Sprint Spectrum LP v. Commissioner of Revenue

676 N.W.2d 656, 2004 Minn. LEXIS 159, 2004 WL 637136

• Court: Supreme Court of Minnesota
• Decided: April 1, 2004
• Docket: A03-954
• Status: Published

Opinions

OPINION

GILBERT, Justice.

This is a tax case that involves a consolidated appeal of the Commissioner of Revenue’s denial of requested refunds of sales tax paid on capital equipment purchases by three companies: Sprint Communications Company LP, Sprint Spectrum LP, and United Telephone Company of Minnesota (collectively “relators”). These companies argue that their purchases of equipment for their local exchange, wireless, and long distance services should qualify for sales tax exemption as “capital equipment” that is used in manufacturing “tangible personal property.”

The parties agreed to stipulated facts. Relators operate in three different segments of the telecommunications business. United Telephone Company of Minnesota operates local exchange networks. Sprint Spectrum provides wireless phone services. Sprint Communications provides long distance telephone services. All three entities purchased equipment for use in their business and paid sales tax on the purchases.¹

Relators’ network equipment transforms a caller’s voice or data to electronic form in order to convey it to the intended recipient. The sound wave is processed and converted into various forms. These forms include digital signals, analog signal waves, optical forms, light pulses, data streams, and electrical signals. The particular form is deconstructed to enable it to travel over distances and then reconstructed. It is then transformed from an electronic format into an electronic reproduction of the original voice or data input. Data streams undergo a similar transformation for high-speed transmission called “packet switching,” which includes breaking the data streams into smaller fragments before routing to the receiver. To qualify for sales tax exemption as capital equipment, the equipment must be used to manufacture “tangible personal property * * * to be sold ultimately at retail.” See Minn.Stat. § 297A.01, subd. 16(a) (2000); Minn.Stat. § 297A.01, subd. 16(d)(4) (2000). The statute at issue defined “tangible personal property” as “corporeal personal property of any kind whatsoever * * *_» Minn.Stat. § 297A.01, subd. 11 (2000).

Relators’ product is taxed and sold at retail. To access the three different networks, customers pay fees. The fees are taxable per Minn.Stat. § 297A.01, subd. 3(f) (2000), defining as taxable sales and purchases of various telephone services. Relators’ customers have paid $53,921,415 in sales taxes during the relevant period on purchases from the businesses that use the equipment at issue. These taxes are not in contention.

During the relevant dates, September 1996 — July 2000, relators purchased large amounts of equipment for inclusion in their local exchange, wireless, and long distance telecommunications networks. Relators paid sales tax of approximately $9 million on the purchases and incorporated the equipment into them various communications systems. The parties agreed that the sales tax paid would be subject to verification by the Commissioner of Revenue if we determine that the exemption applies. Relators seek a tax-refund for taxes paid on these purchases.

The tax court affirmed the denial of relators’ refund claims. Relying on a previous tax court decision, Qwest Corp. v. Comm’r of Rev., Nos. 7214-R and 7283-R, 2001 WL 355861 (Minn. T.C. Apr. 2, 2001), affd by an evenly divided court, 640 N.W.2d 351 (Minn.2002), the tax court noted that “the common definition of ‘corporeal’ ‘does not include a product that can only be heard and not touched or seen.’ ” Sprint Spectrum LP, et al. v. Comm’r of Rev., Nos. 7299-R, 7308-R and 7309-R, 2003 WL 21246600 at *5 (Minn. T.C. May 23, 2003) (quoting Qwest, 2001 WL 355861 at *3).² Based on this definition of corporeal, the tax court held that relators’ equipment does not manufacture tangible personal property as defined in Minn.Stat. § 297A.01, subd. 11, and therefore the equipment is not exempt from sales tax as capital equipment under Minn.Stat. § 297A.25, subd. 42. Sprint, 2003 WL 21246600 at *5, 6. We reverse.

I.

In the current matter, no material facts are in dispute. The sole issue is whether the tax court properly applied the law to the stipulated set of facts. On an appeal from summary judgment, when the facts are stipulated, we review de novo whether the lower court erred in its application of the law. Burlington N. R.R. Co. v. Comm’r of Rev., 606 N.W.2d 54, 57 (Minn.2000); Amoco Corp. v. Comm’r of Rev., 658 N.W.2d 859, 871 (Minn.2003). When interpreting an exemption to general taxation, the exemption provision is to be strictly construed. Camping & Educ. Found, v. State, 282 Minn. 245, 250, 164 N.W.2d 369, 372 (1969). The party seeking an exemption has the burden of proof to establish entitlement to the exemption. Id. When a statute is ambiguous, we may look toward legislative intent to assist us in our interpretation. See Minn.Stat. § 645.16 (2002). Before doing that though, we will review the history of this dispute and discuss the product at issue.

Minnesota imposes sales tax on “the gross receipts from sales at retail made by any person in this state.” Minn.Stat. § 297A.02, subd. 1 (2000). Minnesota imposes use tax “[f]or the privilege of using, storing, distributing, or consuming in Minnesota tangible personal property or taxable services purchased for use, storage, distribution, or consumption in this state * * * ” unless sales tax was paid on the sales price. Minn.Stat. § 297A.14, subd. 1 (2000). However, receipts from the sale, storage, use, or consumption of “capital equipment,” as defined in Minn. Stat. § 297A.01, subd. 16(a) (2000), are exempt from sales and use tax. Minn. Stat. § 297A.25, subd. 42 (2000).

In 1984, the Minnesota Legislature enacted a 2% lower sales tax exemption for capital equipment to stimulate economic activity in Minnesota. This exemption was expanded to a full tax exemption in 1989. Act of October 3, 1989, ch. 1, art. 12, § 7, 1990 Minn. Laws 201, 206-07. Receipts “from the sale of and storage, use, or consumption of capital equipment” are exempt from sales and use tax. Minn.Stat. § 297A.25, subd. 42 (2000). Per Minn. Stat. § 297A.01, subd. 16(a) (2000):

Capital equipment means machinery and equipment purchased or leased for use in this state and used by the purchaser or lessee primarily for manufacturing, fabricating, mining, or refining tangible personal property to be sold ultimately at retail and for electronically transmitting results retrieved by a customer of an on-line computerized data retrieval system * * ⅜.

(emphasis added). “Tangible personal property” is defined as “corporeal personal property of any kind whatsoever, including property which is to become real property as a result of incorporation, attachment, or installation following its acquisition.” Minn. Stat. § 297A.01, subd. 11 (2000).³

In 1993, the legislature amended the statute to insert “tangible personal property” in place of “a product.” Act of May 24, 1993, ch. 375, art. 9, § 25, subd. 16, 1993 Minn. Laws 2728, 2897 (codified as amended at Minn.Stat. § 297A.01, subd. 16(a) (Supp.1993)). In 1994, the statute was amended again to update the language of subdivision 16(a), but left “tangible personal property” intact. Act of May 5, 1994, ch. 587, art. 2, § 2, 1994 Minn. Laws 1043, 1067-68 (codified as amended at Minn. Stat. § 297A.01, subd. 16(a) (2000)). Before the 1993 amendment, capital equipment was statutorily defined as follows:

Capital equipment means machinery and equipment and the materials and supplies necessary to construct or install the machinery or equipment * * * used by the purchaser or lessee for manufacturing, fabricating, mining, quarrying, or refining a product to be sold at retail and must be used for the establishment of a new or the physical expansion of an existing manufacturing, fabricating, mining, quarrying, or refining facility in the state.

Minn.Stat. § 297A.01, subd. 16 (1992) (emphasis added). Following the 1993 amendment, and prior to the 1994 amendment, the statute read:

Capital equipment means machinery and equipment and the materials and supplies necessary to construct or install the machinery or equipment * * * used by the purchaser or lessee for manufacturing, fabricating, mining, quarrying, or refining tangible personal property, for electronically transmitting results retrieved by a customer of an on-line computerized data retrieval system, or for the generation of electricity or steam, to be sold at retail and must be used for the establishment of a new or the physical expansion of an existing manufacturing, fabricating, quarrying, or refining facility in the state.

Minn.Stat. § 297A.01, subd. 16(a) (Supp. 1993) (emphasis added).⁴

In Northern States Power Co. v. Comm’r of Rev., 571 N.W.2d 573, 575 (Minn.1997) (“NSP ”), we reviewed a question of whether electric transformers performed a manufacturing function that would qualify for tax exemption. We utilized legislative history to interpret the purpose of the 1993 amendment, noting:

The purpose of [the amendment] is to confirm and clarify the original intent of the legislature in enacting the exemption for capital equipment * * *. [It] does not create a new category of items that are subject to sales and use tax, nor does it exclude from exemption any machinery, equipment, or other items which were intended to be exempted as capital equipment, as defined in Minnesota Statutes, section 297A.01, subdivision 16.

NSP, 571 N.W.2d at 576 (brackets and ellipsis in original, quoting S.F. No. 924, 78th Leg. (Minn.1993)).

In Qwest, the tax court departed from our interpretation of the 1993 amendment, finding that the amendment “narrowed” the tax exemption. 2001 WL 355861 at *3. It noted that, under the pre-1993 statutory definition of capital equipment, telecommunications equipment would be exempt and that the services provided “would constitute a ‘product.’ ” Id. at *2. However, by changing the term “product” to “tangible personal property,” the tax court reasoned that the 1993 statutory amendment narrowed the definition of capital equipment by requiring that it manufacture a product that can be touched or seen and not only heard. Id. at *3. Further, the tax court pointed out that a second change to the capital equipment exemption added language that specifically exempted “electronically transmitting results retrieved by a customer of an on line computerized data retrieval system.” Qwest, 2001 WL 355861 at *3 (quoting Minn.Stat. § 297A.01, subd. 16(a)). This language, the tax court stated, showed that “[i]f the [Legislature did not intend the 1993[a]mendments to narrow the scope of the capital equipment exemption * ⅜ ⅜, this additional language would be superfluous and without meaning.” Qwest, 2001 WL 355861, at ⅜3. Since Black’s Law Dictionary (“Black’s ”) defines tangible property as “that which may be felt or touched[,] and is necessarily corporeal,” Black’s Law Dictionary 1456 (6th ed.1990), the tax court found that the new version of Minn.Stat. § 297A.01 did not exempt phone equipment because the services they provide did not meet any of the definitions of “tangible personal property.” Qwest, 2001 WL 355861, at *7.

The Qiuest tax court directly contradicted our holding in NSP. In NSP, we noted that the purpose of the 1993 amendment was to “ ‘confirm and clarify the original intent of the legislature in enacting the exemption for capital equipment.’ ” NSP, 571 N.W.2d at 576 (quoting S.F. No. 924, 78th Leg. (Minn.1993)). In the present matter, the tax court did not mention our interpretation of this statutory scheme in NSP. Rather, it relied on its own nonbinding precedent in Qwest. See Sprint, 2003 WL 21246600 at *4-6. In the process, the tax court narrowed the requirements for exemption and required a tax on items that the statute intended to be exempted as capital equipment.

In further support of its decision, the tax court in Qwest distinguished a previous tax court decision, Minnesota RSA 10 Ltd. P’ship v. Comm’r of Rev., No. 6481, 1997 WL 410997 (Minn. T.C. July 18, 1997), aff'd by an equally divided court, 581 N.W.2d 36 (Minn.1998) (“RSA 10 ”), that had found telephone equipment to qualify for exemption based on the statute prior to the 1993 amendment. In RSA 10, the tax court held that the purchase of cellular telephone system equipment was exempt from sales and use tax. 1997 WL 410997 at *3. It found that telecommunications equipment does not merely deliver communications, but also “creates the signal required to transmit voice or data.” Id. The tax court further reasoned that the cellular company “manufactures [cjellular [c]om-munications as that term is commonly understood when it uses radio frequencies, computers (machines) and electronics to transmit and create a product.” Id. The tax court, however, relied on the former version of the statute, which defined exempt capital equipment as “equipment * * * used * * * for manufacturing * * * .a product to be sold at retail.” Id. at *2 (citing MinmStat. § 297A.01, subd. 16 (1992)) (emphasis added). The tax court in RSA 10 concluded that the equipment was used for manufacturing a product to be sold at retail. Id. at *2-3. The tax court in Qiuest refused to rely on RSA 10, reasoning that the 1993 amendments narrowed the definition of product (by inserting “tangible”) and therefore cancelled any tax exemption for the relevant telephone equipment. Qwest, 2001 WL 355861 at *3.

The current question therefore revolves around whether relators’ equipment can be defined as “capital equipment” per Minn. Stat. § 297A.01 to be exempt from sales tax. If the equipment that relators purchased was used by relators primarily for “manufacturing * * * tangible personal property to be sold ultimately at retail,” Minn.Stat. § 297A.01, subd. 16(a) (2000), it will be classified as capital equipment exempt from sales and use tax. In answering this question, we look to the language of the statute, legislative history and our precedents for guidance.

Two of our prior decisions deal with the concept of tangible personal property and offer some guidance in our analysis. In Fingerhut Products Co. v. Comm’r of Rev., 258 N.W.2d 606, 610 (Minn.1977), the revenue commissioner found that mail order business owners were liable for additional use taxes assessed against the value of various mailing lists used in their business, per Minn.Stat. § 297A.14 (1969). For the relevant period, section 297A.14 required a use tax for “the privilege of using, storing or consuming in Minnesota tangible personal property.” Fingerhut, 258 N.W.2d at 608 (quoting Minn.Stat. § 297A.14 (1969)). In essence, if the mailing lists were tangible personal property, they were taxable. If they were classified as a service, they were not taxable. We held that a list of addresses, in and of itself, was not tangible personal property, but that the addresses included on Cheshire tapes, gummed labels, and heat transfers were tangible personal property. Fingerhut, 258 N.W.2d at 610. "While consumers did not use the typed lists themselves, they did use the Cheshire tapes, gummed labels, and heat transfers, which were the “physical manifestation of the property ⅜ * ⅜ not merely the intangible information.” Id.

In Zip Sort, Inc. v. Comm’r of Rev., 567 N.W.2d 34, 40 (Minn.1997), we considered whether bar codes on envelopes could be classified as tangible personal property. We noted that Black’s has defined “corporeal property” as “all things which may be perceived by any of the bodily senses ... although a common definition of the word includes merely that which can be touched and seen.” Zip Sort, 567 N.W.2d at 40 (quoting Black’s Law Dictionary 343 (6th ed.1990)). After applying the Fingerhut test, we held that bar codes were tangible personal property because the bar code was a medium or format to which intangible information was presented that was essential, not merely incidental, to the reason for the purchase. Zip Sort, 567 N.W.2d at 40.

Relators assert that the tax court erred in deferring to Black’s definition of “corporeal personal property.” Instead, relators urge this court to rely on the common dictionary definition. Relators first point to Minn.Stat. § 645.08(1) which provides:

words and phrases are construed according to rules of grammar and according to their common and approved usage; but technical words and phrases and such others as have acquired a special meaning or are defined in this chapter, are construed according to such special meaning or their definition;

Minn.Stat. § 645.08(1) (2002) (emphasis added). Relying on this statute, relators point to several common dictionary definitions of “corporeal,” “material,” “matter,” “substance,” “physical,” and “incorporeal,” none of which require that the physical substance be “touched or seen,” as required by Black’s definition of “corporeal” to which the tax court referred. Adopting regular dictionary definitions, relators argue, would be consistent with Minn.Stat. § 645.08(1).

Relators further point out that the 1999 edition of Black’s revised the definition of “corporeal property” to “property that can be perceived.” Terms such as “seen” or “handled” were eliminated from the newer edition. This change, relators argue, should cause relators’ electronic impulses to be classified as corporeal and therefore tax exempt.

We have previously suggested that definitions of “corporeal property” can vary, noting Black’s defines “corporeal property” as “all things which may be perceived by any of the bodily senses,” but then states that a common definition of the word includes “merely that which can be touched and seen.” Zip Sort, 567 N.W.2d at 40 (quoting Black’s Law Dictionary 343 (6th ed.1990)). Although we referenced the sixth edition of Black’s in Zip SoH, we relied on our Fingerhut decision to resolve the legal issue confronting us. Zip Sort, 567 N.W.2d at 40. As in Zip SoH, we do not wish to be restricted here in our analysis by any single dictionary definition. This is especially true where both the introductory portions of Minn.Stat. § 297A.01, subd. 11 and that dictionary edition start with a much broader definition: “corporeal personal property of any kind whatsoever * * Minn.Stat. § 297A.01, subd. 11 (emphasis added), and “all things which may be perceived by any of the bodily senses * * Black’s Law Dictionary 343 (6th ed.1990) (emphasis added). Black’s gives one common approach as a mere example, but that does not necessarily exclude other common definitions. The tax court relied on Qivest and resorted to a portion of the sixth edition of Black’s entry on “corporeal property” that utilizes a (now superseded) definition of corporeal that could have originated at the time of the Roman Empire. While dictionary definitions are sometimes helpful in statutory interpretations, it would expand the power of a dictionary’s author for this court to rely solely on a portion of a specific dictionary text, or to overemphasize single words or examples within a specific dictionary entry.

We noted in Zip Sort that the statutory language is not all that helpful in determining whether certain products can be classified as tangible personal property to be ultimately sold at retail. 567 N.W.2d at 40. Instead, we looked to our precedent from Fingerhwt and concluded that:

[I]f the medium in which the information resides is merely incidental to the reason for the purchase, the transferred information is intangible property. But if the medium in which the information resides is essential or necessary to the reason for purchase, then the transferred information is tangible property.

Zip Sort, 567 N.W.2d at 40. Here, the customer is paying for more than mere information and is paying for the receipt of a particular form of that information, be it digital, optical, analog waves, light pulses, specific data streams, electric signals or facsimile. Regardless of the medium in which a phone call is being placed, electronic impulses have always been essential to telephone service, and thus essential or necessary to the reason of customers’ communication and purchase.

We have previously determined that electricity is a manufactured product. Minn. Power & Light Co. v. Pers. Prop. Tax, Taxing Dist., City of Fraser, Sch. Dist. No. 695, 289 Minn. 64, 75, 182 N.W.2d 685, 691 (1970) (concluding that electricity is a “manufactured, marketable product” under Minn.Stat. § 272.02(11)). We have also found electrical transformers to be exempt, reasoning that the transformers are an integral part of the manufacturing process. NSP, 571 N.W.2d at 575. In NSP, we referenced the Minnesota Department of Revenue’s definition of “manufacturing” as “a process that ends when the completed state of the product is achieved.” Id. (citation omitted). Transformers are an essential component, of the electrical manufacturing process as “it is clear that electricity is not a ‘finished product’ or in a ‘completed state’ until it passes through the step-down, load tap, and line transformers.” Id. Similarly, as mentioned previously, the tax court has held that cellular communications aré a product and the equipment used to manufacture cellular communications¹ are exempt from sales and use tax. RSA 10, 1997 WL 410997 at *3. The tax court has further determined computerized legal research to be a product. West Publ’g Co. v. Comm’r of Rev., No. 5346, 1990 WL 108040 at *2 (Minn. T.C. July 11, 1990), aff'd without op., 464 N.W.2d 512 (Minn.1991).

In a similar manner, relators’ telecommunications equipment manufactures a product by converting voice and other raw data into a form that can be conveyed, measured, sold, and is perceived by the senses. The matter is transformed, processed, refined, amplified, “packetized,” routed, reconstructed, regenerated, and delivered into digital and optical forms in order to send sound waves, analog signals, and light pulses to the receiver. The form produced can be heard, seen, felt, and received by human senses under certain circumstances and can be precisely measured. As with electricity, telecommunications is corporeal personal property “of any kind whatsoever”⁵ and includes all things which may be perceived by any of the bodily senses, including, but not limited to, touch, sight, hearing and, in this case, can be precisely measured, directed and delivered for use by a retail customer. Our traditional analysis and precedent would categorize this telecommunications equipment as refining or manufacturing a product “to be sold ultimately at retail.” See, e.g., NSP, 571 N.W.2d at 576. As with all other capital equipment, this equipment is not consumed in the manufacturing or fabricating process. The businesses utilizing this equipment have already generated retail sales to relators’ customers that have been taxed in the amount of $54,000,000 and this equipment will continue generating sales in the future.

In addition to looking at the language of the statute, we also consider the legislature’s intent. The “object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature.” Minn.Stat. § 645.16 (2002); see also Peterson v. Haule, 304 Minn. 160, 169, 230 N.W.2d 51, 57 (1975). The legislature’s intention may be ascertained by considering, among other matters, contemporaneous legislative history, the “object to be attained,” the “circumstances under which it was enacted,” and “the occasion and necessity for the law.” Minn.Stat. § 645.16. In NSP, we quoted portions of the legislature’s stated intent regarding its 1993 amendment of Minn.Stat. § 297A.01, subd. 16, from the senate file which speci-fled that the amendment was to “confirm and clarify * * *, [it] does not create a new category of items that are subject to the sales and use tax * * ⁶ NSP, 571 N.W.2d at 576 (brackets in original, quoting S.F. No. 924, 78th Leg. (Minn.1993)). Respondent acknowledged in oral argument that the legislative history of the 1993 amendment does not reveal support for the notion that this telecommunications equipment was meant to be ineligible for tax exemption. We agree. As we noted in NSP, the legislature did not create a new category of items, such as telecommunications equipment, that would now be subject to the sales tax.

In Color-Ad, Packaging, Inc. v. Comm’r of Rev., 428 N.W.2d 806 (Minn.1988), Justice Kelley, in his dissenting opinion, noted that the legislature enacted the tax exemption “to stimulate economic development and [the] resulting employment” by “pro-vid[ing] an incentive to businesses to either locate or to remain in the state.” Id. at 811 (Kelley, J. dissenting; joined by Yetka and Popovich, JJ.). In the past, both our court and the tax court have applied a modern and common sense approach to statutory definitions to classify newer forms of technology as a “product.” See, e.g., Minn. Power & Light, 289 Minn, at 75, 182 N.W.2d at 691 (holding electricity is a product); West, 1990 WL 108040 at *2 (holding that computerized legal research is a product).

Communication equipment should be no exception. This equipment would have been exempt under the 1992 definition of capital equipment and, because the 1993 amendment was only a clarification, the telecommunications equipment continues to be exempt capital equipment under the 1993 definition. Cf. NSP, 571 N.W.2d at 576. The statutory language suggests the legislature’s intention to exempt capital equipment from sales tax pursuant to Minn.Stat. § 297A.25, subd. 42, and to reflect and embrace the major changes occurring in technology.

The initial definition of capital equipment used by the legislature is very embracing. It specifically “includes all machinery and equipment that is essential to the integrated production process.” Minn. Stat. § 297A.01, subd. 16(b) (2000). The legislature has specifically included computers, software, and electronic or electrical devices within this category. See Minn.Stat. § 297A.01, subd. d(l) and (3) (2000). Furthermore, this type of telecommunications equipment is not specifically excluded for exemption as equipment used for non-productive purposes. See Minn. Stat. § 297A.01, subd. 16(c)(2) and (4) (2000). The telecommunications equipment at issue is essential to the purchaser’s ongoing integrated production process.

Vast strides in technological advances have occurred in telecommunications. It appears that the legislature desired that Minnesota remain competitive with its neighboring states in these industries.⁷ It is readily apparent the telecommunications industry is one that the legislature hoped to retain and expand in Minnesota by providing sales tax exemptions for significant capital investment that produces substantial sales at retail. Although modern telecommunications products may not always be “touched or seen” in the traditional sense, the legislative intent to encourage the investment in capital equipment in Minnesota is the same for each.⁸

Accordingly, we hold that the relators have met their burden of proof entitling them to the tax exemption. The capital equipment purchased for use in relators’ business in Minnesota produces telecommunication products that are tangible personal property to be sold ultimately at retail.⁹

Reversed.

BLATZ, C.J., took no part in the consideration or decision of this ease.

1 . The capital equipment utilized includes distribution frames, switches, transmission interface equipment, wires, cables, power generators, transceivers, controllers, communications links, scanning receivers, antenna assemblies, system databases, data storage and retrieval computers, backup power supplies, radio-frequency combiners, and “switch complexes” which include tandem switches, long distance switches, core switches, and digital multiplex system switches.

2 . The tax court described Sprint’s position as essentially “disagreeing] with the definition of tangible personal property in Qwest and requesting] that we redefine the term.” Sprint, 2003 WL 21246600 at *4.

3 . This subdivision was amended in 1997 to include prepaid telephone cards as tangible personal property. Act of June 2, 1997, ch. 231, art. 7 § 7, 1997 Minn. Laws 2394, 2530 (effective for purchases, sales, storage, use, or consumption occurring after June 30, 1997) (codified as amended at Minn.Stat. § 297A.01, subd. 11 (Supp.1997)). The language of this subdivision was further amended in 1998 to define “prepaid telephone calling card.” Act of Mar. 18, 1998, ch. 300, art. 2, § 3, 1998 Minn. Laws 344, 356 (effective for sales or purchases made on or after July 1, 1997) (codified at Minn.Stat. § 297A.01, subd. 11 (2000)).

4 . Although not direct authority to the current matter, it should be noted that recently the legislature amended the tax exemption, effective for sales on or after January 1, 2004. According to Minn.Stat. § 297A.61, subd. 10 (Supp.2003) (emphasis added):

Tangible Personal Property, (a) "Tangible personal property" means personal property that can be seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses. "Tangible personal property” includes, but is not limited to, electricity, water, gas, steam, prew-ritten computer software, and prepaid calling cards.

(b) Tangible personal property does not include:

(1) large ponderous machinery and equipment used in a business or production activity which at common law would be considered to be real property;

(2) property which is subject to an ad valo-rem property tax;

(3) property described in section 272.02, subdivision 9, clauses (a) to (d); and

(4) property described in section 272.03, subdivision 2, clauses (3) and (5).

Act of May 25, 2003, ch. 127, art. 1, § 10, 2003 Minn. Laws 731, 740-41.

Effective after the relevant dates in the present matter, the legislature further added a specific exemption for "Telecommunications equipment:”

(a) Telecommunications machinery and equipment purchased or leased for use directly by a telecommunications service provider primarily in the provision of telecommunications services that are ultimately to be sold at retail are exempt, regardless of whether purchased by the owner, a contractor, or a subcontractor.

Minn.Stat. § 297A.68, subd. 35 (2002).

5 . See Minn.Stat. § 297A.01, subd. 11 (2000).

6 . The dissent "would adhere to our statement in NSP," but then would unilaterally adopt a contrary interpretation diat would modify that holding to mean "the product must be tangible, that is, capable-of being touched and seen, unless included in the express additional categories added by the legislature.” This result would not "confirm and clarify,” but rather follow the tax court reasoning in Qwest, and contrary to our holding in NSP, would effectively narrow the range of capital equipment eligible for exemption.

7 .For general comparison purposes, a 1994 Minnesota governmental advisory council report notes that three surrounding states, Illinois, Wisconsin and North Dakota, impose neither a sales nor personal property tax on manufacturing capital equipment. Capital Equipment Advisoiy Council Report to the Legislature 19 (February 1994). Although this advisoiy report was prepared one year after the 1993 amendment, it reflects a general feeling towards the tax climate at the time and the desire in the region to maintain technological industries. North Dakota, for example, specifically exempts from taxes “[g]ross receipts from sales of computer and telecommunications equipment that is an integral part of a new primary sector business ⅜ ⅛ ⅛.” N.D. Cent.Code § 57-39.2-04.3 (Supp.2003). In addition, neighboring states have adopted broad definitions of the phrase "tangible personal property." Illinois courts, for example, have classified gaseous oxygen as a tangible personal property for the purposes of a tax exemption. Northwestern Steel & Wire Co. v. Dept. of Rev., 120 Ill.App.3d 461, 76 Ill.Dec. 29, 458 N.E.2d 168, 171 (1983).

8 . The telecommunications product manufactured is actually measurable and may be perceived by a variety of bodily senses, including hearing, but also feeling through sound vibrations and, in some instances, the optical forms may even be seen. In the case of data, such as facsimiles, the final form product may be printed, and touched. The product is also sold at retail to the ultimate consumer.

9 . In light of our conclusion that Sprint’s equipment can be classified as "tangible personal property” under Minn.Stat. § 297A.01, subd. 16(a), we need not address Sprint’s other arguments regarding exemption, and consequently vacate the tax court's findings in this regard.

1 . Relators are collectively referred to herein as Sprint.