales tax imposed is nine percent on the gross receipts from 
 retail sales of: 

    (1) intoxicating liquor, as defined in section 340A.101, 
 subdivision 14; and 

    (2) 3.2 percent malt liquor, as defined in section 
 340A.101, subdivision 19, when sold at an on-sale or off-sale 
 municipal liquor store or other establishment licensed to sell 
 any type of intoxicating liquor.  

    Subd. 3.    Manufactured housing and park trailers.  For 
 retail sales of manufactured homes as defined in section 327.31, 
 subdivision 6, for residential uses, the sales tax under 
 subdivision 1 is imposed on 65 percent of the dealer's cost of 
 the manufactured home.  For retail sales of new or used park 
 trailers, as defined in section 168.011, subdivision 8, 
 paragraph (b), the sales tax under subdivision 1 is imposed on 
 65 percent of the sales price of the park trailer.  

    HIST: 2000 c 418 art 1 s 5 

*   NOTE:  Subdivision 2 is repealed by Laws 2001, First 
*Special Session chapter 5, article 12, section 95, effective for 
*sales and purchases made after December 31, 2005.

     297A.63 Use taxes imposed; rates. 

    Subdivision 1.    Use of tangible personal property or 
 taxable services.  (a) For the privilege of using, storing, 
 distributing, or consuming in Minnesota tangible personal 
 property or taxable services purchased for use, storage, 
 distribution, or consumption in this state, a use tax is imposed 
 on a person in Minnesota.  The tax is imposed on the sales price 
 of retail sales of the tangible personal property or taxable 
 services at the rate of tax imposed under section 297A.62. 

    (b) No tax is imposed under paragraph (a) if the tax 
 imposed by section 297A.62 was paid on the sales price of the 
 tangible personal property or taxable services. 

    (c) No tax is imposed under paragraph (a) if the purchase 
 meets the requirements for exemption under section 297A.67, 
 subdivision 21. 

    Subd. 2.    Use of tangible personal property made from 
 materials.  (a) A use tax is imposed on a person who 
 manufactures, fabricates, or assembles tangible personal 
 property from materials, either within or outside this state and 
 who uses, stores, distributes, or consumes the tangible personal 
 property in Minnesota.  The tax is imposed on the sales price of 
 retail sales of the materials contained in the tangible personal 
 property at the rate of tax imposed under section 297A.62. 

    (b) No tax is imposed under paragraph (a) if the tax 
 imposed by section 297A.62 was paid on the sales price of 
 materials contained in the tangible personal property.  

    HIST: 2000 c 418 art 1 s 6 

     297A.64 Rental motor vehicle tax imposed; rate. 

    Subdivision 1.    Tax imposed.  A tax is imposed on the 
 lease or rental in this state for not more than 28 days of a 
 passenger automobile as defined in section 168.011, subdivision 
 7, a van as defined in section 168.011, subdivision 28, or a 
 pickup truck as defined in section 168.011, subdivision 29.  The 
 rate of tax is 6.2 percent of the sales price.  The tax applies 
 whether or not the vehicle is licensed in the state. 

    Subd. 2.    Fee imposed.  A fee equal to three percent 
 of the sales price is imposed on leases or rentals of vehicles 
 subject to the tax under subdivision 1.  The lessor on the 
 invoice to the customer may designate the fee as "a fee imposed 
 by the State of Minnesota for the registration of rental cars." 

    Subd. 3.    Administration.  The retailer shall report 
 and pay the tax imposed in subdivision 1 to the commissioner of 
 revenue with the taxes imposed in this chapter.  The tax imposed 
 in subdivision 1 and the fee imposed in subdivision 2 are 
 subject to the same interest, penalty, and other provisions 
 provided for sales and use taxes under chapter 289A and this 
 chapter.  The commissioner has the same powers to assess and 
 collect the tax and fee that are given the commissioner in 
 chapters 270 and 289A and this chapter to assess and collect 
 sales and use tax. 

    Subd. 4.    Exemptions.  (a) The tax and the fee imposed 
 by this section do not apply to a lease or rental of (1) a 
 vehicle to be used by the lessee to provide a licensed taxi 
 service; (2) a hearse or limousine used in connection with a 
 burial or funeral service; or (3) a van designed or adapted 
 primarily for transporting property rather than passengers. 

    (b) The lessor may elect not to charge the fee imposed in 
 subdivision 2 if in the previous calendar year the lessor had no 
 more than 20 vehicles available for lease that would have been 
 subject to tax under this section, or no more than $50,000 in 
 gross receipts that would have been subject to tax under this 
 section.  

    Subd. 5.    Payment of excess fees.  On the first sales 
 tax return due following the end of a calendar year during which 
 a lessor has imposed a fee under subdivision 2, the lessor shall 
 report to the commissioner of revenue, in the form required by 
 the commissioner, the amount of the fee collected during the 
 previous year and the amount of motor vehicle registration taxes 
 paid during the previous year by the lessor under chapter 168 on 
 vehicles subject to the fee under this section.  If the amount 
 of the fees collected exceeds the amount of motor vehicle 
 registration taxes paid, the lessor shall remit the excess to 
 the commissioner of revenue at the time the report is submitted. 

    HIST: 2000 c 418 art 1 s 7 

*   NOTE:  Subdivision 1 is repealed by Laws 2001, First 
*Special Session chapter 5, article 12, section 95, effective for 
*sales and purchases made after December 31, 2005. 

*   NOTE:  Subdivision 3 was amended by Laws 2001, First 
*Special Session chapter 5, article 12, section 31, effective for 
*leases entered into after December 31, 2005.  Laws 2001, First 
*Special Session chapter 5, article 12, section 31, the effective 
*date.  The subdivision, as amended, will read as follows: 

*   "Subd. 3.    Administration.  The fee imposed in 
*subdivision 2 is subject to the same interest, penalty, and 
*other provisions provided for sales and use taxes under chapter 
*289A and this chapter.  The commissioner has the same powers to 
*assess and collect the fee that are given the commissioner in 
*chapters 270 and 289A and this chapter to assess and collect 
*sales and use tax." 

*   NOTE:  Subdivision 4 was amended by Laws 2001, First 
*Special Session chapter 5, article 12, section 32, effective for 
*leases entered into after December 31, 2005.  Laws 2001, First 
*Special Session chapter 5, article 12, section 32, the effective 
*date.  The subdivision, as amended, will read as follows: 

*   "Subd. 4.    Exemptions.  (a) The fee imposed by this 
*section does not apply to a lease or rental of (1) a vehicle to 
*be used by the lessee to provide a licensed taxi service; (2) a 
*hearse or limousine used in connection with a burial or funeral 
*service; or (3) a van designed or adapted primarily for 
*transporting property rather than passengers. 

*   (b) The lessor may elect not to charge the fee imposed in 
*subdivision 2 if in the previous calendar year the lessor had no 
*more than 20 vehicles available for lease that would have been 
*subject to tax under this section, or no more than $50,000 in 
*gross receipts that would have been subject to tax under this 
*section."

     297A.65 Lottery tickets; in-lieu tax. 

    Sales of state lottery tickets are exempt from the tax 
 imposed under section 297A.62.  The state lottery must on or 
 before the 20th day of each month transmit to the commissioner 
 of revenue an amount equal to the gross receipts from the sale 
 of lottery tickets for the previous month multiplied by the tax 
 rate under section 297A.62, subdivision 1.  The resulting 
 payment is in lieu of the sales tax that otherwise would be 
 imposed by this chapter.  The commissioner shall deposit the 
 money transmitted as provided by section 297A.94 and the money 
 must be treated as other proceeds of the sales tax.  For 
 purposes of this section, "gross receipts" means the proceeds of 
 the sale of tickets before deduction of a commission or other 
 compensation paid to the vendor or retailer for selling tickets. 

    HIST: 2000 c 418 art 1 s 8 

REQUIREMENT TO COLLECT AND REMIT

     297A.66 Jurisdiction to require collection and 
  remittance of tax by retailer. 

    Subdivision 1.    Definitions.  (a) To the extent 
 allowed by the United States Constitution and the laws of the 
 United States, "retailer maintaining a place of business in this 
 state," or a similar term, means a retailer: 

    (1) having or maintaining within this state, directly or by 
 a subsidiary or an affiliate, an office, place of distribution, 
 sales or sample room or place, warehouse, or other place of 
 business; or 

    (2) having a representative, including, but not limited to, 
 an affiliate, agent, salesperson, canvasser, or solicitor 
 operating in this state under the authority of the retailer or 
 its subsidiary, for any purpose, including the repairing, 
 selling, delivering, installing, or soliciting of orders for the 
 retailer's goods or services, or the leasing of tangible 
 personal property located in this state, whether the place of 
 business or agent, representative, affiliate, salesperson, 
 canvasser, or solicitor is located in the state permanently or 
 temporarily, or whether or not the retailer, subsidiary, or 
 affiliate is authorized to do business in this state. 

    (b) "Destination of a sale" means the location to which the 
 retailer makes delivery of the property sold, or causes the 
 property to be delivered, to the purchaser of the property, or 
 to the agent or designee of the purchaser.  The delivery may be 
 made by any means, including the United States Postal Service or 
 a for-hire carrier. 

    Subd. 2.    Retailer maintaining a place of business in 
 this state.  A retailer maintaining a place of business in 
 this state who makes retail sales in Minnesota or to a 
 destination in Minnesota shall collect sales and use taxes and 
 remit them to the commissioner under section 297A.77.  

    Subd. 3.    Retailer not maintaining a place of business 
 in this state.  (a) To the extent allowed by the United States 
 Constitution and the laws of the United States, a retailer 
 making retail sales from outside this state to a destination 
 within this state and not maintaining a place of business in 
 this state shall collect sales and use taxes and remit them to 
 the commissioner under section 297A.77, if the retailer engages 
 in the regular or systematic soliciting of sales from potential 
 customers in this state by: 

    (1) distribution, by mail or otherwise, of catalogs, 
 periodicals, advertising flyers, or other written solicitations 
 of business to customers in this state; 

    (2) display of advertisements on billboards or other 
 outdoor advertising in this state; 

    (3) advertisements in newspapers published in this state; 

    (4) advertisements in trade journals or other periodicals 
 the circulation of which is primarily within this state; 

    (5) advertisements in a Minnesota edition of a national or 
 regional publication or a limited regional edition in which this 
 state is included as part of a broader regional or national 
 publication which are not placed in other geographically defined 
 editions of the same issue of the same publication; 

    (6) advertisements in regional or national publications in 
 an edition which is not by its contents geographically targeted 
 to Minnesota but which is sold over the counter in Minnesota or 
 by subscription to Minnesota residents; 

    (7) advertisements broadcast on a radio or television 
 station located in Minnesota; or 

    (8) any other solicitation by telegraphy, telephone, 
 computer database, cable, optic, microwave, or other 
 communication system. 

    This paragraph (a) must be construed without regard to the 
 state from which distribution of the materials originated or in 
 which they were prepared.  

    (b) The location within or without this state of 
 independent vendors that provide products or services to the 
 retailer in connection with its solicitation of customers within 
 this state, including such products and services as creation of 
 copy, printing, distribution, and recording, is not considered 
 in determining whether the retailer is required to collect tax.  

    (c) A retailer not maintaining a place of business in this 
 state is presumed, subject to rebuttal, to be engaged in regular 
 solicitation within this state if it engages in any of the 
 activities in paragraph (a) and: 

    (1) makes 100 or more retail sales from outside this state 
 to destinations in this state during a period of 12 consecutive 
 months; or 

    (2) makes ten or more retail sales totaling more than 
 $100,000 from outside this state to destinations in this state 
 during a period of 12 consecutive months. 

    Subd. 4.    Affiliated entities.  (a) An entity is an 
 "affiliate" of the retailer for purposes of subdivision 1, 
 paragraph (a), if: 

    (1) the entity uses its facilities or employees in this 
 state to advertise, promote, or facilitate the establishment or 
 maintenance of a market for sales of items by the retailer to 
 purchasers in this state or for the provision of services to the 
 retailer's purchasers in this state, such as accepting returns 
 of purchases for the retailer, providing assistance in resolving 
 customer complaints of the retailer, or providing other 
 services; and 

    (2) the retailer and the entity are related parties. 

    (b) Two entities are related parties under this section if 
 one of the entities meets at least one of the following tests 
 with respect to the other entity: 

    (1) one or both entities is a corporation, and one entity 
 and any party related to that entity in a manner that would 
 require an attribution of stock from the corporation to the 
 party or from the party to the corporation under the attribution 
 rules of section 318 of the Internal Revenue Code owns directly, 
 indirectly, beneficially, or constructively at least 50 percent 
 of the value of the corporation's outstanding stock; 

    (2) one or both entities is a partnership, estate, or trust 
 and any partner or beneficiary, and the partnership, estate, or 
 trust and its partners or beneficiaries own directly, 
 indirectly, beneficially, or constructively, in the aggregate, 
 at least 50 percent of the profits, capital, stock, or value of 
 the other entity or both entities; or 

    (3) an individual stockholder and the members of the 
 stockholder's family (as defined in section 318 of the Internal 
 Revenue Code) owns directly, indirectly, beneficially, or 
 constructively, in the aggregate, at least 50 percent of the 
 value of both entities' outstanding stock. 

    (c) An entity is an affiliate under the provisions of this 
 subdivision if the requirements of paragraphs (a) and (b) are 
 met during any part of the 12-month period ending on the first 
 day of the month before the month in which the sale was made. 

    Subd. 5.    Withdrawal from streamlined sales and use tax 
 agreement.  If the state has withdrawn its membership or been 
 expelled from the streamlined sales and use tax agreement, it 
 shall not use a seller's registration with the central 
 registration system and the collection of sales and use taxes in 
 the state as a factor in determining whether the seller has 
 nexus with that state for any tax at any time. 

    HIST: 2000 c 418 art 1 s 9; 1Sp2001 c 5 art 12 s 33,34; 2002 c 
 377 art 3 s 5,6; 2003 c 127 art 1 s 17 

     297A.665 Presumption of tax; burden of proof. 

    (a) For the purpose of the proper administration of this 
 chapter and to prevent evasion of the tax, until the contrary is 
 established, it is presumed that:  

    (1) all gross receipts are subject to the tax; and 

    (2) all retail sales for delivery in Minnesota are for 
 storage, use, or other consumption in Minnesota.  

    (b) The burden of proving that a sale is not a taxable 
 retail sale is on the seller.  However, the seller may take from 
 the purchaser at the time of the sale a fully completed 
 exemption certificate which conclusively relieves the seller 
 from collecting and remitting the tax.  This relief from 
 liability does not apply to a seller who fraudulently fails to 
 collect the tax or solicits purchasers to participate in the 
 unlawful claim of an exemption.  If a seller claiming that 
 certain sales are exempt is not in possession of the required 
 exemption certificates within 60 days after receiving written 
 notice from the commissioner that the certificates are required, 
 deductions claimed by the seller that required delivery of the 
 certificates must be disallowed.  If the certificates are 
 delivered to the commissioner within the 60-day period, the 
 commissioner may verify the reason or basis for the exemption 
 claimed in the certificates before allowing any deductions.  A 
 deduction must not be granted on the basis of certificates 
 delivered to the commissioner after the 60-day period. 

    (c) A purchaser of tangible personal property or any items 
 listed in section 297A.63 that are shipped or brought to 
 Minnesota by the purchaser has the burden of proving that the 
 property was not purchased from a retailer for storage, use, or 
 consumption in Minnesota.  

    HIST: 2000 c 418 art 1 s 10; 2003 c 127 art 6 s 8 

     297A.666 Amnesty for registration. 

    Subdivision 1.    Amnesty provisions.  Subject to the 
 limitations of subdivision 2: 

    (1) this state shall provide amnesty for uncollected or 
 unpaid sales or use tax to a seller who registers to pay or to 
 collect and remit applicable sales or use tax on sales made to 
 purchasers in this state in accordance with the terms of the 
 streamlined sales and use tax agreement, provided that the 
 seller was not so registered in this state in the 12-month 
 period preceding the effective date of the state's participation 
 in the agreement; and 

    (2) the amnesty shall preclude assessment for uncollected 
 or unpaid sales or use tax together with penalty or interest for 
 sales made during the period the seller was not registered in 
 this state, provided registration occurs within 12 months of the 
 effective date of the state's participation in the agreement. 

    Subd. 2.    Limitations.  (a) The amnesty is not 
 available to a seller with respect to any matter or matters for 
 which the seller received notice of the commencement of an audit 
 and the audit is not yet finally resolved, including any related 
 administrative and judicial processes. 

    (b) The amnesty is not available for sales or use taxes 
 already paid or remitted to this state or to taxes collected by 
 the seller. 

    (c) The amnesty is fully effective, absent the seller's 
 fraud or intentional misrepresentation of a material fact, as 
 long as the seller continues registration and continues payment 
 or collection and remittance of applicable sales or use taxes 
 for a period of at least 36 months.  The statute of limitations 
 provisions of chapter 289A applicable to asserting a sales or 
 use tax liability must be tolled during this 36-month period. 

    (d) The amnesty is applicable only to sales or use taxes 
 due from a seller in its capacity as a seller and not to sales 
 or use taxes due from a seller in its capacity as a buyer. 

    HIST: 2003 c 127 art 1 s 18 

     297A.668 Sourcing of sale; situs in this state. 

    Subdivision 1.    Applicability.  The provisions of this 
 section apply regardless of the characterization of a product as 
 tangible personal property, a digital good, or a service; but do 
 not apply to telecommunications services, or the sales of motor 
 vehicles, watercraft, aircraft, modular homes, manufactured 
 homes, or mobile homes.  These provisions only apply to 
 determine a seller's obligation to pay or collect and remit a 
 sales or use tax with respect to the seller's sale of a 
 product.  These provisions do not affect the obligation of a 
 seller as purchaser to remit tax on the use of the product. 

    Subd. 2.    Sourcing rules.  (a) The retail sale, 
 excluding lease or rental, of a product shall be sourced as 
 required in paragraphs (b) through (f). 

    (b) When the product is received by the purchaser at a 
 business location of the seller, the sale is sourced to that 
 business location. 

    (c) When the product is not received by the purchaser at a 
 business location of the seller, the sale is sourced to the 
 location where receipt by the purchaser or the donee designated 
 by the purchaser occurs, including the location indicated by 
 instructions for delivery to the purchasers or the purchaser's 
 donee, known to the seller. 

    (d) When paragraphs (b) and (c) do not apply, the sale is 
 sourced to the location indicated by an address for the 
 purchaser that is available from the business records of the 
 seller that are maintained in the ordinary course of the 
 seller's business, when use of this address does not constitute 
 bad faith. 

    (e) When paragraphs (b), (c), and (d) do not apply, the 
 sale is sourced to the location indicated by an address for the 
 purchaser obtained during the consummation of the sale, 
 including the address of a purchaser's payment instrument if no 
 other address is available, when use of this address does not 
 constitute bad faith. 

    (f) When paragraphs (b), (c), (d), and (e) do not apply, 
 including the circumstance where the seller is without 
 sufficient information to apply the previous paragraphs, then 
 the location is determined by the address from which tangible 
 personal property was shipped, from which the digital good or 
 the computer software delivered electronically was first 
 available for transmission by the seller, or from which the 
 service was provided.  For purposes of this paragraph, the 
 seller must disregard any location that merely provided the 
 digital transfer of the product sold. 

    (g) For purposes of this subdivision, the terms "receive" 
 and "receipt" mean taking possession of tangible personal 
 property, making first use of services, or taking possession or 
 making first use of digital goods or the computer software 
 delivered electronically, whichever occurs first.  The terms 
 receive and receipt do not include possession by a carrier for 
 hire on behalf of the purchaser. 

    Subd. 3.    Lease or rental of tangible personal property. 
  The lease or rental of tangible personal property, other than 
 property identified in subdivision 4 or 5, shall be sourced as 
 required in paragraphs (a) to (c). 

    (a) For a lease or rental that requires recurring periodic 
 payments, the first periodic payment is sourced the same as a 
 retail sale in accordance with the provisions of subdivision 6.  
 Periodic payments made subsequent to the first payment are 
 sourced to the primary property location for each period covered 
 by the payment.  The primary property location must be as 
 indicated by an address for the property provided by the lessee 
 that is available to the lessor from its records maintained in 
 the ordinary course of business, when use of this address does 
 not constitute bad faith.  The property location must not be 
 altered by intermittent use at different locations, such as use 
 of business property that accompanies employees on business 
 trips and service calls. 

    (b) For a lease or rental that does not require recurring 
 periodic payments, the payment is sourced the same as a retail 
 sale in accordance with the provisions of subdivision 2. 

    (c) This subdivision does not affect the imposition or 
 computation of sales or use tax on leases or rentals based on a 
 lump sum or accelerated basis, or on the acquisition of property 
 for lease. 

    Subd. 4.    Lease or rental of motor vehicles, trailers, 
 semitrailers, or aircraft that do not qualify as transportation 
 equipment.  The lease or rental of motor vehicles, trailers, 
 semitrailers, or aircraft that do not qualify as transportation 
 equipment, as defined in subdivision 5, shall be sourced as 
 required in paragraphs (a) to (c). 

    (a) For a lease or rental that requires recurring periodic 
 payments, each periodic payment is sourced to the primary 
 property location.  The primary property location must be as 
 indicated by an address for the property provided by the lessee 
 that is available to the lessor from its records maintained in 
 the ordinary course of business, when use of this address does 
 not constitute bad faith.  This location must not be altered by 
 intermittent use at different locations. 

    (b) For a lease or rental that does not require recurring 
 periodic payments, the payment is sourced the same as a retail 
 sale in accordance with the provisions of subdivision 2. 

    (c) This subdivision does not affect the imposition or 
 computation of sales or use tax on leases or rentals based on a 
 lump sum or accelerated basis, or on the acquisition of property 
 for lease. 

    Subd. 5.    Transportation equipment.  (a) The retail 
 sale, including lease or rental, of transportation equipment 
 shall be sourced the same as a retail sale in accordance with 
 the provisions of subdivision 2, notwithstanding the exclusion 
 of lease or rental in subdivision 2. 

    (b) "Transportation equipment" means any of the following: 

    (1) locomotives and railcars that are utilized for the 
 carriage of persons or property in interstate commerce; and/or 

    (2) trucks and truck-tractors with a gross vehicle weight 
 rating (GVWR) of 10,001 pounds or greater, trailers, 
 semitrailers, or passenger buses that are: 

    (i) registered through the international registration plan; 
 and 

    (ii) operated under authority of a carrier authorized and 
 certified by the United States Department of Transportation or 
 another federal authority to engage in the carriage of persons 
 or property in interstate commerce.  

    Subd. 6.    Multiple points of use.  (a) Notwithstanding 
 the provisions of subdivisions 2 to 5, a business purchaser that 
 is not a holder of a direct pay permit that knows at the time of 
 its purchase of a digital good, computer software delivered 
 electronically, or a service that the digital good, computer 
 software delivered electronically, or service will be 
 concurrently available for use in more than one taxing 
 jurisdiction shall deliver to the seller in conjunction with its 
 purchase a multiple points of use exemption certificate 
 disclosing this fact.  

    (b) Upon receipt of the multiple points of use exemption 
 certificate, the seller is relieved of the obligation to 
 collect, pay, or remit the applicable tax and the purchaser is 
 obligated to collect, pay, or remit the applicable tax on a 
 direct pay basis. 

    (c) A purchaser delivering the multiple points of use 
 exemption certificate may use any reasonable, but consistent and 
 uniform, method of apportionment that is supported by the 
 purchaser's business records as they exist at the time of the 
 consummation of the sale. 

    (d) The multiple points of use exemption certificate 
 remains in effect for all future sales by the seller to the 
 purchaser until it is revoked in writing, except as to the 
 subsequent sale's specific apportionment that is governed by the 
 principle of paragraph (c) and the facts existing at the time of 
 the sale. 

    (e) A holder of a direct pay permit is not required to 
 deliver a multiple points or use exemption certificate to the 
 seller.  A direct pay permit holder shall follow the provisions 
 of paragraph (c) in apportioning the tax due on a digital good, 
 computer software delivered electronically, or a service that 
 will be concurrently available for use in more than one taxing 
 jurisdiction. 

    Subd. 7.    Direct mail.  (a) Notwithstanding other 
 subdivisions of this section, a purchaser of direct mail that is 
 not a holder of a direct pay permit shall provide to the seller, 
 in conjunction with the purchase, either a direct mail form or 
 information to show the jurisdictions to which the direct mail 
 is delivered to recipients. 

    (1) Upon receipt of the direct mail form, the seller is 
 relieved of all obligations to collect, pay, or remit the 
 applicable tax and the purchaser is obligated to pay or remit 
 the applicable tax on a direct pay basis.  A direct mail form 
 remains in effect for all future sales of direct mail by the 
 seller to the purchaser until it is revoked in writing.  

    (2) Upon receipt of information from the purchaser showing 
 the jurisdictions to which the direct mail is delivered to 
 recipients, the seller shall collect the tax according to the 
 delivery information provided by the purchaser.  In the absence 
 of bad faith, the seller is relieved of any further obligation 
 to collect tax on any transaction for which the seller has 
 collected tax pursuant to the delivery information provided by 
 the purchaser. 

    (b) If the purchaser of direct mail does not have a direct 
 pay permit and does not provide the seller with either a direct 
 mail form or delivery information, as required by paragraph (a), 
 the seller shall collect the tax according to subdivision 2, 
 paragraph (f).  Nothing in this paragraph limits a purchaser's 
 obligation for sales or use tax to any state to which the direct 
 mail is delivered. 

    (c) If a purchaser of direct mail provides the seller with 
 documentation of direct pay authority, the purchaser is not 
 required to provide a direct mail form or delivery information 
 to the seller. 

    HIST: 1Sp2001 c 5 art 12 s 35; 2002 c 379 art 1 s 68; 2003 c 
 127 art 1 s 19 

     297A.669 Telecommunication sourcing. 

    Subdivision 1.    Call-by-call basis sourcing.  Except 
 for the defined telecommunication services in subdivision 3, the 
 sale of telecommunication service sold on a call-by-call basis 
 shall be sourced to (1) each level of taxing jurisdiction where 
 the call originates and terminates in that jurisdiction; or (2) 
 each level of taxing jurisdiction where the call either 
 originates or terminates and in which the service address is 
 also located. 

    Subd. 2.    Other than call-by-call basis sourcing.  
 Except for the defined telecommunication services in subdivision 
 3, a sale of telecommunications services sold on a basis other 
 than a call-by-call basis is sourced to the customer's place of 
 primary use. 

    Subd. 3.    Defined telecommunications services sourcing. 
  The sale of the following telecommunication services shall be 
 sourced to each level of taxing jurisdiction in paragraphs (a) 
 to (d). 

    (a) A sale of mobile telecommunications services, other 
 than air-to-ground radiotelephone service and prepaid calling 
 service, is sourced to the customer's place of primary use as 
 required by the Mobile Telecommunications Sourcing Act. 

    (b) A sale of postpaid calling service is sourced to the 
 origination point of the telecommunications signal as first 
 identified by either: 

    (1) the seller's telecommunications system; or 

    (2) information received by the seller from its service 
 provider, where the system used to transport such signals is not 
 that of the seller. 

    (c) A sale of prepaid calling service is sourced in 
 accordance with section 297A.668, subdivision 2.  However, in 
 the case of a sale of mobile telecommunications service that is 
 a prepaid telecommunications service, the rule provided in 
 section 297A.668, subdivision 2, paragraph (f), shall include as 
 an option the location associated with the mobile telephone 
 number. 

    (d) A sale of a private communication service is sourced as 
 follows: 

    (1) service for a separate charge related to a customer 
 channel termination point is sourced to each level of 
 jurisdiction in which the customer channel termination point is 
 located; 

    (2) service where all customer termination points are 
 located entirely within one jurisdiction or levels of 
 jurisdiction is sourced in such jurisdiction in which the 
 customer channel termination points are located; 

    (3) service for segments of a channel between two customer 
 channel termination points located in different jurisdictions 
 and which segment of channel are separately charged is sourced 
 50 percent in each level of jurisdiction in which the customer 
 channel termination points are located; and 

    (4) service for segments of a channel located in more than 
 one jurisdiction or levels of jurisdiction and which segments 
 are not separately billed is sourced in each jurisdiction based 
 on the percentage determined by dividing the number of customer 
 channel termination points in the jurisdiction by the total 
 number of customer channel termination points. 

    Subd. 4.    Air-to-ground radiotelephone service.  
 "Air-to-ground radiotelephone service," for purposes of this 
 section, means a radio service, as that term is defined in Code 
 of Federal Regulations, title 47, section 22.99, in which common 
 carriers are authorized to offer and provide radio 
 telecommunications service for hire to subscribers in aircraft. 

    Subd. 5.    Call-by-call basis.  "Call-by-call basis," 
 for purposes of this section, means any method of charging for 
 telecommunications services where the price is measured by 
 individual calls. 

    Subd. 6.    Communications channel.  "Communications 
 channel," for purposes of this section, means a physical or 
 virtual path of communications over which signals are 
 transmitted between or among customer channel termination points.

    Subd. 7.    Customer.  "Customer," for purposes of this 
 section, means the person or entity that contracts with the 
 seller of telecommunications services.  If the end user of 
 telecommunications services is not the contracting party, the 
 end user of the telecommunications service is the customer of 
 the telecommunication service, but this sentence applies only 
 for the purpose of sourcing sales of telecommunications services 
 under this section.  Customer does not include a reseller of 
 telecommunications service or for mobile telecommunications 
 service of a serving carrier under an agreement to serve the 
 customer outside the home service provider's licensed service 
 area. 

    Subd. 8.    Customer channel termination point.  
 "Customer channel termination point," for purposes of this 
 section, means the location where the customer either inputs or 
 receives the communications. 

    Subd. 9.    End user.  "End user," for purposes of this 
 section, means the person who utilizes the telecommunication 
 service.  In the case of an entity, end user means the 
 individual who utilizes the service on behalf of the entity. 

    Subd. 10.    Home service provider.  "Home service 
 provider," for purposes of this section, means the same as that 
 term is defined in Section 124(5) of Public Law 106-252 (Mobile 
 Telecommunications Sourcing Act). 

    Subd. 11.    Mobile telecommunications service.  "Mobile 
 telecommunications service," for purposes of this section, means 
 the same as that term is defined in Section 124(1) of Public Law 
 106-252 (Mobile Telecommunications Sourcing Act). 

    Subd. 12.    Place of primary use.  "Place of primary 
 use," for purposes of this section, means the street address 
 representative of where the customer's use of the 
 telecommunications service primarily occurs, which must be the 
 residential street address or the primary business street 
 address of the customer.  In the case of mobile 
 telecommunications services, place of primary use must be within 
 the licensed service area of the home service provider. 

    Subd. 13.    Postpaid calling service.  "Postpaid 
 calling service," for purposes of this section, means the 
 telecommunications service obtained by making a payment on a 
 call-by-call basis either through the use of a credit card or 
 payment mechanism such as a bank card, travel card, credit card, 
 or debit card, or by a charge made to a telephone number that is 
 not associated with the origination or termination of the 
 telecommunications service.  A postpaid calling service includes 
 a telecommunications service that would be a prepaid calling 
 service except it is not exclusively a telecommunication service.

    Subd. 14.    Prepaid calling service.  "Prepaid calling 
 service," for purposes of this section, means the right to 
 access exclusively telecommunications services, which must be 
 paid for in advance and which enables the origination of calls 
 using an access number or authorization code, whether manually 
 or electronically dialed, and that is sold in predetermined 
 units or dollars of which the number declines with use in a 
 known amount. 

    Subd. 15.    Private communication services.  "Private 
 communication services," for purposes of this section, means the 
 same as that term is defined in section 297A.61, subdivision 26. 

    Subd. 16.    Service address.  "Service address," for 
 purposes of this section, means: 

    (1) the location of the telecommunications equipment to 
 which a customer's call is charged and from which the call 
 originates or terminates, regardless of where the call is billed 
 or paid; 

    (2) if the location in paragraph (a) is not known, service 
 address means the origination point of the signal of the 
 telecommunications services first identified by either the 
 seller's telecommunications system or in information received by 
 the seller from its service provider, where the system used to 
 transport the signals is not that of the seller; or 

    (3) if the location in paragraphs (a) and (b) is not known, 
 the service address means the location of the customer's place 
 of primary use. 

    HIST: 2003 c 127 art 1 s 20 

EXEMPTIONS

     297A.67 General exemptions. 

    Subdivision 1.    Scope.  The gross receipts from the 
 sale and purchase of, and storage, distribution, use, or 
 consumption of the items contained in this section are 
 specifically exempted from the taxes imposed by this chapter. 

    Subd. 2.    Food and food ingredients.  Food and food 
 ingredients are exempt.  For purposes of this subdivision, 
 "food" and "food ingredients" mean substances, whether in 
 liquid, concentrated, solid, frozen, dried, or dehydrated form, 
 that are sold for ingestion or chewing by humans and are 
 consumed for their taste or nutritional value.  Food and food 
 ingredients exempt under this subdivision do not include candy, 
 soft drinks, food sold through vending machines, and prepared 
 foods.  Food and food ingredients do not include alcoholic 
 beverages, dietary supplements, and tobacco.  For purposes of 
 this subdivision, "alcoholic beverages" means beverages that are 
 suitable for human consumption and contain one-half of one 
 percent or more of alcohol by volume.  For purposes of this 
 subdivision, "tobacco" means cigarettes, cigars, chewing or pipe 
 tobacco, or any other item that contains tobacco.  For purposes 
 of this subdivision, "dietary supplements" means any product, 
 other than tobacco, intended to supplement the diet that: 

    (1) contains one or more of the following dietary 
 ingredients: 

    (i) a vitamin; 

    (ii) a mineral; 

    (iii) an herb or other botanical; 

    (iv) an amino acid; 

    (v) a dietary substance for use by humans to supplement the 
 diet by increasing the total dietary intake; and 

    (vi) a concentrate, metabolite, constituent, extract, or 
 combination of any ingredient described in items (i) to (v); 

    (2) is intended for ingestion in tablet, capsule, powder, 
 softgel, gelcap, or liquid form, or if not intended for 
 ingestion in such form, is not represented as conventional food 
 and is not represented for use as a sole item of a meal or of 
 the diet; and 

    (3) is required to be labeled as a dietary supplement, 
 identifiable by the supplement facts box found on the label and 
 as required pursuant to Code of Federal Regulations, title 21, 
 section 101.36. 

    Subd. 3.    Food stamps.  Tangible personal property 
 purchased with food stamps, coupons, or vouchers issued by the 
 federal government under the Food Stamp Program is exempt.  This 
 exemption also applies to food purchased under the Special 
 Supplemental Food Program for Women, Infants, and Children.  The 
 exemption provided by this subdivision is effective and applies 
 only to the extent required by federal law. 

    Subd. 4.    Exempt meals at residential facilities.  
 Meals or drinks served to patients, inmates, or persons residing 
 at hospitals, sanitariums, nursing homes, senior citizen homes, 
 and correctional, detention, and detoxification facilities are 
 exempt.  

    Subd. 5.    Exempt meals at schools.  Meals and lunches 
 served at public and private elementary, middle, or secondary 
 schools as defined in section 120A.05 are exempt.  Meals and 
 lunches served to students at a college, university, or private 
 career school under a board contract are exempt.  For purposes 
 of this subdivision, "meals and lunches" does not include sales 
 from vending machines. 

    Subd. 6.    Other exempt meals.  Meals or drinks 
 purchased for and served exclusively to individuals who are 60 
 years of age or over and their spouses or to handicapped persons 
 and their spouses by governmental agencies, nonprofit 
 organizations, or churches, or pursuant to any program funded in 
 whole or in part through United States Code, title 42, sections 
 3001 through 3045, wherever delivered, prepared, or served, are 
 exempt.  

    Subd. 7.    Medicines; medical devices.  (a) Prescribed 
 drugs and medicine, and insulin, intended for internal or 
 external use, in the cure, mitigation, treatment, or prevention 
 of illness or disease in human beings are exempt.  "Prescribed 
 drugs and medicine" includes over-the-counter drugs or medicine 
 prescribed by a licensed health care professional. 

    (b) Nonprescription medicines consisting principally 
 (determined by the weight of all ingredients) of analgesics that 
 are approved by the United States Food and Drug Administration 
 for internal use by human beings are exempt.  For purposes of 
 this subdivision, "principally" means greater than 50 percent 
 analgesics by weight.  

    (c) Prescription glasses, hospital beds, fever 
 thermometers, reusable finger-pricking devices for the 
 extraction of blood, blood glucose monitoring machines, and 
 other diagnostic agents used in diagnosing, monitoring, or 
 treating diabetes, and therapeutic and prosthetic devices are 
 exempt.  "Therapeutic devices" means devices that are attached 
 or applied to the human body to cure, heal, or alleviate injury, 
 illness, or disease, either directly or by administering a 
 curative agent.  "Prosthetic devices" means devices that replace 
 injured, diseased, or missing parts of the human body, either 
 temporarily or permanently.  

    Subd. 8.    Clothing.  (a) Clothing is exempt.  For 
 purposes of this subdivision, "clothing" means all human wearing 
 apparel suitable for general use. 

    (b) Clothing includes, but is not limited to, aprons, 
 household and shop; athletic supporters; baby receiving 
 blankets; bathing suits and caps; beach capes and coats; belts 
 and suspenders; boots; coats and jackets; costumes; children and 
 adult diapers, including disposable; ear muffs; footlets; formal 
 wear; garters and garter belts; girdles; gloves and mittens for 
 general use; hats and caps; hosiery; insoles for shoes; lab 
 coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 
 sandals; scarves; shoes and shoe laces; slippers; sneakers; 
 socks and stockings; steel-toed boots; underwear; uniforms, 
 athletic and nonathletic; and wedding apparel. 

    (c) Clothing does not include the following: 

    (1) belt buckles sold separately; 

    (2) costume masks sold separately; 

    (3) patches and emblems sold separately; 

    (4) sewing equipment and supplies, including but not 
 limited to, knitting needles, patterns, pins, scissors, sewing 
 machines, sewing needles, tape measures, and thimbles; 

    (5) sewing materials that become part of clothing, 
 including but not limited to, buttons, fabric, lace, thread, 
 yarn, and zippers; 

    (6) clothing accessories or equipment; 

    (7) sports or recreational equipment; and 

    (8) protective equipment. 

 Clothing also does not include apparel made from fur if a 
 uniform definition of "apparel made from fur" is developed by 
 the member states of the Streamlined Sales and Use Tax Agreement.

    For purposes of this subdivision, "clothing accessories or 
 equipment" means incidental items worn on the person or in 
 conjunction with clothing.  Clothing accessories and equipment 
 include, but are not limited to, briefcases; cosmetics; hair 
 notions, including barrettes, hair bows, and hairnets; handbags; 
 handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 
 wallets; watches; and wigs and hairpieces.  "Sports or 
 recreational equipment" means items designed for human use and 
 worn in conjunction with an athletic or recreational activity 
 that are not suitable for general use.  Sports and recreational 
 equipment includes, but is not limited to, ballet and tap shoes; 
 cleated or spiked athletic shoes; gloves, including, but not 
 limited to, baseball, bowling, boxing, hockey, and golf gloves; 
 goggles; hand and elbow guards; life preservers and vests; mouth 
 guards; roller and ice skates; shin guards; shoulder pads; ski 
 boots; waders; and wetsuits and fins.  "Protective equipment" 
 means items for human wear and designed as protection of the 
 wearer against injury or disease or as protection against damage 
 or injury of other persons or property but not suitable for 
 general use.  Protective equipment includes, but is not limited 
 to, breathing masks; clean room apparel and equipment; ear and 
 hearing protectors; face shields; finger guards; hard hats; 
 helmets; paint or dust respirators; protective gloves; safety 
 glasses and goggles; safety belts; tool belts; and welders 
 gloves and masks. 

    Subd. 9.    Baby products.  (a) Products such as lotion, 
 creams, ointments, oil, powder, or shampoo, and other articles 
 designed for application to the hair or skin of babies are 
 exempt. 

    (b) Baby bottles and nipples, pacifiers, teething rings, 
 thumb sucking preventatives, and infant syringes are exempt. 

    Subd. 10.    Caskets; vaults.  Caskets and burial vaults 
 for human burial are exempt.  

    Subd. 11.    Automobiles; disabled veterans.  
 Automobiles or other conveyances are exempt if the purchaser is 
 assisted by a grant from the United States in accordance with 
 United States Code, title 38, section 3902. 

    Subd. 12.    Parts and accessories used to make a motor 
 vehicle handicapped accessible.  Parts, accessories, and labor 
 charges that are used solely to modify a motor vehicle to make 
 it handicapped accessible are exempt. 

    Subd. 13.    Textbooks.  Textbooks that are prescribed 
 for use in conjunction with a course of study in a school, 
 college, university, and private career school to students who 
 are regularly enrolled at such institutions are exempt.  For 
 purposes of this subdivision (1) a "school" is as defined in 
 section 120A.22, subdivision 4; and (2) "private career school" 
 means a school licensed under section 141.25. 

    Subd. 13a.    Instructional materials.  Instructional 
 materials, other than textbooks, that are prescribed for use in 
 conjunction with a course of study in a postsecondary school, 
 college, university, or private career school to students who 
 are regularly enrolled at such institutions are exempt.  For 
 purposes of this subdivision, "instructional materials" means 
 materials required to be used directly in the completion of the 
 course of study, including, but not limited to, interactive CDs, 
 tapes, and computer software. 

    Instructional materials do not include general reference 
 works or other items incidental to the instructional process 
 such as pens, pencils, paper, folders, or computers.  For 
 purposes of this subdivision, "school" and "private career 
 school" have the meanings given in subdivision 13. 

    Subd. 14.    Personal computers prescribed for use by 
 school.  Personal computers and related computer software sold 
 by a school, college, university, or private career school to 
 students who are enrolled at the institutions are exempt if: 

    (1) the use of the personal computer, or of a substantially 
 similar model of computer, and the related computer software is 
 prescribed by the institution in conjunction with a course of 
 study; and 

    (2) each student of the institution, or of a unit of the 
 institution in which the student is enrolled, is required by the 
 institution to have such a personal computer and related 
 software as a condition of enrollment.  

    For the purposes of this subdivision, "school" and "private 
 career school" have the meanings given in subdivision 13. 

    Subd. 15.    Residential heating fuels.  Residential 
 heating fuels are exempt as follows: 

    (1) all fuel oil, coal, wood, steam, hot water, propane 
 gas, and L.P. gas sold to residential customers for residential 
 use; 

    (2) for the billing months of November, December, January, 
 February, March, and April, natural gas sold for residential use 
 to customers who are metered and billed as residential users and 
 who use natural gas for their primary source of residential 
 heat; and 

    (3) for the billing months of November, December, January, 
 February, March, and April, electricity sold for residential use 
 to customers who are metered and billed as residential users and 
 who use electricity for their primary source of residential heat.

    Subd. 16.    Residential water services.  Water services 
 for residential use are exempt regardless of how the services 
 are billed. 

    Subd. 17.    Feminine hygiene products.  Sanitary 
 napkins, tampons, or similar items used for feminine hygiene are 
 exempt.  

    Subd. 18.    Used motor oils.  Used motor oils are 
 exempt. 

    Subd. 19.    Cross-country ski passes.  Cross-country 
 ski passes issued under sections 85.40 to 85.43 are exempt. 

    Subd. 20.    Manufactured homes.  Manufactured homes, as 
 defined in section 327.31, subdivision 6, to be used by the 
 purchaser for residential purposes are exempt, unless the sale 
 is the first retail sale of the manufactured home in this state. 

    Subd. 21.    De minimis exemption.  A purchase subject 
 to use tax under section 297A.63 is exempt if (1) the purchase 
 is made by an individual for personal use, and (2) the total 
 purchases that are subject to the use tax do not exceed $770 in 
 the calendar year.  For purposes of this subdivision, "personal 
 use" includes purchases for gifts.  If an individual makes 
 purchases subject to use tax of more than $770 in the calendar 
 year, the individual must pay the use tax on the entire amount.  
 This exemption does not apply to purchases made from retailers 
 who are required or registered to collect taxes under this 
 chapter. 

    Subd. 22.    Property brought into Minnesota by 
 nonresident.  All articles of tangible personal property 
 brought into Minnesota by a person who was a nonresident of this 
 state immediately prior to bringing such property into this 
 state for the person's use, storage, or consumption are exempt 
 from the use tax imposed by section 297A.63. 

    Subd. 23.    Occasional sales.  Isolated and occasional 
 sales in Minnesota not made in the normal course of business of 
 selling that kind of property or service are exempt.  The 
 storage, use, or consumption of property or services acquired as 
 a result of such a sale is exempt.  This exemption does not 
 apply to sales of tangible personal property primarily used in a 
 trade or business. 

    Subd. 24.    Constitutional prohibitions.  The sale of 
 and the storage, use, or consumption in Minnesota of tangible 
 personal property, or services, that the state of Minnesota is 
 prohibited from taxing under the Constitution or laws of the 
 United States or under the Constitution of Minnesota, are exempt.

    Subd. 25.    Maintenance of cemetery grounds.  Lawn care 
 and related services used in the maintenance of cemetery grounds 
 are exempt.  For purposes of this subdivision, "lawn care and 
 related services" means the services listed in section 297A.61, 
 subdivision 3, paragraph (g), clause (6), item (vi), and 
 "cemetery" means a cemetery for human burial. 

    Subd. 26.    Trade allowance.  The amount allowed as a 
 credit against the sales price for tangible personal property 
 taken in trade for resale is exempt. 

    Subd. 27.    Sewing materials.  Sewing materials are 
 exempt. For purposes of this subdivision "sewing materials" mean 
 fabric, thread, zippers, interfacing, buttons, trim, and other 
 items that are usually directly incorporated into the 
 construction of clothing, regardless of whether it is actually 
 used for making clothing.  It does not include batting, foam, or 
 fabric specifically manufactured for arts and craft projects, or 
 other materials for craft projects. 

    Subd. 28.    Ambulance supplies, parts, and equipment.  
 The following sales to or use by an ambulance service licensed 
 under section 144E.10 are exempt: 

    (1) supplies and equipment used to provide medical care; 
 and 

    (2) repair and replacement parts for ambulances. 

    Subd. 29.    Energy efficient products.  (a) A 
 residential lighting fixture or a compact fluorescent bulb is 
 exempt if it has an energy star label. 

    (b) The following products are exempt if they have an 
 energyguide label that indicates that the product meets or 
 exceeds the standards listed below: 

    (1) an electric heat pump hot water heater with an energy 
 factor of at least 1.9; 

    (2) a natural gas water heater with an energy factor of at 
 least 0.62; 

    (3) a propane gas or fuel oil water heater with an energy 
 factor of at least 0.62; 

    (4) a natural gas furnace with an annual fuel utilization 
 efficiency greater than 92 percent; and 

    (5) a propane gas or fuel oil furnace with an annual fuel 
 utilization efficiency greater than 92 percent. 

    (c) A photovoltaic device is exempt.  For purposes of this 
 subdivision, "photovoltaic device" means a solid-state 
 electrical device, such as a solar module, that converts light 
 directly into direct current electricity of voltage-current 
 characteristics that are a function of the characteristics of 
 the light source and the materials in and design of the device.  
 A "solar module" is a photovoltaic device that produces a 
 specified power output under defined test conditions, usually 
 composed of groups of solar cells connected in series, in 
 parallel, or in series-parallel combinations. 

    (d) For purposes of this subdivision, "energy star label" 
 means the label granted to certain products that meet United 
 States Environmental Protection Agency and United States 
 Department of Energy criteria for energy efficiency.  For 
 purposes of this subdivision, "energyguide label" means the 
 label that the United States Federal Trade Commissioner requires 
 manufacturers to apply to certain appliances under United States 
 Code, title 16, part 305. 

    Subd. 30.    Motor vehicles.  Motor vehicles taxable 
 under the provisions of chapter 297B are exempt. 

    Subd. 31.    Service loaner vehicle covered by warranty. 
  The loan of a vehicle by a motor vehicle dealer to a customer 
 as a replacement for a vehicle being serviced or repaired is 
 exempt if the vehicle is loaned pursuant to a warranty included 
 in the original purchase price of the vehicle being serviced or 
 repaired. 

    HIST: 2000 c 418 art 1 s 11,44 subd 3; 2000 c 490 art 8 s 13; 
 1Sp2001 c 5 art 7 s 51; art 12 s 36-44,93; 2002 c 377 art 3 s 
 7-10; 2003 c 127 art 1 s 21,22; art 6 s 9 

*   NOTE:  The amendment to subdivision 5 by Laws 2002, chapter 
*377, article 3, section 7, is effective for sales and purchases 
*made after June 30, 2002.  However, for vending machine 
*contracts entered into by a school, as defined in section 
*120A.05, prior to May 30, 2002, food sales from vending machines 
*continue to be exempt under subdivision 5 until July 1, 2003.  
*Laws 2002, chapter 377, article 3, section 7, the effective 
*date, as amended by Laws 2002, chapter 400, section 8. 

*   NOTE:  Subdivision 13a, as added by Laws 2002, chapter 377, 
*article 3, section 8, is effective for sales after June 30, 
*2003.  Laws 2002, chapter 377, article 3, section 8, the 
*effective date. 

*   NOTE:  Subdivision 29, as added by Laws 2001, First Special 
*Session chapter 5, article 12, section 44, is effective for 
*sales and purchases made after July 31, 2001, and before August 
*1, 2005.  Laws 2001, First Special Session chapter 5, article 
*12, section 44, the effective date. 

*   NOTE:  The amendment to subdivision 29 by Laws 2002, 
*chapter 377, article 3, section 10, is effective for sales and 
*purchases made on or after May 19, 2002, and before August 1, 
*2005.  Laws 2002, chapter 377, article 3, section 10, the 
*effective date.

     297A.68 Business exemptions. 

    Subdivision 1.    Scope.  The gross receipts from the 
 sale of, and storage, distribution, use, or consumption of the 
 items contained in this section are specifically exempted from 
 the taxes imposed by this chapter.  

    Subd. 2.    Materials consumed in industrial production. 
  (a) Materials stored, used, or consumed in industrial 
 production of personal property intended to be sold ultimately 
 at retail are exempt, whether or not the item so used becomes an 
 ingredient or constituent part of the property produced.  
 Materials that qualify for this exemption include, but are not 
 limited to, the following: 

    (1) chemicals, including chemicals used for cleaning food 
 processing machinery and equipment; 

    (2) materials, including chemicals, fuels, and electricity 
 purchased by persons engaged in industrial production to treat 
 waste generated as a result of the production process; 

    (3) fuels, electricity, gas, and steam used or consumed in 
 the production process, except that electricity, gas, or steam 
 used for space heating, cooling, or lighting is exempt if (i) it 
 is in excess of the average climate control or lighting for the 
 production area, and (ii) it is necessary to produce that 
 particular product; 

    (4) petroleum products and lubricants; 

    (5) packaging materials, including returnable containers 
 used in packaging food and beverage products; 

    (6) accessory tools, equipment, and other items that are 
 separate detachable units with an ordinary useful life of less 
 than 12 months used in producing a direct effect upon the 
 product; and 

    (7) the following materials, tools, and equipment used in 
 metalcasting:  crucibles, thermocouple protection sheaths and 
 tubes, stalk tubes, refractory materials, molten metal filters 
 and filter boxes, degassing lances, and base blocks. 

    (b) This exemption does not include: 

    (1) machinery, equipment, implements, tools, accessories, 
 appliances, contrivances and furniture and fixtures, except 
 those listed in paragraph (a), clause (6); and 

    (2) petroleum and special fuels used in producing or 
 generating power for propelling ready-mixed concrete trucks on 
 the public highways of this state. 

    (c) Industrial production includes, but is not limited to, 
 research, development, design or production of any tangible 
 personal property, manufacturing, processing (other than by 
 restaurants and consumers) of agricultural products (whether 
 vegetable or animal), commercial fishing, refining, smelting, 
 reducing, brewing, distilling, printing, mining, quarrying, 
 lumbering, generating electricity, the production of road 
 building materials, and the research, development, design, or 
 production of computer software.  Industrial production does not 
 include painting, cleaning, repairing or similar processing of 
 property except as part of the original manufacturing process.  

    Subd. 3.    Materials used in providing certain taxable 
 services.  (a) Materials stored, used, or consumed in 
 providing a taxable service listed in section 297A.61, 
 subdivision 3, paragraph (g), clause (6), intended to be sold 
 ultimately at retail are exempt. 

    (b) This exemption includes, but is not limited to: 

    (1) chemicals, lubricants, packaging materials, seeds, 
 trees, fertilizers, and herbicides, if these items are used or 
 consumed in providing the taxable service; 

    (2) chemicals used to treat waste generated as a result of 
 providing the taxable service; 

    (3) accessory tools, equipment, and other items that are 
 separate detachable units used in providing the service and that 
 have an ordinary useful life of less than 12 months; and 

    (4) fuel, electricity, gas, and steam used or consumed in 
 the production process, except that electricity, gas, or steam 
 used for space heating, cooling, or lighting is exempt if (i) it 
 is in excess of average climate control or lighting, and (ii) it 
 is necessary to produce that particular service. 

    (c) This exemption does not include machinery, equipment, 
 implements, tools, accessories, appliances, contrivances, 
 furniture, and fixtures used in providing the taxable service. 

    Subd. 4.    Taconite production materials.  Mill liners, 
 grinding rods, and grinding balls that are substantially 
 consumed in the production of taconite are exempt when sold to 
 or stored, used, or consumed by persons taxed under the in-lieu 
 provisions of chapter 298.  

    Subd. 5.    Capital equipment.  (a) Capital equipment is 
 exempt.  The tax must be imposed and collected as if the rate 
 under section 297A.62, subdivision 1, applied, and then refunded 
 in the manner provided in section 297A.75. 

    "Capital equipment" means machinery and equipment purchased 
 or leased, and used in this state by the purchaser or lessee 
 primarily for manufacturing, fabricating, mining, or refining 
 tangible personal property to be sold ultimately at retail if 
 the machinery and equipment are essential to the integrated 
 production process of manufacturing, fabricating, mining, or 
 refining.  Capital equipment also includes machinery and 
 equipment used to electronically transmit results retrieved by a 
 customer of an on-line computerized data retrieval system. 

    (b) Capital equipment includes, but is not limited to: 

    (1) machinery and equipment used to operate, control, or 
 regulate the production equipment; 

    (2) machinery and equipment used for research and 
 development, design, quality control, and testing activities; 

    (3) environmental control devices that are used to maintain 
 conditions such as temperature, humidity, light, or air pressure 
 when those conditions are essential to and are part of the 
 production process; 

    (4) materials and supplies used to construct and install 
 machinery or equipment; 

    (5) repair and replacement parts, including accessories, 
 whether purchased as spare parts, repair parts, or as upgrades 
 or modifications to machinery or equipment; 

    (6) materials used for foundations that support machinery 
 or equipment; 

    (7) materials used to construct and install special purpose 
 buildings used in the production process; 

    (8) ready-mixed concrete equipment in which the ready-mixed 
 concrete is mixed as part of the delivery process regardless if 
 mounted on a chassis and leases of ready-mixed concrete trucks; 
 and 

    (9) machinery or equipment used for research, development, 
 design, or production of computer software.  

    (c) Capital equipment does not include the following: 

    (1) motor vehicles taxed under chapter 297B; 

    (2) machinery or equipment used to receive or store raw 
 materials; 

    (3) building materials, except for materials included in 
 paragraph (b), clauses (6) and (7); 

    (4) machinery or equipment used for nonproduction purposes, 
 including, but not limited to, the following:  plant security, 
 fire prevention, first aid, and hospital stations; support 
 operations or administration; pollution control; and plant 
 cleaning, disposal of scrap and waste, plant communications, 
 space heating, cooling, lighting, or safety; 

    (5) farm machinery and aquaculture production equipment as 
 defined by section 297A.61, subdivisions 12 and 13; 

    (6) machinery or equipment purchased and installed by a 
 contractor as part of an improvement to real property; or 

    (7) any other item that is not essential to the integrated 
 process of manufacturing, fabricating, mining, or refining. 

    (d) For purposes of this subdivision: 

    (1) "Equipment" means independent devices or tools separate 
 from machinery but essential to an integrated production 
 process, including computers and computer software, used in 
 operating, controlling, or regulating machinery and equipment; 
 and any subunit or assembly comprising a component of any 
 machinery or accessory or attachment parts of machinery, such as 
 tools, dies, jigs, patterns, and molds.  

    (2) "Fabricating" means to make, build, create, produce, or 
 assemble components or property to work in a new or different 
 manner. 

    (3) "Integrated production process" means a process or 
 series of operations through which tangible personal property is 
 manufactured, fabricated, mined, or refined.  For purposes of 
 this clause, (i) manufacturing begins with the removal of raw 
 materials from inventory and ends when the last process prior to 
 loading for shipment has been completed; (ii) fabricating begins 
 with the removal from storage or inventory of the property to be 
 assembled, processed, altered, or modified and ends with the 
 creation or production of the new or changed product; (iii) 
 mining begins with the removal of overburden from the site of 
 the ores, minerals, stone, peat deposit, or surface materials 
 and ends when the last process before stockpiling is completed; 
 and (iv) refining begins with the removal from inventory or 
 storage of a natural resource and ends with the conversion of 
 the item to its completed form. 

    (4) "Machinery" means mechanical, electronic, or electrical 
 devices, including computers and computer software, that are 
 purchased or constructed to be used for the activities set forth 
 in paragraph (a), beginning with the removal of raw materials 
 from inventory through completion of the product, including 
 packaging of the product. 

    (5) "Machinery and equipment used for pollution control" 
 means machinery and equipment used solely to eliminate, prevent, 
 or reduce pollution resulting from an activity described in 
 paragraph (a).  

    (6) "Manufacturing" means an operation or series of 
 operations where raw materials are changed in form, composition, 
 or condition by machinery and equipment and which results in the 
 production of a new article of tangible personal property.  For 
 purposes of this subdivision, "manufacturing" includes the 
 generation of electricity or steam to be sold at retail. 

    (7) "Mining" means the extraction of minerals, ores, stone, 
 or peat. 

    (8) "On-line data retrieval system" means a system whose 
 cumulation of information is equally available and accessible to 
 all its customers. 

    (9) "Primarily" means machinery and equipment used 50 
 percent or more of the time in an activity described in 
 paragraph (a). 

    (10) "Refining" means the process of converting a natural 
 resource to an intermediate or finished product, including the 
 treatment of water to be sold at retail. 

    Subd. 6.    Special tooling.  Special tooling is exempt. 
 "Special tooling" means tools, dies, jigs, patterns, gauges, and 
 other special tools that have value and use only for the buyer 
 and for the use for which they are made.  An item has value and 
 use only to the buyer if the item is not standard enough to be 
 stocked or ordered from a catalog or other sales literature, but 
 must be produced in accordance with special requirements 
 peculiar to the buyer and not common to someone else whose 
 conditions for possible use of the material are reasonably 
 similar to the buyer's.  

    Subd. 7.    Air cooling equipment.  Equipment used for 
 air cooling is exempt, if the equipment is purchased for 
 conversion or replacement of an existing groundwater-based 
 once-through cooling system as required under section 103G.271, 
 subdivision 5. 

    Subd. 8.    Pollution control equipment; steel 
 reprocessing.  Pollution control equipment purchased by a 
 steel reprocessing firm is exempt if the equipment is necessary 
 to meet state or federal emission standards.  For purposes of 
 this subdivision: 

    (1) "pollution control equipment" means equipment used for 
 the purpose of eliminating, preventing, or reducing air, land, 
 or water pollution during or as a result of the manufacturing 
 process; and 

    (2) "steel reprocessing firm" means a firm whose primary 
 business is the recovery of steel from automobiles, appliances, 
 and other steel products and the rerefining of this recovered 
 metal into new steel products. 

    Subd. 9.    Super Bowl admissions.  The granting of the 
 privilege of admission to a world championship football game 
 sponsored by the national football league is exempt. 

    Subd. 10.    Publications; publication materials.  
 Tangible personal property that is used or consumed in producing 
 any publication regularly issued at average intervals not 
 exceeding three months is exempt, and any such publication is 
 exempt.  "Publication" includes, but is not limited to, a 
 qualified newspaper as defined by section 331A.02, together with 
 any supplements or enclosures.  "Publication" does not include 
 magazines and periodicals sold over the counter.  Tangible 
 personal property that is used or consumed in producing a 
 publication does not include machinery, equipment, implements, 
 tools, accessories, appliances, contrivances, furniture, and 
 fixtures used in the publication, or fuel, electricity, gas, or 
 steam used for space heating or lighting.  

    Advertising contained in a publication is a nontaxable 
 service and is exempt.  Persons who publish or sell newspapers 
 are engaging in a nontaxable service with respect to gross 
 receipts realized from such news-gathering or news-publishing 
 activities, including the sale of advertising.  

    Subd. 11.    Advertising materials.  Materials designed 
 to advertise and promote the sale of merchandise or services are 
 exempt if these materials are mailed or transferred to a person 
 outside the state for use solely outside the state.  Mailing and 
 reply envelopes and cards used exclusively in connection with 
 these advertising and promotional materials are included in this 
 exemption.  The exemption applies regardless of where the 
 mailing occurs.  The storage of these materials in the state for 
 the purpose of subsequently shipping or otherwise transferring 
 the material out of state is also exempt if the other conditions 
 in this subdivision are met. 

    Subd. 12.    Wind energy conversion systems.  Wind 
 energy conversion systems, as defined in section 216C.06, 
 subdivision 19, that are used as an electric power source are 
 exempt, and the materials used to manufacture, install, 
 construct, repair, or replace them are exempt. 

    Subd. 13.    Outstate transport or delivery.  (a) 
 Tangible personal property is exempt if all of the following 
 conditions are met:  

    (1) the property, without intermediate use, is shipped or 
 transported outside Minnesota by the purchaser or is stored, 
 processed, fabricated or manufactured into, attached to or 
 incorporated into other tangible personal property that is 
 transported or shipped outside Minnesota; and 

    (2) the property is used in a trade or business outside 
 Minnesota after being shipped or transported outside of 
 Minnesota, and is not returned to Minnesota, except in the 
 course of interstate commerce; and 

    (3) the property is either (i) not subject to tax in the 
 state or country to which it is transported for storage or use, 
 or (ii) to be used in other states or countries as part of a 
 maintenance contract. 

    (b) For purposes of this subdivision, storage or 
 processing, fabricating, manufacturing, attaching to, or 
 incorporating into other property is not intermediate use. 

    Subd. 14.    Property in transit.  Tangible personal 
 property is exempt if all of the following conditions are met: 

    (1) it is shipped or brought into Minnesota by a for-hire 
 carrier; 

    (2) without use, it is kept in a public warehouse; 

    (3) it is kept for the purpose of being later transported 
 outside Minnesota; and 

    (4) after storage, it is used solely outside Minnesota, 
 except in the course of interstate commerce. 

    Subd. 15.    Outstate delivery by seller.  Property is 
 exempt if:  

    (1) it is delivered in one of the following ways: 

    (i) delivery by the seller to a common carrier for delivery 
 outside Minnesota; 

    (ii) placement in the United States mail or parcel post 
 directed to the purchaser outside Minnesota; or 

    (iii) delivery to the purchaser outside Minnesota by means 
 of the seller's own delivery vehicles; and 

    (2) it is not later returned to a point within Minnesota, 
 except in the course of interstate commerce. 

    Subd. 16.    Packing materials.  Packing materials used 
 to pack and ship household goods are exempt if the ultimate 
 destination of the goods is outside Minnesota and if the goods 
 are not later returned to a point within Minnesota, except in 
 the course of interstate commerce.  

    Subd. 17.    Ships used in interstate commerce.  Repair, 
 replacement, and rebuilding parts and materials, and lubricants, 
 for ships or vessels used or to be used principally in 
 interstate or foreign commerce are exempt.  Vessels with a gross 
 registered tonnage of at least 3,000 tons are exempt. 

    Subd. 18.    Custom computer software.  The design, 
 development, writing, translation, fabrication, lease, or 
 transfer for a consideration of title or possession of a custom 
 computer program is exempt.  "Custom computer program" means a 
 computer program prepared to the special order of the customer, 
 either in the form of written procedures or contained on tapes, 
 discs, cards, or another device, or any required documentation 
 or manuals designed to facilitate the use of the custom computer 
 program transferred.  It includes those services represented by 
 separately stated charges for modifications to an existing 
 prewritten program that are prepared to the special order of the 
 customer.  It does not include a "canned" or prewritten computer 
 program that is held or existing for general or repeated sale or 
 lease, even if the prewritten or "canned" program was initially 
 developed on a custom basis or for in-house use.  Modification 
 to an existing prewritten program to meet the customer's needs 
 is custom computer programming only to the extent of the 
 modification.  

    Subd. 19.    Petroleum products.  The following 
 petroleum products are exempt: 

    (1) products upon which a tax has been imposed and paid 
 under chapter 296A, and for which no refund has been or will be 
 allowed because the buyer used the fuel for nonhighway use; 

    (2) products that are used in the improvement of 
 agricultural land by constructing, maintaining, and repairing 
 drainage ditches, tile drainage systems, grass waterways, water 
 impoundment, and other erosion control structures; 

    (3) products purchased by a transit system receiving 
 financial assistance under section 174.24, 256B.0625, 
 subdivision 17, or 473.384; 

    (4) products purchased by an ambulance service licensed 
 under chapter 144E; 

    (5) products used in a passenger snowmobile, as defined in 
 section 296A.01, subdivision 39, for off-highway business use as 
 part of the operations of a resort as provided under section 
 296A.16, subdivision 2, clause (2); or 

    (6) products purchased by a state or a political 
 subdivision of a state for use in motor vehicles exempt from 
 registration under section 168.012, subdivision 1, paragraph (b).

    Subd. 20.    Natural gas in vehicles.  Natural gas to be 
 used as a fuel in vehicles propelled by natural gas is exempt. 

    Subd. 21. Repealed, 1Sp2001 c 5 art 12 s 95 

    Subd. 22.    Copies of court reporter documents.  
 Transcripts or copies of transcripts of verbatim testimony are 
 exempt if produced and sold by court reporters or other 
 transcribers of legal proceedings to individuals or entities 
 that are parties to or representatives of parties to the 
 proceeding to which the transcript relates. 

    Subd. 23.    Automatic fire-safety sprinkler systems.  
 Automatic fire-safety sprinkler systems described in section 
 273.11, subdivision 6a, are exempt. 

    Subd. 24.    Waste processing equipment.  Equipment used 
 for processing solid or hazardous waste at a resource recovery 
 facility, as defined in section 115A.03, subdivision 28, is 
 exempt, including pollution control equipment at a resource 
 recovery facility that burns refuse-derived fuel or mixed 
 municipal solid waste as its primary fuel.  An electric 
 generation facility that processes and utilizes waste tires as 
 its primary fuel is a resource recovery facility for the 
 purposes of this section.  

    Subd. 25.    Sale of property used in a trade or business. 
  (a) The sale of tangible personal property primarily used in 
 a trade or business is exempt if the sale is not made in the 
 normal course of business of selling that kind of property and 
 if one of the following conditions is satisfied:  

    (1) the sale occurs in a transaction subject to or 
 described in section 118, 331, 332, 336, 337, 338, 351, 355, 
 368, 721, 731, 1031, or 1033 of the Internal Revenue Code; 

    (2) the sale is between members of a controlled group as 
 defined in section 1563(a) of the Internal Revenue Code; 

    (3) the sale is a sale of farm machinery; 

    (4) the sale is a farm auction sale; 

    (5) the sale is a sale of substantially all of the assets 
 of a trade or business; or 

    (6) the total amount of gross receipts from the sale of 
 trade or business property made during the calendar month of the 
 sale and the preceding 11 calendar months does not exceed $1,000.

    The use, storage, distribution, or consumption of tangible 
 personal property acquired as a result of a sale exempt under 
 this subdivision is also exempt. 

    (b) For purposes of this subdivision, the following terms 
 have the meanings given.  

    (1) A "farm auction" is a public auction conducted by a 
 licensed auctioneer if substantially all of the property sold 
 consists of property used in the trade or business of farming 
 and property not used primarily in a trade or business. 

    (2) "Trade or business" includes the assets of a separate 
 division, branch, or identifiable segment of a trade or business 
 if, before the sale, the income and expenses attributable to the 
 separate division, branch, or identifiable segment could be 
 separately ascertained from the books of account or record (the 
 lease or rental of an identifiable segment does not qualify for 
 the exemption). 

    (3) A "sale of substantially all of the assets of a trade 
 or business" must occur as a single transaction or a series of 
 related transactions within the 12-month period beginning on the 
 date of the first sale of assets intended to qualify for the 
 exemption provided in paragraph (a), clause (5). 

    Subd. 26. Repealed, 2002 c 377 art 3 s 26 

    Subd. 27. Renumbered 297A.67, subd 30 

    Subd. 28.    Medical supplies.  Medical supplies 
 purchased by a licensed health care facility or licensed health 
 care professional to provide medical treatment to residents or 
 patients are exempt.  The exemption does not apply to medical 
 equipment or components of medical equipment, laboratory 
 supplies, radiological supplies, and other items used in 
 providing medical services.  For purposes of this subdivision, 
 "medical supplies" means adhesive and nonadhesive bandages, 
 gauze pads and strips, cotton applicators, antiseptics, 
 nonprescription drugs, eye solution, and other similar supplies 
 used directly on the resident or patient in providing medical 
 services. 

    Subd. 29.    Prizes.  Tangible personal property that 
 will be given as prizes to players in games of skill or chance 
 is exempt if the games are conducted at events such as community 
 festivals, fairs, and carnivals and if the events last less than 
 six days.  This exemption does not apply to property awarded as 
 prizes in connection with lawful gambling as defined in section 
 349.12 or the state lottery. 

    Subd. 30.    Television commercials.  Tangible personal 
 property primarily used or consumed in the preproduction, 
 production, or postproduction of a television commercial is 
 exempt.  Any such commercial, regardless of the medium in which 
 it is transferred, is exempt.  "Preproduction" and "production" 
 include, but are not limited to, all activities related to the 
 preparation for shooting and the shooting of television 
 commercials, including film processing.  Equipment rented for 
 the preproduction and production activities is exempt.  
 "Postproduction" includes, but is not limited to, all activities 
 related to the finishing and duplication of television 
 commercials.  This exemption does not apply to tangible personal 
 property used primarily in administration, general management, 
 or marketing.  Machinery and equipment purchased for use in 
 producing such commercials and fuel, electricity, gas, or steam 
 used for space heating or lighting are not exempt under this 
 subdivision. 

    Subd. 31.    Waste management containers and compactors. 
  Compactors and waste collection containers are exempt if they 
 are purchased by a waste management service provider and are 
 used in providing waste management services as defined in 
 section 297H.01, subdivision 12.  A waste management service 
 provider that does not remit tax on customer charges or lease or 
 rental payments for compactors and waste collection containers 
 under chapter 297H is ineligible for this exemption.  

    Subd. 32.    Events located outside Minnesota.  Tickets 
 or admissions to places of amusement located outside Minnesota 
 or to athletic events to be held outside Minnesota are exempt. 

    Subd. 33.    Patent, trademark, and copyright drawings and 
 documents.  A drawing, diagram, or similar or related document 
 or a copy of such a document is exempt if the document: 

    (1) is produced and sold by a patent drafter; and 

    (2) is for use in: 

    (i) a patent, trademark, or copyright application to be 
 filed with government agencies; 

    (ii) an application to the federal Food and Drug 
 Administration for approval of a medical device; or 

    (iii) a judicial or quasi-judicial proceeding, including 
 mediation and arbitration, relating to the validity of or legal 
 rights under a patent, trademark, or copyright. 

    For purposes of this subdivision, a "patent drafter" is a 
 person who prepares illustrative documents required in the 
 preparation of intellectual property applications. 

    Subd. 34.    Machinery and equipment for ski areas.  
 Tangible personal property used or consumed primarily and 
 directly for tramways at ski areas or in snowmaking and 
 snow-grooming operations at ski hills, ski slopes, or ski 
 trails, including machinery, equipment, fuel, electricity, and 
 water additives used in the production and maintenance of 
 machine-made snow, is exempt. 

    Subd. 35.    Telecommunications equipment.  (a) 
 Telecommunications machinery and equipment purchased or leased 
 for use directly by a telecommunications service provider 
 primarily in the provision of telecommunications services that 
 are ultimately to be sold at retail are exempt, regardless of 
 whether purchased by the owner, a contractor, or a subcontractor.

    (b) For purposes of this subdivision, "telecommunications 
 machinery and equipment" includes, but is not limited to: 

    (1) machinery, equipment, and fixtures utilized in 
 receiving, initiating, amplifying, processing, transmitting, 
 retransmitting, recording, switching, or monitoring 
 telecommunications services, such as computers, transformers, 
 amplifiers, routers, bridges, repeaters, multiplexers, and other 
 items performing comparable functions; 

    (2) machinery, equipment, and fixtures used in the 
 transportation of telecommunications services, radio 
 transmitters and receivers, satellite equipment, microwave 
 equipment, and other transporting media, but not wire, cable, 
 fiber, poles, or conduit; 

    (3) ancillary machinery, equipment, and fixtures that 
 regulate, control, protect, or enable the machinery in clauses 
 (1) and (2) to accomplish its intended function, such as 
 auxiliary power supply, test equipment, towers, heating, 
 ventilating, and air conditioning equipment necessary to the 
 operation of the telecommunications equipment; and software 
 necessary to the operation of the telecommunications equipment; 
 and 

    (4) repair and replacement parts, including accessories, 
 whether purchased as spare parts, repair parts, or as upgrades 
 or modifications to qualified machinery or equipment. 

    (c) For purposes of this subdivision, "telecommunications 
 services" means telecommunications services as defined in 
 section 297A.61, subdivision 24, paragraph (a), only. 

    Subd. 36.    Delivery or distribution charges; direct 
 mail.  Charges for the delivery or distribution of direct mail 
 are exempt if the charges are separately stated on an invoice or 
 similar billing document given to the purchaser. 

    Subd. 37.    Job opportunity building zones.  (a) 
 Purchases of tangible personal property or taxable services by a 
 qualified business, as defined in section 469.310, are exempt if 
 the property or services are primarily used or consumed in a job 
 opportunity building zone designated under section 469.314. 

    (b) Purchase and use of construction materials and supplies 
 for construction of improvements to real property in a job 
 opportunity building zone are exempt if the improvements after 
 completion of construction are to be used in the conduct of a 
 qualified business, as defined in section 469.310.  This 
 exemption applies regardless of whether the purchases are made 
 by the business or a contractor. 

    (c) The exemptions under this subdivision apply to a local 
 sales and use tax regardless of whether the local sales tax is 
 imposed on the sales taxable as defined under this chapter. 

    (d) This subdivision applies to sales, if the purchase was 
 made and delivery received during the duration of the zone. 

    Subd. 38.    Biotechnology and health sciences industry 
 zone.  (a) Purchases of tangible personal property or taxable 
 services by a qualified business, as defined in section 469.330, 
 are exempt if the property or services are primarily used or 
 consumed in a biotechnology and health sciences industry zone 
 designated under section 469.334. 

    (b) Purchase and use of construction materials and supplies 
 for construction of improvements to real property in a 
 biotechnology and health sciences industry zone are exempt if 
 the improvements after completion of construction are to be used 
 in the conduct of a qualified business, as defined in section 
 469.330.  This exemption applies regardless of whether the 
 purchases are made by the business or a contractor. 

    (c) The exemptions under this subdivision apply to a local 
 sales and use tax regardless of whether the local sales tax is 
 imposed on the sales taxable as defined under this chapter. 

    (d)(1) The tax on sales of goods or services exempted under 
 this subdivision are imposed and collected as if the applicable 
 rate under section 297A.62 applied.  Upon application by the 
 purchaser, on forms prescribed by the commissioner, a refund 
 equal to the tax paid must be paid to the purchaser.  The 
 application must include sufficient information to permit the 
 commissioner to verify the sales tax paid and the eligibility of 
 the claimant to receive the credit.  No more than two 
 applications for refunds may be filed under this subdivision in 
 a calendar year.  The provisions of section 289A.40 apply to the 
 refunds payable under this subdivision. 

    (2) The amount required to make the refunds is annually 
 appropriated to the commissioner of revenue. 

    (3) The aggregate amount refunded to a qualified business 
 must not exceed the amount allocated to the qualified business 
 under section 469.335. 

    (e) This subdivision applies only to sales made during the 
 duration of the designation of the zone. 

    Subd. 39.    Preexisting bids or contracts.  (a) The 
 sale of tangible personal property or services is exempt from 
 tax for a period of six months from the effective date of the 
 law change that results in the imposition of the tax under this 
 chapter if: 

    (1) the act imposing the tax does not have transitional 
 effective date language for existing construction contracts and 
 construction bids; and 

    (2) the requirements of paragraph (b) are met. 

    (b) A sale is tax exempt under paragraph (a) if it meets 
 the requirements of either clause (1) or (2): 

    (1) For a construction contract: 

    (i) the goods or services sold must be used for the 
 performance of a bona fide written lump sum or fixed price 
 construction contract; 

    (ii) the contract must be entered into before the date the 
 goods or services become subject to the sales tax; 

    (iii) the contract must not provide for allocation of 
 future taxes; and 

    (iv) for each qualifying contract the contractor must give 
 the seller documentation of the contract on which an exemption 
 is to be claimed. 

    (2) For a bid: 

    (i) the goods or services sold must be used pursuant to an 
 obligation of a bid or bids; 

    (ii) the bid or bids must be submitted and accepted before 
 the date the goods or services became subject to the sales tax; 

    (iii) the bid or bids must not be able to be withdrawn, 
 modified, or changed without forfeiting a bond; and 

    (iv) for each qualifying bid, the contractor must give the 
 seller documentation of the bid on which an exemption is to be 
 claimed. 

    HIST: 2000 c 418 art 1 s 12,44 subd 3; 2000 c 490 art 8 s 
 8,14,15; 1Sp2001 c 5 art 12 s 6,45-54,93; 2002 c 377 art 3 s 11; 
 art 9 s 12; 2003 c 127 art 1 s 23-25; art 6 s 10,11; 1Sp2003 c 
 21 art 1 s 13; art 2 s 8 

     297A.69 Agricultural exemptions. 

    Subdivision 1.    Scope.  The gross receipts from the 
 sale of, and storage, distribution, use, or consumption of the 
 items contained in this section are specifically exempted from 
 the taxes imposed by this chapter.  

    Subd. 2.    Materials consumed in agricultural production. 
  Materials stored, used, or consumed in agricultural 
 production of personal property intended to be sold ultimately 
 at retail are exempt, whether or not the item becomes an 
 ingredient or constituent part of the property produced.  
 Materials that qualify for this exemption include, but are not 
 limited to, the following: 

    (1) feeds, seeds, trees, fertilizers, and herbicides, 
 including when purchased for use by farmers in a federal or 
 state farm or conservation program; 

    (2) materials sold to a veterinarian to be used or consumed 
 in the care, medication, and treatment of agricultural 
 production animals and horses; 

    (3) chemicals, including chemicals used for cleaning food 
 processing machinery and equipment; 

    (4) materials, including chemicals, fuels, and electricity 
 purchased by persons engaged in agricultural production to treat 
 waste generated as a result of the production process; 

    (5) fuels, electricity, gas, and steam used or consumed in 
 the production process, except that electricity, gas, or steam 
 used for space heating, cooling, or lighting is exempt if (i) it 
 is in excess of the average climate control or lighting for the 
 production area, and (ii) it is necessary to produce that 
 particular product; 

    (6) petroleum products and lubricants; 

    (7) packaging materials, including returnable containers 
 used in packaging food and beverage products; and 

    (8) accessory tools and equipment that are separate 
 detachable units with an ordinary useful life of less than 12 
 months used in producing a direct effect upon the product. 

 Machinery, equipment, implements, tools, accessories, 
 appliances, contrivances, and furniture and fixtures, except 
 those listed in this clause are not included within this 
 exemption. 

    Subd. 3.    Repair and replacement parts.  Repair and 
 replacement parts, except tires, used for maintenance or repair 
 of farm machinery, logging equipment, and aquaculture production 
 equipment are exempt, if the part replaces a machinery part 
 assigned a specific or generic part number by the manufacturer 
 of the machinery.  

    Subd. 4.    Machinery, equipment, and fencing.  The 
 following machinery, equipment, and fencing is exempt: 

    (1) farm machinery; 

    (2) logging equipment, including chain saws used for 
 commercial logging; 

    (3) fencing used for the containment of farmed cervidae, as 
 defined in section 17.451, subdivision 2; 

    (4) primary and backup generator units used to generate 
 electricity for the purpose of operating farm machinery, 
 aquacultural production equipment, or logging equipment, or 
 providing light or space heating necessary for the production of 
 livestock, dairy animals, dairy products, or poultry and poultry 
 products; and 

    (5) aquaculture production equipment.  

    Subd. 5.    Used farm tires.  The first $5,000 of gross 
 receipts from the sales of used, remanufactured, or repaired 
 tires for farm machinery, by a sole proprietor, in a calendar 
 year are exempt if: 

    (1) the seller had gross receipts from all sales of less 
 than $10,000 in the previous year; and 

    (2) the tires are not retreaded. 

    Subd. 6.    Horses; related materials.  (a) Horses, 
 including racehorses, are exempt. 

    (b) Materials, including feed and bedding, used or consumed 
 in the breeding, raising, owning, boarding, and keeping of 
 horses are exempt.  Machinery, equipment, implements, tools, 
 appliances, furniture, and fixtures used in the breeding, 
 raising, owning, boarding, and keeping of horses are not 
 included within this exemption. 

    Subd. 7.    Feed for poultry raised for human consumption. 
  Poultry feed is exempt if the poultry is raised for human 
 consumption. 

    HIST: 2000 c 418 art 1 s 13,44 subd 3; 2000 c 490 art 8 s 
 4,16; 1Sp2001 c 5 art 12 s 55; 2003 c 127 art 6 s 12-14 

*   NOTE:  Subdivision 5 is repealed by Laws 2003, chapter 127, 
*article 1, section 34, paragraph (b), effective January 1, 2006.

     297A.70 Exemptions for governments and nonprofit groups. 

    Subdivision 1.    Scope.  (a) To the extent provided in 
 this section, the gross receipts from sales of items to or by, 
 and storage, distribution, use, or consumption of items by the 
 organizations listed in this section are specifically exempted 
 from the taxes imposed by this chapter. 

    (b) Notwithstanding any law to the contrary enacted before 
 1992, only sales to governments and political subdivisions 
 listed in this section are exempt from the taxes imposed by this 
 chapter.  

    (c) "Sales" includes purchases under an installment 
 contract or lease purchase agreement under section 465.71. 

    Subd. 2.    Sales to government.  (a) All sales, except 
 those listed in paragraph (b), to the following governments and 
 political subdivisions, or to the listed agencies or 
 instrumentalities of governments and political subdivisions, are 
 exempt: 

    (1) the United States and its agencies and 
 instrumentalities; 

    (2) school districts, the University of Minnesota, state 
 universities, community colleges, technical colleges, state 
 academies, the Perpich Minnesota Center for Arts Education, and 
 an instrumentality of a political subdivision that is accredited 
 as an optional/special function school by the North Central 
 Association of Colleges and Schools; 

    (3) hospitals and nursing homes owned and operated by 
 political subdivisions of the state of tangible personal 
 property and taxable services used at or by hospitals and 
 nursing homes; 

    (4) the metropolitan council, for its purchases of vehicles 
 and repair parts to equip operations provided for in section 
 473.4051; 

    (5) other states or political subdivisions of other states, 
 if the sale would be exempt from taxation if it occurred in that 
 state; and 

    (6) sales to public libraries, public library systems, 
 multicounty, multitype library systems as defined in section 
 134.001, county law libraries under chapter 134A, state agency 
 libraries, the state library under section 480.09, and the 
 legislative reference library.  

    (b) This exemption does not apply to the sales of the 
 following products and services: 

    (1) building, construction, or reconstruction materials 
 purchased by a contractor or a subcontractor as a part of a 
 lump-sum contract or similar type of contract with a guaranteed 
 maximum price covering both labor and materials for use in the 
 construction, alteration, or repair of a building or facility; 

    (2) construction materials purchased by tax exempt entities 
 or their contractors to be used in constructing buildings or 
 facilities which will not be used principally by the tax exempt 
 entities; 

    (3) the leasing of a motor vehicle as defined in section 
 297B.01, subdivision 5, except for leases entered into by the 
 United States or its agencies or instrumentalities; or 

    (4) meals and lodging as defined under section 297A.61, 
 subdivision 3, paragraphs (d) and (g), clause (2), except for 
 meals and lodging purchased directly by the United States or its 
 agencies or instrumentalities. 

    (c) As used in this subdivision, "school districts" means 
 public school entities and districts of every kind and nature 
 organized under the laws of the state of Minnesota, and any 
 instrumentality of a school district, as defined in section 
 471.59. 

    Subd. 3.    Sales of certain goods and services to 
 government.  (a) The following sales to or use by the 
 specified governments and political subdivisions of the state 
 are exempt: 

    (1) repair and replacement parts for emergency rescue 
 vehicles, fire trucks, and fire apparatus to a political 
 subdivision; 

    (2) machinery and equipment, except for motor vehicles, 
 used directly for mixed municipal solid waste management 
 services at a solid waste disposal facility as defined in 
 section 115A.03, subdivision 10; 

    (3) chore and homemaking services to a political 
 subdivision of the state to be provided to elderly or disabled 
 individuals; 

    (4) telephone services to the Department of Administration 
 that are used to provide telecommunications services through the 
 intertechnologies revolving fund; 

    (5) firefighter personal protective equipment as defined in 
 paragraph (b), if purchased or authorized by and for the use of 
 an organized fire department, fire protection district, or fire 
 company regularly charged with the responsibility of providing 
 fire protection to the state or a political subdivision; 

    (6) bullet-resistant body armor that provides the wearer 
 with ballistic and trauma protection, if purchased by a law 
 enforcement agency of the state or a political subdivision of 
 the state, or a licensed peace officer, as defined in section 
 626.84, subdivision 1; 

    (7) motor vehicles purchased or leased by political 
 subdivisions of the state if the vehicles are exempt from 
 registration under section 168.012, subdivision 1, paragraph 
 (b), exempt from taxation under section 473.448, or exempt from 
 the motor vehicle sales tax under section 297B.03, clause (12); 

    (8) equipment designed to process, dewater, and recycle 
 biosolids for wastewater treatment facilities of political 
 subdivisions, and materials incidental to installation of that 
 equipment; and 

    (9) sales to a town of gravel and of machinery, equipment, 
 and accessories, except motor vehicles, used exclusively for 
 road and bridge maintenance, and leases by a town of motor 
 vehicles exempt from tax under section 297B.03, clause (10). 

    (b) For purposes of this subdivision, "firefighters 
 personal protective equipment" means helmets, including face 
 shields, chin straps, and neck liners; bunker coats and pants, 
 including pant suspenders; boots; gloves; head covers or hoods; 
 wildfire jackets; protective coveralls; goggles; self-contained 
 breathing apparatus; canister filter masks; personal alert 
 safety systems; spanner belts; optical or thermal imaging search 
 devices; and all safety equipment required by the Occupational 
 Safety and Health Administration. 

    Subd. 4.    Sales to nonprofit groups.  (a) All sales, 
 except those listed in paragraph (b), to the following 
 "nonprofit organizations" are exempt: 

    (1) a corporation, society, association, foundation, or 
 institution organized and operated exclusively for charitable, 
 religious, or educational purposes if the item purchased is used 
 in the performance of charitable, religious, or educational 
 functions; and 

    (2) any senior citizen group or association of groups that: 

    (i) in general limits membership to persons who are either 
 age 55 or older, or physically disabled; and 

    (ii) is organized and operated exclusively for pleasure, 
 recreation, and other nonprofit purposes, no part of the net 
 earnings of which inures to the benefit of any private 
 shareholders. 

 For purposes of this subdivision, charitable purpose includes 
 the maintenance of a cemetery owned by a religious organization. 

    (b) This exemption does not apply to the following sales: 

    (1) building, construction, or reconstruction materials 
 purchased by a contractor or a subcontractor as a part of a 
 lump-sum contract or similar type of contract with a guaranteed 
 maximum price covering both labor and materials for use in the 
 construction, alteration, or repair of a building or facility; 

    (2) construction materials purchased by tax-exempt entities 
 or their contractors to be used in constructing buildings or 
 facilities that will not be used principally by the tax-exempt 
 entities; and 

    (3) meals and lodging as defined under section 297A.61, 
 subdivision 3, paragraphs (d) and (g), clause (2); and 

    (4) leasing of a motor vehicle as defined in section 
 297B.01, subdivision 5, except as provided in paragraph (c). 

    (c) This exemption applies to the leasing of a motor 
 vehicle as defined in section 297B.01, subdivision 5, only if 
 the vehicle is: 

    (1) a truck, as defined in section 168.011, a bus, as 
 defined in section 168.011, or a passenger automobile, as 
 defined in section 168.011, if the automobile is designed and 
 used for carrying more than nine persons including the driver; 
 and 

    (2) intended to be used primarily to transport tangible 
 personal property or individuals, other than employees, to whom 
 the organization provides service in performing its charitable, 
 religious, or educational purpose. 

    (d) A limited liability company also qualifies for 
 exemption under this subdivision if (1) it consists of a sole 
 member that would qualify for the exemption, and (2) the items 
 purchased qualify for the exemption. 

    Subd. 5.    Veterans groups.  Sales to an organization 
 of military service veterans or an auxiliary unit of an 
 organization of military service veterans are exempt if: 

    (1) the organization or auxiliary unit is organized within 
 the state of Minnesota and is exempt from federal taxation under 
 section 501(c), clause (19), of the Internal Revenue Code; and 

    (2) the tangible personal property is for charitable, 
 civic, educational, or nonprofit uses and not for social, 
 recreational, pleasure, or profit uses. 

    Subd. 6.    Ambulances.  The lease of a motor vehicle 
 for use as an ambulance by an ambulance service licensed under 
 section 144E.10 is exempt. 

    Subd. 7.    Hospitals and outpatient surgical centers.  
 (a) Sales, except for those listed in paragraph (c), to a 
 hospital are exempt, if the items purchased are used in 
 providing hospital services.  For purposes of this subdivision, 
 "hospital" means a hospital organized and operated for 
 charitable purposes within the meaning of section 501(c)(3) of 
 the Internal Revenue Code, and licensed under chapter 144 or by 
 any other jurisdiction, and "hospital services" are services 
 authorized or required to be performed by a "hospital" under 
 chapter 144. 

    (b) Sales, except for those listed in paragraph (c), to an 
 outpatient surgical center are exempt, if the items purchased 
 are used in providing outpatient surgical services.  For 
 purposes of this subdivision, "outpatient surgical center" means 
 an outpatient surgical center organized and operated for 
 charitable purposes within the meaning of section 501(c)(3) of 
 the Internal Revenue Code, and licensed under chapter 144 or by 
 any other jurisdiction.  For the purposes of this subdivision, 
 "outpatient surgical services" means:  (1) services authorized 
 or required to be performed by an outpatient surgical center 
 under chapter 144; and (2) urgent care.  For purposes of this 
 subdivision, "urgent care" means health services furnished to a 
 person whose medical condition is sufficiently acute to require 
 treatment unavailable through, or inappropriate to be provided 
 by, a clinic or physician's office, but not so acute as to 
 require treatment in a hospital emergency room.  

    (c) This exemption does not apply to the following products 
 and services: 

    (1) purchases made by a clinic, physician's office, or any 
 other medical facility not operating as a hospital or outpatient 
 surgical center, even though the clinic, office, or facility may 
 be owned and operated by a hospital or outpatient surgical 
 center; 

    (2) sales under section 297A.61, subdivision 3, paragraphs 
 (d) and (g), clause (2); 

    (3) building and construction materials used in 
 constructing buildings or facilities that will not be used 
 principally by the hospital or outpatient surgical center; 

    (4) building, construction, or reconstruction materials 
 purchased by a contractor or a subcontractor as a part of a 
 lump-sum contract or similar type of contract with a guaranteed 
 maximum price covering both labor and materials for use in the 
 construction, alteration, or repair of a hospital or outpatient 
 surgical center; or 

    (5) the leasing of a motor vehicle as defined in section 
 297B.01, subdivision 5. 

    (d) A limited liability company also qualifies for 
 exemption under this subdivision if (1) it consists of a sole 
 member that would qualify for the exemption, and (2) the items 
 purchased qualify for the exemption. 

    Subd. 8.    Regionwide public safety radio communication 
 system; products and services.  Products and services 
 including, but not limited to, end user equipment used for 
 construction, ownership, operation, maintenance, and enhancement 
 of the backbone system of the regionwide public safety radio 
 communication system established under sections 403.21 to 
 403.34, are exempt.  For purposes of this subdivision, backbone 
 system is defined in section 403.21, subdivision 9.  This 
 subdivision is effective for purchases, sales, storage, use, or 
 consumption occurring before August 1, 2005, in the counties of 
 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 

    Subd. 9.    Sacramental wine.  Wine for sacramental 
 purposes in religious ceremonies, as described in section 
 340A.316, is exempt if the wine is purchased from a nonprofit 
 religious organization meeting the requirements of subdivision 4 
 or from a person authorized to import sacramental wine without a 
 license as provided in section 340A.316. 

    Subd. 10.    Nonprofit tickets or admissions.  (a) 
 Tickets or admissions to an event are exempt if all the gross 
 receipts are recorded as such, in accordance with generally 
 accepted accounting principles, on the books of one or more 
 organizations whose primary mission is to provide an opportunity 
 for citizens of the state to participate in the creation, 
 performance, or appreciation of the arts, and provided that each 
 organization is: 

    (1) an organization described in section 501(c)(3) of the 
 Internal Revenue Code in which voluntary contributions make up 
 at least the following percent of the organization's annual 
 revenue in its most recently completed 12-month fiscal year, or 
 in the current year if the organization has not completed a 
 12-month fiscal year: 

    (i) for sales made after July 31, 2001, and before July 1, 
 2002, for the organization's fiscal year completed in calendar 
 year 2000, three percent; 

    (ii) for sales made on or after July 1, 2002, and on or 
 before June 30, 2003, for the organization's fiscal year 
 completed in calendar year 2001, three percent; 

    (iii) for sales made on or after July 1, 2003, and on or 
 before June 30, 2004, for the organization's fiscal year 
 completed in calendar year 2002, four percent; and 

    (iv) for sales made in each 12-month period, beginning on 
 July 1, 2004, and each subsequent year, for the organization's 
 fiscal year completed in the preceding calendar year, five 
 percent; 

    (2) a municipal board that promotes cultural and arts 
 activities; or 

    (3) the University of Minnesota, provided that the event is 
 held at a university-owned facility.  

 The exemption only applies if the entire proceeds, after 
 reasonable expenses, are used solely to provide opportunities 
 for citizens of the state to participate in the creation, 
 performance, or appreciation of the arts. 

    (b) Tickets or admissions to the premises of the Minnesota 
 zoological garden are exempt, provided that the exemption under 
 this paragraph does not apply to tickets or admissions to 
 performances or events held on the premises unless the 
 performance or event is sponsored and conducted exclusively by 
 the Minnesota Zoological Board or employees of the Minnesota 
 Zoological Garden. 

    Subd. 11.    School tickets or admissions.  Tickets or 
 admissions to regular season school games, events, and 
 activities are exempt.  For purposes of this subdivision, 
 "school" has the meaning given it in section 120A.22, 
 subdivision 4. 

    Subd. 12.    YMCA, YWCA, and JCC memberships.  The sale 
 of memberships, meaning both onetime initiation fees and 
 periodic membership dues, to an association incorporated under 
 section 315.44 or an organization defined under section 315.51, 
 are exempt.  However, all separate charges made for the 
 privilege of having access to and the use of the association's 
 sports and athletic facilities are taxable. 

    Subd. 13.    Fund-raising sales by or for nonprofit groups.
  (a) The following sales by the specified organizations for 
 fund-raising purposes are exempt, subject to the limitations 
 listed in paragraph (b): 

    (1) all sales made by an organization that exists solely 
 for the purpose of providing educational or social activities 
 for young people primarily age 18 and under; 

    (2) all sales made by an organization that is a senior 
 citizen group or association of groups if (i) in general it 
 limits membership to persons age 55 or older; (ii) it is 
 organized and operated exclusively for pleasure, recreation, and 
 other nonprofit purposes; and (iii) no part of its net earnings 
 inures to the benefit of any private shareholders; 

    (3) the sale or use of tickets or admissions to a golf 
 tournament held in Minnesota if the beneficiary of the 
 tournament's net proceeds qualifies as a tax-exempt organization 
 under section 501(c)(3) of the Internal Revenue Code; and 

    (4) sales of gum, candy, and candy products sold for 
 fund-raising purposes by a nonprofit organization that provides 
 educational and social activities primarily for young people age 
 18 and under. 

    (b) The exemptions listed in paragraph (a) are limited in 
 the following manner: 

    (1) the exemption under paragraph (a), clauses (1) and (2), 
 applies only if the gross annual receipts of the organization 
 from fund-raising do not exceed $10,000; and 

    (2) the exemption under paragraph (a), clause (1), does not 
 apply if the sales are derived from admission charges or from 
 activities for which the money must be deposited with the school 
 district treasurer under section 123B.49, subdivision 2, or be 
 recorded in the same manner as other revenues or expenditures of 
 the school district under section 123B.49, subdivision 4. 

    (c) Sales of tangible personal property are exempt if the 
 entire proceeds, less the necessary expenses for obtaining the 
 property, will be contributed to a registered combined 
 charitable organization described in section 309.501, to be used 
 exclusively for charitable, religious, or educational purposes, 
 and the registered combined charitable organization has given 
 its written permission for the sale.  Sales that occur over a 
 period of more than 24 days per year are not exempt under this 
 paragraph. 

    (d) For purposes of this subdivision, a club, association, 
 or other organization of elementary or secondary school students 
 organized for the purpose of carrying on sports, educational, or 
 other extracurricular activities is a separate organization from 
 the school district or school for purposes of applying the 
 $10,000 limit. 

    Subd. 14.    Fund-raising events sponsored by nonprofit 
 groups.  (a) Sales of tangible personal property at, and 
 admission charges for fund-raising events sponsored by, a 
 nonprofit organization are exempt if: 

    (1) all gross receipts are recorded as such, in accordance 
 with generally accepted accounting practices, on the books of 
 the nonprofit organization; and 

    (2) the entire proceeds, less the necessary expenses for 
 the event, will be used solely and exclusively for charitable, 
 religious, or educational purposes.  Exempt sales include the 
 sale of food, meals, and drinks at the fund-raising event. 

    (b) This exemption is limited in the following manner: 

    (1) it does not apply to admission charges for events 
 involving bingo or other gambling activities or to charges for 
 use of amusement devices involving bingo or other gambling 
 activities; 

    (2) all gross receipts are taxable if the profits are not 
 used solely and exclusively for charitable, religious, or 
 educational purposes; 

    (3) it does not apply unless the organization keeps a 
 separate accounting record, including receipts and disbursements 
 from each fund-raising event that documents all deductions from 
 gross receipts with receipts and other records; 

    (4) it does not apply to any sale made by or in the name of 
 a nonprofit corporation as the active or passive agent of a 
 person that is not a nonprofit corporation; 

    (5) all gross receipts are taxable if fund-raising events 
 exceed 24 days per year; 

    (6) it does not apply to fund-raising events conducted on 
 premises leased for more than five days but less than 30 days; 
 and 

    (7) it does not apply if the risk of the event is not borne 
 by the nonprofit organization and the benefit to the nonprofit 
 organization is less than the total amount of the state and 
 local tax revenues foregone by this exemption. 

    (c) For purposes of this subdivision, a "nonprofit 
 organization" means any unit of government, corporation, 
 society, association, foundation, or institution organized and 
 operated for charitable, religious, educational, civic, 
 fraternal, and senior citizens' or veterans' purposes, no part 
 of the net earnings of which inures to the benefit of a private 
 individual. 

    Subd. 15.    Statewide amateur athletic games.  
 Notwithstanding section 297A.61, subdivision 3, or any other 
 provision of this chapter, the gross receipts from the following 
 sales made to or by a nonprofit corporation designated by the 
 Minnesota Amateur Sports Commission to conduct a series of 
 statewide amateur athletic games and related events, workshops, 
 and clinics are exempt: 

    (1) sales of tangible personal property to or the storage, 
 use, or other consumption of tangible personal property by the 
 nonprofit corporation; and 

    (2) sales of tangible personal property, admission charges, 
 and sales of food, meals, and drinks by the nonprofit 
 corporation at fund-raising events, athletic events, or athletic 
 facilities. 

    Subd. 16.    Camp fees.  Fees to camps or other 
 recreation facilities are exempt for: 

    (1) services primarily for children, adults accompanying 
 children, or persons with disabilities; or 

    (2) educational or religious activities; 

 and the camp or facilities are owned and operated by an exempt 
 organization under section 501(c)(3) of the Internal Revenue 
 Code.  

    HIST: 2000 c 418 art 1 s 14,44 subd 3; 2000 c 490 art 8 s 
 9-11; 1Sp2001 c 5 art 7 s 52; art 12 s 56-64; 1Sp2001 c 8 art 2 
 s 63; 1Sp2001 c 13 s 16; 2002 c 377 art 3 s 12; art 10 s 24; 
 2003 c 2 art 1 s 35; 1Sp2003 c 1 art 2 s 135; 1Sp2003 c 21 art 8 
 s 5-8 

     297A.71 Construction exemptions. 

    Subdivision 1.    Scope.  The gross receipts from the 
 sale of, and storage, distribution, use, or consumption of the 
 tangible personal property contained in this section are 
 specifically exempted from the taxes imposed by this chapter.  
 Building materials, equipment, and supplies and other items 
 exempt under this section are exempt regardless of whether 
 purchased by the owner or a contractor, subcontractor, or 
 builder. 

    Subd. 2. Repealed, 1Sp2001 c 5 art 12 s 95 

    Subd. 3.    Correctional facilities.  Building materials 
 and supplies for constructing or improving an adult or juvenile 
 correctional facility by a county, home rule charter city, or 
 statutory city are exempt if the project is mandated by state or 
 federal law, rule, or regulation.  The tax must be imposed and 
 collected as if the rate under section 297A.62, subdivision 1, 
 applied and then refunded in the manner provided in section 
 297A.75. 

    Subd. 4.    Lake Superior Center.  Building materials 
 and supplies for construction of the Lake Superior Center are 
 exempt. 

    Subd. 5.    Science Museum.  Building materials and 
 supplies for construction of the Science Museum of Minnesota are 
 exempt. 

    Subd. 6.    Business incubator and industrial park.  
 Building materials and supplies for construction of a facility 
 that includes a business incubator and industrial park are 
 exempt if the facility: 

    (1) is owned and operated by a nonprofit charitable 
 organization that qualifies for tax exemption under section 
 501(c)(3) of the Internal Revenue Code; 

    (2) is used for the development of nonretail businesses, 
 offering access to equipment, space, services, and advice to the 
 tenant businesses, for the purpose of encouraging economic 
 development and job creation in the area served by the 
 organization, and emphasizes development of businesses that 
 manufacture products from materials found in the waste stream, 
 or manufacture alternative energy and conservation systems, or 
 make use of emerging environmental technologies; 

    (3) includes in its structure systems of material and 
 energy exchanges that use waste products from one industrial 
 process as sources of energy and material for other processes; 
 and 

    (4) makes use of solar and wind energy technology and 
 incorporates salvaged materials in its construction. 

    A limited liability company also qualifies for exemption 
 under this subdivision if (1) it consists of a sole member that 
 would qualify for the exemption, and (2) the items purchased 
 qualify for the exemption. 

    Subd. 7.    Alfalfa processing facility.  Building 
 materials and supplies for constructing a facility that either 
 develops market-value agricultural products made from alfalfa 
 leaf material, or produces biomass energy fuel or electricity 
 from alfalfa stems in accordance with the biomass mandate 
 imposed under section 216B.2424 are exempt if the total capital 
 investment made in the value-added agricultural products and 
 biomass electric generation facilities is at least $50,000,000. 

    Subd. 8.    Wood waste cogeneration facility.  Building 
 materials and supplies for constructing, equipping, or modifying 
 a district heating and cooling system cogeneration facility are 
 exempt if the facility: 

    (1) utilizes wood waste as a primary fuel source; and 

    (2) satisfies the requirements of the biomass mandate in 
 section 216B.2424, subdivision 5. 

    Subd. 9.    Direct satellite broadcasting facility.  
 Building materials and supplies for constructing a new facility 
 in Minnesota for providing Federal Communications Commission 
 licensed direct satellite broadcasting services using direct 
 broadcast satellites operating in the 12-GHz. band or fixed 
 satellite regional or national program services, as defined in 
 section 272.02, subdivision 16, are exempt if construction of 
 the facility was commenced after June 30, 1993.  All machinery, 
 equipment, tools, accessories, appliances, contrivances, 
 furniture, fixtures, and all technical equipment or tangible 
 personal property of any other nature or description necessary 
 to the construction and equipping of that facility in order to 
 provide those services are also exempt. 

    Subd. 10.    Aircraft heavy maintenance facility.  
 Materials, equipment, and supplies used or consumed in 
 constructing a heavy maintenance facility for aircraft that is 
 to be owned by the state of Minnesota or one of its political 
 subdivisions and leased by an airline company, or an aircraft 
 engine repair facility described in section 116R.02, subdivision 
 6, are exempt.  Except for equipment owned or leased by a 
 contractor, all machinery, equipment, and tools necessary to the 
 construction and equipping of that facility in order to provide 
 those services are also exempt. 

    Subd. 11.    Building materials; disabled veterans.  
 Building materials to be used in the construction or remodeling 
 of a residence are exempt when the construction or remodeling is 
 financed in whole or in part by the United States in accordance 
 with United States Code, title 38, sections 2101 to 2105.  The 
 tax must be imposed and collected as if the rate under section 
 297A.62, subdivision 1, applied and then refunded in the manner 
 provided in section 297A.75. 

    Subd. 12.    Chair lifts, ramps, elevators.  Chair 
 lifts, ramps, and elevators and building materials used to 
 install or construct them are exempt, if they are authorized by 
 a physician and installed in or attached to the owner's 
 homestead.  The tax must be imposed and collected as if the rate 
 under section 297A.62, subdivision 1, applied and then refunded 
 in the manner provided in section 297A.75. 

    Subd. 13.    Agriculture processing facility materials.  
 Building materials and supplies for constructing an agriculture 
 processing facility as defined in section 469.1811 in which the 
 total capital investment in the processing facility is expected 
 to exceed $100,000,000 are exempt.  The tax must be imposed and 
 collected as if the rate under section 297A.62, subdivision 1, 
 applied, and then refunded in the manner provided in section 
 297A.75. 

    Subd. 14.    Mineral production facilities.  Building 
 materials, equipment, and supplies used for the construction of 
 the following mineral production facilities are exempt. 

    The mineral production facilities that qualify for this 
 exemption are: 

    (1) a value added iron products plant, which may be either 
 a new plant or a facility incorporated into an existing plant 
 that produces iron upgraded to a minimum of 75 percent iron 
 content or any iron alloy with a total minimum metallic content 
 of 90 percent; 

    (2) a facility used for the manufacture of fluxed taconite 
 pellets as defined in section 298.24; 

    (3) a new capital project that has a total cost of over 
 $40,000,000 that is directly related to production, cost, or 
 quality at an existing taconite facility that does not qualify 
 under clause (1) or (2); and 

    (4) a new mine or minerals processing plant for any mineral 
 subject to the net proceeds tax imposed under section 298.015. 

    The tax must be imposed and collected as if the rate under 
 section 297A.62, subdivision 1, applied, and then refunded in 
 the manner provided in section 297A.75. 

    Subd. 15. Repealed, 1Sp2001 c 5 art 12 s 95 

    Subd. 16. Repealed, 1Sp2001 c 5 art 12 s 9; 2002 c 377 
 art 3 s 24 

    Subd. 17.    Environmental learning center.  
 Construction materials and supplies are exempt if they are used 
 or consumed in constructing or improving the Long Lake 
 Conservation Center pursuant to the funding provided under Laws 
 1994, chapter 643, section 23, subdivision 28, as amended by 
 Laws 1995, First Special Session chapter 2, article 1, section 
 48; Laws 1996, chapter 463, section 7, subdivision 26; and Laws 
 1997, chapter 246, section 24.  The tax must be calculated and 
 paid as if the rate in section 297A.62, subdivision 1, was in 
 effect and a refund applied for in the manner prescribed in 
 section 297A.75. 

    Subd. 18.    Soybean oilseed processing and refining 
 facility.  Construction materials and supplies are exempt if: 

    (1) the materials and supplies are used or consumed in 
 constructing a facility for soybean oilseed processing and 
 refining; 

    (2) the total capital investment made in the facility is at 
 least $60,000,000; and 

    (3) the facility is constructed by a Minnesota-based 
 cooperative organized under chapter 308A. 

    Subd. 19.    Earle Brown Heritage Center.  Materials and 
 supplies used or consumed in and equipment incorporated into the 
 construction, improvement, or expansion of the Earle Brown 
 Heritage Center in Brooklyn Center are exempt.  This subdivision 
 is effective for purchases made before July 1, 2003. 

    Subd. 20.    Construction materials and supplies; beef 
 processing facility.  Materials and supplies used or consumed 
 in, and equipment incorporated into, the expansion, remodeling, 
 or improvement of a facility used for cattle slaughtering are 
 exempt if:  

    (1) the cost of the project is expected to exceed 
 $15,000,000; 

    (2) the expansion, remodeling, or improvement of the 
 facility will be used to fabricate beef; 

    (3) the number of jobs at the facility is expected to 
 increase by at least 150 when the project is completed; and 

    (4) the project is expected to be completed by December 31, 
 2001.  

    Subd. 21.    Construction materials and equipment; biomass 
 electrical generating facility.  Materials and supplies used 
 or consumed in, and equipment incorporated into, the 
 construction, improvement, or expansion of a facility using 
 biomass to generate electricity are exempt if: 

    (1) the facility exclusively utilizes residue wood, 
 sawdust, bark, chipped wood, or brush to generate electricity; 

    (2) the facility utilizes a reciprocated grate combination 
 system; and 

    (3) the total gross capacity of the facility is 15 to 21 
 megawatts.  

    Subd. 22.    Materials used to make residential property 
 handicapped accessible.  Building materials and equipment sold 
 to, or stored, used, or consumed by, a nonprofit organization 
 are exempt if: 

    (1) the materials and equipment are used or incorporated 
 into modifying an existing residential structure to make it 
 handicapped accessible; and 

    (2) the materials and equipment used in the modification 
 would qualify for an exemption under either subdivision 11 or 12 
 if made by the current owner of the residence. 

    For purposes of this subdivision, "nonprofit organization" 
 means any nonprofit corporation, society, association, 
 foundation, or institution organized and operated exclusively 
 for charitable, religious, educational, or civic purposes; or a 
 veterans' group exempt from federal taxation under section 
 501(c), clause (19), of the Internal Revenue Code. 

    Subd. 23.    Construction materials for qualified 
 low-income housing projects.  (a) Purchases of materials and 
 supplies used or consumed in and equipment incorporated into the 
 construction, improvement, or expansion of qualified low-income 
 housing projects are exempt from the tax imposed under this 
 chapter if the owner of the qualified low-income housing project 
 is: 

    (1) the public housing agency or housing and redevelopment 
 authority of a political subdivision; 

    (2) an entity exercising the powers of a housing and 
 redevelopment authority within a political subdivision; 

    (3) a limited partnership in which the sole general partner 
 is an authority under clause (1) or an entity under clause (2); 

    (4) a nonprofit corporation subject to the provisions of 
 chapter 317A, and qualifying under section 501(c)(3) or 
 501(c)(4) of the Internal Revenue Code of 1986, as amended; or 

    (5) an owner entity, as defined in Code of Federal 
 Regulations, title 24, part 941.604, for a qualified low-income 
 housing project described in paragraph (b), clause (5). 

    This exemption applies regardless of whether the purchases 
 are made by the owner of the facility or a contractor.  

    (b) For purposes of this exemption, "qualified low-income 
 housing project" means: 

    (1) a housing or mixed use project in which at least 20 
 percent of the residential units are qualifying low-income 
 rental housing units as defined in section 273.126; 

    (2) a federally assisted low-income housing project 
 financed by a mortgage insured or held by the United States 
 Department of Housing and Urban Development under United States 
 Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 
 1715z-1; United States Code, title 42, section 1437f; the Native 
 American Housing Assistance and Self-Determination Act, United 
 States Code, title 25, section 4101 et seq.; or any similar 
 successor federal low-income housing program; 

    (3) a qualified low-income housing project as defined in 
 United States Code, title 26, section 42(g), meeting all of the 
 requirements for a low-income housing credit under section 42 of 
 the Internal Revenue Code regardless of whether the project 
 actually applies for or receives a low-income housing credit; 

    (4) a project that will be operated in compliance with 
 Internal Revenue Service revenue procedure 96-32; or 

    (5) a housing or mixed use project in which all or a 
 portion of the residential units are subject to the requirements 
 of section 5 of the United States Housing Act of 1937. 

    (c) For a project, a portion of which is not used for 
 low-income housing units, the amount of purchases that are 
 exempt under this subdivision must be determined by multiplying 
 the total purchases, as specified in paragraph (a), by the ratio 
 of: 

    (1) the total gross square footage of units subject to the 
 income limits under section 273.126, the financing for the 
 project, the federal low-income housing tax credit, revenue 
 procedure 96-32, or section 5 of the United States Housing Act 
 of 1937, as applicable to the project; and 

    (2) the total gross square footage of all units in the 
 project. 

    (d) The tax must be imposed and collected as if the rate 
 under section 297A.62, subdivision 1, applied, and then refunded 
 in the manner provided in section 297A.75. 

    Subd. 24.    Construction materials and equipment; 
 agricultural processing facility.  Materials and supplies used 
 or consumed in, and machinery and equipment incorporated into 
 the construction, improvement, or expansion of a soybean oilseed 
 processing facility are exempt if: 

    (1) the facility is owned and operated by a cooperative 
 organized under chapter 308A; and 

    (2) the facility is located in a county that has a 
 population of less than 21,000 according to the most recent 
 decennial census. 

    Subd. 25. MS 2001 Supp Expired 

    Subd. 26. MS 2001 Supp Expired 

    Subd. 27.    Construction materials and equipment; waste 
 tires cogeneration electric generating facility.  Materials 
 and supplies used or consumed in, and equipment incorporated 
 into, the construction, improvement, or expansion of a facility 
 using waste tires to generate electricity are exempt if: 

    (1) the facility utilizes waste tires as a primary fuel in 
 generating electricity; 

    (2) the facility is a cogeneration facility; and 

    (3) the installed capacity of the facility is 1 to 25 
 megawatts. 

    Subd. 28.    Construction materials and equipment; 
 replacement agricultural processing facility.  Materials and 
 supplies used or consumed in, and machinery and equipment 
 incorporated into, the construction of a meat-packing or 
 meat-processing facility are exempt if: 

    (1) the cost of the project exceeds $75,000,000; and 

    (2) the facility replaces a facility that was destroyed by 
 fire. 

    Subd. 29.    Hydroelectric generating facility.  
 Materials and supplies used or consumed in the construction of a 
 hydroelectric generating facility that meets the requirements of 
 this subdivision are exempt.  To qualify for the exemption under 
 this subdivision, a hydroelectric generating facility must: 

    (1) utilize two turbine generators at a dam site existing 
 on March 31, 1994; 

    (2) be located on publicly owned land and within 2,500 feet 
 of a 13.8 kilovolt distribution circuit; and 

    (3) be eligible to receive a renewable energy production 
 incentive payment under section 216C.41. 

    Subd. 30.    Nonprofit arts organization.  Materials, 
 equipment, and supplies incorporated into the construction or 
 renovation of a state bond financed facility funded in 2002 
 which is owned or operated by a nonprofit arts organization are 
 exempt. 

    Subd. 31.    Construction materials; baseball park.  
 Materials, supplies used or consumed in, and equipment 
 incorporated into the construction or improvement of the 
 baseball park constructed under sections 473I.01 to 473I.10, are 
 exempt.  This subdivision expires one year after the first major 
 league baseball game is played in the baseball park. 

    Subd. 32.    Walker Art Center.  Materials, equipment, 
 and supplies used or consumed in construction of the Walker Art 
 Center are exempt if more than $70,000,000 is raised from 
 private sources to pay for a portion of the costs of the project.

    HIST: 2000 c 418 art 1 s 15,44 subd 3; 2000 c 490 art 8 s 12; 
 1Sp2001 c 5 art 12 s 65-70; 2002 c 377 art 3 s 13-16; 2002 c 397 
 s 2; 1Sp2003 c 21 art 8 s 9 

*   NOTE:  Subdivision 24, as added by Laws 2001, First Special 
*Session chapter 5, article 12, section 66, is effective for 
*sales and purchases made after June 30, 2001, and before July 1, 
*2004.  Laws 2001, First Special Session chapter 5, article 12, 
*section 66, the effective date. 

*   NOTE:  Subdivision 27, as added by Laws 2001, First Special 
*Session chapter 5, article 12, section 69, is effective for 
*purchases and sales made on or after June 1, 2001, and before 
*January 1, 2004.  Laws 2001, First Special Session chapter 5, 
*article 12, section 69, the effective date. 

*   NOTE:  Subdivision 28, as added by Laws 2002, chapter 377, 
*article 3, section 14, is effective for sales and purchases made 
*after March 31, 2002, and before January 1, 2005.  Laws 2002, 
*chapter 377, article 3, section 14, the effective date. 

*   NOTE:  Subdivision 30, as added by Laws 2002, chapter 377, 
*article 3, section 16, is effective for sales and purchases made 
*after May 18, 2002, and before July 1, 2007.  Laws 2002, chapter 
*377, article 3, section 16, the effective date. 

*   NOTE:  Subdivision 21 (formerly section 297A.25, 
*subdivision 82) is effective for purchases made before July 1, 
*2005.  Laws 1999, chapter 243, article 4, section 19, as amended 
*by Laws 2001, First Special Session chapter 5, article 12, 
*section 88; and Laws 2003, First Special Session chapter 21, 
*article 8, section 14. 

*   NOTE:  Subdivision 29, as added by Laws 2002, chapter 377, 
*article 3, section 15, is effective for sales made after August 
*31, 2002, and on or before December 31, 2004.  Laws 2002, 
*chapter 377, article 3, section 15, the effective date, as 
*amended by Laws 2003, First Special Session chapter 21, article 
*8, section 16.

EXEMPTION CERTIFICATES

     297A.72 Exemption certificates. 

    Subdivision 1. Repealed, 2003 c 127 art 6 s 18 

    Subd. 2.    Content and form of exemption certificate.  
 An exemption certificate must be substantially in the form 
 prescribed by the commissioner and: 

    (1) be signed by the purchaser or meet the requirements of 
 section 289A.07; 

    (2) bear the name and address of the purchaser; 

    (3) indicate the sales tax account number, if any, issued 
 to the purchaser; 

    (4) indicate the general character of the property sold by 
 the purchaser in the regular course of business or the 
 activities carried on by the organization; and 

    (5) identify the property purchased.  

    HIST: 2000 c 418 art 1 s 16; 1Sp2001 c 5 art 12 s 71 

     297A.73 Improper use of item obtained with exemption 
  certificate. 

    If a purchaser who gives an exemption certificate makes any 
 use of the item that is not for a purpose exempted under this 
 chapter, that use is considered a retail sale by the purchaser 
 and the sales price to the purchaser is considered the gross 
 receipts.  If the sole use is rental while holding for sale, the 
 purchaser shall include in the purchaser's gross receipts the 
 amount of the rental charged.  Upon subsequent sale of the item, 
 the seller shall include the entire amount of gross receipts 
 received from the sale without deduction of amounts previously 
 received as rentals. 

    HIST: 2000 c 418 art 1 s 17 

     297A.74 Commingling exemption certificate items. 

    If a purchaser gives an exemption certificate for the 
 purchase of fungible items and later commingles the items with 
 similar fungible items not purchased exempt, sales from the 
 commingled items are considered sales of items purchased exempt 
 until a quantity has been sold that equals the quantity 
 purchased exempt. 

    HIST: 2000 c 418 art 1 s 18 

EXEMPTION REFUNDS

     297A.75 Refund; appropriation. 

    Subdivision 1.    Tax collected.  The tax on the gross 
 receipts from the sale of the following exempt items must be 
 imposed and collected as if the sale were taxable and the rate 
 under section 297A.62, subdivision 1, applied.  The exempt items 
 include: 

    (1) capital equipment exempt under section 297A.68, 
 subdivision 5; 

    (2) building materials for an agricultural processing 
 facility exempt under section 297A.71, subdivision 13; 

    (3) building materials for mineral production facilities 
 exempt under section 297A.71, subdivision 14; 

    (4) building materials for correctional facilities under 
 section 297A.71, subdivision 3; 

    (5) building materials used in a residence for disabled 
 veterans exempt under section 297A.71, subdivision 11; 

    (6) chair lifts, ramps, elevators, and associated building 
 materials exempt under section 297A.71, subdivision 12; 

    (7) building materials for the Long Lake Conservation 
 Center exempt under section 297A.71, subdivision 17; 

    (8) materials, supplies, fixtures, furnishings, and 
 equipment for a county law enforcement and family service center 
 under section 297A.71, subdivision 26; and 

    (9) materials and supplies for qualified low-income housing 
 under section 297A.71, subdivision 23. 

    Subd. 2.    Refund; eligible persons.  Upon application 
 on forms prescribed by the commissioner, a refund equal to the 
 tax paid on the gross receipts of the exempt items must be paid 
 to the applicant.  Only the following persons may apply for the 
 refund: 

    (1) for subdivision 1, clauses (1) to (3), the applicant 
 must be the purchaser; 

    (2) for subdivision 1, clauses (4), (7), and (8), the 
 applicant must be the governmental subdivision; 

    (3) for subdivision 1, clause (5), the applicant must be 
 the recipient of the benefits provided in United States Code, 
 title 38, chapter 21; 

    (4) for subdivision 1, clause (6), the applicant must be 
 the owner of the homestead property; and 

    (5) for subdivision 1, clause (9), the owner of the 
 qualified low-income housing project. 

    Subd. 3.    Application.  (a) The application must 
 include sufficient information to permit the commissioner to 
 verify the tax paid.  If the tax was paid by a contractor, 
 subcontractor, or builder, under subdivision 1, clause (4), (5), 
 (6), (7), (8), or (9), the contractor, subcontractor, or builder 
 must furnish to the refund applicant a statement including the 
 cost of the exempt items and the taxes paid on the items unless 
 otherwise specifically provided by this subdivision.  The 
 provisions of sections 289A.40 and 289A.50 apply to refunds 
 under this section. 

    (b) An applicant may not file more than two applications 
 per calendar year for refunds for taxes paid on capital 
 equipment exempt under section 297A.68, subdivision 5.  

    Subd. 4.    Interest.  Interest must be paid on the 
 refund at the rate in section 270.76 from 90 days after the 
 refund claim is filed with the commissioner for taxes paid under 
 subdivision 1. 

    Subd. 5.    Appropriation.  The amount required to make 
 the refunds is annually appropriated to the commissioner. 

    HIST: 2000 c 418 art 1 s 19,44 subd 3; 2000 c 490 art 8 s 6; 
 1Sp2001 c 5 art 12 s 72; 2002 c 377 art 3 s 17; 2003 c 127 art 1 
 s 26 

COMPUTATION AND COLLECTION OF SALES AND USE TAXES

     297A.76 Computation of sales and use taxes. 

    Subdivision 1.    Rounding up or down.  In computing the 
 sales or use tax to be collected or remitted as the result of a 
 transaction, amounts of tax less than one-half of one cent must 
 be disregarded and amounts of tax of one-half cent or more must 
 be considered an additional cent.  

    Subd. 2.    Uniform tax collection methods; rules.  
 Agreements between competitive retailers or the adoption of 
 appropriate rules or regulations by organizations or 
 associations of retailers to provide uniform methods for adding 
 the sales tax or its average equivalent, which do not involve 
 otherwise unlawful price fixing agreements, are expressly 
 authorized and are not in violation of any Minnesota laws 
 prohibiting such agreements.  The commissioner may prescribe 
 rules for such agreements.  

    HIST: 2000 c 418 art 1 s 20 

     297A.77 Collection of sales and use taxes. 

    Subdivision 1.    Collection of tax at time of sale.  
 The tax must be stated and charged separately from the sales 
 price insofar as practicable and must be collected by the seller 
 from the purchaser.  

    Subd. 2.    Receipt.  For use tax, the retailer shall 
 give the purchaser a tax receipt.  The receipt must indicate the 
 tax in the form of a notation on the sales slip or receipt for 
 the sales price or in another form as prescribed by the 
 commissioner. 

    Subd. 3.    Tax must be remitted.  The tax collected by 
 a retailer under this section must be remitted to the 
 commissioner as provided in chapter 289A and this chapter. 

    Subd. 4.    Status of sales and use taxes as debt.  
 Sales and use taxes that are required to be collected by a 
 retailer are debts from the purchaser to the retailer 
 recoverable at law in the same manner as other debts.  

    HIST: 2000 c 418 art 1 s 21; 1Sp2001 c 5 art 12 s 73 

     297A.78 Liability for use tax; receipt as evidence. 

    Liability for the payment of the use tax is not 
 extinguished until the tax has been paid to Minnesota.  However, 
 a receipt from a retailer given to the purchaser under section 
 297A.77, subdivision 2, relieves the purchaser of further 
 liability for the tax to which the receipt refers, unless the 
 purchaser knows or has reason to know that the retailer did not 
 have a permit to collect the tax. 

    HIST: 2000 c 418 art 1 s 22 

     297A.79 Reporting of gross receipts. 

    At the option of the taxpayer, gross receipts from sales 
 may be reported on the cash basis as the consideration is 
 received or on the accrual basis as sales are made. 

    HIST: 2000 c 418 art 1 s 23 

     297A.80 Taxes in other states; offset against use tax. 

    If an article of tangible personal property or an item 
 listed in section 297A.63 has already been taxed by another 
 state and any subdivision thereof for its sale, storage, use, or 
 other consumption in an amount less than the tax imposed by this 
 chapter, then as to the person who paid the tax in the other 
 state or any subdivision thereof, section 297A.63 applies only 
 at a rate measured by the difference between the rate imposed 
 under section 297A.62 and the rate by which the previous tax was 
 computed.  If the tax imposed in the other state or any 
 subdivision thereof is equal to or greater than the tax imposed 
 in this state, then no tax is due from that person under section 
 297A.63.  The credit shall be applied first against the amount 
 of any use tax due the state, and any unused portion of the 
 credit shall then be applied against any use tax due a 
 subdivision. 

    HIST: 2000 c 418 art 1 s 24; 1Sp2001 c 5 art 12 s 74 

     297A.81 Uncollectible debts; offset against other taxes. 

    Subdivision 1.    General.  The taxpayer may offset 
 against the taxes payable for any reporting period the amount of 
 taxes imposed by this chapter previously paid as a result of any 
 transaction the consideration for which became a debt owed to 
 the taxpayer that became uncollectible during the reporting 
 period, but only in proportion to the portion of the debt that 
 became uncollectible.  Section 289A.40, subdivision 2, applies 
 to an offset under this section. 

    Subd. 2.    Manner of allowing deduction for uncollectible 
 debt.  (a) Uncollectible debt is allowed as a deduction in the 
 manner provided in this subdivision. 

    (b) If the uncollectible debt arose with respect to a sale 
 required to be included in gross receipts, subject to a tax 
 imposed under chapter 297A, the entire amount of the debt 
 remaining uncollected is allowed as a deduction. 

    (c) If the uncollectible debt arose with respect to a sale 
 partly subject to the tax imposed under chapter 297A and partly 
 exempt, the amount of the uncollectible debt allowed as a 
 deduction is the amount derived by multiplying the uncollectible 
 debt by the percentage that the taxable sale bears to the total 
 sales. 

    (d) If the uncollectible debt arose with respect to two or 
 more sales made at successive intervals, payments made before 
 the date the debt became uncollectible must be applied first to 
 the earliest sale upon which there is an unpaid balance, and to 
 following sales in successive order. 

    (e) If the books and records of the taxpayer claiming the 
 bad debt allowance support an allocation of the bad debts among 
 the member states of the streamlined sales and use tax 
 agreement, such an allocation shall be allowed. 

    Subd. 3.    Certified service provider.  A certified 
 service provider, as defined in section 297A.995, subdivision 2, 
 on behalf of a taxpayer who is its client, may offset against 
 taxes as provided by this section. 

    HIST: 2000 c 418 art 1 s 25; 2003 c 127 art 1 s 27 

AIRCRAFT AND FLIGHT EQUIPMENT

     297A.82 Aircraft; flight equipment; payment of taxes; 
  exemptions. 

    Subdivision 1.    Requirements for registration.  An 
 aircraft must not be registered or licensed in this state unless 
 the applicant presents proof that the sales or use tax imposed 
 by this chapter has been paid or that the transaction is exempt 
 from the sales and use tax.  The exemption for an occasional 
 sale under section 297A.67, subdivision 23, or 297A.68, 
 subdivision 25, does not apply to the sale or purchase of an 
 aircraft.  

    Subd. 2.    Payment of tax to dealer.  If an aircraft is 
 purchased from a dealer holding a valid sales and use tax permit 
 under this chapter, the applicant shall present proof that the 
 tax has been paid to the dealer.  

    Subd. 3.    Payment of tax.  If an aircraft is purchased 
 from a person who is not the holder of a valid sales and use tax 
 permit under this chapter, the purchaser shall pay the tax prior 
 to registering or licensing the aircraft in this state.  

    Subd. 4.    Exemptions.  (a) The following transactions 
 are exempt from the tax imposed in this chapter to the extent 
 provided. 

    (b) The purchase or use of aircraft previously registered 
 in Minnesota by a corporation or partnership is exempt if the 
 transfer constitutes a transfer within the meaning of section 
 351 or 721 of the Internal Revenue Code. 

    (c) The sale to or purchase, storage, use, or consumption 
 by a licensed aircraft dealer of an aircraft for which a 
 commercial use permit has been issued pursuant to section 
 360.654 is exempt, if the aircraft is resold while the permit is 
 in effect. 

    (d) Airflight equipment when sold to, or purchased, stored, 
 used, or consumed by airline companies, as defined in section 
 270.071, subdivision 4, is exempt.  For purposes of this 
 subdivision, "airflight equipment" includes airplanes and parts 
 necessary for the repair and maintenance of such airflight 
 equipment, and flight simulators, but does not include airplanes 
 with a gross weight of less than 30,000 pounds that are used on 
 intermittent or irregularly timed flights. 

    (e) Sales of, and the storage, distribution, use, or 
 consumption of aircraft, as defined in section 360.511 and 
 approved by the Federal Aviation Administration, and which the 
 seller delivers to a purchaser outside Minnesota or which, 
 without intermediate use, is shipped or transported outside 
 Minnesota by the purchaser are exempt, but only if the purchaser 
 is not a resident of Minnesota and provided that the aircraft is 
 not thereafter returned to a point within Minnesota, except in 
 the course of interstate commerce or isolated and occasional 
 use, and will be registered in another state or country upon its 
 removal from Minnesota.  This exemption applies even if the 
 purchaser takes possession of the aircraft in Minnesota and uses 
 the aircraft in the state exclusively for training purposes for 
 a period not to exceed ten days prior to removing the aircraft 
 from this state. 

    Subd. 5.    Exempt purchase certificate.  If the 
 purchase of an aircraft is exempt under this chapter, the 
 commissioner shall issue a certificate that no sales or use tax 
 is due and owing in respect to the transaction.  

    Subd. 6.    Sales and leases; tax treatment.  (a) A sale 
 of aircraft and parts for the repair of aircraft purchased by a 
 nonprofit, incorporated flying club or association utilized 
 solely by the corporation by leasing the aircraft to 
 shareholders of the corporation is exempt as property purchased 
 for resale.  The leasing of the aircraft to the shareholders by 
 the flying club or association is taxable as a retail sale. 

    (b) A lease of aircraft utilized by a lessee for leasing to 
 others, whether or not the lessee also utilizes the aircraft for 
 charter service or for flight instruction if no separate charge 
 is made for aircraft rental, is exempt as a purchase for resale. 
 However, a proportionate share of the lease payment reflecting 
 use for flight instruction or charter service is taxable under 
 section 297A.63. 

    Subd. 7.    Agreement with commissioner of transportation. 
  Notwithstanding subdivisions 1 to 4, the commissioner may 
 enter into an agreement with the commissioner of transportation 
 whereby, upon approval of both commissioners, the commissioner 
 of transportation will collect the sales tax on aircraft from 
 persons required to register or license aircraft in this state.  
 For purposes of collecting the tax, the commissioner of 
 transportation shall act as agent of the commissioner of revenue 
 and shall be subject to all rules not inconsistent with the 
 provisions of this chapter, that may be prescribed by the 
 commissioner. 

    HIST: 2000 c 418 art 1 s 26,44 subd 3; 2000 c 490 art 8 s 7; 
 1Sp2001 c 5 art 7 s 53,54 

PERMITS

     297A.83 Application for permit. 

    Subdivision 1.    Persons applying.  (a) A retailer 
 required to collect and remit sales taxes under section 297A.66 
 shall file with the commissioner an application for a permit. 

    (b) A retailer making retail sales from outside this state 
 to a destination within this state who is not required to obtain 
 a permit under paragraph (a) may nevertheless voluntarily file 
 an application for a permit. 

    (c) The commissioner may require any person or class of 
 persons obligated to file a use tax return under section 
 289A.11, subdivision 3, to file an application for a permit.  

    Subd. 2.    Application requirements.  The application 
 must be made on a form prescribed by the commissioner and 
 indicate the name under which the applicant intends to transact 
 business, the location of the applicant's place or places of 
 business, and other information the commissioner may require.  
 The application must be filed by the owner, if a natural person; 
 by a member or partner, if the owner is an association or 
 partnership; or by a person authorized to file the application, 
 if the owner is a corporation.  

    Subd. 3.    Commissioner's discretion.  (a) The 
 commissioner may decline to issue a permit to a retailer not 
 maintaining a place of business in this state, or may cancel a 
 permit previously issued to the retailer, if the commissioner 
 believes that the tax can be collected more effectively from the 
 persons using the property in this state.  A refusal to issue or 
 cancellation of a permit on such grounds does not affect the 
 retailer's right to make retail sales from outside this state to 
 destinations within this state. 

    (b) If the commissioner considers it necessary for the 
 efficient administration of the tax to regard a salesperson, 
 representative, trucker, peddler, or canvasser as the agent of 
 the dealer, distributor, supervisor, employer, or other person 
 under whom that person operates or from whom the person obtains 
 the tangible personal property sold, whether making sales 
 personally or in behalf of that dealer, distributor, supervisor, 
 employer, or other person, the commissioner may regard the 
 salesperson, representative, trucker, peddler, or canvasser as 
 such agent, and may regard the dealer, distributor, supervisor, 
 employer, or other person as a retailer for the purposes of 
 collecting the tax. 

    HIST: 2000 c 418 art 1 s 27 

     297A.84 Permits issued. 

    The commissioner shall issue a permit to each applicant who 
 has complied with section 297A.83, and with section 297A.92 if 
 security is required.  A person is considered to have a permit 
 if the person has a Minnesota tax identification number issued 
 by the department that is currently active for taxes imposed by 
 this chapter.  A permit is valid until canceled or revoked.  It 
 is not assignable and is valid only for the person in whose name 
 it is granted and for the transaction of business at the places 
 designated on the permit.  

    HIST: 2000 c 418 art 1 s 28 

     297A.85 Cancellation of permits. 

    The commissioner may cancel a permit if one of the 
 following conditions occurs: 

    (1) the permit holder has not filed a sales or use tax 
 return for at least one year; 

    (2) the permit holder has not reported any sales or use tax 
 liability on the permit holder's returns for at least two years; 

    (3) the permit holder requests cancellation of the permit; 
 or 

    (4) the permit is subject to cancellation pursuant to 
 section 297A.86, subdivision 2, paragraph (a). 

    HIST: 2000 c 418 art 1 s 29; 2003 c 127 art 8 s 12 

     297A.86 Revocation of permits. 

    Subdivision 1.    Notice of revocation; hearings.  (a) 
 If:  (1) a person fails to comply with this chapter or the sales 
 and use tax provisions of chapter 289A or the rules related to 
 sales tax, or (2) any retailer purchases for resale from an 
 unlicensed seller more than 20,000 cigarettes or $500 or more 
 worth of tobacco products, without reasonable cause, the 
 commissioner may give the person 30 days' notice in writing, 
 specifying the violations, and stating that based on the 
 violations the commissioner intends to revoke the person's 
 permit.  The notice must also advise the person of the right to 
 contest the revocation under this subdivision.  It must also 
 explain the general procedures for a contested case hearing 
 under chapter 14.  The notice may be served personally or by 
 mail in the manner prescribed for service of an order of 
 assessment. 

    (b) If the person does not request a hearing within 30 days 
 after the date of the notice of intent, the commissioner may 
 serve a notice of revocation of permit upon the person, and the 
 permit is revoked.  If a hearing is timely requested, and held, 
 the permit is revoked after the commissioner serves an order of 
 revocation of permit under section 14.62, subdivision 1. 

    Subd. 2.    New permits after revocation.  (a) The 
 commissioner shall not issue a new permit after revocation or 
 reinstate a revoked permit unless the taxpayer applies for a 
 permit and provides reasonable evidence of intention to comply 
 with the sales and use tax laws and rules.  The commissioner may 
 require the applicant to provide security, in addition to that 
 authorized by section 297A.92, in an amount reasonably necessary 
 to ensure compliance with the sales and use tax laws and rules.  
 If the commissioner issues or reinstates a permit not in 
 conformance with the requirements of this subdivision or 
 applicable rules, the commissioner may cancel the permit upon 
 notice to the permit holder.  The notice must be served by first 
 class and certified mail at the permit holder's last known 
 address.  The cancellation shall be effective immediately, 
 subject to the right of the permit holder to show that the 
 permit was issued in conformance with the requirements of this 
 subdivision and applicable rules.  Upon such showing, the permit 
 must be reissued. 

    (b) If a taxpayer has had a permit or permits revoked three 
 times in a five-year period, the commissioner shall not issue a 
 new permit or reinstate the revoked permit until 24 months have 
 elapsed after revocation and the taxpayer has satisfied the 
 conditions for reinstatement of a revoked permit or issuance of 
 a new permit imposed by this section and rules adopted under 
 this section. 

    (c) For purposes of this subdivision, "taxpayer" means: 

    (1) an individual, if a revoked permit was issued to or in 
 the name of an individual, or a corporation or partnership, if a 
 revoked permit was issued to or in the name of a corporation or 
 partnership; and 

    (2) an officer of a corporation, a member of a partnership, 
 or an individual who is liable for delinquent sales taxes, 
 either for the entity for which the new or reinstated permit is 
 at issue, or for another entity for which a permit was 
 previously revoked, or personally as a permit holder. 

    HIST: 2000 c 418 art 1 s 30; 1Sp2001 c 5 art 7 s 50; art 12 s 
 75 

     297A.87 Flea markets, shows, and other selling events. 

    Subdivision 1.    Events affected.  (a) This section 
 applies to a flea market, craft show, antique show, coin show, 
 stamp show, comic book show, convention exhibit area, or similar 
 selling event. 

    (b) To be subject to this section, the operator of an event 
 described in paragraph (a) must rent or lease space on the sale 
 premises to the seller, charge the seller a registration or 
 participation fee, or receive a percentage of sales or other 
 consideration from a seller as a condition to participation by a 
 seller in the event.  

    Subd. 2.    Seller's permit or alternate statement.  (a) 
 The operator of an event under subdivision 1 shall obtain one of 
 the following from a person who wishes to do business as a 
 seller at the event: 

    (1) evidence that the person holds a valid seller's permit 
 under section 297A.84; or 

    (2) a written statement that the person is not offering for 
 sale any item that is taxable under this chapter. 

    (b) The operator shall require the evidence or statement as 
 a prerequisite to participating in the event as a seller. 

    Subd. 3.    Occasional sale provisions not applicable.  
 The isolated and occasional sale provisions under section 
 297A.67, subdivision 23, or under section 297A.68, subdivision 
 25, do not apply to a seller at an event under this section. 

    HIST: 2000 c 418 art 1 s 31 

DIRECT PAY

     297A.89 Direct payment by purchasers permitted. 

    Subdivision 1.    Commissioner may permit.  The 
 commissioner may permit purchasers to pay taxes imposed by this 
 chapter directly to the commissioner.  Any taxes paid by 
 purchasers under this section are considered use taxes.  

    Subd. 2.    Retailer does not collect.  The retailer 
 shall not collect the tax from a purchaser who furnishes to the 
 retailer a copy of a certificate issued by the commissioner 
 authorizing the purchaser to pay any sales or use tax due on 
 purchases made by the purchaser directly to the commissioner 
 under subdivision 1. 

    HIST: 2000 c 418 art 1 s 32; 1Sp2001 c 5 art 12 s 76 

     297A.90 Interstate motor carriers as retailers. 

    Subdivision 1.    Registration; records.  (a) A person 
 who is engaged in interstate for-hire transportation of tangible 
 personal property or passengers by motor vehicle may, under 
 rules prescribed by the commissioner, register as a retailer and 
 pay the taxes imposed by this chapter in accordance with this 
 section.  Any taxes paid under this section are use taxes. 

    (b) As used in this section, "person" means:  

    (1) one who possesses a certificate or permit or has 
 completed a registration process that authorizes for-hire 
 transportation of property or passengers from the United States 
 Department of Transportation or the Department of 
 Transportation; 

    (2) one who transports commodities defined as "exempt" in 
 for-hire transportation in interstate commerce; or 

    (3) one who transports tangible personal property in 
 interstate commerce, pursuant to contracts with persons 
 described in clause (1) or (2).  

 Persons qualifying under clause (2) or (3) must maintain on a 
 current basis the same type of mileage records that are required 
 by persons specified in clause (1) by the United States 
 Department of Transportation.  

    (c) Persons who in the course of their business are 
 transporting solely their own goods in interstate commerce may 
 also register as retailers under rules prescribed by the 
 commissioner and pay the taxes imposed by this chapter in 
 accordance with this section.  

    Subd. 2.    Payment of tax.  (a) Persons who are 
 registered as retailers may make purchases in this state or 
 import property into this state without payment of the sales or 
 use taxes imposed by this chapter at the time of purchase or 
 importation, if the purchases or importations come within the 
 provisions of this section and are made in strict compliance 
 with the rules of the commissioner. 

    (b) A person described in subdivision 1 may elect to pay 
 directly to the commissioner any sales or use tax that may be 
 due under this chapter for the acquisition of mobile 
 transportation equipment and parts and accessories attached or 
 to be attached to such equipment registered under section 
 168.187. 

    (c) The total cost of such equipment and parts and 
 accessories attached or to be attached to such equipment must be 
 multiplied by a fraction.  The numerator of the fraction is the 
 Minnesota mileage as reported on the current pro rata 
 application provided for in section 168.187 and the denominator 
 of the fraction is the total mileage reported on the current pro 
 rata registration application.  The amount so determined must be 
 multiplied by the tax rate to obtain the tax due. 

 In computing the tax under this section "sales price" does not 
 include the amount of any tax, except any manufacturer's or 
 importer's excise tax, imposed by the United States upon or with 
 respect to retail sales, whether imposed on the retailer or the 
 consumer.  

    (d) A retailer covered by this section shall make a return 
 and remit to the commissioner the tax due for the preceding 
 calendar month in accordance with sections 289A.11 and 289A.20, 
 subdivision 4. 

    Subd. 3.    Registration subsequent to payment of tax.  
 A person who has paid the tax under this chapter or chapter 297B 
 and who meets the requirements of this section at the time of 
 the sale, but was not registered under this section at the time 
 of the sale, may register as a retailer, make a return, and file 
 for a refund of the difference between the tax calculated under 
 this chapter or chapter 297B and the tax calculated under 
 subdivision 2.  

    Subd. 4.    Agreement with commissioner of public safety. 
  Notwithstanding subdivisions 1 to 3, the commissioner may 
 enter into an agreement with the commissioner of public safety 
 whereby, upon approval of both commissioners, the commissioner 
 of public safety shall collect the sales tax on motor vehicles 
 from persons defined in subdivision 1.  For the purpose of 
 collecting the tax, the commissioner of public safety shall act 
 as the agent of the commissioner of revenue and shall be subject 
 to all rules consistent with this chapter that may be prescribed 
 by the commissioner. 

    HIST: 2000 c 418 art 1 s 33; 2001 c 213 s 30; 1Sp2001 c 5 art 
 12 s 77 

ENFORCEMENT

     297A.91 Seizure; court review. 

    Subdivision 1.    Seizure of property used in illegal 
 transport.  (a) If the retailer does not have a sales or use 
 tax permit and has been engaging in transporting personal 
 property into the state without payment of the tax, the 
 commissioner of revenue or the commissioner's agents may seize 
 in the name of the state any truck, automobile, or means of 
 transportation not owned or operated by a for-hire carrier, used 
 in the illegal importation and transportation of any tangible 
 personal property by a retailer or the retailer's agent or 
 employee.  The commissioner may demand the forfeiture and sale 
 of the truck, automobile, or other means of transportation 
 together with the property being transported illegally, unless 
 the owner establishes to the satisfaction of the commissioner or 
 the court that the owner had no notice or knowledge or reason to 
 believe that the vehicle was used or intended to be used in any 
 such violation. 

    (b) Within ten days after the seizure, the person making 
 the seizure shall serve by certified mail an inventory of the 
 vehicle and property seized on the person from whom the seizure 
 was made, if known, and on any person known or believed to have 
 any right, title, interest, or lien on the vehicle or property, 
 at the last known address.  The person making the seizure shall 
 also file a copy of the inventory with the commissioner.  The 
 notice must include an explanation of the right to demand a 
 judicial forfeiture determination.  

    Subd. 2.    Court review of forfeiture.  (a) Within 60 
 days after the date of service of the inventory, which is the 
 date of mailing, the person from whom the vehicle and property 
 were seized or any person claiming an interest in the vehicle or 
 property may file a demand for a judicial determination of the 
 question of whether the vehicle or property was lawfully subject 
 to seizure and forfeiture.  

    (b) The demand must be in the form of a civil complaint and 
 must be filed with the court administrator in the county in 
 which the seizure occurred, together with proof of service or a 
 copy of the complaint on the commissioner of revenue, and the 
 standard filing fee for civil actions unless the petitioner has 
 the right to sue in forma pauperis under section 563.01.  If the 
 value of the seized property or vehicle is $7,500 or less, the 
 claimant may file an action in conciliation court for its 
 recovery.  If the value of the seized property or vehicle is 
 less than $500, the claimant does not have to pay the 
 conciliation court filing fee.  

    (c) The complaint must be captioned in the name of the 
 claimant as plaintiff and the seized property or vehicle as 
 defendant, and must state with specificity the grounds on which 
 the claimant alleges the property or vehicle was improperly 
 seized and the plaintiff's interest in the property or vehicle 
 seized.  No responsive pleading is required of the commissioner, 
 and no court fees may be charged for the commissioner's 
 appearance in the matter.  The proceedings are governed by the 
 Rules of Civil Procedure.  Notwithstanding any law to the 
 contrary, an action for the return of property or a vehicle 
 seized under this subdivision may not be maintained by or on 
 behalf of any person who has been served with an inventory 
 unless the person has complied with this subdivision.  The court 
 shall hear the action without a jury and shall determine the 
 issues of fact and law involved.  If a judgment of forfeiture is 
 entered and is not stayed pending an appeal, the commissioner 
 may have the forfeited vehicle and property sold at public 
 auction as provided by law.  

    Subd. 3.    Treatment of seized property.  If no demand 
 for judicial determination is made, the vehicle and property 
 seized are considered forfeited to the state by operation of law 
 and may be disposed of by the commissioner as if there were a 
 judgment of forfeiture.  The forfeiture and sale of the 
 automobile, truck, or other means of transportation, and of the 
 property being transported illegally in it, are a penalty for 
 the violation of this chapter.  After deducting the expense of 
 keeping the vehicle and property, the fee for seizure, and the 
 costs of the sale, the commissioner shall pay liens from the 
 funds collected.  The commissioner shall pay all liens, 
 according to their priority, that are established as being bona 
 fide and as existing without the lienor having any notice or 
 knowledge that the vehicle or property was being used or was 
 intended to be used for or in connection with any such 
 violation.  The commissioner shall pay the balance of the 
 proceeds into the state treasury to be credited to the general 
 fund.  The state is not liable for any liens in excess of the 
 proceeds from the sale after allowable deductions.  A sale under 
 this section frees the vehicle and property sold from all liens. 

    HIST: 2000 c 418 art 1 s 34; 1Sp2001 c 5 art 12 s 78; art 18 s 
 3 

     297A.92 Security. 

    Subdivision 1.    Amount of security.  To ensure 
 compliance with the taxes imposed by this chapter, the 
 commissioner may require a retailer subject to this chapter to 
 deposit security with the commissioner.  The security must be in 
 the form and amount the commissioner requires, but not more than 
 twice the retailer's estimated average liability for the period 
 for which the returns are required to be filed, or $10,000, 
 whichever is less.  The amount of security may be increased or 
 decreased by the commissioner, subject to the limitations in 
 this section.  

    Subd. 2.    Auctions of security.  The commissioner may 
 sell property deposited as security at public auction if 
 necessary to recover the amount required to be collected, 
 including any interest and penalties.  Notice of the sale must 
 be served upon the person who deposited the security.  It must 
 be served personally, or by mail as prescribed for an order of 
 assessment under section 289A.37, subdivision 5.  After a sale 
 any surplus above the amount due not required as security under 
 this section must be returned to the person who deposited the 
 security. 

    Subd. 3.    Bond.  In lieu of security, the commissioner 
 may require a retailer to file a bond.  The bond must be issued 
 by a surety company authorized to transact business in this 
 state and approved by the commissioner of commerce as to 
 solvency and responsibility.  

    HIST: 2000 c 418 art 1 s 35; 1Sp2001 c 5 art 12 s 79 

     297A.93 Jeopardy assessment and collection. 

    (a) If the commissioner has reason to believe that the 
 person required to file the return is about to leave the state 
 or remove the person's property from this state with the purpose 
 of evading the tax and penalties imposed by this chapter, or 
 that the collection of the tax will be jeopardized by delays 
 incident to other methods of collection, the commissioner may 
 immediately declare the person's reporting period at an end and 
 assess a tax on the basis of the commissioner's own knowledge or 
 information available.  The commissioner may then demand 
 immediate payment of the tax, and, if payment is not immediately 
 made, collect the tax by any method prescribed in chapter 270. 

    (b) It is not a defense to an assessment made under this 
 section that the tax period has not terminated, that the time 
 otherwise allowed by law for filing a return has not expired, 
 that the notices otherwise required by law for making an 
 assessment have not been given, or that the time otherwise 
 allowed by law for taking or prosecuting an appeal or for paying 
 the tax has not expired. 

    HIST: 2000 c 418 art 1 s 36 

DEPOSIT OF REVENUES

     297A.94 Deposit of revenues. 

    (a) Except as provided in this section, the commissioner 
 shall deposit the revenues, including interest and penalties, 
 derived from the taxes imposed by this chapter in the state 
 treasury and credit them to the general fund.  

    (b) The commissioner shall deposit taxes in the Minnesota 
 agricultural and economic account in the special revenue fund if:

    (1) the taxes are derived from sales and use of property 
 and services purchased for the construction and operation of an 
 agricultural resource project; and 

    (2) the purchase was made on or after the date on which a 
 conditional commitment was made for a loan guaranty for the 
 project under section 41A.04, subdivision 3. 

 The commissioner of finance shall certify to the commissioner 
 the date on which the project received the conditional 
 commitment.  The amount deposited in the loan guaranty account 
 must be reduced by any refunds and by the costs incurred by the 
 Department of Revenue to administer and enforce the assessment 
 and collection of the taxes.  

    (c) The commissioner shall deposit the revenues, including 
 interest and penalties, derived from the taxes imposed on sales 
 and purchases included in section 297A.61, subdivision 3, 
 paragraph (g), clauses (1) and (4), in the state treasury, and 
 credit them as follows: 

    (1) first to the general obligation special tax bond debt 
 service account in each fiscal year the amount required by 
 section 16A.661, subdivision 3, paragraph (b); and 

    (2) after the requirements of clause (1) have been met, the 
 balance to the general fund. 

    (d) The commissioner shall deposit the revenues, including 
 interest and penalties, collected under section 297A.64, 
 subdivision 5, in the state treasury and credit them to the 
 general fund.  By July 15 of each year the commissioner shall 
 transfer to the highway user tax distribution fund an amount 
 equal to the excess fees collected under section 297A.64, 
 subdivision 5, for the previous calendar year. 

    (e) For fiscal year 2001, 97 percent; for fiscal years 2002 
 and 2003, 87 percent; and for fiscal year 2004 and thereafter, 
 72.43 percent of the revenues, including interest and penalties, 
 transmitted to the commissioner under section 297A.65, must be 
 deposited by the commissioner in the state treasury as follows: 

    (1) 50 percent of the receipts must be deposited in the 
 heritage enhancement account in the game and fish fund, and may 
 be spent only on activities that improve, enhance, or protect 
 fish and wildlife resources, including conservation, 
 restoration, and enhancement of land, water, and other natural 
 resources of the state; 

    (2) 22.5 percent of the receipts must be deposited in the 
 natural resources fund, and may be spent only for state parks 
 and trails; 

    (3) 22.5 percent of the receipts must be deposited in the 
 natural resources fund, and may be spent only on metropolitan 
 park and trail grants; 

    (4) three percent of the receipts must be deposited in the 
 natural resources fund, and may be spent only on local trail 
 grants; and 

    (5) two percent of the receipts must be deposited in the 
 natural resources fund, and may be spent only for the Minnesota 
 Zoological Garden, the Como Park Zoo and Conservatory, and the 
 Duluth Zoo. 

    (f) The revenue dedicated under paragraph (e) may not be 
 used as a substitute for traditional sources of funding for the 
 purposes specified, but the dedicated revenue shall supplement 
 traditional sources of funding for those purposes.  Land 
 acquired with money deposited in the game and fish fund under 
 paragraph (e) must be open to public hunting and fishing during 
 the open season, except that in aquatic management areas or on 
 lands where angling easements have been acquired, fishing may be 
 prohibited during certain times of the year and hunting may be 
 prohibited.  At least 87 percent of the money deposited in the 
 game and fish fund for improvement, enhancement, or protection 
 of fish and wildlife resources under paragraph (e) must be 
 allocated for field operations. 

    HIST: 2000 c 418 art 1 s 37; 2000 c 488 art 3 s 29; 2001 c 185 
 s 33; 1Sp2001 c 2 s 146; 1Sp2001 c 5 art 12 s 80; 2002 c 353 s 2; 2003 c 
 128 art 1 s 154 

LOCAL SALES AND USE TAXES

     297A.95 Coordination of state and local sales tax rates. 

    In preparing and distributing a sales tax schedule for use 
 within a local jurisdiction with a separate general sales tax, 
 the state Department of Revenue shall coordinate the state and 
 local sales tax so that a sale of $1 reflects a tax equal to the 
 combination of the state and local sales tax rates.  The 
 combined sales tax on other sales amounts must also reflect the 
 coordinated rather than the separate effects of the state and 
 local sales taxes.  The schedule must be coordinated as long as 
 the local sales tax is in effect.  If the sales tax percentage 
 is changed for either of the taxes, the schedule must be 
 adjusted to reflect the change. 

    HIST: 2000 c 418 art 1 s 38 

     297A.96 Local admissions and amusement taxes; exemption 
  for arts organizations. 

    Amounts charged for admission to an event described in 
 section 297A.70, subdivision 10, paragraph (a), are not subject 
 to a tax imposed by a local unit of government or imposed on 
 sales taking place in a single named local unit of government on 
 sales of admissions or amusements, under a law other than a 
 general sales tax law. 

    HIST: 2000 c 418 art 1 s 39; 2002 c 377 art 3 s 18 

  297A.97 Repealed, 2003 c 127 art 6 s 18 

     297A.98 Local governments exempt from local sales taxes. 

    Notwithstanding any other law, ordinance, or charter 
 provision, a political subdivision of the state is not required 
 to pay any general sales tax imposed by a political subdivision 
 of the state.  

    HIST: 2000 c 418 art 1 s 41 

     297A.99 Local sales taxes. 

    Subdivision 1.    Authorization; scope.  (a) A political 
 subdivision of this state may impose a general sales tax if 
 permitted by special law or if the political subdivision enacted 
 and imposed the tax before the effective date of section 
 477A.016 and its predecessor provision. 

    (b) This section governs the imposition of a general sales 
 tax by the political subdivision.  The provisions of this 
 section preempt the provisions of any special law: 

    (1) enacted before June 2, 1997, or 

    (2) enacted on or after June 2, 1997, that does not 
 explicitly exempt the special law provision from this section's 
 rules by reference. 

    (c) This section does not apply to or preempt a sales tax 
 on motor vehicles or a special excise tax on motor vehicles. 

    Subd. 2.    Local resolution before application for 
 authority.  Before the governing body of a political 
 subdivision requests legislative approval of a special law for a 
 local sales tax that is administered under this section, it 
 shall adopt a resolution indicating its approval of the tax.  
 The resolution must include, at a minimum, information on the 
 proposed tax rate, how the revenues will be used, the total 
 revenue that will be raised before the tax expires, and the 
 estimated length of time that the tax will be in effect.  This 
 subdivision applies to local laws enacted after June 30, 1998.  

    Subd. 3.    Requirements for adoption, use, termination. 
  (a) Imposition of a local sales tax is subject to approval by 
 voters of the political subdivision at a general election.  

    (b) The proceeds of the tax must be dedicated exclusively 
 to payment of the cost of a specific capital improvement which 
 is designated at least 90 days before the referendum on 
 imposition of the tax is conducted. 

    (c) The tax must terminate after the improvement designated 
 under paragraph (b) has been completed. 

    (d) After a sales tax imposed by a political subdivision 
 has expired or been terminated, the political subdivision is 
 prohibited from imposing a local sales tax for a period of one 
 year.  Notwithstanding subdivision 13, this paragraph applies to 
 all local sales taxes in effect at the time of or imposed after 
 May 26, 1999.  

    Subd. 4.    Tax base.  (a) The tax applies to sales 
 taxable under this chapter that occur within the political 
 subdivision. 

    (b) Taxable services are subject to a political 
 subdivision's sales tax, if they are performed either: 

    (1) within the political subdivision, or 

    (2) partly within and partly without the political 
 subdivision and more of the service is performed within the 
 political subdivision, based on the cost of performance. 

    Subd. 5.    Tax rate.  (a) The tax rate is as specified 
 in the special law authorization and as imposed by the political 
 subdivision. 

    (b) The full political subdivision rate applies to any 
 sales that are taxed at a state rate, and the political 
 subdivision must not have more than one local sales tax rate or 
 more than one local use tax rate.  This paragraph does not apply 
 to sales or use taxes imposed on electricity, piped natural or 
 artificial gas, or other heating fuels delivered by the seller, 
 or the retail sale or transfer of motor vehicles, aircraft, 
 watercraft, modular homes, manufactured homes, or mobile homes. 

    Subd. 6.    Use tax.  A compensating use tax applies, at 
 the same rate as the sales tax, on the use, storage, 
 distribution, or consumption of tangible personal property or 
 taxable services. 

    Subd. 7.    Exemptions.  (a) All goods or services that 
 are otherwise exempt from taxation under this chapter are exempt 
 from a political subdivision's tax. 

    (b) The gross receipts from the sale of tangible personal 
 property that meets the requirement of section 297A.68, 
 subdivision 15, are exempt, except the qualification test 
 applies based on the boundaries of the political subdivision 
 instead of the state of Minnesota. 

    (c) All mobile transportation equipment, and parts and 
 accessories attached to or to be attached to the equipment are 
 exempt, if purchased by a holder of a motor carrier direct pay 
 permit under section 297A.90.  

    Subd. 8.    Credit for other local taxes.  If a person 
 paid sales or use tax to another political subdivision of this 
 state on an item subject to tax under this section, a credit 
 applies against the tax imposed under this section.  The credit 
 equals the tax the person paid to the other political 
 subdivision for the item.  

    Subd. 9.    Enforcement; collection; and administration. 
  (a) The commissioner of revenue shall collect the taxes 
 subject to this section.  The commissioner may collect the tax 
 with the state sales and use tax.  All taxes under this section 
 are subject to the same penalties, interest, and enforcement 
 provisions as apply to the state sales and use tax. 

    (b) A request for a refund of state sales tax paid in 
 excess of the amount of tax legally due includes a request for a 
 refund of the political subdivision taxes paid on the goods or 
 services.  The commissioner shall refund to the taxpayer the 
 full amount of the political subdivision taxes paid on exempt 
 sales or use. 

    Subd. 10.    Use of zip code in determining location of 
 sale.  The lowest combined tax rate imposed in the zip code 
 area applies if the area includes more than one tax rate in any 
 level of taxing jurisdictions.  If a nine-digit zip code 
 designation is not available for a street address or if a seller 
 is unable to determine the nine-digit zip code designation of a 
 purchaser after exercising due diligence to determine the 
 designation, the seller may apply the rate for the five-digit 
 zip code area.  For the purposes of this subdivision, there is a 
 rebuttable presumption that a seller has exercised due diligence 
 if the seller has attempted to determine the nine-digit zip code 
 designation by utilizing software approved by the governing 
 board that makes this designation from the street address and 
 the five-digit zip code of the purchaser. Notwithstanding 
 subdivision 13, this subdivision applies to all local sales 
 taxes without regard to the date of authorization.  This 
 subdivision does not apply when the purchased product is 
 received by the purchaser at the business location of the seller.

    Subd. 11.    Revenues; cost of collection.  The 
 commissioner shall remit the proceeds of the tax, less refunds 
 and a proportionate share of the cost of collection, at least 
 quarterly, to the political subdivision.  The commissioner shall 
 deduct from the proceeds remitted an amount that equals 

    (1) the direct and indirect costs of the department to 
 administer, audit, and collect the political subdivision's tax, 
 plus 

    (2) the political subdivision's proportionate share of the 
 indirect cost of administering all taxes under this section, 
 plus 

    (3) the cost of constructing and maintaining a zip code or 
 geo-code database necessary for local sales tax collections 
 under the Streamlined Sales and Use Tax Agreement in section 
 297A.995. 

    The initial cost of constructing a database under clause 
 (3) shall be distributed among the cities with a local sales tax 
 based on each city's population.  The commissioner shall develop 
 a method for distributing the cost of maintaining the database 
 among the cities with a local sales tax based on the number of 
 boundary changes for each city. 

    Subd. 12.    Effective dates; notification.  (a) A 
 political subdivision may impose a tax under this section 
 starting only on the first day of a calendar quarter.  A 
 political subdivision may repeal a tax under this section 
 stopping only on the last day of a calendar quarter. 

    (b) The political subdivision shall notify the commissioner 
 of revenue at least 90 days before imposing, changing the rate 
 of, or repealing a tax under this section. 

    (c) The political subdivision shall change the rate of tax 
 imposed under this section starting only on the first day of a 
 calendar quarter, and only after the commissioner has notified 
 sellers at least 60 days prior to the change. 

    (d) The political subdivision shall apply the rate change 
 for sales tax imposed under this section to purchases from 
 printed catalogs, wherein the purchaser computed the tax based 
 upon local tax rates published in the catalog, starting only on 
 the first day of a calendar quarter, and only after the 
 commissioner has notified sellers at least 120 days prior to the 
 change. 

    (e) The political subdivision shall apply local 
 jurisdiction boundary changes to taxes imposed under this 
 section starting only on the first day of a calendar quarter, 
 and only after the commissioner has notified sellers at least 60 
 days prior to the change. 

    Subd. 13.    Application.  This section applies to all 
 local sales taxes that were authorized before, on, or after June 
 2, 1997. 

    HIST: 2000 c 418 art 1 s 42; 1Sp2001 c 5 art 12 s 81-83; 2003 
 c 127 art 1 s 28-30 

*   NOTE:  The amendment to subdivision 9 by Laws 2001, First 
*Special Session chapter 5, article 12, section 82, is effective 
*for sales and purchases made after December 31, 2005.  Laws 
*2001, First Special Session chapter 5, article 12, section 82, 
*the effective date, as amended by Laws 2002, chapter 377, 
*article 3, section 23.

     297A.991 Reporting of sales tax on Minnesota governments.

    Subdivision 1.    Commissioner of revenue to report.  
 For each fiscal year, the commissioner shall estimate the amount 
 of revenues derived from imposing the tax under this chapter and 
 chapter 297B on state agencies and political subdivisions.  The 
 commissioner shall report this amount to the commissioner of 
 finance before the time for filing reports for the fiscal year 
 with the United States Department of Commerce. 

    Subd. 2.    Commissioner of finance to report.  In 
 reporting the sales tax and sales tax on motor vehicles 
 collections to the United States Department of Commerce, the 
 commissioner of finance shall exclude the estimated amount from 
 the sales and motor vehicle collections.  Sales tax and sales 
 tax on motor vehicles revenues received from political 
 subdivisions must be reported as intergovernmental grants or 
 similar intergovernmental revenue.  The amount of the sales tax 
 and sales tax on motor vehicles paid by state agencies must be 
 reported as reduced state expenditures. 

    HIST: 2000 c 418 art 1 s 43 

     297A.995 Uniform Sales and Use Tax Administration Act. 

    Subdivision 1.    Title.  This section may be cited as 
 the Uniform Sales and Use Tax Administration Act. 

    Subd. 2.    Definitions.  As used in this section: 

    (a) "Agreement" means the Streamlined Sales and Use Tax 
 Agreement. 

    (b) "Certified automated system" means software certified 
 jointly by the states that are signatories to the agreement to 
 calculate the tax imposed by each jurisdiction on a transaction, 
 determine the amount of tax to remit to the appropriate state, 
 and maintain a record of the transaction. 

    (c) "Certified service provider" means an agent certified 
 jointly by the states that are signatories to the agreement to 
 perform all of the seller's sales tax functions. 

    Subd. 3.    Legislative finding.  The legislature finds 
 that this state should enter into an agreement with one or more 
 states to simplify and modernize sales and use tax 
 administration in order to substantially reduce the burden of 
 tax compliance for all sellers and for all types of commerce. 

    Subd. 4.    Authority to enter agreement.  The 
 commissioner of revenue is authorized and directed to enter into 
 the agreement with one or more states to simplify and modernize 
 sales and use tax administration in order to substantially 
 reduce the burden of tax compliance for all sellers and for all 
 types of commerce.  In furtherance of the agreement, the 
 commissioner is authorized to act jointly with other states that 
 are members of the agreement to establish standards for 
 certification of a certified service provider and certified 
 automated system and establish performance standards for 
 multistate sellers. 

    The commissioner of revenue is further directed to 
 negotiate the agreement with the express intention of ensuring 
 uniform sales and use taxation as applied to like-kind 
 transactions.  

    The commissioner is further authorized to take other 
 actions reasonably required to implement the provisions set 
 forth in this article.  Other actions authorized by this section 
 include, but are not limited to, the adoption of rules and 
 regulations and the joint procurement, with other member states, 
 of goods and services in furtherance of the cooperative 
 agreement. 

    The following officials are authorized to represent this 
 state before the other states that are signatories to the 
 agreement: 

    (1) the commissioner or the commissioner's designee; 

    (2) the chair of the house committee with jurisdiction over 
 taxes or the house chair's designee; and 

    (3) the chair of the senate committee with jurisdiction 
 over taxes or the senate chair's designee. 

    Subd. 5.    Relationship to state law.  No provision of 
 the agreement authorized by this bill in whole or part 
 invalidates or amends any provision of the law of this state.  
 Adoption of the agreement by this state does not amend or modify 
 any law of this state.  Implementation of any condition of the 
 agreement in this state, whether adopted before, at, or after 
 membership of this state in the agreement, must be by the action 
 of this state. 

    Subd. 6.    Agreement requirements.  The commissioner of 
 revenue shall not enter into the agreement unless the agreement 
 requires each state to abide by the following requirements: 

    (a)    Uniform state rate.  The agreement must set 
 restrictions to achieve more uniform state rates through the 
 following: 

    (1) limiting the number of state rates; 

    (2) eliminating maximums on the amount of state tax that is 
 due on a transaction; and 

    (3) eliminating thresholds on the application of state tax. 

    (b)    Uniform standards.  The agreement must establish 
 uniform standards for the following: 

    (1) the sourcing of transactions to taxing jurisdictions; 

    (2) the administration of exempt sales; 

    (3) the allowances a seller can take for bad debts; and 

    (4) sales and use tax returns and remittances. 

    (c)    Uniform definitions.  The agreement must require 
 states to develop and adopt uniform definitions of sales and use 
 tax terms.  The definitions must enable a state to preserve its 
 ability to make policy choices not inconsistent with the uniform 
 definitions. 

    (d)    Central registration.  The agreement must provide 
 a central, electronic registration system that allows a seller 
 to register to collect and remit sales and use taxes for all 
 signatory states. 

    (e)    No nexus attribution.  The agreement must provide 
 that registration with the central registration system and the 
 collection of sales and use taxes in the signatory states will 
 not be used as a factor in determining whether the seller has 
 nexus with a state for any tax. 

    (f)    Local sales and use taxes.  The agreement must 
 provide for reduction of the burdens of complying with local 
 sales and use taxes through the following: 

    (1) restricting and eliminating variances between the state 
 and local tax bases; 

    (2) requiring states to administer any sales and use taxes 
 levied by local jurisdictions within the state so that sellers 
 collecting and remitting these taxes will not have to register 
 or file returns with, remit funds to, or be subject to 
 independent audits from local taxing jurisdictions; 

    (3) restricting the frequency of changes in the local sales 
 and use tax rates and setting effective dates for the 
 application of local jurisdictional boundary changes to local 
 sales and use taxes; and 

    (4) providing notice of changes in local sales and use tax 
 rates and of changes in the boundaries of local taxing 
 jurisdictions. 

    (g)    Monetary allowances.  The agreement must outline 
 any monetary allowances that are to be provided by the states to 
 sellers or certified service providers. 

    (h)    State compliance.  The agreement must require 
 each state to certify compliance with the terms of the agreement 
 prior to joining and to maintain compliance, under the laws of 
 the member state, with all provisions of the agreement while a 
 member. 

    (i)    Consumer privacy.  The agreement must require 
 each state to adopt a uniform policy for certified service 
 providers that protects the privacy of consumers and maintains 
 the confidentiality of tax information. 

    (j)    Advisory councils.  The agreement must provide 
 for the appointment of an advisory council of private sector 
 representatives and an advisory council of nonmember state 
 representatives to consult with in the administration of the 
 agreement. 

    Subd. 7.    Cooperating sovereigns.  The agreement 
 authorized by this bill is an accord among individual 
 cooperating sovereigns in furtherance of their governmental 
 functions.  The agreement provides a mechanism among the member 
 states to establish and maintain a cooperative, simplified 
 system for the application and administration of sales and use 
 taxes under the duly adopted law of each member state. 

    Subd. 8.    Limited binding and beneficial effect.  (a) 
 The agreement authorized by this bill binds and inures only to 
 the benefit of this state and the other member states.  No 
 person, other than a member state, is an intended beneficiary of 
 the agreement.  Any benefit to a person other than a state is 
 established by the law of this state and the other member states 
 and not by the terms of the agreement. 

    (b) Consistent with paragraph (a), no person shall have any 
 cause of action or defense under the agreement or by virtue of 
 this state's approval of the agreement.  No person may 
 challenge, in any action brought under any provision of law, any 
 action or inaction by any department, agency, or other 
 instrumentality of this state, or any political subdivision of 
 this state, on the ground that the action or inaction is 
 inconsistent with the agreement. 

    (c) No law of this state, or its application, may be 
 declared invalid as to any person or circumstance on the ground 
 that the provision or application is inconsistent with the 
 agreement. 

    Subd. 9.    Seller and third-party liability.  (a) A 
 certified service provider is the agent of a seller, with whom 
 the certified service provider has contracted, for the 
 collection and remittance of sales and use taxes.  As the 
 seller's agent, the certified service provider is liable for 
 sales and use tax due each member state on all sales 
 transactions it processes for the seller except as set out in 
 this section. 

    A seller that contracts with a certified service provider 
 is not liable to the state for sales or use tax due on 
 transactions processed by the certified service provider unless 
 the seller misrepresented the type of items it sells or 
 committed fraud.  In the absence of probable cause to believe 
 that the seller has committed fraud or made a material 
 misrepresentation, the seller is not subject to audit on the 
 transactions processed by the certified service provider.  A 
 seller is subject to audit for transactions not processed by the 
 certified service provider.  The member states acting jointly 
 may perform a system check of the seller and review the seller's 
 procedures to determine if the certified service provider's 
 system is functioning properly and the extent to which the 
 seller's transactions are being processed by the certified 
 service provider. 

    (b) A person that provides a certified automated system is 
 responsible for the proper functioning of that system and is 
 liable to the state for underpayments of tax attributable to 
 errors in the functioning of the certified automated system.  A 
 seller that uses a certified automated system remains 
 responsible and is liable to the state for reporting and 
 remitting tax. 

    (c) A seller that has a proprietary system for determining 
 the amount of tax due on transactions and has signed an 
 agreement establishing a performance standard for that system is 
 liable for the failure of the system to meet the performance 
 standard. 

    Subd. 10.    Relief from certain liability.  
 Notwithstanding subdivision 9, sellers and certified service 
 providers are relieved from liability to the state for having 
 charged and collected the incorrect amount of sales or use tax 
 resulting from the seller or certified service provider (1) 
 relying on erroneous data provided by this state on tax rates, 
 boundaries, or taxing jurisdiction assignments, or (2) relying 
 on erroneous data provided by the state in its taxability matrix 
 concerning the taxability of products and services. 

    HIST: 1Sp2001 c 5 art 12 s 84; 2002 c 377 art 3 s 19; 2003 c 
 127 art 1 s 31