Bill Text: MN HF633 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Capital equipment exemption allowed at time of purchase.
Spectrum: Partisan Bill (Republican 8-0)
Status: (Introduced - Dead) 2011-03-07 - Author added LeMieur [HF633 Detail]
Download: Minnesota-2011-HF633-Introduced.html
1.2relating to taxation; sales and use; allowing capital equipment exemption at time
1.3of purchase;amending Minnesota Statutes 2010, sections 297A.68, subdivision
1.45; 297A.75.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to
1.7read:
1.8 Subd. 5. Capital equipment. (a) Capital equipment is exempt.The tax must be
1.9imposed and collected as if the rate under section
297A.62, subdivision 1, applied, and
1.10then refunded in the manner provided in section
297A.75.
1.11"Capital equipment" means machinery and equipment purchased or leased, and used
1.12in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
1.13or refining tangible personal property to be sold ultimately at retail if the machinery and
1.14equipment are essential to the integrated production process of manufacturing, fabricating,
1.15mining, or refining. Capital equipment also includes machinery and equipment
1.16used primarily to electronically transmit results retrieved by a customer of an online
1.17computerized data retrieval system.
1.18(b) Capital equipment includes, but is not limited to:
1.19(1) machinery and equipment used to operate, control, or regulate the production
1.20equipment;
1.21(2) machinery and equipment used for research and development, design, quality
1.22control, and testing activities;
2.1(3) environmental control devices that are used to maintain conditions such as
2.2temperature, humidity, light, or air pressure when those conditions are essential to and are
2.3part of the production process;
2.4(4) materials and supplies used to construct and install machinery or equipment;
2.5(5) repair and replacement parts, including accessories, whether purchased as spare
2.6parts, repair parts, or as upgrades or modifications to machinery or equipment;
2.7(6) materials used for foundations that support machinery or equipment;
2.8(7) materials used to construct and install special purpose buildings used in the
2.9production process;
2.10(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
2.11as part of the delivery process regardless if mounted on a chassis, repair parts for
2.12ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
2.13(9) machinery or equipment used for research, development, design, or production
2.14of computer software.
2.15(c) Capital equipment does not include the following:
2.16(1) motor vehicles taxed under chapter 297B;
2.17(2) machinery or equipment used to receive or store raw materials;
2.18(3) building materials, except for materials included in paragraph (b), clauses (6)
2.19and (7);
2.20(4) machinery or equipment used for nonproduction purposes, including, but not
2.21limited to, the following: plant security, fire prevention, first aid, and hospital stations;
2.22support operations or administration; pollution control; and plant cleaning, disposal of
2.23scrap and waste, plant communications, space heating, cooling, lighting, or safety;
2.24(5) farm machinery and aquaculture production equipment as defined by section
2.25297A.61, subdivisions 12 and 13
;
2.26(6) machinery or equipment purchased and installed by a contractor as part of an
2.27improvement to real property;
2.28(7) machinery and equipment used by restaurants in the furnishing, preparing, or
2.29serving of prepared foods as defined in section297A.61, subdivision 31 ;
2.30(8) machinery and equipment used to furnish the services listed in section297A.61,
2.31subdivision 3 , paragraph (g), clause (6), items (i) to (vi) and (viii);
2.32(9) machinery or equipment used in the transportation, transmission, or distribution
2.33of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
2.34tanks, mains, or other means of transporting those products. This clause does not apply to
2.35machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
2.36239.77
; or
3.1(10) any other item that is not essential to the integrated process of manufacturing,
3.2fabricating, mining, or refining.
3.3(d) For purposes of this subdivision:
3.4(1) "Equipment" means independent devices or tools separate from machinery but
3.5essential to an integrated production process, including computers and computer software,
3.6used in operating, controlling, or regulating machinery and equipment; and any subunit or
3.7assembly comprising a component of any machinery or accessory or attachment parts of
3.8machinery, such as tools, dies, jigs, patterns, and molds.
3.9(2) "Fabricating" means to make, build, create, produce, or assemble components or
3.10property to work in a new or different manner.
3.11(3) "Integrated production process" means a process or series of operations through
3.12which tangible personal property is manufactured, fabricated, mined, or refined. For
3.13purposes of this clause, (i) manufacturing begins with the removal of raw materials
3.14from inventory and ends when the last process prior to loading for shipment has been
3.15completed; (ii) fabricating begins with the removal from storage or inventory of the
3.16property to be assembled, processed, altered, or modified and ends with the creation
3.17or production of the new or changed product; (iii) mining begins with the removal of
3.18overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
3.19ends when the last process before stockpiling is completed; and (iv) refining begins with
3.20the removal from inventory or storage of a natural resource and ends with the conversion
3.21of the item to its completed form.
3.22(4) "Machinery" means mechanical, electronic, or electrical devices, including
3.23computers and computer software, that are purchased or constructed to be used for the
3.24activities set forth in paragraph (a), beginning with the removal of raw materials from
3.25inventory through completion of the product, including packaging of the product.
3.26(5) "Machinery and equipment used for pollution control" means machinery and
3.27equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
3.28described in paragraph (a).
3.29(6) "Manufacturing" means an operation or series of operations where raw materials
3.30are changed in form, composition, or condition by machinery and equipment and which
3.31results in the production of a new article of tangible personal property. For purposes of
3.32this subdivision, "manufacturing" includes the generation of electricity or steam to be
3.33sold at retail.
3.34(7) "Mining" means the extraction of minerals, ores, stone, or peat.
3.35(8) "Online data retrieval system" means a system whose cumulation of information
3.36is equally available and accessible to all its customers.
4.1(9) "Primarily" means machinery and equipment used 50 percent or more of the time
4.2in an activity described in paragraph (a).
4.3(10) "Refining" means the process of converting a natural resource to an intermediate
4.4or finished product, including the treatment of water to be sold at retail.
4.5(11) This subdivision does not apply to telecommunications equipment as
4.6provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
4.7for telecommunications services.
4.8EFFECTIVE DATE.This section is effective for sales and purchases made after
4.9June 30, 2013.
4.10 Sec. 2. Minnesota Statutes 2010, section 297A.75, is amended to read:
4.11297A.75 REFUND; APPROPRIATION.
4.12 Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
4.13following exempt items must be imposed and collected as if the sale were taxable and the
4.14rate under section297A.62, subdivision 1 , applied. The exempt items include:
4.15(1) capital equipment exempt under section
297A.68, subdivision 5;
4.16(2) (1) building materials for an agricultural processing facility exempt under section
4.17297A.71, subdivision 13
;
4.18(3) (2) building materials for mineral production facilities exempt under section
4.19297A.71, subdivision 14
;
4.20(4) (3) building materials for correctional facilities under section
297A.71,
4.21subdivision 3 ;
4.22(5) (4) building materials used in a residence for disabled veterans exempt under
4.23section297A.71, subdivision 11 ;
4.24(6) (5) elevators and building materials exempt under section
297A.71, subdivision
4.2512 ;
4.26(7) (6) building materials for the Long Lake Conservation Center exempt under
4.27section297A.71, subdivision 17 ;
4.28(8) (7) materials and supplies for qualified low-income housing under section
4.29297A.71, subdivision 23
;
4.30(9) (8) materials, supplies, and equipment for municipal electric utility facilities
4.31under section297A.71, subdivision 35 ;
4.32(10) (9) equipment and materials used for the generation, transmission, and
4.33distribution of electrical energy and an aerial camera package exempt under section
4.34297A.68
, subdivision 37;
5.1(11) (10) tangible personal property and taxable services and construction materials,
5.2supplies, and equipment exempt under section297A.68 , subdivision 41;
5.3(12) (11) commuter rail vehicle and repair parts under section
297A.70, subdivision
5.43, clause (11);
5.5(13) (12) materials, supplies, and equipment for construction or improvement of
5.6projects and facilities under section297A.71, subdivision 40 ;
5.7(14) (13) materials, supplies, and equipment for construction or improvement of a
5.8meat processing facility exempt under section297A.71, subdivision 41 ; and
5.9(15) (14) materials, supplies, and equipment for construction, improvement, or
5.10expansion of an aerospace defense manufacturing facility exempt under section297A.71,
5.11subdivision 42.
5.12 Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
5.13commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
5.14must be paid to the applicant. Only the following persons may apply for the refund:
5.15 (1) for subdivision 1, clauses (1)to (3) and (2), the applicant must be the purchaser;
5.16 (2) for subdivision 1, clauses(4) (3) and (7) (6), the applicant must be the
5.17governmental subdivision;
5.18 (3) for subdivision 1, clause(5) (4), the applicant must be the recipient of the
5.19benefits provided in United States Code, title 38, chapter 21;
5.20 (4) for subdivision 1, clause(6) (5), the applicant must be the owner of the
5.21homestead property;
5.22 (5) for subdivision 1, clause(8) (7), the owner of the qualified low-income housing
5.23project;
5.24 (6) for subdivision 1, clause(9) (8), the applicant must be a municipal electric utility
5.25or a joint venture of municipal electric utilities;
5.26 (7) for subdivision 1, clauses (9), (10),(11), (13), and (14), and (15), the owner
5.27of the qualifying business; and
5.28 (8) for subdivision 1, clauses (11) and (12)and (13), the applicant must be the
5.29governmental entity that owns or contracts for the project or facility.
5.30 Subd. 3. Application. (a) The application must include sufficient information
5.31to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
5.32subcontractor, or builder, under subdivision 1, clause (3), (4), (5), (6), (7), (8), (9), (10),
5.33(11), (12), (13), or (14),or (15), the contractor, subcontractor, or builder must furnish to
5.34the refund applicant a statement including the cost of the exempt items and the taxes paid
5.35on the items unless otherwise specifically provided by this subdivision. The provisions of
5.36sections289A.40 and
289A.50 apply to refunds under this section.
6.1 (b) An applicant may not file more than two applications per calendar year for
6.2refunds for taxes paid on capital equipment exempt under section297A.68, subdivision 5 .
6.3 (c) Total refunds for purchases of items in section297A.71, subdivision 40 , must not
6.4exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
6.5of items in sections297A.70, subdivision 3 , paragraph (a), clause (11), and
297A.71 ,
6.6subdivision 40, must not be filed until after June 30, 2009.
6.7 Subd. 4. Interest. Interest must be paid on the refund at the rate in section270C.405
6.8from 90 days after the refund claim is filed with the commissioner for taxes paid under
6.9subdivision 1.
6.10 Subd. 5. Appropriation. The amount required to make the refunds is annually
6.11appropriated to the commissioner.
6.12EFFECTIVE DATE.This section is effective for sales and purchases made after
6.13June 30, 2013.
1.3of purchase;amending Minnesota Statutes 2010, sections 297A.68, subdivision
1.45; 297A.75.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to
1.7read:
1.8 Subd. 5. Capital equipment. (a) Capital equipment is exempt.
1.9
1.10
1.11"Capital equipment" means machinery and equipment purchased or leased, and used
1.12in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
1.13or refining tangible personal property to be sold ultimately at retail if the machinery and
1.14equipment are essential to the integrated production process of manufacturing, fabricating,
1.15mining, or refining. Capital equipment also includes machinery and equipment
1.16used primarily to electronically transmit results retrieved by a customer of an online
1.17computerized data retrieval system.
1.18(b) Capital equipment includes, but is not limited to:
1.19(1) machinery and equipment used to operate, control, or regulate the production
1.20equipment;
1.21(2) machinery and equipment used for research and development, design, quality
1.22control, and testing activities;
2.1(3) environmental control devices that are used to maintain conditions such as
2.2temperature, humidity, light, or air pressure when those conditions are essential to and are
2.3part of the production process;
2.4(4) materials and supplies used to construct and install machinery or equipment;
2.5(5) repair and replacement parts, including accessories, whether purchased as spare
2.6parts, repair parts, or as upgrades or modifications to machinery or equipment;
2.7(6) materials used for foundations that support machinery or equipment;
2.8(7) materials used to construct and install special purpose buildings used in the
2.9production process;
2.10(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
2.11as part of the delivery process regardless if mounted on a chassis, repair parts for
2.12ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
2.13(9) machinery or equipment used for research, development, design, or production
2.14of computer software.
2.15(c) Capital equipment does not include the following:
2.16(1) motor vehicles taxed under chapter 297B;
2.17(2) machinery or equipment used to receive or store raw materials;
2.18(3) building materials, except for materials included in paragraph (b), clauses (6)
2.19and (7);
2.20(4) machinery or equipment used for nonproduction purposes, including, but not
2.21limited to, the following: plant security, fire prevention, first aid, and hospital stations;
2.22support operations or administration; pollution control; and plant cleaning, disposal of
2.23scrap and waste, plant communications, space heating, cooling, lighting, or safety;
2.24(5) farm machinery and aquaculture production equipment as defined by section
2.26(6) machinery or equipment purchased and installed by a contractor as part of an
2.27improvement to real property;
2.28(7) machinery and equipment used by restaurants in the furnishing, preparing, or
2.29serving of prepared foods as defined in section
2.30(8) machinery and equipment used to furnish the services listed in section
2.31subdivision 3
2.32(9) machinery or equipment used in the transportation, transmission, or distribution
2.33of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
2.34tanks, mains, or other means of transporting those products. This clause does not apply to
2.35machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
3.1(10) any other item that is not essential to the integrated process of manufacturing,
3.2fabricating, mining, or refining.
3.3(d) For purposes of this subdivision:
3.4(1) "Equipment" means independent devices or tools separate from machinery but
3.5essential to an integrated production process, including computers and computer software,
3.6used in operating, controlling, or regulating machinery and equipment; and any subunit or
3.7assembly comprising a component of any machinery or accessory or attachment parts of
3.8machinery, such as tools, dies, jigs, patterns, and molds.
3.9(2) "Fabricating" means to make, build, create, produce, or assemble components or
3.10property to work in a new or different manner.
3.11(3) "Integrated production process" means a process or series of operations through
3.12which tangible personal property is manufactured, fabricated, mined, or refined. For
3.13purposes of this clause, (i) manufacturing begins with the removal of raw materials
3.14from inventory and ends when the last process prior to loading for shipment has been
3.15completed; (ii) fabricating begins with the removal from storage or inventory of the
3.16property to be assembled, processed, altered, or modified and ends with the creation
3.17or production of the new or changed product; (iii) mining begins with the removal of
3.18overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
3.19ends when the last process before stockpiling is completed; and (iv) refining begins with
3.20the removal from inventory or storage of a natural resource and ends with the conversion
3.21of the item to its completed form.
3.22(4) "Machinery" means mechanical, electronic, or electrical devices, including
3.23computers and computer software, that are purchased or constructed to be used for the
3.24activities set forth in paragraph (a), beginning with the removal of raw materials from
3.25inventory through completion of the product, including packaging of the product.
3.26(5) "Machinery and equipment used for pollution control" means machinery and
3.27equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
3.28described in paragraph (a).
3.29(6) "Manufacturing" means an operation or series of operations where raw materials
3.30are changed in form, composition, or condition by machinery and equipment and which
3.31results in the production of a new article of tangible personal property. For purposes of
3.32this subdivision, "manufacturing" includes the generation of electricity or steam to be
3.33sold at retail.
3.34(7) "Mining" means the extraction of minerals, ores, stone, or peat.
3.35(8) "Online data retrieval system" means a system whose cumulation of information
3.36is equally available and accessible to all its customers.
4.1(9) "Primarily" means machinery and equipment used 50 percent or more of the time
4.2in an activity described in paragraph (a).
4.3(10) "Refining" means the process of converting a natural resource to an intermediate
4.4or finished product, including the treatment of water to be sold at retail.
4.5(11) This subdivision does not apply to telecommunications equipment as
4.6provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
4.7for telecommunications services.
4.8EFFECTIVE DATE.This section is effective for sales and purchases made after
4.9June 30, 2013.
4.10 Sec. 2. Minnesota Statutes 2010, section 297A.75, is amended to read:
4.11297A.75 REFUND; APPROPRIATION.
4.12 Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
4.13following exempt items must be imposed and collected as if the sale were taxable and the
4.14rate under section
4.15
4.16
4.18
4.20
4.21subdivision 3
4.22
4.23section
4.24
4.2512
4.26
4.27section
4.28
4.30
4.31under section
4.32
4.33distribution of electrical energy and an aerial camera package exempt under section
5.1
5.2supplies, and equipment exempt under section
5.3
5.5
5.6projects and facilities under section
5.7
5.8meat processing facility exempt under section
5.9
5.10expansion of an aerospace defense manufacturing facility exempt under section
5.11subdivision
5.12 Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
5.13commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
5.14must be paid to the applicant. Only the following persons may apply for the refund:
5.15 (1) for subdivision 1, clauses (1)
5.16 (2) for subdivision 1, clauses
5.17governmental subdivision;
5.18 (3) for subdivision 1, clause
5.19benefits provided in United States Code, title 38, chapter 21;
5.20 (4) for subdivision 1, clause
5.21homestead property;
5.22 (5) for subdivision 1, clause
5.23project;
5.24 (6) for subdivision 1, clause
5.25or a joint venture of municipal electric utilities;
5.26 (7) for subdivision 1, clauses (9), (10),
5.27of the qualifying business; and
5.28 (8) for subdivision 1, clauses (11) and (12)
5.29governmental entity that owns or contracts for the project or facility.
5.30 Subd. 3. Application. (a) The application must include sufficient information
5.31to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
5.32subcontractor, or builder, under subdivision 1, clause (3), (4), (5), (6), (7), (8), (9), (10),
5.33(11), (12), (13), or (14),
5.34the refund applicant a statement including the cost of the exempt items and the taxes paid
5.35on the items unless otherwise specifically provided by this subdivision. The provisions of
5.36sections
6.1 (b) An applicant may not file more than two applications per calendar year for
6.2refunds for taxes paid on capital equipment exempt under section
6.3 (c) Total refunds for purchases of items in section
6.4exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
6.5of items in sections
6.6subdivision 40, must not be filed until after June 30, 2009.
6.7 Subd. 4. Interest. Interest must be paid on the refund at the rate in section
6.9subdivision 1.
6.10 Subd. 5. Appropriation. The amount required to make the refunds is annually
6.11appropriated to the commissioner.
6.12EFFECTIVE DATE.This section is effective for sales and purchases made after
6.13June 30, 2013.
