1.2relating to taxation; expanding the sales tax base and reducing the rate; providing
1.3a low-income tax credit; appropriating money;amending Minnesota Statutes
1.42012, sections 295.53, subdivision 1; 295.58; 297A.61, subdivisions 3, 4, 5, 6,
1.510, 14a, 21, 25, 27, 38, by adding subdivisions; 297A.62, subdivision 1; 297A.63;
1.6297A.66, subdivision 1, by adding a subdivision; 297A.67, subdivisions 5, 23;
1.7297A.68, subdivisions 10, 19, by adding a subdivision; 297A.69, subdivision
1.82; 297A.70, subdivision 13; 297A.83, subdivision 3; 297A.94; 297A.99,
1.9subdivision 6; proposing coding for new law in Minnesota Statutes, chapter
1.10290; repealing Minnesota Statutes 2012, sections 297A.61, subdivision 45;
1.11297A.67, subdivisions 2, 7, 8, 9, 10, 11, 12, 13, 13a, 14, 15, 16, 17, 19, 21, 27,
1.1229; 297A.70, subdivisions 10, 14, 16; 297A.71, subdivisions 12, 22.
1.13BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.14    Section 1. [290.0682] LOW-INCOME SALES TAX CREDIT.
1.15    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
1.16have the meaning given.
1.17(b) "Dependent" means any person who is considered a dependent under sections
1.18151 and 152 of the Internal Revenue Code.
1.19(c) "Income" has the meaning given in section 290.067, subdivision 2a.
1.20    Subd. 2. Credit allowed. An individual is allowed a credit against the tax imposed
1.21under this chapter. The credit equals $....... for a married couple filing a joint return and
1.22$....... for all other filers, plus $....... for each dependent.
1.23    Subd. 3. Limitations. (a) The credit allowed in this section is reduced by one
1.24percent of income in excess of a threshold. For married couples filing joint returns, the
1.25threshold equals $.......; for single and head of household filers, the threshold equals $.......;
1.26and for married individuals filing separate returns, the threshold equals $........
2.1(b) For a nonresident or part-year resident, the credit must be allocated based on the
2.2percentage calculated under section 290.06, subdivision 2c, paragraph (e).
2.3    Subd. 4. Credit refundable. If the amount of credit which the claimant is eligible
2.4to receive under this section exceeds the claimant's tax liability under this chapter, the
2.5commissioner shall refund the excess to the claimant.
2.6    Subd. 5. Appropriation. An amount sufficient to pay the refunds required by this
2.7section is appropriated to the commissioner from the general fund.
2.8EFFECTIVE DATE.This section is effective for taxable years beginning after
2.9December 31, 2012.

2.10    Sec. 2. Minnesota Statutes 2012, section 295.53, subdivision 1, is amended to read:
2.11    Subdivision 1. Exemptions. (a) The following payments are excluded from the
2.12gross revenues subject to the hospital, surgical center, or health care provider taxes under
2.13sections 295.50 to 295.59:
2.14(1) payments received for services provided under the Medicare program, including
2.15payments received from the government, and organizations governed by sections 1833
2.16and 1876 of title XVIII of the federal Social Security Act, United States Code, title 42,
2.17section 1395, and enrollee deductibles, coinsurance, and co-payments, whether paid by the
2.18Medicare enrollee or by a Medicare supplemental coverage as defined in section 62A.011,
2.19subdivision 3 , clause (10), or by Medicaid payments under title XIX of the federal Social
2.20Security Act. Payments for services not covered by Medicare are taxable;
2.21(2) payments received for home health care services;
2.22(3) payments received from hospitals or surgical centers for goods and services on
2.23which liability for tax is imposed under section 295.52 or the source of funds for the
2.24payment is exempt under clause (1), (7), (10), or (14);
2.25(4) payments received from health care providers for goods and services on which
2.26liability for tax is imposed under this chapter or the source of funds for the payment is
2.27exempt under clause (1), (7), (10), or (14);
2.28(5) amounts paid for legend drugs, other than nutritional products and blood and
2.29blood components, to a wholesale drug distributor who is subject to tax under section
2.30295.52, subdivision 3 , reduced by reimbursements received for legend drugs otherwise
2.31exempt under this chapter;
2.32(6) payments received by a health care provider or the wholly owned subsidiary of a
2.33health care provider for care provided outside Minnesota;
2.34(7) payments received from the chemical dependency fund under chapter 254B;
3.1(8) payments received in the nature of charitable donations that are not designated
3.2for providing patient services to a specific individual or group;
3.3(9) payments received for providing patient services incurred through a formal
3.4program of health care research conducted in conformity with federal regulations
3.5governing research on human subjects. Payments received from patients or from other
3.6persons paying on behalf of the patients are subject to tax;
3.7(10) payments received from any governmental agency for services benefiting the
3.8public, not including payments made by the government in its capacity as an employer
3.9or insurer or payments made by the government for services provided under general
3.10assistance medical care, the MinnesotaCare program, or the medical assistance program
3.11governed by title XIX of the federal Social Security Act, United States Code, title 42,
3.12sections 1396 to 1396v;
3.13(11) government payments received by the commissioner of human services for
3.14state-operated services;
3.15(12) payments received by a health care provider for hearing aids and related
3.16equipment or prescription eyewear delivered outside of Minnesota;
3.17(13) payments received by an educational institution from student tuition, student
3.18activity fees, health care service fees, government appropriations, donations, or grants,
3.19and for services identified in and provided under an individualized education program
3.20as defined in section 256B.0625 or Code of Federal Regulations, chapter 34, section
3.21300.340(a). Fee for service payments and payments for extended coverage are taxable;
3.22(14) payments received under the federal Employees Health Benefits Act, United
3.23States Code, title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of
3.241990. Enrollee deductibles, coinsurance, and co-payments are subject to tax; and
3.25(15) payments received under the federal Tricare program, Code of Federal
3.26Regulations, title 32, section 199.17(a)(7). Enrollee deductibles, coinsurance, and
3.27co-payments are subject to tax.; and
3.28(16) payments received for prosthetic devices, durable medical equipment for home
3.29use only, mobility-enhancing equipment, and prescription eyeglasses subject to the general
3.30sales taxes under chapter 297A and defined in section 297A.61, subdivision 49.
3.31(b) For purposes of clause (16), the following terms have the meanings given in
3.32this paragraph:
3.33    (1) "prosthetic device" means a replacement, corrective, or supportive device,
3.34including repair and replacement parts, except corrective eyeglasses, worn on or in the
3.35body to:
3.36    (i) artificially replace a missing portion of the body;
4.1    (ii) prevent or correct physical deformity or malfunction; or
4.2    (iii) support a weak or deformed portion of the body;
4.3    (2) "durable medical equipment" means equipment, including repair and replacement
4.4parts, but not including mobility-enhancing equipment, for human use that:
4.5    (i) can withstand repeated use;
4.6    (ii) is primarily and customarily used to serve a medical purpose;
4.7    (iii) generally is not useful to a person in the absence of illness or injury; and
4.8    (iv) is not worn in or on the body; and
4.9    (3) "mobility-enhancing equipment" means equipment, including repair and
4.10replacement parts, but not including durable medical equipment, that:
4.11    (i) is primarily and customarily used to provide or increase the ability to move from
4.12one place to another and that is appropriate for use either in a home or a motor vehicle;
4.13    (ii) is not generally used by persons with normal mobility; and
4.14    (iii) does not include any motor vehicle or equipment on a motor vehicle normally
4.15provided by a motor vehicle manufacturer.
4.16(b) (c) Payments received by wholesale drug distributors for legend drugs sold
4.17directly to veterinarians or veterinary bulk purchasing organizations are excluded from the
4.18gross revenues subject to the wholesale drug distributor tax under sections 295.50 to 295.59.
4.19EFFECTIVE DATE.This section is effective for revenues received for sales made
4.20after June 30, 2013.

4.21    Sec. 3. Minnesota Statutes 2012, section 295.58, is amended to read:
4.22295.58 DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.
4.23(a) The commissioner shall deposit in the health care access fund all revenues,
4.24including penalties and interest, derived:
4.25(1) from the taxes imposed by sections 295.50 to 295.57 and;
4.26(2) from the insurance premiums tax imposed by section 297I.05, subdivision 5, on
4.27health maintenance organizations, community integrated service networks, and nonprofit
4.28health service plan corporations in the health care access fund.; and
4.29(3) an amount of revenue from the sales tax under chapter 297A equal to the loss
4.30of revenue, including penalties and interest, resulting from the exemption under section
4.31295.53, subdivision 1, paragraph (a), clause (16).
4.32(b) There is annually appropriated from the health care access fund to the
4.33commissioner of revenue the amount necessary to make refunds under this chapter.
4.34EFFECTIVE DATE.This section is effective July 1, 2013.

5.1    Sec. 4. Minnesota Statutes 2012, section 297A.61, subdivision 3, is amended to read:
5.2    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited
5.3to, each of the transactions listed in this subdivision.
5.4    (b) Sale and purchase include:
5.5    (1) any transfer of title or possession, or both, of tangible personal property,
5.6 specified digital products, or other digital products, whether absolutely or conditionally,
5.7for a consideration in money or by exchange or barter; and
5.8    (2) the leasing of or the granting of a license to use or consume, for a consideration
5.9in money or by exchange or barter, tangible personal property, other than a manufactured
5.10home used for residential purposes for a continuous period of 30 days or more.
5.11    (c) Sale and purchase include the production, fabrication, printing, or processing
5.12of tangible personal property, specified digital products, or other digital products, for a
5.13consideration for consumers who furnish either directly or indirectly the materials used
5.14in the production, fabrication, printing, or processing. It also includes the production or
5.15processing of specified digital products or other digital products for a consideration for
5.16consumers who furnish either directly or indirectly materials or other inputs used in the
5.17production or processing.
5.18    (d) Sale and purchase include the preparing for a consideration of food.
5.19Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
5.20to, the following:
5.21    (1) prepared food sold by the retailer;
5.22    (2) soft drinks;
5.23    (3) candy;
5.24    (4) dietary supplements; and
5.25    (5) all food sold through vending machines.
5.26    (e) A sale and a purchase includes the furnishing for a consideration of sewer
5.27services, electricity, gas, water, or steam for use or consumption within this state.
5.28    (f) A sale and a purchase includes the transfer for a consideration of prewritten
5.29computer software whether delivered electronically, by load and leave, or otherwise.
5.30    (g) A sale and a purchase includes the furnishing for a consideration of the following
5.31services:
5.32    (1) the privilege of admission to places of amusement, amusement events,
5.33exhibitions, selling events, recreational areas, or athletic events, including the rental of
5.34box seats and suites, and the making available of amusement devices, tanning facilities,
5.35reducing salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities.
5.36"Exhibitions" include but are not limited to: trade shows, boat shows, home shows, garden
6.1shows, and other similar events. "Selling events" include but are not limited to: flea
6.2markets, estate sales, auctions, and other similar events;
6.3    (2) lodging and related services by a hotel, rooming house, resort, campground,
6.4motel, or trailer camp, including furnishing the guest of the facility with access to
6.5telecommunication services, and the granting of any similar license to use real property in
6.6a specific facility, other than the renting or leasing of it for a continuous period of 30 days
6.7or more under an enforceable written agreement that may not be terminated without prior
6.8notice and including accommodations intermediary services provided in connection with
6.9other services provided under this clause;
6.10    (3) nonresidential parking services, whether on a contractual, hourly, or other
6.11periodic basis, except for parking at a meter;
6.12    (4) the granting of membership in a club, association, or other organization if: where
6.13"granting of membership" means both onetime initiation fees and periodic membership;
6.14    (i) the club, association, or other organization makes available for the use of its
6.15members sports and athletic facilities, without regard to whether a separate charge is
6.16assessed for use of the facilities; and
6.17    (ii) use of the sports and athletic facility is not made available to the general public
6.18on the same basis as it is made available to members.
6.19granting of membership means both onetime initiation fees and periodic membership
6.20dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
6.21squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
6.22swimming pools; and other similar athletic or sports facilities;
6.23    (5) delivery of aggregate materials by a third party, excluding delivery of aggregate
6.24material used in road construction; and delivery of concrete block by a third party if the
6.25delivery would be subject to the sales tax if provided by the seller of the concrete block; and
6.26    (6) services as provided in this clause:
6.27    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
6.28and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
6.29drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
6.30include services provided by coin operated facilities operated by the customer;
6.31    (ii) motor vehicle washing, waxing, and cleaning services, including services
6.32provided by coin operated facilities operated by the customer, and rustproofing,
6.33undercoating, and towing of motor vehicles;
6.34    (iii) building and residential cleaning, maintenance, and disinfecting services and
6.35pest control and exterminating services;
7.1    (iv) detective, security, burglar, fire alarm, and armored car services; but not including
7.2services performed within the jurisdiction they serve by off-duty licensed peace officers as
7.3defined in section 626.84, subdivision 1, or services provided by a nonprofit organization
7.4for monitoring and electronic surveillance of persons placed on in-home detention
7.5pursuant to court order or under the direction of the Minnesota Department of Corrections;
7.6    (v) pet grooming and veterinary services;
7.7    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
7.8and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
7.9plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
7.10clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
7.11public utility lines. Services performed under a construction contract for the installation of
7.12shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
7.13    (vii) massages, except when provided by a licensed health care facility or
7.14professional or upon written referral from a licensed health care facility or professional for
7.15treatment of illness, injury, or disease; and
7.16    (viii) the furnishing of lodging, board, and care services for animals in kennels and
7.17other similar arrangements, but excluding veterinary and horse boarding services;
7.18    (ix) car repair services;
7.19    (x) general repair services;
7.20    (xi) legal services;
7.21    (xii) accounting, financial planning, and brokerage services;
7.22    (xiii) tattoos and body piercing;
7.23    (xiv) personal grooming and salon services, including, but not limited to: haircuts,
7.24hair styling, and hair dyeing; hair extensions; shaving and waxing; manicures; pedicures;
7.25facials; body wraps; makeup application; and tanning services;
7.26    (xv) personal shopping and wedding and event-planning services;
7.27    (xvi) residential architectural and interior design services;
7.28    (xvii) shoe shining;
7.29    (xviii) personal lessons and instructions in athletics, music and other art, and other
7.30areas, except for tutoring in academic subjects other than art and music; and
7.31    (xix) funeral services.
7.32    In applying the provisions of this chapter, the terms "tangible personal property"
7.33and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
7.34and the provision of these taxable services, unless specifically provided otherwise.
7.35Services performed by an employee for an employer are not taxable. Services performed
7.36by a partnership or association for another partnership or association are not taxable if
8.1one of the entities owns or controls more than 80 percent of the voting power of the
8.2equity interest in the other entity. Services performed between members of an affiliated
8.3group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
8.4group of corporations" means those entities that would be classified as members of an
8.5affiliated group as defined under United States Code, title 26, section 1504, disregarding
8.6the exclusions in section 1504(b).
8.7    For purposes of clause (5), "road construction" means construction of (1) public
8.8roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
8.9metropolitan area up to the point of the emergency response location sign.
8.10    (h) A sale and a purchase includes the furnishing for a consideration of tangible
8.11personal property or taxable services by the United States or any of its agencies or
8.12instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
8.13subdivisions.
8.14    (i) A sale and a purchase includes the furnishing for a consideration of
8.15telecommunications services, ancillary services associated with telecommunication
8.16services, cable television services, and direct satellite services. Telecommunication
8.17services include, but are not limited to, the following services, as defined in section
8.18297A.669 : air-to-ground radiotelephone service, mobile telecommunication service,
8.19postpaid calling service, prepaid calling service, prepaid wireless calling service, and
8.20private communication services. The services in this paragraph are taxed to the extent
8.21allowed under federal law.
8.22    (j) A sale and a purchase includes the furnishing for a consideration of installation if
8.23the installation charges would be subject to the sales tax if the installation were provided
8.24by the seller of the item being installed.
8.25    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
8.26to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
8.27the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
8.2859B.02, subdivision 11.
8.29(l) A sale and a purchase include the furnishing for a consideration of specified
8.30digital products and other digital products and granting the right for a consideration to use
8.31specified digital products and other digital products on a temporary or permanent basis and
8.32regardless of whether the purchaser is required to make continued payments for such right.
8.33EFFECTIVE DATE.This section is effective for sales and purchases made after
8.34December 31, 2013.

8.35    Sec. 5. Minnesota Statutes 2012, section 297A.61, subdivision 4, is amended to read:
9.1    Subd. 4. Retail sale. (a) A "retail sale" means any sale, lease, or rental for any
9.2purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
9.3course of business as defined in subdivision 21.
9.4    (b) A sale of property used by the owner only by leasing it to others or by holding it
9.5in an effort to lease it, and put to no use by the owner other than resale after the lease or
9.6effort to lease, is a sale of property for resale.
9.7    (c) A sale of master computer software that is purchased and used to make copies for
9.8sale or lease is a sale of property for resale.
9.9    (d) A sale of building materials, supplies, and equipment to owners, contractors,
9.10subcontractors, or builders for the erection of buildings or the alteration, repair, or
9.11improvement of real property is a retail sale in whatever quantity sold, whether the sale is
9.12for purposes of resale in the form of real property or otherwise.
9.13    (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
9.14for installation of the floor covering is a retail sale and not a sale for resale since a sale of
9.15floor covering which includes installation is a contract for the improvement of real property.
9.16    (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
9.17for installation of the items is a retail sale and not a sale for resale since a sale of
9.18shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
9.19the improvement of real property.
9.20    (g) A sale of tangible personal property, specified digital products, or other digital
9.21products that is are awarded as prizes is a retail sale and is are not considered a sale of
9.22property for resale.
9.23    (h) A sale of tangible personal property, specified digital products, or other digital
9.24products utilized or employed in the furnishing or providing of services under subdivision
9.253, paragraph (g), clause (1), including, but not limited to, property given as promotional
9.26items, is a retail sale and is not considered a sale of property for resale.
9.27    (i) A sale of tangible personal property, specified digital products, or other digital
9.28products used in conducting lawful gambling under chapter 349 or the State Lottery under
9.29chapter 349A, including, but not limited to, property given as promotional items, is a retail
9.30sale and is not considered a sale of property for resale.
9.31    (j) A sale of machines, equipment, or devices that are used to furnish, provide, or
9.32dispense goods or services, including, but not limited to, coin-operated devices, is a retail
9.33sale and is not considered a sale of property for resale.
9.34    (k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
9.35payment becomes due under the terms of the agreement or the trade practices of the
9.36lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01,
10.1subdivision 11 , but excluding vehicles with a manufacturer's gross vehicle weight rating
10.2greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time
10.3the lease is executed.
10.4    (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
10.5title or possession of the tangible personal property.
10.6    (m) A sale of a bundled transaction in which one or more of the products included
10.7in the bundle is a taxable product is a retail sale, except that if one of the products
10.8is a telecommunication service, ancillary service, Internet access, or audio or video
10.9programming service, and the seller has maintained books and records identifying through
10.10reasonable and verifiable standards the portions of the price that are attributable to the
10.11distinct and separately identifiable products, then the products are not considered part of a
10.12bundled transaction. For purposes of this paragraph:
10.13    (1) the books and records maintained by the seller must be maintained in the regular
10.14course of business, and do not include books and records created and maintained by the
10.15seller primarily for tax purposes;
10.16    (2) books and records maintained in the regular course of business include, but are
10.17not limited to, financial statements, general ledgers, invoicing and billing systems and
10.18reports, and reports for regulatory tariffs and other regulatory matters; and
10.19    (3) books and records are maintained primarily for tax purposes when the books
10.20and records identify taxable and nontaxable portions of the price, but the seller maintains
10.21other books and records that identify different prices attributable to the distinct products
10.22included in the same bundled transaction.
10.23(n) A sale of specified digital products or other digital products to an end user with
10.24or without rights of permanent use and regardless of whether rights of use are conditioned
10.25upon continued payment by the purchaser. When a digital code has been purchased that
10.26relates to specified digital products or other digital products, the subsequent receipt of or
10.27access to the related specified digital products or other digital products is not a retail sale.
10.28EFFECTIVE DATE.This section is effective for sales and purchases made after
10.29December 31, 2013.

10.30    Sec. 6. Minnesota Statutes 2012, section 297A.61, subdivision 5, is amended to read:
10.31    Subd. 5. Storage. "Storage" includes keeping or retaining tangible personal
10.32property, specified digital products, or other digital products in Minnesota for any purpose
10.33except sale in the regular course of business.

10.34    Sec. 7. Minnesota Statutes 2012, section 297A.61, subdivision 6, is amended to read:
11.1    Subd. 6. Use. (a) "Use" includes the exercise of a right or power incident to the
11.2ownership of any interest in tangible personal property, specified digital products, other
11.3digital products, or services, purchased from a retailer, other than the sale of that property
11.4in the regular course of business.
11.5(b) Use includes the consumption of printed materials in the creation of nontaxable
11.6advertising that is distributed, either directly or indirectly, within Minnesota.

11.7    Sec. 8. Minnesota Statutes 2012, section 297A.61, subdivision 10, is amended to read:
11.8    Subd. 10. Tangible personal property. (a) "Tangible personal property" means
11.9personal property that can be seen, weighed, measured, felt, or touched, or that is in any
11.10other manner perceptible to the senses. "Tangible personal property" includes, but is not
11.11limited to, electricity, water, gas, steam, and prewritten computer software.
11.12    (b) Tangible personal property does not include:
11.13    (1) large ponderous machinery and equipment used in a business or production
11.14activity which at common law would be considered to be real property;
11.15    (2) property which is subject to an ad valorem property tax;
11.16    (3) property described in section 272.02, subdivision 9, clauses (a) to (d); and
11.17    (4) property described in section 272.03, subdivision 2, clauses (3) and (5); and
11.18    (5) specified digital products or other digital products transferred electronically,
11.19except prewritten computer software delivered electronically, is tangible personal property.
11.20EFFECTIVE DATE.This section is effective for sales and purchases made after
11.21December 31, 2013.

11.22    Sec. 9. Minnesota Statutes 2012, section 297A.61, subdivision 14a, is amended to read:
11.23    Subd. 14a. Lease or rental. (a) "Lease or rental" means any transfer of possession
11.24or control of tangible personal property, specified digital products, or other digital
11.25products for a fixed or indeterminate term for consideration. A lease or rental may include
11.26future options to purchase or extend.
11.27(b) Lease or rental does not include:
11.28(1) a transfer of possession or control of property under a security agreement or
11.29deferred payment plan that requires the transfer of title upon completion of the required
11.30payments;
11.31(2) a transfer of possession or control of property under an agreement that requires
11.32the transfer of title upon completion of required payments and payment of an option price
11.33does not exceed the greater of $100 or one percent of the total required payments; or
12.1(3) providing tangible personal property along with an operator for a fixed or
12.2indeterminate period of time. A condition of this exclusion is that the operator is necessary
12.3for the equipment to perform as designed. For the purpose of this subdivision, an operator
12.4must do more than maintain, inspect, or set up the tangible personal property.
12.5(c) Lease or rental does include agreements covering motor vehicles and trailers
12.6where the amount of consideration may be increased or decreased by reference to the
12.7amount realized upon sale or disposition of the property as defined in United States Code,
12.8title 26, section 7701(h)(l).
12.9(d) This definition must be used for sales and use tax purposes regardless if a
12.10transaction is characterized as a lease or rental under generally accepted accounting
12.11principles, the Internal Revenue Code, chapter 336, or other provisions of federal, state, or
12.12local law.
12.13EFFECTIVE DATE.This section is effective for sales and purchases made after
12.14December 31, 2013.

12.15    Sec. 10. Minnesota Statutes 2012, section 297A.61, subdivision 21, is amended to read:
12.16    Subd. 21. Normal course of business. "Normal course of business" means
12.17activities that demonstrate a commercial continuity or consistency of making sales or
12.18performing services for the purposes of attaining profit or producing income. Factors that
12.19indicate that a person is acting in the normal course of business include:
12.20(1) systematic solicitation of sales through advertising media;
12.21(2) entering into contracts to perform services or provide tangible personal property,
12.22specified digital products, or other digital products;
12.23(3) maintaining a place of business; or
12.24(4) use of exemption certificates to purchase items exempt from the sales tax.
12.25EFFECTIVE DATE.This section is effective for sales and purchases made after
12.26December 31, 2013.

12.27    Sec. 11. Minnesota Statutes 2012, section 297A.61, subdivision 25, is amended to read:
12.28    Subd. 25. Cable television service. "Cable television service" means the
12.29transmission of video, audio, or other programming service to purchasers, and the
12.30subscriber interaction, if any, required for the selection or use of the programming service,
12.31regardless of whether the programming is transmitted over facilities owned or operated by
12.32the cable service provider or over facilities owned or operated by one or more dealers of
12.33communications services. The term includes point-to-multipoint distribution services by
13.1which programming is transmitted or broadcast by microwave or other equipment directly
13.2to the subscriber's premises. The term includes basic, extended, premium, pay-per-view,
13.3digital, and music services.
13.4EFFECTIVE DATE.This section is effective for sales and purchases made after
13.5December 31, 2013.

13.6    Sec. 12. Minnesota Statutes 2012, section 297A.61, subdivision 27, is amended to read:
13.7    Subd. 27. Direct satellite service. "Direct satellite service" means the transmission
13.8of video, audio, or other programming transmitted or broadcast by satellite directly to
13.9the subscriber's premises subscriber without the use of ground receiving or distribution
13.10equipment, except at the subscriber's premises location or in the uplink process to the
13.11satellite. The term also includes any subscriber interaction, if any, required for the
13.12selection or use of programming services as well as any point-to-multipoint distribution
13.13services transmitted or broadcast by satellite or other equipment directly to the subscriber.
13.14The term includes any and all service packages and formats as well as pay-per-view,
13.15digital video recorder, and music services.
13.16EFFECTIVE DATE.This section is effective for sales and purchases made after
13.17December 31, 2013.

13.18    Sec. 13. Minnesota Statutes 2012, section 297A.61, subdivision 38, is amended to read:
13.19    Subd. 38. Bundled transaction. (a) "Bundled transaction" means the retail sale
13.20of two or more products when the products are otherwise distinct and identifiable, and
13.21the products are sold for one nonitemized price. As used in this subdivision, "product"
13.22includes tangible personal property, services, intangibles, and digital goods, including
13.23specified digital products, or other digital products, but does not include real property or
13.24services to real property. A bundled transaction does not include the sale of any products
13.25in which the sales price varies, or is negotiable, based on the selection by the purchaser of
13.26the products included in the transaction.
13.27    (b) For purposes of this subdivision, "distinct and identifiable" products does not
13.28include:
13.29    (1) packaging and other materials, such as containers, boxes, sacks, bags, and
13.30bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the
13.31products and are incidental or immaterial to the retail sale. Examples of packaging that are
13.32incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags,
13.33and express delivery envelopes and boxes;
14.1    (2) a promotional product provided free of charge with the required purchase of
14.2another product. A promotional product is provided free of charge if the sales price of
14.3another product, which is required to be purchased in order to receive the promotional
14.4product, does not vary depending on the inclusion of the promotional product; and
14.5    (3) items included in the definition of sales price.
14.6    (c) For purposes of this subdivision, the term "one nonitemized price" does not
14.7include a price that is separately identified by product on binding sales or other supporting
14.8sales-related documentation made available to the customer in paper or electronic form
14.9including but not limited to an invoice, bill of sale, receipt, contract, service agreement,
14.10lease agreement, periodic notice of rates and services, rate card, or price list.
14.11    (d) A transaction that otherwise meets the definition of a bundled transaction is
14.12not a bundled transaction if it is:
14.13    (1) the retail sale of tangible personal property and a service and the tangible
14.14personal property is essential to the use of the service, and is provided exclusively in
14.15connection with the service, and the true object of the transaction is the service;
14.16    (2) the retail sale of services if one service is provided that is essential to the use or
14.17receipt of a second service and the first service is provided exclusively in connection with
14.18the second service and the true object of the transaction is the second service;
14.19    (3) a transaction that includes taxable products and nontaxable products and the
14.20purchase price or sales price of the taxable products is de minimis; or
14.21    (4) the retail sale of exempt tangible personal property and taxable tangible personal
14.22property if:
14.23    (i) the transaction includes food and food ingredients, drugs, durable medical
14.24equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices,
14.25or medical supplies; and
14.26    (ii) the seller's purchase price or sales price of the taxable tangible personal property is
14.2750 percent or less of the total purchase price or sales price of the bundled tangible personal
14.28property. Sellers must not use a combination of the purchase price and sales price of the
14.29tangible personal property when making the 50 percent determination for a transaction.
14.30    (e) For purposes of this subdivision, "purchase price" means the measure subject to
14.31use tax on purchases made by the seller, and "de minimis" means that the seller's purchase
14.32price or sales price of the taxable products is ten percent or less of the total purchase
14.33price or sales price of the bundled products. Sellers shall use either the purchase price
14.34or the sales price of the products to determine if the taxable products are de minimis.
14.35Sellers must not use a combination of the purchase price and sales price of the products
15.1to determine if the taxable products are de minimis. Sellers shall use the full term of a
15.2service contract to determine if the taxable products are de minimis.
15.3EFFECTIVE DATE.This section is effective for sales and purchases made after
15.4December 31, 2013.

15.5    Sec. 14. Minnesota Statutes 2012, section 297A.61, is amended by adding a
15.6subdivision to read:
15.7    Subd. 49. Digital audio-visual works. "Digital audio-visual works" mean a series
15.8of related images which, when shown in succession, impart an impression of motion,
15.9together with accompanying sounds, if any, that are transferred electronically. Digital
15.10audio-visual works include such items as motion pictures, movies, musical videos, news
15.11and entertainment programs, and live events. Digital audio-visual works do not include
15.12video greeting cards sent by electronic mail. Unless the context provides otherwise, digital
15.13audio-visual works include the digital code or a subscription to or access to a digital code
15.14for receiving, accessing, or otherwise obtaining digital audio-visual works.
15.15EFFECTIVE DATE.This section is effective for sales and purchases made after
15.16December 31, 2013.

15.17    Sec. 15. Minnesota Statutes 2012, section 297A.61, is amended by adding a
15.18subdivision to read:
15.19    Subd. 50. Digital audio works. "Digital audio works" mean works that result
15.20from the fixation of a series of musical, spoken, or other sounds, that are transferred
15.21electronically. Digital audio works, whether prerecorded or live, include: songs, music,
15.22readings of books or other written materials, speeches, ring tones, or other sound
15.23recordings. Digital audio works do not include audio greeting cards sent by electronic
15.24mail. Unless the context provides otherwise, digital audio works include the digital code
15.25or a subscription to or access to a digital code for receiving, accessing, or otherwise
15.26obtaining digital audio works. For purposes of this subdivision, "ring tone" means a
15.27digitized sound file that is downloaded onto a device and that may be used to alert the
15.28customer with respect to a communication. A ring tone does not include ring back tones
15.29or other digital audio files that are not stored on the customer's communication device.
15.30EFFECTIVE DATE.This section is effective for sales and purchases made after
15.31December 31, 2013.

16.1    Sec. 16. Minnesota Statutes 2012, section 297A.61, is amended by adding a
16.2subdivision to read:
16.3    Subd. 51. Digital books. "Digital books" mean works that are literary works, other
16.4than digital audio-visual works or digital audio works, expressed in words, numbers, or
16.5numerical symbols or indicia so long as the product is generally recognized in the ordinary
16.6and usual sense as "books" and are transferred electronically. It includes works of fiction,
16.7nonfiction, and short stories. It does not include periodicals, magazines, newspapers, or
16.8other news and information products, chat rooms, or weblogs. Unless the context provides
16.9otherwise, digital books include the digital code or a subscription to or access to a digital
16.10code for receiving, accessing, or otherwise obtaining digital books.
16.11EFFECTIVE DATE.This section is effective for sales and purchases made after
16.12December 31, 2013.

16.13    Sec. 17. Minnesota Statutes 2012, section 297A.61, is amended by adding a
16.14subdivision to read:
16.15    Subd. 52. Digital code. "Digital code" means a code that provides a purchaser with
16.16a right to obtain one or more of the specified digital products or other digital products.
16.17A digital code may be transferred electronically such as through e-mail, or it may be
16.18transferred on a tangible medium, such as a plastic card, a piece of paper or invoice, or
16.19imprint on another product. A digital code is not a code that represents stored monetary
16.20value that is deducted from a total as it is used by the purchaser, and it is not a code that
16.21represents a redeemable card, gift card, or gift certificate that entitles the holder to select
16.22a specified digital product or other digital product of an indicated cash value. The end
16.23user of the digital code is any purchaser except one who receives the contractual right to
16.24redistribute the specified digital product or other digital product which is the subject
16.25of the transaction.
16.26EFFECTIVE DATE.This section is effective for sales and purchases made after
16.27December 31, 2013.

16.28    Sec. 18. Minnesota Statutes 2012, section 297A.61, is amended by adding a
16.29subdivision to read:
16.30    Subd. 53. Specified digital products. "Specified digital products" means
16.31digital audio-visual works, digital audio works, and digital books that are transferred
16.32electronically to a customer.
17.1EFFECTIVE DATE.This section is effective for sales and purchases made after
17.2December 31, 2013.

17.3    Sec. 19. Minnesota Statutes 2012, section 297A.61, is amended by adding a
17.4subdivision to read:
17.5    Subd. 54. Transferred electronically. "Transferred electronically" means obtained
17.6by the purchaser by means other than tangible storage media and, unless the context
17.7indicates otherwise, applies to the delivery of specified digital products and other digital
17.8products. For purposes of this subdivision, it is not necessary that a copy of the product
17.9be physically transferred to the purchaser. A product shall be considered to have been
17.10transferred electronically to a purchaser if the purchaser has access to the product.
17.11EFFECTIVE DATE.This section is effective for sales and purchases made after
17.12December 31, 2013.

17.13    Sec. 20. Minnesota Statutes 2012, section 297A.61, is amended by adding a
17.14subdivision to read:
17.15    Subd. 55. Other digital products. "Other digital products" means the following
17.16items when transferred electronically:
17.17(1) greeting cards;
17.18(2) artwork available for reproduction or display purposes; and
17.19(3) video or electronic games.
17.20EFFECTIVE DATE.This section is effective for sales and purchases made after
17.21December 31, 2013.

17.22    Sec. 21. Minnesota Statutes 2012, section 297A.62, subdivision 1, is amended to read:
17.23    Subdivision 1. Generally. Except as otherwise provided in subdivision 3 or in this
17.24chapter, a sales tax of 6.5 ... percent is imposed on the gross receipts from retail sales as
17.25defined in section 297A.61, subdivision 4, made in this state or to a destination in this
17.26state by a person who is required to have or voluntarily obtains a permit under section
17.27297A.83, subdivision 1 .
17.28EFFECTIVE DATE.This section is effective for sales and purchases made after
17.29December 31, 2013.

18.1    Sec. 22. Minnesota Statutes 2012, section 297A.63, is amended to read:
18.2297A.63 USE TAXES IMPOSED; RATES.
18.3    Subdivision 1. Use of tangible personal property, specified digital products,
18.4other digital products, or taxable services. (a) For the privilege of using, storing,
18.5distributing, or consuming in Minnesota tangible personal property, specified digital
18.6products, other digital products, or taxable services purchased for use, storage, distribution,
18.7or consumption in this state, a use tax is imposed on a person in Minnesota. The tax is
18.8imposed on the purchase price of retail sales of the tangible personal property, specified
18.9digital products, other digital products, or taxable services at the rate of tax imposed under
18.10section 297A.62. A person that purchases property from a Minnesota retailer and returns
18.11the tangible personal property, specified digital products, or other digital products, to a
18.12point within Minnesota, except in the course of interstate commerce, after it was delivered
18.13outside of Minnesota, is subject to the use tax.
18.14    (b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
18.15was paid on the sales price of the tangible personal property or taxable services.
18.16    (c) No tax is imposed under paragraph (a) if the purchase meets the requirements for
18.17exemption under section 297A.67, subdivision 21.
18.18    (d) When a transaction otherwise meets the definition of a bundled transaction, but
18.19is not a bundled transaction under section 297A.61, subdivision 38, paragraph (d), and
18.20the seller's purchase price of the taxable product or taxable tangible personal property is
18.21equal to or greater than $100, then use tax is imposed on the purchase price of the taxable
18.22product or taxable personal property. For purposes of this paragraph, "purchase price"
18.23means the measure subject to use tax on purchases made by the seller.
18.24    Subd. 2. Use of tangible personal property, specified digital products, or
18.25other digital products, made from materials. (a) A use tax is imposed on a person
18.26who manufactures, fabricates, or assembles tangible personal property, specified digital
18.27products, or other digital products from materials, either within or outside this state and
18.28who uses, stores, distributes, or consumes the tangible personal property, specified digital
18.29products, or other digital products in Minnesota. The tax is imposed on the purchase price
18.30of retail sales of the materials contained in the tangible personal property, specified digital
18.31products, or other digital products, at the rate of tax imposed under section 297A.62.
18.32(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62 was
18.33paid on the sales price of materials contained in the tangible personal property, specified
18.34digital products, or other digital products.
18.35    Subd. 3. Transitional period for services. When there is a change in the rate of
18.36tax imposed by this section, the following transitional period shall apply to the taxable
19.1services purchased for use, storage, distribution, or consumption in this state when the
19.2service purchased covers a billing period starting before and ending after the statutory
19.3effective date of the rate change:
19.4(1) for a rate increase, the new rate shall apply to the first billing period starting
19.5on or after the effective date; and
19.6(2) for a rate decrease, the new rate shall apply to bills rendered on or after the
19.7effective date.
19.8EFFECTIVE DATE.This section is effective for sales and purchases made after
19.9December 31, 2013.

19.10    Sec. 23. Minnesota Statutes 2012, section 297A.66, subdivision 1, is amended to read:
19.11    Subdivision 1. Definitions. (a) To the extent allowed by the United States
19.12Constitution and the laws of the United States, "retailer maintaining a place of business in
19.13this state," or a similar term, means a retailer:
19.14(1) having or maintaining within this state, directly or by a subsidiary or an affiliate,
19.15an office, place of distribution, sales or sample room or place, warehouse, or other place
19.16of business; or
19.17(2) having a representative, including, but not limited to, an affiliate, agent,
19.18salesperson, canvasser, or solicitor operating in this state under the authority of the retailer
19.19or its subsidiary, for any purpose, including the repairing, selling, delivering, installing, or
19.20soliciting of orders for the retailer's goods or services, or the leasing of tangible personal
19.21property, specified digital products, or other digital products, located in this state, whether
19.22the place of business or agent, representative, affiliate, salesperson, canvasser, or solicitor
19.23is located in the state permanently or temporarily, or whether or not the retailer, subsidiary,
19.24or affiliate is authorized to do business in this state.
19.25(b) "Destination of a sale" means the location to which the retailer makes delivery of
19.26the property sold, or causes the property to be delivered, to the purchaser of the property,
19.27or to the agent or designee of the purchaser. The delivery may be made by any means,
19.28including the United States Postal Service or a for-hire carrier.
19.29EFFECTIVE DATE.This section is effective for sales and purchases made after
19.30December 31, 2013.

19.31    Sec. 24. Minnesota Statutes 2012, section 297A.66, is amended by adding a
19.32subdivision to read:
20.1    Subd. 4a. Solicitor. (a) A retailer is presumed to have a solicitor in this state if it
20.2enters into an agreement with a resident under which the resident, for a commission or
20.3other consideration, directly or indirectly refers potential customers, whether by a link
20.4on an Internet Web site, or otherwise, to the seller. This paragraph only applies if the
20.5total gross receipts from sales to customers located in the state who were referred to the
20.6retailer by all residents with this type of agreement with the retailer is at least $10,000 in
20.7the 12-month period ending on the last day of the most recent calendar quarter before the
20.8calendar quarter in which the sale is made.
20.9(b) The presumption under paragraph (a) may be rebutted by proof that the resident
20.10with whom the retailer has an agreement did not engage in any solicitation in the state
20.11on behalf of the retailer that would satisfy the nexus requirements of the United States
20.12Constitution during the 12-month period in question. Nothing in this section shall be
20.13construed to narrow the scope of the terms affiliate, agent, salesperson, canvasser, or other
20.14representative for purposes of subdivision 1, paragraph (a).
20.15(c) For purposes of this subdivision, "resident" includes an individual who is a
20.16resident of this state, as defined in section 290.01, a business that owns tangible personal
20.17property located in this state, or a business that has one or more employees providing
20.18services for the business in this state.
20.19EFFECTIVE DATE.This section is effective for sales and purchases made after
20.20December 31, 2013.

20.21    Sec. 25. Minnesota Statutes 2012, section 297A.67, subdivision 5, is amended to read:
20.22    Subd. 5. Exempt meals at schools. Prepared food, candy, and soft drinks served
20.23at public and private elementary, middle, or secondary schools as defined in section
20.24120A.05 are exempt. Prepared food, candy, and soft drinks served to students at a college,
20.25university, or private career school under a board contract are exempt. Food sold through
20.26vending machines is not exempt.
20.27EFFECTIVE DATE.This section is effective for sales and purchases made after
20.28June 30, 2013.

20.29    Sec. 26. Minnesota Statutes 2012, section 297A.67, subdivision 23, is amended to read:
20.30    Subd. 23. Occasional sales. Isolated and occasional sales in Minnesota not made
20.31in the normal course of business of selling that kind of property or service are exempt.
20.32The storage, use, or consumption of property, specified digital products, other digital
20.33products, or services acquired as a result of such a sale is exempt. This exemption does
21.1not apply to sales of tangible personal property, specified digital products, or other digital
21.2products primarily used in a trade or business.
21.3EFFECTIVE DATE.This section is effective for sales and purchases made after
21.4December 31, 2013.

21.5    Sec. 27. Minnesota Statutes 2012, section 297A.68, subdivision 10, is amended to read:
21.6    Subd. 10. Publications; publication materials. Tangible personal property that
21.7is used or consumed in producing any publication regularly issued at average intervals
21.8not exceeding three months is exempt, and any such publication is exempt. "Publication"
21.9includes, but is not limited to, a qualified newspaper as defined by section 331A.02,
21.10together with any supplements or enclosures. "Publication" does not include magazines
21.11and periodicals sold over the counter. Tangible personal property that is used or consumed
21.12in producing a publication does not include machinery, equipment, implements, tools,
21.13accessories, appliances, contrivances, furniture, and fixtures used in the publication, or
21.14fuel, electricity, gas, or steam used for space heating or lighting.
21.15Advertising contained in a publication is a nontaxable service and is exempt.
21.16Persons who publish or sell newspapers are engaging in a nontaxable service with
21.17respect to gross receipts realized from such news-gathering or news-publishing activities,
21.18including the sale of advertising.
21.19EFFECTIVE DATE.This section is effective for sales and purchases made after
21.20December 31, 2013.

21.21    Sec. 28. Minnesota Statutes 2012, section 297A.68, subdivision 19, is amended to read:
21.22    Subd. 19. Petroleum products. The following petroleum products are exempt:
21.23(1) products upon which a tax has been imposed and paid under chapter 296A,
21.24and for which no refund has been or will be allowed because the buyer used the fuel
21.25for nonhighway use;
21.26(2) products that are used in the improvement of agricultural land by constructing,
21.27maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water
21.28impoundment, and other erosion control structures;
21.29(3) (2) products purchased by a transit system receiving financial assistance under
21.30section 174.24, 256B.0625, subdivision 17, or 473.384;
21.31(4) (3) products purchased by an ambulance service licensed under chapter 144E;
22.1(5) (4) products used in a passenger snowmobile, as defined in section 296A.01,
22.2subdivision 39 , for off-highway business use as part of the operations of a resort as
22.3provided under section 296A.16, subdivision 2, clause (2);
22.4(6) (5) products purchased by a state or a political subdivision of a state for use in
22.5motor vehicles exempt from registration under section 168.012, subdivision 1, paragraph
22.6(b);
22.7(7) (6) products purchased by providers of transportation to recipients of medical
22.8assistance home and community-based services waivers enrolled in day programs,
22.9including adult day care, family adult day care, day treatment and habilitation,
22.10prevocational services, and structured day services; or
22.11(8) (7) products used in a motor vehicle used exclusively as a mobile medical unit
22.12for the provision of medical or dental services by a federally qualified health center, as
22.13defined under title 19 of the federal Social Security Act, as amended by Section 4161 of
22.14the Omnibus Budget Reconciliation Act of 1990.
22.15EFFECTIVE DATE.This section is effective for sales and purchases made after
22.16December 31, 2013.

22.17    Sec. 29. Minnesota Statutes 2012, section 297A.68, is amended by adding a
22.18subdivision to read:
22.19    Subd. 44. Legal and accounting services. The sales of legal, accounting, financial
22.20planning, and brokerage services are exempt if used in a trade or business.
22.21EFFECTIVE DATE.This section is effective for sales and purchases made after
22.22December 31, 2013.

22.23    Sec. 30. Minnesota Statutes 2012, section 297A.69, subdivision 2, is amended to read:
22.24    Subd. 2. Materials consumed in agricultural production. Materials stored, used,
22.25or consumed in agricultural production of personal property intended to be sold ultimately
22.26at retail are exempt, whether or not the item becomes an ingredient or constituent part
22.27of the property produced. Materials that qualify for this exemption include, but are not
22.28limited to, the following:
22.29    (1) feeds, seeds, trees, fertilizers, and herbicides, including when purchased for use
22.30by farmers in a federal or state farm or conservation program;
22.31    (2) veterinary services and materials sold to a veterinarian to be used or consumed in
22.32the care, medication, and treatment of agricultural production animals and horses;
23.1    (3) chemicals, including chemicals used for cleaning food processing machinery
23.2and equipment;
23.3    (4) materials, including chemicals, fuels, and electricity purchased by persons
23.4engaged in agricultural production to treat waste generated as a result of the production
23.5process;
23.6    (5) fuels, electricity, gas, and steam used or consumed in the production process,
23.7including electricity, gas, or steam used for space heating, cooling, or lighting of facilities
23.8housing agricultural animals;
23.9    (6) petroleum products and lubricants;
23.10    (7) packaging materials, including returnable containers used in packaging food and
23.11beverage products; and
23.12    (8) accessory tools and equipment that are separate detachable units with an ordinary
23.13useful life of less than 12 months used in producing a direct effect upon the product.
23.14Machinery, equipment, implements, tools, accessories, appliances, contrivances, and
23.15furniture and fixtures, except those listed in this clause are not included within this
23.16exemption.
23.17EFFECTIVE DATE.This section is effective for sales and purchases made after
23.18December 31, 2013.

23.19    Sec. 31. Minnesota Statutes 2012, section 297A.70, subdivision 13, is amended to read:
23.20    Subd. 13. Fund-raising sales by or for nonprofit groups. (a) The following
23.21sales by the specified organizations for fund-raising purposes are exempt, subject to the
23.22limitations listed in paragraph (b):
23.23(1) all sales made by a nonprofit organization that exists solely for the purpose of
23.24providing educational or social activities for young people primarily age 18 and under;
23.25(2) all sales made by an organization that is a senior citizen group or association of
23.26groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
23.27and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii)
23.28no part of its net earnings inures to the benefit of any private shareholders; and
23.29(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if
23.30the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization
23.31under section 501(c)(3) of the Internal Revenue Code; and
23.32(4) (3) sales of candy sold for fund-raising purposes by a nonprofit organization that
23.33provides educational and social activities primarily for young people age 18 and under.
23.34(b) The exemptions listed in paragraph (a) are limited in the following manner:
24.1(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross
24.2annual receipts of the organization from fund-raising do not exceed $10,000; and
24.3(2) the exemption under paragraph (a), clause (1), does not apply if the sales are
24.4derived from admission charges or from activities for which the money must be deposited
24.5with the school district treasurer under section 123B.49, subdivision 2, or be recorded in
24.6the same manner as other revenues or expenditures of the school district under section
24.7123B.49, subdivision 4 .
24.8(c) Sales of tangible personal property are exempt if the entire proceeds, less the
24.9necessary expenses for obtaining the property, will be contributed to a registered combined
24.10charitable organization described in section 43A.50, to be used exclusively for charitable,
24.11religious, or educational purposes, and the registered combined charitable organization
24.12has given its written permission for the sale. Sales that occur over a period of more than
24.1324 days per year are not exempt under this paragraph.
24.14(d) (c) For purposes of this subdivision, a club, association, or other organization of
24.15elementary or secondary school students organized for the purpose of carrying on sports,
24.16educational, or other extracurricular activities is a separate organization from the school
24.17district or school for purposes of applying the $10,000 limit.
24.18EFFECTIVE DATE.This section is effective for sales and purchases made after
24.19December 31, 2013.

24.20    Sec. 32. Minnesota Statutes 2012, section 297A.83, subdivision 3, is amended to read:
24.21    Subd. 3. Commissioner's discretion. (a) The commissioner may decline to issue a
24.22permit to a retailer not maintaining a place of business in this state, or may cancel a permit
24.23previously issued to the retailer, if the commissioner believes that the tax can be collected
24.24more effectively from the persons using the property in this state. A refusal to issue or
24.25cancellation of a permit on such grounds does not affect the retailer's right to make retail
24.26sales from outside this state to destinations within this state.
24.27(b) If the commissioner considers it necessary for the efficient administration of the
24.28tax to regard a salesperson, representative, trucker, peddler, or canvasser as the agent of
24.29the dealer, distributor, supervisor, employer, or other person under whom that person
24.30operates or from whom the person obtains the tangible personal property, specified digital
24.31products, or other digital products sold, whether making sales personally or in behalf of
24.32that dealer, distributor, supervisor, employer, or other person, the commissioner may
24.33regard the salesperson, representative, trucker, peddler, or canvasser as such agent, and
24.34may regard the dealer, distributor, supervisor, employer, or other person as a retailer for
24.35the purposes of collecting the tax.
25.1EFFECTIVE DATE.This section is effective for sales and purchases made after
25.2December 31, 2013.

25.3    Sec. 33. Minnesota Statutes 2012, section 297A.94, is amended to read:
25.4297A.94 DEPOSIT OF REVENUES.
25.5(a) Except as provided in this section, the commissioner shall deposit the revenues,
25.6including interest and penalties, derived from the taxes imposed by this chapter in the state
25.7treasury and credit them to the general fund.
25.8(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic
25.9account in the special revenue fund if:
25.10(1) the taxes are derived from sales and use of property and services purchased for
25.11the construction and operation of an agricultural resource project; and
25.12(2) the purchase was made on or after the date on which a conditional commitment
25.13was made for a loan guaranty for the project under section 41A.04, subdivision 3.
25.14The commissioner of management and budget shall certify to the commissioner the date
25.15on which the project received the conditional commitment. The amount deposited in
25.16the loan guaranty account must be reduced by any refunds and by the costs incurred by
25.17the Department of Revenue to administer and enforce the assessment and collection of
25.18the taxes.
25.19(c) The commissioner shall deposit the revenues, including interest and penalties,
25.20derived from the taxes imposed on sales and purchases included in section 297A.61,
25.21subdivision 3 , paragraph (g), clauses (1) and (4), in the state treasury, and credit them
25.22as follows:
25.23(1) first to the general obligation special tax bond debt service account in each fiscal
25.24year the amount required by section 16A.661, subdivision 3, paragraph (b); and
25.25(2) after the requirements of clause (1) have been met, the balance to the general fund.
25.26(d) The commissioner shall deposit the revenues, including interest and penalties,
25.27collected under section 297A.64, subdivision 5, in the state treasury and credit them to the
25.28general fund. By July 15 of each year the commissioner shall transfer to the highway user
25.29tax distribution fund an amount equal to the excess fees collected under section 297A.64,
25.30subdivision 5 , for the previous calendar year.
25.31(e) For fiscal year 2001, 97 percent; for fiscal years 2002 and 2003, 87 percent; and
25.32for fiscal year 2004 and thereafter, 72.43 percent of the revenues, including interest and
25.33penalties, transmitted to the commissioner under section 297A.65, must be deposited by
25.34the commissioner in the state treasury as follows:
26.1(1) 50 percent of the receipts must be deposited in the heritage enhancement account
26.2in the game and fish fund, and may be spent only on activities that improve, enhance, or
26.3protect fish and wildlife resources, including conservation, restoration, and enhancement
26.4of land, water, and other natural resources of the state;
26.5(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and
26.6may be spent only for state parks and trails;
26.7(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and
26.8may be spent only on metropolitan park and trail grants;
26.9(4) three percent of the receipts must be deposited in the natural resources fund, and
26.10may be spent only on local trail grants; and
26.11(5) two percent of the receipts must be deposited in the natural resources fund,
26.12and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and
26.13Conservatory, and the Duluth Zoo.
26.14(f) The revenue dedicated under paragraph (e) may not be used as a substitute
26.15for traditional sources of funding for the purposes specified, but the dedicated revenue
26.16shall supplement traditional sources of funding for those purposes. Land acquired with
26.17money deposited in the game and fish fund under paragraph (e) must be open to public
26.18hunting and fishing during the open season, except that in aquatic management areas or
26.19on lands where angling easements have been acquired, fishing may be prohibited during
26.20certain times of the year and hunting may be prohibited. At least 87 percent of the money
26.21deposited in the game and fish fund for improvement, enhancement, or protection of fish
26.22and wildlife resources under paragraph (e) must be allocated for field operations.
26.23(g) The revenues deposited under paragraphs (a) to (f) do not include the revenues,
26.24including interest and penalties, generated by the sales tax imposed under section
26.25297A.62, subdivision 1a , which must be deposited as provided under the Minnesota
26.26Constitution, article XI, section 15.
26.27(h) The commissioner shall deposit revenues in the health care access fund as
26.28provided under section 295.58, paragraph (a), clause (3).
26.29EFFECTIVE DATE.This section is effective July 1, 2013.

26.30    Sec. 34. Minnesota Statutes 2012, section 297A.99, subdivision 6, is amended to read:
26.31    Subd. 6. Use tax. A compensating use tax applies, at the same rate as the sales tax,
26.32on the use, storage, distribution, or consumption of tangible personal property, specified
26.33digital products, other digital products, or taxable services.
27.1EFFECTIVE DATE.This section is effective for sales and purchases made after
27.2December 31, 2013.

27.3    Sec. 35. REVISOR'S INSTRUCTION.
27.4In Minnesota Rules, part 8130.9700, the revisor of statutes shall remove the last
27.5sentence in subpart 3, item B, that reads "Use of equipment on a time-sharing basis,
27.6where access to the equipment is only by means of remote access facilities, is not taxable
27.7leasing of such equipment."
27.8EFFECTIVE DATE.This section is effective for sales and purchases made after
27.9December 31, 2013.

27.10    Sec. 36. REPEALER.
27.11Minnesota Statutes 2012, sections 297A.61, subdivision 45; 297A.67, subdivisions
27.122, 7, 8, 9, 10, 11, 12, 13, 13a, 14, 15, 16, 17, 19, 21, 27, and 29; 297A.70, subdivisions 10,
27.1314, and 16; and 297A.71, subdivisions 12 and 22, are repealed.
27.14EFFECTIVE DATE.This section is effective for sales and purchases made after
27.15December 31, 2013.