2006 Minnesota Statutes

CHAPTER 295. GROSS REVENUES AND GROSS RECEIPTS TAXES

295.01 [Repealed, 1996 c 310 s 1]

295.02 [Repealed, 1979 c 303 art 7 s 15]

295.021 [Repealed, 1969 c 399 s 51]

295.03 [Repealed, 1979 c 303 art 7 s 15]

295.04 [Repealed, 1979 c 303 art 7 s 15]

295.05 [Repealed, 1979 c 303 art 7 s 15]

295.06 [Repealed, 1969 c 9 s 101; 1969 c 1147 s 22]

295.07 [Repealed, 1969 c 9 s 101; 1969 c 1147 s 22]

295.08 [Repealed, 1969 c 9 s 101; 1969 c 1147 s 22]

295.09 [Repealed, 1969 c 9 s 101; 1969 c 1147 s 22]

295.10 [Repealed, 1969 c 9 s 101; 1969 c 1147 s 22]

295.11 [Repealed, 1969 c 1147 s 22]

295.12 [Repealed, 1979 c 303 art 7 s 15]

295.13 [Repealed, 1979 c 303 art 7 s 15]

295.14 [Repealed, 1979 c 303 art 7 s 15]

295.15 [Repealed, 1989 c 277 art 1 s 35]

295.16 [Repealed, 1969 c 1147 s 22]

295.17 [Repealed, 1969 c 1147 s 22]

295.18 [Repealed, 1969 c 1147 s 22]

295.19 [Repealed, 1969 c 1147 s 22]

295.20 [Repealed, 1969 c 1147 s 22]

295.21 [Repealed, 1989 c 277 art 1 s 35]

295.22 [Repealed, 1969 c 1147 s 22]

295.23 [Repealed, 1989 c 277 art 1 s 35]

295.24 [Repealed, 1989 c 277 art 1 s 35]

295.25 [Repealed, 1989 c 277 art 1 s 35]

295.26 [Repealed, 1969 c 1147 s 22]

295.27 [Repealed, 1989 c 277 art 1 s 35]

295.29 [Repealed, 1989 c 277 art 1 s 35]

295.30 [Repealed, 1989 c 277 art 1 s 35]

295.31 [Repealed, 1989 c 277 art 1 s 35]

295.32 [Repealed, 1987 c 268 art 11 s 11 clause (b)]

295.33 [Repealed, 1987 c 268 art 11 s 11 clause (b)]

295.34 [Repealed, 1987 c 268 art 11 s 11 clause (b)]

295.35 [Repealed, 1969 c 1147 s 22]

295.36 [Repealed, 1987 c 268 art 11 s 11 clause (b)]

295.361 [Repealed, 1969 c 399 s 51]

295.365 [Repealed, 1987 c 268 art 11 s 11 clause (b)]

295.366 [Repealed, 1987 c 268 art 11 s 11 clause (b)]

295.367 [Repealed, 1992 c 511 art 8 s 38]

295.37 [Repealed, 1996 c 471 art 9 s 16]

295.38 [Repealed, 1973 c 650 art 27 s 1]

295.39 [Repealed, 1996 c 471 art 9 s 16]

295.40 [Repealed, 1996 c 471 art 9 s 16]

295.41 [Repealed, 1996 c 471 art 9 s 16]

295.42 [Repealed, 1996 c 471 art 9 s 16]

295.43 [Repealed, 1996 c 471 art 9 s 16]

295.44 [Repealed, 2002 c 377 art 10 s 32]

295.441 APPLICATION OF LAWS 2005, CHAPTER 56, TERMINOLOGY CHANGES.
State agencies shall use the terminology changes specified in Laws 2005, chapter 56, section
1, when printed material and signage are replaced and new printed material and signage are
obtained. State agencies do not have to replace existing printed material and signage to comply
with Laws 2005, chapter 56, sections 1 and 2. Language changes made according to Laws 2005,
chapter 56, sections 1 and 2, shall not expand or exclude eligibility to services.
History: 2005 c 56 s 3

HOSPITALS AND HEALTH CARE PROVIDERS

295.50 DEFINITIONS.
    Subdivision 1. Definitions. For purposes of sections 295.50 to 295.59, the following terms
have the meanings given.
    Subd. 1a. Blood components. "Blood components" means the parts of the blood that are
separated from blood by physical or mechanical means and are intended for transfusion. Blood
components do not include blood derivatives.
    Subd. 2. Commissioner. "Commissioner" is the commissioner of revenue.
    Subd. 2a. Delivered outside of Minnesota. "Delivered outside of Minnesota" means
property which the seller delivers to a common carrier for delivery outside Minnesota, places in
the United States mail or parcel post directed to the purchaser outside Minnesota, or delivers to
the purchaser outside Minnesota by means of the seller's own delivery vehicles, and which is not
later returned to a point within Minnesota, except in the course of interstate commerce.
    Subd. 3. Gross revenues. "Gross revenues" are total amounts received in money or
otherwise by:
(1) a hospital for patient services;
(2) a surgical center for patient services;
(3) a health care provider, other than a staff model health carrier, for patient services;
(4) a wholesale drug distributor for sale or distribution of legend drugs that are delivered in
Minnesota by the wholesale drug distributor, by common carrier, or by mail, unless the legend
drugs are delivered to another wholesale drug distributor who sells legend drugs exclusively at
wholesale. Legend drugs do not include nutritional products as defined in Minnesota Rules, part
9505.0325, and blood and blood components; and
(5) a staff model health plan company as gross premiums for enrollees, co-payments,
deductibles, coinsurance, and fees for patient services.
    Subd. 4. Health care provider. (a) "Health care provider" means:
(1) a person whose health care occupation is regulated or required to be regulated by the
state of Minnesota furnishing any or all of the following goods or services directly to a patient or
consumer: medical, surgical, optical, visual, dental, hearing, nursing services, drugs, laboratory,
diagnostic or therapeutic services;
(2) a person who provides goods and services not listed in clause (1) that qualify for
reimbursement under the medical assistance program provided under chapter 256B;
(3) a staff model health plan company;
(4) an ambulance service required to be licensed; or
(5) a person who sells or repairs hearing aids and related equipment or prescription eyewear.
(b) Health care provider does not include:
(1) hospitals; medical supplies distributors, except as specified under paragraph (a), clause
(5); nursing homes licensed under chapter 144A or licensed in any other jurisdiction; pharmacies;
surgical centers; bus and taxicab transportation, or any other providers of transportation services
other than ambulance services required to be licensed; supervised living facilities for persons
with developmental disabilities, licensed under Minnesota Rules, parts 4665.0100 to 4665.9900;
housing with services establishments required to be registered under chapter 144D; board and
lodging establishments providing only custodial services that are licensed under chapter 157 and
registered under section 157.17 to provide supportive services or health supervision services;
adult foster homes as defined in Minnesota Rules, part 9555.5105; day training and habilitation
services for adults with developmental disabilities as defined in section 252.41, subdivision 3;
boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day care centers
as defined in Minnesota Rules, part 9555.9600;
(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15; a person
providing personal care services and supervision of personal care services as defined in Minnesota
Rules, part 9505.0335; a person providing private duty nursing services as defined in Minnesota
Rules, part 9505.0360; and home care providers required to be licensed under chapter 144A;
(3) a person who employs health care providers solely for the purpose of providing patient
services to its employees; and
(4) an educational institution that employs health care providers solely for the purpose
of providing patient services to its students if the institution does not receive fee for service
payments or payments for extended coverage.
    Subd. 5.[Repealed, 1993 c 345 art 13 s 24]
    Subd. 6. Home health care services. "Home health care services" are services:
(1) defined under the state medical assistance program as home health agency services
provided by a home health agency, personal care services and supervision of personal care
services, private duty nursing services, and waivered services or services by home care providers
required to be licensed under chapter 144A; and
(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing
facility, as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with
developmental disabilities as defined in section 256B.055, subdivision 12, paragraph (d).
    Subd. 6a. Hospice care services. "Hospice care services" are services:
(1) as defined in Minnesota Rules, part 9505.0297; and
(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing
facility as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with
developmental disabilities as defined in section 256B.055, subdivision 12, paragraph (d).
    Subd. 7. Hospital. "Hospital" means a hospital licensed under chapter 144, or a hospital
licensed by any other jurisdiction.
    Subd. 8.[Repealed, 1996 c 471 art 6 s 13]
    Subd. 9.[Repealed, 1996 c 471 art 6 s 13]
    Subd. 9a.[Repealed, 1996 c 471 art 6 s 13]
    Subd. 9b. Patient services. (a) "Patient services" means inpatient and outpatient services and
other goods and services provided by hospitals, surgical centers, or health care providers. They
include the following health care goods and services provided to a patient or consumer:
(1) bed and board;
(2) nursing services and other related services;
(3) use of hospitals, surgical centers, or health care provider facilities;
(4) medical social services;
(5) drugs, biologicals, supplies, appliances, and equipment;
(6) other diagnostic or therapeutic items or services;
(7) medical or surgical services;
(8) items and services furnished to ambulatory patients not requiring emergency care; and
(9) emergency services.
(b) "Patient services" does not include:
(1) services provided to nursing homes licensed under chapter 144A;
(2) examinations for purposes of utilization reviews, insurance claims or eligibility, litigation,
and employment, including reviews of medical records for those purposes;
(3) services provided to and by community residential mental health facilities licensed under
Minnesota Rules, parts 9520.0500 to 9520.0690, and to and by residential treatment programs for
children with severe emotional disturbance licensed or certified under chapter 245A;
(4) services provided to and by community support programs and family community support
programs approved under Minnesota Rules, parts 9535.1700 to 9535.1760, or certified as mental
health rehabilitative services under chapter 256B;
(5) services provided to and by community mental health centers as defined in section
245.62, subdivision 2;
(6) services provided to and by assisted living programs and congregate housing programs;
(7) hospice care services;
(8) home and community-based waivered services under sections 256B.0915, 256B.49,
256B.491, and 256B.501;
(9) targeted case management services under sections 256B.0621; 256B.0625, subdivisions
20, 20a, 33, and 44 ; and 256B.094; and
(10) services provided to the following: supervised living facilities for persons with
developmental disabilities licensed under Minnesota Rules, parts 4665.0100 to 4665.9900;
housing with services establishments required to be registered under chapter 144D; board and
lodging establishments providing only custodial services that are licensed under chapter 157 and
registered under section 157.17 to provide supportive services or health supervision services;
adult foster homes as defined in Minnesota Rules, part 9555.5105; day training and habilitation
services for adults with developmental disabilities as defined in section 252.41, subdivision 3;
boarding care homes as defined in Minnesota Rules, part 4655.0100; adult day care services as
defined in section 245A.02, subdivision 2a; and home health agencies as defined in Minnesota
Rules, part 9505.0175, subpart 15, or licensed under chapter 144A.
    Subd. 9c. Person. "Person" means an individual, partnership, limited liability company,
corporation, association, governmental unit or agency, or public or private organization of any
kind.
    Subd. 10.[Repealed, 1993 c 345 art 13 s 24]
    Subd. 10a. Pharmacy. "Pharmacy" means a pharmacy required to be licensed under chapter
151, or a pharmacy required to be licensed by any other jurisdiction.
    Subd. 10b. Regional treatment center. "Regional treatment center" means a regional center
as defined in section 253B.02, subdivision 18, and named in sections 253.015, subdivision
1 , and 254.05.
    Subd. 11.[Repealed, 1996 c 471 art 6 s 13]
    Subd. 12.[Repealed, 1996 c 471 art 6 s 13]
    Subd. 12a.[Repealed, 1996 c 471 art 6 s 13]
    Subd. 12b. Staff model health plan company. "Staff model health plan company" means a
health plan company as defined in section 62Q.01, subdivision 4, which employs one or more
types of health care provider to deliver health care services to the health plan company's enrollees.
    Subd. 13. Surgical center. "Surgical center" is an outpatient surgical center as defined in
Minnesota Rules, chapter 4675, or a similar facility located in any other jurisdiction.
    Subd. 14. Wholesale drug distributor. "Wholesale drug distributor" means a wholesale
drug distributor required to be licensed under sections 151.42 to 151.51.
    Subd. 15. Legend drug. "Legend drug" means a drug that is required by federal law to bear
one of the following statements: "Caution: Federal law prohibits dispensing without prescription"
or "Rx only".
History: 1992 c 549 art 9 s 5; 1993 c 345 art 13 s 3-10; 1Sp1993 c 6 s 19-23; 1994 c 625 art
8 s 64,65; art 13 s 6-9; 1995 c 234 art 9 s 4-6; 1995 c 264 art 18 s 1,2; 1996 c 305 art 1 s 65;
1996 c 471 art 6 s 1-3; 1997 c 31 art 4 s 1-5; 1997 c 84 art 4 s 1,2; 1997 c 225 art 3 s 4-9,23;
1997 c 251 s 28; 1999 c 243 art 8 s 1; 2000 c 490 art 9 s 2; 1Sp2001 c 5 art 14 s 2-4; 2003 c
127 art 7 s 2; 2004 c 288 art 6 s 25; 2005 c 56 s 1; 1Sp2005 c 3 art 6 s 5,6; 2006 c 212 art 3
s 27; 2006 c 259 art 7 s 3

295.51 MINIMUM CONTACTS REQUIRED FOR JURISDICTION TO TAX GROSS
REVENUE.
    Subdivision 1. Business transactions in Minnesota. A hospital, surgical center, or health
care provider is subject to tax under sections 295.50 to 295.59 if it is "transacting business
in Minnesota." A hospital, surgical center, or health care provider is transacting business in
Minnesota if it maintains contacts with or presence in the state of Minnesota sufficient to permit
taxation of gross revenues received for patient services under the United States Constitution.
    Subd. 1a. Nexus in Minnesota. A wholesale drug distributor has nexus in Minnesota if its
contacts with or presence in Minnesota is sufficient to satisfy the requirements of the United
States Constitution.
    Subd. 2.[Repealed, 1993 c 345 art 13 s 24]
History: 1992 c 549 art 9 s 6; 1993 c 345 art 13 s 11; 1Sp1993 c 6 s 24; 1996 c 471 art 6 s
4,5; 1997 c 31 art 4 s 6; 1997 c 225 art 3 s 10,23; 1997 c 251 s 28

295.52 TAXES IMPOSED.
    Subdivision 1. Hospital tax. A tax is imposed on each hospital equal to two percent of its
gross revenues.
    Subd. 1a. Surgical center tax. A tax is imposed on each surgical center equal to two percent
of its gross revenues.
    Subd. 1b.[Repealed, 1997 c 225 art 3 s 23]
    Subd. 2. Provider tax. A tax is imposed on each health care provider equal to two percent
of its gross revenues.
    Subd. 3. Wholesale drug distributor tax. A tax is imposed on each wholesale drug
distributor equal to two percent of its gross revenues.
    Subd. 4. Use tax; prescription drugs. (a) A person that receives prescription drugs for
resale or use in Minnesota, other than from a wholesale drug distributor that is subject to tax
under subdivision 3, is subject to a tax equal to the price paid to the wholesale drug distributor
multiplied by the tax percentage specified in this section. Liability for the tax is incurred when
prescription drugs are received or delivered in Minnesota by the person.
(b) A person that receives prescription drugs for use in Minnesota from a nonresident
pharmacy required to be registered under section 151.19 is subject to a tax equal to the price
paid by the nonresident pharmacy to the wholesale drug distributor or the price received by
the nonresident pharmacy, whichever is lower, multiplied by the tax percentage specified in
this section. Liability for the tax is incurred when prescription drugs are received in Minnesota
by the person.
(c) A tax imposed under this subdivision does not apply to purchases by an individual
for personal consumption.
    Subd. 4a. Tax collection. A wholesale drug distributor with nexus in Minnesota, who is not
subject to tax under subdivision 3, on all or a particular transaction or a nonresident pharmacy
with nexus in Minnesota, is required to collect the tax imposed under subdivision 4, from the
purchaser of the drugs and give the purchaser a receipt for the tax paid. The tax collected shall be
remitted to the commissioner in the manner prescribed by section 295.55, subdivision 3.
    Subd. 5. Volunteer ambulance services. Volunteer ambulance services are not subject to the
tax under this section. For purposes of this requirement, "volunteer ambulance service" means an
ambulance service in which all of the individuals whose primary responsibility is direct patient
care meet the definition of volunteer under section 144E.001, subdivision 15. The ambulance
service may employ administrative and support staff, and remain eligible for this exemption, if
the primary responsibility of these staff is not direct patient care.
    Subd. 6. Hearing aids and prescription eyewear. The tax liability of a person who meets
the definition of a health care provider solely because the person sells or repairs hearing aids and
related equipment or prescription eyewear is limited to the gross revenues received from the
sale or repair of these items.
    Subd. 7. Tax reduction. Notwithstanding subdivisions 1, 1a, 2, 3, and 4, the tax imposed
under this section equals for calendar years 1998 to 2003, 1.5 percent of the gross revenues
received on or after January 1, 1998, and before January 1, 2004.
History: 1992 c 549 art 9 s 7; 1993 c 345 art 13 s 12,13; 1Sp1993 c 6 s 25; 1994 c 625 art
13 s 10; 1996 c 471 art 6 s 6; 1997 c 31 art 4 s 7; 1997 c 84 art 4 s 3; 1997 c 199 s 14; 1997 c 225
art 3 s 11-13,23; 1997 c 251 s 27,28; 1998 c 389 art 16 s 13,14; 1999 c 8 s 5; 1999 c 243 art 8 s
2; 1Sp2001 c 5 art 14 s 5,6; 1Sp2005 c 3 art 6 s 7

295.53 EXEMPTIONS; SPECIAL RULES.
    Subdivision 1. Exemptions. (a) The following payments are excluded from the gross
revenues subject to the hospital, surgical center, or health care provider taxes under sections
295.50 to 295.59:
(1) payments received for services provided under the Medicare program, including
payments received from the government, and organizations governed by sections 1833 and 1876
of title XVIII of the federal Social Security Act, United States Code, title 42, section 1395, and
enrollee deductibles, coinsurance, and co-payments, whether paid by the Medicare enrollee or by
a Medicare supplemental coverage as defined in section 62A.011, subdivision 3, clause (10), or by
Medicaid payments under title XIX of the federal Social Security Act. Payments for services not
covered by Medicare are taxable;
(2) payments received for home health care services;
(3) payments received from hospitals or surgical centers for goods and services on which
liability for tax is imposed under section 295.52 or the source of funds for the payment is exempt
under clause (1), (7), (10), or (14);
(4) payments received from health care providers for goods and services on which liability
for tax is imposed under this chapter or the source of funds for the payment is exempt under
clause (1), (7), (10), or (14);
(5) amounts paid for legend drugs, other than nutritional products and blood and blood
components, to a wholesale drug distributor who is subject to tax under section 295.52, subdivision
3 , reduced by reimbursements received for legend drugs otherwise exempt under this chapter;
(6) payments received by a health care provider or the wholly owned subsidiary of a health
care provider for care provided outside Minnesota;
(7) payments received from the chemical dependency fund under chapter 254B;
(8) payments received in the nature of charitable donations that are not designated for
providing patient services to a specific individual or group;
(9) payments received for providing patient services incurred through a formal program of
health care research conducted in conformity with federal regulations governing research on
human subjects. Payments received from patients or from other persons paying on behalf of the
patients are subject to tax;
(10) payments received from any governmental agency for services benefiting the public,
not including payments made by the government in its capacity as an employer or insurer or
payments made by the government for services provided under general assistance medical care,
the MinnesotaCare program, or the medical assistance program governed by title XIX of the
federal Social Security Act, United States Code, title 42, sections 1396 to 1396v;
(11) government payments received by the commissioner of human services for
state-operated services;
(12) payments received by a health care provider for hearing aids and related equipment or
prescription eyewear delivered outside of Minnesota;
(13) payments received by an educational institution from student tuition, student activity
fees, health care service fees, government appropriations, donations, or grants, and for services
identified in and provided under an individualized education plan as defined in section 256B.0625
or Code of Federal Regulations, chapter 34, section 300.340(a). Fee for service payments and
payments for extended coverage are taxable;
(14) payments received under the federal Employees Health Benefits Act, United States
Code, title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of 1990. Enrollee
deductibles, coinsurance, and co-payments are subject to tax; and
(15) payments received under the federal Tricare program, Code of Federal Regulations, title
32, section 199.17(a)(7). Enrollee deductibles, coinsurance, and co-payments are subject to tax.
(b) Payments received by wholesale drug distributors for legend drugs sold directly to
veterinarians or veterinary bulk purchasing organizations are excluded from the gross revenues
subject to the wholesale drug distributor tax under sections 295.50 to 295.59.
    Subd. 2. Deductions for staff model health plan company. In addition to the exemptions
allowed under subdivision 1, a staff model health plan company may deduct from its gross
revenues for the year:
(1) amounts paid to hospitals, surgical centers, and health care providers that are not
employees of the staff model health plan company for services on which liability for the tax is
imposed under section 295.52;
(2) net amounts added to reserves, to the extent that the amounts added do not cause total
reserves to exceed 200 percent of the statutory net worth requirement, the calculation of which
may be determined on a consolidated basis, taking into account the amounts held in reserve by
affiliated staff model health plan companies;
(3) assessments for the comprehensive health insurance plan under section 62E.11; and
(4) amounts spent for administration as reported as total administration to the Department
of Health in the statement of revenues, expenses, and net worth pursuant to section 62D.08,
subdivision 3 , clause (a).
    Subd. 3. Separate statement of tax. A hospital, surgical center, health care provider, or
wholesale drug distributor must not state the tax obligation under section 295.52 in a deceptive
or misleading manner. It must not separately state tax obligations on bills provided to patients,
consumers, or other payers when the amount received for the services or goods is not subject
to tax.
Pharmacies that separately state the tax obligations on bills provided to consumers or to
other payers who purchase legend drugs may state the tax obligation as the wholesale price of the
legend drugs multiplied by the tax percentage specified in section 295.52. Pharmacies must not
state the tax obligation based on the retail price.
Whenever the commissioner determines that a person has engaged in any act or practice
constituting a violation of this subdivision, the commissioner may bring an action in the name of
the state in the district court of the appropriate county to enjoin the act or practice and to enforce
compliance with this subdivision, or the commissioner may refer the matter to the attorney
general or the county attorney of the appropriate county. Upon a proper showing, a permanent or
temporary injunction, restraining order, or other appropriate relief must be granted.
    Subd. 4.[Expired]
    Subd. 4a. Credit for research. (a) In addition to the exemptions allowed under subdivision 1,
a hospital or health care provider may claim an annual credit against the total amount of tax, if any,
the hospital or health care provider owes for that calendar year under sections 295.50 to 295.57.
The credit shall equal 2.5 percent of revenues for patient services used to fund expenditures for
qualifying research conducted by an allowable research program. The amount of the credit shall
not exceed the tax liability of the hospital or health care provider under sections 295.50 to 295.57.
(b) For purposes of this subdivision, the following requirements apply:
(1) expenditures must be for program costs of qualifying research conducted by an allowable
research program;
(2) an allowable research program must be a formal program of medical and health care
research conducted by an entity which is exempt under section 501(c)(3) of the Internal Revenue
Code of 1986 or is owned and operated under authority of a governmental unit;
(3) qualifying research must:
(A) be approved in writing by the governing body of the hospital or health care provider
which is taking the deduction under this subdivision;
(B) have as its purpose the development of new knowledge in basic or applied science
relating to the diagnosis and treatment of conditions affecting the human body;
(C) be subject to review by individuals with expertise in the subject matter of the proposed
study but who have no financial interest in the proposed study and are not involved in the conduct
of the proposed study; and
(D) be subject to review and supervision by an institutional review board operating in
conformity with federal regulations if the research involves human subjects or an institutional
animal care and use committee operating in conformity with federal regulations if the research
involves animal subjects. Research expenses are not exempt if the study is a routine evaluation
of health care methods or products used in a particular setting conducted for the purpose of
making a management decision. Costs of clinical research activities paid directly for the benefit
of an individual patient are excluded from this exemption. Basic research in fields including
biochemistry, molecular biology, and physiology are also included if such programs are subject to
a peer review process.
(c) No credit shall be allowed under this subdivision for any revenue received by the hospital
or health care provider in the form of a grant, gift, or otherwise, whether from a government or
nongovernment source, on which the tax liability under section 295.52 is not imposed.
(d) The taxpayer shall apply for the credit under this section on the annual return under
section 295.55, subdivision 5.
(e) Beginning September 1, 2001, if the actual or estimated amount paid under this section for
the calendar year exceeds $2,500,000, the commissioner of finance shall determine the rate of the
research credit for the following calendar year to the nearest one-half percent so that refunds paid
under this section will most closely equal $2,500,000. The commissioner of finance shall publish
in the State Register by October 1 of each year the rate of the credit for the following calendar
year. A determination under this section is not subject to the rulemaking provisions of chapter 14.
    Subd. 5.[Repealed, 1997 c 225 art 3 s 23]
History: 1992 c 549 art 9 s 8; 1993 c 345 art 13 s 14-17; 1Sp1993 c 6 s 26,27; 1994 c 625
art 13 s 11-13; 1995 c 234 art 9 s 7-9; 1995 c 264 art 14 s 2; art 18 s 3,4; 1996 c 471 art 6 s 7,8;
1997 c 31 art 4 s 8-10; 1997 c 84 art 4 s 4; 1997 c 225 art 3 s 14-17,23; 1997 c 251 s 28; 1998 c
300 art 3 s 8; 1999 c 243 art 8 s 3; 2000 c 490 art 9 s 3; 2002 c 377 art 9 s 7; 2003 c 127 art 7 s
3; 1Sp2003 c 14 art 12 s 87; 2004 c 288 art 6 s 26; 1Sp2005 c 3 art 6 s 8; 2006 c 259 art 7 s 4

295.54 CREDIT FOR TAXES PAID.
    Subdivision 1. Taxes paid to another state. A hospital, surgical center, or health care
provider that has paid taxes to another jurisdiction measured by gross revenues and is subject to
tax under sections 295.52 to 295.59 on the same gross revenues is entitled to a credit for the tax
legally due and paid to another jurisdiction to the extent of the lesser of (1) the tax actually paid
to the other jurisdiction, or (2) the amount of tax imposed by Minnesota on the gross revenues
subject to tax in the other taxing jurisdictions.
    Subd. 2. Pharmacy refund. A pharmacy may claim an annual refund against the total
amount of tax, if any, the pharmacy owes during that calendar year under section 295.52,
subdivision 2 . The refund shall equal the amount paid by the pharmacy to a wholesale drug
distributor subject to tax under section 295.52, subdivision 3, for legend drugs delivered by the
pharmacy outside of Minnesota, multiplied by the tax percentage specified in section 295.52.
If the amount of the refund exceeds the tax liability of the pharmacy under section 295.52,
subdivision 1b , the commissioner shall provide the pharmacy with a refund equal to the excess
amount. Each qualifying pharmacy must apply for the refund on the annual return as provided
under section 295.55, subdivision 5. The refund must be claimed within one year of the due date
of the return. Interest on refunds paid under this subdivision will begin to accrue 60 days after the
date a claim for refund is filed. For purposes of this subdivision, the date a claim is filed is the due
date of the return or the date of the actual claim for refund, whichever is later.
    Subd. 3. Wholesale drug distributor credit. A wholesale drug distributor who has paid
taxes to another state or province or territory of Canada measured by gross revenues or sales and
is subject to tax under sections 295.52 to 295.59 on the same gross revenues or sales is entitled
to a credit for the tax legally due and paid to another state or province or territory of Canada to
the extent of the lesser of (1) the tax actually paid to the other state or province or territory of
Canada or (2) the amount of tax imposed by Minnesota on the gross revenues or sales subject to
tax in the other taxing jurisdictions.
History: 1992 c 549 art 9 s 9; 1993 c 345 art 13 s 18; 1Sp1993 c 6 s 28; 1994 c 625 art 13 s
14; 1996 c 471 art 6 s 9-11; 1997 c 31 art 4 s 11; 1997 c 225 art 3 s 18,19,23; 1997 c 251 s 28

295.55 PAYMENT OF TAX.
    Subdivision 1. Scope. The provisions of this section apply to the taxes imposed under
sections 295.50 to 295.58.
    Subd. 2. Estimated tax; hospitals; surgical centers. (a) Each hospital or surgical center
must make estimated payments of the taxes for the calendar year in monthly installments to the
commissioner within 15 days after the end of the month.
(b) Estimated tax payments are not required of hospitals or surgical centers if: (1) the tax for
the current calendar year is less than $500; or (2) the tax for the previous calendar year is less than
$500, if the taxpayer had a tax liability and was doing business the entire year.
(c) Underpayment of estimated installments bear interest at the rate specified in section
270C.40, from the due date of the payment until paid or until the due date of the annual return
whichever comes first. An underpayment of an estimated installment is the difference between the
amount paid and the lesser of (1) 90 percent of one-twelfth of the tax for the calendar year or (2)
one-twelfth of the total tax for the previous calendar year if the taxpayer had a tax liability and
was doing business the entire year.
    Subd. 3. Estimated tax; other taxpayers. (a) Each taxpayer, other than a hospital or surgical
center, must make estimated payments of the taxes for the calendar year in quarterly installments
to the commissioner by April 15, July 15, October 15, and January 15 of the following calendar
year.
(b) Estimated tax payments are not required if: (1) the tax for the current calendar year is less
than $500; or (2) the tax for the previous calendar year is less than $500, if the taxpayer had a tax
liability and was doing business the entire year.
(c) Underpayment of estimated installments bear interest at the rate specified in section
270C.40, from the due date of the payment until paid or until the due date of the annual return
whichever comes first. An underpayment of an estimated installment is the difference between the
amount paid and the lesser of (1) 90 percent of one-quarter of the tax for the calendar year or (2)
one-quarter of the total tax for the previous calendar year if the taxpayer had a tax liability and
was doing business the entire year.
    Subd. 4. Electronic payments. A taxpayer with an aggregate tax liability of:
(1) $20,000 or more in the fiscal year ending June 30, 2005; or
(2) $10,000 or more in the fiscal year ending June 30, 2006, and fiscal years thereafter,
must remit all liabilities by electronic means in the subsequent calendar year.
    Subd. 5. Annual return. The taxpayer must file an annual return reconciling the estimated
payments by March 15 of the following calendar year.
    Subd. 6. Form of returns. The estimated payments and annual return must contain the
information and be in the form prescribed by the commissioner.
    Subd. 7. Extensions for filing returns. If good cause exists, the commissioner may extend
the time for filing MinnesotaCare tax returns for not more than 60 days.
History: 1992 c 549 art 9 s 10; 1993 c 345 art 13 s 19; 1994 c 625 art 13 s 15,16; 1995
c 234 art 9 s 10; 1995 c 264 art 18 s 5; 1997 c 84 art 4 s 5; 1997 c 225 art 3 s 20,23; 1997 c
251 s 28; 1999 c 243 art 8 s 4,5; 1Sp2001 c 5 art 17 s 14; 1Sp2003 c 14 art 7 s 68; 2005 c
151 art 2 s 17; 1Sp2005 c 3 art 9 s 4

295.56 TRANSFER OF ACCOUNTS RECEIVABLE.
When a hospital or health care provider transfers, assigns, or sells accounts receivable
to another person who is subject to tax under this chapter, liability for the tax on the accounts
receivable is imposed on the transferee, assignee, or buyer of the accounts receivable. No liability
for these accounts receivable is imposed on the transferor, assignor, or seller of the accounts
receivable.
History: 1995 c 234 art 9 s 11

295.57 COLLECTION AND ENFORCEMENT; REFUNDS; APPLICATION OF OTHER
CHAPTERS; ACCESS TO RECORDS; INTEREST ON OVERPAYMENTS.
    Subdivision 1. Application of other chapters. Unless specifically provided otherwise by
sections 295.50 to 295.59, the interest, criminal penalties, and refunds provisions in chapter 289A,
the civil penalty provisions applicable to withholding and sales taxes under section 289A.60, and
the audit, assessment, appeal, collection, enforcement, and administrative provisions of chapters
270C and 289A, apply to taxes imposed under sections 295.50 to 295.59.
    Subd. 2. Access to records. For purposes of administering the taxes imposed by sections
295.50 to 295.59, the commissioner may access patients' records that contain billing or other
financial information without prior consent from the patients. The data collected is classified as
private or nonpublic data.
    Subd. 3. Interest on overpayments. Interest must be paid on an overpayment refunded or
credited to the taxpayer from the date of payment of the tax until the date the refund is paid or
credited. For purposes of this subdivision, the date of payment is the due date of the return or the
date of actual payment of the tax, whichever is later.
    Subd. 4. Sampling techniques. The commissioner may use statistical or other sampling
techniques consistent with generally accepted auditing standards in examining returns or records
and making assessments.
    Subd. 5. Exemption for amounts paid for legend drugs. If a hospital or health care provider
cannot determine the actual cost or reimbursement of legend drugs under the exemption provided
in section 295.53, subdivision 1, paragraph (a), clause (6), the following method must be used:
A hospital or health care provider must determine the amount paid for legend drugs used
during the month or quarter and multiply that amount by a ratio, the numerator of which is the total
amount received for taxable patient services, and the denominator of which is the total amount
received for all patient services, including amounts exempt under section 295.53, subdivision 1.
The result represents the allowable exemption for the monthly or quarterly cost of drugs.
History: 1992 c 549 art 9 s 11; 1993 c 345 art 13 s 20; 1995 c 234 art 9 s 12; 1995 c 264 art
18 s 6; 1999 c 243 art 8 s 6; 1Sp2001 c 5 art 14 s 7; 2002 c 377 art 9 s 8; 2005 c 151 art 2 s 11

295.58 DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.
The commissioner shall deposit all revenues, including penalties and interest, derived from
the taxes imposed by sections 295.50 to 295.57 and from the insurance premiums tax imposed
by section 297I.05, subdivision 5, on health maintenance organizations, community integrated
service networks, and nonprofit health service plan corporations in the health care access fund.
There is annually appropriated from the health care access fund to the commissioner of revenue
the amount necessary to make refunds under this chapter.
History: 1992 c 549 art 9 s 12; 1993 c 345 art 13 s 21; 1994 c 625 art 13 s 17; 1997 c 225
art 2 s 62; 2000 c 394 art 2 s 26; 2000 c 490 art 9 s 4

295.581 PROHIBITION ON NON-MINNESOTACARE TRANSFERS FROM FUND.
Notwithstanding any law to the contrary, and notwithstanding section 645.33, money in the
health care access fund shall be appropriated only for purposes that are consistent with past and
current MinnesotaCare appropriations in Laws 1992, chapter 549; Laws 1993, chapter 345; Laws
1994, chapter 625; and Laws 1995, chapter 234, or for initiatives that are part of the section
1115 of the Social Security Act health care reform waiver submitted to the federal Centers for
Medicare and Medicaid Services by the commissioner of human services as appropriated in
Laws 1995, chapter 234.
History: 1995 c 234 art 9 s 13; 2002 c 277 s 32

295.582 AUTHORITY.
    Subdivision 1. Tax expense transfer. (a) A hospital, surgical center, or health care provider
that is subject to a tax under section 295.52, or a pharmacy that has paid additional expense
transferred under this section by a wholesale drug distributor, may transfer additional expense
generated by section 295.52 obligations on to all third-party contracts for the purchase of health
care services on behalf of a patient or consumer. Nothing shall prohibit a pharmacy from
transferring the additional expense generated under section 295.52 to a pharmacy benefits
manager. The additional expense transferred to the third-party purchaser or a pharmacy benefits
manager must not exceed the tax percentage specified in section 295.52 multiplied against the
gross revenues received under the third-party contract, and the tax percentage specified in section
295.52 multiplied against co-payments and deductibles paid by the individual patient or consumer.
The expense must not be generated on revenues derived from payments that are excluded from
the tax under section 295.53. All third-party purchasers of health care services including, but not
limited to, third-party purchasers regulated under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B,
65A, 65B, 79, or 79A, or under section 471.61 or 471.617, and pharmacy benefits managers must
pay the transferred expense in addition to any payments due under existing contracts with the
hospital, surgical center, pharmacy, or health care provider, to the extent allowed under federal
law. A third-party purchaser of health care services includes, but is not limited to, a health carrier
or community integrated service network that pays for health care services on behalf of patients or
that reimburses, indemnifies, compensates, or otherwise insures patients for health care services.
For purposes of this section, a pharmacy benefits manager means an entity that performs pharmacy
benefits management. A third-party purchaser or pharmacy benefits manager shall comply with
this section regardless of whether the third-party purchaser or pharmacy benefits manager is a
for-profit, not-for-profit, or nonprofit entity. A wholesale drug distributor may transfer additional
expense generated by section 295.52 obligations to entities that purchase from the wholesaler, and
the entities must pay the additional expense. Nothing in this section limits the ability of a hospital,
surgical center, pharmacy, wholesale drug distributor, or health care provider to recover all or part
of the section 295.52 obligation by other methods, including increasing fees or charges.
(b) Any hospital, surgical center, or health care provider subject to a tax under section 295.52
or a pharmacy that has paid additional expense transferred under this section by a wholesale drug
distributor may file a complaint with the commissioner responsible for regulating the third-party
purchaser if at any time the third-party purchaser fails to comply with paragraph (a).
(c) If the commissioner responsible for regulating the third-party purchaser finds at any
time that the third-party purchaser has not complied with paragraph (a), the commissioner may
take enforcement action against a third-party purchaser which is subject to the commissioner's
regulatory jurisdiction and which does not allow a hospital, surgical center, pharmacy, or provider
to pass-through the tax. The commissioner may by order fine or censure the third-party purchaser
or revoke or suspend the certificate of authority or license of the third-party purchaser to do
business in this state if the commissioner finds that the third-party purchaser has not complied
with this section. The third-party purchaser may appeal the commissioner's order through a
contested case hearing in accordance with chapter 14.
    Subd. 2. Agreement. A contracting agreement between a third-party purchaser or a
pharmacy benefits manager and a resident or nonresident pharmacy registered under chapter
151, may not prohibit:
(1) a pharmacy that has paid additional expense transferred under this section by a wholesale
drug distributor from exercising its option under this section to transfer such additional expenses
generated by the section 295.52 obligations on to the third-party purchaser or pharmacy benefits
manager; or
(2) a pharmacy that is subject to tax under section 295.52, subdivision 4, from exercising
its option under this section to recover all or part of the section 295.52 obligations from the
third-party purchaser or a pharmacy benefits manager.
History: 1993 c 345 art 13 s 22; 1Sp1993 c 6 s 29; 1994 c 625 art 13 s 18; 1995 c 234
art 9 s 14; 1997 c 31 art 4 s 12; 1997 c 225 art 3 s 21,23; 1997 c 251 s 28; 2005 c 77 s 7;
1Sp2005 c 4 art 5 s 15

295.59 SEVERABILITY.
If any section, subdivision, clause, or phrase of sections 295.50 to 295.582 is for any reason
held to be unconstitutional or in violation of federal law, the decision shall not affect the validity
of the remaining portions of sections 295.50 to 295.582. The legislature declares that it would
have passed sections 295.50 to 295.582 and each section, subdivision, sentence, clause, and
phrase thereof, irrespective of the fact that any one or more sections, subdivisions, sentences,
clauses, or phrases is declared unconstitutional.
History: 1992 c 549 art 9 s 13; 1993 c 345 art 13 s 23

295.60 SPECIAL FUR CLOTHING TAX.
    Subdivision 1. Imposition. If clothing made of fur is not subject to the sales tax under
chapter 297A, a tax is imposed on each furrier equal to 6.5 percent of gross revenues from retail
sales in Minnesota of clothing made from fur.
    Subd. 1a. Use tax; credit for taxes paid. (a) A person that receives fur clothing for use or
storage in Minnesota, other than from a furrier that paid the tax under subdivision 1, is subject
to tax at the rate imposed under subdivision 1. Liability for the tax is incurred when the person
has possession of the fur clothing in Minnesota. The tax must be remitted to the commissioner
in the manner prescribed by subdivision 3.
(b) A person that has paid taxes to another jurisdiction on the same transaction and is
subject to tax under this section is entitled to a credit for the tax legally due and paid to another
jurisdiction to the extent of the lesser of (1) the tax actually paid to the other jurisdiction, or (2)
the amount of tax imposed by Minnesota on the transaction subject to tax in the other jurisdiction.
    Subd. 1b. Tax collection required. A furrier with nexus in Minnesota, who is not subject
to tax under subdivision 1, is required to collect the tax imposed under subdivision 1a from the
purchaser of the clothing made from fur and give the purchaser a receipt for the tax paid. The tax
collected must be remitted to the commissioner in the manner prescribed by subdivision 3.
    Subd. 1c. Taxes paid to another jurisdiction; credit. A furrier that has paid taxes to another
jurisdiction measured by gross revenue and is subject to tax under this section on the same gross
revenues is entitled to a credit for the tax legally due and paid to another jurisdiction to the extent
of the lesser of (1) the tax actually paid to the other jurisdiction, or (2) the amount of tax imposed
by Minnesota on the gross revenues subject to tax in the other taxing jurisdictions.
    Subd. 2. Definitions. (a) For purposes of this section, the following terms have the meanings
given.
(b) "Commissioner" means the commissioner of revenue.
(c) "Furrier" means a retailer that sells clothing made of fur.
(d) "Clothing made of fur" means articles of clothing made of fur on the hide or pelt, and
articles of clothing of which such fur is the component material of chief value, but only if such
value is more than three times the value of the next most valuable material.
(e) "Retail sale" has the meaning given in section 297A.61, subdivision 4.
(f) "Delivered outside of Minnesota" means fur clothing which the furrier delivers to a
common carrier for delivery outside Minnesota, places in the United States mail or parcel post
directed to the purchaser outside Minnesota, or delivers to the purchaser outside Minnesota by
means of the seller's own delivery vehicles, and which is not returned to a point within Minnesota,
except in the course of interstate commerce.
    Subd. 2a. Exemptions. Payments received by a furrier for clothing made of fur delivered
outside of Minnesota are exempt from gross revenues subject to the fur clothing tax.
    Subd. 3. Payment. (a) Each furrier shall make estimated payments of the taxes for the
calendar year in quarterly installments to the commissioner by April 15, July 15, October 15,
and January 15 of the following calendar year.
(b) Estimated tax payments are not required if:
(1) the tax for the current calendar year is less than $500; or
(2) the tax for the previous calendar year is less than $500, if the taxpayer had a tax liability
and was doing business the entire year.
(c) Underpayment of estimated installments bear interest at the rate specified in section
270C.40, from the due date of the payment until paid or until the due date of the annual return,
whichever comes first. An underpayment of an estimated installment is the difference between
the amount paid and the lesser of (1) the tax for the actual gross revenues received during the
quarter, or (2) one-quarter of the total tax for the previous calendar year if the taxpayer had a tax
liability and was doing business the entire year.
    Subd. 4. Electronic funds transfer payments. A taxpayer with an aggregate tax liability of
$120,000 or more during a fiscal year ending June 30 must remit all liabilities by electronic means.
    Subd. 5. Annual return. The taxpayer must file an annual return reconciling the estimated
payments by March 15 of the following calendar year.
    Subd. 6. Form of returns. The estimated payments and annual return must contain the
information and be in the form prescribed by the commissioner.
    Subd. 7. Application of other chapters. Unless specifically provided otherwise by this
section, the interest, criminal penalties, and refunds provisions in chapter 289A, the civil penalty
provisions applicable to withholding and sales taxes under section 289A.60, and the audit,
assessment, appeal, collection, enforcement, and administrative provisions of chapters 270C and
289A, apply to taxes imposed under this section.
    Subd. 8. Interest on overpayments. Interest must be paid on an overpayment refunded or
credited to the taxpayer from the date of payment of the tax until the date the refund is paid or
credited. For purposes of this subdivision, the date of payment is the due date of the return or the
date of actual payment of the tax, whichever is later.
    Subd. 9. Deposit of revenues. The commissioner shall deposit all revenues, including
penalties and interest, derived from the tax imposed by this section in the general fund.
History: 1Sp2001 c 5 art 12 s 4; 2002 c 377 art 9 s 9,10; art 10 s 19-22; 2005 c 151 art
2 s 12,17; art 8 s 2

295.75 LIQUOR GROSS RECEIPTS TAX.
    Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the
meanings given.
(b) "Commissioner" means the commissioner of revenue.
(c) "Gross receipts" means the total amount received, in money or by barter or exchange, for
all liquor sales at retail as measured by the sales price, but does not include any taxes imposed
directly on the consumer that are separately stated on the invoice, bill of sale, or similar document
given to the purchaser.
(d) "Liquor" means:
(1) intoxicating liquor, as defined in section 340A.101, subdivision 14;
(2) beverage containing intoxicating liquor; and
(3) 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.
(e) "Liquor retailer" means a retailer that sells liquor.
(f) "Retail sale" has the meaning given in section 297A.61, subdivision 4.
    Subd. 2. Gross receipts tax imposed. A tax is imposed on each liquor retailer equal to 2.5
percent of gross receipts from retail sales in Minnesota of liquor.
    Subd. 3. Use tax imposed; credit for taxes paid. (a) A person that receives liquor for use or
storage in Minnesota, other than from a liquor retailer that paid the tax under subdivision 2, is
subject to tax at the rate imposed under subdivision 2. Liability for the tax is incurred when the
person has possession of the liquor in Minnesota. The tax must be remitted to the commissioner in
the same manner prescribed for the taxes imposed under chapter 297A.
(b) A person that has paid taxes to another jurisdiction on the same transaction and is
subject to tax under this section is entitled to a credit for the tax legally due and paid to another
jurisdiction to the extent of the lesser of (1) the tax actually paid to the other jurisdiction, or (2)
the amount of tax imposed by Minnesota on the transaction subject to tax in the other jurisdiction.
    Subd. 4. Tax collection required. A liquor retailer with nexus in Minnesota, who is not
subject to tax under subdivision 2, is required to collect the tax imposed under subdivision 3 from
the purchaser of the liquor and give the purchaser a receipt for the tax paid. The tax collected
must be remitted to the commissioner in the same manner prescribed for the taxes imposed
under chapter 297A.
    Subd. 5. Taxes paid to another jurisdiction; credit. A liquor retailer that has paid taxes
to another jurisdiction measured by gross receipts and is subject to tax under this section on the
same gross receipts is entitled to a credit for the tax legally due and paid to another jurisdiction to
the extent of the lesser of (1) the tax actually paid to the other jurisdiction, or (2) the amount of
tax imposed by Minnesota on the gross receipts subject to tax in the other taxing jurisdictions.
    Subd. 6. Exemptions. All of the exemptions applicable to the taxes imposed under chapter
297A are applicable to the taxes imposed under this section.
    Subd. 7. Sourcing of sales. All of the provisions of section 297A.668 apply to the taxes
imposed by this section.
    Subd. 8. Payment; reporting. A liquor retailer shall report the tax on a return prescribed by
the commissioner of revenue, and shall remit the tax with the return. The return and the tax must be
filed and paid using the filing cycle and due dates provided for taxes imposed under chapter 297A.
    Subd. 9. Administration. Unless specifically provided otherwise by this section, the audit,
assessment, refund, penalty, interest, enforcement, collection remedies, appeal, and administrative
provisions of chapters 270 and 289A that are applicable to taxes imposed under chapter 297A
apply to taxes imposed under this section.
    Subd. 10. Interest on overpayments. Interest must be paid on an overpayment refunded or
credited to the taxpayer from the date of payment of the tax until the date the refund is paid or
credited. For purposes of this subdivision, the date of payment is the due date of the return or the
date of actual payment of the tax, whichever is later.
    Subd. 11. Deposit of revenues. The commissioner shall deposit all revenues, including
penalties and interest, derived from the tax imposed by this section in the general fund.
History: 1Sp2005 c 3 art 6 s 9