as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; providing for property tax 1.3 reform; providing for income and corporate franchise 1.4 tax relief and reform; providing for sales, use, and 1.5 motor vehicle sales tax reform; reducing the motor 1.6 vehicle registration tax; changing and reforming 1.7 health care provider taxes, insurance premiums taxes, 1.8 mortgage registry and deed taxes, and gambling, 1.9 petroleum, mining, and liquor taxes; changing property 1.10 tax refunds; reforming property tax aids and local 1.11 government aids provisions; conforming to changes in 1.12 federal income tax provisions; changing certain tax 1.13 increment financing provisions; providing for 1.14 appointment, training, and education of assessors; 1.15 making policy, clarifying, administrative, 1.16 collections, refunds, and licensing changes to various 1.17 taxes and fees; changing administration of the 1.18 political contribution refund; giving certain powers 1.19 and duties to the commissioner of revenue; authorizing 1.20 the commissioner to publish names of certain 1.21 delinquent taxpayers; imposing a use tax on certain 1.22 solid waste generators and self-haulers; requiring 1.23 notice to commissioner of city or town tobacco 1.24 licenses; changing health care funding and creating a 1.25 health care access fund reserve; providing for funding 1.26 of the highway user tax distribution fund; 1.27 appropriating money; amending Minnesota Statutes 2000, 1.28 sections 84.922, by adding a subdivision; 126C.01, by 1.29 adding subdivisions; 126C.13, subdivisions 1, 2, and 1.30 4; 126C.17, subdivisions 5, 6, 7, 8, 9, and 10; 1.31 127A.48, subdivision 1; 168.013, subdivision 1a; 1.32 239.101, subdivision 3; 270.60, by adding a 1.33 subdivision; 270.70, subdivision 13; 270.73, 1.34 subdivision 1; 272.02, subdivisions 7 and 10; 273.061, 1.35 subdivisions 1, 2, and 8; 273.11, subdivision 1a; 1.36 273.121; 273.124, subdivision 13; 273.13, subdivisions 1.37 22, 23, 24, 25, 31, and by adding subdivisions; 1.38 273.1392; 273.1393; 273.1398, subdivisions 1, 8, and 1.39 by adding a subdivision; 273.166, subdivisions 2, 3, 1.40 and 5; 273.42, by adding a subdivision; 274.01, 1.41 subdivision 1; 274.13, subdivision 1; 275.011, by 1.42 adding a subdivision; 275.02; 275.065, subdivisions 3, 1.43 5a, and 6; 275.08, subdivisions 1, 1a, and 1b; 275.28, 1.44 subdivision 1; 275.61; 276.04, subdivision 2; 276A.06, 1.45 subdivision 3; 282.01, subdivisions 1a and 1b; 282.08; 1.46 287.035; 287.08; 287.21, subdivision 1; 287.28; 2.1 289A.02, subdivision 7; 289A.11, subdivision 1; 2.2 289A.18, subdivision 4; 289A.20, subdivision 4; 2.3 289A.56, subdivision 4; 289A.60, subdivision 21; 2.4 290.01, subdivisions 19, 19b, 19c, 19d, 29, 31, and by 2.5 adding a subdivision; 290.02; 290.05, subdivisions 1 2.6 and 3; 290.06, subdivisions 1, 2c, and 23; 290.0671, 2.7 subdivision 1; 290.0674, subdivisions 1 and 2; 2.8 290.0675, subdivisions 1 and 3; 290.068, subdivision 2.9 2, and by adding a subdivision; 290.091, subdivisions 2.10 1 and 6; 290.0921, subdivision 8, and by adding a 2.11 subdivision; 290.0922, subdivision 2; 290.095, 2.12 subdivision 2; 290.17, subdivision 4; 290.191, 2.13 subdivisions 2, 3, and 5; 290.32; 290.92, subdivisions 2.14 3, 23, 28, and 29; 290.9727, subdivision 3; 290.9728, 2.15 subdivision 2; 290.9729, subdivision 2; 290A.03, 2.16 subdivisions 12 and 15; 290A.04, subdivisions 2, 2a, 2.17 and 4; 290A.15; 291.005, subdivision 1; 295.50, 2.18 subdivisions 3 and 4; 295.52, subdivisions 1, 1a, and 2.19 2; 295.53, subdivisions 1 and 3; 295.58; 295.582; 2.20 296A.15, subdivision 1; 296A.16, subdivision 1; 2.21 297A.01, subdivision 5; 297A.07, subdivision 3; 2.22 297A.61, subdivisions 3, 4, 6, 7, 10, 12, 16, and by 2.23 adding subdivisions; 297A.62, subdivision 1; 297A.67, 2.24 subdivisions 5 and 7; 297A.68, subdivisions 2, 3, 5, 2.25 17, 19, and by adding subdivisions; 297A.70, 2.26 subdivisions 1, 2, 4, and 14; 297A.71, by adding a 2.27 subdivision; 297A.72, subdivision 1; 297A.75, 2.28 subdivisions 1, 2, 3, and 4; 297A.80; 297A.82, 2.29 subdivisions 1, 3, 4, and by adding a subdivision; 2.30 297A.86, subdivision 1; 297A.87, subdivision 3; 2.31 297A.94; 297B.01, subdivision 8; 297B.03; 297B.09, 2.32 subdivision 1; 297E.02, subdivisions 1 and 6; 297F.10, 2.33 subdivision 1; 297I.15, by adding a subdivision; 2.34 297I.40, subdivisions 1, 2, and 7; 298.01, 2.35 subdivisions 3, 3a, 3b, 3d, 4, 4a, 4c, and 4e; 298.24, 2.36 subdivision 1; 298.28, subdivisions 1, 4, 5, 6, 10, 2.37 and 11; 461.12, by adding a subdivision; 469.1763, 2.38 subdivision 6; 469.177, subdivisions 1a and 11; 2.39 473.446, subdivision 1; 473F.08, subdivision 3; 2.40 473H.10, subdivision 3; 477A.011, subdivisions 3, 34, 2.41 and by adding subdivisions; 477A.013, subdivisions 1, 2.42 8, and 9; 477A.015; 477A.03, subdivision 2; and 2.43 477A.065, subdivision 1; Laws 2000, chapter 490, 2.44 article 7, section 3; proposing coding for new law in 2.45 Minnesota Statutes, chapters 16A; 126C; 270; 273; 275; 2.46 297A; 297F; and 297H; repealing Minnesota Statutes 2.47 2000, sections 16A.76; 126C.13, subdivision 1; 2.48 126C.18, subdivision 1; 273.13, subdivision 21b; 2.49 273.138; 273.1382; 273.1399; 275.065, subdivision 3a; 2.50 275.078; 275.08, subdivision 1e; 282.01, subdivisions 2.51 1c, 1d, and 1e; 289A.60, subdivision 15; 290.01, 2.52 subdivision 6b; 290.06, subdivision 25; 290.067; 2.53 290.0673; 290.091, subdivisions 1, 2, 3, 4, 5, and 6; 2.54 290.0921, subdivisions 1, 2, 3, 4, 5, 6, and 7; 2.55 290.21; 290.35, subdivisions 3, 4, and 5; 295.50, 2.56 subdivisions 10a, 14, and 15; 295.51, subdivision 1a; 2.57 295.52, subdivisions 3, 4, 4a, and 7; 295.54, 2.58 subdivisions 2 and 3; 297A.67, subdivisions 4, 6, 9, 2.59 10, 11, 12, 16, 17, 18, 19, and 25; 297A.68, 2.60 subdivisions 4, 6, 7, 8, 9, 10, 11, 12, 16, 18, 21, 2.61 22, 23, 24, 25, 26, 28, 29, 30, 31, 33, and 34; 2.62 297A.69, subdivisions 3, 5, 6, and 7; 297A.70, 2.63 subdivisions 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, and 2.64 16; 297A.82, subdivision 5; 297A.90; 297A.96; 297G.03, 2.65 subdivision 4; 297G.07, subdivision 3; 297I.05, 2.66 subdivisions 5 and 8; 297I.30, subdivision 3; 298.01, 2.67 subdivisions 3c and 4d; 469.132, subdivision 2; 2.68 469.1734, subdivisions 4 and 6; 477A.011, subdivisions 2.69 30, 31, 32, 33, 36, and 37; and 477A.03, subdivision 4. 2.70 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.1 ARTICLE 1 3.2 INDIVIDUAL INCOME TAX REFORM AND RELIEF 3.3 Section 1. Minnesota Statutes 2000, section 290.01, 3.4 subdivision 19b, is amended to read: 3.5 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 3.6 individuals, estates, and trusts, there shall be subtracted from 3.7 federal taxable income: 3.8 (1) interest income on obligations of any authority, 3.9 commission, or instrumentality of the United States to the 3.10 extent includable in taxable income for federal income tax 3.11 purposes but exempt from state income tax under the laws of the 3.12 United States; 3.13 (2) if included in federal taxable income, the amount of 3.14 any overpayment of income tax to Minnesota or to any other 3.15 state, for any previous taxable year, whether the amount is 3.16 received as a refund or as a credit to another taxable year's 3.17 income tax liability; 3.18 (3) the amount paid to others, less the credit allowed 3.19 under section 290.0674, not to exceed $1,625 for each qualifying 3.20 child in grades kindergarten to 6 and $2,500 for each qualifying 3.21 child in grades 7 to 12, for tuition,and textbooks, and3.22transportationof each qualifying child in attending an 3.23 elementary or secondary school situated in Minnesota, North 3.24 Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 3.25 this state may legally fulfill the state's compulsory attendance 3.26 laws, which is not operated for profit, and which adheres to the 3.27 provisions of the Civil Rights Act of 1964 and chapter 363. For 3.28 the purposes of this clause, "tuition" includes fees or tuition 3.29 as defined in section 290.0674, subdivision 1, clause (1). As 3.30 used in this clause, "textbooks"includes books and other3.31instructional materials and equipmentis limited to 3.32 instructional books used in elementary and secondary schools in 3.33 teaching only those subjects legally and commonly taught in 3.34 public elementary and secondary schools in this state. 3.35 Equipment expenses qualifying for deduction includes expenses as 3.36 defined and limited in section 290.0674, subdivision 1, clause 4.1 (3). "Textbooks" does not include instructional booksand4.2materialsused in the teaching of religious tenets, doctrines, 4.3 or worship, the purpose of which is to instill such tenets, 4.4 doctrines, or worship, nor does it include booksor materials4.5 for, or transportation to,extracurricular activities including 4.6 sporting events, musical or dramatic events, speech activities, 4.7 driver's education, or similar programs. For purposes of the 4.8 subtraction provided by this clause, "qualifying child" has the 4.9 meaning given in section 32(c)(3) of the Internal Revenue Code; 4.10 (4)contributions made in taxable years beginning after4.11December 31, 1981, and before January 1, 1985, to a qualified4.12governmental pension plan, an individual retirement account,4.13simplified employee pension, or qualified plan covering a4.14self-employed person that were included in Minnesota gross4.15income in the taxable year for which the contributions were made4.16but were deducted or were not included in the computation of4.17federal adjusted gross income, less any amount allowed to be4.18subtracted as a distribution under this subdivision or a4.19predecessor provision in taxable years that began before January4.201, 2000. This subtraction applies only for taxable years4.21beginning after December 31, 1999, and before January 1, 2001.4.22If an individual's subtraction under this clause exceeds the4.23individual's taxable income, the excess may be carried forward4.24to taxable years beginning after December 31, 2000, and before4.25January 1, 2002;4.26(5)income as provided under section 290.0802; 4.27(6) the amount of unrecovered accelerated cost recovery4.28system deductions allowed under subdivision 19g;4.29(7)(5) to the extent included in federal adjusted gross 4.30 income, income realized on disposition of property exempt from 4.31 tax under section 290.491; 4.32(8)(6) to the extent not deducted in determining federal 4.33 taxable income or used to claim the long-term care insurance 4.34 credit under section 290.0672, the amount paid for health 4.35 insurance of self-employed individuals as determined under 4.36 section 162(l) of the Internal Revenue Code, except that the 5.1 percent limit does not apply. If the individual deducted 5.2 insurance payments under section 213 of the Internal Revenue 5.3 Code of 1986, the subtraction under this clause must be reduced 5.4 by the lesser of: 5.5 (i) the total itemized deductions allowed under section 5.6 63(d) of the Internal Revenue Code, less state, local, and 5.7 foreign income taxes deductible under section 164 of the 5.8 Internal Revenue Code and the standard deduction under section 5.9 63(c) of the Internal Revenue Code; or 5.10 (ii) the lesser of (A) the amount of insurance qualifying 5.11 as "medical care" under section 213(d) of the Internal Revenue 5.12 Code to the extent not deducted under section 162(1) of the 5.13 Internal Revenue Code or excluded from income or (B) the total 5.14 amount deductible for medical care under section 213(a); 5.15(9)(7) the exemption amount allowed under Laws 1995, 5.16 chapter 255, article 3, section 2, subdivision 3; 5.17(10)(8) to the extent included in federal taxable income, 5.18 postservice benefits for youth community service under section 5.19 124D.42 for volunteer service under United States Code, title 5.20 42, sections 12601 to 12604; 5.21(11)(9) to the extent not deducted in determining federal 5.22 taxable income by an individual who does not itemize deductions 5.23 for federal income tax purposes for the taxable year, an amount 5.24 equal to 50 percent of the excess of charitable contributions 5.25 allowable as a deduction for the taxable year under section 5.26 170(a) of the Internal Revenue Code over $500; 5.27(12)(10) to the extent included in federal taxable income, 5.28 holocaust victims' settlement payments for any injury incurred 5.29 as a result of the holocaust, if received by an individual who 5.30 was persecuted for racial or religious reasons by Nazi Germany 5.31 or any other Axis regime or an heir of such a person; and 5.32(13)(11) for taxable years beginning before January 1, 5.33 2008, the amount of the federal small ethanol producer credit 5.34 allowed under section 40(a)(3) of the Internal Revenue Code 5.35 which is included in gross income under section 87 of the 5.36 Internal Revenue Code. 6.1 [EFFECTIVE DATE.] This section is effective for tax years 6.2 beginning after December 31, 2001. 6.3 Sec. 2. Minnesota Statutes 2000, section 290.06, 6.4 subdivision 2c, is amended to read: 6.5 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 6.6 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 6.7 married individuals filing joint returns and surviving spouses 6.8 as defined in section 2(a) of the Internal Revenue Code must be 6.9 computed by applying to their taxable net income the following 6.10 schedule of rates: 6.11 (1) On the first $25,680,5.354.95 percent; 6.12 (2) On all over $25,680, but not over $102,030,7.056.65 6.13 percent; 6.14 (3) On all over $102,030,7.857.45 percent. 6.15 Married individuals filing separate returns, estates, and 6.16 trusts must compute their income tax by applying the above rates 6.17 to their taxable income, except that the income brackets will be 6.18 one-half of the above amounts. 6.19 (b) The income taxes imposed by this chapter upon unmarried 6.20 individuals must be computed by applying to taxable net income 6.21 the following schedule of rates: 6.22 (1) On the first $17,570,5.354.95 percent; 6.23 (2) On all over $17,570, but not over $57,710,7.056.65 6.24 percent; 6.25 (3) On all over $57,710,7.857.45 percent. 6.26 (c) The income taxes imposed by this chapter upon unmarried 6.27 individuals qualifying as a head of household as defined in 6.28 section 2(b) of the Internal Revenue Code must be computed by 6.29 applying to taxable net income the following schedule of rates: 6.30 (1) On the first $21,630,5.354.95 percent; 6.31 (2) On all over $21,630, but not over $86,910,7.056.65 6.32 percent; 6.33 (3) On all over $86,910,7.857.45 percent. 6.34 For tax years beginning after December 31, 2002, and before 6.35 January 1, 2004, all of the percentage rates in this section are 6.36 reduced by one-tenth of a percent. For tax years beginning 7.1 after December 31, 2003, all of the percentage rates in this 7.2 section are reduced by two-tenths of a percent. 7.3 (d) In lieu of a tax computed according to the rates set 7.4 forth in this subdivision, the tax of any individual taxpayer 7.5 whose taxable net income for the taxable year is less than an 7.6 amount determined by the commissioner must be computed in 7.7 accordance with tables prepared and issued by the commissioner 7.8 of revenue based on income brackets of not more than $100. The 7.9 amount of tax for each bracket shall be computed at the rates 7.10 set forth in this subdivision, provided that the commissioner 7.11 may disregard a fractional part of a dollar unless it amounts to 7.12 50 cents or more, in which case it may be increased to $1. 7.13 (e) An individual who is not a Minnesota resident for the 7.14 entire year must compute the individual's Minnesota income tax 7.15 as provided in this subdivision. After the application of the 7.16 nonrefundable credits provided in this chapter, the tax 7.17 liability must then be multiplied by a fraction in which: 7.18 (1) the numerator is the individual's Minnesota source 7.19 federal adjusted gross income as defined in section 62 of the 7.20 Internal Revenue Code and increased by the additions required 7.21 under section 290.01, subdivision 19a, clauses (1) and (6), and 7.22 reduced by the Minnesota assignable portion of the subtraction 7.23 for United States government interest under section 290.01, 7.24 subdivision 19b, clause (1), after applying the allocation and 7.25 assignability provisions of section 290.081, clause (a), or 7.26 290.17; and 7.27 (2) the denominator is the individual's federal adjusted 7.28 gross income as defined in section 62 of the Internal Revenue 7.29 Code of 1986, increased by the amounts specified in section 7.30 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 7.31 amounts specified in section 290.01, subdivision 19b, clause (1). 7.32 [EFFECTIVE DATE.] This section is effective for tax years 7.33 beginning after December 31, 2000. 7.34 Sec. 3. Minnesota Statutes 2000, section 290.0671, 7.35 subdivision 1, is amended to read: 7.36 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 8.1 allowed a credit against the tax imposed by this chapter equal 8.2 to a percentage of earned income. To receive a credit, a 8.3 taxpayer must be eligible for a credit under section 32 of the 8.4 Internal Revenue Code. 8.5 (b) For individuals with no qualifying children, the credit 8.6 equals1.91252.85 percent of the first $4,460 of earned income. 8.7 The credit is reduced by1.91252.85 percent of earned income or 8.8 modified adjusted gross income, whichever is greater, in excess 8.9 of $5,570, but in no case is the credit less than zero. 8.10 (c) For individuals with one qualifying child, the credit 8.11 equals8.512.75 percent of the first $6,680 of earned income 8.12 and 8.5 percent of earned income over $11,650 but less than 8.13 $12,990. The credit is reduced by5.738.11 percent of earned 8.14 income or modified adjusted gross income, whichever is greater, 8.15 in excess of $14,560, but in no case is the credit less than 8.16 zero. 8.17 (d) For individuals with two or more qualifying children, 8.18 the credit equalsten15 percent of the first $9,390 of earned 8.19 income and 20 percent of earned income over $14,350 but less 8.20 than $16,230. The credit is reduced by10.313.92 percent of 8.21 earned income or modified adjusted gross income, whichever is 8.22 greater, in excess of $17,280, but in no case is the credit less 8.23 than zero. 8.24 (e) For tax years beginning after December 31, 2000, and 8.25 before January 1, 2003, individuals who qualify for a credit of 8.26 at least $1 under paragraph (c), the credit is increased by 8.27 $100. For tax years beginning after December 31, 2002, for 8.28 individuals who qualify for a credit of at least $1 under 8.29 paragraph (c), the credit is increased by $200. 8.30 (f) For tax years beginning after December 31, 2000, and 8.31 before January 1, 2003, individuals who qualify for a credit of 8.32 at least $1 under paragraph (d), the credit is increased by 8.33 $200. For tax years beginning after December 31, 2002, 8.34 individuals who qualify for a credit of at least $1 under 8.35 paragraph (d), the credit is increased by $400. 8.36 (g) For a nonresident or part-year resident, the credit 9.1 must be allocated based on the percentage calculated under 9.2 section 290.06, subdivision 2c, paragraph (e). 9.3(f)(h) For a person who was a resident for the entire tax 9.4 year and has earned income not subject to tax under this 9.5 chapter, the credit must be allocated based on the ratio of 9.6 federal adjusted gross income reduced by the earned income not 9.7 subject to tax under this chapter over federal adjusted gross 9.8 income. 9.9(g)(i) The commissioner shall construct tables showing the 9.10 amount of the credit at various income levels and make them 9.11 available to taxpayers. The tables shall follow the schedule 9.12 contained in this subdivision, except that the commissioner may 9.13 graduate the transition between income brackets. 9.14 [EFFECTIVE DATE.] This section is effective for tax years 9.15 beginning after December 31, 2000, except the changes in 9.16 paragraphs (b), (c), and (d) are effective for tax years 9.17 beginning after December 31, 2002. 9.18 Sec. 4. Minnesota Statutes 2000, section 290.0674, 9.19 subdivision 1, is amended to read: 9.20 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed 9.21 a credit against the tax imposed by this chapter in an amount 9.22 equal to 75 percent of the amount paid for education-related 9.23 expenses for a qualifying child in kindergarten through grade 9.24 12. For purposes of this section, "education-related expenses" 9.25 means: 9.26 (1) fees or tuition for instruction by an instructorunder9.27 who meets one of the requirements of section 120A.22, 9.28 subdivision 10, clause (1), (2), (3), (4), or (5), orbywho is 9.29 a member of the Minnesota music teachers association, and is not 9.30 a lineal ancestor or sibling of the dependent for instruction 9.31 outside the regular school day or school year, including 9.32 tutoring, driver's education offered as part of school 9.33 curriculum, regardless of whether it is taken from a public or 9.34 private entity or summer camps, in grade or age appropriate 9.35 curricula that supplement curricula and instruction available 9.36 during the regular school year, that assists a dependent to 10.1 improve knowledge of core curriculum areasor to expand10.2knowledge and skills under the graduation rule under section10.3120B.02listed in section 120A.22, subdivision 9, clauses (1), 10.4 (2), and (3), and that do not include the teaching of religious 10.5 tenets, doctrines, or worship, the purpose of which is to 10.6 instill such tenets, doctrines, or worship; 10.7 (2) expenses for textbooks, including books and other10.8instructional materials and equipmentused in elementary and 10.9 secondary schools in teaching only those subjects legally and 10.10 commonly taught in public elementary and secondary schools in 10.11 this state. "Textbooks" does not include instructional books 10.12and materialsused in the teaching of religious tenets, 10.13 doctrines, or worship, the purpose of which is to instill such 10.14 tenets, doctrines, or worship, nor does it include books or 10.15 materials for extracurricular activities including sporting 10.16 events, musical or dramatic events, speech activities, driver's 10.17 education, or similar programs; and 10.18 (3) a maximum expense of $200 per family for personal 10.19 computer hardware, excluding single purpose processors,and10.20educational software that assists a dependent to improve10.21knowledge of core curriculum areas or to expand knowledge and10.22skills under the graduation rule under section 120B.02purchased 10.23 for use in the taxpayer's home and not used in a trade or 10.24 business regardless of whether the computer is required by the 10.25 dependent's school; and10.26(4) the amount paid to others for transportation of a10.27qualifying child attending an elementary or secondary school10.28situated in Minnesota, North Dakota, South Dakota, Iowa, or10.29Wisconsin, wherein a resident of this state may legally fulfill10.30the state's compulsory attendance laws, which is not operated10.31for profit, and which adheres to the provisions of the Civil10.32Rights Act of 1964 and chapter 363. 10.33 For purposes of this section, "qualifying child" has the 10.34 meaning given in section 32(c)(3) of the Internal Revenue Code. 10.35 [EFFECTIVE DATE.] This section is effective tax years 10.36 beginning after December 31, 2001. 11.1 Sec. 5. Minnesota Statutes 2000, section 290.0674, 11.2 subdivision 2, is amended to read: 11.3 Subd. 2. [LIMITATIONS.] (a) For claimants with income not 11.4 greater than $33,500, the maximum credit allowed is $1,000 per 11.5 qualifying child and $2,000 per family. No credit is allowed 11.6 for education-related expenses for claimants with income greater 11.7 than $37,500. The maximum credit per child is reduced by $1 for 11.8 each $4 of household income over $33,500, and the maximum credit 11.9 per family is reduced by $2 for each $4 of household income over 11.10 $33,500, but in no case is the credit less than zero. 11.11 For purposes of this section "income" has the meaning given 11.12 in section290.067, subdivision 2a290A.03, subdivision 3, 11.13 paragraphs (1) and (2). In the case of a married claimant, a 11.14 credit is not allowed unless a joint income tax return is filed. 11.15 (b) For a nonresident or part-year resident, the credit 11.16 determined under subdivision 1 and the maximum credit amount in 11.17 paragraph (a) must be allocated using the percentage calculated 11.18 in section 290.06, subdivision 2c, paragraph (e). 11.19 [EFFECTIVE DATE.] This section is effective for tax years 11.20 beginning after December 31, 2001. 11.21 Sec. 6. Minnesota Statutes 2000, section 290.0675, 11.22 subdivision 1, is amended to read: 11.23 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 11.24 section the following terms have the meanings given. 11.25 (b) "Earned income" means the sum of the following: 11.26 (1) to the extent included in Minnesota taxable income, 11.27 earned income as defined in section 32(c)(2) of the Internal 11.28 Revenue Code; 11.29 (2) to the extent included in Minnesota taxable income, 11.30 income received from a retirement pension, profit-sharing, stock 11.31 bonus, or annuity plan; and 11.32 (3) to the extent included in Minnesota taxable income, 11.33 social security benefits as defined in section 86(d)(1) of the 11.34 Internal Revenue Code. 11.35 (c) "Taxable income" means net income as defined in section 11.36 290.01, subdivision 19. 12.1 (d) "Earned income of lesser-earning spouse" means the 12.2 earned income of the spouse with the lesser amount of earned 12.3 income as defined in paragraph (b) for the taxable year. 12.4 [EFFECTIVE DATE.] This section is effective for tax years 12.5 beginning after December 31, 2000. 12.6 Sec. 7. Minnesota Statutes 2000, section 290.0675, 12.7 subdivision 3, is amended to read: 12.8 Subd. 3. [CREDIT AMOUNT.] The credit amount isas shown in12.9the table in this subdivision, based on the couple's taxable12.10income for the tax year and on the earned income of the12.11lesser-earning spousethe difference between the tax on the 12.12 couple's joint Minnesota taxable income under the rates in 12.13 section 290.06, subdivision 2c, paragraph (a), and the sum of 12.14 the tax under the rates of section 290.06, subdivision 2c, 12.15 paragraph (b), on the earned income of the lesser-earning 12.16 spouse, and the tax under the rates of section 290.06, 12.17 subdivision 2c, paragraph (b), on the couple's joint Minnesota 12.18 taxable income, minus the earned income of the lesser-earning 12.19 spouse. 12.20Credit ForCredit For12.21Earned Income ofTaxable IncomeTaxable Income12.22Lesser Earning Spouse$25,680-$102,029$102,030-over12.23$14,250 - $15,249$7$012.24$15,250 - $16,249$24$012.25$16,250 - $17,249$41$012.26$17,250 - $18,249$58$012.27$18,250 - $19,249$75$012.28$19,250 - $20,249$92$012.29$20,250 - $21,249$109$012.30$21,250 - $22,249$126$012.31$22,250 - $23,249$143$012.32$23,250 - $24,249$160$012.33$24,250 - $25,249$161$012.34$25,250 - $26,249$161$012.35$26,250 - $27,249$161$012.36$27,250 - $28,249$161$013.1$28,250 - $29,249$161$013.2$29,250 - $30,249$161$013.3$30,250 - $31,249$161$013.4$31,250 - $32,249$161$613.5$32,250 - $33,249$161$1413.6$33,250 - $34,249$161$2213.7$34,250 - $35,249$161$3013.8$35,250 - $36,249$161$3813.9$36,250 - $37,249$161$4613.10$37,250 - $38,249$161$5413.11$38,250 - $39,249$161$6213.12$39,250 - $40,249$161$7013.13$40,250 - $41,249$161$7813.14$41,250 - $42,249$161$8613.15$42,250 - $43,249$161$9413.16$43,250 - $44,249$161$10213.17$44,250 - $45,249$161$11013.18$45,250 - $46,249$161$11813.19$46,250 - $47,249$161$12613.20$47,250 - $48,249$161$13413.21$48,250 - $49,249$161$14213.22$49,250 - $50,249$161$15013.23$50,250 - $51,249$161$15813.24$51,250 - $52,249$161$16613.25$52,250 - $53,249$161$17413.26$53,250 - $54,249$161$18213.27$54,250 - $55,249$161$19013.28$55,250 - $56,249$161$19813.29$56,250 - $57,249$161$20613.30$57,250 - $58,249$161$21413.31$58,250 - $59,249$161$22213.32$59,250 - $60,249$161$23013.33$60,250 - $61,249$161$23813.34$61,250 - $62,249$161$24613.35$62,250 - $63,249$161$25413.36$63,250 - $64,249$161$26214.1$64,250 and over$161$26814.2 For taxable years beginning after December 31, 2001, the 14.3 commissioner of revenue shall construct and make available to 14.4 taxpayers a comprehensive table showing the credit under this 14.5 section at brackets of earnings of the lesser-earning spouse and 14.6 joint taxable income. The brackets of earnings shall not be 14.7 more than $2,000. 14.8 For taxable years beginning after December 31,20002002, 14.9 the commissioner shall update the table as necessary to provide 14.10 a credit that reflects the relationship between the marginal tax 14.11 rates imposed under section 290.06, subdivision 2c. 14.12 [EFFECTIVE DATE.] This section is effective for tax years 14.13 beginning after December 31, 2000. 14.14 Sec. 8. Minnesota Statutes 2000, section 290.091, 14.15 subdivision 1, is amended to read: 14.16 Subdivision 1. [IMPOSITION OF TAX.] In addition to all 14.17 other taxes imposed by this chapter a tax is imposed on 14.18 individuals, estates, and trusts equal to the excess (if any) of 14.19 (a) an amount equal to6.46.0 percent of alternative 14.20 minimum taxable income after subtracting the exemption amount, 14.21 over 14.22 (b) the regular tax for the taxable year. 14.23 [EFFECTIVE DATE.] This section is effective for tax years 14.24 beginning after December 31, 2000. 14.25 Sec. 9. Minnesota Statutes 2000, section 290.091, 14.26 subdivision 6, is amended to read: 14.27 Subd. 6. [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) For tax 14.28 years beginning after December 31, 2000, and before January 1, 14.29 2002, a credit is allowed against the tax imposed by this 14.30 chapter on individuals, trusts, and estates equal to the minimum 14.31 tax credit for the taxable year. The minimum tax credit equals 14.32 the adjusted net minimum tax for taxable years beginning after 14.33 December 31, 1988, reduced by the minimum tax credits allowed in 14.34 a prior taxable year. The credit may not exceed the excess (if 14.35 any) for the taxable year of 14.36 (1) the regular tax, over 15.1 (2) the greater of (i) the tentative alternative minimum 15.2 tax, or (ii) zero. 15.3 (b) The adjusted net minimum tax for a taxable year equals 15.4 the lesser of the net minimum tax or the excess (if any) of 15.5 (1) the tentative minimum tax, over 15.6 (2)6.46.0 percent of the sum of 15.7 (i) adjusted gross income as defined in section 62 of the 15.8 Internal Revenue Code, 15.9 (ii) interest income as defined in section 290.01, 15.10 subdivision 19a, clause (1), 15.11 (iii) interest on specified private activity bonds, as 15.12 defined in section 57(a)(5) of the Internal Revenue Code, to the 15.13 extent not included under clause (ii), 15.14 (iv) depletion as defined in section 57(a)(1), determined 15.15 without regard to the last sentence of paragraph (1), of the 15.16 Internal Revenue Code, less 15.17 (v) the deductions allowed in computing alternative minimum 15.18 taxable income provided in subdivision 2, paragraph (a), clause 15.19 (2) of the first series of clauses and clauses (1), (2), and (3) 15.20 of the second series of clauses, and 15.21 (vi) the exemption amount determined under subdivision 3. 15.22 In the case of an individual who is not a Minnesota 15.23 resident for the entire year, adjusted net minimum tax must be 15.24 multiplied by the fraction defined in section 290.06, 15.25 subdivision 2c, paragraph (e). In the case of a trust or 15.26 estate, adjusted net minimum tax must be multiplied by the 15.27 fraction defined under subdivision 4, paragraph (b). 15.28 (c) For tax years beginning after December 31, 2001, and 15.29 before January 1, 2004, a credit is allowed against the tax 15.30 imposed by this chapter on individuals, trusts, and estates 15.31 equal to the minimum tax credit for the taxable year. The 15.32 minimum tax credit equals the adjusted net minimum tax for 15.33 taxable years beginning after December 31, 1988, and before 15.34 January 1, 2002, reduced by the minimum tax credits allowed in a 15.35 prior taxable year. The credit may not exceed the tax imposed 15.36 by this chapter after the allowance of the credits in sections 16.1 290.06, subdivisions 22, 22a, 26, and 28; 290.0672; and 290.075. 16.2 [EFFECTIVE DATE.] This section is effective for tax years 16.3 beginning after December 31, 2000. 16.4 Sec. 10. Minnesota Statutes 2000, section 290.92, 16.5 subdivision 3, is amended to read: 16.6 Subd. 3. [WITHHOLDING, IRREGULAR PERIOD.] If payment of 16.7 wages is made to an employee by an employer 16.8 (a) With respect to a payroll period or other period, any 16.9 part of which is included in a payroll period or other period 16.10 with respect to which wages are also paid to such employees by 16.11 such employer, or 16.12 (b) Without regard to any payroll period or other period, 16.13 but on or prior to the expiration of a payroll period or other 16.14 period with respect to which wages are also paid to such 16.15 employee by such employer, or 16.16 (c) With respect to a period beginning in one and ending in 16.17 another calendar year, or 16.18 (d) Through an agent, fiduciary, or other person who also 16.19 has the control, receipt, custody, or disposal of or pays, the 16.20 wages payable by another employer to such employee. 16.21 The manner of withholding and the amount to be deducted and 16.22 withheld under subdivision 2a shall be determined in accordance 16.23 with rules prescribed by the commissioner under which the 16.24 withholding exemption allowed to the employee in any calendar 16.25 year shall approximate the withholding exemption allowable with 16.26 respect to an annual payroll period, except that if supplemental 16.27 wages are not paid concurrent with a payroll period the employer 16.28 shall withhold tax on the supplemental payment at the rate of 16.296.255.85 percent as if no exemption had been claimed. 16.30 [EFFECTIVE DATE.] This section is effective for wages paid 16.31 after July 1, 2001. 16.32 Sec. 11. Minnesota Statutes 2000, section 290.92, 16.33 subdivision 28, is amended to read: 16.34 Subd. 28. [PAYMENTS TO HORSE RACING LICENSE HOLDERS.] 16.35 Effective with payments made after April 1, 1988, any holder of 16.36 a license issued by the Minnesota racing commission who makes a 17.1 payment for personal or professional services to a holder of a 17.2 class C license issued by the commission, except an amount paid 17.3 as a purse, shall deduct from the payment and withhold6.255.85 17.4 percent of the amount as Minnesota withholding tax when the 17.5 amount paid to that individual by the same person during the 17.6 calendar year exceeds $600. For purposes of the provisions of 17.7 this section, a payment to any person which is subject to 17.8 withholding under this subdivision must be treated as if the 17.9 payment was a wage paid by an employer to an employee. Every 17.10 individual who is to receive a payment which is subject to 17.11 withholding under this subdivision shall furnish the license 17.12 holder with a statement, made under the penalties of perjury, 17.13 containing the name, address, and social security account number 17.14 of the person receiving the payment. No withholding is required 17.15 if the individual presents a signed certificate from the 17.16 individual's employer which states that the individual is an 17.17 employee of that employer. A nonresident individual who holds a 17.18 class C license must be treated as an athlete for purposes of 17.19 applying the provisions of sections 290.17, subdivision 17.20 2(1)(b)(ii) and 290.92, subdivision 4a. 17.21 [EFFECTIVE DATE.] This section is effective for payments 17.22 made after July 1, 2001. 17.23 Sec. 12. Minnesota Statutes 2000, section 290.92, 17.24 subdivision 29, is amended to read: 17.25 Subd. 29. [LOTTERY PRIZES.]7.256.85 percent of the 17.26 payment of Minnesota state lottery winnings which are subject to 17.27 withholding must be withheld as Minnesota withholding tax. For 17.28 purposes of this subdivision, the term "winnings which are 17.29 subject to withholding" has the meaning given in section 17.30 3402(q)(3) of the Internal Revenue Code. For purposes of the 17.31 provisions of this section, a payment to any person of winnings 17.32 which are subject to withholding must be treated as if the 17.33 payment was a wage paid by an employer to an employee. Every 17.34 individual who is to receive a payment of winnings which are 17.35 subject to withholding shall furnish the state lottery with a 17.36 statement, made under the penalties of perjury, containing the 18.1 name, address, and social security account number of the person 18.2 receiving the payment. The Minnesota state lottery is liable 18.3 for the payment of the tax required to be withheld under this 18.4 subdivision but is not liable to any person for the amount of 18.5 the payment. 18.6 [EFFECTIVE DATE.] This section is effective for winnings 18.7 paid after July 1, 2001. 18.8 Sec. 13. [REPEALER.] 18.9 Minnesota Statutes 2000, sections 290.06, subdivision 25; 18.10 290.067; and 290.091, subdivisions 1, 2, 3, 4, 5, and 6, are 18.11 repealed. 18.12 [EFFECTIVE DATE.] This section is effective for tax years 18.13 beginning after December 31, 2001, except the repeal of section 18.14 290.091, subdivision 6, is effective for tax years beginning 18.15 after December 31, 2003. 18.16 ARTICLE 2 18.17 FEDERAL UPDATE 18.18 Section 1. Minnesota Statutes 2000, section 289A.02, 18.19 subdivision 7, is amended to read: 18.20 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 18.21 defined otherwise, "Internal Revenue Code" means the Internal 18.22 Revenue Code of 1986, as amended through December 31,19992000. 18.23 [EFFECTIVE DATE.] This section is effective the day 18.24 following final enactment. 18.25 Sec. 2. Minnesota Statutes 2000, section 290.01, 18.26 subdivision 19, is amended to read: 18.27 Subd. 19. [NET INCOME.] The term "net income" means the 18.28 federal taxable income, as defined in section 63 of the Internal 18.29 Revenue Code of 1986, as amended through the date named in this 18.30 subdivision, incorporating any elections made by the taxpayer in 18.31 accordance with the Internal Revenue Code in determining federal 18.32 taxable income for federal income tax purposes, and with the 18.33 modifications provided in subdivisions 19a to 19f. 18.34 In the case of a regulated investment company or a fund 18.35 thereof, as defined in section 851(a) or 851(g) of the Internal 18.36 Revenue Code, federal taxable income means investment company 19.1 taxable income as defined in section 852(b)(2) of the Internal 19.2 Revenue Code, except that: 19.3 (1) the exclusion of net capital gain provided in section 19.4 852(b)(2)(A) of the Internal Revenue Code does not apply; 19.5 (2) the deduction for dividends paid under section 19.6 852(b)(2)(D) of the Internal Revenue Code must be applied by 19.7 allowing a deduction for capital gain dividends and 19.8 exempt-interest dividends as defined in sections 852(b)(3)(C) 19.9 and 852(b)(5) of the Internal Revenue Code; and 19.10 (3) the deduction for dividends paid must also be applied 19.11 in the amount of any undistributed capital gains which the 19.12 regulated investment company elects to have treated as provided 19.13 in section 852(b)(3)(D) of the Internal Revenue Code. 19.14 The net income of a real estate investment trust as defined 19.15 and limited by section 856(a), (b), and (c) of the Internal 19.16 Revenue Code means the real estate investment trust taxable 19.17 income as defined in section 857(b)(2) of the Internal Revenue 19.18 Code. 19.19 The net income of a designated settlement fund as defined 19.20 in section 468B(d) of the Internal Revenue Code means the gross 19.21 income as defined in section 468B(b) of the Internal Revenue 19.22 Code. 19.23 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 19.24 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 19.25 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 19.26 Protection Act, Public Law Number 104-188, the provisions of 19.27 Public Law Number 104-117, the provisions of sections 313(a) and 19.28 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 19.29 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 19.30 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 19.31 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 19.32 Public Law Number 105-34, the provisions of section 6010 of the 19.33 Internal Revenue Service Restructuring and Reform Act of 1998, 19.34 Public Law Number 105-206, and the provisions of section 4003 of 19.35 the Omnibus Consolidated and Emergency Supplemental 19.36 Appropriations Act, 1999, Public Law Number 105-277, and the 20.1 provisions of section 318 of the Consolidated Appropriation Act 20.2 of 2001, Public Law Number 106-554, shall become effective at 20.3 the time they become effective for federal purposes. 20.4 The Internal Revenue Code of 1986, as amended through 20.5 December 31, 1996, shall be in effect for taxable years 20.6 beginning after December 31, 1996. 20.7 The provisions of sections 202(a) and (b), 221(a), 225, 20.8 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 20.9 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 20.10 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 20.11 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 20.12 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 20.13 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 20.14 7002, and 7003 of the Internal Revenue Service Restructuring and 20.15 Reform Act of 1998, Public Law Number 105-206, the provisions of 20.16 section 3001 of the Omnibus Consolidated and Emergency 20.17 Supplemental Appropriations Act, 1999, Public Law Number 20.18 105-277, and the provisions of section 3001 of the Miscellaneous 20.19 Trade and Technical Corrections Act of 1999, Public Law Number 20.20 106-36, and the provisions of section 316 of the Consolidated 20.21 Appropriation Act of 2001, Public Law Number 106-554, shall 20.22 become effective at the time they become effective for federal 20.23 purposes. 20.24 The Internal Revenue Code of 1986, as amended through 20.25 December 31, 1997, shall be in effect for taxable years 20.26 beginning after December 31, 1997. 20.27 The provisions of sections 5002, 6009, 6011, and 7001 of 20.28 the Internal Revenue Service Restructuring and Reform Act of 20.29 1998, Public Law Number 105-206, the provisions of section 9010 20.30 of the Transportation Equity Act for the 21st Century, Public 20.31 Law Number 105-178, the provisions of sections 1004, 4002, and 20.32 5301 of the Omnibus Consolidation and Emergency Supplemental 20.33 Appropriations Act, 1999, Public Law Number 105-277, the 20.34 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 20.35 Act of 1998, Public Law Number 105-369,andthe provisions of 20.36 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 21.1 Work Incentives Improvement Act of 1999, Public Law Number 21.2 106-170, the provisions of the Installment Tax Correction Act of 21.3 2000, Public Law Number 106-573, and the provisions of section 21.4 309 of the Consolidated Appropriation Act of 2001, Public Law 21.5 Number 106-554, shall become effective at the time they become 21.6 effective for federal purposes. 21.7 The Internal Revenue Code of 1986, as amended through 21.8 December 31, 1998, shall be in effect for taxable years 21.9 beginning after December 31, 1998. 21.10 The provisions of the FSC Repeal and Extraterritorial 21.11 Income Exclusion Act of 2000, Public Law Number 106-519, shall 21.12 become effective at the time it became effective for federal 21.13 purposes. 21.14 The Internal Revenue Code of 1986, as amended through 21.15 December 31, 1999, shall be in effect for taxable years 21.16 beginning after December 31, 1999. The provisions of sections 21.17 306 and 401 of the Consolidated Appropriation Act of 2001, 21.18 Public Law Number 106-554, shall become effective at the same 21.19 time it became effective for federal purposes. 21.20 The Internal Revenue Code of 1986, as amended through 21.21 December 31, 2000, shall be in effect for taxable years 21.22 beginning after December 31, 2000. 21.23 Except as otherwise provided, references to the Internal 21.24 Revenue Code in subdivisions 19a to 19g mean the code in effect 21.25 for purposes of determining net income for the applicable year. 21.26 [EFFECTIVE DATE.] This section is effective the day 21.27 following final enactment. 21.28 Sec. 3. Minnesota Statutes 2000, section 290.01, 21.29 subdivision 31, is amended to read: 21.30 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 21.31 defined otherwise, "Internal Revenue Code" means the Internal 21.32 Revenue Code of 1986, as amended through December 31,19992000. 21.33 [EFFECTIVE DATE.] This section is effective at the same 21.34 time and in the same manner as the federal changes made by the 21.35 FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 21.36 Public Law Number 106-519, and the Consolidated Appropriation 22.1 Act of 2001, Public Law Number 106-554, becomes effective. 22.2 Sec. 4. Minnesota Statutes 2000, section 290.191, 22.3 subdivision 5, is amended to read: 22.4 Subd. 5. [DETERMINATION OF SALES FACTOR.] For purposes of 22.5 this section, the following rules apply in determining the sales 22.6 factor. 22.7 (a) The sales factor includes all sales, gross earnings, or 22.8 receipts received in the ordinary course of the business, except 22.9 that the following types of income are not included in the sales 22.10 factor: 22.11 (1) interest; 22.12 (2) dividends; 22.13 (3) sales of capital assets as defined in section 1221 of 22.14 the Internal Revenue Code; 22.15 (4) sales of property used in the trade or business, except 22.16 sales of leased property of a type which is regularly sold as 22.17 well as leased; 22.18 (5) sales of debt instruments as defined in section 22.19 1275(a)(1) of the Internal Revenue Code or sales of stock;and22.20 (6) royalties, fees, or other like income of a type which 22.21 qualify for a subtraction from federal taxable income under 22.22 section 290.01, subdivision 19(d)(11); and 22.23 (7) all sales, gross earnings, or receipts used to generate 22.24 income excluded under section 114 of the Internal Revenue Code. 22.25 (b) Sales of tangible personal property are made within 22.26 this state if the property is received by a purchaser at a point 22.27 within this state, and the taxpayer is taxable in this state, 22.28 regardless of the f.o.b. point, other conditions of the sale, or 22.29 the ultimate destination of the property. 22.30 (c) Tangible personal property delivered to a common or 22.31 contract carrier or foreign vessel for delivery to a purchaser 22.32 in another state or nation is a sale in that state or nation, 22.33 regardless of f.o.b. point or other conditions of the sale. 22.34 (d) Notwithstanding paragraphs (b) and (c), when 22.35 intoxicating liquor, wine, fermented malt beverages, cigarettes, 22.36 or tobacco products are sold to a purchaser who is licensed by a 23.1 state or political subdivision to resell this property only 23.2 within the state of ultimate destination, the sale is made in 23.3 that state. 23.4 (e) Sales made by or through a corporation that is 23.5 qualified as a domestic international sales corporation under 23.6 section 992 of the Internal Revenue Code are not considered to 23.7 have been made within this state. 23.8 (f) Sales, rents, royalties, and other income in connection 23.9 with real property is attributed to the state in which the 23.10 property is located. 23.11 (g) Receipts from the lease or rental of tangible personal 23.12 property, including finance leases and true leases, must be 23.13 attributed to this state if the property is located in this 23.14 state and to other states if the property is not located in this 23.15 state. Receipts from the lease or rental of moving property 23.16 including, but not limited to, motor vehicles, rolling stock, 23.17 aircraft, vessels, or mobile equipment are included in the 23.18 numerator of the receipts factor to the extent that the property 23.19 is used in this state. The extent of the use of moving property 23.20 is determined as follows: 23.21 (1) A motor vehicle is used wholly in the state in which it 23.22 is registered. 23.23 (2) The extent that rolling stock is used in this state is 23.24 determined by multiplying the receipts from the lease or rental 23.25 of the rolling stock by a fraction, the numerator of which is 23.26 the miles traveled within this state by the leased or rented 23.27 rolling stock and the denominator of which is the total miles 23.28 traveled by the leased or rented rolling stock. 23.29 (3) The extent that an aircraft is used in this state is 23.30 determined by multiplying the receipts from the lease or rental 23.31 of the aircraft by a fraction, the numerator of which is the 23.32 number of landings of the aircraft in this state and the 23.33 denominator of which is the total number of landings of the 23.34 aircraft. 23.35 (4) The extent that a vessel, mobile equipment, or other 23.36 mobile property is used in the state is determined by 24.1 multiplying the receipts from the lease or rental of the 24.2 property by a fraction, the numerator of which is the number of 24.3 days during the taxable year the property was in this state and 24.4 the denominator of which is the total days in the taxable year. 24.5 (h) Royalties and other income not described in paragraph 24.6 (a), clause (6), received for the use of or for the privilege of 24.7 using intangible property, including patents, know-how, 24.8 formulas, designs, processes, patterns, copyrights, trade names, 24.9 service names, franchises, licenses, contracts, customer lists, 24.10 or similar items, must be attributed to the state in which the 24.11 property is used by the purchaser. If the property is used in 24.12 more than one state, the royalties or other income must be 24.13 apportioned to this state pro rata according to the portion of 24.14 use in this state. If the portion of use in this state cannot 24.15 be determined, the royalties or other income must be excluded 24.16 from both the numerator and the denominator. Intangible 24.17 property is used in this state if the purchaser uses the 24.18 intangible property or the rights therein in the regular course 24.19 of its business operations in this state, regardless of the 24.20 location of the purchaser's customers. 24.21 (i) Sales of intangible property are made within the state 24.22 in which the property is used by the purchaser. If the property 24.23 is used in more than one state, the sales must be apportioned to 24.24 this state pro rata according to the portion of use in this 24.25 state. If the portion of use in this state cannot be 24.26 determined, the sale must be excluded from both the numerator 24.27 and the denominator of the sales factor. Intangible property is 24.28 used in this state if the purchaser used the intangible property 24.29 in the regular course of its business operations in this state. 24.30 (j) Receipts from the performance of services must be 24.31 attributed to the state where the services are received. For 24.32 the purposes of this section, receipts from the performance of 24.33 services provided to a corporation, partnership, or trust may 24.34 only be attributed to a state where it has a fixed place of 24.35 doing business. If the state where the services are received is 24.36 not readily determinable or is a state where the corporation, 25.1 partnership, or trust receiving the service does not have a 25.2 fixed place of doing business, the services shall be deemed to 25.3 be received at the location of the office of the customer from 25.4 which the services were ordered in the regular course of the 25.5 customer's trade or business. If the ordering office cannot be 25.6 determined, the services shall be deemed to be received at the 25.7 office of the customer to which the services are billed. 25.8 [EFFECTIVE DATE.] This section is effective for 25.9 transactions after September 30, 2000. 25.10 Sec. 5. Minnesota Statutes 2000, section 290A.03, 25.11 subdivision 15, is amended to read: 25.12 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 25.13 means the Internal Revenue Code of 1986, as amended through 25.14 December 31,19992000. 25.15 [EFFECTIVE DATE.] This section is effective the day 25.16 following final enactment. 25.17 Sec. 6. Minnesota Statutes 2000, section 291.005, 25.18 subdivision 1, is amended to read: 25.19 Subdivision 1. Unless the context otherwise clearly 25.20 requires, the following terms used in this chapter shall have 25.21 the following meanings: 25.22 (1) "Federal gross estate" means the gross estate of a 25.23 decedent as valued and otherwise determined for federal estate 25.24 tax purposes by federal taxing authorities pursuant to the 25.25 provisions of the Internal Revenue Code. 25.26 (2) "Minnesota gross estate" means the federal gross estate 25.27 of a decedent after (a) excluding therefrom any property 25.28 included therein which has its situs outside Minnesota and (b) 25.29 including therein any property omitted from the federal gross 25.30 estate which is includable therein, has its situs in Minnesota, 25.31 and was not disclosed to federal taxing authorities. 25.32 (3) "Personal representative" means the executor, 25.33 administrator or other person appointed by the court to 25.34 administer and dispose of the property of the decedent. If 25.35 there is no executor, administrator or other person appointed, 25.36 qualified, and acting within this state, then any person in 26.1 actual or constructive possession of any property having a situs 26.2 in this state which is included in the federal gross estate of 26.3 the decedent shall be deemed to be a personal representative to 26.4 the extent of the property and the Minnesota estate tax due with 26.5 respect to the property. 26.6 (4) "Resident decedent" means an individual whose domicile 26.7 at the time of death was in Minnesota. 26.8 (5) "Nonresident decedent" means an individual whose 26.9 domicile at the time of death was not in Minnesota. 26.10 (6) "Situs of property" means, with respect to real 26.11 property, the state or country in which it is located; with 26.12 respect to tangible personal property, the state or country in 26.13 which it was normally kept or located at the time of the 26.14 decedent's death; and with respect to intangible personal 26.15 property, the state or country in which the decedent was 26.16 domiciled at death. 26.17 (7) "Commissioner" means the commissioner of revenue or any 26.18 person to whom the commissioner has delegated functions under 26.19 this chapter. 26.20 (8) "Internal Revenue Code" means the United States 26.21 Internal Revenue Code of 1986, as amended through December 31, 26.2219992000. 26.23 [EFFECTIVE DATE.] This section is effective the day 26.24 following final enactment. 26.25 ARTICLE 3 26.26 CORPORATE FRANCHISE TAX REFORM 26.27 Section 1. Minnesota Statutes 2000, section 290.01, is 26.28 amended by adding a subdivision to read: 26.29 Subd. 5b. [DEFINITION OF INSURANCE COMPANY.] The terms 26.30 "insurance company," "life insurance company," and "insurance 26.31 company other than life" have the meanings given in the Internal 26.32 Revenue Code. 26.33 [EFFECTIVE DATE.] This section is effective for tax years 26.34 beginning after December 31, 2000. 26.35 Sec. 2. Minnesota Statutes 2000, section 290.01, 26.36 subdivision 19c, is amended to read: 27.1 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 27.2 INCOME.] For corporations, there shall be added to federal 27.3 taxable income: 27.4 (1) the amount of any deduction taken for federal income 27.5 tax purposes for income, excise, or franchise taxes based on net 27.6 income or related minimum taxes, including but not limited to 27.7 the tax imposed under section 290.0922, paid by the corporation 27.8 to Minnesota, another state, a political subdivision of another 27.9 state, the District of Columbia, or any foreign country or 27.10 possession of the United States; 27.11 (2) interest not subject to federal tax upon obligations 27.12 of: the United States, its possessions, its agencies, or its 27.13 instrumentalities; the state of Minnesota or any other state, 27.14 any of its political or governmental subdivisions, any of its 27.15 municipalities, or any of its governmental agencies or 27.16 instrumentalities; the District of Columbia; or Indian tribal 27.17 governments; 27.18 (3) exempt-interest dividends received as defined in 27.19 section 852(b)(5) of the Internal Revenue Code; 27.20 (4) the amount of any net operating loss deduction taken 27.21 for federal income tax purposes under section 172 or 832(c)(10) 27.22 of the Internal Revenue Code or operations loss deduction under 27.23 section 810 of the Internal Revenue Code; 27.24(5) the amount of any special deductions taken for federal27.25income tax purposes under sections 241 to 247 of the Internal27.26Revenue Code;27.27(6)(5) losses from the business of mining, as defined in 27.28 section 290.05, subdivision 1, clause (a), that are not subject 27.29 to Minnesota income tax; 27.30(7)(6) the amount of any capital losses deducted for 27.31 federal income tax purposes under sections 1211 and 1212 of the 27.32 Internal Revenue Code; 27.33(8) the amount of any charitable contributions deducted for27.34federal income tax purposes under section 170 of the Internal27.35Revenue Code;27.36(9)(7) the exempt foreign trade income of a foreign sales 28.1 corporation under sections 921(a) and 291 of the Internal 28.2 Revenue Code; 28.3(10) the amount of percentage depletion deducted under28.4sections 611 through 614 and 291 of the Internal Revenue Code;28.5(11) for certified pollution control facilities placed in28.6service in a taxable year beginning before December 31, 1986,28.7and for which amortization deductions were elected under section28.8169 of the Internal Revenue Code of 1954, as amended through28.9December 31, 1985, the amount of the amortization deduction28.10allowed in computing federal taxable income for those28.11facilities;28.12(12) the amount of any deemed dividend from a foreign28.13operating corporation determined pursuant to section 290.17,28.14subdivision 4, paragraph (g);28.15(13) the amount of any environmental tax paid under section28.1659(a) of the Internal Revenue Code; and 28.17(14)(8) the amount of a partner's pro rata share of net 28.18 income which does not flow through to the partner because the 28.19 partnership elected to pay the tax on the income under section 28.20 6242(a)(2) of the Internal Revenue Code. 28.21 [EFFECTIVE DATE.] This section is effective for tax years 28.22 beginning after December 31, 2000. 28.23 Sec. 3. Minnesota Statutes 2000, section 290.01, 28.24 subdivision 19d, is amended to read: 28.25 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 28.26 TAXABLE INCOME.] For corporations, there shall be subtracted 28.27 from federal taxable income after the increases provided in 28.28 subdivision 19c: 28.29 (1) the amount of foreign dividend gross-up added to gross 28.30 income for federal income tax purposes under section 78 of the 28.31 Internal Revenue Code; 28.32 (2) the amount of salary expense not allowed for federal 28.33 income tax purposes due to claiming the federal jobs credit 28.34 under section 51 of the Internal Revenue Code; 28.35(3) any dividend (not including any distribution in28.36liquidation) paid within the taxable year by a national or state29.1bank to the United States, or to any instrumentality of the29.2United States exempt from federal income taxes, on the preferred29.3stock of the bank owned by the United States or the29.4instrumentality;29.5(4)(3) amounts disallowed for intangible drilling costs 29.6 due to differences between this chapter and the Internal Revenue 29.7 Code in taxable years beginning before January 1, 1987, as 29.8 follows: 29.9 (i) to the extent the disallowed costs are represented by 29.10 physical property, an amount equal to the allowance for 29.11 depreciation under Minnesota Statutes 1986, section 290.09, 29.12 subdivision 7, subject to the modifications contained in 29.13 subdivision 19e; and 29.14 (ii) to the extent the disallowed costs are not represented 29.15 by physical property, an amount equal to the allowance for cost 29.16 depletion under Minnesota Statutes 1986, section 290.09, 29.17 subdivision 8; except that 29.18 (iii) this subtraction is permitted for the tax year ending 29.19 before December 31, 2002. Disallowed amounts remaining after 29.20 the tax year ending December 31, 2000, must be subtracted from 29.21 federal taxable income under this subdivision in two equal 29.22 portions in tax years 2001 and 2002; 29.23(5)(4) the deduction for capital losses pursuant to 29.24 sections 1211 and 1212 of the Internal Revenue Code, except that: 29.25 (i) for capital losses incurred in taxable years beginning 29.26 after December 31, 1986, capital loss carrybacks shall not be 29.27 allowed; and 29.28 (ii) for capital losses incurred in taxable years beginning 29.29 after December 31, 1986, a capital loss carryover to each of the 29.30 15 taxable years succeeding the loss year shall be allowed; 29.31(iii) for capital losses incurred in taxable years29.32beginning before January 1, 1987, a capital loss carryback to29.33each of the three taxable years preceding the loss year, subject29.34to the provisions of Minnesota Statutes 1986, section 290.16,29.35shall be allowed; and29.36(iv) for capital losses incurred in taxable years beginning30.1before January 1, 1987, a capital loss carryover to each of the30.2five taxable years succeeding the loss year to the extent such30.3loss was not used in a prior taxable year and subject to the30.4provisions of Minnesota Statutes 1986, section 290.16, shall be30.5allowed;30.6(6)(5) an amount for interest and expenses relating to 30.7 income not taxable for federal income tax purposes, if (i) the 30.8 income is taxable under this chapter and (ii) the interest and 30.9 expenses were disallowed as deductions under the provisions of 30.10 section 171(a)(2), 265 or 291 of the Internal Revenue Code in 30.11 computing federal taxable income; 30.12(7) in the case of mines, oil and gas wells, other natural30.13deposits, and timber for which percentage depletion was30.14disallowed pursuant to subdivision 19c, clause (11), a30.15reasonable allowance for depletion based on actual cost. In the30.16case of leases the deduction must be apportioned between the30.17lessor and lessee in accordance with rules prescribed by the30.18commissioner. In the case of property held in trust, the30.19allowable deduction must be apportioned between the income30.20beneficiaries and the trustee in accordance with the pertinent30.21provisions of the trust, or if there is no provision in the30.22instrument, on the basis of the trust's income allocable to30.23each;30.24(8) for(6) certified pollution control facilitiesplaced30.25in service in a taxable year beginning before December 31, 1986,30.26and for which amortization deductions were elected under section30.27169 of the Internal Revenue Code of 1954, as amended through30.28December 31, 1985, an amount equal to the allowance for30.29depreciation under Minnesota Statutes 1986, section 290.09,30.30subdivision 7amortization deduction amounts remaining after the 30.31 tax year ending December 31, 2000, must be subtracted from 30.32 federal taxable income under this subdivision in two equal 30.33 portions in tax years 2001 and 2002; 30.34(9) the amount included in federal taxable income30.35attributable to the credits provided in Minnesota Statutes 1986,30.36section 273.1314, subdivision 9, or Minnesota Statutes, section31.1469.171, subdivision 6;31.2(10)(7) amounts included in federal taxable income that 31.3 are due to refunds of income, excise, or franchise taxes based 31.4 on net income or related minimum taxes paid by the corporation 31.5 to Minnesota, another state, a political subdivision of another 31.6 state, the District of Columbia, or a foreign country or 31.7 possession of the United States to the extent that the taxes 31.8 were added to federal taxable income under section 290.01, 31.9 subdivision 19c, clause (1), in a prior taxable year; 31.10(11) 80 percent of royalties, fees, or other like income31.11accrued or received from a foreign operating corporation or a31.12foreign corporation which is part of the same unitary business31.13as the receiving corporation;31.14(12)(8) income or gains from the business of mining as 31.15 defined in section 290.05, subdivision 1, clause (a), that are 31.16 not subject to Minnesota franchise tax; 31.17(13)(9) the amount of handicap access expenditures in the 31.18 taxable year which are not allowed to be deducted or capitalized 31.19 under section 44(d)(7) of the Internal Revenue Code; 31.20(14)(10) the amount of qualified research expenses not 31.21 allowed for federal income tax purposes under section 280C(c) of 31.22 the Internal Revenue Code, but only to the extent that the 31.23 amount exceeds the amount of the credit allowed under section 31.24 290.068; 31.25(15)(11) the amount of salary expenses not allowed for 31.26 federal income tax purposes due to claiming the Indian 31.27 employment credit under section 45A(a) of the Internal Revenue 31.28 Code; 31.29(16)(12) the amount of any refund of environmental taxes 31.30 paid under section 59A of the Internal Revenue Code; and 31.31(17)(13) for taxable years beginning before January 1, 31.32 2008, the amount of the federal small ethanol producer credit 31.33 allowed under section 40(a)(3) of the Internal Revenue Code 31.34 which is included in gross income under section 87 of the 31.35 Internal Revenue Code. 31.36 [EFFECTIVE DATE.] This section is effective for tax years 32.1 beginning after December 31, 2000. 32.2 Sec. 4. Minnesota Statutes 2000, section 290.01, 32.3 subdivision 29, is amended to read: 32.4 Subd. 29. [TAXABLE INCOME.]For tax years beginning after32.5December 31, 1986,The term "taxable income" means: 32.6 (1) for individuals, estates, and trusts, the same as 32.7 taxable net income; 32.8 (2) for corporations, including insurance companies, the 32.9 taxable net income less 32.10(i)the net operating loss deduction under section 290.095;32.11(ii) the dividends received deduction under section 290.21,32.12subdivision 4; and32.13(iii) the charitable contribution deduction under section32.14290.21, subdivision 3. 32.15 [EFFECTIVE DATE.] This section is effective for tax years 32.16 beginning after December 31, 2000. 32.17 Sec. 5. Minnesota Statutes 2000, section 290.02, is 32.18 amended to read: 32.19 290.02 [FRANCHISE TAX ON CORPORATIONS MEASURED BY NET 32.20 INCOME.] 32.21 An annual franchise tax on the exercise of the corporate 32.22 franchise to engage in contacts with this state that produce 32.23 gross income attributable to sources within this state is 32.24 imposed upon every corporation that so exercises its franchise 32.25 during the taxable year. 32.26 Contacts within this state do not include transportation in 32.27 interstate or foreign commerce, or both, by means of ships 32.28 navigating within or through waters that are made international 32.29 for navigation purposes by any treaty or agreement to which the 32.30 United States is a party. 32.31 The tax so imposed is measured by the corporations' taxable 32.32 incomeand alternative minimum taxable incomefor the taxable 32.33 year for which the tax is imposed, and computed in the manner 32.34 and at the rates provided in this chapter. 32.35 [EFFECTIVE DATE.] This section is effective for tax years 32.36 beginning after December 31, 2000. 33.1 Sec. 6. Minnesota Statutes 2000, section 290.05, 33.2 subdivision 1, is amended to read: 33.3 Subdivision 1. [EXEMPT ENTITIES.] The following 33.4 corporations, individuals, estates, trusts, and organizations 33.5 shall be exempted from taxation under this chapter, provided 33.6 that every such person or corporation claiming exemption under 33.7 this chapter, in whole or in part, must establish to the 33.8 satisfaction of the commissioner the taxable status of any 33.9 income or activity: 33.10 (a) corporations, individuals, estates, and trusts engaged 33.11 in the business of mining or producing iron ore and other ores 33.12 the mining or production of which is subject to the occupation 33.13 tax imposed by section 298.01; but if any such corporation, 33.14 individual, estate, or trust engages in any other business or 33.15 activity or has income from any property not used in such 33.16 business it shall be subject to this tax computed on the net 33.17 income from such property or such other business or activity. 33.18 Royalty shall not be considered as income from the business of 33.19 mining or producing iron ore within the meaning of this section; 33.20 (b) the United States of America, the state of Minnesota or 33.21 any political subdivision of either agencies or 33.22 instrumentalities, whether engaged in the discharge of 33.23 governmental or proprietary functions; 33.24 (c) any insurance company that is domiciled in a state or 33.25 country other than Minnesota that imposes retaliatory taxes, 33.26 fines, deposits, penalties, licenses, or fees and that does not 33.27 grant, on a reciprocal basis, exemption from such retaliatory 33.28 taxes to insurance companies or their agents domiciled in 33.29 Minnesota. "Retaliatory taxes" means taxes imposed on insurance 33.30 companies organized in another state or country that result from 33.31 the fact that an insurance company organized in the taxing 33.32 jurisdiction and doing business in the other jurisdiction is 33.33 subject to taxes, fines, deposits, penalties, licenses, or fees 33.34 in an amount exceeding that imposed by the taxing jurisdiction 33.35 upon an insurance company organized in the other state or 33.36 country and doing business to the same extent in the taxing 34.1 jurisdiction;and34.2 (d) town and farmers' mutual insurance companies and mutual 34.3 property and casualty insurance companies, other than those (1) 34.4 writing life insurance or (2) whose total assets on December 31, 34.5 1989, exceeded $1,600,000,000; and 34.6 (e) insurance companies that have a premium tax liability 34.7 under section 297I.05. 34.8 [EFFECTIVE DATE.] This section is effective for tax years 34.9 beginning after December 31, 2000. 34.10 Sec. 7. Minnesota Statutes 2000, section 290.05, 34.11 subdivision 3, is amended to read: 34.12 Subd. 3. [TAXES IMPOSED ON EXEMPT ENTITIES.] (a) An 34.13 organization exempt from taxation under subdivision 2 shall, 34.14 nevertheless, be subject to tax under this chapter to the extent 34.15 provided in the following provisions of the Internal Revenue 34.16 Code: 34.17 (i) section 527 (dealing with political organizations); 34.18 (ii) section 528 (dealing with certain homeowners 34.19 associations); 34.20 (iii) sections 511 to 515 (dealing with unrelated business 34.21 income); 34.22 (iv) section 521 (dealing with farmers' cooperatives); and 34.23 (v) section 6033(e)(2) (dealing with lobbying expense); but 34.24 notwithstanding this subdivision, shall be considered an 34.25 organization exempt from income tax for the purposes of any law 34.26 which refers to organizations exempt from income taxes. 34.27 (b) The tax shall be imposed on the taxable income of 34.28 political organizations or homeowner associations or the 34.29 unrelated business taxable income, as defined in section 512 of 34.30 the Internal Revenue Code, of organizations defined in section 34.31 511 of the Internal Revenue Code, provided that the tax is not 34.32 imposed on: 34.33 (1) advertising revenues from a newspaper published by an 34.34 organization described in section 501(c)(4) of the Internal 34.35 Revenue Code; or 34.36 (2) revenues from lawful gambling authorized under chapter 35.1 349 that are expended for purposes that qualify for the 35.2 deduction for charitable contributions under section 170 of the 35.3 Internal Revenue Code, disregarding the limitation under section 35.4 170(b)(2), but only to the extent the contributions are not 35.5 deductible in computing federal taxable income. 35.6 The tax shall be at the corporate rates. The tax shall 35.7 only be imposed on income and deductions assignable to this 35.8 state under sections 290.17 to 290.20.To the extent deducted35.9in computing federal taxable income, the deductions contained in35.10section 290.21 shall not be allowed in computing Minnesota35.11taxable net income.35.12 (c) The tax shall be imposed on organizations subject to 35.13 federal tax under section 6033(e)(2) of the Internal Revenue 35.14 Code, in an amount equal to the corporate tax rate multiplied by 35.15 the amount of lobbying expenses taxed under section 6033(e)(2) 35.16 which are attributable to lobbying the Minnesota state 35.17 government. 35.18 [EFFECTIVE DATE.] This section is effective for tax years 35.19 beginning after December 31, 2000. 35.20 Sec. 8. Minnesota Statutes 2000, section 290.06, 35.21 subdivision 1, is amended to read: 35.22 Subdivision 1. [COMPUTATION, CORPORATIONS.] The franchise 35.23 tax imposed upon corporations shall be computed by applying to 35.24 their taxable income the rate of9.89.4 percent. 35.25 [EFFECTIVE DATE.] This section is effective for tax years 35.26 beginning after December 31, 2000. 35.27 Sec. 9. Minnesota Statutes 2000, section 290.068, 35.28 subdivision 2, is amended to read: 35.29 Subd. 2. [DEFINITIONS.] For purposes of this section, the 35.30 following terms have the meanings given. 35.31 (a) "Qualified research expenses" means (i) qualified 35.32 research expenses and basic research payments as defined in 35.33 section 41(b) and (e) of the Internal Revenue Code, except it 35.34 does not include expenses incurred for qualified research or 35.35 basic research conducted outside the state of Minnesota pursuant 35.36 to section 41(d) and (e) of the Internal Revenue Code; and (ii) 36.1 contributions to a nonprofit corporation established and 36.2 operated pursuant to the provisions of chapter 317A for the 36.3 purpose of promoting the establishment and expansion of business 36.4 in this state, provided the contributions are invested by the 36.5 nonprofit corporation for the purpose of providing funds for 36.6 small, technologically innovative enterprises in Minnesota 36.7 during the early stages of their development. 36.8 (b) "Qualified research" means qualified research as 36.9 defined in section 41(d) of the Internal Revenue Code, except 36.10 that the term does not include qualified research conducted 36.11 outside the state of Minnesota. 36.12 (c) "Base amount" meansbase amount as defined in section36.1341(c) of the Internal Revenue Code, except that the average36.14annual gross receipts must be calculated using Minnesota sales36.15or receipts under section 290.191 and the definitions contained36.16in clauses (a) and (b) shall applythe average of qualified 36.17 research expenses as defined in paragraph (a) for the five 36.18 taxable years preceding the taxable year for which the credit is 36.19 being determined. 36.20 [EFFECTIVE DATE.] This section is effective for tax years 36.21 beginning after December 31, 2000. 36.22 Sec. 10. Minnesota Statutes 2000, section 290.068, is 36.23 amended by adding a subdivision to read: 36.24 Subd. 2a. [INITIAL RESEARCH EXPENSE.] In the first taxable 36.25 year in which a taxpayer has qualified research expenses, the 36.26 base amount equals "zero." In the second through the fifth 36.27 years, the base amount must be calculated using the average of 36.28 qualified research expenses for the taxable years which precede 36.29 the tax year for which the credit is being determined. 36.30 [EFFECTIVE DATE.] This section is effective for tax years 36.31 beginning after December 31, 2000. 36.32 Sec. 11. Minnesota Statutes 2000, section 290.0921, 36.33 subdivision 8, is amended to read: 36.34 Subd. 8. [CARRYOVER CREDIT.] (a) A corporation is allowed 36.35 a credit against qualified regular tax for qualified alternative 36.36 minimum tax previously paid. The credit is allowable only 37.1 ifthe corporation has no tax liability under this section for37.2the taxable year and ifthe corporation has an alternative 37.3 minimum tax credit carryover from a previous year. The credit 37.4 allowable in a taxable year equalsthe lesser of37.5(1) the excess of the qualified regular tax for the taxable37.6year over the amount computed under subdivision 1, clause (1),37.7for the taxable year or37.8(2)the carryover credit to the taxable year. 37.9 (b)For purposes of this subdivision, the following terms37.10have the meanings given.37.11(1) "Qualified alternative minimum tax" equals the amount37.12determined under subdivision 1 for the taxable year.37.13(2)"Qualified regular tax" means the tax imposed under 37.14 section 290.06, subdivision 1. 37.15 (c) The qualified alternative minimum tax for a taxable 37.16 year is an alternative minimum tax credit carryover to each of 37.17 the taxable years succeeding the taxable year. The entire 37.18 amount of the credit must be carried to the earliest taxable 37.19 year to which the amount may be carried. Any unused portion of 37.20 the credit must be carried to the following taxable year.No37.21credit may be carried to a taxable year in which alternative37.22minimum tax was paid.37.23 (d) An acquiring corporation may carry over this credit 37.24 from a transferor or distributor corporation in a corporate 37.25 acquisition. The provisions of section 381 of the Internal 37.26 Revenue Code apply in determining the amount of the carryover, 37.27 if any. 37.28 (e) Notwithstanding any provisions in this subdivision to 37.29 the contrary, this credit is only available through the tax year 37.30 ending December 31, 2002. This is not a refundable credit. 37.31 [EFFECTIVE DATE.] This section is effective for tax years 37.32 beginning after December 31, 2000. 37.33 Sec. 12. Minnesota Statutes 2000, section 290.0921, is 37.34 amended by adding a subdivision to read: 37.35 Subd. 9. [EXPIRATION.] This section expires effective for 37.36 taxable years beginning after December 31, 2002. 38.1 [EFFECTIVE DATE.] This section is effective for tax years 38.2 beginning after December 31, 2000. 38.3 Sec. 13. Minnesota Statutes 2000, section 290.0922, 38.4 subdivision 2, is amended to read: 38.5 Subd. 2. [EXEMPTIONS.] The following entities are exempt 38.6 from the tax imposed by this section: 38.7 (1) corporations exempt from tax under section 290.05other38.8than insurance companies exempt under subdivision 1, paragraph38.9(d); 38.10 (2) real estate investment trusts; 38.11 (3) regulated investment companies or a fund thereof; and 38.12 (4) entities having a valid election in effect under 38.13 section 860D(b) of the Internal Revenue Code; 38.14 (5) town and farmers' mutual insurance companies; and 38.15 (6) cooperatives organized under chapter 308A that provide 38.16 housing exclusively to persons age 55 and over and are 38.17 classified as homesteads under section 273.124, subdivision 3. 38.18 Entities not specifically exempted by this subdivision are 38.19 subject to tax under this section, notwithstanding section 38.20 290.05. 38.21 [EFFECTIVE DATE.] This section is effective for tax years 38.22 beginning after December 31, 2000. 38.23 Sec. 14. Minnesota Statutes 2000, section 290.095, 38.24 subdivision 2, is amended to read: 38.25 Subd. 2. [DEFINED AND LIMITED.] (a) The term "net 38.26 operating loss" as used in this section shall mean a net 38.27 operating loss as defined in section 172(c) or 810(a), in the 38.28 case of life insurance companies, of the Internal Revenue Code, 38.29 with the modifications specified in subdivision 4.The38.30deductions provided in section 290.21 and the modification38.31provided in section 290.01, subdivision 19d, clause (11), cannot38.32be used in the determination of a net operating loss.38.33 (b) The term "net operating loss deduction" as used in this 38.34 section means the aggregate of the net operating loss carryovers 38.35 to the taxable year, computed in accordance with subdivision 3. 38.36 The provisions of section 172(b) or 810(b), in the case of life 39.1 insurance companies, of the Internal Revenue Code relating to 39.2 the carryback of net operating losses, do not apply. 39.3 [EFFECTIVE DATE.] This section is effective for tax years 39.4 beginning after December 31, 2000. 39.5 Sec. 15. Minnesota Statutes 2000, section 290.17, 39.6 subdivision 4, is amended to read: 39.7 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 39.8 business conducted wholly within this state or partly within and 39.9 partly without this state is part of a unitary business, the 39.10 entire income of the unitary business is subject to 39.11 apportionment pursuant to section 290.191. Notwithstanding 39.12 subdivision 2, paragraph (c), none of the income of a unitary 39.13 business is considered to be derived from any particular source 39.14 and none may be allocated to a particular place except as 39.15 provided by the applicable apportionment formula. The 39.16 provisions of this subdivision do not apply to business income 39.17 subject to subdivision 5, income of an insurance company 39.18 determined under section 290.35, or income of an investment 39.19 company determined under section 290.36. 39.20 (b) The term "unitary business" means business activities 39.21 or operations which result in a flow of value between them. The 39.22 term may be applied within a single legal entity or between 39.23 multiple entities and without regard to whether each entity is a 39.24 sole proprietorship, a corporation, a partnership or a trust. 39.25 (c) Unity is presumed whenever there is unity of ownership, 39.26 operation, and use, evidenced by centralized management or 39.27 executive force, centralized purchasing, advertising, 39.28 accounting, or other controlled interaction, but the absence of 39.29 these centralized activities will not necessarily evidence a 39.30 nonunitary business. Unity is also presumed when business 39.31 activities or operations are of mutual benefit, dependent upon 39.32 or contributory to one another, either individually or as a 39.33 group. 39.34 (d) Where a business operation conducted in Minnesota is 39.35 owned by a business entity that carries on business activity 39.36 outside the state different in kind from that conducted within 40.1 this state, and the other business is conducted entirely outside 40.2 the state, it is presumed that the two business operations are 40.3 unitary in nature, interrelated, connected, and interdependent 40.4 unless it can be shown to the contrary. 40.5 (e) Unity of ownership is not deemed to exist when a 40.6 corporation is involved unless that corporation is a member of a 40.7 group of two or more business entities and more than 50 percent 40.8 of the voting stock of each member of the group is directly or 40.9 indirectly owned by a common owner or by common owners, either 40.10 corporate or noncorporate, or by one or more of the member 40.11 corporations of the group. For this purpose, the term "voting 40.12 stock" shall include membership interests of mutual insurance 40.13 holding companies formed under section 60A.077. 40.14 (f) The net income and apportionment factors under section 40.15 290.191 or 290.20 of foreign corporations and other foreign 40.16 entities which are part of a unitary business shall not be 40.17 included in the net income or the apportionment factors of the 40.18 unitary business. A foreign corporation or other foreign entity 40.19 which is required to file a return under this chapter shall file 40.20 on a separate return basis.The net income and apportionment40.21factors under section 290.191 or 290.20 of foreign operating40.22corporations shall not be included in the net income or the40.23apportionment factors of the unitary business except as provided40.24in paragraph (g).40.25(g) The adjusted net income of a foreign operating40.26corporation shall be deemed to be paid as a dividend on the last40.27day of its taxable year to each shareholder thereof, in40.28proportion to each shareholder's ownership, with which such40.29corporation is engaged in a unitary business. Such deemed40.30dividend shall be treated as a dividend under section 290.21,40.31subdivision 4.40.32Dividends actually paid by a foreign operating corporation40.33to a corporate shareholder which is a member of the same unitary40.34business as the foreign operating corporation shall be40.35eliminated from the net income of the unitary business in40.36preparing a combined report for the unitary business. The41.1adjusted net income of a foreign operating corporation shall be41.2its net income adjusted as follows:41.3(1) any taxes paid or accrued to a foreign country, the41.4commonwealth of Puerto Rico, or a United States possession or41.5political subdivision of any of the foregoing shall be a41.6deduction; and41.7(2) the subtraction from federal taxable income for41.8payments received from foreign corporations or foreign operating41.9corporations under section 290.01, subdivision 19d, clause (11),41.10shall not be allowed.41.11If a foreign operating corporation incurs a net loss,41.12neither income nor deduction from that corporation shall be41.13included in determining the net income of the unitary business.41.14(h)(g) For purposes of determining the net income of a 41.15 unitary business and the factors to be used in the apportionment 41.16 of net income pursuant to section 290.191 or 290.20, there must 41.17 be included only the income and apportionment factors of 41.18 domestic corporations or other domestic entitiesother than41.19foreign operating corporationsthat are determined to be part of 41.20 the unitary business pursuant to this subdivision, 41.21 notwithstanding that foreign corporations or other foreign 41.22 entities might be included in the unitary business. 41.23(i)(h) Deductions for expenses, interest, or taxes 41.24 otherwise allowable under this chapter that are connected with 41.25 or allocable against dividends, deemed dividends described in41.26paragraph (g), or royalties, fees, or other like income41.27described in section 290.01, subdivision 19d, clause (11),shall 41.28 not be disallowed. 41.29(j)(i) Each corporation or other entity, except a sole 41.30 proprietorship, that is part of a unitary business must file 41.31 combined reports as the commissioner determines. On the 41.32 reports, all intercompany transactions between entities included 41.33 pursuant to paragraph(h)(g) must be eliminated and the entire 41.34 net income of the unitary business determined in accordance with 41.35 this subdivision is apportioned among the entities by using each 41.36 entity's Minnesota factors for apportionment purposes in the 42.1 numerators of the apportionment formula and the total factors 42.2 for apportionment purposes of all entities included pursuant to 42.3 paragraph(h)(g) in the denominators of the apportionment 42.4 formula. 42.5(k)(j) If a corporation has been divested from a unitary 42.6 business and is included in a combined report for a fractional 42.7 part of the common accounting period of the combined report: 42.8 (1) its income includable in the combined report is its 42.9 income incurred for that part of the year determined by 42.10 proration or separate accounting; and 42.11 (2) its sales, property, and payroll included in the 42.12 apportionment formula must be prorated or accounted for 42.13 separately. 42.14 [EFFECTIVE DATE.] This section is effective for tax years 42.15 beginning after December 31, 2000. 42.16 Sec. 16. Minnesota Statutes 2000, section 290.191, 42.17 subdivision 2, is amended to read: 42.18 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 42.19 Except for those trades or businesses required to use a 42.20 different formula under subdivision 3 or section 290.35 or 42.21 290.36, and for those trades or businesses that receive 42.22 permission to use some other method under section 290.20 or 42.23 under subdivision 4, a trade or business required to apportion 42.24 its net income must apportion its income to this state on the 42.25 basis of the percentage obtained by taking the sum of: 42.26 (1)7590 percent of the percentage which the sales made 42.27 within this state in connection with the trade or business 42.28 during the tax period are of the total sales wherever made in 42.29 connection with the trade or business during the tax period; 42.30 (2)12.5five percent of the percentage which the total 42.31 tangible property used by the taxpayer in this state in 42.32 connection with the trade or business during the tax period is 42.33 of the total tangible property, wherever located, used by the 42.34 taxpayer in connection with the trade or business during the tax 42.35 period; and 42.36 (3)12.5five percent of the percentage which the 43.1 taxpayer's total payrolls paid or incurred in this state or paid 43.2 in respect to labor performed in this state in connection with 43.3 the trade or business during the tax period are of the 43.4 taxpayer's total payrolls paid or incurred in connection with 43.5 the trade or business during the tax period. 43.6 [EFFECTIVE DATE.] This section is effective for tax years 43.7 beginning after December 31, 2000. 43.8 Sec. 17. Minnesota Statutes 2000, section 290.191, 43.9 subdivision 3, is amended to read: 43.10 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL 43.11 INSTITUTIONS.] Except for an investment company required to 43.12 apportion its income under section 290.36, a financial 43.13 institution that is required to apportion its net income must 43.14 apportion its net income to this state on the basis of the 43.15 percentage obtained by taking the sum of: 43.16 (1)7590 percent of the percentage which the receipts from 43.17 within this state in connection with the trade or business 43.18 during the tax period are of the total receipts in connection 43.19 with the trade or business during the tax period, from wherever 43.20 derived; 43.21 (2)12.5five percent of the percentage which the sum of 43.22 the total tangible property used by the taxpayer in this state 43.23 and the intangible property owned by the taxpayer and attributed 43.24 to this state in connection with the trade or business during 43.25 the tax period is of the sum of the total tangible property, 43.26 wherever located, used by the taxpayer and the intangible 43.27 property owned by the taxpayer and attributed to all states in 43.28 connection with the trade or business during the tax period; and 43.29 (3)12.5five percent of the percentage which the 43.30 taxpayer's total payrolls paid or incurred in this state or paid 43.31 in respect to labor performed in this state in connection with 43.32 the trade or business during the tax period are of the 43.33 taxpayer's total payrolls paid or incurred in connection with 43.34 the trade or business during the tax period. 43.35 [EFFECTIVE DATE.] This section is effective for tax years 43.36 beginning after December 31, 2000. 44.1 Sec. 18. Minnesota Statutes 2000, section 290.32, is 44.2 amended to read: 44.3 290.32 [TAXES FOR PART OF YEAR, COMPUTATION.] 44.4 When under this chapter a taxpayer is permitted or required 44.5 to make a return for a fractional part of a year, the tax shall 44.6 be computed in the same manner as if such fractional part of a 44.7 year were an entire year, except: 44.8 (1) A taxpayer who is permitted to change the basis for 44.9 reporting income from a fiscal to a calendar year shall make a 44.10 separate return for the period between the close of the 44.11 taxpayer's last fiscal year and the following December 31st; if 44.12 the change is from a calendar to a fiscal year, a separate 44.13 return shall be made for the period between the close of the 44.14 taxpayer's last calendar year and the date designated as the 44.15 close of the fiscal year; and if the change is from one fiscal 44.16 year to another fiscal year, a separate return shall be made for 44.17 the period between the close of the former fiscal year and the 44.18 date designated as the close of the new fiscal year. The 44.19 taxable net income, or for corporations the taxable net income44.20as reduced by the deductions contained in section 290.21,for 44.21 any such period shall be put on an annual basis by multiplying 44.22 the amount thereof by 12 and dividing by the number of months 44.23 included in the period for which such separate return is made; 44.24 and the tax shall be that part of a tax, computed on the taxable 44.25 net income put on such annual basis which the number of months 44.26 in such period bears to 12 months. 44.27 (2) Where any of the enumerated changes in accounting 44.28 period referred to in clause (1) involve a 52-53 week fiscal 44.29 year and any such change results in a short period of less than 44.30 seven days, such short period shall be added to and deemed a 44.31 part of the following taxable year. If the change results in a 44.32 short period of seven or more days, but less than 359 days, the 44.33 taxable net income, or for corporations the taxable net income44.34as reduced by the deductions contained in section 290.21,for 44.35 any such period shall be placed on an annual basis by 44.36 multiplying such income by 365 and dividing the result by the 45.1 same number of days in the short period; and the tax shall be 45.2 that part of a tax, computed on the taxable net income placed on 45.3 such annual basis which the number of days in such short period 45.4 bears to 365 days. Where the short period is 359 days or more, 45.5 the tax shall be computed in the same manner as if such short 45.6 period were an entire year. 45.7 [EFFECTIVE DATE.] This section is effective for tax years 45.8 beginning after December 31, 2000. 45.9 Sec. 19. Minnesota Statutes 2000, section 290.9727, 45.10 subdivision 3, is amended to read: 45.11 Subd. 3. [TAXABLE NET INCOME.] For purposes of this 45.12 section, taxable net income means the lesser of: 45.13 (1) the recognized built-in gains of the S corporation for 45.14 the taxable year, as determined under section 1374 of the 45.15 Internal Revenue Code, subject to the modifications provided in 45.16 section 290.01, subdivision 19f, that are allocable to this 45.17 state under section 290.17, 290.191, or 290.20; or 45.18 (2) the amount of the S corporation's federal taxable 45.19 income, as determined under section 1374(d)(4) of the Internal 45.20 Revenue Code, subject to the provisions of section 290.01, 45.21 subdivisions 19c to 19f, that is allocable to this state under 45.22 section 290.17, 290.191, or 290.20, less the deduction for45.23charitable contributions in section 290.21, subdivision 3. 45.24 [EFFECTIVE DATE.] This section is effective for tax years 45.25 beginning after December 31, 2000. 45.26 Sec. 20. Minnesota Statutes 2000, section 290.9728, 45.27 subdivision 2, is amended to read: 45.28 Subd. 2. [TAXABLE INCOME.] For purposes of this section, 45.29 taxable income means the lesser of: 45.30 (1) the amount of the net capital gain of the S corporation 45.31 for the taxable year, as determined under sections 1222 and 1374 45.32 of the Internal Revenue Code, and subject to the modifications 45.33 provided in section 290.01, subdivisions 19e and 19f, in excess 45.34 of $25,000 that is allocable to this state under section 290.17, 45.35 290.191, or 290.20; or 45.36 (2) the amount of the S corporation's federal taxable 46.1 income, subject to the provisions of section 290.01, 46.2 subdivisions 19c to 19f, that is allocable to this state under 46.3 section 290.17, 290.191, or 290.20, less the deduction for46.4charitable contributions in section 290.21, subdivision 3. 46.5 [EFFECTIVE DATE.] This section is effective for tax years 46.6 beginning after December 31, 2000. 46.7 Sec. 21. Minnesota Statutes 2000, section 290.9729, 46.8 subdivision 2, is amended to read: 46.9 Subd. 2. [TAXABLE INCOME.] For the purposes of this 46.10 section, taxable income means the lesser of: 46.11 (1) the amount of the S corporation's excess net passive 46.12 income, as determined under section 1375 of the Internal Revenue 46.13 Code, subject to the provisions of section 290.01, subdivisions 46.14 19c to 19f, that is allocable to this state under section 46.15 290.17, 290.191, or 290.20; or 46.16 (2) the amount of the S corporation's federal taxable 46.17 income, as determined under section 1374(d)(4) of the Internal 46.18 Revenue Code, subject to the provisions of section 290.01, 46.19 subdivisions 19c to 19f, that is allocable to this state under 46.20 section 290.17, 290.191, or 290.20, less the deduction for46.21charitable contributions in section 290.21, subdivision 3. 46.22 [EFFECTIVE DATE.] This section is effective for tax years 46.23 beginning after December 31, 2000. 46.24 Sec. 22. Minnesota Statutes 2000, section 298.01, 46.25 subdivision 3b, is amended to read: 46.26 Subd. 3b. [DEDUCTIONS.](a)For purposes of determining 46.27 taxable income under subdivision 3, the deductions from gross 46.28 income include only those expenses necessary to convert raw ores 46.29 to marketable quality. Such expenses include costs associated 46.30 with refinement but do not include expenses such as 46.31 transportation, stockpiling, marketing, or marine insurance that 46.32 are incurred after marketable ores are produced, unless the 46.33 expenses are included in gross income. 46.34 (b) The provisions of section 290.01, subdivisions 19c, 46.35clauses (7) and (11)clause (5), and 19d,clauses (7) and46.36(12)clause (8), are not used to determine taxable income. 47.1 [EFFECTIVE DATE.] This section is effective for taxes 47.2 payable May 1, 2002, and thereafter. 47.3 Sec. 23. Minnesota Statutes 2000, section 298.01, 47.4 subdivision 3d, is amended to read: 47.5 Subd. 3d. [ALTERNATIVE MINIMUM TAX CREDIT.] A credit is 47.6 allowed against qualified regular tax for qualified alternative 47.7 minimum tax previously paid. The amount of the credit allowed 47.8 under this subdivision is determined under section 290.0921, 47.9 subdivision 8. For purposes of calculating this credit, the 47.10 following terms have the meanings given: 47.11 (a) "Qualified alternative minimum tax" means the amount of 47.12 alternative minimum tax determined under subdivision 3 and 47.13 Minnesota Statutes 2000, section 290.0921, subdivision 1. 47.14 (b) "Qualified regular tax" means the tax imposed under 47.15 subdivision 3 and section 290.06, subdivision 1. 47.16 Notwithstanding any provisions in this subdivision to the 47.17 contrary, this credit is only available through the tax year 47.18 ending December 31, 2002, for taxes payable on or before May 1, 47.19 2003. This is not a refundable credit. 47.20 [EFFECTIVE DATE.] This section is effective for taxes 47.21 payable May 1, 2002, and thereafter. 47.22 Sec. 24. Minnesota Statutes 2000, section 298.01, 47.23 subdivision 4c, is amended to read: 47.24 Subd. 4c. [SPECIAL DEDUCTIONSDEDUCTION FOR DEPRECIATION; 47.25 NET OPERATING LOSS.] (a) For purposes of determining taxable 47.26 income under subdivision 4, the following modifications are 47.27 allowed: 47.28 (1) the provisions of section 290.01, subdivisions 19c, 47.29clauses (7) and (11)clause (5), and 19d,clauses (7) and47.30(12)clause (8), are not used to determine taxable income; and 47.31 (2) for assets placed in service before January 1, 1990, 47.32 the deduction for depreciation will be the same amount allowed 47.33 under chapter 290, except that after an asset has been fully 47.34 depreciated for federal income tax purposes any remaining 47.35 depreciable basis is allowed as a deduction using the 47.36 straight-line method over the following number of years: 48.1 (i) three-year property, one year; 48.2 (ii) five- and seven-year property, two years; 48.3 (iii) ten-year property, five years; and 48.4 (iv) all other property, seven years. 48.5 No deduction is allowed if an asset is fully depreciated 48.6 for occupation tax purposes before January 1990. 48.7 (b) For purposes of determining the deduction allowed under 48.8 paragraph (a), clause (2), the remaining depreciable basis of 48.9 property placed in service before January 1, 1990, is calculated 48.10 as follows: 48.11 (1) the adjusted basis of the property on December 31, 48.12 1989, which was used to calculate the hypothetical corporate 48.13 franchise tax under Minnesota Statutes 1988, section 298.40, 48.14 including salvage value; less 48.15 (2) deductions for depreciation allowed under section 48.16 290.01, subdivision 19e. 48.17 (c) The basis for determining gain or loss on sale or 48.18 disposition of assets placed in service before January 1, 1990, 48.19 is the basis determined under paragraph (b), less the deductions 48.20 allowed under paragraph (a), clause (2). 48.21 (d) The amount of net operating loss incurred in a taxable 48.22 year beginning before January 1, 1990, that may be carried over 48.23 to a taxable year beginning after December 31, 1989, is the 48.24 amount of net operating loss carryover determined in the 48.25 calculation of the hypothetical corporate franchise tax under 48.26 Minnesota Statutes 1988, sections 298.40 and 298.402. 48.27 [EFFECTIVE DATE.] This section is effective for taxes 48.28 payable May 1, 2002, and thereafter. 48.29 Sec. 25. Minnesota Statutes 2000, section 298.01, 48.30 subdivision 4e, is amended to read: 48.31 Subd. 4e. [ALTERNATIVE MINIMUM TAX CREDIT.] A credit is 48.32 allowed against qualified regular tax for qualified alternative 48.33 minimum tax previously paid. The amount of the credit allowed 48.34 under this paragraph is determined under section 290.0921, 48.35 subdivision 8. For purposes of calculating this credit, the 48.36 following terms have the meanings given: 49.1 (1) "Qualified alternative minimum tax" means the amount of 49.2 alternative minimum tax determined under subdivision 4d 49.3 and Minnesota Statutes 2000, section 290.0921, subdivision 1. 49.4 (2) "Qualified regular tax" means the tax imposed under 49.5 subdivision 4 and section 290.06, subdivision 1. 49.6 Notwithstanding any provisions in this subdivision to the 49.7 contrary, this credit is only available through the tax year 49.8 ending December 31, 2002, for taxes payable on or before May 1, 49.9 2003. This is not a refundable credit. 49.10 [EFFECTIVE DATE.] This section is effective for taxes 49.11 payable May 1, 2002, and thereafter. 49.12 Sec. 26. [REPEALER.] 49.13 (a) Minnesota Statutes 2000, sections 290.01, subdivision 49.14 6b; 290.0673; 290.0921, subdivisions 1, 2, 3, 4, 5, 6, and 7; 49.15 290.21; and 290.35, subdivisions 3, 4, and 5, are repealed. 49.16 (b) Minnesota Statutes 2000, section 298.01, subdivisions 49.17 3c and 4d, are repealed. 49.18 (c) Minnesota Statutes 2000, sections 469.132, subdivision 49.19 2; and 469.1734, subdivision 4, are repealed. 49.20 [EFFECTIVE DATE.] This section, paragraph (a), is effective 49.21 for tax years beginning after December 31, 2000. This section, 49.22 paragraph (b), is effective for taxes payable May 1, 2002, and 49.23 thereafter. This section, paragraph (c), is effective the day 49.24 following final enactment. 49.25 ARTICLE 4 49.26 PROPERTY TAX REFORM 49.27 Section 1. Minnesota Statutes 2000, section 126C.01, is 49.28 amended by adding a subdivision to read: 49.29 Subd. 12. [RESIDENTIAL ASSESSED VALUE.] "Residential 49.30 assessed value" means the assessed value of the following 49.31 taxable properties located within the district, as defined in 49.32 section 273.13: class 1a, 1b, and 1c properties, the house, 49.33 garage, and immediately surrounding one acre of land of class 2a 49.34 properties, class 4a properties, class 4b(1) properties, class 49.35 4b(3) properties, class 4bb properties, and class 4d properties. 49.36 [EFFECTIVE DATE.] This section is effective for taxes 50.1 payable in 2002 and thereafter. 50.2 Sec. 2. Minnesota Statutes 2000, section 126C.01, is 50.3 amended by adding a subdivision to read: 50.4 Subd. 13. [ADJUSTED RESIDENTIAL ASSESSED VALUE.] "Adjusted 50.5 residential assessed value" means the residential assessed value 50.6 of property located within the district as adjusted by the 50.7 commissioner of revenue under section 127A.48. The adjusted 50.8 residential assessed value for a particular assessment year must 50.9 be used to compute referendum levy limitations under section 50.10 126C.17 for levies certified in the succeeding calendar year and 50.11 referendum aid for the school year beginning in the second 50.12 succeeding calendar year. 50.13 [EFFECTIVE DATE.] This section is effective for levies 50.14 certified in 2001 and aids payable for school years beginning in 50.15 2002, and thereafter. 50.16 Sec. 3. Minnesota Statutes 2000, section 126C.01, is 50.17 amended by adding a subdivision to read: 50.18 Subd. 14. [ADJUSTED ASSESSED VALUE.] "Adjusted assessed 50.19 value" means the assessed value of property located within the 50.20 district as adjusted by the commissioner of revenue under 50.21 section 127A.48. The adjusted assessed value for a particular 50.22 assessment year must be used to compute levy limitations for 50.23 levies certified in the succeeding calendar year and aid for the 50.24 school year beginning in the second succeeding calendar year. 50.25 [EFFECTIVE DATE.] This section is effective for levies 50.26 certified in 2001 and aid payable for school years beginning in 50.27 2002, and thereafter. 50.28 Sec. 4. [126C.02] [SCHOOL DISTRICT LEVY ADJUSTMENTS.] 50.29 Subdivision 1. [TRANSITION ADJUSTMENTS.] For taxes payable 50.30 in 2002 and thereafter, the commissioner of children, families, 50.31 and learning shall, in consultation with the commissioner of 50.32 revenue, make the adjustments required by this section. 50.33 Subd. 2. [REVENUE CONVERSION.] Each school district's 50.34 revenue authority that is established as a rate times net tax 50.35 capacity or adjusted net tax capacity under chapter 126C, shall 50.36 be adjusted by multiplying each revenue amount by the ratio of 51.1 the statewide net tax capacity as calculated using the class 51.2 rates in effect for assessment year 2001 to the statewide 51.3 assessed value using the class rates for the assessment year 51.4 related to the taxes payable year for which the revenue 51.5 authority is being determined. 51.6 Subd. 3. [TAX RATE ADJUSTMENT.] Each tax rate established 51.7 under chapters 123B and 124D shall be adjusted by multiplying 51.8 the rate by the ratio of the statewide tax capacity as 51.9 calculated using the class rates in effect for assessment year 51.10 2001 to the statewide assessed value using the class rates for 51.11 the assessment year related to the taxes payable year for which 51.12 the rate is being determined. 51.13 Subd. 4. [EQUALIZING FACTORS.] Each equalizing factor 51.14 established under chapters 123B, 124D, and 126C, excluding 51.15 sections 126C.10, subdivision 21, and 126C.17, subdivision 6, 51.16 shall be adjusted by dividing the equalizing factor by the ratio 51.17 of the statewide tax capacity as calculated using the class 51.18 rates in effect for assessment year 2001 to the statewide 51.19 assessed value using the class rates for the assessment year 51.20 related to the taxes payable year for which the factor is being 51.21 determined. 51.22 Subd. 5. [QUALIFYING RATE.] Each qualifying rate under 51.23 section 123B.51, subdivision 3, shall be adjusted by multiplying 51.24 the qualifying rate times the ratio of the statewide tax 51.25 capacity, as calculated using the class rates in effect for 51.26 assessment year 2001, to the statewide assessed value using the 51.27 class rates for the assessment year related to the taxes payable 51.28 year for which the rate is being determined. 51.29 [EFFECTIVE DATE.] This section is effective for taxes 51.30 payable in 2002 and thereafter. 51.31 Sec. 5. Minnesota Statutes 2000, section 126C.13, 51.32 subdivision 1, is amended to read: 51.33 Subdivision 1. [GENERAL EDUCATION TAX RATE.] The 51.34 commissioner must establish the general education tax rate by 51.35 July 1 of each year for levies payable in the following year. 51.36 The general education tax capacity rate must be a rate, rounded 52.1 up to the nearest hundredth of a percent, that, when applied to 52.2 the adjusted net tax capacity for all districts, raises the 52.3 amount specified in this subdivision. The general education tax 52.4 rate must be the rate that raises $1,330,000,000 for fiscal year 52.5 2001 and fiscal year 2002, and zero for later fiscal years. The 52.6 general education tax rate may not be changed due to changes or 52.7 corrections made to a district's adjusted net tax capacity after 52.8 the tax rate has been established. 52.9 [EFFECTIVE DATE.] This section is effective the day 52.10 following final enactment. 52.11 Sec. 6. Minnesota Statutes 2000, section 126C.13, 52.12 subdivision 2, is amended to read: 52.13 Subd. 2. [GENERAL EDUCATION LEVY.] To obtain general 52.14 education revenue, excluding transition revenue and supplemental 52.15 revenue, a district may levy an amount not to exceed the general 52.16 education tax rate times the adjusted net tax capacity of the 52.17 district for the preceding year. If the amount of the general 52.18 education levy would exceed the general education revenue, 52.19 excluding transition revenue and supplemental revenue, the 52.20 general education levy must be determined according to 52.21 subdivision 3. For taxes payable in 2002 and thereafter, the 52.22 general education levy amount authorized by this subdivision for 52.23 all districts is zero. 52.24 [EFFECTIVE DATE.] This section is effective for taxes 52.25 payable in 2002 and thereafter. 52.26 Sec. 7. Minnesota Statutes 2000, section 126C.13, 52.27 subdivision 4, is amended to read: 52.28 Subd. 4. [GENERAL EDUCATION AID.] (a) For fiscal year 52.29 2002, a district's general education aid is the sum of the 52.30 following amounts: 52.31 (1) the product of (i) the difference between the general 52.32 education revenue, excluding transition revenue and supplemental 52.33 revenue, and the general education levy, times (ii) the ratio of 52.34 the actual amount levied to the permitted levy; 52.35 (2) transition aid according to section 126C.10, 52.36 subdivision 22; 53.1 (3) supplemental aid according to section127A.49126C.10, 53.2 subdivision 11; 53.3 (4) shared time aid according to section 126C.01, 53.4 subdivision 7; and 53.5 (5) referendum aid according to section 126C.17. 53.6 (b) For fiscal year 2003 and later, a district's general 53.7 education aid is the sum of the following amounts: 53.8 (1) the general education revenue according to section 53.9 126C.10, subdivision 1, excluding transition revenue; 53.10 (2) transition aid according to section 126C.10, 53.11 subdivision 22; 53.12 (3) shared time aid according to section 126C.01, 53.13 subdivision 7; and 53.14 (4) referendum aid according to section 126C.17. 53.15 [EFFECTIVE DATE.] This section is effective July 1, 2001, 53.16 and thereafter. 53.17 Sec. 8. Minnesota Statutes 2000, section 126C.17, 53.18 subdivision 5, is amended to read: 53.19 Subd. 5. [REFERENDUM EQUALIZATION REVENUE.] (a) For fiscal 53.20 year 2002, a district's referendum equalization revenue equals 53.21 thereferendum equalization allowancelesser of the district's 53.22 referendum allowance under subdivision 1 or $415 times the 53.23 district's resident marginal cost pupil units for that 53.24 year. For fiscal year 2003 and later, a district's referendum 53.25 equalization revenue equals the sum of the first tier referendum 53.26 equalization revenue and the second tier referendum equalization 53.27 revenue. 53.28 (b)TheA district's first tier referendum equalization 53.29 revenue equals the district's first tier referendum equalization 53.30 allowance times the district's resident marginal cost pupil 53.31 units for that year. 53.32 (c) A district's first tier referendum equalization 53.33 allowance equals$350 for fiscal year 2000 and $415 for fiscal53.34year 2001 and later.53.35(c) Referendum equalization revenue must not exceed a53.36district's total referendum revenue for that yearthe lesser of 54.1 the district's referendum allowance under subdivision 1 or $600. 54.2 (d) A district's second tier referendum equalization 54.3 allowance equals the lesser of the district's referendum 54.4 allowance under subdivision 1 or 25 percent of the formula 54.5 allowance, minus the district's first tier referendum 54.6 equalization allowance. 54.7 [EFFECTIVE DATE.] This section is effective for fiscal year 54.8 2002 and thereafter. 54.9 Sec. 9. Minnesota Statutes 2000, section 126C.17, 54.10 subdivision 6, is amended to read: 54.11 Subd. 6. [REFERENDUM EQUALIZATION LEVY.] (a) A district's 54.12 referendum equalization levy for areferendum levied against the54.13referendum market value of all taxable property as defined in54.14section 126C.01, subdivision 3fiscal year 2002, equals the 54.15 district's referendum equalization revenue times the lesser of 54.16 one or the ratio of the district's referendum market value per 54.17 resident marginal cost pupil unit to $476,000. 54.18 (b) For fiscal year 2003 and later, a district's referendum 54.19 equalization levyfor a referendum levied against the net tax54.20capacity of all taxable property equals the district's54.21referendum equalization revenue times the lesser of one or the54.22ratio of the district's adjusted net tax capacity per resident54.23marginal cost pupil unit to $8,404equals the sum of the first 54.24 tier referendum equalization levy and the second tier referendum 54.25 equalization levy. 54.26 (c) A district's first tier referendum equalization levy 54.27 equals the district's first tier referendum equalization revenue 54.28 times the lesser of one or the ratio of the district's adjusted 54.29 residential assessed value per resident marginal cost pupil unit 54.30 to $6,400. 54.31 (d) A district's second tier referendum equalization levy 54.32 equals the district's second tier revenue times the lesser of 54.33 one or the ratio of the district's adjusted residential assessed 54.34 value per resident marginal cost pupil unit to $4,265. 54.35 [EFFECTIVE DATE.] This section is effective for fiscal year 54.36 2002 and thereafter. 55.1 Sec. 10. Minnesota Statutes 2000, section 126C.17, 55.2 subdivision 7, is amended to read: 55.3 Subd. 7. [REFERENDUM EQUALIZATION AID.] (a) A district's 55.4 referendum equalization aid equals the difference between its 55.5 referendum equalization revenue and levy. 55.6 (b) If a district's actual levy for first or second tier 55.7 referendum equalization revenue is less than its maximum levy 55.8 limit for that tier, aid for that tier shall be proportionately 55.9 reduced. 55.10 [EFFECTIVE DATE.] This section is effective for fiscal year 55.11 2003 and thereafter. 55.12 Sec. 11. Minnesota Statutes 2000, section 126C.17, 55.13 subdivision 8, is amended to read: 55.14 Subd. 8. [UNEQUALIZED REFERENDUM LEVY.] Each year, a 55.15 district may levy an amount equal to the difference between its 55.16 total referendum revenue according to subdivision54 and its 55.17equalized referendum aid and levy according to subdivisions 655.18and 7referendum equalization revenue according to subdivision 5. 55.19 [EFFECTIVE DATE.] This section is effective for taxes 55.20 payable in 2002 and thereafter. 55.21 Sec. 12. Minnesota Statutes 2000, section 126C.17, 55.22 subdivision 9, is amended to read: 55.23 Subd. 9. [REFERENDUM REVENUE.] (a) The revenue authorized 55.24 by section 126C.10, subdivision 1, may be increased in the 55.25 amount approved by the voters of the district at a referendum 55.26 called for the purpose. The referendum may be called by the 55.27 board or shall be called by the board upon written petition of 55.28 qualified voters of the district. The referendum must be 55.29 conducted one or two calendar years before the increased levy 55.30 authority, if approved, first becomes payable. Only one 55.31 election to approve an increase may be held in a calendar year. 55.32 Unless the referendum is conducted by mail under paragraph (g), 55.33 the referendum must be held on the first Tuesday after the first 55.34 Monday in November. The ballot must state the maximum amount of 55.35 the increased revenue per resident marginal cost pupil unit, the 55.36 estimated referendum tax mill rateas a percentage of referendum56.1market valuein the first year it is to be levied, and that the 56.2 revenue must be used to finance school operations. The ballot 56.3 may state a schedule, determined by the board, of increased 56.4 revenue per resident marginal cost pupil unit that differs from 56.5 year to year over the number of years for which the increased 56.6 revenue is authorized. If the ballot contains a schedule 56.7 showing different amounts, it must also indicate the estimated 56.8 referendum tax mill rateas a percent of referendum market value56.9 for the amount specified for the first year and for the maximum 56.10 amount specified in the schedule. The ballot may state that 56.11 existing referendum levy authority is expiring. In this case, 56.12 the ballot may also compare the proposed levy authority to the 56.13 existing expiring levy authority, and express the proposed 56.14 increase as the amount, if any, over the expiring referendum 56.15 levy authority. The ballot must designate the specific number 56.16 of years, not to exceed ten, for which the referendum 56.17 authorization applies. The notice required under section 275.60 56.18 may be modified to read, in cases of renewing existing levies: 56.19 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 56.20 FOR A PROPERTY TAX INCREASE." 56.21 The ballot may contain a textual portion with the 56.22 information required in this subdivision and a question stating 56.23 substantially the following: 56.24 "Shall the increase in the revenue proposed by (petition 56.25 to) the board of ........., School District No. .., be approved?" 56.26 If approved, an amount equal to the approved revenue per 56.27 resident marginal cost pupil unit times the resident marginal 56.28 cost pupil units for the school year beginning in the year after 56.29 the levy is certified shall be authorized for certification for 56.30 the number of years approved, if applicable, or until revoked or 56.31 reduced by the voters of the district at a subsequent referendum. 56.32 (b) The board must prepare and deliver by first class mail 56.33 at least 15 days but no more than 30 days before the day of the 56.34 referendum to each taxpayer a notice of the referendum and the 56.35 proposed revenue increase. The board need not mail more than 56.36 one notice to any taxpayer. For the purpose of giving mailed 57.1 notice under this subdivision, owners must be those shown to be 57.2 owners on the records of the county auditor or, in any county 57.3 where tax statements are mailed by the county treasurer, on the 57.4 records of the county treasurer. Every property owner whose 57.5 name does not appear on the records of the county auditor or the 57.6 county treasurer is deemed to have waived this mailed notice 57.7 unless the owner has requested in writing that the county 57.8 auditor or county treasurer, as the case may be, include the 57.9 name on the records for this purpose. The notice must project 57.10 the anticipated amount of tax increase in annual dollars and 57.11 annualpercentagemill rates for typical residential homesteads, 57.12 agricultural homesteads, and apartments, and57.13commercial-industrial propertywithin the school district. 57.14 The notice for a referendum may state that an existing 57.15 referendum levy is expiring and project the anticipated amount 57.16 of increase over the existing referendum levy in the first year, 57.17 if any, in annual dollars and annualpercentagemill rates for 57.18 typical residential homesteads, agricultural homesteads, and 57.19 apartments, and commercial-industrial propertywithin the 57.20 district. 57.21 The notice must include the following statement: "Passage 57.22 of this referendum will result in an increase in your property 57.23 taxes." However, in cases of renewing existing levies, the 57.24 notice may include the following statement: "Passage of this 57.25 referendum may result in an increase in your property taxes." 57.26 (c) A referendum on the question of revoking or reducing 57.27 the increased revenue amount authorized pursuant to paragraph 57.28 (a) may be called by the board and shall be called by the board 57.29 upon the written petition of qualified voters of the district. 57.30 A referendum to revoke or reduce the levy amount must be based 57.31 upon the dollaramount, local tax rate, oramount per resident 57.32 marginal cost pupil unit, that was stated to be the basis for 57.33 the initial authorization. Revenue approved by the voters of 57.34 the district pursuant to paragraph (a) must be received at least 57.35 once before it is subject to a referendum on its revocation or 57.36 reduction for subsequent years. Only one revocation or 58.1 reduction referendum may be held to revoke or reduce referendum 58.2 revenue for any specific year and for years thereafter. 58.3 (d) A petition authorized by paragraph (a) or (c) is 58.4 effective if signed by a number of qualified voters in excess of 58.5 15 percent of the registered voters of the district on the day 58.6 the petition is filed with the board. A referendum invoked by 58.7 petition must be held on the date specified in paragraph (a). 58.8 (e) The approval of 50 percent plus one of those voting on 58.9 the question is required to pass a referendum authorized by this 58.10 subdivision. 58.11 (f) At least 15 days before the day of the referendum, the 58.12 district must submit a copy of the notice required under 58.13 paragraph (b) to the commissioner and to the county auditor of 58.14 each county in which the district is located. Within 15 days 58.15 after the results of the referendum have been certified by the 58.16 board, or in the case of a recount, the certification of the 58.17 results of the recount by the canvassing board, the district 58.18 must notify the commissioner of the results of the referendum. 58.19 (g) Except for a referendum held under subdivision 11, any 58.20 referendum under this section held on a day other than the first 58.21 Tuesday after the first Monday in November must be conducted by 58.22 mail in accordance with section 204B.46. Notwithstanding 58.23 paragraph (b) to the contrary, in the case of a referendum 58.24 conducted by mail under this paragraph, the notice required by 58.25 paragraph (b) must be prepared and delivered by first class mail 58.26 at least 20 days before the referendum. 58.27 [EFFECTIVE DATE.] This section is effective the day 58.28 following final enactment. 58.29 Sec. 13. Minnesota Statutes 2000, section 126C.17, 58.30 subdivision 10, is amended to read: 58.31 Subd. 10. [SCHOOL REFERENDUM LEVY;MARKETRESIDENTIAL 58.32 ASSESSED VALUE.] Notwithstanding the provisions of subdivision 58.33 9, a school referendum levyapproved after November 1, 1992,for 58.34 taxes payable in19932002 and thereafter, must be levied 58.35 against thereferendum market valueresidential assessed value 58.36 ofalltaxable property as defined in section 126C.01, 59.1 subdivision312. Any referendum levy amount subject to the 59.2 requirements of this subdivision must be certified separately to 59.3 the county auditor under section 275.07. 59.4 All other provisions of subdivision 9 that do not conflict 59.5 with this subdivision apply to referendum levies under this 59.6 subdivision. 59.7 [EFFECTIVE DATE.] This section is effective the day 59.8 following final enactment. 59.9 Sec. 14. Minnesota Statutes 2000, section 127A.48, 59.10 subdivision 1, is amended to read: 59.11 Subdivision 1. [COMPUTATION.] The department of revenue 59.12 must annually conduct an assessment/sales ratio study of the 59.13 taxable property in each school district in accordance with the 59.14 procedures in subdivisions 2 and 3. Based upon the results of 59.15 this assessment/sales ratio study, the department of revenue 59.16 must determine an aggregate equalizednet tax capacityassessed 59.17 value for the various classes of taxable property in each 59.18 district, whichtax capacityassessed value shall be designated 59.19 as the adjustednet tax capacityassessed value. The 59.20 adjustednet tax capacitiesassessed values shall be determined 59.21 using thenet tax capacity percentagesclass rates in effect for 59.22 the assessment year following the assessment year of the study. 59.23 The department of revenue must make whatever estimates are 59.24 necessary to account for changes in the classification system. 59.25 The department of revenue may incur the expense necessary to 59.26 make the determinations. The commissioner of revenue may 59.27 reimburse any county or governmental official for requested 59.28 services performed in ascertaining the adjustednet tax capacity59.29 assessed value. On or before March 15 annually, the department 59.30 of revenue shall file with the chair of the tax committee of the 59.31 house of representatives and the chair of the committee on taxes 59.32 and tax laws of the senate a report of adjustednet tax59.33capacitiesassessed values. On or before June 15 annually, the 59.34 department of revenue shall file its final report on the 59.35 adjustednet tax capacitiesassessed values established by the 59.36 previous year's assessments and the current year'snet tax60.1capacity percentagesclass rates with the commissioner of 60.2 children, families, and learning and each county auditor for 60.3 those districts for which the auditor has the responsibility for 60.4 determination of local tax rates. A copy of the report so filed 60.5 shall be mailed to the clerk of each district involved and to 60.6 the county assessor or supervisor of assessments of the county 60.7 or counties in which each district is located. 60.8 [EFFECTIVE DATE.] This section is effective the day 60.9 following final enactment. 60.10 Sec. 15. Minnesota Statutes 2000, section 272.02, 60.11 subdivision 7, is amended to read: 60.12 Subd. 7. [INSTITUTIONS OF PUBLIC CHARITY.] 60.13InstitutionsProperty of an institution of purely public charity 60.14are, or property that would be listed for taxation in the name 60.15 of an institution of purely public charity under section 272.01, 60.16 subdivision 2, or 273.19, and that is used for the charitable 60.17 purposes of such institution, is exemptexcept parcels of60.18property containing structures and the. However, land and 60.19 structuresdescribed in sectionthat qualify, or that could 60.20 qualify under sections 273.13, subdivision 25, paragraph 60.21 (e), and 462A.071, other than those that qualify for exemption 60.22 under subdivision 26, are not exempt. 60.23 [EFFECTIVE DATE.] This section is effective for taxes 60.24 payable in 2002 and thereafter. 60.25 Sec. 16. Minnesota Statutes 2000, section 272.02, 60.26 subdivision 10, is amended to read: 60.27 Subd. 10. [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 60.28 Personal property used primarily for the abatement and control 60.29 of air, water, or land pollution is exempt to the extent that it 60.30 is so used, and real property is exempt if it is used primarily 60.31 for abatement and control of air, water, or land pollution as 60.32 part of an agricultural operation, as a part of a centralized 60.33 treatment and recovery facility operating under a permit issued 60.34 by the Minnesota pollution control agency pursuant to chapters 60.35 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 60.36 and 7045.0020 to 7045.1260, as a wastewater treatment facility 61.1 and for the treatment, recovery, and stabilization of metals, 61.2 oils, chemicals, water, sludges, or inorganic materials from 61.3 hazardous industrial wastes, or as part of an electric 61.4 generation system. For purposes of this subdivision, personal 61.5 property includes ponderous machinery and equipment used in a 61.6 business or production activity that at common law is considered 61.7 real property. 61.8 Any taxpayer requesting exemption of all or a portion of 61.9 any real property or any equipment or device, or part thereof, 61.10 operated primarily for the control or abatement of airor, 61.11 water, or land pollution shall file an application with the 61.12 commissioner of revenue.The equipment or device shall meet61.13standards, rules, or criteria prescribed by the Minnesota61.14pollution control agency, and must be installed or operated in61.15accordance with a permit or order issued by that agency.The 61.16 Minnesota pollution control agency shall upon request of the 61.17 commissioner furnish informationorand advice to the 61.18 commissioner. 61.19 The information and advice furnished by the Minnesota 61.20 pollution control agency must include statements as to whether 61.21 the equipment, device, or real property meets a standard, rule, 61.22 criteria, guideline, policy, or order of the Minnesota pollution 61.23 control agency, and whether the equipment, device, or real 61.24 property is installed or operated in accordance with it. On 61.25 determining that property qualifies for exemption, the 61.26 commissioner shall issue an order exempting the property from 61.27 taxation. The equipmentor, device, or real property shall 61.28 continue to be exempt from taxation as long as thepermitorder 61.29 issued by theMinnesota pollution control agencycommissioner 61.30 remains in effect. 61.31 [EFFECTIVE DATE.] This section is effective for exemption 61.32 applications received on or after July 1, 2001. 61.33 Sec. 17. Minnesota Statutes 2000, section 273.061, 61.34 subdivision 1, is amended to read: 61.35 Subdivision 1. [OFFICE CREATED; APPOINTMENT, 61.36 QUALIFICATIONS.] Every county in this state shall have a county 62.1 assessor. The county assessor shall be appointed by the board 62.2 of county commissioners. The assessor shall be selected and 62.3 appointed because of knowledge and training in the field of 62.4 property taxation and appointment shall be approved by the 62.5 commissioner of revenue before the same shall become effective. 62.6 Upon receipt by the county commissioners of the commissioner of 62.7 revenue's refusal to approve an appointment, the term of the 62.8 appointee shall terminate at the end of that day. 62.9 The commissioner of revenue may grant approval on a 62.10 probationary basis for a period of two years. The commissioner 62.11 must base the decision to impose a probationary period on 62.12 objective and consistent criteria. At the end of the two-year 62.13 probationary period, the commissioner may either refuse to 62.14 approve the person's appointment for the remainder of the 62.15 person's four-year term, approve the person's appointment but 62.16 only for another two-year probationary period, or 62.17 unconditionally approve the person's appointment for the 62.18 remainder of the four-year term for which the person was 62.19 originally appointed by the county board. The criteria shall 62.20 not be considered rules and are not subject to the 62.21 Administrative Procedure Act. 62.22 Notwithstanding any law to the contrary, a county assessor 62.23 must have senior accreditation from the state board of assessors 62.24 by January 1, 1992, or within two years of the assessor's first 62.25 appointment under this section, whichever is later. 62.26 [EFFECTIVE DATE.] This section is effective the day 62.27 following final enactment. 62.28 Sec. 18. Minnesota Statutes 2000, section 273.061, 62.29 subdivision 2, is amended to read: 62.30 Subd. 2. [TERM; VACANCY.] (a) The terms of county 62.31 assessors appointed under this section shall be four years. A 62.32 new term shall begin on January 1 of every fourth year after 62.33 1973. When any vacancy in the office occurs, the board of 62.34 county commissioners, within3090 days thereafter, shall fill 62.35 the same by appointment for the remainder of the term, following 62.36 the procedure prescribed in subdivision 1. The term of the 63.1 county assessor may be terminated by the board of county 63.2 commissioners at any time, on charges ofinefficiency or neglect63.3of dutymalfeasance, misfeasance, or nonfeasance by the 63.4 commissioner of revenue. If the board of county commissioners 63.5 does not intend to reappoint a county assessor who has been 63.6 certified by the state board of assessors, the board shall 63.7 present written notice to the county assessor not later than 90 63.8 days prior to the termination of the assessor's term, that it 63.9 does not intend to reappoint the assessor. If written notice is 63.10 not timely made, the county assessor will automatically be 63.11 reappointed by the board of county commissioners. 63.12 The commissioner of revenue may recommend to the state 63.13 board of assessors the nonrenewal, suspension, or revocation of 63.14 an assessor's license as provided in sections 270.41 to 270.53. 63.15 (b) In the event of a vacancy in the office of county 63.16 assessor, through death, resignation or other reasons, the 63.17 deputy (or chief deputy, if more than one) shall perform the 63.18 functions of the office. If there is no deputy, the county 63.19 auditor shall designate a person to perform the duties of the 63.20 office until an appointment is made as provided in clause (a). 63.21 Such person shall perform the duties of the office for a period 63.22 not exceeding3090 days during which the county board must 63.23 appoint a county assessor. Such30-day90-day period may, 63.24 however, be extended by written approval of the commissioner of 63.25 revenue. 63.26 (c) In the case of the first appointment under paragraph 63.27 (a) of a county assessor who is accredited but who does not have 63.28 senior accreditation, an approval of the appointment by the 63.29 commissioner shall be provisional, provided that a county 63.30 assessor appointed to a provisional term under this paragraph 63.31 must reapply to the commissioner at the end of the provisional 63.32 term. A provisional term may not exceed two years. The 63.33 commissioner shall not approve the appointment for the remainder 63.34 of the four-year term unless the assessor has obtained senior 63.35 accreditation. 63.36 [EFFECTIVE DATE.] This section is effective the day 64.1 following final enactment. 64.2 Sec. 19. Minnesota Statutes 2000, section 273.061, 64.3 subdivision 8, is amended to read: 64.4 Subd. 8. [POWERS AND DUTIES.] The county assessor shall 64.5 have the following powers and duties: 64.6 (1) To call upon and confer with the township and city 64.7 assessors in the county, and advise and give them the necessary 64.8 instructions and directions as to their duties under the laws of 64.9 this state, to the end that a uniform assessment of all real 64.10 property in the county will be attained. 64.11 (2) To assist and instruct the local assessors in the 64.12 preparation and proper use of land maps and record cards, in the 64.13 property classification of real and personal property, and in 64.14 the determination of proper standards of value. 64.15 (3) To keep the local assessors in the county advised of 64.16 all changes in assessment laws and all instructions which the 64.17 assessor receives from the commissioner of revenue relating to 64.18 their duties. 64.19 (4) Tohave authority torequire the attendance of groups 64.20 of local assessors at sectional meetings called by the assessor 64.21 for the purpose of giving them further assistance and 64.22 instruction as to their duties. 64.23 (5) To require the attendance of all licensed assessors 64.24 working in that county at instructional meetings attended by the 64.25 department of revenue regional representative to provide 64.26 assistance and instruction as to their duties under the law and 64.27 the proper implementation of assessment procedures. 64.28 (6) To immediately commence the preparation of a large 64.29 scale topographical land map of the county, in such form as may 64.30 be prescribed by the commissioner of revenue, showing thereon 64.31 the location of all railroads, highways and roads, bridges, 64.32 rivers and lakes, swamp areas, wooded tracts, stony ridges and 64.33 other features which might affect the value of the land. 64.34 Appropriate symbols shall be used to indicate the best, the 64.35 fair, and the poor land of the county. For use in connection 64.36 with the topographical land map, the assessor shall prepare and 65.1 keep available in the assessor's office tables showing fair 65.2 average minimum and maximum market values per acre of 65.3 cultivated, meadow, pasture, cutover, timber and waste lands of 65.4 each township. The assessor shall keep the map and tables 65.5 available in the office for the guidance of town assessors, 65.6 boards of review, and the county board of equalization. 65.7(6)(7) To also prepare and keep available in the office 65.8 for the guidance of town assessors, boards of review and the 65.9 county board of equalization, a land valuation map of the 65.10 county, in such form as may be prescribed by the commissioner of 65.11 revenue. This map, which shall include the bordering tier of 65.12 townships of each county adjoining, shall show the average 65.13 market value per acre, both with and without improvements, as 65.14 finally equalized in the last assessment of real estate, of all 65.15 land in each town or unorganized township which lies outside the 65.16 corporate limits of cities. 65.17(7)(8) To regularly examine all conveyances of land 65.18 outside the corporate limits of cities of the first and second 65.19 class, filed with the county recorder of the county, and keep a 65.20 file, by descriptions, of the considerations shown thereon. 65.21 From the information obtained by comparing the considerations 65.22 shown with the market values assessed, the assessor shall make 65.23 recommendations to the county board of equalization of necessary 65.24 changes in individual assessments or aggregate valuations. 65.25(8)(9) To become familiar with the values of the different 65.26 items of personal property so as to be in a position when called 65.27 upon to advise the boards of review and the county board of 65.28 equalization concerning property, market values thereof. 65.29(9)(10) While the county board of equalization is in 65.30 session, to give it every possible assistance to enable it to 65.31 perform its duties. The assessor shall furnish the board with 65.32 all necessary charts, tables, comparisons, and data which it 65.33 requires in its deliberations, and shall make whatever 65.34 investigations the board may desire. 65.35(10)(11) At the request of either the board of county 65.36 commissioners or the commissioner of revenue, to investigate 66.1 applications for reductions of valuation and abatements and 66.2 settlements of taxes, examine the real or personal property 66.3 involved, and submit written reports and recommendations with 66.4 respect to the applications, in such form as may be prescribed 66.5 by the board of county commissioners and commissioner of revenue. 66.6(11)(12) To make diligent search each year for real and 66.7 personal property which has been omitted from assessment in the 66.8 county, and report all such omissions to the county auditor. 66.9(12)(13) To regularly confer with county assessors in all 66.10 adjacent counties about the assessment of property in order to 66.11 uniformly assess and equalize the value of similar properties 66.12 and classes of property located in adjacent counties. The 66.13 conference shall emphasize the assessment of agricultural and 66.14 commercial and industrial property or other properties that may 66.15 have an inadequate number of sales in a single county. 66.16(13)(14) To render such other services pertaining to the 66.17 assessment of real and personal property in the county as are 66.18 not inconsistent with the duties set forth in this section, and 66.19 as may be required by the board of county commissioners or by 66.20 the commissioner of revenue. 66.21(14)(15) To maintain a record, in conjunction with other 66.22 county offices, of all transfers of property to assist in 66.23 determining the proper classification of property, including but 66.24 not limited to, transferring homestead property and name changes 66.25 on homestead property. 66.26(15)(16) To determine if a homestead application is 66.27 required due to the transfer of homestead property or an owner's 66.28 name change on homestead property. 66.29 [EFFECTIVE DATE.] This section is effective July 1, 2001, 66.30 and thereafter. 66.31 Sec. 20. [273.0755] [TRAINING AND EDUCATION OF PROPERTY 66.32 TAX PERSONNEL.] 66.33 (a) Beginning with the four-year period starting on July 1, 66.34 2000, every person licensed by the state board of assessors at 66.35 the Accredited Minnesota Assessor level or higher, shall 66.36 successfully complete a week-long Minnesota laws course 67.1 sponsored by the department of revenue at least once in every 67.2 four-year period. An assessor need not attend the course if 67.3 they successfully pass the test for the course. 67.4 (b) The commissioner of revenue may require that each 67.5 county, and each city for which the city assessor performs the 67.6 duties of county assessor, have (i) a person on the assessor's 67.7 staff who is certified by the department of revenue in sales 67.8 ratio calculations, (ii) an officer or employee who is certified 67.9 by the department of revenue in tax calculations, and (iii) an 67.10 officer or employee who is certified by the department of 67.11 revenue in the proper preparation of abstracts of assessment. 67.12 The commissioner of revenue may require that each county have an 67.13 officer or employee who is certified by the department of 67.14 revenue in the proper preparation of abstracts of tax lists. 67.15 [EFFECTIVE DATE.] This section is effective July 1, 2001, 67.16 and thereafter. 67.17 Sec. 21. Minnesota Statutes 2000, section 273.11, 67.18 subdivision 1a, is amended to read: 67.19 Subd. 1a. [LIMITED MARKET VALUE.] (a) In the case of all 67.20 property classified as agricultural homestead or nonhomestead, 67.21 residential homestead or nonhomestead, or noncommercial seasonal 67.22 recreational residential, the assessor shall compare the value 67.23 with that determined in the preceding assessment. The amount of 67.24 the increase entered in the current assessment shall not exceed 67.25 the greater of (1) 8.5 percent of the value in the preceding 67.26 assessment, or (2) 15 percent of the difference between the 67.27 current assessment and the preceding assessment. This 67.28 limitation shall not apply to increases in value due to 67.29 improvements. For purposes of thissubdivisionparagraph, the 67.30 term "assessment" means the value prior to any exclusion under 67.31 subdivision 16. 67.32 The provisions of thissubdivisionparagraph shall be in 67.33 effect only through assessment year 2001. 67.34 (b) For purposes of the assessment/sales ratio study 67.35 conducted under section 127A.48, and the computation of state 67.36 aids paid under chapters 122A, 123A, 123B, 124D, 125A, 126C, 68.1 127A, and 477A, market values andnet tax capacitiesassessed 68.2 values determined under this subdivision and subdivision 16, 68.3 shall be used. 68.4 (c) In each of the assessment years 2002, 2003, and 2004, 68.5 the assessor shall enter the sum of the following amounts for 68.6 the properties described in paragraph (a): (i) the value 68.7 entered for the preceding assessment; (ii) the entire amount of 68.8 the increase between the amount determined for the prior 68.9 assessment and the amount determined for the current assessment; 68.10 plus (iii) one-third of the difference between the value entered 68.11 for the 2001 assessment and the value determined for the 2001 68.12 assessment. This limitation does not apply to increases in 68.13 value due to new improvements. For purposes of this paragraph, 68.14 the term "assessment" means the value prior to any exclusions 68.15 under subdivision 16. 68.16 [EFFECTIVE DATE.] This section is effective the day 68.17 following final enactment. 68.18 Sec. 22. Minnesota Statutes 2000, section 273.121, is 68.19 amended to read: 68.20 273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 68.21 Any county assessor or city assessor having the powers of a 68.22 county assessor, valuing or classifying taxable real property 68.23 shall in each year notify those persons whose property is to be 68.24assessed or reclassifiedincluded on the assessment roll that 68.25 year if the person's address is known to the assessor, otherwise 68.26 the occupant of the property. The notice shall be in writing 68.27 and shall be sent by ordinary mail at least ten days before the 68.28 meeting of the local board of review or equalization under 68.29 section 274.01 or the review process established under section 68.30 274.13, subdivision 1c. The notice may not be mailed within 68.31 five working days of the mailing of the tax statements, unless 68.32 this restriction conflicts with the mailing dates in the 68.33 preceding sentence or in section 276.04 and the approval of the 68.34 commissioner of revenue is obtained for a mailing within the 68.35 five-day period. It shall contain: (1) the market value for 68.36 the current and the prior assessment, (2) the limited market 69.1 value under section 273.11, subdivision 1a for the current and 69.2 the prior assessment, (3) the qualifying amount of any 69.3 improvements under section 273.11, subdivision 16 for the 69.4 current assessment, (4) the market value subject to taxation 69.5 after subtracting the amount of any qualifying improvements for 69.6 the current assessment, (5) thenewclassification of the 69.7 property for the current and prior assessment, (6) a note that 69.8 if the property is homestead and at least 35 years old, 69.9 improvements made to the property may be eligible for a 69.10 valuation exclusion under section 273.11, subdivision 16, (7) 69.11 the assessor's office address, and (8) the dates, places, and 69.12 times set for the meetings of the local board of review or 69.13 equalization, the review process established under section 69.14 274.13, subdivision 1c, and the county board of appeal and 69.15 equalization.If the assessment roll is not complete, the69.16notice shall be sent by ordinary mail at least ten days prior to69.17the date on which the board of review has adjournedThe 69.18 commissioner of revenue shall specify the form of the notice. 69.19 The assessor shall attach to the assessment roll a statement 69.20 that the notices required by this section have been mailed. Any 69.21 assessor who is not provided sufficient funds from the 69.22 assessor's governing body to provide such notices, may make 69.23 application to the commissioner of revenue to finance such 69.24 notices. The commissioner of revenue shall conduct an 69.25 investigation and, if satisfied that the assessor does not have 69.26 the necessary funds, issue a certification to the commissioner 69.27 of finance of the amount necessary to provide such notices. The 69.28 commissioner of finance shall issue a warrant for such amount 69.29 and shall deduct such amount from any state payment to such 69.30 county or municipality. The necessary funds to make such 69.31 payments are hereby appropriated. Failure to receive the notice 69.32 shall in no way affect the validity of the assessment, the 69.33 resulting tax, the procedures of any board of review or 69.34 equalization, or the enforcement of delinquent taxes by 69.35 statutory means. 69.36 [EFFECTIVE DATE.] This section is effective for notices 70.1 required to be mailed in 2002 and thereafter. 70.2 Sec. 23. Minnesota Statutes 2000, section 273.124, 70.3 subdivision 13, is amended to read: 70.4 Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets 70.5 the homestead requirements under subdivision 1 must file a 70.6 homestead application with the county assessor to initially 70.7 obtain homestead classification. 70.8 (b) On or before January 2, 1993, each county assessor 70.9 shall mail a homestead application to the owner of each parcel 70.10 of property within the county which was classified as homestead 70.11 for the 1992 assessment year. The format and contents of a 70.12 uniform homestead application shall be prescribed by the 70.13 commissioner of revenue. The commissioner shall consult with 70.14 the chairs of the house and senate tax committees on the 70.15 contents of the homestead application form. The application 70.16 must clearly inform the taxpayer that this application must be 70.17 signed by all owners who occupy the property or by the 70.18 qualifying relative and returned to the county assessor in order 70.19 for the property to continue receiving homestead treatment. The 70.20 envelope containing the homestead application shall clearly 70.21 identify its contents and alert the taxpayer of its necessary 70.22 immediate response. 70.23 (c) Every property owner applying for homestead 70.24 classification must furnish to the county assessor the social 70.25 security number of each occupant who is listed as an owner of 70.26 the property on the deed of record, the name and address of each 70.27 owner who does not occupy the property, and the name and social 70.28 security number of each owner's spouse who occupies the 70.29 property. The application must be signed by each owner who 70.30 occupies the property and by each owner's spouse who occupies 70.31 the property, or, in the case of property that qualifies as a 70.32 homestead under subdivision 1, paragraph (c), by the qualifying 70.33 relative. 70.34 If a property owner occupies a homestead, the property 70.35 owner's spouse may not claim another property as a homestead 70.36 unless the property owner and the property owner's spouse file 71.1 with the assessor an affidavit or other proof required by the 71.2 assessor stating that the property qualifies as a homestead 71.3 under subdivision 1, paragraph (e). 71.4 Owners or spouses occupying residences owned by their 71.5 spouses and previously occupied with the other spouse, either of 71.6 whom fail to include the other spouse's name and social security 71.7 number on the homestead application or provide the affidavits or 71.8 other proof requested, will be deemed to have elected to receive 71.9 only partial homestead treatment of their residence. The 71.10 remainder of the residence will be classified as nonhomestead 71.11 residential. When an owner or spouse's name and social security 71.12 number appear on homestead applications for two separate 71.13 residences and only one application is signed, the owner or 71.14 spouse will be deemed to have elected to homestead the residence 71.15 for which the application was signed. 71.16 The social security numbers or affidavits or other proofs 71.17 of the property owners and spouses are private data on 71.18 individuals as defined by section 13.02, subdivision 12, but, 71.19 notwithstanding that section, the private data may be disclosed 71.20 to the commissioner of revenue, or, for purposes of proceeding 71.21 under the Revenue Recapture Act to recover personal property 71.22 taxes owing, to the county treasurer. 71.23 (d) If residential real estate is occupied and used for 71.24 purposes of a homestead by a relative of the owner and qualifies 71.25 for a homestead under subdivision 1, paragraph (c), in order for 71.26 the property to receive homestead status, a homestead 71.27 application must be filed with the assessor. The social 71.28 security number of each relative occupying the property and the 71.29 social security number of each owner who is related to an 71.30 occupant of the property shall be required on the homestead 71.31 application filed under this subdivision. If a different 71.32 relative of the owner subsequently occupies the property, the 71.33 owner of the property must notify the assessor within 30 days of 71.34 the change in occupancy. The social security number of a 71.35 relative occupying the property is private data on individuals 71.36 as defined by section 13.02, subdivision 12, but may be 72.1 disclosed to the commissioner of revenue. 72.2 (e) The homestead application shall also notify the 72.3 property owners that the application filed under this section 72.4 will not be mailed annually and that if the property is granted 72.5 homestead status for the 1993 assessment, or any assessment year 72.6 thereafter, that same property shall remain classified as 72.7 homestead until the property is sold or transferred to another 72.8 person, or the owners, the spouse of the owner, or the relatives 72.9 no longer use the property as their homestead. Upon the sale or 72.10 transfer of the homestead property, a certificate of value must 72.11 be timely filed with the county auditor as provided under 72.12 section 272.115. Failure to notify the assessor within 30 days 72.13 that the property has been sold, transferred, or that the owner, 72.14 the spouse of the owner, or the relative is no longer occupying 72.15 the property as a homestead, shall result in the penalty 72.16 provided under this subdivision and the property will lose its 72.17 current homestead status. 72.18 (f) If the homestead application is not returned within 30 72.19 days, the county will send a second application to the present 72.20 owners of record. The notice of proposed property taxes 72.21 prepared under section 275.065, subdivision 3, shall reflect the 72.22 property's classification. Beginning with assessment year 1993 72.23 for all properties, if a homestead application has not been 72.24 filed with the county by December 15, the assessor shall 72.25 classify the property as nonhomestead for the current assessment 72.26 year for taxes payable in the following year, provided that the 72.27 owner may be entitled to receive the homestead classification by 72.28 proper application under section 375.192. 72.29 (g) At the request of the commissioner, each county must 72.30 give the commissioner a list that includes the name and social 72.31 security number of each property owner and the property owner's 72.32 spouse occupying the property, or relative of a property owner, 72.33 applying for homestead classification under this subdivision. 72.34 The commissioner shall use the information provided on the lists 72.35 as appropriate under the law, including for the detection of 72.36 improper claims by owners, or relatives of owners, under chapter 73.1 290A. 73.2 (h) If the commissioner finds that a property owner may be 73.3 claiming a fraudulent homestead, the commissioner shall notify 73.4 the appropriate counties. Within 90 days of the notification, 73.5 the county assessor shall investigate to determine if the 73.6 homestead classification was properly claimed. If the property 73.7 owner does not qualify, the county assessor shall notify the 73.8 county auditor who will determine the amount of homestead 73.9 benefits that had been improperly allowed. For the purpose of 73.10 this section, "homestead benefits" means the tax reduction 73.11 resulting from the classification as a homestead under section 73.12 273.13, the taconite homestead credit under section 273.135, the 73.13 residential homestead and agricultural homestead credits under 73.14 section 273.1384, and the supplemental homestead credit under 73.15 section 273.1391. 73.16 The county auditor shall send a notice to the person who 73.17 owned the affected property at the time the homestead 73.18 application related to the improper homestead was filed, 73.19 demanding reimbursement of the homestead benefits plus a penalty 73.20 equal to 100 percent of the homestead benefits. The person 73.21 notified may appeal the county's determination by serving copies 73.22 of a petition for review with county officials as provided in 73.23 section 278.01 and filing proof of service as provided in 73.24 section 278.01 with the Minnesota tax court within 60 days of 73.25 the date of the notice from the county. Procedurally, the 73.26 appeal is governed by the provisions in chapter 271 which apply 73.27 to the appeal of a property tax assessment or levy, but without 73.28 requiring any prepayment of the amount in controversy. If the 73.29 amount of homestead benefits and penalty is not paid within 60 73.30 days, and if no appeal has been filed, the county auditor shall 73.31 certify the amount of taxes and penalty to the county 73.32 treasurer. The county treasurer will add interest to the unpaid 73.33 homestead benefits and penalty amounts at the rate provided in 73.34 section 279.03 for real property taxes becoming delinquent in 73.35 the calendar year during which the amount remains unpaid. 73.36 Interest may be assessed for the period beginning 60 days after 74.1 demand for payment was made. 74.2 If the person notified is the current owner of the 74.3 property, the treasurer may add the total amount of homestead 74.4 benefits, penalty, interest, and costs to the ad valorem taxes 74.5 otherwise payable on the property by including the amounts on 74.6 the property tax statements under section 276.04, subdivision 74.7 3. The amounts added under this paragraph to the ad valorem 74.8 taxes shall include interest accrued through December 31 of the 74.9 year preceding the taxes payable year for which the amounts are 74.10 first added. These amounts, when added to the property tax 74.11 statement, become subject to all the laws for the enforcement of 74.12 real or personal property taxes for that year, and for any 74.13 subsequent year. 74.14 If the person notified is not the current owner of the 74.15 property, the treasurer may collect the amounts due under the 74.16 Revenue Recapture Act in chapter 270A, or use any of the powers 74.17 granted in sections 277.20 and 277.21 without exclusion, to 74.18 enforce payment of the homestead benefits, penalty, interest, 74.19 and costs, as if those amounts were delinquent tax obligations 74.20 of the person who owned the property at the time the application 74.21 related to the improperly allowed homestead was filed. The 74.22 treasurer may relieve a prior owner of personal liability for 74.23 the homestead benefits, penalty, interest, and costs, and 74.24 instead extend those amounts on the tax lists against the 74.25 property as provided in this paragraph to the extent that the 74.26 current owner agrees in writing. On all demands, billings, 74.27 property tax statements, and related correspondence, the county 74.28 must list and state separately the amounts of homestead 74.29 benefits, penalty, interest and costs being demanded, billed or 74.30 assessed. 74.31 (i) Any amount of homestead benefits recovered by the 74.32 county from the property owner shall be distributed to the 74.33 county, city or town, and school district where the property is 74.34 located in the same proportion that each taxing district's levy 74.35 was to the total of the three taxing districts' levy for the 74.36 current year. Any amount recovered attributable to taconite 75.1 homestead credit shall be transmitted to the St. Louis county 75.2 auditor to be deposited in the taconite property tax relief 75.3 account. Any amount recovered that is attributable to 75.4 supplemental homestead credit is to be transmitted to the 75.5 commissioner of revenue for deposit in the general fund of the 75.6 state treasury. The total amount of penalty collected must be 75.7 deposited in the county general fund. 75.8 (j) If a property owner has applied for more than one 75.9 homestead and the county assessors cannot determine which 75.10 property should be classified as homestead, the county assessors 75.11 will refer the information to the commissioner. The 75.12 commissioner shall make the determination and notify the 75.13 counties within 60 days. 75.14 (k) In addition to lists of homestead properties, the 75.15 commissioner may ask the counties to furnish lists of all 75.16 properties and the record owners. The social security numbers 75.17 and federal identification numbers that are maintained by a 75.18 county or city assessor for property tax administration 75.19 purposes, and that may appear on the lists retain their 75.20 classification as private or nonpublic data; but may be viewed, 75.21 accessed, and used by the county auditor or treasurer of the 75.22 same county for the limited purpose of assisting the 75.23 commissioner in the preparation of microdata samples under 75.24 section 270.0681. 75.25 [EFFECTIVE DATE.] This section is effective for homestead 75.26 applications submitted on or after the day following final 75.27 enactment. 75.28 Sec. 24. Minnesota Statutes 2000, section 273.13, is 75.29 amended by adding a subdivision to read: 75.30 Subd. 21c. [ASSESSED VALUE.] "Assessed value" means the 75.31 product of the appropriate class rates in this section and 75.32 market values. 75.33 [EFFECTIVE DATE.] This section is effective for taxes 75.34 payable in 2002 and thereafter. 75.35 Sec. 25. Minnesota Statutes 2000, section 273.13, 75.36 subdivision 22, is amended to read: 76.1 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 76.2 23 and in paragraphs (b) and (c), real estate which is 76.3 residential and used for homestead purposes is class11a. The 76.4 market value of class 1a property must be determined based upon 76.5 the value of the house, garage, and land. 76.6 The first$76,000$200,000 of market value of class 1a 76.7 property has anetclass rate ofone percent of its market value76.8 0.50; and the market value of class 1a property that 76.9 exceeds$76,000$200,000 has a class rate of1.65 percent of its76.10market value0.75. 76.11 (b) Class 1b property includes homestead real estate or 76.12 homestead manufactured homes used for the purposes of a 76.13 homestead by 76.14 (1) any blind person, or the blind person and the blind 76.15 person's spouse; or 76.16 (2) any person, hereinafter referred to as "veteran," who: 76.17 (i) served in the active military or naval service of the 76.18 United States; and 76.19 (ii) is entitled to compensation under the laws and 76.20 regulations of the United States for permanent and total 76.21 service-connected disability due to the loss, or loss of use, by 76.22 reason of amputation, ankylosis, progressive muscular 76.23 dystrophies, or paralysis, of both lower extremities, such as to 76.24 preclude motion without the aid of braces, crutches, canes, or a 76.25 wheelchair; and 76.26 (iii) has acquired a special housing unit with special 76.27 fixtures or movable facilities made necessary by the nature of 76.28 the veteran's disability, or the surviving spouse of the 76.29 deceased veteran for as long as the surviving spouse retains the 76.30 special housing unit as a homestead; or 76.31 (3) any person who: 76.32 (i) is permanently and totally disabled and 76.33 (ii) receives 90 percent or more of total household income, 76.34 as defined in section 290A.03, subdivision 5, from 76.35 (A) aid from any state as a result of that disability; or 76.36 (B) supplemental security income for the disabled; or 77.1 (C) workers' compensation based on a finding of total and 77.2 permanent disability; or 77.3 (D) social security disability, including the amount of a 77.4 disability insurance benefit which is converted to an old age 77.5 insurance benefit and any subsequent cost of living increases; 77.6 or 77.7 (E) aid under the federal Railroad Retirement Act of 1937, 77.8 United States Code Annotated, title 45, section 228b(a)5; or 77.9 (F) a pension from any local government retirement fund 77.10 located in the state of Minnesota as a result of that 77.11 disability; or 77.12 (G) pension, annuity, or other income paid as a result of 77.13 that disability from a private pension or disability plan, 77.14 including employer, employee, union, and insurance plans and 77.15 (iii) has household income as defined in section 290A.03, 77.16 subdivision 5, of $50,000 or less; or 77.17 (4) any person who is permanently and totally disabled and 77.18 whose household income as defined in section 290A.03, 77.19 subdivision 5, is 275 percent or less of the federal poverty 77.20 level. 77.21 Property is classified and assessed under clause (4) only 77.22 if the government agency or income-providing source certifies, 77.23 upon the request of the homestead occupant, that the homestead 77.24 occupant satisfies the disability requirements of this paragraph. 77.25 Property is classified and assessed pursuant to clause (1) 77.26 only if the commissioner of economic security certifies to the 77.27 assessor that the homestead occupant satisfies the requirements 77.28 of this paragraph. 77.29 Permanently and totally disabled for the purpose of this 77.30 subdivision means a condition which is permanent in nature and 77.31 totally incapacitates the person from working at an occupation 77.32 which brings the person an income. The first $32,000 market 77.33 value of class 1b property has anetclass rate of.45 percent77.34of its market value0.225. The remaining market value of class 77.35 1b property has anetclass rate using the rates for class11a 77.36 or class 2a property, whichever is appropriate, of similar 78.1 market value. 78.2 (c) Class 1c property is commercial use real property that 78.3 abuts a lakeshore line and is devoted to temporary and seasonal 78.4 residential occupancy for recreational purposes but not devoted 78.5 to commercial purposes for more than 250 days in the year 78.6 preceding the year of assessment, and that includes a portion 78.7 used as a homestead by the owner, which includes a dwelling 78.8 occupied as a homestead by a shareholder of a corporation that 78.9 owns the resort or a partner in a partnership that owns the 78.10 resort, even if the title to the homestead is held by the 78.11 corporation or partnership. For purposes of this clause, 78.12 property is devoted to a commercial purpose on a specific day if 78.13 any portion of the property, excluding the portion used 78.14 exclusively as a homestead, is used for residential occupancy 78.15 and a fee is charged for residential occupancy. The first 78.16 $200,000 of market value of class 1c property has a class rate 78.17 ofone percent of total0.50, and the remaining market value of 78.18 class 1c property has a class rate of 0.75, with the following 78.19 limitation: the area of the property must not exceed 100 feet 78.20 of lakeshore footage for each cabin or campsite located on the 78.21 property up to a total of 800 feet and 500 feet in depth, 78.22 measured away from the lakeshore. If any portion of the class 78.23 1c resort property is classified as class 4c under subdivision 78.24 25, the entire property must meet the requirements of 78.25 subdivision 25, paragraph (d), clause (1), to qualify for class 78.26 1c treatment under this paragraph. 78.27 (d) Class 1d property includes structures that meet all of 78.28 the following criteria: 78.29 (1) the structure is located on property that is classified 78.30 as agricultural property under section 273.13, subdivision 23; 78.31 (2) the structure is occupied exclusively by seasonal farm 78.32 workers during the time when they work on that farm, and the 78.33 occupants are not charged rent for the privilege of occupying 78.34 the property, provided that use of the structure for storage of 78.35 farm equipment and produce does not disqualify the property from 78.36 classification under this paragraph; 79.1 (3) the structure meets all applicable health and safety 79.2 requirements for the appropriate season; and 79.3 (4) the structure is not salable as residential property 79.4 because it does not comply with local ordinances relating to 79.5 location in relation to streets or roads. 79.6 The market value of class 1d property has the same class 79.7 rates as class 1a property under paragraph (a). 79.8 [EFFECTIVE DATE.] This section is effective for taxes 79.9 payable in 2002 and thereafter. 79.10 Sec. 26. Minnesota Statutes 2000, section 273.13, 79.11 subdivision 23, is amended to read: 79.12 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 79.13 land including any improvements that is homesteaded. The market 79.14 value of the house and garage and immediately surrounding one 79.15 acre of land has the same class rates as class 1a property under 79.16 subdivision 22. The market value of the remaining land 79.17 including improvements up to$115,000$600,000 has anetclass 79.18 rate of0.35 percent of market value0.30. The market value of 79.19 class 2a property over$115,000 of market value up to and79.20including$600,000market valuehas anetclass rate of0.879.21percent of market value0.50.The remaining property over79.22$600,000 market value has a class rate of 1.20 percent of market79.23value.79.24 (b) Class 2b property is (1) real estate, rural in 79.25 character and used exclusively for growing trees for timber, 79.26 lumber, and wood and wood products; (2) real estate that is not 79.27 improved with a structure and is used exclusively for growing 79.28 trees for timber, lumber, and wood and wood products, if the 79.29 owner has participated or is participating in a cost-sharing 79.30 program for afforestation, reforestation, or timber stand 79.31 improvement on that particular property, administered or 79.32 coordinated by the commissioner of natural resources; (3) real 79.33 estate that is nonhomestead agricultural land; or (4) a landing 79.34 area or public access area of a privately owned public use 79.35 airport. The market value of class 2b property has anetclass 79.36 rate of1.20 percent of market value0.50. 80.1 (c) Agricultural land as used in this section means 80.2 contiguous acreage of ten acres or more, used during the 80.3 preceding year for agricultural purposes. "Agricultural 80.4 purposes" as used in this section means the raising or 80.5 cultivation of agricultural products or enrollment in the 80.6 Reinvest in Minnesota program under sections 103F.501 to 80.7 103F.535 or the federal Conservation Reserve Program as 80.8 contained in Public Law Number 99-198. Contiguous acreage on 80.9 the same parcel, or contiguous acreage on an immediately 80.10 adjacent parcel under the same ownership, may also qualify as 80.11 agricultural land, but only if it is pasture, timber, waste, 80.12 unusable wild land, or land included in state or federal farm 80.13 programs. Agricultural classification for property shall be 80.14 determined excluding the house, garage, and immediately 80.15 surrounding one acre of land, and shall not be based upon the 80.16 market value of any residential structures on the parcel or 80.17 contiguous parcels under the same ownership. 80.18 (d) Real estate, excluding the house, garage, and 80.19 immediately surrounding one acre of land, of less than ten acres 80.20 which is exclusively and intensively used for raising or 80.21 cultivating agricultural products, shall be considered as 80.22 agricultural land. 80.23 Land shall be classified as agricultural even if all or a 80.24 portion of the agricultural use of that property is the leasing 80.25 to, or use by another person for agricultural purposes. 80.26 Classification under this subdivision is not determinative 80.27 for qualifying under section 273.111. 80.28 The property classification under this section supersedes, 80.29 for property tax purposes only, any locally administered 80.30 agricultural policies or land use restrictions that define 80.31 minimum or maximum farm acreage. 80.32 (e) The term "agricultural products" as used in this 80.33 subdivision includes production for sale of: 80.34 (1) livestock, dairy animals, dairy products, poultry and 80.35 poultry products, fur-bearing animals, horticultural and nursery 80.36 stock described in sections 18.44 to 18.61, fruit of all kinds, 81.1 vegetables, forage, grains, bees, and apiary products by the 81.2 owner; 81.3 (2) fish bred for sale and consumption if the fish breeding 81.4 occurs on land zoned for agricultural use; 81.5 (3) the commercial boarding of horses if the boarding is 81.6 done in conjunction with raising or cultivating agricultural 81.7 products as defined in clause (1); 81.8 (4) property which is owned and operated by nonprofit 81.9 organizations used for equestrian activities, excluding racing; 81.10 (5) game birds and waterfowl bred and raised for use on a 81.11 shooting preserve licensed under section 97A.115; 81.12 (6) insects primarily bred to be used as food for animals; 81.13 and 81.14 (7) trees, grown for sale as a crop, and not sold for 81.15 timber, lumber, wood, or wood products. 81.16 (f) If a parcel used for agricultural purposes is also used 81.17 for commercial or industrial purposes, including but not limited 81.18 to: 81.19 (1) wholesale and retail sales; 81.20 (2) processing of raw agricultural products or other goods; 81.21 (3) warehousing or storage of processed goods; and 81.22 (4) office facilities for the support of the activities 81.23 enumerated in clauses (1), (2), and (3), 81.24 the assessor shall classify the part of the parcel used for 81.25 agricultural purposes as class 1b, 2a, or 2b, whichever is 81.26 appropriate, and the remainder in the class appropriate to its 81.27 use. The grading, sorting, and packaging of raw agricultural 81.28 products for first sale is considered an agricultural purpose. 81.29 A greenhouse or other building where horticultural or nursery 81.30 products are grown that is also used for the conduct of retail 81.31 sales must be classified as agricultural if it is primarily used 81.32 for the growing of horticultural or nursery products from seed, 81.33 cuttings, or roots and occasionally as a showroom for the retail 81.34 sale of those products. Use of a greenhouse or building only 81.35 for the display of already grown horticultural or nursery 81.36 products does not qualify as an agricultural purpose. 82.1 The assessor shall determine and list separately on the 82.2 records the market value of the homestead dwelling and the one 82.3 acre of land on which that dwelling is located. If any farm 82.4 buildings or structures are located on this homesteaded acre of 82.5 land, their market value shall not be included in this separate 82.6 determination. 82.7 (g) To qualify for classification under paragraph (b), 82.8 clause (4), a privately owned public use airport must be 82.9 licensed as a public airport under section 360.018. For 82.10 purposes of paragraph (b), clause (4), "landing area" means that 82.11 part of a privately owned public use airport properly cleared, 82.12 regularly maintained, and made available to the public for use 82.13 by aircraft and includes runways, taxiways, aprons, and sites 82.14 upon which are situated landing or navigational aids. A landing 82.15 area also includes land underlying both the primary surface and 82.16 the approach surfaces that comply with all of the following: 82.17 (i) the land is properly cleared and regularly maintained 82.18 for the primary purposes of the landing, taking off, and taxiing 82.19 of aircraft; but that portion of the land that contains 82.20 facilities for servicing, repair, or maintenance of aircraft is 82.21 not included as a landing area; 82.22 (ii) the land is part of the airport property; and 82.23 (iii) the land is not used for commercial or residential 82.24 purposes. 82.25 The land contained in a landing area under paragraph (b), clause 82.26 (4), must be described and certified by the commissioner of 82.27 transportation. The certification is effective until it is 82.28 modified, or until the airport or landing area no longer meets 82.29 the requirements of paragraph (b), clause (4). For purposes of 82.30 paragraph (b), clause (4), "public access area" means property 82.31 used as an aircraft parking ramp, apron, or storage hangar, or 82.32 an arrival and departure building in connection with the airport. 82.33 [EFFECTIVE DATE.] This section is effective for taxes 82.34 payable in 2002 and thereafter. 82.35 Sec. 27. Minnesota Statutes 2000, section 273.13, 82.36 subdivision 24, is amended to read: 83.1 Subd. 24. [CLASS 3.] (a) Commercial and industrial 83.2 property and utility real and personal property is class 3a. 83.3 (1) Except as otherwise provided, each parcel of 83.4 commercial, industrial, or utility real property has a class 83.5 rate of2.4 percent of0.75 for the first tier of market value, 83.6 and3.4 percent of1.0 for the remaining market value. In the 83.7 case of contiguous parcels of property owned by the same person 83.8 or entity, only the value equal to the first-tier value of the 83.9 contiguous parcels qualifies for the reduced class rate, except 83.10 that contiguous parcels owned by the same person or entity shall 83.11 be eligible for the first-tier value class rate on each separate 83.12 business operated by the owner of the property, provided the 83.13 business is housed in a separate structure. For the purposes of 83.14 this subdivision, the first tier means the 83.15 first$150,000$200,000 of market value. Real property owned in 83.16 fee by a utility for transmission line right-of-way shall be 83.17 classified at the class rate for the higher tier. 83.18 For purposes of this subdivision, parcels are considered to 83.19 be contiguous even if they are separated from each other by a 83.20 road, street, waterway, or other similar intervening type of 83.21 property. Connections between parcels that consist of power 83.22 lines or pipelines do not cause the parcels to be contiguous. 83.23 Property owners who have contiguous parcels of property that 83.24 constitute separate businesses that may qualify for the 83.25 first-tier class rate shall notify the assessor by July 1, for 83.26 treatment beginning in the following taxes payable year. 83.27 (2) Notwithstanding clauses (1) and (3), all railroad 83.28 operating property and all personal property that is: (i) part 83.29 of an electric generation, transmission, or distribution system; 83.30 or (ii) part of a pipeline system transporting or distributing 83.31 water, gas, crude oil, or petroleum products; and (iii) not 83.32 described in clause (3), has a class rateas provided under83.33clause (1) for the first tierof 0.75 for the first $200,000 of 83.34 market value and a class rate of 1.0 for the remaining market 83.35 value. In the case of multiple parcels in one county that are 83.36 owned by one person or entity, only one first tier amount is 84.1 eligible for the reduced rate. 84.2 (3) The entire market value of personal property that is: 84.3 (i) tools, implements, and machinery of an electric generation, 84.4 transmission, or distribution system; (ii) tools, implements, 84.5 and machinery of a pipeline system transporting or distributing 84.6 water, gas, crude oil, or petroleum products; or (iii) the mains 84.7 and pipes used in the distribution of steam or hot or chilled 84.8 water for heating or cooling buildings, has a class rate as 84.9 provided under clause (1) for the remaining market value in 84.10 excess of the first tier. 84.11 (b) Employment property defined in section 469.166, during 84.12 the period provided in section 469.170, shall constitute class 84.13 3b. The class rates for class 3b property are determined under 84.14 paragraph (a). 84.15(c)(1) Subject to the limitations of clause (2), structures84.16which are (i) located on property classified as class 3a, (ii)84.17constructed under an initial building permit issued after84.18January 2, 1996, (iii) located in a transit zone as defined84.19under section 473.3915, subdivision 3, (iv) located within the84.20boundaries of a school district, and (v) not primarily used for84.21retail or transient lodging purposes, shall have a class rate84.22equal to the lesser of 2.975 percent or the class rate of the84.23second tier of the commercial property rate under paragraph (a)84.24on any portion of the market value that does not qualify for the84.25first tier class rate under paragraph (a). As used in item (v),84.26a structure is primarily used for retail or transient lodging84.27purposes if over 50 percent of its square footage is used for84.28those purposes. A class rate equal to the lesser of 2.97584.29percent or the class rate of the second tier of the commercial84.30property class rate under paragraph (a) shall also apply to84.31improvements to existing structures that meet the requirements84.32of items (i) to (v) if the improvements are constructed under an84.33initial building permit issued after January 2, 1996, even if84.34the remainder of the structure was constructed prior to January84.352, 1996. For the purposes of this paragraph, a structure shall84.36be considered to be located in a transit zone if any portion of85.1the structure lies within the zone. If any property once85.2eligible for treatment under this paragraph ceases to remain85.3eligible due to revisions in transit zone boundaries, the85.4property shall continue to receive treatment under this85.5paragraph for a period of three years.85.6(2) This clause applies to any structure qualifying for the85.7transit zone reduced class rate under clause (1) on January 2,85.81999, or any structure meeting any of the qualification criteria85.9in item (i) and otherwise qualifying for the transit zone85.10reduced class rate under clause (1). Such a structure continues85.11to receive the transit zone reduced class rate until the85.12occurrence of one of the events in item (ii). Property85.13qualifying under item (i)(D), that is located outside of a city85.14of the first class, qualifies for the transit zone reduced class85.15rate as provided in that item. Property qualifying under item85.16(i)(E) qualifies for the transit zone reduced class rate as85.17provided in that item.85.18(i) A structure qualifies for the rate in this clause if it85.19is:85.20(A) property for which a building permit was issued before85.21December 31, 1998; or85.22(B) property for which a building permit was issued before85.23June 30, 2001, if:85.24(I) at least 50 percent of the land on which the structure85.25is to be built has been acquired or is the subject of signed85.26purchase agreements or signed options as of March 15, 1998, by85.27the entity that proposes construction of the project or an85.28affiliate of the entity;85.29(II) signed agreements have been entered into with one85.30entity or with affiliated entities to lease for the account of85.31the entity or affiliated entities at least 50 percent of the85.32square footage of the structure or the owner of the structure85.33will occupy at least 50 percent of the square footage of the85.34structure; and85.35(III) one of the following requirements is met:85.36the project proposer has submitted the completed data86.1portions of an environmental assessment worksheet by December86.231, 1998; or86.3a notice of determination of adequacy of an environmental86.4impact statement has been published by April 1, 1999; or86.5an alternative urban areawide review has been completed by86.6April 1, 1999; or86.7(C) property for which a building permit is issued before86.8July 30, 1999, if:86.9(I) at least 50 percent of the land on which the structure86.10is to be built has been acquired or is the subject of signed86.11purchase agreements as of March 31, 1998, by the entity that86.12proposes construction of the project or an affiliate of the86.13entity;86.14(II) a signed agreement has been entered into between the86.15building developer and a tenant to lease for its own account at86.16least 200,000 square feet of space in the building;86.17(III) a signed letter of intent is entered into by July 1,86.181998, between the building developer and the tenant to lease the86.19space for its own account; and86.20(IV) the environmental review process required by state law86.21was commenced by December 31, 1998;86.22(D) property for which an irrevocable letter of credit with86.23a housing and redevelopment authority was signed before December86.2431, 1998. The structure shall receive the transit zone reduced86.25class rate during construction and for the duration of time that86.26the original tenants remain in the building. Any unoccupied net86.27leasable square footage that is not leased within 36 months86.28after the certificate of occupancy has been issued for the86.29building shall not be eligible to receive the reduced class86.30rate. This reduced class rate applies only if a qualifying86.31entity continues to own the property;86.32(E) property, located in a city of the first class, and for86.33which the building permits for the excavation, the parking ramp,86.34and the office tower were issued prior to April 1, 1999, shall86.35receive the reduced class rate during construction and for the86.36first five assessment years immediately following its initial87.1occupancy provided that, when completed, at least 25 percent of87.2the net leasable square footage must be occupied by a qualifying87.3entity each year during this time period. In order to receive87.4the reduced class rate on the structure in any subsequent87.5assessment years, at least 50 percent of the rentable square87.6footage must be occupied by a qualifying entity. This reduced87.7class rate applies only if a qualifying entity continues to own87.8the property.87.9(ii) A structure specified by this clause, other than a87.10structure qualifying under clause (i)(D) or (E), shall continue87.11to receive the transit zone reduced class rate until the87.12occurrence of one of the following events:87.13(A) if the structure upon initial occupancy will be owner87.14occupied by the entity initially constructing the structure or87.15an affiliated entity, the structure receives the reduced class87.16rate until the structure ceases to be at least 50 percent87.17occupied by the entity or an affiliated entity, provided, if the87.18portion of the structure occupied by that entity or an affiliate87.19of the entity is less than 85 percent, the transit zone class87.20rate reduction for the portion of structure not so occupied87.21terminates upon the leasing of such space to any nonaffiliated87.22entity; or87.23(B) if the structure is leased by a single entity or87.24affiliated entity at the time of initial occupancy, the87.25structure shall receive the reduced class rate until the87.26structure ceases to be at least 50 percent occupied by the87.27entity or an affiliated entity, provided, if the portion of the87.28structure occupied by that entity or an affiliate of the entity87.29is less than 85 percent, the transit zone class rate reduction87.30for the portion of structure not so occupied shall terminate87.31upon the leasing of such space to any nonaffiliated entity; or87.32(C) if the structure meets the criteria in item (i)(C), the87.33structure shall receive the reduced class rate until the87.34expiration of the initial lease term of the applicable tenants.87.35Percentages occupied or leased shall be determined based87.36upon net leasable square footage in the structure. The assessor88.1shall allocate the value of the structure in the same fashion as88.2provided in the general law for portions of any structure88.3receiving and not receiving the transit tax class reduction as a88.4result of this clause.88.5(3) For purposes of paragraph (c), "qualifying entity"88.6means the entity owning the property on September 1, 2000, or an88.7affiliate of an entity that owned the property on September 1,88.82000.88.9 [EFFECTIVE DATE.] This section is effective for taxes 88.10 payable in 2002 and thereafter. 88.11 Sec. 28. Minnesota Statutes 2000, section 273.13, 88.12 subdivision 25, is amended to read: 88.13 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 88.14 estate containing four or more units and used or held for use by 88.15 the owner or by the tenants or lessees of the owner as a 88.16 residence for rental periods of 30 days or more. Class 4a also 88.17 includes hospitals licensed under sections 144.50 to 144.56, 88.18 other than hospitals exempt under section 272.02, and contiguous 88.19 property used for hospital purposes, without regard to whether 88.20 the property has been platted or subdivided. The market value 88.21 of class 4a propertyin a city with a population of 5,000 or88.22less, that is (1) located outside of the metropolitan area, as88.23defined in section 473.121, subdivision 2, or outside any county88.24contiguous to the metropolitan area, and (2) whose city boundary88.25is at least 15 miles from the boundary of any city with a88.26population greater than 5,000 has a class rate of 2.15 percent88.27of market value. All other class 4a propertyhas a class rate 88.28 of2.4 percent of market value. For purposes of this paragraph,88.29population has the same meaning given in section 477A.011,88.30subdivision 30.75. 88.31 (b) Class 4b includes: 88.32 (1) residential real estate containing less than four units 88.33 that does not qualify as class 4bb, other than seasonal 88.34 residential, and recreational; 88.35 (2) manufactured homes not classified under any other 88.36 provision; 89.1 (3) a dwelling, garage, and surrounding one acre of 89.2 property on a nonhomestead farm classified under subdivision 23, 89.3 paragraph (b) containing two or three units; 89.4 (4) unimproved property that is classified residential as 89.5 determined under subdivision 33. 89.6 The market value of class 4b property has a class rate of 89.71.65 percent of market value0.75. 89.8 (c) Class 4bb includes: 89.9 (1) nonhomestead residential real estate containing one 89.10 unit, other than seasonal residential, and recreational; and 89.11 (2) a single family dwelling, garage, and surrounding one 89.12 acre of property on a nonhomestead farm classified under 89.13 subdivision 23, paragraph (b). 89.14 Class 4bb has a class rate of1.2 percent0.50 on the first 89.15$76,000$200,000 of market value and a class rate of1.6589.16percentof 0.75 for that portion of its market value that 89.17 exceeds$76,000$200,000. 89.18 Property that has been classified as seasonal recreational 89.19 residential property at any time during which it has been owned 89.20 by the current owner or spouse of the current owner does not 89.21 qualify for class 4bb. 89.22 (d) Class 4c property includes: 89.23 (1) except as provided in subdivision 22, paragraph (c), 89.24 real property devoted to temporary and seasonal residential 89.25 occupancy for recreation purposes, including real property 89.26 devoted to temporary and seasonal residential occupancy for 89.27 recreation purposes and not devoted to commercial purposes for 89.28 more than 250 days in the year preceding the year of 89.29 assessment. For purposes of this clause, property is devoted to 89.30 a commercial purpose on a specific day if any portion of the 89.31 property is used for residential occupancy, and a fee is charged 89.32 for residential occupancy. In order for a property to be 89.33 classified as class 4c, seasonal recreational residential for 89.34 commercial purposes, at least 40 percent of the annual gross 89.35 lodging receipts related to the property must be from business 89.36 conducted during 90 consecutive days and either (i) at least 60 90.1 percent of all paid bookings by lodging guests during the year 90.2 must be for periods of at least two consecutive nights; or (ii) 90.3 at least 20 percent of the annual gross receipts must be from 90.4 charges for rental of fish houses, boats and motors, 90.5 snowmobiles, downhill or cross-country ski equipment, or charges 90.6 for marina services, launch services, and guide services, or the 90.7 sale of bait and fishing tackle. For purposes of this 90.8 determination, a paid booking of five or more nights shall be 90.9 counted as two bookings. Class 4c also includes commercial use 90.10 real property used exclusively for recreational purposes in 90.11 conjunction with class 4c property devoted to temporary and 90.12 seasonal residential occupancy for recreational purposes, up to 90.13 a total of two acres, provided the property is not devoted to 90.14 commercial recreational use for more than 250 days in the year 90.15 preceding the year of assessment and is located within two miles 90.16 of the class 4c property with which it is used. Class 4c 90.17 property classified in this clause also includes the remainder 90.18 of class 1c resorts provided that the entire property including 90.19 that portion of the property classified as class 1c also meets 90.20 the requirements for class 4c under this clause; otherwise the 90.21 entire property is classified as class 3. Owners of real 90.22 property devoted to temporary and seasonal residential occupancy 90.23 for recreation purposes and all or a portion of which was 90.24 devoted to commercial purposes for not more than 250 days in the 90.25 year preceding the year of assessment desiring classification as 90.26 class 1c or 4c, must submit a declaration to the assessor 90.27 designating the cabins or units occupied for 250 days or less in 90.28 the year preceding the year of assessment by January 15 of the 90.29 assessment year. Those cabins or units and a proportionate 90.30 share of the land on which they are located will be designated 90.31 class 1c or 4c as otherwise provided. The remainder of the 90.32 cabins or units and a proportionate share of the land on which 90.33 they are located will be designated as class 3a. The owner of 90.34 property desiring designation as class 1c or 4c property must 90.35 provide guest registers or other records demonstrating that the 90.36 units for which class 1c or 4c designation is sought were not 91.1 occupied for more than 250 days in the year preceding the 91.2 assessment if so requested. The portion of a property operated 91.3 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 91.4 nonresidential facility operated on a commercial basis not 91.5 directly related to temporary and seasonal residential occupancy 91.6 for recreation purposes shall not qualify for class 1c or 4c; 91.7 (2) qualified property used as a golf course if: 91.8 (i) it is open to the public on a daily fee basis. It may 91.9 charge membership fees or dues, but a membership fee may not be 91.10 required in order to use the property for golfing, and its green 91.11 fees for golfing must be comparable to green fees typically 91.12 charged by municipal courses; and 91.13 (ii) it meets the requirements of section 273.112, 91.14 subdivision 3, paragraph (d). 91.15 A structure used as a clubhouse, restaurant, or place of 91.16 refreshment in conjunction with the golf course is classified as 91.17 class 3a property; 91.18 (3) real property up to a maximum of one acre of land owned 91.19 by a nonprofit community service oriented organization; provided 91.20 that the property is not used for a revenue-producing activity 91.21 for more than six days in the calendar year preceding the year 91.22 of assessment and the property is not used for residential 91.23 purposes on either a temporary or permanent basis. For purposes 91.24 of this clause, a "nonprofit community service oriented 91.25 organization" means any corporation, society, association, 91.26 foundation, or institution organized and operated exclusively 91.27 for charitable, religious, fraternal, civic, or educational 91.28 purposes, and which is exempt from federal income taxation 91.29 pursuant to section 501(c)(3), (10), or (19) of the Internal 91.30 Revenue Code of 1986, as amended through December 31, 1990. For 91.31 purposes of this clause, "revenue-producing activities" shall 91.32 include but not be limited to property or that portion of the 91.33 property that is used as an on-sale intoxicating liquor or 3.2 91.34 percent malt liquor establishment licensed under chapter 340A, a 91.35 restaurant open to the public, bowling alley, a retail store, 91.36 gambling conducted by organizations licensed under chapter 349, 92.1 an insurance business, or office or other space leased or rented 92.2 to a lessee who conducts a for-profit enterprise on the 92.3 premises. Any portion of the property which is used for 92.4 revenue-producing activities for more than six days in the 92.5 calendar year preceding the year of assessment shall be assessed 92.6 as class 3a. The use of the property for social events open 92.7 exclusively to members and their guests for periods of less than 92.8 24 hours, when an admission is not charged nor any revenues are 92.9 received by the organization shall not be considered a 92.10 revenue-producing activity; 92.11 (4) post-secondary student housing of not more than one 92.12 acre of land that is owned by a nonprofit corporation organized 92.13 under chapter 317A and is used exclusively by a student 92.14 cooperative, sorority, or fraternity for on-campus housing or 92.15 housing located within two miles of the border of a college 92.16 campus; 92.17 (5) manufactured home parks as defined in section 327.14, 92.18 subdivision 3; 92.19 (6) real property that is actively and exclusively devoted 92.20 to indoor fitness, health, social, recreational, and related 92.21 uses, is owned and operated by a not-for-profit corporation, and 92.22 is located within the metropolitan area as defined in section 92.23 473.121, subdivision 2; and 92.24 (7) a leased or privately owned noncommercial aircraft 92.25 storage hangar not exempt under section 272.01, subdivision 2, 92.26 and the land on which it is located, provided that: 92.27 (i) the land is on an airport owned or operated by a city, 92.28 town, county, metropolitan airports commission, or group 92.29 thereof; and 92.30 (ii) the land lease, or any ordinance or signed agreement 92.31 restricting the use of the leased premise, prohibits commercial 92.32 activity performed at the hangar. 92.33 If a hangar classified under this clause is sold after June 92.34 30, 2000, a bill of sale must be filed by the new owner with the 92.35 assessor of the county where the property is located within 60 92.36 days of the sale. 93.1 The market value of class 4c property has a class rate of 93.21.65 percent of market value0.75, except that (i)each parcel93.3ofseasonal residential recreational property not used for 93.4 commercial purposes has the same class rates as class 4bb 93.5 property, (ii)manufactured home parks assessed under clause (5)93.6have the same class rate as class 4b property, and (iii)93.7property described in paragraph (d), clause (4), has the same93.8class rate as the rate applicable to the first tier of class 4bb93.9nonhomestead residential real estate under paragraph (c)the 93.10 market value of commercial-use seasonal residential recreational 93.11 property has a class rate of 0.50, and (iii) the market value of 93.12 property described in clauses (2) and (6) has a class rate of 93.13 0.50. 93.14 (e) Class 4d property is qualifying low-income rental 93.15 housing certified to the assessor by the housing finance agency 93.16 under sections 273.126 and 462A.071. Class 4d includes land in 93.17 proportion to the total market value of the building that is 93.18 qualifying low-income rental housing. For all properties 93.19 qualifying as class 4d, the market value determined by the 93.20 assessor must be based on the normal approach to value using 93.21 normal unrestricted rents. 93.22 The market value of class 4d property has a class rate of 93.23one percent of market value0.40. 93.24 [EFFECTIVE DATE.] This section is effective for taxes 93.25 payable in 2002 and thereafter. 93.26 Sec. 29. Minnesota Statutes 2000, section 273.13, 93.27 subdivision 31, is amended to read: 93.28 Subd. 31. [CLASS 5.] Class 5 property includes: 93.29 (1) unmined iron ore and low-grade iron-bearing formations 93.30 as defined in section 273.14; and 93.31 (2) all other property not otherwise classified. 93.32 The market value of class 5 property has a class rate of 93.333.4 percent of market value1.0. 93.34 [EFFECTIVE DATE.] This section is effective for taxes 93.35 payable in 2002 and thereafter. 93.36 Sec. 30. Minnesota Statutes 2000, section 273.13, is 94.1 amended by adding a subdivision to read: 94.2 Subd. 34. [INFLATION ADJUSTMENT.] Beginning with the year 94.3 2002 assessment, for taxes payable in 2003, the commissioner of 94.4 revenue shall annually adjust the valuation limits specified in 94.5 subdivisions 22, 23, 24, and 25 for inflation. The commissioner 94.6 shall make the adjustments in accordance with section 290.06, 94.7 subdivision 2d, except that for the purposes of this subdivision 94.8 the percentage increase shall be determined from the year ending 94.9 on August 31, 2000, to the year ending on August 31 of the year 94.10 preceding the assessment year. The commissioner shall round the 94.11 valuation limits to the nearest $1,000. The commissioner shall 94.12 annually announce the valuation limits at the time specified in 94.13 section 290.06 for the succeeding assessment year. The 94.14 determination of the commissioner under this subdivision is not 94.15 a rule under the Administrative Procedure Act. 94.16 [EFFECTIVE DATE.] This section is effective July 1, 2001, 94.17 and thereafter. 94.18 Sec. 31. [273.1384] [MARKET VALUE HOMESTEAD CREDITS.] 94.19 Subdivision 1. [RESIDENTIAL HOMESTEAD MARKET VALUE 94.20 CREDIT.] Each county auditor shall determine a residential 94.21 homestead market value credit for each class 1a, 1b, 1c, and 2a 94.22 homestead property within the county. The credit is equal to 94.23 0.5 percent of the market value of the property. The amount of 94.24 homestead credit for a homestead may not exceed the lesser of 94.25 $330 or an amount that would reduce the tax on the parcel to an 94.26 amount equal to 0.85 percent of the parcel's market value. In 94.27 the case of an agricultural or resort homestead, only the market 94.28 value of the house, garage, and immediately surrounding one acre 94.29 of land is eligible in determining the property's residential 94.30 homestead market value credit. 94.31 Subd. 2. [AGRICULTURAL HOMESTEAD MARKET VALUE 94.32 CREDIT.] Except as provided in subdivision 1, property 94.33 classified as class 2a agricultural homestead is eligible for an 94.34 agricultural market value credit. The credit is equal to 0.25 94.35 percent of the property's market value. The credit under this 94.36 subdivision is limited to $288 for each homestead. 95.1 Subd. 3. [CREDIT REIMBURSEMENTS.] The county auditor shall 95.2 determine the tax reductions allowed under this section within 95.3 the county for each taxes payable year and shall certify that 95.4 amount to the commissioner of revenue as a part of the abstracts 95.5 of tax lists submitted by the county auditors under section 95.6 275.29. Any prior year adjustments shall also be certified on 95.7 the abstracts of tax lists. The commissioner shall review the 95.8 certifications for accuracy, and may make such changes as are 95.9 deemed necessary, or return the certification to the county 95.10 auditor for correction. 95.11 Subd. 4. [PAYMENT.] (a) The commissioner of revenue shall 95.12 reimburse each local taxing jurisdiction, other than school 95.13 districts, for the tax reductions granted under this section in 95.14 two equal installments on August 31 and December 15 of the taxes 95.15 payable year for which the reductions are granted, including in 95.16 each payment the prior year adjustments certified on the 95.17 abstracts for that taxes payable year. 95.18 (b) The commissioner of revenue shall certify the total of 95.19 the tax reductions granted under this section for each taxes 95.20 payable year within each school district to the commissioner of 95.21 the department of children, families, and learning and the 95.22 commissioner of children, families, and learning shall pay the 95.23 reimbursement amounts to each school district under the 95.24 provisions of section 273.1392. 95.25 Subd. 5. [APPROPRIATION.] An amount sufficient to make the 95.26 payments required by this section to taxing jurisdictions other 95.27 than school districts is annually appropriated from the general 95.28 fund to the commissioner of revenue. An amount sufficient to 95.29 make the payments required by this section for school districts 95.30 is annually appropriated from the general fund to the 95.31 commissioner of children, families, and learning. 95.32 [EFFECTIVE DATE.] This section is effective for taxes, 95.33 credits, and reimbursements payable in 2002 and thereafter. 95.34 Sec. 32. Minnesota Statutes 2000, section 273.1392, is 95.35 amended to read: 95.36 273.1392 [PAYMENT; SCHOOL DISTRICTS.] 96.1 The amounts of conservation tax credits under section 96.2 273.119; disaster or emergency reimbursement under section 96.3 273.123;attached machinery aid under section 273.138; homestead96.4credit under section 273.13market value homestead credits under 96.5 section 273.1384; aids and credits under section 273.1398; 96.6 wetlands reimbursement under section 275.295; enterprise zone 96.7 property credit payments under section 469.171; and metropolitan 96.8 agricultural preserve reduction under section 473H.10 for school 96.9 districts, shall be certified to the department of children, 96.10 families, and learning by the department of revenue. The 96.11 amounts so certified shall be paid according to section 127A.45, 96.12 subdivisions 9 and 13. 96.13 [EFFECTIVE DATE.] This section is effective for aids and 96.14 credits payable in 2002 and thereafter. 96.15 Sec. 33. Minnesota Statutes 2000, section 273.1393, is 96.16 amended to read: 96.17 273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 96.18 Notwithstanding any other provisions to the contrary, "net" 96.19 property taxes are determined by subtracting the credits in the 96.20 order listed from the gross tax: 96.21 (1) disaster credit as provided in section 273.123; 96.22 (2) powerline credit as provided in section 273.42; 96.23 (3) agricultural preserves credit as provided in section 96.24 473H.10; 96.25 (4) enterprise zone credit as provided in section 469.171; 96.26 (5) disparity reduction credit; 96.27 (6) conservation tax credit as provided in section 273.119; 96.28 (7)educationresidential homestead market value credit and 96.29 agricultural market value credit as provided in section273.138296.30 273.1384; 96.31 (8) taconite homestead credit as provided in section 96.32 273.135; and 96.33 (9) supplemental homestead credit as provided in section 96.34 273.1391. 96.35 The combination of all property tax credits must not exceed 96.36 the gross tax amount. 97.1 [EFFECTIVE DATE.] This section is effective for taxes 97.2 payable in 2002 and thereafter. 97.3 Sec. 34. Minnesota Statutes 2000, section 273.1398, 97.4 subdivision 1, is amended to read: 97.5 Subdivision 1. [DEFINITIONS.] (a) In this section, the 97.6 terms defined in this subdivision have the meanings given them. 97.7 (b) "Unique taxing jurisdiction" means the geographic area 97.8 subject to the same set of local tax rates. 97.9 (c) "Previous net tax capacity" means the product of the 97.10 appropriate net class rates for the year previous to the year in 97.11 which the aid is payable, and estimated market values for the 97.12 assessment two years prior to that in which aid is payable. 97.13 "Total previous net tax capacity" means the previous net tax 97.14 capacities for all property within the unique taxing 97.15 jurisdiction. The total previous net tax capacity shall be 97.16 reduced by the sum of (1) the unique taxing jurisdiction's 97.17 previous net tax capacity of commercial-industrial property as 97.18 defined in section 473F.02, subdivision 3, or 276A.01, 97.19 subdivision 3, multiplied by the ratio determined pursuant to 97.20 section 473F.08, subdivision 6, or 276A.06, subdivision 7, for 97.21 the municipality, as defined in section 473F.02, subdivision 8, 97.22 or 276A.01, subdivision 8, in which the unique taxing 97.23 jurisdiction is located, (2) the previous net tax capacity of 97.24 the captured value of tax increment financing districts as 97.25 defined in section 469.177, subdivision 2, and (3) the previous 97.26 net tax capacity of transmission lines deducted from a local 97.27 government's total net tax capacity under section 273.425. 97.28 Previous net tax capacity cannot be less than zero. 97.29 (d) "Equalized market values" are market values that have 97.30 been equalized by dividing the assessor's estimated market value 97.31 for the second year prior to that in which the aid is payable by 97.32 the assessment sales ratios determined by class in the 97.33 assessment sales ratio study conducted by the department of 97.34 revenue pursuant to section 127A.48 in the second year prior to 97.35 that in which the aid is payable. The equalized market values 97.36 shall equal the unequalized market values divided by the 98.1 assessment sales ratio. 98.2 (e) "Equalized school levies" means the amounts levied for: 98.3 (1) general education under section 126C.13, subdivision 2; 98.4 (2) supplemental revenue under section 126C.10, subdivision 98.5 10; 98.6 (3) transition revenue under section 126C.10, subdivision 98.7 20; and 98.8 (4) referendum revenue under section 126C.17. 98.9 (f) "Current local tax rate" means the quotient derived by 98.10 dividing the taxes levied within a unique taxing jurisdiction 98.11 for taxes payable in the year prior to that for which aids are 98.12 being calculated by the total previous net tax capacity of the 98.13 unique taxing jurisdiction. 98.14 (g) For purposes of calculating and allocating homestead 98.15 and agricultural credit aid authorized pursuant to subdivision 2 98.16 and the disparity reduction aid authorized in subdivision 3, 98.17 "gross taxes levied on all properties," "gross taxes," or "taxes 98.18 levied" means the total net tax capacity based taxes levied on 98.19 all properties except that levied on the captured value of tax 98.20 increment districts as defined in section 469.177, subdivision 98.21 2, and that levied on the portion of commercial industrial 98.22 properties' assessed value or gross tax capacity, as defined in 98.23 section 473F.02, subdivision 3, subject to the areawide tax as 98.24 provided in section 473F.08, subdivision 6, in a unique taxing 98.25 jurisdiction. "Gross taxes" are before any reduction for 98.26 disparity reduction aid but "taxes levied" are after any 98.27 reduction for disparity reduction aid. Gross taxes levied or 98.28 taxes levied cannot be less than zero. 98.29 "Taxes levied" excludes equalized school levies. 98.30 (h) "Household adjustment factor" means the number of 98.31 households, for the year most recently determined as ofJuly98.32 June 1 in the aid calculation year, divided by the number of 98.33 households for the year immediately preceding the year for which 98.34 the number of households has most recently been determined as of 98.35JulyJune 1. The household adjustment factor cannot be less 98.36 than one. 99.1 (i) "Growth adjustment factor" means the household 99.2 adjustment factor in the case of counties. In the case of 99.3 cities, towns, school districts, and special taxing districts, 99.4 the growth adjustment factor equals one. The growth adjustment 99.5 factor cannot be less than one. 99.6 (j) "Homestead and agricultural credit base" means the 99.7 previous year's certified homestead and agricultural credit aid 99.8 determined under subdivision 2 less any permanent aid reduction 99.9 in the previous year to homestead and agricultural credit aid. 99.10 (k) "Net tax capacity adjustment" means (1) the tax base 99.11 differential defined in subdivision 1a, multiplied by (2) the 99.12 unique taxing jurisdiction's current local tax rate. The net 99.13 tax capacity adjustment cannot be less than zero. 99.14 (l) "Fiscal disparity adjustment" means a taxing 99.15 jurisdiction's fiscal disparity distribution levy under section 99.16 473F.08, subdivision 3, clause (a), or 276A.06, subdivision 3, 99.17 clause (a), for taxes payable in the year prior to that for 99.18 which aids are being calculated, multiplied by the ratio of the 99.19 tax base differential percent referenced in subdivision 1a for 99.20 the highest class rate for class 3 property for taxes payable in 99.21 the year prior to that for which aids are being calculated to 99.22 the highest class rate for class 3 property for taxes payable in 99.23 the second prior year to that for which aids are being 99.24 calculated. In the case of school districts, the fiscal 99.25 disparity distribution levy shall exclude that part of the levy 99.26 attributable to equalized school levies. 99.27 [EFFECTIVE DATE.] This section is effective the day 99.28 following final enactment. 99.29 Sec. 35. Minnesota Statutes 2000, section 273.1398, is 99.30 amended by adding a subdivision to read: 99.31 Subd. 4b. [CREDIT AID CHANGES.] (a) For aid payable in 99.32 2002, each county shall have its aid under subdivision 2, after 99.33 adjustment under subdivision 4a, permanently reduced. The 99.34 amount of the reduction for each county is the sum of the 99.35 following amounts: 99.36 (1) for counties in the first through fourth, sixth, and 100.1 tenth judicial districts, the estimated costs submitted by the 100.2 court administrators for the calendar year 2001 budget requests 100.3 of such counties for guardians ad litem, court interpreters, 100.4 Rule 20 and civil commitment examinations and hearings, and in 100.5 forma pauperis costs, as confirmed and reported by the Minnesota 100.6 supreme court to the commissioner of revenue on or before July 100.7 1, 2001; 100.8 (2) the 1999 nonfederal expenditures for child family 100.9 foster care as reported by the county during calendar year 2000 100.10 to the department of human services under section 256E.08, 100.11 subdivision 8; and 100.12 (3) the additional amount of aid the county receives in 100.13 2002 under section 477A.03, subdivision 2, paragraph (c), clause 100.14 (ii), excluding increases due to inflation. 100.15 (b) For aid payable in 2002 and thereafter, no aid shall be 100.16 computed or paid pursuant to subdivision 2 for statutory or home 100.17 rule cities, towns, school districts, and special taxing 100.18 districts. 100.19 [EFFECTIVE DATE.] This section is effective for aid payable 100.20 in 2002 and thereafter. 100.21 Sec. 36. Minnesota Statutes 2000, section 273.1398, 100.22 subdivision 8, is amended to read: 100.23 Subd. 8. [APPROPRIATION.] (a) An amount sufficient to pay 100.24 the aids and credits provided under this section for school 100.25 districts, intermediate school districts, or any group of school 100.26 districts levying as a single taxing entity, is annually 100.27 appropriated from the general fund to the commissioner of 100.28 children, families, and learning. An amount sufficient to pay 100.29 the aids and credits provided under this section for counties, 100.30 cities, towns, and special taxing districts is annually 100.31 appropriated from the general fund to the commissioner of 100.32 revenue. A jurisdiction's aid amount may be increased or 100.33 decreased based on any prior year adjustments for homestead 100.34 credit or other property tax credit or aid programs. 100.35 (b) The commissioner of finance shall bill the commissioner 100.36 of revenue for the cost of preparation of local impact notes as 101.1 required by section 3.987 only to the extent to which those 101.2 costs exceed those costs incurred in fiscal year 1997 and for 101.3 any other new costs attributable to the local impact note 101.4 function required by section 3.987, not to exceed $100,000 in 101.5 fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and 101.6 thereafter. 101.7 The commissioner of revenue shall deduct the amount billed 101.8 under this paragraph from aid payments to be made tocities and101.9 counties under subdivision 2 on a pro rata basis. The amount 101.10 deducted under this paragraph is appropriated to the 101.11 commissioner of finance for the preparation of local impact 101.12 notes. 101.13 [EFFECTIVE DATE.] This section is effective January 1, 2002 101.14 and thereafter. 101.15 Sec. 37. Minnesota Statutes 2000, section 273.166, 101.16 subdivision 2, is amended to read: 101.17 Subd. 2. [MANUFACTURED HOME HOMESTEAD AND AGRICULTURAL 101.18 CREDIT AID.]ForIn calendar year 2002, and each calendar year 101.19 thereafter,themanufactured home homestead and agricultural 101.20 credit aidfor each taxing jurisdiction equals the taxing101.21jurisdiction'sshall be paid to each county under this section 101.22 in an amount equal to the county's manufactured home homestead 101.23 and agricultural credit aid determined under this subdivision 101.24 for the preceding aid payable year times the growth adjustment 101.25 factor for thejurisdiction plus the net tax capacity adjustment101.26for the jurisdictioncounty. Payment will not be made to 101.27 anytaxing jurisdictioncounty that has ceased to levy a 101.28 property tax. 101.29 [EFFECTIVE DATE.] This section is effective for aid paid in 101.30 2002 and thereafter. 101.31 Sec. 38. Minnesota Statutes 2000, section 273.166, 101.32 subdivision 3, is amended to read: 101.33 Subd. 3. [AID CALCULATION.] The commissioner of revenue 101.34 shall make the calculation required in subdivision 2 and 101.35 annually pay manufactured home homestead and agricultural credit 101.36 aid tothe local governmentscounties at the times provided in 102.1 section 473H.10 for local governments other than school 102.2 districts.Aid payments to the school districts must be102.3certified to the commissioner of children, families, and102.4learning and paid under section 273.1392.102.5 [EFFECTIVE DATE.] This section is effective for aid paid in 102.6 2002 and thereafter. 102.7 Sec. 39. Minnesota Statutes 2000, section 273.166, 102.8 subdivision 5, is amended to read: 102.9 Subd. 5. [APPROPRIATION.]There is annually appropriated102.10from the general fund to the commissioner of children, families,102.11and learning a sum sufficient to pay the aids provided under102.12this section for school districts, intermediate school102.13districts, or any group of school districts levying as a single102.14taxing entity.There is annually appropriated from the general 102.15 fund to the commissioner of revenue a sum sufficient to pay the 102.16 aids provided under this section to counties, cities, towns, and102.17special taxing districts. 102.18 [EFFECTIVE DATE.] This section is effective for fiscal year 102.19 2003 and thereafter. 102.20 Sec. 40. Minnesota Statutes 2000, section 273.42, is 102.21 amended by adding a subdivision to read: 102.22 Subd. 3. [STATE TAX ON TRANSMISSION AND DISTRIBUTION 102.23 LINES.] Notwithstanding section 273.425, the entire assessed 102.24 value of property taxed at the average local tax rate under 102.25 subdivision 1 is subject to the state tax rate provided in 102.26 section 275.02. Notwithstanding subdivisions 1 and 2, the 102.27 entire proceeds of the state tax levy for each such property 102.28 must be distributed to the state under the procedures provided 102.29 in chapter 276. No portion of the proceeds from the state levy 102.30 on such property is distributed within the county under 102.31 subdivision 1 or 2. 102.32 [EFFECTIVE DATE.] This section is effective for taxes 102.33 payable in 2002 and thereafter. 102.34 Sec. 41. Minnesota Statutes 2000, section 274.01, 102.35 subdivision 1, is amended to read: 102.36 Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, 103.1 GRIEVANCES.] (a) The town board of a town, or the council or 103.2 other governing body of a city, is the board ofreviewappeal 103.3 and equalization except (1) in cities whose charters provide for 103.4 a board of equalization or (2) in any city or town that has 103.5 transferred its local board of review power and duties to the 103.6 county board as provided in subdivision 3. The county assessor 103.7 shall fix a day and time when the board or the board of 103.8 equalization shall meet in the assessment districts of the 103.9 county. Notwithstanding any law or city charter to the 103.10 contrary, a city board of equalization shall be referred to as a 103.11 board of appeal and equalization. On or before February 15 of 103.12 each year the assessor shall give written notice of the time to 103.13 the city or town clerk. Notwithstanding the provisions of any 103.14 charter to the contrary, the meetings must be held between April 103.15 1 and May 31 each year. The clerk shall give published and 103.16 posted notice of the meeting at least ten days before the date 103.17 of the meeting. 103.18If in any county, at least 25 percent of the total net tax103.19capacity of a city or town is noncommercial seasonal residential103.20recreational property classified under section 273.13,103.21subdivision 25, the county must hold two countywide103.22informational meetings on Saturdays. The meetings will allow103.23noncommercial seasonal residential recreational taxpayers to103.24discuss their property valuation with the appropriate assessment103.25staff. These Saturday informational meetings must be scheduled103.26to allow the owner of the noncommercial seasonal residential103.27recreational property the opportunity to attend one of the103.28meetings prior to the scheduled board of review for their city103.29or town. The Saturday meeting dates must be contained on the103.30notice of valuation of real property under section 273.121.103.31 The board shall meet at the office of the clerk to review 103.32 the assessment and classification of property in the town or 103.33 city. No changes in valuation or classification which are 103.34 intended to correct errors in judgment by the county assessor 103.35 may be made by the county assessor after the boardof reviewhas 103.36 adjourned in those cities or towns that hold a local board of 104.1 review; however, corrections of errors that are merely clerical 104.2 in nature or changes that extend homestead treatment to property 104.3 are permitted after adjournment until the tax extension date for 104.4 that assessment year. The changes must be fully documented and 104.5 maintained in the assessor's office and must be available for 104.6 review by any person. A copy of the changes made during this 104.7 period in those cities or towns that hold a local board of 104.8 review must be sent to the county board no later than December 104.9 31 of the assessment year. 104.10 (b) The board shall determine whether the taxable property 104.11 in the town or city has been properly placed on the list and 104.12 properly valued by the assessor. If real or personal property 104.13 has been omitted, the board shall place it on the list with its 104.14 market value, and correct the assessment so that each tract or 104.15 lot of real property, and each article, parcel, or class of 104.16 personal property, is entered on the assessment list at its 104.17 market value. No assessment of the property of any person may 104.18 be raised unless the person has been duly notified of the intent 104.19 of the board to do so. On application of any person feeling 104.20 aggrieved, the board shall review the assessment or 104.21 classification, or both, and correct it as appears just. The 104.22 board may not make an individual market value adjustment or 104.23 classification change that would benefit the property in cases 104.24 where the owner or other person having control over the property 104.25 will not permit the assessor to inspect the property and the 104.26 interior of any buildings or structures. 104.27 (c) A local boardof reviewmay reduce assessments upon 104.28 petition of the taxpayer but the total reductions must not 104.29 reduce the aggregate assessment made by the county assessor by 104.30 more than one percent. If the total reductions would lower the 104.31 aggregate assessments made by the county assessor by more than 104.32 one percent, none of the adjustments may be made. The assessor 104.33 shall correct any clerical errors or double assessments 104.34 discovered by the boardof reviewwithout regard to the one 104.35 percent limitation. 104.36 (d) A majority of the members may act at the meeting, and 105.1 adjourn from day to day until they finish hearing the cases 105.2 presented. The assessor shall attend, with the assessment books 105.3 and papers, and take part in the proceedings, but must not 105.4 vote. The county assessor, or an assistant delegated by the 105.5 county assessor shall attend the meetings. The board shall list 105.6 separately, on a form appended to the assessment book, all 105.7 omitted property added to the list by the board and all items of 105.8 property increased or decreased, with the market value of each 105.9 item of property, added or changed by the board, placed opposite 105.10 the item. The county assessor shall enter all changes made by 105.11 the board in the assessment book. 105.12 (e) Except as provided in subdivision 3, if a person fails 105.13 to appear in person, by counsel, or by written communication 105.14 before the board after being duly notified of the board's intent 105.15 to raise the assessment of the property, or if a person feeling 105.16 aggrieved by an assessment or classification fails to apply for 105.17 a review of the assessment or classification, the person may not 105.18 appear before the county board of appeal and equalization for a 105.19 review of the assessment or classification. This paragraph does 105.20 not apply if an assessment was made after the local board 105.21 meeting, as provided in section 273.01, or if the person can 105.22 establish not having received notice of market value at least 105.23 five days before the local boardof reviewmeeting. 105.24 (f) The local boardof review or the board of equalization105.25 must complete its work and adjourn within 20 days from the time 105.26 of convening stated in the notice of the clerk, unless a longer 105.27 period is approved by the commissioner of revenue. No action 105.28 taken after that date is valid. All complaints about an 105.29 assessment or classification made after the meeting of the board 105.30 must be heard and determined by the county board of 105.31 equalization. A nonresident may, at any time, before the 105.32 meeting of the boardof reviewfile written objections to an 105.33 assessment or classification with the county assessor. The 105.34 objections must be presented to the boardof reviewat its 105.35 meeting by the county assessor for its consideration. 105.36 [EFFECTIVE DATE.] This section is effective January 1, 106.1 2002, and thereafter. 106.2 Sec. 42. Minnesota Statutes 2000, section 274.13, 106.3 subdivision 1, is amended to read: 106.4 Subdivision 1. [MEMBERS; MEETINGS; RULES FOR EQUALIZING 106.5 ASSESSMENTS.] The county commissioners, or a majority of them, 106.6 with the county auditor, or, if the auditor cannot be present, 106.7 the deputy county auditor, or, if there is no deputy, the court 106.8 administrator of the district court, shall form a board for the 106.9 equalization of the assessment of the property of the county, 106.10 including the property of all cities whose charters provide for 106.11 a board of equalization. This board shall be referred to as the 106.12 county board of appeal and equalization. The board shall meet 106.13 annually, on the date specified in section 274.14, at the office 106.14 of the auditor. Each member shall take an oath to fairly and 106.15 impartially perform duties as a member. The board shall examine 106.16 and compare the returns of the assessment of property of the 106.17 towns or districts, and equalize them so that each tract or lot 106.18 of real property and each article or class of personal property 106.19 is entered on the assessment list at its market value, subject 106.20 to the following rules: 106.21 (1) The board shall raise the valuation of each tract or 106.22 lot of real property which in its opinion is returned below its 106.23 market value to the sum believed to be its market value. The 106.24 board must first give notice of intention to raise the valuation 106.25 to the person in whose name it is assessed, if the person is a 106.26 resident of the county. The notice must fix a time and place 106.27 for a hearing. 106.28 (2) The board shall reduce the valuation of each tract or 106.29 lot which in its opinion is returned above its market value to 106.30 the sum believed to be its market value. 106.31 (3) The board shall raise the valuation of each class of 106.32 personal property which in its opinion is returned below its 106.33 market value to the sum believed to be its market value. It 106.34 shall raise the aggregate value of the personal property of 106.35 individuals, firms, or corporations, when it believes that the 106.36 aggregate valuation, as returned, is less than the market value 107.1 of the taxable personal property possessed by the individuals, 107.2 firms, or corporations, to the sum it believes to be the market 107.3 value. The board must first give notice to the persons of 107.4 intention to do so. The notice must set a time and place for a 107.5 hearing. 107.6 (4) The board shall reduce the valuation of each class of 107.7 personal property that is returned above its market value to the 107.8 sum it believes to be its market value. Upon complaint of a 107.9 party aggrieved, the board shall reduce the aggregate valuation 107.10 of the individual's personal property, or of any class of 107.11 personal property for which the individual is assessed, which in 107.12 its opinion has been assessed at too large a sum, to the sum it 107.13 believes was the market value of the individual's personal 107.14 property of that class. 107.15 (5) The board must not reduce the aggregate value of all 107.16 the property of its county, as submitted to the county board of 107.17 equalization, with the additions made by the auditor under this 107.18 chapter, by more than one percent of its whole valuation. The 107.19 board may raise the aggregate valuation of real property, and of 107.20 each class of personal property, of the county, or of any town 107.21 or district of the county, when it believes it is below the 107.22 market value of the property, or class of property, to the 107.23 aggregate amount it believes to be its market value. 107.24 (6) The board shall change the classification of any 107.25 property which in its opinion is not properly classified. 107.26 [EFFECTIVE DATE.] This section is effective January 1, 107.27 2002, and thereafter. 107.28 Sec. 43. Minnesota Statutes 2000, section 275.011, is 107.29 amended by adding a subdivision to read: 107.30 Subd. 4. [CONVERSION OF NET TAX CAPACITY RATE LEVY LIMIT.] 107.31 (a) Except as provided in section 126C.02, for purposes of 107.32 determining the mill rate limits applicable to a levy authority 107.33 or limitation expressed in law as a net tax capacity rate limit, 107.34 the commissioner of revenue shall prescribe the conversion 107.35 factors and methodology for use by all county auditors. 107.36 (b) If the conversion from net tax capacities to assessed 108.1 values or from net tax capacity tax rates to mill rates, as 108.2 provided in this article, causes a provision of law related to 108.3 the administration of the property tax to be unadministrable, 108.4 the commissioner of revenue may prescribe an adjustment or 108.5 conversion factor or method to preserve the purpose of that law. 108.6 (c) The prescription of a conversion or adjustment factor 108.7 or method by the commissioner of revenue under this subdivision 108.8 shall not be considered a "rule" and is not subject to the 108.9 Administrative Procedure Act. 108.10 [EFFECTIVE DATE.] This section is effective for taxes 108.11 payable in 2002 and thereafter. 108.12 Sec. 44. Minnesota Statutes 2000, section 275.02, is 108.13 amended to read: 108.14 275.02 [STATE LEVY, EXCEPTIONS; CERTIFICATION OF TAX RATE.] 108.15The(a) For taxes payable in 2002 and subsequent years, a 108.16 state tax shall be levied on all class 3, other than attached 108.17 machinery located at an electric generating station that is part 108.18 of an electric generating system, class 4c(1), class 4c(2), and 108.19 class 5(1) taxable property in the state as defined in section 108.20 273.13. For noncommercial class 4c(1) property, 50 percent of 108.21 the assessed value of the property, up to a maximum of $20,000, 108.22 is exempt from the state levy. The rate of the tax shall be 108.23 certified by thestate auditorcommissioner of revenue to each 108.24 county auditor on or before November151 annually. 108.25 For taxes payable in 2002, the commissioner shall compute 108.26 and certify a tax rate necessary to raise $470,400,000. For 108.27 taxes payable in years after 2002, the amount to be raised is 108.28 increased each year by multiplying the amount for the prior year 108.29 by the sum of one plus the rate of increase, if any, in the 108.30 implicit price deflator for government consumption expenditures 108.31 and gross investment for state and local governments prepared by 108.32 the Bureau of Economic Analysts of the United States Department 108.33 of Commerce for the 12-month period ending March 31 of the year 108.34 prior to the year the taxes are payable. It shall take a 108.35 two-thirds vote of the legislature to increase the state tax 108.36 levy by a greater amount. 109.1 (b) The state levy under paragraph (a) is in addition to 109.2 any state levy certified by the state auditor under article XI 109.3 of the Minnesota Constitution. A levy certified by the state 109.4 auditor under article XI shall be certified by the state auditor 109.5 to each county auditor by November 1 for taxes payable in the 109.6 following year, and shall be applied against the assessed value 109.7 of all taxable property in the state. 109.8 [EFFECTIVE DATE.] This section is effective for taxes 109.9 payable in 2002 and thereafter. 109.10 Sec. 45. Minnesota Statutes 2000, section 275.065, 109.11 subdivision 3, is amended to read: 109.12 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 109.13 county auditor shall prepare and the county treasurer shall 109.14 deliver after November 10 and on or before November 24 each 109.15 year, by first class mail to each taxpayer at the address listed 109.16 on the county's current year's assessment roll, a notice of 109.17 proposed property taxes. 109.18 (b) The commissioner of revenue shall prescribe the form of 109.19 the notice. 109.20 (c) The notice must inform taxpayers that it contains the 109.21 amount of property taxes each taxing authority proposes to 109.22 collect for taxes payable the following year. In the case of a 109.23 town,or in the case of the state determined portion of the109.24school district levy,the final tax amount will be its proposed 109.25 tax. In the case of taxing authorities required to hold a 109.26 public meeting under subdivision 6, the notice must clearly 109.27 state that each taxing authority, including regional library 109.28 districts established under section 134.201, and including the 109.29 metropolitan taxing districts as defined in paragraph (i), but 109.30 excluding all other special taxing districts and towns, will 109.31 hold a public meeting to receive public testimony on the 109.32 proposed budget and proposed or final property tax levy, or, in 109.33 case of a school district, on the current budget and proposed 109.34 property tax levy. It must clearly state the time and place of 109.35 each taxing authority's meeting, a phone number for the taxing 109.36 jurisdiction where taxpayers may call if they have questions 110.1 related to the notice, and an address where comments will be 110.2 received by mail. 110.3 (d) The notice must state for each parcel: 110.4 (1) the market value of the property as determined under 110.5 section 273.11, and used for computing property taxes payable in 110.6 the following year and for taxes payable in the current year as 110.7 each appears in the records of the county assessor on November 1 110.8 of the current year; and, in the case of residential property, 110.9 whether the property is classified as homestead or 110.10 nonhomestead. The notice must clearly inform taxpayers of the 110.11 years to which the market values apply and that the values are 110.12 final values; 110.13 (2) the items listed below, shown separately by county, 110.14 city or town, statedetermined schooltaxnet of the education110.15homestead creditunder section273.1382275.02, voter approved 110.16 school levy, other local school levy, and the sum of the special 110.17 taxing districts, and as a total of all taxing authorities: 110.18 (i) the actual tax for taxes payable in the current 110.19 year; and 110.20 (ii)the tax change due to spending factors, defined as the110.21proposed tax minus the constant spending tax amount;110.22(iii) the tax change due to other factors, defined as the110.23constant spending tax amount minus the actual current year tax;110.24and110.25(iv)the proposed tax amount net of credits. 110.26 In the case of a town or the statedetermined schooltax, 110.27 the final tax shall also be its proposed tax unless the town 110.28 changes its levy at a special town meeting under section 110.29 365.52. If a school district has certified under section 110.30 126C.17, subdivision 9, that a referendum will be held in the 110.31 school district at the November general election, the county 110.32 auditor must note next to the school district's proposed amount 110.33 that a referendum is pending and that, if approved by the 110.34 voters, the tax amount may be higher than shown on the notice. 110.35 In the case of the city of Minneapolis, the levy for the 110.36 Minneapolis library board and the levy for Minneapolis park and 111.1 recreation shall be listed separately from the remaining amount 111.2 of the city's levy. In the case of a parcel where tax increment 111.3 or the fiscal disparities areawide tax under chapter 276A or 111.4 473F applies, the proposed tax levy on the captured value or the 111.5 proposed tax levy on the tax capacity subject to the areawide 111.6 tax must each be stated separately and not included in the sum 111.7 of the special taxing districts; and 111.8 (3) the increase or decrease between the total taxes 111.9 payable in the current year and the total proposed taxes, 111.10 expressed as a percentage. 111.11 For purposes of this section, the amount of the tax on 111.12 homesteads qualifying under the senior citizens' property tax 111.13 deferral program under chapter 290B is the total amount of 111.14 property tax before subtraction of the deferred property tax 111.15 amount. 111.16 (e) The notice must clearly state that the proposed or 111.17 final taxes do not include the following: 111.18 (1) special assessments; 111.19 (2) levies approved by the voters after the date the 111.20 proposed taxes are certified, including bond referenda, school 111.21 district levy referenda, and levy limit increase referenda; 111.22 (3) amounts necessary to pay cleanup or other costs due to 111.23 a natural disaster occurring after the date the proposed taxes 111.24 are certified; 111.25 (4) amounts necessary to pay tort judgments against the 111.26 taxing authority that become final after the date the proposed 111.27 taxes are certified; and 111.28 (5) the contamination tax imposed on properties which 111.29 received market value reductions for contamination. 111.30 (f) Except as provided in subdivision 7, failure of the 111.31 county auditor to prepare or the county treasurer to deliver the 111.32 notice as required in this section does not invalidate the 111.33 proposed or final tax levy or the taxes payable pursuant to the 111.34 tax levy. 111.35 (g) If the notice the taxpayer receives under this section 111.36 lists the property as nonhomestead, and satisfactory 112.1 documentation is provided to the county assessor by the 112.2 applicable deadline, and the property qualifies for the 112.3 homestead classification in that assessment year, the assessor 112.4 shall reclassify the property to homestead for taxes payable in 112.5 the following year. 112.6 (h) In the case of class 4 residential property used as a 112.7 residence for lease or rental periods of 30 days or more, the 112.8 taxpayer must either: 112.9 (1) mail or deliver a copy of the notice of proposed 112.10 property taxes to each tenant, renter, or lessee; or 112.11 (2) post a copy of the notice in a conspicuous place on the 112.12 premises of the property. 112.13 The notice must be mailed or posted by the taxpayer by 112.14 November 27 or within three days of receipt of the notice, 112.15 whichever is later. A taxpayer may notify the county treasurer 112.16 of the address of the taxpayer, agent, caretaker, or manager of 112.17 the premises to which the notice must be mailed in order to 112.18 fulfill the requirements of this paragraph. 112.19 (i) For purposes of this subdivision, subdivisions 5a and 112.20 6, "metropolitan special taxing districts" means the following 112.21 taxing districts in the seven-county metropolitan area that levy 112.22 a property tax for any of the specified purposes listed below: 112.23 (1) metropolitan council under section 473.132, 473.167, 112.24 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 112.25 (2) metropolitan airports commission under section 473.667, 112.26 473.671, or 473.672; and 112.27 (3) metropolitan mosquito control commission under section 112.28 473.711. 112.29 For purposes of this section, any levies made by the 112.30 regional rail authorities in the county of Anoka, Carver, 112.31 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 112.32 398A shall be included with the appropriate county's levy and 112.33 shall be discussed at that county's public hearing. 112.34 (j) If a statutory or home rule charter city or a town has 112.35 exercised the local levy option provided by section 473.388, 112.36 subdivision 7, it may include in the notice of its proposed 113.1 taxes the amount of its proposed taxes attributable to its 113.2 exercise of the option. In the first year of the city or town's 113.3 exercise of this option, the statement shall include an estimate 113.4 of the reduction of the metropolitan council's tax on the parcel 113.5 due to exercise of that option. The metropolitan council's levy 113.6 shall be adjusted accordingly. 113.7 [EFFECTIVE DATE.] This section is effective for notices of 113.8 proposed property taxes required in 2001 for taxes payable in 113.9 2002, and thereafter. 113.10 Sec. 46. Minnesota Statutes 2000, section 275.065, 113.11 subdivision 5a, is amended to read: 113.12 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 113.13 population of more than 2,500, county, a metropolitan special 113.14 taxing district as defined in subdivision 3, paragraph (i), a 113.15 regional library district established under section 134.201, or 113.16 school district shall advertise in a newspaper a notice of its 113.17 intent to adopt a budget and property tax levy or, in the case 113.18 of a school district, to review its current budget and proposed 113.19 property taxes payable in the following year, at a public 113.20 hearing, if a public hearing is required under subdivision 6. 113.21 The notice must be published not less than two business days nor 113.22 more than six business days before the hearing. 113.23 The advertisement must be at least one-eighth page in size 113.24 of a standard-size or a tabloid-size newspaper. The 113.25 advertisement must not be placed in the part of the newspaper 113.26 where legal notices and classified advertisements appear. The 113.27 advertisement must be published in an official newspaper of 113.28 general circulation in the taxing authority. The newspaper 113.29 selected must be one of general interest and readership in the 113.30 community, and not one of limited subject matter. The 113.31 advertisement must appear in a newspaper that is published at 113.32 least once per week. 113.33 For purposes of this section, the metropolitan special 113.34 taxing district's advertisement must only be published in the 113.35 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 113.36 (b) The advertisement for school districts, metropolitan 114.1 special taxing districts, and regional library districts must be 114.2 in the following form, except that the notice for a school 114.3 district may include references to the current budget in regard 114.4 to proposed property taxes. 114.5 "NOTICE OF 114.6 PROPOSED PROPERTY TAXES 114.7 (School District/Metropolitan 114.8 Special Taxing District/Regional 114.9 Library District) of ......... 114.10 The governing body of ........ will soon hold budget hearings 114.11 and vote on the property taxes for (metropolitan special taxing 114.12 district/regional library district services that will be 114.13 provided in (year)/school district services that will be 114.14 provided in (year) and (year)). 114.15 NOTICE OF PUBLIC HEARING: 114.16 All concerned citizens are invited to attend a public hearing 114.17 and express their opinions on the proposed (school 114.18 district/metropolitan special taxing district/regional library 114.19 district) budget and property taxes, or in the case of a school 114.20 district, its current budget and proposed property taxes, 114.21 payable in the following year. The hearing will be held on 114.22 (Month/Day/Year) at (Time) at (Location, Address)." 114.23 (c) The advertisement for cities and counties must be in 114.24 the following form. 114.25 "NOTICE OF PROPOSED 114.26 TOTAL BUDGET AND PROPERTY TAXES 114.27 The (city/county) governing body or board of commissioners will 114.28 hold a public hearing to discuss the budget and to vote on the 114.29 amount of property taxes to collect for services the 114.30 (city/county) will provide in (year). 114.31 114.32 SPENDING: The total budget amounts below compare 114.33 (city's/county's) (year) total actual budget with the amount the 114.34 (city/county) proposes to spend in (year). 114.35 114.36 (Year) Total Proposed (Year) Change from 115.1 Actual Budget Budget (Year)-(Year) 115.2 115.3 $....... $....... ...% 115.4 115.5 TAXES: The property tax amounts below compare that portion of 115.6 the current budget levied in property taxes in (city/county) for 115.7 (year) with the property taxes the (city/county) proposes to 115.8 collect in (year). 115.9 115.10 (Year) Property Proposed (Year) Change from 115.11 Taxes Property Taxes (Year)-(Year) 115.12 115.13 $....... $....... ...% 115.14 115.15 ATTEND THE PUBLIC HEARING 115.16 All (city/county) residents are invited to attend the public 115.17 hearing of the (city/county) to express your opinions on the 115.18 budget and the proposed amount of (year) property taxes. The 115.19 hearing will be held on: 115.20 (Month/Day/Year/Time) 115.21 (Location/Address) 115.22 If the discussion of the budget cannot be completed, a time and 115.23 place for continuing the discussion will be announced at the 115.24 hearing. You are also invited to send your written comments to: 115.25 (City/County) 115.26 (Location/Address)" 115.27 (d) For purposes of this subdivision, the budget amounts 115.28 listed on the advertisement mean: 115.29 (1) for cities, the total government fund expenditures, as 115.30 defined by the state auditor under section 471.6965, less any 115.31 expenditures for improvements or services that are specially 115.32 assessed or charged under chapter 429, 430, 435, or the 115.33 provisions of any other law or charter; and 115.34 (2) for counties, the total government fund expenditures, 115.35 as defined by the state auditor under section 375.169, less any 115.36 expenditures for direct payments to recipients or providers for 116.1 the human service aids listed below: 116.2 (i) Minnesota family investment program under chapters 256J 116.3 and 256K; 116.4 (ii) medical assistance under sections 256B.041, 116.5 subdivision 5, and 256B.19, subdivision 1; 116.6 (iii) general assistance medical care under section 116.7 256D.03, subdivision 6; 116.8 (iv) general assistance under section 256D.03, subdivision 116.9 2; 116.10 (v) emergency assistance under section 256J.48; 116.11 (vi) Minnesota supplemental aid under section 256D.36, 116.12 subdivision 1; 116.13 (vii) preadmission screening under section 256B.0911, and 116.14 alternative care grants under section 256B.0913; 116.15 (viii) general assistance medical care claims processing, 116.16 medical transportation and related costs under section 256D.03, 116.17 subdivision 4; 116.18 (ix) medical transportation and related costs under section 116.19 256B.0625, subdivisions 17 to 18a; 116.20 (x) group residential housing under section 256I.05, 116.21 subdivision 8, transferred from programs in clauses (iv) and 116.22 (vi); or 116.23 (xi) any successor programs to those listed in clauses (i) 116.24 to (x). 116.25 (e) A city with a population of over 500 but not more than 116.26 2,500 that is required to hold a public hearing under 116.27 subdivision 6 must advertise by posted notice as defined in 116.28 section 645.12, subdivision 1. The advertisement must be posted 116.29 at the time provided in paragraph (a). It must be in the form 116.30 required in paragraph (b). 116.31 (f) For purposes of this subdivision, the population of a 116.32 city is the most recent population as determined by the state 116.33 demographer under section 4A.02. 116.34 (g) The commissioner of revenue, subject to the approval of 116.35 the chairs of the house and senate tax committees, shall 116.36 prescribe the form and format of theadvertisement117.1 advertisements required under this subdivision. 117.2 [EFFECTIVE DATE.] This section is effective for public 117.3 advertisements required in 2001 for taxes payable in 2002, and 117.4 thereafter. 117.5 Sec. 47. Minnesota Statutes 2000, section 275.065, 117.6 subdivision 6, is amended to read: 117.7 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 117.8 (a) For purposes of this section, the following terms shall have 117.9 the meanings given: 117.10 (1) "Initial hearing" means the first and primary hearing 117.11 held to discuss the taxing authority's proposed budget and 117.12 proposed property tax levy for taxes payable in the following 117.13 year, or, for school districts, the current budget and the 117.14 proposed property tax levy for taxes payable in the following 117.15 year. 117.16 (2) "Continuation hearing" means a hearing held to complete 117.17 the initial hearing, if the initial hearing is not completed on 117.18 its scheduled date. 117.19 (3) "Subsequent hearing" means the hearing held to adopt 117.20 the taxing authority's final property tax levy, and, in the case 117.21 of taxing authorities other than school districts, the final 117.22 budget, for taxes payable in the following year. 117.23 (b) Between November 29 and December 20, the governing 117.24 bodies of a city that has a population over 500, county, 117.25 metropolitan special taxing districts as defined in subdivision 117.26 3, paragraph (i), and regional library districts shall each hold 117.27 an initial public hearing to discuss and seek public comment on 117.28 its final budget and property tax levy for taxes payable in the 117.29 following year, and the governing body of the school district 117.30 shall hold an initial public hearing to review its current 117.31 budget and proposed property tax levy for taxes payable in the 117.32 following year. The metropolitan special taxing districts shall 117.33 be required to hold only a single joint initial public hearing, 117.34 the location of which will be determined by the affected 117.35 metropolitan agencies. A city, county, metropolitan special 117.36 taxing district as defined in subdivision 3, paragraph (i), 118.1 regional library district established under section 134.201, or 118.2 school district is not required to hold a public hearing under 118.3 this subdivision unless its proposed property tax levy for taxes 118.4 payable in the following year, as certified under subdivision 1, 118.5 has increased over its final property tax levy for taxes payable 118.6 in the current year by a percentage that is greater than the 118.7 percentage increase in the implicit price deflator for 118.8 government consumption expenditures and gross investment for 118.9 state and local governments prepared by the Bureau of Economic 118.10 Analysts of the United States Department of Commerce for the 118.11 12-month period ending March 31 of the current year. 118.12 (c) The initial hearing must be held after 5:00 p.m. if 118.13 scheduled on a day other than Saturday. No initial hearing may 118.14 be held on a Sunday. 118.15 (d) At the initial hearing under this subdivision, the 118.16 percentage increase in property taxes proposed by the taxing 118.17 authority, if any, and the specific purposes for which property 118.18 tax revenues are being increased must be discussed. During the 118.19 discussion, the governing body shall hear comments regarding a 118.20 proposed increase and explain the reasons for the proposed 118.21 increase. The public shall be allowed to speak and to ask 118.22 questions. At the public hearing, the school district must also 118.23 provide and discuss information on the distribution of its 118.24 revenues by revenue source, and the distribution of its spending 118.25 by program area. 118.26 (e) If the initial hearing is not completed on its 118.27 scheduled date, the taxing authority must announce, prior to 118.28 adjournment of the hearing, the date, time, and place for the 118.29 continuation of the hearing. The continuation hearing must be 118.30 held at least five business days but no more than 14 business 118.31 days after the initial hearing. A continuation hearing may not 118.32 be held later than December 20 except as provided in paragraphs 118.33 (f) and (g). A continuation hearing must be held after 5:00 118.34 p.m. if scheduled on a day other than Saturday. No continuation 118.35 hearing may be held on a Sunday. 118.36 (f) The governing body of a county shall hold its initial 119.1 hearing on the first Thursday in December each year, and may 119.2 hold additional initial hearings on other dates before December 119.3 20 if necessary for the convenience of county residents. If the 119.4 county needs a continuation of its hearing, the continuation 119.5 hearing shall be held on the third Tuesday in December. If the 119.6 third Tuesday in December falls on December 21, the county's 119.7 continuation hearing shall be held on Monday, December 20. 119.8 (g) The metropolitan special taxing districts shall hold a 119.9 joint initial public hearing on the first Wednesday of 119.10 December. A continuation hearing, if necessary, shall be held 119.11 on the second Wednesday of December even if that second 119.12 Wednesday is after December 10. 119.13 (h) The county auditor shall provide for the coordination 119.14 of initial and continuation hearing dates for all school 119.15 districts and cities within the county to prevent conflicts 119.16 under clauses (i) and (j). 119.17 (i) By August 10, each school board and the board of the 119.18 regional library district shall certify to the county auditors 119.19 of the counties in which the school district or regional library 119.20 district is located the dates on which it elects to hold its 119.21 initial hearing and any continuation hearing. If a school board 119.22 or regional library district does not certify these dates by 119.23 August 10, the auditor will assign the initial and continuation 119.24 hearing dates. The dates elected or assigned must not conflict 119.25 with the initial and continuation hearing dates of the county or 119.26 the metropolitan special taxing districts. 119.27 (j) By August 20, the county auditor shall notify the 119.28 clerks of the cities within the county of the dates on which 119.29 school districts and regional library districts have elected to 119.30 hold their initial and continuation hearings. At the time a 119.31 city certifies its proposed levy under subdivision 1 it shall 119.32 certify the dates on which it elects to hold its initial hearing 119.33 and any continuation hearing. Until September 15, the first and 119.34 second Mondays of December are reserved for the use of the 119.35 cities. If a city does not certify its hearing dates by 119.36 September 15, the auditor shall assign the initial and 120.1 continuation hearing dates. The dates elected or assigned for 120.2 the initial hearing must not conflict with the initial hearing 120.3 dates of the county, metropolitan special taxing districts, 120.4 regional library districts, or school districts within which the 120.5 city is located. To the extent possible, the dates of the 120.6 city's continuation hearing should not conflict with the 120.7 continuation hearing dates of the county, metropolitan special 120.8 taxing districts, regional library districts, or school 120.9 districts within which the city is located. This paragraph does 120.10 not apply to cities of 500 population or less. 120.11 (k) The county initial hearing date and the city, 120.12 metropolitan special taxing district, regional library district, 120.13 and school district initial hearing dates must be designated on 120.14 the notices required under subdivision 3. The continuation 120.15 hearing dates need not be stated on the notices. 120.16 (l) At a subsequent hearing, each county, school district, 120.17 city over 500 population, and metropolitan special taxing 120.18 district may amend its proposed property tax levy and must adopt 120.19 a final property tax levy. Each county, city over 500 120.20 population, and metropolitan special taxing district may also 120.21 amend its proposed budget and must adopt a final budget at the 120.22 subsequent hearing. The final property tax levy must be adopted 120.23 prior to adopting the final budget. A school district is not 120.24 required to adopt its final budget at the subsequent hearing. 120.25 The subsequent hearing of a taxing authority must be held on a 120.26 date subsequent to the date of the taxing authority's initial 120.27 public hearing. If a continuation hearing is held, the 120.28 subsequent hearing must be held either immediately following the 120.29 continuation hearing or on a date subsequent to the continuation 120.30 hearing. The subsequent hearing may be held at a regularly 120.31 scheduled board or council meeting or at a special meeting 120.32 scheduled for the purposes of the subsequent hearing. The 120.33 subsequent hearing of a taxing authority does not have to be 120.34 coordinated by the county auditor to prevent a conflict with an 120.35 initial hearing, a continuation hearing, or a subsequent hearing 120.36 of any other taxing authority. All subsequent hearings must be 121.1 held prior to five working days after December 20 of the levy 121.2 year. The date, time, and place of the subsequent hearing must 121.3 be announced at the initial public hearing or at the 121.4 continuation hearing. 121.5 (m) The property tax levy certified under section 275.07 by 121.6 a city of any population, county, metropolitan special taxing 121.7 district, regional library district, or school district must not 121.8 exceed the proposed levy determined under subdivision 1, except 121.9 by an amount up to the sum of the following amounts: 121.10 (1) the amount of a school district levy whose voters 121.11 approved a referendum to increase taxes under section 123B.63, 121.12 subdivision 3, or 126C.17, subdivision 9, after the proposed 121.13 levy was certified; 121.14 (2) the amount of a city or county levy approved by the 121.15 voters after the proposed levy was certified; 121.16 (3) the amount of a levy to pay principal and interest on 121.17 bonds approved by the voters under section 475.58 after the 121.18 proposed levy was certified; 121.19 (4) the amount of a levy to pay costs due to a natural 121.20 disaster occurring after the proposed levy was certified, if 121.21 that amount is approved by the commissioner of revenue under 121.22 subdivision 6a; 121.23 (5) the amount of a levy to pay tort judgments against a 121.24 taxing authority that become final after the proposed levy was 121.25 certified, if the amount is approved by the commissioner of 121.26 revenue under subdivision 6a; 121.27 (6) the amount of an increase in levy limits certified to 121.28 the taxing authority by the commissioner of children, families, 121.29 and learning or the commissioner of revenue after the proposed 121.30 levy was certified; and 121.31 (7) the amount required under section 126C.55. 121.32 (n) This subdivision does not apply to towns and special 121.33 taxing districts other than regional library districts and 121.34 metropolitan special taxing districts. 121.35 (o) Notwithstanding the requirements of this section, the 121.36 employer is required to meet and negotiate over employee 122.1 compensation as provided for in chapter 179A. 122.2 [EFFECTIVE DATE.] This section is effective for hearings 122.3 required in 2001 for taxes payable in 2002 and thereafter. 122.4 Sec. 48. Minnesota Statutes 2000, section 275.08, 122.5 subdivision 1, is amended to read: 122.6 Subdivision 1. [GENERALLY.] The mill ratepercentof all 122.7 taxes, except the state tax and taxes the rate of which may be 122.8 fixed by law, shall be calculated and fixed by the county 122.9 auditor according to the limitations in this chapter hereinafter 122.10 prescribed; provided, that if any county, city, town, or school 122.11 district shall return a greater amount than its limit or than 122.12 the prescribed rates will raise, the auditor shall extend only 122.13 such amount of tax as allowed by the limit or that the limited 122.14 rate will produce. 122.15 [EFFECTIVE DATE.] This section is effective for taxes 122.16 payable in 2002 and thereafter. 122.17 Sec. 49. Minnesota Statutes 2000, section 275.08, 122.18 subdivision 1a, is amended to read: 122.19 Subd. 1a. [COMPUTATION OFTAX CAPACITYASSESSED VALUE.] 122.20 For taxes payable in19892002 and subsequent years, the county 122.21 auditor shall compute thegross tax capacityassessed value for 122.22 each parcel according to the class rates specified in section 122.23 273.13. Thegross tax capacity will beassessed value is the 122.24 appropriate class rate multiplied by the parcel's market value. 122.25For taxes payable in 1990 and subsequent years, the county122.26auditor shall compute the net tax capacity for each parcel122.27according to the class rates specified in section 273.13. The122.28net tax capacity will be the appropriate class rate multiplied122.29by the parcel's market value.122.30 [EFFECTIVE DATE.] This section is effective for taxes 122.31 payable in 2002 and thereafter. 122.32 Sec. 50. Minnesota Statutes 2000, section 275.08, 122.33 subdivision 1b, is amended to read: 122.34 Subd. 1b. [COMPUTATION OF TAX RATES.] The amounts 122.35 certified to be levied againstnet tax capacityassessed value 122.36 under section 275.07 by an individual local government unit 123.1 shall be divided by the totalnet tax capacityassessed value of 123.2 all taxable properties within the local government unit's taxing 123.3 jurisdiction, excluding the assessed value of properties taxed 123.4 under section 275.083. The resulting ratio,is expressed as a 123.5 mill rate, where one mill equals one-tenth of a percent. The 123.6 mill rate shall be the local government's local tax rate,. The 123.7 mill rate multiplied by each property'snet tax capacity shall123.8beassessed value produces each property'snet tax capacitytax 123.9 for that local government unit before reduction by any credits. 123.10Any amount certified to the county auditor to be levied123.11against market value shall be divided by the total referendum123.12market value of all taxable properties within the taxing123.13district. The resulting ratio, the taxing district's new123.14referendum tax rate, multiplied by each property's referendum123.15market value shall be each property's new referendum tax before123.16reduction by any credits. For the purposes of this subdivision,123.17"referendum market value" means the market value as defined in123.18section 126C.01, subdivision 3.123.19 [EFFECTIVE DATE.] This section is effective for taxes 123.20 payable in 2002 and thereafter. 123.21 Sec. 51. [275.083] [LOCAL OPTION PUBLIC SAFETY FEE.] 123.22 Notwithstanding section 272.02, subdivision 7, and any 123.23 other law to the contrary, a home rule charter or statutory city 123.24 may impose a tax on each parcel, lot, or tract of real property 123.25 described as exempt under section 272.02, subdivision 7, that is 123.26 located within the boundaries of the city or county. The tax 123.27 shall be imposed at a uniform rate within the city. The tax on 123.28 any parcel shall not exceed the market value of the property, as 123.29 determined under the provisions of chapters 272 and 273 for 123.30 taxable properties, times 0.75, times the city local tax rate 123.31 for the applicable taxes payable year, times a proportion equal 123.32 to the city's total public safety expenditures divided by its 123.33 total expenditures, both as reported for the most recent budget 123.34 year for which the city has submitted information to the state 123.35 auditor under section 6.74. A tax imposed under this section 123.36 must be certified according to the provisions of section 275.07, 124.1 and must be entered on the tax rolls as a local property tax. 124.2 All the laws for the enforcement of taxes on real estate apply 124.3 to the tax imposed under this section. 124.4 [EFFECTIVE DATE.] This section is effective for taxes 124.5 payable in 2002 and thereafter. 124.6 Sec. 52. [275.084] [TRANSPORTATION UTILITY FEE.] 124.7 Subdivision 1. [DEFINITIONS.] For the purposes of this 124.8 section, the following terms in this subdivision have the 124.9 meanings given: 124.10 (1) "Municipality" means a home rule charter or statutory 124.11 city. 124.12 (2) "Governing body" means the city council of a 124.13 municipality. 124.14 (3) "Reconstruction" means paving, grading, curbs and 124.15 gutters, bridge repair, overlays, drainage, base work, subgrade 124.16 corrections, and boulevard restoration. 124.17 (4) "Facility upgrade" means traffic signals, turn lanes, 124.18 medians, street approaches, alleys, rights-of-way, sidewalks, 124.19 retaining walls, fence installation, and additional traffic 124.20 lanes. 124.21 (5) "Maintenance" means striping, seal coating, crack 124.22 sealing, sidewalk maintenance, signal maintenance, street light 124.23 maintenance, and signage. 124.24 Subd. 2. [AUTHORIZATION.] A municipality may impose the 124.25 transportation utility fee provided in this section against land 124.26 located within its boundaries. 124.27 Subd. 3. [PROCEDURES FOR ADOPTION.] A municipality may 124.28 impose the transportation utility fee provided in this section 124.29 by ordinance adopted by a two-thirds vote of its governing 124.30 body. The resolution must not be voted on or adopted until 124.31 after a public hearing has been held on the question. A notice 124.32 of the time, place, and purpose of the hearing must be published 124.33 at least once in each week for two successive weeks in the 124.34 official newspaper of the municipality, or in a newspaper of 124.35 general content and circulation within the municipality, and the 124.36 last notice must be published at least seven days prior to the 125.1 hearing. The municipality, if adopted, must file the ordinance 125.2 of record with the county recorder, and the municipality must 125.3 provide a copy to the county auditor. 125.4 Subd. 4. [COLLECTION.] The ordinance adopted under this 125.5 section must provide for the billing and payment of the fee on a 125.6 monthly, quarterly, or other basis as the governing body by 125.7 resolution shall direct. Fees that, as of October 15 each 125.8 calendar year, have remained unpaid for at least 30 days must be 125.9 certified to the county auditor for collection as a special 125.10 assessment payable in the following calendar year against the 125.11 affected property. 125.12 Subd. 5. [MASTER PLAN REQUIREMENT.] A municipality may not 125.13 impose the fee provided in this section unless it has prepared 125.14 and adopted a master plan that includes information on the 125.15 proposed reconstruction, facility upgrade, and maintenance for 125.16 the following five years. A capital improvement plan, public 125.17 facility plan, or comparable information qualifies as a master 125.18 plan. The master plan must include information on the proposed 125.19 funding sources for all projects required to be included in the 125.20 plan. The master plan must be adopted by resolution of the 125.21 governing body following a hearing and publication of notice of 125.22 the hearing, as provided in subdivision 3. 125.23 Subd. 6. [USE OF PROCEEDS.] Revenues from the fee 125.24 authorized in this section may only be used for specific 125.25 projects listed in the master plan and are limited to projected 125.26 costs of the needs approved in the master plan. The 125.27 municipality may not accumulate revenues from the fee beyond the 125.28 estimated costs for reconstructions, facility upgrades, and 125.29 maintenance that are described in the master plan. 125.30 Subd. 7. [TRIP GENERATION DATA.] The fee imposed must be 125.31 calculated based on the relationship of the revenues the 125.32 municipality proposes to generate and a city determined trip 125.33 generation rate for each type of land use. 125.34 Subd. 8. [APPEALS.] A property owner may administratively 125.35 appeal the amount of the fee or the trip generation rate to the 125.36 governing body within 60 days after notice of the amount of fee 126.1 due has been mailed to the property owner. The appeal must be 126.2 in writing, signed, and dated by the property owner, and must 126.3 state the reasons why the amount of the fee or the trip 126.4 generation rate is incorrect. The decision of the governing 126.5 body may be appealed to the tax court in the same manner as 126.6 appeals of determinations regarding property tax matters 126.7 provided for in chapter 271. If the governing body does not 126.8 make a decision within six months after the filing of an 126.9 administrative appeal, the property owner may elect to appeal to 126.10 tax court. The appeal procedures in this subdivision are in 126.11 lieu of any appeal procedures relating to special assessments 126.12 provided for in chapter 429. 126.13 Subd. 9. [SPECIAL ASSESSMENTS; BONDS; PROPERTY TAX 126.14 LEVIES.] The use of the transportation utility fee by a 126.15 municipality does not restrict the municipality from imposing 126.16 special assessments, issuing bond debt, or levying property 126.17 taxes to pay the costs of local street reconstruction, facility 126.18 upgrades, or maintenance. 126.19 [EFFECTIVE DATE.] This section is effective for fees 126.20 payable in 2002 and thereafter. 126.21 Sec. 53. Minnesota Statutes 2000, section 275.28, 126.22 subdivision 1, is amended to read: 126.23 Subdivision 1. [AUDITOR TO MAKE.] The county auditor shall 126.24 make out the tax lists according to the prescribed form, and to 126.25 correspond with the assessment districts. The mill ratepercent126.26 necessary to raise the required amount of the various taxes 126.27 shall be calculated on thenet tax capacityassessed value of 126.28 property as determined by the state board of equalization, but, 126.29 in calculating such rates, no rate shall be usedresulting in a126.30fraction other than a decimal fraction, orless than agross126.31 local tax rate of.01 percent or a net local tax rate of .01126.32percent1/1000 of a mill; and, in extending any tax, whenever it 126.33 amounts to the fractional part of a cent, it shall be made one 126.34 cent. The tax lists shall also be made out to correspond with 126.35 the assessment books in reference to ownership and description 126.36 of property, with columns for the valuation and for the various 127.1 items of tax included in the total amount of all taxes set down 127.2 opposite each description. The auditor shall enter both the 127.3 state tax determined under section 275.02, and the local taxes 127.4 determined under sections 275.08 and 275.083, on the tax lists. 127.5 The total ad valorem property tax for each description of 127.6 property before credits is the sum of the amounts of the various 127.7 local taxes that apply to the parcel plus the amount of any 127.8 applicable state tax under section 275.02. Opposite each 127.9 description which has been sold for taxes, and which is subject 127.10 to redemption, but not redeemed, shall be placed the words "sold 127.11 for taxes." The amount of all special taxes shall be entered in 127.12 the proper columns, but the general taxes may be shown by 127.13 entering the mill ratepercentof each tax at the head of the 127.14 proper columns, without extending the same, in which case a 127.15 schedule of the mill ratespercentof such taxes shall be made 127.16 on the first page of each tax list. If the auditor fails to 127.17 enter on any such list before its delivery to the treasurer any 127.18 tax levied, the tax may be subsequently entered. The tax lists 127.19 shall be deemed completed, and all taxes extended thereon, as of 127.20 January 1 annually. 127.21 [EFFECTIVE DATE.] This section is effective for taxes 127.22 payable in 2002 and thereafter. 127.23 Sec. 54. Minnesota Statutes 2000, section 275.61, is 127.24 amended to read: 127.25 275.61 [VOTER APPROVED LEVY;MARKETASSESSED VALUE.] 127.26 For local governmental subdivisions other than school 127.27 districts, any levy, including the issuance of debt obligations 127.28 payable in whole or in part from property taxes, required to be 127.29 approved and approved by the voters at a general or special 127.30 electionfor taxes payable in 1993 and thereafter,shall be 127.31 levied against thereferendum marketassessed value of all 127.32 taxable property within the governmental subdivision, as defined127.33in section 126C.01, subdivision 3. Any levy amount subject to 127.34 the requirements of this section shall be certified separately 127.35 to the county auditor under section 275.07. 127.36 The ballot shall state the maximum amount of the increased 128.1 levy as a percentage ofmarketassessed value and the amount 128.2 that will be raised by the new referendum tax rate in the first 128.3 year it is to be levied. 128.4 [EFFECTIVE DATE.] This section is effective for taxes 128.5 payable in 2002 and thereafter. 128.6 Sec. 55. Minnesota Statutes 2000, section 276.04, 128.7 subdivision 2, is amended to read: 128.8 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 128.9 shall provide for the printing of the tax statements. The 128.10 commissioner of revenue shall prescribe the form of the property 128.11 tax statement and its contents. The statement must contain a 128.12 tabulated statement of the dollar amount due to each taxing 128.13 authority and the amount of the statedetermined schooltax from 128.14 the parcel of real property for which a particular tax statement 128.15 is prepared. The dollar amounts attributable to the county, the 128.16 statedetermined schooltax, the voter approved school tax, the 128.17 other local school tax, the township or municipality, and the 128.18 total of the metropolitan special taxing districts as defined in 128.19 section 275.065, subdivision 3, paragraph (i), must be 128.20 separately stated. The amounts due all other special taxing 128.21 districts, if any, may be aggregated. The amount of the tax on 128.22 homesteads qualifying under the senior citizens' property tax 128.23 deferral program under chapter 290B is the total amount of 128.24 property tax before subtraction of the deferred property tax 128.25 amount. The amount of the tax on contamination value imposed 128.26 under sections 270.91 to 270.98, if any, must also be separately 128.27 stated. The dollar amounts, including the dollar amount of any 128.28 special assessments, may be rounded to the nearest even whole 128.29 dollar. For purposes of this section whole odd-numbered dollars 128.30 may be adjusted to the next higher even-numbered dollar. The 128.31 amount of market value excluded under section 273.11, 128.32 subdivision 16, if any, must also be listed on the tax 128.33 statement.The statement shall include the following sentences,128.34printed in upper case letters in boldface print: "EVEN THOUGH128.35THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX128.36REVENUES, IT SETS THE AMOUNT OF THE STATE-DETERMINED SCHOOL TAX129.1LEVY. THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY129.2PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."129.3 (b) The property tax statements for manufactured homes and 129.4 sectional structures taxed as personal property shall contain 129.5 the same information that is required on the tax statements for 129.6 real property. 129.7 (c) Real and personal property tax statements must contain 129.8 the following information in the order given in this paragraph. 129.9 The information must contain the current year tax information in 129.10 the right column with the corresponding information for the 129.11 previous year in a column on the left: 129.12 (1) the property's estimated market value under section 129.13 273.11, subdivision 1; 129.14 (2) the property's taxable market value after reductions 129.15 under section 273.11, subdivisions 1a and 16; 129.16 (3) the property's gross tax, calculated by adding the 129.17 property's total property tax to the sum of the aids enumerated 129.18 in clause (4); 129.19 (4) a total of the following aids: 129.20 (i) education aids payable under chapters 122A, 123A, 123B, 129.21 124D, 125A, 126C, and 127A; 129.22 (ii) local government aids for cities, towns, and counties 129.23 under chapter 477A; 129.24 (iii) disparity reduction aid under section 273.1398; and 129.25 (iv) homestead and agricultural credit aid under section 129.26 273.1398; 129.27 (5) for homesteadresidential and agriculturalproperties, 129.28 theeducationmarket value homesteadcreditcredits under 129.29 section273.1382273.1384; 129.30 (6) any credits received under sections 273.119; 273.123; 129.31 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 129.32 473H.10, except that the amount of credit received under section 129.33 273.135 must be separately stated and identified as "taconite 129.34 tax relief"; and 129.35 (7) the net tax payable in the manner required in paragraph 129.36 (a). 130.1 (d) If the county uses envelopes for mailing property tax 130.2 statements and if the county agrees, a taxing district may 130.3 include a notice with the property tax statement notifying 130.4 taxpayers when the taxing district will begin its budget 130.5 deliberations for the current year, and encouraging taxpayers to 130.6 attend the hearings. If the county allows notices to be 130.7 included in the envelope containing the property tax statement, 130.8 and if more than one taxing district relative to a given 130.9 property decides to include a notice with the tax statement, the 130.10 county treasurer or auditor must coordinate the process and may 130.11 combine the information on a single announcement. 130.12 The commissioner of revenue shall certify to the county 130.13 auditor the actual or estimated aids enumerated in clause (4) 130.14 that local governments will receive in the following year. The 130.15 commissioner must certify this amount by January 1 of each year. 130.16 [EFFECTIVE DATE.] This section is effective July 1, 2001 130.17 and thereafter, for statements required in 2002 and thereafter. 130.18 Sec. 56. Minnesota Statutes 2000, section 276A.06, 130.19 subdivision 3, is amended to read: 130.20 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 130.21 apportion the levy of each governmental unit in the county in 130.22 the manner prescribed by this subdivision. The auditor shall: 130.23 (a) by August 20 of 1997 and each subsequent year, 130.24 determine the areawide portion of the levy for each governmental 130.25 unit by multiplying the local tax rate of the governmental unit 130.26 for the preceding levy year times the distribution value set 130.27 forth in subdivision 2, clause (b);and130.28 (b) by September 5 of 1997 and each subsequent year, 130.29 determine the local portion of the current year's levy by 130.30 subtracting the resulting amount from clause (a) from the 130.31 governmental unit's current year's levy.; and 130.32 (c) for determinations made under paragraph (a) in the case 130.33 of school districts, in 2001 and thereafter, for taxes payable 130.34 in 2002 and thereafter, exclude the general education tax rate 130.35 from the local tax rate for the preceding levy year. 130.36 [EFFECTIVE DATE.] This section is effective the day 131.1 following final enactment. 131.2 Sec. 57. Minnesota Statutes 2000, section 282.01, 131.3 subdivision 1a, is amended to read: 131.4 Subd. 1a. [CONVEYANCE; GENERALLY.] Tax-forfeited lands may 131.5 be sold by the county board to an organized or incorporated 131.6 governmental subdivision of the state for any public purpose for 131.7 which the subdivision is authorized to acquire property or may 131.8 be released from the trust in favor of the taxing districts on 131.9 application of a state agency for an authorized use at not less 131.10 than their value as determined by the county board.The131.11commissioner of revenue may convey by deed in the name of the131.12state a tract of tax-forfeited land held in trust in favor of131.13the taxing districts to a governmental subdivision for an131.14authorized public use, if an application is submitted to the131.15commissioner which includes a statement of facts as to the use131.16to be made of the tract and the need therefor and the131.17recommendation of the county board.131.18 [EFFECTIVE DATE.] This section is effective for deeds 131.19 issued on or after July 1, 2001. 131.20 Sec. 58. Minnesota Statutes 2000, section 282.01, 131.21 subdivision 1b, is amended to read: 131.22 Subd. 1b. [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 131.23 Notwithstanding subdivision 1a, in the case of tax-forfeited 131.24 lands located in a targeted neighborhood, as defined in section 131.25 469.201, subdivision 10,outside the metropolitan area, as131.26defined inand section 473.121, subdivision 2, the commissioner 131.27 of revenuemayshall convey by deed in the name of the state any 131.28 tract of tax-forfeited land held in trust in favor of the taxing 131.29 districts, to a political subdivision that submits an 131.30 application to the commissioner of revenue and the 131.31 recommendation of the county board. 131.32 (b)Notwithstanding subdivision 1a, in the case of131.33tax-forfeited lands located in a targeted neighborhood, as131.34defined in section 469.201, subdivision 10, in a county in the131.35metropolitan area, as defined in section 473.121, subdivision 2,131.36the commissioner of revenue shall convey by deed in the name of132.1the state any tract of tax-forfeited land held in trust in favor132.2of the taxing districts, to a political subdivision that submits132.3an application to the commissioner of revenue and the county132.4board.132.5(c)The application under paragraph (a)or (b)must include 132.6 a statement of facts as to the use to be made of the tract, the 132.7 need therefor, and a resolution, adopted by the governing body 132.8 of the political subdivision, finding that the conveyance of a 132.9 tract of tax-forfeited land to the political subdivision is 132.10 necessary to provide for the redevelopment of land as productive 132.11 taxable property. Deeds of conveyance issued under paragraph 132.12 (a) are not conditioned on continued use of the property for the 132.13 use stated in the application. 132.14 [EFFECTIVE DATE.] This section is effective for deeds 132.15 issued on or after July 1, 2001. 132.16 Sec. 59. Minnesota Statutes 2000, section 282.08, is 132.17 amended to read: 132.18 282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 132.19 The net proceeds from the sale or rental of any parcel of 132.20 forfeited land, or from the sale of products from the forfeited 132.21 land, must be apportioned by the county auditor to the taxing 132.22 districts interested in the land, as follows: 132.23 (1) the portion required to pay any amounts included in the 132.24 appraised value under section 282.01, subdivision 3, as 132.25 representing increased value due to any public improvement made 132.26 after forfeiture of the parcel to the state, but not exceeding 132.27 the amount certified by the clerk of the municipality must be 132.28 apportioned to the municipal subdivision entitled to it; 132.29 (2) the portion required to pay any amount included in the 132.30 appraised value under section 282.019, subdivision 5, 132.31 representing increased value due to response actions taken after 132.32 forfeiture of the parcel to the state, but not exceeding the 132.33 amount of expenses certified by the pollution control agency or 132.34 the commissioner of agriculture, must be apportioned to the 132.35 agency or the commissioner of agriculture and deposited in the 132.36 fund from which the expenses were paid; 133.1 (3) the portion of the remainder required to discharge any 133.2 special assessment chargeable against the parcel for drainage or 133.3 other purpose whether due or deferred at the time of forfeiture, 133.4 must be apportioned to the municipal subdivision entitled to it; 133.5and133.6 (4) the portion of the remainder equal to unpaid state tax 133.7 levies against the property for the years the property was on 133.8 the tax lists prior to forfeiture, not including the associated 133.9 penalty and interest amounts; and 133.10 (5) any balance must be apportioned as follows: 133.11 (i) The county board may annually by resolution set aside 133.12 no more than 30 percent of the receipts remaining to be used for 133.13 timber development on tax-forfeited land and dedicated memorial 133.14 forests, to be expended under the supervision of the county 133.15 board. It must be expended only on projects approved by the 133.16 commissioner of natural resources. 133.17 (ii) The county board may annually by resolution set aside 133.18 no more than 20 percent of the receipts remaining to be used for 133.19 the acquisition and maintenance of county parks or recreational 133.20 areas as defined in sections 398.31 to 398.36, to be expended 133.21 under the supervision of the county board. 133.22 (iii) Any balance remaining must be apportioned as 133.23 follows: county, 40 percent; town or city, 20 percent; and 133.24 school district, 40 percent, provided, however, that in 133.25 unorganized territory that portion which would have accrued to 133.26 the township must be administered by the county board of 133.27 commissioners. 133.28 [EFFECTIVE DATE.] This section is effective July 1, 2001, 133.29 and thereafter. 133.30 Sec. 60. Minnesota Statutes 2000, section 290A.04, 133.31 subdivision 2, is amended to read: 133.32 Subd. 2. [HOMEOWNERS.] A claimant whose property taxes 133.33 payable are in excess of the percentage of the household income 133.34 stated below shall pay an amount equal to the percent of income 133.35 shown for the appropriate household income level along with the 133.36 percent to be paid by the claimant of the remaining amount of 134.1 property taxes payable. The state refund equals the amount of 134.2 property taxes payable that remain, up to the state refund 134.3 amount shown below. 134.4 Percent Percent Maximum 134.5 Household Income of Income Paid by State 134.6 Claimant Refund 134.7$0 to 1,029134.8 $0 to 1,189 1.2 percent 18 percent$440$1,190 134.91,030 to 2,059134.10 1,190 to 2,389 1.3 percent 18 percent$440$1,190 134.112,060 to 3,099134.12 2,390 to 3,589 1.4 percent 20 percent$440$1,190 134.133,100 to 4,129134.14 3,590 to 4,779 1.6 percent 20 percent$440$1,190 134.154,130 to 5,159134.16 4,780 to 5,969 1.7 percent 20 percent$440$1,190 134.175,160 to 7,229134.18 5,970 to 8,369 1.9 percent 25 percent$440$1,190 134.197,230 to 8,259134.20 8,370 to 9,559 2.1 percent 25 percent$440$1,190 134.218,260 to 9,289134.22 9,560 to 10,759 2.2 percent 25 percent$440$1,190 134.239,290 to 10,319134.24 10,760 to 11,949 2.3 percent 30 percent$440$1,190 134.2510,320 to 11,349134.26 11,950 to 13,139 2.4 percent 30 percent$440$1,190 134.2711,350 to 12,389134.28 13,140 to 14,349 2.5 percent 30 percent$440$1,190 134.2912,390 to 14,449134.30 14,350 to 16,729 2.6 percent 30 percent$440$1,190 134.3114,450 to 15,479134.32 16,730 to 17,919 2.8 percent 35 percent$440$1,190 134.3315,480 to 16,509134.34 17,920 to 19,119 3.0 percent 35 percent$440$1,190 134.3516,510 to 17,549134.36 19,120 to 20,319 3.2 percent 40 percent$440$1,190 134.3717,550 to 21,669134.38 20,320 to 25,089 3.3 percent 40 percent$440$1,190 134.3921,670 to 24,769134.40 25,090 to 28,679 3.4 percent 45 percent$440$1,190 134.4124,770 to 30,959134.42 28,680 to 41,819 3.5 percent 45 percent$440$1,190 134.4330,960 to 36,1193.5 percent45 percent$440134.4436,120 to 41,279134.45 41,820 to 47,789 3.7 percent 50 percent$440$1,190 134.4641,280 to 58,829134.47 47,790 to 63,329 4.0 percent 50 percent$440$1,190 134.48 63,330 to 64,519 4.0 percent 50 percent $1,080 134.49 64,520 to 65,719 4.0 percent 50 percent $ 960 134.50 65,720 to 66,909 4.0 percent 50 percent $ 830 134.51 66,910 to 68,109 4.0 percent 50 percent $ 720 134.5258,830 to 59,859134.53 68,110 to 69,309 4.0 percent 50 percent$310$600 134.5459,860 to 60,889134.55 69,310 to 70,499 4.0 percent 50 percent$210$360 134.5660,890 to 61,929134.57 70,500 to 71,699 4.0 percent 50 percent$100$120 134.58 The payment made to a claimant shall be the amount of the 134.59 state refund calculated under this subdivision. No payment is 134.60 allowed if the claimant's household income is$61,930$71,700 or 134.61 more. 134.62 [EFFECTIVE DATE.] This section is effective beginning with 135.1 refunds based on property taxes payable in 2002. 135.2 Sec. 61. Minnesota Statutes 2000, section 290A.04, 135.3 subdivision 2a, is amended to read: 135.4 Subd. 2a. [RENTERS.] A claimant whose rent constituting 135.5 property taxes exceeds the percentage of the household income 135.6 stated below must pay an amount equal to the percent of income 135.7 shown for the appropriate household income level along with the 135.8 percent to be paid by the claimant of the remaining amount of 135.9 rent constituting property taxes. The state refund equals the 135.10 amount of rent constituting property taxes that remain, up to 135.11 the maximum state refund amount shown below. 135.12 Percent Percent Maximum 135.13 Household Income of Income Paid by State 135.14 Claimant Refund 135.15 $0 to 3,099135.16 0 to 3,589 1.0 percent 5 percent$1,030$1,190 135.173,100 to 4,129135.18 3,590 to 4,779 1.0 percent 10 percent$1,030$1,190 135.194,130 to 5,159135.20 4,780 to 5,969 1.1 percent 10 percent$1,030$1,190 135.215,160 to 7,229135.22 5,970 to 8,369 1.2 percent 10 percent$1,030$1,190 135.237,230 to 9,289135.24 8,370 to 10,759 1.3 percent 15 percent$1,030$1,190 135.259,290 to 10,319135.26 10,760 to 11,949 1.4 percent 15 percent$1,030$1,190 135.2710,320 to 11,349135.28 11,950 to 13,139 1.4 percent 20 percent$1,030$1,190 135.2911,350 to 13,419135.30 13,140 to 15,539 1.5 percent 20 percent$1,030$1,190 135.3113,420 to 14,449135.32 15,540 to 16,729 1.6 percent 20 percent$1,030$1,190 135.3314,450 to 15,479135.34 16,730 to 17,919 1.7 percent 25 percent$1,030$1,190 135.3515,480 to 17,549135.36 17,920 to 20,319 1.8 percent 25 percent$1,030$1,190 135.3717,550 to 18,579135.38 20,320 to 21,509 1.9 percent 30 percent$1,030$1,190 135.3918,580 to 19,609135.40 21,510 to 22,699 2.0 percent 30 percent$1,030$1,190 135.4119,610 to 20,639135.42 22,700 to 23,899 2.2 percent 30 percent$1,030$1,190 135.4320,640 to 21,669135.44 23,900 to 25,089 2.4 percent 30 percent$1,030$1,190 135.4521,670 to 22,709135.46 25,090 to 26,289 2.6 percent 35 percent$1,030$1,190 135.4722,710 to 23,739135.48 26,290 to 27,489 2.7 percent 35 percent$1,030$1,190 135.4923,740 to 24,769135.50 27,490 to 28,679 2.8 percent 35 percent$1,030$1,190 135.5124,770 to 25,799135.52 28,680 to 29,869 2.9 percent 40 percent$1,030$1,190 135.5325,800 to 26,839135.54 29,870 to 31,079 3.0 percent 40 percent$1,030$1,190 135.5526,840 to 27,869135.56 31,080 to 32,269 3.1 percent 40 percent$1,030$1,190 135.5727,870 to 28,899135.58 32,270 to 33,459 3.2 percent 40 percent$1,030$1,190 135.5928,900 to 29,929135.60 33,460 to 34,649 3.3 percent 45 percent$ 930$1,080 136.129,930 to 30,959136.2 34,650 to 35,849 3.4 percent 45 percent$ 830$ 960 136.330,960 to 31,999136.4 35,850 to 37,049 3.5 percent 45 percent$ 720$ 830 136.532,000 to 33,029136.6 37,050 to 38,239 3.5 percent 50 percent$ 620$ 720 136.733,030 to 34,059136.8 38,240 to 39,439 3.5 percent 50 percent$ 520$ 600 136.934,060 to 35,089136.10 39,440 to 40,629 3.5 percent 50 percent$ 310$ 360 136.1135,090 to 36,119136.12 40,630 to 41,819 3.5 percent 50 percent$ 100$ 120 136.13 The payment made to a claimant is the amount of the state 136.14 refund calculated under this subdivision. No payment is allowed 136.15 if the claimant's household income is$36,120$41,820 or more. 136.16 [EFFECTIVE DATE.] This section is effective beginning with 136.17 refunds based on rent constituting property taxes paid in 2001. 136.18 Sec. 62. Minnesota Statutes 2000, section 290A.04, 136.19 subdivision 4, is amended to read: 136.20 Subd. 4. [INFLATION ADJUSTMENT.] Beginning for property 136.21 tax refunds payable in calendar year19962002, the commissioner 136.22 shall annually adjust the dollar amounts of the income 136.23 thresholds and the maximum refunds under subdivisions 2 and 2a 136.24 for inflation. The commissioner shall make the inflation 136.25 adjustments in accordance with section290.06, subdivision 2d1f 136.26 of the Internal Revenue Code, except that for purposes of this 136.27 subdivision the percentage increase shall be determined from the 136.28 year ending on June 30,19942000, to the year ending on June 30 136.29 of the year preceding that in which the refund is payable. The 136.30 commissioner shall use the appropriate percentage increase to 136.31 annually adjust the income thresholds and maximum refunds under 136.32 subdivisions 2 and 2a for inflation without regard to whether or 136.33 not the income tax brackets are adjusted for inflation in that 136.34 year. The commissioner shall round the thresholds and the 136.35 maximum amounts, as adjusted to the nearest $10 amount. If the 136.36 amount ends in $5, the commissioner shall round it up to the 136.37 next $10 amount. 136.38 The commissioner shall annually announce the adjusted 136.39 refund schedule at the same time provided under section 290.06. 136.40 The determination of the commissioner under this subdivision is 136.41 not a rule under the Administrative Procedure Act. 137.1 [EFFECTIVE DATE.] This section is effective the day 137.2 following final enactment. 137.3 Sec. 63. Minnesota Statutes 2000, section 469.1763, 137.4 subdivision 6, is amended to read: 137.5 Subd. 6. [POOLING PERMITTED FOR DEFICITS.] (a) This 137.6 subdivision applies only to districts for which the request for 137.7 certification was made before June 2,19972001. 137.8 (b) The municipality for the district may transfer 137.9 available increments from another tax increment financing 137.10 district located in the municipality, if the transfer is 137.11 necessary to eliminate a deficit in the district to which the 137.12 increments are transferred. A deficit in the district for 137.13 purposes of this subdivision means the lesser of the following 137.14 two amounts: 137.15 (1)(i) the amount due during the calendar year to pay 137.16 preexisting obligations of the district; minus 137.17 (ii) the total increments to be collected from properties 137.18 located within the district that are available for the calendar 137.19 year; plus 137.20 (iii) total increments from properties located in other 137.21 districts in the municipality that are available to be used to 137.22 meet the district's obligations under this section, excluding 137.23 this subdivision, or other provisions of law (but excluding a 137.24 special tax under section 469.1791 and the grant program under 137.25 Laws 1997, chapter 231, article 1, section 19, or this article); 137.26 or 137.27 (2) the reduction in increments collected from properties 137.28 located in the district for the calendar year as a result of the 137.29 changes in class rates inLaws 1997, chapter 231, article 1;137.30Laws 1998, chapter 389, article 2; and Laws 1999, chapter137.31243this article or the elimination of the general education tax 137.32 levy under this article. 137.33 (c) A preexisting obligation means bonds issued and sold 137.34 before June 2,19972001, and bonds issued to refund such bonds 137.35 or to reimburse expenditures made in conjunction with a signed 137.36 contractual agreement entered into before June 2,19972001, to 138.1 the extent that the bonds are secured by a pledge of increments 138.2 from the tax increment financing district. For purposes of this 138.3 subdivision, bonds exclude an obligation to reimburse or pay a 138.4 developer or owner of property located in the district for 138.5 amounts incurred or paid by the developer or owner. 138.6 (d) The municipality may require a development authority, 138.7 other than a seaway port authority, to transfer available 138.8 increments for any of its tax increment financing districts in 138.9 the municipality to make up an insufficiency in another district 138.10 in the municipality, regardless of whether the district was 138.11 established by the development authority or another development 138.12 authority. This authority applies notwithstanding any law to 138.13 the contrary, but applies only to a development authority that: 138.14 (1) was established by the municipality; or 138.15 (2) the governing body of which is appointed, in whole or 138.16 part, by the municipality or an officer of the municipality or 138.17 which consists, in whole or part, of members of the governing 138.18 body of the municipality. 138.19 (e) The authority under this subdivision to spend tax 138.20 increments outside of the area of the district from which the 138.21 tax increments were collected: 138.22 (1) may only be exercised after obtaining approval of the 138.23 use of the increments, in writing, by the commissioner of 138.24 revenue; 138.25 (2) is an exception to the restrictions under section 138.26 469.176, subdivision 4i, and the other provisions of this 138.27 section, and the percentage restrictions under subdivision 2 138.28 must be calculated after deducting increments spent under this 138.29 subdivision from the total increments for the district; and 138.30 (3) applies notwithstanding the provisions of the Tax 138.31 Increment Financing Act in effect for districts for which the 138.32 request for certification was made before June 30, 1982, or any 138.33 other law to the contrary. 138.34 [EFFECTIVE DATE.] This section is effective January 2, 138.35 2003, and thereafter. 138.36 Sec. 64. Minnesota Statutes 2000, section 469.177, 139.1 subdivision 1a, is amended to read: 139.2 Subd. 1a. [ORIGINAL LOCAL TAX RATE.] At the time of the 139.3 initial certification of the original net tax capacity for a tax 139.4 increment financing district or a subdistrict, the county 139.5 auditor shall certify the original local tax rate that applies 139.6 to the district or subdistrict. The original local tax rate is 139.7 the sum of all the local tax rates that apply to a property in 139.8 the district or subdistrict. The local tax rate to be certified 139.9 is the rate in effect for the same taxes payable year applicable 139.10 to the tax capacity values certified as the district's or 139.11 subdistrict's original tax capacity. The resulting tax capacity 139.12 rate is the original local tax rate for the life of the district 139.13 or subdistrict. The original local tax rate does not include 139.14 any rate or amount attributable to a state levy, whether the 139.15 state levy is imposed by section 275.02 or another provision of 139.16 law. 139.17 [EFFECTIVE DATE.] This section is effective the day 139.18 following final enactment. 139.19 Sec. 65. Minnesota Statutes 2000, section 469.177, 139.20 subdivision 11, is amended to read: 139.21 Subd. 11. [DEDUCTION FOR ENFORCEMENT COSTS; 139.22 APPROPRIATION.] (a) The county treasurer shall deduct an amount 139.23 equal to0.250.34 percent of any increment distributed to an 139.24 authority or municipality. The county treasurer shall pay the 139.25 amount deducted to the state treasurer for deposit in the state 139.26 general fund. 139.27 (b) The amounts deducted and paid under paragraph (a) are 139.28 appropriated to the state auditor for the cost of (1) the 139.29 financial reporting of tax increment financing information and 139.30 (2) the cost of examining and auditing of authorities' use of 139.31 tax increment financing as provided under section 469.1771, 139.32 subdivision 1. Notwithstanding section 16A.28 or any other law 139.33 to the contrary, this appropriation does not cancel and remains 139.34 available until spent. 139.35 [EFFECTIVE DATE.] This section is effective for taxes 139.36 payable in 2002 and thereafter. 140.1 Sec. 66. Minnesota Statutes 2000, section 473.446, 140.2 subdivision 1, is amended to read: 140.3 Subdivision 1. [WITHIN TRANSIT TAXING DISTRICT.] For the 140.4 purposes of sections 473.405 to 473.449 and the metropolitan 140.5 transit system, except as otherwise provided in this subdivision 140.6 and subdivision 1b, the council shall levy each year upon all 140.7 taxable property within the metropolitan transit taxing 140.8 district, defined in subdivision 2, a transit tax consisting of: 140.9 (a) an amount which shall be used for payment of the 140.10 expenses of operating transit and paratransit service and to 140.11 provide for payment of obligations issued by the council under 140.12 section 473.436, subdivision 6; 140.13 (b) an additional amount, if any, the council determines to 140.14 be necessary to provide for the full and timely payment of its 140.15 certificates of indebtedness and other obligations outstanding 140.16 on July 1, 1985, to which property taxes under this section have 140.17 been pledged; and 140.18 (c) an additional amount necessary to provide full and 140.19 timely payment of certificates of indebtedness, bonds, including 140.20 refunding bonds or other obligations issued or to be issued 140.21 under section 473.39 by the council for purposes of acquisition 140.22 and betterment of property and other improvements of a capital 140.23 nature and to which the council has specifically pledged tax 140.24 levies under this clause. 140.25 The property tax levied by the council for general purposes 140.26 under paragraph (a) must not exceed the following amount for the 140.27 years specified: 140.28 (1) for taxes payable in 1995, the council's property tax 140.29 levy limitation for general transit purposes is equal to the 140.30 former regional transit board's property tax levy limitation for 140.31 general transit purposes under this subdivision, for taxes 140.32 payable in 1994, multiplied by an index for market valuation 140.33 changes equal to the total market valuation of all taxable 140.34 property located within the metropolitan transit taxing district 140.35 for the current taxes payable year divided by the total market 140.36 valuation of all taxable property located within the 141.1 metropolitan transit taxing district for the previous taxes 141.2 payable year;and141.3 (2) for taxes payable in 1996and subsequent yearsthrough 141.4 2001, the product of (i) the council's property tax levy 141.5 limitation for general transit purposes for the previous year 141.6 determined under this subdivision before reduction by the amount 141.7 levied by any municipality in the previous year under section 141.8 473.388, subdivision 7, multiplied by (ii) an index for market 141.9 valuation changes equal to the total market valuation of all 141.10 taxable property located within the metropolitan transit taxing 141.11 district for the current taxes payable year divided by the total 141.12 market valuation of all taxable property located within the 141.13 metropolitan transit taxing district for the previous taxes 141.14 payable year, minus the amount levied by any municipality in the 141.15 current levy year under section 473.388, subdivision 7.; 141.16 (3) for taxes payable in 2002, the council's property tax 141.17 levy limitation for general transit purposes is equal to (i) the 141.18 council's property tax levy limitation for general transit 141.19 purposes for the previous year, determined under this 141.20 subdivision before reduction by the amount levied by any 141.21 municipality for the previous year under section 473.388, 141.22 subdivision 7, multiplied by (ii) an index for market valuation 141.23 changes equal to the total market valuation of all taxable 141.24 property located within the metropolitan transit taxing district 141.25 for the current taxes payable year divided by the total market 141.26 valuation of all taxable property located within the 141.27 metropolitan transit taxing district for the previous taxes 141.28 payable year, minus (iii) the amount levied by a municipality 141.29 under section 473.388, subdivision 7, for the same taxes payable 141.30 year as the council's limitation, plus (iv) $17,400,000. The 141.31 council must distribute 13.8 percent of any amount levied 141.32 pursuant to item (iv) as additional financial assistance under 141.33 section 473.388; 141.34 (4) for taxes payable in 2003, the council's property tax 141.35 levy limitation for general transit purposes is equal to (i) the 141.36 council's property tax levy limitation for general transit 142.1 purposes for the previous year, determined under this 142.2 subdivision before reduction by the amount levied by any 142.3 municipality for the previous year under section 473.388, 142.4 subdivision 7, minus (ii) $17,400,000, multiplied by (iii) the 142.5 index for market valuation changes as described in clause (3), 142.6 minus (iv) the amount levied by a municipality under section 142.7 473.388, subdivision 7, for the same taxes payable year as the 142.8 council's limitation, plus (iv) $11,500,000. The council must 142.9 distribute 13.8 percent of any amount levied pursuant to item 142.10 (iv) as additional financial assistance under section 473.388; 142.11 and 142.12 (5) for taxes payable in 2004 and thereafter, the council's 142.13 property tax levy limitation for general transit purposes is 142.14 equal to (i) the council's property tax levy limitation for 142.15 general transit purposes for the previous year, determined under 142.16 this subdivision before reduction by the amount levied by any 142.17 municipality for the previous year under section 473.388, 142.18 subdivision 7, but excluding the amount in clause (4), item 142.19 (iv), multiplied by (ii) the index for market valuation changes 142.20 as described in clause (3), minus (iii) the amount levied by a 142.21 municipality under section 473.388, subdivision 7, for the same 142.22 taxes payable year as the council's limitation, plus (iv) 142.23 $11,500,000 times an index for market valuation changes equal to 142.24 the total market valuation of all taxable property located 142.25 within the transit district for the current taxes payable year 142.26 divided by the total market valuation of all taxable property 142.27 located in the district for the taxes payable year 2002. In 142.28 2004, and each year thereafter, the council must distribute 13.8 142.29 percent of any amount levied pursuant to item (iv) as additional 142.30 financial assistance under section 473.388, subdivision 7. 142.31 The portion of the property tax levy for transit district 142.32 operating purposes attributable to a municipality that has 142.33 exercised a local levy option under section 473.388, subdivision 142.34 7, is the amount as determined under subdivision 1b. The 142.35 portion of the property tax levy for transit district operating 142.36 purposes attributable to the remaining municipalities within the 143.1 transit district is found by subtracting the portions 143.2 attributable to the municipalities that have exercised a local 143.3 levy option under section 473.388, subdivision 7. 143.4 For the taxes payable year 1995, the index for market 143.5 valuation changes shall be multiplied by an amount equal to the 143.6 sum of the regional transit board's property tax levy limitation 143.7 for the taxes payable year 1994 and $160,665. The $160,665 143.8 increase shall be a permanent adjustment to the levy limit base 143.9 used in determining the regional transit board's property tax 143.10 levy limitation for general purposes for subsequent taxes 143.11 payable years. 143.12 For the purpose of determining the council's property tax 143.13 levy limitation for general transit purposes under this 143.14 subdivision, "total market valuation" means the total market 143.15 valuation of all taxable property within the metropolitan 143.16 transit taxing district without valuation adjustments for fiscal 143.17 disparities (chapter 473F), tax increment financing (sections 143.18 469.174 to 469.179), and high voltage transmission lines 143.19 (section 273.425). 143.20 The county auditor shall reduce the tax levied pursuant to 143.21 this section and section 473.388 on all property within 143.22 statutory and home rule charter cities and towns that receive 143.23 full-peak service and limited off-peak service by an amount 143.24 equal to the tax levy that would be produced by applying a rate 143.25 of 0.510 percent of net tax capacity on the property. The 143.26 county auditor shall reduce the tax levied pursuant to this 143.27 section and section 473.388 on all property within statutory and 143.28 home rule charter cities and towns that receive limited peak 143.29 service by an amount equal to the tax levy that would be 143.30 produced by applying a rate of 0.765 percent of net tax capacity 143.31 on the property. The amounts so computed by the county auditor 143.32 shall be submitted to the commissioner of revenue as part of the 143.33 abstracts of tax lists required to be filed with the 143.34 commissioner under section 275.29. Any prior year adjustments 143.35 shall also be certified in the abstracts of tax lists. The 143.36 commissioner shall review the certifications to determine their 144.1 accuracy and may make changes in the certification as necessary 144.2 or return a certification to the county auditor for 144.3 corrections. The commissioner shall pay to the council and to 144.4 the municipalities levying under section 473.388, subdivision 7, 144.5 the amounts certified by the county auditors on the dates 144.6 provided in section 273.1398, apportioned between the council 144.7 and the municipality in the same proportion as the total transit 144.8 levy is apportioned within the municipality. There is annually 144.9 appropriated from the general fund in the state treasury to the 144.10 department of revenue the amounts necessary to make these 144.11 payments. 144.12 For the purposes of this subdivision, "full-peak and 144.13 limited off-peak service" means peak period regular route 144.14 service, plus weekday midday regular route service at intervals 144.15 longer than 60 minutes on the route with the greatest frequency; 144.16 and "limited peak period service" means peak period regular 144.17 route service only. 144.18 For the purposes of property taxes payable in the following 144.19 year, the council shall annually determine which cities and 144.20 towns qualify for the 0.510 percent or 0.765 percent tax 144.21 capacity rate reduction and shall certify this list to the 144.22 county auditor of the county wherein such cities and towns are 144.23 located on or before September 15. No changes may be made to 144.24 the annual list after September 15. 144.25 [EFFECTIVE DATE.] This section is effective for taxes 144.26 payable in 2002 and thereafter. 144.27 Sec. 67. Minnesota Statutes 2000, section 473F.08, 144.28 subdivision 3, is amended to read: 144.29 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 144.30 apportion the levy of each governmental unit in the auditor's 144.31 county in the manner prescribed by this subdivision. The 144.32 auditor shall: 144.33 (a) by August 20, determine the areawide portion of the 144.34 levy for each governmental unit by multiplying the local tax 144.35 rate of the governmental unit for the preceding levy year times 144.36 the distribution value set forth in subdivision 2, clause (b); 145.1and145.2 (b) by September 5, determine the local portion of the 145.3 current year's levy by subtracting the resulting amount from 145.4 clause (a) from the governmental unit's current year's levy.; 145.5 and 145.6 (c) for determinations made under paragraph (a), in the 145.7 case of school districts, in 2001 and thereafter, for taxes 145.8 payable in 2002 and thereafter, exclude the general education 145.9 tax rate from the local tax rate for the preceding levy year. 145.10 [EFFECTIVE DATE.] This section is effective the day 145.11 following final enactment. 145.12 Sec. 68. Minnesota Statutes 2000, section 473H.10, 145.13 subdivision 3, is amended to read: 145.14 Subd. 3. [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 145.15 After having determined the market value of all land valued 145.16 according to subdivision 2, the assessor shall compute thenet145.17tax capacityassessed value of those properties by applying the 145.18 appropriate class rates. When computing the rate of tax 145.19 pursuant to section 275.08, the county auditor shall include the 145.20net tax capacityassessed value of land as provided in this 145.21 clause. 145.22 (b) The county auditor shall compute the tax on lands 145.23 valued according to subdivision 2 and nonresidential buildings 145.24 by multiplying thenet tax capacityassessed value times the 145.25 total local tax rate for all purposes as provided in clause (a). 145.26 (c) The county auditor shall then compute the tax on lands 145.27 valued according to subdivision 2 and nonresidential buildings 145.28 by multiplying thenet tax capacityassessed value times the 145.29 total local tax rate for all purposes as provided in clause (a), 145.30 subtracting $1.50 per acre of land in the preserve. 145.31 (d) The county auditor shall then compute the maximum ad 145.32 valorem property tax on lands valued according to subdivision 2 145.33 and nonresidential buildings by multiplying thenet tax capacity145.34 assessed value times 105 percent of the previous year's 145.35 statewide average local tax rate levied on property located 145.36 within townships for all purposes. 146.1 (e) The tax due and payable by the owner of preserve land 146.2 valued according to subdivision 2 and nonresidential buildings 146.3 will be the amount determined in clause (c) or (d), whichever is 146.4 less. The state shall reimburse the taxing jurisdictions for 146.5 the amount of the difference between the net tax determined 146.6 under this clause and the gross tax in clause (b). Residential 146.7 buildings shall continue to be valued and classified according 146.8 to the provisions of sections 273.11 and 273.13, as they would 146.9 be in the absence of this section, and the tax on those 146.10 buildings shall not be subject to the limitation contained in 146.11 this clause. 146.12 The county may transfer money from the county conservation 146.13 account created in section 40A.152 to the county revenue fund to 146.14 reimburse the fund for the tax lost as a result of this 146.15 subdivision or to pay taxing jurisdictions within the county for 146.16 the tax lost. The county auditor shall certify to the 146.17 commissioner of revenue on or before June 1 the total amount of 146.18 tax lost to the county and taxing jurisdictions located within 146.19 the county as a result of this subdivision and the extent that 146.20 the tax lost exceeds funds available in the county conservation 146.21 account. Payment shall be made by the state on December2615 146.22 to each of the affected taxing jurisdictions, other than school 146.23 districts, in the same proportion that the ad valorem tax is 146.24 distributed if the county conservation account is insufficient 146.25 to make the reimbursement. There is annually appropriated from 146.26 the Minnesota conservation fund under section 40A.151 to the 146.27 commissioner of revenue an amount sufficient to make the 146.28 reimbursement provided in this subdivision. If the amount 146.29 available in the Minnesota conservation fund is insufficient, 146.30 the balance that is needed is appropriated from the general fund. 146.31 [EFFECTIVE DATE.] This section is effective for taxes and 146.32 reimbursements payable in 2002 and thereafter. 146.33 Sec. 69. Minnesota Statutes 2000, section 477A.011, 146.34 subdivision 3, is amended to read: 146.35 Subd. 3. [POPULATION.] "Population" means the population 146.36 established as ofJulyJune 1 in an aid calculation year by the 147.1 most recent federal census, by a special census conducted under 147.2 contract with the United States Bureau of the Census, by a 147.3 population estimate made by the metropolitan council, or by a 147.4 population estimate of the state demographer made pursuant to 147.5 section 4A.02, whichever is the most recent as to the stated 147.6 date of the count or estimate for the preceding calendar year. 147.7 The term "per capita" refers to population as defined by this 147.8 subdivision. 147.9 [EFFECTIVE DATE.] This section is effective the day 147.10 following final enactment. 147.11 Sec. 70. Minnesota Statutes 2000, section 477A.011, is 147.12 amended by adding a subdivision to read: 147.13 Subd. 3b. [POPULATION SPRAWL FACTOR.] For a city with a 147.14 population of 5,000 or more that is located outside of the 147.15 metropolitan area, the "population sprawl factor" is equal to 147.16 ten percent of the population of the towns located within five 147.17 miles of the city. Cities of under 5,000 population located 147.18 outside the metropolitan area are to be treated as towns under 147.19 the preceding sentence. The unorganized territory of a county 147.20 is treated as one town for the same purpose. For all other 147.21 cities, the "population sprawl factor" is zero. If a town is 147.22 within five miles of more than one city, ten percent of the 147.23 town's population is counted for the closest city only, unless 147.24 the town is adjacent to more than one city. 147.25 [EFFECTIVE DATE.] This section is effective for aid payable 147.26 in 2002 and thereafter. 147.27 Sec. 71. Minnesota Statutes 2000, section 477A.011, is 147.28 amended by adding a subdivision to read: 147.29 Subd. 3c. [DENSITY FACTOR.] For a city located within the 147.30 metropolitan area, except Minneapolis and St. Paul, the "density 147.31 factor" is equal to the square root of the quotient derived by 147.32 dividing the number of residential units per acre within the 147.33 city by the average number of residential units per acre for all 147.34 cities located within the metropolitan area, except for the 147.35 cities of St. Paul and Minneapolis, as certified to the 147.36 commissioner by the metropolitan council on or before June 30 of 148.1 the aid determination year. If the density factor computed for 148.2 a city is greater than 1.75, the density factor for that city is 148.3 1.75. If the density factor computed for a city is less than 148.4 0.50, the density factor for that city is 0.50. For all other 148.5 cities, the "density factor" is zero. 148.6 [EFFECTIVE DATE.] This section is effective for aid payable 148.7 in 2002 and thereafter. 148.8 Sec. 72. Minnesota Statutes 2000, section 477A.011, is 148.9 amended by adding a subdivision to read: 148.10 Subd. 3d. [TAX CAPACITY.] "Tax capacity" means (1) the net 148.11 tax capacity or assessed value of all taxable property located 148.12 in a city or town computed using the class rates in section 148.13 273.13, and the market values for taxes payable in the year 148.14 prior to the aid distribution, plus (2) the city's or town's 148.15 fiscal disparities distribution net tax capacity or assessed 148.16 value under section 276A.06, subdivision 2, paragraph (b), or 148.17 473F.08, subdivision 2, paragraph (b), for taxes payable in the 148.18 year prior to the aid distribution. The market values utilized 148.19 in computing a city's or town's tax capacity must be reduced by 148.20 the sum of (1) the city's or town's market value of commercial 148.21 industrial property as defined in section 276A.01, subdivision 148.22 3, or 473F.02, subdivision 3, multiplied by the ratio determined 148.23 pursuant to section 276A.06, subdivision 2, paragraph (a), or 148.24 473F.08, subdivision 2, paragraph (a), and (2) the market value 148.25 of the captured value of tax increment financing districts as 148.26 defined in section 469.177, subdivision 2, and (3) the market 148.27 value of transmission lines deducted from the city's or town's 148.28 total assessed value under section 273.425. Tax capacity must 148.29 be computed using equalized market values. 148.30 [EFFECTIVE DATE.] This section is effective for aid payable 148.31 in 2002 and thereafter. 148.32 Sec. 73. Minnesota Statutes 2000, section 477A.011, 148.33 subdivision 34, is amended to read: 148.34 Subd. 34. [CITY REVENUE NEED.] (a)For a city with a148.35population equal to or greater than 2,500, "city revenue need"148.36is the sum of (1) 3.462312 times the pre-1940 housing149.1percentage; plus (2) 2.093826 times the commercial industrial149.2percentage; plus (3) 6.862552 times the population decline149.3percentage; plus (4) .00026 times the city population; plus (5)149.4152.0141."City revenue need" for the city of Minneapolis is 149.5 $508. "City revenue need" for the city of St. Paul is $431. 149.6 "City revenue need" for the city of Duluth is $425. "City 149.7 revenue need" for all cities in the metropolitan area, except 149.8 for the cities of Minneapolis and St. Paul, is $194 times the 149.9 city's density factor. "City revenue need" for all cities 149.10 outside the metropolitan area with a population of 5,000 or 149.11 more, except for the city of Duluth, is $265. "City revenue 149.12 need" for all cities outside the metropolitan area with a 149.13 population of less than 5,000 is $234. 149.14 (b)For a city with a population less than 2,500, "city149.15revenue need" is the sum of (1) 1.795919 times the pre-1940149.16housing percentage; plus (2) 1.562138 times the commercial149.17industrial percentage; plus (3) 4.177568 times the population149.18decline percentage; plus (4) 1.04013 times the transformed149.19population; minus (5) 107.475.149.20(c) The city revenue need cannot be less than zero.149.21(d)For aid payable in calendar year19982003 and 149.22 subsequent years,the city revenue need for a city, as149.23determined in paragraphs (a) to (c), isthe dollar amounts in 149.24 paragraph (a) are multiplied by theratio of the annual implicit149.25price deflator for government consumption expenditures and gross149.26investment for state and local governments as prepared by the149.27United States Department of Commerce, for the most recently149.28available year to the 1993 implicit price deflator for state and149.29local government purchasesinflation adjustment determined for 149.30 the aid payment year under section 477A.03, subdivision 3, 149.31 paragraph (b), without regard to the minimum and maximum 149.32 inflation adjustments in that paragraph. 149.33 [EFFECTIVE DATE.] This section is effective for aid payable 149.34 in 2002 and thereafter. 149.35 Sec. 74. Minnesota Statutes 2000, section 477A.011, is 149.36 amended by adding a subdivision to read: 150.1 Subd. 36a. [CITY AID BASE.] For cities located outside of 150.2 the metropolitan area "city aid base" means the sum of (1) the 150.3 amount of local government aid the city was originally certified 150.4 to receive in calendar year 2001 under section 477A.013, and (2) 150.5 the amount of homestead and agricultural aid the city was 150.6 originally certified to receive in calendar year 2001 under 150.7 section 273.1398, subdivision 2, less an amount equal to eight 150.8 percent of the city tax capacity as defined in subdivision 3d. 150.9 If the amount determined under clause (2) for a city is less 150.10 than zero, the city aid base for that city is equal to the 150.11 amount determined under clause (1). 150.12 [EFFECTIVE DATE.] This section is effective for aid payable 150.13 in 2002 and thereafter. 150.14 Sec. 75. Minnesota Statutes 2000, section 477A.013, 150.15 subdivision 1, is amended to read: 150.16 Subdivision 1. [TOWNS.] In19942002 each town that had 150.17 levied for taxes payable inthe prior year1993 a local tax rate 150.18 of at least .008 shall receive a distribution equal tothe150.19amount it received in 1993 under this section before any150.20nonpermanent reductions made under section 477A.0132. In 1995150.21each town that had levied for taxes payable in 1993 a local tax150.22rate of at least .008 shall receive a distribution equal to 102150.23percent of the amount it received in 1994 under this section150.24before any increases or reductions under sections 16A.711,150.25subdivision 5, and 477A.0132(1) $9 times the town's population 150.26 plus (2)(i) $81 minus (ii) ten percent of the per capita net tax 150.27 capacity of the class 1, 3, 4, and 5 properties in the town for 150.28 taxes payable in 2001 times (iii) the town's population. No 150.29 town shall have a value under clause (2) of less than zero. In 150.3019962003 and subsequent years each townthat had levied for150.31taxes payable in 1993 a local tax rate of at least .008shall 150.32 receive a distribution equal to the amount it received in the 150.33 previous year under this section before any increases or 150.34 reductions under section 477A.0132, adjusted for inflation as 150.35 provided under section 477A.03, subdivision 3.and adjusted by 150.36 the "household adjustment factor" defined in section 273.1398, 151.1 subdivision 1. The commissioner shall prorate the amount 151.2 distributed to each town under clause (2) as necessary so that 151.3 the total amount distributed does not exceed the appropriation 151.4 for this purpose in section 477A.03. 151.5 [EFFECTIVE DATE.] This section is effective for aid payable 151.6 in 2002 and thereafter. 151.7 Sec. 76. Minnesota Statutes 2000, section 477A.013, 151.8 subdivision 8, is amended to read: 151.9 Subd. 8. [CITY FORMULA AID.] (a) In calendar year1994 and151.10subsequent years2002, the formula aid for a city is equal to 151.11 the need increase percentage multiplied bythe difference151.12between (1) the city's revenue need multiplied by its151.13population, and (2) the city's net tax capacity multiplied by151.14the tax effort rate.(1) the city revenue need minus (2) 0.17 151.15 times the city's tax capacity divided by its population times 151.16 (3) the city population or, for cities of 5,000 population or 151.17 more located outside the metropolitan area, the city population 151.18 plus the city's population sprawl factor. 151.19 (b) In calendar year 2003 and thereafter, the formula aid 151.20 for a city is equal to the need increase percentage multiplied 151.21 by (i) the city revenue need minus (ii) a uniform mill rate 151.22 determined by the commissioner to be the equivalent to the 0.17 151.23 rate in paragraph (a) times (iii) the city's tax capacity 151.24 divided by its population times (iv) the city's population, or 151.25 in the case of a city of 5,000 population or more located 151.26 outside the metropolitan area, the city's population plus its 151.27 population sprawl factor. No city may have a formula aid amount 151.28 less than zero. The need increase percentage must be the 151.29 same within each category for all cities in the following 151.30 categories: (i) Minneapolis, St. Paul, and Duluth; (ii) cities 151.31 in the metropolitan area except for Minneapolis and St. Paul; 151.32 and (iii) all other cities. 151.33Notwithstanding the prior sentence, in 1995 only, the need151.34increase percentage for a city shall be twice the need increase151.35percentage applicable to other cities if:151.36(1) the city, in 1992 or 1993, transferred an amount from152.1governmental funds to their sewer and water fund, and152.2(2) the amount transferred exceeded their net levy for152.3taxes payable in the year in which the transfer occurred.152.4 The applicable need increase percentage or percentages must 152.5 be calculated by the department of revenue so that the total of 152.6 the aid under subdivision 9 equals the total amount available 152.7 for aid under section 477A.03. 152.8 [EFFECTIVE DATE.] This section is effective for aid payable 152.9 in 2002 and thereafter. 152.10 Sec. 77. Minnesota Statutes 2000, section 477A.013, 152.11 subdivision 9, is amended to read: 152.12 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 152.131994 and thereafter, each city shall receive an aid distribution152.14equal to the sum of (1) the city formula aid under subdivision152.158, and (2) its city aid base2002 and thereafter, each city in 152.16 the metropolitan area and the city of Duluth shall receive an 152.17 aid distribution equal to its formula aid. 152.18 (b)The percentage increase for a first class city in152.19calendar year 1995 and thereafter shall not exceed the152.20percentage increase in the sum of the aid to all cities under152.21this section in the current calendar year compared to the sum of152.22the aid to all cities in the previous year.152.23(c) The total aid for any city, except a first class city,152.24shall not exceed the sum of (1) ten percent of the city's net152.25levy for the year prior to the aid distribution plus (2) its152.26total aid in the previous year before any increases or decreases152.27under sections 16A.711, subdivision 5, and 477A.0132.152.28(d) Notwithstanding paragraph (c), in 1995 only, for cities152.29which in 1992 or 1993 transferred an amount from governmental152.30funds to their sewer and water fund in an amount greater than152.31their net levy for taxes payable in the year in which the152.32transfer occurred, the total aid shall not exceed the sum of (1)152.3320 percent of the city's net levy for the year prior to the aid152.34distribution plus (2) its total aid in the previous year before152.35any increases or decreases under sections 16A.711, subdivision152.365, and 477A.0132.In calendar year 2002, each nonmetropolitan 153.1 city, except Duluth, shall receive an aid distribution equal to 153.2 (1) 90 percent of its city aid base plus (2) a percentage of its 153.3 city formula aid. The commissioner of revenue shall determine 153.4 the percentage of its city formula aid amount that each 153.5 nonmetropolitan city will receive by comparing the aggregate 153.6 amount determined for nonmetropolitan cities under clause (1) 153.7 with the appropriation available under section 477A.03 for this 153.8 paragraph. The percentage of city formula aid that each 153.9 nonmetropolitan city will receive is the percentage that will 153.10 make the total aid distribution for nonmetropolitan cities equal 153.11 to the appropriation for that purpose under section 477A.03. 153.12 For calendar years 2003 and thereafter, a nonmetropolitan city 153.13 shall receive the amount computed under this subdivision, except 153.14 that the percentage in clause (1) shall be 72 percent for aid 153.15 payable in 2003, 54 percent for aid payable in 2004, 36 percent 153.16 for aid payable in 2005, 18 percent for aid payable in 2006, and 153.17 zero for aid payable in 2007 and thereafter. 153.18 [EFFECTIVE DATE.] This section is effective for aid payable 153.19 in 2002 and thereafter. 153.20 Sec. 78. Minnesota Statutes 2000, section 477A.015, is 153.21 amended to read: 153.22 477A.015 [PAYMENT DATES.] 153.23 The commissioner of revenue shall make the payments of 153.24 local government aid to affected taxing authorities in two 153.25 installments onJulyJune 20 and December2615 annually. If 153.26 any statute incorporates by reference the payment dates provided 153.27 in this section, the payment date of the first annual 153.28 installment for the purpose of that other statute is July 20. 153.29 The commissioner may pay all or part of the payment due on 153.30 December2615 at any time after August 15 upon the request of a 153.31 city or town that requests such payment as being necessary for 153.32 meeting its cash flow needs. 153.33 [EFFECTIVE DATE.] This section is effective for payments 153.34 made in 2002 and thereafter. 153.35 Sec. 79. Minnesota Statutes 2000, section 477A.03, 153.36 subdivision 2, is amended to read: 154.1 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 154.2 discharge the duties imposed by sections 477A.011 to 477A.014 is 154.3 annually appropriated from the general fund to the commissioner 154.4 of revenue. 154.5 (b)Aid payments to counties under section 477A.0121 are154.6limited to $20,265,000 in 1996. Aid payments to counties under154.7section 477A.0121 are limited to $27,571,625 in 1997.For aid 154.8 payable in 1998 and thereafter, the total aids paid under 154.9 section 477A.0121 are the amounts certified to be paid in the 154.10 previous year, adjusted for inflation as provided under 154.11 subdivision 3. 154.12 (c)(i) For aids payable in 1998 and thereafter, the total 154.13 aids paid to counties under section 477A.0122 are the amounts 154.14 certified to be paid in the previous year, adjusted for 154.15 inflation as provided under subdivision 3. 154.16 (ii) Aid payments to counties under section 477A.0122in154.172000are further increased by an additional $20,000,000 in 2000, 154.18 and an additional $10,000,000 in 2002. The amounts provided in 154.19 this clause are annually adjusted for inflation as provided in 154.20 clause (i). 154.21 (d) Aid paymentsto citiesin19992002 under section 154.22 477A.013,subdivisionsubdivisions 1 and 9, are limitedto154.23$380,565,489. For aids payable in 2000, the total aids paid154.24under section 477A.013, subdivision 9, are the amounts certified154.25to be paid in the previous year, adjusted for inflation as154.26provided in subdivision 3, and increased by the amount necessary154.27to effectuate Laws 1999, chapter 243, article 5, section 48,154.28paragraph (b)in the aggregate to $184,065,000 for the first 154.29 class cities of Minneapolis, St. Paul, and Duluth; $51,916,000 154.30 for the cities in the metropolitan area excluding the cities of 154.31 Minneapolis and St. Paul; $235,981,000 for all nonmetropolitan 154.32 cities except for the city of Duluth; and $18,476,000 for all 154.33 towns. For aids payable in2001 through2003, the total aids 154.34 paid under section 477A.013,subdivisionsubdivisions 1 and 9, 154.35 are the amounts certified to be paid in the previous year, 154.36 adjusted for inflation as provided under subdivision 3 and 155.1 increased by the household adjustment factor defined in section 155.2 273.1398. For aids payable in 2004, the total aids paid under 155.3 section 477A.013,subdivisionsubdivisions 1 and 9, are the 155.4 amounts certified to be paid in the previous year, adjusted for 155.5 inflation as provided under subdivision 3,andincreased by the 155.6 amount certified to be paid in 2003 under section 477A.06 and 155.7 increased by the household adjustment factor defined in section 155.8 273.1398. For aids payable in 2005 and thereafter, the total 155.9 aids paid under section 477A.013,subdivisionsubdivisions 1 and 155.10 9, are the amounts certified to be paid in the previous year, 155.11 adjusted for inflation as provided under subdivision 3 and 155.12 increased by the household adjustment factor defined in section 155.13 273.1398. The additional amount authorized under subdivision 4 155.14 is not included when calculating the appropriation limits under 155.15 this paragraph. 155.16 [EFFECTIVE DATE.] This section is effective for aids paid 155.17 in 2002 and thereafter. 155.18 Sec. 80. Minnesota Statutes 2000, section 477A.065, 155.19 subdivision 1, is amended to read: 155.20 Subdivision 1. [ELIGIBILITY.] Each taxes payable year, 155.21 each city containing class 4d property on which initial 155.22 construction was begun after January 1, 1999, shall be eligible 155.23 for aid equal to (1)1.5 timesthenet tax capacitymarket value 155.24 of the property for the assessment year corresponding to the 155.25 taxes payable year, multiplied by (2) the city government's 155.26 average local tax rate for the previous taxes payable year. 155.27 [EFFECTIVE DATE.] This section is effective for aid paid in 155.28 2002 and thereafter. 155.29 Sec. 81. [TIF GRANTS; APPROPRIATIONS.] 155.30 Subdivision 1. [TIF GRANTS.] (a) The commissioner of 155.31 revenue shall pay grants to municipalities in calendar years 155.32 2003, 2004, and 2005 for deficits in tax increment financing 155.33 districts caused by the changes in class rates and the 155.34 elimination of the state-determined general education property 155.35 tax levy under this article. Municipalities must submit 155.36 applications for the grants in a form prescribed by the 156.1 commissioner no later than August 1 for grants payable during 156.2 the calendar year. The maximum grant equals the lesser of: 156.3 (1) for taxes payable in the year before the grant is paid, 156.4 the reduction in the tax increment financing district's revenues 156.5 derived from increment resulting from the class rate changes and 156.6 the elimination of the state-determined general education 156.7 property tax levy under this article; or 156.8 (2) the amount due during the calendar year to pay (i) 156.9 bonds issued before June 2, 2001, and (ii) binding contracts 156.10 entered into before June 2, 2001, less (iii) the municipality's 156.11 total tax increments, including unspent increments from previous 156.12 years. 156.13 (b) The commissioner of revenue may require applicants for 156.14 grants under this section to provide any information the 156.15 commissioner deems appropriate. The commissioner shall 156.16 calculate the amount under paragraph (a), clause (2), based on 156.17 the reports for the tax increment financing district or 156.18 districts filed with the state auditor on or before August 1 of 156.19 the year before the year in which the grant is to be paid. 156.20 (c) This section applies only to deficits in tax increment 156.21 districts for which: 156.22 (1) the request for certification was made before June 2, 156.23 2001; and 156.24 (2) all timely reports have been filed with the state 156.25 auditor, as required by Minnesota Statutes, section 469.175. 156.26 (d) The commissioner shall pay the grants under this 156.27 section by December 15 of the year. 156.28 (e) For the purposes of this section "tax increments" and 156.29 "revenues derived from tax increments" have the meanings given 156.30 in Minnesota Statutes, section 469.174, subdivision 25, except 156.31 that the definition applies to all tax increment districts, 156.32 regardless of when the request for certification was made and 156.33 regardless of when the revenues were received, notwithstanding 156.34 the effective date of Minnesota Statutes, section 469.174, 156.35 subdivision 25. 156.36 Subd. 2. [APPROPRIATION.] $65,600,000 in fiscal year 2003, 157.1 $65,600,000 in fiscal year 2004, and $65,600,000 in fiscal year 157.2 2005 is appropriated to the commissioner of revenue from the 157.3 general fund to make grants under this section. The 157.4 appropriated amounts do not lapse at the end of a fiscal year. 157.5 Each amount is available until the later of when expended or 157.6 when this section expires. If the amount of grant entitlements 157.7 for a year exceeds the amount available for grants, the 157.8 commissioner shall reduce each grant proportionately so the 157.9 total does not exceed the amount available. 157.10 Subd. 3. [EXPIRATION.] This section expires on January 1, 157.11 2006. 157.12 [EFFECTIVE DATE.] This section is effective January 1, 157.13 2002, and thereafter. 157.14 Sec. 82. [INSTRUCTIONS TO REVISOR.] 157.15 In the next edition of Minnesota Statutes, the revisor of 157.16 statutes shall replace each occurrence of the phrase "net tax 157.17 capacity" with the phrase "assessed value," except for 157.18 occurrences in Minnesota Statutes, section 275.011. 157.19 [EFFECTIVE DATE.] This section is effective the day 157.20 following final enactment. 157.21 Sec. 83. [REPEALER.] 157.22 (a) Minnesota Statutes 2000, sections 126C.13, subdivision 157.23 1; 126C.18, subdivision 1; 273.13, subdivision 21b; 273.1382; 157.24 275.078; and 275.08, subdivision 1e, are repealed effective for 157.25 taxes payable in 2002 and thereafter. 157.26 (b) Minnesota Statutes 2000, sections 273.138; 273.1399; 157.27 477A.011, subdivisions 30, 31, 32, 33, 36, and 37; and 477A.03, 157.28 subdivision 4, are repealed for aids payable in 2002 and 157.29 thereafter. 157.30 (c) Minnesota Statutes 2000, section 275.065, subdivision 157.31 3a, is repealed. 157.32 (d) Minnesota Statutes 2000, section 282.01, subdivisions 157.33 1c, 1d, and 1e, are repealed for deeds issued on or after July 157.34 1, 2001. 157.35 [EFFECTIVE DATE.] This section is effective the day 157.36 following final enactment. 158.1 ARTICLE 5 158.2 SALES AND USE TAX REFORM 158.3 Section 1. Minnesota Statutes 2000, section 289A.11, 158.4 subdivision 1, is amended to read: 158.5 Subdivision 1. [RETURN REQUIRED.]Except as provided in158.6section 289A.18, subdivision 4,For themonthperiod in which 158.7 taxes imposed by chapter 297A are payable, or for which a return 158.8 is due, a return for the preceding reporting period must be 158.9 filed with the commissioner in the form and manner the 158.10 commissioner prescribes. A person making sales at retail at two 158.11 or more places of business may file a consolidated return 158.12 subject to rules prescribed by the commissioner. In computing 158.13 the dollar amount of items on the return, the amounts are 158.14 rounded off to the nearest whole dollar, disregarding amounts 158.15 less than 50 cents and increasing amounts of 50 cents to 99 158.16 cents to the next highest dollar. 158.17 Notwithstanding this subdivision, a person who is not 158.18 required to hold a sales tax permit under chapter 297A and who 158.19 makes annual purchases of less than $18,500 that are subject to 158.20 the use tax imposed by section 297A.14, may file an annual use 158.21 tax return on a form prescribed by the commissioner. If a 158.22 person who qualifies for an annual use tax reporting period is 158.23 required to obtain a sales tax permit or makes use tax purchases 158.24 in excess of $18,500 during the calendar year, the reporting 158.25 period must be considered ended at the end of the month in which 158.26 the permit is applied for or the purchase in excess of $18,500 158.27 is made and a return must be filed for the preceding reporting 158.28 period. 158.29 [EFFECTIVE DATE.] This section is effective for returns due 158.30 after January 1, 2002. 158.31 Sec. 2. Minnesota Statutes 2000, section 289A.18, 158.32 subdivision 4, is amended to read: 158.33 Subd. 4. [SALES AND USE TAX RETURNS.] (a) Sales and use 158.34 tax returns must be filed on or before the 20th day of the month 158.35 following the close of the preceding reporting period, except 158.36 that annual use tax returns provided for under section 289A.11, 159.1 subdivision 1, must be filed by April 15 following the close of 159.2 the calendar year, in the case of individuals. Annual use tax 159.3 returns of businesses, including sole proprietorships, and 159.4 annual sales tax returns must be filed by February 5 following 159.5 the close of the calendar year. 159.6 (b)Except for the return for the June reporting period,159.7which is due on the following August 25,Returns filed by 159.8 retailers required to remit liabilities by means of funds 159.9 transfer under section 289A.20, subdivision 4, 159.10 paragraph(d)(b), are due on or before the 25th day of the 159.11 month following the close of the preceding reporting period. 159.12 (c) If a retailer has an average sales and use tax 159.13 liability, including local sales and use taxes administered by 159.14 the commissioner, equal to or less than $500 per month in any 159.15 quarter of a calendar year, and has substantially complied with 159.16 the tax laws during the preceding four calendar quarters, the 159.17 retailer may request authorization to file and pay the taxes 159.18 quarterly in subsequent calendar quarters. The authorization 159.19 remains in effect during the period in which the retailer's 159.20 quarterly returns reflect sales and use tax liabilities of less 159.21 than $1,500 and there is continued compliance with state tax 159.22 laws. 159.23 (d) If a retailer has an average sales and use tax 159.24 liability, including local sales and use taxes administered by 159.25 the commissioner, equal to or less than $100 per month during a 159.26 calendar year, and has substantially complied with the tax laws 159.27 during that period, the retailer may request authorization to 159.28 file and pay the taxes annually in subsequent years. The 159.29 authorization remains in effect during the period in which the 159.30 retailer's annual returns reflect sales and use tax liabilities 159.31 of less than $1,200 and there is continued compliance with state 159.32 tax laws. 159.33 (e) The commissioner may also grant quarterly or annual 159.34 filing and payment authorizations to retailers if the 159.35 commissioner concludes that the retailers' future tax 159.36 liabilities will be less than the monthly totals identified in 160.1 paragraphs (c) and (d). An authorization granted under this 160.2 paragraph is subject to the same conditions as an authorization 160.3 granted under paragraphs (c) and (d). 160.4 (f) A taxpayer who is a materials supplier may report gross 160.5 receipts either on: 160.6 (1) the cash basis as the consideration is received; or 160.7 (2) the accrual basis as sales are made. 160.8 As used in this paragraph, "materials supplier" means a person 160.9 who provides materials for the improvement of real property; who 160.10 is primarily engaged in the sale of lumber and building 160.11 materials-related products to owners, contractors, 160.12 subcontractors, repairers, or consumers; who is authorized to 160.13 file a mechanics lien upon real property and improvements under 160.14 chapter 514; and who files with the commissioner an election to 160.15 file sales and use tax returns on the basis of this paragraph. 160.16 [EFFECTIVE DATE.] This section is effective for returns due 160.17 after January 1, 2002. 160.18 Sec. 3. Minnesota Statutes 2000, section 289A.20, 160.19 subdivision 4, is amended to read: 160.20 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 160.21 chapter 297A are due and payable to the commissioner monthly on 160.22 or before the 20th day of the month following the month in which 160.23 the taxable event occurred, or following another reporting 160.24 period as the commissioner prescribes or as allowed under 160.25 section 289A.18, subdivision 4, paragraph (f), except that use 160.26 taxes due on an annual use tax return as provided under section 160.27 289A.11, subdivision 1, are payable by April 15 following the 160.28 close of the calendar year. 160.29 (b)A vendor having a liability of $120,000 or more during160.30a fiscal year ending June 30 must remit the June liability for160.31the next year in the following manner:160.32(1) Two business days before June 30 of the year, the160.33vendor must remit 62 percent of the estimated June liability to160.34the commissioner.160.35(2) On or before August 14 of the year, the vendor must pay160.36any additional amount of tax not remitted in June.161.1(c)A vendor having a liability of $120,000 or more during 161.2 a fiscal year ending June 30 must remit all liabilities on 161.3 returns due for periods beginning in the subsequent calendar 161.4 year by means of a funds transfer as defined in section 161.5 336.4A-104, paragraph (a). The funds transfer payment date, as 161.6 defined in section 336.4A-401, must be on or before the 14th day 161.7 of the month following the month in which the taxable event 161.8 occurred, or on or before the 14th day of the month following 161.9 the month in which the sale is reported under section 289A.18, 161.10 subdivision 4, except for 62 percent of the estimated June161.11liability, which is due two business days before June 30. The161.12remaining amount of the June liability is due on August 14. If 161.13 the date the tax is due is not a funds transfer business day, as 161.14 defined in section 336.4A-105, paragraph (a), clause (4), the 161.15 payment date must be on or before the funds transfer business 161.16 day next following the date the tax is due. 161.17(d)(c) If the vendor required to remit by electronic funds 161.18 transfer as provided in paragraph(c)(b) is unable due to 161.19 reasonable cause to determine the actual sales and use tax due 161.20 on or before the due date for payment, the vendor may remit an 161.21 estimate of the tax owed using one of the following options: 161.22 (1) 100 percent of the tax reported on the previous month's 161.23 sales and use tax return; 161.24 (2) 100 percent of the tax reported on the sales and use 161.25 tax return for the same month in the previous calendar year; or 161.26 (3) 95 percent of the actual tax due. 161.27 Any additional amount of tax that is not remitted on or 161.28 before the due date for payment, must be remitted with the 161.29 return. If a vendor fails to remit the actual liability or does 161.30 not remit using one of the estimate options by the due date for 161.31 payment, the vendor must remit actual liability as provided in 161.32 paragraph(c)(b) in all subsequent periods.This paragraph161.33does not apply to the June sales and use tax liability.161.34 [EFFECTIVE DATE.] This section is effective for taxes due 161.35 after January 1, 2002. 161.36 Sec. 4. Minnesota Statutes 2000, section 289A.56, 162.1 subdivision 4, is amended to read: 162.2 Subd. 4. [CAPITAL EQUIPMENT REFUNDS;REFUNDS TO 162.3 PURCHASERS.]Notwithstanding subdivision 3, for refunds payable162.4under section 297A.15, subdivision 5, interest is computed from162.5the date the refund claim is filed with the commissioner.For 162.6 refunds payable under section 289A.50, subdivision 2a, interest 162.7 is computed from the 20th day of the month following the month 162.8 of the invoice date for the purchase which is the subject of the 162.9 refund, if the refund claim includes a detailed schedule of 162.10 purchases made during each of the periods in the claim. If the 162.11 refund claim submitted does not contain a schedule reflecting 162.12 purchases made in each period, interest is computed from the 162.13 date the claim was filed. 162.14 [EFFECTIVE DATE.] This section is effective for capital 162.15 equipment purchased after December 31, 2001. 162.16 Sec. 5. Minnesota Statutes 2000, section 289A.60, 162.17 subdivision 21, is amended to read: 162.18 Subd. 21. [PENALTY FOR FAILURE TO MAKE PAYMENT BY 162.19 ELECTRONIC FUNDS TRANSFER.] In addition to other applicable 162.20 penalties imposed by this section, after notification from the 162.21 commissioner to the taxpayer that payments are required to be 162.22 made by means of electronic funds transfer under section 162.23 289A.20, subdivision 2, paragraph (e), or 4, paragraph(d)(b), 162.24 or 289A.26, subdivision 2a, and the payments are remitted by 162.25 some other means, there is a penalty in the amount of five 162.26 percent of each payment that should have been remitted 162.27 electronically. The penalty can be abated under the abatement 162.28 procedures prescribed in section 270.07, subdivision 6, if the 162.29 failure to remit the payment electronically is due to reasonable 162.30 cause. 162.31 Sec. 6. Minnesota Statutes 2000, section 297A.61, 162.32 subdivision 3, is amended to read: 162.33 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 162.34 include, but are not limited to, each of the transactions listed 162.35 in this subdivision. 162.36 (b) Sale and purchase include any transfer of title or 163.1 possession, or both, of tangible personal property, whether 163.2 absolutely or conditionally, and the leasing of or the granting 163.3 of a license to use or consume, for a consideration, tangible 163.4 personal property, other than a manufactured home used for 163.5 residential purposes for a continuous period of 30 days or more. 163.6 (c) Sale and purchase include the production, fabrication, 163.7 printing, or processing of tangible personal property for a 163.8 consideration for consumers who furnish either directly or 163.9 indirectly the materials used in the production, fabrication, 163.10 printing, or processing. 163.11 (d) Sale and purchase include the furnishing, preparing, or 163.12 serving for a consideration of food or drinks. Notwithstanding 163.13 section 297A.67, subdivision 2, taxable food or drinks include, 163.14 but are not limited to, the following: 163.15 (1) food or drinks sold by the retailer for immediate 163.16 consumption on the retailer's premises. Food and drinks sold 163.17 within a building or grounds that require an admission charge 163.18 for entrance are presumed to be sold for consumption on the 163.19 premises; 163.20 (2) food or drinks prepared by the retailer for immediate 163.21 consumption either on or off the retailer's premises. For 163.22 purposes of this subdivision, "food or drinks prepared for 163.23 immediate consumption" means any food product upon which an act 163.24 of preparation including, but not limited to, cooking, mixing, 163.25 sandwich making, blending, heating, or pouring has been 163.26 performed by the retailer so the food product may be immediately 163.27 consumed by the purchaser; 163.28 (3) ice cream, ice milk, frozen yogurt products, or frozen 163.29 novelties sold in single or individual servings including, but 163.30 not limited to, cones, sundaes, and snow cones; 163.31 (4) soft drinks and other beverages, including all 163.32 carbonated and noncarbonated beverages or drinks sold in liquid 163.33 form, but not including beverages or drinks which contain milk 163.34 or milk products, beverages or drinks containing 15 or more 163.35 percent fruit juice, and noncarbonated and noneffervescent 163.36 bottled water sold in individual containers of one-half gallon 164.1 or more in size; 164.2 (5) gum, candy, and candy products; 164.3 (6) ice; 164.4 (7) all food sold from vending machines; 164.5 (8) all food for immediate consumption sold from concession 164.6 stands and vehicles; 164.7 (9) party trays; 164.8 (10) all meals and single servings of packaged snack food 164.9 sold in restaurants and bars; and 164.10 (11) bakery products that are: 164.11 (i) prepared by the retailer for consumption on the 164.12 retailer's premises; 164.13 (ii) sold at a place that charges admission; 164.14 (iii) sold from vending machines; or 164.15 (iv) sold in single or individual servings from concession 164.16 stands, vehicles, bars, and restaurants. 164.17 For purposes of this paragraph, "single or individual 164.18 servings" does not include products when sold in bulk containers 164.19 or bulk packaging. 164.20 For purposes of this paragraph, "premises" means the total 164.21 space and facilities, including buildings, grounds, and parking 164.22 lots that are made available or that are available for use by 164.23 the retailer or customer for the purpose of sale or consumption 164.24 of prepared food and drinks. The premises of a caterer is the 164.25 place where the catered food or drinks are served. 164.26 (e) A sale and a purchase includes the furnishing for a 164.27 consideration of sewer services, electricity, gas, water, or 164.28 steam for use or consumption within this stateor local exchange164.29telephone service, intrastate toll service, and interstate toll164.30service, if that service originates from and is charged to a164.31telephone located in this state. Telephone service includes (1)164.32paging services, and (2) private communication service, as164.33defined in United States Code, title 26, section 4252(d), except164.34for private communication service purchased by an agent acting164.35on behalf of the state lottery. Telephone service does not164.36include services purchased with a prepaid telephone calling165.1card. The furnishing for a consideration of access to telephone165.2services by a hotel to its guests is a sale.The furnishing for 165.3 a consideration of items listed in this paragraph by a municipal 165.4 corporation is a sale. 165.5 (f) A sale and a purchase includes the transfer for a 165.6 consideration of computer software. 165.7 (g) A sale and a purchase includes the furnishing for a 165.8 consideration of taxable services as defined in subdivision 16. 165.9 (h) A sale and a purchase includes the furnishing for a 165.10 consideration of tangible personal property or taxable services 165.11 by the United States or any of its agencies or 165.12 instrumentalities, or the state of Minnesota, its agencies, 165.13 instrumentalities, or political subdivisions. 165.14 [EFFECTIVE DATE.] This section is effective for sales and 165.15 purchases occurring after December 31, 2001. 165.16 Sec. 7. Minnesota Statutes 2000, section 297A.61, 165.17 subdivision 4, is amended to read: 165.18 Subd. 4. [RETAIL SALE.] (a) A "retail sale" means a sale 165.19 for any purpose other than resale in the regular course of 165.20 business. 165.21 (b) A sale of property used by the owner only by leasing it 165.22 to others or by holding it in an effort to lease it, and put to 165.23 no use by the owner other than resale after the lease or effort 165.24 to lease, is a sale of property for resale. 165.25 (c) A sale of master computer software that is purchased 165.26 and used to make copies for sale or lease is a sale of property 165.27 for resale. 165.28 (d) A sale of building materials,and supplies, and165.29equipmenttoowners,contractors, subcontractors, or builders 165.30 for the erection of buildings or the alteration, repair, or 165.31 improvement of real property is aretailsalein whatever165.32quantity sold, whether the sale is for purposes of resale in the165.33form of real property or otherwisefor resale. 165.34 (e) A sale of carpeting, linoleum, or similar floor 165.35 covering to a person who provides for installation of the floor 165.36 covering is aretailsaleand not a sale for resale since a sale166.1of floor covering which includes installation is a contract for166.2the improvement of real propertyfor resale. 166.3 (f) A sale of shrubbery, plants, sod, trees, and similar 166.4 items to a person who provides for installation of the items is 166.5 aretailsaleand not a sale for resale since a sale of166.6shrubbery, plants, sod, trees, and similar items that includes166.7installation is a contract for the improvement of real166.8propertyfor resale. 166.9(g) A sale of tangible personal property that is awarded as166.10prizes is a retail sale and is not considered a sale of property166.11for resale.166.12(h)(g) A sale of tangible personalproperty utilized or166.13employed in the furnishing or providing of services under166.14subdivision 16, paragraph (b), including, but not limited to,166.15 property given as promotional items, is a retail sale and is not 166.16 considered a sale of property for resale. 166.17(i)(h) A sale of tangible personal property used in 166.18 conducting lawful gambling under chapter 349 or the state 166.19 lottery under chapter 349A, including, but not limited to, 166.20 property given as promotional items, is a retail sale and is not 166.21 considered a sale of property for resale. 166.22(j)(i) A sale of machines, equipment, or devices that are 166.23 used to furnish, provide, or dispense goods or services, 166.24 including, but not limited to, coin-operated devices, is a 166.25 retail sale and is not considered a sale of property for resale. 166.26(k)(j) In the case of a lease, a retail sale occurs when 166.27 an obligation to make a lease payment becomes due under the 166.28 terms of the agreement or the trade practices of the lessor. 166.29(l)(k) In the case of a conditional sales contract, a 166.30 retail sale occurs upon the transfer of title or possession of 166.31 the tangible personal property. 166.32 [EFFECTIVE DATE.] This section is effective for sales and 166.33 purchases occurring after December 31, 2001. 166.34 Sec. 8. Minnesota Statutes 2000, section 297A.61, 166.35 subdivision 6, is amended to read: 166.36 Subd. 6. [USE.](a)"Use" includes the exercise of a right 167.1 or power incident to the ownership of any interest in tangible 167.2 personal property, or taxable services, purchased from a 167.3 retailer, other than the sale of that property in the regular 167.4 course of business. 167.5(b) Use includes the consumption of printed materials in167.6the creation of nontaxable advertising that is distributed,167.7either directly or indirectly, within Minnesota.167.8 [EFFECTIVE DATE.] This section is effective for sales and 167.9 purchases occurring after December 31, 2001. 167.10 Sec. 9. Minnesota Statutes 2000, section 297A.61, 167.11 subdivision 7, is amended to read: 167.12 Subd. 7. [SALES PRICE.] (a) "Sales price" means the total 167.13 consideration for a retail sale, valued in money, whether paid 167.14 in money or by barter or exchange. 167.15 (b) Sales price includes: 167.16 (1) the cost of the property sold, cost of materials used, 167.17 labor or service cost, interest, or discount allowed after the 167.18 sale is consummated; 167.19 (2)the cost ofall transportationincurred prior to the167.20time of saleand delivery charges; 167.21 (3) any amount for which credit is given by the seller to 167.22 the purchaser; 167.23 (4) charges for services that are part of a sale;or167.24 (5) any other expense whatsoever; or 167.25 (6) charges for labor or service used in installing or 167.26 applying the property sold. 167.27 (c) Sales price does not include the following: 167.28 (1) an amount allowed as credit for tangible personal 167.29 property taken in trade for resale; 167.30 (2) charges of up to 15 percent in lieu of tips if the 167.31 charges are separately stated; 167.32 (3) interest, financing, or carrying charges if the charges 167.33 are separately stated; 167.34 (4)charges for labor or services used in installing or167.35applying the property sold if the charges are separately stated;167.36(5) transportation charges if the transportation occurs168.1after the retail sale of the property if the charges are168.2separately stated;168.3(6)cash discounts allowed and taken on sales or the amount 168.4 refunded either in cash or in credit for property returned by 168.5 purchasers; 168.6(7)(5) the rental motor vehicle tax imposed under section 168.7 297A.64; or 168.8(8)(6) the amount of any tax imposed by the United States 168.9 on communications services under United States Code, title 26, 168.10 section 4251(a). 168.11(d) Notwithstanding paragraph (c), "sales price," for168.12purposes of sales of ready-mixed concrete sold from a168.13ready-mixed concrete truck, includes any transportation,168.14delivery, or other service charges, and no deduction is allowed168.15for those charges, whether or not the charges are separately168.16stated.168.17 [EFFECTIVE DATE.] This section is effective for sales and 168.18 purchases occurring after December 31, 2001. 168.19 Sec. 10. Minnesota Statutes 2000, section 297A.61, 168.20 subdivision 10, is amended to read: 168.21 Subd. 10. [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 168.22 personal property" means corporeal personal property of any 168.23 kind, including property that is to become real property as a 168.24 result of incorporation, attachment, or installation following 168.25 its acquisition. 168.26 (b) Tangible personal property includes, but is not limited 168.27 to: 168.28 (1) computer software, whether contained on tape, discs, 168.29 cards, or other devices;and168.30 (2) prepaid telephone calling cards.; 168.31 (3) tools, implements, machinery, and equipment used in a 168.32 business or production activity regardless of size, weight, or 168.33 method of attachment to real property; 168.34 (4) building materials and supplies when initially 168.35 incorporated, attached, or installed into real property; and 168.36 (5) electricity. 169.1 (c) Personal property does not include: 169.2 (1)large ponderous machinery and equipment used in a169.3business or production activity which at common law would be169.4considered to be real property;169.5(2)property which is subject to an ad valorem property 169.6 tax; 169.7(3)(2) property described in section 272.02, subdivision 169.8 9, clauses(a)(b) to (d); and169.9(4) property described in section 272.03, subdivision 2,169.10clauses (3) and (5). 169.11 [EFFECTIVE DATE.] This section is effective for sales and 169.12 purchases occurring after December 31, 2001. 169.13 Sec. 11. Minnesota Statutes 2000, section 297A.61, 169.14 subdivision 12, is amended to read: 169.15 Subd. 12. [FARM MACHINERY.] (a) "Farm machinery" means new 169.16 or used machinery, equipment, implements, accessories, and 169.17 contrivances used directly and principally in the production for 169.18 sale, but not including the processing, of livestock, dairy 169.19 animals, dairy products, poultry and poultry products, fruits, 169.20 vegetables, trees and shrubs, plants, forage, grains, and bees 169.21 and apiary products. 169.22 (b) Farm machinery includes: 169.23 (1) machinery for the preparation, seeding, or cultivation 169.24 of soil for growing agricultural crops and sod, for the 169.25 harvesting and threshing of agricultural products, or for the 169.26 harvesting or mowing of sod; 169.27 (2) barn cleaners, milking systems, grain dryers, automatic 169.28 feeding systems, and similar installations, whether or not the169.29equipment is installed by the seller and becomes part of the169.30real property; 169.31 (3) irrigation equipment sold for exclusively agricultural 169.32 use, including pumps, pipe fittings, valves, sprinklers, and 169.33 other equipment necessary to the operation of an irrigation 169.34 system when sold as part of an irrigation system, whether or not169.35the equipment is installed by the seller and becomes part of the169.36real property; 170.1 (4) logging equipment, including chain saws used for 170.2 commercial logging; 170.3 (5) fencing used for the containment of farmed cervidae, as 170.4 defined in section 17.451, subdivision 2; 170.5 (6) primary and backup generator units used to generate 170.6 electricity for the purpose of operating farm machinery, as 170.7 defined in this subdivision, or providing light or space heating 170.8 necessary for the production of livestock, dairy animals, dairy 170.9 products, or poultry and poultry products; 170.10 (7) aquaculture production equipment as defined in 170.11 subdivision 13;and170.12 (8) equipment used for maple syrup harvesting.; 170.13 (9) repair and replacement parts, including tires, and 170.14 accessories attached to the farm machinery; and 170.15 (10) animal handling equipment, including squeeze chutes 170.16 and portable farrowing crates. 170.17 (c) Farm machinery does not include: 170.18 (1)repair or replacement parts;170.19(2)tools, shop equipment, grain bins, feed bunks, fencing 170.20 material except fencing material covered by paragraph (b), 170.21 clause (5), communication equipment, and other farm supplies; 170.22(3)(2) motor vehicles taxed under chapter 297B; 170.23(4)(3) all-terrain vehicles, snowmobiles, or snow blowers; 170.24 or 170.25(5)(4) lawn mowers except those used in the production of 170.26 sod for sale, or garden-type tractors or garden tillers. 170.27 [EFFECTIVE DATE.] This section is effective for sales and 170.28 purchases occurring after December 31, 2001. 170.29 Sec. 12. Minnesota Statutes 2000, section 297A.61, 170.30 subdivision 16, is amended to read: 170.31 Subd. 16. [TAXABLE SERVICES; SERVICE.] (a) "Taxable 170.32 services" means the services listed in this subdivision and 170.33 other services listed in subdivision 3. 170.34 (b)Taxable services includes the granting of the privilege170.35of admission to places of amusement, recreational areas, or170.36athletic events, and the making available of amusement devices,171.1tanning facilities, reducing salons, steam baths, turkish baths,171.2health clubs, and spas or athletic facilities.171.3(c) Taxable services includes the furnishing of lodging and171.4related services by a hotel, rooming house, resort, campground,171.5motel, or trailer camp and the granting of any similar license171.6to use real property other than the renting or leasing thereof171.7for a continuous period of 30 days or more.171.8(d) Taxable services includes the furnishing of cable171.9television services or similar television services, including,171.10but not limited to, charges for basic, premium, pay-per-view,171.11and any other similar service.171.12(e) Taxable services includes the furnishing of parking171.13services, whether on a contractual, hourly, or other periodic171.14basis, except for parking at a meter.The term "service" means 171.15 all activities engaged in for other persons for consideration 171.16 that involve predominantly the performance of a service as 171.17 distinguished from selling property. 171.18 (c) The following services are not included within the 171.19 definition of taxable services: 171.20 (1) services performed by an employee for an employer; 171.21 (2) the sale or use of services between divisions within 171.22 the same corporation; and 171.23 (3) services that partners who are natural persons render 171.24 to their partnerships, unless the partner renders the services 171.25 to the partnership in the capacity of an independent contractor. 171.26 (d) Taxable services includes the furnishing of 171.27 communications services which include telecommunications 171.28 services, cable television services, and direct satellite 171.29 services. Telecommunications services are taxed to the extent 171.30 allowed by federal law, if those services 171.31 (1)(i) originated in this state and terminated in this 171.32 state; or (ii) originated in this state and terminated outside 171.33 this state and the service is charged to a telephone number or 171.34 customer located in this state or to the account of any 171.35 transmission instrument in this state; or (iii) originated 171.36 outside this state and terminated in this state and the service 172.1 is charged to a telephone number or customer located in this 172.2 state or to the account of any transmission instrument in this 172.3 state; or 172.4 (2) are rendered by providing a private communications 172.5 service for which the customer has one or more locations within 172.6 Minnesota connected to the service and the service is charged to 172.7 a telephone number or customer located in this state or to the 172.8 account of any transmission instrument in this state. 172.9(f)(e) Taxable services includes the granting of 172.10 membership in a club, association, or other organization if: 172.11 (1) the club, association, or other organization makes 172.12 available for the use of its members sports and athletic 172.13 facilities, without regard to whether a separate charge is 172.14 assessed for use of the facilities; and 172.15 (2) use of the sports and athletic facility is not made 172.16 available to the general public on the same basis as it is made 172.17 available to members. 172.18 Granting of membership means both one-time initiation fees and 172.19 periodic membership dues. Sports and athletic facilities 172.20 include golf courses; tennis, racquetball, handball, and squash 172.21 courts; basketball and volleyball facilities; running tracks; 172.22 exercise equipment; swimming pools; and other similar athletic 172.23 or sports facilities. 172.24(g) Taxable services includes the furnishing of the172.25following services as provided in this paragraph:172.26(1) laundry and dry cleaning services including cleaning,172.27pressing, repairing, altering, and storing clothes, linen172.28services and supply, cleaning and blocking hats, and carpet,172.29drapery, upholstery, and industrial cleaning. Laundry and dry172.30cleaning services do not include services provided by coin172.31operated facilities operated by the customer;172.32(2) motor vehicle washing, waxing, and cleaning services,172.33including services provided by coin operated facilities operated172.34by the customer, and rustproofing, undercoating, and towing of172.35motor vehicles;172.36(3) building and residential cleaning, maintenance, and173.1disinfecting and exterminating services;173.2(4) detective, security, burglar, fire alarm, and armored173.3car services; but not including services performed within the173.4jurisdiction they serve by off-duty licensed peace officers as173.5defined in section 626.84, subdivision 1, or services provided173.6by a nonprofit organization for monitoring and electronic173.7surveillance of persons placed on in-home detention pursuant to173.8court order or under the direction of the Minnesota department173.9of corrections;173.10(5) pet grooming services;173.11(6) lawn care, fertilizing, mowing, spraying and sprigging173.12services; garden planting and maintenance; tree, bush, and shrub173.13pruning, bracing, spraying, and surgery; indoor plant care;173.14tree, bush, shrub, and stump removal; and tree trimming for173.15public utility lines. Services performed under a construction173.16contract for the installation of shrubbery, plants, sod, trees,173.17bushes, and similar items are not taxable;173.18(7) massages, except when provided by a licensed health173.19care facility or professional or upon written referral from a173.20licensed health care facility or professional for treatment of173.21illness, injury, or disease; and173.22(8) the furnishing of lodging, board, and care services for173.23animals in kennels and other similar arrangements, but excluding173.24veterinary and horse boarding services.173.25The services listed in this paragraph are taxable under173.26section 297A.62 if the service is performed wholly within173.27Minnesota or if the service is performed partly within and173.28partly outside Minnesota and the greater proportion of the173.29service is performed in Minnesota, based on the cost of173.30performance. In applying the provisions of this chapter, the173.31terms "tangible personal property" and "sales at retail" include173.32taxable services and the provision of taxable services, unless173.33specifically provided otherwise. Services performed by an173.34employee for an employer are not taxable. Services performed by173.35a partnership or association for another partnership or173.36association are not taxable if one of the entities owns or174.1controls more than 80 percent of the voting power of the equity174.2interest in the other entity. Services performed between174.3members of an affiliated group of corporations are not taxable.174.4For purposes of this section, "affiliated group of corporations"174.5includes those entities that would be classified as members of174.6an affiliated group under United States Code, title 26, section174.71504, and that are eligible to file a consolidated tax return174.8for federal income tax purposes.174.9 (f) Taxable services includes the following services 174.10 enumerated in North American Industry Classification System, 174.11 1997, as prepared by the Office of Management and Budget, 174.12 Executive Office of the President: special trade contractors 174.13 (subsector no. 235); taxi and limousine service (industry group 174.14 no. 4853); scenic and sightseeing transportation (subsector no. 174.15 487); motor vehicle towing (industry no. 48841); postal service 174.16 (subsector no. 491); couriers and messengers (subsector no. 174.17 492); warehousing and storage (subsector no. 493); information 174.18 (sector no. 51); security brokerage (industry no. 52312); 174.19 investment advice (industry no. 52393); insurance-related 174.20 activities (industry no. 524291); lessors of miniwarehouse and 174.21 self-storage units (industry no. 531130); offices of real estate 174.22 agents and brokers (industry group no. 5312); activities related 174.23 to real estate (industry group no. 53130); professional, 174.24 scientific, and technical services (subsector no. 541); 174.25 administrative and support services (subsector no. 561); septic 174.26 tank and related services (industry no. 562991); amusement, 174.27 entertainment, and recreation services (sector no. 71), except 174.28 gambling services provided under industry group no. 7132; 174.29 accommodations services (subsector no. 721), except contracts or 174.30 leases to use real property for a continuous period of 30 days 174.31 or more; repair and maintenance services (subsector no. 811); 174.32 personal and laundry services (subsector no. 812); massage 174.33 services, including reflexology, shiatsu and other forms of 174.34 alternative medical treatment, except when provided by a 174.35 licensed health care facility or licensed health care 174.36 professional or upon written referral from a licensed health 175.1 care facility or professional for treatment of illness, injury, 175.2 or disease; and leases or rentals of office space, meeting 175.3 rooms, or convention and trade show space for periods of 29 days 175.4 or less. 175.5 (g) Taxable services includes the following services 175.6 enumerated in the North American Industry Classification System, 175.7 1997, as prepared by the Office of Management and Budget, 175.8 Executive Office of the President: air transportation 175.9 (subsector no. 481); rail transportation (subsector no. 482); 175.10 water transportation (subsector no. 483); truck transportation 175.11 (subsector no. 484); pipeline transportation (subsector no. 175.12 486); charter bus industry (industry group no. 4855); and other 175.13 transit and group passenger transportation (industry group no. 175.14 4859), except special needs transportation provided under 175.15 industry group no. 485991. The services listed in this 175.16 paragraph are taxed to the extent allowed by the United States 175.17 Constitution and the laws of the United States. The tax applies 175.18 only to the transportation of tangible personal property if both 175.19 the origin and destination of the tangible personal property are 175.20 within this state and to the transportation of passengers if the 175.21 passenger boards and exits the mode of transportation within 175.22 this state. 175.23 [EFFECTIVE DATE.] This section is effective for sales and 175.24 purchases occurring after December 31, 2001. 175.25 Sec. 13. Minnesota Statutes 2000, section 297A.61, is 175.26 amended by adding a subdivision to read: 175.27 Subd. 24. [TELECOMMUNICATIONS SERVICES.] (a) 175.28 "Telecommunications services" means the transmission, 175.29 conveyance, or routing of voice, data, audio, video, or any 175.30 other information or signals to a point, or between or among 175.31 points, by or through any electronic, satellite, optical, 175.32 microwave, or other medium or method now in existence or 175.33 hereafter devised, regardless of the protocol used for such 175.34 transmission, conveyance, or routing. 175.35 (b) Telecommunications services includes the furnishing for 175.36 consideration of access to telephone services by a hotel to its 176.1 guests. 176.2 (c) Telecommunications services do not include: 176.3 (1) services purchased with a prepaid telephone calling 176.4 card; 176.5 (2) private communication service purchased by an agent 176.6 acting on behalf of the state lottery; 176.7 (3) information services; and 176.8 (4) purchases of telecommunications when the purchaser uses 176.9 the purchased services as a component part of or integrates such 176.10 service into another telecommunications service that is sold by 176.11 the purchaser in the normal course of business. 176.12 (d) For purposes of this subdivision, "information 176.13 services" means the offering of the capability for generating, 176.14 acquiring, storing, transforming, processing, retrieving, 176.15 utilizing, or making available information. 176.16 [EFFECTIVE DATE.] This section is effective for sales and 176.17 purchases occurring after December 31, 2001. 176.18 Sec. 14. Minnesota Statutes 2000, section 297A.61, is 176.19 amended by adding a subdivision to read: 176.20 Subd. 25. [CABLE TELEVISION SERVICE.] "Cable television 176.21 service" means the transmission of video, audio, or other 176.22 programming service to purchasers, and the subscriber 176.23 interaction, if any, required for the selection or use of the 176.24 programming service, regardless of whether the programming is 176.25 transmitted over facilities owned or operated by the cable 176.26 service provider or over facilities owned or operated by one or 176.27 more dealers of communications services. The term includes 176.28 point-to-multipoint distribution services by which programming 176.29 is transmitted or broadcast by microwave or other equipment 176.30 directly to the subscriber's premises. The term includes basic, 176.31 extended, premium, pay-per-view, digital, and music services. 176.32 [EFFECTIVE DATE.] This section is effective for sales and 176.33 purchases occurring after December 31, 2001. 176.34 Sec. 15. Minnesota Statutes 2000, section 297A.61, is 176.35 amended by adding a subdivision to read: 176.36 Subd. 26. [PRIVATE COMMUNICATION SERVICE.] "Private 177.1 communication service" means a communication service furnished 177.2 to a subscriber which entitles the subscriber to: 177.3 (1) exclusive or priority use of any communication channel 177.4 or group of channels; 177.5 (2) the use of an intercommunication system for the 177.6 subscriber's stations, or regardless of whether the channel, 177.7 group of channels, or intercommunication system may be connected 177.8 through switching; 177.9 (3) the switching capacity, extension lines and stations, 177.10 or other associated services that are provided in connection 177.11 with, and are necessary or unique to the use of, channels or 177.12 systems described in clause (1); or 177.13 (4) any combination of tunneling, encryption, 177.14 authentication, and access control technologies and services 177.15 used to carry traffic over the Internet, a managed Internet 177.16 provider network or provider's backbone. 177.17 [EFFECTIVE DATE.] This section is effective for sales and 177.18 purchases occurring after December 31, 2001. 177.19 Sec. 16. Minnesota Statutes 2000, section 297A.61, is 177.20 amended by adding a subdivision to read: 177.21 Subd. 27. [DIRECT SATELLITE SERVICE.] "Direct satellite 177.22 service" means programming transmitted or broadcast by satellite 177.23 directly to the subscriber's premises without the use of ground 177.24 receiving or distribution equipment, except at the subscriber's 177.25 premises or in the uplink process to the satellite. 177.26 [EFFECTIVE DATE.] This section is effective for sales and 177.27 purchases occurring after December 31, 2001. 177.28 Sec. 17. Minnesota Statutes 2000, section 297A.62, 177.29 subdivision 1, is amended to read: 177.30 Subdivision 1. [GENERALLY.] Except as otherwise provided 177.31 in subdivision 2 or 3 or in this chapter, a sales tax of6.5six 177.32 percent is imposed on the gross receipts from retail sales as 177.33 defined in section 297A.61, subdivision 4, made in this state or 177.34 to a destination in this state by a person who is required to 177.35 have or voluntarily obtains a permit under section 297A.83, 177.36 subdivision 1. 178.1 [EFFECTIVE DATE.] This section is effective for sales and 178.2 purchases occurring after December 31, 2001. 178.3 Sec. 18. [297A.668] [SOURCING OF SALE; SITUS IN THIS 178.4 STATE.] 178.5 Subdivision 1. [SOURCING RULES.] (a) The following 178.6 provisions apply regardless of the characterization of a product 178.7 as tangible personal property, a digital good, or a service; but 178.8 do not apply to telecommunications services, or to sales of 178.9 motor vehicles, watercraft, or aircraft. These provisions only 178.10 apply to determine a seller's obligation to pay or collect and 178.11 remit a sales or use tax with respect to the seller's sale of a 178.12 product. These provisions do not affect the obligation of a 178.13 seller as purchaser to remit tax on the use of the product. 178.14 (b) When the product is received by the purchaser at a 178.15 business location of the seller, the sale is sourced to that 178.16 business location. 178.17 (c) When the product is not received by the purchaser at a 178.18 business location of the seller, the sale is sourced to the 178.19 location where receipt by the purchaser or the donee designated 178.20 by the purchaser occurs, including the location indicated by 178.21 instructions for delivery to the purchasers or the purchaser's 178.22 donee, known to the seller. 178.23 (d) When paragraphs (b) and (c) do not apply, the sale is 178.24 sourced to the location indicated by an address for the 178.25 purchaser that is available from the business records of the 178.26 seller that are maintained in the ordinary course of the 178.27 seller's business when use of this address does not constitute 178.28 bad faith. 178.29 (e) When paragraphs (b), (c), and (d) do not apply, the 178.30 sale is sourced to the location indicated by an address for the 178.31 purchaser obtained during the consummation of the sale, 178.32 including the address of a purchaser's payment instrument if no 178.33 other address is available, when use of this address does not 178.34 constitute bad faith. 178.35 (f) When paragraphs (b), (c), (d), and (e) do not apply, 178.36 including the circumstance where the seller is without 179.1 sufficient information to apply the previous paragraphs, then 179.2 the location is determined by the address from which tangible 179.3 personal property was shipped, from which the digital good was 179.4 first available for transmission by the seller, or from which 179.5 the service was provided. 179.6 Subd. 2. [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 179.7 provisions of subdivision 1, a business purchaser that is not a 179.8 holder of a direct pay permit and that knows at the time of its 179.9 purchase of a digital good or service that the digital good or 179.10 service will be concurrently available for use in more than one 179.11 taxing jurisdiction shall deliver to the seller in conjunction 179.12 with its purchase a multiple points of use exemption certificate 179.13 disclosing this fact. 179.14 (b) Upon receipt of the multiple points of use exemption 179.15 certificate, the seller is relieved of the obligation to 179.16 collect, pay, or remit the applicable tax and the purchaser is 179.17 obligated to collect, pay, or remit the applicable tax on a 179.18 direct pay basis. 179.19 (c) A purchaser delivering the multiple points of use 179.20 exemption certificate may use any reasonable, but consistent and 179.21 uniform, method of apportionment that is supported by the 179.22 purchaser's business records as they exist at the time of the 179.23 consummation of the sale. 179.24 (d) The multiple points of use exemption certificate 179.25 remains in effect for all future sales by the seller to the 179.26 purchaser until it is revoked in writing. 179.27 (e) A holder of a direct pay permit is not required to 179.28 deliver a multiple points or use exemption certificate to the 179.29 seller. A direct pay permit holder shall follow the provisions 179.30 of paragraph (c) in apportioning the tax due on a digital good 179.31 or a service that will be concurrently available for use in more 179.32 than one taxing jurisdiction. 179.33 Subd. 3. [DEFINITION OF TERMS.] For purposes of this 179.34 section, the terms "receive" and "receipt" mean taking 179.35 possession of tangible personal property, making first use of 179.36 services, or taking possession or making first use of digital 180.1 goods, whichever occurs first. The terms receive and receipt do 180.2 not include possession by a carrier for hire on behalf of the 180.3 purchaser. 180.4 [EFFECTIVE DATE.] This section is effective for sales and 180.5 purchases occurring after December 31, 2001. 180.6 Sec. 19. Minnesota Statutes 2000, section 297A.67, 180.7 subdivision 5, is amended to read: 180.8 Subd. 5. [EXEMPT MEALS AT SCHOOLS.]Meals and lunchesFood 180.9 and drinks furnished, prepared, or servedatby public and 180.10 private schools, universities, or colleges are exempt. 180.11 [EFFECTIVE DATE.] This section is effective for sales and 180.12 purchases occurring after December 31, 2001. 180.13 Sec. 20. Minnesota Statutes 2000, section 297A.67, 180.14 subdivision 7, is amended to read: 180.15 Subd. 7. [MEDICINES;MEDICALEYEGLASSES; PROSTHETIC 180.16 DEVICES.] (a) Prescribed drugs and medicine, and insulin, 180.17 intended for internal or external use, in the cure, mitigation, 180.18 treatment, or prevention of illness or disease in human beings 180.19 are exempt. "Prescribed drugs and medicine" includes 180.20 over-the-counter drugs or medicine prescribed by a licensed 180.21 physician. 180.22 (b)Nonprescription medicines consisting principally180.23(determined by the weight of all ingredients) of analgesics that180.24are approved by the United States Food and Drug Administration180.25for internal use by human beings are exempt. For purposes of180.26this subdivision, "principally" means greater than 50 percent180.27analgesics by weight.180.28(c)Prescription glasses, hospital beds, fever180.29thermometers, reusable finger-pricking devices for the180.30extraction of blood, blood glucose monitoring machines, and180.31other diagnostic agents used in diagnosing, monitoring, or180.32treating diabetes, and therapeuticand prosthetic devices are 180.33 exempt."Therapeutic devices" means devices that are attached180.34or applied to the human body to cure, heal, or alleviate injury,180.35illness, or disease, either directly or by administering a180.36curative agent."Prosthetic devices" means devices that replace 181.1 injured, diseased, or missing parts of the human body, either 181.2 temporarily or permanently. 181.3 [EFFECTIVE DATE.] This section is effective for sales and 181.4 purchases occurring after December 31, 2001. 181.5 Sec. 21. Minnesota Statutes 2000, section 297A.68, 181.6 subdivision 2, is amended to read: 181.7 Subd. 2. [MATERIALS AND SERVICES USED OR CONSUMED IN 181.8 INDUSTRIAL PRODUCTION.] (a) Materialsstored, used, or181.9consumedand services used or consumed directly in industrial 181.10 production of personal property intended to be sold ultimately 181.11 at retail are exempt, whether or not the item so used becomes an 181.12 ingredient or constituent part of the property produced. 181.13 Materials that qualify for this exemption include, but are not 181.14 limited to, the following: 181.15 (1) chemicals, including chemicals used for cleaning food 181.16 processing machinery and equipment; 181.17 (2) materials, including chemicals, fuels, and electricity 181.18 purchased by persons engaged in industrial production to treat 181.19 waste generated as a result of the production process; 181.20 (3) fuels, electricity, gas, and steam used or consumed in 181.21 the production process, except that electricity, gas, or steam 181.22 used for space heating or lighting is exempt only if it is 181.23 necessary to produce that particular industrial product; 181.24 (4) petroleum products and lubricants; and 181.25 (5) packaging materials, including returnable containers 181.26 used in packaging food and beverage products;. 181.27(6) accessory tools, equipment, and other items that are181.28separate detachable units with an ordinary useful life of less181.29than 12 months used in producing a direct effect upon the181.30product; and181.31(7) the following materials, tools, and equipment used in181.32metalcasting: crucibles, thermocouple protection sheaths and181.33tubes, stalk tubes, refractory materials, molten metal filters181.34and filter boxes, degassing lances, and base blocks.181.35 (b) This exemption does not include: 181.36 (1) machinery, equipment, implements, tools, accessories, 182.1 appliances, contrivances and furniture and fixtures, except182.2those listed in paragraph (a), clause (6); and 182.3 (2)petroleum and special fuels used in producing or182.4generating power for propelling ready-mixed concrete trucks on182.5the public highways of this stateservices used for 182.6 nonproduction purposes, including, but not limited to, the 182.7 following: plant security; fire prevention or safety unless 182.8 required by state or federal law; administrative, sales, and 182.9 marketing; facility maintenance; communications; and 182.10 transportation. 182.11 (c) Industrial production includes, but is not limited to, 182.12 research, development, design or production of any tangible 182.13 personal property, manufacturing, processing(other than by182.14restaurants and consumers)of agricultural products (whether 182.15 vegetable or animal), commercial fishing, refining, smelting, 182.16 reducing, brewing, distilling, printing, mining, quarrying, 182.17 lumbering, generating electricity and the production of road 182.18 building materials. Industrial production does not include 182.19 painting, cleaning, repairing or similar processing of property 182.20 except as part of the original manufacturing process. 182.21 (d) Industrial production does not include storage, 182.22 transportation, transmission, or distribution of electricity, 182.23 petroleum, liquefied gas, water, or steam in, by, or through 182.24 lines, wires, cables, poles, pipelines, tanks, mains, or other 182.25 modes of transporting these products. 182.26 [EFFECTIVE DATE.] This section is effective for sales and 182.27 purchases occurring after December 31, 2001. 182.28 Sec. 22. Minnesota Statutes 2000, section 297A.68, 182.29 subdivision 3, is amended to read: 182.30 Subd. 3. [MATERIALS AND SERVICES USED IN PROVIDINGCERTAIN182.31 TAXABLE SERVICES.] (a) Materialsstored, used, or consumedand 182.32 services used or consumed directly in providingataxable 182.33service listed in section 297A.61, subdivision 16, paragraph182.34(g),services intended to be sold ultimately at retail are 182.35 exempt. 182.36 (b) This exemption includes, but is not limited to: 183.1 (1) chemicals, lubricants, packaging materials, seeds, 183.2 trees, fertilizers, and herbicides, if these items are used or 183.3 consumed in providing the taxable service; 183.4 (2) chemicals used to treat waste generated as a result of 183.5 providing the taxable service; 183.6 (3) accessory tools, equipment, and other items that are 183.7 separate detachable units used in providing the service and that 183.8 have an ordinary useful life of less than 12 months; and 183.9 (4) fuel, electricity, gas, and steam used or consumed in 183.10the production processfurnishing the service, except that 183.11 electricity, gas, or steam used for space heating or lighting is 183.12 exempt only if it isnecessaryessential toproducefurnish that 183.13 particular taxable service. 183.14 (c) This exemption does not include machinery, equipment, 183.15 implements, tools, accessories, appliances, contrivances, 183.16 furniture, and fixtures used in providing the taxable service. 183.17 (d) This exemption does not apply to materials and services 183.18 used or consumed for the following purposes, including, but not 183.19 limited to: security; fire prevention and safety unless 183.20 required by state or federal law; administrative, sales, and 183.21 marketing; facility maintenance; communications; and 183.22 transportation. 183.23 [EFFECTIVE DATE.] This section is effective for sales and 183.24 purchases occurring after December 31, 2001. 183.25 Sec. 23. Minnesota Statutes 2000, section 297A.68, 183.26 subdivision 5, is amended to read: 183.27 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 183.28 exempt.The tax must be imposed and collected as if the rate183.29under section 297A.62, subdivision 1, applied, and then refunded183.30in the manner provided in section 297A.75.183.31 "Capital equipment" means machinery and equipment purchased 183.32 or leased and used in this state by the purchaser or lessee 183.33 primarily for manufacturing, fabricating, mining, or refining 183.34 tangible personal property or for furnishing taxable services to 183.35 be sold ultimately at retail. 183.36 Capital equipment means machinery and equipment essential 184.1 to the integrated production process or to the furnishing of 184.2 taxable services.Capital equipment also includes machinery and184.3equipment used to electronically transmit results retrieved by a184.4customer of an online computerized data retrieval system.184.5 (b) Capital equipment includes, but is not limited to: 184.6 (1) machinery and equipment used to operate, control, or 184.7 regulate the production or service equipment; 184.8 (2) machinery and equipment used for research and 184.9 development, design, quality control, and testing activities; 184.10 (3) environmental control devices that are used to maintain 184.11 conditions such as temperature, humidity, light, or air pressure 184.12 when those conditions are essential to and are part of the 184.13 production or service process; 184.14 (4) materials and supplies used to construct and install 184.15 machinery or equipment; 184.16 (5) repair and replacement parts, including accessories, 184.17 whether purchased as spare parts, repair parts, or as upgrades 184.18 or modifications to machinery or equipment; 184.19 (6) materials used for foundations that support machinery 184.20 or equipment; 184.21 (7) materials used to construct and install special purpose 184.22 buildings used in the production or service process;and184.23 (8) ready-mixed concretetrucksequipment in which the 184.24 ready-mixed concrete is mixed as part of the delivery process.184.25 regardless if mounted on a chassis; 184.26 (9) machinery and equipment used for control of pollution 184.27 that was generated as a result of the integrated production 184.28 process or the furnishing of taxable services; and 184.29 (10) machinery and equipment used to receive and store raw 184.30 materials. 184.31 (c) Capital equipment does not include the following: 184.32 (1) motor vehicles taxed under chapter 297B; 184.33 (2) machinery or equipment used toreceive or store raw184.34materialsstore or handle finished goods; 184.35 (3) building materials, except for materials included in 184.36 paragraph (b), clauses (6) and (7); 185.1 (4) machinery or equipment used for nonproduction or 185.2 non-service-related purposes, including, but not limited to, the 185.3 following: plant security,fire prevention,first aid, and 185.4 hospital stations; support operations or 185.5 administration;pollution control;and plant cleaning, disposal 185.6 of scrap and waste, plant communications, space heating, or 185.7 lighting, or safety; 185.8 (5) farm machinery and aquaculture production equipment as 185.9 defined by section 297A.61, subdivisions 12 and 13; 185.10 (6)machinery or equipment purchased and installed by a185.11contractor as part of an improvement to real propertymachinery 185.12 and equipment used in connection with the storage, 185.13 transportation, transmission, or distribution of electricity, 185.14 petroleum, liquefied gas, water, or steam in, by, or through 185.15 lines, wires, cables, poles, pipelines, tanks, mains, or other 185.16 modes of transporting these products; or 185.17 (7) any other item that is not essential to the integrated 185.18 process of manufacturing, fabricating, mining, or refining or to 185.19 the furnishing of taxable services. 185.20 (d) For purposes of this subdivision: 185.21 (1) "Machinery" means mechanical, electronic, or electrical 185.22 devices, including computers and computer software, that are 185.23 purchased or constructed to be used for the activities set forth 185.24 in paragraph (a). 185.25 (2) "Equipment" means independent devices or tools separate 185.26 from machinery, including computers and computer software, used 185.27 in operating, controlling, or regulating machinery and 185.28 equipment; and any subunit or assembly comprising a component of 185.29 any machinery or accessory or attachment parts of machinery, 185.30 such as tools, dies, jigs, patterns, and molds. 185.31 (3) "Primarily" means machinery and equipment used 50 185.32 percent or more of the time in an activity described in 185.33 paragraph (a). 185.34 (4) "Manufacturing" means an operation or series of 185.35 operations where raw materials are changed in form, composition, 185.36 or condition by machinery and equipment and which results in the 186.1 production of a new article of tangible personal property. For 186.2 purposes of this subdivision, "manufacturing" includes the 186.3 generation of electricity or steam to be sold at retail. 186.4 (5) "Fabricating" means to make, build, create, produce, or 186.5 assemble components or property to work in a new or different 186.6 manner. 186.7 (6) "Mining" means the extraction of minerals, ores, stone, 186.8 or peat. 186.9 (7) "Refining" means the process of converting a natural 186.10 resource to a product, including the treatment of water to be 186.11 sold at retail. 186.12 (8) "Integrated production process" means a process 186.13 beginning with theremovalreceipt and storage of raw materials 186.14from inventorythrough the completion of the product, including 186.15 packaging of the product. 186.16 (9)"Online data retrieval system" means a system whose186.17cumulation of information is equally available and accessible to186.18all its customers.186.19(10)"Machinery and equipment used for pollution control" 186.20 means machinery and equipment usedsolely to eliminate, prevent,186.21or reduce pollution resulting from an activity described in186.22paragraph (a)primarily for the abatement and control of air, 186.23 water, or land pollution. 186.24 [EFFECTIVE DATE.] This section is effective for sales and 186.25 purchases occurring after December 31, 2001. 186.26 Sec. 24. Minnesota Statutes 2000, section 297A.68, 186.27 subdivision 17, is amended to read: 186.28 Subd. 17. [SHIPS USED IN INTERSTATE COMMERCE.]Repair,186.29replacement, and rebuilding parts and materials, and lubricants,186.30for ships or vessels used or to be used principally in186.31interstate or foreign commerce are exempt.Vessels used 186.32 principally in interstate or foreign commerce with a gross 186.33 registered tonnage of at least 3,000 tons are exempt. The 186.34 exemption does not apply to lubricants, fuels, or to parts and 186.35 accessories to be attached to the vessel. 186.36 [EFFECTIVE DATE.] This section is effective for sales and 187.1 purchases occurring after December 31, 2001. 187.2 Sec. 25. Minnesota Statutes 2000, section 297A.68, 187.3 subdivision 19, is amended to read: 187.4 Subd. 19. [PETROLEUM PRODUCTS.] The following petroleum 187.5 products are exempt: 187.6 (1) products upon which a tax has been imposed and paid 187.7 under chapter 296A, and for which no refund has been or will be 187.8 allowed because the buyer used the fuel for nonhighway use; 187.9 (2) products that are used in the improvement of 187.10 agricultural land by constructing, maintaining, and repairing 187.11 drainage ditches, tile drainage systems, grass waterways, water 187.12 impoundment, and other erosion control structures; 187.13 (3) products purchased by a transit system receiving 187.14 financial assistance under section 174.24 or 473.384; or 187.15 (4) products used in a passenger snowmobile, as defined in 187.16 section 296A.01, subdivision 39, for off-highway business use as 187.17 part of the operations of a resort as provided under section 187.18 296A.16, subdivision 2, clause (2); or187.19(5) products purchased by a state or a political187.20subdivision of a state for use in motor vehicles exempt from187.21registration under section 168.012, subdivision 1, paragraph (b). 187.22 [EFFECTIVE DATE.] This section is effective for sales and 187.23 purchases occurring after December 31, 2001. 187.24 Sec. 26. Minnesota Statutes 2000, section 297A.68, is 187.25 amended by adding a subdivision to read: 187.26 Subd. 35. [INTERSTATE MOTOR VEHICLES.] Motor vehicles used 187.27 by persons who engage in interstate for-hire transportation of 187.28 tangible personal property or passengers are exempt. For 187.29 purposes of this subdivision, "person" means 187.30 (1) one who possesses a certificate or permit or has 187.31 completed a registration process that authorizes for-hire 187.32 transportation of property or passengers from the United States 187.33 Department of Transportation, the transportation regulation 187.34 board, or the department of transportation; 187.35 (2) one who transports commodities defined as "exempt" in 187.36 for-hire transportation in interstate commerce; or 188.1 (3) one who transports tangible personal property in 188.2 interstate commerce, pursuant to contracts with persons 188.3 described in clause (1) or (2). The exemption also applies to 188.4 motor vehicles used by persons who in the course of their 188.5 business are transporting solely their own goods in interstate 188.6 commerce. The exemption does not apply to parts or accessories 188.7 to be attached to the vehicle. 188.8 [EFFECTIVE DATE.] This section is effective for sales and 188.9 purchases occurring after December 31, 2001. 188.10 Sec. 27. Minnesota Statutes 2000, section 297A.68, is 188.11 amended by adding a subdivision to read: 188.12 Subd. 36. [RAILROAD ROLLING STOCK.] Rolling stock used by 188.13 railroads to engage in the for-hire transportation of persons or 188.14 property is exempt. For purposes of this subdivision, "rolling 188.15 stock" means all portable or movable equipment, apparatus, or 188.16 machinery that moves on railroad tracks, including engines, 188.17 cars, tenders, coaches, and sleeping cars. The exemption does 188.18 not apply to lubricants, fuels, or to parts and accessories to 188.19 be attached to the rolling stock. 188.20 [EFFECTIVE DATE.] This section is effective for sales and 188.21 purchases occurring after December 31, 2001. 188.22 Sec. 28. Minnesota Statutes 2000, section 297A.70, 188.23 subdivision 1, is amended to read: 188.24 Subdivision 1. [SCOPE.] (a) To the extent provided in this 188.25 section, the gross receipts from sales of items toor by, and 188.26 storage, distribution, use, or consumption of items by the 188.27 organizations listed in this section are specifically exempted 188.28 from the taxes imposed by this chapter. 188.29 (b)Notwithstanding any law to the contrary enacted before188.301992, only sales to governments and political subdivisions188.31listed in this section are exempt from the taxes imposed by this188.32chapter.188.33(c)"Sales" includes purchases under an installment 188.34 contract or lease purchase agreement under section 465.71. 188.35 [EFFECTIVE DATE.] This section is effective for sales and 188.36 purchases occurring after December 31, 2001. 189.1 Sec. 29. Minnesota Statutes 2000, section 297A.70, 189.2 subdivision 2, is amended to read: 189.3 Subd. 2. [SALES TO GOVERNMENT.] (a) All sales, except 189.4 those listed in paragraph (b), to the following governments and 189.5 political subdivisions, or to the listed agencies or 189.6 instrumentalities of governments and political subdivisions, are 189.7 exempt: 189.8 (1) the United States and its agencies and 189.9 instrumentalities; and 189.10 (2)school districts, the University of Minnesota, state189.11universities, community colleges, technical colleges, state189.12academies, the Perpich Minnesota center for arts education, and189.13an instrumentality of a political subdivision that is accredited189.14as an optional/special function school by the North Central189.15Association of Colleges and Schools;189.16(3) hospitals and nursing homes owned and operated by189.17political subdivisions of the state;189.18(4) other states or political subdivisions of other states,189.19if the sale would be exempt from taxation if it occurred in that189.20state; and189.21(5) sales to public libraries, public library systems,189.22multicounty, multitype library systems as defined in section189.23134.001, county law libraries under chapter 134A, state agency189.24libraries, the state library under section 480.09, and the189.25legislative reference librarya state and its agencies, 189.26 instrumentalities, and political subdivisions. 189.27 (b) This exemptiondoes not applyapplies tothe sales189.28 purchases ofthe following products and services:189.29(1)building, construction, or reconstruction materials 189.30purchasedby a contractor or a subcontractoras a part ofunder 189.31 alump-sumconstruction contractor similar type of contract189.32with a guaranteed maximum price covering both labor and189.33materialswith a government entity for use in the construction, 189.34 alteration, or repair of a building or facility;189.35(2) construction materials purchased by tax exempt entities189.36or their contractors to be used in constructingprovided that 190.1 the buildings or facilitieswhichwillnotbe used principally 190.2 by thetax exempt entities;government entity. 190.3(3) the leasing of a motor vehicle as defined in section190.4297B.01, subdivision 5, except for leases entered into by the190.5United States or its agencies or instrumentalities; or190.6(4) meals and lodging as defined under section 297A.61,190.7subdivisions 3, paragraph (d), and 16, paragraph (c), except for190.8meals and lodging purchased directly by the United States or its190.9agencies or instrumentalities.190.10(c) As used in this subdivision, "school districts" means190.11public school entities and districts of every kind and nature190.12organized under the laws of the state of Minnesota, and any190.13instrumentality of a school district, as defined in section190.14471.59.190.15 [EFFECTIVE DATE.] This section is effective for sales and 190.16 purchases occurring after December 31, 2001. 190.17 Sec. 30. Minnesota Statutes 2000, section 297A.70, 190.18 subdivision 4, is amended to read: 190.19 Subd. 4. [SALES TO NONPROFIT GROUPS.] (a) All sales,190.20except those listed in paragraph (b), to the following190.21"nonprofit organizations" are exempt:190.22(1) an entity organized and operated exclusively for190.23charitable, religious, or educational purposes if the item190.24purchased is used in the performance of charitable, religious,190.25or educational functions;190.26(2) any senior citizen group or association of groups that:190.27(i) in general limits membership to persons who are either190.28age 55 or older, or physically disabled; and190.29(ii) is organized and operated exclusively for pleasure,190.30recreation, and other nonprofit purposes, no part of the net190.31earnings of which inures to the benefit of any private190.32shareholders; and190.33(3) an entity organized and operated exclusively to190.34maintain a cemetery owned by a religious organizationto an 190.35 organization that (1) has a federal determination letter stating 190.36 that it qualifies as an exempt organization under section 191.1 501(c)(3) of the Internal Revenue Code, and (2) obtains a tax 191.2 identification number from the department of revenue under 191.3 section 297A.83, are exempt. 191.4 (b) This exemptiondoes not applyapplies to thefollowing191.5sales:191.6(1)purchase of building, construction, or reconstruction 191.7 materialspurchasedby a contractor or a subcontractoras a part191.8ofunder alump-sumconstruction contractor similar type of191.9contract with a guaranteed maximum price covering both labor and191.10materialswith a 501(c)(3) organization for use in the 191.11 construction, alteration, or repair of a building or facility;191.12(2) construction materials purchased by tax-exempt entities191.13or their contractors to be used in constructingprovided that 191.14 the buildings or facilitiesthatwillnotbe used principally by 191.15 thetax-exempt entities; and501(c)(3) organization. 191.16(3) meals and lodging as defined under section 297A.61,191.17subdivisions 3, paragraph (d), and 16, paragraph (c); and191.18(4) leasing of a motor vehicle as defined in section191.19297B.01, subdivision 5, except as provided in paragraph (c).191.20(c) This exemption applies to the leasing of a motor191.21vehicle as defined in section 297B.01, subdivision 5, only if191.22the vehicle is:191.23(1) a truck, as defined in section 168.011, a bus, as191.24defined in section 168.011, or a passenger automobile, as191.25defined in section 168.011, if the automobile is designed and191.26used for carrying more than nine persons including the driver;191.27and191.28(2) intended to be used primarily to transport tangible191.29personal property or individuals, other than employees, to whom191.30the organization provides service in performing its charitable,191.31religious, or educational purpose.191.32 [EFFECTIVE DATE.] This section is effective for sales and 191.33 purchases occurring after December 31, 2001. 191.34 Sec. 31. Minnesota Statutes 2000, section 297A.70, 191.35 subdivision 14, is amended to read: 191.36 Subd. 14. [FUNDRAISING EVENTS SPONSORED BYNONPROFIT 192.1GROUPSSALES.] (a) Salesof tangible personal property at, and192.2admission charges for fundraising eventsmade or sponsored by,a 192.3 nonprofit organization are exemptif the entire proceeds, less192.4the necessary expenses for the event, will be used solely and192.5exclusively for charitable, religious, or educational purposes.192.6Exempt sales include the sale of food, meals, drinks, and192.7taxable services at the fundraising event. 192.8 (b) This exemption is limited in the following manner: 192.9 (1)it does not apply to admission charges for events192.10involving bingo or other gambling activities or to charges for192.11use of amusement devices involving bingo or other gambling192.12activities;192.13(2) all gross receipts are taxable if the profits are not192.14used solely and exclusively for charitable, religious, or192.15educational purposes;192.16(3)it does not apply unless the organization keeps a 192.17 separate accounting record, including receipts and disbursements192.18from each fundraising event that documents all deductions from192.19gross receipts with receipts and other recordsof sales 192.20 qualifying for the exemption; 192.21(4)(2) it does not apply to any sale made by or in the 192.22 name of a nonprofit corporation as the active or passive agent 192.23 of a person that is not a nonprofit corporation; 192.24(5) all gross receipts are taxable if fundraising events192.25exceed 24 days per year; and192.26(6) it does not apply to fundraising events conducted on192.27premises leased for more than five days but less than 30 days.192.28 (3) it only applies to the first $25,000 of taxable sales 192.29 in a calendar year and it does not apply to any sales after the 192.30 $25,000 amount has been exceeded; and 192.31 (4) it does not apply if the sales are derived from 192.32 admission charges or from activities for which the money must be 192.33 deposited with the school district treasurer under section 192.34 123B.49, subdivision 2, or be recorded in the same manner as 192.35 other revenues or expenditures of the school district under 192.36 section 123B.49, subdivision 4. 193.1 (c) For purposes of this subdivision, a "nonprofit 193.2 organization" means a public school or anyunit of government,193.3 corporation, society, association, foundation, or institution 193.4 organized and operated for charitable, religious, educational, 193.5 civic, fraternal, and senior citizens' or veterans' purposes, no 193.6 part of the net earnings of which inures to the benefit of a 193.7 private individual. 193.8 (d) For purposes of this subdivision, a club, association, 193.9 or other organization of elementary or secondary school students 193.10 organized for the purpose of carrying on sports, educational, or 193.11 other extracurricular activities is a separate organization from 193.12 the school district or school. 193.13 [EFFECTIVE DATE.] This section is effective for sales and 193.14 purchases occurring after December 31, 2001. 193.15 Sec. 32. Minnesota Statutes 2000, section 297A.71, is 193.16 amended by adding a subdivision to read: 193.17 Subd. 1a. [EXPIRATION DATES.] Except as otherwise provided 193.18 in subdivision 19, the exemptions provided in this section are 193.19 only effective for sales and purchases occurring before January 193.20 1, 2003. This section expires on January 1, 2003, except that 193.21 subdivision 19 expires on July 1, 2003. 193.22 Sec. 33. Minnesota Statutes 2000, section 297A.72, 193.23 subdivision 1, is amended to read: 193.24 Subdivision 1. [DUTY OF RETAILER.] An exemption 193.25 certificate conclusively relieves the retailer from collecting 193.26 and remitting the taxonlyif takenin good faithfrom the 193.27 purchaser. 193.28 [EFFECTIVE DATE.] This section is effective for sales and 193.29 purchases occurring after December 31, 2001. 193.30 Sec. 34. Minnesota Statutes 2000, section 297A.75, 193.31 subdivision 1, is amended to read: 193.32 Subdivision 1. [TAX COLLECTED.] The tax on the gross 193.33 receipts from the sale of the following exempt items must be 193.34 imposed and collected as if the sale were taxable and the rate 193.35 under section 297A.62, subdivision 1, applied. The exempt items 193.36 include: 194.1 (1)capital equipment exempt under section 297A.68,194.2subdivision 5;194.3(2)building materials for an agricultural processing 194.4 facility exempt under section 297A.71, subdivision 13; 194.5(3)(2) building materials for mineral production 194.6 facilities exempt under section 297A.71, subdivision 14; 194.7(4)(3) building materials for correctional facilities 194.8 under section 297A.71, subdivision 3; 194.9(5)(4) building materials used in a residence for disabled 194.10 veterans exempt under section 297A.71, subdivision 11; and 194.11(6)(5) chair lifts, ramps, elevators, and associated 194.12 building materials exempt under section 297A.71, subdivision 12. 194.13 [EFFECTIVE DATE.] This section is effective for sales and 194.14 purchases occurring after December 31, 2001. 194.15 Sec. 35. Minnesota Statutes 2000, section 297A.75, 194.16 subdivision 2, is amended to read: 194.17 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 194.18 forms prescribed by the commissioner, a refund equal to the tax 194.19 paid on the gross receipts of the exempt items must be paid to 194.20 the applicant. Only the following persons may apply for the 194.21 refund: 194.22 (1) for subdivision 1, clauses (1) to(3)(2), the 194.23 applicant must be the purchaser; 194.24 (2) for subdivision 1, clause(4)(3), the applicant must 194.25 be the governmental subdivision; 194.26 (3) for subdivision 1, clause(5)(4), the applicant must 194.27 be the recipient of the benefits provided in United States Code, 194.28 title 38, chapter 21; and 194.29 (4) for subdivision 1, clause(6)(5), the applicant must 194.30 be the owner of the homestead property. 194.31 [EFFECTIVE DATE.] This section is effective for sales and 194.32 purchases occurring after December 31, 2001. 194.33 Sec. 36. Minnesota Statutes 2000, section 297A.75, 194.34 subdivision 3, is amended to read: 194.35 Subd. 3. [APPLICATION.](a)The application must include 194.36 sufficient information to permit the commissioner to verify the 195.1 tax paid. If the tax was paid by a contractor, subcontractor, 195.2 or builder, under subdivision 1, clause (3), (4), or (5),or195.3(6),the contractor, subcontractor, or builder must furnish to 195.4 the refund applicant a statement including the cost of the 195.5 exempt items and the taxes paid on the items unless otherwise 195.6 specifically provided by this subdivision. The provisions of 195.7 sections 289A.40 and 289A.50 apply to refunds under this section. 195.8(b) An applicant may not file more than two applications195.9per calendar year for refunds for taxes paid on capital195.10equipment exempt under section 297A.68, subdivision 5.195.11 [EFFECTIVE DATE.] This section is effective for sales and 195.12 purchases occurring after December 31, 2001. 195.13 Sec. 37. Minnesota Statutes 2000, section 297A.75, 195.14 subdivision 4, is amended to read: 195.15 Subd. 4. [INTEREST.] Interest must be paid on the refund 195.16 at the rate in section 270.76 from the date the refund claim is 195.17 filed for taxes paid under subdivision 1, clauses (1)to (3), 195.18 (2), and(5)(4), and from 60 days after the date the refund 195.19 claim is filed with the commissioner for claims filed under 195.20 subdivision 1, clauses(4) and (6)(3) and (5). 195.21 [EFFECTIVE DATE.] This section is effective for sales and 195.22 purchases occurring after December 31, 2001. 195.23 Sec. 38. Minnesota Statutes 2000, section 297A.80, is 195.24 amended to read: 195.25 297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE TAX.] 195.26 If an article of tangible personal property or an item 195.27 listed in section 297A.63 has already been taxed by another 195.28 state and any subdivision thereof for its sale, storage, use, or 195.29 other consumption in an amount less than the tax imposed by this 195.30 chapter, then as to the person who paid the tax in the other 195.31 state or any subdivision thereof, section 297A.63 applies only 195.32 at a rate measured by the difference between the rate imposed 195.33 under section 297A.62 and the rate by which the previous tax was 195.34 computed. If the tax imposed in the other state or any 195.35 subdivision thereof is equal to or greater than the tax imposed 195.36 in this state, then no tax is due from that person under section 196.1 297A.63. The credit shall be applied first against the amount 196.2 of any use tax due the state, and any unused portion of the 196.3 credit shall then be applied against any use tax due a 196.4 subdivision. 196.5 [EFFECTIVE DATE.] This section is effective for sales and 196.6 purchases occurring after December 31, 2001. 196.7 Sec. 39. Minnesota Statutes 2000, section 297A.82, 196.8 subdivision 1, is amended to read: 196.9 Subdivision 1. [REQUIREMENTS FOR REGISTRATION.] An 196.10 aircraft must not be registered or licensed in this state unless 196.11 the applicant presents proof that the sales or use tax imposed 196.12 by this chapter has been paid or that the transaction is exempt 196.13 from the sales and use tax. The exemption for an occasional 196.14 sale under section 297A.67, subdivision 23,or 297A.68,196.15subdivision 25,does not apply to the sale or purchase of an 196.16 aircraft. 196.17 [EFFECTIVE DATE.] This section is effective for sales and 196.18 purchases occurring after December 31, 2001. 196.19 Sec. 40. Minnesota Statutes 2000, section 297A.82, 196.20 subdivision 3, is amended to read: 196.21 Subd. 3. [PAYMENT OF TAXTO COMMISSIONER.] If the aircraft 196.22 is purchased from a person who is not the holder of a valid 196.23 sales and use tax permit under this chapter, the purchaser shall 196.24 pay the taxto the commissioner of revenueprior to registering 196.25 or licensing the aircraft in this state.The commissioner of196.26revenue shall issue a certificate stating that the sales and use196.27tax in respect to the transaction has been paid.196.28 [EFFECTIVE DATE.] This section is effective for sales and 196.29 purchases occurring after the day following final enactment. 196.30 Sec. 41. Minnesota Statutes 2000, section 297A.82, 196.31 subdivision 4, is amended to read: 196.32 Subd. 4. [EXEMPTIONS.] (a) The following transactions are 196.33 exempt from the tax imposed in this chapter to the extent 196.34 provided. 196.35 (b) The purchase or use of aircraft previously registered 196.36 in Minnesota by a corporation or partnership is exempt if the 197.1 transfer constitutes a transfer within the meaning of section 197.2 351 or 721 of the Internal Revenue Code. 197.3 (c) The sale to or purchase, storage, use, or consumption 197.4 by a licensed aircraft dealer of an aircraft for which a 197.5 commercial use permit has been issued pursuant to section 197.6 360.654 is exempt, if the aircraft is resold while the permit is 197.7 in effect. 197.8 (d) Airflight equipment when sold to, or purchased, stored, 197.9 used, or consumed by airline companies, as defined in section 197.10 270.071, subdivision 4, is exempt. For purposes of this 197.11 subdivision, "airflight equipment" includes airplanesand parts197.12necessary for the repair and maintenance of such airflight197.13equipment, and flight simulators, aircraft communications and 197.14 navigational equipment, flight crew equipment, and hydraulics 197.15 equipment, but does not include airplanes with a gross weight of 197.16 less than 30,000 pounds that are used on intermittent or 197.17 irregularly timed flights. The exemption does not apply to 197.18 repair parts, lubricants, fuels, or flight simulators. 197.19 (e) Sales of, and the storage, distribution, use, or 197.20 consumption of aircraft, as defined in section 360.511 and 197.21 approved by the Federal Aviation Administration, and which the 197.22 seller delivers to a purchaser outside Minnesota or which, 197.23 without intermediate use, is shipped or transported outside 197.24 Minnesota by the purchaser are exempt, but only if the purchaser 197.25 is not a resident of Minnesota and provided that the aircraft is 197.26 not thereafter returned to a point within Minnesota, except in 197.27 the course of interstate commerce or isolated and occasional 197.28 use, and will be registered in another state or country upon its 197.29 removal from Minnesota. This exemption applies even if the 197.30 purchaser takes possession of the aircraft in Minnesota and uses 197.31 the aircraft in the state exclusively for training purposes for 197.32 a period not to exceed ten days prior to removing the aircraft 197.33 from this state. 197.34 [EFFECTIVE DATE.] This section is effective for sales and 197.35 purchases occurring after December 31, 2001. 197.36 Sec. 42. Minnesota Statutes 2000, section 297A.82, is 198.1 amended by adding a subdivision to read: 198.2 Subd. 7. [AGREEMENT WITH COMMISSIONER OF 198.3 TRANSPORTATION.] Notwithstanding subdivisions 1 to 4, the 198.4 commissioner may enter into an agreement with the commissioner 198.5 of transportation whereby, upon approval of both commissioners, 198.6 the commissioner of transportation will collect the sales tax on 198.7 aircraft from persons required to register or license aircraft 198.8 in this state. For purposes of collecting the tax, the 198.9 commissioner of transportation shall act as agent of the 198.10 commissioner of revenue and shall be subject to all rules not 198.11 inconsistent with the provisions of this chapter, that may be 198.12 prescribed by the commissioner. 198.13 [EFFECTIVE DATE.] This section is effective the day 198.14 following final enactment. 198.15 Sec. 43. Minnesota Statutes 2000, section 297A.87, 198.16 subdivision 3, is amended to read: 198.17 Subd. 3. [OCCASIONAL SALE PROVISIONS NOT APPLICABLE.] The 198.18 isolated and occasional sale provisions under section 297A.67, 198.19 subdivision 23,or under section 297A.68, subdivision 25,do not 198.20 apply to a seller at an event under this section. 198.21 [EFFECTIVE DATE.] This section is effective for sales and 198.22 purchases occurring after December 31, 2001. 198.23 Sec. 44. Minnesota Statutes 2000, section 297A.94, is 198.24 amended to read: 198.25 297A.94 [DEPOSIT OF REVENUES.] 198.26 (a) Except as provided in this section, the commissioner 198.27 shall deposit the revenues, including interest and penalties, 198.28 derived from the taxes imposed by this chapter in the state 198.29 treasury and credit them to the general fund. 198.30 (b) The commissioner shall deposit taxes in the Minnesota 198.31 agricultural and economic account in the special revenue fund if: 198.32 (1) the taxes are derived from sales and use of property 198.33 and services purchased for the construction and operation of an 198.34 agricultural resource project; and 198.35 (2) the purchase was made on or after the date on which a 198.36 conditional commitment was made for a loan guaranty for the 199.1 project under section 41A.04, subdivision 3. 199.2 The commissioner of finance shall certify to the commissioner 199.3 the date on which the project received the conditional 199.4 commitment. The amount deposited in the loan guaranty account 199.5 must be reduced by any refunds and by the costs incurred by the 199.6 department of revenue to administer and enforce the assessment 199.7 and collection of the taxes. 199.8 (c) The commissioner shall deposit the revenues, including 199.9 interest and penalties, derived from the taxes imposed on sales 199.10 and purchases included in section 297A.61, subdivision 16, 199.11paragraphs (b) and (f)paragraph (e), and on amusement, 199.12 entertainment, and recreation services under section 297A.61, 199.13 subdivision 16, paragraph (f), in the state treasury, and credit 199.14 them as follows: 199.15 (1) first to the general obligation special tax bond debt 199.16 service account in each fiscal year the amount required by 199.17 section 16A.661, subdivision 3, paragraph (b); and 199.18 (2) after the requirements of clause (1) have been met, the 199.19 balance to the general fund. 199.20 (d) The commissioner shall deposit the revenues, including 199.21 interest and penalties, collected under section 297A.64, 199.22 subdivision 5, in the state treasury and credit them to the 199.23 general fund. By July 15 of each year the commissioner shall 199.24 transfer to the highway user tax distribution fund an amount 199.25 equal to the excess fees collected under section 297A.64, 199.26 subdivision 5, for the previous calendar year. 199.27 (e) For fiscal year 2001, 97 percent, and for fiscal year 199.28 2002 and thereafter, 87 percent of the revenues, including 199.29 interest and penalties, transmitted to the commissioner under 199.30 section 297A.65, must be deposited by the commissioner in the 199.31 state treasury as follows: 199.32 (1) 50 percent of the receipts must be deposited in the 199.33 heritage enhancement account in the game and fish fund, and may 199.34 be spent only on activities that improve, enhance, or protect 199.35 fish and wildlife resources, including conservation, 199.36 restoration, and enhancement of land, water, and other natural 200.1 resources of the state; 200.2 (2) 22.5 percent of the receipts must be deposited in the 200.3 natural resources fund, and may be spent only for state parks 200.4 and trails; 200.5 (3) 22.5 percent of the receipts must be deposited in the 200.6 natural resources fund, and may be spent only on metropolitan 200.7 park and trail grants; 200.8 (4) three percent of the receipts must be deposited in the 200.9 natural resources fund, and may be spent only on local trail 200.10 grants; and 200.11 (5) two percent of the receipts must be deposited in the 200.12 natural resources fund, and may be spent only for the Minnesota 200.13 zoological garden, the Como park zoo and conservatory, and the 200.14 Duluth zoo. 200.15 (f) The revenue dedicated under paragraph (e) may not be 200.16 used as a substitute for traditional sources of funding for the 200.17 purposes specified, but the dedicated revenue shall supplement 200.18 traditional sources of funding for those purposes. Land 200.19 acquired with money deposited in the game and fish fund under 200.20 paragraph (e) must be open to public hunting and fishing during 200.21 the open season. At least 87 percent of the money deposited in 200.22 the game and fish fund for improvement, enhancement, or 200.23 protection of fish and wildlife resources under paragraph (e) 200.24 must be allocated for field operations. 200.25 Sec. 45. Minnesota Statutes 2000, section 297B.01, 200.26 subdivision 8, is amended to read: 200.27 Subd. 8. [PURCHASE PRICE.] "Purchase price" means the 200.28 total consideration valued in money for a sale, whether paid in 200.29 money or otherwise. The purchase price excludes the amount of a 200.30 manufacturer's rebate paid or payable to the purchaser. If a 200.31 motor vehicle is taken in trade as a credit or as part payment 200.32 on a motor vehicle taxable under this chapter, the credit or 200.33 trade-in value allowed by the person selling the motor vehicle 200.34 shall be deducted from the total selling price to establish the 200.35 purchase price of the vehicle being sold and the trade-in 200.36 allowance allowed by the seller shall constitute the purchase 201.1 price of the motor vehicle accepted as a trade-in. The purchase 201.2 price in those instances where the motor vehicle is acquired by 201.3 gift or by any other transfer for a nominal or no monetary 201.4 consideration shall also include the average value of similar 201.5 motor vehicles, established by standards and guides as 201.6 determined by the motor vehicle registrar. The purchase price 201.7 in those instances where a motor vehicle is manufactured by a 201.8 person who registers it under the laws of this state shall mean 201.9 the manufactured cost of such motor vehicle and manufactured 201.10 cost shall mean the amount expended for materials, labor and 201.11 other properly allocable costs of manufacture, except that in 201.12 the absence of actual expenditures for the manufacture of a part 201.13 or all of the motor vehicle, manufactured costs shall mean the 201.14 reasonable value of the completed motor vehicle. 201.15 The term "purchase price" shallnotinclude the portion of 201.16 the value of a motor vehicle due solely to modifications 201.17 necessary to make the motor vehicle handicapped accessible. The 201.18 term "purchase price" shall not include the transfer of a motor 201.19 vehicle by way of gift between a husband and wife or parent and 201.20 child, or to a nonprofit organization as provided under 201.21 subdivision 7, paragraph (e), nor shall it include the transfer 201.22 of a motor vehicle by a guardian to a ward when there is no 201.23 monetary consideration and the title to such vehicle was 201.24 registered in the name of the guardian, as guardian, only 201.25 because the ward was a minor. There shall not be included in 201.26 "purchase price" the amount of any tax imposed by the United 201.27 States upon or with respect to retail sales whether imposed upon 201.28 the retailer or the consumer. The term "purchase price" does 201.29 not include the portion of the value of a motor vehicle due 201.30 solely to additions or modifications necessary to make the 201.31 vehicle into a ready-mixed concrete vehicle. 201.32 The term "purchase price" shall not include the transfer of 201.33 a motor vehicle as a gift between a foster parent and foster 201.34 child. For purposes of this subdivision, a foster relationship 201.35 exists, regardless of the age of the child, if (1) a foster 201.36 parent's home is or was licensed as a foster family home under 202.1 Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 202.2 county verifies that the child was a state ward or in permanent 202.3 foster care. 202.4 [EFFECTIVE DATE.] This section is effective for vehicles 202.5 sold, purchased, or acquired after December 31, 2001. 202.6 Sec. 46. Minnesota Statutes 2000, section 297B.03, is 202.7 amended to read: 202.8 297B.03 [EXEMPTIONS.] 202.9 There is specifically exempted from the provisions of this 202.10 chapter and from computation of the amount of tax imposed by it 202.11 the following: 202.12 (1) purchase or use, including use under a lease purchase 202.13 agreement or installment sales contract made pursuant to section 202.14 465.71, of any motor vehicle by the United States and its 202.15 agencies and instrumentalities and by any person described in 202.16 and subject to the conditions provided insection 297A.25,202.17subdivision 18section 297A.70, subdivisions 2 and 4; 202.18 (2) purchase or use of any motor vehicle by any person who 202.19 was a resident of another state at the time of the purchase and 202.20 who subsequently becomes a resident of Minnesota, provided the 202.21 purchase occurred more than 60 days prior to the date such 202.22 person began residing in the state of Minnesota; 202.23 (3) purchase or use of any motor vehicleby any person202.24making a valid election to be taxed under the provisions of202.25section 297A.211that is exempt from taxation under section 202.26 297A.68, subdivision 35; 202.27 (4) purchase or use of any motor vehicle previously 202.28 registered in the state of Minnesota when such transfer 202.29 constitutes a transfer within the meaning of section 118, 331, 202.30 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 202.31 1563(a) of the Internal Revenue Code of 1986, as amended through 202.32 December 31, 1999; 202.33 (5) purchase or use of any vehicle owned by a resident of 202.34 another state and leased to a Minnesota based private or for 202.35 hire carrier for regular use in the transportation of persons or 202.36 property in interstate commerce provided the vehicle is titled 203.1 in the state of the owner or secured party, and that state does 203.2 not impose a sales tax or sales tax on motor vehicles used in 203.3 interstate commerce; and 203.4 (6)purchase or use of a motor vehicle by a private203.5nonprofit or public educational institution for use as an203.6instructional aid in automotive training programs operated by203.7the institution. "Automotive training programs" includes motor203.8vehicle body and mechanical repair courses but does not include203.9driver education programs;203.10(7)purchase of a motor vehicle for use as an ambulance by 203.11 an ambulance service licensed under section 144E.10;. 203.12(8) purchase of a motor vehicle by or for a public library,203.13as defined in section 134.001, subdivision 2, as a bookmobile or203.14library delivery vehicle;203.15(9) purchase of a ready-mixed concrete truck;203.16(10) purchase or use of a motor vehicle by a town for use203.17exclusively for road maintenance, including snowplows and dump203.18trucks, but not including automobiles, vans, or pickup trucks;203.19(11) purchase or use of a motor vehicle by a corporation,203.20society, association, foundation, or institution organized and203.21operated exclusively for charitable, religious, or educational203.22purposes, but only if the vehicle is:203.23(i) a truck, as defined in section 168.011, a bus, as203.24defined in section 168.011, or a passenger automobile, as203.25defined in section 168.011, if the automobile is designed and203.26used for carrying more than nine persons including the driver;203.27and203.28(ii) intended to be used primarily to transport tangible203.29personal property or individuals, other than employees, to whom203.30the organization provides service in performing its charitable,203.31religious, or educational purpose.203.32 [EFFECTIVE DATE.] This section is effective for vehicles 203.33 sold, purchased, or acquired after December 31, 2001. 203.34 Sec. 47. [WHEN SERVICES PROVIDED; TRANSITION.] 203.35 If a service that is taxable beginning January 1, 2002, is 203.36 provided prior to that date, it is not taxed, notwithstanding 204.1 that compensation for the service is paid or payable on or after 204.2 that date. If a service that is taxable beginning January 1, 204.3 2002, is provided on or after that date, the service is taxed 204.4 unless it was prepaid in full prior to October 1, 2001. If a 204.5 service that is taxable beginning January 1, 2002, is provided 204.6 over a period of time beginning prior to that date and ending 204.7 after that date, only that portion of the service provided on or 204.8 after January 1, 2002, is taxed. 204.9 Sec. 48. [APPROPRIATIONS.] 204.10 $6,839,810 is appropriated from the general fund to the 204.11 commissioner of revenue for fiscal year 2002 to administer this 204.12 act, and $4,945,125 is appropriated from the general fund to the 204.13 commissioner of revenue for fiscal year 2003 to administer this 204.14 act. The appropriations are available until June 30, 2003. 204.15 [EFFECTIVE DATE.] This section is effective July 1, 2001. 204.16 Sec. 49. [REPEALER.] 204.17 (a) Minnesota Statutes 2000, sections 289A.60, subdivision 204.18 15, is repealed. 204.19 (b) Minnesota Statutes 2000, sections 297A.67, subdivisions 204.20 4, 6, 9, 10, 11, 12, 16, 17, 18, 19, and 25; 297A.68, 204.21 subdivisions 4, 6, 7, 8, 9, 10, 11, 12, 16, 18, 21, 22, 23, 24, 204.22 25, 26, 28, 29, 30, 31, 33, and 34; 297A.69, subdivisions 3, 5, 204.23 6, and 7; 297A.70, subdivisions 3, 5, 6, 7, 8, 9, 10, 11, 12, 204.24 13, 15, and 16; 297A.82, subdivision 5; 297A.90; 297A.96; and 204.25 469.1734, subdivision 6, are repealed. 204.26 [EFFECTIVE DATE.] This section, paragraph (a), is effective 204.27 for returns due after January 2002. This section, paragraph 204.28 (b), is effective for sales and purchases occurring after 204.29 December 31, 2001. 204.30 ARTICLE 6 204.31 SPECIAL TAXES REFORM 204.32 Section 1. Minnesota Statutes 2000, section 287.035, is 204.33 amended to read: 204.34 287.035 [IMPOSITION OF TAX.] 204.35 A taxof 23 centsis imposed uponeach $100, or fraction204.36thereof, ofthe debt or portion of a debt that is secured by any 205.1 recorded mortgage of real property located in this state at the 205.2 rate of .0023. The person liable for the tax is the mortgagee. 205.3 The tax is not imposed on the lawful interest amounts that may 205.4 accrue with respect to a debt. 205.5 [EFFECTIVE DATE.] This section is effective for documents 205.6 executed, recorded, or registered after June 30, 2001. 205.7 Sec. 2. Minnesota Statutes 2000, section 287.21, 205.8 subdivision 1, is amended to read: 205.9 Subdivision 1. [DETERMINATION OF TAX.] (a) A tax is 205.10 imposed on each deed or instrument by which any real property in 205.11 this state is granted, assigned, transferred, or otherwise 205.12 conveyed. The tax applies against the net consideration. 205.13 (b) The tax is determined in the following manner: (1) 205.14 when transfers are made by instruments pursuant to mergers, 205.15 consolidations, sales, or transfers of substantially all of the 205.16 assets of the entities as defined in section 287.20, subdivision 205.17 9, pursuant to plans of reorganization, the tax is $1.65; (2) 205.18 when there is no consideration or when the consideration, 205.19 exclusive of the value of any lien or encumbrance remaining 205.20 thereon at the time of sale, is $500 or less, the tax is $1.65; 205.21 or (3) when the consideration, exclusive of the value of any 205.22 lien or encumbrance remaining at the time of sale, exceeds $500, 205.23 the tax is$1.65 plus $1.65 for each additional $500 or fraction205.24of that amount.0033 of the net consideration. 205.25 (c) The tax is due at the time a taxable deed or instrument 205.26 is presented for recording. 205.27 [EFFECTIVE DATE.] This section is effective for documents 205.28 executed, recorded, or registered after June 30, 2001. 205.29 Sec. 3. Minnesota Statutes 2000, section 297E.02, 205.30 subdivision 1, is amended to read: 205.31 Subdivision 1. [IMPOSITIONTAX ON BINGO.] A tax is imposed 205.32 on alllawful gambling other than (1) pull-tab deals or games;205.33(2) tipboard deals or games; and (3) items listed in section205.34297E.01, subdivision 8, clauses (4) and (5)bingo games, at the 205.35 rate of8.5five percent on the gross receipts as defined in 205.36 section 297E.01, subdivision 8, less prizes actually paid. The 206.1 tax imposed by this subdivision is in lieu of the tax imposed by 206.2 section 297A.02 and all local taxes and license fees except a 206.3 fee authorized under section 349.16, subdivision 8, or a tax 206.4 authorized under subdivision 5. 206.5 The tax imposed under this subdivision is payable by the 206.6 organization or party conducting, directly or indirectly, the 206.7 gambling. 206.8 [EFFECTIVE DATE.] This section is effective for tax periods 206.9 beginning on or after July 1, 2001. 206.10 Sec. 4. Minnesota Statutes 2000, section 297E.02, 206.11 subdivision 6, is amended to read: 206.12 Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes 206.13 imposed under subdivisions 1 and 4, a tax is imposed on the 206.14 combined receipts of the organization. As used in this section, 206.15 "combined receipts" is the sum of the organization's gross 206.16 receipts from lawful gambling less gross receipts directly 206.17 derived from the conduct of bingo, raffles, and paddlewheels, as 206.18 defined in section 297E.01, subdivision 8, for the fiscal year. 206.19 The combined receipts of an organization are subject to a tax 206.20 computed according to the following schedule: 206.21 If the combined receipts for the The tax is: 206.22 fiscal year are: 206.23 Not over$500,000$700,000 zero 206.24 Over$500,000$700,000, but 206.25 not over$700,000$900,000 1.7 percent of the amount 206.26 over$500,000$700,000, 206.27 but not over$700,000206.28 $900,000 206.29 Over$700,000$900,000, but 206.30 not over$900,000$1,100,000 $3,400 plus 3.4 206.31 percent of the amount 206.32 over$700,000206.33 $900,000, but not 206.34 over$900,000206.35 $1,100,000 206.36 Over$900,000$1,100,000 $10,200 plus 5.1 207.1 percent of the amount 207.2 over$900,000207.3 $1,100,000 207.4 [EFFECTIVE DATE.] This section is effective for tax periods 207.5 beginning on or after July 1, 2001. 207.6 Sec. 5. Minnesota Statutes 2000, section 297I.40, 207.7 subdivision 1, is amended to read: 207.8 Subdivision 1. [REQUIREMENT TO PAY.] On or beforeApril 1207.9 March 15, June115, September 15, and December1 of each year207.10 15 of the current year, every taxpayer subject to tax under 207.11 section 297I.05, subdivisions 1 to 6, and 12, paragraphs (a), 207.12 clauses (1) to (5), (b), and (e), must pay to the commissioner 207.13 an installment equal toone-thirdone-fourth of the insurer's 207.14 total estimated tax for the current year. 207.15 [EFFECTIVE DATE.] This section is effective for payments 207.16 required to be made after December 31, 2001. 207.17 Sec. 6. Minnesota Statutes 2000, section 297I.40, 207.18 subdivision 2, is amended to read: 207.19 Subd. 2. [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 207.20 any required installment isone-thirdone-fourth of the lesser 207.21 of 207.22 (1) 80 percent of the tax imposed for the current year, or 207.23 (2) 100 percent of the tax paid for the previous year. 207.24 [EFFECTIVE DATE.] This section is effective for payments 207.25 required to be made after December 31, 2001. 207.26 Sec. 7. Minnesota Statutes 2000, section 297I.40, 207.27 subdivision 7, is amended to read: 207.28 Subd. 7. [APRILMARCH ESTIMATED PAYMENT.] A taxpayer who 207.29 claims a refund of an overpayment on an original return may 207.30 elect to have all or any portion of the overpayment applied as a 207.31 credit to theApril 1March 15 estimated tax payment for the 207.32 year following the year of the return. The credit is considered 207.33 applied onApril 1March 15. Notwithstanding section 297I.80, 207.34 the amount credited does not bear interest. 207.35 [EFFECTIVE DATE.] This section is effective for payments 207.36 required to be made after December 31, 2001. 208.1 Sec. 8. [REPEALER.] 208.2 (a) Minnesota Statutes 2000, sections 297G.03, subdivision 208.3 4; and 297G.07, subdivision 3, are repealed. 208.4 (b) Minnesota Statutes 2000, sections 297I.05, subdivision 208.5 8; and 297I.30, subdivision 3, are repealed. 208.6 [EFFECTIVE DATE.] This section, paragraph (a), is effective 208.7 for tax periods beginning on or after July 1, 2001. This 208.8 section, paragraph (b), is effective for calendar years 208.9 beginning after December 31, 1999. 208.10 ARTICLE 7 208.11 PETROLEUM TAX REFORM 208.12 Section 1. Minnesota Statutes 2000, section 239.101, 208.13 subdivision 3, is amended to read: 208.14 Subd. 3. [PETROLEUM INSPECTION FEE.]A person who owns208.15petroleum products held in storage at a pipeline terminal, river208.16terminal, or refinery shall pay a petroleum inspection fee of 85208.17cents for every 1,000 gallons sold or withdrawn from the208.18terminal or refinery storageAn inspection fee is imposed on 208.19 petroleum products when received by the first licensed 208.20 distributor, and on petroleum products received and held for 208.21 sale or use by any person when the petroleum products have not 208.22 previously been received by a licensed distributor. The 208.23 petroleum inspection fee is 85 cents for every 1,000 gallons 208.24 received. The commissioner of revenue shall collect the fee. 208.25 The revenue from the fee must first be applied to cover the 208.26 amounts appropriated for petroleum product quality inspection 208.27 expenses, for the inspection and testing of petroleum product 208.28 measuring equipment, and for petroleum supply monitoring under 208.29 chapter 216C. 208.30 The commissioner of revenue shall credit a person for 208.31 inspection fees previously paid in error or for any material 208.32 exported or sold for export from the state upon filing of a 208.33 report as prescribed by the commissioner of revenue. The 208.34 commissioner of revenue may collect the inspection fee along 208.35 with any taxes due under chapter 296A. 208.36 [EFFECTIVE DATE.] This section is effective for petroleum 209.1 products received on or after July 1, 2001. 209.2 Sec. 2. Minnesota Statutes 2000, section 296A.15, 209.3 subdivision 1, is amended to read: 209.4 Subdivision 1. [MONTHLY GASOLINE REPORT; SHRINKAGE 209.5 ALLOWANCE.] (a) Except as provided in paragraph (e), on or 209.6 before the 23rd day of each month, every person who is required 209.7 to pay a gasoline tax shall file with the commissioner a report, 209.8 in the form and manner prescribed by the commissioner, showing 209.9 the number of gallons of petroleum products received by the 209.10 reporter during the preceding calendar month, and other 209.11 information the commissioner may require. A written report is 209.12 deemed to have been filed as required in this subdivision if 209.13 postmarked on or before the 23rd day of the month in which the 209.14 tax is payable. 209.15 (b) The number of gallons of gasoline must be reported in 209.16 United States standard liquid gallons, 231 cubic inches, except 209.17 that the commissioner may upon written application and for cause 209.18 shown permit the distributor to report the number of gallons of 209.19 gasoline as corrected to a temperature of 60-degrees 209.20 Fahrenheit. If the application is granted, all gasoline covered 209.21 in the application and allowed by the commissioner must continue 209.22 to be reported by the distributor on the adjusted basis for a 209.23 period of one year from the date of the granting of the 209.24 application. The number of gallons of petroleum products other 209.25 than gasoline must be reported as originally invoiced. Each 209.26 report must show separately the number of gallons of aviation 209.27 gasoline received by the reporter during each calendar month. 209.28 (c) Each report must also include the amount of gasoline 209.29 tax on gasoline received by the reporter during the preceding 209.30 month. In computing the tax a deduction ofthree2.5 percent of 209.31 the quantity of gasoline received by a distributor shall be made 209.32 for evaporation and loss. At the time of reporting, the 209.33 reporter shall submit satisfactory evidence that one-third of 209.34 thethree2.5 percent deduction has been credited or paid to 209.35 dealers on quantities sold to them. 209.36 (d) Each report shall contain a confession of judgment for 210.1 the amount of the tax shown due to the extent not timely paid. 210.2 (e) Under certain circumstances and with the approval of 210.3 the commissioner, taxpayers may be allowed to file reports 210.4 annually. 210.5 [EFFECTIVE DATE.] This section is effective for reports due 210.6 on or after July 1, 2001. 210.7 Sec. 3. Minnesota Statutes 2000, section 296A.16, 210.8 subdivision 1, is amended to read: 210.9 Subdivision 1. [CREDIT OR REFUND OF GASOLINE OR SPECIAL 210.10 FUEL TAX PAID.] The commissioner shall allow the distributor 210.11 credit or refund of the tax paid on gasoline and special fuel: 210.12 (1) exported or sold for export from the state, other than 210.13 in the supply tank of a motor vehicle or of an aircraft; 210.14 (2) sold to the United States government to be used 210.15 exclusively in performing its governmental functions and 210.16 activities or to any "cost plus a fixed fee" contractor employed 210.17 by the United States government on any national defense project; 210.18 (3) if the fuel is placed in a tank used exclusively for 210.19 residential heating; 210.20 (4) destroyed by accident while in the possession of the 210.21 distributor; 210.22 (5) in error; and 210.23 (6)in the case of gasoline only, sold for storage in an210.24on-farm bulk storage tank, if the tax was not collected on the210.25sale; and210.26(7)in such other cases as the commissioner may permit, 210.27 consistent with the provisions of this chapter and other laws 210.28 relating to the gasoline and special fuel excise taxes. 210.29 [EFFECTIVE DATE.] This section is effective for gasoline 210.30 purchased or refunds claimed on or after July 1, 2001. 210.31 Sec. 4. [APPROPRIATION.] 210.32 A one-time appropriation of $140,000 is appropriated for 210.33 fiscal year 2002 from the highway user tax distribution fund to 210.34 the commissioner of revenue for systems modifications associated 210.35 with petroleum tax reform. 210.36 ARTICLE 8 211.1 MINERALS TAX REFORM 211.2 Section 1. Minnesota Statutes 2000, section 298.01, 211.3 subdivision 3, is amended to read: 211.4 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 211.5 engaged in the business of mining or producing ores in this 211.6 state, except iron ore or taconite concentrates, shall pay an 211.7 occupation tax to the state of Minnesota as provided in this 211.8 subdivision. The tax is determined in the same manner as the 211.9 tax imposed by section 290.02, except that sections 290.05, 211.10 subdivision 1, clause (a), and 290.17, subdivision 4, do not 211.11 apply, and except that the tax rate is 2.45 percent of a 211.12 person's taxable income. The tax is in addition to all other 211.13 taxes. 211.14 [EFFECTIVE DATE.] This section is effective for taxes 211.15 payable May 1, 2002, and thereafter. 211.16 Sec. 2. Minnesota Statutes 2000, section 298.01, 211.17 subdivision 3a, is amended to read: 211.18 Subd. 3a. [GROSS INCOME.] (a) For purposes of determining 211.19 a person's taxable income under subdivision 3, gross income is 211.20 determined by the amount of gross proceeds from mining in this 211.21 state under section 298.016 and includes any gain or loss 211.22 recognized from the sale or disposition of assets used in the 211.23 business in this state. 211.24 (b) In applying section 290.191, subdivision 5, all 211.25 transfers of ores are deemed to be salesoutsideinside this 211.26 stateif the ores are transported out of this state after the211.27ores have been converted to a marketable quality. 211.28 [EFFECTIVE DATE.] This section is effective for taxes 211.29 payable May 1, 2002, and thereafter. 211.30 Sec. 3. Minnesota Statutes 2000, section 298.01, 211.31 subdivision 4, is amended to read: 211.32 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 211.33 CONCENTRATES.] A person engaged in the business of mining or 211.34 producing of iron ore, taconite concentrates or direct reduced 211.35 ore in this state shall pay an occupation tax to the state of 211.36 Minnesota. The tax is determined in the same manner as the tax 212.1 imposed by section 290.02, except that sections 290.05, 212.2 subdivision 1, clause (a), and 290.17, subdivision 4, do not 212.3 apply, and except that the tax rate is 2.45 percent of a 212.4 person's taxable income. The tax is in addition to all other 212.5 taxes. 212.6 [EFFECTIVE DATE.] This section is effective for taxes 212.7 payable May 1, 2002, and thereafter. 212.8 Sec. 4. Minnesota Statutes 2000, section 298.01, 212.9 subdivision 4a, is amended to read: 212.10 Subd. 4a. [GROSS INCOME.] (a) For purposes of determining 212.11 a person's taxable income under subdivision 4, gross income is 212.12 determined by the mine value of the ore mined in Minnesota and 212.13 includes any gain or loss recognized from the sale or 212.14 disposition of assets used in the business in this state. 212.15 (b) Mine value is the value, or selling price, of iron ore 212.16 or taconite concentrates, f.o.b. mine. The mine value is 212.17 calculated by multiplying the iron unit price for the period, as 212.18 determined by the commissioner, by the tons produced and the 212.19 weighted average analysis. 212.20 (c) In applying section 290.191, subdivision 5, all 212.21 transfers of iron ore and taconite concentrates are deemed to be 212.22 salesoutsideinside this stateif the iron ore or taconite212.23concentrates are transported out of this state after the raw212.24iron ore and taconite concentrates have been converted to a212.25marketable quality. 212.26 [EFFECTIVE DATE.] This section is effective for taxes 212.27 payable May 1, 2002, and thereafter. 212.28 Sec. 5. Minnesota Statutes 2000, section 298.01, 212.29 subdivision 4c, is amended to read: 212.30 Subd. 4c. [SPECIAL DEDUCTIONS; NET OPERATING LOSS.] (a) 212.31 For purposes of determining taxable income under subdivision 212.32 4,the following modifications are allowed:212.33(1)the provisions of section 290.01, subdivisions 19c, 212.34 clauses (7) and (11), and 19d, clauses (7) and (12), are not 212.35 used to determine taxable income; and. 212.36(2) for assets placed in service before January 1, 1990,213.1the deduction for depreciation will be the same amount allowed213.2under chapter 290, except that after an asset has been fully213.3depreciated for federal income tax purposes any remaining213.4depreciable basis is allowed as a deduction using the213.5straight-line method over the following number of years:213.6(i) three-year property, one year;213.7(ii) five- and seven-year property, two years;213.8(iii) ten-year property, five years; and213.9(iv) all other property, seven years.213.10No deduction is allowed if an asset is fully depreciated213.11for occupation tax purposes before January 1990.213.12(b) For purposes of determining the deduction allowed under213.13paragraph (a), clause (2), the remaining depreciable basis of213.14property placed in service before January 1, 1990, is calculated213.15as follows:213.16(1) the adjusted basis of the property on December 31,213.171989, which was used to calculate the hypothetical corporate213.18franchise tax under Minnesota Statutes 1988, section 298.40,213.19including salvage value; less213.20(2) deductions for depreciation allowed under section213.21290.01, subdivision 19e.213.22(c) The basis for determining gain or loss on sale or213.23disposition of assets placed in service before January 1, 1990,213.24is the basis determined under paragraph (b), less the deductions213.25allowed under paragraph (a), clause (2).213.26(d)(b) The amount of net operating loss incurred in a 213.27 taxable year beginning before January 1, 1990, that may be 213.28 carried over to a taxable year beginning after December 31, 213.29 1989, is the amount of net operating loss carryover determined 213.30 in the calculation of the hypothetical corporate franchise tax 213.31 under Minnesota Statutes 1988, sections 298.40 and 298.402. 213.32 [EFFECTIVE DATE.] This section is effective for taxes 213.33 payable May 1, 2002, and thereafter. 213.34 Sec. 6. Minnesota Statutes 2000, section 298.24, 213.35 subdivision 1, is amended to read: 213.36 Subdivision 1. (a) For concentrate produced in 1999, there 214.1 is imposed upon taconite and iron sulphides, and upon the mining 214.2 and quarrying thereof, and upon the production of iron ore 214.3 concentrate therefrom, and upon the concentrate so produced, a 214.4 tax of $2.141 per gross ton of merchantable iron ore concentrate 214.5 produced therefrom. 214.6 (b) For concentrates produced in 2000 and subsequent years, 214.7 the tax rate shall be equal to the preceding year's tax rate 214.8 plus an amount equal to the preceding year's tax rate multiplied 214.9 by the percentage increase in the implicit price deflator from 214.10 the fourth quarter of the second preceding year to the fourth 214.11 quarter of the preceding year, except that for concentrates 214.12 produced in 2001, the tax rate is $1.956 per gross ton of 214.13 merchantable iron ore concentrate produced therefrom. "Implicit 214.14 price deflator" means the implicit price deflator for the gross 214.15 domestic product prepared by the bureau of economic analysis of 214.16 the United States Department of Commerce. 214.17 (c) On concentrates produced in 1997 and thereafter, an 214.18 additional tax is imposed equal to three cents per gross ton of 214.19 merchantable iron ore concentrate for each one percent that the 214.20 iron content of the product exceeds 72 percent, when dried at 214.21 212 degrees Fahrenheit. 214.22 (d) The tax shall be imposed on the average of the 214.23 production for the current year and the previous two years. The 214.24 rate of the tax imposed will be the current year's tax rate. 214.25 This clause shall not apply in the case of the closing of a 214.26 taconite facility if the property taxes on the facility would be 214.27 higher if this clause and section 298.25 were not applicable. 214.28 (e) If the tax or any part of the tax imposed by this 214.29 subdivision is held to be unconstitutional, a tax of $2.141 per 214.30 gross ton of merchantable iron ore concentrate produced shall be 214.31 imposed. 214.32 (f) Consistent with the intent of this subdivision to 214.33 impose a tax based upon the weight of merchantable iron ore 214.34 concentrate, the commissioner of revenue may indirectly 214.35 determine the weight of merchantable iron ore concentrate 214.36 included in fluxed pellets by subtracting the weight of the 215.1 limestone, dolomite, or olivine derivatives or other basic flux 215.2 additives included in the pellets from the weight of the 215.3 pellets. For purposes of this paragraph, "fluxed pellets" are 215.4 pellets produced in a process in which limestone, dolomite, 215.5 olivine, or other basic flux additives are combined with 215.6 merchantable iron ore concentrate. No subtraction from the 215.7 weight of the pellets shall be allowed for binders, mineral and 215.8 chemical additives other than basic flux additives, or moisture. 215.9 (g)(1) Notwithstanding any other provision of this 215.10 subdivision, for the first two years of a plant's production of 215.11 direct reduced ore, no tax is imposed under this section. As 215.12 used in this paragraph, "direct reduced ore" is ore that results 215.13 in a product that has an iron content of at least 75 percent. 215.14 For the third year of a plant's production of direct reduced 215.15 ore, the rate to be applied to direct reduced ore is 25 percent 215.16 of the rate otherwise determined under this subdivision. For 215.17 the fourth such production year, the rate is 50 percent of the 215.18 rate otherwise determined under this subdivision; for the fifth 215.19 such production year, the rate is 75 percent of the rate 215.20 otherwise determined under this subdivision; and for all 215.21 subsequent production years, the full rate is imposed. 215.22 (2) Subject to clause (1), production of direct reduced ore 215.23 in this state is subject to the tax imposed by this section, but 215.24 if that production is not produced by a producer of taconite or 215.25 iron sulfides, the production of taconite or iron sulfides 215.26 consumed in the production of direct reduced iron in this state 215.27 is not subject to the tax imposed by this section on taconite or 215.28 iron sulfides. 215.29 [EFFECTIVE DATE.] This section is effective the day 215.30 following final enactment. 215.31 Sec. 7. Minnesota Statutes 2000, section 298.28, 215.32 subdivision 1, is amended to read: 215.33 Subdivision 1. [DISTRIBUTION.] The proceeds of the taxes 215.34 collected under section 298.24, except the tax collected under 215.35 section 298.24, subdivision 2, shall, upon certification of the 215.36 commissioner of revenue, be allocated under subdivisions 2 to 216.1 12, except as otherwise provided in subdivision 4, paragraph 216.2 (f), and subdivision 11, paragraph (d). 216.3 [EFFECTIVE DATE.] This section is effective the day 216.4 following final enactment. 216.5 Sec. 8. Minnesota Statutes 2000, section 298.28, 216.6 subdivision 4, is amended to read: 216.7 Subd. 4. [SCHOOL DISTRICTS.] (a) 22.28 cents per taxable 216.8 ton plus the increase provided in paragraph (d) must be 216.9 allocated to qualifying school districts to be distributed, 216.10 based upon the certification of the commissioner of revenue, 216.11 under paragraphs (b) and (c), except as otherwise provided in 216.12 paragraph (f). 216.13 (b) 4.46 cents per taxable ton must be distributed to the 216.14 school districts in which the lands from which taconite was 216.15 mined or quarried were located or within which the concentrate 216.16 was produced. The distribution must be based on the 216.17 apportionment formula prescribed in subdivision 2. 216.18 (c)(i) 17.82 cents per taxable ton, less any amount 216.19 distributed under paragraph (e), shall be distributed to a group 216.20 of school districts comprised of those school districts in which 216.21 the taconite was mined or quarried or the concentrate produced 216.22 or in which there is a qualifying municipality as defined by 216.23 section 273.134 in direct proportion to school district indexes 216.24 as follows: for each school district, its pupil units 216.25 determined under section 126C.05 for the prior school year shall 216.26 be multiplied by the ratio of the average adjusted net tax 216.27 capacity per pupil unit for school districts receiving aid under 216.28 this clause as calculated pursuant to chapters 122A, 126C, and 216.29 127A for the school year ending prior to distribution to the 216.30 adjusted net tax capacity per pupil unit of the district. Each 216.31 district shall receive that portion of the distribution which 216.32 its index bears to the sum of the indices for all school 216.33 districts that receive the distributions. 216.34 (ii) Notwithstanding clause (i), each school district that 216.35 receives a distribution under sections 298.018; 298.23 to 216.36 298.28, exclusive of any amount received under this clause; 217.1 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 217.2 imposing a tax on severed mineral values that is less than the 217.3 amount of its levy reduction under section 126C.48, subdivision 217.4 8, for the second year prior to the year of the distribution 217.5 shall receive a distribution equal to the difference; the amount 217.6 necessary to make this payment shall be derived from 217.7 proportionate reductions in the initial distribution to other 217.8 school districts under clause (i). 217.9 (d) Any school district described in paragraph (c) where a 217.10 levy increase pursuant to section 126C.17, subdivision 9, is 217.11 authorized by referendum, shall receive a distribution from a 217.12 fund that receives a distribution in 1998 of 21.3 cents per 217.13 ton. On July 15 of 1999, and each year thereafter, the increase 217.14 over the amount established for the prior year shall be 217.15 determined according to the increase in the implicit price 217.16 deflator as provided in section 298.24, subdivision 1. Each 217.17 district shall receive the product of: 217.18 (i) $175 times the pupil units identified in section 217.19 126C.05, subdivision 1, enrolled in the second previous year or 217.20 the 1983-1984 school year, whichever is greater, less the 217.21 product of 1.8 percent times the district's taxable net tax 217.22 capacity in the second previous year; times 217.23 (ii) the lesser of: 217.24 (A) one, or 217.25 (B) the ratio of the sum of the amount certified pursuant 217.26 to section 126C.17, subdivision 6, in the previous year, plus 217.27 the amount certified pursuant to section 126C.17, subdivision 8, 217.28 in the previous year, plus the referendum aid according to 217.29 section 126C.17, subdivision 7, for the current year, plus an 217.30 amount equal to the reduction under section 126C.17, subdivision 217.31 12, to the product of 1.8 percent times the district's taxable 217.32 net tax capacity in the second previous year. 217.33 If the total amount provided by paragraph (d) is 217.34 insufficient to make the payments herein required then the 217.35 entitlement of $175 per pupil unit shall be reduced uniformly so 217.36 as not to exceed the funds available. Any amounts received by a 218.1 qualifying school district in any fiscal year pursuant to 218.2 paragraph (d) shall not be applied to reduce general education 218.3 aid which the district receives pursuant to section 126C.13 or 218.4 the permissible levies of the district. Any amount remaining 218.5 after the payments provided in this paragraph shall be paid to 218.6 the commissioner of iron range resources and rehabilitation who 218.7 shall deposit the same in the taconite environmental protection 218.8 fund and the northeast Minnesota economic protection trust fund 218.9 as provided in subdivision 11. 218.10 Each district receiving money according to this paragraph 218.11 shall reserve $25 times the number of pupil units in the 218.12 district. It may use the money for early childhood programs or 218.13 for outcome-based learning programs that enhance the academic 218.14 quality of the district's curriculum. The outcome-based 218.15 learning programs must be approved by the commissioner of 218.16 children, families, and learning. 218.17 (e) There shall be distributed to any school district the 218.18 amount which the school district was entitled to receive under 218.19 section 298.32 in 1975. 218.20 (f) Notwithstanding language to the contrary in this 218.21 subdivision, beginning with the year 2002 distribution, the 218.22 amount necessary for distributions to school districts under 218.23 paragraphs (c) and (e) is annually appropriated, upon 218.24 certification by the commissioner of revenue, to the 218.25 commissioner of children, families, and learning from the 218.26 general fund. On or before February 25, the commissioner of 218.27 children, families, and learning shall distribute the 218.28 appropriation in the manner provided by paragraphs (c) and (e). 218.29 [EFFECTIVE DATE.] This section is effective the day 218.30 following final enactment. 218.31 Sec. 9. Minnesota Statutes 2000, section 298.28, 218.32 subdivision 5, is amended to read: 218.33 Subd. 5. [COUNTIES.] (a)16.526.05 cents per taxable ton 218.34 is allocated to counties to be distributed, based upon 218.35 certification by the commissioner of revenue, under paragraphs 218.36 (b) to (d). 219.1 (b)1320.525 cents per taxable ton shall be distributed to 219.2 the county in which the taconite is mined or quarried or in 219.3 which the concentrate is produced, less any amount which is to 219.4 be distributed pursuant to paragraph (c). The apportionment 219.5 formula prescribed in subdivision 2 is the basis for the 219.6 distribution. 219.7 (c) If an electric power plant owned by and providing the 219.8 primary source of power for a taxpayer mining and concentrating 219.9 taconite is located in a county other than the county in which 219.10 the mining and the concentrating processes are conducted, one 219.11 cent per taxable ton of the tax distributed to the counties 219.12 pursuant to paragraph (b) and imposed on and collected from such 219.13 taxpayer shall be paid to the county in which the power plant is 219.14 located. 219.15 (d)3.55.525 cents per taxable ton shall be paid to the 219.16 county from which the taconite was mined, quarried or 219.17 concentrated to be deposited in the county road and bridge 219.18 fund. If the mining, quarrying and concentrating, or separate 219.19 steps in any of those processes are carried on in more than one 219.20 county, the commissioner shall follow the apportionment formula 219.21 prescribed in subdivision 2. 219.22 [EFFECTIVE DATE.] This section is effective the day 219.23 following final enactment. 219.24 Sec. 10. Minnesota Statutes 2000, section 298.28, 219.25 subdivision 6, is amended to read: 219.26 Subd. 6. [PROPERTY TAX RELIEF.] (a) In 1999,38.8136.81 219.27 cents per taxable ton, less any amount required to be 219.28 distributed under paragraphs (b) and (c),and less any amount219.29required to be deducted under paragraph (d),must be allocated 219.30 to St. Louis county acting as the counties' fiscal agent, to be 219.31 distributed as provided in sections 273.134 to 273.136. 219.32 (b) If an electric power plant owned by and providing the 219.33 primary source of power for a taxpayer mining and concentrating 219.34 taconite is located in a county other than the county in which 219.35 the mining and the concentrating processes are conducted, .1875 219.36 cent per taxable ton of the tax imposed and collected from such 220.1 taxpayer shall be paid to the county. 220.2 (c) If an electric power plant owned by and providing the 220.3 primary source of power for a taxpayer mining and concentrating 220.4 taconite is located in a school district other than a school 220.5 district in which the mining and concentrating processes are 220.6 conducted,.7282.5898 cent per taxable ton of the tax imposed 220.7 and collected from the taxpayer shall be paid to the school 220.8 district. 220.9(d) Two cents per taxable ton must be deducted from the220.10amount allocated to the St. Louis county auditor under paragraph220.11(a).220.12 [EFFECTIVE DATE.] This section is effective the day 220.13 following final enactment. 220.14 Sec. 11. Minnesota Statutes 2000, section 298.28, 220.15 subdivision 10, is amended to read: 220.16 Subd. 10. [INCREASE.] Beginning with distributions in 220.17 2000, the amounts determined under subdivisions 6, paragraph 220.18 (a), and 9 shall be increased in the same proportion as the 220.19 increase in the implicit price deflator as provided in section 220.20 298.24, subdivision 1. 220.21The distributions per ton determined under subdivisions 5,220.22paragraphs (b) and (d), and 6, paragraph (b), for distribution220.23in 1988 and subsequent years shall be the distribution per ton220.24determined for distribution in 1987. The distribution per ton220.25under subdivision 6, paragraph (c), for distribution in 2000 and220.26subsequent years shall be 81 percent of the distribution per ton220.27determined for distribution in 1987.220.28 [EFFECTIVE DATE.] This section is effective the day 220.29 following final enactment. 220.30 Sec. 12. Minnesota Statutes 2000, section 298.28, 220.31 subdivision 11, is amended to read: 220.32 Subd. 11. [REMAINDER.] (a) The proceeds of the tax imposed 220.33 by section 298.24 which remain after the distributions and 220.34 payments in subdivisions 2 to 10a, as certified by the 220.35 commissioner of revenue, and paragraphs (b),and (c), and (d)220.36 have been made, together with interest earned on all money 221.1 distributed under this section prior to distribution, shall be 221.2 divided between the taconite environmental protection fund 221.3 created in section 298.223 and the northeast Minnesota economic 221.4 protection trust fund created in section 298.292 as follows: 221.5 Two-thirds to the taconite environmental protection fund and 221.6 one-third to the northeast Minnesota economic protection trust 221.7 fund. The proceeds shall be placed in the respective special 221.8 accounts. In this paragraph, the terms "distributions and 221.9 payments" and "all money distributed under this section" do not 221.10 mean distributions from general fund appropriations. 221.11 (b) There shall be distributed to each city, town, and 221.12 county the amount that it received under section 294.26 in 221.13 calendar year 1977; provided, however, that the amount 221.14 distributed in 1981 to the unorganized territory number 2 of 221.15 Lake county and the town of Beaver Bay based on the 221.16 between-terminal trackage of Erie Mining Company will be 221.17 distributed in 1982 and subsequent years to the unorganized 221.18 territory number 2 of Lake county and the towns of Beaver Bay 221.19 and Stony River based on the miles of track of Erie Mining 221.20 Company in each taxing district. 221.21 (c) There shall be distributed to the iron range resources 221.22 and rehabilitation board the amounts it received in 1977 under 221.23 section 298.22. The amount distributed under this paragraph 221.24 shall be expended within or for the benefit of the tax relief 221.25 area defined in section 273.134. 221.26 (d) There shall be distributed to each school district 81 221.27 percent of the amount that it received under section 294.26 in 221.28 calendar year 1977, except that, beginning with the year 2002 221.29 distribution, the amount necessary for distributions to school 221.30 districts is annually appropriated, upon certification by the 221.31 commissioner of revenue, to the commissioner of children, 221.32 families, and learning from the general fund. On or before 221.33 February 25, the commissioner of children, families, and 221.34 learning shall distribute the appropriation as provided in this 221.35 paragraph. 221.36 [EFFECTIVE DATE.] This section is effective the day 222.1 following final enactment. 222.2 ARTICLE 9 222.3 MINNESOTACARE TAX REFORM 222.4 Section 1. [16A.78] [HEALTH CARE ACCESS FUND RESERVE.] 222.5 Subdivision 1. [ESTABLISH RESERVE.] A reserve is 222.6 established within the health care access fund for uses 222.7 necessary to preserve access to basic health care services. 222.8 Subd. 2. [RESERVE FINANCING.] The funds in the reserve are 222.9 equal to 20 percent of the direct appropriation for the 222.10 MinnesotaCare program. 222.11 Subd. 3. [RESERVE USE.] The reserve is established to 222.12 protect access to basic health care services that are publicly 222.13 funded. 222.14 [EFFECTIVE DATE.] This section is effective July 1, 2001. 222.15 Sec. 2. Minnesota Statutes 2000, section 295.50, 222.16 subdivision 3, is amended to read: 222.17 Subd. 3. [GROSS REVENUES.] "Gross revenues" are total 222.18 amounts received in money or otherwise by: 222.19 (1) a hospital for patient services; 222.20 (2) a surgical center for patient services; 222.21 (3) a health care provider, other than a staff model health 222.22 carrier, for patient services; 222.23(4) a wholesale drug distributor for sale or distribution222.24of legend drugs that are delivered in Minnesota by the wholesale222.25drug distributor, by common carrier, or by mail, unless the222.26legend drugs are delivered to another wholesale drug distributor222.27who sells legend drugs exclusively at wholesale. Legend drugs222.28do not include nutritional products as defined in Minnesota222.29Rules, part 9505.0325;and 222.30(5)(4) a staff model health plan company as gross premiums 222.31 for enrollees, copayments, deductibles, coinsurance, and fees 222.32 for patient services covered under its contracts with groups and 222.33 enrollees. 222.34 [EFFECTIVE DATE.] This section is effective for gross 222.35 revenues received on or after January 1, 2002. 222.36 Sec. 3. Minnesota Statutes 2000, section 295.52, 223.1 subdivision 1, is amended to read: 223.2 Subdivision 1. [HOSPITAL TAX.] A tax is imposed on each 223.3 hospital equal totwo1.5 percent of its gross revenues. 223.4 [EFFECTIVE DATE.] This section is effective for gross 223.5 revenues received on or after January 1, 2002. 223.6 Sec. 4. Minnesota Statutes 2000, section 295.52, 223.7 subdivision 1a, is amended to read: 223.8 Subd. 1a. [SURGICAL CENTER TAX.] A tax is imposed on each 223.9 surgical center equal totwo1.5 percent of its gross revenues. 223.10 [EFFECTIVE DATE.] This section is effective for gross 223.11 revenues received on or after January 1, 2002. 223.12 Sec. 5. Minnesota Statutes 2000, section 295.52, 223.13 subdivision 2, is amended to read: 223.14 Subd. 2. [PROVIDER TAX.] A tax is imposed on each health 223.15 care provider equal totwo1.5 percent of its gross revenues. 223.16 [EFFECTIVE DATE.] This section is effective for gross 223.17 revenues received on or after January 1, 2002. 223.18 Sec. 6. Minnesota Statutes 2000, section 295.53, 223.19 subdivision 1, is amended to read: 223.20 Subdivision 1. [EXEMPTIONS.](a)The following payments 223.21 are excluded from the gross revenues subject to the hospital, 223.22 surgical center, or health care provider taxes under sections 223.23 295.50 to 295.57: 223.24 (1) payments received for services provided under the 223.25 Medicare program, including payments received from the 223.26 government, and organizations governed by sections 1833 and 1876 223.27 of title XVIII of the federal Social Security Act, United States 223.28 Code, title 42, section 1395, and enrollee deductibles, 223.29 coinsurance, and copayments, whether paid by the Medicare 223.30 enrollee or by a Medicare supplemental coverage as defined in 223.31 section 62A.011, subdivision 3, clause (10). Payments for 223.32 services not covered by Medicare are taxable; 223.33 (2) medical assistance payments including payments received 223.34 directly from the government or from a prepaid plan; 223.35 (3) payments received for home health care services; 223.36 (4) payments received from hospitals or surgical centers 224.1 for goods and services on which liability for tax is imposed 224.2 under section 295.52 or the source of funds for the payment is 224.3 exempt under clause (1), (2),(7), (8), (10), (13),(6), (7), 224.4 (9), (12), or(20)(19); 224.5 (5) payments received from health care providers for goods 224.6 and services on which liability for tax is imposed under this 224.7 chapter or the source of funds for the payment is exempt under 224.8 clause (1), (2),(7), (8), (10), (13),(6), (7), (9), (12), or 224.9(20)(19); 224.10(6) amounts paid for legend drugs, other than nutritional224.11products, to a wholesale drug distributor who is subject to tax224.12under section 295.52, subdivision 3, reduced by reimbursements224.13received for legend drugs under clauses (1), (2), (7), and (8);224.14(7)(6) payments received under the general assistance 224.15 medical care program including payments received directly from 224.16 the government or from a prepaid plan; 224.17(8)(7) payments received for providing services under the 224.18 MinnesotaCare program including payments received directly from 224.19 the government or from a prepaid plan and enrollee deductibles, 224.20 coinsurance, and copayments. For purposes of this clause, 224.21 coinsurance means the portion of payment that the enrollee is 224.22 required to pay for the covered service; 224.23(9)(8) payments received by a health care provider or the 224.24 wholly owned subsidiary of a health care provider for care 224.25 provided outside Minnesota; 224.26(10)(9) payments received from the chemical dependency 224.27 fund under chapter 254B; 224.28(11)(10) payments received in the nature of charitable 224.29 donations that are not designated for providing patient services 224.30 to a specific individual or group; 224.31(12)(11) payments received for providing patient services 224.32 incurred through a formal program of health care research 224.33 conducted in conformity with federal regulations governing 224.34 research on human subjects. Payments received from patients or 224.35 from other persons paying on behalf of the patients are subject 224.36 to tax; 225.1(13)(12) payments received from any governmental agency 225.2 for services benefiting the public, not including payments made 225.3 by the government in its capacity as an employer or insurer; 225.4(14)(13) payments received for services provided by 225.5 community residential mental health facilities licensed under 225.6 Minnesota Rules, parts 9520.0500 to 9520.0690, community support 225.7 programs and family community support programs approved under 225.8 Minnesota Rules, parts 9535.1700 to 9535.1760, and community 225.9 mental health centers as defined in section 245.62, subdivision 225.10 2; 225.11(15)(14) government payments received by a regional 225.12 treatment center; 225.13(16)(15) payments received for hospice care services; 225.14(17)(16) payments received by a health care provider for 225.15 hearing aids and related equipment or prescription eyewear 225.16 delivered outside of Minnesota; 225.17(18)(17) payments received by an educational institution 225.18 from student tuition, student activity fees, health care service 225.19 fees, government appropriations, donations, or grants. Fee for 225.20 service payments and payments for extended coverage are taxable; 225.21(19)(18) payments received for services provided by: 225.22 assisted living programs and congregate housing programs; and 225.23(20)(19) payments received under the federal Employees 225.24 Health Benefits Act, United States Code, title 5, section 225.25 8909(f), as amended by the Omnibus Reconciliation Act of 1990. 225.26(b) Payments received by wholesale drug distributors for225.27legend drugs sold directly to veterinarians or veterinary bulk225.28purchasing organizations are excluded from the gross revenues225.29subject to the wholesale drug distributor tax under sections225.30295.50 to 295.59.225.31 [EFFECTIVE DATE.] This section is effective for gross 225.32 revenues received on or after January 1, 2002. 225.33 Sec. 7. Minnesota Statutes 2000, section 295.53, 225.34 subdivision 3, is amended to read: 225.35 Subd. 3. [SEPARATE STATEMENT OF TAX.] A hospital, surgical 225.36 center, or health care provider must not state the tax 226.1 obligation under section 295.52 in a deceptive or misleading 226.2 manner. It must not separately state tax obligations on bills 226.3 provided to patients, consumers, or other payers when the amount 226.4 received for the services or goods is not subject to tax. 226.5Pharmacies that separately state the tax obligations on226.6bills provided to consumers or to other payers who purchase226.7legend drugs may state the tax obligation as the wholesale price226.8of the legend drugs multiplied by the tax percentage specified226.9in section 295.52. Pharmacies must not state the tax obligation226.10based on the retail price.226.11 Whenever the commissioner determines that a person has 226.12 engaged in any act or practice constituting a violation of this 226.13 subdivision, the commissioner may bring an action in the name of 226.14 the state in the district court of the appropriate county to 226.15 enjoin the act or practice and to enforce compliance with this 226.16 subdivision, or the commissioner may refer the matter to the 226.17 attorney general or the county attorney of the appropriate 226.18 county. Upon a proper showing, a permanent or temporary 226.19 injunction, restraining order, or other appropriate relief must 226.20 be granted. 226.21 [EFFECTIVE DATE.] This section is effective for gross 226.22 revenues received on or after January 1, 2002. 226.23 Sec. 8. Minnesota Statutes 2000, section 295.58, is 226.24 amended to read: 226.25 295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 226.26 The commissioner shall deposit all revenues, including 226.27 penalties and interest, derived from the taxes imposed by 226.28 sections 295.50 to 295.57and from the insurance premiums tax226.29imposed by section 297I.05, subdivision 5, on health maintenance226.30organizations, community integrated service networks, and226.31nonprofit health service plan corporationsin the health care 226.32 access fund. There is annually appropriated from the health 226.33 care access fund to the commissioner of revenue the amount 226.34 necessary to make refunds under this chapter. 226.35 [EFFECTIVE DATE.] This section is effective the day 226.36 following final enactment. 227.1 Sec. 9. Minnesota Statutes 2000, section 295.582, is 227.2 amended to read: 227.3 295.582 [AUTHORITY.] 227.4 (a) A hospital, surgical center, or health care provider 227.5 that is subject to a tax under section 295.52, or a pharmacy227.6that has paid additional expense transferred under this section227.7by a wholesale drug distributor,may transfer additional expense 227.8 generated by section 295.52 obligations on to all third-party 227.9 contracts for the purchase of health care services on behalf of 227.10 a patient or consumer. The additional expense transferred to 227.11 the third-party purchaser must not exceed the tax percentage 227.12 specified in section 295.52 multiplied against the gross 227.13 revenues received under the third-party contract, and the tax 227.14 percentage specified in section 295.52 multiplied against 227.15 copayments and deductibles paid by the individual patient or 227.16 consumer. The expense must not be generated on revenues derived 227.17 from payments that are excluded from the tax under section 227.18 295.53. All third-party purchasers of health care services 227.19 including, but not limited to, third-party purchasers regulated 227.20 under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, 227.21 or 79A, or under section 471.61 or 471.617, must pay the 227.22 transferred expense in addition to any payments due under 227.23 existing contracts with the hospital, surgical center,pharmacy,227.24 or health care provider, to the extent allowed under federal 227.25 law. A third-party purchaser of health care services includes, 227.26 but is not limited to, a health carrier or community integrated 227.27 service network that pays for health care services on behalf of 227.28 patients or that reimburses, indemnifies, compensates, or 227.29 otherwise insures patients for health care services. A 227.30 third-party purchaser shall comply with this section regardless 227.31 of whether the third-party purchaser is a for-profit, 227.32 not-for-profit, or nonprofit entity.A wholesale drug227.33distributor may transfer additional expense generated by section227.34295.52 obligations to entities that purchase from the227.35wholesaler, and the entities must pay the additional expense.227.36 Nothing in this section limits the ability of a hospital, 228.1 surgical center,pharmacy, wholesale drug distributor,or health 228.2 care provider to recover all or part of the section 295.52 228.3 obligation by other methods, including increasing fees or 228.4 charges. 228.5 (b) Each third-party purchaser regulated under any chapter 228.6 cited in paragraph (a) shall include with its annual renewal for 228.7 certification of authority or licensure documentation indicating 228.8 compliance with paragraph (a). 228.9 (c) Any hospital, surgical center, or health care provider 228.10 subject to a tax under section 295.52or a pharmacy that has228.11paid additional expense transferred under this section by a228.12wholesale drug distributormay file a complaint with the 228.13 commissioner responsible for regulating the third-party 228.14 purchaser if at any time the third-party purchaser fails to 228.15 comply with paragraph (a). 228.16 (d) If the commissioner responsible for regulating the 228.17 third-party purchaser finds at any time that the third-party 228.18 purchaser has not complied with paragraph (a), the commissioner 228.19 may take enforcement action against a third-party purchaser 228.20 which is subject to the commissioner's regulatory jurisdiction 228.21 and which does not allow a hospital, surgical center,pharmacy,228.22 or provider to pass-through the tax. The commissioner may by 228.23 order fine or censure the third-party purchaser or revoke or 228.24 suspend the certificate of authority or license of the 228.25 third-party purchaser to do business in this state if the 228.26 commissioner finds that the third-party purchaser has not 228.27 complied with this section. The third-party purchaser may 228.28 appeal the commissioner's order through a contested case hearing 228.29 in accordance with chapter 14. 228.30 [EFFECTIVE DATE.] This section is effective for gross 228.31 revenues received on or after January 1, 2002. 228.32 Sec. 10. Minnesota Statutes 2000, section 297F.10, 228.33 subdivision 1, is amended to read: 228.34 Subdivision 1. [TAX AND USE TAX ON CIGARETTES.] Revenue 228.35 received from cigarette taxes, as well as related penalties, 228.36 interest, license fees, and miscellaneous sources of revenue 229.1 shall be deposited by the commissioner in the state treasury and 229.2 credited as follows: 229.3 (a) first to the general obligation special tax bond debt 229.4 service account in each fiscal year the amount required to 229.5 increase the balance on hand in the account on each December 1 229.6 to an amount equal to the full amount of principal and interest 229.7 to come due on all outstanding bonds whose debt service is 229.8 payable primarily from the proceeds of the tax to and including 229.9 the second following July 1; and 229.10 (b) after the requirements of paragraph (a) have been met: 229.11 (1) the revenue produced by one mill of the tax on 229.12 cigarettes weighing not more than three pounds a thousand and 229.13 two mills of the tax on cigarettes weighing more than three 229.14 pounds a thousand must be credited to the Minnesota future 229.15 resources fund;and229.16 (2) 85 percent of the taxes on cigarettes collected under 229.17 section 297F.05 must be credited to the health care access fund 229.18 in the state treasury; and 229.19 (3) the balance of the revenues derived from taxes, 229.20 penalties, and interest (under this chapter) and from license 229.21 fees and miscellaneous sources of revenue shall be credited to 229.22 the general fund. 229.23 [EFFECTIVE DATE.] This section is effective July 1, 2003. 229.24 Sec. 11. Minnesota Statutes 2000, section 297I.15, is 229.25 amended by adding a subdivision to read: 229.26 Subd. 11. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 229.27 HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 229.28 SERVICE NETWORKS.] Health maintenance organizations, nonprofit 229.29 health service plan corporations, and community integrated 229.30 service networks are exempt from the taxes imposed under this 229.31 chapter. 229.32 [EFFECTIVE DATE.] This section is effective the day 229.33 following final enactment. 229.34 Sec. 12. [REPEALER.] 229.35 (a) Minnesota Statutes 2000, sections 295.50, subdivisions 229.36 10a, 14, and 15; 295.51, subdivision 1a; 295.52, subdivisions 3, 230.1 4, 4a, and 7; 295.54, subdivisions 2 and 3; and 297I.05, 230.2 subdivision 5, are repealed. 230.3 (b) Minnesota Statutes 2000, section 16A.76, is repealed. 230.4 [EFFECTIVE DATE.] This section, paragraph (a), is effective 230.5 for gross revenues received on or after January 1, 2002. This 230.6 section, paragraph (b), is effective July 1, 2001. 230.7 ARTICLE 10 230.8 MOTOR VEHICLE REGISTRATION TAX REFORM 230.9 Section 1. Minnesota Statutes 2000, section 168.013, 230.10 subdivision 1a, is amended to read: 230.11 Subd. 1a. [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 230.12 automobiles as defined in section 168.011, subdivision 7, and 230.13 hearses, except as otherwise provided, the tax shall be $10 plus 230.14 an additional tax equal to 1.25 percent of the base value. 230.15 (b) Subject to the classification provisions herein, "base 230.16 value" means the manufacturer's suggested retail price of the 230.17 vehicle including destination charge using list price 230.18 information published by the manufacturer or determined by the 230.19 registrar if no suggested retail price exists, and shall not 230.20 include the cost of each accessory or item of optional equipment 230.21 separately added to the vehicle and the suggested retail price. 230.22 (c) If the manufacturer's list price information contains a 230.23 single vehicle identification number followed by various 230.24 descriptions and suggested retail prices, the registrar shall 230.25 select from those listings only the lowest price for determining 230.26 base value. 230.27 (d) If unable to determine the base value because the 230.28 vehicle is specially constructed, or for any other reason, the 230.29 registrar may establish such value upon the cost price to the 230.30 purchaser or owner as evidenced by a certificate of cost but not 230.31 including Minnesota sales or use tax or any local sales or other 230.32 local tax. 230.33 (e) The registrar shall classify every vehicle in its 230.34 proper base value class as follows: 230.35 FROM TO 230.36 $ 0 $199.99 231.1 200 399.99 231.2 and thereafter a series of classes successively set in brackets 231.3 having a spread of $200 consisting of such number of classes as 231.4 will permit classification of all vehicles. 231.5 (f) The base value for purposes of this section shall be 231.6 the middle point between the extremes of its class. 231.7 (g) The registrar shall establish the base value, when new, 231.8 of every passenger automobile and hearse registered prior to the 231.9 effective date of Extra Session Laws 1971, chapter 31, using 231.10 list price information published by the manufacturer or any 231.11 nationally recognized firm or association compiling such data 231.12 for the automotive industry. If unable to ascertain the base 231.13 value of any registered vehicle in the foregoing manner, the 231.14 registrar may use any other available source or method. The tax 231.15 on all previously registered vehicles shall be computed upon the 231.16 base value thus determined taking into account the depreciation 231.17 provisions of paragraph (h). 231.18 (h) (1) Except as provided in paragraph (i), the annual 231.19 additional tax computed upon the base value as provided herein, 231.20 during the first and second years of vehicle life shall be 231.21 computed upon 100 percent of the base value; for the third and 231.22 fourth years, 90 percent of such value; for the fifth and sixth 231.23 years, 75 percent of such value; for the seventh year, 60 231.24 percent of such value; for the eighth year, 40 percent of such 231.25 value; for the ninth year, 30 percent of such value; for the 231.26 tenth year, ten percent of such value; for the 11th and each 231.27 succeeding year, the sum of $25. 231.28 In no event shall the annual additional tax be less than $25. 231.29 (2) Until superseded by clause (3), the total tax under 231.30 this subdivision shall not exceed $189 upon the initial 231.31 registration of any vehicle first subject to registration tax in 231.32 Minnesota prior to the end of the first year of vehicle life. 231.33 The total tax under this subdivision shall not exceed$189$89 231.34 forthe firstany renewal periodand shall not exceed $99 for231.35subsequent renewal periods. The total tax under this231.36subdivision onor for any vehicle filing its initial 232.1 registration in Minnesota in the second year of vehicle 232.2 lifeshall not exceed $189 and shall not exceed $99 for232.3subsequent renewal periods. The total tax under this232.4subdivision on any vehicle filing its initial registration in232.5Minnesota in the third or subsequent year of vehicle life shall232.6not exceed $99 and shall not exceed $99 in any subsequent232.7renewal periodor later. 232.8 (3) Beginning in 2004, the total tax under this subdivision 232.9 shall not exceed $75. 232.10 (i) The annual additional tax under paragraph (h) on a 232.11 motor vehicle on which the first annual tax was paid before 232.12 January 1, 1990, must not exceed the tax that was paid on that 232.13 vehicle the year before. 232.14 [EFFECTIVE DATE.] (a) The change to this section, paragraph 232.15 (h), clause (2), is effective for vehicles first subject to 232.16 registration tax in Minnesota on or after January 1, 2002. It 232.17 is also effective for vehicles registered in Minnesota prior to 232.18 January 1, 2002, beginning with the renewal of the registration 232.19 of vehicles that were assigned an expiration month pursuant to 232.20 section 168.017 of January 1, 2002, or later. It does not apply 232.21 to vehicles that were assigned an expiration month pursuant to 232.22 section 168.017 of December 2001 or earlier. 232.23 (b) The change to this section, paragraph (h), clause (3), 232.24 is effective for vehicles first subject to registration tax in 232.25 Minnesota on or after January 1, 2004. It is also effective for 232.26 vehicles registered in Minnesota prior to January 1, 2004, 232.27 beginning with the renewal of the registration of vehicles that 232.28 were assigned an expiration month pursuant to section 168.017 of 232.29 January 2004 or later. It does not apply to vehicles that were 232.30 assigned an expiration month pursuant to section 168.017 of 232.31 December 2003 or earlier. 232.32 Sec. 2. Minnesota Statutes 2000, section 297B.09, 232.33 subdivision 1, is amended to read: 232.34 Subdivision 1. [GENERAL FUND SHARE.] Money collected and 232.35 received under this chapter must be deposited as provided in 232.36 this subdivision. 233.1Thirty-two(a) Thirty-nine percent of the money collected 233.2 and received after June 30, 2001, but before July 1, 2002, must 233.3 be deposited in the highway user tax distribution fund, and. 233.4 Theremaining 68 percent of the moneyremainder must be 233.5 deposited in the general fund. 233.6 (b) Fifty percent of the money collected and received after 233.7 June 30, 2002, but before July 1, 2003, must be deposited in the 233.8 highway user tax distribution fund. The remainder must be 233.9 deposited in the general fund. 233.10 (c) Fifty-five percent of the money collected and received 233.11 after June 30, 2003, but before July 1, 2004, must be deposited 233.12 in the highway user tax distribution fund. The remainder must 233.13 be deposited in the general fund. 233.14 (d) Sixty-one percent of the money collected and received 233.15 after June 30, 2004, must be deposited in the highway user tax 233.16 distribution fund. The remainder must be deposited in the 233.17 general fund. 233.18 [EFFECTIVE DATE.] This section is effective for money 233.19 collected and received after June 30, 2001. 233.20 Sec. 3. Laws 2000, chapter 490, article 7, section 3, is 233.21 amended to read: 233.22 Sec. 3. [APPROPRIATION.] 233.23 For fiscal year 2001, $149,804,000 is appropriated from the 233.24 general fund to the highway user tax distribution fund.For233.25fiscal year 2002, $161,723,000 is appropriated from the general233.26fund to the highway user tax distribution fund.233.27 ARTICLE 11 233.28 TAX POLICY PROVISIONS 233.29 Section 1. Minnesota Statutes 2000, section 84.922, is 233.30 amended by adding a subdivision to read: 233.31 Subd. 11. [PROOF OF SALES TAX PAYMENT.] A person applying 233.32 for initial registration in Minnesota of an all-terrain vehicle 233.33 shall provide a purchaser's certificate showing a complete 233.34 description of the all-terrain vehicle, the seller's name and 233.35 address, the full purchase price of the all-terrain vehicle, and 233.36 the trade-in allowance, if any. The certificate also must 234.1 include information showing either that (1) the sales and use 234.2 tax under chapter 297A was paid, or (2) the purchase was exempt 234.3 from tax under chapter 297A. The certificate is not required if 234.4 the applicant provides a receipt, invoice, or other document 234.5 that shows the all-terrain vehicle was purchased from a retailer 234.6 maintaining a place of business in this state as defined in 234.7 section 297A.66, subdivision 1. 234.8 [EFFECTIVE DATE.] This section is effective for 234.9 registrations occurring on or after July 1, 2001. 234.10 Sec. 2. Minnesota Statutes 2000, section 270.60, is 234.11 amended by adding a subdivision to read: 234.12 Subd. 5. [FEES; APPROPRIATION.] (a) The commissioner may 234.13 enter into an agreement with the governing body of any federally 234.14 recognized Indian reservation in Minnesota concerning fees 234.15 administered by the commissioner that are paid by the tribe, 234.16 members of the tribe, or persons who conduct business with the 234.17 tribe, or otherwise imposed on on-reservation activities. The 234.18 agreement may provide for the refund or sharing of the fee. The 234.19 commissioner may make any payments required by the agreement 234.20 from the fees collected. 234.21 (b) Each head of an agency, board, or other governmental 234.22 entity that administers a program that is funded by fees 234.23 administered by the commissioner may sign an agreement entered 234.24 into by the commissioner under this subdivision. An agreement 234.25 is not valid until signed by the head of each agency, board, or 234.26 other governmental entity that administers a program funded by 234.27 the particular fee covered in an agreement and by the 234.28 commissioner of revenue. 234.29 (c) There is annually appropriated to the commissioner of 234.30 revenue from the funds for which the fees are collected the 234.31 amounts necessary to make payments as provided in this 234.32 subdivision. 234.33 [EFFECTIVE DATE.] This section is effective the day 234.34 following final enactment and applies to all fees administered 234.35 by the commissioner of revenue for which timely claims for 234.36 refund have been, or can be, filed. 235.1 Sec. 3. [270.691] [PUBLICATION OF NAMES OF DELINQUENT 235.2 TAXPAYERS.] 235.3 Subdivision 1. [COMMISSIONER MAY PUBLISH.] (a) 235.4 Notwithstanding any other law, the commissioner may publish a 235.5 list or lists of taxpayers who owe delinquent taxes or fees 235.6 administered by the commissioner, and who meet the requirements 235.7 of paragraph (b). 235.8 (b) For purposes of this section, a taxpayer may be 235.9 included on a list if: 235.10 (1) the taxes or fees owed remain unpaid at least 180 days 235.11 after the dates they were due; 235.12 (2) the taxpayer's total liability for the taxes and fees, 235.13 including penalties, interest, and other charges, is at least 235.14 $5,000; and 235.15 (3) a tax lien has been filed or a judgment for the 235.16 liability has been entered against the taxpayer before notice is 235.17 given under subdivision 3. 235.18 (c) In the case of listed taxpayers that are business 235.19 entities, the commissioner may also list the names of 235.20 responsible persons assessed pursuant to section 270.101 for 235.21 listed liabilities, who are not protected from publication by 235.22 subdivision 2, and for whom the requirements of paragraph (b) 235.23 are satisfied with regard to the personal assessment. 235.24 Subd. 2. [REQUIRED AND EXCLUDED TAXPAYERS.] (a) The 235.25 commissioner may publish lists of some or all of the taxpayers 235.26 described in subdivision 1. A list must include the taxpayers 235.27 with the largest unpaid liabilities of the kind used to define 235.28 the list, subject to the limitations of paragraphs (b) and (c). 235.29 (b) For the purposes of this section, a tax or fee is not 235.30 delinquent if: 235.31 (1) an administrative or court action contesting the amount 235.32 or validity of the taxpayer's liability has been filed or served 235.33 and is unresolved at the time when notice would be given under 235.34 subdivision 3; 235.35 (2) an appeal period to contest the liability has not 235.36 expired; or 236.1 (3) the liability is subject to a payment agreement and 236.2 there is no delinquency in the payments required under the 236.3 agreement. 236.4 (c) Unpaid liabilities are not subject to publication if: 236.5 (1) the commissioner is in the process of reviewing or 236.6 adjusting the liability; 236.7 (2) the taxpayer is a debtor in a bankruptcy proceeding and 236.8 the automatic stay is in effect; 236.9 (3) the commissioner has been notified that the taxpayer is 236.10 deceased; or 236.11 (4) the time period for collecting the taxes or fees has 236.12 expired. 236.13 Subd. 3. [NOTICE TO TAXPAYER.] (a) At least 30 days before 236.14 publishing the name of a delinquent taxpayer, the commissioner 236.15 shall mail a written notice to the taxpayer, detailing the 236.16 amount and nature of each liability and the intended publication 236.17 of the information listed in subdivision 4 related to the 236.18 liability. The notice must be mailed by first class and 236.19 certified mail addressed to the last known address of the 236.20 taxpayer. The notice must include information regarding the 236.21 exceptions listed in subdivision 2 and must state that the 236.22 taxpayer's information will not be published if the taxpayer 236.23 pays the delinquent obligation, enters into an agreement to pay, 236.24 or provides information establishing that subdivision 2 236.25 prohibits publication of the taxpayer's name. 236.26 (b) After at least 30 days has elapsed since the notice was 236.27 mailed and the delinquent tax or fee has not been paid and the 236.28 taxpayer has not proved to the commissioner that subdivision 2 236.29 prohibits publication, the commissioner may publish in a list of 236.30 delinquent taxpayers the information about the taxpayer that is 236.31 listed in subdivision 4. 236.32 Subd. 4. [FORM OF LIST.] The list may be published by any 236.33 medium or method. The list must contain the name, address, type 236.34 of tax or fee, and period for which payment is due for each 236.35 liability, including penalties, interest, and other charges owed 236.36 by each listed delinquent taxpayer. 237.1 Subd. 5. [REMOVAL FROM LIST.] The commissioner shall 237.2 remove the name of a taxpayer from the list of delinquent 237.3 taxpayers after the commissioner receives written notice of and 237.4 verifies any of the following facts about the liability in 237.5 question: 237.6 (1) the taxpayer has contacted the commissioner and 237.7 arranged resolution of the liability; 237.8 (2) an active bankruptcy proceeding has been initiated for 237.9 the liability; 237.10 (3) a bankruptcy proceeding concerning the liability has 237.11 resulted in discharge of the liability; or 237.12 (4) the commissioner has written off the liability. 237.13 Subd. 6. [NAMES PUBLISHED IN ERROR.] If the commissioner 237.14 publishes a name under subdivision 1 in error, the taxpayer 237.15 whose name was erroneously published has a right to request a 237.16 retraction and apology. If the taxpayer so requests, the 237.17 commissioner shall publish a retraction and apology 237.18 acknowledging that the taxpayer's name was published in error. 237.19 The retraction and apology must appear in the same medium and 237.20 the same format as the original list that contained the name 237.21 listed in error. 237.22 [EFFECTIVE DATE.] This section is effective the day 237.23 following final enactment for all liabilities owing on that date 237.24 for which the statute of limitations for collection has not 237.25 expired, and all liabilities arising after that date. 237.26 Sec. 4. Minnesota Statutes 2000, section 270.70, 237.27 subdivision 13, is amended to read: 237.28 Subd. 13. [LEVY AND SALE BY SHERIFF.] If any tax payable 237.29 to the commissioner of revenue or to the department of revenue 237.30 is not paid as provided in subdivision 2, the commissioner may,237.31within five years after the date of assessment of the237.32tax, within the time periods provided in subdivision 1 for 237.33 collection of taxes, delegate the authority granted by 237.34 subdivision 1, by means of issuing a warrant to the sheriff of 237.35 any county of the state commanding the sheriff, as agent for the 237.36 commissioner, to levy upon and sell the real and personal 238.1 property of the person liable for the payment or collection of 238.2 the tax and to levy upon the rights to property of that person 238.3 within the county, or to levy upon and seize any property within 238.4 the county on which there is a lien provided in section 270.69, 238.5 and to return the warrant to the commissioner and pay to the 238.6 commissioner the money collected by virtue thereof by a time to 238.7 be therein specified not less than 60 days from the date of the 238.8 warrant. The sheriff shall proceed thereunder to levy upon and 238.9 seize any property of the person and to levy upon the rights to 238.10 property of the person within the county (except the person's 238.11 homestead or that property which is exempt from execution 238.12 pursuant to section 550.37), or to levy upon and seize any 238.13 property within the county on which there is a lien provided in 238.14 section 270.69. For purposes of the preceding sentence, the 238.15 term "tax" shall include any penalty, interest and costs 238.16 properly payable. The sheriff shall then sell so much of the 238.17 property levied upon as is required to satisfy the taxes, 238.18 interest, and penalties, together with the sheriff's costs; but 238.19 the sales, and the time and manner of redemption therefrom, 238.20 shall, to the extent not provided in sections 270.701 to 238.21 270.709, be governed by chapter 550. The proceeds of the sales, 238.22 less the sheriff's costs, shall be turned over to the 238.23 commissioner, who shall then apply the proceeds as provided in 238.24 section 270.708. 238.25 [EFFECTIVE DATE.] This section is effective the day 238.26 following final enactment for all taxes for which issuance of a 238.27 warrant under this subdivision has not been barred as of that 238.28 date. 238.29 Sec. 5. Minnesota Statutes 2000, section 270.73, 238.30 subdivision 1, is amended to read: 238.31 Subdivision 1. [POSTING, NOTICE.] Pursuant to the 238.32 authority to disclose under section 270B.12, subdivision 4, the 238.33 commissioner shall, by the 15th of each month, submit to the 238.34 commissioner of public safety a list of all taxpayers who are 238.35 required to pay, withhold, or collect the tax imposed by section 238.36 290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or 239.1 297A.02, or local sales and use tax payable to the commissioner 239.2 of revenue, or a local option tax administered and collected by 239.3 the commissioner of revenue, and who are ten days or more 239.4 delinquent in either filing a tax return or paying the tax. 239.5 The commissioner of revenue is under no obligation to list 239.6 a taxpayer whose business is inactive. At least ten days before 239.7 notifying the commissioner of public safety, the commissioner of 239.8 revenue shall notify the taxpayer of the intended action. 239.9 The commissioner of public safety shall post the list in 239.10 the same manner as provided in section 340A.318, subdivision 3. 239.11 The list will prominently show the date of posting. If a 239.12 taxpayer previously listed files all returns and pays all taxes 239.13 then due, the commissioner shall notify the commissioner of 239.14 public safety within two business days. 239.15 [EFFECTIVE DATE.] This section is effective for lists 239.16 submitted to the commissioner of public safety on or after the 239.17 day following final enactment. 239.18 Sec. 6. Minnesota Statutes 2000, section 287.08, is 239.19 amended to read: 239.20 287.08 [TAX, HOW PAYABLE; RECEIPTS.] 239.21 (a) The tax imposed by sections 287.01 to 287.12 must be 239.22 paid to the treasurer of any county in this state in which the 239.23 real property or some part is located at or before the time of 239.24 filing the mortgage for record. The treasurer shall endorse 239.25 receipt on the mortgage and the receipt is conclusive proof that 239.26 the tax has been paid in the amount stated and authorizes any 239.27 county recorder or registrar of titles to record the mortgage. 239.28 Its form, in substance, shall be "registration tax hereon of 239.29 ..................... dollars paid." If the mortgage is exempt 239.30 from taxation the endorsement shall, in substance, be "exempt 239.31 from registration tax." In either case the receipt must be 239.32 signed by the treasurer. In case the treasurer is unable to 239.33 determine whether a claim of exemption should be allowed, the 239.34 tax must be paid as in the case of a taxable mortgage. 239.35 (b)Upon written application of the taxpayer,The county 239.36 treasurer may refund in whole or in part any mortgage registry 240.1 taxthat has been erroneously paid, or a person having paid a240.2mortgage registry tax amount may seek a refund of the tax, or240.3other appropriate relief,overpayment if a written application 240.4 by the taxpayer is submitted to the county treasurer within 240.5 three and one-half years from the date of the overpayment. If 240.6 the county has not issued a denial of the application, the 240.7 taxpayer may bring an action in tax court in the county in which 240.8 the tax was paid at any time after the expiration of six months 240.9 from the time that the application was submitted. A denial of 240.10 refund may be appealed within 60 days from the date of the 240.11 denial by bringing an action in tax court in the county in which 240.12 the tax was paid, within 60 days of the payment. The action is 240.13 commenced by the serving of a petition for relief on the county 240.14 treasurer, and by filing a copy with the court. The county 240.15 attorney shall defend the action. The county treasurer shall 240.16 notify the treasurer of each county that has or would receive a 240.17 portion of the tax as paid. 240.18 (c) If the county treasurer determines a refund should be 240.19 paid, or if a refund is ordered by the court, the county 240.20 treasurer of each county that actually received a portion of the 240.21 tax shall immediately pay a proportionate share of three percent 240.22 of the refund using any available county funds. The county 240.23 treasurer of each county that received, or would have received, 240.24 a portion of the tax shall also pay their county's proportionate 240.25 share of the remaining 97 percent of the court-ordered refund on 240.26 or before the 20th day of the following month using solely the 240.27 mortgage registry tax funds that would be paid to the 240.28 commissioner of revenue on that date under section 287.12. If 240.29 the funds on hand under this procedure are insufficient to fully 240.30 fund 97 percent of the court-ordered refund, the county 240.31 treasurer of the county in which the action was brought shall 240.32 file a claim with the commissioner of revenue under section 240.33 16A.48 for the remaining portion of 97 percent of the refund, 240.34 and shall pay over the remaining portion upon receipt of a 240.35 warrant from the state issued pursuant to the claim. 240.36 (d) When any mortgage covers real property located in more 241.1 than one county in this state the total tax must be paid to the 241.2 treasurer of the county where the mortgage is first presented 241.3 for recording, and the payment must be receipted as provided in 241.4 paragraph (a). If the principal debt or obligation secured by 241.5 such a multiple county mortgage exceeds $1,000,000, the nonstate 241.6 portion of the tax must be divided and paid over by the county 241.7 treasurer receiving it, on or before the 20th day of each month 241.8 after receipt, to the county or counties entitled in the ratio 241.9 that the market value of the real property covered by the 241.10 mortgage in each county bears to the market value of all the 241.11 real property in this state described in the mortgage. In 241.12 making the division and payment the county treasurer shall send 241.13 a statement giving the description of the real property 241.14 described in the mortgage and the market value of the part 241.15 located in each county. For this purpose, the treasurer of any 241.16 county may require the treasurer of any other county to certify 241.17 to the former the market valuation of any tract of real property 241.18 in any mortgage. 241.19 [EFFECTIVE DATE.] This section is effective for 241.20 overpayments made on or after July 1, 2001. 241.21 Sec. 7. Minnesota Statutes 2000, section 287.28, is 241.22 amended to read: 241.23 287.28 [REFUNDS OR REDEMPTION.] 241.24 (a) The county treasurer mayrefund in whole or in part any241.25tax which has been erroneously paid and may allow for orredeem 241.26such of thestamps,issued under the authority of sections 241.27 287.20 to 287.31as maythat have been spoiled, destroyed, or 241.28 rendered useless or unfit for the purpose intended or for which 241.29 the owner may have no use or which through mistake may have been 241.30 improperly or unnecessarily used.Such orderRedemption shall 241.31 be made only upon written application of the taxpayer. 241.32 (b)A person having paid a deed tax amount may seek a241.33refund of the tax, or other appropriate relief,The county 241.34 treasurer may refund any deed tax overpayment if a written 241.35 application by the taxpayer is submitted to the county treasurer 241.36 within three and one-half years from the date of the 242.1 overpayment. If the county has not issued a denial of the 242.2 application, the taxpayer may bring an action in tax court in 242.3 the county in which the tax was paid at any time after the 242.4 expiration of six months from the time that the application was 242.5 submitted. A denial of refund may be appealed within 60 days 242.6 from the date of the denial by commencing an action in tax court 242.7 in the county where the tax was paid, within 60 days of the242.8payment. The action is commenced by serving a petition for 242.9 relief on the county treasurer, and filing a copy with the 242.10 court. The county attorney shall defend the action. The county 242.11 treasurer shall notify the treasurer of each county that has, or 242.12 would receive a portion of the tax as paid. Any refund of deed 242.13 tax which the county treasurer determines should be made, and 242.14 any court ordered refund of deed tax, shall be accomplished 242.15 using the refund procedures in section 287.08. 242.16 [EFFECTIVE DATE.] This section is effective for 242.17 overpayments made on or after July 1, 2001. 242.18 Sec. 8. Minnesota Statutes 2000, section 290.06, 242.19 subdivision 23, is amended to read: 242.20 Subd. 23. [REFUND OF CONTRIBUTIONS TO POLITICAL PARTIES 242.21 AND CANDIDATES.] (a) A taxpayer may claim a refund equal to the 242.22 amount of the taxpayer's contributions made in the calendar year 242.23 to candidates and to a political party. The maximum refund for 242.24 an individual must not exceed $50 and for a married couple, 242.25 filing jointly, must not exceed $100. A refund of a 242.26 contribution is allowed only if the taxpayer files a form 242.27 required by the commissioner and attaches to the form a copy of 242.28 an official refund receipt form issued by the candidate or party 242.29 and signed by the candidate, the treasurer of the candidate's 242.30 principal campaign committee, or the chair or treasurer of the 242.31 party unit, after the contribution was received. The receipt 242.32 forms must be numbered, and the data on the receipt that are not 242.33 public must be made available to the campaign finance and public 242.34 disclosure board upon its request. A claim must be filed with 242.35 the commissioner no sooner than January 1 of the calendar year 242.36 in which the contribution was made and no later than April 15 of 243.1 the calendar year following the calendar year in which the 243.2 contribution was made. A taxpayer may file only one claim per 243.3 calendar year. Amounts paid by the commissioner after June 15 243.4 of the calendar year following the calendar year in which the 243.5 contribution was made must include interest at the rate 243.6 specified in section 270.76. 243.7 (b) No refund is allowed under this subdivision for a 243.8 contribution to a candidate unless the candidate: 243.9 (1) has signed an agreement to limit campaign expenditures 243.10 as provided in section 10A.322; 243.11 (2) is seeking an office for which voluntary spending 243.12 limits are specified in section 10A.25; and 243.13 (3) has designated a principal campaign committee. 243.14 This subdivision does not limit the campaign expenditures 243.15 of a candidate who does not sign an agreement but accepts a 243.16 contribution for which the contributor improperly claims a 243.17 refund. 243.18 (c) For purposes of this subdivision, "political party" 243.19 means a major political party as defined in section 200.02, 243.20 subdivision 7, or a minor political party qualifying for 243.21 inclusion on the income tax or property tax refund form under 243.22 section 10A.31, subdivision 3a. 243.23 A "major party" or "minor party" includes the aggregate of 243.24 that party's organization within each house of the legislature, 243.25 the state party organization, and the party organization within 243.26 congressional districts, counties, legislative districts, 243.27 municipalities, and precincts. 243.28 "Candidate" means a candidate as defined in section 10A.01, 243.29 subdivision 10, except a candidate for judicial office. 243.30 "Contribution" means a gift of money. 243.31 (d) The commissioner shall make copies of the form 243.32 available to the public and candidates upon request. 243.33 (e) The following data collected or maintained by the 243.34 commissioner under this subdivision are private: the identities 243.35 of individuals claiming a refund, the identities of candidates 243.36 to whom those individuals have made contributions, and the 244.1 amount of each contribution. 244.2 (f) The commissioner shall report to the campaign finance 244.3 and public disclosure board by each August 1 a summary showing 244.4 the total number and aggregate amount of political contribution 244.5 refunds made on behalf of each candidate and each political 244.6 party. These data are public. 244.7 (g) The amount necessary to pay claims for the refund 244.8 provided in this section is appropriated from the general fund 244.9 to the commissioner of revenue. 244.10 (h) For a taxpayer who files a claim for refund via the 244.11 Internet or other electronic means, the commissioner may accept 244.12 the number on the official receipt as documentation that a 244.13 contribution was made rather than the actual receipt as required 244.14 by paragraph (a). 244.15 [EFFECTIVE DATE.] This section is effective for refund 244.16 claims based on contributions made after December 31, 2001. 244.17 Sec. 9. Minnesota Statutes 2000, section 290.92, 244.18 subdivision 23, is amended to read: 244.19 Subd. 23. [WITHHOLDING BY EMPLOYER OF DELINQUENT TAXES.] 244.20 (1) The commissioner may, within five years after the date of 244.21 assessment of the tax, or if a lien has been filed under section 244.22 270.69, within the statutory period for enforcement of the lien, 244.23 give notice to any employer deriving income which has a taxable 244.24 situs in this state regardless of whether the income is exempt 244.25 from taxation, that an employee of that employer is delinquent 244.26 in a certain amount with respect to any state taxes, including 244.27 penalties, interest, and costs. The commissioner can proceed 244.28 under this subdivision only if the tax is uncontested or if the 244.29 time for appeal of the tax has expired. The commissioner shall 244.30 not proceed under this subdivision until the expiration of 30 244.31 days after mailing to the taxpayer, at the taxpayer's last known 244.32 address, a written notice of (a) the amount of taxes, interest, 244.33 and penalties due from the taxpayer and demand for their 244.34 payment, and (b) the commissioner's intention to require 244.35 additional withholding by the taxpayer's employer pursuant to 244.36 this subdivision. The effect of the notice shall expire180245.1daysone year after it has been mailed to the taxpayer provided 245.2 that the notice may be renewed by mailing a new notice which is 245.3 in accordance with this subdivision. The renewed notice shall 245.4 have the effect of reinstating the priority of the original 245.5 claim. The notice to the taxpayer shall be in substantially the 245.6 same form as that provided in section 571.72. The notice shall 245.7 further inform the taxpayer of the wage exemptions contained in 245.8 section 550.37, subdivision 14. If no statement of exemption is 245.9 received by the commissioner within 30 days from the mailing of 245.10 the notice, the commissioner may proceed under this 245.11 subdivision. The notice to the taxpayer's employer may be 245.12 served by mail or by delivery by an employee of the department 245.13 of revenue and shall be in substantially the same form as 245.14 provided in section 571.75. Upon receipt of notice, the 245.15 employer shall withhold from compensation due or to become due 245.16 to the employee, the total amount shown by the notice, subject 245.17 to the provisions of section 571.922. The employer shall 245.18 continue to withhold each pay period until the notice is 245.19 released by the commissioner under section 270.709. Upon 245.20 receipt of notice by the employer, the claim of the state of 245.21 Minnesota shall have priority over any subsequent garnishments 245.22 or wage assignments. The commissioner may arrange between the 245.23 employer and the employee for withholding a portion of the total 245.24 amount due the employee each pay period, until the total amount 245.25 shown by the notice plus accrued interest has been withheld. 245.26 The "compensation due" any employee is defined in 245.27 accordance with the provisions of section 571.921. The maximum 245.28 withholding allowed under this subdivision for any one pay 245.29 period shall be decreased by any amounts payable pursuant to a 245.30 garnishment action with respect to which the employer was served 245.31 prior to being served with the notice of delinquency and any 245.32 amounts covered by any irrevocable and previously effective 245.33 assignment of wages; the employer shall give notice to the 245.34 department of the amounts and the facts relating to such 245.35 assignments within ten days after the service of the notice of 245.36 delinquency on the form provided by the department of revenue as 246.1 noted in this subdivision. 246.2 (2) If the employee ceases to be employed by the employer 246.3 before the full amount set forth in a notice of delinquency plus 246.4 accrued interest has been withheld, the employer shall 246.5 immediately notify the commissioner in writing of the 246.6 termination date of the employee and the total amount withheld. 246.7 No employer may discharge any employee by reason of the fact 246.8 that the commissioner has proceeded under this subdivision. If 246.9 an employer discharges an employee in violation of this 246.10 provision, the employee shall have the same remedy as provided 246.11 in section 571.927, subdivision 2. 246.12 (3) Within ten days after the expiration of such pay 246.13 period, the employer shall remit to the commissioner, on a form 246.14 and in the manner prescribed by the commissioner, the amount 246.15 withheld during each pay period under this subdivision. 246.16 (4) Clauses (1), (2), and (3), except provisions imposing a 246.17 liability on the employer for failure to withhold or remit, 246.18 shall apply to cases in which the employer is the United States 246.19 or any instrumentality thereof or this state or any municipality 246.20 or other subordinate unit thereof. 246.21 (5) The commissioner shall refund to the employee excess 246.22 amounts withheld from the employee under this subdivision. If 246.23 any excess results from payments by the employer because of 246.24 willful failure to withhold or remit as prescribed in clause 246.25 (3), the excess attributable to the employer's payment shall be 246.26 refunded to the employer. 246.27 (6) Employers required to withhold delinquent taxes, 246.28 penalties, interest, and costs under this subdivision shall not 246.29 be required to compute any additional interest, costs or other 246.30 charges to be withheld. 246.31 (7) The collection remedy provided to the commissioner by 246.32 this subdivision shall have the same legal effect as if it were 246.33 a levy made pursuant to section 270.70. 246.34 [EFFECTIVE DATE.] This section is effective for notices of 246.35 intent mailed on or after the day following final enactment. 246.36 Sec. 10. Minnesota Statutes 2000, section 290A.03, 247.1 subdivision 12, is amended to read: 247.2 Subd. 12. [GROSS RENT.] (a) "Gross rent" means rental paid 247.3 for the right of occupancy, at arms-length, of a homestead, 247.4 exclusive of charges for any medical services furnished by the 247.5 landlord as a part of the rental agreement, whether expressly 247.6 set out in the rental agreement or not. 247.7 (b) The gross rent of a resident of a nursing home or 247.8 intermediate care facility is $350 per month. The gross rent of 247.9 a resident of an adult foster care home is $550 per month. 247.10 Beginning for rent paid in 2002, the commissioner shall annually 247.11 adjust for inflation the gross rent amounts stated in this 247.12 paragraph. The adjustment must be made in accordance with 247.13 section 1f of the Internal Revenue Code, except that for 247.14 purposes of this paragraph the percentage increase shall be 247.15 determined from the year ending on June 30, 2001, to the year 247.16 ending on June 30 of the year in which the rent is paid. The 247.17 commissioner shall round the gross rents to the nearest $10 247.18 amount. If the amount ends in $5, the commissioner shall round 247.19 it up to the next $10 amount. The determination of the 247.20 commissioner under this paragraph is not a rule under the 247.21 Administrative Procedure Act. 247.22 (c) If the landlord and tenant have not dealt with each 247.23 other at arms-length and the commissioner determines that the 247.24 gross rent charged was excessive, the commissioner may adjust 247.25 the gross rent to a reasonable amount for purposes of this 247.26 chapter. 247.27 (d) Any amount paid by a claimant residing in property 247.28 assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 247.29 for occupancy in that property shall be excluded from gross rent 247.30 for purposes of this chapter. However, property taxes imputed 247.31 to the homestead of the claimant or the dwelling unit occupied 247.32 by the claimant that qualifies for homestead treatment pursuant 247.33 to section 273.124, subdivision 3, 4, 5, or 6 shall be included 247.34 within the term "property taxes payable" as defined in 247.35 subdivision 13, notwithstanding the fact that ownership is not 247.36 in the name of the claimant. 248.1 [EFFECTIVE DATE.] This section is effective for refunds 248.2 based on rent paid after December 31, 2000. 248.3 Sec. 11. Minnesota Statutes 2000, section 290A.15, is 248.4 amended to read: 248.5 290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 248.6 The amount of any claim otherwise payable under this 248.7 chapter may be applied by the commissioner against any 248.8 delinquent tax liability ofthe claimant or spouse of the248.9claimant payable to the department of revenueany member of the 248.10 household. If there are two members of the household, the 248.11 commissioner may apply only one-half of a refund to the separate 248.12 liability of either member of the household. 248.13 [EFFECTIVE DATE.] This section is effective beginning with 248.14 refunds paid on or after July 1, 2001. 248.15 Sec. 12. Minnesota Statutes 2000, section 295.50, 248.16 subdivision 4, is amended to read: 248.17 Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care 248.18 provider" means: 248.19 (1) a person whose health care occupation is regulated or 248.20 required to be regulated by the state of Minnesota furnishing 248.21 any or all of the following goods or services directly to a 248.22 patient or consumer: medical, surgical, optical, visual, 248.23 dental, hearing, nursing services, drugs, laboratory, diagnostic 248.24 or therapeutic services; 248.25 (2) a person who provides goods and services not listed in 248.26 clause (1) that qualify for reimbursement under the medical 248.27 assistance program provided under chapter 256B; 248.28 (3) a staff model health plan company; 248.29 (4) an ambulance service required to be licensed; or 248.30 (5) a person who sells or repairs hearing aids and related 248.31 equipment or prescription eyewear. 248.32 (b) Health care provider does not include: 248.33 (1) hospitals; medical supplies distributors, except as 248.34 specified under paragraph (a), clause (5); nursing homes 248.35 licensed under chapter 144A or licensed in any other 248.36 jurisdiction; pharmacies; surgical centers; bus and taxicab 249.1 transportation, or any other providers of transportation 249.2 services other than ambulance services required to be licensed; 249.3 supervised living facilities for persons with mental retardation 249.4 or related conditions, licensed under Minnesota Rules, parts 249.5 4665.0100 to 4665.9900; residential care homes licensed under 249.6 chapter 144B; board and lodging establishments providing only 249.7 custodial services that are licensed under chapter 157 and 249.8 registered under section 157.17 to provide supportive services 249.9 or health supervision services; adult foster homes as defined in 249.10 Minnesota Rules, part 9555.5105; day training and habilitation 249.11 services for adults with mental retardation and related 249.12 conditions as defined in section 252.41, subdivision 3;and249.13 boarding care homes, as defined in Minnesota Rules, part 249.14 4655.0100; and adult day care centers as defined in Minnesota 249.15 Rules, part 9555.9600; 249.16 (2) home health agencies as defined in Minnesota Rules, 249.17 part 9505.0175, subpart 15; a person providing personal care 249.18 services and supervision of personal care services as defined in 249.19 Minnesota Rules, part 9505.0335; a person providing private duty 249.20 nursing services as defined in Minnesota Rules, part 9505.0360; 249.21 and home care providers required to be licensed under chapter 249.22 144A; 249.23 (3) a person who employs health care providers solely for 249.24 the purpose of providing patient services to its employees; and 249.25 (4) an educational institution that employs health care 249.26 providers solely for the purpose of providing patient services 249.27 to its students if the institution does not receive fee for 249.28 service payments or payments for extended coverage. 249.29 [EFFECTIVE DATE.] This section is effective for gross 249.30 revenues received on or after January 1, 2002. 249.31 Sec. 13. Minnesota Statutes 2000, section 297A.01, 249.32 subdivision 5, is amended to read: 249.33 Subd. 5. "Storage" includes any keeping or retention in 249.34 Minnesota for any purpose except sale in the regular course of 249.35 businessor subsequent use solely outside Minnesota of tangible249.36personal property. 250.1 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] (a) This section 250.2 is effective for purchases, sales, storage, use, or consumption 250.3 occurring after June 30, 1997. 250.4 (b) In the next edition of Minnesota Statutes, the revisor 250.5 shall codify the amendment to this section in Minnesota 250.6 Statutes, section 297A.61, subdivision 5. 250.7 Sec. 14. Minnesota Statutes 2000, section 297A.07, 250.8 subdivision 3, is amended to read: 250.9 Subd. 3. [NEW PERMITS AFTER REVOCATION.] The commissioner 250.10 shall not issue a new permit or reinstate a revoked permit after 250.11 revocation unless the taxpayer applies for a permit and provides 250.12 reasonable evidence of intention to comply with the sales and 250.13 use tax laws and rules. The commissioner may require the 250.14 applicant to supply security, in addition to that authorized by 250.15 section 297A.28, as is reasonably necessary to insure compliance 250.16 with the sales and use tax laws and rules. If the commissioner 250.17 issues or reinstates a permit not in conformance with the 250.18 requirements of this subdivision or applicable rules, the 250.19 commissioner may cancel the permit upon notice to the permit 250.20 holder. The notice must be served by first class and certified 250.21 mail at the permit holder's last known address. The 250.22 cancellation shall be effective immediately, subject to the 250.23 right of the permit holder to show that the permit was issued in 250.24 conformance with the requirements of this subdivision and 250.25 applicable rules. Upon such showing, the permit must be 250.26 reissued. 250.27 If a taxpayer has had a permit or permits revoked three 250.28 times in a five-year period, the commissioner shall not issue a 250.29 new permit or reinstate the revoked permit until 24 months have 250.30 elapsed after revocation and the taxpayer has satisfied the 250.31 conditions for reinstatement of a revoked permit or issuance of 250.32 a new permit imposed by this section and rules adopted hereunder. 250.33 For purposes of this subdivision, the term "taxpayer" means 250.34 an individual, if a revoked permit was issued to or in the name 250.35 of an individual, or a corporation or partnership, if a revoked 250.36 permit was issued to or in the name of a corporation or 251.1 partnership. Taxpayer also means an officer of a corporation, a 251.2 member of a partnership, or an individual who is liable for 251.3 delinquent sales taxes, either for the entity for which the new 251.4 or reinstated permit is at issue, or for another entity for 251.5 which a permit was previously revoked, or personally as a permit 251.6 holder. 251.7 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] (a) This section 251.8 is effective the day following final enactment. 251.9 (b) In the next edition of Minnesota Statutes, the revisor 251.10 shall codify the amendments to this section in Minnesota 251.11 Statutes, section 297A.86, subdivision 2. 251.12 Sec. 15. Minnesota Statutes 2000, section 297A.86, 251.13 subdivision 1, is amended to read: 251.14 Subdivision 1. [NOTICE OF REVOCATION; HEARINGS.] (a) If a 251.15 person fails to comply with this chapter or the sales and use 251.16 tax provisions of chapter 289A or the rulesadopted under either251.17chapterrelated to sales and use tax, or if any person fails to 251.18 comply with chapter 297F or the rules related to cigarette and 251.19 tobacco products, without reasonable cause, the commissioner may 251.20 give the person 30 days' notice in writing, specifying the 251.21 violations, and stating that based on the violations the 251.22 commissioner intends to revoke the person's permit. The notice 251.23 must also advise the person of the right to contest the 251.24 revocation under this subdivision. It must also explain the 251.25 general procedures for a contested case hearing under chapter 251.26 14. The notice may be served personally or by mail in the 251.27 manner prescribed for service of an order of assessment. 251.28 (b) If the person does not request a hearing within 30 days 251.29 after the date of the notice of intent, the commissioner may 251.30 serve a notice of revocation of permit upon the person, and the 251.31 permit is revoked. If a hearing is timely requested, and held, 251.32 the permit is revoked after the commissioner serves an order of 251.33 revocation of permit under section 14.62, subdivision 1. 251.34 [EFFECTIVE DATE.] This section is effective for violations 251.35 occurring on or after July 1, 2001. 251.36 Sec. 16. Minnesota Statutes 2000, section 297B.03, is 252.1 amended to read: 252.2 297B.03 [EXEMPTIONS.] 252.3 There is specifically exempted from the provisions of this 252.4 chapter and from computation of the amount of tax imposed by it 252.5 the following: 252.6 (1) purchase or use, including use under a lease purchase 252.7 agreement or installment sales contract made pursuant to section 252.8 465.71, of any motor vehicle by the United States and its 252.9 agencies and instrumentalities and by any person described in 252.10 and subject to the conditions provided in section 297A.25, 252.11 subdivision 18; 252.12 (2) purchase or use of any motor vehicle by any person who 252.13 was a resident of another state or country at the time of the 252.14 purchase and who subsequently becomes a resident of Minnesota, 252.15 provided the purchase occurred more than 60 days prior to the 252.16 date such person began residing in the state of Minnesota and 252.17 the motor vehicle was registered in the person's name in the 252.18 other state or country; 252.19 (3) purchase or use of any motor vehicle by any person 252.20 making a valid election to be taxed under the provisions of 252.21 section 297A.211; 252.22 (4) purchase or use of any motor vehicle previously 252.23 registered in the state of Minnesota when such transfer 252.24 constitutes a transfer within the meaning of section 118, 331, 252.25 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 252.26 1563(a) of the Internal Revenue Code of 1986, as amended through 252.27 December 31, 1999; 252.28 (5) purchase or use of any vehicle owned by a resident of 252.29 another state and leased to a Minnesota based private or for 252.30 hire carrier for regular use in the transportation of persons or 252.31 property in interstate commerce provided the vehicle is titled 252.32 in the state of the owner or secured party, and that state does 252.33 not impose a sales tax or sales tax on motor vehicles used in 252.34 interstate commerce; 252.35 (6) purchase or use of a motor vehicle by a private 252.36 nonprofit or public educational institution for use as an 253.1 instructional aid in automotive training programs operated by 253.2 the institution. "Automotive training programs" includes motor 253.3 vehicle body and mechanical repair courses but does not include 253.4 driver education programs; 253.5 (7) purchase of a motor vehicle for use as an ambulance by 253.6 an ambulance service licensed under section 144E.10; 253.7 (8) purchase of a motor vehicle by or for a public library, 253.8 as defined in section 134.001, subdivision 2, as a bookmobile or 253.9 library delivery vehicle; 253.10 (9) purchase of a ready-mixed concrete truck; 253.11 (10) purchase or use of a motor vehicle by a town for use 253.12 exclusively for road maintenance, including snowplows and dump 253.13 trucks, but not including automobiles, vans, or pickup trucks; 253.14 (11) purchase or use of a motor vehicle by a corporation, 253.15 society, association, foundation, or institution organized and 253.16 operated exclusively for charitable, religious, or educational 253.17 purposes, except a public school, university, or library, but 253.18 only if the vehicle is: 253.19 (i) a truck, as defined in section 168.011, a bus, as 253.20 defined in section 168.011, or a passenger automobile, as 253.21 defined in section 168.011, if the automobile is designed and 253.22 used for carrying more than nine persons including the driver; 253.23 and 253.24 (ii) intended to be used primarily to transport tangible 253.25 personal property or individuals, other than employees, to whom 253.26 the organization provides service in performing its charitable, 253.27 religious, or educational purpose. 253.28 [EFFECTIVE DATE.] This section is effective the day 253.29 following final enactment, except that the change to paragraph 253.30 (11) is effective for sales and purchases occurring after June 253.31 30, 2000. 253.32 Sec. 17. [297F.185] [REVOCATION OF SALES AND USE TAX 253.33 PERMITS.] 253.34 If a person fails to comply with this chapter, or the rules 253.35 related to cigarette and tobacco products, the commissioner may 253.36 revoke the person's sales and use tax permit as provided in 254.1 section 297A.86. 254.2 [EFFECTIVE DATE.] This section is effective for violations 254.3 occurring on or after July 1, 2001. 254.4 Sec. 18. [297H.115] [USE TAX.] 254.5 Subdivision 1. [IMPOSITION; LIABILITY OF GENERATORS AND 254.6 SELF-HAULERS.] (a) A use tax is imposed on the sales price of 254.7 mixed municipal solid waste management services received by a 254.8 residential generator at the rate imposed under section 297H.02, 254.9 unless the tax imposed under section 297H.02 was paid. The 254.10 residential generator is liable. 254.11 (b) A use tax is imposed on the sales price of mixed 254.12 municipal solid waste management services received by a 254.13 commercial generator at the rate imposed under section 297H.03, 254.14 unless the tax imposed under section 297H.03 was paid. The 254.15 commercial generator is liable. 254.16 (c) A use tax is imposed on the volume of nonmixed 254.17 municipal solid waste that is managed at the rate imposed under 254.18 section 297H.04, unless the tax imposed under section 297H.04 254.19 was paid. The generator is liable. 254.20 (d) A use tax is imposed on the sales price of mixed 254.21 municipal solid waste management services received by a 254.22 self-hauler at the rate imposed under section 297H.05, paragraph 254.23 (a), unless the tax imposed under section 297H.05, paragraph 254.24 (a), was paid. The self-hauler is liable. 254.25 (e) A use tax is imposed on the volume of nonmixed 254.26 municipal solid waste managed at the rate imposed under section 254.27 297H.05, paragraph (b), unless the tax imposed under section 254.28 297H.05, paragraph (b), was paid. The self-hauler is liable. 254.29 Subd. 2. [PAYMENT; REPORTING.] A generator or self-hauler 254.30 that is liable under subdivision 1 shall report the use tax on a 254.31 return prescribed by the commissioner of revenue, and shall 254.32 remit the tax with the return. The return and the tax must be 254.33 filed using the filing cycle and due dates provided for taxes 254.34 imposed under chapter 297A. 254.35 Subd. 3. [COMMISSIONER ASSESSMENT.] (a) The commissioner 254.36 of revenue may not assess the generator or self-hauler a use tax 255.1 on a transaction for which the waste management service provider 255.2 has paid the solid waste management tax, except as provided in 255.3 paragraph (b). 255.4 (b) If the waste management service provider who is an 255.5 accrual basis taxpayer remits a payment and thereafter offsets 255.6 the amount as a bad debt under section 297H.09, the commissioner 255.7 of revenue may assess the generator or self-hauler a use tax for 255.8 the offset amount. 255.9 [EFFECTIVE DATE.] This section is effective for services 255.10 received on or after July 1, 2001. 255.11 Sec. 19. Minnesota Statutes 2000, section 461.12, is 255.12 amended by adding a subdivision to read: 255.13 Subd. 8. [NOTICE TO COMMISSIONER.] The licensing authority 255.14 under this section shall, within 30 days of the issuance of a 255.15 license, inform the commissioner of revenue of the licensee's 255.16 name, address, trade name, and the effective and expiration 255.17 dates of the license. The commissioner of revenue must also be 255.18 informed of a license renewal, transfer, cancellation, 255.19 suspension, or revocation during the license period. 255.20 [EFFECTIVE DATE.] This section is effective for licenses 255.21 issued, renewed, transferred, canceled, suspended, or revoked on 255.22 or after January 1, 2002.