1.1.................... moves to amend H.F. No. 1980 as follows:
1.2Delete everything after the enacting clause and insert:

1.3    "Section 1. Minnesota Statutes 2008, section 297A.61, subdivision 3, is amended to
1.4read:
1.5    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited
1.6to, each of the transactions listed in this subdivision.
1.7    (b) Sale and purchase include:
1.8    (1) any transfer of title or possession, or both, of tangible personal property,
1.9specified digital products, or other digital products whether absolutely or conditionally, for
1.10a consideration in money or by exchange or barter; and
1.11    (2) the leasing of or the granting of a license to use or consume, for a consideration
1.12in money or by exchange or barter, tangible personal property, specified digital products or
1.13other digital products, other than a manufactured home used for residential purposes for
1.14a continuous period of 30 days or more.
1.15    (c) Sale and purchase include the production, fabrication, printing, or processing of
1.16tangible personal property for a consideration for consumers who furnish either directly or
1.17indirectly the materials used in the production, fabrication, printing, or processing. It also
1.18includes the production or processing of specified digital products or other digital products
1.19for a consideration for consumers who furnish either directly or indirectly materials or
1.20other inputs used in the production or processing.
1.21    (d) Sale and purchase include the preparing for a consideration of food.
1.22Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
1.23to, the following:
1.24    (1) prepared food sold by the retailer;
1.25    (2) soft drinks;
1.26    (3) candy;
1.27    (4) dietary supplements; and
2.1    (5) all food sold through vending machines.
2.2    (e) A sale and a purchase includes the furnishing for a consideration of electricity,
2.3gas, water, or steam for use or consumption within this state.
2.4    (f) A sale and a purchase includes the transfer for a consideration of prewritten
2.5computer software whether delivered electronically, by load and leave, or otherwise.
2.6    (g) A sale and a purchase includes the furnishing for a consideration of the following
2.7services:
2.8    (1) the privilege of admission to places of amusement, recreational areas, or athletic
2.9events, and the making available of amusement devices, tanning facilities, reducing
2.10salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities;
2.11    (2) lodging and related services by a hotel, rooming house, resort, campground,
2.12motel, or trailer camp, including furnishing the guest of the facility with access to
2.13telecommunication services, and the granting of any similar license to use real property
2.14in a specific facility, other than the renting or leasing of it for a continuous period of
2.1530 days or more under an enforceable written agreement that may not be terminated
2.16without prior notice;
2.17    (3) nonresidential parking services, whether on a contractual, hourly, or other
2.18periodic basis, except for parking at a meter;
2.19    (4) the granting of membership in a club, association, or other organization if:
2.20    (i) the club, association, or other organization makes available for the use of its
2.21members sports and athletic facilities, without regard to whether a separate charge is
2.22assessed for use of the facilities; and
2.23    (ii) use of the sports and athletic facility is not made available to the general public
2.24on the same basis as it is made available to members.
2.25Granting of membership means both onetime initiation fees and periodic membership
2.26dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
2.27squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
2.28swimming pools; and other similar athletic or sports facilities;
2.29    (5) delivery of aggregate materials by a third party, excluding delivery of aggregate
2.30material used in road construction, and delivery of concrete block by a third party if
2.31the delivery would be subject to the sales tax if provided by the seller of the concrete
2.32block; and
2.33    (6) services as provided in this clause:
2.34    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
2.35and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
3.1drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
3.2include services provided by coin operated facilities operated by the customer;
3.3    (ii) motor vehicle washing, waxing, and cleaning services, including services
3.4provided by coin operated facilities operated by the customer, and rustproofing,
3.5undercoating, and towing of motor vehicles;
3.6    (iii) building and residential cleaning, maintenance, and disinfecting services and
3.7pest control and exterminating services;
3.8    (iv) detective, security, burglar, fire alarm, and armored car services; but not
3.9including services performed within the jurisdiction they serve by off-duty licensed peace
3.10officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
3.11organization for monitoring and electronic surveillance of persons placed on in-home
3.12detention pursuant to court order or under the direction of the Minnesota Department
3.13of Corrections;
3.14    (v) pet grooming services;
3.15    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
3.16and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
3.17plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
3.18clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
3.19public utility lines. Services performed under a construction contract for the installation of
3.20shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
3.21    (vii) massages, except when provided by a licensed health care facility or
3.22professional or upon written referral from a licensed health care facility or professional for
3.23treatment of illness, injury, or disease; and
3.24    (viii) the furnishing of lodging, board, and care services for animals in kennels and
3.25other similar arrangements, but excluding veterinary and horse boarding services.
3.26    In applying the provisions of this chapter, the terms "tangible personal property"
3.27and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii),
3.28and the provision of these taxable services, unless specifically provided otherwise.
3.29Services performed by an employee for an employer are not taxable. Services performed
3.30by a partnership or association for another partnership or association are not taxable if
3.31one of the entities owns or controls more than 80 percent of the voting power of the
3.32equity interest in the other entity. Services performed between members of an affiliated
3.33group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
3.34group of corporations" means those entities that would be classified as members of an
3.35affiliated group as defined under United States Code, title 26, section 1504, disregarding
3.36the exclusions in section 1504(b).
4.1    For purposes of clause (5), "road construction" means construction of (1) public
4.2roads, (2) cartways, and (3) private roads in townships located outside of the seven-county
4.3metropolitan area up to the point of the emergency response location sign.
4.4    (h) A sale and a purchase includes the furnishing for a consideration of tangible
4.5personal property or taxable services by the United States or any of its agencies or
4.6instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
4.7subdivisions.
4.8    (i) A sale and a purchase includes the furnishing for a consideration of
4.9telecommunications services, ancillary services associated with telecommunication
4.10services, cable television services, direct satellite services, and ring tones.
4.11Telecommunication services include, but are not limited to, the following services,
4.12as defined in section 297A.669: air-to-ground radiotelephone service, mobile
4.13telecommunication service, postpaid calling service, prepaid calling service, prepaid
4.14wireless calling service, and private communication services. The services in this
4.15paragraph are taxed to the extent allowed under federal law.
4.16    (j) A sale and a purchase includes the furnishing for a consideration of installation if
4.17the installation charges would be subject to the sales tax if the installation were provided
4.18by the seller of the item being installed.
4.19    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
4.20to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
4.21the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
4.2265B.29, subdivision 1 , clause (1).
4.23(l) A sale and a purchase includes the furnishing for a consideration of specified
4.24digital products and other digital products and granting the right for a consideration to use
4.25specified digital products and other digital products on a temporary or permanent basis and
4.26regardless of whether the purchaser is required to make continued payments for such right.
4.27EFFECTIVE DATE.This section is effective for sales and purchases made after
4.28June 30, 2009.

4.29    Sec. 2. Minnesota Statutes 2008, section 297A.61, subdivision 4, is amended to read:
4.30    Subd. 4. Retail sale. (a) A "retail sale" means any sale, lease, or rental for any
4.31purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
4.32course of business as defined in subdivision 21.
4.33    (b) A sale of property used by the owner only by leasing it to others or by holding it
4.34in an effort to lease it, and put to no use by the owner other than resale after the lease or
4.35effort to lease, is a sale of property for resale.
5.1    (c) A sale of master computer software that is purchased and used to make copies for
5.2sale or lease is a sale of property for resale.
5.3    (d) A sale of building materials, supplies, and equipment to owners, contractors,
5.4subcontractors, or builders for the erection of buildings or the alteration, repair, or
5.5improvement of real property is a retail sale in whatever quantity sold, whether the sale is
5.6for purposes of resale in the form of real property or otherwise.
5.7    (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
5.8for installation of the floor covering is a retail sale and not a sale for resale since a sale
5.9of floor covering which includes installation is a contract for the improvement of real
5.10property.
5.11    (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
5.12for installation of the items is a retail sale and not a sale for resale since a sale of
5.13shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
5.14the improvement of real property.
5.15    (g) A sale of tangible personal property, specified digital products, or other digital
5.16products that is awarded as prizes is a retail sale and is not considered a sale of property
5.17for resale.
5.18    (h) A sale of tangible personal property, specified digital products, or other digital
5.19products utilized or employed in the furnishing or providing of services under subdivision
5.203, paragraph (g), clause (1), including, but not limited to, property given as promotional
5.21items, is a retail sale and is not considered a sale of property for resale.
5.22    (i) A sale of tangible personal property, specified digital products, or other digital
5.23products used in conducting lawful gambling under chapter 349 or the State Lottery under
5.24chapter 349A, including, but not limited to, property given as promotional items, is a retail
5.25sale and is not considered a sale of property for resale.
5.26    (j) A sale of machines, equipment, or devices that are used to furnish, provide, or
5.27dispense goods or services, including, but not limited to, coin-operated devices, is a retail
5.28sale and is not considered a sale of property for resale.
5.29    (k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
5.30payment becomes due under the terms of the agreement or the trade practices of the
5.31lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01,
5.32subdivision 11 , but excluding vehicles with a manufacturer's gross vehicle weight rating
5.33greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time
5.34the lease is executed.
5.35    (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
5.36title or possession of the tangible personal property.
6.1    (m) A sale of a bundled transaction in which one or more of the products included
6.2in the bundle is a taxable product is a retail sale, except that if one of the products
6.3is a telecommunication service, ancillary service, Internet access, or audio or video
6.4programming service, and the seller has maintained books and records identifying through
6.5reasonable and verifiable standards the portions of the price that are attributable to the
6.6distinct and separately identifiable products, then the products are not considered part of a
6.7bundled transaction. For purposes of this paragraph:
6.8    (1) the books and records maintained by the seller must be maintained in the regular
6.9course of business, and do not include books and records created and maintained by the
6.10seller primarily for tax purposes;
6.11    (2) books and records maintained in the regular course of business include, but are
6.12not limited to, financial statements, general ledgers, invoicing and billing systems and
6.13reports, and reports for regulatory tariffs and other regulatory matters; and
6.14    (3) books and records are maintained primarily for tax purposes when the books
6.15and records identify taxable and nontaxable portions of the price, but the seller maintains
6.16other books and records that identify different prices attributable to the distinct products
6.17included in the same bundled transaction.
6.18(n) A sale of specified digital products or other digital products to an end user with
6.19or without rights of permanent use and regardless of whether rights of use are conditioned
6.20upon continued payment by the purchaser. When a digital code has been purchased that
6.21relates to a specified digital products or other digital products, the subsequent receipt of or
6.22access to the related specified digital products or other digital products is not a retail sale.
6.23EFFECTIVE DATE.This section is effective for sales and purchases made after
6.24June 30, 2009.

6.25    Sec. 3. Minnesota Statutes 2008, section 297A.61, subdivision 5, is amended to read:
6.26    Subd. 5. Storage. "Storage" includes keeping or retaining tangible personal
6.27property, specified digital products, or other digital products in Minnesota for any purpose
6.28except sale in the regular course of business.
6.29EFFECTIVE DATE.This section is effective for sales and purchases made after
6.30June 30, 2009.

6.31    Sec. 4. Minnesota Statutes 2008, section 297A.61, subdivision 6, is amended to read:
6.32    Subd. 6. Use. (a) "Use" includes the exercise of a right or power incident to the
6.33ownership of any interest in tangible personal property, specified digital products, other
7.1digital products, or services, purchased from a retailer, other than the sale of that property
7.2in the regular course of business.
7.3(b) Use includes the consumption of printed materials in the creation of nontaxable
7.4advertising that is distributed, either directly or indirectly, within Minnesota.
7.5EFFECTIVE DATE.This section is effective for sales and purchases made after
7.6June 30, 2009.

7.7    Sec. 5. Minnesota Statutes 2008, section 297A.61, subdivision 10, is amended to read:
7.8    Subd. 10. Tangible personal property. (a) "Tangible personal property" means
7.9personal property that can be seen, weighed, measured, felt, or touched, or that is in any
7.10other manner perceptible to the senses. "Tangible personal property" includes, but is not
7.11limited to, electricity, water, gas, steam, and prewritten computer software.
7.12    (b) Tangible personal property does not include:
7.13    (1) large ponderous machinery and equipment used in a business or production
7.14activity which at common law would be considered to be real property;
7.15    (2) property which is subject to an ad valorem property tax;
7.16    (3) property described in section 272.02, subdivision 9, clauses (a) to (d); and
7.17    (4) property described in section 272.03, subdivision 2, clauses (3) and (5); and
7.18(5) specified digital products, or other digital products transferred electronically,
7.19except prewritten computer software delivered electronically is tangible personal property.
7.20EFFECTIVE DATE.This section is effective for sales and purchases made after
7.21June 30, 2009.

7.22    Sec. 6. Minnesota Statutes 2008, section 297A.61, subdivision 14a, is amended to read:
7.23    Subd. 14a. Lease or rental. (a) "Lease or rental" means any transfer of possession
7.24or control of tangible personal property, specified digital products, or other digital
7.25products for a fixed or indeterminate term for consideration. A lease or rental may include
7.26future options to purchase or extend.
7.27(b) Lease or rental does not include:
7.28(1) a transfer of possession or control of property under a security agreement or
7.29deferred payment plan that requires the transfer of title upon completion of the required
7.30payments;
7.31(2) a transfer of possession or control of property under an agreement that requires
7.32the transfer of title upon completion of required payments and payment of an option price
7.33does not exceed the greater of $100 or one percent of the total required payments; or
8.1(3) providing tangible personal property along with an operator for a fixed or
8.2indeterminate period of time. A condition of this exclusion is that the operator is necessary
8.3for the equipment to perform as designed. For the purpose of this subdivision, an operator
8.4must do more than maintain, inspect, or set up the tangible personal property.
8.5(c) Lease or rental does include agreements covering motor vehicles and trailers
8.6where the amount of consideration may be increased or decreased by reference to the
8.7amount realized upon sale or disposition of the property as defined in United States Code,
8.8title 26, section 7701(h)(l).
8.9(d) This definition must be used for sales and use tax purposes regardless if a
8.10transaction is characterized as a lease or rental under generally accepted accounting
8.11principles, the Internal Revenue Code, chapter 336, or other provisions of federal, state, or
8.12local law.
8.13EFFECTIVE DATE.This section is effective for sales and purchases made after
8.14June 30, 2009.

8.15    Sec. 7. Minnesota Statutes 2008, section 297A.61, subdivision 17a, is amended to read:
8.16    Subd. 17a. Delivered electronically. "Delivered electronically" means delivered
8.17to the purchaser by means other than tangible storage media; and unless the context
8.18indicates otherwise, applies to the delivery of computer software. Computer software is
8.19not considered "delivered electronically" to a purchaser simply because the purchaser
8.20has access to the product.
8.21EFFECTIVE DATE.This section is effective for sales and purchases made after
8.22June 30, 2009.

8.23    Sec. 8. Minnesota Statutes 2008, section 297A.61, subdivision 21, is amended to read:
8.24    Subd. 21. Normal course of business. "Normal course of business" means
8.25activities that demonstrate a commercial continuity or consistency of making sales or
8.26performing services for the purposes of attaining profit or producing income. Factors that
8.27indicate that a person is acting in the normal course of business include:
8.28(1) systematic solicitation of sales through advertising media;
8.29(2) entering into contracts to perform services or provide tangible personal property,
8.30specified digital products, or other digital products;
8.31(3) maintaining a place of business; or
8.32(4) use of exemption certificates to purchase items exempt from the sales tax.
8.33EFFECTIVE DATE.This section is effective for sales and purchases made after
8.34June 30, 2009.

9.1    Sec. 9. Minnesota Statutes 2008, section 297A.61, subdivision 38, is amended to read:
9.2    Subd. 38. Bundled transaction. (a) "Bundled transaction" means the retail sale
9.3of two or more products when the products are otherwise distinct and identifiable, and
9.4the products are sold for one nonitemized price. As used in this subdivision, "product"
9.5includes tangible personal property, services, intangibles, and digital goods, including
9.6specified digital products, or other digital products, but does not include real property or
9.7services to real property. A bundled transaction does not include the sale of any products
9.8in which the sales price varies, or is negotiable, based on the selection by the purchaser of
9.9the products included in the transaction.
9.10    (b) For purposes of this subdivision, "distinct and identifiable" products does not
9.11include:
9.12    (1) packaging and other materials, such as containers, boxes, sacks, bags, and
9.13bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the
9.14products and are incidental or immaterial to the retail sale. Examples of packaging that are
9.15incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags,
9.16and express delivery envelopes and boxes;
9.17    (2) a promotional product provided free of charge with the required purchase of
9.18another product. A promotional product is provided free of charge if the sales price of
9.19another product, which is required to be purchased in order to receive the promotional
9.20product, does not vary depending on the inclusion of the promotional product; and
9.21    (3) items included in the definition of sales price.
9.22    (c) For purposes of this subdivision, the term "one nonitemized price" does not
9.23include a price that is separately identified by product on binding sales or other supporting
9.24sales-related documentation made available to the customer in paper or electronic form
9.25including but not limited to an invoice, bill of sale, receipt, contract, service agreement,
9.26lease agreement, periodic notice of rates and services, rate card, or price list.
9.27    (d) A transaction that otherwise meets the definition of a bundled transaction is
9.28not a bundled transaction if it is:
9.29    (1) the retail sale of tangible personal property and a service and the tangible
9.30personal property is essential to the use of the service, and is provided exclusively in
9.31connection with the service, and the true object of the transaction is the service;
9.32    (2) the retail sale of services if one service is provided that is essential to the use or
9.33receipt of a second service and the first service is provided exclusively in connection with
9.34the second service and the true object of the transaction is the second service;
9.35    (3) a transaction that includes taxable products and nontaxable products and the
9.36purchase price or sales price of the taxable products is de minimis; or
10.1    (4) the retail sale of exempt tangible personal property and taxable tangible personal
10.2property if:
10.3    (i) the transaction includes food and food ingredients, drugs, durable medical
10.4equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices,
10.5or medical supplies; and
10.6    (ii) the seller's purchase price or sales price of the taxable tangible personal property
10.7is 50 percent or less of the total purchase price or sales price of the bundled tangible
10.8personal property. Sellers must not use a combination of the purchase price and sales
10.9price of the tangible personal property when making the 50 percent determination for
10.10a transaction.
10.11    (e) For purposes of this subdivision, "purchase price" means the measure subject to
10.12use tax on purchases made by the seller, and "de minimis" means that the seller's purchase
10.13price or sales price of the taxable products is ten percent or less of the total purchase
10.14price or sales price of the bundled products. Sellers shall use either the purchase price
10.15or the sales price of the products to determine if the taxable products are de minimis.
10.16Sellers must not use a combination of the purchase price and sales price of the products
10.17to determine if the taxable products are de minimis. Sellers shall use the full term of a
10.18service contract to determine if the taxable products are de minimis.
10.19EFFECTIVE DATE.This section is effective for sales and purchases made after
10.20June 30, 2009.

10.21    Sec. 10. Minnesota Statutes 2008, section 297A.61, is amended by adding a
10.22subdivision to read:
10.23    Subd. 47. Digital audio-visual works. "Digital audio-visual works" means a series
10.24of related images which, when shown in succession, impart an impression of motion,
10.25together with accompanying sounds, if any, that are transferred electronically. Digital
10.26audio-visual works include such items as motion pictures, movies, musical videos, news
10.27and entertainment programs, and live events. Digital audio-visual works does not include
10.28video greeting cards sent by electronic mail. Unless the context provides otherwise, digital
10.29audio-visual works includes the digital code or a subscription to or access to a digital code
10.30for receiving, accessing, or otherwise obtaining digital audio-visual works.
10.31EFFECTIVE DATE.This section is effective for sales and purchases made after
10.32June 30, 2009.

10.33    Sec. 11. Minnesota Statutes 2008, section 297A.61, is amended by adding a
10.34subdivision to read:
11.1    Subd. 48. Digital audio works. "Digital audio works" mean works that result
11.2from the fixation of a series of musical, spoken, or other sounds, that are transferred
11.3electronically. Digital audio works includes such items as which may be either prerecorded
11.4or live: songs, music, readings of books or other written materials, speeches, ring tones, or
11.5other sound recordings. Digital audio works does not include audio greeting cards sent
11.6by electronic mail. Unless the context provides otherwise, digital audio works includes
11.7the digital code or a subscription to or access to a digital code for receiving, accessing,
11.8or otherwise obtaining digital audio works. For purposes of this subdivision, "ring tone"
11.9means a digitized sound file that is downloaded onto a device and that may be used to alert
11.10the customer with respect to a communication. A ring tone does not include ring back tones
11.11or other digital audio files that are not stored on the customer's communication device.
11.12EFFECTIVE DATE.This section is effective for sales and purchases made after
11.13June 30, 2009.

11.14    Sec. 12. Minnesota Statutes 2008, section 297A.61, is amended by adding a
11.15subdivision to read:
11.16    Subd. 49. Digital books. "Digital books" mean works that are literary works, other
11.17than digital audio-visual works or digital audio works, expressed in words, numbers, or
11.18numerical symbols or indicia so long as the product is generally recognized in the ordinary
11.19and usual sense as a "books" and are transferred electronically. It includes works of fiction,
11.20nonfiction, and short stories. It does not include periodicals, magazines, newspapers, or
11.21other news and information products, chat rooms, or weblogs. Unless the context provides
11.22otherwise, digital books includes the digital code or a subscription to or access to a digital
11.23code for receiving, accessing, or otherwise obtaining digital books.
11.24EFFECTIVE DATE.This section is effective for sales and purchases made after
11.25June 30, 2009.

11.26    Sec. 13. Minnesota Statutes 2008, section 297A.61, is amended by adding a
11.27subdivision to read:
11.28    Subd. 50. Digital code. "Digital code" means a code which provides a purchaser
11.29with a right to obtain one or more of the specified digital products or other digital products.
11.30A digital code may be transferred electronically such as through electronic email, or
11.31it may be transferred on a tangible medium, such as a plastic card, a piece of paper or
11.32invoice, or imprinted on another product. A digital code is not a code that represents
11.33stored monetary value that is deducted from a total as it is used by the purchaser and it is
11.34not a code that represents a redeemable card, gift card, or gift certificate that entitles the
12.1holder to select a specified digital product or other digital product of an indicated cash
12.2value. The end user of the digital code is any purchaser except one who receives the
12.3contractual right to redistribute the specified digital product or other digital product which
12.4is the subject of the transaction.
12.5EFFECTIVE DATE.This section is effective for sales and purchases made after
12.6June 30, 2009.

12.7    Sec. 14. Minnesota Statutes 2008, section 297A.61, is amended by adding a
12.8subdivision to read:
12.9    Subd. 51. Specified digital products. "Specified digital products" means digital
12.10audio-visual works, digital audio works, and digital books which are transferred
12.11electronically to a customer.
12.12EFFECTIVE DATE.This section is effective for sales and purchases made after
12.13June 30, 2009.

12.14    Sec. 15. Minnesota Statutes 2008, section 297A.61, is amended by adding a
12.15subdivision to read:
12.16    Subd. 52. Transferred electronically. "Transferred electronically" means obtained
12.17by the purchaser by means other than tangible storage media and, unless the context
12.18indicated otherwise, applies to the delivery of specified digital products and other digital
12.19products. For purposes of this subdivision, it is not necessary that a copy of the product
12.20be physically transferred to the purchaser. A product shall be considered to have been
12.21transferred electronically to a purchaser if the purchaser has access to the product.
12.22EFFECTIVE DATE.This section is effective for sales and purchases made after
12.23June 30, 2009.

12.24    Sec. 16. Minnesota Statutes 2008, section 297A.61, is amended by adding a
12.25subdivision to read:
12.26    Subd. 53. Other digital products. "Other digital products" means the following
12.27items when transferred electronically:
12.28(i) greeting cards;
12.29(ii) artwork available for reproduction or display purposes; and
12.30(iii) video or electronic games.
12.31EFFECTIVE DATE.This section is effective for sales and purchases made after
12.32June 30, 2009.

13.1    Sec. 17. Minnesota Statutes 2008, section 297A.63, is amended to read:
13.2297A.63 USE TAXES IMPOSED; RATES.
13.3    Subdivision 1. Use of tangible personal property, specified digital products,
13.4other digital products, or taxable services. (a) For the privilege of using, storing,
13.5distributing, or consuming in Minnesota tangible personal property, specified digital
13.6products, other digital products, or taxable services purchased for use, storage, distribution,
13.7or consumption in this state, a use tax is imposed on a person in Minnesota. The tax is
13.8imposed on the purchase price of retail sales of the tangible personal property, specified
13.9digital products, other digital products, or taxable services at the rate of tax imposed under
13.10section 297A.62. A person that purchases property from a Minnesota retailer and returns
13.11the tangible personal property, specified digital products, or other digital products, to a
13.12point within Minnesota, except in the course of interstate commerce, after it was delivered
13.13outside of Minnesota, is subject to the use tax.
13.14    (b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
13.15was paid on the sales price of the tangible personal property or taxable services.
13.16    (c) No tax is imposed under paragraph (a) if the purchase meets the requirements for
13.17exemption under section 297A.67, subdivision 21.
13.18    (d) When a transaction otherwise meets the definition of a bundled transaction, but
13.19is not a bundled transaction under section 297A.61, subdivision 38, paragraph (d), and
13.20the seller's purchase price of the taxable product or taxable tangible personal property is
13.21equal to or greater than $100, then use tax is imposed on the purchase price of the taxable
13.22product or taxable personal property. For purposes of this paragraph, "purchase price"
13.23means the measure subject to use tax on purchases made by the seller.
13.24    Subd. 2. Use of tangible personal property, specified digital products, other
13.25digital products, made from materials. (a) A use tax is imposed on a person who
13.26manufactures, fabricates, or assembles tangible personal property, specified digital
13.27products, or other digital products, from materials, either within or outside this state and
13.28who uses, stores, distributes, or consumes the tangible personal property, specified digital
13.29products, or other digital products, in Minnesota. The tax is imposed on the purchase price
13.30of retail sales of the materials contained in the tangible personal property, specified digital
13.31products, or other digital products, at the rate of tax imposed under section 297A.62.
13.32(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62 was
13.33paid on the sales price of materials contained in the tangible personal property, specified
13.34digital products, or other digital products.
14.1EFFECTIVE DATE.This section is effective for sales and purchases made after
14.2June 30, 2009.

14.3    Sec. 18. Minnesota Statutes 2008, section 297A.66, subdivision 1, is amended to read:
14.4    Subdivision 1. Definitions. (a) To the extent allowed by the United States
14.5Constitution and the laws of the United States, "retailer maintaining a place of business in
14.6this state," or a similar term, means a retailer:
14.7(1) having or maintaining within this state, directly or by a subsidiary or an affiliate,
14.8an office, place of distribution, sales or sample room or place, warehouse, or other place
14.9of business; or
14.10(2) having a representative, including, but not limited to, an affiliate, agent,
14.11salesperson, canvasser, or solicitor operating in this state under the authority of the retailer
14.12or its subsidiary, for any purpose, including the repairing, selling, delivering, installing, or
14.13soliciting of orders for the retailer's goods or services, or the leasing of tangible personal
14.14property, specified digital products, or other digital products, located in this state, whether
14.15the place of business or agent, representative, affiliate, salesperson, canvasser, or solicitor
14.16is located in the state permanently or temporarily, or whether or not the retailer, subsidiary,
14.17or affiliate is authorized to do business in this state.
14.18(b) "Destination of a sale" means the location to which the retailer makes delivery of
14.19the property sold, or causes the property to be delivered, to the purchaser of the property,
14.20or to the agent or designee of the purchaser. The delivery may be made by any means,
14.21including the United States Postal Service or a for-hire carrier.
14.22EFFECTIVE DATE.This section is effective for sales and purchases made after
14.23June 30, 2009.

14.24    Sec. 19. Minnesota Statutes 2008, section 297A.67, subdivision 23, is amended to read:
14.25    Subd. 23. Occasional sales. Isolated and occasional sales in Minnesota not made in
14.26the normal course of business of selling that kind of property or service are exempt. The
14.27storage, use, or consumption of property or services acquired as a result of such a sale is
14.28exempt. This exemption does not apply to sales of tangible personal property, specified
14.29digital products, or other digital products, primarily used in a trade or business.
14.30EFFECTIVE DATE.This section is effective for sales and purchases made after
14.31June 30, 2009.

14.32    Sec. 20. Minnesota Statutes 2008, section 297A.83, subdivision 3, is amended to read:
15.1    Subd. 3. Commissioner's discretion. (a) The commissioner may decline to issue a
15.2permit to a retailer not maintaining a place of business in this state, or may cancel a permit
15.3previously issued to the retailer, if the commissioner believes that the tax can be collected
15.4more effectively from the persons using the property in this state. A refusal to issue or
15.5cancellation of a permit on such grounds does not affect the retailer's right to make retail
15.6sales from outside this state to destinations within this state.
15.7(b) If the commissioner considers it necessary for the efficient administration of the
15.8tax to regard a salesperson, representative, trucker, peddler, or canvasser as the agent of
15.9the dealer, distributor, supervisor, employer, or other person under whom that person
15.10operates or from whom the person obtains the tangible personal property, specified digital
15.11products, or other digital products, sold, whether making sales personally or in behalf of
15.12that dealer, distributor, supervisor, employer, or other person, the commissioner may
15.13regard the salesperson, representative, trucker, peddler, or canvasser as such agent, and
15.14may regard the dealer, distributor, supervisor, employer, or other person as a retailer for
15.15the purposes of collecting the tax.
15.16EFFECTIVE DATE.This section is effective for sales and purchases made after
15.17June 30, 2009.

15.18    Sec. 21. Minnesota Statutes 2008, section 297A.99, subdivision 6, is amended to read:
15.19    Subd. 6. Use tax. A compensating use tax applies, at the same rate as the sales tax,
15.20on the use, storage, distribution, or consumption of tangible personal property, specified
15.21digital products, other digital products, or taxable services.
15.22EFFECTIVE DATE.This section is effective for sales and purchases made after
15.23June 30, 2009.

15.24    Sec. 22. REPEALER.
15.25Minnesota Statutes 2008, section 297A.61, subdivision 45, is repealed.
15.26EFFECTIVE DATE.This section is effective for sales and purchases made after
15.27June 30, 2009."
15.28Amend the title accordingly