1.1    .................... moves to amend H. F. No. 929 as follows:
1.2Page 1, before line 5 insert:

1.3    "Section 1. Minnesota Statutes 2006, section 297A.68, subdivision 5, is amended to
1.4read:
1.5    Subd. 5. Capital equipment. (a) Capital equipment is exempt. The tax must be
1.6imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and
1.7then refunded in the manner provided in section 297A.75.
1.8    "Capital equipment" means machinery and equipment purchased or leased, and used
1.9in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
1.10or refining tangible personal property to be sold ultimately at retail if the machinery and
1.11equipment are essential to the integrated production process of manufacturing, fabricating,
1.12mining, or refining. Capital equipment also includes machinery and equipment
1.13used primarily to electronically transmit results retrieved by a customer of an online
1.14computerized data retrieval system.
1.15    (b) Capital equipment includes, but is not limited to:
1.16    (1) machinery and equipment used to operate, control, or regulate the production
1.17equipment;
1.18    (2) machinery and equipment used for research and development, design, quality
1.19control, and testing activities;
1.20    (3) environmental control devices that are used to maintain conditions such as
1.21temperature, humidity, light, or air pressure when those conditions are essential to and are
1.22part of the production process;
1.23    (4) materials and supplies used to construct and install machinery or equipment;
1.24    (5) repair and replacement parts, including accessories, whether purchased as spare
1.25parts, repair parts, or as upgrades or modifications to machinery or equipment;
1.26    (6) materials used for foundations that support machinery or equipment;
2.1    (7) materials used to construct and install special purpose buildings used in the
2.2production process;
2.3    (8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
2.4as part of the delivery process regardless if mounted on a chassis, repair parts for
2.5ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
2.6    (9) machinery or equipment used for research, development, design, or production
2.7of computer software.
2.8    (c) Capital equipment does not include the following:
2.9    (1) motor vehicles taxed under chapter 297B;
2.10    (2) machinery or equipment used to receive or store raw materials;
2.11    (3) building materials, except for materials included in paragraph (b), clauses (6)
2.12and (7);
2.13    (4) machinery or equipment used for nonproduction purposes, including, but not
2.14limited to, the following: plant security, fire prevention, first aid, and hospital stations;
2.15support operations or administration; pollution control; and plant cleaning, disposal of
2.16scrap and waste, plant communications, space heating, cooling, lighting, or safety;
2.17    (5) farm machinery and aquaculture production equipment as defined by section
2.18297A.61, subdivisions 12 and 13 ;
2.19    (6) machinery or equipment purchased and installed by a contractor as part of an
2.20improvement to real property;
2.21    (7) machinery and equipment used by restaurants in the furnishing, preparing, or
2.22serving of prepared foods as defined in section 297A.61, subdivision 31;
2.23    (8) machinery and equipment used to furnish the services listed in section 297A.61,
2.24subdivision 3 , paragraph (g), clause (6), items (i) to (vi) and (viii);
2.25    (9) machinery or equipment used in the transportation, transmission, or distribution
2.26of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
2.27tanks, mains, or other means of transporting those products. This clause does not apply to
2.28machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
2.29239.77 ; or
2.30    (10) any other item that is not essential to the integrated process of manufacturing,
2.31fabricating, mining, or refining.
2.32    (d) For purposes of this subdivision:
2.33    (1) "Equipment" means independent devices or tools separate from machinery but
2.34essential to an integrated production process, including computers and computer software,
2.35used in operating, controlling, or regulating machinery and equipment; and any subunit or
3.1assembly comprising a component of any machinery or accessory or attachment parts of
3.2machinery, such as tools, dies, jigs, patterns, and molds.
3.3    (2) "Fabricating" means to make, build, create, produce, or assemble components or
3.4property to work in a new or different manner.
3.5    (3) "Integrated production process" means a process or series of operations through
3.6which tangible personal property is manufactured, fabricated, mined, or refined. For
3.7purposes of this clause, (i) manufacturing begins with the removal of raw materials
3.8from inventory and ends when the last process prior to loading for shipment has been
3.9completed; (ii) fabricating begins with the removal from storage or inventory of the
3.10property to be assembled, processed, altered, or modified and ends with the creation
3.11or production of the new or changed product; (iii) mining begins with the removal of
3.12overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
3.13ends when the last process before stockpiling is completed; and (iv) refining begins with
3.14the removal from inventory or storage of a natural resource and ends with the conversion
3.15of the item to its completed form.
3.16    (4) "Machinery" means mechanical, electronic, or electrical devices, including
3.17computers and computer software, that are purchased or constructed to be used for the
3.18activities set forth in paragraph (a), beginning with the removal of raw materials from
3.19inventory through completion of the product, including packaging of the product.
3.20    (5) "Machinery and equipment used for pollution control" means machinery and
3.21equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
3.22described in paragraph (a).
3.23    (6) "Manufacturing" means an operation or series of operations where raw materials
3.24are changed in form, composition, or condition by machinery and equipment and which
3.25results in the production of a new article of tangible personal property. For purposes of
3.26this subdivision, "manufacturing" includes the generation of electricity or steam to be
3.27sold at retail.
3.28    (7) "Mining" means the extraction of minerals, ores, stone, or peat.
3.29    (8) "Online data retrieval system" means a system whose cumulation of information
3.30is equally available and accessible to all its customers.
3.31    (9) "Primarily" means machinery and equipment used 50 percent or more of the time
3.32in an activity described in paragraph (a).
3.33    (10) "Refining" means the process of converting a natural resource to an intermediate
3.34or finished product, including the treatment of water to be sold at retail.
4.1    (11) This subdivision does not apply to telecommunications equipment as
4.2provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
4.3for telecommunications services.
4.4EFFECTIVE DATE.This section is effective for sales and purchases made after
4.5June 30, 2007."
4.6Renumber the sections in sequence and correct the internal references
4.7Amend the title accordingly