Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1988, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1988
CHAPTER 719-H.F.No. 2590
An act relating to the financing of government in
Minnesota; changing tax rates and bases; modifying the
administration, collection, and enforcement of taxes;
imposing taxes; changing the computation,
administration, and payment of aids, credits, and
refunds; limiting taxing powers; transferring and
imposing governmental powers and duties; making
technical corrections and clarifications; providing
bonding authority to Hennepin county, Ramsey county,
the city of Little Falls, and the city of Shafer;
authorizing establishment of special service districts
in the cities of Robbinsdale, Minneapolis, and White
Bear Lake; imposing penalties; appropriating money and
reducing appropriations; amending Minnesota Statutes
1986, sections 62E.13, by adding a subdivision;
69.031, subdivision 3; 183.411, subdivisions 1, 3, and
by adding a subdivision; 183.466; 183.51, subdivisions
4, 7, and 10; 237.075, subdivision 8; 256.72; 256.81;
256.82, subdivision 1; 256.863; 256.871, subdivision
6; 256.935, subdivision 1; 256.991; 256B.041,
subdivisions 5 and 7; 256B.05, subdivision 1; 256B.19,
subdivision 2; 256D.03, subdivision 6; 256D.04;
256D.36, subdivision 1; 270.075, subdivision 2;
270.41; 270.70, subdivision 1; 271.01, subdivision 5;
273.01; 273.05, subdivision 1; 273.061, subdivision 2;
273.112, subdivisions 3 and 6; 273.121; 273.124,
subdivisions 1 and 6; 273.13, by adding a subdivision;
273.1315; 273.40; 275.07, by adding a subdivision;
275.08, by adding subdivisions; 275.51, subdivision
3f, and by adding a subdivision; 277.05; 277.06;
279.01, subdivision 3; 287.21, by adding a
subdivision; 290.01, by adding subdivisions; 290.06,
by adding a subdivision; 290.067, subdivision 1;
290.39, by adding a subdivision; 290.50, subdivision
3; 290.92, subdivision 21; 290.931, subdivision 1;
290.934, subdivisions 1, 3, and by adding a
subdivision; 290A.03, subdivision 7; 290A.04, by
adding a subdivision; 297.01, by adding a subdivision;
297.03, subdivision 12, and by adding a subdivision;
297.041, subdivision 1; 297.06, subdivisions 1, 2, 3,
and by adding a subdivision; 297.08, subdivision 1;
297.12, subdivision 1; 297.35, by adding a
subdivision; 297A.15, subdivisions 1 and 5; 297A.16;
297A.17; 297A.21; 297A.25, subdivision 5, and by
adding subdivisions; 297A.256; 297A.35, subdivision 1;
297C.02, subdivisions 3 and 4; 297C.03, by adding a
subdivision; 297C.07; 297D.08; 298.223; 298.28,
subdivisions 3 and 6; 299.01, subdivision 1; 303.03;
329.11; 349.12, subdivision 18, and by adding
subdivisions; 349.2121, subdivisions 1, 2, 5, and by
adding a subdivision; 349.22, subdivision 1, and by
adding subdivisions; 373.40, subdivision 4; 375.192,
subdivision 1; 387.212; 393.07, subdivision 2;
473.843, subdivision 2; 473F.02, by adding a
subdivision; 473F.07, subdivisions 4 and 5; 473F.08,
subdivisions 1, 3, 3a, 5, and 10; 473F.10; 477A.011,
by adding subdivisions; 477A.015; and 507.235,
subdivision 1; Minnesota Statutes 1987 Supplement,
sections 16A.15, subdivision 6; 16A.1541; 60A.15,
subdivision 1; 60E.04, subdivision 4; 69.021,
subdivision 5; 69.54; 124.155, subdivision 2;
124.2131, subdivision 3; 124.2139; 124A.02,
subdivisions 3a and 11; 256.01, subdivision 2;
256B.091, subdivision 8; 256B.15; 256B.19, subdivision
1; 256B.431, subdivision 2b; 256D.03, subdivision 2;
256G.01, subdivision 3; 256G.02, subdivision 4;
256G.04, subdivision 1; 256G.05; 256G.07; 256G.10;
256G.11; 270.485; 272.01, subdivision 2; 272.02,
subdivision 1; 272.115, subdivision 4; 272.121;
273.061, subdivision 1; 273.1102, by adding a
subdivision; 273.1195; 273.123, subdivisions 4 and 5;
273.124, subdivisions 8, 11, and 13; 273.13,
subdivisions 15a, 22, 23, 24, 25, and 31; 273.135,
subdivision 2; 273.1391, subdivision 2; 273.1392;
273.1393; 273.165, subdivision 2; 273.37, subdivision
2; 274.01, subdivision 1; 275.07, subdivision 1;
275.50, subdivisions 2 and 5; 275.51, subdivisions 3h
and 3i; 276.04; 276.06; 279.01, subdivision 1; 290.01,
subdivisions 3a, 4, 5, 7, 19, 19a, 19b, 19c, 19d, 19e,
20, and 29; 290.015, subdivisions 1, 2, 3, and 4;
290.032, subdivision 2; 290.06, subdivisions 1, 2c,
and 21; 290.081; 290.092, subdivisions 3, 4, 5, and by
adding a subdivision; 290.095, subdivisions 1, 2, 3,
and by adding a subdivision; 290.10; 290.17,
subdivisions 2 and 4; 290.191, subdivisions 1, 4, 5,
6, and 11; 290.21, subdivisions 3 and 4; 290.34,
subdivision 2; 290.35, subdivision 2; 290.37,
subdivision 1; 290.371, subdivisions 1, 3, 4, and 5;
290.38; 290.41, subdivision 2; 290.491; 290.92,
subdivisions 7 and 15; 290.934, subdivision 2;
290.9725; 290A.03, subdivisions 3, 13, 14, and 15;
290A.04, subdivisions 2 and 2b; 290A.06; 295.32;
295.34, subdivision 1; 297.01, subdivisions 7 and 14;
297.03, subdivision 6; 297.11, subdivision 5; 297A.01,
subdivision 3; 297A.212; 297A.25, subdivisions 3 and
11; 297B.03; 297C.04; 298.01, subdivisions 3 and 4;
298.22, subdivision 1; 298.2213, subdivision 3;
349.212, subdivisions 1 and 4; 349.2121, subdivisions
4a and 10; 349.2122; 349.2123; 393.07, subdivision 10;
469.170, by adding a subdivision; 469.174,
subdivisions 2, 7, 10, 11, and by adding subdivisions;
469.175, subdivisions 1, 2, 3, 4, and by adding
subdivisions; 469.176, subdivisions 1, 4, 5, and 6;
469.177, subdivisions 1, 3, 4, and by adding
subdivisions; 469.179; 473.446, subdivision 1;
473F.02, subdivision 4; 473F.05; 473F.06; 473F.07,
subdivision 1; 473F.08, subdivisions 2, 4, and 6;
475.53, subdivision 4; 475.61, subdivision 3;
477A.013, subdivisions 1, 2, and by adding
subdivisions; and 508.25; Laws 1987, chapter 268,
articles 3, section 12; 6, sections 53 and 54; Laws
1988, chapter 516, section 3; proposing coding for new
law in Minnesota Statutes, chapters 256, 270, 273,
275, 290, 290A, 297, 297C, 298, 349, 375, and 424A;
proposing coding for new law as Minnesota Statutes,
chapter 428A; repealing Minnesota Statutes 1986,
sections 13.58; 124.2131, subdivision 4; 124.2137;
124.2139; 124A.031, subdivision 4; 256.965; 272.64;
273.112, subdivision 9; 273.115; 273.116; 273.13,
subdivisions 7a, 26, 27, 28, 29, and 30; 273.1311;
273.1315; 273.135, subdivision 5; 273.1391,
subdivision 4; 275.035; 275.49; 275.50, subdivisions
3, 7, and 8; 290.07, subdivisions 3 and 6; 290.11;
290.12, as amended; 290.131, as amended; 290.132, as
amended; 290.133, as amended; 290.134, as amended;
290.135, as amended; 290.136, as amended; 290.138, as
amended; 290.934, subdivision 4; 297A.15, subdivision
2; 297C.03, subdivision 5; 298.401; 299.013; 477A.011,
subdivisions 4, 5, 6, 7a, 10, 11, 12, 13, and 14;
Minnesota Statutes 1987 Supplement, sections 256D.22;
273.1102, subdivision 2; 273.1195; 273.13,
subdivisions 9 and 15a; 273.1394; 273.1395; 273.1396;
273.1397; 275.081; 275.082; 275.125, subdivision 22;
290.06, subdivision 20; 290.077, subdivision 1;
290.14; 290.21, subdivision 8; 290.371, subdivision 2;
290A.04, subdivision 2a; 296.02, subdivisions 2a and
2b; 296.025, subdivisions 2a and 2b; and 477A.011,
subdivision 7; Laws 1987, chapter 268, articles 3,
section 11; and 6, section 19.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
INDIVIDUAL INCOME TAX
Section 1. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 3a, is amended to read:
Subd. 3a. [TRUST.] The term "trust" has the meaning given
in provided under the Internal Revenue Code of 1986, as amended
through December 31, 1986 1987.
Sec. 2. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 7, is amended to read:
Subd. 7. [RESIDENT.] The term "resident" means (1) any
individual domiciled in Minnesota, except that an individual is
not a "resident" for the period of time that the individual is a
"qualified individual" as defined in section 911(d)(1) of the
Internal Revenue Code of 1986, as amended through December 31,
1986, unless, during that period, a Minnesota homestead
application is filed for property in which the individual has an
interest; and (2) any individual domiciled outside the state who
maintains a place of abode in the state and spends in the
aggregate more than one-half of the tax year in Minnesota,
unless the individual or the spouse of the individual is in the
armed forces of the United States, or the individual is covered
under the reciprocity provisions in section 290.081.
For purposes of this subdivision, presence within the state
for any part of a calendar day constitutes a day spent in the
state. Individuals shall keep adequate records to substantiate
the days spent outside the state.
Sec. 3. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 19a, is amended to read:
Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For
individuals, estates, and trusts, there shall be added to
federal taxable income:
(1)(i) interest income on obligations of any state other
than Minnesota or a political or governmental subdivision,
municipality, or governmental agency or instrumentality of any
state other than Minnesota exempt from federal income taxes
under the Internal Revenue Code or any other federal statute,
and
(ii) exempt-interest dividends as defined in section
852(b)(5)(A) of the Internal Revenue Code of 1986, except the
portion of the exempt-interest dividends derived from interest
income on obligations of the state of Minnesota or its political
or governmental subdivisions, municipalities, governmental
agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to
all shareholders represents 95 percent or more of the
exempt-interest dividends that are paid by the fund or series of
funds regulated investment company as defined in section 851(a)
of the Internal Revenue Code of 1986, or the fund of the
regulated investment company as defined in section 851(q) of the
Internal Revenue Code of 1986, making the payment; and
(2) the amount of income taxes paid or accrued within the
taxable year under this chapter and income taxes paid to any
other state or to any province or territory of Canada, to the
extent allowed as a deduction under section 63(d) of the
Internal Revenue Code, but the addition may not be more than the
amount by which the itemized deductions as allowed under section
63(d) of the Internal Revenue Code exceeds the amount of the
standard deduction as defined in section 63(c) of the Internal
Revenue Code; and
(3) the capital gain amount of a lump sum distribution to
which the special tax under section 1122(h)(3)(B)(ii) of the Tax
Reform Act of 1986, Public Law Number 99-514, applies.
Sec. 4. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 19b, is amended to read:
Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For
individuals, estates, and trusts, there shall be subtracted from
federal taxable income:
(1) interest income on obligations of any authority,
commission, or instrumentality of the United States to the
extent includable in taxable income for federal income tax
purposes but exempt from state income tax under the laws of the
United States;
(2) if included in federal taxable income, the amount of
any overpayment of income tax to Minnesota or to any other
state, for any previous taxable year, whether the amount is
received as a refund or as a credit to another taxable year's
income tax liability; and
(3) the amount paid to others not to exceed $650 for each
dependent in grades kindergarten to six and $1,000 for each
dependent in grades seven to 12, for tuition, textbooks, and
transportation of each dependent in attending an elementary or
secondary school situated in Minnesota, North Dakota, South
Dakota, Iowa, or Wisconsin, wherein a resident of this state may
legally fulfill the state's compulsory attendance laws, which is
not operated for profit, and which adheres to the provisions of
the Civil Rights Act of 1964 and chapter 363. As used in this
clause, "textbooks" includes books and other instructional
materials and equipment used in elementary and secondary schools
in teaching only those subjects legally and commonly taught in
public elementary and secondary schools in this state.
"Textbooks" does not include instructional books and materials
used in the teaching of religious tenets, doctrines, or worship,
the purpose of which is to instill such tenets, doctrines, or
worship, nor does it include books or materials for, or
transportation to, extracurricular activities including sporting
events, musical or dramatic events, speech activities, driver's
education, or similar programs. In order to qualify for the
subtraction under this clause the taxpayer must elect to itemize
deductions under section 63(e) of the Internal Revenue Code of
1986, as amended through December 31, 1986;
(4) to the extent included in federal taxable income,
distributions from a qualified governmental pension plan, an
individual retirement account, simplified employee pension, or
qualified plan covering a self-employed person that represent a
return of contributions that were included in Minnesota gross
income in the taxable year for which the contributions were made
but were deducted or were not included in the computation of
federal adjusted gross income. The distribution shall be
allocated first to return of contributions until the
contributions included in Minnesota gross income have been
exhausted. This subtraction applies only to contributions made
in a taxable year prior to 1985;
(5) income as provided under section 10; and
(6) the amount of unrecovered accelerated cost recovery
system deductions allowed under section 5.
Sec. 5. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 19g. [ACRS MODIFICATION FOR INDIVIDUALS.] (a) An
individual is allowed a subtraction from federal taxable income
for the amount of accelerated cost recovery system deductions
that were added to federal adjusted gross income in computing
Minnesota gross income for taxable year 1981, 1982, 1983, or
1984 and that were not deducted in a later taxable year. The
deduction is allowed beginning in the first taxable year after
the entire allowable deduction for the property has been allowed
under federal law or the first taxable year beginning after
December 31, 1987, whichever is later. The amount of the
deduction is computed by deducting the amount added to federal
adjusted gross income in computing Minnesota gross income (less
any deduction allowed under Minnesota Statutes 1986, section
290.01, subdivision 20f) in equal annual amounts over five years.
(b) In the event of a sale or exchange of the property, a
deduction is allowed equal to the lesser of (1) the remaining
amount that would be allowed as a deduction under paragraph (a)
or (2) the amount of capital gain recognized and the amount of
cost recovery deductions that were subject to recapture under
sections 1245 and 1250 of the Internal Revenue Code of 1986 for
the taxable year.
(c) In the case of a corporation electing S corporation
status under section 1362 of the Internal Revenue Code, the
amount of the corporation's cost recovery allowances that have
been deducted in computing federal tax, but have been added to
federal taxable income or not deducted in computing tax under
this chapter as a result of the application of subdivision 19e,
paragraphs (a) and (c) or Minnesota Statutes 1986, section
290.09, subdivision 7 is allowed as a deduction to the
shareholders under the provisions of paragraph (a).
Sec. 6. Minnesota Statutes 1987 Supplement, section
290.032, subdivision 2, is amended to read:
Subd. 2. The amount of tax imposed by subdivision 1 shall
be computed in the same way as the tax imposed under section
402(e) of the Internal Revenue Code of 1986, as amended through
December 31, 1986, except that the initial separate tax shall be
an amount equal to five times the tax which would be imposed by
section 290.06, subdivision 2c, if the recipient was an
unmarried individual, and the taxable net income was an amount
equal to one-fifth of the excess of
(i) the total taxable amount of the lump sum distribution
for the year, over
(ii) the minimum distribution allowance, and except that
references in section 402(e) of the Internal Revenue Code of
1986, as amended through December 31, 1986, to paragraph (1)(A)
thereof shall instead be references to subdivision 1, and the
excess, if any, of the subtraction base amount over federal
taxable income for a qualified individual as provided under
section 290.0802, subdivision 2.
Sec. 7. Minnesota Statutes 1987 Supplement, section
290.06, subdivision 2c, is amended to read:
Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES,
AND TRUSTS.] (a) The income taxes imposed by this chapter upon
married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code of 1986
as amended through December 31, 1987, must be computed by
applying to their taxable net income the following schedule of
rates:
(1) For taxable years beginning after December 31, 1986,
and before January 1, 1988
if taxable income is: the tax is:
not over $4,000 4 percent
over $4,000, but not $160 plus 6 percent of the
over $11,000 excess over $4,000
over $11,000, but not $580 plus 8 percent of the
over $21,000 excess over $11,000
over $21,000 $1,380 plus 9 percent of
the excess over $21,000
(2) For taxable years beginning after December 31, 1987
if taxable income is: the tax is:
not over $19,000 6 percent
over $19,000 $1,140 plus 8 percent of
the excess over $19,000;
plus an amount equal to ten percent of the tax paid by the
taxpayer under section 1(g) of the Internal Revenue Code of
1986, as amended through December 31, 1986 computed using the
following schedule of rates:
if taxable income is: the tax is:
over $75,500, but not 0.5 percent of the
over $165,000 excess over $75,500
over $165,000 $447.50.
Married individuals filing separate returns, estates, and
trusts must compute their income tax by applying the above rates
to their taxable income, except that the income brackets will be
one-half of the above amounts.
(b) The income taxes imposed by this chapter upon unmarried
individuals, married individuals filing separate returns,
estates, and trusts must be computed by applying to taxable net
income the following schedule of rates:
(1) For taxable years beginning after December 31, 1986,
and before January 1, 1988
if taxable income is: the tax is:
not over $3,000 4 percent
over $3,000, but not $120 plus 6 percent
over $9,000 of the excess over $3,000
over $9,000, but not $480 plus 8 percent
over $16,000 of the excess over $9,000
over $16,000 $1,040 plus 9 percent
of the excess over $16,000
(2) For taxable years beginning after December 31, 1987
if taxable income is: the tax is:
not over $13,000 6 percent
over $13,000 $780 plus 8 percent
of the excess over $13,000;
plus an amount equal to ten percent of the tax paid by the
taxpayer under section 1(g) of the Internal Revenue Code of
1986, as amended through December 31, 1986 computed using the
following schedule of rates:
if taxable income is: the tax is:
over $42,700, but not 0.5 percent of the
over $93,000 excess over $42,700
over $93,000 $251.50.
(c) The income taxes imposed by this chapter upon unmarried
individuals qualifying as a head of household as defined in
section 2(b) of the Internal Revenue Code of 1986, as amended
through December 31, 1986 1987, must be computed by applying to
taxable net income the following schedule of rates:
(1) For taxable years beginning after December 31, 1986,
and before January 1, 1988
if taxable income is: the tax is:
not over $3,500 4 percent
over $3,500, but not $140 plus 6 percent
over $10,000 of the excess over $3,500
over $10,000, but not $530 plus 8 percent
over $18,500 of the excess over $10,000
over $18,500 $1,210 plus 9 percent
of the excess over $18,500
(2) For taxable years beginning after December 31, 1987
if taxable income is: the tax is:
not over $16,000 6 percent
over $16,000 $960 plus 8 percent
of the excess over $16,000;.
plus an amount equal to ten percent of the tax paid by the
taxpayer under section 1(g) of the Internal Revenue Code of
1986, as amended through December 31, 1986 computed using the
following schedule of rates:
if taxable income is: the tax is:
over $64,300, but not 0.5 percent of the
over $135,000 excess over $64,300
over $135,000 $353.50.
(d) In lieu of a tax computed according to the rates set
forth in this subdivision, the tax of any individual taxpayer
whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in
accordance with tables prepared and issued by the commissioner
of revenue based on income brackets of not more than $100. The
amount of tax for each bracket shall be computed at the rates
set forth in this subdivision, provided that the commissioner
may disregard a fractional part of a dollar unless it amounts to
50 cents or more, in which case it may be increased to $1.
(e) An individual who is not a Minnesota resident for the
entire year must compute the individual's Minnesota income tax
as provided in this subdivision. After the application of the
nonrefundable credits provided in this chapter, the tax
liability must then be multiplied by a fraction in which:
(1) The numerator is the individual's Minnesota sourced
source federal adjusted gross income as defined in section 62 of
the Internal Revenue Code of 1986, as amended through December
31, 1986, after applying the allocation and assignability
provisions of section 290.081, clause (a), or 290.17; and
(2) the denominator is the individual's federal adjusted
gross income as defined in section 62 of the Internal Revenue
Code of 1986, as amended through December 31, 1986 1987,
increased by the addition required for interest income from
non-Minnesota state and municipal bonds under section 290.01,
subdivision 19a, clause (1).
(f) Any individual who has income which is included in the
computation of federal adjusted gross income but is not subject
to tax by Minnesota other than income specifically allowed as a
subtraction under section 290.01, subdivision 19b, shall compute
the tax in the same manner described in paragraph (e). The
numerator of the fraction under paragraph (e) is the
individual's Minnesota source federal adjusted gross income
reduced by the income not subject to Minnesota tax and the
denominator is the federal adjusted gross income.
Sec. 8. Minnesota Statutes 1986, section 290.06, is
amended by adding a subdivision to read:
Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A
taxpayer who is liable for taxes on or measured by net income to
another state or province or territory of Canada, as provided in
paragraphs (b) through (f), upon income allocated or apportioned
to Minnesota, is entitled to a credit for the tax paid to
another state or province or territory of Canada if the tax is
actually paid in the taxable year or a subsequent taxable year.
A taxpayer who is a resident of this state pursuant to section
290.01, subdivision 7a, clause (b) and who is subject to income
tax as a resident in the state of the individual's domicile is
not allowed this credit unless the state of domicile does not
allow a similar credit.
(b) For an individual, estate, or trust, the credit is
determined by multiplying the tax payable under this chapter by
the ratio derived by dividing the income subject to tax in the
other state or province or territory of Canada that is also
subject to tax in Minnesota while a resident of Minnesota by the
taxpayer's federal adjusted gross income, as defined in section
62 of the Internal Revenue Code of 1986, as amended through
December 31, 1987, to the extent the income is allocated or
assigned to Minnesota under sections 290.081 and 290.17.
(c) If the taxpayer is an athletic team that apportions all
of its income under section 290.17, subdivision 5, paragraph
(a), the credit is determined by multiplying the tax payable
under this chapter by the ratio derived from dividing the total
net income subject to tax in the other state or province or
territory of Canada by the taxpayer's Minnesota taxable income.
(d) The credit determined under paragraph (b) or (c) shall
not exceed the amount of tax so paid to the other state or
province or territory of Canada on the gross income earned
within the other state or province or territory of Canada
subject to tax under this chapter, nor shall the allowance of
the credit reduce the taxes paid under this chapter to an amount
less than what would be assessed if such income amount was
excluded from taxable net income.
(e) In the case of the tax assessed on a lump sum
distribution under section 290.032, the credit allowed under
paragraph (a) is the tax assessed by the other state or province
or territory of Canada on the lump sum distribution that is also
subject to tax under section 290.032, and shall not exceed the
tax assessed under section 290.032.
(f) If a Minnesota resident reported an item of income to
Minnesota and is assessed tax in such other state or province or
territory of Canada on that same income after the Minnesota
statute of limitations has expired, the taxpayer shall receive a
credit for that year under paragraph (a), notwithstanding any
statute of limitations to the contrary. The claim for the
credit must be submitted within one year from the date the taxes
were paid to the other state or province or territory of
Canada. The taxpayer must submit sufficient proof to show
entitlement to a credit.
Sec. 9. Minnesota Statutes 1986, section 290.067,
subdivision 1, is amended to read:
Subdivision 1. [AMOUNT OF CREDIT.] A taxpayer may take as
a credit against the tax due from the taxpayer and a spouse, if
any, under this chapter an amount equal to the dependent care
credit for which the taxpayer is eligible pursuant to the
provisions of section 21 of the Internal Revenue Code subject to
the limitations provided in subdivision 2.
In the case of nonresident or part-year resident, the
credit determined under section 21 of the Internal Revenue Code
must be allocated based on the ratio by which the earned income
of the claimant and the claimant's spouse from Minnesota sources
bears to the total earned income of the claimant and the
claimant's spouse.
Sec. 10. [290.0802] [SUBTRACTION FOR THE ELDERLY AND
DISABLED.]
Subdivision 1. [DEFINITIONS.] For purposes of this
section, the following terms have the meanings given.
(a) "Adjusted gross income" means federal adjusted gross
income as used in section 22(d) of the Internal Revenue Code for
the taxable year plus the ordinary income portion of a lump sum
distribution as defined in section 407(e) of the Internal
Revenue Code.
(b) "Disability income" means disability income as defined
in section 22(c)(2)(B)(iii) of the Internal Revenue Code.
(c) "Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended through December 31, 1987.
(d) "Nontaxable retirement and disability benefits" means
the amount of pension, annuity, or disability benefits that
would be included in the reduction under section 22(c)(3) of the
Internal Revenue Code, but excluding tier one railroad
retirement benefits.
(e) "Qualified individual" means a qualified individual as
defined in section 22(b) of the Internal Revenue Code.
Subd. 2. [SUBTRACTION.] (a) A qualified individual is
allowed a subtraction from federal taxable income equal to the
lesser of federal taxable income or the individual's subtraction
base amount. The excess of the subtraction base amount over
federal taxable income may be used to reduce the amount of a
lump sum distribution subject to tax under section 290.032.
(b)(1) The initial subtraction base amount equals
(i) $10,000 for a married taxpayer filing a joint return if
a spouse is a qualified individual,
(ii) $8,000 for a single taxpayer, and
(iii) $5,000 for a married taxpayer filing a separate
federal return.
(2) The qualified individual's initial subtraction base
amount, then, must be reduced by the sum of nontaxable
retirement and disability benefits and one-half of the amount of
adjusted gross income in excess of the following thresholds:
(i) $15,000 for a married taxpayer filing a joint return if
both spouses are qualified individuals,
(ii) $12,000 for a single taxpayer or for a married couple
filing a joint return if only one spouse is a qualified
individual, and
(iii) $7,500 for a married taxpayer filing a separate
federal return.
(3) In the case of a qualified individual who is under the
age of 65, the maximum amount of the subtraction base may not
exceed the taxpayer's disability income.
(4) The resulting amount is the subtraction base amount.
Subd. 3. [RESTRICTIONS; MARRIED COUPLES.] Except in the
case of a husband and wife who live apart at all times during
the taxable year, if the taxpayer is married at the close of the
taxable year, the subtraction under subdivision 2 is allowable
only if the taxpayers file joint federal and state income tax
returns for the taxable year.
Sec. 11. Minnesota Statutes 1987 Supplement, section
290.081, is amended to read:
290.081 [INCOME OF NONRESIDENTS, RECIPROCITY; CREDIT FOR
TAXES PAID TO ANOTHER STATE.]
(a) The compensation received for the performance of
personal or professional services within this state by an
individual whose residence, place of abode, and place
customarily returned to at least once a month is in another
state, shall be excluded from gross income to the extent such
compensation is subject to an income tax imposed by the state of
residence; provided that such state allows a similar exclusion
of compensation received by residents of Minnesota for services
performed therein, or.
(b) If any taxpayer who is a resident of this state, or a
domestic corporation or corporation commercially domiciled
therein, has become liable for taxes on or measured by net
income to another state or a province or territory of Canada
upon, if the taxpayer is an individual, or if the taxpayer is an
athletic team and all of the team's income is apportioned to
Minnesota, any income, or if it is a corporation, estate, or
trust, upon income derived from the performance of personal or
professional services within such other state or province or
territory of Canada and subject to taxation under this chapter
the taxpayer shall be entitled to a credit against the amount of
taxes payable under this chapter, of such proportion thereof, as
such gross income subject to taxation in such state or province
or territory of Canada bears to the taxpayer's entire gross
income subject to taxation under this chapter; provided (1) that
such credit shall in no event exceed the amount of tax so paid
to such other state or province or territory of Canada on the
gross income earned within such other state or province or
territory of Canada and subject to taxation under this chapter,
and (2) the allowance of such credit shall not operate to reduce
the taxes payable under this chapter to an amount less than
would have been payable if the gross income earned in such other
state or province or territory of Canada had been excluded in
computing net income under this chapter. A taxpayer who is a
resident of this state pursuant to section 290.01, subdivision
7a, clause (2), and is subject to income tax as a resident in
the state of the individual's domicile is not allowed this
credit unless the state of domicile does not allow a similar
credit.
(c) The commissioner shall by rule determine with respect
to gross income earned in any other state the applicable clause
of this section. When it is deemed to be in the best interests
of the people of this state, the commissioner may determine that
the provisions of clause (a) shall not apply. As long as the
provisions of clause (a) apply between Minnesota and Wisconsin,
the provisions of clause (a) shall apply to any individual who
is domiciled in Wisconsin.
(d) "Tax So Paid" as used in this section means taxes on or
measured by net income payable to another state or province or
territory of Canada on income earned within the taxable year for
which the credit is claimed, provided that such tax is actually
paid in that taxable year, or subsequent taxable years.
For purposes of clause (b), where a Minnesota resident
reported an item of income to Minnesota and is assessed tax in
another state or a province or territory of Canada on that same
item of income after the Minnesota statute of limitations has
expired, the taxpayer shall be allowed to receive a credit for
that year based on clause (b), notwithstanding the provisions of
sections 290.49, 290.50, and 290.56. For purposes of the
preceding sentence, the burden of proof shall be on the taxpayer
to show entitlement to a credit.
(e) (c) For the purposes of clause (a), whenever the
Wisconsin tax on Minnesota residents which would have been paid
Wisconsin without clause (a) exceeds the Minnesota tax on
Wisconsin residents which would have been paid Minnesota without
clause (a), or vice versa, then the state with the net revenue
loss resulting from clause (a) shall receive from the other
state the amount of such loss. This provision shall be
effective for all years beginning after December 31, 1972. The
data used for computing the loss to either state shall be
determined on or before September 30 of the year following the
close of the previous calendar year.
Interest shall be payable on all delinquent balances
relating to taxable years beginning after December 31, 1977.
The commissioner of revenue is authorized to enter into
agreements with the state of Wisconsin specifying the
reciprocity payment due date, conditions constituting
delinquency, interest rates, and a method for computing interest
due on any delinquent amounts.
If an agreement cannot be reached as to the amount of the
loss, the commissioner of revenue and the taxing official of the
state of Wisconsin shall each appoint a member of a board of
arbitration and these members shall appoint the third member of
the board. The board shall select one of its members as chair.
Such board may administer oaths, take testimony, subpoena
witnesses, and require their attendance, require the production
of books, papers and documents, and hold hearings at such places
as are deemed necessary. The board shall then make a
determination as to the amount to be paid the other state which
determination shall be final and conclusive.
Notwithstanding the provisions of section 290.61, the
commissioner may furnish copies of returns, reports, or other
information to the taxing official of the state of Wisconsin, a
member of the board of arbitration, or a consultant under joint
contract with the states of Minnesota and Wisconsin for the
purpose of making a determination as to the amount to be paid
the other state under the provisions of this section. Prior to
the release of any information under the provisions of this
section, the person to whom the information is to be released
shall sign an agreement which provides that the person will
protect the confidentiality of the returns and information
revealed thereby to the extent that it is protected under the
laws of the state of Minnesota.
Sec. 12. Minnesota Statutes 1987 Supplement, section
290.17, subdivision 2, is amended to read:
Subd. 2. [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR
BUSINESS.] The income of a taxpayer subject to the allocation
rules that is not derived from the conduct of a trade or
business must be assigned in accordance with paragraphs (a) to
(f):
(a)(1) Subject to paragraphs (a)(2) and (a)(3), income from
labor or personal or professional services is assigned to this
state if, and to the extent that, the labor or services are
performed within it; all other income from such sources is
treated as income from sources without this state.
(2) In the case of an individual who is a nonresident of
Minnesota and who is an athlete or entertainer, income from
compensation for labor or personal services performed within
this state shall be determined in the following manner:
(i) The amount of income to be assigned to Minnesota for an
individual who is a nonresident salaried athletic team employee
shall be determined by using a fraction in which the denominator
contains the total number of days in which the individual is
under a duty to perform for the employer, and the numerator is
the total number of those days spent in Minnesota; and
(ii) The amount of income to be assigned to Minnesota for
an individual who is a nonresident, and who is an athlete or
entertainer not listed in clause (i), for that person's athletic
or entertainment performance in Minnesota shall be determined by
assigning to this state all income from performances or athletic
contests in this state.
(3) For purposes of this section, amounts received by a
nonresident from the United States, its agencies or
instrumentalities, the Federal Reserve Bank, the state of
Minnesota or any of its political or governmental subdivisions,
or a Minnesota volunteer firefighters' relief association, by
way of payment as a pension, public employee retirement benefit,
or any combination of these, or as a retirement or survivor's
benefit made from a plan qualifying under section 401, 403, 408,
or 409, or as defined in section 403(b) or 457 of the Internal
Revenue Code of 1986, as amended through December 31, 1986, are
not considered income derived from carrying on a trade or
business or from performing personal or professional services in
Minnesota, and are not taxable under this chapter.
(b) Income or gains from tangible property located in this
state that is not employed in the business of the recipient of
the income or gains must be assigned to this state.
(c) Except upon the sale of a partnership interest or the
sale of stock of an "S" corporation, income or gains from
intangible personal property not employed in the business of the
recipient of the income or gains must be assigned to this state
if the recipient of the income or gains is a resident of this
state or is a resident trust or estate.
Gain on the sale of a partnership interest is allocable to
this state in the ratio of the original cost of partnership
tangible property in this state to the original cost of
partnership tangible property everywhere, determined at the time
of the sale. If more than 50 percent of the value of the
partnership's assets consists of intangibles, gain or loss from
the sale of the partnership interest is allocated to this state
in accordance with the sales factor of the partnership for its
first full tax period immediately preceding the tax period of
the partnership during which the partnership interest was sold.
Gain on the sale of stock held in an "S" corporation is
allocable to this state in the ratio of the original cost of
tangible property of the "S" corporation within this state to
the original cost of tangible property of the "S" corporation
everywhere.
(d) Income from the operation of a farm shall be assigned
to this state if the farm is located within this state and to
other states only if the farm is not located in this state.
(e) Income from winnings on Minnesota pari-mutuel betting
tickets and lawful gambling as defined in section 349.12,
subdivision 2, conducted within the boundaries of the state of
Minnesota shall be assigned to this state.
(f) All items of gross income not covered in paragraphs (a)
to (e) and not part of the taxpayer's income from a trade or
business shall be assigned to the taxpayer's domicile.
Sec. 13. Minnesota Statutes 1987 Supplement, section
290.38, is amended to read:
290.38 [RETURNS OF MARRIED PERSONS.]
A husband and wife must file a joint Minnesota income tax
return if they filed a joint federal income tax return. If a
joint return is made the tax shall be computed on the aggregate
income and the liability with respect to the tax shall be joint
and several; provided that a spouse who is relieved of a
liability attributable to a substantial underpayment under
section 6013(e) of the Internal Revenue Code of 1986, as amended
through December 31, 1987, shall also be relieved of the state
tax liability on the substantial underpayment. If the husband
and wife have elected to file separate federal income tax
returns they must file separate Minnesota income tax returns.
This election to file a joint or separate returns must be
changed if they change their election for federal purposes. In
the event taxpayers desire to change their election, such change
shall be done in the manner and on such form as the commissioner
shall prescribe by rule.
The determination of whether an individual is married shall
be made under provisions of section 7703 of the Internal Revenue
Code of 1986, as amended through December 31, 1986.
Sec. 14. Minnesota Statutes 1986, section 290.39, is
amended by adding a subdivision to read:
Subd. 5. [PARTNERSHIPS; NONRESIDENT PARTNERS.] (a) The
commissioner may allow a partnership with five or more
nonresident partners to file a composite return on behalf of
nonresident partners who have no other Minnesota source income.
This composite return must include the names, addresses, social
security numbers, income allocation, and tax liability for all
nonresident partners electing to be covered by the composite
return.
(b) The computation of each partner's tax liability will be
determined by multiplying the income allocated to that partner
by the highest rate used to determine the tax liability for
individuals under section 290.06, subdivision 2c. Nonbusiness
deductions, standard deductions, or personal exemptions are not
allowed.
(c) The partnership must submit a request to use this
composite return filing method for nonresident partners on or
before the due date for filing the individual income tax
return. The request may be made a part of the return filed.
(d) The electing partner must not have any Minnesota source
income other than the income from the partnership and other
electing partnerships. If it is determined that the electing
partner has other Minnesota source income, the inclusion of the
income and tax liability for that partner under this provision
will not constitute a return to satisfy the requirements of
subdivision 1. The penalty for failure to file a return as
provided in section 290.53, subdivision 2, is assessed from the
due date for filing a return until a non-composite return is
filed. The tax paid for such an individual as part of the
composite return is allowed as a payment of the tax by the
individual on the date on which the composite return payment was
made. If the electing nonresident partner has no other
Minnesota source income, filing of the composite return
constitutes a return for purposes of subdivision 1 of this
section.
(e) This subdivision does not preclude the requirement that
an individual pay estimated tax if the individual's liability
would exceed the requirements set forth in section 290.93.
However, a composite estimate may be filed in a manner similar
to and containing the same information required under paragraph
(a).
(f) If an electing partner's share of the partnership's
gross income from Minnesota sources is less than the filing
requirements for a nonresident under section 290.37, subdivision
1, the tax liability is zero. However, a statement showing the
partner's share of gross income must be included as part of the
composite return.
(g) The election provided in this subdivision is not
available to any partner other than a full-year nonresident
individual who has no other Minnesota source income.
(h) A corporation defined in section 290.9725 and its
nonresident shareholders may make an election under this
subdivision. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply
to each shareholder.
(i) Estates and trusts distributing current income only and
the nonresident individual beneficiaries of such estates or
trusts may make an election under this subdivision. The
provisions covering the partnership apply to the estate or
trust. The provisions applying to the partner apply to each
beneficiary.
Sec. 15. Minnesota Statutes 1987 Supplement, section
290.41, subdivision 2, is amended to read:
Subd. 2. [BY PERSONS, CORPORATIONS, COOPERATIVES,
GOVERNMENTAL ENTITIES OR SCHOOL DISTRICTS.] To the extent
required by section 6041 of the Internal Revenue Code of 1986,
as amended through December 31, 1986 1987, every person,
corporation, or cooperative, the state of Minnesota and its
political subdivisions, and every city, county and school
district in Minnesota, making payments in the regular course of
a trade or business during the taxable year to any person or
corporation of $600 or more on account of rents or royalties, or
of $10 or more on account of interest, or $10 or more on account
of dividends or patronage dividends, or $600 or more on account
of either wages, salaries, commissions, fees, prizes, awards,
pensions, annuities, or any other fixed or determinable gains,
profits or income, not otherwise reportable under section
290.92, subdivision 7, or on account of earnings of $10 or more
distributed to its members by savings, building and loan
associations or credit unions chartered under the laws of this
state or the United States, (a) shall make a return (except in
cases where a valid agreement to participate in the combined
federal and state information reporting system has been entered
into, and such return is therefore filed only with the
commissioner of internal revenue pursuant to the applicable
filing and informational reporting requirements of the Internal
Revenue Code of 1986, as amended through December 31, 1986 1987)
in respect to such payments in excess of the amounts specified,
giving the names and addresses of the persons to whom such
payments were made, the amounts paid to each, and (b) shall make
a return in respect to the total number of such payments and
total amount of such payments, for each category of income
specified, which were in excess of the amounts specified. This
subdivision shall not apply to the payment of interest or
dividends to a person who was a nonresident of Minnesota for the
entire year.
A person, corporation, or cooperative required to file
returns under this subdivision on interest, dividends, or
patronage dividend payments with respect to more than 50 payees
for any calendar year must file all of these returns on magnetic
media if the media were used to satisfy the federal reporting
requirement under section 6011(e) of the Internal Revenue Code
of 1986, as amended through December 31, 1987, unless the person
establishes to the satisfaction of the commissioner that
compliance with this requirement would be an undue hardship.
Sec. 16. Minnesota Statutes 1987 Supplement, section
290.491, is amended to read:
290.491 [TAX ON GAIN; DISCHARGE IN BANKRUPTCY.]
(a) Any tax due under this chapter on a gain realized on a
forced sale pursuant to foreclosure of a mortgage or other
security interest in agricultural production property, other
real property, or equipment, used in a farm business that was
owned and operated by the taxpayer shall be a dischargeable debt
in a bankruptcy proceeding under United States Code, title 11,
section 727.
(b) Income realized on a sale or exchange of agricultural
production property, other real property, or equipment, used in
a farm business that was owned and operated by the taxpayer
shall be exempt from taxation under this chapter, if the
taxpayer was insolvent at the time of the sale and the proceeds
of the sale were used solely to discharge indebtedness secured
by a mortgage, lien, or other security interest on the property
sold. For purposes of this section, "insolvent" means insolvent
as defined in section 108(d)(3) of the Internal Revenue Code of
1954, as amended through December 31, 1985. This paragraph
applies only to the extent that the gain is includable in
federal taxable income or in the computation of the alternative
minimum taxable income under section 290.091 for purposes of the
alternative minimum tax. The amount of the exemption is limited
to the excess of the taxpayer's (1) liabilities over (2) the
total assets and any exclusion claimed under section 108 of the
Internal Revenue Code of 1986, as amended through December 31,
1987, determined immediately before application of this
paragraph.
(c) For purposes of this section, any tax due under this
chapter specifically includes, but is not limited to, tax
imposed under sections 290.02 and 290.03 on income derived from
a sale or exchange, whether constituting gain, discharge of
indebtedness or recapture of depreciation deductions, or the
alternative minimum tax imposed under section 290.091.
Sec. 17. Minnesota Statutes 1987 Supplement, section
290.92, subdivision 7, is amended to read:
Subd. 7. [WITHHOLDING STATEMENT TO EMPLOYEE OR PAYEE AND
TO COMMISSIONER.] (1) Every person required to deduct and
withhold from an employee a tax under subdivision 2a or 3, or
section 290.923, subdivision 2, or who would have been required
to deduct and withhold a tax under subdivision 2a or 3, or
persons required to withhold tax under section 290.923,
subdivision 2, determined without regard to subdivision 19, if
the employee or payee had claimed no more than one withholding
exemption, or who paid wages or made payments not subject to
withholding under subdivision 2a or 3, or section 290.923,
subdivision 2, to an employee or person receiving royalty
payments in excess of $600, or who has entered into a voluntary
withholding agreement with a payee pursuant to subdivision 20,
shall furnish to each such employee or person receiving royalty
payments in respect to the remuneration paid by such person to
such employee or person receiving royalty payments during the
calendar year, on or before January 31 of the succeeding year,
or, if employment is terminated before the close of such
calendar year, within 30 days after the date of receipt of a
written request from the employee if the 30-day period ends
before January 31, a written statement showing the following:
(a) Name of such person,
(b) The name of the employee or payee and the employee's or
payee's social security account number,
(c) The total amount of wages as that term is defined in
subdivision 1(1), and/or the total amount of remuneration
subject to withholding pursuant to subdivision 20, and the
amount of sick pay as required under section 6051(f) of the
Internal Revenue Code of 1954 1986, as amended through December
31, 1985 1987,
(d) The total amount deducted and withheld as tax under
subdivision 2a or 3, or section 290.923, subdivision 2.
(2) The statement required to be furnished by this
subdivision in respect of any remuneration shall be furnished at
such other times, shall contain such other information, and
shall be in such form as the commissioner may prescribe.
(3) The commissioner may prescribe rules providing for
reasonable extensions of time, not in excess of 30 days, to
employers or payers required to furnish such statements to their
employees or payees under this subdivision.
(4) A duplicate of any statement made pursuant to this
subdivision and in accordance with rules prescribed by the
commissioner, along with a reconciliation in such form as the
commissioner may prescribe of all such statements for the
calendar year (including a reconciliation of the quarterly
returns required to be filed pursuant to subdivision 6), shall
be filed with the commissioner on or before February 28 of the
year after the payments were made.
(5) The employer must submit the statements required to be
sent to the commissioner on magnetic media, if the media were
required to satisfy the federal reporting requirements pursuant
to section 6011(e) of the Internal Revenue Code of 1986, as
amended through December 31, 1987, and the regulations issued
under it.
Sec. 18. Minnesota Statutes 1987 Supplement, section
290.92, subdivision 15, is amended to read:
Subd. 15. [PENALTIES; FAILURE TO PAY TAX.] (1) In the case
of any failure to withhold a tax on wages, or make payments to
or deposits with the commissioner of amounts withheld, as
required by this section, within the time prescribed by law,
there shall be added to the tax a penalty equal to three percent
of the amount of tax that should have been properly withheld and
paid over to or deposited with the commissioner if the failure
is for not more than 30 days with an additional three percent
for each additional 30 days or fraction thereof during which the
failure continues, not exceeding 24 percent in the aggregate.
The amount of the tax together with this amount shall bear
interest at the rate specified in section 270.75 from the time
the tax should have been paid until paid. The amount added to
the tax shall be collected at the same time and in the same
manner and as a part of the tax unless the tax has been paid
before the discovery of the negligence, in which case the amount
added shall be collected in the same manner as the tax.
(1a) In the case of a failure to make and file quarterly
returns with the commissioner as required by this section, there
shall be added to the tax a penalty equal to three percent of
the amount of tax not properly withheld and paid over to or
deposited with the commissioner if the failure is for not more
than 30 days with an additional five percent of the amount of
tax remaining unpaid during each additional 30 days or fraction
thereof during which the failure continues, not exceeding 23
percent in the aggregate. The amount of the tax together with
this amount shall bear interest at the rate specified in section
270.75 from the time the tax should have been paid until paid.
The amount added to the tax shall be collected at the same time
and in the same manner and as a part of the tax unless the tax
has been paid before the discovery of the negligence, in which
case the amount added shall be collected in the same manner as
the tax.
(1b) In the case of a failure to file a return of tax
imposed by this chapter within 60 days of the date prescribed
for filing of the return (determined with regard to any
extension of time for filing), the addition to tax under
paragraph (1a) shall not be less than the lesser of (i) $200; or
(ii) the greater of (a) 25 percent of the amount required to be
shown as tax on the return without reduction for any payments
made or refundable credits allowable against the tax or (b) $50.
(1c) Where penalties are imposed under paragraphs (1) and
(1a), except for the minimum penalty under paragraph (1b), the
combined penalty percentage shall not exceed 38 percent in the
aggregate.
(2) If any employer required to withhold a tax on wages,
make deposits, make and file quarterly returns and make payments
to the commissioner of amounts withheld, as required by sections
290.92 to 290.97, willfully fails to withhold the tax or make
the deposits, files a false or fraudulent return, willfully
fails to make the payment or deposit, or willfully attempts in
any manner to evade or defeat the tax or the payment or deposit
of it, there shall also be imposed on the employer as a penalty
an amount equal to 50 percent of the amount of tax, less any
amount paid or deposited by the employer on the basis of the
false or fraudulent return or deposit, that should have been
properly withheld and paid over or deposited with the
commissioner. The amount of the tax together with this amount
shall bear interest at the rate specified in section 270.75 from
the time the tax should have been paid until paid. The penalty
imposed by this paragraph shall be collected as a part of the
tax, and shall be in addition to any other penalties civil and
criminal, prescribed by this subdivision.
(3) If any person required under the provisions of
subdivision 7 to furnish a statement to an employee or payee and
a duplicate statement to the commissioner, or to furnish a
reconciliation of the statements, and quarterly returns, to the
commissioner, willfully furnishes a false or fraudulent
statement to an employee or payee or a false or fraudulent
duplicate statement or reconciliation of statements, and
quarterly returns, to the commissioner, or willfully fails to
furnish a statement or the reconciliation in the manner, at the
time, and showing the information required by the provisions of
subdivision 7, or rules prescribed by the commissioner
thereunder, there shall be imposed on the person a penalty of
$50 for each act or failure to act, but the total amount imposed
on the delinquent person for all such failures during any
calendar year shall not exceed $25,000. The penalty imposed by
this paragraph is due and payable within ten days after the
mailing of a written demand therefor, and may be collected in
the manner prescribed in subdivision 6, paragraph (8).
(4) In addition to any other penalties prescribed, any
person required to withhold a tax on wages, file quarterly
returns, and make payments or deposits to the commissioner of
amounts withheld, as required by this section, who attempts to
evade the tax by (i) willfully failing to withhold the tax, file
the return, or make the payment or deposit, or (ii) willfully
preparing or filing a false return, is guilty of a gross
misdemeanor unless the tax involved exceeds $300, in which event
the person is guilty of a felony.
(5) In lieu of any other penalty provided by law, except
the penalty provided by paragraph (3), any person required under
the provisions of subdivision 7 to furnish a statement of wages
to an employee and a duplicate statement to the commissioner,
who willfully furnishes a false or fraudulent statement of wages
to an employee or a false or fraudulent duplicate statement of
wages to the commissioner, or who willfully fails to furnish a
statement in the manner, at the time, and showing the
information required by the provisions of subdivision 7, or
rules prescribed by the commissioner thereunder, is guilty of a
gross misdemeanor.
(6) Any employee required to supply information to an
employer under the provisions of subdivision subdivisions 4a and
5, who willfully fails to supply information or willfully
supplies false or fraudulent information thereunder which would
require an increase in the tax to be deducted and withheld under
subdivision 2a or 3, is guilty of a gross misdemeanor.
(7) The term "person," as used in this section, includes an
officer or employee of a corporation, or a member or employee of
a partnership, who as an officer, employee, or member is under a
duty to perform the act in respect of which the violation occurs.
(8) All payments received may, in the discretion of the
commissioner of revenue, be credited first to the oldest
liability not secured by a judgment or lien, but in all cases
shall be credited first to penalties, next to interest, and then
to the tax due.
(9) In addition to any other penalty provided by law, any
employee who furnishes a withholding exemption certificate or a
residency affidavit to an employer which the employee has reason
to know contains a materially incorrect statement is liable to
the commissioner of revenue for a penalty of $500 for each
instance. The penalty is immediately due and payable and may be
collected in the same manner as any delinquent income tax.
(10) In addition to any other penalty provided by law, any
employer who fails to submit a copy of a withholding exemption
certificate or a residency affidavit required by subdivision 5a,
clause (1)(a), (1)(b), or (2) is liable to the commissioner of
revenue for a penalty of $50 for each instance. The penalty is
immediately due and payable and may be collected in the manner
provided in subdivision 6, paragraph (8).
(11) Any person who willfully aids or assists in, or
procures, counsels, or advises the preparation or presentation
under, or in connection with any matter arising under this
section, of a return, affidavit, claim, or other document, which
is fraudulent or false as to any material matter, whether or not
the falsity or fraud is with the knowledge or consent of the
person authorized or required to present the return, affidavit,
claim, or document, is guilty of a gross misdemeanor, unless the
tax involved exceeds $300, in which event the actor is guilty of
a felony.
(12) Notwithstanding the provisions of section 628.26, or
any other provision of the criminal laws of this state, an
indictment may be found and filed, or a complaint filed, upon
any criminal offense specified in this subdivision, in the
proper court within six years after the commission of the
offense.
Sec. 19. Minnesota Statutes 1986, section 290.92,
subdivision 21, is amended to read:
Subd. 21. [EXTENSION OF WITHHOLDING TO UNEMPLOYMENT
COMPENSATION BENEFITS.] (a) At the time an individual makes a
claim for unemployment compensation benefits, the commissioner
of jobs and training must notify the individual that the
individual's unemployment compensation may be subject to state
income taxes depending on the individual's other income and that
the individual may elect to have the payments subject to
withholding under this section. If the individual so requests,
unemployment compensation benefits paid to the individual shall
be treated as if it were a payment of wages by an employer to an
employee for a payroll period.
(b) For purposes of this section, any supplemental
unemployment compensation benefit paid to an individual to the
extent includable in such individual's Minnesota gross income,
shall be treated as if it were a payment of wages by an employer
to an employee for a payroll period.
Sec. 20. [ESTIMATED TAX EXCEPTION FOR 1987.]
For taxable years beginning after December 31, 1986, but
beginning before January 1, 1988, the required amount of the
annual payment of the current year's tax in determining the
underpayment in Minnesota Statutes, section 290.93, subdivision
10, paragraph (4), clause (a), shall be 80 percent instead of 90
percent and the penalty shall also be reduced by the ratio by
which the salary income subject to withholding bears to the
federal adjusted gross income for 1987 as determined under
section 62 of the Internal Revenue Code of 1986, as amended
through December 31, 1987.
Sec. 21. [REPEALER.]
Minnesota Statutes 1987 Supplement, sections 290.06,
subdivision 20; and 290.077, subdivision 1, are repealed.
Sec. 22. [EFFECTIVE DATES.]
Except as otherwise provided, sections 1 to 3 and 16 are
effective for taxable years beginning after December 31, 1986.
Sections 5, 7 to 12, 14, 15, 17, and 21 are effective for
taxable years beginning after December 31, 1987. The deduction
allowed under section 4, clause (4) and the ability of surviving
spouses to use the married filing joint rates in section 7 are
effective for taxable years beginning after December 31, 1986.
The rest of sections 4 and 7 are effective for taxable years
beginning after December 31, 1987. Section 13 is effective for
taxable years beginning after December 31, 1984. Section 18 is
effective the day following final enactment.
ARTICLE 2
BUSINESS TAXES
Section 1. Minnesota Statutes 1987 Supplement, section
60A.15, subdivision 1, is amended to read:
Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or
before April 15, June 15, and December 15 of each year, every
domestic and foreign company, including town and farmers' mutual
insurance companies and domestic mutual insurance companies,
shall pay to the commissioner of revenue installments equal to
one-third of the insurer's total estimated tax for the current
year. For insurers other than town and farmers' mutual
insurance companies and mutual property and casualty insurance
companies other than those (i) principally writing workers'
compensation insurance, (ii) writing life insurance, or (iii)
whose total assets at the end of the preceding calendar year
exceed $1,600,000,000, installments must be based on a sum equal
to two percent of the premiums described in paragraph (b). For
town and farmers' mutual insurance companies and mutual property
and casualty insurance companies other than those (i)
principally writing workers' compensation insurance, (ii)
writing life insurance, or (iii) whose total assets at the end
of the preceding calendar year exceed $1,600,000,000, the
installments must be based on an amount equal to the following
percentages of the premiums described in paragraph (b):
(1) for premiums paid after December 31, 1987, and before
January 1, 1989, 1.5 percent;
(2) for premiums paid after December 31, 1988, and before
January 1, 1992, one percent; and
(3) for premiums paid after December 31, 1991, one-half of
one percent.
(b) Installments under paragraph (a) are percentages of
gross premiums less return premiums on all direct business
received by it the insurer in this state, or by its agents for
it, in cash or otherwise, during such year, excepting premiums
written for marine insurance as specified in subdivision 6.
(c) Failure of a company to make payments of at least
one-third of either (a) (1) the total tax paid during the
previous calendar year or (b) (2) 80 percent of the actual tax
for the current calendar year shall subject the company to the
penalty and interest provided in this section.
Sec. 2. Minnesota Statutes 1987 Supplement, section
60E.04, subdivision 4, is amended to read:
Subd. 4. [TAXATION.] (a) All premiums paid for coverages
within this state to risk retention groups are subject to
taxation at the same rate and subject to the same interest,
fines, and penalties for nonpayment as that applicable to
foreign admitted other insurers.
(b) To the extent agents or brokers are utilized, they
shall report and pay the taxes for the premiums for risks which
they have placed with or on behalf of a risk retention group not
chartered in this state. The agents or brokers are subject to
the provisions of sections 60A.195 to 60A.209.
(c) To the extent agents or brokers are not utilized or
fail to pay the tax, each risk retention group shall pay the tax
for risks insured within the state. Each risk retention group
shall report all premiums paid to it for risks insured within
the state and shall be subject to the same interest, fines, and
penalties for nonpayment as that applicable to foreign admitted
insurers.
Sec. 3. Minnesota Statutes 1986, section 62E.13, is
amended by adding a subdivision to read:
Subd. 10. Premiums received by the writing carrier for the
comprehensive health insurance plan are exempt from the
provisions of section 60A.15.
Sec. 4. Minnesota Statutes 1987 Supplement, section
69.021, subdivision 5, is amended to read:
Subd. 5. [CALCULATION OF STATE AID.] The amount of state
aid available for apportionment shall be two percent of the
fire, lightning, sprinkler leakage, and extended coverage
premiums reported to the commissioner by insurers on the
Minnesota Firetown Premium Report and two percent of the
premiums reported to the commissioner by insurers on the
Minnesota Aid to Police Premium Report. The amount for
apportionment in respect to firefighter's state aid shall not be
greater or lesser than the amount of premium taxes paid to the
state upon the premiums reported to the commissioner by insurers
on the Minnesota Firetown Premium Report after subtracting This
amount shall be reduced by the amount required to pay the state
auditor's costs and expenses of the audits or exams of the
firefighters relief associations. The total amount for
apportionment in respect to police state aid shall not be
greater or lesser than the amount of premium taxes paid to the
state upon the premiums reported to the commissioner by insurers
on the Minnesota Aid to Police Premium Report after subtracting
the amount required to pay the state auditor's costs and
expenses of the audits or exams of the police relief
associations. The amount for apportionment in respect to police
state aid shall be distributed to the municipalities maintaining
police departments and to the county on the basis of the number
of active peace officers, as certified pursuant to section
69.011, subdivision 2, clause (b). The commissioner shall
calculate the percentage of increase or decrease reflected in
the apportionment over or under the previous year's available
state aid using the same premiums as a basis for comparison.
Sec. 5. Minnesota Statutes 1986, section 69.031,
subdivision 3, is amended to read:
Subd. 3. [APPROPRIATIONS.] There is hereby appropriated
annually from the state general fund to the commissioner of
revenue an amount sufficient to make the payments specified in
this section and section 69.021 not exceeding the tax collected.
Sec. 6. Minnesota Statutes 1986, section 237.075,
subdivision 8, is amended to read:
Subd. 8. [CHARITABLE CONTRIBUTIONS.] The commission shall
allow as operating expenses only those charitable contributions
which the commission deems prudent and which qualify under
section 290.21, subdivision 3, clause (b) or (e). Only 50
percent of the qualified contributions shall be allowed as
operating expenses.
Sec. 7. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 5, is amended to read:
Subd. 5. [DOMESTIC CORPORATIONS.] The term "domestic" when
applied to a corporation means a corporation:
(1) created or organized in Minnesota or under its laws;
and the term "foreign" when thus applied means a corporation
other than a domestic corporation the United States, or under
the laws of the United States or of any state, the District of
Columbia, or any political subdivision of any of the foregoing
but not including the commonwealth of Puerto Rico, or any
possession of the United States;
(2) which qualifies as a DISC, as defined in section 992(a)
of the Internal Revenue Code of 1954, as amended through
December 31, 1985; or
(3) which qualifies as a FSC, as defined in section 922 of
the Internal Revenue Code of 1986, as amended through December
31, 1987.
Sec. 8. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 5a. [FOREIGN CORPORATION.] The term "foreign," when
applied to a corporation, means a corporation other than a
domestic corporation.
Sec. 9. Minnesota Statutes 1986, section 290.01, is
amended by adding a subdivision to read:
Subd. 6b. [FOREIGN OPERATING CORPORATION.] The term
"foreign operating corporation," when applied to a corporation,
means a domestic corporation with the following characteristics:
(1) it is part of a unitary business at least one member of
which is taxable in this state; and
(2) either (i) the average of the percentages of its
property and payrolls assigned to locations inside the United
States and the District of Columbia, excluding the commonwealth
of Puerto Rico and possessions of the United States, as
determined under section 290.191 or 290.20, is 20 percent or
less; or (ii) it has in effect a valid election under section
936 of the Internal Revenue Code of 1986, as amended through
December 31, 1987.
Sec. 10. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 19, is amended to read:
Subd. 19. [NET INCOME.] The term "net income" means the
federal taxable income, as defined in section 63 of the Internal
Revenue Code of 1986, as amended through the date named in this
subdivision, incorporating any elections made by the taxpayer in
accordance with the Internal Revenue Code in determining federal
taxable income for federal income tax purposes, and with the
modifications provided in subdivisions 19a to 19f.
In the case of a regulated investment company or a fund
thereof, as defined in section 851(a) or 851(q) of the Internal
Revenue Code, federal taxable income means investment company
taxable income as defined in section 852(b)(2) of the Internal
Revenue Code, except that:
(1) the exclusion of net capital gain provided in section
852(b)(2)(A) of the Internal Revenue Code does not apply; and
(2) the deduction for dividends paid under section
852(b)(2)(D) of the Internal Revenue Code must be applied by
allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C)
and 852(b)(5) of the Internal Revenue Code.
The Internal Revenue Code of 1986, as amended through
December 31, 1986, shall be in effect for taxable years
beginning after December 31, 1986.
Except as otherwise provided, references to the Internal
Revenue Code in subdivisions 19a to 19f mean the code in effect
for purposes of determining net income for the applicable year.
Sec. 11. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 19c, is amended to read:
Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE
INCOME.] For corporations, there shall be added to federal
taxable income:
(1) the amount of any deduction taken for federal income
tax purposes for income, excise, or franchise taxes based on net
income or related minimum taxes paid by the corporation to
Minnesota, another state, a political subdivision of another
state, the District of Columbia, or any foreign country or
possession of the United States;
(2) interest not subject to federal tax upon obligations
of: the United States, its possessions, its agencies, or its
instrumentalities to the extent the obligations are not subject
to federal tax; the state of Minnesota or any other state, any
of its political or governmental subdivisions, any of its
municipalities, or any of its governmental agencies or
instrumentalities; or the District of Columbia;
(3) exempt interest exempt-interest dividends received as
defined in section 852(b)(5) of the Internal Revenue Code of
1986, as amended through December 31, 1986;
(4) the amount of any windfall profits tax deducted under
section 164 or 471 of the Internal Revenue Code of 1986, as
amended through December 31, 1986;
(5) the amount of any net operating loss deduction taken
for federal income tax purposes under section 172 of the
Internal Revenue Code of 1986, as amended through December 31,
1986;
(6) the amount of any special deductions taken for federal
income tax purposes under sections 241 to 247 of the Internal
Revenue Code of 1986, as amended through December 31, 1986;
(7) losses from the business of mining, as defined in
section 290.05, subdivision 1, clause (a), that are not subject
to Minnesota income tax;
(8) the amount of any capital losses deducted for federal
income tax purposes under sections 1211 and 1212 of the Internal
Revenue Code of 1986, as amended through December 31, 1986;
(9) the amount of any charitable contributions deducted for
federal income tax purposes under section 170 of the Internal
Revenue Code of 1986, as amended through December 31, 1986;
(10) the exempt foreign trade income of a foreign sales
corporation under sections 921(a) and 291 of the Internal
Revenue Code of 1986, as amended through December 31, 1986;
(11) the amount of percentage depletion deducted under
sections 611 through 614 and 291 of the Internal Revenue Code of
1986, as amended through December 31, 1986; and
(12) for certified pollution control facilities placed in
service in a taxable year beginning before December 31, 1986,
and for which amortization deductions were elected under section
169 of the Internal Revenue Code of 1954, as amended through
December 31, 1985, the amount of the amortization deduction
allowed in computing federal taxable income for those
facilities; and
(13) the amount of any deemed dividend from a foreign
operating corporation determined pursuant to section 290.17,
subdivision 4, paragraph (g).
Sec. 12. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 19d, is amended to read:
Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL
TAXABLE INCOME.] For corporations, there shall be subtracted
from federal taxable income after the increases provided in
subdivision 19c:
(1) the amount of foreign dividend gross-up added to gross
income for federal income tax purposes under section 78 of the
Internal Revenue Code;
(2) the decrease in salary expense for federal income tax
purposes due to claiming the federal jobs credit under section
51 of the Internal Revenue Code;
(3) any dividend (not including any distribution in
liquidation) paid within the taxable year by a national or state
bank to the United States, or to any instrumentality of the
United States exempt from federal income taxes, on the preferred
stock of the bank owned by the United States or the
instrumentality;
(4) amounts disallowed for intangible drilling costs due to
differences between this chapter and the Internal Revenue Code
in taxable years beginning before January 1, 1987, as follows:
(i) to the extent the disallowed costs are represented by
physical property, an amount equal to the allowance for
depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in
subdivision 19e; and
(ii) to the extent the disallowed costs are not represented
by physical property, an amount equal to the allowance for cost
depletion under Minnesota Statutes 1986, section 290.09,
subdivision 8;
(5) the deduction for capital losses pursuant to sections
1211 and 1212 of the Internal Revenue Code of 1986, as amended
through December 31, 1986, except that:
(i) for capital losses incurred in taxable years beginning
after December 31, 1986, capital loss carrybacks shall not be
allowed; and
(ii) for capital losses incurred in taxable years beginning
after December 31, 1986, a capital loss carryover to each of the
15 taxable years succeeding the loss year shall be allowed;
(iii) for capital losses incurred in taxable years
beginning before January 1, 1987, a capital loss carryback to
each of the three taxable years preceding the loss year, subject
to the provisions of Minnesota Statutes 1986, section 290.16,
shall be allowed; and
(iv) for capital losses incurred in taxable years beginning
before January 1, 1987, a capital loss carryover to each of the
five taxable years succeeding the loss year to the extent such
loss was not used in a prior taxable year and subject to the
provisions of Minnesota Statutes 1986, section 290.16, shall be
allowed;
(6) an amount for interest and expenses relating to income
not taxable for federal income tax purposes, if (i) the income
is taxable under this chapter and (ii) the interest and expenses
were disallowed as deductions under the provisions of section
171(a)(2), 265 or 291 of the Internal Revenue Code of 1986, as
amended through December 31, 1986, in computing federal taxable
income;
(7) in the case of mines, oil and gas wells, other natural
deposits, and timber for which percentage depletion was
disallowed pursuant to subdivision 19c, clause (11), a
reasonable allowance for depletion based on actual cost. In the
case of leases the deduction must be apportioned between the
lessor and lessee in accordance with rules prescribed by the
commissioner. In the case of property held in trust, the
allowable deduction must be apportioned between the income
beneficiaries and the trustee in accordance with the pertinent
provisions of the trust, or if there is no provision in the
instrument, on the basis of the trust's income allocable to each;
(8) for certified pollution control facilities placed in
service in a taxable year beginning before December 31, 1986,
and for which amortization deductions were elected under section
169 of the Internal Revenue Code of 1954, as amended through
December 31, 1985, an amount equal to the allowance for
depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7;
(9) the amount included in federal taxable income
attributable to the credits provided in Minnesota Statutes 1986,
section 273.1314, subdivision 9, or Minnesota Statutes, section
469.171, subdivision 6;
(10) amounts included in federal taxable income that are
due to refunds of income, excise, or franchise taxes based on
net income or related minimum taxes paid by the corporation to
Minnesota, another state, a political subdivision of another
state, the District of Columbia, or a foreign country or
possession of the United States to the extent that the taxes
were added to federal taxable income under section 290.01,
subdivision 19c, clause (1), in a prior taxable year; and
(11) the following percentage of royalties, fees, or other
like income accrued or received from a foreign operating
corporation or a foreign corporation which is part of the same
unitary business as the receiving corporation:
Taxable Year
Beginning After .......... Percentage
December 31, 1988 ........ 50 percent
December 31, 1990 ........ 80 percent.
Sec. 13. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 19e, is amended to read:
Subd. 19e. [DEPRECIATION MODIFICATIONS FOR CORPORATIONS.]
In the case of corporations, a modification shall be made for
the accelerated cost recovery system. The allowable deduction
for the accelerated cost recovery system is the same amount as
provided in section 168 of the Internal Revenue Code with the
following modifications. The modifications apply to taxable
years beginning after December 31, 1986, and to property for
which deductions under the Tax Reform Act of 1986, Public Law
Number 99-514, are elected or apply.
(a) For property placed in service after December 31, 1980,
and before January 1, 1987, 40 percent of the allowance pursuant
to section 168 of the Internal Revenue Code of 1954, as amended
through December 31, 1985, for 15-, 18-, or 19-year real
property shall not be allowed and for all other property 20
percent shall not be allowed.
(b) For property placed in service after December 31, 1987,
no modification shall be made.
(c) For property placed in service after July 31, 1986, and
before January 1, 1987, for which the taxpayer elects the
deduction pursuant to section 203 of the Tax Reform Act of 1986,
Public Law Number 99-514, and for property placed in service
after December 31, 1986, and before January 1, 1988, 15 percent
of the allowance pursuant to section 168 of the Internal Revenue
Code of 1986 shall not be allowed.
(d) For property placed in service after December 31, 1980,
and before January 1, 1987, for which the taxpayer elects to use
the straight line method provided in section 168(b)(3), (f)(12),
or (j)(1) or a method provided in section 168(e)(2) of the
Internal Revenue Code of 1986, as amended through December 31,
1986, but excluding property for which the taxpayer elects the
deduction pursuant to section 203 of the Tax Reform Act of 1986,
Public Law Number 99-514, the modifications provided in
paragraph (a) do not apply.
(e) For property subject to the modifications contained in
paragraphs (a) and (b) (c) and Minnesota Statutes 1986, section
290.09, subdivision 7, clause (c), the following modification
shall be made after the entire amount of the allowable deduction
has been allowed for federal tax purposes for that property
under the provisions of section 168 of the Internal Revenue Code
of 1986, as amended through December 31, 1986. The remaining
depreciable basis in those assets for Minnesota purposes,
including the amount of any basis reduction to reflect the
investment tax credit for federal purposes under sections 48(q)
and 49(d) of the Internal Revenue Code of 1986, as amended
through December 31, 1986, shall be a depreciation allowance
computed using the straight line method over the following
number of years:
(1) three-year property, one year;
(2) five-year and seven-year property, two years;
(3) ten-year property, five years; and
(4) all other property, seven years.
(f) For property placed in service after December 31, 1987,
the remaining depreciable basis for Minnesota purposes that is
attributable to the basis reduction for federal purposes to
reflect the investment tax credit under sections 48(q) and 49(d)
of the Internal Revenue Code of 1986, as amended through
December 31, 1986, shall be allowed as a deduction in the first
taxable year after the entire amount of the allowable deduction
for that property under the provisions of section 168 of the
Internal Revenue Code of 1986, has been allowed, except that
where the straight line method provided in section 168(b)(3) is
used, the deduction provided in this clause shall be allowed in
the last taxable year in which an allowance for depreciation is
allowed for that property.
(g) For qualified timber property for which the taxpayer
made an election under section 194 of the Internal Revenue Code
of 1986, the remaining depreciable basis for Minnesota purposes
is allowed as a deduction in the first taxable year after the
entire allowable deduction has been allowed for federal tax
purposes.
(h) The basis of property to which section 168 of the
Internal Revenue Code applies is its basis as provided in this
chapter including the modifications provided in this subdivision
and in Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c). The recapture tax provisions provided in
sections 1245 and 1250 of the Internal Revenue Code of 1986, as
amended through December 31, 1986, apply but must be calculated
using the basis provided in the preceding sentence.
(i) The basis of an asset acquired in an exchange of
assets, including an involuntary conversion, is the same as its
federal basis under the provisions of the Internal Revenue Code
of 1986, except that the difference in basis due to the
modifications in this subdivision and in Minnesota Statutes
1986, section 290.09, subdivision 7, paragraph (c), is a
deduction as provided in paragraph (e).
Sec. 14. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 29, is amended to read:
Subd. 29. [TAXABLE INCOME.] For tax years beginning after
December 31, 1986, the term "taxable income" means:
(1) for individuals, estates, and trusts, the same as
taxable net income;
(2) for corporations, the taxable net income less
(i) the net operating loss deduction under section 290.095;
(ii) the dividends received deduction under section 290.21,
subdivision 4; and
(iii) the charitable contribution deduction under section
290.21, subdivision 3; and
(iv) the foreign royalty deduction under section 290.21,
subdivision 8.
Sec. 15. Minnesota Statutes 1987 Supplement, section
290.015, subdivision 1, is amended to read:
Subdivision 1. [GENERAL RULE.] A person, other than a
resident individual, that conducts a trade or business with its
principal place of business outside of Minnesota is subject to
the taxes imposed by this chapter with respect to that trade or
business if the trade or business makes sales or receives other
income that is assignable or apportionable to this state under
section 290.17, 290.191, 290.20, 290.35 or 290.36 without regard
to physical presence in this state, except as provided in
subdivision 3. Activities that create jurisdiction to tax under
this chapter include, but are not limited to:
(1) having a place of business in this state;
(2) having employees, representatives, or independent
contractors conducting business activities in this state;
(3) regularly selling products or services of any kind or
nature to customers in this state who receive the product or
service in this state;
(4) regularly soliciting business from potential customers
in this state;
(5) regularly performing services from outside this state
which are consumed within this state;
(6) regularly engaging in transactions with customers in
this state that involve intangible property, including loans but
not property described in subdivision 3, paragraph (b), and
result in income flowing to the person from within this state;
(7) owning or leasing tangible personal or real property
located in this state; or
(8) if a financial institution, regularly soliciting and
receiving deposits from customers in this state.
(a) Except as provided in subdivision 3, a person that
conducts a trade or business that has a place of business in
this state, regularly has employees or independent contractors
conducting business activities on its behalf in this state, or
owns or leases real property located in this state or tangible
personal property located in this state as defined in section
290.191, subdivision 6, paragraph (e), is subject to the taxes
imposed by this chapter.
(b) Except as provided in subdivision 3, a person that
conducts a trade or business not described in paragraph (a) is
subject to the taxes imposed by this chapter if the trade or
business obtains or regularly solicits business from within this
state, without regard to physical presence in this state.
(c) For purposes of paragraph (b), business from within
this state includes, but is not limited to:
(1) sales of products or services of any kind or nature to
customers in this state who receive the product or service in
this state;
(2) sales of services which are performed from outside this
state but the benefits of which are consumed in this state;
(3) transactions with customers in this state that involve
intangible property and result in income flowing to the person
from within this state as provided in section 290.191;
(4) leases of tangible personal property that is located in
this state as defined in section 290.191, subdivision 6,
paragraph (e);
(5) sales and leases of real property located in this
state; and
(6) if a financial institution, deposits received from
customers in this state.
(d) For purposes of paragraph (b), solicitation includes,
but is not limited to:
(1) the distribution, by mail or otherwise, without regard
to the state from which such distribution originated or in which
the materials were prepared, of catalogs, periodicals,
advertising flyers, or other written solicitations of business
to customers in this state;
(2) display of advertisements on billboards or other
outdoor advertising in this state;
(3) advertisements in newspapers published in this state;
(4) advertisements in trade journals or other periodicals,
the circulation of which is primarily within this state;
(5) advertisements in a Minnesota edition of a national or
regional publication or a limited regional edition of which this
state is included of a broader regional or national publication
which are not placed in other geographically defined editions of
the same issue of the same publication;
(6) advertisements in regional or national publications in
an edition which is not by its contents geographically targeted
to Minnesota, but which is sold over the counter in Minnesota or
by subscription to Minnesota residents;
(7) advertisements broadcast on a radio or television
station located in Minnesota; or
(8) any other solicitation by telegraph, telephone,
computer data base, cable, optic, microwave, or other
communication system.
Sec. 16. Minnesota Statutes 1987 Supplement, section
290.015, subdivision 2, is amended to read:
Subd. 2. [PRESUMPTION.] (a) A person is presumed, subject
to rebuttal, to be engaged in regular solicitation within this
state if it conducts transactions described in any of
subdivision 1, clauses (3) to (6), with 20 or more residents of
this state during any tax period or, if a financial institution,
if the sum of its assets and the absolute value of its deposits
attributable to sources within this state equals or exceeds
$5,000,000. Assets and deposits must be attributed to sources
within this state by applying the principles established under
section 290.191 obtaining or regularly soliciting business from
within this state if:
(1) it is a financial institution and it conducts
activities described in subdivision 1, paragraph (b), without
regard to transactions described in subdivision 3, with 20 or
more persons within this state during any tax period; or
(2) it is a financial institution as defined in section
290.01, subdivision 4a, and the sum of its assets and the
absolute value of its deposits attributable to sources within
this state equals or exceeds $5,000,000, with assets and
deposits attributed to sources within this state by applying the
principles established under section 290.191, except as provided
in subdivision 3.
(b) A financial institution that (i) is not engaged in
activities within this state under subdivision 1, paragraph (a),
and (ii) does not satisfy the requirements of paragraph (a) is
not subject to taxes imposed by this chapter.
Sec. 17. Minnesota Statutes 1987 Supplement, section
290.015, subdivision 3, is amended to read:
Subd. 3. [EXCEPTIONS.] (a) A person is not subject to tax
under this chapter if the person is engaged in the business of
selling tangible personal property and taxation of that person
under this chapter is precluded by Public Law Number 86-272,
United States Code, title 15, sections 381 to 384 or would be so
precluded except for the fact that the person stored tangible
personal property in a state licensed facility under chapter 231.
(b) Ownership of an interest in the following types of
property (including those contacts with this state reasonably
required to evaluate and complete the acquisition or disposition
of the property, the servicing of the property or the income
from it, the collection of income from the property, or the
acquisition or liquidation of collateral relating to the
property) shall not be a factor in determining whether the owner
is subject to tax under this chapter:
(1) an interest in a real estate mortgage investment
conduit, a real estate investment trust, or a regulated
investment company, as those terms are defined in the Internal
Revenue Code of 1986, as amended through December 31, 1986; and
(2) an interest in a loan-backed, mortgage-backed, or
receivable-backed security representing either: (i) ownership
in a pool of promissory notes, mortgages, or receivables or
certificates of interest or participation in such notes,
mortgages, or receivables, or (ii) debt obligations or equity
interests which provide for payments in relation to payments or
reasonable projections of payments on the notes, mortgages, or
receivables, and which are issued by a financial institution or
by an entity substantially all of whose assets consist of
promissory notes, mortgages, receivables, or interests in them;
(3) an interest in any assets described in section 290.191,
subdivision 11, paragraphs (e) to (l), and in which the payment
obligations embodies in such assets were solicited and entered
into by persons independent and not acting on behalf of the
owner;
(4) an interest in the right to service, or collect income
from any assets described in section 290.191, subdivision 11,
paragraphs (e) to (l), and in which the payment obligations
embodied in such assets were solicited and entered into by
persons independent and not acting on behalf of the owner;
(5) an interest of a person other than an individual,
estate, or trust, in any intangible, tangible, real, or personal
property acquired in satisfaction, whether in whole or in part,
of any asset embodying a payment obligation which is in default,
whether secured or unsecured, the ownership of an interest in
which would be exempt under the preceding provisions of this
subdivision, provided the property is disposed of within a
reasonable period of time; or
(6) amounts held in escrow or trust accounts, pursuant to
and in accordance with the terms of property described in this
subdivision.
If the person is a member of the unitary group, paragraph
(b) does not apply to an interest acquired from another member
of the unitary group.
Sec. 18. Minnesota Statutes 1987 Supplement, section
290.015, subdivision 4, is amended to read:
Subd. 4. [LIMITATIONS.] (a) This section does not (1)
subject a trade or business to any regulation, including any
tax, of any local unit of government or subdivision of this
state if the trade or business does not own or lease tangible or
real property located within this state and has no employees or
independent contractors present in this state to assist in the
carrying on of the business; or (2) exclude a trade or business
from the filing requirements of the notice of business
activities report under section 290.371.
(b) The purchase of tangible personal property or
intangible property or services by a person that conducts a
trade or business with the principal place of business outside
of Minnesota (the "non-Minnesota person") from a person within
Minnesota shall not be taken into account in determining whether
the non-Minnesota person is subject to the taxes imposed by this
chapter, except for services involving either the direct
solicitation of Minnesota customers or relationships with
Minnesota customers after sales are made.
(c) No contact with any Minnesota financial institution by
any financial institution with its principal place of business
outside Minnesota with respect to transactions described in
subdivision 3, or with respect to deposits received from or by a
Minnesota financial institution, shall be taken into account in
determining whether such a financial institution is subject to
the taxes imposed by this chapter. The fact of participation by
a Minnesota financial institution in a transaction which also
involves a borrower and a financial institution that conducts a
trade or business with its principal place of business outside
of Minnesota shall not be a factor in determining whether such
financial institution is subject to the taxes imposed by this
chapter. This paragraph does not apply to transactions between
or among members of the same unitary group.
Sec. 19. Minnesota Statutes 1987 Supplement, section
290.06, subdivision 1, is amended to read:
Subdivision 1. [COMPUTATION, CORPORATIONS.] (a) The
franchise tax imposed by this chapter upon corporations shall be
computed by applying to their taxable income the rate of 9.5
percent adjusted as provided in paragraph (b).
(b) For taxable years beginning after December 31, 1989,
the commissioner of revenue must adjust the rate provided in
paragraph (a) as provided in this paragraph. By December 15,
1989, the commissioner shall prepare a forecast of revenues
predicted to be raised for taxable years beginning in 1990 by
the franchise tax on corporations under this chapter for taxable
years beginning in 1990, including the tax under section
290.092, computed as if the tax were imposed under section
290.092, subdivisions 1 to 4, and the rate in effect in this
subdivision were 9.5 percent. The commissioner shall adjust the
rate provided in paragraph (a) so that the amount forecast to be
raised by the franchise tax on corporations under this chapter,
including the tax under section 290.092, subdivision 5, is equal
to the amount of the forecast computed as if the tax under
section 290.092, subdivisions 1 to 4, were in effect. The
adjustment of the tax rate by the commissioner under this
subdivision shall not be considered a "rule" and shall not be
subject to the administrative procedure act contained in chapter
14.
Sec. 20. Minnesota Statutes 1987 Supplement, section
290.06, subdivision 21, is amended to read:
Subd. 21. [ALTERNATIVE MINIMUM TAX.] (a) A corporation is
allowed a credit for alternative minimum tax previously paid for
any taxable year in which the corporation has no tax liability
under section 290.092, subdivision 1, and has an alternative
minimum tax credit carryover from a previous year. The credit
allowable in any taxable year shall be equal to the lesser of (1)
the excess of the tax under section 290.06 for the taxable year
over the amount computed under section 290.092, subdivision 1,
clause (a) (1), for the taxable year, or (2) the alternative
minimum tax credit carryover to the taxable year.
(b) The tax imposed under section 290.092, subdivision 1,
for any taxable year is a credit for an alternative minimum tax
previously paid which is a credit carryover to each of the five
taxable years succeeding the taxable year. The entire amount of
the alternative minimum tax credit must be carried to the
earliest of the taxable years year to which such amount may be
carried. The portion of the alternative minimum tax credit
which is carried to each of the other taxable years to which the
credit may be carried is the excess, if any, of the credit over
the amount allowable under paragraph (a) for each of the taxable
years to which the credit may be carried. In each taxable year
in which a credit is allowable under paragraph (a), the credit
for alternative minimum tax previously paid must be used
beginning with the earliest taxable year from which the credit
may be carried Any unused portion of the credit must be carried
to the following taxable year. No credit may be carried to a
taxable year more than five years after the taxable year in
which the alternative minimum tax was paid.
Sec. 21. Minnesota Statutes 1987 Supplement, section
290.092, subdivision 3, is amended to read:
Subd. 3. [ALTERNATIVE MINIMUM TAX BASE.] The alternative
minimum tax base equals the sum of:
(1) the total amount of Minnesota sales and or receipts;
(2) the amount of the taxpayer's total Minnesota property;
and
(3) the taxpayer's total Minnesota payrolls;
less the exemption amount, if any.
Sec. 22. Minnesota Statutes 1987 Supplement, section
290.092, subdivision 4, is amended to read:
Subd. 4. [DEFINITIONS.] (a) "Minnesota sales and or
receipts" means the total sales apportioned to Minnesota
pursuant to section 290.191, subdivision 5, the total receipts
attributed to Minnesota pursuant to section 290.191,
subdivisions 6 to 8, and/or the total sales or receipts
apportioned or attributed to Minnesota pursuant to any other
apportionment formula applicable to the taxpayer.
(b) "Minnesota property" means total Minnesota tangible
property as provided in section 290.191, subdivisions 9 to 11,
and any other tangible property located in Minnesota except as
provided in subdivision 4a. Intangible property shall not be
included in Minnesota property for purposes of this section.
Taxpayers who do not utilize tangible property to apportion
income shall nevertheless include Minnesota property for
purposes of this section. For the first five taxable years
during which a corporation is subject to taxation under this
chapter, the amount of its Minnesota property and payrolls shall
be deemed to be zero for purposes of this section On a return
for a short taxable year, the amount of Minnesota property
owned, as determined under section 290.191, shall be included in
Minnesota property based on a fraction in which the numerator is
the number of days in the short taxable year and the denominator
is 365.
(c) "Minnesota payrolls" means total Minnesota payrolls as
provided in section 290.191, subdivision 12, except as provided
in subdivision 4a. Taxpayers who do not utilize payrolls to
apportion income shall nevertheless include Minnesota payrolls
for purposes of this section.
(d) The "exemption amount" equals the lesser of (1) the sum
of the taxpayer's Minnesota sales and or receipts, property, and
payrolls, as defined in this section, or (2) $5,000,000 reduced
by one-half of the amount of the taxpayer's total sales and
receipts, property, and payrolls, as defined in this section, in
excess of $10,000,000. In the case of a unitary group, the
exemption amount equals the lesser of (1) the sum of the unitary
group's Minnesota sales or receipts, property, and payrolls or
(2) $5,000,000 reduced by one-half of the unitary group's total
sales or receipts, property, and payrolls in excess of
$10,000,000. Each member of a unitary group may use a portion
of the unitary group's exemption amount based on a fraction, the
numerator of which is the sum of the taxpayer's Minnesota sales
or receipts, property, and payrolls and the denominator is the
sum of the Minnesota sales or receipts, property, and payrolls
of all unitary members subject to the taxes imposed by this
chapter. Total sales and receipts, property, and payroll means
the total determined under section 290.191 as the denominator of
the apportionment formula. For purposes of this section,
taxpayers who use an apportionment formula that does not include
sales or receipts, property, and payrolls shall, nevertheless,
use those amounts as defined in section 290.191, subdivisions 5
to 12. On a return for a short taxable year, the amount of
total property owned, as determined under section 290.191, shall
be included in Minnesota property based on a fraction in which
the numerator is the number of days in the short taxable year
and the denominator is 365. In the case of a unitary business,
the exemption amount must reflect the factors of the entire all
businesses included in the unitary business group as reported on
the combined report defined in section 290.17, subdivision 4. A
corporation that has as its sole or primary business activity
(1) the providing of professional services, as defined in
section 319A.02; (2) operation as a financial institution, as
defined in section 290.01, subdivision 4a; (3) sales or
management of real estate; or (4) operation as an insurance
agency, as defined in section 60A.02, does not have an exemption
amount.
Sec. 23. Minnesota Statutes 1987 Supplement, section
290.092, is amended by adding a subdivision to read:
Subd. 4a. [NEW BUSINESS EXCLUSION.] For the first five
taxable years during which a corporation is subject to taxation
under this chapter, the amount of its Minnesota property and
payrolls must be excluded from the alternative minimum tax base
unless it is disqualified in this subdivision. A corporation is
considered subject to taxation under this chapter if it would be
subject to Minnesota's jurisdiction to tax as provided in
section 290.015, before claiming this exclusion. The following
does not qualify for this exclusion:
(1) a corporation that is a member of a unitary group that
includes at least one business that does not qualify for this
exclusion;
(2) any corporation organized under the laws of this state
or certified to do business within this state at least five
taxable years before the taxable year in which this exclusion is
claimed;
(3) corporations created by: reorganizations, as defined
in section 368 of the Internal Revenue Code of 1986, as amended
through December 31, 1987; or split-ups, split-offs, or
spin-offs, as described in section 355 of the Internal Revenue
Code of 1986, as amended through December 31, 1987; or the
transfer or acquisition, whether directly or indirectly, of
assets which constitute a trade or business, including stock
purchases under section 338 of the Internal Revenue Code of
1986, as amended through December 31, 1987, where the surviving,
newly formed, or acquiring corporation conducts substantially
the same activities as the predecessor corporation, regardless
of whether or not the survivor corporation also conducts
additional activities, and the predecessor corporation would not
otherwise qualify for this exclusion if it had continued to
conduct those activities;
(4) any change in identity or form of business where the
original business entity would have been subject to Minnesota's
taxing jurisdiction, as provided in section 290.015, at least
five taxable years before the taxable year in which this
exclusion is claimed;
(5) a corporation, the primary business activity of which
is the providing of professional services as defined in section
319A.02, operation as a financial institution, as defined in
section 290.01, subdivision 4a; sales or management of real
estate; or operation as an insurance agency, as defined in
section 60A.03; or
(6) a corporation the affairs of which the commissioner
finds were arranged as they were primarily to reduce taxes by
qualifying as a new business under this subdivision.
Sec. 24. Minnesota Statutes 1987 Supplement, section
290.092, subdivision 5, is amended to read:
Subd. 5. [IMPOSITION OF TAX AFTER 1989.] For taxable years
beginning after December 31, 1989, in addition to the taxes
computed under this chapter without regard to this section, the
franchise tax imposed on corporations includes a tax equal to
the excess, if any, of:
(1) 40 percent of the tax imposed upon the corporation
under section 55(a) of the Internal Revenue Code of 1986, as
amended through December 31, 1986, apportioned to Minnesota
under section 290.191. In computing the amount of the liability
under section 55(a) of the Internal Revenue Code of 1986, the
regular federal tax liability under section 55(a)(2) of the
Internal Revenue Code of 1986, must be determined using federal
taxable income as modified by sections 290.01, subdivisions 19c
and 19d, 290.095, and 290.21, and alternative minimum taxable
income under section 56 of the Internal Revenue Code of 1986
must be computed as if the section 290.095 restrictions on net
operating losses applied.
(2) the amount of tax computed under this chapter without
regard to this section.
Sec. 25. Minnesota Statutes 1987 Supplement, section
290.095, subdivision 1, is amended to read:
Subdivision 1. [ALLOWANCE OF DEDUCTION.] (a) There shall
be allowed as a deduction for the taxable year the amount of any
net operating loss deduction as provided in section 172 of the
Internal Revenue Code of 1986, as amended through December 31,
1986, subject to the limitations and modifications provided in
this section.
(b) A net operating loss deduction shall be available under
this section only to corporate taxpayers except that
subdivisions 7, 9, and 11 hereof apply only to individuals,
estates, and trusts.
(c) In the case of a regulated investment company or fund
thereof, as defined in section 851(a) or 851(q) of the Internal
Revenue code of 1986, as amended through December 31, 1987, the
deduction provided by this section shall not be allowed.
Sec. 26. Minnesota Statutes 1987 Supplement, section
290.095, subdivision 2, is amended to read:
Subd. 2. [DEFINED AND LIMITED.] (a) The term "net
operating loss" as used in this section shall mean a net
operating loss as defined in section 172(c) of the Internal
Revenue Code of 1986, as amended through December 31, 1986, with
the modifications specified in subdivision 4. The deductions
provided in section 290.21 and the modification provided in
section 290.01, subdivision 19d, clause (11), cannot be used in
the determination of a net operating loss.
(b) The term "net operating loss deduction" as used in this
section means the aggregate of the net operating loss carryovers
to the taxable year, computed in accordance with subdivision 3.
The provisions of section 172(b) of the Internal Revenue Code of
1986, as amended through December 31, 1986, relating to the
carryback of net operating losses, do not apply.
Sec. 27. Minnesota Statutes 1987 Supplement, section
290.095, subdivision 3, is amended to read:
Subd. 3. [CARRYOVER.] (a) A net operating loss for any
taxable year incurred in a taxable year: (i) beginning after
December 31, 1986, shall be a net operating loss carryover to
each of the 15 taxable years following the taxable year of such
loss; (ii) beginning before January 1, 1987, shall be a net
operating loss carryover to each of the five taxable years
following the taxable year of such loss subject to the
provisions of Minnesota Statutes 1986, section 290.095; and (iii)
beginning before January 1, 1987, shall be a net operating loss
carryback to each of the three taxable years preceding the loss
year subject to the provisions of Minnesota Statutes 1986,
section 290.095.
(b) The entire amount of the net operating loss for any
taxable year shall be carried to the earliest of the taxable
years to which such loss may be carried. The portion of such
loss which shall be carried to each of the other taxable years
shall be the excess, if any, of the amount of such loss over the
sum of the taxable net income, adjusted by the modifications
specified in subdivision 4, for each of the taxable years to
which such loss may be carried.
(c) Where a corporation does business both within and
without Minnesota, and apportions its income under the
provisions of section 290.191, the net operating loss deduction
incurred in any taxable year shall be allowed to the extent of
the apportionment ratio of the loss year.
(d) No additional net operating loss deduction is allowed
in a subsequent taxable year for the portion of a net operating
loss deduction incurred in any taxable year used to offset
Minnesota income in a year in which the taxpayer is subject to
the alternative minimum tax in section 290.092.
Sec. 28. Minnesota Statutes 1987 Supplement, section
290.095, is amended by adding a subdivision to read:
Subd. 12. [UNITARY GROUP; CARRYBACK; CARRYFORWARD.] A
taxpayer may elect a net operating loss carryback to each of the
three taxable years preceding the taxable year of the loss and a
net operating loss carryover to each of the five taxable years
following the taxable year of the loss, notwithstanding
subdivision 3, clause (a). The net operating loss carryback and
carryover allowed under this subdivision is limited to the part
of the net operating loss attributable to the deduction allowed
for bad debts under section 166(a) of the Internal Revenue Code
of 1986, as amended through December 31, 1987. The part of the
net operating loss for any taxable year that is attributable to
the deduction allowed for bad debts is the excess of the net
operating loss for the taxable year, over the net operating loss
for the taxable year determined without regard to the amount
allowed as a deduction for bad debts for the taxable year. In
applying the provisions of subdivision 3, clause (b), the part
of the net operating loss for the loss year that is attributable
to the deduction allowed for bad debts is considered a separate
net operating loss for the year to be applied before the other
part of the net operating loss. This subdivision applies only
to taxpayers where a member of the unitary group meets the
definition found in section 585(c)(2)(A) of the Internal Revenue
Code of 1986, as amended through December 31, 1987, and includes
all corporations included in the unitary group and required to
be included on a combined report. A refund of tax that is the
result of a net operating loss carryback under this section must
be paid after two years but before two years and 30 days after
the claim for refund was filed.
Sec. 29. Minnesota Statutes 1987 Supplement, section
290.10, is amended to read:
290.10 [NONDEDUCTIBLE ITEMS.]
Notwithstanding any other provision of law Except as
provided in section 290.17, subdivision 4, paragraph (i), in
computing the net income of a corporation no deduction shall in
any case be allowed for expenses, interest and taxes connected
with or allocable against the production or receipt of all
income not included in the measure of the tax imposed by this
chapter, except that for corporations engaged in the business of
mining or producing iron ore, the mining of which is subject to
the occupation tax imposed by section 298.01, subdivision 1, and
the provisions of section 298.031, this shall not prevent the
deduction of expenses and other items to the extent that the
expenses and other items are allowable under this chapter and
are not deductible, capitalizable, retainable in basis, or taken
into account by allowance or otherwise in computing the
occupation tax and do not exceed the amounts taken for federal
income tax purposes for that year. Occupation taxes imposed
under chapter 298, royalty taxes imposed under chapter 299, or
depletion expenses may not be deducted under this clause.
Sec. 30. Minnesota Statutes 1987 Supplement, section
290.17, subdivision 4, is amended to read:
Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or
business conducted wholly within this state or partly within and
partly without this state is part of a unitary business, the
entire income of the unitary business is subject to
apportionment pursuant to section 290.191. Notwithstanding
subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source
and none may be allocated to a particular place except as
provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to farm income
subject to subdivision 5, paragraph (a), business income subject
to subdivision 5, paragraph (b) or (c), income of an insurance
company determined under section 290.35, or income of an
investment company determined under section 290.36.
(b) The term "unitary business" means business activities
or operations which are of mutual benefit, dependent upon, or
contributory to one another, individually or as a group. The
term may be applied within a single legal entity or between
multiple entities and without regard to whether each entity is a
corporation, a partnership or a trust.
(c) Unity is presumed whenever there is unity of ownership,
operation, and use, evidenced by centralized management or
executive force, centralized purchasing, advertising,
accounting, or other controlled interaction, but the absence of
these centralized activities will not necessarily evidence a
nonunitary business.
(d) Where a business operation conducted in Minnesota is
owned by a business entity that carries on business activity
outside the state different in kind from that conducted within
this state, and the other business is conducted entirely outside
the state, it is presumed that the two business operations are
unitary in nature, interrelated, connected, and interdependent
unless it can be shown to the contrary.
(e) Unity of ownership is not deemed to exist when a
corporation is involved unless that corporation is a member of a
group of two or more business entities and more than 50 percent
of the voting stock of each member of the group is directly or
indirectly owned by a common owner or by common owners, either
corporate or noncorporate, or by one or more of the member
corporations of the group.
(f) For purposes of determining the net income of a unitary
business and the factors to be used in the apportionment of net
income pursuant to section 290.191 or 290.20, there must be
included only the income and apportionment factors of
corporations or other entities created or organized in the
United States or under the laws of the United States or of any
state, the District of Columbia, the commonwealth of Puerto
Rico, any possession of the United States, or any political
subdivision of any the foregoing and of any FSC as defined in
section 922 of the Internal Revenue Code of 1986, as amended
through December 31, 1986, that are determined to be part of the
unitary business pursuant to this subdivision, notwithstanding
that other corporations or other entities organized in foreign
countries might be included in the unitary business. The net
income and apportionment factors under section 290.191 or 290.20
of foreign corporations and other foreign entities which are
part of a unitary business shall not be included in the net
income or the apportionment factors of the unitary business. A
foreign corporation or other foreign entity which is required to
file a return under this chapter shall file on a separate return
basis. The net income and apportionment factors under section
290.191 or 290.20 of foreign operating corporations shall not be
included in the net income or the apportionment factors of the
unitary business except as provided in paragraph (g).
(g) The adjusted net income of a foreign operating
corporation shall be deemed to be paid as a dividend on the last
day of its taxable year to each shareholder thereof, in
proportion to each shareholder's ownership, with which such
corporation is engaged in a unitary business. Such deemed
dividend shall be treated as a dividend under section 290.21,
subdivision 4.
Dividends actually paid by a foreign operating corporation
to a corporate shareholder which is a member of the same unitary
business as the foreign operating corporation shall be
eliminated from the net income of the unitary business in
preparing a combined report for the unitary business. The
adjusted net income of a foreign operating corporation shall be
its net income adjusted as follows:
(1) any taxes paid or accrued to a foreign country, the
commonwealth of Puerto Rico, or a United States possession or
political subdivision of any of the foregoing shall be a
deduction; and
(2) the subtraction from federal taxable income for
payments received from foreign corporations or foreign operating
corporations under section 290.01, subdivision 19d, clause (11),
shall not be allowed.
If a foreign operating corporation incurs a net loss,
neither income nor deduction from that corporation shall be
included in determining the net income of the unitary business.
(h) For purposes of determining the net income of a unitary
business and the factors to be used in the apportionment of net
income pursuant to section 290.191 or 290.20, there must be
included only the income and apportionment factors of domestic
corporations or other domestic entities other than foreign
operating corporations that are determined to be part of the
unitary business pursuant to this subdivision, notwithstanding
that foreign corporations or other foreign entities might be
included in the unitary business.
(i) Deductions for expenses, interest, or taxes otherwise
allowable under this chapter that are connected with or
allocable against dividends, deemed dividends described in
paragraph (g) or royalties, fees, or other like income described
in section 290.01, subdivision 19d, clause (11), shall not be
disallowed.
(g) (j) Each corporation or other entity that is part of a
unitary business must file combined reports as the commissioner
determines. On the reports, all intercompany transactions
between entities included pursuant to paragraph (f) (h) must be
eliminated and the entire net income of the unitary business
determined in accordance with this subdivision is apportioned
among the entities by using each entity's Minnesota factors for
apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all
entities included pursuant to paragraph (f) (h) in the
denominators of the apportionment formula.
(k) If a corporation has been divested from a unitary
business and is included in a combined report for a fractional
part of the common accounting period of the combined report:
(1) its income includable in the combined report is its
income incurred for that part of the year determined by
proration or separate accounting; and
(2) its sales, property, and payroll included in the
apportionment formula must be prorated or accounted for
separately.
Sec. 31. Minnesota Statutes 1987 Supplement, section
290.191, subdivision 1, is amended to read:
Subdivision 1. [GENERAL RULE.] Except as otherwise
provided in section 290.17, subdivision 5, the net income from a
trade or business carried on partly within and partly without
this state must be apportioned to this state as provided in this
section. For purposes of this section, state means a state of
the United States, the District of Columbia, the commonwealth of
Puerto Rico, or any territory or possession of the United States
or any foreign country.
Sec. 32. Minnesota Statutes 1987 Supplement, section
290.191, subdivision 4, is amended to read:
Subd. 4. [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER
BUSINESSES.] If the business consists exclusively of the selling
of tangible personal property and services in response to orders
received by United States mail or telephone, and 100 99 percent
of the taxpayer's property and payroll is within Minnesota, then
the taxpayer may apportion net income to Minnesota based solely
upon the percentage that the sales made within this state in
connection with the trade or business during the tax period are
of the total sales wherever made in connection with the trade or
business during the tax period. Property and payroll factors
are disregarded. In determining eligibility for this
subdivision, the sale not in the ordinary course of business of
tangible or intangible assets used in conducting business
activities must be disregarded. This subdivision is repealed
effective for taxable years beginning after December 31, 1988.
Sec. 33. Minnesota Statutes 1987 Supplement, section
290.191, subdivision 5, is amended to read:
Subd. 5. [DETERMINATION OF SALES FACTOR.] (a) For purposes
of this section, the following rules apply in determining the
sales factor.
(b) (a) The sales factor includes all sales, gross
earnings, or receipts received in the ordinary course of the
business, except that the following types of income are not
included in the sales factor:
(1) interest;
(2) dividends;
(3) sales of capital assets as defined in section 1221 of
the Internal Revenue Code of 1986, as amended through December
31, 1987;
(4) sales of property used in the trade or business, except
sales of leased property of a type which is regularly sold as
well as leased;
(5) sales of debt instruments as defined in section
1275(a)(1) of the Internal Revenue Code of 1986, as amended
through December 31, 1987, or sales of stock; and
(6) royalties, fees, or other like income of a type which
qualify for a subtraction from federal taxable income under
section 290.01, subdivision 19(d)(11).
(b) Sales of tangible personal property are made within
this state if the property is received by a purchaser at a point
within this state, and the taxpayer is taxable in this state,
regardless of the f.o.b. point, other conditions of the sale, or
the ultimate destination of the property.
(c) Tangible personal property delivered to a common or
contract carrier or foreign vessel for delivery to a purchaser
in another state or nation is a sale in that state or nation,
regardless of f.o.b. point or other conditions of the sale.
(d) Notwithstanding paragraphs (b) and (c), when
intoxicating liquor, wine, fermented malt beverages, cigarettes,
or tobacco products are sold to a purchaser who is licensed by a
state or political subdivision to resell this property only
within the state of ultimate destination, the sale is made in
that state.
(e) Sales made by or through a corporation that is
qualified as a domestic international sales corporation under
section 992 of the Internal Revenue Code are not considered to
have been made within this state.
(f) Sales, other than sales of tangible personal property,
are made in this state if the property is used, or the benefits
of the services are consumed, in this state. If the property is
used or the benefits of the services are consumed in more than
one state, the sales must be apportioned pro rata according to
the portion of use or consumption of benefits in this
state. Sales, rents, royalties, and other income in connection
with real property is attributed to the state in which the
property is located.
(g) Receipts from the lease or rental of tangible personal
property, including finance leases and true leases, must be
attributed to this state if the property is located in this
state and to other states if the property is not located in this
state. Moving property including, but not limited to, motor
vehicles, rolling stock, aircraft, vessels, or mobile equipment
is located in this state if:
(1) the operation of the property is entirely within this
state; or
(2) the operation of the property is in two or more states
and the principal base of operations from which the property is
sent out is in this state.
(h) Royalties and other income not described in paragraph
(a), clause (6), received for the use of or for the privilege of
using intangible property, including patents, know-how,
formulas, designs, processes, patterns, copyrights, trade names,
service names, franchises, licenses, contracts, customer lists,
or similar items, must be attributed to the state in which the
property is used by the purchaser. If the property is used in
more than one state, the royalties or other income must be
apportioned to this state pro rata according to the portion of
use in this state. If the portion of use in this state cannot
be determined, the royalties or other income must be excluded
from both the numerator and the denominator. Intangible
property is used in this state if the purchaser uses the
intangible property or the rights therein in the regular course
of its business operations in this state, regardless of the
location of the purchaser's customers.
(i) Sales of intangible property are made within the state
in which the property is used by the purchaser. If the property
is used in more than one state, the sales must be apportioned to
this state pro rata according to the portion of use in this
state. If the portion of use in this state cannot be
determined, the sale must be excluded from both the numerator
and the denominator of the sales factor. Intangible property is
used in this state if the purchaser used the intangible property
in the regular course of its business operations in this state.
(j) Receipts from the performance of services must be
attributed to the state in which the benefits of the services
are consumed. If the benefits are consumed in more than one
state, the receipts from those benefits must be apportioned to
this state pro rata according to the portion of the benefits
consumed in this state. If the extent to which the benefits of
services are consumed in this state is not readily determinable,
the benefits of the services shall be deemed to be consumed at
the location of the office of the customer from which the
services were ordered in the regular course of the customer's
trade or business. If the ordering office cannot be determined,
the benefits of the services shall be deemed to be consumed at
the office of the customer to which the services are billed.
Sec. 34. Minnesota Statutes 1987 Supplement, section
290.191, subdivision 6, is amended to read:
Subd. 6. [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL
INSTITUTIONS.] (a) For purposes of this section, the rules in
this subdivision and subdivisions 7 and 8 apply in determining
the receipts factor for financial institutions.
(b) "Receipts" for this purpose means gross income,
including net taxable gain on disposition of assets, including
securities and money market transactions instruments, when
derived from transactions and activities in the regular course
of the taxpayer's trade or business.
(c) "Money market instruments" means federal funds sold and
securities purchased under agreements to resell, commercial
paper, banker's acceptances, and purchased certificates of
deposit and similar instruments to the extent that the
instruments are reflected as assets under generally accepted
accounting principles.
(d) "Securities" means United States Treasury securities,
obligations of United States government agencies and
corporations, obligations of state and political subdivisions,
corporate stock and other securities, participations in
securities backed by mortgages held by United States or state
government agencies, loan-backed securities and similar
investments to the extent the investments are reflected as
assets under generally accepted accounting principles.
(e) Receipts from the lease or rental of real or tangible
personal property, including both finance leases and true
leases, must be attributed to this state if the property is
located in this state. Tangible personal property that is
characteristically moving property, such as motor vehicles,
rolling stock, aircraft, vessels, mobile equipment, and the
like, is considered to be located in a state if:
(1) the operation of the property is entirely within the
state; or
(2) the operation of the property is in two or more states,
but the principal base of operations from which the property is
sent out is in the state.
(f) Interest income and other receipts from assets in the
nature of loans that are secured primarily by real estate or
tangible personal property must be attributed to this state if
the security property is located in this state under the
principles stated in paragraph (e).
(g) Interest income and other receipts from consumer loans
not secured by real or tangible personal property that are made
to residents of this state, whether at a place of business, by
traveling loan officer, by mail, by telephone or other
electronic means, must be attributed to this state.
(h) Interest income and other receipts from commercial
loans and installment obligations not secured by real or
tangible personal property must be attributed to this state if
the proceeds of the loan are to be applied in this state. If it
cannot be determined where the funds are to be applied, the
income and receipts are attributed to the state in which the
business applied for the loan. "Applied for" means initial
inquiry (including customer assistance in preparing the loan
application) or submission of a completed loan application,
whichever occurs first the office of the borrower from which the
application would be made in the regular course of business is
located. If this cannot be determined, the transaction is
disregarded in the apportionment formula.
(i) Interest income and other receipts from a participating
financial institution's portion of participation loans must be
attributed under paragraphs (e) to (h). A participation loan is
a loan in which more than one lender is a creditor to a common
borrower.
(j) Interest income and other receipts including service
charges from financial institution credit card and travel and
entertainment credit card receivables and credit card holders'
fees must be attributed to the state to which the card charges
and fees are regularly billed.
(k) Merchant discount income derived from financial
institution credit card holder transactions with a merchant must
be attributed to the state in which the merchant is located. In
the case of merchants located within and outside the state, only
receipts from merchant discounts attributable to sales made from
locations within the state are attributed to this state. It is
presumed, subject to rebuttal, that the location of a merchant
is the address shown on the invoice submitted by the merchant to
the taxpayer.
(l) Receipts from the performance of fiduciary and other
services must be attributed to the state in which the benefits
of the services are consumed. If the benefits are consumed in
more than one state, the receipts from those benefits must be
apportioned to this state pro rata according to the portion of
the benefits consumed in this state. If the extent to which the
benefits of services are consumed in this state is not readily
determinable, the benefits of the services shall be deemed to be
consumed at the location of the office of the customer from
which the services were ordered in the regular course of the
customer's trade or business. If the ordering office cannot be
determined, the benefits of the services shall be deemed to be
consumed at the office of the customer to which the services are
billed.
(m) Receipts from the issuance of travelers checks and
money orders must be attributed to the state in which the checks
and money orders are purchased.
(n) Receipts from investments of a financial institution in
securities of this state, its political subdivisions, agencies,
and instrumentalities must be attributed to this state.
(o) Receipts from a financial institution's interest in any
property described in section 290.015, subdivision 3, paragraph
(b), is not included in the numerator or the denominator of the
receipts factor provided the financial institution's activities
within this state with respect to any interest in the property
are limited in the manner provided in section 290.015,
subdivision 3, paragraph (b). If a financial institution is
subject to tax under this chapter, its interest in property
described in section 290.015, subdivision 3, paragraph (b), is
included in the receipts factor in the same manner as assets in
the nature of securities or money market instruments are
included under paragraph (n) and subdivision 7.
Sec. 35. Minnesota Statutes 1987 Supplement, section
290.191, subdivision 11, is amended to read:
Subd. 11. [FINANCIAL INSTITUTIONS; PROPERTY FACTOR.] (a)
For financial institutions, the property factor includes, as
well as tangible property, intangible property as set forth in
this subdivision.
(b) Intangible personal property must be included at its
tax basis for federal income tax purposes.
(c) Goodwill must not be included in the property factor.
(d) Coin and currency located in this state must be
attributed to this state.
(e) Lease financing receivables must be attributed to this
state if and to the extent that the property is located within
this state.
(f) Assets in the nature of loans that are secured by real
or tangible personal property must be attributed to this state
if and to the extent that the security property is located
within this state.
(g) Assets in the nature of consumer loans and installment
obligations that are unsecured or secured by intangible property
must be attributed to this state if the loan was made to a
resident of this state.
(h) Assets in the nature of commercial loan and installment
obligations that are unsecured or secured by intangible property
must be attributed to this state if the loan proceeds of the
loan are to be applied in this state. If it cannot be
determined where the funds are to be applied, the assets must be
attributed to the state in which the business applied for the
loan. "Applied for" means initial inquiry (including customer
assistance in preparing the loan application) or submission of a
completed loan application, whichever occurs first there is
located the office of the borrower from which the application
would be made in the regular course of business. If this cannot
be determined, the transaction is disregarded in the
apportionment formula.
(i) A participating financial institution's portion of a
participation loan must be attributed under paragraphs (e) to
(h).
(j) Financial institution credit card and travel and
entertainment credit card receivables must be attributed to the
state to which the credit card charges and fees are regularly
billed.
(k) Receivables arising from merchant discount income
derived from financial institution credit card holder
transactions with a merchant are attributed to the state in
which the merchant is located. In the case of merchants located
within and without the state, only receipts from merchant
discounts attributable to sales made from locations within the
state are attributed to this state. It is presumed, subject to
rebuttal, that the location of a merchant is the address shown
on the invoice submitted by the merchant to the taxpayer.
(l) Assets in the nature of securities and money market
instruments are apportioned to this state based upon the ratio
that total deposits from this state, its residents, its
political subdivisions, agencies and instrumentalities bear to
the total deposits from all states, their residents, their
political subdivisions, agencies and instrumentalities. In the
case of an unregulated financial institution subject to this
regulation, the receipts assets are apportioned to this state
based upon the ratio that its gross business income earned from
sources within this state bears to gross business income earned
from sources within all states. For purposes of this
subsection, deposits made by this state, its residents, its
political subdivisions, agencies, and instrumentalities are
attributed to this state, whether or not the deposits are
accepted or maintained by the taxpayer at locations within this
state.
(m) A financial institution's interest in any property
described in section 290.015, subdivision 3, paragraph (b), is
not included in the numerator or the denominator of the property
factor provided the financial institution's activities within
this state with respect to any interest in such property are
limited in the manner provided in section 290.015, subdivision
3, paragraph (b). If a financial institution is subject to tax
under this chapter, its interest in property described in
section 290.015, subdivision 3, paragraph (b), is included in
the property factor in the same manner as assets in the nature
of securities or money market instruments are included under
paragraph (1).
Sec. 36. Minnesota Statutes 1987 Supplement, section
290.21, subdivision 3, is amended to read:
Subd. 3. An amount for contribution or gifts made within
the taxable year:
(a) to or for the use of the state of Minnesota, or any of
its political subdivisions for exclusively public purposes,
(b) to or for the use of any community chest, corporation,
organization, trust, fund, association, or foundation located in
and carrying on substantially all of its activities within this
state, organized and operating exclusively for religious,
charitable, public cemetery, scientific, literary, artistic, or
educational purposes, or for the prevention of cruelty to
children or animals, no part of the net earnings of which inures
to the benefit of any private stockholder or individual,
(c) to a fraternal society, order, or association,
operating under the lodge system located in and carrying on
substantially all of their activities within this state if such
contributions or gifts are to be used exclusively for the
purposes specified in clause (b), or for or to posts or
organizations of war veterans or auxiliary units or societies of
such posts or organizations, if they are within the state and no
part of their net income inures to the benefit of any private
shareholder or individual,
(d) to or for the use of the United States of America for
exclusively public purposes if the contribution or gift consists
of real property located in Minnesota,
(e) to or for the use of a foundation if the foundation is
organized and operated exclusively for a purpose in clause (b),
and has no part of its net earnings inuring to the benefit of a
private shareholder or individual, but does not carry on
substantially all of its activities within this state. The
deduction under this clause equals the amount of the
corporation's contributions or gifts to the foundation within
the taxable year multiplied by a fraction equal to the ratio of
the foundation's total expenditures during the taxable year for
the benefit of organizations described in clause (b) to the
foundation's total expenditures during the taxable year.
(f) the total deduction hereunder shall not exceed 15
percent of the taxpayer's taxable net income less the deductions
allowable under this section other than those for contributions
or gifts,
(f) (g) in the case of a corporation reporting its taxable
income on the accrual basis, if: (A) the board of directors
authorizes a charitable contribution during any taxable year,
and (B) payment of such contribution is made after the close of
such taxable year and on or before the fifteenth day of the
third month following the close of such taxable year; then the
taxpayer may elect to treat such contribution as paid during
such taxable year. The election may be made only at the time of
the filing of the return for such taxable year, and shall be
signified in such manner as the commissioner shall by rules
prescribe.
Sec. 37. Minnesota Statutes 1987 Supplement, section
290.21, subdivision 4, is amended to read:
Subd. 4. (a) Eighty percent of dividends received by a
corporation during the taxable year from another corporation, in
which the recipient owns 20 percent or more of the stock, by
vote and value, not including stock described in section
1504(a)(4) of the Internal Revenue Code of 1986, as amended
through December 31, 1987, when the corporate stock with respect
to which dividends are paid does not constitute the stock in
trade of the taxpayer or would not be included in the inventory
of the taxpayer, or does not constitute property held by the
taxpayer primarily for sale to customers in the ordinary course
of the taxpayer's trade or business, or when the trade or
business of the taxpayer does not consist principally of the
holding of the stocks and the collection of the income and gains
therefrom. The remaining 20 percent shall be allowed if the
recipient owns 80 percent or more of all the voting stock of the
other corporation and the dividends were paid from income
arising out of business done in this state by the corporation
paying the dividends. If the dividends were declared from
income arising out of business done within and without this
state, then a proportion of the remainder shall be allowed as a
deduction. The proportion must be that which the amount of the
taxable net income of the corporation paying the dividends
assignable or allocable to this state bears to the entire net
income of the corporation. The amounts must be determined by
the returns under this chapter of the corporation paying the
dividends for the taxable year preceding their distribution.
The burden is on the taxpayer to show that the amount of
remainder claimed as a deduction has been received from income
arising out of business done in this state.
(b) If the trade or business of the taxpayer consists
principally of the holding of the stocks and the collection of
the income and gains therefrom, dividends received by a
corporation during the taxable year from another corporation, if
the recipient owns 80 percent or more of all the voting stock of
the other corporation, from income arising out of business done
in this state by the corporation paying the dividends. If the
dividends were declared from income arising out of business done
within and without this state, then a proportion of the
dividends shall be allowed as a deduction. The proportion must
be that which the amount of the taxable net income of the
corporation paying the dividends assignable or allocable to this
state bears to the entire net income of the corporation. The
amounts must be determined by the returns under this chapter of
the corporation paying the dividends for the taxable year
preceding their distribution. The burden is on the taxpayer to
show that the amount of dividends claimed as a deduction has
been received from income arising out of business done in this
state.
(b) Seventy percent of dividends received by a corporation
during the taxable year from another corporation in which the
recipient owns less than 20 percent of the stock, by vote or
value, not including stock described in section 1504(a)(4) of
the Internal Revenue Code of 1986 as amended through December
31, 1987, when the corporate stock with respect to which
dividends are paid does not constitute the stock in trade of the
taxpayer, or does not constitute property held by the taxpayer
primarily for sale to customers in the ordinary course of the
taxpayer's trade or business, or when the trade or business of
the taxpayer does not consist principally of the holding of the
stocks and the collection of income and gain therefrom.
(c) The dividend deduction provided in this subdivision
shall be allowed only with respect to dividends that are
included in a corporation's Minnesota taxable net income for the
taxable year.
The dividend deduction provided in this subdivision does
not apply to a dividend from a corporation which, for the
taxable year of the corporation in which the distribution is
made or for the next preceding taxable year of the corporation,
is a corporation exempt from tax under section 501 of the
Internal Revenue Code of 1986, as amended through December 31,
1986.
The dividend deduction provided in this subdivision applies
to the amount of regulated investment company dividends only to
the extent determined under section 854(b) of the Internal
Revenue Code of 1986, as amended through December 31, 1986.
The dividend deduction provided in this subdivision shall
not be allowed with respect to any dividend for which a
deduction is not allowed under the provisions of section 246(c)
of the Internal Revenue Code of 1986, as amended through
December 31, 1986.
(d) If dividends received by a corporation that does not
have nexus with Minnesota under the provisions of Public Law
Number 86-272 are included as income on the return of an
affiliated corporation permitted or required to file a combined
report under section 290.34, subdivision 2, then for purposes of
this subdivision the determination as to whether the trade or
business of the corporation consists principally of the holding
of stocks and the collection of income and gains therefrom shall
be made with reference to the trade or business of the
affiliated corporation having a nexus with Minnesota.
(e) The deduction provided by this subdivision does not
apply if the dividends are paid by a FSC as defined in section
922 of the Internal Revenue Code of 1986, as amended through
December 31, 1986.
(f) If one or more of the members of the unitary group
whose income is included on the combined report received a
dividend, the deduction under this subdivision for each member
of the unitary business required to file a return under this
chapter is the product of: (1) 100 percent of the dividends
received by members of the group; (2) 80 percent or 70 percent,
pursuant to paragraph (a) or (b); and (3) the percentage of the
taxpayer's business income apportionable to this state for the
taxable year under section 290.191 or 290.20.
Sec. 38. Minnesota Statutes 1987 Supplement, section
290.34, subdivision 2, is amended to read:
Subd. 2. [AFFILIATED OR RELATED CORPORATIONS, COMBINED
REPORT.] (a) When a corporation which is required to file an
income tax return is affiliated with or related to any other
corporation through stock ownership by the same interests or as
parent or subsidiary corporations, or has its income regulated
through contract or other arrangement, the commissioner of
revenue may permit or require such combined report as, in the
commissioner's opinion, is necessary in order to determine the
taxable net income of any one of the affiliated or related
corporations.
(b) If a corporation has been divested from the unitary
group and is included in a combined report for a fractional part
of the common accounting period that the report is based on,
then the sales, property, and payroll attributed to the
corporation in the apportionment formula must be prorated or
separately accounted and must show for what part of the
accounting period the corporation is included in the report.
(c) The combined report shall reflect the income of the
entire unitary business as provided in section 290.17,
subdivision 4. If a corporation has been divested from the
unitary group and is included in the combined report for a
fractional part of the common accounting period that the
combined report is based on, its income includable in the
combined report is its income for that part of the year.
Sec. 39. Minnesota Statutes 1987 Supplement, section
290.35, subdivision 2, is amended to read:
Subd. 2. [APPORTIONMENT OF TAXABLE NET INCOME.] The
commissioner shall compute therefrom the taxable net income of
such companies by assigning to this state that proportion
thereof which the gross premiums collected by them during the
taxable year from old and new business within this state bears
to the total gross premiums collected by them during that year
from their entire old and new business, including reinsurance
premiums; provided, the commissioner shall add to the taxable
net income so apportioned to this state the amount of any taxes
on premiums paid by the company by virtue of any law of this
state (other than the surcharge on premiums imposed by sections
69.54 to 69.56) which shall have been deducted from gross income
by the company in arriving at its total net income under the
provisions of such act of congress.
(a) For purposes of determining the Minnesota apportionment
percentage, premiums from reinsurance contracts assumed from
companies domiciled in Minnesota and premiums in connection with
property in or liability arising out of activity in, or in
connection with the lives or health of Minnesota residents shall
be assigned to Minnesota and premiums from reinsurance contracts
assumed from companies domiciled outside of Minnesota and
premiums in connection with property in or liability arising out
of activity in, or in connection with the lives or health of
non-Minnesota residents shall be assigned outside of Minnesota.
Reinsurance premiums are presumed to be received for a Minnesota
risk and are assigned to Minnesota, if:
(1) the reinsurance contract is assumed for a company
domiciled in Minnesota; and
(2) the taxpayer, upon request of the commissioner, fails
to provide reliable records indicating the reinsured contract
covered non-Minnesota risks.
For purposes of this paragraph, "Minnesota risk" means coverage
in connection with property in or liability arising out of
activity in Minnesota, or in connection with the lives or health
of Minnesota residents.
(b) The apportionment method prescribed by paragraph (a)
shall be presumed to fairly and correctly determine the
taxpayer's taxable net income. If the method prescribed in
paragraph (a) does not fairly reflect all or any part of taxable
net income, the taxpayer may petition for or the commissioner
may require the determination of taxable net income by use of
another method if that method fairly reflects taxable net
income. A petition within the meaning of this section must be
filed by the taxpayer on such form as the commissioner shall
require.
Sec. 40. Minnesota Statutes 1987 Supplement, section
290.37, subdivision 1, is amended to read:
Subdivision 1. [PERSONS MAKING RETURNS.] (a) A taxpayer
shall file a return for each taxable year the taxpayer is
required to file a return under section 6012 of the Internal
Revenue Code of 1986, as amended through December 31, 1986,
except that an individual who is not a Minnesota resident for
any part of the year is not required to file a Minnesota income
tax return if the individual's gross income derived from
Minnesota sources under sections 290.081, paragraph (a), and
290.17, is less than the filing requirements for a single
individual who is a full year resident of Minnesota.
The decedent's final income tax return, and all other
income tax returns for prior years where the decedent had gross
income in excess of the minimum amount at which an individual is
required to file and did not file, shall be filed by the
decedent's personal representative, if any. If there is no
personal representative, the return or returns shall be filed by
the transferees as defined in section 290.29, subdivision 3, who
receive any property of the decedent.
The trustee or other fiduciary of property held in trust
shall file a return with respect to the taxable net income of
such trust if that exceeds an amount determined by the
commissioner if such trust belongs to the class of taxable
persons.
Every corporation shall file a return, if the corporation
is subject to the state's jurisdiction to tax under section
290.014, subdivision 5, except that a foreign operating
corporation as defined in section 290.01, subdivision 6b, is not
required to file a return. The return in the case of a
corporation must be signed by a person designated by the
corporation. The commissioner may adopt rules for the filing of
one return on behalf of the members of an affiliated group of
corporations that are required to file a combined report if the
affiliated group includes a bank subject to tax under this
chapter. Members of an affiliated group that elect to file one
return on behalf of the members of the group under rules adopted
by the commissioner may modify or rescind the election by filing
the form required by the commissioner.
The receivers, trustees in bankruptcy, or assignees
operating the business or property of a taxpayer shall file a
return with respect to the taxable net income of such taxpayer
if a return is required.
(b) Such return shall (1) contain a written declaration
that it is correct and complete, and (2) shall contain language
prescribed by the commissioner providing a confession of
judgment for the amount of the tax shown due thereon to the
extent not timely paid.
Sec. 41. Minnesota Statutes 1987 Supplement, section
290.371, subdivision 1, is amended to read:
Subdivision 1. [REPORT REQUIRED.] Every corporation that,
during any calendar year or fiscal accounting year ending
beginning after December 31, 1986, carried on any activity or
owned or maintained any property in this state, unless
specifically exempted under subdivision 3 obtained any business
from within this state as described in section 290.015,
subdivision 1, with the exception of:
(1) activity levels lower than those set forth in section
290.015, subdivision 2, paragraph (a), if the corporation is a
financial institution; or
(2) activities described in section 290.015, subdivision 3,
paragraph (b); or
(3) corporations specifically exempted under subdivision 3,
must file a notice of business activities report, as provided in
this section. Filing of the report is not a factor in
determining whether a corporation is subject to taxation under
this chapter.
Sec. 42. Minnesota Statutes 1987 Supplement, section
290.371, subdivision 3, is amended to read:
Subd. 3. [EXEMPTIONS.] A corporation is not required to
file a notice of business activities report if:
(1) by the end of an accounting period for which it was
otherwise required to file a notice of business activities
report under this section, it had received a certificate of
authority to do business in this state;
(2) a timely return or report has been filed under section
290.05, subdivision 4; or 290.37; or
(3) the corporation is exempt from taxation under this
chapter pursuant to section 290.05, subdivision 1; or
(4) the corporation's activities in Minnesota, or the
interests in property which it owns, consist solely of
activities or property exempted from jurisdiction to tax under
section 290.015, subdivision 3, paragraph (b).
Sec. 43. Minnesota Statutes 1987 Supplement, section
290.371, subdivision 4, is amended to read:
Subd. 4. [ANNUAL FILING.] Every corporation not exempt
under subdivision 3 must file annually a notice of business
activities report, including such forms as the commissioner may
require, with respect to all or any part of each of its calendar
or fiscal accounting years beginning after December 31, 1986, on
or before the 15th day of the fourth month after the close of
the calendar or fiscal accounting year.
Sec. 44. Minnesota Statutes 1987 Supplement, section
290.371, subdivision 5, is amended to read:
Subd. 5. [FAILURE TO FILE TIMELY REPORT.] (a) Any
corporation required to file a notice of business activities
report does not have any cause of action upon which it may bring
suit under Minnesota law unless the corporation has filed a
notice of business activities report.
(b) The failure of a corporation to file a timely report
prevents the use of the courts in this state, except regarding
activities and property described in section 290.015,
subdivision 3, paragraph (b), for all contracts executed and all
causes of action that arose at any time before the end of the
last accounting period for which the corporation failed to file
a required report.
(c) The court in which the issues arise has the power to
excuse the corporation for its failure to file a report when
due, and restore the corporation's cause of action under the
laws of this state, if the corporation has paid all taxes,
interest, and civil penalties due the state for all periods, or
provided for payment of them by adequate security or bond
approved by the commissioner.
(d) Notwithstanding the provisions of section 290.61, the
commissioner may acknowledge whether or not a particular
corporation has filed with the commissioner reports or returns
required by this chapter if the acknowledgment:
(1) is to a party in a civil action;
(2) relates to the filing status of another party in the
same civil action; and
(3) is in response to a written request accompanied by a
copy of the summons and complaint in the civil action.
Sec. 45. Minnesota Statutes 1986, section 290.50,
subdivision 3, is amended to read:
Subd. 3. [EXCEPTIONS.] This section shall not be construed
so as to disallow:
(a) a net operating loss carryback to any taxable year
authorized by section 290.095 or section 172 of the Internal
Revenue Code of 1954, as amended through December 31, 1985, but
the refund or credit shall be limited to the amount of
overpayment arising from the carryback;
(b) a capital loss carryback by a corporation
under Minnesota Statutes 1986, section 290.16, provided that the
claim for refund or credit is made prior to the expiration of
the 15th day of the 45th month following the end of the taxable
year of the net capital loss which results in the carryback,
plus any extension of time granted for filing the return, but
only if the return was filed within the extended time, and the
refund or credit is limited to the amount of overpayment arising
from the carryback.
Sec. 46. Minnesota Statutes 1987 Supplement, section
290.9725, is amended to read:
290.9725 [ELECTION BY SMALL BUSINESS CORPORATION S
CORPORATIONS.]
For purposes of this chapter, the term "S corporation"
means any corporation having a valid election in effect for the
taxable year under section 1362 of the Internal Revenue Code of
1986, as amended through December 31, 1986, 1987. An S
corporation shall not be subject to the taxes imposed by this
chapter, except:
(1) the corporation is subject to the tax imposed under
section 290.92; and
(2) the corporation is subject to the tax imposed under
section 290.02 in any tax period in which it recognizes income
for federal income tax purposes under Internal Revenue Code,
section 1363(d), 1374, or 1375; the total amount of income
recognized is the federal taxable income for the corporation
within the meaning of section 290.01, subdivision 19; the
provisions of sections 290.01, subdivisions 19a to 19f, and
290.17 to 290.20, must be employed to determine the taxable net
income of the corporation; and the taxable net income of the
corporation is its taxable income, except that any net operating
loss carryforward that arose in a year when there was no
election in effect under Section 1362 of the Internal Revenue
Code is allowed as a deduction the taxes imposed under sections
290.92, 290.9727, 290.9728, and 290.9729.
Sec. 47. [290.9727] [TAX ON CERTAIN BUILT-IN GAINS.]
Subdivision 1. [TAX IMPOSED.] For a corporation electing S
corporation status pursuant to section 1362 of the Internal
Revenue Code of 1986, as amended through December 31, 1987,
after December 31, 1986, and having a recognized built-in gain
as defined in section 1374 of the Internal Revenue Code of 1986,
as amended through December 31, 1987, there is imposed a tax on
the taxable income of such S corporation, as defined in this
section, at the rate prescribed by section 290.06, subdivision
1. This section does not apply to any corporation having an S
election in effect for each of its taxable years. An S
corporation and any predecessor corporation must be treated as
one corporation for purposes of the preceding sentence.
Subd. 2. [TAXABLE INCOME.] For purposes of this section,
taxable income means taxable net income less the deduction for
net operating loss carryforwards as provided by this section.
Subd. 3. [TAXABLE NET INCOME.] For purposes of this
section, taxable net income means the lesser of:
(1) the recognized built-in gains of the S corporation for
the taxable year, as determined under section 1374 of the
Internal Revenue Code of 1986, as amended through December 31,
1987, subject to the modifications provided in section 290.01,
subdivisions 19e and 19f, that are allocable to this state under
section 290.17, 290.191, or 290.20; or
(2) the amount of the S corporation's federal taxable
income, as determined under section 1374(d)(4) of the Internal
Revenue Code of 1986, as amended through December 31, 1987,
subject to the provisions of section 290.01, subdivisions 19c to
19f, that is allocable to this state under section 290.17,
290.191, or 290.20, less the deduction for charitable
contributions in section 290.21, subdivision 3.
Subd. 4. [NET OPERATING LOSS CARRYFORWARD.] A net
operating loss carryforward, as determined under section
290.095, arising in a taxable year before the corporation
elected S corporation status, shall be allowed as a deduction
against the lesser of the amounts referred to in subdivision 3,
clauses (1) and (2). For purposes of determining the amount of
any such loss that may be carried to later taxable years, the
lesser of the amounts referred to in subdivision 3, clauses (1)
and (2) shall be treated as taxable income.
Sec. 48. [290.9728] [TAX ON CAPITAL GAINS.]
Subdivision 1. [TAX IMPOSED.] There is imposed a tax on
the taxable income of a corporation that has:
(1) elected S corporation status pursuant to section 1362
of the Internal Revenue Code of 1954, as amended through
December 31, 1985, before January 1, 1987;
(2) a net capital gain for the taxable year (i) in excess
of $25,000 and (ii) exceeding 50 percent of the corporation's
federal taxable income for the taxable year; and
(3) federal taxable income for the taxable year exceeding
$25,000.
The tax is imposed at the rate prescribed by section
290.06, subdivision 1. For purposes of this section, "federal
taxable income" means federal taxable income determined under
section 1374(4)(d) of the Internal Revenue Code of 1986, as
amended through December 31, 1987. This section does not apply
to an S corporation which has had an election under section 1362
of the Internal Revenue Code of 1954, in effect for the three
immediately preceding taxable years. This section does not
apply to an S corporation that has been in existence for less
than four taxable years and has had an election in effect under
section 1362 of the Internal Revenue Code of 1954 for each of
the corporation's taxable years. For purposes of this section,
an S corporation and any predecessor corporation are treated as
one corporation.
Subd. 2. [TAXABLE INCOME.] For purposes of this section,
taxable income means the lesser of:
(1) the amount of the net capital gain of the S corporation
for the taxable year, as determined under sections 1222 and 1374
of the Internal Revenue Code of 1986, as amended through
December 31, 1987, and subject to the modifications provided in
section 290.01, subdivisions 19e and 19f, in excess of $25,000
that is allocable to this state under section 290.17, 290.191,
or 290.20; or
(2) the amount of the S corporation's federal taxable
income, subject to the provisions of section 290.01,
subdivisions 19c to 19f, that is allocable to this state under
section 290.17, 290.191, or 290.20, less the deduction for
charitable contributions in section 290.21, subdivision 3.
Sec. 49. [290.9729] [TAX ON PASSIVE INVESTMENT INCOME.]
Subdivision 1. [TAX IMPOSED.] There is imposed a tax for
the taxable year on the taxable income of an S corporation, if
for the taxable year an S corporation has:
(1) subchapter C earnings and profits at the close of such
taxable year; and
(2) gross receipts more than 25 percent of which are
passive investment income.
The tax is imposed at the rate prescribed by section
290.06, subdivision 1. The terms "subchapter C earnings and
profits," "passive investment income," and "gross receipts" have
the same meanings as when used in sections 1362(d)(3) and 1375
of the Internal Revenue Code of 1986, as amended through
December 31, 1987.
Subd. 2. [TAXABLE INCOME.] For the purposes of this
section, taxable income means the lesser of:
(1) the amount of the S corporation's excess net passive
income, as determined under section 1375 of the Internal Revenue
Code of 1986, as amended through December 31, 1986, subject to
the provisions of section 290.01, subdivisions 19c to 19f, that
is allocable to this state under section 290.17, 290.191, or
290.20; or
(2) the amount of the S corporation's federal taxable
income, as determined under section 1374(d)(4) of the Internal
Revenue Code of 1986, as amended through December 31, 1987,
subject to the provisions of section 290.01, subdivisions 19c to
19f, that is allocable to this state under section 290.17,
290.191, or 290.20, less the deduction for charitable
contributions in section 290.21, subdivision 3.
Subd. 3. [WAIVER OF TAX.] The tax imposed by this section
shall be waived if the taxpayer receives a waiver for federal
income tax purposes under section 1375(d) of the Internal
Revenue Code of 1986, as amended through December 31, 1987.
Sec. 50. Minnesota Statutes 1987 Supplement, section
295.34, subdivision 1, is amended to read:
Subdivision 1. Except as provided in subdivision 2 every
telephone company shall file a return with the commissioner of
revenue on or before April 15 of each year, and submit payment
therewith, of the following percentages of its gross earnings,
including long distance access charges, of the preceding
calendar year derived from business within this state:
(a) for gross earnings from service to rural subscribers
and from exchange business of all cities of the fourth class and
statutory cities having a population of 10,000 or less
for calendar years beginning before December 31, 1988, 4
percent,
for calendar year 1989, 3 percent, provided that the
estimated tax payments made on March 15 and June 15, 1989,
pursuant to section 295.365, must be made as if the tax were
imposed at a rate of four percent,
for calendar year 1990, 1.5 percent,
for calendar year 1991, 1 percent, and
for calendar years beginning after December 31, 1991,
exempt; and
(b) for gross earnings derived from all other business
for calendar years beginning before December 31, 1988, 7
percent,
for calendar year 1989, 5.5 percent, provided that the
estimated tax payments made on March 15 and June 15, 1989,
pursuant to section 295.365, must be made as if the tax were
imposed at a rate of seven percent,
for calendar year 1990, 3 percent,
for calendar year 1991, 2.5 percent, and
for calendar years beginning after December 31, 1991,
exempt.
A tax shall not be imposed on the gross earnings of a
telephone company from business originating or terminating
outside of Minnesota, except that the gross earnings tax is
imposed on all long distance access charges allocated to
interstate service received in payment from a telephone company
before December 31, 1989.
The tax imposed is in lieu of all other taxes, except the
taxes imposed by chapter 290, property taxes assessed beginning
in 1989, payable in 1990, and sales and use taxes imposed as a
result of chapter 297A. All money paid by a company for
connecting fees and switching charges to any other company shall
be reported as earnings by the company to which they are paid.
For the purposes of this section, the population of any
statutory city shall be considered as that stated in the latest
federal census.
(c) For the period January 1, 1984 through December 31,
1986, all money paid by a company for connecting fees and
switching charges, including carriers access charges except that
portion paid for directory assistance and billing and collection
services, to any other company must be reported as earnings by
the company to which they are paid, but are not deemed to be
earnings of the collecting and paying company.
Sec. 51. Minnesota Statutes 1987 Supplement, section
298.01, subdivision 3, is amended to read:
Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person
engaged in the business of mining or producing ores, except iron
ore or taconite concentrates, shall pay an occupation tax to the
state of Minnesota as provided in this subdivision. The tax is
measured by the person's taxable income for the year for which
the tax is imposed, and computed in the manner and at the rates
provided in chapter 290, except that section sections 290.01,
subdivisions 19c, clause (11), 19d, clause (7), and 290.05,
subdivision 1, clause (a), does do not apply. Corporations and
individuals shall be subject to the alternative minimum taxes
imposed under chapter 290. The tax is in addition to all other
taxes and is due and payable on or before June 15 of the year
succeeding the calendar year covered by the report required by
section 298.05.
Sec. 52. Minnesota Statutes 1987 Supplement, section
298.01 subdivision 4, is amended to read:
Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE
CONCENTRATES.] A person engaged in the business of mining or
producing of iron ore or taconite concentrates shall pay an
occupation tax to the state of Minnesota. The tax is measured
by the person's taxable income for the year for which the tax is
imposed, and computed in the manner and at the rates provided
for in chapter 290, except that section sections 290.01,
subdivisions 19c, clause (11), 19d, clause (7), and 290.05,
subdivision 1, clause (a), does do not apply. Corporations and
individuals shall be subject to the alternative minimum taxes
imposed under chapter 290. The tax is in addition to all other
taxes and is due and payable on or before June 15 of the year
succeeding the calendar year covered by the report required by
section 298.05.
Sec. 53. [298.402] [NET OPERATING LOSSES.]
For purposes of the computation under section 298.40,
subdivision 1, clause (b), a net operating loss incurred in a
taxable year beginning after December 31, 1986, is a net
operating loss carryover to each of the 15 taxable years
following the taxable year of the loss, in accordance with
section 290.095. A net operating loss incurred in a taxable
year beginning after December 31, 1981, and before January 1,
1987, is a net operating loss carryover to taxable years
beginning after December 31, 1986, not to exceed the five
taxable years following the taxable year of the loss, in
accordance with section 290.095. No net operating loss
carryback is allowed for a net operating loss incurred in a
taxable year beginning after December 31, 1986.
Sec. 54. Minnesota Statutes 1986, section 299.01,
subdivision 1, is amended to read:
Subdivision 1. There shall be levied and collected upon
all royalty received during each calendar year for permission to
explore, mine, take out and remove iron ore or taconites from
land in this state, a tax of 15 percent before January 1, 1986,
a tax of 14.5 percent after December 31, 1985, and before
January 1, 1987, and a tax of 14 percent after December 31, 1986.
Sec. 55. Minnesota Statutes 1986, section 303.03, is
amended to read:
303.03 [FOREIGN CORPORATIONS MUST HAVE CERTIFICATE OF
AUTHORITY.]
No foreign corporation shall transact business in this
state unless it holds a certificate of authority so to do; and
no foreign corporation whose certificate of authority has been
revoked or canceled pursuant to the provisions of this chapter
shall be entitled to obtain a certificate of authority except in
accordance with the provisions of section 303.19. This section
does not establish standards for those activities that may
subject a foreign corporation to taxation under section 290.015
and to the reporting requirements of section 290.371. Without
excluding other activities which may not constitute transacting
business in this state, and subject to the provisions of
sections 303.13 and 543.19, a foreign corporation shall not be
considered to be transacting business in this state for the
purposes of this chapter solely by reason of carrying on in this
state any one or more of the following activities:
(a) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the
settlement thereof or the settlement of claims or disputes;
(b) Holding meetings of its directors or shareholders or
carrying on other activities concerning its internal affairs;
(c) Maintaining bank accounts;
(d) Maintaining offices or agencies for the transfer,
exchange and registration of its securities, or appointing and
maintaining trustees or depositaries with relation to its
securities;
(e) Holding title to and managing real or personal
property, or any interest therein, situated in this state, as
executor of the will or administrator of the estate of any
decedent, as trustee of any trust, or as guardian or conservator
of the person or estate, or both, of any person;
(f) Making, participating in, or investing in loans or
creating, as borrower or lender, or otherwise acquiring
indebtedness or mortgages or other security interests in real or
personal property;
(g) Securing or collecting its debts or enforcing any
rights in property securing them; or
(h) Conducting an isolated transaction completed within a
period of 30 days and not in the course of a number of repeated
transactions of like nature.
Sec. 56. [REPEALER.]
(a) Minnesota Statutes 1986, section 298.401, is repealed.
(b) Minnesota Statutes 1986, section 299.013, is repealed.
(c) Minnesota Statutes 1987 Supplement, section 290.21,
subdivision 8, is repealed.
(d) Minnesota Statutes 1987 Supplement, section 290.371,
subdivision 2, is repealed.
Sec. 57. [EFFECTIVE DATE.]
Sections 1, 4, and 5 are effective January 1, 1988.
Sections 7, 8, 9, 11, clause (13), 31, and 40 are effective for
taxable years beginning after December 31, 1990, except that
sections 9, 11, clause (13), and 40 are effective for taxable
years beginning after December 31, 1989, insofar as they apply
to 936 corporations. In this section, "936 corporations" are
corporations referred to in section 9, clause (2)(ii). Sections
12, clause (11), 14, 26, 33, and 56, paragraph (c), are
effective for taxable years beginning after December 31, 1988.
Sections 2, 3, 32, 36, 37, and 38 are effective for taxable
years beginning after December 31, 1987. Section 30, paragraphs
(f), (g), (h), and (j) are effective for taxable years beginning
after December 31, 1990, except that insofar as they apply to
936 corporations, they are effective for taxable years beginning
after December 31, 1989. Sections 29, in its reference to
section 290.17, subdivision 4, paragraph (i), and 30, paragraph
(i), are effective for taxable years beginning after December
31, 1988, in its application to income described in section
290.01, subdivision 19d, clause (11), for taxable years
beginning after December 31, 1989, in its application to other
income of 936 corporations, and for taxable years beginning
after December 31, 1990, in its application to other income of
foreign operating corporations. Section 30, paragraph (k) is
effective for taxable years beginning after December 31, 1987.
Sections 10, 11, clauses (2) and (3), 12, except for clause
(11), 13, 15 to 18, 20, 21, 23, 25, 29 insofar as it refers to
companies subject to the occupation tax, 34, 35, 39, 41 to 49,
and 56, paragraph (d), are effective for taxable years beginning
after December 31, 1986. Section 22 is effective for taxable
years beginning after December 31, 1986, except that the part
relating to the apportionment of the exemption amount among
members of a unitary group is effective for taxable years
beginning after December 31, 1987. Section 27 is effective for
taxable years beginning after December 31, 1986, except that the
part relating to the allowance of a net operating loss incurred
in any taxable year to the extent of the apportionment ratio of
the loss year is effective for taxable years beginning after
December 31, 1987. Section 28 is effective for losses incurred
in taxable years beginning after December 31, 1986, and is
repealed effective for taxable years beginning after December
31, 1993. Sections 6, 50, and 55 are effective the day
following final enactment. Sections 51 and 52 are effective for
ores mined after December 31, 1989. Section 53 is effective for
ores mined after December 31, 1986, and before January 1, 1990.
Section 54 is effective for ore mined after December 31, 1986.
Section 56, paragraph (a), is effective for ores mined after
December 31, 1989. Section 56, paragraph (b), is effective for
ores mined after December 31, 1986, and supersedes the repealer
in Laws 1987, chapter 268, article 9, section 43.
ARTICLE 3
FEDERAL UPDATE
Section 1. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 4, is amended to read:
Subd. 4. [CORPORATIONS.] The term "corporation" shall
include every entity which is a corporation under section
7701(a)(3) or is treated as a corporation under section 851(q)
or 7704 of the Internal Revenue Code of 1986, as amended through
December 31, 1986 1987, and financial institutions. A
corporation's franchise is its authorization to exist and
conduct business, whether created by legislation, by executive
order, by a governmental agency, by contract or other private
action, or by some combination thereof. Every corporation is
deemed to have a corporate franchise. An entity described in
section 646(b) of the Tax Reform Act of 1986, Public Law Number
99-514, shall be classified in the same manner for purposes of
this chapter as it is for federal income tax purposes.
Sec. 2. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 19, is amended to read:
Subd. 19. [NET INCOME.] The term "net income" means the
federal taxable income, as defined in section 63 of the Internal
Revenue Code of 1986, as amended through the date named in this
subdivision, incorporating any elections made by the taxpayer in
accordance with the Internal Revenue Code in determining federal
taxable income for federal income tax purposes, and with the
modifications provided in subdivisions 19a to 19f.
The Internal Revenue Code of 1986, as amended through
December 31, 1986, shall be in effect for taxable years
beginning after December 31, 1986. The provisions of sections
10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223,
10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the
Omnibus Budget Reconciliation Act of 1987, Public Law Number
100-203, shall be effective at the time they become effective
for federal income tax purposes.
The Internal Revenue Code of 1986, as amended through
December 31, 1987, shall be in effect for taxable years
beginning after December 31, 1987.
Except as otherwise provided, references to the Internal
Revenue Code in subdivisions 19a to 19f mean the code in effect
for purposes of determining net income for the applicable year.
Sec. 3. Minnesota Statutes 1987 Supplement, section
290.01, subdivision 20, is amended to read:
Subd. 20. [GROSS INCOME.] For tax years beginning after
December 31, 1986, The term "gross income" means the gross
income as defined in section 61 of the Internal Revenue Code of
1986, as amended through the date named in subdivision 19 for
the applicable taxable year, plus any additional items of income
taxable under this chapter but not taxable under the Internal
Revenue Code, less any items included in federal gross income
but of a character exempt from state income tax under the laws
of the United States. For tax years beginning before January 1,
1987, except as otherwise provided in this chapter, the term
"gross income," as applied to corporations includes every kind
of compensation for labor or personal services of every kind
from any private or public employment, office, position or
services; income derived from the ownership or use of property;
gains or profits derived from every kind of disposition of, or
every kind of dealing in, property; income derived from the
transaction of any trade or business; and income derived from
any source.
For tax years beginning before January 1, 1987, the term
"gross income" in its application to individuals, estates, and
trusts shall mean the adjusted gross income as defined in the
Internal Revenue Code of 1954, as amended through the date
specified herein for the applicable taxable year, with the
modifications specified in this subdivision and in Minnesota
Statutes 1986, section 290.01, subdivisions 20a to 20f. For
estates and trusts the adjusted gross income for purposes of the
preceding sentence shall be their federal taxable income as
defined in the Internal Revenue Code of 1954, as amended through
the date specified herein for the applicable taxable year, with
the modifications specified in this subdivision and in Minnesota
Statutes 1986, section 290.01, subdivisions 20a to 20f.
(i) The Internal Revenue Code of 1954, as amended through
December 31, 1981, shall be in effect for taxable years
beginning after December 31, 1981. The provisions of sections
205(a), 214 to 222, 231, 232, 236, 247, 251, 252, 253, 265, 266,
285, 288, and 335 of the Tax Equity and Fiscal Responsibility
Act of 1982, Public Law Number 97-248, section 6(b)(2) and (3)
of the Subchapter S Revision Act of 1982, Public Law Number
97-354, section 517 of Public Law Number 97-424, sections 101(c)
and (d), 102(a), (aa), (f)(4), (g), (j), (l), 103(c), 104(b)(3),
105, 305(d), 306(a)(9) of Public Law Number 97-448, sections 101
and 102 of Public Law Number 97-473, and section 243 of the Tax
Reform Act of 1986, Public Law Number 99-514, shall be effective
at the same time that they become effective for federal income
tax purposes. The Payment-in-Kind Tax Treatment Act of 1983,
Public Law Number 98-4, shall be effective at the same time that
it becomes effective for federal income tax purposes.
(ii) The Internal Revenue Code of 1954, as amended through
January 15, 1983, shall be in effect for taxable years beginning
after December 31, 1982. The provisions of sections 905, 1708,
and 1879(m) of the Tax Reform Act of 1986, Public Law Number
99-514, shall be effective at the same time that they become
effective for federal income tax purposes.
(iii) The Internal Revenue Code of 1954, as amended through
December 31, 1983, shall be in effect for taxable years
beginning after December 31, 1983. The provisions of sections
13, 17, 25(b), 31, 32, 41 to 43, 52, 55, 56, 71 to 74, 77, 81,
82, 91, 92, 94, 101 to 103, 105 to 108, 111 to 113, 147(c), 171,
172, 174, 175, 179(a), 221, 223, 224, 421(b), 432, 481, 491,
512, 522 to 524, 554 to 557, 561, 611(a), 621 to 623, 626 to
628, 711(c), 712(d), 713(b), (e), (g), and (h), 721(a), (b),
(d), (g), (i), (o), (p), (r), (t), and (w), 722(e), 1001, 1026,
1061 to 1064, 1066, 1076, 1078, and 2638(b) of the Deficit
Reduction Act of 1984, Public Law Number 98-369, section 1 of
Public Law Number 98-611, and sections 1801, 1802, 1805 to 1809,
1812, 1842, 1853 to 1855, 1866, 1869 to 1873, 1875, and 1878(g)
and (h) of the Tax Reform Act of 1986, Public Law Number 99-514,
shall be effective at the same time that they become effective
for federal income tax purposes.
(iv) The Internal Revenue Code of 1954, as amended through
May 25, 1985, shall be in effect for taxable years beginning
after December 31, 1984. The provisions of sections 101, 102,
103, 201, and 202 of Public Law Number 99-121 and sections 402,
403, 1803, 1804, 1852, and 1861 of the Tax Reform Act of 1986,
Public Law Number 99-514, shall be effective at the same time
that they become effective for federal income tax purposes.
(v) The Internal Revenue Code of 1954, as amended through
December 31, 1985, shall be in effect for taxable years
beginning after December 31, 1985.
The provisions of sections 121 to 123, 201, 202, 241, 401,
405, 411 to 413, 653, 654, 804, 811, 822, 1001, 1003, 1122,
1162, 1164, 1166, 1301, 1401, 1402, 1707, 1826, 1827, 1843,
1867, 1868, 1879(f), and 1895 of the Tax Reform Act of 1986,
Public Law Number 99-514, shall be effective at the same time
that they become effective for federal income tax purposes.
References to the Internal Revenue Code of 1954 in
subdivisions 20a, 20b, 20e, and 20f mean the code in effect for
the purpose of defining gross income for the applicable taxable
year.
Sec. 4. Minnesota Statutes 1987 Supplement, section
290.095, subdivision 3, is amended to read:
Subd. 3. [CARRYOVER.] (a) A net operating loss for any
taxable year shall be a net operating loss carryover to each of
the 15 taxable years following the taxable year of such loss.
(b) The entire amount of the net operating loss for any
taxable year shall be carried to the earliest of the taxable
years to which such loss may be carried. The portion of such
loss which shall be carried to each of the other taxable years
shall be the excess, if any, of the amount of such loss over the
sum of the taxable net income, adjusted by the modifications
specified in subdivision 4, for each of the taxable years to
which such loss may be carried.
(c) Where a corporation does business both within and
without Minnesota, and apportions its income under the
provisions of section 290.191, the net operating loss deduction
shall be allowed to the extent of the apportionment ratio of the
loss year.
(d) No additional net operating loss deduction is allowed
in a subsequent taxable year for the portion of a net operating
loss deduction used to offset Minnesota income in a year in
which the taxpayer is subject to the alternative minimum tax in
section 290.092.
(e) The provisions of sections 381, 382, and 384 of the
Internal Revenue Code of 1986, as amended through December 31,
1987, apply to carryovers in certain corporate acquisitions and
special limitations on net operating loss carryovers.
Sec. 5. Minnesota Statutes 1986, section 290.931,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENTS OF DECLARATION.] Every
corporation subject to taxation under this chapter (excluding
section 290.92) shall make a declaration of estimated tax for
the taxable year if its tax liability so computed can reasonably
be expected to exceed $1,000 $500, or in accordance with rules
prescribed by the commissioner for an affiliated group of
corporations electing to file one return as permitted by rules
prescribed under section 290.37, subdivision 1.
Sec. 6. Minnesota Statutes 1986, section 290.934,
subdivision 1, is amended to read:
Subdivision 1. [ADDITION TO THE TAX.] In case of any
underpayment of estimated tax by a corporation, except as
provided in subdivision 4, there shall be added to the tax for
the taxable year an amount determined at the rate specified in
section 270.75 upon the amount of the underpayment (determined
under subdivision 2) for the period of the underpayment
(determined under subdivision 3).
Sec. 7. Minnesota Statutes 1987 Supplement, section
290.934, subdivision 2, is amended to read:
Subd. 2. [AMOUNT OF UNDERPAYMENT.] For purposes of
subdivision 1, the amount of the underpayment shall be the
excess of
(1) the amount of tax shown on the return for the tax year
or, if no return is filed, the tax for the tax year required
installment, over
(2) the amount, if any, of the installment paid on or
before the last date prescribed for payment.
Sec. 8. Minnesota Statutes 1986, section 290.934,
subdivision 3, is amended to read:
Subd. 3. [PERIOD OF UNDERPAYMENT.] The period of the
underpayment shall run from the date the installment was
required to be paid to whichever of the following dates is the
earlier
(1) The 15th day of the third month following the close of
the taxable year.
(2) With respect to any portion of the underpayment, the
date on which such portion is paid. For purposes of this
paragraph, a payment of estimated tax on any installment date
shall be considered a payment of any previous underpayment only
to the extent such payment exceeds the amount of the installment
determined under subdivision 2(1) for such installment
date credited against unpaid required installments in the order
in which such installments are required to be paid.
Sec. 9. Minnesota Statutes 1986, section 290.934, is
amended by adding a subdivision to read:
Subd. 3a. [REQUIRED INSTALLMENTS.] (1) Except as otherwise
provided in this subdivision, the amount of a required
installment is 25 percent of the required annual payment.
(2) Except as otherwise provided in this subdivision, the
term "required annual payment" means the lesser of:
(a) 90 percent of the tax shown on the return for the
taxable year, or if no return is filed 90 percent of the tax for
such year; or
(b) 100 percent of the tax shown on the return of the
corporation for the preceding taxable year providing such return
was for a full 12-month period, did show a liability, and was
filed by the corporation.
(3) Except for determining the first required installment
for any taxable year, paragraph (2), clause (b) does not apply
in the case of a large corporation. The term "large
corporation" means a corporation or any predecessor corporation
that had taxable net income of $1,000,000 or more for any
taxable year during the testing period. The term "testing
period" means the three taxable years immediately preceding the
taxable year involved. A reduction allowed to a large
corporation for the first installment that is allowed by
applying paragraph (2), clause (b) must be recaptured by
increasing the next required installment by the amount of the
reduction.
(4) In the case of a required installment, if the
corporation establishes that the annualized income installment
is less than the amount determined in paragraph (1), the amount
of the required installment is the annualized income installment
and the recapture of previous quarters' reductions allowed by
this paragraph must be recovered by increasing subsequent
required installments to the extent the reductions have not
previously been recovered. A reduction shall be treated as
recaptured for purposes of this paragraph if 90 percent of the
reduction is recaptured.
(5) The "annualized income installment" is the excess, if
any, of:
(a) an amount equal to the applicable percentage of the tax
for the taxable year computed by placing on an annualized basis
the taxable income:
(i) for the first two months of the taxable year, in the
case of the first required installment;
(ii) for the first two months or for the first five months
of the taxable year, in the case of the second required
installment;
(iii) for the first six months or for the first eight
months of the taxable year, in the case of the third required
installment; and
(iv) for the first nine months or for the first 11 months
of the taxable year, in the case of the fourth required
installment, over;
(b) the aggregate amount of any prior required installments
for the taxable year.
(c) For the purpose of this paragraph, the annualized
income shall be computed by placing on an annualized basis the
taxable income for the year up to the end of the month preceding
the due date for the quarterly payment multiplied by 12 and
dividing the resulting amount by the number of months in the
taxable year (2, 5, 6, 8, 9, or 11 as the case may be) referred
to in clause (a).
(d) The "applicable percentage" used in clause (a) is:
In the case of the following The applicable
required installments: percentage is:
1st 22.5
2nd 45
3rd 67.5
4th 90
(6)(a) If this paragraph applies, the amount determined for
any installment must be determined in the following manner:
(i) take the taxable income for all months during the
taxable year preceding the filing month;
(ii) divide that amount by the base period percentage for
all months during the taxable year preceding the filing month;
(iii) determine the tax on the amount determined under item
(ii); and
(iv) multiply the tax computed under item (iii) by the base
period percentage for the filing month and all months during the
taxable year preceding the filing month.
(b) For purposes of this paragraph:
(i) the "base period percentage" for any period of months
is the average percent which the taxable income for the
corresponding months in each of the three preceding taxable
years bears to the taxable income for the three preceding
taxable years;
(ii) the term "filing month" means the month in which the
installment is required to be paid;
(iii) this paragraph shall only apply if the base period
percentage for any six consecutive months of the taxable year
equals or exceeds 70 percent; and
(iv) the commissioner may provide by rule for the
determination of the base period percentage in the case of
reorganizations, new corporations, and other similar
circumstances.
(c) In the case of a required installment, determined
under this paragraph, if the corporation determines that the
installment is less than the amount determined in paragraph (1),
the amount of the required installment is the amount determined
under this paragraph and the recapture of previous quarters'
reductions allowed by this paragraph must be recovered by
increasing subsequent required installments to the extent the
reductions have not previously been recovered. A reduction
shall be treated as recaptured for purposes of this paragraph if
90 percent of the reduction is recaptured.
Sec. 10. Minnesota Statutes 1987 Supplement, section
290A.03, subdivision 15, is amended to read:
Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code"
means the Internal Revenue Code of 1986, as amended through
December 31, 1986 1987.
Sec. 11. [REPEALER.]
Minnesota Statutes 1986, sections 290.07, subdivisions 3
and 6; 290.11; 290.12, as amended by Laws 1987, chapter 268,
article 1, section 64; 290.131, as amended by Laws 1987, chapter
268, article 1, section 65; 290.132, as amended by Laws 1987,
chapter 268, article 1, section 66; 290.133, as amended by Laws
1987, chapter 268, article 1, section 67; 290.134, as amended by
Laws 1987, chapter 268, article 1, section 68; 290.135, as
amended by Laws 1987, chapter 268, article 1, section 69;
290.136, as amended by Laws 1987, chapter 268, article 1,
section 70; 290.138, as amended by Laws 1987, chapter 268,
article 1, section 71; and 290.934, subdivision 4; and Minnesota
Statutes 1987 Supplement, section 290.14, is repealed.
Sec. 12. [INSTRUCTION TO REVISOR.]
In the next edition of Minnesota Statutes, the revisor of
statutes shall substitute the phrase "Internal Revenue Code of
1986, as amended through December 31, 1987" for the phrase
"Internal Revenue Code of 1986, as amended through December 31,
1986" whenever that phrase occurs in chapter 290, except section
290.01, subdivision 19, and chapter 291.
Sec. 13. [EFFECTIVE DATES.]
Section 4 is effective for taxable years beginning after
December 31, 1986. The repeal in section 11 of Minnesota
Statutes 1986, section 290.07, subdivisions 3 and 6, are
effective for taxable years beginning after December 31, 1986.
The remainder of section 11 is effective for taxable years
beginning after December 31, 1987. Except as provided in
section 2, all other sections of this article are effective for
taxable years beginning after December 31, 1987.
ARTICLE 4
PROPERTY TAX REFUND
Section 1. Minnesota Statutes 1987 Supplement, section
290A.03, subdivision 3, is amended to read:
Subd. 3. [INCOME.] (1) "Income" means the sum of the
following:
(a) the greater of federal adjusted gross income as defined
in the Internal Revenue Code or zero; and
(b) the sum of the following amounts to the extent not
included in clause (a):
(i) all nontaxable income;
(ii) the amount of a passive activity loss that is not
disallowed as a result of section 469, paragraph (i) or (1) of
the Internal Revenue Code and the amount of passive activity
loss carryover allowed under section 469(b) of the Internal
Revenue Code;
(iii) an amount equal to the total of any discharge of
qualified farm indebtedness of a solvent individual excluded
from gross income under section 108(g) of the Internal Revenue
Code;
(iv) cash public assistance and relief;
(v) any pension or annuity (including railroad retirement
benefits, all payments received under the federal Social
Security Act, supplemental security income, and veterans
benefits), which was not exclusively funded by the claimant or
spouse, or which was funded exclusively by the claimant or
spouse and which funding payments were excluded from federal
adjusted gross income in the years when the payments were made;
(vi) interest received from the federal or a state
government or any instrumentality or political subdivision
thereof;
(vii) workers' compensation;
(viii) nontaxable strike benefits;
(ix) the gross amounts of payments received in the nature
of disability income or sick pay as a result of accident,
sickness, or other disability, whether funded through insurance
or otherwise;
(x) the ordinary income portion of a lump sum distribution
under section 402(e)(3) of the Internal Revenue Code; and
(xi) contributions made by the claimant to an individual
retirement account, including a qualified voluntary employee
contribution; simplified employee pension plan; self-employed
retirement plan; cash or deferred arrangement plan under section
401(k) of the Internal Revenue Code; or deferred compensation
plan under section 457 of the Internal Revenue Code; and
(xii) nontaxable scholarship or fellowship grants.
In the case of an individual who files an income tax return
on a fiscal year basis, the term "federal adjusted gross income"
shall mean federal adjusted gross income reflected in the fiscal
year ending in the calendar year. Federal adjusted gross income
shall not be reduced by the amount of a net operating loss
carryback.
(2) "Income" does not include
(a) amounts excluded pursuant to the Internal Revenue Code,
sections 101(a), 102, 117, and 121;
(b) amounts of any pension or annuity which was exclusively
funded by the claimant or spouse and which funding payments were
not excluded from federal adjusted gross income in the years
when the payments were made;
(c) surplus food or other relief in kind supplied by a
governmental agency;
(d) relief granted under this chapter; or
(e) child support payments received under a temporary or
final decree of dissolution or legal separation.
(3) The sum of the following amounts shall be subtracted
from income:
(a) for the claimant's first dependent, the exemption
amount multiplied by 1.4;
(b) for the claimant's second dependent, the exemption
amount multiplied by 1.3;
(c) for the claimant's third dependent, the exemption
amount multiplied by 1.2;
(d) for the claimant's fourth dependent, the exemption
amount multiplied by 1.1;
(e) for the claimant's fifth dependent, the exemption
amount; and
(f) if the claimant or claimant's spouse was disabled or
attained the age of 65 prior to June 1 of the year for which the
taxes were levied or rent paid, the exemption amount.
For purposes of this subdivision, the "exemption amount"
means the exemption amount under section 151(d) of the Internal
Revenue Code of 1986, as amended through December 31, 1987, for
the taxable year for which the income is reported.
Sec. 2. Minnesota Statutes 1986, section 290A.03,
subdivision 7, is amended to read:
Subd. 7. [DEPENDENT.] "Dependent" means any person who
is under 18 years of age at the end of the calendar year who
receives more than 50 percent of support from the claimant, or
who is between 18 and 21 years of age and is a full time student
who receives more than 50 percent of support from the
claimant considered a dependent under sections 151 and 152 of
the Internal Revenue Code of 1986, as amended through December
31, 1987. In the case of a son, stepson, daughter, or
stepdaughter of the claimant, amounts received as an aid to
families with dependent children grant or allowance to or on
behalf of the child must not be taken into account in
determining whether the child received more than half of the
child's support from the claimant. "Dependent" includes a
parent of the claimant or spouse who lives in the claimant's
homestead. "Dependent" includes a person over 18 years of age
who lives in the claimant's homestead and who receives more than
50 percent of support from the claimant.
Sec. 3. Minnesota Statutes 1987 Supplement, section
290A.03, subdivision 13, is amended to read:
Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes
payable" means the property tax exclusive of special
assessments, penalties, and interest payable on a claimant's
homestead before reductions made under section 273.13 but after
deductions made pursuant to under sections 273.132, 273.135,
273.1391, 273.42, subdivision 2, and any other state paid
property tax credits in any calendar year. In the case of a
claimant who makes ground lease payments, "property taxes
payable" includes the amount of the payments directly
attributable to the property taxes assessed against the parcel
on which the house is located. No apportionment or reduction of
the "property taxes payable" shall be required for the use of a
portion of the claimant's homestead for a business purpose if
the claimant does not deduct any business depreciation expenses
for the use of a portion of the homestead in the determination
of federal adjusted gross income. For homesteads which are
manufactured homes as defined in section 274.19, subdivision 8,
"property taxes payable" shall also include the amount of the
gross rent paid in the preceding year for the site on which the
homestead is located, which is attributable to the net tax paid
on the site. The amount attributable to property taxes shall be
determined by multiplying the net tax on the parcel by a
fraction, the numerator of which is the gross rent paid for the
calendar year for the site and the denominator of which is the
gross rent paid for the calendar year for the parcel. When a
homestead is owned by two or more persons as joint tenants or
tenants in common, such tenants shall determine between them
which tenant may claim the property taxes payable on the
homestead. If they are unable to agree, the matter shall be
referred to the commissioner of revenue whose decision shall be
final. Property taxes are considered payable in the year
prescribed by law for payment of the taxes.
In the case of a claim relating to "property taxes
payable," the claimant must have owned and occupied the
homestead on January 2 of the year in which the tax is payable
and (i) the property must have been classified as homestead
property pursuant to section 273.13, subdivision 22 or 23 on or
before June 1 of the year in which the "property taxes payable"
were levied; or (ii) the claimant must provide documentation
from the local assessor that application for homestead
classification has been made prior to October 1 of the year in
which the "property taxes payable" were payable and that the
assessor has approved the application.
Sec. 4. Minnesota Statutes 1987 Supplement, section
290A.03, subdivision 14, is amended to read:
Subd. 14. [NET TAX.] "Net tax" means
(a) the property tax, exclusive of special assessments,
interest, and penalties, and after reduction for any state paid
property tax credits as required in subdivision 13 except for
the reduction under section 273.13, subdivisions 22 and 23, or
(b) the payments made in lieu of ad valorem taxes,
including payments of special assessments imposed in lieu of ad
valorem taxes,
for the calendar year in which the rent was paid. If a
portion of the property is occupied as a homestead or is used
for other than rental purposes, the net tax shall be the amount
of tax reduced by the percentage that the nonrental use
comprises of the total square footage of the building. If a
portion of the property is used for purposes other than for
residential rental and none of the property is occupied as a
homestead, the net tax shall be the amount of the tax of the
parcel multiplied by a fraction, the numerator of which is the
assessed value of the residential rental portion and the
denominator of which is the total assessed value of the parcel.
If a portion of the property is used for other than rental
residential purposes, the county treasurer shall list on the
property tax statement the amount of net tax pertaining to the
rental residential portion of the property.
The amount of the net tax shall not be reduced by an
abatement or a court ordered reduction in the property tax on
the property made after the certificate of rent constituting
property tax has been provided to the renter.
Sec. 5. Minnesota Statutes 1987 Supplement, section
290A.04, subdivision 2, is amended to read:
Subd. 2. A claimant who is disabled or has attained the
age of 65 by June 1 of the year in which a refund is payable or
who, on the federal tax return filed for the prior year, claimed
a personal exemption for a dependent pursuant to section 151 of
the Internal Revenue Code, and whose property taxes payable or
rent constituting property taxes are in excess of the percentage
of the household income stated below shall pay an amount equal
to the percent of income shown for the appropriate household
income level along with the percent to be paid by the claimant
of the remaining amount of property taxes payable or rent
constituting property taxes. The state refund will be equal to
the amount of property taxes payable or rent constituting
property taxes that remain, up to the state refund amount shown
below.
Percent Percent Maximum
Household Income of Income Paid by State
Claimant Refund
$0 to 999 1.0 percent 10 percent $1,100
1,000 to 1,999 1.0 1.1 percent 10 11 percent $1,100
2,000 to 2,999 1.0 1.2 percent 10 12 percent $1,100
3,000 to 3,499 1.0 1.3 percent 11 13 percent $1,100
3,500 to 3,999 1.0 1.3 percent 11 13 percent $1,100
4,000 to 4,499 1.0 1.4 percent 11 14 percent $1,100
4,500 to 4,999 1.0 1.4 percent 12 14 percent $1,100
5,000 to 5,999 1.0 1.5 percent 12 15 percent $1,100
6,000 to 6,999 1.1 1.5 percent 12 16 percent $1,100
7,000 to 7,999 1.1 1.6 percent 13 17 percent $1,100
8,000 to 8,999 1.2 1.6 percent 13 18 percent $1,100
9,000 to 9,999 1.2 1.7 percent 13 19 percent $1,100
10,000 to 10,999 1.3 1.7 percent 14 20 percent $1,075
11,000 to 11,999 1.4 1.8 percent 14 22 percent $1,075
12,000 to 12,999 1.5 1.8 percent 14 24 percent $1,075
13,000 to 13,999 1.5 1.9 percent 15 26 percent $1,075
14,000 to 14,999 1.5 2.0 percent 16 28 percent $1,075
15,000 to 15,999 1.6 2.1 percent 17 30 percent $1,075
16,000 to 16,999 1.7 2.2 percent 18 32 percent $1,075
17,000 to 17,999 1.8 2.3 percent 19 34 percent $1,050
18,000 to 18,999 1.9 2.4 percent 20 36 percent $1,050
19,000 to 19,999 2.0 2.6 percent 22 38 percent $1,050
20,000 to 20,999 2.1 2.8 percent 24 40 percent $1,050
21,000 to 21,999 2.2 3.0 percent 26 42 percent $1,050
22,000 to 22,999 2.2 3.2 percent 28 44 percent $1,050
23,000 to 23,999 2.2 3.3 percent 30 46 percent $1,025
24,000 to 24,999 2.3 3.4 percent 32 48 percent $1,025
25,000 to 25,999 2.3 3.5 percent 34 50 percent $1,025
26,000 to 26,999 2.3 3.6 percent 36 52 percent $1,025
27,000 to 27,999 2.4 3.7 percent 38 54 percent $1,000
28,000 to 28,999 2.4 3.8 percent 40 56 percent $ 900
29,000 to 29,999 2.4 3.9 percent 42 58 percent $ 800
30,000 to 30,999 2.4 4.0 percent 44 60 percent $ 700
31,000 to 31,999 2.5 4.0 percent 46 60 percent $ 600
32,000 to 32,999 2.5 4.0 percent 48 60 percent $ 500
33,000 to 33,999 2.5 4.0 percent 50 60 percent $ 300
34,000 to 34,999 2.5 4.0 percent 50 60 percent $ 100
The payment made to a claimant shall be the amount of the
state refund calculated pursuant to this subdivision. For taxes
payable in 1989, the amount of the refund must be reduced by the
homestead credit. No payment is allowed if the claimant's
household income is $35,000 or more.
Sec. 6. Minnesota Statutes 1987 Supplement, section
290A.04, subdivision 2b, is amended to read:
Subd. 2b. The commissioner may reconstruct the tables in
subdivisions subdivision 2 and 2a for homeowners to reflect the
elimination of the homestead credit beginning for claims based
on taxes payable in 1989 1990.
Sec. 7. Minnesota Statutes 1986, section 290A.04, is
amended by adding a subdivision to read:
Subd. 2h. If the net property taxes payable in 1989 on a
homestead increase more than ten percent over the net property
taxes payable in 1988 on the same property, and the amount of
that increase is $40 or more, a claimant who is a homeowner
shall be allowed an additional refund equal to 75 percent of the
amount by which the increase exceeds ten percent. This
subdivision shall not apply to any increase in the net property
taxes payable attributable to improvements made to the homestead.
A refund under this subdivision shall not exceed $250.
For purposes of this subdivision, "net property taxes
payable" means property taxes payable after reductions made
pursuant to sections 273.13, subdivisions 22 and 23; 273.132;
273.135; 273.1391; and 273.42, subdivision 2, and any other
state paid property tax credits and after the deduction of tax
refund amounts for which the claimant qualifies pursuant to
subdivision 2.
In addition to the other proofs required by this chapter,
each claimant under this subdivision shall file with the
property tax refund return a copy of the property tax statement
for taxes payable in the preceding year or other documents
required by the commissioner.
Sec. 8. Minnesota Statutes 1987 Supplement, section
290A.06, is amended to read:
290A.06 [FILING TIME LIMIT, LATE FILING; INCOME TAX
RETURN.]
Any claim for a refund based on property taxes payable
shall be filed with the department of revenue on or before
August 15 of the year in which the property taxes are due and
payable. A copy of the claimant's federal income tax return for
the taxable year preceding the year in which the property taxes
are payable must be filed with the claim if the claimant filed a
federal income tax return for that year.
Any claim for rent constituting property taxes shall be
filed with the department of revenue on or before August 15 of
the year following the year in which the rent was paid. A copy
of the claimant's federal income tax return for the taxable year
in which the rent was paid must be filed with the claim if the
claimant filed a federal income tax return for that year.
The commissioner may extend the time for filing these
claims for a period not to exceed six months in the case of
sickness, absence, or other disability, or when in the
commissioner's judgment other good cause exists.
A claim filed after the original or extended due date shall
be allowed, but the amount of credit shall be reduced by five
percent of the amount otherwise allowable, plus an additional
five percent for each month of delinquency, not exceeding a
total reduction of 25 percent which may be canceled or reduced
by the commissioner in the case of sickness, absence, or other
disability, or when in the commissioner's judgment other good
cause exists. In any event no claim shall be allowed if the
initial claim is filed one year after the original due date for
filing the claim.
The time limit on redetermination of claims for refund and
examination of records shall be governed by sections 290.49,
290.50, and 290.56 and for purposes of computing the time limit
as provided in these sections the due date of the property tax
refund return shall be the same as the due date contained in
section 290.42 for an income tax return covering the year in
which the rent was paid or the year preceding the year in which
the property taxes are payable.
Sec. 9. [290A.24] [FINANCIAL REPORTING.]
For financial reporting and accounting purposes and for
purposes of the state budget, the refunds paid under this
chapter must be recognized and accounted for as an adjustment in
the total amount of withholding tax paid under section 290.92
and declarations of estimated tax under section 290.93.
Sec. 10. [TRANSITION RULE.]
For purposes of claims based on rent paid in 1987 and
property taxes payable in 1988, a claimant who has a dependent
under the revised definition in section 2 shall be treated as
having claimed a personal exemption for a dependent under
federal law in order to qualify for a refund under Minnesota
Statutes 1987 Supplement, section 290A.04, subdivision 2.
Sec. 11. Laws 1987, chapter 268, article 3, section 12, is
amended to read:
Sec. 12. [LIMITATIONS ON PROPERTY TAX REFUNDS.]
(a) For claims filed based on rent paid in 1986 and
property taxes payable in 1987, the commissioner shall pay 67
100 percent of the payments allowable under section 290A.04,
subdivisions 1 and 2. The commissioner shall include with each
reduced refund a statement that the reduction is required by
this section.
(b) Minnesota Statutes 1986, section 290A.23 does not apply
to claims based on property taxes payable in 1988 and rent paid
in 1987 under section 290A.04, subdivisions 1 and 2.
$125,000,000 is appropriated to the commissioner of revenue for
fiscal year 1989 to pay the claims. The commissioner shall
estimate the amount of payments allowable under section 290A.04,
subdivisions 1 and 2, by August 25, 1988. If the estimate
exceeds the $125,000,000 limitation, the commissioner shall
proportionally reduce the refunds paid so that the refunds paid
equal $125,000,000. All refunds for claims based on property
taxes payable in 1988 and rent paid in 1987 must be reduced by
the same percentage. If reduced, the commissioner shall include
with each refund a statement that the reduction is required by
this section.
Sec. 12. [PAYMENT.]
By June 15, 1988, the commissioner of revenue shall pay
claimants for claims paid before the date of final enactment
based on rent paid in 1986 and property taxes payable in 1987
the difference between the payments allowable under Minnesota
Statutes, section 290A.04, subdivisions 1 and 2, and the amounts
paid under Laws 1987, chapter 268, article 3, section 12,
paragraph (a). The amounts paid shall be reduced for claims
filed after the original or extended due date as provided in
Minnesota Statutes, section 290A.06. Interest shall not be paid
on payments made by June 15, 1988. Thereafter, interest shall
be added at the rate specified in Minnesota Statutes, section
270.76, from June 15, 1988, until the claim is paid.
The commissioner of revenue shall include with each payment
a statement explaining that the payment is the balance of the
claim filed based on rent paid in 1986 or property taxes payable
in 1987 and that the payment is required by this act. The
statement must read substantially as follows:
"Here is the rest of your 1986 property tax refund.
As you recall, a state law reduced all 1986 property tax
refund checks by 33 percent.
The amount of this check, together with the amount of the
property tax refund check you received last fall, should equal
the amount of the refund you listed on your 1986 property tax
refund application."
Sec 13. [REPEALER.]
Minnesota Statutes 1987 Supplement, section 290A.04,
subdivision 2a, is repealed.
Sec. 14. [APPROPRIATION.]
The amount necessary to pay the refunds required in section
12 is appropriated for fiscal year 1988 from the general fund to
the commissioner of revenue.
Sec. 15. [EFFECTIVE DATES.]
Sections 1 to 5 and 13 are effective for claims based on
rent paid in 1988 and subsequent years and claims based on
property taxes payable in 1989 and subsequent years. Section 6
is effective for claims based on property taxes paid in 1990.
Section 7 is effective for property taxes payable in 1989.
Section 8 is effective for claims based on rent paid in 1987 and
subsequent years and claims based on property taxes payable in
1988 and subsequent years. Sections 10, 11, 12, and 14 are
effective the day following final enactment.
ARTICLE 5
PROPERTY TAX REFORM
Section 1. Minnesota Statutes 1987 Supplement, section
124.155, subdivision 2, is amended to read:
Subd. 2. [ADJUSTMENT TO AIDS.] The amount specified in
subdivision 1 shall be used to adjust the following state aids
and credits in the order listed:
(a) foundation aid as defined in section 124A.01;
(b) secondary vocational aid authorized in section 124.573;
(c) special education aid authorized in section 124.32;
(d) secondary vocational aid for handicapped children
authorized in section 124.574;
(e) gifted and talented aid authorized in section 124.247;
(f) aid for pupils of limited English proficiency
authorized in section 124.273;
(g) aid for chemical use programs authorized in section
124.246;
(h) interdistrict cooperation aid authorized in section
124.272;
(i) summer program aid authorized in section 124A.033;
(j) transportation aid authorized in section 124.225;
(k) community education programs aid authorized in section
124.271;
(l) adult education aid authorized in section 124.26;
(m) early childhood family education aid authorized in
section 124.2711;
(n) capital expenditure equalization aid authorized in
section 124.245;
(o) homestead credit replacement aid authorized in section
273.1394 under section 273.13 for taxes payable in 1989 and
under section 273.1398 for taxes payable in 1990 and thereafter;
(p) agricultural credit replacement aid authorized in under
section 273.1395 273.132 for taxes payable in 1989 and under
section 273.1398 for taxes payable in 1990 and thereafter;
(q) transition aid and disparity reduction aid authorized
in section 273.1398;
(q) (r) attached machinery aid authorized in section
273.138, subdivision 3; and
(r) (s) teacher retirement and F.I.C.A. aid authorized in
sections 124.2162 and 124.2163.
The commissioner of education shall schedule the timing of
the adjustments to state aids and credits specified in
subdivision 1, as close to the end of the fiscal year as
possible.
Sec. 2. Minnesota Statutes 1987 Supplement, section
124.2131, subdivision 3, is amended to read:
Subd. 3. [DECREASE IN IRON ORE ASSESSED VALUE.] If in any
year the assessed value gross tax capacity of iron ore property,
as defined in section 273.13, subdivision 31 in any district is
less than the assessed value gross tax capacity of such property
in the preceding year, the commissioner of revenue shall
redetermine for all purposes the adjusted assessed value gross
tax capacity of the preceding year taking into account only the
decrease in assessed value gross tax capacity of iron ore
property as defined in section 273.13, subdivision 31. If
subdivision 2, clause (a), is applicable to the district, the
decrease in iron ore property shall be applied to the adjusted
assessed value as limited therein. In all other respects, the
provisions of clause (1) shall apply.
Sec. 3. Minnesota Statutes 1987 Supplement, section
124.2139, is amended to read:
124.2139 [REDUCTION OF HOMESTEAD CREDIT PAYMENTS TO SCHOOL
DISTRICTS.]
The commissioner of revenue shall reduce the homestead
credit replacement aid payments under section 273.13 for fiscal
year 1990, the sum of the homestead credit, and transition aid
and disparity reduction aid payments under section 273.1398 for
fiscal years 1991 and thereafter made to school
districts pursuant to section 273.1394 by the product of:
(1) the district's fiscal year 1984 payroll for coordinated
plan members of the public employees retirement association,
times
(2) the difference between the employer contribution rate
in effect prior to July 1, 1984, and the total employer
contribution rate in effect after June 30, 1984.
Sec. 4. Minnesota Statutes 1987 Supplement, section
124A.02, subdivision 3a, is amended to read:
Subd. 3a. [ADJUSTED ASSESSED VALUATION.] "Adjusted
assessed valuation" means the assessed valuation of the taxable
property notwithstanding the provisions of section 275.49 of the
school district as adjusted by the commissioner of revenue under
section 124.2131. The adjusted assessed valuation for any given
calendar year shall be used to compute levy limitations for
levies certified in the succeeding calendar year and aid for the
school year beginning in the second succeeding calendar year.
Sec. 5. Minnesota Statutes 1987 Supplement, section
124A.02, subdivision 11, is amended to read:
Subd. 11. [MINIMUM AID.] A qualifying district's minimum
aid for each school year shall equal its minimum guarantee for
that school year, minus the sum of:
(1) the amount of the district's homestead credit
replacement aid paid under section 273.1394 and its 273.13, for
taxes payable in 1989 and under section 273.1398 for taxes
payable in 1990 and thereafter, agricultural credit replacement
aid under section 273.1395 273.132, for taxes payable in 1989
and under section 273.1398 for taxes payable in 1990 and
thereafter, and transition aid and disparity reduction aid paid
under section 273.1398 for that school year, after any positive
tax base adjustment but prior to any negative tax base
adjustment under section 273.1396;
(2) the amount by which property taxes of the district for
use in that school year are reduced by the attached machinery
provisions in section 273.138, subdivision 6;
(3) the amount by which property taxes of the district for
use in that school year are reduced by the state reimbursed
disaster or emergency reassessment provisions in section
273.123; and
(4) the amount by which property taxes of the district for
use in that school year are reduced by the metropolitan
agricultural preserve provisions in section 473H.10.
Sec. 6. Minnesota Statutes 1987 Supplement, section
272.115, subdivision 4, is amended to read:
Subd. 4. No real estate sold on or after January 1, 1978,
for which a certificate of value is required pursuant to
subdivision 1 shall receive the homestead value exemption amount
or the agricultural exemption amount computed in section
275.081; or the taconite homestead credit provided in sections
273.134 to 273.136 be classified as a homestead, unless a
certificate of value has been filed with the county auditor in
accordance with this section.
This subdivision shall apply to any real estate taxes that
are payable the year or years following the sale of the property.
Sec. 7. Minnesota Statutes 1987 Supplement, section
273.1102, is amended by adding a subdivision to read:
Subd. 3. [1988 ADJUSTMENT.] For school districts levy
limitations or authorities expressed in terms of mills and
adjusted assessed value, their levy limitations shall be
converted by the department of education to "equalized tax
capacity rates." For purposes of this calculation, the 1987
adjusted assessed values of the district shall be converted to
"adjusted gross tax capacities" by multiplying the equalized
market values by class of property by the gross tax capacity
rates provided in section 273.13. Each county assessor and the
city assessors of Minneapolis, Duluth, and St. Cloud shall
furnish the commissioner of revenue the 1987 market value for
taxes payable in 1988 for any new classes of property
established in this article. The commissioner shall use those
values, and estimate values where needed, in developing the 1987
tax capacity for each school district under this section. The
requirements of section 124.2131, subdivision 1, paragraph (c),
and subdivisions 2 and 3, shall remain in effect.
Sec. 8. Minnesota Statutes 1987 Supplement, section
273.123, subdivision 4, is amended to read:
Subd. 4. [STATE REIMBURSEMENT.] The county auditor shall
calculate the tax on the property described in subdivision 2
based on the assessment made on January 2 of the year in which
the disaster or emergency occurred. The difference between the
tax determined on the January 2 assessed value and the tax
actually payable based on the reassessed value determined under
subdivision 2 shall be reimbursed to each taxing jurisdiction in
which the damaged property is located. The amount shall be
certified by the county auditor and reported to the commissioner
of revenue. The commissioner shall make the payments to the
taxing jurisdictions containing the property at the time
distributions are made pursuant to section 273.1394 273.13 for
taxes payable in 1989, and pursuant to section 273.1398 for
taxes payable in 1990 and thereafter, in the same proportion
that the ad valorem tax is distributed.
Sec. 9. Minnesota Statutes 1987 Supplement, section
273.123, subdivision 5, is amended to read:
Subd. 5. [COMPUTATION OF CREDITS.] The amounts of any
credits or tax relief which reduce the gross tax shall be
computed upon the reassessed value determined under subdivision
2. Payment shall be made pursuant to section 273.1394 273.13
for taxes payable in 1989, and pursuant to section 273.1398 for
taxes payable in 1990 and thereafter. For purposes of the
property tax refund, property taxes payable, as defined in
section 290A.03, subdivision 13, and net property taxes payable,
as defined in section 290A.04, subdivision 2d, shall be computed
upon the reassessed value determined under subdivision 2.
Sec. 10. Minnesota Statutes 1987 Supplement, section
273.124, subdivision 8, is amended to read:
Subd. 8. [HOMESTEAD OWNED BY FAMILY FARM CORPORATION OR
PARTNERSHIP.] (a) Each family farm corporation and each
partnership operating a family farm is entitled to class 1b
under section 273.13, subdivision 22, paragraph (b), or class 2a
assessment for one homestead occupied by a shareholder or
partner thereof who is residing on the land and actively engaged
in farming of the land owned by the corporation or partnership.
Homestead treatment applies even if legal title to the property
is in the name of the corporation or partnership and not in the
name of the person residing on it. "Family farm corporation"
and "family farm" have the meanings given in section 500.24.
(b) In addition to property specified in paragraph (a), any
other residences owned by corporations or partnerships described
in paragraph (a) which are located on agricultural land and
occupied as homesteads by shareholders or partners who are
actively engaged in farming on behalf of the corporation or
partnership must also be assessed as class 2a property or as
class 1b property under section 273.13, subdivision 22,
paragraph (b), but the property eligible is limited to the
residence itself and as much of the land surrounding the
homestead, not exceeding one acre, as is reasonably necessary
for the use of the dwelling as a home, and does not include any
other structures that may be located on it.
Sec. 11. Minnesota Statutes 1987 Supplement, section
273.124, subdivision 11, is amended to read:
Subd. 11. [LIMITATION ON HOMESTEAD CLASSIFICATION.] If the
assessor has classified a property as both homestead and
nonhomestead, the greater of the value attributable to the
portion of the property classified as class 1 or class 2a or the
value of the first tier of assessment gross tax capacity
percentages provided under section 273.13, subdivision 22, or
23, paragraph (a) is entitled to assessment as a homestead under
section 273.13, subdivision 22 or 23, and the homestead
exemption under section 275.081, subdivision 2. The limitation
in this subdivision does not apply to buildings containing fewer
than four residential units or to a single rented or leased
dwelling unit located within or attached to a private garage or
similar structure owned by the owner of a homestead and located
on the premises of that homestead.
If the assessor has classified a property as both homestead
and nonhomestead, the homestead credit provided in section
273.13, subdivisions 22 and 23 and the reductions in tax
provided under sections 273.135 and 273.1391 apply to the value
of both the homestead and the nonhomestead portions of the
property.
Sec. 12. Minnesota Statutes 1987 Supplement, section
273.124, subdivision 13, is amended to read:
Subd. 13. [SOCIAL SECURITY NUMBER REQUIRED FOR HOMESTEAD
APPLICATION.] Beginning with the January 2, 1987, assessment,
Every property owner applying for homestead classification must
furnish to the county assessor that owner's social security or
taxpayer identification number. If the social security or
taxpayer identification number is not provided, the county
assessor shall classify the property as nonhomestead. The
social security numbers of the property owners are private data
on individuals as defined by section 13.02, subdivision 12, but,
notwithstanding that section, the private data may be disclosed
to the commissioner of revenue.
At the request of the commissioner, each county must give
the commissioner a listing list that includes the name and
social security or taxpayer identification number of each
property owner applying for homestead classification.
If, in comparing the lists supplied by the counties, the
commissioner finds that a property owner is claiming more than
one homestead, the commissioner shall notify the appropriate
counties. Within 90 days of the notification, the county
assessor shall investigate to determine if the homestead
classification was properly claimed. If the property owner does
not qualify, the county assessor shall notify the county auditor
who will determine the amount of homestead benefits that had
been improperly allowed. For the purpose of this section,
"homestead benefits" means the tax reduction resulting from the
homestead exemption amount provided under section 275.081
classification as a homestead under section 273.13, the
homestead credit under section 273.13 for taxes payable in 1989
and under section 273.1398 for taxes payable in 1990 and
thereafter, the taconite homestead credit, and the supplemental
homestead credit, and the tax reduction resulting from the
agricultural exemption amount provided in section 275.081 credit
under section 273.132 for taxes payable in 1989 and under
section 273.1398 for taxes payable in 1990 and thereafter. The
county auditor shall send a notice to the owners of the affected
property, demanding reimbursement of the homestead benefits plus
a penalty equal to 25 percent of the homestead benefits. The
property owners may appeal the county's determination by filing
a notice of appeal with the Minnesota tax court within 60 days
of the date of the notice from the county.
If the amount of homestead benefits and penalty is not paid
within 60 days, and if no appeal has been filed, the county
auditor shall certify the amount to the succeeding year's tax
list to be collected as part of the property taxes.
Any amount of homestead benefits recovered from the
property owner must be transmitted to the commissioner by the
end of each calendar quarter. Any amount recovered attributable
to taconite homestead credit shall be transmitted to the St.
Louis county auditor to be deposited in the taconite property
tax relief account. The amount of penalty collected must be
deposited in the county general fund.
The commissioner will provide suggested homestead
applications to each county. If a property owner has applied
for more than one homestead and the county assessors cannot
determine which property should be classified as homestead, the
county assessors will refer the information to the commissioner.
The commissioner shall make the determination and notify the
counties within 60 days.
In addition to lists of homestead properties, the
commissioner may ask the counties to furnish lists of all
properties and the record owners.
Sec. 13. Minnesota Statutes 1987 Supplement, section
273.13, subdivision 15a, is amended to read:
Subd. 15a. [GENERAL FUND, REPLACEMENT OF REVENUE.] (1)
Payment from the general fund shall be made, as provided herein,
for the purpose of replacing revenue lost as a result of the
reduction of property taxes provided in subdivision subdivisions
22 and 23.
(2) Each county auditor shall certify, not later than May 1
of each year to the commissioner of revenue the amount of
reduction resulting from subdivision subdivisions 22 and 23 in
the auditor's county. This certification shall be submitted to
the commissioner of revenue as part of the abstracts of tax
lists required to be filed with the commissioner under the
provisions of section 275.29. Any prior year adjustments shall
also be certified in the abstracts of tax lists. The
commissioner of revenue shall review such certifications to
determine their accuracy. The commissioner may make such
changes in the certification as are deemed necessary or return a
certification to the county auditor for corrections.
(3) Based on current year tax data reported in the
abstracts of tax lists, the commissioner of revenue shall
annually determine the taxing district distribution of the
amounts certified under clause (2). The commissioner of revenue
shall pay to each taxing district, other than school districts,
its total payment for the year in equal installments on or
before July 15 20 and December 15 of each year.
Sec. 14. Minnesota Statutes 1986, section 273.13, is
amended by adding a subdivision to read:
Subd. 21a. [TAX CAPACITY.] In this section, wherever the
"tax capacity" of a class of property is specified without
qualification as to whether it is the property's "net tax
capacity" or its "gross tax capacity," the "net tax capacity"
and "gross tax capacity" of that property are the same as its
"tax capacity."
Sec. 15. Minnesota Statutes 1987 Supplement, section
273.13, subdivision 22, is amended to read:
Subd. 22. [CLASS 1.] (a) Except as provided in subdivision
23, real estate which is residential and used for homestead
purposes is class 1. The market value of class 1a property must
be determined based upon the value of the house, garage, and
land.
The first $68,000 of market value of class 1a property must
be assessed at 17 has a net tax capacity of one percent of its
market value and a gross tax capacity of 2.17 percent of its
market value. The homestead market value of class 1a property
that exceeds $68,000 must be assessed at 27 but does not exceed
$100,000 has a tax capacity of 2.5 percent of its market value.
The market value of class 1a property that exceeds $100,000 has
a tax capacity of 3.3 percent of its market value.
(b) Class 1b property includes real estate or manufactured
homes used for the purposes of a homestead by
(1) any blind person, if the blind person is the owner
thereof or if the blind person and the blind person's spouse are
the sole owners thereof; or
(2) any person, hereinafter referred to as "veteran," who:
(i) served in the active military or naval service of the
United States; and
(ii) is entitled to compensation under the laws and
regulations of the United States for permanent and total
service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular
dystrophies, or paralysis, of both lower extremities, such as to
preclude motion without the aid of braces, crutches, canes, or a
wheelchair; and
(iii) with assistance by the administration of veterans
affairs has acquired a special housing unit with special
fixtures or movable facilities made necessary by the nature of
the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the
special housing unit as a homestead; or
(3) any person who:
(i) is permanently and totally disabled and
(ii) receives 90 percent or more of total income from
(A) aid from any state as a result of that disability; or
(B) supplemental security income for the disabled; or
(C) workers' compensation based on a finding of total and
permanent disability; or
(D) social security disability, including the amount of a
disability insurance benefit which is converted to an old age
insurance benefit and any subsequent cost of living increases;
or
(E) aid under the Federal Railroad Retirement Act of 1937,
United States Code Annotated, title 45, section 228b(a)5; or
(F) a pension from any local government retirement fund
located in the state of Minnesota as a result of that disability;
or
(iii) whose household income as defined in section 290A.03,
subdivision 5, is 150 percent or less of the federal poverty
level.
Property is classified and assessed pursuant to clause (1)
only if the commissioner of jobs and training certifies to the
assessor that the owner of the property satisfies the
requirements of this subdivision. The commissioner of jobs and
training shall provide a copy of the certification to the
commissioner of revenue.
Class 1b property is valued and assessed as follows: in
the case of agricultural land, including a manufactured home,
used for a homestead, the first $33,000 of market value shall be
valued and assessed at five percent, the next $33,000 of market
value shall be valued and assessed at 14 percent, and the
remaining market value shall be valued and assessed at 18
percent; and in the case of all other real estate and
manufactured homes, the first $34,000 of market value shall be
valued and assessed at five percent, the next $34,000 of market
value shall be valued and assessed at 17 percent, and the
remaining market value shall be valued and assessed at 27
percent. In the case of agricultural land including a
manufactured home used for purposes of a homestead, the
commissioner of revenue shall adjust, as provided in section
273.1311, the maximum amount of the market value of the
homestead brackets subject to the five percent and 18 percent
rates; and for all other real estate and manufactured homes, the
commissioner of revenue shall adjust, as provided in section
273.1311, the maximum amount of the market value of the
homestead brackets subject to the five percent and 17 percent
rates. Permanently and totally disabled for the purpose of this
subdivision means a condition which is permanent in nature and
totally incapacitates the person from working at an occupation
which brings the person an income. The first $32,000 market
value of class 1b property has a net tax capacity of .4 percent
of its market value and a gross tax capacity of .87 percent of
its market value. The remaining market value of class 1b
property has a gross or net tax capacity using the rates for
class 1 or class 2a property, whichever is appropriate, of
similar market value.
(c) Class 1c property is commercial use real property that
abuts a lakeshore line and is devoted to temporary and seasonal
residential occupancy for recreational purposes but not devoted
to commercial purposes for more than 200 days in the year
preceding the year of assessment, and that includes a portion
used as a homestead by the owner. It must be assessed at 12
Class 1c property has a tax capacity of .9 percent of market
value with the following limitation: the area of the property
must not exceed 100 feet of lakeshore footage for each cabin or
campsite located on the property up to a total of 800 feet and
500 feet in depth, measured away from the lakeshore.
(d) For taxes levied in 1988, payable in 1989 only, the tax
to be paid on class 1a or class 1b property, less any reduction
received pursuant to sections 273.123 and 473H.10, shall be
reduced by 54 percent of the tax imposed on the first $68,000 of
market value. The amount of the reduction shall not
exceed $700 $725.
Sec. 16. Minnesota Statutes 1987 Supplement, section
273.13, subdivision 23, is amended to read:
Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural
land including any improvements that is homesteaded, together
with the house and garage. The first $66,000 of market value of
an agricultural homestead is valued at 30 percent. The market
value of the house and garage and immediately surrounding one
acre of land that does not exceed $65,000 has a net tax capacity
of .805 percent of market value and a gross tax capacity of 1.75
percent of market value. The excess market value over $65,000
has a tax capacity of 2.2 percent. If the market value of the
house, garage, and surrounding one acre of land is less than
$65,000, the value of the remaining land including improvements
equal to the difference between $65,000 and the market value of
the house, garage, and surrounding one acre of land has a net
tax capacity of 1.12 percent of market value and a gross tax
capacity of 1.75 percent of market value for the first 320 acres
of land and the remaining value over 320 acres has a net tax
capacity of 1.295 percent of market value and a gross tax
capacity of 1.75 percent of market value. The remaining value
of class 2a property is assessed at 40 over the $65,000 market
value that does not exceed 320 acres has a net tax capacity of
1.44 percent of market value and a gross tax capacity of 2.25
percent of market value. The remaining property over the
$65,000 market value in excess of 320 acres has a net tax
capacity of 1.665 percent of market value and a gross tax
capacity of 2.25 percent of market value.
Noncontiguous land shall constitute class 2a only if the
homestead is classified as class 2a and the detached land is
located in the same township or city or not farther than two
townships or cities or combination thereof from the homestead.
Agricultural land used for purposes of a homestead and
actively farmed by a person holding a vested remainder interest
in it must be classified class 2a. If agricultural land is
classified class 2a, any other dwellings on the land used for
purposes of a homestead by persons holding vested remainder
interests who are actively engaged in farming the property, and
up to one acre of the land surrounding each homestead and
reasonably necessary for the use of the dwelling as a home, must
also be assessed class 2a and is entitled to the homestead
credit.
For taxes levied in 1988, payable in 1989 only, the tax to
be paid on class 2a property, less any reduction received
pursuant to sections 273.123 and 473H.10 and class 1b property
under section 273.13, subdivision 22, paragraph (b), used for
agricultural purposes shall be reduced by 52 54 percent of the
tax. The amount of the reduction shall not exceed $700 $725.
(b) Class 2b property is (1) real estate, rural in
character and used exclusively for growing trees for timber,
lumber, and wood and wood products; and (2) real estate that is
nonhomestead agricultural land. Class 2b property is assessed
at 40 has a net tax capacity of 1.665 percent of market value
and a gross tax capacity of 2.25 percent of market value.
Agricultural land as used in this section shall mean means
contiguous acreage of ten acres or more, primarily used during
the preceding year for agricultural purposes. Agricultural use
may include pasture, timber, waste, unusable wild land and land
included in federal farm programs.
Real estate of less than ten acres used principally for
raising poultry, livestock, fruit, vegetables or other
agricultural products, including the breeding of fish for sale
and consumption provided that it is located on land zoned for
agricultural use, shall be considered as agricultural land, if
it is not used primarily for residential purposes.
The assessor shall determine and list separately on the
records the market value of the homestead dwelling and the one
acre of land on which that dwelling is located. If any farm
buildings or structures are located on this homesteaded acre of
land, their market value shall not be included in this separate
determination.
Sec. 17. Minnesota Statutes 1987 Supplement, section
273.13, subdivision 24, is amended to read:
Subd. 24. [CLASS 3.] (a) Commercial and, industrial, and
utility property is class 3a. It is assessed at 60 has a tax
capacity of 3.3 percent of the first $80,000 $100,000 of market
value and 96 5.25 percent of the market value
over $80,000 $100,000. For taxes payable in 1991, the 5.25
percent rate shall be 5.2 percent and for taxes payable in 1992
and subsequent years the rate shall be 5.15 percent. In the
case of state-assessed commercial or, industrial, and utility
property owned by one person or entity, only one parcel may
qualify for the 60 has a tax capacity 3.3 percent assessment.
In the case of other commercial or, industrial, and utility
property owned by one person or entity, only one parcel in each
county may qualify for the 60 has a tax capacity of 3.3 percent
assessment.
(b) Employment property defined in section 469.166, during
the period provided in section 469.170, shall constitute class
3b and shall be valued and assessed at 45 has a tax capacity of
2.5 percent of the first $50,000 of market value and 50 3.5
percent of the remainder, except that for employment property
located in a border city enterprise zone designated pursuant to
section 469.168, subdivision 4, paragraph (c), the tax capacity
of the first $80,000 $100,000 of market value shall be valued
and assessed at 60 is 3.3 percent and the tax capacity of the
remainder shall be assessed and valued at 86 is 4.8 percent,
unless the governing body of the city designated as an
enterprise zone determines that a specific parcel shall be
assessed pursuant to the first clause of this sentence. The
governing body may provide for assessment under the first clause
of the preceding sentence only for property which is located in
an area which has been designated by the governing body for the
receipt of tax reductions authorized by section 469.171,
subdivision 1.
Sec. 18. Minnesota Statutes 1987 Supplement, section
273.13, subdivision 25, is amended to read:
Subd. 25. [CLASS 4.] (a) Class 4a is residential real
estate containing four or more units and used or held for use by
the owner or by the tenants or lessees of the owner as a
residence for rental periods of 30 days or more. Class 4a also
includes hospitals licensed under sections 144.50 to 144.56,
other than hospitals exempt under section 272.02, and contiguous
property used for hospital purposes, without regard to whether
the property has been platted or subdivided. Class 4a property
is assessed at 70 has a tax capacity of 4.1 percent of market
value.
(b) Class 4b includes:
(1) residential real estate containing less than four
units, other than seasonal residential, recreational, and
homesteads a structure having five or more stories that is
constructed with materials meeting the requirements for type I
or II construction as defined in the state building code, 90
percent or more of which is used or is to be used as apartment
housing for a period of 40 years from the date of completion of
original construction, or the date of initial though partial
use, whichever is the earlier date;
(2) post-secondary student housing not to exceed one acre
of land which is owned by a nonprofit corporation organized
under chapter 317 and is used exclusively by a sorority or
fraternity organization for housing;
(3) manufactured homes not classified under any other
provision; and
(4) a dwelling, garage, and surrounding one acre of
property on a nonhomestead farm classified under subdivision 23,
paragraph (b), which has a tax capacity of 2.7 percent of market
value.
Class 4b property is assessed at 60 percent for taxes
levied in 1988, payable in 1989 and thereafter has a tax
capacity of 3.5 percent of market value, except as provided in
clause (4).
(c) Class 4c property includes:
(1) a structure that is situated on real property that is
used for housing for the elderly or for low and moderate income
families as defined by Title II of the National Housing Act or
the Minnesota housing finance agency law of 1971 or rules
promulgated by the agency pursuant thereto and financed by a
direct federal loan or federally insured loan or a loan made by
the Minnesota housing finance agency pursuant to the provisions
of either of those acts and acts amendatory thereof. This
clause applies only to property of a nonprofit or limited
dividend entity. Property is classified as class 4c under this
clause for 15 years from the date of the completion of the
original construction or substantial rehabilitation, or for the
original term of the loan;
(2) a structure that is:
(i) situated upon real property that is used for housing
lower income families or elderly or handicapped persons, as
defined in section 8 of the United States Housing Act of 1937,
as amended; and
(ii) owned by an entity which has entered into a housing
assistance payments contract under section 8 which provides
assistance for 100 percent of the dwelling units in the
structure, other than dwelling units intended for management or
maintenance personnel. Property is classified as class 4c under
this clause for the term of the housing assistance payments
contract, including all renewals, or for the term of its
permanent financing, whichever is shorter.; and
(3) a qualified low-income building that (i) receives a
low-income housing credit under section 42 of the Internal
Revenue Code of 1986, as amended through December 31, 1987; or
(ii) meets the requirements of that section. Classification
pursuant to this clause is limited to buildings the construction
or rehabilitation of which began after May 1, 1988 and to a term
of 15 years.
For all properties described in clauses (1) and (2), (2),
and (3) and in paragraph (d), clause (2), the market value
determined by the assessor must be based on the normal approach
to value using normal unrestricted rents. The land on which
these structures are situated has a tax capacity of 3.5 percent
of market value if the structure contains fewer than four units,
and 4.1 percent of market value if the structure contains four
or more units.
(3) (4) a parcel of land, not to exceed one acre, and its
improvements or a parcel of unimproved land, not to exceed one
acre, if it is owned by a neighborhood real estate trust and at
least 60 percent of the dwelling units, if any, on all land
owned by the trust are leased to or occupied by lower income
families or individuals. This clause does not apply to any
portion of the land or improvements used for nonresidential
purposes. For purposes of this clause, a lower income family is
a family with an income that does not exceed 65 percent of the
median family income for the area, and a lower income individual
is an individual whose income does not exceed 65 percent of the
median individual income for the area, as determined by the
United States Secretary of Housing and Urban Development. For
purposes of this clause, "neighborhood real estate trust" means
an entity which is certified by the governing body of the
municipality in which it is located to have the following
characteristics: (a) it is a nonprofit corporation organized
under chapter 317; (b) it has as its principal purpose providing
housing for lower income families in a specific geographic
community designated in its articles or bylaws; (c) it limits
membership with voting rights to residents of the designated
community; and (d) it has a board of directors consisting of at
least seven directors, 60 percent of whom are members with
voting rights and, to the extent feasible, 25 percent of whom
are elected by resident members of buildings owned by the trust;
and
(4) (5) except as provided in subdivision 22,
paragraph (d) (c), clause (1), real property devoted to
temporary and seasonal residential occupancy for recreation
purposes, including real property devoted to temporary and
seasonal residential occupancy for recreation purposes and not
devoted to commercial purposes for more than 200 days in the
year preceding the year of assessment. For this purpose,
property is devoted to commercial use on a specific day if it is
used, or offered for use, and a fee is charged for the use.
Class 4c also includes commercial use real property used
exclusively for recreational purposes in conjunction with class
4c property devoted to temporary and seasonal residential
occupancy for recreational purposes, up to a total of two acres,
provided the property is not devoted to commercial recreational
use for more than 200 days in the year preceding the year of
assessment and is located within two miles of the class 4c
property with which it is used. Class 4c property classified in
clauses (5) and (6) also includes the remainder of class 4d 1c
resorts and has a tax capacity of 2.6 percent of market value,
except that noncommercial seasonal recreational property has a
tax capacity of 2.3 percent of market value; and
(5) (6) real property up to a maximum of one acre of land
owned by a nonprofit community service oriented organization;
provided that the property is not used for a revenue-producing
activity for more than six days in the calendar year preceding
the year of assessment and the property is not used for
residential purposes on either a temporary or permanent basis.
For purposes of this clause, a "nonprofit community service
oriented organization" means any corporation, society,
association, foundation, or institution organized and operated
exclusively for charitable, religious, fraternal, civic, or
educational purposes, and which is exempt from federal income
taxation pursuant to section 501(c)(3), (10), or (19) of the
Internal Revenue Code of 1986, as amended through December 31,
1986. For purposes of this clause, "revenue-producing
activities" shall include but not be limited to property or that
portion of the property that is used as an on-sale intoxicating
liquor or nonintoxicating malt liquor establishment licensed
under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations
licensed under chapter 349, an insurance business, or office or
other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises. Any portion of the
property which is used for revenue-producing activities for more
than six days in the calendar year preceding the year of
assessment shall be assessed as class 3a. The use of the
property for social events open exclusively to members and their
guests for periods of less than 24 hours, when an admission is
not charged nor any revenues are received by the organization
shall not be considered a revenue-producing activity; and
Class 4c property is assessed at 50 classified under
clauses (1), (2), (3), and (4) has a tax capacity of 2.5 percent
of market value.
(d) Class 4d property includes:
(1) commercial use real property that abuts a lakeshore
line and is devoted to temporary and seasonal residential
occupancy for recreational purposes but not devoted to
commercial purposes for more than 200 days in the year preceding
the year of assessment, and that includes a portion used as a
homestead by the owner. The area of the property that is
classified as class 4d must not exceed 100 feet of lakeshore
footage for each cabin or campsite located on the property up to
a total of 800 feet and 500 feet in depth, measured away from
the lakeshore;
(2) any structure:
(i) situated on real property that is used for housing for
the elderly or for low and moderate income families as defined
by the farmers home administration;
(ii) located in a municipality of less than 10,000
population; and
(iii) financed by a direct loan or insured loan from the
farmers home administration. Property must be assessed is
classified under this clause for 15 years from the date of the
completion of the original construction or for the original term
of the loan.
The 30 percent and 50 percent assessment ratios 1.5 percent
and 2.5 percent tax capacity assignments apply to the properties
described in paragraph (c), clauses (1) and (2), (2), and (3)
and this clause, only in proportion to occupancy of the
structure by elderly or handicapped persons or low and moderate
income families as defined in the applicable laws unless
construction of the structure had been commenced prior to
January 1, 1984; or the project had been approved by the
governing body of the municipality in which it is located prior
to June 30, 1983; or financing of the project had been approved
by a federal or state agency prior to June 30, 1983.
Classification under this clause is only available to property
of a nonprofit or limited dividend entity; and
(3) the first $34,000 of market value of real estate or
manufactured homes used for the purposes of a homestead by
(i) any blind person, if the blind person is the owner
thereof or if the blind person and the blind person's spouse are
the sole owners thereof; or
(ii) any person, hereinafter referred to as "veteran," who:
(A) served in the active military or naval service of the
United States; and
(B) is entitled to compensation under the laws and
regulations of the United States for permanent and total
service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular
dystrophies, or paralysis, of both lower extremities, such as to
preclude motion without the aid of braces, crutches, canes, or a
wheelchair; and
(C) with assistance by the administration of veterans
affairs has acquired a special housing unit with special
fixtures or movable facilities made necessary by the nature of
the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the
special housing unit as a homestead; or
(iii) any person who:
(A) is permanently and totally disabled and
(B) receives 90 percent or more of total income from
(1) aid from any state as a result of that disability; or
(2) supplemental security income for the disabled; or
(3) workers' compensation based on a finding of total and
permanent disability; or
(4) social security disability, including the amount of a
disability insurance benefit which is converted to an old age
insurance benefit and any subsequent cost of living increases;
or
(5) aid under the Federal Railroad Retirement Act of 1937,
United States Code Annotated, title 45, section 228b(a)5; or
(6) a pension from any local government retirement fund
located in the state of Minnesota as a result of that disability.
Property is classified and assessed pursuant to this clause
only if the commissioner of human services certifies to the
assessor that the owner of the property satisfies the
requirements of this subdivision. The commissioner of human
services shall provide a copy of the certification to the
commissioner of revenue.
The remaining value of class 4(d)(3) property in excess of
$34,000 shall be valued and assessed under subdivision 22 or 23,
as appropriate, provided that only the value in excess of
$34,000 but not in excess of $68,000 is assessed at the rate
provided for the first tier of value in subdivision 22 or only
the value in excess of $34,000 but not in excess of $66,000 is
assessed at the rate provided for the first tier of value in
subdivision 23.
Class 4d property is assessed at 30 percent of market value
has a tax capacity of 1.5 percent of market value.
Sec. 19. Minnesota Statutes 1987 Supplement, section
273.13, subdivision 31, is amended to read:
Subd. 31. [CLASS 5.] All property not included in any
other class is class 5 property and is assessed at 96 percent of
market value.
(a) Tools, implements, and machinery of an electric
generating, transmission, or distribution system or a pipeline
system transporting or distributing water, gas, crude oil, or
petroleum products or mains and pipes used in the distribution
of steam or hot or chilled water for heating or cooling
buildings, which are fixtures, have a tax capacity of 4.6
percent of market value.
(b) Unmined iron ore and low-grade iron-bearing formations
as defined in section 273.14 have a tax capacity of 5.25 percent
of market value.
(c) Vacant land has a tax capacity of 5.25 percent of
market value.
(d) All other property not otherwise classified has a tax
capacity of 5.25 percent of market value.
Sec. 20. Minnesota Statutes 1986, section 273.1315, is
amended to read:
273.1315 [CERTIFICATION OF 1B PROPERTY.]
Any property owner seeking classification and assessment of
the owner's homestead as class 1b property pursuant to section
273.13, subdivision 22, paragraph (b), clause (2) or (3), shall
file with the commissioner of revenue for each assessment year a
1b homestead declaration, on a form prescribed by the
commissioner. The declaration shall contain the following
information:
(a) the information necessary to verify that the property
owner or the owner's spouse satisfies the requirements of
section 273.13, subdivision 22, paragraph (b), clause (2) or
(3), for 1b classification;
(b) the property owner's household income, as defined in
section 290A.03, for the previous calendar year; and
(c) any additional information prescribed by the
commissioner.
The declaration shall be filed on or before March 1 of each
year to be effective for property taxes payable during the
succeeding calendar year. The declaration and any supplementary
information received from the property owner pursuant to this
section shall be subject to section 290A.17.
The commissioner shall provide to the assessor on or before
April 1 a listing of the parcels of property qualifying for 1b
classification.
Sec. 21. [273.132] [STATE AGRICULTURAL CREDIT.]
Subdivision 1. [AGRICULTURAL HOMESTEAD PROPERTY.] For
taxes levied in 1988, payable in 1989 only, the county auditor
shall reduce the tax for all purposes on all property receiving
the homestead credit under section 273.13, subdivision 23, by an
amount equal to 36 percent of the tax levy imposed on up to 320
acres of land including the buildings and structures thereon but
excluding all dwellings and an acre of land for each dwelling.
Subd. 2. [OTHER AGRICULTURAL PROPERTY.] For taxes levied
in 1988, payable in 1989 only, the county auditor shall reduce
the tax for all purposes on all other agricultural lands
classified under section 273.13, subdivision 23, including
buildings and structures thereon but excluding all dwellings and
an acre of land for each dwelling, and on timber land classified
under section 273.13, subdivision 23, paragraph (b) by an amount
equal to 26 percent of the tax levy imposed on the property.
Subd. 3. [ADMINISTRATION.] The amounts so computed by the
county auditor shall be submitted to the commissioner of revenue
as part of the abstracts of tax lists required to be filed with
the commissioner under the provisions of section 275.29. Any
prior year adjustments shall also be certified in the abstracts
of tax lists. The commissioner of revenue shall review the
certifications to determine their accuracy and may make changes
in the certification as deemed necessary or return a
certification to the county auditor for corrections.
Subd. 4. [PAYMENT TO TAXING JURISDICTIONS.] Payment from
the general fund must be made to each taxing jurisdiction to
replace the revenue lost as a result of the credit provided in
this section. Payment to taxing jurisdictions other than school
districts must be made by the commissioner in equal installments
on or before July 20 and December 15 each year. Payment to
school districts must be made to the commissioner of education
as provided in section 273.1392.
Subd. 5. [APPROPRIATION.] The amount necessary to make the
payments required under this section is appropriated from the
general fund in the state treasury to the commissioners of
revenue and education for property taxes payable in 1989.
Sec. 22. Minnesota Statutes 1987 Supplement, section
273.135, subdivision 2, is amended to read:
Subd. 2. For taxes payable in 1989 only, the amount of the
reduction authorized by subdivision 1 shall be:
(a) In the case of property located within the boundaries
of a municipality which meets the qualifications prescribed in
section 273.134, 66 percent of the net tax up to the taconite
breakpoint plus a percentage equal to the homestead credit
equivalency percentage of the net tax in excess of the taconite
breakpoint, provided that the reduction shall not exceed the
maximum amounts specified in clause (c), and shall not exceed an
amount sufficient to reduce the effective tax rate on each
parcel of property to 95 percent of the base year effective tax
rate. In no case will the reduction resulting from this credit
be less than $10.
(b) In the case of property located within the boundaries
of a school district which qualifies as a tax relief area but
which is outside the boundaries of a municipality which meets
the qualifications prescribed in section 273.134, 57 percent of
the net tax up to the taconite breakpoint plus a percentage
equal to the homestead credit equivalency percentage of the net
tax in excess of the taconite breakpoint, provided that the
reduction shall not exceed the maximum amounts specified in
clause (c), and shall not exceed an amount sufficient to reduce
the effective tax rate on each parcel of property to 95 percent
of the base year effective tax rate. In no case will the
reduction resulting from this credit be less than $10.
(c)(1) The maximum reduction of the net tax up to the
taconite breakpoint is $225.40 on property described in clause
(a) and $200.10 on property described in clause (b), for taxes
payable in 1985. These maximum amounts shall increase by $15
times the quantity one minus the homestead credit equivalency
percentage per year for taxes payable in 1986 and subsequent
years.
(2) The total maximum reduction of the net tax on property
described in clause (a) is $490 for taxes payable in 1985. The
total maximum reduction for the net tax on property described in
clause (b) is $435 for taxes payable in 1985. These maximum
amounts shall increase by $15 per year for taxes payable in 1986
and thereafter.
For the purposes of this subdivision, "net tax" means the
tax on the property after deduction of any credit under section
273.13, subdivision 22 or 23, "taconite breakpoint" means the
lowest possible net tax for a homestead qualifying for the
maximum reduction pursuant to section 273.13, subdivision 22,
rounded to the nearest whole dollar, "homestead credit
equivalency percentage" means a percentage equal to the
percentage reduction authorized in section 273.13, subdivision
22, "effective tax rate" means tax divided by the market value
of the property, and the "base year effective tax rate" means
the tax on the property after the application of the credits
payable under section 273.13, subdivisions 22 and 23, and this
section for taxes payable in 1988, divided by the market value
of the property. A new parcel of property or a parcel with a
current year classification that is different from its base year
classification has the same base year effective tax rate as an
equivalent homesteaded parcel.
Subd. 2a. For taxes payable in 1990 and thereafter, the
amount of the reduction authorized by subdivision 1 shall be
(a) In the case of property located within the boundaries
of a municipality which meets the qualifications prescribed in
section 273.134, 66 percent of the tax, provided that the
reduction shall not exceed the maximum amounts specified in
clause (c) and shall not exceed an amount sufficient to reduce
the effective tax rate on each parcel of property to 95 percent
of the base year effective tax rate. In no case will the
reduction resulting from this credit be less than $10.
(b) In the case of property located within the boundaries
of a school district which qualifies as a tax relief area but
which is outside the boundaries of a municipality which meets
the qualifications prescribed in section 273.134, 57 percent of
the tax, provided that the reduction shall not exceed the
maximum amounts specified in clause (c) and shall not exceed an
amount sufficient to reduce the effective tax rate on each
parcel of property to 95 percent of the base year effective tax
rate. In no case will the reduction resulting from this credit
be less than $10.
(c) The total maximum reduction of the net tax on property
described in clause (a) is $490 for taxes payable in 1985. The
total maximum reduction for the net tax on property described in
clause (b) is $435 for taxes payable in 1985. These maximum
amounts shall increase by $15 per year for taxes payable in 1986
and thereafter.
For the purposes of this subdivision, "tax" means the tax
on the property before application of the credit payable under
this section and "effective tax rate" means tax divided by the
market value of the property, and "base year effective tax rate"
means the tax on the property after the application of the
credits payable under section 273.13, subdivisions 22 and 23,
and this section for taxes payable in 1988, divided by the
market value of the property. A new parcel of property or a
parcel with a current year classification that is different from
its base year classification has the same base year effective
tax rate as an equivalent homesteaded parcel.
Sec. 23. Minnesota Statutes 1987 Supplement, section
273.1391, subdivision 2, is amended to read:
Subd. 2. For taxes payable in 1989 only, the amount of the
reduction authorized by subdivision 1 shall be:
(a) In the case of property located within a school
district which does not meet the qualifications of section
273.134 as a tax relief area, but which is located in a county
with a population of less than 100,000 in which taconite is
mined or quarried and wherein a school district is located which
does meet the qualifications of a tax relief area, and provided
that at least 90 percent of the area of the school district
which does not meet the qualifications of section 273.134 lies
within such county, 57 percent of the net tax up to the taconite
breakpoint plus a percentage equal to the homestead credit
equivalency percentage of the net tax in excess of the taconite
breakpoint on qualified property located in the school district
that does not meet the qualifications of section 273.134,
provided that the amount of said reduction shall not exceed the
maximum amounts specified in clause (c), and shall not exceed an
amount sufficient to reduce the effective tax rate on each
parcel of property to 95 percent of the base year effective tax
rate. In no case will the reduction resulting from this credit
be less than $10. The reduction provided by this clause shall
only be applicable to property located within the boundaries of
the county described therein.
(b) In the case of property located within a school
district which does not meet the qualifications of section
273.134 as a tax relief area, but which is located in a school
district in a county containing a city of the first class and a
qualifying municipality, but not in a school district containing
a city of the first class or adjacent to a school district
containing a city of the first class unless the school district
so adjacent contains a qualifying municipality, 57 percent of
the net tax up to the taconite breakpoint plus a percentage
equal to the homestead credit equivalency percentage of the net
tax in excess of the taconite breakpoint, but not to exceed the
maximums specified in clause (c), and shall not exceed an amount
sufficient to reduce the effective tax rate on each parcel of
property to 95 percent of the base year effective tax rate. In
no case will the reduction resulting from this credit be less
than $10.
(c)(1) The maximum reduction of the net tax up to the
taconite breakpoint is $200.10 for taxes payable in 1985. This
maximum amount shall increase by $15 multiplied by the quantity
one minus the homestead credit equivalency percentage per year
for taxes payable in 1986 and subsequent years.
(2) The total maximum reduction of the net tax is $435 for
taxes payable in 1985. This total maximum amount shall increase
by $15 per year for taxes payable in 1986 and thereafter.
For the purposes of this subdivision, "net tax" means the
tax on the property after deduction of any credit under section
273.13, subdivision 22 or 23, "taconite breakpoint" means the
lowest possible net tax for a homestead qualifying for the
maximum reduction pursuant to section 273.13, subdivision 22,
rounded to the nearest whole dollar, "homestead credit
equivalency percentage" means a percentage equal to the
percentage reduction authorized in section 273.13, subdivision
22 and "effective tax rate" means tax divided by the market
value of the property, and the "base year effective tax rate"
means the tax on the property after application of the credits
payable under section 273.13, subdivisions 22 and 23 and this
section for taxes payable in 1988, divided by the market value
of the property. A new parcel with a current year
classification that is different from its base year
classification has the same base year effective tax rate as an
equivalent homesteaded parcel.
Subd. 2a. For taxes payable in 1990 and thereafter, the
amount of the reduction authorized by subdivision 1 shall be:
(a) In the case of property located within a school
district which does not meet the qualifications of section
273.134 as a tax relief area, but which is located in a county
with a population of less than 100,000 in which taconite is
mined or quarried and wherein a school district is located which
does meet the qualifications of a tax relief area, and provided
that at least 90 percent of the area of the school district
which does not meet the qualifications of section 273.134 lies
within such county, 57 percent of the tax, provided that the
amount of said the reduction shall not exceed the maximum
amounts specified in clause (c) and shall not exceed an amount
sufficient to reduce the effective tax rate on each parcel of
property to 95 percent of the base year effective tax rate. In
no case will the reduction resulting from this credit be less
than $10. The reduction provided by this clause shall only be
applicable to property located within the boundaries of the
county described therein.
(b) In the case of property located within a school
district which does not meet the qualifications of section
273.134 as a tax relief area, but which is located in a school
district in a county containing a city of the first class and a
qualifying municipality, but not in a school district containing
a city of the first class or adjacent to a school district
containing a city of the first class unless the school district
so adjacent contains a qualifying municipality, 57 percent of
the tax, but not to exceed the maximums specified in clause
(c) and not to exceed an amount sufficient to reduce the
effective tax rate on each parcel of property to 95 percent of
the base year effective tax rate. In no case will the reduction
resulting from this credit be less than $10.
(c) The total maximum reduction of the tax is $435 for
taxes payable in 1985. This total maximum amount shall increase
by $15 per year for taxes payable in 1986 and thereafter.
For the purposes of this subdivision, "tax" means the tax
on the property before application of the credit under this
section, "effective tax rate" means tax divided by the market
value of the property, and "base year effective tax rate" means
the tax on the property after the application of the credits
payable under section 273.13, subdivisions 22 and 23, and this
section for taxes payable in 1988, divided by the market value
of the property. A new parcel of property or a parcel with a
current year classification that is different from its base year
classification has the same base year effective tax rate as an
equivalent homesteaded parcel.
Sec. 24. Minnesota Statutes 1987 Supplement, section
273.1392, is amended to read:
The amounts of small business transition credit under
section 273.1195; disaster or emergency reimbursement under
section 273.123; attached machinery aid under section 273.138;
homestead credit replacement aid under section 273.1394 273.13;
agricultural credit replacement aid under section 273.1395
273.132; aids and credits under section 273.1398; and
metropolitan agricultural preserve reduction under section
473H.10, shall be certified to the department of education by
the department of revenue. The amounts so certified shall be
paid according to section 124.195, subdivisions 6 and 10.
Sec. 25. Minnesota Statutes 1987 Supplement, section
273.1393, is amended to read:
Notwithstanding any other provisions to the contrary, "net"
property taxes are determined by subtracting the credits in the
order listed from the gross tax:
(1) small business property tax transition credit as
provided in section 273.1195;
(2) disaster credit as provided in section 273.123;
(3) (2) powerline credit as provided in section 273.42;
(4) (3) agricultural preserves credit as provided in
section 473H.10;
(5) (4) enterprise zone credit as provided in section
469.171;
(5) state agricultural credit as provided in section
273.132;
(6) state paid homestead credit as provided in section
273.13, subdivision 23;
(7) taconite homestead credit as provided in section
273.135;
(8) supplemental homestead credit as provided in section
273.1391.
The combination of all property tax credits must not exceed
the gross tax amount.
Sec. 26. [273.1398] [TRANSITION AND DISPARITY REDUCTION
AID; CREDIT GUARANTEE.]
Subdivision 1. [DEFINITIONS.] (a) In this section, the
terms defined in this subdivision have the meanings given them.
(b) "Unique taxing jurisdiction" means the geographic area
subject to the same set of mill rates.
(c) "Gross tax capacity" means the product of the
appropriate percentages of market value listed as gross tax
capacities in section 273.13 and equalized market values.
"Total gross tax capacity" means the gross tax capacities for
all property within the unique taxing jurisdiction. The total
gross tax capacity used shall be reduced by the sum of (1) the
unique taxing jurisdiction's gross tax capacity of commercial
industrial property as defined in section 473F.02, subdivision
3, multiplied by the ratio determined pursuant to section
473F.08, subdivision 6, for the municipality, as defined in
section 473F.02, subdivision 8, in which the unique taxing
jurisdiction is located and (2) the gross tax capacity of the
captured value of tax increment financing districts as defined
in section 469.177, subdivision 2. For purposes of determining
the gross tax capacity of property referred to in clauses (1)
and (2) for disparity reduction aid payable in 1989, the gross
tax capacity before equalization shall equal the property's 1987
assessed value multiplied by 12 percent. Gross tax capacity
cannot be less than zero.
(d) "Net tax capacity" means the product of the appropriate
percentages of market value listed as net tax capacities in
section 273.13 and equalized market values. "Total net tax
capacity" means the net tax capacities for all property within
the unique taxing jurisdiction. The total net tax capacity used
shall be reduced by the sum of (1) the unique taxing
jurisdiction's net tax capacity of commercial industrial
property as defined in section 473F.02, subdivision 3,
multiplied by the ratio determined pursuant to section 473F.08,
subdivision 6, for the municipality, as defined in section
473F.02, subdivision 8, in which the unique taxing jurisdiction
is located and (2) the net tax capacity of the captured value of
tax increment financing districts as defined in section 469.177,
subdivision 2. For purposes of determining the net tax capacity
of property referred to in clauses (1) and (2), the net tax
capacity before equalization shall equal the property's 1987
assessed value multiplied by 12 percent. Net tax capacity
cannot be less than zero.
(e) "Equalized market values" are market values that have
been equalized by dividing the assessor's estimated market value
for the second year prior to that in which the aid is payable by
the assessment sales ratios determined by class in the
assessment sales ratio study conducted by the department of
revenue pursuant to section 124.2131 in the second year prior to
that in which the aid is payable. For computation of aids
payable in 1989 only, if the aggregate assessment sales ratio is
less than or equal to 92 percent, the assessment sales ratios by
class shall be adjusted proportionally so that the aggregate
ratio of the unequalized market values to the equalized market
values equals 92 percent; otherwise the equalized market values
shall equal the unequalized market values divided by the
assessment sales ratio.
(f) "Homestead effective rate" means the product of (i) 46
percent; (ii) 2.17 percent; and (iii) the total tax capacity
rate for taxes payable in 1989 within a unique taxing
jurisdiction multiplied by the 1988 aggregate assessment sales
ratio. A sales ratio of .92 is used if the actual sales ratio
is less than .92.
(g) For purposes of calculating the transition aid
authorized pursuant to subdivision 2, the "subtraction factor"
is the product of (i) a unique taxing jurisdiction's homestead
effective rate; (ii) its net tax capacity; and (iii) 103.
(h) For purposes of calculating and allocating transition
aid authorized pursuant to subdivision 2 and the disparity
reduction aid authorized in subdivision 3, "gross taxes levied
on all properties" or "gross taxes" means the total gross taxes
levied on all properties except that levied on the captured
value of tax increment districts as defined in section 469.177,
subdivision 2, and that levied on the portion of commercial
industrial properties' assessed value, as defined in section
473F.02, subdivision 3, subject to the areawide tax as provided
in section 473F.08, subdivision 6, in a unique taxing
jurisdiction before reduction by any credits for taxes payable
in the year prior to that in which the aids are payable. For
purposes of disparity reduction aid only, total gross taxes
shall be reduced by the taxes levied for any school district
referendum levies authorized pursuant to section 124A.03,
subdivision 2, and any school district debt levies authorized
pursuant to section 475.61. Gross taxes levied cannot be less
than zero.
(i) "Income maintenance aids" means:
(1) medical assistance under sections 256B.041, subdivision
5, and 256B.19, subdivision 1;
(2) preadmission screening and alternative care grants
under section 256B.091, subdivision 8;
(3) general assistance, and work readiness under section
256D.03, subdivision 2;
(4) general assistance medical care under section 256D.03,
subdivision 6;
(5) aid to families with dependent children under section
256.82, subdivision 1, including emergency assistance under
section 256.871, subdivision 6; and funeral expense payments
under section 256.935, subdivision 1; and
(6) supplemental aid under section 256D.36, subdivision 1.
Subd. 2. [TRANSITION AID.] (a) Transition aid for each
unique taxing jurisdiction for taxes payable in 1990 equals the
total gross taxes levied on all properties, minus the unique
taxing jurisdiction's subtraction factor. Transition aid cannot
be less than zero. The transition aid so determined for school
districts for purposes of general education and transportation
levies shall be multiplied by the ratio of the adjusted gross
tax capacity based upon the 1988 adjusted gross tax capacity to
the estimated 1987 adjusted gross tax capacity based upon the
1987 adjusted assessed value. Each county assessor and the city
assessors of Minneapolis, Duluth, and St. Cloud shall furnish
the commissioner of revenue with the 1988 market values for
taxes payable in 1989 for any new classes of property
established in this article. The commissioner shall use those
values, and estimate values where needed, in developing the 1988
tax capacity for each unique taxing jurisdiction under this
section.
(b)(1) The transition aid is allocated to each local
government levying taxes in the unique taxing jurisdiction in
the proportion that the local government's gross taxes bears to
the total gross taxes levied within the unique taxing
jurisdiction.
(2) If a local government's total tax capacity rate for all
funds for taxes payable in 1989 varies within the area in which
it exercises taxing authority, the local government's allocated
transition aid must be further allocated between the part of its
levy in respect to which the tax capacity rate is constant
throughout the area in which it exercises taxing authority and
the part of its levy in respect to which the tax capacity rate
varies throughout the area in which it exercises taxing
authority.
(c) In 1991 and subsequent years, a local government shall
receive transition aid equal to that it received in 1990 subject
to the requirement of the last sentence of subdivision 6.
(d) The difference between (1) the income maintenance aids
payable to a county and (2) the income maintenance aids that
would be payable to the county pursuant to the rates in effect
for calendar year 1989 shall be reduced by the sum of the amount
of transition aid a county receives under this subdivision for
all unique taxing jurisdictions located within its borders. The
reduction must not reduce the difference to less than zero. The
reduction shall be prorated among all payments of the increased
income maintenance aids so that each payment is reduced by an
equal percentage amount. The commissioner of revenue shall
certify each county's transition aid to the commissioner of
human services for purposes of this adjustment.
Subd. 3. [DISPARITY REDUCTION AID.] (a) For taxes payable
in 1989, a disparity reduction aid shall be calculated for each
unique taxing jurisdiction. The aid is the greater of:
(1) the difference between (i) the total 1988 gross tax
payable on all taxable property within the unique taxing
jurisdiction, and (ii) the gross tax capacity of the unique
taxing jurisdiction; or
(2) 20 percent of the difference between (i) the 1988 gross
tax of the city or township, and (ii) 23 percent of the city's
or township's gross tax capacity.
In no case can the aid be less than $0.
(b) The disparity reduction aid is allocated to each local
government levying taxes in the unique taxing jurisdiction in
the proportion that the local government's payable gross taxes
bears to the total payable gross taxes levied within the unique
taxing jurisdiction.
(c) In 1990 and subsequent years, a local government shall
receive disparity reduction aid equal to that it received in
1989.
Subd. 4. [DISPARITY REDUCTION CREDIT.] (a) Beginning with
taxes payable in 1989, class 4a, class 3a, and class 3b property
located in a border city enterprise zone designated pursuant to
section 469.168, subdivision 4, located in cities with a
population greater than 2,500 and less than 35,000 according to
the 1980 decennial census which are adjacent to cities in
another state or immediately adjacent to a city adjacent to a
city in another state qualify for disparity reduction credits,
if the adjacent city in the other state has a population of
greater than 5,000 and less than 75,000. The credit is an
amount sufficient to reduce (i) the taxes levied on class 4a
property to three percent of the property's market value and
(ii) the tax on class 3a and class 3b property to 3.3 percent of
market value.
(b) The county auditor shall annually certify the costs of
the credits to the department of revenue. The department shall
reimburse local governments for the property taxes foregone as
the result of the credits in proportion to their total levies.
Subd. 5. [HOMESTEAD AND AGRICULTURAL CREDIT
GUARANTEE.] Beginning with taxes payable in 1990, each unique
taxing jurisdiction may receive additional homestead and
agricultural credit payments.
(1) Each year, the commissioner shall certify to the county
auditor the total education aids paid under chapters 124 and
124A, transition aid and disparity reduction aid paid under
section 273.1398, local government aid to cities, counties, and
towns paid under chapter 477A, and income maintenance aid paid
to counties for each taxing jurisdiction. The county auditor
shall apportion each local government's aids to the unique
taxing jurisdiction based upon the proportion that the unique
taxing jurisdiction's tax capacity bears to the total tax
capacity of the local government.
(2) Each year, the county auditor will compute a gross tax
capacity rate for each taxing jurisdiction equal to its total
levy divided by its gross tax capacity. For each unique taxing
jurisdiction, a total gross tax capacity rate will be determined.
This total gross tax capacity rate will be applied against the
gross tax capacity of each property that would have been
eligible for the homestead credit or the agricultural credit for
taxes payable in 1989. A credit amount will be determined for
each parcel based upon the credit rate structure in effect for
taxes payable in 1989. The resulting credit amounts will be
summed for all parcels in the unique taxing jurisdiction.
If the amount determined in clause (2) is greater than the
amount determined in clause (1), the difference will be
additional homestead and agricultural credit payments for the
unique taxing jurisdiction. The additional credit amount shall
proportionately reduce the tax capacity rates of all local
governments levying taxes within the unique taxing jurisdiction.
The county auditor shall certify the amounts of all additional
credits determined under this section in a form prescribed by
the commissioner.
Subd. 6. [PAYMENT.] The commissioner shall certify the
aids provided in subdivisions 2 and 3 before September 30 of the
year preceding the distribution year to the county auditor of
the affected local government and pay them and the credit
reimbursements to local governments other than school districts
at the times provided in section 477A.015 for payment of local
government aid to taxing jurisdictions. Aids and credit
reimbursements to school districts must be certified to the
commissioner of education and paid under section 273.1392.
Payment shall not be made to any taxing jurisdiction that has
ceased to levy a property tax nor shall transition aid be
payable on the part of a levy to which transition aid was
separately allocated under subdivision 2, paragraph (b), clause
(2) which is no longer levied.
Subd. 7. [APPROPRIATION.] An amount sufficient to pay the
aids and credits provided under this section is annually
appropriated from the general fund to the commissioner of
revenue.
Sec. 27. Minnesota Statutes 1987 Supplement, section
273.165, subdivision 2, is amended to read:
Subd. 2. [IRON ORE.] Unmined iron ore included in class 5,
paragraph (b), must be assessed with and as a part of the real
estate in which it is located, but at the rate its gross tax
capacity would be as established in section 273.13, subdivision
30 31. The real estate in which iron ore is located, other than
the ore, must be classified and assessed in accordance with the
provisions of the appropriate classes. In assessing any tract
or lot of real estate in which iron ore is known to exist, the
assessable value of the ore exclusive of the land in which it is
located, and the assessable value of the land exclusive of the
ore must be determined and set down separately and the aggregate
of the two must be assessed against the tract or lot.
Sec. 28. Minnesota Statutes 1987 Supplement, section
273.37, subdivision 2, is amended to read:
Subd. 2. Transmission lines of less than 69 kv,
transmission lines of 69 kv and above located in an unorganized
township, and distribution lines, and equipment attached
thereto, having a fixed situs outside the corporate limits of
cities except distribution lines taxed as provided in sections
273.40 and 273.41, shall be listed with and assessed by the
commissioner of revenue in the county where situated. The
commissioner shall assess such property at the percentage of
market value fixed by law; and, on or before the 15th day of
November, shall certify to the auditor of each county in which
such property is located the amount of the assessment made
against each company and person owning such property.
Sec. 29. Minnesota Statutes 1986, section 273.40, is
amended to read:
273.40 [ANNUAL TAX ON COOPERATIVE ASSOCIATIONS.]
Cooperative associations organized under the provisions of
Laws 1923, chapter 326, and laws amendatory thereof and laws
supplemental thereto, and engaged in electrical heat, light or
power business upon a mutual, nonprofit, and cooperative plan in
rural areas, as hereinafter defined, are hereby recognized as
quasi-public in their nature and purposes; but such cooperative
associations, which operate within the corporate limits of any
city shall be assessed on the basis of 43 percent have a tax
capacity of the market value of that portion of its property
located within the corporate limits of any city as provided for
in section 273.13, subdivisions 24 and 31.
Sec. 30. [275.065] [PROPOSED PROPERTY TAXES; NOTICE.]
Subdivision 1. [PROPOSED LEVY.] On or before August 1,
each taxing authority shall adopt a proposed budget and certify
to the county auditor the proposed property tax levy for taxes
payable in the following year. For purposes of this section,
"taxing authority" shall include all home rule and statutory
cities with a population of over 2,500, counties, school
districts, the metropolitan council, and the metropolitan
regional transit commission.
Subd. 2. [TAX RATE COMPUTATIONS.] (a) The county auditor
shall compute each taxing authority's tax capacity rate that
when applied to the net tax capacity of the taxing district as
of January 2 of the current year, excluding new construction,
additions to structures, or property added to or deleted from
the assessment rolls since the previous year's assessment,
yields the taxing authority the same levy as the taxing
authority levied the previous year. This tax capacity rate is
the "no-increase tax rate."
(b) The county auditor shall compute a tax capacity rate
that when applied to the net tax capacity of the taxing
authority as of January 2 of the current year, including new
construction, additions to structures, or property added to or
deleted from the assessment rolls since the previous year's
assessment, yields the authority's proposed levy for taxes
levied in the current year. This tax capacity rate is the
"proposed tax rate."
(c) The county auditor shall notify the taxing authority of
its no-increase tax capacity rate and its proposed tax capacity
rate on or before August 8. The taxing authority may amend its
proposed levy but must certify to the county auditor by August
15 its final proposed levy and the date the taxing authority
will hold a public hearing to adopt its budget and property tax
levy.
(d) The county auditor shall recompute the taxing
authority's proposed tax capacity rate to reflect any
adjustments made by the taxing authority under paragraph (c),
and notify the taxing authority of the proposed tax capacity
rate and the percent, if any, by which the recomputed proposed
tax capacity rate exceeds the no-increase tax capacity rate.
That percent is the percentage increase in property taxes
proposed by the taxing authority.
Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) If there
is a percentage increase in property taxes proposed by the
taxing authority, on or before September 15, the county auditor
shall compute for each parcel of property on the assessment
rolls within the taxing authority the proposed property tax for
taxes levied in the current year. In the case of cities under
2,500 population, and all special taxing districts except the
metropolitan council and the metropolitan regional transit
commission, the auditor shall use the taxing district's previous
year tax capacity rate for use in computing the total property
tax. The county auditor shall prepare and deliver by first
class mail to each taxpayer at the address listed on the city's
current year's assessment roll, a notice of the taxpayer's
proposed property taxes.
(b) The commissioner of revenue shall prescribe the form of
the notice.
(c) A notice in substantially the following form shall be
sufficient.
NOTICE OF PROPOSED PROPERTY TAXES
DO NOT PAY - THIS IS NOT A BILL
This notice shows the amount your next property tax bill will be
if proposed budgets are approved by the local government
districts you live in. It also shows the amount of your next
property tax bill if the local government districts you live in
do not change their budgets from this year.
Name of Description Market value Class of
property of property of property property
owner
John Q. Lot 1, $65,000 residential
and Mary Block 1 homestead
W. Smith Pleasant
Acres sub-
division
Middletown,
Minnesota
Based on their proposed budgets, next year the governing bodies
of the county, city, school district, and special tax districts
you live in are proposing to collect from you the amount of
property tax shown below. At the meetings listed below, the
governing bodies will discuss and vote on the amount of their
budgets for next year. The larger the amount of the budget, the
more property tax you will pay. You can attend the meetings and
express your opinions about the amount of the budget before the
budget is voted on.
These local Amount of Amount of Time and
governments your tax your tax place of
collect next year next year meetings on
property tax if they if they proposed
from you do not adopt budgets
change their
their proposed
budgets budgets
from
this
year
County: Spruce $218.55 $257.75 September 1,
1988, 7:30 pm
Room 123, Spruce
Co. Courthouse
City or Town: $168.63 $184.09 October 1, 1988,
Middletown 8:00 pm Middletown
Town Hall
Public School: Ind. Dist. 123
set by school $47.56 $146.88 September 25, 1988,
board
set by state law $300.00 $300.00 Cafeteria,
Middletown
Town Hall
Special Tax Districts
Metropolitan Council $25.00 $50.00 October 5,
1988, 3:00 pm
Board Room,
Tri-County
Hospital
Metropolitan $10.00 $12.00 October 12,
Regional Transit 1988, 6:00 pm
Board Common Room,
Tri-County
Library
Tax before State
payments: $769.74 $950.72
Payments by
State: (subtract: $215.00) (subtract: $235.00)
-----------------------------------------------------------
Your tax if budget is not changed: $554.74
Your tax if proposed budget is adopted: $715.72
Subd. 4. [COSTS.] The taxing authority shall pay the
county for the reasonable cost of the county auditor's services
and for the costs of preparing and mailing the notice required
in this section.
Subd. 5. [PUBLIC ADVERTISEMENT.] (a) On or before
September 15, the taxing authority shall advertise in a
qualified newspaper a notice of its intent to adopt a budget and
property tax levy at a public hearing.
The advertisement must be no less than one-quarter page in
size of a standard-size or a tabloid-size newspaper, and the
headline in the advertisement shall be in a type no smaller than
18 point. The advertisement must not be placed in the part of
the newspaper where legal notices and classified advertisements
appear. The advertisement must be published in a newspaper of
general paid circulation in the city. Whenever possible, the
advertisement must appear in a newspaper that is published at
least five days a week, unless the only newspaper in the city is
published less than five days a week. The newspaper selected
must be one of general interest and readership in the community,
and not one of limited subject matter.
(b) If the taxing authority proposes a percentage increase
in property taxes, the advertisement must be in the following
form:
"NOTICE OF TAX INCREASE
The ...(name of taxing authority)... has tentatively
adopted a measure to increase its property tax levy by
...(percentage of increase over no-increase rate)... percent.
All concerned citizens are invited to attend a public
hearing on the tax increase to be held on ...(date and time)...
at ...(meeting place)....
A FINAL DECISION on the proposed tax increase and the
budget will be made at this hearing."
Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND
LEVY.] Prior to October 25, the governing body of the city shall
hold a public hearing to adopt its final budget and property tax
levy for taxes payable in the following year. The hearing must
be held not less than two days or more than five days after the
day the notice is first published.
At the hearing the taxing authority may amend the proposed
budget and property tax levy and must adopt a final budget and
property tax levy. The property tax levy adopted may not exceed
the final proposed levy determined under subdivision 2,
paragraph (c).
At the hearing the percentage increase in property taxes
proposed by the taxing authority, if any, and the specific
purposes for which property tax revenues are being increased
must be discussed. During the discussion, the governing body
shall hear comments regarding a proposed increase and explain
the reasons for the proposed increase. The public shall be
allowed to speak and to ask questions prior to adoption of any
measures by the governing body. The governing body shall adopt
its final property tax levy prior to adopting its final budget.
The hearing must be held after 5:00 p.m. if scheduled on a
day other than Saturday. No hearing may be held on a Sunday.
The school board and county board shall not schedule public
meetings on days scheduled for the hearing by the governing body
of the city.
If the hearing is recessed, the taxing authority shall
publish a notice in a qualified newspaper of general paid
circulation in the city. The notice must state the time and
place for the continuation of the hearing and must be published
at least two days but not more than five days prior to the date
the hearing will be continued.
Subd. 7. [CERTIFICATION OF COMPLIANCE.] At the time the
taxing authority certifies its tax levy under section 275.07, it
shall certify to the commissioner of revenue its compliance with
this section. The certification must contain copies of the
advertisement required under subdivision 5, the resolution
adopting the final property tax levy under subdivision 6, and
any other information required by the commissioner of revenue.
If the commissioner determines that the taxing authority has
failed to substantially comply with the requirements of this
section, the commissioner of revenue shall notify the county
auditor. When fixing rates under section 275.08 for a taxing
authority that has not complied with this section, the county
auditor must use the no-increase tax rate.
Sec. 31. Minnesota Statutes 1987 Supplement, section
275.07, subdivision 1, is amended to read:
Subdivision 1. The taxes voted by cities and, towns,
counties, school districts, and special districts shall be
certified by the proper authorities to the county auditor on or
before October 10 25 in each year. The taxes of a school
district must be certified to the commissioner of education by
October 10 in each year certified shall not be adjusted by the
aid received under section 273.1398, subdivisions 2 and 3. If a
city, town, county, school district, or special district fails
to certify its levy by that date, its levy shall be the amount
levied by it for the preceding year. If the local unit notifies
the commissioner of revenue, or the commissioner of education in
the case of a school district, before October 10 25 of its
inability to certify its levy by that date, and the commissioner
is satisfied that the delay is unavoidable and is not due to the
negligence of the local unit's officials or staff, the
commissioner shall extend the time within which the local unit
shall certify its levy up to 15 calendar days beyond the date of
request for extension. For 1988 only, the commissioner may
extend the certification time to November 7 if the requirements
of this subdivision are met.
Sec. 32. Minnesota Statutes 1986, section 275.07, is
amended by adding a subdivision to read:
Subd. 3. The county auditor shall adjust each local
government's levy certified under subdivision 1 by the amount of
transition aid certified by section 273.1398, subdivision 2. If
a local government's transition aid was further allocated
between portions of its levy pursuant to section 273.1398,
subdivision 2, paragraph (b)(2), the levy or fund to which the
transition aid was allocated is the levy or fund which must be
adjusted.
Sec. 33. Minnesota Statutes 1986, section 275.08, is
amended by adding a subdivision to read:
Subd. 1a. For taxes payable in 1989, the county auditor
shall compute the gross tax capacity for each parcel according
to the rates specified in section 273.13. The gross tax
capacity will be the appropriate rate multiplied by the parcel's
market value. For taxes payable in 1990 and subsequent years,
the county auditor shall compute the net tax capacity for each
parcel according to the rates specified in section 273.13. The
net tax capacity will be the appropriate rate multiplied by the
parcel's market value.
Sec. 34. Minnesota Statutes 1986, section 275.08, is
amended by adding a subdivision to read:
Subd. 1b. The amounts certified under section 275.07 after
adjustment under section 275.07, subdivision 3 by an individual
local government unit shall be divided by the total gross tax
capacity of all taxable properties within the local government
unit's taxing jurisdiction for tax payable in 1989 and by the
total net tax capacity of all taxable properties within the
local government unit's taxing jurisdiction, for taxes payable
in 1990 and thereafter. The resulting ratio, the local
government's tax capacity rate, multiplied by each property's
gross tax capacity for taxes payable in 1989 and net tax
capacity for taxes payable in 1990 and subsequent years shall be
each property's total tax for that local government unit before
reduction by any credits.
Sec. 35. Minnesota Statutes 1986, section 275.08, is
amended by adding a subdivision to read:
Subd. 1c. After the tax capacity rate of a local
government has been determined pursuant to subdivision 1b, the
auditor shall adjust the local government's tax capacity rate
within each unique taxing jurisdiction as defined in section
273.1398, subdivision 1, in which the local government exercises
taxing authority. The adjustment shall equal the unique taxing
jurisdiction's disparity reduction aids allocated to the local
government pursuant to section 273.1398, subdivision 3 divided
by the total tax capacity of all taxable property within the
unique taxing jurisdiction. The adjustment shall reduce the tax
capacity rate of the local government within the unique taxing
jurisdiction for which the adjustment was calculated.
Sec. 36. [275.011] [MILL RATE LEVY LIMITATIONS; CONVERSION
FROM MILLS TO DOLLARS.]
Subdivision 1. The property tax levied for any purpose
subject to a mill rate limitation imposed by statute or special
law, excluding levies subject to mill rate limitations that use
adjusted assessed values determined by the commissioner of
revenue under section 124.2131, must not exceed the following
amount for the years specified:
(a) for taxes payable in 1988, the product of the
applicable mill rate limitation imposed by statute or special
law multiplied by the total assessed valuation of all taxable
property subject to the tax as adjusted by the provisions of
Minnesota Statutes 1986, sections 272.64; 273.13, subdivision
7a; and 275.49;
(b) for taxes payable in 1989, the product of (1) the
property tax levy limitation for the taxes payable year 1988
determined under clause (a) multiplied by (2) an index for
market valuation changes equal to the assessment year 1988 total
market valuation of all taxable property subject to the tax
divided by the assessment year 1987 total market valuation of
all taxable property subject to the tax; and
(c) for taxes payable in 1990 and subsequent years, the
product of (1) the property tax levy limitation for the previous
year determined pursuant to this subdivision multiplied by (2)
an index for market valuation changes equal to the total market
valuation of all taxable property subject to the tax for the
current assessment year divided by the total market valuation of
all taxable property subject to the tax for the previous
assessment year.
For the purpose of determining the property tax levy
limitation for the taxes payable year 1988 and subsequent years
under this subdivision, "total market valuation" means the total
market valuation of all taxable property subject to the tax
without valuation adjustments for fiscal disparities (chapter
473F), tax increment financing (sections 469.174 to 469.179),
and high voltage transmission lines (section 273.425).
Subd. 2. A mill rate levy limitation imposed by statute or
special law that is presently in effect, excluding those mill
rate levy limitations that use adjusted assessed values
determined by the commissioner of revenue under section
124.2131, shall be construed to allow no more and no less
property taxes than the amount determined under this section.
Subd. 3. [COUNTY CAPITAL IMPROVEMENT MILL LIMITS.] For
purposes of determining the mill rate limits applicable to
county capital improvement programs under section 373.40, the
mill rate limit applicable to the county must be divided by 0.45
and multiplied by the county's assessed value for taxes payable
in 1988. The resulting dollar amount must be used in
determining the limitation under the procedures provided by this
section.
Sec. 37. Minnesota Statutes 1987 Supplement, section
275.50, subdivision 2, is amended to read:
Subd. 2. [GOVERNMENTAL SUBDIVISION.] (a) "Governmental
subdivision" means a county, a home rule charter city, or a
statutory city, except a home rule charter or statutory city
that has a population of less than 2,500 according to the most
recent federal census.
(b) "Governmental subdivision" also includes any home rule
charter or statutory city or town that receives a distribution
from the taconite municipal aid account in the levy year.
Sec. 38. Minnesota Statutes 1987 Supplement, section
275.50, subdivision 5, is amended to read:
Subd. 5. Notwithstanding any other law to the contrary for
taxes levied in 1983 1988 payable in 1984 1989 and subsequent
years, "special levies" means those portions of ad valorem taxes
levied by governmental subdivisions to:
(a) satisfy judgments rendered against the governmental
subdivision by a court of competent jurisdiction in any tort
action, or to pay the costs of settlements out of court against
the governmental subdivision in a tort action when substantiated
by a stipulation for the dismissal of the action filed with the
court of competent jurisdiction and signed by both the plaintiff
and the legal representative of the governmental subdivision,
but only to the extent of the increase in levy for such
judgments and out of court settlements over levy year 1970,
taxes payable in 1971;
(b) pay the costs of complying with any written lawful
order initially issued prior to January 1, 1977, by the state of
Minnesota, or the United States, or any agency or subdivision
thereof, which is authorized by law, statute, special act or
ordinance and is enforceable in a court of competent
jurisdiction, or any stipulation agreement or permit for
treatment works or disposal system for pollution abatement in
lieu of a lawful order signed by the governmental subdivision
and the state of Minnesota, or the United States, or any agency
or subdivision thereof which is enforceable in a court of
competent jurisdiction. The commissioner of revenue shall in
consultation with other state departments and agencies, develop
a suggested form for use by the state of Minnesota, its agencies
and subdivisions in issuing orders pursuant to this subdivision;
(c) pay the costs to a governmental subdivision for their
minimum required share of any program otherwise authorized by
law for which matching funds have been appropriated by the state
of Minnesota or the United States, excluding the administrative
costs of public assistance programs, to the extent of the
increase in levy over the amount levied for the local share of
the program for the taxes payable year 1971. This clause shall
apply only to those programs or projects for which matching
funds have been designated by the state of Minnesota or the
United States on or before September 1, of the previous year and
only when the receipt of these matching funds is contingent upon
the initiation or implementation of the project or program
during the year in which the taxes are payable or those programs
or projects approved by the commissioner;
(d) (a) pay the costs not reimbursed by the state or
federal government, of payments made to or on behalf of
recipients of aid under any public assistance program authorized
by law, and the costs of purchase or delivery of social
services. Except for the costs of general assistance as defined
in section 256D.02, subdivision 4, general assistance medical
care under section 256D.03 and the costs of hospital care
pursuant to section 261.21, the aggregate amounts levied
pursuant to this clause are subject to a maximum increase of 18
percent over the amount levied for these purposes in the
previous year. Effective with taxes levied in 1989, the portion
of this special levy for income maintenance programs identified
in section 273.1398, subdivision 1, paragraph (i), is eliminated;
(e) (b) pay the costs of principal and interest on bonded
indebtedness except on bonded indebtedness issued under section
471.981, subdivisions 4 to 4c or to reimburse for the amount of
liquor store revenues used to pay the principal and interest due
in the year preceding the year for which the levy limit is
calculated on municipal liquor store bonds;
(f) (c) pay the costs of principal and interest on
certificates of indebtedness, except tax anticipation or aid
anticipation certificates of indebtedness, issued for any
corporate purpose except current expenses or funding an
insufficiency in receipts from taxes or other sources or funding
extraordinary expenditures resulting from a public emergency;
and to pay the cost for certificates of indebtedness issued
pursuant to sections 298.28 and 298.282;
(g) (d) fund the payments made to the Minnesota state
armory building commission pursuant to section 193.145,
subdivision 2, to retire the principal and interest on armory
construction bonds;
(h) (e) provide for the bonded indebtedness portion of
payments made to another political subdivision of the state of
Minnesota;
(i) pay the amounts required to compensate for a decrease
in manufactured homes property tax receipts to the extent that
the governmental subdivision's portion of the total levy in the
current levy year, pursuant to section 274.19, subdivision 8, as
amended, is less than the distribution of the manufactured homes
tax to the governmental subdivision pursuant to Minnesota
Statutes 1969, section 273.13, subdivision 3, in calendar year
1971;
(j) (f) pay the amounts required, in accordance with
section 275.075, to correct for a county auditor's error of
omission but only to the extent that when added to the preceding
year's levy it is not in excess of an applicable statutory,
special law or charter limitation, or the limitation imposed on
the governmental subdivision by sections 275.50 to 275.56 in the
preceding levy year;
(k) (g) pay amounts required to correct for an error of
omission in the levy certified to the appropriate county auditor
or auditors by the governing body of a city or town with
statutory city powers in a levy year, but only to the extent
that when added to the preceding year's levy it is not in excess
of an applicable statutory, special law or charter limitation,
or the limitation imposed on the governmental subdivision by
sections 275.50 to 275.56 in the preceding levy year;
(l) pay the increased cost of municipal services as the
result of an annexation or consolidation ordered by the
Minnesota municipal board but only to the extent and for the
levy years as provided by the board in its order pursuant to
section 414.01, subdivision 15. Special levies authorized by
the board shall not exceed 50 percent of the levy limit base of
the governmental subdivision and may not be in effect for more
than three years after the board's order;
(m) pay the increased costs of municipal services provided
to new private industrial and nonresidential commercial
development, to the extent that the extension of such services
are not paid for through bonded indebtedness or special
assessments, and not to exceed the amount determined as
follows. The governmental subdivision may calculate the
aggregate of:
(1) the increased expenditures necessary in preparation for
the delivering of municipal services to new private industrial
and nonresidential commercial development, but limited to one
year's expenditures one time for each such development;
(2) the amount determined by dividing the overall levy
limitation established pursuant to sections 275.50 to 275.56,
and exclusive of special levies and special assessments, by the
total taxable value of the governmental subdivision, and then
multiplying this quotient times the total increase in assessed
value of private industrial and nonresidential commercial
development within the governmental subdivision. For the
purpose of this clause, the increase in the assessed value of
private industrial and nonresidential commercial development is
calculated as the increase in assessed value over the assessed
value of the real estate parcels subject to such private
development as most recently determined before the building
permit was issued. In the fourth levy year subsequent to the
levy year in which the building permit was issued, the increase
in assessed value of the real estate parcels subject to such
private development shall no longer be included in determining
the special levy.
The aggregate of the foregoing amounts, less any costs of
extending municipal services to new private industrial and
nonresidential commercial development which are paid by bonded
indebtedness or special assessments, equals the maximum amount
that may be levied as a "special levy" for the increased costs
of municipal services provided to new private industrial and
nonresidential commercial development. In the levy year
following the levy year in which the special levy made pursuant
to this clause is discontinued, one-half of the amount of that
special levy made in the preceding year shall be added to the
permanent levy base of the governmental subdivision;
(n) recover a loss or refunds in tax receipts incurred in
nonspecial levy funds resulting from abatements or court action
in the previous year pursuant to section 275.48;
(o) (h) pay amounts required by law to be paid to pay the
interest on and to reduce the unfunded accrued liability of
public pension funds in accordance with the actuarial standards
and guidelines specified in sections 356.215 and 356.216 reduced
by 106 percent of the amount levied for that purpose in 1976,
payable in 1977. For the purpose of this special levy, the
estimated receipts expected from the state of Minnesota pursuant
to sections 69.011 to 69.031 or any other state aid expressly
intended for the support of public pension funds shall be
considered as a deduction in determining the required levy for
the normal costs of the public pension funds. No amount of
these aids shall be considered as a deduction in determining the
governmental subdivision's required levy for the reduction of
the unfunded accrued liability of public pension funds;
(p) the amounts allowed under section 174.27 to establish
and administer a commuter van program;
(q) pay the costs of financial assistance to local
governmental units and certain administrative, engineering, and
legal expenses pursuant to Laws 1979, chapter 253, section 3;
(r)(i) to compensate for revenue lost as a result of
abatements or court action pursuant to section 270.07, 270.17 or
278.01 due to the state for the cost of a reassessment ordered
by the commissioner of revenue pursuant to section 270.16;
(s) pay the total operating cost of a county jail as
authorized in section 641.01. If the county government utilizes
this special levy, then any amount levied by the county
government in the previous year for operating its county jail
and included in its previous year's levy limitation computed
pursuant to section 275.51 shall be deducted from the current
levy limitation;
(t) pay the costs of implementing section 18.023, including
sanitation and reforestation;
(u) pay the estimated cost for the following calendar year
of the county's share of funding the Minnesota cooperative soil
survey;
(v) pay the costs of meeting the planning requirements of
section 115A.46; the requirements of section 115A.917; the
planning requirements of the metropolitan plan adopted under
section 473.149 and county master plans adopted under section
473.803; waste reduction and source separation programs and
facilities; response actions that are financed in part by
service charges under section 400.08 or 115A.15, subdivision 6;
closure and postclosure care of a solid waste facility closed by
order of the pollution control agency or by expiration of an
agency permit before January 1, 1989; and current operating and
maintenance costs of a publicly-owned solid waste processing
facility financed with general obligation bonds issued after a
referendum before March 25, 1986;
(w) pay the annual principal and interest due on a loan
made under section 116J.37;
(x) pay the annual principal and interest due on a loan
from money received from litigation or settlement of alleged
violations of federal petroleum pricing regulations; and
(y) pay the costs of constructing public libraries. and
(j) pay the debt service on tax increment financing revenue
bonds to the extent that revenue to pay the bonds or to maintain
reserves for the bonds is insufficient as a result of the
provisions of this article.
Sec. 39. Minnesota Statutes 1986, section 275.51,
subdivision 3f, is amended to read:
Subd. 3f. [LEVY LIMIT BASE.] (a) The property tax levy
limit base for governmental subdivisions for taxes levied in
1983 1988 shall be calculated by adding the following
amounts: equal to the total actual levy for taxes payable in
1988 plus the amount of any payments the governmental
subdivision was certified to receive in 1988 under sections
477A.011 to 477A.014 and minus any special levies claimed for
taxes payable in 1988 pursuant to Laws 1987, chapter 268,
article 5, section 12, subdivision 4, clauses (1), (2), (3), and
(4). A county's levy limit base will be increased by the amount
of any increase in its levy under section 134.07 over that
levied under section 134.07 for taxes payable in 1988 which is
required under Laws 1987, chapter 398, article 9, section 2.
For governmental subdivisions located in the seven-county
metropolitan area, the total actual levy for taxes payable in
1988 shall include the fiscal disparities distribution levy
pursuant to Minnesota Statutes 1986, section 473F.08,
subdivision 7a.
(1) the property tax permitted to be levied in 1982 for
taxes payable in 1983 pursuant to Minnesota Statutes 1982,
section 275.51, subdivision 3e; plus
(2) the amount of any payments the governmental subdivision
was certified to receive in 1983 pursuant to Minnesota Statutes
1982, sections 477A.011 to 477A.03; plus
(3) the amount of any payments certified to the
governmental subdivision in 1983 pursuant to Minnesota Statutes
1982, sections 298.28 and 298.282; plus
(4) the difference between the amount certified to the
governmental subdivision in 1983 and the amount certified in
1984 pursuant to section 273.138; plus
(5) any amount levied as a special assessment to cover the
costs of municipal operation and maintenance activities for the
taxes payable year 1983; and
(6) the amount of any base adjustment authorized by the
commissioner of revenue pursuant to subdivision 3g.
(b) For taxes levied in 1984 1989 and subsequent years, a
governmental subdivision's levy limit base is equal to its
adjusted levy limit base for the preceding year provided that,
for taxes levied in 1984, the levy limit base of a county
containing a city of the first class shall be increased by the
amount paid to the county under section 273.138 in 1984 less the
amount that will be paid to it under section 273.138 in 1985 not
including the adjustment made under subdivision 3h, paragraph
(c), plus for taxes levied in 1989 the administrative
reimbursement aid received in 1988.
(c) The property tax levy limit base for cities and towns
defined as a governmental subdivision only under section 275.50,
subdivision 2, paragraph (b), for taxes levied in 1986 shall be
calculated by adding the following amounts:
(1) the property tax levied in 1985 for taxes payable in
1986, exclusive of any levies for debt service; plus
(2) the amount of any payments the governmental subdivision
was certified to receive in 1986 pursuant to Minnesota Statutes
1985 Supplement, sections 477A.011 to 477A.03; plus
(3) the amount of any payments certified to the
governmental subdivision in 1986 pursuant to Minnesota Statutes
1984, section 298.282, and Minnesota Statutes 1985 Supplement,
section 298.28; plus
(4) any amount levied as a special assessment to cover the
costs of municipal operation and maintenance activities for the
taxes payable year 1986.
For taxes levied in 1987 and subsequent years, the levy limit
base of a governmental subdivision defined only in section
275.50, subdivision 2, paragraph (b), is equal to its adjusted
levy limit base for the preceding year.
Sec. 40. Minnesota Statutes 1987 Supplement, section
275.51, subdivision 3h, is amended to read:
Subd. 3h. [ADJUSTED LEVY LIMIT BASE.] For taxes levied in
1988 and thereafter, the adjusted levy limit base is equal to
the levy limit base computed pursuant to Laws 1987, article 5,
section 12, or subdivision 3f, increased by:
(a) a percentage equal to the percentage growth in the
implicit price deflator, or three four percent, whichever is
lesser for taxes levied in 1988 and three percent for taxes
levied in 1989 and subsequent years; and
(b) a percentage equal to the greater of the percentage
increases in population or in number of households, if any, for
the most recent 12-month period for which data is available,
using figures derived pursuant to subdivision 6;.
(c) one-half of the amount levied as a special levy in the
previous year for paying the costs of municipal services
provided to new private industrial and nonresidential commercial
development pursuant to section 275.50, subdivision 5, clause
(m), if the special levy is discontinued;
(d) the amount of any permanent increase in the levy limit
base approved at a general or special election held during the
12-month period ending September 30 of the levy year, pursuant
to section 275.58, subdivisions 1 and 2; and
(e) the amount, if known, equal to the decrease in federal
revenue sharing allotment from the levy year to the year in
which the levy is payable; otherwise the amount equal to the
decrease in federal revenue sharing allotment in the levy year
as compared to the previous year if the levy base for the
previous year has not been adjusted for a decrease in federal
revenue sharing allotment.
For taxes levied in 1989 and subsequent years, to the
resulting product must be added the estimated reduction in a
county's income maintenance aids as defined in section 273.1398,
subdivision 1, pursuant to section 273.1398, subdivision 2,
paragraph (d). The department of human services shall annually
estimate the increase in income maintenance aids referred to in
section 273.1398, subdivision 2, paragraph (d) and certify it by
county to the department of revenue by July 15 of the levy year
preceding that in which the aids are payable. If the actual
increase in a county's income maintenance aid referred to in
section 273.1398, subdivision 2, paragraph (d) is less than or
greater than the amount added to a county's adjusted levy limit
base in the prior year, its adjusted levy limit base for the
subsequent year will be increased or decreased by the
appropriate amount.
Sec. 41. Minnesota Statutes 1987 Supplement, section
275.51, subdivision 3i, is amended to read:
Subd. 3i. [LEVY LIMITATION.] The levy limitation for a
governmental subdivision shall be equal to the adjusted levy
limit base determined pursuant to subdivision 3h, reduced by
(a) the total amount of local government aid that the
governmental subdivision has been certified to receive pursuant
to sections 477A.011 to 477A.014;.
(b) taconite aids pursuant to sections 298.28 and 298.282
including any aid received in the levy year which was required
to be placed in a special fund for expenditure in the next
succeeding year;
(c) state reimbursements for wetlands and native prairie
property tax exemptions pursuant to sections 273.115,
subdivision 3, and 273.116, subdivision 3; (d) payments in lieu
of taxes to a county pursuant to section 477A.12 which are
required to be used to provide property tax levy reduction
certified to be paid in the calendar year in which property
taxes are payable; and (e) payments from the proceeds of the net
proceeds tax under section 298.018. If the sum of the taconite
aids deducted exceeds the adjusted levy limit base, the excess
must be used to reduce the amounts levied as special levies
pursuant to section 275.50, subdivisions 5 and 7. The
commissioner of revenue shall notify a governmental subdivision
of any excess taconite aids to be used to reduce special levies.
As provided in section 298.28, one cent per taxable ton of
the amount distributed under section 298.28, subdivision 5,
paragraph (d), shall not be deducted from the levy limit base of
the counties that receive that aid. The resulting figure This
amount is the amount of property taxes which a governmental
subdivision may levy for all purposes other than those for which
special levies and special assessments are made.
For taxes levied in 1987 and subsequent years, the levy
limit for a county as calculated under paragraph (b) shall be
decreased by an additional amount equal to the reduction in the
distribution to the county under section 298.28, from the 1986
distribution to the 1987 distribution.
Sec. 42. Minnesota Statutes 1986, section 275.51, is
amended by adding a subdivision to read:
Subd. 3j. [APPEALS.] A governmental subdivision subject to
the limitations in this section may appeal to the commissioner
of revenue for an adjustment in its levy limit base under this
section. If the governmental subdivision can provide evidence
satisfactory to the commissioner that its levy for taxes payable
in 1988 had been reduced because it had made expenditures from
reserve funds, the commissioner may permit the governmental
subdivision to increase its levy limit base under this section
by the amount determined by the commissioner. The
commissioner's decision is final.
Sec. 43. Minnesota Statutes 1987 Supplement, section
276.04, is amended to read:
276.04 [NOTICE OF RATES; PROPERTY TAX STATEMENTS.]
Subdivision 1. [AUDITOR TO PUBLISH RATES.] On receiving
the tax lists from the county auditor, the county treasurer
shall, if directed by the county board, give three weeks'
published notice in a newspaper specifying the rates of taxation
for all general purposes and the amounts raised for each
specific purpose.
Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer
shall, whether or not directed by the county board, cause to be
printed on all tax statements, or on an attachment, a tabulated
statement of the dollar amount due to each taxing authority from
the parcel of real property for which a particular tax statement
is prepared. The dollar amounts due the county, township or
municipality and school district shall must be separately stated
but. The amounts due other taxing districts, if any, may be
aggregated. The dollar amounts, including the dollar amount of
any special assessments, may be rounded to the nearest even
whole dollar. For purposes of this section whole odd-numbered
dollars may be adjusted to the next higher even-numbered
dollar. The statement shall include the following sentence,
printed in upper case letters in boldface print: "THE STATE OF
MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES. THE STATE
OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND
REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."
(b) The property tax statements for manufactured homes and
sectional structures taxed as personal property shall contain
the same information that is required on the tax statements for
real property.
(c) For taxes payable in 1990 and thereafter, real and
personal property tax statements must contain (1) the property's
market value, as defined in section 272.03, subdivision 8, (2)
the net tax capacity rate applicable to the property's
classification under section 273.13, and the product of (1) and
(2), the property's initial tax. The statement must show the
difference between a property's gross tax capacity and net tax
capacity multiplied by the tax capacity rate as "state paid
homestead and agricultural credit." The statement must also
show the decrease in tax attributable to that portion of the sum
of the following aids attributable to the property as "state
paid tax relief": (i) education aids payable under chapters 124
and 124A, (ii) local government aid for cities, towns, and
counties under chapter 477A, (iii) disparity reduction aid paid
under section 273.1398, and (iv) income maintenance aids as
defined in section 273.1398, subdivision 1, paragraph (i). The
commissioner of revenue shall certify to the county auditor the
actual or estimated aids local governments will receive in the
following year.
(d) For taxes payable in 1989 only, the statement must show
the property's market value, as defined in section 272.03,
subdivision 8, and the amount attributable to section 273.13,
subdivisions 22 and 23 as "state paid homestead credit" and the
amount attributable to section 273.132 as "state paid
agricultural credit." The statement must also show the decrease
in tax attributable to that portion of the sum of the following
aids attributable to the property as "state paid tax relief":
(i) education aids under chapters 124 and 124A, (ii) local
government aid for cities, towns, and counties under chapter
477A, and (iii) disparity reduction aid under section 273.1398.
The commissioner of revenue shall certify to the county auditor
the actual or estimated aids local governments will receive in
the following year.
Subd. 3. [MAILING OF TAX STATEMENTS.] The county treasurer
shall mail to taxpayers statements of their personal property
taxes due, such statements to be mailed not later than February
15 (, except in the case of manufactured homes and sectional
structures taxed as personal property),. Statements of the real
property taxes due shall be mailed not later than January 31;
provided, that. The validity of the tax shall not be affected
by failure of the treasurer to mail such the statement. The
taxpayer is defined as the owner who is responsible for the
payment of the tax. Such real and personal property tax
statements shall contain the market value, as defined in section
272.03, subdivision 8, used in determining the tax. The
statement shall show the amount attributable to the decrease in
tax under section 275.082 attributable to Minnesota Statutes
1986, section 124.2137 as "state paid agricultural credit
amount" and the amount attributable to the decrease in tax under
section 275.082 attributable to Minnesota Statutes 1986, section
273.13, subdivisions 22 and 23 as "state paid homestead credit
amount." The statement must state the amount deducted under
section 273.1195 and identify it as "state paid small business
transition credit."
Subd. 4. [COLLECTION SITE.] If so directed by the county
board, the treasurer shall visit places in the county as the
treasurer deems expedient for the purpose of receiving taxes and
the county board is authorized to pay the expenses of such
visits and of preparing duplicate tax lists. Failure to mail
the tax statement shall not be deemed a material defect to
affect the validity of any judgment and sale for delinquent
taxes.
Sec. 44. Minnesota Statutes 1987 Supplement, section
276.06, is amended to read:
276.06 [TAX STATEMENTS TO STATE APPORTIONMENT OF TAXES.]
The treasurer of each county may cause to be printed,
stamped, or written on the back of all current tax statements,
or on a separate sheet or card to be furnished with the
statements, a statement showing the number of mills tax capacity
rate of the current tax apportioned to the state, county, city,
town, or school district.
Sec. 45. Minnesota Statutes 1986, section 298.28,
subdivision 6, is amended to read:
Subd. 6. [PROPERTY TAX RELIEF.] (a) 22 12 cents per
taxable ton, less any amount required to be distributed under
paragraphs (b) and (c), must be allocated to St. Louis county
acting as the counties' fiscal agent, to be distributed as
provided in sections 273.134 to 273.136.
(b) If an electric power plant owned by and providing the
primary source of power for a taxpayer mining and concentrating
taconite is located in a county other than the county in which
the mining and the concentrating processes are conducted, .1875
cent per taxable ton of the tax imposed and collected from such
taxpayer shall be paid to the county.
(c) If an electric power plant owned by and providing the
primary source of power for a taxpayer mining and concentrating
taconite is located in a school district other than a school
district in which the mining and concentrating processes are
conducted, .5625 cent per taxable ton of the tax imposed and
collected from the taxpayer shall be paid to the school district.
Sec. 46. [TAX INCREMENT ADJUSTMENT.]
The county auditor shall determine a tax increment
district's original tax capacity by multiplying the district's
market values by class in the year of original certification or
year of certification for any modification, as the case may be,
by the tax capacity rates in section 273.13. The original tax
capacity of an economic development district shall also be
inflated to reflect the annual adjustment required by section
469.177 for prior years. The original tax capacities of the
districts under this section shall be certified to authorities
by July 1, 1988.
Sec. 47. Minnesota Statutes 1987 Supplement, section
473.446, subdivision 1, is amended to read:
Subdivision 1. [TAXATION WITHIN TRANSIT TAXING DISTRICT.]
For the purposes of sections 473.401 to 473.451 and the
metropolitan transit system, except as otherwise provided in
this subdivision the regional transit board shall levy each year
upon all taxable property within the metropolitan transit taxing
district, defined in subdivision 2, a transit tax consisting of:
(a) an amount up to two mills times the assessed value of
all such property, based upon the level of transit service
provided for the property, the proceeds of which shall be used
for payment of the expenses of operating transit and paratransit
service and to provide for payment of obligations issued by the
commission under section 473.436, subdivision 6;
(b) an additional amount, if any, as the board determines
to be necessary to provide for the full and timely payment of
its certificates of indebtedness and other obligations
outstanding on July 1, 1985, to which property taxes under this
section have been pledged; and
(c) an additional amount necessary to provide full and
timely payment of certificates of indebtedness, bonds, including
refunding bonds or other obligations issued or to be issued
under section 473.39 by the council for purposes of acquisition
and betterment of property and other improvements of a capital
nature and to which the council or board has specifically
pledged tax levies under this clause.
The county auditor shall reduce the tax levied pursuant to
this subdivision on all property within statutory and home rule
charter cities and towns that receive full peak service and
limited off-peak service by an amount equal to the tax levy that
would be produced by applying a rate of 0.5 mills on the
property. The county auditor shall reduce the tax levied
pursuant to this subdivision on all property within statutory
and home rule charter cities and towns that receive limited peak
service by an amount equal to the tax levy that would be
produced by applying a rate of 0.75 mills on the property. The
amounts so computed by the county auditor shall be submitted to
the commissioner of revenue as part of the abstracts of tax
lists required to be filed with the commissioner under section
275.29. Any prior year adjustments shall also be certified in
the abstracts of tax lists. The commissioner shall review the
certifications to determine their accuracy and may make changes
in the certification as necessary or return a certification to
the county auditor for corrections. The commissioner shall pay
to the regional transit board the amounts certified by the
county auditors on the dates provided in section 273.1394
273.1398. There is annually appropriated from the general fund
in the state treasury to the department of revenue the amounts
necessary to make these payments in fiscal year 1987 and
thereafter.
For the purposes of this subdivision, "full peak and
limited off-peak service" means peak period regular route
service, plus weekday midday regular route service at intervals
longer than 60 minutes on the route with the greatest frequency;
and "limited peak period service" means peak period regular
route service only.
Sec. 48. Minnesota Statutes 1987 Supplement, section
473F.02, subdivision 4, is amended to read:
Subd. 4. "Residential property" means the following
categories of property, as defined in section 273.13, excluding
that portion of such property exempt from taxation pursuant to
section 272.02:
(a) Class 1, 1b, 2a, 4a, 4b, 4c, and 4d property except
resorts and property classified under section 273.13,
subdivision 25, paragraph (c), clause (6);
(b) and that portion of class 3a, 3b, and 5 property used
exclusively for residential occupancy.
Sec. 49. Minnesota Statutes 1986, section 473F.02, is
amended by adding a subdivision to read:
Subd. 23. "Gross tax capacity" means the market value of
real and personal property multiplied by its gross tax capacity
rates in section 273.13.
Sec. 50. Minnesota Statutes 1987 Supplement, section
473F.05, is amended to read:
473F.05 [ASSESSED VALUATION GROSS TAX CAPACITY; 1972 1988
AND SUBSEQUENT YEARS.]
On or before November 20 of 1972 1988 and each subsequent
year, the assessors within each county in the area shall
determine and certify to the county auditor the assessed
valuation gross tax capacity in that year of
commercial-industrial property subject to taxation within each
municipality in the county, determined without regard to section
469.177, subdivision 3.
Sec. 51. Minnesota Statutes 1987 Supplement, section
473F.06, is amended to read:
473F.06 [INCREASE IN ASSESSED VALUATION GROSS TAX
CAPACITY.]
On or before September 1 of 1976 and each subsequent year,
the auditor of each county in the area shall determine the
amount, if any, by which the assessed valuation gross tax
capacity determined in the preceding year pursuant to section
473F.05, of commercial-industrial property subject to taxation
within each municipality in the auditor's county exceeds
the assessed valuation gross tax capacity in 1971 of
commercial-industrial property subject to taxation within that
municipality. If a municipality is located in two or more
counties within the area, the auditors of those counties shall
certify the data required by section 473F.05 to the county
auditor who is responsible under other provisions of law for
allocating the levies of that municipality between or among the
affected counties. That county auditor shall determine the
amount of the net excess, if any, for the municipality under
this section, and certify that amount under section 473F.07.
Notwithstanding any other provision of sections 473F.01 to
473F.13 to the contrary, in the case of a municipality which is
designated on July 24, 1971, as a redevelopment area pursuant to
section 401(a)(4) of the Public Works and Economic Development
Act of 1965, Public Law Number 89-136, the increase in
its assessed valuation gross tax capacity of
commercial-industrial property for purposes of this section
shall be determined in each year subsequent to the termination
of such designation by using as a base the assessed valuation
gross tax capacity of commercial-industrial property in that
municipality in the year following that in which such
designation is terminated, rather than the assessed valuation
gross tax capacity of such property in 1971. The increase in
assessed valuation gross tax capacity determined by this section
shall be reduced by the amount of any decreases in the assessed
valuation gross tax capacity of commercial-industrial property
resulting from any court decisions, court related stipulation
agreements, or abatements for a prior year, and only in the
amount of such decreases made during the 12-month period ending
on June 30 of the current assessment year, where such decreases,
if originally reflected in the determination of a prior
year's valuation gross tax capacity under section 473F.05, would
have resulted in a smaller contribution from the municipality in
that year. An adjustment for such decreases shall be made only
if the municipality made a contribution in a prior year based on
the higher valuation gross tax capacity of the
commercial-industrial property.
Sec. 52. Minnesota Statutes 1987 Supplement, section
473F.07, subdivision 1, is amended to read:
Subdivision 1. Each county auditor shall certify the
determinations pursuant to sections 473F.05 and 473F.06 to the
administrative auditor on or before November 20 of each year.
The administrative auditor shall determine the sum of the
amounts certified pursuant to section 473F.06, and divide that
sum by 2-1/2. The resulting amount shall be known as the
"areawide gross tax base capacity for ........(year)."
Sec. 53. Minnesota Statutes 1986, section 473F.07,
subdivision 4, is amended to read:
Subd. 4. The administrative auditor shall determine the
proportion which the index of each municipality bears to the sum
of the indices of all municipalities and shall then multiply
this proportion in the case of each municipality, by the
areawide gross tax base capacity.
Sec. 54. Minnesota Statutes 1986, section 473F.07,
subdivision 5, is amended to read:
Subd. 5. The product of the multiplication prescribed by
subdivision 4 shall be known as the "areawide gross tax base
capacity for ........(year) attributable to
..................(municipality)." The administrative auditor
shall certify such product to the auditor of the county in which
the municipality is located on or before November 25.
Sec. 55. Minnesota Statutes 1986, section 473F.08,
subdivision 1, is amended to read:
Subdivision 1. The county auditor shall determine the
taxable value gross tax capacity of each governmental unit
within the auditor's county in the manner prescribed by this
section.
Sec. 56. Minnesota Statutes 1987 Supplement, section
473F.08, subdivision 2, is amended to read:
Subd. 2. The taxable value gross tax capacity of a
governmental unit is its assessed valuation gross tax capacity,
as determined in accordance with other provisions of law
including section 469.177, subdivision 3, subject to the
following adjustments:
(a) There shall be subtracted from its assessed valuation
gross tax capacity, in each municipality in which the
governmental unit exercises ad valorem taxing jurisdiction, an
amount which bears the same proportion to 40 percent of the
amount certified in that year pursuant to section 473F.06 in
respect to that municipality as the total preceding
year's assessed valuation gross tax capacity of
commercial-industrial property which is subject to the taxing
jurisdiction of the governmental unit within the municipality,
determined without regard to section 469.177, subdivision 3,
bears to the total preceding year's assessed valuation gross tax
capacity of commercial-industrial property within the
municipality, determined without regard to section 469.177,
subdivision 3;
(b) There shall be added to its assessed valuation gross
tax capacity, in each municipality in which the governmental
unit exercises ad valorem taxing jurisdiction, an amount which
bears the same proportion to the areawide base gross tax
capacity for the year attributable to that municipality as the
total preceding year's assessed valuation gross tax capacity of
residential property which is subject to the taxing jurisdiction
of the governmental unit within the municipality bears to the
total preceding year's assessed valuation gross tax capacity of
residential property of the municipality.
Sec. 57. Minnesota Statutes 1986, section 473F.08,
subdivision 3, is amended to read:
Subd. 3. On or before October 15 of 1976 and each
subsequent year, the county auditor shall apportion the levy of
each governmental unit in the auditor's county in the manner
prescribed by this subdivision. The auditor shall:
(a) Determine the areawide portion of the levy for each
governmental unit by multiplying the nonagricultural mill rate
tax capacity rate of the governmental unit for the preceding
levy year times the distribution value set forth in subdivision
2, clause (b); and
(b) Determine the local portion of the current year's levy
by subtracting the resulting amount from clause (a) from the
governmental unit's current year's levy.
Sec. 58. Minnesota Statutes 1986, section 473F.08,
subdivision 3a, is amended to read:
Subd. 3a. Beginning in 1987 and each subsequent year
through 1998, the city of Bloomington shall determine the
interest payments for that year for the bonds which have been
sold for the highway improvements pursuant to Laws 1986, chapter
391, section 2, paragraph (g). Effective for property taxes
payable in 1988 through property taxes payable in 1999, after
the Hennepin county auditor has computed the areawide portion of
the levy for the city of Bloomington pursuant to subdivision 3,
clause (a), the auditor shall annually add a dollar amount to
the city of Bloomington's areawide portion of the levy equal to
the amount which has been certified to the auditor by the city
of Bloomington for the interest payments for that year for the
bonds which were sold for highway improvements. The total
areawide portion of the levy for the city of Bloomington
including the additional amount for interest repayment certified
pursuant to this subdivision shall be certified by the Hennepin
county auditor to the administrative auditor pursuant to
subdivision 5. The Hennepin county auditor shall distribute to
the city of Bloomington the additional areawide portion of the
levy computed pursuant to this subdivision at the same time that
payments are made to the other counties pursuant to subdivision
7a. This additional areawide portion of the levy which is
distributed to the city of Bloomington shall be exempt from the
city's levy limit provisions contained in sections 275.50 to
275.56. For property taxes payable from the year 2000 through
2009, the Hennepin county auditor shall adjust Bloomington's
contribution to the areawide gross tax base capacity upward each
year by a value equal to ten percent of the total additional
areawide levy distributed to Bloomington under this subdivision
from 1988 to 1999, divided by the areawide mill rate tax
capacity rate for taxes payable in the previous year.
Sec. 59. Minnesota Statutes 1987 Supplement, section
473F.08, subdivision 4, is amended to read:
Subd. 4. In 1972 and subsequent years, the county auditor
shall divide that portion of the levy determined pursuant to
subdivision 3, clause (b), by the assessed valuation gross tax
capacity of the governmental unit, taking section 469.177,
subdivision 3, into account, less that portion subtracted
from assessed valuation gross tax capacity pursuant to
subdivision 2, clause (a). The resulting rate shall apply to
all taxable property except commercial-industrial property,
which shall be taxed in accordance with subdivision 6.
Sec. 60. Minnesota Statutes 1986, section 473F.08,
subdivision 5, is amended to read:
Subd. 5. On or before November 30 of 1972 and each
subsequent year, the county auditor shall certify to the
administrative auditor that portion of the levy of each
governmental unit determined pursuant to subdivision 3, clause
(a). The administrative auditor shall then determine the rate
of taxation tax capacity rate sufficient to yield an amount
equal to the sum of such levies from the areawide gross tax base
capacity. On or before December 5 the administrative auditor
shall certify said rate to each of the county auditors.
Sec. 61. Minnesota Statutes 1987 Supplement, section
473F.08, subdivision 6, is amended to read:
Subd. 6. The rate of taxation determined in accordance
with subdivision 5 shall apply in the taxation of each item of
commercial-industrial property subject to taxation within a
municipality, including property located within any tax
increment financing district, as defined in section 469.174,
subdivision 9, to that portion of the assessed valuation gross
tax capacity of the item which bears the same proportion to its
total assessed valuation gross tax capacity as 40 percent of the
amount determined pursuant to section 473F.06 in respect to the
municipality in which the property is taxable bears to the
amount determined pursuant to section 473F.05. The rate of
taxation determined in accordance with subdivision 4 shall apply
in the taxation of the remainder of the assessed valuation gross
tax capacity of the item.
Sec. 62. Minnesota Statutes 1986, section 473F.08,
subdivision 10, is amended to read:
Subd. 10. For the purpose of computing the amount or rate
of any salary, aid, tax, or debt authorized, required, or
limited by any provision of any law or charter, where such
authorization, requirement, or limitation is related in any
manner to any value or valuation of taxable property within any
governmental unit, such value or valuation gross tax capacity
shall be adjusted to reflect the adjustments to valuation gross
tax capacity effected by subdivision 2, provided that: (1) in
determining the market value of commercial-industrial property
or any class thereof within a governmental unit for any purpose
other than section 473F.07, (a) the reduction required by this
subdivision shall be that amount which bears the same proportion
to the amount subtracted from the governmental unit's assessed
valuation gross tax capacity pursuant to subdivision 2, clause
(a), as the market value of commercial-industrial property, or
such class thereof, located within the governmental unit bears
to the assessed valuation gross tax capacity of
commercial-industrial property, or such class thereof, located
within the governmental unit, and (b) the increase required by
this subdivision shall be that amount which bears the same
proportion to the amount added to the governmental
unit's assessed valuation gross tax capacity pursuant to
subdivision 2, clause (b), as the market value of
commercial-industrial property, or such class thereof, located
within the governmental unit bears to the assessed valuation
gross tax capacity of commercial-industrial property, or such
class thereof, located within the governmental unit; and (2) in
determining the market value of real property within a
municipality for purposes of section 473F.07, the adjustment
prescribed by clause (1) (a) hereof shall be made and that
prescribed by clause (1) (b) hereof shall not be made.
Sec. 63. Minnesota Statutes 1986, section 473F.10, is
amended to read:
473F.10 [REASSESSMENTS AND OMITTED PROPERTY.]
Subdivision 1. If the commissioner of revenue orders a
reassessment of all or any portion of the property in a
municipality other than in the form of a mathematically
prescribed adjustment of valuation, or if omitted property is
placed upon the tax rolls, and the reassessment has not been
completed or the property placed upon the rolls, as the case may
be, by November 15, the assessed valuation gross tax capacity of
the affected property shall, for purposes of sections 473F.03 to
473F.08, be determined from the abstracts filed by the county
auditor with the commissioner of revenue.
Subd. 2. If the reassessment, when completed and
incorporated in the commissioner of revenue's certification of
the assessed valuation gross tax capacity of the municipality,
or the listing of omitted property, when placed on the rolls,
results in an increase in the assessed valuation gross tax
capacity of commercial-industrial property in the municipality
which differs from that used, pursuant to subdivision 1, for
purposes of sections 473F.03 to 473F.08, the increase in
the assessed valuation gross tax capacity of
commercial-industrial property in that municipality in the
succeeding year, as otherwise computed under section 473F.06,
shall be adjusted in a like amount, by an increase if the
reassessment or listing discloses a larger increase than was
used for purposes of sections 473F.03 to 473F.08, or by a
decrease if the reassessment or listing discloses a smaller
increase than was used for those purposes, provided that no
adjustment shall reduce the amount determined under section
473F.06 to an amount less than zero.
Subd. 3. Subdivisions 1 and 2 shall not apply to the
determination of the tax rate under section 473F.08, subdivision
4, or to the determination of the assessed valuation gross tax
capacity of commercial-industrial property and each item thereof
for purposes of section 473F.08, subdivision 6.
Sec. 64. [FISCAL DISPARITIES ADJUSTMENT.]
For purposes of determining the areawide levy and local
levies under section 473F.08, subdivisions 3, 4, 5, and 6, for
taxes payable in 1989, the initial computation shall be done
based on chapter 473F as codified in Minnesota Statutes 1986 and
Minnesota Statutes 1987 Supplement. However, after the dollar
amount of the areawide and local levies has been determined
under section 473F.08, subdivisions 3, 4, 5, and 6, the dollar
amount of the levies shall be spread on the basis of this act.
The dollar amount of the areawide tax shall be levied against
the portion of commercial-industrial gross tax capacity equal to
the portion of commercial-industrial assessed value that would
have been subject to the areawide tax under Minnesota Statutes
1986. Prior to November 20, 1988, the county auditors with the
assistance of the county assessors shall determine the gross tax
capacity of commercial-industrial property in each municipality
as of the January 2, 1971, assessment. The gross tax capacity
shall be computed by multiplying the municipality's market value
of commercial-industrial assessed value by class by the gross
tax capacity rates in section 273.13.
Sec. 65. Minnesota Statutes 1987 Supplement, section
475.53, subdivision 4, is amended to read:
Subd. 4. [SCHOOL DISTRICTS.] Except as otherwise provided
by law, no school district shall be subject to a net debt in
excess of ten percent of the actual market value of all taxable
property and of exempt property referred to in section 275.49,
situated within its corporate limits, as computed in accordance
with this subdivision. The county auditor of each county
containing taxable real or personal property situated within any
school district shall certify to the district upon request the
market value of all such property. The county auditor of each
county containing exempt property referred to in section 275.49,
situated within any school district, shall certify to the
district upon request the total market value of all such
property as determined under section 275.49. The commissioner
of revenue shall certify to the district upon request the market
value of railroad property within the district as most recently
determined under section 270.87. Whenever the commissioner of
revenue, in accordance with section 124.2131, subdivision 1, has
determined that the assessed valuation of any district furnished
by county auditors is not based upon the market value of taxable
property in the district, the commissioner of revenue shall
certify to the district upon request the ratio most recently
ascertained to exist between such value and the actual market
value of property within the district. The actual market value
of property within a district, on which its debt limit under
this subdivision is based, is (a) the value certified by the
county auditors and, where applicable, by the commissioner of
revenue under section 270.87, or (b) this value divided by the
ratio certified by the commissioner of revenue, whichever
results in a higher value.
Sec. 66. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 15. [CITY REVENUE.] "City revenue" equals the sum of
(i) the city's aid payable under section 477A.013, in the year
prior to that for which aids are being calculated, and (ii) its
levy for taxes payable in the year prior to that for which aids
are being calculated, and (iii) for aids payable in 1991 and
subsequent years, the city's transition aid payable under
section 273.1398, subdivision 2, in the year prior to that for
which aids are being calculated.
Sec. 67. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 16. [BASE REVENUE GUARANTEE.] "Base revenue
guarantee" is the sum of (1) $160 per household plus (2) $150
multiplied by each tenfold increase in households, or fraction
thereof, above ten rounded to the nearest dollar.
Sec. 68. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 17. [REVENUE GUARANTEE INCREASE.] "Revenue guarantee
increase" is the sum of:
(1) $190 per household for cities of the first class
located in the metropolitan area and $190 per household for
cities located outside the metropolitan area; and
(2) 15 percent of a city's base revenue guarantee for
cities in which the population has declined since the estimate
for the third year preceding the most recent estimate.
Sec. 69. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 18. [CITY REVENUE GUARANTEE.] "City revenue
guarantee" is the product of:
(1) the sum of a city's base revenue guarantee and the
city's revenue guarantee increase;
(2) the number of households in the city; and
(3) 108 percent for aids payable in 1989 and 104 percent
for aids payable in 1990 and subsequent years.
Sec. 70. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 19. [METROPOLITAN AREA.] "Metropolitan area" is the
metropolitan area as defined in section 473.121, subdivision 2.
Sec. 71. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 20. [CITY TAX CAPACITY.] "City tax capacity" means
(1) 23 percent of the net tax capacity computed using the net
tax capacity rates listed in section 273.13 for all taxable
property within the city based on the assessment two years prior
to that for which aids are being calculated, plus (2) a city's
levy on the fiscal disparities distribution under section
473F.08, subdivision 3, paragraph (a), for taxes payable in the
year prior to that for which aids are being calculated. The
market value utilized in computing net tax capacity shall be
reduced by the sum of (1) a city's market value of commercial
industrial property as defined in section 473F.02, subdivision
3, multiplied by the ratio determined pursuant to section
473F.08, subdivision 2, paragraph (a), and (2) the market value
of the captured value of tax increment financing districts as
defined in section 469.177, subdivision 2. The net tax capacity
will be computed using equalized market values.
Sec. 72. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 21. [EQUALIZED MARKET VALUES.] Equalized market
values are equalized market values as defined in section
273.1398, subdivision 1.
Sec. 73. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 22. [CITY INITIAL AID.] "Initial aid" for a city is
its city revenue guarantee minus the city's tax capacity.
Initial aid cannot be less than $0.
Sec. 74. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 23. [CITY EXPENDITURE/UNLIMITED AID RATIO.]
"Expenditure/unlimited aid ratio" for a city is the ratio of its
city revenue to its city revenue guarantee.
Sec. 75. Minnesota Statutes 1986, section 477A.011, is
amended by adding a subdivision to read:
Subd. 24. [LOCAL GOVERNMENT AID INCREASE.] "Local
government aid increase" is aid payable in 1989 pursuant to
section 477A.013, subdivision 3, minus the city's 1988 local
government aid.
Sec. 76. Minnesota Statutes 1987 Supplement, section
477A.013, subdivision 1, is amended to read:
Subdivision 1. [TOWNS.] In calendar year 1988 and calendar
years thereafter, each town which had levied for taxes payable
in the previous year at least one mill on the dollar of the
assessed value of the town shall receive a distribution equal to
the greater of: (a) 60 percent of the amount received in 1983
pursuant to Minnesota Statutes 1982, sections 273.138, 273.139,
and 477A.011 to 477A.03; or (b) the amount certified in 1987
pursuant to sections 477A.011 to 477A.03. In calendar year
1989, each town that had levied for taxes payable in 1988 at
least one mill on the dollar of the assessed value of the town
shall receive a distribution equal to 106 percent of the
distribution received under Minnesota Statutes 1987 Supplement,
section 477A.013, subdivision 1, in 1988. In calendar year 1990
and subsequent years, each town that had levied for taxes
payable in the prior year a tax capacity rate of at least .0125
shall receive a distribution equal to the amount received in
1989 under this subdivision.
Sec. 77. Minnesota Statutes 1987 Supplement, section
477A.013, subdivision 2, is amended to read:
Subd. 2. [CITIES.] In calendar year 1988 and calendar
years thereafter, each city shall receive a local government aid
distribution equal to the amount that the city was certified to
receive for calendar year 1987 under this subdivision.
Sec. 78. Minnesota Statutes 1987 Supplement, section
477A.013, is amended by adding a subdivision to read:
Subd. 3. [CITY AID DISTRIBUTION.] In 1989, a city whose
initial aid is greater than $0 will receive the following aid
increases in addition to an amount equal to the local government
aid it received in 1988 under Minnesota Statutes 1987
Supplement, section 477A.013:
(1) for a city whose expenditure/unlimited aid ratio is at
least 1.5, two percent of city revenue;
(2) for a city whose expenditure/unlimited aid ratio is at
least 1.4 but less than 1.5, 2.5 percent of city revenue;
(3) for a city whose expenditure/unlimited aid ratio is at
least 1.3 but less than 1.4, three percent of city revenue;
(4) for a city whose expenditure/unlimited aid ratio is at
least 1.2 but less than 1.3, four percent of city revenue;
(5) for a city whose expenditure/unlimited aid ratio is at
least 1.1 but less than 1.2, five percent of city revenue;
(6) for a city whose expenditure/unlimited aid ratio is at
least 1.05 but less than 1.1, six percent of city revenue;
(7) for a city whose expenditure/unlimited aid ratio is at
least 1.0 but less than 1.05, seven percent of city revenue;
(8) for a city whose expenditure/unlimited aid ratio is at
least .95 but less than 1.0, 7.5 percent of city revenue;
(9) for a city whose expenditure/unlimited aid ratio is at
least .75 but less than .95, 8.5 percent of city revenue; and
(10) for a city whose expenditure/unlimited aid ratio is
less than .75, nine percent of city revenue.
In 1990 and subsequent years, a city whose initial aid is
greater than $0 will receive an amount equal to the aid it
received under this subdivision and subdivision 4 in the year
prior to that for which aids are being calculated plus an aid
increase equal to 50 percent of the rates listed in clauses 1 to
10 multiplied by city revenue.
A city's aid increase under this subdivision is limited to
the lesser of (1) 20 percent of its levy for taxes payable in
the year prior to that for which aids are being calculated after
the adjustments provided in section 273.1398, subdivision 2, or
(2) its initial aid amount, provided that no city will receive
an increase that is less than two percent of its 1988 local
government aid for aids payable in 1989.
A city whose initial aid is $0 will receive in 1989 an
amount equal to 102 percent of the local government aid it
received in 1988 under Minnesota Statutes 1987 Supplement,
section 477A.013. A city whose initial aid is $0 will receive
in 1990 and subsequent years an amount equal to the aid it
received in the previous year under this subdivision and
subdivision 4.
Sec. 79. Minnesota Statutes 1987 Supplement, section
477A.013, is amended by adding a subdivision to read:
Subd. 4. [ADDITIONAL DISTRIBUTION.] A city with a
population over 2,500 is eligible for additional aid in 1989
only. The amount of additional aid is equal to (1) the product
of (i) the lesser of 50 percent of a city's "city revenue
guarantee" or 50 percent of a city's "city revenue" and (ii) one
minus the ratio of the city's tax capacity per household to 435;
less (2) the sum of (i) the disparity reduction aid payable to
all unique taxing jurisdictions within a city and (ii) the local
government aid increase for the city. The additional aid under
this section cannot be less than zero.
Sec. 80. [NOTIFICATION OF ADMINISTRATIVE DIRECTIVES.]
The commissioner of revenue shall notify the chairs of the
senate committee on taxes and tax laws and the house committee
on taxes of administrative directives or interpretations of the
provisions of this article. The notice must be given at least
five days before a directive or interpretation is released to
the public or provided to a local government to allow time for
the chairs to provide advice or to comment on the commissioner's
directive or interpretation of the law. An administrative
directive or interpretation includes an explanation of a
provision, a clarification of its application to a particular
circumstance, a directive on how to apply or administer a
provision, and other similar communications that are intended to
direct or guide local government officials in administering the
law. This section applies only to written materials that are
either released to the public or mailed, sent or provided to a
local government or a local government official.
Sec. 81. [REPEALER.]
(a) Minnesota Statutes 1986, sections 272.64; 273.13,
subdivisions 7a and 30; 275.49; 477A.011, subdivisions 4, 5, 6,
7a, 10, 11, 12, 13, and 14; and Minnesota Statutes 1987
Supplement, sections 273.1102, subdivision 2; 273.1195; 273.13,
subdivision 9; 273.1394; 273.1395; 273.1396; 273.1397; 275.081;
275.082; 275.125, subdivision 22; and 477A.011, subdivision 7;
and Laws 1987, chapter 268, article 6, section 19, are repealed.
(b) Minnesota Statutes 1986, section 275.50, subdivisions
3, 7, and 8 are repealed.
(c) Minnesota Statutes 1987 Supplement, section 273.13,
subdivision 15a, and section 21 are repealed.
Sec. 82. Laws 1987, chapter 268, article 6, section 53, is
amended to read:
Sec. 53. [REPEALER.]
Minnesota Statutes 1986, sections 13.58; 124.2131,
subdivision 4; 124.2137; 124.2139; 124A.031, subdivision 4;
273.112, subdivision 9; 273.115; 273.116; 273.13, subdivisions
26, 27, 28, and 29; and 273.1311; 273.1315; 273.135, subdivision
5; and 273.1391, subdivision 4, are repealed.
Sec. 83. [REENACTMENT.]
Notwithstanding Minnesota Statutes, section 645.36,
Minnesota Statutes, sections 124.2139; 273.1315; 273.135,
subdivision 5; and 273.1391, subdivision 4, are reenacted and
are effective as amended in this article for taxes levied in
1988 and thereafter, payable in 1989 and thereafter.
Sec. 84. [INSTRUCTION TO REVISOR.]
The revisor of statutes shall change the words "assessed
value" or "assessed valuation" wherever they appear in Minnesota
Statutes to "gross tax capacity" in Minnesota Statutes 1988 and
"net tax capacity" in Minnesota Statutes 1989 Supplement and
subsequent editions of the statutes except section 275.011. The
revisor of statutes shall change the words "mill rate" wherever
they appear in Minnesota Statutes to "tax capacity rate" in
Minnesota Statutes 1988 and subsequent editions of the statutes
except section 275.011.
Sec. 85. [APPROPRIATION.]
$4,000,000 is appropriated to the commissioner of revenue
from the general fund for the biennium ending June 30, 1989.
This money is to be used by the commissioner to provide grants
and other assistance to all counties for the purpose of
developing, upgrading, and maintaining county property tax
administrative data collection and processing systems and for
the costs of administering this article.
Sec. 86. [EFFECTIVE DATE.]
Sections 1 to 29, 31 to 79, 81, paragraphs (a) and (b), 82
and 83 are effective for taxes levied in 1988, payable in 1989,
and thereafter, except as otherwise provided. Sections 30 and
81, paragraph (c) are effective for taxes levied in 1989,
payable in 1990, and thereafter. Sections 80 and 85 are
effective the day following final enactment.
ARTICLE 6
PROPERTY TAX TECHNICAL AND ADMINISTRATION
Section 1. Minnesota Statutes 1986, section 270.075,
subdivision 2, is amended to read:
Subd. 2. As soon as practicable and not later than
November December 1 next following the levy of the tax, the
commissioner shall give actual notice to the airline company of
the assessed valuation and of the tax. The taxes imposed under
sections 270.071 to 270.079 shall become due and payable on
January 1 following the levy thereof. If any tax is not paid on
the due date or, if an appeal is made pursuant to section
270.076, within 60 days after notice of an increased tax, a late
payment penalty of ten percent of the unpaid tax shall be
assessed. The unpaid tax and penalty shall bear interest at the
rate specified in section 270.75 from the time such tax should
have been paid until paid. All interest and penalties shall be
added to the tax and collected as a part thereof.
Sec. 2. Minnesota Statutes 1987 Supplement, section
272.01, subdivision 2, is amended to read:
Subd. 2. (a) When any real or personal property which for
any reason is exempt from ad valorem taxes, and taxes in lieu
thereof, is leased, loaned, or otherwise made available and used
by a private individual, association, or corporation in
connection with a business conducted for profit, there shall be
imposed a tax, for the privilege of so using or possessing such
real or personal property, in the same amount and to the same
extent as though the lessee or user was the owner of such
property.
(b) The tax imposed by this subdivision shall not apply to
(1) property leased or used by way of a concession in or
relative to the use in whole or part of a public park, market,
fairgrounds, port authority, economic development authority
established under chapter 458C, municipal auditorium, airport
owned by a city, town, county, or group thereof but not the
airports owned or operated by the metropolitan airports
commission or a city of over 50,000 population or an airport
authority therein, municipal museum or municipal stadium or (2)
property constituting or used as a public pedestrian ramp or
concourse in connection with a public airport or (3) property
constituting or used as a passenger check-in area or ticket sale
counter, boarding area, or luggage claim area in connection with
a public airport but not the airports owned or operated by the
metropolitan airports commission or cities of over 50,000
population or an airport authority therein. Real estate owned
by a municipality in connection with the operation of a public
airport and leased or used for agricultural purposes shall not
be exempt.
(c) Taxes imposed by this subdivision shall be due and
payable as in the case of personal property taxes and such taxes
shall be assessed to such lessees or users of real or personal
property in the same manner as taxes assessed to owners of real
or personal property, except that such taxes shall not become a
lien against the property. When due, the taxes shall constitute
a debt due from the lessee or user to the state, township, city,
county and school district for which the taxes were assessed and
shall be collected in the same manner as personal property
taxes. If property subject to the tax imposed by this
subdivision is leased or used jointly by two or more persons,
each lessee or user shall be jointly and severally liable for
payment of the tax.
Sec. 3. Minnesota Statutes 1987 Supplement, section
272.02, subdivision 1, is amended to read:
Subdivision 1. All property described in this section to
the extent herein limited shall be exempt from taxation:
(1) all public burying grounds;
(2) all public schoolhouses;
(3) all public hospitals;
(4) all academies, colleges, and universities, and all
seminaries of learning;
(5) all churches, church property, and houses of worship;
(6) institutions of purely public charity except parcels of
property containing structures and the structures described in
section 273.13, subdivision 25, paragraph (c), clause (1) or
(2), or paragraph (d), clause (2);
(7) all public property exclusively used for any public
purpose;
(8) except for the taxable personal property enumerated
below, all personal property and the property described in
section 272.03, subdivision 1, paragraphs (c) and (d) shall be
exempt.
The following personal property shall be taxable:
(a) personal property which is part of an electric
generating, transmission, or distribution system or a pipeline
system transporting or distributing water, gas, crude oil, or
petroleum products or mains and pipes used in the distribution
of steam or hot or chilled water for heating or cooling
buildings and structures;
(b) railroad docks and wharves which are part of the
operating property of a railroad company as defined in section
270.80;
(c) personal property defined in section 272.03,
subdivision 2, clause (3);
(d) leasehold or other personal property interests which
are taxed pursuant to section 272.01, subdivision 2; 273.124,
subdivision 7; or 273.19, subdivision 1; or any other law
providing the property is taxable as if the lessee or user were
the fee owner;
(e) manufactured homes and sectional structures; and
(f) flight property as defined in section 270.071.
(9) Real and personal property used primarily for the
abatement and control of air, water, or land pollution to the
extent that it is so used, other than real property used
primarily as a solid waste disposal site.
Any taxpayer requesting exemption of all or a portion of
any equipment or device, or part thereof, operated primarily for
the control or abatement of air or water pollution shall file an
application with the commissioner of revenue. The equipment or
device shall meet standards, rules or criteria prescribed by the
Minnesota pollution control agency, and must be installed or
operated in accordance with a permit or order issued by that
agency. The Minnesota pollution control agency shall upon
request of the commissioner furnish information or advice to the
commissioner. On determining that property qualifies for
exemption, the commissioner shall issue an order exempting the
property from taxation. The equipment or device shall continue
to be exempt from taxation as long as the permit issued by the
Minnesota pollution control agency remains in effect.
(10) Wetlands. For purposes of this subdivision,
"wetlands" means (1) land described in section 105.37,
subdivision 15, or (2) land which is mostly under water,
produces little if any income, and has no use except for
wildlife or water conservation purposes, provided it is
preserved in its natural condition and drainage of it would be
legal, feasible, and economically practical for the production
of livestock, dairy animals, poultry, fruit, vegetables, forage
and grains, except wild rice. "Wetlands" shall include adjacent
land which is not suitable for agricultural purposes due to the
presence of the wetlands. "Wetlands" shall not include woody
swamps containing shrubs or trees, wet meadows, meandered water,
streams, rivers, and floodplains or river bottoms. Exemption of
wetlands from taxation pursuant to this section shall not grant
the public any additional or greater right of access to the
wetlands or diminish any right of ownership to the wetlands.
(11) Native prairie. The commissioner of the department of
natural resources shall determine lands in the state which are
native prairie and shall notify the county assessor of each
county in which the lands are located. Pasture land used for
livestock grazing purposes shall not be considered native
prairie for the purposes of this clause and section 273.116.
Upon receipt of an application for the exemption and credit
provided in this clause and section 273.116 for lands for which
the assessor has no determination from the commissioner of
natural resources, the assessor shall refer the application to
the commissioner of natural resources who shall determine within
30 days whether the land is native prairie and notify the county
assessor of the decision. Exemption of native prairie pursuant
to this clause shall not grant the public any additional or
greater right of access to the native prairie or diminish any
right of ownership to it.
(12) Property used in a continuous program to provide
emergency shelter for victims of domestic abuse, provided the
organization that owns and sponsors the shelter is exempt from
federal income taxation pursuant to section 501(c)(3) of the
Internal Revenue Code of 1986, as amended through December 31,
1986, notwithstanding the fact that the sponsoring organization
receives funding under section 8 of the United States Housing
Act of 1937, as amended.
(13) If approved by the governing body of the municipality
in which the property is located, property not exceeding one
acre which is owned and operated by any senior citizen group or
association of groups that in general limits membership to
persons age 55 or older and is organized and operated
exclusively for pleasure, recreation, and other nonprofit
purposes, no part of the net earnings of which inures to the
benefit of any private shareholders; provided the property is
used primarily as a clubhouse, meeting facility or recreational
facility by the group or association and the property is not
used for residential purposes on either a temporary or permanent
basis.
(14) To the extent provided by section 295.44, real and
personal property used or to be used primarily for the
production of hydroelectric or hydromechanical power on a site
owned by the state or a local governmental unit which is
developed and operated pursuant to the provisions of section
105.482, subdivisions 1, 8, and 9.
(15) If approved by the governing body of the municipality
in which the property is located, and if construction is
commenced after June 30, 1983:
(a) a "direct satellite broadcasting facility" operated by
a corporation licensed by the federal communications commission
to provide direct satellite broadcasting services using direct
broadcast satellites operating in the 12-ghz. band; and
(b) a "fixed satellite regional or national program service
facility" operated by a corporation licensed by the federal
communications commission to provide fixed satellite-transmitted
regularly scheduled broadcasting services using satellites
operating in the 6-ghz. band.
An exemption provided by paragraph (15) shall apply for a period
not to exceed five years. When the facility no longer qualifies
for exemption, it shall be placed on the assessment rolls as
provided in subdivision 4. Before approving a tax exemption
pursuant to this paragraph, the governing body of the
municipality shall provide an opportunity to the members of the
county board of commissioners of the county in which the
facility is proposed to be located and the members of the school
board of the school district in which the facility is proposed
to be located to meet with the governing body. The governing
body shall present to the members of those boards its estimate
of the fiscal impact of the proposed property tax exemption.
The tax exemption shall not be approved by the governing body
until the county board of commissioners has presented its
written comment on the proposal to the governing body, or 30
days has passed from the date of the transmittal by the
governing body to the board of the information on the fiscal
impact, whichever occurs first.
(16) Real and personal property owned and operated by a
private, nonprofit corporation exempt from federal income
taxation pursuant to United States Code, title 26, section
501(c)(3), primarily used in the generation and distribution of
hot water for heating buildings and structures.
(17) Notwithstanding section 273.19, state lands that are
leased from the department of natural resources under section
92.46.
(18) Electric power distribution lines and their
attachments and appurtenances, that are used primarily for
supplying electricity to farmers at retail.
(19) Transitional housing facilities. "Transitional
housing facility" means a facility that meets the following
requirements. (i) It provides temporary housing to parents and
children who are receiving AFDC or parents of children who are
temporarily in foster care. (ii) It has the purpose of
reuniting families and enabling parents to advance their
education, get job training, or become employed in jobs that
provide a living wage. (iii) It provides support services such
as child care, work readiness training, and career development
counseling; and a self-sufficiency program with periodic
monitoring of each resident's progress in completing the
program's goals. (iv) It provides services to a resident of the
facility for at least six months but no longer than one year,
except residents enrolled in an educational or vocational
institution or job training program. These residents may
receive services during the time they are enrolled but in no
event longer than four years. (v) It is sponsored by an
organization that has received a grant under section 256.7365
for the biennium ending June 30, 1989, for the purposes of
providing the services in items (i) to (iv). (vi) It is
sponsored by an organization that is exempt from federal income
tax under section 501(c)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1987. This exemption
applies notwithstanding the fact that the sponsoring
organization receives financing by a direct federal loan or
federally insured loan or a loan made by the Minnesota housing
finance agency under the provisions of either Title II of the
National Housing Act or the Minnesota housing finance agency law
of 1971 or rules promulgated by the agency pursuant to it, and
notwithstanding the fact that the sponsoring organization
receives funding under Section 8 of the United States Housing
Act of 1937, as amended.
Sec. 4. Minnesota Statutes 1987 Supplement, section
272.121, is amended to read:
272.121 [CURRENT TAX ON DIVIDED PARCELS.]
Subdivision 1. [CERTIFICATION OF PAYMENT.] Except as
provided in subdivision 2, if a deed or other instrument conveys
a parcel of land that is less than a whole parcel of land as
described in the current tax list, the county auditor shall not
transfer or divide the land in the auditor's official records,
and the county recorder shall not file and record the
instrument, unless the instrument of conveyance contains a
certification by the county treasurer that the taxes due in the
current tax year for the whole parcel have been paid. This
certification is in addition to the certification for delinquent
tax required by section 272.12.
Subd. 2. [EXCEPTIONS.] No certification of current tax
paid is required when the land is being conveyed to the federal
government, the state, or a home rule charter or statutory city
or any other political subdivision, or for any sheriff's or
referee's certificate of sale or other instrument if a
certification of delinquent tax for the instrument is not
required under section 272.12.
Sec. 5. Minnesota Statutes 1986, section 273.112,
subdivision 3, is amended to read:
Subd. 3. Real estate shall be entitled to valuation and
tax deferment under this section only if it is:
(a) actively and exclusively devoted to golf, skiing or
archery or firearms range recreational use or uses and other
recreational uses carried on at the establishment;
(b) five acres in size or more, except in the case of an
archery or firearms range;
(c)(1) operated by private individuals and open to the
public; or
(2) operated by firms or corporations for the benefit of
employees or guests; or
(3) operated by private clubs having a membership of 50 or
more, provided that the club does not discriminate in membership
requirements or selection on the basis of sex; and
(d) made available, in the case of real estate devoted to
golf, for use without discrimination on the basis of sex during
the time when the facility is open to use by the public or by
members, except that use for golf may be restricted on the basis
of sex no more frequently than one, or part of one, weekend each
calendar month for each sex and no more than two, or part of
two, weekdays each week for each sex.
If a golf club membership allows use of golf course
facilities by more than one adult per membership, the use must
be equally available to all adults entitled to use of the golf
course under the membership, except that use may be restricted
on the basis of sex as permitted in this section. Memberships
that permit play during restricted times may be allowed only if
the restricted times apply to all adults using the membership.
A golf club may have or create an individual membership
category which entitles a member for a reduced rate to play
during restricted hours as established by the club. The club
must have on record a written request by the member for such
membership.
For purposes of this subdivision and subdivision 7a,
discrimination means a pattern or course of conduct and not
linked to an isolated incident.
Sec. 6. Minnesota Statutes 1986, section 273.112,
subdivision 6, is amended to read:
Subd. 6. Application for deferment of taxes and assessment
under this section shall be made at least 60 days prior to
January 2 of each year. Such application shall be filed with
the assessor of the taxing district in which the real property
is located on such form as may be prescribed by the commissioner
of revenue. The assessor may require proof by affidavit or
other written verification that the property qualifies under
subdivision 3. In the case of property operated by private
clubs pursuant to subdivision 3, clause (c)(3), in order to
qualify for valuation and tax deferment under this section, the
taxpayer must submit to the assessor proof by affidavit or other
written verification that the bylaws or rules and regulations of
the club meet the eligibility requirements provided under this
section. The signed affidavit or other written verification
shall be sufficient demonstration of eligibility for the
assessor unless the county attorney determines otherwise.
The county assessor shall refer any question regarding the
eligibility for valuation and deferment under this section to
the county attorney for advice and opinion under section
388.051, subdivision 1. Upon request of the county attorney,
the taxpayer shall furnish information that the county attorney
considers necessary in order to determine eligibility under this
section.
Real estate is not entitled to valuation and deferment
under this section unless the county assessor has filed with the
assessor's tax records prior to October 16 a statement that the
application has been accepted.
Sec. 7. Minnesota Statutes 1987 Supplement, section
273.1195, is amended to read:
273.1195 [STATE PAID SMALL BUSINESS PROPERTY TAX TRANSITION
CREDIT.]
For property taxes payable in 1988 only, class 3a
commercial industrial property is eligible for a state paid
small business transition property tax credit if the payable
1988 property taxes on the first $120,000 of market value of the
property exceed three percent of the January 2, 1987, market
value. The credit is equal to 50 percent of the property tax
amount which is in excess of three percent of market value.
Only the first $120,000 of market value of a qualifying parcel
and the taxes attributable to the first $120,000 of market value
are eligible for the computation of this credit. Only a parcel
that qualifies for the 28 percent assessment ratio contained in
section 273.13, subdivision 24, paragraph (a), qualifies for the
credit provided in this section. Only the market value and
property tax attributable to the part of the parcel that is
class 3a must be used in computing the credit provided in this
section.
In the case of taxes paid in installments pursuant to
section 279.01, subdivision 1, the credit under this section
must be deducted from the second one-half installment payable
October 15. The amount of the reduction must be reported to the
commissioner of revenue as part of the abstracts of tax lists
required to be filed with the commissioner under section 275.29.
There is annually appropriated from the general fund to the
commissioners of revenue and education the amount necessary to
replace the revenue lost to local units of government and school
districts as a result of the reduction in property taxes
provided in this section. The payment amounts must be
determined and the installments paid under the provisions of
sections 273.13, subdivision 15a, and 273.1392.
Sec. 8. Minnesota Statutes 1986, section 273.121, is
amended to read:
273.121 [VALUATION OF REAL PROPERTY, NOTICE.]
Any county assessor or city assessor having the powers of a
county assessor, valuing or classifying taxable real property
shall in each year notify those persons whose property is to be
assessed or reclassified that year if the person's address is
known to the assessor, otherwise the occupant of the property.
In the case of property owned by a married couple in joint
tenancy or tenancy in common, the assessor shall not deny
homestead treatment in whole or in part if only one of the
spouses is occupying the property and the other spouse is absent
due to divorce or separation, or is a resident of a nursing home
or a boarding care facility. The notice shall be in writing and
shall be sent by ordinary mail at least ten days before the
meeting of the local board of review or equalization. It shall
contain the amount of the valuation in terms of market value,
the new classification, the assessor's office address, and the
dates, places, and times set for the meetings of the local board
of review or equalization and the county board of equalization.
If the assessment roll is not complete, the notice shall be sent
by ordinary mail at least ten days prior to the date on which
the board of review has adjourned. The assessor shall attach to
the assessment roll a statement that the notices required by
this section have been mailed. Any assessor who is not provided
sufficient funds from the assessor's governing body to provide
such notices, may make application to the commissioner of
revenue to finance such notices. The commissioner of revenue
shall conduct an investigation and, if satisfied that the
assessor does not have the necessary funds, issue a
certification to the commissioner of finance of the amount
necessary to provide such notices. The commissioner of finance
shall issue a warrant for such amount and shall deduct such
amount from any state payment to such county or municipality.
The necessary funds to make such payments are hereby
appropriated. Failure to receive the notice shall in no way
affect the validity of the assessment, the resulting tax, the
procedures of any board of review or equalization, or the
enforcement of delinquent taxes by statutory means.
Sec. 9. Minnesota Statutes 1986, section 273.124,
subdivision 1, is amended to read:
Subdivision 1. [GENERAL RULE.] Residential real estate
that is occupied and used for the purposes of a homestead by its
owner, who must be a Minnesota resident, is a homestead. Dates
for establishment of a homestead and homestead treatment
provided to particular types of property are as provided in this
section.
The assessor shall require proof, by affidavit or
otherwise, of the facts upon which classification as a homestead
may be determined.
For purposes of this section, homestead property shall
include property which is used for purposes of the homestead but
is separated from the homestead by a road, street, lot,
waterway, or other similar intervening property. The term "used
for purposes of the homestead" shall include but not be limited
to uses for gardens, garages, or other outbuildings commonly
associated with a homestead, but shall not include vacant land
held primarily for future development. In order to receive
homestead treatment for the noncontiguous property, the owner
shall apply for it to the assessor by July 1 of the year when
the treatment is initially sought. After initial qualification
for the homestead treatment, additional applications for
subsequent years are not required.
In the case of property owned by a married couple in joint
tenancy or tenancy in common, the assessor must not deny
homestead treatment in whole or in part if only one of the
spouses is occupying the property and the other spouse is absent
due to divorce or separation, or is a resident of a nursing home
or a boarding care facility.
If an individual is purchasing property with the intent of
claiming it as a homestead, and is required by the terms of the
financing agreement to have one or both parents shown on the
deed as coowners, the assessor shall allow a full homestead
classification and extend full homestead credit. This provision
only applies to first time purchasers, whether married or
single, or to a person who had previously been married and is
purchasing as a single individual for the first time. The
application for homestead benefits must be on a form prescribed
by the commissioner and must contain the data necessary for the
assessor to determine if full homestead benefits are warranted.
Sec. 10. Minnesota Statutes 1986, section 273.124,
subdivision 6, is amended to read:
Subd. 6. [LEASEHOLD COOPERATIVES.] When one or more
dwellings or one or more buildings which each contain several
dwelling units is owned by a nonprofit corporation subject to
the provisions of chapter 317 or a limited partnership which
corporation or partnership operates the property in conjunction
with a cooperative association, homestead treatment may be
claimed by the cooperative association on behalf of the members
of the cooperative for each dwelling unit occupied by a member
of the cooperative. The cooperative association must provide
the assessor with the social security numbers of those members.
To qualify for the treatment provided by this subdivision, the
following conditions must be met: (a) the cooperative
association must be organized under sections 308.05 to 308.18;
(b) the cooperative association must have a lease for occupancy
of the property for a term of at least 20 years; (c) to the
extent permitted under state or federal law, the cooperative
association must have a right under a written agreement with the
owner to purchase the property if the owner proposes to sell it;
if the cooperative association does not purchase the property
when it is offered for sale, the owner may not subsequently sell
the property to another purchaser at a price lower than the
price at which it was offered for sale to the cooperative
association unless the cooperative association approves the
sale; and (d) if a limited partnership owns the property, it
must include as the managing general partner either the
cooperative association or a nonprofit organization operating
under the provisions of chapter 317. Homestead treatment must
be afforded to units occupied by members of the cooperative
association and the units must be assessed as provided in
subdivision 3, provided that any unit not so occupied shall be
classified and assessed pursuant to the appropriate class. No
more than three acres of land may, for assessment purposes, be
included with each dwelling unit that qualifies for homestead
treatment under this subdivision.
Sec. 11. Minnesota Statutes 1986, section 277.05, is
amended to read:
277.05 [SHERIFF TO FILE LIST OF UNCOLLECTED TAXES.]
If the sheriff is unable, for want of goods and chattels
whereon to levy, to collect by a distress, or otherwise, the
taxes, or any part thereof, assessed upon the personal property
of any persons, the sheriff shall file with the court
administrator of the district court, on September first
following, a list of such taxes, with an affidavit of the
sheriff, or of the deputy sheriff entrusted with the collection
thereof, stating that the affiant has made diligent search and
inquiry for goods and chattels from which to collect such taxes,
and is unable to collect the same. The list of such taxes as
they apply to manufactured homes shall be filed on December 1.
The sheriff shall note on the margin of such list the place to
which any delinquent taxpayer may have removed, with the date of
removal, if known. At the time of filing the list the sheriff
shall also return all the warrants with endorsements thereon
showing the doings of the sheriff or deputy in the premises, and
the court administrator shall file and preserve the same. On or
before September tenth thereafter, the court administrator shall
deliver such list and affidavit to the county treasurer, who
shall, by comparison of such list with the tax duplicates in the
treasurer's office, ascertain whether or not all personal
property taxes reported by the treasurer to the court
administrator as delinquent, except those included in such list,
have been paid into the treasurer's office, and shall attach to
the list a certificate stating whether or not all taxes reported
by the treasurer to the court administrator as delinquent and
not included in the list have been received, and stating the
items of such taxes, if any, as have been received. The court
administrator shall deliver such list and affidavit as they
apply to manufactured homes on or before December 10. The
treasurer shall deliver such list and affidavit, with the
certificate attached, to the county board at its first session
thereafter, which shall cancel such taxes as it is satisfied
cannot be collected. A copy of the tax list so revised, and
also a separate list of the taxes so canceled, shall be included
in the records of the proceedings of the board, and published in
full, as a part of the proceedings.
Sec. 12. Minnesota Statutes 1986, section 277.06, is
amended to read:
277.06 [CITATION TO DELINQUENTS; DEFAULT JUDGMENT.]
On October 20, or within ten days after the adjournment of
the county board, whichever occurs first, the county auditor
shall file a copy of such revised list with the court
administrator of the district court, and. The county auditor
shall file a copy of the revised list as it applies to
manufactured homes on January 20. Within ten days
thereafter after the list has been filed, the court
administrator shall issue a citation to each delinquent named in
the list, stating the amount of tax and penalty, and requiring
such delinquent to appear on a day to be set by the district
court in the county, appointed to be held at a time not less
than 30 days after the issuance of such citation, and show
cause, if any there be, why the delinquent should not pay the
tax and penalty. The citation shall be delivered for service to
the sheriff of the county where such person may at the time
reside or be. If such person, after service of the citation,
fails to pay such tax, penalty, and costs to the sheriff before
the first day of the term, or on such day to show cause as
aforesaid, the court shall direct judgment against the person
for the amount of such tax, penalty, and costs. When unable to
serve the citation, the sheriff shall return the same to the
court administrator, with a return thereto to that effect, and
thereupon, or if the court decides that the service of such
citation made or attempted to be made, or the issuance thereof
by the court administrator, was illegal, the court administrator
shall issue another like citation, requiring such delinquent to
appear on the first day of the next general term to be held in
the county, and show cause as aforesaid, and if the delinquent
fails to pay or to show cause, the court shall direct judgment
as aforesaid. Whenever the sheriff has been unable to serve any
such citation theretofore issued in any year or years, or
whenever the court decides that the service of any such citation
theretofore made or attempted to be made, or the issuance
thereof by the court administrator, was illegal, the court
administrator shall issue another like citation requiring such
delinquent to appear, as in the case last provided, and with
like effect; provided, that all citations other than the first
shall be issued only on the request of the county attorney.
Sec. 13. Minnesota Statutes 1987 Supplement, section
279.01, subdivision 1, is amended to read:
Subdivision 1. Except as provided in subdivision 3, on May
16, of each year, with respect to property actually occupied and
used as a homestead by the owner of the property, a penalty of
three percent shall accrue and thereafter be charged upon all
unpaid taxes on real estate on the current lists in the hands of
the county treasurer, and a penalty of seven percent on
nonhomestead property, except that this penalty shall not accrue
until June 1 of each year on commercial use real property used
for seasonal residential recreational purposes and classified as
class 4d or 4c, and on other commercial use real property
classified as class 3a, provided that over 60 percent of the
gross income earned by the enterprise on the class 3a property
is earned during the months of May, June, July, and August. Any
property owner of such class 3a property who pays the first half
of the tax due on the property after May 15 and before June 1
shall attach an affidavit to the payment attesting to compliance
with the income provision of this subdivision. Thereafter, for
both homestead and nonhomestead property, on the 16th first day
of each month, up to and including October 16 1 following, an
additional penalty of one percent for each month shall accrue
and be charged on all such unpaid taxes. When the taxes against
any tract or lot exceed $50, one-half thereof may be paid prior
to May 16; and, if so paid, no penalty shall attach; the
remaining one-half shall be paid at any time prior to October 16
following, without penalty; but, if not so paid, then a penalty
of four percent shall accrue thereon for homestead property and
a penalty of four percent on nonhomestead property. Thereafter,
for homestead property, on the 16th day of each month up to and
including December 16 first day of November and December
following, an additional penalty of two percent for each month
shall accrue and be charged on all such unpaid taxes.
Thereafter, for nonhomestead property, on the 16th day of each
month up to and including December 16 first day of November and
December following, an additional penalty of four percent for
each month shall accrue and be charged on all such unpaid
taxes. If one-half of such taxes shall not be paid prior to May
16, the same may be paid at any time prior to October 16, with
accrued penalties to the date of payment added, and thereupon no
penalty shall attach to the remaining one-half until October 16
following.
A county may provide by resolution that in the case of a
property owner that has multiple tracts or parcels with
aggregate taxes exceeding $50, payments may be made in
installments as provided in this subdivision.
The county treasurer may accept payments of more or less
than the exact amount of a tax installment due. If the accepted
payment is less than the amount due, payments must be applied
first to the penalty accrued for the year the payment is made.
Acceptance of partial payment of tax does not constitute a
waiver of the minimum payment required as a condition for filing
an appeal under section 278.03 or any other law, nor does it
affect the order of payment of delinquent taxes under section
280.39.
Sec. 14. Minnesota Statutes 1986, section 279.01,
subdivision 3, is amended to read:
Subd. 3. In the case of class 1b agricultural homestead,
class 2a agricultural homestead property, and class 2c
agricultural nonhomestead property, no penalties shall attach to
the second one-half property tax payment as provided in this
section if paid by November 15. Thereafter for class 1b
agricultural homestead and class 2a homestead property, on
November 16 following, a penalty of six percent shall accrue and
be charged on all such unpaid taxes and on December 16 1
following, an additional two percent shall be charged on all
such unpaid taxes. Thereafter for class 2c agricultural
nonhomestead property, on November 16 following, a penalty of
eight percent shall accrue and be charged on all such unpaid
taxes and on December 16 1 following, an additional four percent
shall be charged on all such unpaid taxes.
If the owner of class 1b agricultural homestead, class 2a,
or class 2c agricultural property receives a consolidated
property tax statement that shows only an aggregate of the taxes
and special assessments due on that property and on other
property not classified as class 1b agricultural homestead,
class 2a, or class 2c agricultural property, the aggregate tax
and special assessments shown due on the property by the
consolidated statement will be due on November 15 provided that
at least 50 percent of the property's market value is classified
class 1b agricultural, class 2a, or class 2c agricultural.
Sec. 15. [375.1691] [JUDICIAL ORDER AFTER BUDGET
PREPARATION.]
Notwithstanding any law to the contrary, a judicial order
compelling payment out of county funds shall not be paid unless
approved by the county board, if a budget request for the item
was not submitted to the county board prior to adoption of the
budget in effect for the fiscal year. If the county board
refuses to approve payment, the order may be paid in the first
fiscal year for which a budget is approved after receipt of the
order. This section does not apply to a judgment or other award
against the county that is a result of litigation to which the
county or a county official in an official capacity was a party.
Sec. 16. Minnesota Statutes 1986, section 375.192,
subdivision 1, is amended to read:
Subdivision 1. Notwithstanding section 270.07, upon
written application by the owner of the property, the county
board may grant a reduction, for the current year, of the
assessed valuation of any real property in that county which
erroneously has been classified, for tax purposes, as
nonhomestead property, as is necessary to give it the assessed
valuation which it would have received if it had been classified
correctly. The application shall be made on a form prescribed
by the commissioner of revenue. It shall include the social
security number of the applicant and a statement of facts of
ownership and occupancy. The social security number of the
property owner is private data on individuals as defined by
section 13.02, subdivision 12. It shall be sworn to by the
owner of the property before an officer authorized to take
acknowledgments. Before it is acted upon by the county board,
the application shall be referred to the county assessor, or if
the property is located in a city of the first class having a
city assessor, to the city assessor, who shall investigate the
facts and attach a report of the investigation to the
application.
With respect to abatements relating to the current year's
tax processed through June 30, the county auditor shall notify
the commissioner of revenue on or before July 31 of that same
year of all applications granted pursuant to this subdivision.
With respect to abatements relating to the current year's tax
processed after June 30 through the balance of the year, the
county auditor shall notify the commissioner of revenue on or
before the following January 31 of all applications granted
pursuant to this subdivision. The form submitted by the county
auditor shall be prescribed by the commissioner of revenue and
shall contain the information which the commissioner deems
necessary.
Sec. 17. Minnesota Statutes 1987 Supplement, section
475.61, subdivision 3, is amended to read:
Subd. 3. [IRREVOCABILITY.] Tax levies so made and filed
shall be irrevocable, except as provided in this subdivision.
In each year when there is on hand any excess amount in the
debt redemption fund of a school district at the time the
district makes its property tax levies, the amount of the excess
shall be certified by the school board to the commissioner of
education who shall compute the reduced tax levy, after
adjustment for the homestead credit replacement aid paid
pursuant to section 273.1394, the agricultural credit
replacement aid paid pursuant to section 273.1395, and the tax
base adjustment pursuant to section 273.1396. The commissioner
of education shall certify the adjusted reduced tax levy to the
county auditor and the auditor shall reduce the tax levy
otherwise to be included in the rolls next prepared by the
amount certified, unless the school board determines that the
excess amount is necessary to ensure the prompt and full payment
of the obligations and any call premium on the obligations, or
will be used for redemption of the obligations in accordance
with their terms. An amount shall be presumed to be excess for
a school district in the amount that it, together with the levy
required by subdivision 1, will exceed 106 percent of the amount
needed to meet when due the principal and interest payments on
the obligations due before the second following July 1. This
subdivision shall not limit a school board's authority to
specify a tax levy in a higher amount if necessary because of
anticipated tax delinquency or for cash flow needs to meet the
required payments from the debt redemption fund.
If the governing body, including the governing body of a
school district, in any year makes an irrevocable appropriation
to the debt service fund of moneys actually on hand or if there
is on hand any excess amount in the debt service fund, the
recording officer may certify to the county auditory the fact
and amount thereof and the auditor shall reduce by the amount so
certified the amount otherwise to be included in the rolls next
thereafter prepared.
Sec. 18. Minnesota Statutes 1986, section 477A.015, is
amended to read:
477A.015 [PAYMENT DATES.]
The commissioner of revenue shall make the payments of
local government aid to affected taxing authorities in two
installments on July 15 20 and December 15 annually.
The commissioner may pay all or part of the payment due on
December 15 at any time after August 15 upon the request of a
city that requests such payment as being necessary for meeting
its cash flow needs.
Sec. 19. [ADJUSTMENT FOR CREDITS.]
Subdivision 1. A county auditor may make a final
certification of prior year adjustments not previously claimed
for wetlands credit and reimbursement, native prairie credit and
reimbursement, and the small business credit in the 1989
abstract of tax lists. The commissioner of revenue shall review
the certifications to determine their accuracy and make the
changes deemed necessary. After they have been reviewed, the
commissioner shall include these prior year adjustments in the
1989 aid payments.
Subd. 2. A county auditor may make a final certification
of prior year adjustments not previously claimed for homestead
credit and agricultural credit in the 1990 abstract of tax
lists. The commissioner of revenue shall review the
certifications to determine their accuracy and make the changes
deemed necessary. After they have been reviewed, the
commissioner shall include these prior year adjustments in the
1990 aid payments.
Sec. 20. Laws 1987, chapter 268, article 6, section 54, is
amended to read:
Sec. 54. [EFFECTIVE DATE.]
Except where provided otherwise, sections 1 to 13, and 15
to 53 are effective for taxes levied in 1988, payable in 1989,
and thereafter. Section 14 is effective for taxes payable in
1987 and thereafter.
Sec. 21. [REPEALER.]
Minnesota Statutes 1986, section 275.035, is repealed.
Sec. 22. [EFFECTIVE DATE.]
Sections 2, 3, 9, 10, 13, 14, and 17 are effective for
taxes levied in 1988 and thereafter, payable in 1989 and
thereafter.
Sections 4 and 20 are effective the day following final
enactment.
Sections 5 and 6 are effective for assessment year 1988 and
thereafter, taxes payable in 1989 and thereafter.
Notwithstanding Minnesota Statutes, section 273.112, subdivision
6, in order to qualify for the valuation and tax deferment for
the 1988 assessment, the taxpayer of the property operated by
private clubs under Minnesota Statutes, section 273.112,
subdivision 3, clause (c)(3), must submit an affidavit or other
written verification to the assessor by September 1, 1988,
showing that the bylaws or rules and regulations of the private
club meet the eligibility requirements of section 5 by September
1, 1988.
Section 7 is effective only for taxes payable in 1988.
ARTICLE 7
ASSESSORS
Section 1. [270.185] [REASSESSMENT FUND; COMPENSATION.]
Subdivision 1. A permanent reassessment revolving fund of
$250,000 is created. $250,000 is appropriated from the general
fund to the permanent reassessment revolving fund. The fund is
annually appropriated to the commissioner of revenue for the
purposes of this section.
Subd. 2. Each special assessor or deputy appointed under
sections 270.11, subdivision 3, or 270.16 shall be compensated
from the revolving fund for costs of assessment in an amount
fixed by the commissioner. The commissioner shall certify the
amounts to the commissioner of finance who shall make payment
from the revolving fund. Each county shall reimburse the
revolving fund within two years after the expenses are paid.
The commissioner shall notify each county auditor of the
reimbursable amount and the auditor shall levy a tax upon all
taxable property in the assessment district or districts where
the reassessment was made to pay the expenses. The amounts
reimbursed shall be deposited in the revolving fund and are
annually appropriated for its purposes.
Sec. 2. Minnesota Statutes 1986, section 270.41, is
amended to read:
270.41 [BOARD OF ASSESSORS.]
(a) A board of assessors is hereby created. The board
shall be for the purpose of establishing, conducting, reviewing,
supervising, coordinating or approving courses in assessment
practices, and establishing criteria for determining assessor's
qualifications. The board shall also have authority and
responsibility to consider other matters relating to assessment
administration brought before it by the commissioner of
revenue. The board may grant, renew, suspend, or revoke an
assessor's license. The board shall consist of nine members,
who shall be appointed by the commissioner of revenue, in the
manner provided herein.
1. Two from the department of revenue,
2. Two county assessors,
3. Two assessors who are not county assessors, one of whom
shall be a township assessor, and
4. One from the private appraisal field holding a
professional appraisal designation,
5. Two public members as defined by section 214.02.
The appointment provided in 2 and 3 may be made from two
lists of not less than three names each, one submitted to the
commissioner of revenue by the Minnesota association of
assessing officers or its successor organization containing
recommendations for the appointment of appointees described in
2, and one by the Minnesota association of assessors, inc. or
its successor organization containing recommendations for the
appointees described in 3. The lists must be submitted 30 days
before the commencement of the term. In the case of a vacancy,
a new list shall be furnished to the commissioner by the
respective organization immediately. A member of the board who
shall no longer be engaged in the capacity listed above shall
automatically be disqualified from membership in the board.
The board shall annually elect a chair and a secretary of
the board.
(b) The board may refuse to grant or renew, or may suspend
or revoke, a license of an applicant or licensee for any of the
following causes or acts:
(1) failure to complete required training;
(2) inefficiency or neglect of duty;
(3) "unprofessional conduct" which means knowingly
neglecting to perform a duty required by law, or violation of
the laws of this state relating to the assessment of property or
unlawfully exempting property or knowingly and intentionally
listing property on the tax list at substantially less than its
market value or the level required by law in order to gain favor
or benefit, or knowingly and intentionally misclassifying
property in order to gain favor or benefit; or
(4) conviction of a crime involving moral turpitude; or
(5) any other cause or act that in the board's opinion
warrants a refusal to issue or suspension or revocation of a
license.
(c) The board of assessors may adopt rules under chapter
14, defining or interpreting grounds for refusing to grant or
renew, and for suspending or revoking a license under this
section. An action of the board of assessors in refusing to
grant or renew a license or in suspending or revoking a license
is subject to review in accordance with chapter 14.
Sec. 3. Minnesota Statutes 1987 Supplement, section
270.485, is amended to read:
270.485 [SENIOR ACCREDITATION.]
The legislature finds that the property tax system would be
enhanced by requiring that every county assessor and senior
appraiser in the department of revenue's property tax review
local government services division obtain senior accreditation
from the state board of assessors. By January 1, 1989 1990, or
in the case of a county assessor within one year of the first
appointment under section 273.061, whichever is later, every
county assessor and senior appraiser, including the department's
regional representatives, must obtain senior accreditation from
the state board of assessors. The board shall provide the
necessary courses or training. If a department senior appraiser
or regional representative fails to obtain senior accreditation
by January 1, 1989 1990, the failure shall be grounds for
dismissal, disciplinary action, or corrective action. Except as
provided in section 273.061, subdivision 2, paragraph (c), after
December 30, 1988 1989, the commissioner must not approve the
appointment of a county assessor who is not senior accredited by
the state board of assessors. No employee hired by the
commissioner as a senior appraiser or regional representative
after June 30, 1987, shall attain permanent status until the
employee obtains senior accreditation.
Sec. 4. Minnesota Statutes 1986, section 273.01, is
amended to read:
273.01 [LISTING AND ASSESSMENT, TIME.]
All real property subject to taxation shall be listed and
at least one-fourth of the parcels listed shall be appraised
each year with reference to their value on January 2 preceding
the assessment so that each parcel shall be reappraised at
maximum intervals of four years. All real property becoming
taxable in any year shall be listed with reference to its value
on January 2 of that year. Except for the corrections permitted
herein as provided in section 274.01, subdivision 1, all real
property assessments shall be completed two weeks prior to the
date scheduled for the local board of review or equalization and
no valuations entered thereafter shall be of any force and
effect. In the event a valuation and classification is not
placed on any real property by the dates scheduled for the local
board of review or equalization the valuation and classification
determined in the preceding assessment shall be continued in
effect and the provisions of section 273.13 shall, in such case,
not be applicable, except with respect to real estate which has
been constructed since the previous assessment. The county
assessor or any assessor in any city of the first class may
either before or after the dates specified herein correct any
errors in valuation of any parcels of property, that may have
been incurred in the assessment; provided, that in the case of
such correction it increases the valuation of any parcel of
property, the assessor shall notify the owner of record or the
person to whom the tax statement is mailed. Not more than two
percent of the total number of parcels in the assessor's
jurisdiction may be corrected after the dates specified herein
and in the event of any corrections in excess of the authorized
number of such corrections, all corrections shall be void. Real
property containing iron ore, the fee to which is owned by the
state of Minnesota, shall, if leased by the state after January
2 in any year, be subject to assessment for that year on the
value of any iron ore removed under said lease prior to January
2 of the following year. Personal property subject to taxation
shall be listed and assessed annually with reference to its
value on January 2; and, if acquired on that day, shall be
listed by or for the person acquiring it.
Sec. 5. Minnesota Statutes 1986, section 273.05,
subdivision 1, is amended to read:
Subdivision 1. [APPOINTMENT OF TOWN AND CITY ASSESSORS.]
Notwithstanding any other provision of law all town assessors
shall be appointed by the town board, and notwithstanding any
charter provisions to the contrary, all city assessors shall be
appointed by the city council or other appointing authority as
provided by law or charter. Such assessors shall be residents
of the state but need not be a resident of the town or city for
which they are appointed. They shall be selected and appointed
because of their knowledge and training in the field of property
taxation. All town and statutory city assessors shall be
appointed for indefinite terms. The term of the town or city
assessors may be terminated at any time by the town board or
city council on charges by the commissioner of revenue of
inefficiency or neglect of duty. Vacancies in the office of
town or city assessor shall be filled within 90 days by
appointment of the respective appointing authority indicated
above. If the vacancy is not filled within 90 days, the office
shall be terminated. When a vacancy in the office of town or
city assessor is not filled by appointment, and it is imperative
that the office of assessor be filled, the county auditor shall
appoint some resident of the county as assessor for such town or
city. The county auditor may appoint the county assessor as
assessor for such town or city, in which case the town or city
shall pay to the county treasurer the amount determined by the
county auditor to be due for the services performed and expenses
incurred by the county assessor in acting as assessor for such
town or city. The term of any town or statutory city assessor
in a county electing in accordance with section 273.052 shall be
terminated as provided in section 273.055.
The commissioner of revenue may recommend to the state
board of assessors the nonrenewal, suspension, or revocation of
an assessor's license as provided in sections 270.41 to 270.53.
Sec. 6. Minnesota Statutes 1987 Supplement, section
273.061, subdivision 1, is amended to read:
Subdivision 1. [OFFICE CREATED; APPOINTMENT,
QUALIFICATIONS.] Every county in this state shall have a county
assessor. The county assessor shall be appointed by the board
of county commissioners and shall be a resident of this state.
The assessor shall be selected and appointed because of
knowledge and training in the field of property taxation and
appointment shall be approved by the commissioner of revenue
before the same shall become effective. Upon receipt by the
county commissioners of the commissioner of revenue's refusal to
approve an appointment, the term of the appointee shall
terminate at the end of that day. Notwithstanding any law to
the contrary, a county assessor must have senior accreditation
from the state board of assessors by January 1, 1989 1990, or
within one year of the assessor's first appointment under this
section, whichever is later.
Sec. 7. Minnesota Statutes 1986, section 273.061,
subdivision 2, is amended to read:
Subd. 2. [TERM; VACANCY.] (a) The terms of county
assessors appointed under this section shall be four years. A
new term shall begin on January 1 of every fourth year after
1973. When any vacancy in the office occurs, the board of
county commissioners, within 30 days thereafter, shall fill the
same by appointment for the remainder of the term, following the
procedure prescribed in subdivision 1. The term of the county
assessor may be terminated by the board of county commissioners
at any time, on charges of inefficiency or neglect of duty by
the commissioner of revenue. If the board of county
commissioners does not intend to reappoint a county assessor who
has been certified by the state board of assessors, the board
shall present written notice to the county assessor not later
than 90 days prior to the termination of the assessor's term,
that it does not intend to reappoint the assessor. If written
notice is not timely made, the county assessor will
automatically be reappointed by the board of county
commissioners.
The commissioner of revenue may recommend to the state
board of assessors the nonrenewal, suspension, or revocation of
an assessor's license as provided in sections 270.41 to 270.53.
(b) In the event of a vacancy in the office of county
assessor, through death, resignation or other reasons, the
deputy (or chief deputy, if more than one) shall perform the
functions of the office. If there is no deputy, the county
auditor shall designate a person to perform the duties of the
office until an appointment is made as provided in clause (a).
Such person shall perform the duties of the office for a period
not exceeding 30 days during which the county board must appoint
a county assessor. Such 30-day period may, however, be extended
by written approval of the commissioner of revenue.
(c) In the case of the first appointment under paragraph
(a) of a county assessor who is accredited but who does not have
senior accreditation, an approval of the appointment by the
commissioner shall be for a term of one year. A county assessor
appointed to a one-year term under this paragraph must reapply
to the commissioner at the end of the one-year term. The
commissioner shall not approve the appointment for the remainder
of the four-year term unless the assessor has obtained senior
accreditation.
Sec. 8. Minnesota Statutes 1987 Supplement, section
274.01, subdivision 1, is amended to read:
Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES,
GRIEVANCES.] (a) The town board of a town, or the council or
other governing body of a city, is the board of review except in
cities whose charters provide for a board of equalization. The
county assessor shall fix a day and time when the board or the
board of equalization shall meet in the assessment districts of
the county. On or before February 15 of each year the assessor
shall give written notice of the time to the city or town
clerk. Notwithstanding the provisions of any charter to the
contrary, the meetings must be held between April 1 and May 31
each year. The clerk shall give published and posted notice of
the meeting at least ten days before the date of the meeting.
The board shall meet at the office of the clerk to review the
assessment and classification of property in the town or
city. No changes in valuation may be made by the county
assessor after the board of review or the county board of
equalization has adjourned. This restriction does not apply to
corrections of errors that are merely clerical or administrative
in nature.
(b) The board shall determine whether the taxable property
in the town or city has been properly placed on the list and
properly valued by the assessor. If real or personal property
has been omitted, the board shall place it on the list with its
market value, and correct the assessment so that each tract or
lot of real property, and each article, parcel, or class of
personal property, is entered on the assessment list at its
market value. No assessment of the property of any person may
be raised unless the person has been duly notified of the intent
of the board to do so. On application of any person feeling
aggrieved, the board shall review the assessment or
classification, or both, and correct it as appears just.
(c) A local board of review may reduce assessments upon
petition of the taxpayer but the total reductions must not
reduce the aggregate assessment made by the county assessor by
more than one percent. If the total reductions would lower the
aggregate assessments made by the county assessor by more than
one percent, none of the adjustments may be made. The assessor
shall correct any clerical errors or double assessments
discovered by the board of review without regard to the one
percent limitation.
(d) A majority of the members may act at the meeting, and
adjourn from day to day until they finish hearing the cases
presented. The assessor shall attend, with the assessment books
and papers, and take part in the proceedings, but must not
vote. The county assessor, or an assistant delegated by the
county assessor shall attend the meetings. The board shall list
separately, on a form appended to the assessment book, all
omitted property added to the list by the board and all items of
property increased or decreased, with the market value of each
item of property, added or changed by the board, placed opposite
the item. The county assessor shall enter all changes made by
the board in the assessment book.
(e) If a person fails to appear in person, by counsel, or
by written communication before the board after being duly
notified of the board's intent to raise the assessment of the
property, or if a person feeling aggrieved by an assessment or
classification fails to apply for a review of the assessment or
classification, the person may not appear before the county
board of equalization for a review of the assessment or
classification. This paragraph does not apply if an assessment
was made after the board meeting, as provided in section 273.01,
or if the person can establish not having received notice of
market value at least five days before the local board of review
meeting.
(f) The board of review or the board of equalization must
complete its work and adjourn within 20 days from the time of
convening stated in the notice of the clerk, unless a longer
period is approved by the commissioner of revenue. No action
taken after that date is valid. All complaints about an
assessment or classification made after the meeting of the board
must be heard and determined by the county board of
equalization. A nonresident may, at any time, before the
meeting of the board of review file written objections to an
assessment or classification with the county assessor. The
objections must be presented to the board of review at its
meeting by the county assessor for its consideration.
Sec. 9. [COUNTY ASSESSORS; SENIOR ACCREDITATION.]
Notwithstanding Minnesota Statutes, section 273.061, the
commissioner of revenue's approval on January 1, 1989, of
appointments of assessors who are not senior accredited on
January 1, 1989, shall be for a term of one year. A county
assessor appointed for a one-year term must reapply to the
commissioner by January 1, 1990, to obtain the approval of the
commissioner for the remainder of the four-year term.
Sec. 10. [APPROPRIATION.]
There is appropriated to the state board of assessors from
the general fund the amount of $10,000 to be used in fiscal year
1989 for adopting rules under section 2.
Sec. 11. [EFFECTIVE DATE.]
Section 1 is effective the day after final enactment.
ARTICLE 8
HUMAN SERVICES PROGRAMS
Section 1. Minnesota Statutes 1987 Supplement, section
256.01, subdivision 2, is amended to read:
Subd. 2. [SPECIFIC POWERS.] Subject to the provisions of
section 241.021, subdivision 2, the commissioner of human
services shall:
(1) Administer and supervise all forms of public assistance
provided for by state law and other welfare activities or
services as are vested in the commissioner. Administration and
supervision of human services activities or services includes,
but is not limited to, assuring timely and accurate distribution
of benefits, completeness of service, and quality program
management. In addition to administering and supervising human
services activities vested by law in the department, the
commissioner shall have the authority to:
(a) require local agency participation in training and
technical assistance programs to promote compliance with
statutes, rules, federal laws, regulations and policies
governing human services;
(b) monitor, on an ongoing basis, the performance of local
agencies in the operation and administration of human services,
enforce compliance with statutes, rules, federal laws,
regulations, and policies governing welfare services and promote
excellence of administration and program operation;
(c) develop a quality control program or other monitoring
program to review county performance and accuracy of benefit
determinations;
(d) require local agencies to make an adjustment to the
public assistance benefits issued to any individual consistent
with federal law and regulation and state law and rule and to
issue or recover benefits as appropriate;
(e) delay or deny payment of all or part of the state and
federal share of benefits and administrative reimbursement
according to the procedures set forth in section 256.016; and
(f) make contracts with and grants to public and private
agencies and organizations, both profit and nonprofit, and
individuals, using appropriated funds.
(2) Inform local agencies, on a timely basis, of changes in
statute, rule, federal law, regulation, and policy necessary to
local agency administration of the programs.
(3) Administer and supervise all child welfare activities;
promote the enforcement of laws protecting handicapped,
dependent, neglected and delinquent children, and children born
to mothers who were not married to the children's fathers at the
times of the conception nor at the births of the children;
license and supervise child-caring and child-placing agencies
and institutions; supervise the care of children in boarding and
foster homes or in private institutions; and generally perform
all functions relating to the field of child welfare now vested
in the state board of control.
(3) (4) Administer and supervise all noninstitutional
service to handicapped persons, including those who are visually
impaired, hearing impaired, or physically impaired or otherwise
handicapped. The commissioner may provide and contract for the
care and treatment of qualified indigent children in facilities
other than those located and available at state hospitals when
it is not feasible to provide the service in state hospitals.
(4) (5) Assist and actively cooperate with other
departments, agencies and institutions, local, state, and
federal, by performing services in conformity with the purposes
of Laws 1939, chapter 431.
(5) (6) Act as the agent of and cooperate with the federal
government in matters of mutual concern relative to and in
conformity with the provisions of Laws 1939, chapter 431,
including the administration of any federal funds granted to the
state to aid in the performance of any functions of the
commissioner as specified in Laws 1939, chapter 431, and
including the promulgation of rules making uniformly available
medical care benefits to all recipients of public assistance, at
such times as the federal government increases its participation
in assistance expenditures for medical care to recipients of
public assistance, the cost thereof to be borne in the same
proportion as are grants of aid to said recipients.
(6) (7) Establish and maintain any administrative units
reasonably necessary for the performance of administrative
functions common to all divisions of the department.
(7) Administer and supervise any additional welfare
activities and services as are vested by law in the department.
(8) The commissioner is designated as guardian of both the
estate and the person of all the wards of the state of
Minnesota, whether by operation of law or by an order of court,
without any further act or proceeding whatever, except as to
persons committed as mentally retarded.
(9) Act as coordinating referral and informational center
on requests for service for newly arrived immigrants coming to
Minnesota.
(10) The specific enumeration of powers and duties as
hereinabove set forth shall in no way be construed to be a
limitation upon the general transfer of powers herein contained.
(11) Establish county, regional, or statewide schedules of
maximum fees and charges which may be paid by local agencies for
medical, dental, surgical, hospital, nursing and nursing home
care and medicine and medical supplies under all programs of
medical care provided by the state and for congregate living
care under the income maintenance programs.
(12) Have the authority to conduct and administer
experimental projects to test methods and procedures of
administering assistance and services to recipients or potential
recipients of public welfare. To carry out such experimental
projects, it is further provided that the commissioner of human
services is authorized to waive the enforcement of existing
specific statutory program requirements, rules, and standards in
one or more counties. The order establishing the waiver shall
provide alternative methods and procedures of administration,
shall not be in conflict with the basic purposes, coverage, or
benefits provided by law, and in no event shall the duration of
a project exceed four years. It is further provided that no
order establishing an experimental project as authorized by the
provisions of this section shall become effective until the
following conditions have been met:
(a) The proposed comprehensive plan including estimated
project costs and the proposed order establishing the waiver
shall be filed with the secretary of the senate and chief clerk
of the house of representatives at least 60 days prior to its
effective date.
(b) The secretary of health, education, and welfare of the
United States has agreed, for the same project, to waive state
plan requirements relative to statewide uniformity.
(c) A comprehensive plan, including estimated project
costs, shall be approved by the legislative advisory commission
and filed with the commissioner of administration.
(13) In accordance with federal requirements establish
procedures to be followed by local welfare boards in creating
citizen advisory committees, including procedures for selection
of committee members.
(14) Allocate federal fiscal disallowances or sanctions
which are based on quality control error rates for the aid to
families with dependent children, medical assistance, or food
stamp program in the following manner:
(a) One-half of the total amount of the disallowance shall
be borne by the county boards responsible for administering the
programs. For the medical assistance and AFDC programs,
disallowances shall be shared by each county board in the same
proportion as that county's expenditures for the sanctioned
program are to the total of all counties' expenditures for the
AFDC and medical assistance programs. For the food stamp
program, sanctions shall be shared by each county board, with 50
percent of the sanction being distributed to each county in the
same proportion as that county's administrative costs for food
stamps are to the total of all food stamp administrative costs
for all counties, and 50 percent of the sanctions being
distributed to each county in the same proportion as that
county's value of food stamp benefits issued are to the total of
all benefits issued for all counties. Each county shall pay its
share of the disallowance to the state of Minnesota. When a
county fails to pay the amount due hereunder, the commissioner
may deduct the amount from reimbursement otherwise due the
county, or the attorney general, upon the request of the
commissioner, may institute civil action to recover the amount
due.
(b) Notwithstanding the provisions of paragraph (a), if the
disallowance results from knowing noncompliance by one or more
counties with a specific program instruction, and that knowing
noncompliance is a matter of official county board record, the
commissioner may require payment or recover from the county or
counties, in the manner prescribed in paragraph (a), an amount
equal to the portion of the total disallowance which resulted
from the noncompliance, and may distribute the balance of the
disallowance according to paragraph (a).
(15) Develop and implement special projects that maximize
reimbursements and result in the recovery of money to the
state. For the purpose of recovering state money, the
commissioner may enter into contracts with third parties. Any
recoveries that result from projects or contracts entered into
under this paragraph shall be deposited in the state treasury
and credited to a special account until the balance in the
account reaches $400,000. When the balance in the account
exceeds $400,000, the excess shall be transferred and credited
to the general fund. All money in the account is appropriated
to the commissioner for the purposes of this paragraph.
(16) Have the authority to make direct payments to
facilities providing shelter to women and their children
pursuant to section 256D.05, subdivision 3. Upon the written
request of a shelter facility that has been denied payments
under section 256.05, subdivision 3, the commissioner shall
review all relevant evidence and make a determination within 30
days of the request for review regarding issuance of direct
payments to the shelter facility. Failure to act within 30 days
shall be considered a determination not to issue direct payments.
Sec. 2. [256.017] [COMPLIANCE SYSTEM.]
Subdivision 1. [AUTHORITY AND PURPOSE.] The commissioner
shall administer a compliance system for aid to families with
dependent children, the food stamp program, emergency
assistance, general assistance, work readiness, medical
assistance, general assistance medical care, emergency general
assistance, Minnesota supplemental assistance, preadmission
screening, and alternative care grants under the powers and
authorities named in section 256.01, subdivision 2. The purpose
of the compliance system is to permit the commissioner to
supervise the administration of public assistance programs and
to enforce timely and accurate distribution of benefits,
completeness of service and efficient and effective program
management and operations, to increase uniformity and
consistency in the administration and delivery of public
assistance programs throughout the state, and to reduce the
possibility of sanctions and fiscal disallowances for
noncompliance with federal regulations and state statutes.
The commissioner shall utilize training, technical
assistance, and monitoring activities, as specified in section
256.01, subdivision 2, to encourage local agency compliance with
written policies and procedures.
Subd. 2. [DEFINITIONS.] The following terms have the
meanings given for the purpose of this section.
(a) "Administrative penalty" means an adjustment against
the local agency's state and federal benefit and federal
administrative reimbursement when the commissioner determines
that the local agency is not in compliance with the policies and
procedures established by the commissioner.
(b) "Quality control case penalty" means an adjustment
against the local agency's federal administrative reimbursement
and state and federal benefit reimbursement when the
commissioner determines through a quality control review that
the local agency has made incorrect payments, terminations, or
denials of benefits as determined by state quality control
procedures for the aid to families with dependent children, food
stamp, or medical assistance programs, or any other programs for
which the commissioner has developed a quality control system.
Quality control case penalties apply only to agency errors as
defined by state quality control procedures.
(c) "Quality control" means a review system of a statewide
random sample of cases, designed to provide data on the accuracy
with which state and federal policies are being applied in
issuing benefits and as a fiscal audit to ensure the accuracy of
expenditures. The quality control system is administered by the
department. For the aid to families with dependent children,
food stamp, and medical assistance programs, the quality control
system is that required by federal regulation.
Subd. 3. [QUALITY CONTROL CASE PENALTY.] The department
shall disallow, withhold, or deny state and federal benefit
reimbursement and federal administrative reimbursement payment
to a county when the commissioner determines that the county has
incorrectly issued benefits or incorrectly denied or terminated
benefits. These cases shall be identified by state quality
control reviews.
Subd. 4. [DETERMINING THE AMOUNT OF THE QUALITY CONTROL
CASE PENALTY.] (a) The amount of the quality control case
penalty is limited to the amount of the dollar error for the
quality control sample month in a reviewed case as determined by
the state quality control review procedures for the aid to
families with dependent children and food stamp programs or for
any other income transfer program for which the commissioner
develops a quality control program.
(b) Payment errors in medical assistance or any other
medical services program for which the department develops a
quality control program are subject to set rate penalties based
on the average cost of the specific quality control error
element for a sample review month for that household size and
status of institutionalization and as determined from state
quality control data in the preceding fiscal year for the
corresponding program.
(c) Errors identified in negative action cases, such as
incorrect terminations or denials of assistance are subject to
set rate penalties based on the average benefit cost of that
household size as determined from state quality control data in
the preceding fiscal year for the corresponding program.
Subd. 5. [ADMINISTRATIVE PENALTIES.] The department shall
disallow or withhold state and federal benefit reimbursement and
federal administrative reimbursement from local agencies when
the actions performed by the local agency are not in compliance
with the written policies and procedures established by the
commissioner. The policies and procedures must be previously
communicated to the local agency. A local agency shall not be
penalized for complying with a written policy or procedure, even
if the policy or procedure is found to be erroneous and is
subsequently rescinded by the commissioner.
Subd. 6. [DETERMINING THE AMOUNT OF THE ADMINISTRATIVE
PENALTY.] The amount of the penalty imposed on any local agency
is based on the numbers of public assistance applicants and
recipients that may be affected by the local agency's failure to
comply with the policies and procedures established by the
commissioner, the fiscal impact of the local agency's action,
and the duration of the noncompliance as determined by the
commissioner. Administrative penalties shall be imposed
independent of any quality control case penalties.
Subd. 7. [PROCESS AND EXCEPTION.] (a)(1) The department
shall notify the local agency in writing of all proposed quality
control case penalties.
(2) The local agency may submit a written exception of the
quality control error claim and proposed penalty. The exception
must be submitted to the commissioner within ten calendar days
of the receipt of the penalty notice.
(3) Within 20 calendar days of receipt of the written
exception, the commissioner shall sustain, dismiss, or amend the
quality control findings and case penalty and notify the local
agency, in writing, of the decision and the amount of any
penalty. The commissioner's decision is not subject to judicial
review.
(b)(1) The department shall notify the local agency in
writing of any proposed administrative penalty, the date by
which the local agency must correct the issues noted in the
penalty, and the time period within which the local agency must
submit a corrective action plan for compliance.
(2) If the local agency fails to submit a corrective action
plan within the stated time period, or if the corrective action
plan does not bring the agency into compliance as determined by
the department, or if the local agency fails to meet the
commitments in the corrective action plan, the department shall
issue the administrative penalty and notify the local agency in
writing.
(3) The local agency may file written exception to the
administrative penalty with the commissioner within 30 days of
the receipt of the department's notice of issuing the
administrative penalty. The local agency must notify the
commissioner of its intent to file a written exception within
ten days of the delivery of the department's notice of the
administrative penalty. If the local agency does not notify the
commissioner of its intent to file and does not file a written
exception within the prescribed time periods, the department's
initial decision shall be final.
(4) The commissioner shall sustain, dismiss, or amend the
administrative penalty findings, and shall issue a written order
to the local agency within 30 calendar days after receiving the
local agency's written exception.
Subd. 8. [JUDICIAL REVIEW.] A local agency that is
aggrieved by the order of the commissioner in an administrative
penalty of over $75,000, or 1.5 percent of the total benefit
expenditures for the income maintenance programs listed in
subdivision 1, for that county, whichever is the lesser amount,
may appeal the order to the court of appeals by serving a
written copy of a notice of appeal upon the commissioner within
30 days after the date the commissioner issued the
administrative penalty order, and by filing the original notice
and proof of service with the court administrator of the court
of appeals. Service may be made personally or by mail. Service
by mail is complete upon mailing. The record of review shall
consist of the advance notice of the administrative penalty to
the local agency, the local agency corrective action plan if
any, the final notice of the administrative penalty, the local
agency's written exception to the administrative penalty order,
and any other material submitted for the commissioner's
consideration, and the commissioner's final written order. The
court may affirm the commissioner's decision or remand the case
for further proceedings, or it may reverse or modify the
decision if the substantial rights of the local agency have been
prejudiced because the decision is: (1) in excess of the
statutory authority or jurisdiction of the agency; (2)
unsupported by substantial evidence in view of the entire record
as submitted; (3) arbitrary or capricious; or (4) in violation
of constitutional provisions.
Subd. 9. [TIMING AND DISPOSITION OF PENALTY AND CASE
DISALLOWANCE FUNDS.] Quality control case penalty and
administrative penalty amounts shall be disallowed or withheld
from the next regular reimbursement made to the county agency
for state and federal benefit reimbursements and federal
administrative reimbursements for all programs covered in this
section, according to procedures established in statute, but
shall not be imposed sooner than 30 calendar days from the date
of written notice of such penalties. All penalties must be
deposited in the county incentive fund provided in section
256.017. All penalties must be imposed according to this
provision until a decision is made regarding the status of a
written exception. Penalties must be returned to local agencies
when a review of a written exception results in a decision in
their favor.
Subd. 10. [COUNTY OBLIGATION TO MAKE BENEFIT
PAYMENTS.] Counties subject to fiscal penalties shall not reduce
or withhold benefits from eligible recipients of programs listed
in subdivision 1 in order to cover the cost of penalties under
this section. County funds shall be used to cover the cost of
any penalties.
Sec. 3. [256.018] [COUNTY PUBLIC ASSISTANCE INCENTIVE
FUND.]
Beginning in 1990, $1,000,000 is appropriated from the
general fund to the department in each fiscal year for awards to
counties: (1) that have not been assessed an administrative
penalty under section 256.016 in the corresponding fiscal year;
and (2) that perform satisfactorily according to indicators
established by the commissioner.
After consultation with local agencies, the commissioner
shall inform local agencies in writing of the performance
indicators that govern the awarding of the incentive fund for
each fiscal year by April of the preceding fiscal year.
The commissioner may set performance indicators to govern
the awarding of the total fund, may allocate portions of the
fund to be awarded by unique indicators, or may set a sole
indicator to govern the awarding of funds.
The funds shall be awarded to qualifying local agencies
according to their share of benefits for the programs related to
the performance indicators governing the distribution of the
fund or part of it as compared to the total benefits of all
qualifying local agencies for the programs related to the
performance indicators governing the distribution of the fund or
part of it.
Sec. 4. Minnesota Statutes 1986, section 256.72, is
amended to read:
256.72 [DUTIES OF COUNTY AGENCIES.]
The county agencies shall:
(1) Administer the provisions of sections 256.72 to 256.87
in the respective counties subject to the rules prescribed by
the state agency pursuant to the provisions of those
sections and to the supervision of the commissioner of human
services specified in section 256.01;
(2) Report to the state agency at such times and in such
manner and form as the state agency may from time to time
direct; and
(3) Submit quarterly and annually to the county board of
commissioners a budget containing an estimate and supporting
data setting forth the amount of money needed to carry out the
provisions of those sections.
(4) In addition to providing financial assistance, provide
such services as will help to maintain and strengthen family
life and promote the support and personal independence of
parents and relatives insofar as such help is consistent with
continuing parental care and protection.
Sec. 5. Minnesota Statutes 1986, section 256.81, is
amended to read:
256.81 [COUNTY AGENCY, DUTIES.]
(1) The county agency shall keep such records, accounts,
and statistics in relation to aid to families with dependent
children as the state agency shall prescribe.
(2) Each grant of aid to families with dependent children
shall be paid to the recipient by the county agency except in
those instances in which the county agency subject to the rules
of the state agency determines that payments for care shall be
made to an individual other than the parent or relative with
whom the dependent child is living or to vendors of goods and
services for the benefit of the child because such parent or
relative is unable to properly manage the funds in the best
interests and welfare of the child.
(3) The county shall be paid from state and federal funds
available therefor the amount provided for in section 256.82.
(4) Federal funds available for administrative purposes
shall be distributed between the state and the counties in the
same proportion that expenditures were made except as provided
for in section 256.016.
Sec. 6. Minnesota Statutes 1986, section 256.82,
subdivision 1, is amended to read:
Subdivision 1. [MONTHLY PAYMENTS.] For the period from
January 1 to June 30, based upon estimates submitted by the
county agency to the state agency, which shall state the
estimated required expenditures for the succeeding month, upon
the direction of the state agency payment shall be made monthly
in advance by the state to the counties of all federal funds
available for that purpose for such succeeding month, together
with an amount of state funds equal to 70 85 percent of the
difference between the total estimated cost and the federal
funds so available for payments made after December 31, 1979 and
before January 1, 1981, and 85 percent of the difference for
payments made after December 31, 1980 except as provided for in
section 256.016. Adjustment of any overestimate or
underestimate made by any county shall be made upon the
direction of the state agency in any succeeding month.
Subsequent to July 1 of each year, the state agency shall
reimburse the county agency for the funds expended during the
January 1 to June 30 period except as provided for in section
256.016. For the period from July 1 to December 31 based upon
the estimates submitted by the county agency to the state
agency, which shall state the estimated required expenditures
for the succeeding month, upon the direction of the state
agency, payment shall be made monthly in advance by the state to
the counties of all state and federal funds available for that
purpose for the succeeding month except as provided for in
section 256.016. Payment shall be made on the basis of federal
and state participation rates described in this subdivision.
Adjustment of any overestimate or underestimate made by any
county shall be made upon the direction of the state agency in
any succeeding month. Effective January 1, 1989, the state rate
of participation shall be determined as a percentage that equals
the difference between 100 percent and the percentage rate of
federal financial participation.
Sec. 7. Minnesota Statutes 1986, section 256.863, is
amended to read:
256.863 [RECOVERY OF MONEYS; APPORTIONMENT.]
When any amount shall be recovered from any source for
assistance furnished under the provisions of sections 256.72 to
256.87, except as provided in sections 256.018 and 256.98,
subdivision 7, there shall be paid to the United States the
amount which shall be due under the terms of the Social Security
Act and the balance thereof shall be paid into the treasury of
the state or county substantially in the proportion in which
they have respectively contributed toward the total assistance
paid. The amount due the respective participating units of
government shall be determined by rule adopted by the
commissioner of human services pursuant to a formula of
reimbursement prescribed or authorized by the federal Social
Security Administration.
Sec. 8. Minnesota Statutes 1986, section 256.871,
subdivision 6, is amended to read:
Subd. 6. [ESTIMATED EXPENDITURES; PAYMENTS.] The county
agency shall submit to the state agency an estimate of
expenditures for each succeeding month in such form as required
by the state agency. For the period from January 1 to June 30,
payment shall be made monthly in advance by the state agency to
the counties, of federal funds available for that purpose for
each succeeding month, together with an amount of state funds
equal to ten percent of the difference between the total
estimated cost and the federal funds so available, except as
provided for in section 256.016. Subsequent to July 1 of each
year the state agency shall reimburse the county agency for the
funds expended during the January 1 to June 30 period, except as
provided for in section 256.016. For the period from July 1 to
December 31, payment shall be made monthly in advance by the
state agency to the counties, of all state and federal funds
available for that purpose for the succeeding month, except as
provided for in section 256.016. Payment shall be made on the
basis of federal and state participation rates described in this
subdivision. Effective January 1, 1989, the state rate of
participation shall be determined as a percentage that equals
the difference between 100 percent and the percentage rate of
federal financial participation. Adjustment of any overestimate
or underestimate made by any county shall be made upon the
direction of the state agency in any succeeding month.
Sec. 9. Minnesota Statutes 1986, section 256.935,
subdivision 1, is amended to read:
Subdivision 1. On the death of any person receiving public
assistance through aid to dependent children, the county agency
shall pay an amount for funeral expenses not exceeding $370 and
actual cemetery charges. No funeral expenses shall be paid if
the estate of the deceased is sufficient to pay such expenses or
if the children, or spouse, who were legally responsible for the
support of the deceased while living, are able to pay such
expenses; provided, that the additional payment or donation of
the cost of cemetery lot, interment, religious service, or for
the transportation of the body into or out of the community in
which the deceased resided, shall not limit payment by the
county agency as herein authorized. Freedom of choice in the
selection of a funeral director shall be granted to persons
lawfully authorized to make arrangements for the burial of any
such deceased recipient. In determining the sufficiency of such
estate, due regard shall be had for the nature and marketability
of the assets of the estate. The county agency may grant
funeral expenses where the sale would cause undue loss to the
estate. Any amount paid for funeral expenses shall be a prior
claim against the estate, as provided in section 524.3-805, and
any amount recovered shall be reimbursed to the agency which
paid the expenses. For the period from January 1 to June 30,
the state shall reimburse the county for 50 percent of any
payments made for funeral expenses except as provided for in
section 256.016. Subsequent to July 1 of each year, the state
agency shall reimburse the county agency for the funds expended
during the January 1 to June 30 period. For the period from
July 1 to December 31, the state shall reimburse the county for
100 percent of any payments made for funeral expenses except as
provided for in section 256.016.
Sec. 10. Minnesota Statutes 1986, section 256.991, is
amended to read:
256.991 [RULES.]
The commissioner of human services may promulgate emergency
and permanent rules as necessary to implement sections 256.01,
subdivision 2; 256.82, subdivision 3; 256.966, subdivision 1;
256.968; 256D.03, subdivisions 3, 4, 6, and 7; and 261.23. The
commissioner shall promulgate emergency and permanent rules to
establish standards and criteria for deciding which medical
assistance services require prior authorization and for deciding
whether a second medical opinion is required for an elective
surgery. The commissioner shall promulgate permanent and
emergency rules as necessary to establish the methods and
standards for determining inappropriate utilization of medical
assistance services.
The commissioner of human services shall adopt emergency
rules which meet the requirements of sections 14.29 to 14.36 for
the medical assistance demonstration project. Notwithstanding
the provisions of section 14.35, the emergency rules promulgated
to implement section 256B.69 shall be effective for 360 days and
may be continued in effect for an additional 900 days if the
commissioner gives notice by publishing a notice in the state
register and mailing notice to all persons registered with the
commissioner to receive notice of rulemaking proceedings in
connection with the project. The emergency rules shall not be
effective beyond December 31, 1986, without meeting the
requirements of sections 14.13 to 14.20.
Sec. 11. Minnesota Statutes 1986, section 256B.041,
subdivision 5, is amended to read:
Subd. 5. [PAYMENT BY COUNTY TO STATE TREASURER.] If
required by federal law or rules promulgated thereunder, or by
authorized rule of the state agency, each county shall pay to
the state treasurer the portion of medical assistance paid by
the state for which it is responsible. The county's share of
cost shall be ten percent of that portion not met by federal
funds. Effective January 1, 1989, the state rate of
participation shall be determined as a percentage that equals
the difference between 100 percent and the percentage rate of
federal financial participation.
For the period from January 1 to June 30, the county shall
advance its portion ten percent of that portion of medical
assistance costs not met by federal funds, based upon estimates
submitted by the state agency to the county agency, stating the
estimated expenditures for the succeeding month. Upon the
direction of the county agency, payment shall be made monthly by
the county to the state for the estimated expenditures for each
month. Adjustment of any overestimate or underestimate based on
actual expenditures shall be made by the state agency by
adjusting the estimate for any succeeding month. Subsequent to
July 1 of each year, the state agency shall reimburse the county
agency for the funds expended during the January 1 to June 30
period, except as provided for in section 256.016. For the
period from July 1 to December 31, payments will be made by the
state agency, except as provided for in section 256.016, and the
county agency will be advised of the amounts paid monthly.
Sec. 12. Minnesota Statutes 1986, section 256B.041,
subdivision 7, is amended to read:
Subd. 7. Federal funds available for administrative
purposes shall be distributed between the state and the county
on the same basis that reimbursements are earned, except as
provided for under section 256.016.
Sec. 13. Minnesota Statutes 1986, section 256B.05,
subdivision 1, is amended to read:
Subdivision 1. The county agencies shall administer
medical assistance in their respective counties under the
supervision of the state agency and the commissioner of human
services as specified in section 256.01, and shall make such
reports, prepare such statistics, and keep such records and
accounts in relation to medical assistance as the state agency
may require.
Sec. 14. Minnesota Statutes 1987 Supplement, section
256B.091, subdivision 8, is amended to read:
Subd. 8. [ALTERNATIVE CARE GRANTS.] The commissioner shall
provide grants to counties participating in the program to pay
costs of providing alternative care to individuals screened
under subdivision 4 and nursing home or boarding care home
residents who request a screening. Prior to July of each year,
the commissioner shall allocate state funds available for
alternative care grants to each local agency. This allocation
must be made as follows: half of the state funds available for
alternative care grants must be allocated to each county
according to the total number of adults in that county who are
recipients age 65 or older who are reported to the department by
March 1 of each state fiscal year and half of the state funds
available for alternative care grants must be allocated to a
county according to that county's number of Medicare enrollments
age 65 or older for the most recent statistical report. Payment
is available under this subdivision only for individuals (1) for
whom the screening team would recommend nursing home or boarding
care home admission, or continued stay if alternative care were
not available; (2) who are receiving medical assistance or who
would be eligible for medical assistance within 180 days of
admission to a nursing home; (3) who need services that are not
available at that time in the county through other public
assistance; and (4) who are age 65 or older.
The commissioner shall establish by rule, in accordance
with chapter 14, procedures for determining grant reallocations,
limits on the rates for payment of approved services, including
screenings, and submittal and approval of a biennial county plan
for the administration of the preadmission screening and
alternative care grants program. Grants may be used for payment
of costs of providing care-related supplies, equipment, and
services such as, but not limited to, foster care for elderly
persons, day care whether or not offered through a nursing home,
nutritional counseling, or medical social services, which
services are provided by a licensed health care provider, a home
health service eligible for reimbursement under Titles XVIII and
XIX of the federal Social Security Act, or by persons employed
by or contracted with by the county board or the local welfare
agency. The county agency shall ensure that a plan of care is
established for each individual in accordance with subdivision
3, clause (e)(2), and that a client's service needs and
eligibility is reassessed at least every six months. The plan
shall include any services prescribed by the individual's
attending physician as necessary and follow up services as
necessary. The county agency shall provide documentation to the
commissioner verifying that the individual's alternative care is
not available at that time through any other public assistance
or service program and shall provide documentation in each
individual's plan of care and to the commissioner that the most
cost-effective alternatives available have been offered to the
individual and that the individual was free to choose among
available qualified providers, both public and private. The
county agency shall document to the commissioner that the agency
made reasonable efforts to inform potential providers of the
anticipated need for services under the alternative care grants
program, including a minimum of 14 days written advance notice
of the opportunity to be selected as a service provider and an
annual public meeting with providers to explain and review the
criteria for selection, and that the agency allowed potential
providers an opportunity to be selected to contract with the
county board. Grants to counties under this subdivision are
subject to audit by the commissioner for fiscal and utilization
control.
The county must select providers for contracts or
agreements using the following criteria and other criteria
established by the county:
(1) the need for the particular services offered by the
provider;
(2) the population to be served, including the number of
clients, the length of time services will be provided, and the
medical condition of clients;
(3) the geographic area to be served;
(4) quality assurance methods, including appropriate
licensure, certification, or standards, and supervision of
employees when needed;
(5) rates for each service and unit of service exclusive of
county administrative costs;
(6) evaluation of services previously delivered by the
provider; and
(7) contract or agreement conditions, including billing
requirements, cancellation, and indemnification.
The county must evaluate its own agency services under the
criteria established for other providers. The county shall
provide a written statement of the reasons for not selecting
providers.
The commissioner shall establish a sliding fee schedule for
requiring payment for the cost of providing services under this
subdivision to persons who are eligible for the services but who
are not yet eligible for medical assistance. The sliding fee
schedule is not subject to chapter 14 but the commissioner shall
publish the schedule and any later changes in the State Register
and allow a period of 20 working days from the publication date
for interested persons to comment before adopting the sliding
fee schedule in final forms.
The commissioner shall apply for a waiver for federal
financial participation to expand the availability of services
under this subdivision. The commissioner shall provide grants
to counties from the nonfederal share, unless the commissioner
obtains a federal waiver for medical assistance payments, of
medical assistance appropriations. A county agency may use
grant money to supplement but not supplant services available
through other public assistance or service programs and shall
not use grant money to establish new programs for which public
money is available through sources other than grants provided
under this subdivision. A county agency shall not use grant
money to provide care under this subdivision to an individual if
the anticipated cost of providing this care would exceed the
average payment, as determined by the commissioner, for the
level of care that the recipient would receive if placed in a
nursing home or boarding care home. For the period from January
1 to June 30, the nonfederal share may be used to pay up to 90
percent of the start-up and service delivery costs of providing
care under this subdivision. Each county agency that receives a
grant shall pay ten percent of the costs for persons who are
eligible for the services but who are not yet eligible for
medical assistance. Subsequent to July 1 of each year, the
state agency shall reimburse the county agency for the funds
expended during the January 1 to June 30 period, except as
provided for in section 256.016. For the period from July 1 to
December 31, the nonfederal share may be used to pay up to 100
percent of the start-up and service delivery costs of providing
care under this subdivision.
The commissioner shall promulgate emergency rules in
accordance with sections 14.29 to 14.36, to establish required
documentation and reporting of care delivered.
Sec. 15. Minnesota Statutes 1987 Supplement, section
256B.15, is amended to read:
256B.15 [CLAIMS AGAINST ESTATES.]
If a person receives any medical assistance hereunder, on
the person's death, if single, or on the death of the survivor
of a married couple, either or both of whom received medical
assistance, and only when there is no surviving child who is
under 21 or is blind or totally disabled, the total amount paid
for medical assistance rendered for the person and spouse, after
age 65, without interest, shall be filed as a claim against the
estate of the person or the estate of the surviving spouse in
the court having jurisdiction to probate the estate. A claim
against the estate of a surviving spouse who did not receive
medical assistance, for medical assistance rendered for the
predeceased spouse, is limited to the value of the assets of the
estate that were marital property or jointly-owned property at
any time during the marriage. The claim shall be considered an
expense of the last illness of the decedent for the purpose of
section 524.3-805. Any statute of limitations that purports to
limit any county agency or the state agency, or both, to recover
for medical assistance granted hereunder shall not apply to any
claim made hereunder for reimbursement for any medical
assistance granted hereunder. Counties may retain are entitled
to one-half of the nonfederal share of medical assistance
collections from estates that are directly attributable to
county effort.
Sec. 16. Minnesota Statutes 1987 Supplement, section
256B.19, subdivision 1, is amended to read:
Subdivision 1. [DIVISION OF COST.] The cost of medical
assistance paid by each county of financial responsibility shall
be borne as follows: For the period from January 1 to June 30,
payments shall be made by the state to the county for that
portion of medical assistance paid by the federal government and
the state on or before the 20th day of each month for the
succeeding month upon requisition from the county showing the
amount required for the succeeding month. Ninety percent of the
expense of assistance not paid by federal funds available for
that purpose shall be paid by the state and ten percent shall be
paid by the county of financial responsibility, except as
provided for in section 256.016.
For the period from January 1 to June 30, for counties that
participate in a Medicaid demonstration project under sections
256B.69 and 256B.71, the division of the nonfederal share of
medical assistance expenses for payments made to prepaid health
plans or for payments made to health maintenance organizations
in the form of prepaid capitation payments, this division of
medical assistance expenses shall be 95 percent by the state and
five percent by the county of financial
responsibility. Subsequent to July 1 of each year, the state
agency shall reimburse the county agency for the funds expended
during the January 1 to June 30 period, except as provided for
in section 256.016.
For the period from July 1 to December 31, except as
provided for in section 256.016, payments shall be made by the
state to the county for that portion of medical assistance paid
by the federal government and the state on or before the 20th
day of each month for the succeeding month upon requisition from
the county showing the amount required for the succeeding
month. The expense of assistance not paid by federal funds
available for that purpose shall be paid by the state.
In counties where prepaid health plans are under contract
to the commissioner to provide services to medical assistance
recipients, the cost of court ordered treatment ordered without
consulting the prepaid health plan that does not include
diagnostic evaluation, recommendation, and referral for
treatment by the prepaid health plan is the responsibility of
the county of financial responsibility.
Sec. 17. Minnesota Statutes 1986, section 256B.19,
subdivision 2, is amended to read:
Subd. 2. Federal funds available for administrative
purposes shall be distributed between the state and the county
in the same proportion that expenditures were made, except as
provided for in section 256.016.
Sec. 18. Minnesota Statutes 1987 Supplement, section
256D.03, subdivision 2, is amended to read:
Subd. 2. After December 31, 1980, For the period from
January 1 to June 30, state aid shall be paid to local agencies
for 75 percent of all general assistance and work readiness
grants up to the standards of sections 256D.01, subdivision 1a,
and 256D.051, and according to procedures established by the
commissioner, except as provided for under section 256.016.
Subsequent to July 1 of each year, the state agency shall
reimburse the county agency for the funds expended during the
January 1 to June 30 period, except as provided for in section
256.016.
For the period from July 1 to December 31, state aid shall
be paid to local agencies for 75 100 percent of all general
assistance and work readiness grants up to the standards
of section sections 256D.01, subdivision 1a, and 256D.051, and
according to procedures established by the commissioner, except
as provided for under section 256.016 and except that, after
December 31, 1987 1988, state aid is reduced to 65 percent of
all general assistance grants if the local agency does not make
occupational or vocational literacy training available and
accessible to recipients who are eligible for assistance under
section 256D.05, subdivision 1, paragraph (a), clause (15).
After December 31, 1986 1988, state aid must be paid to
local agencies for 65 percent of work readiness assistance paid
under section 256D.051 if the county does not have an approved
and operating community investment program.
Any local agency may, from its own resources, make payments
of general assistance: (a) at a standard higher than that
established by the commissioner without reference to the
standards of section 256D.01, subdivision 1; or, (b) to persons
not meeting the eligibility standards set forth in section
256D.05, subdivision 1, but for whom the aid would further the
purposes established in the general assistance program in
accordance with rules promulgated by the commissioner pursuant
to the administrative procedure act.
Sec. 19. Minnesota Statutes 1986, section 256D.03,
subdivision 6, is amended to read:
Subd. 6. [DIVISION OF COSTS.] The state shall pay 90 100
percent of the cost of general assistance medical care paid by
the local agency or county pursuant to this section, in
accordance with sections 256B.041, subdivision 5, and 256B.19,
subdivision 1, except as provided for in section 256.016. In
counties where prepaid health plans are under contract to the
commissioner to provide services to general assistance medical
care recipients, the cost of court ordered treatment that does
not include diagnostic evaluation, recommendation, or referral
for treatment by the prepaid health plan is the responsibility
of the county of financial responsibility.
Sec. 20. Minnesota Statutes 1986, section 256D.04, is
amended to read:
256D.04 [DUTIES OF THE COMMISSIONER.]
In addition to any other duties imposed by law, the
commissioner shall:
(1) Supervise according to section 256.01 the
administration of general assistance and general assistance
medical care by local agencies as provided in sections 256D.01
to 256D.21;
(2) Promulgate uniform rules consistent with law for
carrying out and enforcing the provisions of sections 256D.01 to
256D.21 to the end that general assistance may be administered
as uniformly as possible throughout the state; rules shall be
furnished immediately to all local agencies and other interested
persons; in promulgating rules, the provisions of sections 14.01
to 14.70, shall apply;
(3) Allocate moneys appropriated for general assistance and
general assistance medical care to local agencies as provided in
section 256D.03, subdivisions 2 and 3;
(4) Accept and supervise the disbursement of any funds that
may be provided by the federal government or from other sources
for use in this state for general assistance and general
assistance medical care;
(5) Cooperate with other agencies including any agency of
the United States or of another state in all matters concerning
the powers and duties of the commissioner under sections 256D.01
to 256D.21;
(6) Cooperate to the fullest extent with other public
agencies empowered by law to provide vocational training,
rehabilitation, or similar services; and
(7) Gather and study current information and report at
least annually to the governor and legislature on the nature and
need for general assistance and general assistance medical care,
the amounts expended under the supervision of each local agency,
and the activities of each local agency and publish such reports
for the information of the public.
Sec. 21. Minnesota Statutes 1986, section 256D.36,
subdivision 1, is amended to read:
Subdivision 1. Commencing January 1, 1974, the
commissioner shall certify to each local agency the names of all
county residents who were eligible for and did receive aid
during December, 1973 pursuant to a categorical aid program of
old age assistance, aid to the blind, or aid to the disabled.
From and after January 1, 1980, until January 1, 1981, For the
period from January 1 to June 30, the state shall pay 70 85
percent and the county shall pay 30 15 percent of the
supplemental aid calculated for each county resident certified
under this section who is an applicant for or recipient of
supplemental security income, except as provided for in section
256.016. After December 31, 1980, the state shall pay 85
percent and the county shall pay 15 percent of the aid.
Subsequent to July 1 of each year, the state agency shall
reimburse the county agency for the funds expended during the
January 1 to June 30 period, except as provided for in section
256.016. For the period from July 1 to December 31, the state
agency shall pay 100 percent of the supplemental aid calculated
for each county resident certified under this section who is an
applicant for or recipient of supplemental security income,
except as provided for in section 256.016. The amount of
supplemental aid for each individual eligible under this section
shall be calculated pursuant to the formula prescribed in title
II, section 212 (a) (3) of Public Law Number 93-66, as amended.
Sec. 22. Minnesota Statutes 1987 Supplement, section
256G.01, subdivision 3, is amended to read:
Subd. 3. [PROGRAM COVERAGE.] This chapter applies to all
programs administered by the commissioner in which residence is
the determining factor in establishing financial
responsibility. These include, but are not limited to: aid to
families with dependent children; medical assistance; general
assistance; general assistance medical care; Minnesota
supplemental aid; commitment proceedings, including voluntary
admissions; poor relief funded wholly through local agencies;
and social services, including title XX, IV-E and other
components of the community social services act, sections
256E.01 to 256E.12. It also applies to service responsibility
in the income maintenance and health care programs administered
by the commissioner.
Sec. 23. Minnesota Statutes 1987 Supplement, section
256G.02, subdivision 4, is amended to read:
Subd. 4. [COUNTY OF FINANCIAL RESPONSIBILITY.] (a) "County
of financial responsibility" has the meanings in paragraphs (b)
to (h) (e).
(b) For an applicant who resides in the state and is not in
a facility described in subdivision 5, it means the county in
which the applicant resides at the time of application.
(c) For an applicant who resides in a facility described in
subdivision 5, it means the county in which the applicant last
resided in nonexcluded status immediately before entering the
facility.
(d) For an applicant who has not resided in this state for
any time other than the excluded time, it means the county in
which the applicant resides at the time of making application.
(e) For medical assistance purposes only, and for an infant
who has resided only in an excluded time facility, it means the
county that would have been responsible for the infant if
eligibility had been established, based on that of the birth
mother, at the time of application.
(f) Notwithstanding paragraphs (b) to (d), the county of
financial responsibility for medical assistance recipients is
the county from which a recipient is receiving a maintenance
grant or money payment under the program of aid to families with
dependent children or Minnesota supplemental aid.
(g) Notwithstanding paragraphs (b) to (f), the county of
financial responsibility for social services for a person
receiving aid to families with dependent children, general
assistance, general assistance medical care, medical assistance,
or Minnesota supplemental aid is the county from which that
person is receiving the aid or assistance. If more than one
named program is open concurrently, financial responsibility for
social services attaches to the program that has the earliest
date of application and has been open without interruption.
(h) (f) Notwithstanding paragraphs (b) to (g) (e), the
county of financial responsibility for semi-independent living
services provided under section 252.275, and Minnesota Rules,
parts 9525.0500 to 9525.0660, is the county of residence in
nonexcluded status immediately before the placement into or
request for those services.
Sec. 24. Minnesota Statutes 1987 Supplement, section
256G.04, subdivision 1, is amended to read:
Subdivision 1. [TIME OF DETERMINATION.] For purposes of
establishing financial responsibility, residence must be
determined as of the date a local agency receives a signed
request or signed application or the date of eligibility,
whichever is later. This subdivision extends to cases in which
the applicant may move to another county after the date of
application but before the grant or service is actually approved.
Sec. 25. Minnesota Statutes 1987 Supplement, section
256G.05, is amended to read:
256G.05 [RESPONSIBILITY FOR EMERGENCIES.]
Subdivision 1. [RESIDENCE NOT A TEST.] In situations
involving emergencies verified by a local agency, financial
responsibility for aid to families with dependent children,
general assistance, and Minnesota supplemental aid rests with
the county in which an otherwise eligible person is physically
present when the application is filed. The county of residence
is not obligated to reimburse. Financial responsibility is
limited to 30 days unless otherwise specified in the context of
the affected program.
Subd. 2. [NON-MINNESOTA RESIDENTS.]
State residence is not required for receiving emergency
assistance in the general assistance and Minnesota supplemental
aid programs only. The receipt of emergency assistance must not
be used as a factor in determining county or state residence.
Sec. 26. Minnesota Statutes 1987 Supplement, section
256G.07, is amended to read:
256G.07 [MOVING TO ANOTHER COUNTY.]
Subdivision 1. [EFFECT OF MOVING.] Except as provided in
subdivision 4, a person who has applied for and is
receiving assistance services under a program governed by this
chapter, in any county in this state, and who moves to another
county in this state, is entitled to continue to receive that
assistance from the county from which that person has moved
until that person has resided in nonexcluded status for two full
calendar months in the county to which that person has moved.
For purposes of general assistance and general assistance
medical care, this time period is, however, one full calendar
month.
Subd. 2. [TRANSFER OF RECORDS.] Before the person has
resided in nonexcluded status for two calendar months, or one
calendar month in the case of general assistance or general
assistance medical care, in the county to which that person has
moved, the local agency of the county from which the person has
moved shall transfer all necessary records relating to that
person to the local agency of the county to which the person has
moved.
Subd. 3. [CONTINUATION OF CASE.] When the case is
terminated for 30 days or less before the recipient reapplies,
that case remains the financial responsibility of the county
from which the recipient moved until the residence requirement
in subdivision 1 is met.
Subd. 4. [MULTIPLE FINANCIAL RESPONSIBILITY.] When more
than one county becomes financially responsible for a case
involving a single assistance unit, under a program covered by
this chapter, that case must be immediately reconsidered by the
affected local agencies. Beginning with the first day of the
calendar month after that reconsideration, financial
responsibility for the entire assistance unit belongs to the
county that was initially responsible for the program with the
earliest date of application.
Subd. 5. [SOCIAL SERVICE PROVISION.] The types and level
of social services to be provided in any case governed by this
chapter are those otherwise provided in the county in which the
person is physically residing at the time those services are
provided.
Sec. 27. Minnesota Statutes 1987 Supplement, section
256G.10, is amended to read:
256G.10 [DERIVATIVE SETTLEMENT ELIMINATED.]
Except as described in section 256G.02, subdivision 4,
paragraph (d), Residence under this chapter must be determined
independently for each applicant. The residence of the parent
or guardian does not determine the residence of the child or
ward. Physical or legal custody has no bearing on residence
determinations. This section does not, however, apply to
situations involving another state or limit the application of
an interstate compact.
Sec. 28. Minnesota Statutes 1987 Supplement, section
256G.11, is amended to read:
256G.11 [NO RETROACTIVE EFFECT.]
This chapter is not retroactive and does not require the
retroactive redetermination of financial responsibility for
cases existing on January 1, 1988. This chapter applies only to
applications and redeterminations of eligibility taken or
routinely made after January 1, 1988.
Notwithstanding this section, however, existing social
service cases tie to cases for those programs outlined in
section 256G.02, subdivision 4, paragraph (g), for which an
application is taken or a redetermination is made after January
1, 1988.
Sec. 29. [256.019] [RECOVERY OF MONEY; APPORTIONMENT.]
When an amount is recovered from any source for assistance
given under the provisions governing public assistance programs
including aid to families with dependent children, emergency
assistance, general assistance, work readiness, and Minnesota
supplemental aid, there shall be paid to the United States the
amount due under the terms of the Social Security Act and the
balance must be paid into the treasury of the state or county in
accordance with current rates of financial participation; except
if the recovery is directly attributable to county effort, the
county may keep one-half of the nonfederal share of the
recovery. This does not apply to recoveries from medical
providers or to recoveries begun by the department of human
services' surveillance and utilization review division, state
hospital collections unit, and the benefit recoveries division
or, by the attorney general's office, or child support
collections.
Sec. 30. Minnesota Statutes 1986, section 393.07,
subdivision 2, is amended to read:
Subd. 2. [ADMINISTRATION OF PUBLIC WELFARE.] The county
welfare board, subject to the supervision of the commissioner of
human services, shall administer all forms of public welfare,
both for children and adults, responsibility for which now or
hereafter may be imposed on the commissioner of human services
by law, including general assistance, aid to dependent children,
county supplementation, if any, or state aid to recipients of
supplemental security income for aged, blind and disabled, child
welfare services, mental health services, and other public
assistance or public welfare services, provided that the county
welfare board shall not employ public health nursing or home
health service personnel other than homemaker-home help aides,
but shall contract for or purchase the necessary services from
existing community agencies. The duties of the county welfare
board shall be performed in accordance with the standards and
rules which may be promulgated by the commissioner of human
services to achieve the purposes intended by law and in order to
comply with the requirements of the federal Social Security Act
in respect to public assistance and child welfare services, so
that the state may qualify for grants-in-aid available under
that act. To avoid administrative penalties under section
256.016, the county welfare board must comply with (1) policies
established by state law and (2) instructions from the
commissioner relating (i) to public assistance program policies
consistent with federal law and regulation and state law and
rule and (ii) to local agency program operations. The
commissioner may enforce county welfare board compliance with
the instructions, and may delay, withhold, or deny payment of
all or part of the state and federal share of benefits and
federal administrative reimbursement, according to the
provisions under section 256.016. The county welfare board
shall supervise wards of the commissioner and, when so
designated, act as agent of the commissioner of human services
in the placement of the commissioner's wards in adoptive homes
or in other foster care facilities. The county welfare board
may contract with a bank or other financial institution to
provide services associated with the processing of public
assistance checks and pay a service fee for these services,
provided the fee charged does not exceed the fee charged to
other customers of the institution for similar services.
Sec. 31. Minnesota Statutes 1987 Supplement, section
393.07, subdivision 10, is amended to read:
Subd. 10. [FEDERAL FOOD STAMP PROGRAM.] (a) The county
welfare board shall establish and administer the food stamp
program pursuant to rules of the commissioner of human services,
the supervision of the commissioner as specified in section
256.01, and all federal laws and regulations. The commissioner
of human services shall monitor food stamp program delivery on
an ongoing basis to ensure that each county complies with
federal laws and regulations. Program requirements to be
monitored include, but are not limited to, number of
applications, number of approvals, number of cases pending,
length of time required to process each application and deliver
benefits, number of applicants eligible for expedited issuance,
length of time required to process and deliver expedited
issuance, number of terminations and reasons for terminations,
client profiles by age, household composition and income level
and sources, and the use of phone certification and home
visits. The commissioner shall determine the county-by-county
and statewide participation rate. The commissioner shall report
on the monitoring activities on a county-by-county basis in a
report presented to the legislature by July 1 each year. This
monitoring activity shall be separate from the management
evaluation survey sample required under federal regulations.
(b) On July 1 of each year, the commissioner of human
services shall determine a statewide and county-by-county food
stamp program participation rate. The commissioner may
designate a different agency to administer the food stamp
program in a county if the agency administering the program
fails to increase the food stamp program participation rate
among families or eligible individuals, or comply with all
federal laws and regulations governing the food stamp program.
The commissioner shall review agency performance annually to
determine compliance with this paragraph.
(c) The county welfare board shall participate in a food
stamp quality control system subject to the supervision of the
commissioner of human services and pursuant to federal
regulations.
A person who commits any of the following acts has violated
section 256.98 and is subject to both the criminal and civil
penalties provided under that section:
(1) Obtains or attempts to obtain, or aids or abets any
person to obtain by means of a willfully false statement or
representation, or intentional concealment of a material fact,
food stamps to which the person is not entitled or in an amount
greater than that to which that person is entitled; or
(2) Presents or causes to be presented, coupons for payment
or redemption knowing them to have been received, transferred or
used in a manner contrary to existing state or federal law; or
(3) Willfully uses or transfers food stamp coupons or
authorization to purchase cards in any manner contrary to
existing state or federal law.
Sec. 32. [TRANSFER OF COUNTY FOOD STAMP QUALITY CONTROL
SYSTEM EMPLOYEES.]
(a) All positions covered by the Minnesota merit system
located in Crow Wing county family social service center and in
the Redwood county welfare department classified as food stamp
corrective action specialist I and II and as financial assistant
supervisor I, if the positions supervise food stamp corrective
action specialists, are transferred to the department of human
services and become state civil service positions.
(b) All incumbent employees affected by this transfer, who
choose to transfer to state civil service positions in the
department of human services, must be transferred with no
reduction in salary. Salaries of individual employees who
transfer must be adjusted to the minimum salary or to the
nearest equal or higher step on the state compensation plan for
their class, whichever is greater.
(c) Existing sick leave and vacation accruals for an
employee who transfers must be transferred to the department of
human services and the employee shall accrue additional vacation
and sick leave under the provisions of the appropriate state
collective bargaining agreement based on the employee's years of
service in either Crow Wing county family service center or in
the Redwood county welfare department.
(d) If an employee who transfers chooses to retain the
county coverage for employee and dependent health, dental, and
life insurance, the department of human services shall reimburse
the employee for one month of continued enrollment in the
health, dental, and life insurance plans in an amount equal to
what their former county employer would have paid for the
coverage had the employee remained a county employee, until the
employee is eligible for coverage under the state insurance
plans.
(e) Classification seniority for an employee who transfers
must be calculated according to the provisions of the
appropriate state collective bargaining agreement based upon the
employee's years of service in the county merit system.
Sec. 33. [REPEALER.]
Minnesota Statutes 1986, section 256.965; and Minnesota
Statutes 1987 Supplement, section 256D.22, are repealed.
Sec. 34. [HUMAN SERVICES; APPROPRIATIONS.]
$1,655,500 is appropriated from the general fund to the
commissioner of human services for the purposes indicated.
(a) $990,000 is for the county incentive fund, to be
available until June 30, 1991.
(b) $110,000 is available beginning June 1, 1989, to
convert county food stamp quality control staff to state
employment.
(c) $555,500 is available beginning January 1, 1990, to
implement state financing of income maintenance benefits as
contained in this article by monitoring local agency performance
in administering the income maintenance programs, providing
technical assistance and program support, and reviewing local
agency exceptions to compliance actions.
Sec. 35. [HUMAN SERVICES APPROPRIATION REDUCTION.]
The appropriation in Laws 1987, chapter 403, article 1,
section 2, subdivision 2, for county administrative aid for
fiscal year 1989 is reduced by $1,150,000 because of the changes
made by this article.
Sec. 36. [POSITIONS.]
The following additional positions are approved for the
department of human services.
Appeals and Contracts 1
Financial Management 2
Assistance Payments 22
Food Stamp Quality Control 25
Sec. 37. [EFFECTIVE DATE.]
The part of section 31 that strikes a part of paragraph (c)
is effective June 1, 1990. Section 32 is effective June 1, 1989.
Except as provided in section 34, the rest of this article is
effective January 1, 1990.
ARTICLE 9
PULL-TAB TAX
Section 1. Minnesota Statutes 1986, section 349.12,
subdivision 18, is amended to read:
Subd. 18. [DEAL.] "Deal" means each separate package, or
series of packages, consisting of one game of pull-tabs or
tipboards with the same serial number purchased from a
distributor.
Sec. 2. Minnesota Statutes 1986, section 349.12, is
amended by adding a subdivision to read:
Subd. 19. [IDEAL GROSS.] "Ideal gross" means the total
amount of receipts that would be received if every individual
ticket in the pull-tab or tipboard deal was sold at its face
value.
Sec. 3. Minnesota Statutes 1986, section 349.12, is
amended by adding a subdivision to read:
Subd. 20. [IDEAL NET.] "Ideal net" means the pull-tab or
tipboard deal's ideal gross, as defined under subdivision 19,
less the total predetermined prize amounts available to be paid
out. When the prize is not a monetary one, the ideal net is 50
percent of the ideal gross.
Sec. 4. Minnesota Statutes 1987 Supplement, section
349.212, subdivision 1, is amended to read:
Subdivision 1. [RATE.] There is hereby imposed a tax on
all lawful gambling, other than (1) pull-tabs purchased and
placed into inventory after January 1, 1987, and (2) tipboards
purchased and placed into inventory after June 30, 1988,
conducted by organizations licensed by the board at the rate
specified in this subdivision. The tax imposed by this
subdivision is in lieu of the tax imposed by section 297A.02 and
all local taxes and license fees except a fee authorized under
section 349.16, subdivision 4.
On all lawful gambling, other than (1) pull-tabs purchased
and placed into inventory after January 1, 1987, and (2)
tipboards purchased and placed into inventory after June 30,
1988, the tax is ten percent of the gross receipts of a licensed
organization from lawful gambling less prizes actually paid out,
payable by the organization.
Sec. 5. Minnesota Statutes 1987 Supplement, section
349.212, subdivision 4, is amended to read:
Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) There is imposed
a tax on the sale of each deal of pull-tabs and tipboards sold
by a licensed distributor to a licensed organization, or to an
organization holding an exemption identification number. The
rate of the tax is ten percent of the face resale value of all
the pull-tabs in each deal less the total prizes which may be
paid out on all the pull-tabs in that ideal net of the pull-tab
and tipboard deal. The tax is payable to the commissioner of
revenue in the manner prescribed in section 349.2121 and the
rules of the commissioner. The commissioner shall pay the
proceeds of the tax to the state treasurer for deposit in the
general fund. The sales tax imposed by chapter 297A on the sale
of the pull-tabs and tipboards by the licensed distributor to an
organization is imposed on the retail sales price less the tax
imposed by this subdivision. The retail sale of pull-tabs or
tipboards by the organization is exempt from taxes imposed by
chapter 297A if the tax imposed by this subdivision has been
paid and is exempt from all local taxes and license fees except
a fee authorized under section 349.16, subdivision 4.
(b) The liability for the tax imposed by this section is
incurred when the pull-tabs and tipboards are delivered by the
distributor to the licensed or exempt organization, to a common
or contract carrier for delivery to the organization, or when
received by the organization's authorized representative at the
distributor's place of business, regardless of the distributor's
method of accounting or the terms of the sale.
If a licensed organization or any organization holding an
exemption number receives pull-tabs directly from the
manufacturer and the manufacturer is not a licensed distributor,
the distributor from whom the pull-tabs were purchased is liable
for tax when the manufacturer delivers the pull-tabs to the
organization, or to a contract or common carrier for delivery to
the organization, or when the pull-tabs are received by the
organization's authorized representative at the manufacturer's
place of business, regardless of the manufacturer's or the
distributor's method of accounting or the terms of the sale.
(c) The exemptions contained in section 349.214,
subdivision 2, paragraph (b), do not apply to the tax imposed in
this subdivision.
Sec. 6. Minnesota Statutes 1986, section 349.2121,
subdivision 1, is amended to read:
Subdivision 1. [APPLICATION AND ISSUANCE.] Every
distributor licensed by the board who sells pull-tabs and
tipboards to organizations authorized to sell pull-tabs and
tipboards under this chapter must file with the commissioner of
revenue an application, on a form the commissioner prescribes,
for a gambling tax identification number and gambling tax
permit. The commissioner, when satisfied that the applicant has
a valid license from the board, shall issue the applicant a
permit and number. A permit is not assignable and is valid only
for the distributor in whose name it is issued.
Sec. 7. Minnesota Statutes 1986, section 349.2121,
subdivision 2, is amended to read:
Subd. 2. [RECORDS.] The commissioner may by rule require a
licensed distributor holding a permit under this section to keep
such books, papers, documents, and records as the commissioner
deems necessary to the enforcement of this chapter. The
commissioner may examine, or cause to be examined, any books,
papers, records, or other documents relevant to making a
determination, whether they are in the possession of a
distributor or another person or corporation. The commissioner
may require the attendance of any persons having knowledge or
information in the premises, to compel the production of books,
papers, records, or memoranda by persons so required to attend,
to take testimony on matters material to a determination, and to
administer oaths or affirmations. A distributor shall keep at
each licensed place of business complete and accurate records
for that place of business, including itemized invoices of
pull-tabs and tipboards held, purchased, manufactured, or
brought in or caused to be brought in from without this state,
and of all sales of pull-tabs and tipboards. The records must
show the names and addresses of purchasers, the inventory at the
close of each period for which a return is required of all
pull-tab and tipboard deals on hand, and other pertinent papers
and documents relating to the purchase, sale, or disposition of
pull-tab and tipboard deals. Books, records, and other papers
and documents required by this section must be kept for a period
of at least 3-1/2 years after the date of the documents, or the
date of the entries appearing in the records, unless the
commissioner authorizes in writing their destruction or disposal
at an earlier date. At any time during usual business hours,
the commissioner, executive secretary of the charitable gambling
control board, or any of their duly authorized agents or
employees, may enter a place of business of a distributor,
charitable organization, or any site from which pull-tabs or
tipboards are being sold and inspect the premises and the
records required to be kept under this section to determine
whether or not all the provisions of this section are being
fully complied with. If the commissioner, executive secretary,
or their duly authorized agents or employees are denied free
access to or are hindered or interfered with in making an
inspection of the distributor's place of business, the permit of
the distributor may be revoked by the commissioner, and the
license of the distributor may be revoked by the charitable
gambling control board.
Sec. 8. Minnesota Statutes 1986, section 349.2121, is
amended by adding a subdivision to read:
Subd. 2a. A distributor who sells pull-tabs and tipboards
to persons other than the ultimate consumer shall give with each
sale an itemized invoice showing the distributor's name and
address, the purchaser's name and address, the date of the sale,
description of the deals including the ideal net amounts, and
all prices and discounts, and shall keep legible copies of all
the itemized invoices for 3-1/2 years from the date of sale.
Sec. 9. Minnesota Statutes 1987 Supplement, section
349.2121, subdivision 4a, is amended to read:
Subd. 4a. [REFUND.] If any deal of pull-tabs or tipboards
registered with the board and upon which the tax imposed by
section 349.212, subdivision 4, has been paid is returned
unplayed to the distributor, the commissioner of revenue shall
allow a refund of the tax paid.
In the case of a defective deal registered with the board
and upon which the taxes have been paid is returned to the
manufacturer, the distributor shall submit to the commissioner
of revenue certification from the manufacturer that the deal was
returned and in what respect it was defective. The
certification must be in a form prescribed by the commissioner
and must contain additional information the commissioner
requires.
The commissioner may require that no refund under this
subdivision be made unless the returned pull-tabs or tipboards
have been set aside for inspection by the commissioner's
employee.
Reductions in previously paid taxes authorized by this
subdivision shall be made at the time and in the manner
prescribed by the commissioner.
Sec. 10. Minnesota Statutes 1986, section 349.2121,
subdivision 5, is amended to read:
Subd. 5. [PUBLIC INFORMATION CONFIDENTIAL.] Neither the
commissioner nor any other public official or employee may
divulge or otherwise make known in any manner any particulars
disclosed in any report or return required by this section, or
any information concerning the affairs of the distributor making
the return acquired from its records, officers, or employees
while examining or auditing under the authority of this chapter,
except in connection with a proceeding involving taxes due under
this chapter. Nothing herein prohibits the commissioner from
publishing statistics so classified as not to disclose the
identity of particular returns or reports and their contents.
Any person violating the provisions of this section is guilty of
a gross misdemeanor.
Notwithstanding the provisions of this section, the
commissioner may furnish information on a reciprocal basis to
the taxing officials of another state or the board in order to
implement the purposes of this chapter.
In order to facilitate processing of returns and payments
of taxes required by this chapter, the commissioner may contract
with outside vendors and may disclose private and nonpublic data
to the vendor. The data disclosed must be administered by the
vendor consistent with this section. All records concerning the
administration of the pull-tab and tipboard taxes are classified
as public information.
Sec. 11. Minnesota Statutes 1987 Supplement, section
349.2121, subdivision 10, is amended to read:
Subd. 10. [UNTAXED PULL-TABS OR TIPBOARDS.] It is a gross
misdemeanor for any person to possess pull-tabs or tipboards for
resale in this state that have not been registered with the
board, for which a registration stamp has not been affixed to
the flare, and upon which the taxes imposed by section 349.212,
subdivision 4, or chapter 297A have not been paid. The
executive secretary of the charitable gambling control board or
the commissioner of revenue or their designated inspectors and
employees may seize in the name of the state of Minnesota any
unregistered or untaxed pull-tabs or tipboards.
Sec. 12. Minnesota Statutes 1987 Supplement, section
349.2122, is amended to read:
349.2122 [MANUFACTURERS; REPORTS TO THE COMMISSIONER;
PENALTY.]
A manufacturer registered with the board who sells
pull-tabs and tipboards to a distributor licensed by the board
must file with the commissioner of revenue, on a form prescribed
by the commissioner, a report of pull-tabs and tipboards sold to
licensed distributors. The report must be filed monthly on or
before the 25th day of the month succeeding the month in which
the sale was made. Any person violating this section shall be
guilty of a misdemeanor.
Sec. 13. Minnesota Statutes 1987 Supplement, section
349.2123, is amended to read:
349.2123 [CERTIFIED PHYSICAL INVENTORY.]
The commissioner of revenue may, upon request, require a
pull-tab licensed distributor to furnish a certified physical
inventory of the pull-tabs and tipboards in stock. The
inventory must contain the information required by the
commissioner.
Sec. 14. [349.2125] [CONTRABAND.]
Subdivision 1. [CONTRABAND DEFINED.] The following are
contraband:
(1) all pull-tab or tipboard deals that do not have stamps
affixed to them as provided in section 349.162;
(2) all pull-tab or tipboard deals in the possession of any
unlicensed organization whether stamped or unstamped;
(3) any container used for the storage and display of any
contraband pull-tab or tipboard deals as defined in clauses (1)
and (2);
(4) any cash drawer, cash register, or any other container
used for illegal pull-tab or tipboard transactions including its
contents; and
(5) any device including, but not limited to, motor
vehicles, trailers, snowmobiles, airplanes, and boats used, with
the knowledge of the owner or of a person operating with the
consent of the owner, for the storage or transportation of more
than five pull-tab or tipboard deals that are contraband under
this subdivision. When pull-tabs and tipboards are being
transported in the course of interstate commerce, or from one
distributor to another, the pull-tab and tipboard deals are not
contraband, notwithstanding the provisions of clause (1).
Subd. 2. [SEIZURE.] Pull-tabs or tipboards or other
property made contraband by subdivision 1 may be seized by the
commissioner of revenue or the executive secretary of the
charitable gambling control board or their authorized agents or
by any sheriff or other police officer, hereinafter referred to
as the seizing authority, with or without process, and shall be
subject to forfeiture as provided in subdivisions 3 and 4.
Subd. 3. [INVENTORY; JUDICIAL DETERMINATION; APPEAL;
DISPOSITION OF SEIZED PROPERTY.] Within two days after the
seizure of any alleged contraband, the person making the seizure
shall deliver an inventory of the property seized to the person
from whom the property was seized, if known, and file a copy
with the commissioner or the executive secretary of the
charitable gambling control board. Within ten days after the
date of service of the inventory, the person from whom the
property was seized or any person claiming an interest in the
property may file with the seizing authority a demand for
judicial determination of whether the property was lawfully
subject to seizure and forfeiture. Within 30 days after the
date of filing of the demand, the seizing authority must bring
an action in the district court of the county where seizure was
made to determine the issue of forfeiture. The action must be
brought in the name of the state and be prosecuted by the county
attorney or by the attorney general. The court shall hear the
action without a jury and determine the issues of fact and laws
involved. When a judgment of forfeiture is entered, the seizing
authority may, unless the judgment is stayed pending an appeal,
either (1) cause the forfeited property to be destroyed; or (2)
cause it to be sold at a public auction as provided by law.
If demand for judicial determination is made and no action
is commenced as provided in this subdivision, the property must
be released by the seizing authority and delivered to the person
entitled to it. If no demand is made, the property seized is
considered forfeited to the state by operation of law and may be
disposed of by the seizing authority as provided where there has
been a judgment of forfeiture. When the seizing authority is
satisfied that a person from whom property is seized was acting
in good faith and without intent to evade the tax imposed by
section 349.2121, subdivision 4, the seizing authority shall
release the property seized without further legal proceedings.
Subd. 4. [DISPOSAL.] The property described in subdivision
1, clauses (4) and (5), must be confiscated after conviction of
the person from whom it was seized, upon compliance with the
following procedure: the seizing authority shall file with the
court a separate complaint against the property, describing it
and charging its use in the specific violation, and specifying
substantially the time and place of the unlawful use. A copy of
the complaint must be served upon the defendant or person in
charge of the property at the time of seizure, if any. If the
person arrested is acquitted, the court shall dismiss the
complaint against the property and order it returned to the
persons legally entitled to it. Upon conviction of the person
arrested, the court shall issue an order directed to any person
known or believed to have any right, title or interest in, or
lien upon, any of the property, and to persons unknown claiming
any right, title, interest, or lien in it, describing the
property and (1) stating that it was seized and that a complaint
against it, charging the specified violation, has been filed
with the court, (2) requiring the persons to file with the court
administrator their answer to the complaint, setting forth any
claim they may have to any right or title to, interest in, or
lien upon the property, within 30 days after the service of the
order, and (3) notifying them in substance that if they fail to
file their answer within the time, the property will be ordered
sold by the seizing authority. The court shall cause the order
to be served upon any person known or believed to have any
right, title, interest, or lien as in the case of a summons in a
civil action, and upon unknown persons by publication, as
provided for service of summons in a civil action. If no answer
is filed within the time prescribed, the court shall, upon
affidavit by the court administrator, setting forth the fact,
order the property sold by the seizing authority. The proceeds
of the sale, after deducting the expense of keeping the property
and fees and costs of sale, must be paid into the state treasury
and credited to the general fund. If answer is filed within the
time provided, the court shall fix a time for a hearing, which
shall be not less than ten nor more than 30 days after the time
for filing answer expires. At the time fixed for hearing,
unless continued for cause, the matter shall be heard and
determined by the court, without a jury, as in other civil
actions.
If the court finds that the property, or any part of it,
was used in the violation specified in the complaint, it shall
order the property unlawfully used, sold as provided by law,
unless the owner shows to the satisfaction of the court that the
owner had no notice or knowledge or reason to believe that the
property was used or intended to be used in the violation. The
officer making a sale, after deducting the expense of keeping
the property, the fee for seizure, and the costs of the sale,
shall pay all liens according to their priority, which are
established at the hearing as being bona fide and as existing
without the lienor having any notice or knowledge that the
property was being used or was intended to be used for or in
connection with the violation specified in the order of the
court, and shall pay the balance of the proceeds into the state
treasury to be credited to the general fund. A sale under this
section shall free the property sold from any and all liens on
it. Appeal from the order of the district court will lie as in
other civil cases. At any time after seizure of the articles
specified in this subdivision, and before the hearing provided
for, the property must be returned to the owner or person having
a legal right to its possession, upon execution of a good and
valid bond to the state, with corporate surety, in the sum of
not less than $100 and not more than double the value of the
property seized, to be approved by the court in which the case
is triable, or a judge of it, conditioned to abide any order and
the judgment of the court, and to pay the full value of the
property at the time of the seizure. The seizing authority may
dismiss the proceedings outlined in this subdivision when the
seizing authority considers it to be in the best interests of
the state to do so.
Sec. 15. [349.2127] [PROHIBITIONS.]
Subdivision 1. [COUNTERFEITING.] No person shall with
intent to defraud the state, make, alter, forge, or counterfeit
any license or stamp provided for in this chapter, or have in
possession any forged, spurious, or altered stamps, with the
intent, or with the result of, depriving the state of the tax
imposed by this chapter.
Subd. 2. [PROHIBITION AGAINST POSSESSION.] No person,
other than a licensed distributor, shall sell, offer for sale,
or have in possession with intent to sell or offer for sale, a
pull-tab or tipboard deal not stamped in accordance with the
provisions of this chapter.
Subd. 3. [FALSIFICATION OF RECORDS.] No person required by
section 349.2121, subdivision 2, to keep records or to make
returns shall falsify or fail to keep the records or falsify or
fail to make the returns.
Subd. 4. [TRANSPORTING UNSTAMPED DEALS.] No person shall
transport into, or receive, carry, or move from place to place
in this state, any deals of pull-tabs or tipboards not stamped
in accordance with this chapter except in the course of
interstate commerce, unless the deals are moving from one
distributor to another.
Sec. 16. Minnesota Statutes 1986, section 349.22,
subdivision 1, is amended to read:
Subdivision 1. [GROSS MISDEMEANOR.] Any other violation of
A person who in any manner violates sections 349.11 to
349.214 is to evade the tax imposed by this chapter, or who aids
and abets evasion of the tax, or hinders or interferes with a
seizing authority when a seizure is made as provided by section
349.2125, is guilty of a gross misdemeanor.
Sec. 17. Minnesota Statutes 1986, section 349.22, is
amended by adding a subdivision to read:
Subd. 3. [FELONY.] (a) A person violating section
349.2127, subdivision 1 or 3, is guilty of a felony.
(b) A person violating section 349.2127, subdivisions 2 and
4, by possessing, receiving, or transporting more than ten
pull-tab or tipboard deals not stamped in accordance with this
chapter is guilty of a felony.
Sec. 18. Minnesota Statutes 1986, section 349.22, is
amended by adding a subdivision to read:
Subd. 4. [SALES AFTER REVOCATION.] A person selling
pull-tabs or tipboards after the person's license or permit has
been revoked is guilty of a felony.
Sec. 19. [EFFECTIVE DATE.]
Sections 1 to 4 and 6 to 18 are effective July 1, 1988.
Section 5 is effective for deals of tipboards purchased and
placed into inventory after June 30, 1988.
ARTICLE 10
SALES TAX
Section 1. Minnesota Statutes 1987 Supplement, section
297A.01, subdivision 3, is amended to read:
Subd. 3. A "sale" and a "purchase" includes, but is not
limited to, each of the following transactions:
(a) Any transfer of title or possession, or both, of
tangible personal property, whether absolutely or conditionally,
and the leasing of or the granting of a license to use or
consume tangible personal property other than manufactured homes
used for residential purposes for a continuous period of 30 days
or more, for a consideration in money or by exchange or barter;
(b) The production, fabrication, printing or processing of
tangible personal property for a consideration for consumers who
furnish either directly or indirectly the materials used in the
production, fabrication, printing or processing;
(c) The furnishing, preparing or serving for a
consideration of food, meals or drinks, not including meals or
drinks served to patients, inmates, or persons residing at
hospitals, sanatoriums, nursing homes or, senior citizens homes,
and correctional, detention, and detoxification facilities,
meals or drinks purchased for and served exclusively to
individuals who are 60 years of age or over and their spouses or
to the handicapped and their spouses by governmental agencies,
nonprofit organizations, agencies, or churches or pursuant to
any program funded in whole or part through 42 USCA sections
3001 through 3045, wherever delivered, prepared or served, meals
and lunches served at public and private schools, universities
or colleges. "Sales" also includes meals furnished by employers
to employees at less than fair market value, except meals
furnished at no charge to employees of hospitals, nursing homes,
boarding care homes, sanatoriums, group homes, and correctional,
detention, and detoxification facilities, who are required to
eat with the patients, residents, or inmates residing in them.
Notwithstanding section 297A.25, subdivision 2, taxable food or
meals include, but are not limited to, the following:
(i) heated food or drinks;
(ii) sandwiches prepared by the retailer;
(iii) single sales of prepackaged ice cream or ice milk
novelties prepared by the retailer;
(iv) hand-prepared or dispensed ice cream or ice milk
products including cones, sundaes, and snow cones;
(v) soft drinks and other beverages prepared or served by
the retailer;
(vi) gum;
(vii) ice;
(viii) all food sold in vending machines;
(ix) party trays prepared by the retailers; and
(x) all meals and single servings of packaged snack food,
single cans or bottles of pop, sold in restaurants and bars;
(d) The granting of the privilege of admission to places of
amusement, recreational areas, or athletic events and the
privilege of having access to and the use of amusement devices,
tanning facilities, reducing salons, steam baths, turkish baths,
massage parlors, health clubs, and spas or athletic facilities;
(e) The furnishing for a consideration of lodging and
related services by a hotel, rooming house, tourist court, motel
or trailer camp and of the granting of any similar license to
use real property other than the renting or leasing thereof for
a continuous period of 30 days or more;
(f) The furnishing for a consideration of electricity, gas,
water, or steam for use or consumption within this state, or
local exchange telephone service, intrastate toll service, and
interstate toll service, if that service originates from and is
charged to a telephone located in this state; the tax imposed on
amounts paid for telephone services is the liability of and
shall be paid by the person paying for the services. Sales by
municipal corporations in a proprietary capacity are included in
the provisions of this clause. The furnishing of water and
sewer services for residential use shall not be considered a
sale;
(g) The furnishing for a consideration of cable television
services, including charges for basic monthly service, charges
for monthly premium service, and charges for any other similar
television services;
(h) Notwithstanding subdivision 4, and section 297A.25,
subdivision 9, the sales of horses including claiming sales and
fees paid for breeding a stallion to a mare. This clause
applies to sales and fees with respect to a horse to be used for
racing whose birth has been recorded by the Jockey Club or the
United States Trotting Association or the American Quarter Horse
Association;
(i) The furnishing for a consideration of parking services,
whether on a contractual, hourly, or other periodic basis,
except for parking at a meter;
(j) The furnishing for a consideration of services listed
in this paragraph:
(i) laundry and dry cleaning services including cleaning,
pressing, repairing, altering, and storing clothes, linen
services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry
cleaning services do not include services provided by coin
operated facilities operated by the customer;
(ii) motor vehicle washing, waxing, and cleaning services,
including services provided by coin-operated facilities operated
by the customer, and rustproofing, undercoating, and towing of
motor vehicles;
(iii) building and residential cleaning, maintenance, and
disinfecting and exterminating services;
(iv) services provided by detective agencies, security
services, burglar, fire alarm, and armored car services not
including services performed within the jurisdiction they serve
by off-duty licensed peace officers as defined in section
626.84, subdivision 1;
(v) pet grooming services; and
(vi) lawn care, fertilizing, mowing, spraying and sprigging
services; garden planting and maintenance; arborist services;
tree, bush, and shrub planting, pruning, bracing, spraying, and
surgery; and tree trimming for public utility lines.
The services listed in this paragraph are taxable under section
297A.02 if the service is performed wholly within Minnesota or
if the service is performed partly within and partly without
Minnesota and the greater proportion of the service is performed
in Minnesota, based on the cost of performance. In applying the
provisions of this chapter, the terms "tangible personal
property" and "sales at retail" include taxable services and the
provision of taxable services, unless specifically provided
otherwise. Services performed by an employee for an employer
are not taxable under this paragraph. Services performed by a
corporation, partnership, or association for another
corporation, partnership, or association are not taxable under
this paragraph if one of the entities owns or controls more than
80 percent of the voting power of the equity interest in the
other entity. Services performed between members of an
affiliated group of corporations are not taxable. For purposes
of this section, "affiliated group of corporations" includes
those entities that would be classified as a member of an
affiliated group under United States Code, title 26, section
1504, and who are eligible to file a consolidated tax return for
federal income tax purposes;
(k) A "sale" and a "purchase" includes the transfer of
computer software, meaning information and directions that
dictate the function performed by data processing equipment. A
"sale" and a "purchase" does not include the design,
development, writing, translation, fabrication, lease, or
transfer for a consideration of title or possession of a custom
computer program; and
(l) The granting of membership in a club, association, or
other organization if:
(1) the club, association, or other organization makes
available for the use of its members sports and athletic
facilities (without regard to whether a separate charge is
assessed for use of the facilities); and
(2) use of the sports and athletic facilities is not made
available to the general public on the same basis as it is made
available to members.
Granting of membership includes both one-time initiation fees
and periodic membership dues. Sports and athletic facilities
include golf courses, tennis, racquetball, handball and squash
courts, basketball and volleyball facilities, running tracks,
exercise equipment, swimming pools, and other similar athletic
or sports facilities. The provisions of this paragraph do not
apply to camps or other recreation facilities owned and operated
by an exempt organization under section 501(c)(3) of the
Internal Revenue Code of 1986, as amended through December 31,
1986, for educational and social activities for young people
primarily age 18 and under. The provisions of this paragraph do
not apply to an association incorporated under section 315.44.
Sec. 2. Minnesota Statutes 1986, section 297A.15,
subdivision 1, is amended to read:
Subdivision 1. Liability for the payment of the use tax is
not extinguished until the tax has been paid to Minnesota.
However, a receipt from a retailer maintaining a place of
business in Minnesota, or from a retailer who is authorized by
the commissioner under such rules as the commissioner may
prescribe, to collect the tax, given to the purchaser pursuant
to section 297A.16 relieves the purchaser of further liability
for the tax to which the receipt refers, unless the purchaser
knows or has reason to know that the retailer did not have a
permit to collect the tax.
Sec. 3. Minnesota Statutes 1986, section 297A.15,
subdivision 5, is amended to read:
Subd. 5. [REFUND; APPROPRIATION.] Notwithstanding the
provisions of sections 297A.02, subdivision 2, and 297A.257 the
tax on sales of capital equipment, and construction materials
and supplies under section 297A.257, shall be imposed and
collected as if the rate under section 297A.02, subdivision 1,
applied. Upon application by the purchaser, on forms prescribed
by the commissioner, a refund equal to the reduction in the tax
due as a result of the application of the rates under section
297A.02, subdivision 2, or the exemption under section 297A.257
shall be paid to the purchaser. In the case of building
materials qualifying under section 297A.257 where the tax was
paid by a contractor, application must be made by the owner for
the sales tax paid by all the contractors, subcontractors, and
builders for the project. The application must include
sufficient information to permit the commissioner to verify the
sales tax paid for the project. The application shall include
information necessary for the commissioner initially to verify
that the purchases qualified as capital equipment under section
297A.02, subdivision 2, or capital equipment or construction
materials and supplies under section 297A.257. No more than two
applications for refunds may be filed under this subdivision in
a calendar year. Unless otherwise specifically provided by this
subdivision, the provisions of section 297A.34 apply to the
refunds payable under this subdivision. There is annually
appropriated to the commissioner of revenue the amount required
to make the refunds.
The amount to be refunded shall bear interest at the rate
in section 270.76 from the date the refund claim is filed with
the commissioner.
Sec. 4. Minnesota Statutes 1986, section 297A.16, is
amended to read:
297A.16 [COLLECTION OF TAX AT TIME OF SALE.]
Any corporation authorized to do business in Minnesota, any
retailer as defined in who is required under section 297A.21, or
any other retailer as the commissioner shall authorize pursuant
to section 297A.15, or authorized by the commissioner to collect
the use tax upon making retail sales of any items enumerated in
this chapter not exempted under sections 297A.01 to 297A.44, to
which the use tax applies shall at the time of making such sales
collect the use tax from the purchaser and give to the purchaser
a receipt therefor in the form of a notation on the sales slip
or receipt for the sales price or in such other form as
prescribed by the commissioner. Any such corporation or
retailer shall not collect the tax from a purchaser who
furnishes to such corporation or retailer a copy of a
certificate issued by the commissioner authorizing such
purchaser to pay any sales or use tax due on purchases made by
such purchaser directly to the commissioner. The tax collected
by such corporation or retailer pursuant to the provisions of
this section shall be remitted to the commissioner as provided
in other sections of this chapter.
Any corporation or any retailer required to collect the use
tax and remit such tax to the commissioner pursuant to this
section shall file with the commissioner an application for a
permit pursuant to section 297A.04. Every such corporation or
retailer shall furnish the commissioner with the name and
address of all its agents operating in Minnesota and the
location of each of its distribution or sales houses or offices
or other places of business in this state.
Sec. 5. Minnesota Statutes 1986, section 297A.17, is
amended to read:
297A.17 [TAX TO BE COLLECTED; STATUS AS DEBT.]
The use tax required to be collected by the retailer
constitutes a debt owed by the retailer to Minnesota and shall
be a debt from the purchaser to the retailer recoverable at law
in the same manner as other debts. A retailer who does not
maintain a place of business within this state shall not be
indebted to Minnesota for amounts of use tax which it was
required to collect but did not collect unless the retailer knew
or had been advised by the commissioner of its obligation to
collect the use tax.
Sec. 6. Minnesota Statutes 1986, section 297A.21, is
amended to read:
297A.21 [REGISTRATION; INFORMATION RELATING TO BUSINESS
LOCATION TO COLLECT USE TAX.]
Subdivision 1. Every retailer making retail sales for
storage, use or other consumption in Minnesota shall register
with the commissioner and give the name and address of all
agents operating in Minnesota, the location of all distribution
or sales houses, offices or other places of business in
Minnesota, and such other information as the commissioner may
require. When, in the opinion of the commissioner, it is
necessary for the efficient administration of sections 297A.14
to 297A.25 to regard any salesperson, representative, trucker,
peddler, or canvasser as the agent of the dealer, distributor,
supervisor, employer, or other person under whom that person
operates or from whom the person obtains the tangible personal
property sold, whether making sales personally or in behalf of
such dealer, distributor, supervisor, employer, or other person,
the commissioner may regard the salesperson, representative,
trucker, peddler, or canvasser as such agent, and may regard the
dealer, distributor, supervisor, employer, or other person as a
retailer for the purposes of sections 297A.14 to 297A.25.
Subd. 2. [RETAILER MAINTAINING PLACE OF BUSINESS IN
MINNESOTA.] "Retailer maintaining a place of business in this
state", or any like term, shall mean any retailer having or
maintaining within this state, directly or by a subsidiary, an
office, distribution house, sales house, warehouse, or other
place of business, or any agent operating within this state
under the authority of the retailer or its subsidiary, whether
such place of business or agent is located in the state
permanently or temporarily, or whether or not such retailer or
subsidiary is authorized to do business within this state.
Subd. 2. [DESTINATION.] The destination of a sale is the
location to which the retailer makes delivery of the property
sold, or causes the property to be delivered, to the purchaser
of the property, or to the agent or designee of the purchaser by
any means of delivery, including the United States Postal
Service, a common carrier, or a contract carrier.
Subd. 3. [OUT-OF-STATE RETAILER MAINTAINING PLACE OF
BUSINESS IN MINNESOTA.] A retailer making retail sales from
outside this state to a destination within this state and
maintaining a place of business in this state shall file an
application for a permit pursuant to section 297A.04 and shall
collect and remit the use tax as provided in section 297A.16.
Subd. 4. [REQUIRED REGISTRATION BY OUT-OF-STATE RETAILER
NOT MAINTAINING PLACE OF BUSINESS IN MINNESOTA.] (a) A retailer
making retail sales from outside this state to a destination
within this state and not maintaining a place of business in
this state shall file an application for a permit pursuant to
section 297A.04 and shall collect and remit the use tax as
provided in section 297A.16 if the retailer engages in the
regular or systematic soliciting of sales from potential
customers in this state by:
(1) the distribution, by mail or otherwise, without regard
to the state from which such distribution originated or in which
the materials were prepared, of catalogs, periodicals,
advertising flyers, or other written solicitations of business
to customers in this state;
(2) display of advertisements on billboards or other
outdoor advertising in this state;
(3) advertisements in newspapers published in this state;
(4) advertisements in trade journals or other periodicals
the circulation of which is primarily within this state;
(5) advertisements in a Minnesota edition of a national or
regional publication or a limited regional edition in which this
state is included of a broader regional or national publication
which are not placed in other geographically defined editions of
the same issue of the same publication;
(6) advertisements in regional or national publications in
an edition which is not by its contents geographically targeted
to Minnesota but which is sold over the counter in Minnesota or
by subscription to Minnesota residents;
(7) advertisements broadcast on a radio or television
station located in Minnesota; or
(8) any other solicitation by telegraphy, telephone,
computer data base, cable, optic, microwave, or other
communication system.
(b) The location within or without this state of vendors
independent of the retailer which provide products or services
to the retailer in connection with its solicitation of customers
within this state, including such products and services as
creation of copy, printing, distribution, and recording, is not
to be taken into account in the determination of whether the
retailer is required to collect use tax. Paragraph (a) shall be
construed without regard to the state from which distribution of
the materials originated or in which they were prepared.
(c) A retailer not maintaining a place of business in this
state shall be presumed, subject to rebuttal, to be engaged in
regular solicitation within this state if it engages in any of
the activities in paragraph (a) and makes 100 or more retail
sales from outside this state to destinations within this state
during a period of 12 consecutive months.
(d) A retailer not maintaining a place of business in this
state shall not be required to collect use tax imposed by any
local governmental unit or subdivision of this state and this
section does not subject such a retailer to any regulation of
any local unit of government or subdivision of this state.
Subd. 5. [VOLUNTARY REGISTRATION BY OUT-OF-STATE RETAILER
NOT MAINTAINING PLACE OF BUSINESS IN MINNESOTA.] A retailer
making retail sales from outside this state to a destination
within this state who is not required to collect and remit use
tax may nevertheless voluntarily file an application for a
permit pursuant to section 297A.04. If the application is
granted, the retailer shall collect and remit the use tax as
provided in section 297A.16 until the permit is canceled or
revoked.
Subd. 6. [COMMISSIONER'S DISCRETION.] (a) The commissioner
may decline to issue a permit to any retailer not maintaining a
place of business in this state, or may cancel a permit
previously issued to the retailer, if the commissioner believes
that the use tax can be collected more effectively from the
persons using the property in this state. A refusal to issue or
cancellation of a permit on such grounds does not affect the
retailer's right to make retail sales from outside this state to
destinations within this state.
(b) When, in the opinion of the commissioner, it is
necessary for the efficient administration of sections 297A.14
to 297A.25 to regard a salesperson, representative, trucker,
peddler, or canvasser as the agent of the dealer, distributor,
supervisor, employer, or other person under whom that person
operates or from whom the person obtains the tangible personal
property sold, whether making sales personally or in behalf of
that dealer, distributor, supervisor, employer, or other person
the commissioner may regard the salesperson, representative,
trucker, peddler, or canvasser as such agent, and may regard the
dealer, distributor, supervisor, employer, or other person as a
retailer for the purposes of sections 297A.14 to 297A.25.
Sec. 7. Minnesota Statutes 1987 Supplement, section
297A.212, is amended to read:
297A.212 [RAILROAD ROLLING STOCK.]
Railroad rolling stock used by a railroad operating in this
state that is licensed as a common carrier by the Interstate
Commerce Commission and used to transport persons or property in
interstate or foreign commerce is subject to taxation under this
chapter only to the extent provided in this section. The tax
must be computed using the ratio of intrastate mileage to
interstate or foreign mileage traveled by the carrier during the
previous fiscal year of the carrier revenue ton miles of
passengers, mail, express, and freight carried by the railroad
within this state to the total number of revenue ton miles
carried by the railroad within and without this state. This
ratio must be determined at the close of the carrier's previous
fiscal year. This ratio must be applied each month to
the purchase price total amount of purchases of total purchases
of rolling stock that are used in within and without this state
by the railroad to establish that portion of the total used and
consumed in intrastate movement and subject to tax under this
chapter. "Railroad rolling stock" means all portable or moving
apparatus and machinery of a railroad company and includes
engines, cars, tenders, coaches, sleeping cars, and parts
necessary for the repair and maintenance of the rolling stock.
Sec. 8. Minnesota Statutes 1987 Supplement, section
297A.25, subdivision 3, is amended to read:
Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts
from the sale of prescribed drugs, prescribed medicine and
insulin, intended for use, internal or external, in the cure,
mitigation, treatment or prevention of illness or disease in
human beings are exempt, together with prescription glasses,
therapeutic, and prosthetic devices. "Prescribed drugs" or
"prescribed medicine" includes over-the-counter drugs or
medicine prescribed by a licensed physician. Nonprescription
analgesics consisting principally (determined by the weight of
all ingredients) of acetaminophen, acetylsalicylic acid,
ibuprofen, or a combination thereof are exempt.
Sec. 9. Minnesota Statutes 1986, section 297A.25,
subdivision 5, is amended to read:
Subd. 5. [OUTSTATE TRANSPORT OR DELIVERY.] The gross
receipts from the following sales of tangible personal property
are exempt:
(1) property which, without intermediate use, is shipped or
transported outside Minnesota by the purchaser and thereafter
used in a trade or business or is stored, processed, fabricated
or manufactured into, attached to or incorporated into other
tangible personal property transported or shipped outside
Minnesota and thereafter used in a trade or business outside
Minnesota, and which is not thereafter returned to a point
within Minnesota, except in the course of interstate commerce
(storage shall not constitute intermediate use); provided that
the property is not subject to tax in that state or country to
which it is transported for storage or use, or, if subject to
tax in that other state, that state allows a similar exemption
for property purchased therein and transported to Minnesota for
use in this state; except that sales of tangible personal
property that is shipped or transported for use outside
Minnesota shall be taxed at the rate of the use tax imposed by
the state to which the property is shipped or transported,
unless that state has no use tax, in which case the sale shall
be taxed at the rate generally imposed by this state; and
provided further that sales of tangible personal property to be
used in other states or countries as part of a maintenance
contract shall be specifically exempt; or
(2) property which the seller delivers to a common carrier
for delivery outside Minnesota, places in the United States mail
or parcel post directed to the purchaser outside Minnesota, or
delivers to the purchaser outside Minnesota by means of the
seller's own delivery vehicles, and which is not thereafter
returned to a point within Minnesota, except in the course of
interstate commerce.
Sec. 10. Minnesota Statutes 1987 Supplement, section
297A.25, subdivision 11, is amended to read:
Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from
all sales, including sales in which title is retained by a
seller or a vendor or is assigned to a third party under an
installment sale or lease purchase agreement under section
465.71, of tangible personal property to, and all storage, use
or consumption of such property by, the United States and its
agencies and instrumentalities, the University of Minnesota,
state universities, community colleges, technical institutes,
state academies, and political subdivisions of the state are
exempt. Sales exempted by this subdivision include sales under
section 297A.01, subdivision 3, clause (f). This exemption
shall not apply to building, construction or reconstruction
materials purchased by a contractor or a subcontractor as a part
of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for
use in the construction, alteration or repair of a building or
facility. This exemption does not apply to construction
materials purchased by tax exempt entities or their contractors
to be used in constructing buildings or facilities which will
not be used principally by the tax exempt entities.
Sec. 11. Minnesota Statutes 1986, section 297A.25, is
amended by adding a subdivision to read:
Subd. 37. [YMCA AND YWCA MEMBERSHIPS.] The gross receipts
from the sale of memberships, including both one-time initiation
fees and periodic membership dues, to an association
incorporated under section 315.44 are exempt. However, all
separate charges made for the privilege of having access to and
the use of the association's sports and athletic facilities are
taxable.
Sec. 12. Minnesota Statutes 1986, section 297A.25, is
amended by adding a subdivision to read:
Subd. 38. [USED MOTOR OILS.] The gross receipts from the
sale of used motor oils are exempt.
Sec. 13. Minnesota Statutes 1986, section 297A.25, is
amended by adding a subdivision to read:
Subd. 39. [CROSS COUNTRY SKI PASSES.] The gross receipts
from the sale of cross country ski passes issued under sections
85.40 to 85.43 are exempt.
Sec. 14. Minnesota Statutes 1986, section 297A.25, is
amended by adding a subdivision to read:
Subd. 40. [STATE FAIR ADMISSIONS.] The gross receipts from
the sale of tickets to the premises of or events sponsored by
the state agricultural society and conducted on the state
fairgrounds during the period of the annual state fair are
exempt, provided that:
(1) the tax foregone under this subdivision is used
exclusively for the purpose of making capital improvements to
state-owned buildings and facilities on the state fairgrounds;
and
(2) the tax foregone under this subdivision is matched in
equal amount by proceeds from special assessments levied against
commercial exhibits, concessions and rentals, and from other
special user fees specifically designated for capital
improvements.
Sec. 15. Minnesota Statutes 1986, section 297A.25, is
amended by adding a subdivision to read:
Subd. 41. [BULLET-PROOF VESTS.] The gross receipts from
the sale of bullet-resistant soft body armor that is flexible,
concealable, and custom-fitted to provide the wearer with
ballistic and trauma protection are exempt if purchased by a
licensed peace officer, as defined in section 626.84,
subdivision 1. The bullet-resistant soft body armor must meet
or exceed the requirements of standard 0101.01 of the National
Institute of Law Enforcement and Criminal Justice in effect on
December 30, 1986, or meet or exceed the requirements of the
standard except wet armor conditioning.
Sec. 16. Minnesota Statutes 1986, section 297A.256, is
amended to read:
297A.256 [EXEMPTIONS FOR CERTAIN NONPROFIT GROUPS.]
Notwithstanding the provisions of this chapter, the
following sales made by a "nonprofit organization" are exempt
from the sales and use tax.
(a) (1) All sales made by an organization for fundraising
purposes if that organization exists solely for the purpose of
providing educational or social activities for young people
primarily age 18 and under. This exemption shall apply only if
the gross annual sales receipts of the organization from
fundraising do not exceed $10,000.
(2) A club, association, or other organization of
elementary or secondary school students organized for the
purpose of carrying on sports, educational, or other
extracurricular activities is a separate organization from the
school district or school for purposes of applying the $10,000
limit. This paragraph does not apply if the sales are derived
from admission charges or from activities for which the money
must be deposited with the school district treasurer under
section 123.38, subdivision 2 or be recorded in the same manner
as other revenues or expenditures of the school district under
section 123.38, subdivision 2b.
(b) All sales made by an organization for fundraising
purposes if that organization is a senior citizen group which
qualifies for exemption on its purchases pursuant to section
297A.25, subdivision 16. This exemption shall apply only if the
gross annual sales receipts of the organization from fundraising
do not exceed $10,000.
(c) The gross receipts from the sales of tangible personal
property at, admission charges for, and sales of food, meals, or
drinks at fundraising events sponsored by a nonprofit
organization when the entire proceeds, except for the necessary
expenses therewith, will be used solely and exclusively for
charitable, religious, or educational purposes. This exemption
does not apply to admission charges for events involving bingo
or other gambling activities or to charges for use of amusement
devices involving bingo or other gambling activities. For
purposes of this clause, a "nonprofit organization" means any
unit of government, corporation, society, association,
foundation, or institution organized and operated for
charitable, religious, educational, civic, fraternal, senior
citizens' or veterans' purposes, no part of the net earnings of
which enures to the benefit of a private individual.
If the profits are not used solely and exclusively for
charitable, religious, or educational purposes, the entire gross
receipts are subject to tax.
Each nonprofit organization shall keep a separate
accounting record, including receipts and disbursements from
each fundraising event. All deductions from gross receipts must
be documented with receipts and other records. If records are
not maintained as required, the entire gross receipts are
subject to tax.
The exemption provided by this section does not apply to
any sale made by or in the name of a nonprofit corporation as
the active or passive agent of a person that is not a nonprofit
corporation.
The exemption for fundraising events under this section is
limited to no more than 24 days a year. Fundraising events
conducted on premises leased or occupied for more than four days
but less than 30 days do not qualify for this exemption.
Sec. 17. Minnesota Statutes 1986, section 297A.35,
subdivision 1, is amended to read:
Subdivision 1. A person who has, pursuant to the
provisions of this chapter, paid to the commissioner an amount
of tax for any period in excess of the amount legally due for
that period, may file with the commissioner a claim for a refund
of such excess subject to the conditions specified in
subdivision 5. Except as provided in subdivision 4 no such
claim shall be entertained unless filed within two years after
such tax was paid, or within three years from the filing of the
return, whichever period is the longer. The commissioner shall
examine the claim and make and file written findings thereon
denying or allowing the claim in whole or in part and shall mail
a notice thereof to such person at the address stated upon the
claim. Any allowance shall include interest on the excess
determined at a rate specified in section 270.76 from the date
such excess was paid or collected until the date it is refunded
or credited, unless otherwise specified in this chapter. If
such claim is allowed in whole or in part, the commissioner
shall credit the amount of the allowance against any taxes under
sections 297A.01 to 297A.44 due from the claimant and for the
balance of said allowance, if any, the commissioner shall issue
a certificate for the refundment of the excess paid, and the
commissioner of finance shall cause such refund to be paid out
of the proceeds of the taxes imposed by sections 297A.01 to
297A.44, as other state moneys are expended. So much of the
proceeds of such taxes as may be necessary are hereby
appropriated for that purpose.
Sec. 18. Minnesota Statutes 1987 Supplement, section
297B.03, is amended to read:
297B.03 [EXEMPTIONS.]
There is specifically exempted from the provisions of this
chapter and from computation of the amount of tax imposed by it
the following:
(1) Purchase or use, including use under a lease purchase
agreement or installment sales contract made pursuant to section
465.71, of any motor vehicle by the United States and its
agencies and instrumentalities and by any person described in
and subject to the conditions provided in section 297A.25,
subdivision 18.
(2) Purchase or use of any motor vehicle by any person who
was a resident of another state at the time of the purchase and
who subsequently becomes a resident of Minnesota, provided the
purchase occurred more than 60 days prior to the date such
person began residing in the state of Minnesota.
(3) Purchase or use of any motor vehicle by any person
making a valid election to be taxed under the provisions of
section 297A.211.
(4) Purchase or use of any motor vehicle previously
registered in the state of Minnesota by any corporation or
partnership when such transfer constitutes a transfer within the
meaning of section 351 or 721 of the Internal Revenue Code of
1954, as amended through December 31, 1974.
(5) Purchase or use of any vehicle owned by a resident of
another state and leased to a Minnesota based private or for
hire carrier for regular use in the transportation of persons or
property in interstate commerce provided the vehicle is titled
in the state of the owner or secured party, and that state does
not impose a sales or motor vehicle excise tax on motor vehicles
used in interstate commerce.
(6) Purchase or use of a motor vehicle by a private
nonprofit or public educational institution for use as an
instructional aid in automotive training programs operated by
the institution.
Sec. 19. Minnesota Statutes 1986, section 329.11, is
amended to read:
329.11 [LICENSE; APPLICATION, ISSUANCE, FEE; BOND; AGENT
FOR SERVICE OF PROCESS.]
Any transient merchant desiring to engage in, do, or
transact business by auction or otherwise, in any county in this
state shall file an application for a license for that purpose
with the auditor of the county in which the desired business is
to be conducted, which application shall state the name of the
applicant, the proposed place of business, the kind of business
proposed to be conducted, and the length of time desired to do
business. Such transient merchant shall pay to the treasurer of
such county a license fee of $150, any personal property taxes
payable by the merchant pursuant to Minnesota Statutes 1949,
Sections 288.01 to 288.03, and shall give bond to the county in
an amount to be determined by the county treasurer, which shall
be not less than $1,000 nor more than $3,000 which. The bond
shall be approved by the treasurer and be conditioned that the
merchant will in all things conform to the laws relating to
transient merchants and further conditioned on full compliance
with all material oral or written statements and representations
made by the seller, the seller's agents, representatives, or
auctioneers with reference to merchandise sold or offered for
sale and on faithful performance under all warranties made with
reference thereto. The treasurer of such county shall issue to
such person receipts therefor, and such transient merchant shall
thereupon file such receipts with the auditor of such county,
who shall thereupon issue to such transient merchant a license
to do business as such at the place described in the
application; and the kind of business to be done shall be
described therein. No license shall be good for more than one
person unless such person shall be a member of a copartnership,
nor for more than one place, and shall not be good outside of
the county in which it was issued. Such license shall be good
for a period of one year from the date of its issuance. The
auditor shall keep a record of such licenses in a book provided
for that purpose, which shall at all times be open for public
inspection. No license shall be issued unless the merchant
produces evidence that the merchant is the holder of a valid
seller's permit issued under section 297A.04, or a written
statement from the merchant that the merchant is not offering
for sale any item that is taxable under chapter 297A.
The application shall further contain the applicant's
residence and business address for the prior two year period;
the type of business engaged in during the previous two years;
and the name and address of the auctioneer who will conduct the
sale. No such sale shall be conducted in the name of any person
other than the bona fide owner of the merchandise.
The applicant shall attach to the application an itemized
list of merchandise to be offered for sale reciting as to each
item a description thereof including serial number if any, the
owner's actual cost thereof, and a designation by number
corresponding with a number to be affixed to each item by a tag
which shall be kept fastened to the item at all times until sold.
Prior to the issuance of the license and approval of bond,
the applicant shall in writing appoint the county auditor as the
applicant's agent to accept service of process in any action
commenced against the applicant arising out of the sale for
which the license is sought. Such action shall be brought in
the county where the sale was held.
Sec. 20. [REPEALER.]
Minnesota Statutes 1986, section 297A.15, subdivision 2, is
repealed.
Sec. 21. [TODD COUNTY.]
For purposes of the designation of distressed counties
under Minnesota Statutes, section 297A.257, the city of Staples
is deemed to be located entirely in Todd county.
Sec. 22. [EFFECTIVE DATE.]
Section 1, paragraph (c), is effective for all meals
furnished on or after October 15, 1987, except the provisions
relating to meals furnished to inmates or residents of
correctional, detention, and detoxification facilities are
effective for sales made after June 30, 1988. Sections 1,
paragraphs (j) and (l), 8, 10 to 13, 15, 16 and 18 are effective
for retail sales made after June 30, 1988, except as otherwise
provided. Sections 2, and 4 to 6 and 20 are effective June 1,
1988. Section 19 is effective July 1, 1988. Sections 3 and 17
are effective for all refund claims filed after June 30, 1988.
Section 7 and the provisions of section 10 exempting utility
services purchased by governmental units and all purchases by
the University of Minnesota hospitals are effective for all
sales made after May 31, 1987, but do not apply to sales of
tangible personal property made pursuant to bona fide written
contracts that were enforceable before June 1, 1987, and
delivery is made on or before December 31, 1987. Section 9 is
effective for all sales made after June 30, 1988, but does not
apply to sales of tangible personal property made pursuant to
bona fide written contracts that were enforceable before July 1,
1988, and delivery is made on or before December 31, 1988.
Section 14 is effective for sales made after December 31, 1988.
Section 21 is effective beginning with the designation of
distressed counties in calendar year 1987.
ARTICLE 11
CIGARETTE AND LIQUOR TAXES
Section 1. Minnesota Statutes 1987 Supplement, section
297.01, subdivision 7, is amended to read:
Subd. 7. "Distributor" means any and each of the following:
(1) any person engaged in the business of selling
cigarettes in this state and who manufactures or who brings, or
causes to be brought, into this state from without the state any
packages of cigarettes for sale to subjobbers or retailers;
(2) any person who makes, manufactures, or fabricates
cigarettes in this state for sale in this state;
(3) any person engaged in the business without this state
who ships or transports cigarettes to retailers in this state,
to be sold by those retailers;
(4) (3) any person who is on direct purchase from a
cigarette manufacturer and applies cigarette stamps or indicia
on at least 50 percent of cigarettes sold by that person.
A distributor who also sells at retail must maintain a
separate inventory, substantiated with invoices for cigarettes
that were acquired for retail sale.
A distributor may transfer another state's stamped
cigarettes to another distributor for the purpose of resale in
the other state.
Sec. 2. Minnesota Statutes 1987 Supplement, section
297.01, subdivision 14, is amended to read:
Subd. 14. "Subjobber" means any person who acquires
stamped cigarettes or other state's stamped cigarettes for the
primary purpose of resale to retailers, and any licensed
distributor who delivers to and sells or distributes stamped
cigarettes from a place of business other than that licensed in
the distributor's license. The definition of subjobber does not
include the occasional sale of stamped cigarettes from one
retailer to another. Notwithstanding the foregoing, "subjobber"
shall also mean any person who is a vending machine operator. A
vending machine operator is any person whose principal business
is operating, or owning and leasing to operators, machines for
the vending of merchandise or service.
For the purpose of this section, any subjobber that sells
at retail must maintain a separate inventory, substantiated with
invoices, that reflect the cigarettes were acquired for retail
sale.
Sec. 3. Minnesota Statutes 1986, section 297.01, is
amended by adding a subdivision to read:
Subd. 15. "Prior continuous compliance taxpayer" means a
person who is licensed under section 297.04 and who, having been
a licensee for a continuous period of five years, the
commissioner determines has not been either delinquent or
deficient in the payment of tax liability during that period or
otherwise in violation of this chapter. Any taxpayer who has,
as verified by the commissioner, continuously complied with the
condition of a bond or other security under provisions of this
chapter for a period of five consecutive years is considered a
"prior continuous compliance taxpayer." A continuous period of
time of qualifying compliance immediately prior to August 1,
1988, is credited to any licensee who became licensed on or
before that date.
Sec. 4. Minnesota Statutes 1986, section 297.03, is
amended by adding a subdivision to read:
Subd. 5a. [REVOLVING ACCOUNT.] A heat applied cigarette
tax stamp revolving account is created. The commissioner shall
use the amounts in this fund to purchase heat applied stamps for
resale. The commissioner shall charge the purchasers for the
costs of the stamps along with the tax value plus shipping
costs. The costs recovered along with shipping costs must be
deposited into this revolving account and are available to the
commissioner for further purchases and shipping costs. The
revolving account must be funded by reducing the stamping
discounts allowed in subdivision 5 for the first three months of
fiscal year 1989. The stamping discounts are 0.75 percent of
the face amount of any stamps purchased in the first three
months for the first $1,500,000 of the stamps and 0.50 percent
on the remainder of the stamps purchased.
At the end of each of the first three months of fiscal year
1989, the commissioner shall notify the commissioner of finance
of the amount of reduced stamping discounts that have accrued to
the tobacco tax revenue fund. The commissioner of finance shall
then transfer the amounts to the heat applied cigarette tax
stamp revolving account from the tobacco tax revenue fund.
Sec. 5. Minnesota Statutes 1987 Supplement, section
297.03, subdivision 6, is amended to read:
Subd. 6. [TAX METER MACHINES.] (1) (a) Before January 1,
1990, the commissioner may authorize any person licensed as a
distributor to stamp packages with a tax meter machine, approved
by the commissioner, which shall be provided by the
distributor. The commissioner may provide for the use of such a
machine by the distributor, supervise and check its operation,
provide for the payment of the tax on any package so stamped,
subject to the discount provided in subdivision 5, and in that
connection. Except as provided in paragraph (d), the
commissioner may require the furnishing of a corporate surety
bond, check guarantee bond, or certified check in a suitable
amount to guarantee the payment of the tax.
(2) (b) Before January 1, 1990, the commissioner may
authorize, and after December 31, 1989, the commissioner shall
require any person licensed as a distributor whose stamp meter
machine is no longer operational to stamp packages with a
heat-applied tax stamping machine, approved by the commissioner,
which shall be provided by the distributor. The commissioner
shall supervise and check the operation of the machines and
shall provide for the payment of the tax on any package so
stamped, subject to the discount provided in subdivision 5. The
commissioner may sell heat-applied stamps on a credit basis
under conditions prescribed by the commissioner, and in that
connection. Except as provided in paragraph (d), the
commissioner may require the furnishing of a corporate surety
bond, check guarantee bond, or certified check in an amount
suitable to guarantee payment of the tax stamps so purchased by
a distributor. The stamps shall be sold by the commissioner at
a price which includes the tax after giving effect to the
discount provided in subdivision 5. The commissioner shall
recover the actual costs of the stamps from the distributor.
(3) (c) If the commissioner finds that a stamping machine
is not printing or affixing a legible stamp on the package, the
commissioner may order the distributor to immediately cease the
stamping process until the machine is functioning properly.
(d) Every prior continuous compliance taxpayer is exempt
from all requirements under this chapter concerning the
furnishing of a bond. This exemption continues for the taxpayer
until the commissioner determines that the taxpayer (1) is
delinquent in the filing of any return, or (2) is delinquent or
deficient in the payment of any uncontested tax liability under
this chapter. At that time that taxpayer is subject to the bond
requirements of this chapter and, as a condition of being
allowed to continue to engage in the business licensed under
this chapter, is required to furnish bond to the commissioner as
provided in this chapter. The taxpayer shall furnish the bond
for a period of two years, after which, if the taxpayer has not
been delinquent in the filing of any returns, or delinquent or
deficient in the paying of any tax under this chapter, the
commissioner may reinstate the person as a prior continuous
compliance taxpayer. A taxpayer who fails to pay an uncontested
tax liability under this chapter may be required to post bond or
other acceptable security with the commissioner guaranteeing the
payment of the uncontested tax liability. The commissioner
shall annually establish the maximum amount of heat applied
stamps or meter units that may be purchased each month.
Notwithstanding any other provisions of this chapter, the tax
due on the return will be based upon actual heat applied stamps
or meter units purchased during the reporting period.
Sec. 6. Minnesota Statutes 1986, section 297.03,
subdivision 12, is amended to read:
Subd. 12. [SETTING OF TAX METERS.] The commissioner may
designate the county treasurer of any county or any banking
institution as defined by section 48.01, or any banking
institution as defined by any states' statutes as the
representative of the commissioner in the setting of a tax meter
machine of any particular distributor and the collection of the
cigarette tax upon such setting. The county treasurer or
banking institution so designated shall be required to set tax
meter machines following the method prescribed by the
commissioner of revenue and to transmit the amount of tax
collected and to report the setting of each tax meter to the
commissioner on or before the next business day. For purposes
of this paragraph, a business day shall not include Saturday.
Such duties shall be within the coverage of the official bond of
the county treasurer. The commissioner shall prescribe the form
and amount of a surety bond which shall be furnished by a
banking institution designated pursuant to this subdivision.
The commissioner shall have the right to withdraw this
designation without cause.
Sec. 7. Minnesota Statutes 1986, section 297.041,
subdivision 1, is amended to read:
Subdivision 1. [WHOLESALERS.] Any wholesaler who furnishes
a surety bond in a sum satisfactory to the commissioner shall be
permitted to set aside, without affixing the stamps required by
this chapter, that part of the wholesaler's stock necessary for
the conduct of business in making sales to the established
governing body of any Indian tribe recognized by the United
States Department of Interior. The unstamped stock shall be
kept separate and apart from stamped stock. Every wholesaler
shall, at the time of shipping or delivering any of the
unstamped stock to an Indian tribal organization, make a true
duplicate invoice which shall show the complete details of the
sale or delivery and shall transmit the duplicate to the
commissioner not later than the fifteenth 18th day of the
following calendar month. Failure to comply with the
requirements of this section shall cause the commissioner to
revoke the permission granted to the wholesaler to maintain a
stock of goods which may be unstamped. The commissioner may
also revoke this permission to maintain a stock of unstamped
goods for sale to a specific Indian tribal organization when it
appears that sales of unstamped cigarettes to persons who are
not enrolled members of a recognized Indian tribe are taking
place, or have taken place, within the exterior boundaries of
the reservation occupied by that tribe.
Sec. 8. Minnesota Statutes 1986, section 297.06,
subdivision 1, is amended to read:
Subdivision 1. [DISTRIBUTOR TO KEEP RECORDS.] Every
distributor shall keep at each licensed place of business
complete and accurate records, for that place of business,
including itemized invoices, of cigarettes held, purchased,
manufactured, or brought in or caused to be brought in from
without the state, and of all sales of cigarettes made, except
sales to the ultimate consumer. These records shall show the
names and addresses of purchasers, the inventory at the close of
each period for which a return is required of all cigarettes on
hand, and of all stamps, affixed and unaffixed, and other
pertinent papers and documents relating to the purchase, sale,
or disposition of cigarettes. When a licensed distributor sells
cigarettes exclusively to the ultimate consumer at the address
given in the license, no invoice of those sales shall be
required, but itemized invoices shall be made of all cigarettes
transferred to other retail outlets owned or controlled by that
licensed distributor. All books, records, and other papers and
documents required by sections 297.01 to 297.13 to be kept shall
be preserved for a period of at least one year three years after
the date of the documents, as aforesaid, or the date of the
entries thereof appearing in the records, unless the
commissioner, in writing, authorizes their destruction or
disposal at an earlier date. At any time during usual business
hours the commissioner, or duly authorized agents or employees,
may enter any place of business of a distributor, without a
search warrant, and inspect the premises, the records required
to be kept under sections 297.01 to 297.13, and the packages of
cigarettes and the vending devices contained therein, to
determine whether or not all the provisions of these sections
are being fully complied with. If the commissioner, or any such
agent or employee, is denied free access or is hindered or
interfered with in making such examination, the license of the
distributor at such premises shall be subject to revocation by
the commissioner.
Sec. 9. Minnesota Statutes 1986, section 297.06,
subdivision 2, is amended to read:
Subd. 2. [DISTRIBUTOR TO PRESERVE COPIES OF INVOICES.]
Every person who sells cigarettes to persons other than the
ultimate consumer shall render with each sale itemized invoices
showing the seller's name and address, the purchaser's name and
address, the date of sale, and all prices and discounts and
shall preserve legible copies of all such invoices for one year
three years from the date of sale.
Sec. 10. Minnesota Statutes 1986, section 297.06,
subdivision 3, is amended to read:
Subd. 3. [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE
INVOICES.] Every retailer and subjobber shall procure itemized
invoices of all cigarettes purchased. The invoices shall show
the name and address of the seller and the date of purchase.
The retailer and subjobber shall preserve a legible copy of each
such invoice for one year from the date of purchase. Invoices
shall be available for inspection by the commissioner or
authorized agents or employees at the retailer's or subjobber's
place of business.
At any time during normal business hours, the commissioner
or the commissioner's agents may enter any place of business of
a retailer or subjobber and inspect the premises, the records
required to be kept for this subdivision, and the packages of
cigarettes, tobacco products, and vending devices contained on
the premises to determine whether all provisions of chapter 297
and sections 325D.30 to 325D.40 are being fully complied with.
Sec. 11. Minnesota Statutes 1986, section 297.06, is
amended by adding a subdivision to read:
Subd. 4. [PHYSICAL INVENTORY.] The commissioner of revenue
or the commissioner's authorized agents may, upon request but
not more than twice annually, require a cigarette or tobacco
distributor to furnish a physical inventory of all cigarettes in
stock. The inventory must contain the information that the
commissioner requests and must be certified by an officer of the
corporation.
Sec. 12. Minnesota Statutes 1986, section 297.08,
subdivision 1, is amended to read:
Subdivision 1. [CONTRABAND DEFINED.] The following are
declared to be contraband:
(1) All packages which do not have stamps affixed to them
as provided in sections 297.01 to 297.13 and all devices for the
vending of cigarettes in which such unstamped packages are
found, including all contents contained within the devices.
(2) Any device for the vending of cigarettes and all
packages of cigarettes contained therein, where the device does
not afford at least partial visibility of contents. Where any
package exposed to view does not carry the stamp or imprint
required by sections 297.01 to 297.13, it shall be presumed that
all packages contained in the device are unstamped and
contraband.
(3) Any device for the vending of cigarettes to which the
commissioner or authorized agents have been denied access for
the inspection of contents. In lieu of seizure, the
commissioner or an agent may seal the device to prevent its use
until inspection of contents is permitted.
(4) Any device for the vending of cigarettes which does not
carry the name and address of the owner, plainly marked and
visible from the front of the machine.
(5) Any device including, but not limited to, motor
vehicles, trailers, snowmobiles, airplanes and boats used with
the knowledge of the owner or of a person operating with the
consent of the owner for the storage or transportation of more
than 5,000 cigarettes which are contraband under this
subdivision. When cigarettes are being transported in the
course of interstate commerce, or are in movement from either a
public warehouse to a distributor upon orders from a
manufacturer or distributor, or from one distributor to another,
the cigarettes are not contraband, notwithstanding the
provisions of clause (1).
Sec. 13. Minnesota Statutes 1987 Supplement, section
297.11, subdivision 5, is amended to read:
Subd. 5. [TRANSPORTING UNSTAMPED PACKAGES.] No person
shall transport into, or receive, carry, or move from place to
place in this state, any packages of cigarettes not stamped in
accordance with the provisions of this act except in the course
of interstate commerce, unless the cigarettes are moving from a
public warehouse to a distributor upon orders from the
manufacturer or distributor. This subdivision shall not apply
to a person carrying for personal use not more than 200
cigarettes when those cigarettes have had the individual
packages or seals thereof broken and are intended for personal
use by that person and not to be sold or offered for sale.
Common carriers and contract carriers transporting
cigarettes into this state shall file with the commissioner
reports of all such shipments other than those which are
delivered to public warehouses of first destination in this
state which are licensed under the provisions of chapter 231.
Such reports shall be filed monthly on or before the 10th day of
each month and shall show with respect to deliveries made in the
preceding month: the date, point of origin, point of delivery,
name of consignee, the quantity of cigarettes delivered and such
other information as the commissioner may require.
All common carriers and contract carriers transporting
cigarettes into Minnesota shall permit examination by the
commissioner of their records relating to the shipment of
cigarettes.
Any person who fails or refuses to transmit to the
commissioner the required reports or whoever refuses to permit
the examination of the records by the commissioner shall be
guilty of a gross misdemeanor.
Sec. 14. Minnesota Statutes 1986, section 297.12,
subdivision 1, is amended to read:
Subdivision 1. [FELONY.] (a) Any person violating section
297.11, subdivision 1, shall be guilty of a felony.
(b) Any person violating section 297.11, subdivisions 2 or
5 by possessing, receiving, or transporting more than 20,000
cigarettes not stamped in accordance with the provisions of
sections 297.01 to 297.13 shall be guilty of a felony.
(c) A person selling cigarettes after the person's license
has been revoked is guilty of a felony.
Sec. 15. Minnesota Statutes 1986, section 297.35, is
amended by adding a subdivision to read:
Subd. 10. A manufacturer of tobacco products as defined by
section 297.31, shall report on a form prescribed by the
commissioner all sales of tobacco products to Minnesota-licensed
distributors, subjobbers, retailers, or to any locations within
the state. The report is due on the 18th of the month following
the reporting period.
Anyone violating this section is guilty of a gross
misdemeanor.
Sec. 16. [297.44] [TIME LIMITATIONS.]
Subdivision 1. [TIME FOR ASSESSMENT; NOTICE.] Except as
otherwise provided in this chapter, the amount of taxes
assessable with respect to a taxable period must be assessed
within three years after the return for the period is filed.
The taxes are considered assessed within the meaning of this
section when the commissioner has prepared a notice of tax
assessment and mailed it to the person required to file a return
to the post office address given in the return. The record of
the mailing is presumptive evidence of the giving of the notice,
and the records must be preserved by the commissioner.
Subd. 2. [OMISSION OVER 25 PERCENT.] If the person
required to file the return omits from the return a dollar
amount properly includable in it that is in excess of 25 percent
of the dollar amount reported in the return, the tax may be
assessed, or a proceeding in court for the collection of such
tax may be begun, at any time within five years after the return
was filed.
Subd. 3. [DATE OF FILING.] For purposes of this section
and section 297.36, a return filed before the last day
prescribed by law for its filing is considered filed on the last
day.
Subd. 4. [FRAUD; FAILURE TO FILE.] In the case of a false
or fraudulent return with intent to evade tax or failure with
the same intent to file a return, the tax may be assessed at any
time, and a proceeding in court for the collection of the tax
must be begun within five years after the assessment.
Subd. 5. [COLLECTION.] Where the assessment of any tax is
made within the period of limitation properly applicable to it,
the tax may be collected by a proceeding in court, but only if
begun within five years after the date of assessment.
Subd. 6. [SUSPENSION OF TIME; BANKRUPTCY PROCEEDINGS.] The
time during which a tax must be assessed or collection
proceedings commenced under this chapter is suspended during the
period from the date of a filing of a petition in bankruptcy
until 30 days after notice to the commissioner of revenue that
the bankruptcy proceedings have been closed or dismissed, or
that the automatic stay has been terminated or has expired.
The suspension of the statute of limitations under this
subdivision applies to the person against whom the petition in
bankruptcy is filed, and to all other persons who may be wholly
or partially liable for the tax under this chapter.
Sec. 17. Minnesota Statutes 1986, section 297C.02,
subdivision 3, is amended to read:
Subd. 3. [TAX CREDIT.] A qualified brewer producing
fermented malt beverages is entitled to a tax credit of $4 $4.60
per barrel on 25,000 barrels sold in any fiscal year beginning
July 1, regardless of the alcohol content of the product.
Qualified brewers may take the credit on the 15th 18th day of
each month, but the total credit allowed may not exceed in any
fiscal year the lesser of (a) the liability for tax or (b)
$100,000 $115,000.
For purposes of this subdivision, a "qualified brewer"
means a brewer, whether or not located in this state,
manufacturing less than 100,000 barrels of fermented malt
beverages in the calendar year immediately preceding the
calendar year for which the credit under this subdivision is
claimed. In determining the number of barrels, all brands or
labels of a brewer must be combined. All facilities for the
manufacture of fermented malt beverages owned or controlled by
the same person, corporation, or other entity must be treated as
a single brewer.
Sec. 18. Minnesota Statutes 1986, section 297C.02,
subdivision 4, is amended to read:
Subd. 4. [BOTTLE TAX.] A tax of one cent is imposed on
each bottle or container of distilled spirits and wine. The
wholesaler is responsible for the payment of this tax when the
bottles of distilled spirits and wine are removed from inventory
for sale, delivery, or shipment.
The following are exempt from the tax:
(1) miniatures of distilled spirits and wines;
(2) containers of fermented malt beverage;
(3) containers of intoxicating liquor or wine holding less
than 200 milliliters;
(4) containers of wine intended exclusively for sacramental
purposes;
(5) containers of alcoholic beverages sold to qualified,
approved military clubs;
(6) containers of alcoholic beverages sold to common
carriers engaged in interstate commerce;
(7) containers of alcoholic beverages sold to authorized
food processors or pharmaceutical firms for use exclusively in
the manufacturing of food products or medicines;
(8) containers of alcoholic beverages sold and shipped to
dealers, wineries, or distillers in other states; and
(9) containers of alcoholic beverages sold to other
Minnesota wholesalers.
Sec. 19. Minnesota Statutes 1986, section 297C.03, is
amended by adding a subdivision to read:
Subd. 6. [INFORMATIONAL RETURNS.] Manufacturers,
wholesalers, and importers licensed to ship distilled spirits or
wine into Minnesota shall file with the commissioner a monthly
informational report on a form prescribed by the commissioner.
No payment of any tax is required to be remitted with this
report. The report must be filed on or before the tenth day
following the end of each calendar month, regardless of whether
or not any shipments were made into Minnesota during the
previous month. A person failing to file this monthly report is
subject to the provisions of section 297C.14, subdivision 8.
Sec. 20. Minnesota Statutes 1987 Supplement, section
297C.04, is amended to read:
297C.04 [PAYMENT OF TAX; MALT LIQUOR.]
The commissioner may by rule provide a reporting method for
paying and collecting the excise tax on fermented malt
beverages. The tax is imposed upon the first sale or
importation made in this state by a licensed brewer or
importer. The rules must require reports to be filed with and
the excise tax to be paid to the commissioner on or before the
18th day of the month following the month in which the
importation into or the first sale is made in this state,
whichever first occurs. The rules must also require payments in
June of 1987 and subsequent years according to the provisions of
section 297C.05, subdivision 2.
A distributor who has title to or possession of fermented
malt beverages upon which the excise tax has not been paid and
who knows that the tax has not been paid, shall file a return
with the commissioner on or before the 18th day of the month
following the month in which the distributor obtains title or
possession of the fermented malt beverages. The return must be
made on a form furnished and prescribed by the commissioner, and
must contain all information that the commissioner requires.
The return must be accompanied by a remittance for the full
unpaid liability shown on it.
Sec. 21. Minnesota Statutes 1986, section 297C.07, is
amended to read:
297C.07 [EXCEPTIONS.]
The following are not subject to the excise tax:
(1) Sales by a manufacturer, brewer, or wholesaler for
shipment outside the state in interstate commerce.
(2) Sales of wine for sacramental purposes under section
340A.316.
(3) Fruit juices naturally fermented or beer naturally
brewed in the home for family use.
(4) Malt beverages served by a brewery for on-premise
consumption at no charge, or distributed to brewery employees
for on-premise consumption under a labor contract.
(5) Alcoholic beverages sold to authorized manufacturers of
food products or pharmaceutical firms. The alcoholic beverage
must be used exclusively in the manufacture of food products or
medicines. For purposes of this part, "manufacturer" means a
manufacturer of food products intended for sale to wholesalers
or retailers for ultimate sale to the consumer.
(6) Sales to common carriers engaged in interstate
transportation of passengers and qualified approved military
clubs, except as provided in section 297C.17.
(7) Alcoholic beverages sold or transferred between
Minnesota wholesalers.
(8) Sales to a federal agency, that the state of Minnesota
is prohibited from taxing under the constitution or laws of the
United States or under the constitution of Minnesota.
Sec. 22. [297C.17] [COMMON CARRIERS.]
Common carriers engaged in interstate transportation of
passengers must file monthly reports together with the tax
payment on the sale of alcoholic beverages sold within the state
of Minnesota. The report and payment must be filed by the 18th
day of the month following the month in which the sale took
place. A common carrier is permitted to use a formula for the
allocation of the total sales of alcoholic beverages among
states on the basis of passenger miles in each state or some
other method of allocation if written approval is received from
the commissioner.
Sec. 23. [REPEALER.]
Minnesota Statutes 1986, section 297C.03, subdivision 5, is
repealed.
Sec. 24. [EFFECTIVE DATE.]
This article is effective July 1, 1988, except section 17
is effective for barrels sold after June 1, 1987, and sections 3
and 5 are effective January 1, 1989.
ARTICLE 12
TAX INCREMENT FINANCING
Section 1. Minnesota Statutes 1987 Supplement, section
469.174, subdivision 2, is amended to read:
Subd. 2. [AUTHORITY.] "Authority" means a rural
development financing authority created pursuant to sections
469.142 to 469.150; a housing and redevelopment authority
created pursuant to sections 469.001 to 469.047; a port
authority created pursuant to sections 469.048 to 469.068; an
economic development authority created pursuant to sections
469.090 to 469.108; a redevelopment agency as defined in
sections 469.152 to 469.165; a municipality that is
administering a development district created pursuant to
sections 469.124 to 469.134 or any special law; a municipality
that undertakes a project pursuant to sections 469.152 to
469.165, except a town located outside the metropolitan area or
with a population of 5,000 persons or less; or a municipality
that exercises the powers of a port authority pursuant to any
general or special law.
Sec. 2. Minnesota Statutes 1987 Supplement, section
469.174, subdivision 7, is amended to read:
Subd. 7. [ORIGINAL ASSESSED VALUE.] (a) Except as provided
in paragraph (b), "original assessed value" means the assessed
value of all taxable real property within a tax increment
financing district as most recently certified by the
commissioner of revenue as of the date of the request by an
authority for certification by the county auditor, together with
subsequent adjustments as set forth in section 469.177,
subdivisions 1 and 4. In determining the original assessed
value the assessed value of real property exempt from taxation
at the time of the request shall be zero, except for real
property which is tax exempt by reason of public ownership by
the requesting authority and which has been publicly owned for
less than one year prior to the date of the request for
certification, in which event the assessed value of the property
shall be the assessed value as most recently determined by the
commissioner of revenue.
(b) The original assessed value of any designated hazardous
substance site or hazardous substance subdistrict shall be
determined on January 2 following the date the agency or
municipality certifies to the county auditor that the agency or
municipality has entered a redevelopment or other agreement for
the removal actions or remedial actions specified in a
development response action plan, or otherwise provided funds to
finance the development response action plan. The original
assessed value equals (i) the assessed value of the parcel, as
most recently determined by the commissioner of revenue, less
(ii) the estimated reasonable and necessary costs of the removal
actions and remedial actions as specified in a development
response action plan to be undertaken with respect to the parcel
as certified to the county auditor by the municipality or
agency, (iii) but not less than zero.
(c) The original assessed value of a hazardous substance
site or subdistrict shall be increased by the amount by which it
was reduced pursuant to paragraph (b), clause (ii), upon
certification by the municipality that the removal and remedial
actions specified in the development response action plan,
except for long-term monitoring and similar activities, have
been completed.
(d) For purposes of this subdivision, "real property" shall
include any property normally taxable as personal property by
reason of its location on or over publicly-owned property.
Sec. 3. Minnesota Statutes 1987 Supplement, section
469.174, subdivision 10, is amended to read:
Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment
district" means a type of tax increment financing district
consisting of a project, or portions of a project, within which
the authority finds by resolution that one of the following
conditions, reasonably distributed throughout the district,
exists:
(1) 70 percent of the parcels in the district are occupied
by buildings, streets, utilities, or other improvements and more
than 50 percent of the buildings, not including outbuildings,
are structurally substandard to a degree requiring substantial
renovation or clearance; or
(2) 70 percent of the parcels in the district are occupied
by buildings, streets, utilities, or other improvements and 20
percent of the buildings are structurally substandard and an
additional 30 percent of the buildings are found to require
substantial renovation or clearance in order to remove such
existing conditions as: inadequate street layout, incompatible
uses or land use relationships, overcrowding of buildings on the
land, excessive dwelling unit density, obsolete buildings not
suitable for improvement or conversion, or other identified
hazards to the health, safety, and general well-being of the
community; or
(3) less than 70 percent of the parcels in the district are
occupied by buildings, streets, utilities, or other
improvements, but due to unusual terrain or soil deficiencies
requiring substantial filling, grading, or other physical
preparation for use at least 80 percent of the total acreage of
such land has a fair market value upon inclusion in the
redevelopment district which, when added to the estimated cost
of preparing that land for development, excluding costs directly
related to roads as defined in section 160.01 and local
improvements as described in section 429.021, subdivision 1,
clauses 1 to 7, 11 and 12, and 430.01, if any, exceeds its
anticipated fair market value after completion of the
preparation. No parcel shall be included within a redevelopment
district pursuant to this paragraph unless the authority has
concluded an agreement or agreements for the development of at
least 50 percent of the acreage having the unusual soil or
terrain deficiencies, which agreement provides recourse for the
authority should the development not be completed; or
(4) the property consists of underutilized air rights
existing over a public street, highway, or right-of-way; or
(5) (4) the property consists of vacant, unused, underused,
inappropriately used, or infrequently used railyards, rail
storage facilities, or excessive or vacated railroad
rights-of-way; or
(6) (5) the district consists of an existing or proposed
industrial park no greater in size than 250 acres, which
contains a sewage lagoon contaminated with polychlorinated
biphenyls.
(b) For purposes of this subdivision, "structurally
substandard" shall mean containing defects in structural
elements or a combination of deficiencies in essential utilities
and facilities, light and ventilation, fire protection including
adequate egress, layout and condition of interior partitions, or
similar factors, which defects or deficiencies are of sufficient
total significance to justify substantial renovation or
clearance.
Sec. 4. Minnesota Statutes 1987 Supplement, section
469.174, subdivision 11, is amended to read:
Subd. 11. [HOUSING DISTRICT.] "Housing district" means a
type of tax increment financing district which consists of a
project, or a portion of a project, intended for occupancy, in
part, by persons or families of low and moderate income, as
defined in chapter 462A, Title II of the National Housing Act of
1934, the National Housing Act of 1959, the United States
Housing Act of 1937, as amended, Title V of the Housing Act of
1949, as amended, any other similar present or future federal,
state, or municipal legislation, or the regulations promulgated
under any of those acts. A project does not qualify under this
subdivision if the fair market value of the improvements which
are constructed for commercial uses or for uses other than low
and moderate income housing consists of more than one-third of
the total fair market value of the planned improvements in the
development plan or agreement. The fair market value of the
improvements may be determined using the cost of construction,
capitalized income, or other appropriate method of estimating
market value.
Sec. 5. Minnesota Statutes 1987 Supplement, section
469.174, is amended by adding a subdivision to read:
Subd. 16. [DESIGNATED HAZARDOUS SUBSTANCE
SITE.] "Designated hazardous substance site" means any parcel or
parcels with respect to which the authority or municipality has
certified to the county auditor that the authority or
municipality has entered into a redevelopment or other agreement
providing for the removal actions or remedial actions specified
in a development response action plan or the municipality or
authority will use other available money, including without
limitation tax increments, to finance the removal or remedial
actions.
Sec. 6. Minnesota Statutes 1987 Supplement, section
469.174, is amended by adding a subdivision to read:
Subd. 17. [DEVELOPMENT ACTION RESPONSE PLAN.] "Development
action response plan" means a plan or proposal for removal
actions or remedial actions if the plan or proposal is submitted
to the pollution control agency and the actions contained in the
plan or proposal are approved in writing by the commissioner of
the agency as reasonable and necessary to protect the public
health, welfare, and environment.
Sec. 7. Minnesota Statutes 1987 Supplement, section
469.174, is amended by adding a subdivision to read:
Subd. 18. [TERMS DEFINED IN OTHER CHAPTERS.] The terms
"removal," "remedy," "remedial action," "response," "hazardous
substance," and "pollutant or contaminant" have the meanings
given in section 115B.02. The term "petroleum" has the meaning
given in section 115C.02.
Sec. 8. Minnesota Statutes 1987 Supplement, section
469.174, is amended by adding a subdivision to read:
Subd. 19. [SOILS CONDITION DISTRICTS.] (a) "Soils
condition district" means a type of tax increment financing
district consisting of a project, or portions of a project,
within which the authority finds by resolution that the
following conditions exist:
(1) less than 70 percent of the parcels in the district are
occupied by buildings, streets, utilities, or other improvements;
(2) unusual terrain or soil deficiencies for 80 percent of
the acreage in the district require substantial filling,
grading, or other physical preparation for use;
(3) the estimated cost of the physical preparation under
clause (2), but excluding costs directly related to roads as
defined in section 160.01 and local improvements as described in
section 429.021, subdivision 1, clauses (1) to (7), (11) and
(12), and 430.01, when added to the fair market value of the
land upon inclusion in the district exceeds the anticipated fair
market value of the land upon completion of the preparation.
(b) An area does not qualify as a soils condition district
if it contains a wetland, as defined in section 105.37, unless
the development agreement prohibits draining, filling, or other
alteration of the wetland or other binding legal assurances for
preservation of the wetland are provided.
(c) If the district is located in the metropolitan area,
the proposed development of the district in the tax increment
financing plan must be consistent with the municipality's land
use plan adopted in accordance with sections 473.851 to 473.872
and reviewed by the metropolitan council under section 473.175.
If the district is located outside of the metropolitan area, the
proposed development of the district must be consistent with the
municipality's comprehensive municipal plan.
(d) No parcel shall be included in the district unless the
authority has concluded an agreement or agreements for the
development of at least 50 percent of the acreage having the
unusual soil or terrain deficiencies. The agreement must
provide recourse for the authority if the development is not
completed.
Sec. 9. Minnesota Statutes 1987 Supplement, section
469.175, subdivision 1, is amended to read:
Subdivision 1. [TAX INCREMENT FINANCING PLAN.] A tax
increment financing plan shall contain:
(1) a statement of objectives of an authority for the
improvement of a project;
(2) a statement as to the development program for the
project, including the property within the project, if any, that
the authority intends to acquire;
(3) a list of any development activities that the plan
proposes to take place within the project, for which contracts
have been entered into at the time of the preparation of the
plan, including the names of the parties to the contract, the
activity governed by the contract, the cost stated in the
contract, and the expected date of completion of that activity;
(4) identification or description of the type of any other
specific development reasonably expected to take place within
the project, and the date when the development is likely to
occur;
(5) estimates of the following:
(i) cost of the project, including administration expenses;
(ii) amount of bonded indebtedness to be incurred;
(iii) sources of revenue to finance or otherwise pay public
costs;
(iv) the most recent assessed value of taxable real
property within the tax increment financing district;
(v) the estimated captured assessed value of the tax
increment financing district at completion; and
(vi) the duration of the tax increment financing district's
existence; and
(6) a statement statements of the authority's estimate
alternate estimates of the impact of tax increment financing on
the assessed values of all taxing jurisdictions in which the tax
increment financing district is located in whole or in
part. For purposes of one statement, the authority shall assume
that the estimated captured assessed value would be available to
the taxing jurisdictions without creation of the district, and
for purposes of the second statement, the authority shall assume
that none of the estimated captured assessed value would be
available to the taxing jurisdictions without creation of the
district;
(7) identification and description of studies and analyses
used to make the determination set forth in subdivision 3,
clause (2); and
(8) identification of all parcels to be included in the
district.
Sec. 10. Minnesota Statutes 1987 Supplement, section
469.175, is amended by adding a subdivision to read:
Subd. 1a. [INCLUSION OF COUNTY ROAD COSTS.] (a) The county
board may require the authority to pay all or a portion of the
cost of county road improvements out of increment revenues, if
the following conditions occur:
(1) the proposed tax increment financing plan or an
amendment to the plan contemplates construction of a development
that will, in the judgment of the county, substantially increase
the use of county roads requiring construction of road
improvements or other road costs;
(2) the proposed tax increment financing district is a
soils condition district; and
(3) the road improvements or other road costs, in the
opinion of the county, would not reasonably be expected to be
needed within the reasonably foreseeable future if the tax
increment financing plan were not implemented.
(b) If the county elects to use increments to finance the
road improvements, the county must notify the authority and
municipality within 30 days after receipt of the information on
the proposed tax increment district under subdivision 2. The
notice must include the estimated cost of the road improvements
and schedule for construction and payment of the cost. The
authority must include the improvements in the tax increment
financing plan. The improvements may be financed with the
proceeds of tax increment bonds or the authority and the county
may agree that the county will finance the improvements with
county funds to be repaid in installments, with or without
interest, out of increment revenues. If the cost of the road
improvements and other project costs exceed the projected amount
of the increment revenues, the county and authority shall
negotiate an agreement, modifying the development plan or
proposed road improvements that will permit financing of the
costs before the tax increment financing plan may be approved.
Sec. 11. Minnesota Statutes 1987 Supplement, section
469.175, subdivision 2, is amended to read:
Subd. 2. [CONSULTATIONS; COMMENT AND FILING.] Before
formation of a tax increment financing district, the authority
shall provide an opportunity to the members of the county boards
of commissioners of any county in which any portion of the
proposed district is located and the members of the school board
of any school district in which any portion of the proposed
district is located to meet with the authority. The authority
shall present to the members of the county boards of
commissioners and the school boards its estimate of the fiscal
and economic implications of the proposed tax increment
financing district. The information on the fiscal and economic
implications of the plan must be provided to the county and
school district boards at least 30 days before the public
hearing required by subdivision 3. The 30-day requirement is
waived if the county and school district submit written comments
on the proposal and any modification of the proposal to the
authority after receipt of the information. The members of the
county boards of commissioners and the school boards may present
their comments at the public hearing on the tax increment
financing plan required by subdivision 3. The county auditor
shall not certify the original assessed value of a district
pursuant to section 469.177, subdivision 1, until the county
board of commissioners has presented its written comment on the
proposal to the authority, or 30 days has passed from the date
of the transmittal by the authority to the board of the
information regarding the fiscal and economic implications,
whichever occurs first. Upon adoption of the tax increment
financing plan, the authority shall file a copy of the plan with
the commissioner of energy trade and economic development. The
authority must also file with the commissioner a copy of the
development plan for the project area.
Sec. 12. Minnesota Statutes 1987 Supplement, section
469.175, subdivision 3, is amended to read:
Subd. 3. [MUNICIPALITY APPROVAL.] A county auditor shall
not certify the original assessed value of a tax increment
financing district until the tax increment financing plan
proposed for that district has been approved by the municipality
in which the district is located. If an authority that proposes
to establish a tax increment financing district and the
municipality are not the same, the authority shall apply to the
municipality in which the district is proposed to be located and
shall obtain the approval of its tax increment financing plan by
the municipality before the authority may use tax increment
financing. The municipality shall approve the tax increment
financing plan only after a public hearing thereon after
published notice in a newspaper of general circulation in the
municipality at least once not less than ten days nor more than
30 days prior to the date of the hearing. This hearing may be
held before or after the approval or creation of the project or
it may be held in conjunction with a hearing to approve the
project. Before or at the time of approval of the tax increment
financing plan, the municipality shall make the following
findings, and shall set forth in writing the reasons and
supporting facts for each determination:
(1) that the proposed tax increment financing district is a
redevelopment district, a mined underground space development
district, a housing district, a soils condition district, or an
economic development district; if the proposed district is a
redevelopment district, the reasons and supporting facts for the
determination that the district meets the criteria of section
469.174, subdivision 10, paragraph (a), clauses (1) to (5), must
be retained and made available to the public by the authority
until the district has been terminated.
(2) that the proposed development or redevelopment, in the
opinion of the municipality, would not reasonably be expected to
occur solely through private investment within the reasonably
foreseeable future and therefore the use of tax increment
financing is deemed necessary.
(3) that the tax increment financing plan conforms to the
general plan for the development or redevelopment of the
municipality as a whole.
(4) that the tax increment financing plan will afford
maximum opportunity, consistent with the sound needs of the
municipality as a whole, for the development or redevelopment of
the project by private enterprise.
(5) that the municipality elects the method of tax
increment computation set forth in section 469.177, subdivision
3, clause (b), if applicable.
When the municipality and the authority are not the same,
the municipality shall approve or disapprove the tax increment
financing plan within 60 days of submission by the authority, or
the plan shall be deemed approved. When the municipality and
the authority are not the same, the municipality may not amend
or modify a tax increment financing plan except as proposed by
the authority pursuant to subdivision 4. Once approved, the
determination of the authority to undertake the project through
the use of tax increment financing and the resolution of the
governing body shall be conclusive of the findings therein and
of the public need for the financing.
Sec. 13. Minnesota Statutes 1987 Supplement, section
469.175, subdivision 4, is amended to read:
Subd. 4. [MODIFICATION OF PLAN.] (a) A tax increment
financing plan may be modified by an authority, provided that
any reduction or enlargement of geographic area of the project
or tax increment financing district, increase in amount of
bonded indebtedness to be incurred, including a determination to
capitalize interest on the debt if that determination was not a
part of the original plan, or to increase or decrease the amount
of interest on the debt to be capitalized, increase in the
portion of the captured assessed value to be retained by the
authority, increase in total estimated tax increment
expenditures or designation of additional property to be
acquired by the authority shall be approved upon the notice and
after the discussion, public hearing, and findings required for
approval of the original plan; provided that if an authority
changes the type of district from housing, redevelopment, or
economic development to another type of district, this change
shall not be considered a modification but shall require the
authority to follow the procedure set forth in sections 469.174
to 469.179 for adoption of a new plan, including certification
of the assessed valuation of the district by the county
auditor. If a redevelopment district is enlarged, the reasons
and supporting facts for the determination that the addition to
the district meets the criteria of section 469.174, subdivision
10, paragraph (a), clauses (1) to (5), must be documented. The
requirements of this paragraph do not apply if (1) the only
modification is elimination of parcels from the project or
district and (2)(A) the current assessed value of the parcels
eliminated from the district equals or exceeds the assessed
value of those parcels in the district's original assessed value
or (B) the authority agrees that, notwithstanding section
469.177, subdivision 1, the original assessed value will be
reduced by no more than the current assessed value of the
parcels eliminated from the district. The authority must notify
the county auditor of any modification that reduces or enlarges
the geographic area of a district or a project area.
(b) The geographic area of a tax increment financing
district may be reduced, but shall not be enlarged after five
years following the date of certification of the original
assessed value by the county auditor or after August 1, 1984,
for tax increment financing districts authorized prior to August
1, 1979, except that development districts created pursuant to
Minnesota Statutes 1978, chapter 472A, prior to August 1, 1979,
may be reduced but shall not be enlarged after five years
following the date of designation of the district.
Sec. 14. Minnesota Statutes 1987 Supplement, section
469.175, is amended by adding a subdivision to read:
Subd. 7. [CREATION OF HAZARDOUS SUBSTANCE SUBDISTRICT;
RESPONSE ACTIONS.] (a) A municipality or authority which is
creating or has created a tax increment financing district may
establish within the district a hazardous substance subdistrict
upon the notice and after the discussion, public hearing, and
findings required for approval of the original plan. The
geographic area of the subdistrict is made up of any parcels in
the district designated for inclusion by the municipality or
authority that are designated hazardous substance sites, and any
additional parcels in the district designated for inclusion that
are contiguous except for the interposition of a right-of-way.
Before or at the time of approval of the tax increment financing
plan, the municipality must make the findings under paragraphs
(b) to (d), and set forth in writing the reasons and supporting
facts for each.
(b) Development or redevelopment of the site, in the
opinion of the municipality, would not reasonably be expected to
occur solely through private investment and tax increment
otherwise available, and therefore the hazardous substance
district is deemed necessary.
(c) Other parcels that are not designated hazardous
substance sites are expected to be developed together with a
designated hazardous substance site.
(d) The subdistrict is not larger than, and the period of
time during which increments are elected to be received is not
longer than, that which is necessary in the opinion of the
municipality to provide for the additional costs due to the
designated hazardous substance site.
(e) Upon request by a municipality or authority that has
incurred expenses for removal or remedial actions to implement a
development response action plan, the attorney general may:
(1) bring a civil action on behalf of the municipality or
authority to recover the expenses, including administrative
costs and litigation expenses, under section 115B.04 or other
law; or
(2) assist the municipality or agency in bringing an action
as described in clause (1), by providing legal and technical
advice, intervening in the action, or other appropriate
assistance.
The decision to participate in any action to recover expenses is
at the discretion of the attorney general.
(f) If the attorney general brings an action as provided in
paragraph (e), clause (1), the municipality or authority shall
certify its reasonable and necessary expenses incurred to
implement the development response action plan and shall
cooperate with the attorney general as required to effectively
pursue the action. The certification by the municipality or
authority is prima facie evidence that the expenses are
reasonable and necessary. The attorney general may deduct
litigation expenses incurred by the attorney general from any
amounts recovered in an action brought under paragraph (e),
clause (1). The municipality or authority shall reimburse the
attorney general for litigation expenses not recovered in an
action under paragraph (e), clause (1), and for litigation
expenses incurred to assist in bringing an action under
paragraph (e), clause (1). All money recovered or paid to the
attorney general for litigation expenses under this paragraph
shall be paid to the general fund of the state for deposit to
the account of the attorney general. For the purposes of this
section, "litigation expenses" means attorney fees and costs of
discovery and other preparation for litigation.
(g) The municipality or authority shall reimburse the
pollution control agency for its administrative expenses
incurred to review and approve a development action response
plan and associated activities, and for expenses incurred for
any services rendered to the attorney general to support the
attorney general in actions brought or assistance provided under
paragraph (e). All money paid to the pollution control agency
under this paragraph shall be deposited in the environmental
response, compensation and compliance fund.
(h) Actions taken by a municipality or authority consistent
with a development response action plan are deemed to be
authorized response actions for the purpose of section 115B.17,
subdivision 12. A municipality or agency that takes actions
consistent with a development response action plan qualifies for
the defenses available under sections 115B.04, subdivision 11,
and 115B.05, subdivision 9.
(i) All money recovered by a municipality or authority in
an action brought under paragraph (e) in excess of the amounts
paid to the attorney general and the pollution control agency
must be treated as excess increments and be distributed as
provided in section 469.176, subdivision 2, clause (4), to the
extent the removal and remedial actions were initially financed
with increment revenues.
Sec. 15. Minnesota Statutes 1987 Supplement, section
469.176, subdivision 1, is amended to read:
Subdivision 1. [DURATION OF TAX INCREMENT FINANCING
DISTRICTS.] (a) Subject to the limitations contained in
paragraphs (b) to (f), any tax increment financing district as
to which bonds are outstanding, payment for which the tax
increment and other revenues have been pledged, shall remain in
existence at least as long as the bonds continue to be
outstanding.
(b) The tax increment pledged to the payment of the bonds
and interest thereon may be discharged and the tax increment
financing district may be terminated if sufficient funds have
been irrevocably deposited in the debt service fund or other
escrow account held in trust for all outstanding bonds to
provide for the payment of the bonds at maturity or date of
redemption and interest thereon to the maturity or redemption
date.
(c) For bonds issued pursuant to section 469.178,
subdivisions 2 and 3, the full faith and credit and any taxing
powers of the municipality or authority shall continue to be
pledged to the payment of the bonds until the principal of and
interest on the bonds has been paid in full.
(d) No tax increment shall be paid to an authority for a
tax increment financing district after three years from the date
of certification of the original assessed value of the taxable
real property in the district by the county auditor or after
August 1, 1982, for tax increment financing districts authorized
prior to August 1, 1979, unless within the three-year period (1)
bonds have been issued pursuant to section 469.178, or in aid of
a project pursuant to any other law, except revenue bonds issued
pursuant to sections 469.152 to 469.165, prior to August 1,
1979, or (2) the authority has acquired property within the
district, or (3) the authority has constructed or caused to be
constructed public improvements within the district.
(e) No tax increment shall in any event be paid to the
authority from a redevelopment district after 25 years from date
of receipt by the authority of the first tax increment, after 25
years from the date of the receipt for a housing district, after
25 years from the date of the receipt for a mined underground
space development district, after 12 years from approval of the
tax increment financing plan for a soils condition district, and
after eight years from the date of the receipt, or ten years
from approval of the tax increment financing plan, whichever is
less, for an economic development district.
For tax increment financing districts created prior to
August 1, 1979, no tax increment shall be paid to the authority
after 30 years from August 1, 1979 April 1, 2001, or the term of
a nondefeased bond or obligation outstanding on April 1, 1990,
secured by increments from the district or project area,
whichever time is greater, provided that in no case will a tax
increment be paid to an authority after August 1, 2009, from
such a district. If a district's termination date is extended
beyond April 1, 2001, because bonds were outstanding on April 1,
1990, with maturities extending beyond April 1, 2001, the
following restrictions apply. No increment collected from the
district may be expended after April 1, 2001, except to pay or
defease (i) bonds issued before April 1, 1990, or (ii) bonds
issued to refund the principal of the outstanding bonds and pay
associated issuance costs, provided the average maturity of the
refunding bonds does not exceed the bonds refunded.
(f) Modification of a tax increment financing plan pursuant
to section 469.175, subdivision 4, shall not extend the
durational limitations of this subdivision.
(g) If a parcel of a district is part of a designated
hazardous substance site or a hazardous substance subdistrict,
tax increment may be paid to the authority from the parcel for
longer than the period otherwise provided by this subdivision.
The extended period for collection of tax increment begins on
the date of receipt of the first tax increment from the parcel
that is more than any tax increment received from the parcel
before the date of the certification under section 469.175,
subdivision 7, paragraph (b), and received after the date of
certification to the county auditor described in section
469.175, subdivision 7, paragraph (b). The extended period for
collection of tax increment is the lesser of: (1) 25 years from
the date of commencement of the extended period; or (2) the
period necessary to recover the costs of removal actions or
remedial actions specified in a development response action plan.
Sec. 16. Minnesota Statutes 1987 Supplement, section
469.176, subdivision 4, is amended to read:
Subd. 4. [LIMITATION ON USE OF TAX INCREMENT; GENERAL
RULE.] (a) All revenues derived from tax increment shall be used
in accordance with the tax increment financing plan. The
revenues shall be used solely for the following purposes: (1)
to pay the principal of and interest on bonds issued to finance
a project; (2) by a rural development financing authority for
the purposes stated in section 469.142, by a port authority or
municipality exercising the powers of a port authority to
finance or otherwise pay the cost of redevelopment pursuant to
sections 469.048 to 469.068, by an economic development
authority to finance or otherwise pay the cost of redevelopment
pursuant to sections 469.090 to 469.108, by a housing and
redevelopment authority or economic development authority to
finance or otherwise pay public redevelopment costs pursuant to
sections 469.001 to 469.047, by a municipality or economic
development authority to finance or otherwise pay the capital
and administration costs of a development district pursuant to
sections 469.124 to 469.134, by a municipality or redevelopment
agency to finance or otherwise pay premiums for insurance or
other security guaranteeing the payment when due of principal of
and interest on the bonds pursuant to chapter 462C, sections
469.152 to 469.165, or both, or to accumulate and maintain a
reserve securing the payment when due of the principal of and
interest on the bonds pursuant to chapter 462C, sections 469.152
to 469.165, or both, which revenues in the reserve shall not
exceed, subsequent to the fifth anniversary of the date of issue
of the first bond issue secured by the reserve, an amount equal
to 20 percent of the aggregate principal amount of the
outstanding and nondefeased bonds secured by the reserve.
Subd. 4a. [MINED UNDERGROUND SPACE DISTRICTS.] Revenue
derived from tax increment from a mined underground space
development district may be used only to pay for the costs of
excavating and supporting the space, of providing public access
to the mined underground space including roadways, and of
installing utilities including fire sprinkler systems in the
space.
(b) Subd. 4b. [SOILS CONDITION DISTRICTS.] Revenue derived
from tax increment from a soils condition district under section
469.174, subdivision 19, may be used only to (1) acquire parcels
on which the improvements described in clause (2) will occur;
(2) pay for the cost of correcting the unusual terrain or soil
deficiencies and the additional cost of installing public
improvements directly caused by the deficiencies; and (3) pay
for the administrative expenses of the authority allocable to
the district. The sale by the authority of a parcel acquired
and improved as described in clauses (1) and (2) must be for a
price that is no less than the cost of acquisition.
Subd. 4c. [ECONOMIC DEVELOPMENT DISTRICTS.] Revenue
derived from tax increment from an economic development district
may not be used to provide improvements, loans, subsidies,
grants, interest rate subsidies, or assistance in any form to
developments consisting of buildings and ancillary facilities,
if 25 percent of the buildings and facilities (determined on the
basis of square footage) are used for the purposes listed in
section 144(a)(8) of the Internal Revenue Code of 1986
(determined without regard to the 25 percent restriction in
subparagraph (A)). The restrictions under this paragraph apply
only to districts located in development regions, as defined in
section 462.384, with populations in excess of 1,000,000.
Population must be determined under the provisions of section
477A.011.
Subd. 4d. [HOUSING DISTRICTS.] Revenue derived from tax
increment from a housing district must be used solely to finance
the cost of housing projects as defined in section 469.174,
subdivision 11. The cost of public improvements directly
related to the housing projects and the allocated administrative
expenses of the authority may be included in the cost of a
housing project.
Subd. 4e. [HAZARDOUS SUBSTANCE SUBDISTRICTS.] The
additional tax increment received by the municipality from a
hazardous substance subdistrict as a result of a reduction in
original assessed value pursuant to section 469.174, subdivision
7, paragraph (b), or as a result of the extension of the period
for collection of tax increment from a hazardous substance site
or subdistrict provided for in section 469.176, subdivision 1,
paragraph (g), may be used only to pay or reimburse the costs
of: (1) removal actions or remedial actions with respect to
hazardous substances or pollutants or contaminants or petroleum
releases affecting or which may affect the designated hazardous
substance site; (2) pollution testing, demolition, and soil
compaction correction necessitated by the development response
action plan for the designated hazardous substance site; and (3)
related administrative and legal costs, including costs of
review and approval of development response action plans by the
pollution control agency and litigation expenses of the attorney
general.
Subd. 4f. [INTEREST REDUCTION.] Revenues derived from tax
increment may be used to finance the costs of an interest
reduction program operated pursuant to section 469.012,
subdivisions 7 to 10, or pursuant to other law granting interest
reduction authority and power by reference to those subdivisions
only under the following conditions: (1) tax increments may not
be collected for a program for a period in excess of 12 years
after the date of the first interest rate reduction payment for
the program, (2) tax increments may not be used for an interest
reduction program, if the proceeds of bonds issued pursuant to
section 469.178 after December 31, 1985, have been or will be
used to provide financial assistance to the specific project
which would receive the benefit of the interest reduction
program, and (3) tax increments may not be used to finance an
interest reduction program for owner-occupied single-family
dwellings.
(c) Subd. 4g. [GENERAL GOVERNMENT USE PROHIBITED.] These
revenues shall not be used to circumvent existing levy limit
law. No revenues derived from tax increment from any district,
whether certified before or after August 1, 1979, shall be used
for the acquisition, construction or, renovation, operation, or
maintenance of a municipally owned building to be used primarily
and regularly for conducting the business of the a municipality
;, county, school district, or any other local unit of
government or the state or federal government. This provision
shall not prohibit the use of revenues derived from tax
increments for the construction or renovation of a parking
structure, a commons area used as a public park, or a facility
used for social, recreational, or conference purposes and not
primarily for conducting the business of the municipality.
Subd. 4h. [COUNTY COSTS.] (a) Tax increments may be used
to pay for the county's actual administrative expenses under
sections 469.174 to 469.179. The county may require payment of
those expenses by February 15 of the year after the year in
which the expenses are incurred. The amount of these payments
is not required to be set forth in the tax increment financing
plan for the project. To obtain payment for actual
administrative costs, the county auditor must submit to the
authority a record of costs incurred by the county auditor
related to administration of the authority's tax increment
financing districts.
(b) Tax increments may be used to pay county road costs as
provided in section 469.175, subdivision 1a.
Subd. 4i. [MULTI-COUNTY USE PROHIBITED.] If a tax
increment district is located in a municipality, parts of which
are situated in more than one county, the revenue derived from
tax increments from parcels located in one county must be
expended for the direct and primary benefit of a project located
or conducted within that county, unless the county boards of
each of the counties involved agree to waive this requirement.
Sec. 17. Minnesota Statutes 1987 Supplement, section
469.176, subdivision 5, is amended to read:
Subd. 5. [REQUIREMENT FOR AGREEMENTS.] No more than 25
percent, by acreage, of the property to be acquired within a
project which contains a redevelopment district, or ten percent,
by acreage, of the property to be acquired within a project
which contains a housing or economic development district, as
set forth in the tax increment financing plan, shall at any time
be owned by an authority as a result of acquisition with the
proceeds of bonds issued pursuant to section 469.178 unless
prior to acquisition in excess of the percentages, the authority
has concluded an agreement for the development or redevelopment
of the property acquired and which provides recourse for the
authority should the development or redevelopment not be
completed. This subdivision does not apply to a parcel of a
district that is a designated hazardous substance site
established under section 469.174, subdivision 16, or part of a
hazardous substance subdistrict established under section
469.175, subdivision 7.
Sec. 18. Minnesota Statutes 1987 Supplement, section
469.176, subdivision 6, is amended to read:
Subd. 6. [ACTION REQUIRED.] If, after four years from the
date of certification of the original assessed value of the tax
increment financing district pursuant to section 469.177, no
demolition, rehabilitation, or renovation of property or other
site preparation, including improvement of a street adjacent to
a parcel but not installation of utility service including sewer
or water systems, has been commenced on a parcel located within
a tax increment financing district by the authority or by the
owner of the parcel in accordance with the tax increment
financing plan, no additional tax increment may be taken from
that parcel, and the original assessed value of that parcel
shall be excluded from the original assessed value of the tax
increment financing district. If the authority or the owner of
the parcel subsequently commences demolition, rehabilitation, or
renovation or other site preparation on that parcel including
improvement of a street adjacent to that parcel, in accordance
with the tax increment financing plan, the authority shall
certify to the county auditor that the activity has commenced,
and the county auditor shall certify the assessed value thereof
as most recently certified by the commissioner of revenue and
add it to the original assessed value of the tax increment
financing district. The county auditor must enforce the
provisions of this subdivision. The authority must submit to
the county auditor evidence that the required activity has taken
place for each parcel in the district. The evidence for a
parcel must be submitted by February 1 of the fifth year
following the year in which the parcel was certified as included
in the district.
Sec. 19. Minnesota Statutes 1987 Supplement, section
469.177, subdivision 1, is amended to read:
Subdivision 1. [ORIGINAL ASSESSED VALUE.] Upon or after
adoption of a tax increment financing plan, the auditor of any
county in which the district is situated shall, upon request of
the authority, certify the original assessed value of the tax
increment financing district as described in the tax increment
financing plan and shall certify in each year thereafter the
amount by which the original assessed value has increased or
decreased as a result of a change in tax exempt status of
property within the district, reduction or enlargement of the
district or changes pursuant to subdivision 4. In the case of a
mined underground space development district the county auditor
shall certify the original assessed value as zero, plus the
assessed value, if any, previously assigned to any subsurface
area included in the mined underground space development
district pursuant to section 272.04. For districts approved
under section 469.175, subdivision 3, or parcels added to
existing districts after May 1, 1988, if the classification
under section 273.13 of property located in a district changes
to a classification that has a different assessment ratio, the
original assessed value of that property must be redetermined at
the time when its use is changed as if the property had
originally been classified in the same class in which it is
classified after its use is changed. The amount to be added to
the original assessed value of the district as a result of
previously tax exempt real property within the district becoming
taxable shall be equal to the assessed value of the real
property as most recently assessed pursuant to section 273.18
or, if that assessment was made more than one year prior to the
date of title transfer rendering the property taxable, the value
assessed by the assessor at the time of the transfer. The
amount to be added to the original assessed value of the
district as a result of enlargements thereof shall be equal to
the assessed value of the added real property as most recently
certified by the commissioner of revenue as of the date of
modification of the tax increment financing plan pursuant to
section 469.175, subdivision 4. For districts approved under
section 469.175, subdivision 3, or parcels added to existing
districts after May 1, 1988, if the assessed value of a property
increases because the property no longer qualifies under the
Minnesota agricultural property tax law, section 273.111; the
Minnesota open space property tax law, section 273.112; or the
metropolitan agricultural preserves act, chapter 473H, or
because platted, unimproved property is improved or three years
pass after approval of the plat under section 273.11,
subdivision 1, the increase in assessed value must be added to
the original assessed value. Each year the auditor shall also
add to the original assessed value of each economic development
district an amount equal to the original assessed value for the
preceding year multiplied by the average percentage increase in
the assessed valuation of all property included in the economic
development district during the five years prior to
certification of the district. The amount to be subtracted from
the original assessed value of the district as a result of
previously taxable real property within the district becoming
tax exempt, or a reduction in the geographic area of the
district, shall be the amount of original assessed value
initially attributed to the property becoming tax exempt or
being removed from the district. If the assessed value of
property located within the tax increment financing district is
reduced by reason of a court-ordered abatement, stipulation
agreement, voluntary abatement made by the assessor or auditor
or by order of the commissioner of revenue, the reduction shall
be applied to the original assessed value of the district when
the property upon which the abatement is made has not been
improved since the date of certification of the district and to
the captured assessed value of the district in each year
thereafter when the abatement relates to improvements made after
the date of certification. The county auditor may specify
reasonable form and content of the request for certification of
the authority and any modification thereof pursuant to section
469.175, subdivision 4.
Sec. 20. Minnesota Statutes 1987 Supplement, section
469.177, is amended by adding a subdivision to read:
Subd. 1a. [ORIGINAL MILL RATE.] (a) At the time of the
initial certification of the original assessed value for a tax
increment financing district, the county auditor shall certify
the original mill rate that applies to the district. The
original mill rate is the sum of all the mill rates that apply
to a property in the district for the taxes payable in the
calendar year in which the initial certification of original
assessed value is requested under subdivision 1. If the total
mill rate applicable to properties in the tax increment
financing district varies, the mill rate must be computed by
determining the average total mill rate in the district,
weighted on the basis of assessed value. The resulting mill
rate is the original mill rate for the life of the district.
(b) In the case of districts certified during calendar year
1988, the original mill rate equals the amount calculated under
paragraph (a) multiplied by 0.45.
Sec. 21. Minnesota Statutes 1987 Supplement, section
469.177, subdivision 3, is amended to read:
Subd. 3. [TAX INCREMENT, RELATIONSHIP TO CHAPTER 473F.]
(a) Unless the governing body elects pursuant to clause (b) the
following method of computation shall apply:
(1) The original assessed value and the current assessed
value shall be determined before the application of the fiscal
disparity provisions of chapter 473F. Where the original
assessed value is equal to or greater than the current assessed
value, there is no captured assessed value and no tax increment
determination. Where the original assessed value is less than
the current assessed value, the difference between the original
assessed value and the current assessed value is the captured
assessed value. This amount less any portion thereof which the
authority has designated, in its tax increment financing plan,
to share with the local taxing districts is the retained
captured assessed value of the authority.
(2) The county auditor shall exclude the retained captured
assessed value of the authority from the taxable value of the
local taxing districts in determining local taxing district mill
rates. The mill rates so determined are to be extended against
the retained captured assessed value of the authority as well as
the taxable value of the local taxing districts. The tax
generated by the extension of the lesser of (A) the local taxing
district mill rates or (B) the original mill rate to the
retained captured assessed value of the authority is the tax
increment of the authority.
(b) The governing body may, by resolution approving the tax
increment financing plan pursuant to section 469.175,
subdivision 3, elect the following method of computation:
(1) The original assessed value shall be determined before
the application of the fiscal disparity provisions of chapter
473F. The current assessed value shall exclude any fiscal
disparity commercial-industrial assessed value increase between
the original year and the current year multiplied by the fiscal
disparity ratio determined pursuant to section 473F.08,
subdivision 6. Where the original assessed value is equal to or
greater than the current assessed value, there is no captured
assessed value and no tax increment determination. Where the
original assessed value is less than the current assessed value,
the difference between the original assessed value and the
current assessed value is the captured assessed value. This
amount less any portion thereof which the authority has
designated, in its tax increment financing plan, to share with
the local taxing districts is the retained captured assessed
value of the authority.
(2) The county auditor shall exclude the retained captured
assessed value of the authority from the taxable value of the
local taxing districts in determining local taxing district mill
rates. The mill rates so determined are to be extended against
the retained captured assessed value of the authority as well as
the taxable value of the local taxing districts. The tax
generated by the extension of the lesser of (A) the local taxing
district mill rates or (B) the original mill rate to the
retained captured assessed value of the authority is the tax
increment of the authority.
(3) An election by the governing body pursuant to part
paragraph (b) shall be submitted to the county auditor by the
authority at the time of the request for certification pursuant
to subdivision 1.
(c) The method of computation of tax increment applied to a
district pursuant to clause paragraph (a) or (b) shall remain
the same for the duration of the district, except that the
governing body may elect to change its election from the method
of computation in paragraph (a) to the method in paragraph (b).
Sec. 22. Minnesota Statutes 1987 Supplement, section
469.177, subdivision 4, is amended to read:
Subd. 4. [PRIOR PLANNED IMPROVEMENTS.] The authority
shall, after diligent search, accompany its request for
certification to the county auditor pursuant to subdivision 1,
or its notice of district enlargement pursuant to section
469.175, subdivision 4, with a listing of all properties within
the tax increment financing district or area of enlargement for
which building permits have been issued during the 18 months
immediately preceding approval of the tax increment financing
plan by the municipality pursuant to section 469.175,
subdivision 3. The county auditor shall increase the original
assessed value of the district by the assessed valuation of the
improvements each improvement for which the a building permit
was issued, excluding the assessed valuation of improvements for
which a building permit was issued during the three-month period
immediately preceding said approval of the tax increment
financing plan, as certified by the assessor.
Sec. 23. Minnesota Statutes 1987 Supplement, section
469.177, is amended by adding a subdivision to read:
Subd. 9. [DISTRIBUTIONS OF EXCESS TAXES ON CAPTURED
VALUE.] (a) If the amount of tax paid on captured value exceeds
the amount of tax increment, the county auditor shall distribute
the excess to the municipality, county, and school district as
follows: each governmental unit's share of the excess equals
(1) the total amount of the excess for the tax increment
financing district, multiplied by
(2) a fraction, the numerator of which is the current mill
rate of the governmental unit less the governmental unit's mill
rate for the year the original mill rate for the district was
certified (in no case may this amount be less than zero) and the
denominator of which is the sum of the numerators for the
municipality, county, and school district.
If the entire increase in the mill rate is attributable to a
taxing district, other than the municipality, county, or school
district, then the excess must be distributed to the
municipality, county, and school district in proportion to their
respective mill rates.
(b) The amounts distributed shall be deducted in computing
the levy limits of the taxing district for the succeeding
taxable year.
(c) In the case of distributions to a school district, the
county auditor shall report amounts distributed to the
commissioner of education in the same manner as provided for
excess increments under section 469.176, subdivision 2, and the
distribution shall be treated as an excess increment for
purposes of section 124.214, subdivision 3.
Sec. 24. Minnesota Statutes 1987 Supplement, section
469.177, is amended by adding a subdivision to read:
Subd. 10. [PAYMENT TO SCHOOL FOR REFERENDUM LEVY.] The
provisions of this subdivision apply to tax increment financing
districts and projects for which certification was requested
before May 1, 1988, that are located in a school district in
which the voters have approved new millage or an increase in
millage after the tax increment financing district was certified
(1) if there are no outstanding bonds on May 1, 1988, to which
increment from the district is pledged, or (2) if the referendum
is approved after May 1, 1988, and there are no bonds
outstanding at the time the referendum is approved, that were
issued before May 1, 1988, or (3) if the referendum increasing
the mill rate was approved after the most recent issue of bonds
to which increment from the district is pledged. If clause (1)
or (2) applies, the authority must annually pay to the school
district an amount of increment equal to the increment that is
attributable to the increase in the mill rate under the
referendum. If clause (3) applies, upon approval by a majority
vote of the governing body of the municipality and the school
board, the authority must pay to the school district an amount
of increment equal to the increment that is attributable to the
increase in the mill rate under the referendum. The amounts of
these increments may be expended and must be treated by the
school district in the same manner as provided for the revenues
derived from the referendum levy approved by the voters.
Sec. 25. Minnesota Statutes 1987 Supplement, section
469.179, is amended to read:
469.179 [EXISTING PROJECTS.]
Subdivision 1. [EXEMPTION.] The provisions of sections
469.174 to 469.178 shall not affect any project for which tax
increment certification was requested pursuant to law prior to
August 1, 1979, or any project carried on by an authority
pursuant to section 469.033, subdivision 5, with respect to
which the governing body has by resolution designated properties
for inclusion in the district prior to August 1, 1979, except:
(1) as otherwise expressly provided in sections 469.174 to
469.178; or
(2) as an authority elects to proceed with an existing
district, under the provisions of sections 469.174 to 469.178;
or
(3) that any enlargements of the geographic area of an
existing tax increment financing district subsequent to August
1, 1979, shall be accomplished in accordance with and shall
subject the property added as a result of the enlargement to the
terms and conditions of sections 469.174 to 469.178 as provided
in subdivision 2; or
(4) that beginning with taxes payable in 1980, section
469.177, subdivision 3, clause (b), shall apply to all
development districts created pursuant to Minnesota Statutes
1978, chapter 472A, or any special law, prior to August 1, 1979.
Subd. 2. [APPLICATION TO EXISTING DISTRICTS.] If the
development or redevelopment activity within the project or
district of a tax increment financing project certified prior to
August 1, 1979, is extended beyond the scope of activity set
forth in the district's redevelopment plan under Minnesota
Statutes, chapter 462, or Minnesota Statutes, chapter 472A, if
applicable, after May 1, 1988, the authority must with regard to
the new activity conform to the provisions of sections 469.174
to 469.178 with the following exceptions.
(a) Section 469.175, subdivision 3, paragraphs (1) and (5),
shall not apply. Furthermore, the provisions of section
473F.02, subdivision 3, shall continue to apply to the entire
district, if applicable.
(b) Section 469.177, subdivision 3, shall not apply.
Sec. 26. [CITY OF VIRGINIA TAX INCREMENT FINANCING
DISTRICT; PARCELS INCLUDED.]
Redevelopment tax increment financing district No. 1 in
enterprise zone development district No. 3 in the city of
Virginia, is deemed for all purposes under Minnesota Statutes,
sections 469.174 to 469.179 to include the following parcels of
real property as of June 12, 1984:
(1) Parcel No. 90-124-245 - Ely 79.2' of Lot 1 and all of
Lot 2, Block 3, Olcott Addition;
(2) Parcel No. 90-125-247 - Lot 3, Block 3, Olcott Addition;
and
(3) Parcel No. 90-125-270 - Lot 4, Block 3, Olcott Addition.
Sec. 27. [ORIGINAL ASSESSED VALUE.]
The original assessed value of the parcels of real property
described in sections 24 to 26 is deemed for all purposes under
Minnesota Statutes, sections 469.174 to 469.179 to be the
original assessed value of those parcels as of June 12, 1984.
Sec. 28. [CAPTURED ASSESSED VALUE.]
The captured assessed value of the parcels of real property
described in sections 24 to 26 is deemed for all purposes under
Minnesota Statutes, sections 469.174 to 469.179 to be the
increased assessed value of those parcels computed in the manner
prescribed by Minnesota Statutes, section 469.177, and in
accordance with sections 26 to 28.
Sec. 29. [TRANSITION RULES.]
(a) The provisions of sections 3, 6, 10, and 14 do not
apply to proposed tax increment financing districts for which
the authority called for a public hearing in a resolution dated
March 23, 1987, and for which a public hearing was held on April
28, 1987. The provisions of Minnesota Statutes 1987 Supplement,
sections 469.174, subdivision 10, and 469.176, subdivision 4,
apply to such districts.
(b) The provisions of sections 3, 6, 10, and 14 do not
apply to candidate sites in the old highway 8 corridor tax
increment project area, identified in the old highway 8 corridor
plan as approved by an authority on October 14, 1986, if the
requests for certification of the districts are filed with the
county before January 1, 1998. The provisions of Minnesota
Statutes 1987 Supplement, sections 469.174, subdivision 10, and
469.176, subdivision 4, apply to such districts.
(c) The provisions of section 14, subdivision 4c, do not
apply to an economic development district located in a
development district approved on November 9, 1987, provided the
request for certification of the tax increment district is
submitted to the county by September 30, 1988.
Sec. 30. [EFFECTIVE DATES.]
Sections 2, 5, 6, 7, 14, 16, subdivision 4e, 17, and the
provisions of section 15 relating to the duration of hazardous
substance sites and subdistricts are effective for hazardous
substance sites and subdistricts designated and created after
the day following final enactment. Except as otherwise
specifically provided, sections 1, 3, 4, 8 to 12, 16, and 20 to
23, and the provisions of section 15 applying to soils condition
districts are effective for districts and amendments adding
geographic area to an existing district for which the request
for certification was filed with the county auditor after May 1,
1988. Sections 13, 15, 16, subdivision 4g, 18, 24, and 25, and
the provisions of section 21 allowing a change in the fiscal
disparities election are effective May 1, 1988, except as
otherwise specifically provided. Section 16, subdivision 4c, is
effective for districts for which the request for certification
is filed with the county before May 1, 1988, and to all
increment collected after January 1, 1990. Sections 26 to 28
are effective upon approval by the city council of the city of
Virginia and compliance with Minnesota Statutes, section
645.021. Section 29 is effective the day following final
enactment.
ARTICLE 13
BUDGET RESERVE
Section 1. Minnesota Statutes 1987 Supplement, section
16A.15, subdivision 6, is amended to read:
Subd. 6. [BUDGET AND CASH FLOW RESERVE ACCOUNT.] A budget
and cash flow reserve account is created in the general fund in
the state treasury. The commissioner of finance shall, as
authorized from time to time by law, restrict part or all of the
budgetary balance in the general fund for use as the budget and
cash flow reserve account. The commissioner of finance on July
1, 1987, shall transfer to the budget and cash flow reserve
account the amount necessary such amounts as are available to
bring the total amount, including any existing balance in the
account on June 30, 1987 1988, to $250,000,000 $265,000,000.
The amounts restricted shall remain in the account until drawn
down under subdivision 1 or increased under section 16A.1541.
Sec. 2. Minnesota Statutes 1987 Supplement, section
16A.1541, is amended to read:
16A.1541 [ADDITIONAL REVENUES; PRIORITY.]
If on the basis of a forecast of general fund revenues and
expenditures the commissioner of finance determines that there
will be a positive unrestricted budgetary general fund balance
at the close of the biennium, the commissioner of finance must
allocate money in the following order of priority:
(1) the amount necessary to reduce the property tax levy
recognition percent under section 121.904, subdivision 4c, to 24
percent;
(2) the remainder (i) one-half to the greater Minnesota
fund, but not to exceed $120,000,000 and (ii) one-half to the
budget and cash flow reserve account until the total amount in
the account equals $550,000,000.
The amounts necessary to meet the requirements of clauses
(1) and (2) this section are appropriated from the general fund.
Sec. 3. [TRANSFER RETURNED.]
The Greater Minnesota Corporation shall return to the state
treasury $80,500,000 of the money transferred to it under
Minnesota Statutes 1987 Supplement, section 16A.1541. The
return must be made to the commissioner of finance, who shall
credit the receipt to the general fund. The return must be made
as soon as is practical, while minimizing any investment losses
that might result from early redemption.
Sec. 4. [APPROPRIATION REDUCTION.]
The appropriation from the general fund under Minnesota
Statutes 1987 Supplement, section 16A.1541 to reduce the
property tax recognition percent is reduced to zero.
Sec. 5. [EFFECTIVE DATE.]
Sections 1 to 4 are effective the day following final
enactment.
ARTICLE 14
SPECIAL SERVICE DISTRICT PROCEDURES
Section 1. [428A.01] [SPECIAL SERVICE DISTRICT PROCEDURES;
DEFINITIONS.]
Subdivision 1. [APPLICABILITY.] As used in sections 1 to
10, the terms defined in this section have the meanings given
them.
Subd. 2. [CITY.] "City" means the city in which the
special service district is authorized to be established under a
special law.
Subd. 3. [SPECIAL SERVICES.] "Special services" has the
meaning given in the city's enabling legislation.
Special services do not include a service that is
ordinarily provided throughout the city from general fund
revenues of the city unless an increased level of the service is
provided in the special service district.
Subd. 4. [SPECIAL SERVICE DISTRICT.] "Special service
district" means a defined area within the city where special
services are rendered and the costs of the special services are
paid from revenues collected from service charges imposed within
that area.
Subd. 5. [ASSESSED VALUE.] "Assessed value" means the
assessed value most recently certified by the county auditor
before the effective date of the ordinance or resolution adopted
under section 2 or 3.
Subd. 6. [LAND AREA.] "Land area" means the land area in
the district that is subject to property taxes.
Sec. 2. [428A.02] [ESTABLISHMENT OF SPECIAL SERVICE
DISTRICT.]
Subdivision 1. [ORDINANCE.] The governing body of the city
may adopt an ordinance establishing a special service district.
Only property that is classified under section 273.13 and used
for commercial, industrial, or public utility purposes, or is
vacant land zoned or designated on a land use plan for
commercial or industrial use and located in the special service
district, may be subject to the charges imposed by the city on
the special service district. Other types of property may be
included within the boundaries of the special service district
but are not subject to the levies or charges imposed by the city
on the special service district. If 50 percent or more of the
market value of a parcel of property is classified under section
273.13 as commercial, industrial, or vacant land zoned or
designated on a land use plan for commercial or industrial use,
or public utility for the current assessment year, then the
entire market value of the property is subject to a service
charge based on assessed value for purposes of sections 1 to
10. The ordinance shall describe with particularity the area
within the city to be included in the district and the special
services to be furnished in the district. The ordinance may not
be adopted until after a public hearing has been held on the
question. Notice of the hearing shall include the time and
place of hearing, a map showing the boundaries of the proposed
district, and a statement that all persons owning property in
the proposed district that would be subject to a service charge
will be given opportunity to be heard at the hearing.
Subd. 2. [NOTICE.] Notice of the hearing must be given by
publication in at least two issues of the official newspaper of
the city. The two publications must be two weeks apart and the
hearing must be held at least three days after the last
publication. Not less than ten days before the hearing, notice
must also be mailed to the owner of each parcel within the area
proposed to be included in the district. For the purpose of
giving mailed notice, owners are those shown on the records of
the county auditor. Other records may be used to supply the
necessary information. For properties that are tax exempt or
subject to taxation on a gross earnings basis in lieu of
property tax and are not listed on the records of the county
auditor, the owners must be ascertained by any practicable means
and mailed notice given them. At the public hearing a person
affected by the proposed district may testify on any issues
relevant to the proposed district. The hearing may be adjourned
from time to time and the ordinance establishing the district
may be adopted at any time within six months after the date of
the conclusion of the hearing by a vote of the majority of the
governing body of the city.
Subd. 3. [CHARGES; RELATIONSHIP TO SERVICES.] The city may
impose service charges under sections 1 to 10 that are
reasonably related to the special services provided. Charges
for service shall be as nearly as possible proportionate to the
cost of furnishing the service, and may be fixed on the basis of
the service directly rendered, or by reference to a reasonable
classification of the types of premises to which service is
furnished, or on any other equitable basis.
Subd. 4. [BENEFIT; OBJECTION.] Before the ordinance is
adopted or at the hearing at which it is to be adopted, any
affected landowner may file a written objection with the city
clerk asserting that the landowner's property should not be
included in the district or should not be subjected to a service
charge and objecting to:
(1) the inclusion of the landowner's property in the
district, for the reason that the property would not receive
services that are not provided throughout the city to the same
degree;
(2) the levy of a service charge on the landowner's
property, for the reason that the property is exempted under
this article or the special law under which the district was
created; or
(3) the fact that neither the landowner's property nor its
use is benefited by the proposed special service.
The governing body shall make a determination on the objection
within 30 days of its filing. Pending its determination, the
governing body may delay adoption of the ordinance or it may
adopt the ordinance with a reservation that the landowner's
property may be excluded from the district or district service
charges when the determination is made.
Subd. 5. [APPEAL TO DISTRICT COURT.] Within 30 days after
the determination of the objection, any person aggrieved, who is
not precluded by failure to object before or at the hearing, or
whose failure to object is due to a reasonable cause, may appeal
to the district court by serving a notice upon the mayor or city
clerk. The notice shall be filed with the court administrator
of the district court within ten days after its service. The
city clerk shall furnish the appellant a certified copy of the
findings and determination of the governing body. The court may
affirm the action objected to or, if the appellant's objections
have merit, modify or cancel it. If the appellant does not
prevail upon the appeal, the costs incurred shall be taxed to
the appellant by the court and judgment entered for them. All
objections shall be deemed waived unless presented on appeal.
Sec. 3. [428A.03] [SERVICE CHARGE AUTHORITY; NOTICE AND
HEARING REQUIREMENTS.]
Subdivision 1. [HEARING.] Service charges may be imposed
by the city within the special service district at a rate or
amount sufficient to produce the revenues required to provide
special services in the district. To determine the appropriate
rate for a service charge based on assessed value, taxable
property or value must be determined without regard to captured
or original assessed value under section 469.177 or to the
distribution or contribution value under section 473F.08.
Service charges may not be imposed to finance a special service
if the service is ordinarily provided by the city from its
general fund revenues unless the service is provided in the
district at an increased level. In that case, a service charge
may be imposed only in the amount needed to pay for the
increased level of service. A service charge may not be imposed
on the receipts from the sale of intoxicating liquor, food, or
lodging. Before the imposition of service charges in a
district, for each calendar year, a hearing must be held under
section 2 and notice must be given and must be mailed to any
individual or business organization subject to a service
charge. For purposes of this section, the notice shall also
include:
(1) a statement that all interested persons will be given
an opportunity to be heard at the hearing regarding a proposed
service charge;
(2) the estimated cost of improvements to be paid for in
whole or in part by service charges imposed under this section,
the estimated cost of operating and maintaining the improvements
during the first year and upon completion of the improvements,
the proposed method and source of financing the improvements,
and the annual cost of operating and maintaining the
improvements;
(3) the proposed rate or amount of the proposed service
charge to be imposed in the district during the calendar year
and the nature and character of special services to be rendered
in the district during the calendar year in which the service
charge is to be collected; and
(4) a statement that the petition requirements of section 8
have either been met or do not apply to the proposed service
charge.
Within six months of the public hearing, the city may adopt
a resolution imposing a service charge within the district not
exceeding the amount or rate expressed in the notice issued
under this section.
Subd. 2. [EXEMPTION OF CERTAIN PROPERTIES FROM TAXES AND
SERVICE CHARGES.] Property exempt from taxation by section
272.02 is exempt from any service charges based on assessed
value imposed under sections 1 to 10.
Subd. 3. [LEVY LIMIT.] Service charges imposed under
sections 1 to 10 are not included in the calculation of levies
or limits on levies imposed under law or charter.
Sec. 4. [428A.04] [ENLARGEMENT OF SPECIAL SERVICE
DISTRICTS.]
Boundaries of a special service district may be enlarged
only after hearing and notice as provided in sections 2 and 3.
Notice must be served in the original district and in the area
proposed to be added to the district. Property added to the
district is subject to all service charges imposed within the
district after the property becomes a part of the district if it
is property of the type that is subject to service charges in
the district. On the question of enlargement, the petition
requirement in section 8 and the veto power in section 9 apply
only to owners, individuals, and business organizations in the
area proposed to be added to the district.
Sec. 5. [428A.05] [COLLECTION OF SERVICE CHARGES.]
Service charges may be imposed on the basis of the assessed
value of the property on which the service charge is imposed but
must be spread only upon the assessed value of the taxable
property located in the geographic area described in the
ordinance. Service charges based on assessed value may be
payable and collected at the same time and in the same manner as
provided for payment and collection of ad valorem taxes. Other
service charges imposed must be collected as provided by
ordinance. Service charges based on assessed value collected
under sections 1 to 10 are not included in computations under
section 469.177, chapter 473F, or any other law that applies to
general ad valorem levies.
Sec. 6. [428A.06] [BONDS.]
At any time after a contract for the construction of all or
part of an improvement authorized under sections 1 to 10 has
been entered into or the work has been ordered done by day
labor, the governing body of the city may issue obligations in
the amount it deems necessary to defray in whole or in part the
expense incurred and estimated to be incurred in making the
improvement, including every item of cost from inception to
completion and all fees and expenses incurred in connection with
the improvement or the financing. The obligations are payable
primarily out of the proceeds of the service charge based on
assessed value imposed under section 3, or from any other
special assessments or nontax revenues available to be pledged
for their payment under charter or statutory authority, or from
two or more of those sources. The governing body may, by
resolution adopted prior to the sale of obligations, pledge the
full faith, credit, and taxing power of the city to assure
payment of the principal and interest if the proceeds of the
service charge in the district are insufficient to pay the
principal and interest. The obligations must be issued in
accordance with chapter 475, except that an election is not
required, and the amount of the obligations need not be included
in determining the net debt of the city under the provisions of
any law or charter limiting debt.
Sec. 7. [428A.07] [ADVISORY BOARD.]
The governing body of the city may create and appoint an
advisory board for each special service district in the city to
advise the governing body in connection with the construction,
maintenance, and operation of improvements, and the furnishing
of special services in a district. The advisory board shall
make recommendations to the governing body on the requests and
complaints of owners, occupants, and users of property within
the district and members of the public. Before the adoption of
any proposal by the governing body to provide services or impose
service charges within the district, the advisory board of the
district shall have an opportunity to review and comment upon
the proposal.
Sec. 8. [428A.08] [PETITION REQUIRED.]
No action may be taken under section 2 unless owners of 25
percent or more of the land area of property that would be
subject to service charges in the proposed special service
district and owners of 25 percent or more of the assessed value
of property that would be subject to service charges in the
proposed special service district file a petition requesting a
public hearing on the proposed action with the city clerk. No
action may be taken under section 3 to impose a service charge
based on assessed value unless owners of 25 percent or more of
the land area subject to a proposed service charge and owners of
25 percent or more of the assessed value subject to a proposed
service charge file a petition requesting a public hearing on
the proposed action with the city clerk. No action may be taken
under section 3 to impose any other type of service charge
unless 25 percent or more of the individual or business
organizations subject to the proposed service charge file a
petition requesting a public hearing on the proposed action with
the city clerk. If the boundaries of a proposed district are
changed or the land area or assessed value subject to a service
charge or the individuals or business organizations subject to a
service charge are changed after the public hearing, a petition
meeting the requirements of this section must be filed with the
city clerk before the ordinance establishing the district or
resolution imposing the service charge may become effective.
Sec. 9. [428A.09] [VETO POWER OF OWNERS.]
Subdivision 1. [NOTICE OF RIGHT TO FILE
OBJECTIONS.] Except as provided in section 10, the effective
date of any ordinance or resolution adopted under sections 2 and
3 must be at least 45 days after it is adopted. Within five
days after adoption of the ordinance or resolution, a summary of
the ordinance or resolution must be mailed to the owner of each
parcel included in the special service district and any
individual or business organization subject to a service charge
in the same manner that notice is mailed under section 2. The
mailing must include a notice that owners subject to a service
charge based on assessed value and individuals and business
organizations subject to a service charge imposed on another
basis have a right to veto the ordinance or resolution by filing
the required number of objections with the city clerk before the
effective date of the ordinance or resolution and that a copy of
the ordinance or resolution is on file with the city clerk for
public inspection.
Subd. 2. [REQUIREMENTS FOR VETO.] If owners of 35 percent
or more of the land area in the district subject to the service
charge based on assessed value or owners of 35 percent or more
of the assessed value in the district subject to the service
charge based on assessed value file an objection to the
ordinance adopted by the city under section 2 with the city
clerk before the effective date of the ordinance, the ordinance
does not become effective. If owners of 35 percent or more of
the land area subject to the service charge based on assessed
value or owners of 35 percent or more of the assessed value
subject to the service charge based on assessed value file an
objection to the resolution adopted imposing a service charge
based on assessed value under section 3 with the city clerk
before the effective date of the resolution, the resolution does
not become effective. If 35 percent or more of individuals and
business organizations subject to a service charge file an
objection to the resolution adopted imposing a service charge on
a basis other than assessed value under section 3 with the city
clerk before the effective date of the resolution, the
resolution does not become effective. In the event of a veto,
no district shall be established during the current calendar
year and until a petition meeting the qualifications set forth
in this subdivision for a veto has been filed.
Sec. 10. [428A.10] [EXCLUSION FROM PETITION REQUIREMENTS
AND VETO POWER.]
The petition requirements of section 8 and the right of
owners and those subject to a service charge to veto a
resolution in section 9 do not apply to second or subsequent
years' applications of a service charge that is authorized to be
in effect for more than one year under a resolution that has met
the petition requirements of section 8 and which has not been
vetoed under section 9 for the first year's application. A
resolution imposing a service charge for more than one year must
not be adopted unless the notice of public hearing required by
section 3 and the notice mailed with the adopted resolution
under section 9 include the following information:
(1) in the case of improvements, the maximum service charge
to be imposed in any year and the maximum number of years the
service charges imposed to pay for the improvement; and
(2) in the case of operating and maintenance services, the
maximum service charge to be imposed in any year and the maximum
number of years, or a statement that the service charge will be
imposed for an indefinite number of years, the service charges
will be imposed to pay for operation and maintenance services.
The resolution may provide that the maximum service charge
to be imposed in any year will increase or decrease from the
maximum amount authorized in the preceding year based on an
indicator of increased cost or a percentage amount established
by the resolution.
ARTICLE 15
ROBBINSDALE SPECIAL SERVICE DISTRICT
Section 1. [CITY OF ROBBINSDALE SPECIAL SERVICE DISTRICT;
DEFINITIONS.]
Subdivision 1. [APPLICABILITY.] For purposes of sections 1
and 2, the terms defined in this section have the meanings given
them.
Subd. 2. [CITY.] "City" means the city of Robbinsdale.
Subd. 3. [SPECIAL SERVICES.] "Special services" means all
services rendered or contracted for by the city, including, but
not limited to:
(1) the repair, maintenance, operation, and construction of
any improvements authorized by section 429.021;
(2) parking services rendered or contracted for by the
city; and
(3) any other service provided to the public by the city
that is authorized by law or charter.
Sec. 2. [ESTABLISHMENT OF SPECIAL SERVICE DISTRICT.]
Subdivision 1. [ORDINANCE.] The governing body of the city
may adopt an ordinance establishing a special service district.
The provisions of article 14 govern the establishment and
operation of special service districts in the city.
Sec. 3. [LOCAL APPROVAL.]
This article takes effect the day after the governing body
of the city of Robbinsdale complies with Minnesota Statutes,
section 645.021, subdivision 3.
ARTICLE 16
MINNEAPOLIS NEIGHBORHOODS SPECIAL SERVICE DISTRICTS
Section 1. [DEFINITIONS.]
Subdivision 1. [TERMS DEFINED.] For the purposes of
sections 1 to 6, the terms defined in this section have the
meanings given them.
Subd. 2. [CITY.] "City" means the city of Minneapolis.
Subd. 3. [SPECIAL SERVICES.] "Special services" means the
following services rendered or contracted for by the city:
(1) snow and ice removal;
(2) sweeping and cleaning sidewalks, curbs, gutters,
streets, and alleys;
(3) litter, poster, and handbill removal;
(4) construction, repair, operation, and maintenance of
sidewalks, curbs, gutters, bus shelters, lighting, benches,
chairs, tables, telephone booths, traffic signs, fire hydrants,
newsstands, kiosks, trash receptacles, utility connections,
marquees, awnings, canopies, display cases, information booths,
and banners;
(5) landscaping, planting, repair, maintenance, and care of
trees, shrubs, bushes, flowers, grass, and other decorative
materials;
(6) security personnel, equipment, and systems;
(7) approval and supervision of special activities;
(8) insurance; and
(9) administration, coordination, studies, and preparation
of designs.
Special service district funds may be used to pay operating
costs of a neighborhood business association composed of a
majority of owners or operators of businesses located within the
district.
Sec. 2. [ESTABLISHMENT OF SPECIAL SERVICE DISTRICT.]
Subdivision 1. [ORDINANCE.] The governing body of the city
may adopt an ordinance establishing a special service district
in any area zoned for commercial, business, or industrial use
outside of the area bounded by the centerlines of the main
channel of the Mississippi river, 10th Avenue South, Washington
Avenue South, Chicago Avenue South, South 3rd Street, 11th
Avenue South, South 6th Street, 5th Avenue South, South 12th
Street, 4th Avenue South, East 16th Street, 1st Avenue South,
Grant Street, Willow Street extended, Harmon Place, Interstate
Highway 94, Highway 12, North 12th Street, and 3rd Avenue North;
and, south of 28th Street, west of Fremont Avenue South, north
of 31st Street, and east of Humboldt Avenue South; and outside
any other existing special service district. The provisions of
article 14 govern the establishment and operation of special
service districts in the city under sections 1 to 6, except to
the extent specified otherwise in sections 1 to 6.
Subd. 2. [USE OF CITY EMPLOYEES.] If the city determines
that any of the special services to be provided are under the
jurisdiction of a city public employee bargaining unit, the city
shall negotiate with that unit to determine whether that service
shall be provided by the city or contracted for with another
service provider.
Sec. 3. [SERVICE CHARGE ABATEMENT.]
An individual or business organization subject to a service
charge imposed under sections 1 to 6 may apply to the city for a
service charge abatement for that calendar year on the basis of
economic hardship. The city may grant the abatement of the
service charge for the calendar year if the city determines that
an economic hardship exists.
Sec. 4. [BONDS.]
The provisions of article 14, section 6, govern the
issuance of bonds for the special service district, except that
the obligations shall be payable primarily out of the proceeds
of the service charge imposed under article 14, section 3. The
governing body may, by resolution adopted before the sale of
obligations, pledge the full faith, credit, and taxing power of
the city to assure payment of the principal and interest if the
proceeds of the service charge based on assessed value in the
special service district are insufficient to pay the principal
and interest.
Sec. 5. [EXPIRATION.]
A special service district established under this article
shall expire four years after the date of its establishment
unless renewed by following the procedure for establishing a
district provided by article 14, section 2. After the
expiration or termination of a district, service charges may
continue to be imposed in the district to pay the costs of an
improvement specified in section 1, subdivision 3, clause (4).
Sec. 6. [ADVISORY BOARD.]
Notwithstanding article 14, section 7, the city council
must create and appoint an advisory board for the special
service district to operate as provided in that section. All
members of the advisory board must be property owners, tenants,
or residents of the district.
Sec. 7. [LOCAL APPROVAL.]
This article takes effect the day after the governing body
of the city of Minneapolis complies with Minnesota Statutes,
section 645.021, subdivision 3.
ARTICLE 17
MINNEAPOLIS DOWNTOWN SPECIAL SERVICE DISTRICTS
Section 1. [DEFINITIONS.]
Subdivision 1. [TERMS DEFINED.] For purposes of sections 1
to 7, the terms defined in this section have the meanings given
them.
Subd. 2. [CITY.] "City" means the city of Minneapolis.
Subd. 3. [PEDESTRIAN MALL.] "Pedestrian mall" means an
improvement designed and used primarily for the movement,
safety, convenience, and enjoyment of pedestrians, whether or
not a part of a street is set apart for a roadway for emergency
vehicles, transit vehicles, or private vehicles at some or all
times. A pedestrian mall includes related sidewalks, moving
sidewalks, curbs, gutters, streets, parks, playgrounds, plazas,
recreational facilities, performance areas, bus shelters,
transit facilities and vehicles, sound and video systems,
overhead and underground radiant heating devices, lighting,
benches, chairs, tables, sculpture, telephone booths, traffic
signs, fire hydrants, newsstands, kiosks, trash receptacles,
utility connections, marquees, awnings, canopies, walls,
bollards, chains, paintings, murals, alleys, display cases,
fountains, sprinkler systems, restrooms, information booths,
aquariums, aviaries, pedestrian tunnels, banners, pedestrian
bridges, pedestrian ramps, pedestrian overpasses, pedestrian
underpasses, drainage, sewers, and water mains. A pedestrian
mall does not include a plaza adjacent to a convention center.
Subd. 4. [SPECIAL SERVICES.] "Special services" means the
following services rendered or contracted for by the city:
(a) snow and ice removal;
(b) sweeping and cleaning of sidewalks, curbs, gutters,
streets, and alleys;
(c) litter, poster, and handbill removal;
(d) construction, repair, operation, and maintenance of
pedestrian malls;
(e) repair and maintenance of capital improvements
constructed with funds other than special service district
proceeds;
(f) landscaping, planting, repair, maintenance, and care of
trees, shrubs, bushes, flowers, grass, and other decorative
materials;
(g) security personnel, equipment, and systems and
coordination of private security, including lighting;
(h) operation of public transit;
(i) information and signs relating to parking and vehicle
and pedestrian movement at street and skyway levels;
(j) approval, supervision, and coordination of special
activities; and
(k) administration, coordination, studies, and preparation
of designs.
Sec. 2. [ESTABLISHMENT OF SPECIAL SERVICE DISTRICT.]
Subdivision 1. [ORDINANCE.] The governing body of the city
may adopt an ordinance establishing special service districts in
that part of the city bounded by the centerlines of the main
channel of the Mississippi river, 10th Avenue South, Washington
Avenue South, Chicago Avenue South, South 3rd Street, 11th
Avenue South, South 6th Street, 5th Avenue South, South 12th
Street, 4th Avenue South, East 16th Street, 1st Avenue South,
Grant Street, Willow Street extended, Harmon Place, Interstate
Highway 94, Highway 12, North 12th Street and 3rd Avenue North.
Only property that is used for commercial, business, or
industrial purposes or classified as public utility or vacant
land and located in the special service district may be subject
to the charges imposed by the city on the special service
district. Property used for residential purposes, including
condominiums, apartments, and cooperatives, or used by a church
or a charitable organization organized under Minnesota Statutes,
sections 315.44 and 315.49, or owned or leased in its entirety
by a charitable organization described in section 501(c)(3) of
the Internal Revenue Code, as amended through December 31, 1987,
shall not be subject to any service charges under sections 1 to
6. Property owned by a unit of government and used to raise
revenue, except public hospitals, libraries, and Orchestra Hall,
shall be subject to service charges other than service charges
based on assessed value. In addition, property that is exempt
from taxation under Minnesota Statutes, section 272.02, is
exempt from service charges based on assessed value imposed
under sections 1 to 6, but is subject to other types of service
charges under sections 1 to 6 unless otherwise exempted under
this subdivision. The owner of any property that is exempted
from any or all service charges under this subdivision may
notify the governing body of its intent to receive the benefits
provided to property within the special service district, and
thereby elect to be subject to the service charges imposed for
those services. Property may be served within the boundaries of
the special service district whether or not the property is
subject to the charges imposed by the city on the special
service district. The ordinance must specifically describe the
area within the city to be included in the district and the
special services to be furnished in the district. The ordinance
must state the reasons for establishment of a district. The
ordinance may not be adopted until after a public hearing has
been held on the question. The provisions of article 14 govern
the establishment and operation of special service districts in
the city under sections 1 to 7, except to the extent specified
otherwise under sections 1 to 7.
Subd. 2. [CONTRACTORS.] Notwithstanding any other
provision of law or charter to the contrary, the city may
provide or contract for services in the district. All hiring by
contractors must be done in accordance with the Federal Civil
Rights Act of 1964, United States Code, title 21, sections 2000e
to 2000e-17; Minnesota Statutes, section 363.03; and the
Minneapolis Code of Ordinances, chapters 139 and 141.
Subd. 3. [CITY EMPLOYEES.] Job activities for special
services that are under the jurisdiction of any city public
employee bargaining unit must be performed by a member of the
bargaining unit.
Subd. 4. [LEVEL OF SERVICE.] The governing body of the
city shall not transfer the financial burden of citywide
services to the district nor discriminate against the district
in reductions and increases in citywide services because of the
existence of the district. Prior to establishment of a
district, the city and the downtown management board, provided
in section 6, shall meet to review the level of services in the
downtown area in order to assure that downtown is equitably
served through the city's normal operating budget. They shall
meet each succeeding year prior to the adoption of a budget for
the district and prior to imposition of a service charge in the
district under article 14, section 3.
Sec. 3. [LIMITATIONS.]
Subdivision 1. [SERVICES EXPENDITURES CAP.] Service
charges imposed in the special service district in any year for
special services specified in section 1, subdivision 4, with the
exception of construction under paragraph (d), must not exceed
an amount equal to the funds raised by a levy of three mills on
current assessed value of property subject to a service charge
in the district under property tax classifications in effect on
July 1, 1987.
Subd. 2. [CAPITAL EXPENDITURES CAP.] Service charges
imposed in any year in a special service district established
under sections 1 to 6 for construction of an improvement
specified in section 1, subdivision 4, paragraph (d), must not
exceed 50 percent of the total costs of the improvement,
including interest, payable in that year; no more than 50
percent of the total costs of the improvement may be specially
assessed under Minnesota Statutes, chapter 429 or 430.
Sec. 4. [VETO POWERS.]
Subdivision 1. [GENERALLY.] In addition to the provisions
of article 14, section 9, relating to veto of the establishment
of a district, the provisions of this section apply to special
service districts established under sections 1 to 6.
Subd. 2. [VETO OF PEDESTRIAN MALLS.] The effective date of
any imposition of service charge for construction of an
improvement specified in section 1, subdivision 4, paragraph
(d), under article 14, section 3, must be at least 45 days after
it is adopted. Within five days after adoption, a summary of
the city council action must be mailed to the owner of each
parcel included in the special service district and any
individual or business organization subject to a service charge
in the same manner that notice is mailed under article 14,
section 2. The mailing must include a notice that owners
subject to a service charge based on assessed value and
individuals and business organizations subject to a service
charge have a right to veto the action by filing the required
number of objections with the city clerk before the effective
date of the imposition and that a copy of the action is on file
with the city clerk for public inspection. If owners of at
least 35 percent of the land area subject to a service charge
based on assessed value or owners of at least 35 percent of the
assessed value subject to the service charge based on assessed
value file an objection to the service charge with the city
clerk before the effective date, the service charge based on
assessed value does not become effective. If individuals and
business organizations subject to at least 35 percent of a
service charge imposed on a basis other than assessed value file
an objection to imposition of the service charge with the city
clerk before the effective date, the service charge does not
become effective. In the event of a veto, no service charge may
be imposed in the district for construction of a pedestrian mall
during the current calendar year and until a petition meeting
the qualifications set forth in this subdivision for a veto has
been filed. Service charges may continue to be levied and
imposed in the district, regardless of a veto under this
subdivision, to pay the costs of construction of an improvement
specified in section 1, subdivision 4, paragraph (d), for which
debt has been incurred and a service charge imposed during a
prior year.
Subd. 3. [VETO OF SERVICES.] Each year after the fourth
year after establishment of a district, the veto provisions of
this subdivision apply, except that a veto is not effective
until the year following the year of the veto. Four years after
establishment of a district, the effective date of any
imposition of service charge under article 14, section 3, for
services specified in section 1, subdivision 4, with the
exception of construction under paragraph (d), must be at least
45 days after it is adopted. Within five days after adoption, a
summary of the city council action must be mailed to the owner
of each parcel included in the special service district and any
individual or business organization subject to a service charge,
in the same manner that notice is mailed under article 14,
section 2. The mailing must include a notice that owners
subject to a service charge based on assessed value and
individuals and business organizations subject to a service
charge have a right to veto the action by filing the required
number of objections with the city clerk before the effective
date of the imposition, and that a copy of the action is on file
with the city clerk for public inspection. If owners of at
least 35 percent of the land area subject to a service charge
based on assessed value or the owners of at least 35 percent of
the assessed value subject to the service charge based on
assessed value file an objection to the service charge for
services under section 3 with the city clerk before the
effective date, the service charge based on assessed value does
not become effective. If individuals and business organizations
subject to at least 35 percent of a service charge imposed on a
basis other than assessed value file an objection to imposition
of the service charge under section 3 with the city clerk before
the effective date, the service charge does not become
effective. In the event of a veto, no service charge may be
imposed in the district for services during the current calendar
year and until a petition meeting the qualifications set forth
in this subdivision for a veto has been filed, and no service
charge may be collected during a year for which a service charge
has been vetoed. Service charges may continue to be imposed in
the district, regardless of a veto under this subdivision, to
pay the costs of services specified in section 1, subdivision 4,
with the exception of construction under clause (d), for which
debt has been incurred prior to the filing of a veto.
Sec. 5. [DEBT OBLIGATIONS.]
Subdivision 1. [GENERALLY.] The provisions of this section
apply to service districts created under sections 1 to 6 in lieu
of the provisions of article 14, section 6.
Subd. 2. [CERTIFICATES OF INDEBTEDNESS.] Certificates of
indebtedness may be issued for purposes of any work or service
authorized under sections 1 to 6. The certificates shall be
payable in not more than five years and shall be issued on the
terms and in the manner determined by the issuer. The
obligations are payable out of the proceeds of the tax or charge
levied under article 14, section 3, in the same manner as bonds.
Subd. 3. [BONDS.] Obligations may be issued in the amount
deemed necessary to defray in whole or in part the expense
incurred and estimated to be incurred in making a pedestrian
mall improvement authorized under sections 1 to 6, including
every item of cost from inception to completion and all fees and
expenses incurred in connection with the improvement or the
financing. The obligations are payable primarily out of the
proceeds of the charge levied under article 14, section 3, or
from any other special assessments or nontax revenues available
to be pledged for their payment under charter or statutory
authority, or from two or more of those sources. The full
faith, credit, and taxing power of the city may, by resolution
adopted prior to the sale of obligations, be pledged to assure
payment of the principal and interest if the proceeds of the
service charge in the district and other pledged special
assessments or revenues are insufficient to pay the principal
and interest.
Subd. 4. [PROCEDURES.] Debt obligations must be issued in
accordance with Minnesota Statutes, chapter 475, and the city
charter, except that an election is not required under any
circumstances, and the amount of the obligations need not be
included in determining the net debt of the city.
Sec. 6. [DOWNTOWN MANAGEMENT BOARD.]
In lieu of the advisory board authorized under article 14,
section 7, the city council shall create and provide for
appointment of a downtown management board for the special
service district to advise the governing body in connection with
the furnishing of special services in a district. The downtown
management board shall make recommendations to the governing
body on the requests and complaints of owners, occupants, and
users of property within the district and members of the
public. Before the adoption of any proposal by the governing
body to provide services or impose service charges within the
district, the downtown management board of the district shall
review and comment upon the proposal. The board may incorporate
as a nonprofit corporation under Minnesota Statutes, chapter 317.
The board shall have the power to enter into contracts. A
majority of members of the board must be property owners or
tenants in the district and subject to a service charge. At
least one member must be an owner of commercial property.
Sec. 7. [CITY OPTION.]
The city may elect to exercise the powers provided by
sections 1 to 6 or the powers provided by general or special law
relating to the same subject.
Sec. 8. [EFFECTIVE DATE.]
Sections 1 to 7 are effective the day after compliance with
Minnesota Statutes, section 645.021, subdivision 3, by the
governing body of the city of Minneapolis.
ARTICLE 18
WHITE BEAR LAKE SPECIAL SERVICE DISTRICTS
Section 1. [DEFINITIONS.]
Subdivision 1. For the purposes of sections 1 and 2, the
terms defined in this section have the meanings given them.
Subd. 2. "City" means the city of White Bear Lake.
Subd. 3. "Special services" mean:
(1) the promotion and management of a special service
district as a trade or shopping area;
(2) parking services rendered or contracted for by the
city; and
(3) the repair, maintenance, operation and replacement of
improvements, within the boundaries of a special service
district established under section 2.
Sec. 2. [ESTABLISHMENT OF SPECIAL SERVICE DISTRICT.]
Subdivision 1. [ORDINANCE.] The governing body of the city
may adopt ordinances establishing special service districts in
the following areas:
All that land zoned as "General Business (B-4)" or "Central
Business (B-5)" within the following described area: Beginning
at the northeast corner of the intersection of Minnesota State
Highway 96E and U.S. Highway 61, thence easterly along the north
right-of-way line of Minnesota State Highway 96E and Stewart
Avenue, thence southerly along the east right-of-way line of
Stewart Avenue a distance of 3,600 feet to the northeast
intersection of Stewart Avenue with Lake Avenue, thence
southwesterly along Lake Avenue a distance of 3,400 feet to the
northwest corner of the intersection of Lake Avenue with U.S.
Highway 61, thence northerly a distance of 2,600 feet along the
east right-of-way line of Bald Eagle Avenue to a point of
intersection with the north right-of-way line of 5th Street,
thence easterly along the north right-of-way line of 5th Street
a distance of 1,280 feet to a point of intersection with the
west right-of-way line of Division Street, thence northerly
along the west right-of-way line of Division Street a distance
of 2,700 feet to a point of intersection with the north
right-of-way line of 12th Street, thence easterly 1,200 feet
along a line extended on the north right-of-way line of 12th
Street to the intersection with the west right-of-way line of
U.S. Highway 61, thence southeasterly 160 feet along the west
right-of-way line of U.S. Highway 61 to the point of beginning.
The provisions of article 14 govern the establishment and
operation of special service districts in the city, except to
the extent otherwise specified in sections 1 and 2.
Sec. 3. [LOCAL APPROVAL.]
This article is effective the day after the governing body
of the city of White Bear Lake complies with Minnesota Statutes,
section 645.021, subdivision 3.
ARTICLE 19
MISCELLANEOUS
Section 1. Minnesota Statutes 1987 Supplement, section
69.54, is amended to read:
69.54 [SURCHARGE ON PREMIUMS TO RESTORE DEFICIENCY IN
SPECIAL FUND.]
The commissioner shall order and direct a surcharge to be
collected of two percent of the fire, lightning, and sprinkler
leakage gross premiums, less return premiums, on all direct
business received by any licensed foreign or domestic fire
insurance company on property in this city of the first class,
or by its agents for it, in cash or otherwise. This surcharge
shall be due and payable from these companies to the state
treasurer on March 15 31, May 15 31, and November 15 30 of
each calendar year, and if not paid within 30 days after these
dates, a penalty of ten percent shall accrue thereon and
thereafter this sum and penalty shall draw interest at the rate
of one percent per month until paid.
Sec. 2. Minnesota Statutes 1986, section 183.411,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITION.] For the purpose of this
section "stationary show boiler" means a boiler that is used
only for display and demonstration purposes. In recognition of
the historical significance of show boilers in maintaining a
working reminder of Minnesota's agricultural and lumber
industries, show boilers and engines are considered to be
historical artifacts.
Sec. 3. Minnesota Statutes 1986, section 183.411,
subdivision 3, is amended to read:
Subd. 3. [LICENSES.] A license to operate steam farm
traction engines, portable and stationary show engines and
portable and stationary show boilers shall be issued to an
applicant who:
(a) is 18 years of age or older;
(b) has two licensed second class, grade A engineers or
steam traction engineers, or any combination thereof, cosign the
application; attesting to the applicant's competence in
operating said devices;
(c) passes a written test for competence in operating said
devices; and
(d) has at least 25 hours of actual operating experience on
said devices; and
(e) pays the required fee.
A license shall be valid for the lifetime of the licensee.
A one time fee set by the commissioner pursuant to section
16A.128, shall be charged for the license.
Sec. 4. Minnesota Statutes 1986, section 183.411, is
amended by adding a subdivision to read:
Subd. 5. [LICENSED OPERATOR; PRESENCE REQUIRED.] An
operator licensed under this section must be present when a
traction engine, portable or stationary show engine, or portable
or stationary show boiler is in operation and a member of the
public is present.
Sec. 5. Minnesota Statutes 1986, section 183.466, is
amended to read:
183.466 [STANDARDS OF REPAIRS.]
The recommended rules for repair of boilers and pressure
vessels for use in this state shall be those established by the
national board of boiler and pressure vessel inspectors
inspection code and the rules of the division of boiler
inspection adopted by the department of labor and industry.
Sec. 6. Minnesota Statutes 1986, section 183.51,
subdivision 4, is amended to read:
Subd. 4. [CHIEF ENGINEER, GRADE A.] A person seeking
licensure as a chief engineer, Grade A, shall be at least 18
years of age and have habits and experience which justify the
belief verifies that the person is competent to take charge of
and be responsible for the safe operation and maintenance of all
classes of boilers, steam engines, or and turbines and their
appurtenances; and, before receiving a license, the applicant
shall take and subscribe an oath attesting to at least five
years actual experience in operating such boilers, including at
least two years experience in operating such engines or turbines.
Sec. 7. Minnesota Statutes 1986, section 183.51,
subdivision 7, is amended to read:
Subd. 7. [FIRST-CLASS ENGINEER, GRADE A.] A person seeking
licensure as a first-class engineer, Grade A, shall be at least
18 years of age and have habits and experience which justify the
belief verifies that the person is competent to take charge of
and be responsible for the safe operation and maintenance of all
classes of boilers, engines, or and turbines and their
appurtenances of not more than 300 horsepower or to operate as a
shift engineer in a plant of unlimited horsepower. Before
receiving a license, the applicant shall take and subscribe an
oath attesting to at least three years actual experience in
operating such boilers, including at least two years experience
in operating such engines, or turbines.
Sec. 8. Minnesota Statutes 1986, section 183.51,
subdivision 10, is amended to read:
Subd. 10. [SECOND-CLASS ENGINEER, GRADE A.] A person
seeking licensure as a second-class engineer, Grade A, shall be
at least 18 years of age and have habits and experience which
justify the belief verifies that the person is competent to take
charge of and be responsible for the safe operation and
maintenance of all classes of boilers, engines, or and turbines
and their appurtenances of not more than 100 horsepower or to
operate as a shift engineer in a plant of not more than 300
horsepower, or to assist the shift engineer, under direct
supervision, in a plant of unlimited horsepower. Before
receiving a license the applicant shall take and subscribe an
oath attesting to at least one year of actual experience in
operating such boilers, including at least one year of
experience in operating such engines, or turbines.
Sec. 9. Minnesota Statutes 1987 Supplement, section
256B.431, subdivision 2b, as amended by H.F. No. 2126, if
enacted, is amended to read:
Subd. 2b. [OPERATING COSTS, AFTER JULY 1, 1985.] (a) For
rate years beginning on or after July 1, 1985, the commissioner
shall establish procedures for determining per diem
reimbursement for operating costs.
(b) The commissioner shall contract with an econometric
firm with recognized expertise in and access to national
economic change indices that can be applied to the appropriate
cost categories when determining the operating cost payment rate.
(c) The commissioner shall analyze and evaluate each
nursing home's cost report of allowable operating costs incurred
by the nursing home during the reporting year immediately
preceding the rate year for which the payment rate becomes
effective.
(d) The commissioner shall establish limits on actual
allowable historical operating cost per diems based on cost
reports of allowable operating costs for the reporting year that
begins October 1, 1983, taking into consideration relevant
factors including resident needs, geographic location, size of
the nursing home, and the costs that must be incurred for the
care of residents in an efficiently and economically operated
nursing home. In developing the geographic groups for purposes
of reimbursement under this section, the commissioner shall
ensure that nursing homes in any county contiguous to the
Minneapolis-St. Paul seven-county metropolitan area are included
in the same geographic group. The limits established by the
commissioner shall not be less, in the aggregate, than the 60th
percentile of total actual allowable historical operating cost
per diems for each group of nursing homes established under
subdivision 1 based on cost reports of allowable operating costs
in the previous reporting year. For rate years beginning on or
after July 1, 1987, or until the new base period is established,
facilities located in geographic group I as described in
Minnesota Rules, part 9549.0052 (Emergency), on January 1, 1987,
may choose to have the commissioner apply either the care
related limits or the other operating cost limits calculated for
facilities located in geographic group II, or both, if either of
the limits calculated for the group II facilities is higher.
The efficiency incentive for geographic group I nursing homes
must be calculated based on geographic group I limits. The
phase-in must be established utilizing the chosen limits. For
purposes of these exceptions to the geographic grouping
requirements, the definitions in Minnesota Rules, parts
9549.0050 to 9549.0059 (Emergency), and 9549.0010 to 9549.0080,
apply. The limits established under this paragraph remain in
effect until the commissioner establishes a new base period.
Until the new base period is established, the commissioner shall
adjust the limits annually using the appropriate economic change
indices established in paragraph (e). In determining allowable
historical operating cost per diems for purposes of setting
limits and nursing home payment rates, the commissioner shall
divide the allowable historical operating costs by the actual
number of resident days, except that where a nursing home is
occupied at less than 90 percent of licensed capacity days, the
commissioner may establish procedures to adjust the computation
of the per diem to an imputed occupancy level at or below 90
percent. The commissioner shall establish efficiency incentives
as appropriate. The commissioner may establish efficiency
incentives for different operating cost categories. The
commissioner shall consider establishing efficiency incentives
in care related cost categories. The commissioner may combine
one or more operating cost categories and may use different
methods for calculating payment rates for each operating cost
category or combination of operating cost categories. For the
rate year beginning on July 1, 1985, the commissioner shall:
(1) allow nursing homes that have an average length of stay
of 180 days or less in their skilled nursing level of care, 125
percent of the care related limit and 105 percent of the other
operating cost limit established by rule; and
(2) exempt nursing homes licensed on July 1, 1983, by the
commissioner to provide residential services for the physically
handicapped under Minnesota Rules, parts 9570.2000 to 9570.3600,
from the care related limits and allow 105 percent of the other
operating cost limit established by rule.
For the purpose of calculating the other operating cost
efficiency incentive for nursing homes referred to in clause (1)
or (2), the commissioner shall use the other operating cost
limit established by rule before application of the 105 percent.
(e) The commissioner shall establish a composite index or
indices by determining the appropriate economic change
indicators to be applied to specific operating cost categories
or combination of operating cost categories.
(f) Each nursing home shall receive an operating cost
payment rate equal to the sum of the nursing home's operating
cost payment rates for each operating cost category. The
operating cost payment rate for an operating cost category shall
be the lesser of the nursing home's historical operating cost in
the category increased by the appropriate index established in
paragraph (e) for the operating cost category plus an efficiency
incentive established pursuant to paragraph (d) or the limit for
the operating cost category increased by the same index. If a
nursing home's actual historic operating costs are greater than
the prospective payment rate for that rate year, there shall be
no retroactive cost settle-up. In establishing payment rates
for one or more operating cost categories, the commissioner may
establish separate rates for different classes of residents
based on their relative care needs.
(g) The commissioner shall include the reported actual real
estate tax liability or payments in lieu of real estate tax of
each nursing home as an operating cost of that nursing
home. Except as provided in Minnesota Rules, parts 9549.0010 to
9549.0080, the commissioner shall allow an amount for payments
in lieu of real estate tax assessed by a municipality, city,
township, or county that does not exceed an amount equivalent to
a similar assessment for fire, police, or sanitation services
assessed to all other nonprofit or governmental entities located
in the municipality, city, township, or county in which a
nursing home to be assessed is located. Allowable costs under
this subdivision for payments made by a nonprofit nursing home
that are in lieu of real estate taxes shall not exceed the
amount which the nursing home would have paid to a city or
township and county for fire, police, sanitation services, and
road maintenance costs had real estate taxes been levied on that
property for those purposes. For rate years beginning on or
after July 1, 1987, the reported actual real estate tax
liability or payments in lieu of real estate tax of nursing
homes shall be adjusted to include an amount equal to one-half
of the dollar change in real estate taxes from the prior year.
The commissioner shall include a reported actual special
assessment, and reported actual license fees required by the
Minnesota department of health, for each nursing home as an
operating cost of that nursing home. Total adjusted real estate
tax liability, payments in lieu of real estate tax, actual
special assessments paid, and license fees paid as required by
the Minnesota department of health, for each nursing home (1)
shall be divided by actual resident days in order to compute the
operating cost payment rate for this operating cost category,
(2) shall not be used to compute the 60th percentile or other
operating cost limits established by the commissioner, and (3)
shall not be increased by the composite index or indices
established pursuant to paragraph (e).
(h) For rate years beginning on or after July 1, 1987, the
commissioner shall adjust the rates of a nursing home that meets
the criteria for the special dietary needs of its residents as
specified in section 144A.071, subdivision 3, clause (c), and
the requirements in section 31.651. The adjustment for raw food
cost shall be the difference between the nursing home's
allowable historical raw food cost per diem and 115 percent of
the median historical allowable raw food cost per diem of the
corresponding geographic group.
The rate adjustment shall be reduced by the applicable
phase-in percentage as provided under subdivision 2h.
Sec. 10. [270.0681] [TAX INFORMATION SAMPLE DATA.]
Subdivision 1. [PREPARATION OF SAMPLES.] The commissioner
of revenue shall prepare microdata samples of income tax returns
and other information useful for purposes of (1) estimating
state revenues, (2) simulating the effect of changes or proposed
changes in state and federal tax law on the amount of state
revenues, and (3) analyzing the incidence of present or proposed
taxes.
Subd. 2. [COORDINATING COMMITTEE.] A coordinating
committee is established to oversee and coordinate preparation
of the microdata samples. The committee consists of (1) the
director of the research division of the department of revenue
who shall serve as chair of the committee, (2) the state
economist, (3) the chair of the committee on taxes of the house
of representatives or the chair's designee, and (4) the chair of
the committee on taxes and tax laws of the senate or the chair's
designee. The committee shall consider the analysis needs and
use of the microdata samples by the finance and revenue
departments and the legislature in designing and preparing the
samples, including the type of data to be included, the
structure of the samples, size of the samples, and other
relevant factors.
Subd. 3. [CONTENTS OF SAMPLES.] The samples must consist
of information derived from a random sample of federal and
Minnesota individual income tax returns. The samples prepared
in odd numbered years must be augmented by additional
information from other sources as the coordinating committee
determines is feasible and appropriate. The coordinating
committee shall consider inclusion of (1) information derived
from property tax refund returns, (2) the estimated market value
of the taxpayer's home from the homestead declaration, and (3)
information from other sources, such as the surveys conducted by
the United States departments of commerce and labor.
Subd. 4. [CONSULTATION ON ANALYSIS MODELS.] The
coordinating committee shall facilitate regular consultation
among the department of revenue, the department of finance, and
house and senate staffs in development and maintenance of their
respective computer models used to analyze the microdata
samples. The committee shall encourage efforts to attain more
commonality in the models, greater sharing of program
development efforts and programming tasks, and more consistency
in the resulting analyses.
Sec. 11. Minnesota Statutes 1986, section 270.70,
subdivision 1, is amended to read:
Subdivision 1. [AUTHORITY OF COMMISSIONER.] If any tax
payable to the commissioner of revenue or to the department of
revenue is not paid when due, such tax may be collected by the
commissioner of revenue within five years after the date of
assessment of the tax, or if the tax judgment has been filed,
within the statutory period of enforcement of a valid tax
judgment, by a levy upon all property and rights to property,
including any property in the possession of law enforcement
officials, of the person liable for the payment or collection of
such tax (except that which is exempt from execution pursuant to
section 550.37) or property on which there is a lien provided in
section 270.69. For this purpose, the term "tax" shall include
any penalty, interest and costs properly payable. The term
"levy" includes the power of distraint and seizure by any means.
Sec. 12. Minnesota Statutes 1986, section 271.01,
subdivision 5, is amended to read:
Subd. 5. [JURISDICTION.] The tax court shall have
statewide jurisdiction. Except for an appeal to the supreme
court or any other appeal allowed under this subdivision, the
tax court shall be the sole, exclusive, and final authority for
the hearing and determination of all questions of law and fact
arising under the tax laws of the state, as defined in this
subdivision, in those cases that have been appealed to the tax
court and in any case that has been transferred by the district
court to the tax court. The tax court shall have no
jurisdiction in any case that does not arise under the tax laws
of the state or in any criminal case or in any case determining
or granting title to real property or in any case that is under
the jurisdiction of the probate court. The small claims
division of the tax court shall have no jurisdiction in any case
dealing with property valuation or assessment for property tax
purposes until the taxpayer has appealed the valuation or
assessment to the town or city board of equalization and to the
county board of equalization, except for those taxpayers whose
original assessments are determined by the commissioner of
revenue. The tax court shall have no jurisdiction in any case
involving an order of the state board of equalization unless a
taxpayer contests the valuation of property. Only the taxes,
aids and related matters contained in chapters 60A, 69, 124,
270, 272, 273, 274, 275, 276, 277, 278, 279, 285, 287, 288, 290,
290A, 291, 292, 293, 294, 295, 296, 297, 297A, 297B, 297C, 297D,
298, 299, 299F, 473, 473F, and 477A shall be considered tax laws
of this state subject to the jurisdiction of the tax court.
This subdivision shall not be construed to prevent an appeal, as
provided by law, to an administrative agency, board of
equalization, or to the commissioner of revenue. Wherever used
in this chapter, the term commissioner shall mean the
commissioner of revenue, unless otherwise specified.
Sec. 13. Minnesota Statutes 1986, section 287.21, is
amended by adding a subdivision to read:
Subd. 4. [TAX-FORFEITED LAND.] Before a state deed for
tax-forfeited land may be issued, the deed tax must be paid by
purchasers of tax-forfeited land, persons who redeem
tax-forfeited land, or local units of government that apply for
use or purchase of tax-forfeited land.
Sec. 14. Minnesota Statutes 1987 Supplement, section
295.32, is amended to read:
295.32 [GROSS EARNINGS TAX; ANNUAL RETURN.]
Every telegraph company as defined in section 295.01,
subdivision 9, shall file a return with the commissioner of
revenue, in such form as the commissioner shall prescribe,
containing a true and just report of its gross earnings derived
from business within the state during the preceding calendar
year, and make payment of the tax based upon the following
percentages of such gross earnings:
for calendar years beginning before December 31, 1989, 6
percent,
for calendar year 1990, 4.5 4 percent,
for calendar year 1991, 3 2 percent,
for calendar year 1992, 1.5 percent, and
for calendar years beginning after December 31, 1992 1991,
exempt.
Such return and payment of the tax due therewith shall be
submitted on or before March first of each year, and shall be in
lieu of all ad valorem taxes upon the property of such company
within the state for the year during which such gross earnings
accrued. The provisions of chapter 294 and acts amendatory
thereto, shall be applicable to such telegraph companies and to
the returns and to the taxes submitted therewith by them.
Sec. 15. Minnesota Statutes 1986, section 297D.08, is
amended to read:
297D.08 [TAX RATE.]
A tax is imposed on marijuana and controlled substances as
defined in section 297D.01 at the following rates:
(1) on each gram of marijuana, or each portion of a gram,
$3.50; and
(2) on each gram of controlled substance, or portion of a
gram, $200; or
(3) on each 50 ten dosage units of a controlled substance
that is not sold by weight, or portion thereof, $2,000 $400.
Sec. 16. Minnesota Statutes 1987 Supplement, section
298.22, subdivision 1, is amended to read:
Subdivision 1. (1) The office of commissioner of iron
range resources and rehabilitation is created. The commissioner
shall be appointed by the governor under the provisions of
section 15.06.
(2) The commissioner may hold such other positions or
appointments as are not incompatible with duties as commissioner
of iron range resources and rehabilitation. The commissioner
may appoint a deputy commissioner. All expenses of the
commissioner, including the payment of such assistance as may be
necessary, shall be paid out of the amounts appropriated by
section 298.28. The compensation of the commissioner shall be
set by the legislative coordinating commission and may not
exceed the maximum salary set for the commissioner of
administration under section 15A.081, subdivision 1.
(3) When the commissioner shall determine that distress and
unemployment exists or may exist in the future in any county by
reason of the removal of natural resources or a possibly limited
use thereof in the future and the decrease in employment
resulting therefrom, now or hereafter, the commissioner may use
such amounts of the appropriation made to the commissioner of
revenue in section 298.28 as are determined to be necessary and
proper in the development of the remaining resources of said
county and in the vocational training and rehabilitation of its
residents, except that the amount needed to cover cost overruns
awarded to a contractor by an arbitrator in relation to a
contract awarded by the commissioner or in effect after July 1,
1985, is appropriated from the general fund. For the purposes
of this section, "development of remaining resources" includes,
but is not limited to, the promotion of tourism.
Sec. 17. Minnesota Statutes 1987 Supplement, section
298.2213, subdivision 3, is amended to read:
Subd. 3. [USE OF MONEY.] The money appropriated under this
section may be used to provide loans, loan guarantees, interest
buy-downs, and other forms of participation with private sources
of financing, provided that a loan to a private enterprise must
be for a principal amount not to exceed one-half of the cost of
the project for which financing is sought, and the rate of
interest on a loan must be no less than the lesser of eight
percent or the rate of interest set by the Minnesota development
board for comparable small business development loans at that
time that is three percentage points less than a full faith and
credit obligation of the United States government of comparable
maturity, at the time that the loan is approved.
Money appropriated in this section must be expended only in
or for the benefit of the tax relief area defined in section
273.134, and as otherwise provided in this section.
Sec. 18. Minnesota Statutes 1986, section 298.223, is
amended to read:
298.223 [TACONITE AREA ENVIRONMENTAL PROTECTION FUND.]
Subdivision 1. [CREATION; PURPOSES.] A fund called the
taconite environmental protection fund is created for the
purpose of reclaiming, restoring and enhancing those areas of
northeast Minnesota located within a tax relief area defined in
section 273.134 that are adversely affected by the
environmentally damaging operations involved in mining taconite
and iron ore and producing iron ore concentrate and for the
purpose of promoting the economic development of northeast
Minnesota. The taconite environmental protection fund shall be
used for the following purposes:
(a) to initiate investigations into matters the iron range
resources and rehabilitation board determines are in need of
study and which will determine the environmental problems
requiring remedial action;
(b) reclamation, restoration or reforestation of minelands
not otherwise provided for by state law;
(c) local economic development projects including
construction of sewer and water systems, and other public works
located within a tax relief area defined in section 273.134;
(d) monitoring of mineral industry related health problems
among mining employees.
Subd. 2. [ADMINISTRATION.] The taconite environmental
protection fund shall be administered by the commissioner of the
iron range resources and rehabilitation board. The commissioner
shall by September 1 of each year prepare a list of projects to
be funded from the taconite environmental protection fund, with
such supporting information including description of the
projects, plans, and cost estimates as may be necessary. Upon
recommendation of the iron range resources and rehabilitation
board, this list shall be submitted to the legislative advisory
commission for its review. This list with the recommendation of
the legislative advisory commission shall then be transmitted to
the governor by November 1 of each year. By December 1 of each
year, the governor shall approve or disapprove, or return for
further consideration, each individual project. Funds for a
project may be expended only upon approval of the project by the
governor.
The commissioner may submit supplemental projects for
approval at any time. Supplemental projects approved by the
board must be submitted to the members of the legislative
advisory commission for their review and recommendations of
further review. If a recommendation is not provided within ten
days, no further review by the legislative advisory commission
is required, and the governor shall approve or disapprove each
project or return it for further consideration. If the
recommendation by any member is for further review the governor
shall submit the request to the legislative advisory commission
for its review and recommendation. Failure or refusal of the
commission to make a recommendation promptly is a negative
recommendation.
Subd. 3. [APPROPRIATION.] There is hereby annually
appropriated to the commissioner of iron range resources and
rehabilitation such funds as are necessary to carry out the
projects approved and such funds as are necessary for
administration of this section. Annual administrative costs,
not including detailed engineering expenses for the projects,
shall not exceed five percent of the amount annually expended
from the fund.
Funds for the purposes of this section are provided by
section 298.28, subdivision 11 relating to the taconite
environmental protection fund.
Sec. 19. Minnesota Statutes 1986, section 298.28,
subdivision 3, is amended to read:
Subd. 3. [CITIES; TOWNS.] (a) 12.5 cents per taxable ton,
less any amount distributed under subdivision 8, and paragraph
(b) of this subdivision, must be allocated to the taconite
municipal aid account to be distributed as provided in section
298.282.
(b) An amount must be allocated to towns or cities that is
annually certified by the county auditor of a county containing
a taconite tax relief area within which there is (1) an
organized township if, as of January 2, 1982, more than 75
percent of the assessed valuation of the township consists of
iron ore or (2) a city if, as of January 2, 1980, more than 75
percent of the assessed valuation of the city consists of iron
ore.
(c) The amount allocated under paragraph (b) will be the
portion of a township's or city's certified levy equal to the
proportion of (1) the difference between 50 percent of January
2, 1982, assessed value in the case of a township and 50 percent
of the January 2, 1980, assessed value in the case of a city and
its current assessed value to (2) the sum of its current
assessed value plus the difference determined in (1), provided
that the amount distributed shall not exceed $55 per capita in
the case of a township or $75 per capita in the case of a city.
For purposes of this limitation, population will be determined
according to the 1980 decennial census conducted by the United
States Bureau of the Census. The county auditor shall extend
the township's or city's levy against the sum of the township's
or city's current assessed value plus the difference between 50
percent of its January 2, 1982, assessed value and its current
assessed value in the case of a township and between 50 percent
of its January 2, 1980, assessed value and its current assessed
value in the case of a city. If the current assessed value of
the township exceeds 50 percent of the township's January 2,
1982, assessed value, or if the current assessed value of the
city exceeds 50 percent of the city's January 2, 1980, assessed
value, this paragraph shall not apply.
Sec. 20. Minnesota Statutes 1986, section 373.40,
subdivision 4, as added by H.F. No. 1796, if enacted, is amended
to read:
Subd. 4. [LIMITATIONS ON AMOUNT.] A county, other than
Hennepin or Ramsey, may not issue bonds under this section if
the maximum amount of principal and interest to become due in
any year on all the outstanding bonds issued pursuant to this
section (including the bonds to be issued) will equal or exceed
one mill multiplied by the taxable assessed value of property in
the county. Ramsey county may not issue bonds under this
section if the maximum amount of principal and interest to
become due in any year on all the outstanding bonds issued
pursuant to this section (including the bonds to be issued) will
equal or exceed 1.2 mills multiplied by the taxable assessed
value of property in the county. Hennepin county may not issue
bonds under this section if the maximum amount of principal and
interest to become due in any year on all the outstanding bonds
issued pursuant to this section together with the bonds proposed
to be issued, will equal or exceed one-half mill multiplied by
the taxable assessed value of the property in the county.
Calculation of the limit must be made using the taxable assessed
value for the taxes payable year in which the obligations are
issued and sold. This section does not limit the authority to
issue bonds under any other special or general law.
Sec. 21. Minnesota Statutes 1986, section 387.212, is
amended to read:
387.212 [CONTINGENT FUND.]
The board of county commissioners in any county may create
a sheriff's contingent fund and may credit thereto not more than
$3,000 $10,000. The money in such fund may be used for the
advancement and reimbursement of expenses of the sheriff and the
sheriff's office. Such moneys shall be disbursed by the county
treasurer in accordance with rules and regulations prescribed by
the board. Any balance remaining at the end of the year shall
be transferred to the revenue fund.
Sec. 22. [424A.10] [STATE SUPPLEMENTAL BENEFIT; VOLUNTEER
FIREFIGHTERS.]
Subdivision 1. [DEFINITION.] For purposes of this section,
"qualified recipient" means an individual who receives an
involuntary lump sum distribution of pension or retirement
benefits from a firefighters' relief association for service
performed as a volunteer firefighter.
Subd. 2. [PAYMENT OF SUPPLEMENTAL BENEFIT.] Upon the
payment by a firefighters' relief association of an involuntary
lump sum distribution to a qualified recipient, the association
must pay a supplemental benefit to the qualified recipient.
Notwithstanding any law to the contrary, the relief association
may pay the supplemental benefit out of its special fund. The
amount of this benefit equals ten percent of the regular
involuntary lump sum distribution that is paid on the basis of
service as a volunteer firefighter. In no case may the amount
of the supplemental benefit exceed $1,000.
Subd. 3. [STATE REIMBURSEMENT.] By February 15 of each
year, the relief association shall apply to the commissioner of
revenue for state reimbursement of the amount of supplemental
benefits paid under subdivision 2 during the preceding calendar
year. By March 15 the commissioner shall reimburse the relief
association for the amount of the supplemental benefits paid to
qualified recipients. The commissioner of revenue shall
prescribe the form of and supporting information that must be
supplied as part of the application for state reimbursement.
The reimbursement payment must be deposited in the special fund
of the relief association.
Subd. 4. [IN LIEU OF INCOME TAX EXCLUSION.] The
supplemental benefit provided by this section is in lieu of the
state income tax exclusion for involuntary lump sum
distributions of retirement benefits paid to volunteer
firefighters. If the law is modified to exclude or exempt
volunteer firefighters' lump sum distributions from state income
taxation, the supplemental benefits under this section may no
longer be paid beginning with the first calendar year in which
the exclusion or exemption is effective. This subdivision does
not apply to exemption of all or part of a lump sum distribution
under section 290.032 or 290.0802.
Sec. 23. Minnesota Statutes 1987 Supplement, section
469.170, is amended by adding a subdivision to read:
Subd. 5d. [AMENDMENT OF PLANS.] A written multiyear
enterprise zone tax credit distribution plan submitted under
subdivision 5a, 5b, or 5c, may be amended, provided that an
initial amendment may be made no sooner than two years from the
date of submission of the original plan, and subsequent
amendments may be made no sooner than two years after the most
recent prior amendment.
Sec. 24. Minnesota Statutes 1986, section 473.843,
subdivision 2, is amended to read:
Subd. 2. [DISPOSITION OF PROCEEDS.] After reimbursement to
the department of revenue for costs incurred in administering
this section, the proceeds of the fees imposed under this
section, including interest and penalties, must be deposited as
follows:
(a) one-half of the proceeds must be deposited in the
landfill abatement fund established in section 473.844; and
(b) one-half of the proceeds must be deposited in the
metropolitan landfill contingency action fund established in
section 473.845.
Sec. 25. Minnesota Statutes 1986, section 507.235,
subdivision 1, is amended to read:
Subdivision 1. [FILING REQUIRED.] All contracts for deed
executed on or after January 1, 1984, shall be recorded within
six months in the office of the county recorder or registrar of
titles in the county in which the land is situated. This filing
period may be extended if failure to pay the property tax due in
the current year on a parcel as required in section 272.121 has
prevented filing and recording of the contract. In the case of
a parcel that was divided and classified under section 273.13 as
class 1a or 1b, the period may be extended to October 31 of the
year in which the sale occurred, and in the case of a parcel
that was divided and classified under section 273.13 as class
2a, the period may be extended to November 30 of the year in
which the sale occurred.
Sec. 26. Minnesota Statutes 1987 Supplement, section
508.25, is amended to read:
508.25 [RIGHTS OF PERSON HOLDING CERTIFICATE OF TITLE.]
Every person receiving a certificate of title pursuant to a
decree of registration and every subsequent purchaser of
registered land who receives a certificate of title in good
faith and for a valuable consideration shall hold it free from
all encumbrances and adverse claims, excepting only the estates,
mortgages, liens, charges, and interests as may be noted in the
last certificate of title in the office of the registrar, and
also excepting any of the following rights or encumbrances
subsisting against it, if any:
(1) Liens, claims, or rights arising or existing under the
laws or the constitution of the United States, which this state
cannot require to appear of record;
(2) The lien of any real property tax or special assessment
for which the land has not been sold at the date of the
certificate of title;
(3) Any lease for a period not exceeding three years when
there is actual occupation of the premises thereunder;
(4) All rights in public highways upon the land;
(5) The right of appeal, or right to appear and contest the
application, as is allowed by this chapter;
(6) The rights of any person in possession under deed or
contract for deed from the owner of the certificate of title;
(7) Any outstanding mechanics lien rights which may exist
under sections 514.01 to 514.17.
(8) No existing or future liens or judgments,
notwithstanding section 508.63, arising under the laws of this
state for the nonpayment of any amounts due under chapter 268 or
any tax administered by the commissioner of revenue may encumber
title to lands registered under chapter 508 unless filed under
the terms of chapter 508.
Sec. 27. Laws 1988, chapter 516, section 3, is amended to
read:
Sec. 3. [AREA OF OPERATION.]
The area of operation of the joint authority and the
project for purposes of Minnesota Statutes, section 469.174,
subdivision 8 shall include all of Cook county. The Grand
Marais city council must approve any project as defined in
Minnesota Statutes, section 469.174, subdivision 8, and any
economic development district as defined in Minnesota Statutes,
section 469.101, if the project or economic development district
includes real property within the boundaries of Grand Marais or
includes real property owned by Grand Marais.
Sec. 28. H.F. No. 1796, section 6, if enacted, is amended
to read:
Sec. 6. [EFFECTIVE DATE.]
Section 5 is effective upon compliance by the Hennepin
county board with Minnesota Statutes, section 645.021. The rest
of this act is effective June 1, 1988.
Sec. 29. [REFUNDING BONDS.]
The city of Little Falls in Morrison county, by resolution
of its city council, may issue and sell general obligation
refunding bonds of the city in a principal amount not exceeding
$3,300,000, the proceeds of which are to be used to refund the
city's general obligation tax increment bonds of 1985. The
refunding bonds shall be issued and sold in accordance with
Minnesota Statutes, chapter 475, except that:
(1) the refunding bonds shall be treated as obligations
described in Minnesota Statutes, section 475.58, subdivision 1,
paragraph (3);
(2) Minnesota Statutes, section 475.67, subdivision 12,
shall not apply;
(3) the amount of bonds issued shall not be included in
computing any debt limitation applicable to the city; and
(4) the levy of taxes required by Minnesota Statutes,
section 475.61, to pay the principal of and interest on the
bonds shall not be subject to any levy limitation or be included
in computing or applying any levy limitation applicable to the
city.
Sec. 30. [APPLICATION OF PROCEEDS OF REFUNDED BONDS.]
The city of Little Falls in Morrison county, by resolution
of its city council, may appropriate any of the unexpended
proceeds of its general obligation tax increment bonds of 1985,
except proceeds held in the debt service fund for the bonds, to
any other municipal purpose for which the city could issue its
bonds, including the purposes set forth in Minnesota Statutes,
section 475.52, subdivision 1 or 2, 429.021, or 444.075. To the
extent that the proceeds are appropriated for an improvement for
which special assessments are levied or tax increments are
collectible, the city shall appropriate the receipts from the
special assessments or tax increments, subject to any prior
pledge of them to secure other obligations of the city, to the
payment of the general obligation tax increment bonds of 1985,
or to the payment of any refunding bonds issued pursuant to
section 29.
Sec. 31. [CITY OF HERMANTOWN; PROPERTY TAXES ON LAND HELD
FOR ECONOMIC DEVELOPMENT.]
Notwithstanding the time limitation contained in Minnesota
Statutes 1986, section 272.02, subdivision 5, the holding of
property that has been held for seven years as of August 1,
1987, by the city of Hermantown for later resale for economic
development purposes is a public purpose under Minnesota
Statutes, section 272.02, subdivision 1, clause (7), for a
period not to exceed 10 years. This section does not apply if
buildings or other improvements are constructed after
acquisition of the property, and if more than one-half of the
floor space of the buildings or improvements that is available
for lease to or use by a private individual, corporation, or
other entity is leased to or otherwise used by a private
individual, corporation, or other entity. This section does not
create an exemption from Minnesota Statutes, section 272.01,
subdivision 2; 272.68; 273.19; or 469.040, subdivision 3; or
other provision of law providing for the taxation of or for
payments in lieu of taxes for publicly held property which is
leased, loaned, or otherwise made available and used by a
private person.
Sec. 32. [383A.65] [RAMSEY COUNTY; AUTHORIZATION FOR BONDS.]
Ramsey county may issue general obligation bonds in one or
more series in an amount not to exceed $2,000,000, in the
aggregate, to finance the restoration of the concourse of the
St. Paul union depot as a facility for the exhibition of works
of art, the proceeds of which may not be used for that purpose
until $500,000 in operational funding has been committed by
nonpublic sources. The bonds shall be issued pursuant to
Minnesota Statutes, chapter 475, except that the bonds shall not
be subject to its election requirements or debt limits. They
shall not be subject to any other debt or tax levy limitations
applicable to the county and shall not be considered in
calculating amounts subject to any other debt or tax levy
limitations. Levies by the county for debt servicing payment
for the retirement of the bonds shall be exempt from and
disregarded in the calculation of all tax levy limitations
applicable to the county.
Sec. 33. [CITY OF SHAFER BOND ISSUE.]
The city of Shafer may issue general obligation bonds of
the city in an aggregate principal amount not to exceed $40,000
to finance the acquisition and betterment of a municipal
building. The bonds shall be issued and sold in accordance with
the provisions of Minnesota Statutes, chapter 475, including the
provision requiring the approval of a majority of the electors
voting on the question of issuing the bonds. Notwithstanding
any other statutory or charter provision, the principal amount
of bonds issued shall not be included in computing any debt
limit applicable to the city, nor shall the taxes required to be
levied to pay the principal of and interest on the bonds be
subject to any levy limitation or be included in computing any
levy limitation applicable to the city.
Sec. 34. [STEARNS COUNTY; PROPERTY TAX REFUND.]
Stearns county shall refund to Lake Koronis Assembly
Grounds the property taxes assessed in 1985, paid in 1986, for
the parcels identified as 26-16447-03, 26-15788-00, 26-15790-00,
26-15788-04, 26-16447-02, 26-16447-04, 26-16447-16, 26-16447-06,
and 26-16447-07.
Stearns county shall refund to Lake Koronis Assembly
Grounds the amount of $4,786 according to the following schedule:
one-third by August 1, 1988;
one-third by July 1, 1989; and
one-third by July 1, 1990.
The refund shall be paid from the property taxes and
charged against the receipts held by the county for the taxing
jurisdictions in the same proportion as the taxes paid on this
property in 1986. No interest shall be paid on the amounts
refunded.
Sec. 35. [HARDSHIP LOANS.]
Notwithstanding the limitations on the metropolitan
council's authority to make hardship loans in Minnesota
Statutes, section 473.167, subdivision 2a, paragraph (b), the
council may make hardship loans until December 31, 1988, to
Washington county to purchase homestead property from and
provide relocation assistance to property owners affected by
hardship acquisitions incurred because of adoption of the
Washington county Big Marine Park master plan. Except as
provided in this section, the hardship loans must be made in
accordance with Minnesota Statutes, section 473.167,
subdivisions 2 and 2a.
Sec. 36. [APPROPRIATION.]
(a) $49,000 is appropriated for fiscal year 1989 from the
general fund to the commissioner of revenue for purposes of
preparing income tax samples under section 10.
(b) $263,000 is appropriated for fiscal year 1988 from the
general fund to the commissioner of revenue for purposes of
administering restoration of property tax refunds under article
4, section 12. Amounts not expended in fiscal year 1988 are
available in fiscal year 1989.
(c) $45,000 is appropriated for fiscal year 1989 from the
general fund to the commissioner of revenue for purposes of
administering property tax refund targeting under article 4,
section 7.
(d) $165,000 is appropriated for fiscal year 1989 from the
general fund to the commissioner of revenue for purposes of
administering the property tax reform provisions of article 5.
(e) $600,000 is appropriated for fiscal year 1989 from the
general fund to the commissioner of revenue to make
reimbursement payments to firefighters' relief associations
under section 22.
Sec. 37. [REPEALER.]
(a) Minnesota Statutes 1987 Supplement, sections 296.02,
subdivisions 2a and 2b, as amended by H.F. No. 1749, if enacted,
and 296.025, subdivisions 2a and 2b, as amended by H.F. No.
1749, if enacted, are repealed.
(b) Laws 1987, chapter 268, article 3, section 11 is
repealed.
Sec. 38. [EFFECTIVE DATE.]
Sections 1, 15, and 19 are effective July 1, 1988. Section
13 is effective for all instruments recorded after May 31, 1987.
Sections 11, 12, 14, 16, 17, 18, 21, 23, 24, 25, 36, and 37,
paragraph (b), are effective the day following final enactment.
Sections 20 and 28 are effective June 1, 1988. Section 26 is
effective retroactive to August 1, 1987. Section 22 is
effective for lump sums paid after December 31, 1986. Section
27 is effective at the same time Laws 1988, chapter 516, is
effective.
Pursuant to Minnesota Statutes, section 645.023,
subdivision 1, paragraph (a), sections 29, 30, and 33 are
effective without local approval on the day following final
enactment.
Section 31 is effective the day after compliance with
Minnesota Statutes, section 645.021 by the city council of
Hermantown and terminates effective with taxes levied in 1989,
payable 1990. Section 32 is effective the day after filing of
certificates of local approval by the governing body of the city
of St. Paul and the Ramsey county board in compliance with
Minnesota Statutes, section 645.021, subdivision 3. Section 37,
paragraph (a) is effective retroactive to July 1, 1987.
Section 27 is effective the day after compliance by the
governing bodies of Cook county and the city of Grand Marais
with Minnesota Statutes, section 645.021, subdivision 3.
Section 35 is effective in the counties of Anoka, Carver,
Dakota, Hennepin, Ramsey, Scott, and Washington.
Approved May 7, 1988
Official Publication of the State of Minnesota
Revisor of Statutes