Bill Text: MN SF95 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Capital equipment sales tax exemption at time of purchase authorization
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Introduced - Dead) 2013-01-24 - Referred to Taxes [SF95 Detail]
Download: Minnesota-2013-SF95-Introduced.html
1.2relating to taxation; sales and use; allowing capital equipment exemption at time
1.3of purchase;amending Minnesota Statutes 2012, sections 297A.68, subdivision
1.45; 297A.75, subdivisions 1, 2, 3.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2012, section 297A.68, subdivision 5, is amended to read:
1.7 Subd. 5. Capital equipment. (a) Capital equipment is exempt.The tax must be
1.8imposed and collected as if the rate under section
297A.62, subdivision 1, applied, and
1.9then refunded in the manner provided in section
297A.75.
1.10"Capital equipment" means machinery and equipment purchased or leased, and used
1.11in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
1.12or refining tangible personal property to be sold ultimately at retail if the machinery and
1.13equipment are essential to the integrated production process of manufacturing, fabricating,
1.14mining, or refining. Capital equipment also includes machinery and equipment
1.15used primarily to electronically transmit results retrieved by a customer of an online
1.16computerized data retrieval system.
1.17(b) Capital equipment includes, but is not limited to:
1.18(1) machinery and equipment used to operate, control, or regulate the production
1.19equipment;
1.20(2) machinery and equipment used for research and development, design, quality
1.21control, and testing activities;
1.22(3) environmental control devices that are used to maintain conditions such as
1.23temperature, humidity, light, or air pressure when those conditions are essential to and are
1.24part of the production process;
2.1(4) materials and supplies used to construct and install machinery or equipment;
2.2(5) repair and replacement parts, including accessories, whether purchased as spare
2.3parts, repair parts, or as upgrades or modifications to machinery or equipment;
2.4(6) materials used for foundations that support machinery or equipment;
2.5(7) materials used to construct and install special purpose buildings used in the
2.6production process;
2.7(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
2.8as part of the delivery process regardless if mounted on a chassis, repair parts for
2.9ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
2.10(9) machinery or equipment used for research, development, design, or production
2.11of computer software.
2.12(c) Capital equipment does not include the following:
2.13(1) motor vehicles taxed under chapter 297B;
2.14(2) machinery or equipment used to receive or store raw materials;
2.15(3) building materials, except for materials included in paragraph (b), clauses (6)
2.16and (7);
2.17(4) machinery or equipment used for nonproduction purposes, including, but not
2.18limited to, the following: plant security, fire prevention, first aid, and hospital stations;
2.19support operations or administration; pollution control; and plant cleaning, disposal of
2.20scrap and waste, plant communications, space heating, cooling, lighting, or safety;
2.21(5) farm machinery and aquaculture production equipment as defined by section
2.22297A.61
, subdivisions 12 and 13;
2.23(6) machinery or equipment purchased and installed by a contractor as part of an
2.24improvement to real property;
2.25(7) machinery and equipment used by restaurants in the furnishing, preparing, or
2.26serving of prepared foods as defined in section297A.61, subdivision 31 ;
2.27(8) machinery and equipment used to furnish the services listed in section297A.61,
2.28subdivision 3 , paragraph (g), clause (6), items (i) to (vi) and (viii);
2.29(9) machinery or equipment used in the transportation, transmission, or distribution
2.30of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
2.31tanks, mains, or other means of transporting those products. This clause does not apply to
2.32machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
2.33239.77
; or
2.34(10) any other item that is not essential to the integrated process of manufacturing,
2.35fabricating, mining, or refining.
2.36(d) For purposes of this subdivision:
3.1(1) "Equipment" means independent devices or tools separate from machinery but
3.2essential to an integrated production process, including computers and computer software,
3.3used in operating, controlling, or regulating machinery and equipment; and any subunit or
3.4assembly comprising a component of any machinery or accessory or attachment parts of
3.5machinery, such as tools, dies, jigs, patterns, and molds.
3.6(2) "Fabricating" means to make, build, create, produce, or assemble components or
3.7property to work in a new or different manner.
3.8(3) "Integrated production process" means a process or series of operations through
3.9which tangible personal property is manufactured, fabricated, mined, or refined. For
3.10purposes of this clause, (i) manufacturing begins with the removal of raw materials
3.11from inventory and ends when the last process prior to loading for shipment has been
3.12completed; (ii) fabricating begins with the removal from storage or inventory of the
3.13property to be assembled, processed, altered, or modified and ends with the creation
3.14or production of the new or changed product; (iii) mining begins with the removal of
3.15overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
3.16ends when the last process before stockpiling is completed; and (iv) refining begins with
3.17the removal from inventory or storage of a natural resource and ends with the conversion
3.18of the item to its completed form.
3.19(4) "Machinery" means mechanical, electronic, or electrical devices, including
3.20computers and computer software, that are purchased or constructed to be used for the
3.21activities set forth in paragraph (a), beginning with the removal of raw materials from
3.22inventory through completion of the product, including packaging of the product.
3.23(5) "Machinery and equipment used for pollution control" means machinery and
3.24equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
3.25described in paragraph (a).
3.26(6) "Manufacturing" means an operation or series of operations where raw materials
3.27are changed in form, composition, or condition by machinery and equipment and which
3.28results in the production of a new article of tangible personal property. For purposes of
3.29this subdivision, "manufacturing" includes the generation of electricity or steam to be
3.30sold at retail.
3.31(7) "Mining" means the extraction of minerals, ores, stone, or peat.
3.32(8) "Online data retrieval system" means a system whose cumulation of information
3.33is equally available and accessible to all its customers.
3.34(9) "Primarily" means machinery and equipment used 50 percent or more of the time
3.35in an activity described in paragraph (a).
4.1(10) "Refining" means the process of converting a natural resource to an intermediate
4.2or finished product, including the treatment of water to be sold at retail.
4.3(11) This subdivision does not apply to telecommunications equipment as
4.4provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
4.5for telecommunications services.
4.6EFFECTIVE DATE.This section is effective for sales and purchases made after
4.7June 30, 2013.
4.8 Sec. 2. Minnesota Statutes 2012, section 297A.75, subdivision 1, is amended to read:
4.9 Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
4.10following exempt items must be imposed and collected as if the sale were taxable and the
4.11rate under section297A.62, subdivision 1 , applied. The exempt items include:
4.12(1) capital equipment exempt under section
297A.68, subdivision 5;
4.13(2) (1) building materials for an agricultural processing facility exempt under section
4.14297A.71, subdivision 13
;
4.15(3) (2) building materials for mineral production facilities exempt under section
4.16297A.71, subdivision 14
;
4.17(4) (3) building materials for correctional facilities under section
297A.71,
4.18subdivision 3 ;
4.19(5) (4) building materials used in a residence for disabled veterans exempt under
4.20section297A.71, subdivision 11 ;
4.21(6) (5) elevators and building materials exempt under section
297A.71, subdivision
4.2212 ;
4.23(7) (6) building materials for the Long Lake Conservation Center exempt under
4.24section297A.71, subdivision 17 ;
4.25(8) (7) materials and supplies for qualified low-income housing under section
4.26297A.71, subdivision 23
;
4.27(9) (8) materials, supplies, and equipment for municipal electric utility facilities
4.28under section297A.71, subdivision 35 ;
4.29(10) (9) equipment and materials used for the generation, transmission, and
4.30distribution of electrical energy and an aerial camera package exempt under section
4.31297A.68
, subdivision 37;
4.32(11) (10) commuter rail vehicle and repair parts under section
297A.70 , subdivision
4.333, paragraph (a), clause (10);
4.34(12) (11) materials, supplies, and equipment for construction or improvement of
4.35projects and facilities under section297A.71, subdivision 40 ;
5.1(13) (12) materials, supplies, and equipment for construction or improvement of a
5.2meat processing facility exempt under section297A.71, subdivision 41 ;
5.3(14) (13) materials, supplies, and equipment for construction, improvement, or
5.4expansion of an aerospace defense manufacturing facility exempt under section297A.71 ,
5.5subdivision 42;
5.6(15) (14) enterprise information technology equipment and computer software for
5.7use in a qualified data center exempt under section297A.68, subdivision 42 ; and
5.8(16) (15) materials, supplies, and equipment for qualifying capital projects under
5.9section297A.71, subdivision 44 .
5.10EFFECTIVE DATE.This section is effective for sales and purchases made after
5.11June 30, 2013.
5.12 Sec. 3. Minnesota Statutes 2012, section 297A.75, subdivision 2, is amended to read:
5.13 Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
5.14commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
5.15must be paid to the applicant. Only the following persons may apply for the refund:
5.16 (1) for subdivision 1, clauses (1)to (3) and (2), the applicant must be the purchaser;
5.17 (2) for subdivision 1, clauses(4) (3) and (7) (6), the applicant must be the
5.18governmental subdivision;
5.19 (3) for subdivision 1, clause(5) (4), the applicant must be the recipient of the
5.20benefits provided in United States Code, title 38, chapter 21;
5.21 (4) for subdivision 1, clause(6) (5), the applicant must be the owner of the
5.22homestead property;
5.23 (5) for subdivision 1, clause(8) (7), the owner of the qualified low-income housing
5.24project;
5.25 (6) for subdivision 1, clause(9) (8), the applicant must be a municipal electric utility
5.26or a joint venture of municipal electric utilities;
5.27 (7) for subdivision 1, clauses(10) (9), (12), (13), and (14), and (15), the owner
5.28of the qualifying business; and
5.29 (8) for subdivision 1, clauses (10), (11),(12), and (16) (15), the applicant must be
5.30the governmental entity that owns or contracts for the project or facility.
5.31EFFECTIVE DATE.This section is effective for sales and purchases made after
5.32June 30, 2013.
5.33 Sec. 4. Minnesota Statutes 2012, section 297A.75, subdivision 3, is amended to read:
6.1 Subd. 3. Application. (a) The application must include sufficient information
6.2to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
6.3subcontractor, or builder, under subdivision 1, clause (3), (4), (5), (6), (7), (8), (9), (10),
6.4(11), (12), (13), (14), or (15),or (16), the contractor, subcontractor, or builder must
6.5furnish to the refund applicant a statement including the cost of the exempt items and the
6.6taxes paid on the items unless otherwise specifically provided by this subdivision. The
6.7provisions of sections289A.40 and
289A.50 apply to refunds under this section.
6.8 (b) An applicant may not file more than two applications per calendar year for
6.9refunds for taxes paid on capital equipment exempt under section297A.68, subdivision 5 .
6.10 (c) Total refunds for purchases of items in section297A.71, subdivision 40 , must not
6.11exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
6.12of items in sections297A.70, subdivision 3 , paragraph (a), clause (11), and
297A.71 ,
6.13subdivision 40, must not be filed until after June 30, 2009.
6.14EFFECTIVE DATE.This section is effective for sales and purchases made after
6.15June 30, 2013.
1.3of purchase;amending Minnesota Statutes 2012, sections 297A.68, subdivision
1.45; 297A.75, subdivisions 1, 2, 3.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2012, section 297A.68, subdivision 5, is amended to read:
1.7 Subd. 5. Capital equipment. (a) Capital equipment is exempt.
1.8
1.9
1.10"Capital equipment" means machinery and equipment purchased or leased, and used
1.11in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
1.12or refining tangible personal property to be sold ultimately at retail if the machinery and
1.13equipment are essential to the integrated production process of manufacturing, fabricating,
1.14mining, or refining. Capital equipment also includes machinery and equipment
1.15used primarily to electronically transmit results retrieved by a customer of an online
1.16computerized data retrieval system.
1.17(b) Capital equipment includes, but is not limited to:
1.18(1) machinery and equipment used to operate, control, or regulate the production
1.19equipment;
1.20(2) machinery and equipment used for research and development, design, quality
1.21control, and testing activities;
1.22(3) environmental control devices that are used to maintain conditions such as
1.23temperature, humidity, light, or air pressure when those conditions are essential to and are
1.24part of the production process;
2.1(4) materials and supplies used to construct and install machinery or equipment;
2.2(5) repair and replacement parts, including accessories, whether purchased as spare
2.3parts, repair parts, or as upgrades or modifications to machinery or equipment;
2.4(6) materials used for foundations that support machinery or equipment;
2.5(7) materials used to construct and install special purpose buildings used in the
2.6production process;
2.7(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
2.8as part of the delivery process regardless if mounted on a chassis, repair parts for
2.9ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
2.10(9) machinery or equipment used for research, development, design, or production
2.11of computer software.
2.12(c) Capital equipment does not include the following:
2.13(1) motor vehicles taxed under chapter 297B;
2.14(2) machinery or equipment used to receive or store raw materials;
2.15(3) building materials, except for materials included in paragraph (b), clauses (6)
2.16and (7);
2.17(4) machinery or equipment used for nonproduction purposes, including, but not
2.18limited to, the following: plant security, fire prevention, first aid, and hospital stations;
2.19support operations or administration; pollution control; and plant cleaning, disposal of
2.20scrap and waste, plant communications, space heating, cooling, lighting, or safety;
2.21(5) farm machinery and aquaculture production equipment as defined by section
2.23(6) machinery or equipment purchased and installed by a contractor as part of an
2.24improvement to real property;
2.25(7) machinery and equipment used by restaurants in the furnishing, preparing, or
2.26serving of prepared foods as defined in section
2.27(8) machinery and equipment used to furnish the services listed in section
2.28subdivision 3
2.29(9) machinery or equipment used in the transportation, transmission, or distribution
2.30of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
2.31tanks, mains, or other means of transporting those products. This clause does not apply to
2.32machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
2.34(10) any other item that is not essential to the integrated process of manufacturing,
2.35fabricating, mining, or refining.
2.36(d) For purposes of this subdivision:
3.1(1) "Equipment" means independent devices or tools separate from machinery but
3.2essential to an integrated production process, including computers and computer software,
3.3used in operating, controlling, or regulating machinery and equipment; and any subunit or
3.4assembly comprising a component of any machinery or accessory or attachment parts of
3.5machinery, such as tools, dies, jigs, patterns, and molds.
3.6(2) "Fabricating" means to make, build, create, produce, or assemble components or
3.7property to work in a new or different manner.
3.8(3) "Integrated production process" means a process or series of operations through
3.9which tangible personal property is manufactured, fabricated, mined, or refined. For
3.10purposes of this clause, (i) manufacturing begins with the removal of raw materials
3.11from inventory and ends when the last process prior to loading for shipment has been
3.12completed; (ii) fabricating begins with the removal from storage or inventory of the
3.13property to be assembled, processed, altered, or modified and ends with the creation
3.14or production of the new or changed product; (iii) mining begins with the removal of
3.15overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
3.16ends when the last process before stockpiling is completed; and (iv) refining begins with
3.17the removal from inventory or storage of a natural resource and ends with the conversion
3.18of the item to its completed form.
3.19(4) "Machinery" means mechanical, electronic, or electrical devices, including
3.20computers and computer software, that are purchased or constructed to be used for the
3.21activities set forth in paragraph (a), beginning with the removal of raw materials from
3.22inventory through completion of the product, including packaging of the product.
3.23(5) "Machinery and equipment used for pollution control" means machinery and
3.24equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
3.25described in paragraph (a).
3.26(6) "Manufacturing" means an operation or series of operations where raw materials
3.27are changed in form, composition, or condition by machinery and equipment and which
3.28results in the production of a new article of tangible personal property. For purposes of
3.29this subdivision, "manufacturing" includes the generation of electricity or steam to be
3.30sold at retail.
3.31(7) "Mining" means the extraction of minerals, ores, stone, or peat.
3.32(8) "Online data retrieval system" means a system whose cumulation of information
3.33is equally available and accessible to all its customers.
3.34(9) "Primarily" means machinery and equipment used 50 percent or more of the time
3.35in an activity described in paragraph (a).
4.1(10) "Refining" means the process of converting a natural resource to an intermediate
4.2or finished product, including the treatment of water to be sold at retail.
4.3(11) This subdivision does not apply to telecommunications equipment as
4.4provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
4.5for telecommunications services.
4.6EFFECTIVE DATE.This section is effective for sales and purchases made after
4.7June 30, 2013.
4.8 Sec. 2. Minnesota Statutes 2012, section 297A.75, subdivision 1, is amended to read:
4.9 Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
4.10following exempt items must be imposed and collected as if the sale were taxable and the
4.11rate under section
4.12
4.13
4.15
4.17
4.18subdivision 3
4.19
4.20section
4.21
4.2212
4.23
4.24section
4.25
4.27
4.28under section
4.29
4.30distribution of electrical energy and an aerial camera package exempt under section
4.32
4.333, paragraph (a), clause (10);
4.34
4.35projects and facilities under section
5.1
5.2meat processing facility exempt under section
5.3
5.4expansion of an aerospace defense manufacturing facility exempt under section
5.5subdivision 42;
5.6
5.7use in a qualified data center exempt under section
5.8
5.9section
5.10EFFECTIVE DATE.This section is effective for sales and purchases made after
5.11June 30, 2013.
5.12 Sec. 3. Minnesota Statutes 2012, section 297A.75, subdivision 2, is amended to read:
5.13 Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
5.14commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
5.15must be paid to the applicant. Only the following persons may apply for the refund:
5.16 (1) for subdivision 1, clauses (1)
5.17 (2) for subdivision 1, clauses
5.18governmental subdivision;
5.19 (3) for subdivision 1, clause
5.20benefits provided in United States Code, title 38, chapter 21;
5.21 (4) for subdivision 1, clause
5.22homestead property;
5.23 (5) for subdivision 1, clause
5.24project;
5.25 (6) for subdivision 1, clause
5.26or a joint venture of municipal electric utilities;
5.27 (7) for subdivision 1, clauses
5.28of the qualifying business; and
5.29 (8) for subdivision 1, clauses (10), (11),
5.30the governmental entity that owns or contracts for the project or facility.
5.31EFFECTIVE DATE.This section is effective for sales and purchases made after
5.32June 30, 2013.
5.33 Sec. 4. Minnesota Statutes 2012, section 297A.75, subdivision 3, is amended to read:
6.1 Subd. 3. Application. (a) The application must include sufficient information
6.2to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
6.3subcontractor, or builder, under subdivision 1, clause (3), (4), (5), (6), (7), (8), (9), (10),
6.4(11), (12), (13), (14), or (15),
6.5furnish to the refund applicant a statement including the cost of the exempt items and the
6.6taxes paid on the items unless otherwise specifically provided by this subdivision. The
6.7provisions of sections
6.8 (b) An applicant may not file more than two applications per calendar year for
6.9refunds for taxes paid on capital equipment exempt under section
6.10 (c) Total refunds for purchases of items in section
6.11exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases
6.12of items in sections
6.13subdivision 40, must not be filed until after June 30, 2009.
6.14EFFECTIVE DATE.This section is effective for sales and purchases made after
6.15June 30, 2013.
