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Minnesota Legislature

Office of the Revisor of Statutes

Chapter 297A

Section 297A.68

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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.
(d) Industrial production does not include:
(1) the furnishing of services listed in section 297A.61, subdivision 3, paragraph (g), clause
(6), items (i) to (vi) and (viii); or
(2) the transportation, transmission, or distribution of petroleum, liquefied gas, natural gas,
water, or steam, in, by, or through pipes, lines, tanks, mains, or other means of transporting those
products. For purposes of this paragraph, "transportation, transmission, or distribution" does not
include blending of petroleum or biodiesel fuel as defined in section 239.77.
    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 primarily to electronically
transmit results retrieved by a customer of an online 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, repair parts for ready-mixed concrete
trucks, 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;
(7) machinery and equipment used by restaurants in the furnishing, preparing, or serving of
prepared foods as defined in section 297A.61, subdivision 31;
(8) machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3
, paragraph (g), clause (6), items (i) to (vi) and (viii);
(9) machinery or equipment used in the transportation, transmission, or distribution of
petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines, tanks, mains,
or other means of transporting those products. This clause does not apply to machinery or
equipment used to blend petroleum or biodiesel fuel as defined in section 239.77; or
(10) 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) "Online 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.
(11) This subdivision does not apply to telecommunications equipment as provided in
subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit for telecommunications
services.
    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.[Repealed, 2006 c 259 art 6 s 32]
    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.[Repealed, 2006 c 259 art 6 s 32]
    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 durable medical equipment or components of durable 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, 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, paragraphs (a),
(c), and (d).
    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. For purposes of this subdivision, an aerial camera package, including any
camera, computer, and navigation device contained in the package, that is used in an aircraft
that is operated under a Federal Aviation Administration Restricted Airworthiness Certificate
according to Code of Federal Regulations, title 14, part 21, section 21.25(b)(3), relating to aerial
surveying, and that is based, maintained, and dispatched from a job opportunity building zone,
qualifies as primarily used or consumed in a job opportunity building zone if the imagery acquired
from the aerial camera package is returned to the job opportunity building zone for processing.
The exemption for an aerial camera package is limited as provided in this subdivision and 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. The total amount of the aerial camera
package exemption refunded for all taxpayers for all fiscal years is limited to $50,000 in taxes.
(b) Purchase and use of construction materials and supplies used or consumed in, and
equipment incorporated into, the 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.
(e) Notwithstanding the restriction in paragraph (a), which requires items purchased to be
primarily used or consumed in the zone, purchases by a qualified business that is an electrical
cooperative located in Meeker County of equipment and materials used for the generation,
transmission, and distribution of electrical energy are exempt under this subdivision, except that:
(1) the exemption for materials and equipment used or consumed outside the zone must not
exceed $200,000 in taxes for all taxpayers for all fiscal years; and
(2) no sales and use tax exemption is allowed for equipment purchased for resale.
For purposes of this paragraph, 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. 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 used or consumed in, and
equipment incorporated into, the 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 or a tax rate increase for a period of six months from the effective
date of the law change that results in the imposition of the tax or the tax rate increase under
this chapter if:
(1) the act imposing the tax or increasing the tax rate 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 or the tax rate was increased;
(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 construction 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 or the tax rate was increased;
(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.
    Subd. 40. Land clearing. Tree, bush, shrub, and stump removal are exempt when sold to
contractors or subcontractors as part of a land clearing contract. For purposes of this subdivision,
"land clearing contract" means a contract for the removal of trees, bushes, and shrubs, including
the removal of roots and stumps, to develop a site. This exemption does not apply to land clearing
of a portion of a site to allow for remodeling, improvement, or expansion of an existing structure.
    Subd. 41. International economic development zones. (a) Purchases of tangible personal
property or taxable services by a qualified business, as defined in section 469.321, are exempt
if the property or services are primarily used or consumed in the international economic
development zone designated under section 469.322. This exemption applies only if the purchase
is made and delivery received after the business signed the business subsidy agreement required
under chapter 469.
(b) Purchase and use of construction materials, supplies, and equipment incorporated into
the construction of improvements to real property in the international economic development
zone are exempt if the improvements after completion of construction are to be used as a regional
distribution center as defined in section 469.321 or otherwise used in the conduct of freight
forwarding activities of a qualified business as defined in section 469.321. 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 tax is imposed on sales taxable under this chapter or in another law, ordinance,
or charter provision.
(d) The exemptions in this section apply to sales and purchases made after the date of final
zone designation under section 469.322, paragraph (c), and before the expiration of the zone
under section 469.322, paragraph (d).
(e) For purchases made for improvements to real property to be occupied by a business that
has not signed a business subsidy agreement at the time of the purchase, 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. The taxpayer must attach to the claim for refund information
sufficient for the commissioner to be able to determine that the improvements are being occupied
by a business that has signed a business subsidy agreement.
History: 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; 2005 c 151 art 7 s 14-17; 1Sp2005 c 3 art 5 s 8-11; art 7 s 8,9; art
10 s 12; 2006 c 259 art 6 s 16,17; art 13 s 6