1.1                          A bill for an act 
  1.2             relating to the financing and operation of government 
  1.3             in this state; modifying certain tax rates, credits, 
  1.4             refunds, bases, and exemptions; modifying property tax 
  1.5             exemptions, valuation, and classification; providing a 
  1.6             senior citizen property tax deferral; providing for 
  1.7             the deposit of certain revenues in the highway user 
  1.8             tax distribution and transit assistance funds; 
  1.9             establishing an education investment fund; providing 
  1.10            tax incentives for savings for education; changing tax 
  1.11            increment financing, special services district, and 
  1.12            taxing district provisions; authorizing local taxes; 
  1.13            authorizing certain special districts; providing local 
  1.14            levy or other authority; authorizing municipal debt; 
  1.15            providing for certain tax base sharing; changing 
  1.16            certain aids; modifying revenue recapture; making tax 
  1.17            policy, collection, administrative and technical 
  1.18            changes, corrections, and clarifications; requiring 
  1.19            studies; providing for appointments; appropriating 
  1.20            money; amending Minnesota Statutes 1994, sections 
  1.21            10A.31, subdivision 3a; 13.99, subdivision 97a; 
  1.22            103E.611, subdivision 7; 115.26, by adding a 
  1.23            subdivision; 165.08, subdivision 5; 216B.16, by adding 
  1.24            a subdivision; 239.761, subdivision 5; 270.067, 
  1.25            subdivision 2; 270.07, subdivision 1; 270.102, 
  1.26            subdivisions 1, 2, and 3; 270.70, subdivision 2; 
  1.27            270A.03, subdivision 2; 270B.12, by adding a 
  1.28            subdivision; 273.02, subdivision 3; 273.11, 
  1.29            subdivision 1a; 273.111, subdivisions 3 and 6; 
  1.30            273.124, by adding a subdivision; 273.13, subdivisions 
  1.31            22, 23, and 32; 273.1398, by adding a subdivision; 
  1.32            275.065, subdivision 5a; 275.07, subdivision 4, and by 
  1.33            adding a subdivision; 275.61; 278.01, by adding a 
  1.34            subdivision; 278.08; 279.06, subdivision 1; 279.37, by 
  1.35            adding a subdivision; 281.17; 287.06; 289A.50, by 
  1.36            adding a subdivision; 289A.56, subdivision 4; 290.01, 
  1.37            subdivisions 4a and 19a; 290.06, subdivisions 2c and 
  1.38            22; 290.091, subdivisions 2 and 6; 290.0922, 
  1.39            subdivisions 1 and 3; 290.095, subdivision 3; 290.17, 
  1.40            subdivision 2; 290A.03, subdivision 11; 290A.25; 
  1.41            295.51, subdivision 1, and by adding a subdivision; 
  1.42            295.52, by adding a subdivision; 295.54, subdivisions 
  1.43            1, 2, and by adding a subdivision; 296.01, 
  1.44            subdivisions 2 and 13; 296.02, by adding a 
  1.45            subdivision; 296.025, subdivision 6; 296.141, 
  1.46            subdivisions 4 and 5; 296.15, by adding a subdivision; 
  2.1             296.17, subdivision 7; 297.04, subdivision 9; 297A.01, 
  2.2             subdivision 16; 297A.02, subdivision 5; 297A.14, by 
  2.3             adding a subdivision; 297A.15, subdivision 6; 297A.21, 
  2.4             subdivision 4; 297A.211, subdivision 3; 297A.24, 
  2.5             subdivision 1; 297A.25, subdivisions 14, 37, and by 
  2.6             adding a subdivision; 297A.256, subdivision 1; 
  2.7             297A.2572; 297A.2573; 297A.44, subdivision 1; 297A.46; 
  2.8             297B.09, subdivision 1; 297E.02, subdivisions 4 and 
  2.9             10; 298.01, subdivision 4e; 298.17; 298.28, 
  2.10            subdivisions 2 and 11; 298.75, subdivision 1, and by 
  2.11            adding a subdivision; 349.15, by adding a subdivision; 
  2.12            349.154, subdivision 2; 349.19, subdivision 2, and by 
  2.13            adding a subdivision; 373.40, subdivision 7; 375.192, 
  2.14            subdivision 2; 383B.51; 428A.01, subdivisions 2 and 3; 
  2.15            428A.02, subdivision 1; 444.075, by adding a 
  2.16            subdivision; 458A.32, subdivision 4; 469.040, 
  2.17            subdivision 3, and by adding a subdivision; 469.167, 
  2.18            subdivision 2; 469.173, subdivision 7; 469.174, 
  2.19            subdivision 2; 469.176, subdivision 4f; 469.1761, 
  2.20            subdivision 1; 469.177, subdivision 3; 471.88, 
  2.21            subdivision 14; 473.625; 477A.011, subdivisions 3, 20, 
  2.22            27, 32, and 35; and 477A.013, subdivision 6; Minnesota 
  2.23            Statutes 1995 Supplement, sections 41A.09, subdivision 
  2.24            2a; 115B.48, by adding subdivisions; 115B.49, 
  2.25            subdivisions 2 and 4; 116.07, subdivision 10; 124A.03, 
  2.26            subdivision 2; 216B.161, subdivision 1; 270A.03, 
  2.27            subdivision 7; 272.02, subdivision 1; 273.11, 
  2.28            subdivision 16; 273.124, subdivisions 3 and 13; 
  2.29            273.13, subdivisions 24 and 25; 273.1398, subdivision 
  2.30            1; 273.1399, subdivisions 6 and 7; 275.065, 
  2.31            subdivisions 3 and 6; 275.08, subdivision 1b; 276.04, 
  2.32            subdivision 2; 289A.40, subdivision 1; 290.01, 
  2.33            subdivision 19b; 290.067, subdivision 1; 290.191, 
  2.34            subdivisions 5 and 6; 290A.04, subdivision 2h; 295.50, 
  2.35            subdivisions 3 and 4; 295.53, subdivisions 1, 5, and 
  2.36            by adding a subdivision; 296.02, subdivision 1; 
  2.37            296.025, subdivision 1; 296.12, subdivision 3; 
  2.38            297A.01, subdivision 3; 297A.02, subdivision 4; 
  2.39            297A.25, subdivisions 57 and 59; 297A.45, subdivisions 
  2.40            2, 3, and 4; 297B.01, subdivision 8; 428A.05; 465.82, 
  2.41            subdivision 2; 469.169, subdivisions 9 and 10; 
  2.42            469.174, subdivision 4; 469.175, subdivisions 1, 5, 
  2.43            and 6; 469.176, subdivision 2; 469.177, subdivision 1; 
  2.44            471.6965; 473.448; 477A.0121, subdivision 4; 
  2.45            477A.0132; and 477A.03, subdivision 2; Laws 1963, 
  2.46            chapter 118, sections 1, subdivision 3; 2; 4; 6; Laws 
  2.47            1971, chapter 869, sections 2, subdivisions 2, as 
  2.48            amended, 14, and 17, as added; 3, subdivisions 5, 6, 
  2.49            and 9; 4, subdivisions 1, 2, and 5, as amended; 5, 
  2.50            subdivisions 1 and 3; 8; 10, subdivision 3b, as added; 
  2.51            12, subdivisions 1, as amended, and 2, as amended; 17, 
  2.52            subdivision 11; 19; 20, subdivision 2; 21; 24; Laws 
  2.53            1985, chapter 302, section 2, subdivision 1, as 
  2.54            amended; Laws 1991, chapter 291, article 8, section 
  2.55            27, by adding a subdivision; Laws 1992, chapter 511, 
  2.56            article 8, section 39; and Laws 1995, chapter 264, 
  2.57            articles 2; sections 42, subdivision 1; and 44; 5, 
  2.58            sections 40, subdivision 1; 44, subdivision 4; and 45, 
  2.59            subdivision 1; proposing coding for new law in 
  2.60            Minnesota Statutes, chapters 11A; 103D; 115B; 136A; 
  2.61            272; 273; 281; 287; 290; 290A; 297A; 315; 375; 428A; 
  2.62            462A; 469; and 477A; proposing coding for new law as 
  2.63            Minnesota Statutes, chapters 276A; and 290B; repealing 
  2.64            Minnesota Statutes 1994, sections 13.99, subdivision 
  2.65            97; 273.1316; 273.1317; 273.1318; 273.1398, 
  2.66            subdivision 5b; 290.06, subdivision 21; 290.092; 
  2.67            295.37; 295.39; 295.40; 295.41; 295.42; 295.43; 
  2.68            295.50, subdivisions 8, 9, 9a, 11, 12, and 12a; 
  2.69            296.25, subdivision 1a; 297A.01, subdivision 20; 
  2.70            297A.14, subdivision 3; 297A.15, subdivision 5; 
  2.71            297A.24, subdivision 2; and 469.150; Minnesota 
  3.1             Statutes 1995 Supplement, sections 270B.12, 
  3.2             subdivision 11; 276.012; 290A.055; 290A.26; and 
  3.3             469.176, subdivision 7; Laws 1971, chapter 869, 
  3.4             section 6, subdivision 3; Laws 1987, chapter 285; and 
  3.5             Laws 1995, chapter 264, article 4.  
  3.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.7                              ARTICLE 1 
  3.8                      INCOME AND FRANCHISE TAXES 
  3.9      Section 1.  Minnesota Statutes 1994, section 10A.31, 
  3.10  subdivision 3a, is amended to read: 
  3.11     Subd. 3a.  [QUALIFICATION OF POLITICAL PARTIES.] A major 
  3.12  political party as defined in section 10A.01, subdivision 12, 
  3.13  qualifies for inclusion on the income tax form and property tax 
  3.14  refund return as provided in subdivision 3, provided that it 
  3.15  qualifies as a major political party by July 1 of the taxable 
  3.16  year. 
  3.17     A minor political party as defined in section 10A.01, 
  3.18  subdivision 13 qualifies for inclusion on the income tax form 
  3.19  and property tax refund return as provided in subdivision 3, 
  3.20  provided that 
  3.21     (1) (a) if a petition is filed, it is filed by June 1 of 
  3.22  the taxable year; or 
  3.23     (b) if the party ran a candidate for statewide office, that 
  3.24  office must have been the office of governor and lieutenant 
  3.25  governor, secretary of state, state auditor, state treasurer, or 
  3.26  attorney general; and 
  3.27     (2) the secretary of state certifies to the commissioner of 
  3.28  revenue by July 1, 1984, and by July 1 of every odd-numbered 
  3.29  year thereafter the parties which qualify as minor political 
  3.30  parties under this subdivision.  
  3.31     A minor party shall be certified only if the secretary of 
  3.32  state determines that the party satisfies the following 
  3.33  conditions:  
  3.34     (a) the party meets the requirements of section 10A.01, 
  3.35  subdivision 13, and in the last applicable election ran a 
  3.36  candidate for the statewide offices listed in clause (1)(b) of 
  3.37  this subdivision; 
  3.38     (b) it is a political party, not a principal campaign 
  4.1   committee; 
  4.2      (c) it has held a state convention in the last two years, 
  4.3   adopted a state constitution, and elected state officers; and 
  4.4      (d) an officer of the party has filed with the secretary of 
  4.5   state a certification that the party held a state convention in 
  4.6   the last two years, adopted a state constitution, and elected 
  4.7   state officers. 
  4.8      Sec. 2.  Minnesota Statutes 1994, section 165.08, 
  4.9   subdivision 5, is amended to read: 
  4.10     Subd. 5.  [EXEMPTIONS.] Notwithstanding any other provision 
  4.11  of law to the contrary, the properties, moneys, and other assets 
  4.12  of any joint and independent international authority or 
  4.13  commission created under subdivision 1, all revenues or other 
  4.14  income of any such authority or commission~~, and all bonds,~~ 
  4.15  ~~certificates of indebtedness, or other obligations issued by any~~ 
  4.16  ~~such authority or commission, and the interest thereon,~~ shall be 
  4.17  exempt from all taxation, licenses, fees, or charges of any kind 
  4.18  imposed by the state or by any county, municipality, political 
  4.19  subdivision, taxing district, or other public agency or body of 
  4.20  the state. 
  4.21     Sec. 3.  Minnesota Statutes 1994, section 290.01, 
  4.22  subdivision 4a, is amended to read: 
  4.23     Subd. 4a.  [FINANCIAL INSTITUTION.] (a) "Financial 
  4.24  institution" means: 
  4.25     (1) a holding company; 
  4.26     (2) any regulated financial corporation; or 
  4.27     (3) any other corporation organized under the laws of the 
  4.28  United States or organized under the laws of this state or any 
  4.29  other state or country that is carrying on the business of a 
  4.30  financial institution. 
  4.31     (b) "Holding company" means any corporation registered 
  4.32  under the Federal Bank Holding Company Act of 1956, as amended, 
  4.33  or registered as a savings and loan holding company under the 
  4.34  Federal National Housing Act, as amended. 
  4.35     (c) "Regulated financial corporation" means an institution, 
  4.36  the deposits or accounts of which are insured under the Federal 
  5.1   Deposit Insurance Act or by the Federal Savings and Loan 
  5.2   Insurance Corporation, any institution which is a member of a 
  5.3   Federal Home Loan Bank, any other bank or thrift institution 
  5.4   incorporated or organized under the laws of any state or any 
  5.5   foreign country which is engaged in the business of receiving 
  5.6   deposits, any corporation organized under the provisions of 
  5.7   United States Code, title 12, sections 611 to 631 (Edge Act 
  5.8   Corporations), and any agency of a foreign depository as defined 
  5.9   in United States Code, title 12, section 3101. 
  5.10     (d) "Business of a financial institution" means: 
  5.11     (1) ~~the business that a regulated financial corporation may~~ 
  5.12  ~~be authorized to do under state or federal law or the business~~ 
  5.13  ~~that its subsidiary is authorized to do by the proper regulatory~~ 
  5.14  ~~authorities;~~ 
  5.15     ~~(2)~~ the business that any corporation organized under the 
  5.16  authority of the United States or organized under the laws of 
  5.17  this state or any other state or country does or has authority 
  5.18  to do which is substantially similar to the business which a 
  5.19  corporation may be created to do under chapters 46 to 55 or any 
  5.20  business which a corporation ~~or its subsidiary~~ is authorized to 
  5.21  do by those laws; or 
  5.22     ~~(3)~~ (2) the business that any corporation organized under 
  5.23  the authority of the United States or organized under the laws 
  5.24  of this state or any other state or country does or has 
  5.25  authority to do if the corporation derives more than 50 percent 
  5.26  of its gross income from lending activities (including 
  5.27  discounting obligations) in substantial competition with the 
  5.28  businesses described in ~~clauses~~ clause (1) ~~and (2)~~.  For 
  5.29  purposes of this clause, the computation of the gross income of 
  5.30  a corporation does not include income from nonrecurring, 
  5.31  extraordinary items. 
  5.32     Sec. 4.  Minnesota Statutes 1994, section 290.06, 
  5.33  subdivision 2c, is amended to read: 
  5.34     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  5.35  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  5.36  married individuals filing joint returns and surviving spouses 
  6.1   as defined in section 2(a) of the Internal Revenue Code must be 
  6.2   computed by applying to their taxable net income the following 
  6.3   schedule of rates: 
  6.4      (1) On the first $19,910, 6 percent; 
  6.5      (2) On all over $19,910, but not over $79,120, 8 percent; 
  6.6      (3) On all over $79,120, 8.5 percent. 
  6.7      Married individuals filing separate returns, estates, and 
  6.8   trusts must compute their income tax by applying the above rates 
  6.9   to their taxable income, except that the income brackets will be 
  6.10  one-half of the above amounts.  
  6.11     (b) The income taxes imposed by this chapter upon unmarried 
  6.12  individuals must be computed by applying to taxable net income 
  6.13  the following schedule of rates: 
  6.14     (1) On the first $13,620, 6 percent; 
  6.15     (2) On all over $13,620, but not over $44,750, 8 percent; 
  6.16     (3) On all over $44,750, 8.5 percent. 
  6.17     (c) The income taxes imposed by this chapter upon unmarried 
  6.18  individuals qualifying as a head of household as defined in 
  6.19  section 2(b) of the Internal Revenue Code must be computed by 
  6.20  applying to taxable net income the following schedule of rates: 
  6.21     (1) On the first $16,770, 6 percent; 
  6.22     (2) On all over $16,770, but not over $67,390, 8 percent; 
  6.23     (3) On all over $67,390, 8.5 percent. 
  6.24     (d) In lieu of a tax computed according to the rates set 
  6.25  forth in this subdivision, the tax of any individual taxpayer 
  6.26  whose taxable net income for the taxable year is less than an 
  6.27  amount determined by the commissioner must be computed in 
  6.28  accordance with tables prepared and issued by the commissioner 
  6.29  of revenue based on income brackets of not more than $100.  The 
  6.30  amount of tax for each bracket shall be computed at the rates 
  6.31  set forth in this subdivision, provided that the commissioner 
  6.32  may disregard a fractional part of a dollar unless it amounts to 
  6.33  50 cents or more, in which case it may be increased to $1. 
  6.34     (e) An individual who is not a Minnesota resident for the 
  6.35  entire year must compute the individual's Minnesota income tax 
  6.36  as provided in this subdivision.  After the application of the 
  7.1   nonrefundable credits provided in this chapter, the tax 
  7.2   liability must then be multiplied by a fraction in which:  
  7.3      (1) The numerator is the individual's Minnesota source 
  7.4   federal adjusted gross income as defined in section 62 of the 
  7.5   Internal Revenue Code increased by the addition required for 
  7.6   interest income from non-Minnesota state and municipal bonds 
  7.7   under section 290.01, subdivision 19a, clause (1), after 
  7.8   applying the allocation and assignability provisions of section 
  7.9   290.081, clause (a), or 290.17; and 
  7.10     (2) the denominator is the individual's federal adjusted 
  7.11  gross income as defined in section 62 of the Internal Revenue 
  7.12  Code of 1986, as amended through April 15, 1995, increased by 
  7.13  the addition required for interest income from non-Minnesota 
  7.14  state and municipal bonds under section 290.01, subdivision 19a, 
  7.15  clause (1). 
  7.16     Sec. 5.  Minnesota Statutes 1994, section 290.06, 
  7.17  subdivision 22, is amended to read: 
  7.18     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
  7.19  taxpayer who is liable for taxes on or measured by net income to 
  7.20  another state or province or territory of Canada, as provided in 
  7.21  paragraphs (b) through (f), upon income allocated or apportioned 
  7.22  to Minnesota, is entitled to a credit for the tax paid to 
  7.23  another state or province or territory of Canada if the tax is 
  7.24  actually paid in the taxable year or a subsequent taxable year.  
  7.25  A taxpayer who is a resident of this state pursuant to section 
  7.26  290.01, subdivision 7, clause (2), and who is subject to income 
  7.27  tax as a resident in the state of the individual's domicile is 
  7.28  not allowed this credit unless the state of domicile does not 
  7.29  allow a similar credit. 
  7.30     (b) For an individual, estate, or trust, the credit is 
  7.31  determined by multiplying the tax payable under this chapter by 
  7.32  the ratio derived by dividing the income subject to tax in the 
  7.33  other state or province or territory of Canada that is also 
  7.34  subject to tax in Minnesota while a resident of Minnesota by the 
  7.35  taxpayer's federal adjusted gross income, as defined in section 
  7.36  62 of the Internal Revenue Code, modified by the addition 
  8.1   required by section 290.01, subdivision 19a, clause (1), and the 
  8.2   subtraction allowed by section 290.01, subdivision 19b, clause 
  8.3   (1), to the extent the income is allocated or assigned to 
  8.4   Minnesota under sections 290.081 and 290.17.  
  8.5      (c) If the taxpayer is an athletic team that apportions all 
  8.6   of its income under section 290.17, subdivision 5, paragraph 
  8.7   (c), the credit is determined by multiplying the tax payable 
  8.8   under this chapter by the ratio derived from dividing the total 
  8.9   net income subject to tax in the other state or province or 
  8.10  territory of Canada by the taxpayer's Minnesota taxable income. 
  8.11     (d) The credit determined under paragraph (b) or (c) shall 
  8.12  not exceed the amount of tax so paid to the other state or 
  8.13  province or territory of Canada on the gross income earned 
  8.14  within the other state or province or territory of Canada 
  8.15  subject to tax under this chapter, nor shall the allowance of 
  8.16  the credit reduce the taxes paid under this chapter to an amount 
  8.17  less than what would be assessed if such income amount was 
  8.18  excluded from taxable net income. 
  8.19     (e) In the case of the tax assessed on a lump sum 
  8.20  distribution under section 290.032, the credit allowed under 
  8.21  paragraph (a) is the tax assessed by the other state or province 
  8.22  or territory of Canada on the lump sum distribution that is also 
  8.23  subject to tax under section 290.032, and shall not exceed the 
  8.24  tax assessed under section 290.032.  To the extent the total 
  8.25  lump sum distribution defined in section 290.032, subdivision 1, 
  8.26  includes lump sum distributions received in prior years or is 
  8.27  all or in part an annuity contract, the reduction to the tax on 
  8.28  the lump sum distribution allowed under section 290.032, 
  8.29  subdivision 2, includes tax paid to another state that is 
  8.30  properly apportioned to that distribution. 
  8.31     (f) If a Minnesota resident reported an item of income to 
  8.32  Minnesota and is assessed tax in such other state or province or 
  8.33  territory of Canada on that same income after the Minnesota 
  8.34  statute of limitations has expired, the taxpayer shall receive a 
  8.35  credit for that year under paragraph (a), notwithstanding any 
  8.36  statute of limitations to the contrary.  The claim for the 
  9.1   credit must be submitted within one year from the date the taxes 
  9.2   were paid to the other state or province or territory of 
  9.3   Canada.  The taxpayer must submit sufficient proof to show 
  9.4   entitlement to a credit. 
  9.5      (g) For the purposes of this subdivision, a resident 
  9.6   shareholder of a corporation having a valid election in effect 
  9.7   under section 1362 of the Internal Revenue Code must be 
  9.8   considered to have paid a tax imposed on the shareholder in an 
  9.9   amount equal to the shareholder's pro rata share of any net 
  9.10  income tax paid by the S corporation to ~~a~~ another state ~~that~~ 
  9.11  ~~does not measure the income of the shareholder of the S~~ 
  9.12  ~~corporation by reference to the income of the S corporation~~.  
  9.13  For the purposes of the preceding sentence, the term "net income 
  9.14  tax" means any tax imposed on or measured by a corporation's net 
  9.15  income. 
  9.16     (h) For the purposes of this subdivision, a resident member 
  9.17  of a limited liability company taxed as a partnership under the 
  9.18  Internal Revenue Code must be considered to have paid a tax 
  9.19  imposed on the member in an amount equal to the member's pro 
  9.20  rata share of any net income tax paid by the limited liability 
  9.21  company to a state that does not measure the income of the 
  9.22  member of the limited liability company by reference to the 
  9.23  income of the limited liability company.  For purposes of the 
  9.24  preceding sentence, the term "net income" tax means any tax 
  9.25  imposed on or measured by a limited liability company's net 
  9.26  income. 
  9.27     Sec. 6.  Minnesota Statutes 1995 Supplement, section 
  9.28  290.067, subdivision 1, is amended to read: 
  9.29     Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
  9.30  as a credit against the tax due from the taxpayer and a spouse, 
  9.31  if any, under this chapter an amount equal to the dependent care 
  9.32  credit for which the taxpayer is eligible pursuant to the 
  9.33  provisions of section 21 of the Internal Revenue Code subject to 
  9.34  the limitations provided in subdivision 2 except that in 
  9.35  determining whether the child qualified as a dependent, income 
  9.36  received as an aid to families with dependent children grant or 
 10.1   allowance to or on behalf of the child must not be taken into 
 10.2   account in determining whether the child received more than half 
 10.3   of the child's support from the taxpayer, and the provisions of 
 10.4   section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
 10.5      (b) If a child who has not attained the age of six years at 
 10.6   the close of the taxable year is cared for at a licensed family 
 10.7   day care home operated by the child's parent, the taxpayer is 
 10.8   deemed to have paid employment-related expenses.  If the child 
 10.9   is 16 months old or younger at the close of the taxable year, 
 10.10  the amount of expenses deemed to have been paid equals the 
 10.11  maximum limit for one qualified individual under section 21(c) 
 10.12  and (d) of the Internal Revenue Code.  If the child is older 
 10.13  than 16 months of age but has not attained the age of six years 
 10.14  at the close of the taxable year, the amount of expenses deemed 
 10.15  to have been paid equals the amount the licensee would charge 
 10.16  for the care of a child of the same age for the same number of 
 10.17  hours of care.  
 10.18     (c) If a married couple: 
 10.19     (1) in tax year 1997 has ~~a child who has not attained the~~ 
 10.20  ~~age of one year~~ one or more children who have not attained two 
 10.21  years of age; in tax year 1998 has one or more children who have 
 10.22  not attained three years of age; in tax year 1999 has one or 
 10.23  more children who have not attained four years of age; in tax 
 10.24  year 2000 has one or more children who have not attained five 
 10.25  years of age; or in tax year 2001 and following years has one or 
 10.26  more children who have not attained six years of age at the 
 10.27  close of the taxable year; 
 10.28     (2) files a joint tax return for the taxable year; and 
 10.29     (3) does not participate in a dependent care assistance 
 10.30  program as defined in section 129 of the Internal Revenue Code, 
 10.31  in lieu of the actual employment related expenses paid for ~~that~~ 
 10.32  ~~child~~ those children under paragraph (a) or the deemed amount 
 10.33  under paragraph (b), the lesser of (i) the combined earned 
 10.34  income of the couple or (ii) $2,400 in the case of filers with 
 10.35  one child who has not attained the age specified in paragraph 
 10.36  (1), and $4,800 in the case of filers with more than one child 
 11.1   who has not attained the age specified in paragraph (1) will be 
 11.2   deemed to be the employment related expense paid for that 
 11.3   child.  The earned income limitation of section 21(d) of the 
 11.4   Internal Revenue Code shall not apply to this deemed amount.  
 11.5   These deemed amounts apply regardless of whether any 
 11.6   employment-related expenses have been paid.  
 11.7      (d) If the taxpayer is not required and does not file a 
 11.8   federal individual income tax return for the tax year, no credit 
 11.9   is allowed for any amount paid to any person unless: 
 11.10     (1) the name, address, and taxpayer identification number 
 11.11  of the person are included on the return claiming the credit; or 
 11.12     (2) if the person is an organization described in section 
 11.13  501(c)(3) of the Internal Revenue Code and exempt from tax under 
 11.14  section 501(a) of the Internal Revenue Code, the name and 
 11.15  address of the person are included on the return claiming the 
 11.16  credit.  
 11.17  In the case of a failure to provide the information required 
 11.18  under the preceding sentence, the preceding sentence does not 
 11.19  apply if it is shown that the taxpayer exercised due diligence 
 11.20  in attempting to provide the information required. 
 11.21     In the case of a nonresident, part-year resident, or a 
 11.22  person who has earned income not subject to tax under this 
 11.23  chapter, the credit determined under section 21 of the Internal 
 11.24  Revenue Code must be allocated based on the ratio by which the 
 11.25  earned income of the claimant and the claimant's spouse from 
 11.26  Minnesota sources bears to the total earned income of the 
 11.27  claimant and the claimant's spouse. 
 11.28     Sec. 7.  [290.0672] [JOB TRAINING CREDIT.] 
 11.29     Subdivision 1.  [CREDIT ALLOWED.] (a) A credit is allowed 
 11.30  against the tax imposed by section 290.06, subdivision 1, equal 
 11.31  to the sum of: 
 11.32     (1) placement fees paid to a job training program upon 
 11.33  hiring a qualified graduate of the program; and 
 11.34     (2) retention fees paid to a job training program for 
 11.35  retention of a qualified graduate of the program. 
 11.36     (b) The maximum placement fee qualifying for a credit under 
 12.1   this section is $8,000 per qualified graduate in the year 
 12.2   hired.  The maximum retention fee qualifying for a credit under 
 12.3   this section is $6,000 per qualified graduate retained as an 
 12.4   employee per year.  Only retention fees paid in the second year 
 12.5   and third year after the qualified graduate is hired qualify for 
 12.6   the credit. 
 12.7      (c) A credit is allowed only up to the dollar amount of 
 12.8   certificates, issued under subdivision 4, and provided by the 
 12.9   job training program to the taxpayer. 
 12.10     Subd. 2.  [QUALIFIED JOB TRAINING PROGRAM.] (a) To qualify 
 12.11  for credits under this section, a job training program must 
 12.12  satisfy the following requirements: 
 12.13     (1) It must be operated by a nonprofit corporation, 
 12.14  qualifying under section 501(c)(3) of the Internal Revenue Code. 
 12.15     (2) The organization must spend at least $5,000 per 
 12.16  graduate of the program. 
 12.17     (3) The program must provide education and training in: 
 12.18     (i) basic skills, such as reading, writing, mathematics, 
 12.19  and communications; 
 12.20     (ii) thinking skills, such as reasoning, creative thinking, 
 12.21  decision making, and problem solving; and 
 12.22     (iii) personal qualities, such as responsibility, 
 12.23  self-esteem, self-management, honesty, and integrity. 
 12.24     (4) The program must provide income supplements, when 
 12.25  needed, to participants for housing, counseling, tuition, and 
 12.26  other basic needs. 
 12.27     (5) The education and training course must last for at 
 12.28  least six months. 
 12.29     (6) Individuals served by the program must: 
 12.30     (i) be over 18 years old; 
 12.31     (ii) have had federal adjusted gross income of no more than 
 12.32  $10,000 per year in the last two years; 
 12.33     (iii) have assets of no more than $5,000; and 
 12.34     (iv) not have been claimed as a dependent on the federal 
 12.35  tax return of another person in the previous taxable year. 
 12.36     (7) The program must charge placement and retention fees 
 13.1   that exceed the amount of credit certificates provided to the 
 13.2   employer by at least ten percent of wages paid to graduate. 
 13.3      (b) In addition, the program must be certified by the 
 13.4   commissioner of revenue as meeting the requirements of this 
 13.5   subdivision. 
 13.6      Subd. 3.  [QUALIFIED GRADUATE.] A qualified graduate is a 
 13.7   graduate of a job training program qualifying under subdivision 
 13.8   1, who is placed in a job paying at least $9 per hour or its 
 13.9   equivalent.  To qualify for a credit under this section for a 
 13.10  retention fee, the job in which the graduate is retained must 
 13.11  pay at least $10 per hour. 
 13.12     Subd. 4.  [DUTIES OF PROGRAM.] (a) Each program certified 
 13.13  by the commissioner under subdivision 2 must comply with the 
 13.14  requirements of this subdivision. 
 13.15     (b) Each program must maintain records for each graduate 
 13.16  for which the program provides a credit certificate to an 
 13.17  employer.  These records must include information sufficient to 
 13.18  verify the graduate's eligibility under this section, identify 
 13.19  the employer, describe the job including its compensation rate 
 13.20  and benefits, and determine the amount of placement and 
 13.21  retention fees received. 
 13.22     (c) Each program must report to the commissioner of revenue 
 13.23  by January 1, 1999, on its use of the credit.  The report must 
 13.24  include, at least, information on: 
 13.25     (1) the number of graduates placed; 
 13.26     (2) demographic information on the graduates; 
 13.27     (3) information of the type of positions in which the 
 13.28  graduates are placed, including compensation information; 
 13.29     (4) the tenure of graduates at the placed position or in 
 13.30  other jobs; 
 13.31     (5) the amount of employer fees paid to the program; and 
 13.32     (6) amount of money raised by the program from other 
 13.33  sources. 
 13.34     (d) The commissioner shall compile and summarize this 
 13.35  information and report to the legislature by February 15, 1999.  
 13.36     Subd. 5.  [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total 
 14.1   amount of credits under this section is limited to $1,500,000 
 14.2   for taxable years beginning after December 31, 1995, and before 
 14.3   January 1, 2001.  The commissioner may issue under paragraph (b) 
 14.4   no more than the specified amount of certificates for taxable 
 14.5   years beginning during each calendar year: 
 14.6          1996            $120,000
 14.7          1997            $370,000
 14.8          1998            $500,000
 14.9          1999            $360,000
 14.10         2000            $150,000
 14.11     Unused certificates for a taxable year carry over and may 
 14.12  be used for a later taxable year, regardless of whether issued 
 14.13  by the commissioner. 
 14.14     (b) Upon application, the commissioner shall issue 
 14.15  certificates to job training programs, certified under 
 14.16  subdivision 2, up to the dollar amount available for the taxable 
 14.17  year.  The certificates must be in a dollar amount (1) up to the 
 14.18  dollar amount applied for, and (2) that reflects the 
 14.19  commissioner's estimate of the job training program's projected 
 14.20  fees for placements and retentions of qualifying graduates.  The 
 14.21  commissioner shall issue the certificates in the order in which 
 14.22  applications are received until the available authority has been 
 14.23  issued. 
 14.24     (c) To the extent available, the job training program must 
 14.25  provide to employers of its qualified graduates certificates 
 14.26  issued by the commissioner under this subdivision. 
 14.27     Subd. 6.  [NONREFUNDABLE; CARRYOVER.] (a) The credit for 
 14.28  the taxable year may not exceed the liability for tax under 
 14.29  section 290.06, subdivision 1, for the taxable year, reduced by 
 14.30  the sum of nonrefundable credits allowed under this chapter. 
 14.31     (b) If the credit for a taxable year exceeds the limitation 
 14.32  under paragraph (a), the rest is a carryover to each of the five 
 14.33  succeeding taxable years.  All of the carryover must be carried 
 14.34  to the earliest of the taxable years to which it may be carried 
 14.35  and then to each later year.  The carryover may not exceed the 
 14.36  taxpayer's tax under section 290.06, subdivision 1, for the 
 15.1   taxable year after deducting the credit for the taxable year. 
 15.2      Subd. 7.  [EXPIRATION.] This section expires effective for 
 15.3   taxable years beginning after December 31, 2000. 
 15.4      Sec. 8.  Minnesota Statutes 1994, section 290.091, 
 15.5   subdivision 2, is amended to read: 
 15.6      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 15.7   this section, the following terms have the meanings given: 
 15.8      (a) "Alternative minimum taxable income" means the sum of 
 15.9   the following for the taxable year: 
 15.10     (1) the taxpayer's federal alternative minimum taxable 
 15.11  income as defined in section 55(b)(2) of the Internal Revenue 
 15.12  Code; 
 15.13     (2) the taxpayer's itemized deductions allowed in computing 
 15.14  federal alternative minimum taxable income, but excluding the 
 15.15  Minnesota charitable contribution deduction and the medical 
 15.16  expense deduction; 
 15.17     (3) for depletion allowances computed under section 613A(c) 
 15.18  of the Internal Revenue Code, with respect to each property (as 
 15.19  defined in section 614 of the Internal Revenue Code), to the 
 15.20  extent not included in federal alternative minimum taxable 
 15.21  income, the excess of the deduction for depletion allowable 
 15.22  under section 611 of the Internal Revenue Code for the taxable 
 15.23  year over the adjusted basis of the property at the end of the 
 15.24  taxable year (determined without regard to the depletion 
 15.25  deduction for the taxable year); 
 15.26     (4) to the extent not included in federal alternative 
 15.27  minimum taxable income, the amount of the tax preference for 
 15.28  intangible drilling cost under section 57(a)(2) of the Internal 
 15.29  Revenue Code determined without regard to subparagraph (E); 
 15.30     (5) to the extent not included in federal alternative 
 15.31  minimum taxable income, the amount of interest income as 
 15.32  provided by section 290.01, subdivision 19a, clause (1); 
 15.33     less the sum of the amounts determined under the following 
 15.34  clauses (1) to (3): 
 15.35     (1) interest income as defined in section 290.01, 
 15.36  subdivision 19b, clause (1); 
 16.1      (2) an overpayment of state income tax as provided by 
 16.2   section 290.01, subdivision 19b, clause (2), to the extent 
 16.3   included in federal alternative minimum taxable income; and 
 16.4      (3) the amount of investment interest paid or accrued 
 16.5   within the taxable year on indebtedness to the extent that the 
 16.6   amount does not exceed net investment income, as defined in 
 16.7   section 163(d)(4) of the Internal Revenue Code.  Interest does 
 16.8   not include amounts deducted in computing federal adjusted gross 
 16.9   income. 
 16.10     In the case of an estate or trust, alternative minimum 
 16.11  taxable income must be computed as provided in section 59(c) of 
 16.12  the Internal Revenue Code. 
 16.13     (b) "Investment interest" means investment interest as 
 16.14  defined in section 163(d)(3) of the Internal Revenue Code. 
 16.15     (c) "Tentative minimum tax" equals seven percent of 
 16.16  alternative minimum taxable income after subtracting the 
 16.17  exemption amount determined under subdivision 3. 
 16.18     (d) "Regular tax" means the tax that would be imposed under 
 16.19  this chapter (without regard to this section and section 
 16.20  290.032), reduced by the sum of the nonrefundable credits 
 16.21  allowed under this chapter.  
 16.22     (e) "Net minimum tax" means the minimum tax imposed by this 
 16.23  section. 
 16.24     (f) "Minnesota charitable contribution deduction" means a 
 16.25  charitable contribution deduction under section 170 of the 
 16.26  Internal Revenue Code to or for the use of an entity described 
 16.27  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 16.28  federal deduction for charitable contributions is limited under 
 16.29  section 170(b) of the Internal Revenue Code, the allowable 
 16.30  contributions in the year of contribution are deemed to be first 
 16.31  contributions to entities described in section 290.21, 
 16.32  subdivision 3, clauses (a) to (e). 
 16.33     Sec. 9.  Minnesota Statutes 1994, section 290.0922, 
 16.34  subdivision 1, is amended to read: 
 16.35     Subdivision 1.  [IMPOSITION.] (a) In addition to the tax 
 16.36  imposed by this chapter without regard to this section, the 
 17.1   franchise tax imposed on a corporation required to file under 
 17.2   section 289A.08, subdivision 3, other than a corporation having 
 17.3   a valid election in effect under section 1362 of the Internal 
 17.4   Revenue Code for the taxable year includes a tax equal to the 
 17.5   following amounts: 
 17.6        If the sum of the corporation's
 17.7   Minnesota property, payrolls, and sales
 17.8   or receipts is:                            the tax equals:
 17.9              less than $500,000                    $0
 17.10     $   500,000 to $   999,999                  $100
 17.11     $ 1,000,000 to $ 4,999,999                  $300
 17.12     $ 5,000,000 to $ 9,999,999                $1,000 
 17.13     $10,000,000 to $19,999,999                $2,000 
 17.14     $20,000,000 or more                       $5,000 
 17.15     (b) A tax is imposed ~~annually beginning in 1990~~ for each 
 17.16  taxable year on a corporation required to file a return under 
 17.17  section 289A.12, subdivision 3, that has a valid election in 
 17.18  effect for the taxable year under section 1362 of the Internal 
 17.19  Revenue Code and on a partnership required to file a return 
 17.20  under section 289A.12, subdivision 3, other than a partnership 
 17.21  that derives over 80 percent of its income from farming.  The 
 17.22  tax imposed under this paragraph is due on or before the due 
 17.23  date of the return for the taxpayer due under section 289A.18, 
 17.24  subdivision 1.  The commissioner shall prescribe the return to 
 17.25  be used for payment of this tax. The tax under this paragraph is 
 17.26  equal to the following amounts:  
 17.27       If the sum of the S corporation's or partnership's 
 17.28  Minnesota property, payrolls, and sales
 17.29  or receipts is:                        the tax equals:
 17.30               less than $500,000                $0 
 17.31       $   500,000 to $   999,999              $100 
 17.32       $ 1,000,000 to $ 4,999,999              $300 
 17.33       $ 5,000,000 to $ 9,999,999            $1,000 
 17.34       $10,000,000 to $19,999,999            $2,000 
 17.35       $20,000,000 or more                   $5,000 
 17.36     Sec. 10.  Minnesota Statutes 1994, section 290.17, 
 18.1   subdivision 2, is amended to read: 
 18.2      Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
 18.3   BUSINESS.] The income of a taxpayer subject to the allocation 
 18.4   rules that is not derived from the conduct of a trade or 
 18.5   business must be assigned in accordance with paragraphs (a) to 
 18.6   (f):  
 18.7      (a)(1) Subject to paragraphs (a)(2) and (a)(3), income from 
 18.8   labor or personal or professional services is assigned to this 
 18.9   state if, and to the extent that, the labor or services are 
 18.10  performed within it; all other income from such sources is 
 18.11  treated as income from sources without this state.  
 18.12     Severance pay shall be considered income from labor or 
 18.13  personal or professional services. 
 18.14     (2) In the case of an individual who is a nonresident of 
 18.15  Minnesota and who is an athlete or entertainer, income from 
 18.16  compensation for labor or personal services performed within 
 18.17  this state shall be determined in the following manner:  
 18.18     (i) The amount of income to be assigned to Minnesota for an 
 18.19  individual who is a nonresident salaried athletic team employee 
 18.20  shall be determined by using a fraction in which the denominator 
 18.21  contains the total number of days in which the individual is 
 18.22  under a duty to perform for the employer, and the numerator is 
 18.23  the total number of those days spent in Minnesota; and 
 18.24     (ii) The amount of income to be assigned to Minnesota for 
 18.25  an individual who is a nonresident, and who is an athlete or 
 18.26  entertainer not listed in clause (i), for that person's athletic 
 18.27  or entertainment performance in Minnesota shall be determined by 
 18.28  assigning to this state all income from performances or athletic 
 18.29  contests in this state.  
 18.30     (3) For purposes of this section, amounts received by a 
 18.31  nonresident from the United States, its agencies or 
 18.32  instrumentalities, the Federal Reserve Bank, the state of 
 18.33  Minnesota or any of its political or governmental subdivisions, 
 18.34  or a Minnesota volunteer firefighters' relief association, by 
 18.35  way of payment as a pension, public employee retirement benefit, 
 18.36  or any combination of these, or as a retirement or survivor's 
 19.1   benefit made from a plan qualifying under section 401, 403, 408, 
 19.2   or 409, or as defined in section 403(b) or 457 of the Internal 
 19.3   Revenue Code, are not considered income derived from carrying on 
 19.4   a trade or business or from performing personal or professional 
 19.5   services in Minnesota, and are not taxable under this chapter.  
 19.6      (b) Income or gains from tangible property located in this 
 19.7   state that is not employed in the business of the recipient of 
 19.8   the income or gains must be assigned to this state. 
 19.9      (c) Income or gains from intangible personal property not 
 19.10  employed in the business of the recipient of the income or gains 
 19.11  must be assigned to this state if the recipient of the income or 
 19.12  gains is a resident of this state or is a resident trust or 
 19.13  estate.  
 19.14     Gain on the sale of a partnership interest is allocable to 
 19.15  this state in the ratio of the original cost of partnership 
 19.16  tangible property in this state to the original cost of 
 19.17  partnership tangible property everywhere, determined at the time 
 19.18  of the sale.  If more than 50 percent of the value of the 
 19.19  partnership's assets consists of intangibles, gain or loss from 
 19.20  the sale of the partnership interest is allocated to this state 
 19.21  in accordance with the sales factor of the partnership for its 
 19.22  first full tax period immediately preceding the tax period of 
 19.23  the partnership during which the partnership interest was sold. 
 19.24     Gain on the sale of goodwill or income from a covenant not 
 19.25  to compete that is connected with a business operating all or 
 19.26  partially in Minnesota is allocated to this state to the extent 
 19.27  that the income from the business in the year preceding the year 
 19.28  of sale was assignable to Minnesota under subdivision 3.  
 19.29     When an employer pays an employee for a covenant not to 
 19.30  compete, the income allocated to this state is in the ratio of 
 19.31  the employee's service in Minnesota in the calendar year 
 19.32  preceding leaving the employment of the employer over the total 
 19.33  services performed by the employee for the employer in that year.
 19.34     (d) Income from the operation of a farm shall be assigned 
 19.35  to this state if the farm is located within this state and to 
 19.36  other states only if the farm is not located in this state.  
 20.1      (e) Income from winnings on Minnesota pari-mutuel betting 
 20.2   tickets, the Minnesota state lottery, and lawful gambling as 
 20.3   defined in section 349.12, subdivision 24, conducted within the 
 20.4   boundaries of the state of Minnesota shall be assigned to this 
 20.5   state.  
 20.6      (f) All items of gross income not covered in paragraphs (a) 
 20.7   to (e) and not part of the taxpayer's income from a trade or 
 20.8   business shall be assigned to the taxpayer's domicile. 
 20.9      Sec. 11.  Minnesota Statutes 1995 Supplement, section 
 20.10  290.191, subdivision 5, is amended to read: 
 20.11     Subd. 5.  [DETERMINATION OF SALES FACTOR.] For purposes of 
 20.12  this section, the following rules apply in determining the sales 
 20.13  factor.  
 20.14     (a) The sales factor includes all sales, gross earnings, or 
 20.15  receipts received in the ordinary course of the business, except 
 20.16  that the following types of income are not included in the sales 
 20.17  factor: 
 20.18     (1) interest; 
 20.19     (2) dividends; 
 20.20     (3) sales of capital assets as defined in section 1221 of 
 20.21  the Internal Revenue Code; 
 20.22     (4) sales of property used in the trade or business, except 
 20.23  sales of leased property of a type which is regularly sold as 
 20.24  well as leased; 
 20.25     (5) sales of debt instruments as defined in section 
 20.26  1275(a)(1) of the Internal Revenue Code or sales of stock; and 
 20.27     (6) royalties, fees, or other like income of a type which 
 20.28  qualify for a subtraction from federal taxable income under 
 20.29  section 290.01, subdivision 19(d)(11).  
 20.30     (b) Sales of tangible personal property are made within 
 20.31  this state if the property is received by a purchaser at a point 
 20.32  within this state, and the taxpayer is taxable in this state, 
 20.33  regardless of the f.o.b. point, other conditions of the sale, or 
 20.34  the ultimate destination of the property. 
 20.35     (c) Tangible personal property delivered to a common or 
 20.36  contract carrier or foreign vessel for delivery to a purchaser 
 21.1   in another state or nation is a sale in that state or nation, 
 21.2   regardless of f.o.b. point or other conditions of the sale.  
 21.3      (d) Notwithstanding paragraphs (b) and (c), when 
 21.4   intoxicating liquor, wine, fermented malt beverages, cigarettes, 
 21.5   or tobacco products are sold to a purchaser who is licensed by a 
 21.6   state or political subdivision to resell this property only 
 21.7   within the state of ultimate destination, the sale is made in 
 21.8   that state.  
 21.9      (e) Sales made by or through a corporation that is 
 21.10  qualified as a domestic international sales corporation under 
 21.11  section 992 of the Internal Revenue Code are not considered to 
 21.12  have been made within this state.  
 21.13     (f) Sales, rents, royalties, and other income in connection 
 21.14  with real property is attributed to the state in which the 
 21.15  property is located.  
 21.16     (g) Receipts from the lease or rental of tangible personal 
 21.17  property, including finance leases and true leases, must be 
 21.18  attributed to this state if the property is located in this 
 21.19  state and to other states if the property is not located in this 
 21.20  state.  Receipts from the lease or rental of moving property 
 21.21  including, but not limited to, motor vehicles, rolling stock, 
 21.22  aircraft, vessels, or mobile equipment ~~is located in this state~~ 
 21.23  ~~if~~ are included in the numerator of the receipts factor to the 
 21.24  extent that the property is used in this state.  The extent of 
 21.25  the use of moving property is determined as follows: 
 21.26     (1) ~~the operation of the property is entirely within this~~ 
 21.27  ~~state; or~~ A motor vehicle is used wholly in the state in which 
 21.28  it is registered.  
 21.29     (2) ~~the operation of the property is in two or more states~~ 
 21.30  ~~and the principal base of operations from which the property is~~ 
 21.31  ~~sent out is in this state.~~  The extent that rolling stock is 
 21.32  used in this state is determined by multiplying the receipts 
 21.33  from the lease or rental of the rolling stock by a fraction, the 
 21.34  numerator of which is the miles traveled within this state by 
 21.35  the leased or rented rolling stock and the denominator of which 
 21.36  is the total miles traveled by the leased or rented rolling 
 22.1   stock. 
 22.2      (3) The extent that an aircraft is used in this state is 
 22.3   determined by multiplying the receipts from the lease or rental 
 22.4   of the aircraft by a fraction, the numerator of which is the 
 22.5   number of landings of the aircraft in this state and the 
 22.6   denominator of which is the total number of landings of the 
 22.7   aircraft. 
 22.8      (4) The extent that a vessel, mobile equipment, or other 
 22.9   mobile property is used in the state is determined by 
 22.10  multiplying the receipts from the lease or rental of the 
 22.11  property by a fraction, the numerator of which is the number of 
 22.12  days during the taxable year the property was in this state and 
 22.13  the denominator of which is the total days in the taxable year.  
 22.14     (h) Royalties and other income not described in paragraph 
 22.15  (a), clause (6), received for the use of or for the privilege of 
 22.16  using intangible property, including patents, know-how, 
 22.17  formulas, designs, processes, patterns, copyrights, trade names, 
 22.18  service names, franchises, licenses, contracts, customer lists, 
 22.19  or similar items, must be attributed to the state in which the 
 22.20  property is used by the purchaser.  If the property is used in 
 22.21  more than one state, the royalties or other income must be 
 22.22  apportioned to this state pro rata according to the portion of 
 22.23  use in this state.  If the portion of use in this state cannot 
 22.24  be determined, the royalties or other income must be excluded 
 22.25  from both the numerator and the denominator.  Intangible 
 22.26  property is used in this state if the purchaser uses the 
 22.27  intangible property or the rights therein in the regular course 
 22.28  of its business operations in this state, regardless of the 
 22.29  location of the purchaser's customers. 
 22.30     (i) Sales of intangible property are made within the state 
 22.31  in which the property is used by the purchaser.  If the property 
 22.32  is used in more than one state, the sales must be apportioned to 
 22.33  this state pro rata according to the portion of use in this 
 22.34  state.  If the portion of use in this state cannot be 
 22.35  determined, the sale must be excluded from both the numerator 
 22.36  and the denominator of the sales factor.  Intangible property is 
 23.1   used in this state if the purchaser used the intangible property 
 23.2   in the regular course of its business operations in this state. 
 23.3      (j) Receipts from the performance of services must be 
 23.4   attributed to the state where the services are received.  For 
 23.5   the purposes of this section, receipts from the performance of 
 23.6   services provided to a corporation, partnership, or trust may 
 23.7   only be attributed to a state where it has a fixed place of 
 23.8   doing business.  If the state where the services are received is 
 23.9   not readily determinable or is a state where the corporation, 
 23.10  partnership, or trust receiving the service does not have a 
 23.11  fixed place of doing business, the services shall be deemed to 
 23.12  be received at the location of the office of the customer from 
 23.13  which the services were ordered in the regular course of the 
 23.14  customer's trade or business.  If the ordering office cannot be 
 23.15  determined, the services shall be deemed to be received at the 
 23.16  office of the customer to which the services are billed. 
 23.17     Sec. 12.  Minnesota Statutes 1995 Supplement, section 
 23.18  290.191, subdivision 6, is amended to read: 
 23.19     Subd. 6.  [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL 
 23.20  INSTITUTIONS.] (a) For purposes of this section, the rules in 
 23.21  this subdivision and subdivision 8 apply in determining the 
 23.22  receipts factor for financial institutions.  
 23.23     (b) "Receipts" for this purpose means gross income, 
 23.24  including net taxable gain on disposition of assets, including 
 23.25  securities and money market instruments, when derived from 
 23.26  transactions and activities in the regular course of the 
 23.27  taxpayer's trade or business.  
 23.28     (c) "Money market instruments" means federal funds sold and 
 23.29  securities purchased under agreements to resell, commercial 
 23.30  paper, banker's acceptances, and purchased certificates of 
 23.31  deposit and similar instruments to the extent that the 
 23.32  instruments are reflected as assets under generally accepted 
 23.33  accounting principles.  
 23.34     (d) "Securities" means United States Treasury securities, 
 23.35  obligations of United States government agencies and 
 23.36  corporations, obligations of state and political subdivisions, 
 24.1   corporate stock, bonds, and other securities, participations in 
 24.2   securities backed by mortgages held by United States or state 
 24.3   government agencies, loan-backed securities and similar 
 24.4   investments to the extent the investments are reflected as 
 24.5   assets under generally accepted accounting principles.  
 24.6      (e) Receipts from the lease or rental of real or tangible 
 24.7   personal property, including both finance leases and true 
 24.8   leases, must be attributed to this state if the property is 
 24.9   located in this state.  Receipts from the lease or rental of 
 24.10  tangible personal property that is characteristically moving 
 24.11  property, ~~such as~~ including, but not limited to, motor vehicles, 
 24.12  rolling stock, aircraft, vessels, or mobile equipment~~, and the~~ 
 24.13  ~~like, is considered to be located in a state if~~ are included in 
 24.14  the numerator of the receipts factor to the extent that the 
 24.15  property is used in this state.  The extent of the use of moving 
 24.16  property is determined as follows: 
 24.17     (1) ~~the operation of the property is entirely within the~~ 
 24.18  ~~state; or~~ A motor vehicle is used wholly in the state in which 
 24.19  it is registered. 
 24.20     (2) ~~the operation of the property is in two or more states,~~ 
 24.21  ~~but the principal base of operations from which the property is~~ 
 24.22  ~~sent out is in the state.~~  The extent that rolling stock is used 
 24.23  in this state is determined by multiplying the receipts from the 
 24.24  lease or rental of the rolling stock by a fraction, the 
 24.25  numerator of which is the miles traveled within this state by 
 24.26  the leased or rented rolling stock and the denominator of which 
 24.27  is the total miles traveled by the leased or rented rolling 
 24.28  stock. 
 24.29     (3) The extent that an aircraft is used in this state is 
 24.30  determined by multiplying the receipts from the lease or rental 
 24.31  of the aircraft by a fraction, the numerator of which is the 
 24.32  number of landings of the aircraft in this state and the 
 24.33  denominator of which is the total number of landings of the 
 24.34  aircraft. 
 24.35     (4) The extent that a vessel, mobile equipment, or other 
 24.36  mobile property is used in the state is determined by 
 25.1   multiplying the receipts from the lease or rental of property by 
 25.2   a fraction, the numerator of which is the number of days during 
 25.3   the taxable year the property was in this state and the 
 25.4   denominator of which is the total days in the taxable year. 
 25.5      (f) Interest income and other receipts from assets in the 
 25.6   nature of loans that are secured primarily by real estate or 
 25.7   tangible personal property must be attributed to this state if 
 25.8   the security property is located in this state under the 
 25.9   principles stated in paragraph (e).  
 25.10     (g) Interest income and other receipts from consumer loans 
 25.11  not secured by real or tangible personal property that are made 
 25.12  to residents of this state, whether at a place of business, by 
 25.13  traveling loan officer, by mail, by telephone or other 
 25.14  electronic means, must be attributed to this state.  
 25.15     (h) Interest income and other receipts from commercial 
 25.16  loans and installment obligations that are unsecured by real or 
 25.17  tangible personal property or secured by intangible property 
 25.18  must be attributed to this state if the proceeds of the loan are 
 25.19  to be applied in this state.  If it cannot be determined where 
 25.20  the funds are to be applied, the income and receipts are 
 25.21  attributed to the state in which the office of the borrower from 
 25.22  which the application would be made in the regular course of 
 25.23  business is located.  If this cannot be determined, the 
 25.24  transaction is disregarded in the apportionment formula. 
 25.25     (i) Interest income and other receipts from a participating 
 25.26  financial institution's portion of participation and syndication 
 25.27  loans must be attributed under paragraphs (e) to (h).  A 
 25.28  participation loan is an arrangement in which a lender makes a 
 25.29  loan to a borrower and then sells, assigns, or otherwise 
 25.30  transfers all or a part of the loan to a purchasing financial 
 25.31  institution.  A syndication loan is a loan transaction involving 
 25.32  multiple financial institutions in which all the lenders are 
 25.33  named as parties to the loan documentation, are known to the 
 25.34  borrower, and have privity of contract with the borrower.  
 25.35     (j) Interest income and other receipts including service 
 25.36  charges from financial institution credit card and travel and 
 26.1   entertainment credit card receivables and credit card holders' 
 26.2   fees must be attributed to the state to which the card charges 
 26.3   and fees are regularly billed.  
 26.4      (k) Merchant discount income derived from financial 
 26.5   institution credit card holder transactions with a merchant must 
 26.6   be attributed to the state in which the merchant is located.  In 
 26.7   the case of merchants located within and outside the state, only 
 26.8   receipts from merchant discounts attributable to sales made from 
 26.9   locations within the state are attributed to this state.  It is 
 26.10  presumed, subject to rebuttal, that the location of a merchant 
 26.11  is the address shown on the invoice submitted by the merchant to 
 26.12  the taxpayer. 
 26.13     (l) Receipts from the performance of fiduciary and other 
 26.14  services must be attributed to the state in which the services 
 26.15  are received.  For the purposes of this section, services 
 26.16  provided to a corporation, partnership, or trust must be 
 26.17  attributed to a state where it has a fixed place of doing 
 26.18  business.  If the state where the services are received is not 
 26.19  readily determinable or is a state where the corporation, 
 26.20  partnership, or trust does not have a fixed place of doing 
 26.21  business, the services shall be deemed to be received at the 
 26.22  location of the office of the customer from which the services 
 26.23  were ordered in the regular course of the customer's trade or 
 26.24  business.  If the ordering office cannot be determined, the 
 26.25  services shall be deemed to be received at the office of the 
 26.26  customer to which the services are billed.  
 26.27     (m) Receipts from the issuance of travelers checks and 
 26.28  money orders must be attributed to the state in which the checks 
 26.29  and money orders are purchased.  
 26.30     (n) Receipts from investments of a financial institution in 
 26.31  securities and from money market instruments must be apportioned 
 26.32  to this state based on the ratio that total deposits from this 
 26.33  state, its residents, including any business with an office or 
 26.34  other place of business in this state, its political 
 26.35  subdivisions, agencies, and instrumentalities bear to the total 
 26.36  deposits from all states, their residents, their political 
 27.1   subdivisions, agencies, and instrumentalities.  In the case of 
 27.2   an unregulated financial institution subject to this section, 
 27.3   these receipts are apportioned to this state based on the ratio 
 27.4   that its gross business income, excluding such receipts, earned 
 27.5   from sources within this state bears to gross business income, 
 27.6   excluding such receipts, earned from sources within all states.  
 27.7   For purposes of this subdivision, deposits made by this state, 
 27.8   its residents, its political subdivisions, agencies, and 
 27.9   instrumentalities must be attributed to this state, whether or 
 27.10  not the deposits are accepted or maintained by the taxpayer at 
 27.11  locations within this state. 
 27.12     (o) A financial institution's interest in property 
 27.13  described in section 290.015, subdivision 3, paragraph (b), is 
 27.14  included in the receipts factor in the same manner as assets in 
 27.15  the nature of securities or money market instruments are 
 27.16  included in paragraph (n). 
 27.17     Sec. 13.  Minnesota Statutes 1994, section 383B.51, is 
 27.18  amended to read: 
 27.19     383B.51 [NO ASSIGNMENT OR GARNISHMENT.] 
 27.20     The right of a participant who has shares to the credit of 
 27.21  the participant's share account record to redeem all or any 
 27.22  portion of the shares is a personal right only and shall be in 
 27.23  the state of Minnesota or the state board of investment or the 
 27.24  nominee of either, subject to the rights of the county of 
 27.25  Hennepin.  Any assignment or attempted assignment of shares to 
 27.26  the credit of a participant's share account record by any person 
 27.27  is null and void.  The shares are exempt from garnishment or 
 27.28  levy under attachment or execution or other legal process, 
 27.29  except as provided in section 518.58, 518.581, or 518.611.  The 
 27.30  shares are also exempt from all taxation, except individual 
 27.31  income taxation, by the state of Minnesota. 
 27.32     Sec. 14.  Minnesota Statutes 1994, section 458A.32, 
 27.33  subdivision 4, is amended to read: 
 27.34     Subd. 4.  Revenue bonds of the authority shall be deemed 
 27.35  and treated as instrumentalities of a public government agency~~;~~ 
 27.36  ~~and as such, together with interest thereon, exempt from~~ 
 28.1   ~~taxation~~. 
 28.2      Sec. 15.  [EFFECTIVE DATE.] 
 28.3      Sections 1, 4, 7, 8, and 10 are effective for tax years 
 28.4   beginning after December 31, 1995. 
 28.5      Sections 2 and 14 are effective for income earned after 
 28.6   July 1, 1983, in taxable years beginning after December 31, 1982.
 28.7      Section 13 is a clarification of the law and is effective 
 28.8   the day following final enactment. 
 28.9      Sections 11 and 12 are effective for taxable years 
 28.10  beginning after December 31, 1997. 
 28.11     Section 6 is effective for tax years beginning after 
 28.12  December 31, 1996. 
 28.13                             ARTICLE 2
 28.14                      SALES AND SPECIAL TAXES
 28.15     Section 1.  Minnesota Statutes 1995 Supplement, section 
 28.16  115B.48, is amended by adding a subdivision to read: 
 28.17     Subd. 7.  [FACILITY.] "Facility" means one or more 
 28.18  buildings or parts of a building and the equipment, 
 28.19  installations, and structures contained in the building, located 
 28.20  on a single site or on contiguous or adjacent sites.  Facility 
 28.21  includes any site or area where a hazardous substance, or a 
 28.22  pollutant or contaminant, has been deposited, stored, disposed 
 28.23  of, or placed, or otherwise comes to be located. 
 28.24     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 28.25  115B.48, is amended by adding a subdivision to read: 
 28.26     Subd. 8.  [FULL-TIME EQUIVALENCE.] "Full-time equivalence" 
 28.27  means 2,000 hours worked by employees, owners, and others, at 
 28.28  duties related to the drycleaning operation in a drycleaning 
 28.29  facility during a 12-month period beginning July 1 of the 
 28.30  preceding year and running through June 30 of the year in which 
 28.31  the annual registration fee is due.  For those drycleaning 
 28.32  facilities that were in business less than the 12-month period, 
 28.33  full-time equivalence means the total of all of the hours worked 
 28.34  at duties related to the drycleaning operation in the 
 28.35  drycleaning facility, divided by 2,000 and multiplied by a 
 28.36  fraction, the numerator of which is 50 and the denominator of 
 29.1   which is the number of weeks in business during the reporting 
 29.2   period. 
 29.3      Sec. 3.  Minnesota Statutes 1995 Supplement, section 
 29.4   115B.49, subdivision 2, is amended to read: 
 29.5      Subd. 2.  [REVENUE SOURCES.] Revenue from the following 
 29.6   sources must be deposited in the state treasury and credited to 
 29.7   the account: 
 29.8      (1) the proceeds of the fees imposed by subdivision 4; 
 29.9      (2) interest attributable to investment of money in the 
 29.10  account; 
 29.11     (3) penalties and interest collected under subdivision 4, 
 29.12  ~~paragraphs (e) and (f)~~ paragraph (d); and 
 29.13     (4) money received by the commissioner for deposit in the 
 29.14  account in the form of gifts, grants, and appropriations. 
 29.15     Sec. 4.  Minnesota Statutes 1995 Supplement, section 
 29.16  115B.49, subdivision 4, is amended to read: 
 29.17     Subd. 4.  [REGISTRATION; FEES.] (a) The owner or operator 
 29.18  of a drycleaning facility shall register on or before July 1 of 
 29.19  each year with the commissioner of revenue in a manner 
 29.20  prescribed by the commissioner of revenue and pay a registration 
 29.21  fee for the facility.  The amount of the fee is: 
 29.22     (1) $500, for facilities with ~~up to four full-time~~ 
 29.23  ~~equivalent employees~~ a full-time equivalence of fewer than five; 
 29.24     (2) $1,000, for facilities with a full-time equivalence of 
 29.25  five to ten ~~full-time equivalent employees~~; and 
 29.26     (3) $1,500, for facilities with a full-time equivalence of 
 29.27  more than ten ~~full-time equivalent employees~~. 
 29.28     (b) A person who sells drycleaning solvents for use by 
 29.29  drycleaning facilities in the state shall collect and remit to 
 29.30  the commissioner of revenue in a manner prescribed by the 
 29.31  commissioner of revenue, on or before the 20th day of the month 
 29.32  following the month in which the sales of drycleaning solvents 
 29.33  are made, a fee of: 
 29.34     (1) $3.50 for each gallon of perchloroethylene sold for use 
 29.35  by drycleaning facilities in the state; and 
 29.36     (2) 70 cents for each gallon of hydrocarbon-based 
 30.1   drycleaning solvent sold for use by drycleaning facilities in 
 30.2   the state. 
 30.3      (c) ~~The commissioner of revenue shall provide each person~~ 
 30.4   ~~who pays a registration fee under paragraph (a) with a receipt.~~  
 30.5   ~~The receipt or a copy of the receipt must be produced for~~ 
 30.6   ~~inspection at the request of any authorized representative of~~ 
 30.7   ~~the commissioner of revenue.~~ 
 30.8      ~~(d)~~ The commissioner shall, after a public hearing but 
 30.9   notwithstanding section 16A.1285, subdivision 4, annually adjust 
 30.10  the fees in this subdivision as necessary to maintain an 
 30.11  unencumbered balance in the account of at least $1,000,000.  Any 
 30.12  adjustment under this paragraph must be prorated among all the 
 30.13  fees in this subdivision.  Fees adjusted under this paragraph 
 30.14  may not exceed 200 percent of the fees in this subdivision.  The 
 30.15  commissioner shall notify the commissioner of revenue of an 
 30.16  adjustment under this paragraph no later than March 1 of the 
 30.17  year in which the adjustment is to become effective.  The 
 30.18  adjustment is effective for sales of drycleaning solvents made, 
 30.19  and annual registration fees due, beginning on July 1 of the 
 30.20  same year. 
 30.21     ~~(e) An owner of a drycleaning facility who fails to pay a~~ 
 30.22  ~~fee under paragraph (a) when due is subject to a penalty of $50~~ 
 30.23  ~~per facility for each day the fee is not paid.~~ 
 30.24     ~~(f)~~ (d) To enforce this subdivision, the commissioner of 
 30.25  revenue may examine documents, assess and collect fees, conduct 
 30.26  investigations, issue subpoenas, grant extensions to file 
 30.27  returns and pay fees, impose ~~sales and use tax~~ penalties and 
 30.28  interest on the annual registration fee under paragraph (a) and 
 30.29  the monthly fee under paragraph (b), abate penalties and 
 30.30  interest, and administer appeals, in the manner provided in 
 30.31  chapters 270 and 289A.  The penalties and interest imposed on 
 30.32  taxes under chapter 297A apply to the fees imposed under this 
 30.33  subdivision.  Disclosure of data collected by the commissioner 
 30.34  of revenue under this subdivision is governed by chapter 270B. 
 30.35     Sec. 5.  [115B.491] [DRYCLEANING FACILITY USE FEE; 
 30.36  FACILITIES TO FILE RETURN.] 
 31.1      Subdivision 1.  [USE FEE.] A drycleaning facility that 
 31.2   purchases drycleaning solvents for use in Minnesota without 
 31.3   paying the seller of drycleaning solvents the fee under section 
 31.4   115B.49, subdivision 4, paragraph (b), is subject to an 
 31.5   equivalent fee.  Liability for the fee is incurred when 
 31.6   drycleaning solvents are received in Minnesota by the 
 31.7   drycleaning facility. 
 31.8      Subd. 2.  [RETURN REQUIRED.] On or before the 20th of each 
 31.9   calendar month, every drycleaning facility that has purchased 
 31.10  drycleaning solvents for use in this state during the preceding 
 31.11  calendar month, upon which the fee imposed by section 115B.49, 
 31.12  subdivision 4, paragraph (b), has not been paid to the seller of 
 31.13  the drycleaning solvents, shall file a return with the 
 31.14  commissioner of revenue showing the quantity of solvents 
 31.15  purchased and a computation of the fee under section 115B.49, 
 31.16  subdivision 4, paragraph (d).  The fee must accompany the 
 31.17  return.  The return must be made upon a form furnished and 
 31.18  prescribed by the commissioner of revenue and must contain such 
 31.19  other information as the commissioner of revenue may require. 
 31.20     Subd. 3.  [APPLICABILITY.] All of the provisions of section 
 31.21  115B.49, subdivision 4, paragraph (d), apply to this section. 
 31.22     Sec. 6.  [115B.492] [ALLOCATION OF PAYMENT.] 
 31.23     In the discretion of the commissioner of revenue, payments 
 31.24  received for fees may be credited first to the oldest liability 
 31.25  not secured by a judgment or lien.  For liabilities to which 
 31.26  payments are applied, the commissioner of revenue may credit 
 31.27  payments first to penalties, next to interest, and then to the 
 31.28  fee due. 
 31.29     Sec. 7.  Minnesota Statutes 1995 Supplement, section 
 31.30  289A.40, subdivision 1, is amended to read: 
 31.31     Subdivision 1.  [TIME LIMIT; GENERALLY.] Unless otherwise 
 31.32  provided in this chapter, a claim for a refund of an overpayment 
 31.33  of state tax must be filed within 3-1/2 years from the date 
 31.34  prescribed for filing the return, plus any extension of time 
 31.35  granted for filing the return, but only if filed within the 
 31.36  extended time, or one year from the date of an order assessing 
 32.1   tax under section 289A.37, subdivision 1, upon payment in full 
 32.2   of the tax, penalties, and interest shown on the order, 
 32.3   whichever period expires later.  Claims for refund, except for 
 32.4   taxes under chapter 297A, filed after the 3-1/2 year period but 
 32.5   within the one-year period are limited to the amount of the tax, 
 32.6   penalties, and interest on the order and to issues determined by 
 32.7   the order. 
 32.8      In the case of assessments under section 289A.38, 
 32.9   subdivisions 5 or 6, claims for refund under chapter 297A filed 
 32.10  after the 3-1/2 year period but within the one-year period are 
 32.11  limited to the amount of the tax, penalties, and interest on the 
 32.12  order that are due for the period before the 3-1/2 year period. 
 32.13     Sec. 8.  Minnesota Statutes 1994, section 289A.50, is 
 32.14  amended by adding a subdivision to read: 
 32.15     Subd. 2a.  [REFUND OF SALES TAX TO PURCHASERS.] If a vendor 
 32.16  has collected from a purchaser a tax on a transaction that is 
 32.17  not subject to the tax imposed by chapter 297A, the purchaser 
 32.18  may apply directly to the commissioner for a refund under this 
 32.19  section if: 
 32.20     (a) the purchaser is currently registered to collect and 
 32.21  remit the sales and use tax; and 
 32.22     (b) the amount of the refund applied for exceeds $500. 
 32.23     The purchaser may not file more than two applications for 
 32.24  refund under this subdivision in a calendar year. 
 32.25     Sec. 9.  Minnesota Statutes 1994, section 289A.56, 
 32.26  subdivision 4, is amended to read: 
 32.27     Subd. 4.  [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO 
 32.28  PURCHASERS.] Notwithstanding subdivision 3, for refunds payable 
 32.29  under ~~section~~ sections 297A.15, subdivision 5, and 289A.50, 
 32.30  subdivision 2a, interest is computed from the date the refund 
 32.31  claim is filed with the commissioner. 
 32.32     Sec. 10.  Minnesota Statutes 1994, section 297.04, 
 32.33  subdivision 9, is amended to read: 
 32.34     Subd. 9.  [APPLICATION DENIAL; LICENSE SUSPENSION AND 
 32.35  REVOCATION.] (a) The commissioner may revoke~~, cancel,~~ or suspend 
 32.36  the license or licenses of any distributor or subjobber for 
 33.1   violation of sections 297.01 to 297.13, or any other act 
 33.2   applicable to the sale of cigarettes, or any rule promulgated by 
 33.3   the commissioner, and may also revoke any such license or 
 33.4   licenses of any distributor or subjobber for the violation of 
 33.5   sections 297.31 to 297.39, or any other act applicable to the 
 33.6   sale of tobacco products, or any rule promulgated by the 
 33.7   commissioner in furtherance of sections 297.31 to 297.39.  The 
 33.8   commissioner may revoke~~, cancel,~~ or suspend the license or 
 33.9   licenses of any distributor or subjobber for violation of 
 33.10  sections 325D.31 to 325D.42.  
 33.11     (b) The department must not issue or renew a license under 
 33.12  this chapter, and may revoke a license under this chapter, if 
 33.13  the applicant or licensee: 
 33.14     (1) owes $500 or more in delinquent taxes as defined in 
 33.15  section 270.72; 
 33.16     (2) after demand, has not filed tax returns required by the 
 33.17  commissioner of revenue; 
 33.18     (3) had a cigarette or tobacco license revoked by the 
 33.19  commissioner of revenue within the past two years; 
 33.20     (4) had a sales and use tax permit revoked by the 
 33.21  commissioner of revenue within the past two years; or 
 33.22     (5) has been convicted of a crime involving cigarettes, 
 33.23  including but not limited to:  selling stolen cigarettes or 
 33.24  tobacco items, receiving stolen cigarettes or tobacco items, or 
 33.25  involvement in the smuggling of cigarettes or tobacco items. 
 33.26     (c) No license shall be revoked~~, canceled,~~ or suspended 
 33.27  under this chapter, and no application for a license shall be 
 33.28  denied under this chapter, except after 20 days' notice ~~and~~ 
 33.29  specifying the commissioner's allegations against the licensee 
 33.30  or applicant, and the right to request, in writing within 20 
 33.31  days, a contested case hearing ~~by the commissioner~~ as provided 
 33.32  in ~~section 297.09~~ chapter 14.  If a written request for a 
 33.33  hearing is received by the department of revenue within 20 days 
 33.34  of the date of the initial notice, the hearing must be held 
 33.35  within 45 days after referral to the office of administrative 
 33.36  hearings, and no earlier than 20 days after notice to the 
 34.1   licensee or applicant of the hearing time and place.  A license 
 34.2   is revoked or suspended, and an application is denied, when the 
 34.3   commissioner serves notice of revocation, suspension, or denial 
 34.4   after 20 days have passed following the initial notice under 
 34.5   this paragraph without a request for hearing being made, or if a 
 34.6   hearing is held, after the commissioner serves an order of 
 34.7   revocation, suspension, or denial under section 14.62, 
 34.8   subdivision 1.  All notices under this paragraph may be served 
 34.9   personally or by mail.  
 34.10     Sec. 11.  Minnesota Statutes 1995 Supplement, section 
 34.11  297A.01, subdivision 3, is amended to read: 
 34.12     Subd. 3.  A "sale" and a "purchase" includes, but is not 
 34.13  limited to, each of the following transactions: 
 34.14     (a) Any transfer of title or possession, or both, of 
 34.15  tangible personal property, whether absolutely or conditionally, 
 34.16  and the leasing of or the granting of a license to use or 
 34.17  consume tangible personal property other than manufactured homes 
 34.18  used for residential purposes for a continuous period of 30 days 
 34.19  or more, for a consideration in money or by exchange or barter; 
 34.20     (b) The production, fabrication, printing, or processing of 
 34.21  tangible personal property for a consideration for consumers who 
 34.22  furnish either directly or indirectly the materials used in the 
 34.23  production, fabrication, printing, or processing; 
 34.24     (c) The furnishing, preparing, or serving for a 
 34.25  consideration of food, meals, or drinks.  "Sale" does not 
 34.26  include: 
 34.27     (1) meals or drinks served to patients, inmates, or persons 
 34.28  residing at hospitals, sanitariums, nursing homes, senior 
 34.29  citizens homes, and correctional, detention, and detoxification 
 34.30  facilities; 
 34.31     (2) meals or drinks purchased for and served exclusively to 
 34.32  individuals who are 60 years of age or over and their spouses or 
 34.33  to the handicapped and their spouses by governmental agencies, 
 34.34  nonprofit organizations, agencies, or churches or pursuant to 
 34.35  any program funded in whole or part through 42 USCA sections 
 34.36  3001 through 3045, wherever delivered, prepared or served; or 
 35.1      (3) meals and lunches served at public and private schools, 
 35.2   universities, or colleges. 
 35.3   Notwithstanding section 297A.25, subdivision 2, taxable food or 
 35.4   meals include, but are not limited to, the following:  
 35.5      (i) heated food or drinks; 
 35.6      (ii) sandwiches prepared by the retailer; 
 35.7      (iii) single sales of prepackaged ice cream or ice milk 
 35.8   novelties prepared by the retailer; 
 35.9      (iv) hand-prepared or dispensed ice cream or ice milk 
 35.10  products including cones, sundaes, and snow cones; 
 35.11     (v) soft drinks and other beverages prepared or served by 
 35.12  the retailer; 
 35.13     (vi) gum; 
 35.14     (vii) ice; 
 35.15     (viii) all food sold in vending machines; 
 35.16     (ix) party trays prepared by the retailers; and 
 35.17     (x) all meals and single servings of packaged snack food, 
 35.18  single cans or bottles of pop, sold in restaurants and bars; 
 35.19     (d) The granting of the privilege of admission to places of 
 35.20  amusement, recreational areas, or athletic events, except a 
 35.21  world championship football game sponsored by the national 
 35.22  football league, and the privilege of having access to and the 
 35.23  use of amusement devices, tanning facilities, reducing salons, 
 35.24  steam baths, turkish baths, health clubs, and spas or athletic 
 35.25  facilities; 
 35.26     (e) The furnishing for a consideration of lodging and 
 35.27  related services by a hotel, rooming house, tourist court, motel 
 35.28  or trailer camp and of the granting of any similar license to 
 35.29  use real property other than the renting or leasing thereof for 
 35.30  a continuous period of 30 days or more; 
 35.31     (f) The furnishing for a consideration of electricity, gas, 
 35.32  water, or steam for use or consumption within this state, or 
 35.33  local exchange telephone service, intrastate toll service, and 
 35.34  interstate toll service, if that service originates from and is 
 35.35  charged to a telephone located in this state.  Telephone service 
 35.36  includes paging services and private communication service, as 
 36.1   defined in United States Code, title 26, section 4252(d), except 
 36.2   for private communication service purchased by an agent acting 
 36.3   on behalf of the state lottery.  The furnishing for a 
 36.4   consideration of access to telephone services by a hotel to its 
 36.5   guests is a sale under this clause.  Sales by municipal 
 36.6   corporations in a proprietary capacity are included in the 
 36.7   provisions of this clause.  The furnishing of water and sewer 
 36.8   services for residential use shall not be considered a sale.  
 36.9   The sale of natural gas to be used as a fuel in vehicles 
 36.10  propelled by natural gas shall not be considered a sale for the 
 36.11  purposes of this section; 
 36.12     (g) The furnishing for a consideration of cable television 
 36.13  services, including charges for basic service, charges for 
 36.14  premium service, and any other charges for any other 
 36.15  pay-per-view, monthly, or similar television services; 
 36.16     (h) The furnishing for a consideration of parking services, 
 36.17  whether on a contractual, hourly, or other periodic basis, 
 36.18  except for parking at a meter; 
 36.19     (i) The furnishing for a consideration of services listed 
 36.20  in this paragraph: 
 36.21     (i) laundry and dry cleaning services including cleaning, 
 36.22  pressing, repairing, altering, and storing clothes, linen 
 36.23  services and supply, cleaning and blocking hats, and carpet, 
 36.24  drapery, upholstery, and industrial cleaning.  Laundry and dry 
 36.25  cleaning services do not include services provided by coin 
 36.26  operated facilities operated by the customer; 
 36.27     (ii) motor vehicle washing, waxing, and cleaning services, 
 36.28  including services provided by coin-operated facilities operated 
 36.29  by the customer, and rustproofing, undercoating, and towing of 
 36.30  motor vehicles; 
 36.31     (iii) building and residential cleaning, maintenance, and 
 36.32  disinfecting and exterminating services; 
 36.33     (iv) detective services, security services, burglar, fire 
 36.34  alarm, and armored car services not including services performed 
 36.35  within the jurisdiction they serve by off-duty licensed peace 
 36.36  officers as defined in section 626.84, subdivision 1; 
 37.1      (v) pet grooming services; 
 37.2      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 37.3   services; garden planting and maintenance; tree, bush, and shrub 
 37.4   pruning, bracing, spraying, and surgery; tree, bush, shrub and 
 37.5   stump removal; and tree trimming for public utility lines.  
 37.6   Services performed under a construction contract for the 
 37.7   installation of shrubbery, plants, sod, trees, bushes, and 
 37.8   similar items are not taxable.  Services provided for the upkeep 
 37.9   of a cemetery are not taxable; 
 37.10     (vii) mixed municipal solid waste management services as 
 37.11  described in section 297A.45; 
 37.12     (viii) massages, except when provided by a licensed health 
 37.13  care facility or professional or upon written referral from a 
 37.14  licensed health care facility or professional for treatment of 
 37.15  illness, injury, or disease; and 
 37.16     (ix) the furnishing for consideration of lodging, board and 
 37.17  care services for animals in kennels and other similar 
 37.18  arrangements, but excluding veterinary and horse boarding 
 37.19  services. 
 37.20  The services listed in this paragraph are taxable under section 
 37.21  297A.02 if the service is performed wholly within Minnesota or 
 37.22  if the service is performed partly within and partly without 
 37.23  Minnesota and the greater proportion of the service is performed 
 37.24  in Minnesota, based on the cost of performance.  In applying the 
 37.25  provisions of this chapter, the terms "tangible personal 
 37.26  property" and "sales at retail" include taxable services and the 
 37.27  provision of taxable services, unless specifically provided 
 37.28  otherwise.  Services performed by an employee for an employer 
 37.29  are not taxable under this paragraph.  Services performed by a 
 37.30  partnership or association for another partnership or 
 37.31  association are not taxable under this paragraph if one of the 
 37.32  entities owns or controls more than 80 percent of the voting 
 37.33  power of the equity interest in the other entity.  Services 
 37.34  performed between members of an affiliated group of corporations 
 37.35  are not taxable.  For purposes of this section, "affiliated 
 37.36  group of corporations" includes those entities that would be 
 38.1   classified as a member of an affiliated group under United 
 38.2   States Code, title 26, section 1504, and who are eligible to 
 38.3   file a consolidated tax return for federal income tax purposes; 
 38.4      (j) A "sale" and a "purchase" includes the transfer of 
 38.5   computer software, meaning information and directions that 
 38.6   dictate the function performed by data processing equipment.  A 
 38.7   "sale" and a "purchase" does not include the design, 
 38.8   development, writing, translation, fabrication, lease, or 
 38.9   transfer for a consideration of title or possession of a custom 
 38.10  computer program; and 
 38.11     (k) The granting of membership in a club, association, or 
 38.12  other organization if: 
 38.13     (1) the club, association, or other organization makes 
 38.14  available for the use of its members sports and athletic 
 38.15  facilities (without regard to whether a separate charge is 
 38.16  assessed for use of the facilities); and 
 38.17     (2) use of the sports and athletic facilities is not made 
 38.18  available to the general public on the same basis as it is made 
 38.19  available to members.  
 38.20  Granting of membership includes both one-time initiation fees 
 38.21  and periodic membership dues.  Sports and athletic facilities 
 38.22  include golf courses, tennis, racquetball, handball and squash 
 38.23  courts, basketball and volleyball facilities, running tracks, 
 38.24  exercise equipment, swimming pools, and other similar athletic 
 38.25  or sports facilities.  The provisions of this paragraph do not 
 38.26  apply to camps or other recreation facilities owned and operated 
 38.27  by an exempt organization under section 501(c)(3) of the 
 38.28  Internal Revenue Code of 1986, as amended through December 31, 
 38.29  1992, for educational and social activities for young people 
 38.30  primarily age 18 and under.  
 38.31     Sec. 12.  Minnesota Statutes 1994, section 297A.01, 
 38.32  subdivision 16, is amended to read: 
 38.33     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
 38.34  machinery and equipment purchased or leased for use in this 
 38.35  state and used by the purchaser or lessee primarily for 
 38.36  manufacturing, fabricating, mining, or refining tangible 
 39.1   personal property to be sold ultimately at retail and for 
 39.2   electronically transmitting results retrieved by a customer of 
 39.3   an on-line computerized data retrieval system.  
 39.4      (b) Capital equipment includes all machinery and equipment 
 39.5   that is essential to the integrated production process.  Capital 
 39.6   equipment includes, but is not limited to: 
 39.7      (1) machinery and equipment used or required to operate, 
 39.8   control, or regulate the production equipment; 
 39.9      (2) machinery and equipment used for research and 
 39.10  development, design, quality control, and testing activities; 
 39.11     (3) environmental control devices that are used to maintain 
 39.12  conditions such as temperature, humidity, light, or air pressure 
 39.13  when those conditions are essential to and are part of the 
 39.14  production process; ~~or~~ 
 39.15     (4) materials and supplies necessary to construct and 
 39.16  install machinery or equipment; 
 39.17     (5) repair and replacement parts, including accessories, 
 39.18  whether purchased as spare parts, repair parts, or as upgrades 
 39.19  or modifications to machinery or equipment; 
 39.20     (6) replacement or enhanced software used or required to 
 39.21  operate, control, or regulate machinery or equipment; or 
 39.22     (7) materials used for foundations that support machinery 
 39.23  or equipment or special purpose buildings used in the production 
 39.24  process. 
 39.25     (c) Capital equipment does not include the following: 
 39.26     (1) ~~repair or replacement parts, including accessories,~~ 
 39.27  ~~whether purchased as spare parts, repair parts, or as upgrades~~ 
 39.28  ~~or modifications, and whether purchased before or after the~~ 
 39.29  ~~machinery or equipment is placed into service.  Parts or~~ 
 39.30  ~~accessories are treated as capital equipment only to the extent~~ 
 39.31  ~~that they are a part of and are essential to the operation of~~ 
 39.32  ~~the machinery or equipment as initially purchased;~~ 
 39.33     ~~(2)~~ motor vehicles taxed under chapter 297B; 
 39.34     ~~(3)~~ (2) machinery or equipment used to receive or store raw 
 39.35  materials; 
 39.36     ~~(4)~~ (3) building materials; 
 40.1      ~~(5)~~ (4) machinery or equipment used for nonproduction 
 40.2   purposes, including, but not limited to, the following:  
 40.3   machinery and equipment used for plant security, fire 
 40.4   prevention, first aid, and hospital stations; machinery and 
 40.5   equipment used in support operations or for administrative 
 40.6   purposes; machinery and equipment used solely for pollution 
 40.7   control, prevention, or abatement; and machinery and equipment 
 40.8   used in plant cleaning, disposal of scrap and waste, plant 
 40.9   communications, space heating, lighting, or safety; 
 40.10     ~~(6)~~ (5) "farm machinery" as defined by subdivision 15, and 
 40.11  "aquaculture production equipment" as defined by subdivision 19~~,~~ 
 40.12  ~~and "replacement capital equipment" as defined by subdivision~~ 
 40.13  ~~20~~; or 
 40.14     ~~(7)~~ (6) any other item that is not essential to the 
 40.15  integrated process of manufacturing, fabricating, mining, or 
 40.16  refining. 
 40.17     (d) For purposes of this subdivision: 
 40.18     (1) "Equipment" means independent devices or tools separate 
 40.19  from machinery but essential to an integrated production 
 40.20  process, including computers and software, used in operating, 
 40.21  controlling, or regulating machinery and equipment; and any 
 40.22  subunit or assembly comprising a component of any machinery or 
 40.23  accessory or attachment parts of machinery, such as tools, dies, 
 40.24  jigs, patterns, and molds. 
 40.25     (2) "Fabricating" means to make, build, create, produce, or 
 40.26  assemble components or property to work in a new or different 
 40.27  manner. 
 40.28     (3) "Machinery" means mechanical, electronic, or electrical 
 40.29  devices, including computers and software, that are purchased or 
 40.30  constructed to be used for the activities set forth in paragraph 
 40.31  (a), beginning with the removal of raw materials from inventory 
 40.32  through the completion of the product, including packaging of 
 40.33  the product. 
 40.34     (4) "Manufacturing" means an operation or series of 
 40.35  operations where raw materials are changed in form, composition, 
 40.36  or condition by machinery and equipment and which results in the 
 41.1   production of a new article of tangible personal property.  For 
 41.2   purposes of this subdivision, "manufacturing" includes the 
 41.3   generation of electricity or steam to be sold at retail. 
 41.4      (5) "Mining" means the extraction of minerals, ores, stone, 
 41.5   and peat. 
 41.6      (6) "On-line data retrieval system" means a system whose 
 41.7   cumulation of information is equally available and accessible to 
 41.8   all its customers. 
 41.9      (7) "Pollution control equipment" means machinery and 
 41.10  equipment used to eliminate, prevent, or reduce pollution 
 41.11  resulting from an activity described in paragraph (a). 
 41.12     (8) "Primarily" means machinery and equipment used 50 
 41.13  percent or more of the time in an activity described in 
 41.14  paragraph (a). 
 41.15     (9) "Refining" means the process of converting a natural 
 41.16  resource to a product, including the treatment of water to be 
 41.17  sold at retail. 
 41.18     (e) For purposes of this subdivision the requirement that 
 41.19  the machinery or equipment "must be used by the purchaser or 
 41.20  lessee" means that the person who purchases or leases the 
 41.21  machinery or equipment must be the one who uses it for the 
 41.22  qualifying purpose.  When a contractor buys and installs 
 41.23  machinery or equipment as part of an improvement to real 
 41.24  property, only the contractor is considered the purchaser. 
 41.25     ~~(f) Notwithstanding prior provisions of this subdivision,~~ 
 41.26  ~~machinery and equipment purchased or leased to replace machinery~~ 
 41.27  ~~and equipment used in the mining or production of taconite shall~~ 
 41.28  ~~qualify as capital equipment.~~ 
 41.29     Sec. 13.  Minnesota Statutes 1995 Supplement, section 
 41.30  297A.02, subdivision 4, is amended to read: 
 41.31     Subd. 4.  [MANUFACTURED HOUSING AND PARK TRAILERS.] 
 41.32  Notwithstanding the provisions of subdivision 1, for sales at 
 41.33  retail of ~~new~~ manufactured homes used for residential purposes 
 41.34  and new or used park trailers, as defined in section 168.011, 
 41.35  subdivision 8, paragraph (b), the excise tax is imposed upon 65 
 41.36  percent of the sales price of the home or park trailer.  
 42.1      Sec. 14.  Minnesota Statutes 1994, section 297A.02, 
 42.2   subdivision 5, is amended to read: 
 42.3      Subd. 5.  [REPLACEMENT CAPITAL EQUIPMENT.] Notwithstanding 
 42.4   the provisions of subdivision 1, the rate of excise tax imposed 
 42.5   upon retail sales of replacement capital equipment is: 
 42.6      for purchases after June 30, 1994, and prior to July 1, 
 42.7   1995, 5.0 percent, 
 42.8      for purchases after June 30, 1995, and prior to July 1, 
 42.9   1996, 4.0 percent, 
 42.10     for purchases after June 30, 1996, and prior to July 1, 
 42.11  1997, 3.8 percent, 
 42.12     for purchases after June 30, 1997, and prior to July 1, 
 42.13  1998, 2.9 percent, ~~and~~ 
 42.14     for purchases after June 30, 1998, ~~2.0~~ and prior to July 1, 
 42.15  1999, 1.5 percent, and 
 42.16     for purchases after June 30, 1999, zero. 
 42.17     ~~This subdivision shall cease to be operative on July 1,~~ 
 42.18  ~~2001, or on July 1 of the earliest year thereafter, if the total~~ 
 42.19  ~~employment in the manufacturing sector in this state, as~~ 
 42.20  ~~determined by the commissioner of economic security on the~~ 
 42.21  ~~preceding January 1, does not exceed by 4,500 the total~~ 
 42.22  ~~employment in the manufacturing sector in the state on January~~ 
 42.23  ~~1, 1994.~~ 
 42.24     Sec. 15.  [297A.023] [REMITTANCE OF AMOUNTS COLLECTED AS 
 42.25  TAXES.] 
 42.26     Any amounts collected, even if erroneously or illegally 
 42.27  collected, from a purchaser under a representation that they are 
 42.28  taxes imposed under this chapter are state funds from the time 
 42.29  of collection and must be reported on a return filed with the 
 42.30  commissioner and are not subject to refund without proof that 
 42.31  such amounts have been refunded or credited to the purchaser by 
 42.32  the seller. 
 42.33     Sec. 16.  Minnesota Statutes 1994, section 297A.14, is 
 42.34  amended by adding a subdivision to read: 
 42.35     Subd. 4.  [DE MINIMIS EXEMPTION.] Purchases subject to use 
 42.36  tax under this section are exempt if (1) the purchase is made by 
 43.1   an individual for personal use, and (2) the total purchases that 
 43.2   are subject to the use tax do not exceed $770 in the calendar 
 43.3   year.  For purposes of this subdivision, "personal use" includes 
 43.4   purchases for gifts.  If an individual makes purchases, which 
 43.5   are subject to use tax, of more than $770 in the calendar year 
 43.6   the individual must pay the use tax on the entire amount. 
 43.7      Sec. 17.  Minnesota Statutes 1994, section 297A.25, 
 43.8   subdivision 14, is amended to read: 
 43.9      Subd. 14.  [AIRFLIGHT EQUIPMENT.] The gross receipts from 
 43.10  sales of airflight equipment to, and the storage, use or other 
 43.11  consumption of such property by airline companies ~~taxed under~~ 
 43.12  ~~the provisions of sections 270.071 to 270.079~~, as defined in 
 43.13  section 270.071, subdivision 4, are exempt.  For purposes of 
 43.14  this subdivision, "airflight equipment" includes airplanes and 
 43.15  parts necessary for the repair and maintenance of such airflight 
 43.16  equipment, and flight simulators, but does not include airplanes 
 43.17  with a gross weight of less than 30,000 pounds that are used on 
 43.18  intermittent or irregularly timed flights. 
 43.19     Sec. 18.  Minnesota Statutes 1994, section 297A.25, 
 43.20  subdivision 37, is amended to read: 
 43.21     Subd. 37.  [YMCA ~~AND~~, YWCA, AND JCC MEMBERSHIPS.] The gross 
 43.22  receipts from the sale of memberships, including both one-time 
 43.23  initiation fees and periodic membership dues, to an association 
 43.24  incorporated under section 315.44 or an organization defined 
 43.25  under section 315.51, are exempt.  However, all separate charges 
 43.26  made for the privilege of having access to and the use of the 
 43.27  association's sports and athletic facilities are taxable. 
 43.28     Sec. 19.  Minnesota Statutes 1995 Supplement, section 
 43.29  297A.25, subdivision 57, is amended to read: 
 43.30     Subd. 57.  [HORSES; RELATED MATERIALS.] (a) The gross 
 43.31  receipts from the sale of horses, including racehorses~~, and~~ 
 43.32  ~~all~~ are exempt. 
 43.33     (b) Sales ~~to persons who raise or board horses,~~ of all 
 43.34  materials, including feed and bedding, used or consumed in the 
 43.35  breeding, raising, owning, boarding, and keeping of horses, are 
 43.36  exempt.  Machinery, equipment, implements, tools, appliances, 
 44.1   furniture, and fixtures, used in the breeding, raising, and 
 44.2   keeping of horses, are not included within this exemption. 
 44.3      Sec. 20.  Minnesota Statutes 1995 Supplement, section 
 44.4   297A.25, subdivision 59, is amended to read: 
 44.5      Subd. 59.  [FARM MACHINERY.] ~~From July 1, 1994, until June~~ 
 44.6   ~~30, 1996,~~ The gross receipts from the sale of used farm 
 44.7   machinery are exempt.  This exemption is limited to equipment 
 44.8   for use in the trade or business of farming.  
 44.9      Sec. 21.  Minnesota Statutes 1994, section 297A.25, is 
 44.10  amended by adding a subdivision to read: 
 44.11     Subd. 62.  [MATERIALS USED IN PROVIDING TAXABLE 
 44.12  SERVICES.] The gross receipts from the sale of and the storage, 
 44.13  use, or consumption of all materials, including chemicals, 
 44.14  fuels, petroleum products, lubricants, packaging materials, 
 44.15  seeds, trees, fertilizers, herbicides, electricity, gas and 
 44.16  steam, used or consumed in the provision of a taxable service 
 44.17  intended to be sold ultimately at retail, are exempt.  
 44.18  Materials, including chemicals, fuels, and electricity purchased 
 44.19  by persons engaged in providing a taxable service to treat waste 
 44.20  generated as a result of providing the service are included in 
 44.21  this exemption.  Machinery, equipment, implements, tools, 
 44.22  accessories, appliances, contrivances, furniture and fixtures, 
 44.23  used in such production and fuel, electricity, gas or steam used 
 44.24  for space heating or lighting, are not included within this 
 44.25  exemption; however, accessory tools, equipment and other 
 44.26  short-lived items, which are separate detachable units used in 
 44.27  providing the service, where such items have an ordinary useful 
 44.28  life of less than 12 months, are included within the exemption. 
 44.29     For purposes of this subdivision, "taxable service" means 
 44.30  the services listed in section 297A.01, subdivision 3, clause 
 44.31  (i), except for solid waste management services as described in 
 44.32  section 297A.45. 
 44.33     Sec. 22.  Minnesota Statutes 1994, section 297A.256, 
 44.34  subdivision 1, is amended to read: 
 44.35     Subdivision 1.  [FUNDRAISING SALES BY NONPROFIT GROUPS.] 
 44.36  Notwithstanding the provisions of this chapter, the following 
 45.1   sales made by a "nonprofit organization" are exempt from the 
 45.2   sales and use tax. 
 45.3      (a)(1) All sales made by an organization for fundraising 
 45.4   purposes if that organization exists solely for the purpose of 
 45.5   providing educational or social activities for young people 
 45.6   primarily age 18 and under.  This exemption shall apply only if 
 45.7   the gross annual sales receipts of the organization from 
 45.8   fundraising do not exceed $10,000. 
 45.9      (2) A club, association, or other organization of 
 45.10  elementary or secondary school students organized for the 
 45.11  purpose of carrying on sports, educational, or other 
 45.12  extracurricular activities is a separate organization from the 
 45.13  school district or school for purposes of applying the $10,000 
 45.14  limit.  This paragraph does not apply if the sales are derived 
 45.15  from admission charges or from activities for which the money 
 45.16  must be deposited with the school district treasurer under 
 45.17  section 123.38, subdivision 2, or be recorded in the same manner 
 45.18  as other revenues or expenditures of the school district under 
 45.19  section 123.38, subdivision 2b. 
 45.20     (b) All sales made by an organization for fundraising 
 45.21  purposes if that organization is a senior citizen group or 
 45.22  association of groups that in general limits membership to 
 45.23  persons age 55 or older and is organized and operated 
 45.24  exclusively for pleasure, recreation and other nonprofit 
 45.25  purposes and no part of the net earnings inure to the benefit of 
 45.26  any private shareholders.  This exemption shall apply only if 
 45.27  the gross annual sales receipts of the organization from 
 45.28  fundraising do not exceed $10,000. 
 45.29     (c) The gross receipts from the sales of tangible personal 
 45.30  property at, admission charges for, and sales of food, meals, or 
 45.31  drinks at fundraising events sponsored by a nonprofit 
 45.32  organization when the entire proceeds, except for the necessary 
 45.33  expenses therewith, will be used solely and exclusively for 
 45.34  charitable, religious, or educational purposes.  This exemption 
 45.35  does not apply to admission charges for events involving bingo 
 45.36  or other gambling activities or to charges for use of amusement 
 46.1   devices involving bingo or other gambling activities.  For 
 46.2   purposes of this ~~clause~~ paragraph, a "nonprofit organization" 
 46.3   means any unit of government, corporation, society, association, 
 46.4   foundation, or institution organized and operated for 
 46.5   charitable, religious, educational, civic, fraternal, senior 
 46.6   citizens' or veterans' purposes, no part of the net earnings of 
 46.7   which enures to the benefit of a private individual. 
 46.8      If the profits are not used solely and exclusively for 
 46.9   charitable, religious, or educational purposes, the entire gross 
 46.10  receipts are subject to tax. 
 46.11     Each nonprofit organization shall keep a separate 
 46.12  accounting record, including receipts and disbursements from 
 46.13  each fundraising event.  All deductions from gross receipts must 
 46.14  be documented with receipts and other records.  If records are 
 46.15  not maintained as required, the entire gross receipts are 
 46.16  subject to tax. 
 46.17     The exemption provided by this ~~section~~ paragraph does not 
 46.18  apply to any sale made by or in the name of a nonprofit 
 46.19  corporation as the active or passive agent of a person that is 
 46.20  not a nonprofit corporation. 
 46.21     The exemption for fundraising events under this ~~section~~ 
 46.22  paragraph is limited to no more than 24 days a year.  
 46.23  Fundraising events conducted on premises leased ~~or occupied~~ for 
 46.24  more than four days but less than 30 days do not qualify for 
 46.25  this exemption. 
 46.26     (d) The gross receipts from the sale or use of tickets or 
 46.27  admissions to a golf tournament held in Minnesota are exempt if 
 46.28  the beneficiary of the tournament's net proceeds qualifies as a 
 46.29  tax-exempt organization under section 501(c)(3) of the Internal 
 46.30  Revenue Code, including a tournament conducted on premises 
 46.31  leased or occupied for more than four days. 
 46.32     Sec. 23.  Minnesota Statutes 1995 Supplement, section 
 46.33  297B.01, subdivision 8, is amended to read: 
 46.34     Subd. 8.  [PURCHASE PRICE.] "Purchase price" means the 
 46.35  total consideration valued in money for a sale, whether paid in 
 46.36  money or otherwise.  The purchase price excludes the amount of a 
 47.1   manufacturer's rebate paid or payable to the purchaser.  If a 
 47.2   motor vehicle is taken in trade as a credit or as part payment 
 47.3   on a motor vehicle taxable under this chapter, the credit or 
 47.4   trade-in value allowed by the person selling the motor vehicle 
 47.5   shall be deducted from the total selling price to establish the 
 47.6   purchase price of the vehicle being sold and the trade-in 
 47.7   allowance allowed by the seller shall constitute the purchase 
 47.8   price of the motor vehicle accepted as a trade-in.  The purchase 
 47.9   price in those instances where the motor vehicle is acquired by 
 47.10  gift or by any other transfer for a nominal or no monetary 
 47.11  consideration shall also include the average value of similar 
 47.12  motor vehicles, established by standards and guides as 
 47.13  determined by the motor vehicle registrar.  The purchase price 
 47.14  in those instances where a motor vehicle is manufactured by a 
 47.15  person who registers it under the laws of this state shall mean 
 47.16  the manufactured cost of such motor vehicle and manufactured 
 47.17  cost shall mean the amount expended for materials, labor and 
 47.18  other properly allocable costs of manufacture, except that in 
 47.19  the absence of actual expenditures for the manufacture of a part 
 47.20  or all of the motor vehicle, manufactured costs shall mean the 
 47.21  reasonable value of the completed motor vehicle.  
 47.22     The term "purchase price" shall not include the portion of 
 47.23  the value of a motor vehicle due solely to modifications 
 47.24  necessary to make the motor vehicle handicapped accessible.  The 
 47.25  term "purchase price" shall not include the transfer of a motor 
 47.26  vehicle by way of gift between a husband and wife or parent and 
 47.27  child, nor shall it include the transfer of a motor vehicle by a 
 47.28  guardian to a ward when there is no monetary consideration and 
 47.29  the title to such vehicle was registered in the name of the 
 47.30  guardian, as guardian, only because the ward was a minor.  There 
 47.31  shall not be included in "purchase price" the amount of any tax 
 47.32  imposed by the United States upon or with respect to retail 
 47.33  sales whether imposed upon the retailer or the consumer.  
 47.34     The term "purchase price" shall not include the transfer of 
 47.35  a motor vehicle as a gift between a foster parent and foster 
 47.36  child.  For purposes of this subdivision, a foster relationship 
 48.1   exists, regardless of the age of the child, if (1) a foster 
 48.2   parent's home is or was licensed as a foster family home under 
 48.3   Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 
 48.4   county verifies that the child was a state ward or in permanent 
 48.5   foster care. 
 48.6      Sec. 24.  Minnesota Statutes 1994, section 297B.09, 
 48.7   subdivision 1, is amended to read: 
 48.8      Subdivision 1.  [GENERAL FUND AND TRANSPORTATION SHARE.] (a)
 48.9   Money collected and received under this chapter must be 
 48.10  deposited in the state treasury and credited ~~to the general~~ 
 48.11  ~~fund.  The amounts collected and received shall be credited as~~ 
 48.12  ~~provided in this subdivision, and transferred from the general~~ 
 48.13  ~~fund on July 15 and February 15 of each fiscal year.  The~~ 
 48.14  ~~commissioner of finance must make each transfer based upon the~~ 
 48.15  ~~actual receipts of the preceding six calendar months and include~~ 
 48.16  ~~the interest earned during that six-month period.  The~~ 
 48.17  ~~commissioner of finance may establish a quarterly or other~~ 
 48.18  ~~schedule providing for more frequent payments to the transit~~ 
 48.19  ~~assistance fund if the commissioner determines it is necessary~~ 
 48.20  ~~or desirable to provide for the cash flow needs of the~~ 
 48.21  ~~recipients of money from the transit assistance fund.~~  
 48.22     ~~(b) Twenty-five percent of the money collected and received~~ 
 48.23  ~~under this chapter after June 30, 1990, and before July 1, 1991,~~ 
 48.24  ~~must be transferred to the highway user tax distribution fund~~ 
 48.25  ~~and the transit assistance fund for apportionment as follows:~~  
 48.26  ~~75 percent must be transferred to the highway user tax~~ 
 48.27  ~~distribution fund for apportionment in the same manner and for~~ 
 48.28  ~~the same purposes as other money in that fund, and the remaining~~ 
 48.29  ~~25 percent of the money must be transferred to the transit~~ 
 48.30  ~~assistance fund to be appropriated to the commissioner of~~ 
 48.31  ~~transportation for transit assistance within the state and to~~ 
 48.32  ~~the metropolitan council.~~  
 48.33     ~~(c) The distributions under this subdivision to the highway~~ 
 48.34  ~~user tax distribution fund until June 30, 1991, and to the trunk~~ 
 48.35  ~~highway fund thereafter, must be reduced by the amount necessary~~ 
 48.36  ~~to fund the appropriation under section 41A.09, subdivision 1.~~  
 49.1   ~~For the fiscal years ending June 30, 1988, and June 30, 1989,~~ 
 49.2   ~~the commissioner of finance, before making the transfers~~ 
 49.3   ~~required on July 15 and January 15 of each year, shall estimate~~ 
 49.4   ~~the amount required to fund the appropriation under section~~ 
 49.5   ~~41A.09, subdivision 1, for the six-month period for which the~~ 
 49.6   ~~transfer is being made.  The commissioner shall then reduce the~~ 
 49.7   ~~amount transferred to the highway user tax distribution fund by~~ 
 49.8   ~~the amount of that estimate.  The commissioner shall reduce the~~ 
 49.9   ~~estimate for any six-month period by the amount by which the~~ 
 49.10  ~~estimate for the previous six-month period exceeded the amount~~ 
 49.11  ~~needed to fund the appropriation under section 41A.09,~~ 
 49.12  ~~subdivision 1, for that previous six-month period.  If at any~~ 
 49.13  ~~time during a six-month period in those fiscal years the amount~~ 
 49.14  ~~of reduction in the transfer to the highway user tax~~ 
 49.15  ~~distribution fund is insufficient to fund the appropriation~~ 
 49.16  ~~under section 41A.09, subdivision 1, for that period, the~~ 
 49.17  ~~commissioner shall transfer to the general fund from the highway~~ 
 49.18  ~~user tax distribution fund an additional amount sufficient to~~ 
 49.19  ~~fund the appropriation for that period, but the additional~~ 
 49.20  ~~amount so transferred to the general fund in a six-month period~~ 
 49.21  ~~may not exceed the amount transferred to the highway user tax~~ 
 49.22  ~~distribution fund for that six-month period.~~ as follows: 
 49.23     (1) from July 1, 1997 to June 30, 1999, 75 percent to the 
 49.24  general fund, 18.75 percent to the highway user tax distribution 
 49.25  fund, and 6.25 percent to the transit assistance fund; 
 49.26     (2) from July 1, 1999 to June 30, 2001, 50 percent to the 
 49.27  general fund, 37.5 percent to the highway user tax distribution 
 49.28  fund, and 12.5 percent to the transit assistance fund; 
 49.29     (3) from July 1, 2001 to June 30, 2003, 25 percent to the 
 49.30  general fund, 56.25 percent to the highway user tax distribution 
 49.31  fund, and 18.75 percent to the transit assistance fund; 
 49.32     (4) on and after July 1, 2003, 75 percent to the highway 
 49.33  user tax distribution fund and 25 percent to the transit 
 49.34  assistance fund. 
 49.35     Sec. 25.  [315.51] [JCC; DEFINITION.] 
 49.36     A "JCC" means a nonprofit religious organization under 
 50.1   section 501(c)(3) of the Internal Revenue Code of 1986 known as 
 50.2   the Jewish Community Center of Greater Minneapolis or the Jewish 
 50.3   Community Center of Greater St. Paul and organized for the 
 50.4   purpose of serving the cultural, educational, and recreational 
 50.5   needs of the Jewish community. 
 50.6      Sec. 26.  Laws 1991, chapter 291, article 8, section 27, is 
 50.7   amended by adding a subdivision to read: 
 50.8      Subd. 9.  [ADDITIONAL AUTHORITY; MANKATO MUNICIPAL 
 50.9   AIRPORT.] (a) In addition to the uses of revenues authorized in 
 50.10  subdivision 3, the city may use revenues received from taxes 
 50.11  authorized by subdivisions 1 and 2 to pay for rehabilitation, 
 50.12  expansion, improvement, and operation of the Mankato municipal 
 50.13  airport and related facilities, including securing or paying 
 50.14  debt service on bonds or other obligations issued to finance the 
 50.15  improvements. 
 50.16     (b) The city may issue general obligation bonds of the city 
 50.17  for the Mankato municipal airport and related facilities without 
 50.18  election under Minnesota Statutes, chapter 475, on the question 
 50.19  of issuance of the bonds or a tax to pay them.  The debt 
 50.20  represented by bonds issued for the Mankato municipal airport 
 50.21  and related facilities shall not be included in computing any 
 50.22  levy or debt limits applicable to the city. 
 50.23     (c) The total capital, administrative, and operating 
 50.24  expenses authorized in paragraph (a) payable from bond proceeds 
 50.25  and from the taxes authorized in subdivisions 1 and 2, excluding 
 50.26  investment earnings on bond proceeds and revenues, shall not 
 50.27  exceed $500,000 in any year, unless the city has dedicated in a 
 50.28  reserve fund sufficient funds to pay or secure payment of 
 50.29  principal and interest on bonds issued under subdivision 5 for a 
 50.30  period of at least one year.  The total amount of general 
 50.31  obligation bonds of the city issued for the Mankato municipal 
 50.32  airport and related facilities may not exceed $4,500,000. 
 50.33     (d) Notwithstanding the provisions of subdivision 4, the 
 50.34  authority of the city to impose taxes under subdivisions 1 and 2 
 50.35  shall not expire until the principal and interest on any bonds 
 50.36  or obligations issued to finance the Mankato municipal airport 
 51.1   and related facilities have been paid, or the city determines by 
 51.2   ordinance an earlier expiration date. 
 51.3      Sec. 27.  Laws 1992, chapter 511, article 8, section 39, is 
 51.4   amended to read: 
 51.5      Sec. 39.  [EFFECTIVE DATE.] 
 51.6      Sections 1, 2, 7, 8, 9, 11, 12, 24, and 28 are effective 
 51.7   the day after final enactment. 
 51.8      Sections 3 and 4 are effective for tax payments due for 
 51.9   sales made after September 30, 1992. 
 51.10     Sections 5 and 6 are effective July 1, 1992, and apply to 
 51.11  refunds filed after that date. 
 51.12     Sections 10, 13, 22, and 26 are effective for sales made 
 51.13  after June 30, 1992. 
 51.14     Sections 14, 15, and 18 are effective for sales made after 
 51.15  May 31, 1992. 
 51.16     Section 16 is effective retroactive for sales made after 
 51.17  June 30, 1991. 
 51.18     Section 19 is effective for all open tax years. 
 51.19     Sections 20 and 21 are effective for sales made after June 
 51.20  30, 1992~~, and before July 1, 1996~~. 
 51.21     Section 23 is effective for sales made on or after the date 
 51.22  of enactment, but prior to April 1, 1994. 
 51.23     Section 25 is effective for fiscal year 1993 and thereafter.
 51.24     Section 36 is effective the day following final enactment, 
 51.25  and upon approval by the governing body of the city of Duluth 
 51.26  pursuant to Minnesota Statutes, section 645.021. 
 51.27     Section 38 is effective for sales made after December 31, 
 51.28  1991. 
 51.29     Sec. 28.  Laws 1995, chapter 264, article 2, section 42, 
 51.30  subdivision 1, is amended to read: 
 51.31     Subdivision 1.  [CREATION; MEMBERSHIP.] (a) A state 
 51.32  advisory council is established to study the general and motor 
 51.33  vehicle sales and use taxes under Minnesota Statutes 1994, 
 51.34  chapters 297A and 297B, and to make recommendations to the 1996 
 51.35  legislature and the 1997 legislature.  ~~The study shall be~~ 
 51.36  ~~completed and~~ Interim findings shall be reported to the 
 52.1   legislature by February 1, 1996.  The study shall be completed 
 52.2   and a final report submitted to the legislature by January 1, 
 52.3   1997. 
 52.4      (b) The advisory council consists of 17 members who serve 
 52.5   at the pleasure of the appointing authority as follows: 
 52.6      (1) ten legislators; five members of the senate, including 
 52.7   two members of the minority party, appointed by the subcommittee 
 52.8   on committees of the committee on rules and administration and 
 52.9   five members of the house of representatives, including two 
 52.10  members of the minority party, appointed by the speaker; 
 52.11     (2) the commissioner of revenue or the commissioner's 
 52.12  designee; and 
 52.13     (3) six members of the public; two appointed by the 
 52.14  subcommittee on committees of the committee on rules and 
 52.15  administration of the senate, two appointed by the speaker of 
 52.16  the house, and two appointed by the governor.  At least one 
 52.17  member of the public that is appointed by each entity must 
 52.18  represent a consumer interest group or other private citizen 
 52.19  group, public policy organization, or university department of 
 52.20  public policy or economics. 
 52.21     Sec. 29.  Laws 1995, chapter 264, article 2, section 44, is 
 52.22  amended to read: 
 52.23     Sec. 44.  [EFFECTIVE DATE.] 
 52.24     Section 1 is effective the day following final enactment. 
 52.25     Sections 3 and 4 are effective June 1, 1995.  Section 4 is 
 52.26  repealed June 1, 2000. 
 52.27     Sections 5 to 21 and 43, paragraph (a), are effective July 
 52.28  1, 1995. 
 52.29     Sections 23, 28, 33, 40, 42, and the part of section 22 
 52.30  amending language in paragraph (i), clause (vii), are effective 
 52.31  the day following final enactment. 
 52.32     Sections 24 and 34 are effective for sales made after 
 52.33  December 31, 1996. 
 52.34     Section 25 is effective beginning with leases or rentals 
 52.35  made after June 30, 1995. 
 52.36     Section 26 is effective retroactively for sales after May 
 53.1   31, 1992. 
 53.2      Section 27 is effective for sales made after June 30, 1995. 
 53.3      Section 29 and the part of section 22 striking the language 
 53.4   after paragraph (h) are effective for sales after June 30, 1995. 
 53.5      Section 32 is effective for sales made after June 30, 1995, 
 53.6   and before July 1, ~~1996~~ 1998. 
 53.7      Sections 35 and 36 are effective for sales or transfers 
 53.8   made after June 30, 1995. 
 53.9      Section 38 is effective the day after the governing body of 
 53.10  the city of Winona complies with Minnesota Statutes, section 
 53.11  645.021, subdivision 3. 
 53.12     Section 39 is effective upon compliance by the Minneapolis 
 53.13  city council with Minnesota Statutes, section 645.021, 
 53.14  subdivision 3. 
 53.15     Section 43, paragraph (b), is effective for sales of 900 
 53.16  information services made after June 30, 1995. 
 53.17     Sec. 30.  [SOLID WASTE MANAGEMENT TAXES.] 
 53.18     Subdivision 1.  [MORATORIUM EXTENDED.] The commissioner of 
 53.19  revenue shall not initiate or continue any action to collect any 
 53.20  underpayment from political subdivisions, or to reimburse any 
 53.21  overpayment to any political subdivisions of taxes on solid 
 53.22  waste management services under Minnesota Statutes, section 
 53.23  297A.45, until June 1, 1997.  The statute of limitations for 
 53.24  assessing, collecting, or refunding taxes subject to the 
 53.25  provisions of this subdivision and Laws 1995, chapter 264, 
 53.26  article 2, section 40, is tolled from the date of enactment of 
 53.27  this law, if enacted, until June 1, 1997. 
 53.28     Subd. 2.  [CONTINUE EVALUATION; REPORT.] (a) The 
 53.29  commissioner of revenue shall continue the evaluation to 
 53.30  determine the taxes paid by all affected political subdivisions 
 53.31  on solid waste management services as required by Minnesota 
 53.32  Statutes, section 297A.45.  This is a continuation of the 
 53.33  evaluation provided for under Laws 1995, chapter 264, article 2, 
 53.34  section 40, except that the evaluation under this subdivision 
 53.35  includes all political subdivisions subject to the tax under 
 53.36  Minnesota Statutes, section 297A.45.  The political subdivisions 
 54.1   shall cooperate fully and shall supply the commissioner of 
 54.2   revenue with whatever information the commissioner of revenue 
 54.3   deems necessary for compliance under the law. 
 54.4      (b) By May 15, 1996, the commissioner of revenue shall 
 54.5   notify all counties of the opportunity to correct the 
 54.6   information provided under Laws 1995, chapter 264, article 2, 
 54.7   section 40.  A county must submit their corrections in writing 
 54.8   to the department of revenue by July 15, 1996. 
 54.9      (c) The commissioner of revenue shall report by January 15, 
 54.10  1997, the results of the evaluation under this subdivision to 
 54.11  the chairs of the house committee on taxes and the senate 
 54.12  committee on taxes and tax laws.  The final results of the 
 54.13  evaluation are classified as public data. 
 54.14     Subd. 3.  [TASK FORCE; SCOPE.] (a) The director of the 
 54.15  office of environmental assistance shall establish and staff a 
 54.16  task force to study implementation of the sales and use taxes on 
 54.17  solid waste management services under Minnesota Statutes, 
 54.18  section 297A.45.  The task force shall make recommendations to 
 54.19  the chairs of the house committee on taxes, the senate committee 
 54.20  on taxes and tax laws, the house environment and natural 
 54.21  resources committee, and the senate environment and natural 
 54.22  resources committee of the legislature by November 15, 1996. 
 54.23     The task force shall consist of 16 members with expertise 
 54.24  in the areas of taxation or waste management, as provided in 
 54.25  this subdivision: 
 54.26     (1) four legislators, or their designees, including two 
 54.27  members of the senate, one from the minority party and one from 
 54.28  the majority party, appointed by the subcommittee on committees 
 54.29  of the committee on rules and administration and two members of 
 54.30  the house of representatives, one from the minority party and 
 54.31  one from the majority party, appointed by the speaker; 
 54.32     (2) two representatives from the department of revenue, 
 54.33  appointed by the commissioner of revenue; 
 54.34     (3) one representative from the office of environmental 
 54.35  assistance, appointed by the director of the office; 
 54.36     (4) one representative from the pollution control agency, 
 55.1   appointed by the commissioner of the agency; 
 55.2      (5) three persons representing political subdivisions, at 
 55.3   least one of which must represent county government, appointed 
 55.4   by the director of the office of environmental assistance; 
 55.5      (6) one person representing the private waste collection 
 55.6   industry, appointed by the director of the office of 
 55.7   environmental assistance; and 
 55.8      (7) four legislative staff, one representing the house tax 
 55.9   committee, one representing the senate committee on taxes and 
 55.10  tax laws, one representing the house environment and natural 
 55.11  resources committee, and one representing the senate environment 
 55.12  and natural resources committee, each one appointed by each of 
 55.13  the respective committee chairs. 
 55.14     (b) The goals of the task force are: 
 55.15     (1) relating to solid waste management taxes: 
 55.16     (A) to monitor the evaluation conducted under subdivision 2 
 55.17  and to advise the commissioner of revenue on interpretations 
 55.18  arising during the evaluation; 
 55.19     (B) to discuss the tax base principles and possible options 
 55.20  to use for the tax period from January 1, 1990, to December 31, 
 55.21  1995, when the moratorium ends under subdivision 1; 
 55.22     (C) to recommend a base to which the tax should apply 
 55.23  beginning January 1, 1996, taking into consideration the impact 
 55.24  on political subdivisions and private haulers, resulting from 
 55.25  recent court decisions regarding government control over the 
 55.26  flow of waste and the effect of these decisions on waste 
 55.27  management fee structures; 
 55.28     (D) to examine the impact on total revenues from various 
 55.29  funding sources including tipping fees, service charges, 
 55.30  assessments, or subsidizing through the property tax system; 
 55.31     (E) to identify ways to simplify or restructure the current 
 55.32  tax system for ease of collection and administration; 
 55.33     (F) to discuss methods to ensure that the taxes paid to the 
 55.34  state by haulers equals the amount of the sales tax exemption 
 55.35  provided to the political subdivision on the department of 
 55.36  revenue's ST-10 form; and 
 56.1      (G) to recommend a process to monitor future issues 
 56.2   relating to this tax. 
 56.3      (2) relating to the solid waste generator assessment: 
 56.4      to discuss the distinction between "residential" and 
 56.5   "nonresidential" for purposes of the solid waste generator 
 56.6   assessment under Minnesota Statutes, section 116.07, subdivision 
 56.7   10. 
 56.8      Subd. 4.  [USE OF TAX PROCEEDS.] It is the legislature's 
 56.9   intent that the total amount of tax proceeds collected under 
 56.10  Minnesota Statutes, section 297A.45, less the department of 
 56.11  revenue's costs of administering the program, be used for 
 56.12  administration of programs and functions related to reducing the 
 56.13  quantity and toxicity of solid waste, recycling, household 
 56.14  hazardous waste management, and other similarly related 
 56.15  programs.  Appropriations may be made in block grants or 
 56.16  competitive grants to political subdivisions.  Money may also be 
 56.17  used by the office of environmental assistance and the pollution 
 56.18  control agency in helping to administer and enforce the programs 
 56.19  and functions identified in this subdivision.  Appropriations 
 56.20  may also be made to the state attorney general's office for 
 56.21  providing legal assistance to political subdivisions relating to 
 56.22  solid waste management.  
 56.23     Subd. 5.  [DEPARTMENT OF REVENUE GUIDELINES.] The 
 56.24  commissioner of revenue shall prepare a single set of guidelines 
 56.25  for complying with Minnesota Statutes, section 297A.45, 
 56.26  including all existing rules, and shall send a copy of these 
 56.27  guidelines on or before May 1, 1996, to all known political 
 56.28  subdivisions subject to the tax under Minnesota Statutes, 
 56.29  section 297A.45.  Notwithstanding taxes collected prior to 
 56.30  January 1, 1996, political subdivisions and persons responsible 
 56.31  for collecting the tax under Minnesota Statutes, section 
 56.32  297A.45, must follow these guidelines for all taxes collected on 
 56.33  solid waste management services beginning January 1, 1996.  The 
 56.34  commissioner shall send a copy of the guidelines to the chairs 
 56.35  of the house committee on taxes and the senate committee on 
 56.36  taxes and tax laws by April 22, 1996, for their review and 
 57.1   comment. 
 57.2      Subd. 6.  [SEPARATE REPORTING; ADDITIONAL PENALTY.] (a) In 
 57.3   order to determine the total amount of sales and use taxes 
 57.4   collected under Minnesota Statutes, section 297A.45, the 
 57.5   department of revenue shall re-examine the present method of 
 57.6   having this tax reported on the sales tax return.  The 
 57.7   department must also consider other options including requiring 
 57.8   the sales and use tax amounts to be reported on a separate form. 
 57.9      (b) In addition to the penalties and interest that apply to 
 57.10  taxes under Minnesota Statutes, section 297A.45, a penalty equal 
 57.11  to the specified penalty of the taxpayer's tax liability is 
 57.12  imposed on any person or political subdivision who fails to 
 57.13  separately report the amount of the taxes due under Minnesota 
 57.14  Statutes, section 297A.45.  The specified penalties are: 
 57.15     First violation            10 percent 
 57.16     Second and subsequent 
 57.17     violations                 20 percent 
 57.18     The additional penalties apply only to that portion of the 
 57.19  sales and use tax which should have been reported on the 
 57.20  separate line for taxes under Minnesota Statutes, section 
 57.21  297A.45, and that was included on other lines of the sales tax 
 57.22  return. 
 57.23     Subd. 7.  [EFFECTIVE DATE.] Subdivisions 1 to 3 and 6, 
 57.24  paragraph (a), are effective the day following final enactment.  
 57.25  Subdivisions 4 and 5 are effective for taxes collected January 
 57.26  1, 1996, and thereafter.  Subdivision 6, paragraph (b), is 
 57.27  effective for returns filed after July 1, 1996. 
 57.28     Sec. 31.  [CITY OF LITTLE FALLS; TAX AUTHORIZED.] 
 57.29     Subdivision 1.  [SALES OF FOOD; TAX.] The city of Little 
 57.30  Falls may by ordinance impose a tax of one-half percent on the 
 57.31  gross receipts from the retail sale of food and nonalcoholic 
 57.32  beverages sold by the operator of a restaurant or place of 
 57.33  refreshment within the city.  The tax imposed may be effective 
 57.34  at any time after July 1, 1996.  
 57.35     Subd. 2.  [DEFINITIONS.] For purposes of this section:  
 57.36     (1) "restaurant" means every building or other structure or 
 58.1   enclosure, or any part thereof and all buildings in connection, 
 58.2   kept, used or maintained as, or held out to the public to be an 
 58.3   enclosure where meals or lunches are served or prepared for 
 58.4   service elsewhere, excepting schools; 
 58.5      (2) "place of refreshment" means every building, structure, 
 58.6   vehicle, sidewalk cart or any part thereof, used as, maintained 
 58.7   as, or advertised as, or held out to be a place where 
 58.8   confectionery, ice cream, or drinks of various kinds are made, 
 58.9   sold, or served at retail, excepting schools and school 
 58.10  sponsored events; and 
 58.11     (3) "operator" means the person who is the proprietor of 
 58.12  the restaurant, or place of refreshment, whether in the capacity 
 58.13  of owner, lessee, subleases, licensee, or an other capacity. 
 58.14     Subd. 3.  [USE OF PROCEEDS.] The ordinance adopted by the 
 58.15  city shall provide for distribution of the proceeds of the tax.  
 58.16  The proceeds of the tax must be used for tourism purposes, 
 58.17  including operating and maintaining the activities and programs 
 58.18  of the tourism and convention bureau. 
 58.19     Subd. 4.  [ENFORCEMENT, COLLECTION, AND ADMINISTRATION OF 
 58.20  TAXES.] Unless the city of Little Falls and the commissioner of 
 58.21  revenue otherwise agree, a tax imposed under this section shall 
 58.22  be enforced, collected, and administered pursuant to this 
 58.23  section.  
 58.24     The tax shall be reported and paid to the commissioner of 
 58.25  revenue with the state sales and use taxes, and be subject to 
 58.26  the same penalties, interest, and enforcement provisions.  The 
 58.27  proceeds of the tax, less refunds and a proportionate share of 
 58.28  the costs of collection, shall be remitted at least quarterly to 
 58.29  the city.  The commissioner shall deduct from the proceeds 
 58.30  remitted an amount that equals the direct and indirect 
 58.31  department costs necessary to administer, audit, and collect the 
 58.32  tax. 
 58.33     Subd. 5.  [EXPIRATION OF TAXING AUTHORITY.] The tax imposed 
 58.34  under this section shall expire 15 years after it first becomes 
 58.35  effective. 
 58.36     Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
 59.1   day following compliance by the governing body of the city of 
 59.2   Little Falls with Minnesota Statutes, section 645.021, 
 59.3   subdivision 3. 
 59.4      Sec. 32.  [CITY OF HERMANTOWN; SALES TAX.] 
 59.5      Subdivision 1.  [SALES TAX AUTHORIZED.] Notwithstanding 
 59.6   Minnesota Statutes, section 477A.016, or any other contrary 
 59.7   provision of law, ordinance, or city charter, the city of 
 59.8   Hermantown may, by ordinance, impose an additional sales tax of 
 59.9   up to one percent on sales transactions taxable pursuant to 
 59.10  Minnesota Statutes, chapter 297A, that occur within the city. 
 59.11     Subd. 2.  [USE OF REVENUES.] Revenues received from the 
 59.12  taxes authorized by subdivision 1 shall be used by the city to 
 59.13  pay the cost of collecting the tax and to pay for the following 
 59.14  infrastructure development projects or pay principal, premiums, 
 59.15  and interest on bonds issued for the following projects.  
 59.16     (1) construction of a sewer interceptor line; 
 59.17     (2) improvements and additions to the municipal water 
 59.18  system, including but not limited to booster pumps and new 
 59.19  reservoirs; and 
 59.20     (3) construction of a combined police and fire station. 
 59.21     Subd. 3.  [REFERENDUM.] If the Hermantown city council 
 59.22  proposes to impose the sales tax authorized by this section, it 
 59.23  shall conduct a referendum on the issue.  The question of 
 59.24  imposing the tax must be submitted to the voters at a special or 
 59.25  general election.  The tax may not be imposed unless a majority 
 59.26  of votes cast on the question of imposing the tax are in the 
 59.27  affirmative.  The commissioner of revenue shall prepare a 
 59.28  suggested form of question to be presented at the election.  
 59.29  This subdivision applies notwithstanding any city charter 
 59.30  provision to the contrary. 
 59.31     Subd. 4.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 
 59.32  TAXES.] A sales tax imposed under this section must be reported 
 59.33  and paid to the commissioner of revenue with the state sales 
 59.34  taxes, and be subject to the same penalties, interest, and 
 59.35  enforcement provisions.  The proceeds of the tax, less refunds 
 59.36  and a proportionate share of the cost of collection, shall be 
 60.1   remitted at least quarterly to the city.  The commissioner shall 
 60.2   deduct from the proceeds remitted an amount that equals the 
 60.3   direct and indirect department costs necessary to administer, 
 60.4   audit, and collect the tax. 
 60.5      Subd. 5.  [EXPIRATION OF TAXING AUTHORITY.] The tax imposed 
 60.6   under this section shall expire 15 years after it first becomes 
 60.7   effective. 
 60.8      Subd. 6.  [LOCAL APPROVAL; EFFECTIVE DATE.] This section is 
 60.9   effective the day after final enactment, upon compliance with 
 60.10  Minnesota Statutes, section 645.021, subdivision 3, by the city 
 60.11  of Hermantown. 
 60.12     Sec. 33.  [REPEALER.] 
 60.13     Minnesota Statutes 1994, sections 297A.01, subdivision 20; 
 60.14  and 297A.15, subdivision 5, are repealed. 
 60.15     Sec. 34.  [EFFECTIVE DATES.] 
 60.16     Sections 1 to 7, 10, 15, 17, 22, 27, 28, and 29 are 
 60.17  effective the day after final enactment. 
 60.18     Sections 8 and 9 are effective for refunds applied for 
 60.19  after December 31, 1996.  
 60.20     Section 13 is effective for sales made after December 31, 
 60.21  1996.  
 60.22     Section 14 is effective for purchases after June 30, 1998.  
 60.23     Sections 16 and 21 are effective for purchases made after 
 60.24  December 31, 1996. 
 60.25     Sections 12 and 33 are effective for sales made after June 
 60.26  30, 1999. 
 60.27     Sections 11, 19, and 20 are effective for sales made after 
 60.28  June 30, 1996. 
 60.29     Section 18 is effective for sales after June 30, 1996. 
 60.30     Section 23 is effective for transfers of motor vehicles 
 60.31  after June 30, 1996. 
 60.32     Section 24 is effective July 1, 1997. 
 60.33     Section 26 is effective the day after compliance with 
 60.34  Minnesota Statutes, section 645.021, subdivision 3, by the 
 60.35  governing body of the city of Mankato. 
 60.36                             ARTICLE 3 
 61.1                            PROPERTY TAXES 
 61.2      Section 1.  Minnesota Statutes 1994, section 103E.611, 
 61.3   subdivision 7, is amended to read: 
 61.4      Subd. 7.  [COLLECTION AND ENFORCEMENT OF DRAINAGE LIENS.] 
 61.5   The ~~provisions of law that exist relating to the~~ enforcement, 
 61.6   collection ~~of~~, penalty, and interest provisions relating to real 
 61.7   estate taxes ~~are adopted~~ apply to ~~enforce~~ the payment of 
 61.8   drainage liens.  ~~If there is a default, a penalty may not be~~ 
 61.9   ~~added to an installment of principal and interest, but each~~ 
 61.10  ~~defaulted payment, principal, and interest draws interest from~~ 
 61.11  ~~the date of default until paid at the rate determined by the~~ 
 61.12  ~~state court administrator for judgments under section 549.09.~~  
 61.13     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 61.14  124A.03, subdivision 2, is amended to read: 
 61.15     Subd. 2.  [REFERENDUM REVENUE.] (a) The revenue authorized 
 61.16  by section 124A.22, subdivision 1, may be increased in the 
 61.17  amount approved by the voters of the district at a referendum 
 61.18  called for the purpose.  The referendum may be called by the 
 61.19  school board or shall be called by the school board upon written 
 61.20  petition of qualified voters of the district.  The referendum 
 61.21  shall be conducted one or two calendar years before the 
 61.22  increased levy authority, if approved, first becomes payable. 
 61.23  Only one election to approve an increase may be held in a 
 61.24  calendar year.  Unless the referendum is conducted by mail under 
 61.25  paragraph (g), the referendum must be held on the first Tuesday 
 61.26  after the first Monday in November.  The ballot shall state the 
 61.27  maximum amount of the increased revenue per actual pupil unit, 
 61.28  the estimated referendum tax rate as a percentage of market 
 61.29  value in the first year it is to be levied, and that the revenue 
 61.30  shall be used to finance school operations.  The ballot may 
 61.31  state that existing referendum levy authority is expiring.  In 
 61.32  this case, the ballot may also compare the proposed levy 
 61.33  authority to the existing expiring levy authority, and express 
 61.34  the proposed increase as the amount, if any, over the expiring 
 61.35  referendum levy authority.  The ballot shall designate the 
 61.36  specific number of years, not to exceed ten, for which the 
 62.1   referendum authorization shall apply.  The notice required under 
 62.2   section 275.60 may be modified to read, in cases of renewing 
 62.3   existing levies: 
 62.4      "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
 62.5      FOR A PROPERTY TAX INCREASE." 
 62.6      The ballot may contain a textual portion with the 
 62.7   information required in this subdivision and a question stating 
 62.8   substantially the following:  
 62.9      "Shall the increase in the revenue proposed by (petition 
 62.10  to) the board of ........., School District No. .., be approved?"
 62.11     If approved, an amount equal to the approved revenue per 
 62.12  actual pupil unit times the actual pupil units for the school 
 62.13  year beginning in the year after the levy is certified shall be 
 62.14  authorized for certification for the number of years approved, 
 62.15  if applicable, or until revoked or reduced by the voters of the 
 62.16  district at a subsequent referendum. 
 62.17     (b) The school board shall prepare and deliver by first 
 62.18  class mail at least 15 days but no more than 30 days prior to 
 62.19  the day of the referendum to each taxpayer a notice of the 
 62.20  referendum and the proposed revenue increase.  The school board 
 62.21  need not mail more than one notice to any taxpayer.  For the 
 62.22  purpose of giving mailed notice under this subdivision, owners 
 62.23  shall be those shown to be owners on the records of the county 
 62.24  auditor or, in any county where tax statements are mailed by the 
 62.25  county treasurer, on the records of the county treasurer.  Every 
 62.26  property owner whose name does not appear on the records of the 
 62.27  county auditor or the county treasurer shall be deemed to have 
 62.28  waived this mailed notice unless the owner has requested in 
 62.29  writing that the county auditor or county treasurer, as the case 
 62.30  may be, include the name on the records for this purpose.  The 
 62.31  notice must project the anticipated amount of tax increase in 
 62.32  annual dollars and annual percentage for typical residential 
 62.33  homesteads, agricultural homesteads, apartments, and 
 62.34  commercial-industrial property within the school district. 
 62.35     The notice for a referendum may state that an existing 
 62.36  referendum levy is expiring and project the anticipated amount 
 63.1   of increase over the existing referendum levy, if any, in annual 
 63.2   dollars and annual percentage for typical residential 
 63.3   homesteads, agricultural homesteads, apartments, and 
 63.4   commercial-industrial property within the school district. 
 63.5      The notice must include the following statement:  "Passage 
 63.6   of this referendum will result in an increase in your property 
 63.7   taxes."  However, in cases of renewing existing levies, the 
 63.8   notice may include the following statement:  "Passage of this 
 63.9   referendum may result in an increase in your property taxes." 
 63.10     (c) A referendum on the question of revoking or reducing 
 63.11  the increased revenue amount authorized pursuant to paragraph 
 63.12  (a) may be called by the school board and shall be called by the 
 63.13  school board upon the written petition of qualified voters of 
 63.14  the district.  A referendum to revoke or reduce the levy amount 
 63.15  must be based upon the dollar amount, local tax rate, or amount 
 63.16  per actual pupil unit, that was stated to be the basis for the 
 63.17  initial authorization.  Revenue approved by the voters of the 
 63.18  district pursuant to paragraph (a) must be received at least 
 63.19  once before it is subject to a referendum on its revocation or 
 63.20  reduction for subsequent years.  Only one revocation or 
 63.21  reduction referendum may be held to revoke or reduce referendum 
 63.22  revenue for any specific year and for years thereafter. 
 63.23     (d) A petition authorized by paragraph (a) or (c) shall be 
 63.24  effective if signed by a number of qualified voters in excess of 
 63.25  15 percent of the registered voters of the school district on 
 63.26  the day the petition is filed with the school board.  A 
 63.27  referendum invoked by petition shall be held on the date 
 63.28  specified in paragraph (a). 
 63.29     (e) The approval of 50 percent plus one of those voting on 
 63.30  the question is required to pass a referendum authorized by this 
 63.31  subdivision. 
 63.32     (f) At least 15 days prior to the day of the referendum, 
 63.33  the district shall submit a copy of the notice required under 
 63.34  paragraph (b) to the commissioner of children, families, and 
 63.35  learning and to the county auditor of each county in which the 
 63.36  school district is located.  Within 15 days after the results of 
 64.1   the referendum have been certified by the school board, or in 
 64.2   the case of a recount, the certification of the results of the 
 64.3   recount by the canvassing board, the district shall notify the 
 64.4   commissioner of children, families, and learning of the results 
 64.5   of the referendum. 
 64.6      (g) Except for a referendum held under subdivision 2b, any 
 64.7   referendum under this section held on a day other than the first 
 64.8   Tuesday after the first Monday in November must be conducted by 
 64.9   mail in accordance with section 204B.46.  Notwithstanding 
 64.10  paragraph (b) to the contrary, in the case of a referendum 
 64.11  conducted by mail under this paragraph, the notice required by 
 64.12  paragraph (b) shall be prepared and delivered by first class 
 64.13  mail at least 20 days before the referendum. 
 64.14     Sec. 3.  Minnesota Statutes 1994, section 216B.16, is 
 64.15  amended by adding a subdivision to read: 
 64.16     Subd. 6d.  [WIND ENERGY; PROPERTY TAX.] The commission 
 64.17  shall require a public utility that is purchasing electricity 
 64.18  from a wind generation facility installed after January 1, 1991, 
 64.19  and by December 31, 2002, to either (i) pay all property taxes 
 64.20  on the facility directly to the county treasurer of the county 
 64.21  in which the facility is located, or (ii) pay to the owner of 
 64.22  the facility the amount of property taxes due on the facility at 
 64.23  least 15 days prior to the due dates under sections 277.01 and 
 64.24  279.01.  If for any reason the public utility does not pay the 
 64.25  property tax on wind generation facilities installed between 
 64.26  January 1, 1991, and December 31, 2002, the tax provided in 
 64.27  Minnesota Statutes 1995 Supplement, section 272.02, subdivision 
 64.28  1, clause (21), shall remain in effect.  The commission shall 
 64.29  permit a public utility that is purchasing electricity from a 
 64.30  wind generation facility installed after January 1, 1991, and by 
 64.31  December 31, 2002, to recover in the public utility's rates all 
 64.32  property tax payments made directly to the county or to the 
 64.33  owner of the facility as provided in this subdivision. 
 64.34     Sec. 4.  Minnesota Statutes 1994, section 270.07, 
 64.35  subdivision 1, is amended to read: 
 64.36     Subdivision 1.  [POWERS OF COMMISSIONER; APPLICATION FOR 
 65.1   ABATEMENT; ORDERS.] (a) The commissioner of revenue shall 
 65.2   prescribe the form of all blanks and books required under this 
 65.3   chapter and shall hear and determine all matters of grievance 
 65.4   relating to taxation.  Except for matters delegated to the 
 65.5   various boards of county commissioners under section 375.192, 
 65.6   and except as otherwise provided by law, the commissioner shall 
 65.7   have power to grant such reduction or abatement of net tax 
 65.8   capacities or taxes and of any costs, penalties or interest 
 65.9   thereon as the commissioner may deem just and equitable, and to 
 65.10  order the refundment, in whole or in part, of any taxes, costs, 
 65.11  penalties or interest thereon which have been erroneously or 
 65.12  unjustly paid.  Application therefor shall be submitted with a 
 65.13  statement of facts in the case and the favorable recommendation 
 65.14  of the county board or of the board of abatement of any city 
 65.15  where any such board exists, and the county auditor of the 
 65.16  county wherein such tax was levied or paid. In the case of taxes 
 65.17  other than gross earnings taxes, the order may be made only on 
 65.18  application and approval as provided in this paragraph.  No 
 65.19  reduction, abatement, or refundment of any special assessments 
 65.20  made or levied by any municipality for local improvements shall 
 65.21  be made unless it is also approved by the board of review or 
 65.22  similar taxing authority of such municipality. 
 65.23     (b) The commissioner has the power to grant reductions or 
 65.24  abatements of gross earnings tax.  An application for reduction 
 65.25  of gross earnings taxes may be made directly to the commissioner 
 65.26  without the favorable action of the county board and county 
 65.27  auditor.  The commissioner shall direct that any gross earnings 
 65.28  taxes that may have been erroneously or unjustly paid be applied 
 65.29  against unpaid taxes due from the applicant. 
 65.30     (c) The commissioner shall forward to the county auditor a 
 65.31  copy of the order made by the commissioner in all cases in which 
 65.32  the approval of the county board is required. 
 65.33     (d) The commissioner may refer any question that may arise 
 65.34  in reference to the true construction of this chapter to the 
 65.35  attorney general, and the decision thereon shall be in force and 
 65.36  effect until annulled by the judgment of a court of competent 
 66.1   jurisdiction.  
 66.2      (e) The commissioner may by written order abate, reduce, or 
 66.3   refund any penalty or interest imposed by any law relating to 
 66.4   taxation, if in the commissioner's opinion the failure to timely 
 66.5   pay the tax or failure to timely file the return is due to 
 66.6   reasonable cause.  The order shall be made on application of the 
 66.7   taxpayer to the commissioner. 
 66.8      (f) If an order issued under this subdivision is for an 
 66.9   abatement, reduction, or refund of over $5,000, it shall be 
 66.10  valid only if approved in writing by the attorney general. 
 66.11     (g) An appeal may not be taken to the tax court from any 
 66.12  order of the commissioner of revenue made in the exercise of the 
 66.13  discretionary authority granted in paragraph (a) with respect to 
 66.14  the reduction or abatement of real or personal property taxes in 
 66.15  response to a taxpayer's application for an abatement, 
 66.16  reduction, or refund of taxes, net tax capacities, costs, 
 66.17  penalties, or interest. 
 66.18     Sec. 5.  Minnesota Statutes 1995 Supplement, section 
 66.19  272.02, subdivision 1, is amended to read: 
 66.20     Subdivision 1.  All property described in this section to 
 66.21  the extent herein limited shall be exempt from taxation: 
 66.22     (1) All public burying grounds. 
 66.23     (2) All public schoolhouses. 
 66.24     (3) All public hospitals. 
 66.25     (4) All academies, colleges, and universities, and all 
 66.26  seminaries of learning. 
 66.27     (5) All churches, church property, and houses of worship. 
 66.28     (6) Institutions of purely public charity except parcels of 
 66.29  property containing structures and the structures described in 
 66.30  section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 
 66.31  and (3), or paragraph (d), other than those that qualify for 
 66.32  exemption under clause (25). 
 66.33     (7) All public property exclusively used for any public 
 66.34  purpose. 
 66.35     (8) Except for the taxable personal property enumerated 
 66.36  below, all personal property and the property described in 
 67.1   section 272.03, subdivision 1, paragraphs (c) and (d), shall be 
 67.2   exempt.  
 67.3      The following personal property shall be taxable:  
 67.4      (a) personal property which is part of an electric 
 67.5   generating, transmission, or distribution system or a pipeline 
 67.6   system transporting or distributing water, gas, crude oil, or 
 67.7   petroleum products or mains and pipes used in the distribution 
 67.8   of steam or hot or chilled water for heating or cooling 
 67.9   buildings and structures; 
 67.10     (b) railroad docks and wharves which are part of the 
 67.11  operating property of a railroad company as defined in section 
 67.12  270.80; 
 67.13     (c) personal property defined in section 272.03, 
 67.14  subdivision 2, clause (3); 
 67.15     (d) leasehold or other personal property interests which 
 67.16  are taxed pursuant to section 272.01, subdivision 2; 273.124, 
 67.17  subdivision 7; or 273.19, subdivision 1; or any other law 
 67.18  providing the property is taxable as if the lessee or user were 
 67.19  the fee owner; 
 67.20     (e) manufactured homes and sectional structures, including 
 67.21  storage sheds, decks, and similar removable improvements 
 67.22  constructed on the site of a manufactured home, sectional 
 67.23  structure, park trailer or travel trailer as provided in section 
 67.24  273.125, subdivision 8, paragraph (f); and 
 67.25     (f) flight property as defined in section 270.071.  
 67.26     (9) Personal property used primarily for the abatement and 
 67.27  control of air, water, or land pollution to the extent that it 
 67.28  is so used, and real property which is used primarily for 
 67.29  abatement and control of air, water, or land pollution as part 
 67.30  of an agricultural operation, as a part of a centralized 
 67.31  treatment and recovery facility operating under a permit issued 
 67.32  by the Minnesota pollution control agency pursuant to chapters 
 67.33  115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
 67.34  and 7045.0020 to 7045.1260, as a wastewater treatment facility 
 67.35  and for the treatment, recovery, and stabilization of metals, 
 67.36  oils, chemicals, water, sludges, or inorganic materials from 
 68.1   hazardous industrial wastes, or as part of an electric 
 68.2   generation system.  For purposes of this clause, personal 
 68.3   property includes ponderous machinery and equipment used in a 
 68.4   business or production activity that at common law is considered 
 68.5   real property. 
 68.6      Any taxpayer requesting exemption of all or a portion of 
 68.7   any real property or any equipment or device, or part thereof, 
 68.8   operated primarily for the control or abatement of air or water 
 68.9   pollution shall file an application with the commissioner of 
 68.10  revenue.  The equipment or device shall meet standards, rules, 
 68.11  or criteria prescribed by the Minnesota pollution control 
 68.12  agency, and must be installed or operated in accordance with a 
 68.13  permit or order issued by that agency.  The Minnesota pollution 
 68.14  control agency shall upon request of the commissioner furnish 
 68.15  information or advice to the commissioner.  On determining that 
 68.16  property qualifies for exemption, the commissioner shall issue 
 68.17  an order exempting the property from taxation.  The equipment or 
 68.18  device shall continue to be exempt from taxation as long as the 
 68.19  permit issued by the Minnesota pollution control agency remains 
 68.20  in effect. 
 68.21     (10) Wetlands.  For purposes of this subdivision, 
 68.22  "wetlands" means:  (i) land described in section 103G.005, 
 68.23  subdivision 18; (ii) land which is mostly under water, produces 
 68.24  little if any income, and has no use except for wildlife or 
 68.25  water conservation purposes, provided it is preserved in its 
 68.26  natural condition and drainage of it would be legal, feasible, 
 68.27  and economically practical for the production of livestock, 
 68.28  dairy animals, poultry, fruit, vegetables, forage and grains, 
 68.29  except wild rice; or (iii) land in a wetland preservation area 
 68.30  under sections 103F.612 to 103F.616.  "Wetlands" under items (i) 
 68.31  and (ii) include adjacent land which is not suitable for 
 68.32  agricultural purposes due to the presence of the wetlands, but 
 68.33  do not include woody swamps containing shrubs or trees, wet 
 68.34  meadows, meandered water, streams, rivers, and floodplains or 
 68.35  river bottoms.  Exemption of wetlands from taxation pursuant to 
 68.36  this section shall not grant the public any additional or 
 69.1   greater right of access to the wetlands or diminish any right of 
 69.2   ownership to the wetlands. 
 69.3      (11) Native prairie.  The commissioner of the department of
 69.4   natural resources shall determine lands in the state which are 
 69.5   native prairie and shall notify the county assessor of each 
 69.6   county in which the lands are located.  Pasture land used for 
 69.7   livestock grazing purposes shall not be considered native 
 69.8   prairie for the purposes of this clause.  Upon receipt of an 
 69.9   application for the exemption provided in this clause for lands 
 69.10  for which the assessor has no determination from the 
 69.11  commissioner of natural resources, the assessor shall refer the 
 69.12  application to the commissioner of natural resources who shall 
 69.13  determine within 30 days whether the land is native prairie and 
 69.14  notify the county assessor of the decision.  Exemption of native 
 69.15  prairie pursuant to this clause shall not grant the public any 
 69.16  additional or greater right of access to the native prairie or 
 69.17  diminish any right of ownership to it. 
 69.18     (12) Property used in a continuous program to provide 
 69.19  emergency shelter for victims of domestic abuse, provided the 
 69.20  organization that owns and sponsors the shelter is exempt from 
 69.21  federal income taxation pursuant to section 501(c)(3) of the 
 69.22  Internal Revenue Code of 1986, as amended through December 31, 
 69.23  1992, notwithstanding the fact that the sponsoring organization 
 69.24  receives funding under section 8 of the United States Housing 
 69.25  Act of 1937, as amended. 
 69.26     (13) If approved by the governing body of the municipality 
 69.27  in which the property is located, property not exceeding one 
 69.28  acre which is owned and operated by any senior citizen group or 
 69.29  association of groups that in general limits membership to 
 69.30  persons age 55 or older and is organized and operated 
 69.31  exclusively for pleasure, recreation, and other nonprofit 
 69.32  purposes, no part of the net earnings of which inures to the 
 69.33  benefit of any private shareholders; provided the property is 
 69.34  used primarily as a clubhouse, meeting facility, or recreational 
 69.35  facility by the group or association and the property is not 
 69.36  used for residential purposes on either a temporary or permanent 
 70.1   basis. 
 70.2      (14) To the extent provided by section 295.44, real and 
 70.3   personal property used or to be used primarily for the 
 70.4   production of hydroelectric or hydromechanical power on a site 
 70.5   owned by the state or a local governmental unit which is 
 70.6   developed and operated pursuant to the provisions of section 
 70.7   103G.535. 
 70.8      (15) If approved by the governing body of the municipality 
 70.9   in which the property is located, and if construction is 
 70.10  commenced after June 30, 1983:  
 70.11     (a) a "direct satellite broadcasting facility" operated by 
 70.12  a corporation licensed by the federal communications commission 
 70.13  to provide direct satellite broadcasting services using direct 
 70.14  broadcast satellites operating in the 12-ghz. band; and 
 70.15     (b) a "fixed satellite regional or national program service 
 70.16  facility" operated by a corporation licensed by the federal 
 70.17  communications commission to provide fixed satellite-transmitted 
 70.18  regularly scheduled broadcasting services using satellites 
 70.19  operating in the 6-ghz. band. 
 70.20  An exemption provided by clause (15) shall apply for a period 
 70.21  not to exceed five years.  When the facility no longer qualifies 
 70.22  for exemption, it shall be placed on the assessment rolls as 
 70.23  provided in subdivision 4.  Before approving a tax exemption 
 70.24  pursuant to this paragraph, the governing body of the 
 70.25  municipality shall provide an opportunity to the members of the 
 70.26  county board of commissioners of the county in which the 
 70.27  facility is proposed to be located and the members of the school 
 70.28  board of the school district in which the facility is proposed 
 70.29  to be located to meet with the governing body.  The governing 
 70.30  body shall present to the members of those boards its estimate 
 70.31  of the fiscal impact of the proposed property tax exemption.  
 70.32  The tax exemption shall not be approved by the governing body 
 70.33  until the county board of commissioners has presented its 
 70.34  written comment on the proposal to the governing body or 30 days 
 70.35  have passed from the date of the transmittal by the governing 
 70.36  body to the board of the information on the fiscal impact, 
 71.1   whichever occurs first. 
 71.2      (16) Real and personal property owned and operated by a 
 71.3   private, nonprofit corporation exempt from federal income 
 71.4   taxation pursuant to United States Code, title 26, section 
 71.5   501(c)(3), primarily used in the generation and distribution of 
 71.6   hot water for heating buildings and structures.  
 71.7      (17) Notwithstanding section 273.19, state lands that are 
 71.8   leased from the department of natural resources under section 
 71.9   92.46. 
 71.10     (18) Electric power distribution lines and their 
 71.11  attachments and appurtenances, that are used primarily for 
 71.12  supplying electricity to farmers at retail.  
 71.13     (19) Transitional housing facilities.  "Transitional 
 71.14  housing facility" means a facility that meets the following 
 71.15  requirements.  (i) It provides temporary housing to individuals, 
 71.16  couples, or families.  (ii) It has the purpose of reuniting 
 71.17  families and enabling parents or individuals to obtain 
 71.18  self-sufficiency, advance their education, get job training, or 
 71.19  become employed in jobs that provide a living wage.  (iii) It 
 71.20  provides support services such as child care, work readiness 
 71.21  training, and career development counseling; and a 
 71.22  self-sufficiency program with periodic monitoring of each 
 71.23  resident's progress in completing the program's goals.  (iv) It 
 71.24  provides services to a resident of the facility for at least 
 71.25  three months but no longer than three years, except residents 
 71.26  enrolled in an educational or vocational institution or job 
 71.27  training program.  These residents may receive services during 
 71.28  the time they are enrolled but in no event longer than four 
 71.29  years.  (v) It is owned and operated or under lease from a unit 
 71.30  of government or governmental agency under a property 
 71.31  disposition program and operated by one or more organizations 
 71.32  exempt from federal income tax under section 501(c)(3) of the 
 71.33  Internal Revenue Code of 1986, as amended through December 31, 
 71.34  1992.  This exemption applies notwithstanding the fact that the 
 71.35  sponsoring organization receives financing by a direct federal 
 71.36  loan or federally insured loan or a loan made by the Minnesota 
 72.1   housing finance agency under the provisions of either Title II 
 72.2   of the National Housing Act or the Minnesota housing finance 
 72.3   agency law of 1971 or rules promulgated by the agency pursuant 
 72.4   to it, and notwithstanding the fact that the sponsoring 
 72.5   organization receives funding under Section 8 of the United 
 72.6   States Housing Act of 1937, as amended. 
 72.7      (20) Real and personal property, including leasehold or 
 72.8   other personal property interests, owned and operated by a 
 72.9   corporation if more than 50 percent of the total voting power of 
 72.10  the stock of the corporation is owned collectively by:  (i) the 
 72.11  board of regents of the University of Minnesota, (ii) the 
 72.12  University of Minnesota Foundation, an organization exempt from 
 72.13  federal income taxation under section 501(c)(3) of the Internal 
 72.14  Revenue Code of 1986, as amended through December 31, 1992, and 
 72.15  (iii) a corporation organized under chapter 317A, which by its 
 72.16  articles of incorporation is prohibited from providing pecuniary 
 72.17  gain to any person or entity other than the regents of the 
 72.18  University of Minnesota; which property is used primarily to 
 72.19  manage or provide goods, services, or facilities utilizing or 
 72.20  relating to large-scale advanced scientific computing resources 
 72.21  to the regents of the University of Minnesota and others. 
 72.22     (21)(a) Small scale wind energy conversion systems~~, as~~ 
 72.23  ~~defined in section 216C.06, subdivision 12,~~ installed after 
 72.24  January 1, 1991, and ~~before January 2, 1995, and~~ used as an 
 72.25  electric power source~~,~~ are exempt.  ~~(b)~~ "Small scale wind energy 
 72.26  conversion systems" are wind energy conversion systems, as 
 72.27  defined in section 216C.06, subdivision 12, ~~installed after~~ 
 72.28  ~~January 1, 1995,~~ including the foundation or support pad, which 
 72.29  are (i) used as an electric power source; (ii) located within 
 72.30  one county and owned by the same owner; and (iii) produce two 
 72.31  megawatts or less of electricity as measured by nameplate 
 72.32  ratings~~, are exempt~~. 
 72.33     ~~(c)~~ (b) Medium scale wind energy conversion systems~~, as~~ 
 72.34  ~~defined in section 216C.06, subdivision 12,~~ installed after 
 72.35  January 1, ~~1995~~ 1991, ~~and used as an electric power source but~~ 
 72.36  ~~not exempt under item (b),~~ are treated as follows:  (i) the 
 73.1   foundation and support pad are taxable; (ii) the associated 
 73.2   supporting and protective structures are exempt for the first 
 73.3   five assessment years after they have been constructed, and 
 73.4   thereafter, 30 percent of the market value of the associated 
 73.5   supporting and protective structures are taxable; and (iii) the 
 73.6   turbines, blades, transformers, and its related equipment, are 
 73.7   exempt.  "Medium scale wind energy conversion systems" are wind 
 73.8   energy conversion systems as defined in section 216C.06, 
 73.9   subdivision 12, including the foundation or support pad, which 
 73.10  are:  (i) used as an electric power source; (ii) located within 
 73.11  one county and owned by the same owner; and (iii) produce more 
 73.12  than two but equal to or less than 12 megawatts of energy as 
 73.13  measured by nameplate ratings. 
 73.14     (c) Large scale wind energy conversion systems installed 
 73.15  after January 1, 1991, are treated as follows:  40 percent of 
 73.16  the market value of all property is taxable, including (i) the 
 73.17  foundation and support pad; (ii) the associated supporting and 
 73.18  protective structures; and (iii) the turbines, blades, 
 73.19  transformers, and its related equipment.  "Large scale wind 
 73.20  energy conversion systems" are wind energy conversion systems as 
 73.21  defined in section 216C.06, subdivision 12, including the 
 73.22  foundation or support pad, which are:  (i) used as an electric 
 73.23  power source; and (ii) produce more than 12 megawatts of energy 
 73.24  as measured by nameplate ratings. 
 73.25     (22) Containment tanks, cache basins, and that portion of 
 73.26  the structure needed for the containment facility used to 
 73.27  confine agricultural chemicals as defined in section 18D.01, 
 73.28  subdivision 3, as required by the commissioner of agriculture 
 73.29  under chapter 18B or 18C. 
 73.30     (23) Photovoltaic devices, as defined in section 216C.06, 
 73.31  subdivision 13, installed after January 1, 1992, and used to 
 73.32  produce or store electric power. 
 73.33     (24) Real and personal property owned and operated by a 
 73.34  private, nonprofit corporation exempt from federal income 
 73.35  taxation pursuant to United States Code, title 26, section 
 73.36  501(c)(3), primarily used for an ice arena or ice rink, and used 
 74.1   primarily for youth and high school programs. 
 74.2      (25) A structure that is situated on real property that is 
 74.3   used for: 
 74.4      (i) housing for the elderly or for low- and moderate-income 
 74.5   families as defined in Title II of the National Housing Act, as 
 74.6   amended through December 31, 1990, and funded by a direct 
 74.7   federal loan or federally insured loan made pursuant to Title II 
 74.8   of the act; or 
 74.9      (ii) housing lower income families or elderly or 
 74.10  handicapped persons, as defined in Section 8 of the United 
 74.11  States Housing Act of 1937, as amended. 
 74.12     In order for a structure to be exempt under (i) or (ii), it 
 74.13  must also meet each of the following criteria: 
 74.14     (A) is owned by an entity which is operated as a nonprofit 
 74.15  corporation organized under chapter 317A; 
 74.16     (B) is owned by an entity which has not entered into a 
 74.17  housing assistance payments contract under Section 8 of the 
 74.18  United States Housing Act of 1937, or, if the entity which owns 
 74.19  the structure has entered into a housing assistance payments 
 74.20  contract under Section 8 of the United States Housing Act of 
 74.21  1937, the contract provides assistance for less than 90 percent 
 74.22  of the dwelling units in the structure, excluding dwelling units 
 74.23  intended for management or maintenance personnel; 
 74.24     (C) operates an on-site congregate dining program in which 
 74.25  participation by residents is mandatory, and provides assisted 
 74.26  living or similar social and physical support services for 
 74.27  residents; and 
 74.28     (D) was not assessed and did not pay tax under chapter 273 
 74.29  prior to the 1991 levy, while meeting the other conditions of 
 74.30  this clause. 
 74.31     An exemption under this clause remains in effect for taxes 
 74.32  levied in each year or partial year of the term of its permanent 
 74.33  financing. 
 74.34     (26) Real and personal property that is located in the 
 74.35  Superior National Forest, and owned or leased and operated by a 
 74.36  nonprofit organization that is exempt from federal income 
 75.1   taxation under section 501(c)(3) of the Internal Revenue Code of 
 75.2   1986, as amended through December 31, 1992, and primarily used 
 75.3   to provide recreational opportunities for disabled veterans and 
 75.4   their families. 
 75.5      (27) Manure pits and appurtenances, which may include 
 75.6   slatted floors and pipes, installed or operated in accordance 
 75.7   with a permit, order, or certificate of compliance issued by the 
 75.8   Minnesota pollution control agency.  The exemption shall 
 75.9   continue for as long as the permit, order, or certificate issued 
 75.10  by the Minnesota pollution control agency remains in effect. 
 75.11     (28) Notwithstanding clause (8), item (a), attached 
 75.12  machinery and other personal property which is part of a 
 75.13  facility containing a cogeneration system as described in 
 75.14  section 216B.166, subdivision 2, paragraph (a), if the 
 75.15  cogeneration system has met the following criteria:  (i) the 
 75.16  system utilizes natural gas as a primary fuel and the 
 75.17  cogenerated steam initially replaces steam generated from 
 75.18  existing thermal boilers utilizing coal; (ii) the facility 
 75.19  developer is selected as a result of a procurement process 
 75.20  ordered by the public utilities commission; and (iii) 
 75.21  construction of the facility is commenced after July 1, 1994, 
 75.22  and before July 1, 1997. 
 75.23     (29) Real property acquired by a home rule charter city, 
 75.24  statutory city, county, town, or school district under a lease 
 75.25  purchase agreement or an installment purchase contract during 
 75.26  the term of the lease purchase agreement as long as and to the 
 75.27  extent that the property is used by the city, county, town, or 
 75.28  school district and devoted to a public use and to the extent it 
 75.29  is not subleased to any private individual, entity, association, 
 75.30  or corporation in connection with a business or enterprise 
 75.31  operated for profit.  
 75.32     Sec. 6.  [272.0211] [SLIDING SCALE MARKET VALUE EXCLUSION 
 75.33  FOR ELECTRIC POWER GENERATION EFFICIENCY.] 
 75.34     Subdivision 1.  [EFFICIENCY DETERMINATION AND 
 75.35  CERTIFICATION.] An owner or operator of a new or existing 
 75.36  electric power generation facility, excluding wind energy 
 76.1   conversion systems, may apply to the commissioner of revenue for 
 76.2   a market value exclusion on the property as provided for in this 
 76.3   section.  This exclusion shall apply only to the market value of 
 76.4   the equipment of the facility, and shall not apply to the 
 76.5   structures and the land upon which the facility is located.  The 
 76.6   commissioner of revenue shall prescribe the forms and procedures 
 76.7   for this application.  Upon receiving the application, the 
 76.8   commissioner of revenue shall request the commissioner of public 
 76.9   service to make a determination of the efficiency of the 
 76.10  applicant's electric power generation facility.  In calculating 
 76.11  the efficiency of a facility, the commissioner of public service 
 76.12  shall use a definition of efficiency which calculates efficiency 
 76.13  as the sum of: 
 76.14     (1) the useful electrical power output; plus 
 76.15     (2) the useful thermal energy output; plus 
 76.16     (3) the fuel energy of the useful chemical products, 
 76.17  expressed as a percentage. 
 76.18     The commissioner must include in this formula the energy 
 76.19  used in any on-site preparation of materials necessary to 
 76.20  convert the materials into the fuel used to generate 
 76.21  electricity, such as a process to gasify petroleum coke. The 
 76.22  commissioner shall use the high heating value for all substances 
 76.23  in the commissioner's efficiency calculations.  The applicant 
 76.24  shall provide the commissioner of public service with whatever 
 76.25  information the commissioner deems necessary to make the 
 76.26  determination.  Within 30 days of the receipt of the necessary 
 76.27  information, the commissioner of public service shall certify 
 76.28  the findings of the efficiency determination to the commissioner 
 76.29  of revenue and to the applicant.  The commissioner of public 
 76.30  service shall determine the efficiency of the facility and 
 76.31  certify the findings of that determination to the commissioner 
 76.32  of revenue every two years thereafter from the date of the 
 76.33  original certification. 
 76.34     Subd. 2.  [SLIDING SCALE EXCLUSION.] Based upon the 
 76.35  efficiency determination provided by the commissioner of public 
 76.36  service as described in subdivision 1, the commissioner of 
 77.1   revenue shall subtract five percent of the market value of the 
 77.2   qualifying property for each percent that the efficiency of the 
 77.3   specific facility, as determined by the commissioner of public 
 77.4   service, is above 35 percent.  The reduction in market value 
 77.5   shall be reflected in the market value of the facility beginning 
 77.6   with the assessment year immediately following the 
 77.7   determination.  For a facility that has its market value 
 77.8   assessed by the county in which the facility is located, the 
 77.9   commissioner of revenue shall certify to the assessor of that 
 77.10  county the percentage of the market value of the facility to be 
 77.11  excluded. 
 77.12     Subd. 3.  [REVOCATION.] (a) The commissioner of revenue 
 77.13  shall revoke the market value reduction under this section, if: 
 77.14     (1) the applicant exercises its right under federal law to 
 77.15  require an electric utility to purchase power generated by the 
 77.16  facility; and 
 77.17     (2) the electric utility notifies the commissioner that the 
 77.18  applicant has exercised its right to require purchase of power. 
 77.19     The revocation applies for the first assessment year after 
 77.20  notification of the commissioner. 
 77.21     (b) For purposes of this subdivision, the following terms 
 77.22  mean: 
 77.23     (1) "Federal law" is the federal Public Utility Regulatory 
 77.24  Policies Act, United States Code, title 16, section 824a-3, and 
 77.25  regulations promulgated under that section, including Code of 
 77.26  Federal Regulations, title 18, sections 929.303 and 929.304. 
 77.27     (2) "Electric utility" is an electric utility as defined in 
 77.28  section 216B.38, subdivision 5. 
 77.29     Sec. 7.  Minnesota Statutes 1994, section 273.02, 
 77.30  subdivision 3, is amended to read: 
 77.31     Subd. 3.  [WHAT RIGHTS NOT AFFECTED.] Nothing in 
 77.32  subdivisions 1 to 3 shall affect any rights in undervalued or 
 77.33  erroneously classified property, acquired for value in good 
 77.34  faith prior to the correction of the net tax capacity thereof by 
 77.35  the county auditor as provided in this section.  Any person 
 77.36  whose rights are adversely affected by any action of the county 
 78.1   auditor as provided in this subdivision may apply for a 
 78.2   reduction of the net tax capacity under the provisions of 
 78.3   section ~~270.07, relating to the powers of the commissioner of~~ 
 78.4   ~~revenue~~ 375.192. 
 78.5      Sec. 8.  Minnesota Statutes 1994, section 273.11, 
 78.6   subdivision 1a, is amended to read: 
 78.7      Subd. 1a.  [LIMITED MARKET VALUE.] For assessments of 
 78.8   property for the purpose of determining taxes to be levied in 
 78.9   1997, payable in 1998, in the case of all property classified as 
 78.10  agricultural homestead or nonhomestead, residential homestead or 
 78.11  nonhomestead, or noncommercial seasonal recreational 
 78.12  residential, the assessor shall compare the value with that 
 78.13  determined in the preceding assessment.  Notwithstanding the 
 78.14  provisions of section 273.17 the amount of the increase entered 
 78.15  in the current assessment shall not exceed ~~the greater of (1)~~ 
 78.16  ten percent of the value in the preceding assessment, or ~~(2)~~ 
 78.17  ~~one-third of the difference between the current assessment and~~ 
 78.18  ~~the preceding assessment.~~ one-half of the total amount of the 
 78.19  increase in valuation whichever is greater.  The excess together 
 78.20  with any increase of value which has occurred since the previous 
 78.21  assessment, shall be added to the market value of the property 
 78.22  for the purposes of determining taxes to be levied in 1998, 
 78.23  payable in 1999.  In all subsequent assessments, all real 
 78.24  property shall be valued at its full market value.  This 
 78.25  limitation shall not apply to increases in value due to 
 78.26  improvements.  For purposes of this subdivision, the term 
 78.27  "assessment" means the value prior to any exclusion under 
 78.28  subdivision 16. 
 78.29     ~~The provisions of this subdivision shall be in effect only~~ 
 78.30  ~~for assessment years 1993 through 1997.~~ 
 78.31     For purposes of the assessment/sales ratio study conducted 
 78.32  under section 124.2131, and the computation of state aids paid 
 78.33  under chapters 124, 124A, and 477A, market values and net tax 
 78.34  capacities determined under this subdivision and subdivision 16, 
 78.35  shall be used. 
 78.36     Sec. 9.  Minnesota Statutes 1995 Supplement, section 
 79.1   273.11, subdivision 16, is amended to read: 
 79.2      Subd. 16.  [VALUATION EXCLUSION FOR CERTAIN IMPROVEMENTS.] 
 79.3   Improvements to homestead property made before January 2, 2003, 
 79.4   shall be fully or partially excluded from the value of the 
 79.5   property for assessment purposes provided that (1) the house is 
 79.6   at least 35 years old at the time of the improvement and (2) 
 79.7   either 
 79.8      (a) the assessor's estimated market value of the house on 
 79.9   January 2 of the current year is equal to or less than $150,000, 
 79.10  or 
 79.11     (b) if the estimated market value of the house is over 
 79.12  $150,000 market value but is less than $300,000 on January 2 of 
 79.13  the current year, the property qualifies if 
 79.14     (i) it is located in a city or town in which 50 percent or 
 79.15  more of the owner-occupied housing units were constructed before 
 79.16  1960 based upon the 1990 federal census, and 
 79.17     (ii) the city or town's median family income based upon the 
 79.18  1990 federal census is less than the statewide median family 
 79.19  income based upon the 1990 federal census, or 
 79.20     (c) if the estimated market value of the house is $300,000 
 79.21  or more on January 2 of the current year, the property qualifies 
 79.22  if 
 79.23     (i) it is located in a city or town in which 45 percent or 
 79.24  more of the homes were constructed before 1940 based upon the 
 79.25  1990 federal census, and 
 79.26     (ii) it is located in a city or town in which 45 percent or 
 79.27  more of the housing units were rental based upon the 1990 
 79.28  federal census, and 
 79.29     (iii) the city or town's median value of owner occupied 
 79.30  housing units based upon the 1990 federal census is less than 
 79.31  the statewide median value of owner occupied housing units based 
 79.32  upon the 1990 federal census, and 
 79.33     (iv) the city or town's median family income based upon the 
 79.34  1990 federal census is less than the statewide median family 
 79.35  income based upon the 1990 federal census. 
 79.36     ~~Any house which has an estimated market value of $300,000~~ 
 80.1   ~~or more on January 2 of the current year is not eligible to~~ 
 80.2   ~~receive any property valuation exclusion under this section.~~  
 80.3   For purposes of determining this eligibility, "house" means land 
 80.4   and buildings.  
 80.5      The age of a residence is the number of years that the 
 80.6   residence has existed at its present site.  In the case of an 
 80.7   owner-occupied duplex or triplex, the improvement is eligible 
 80.8   regardless of which portion of the property was improved. 
 80.9      If the property lies in a jurisdiction which is subject to 
 80.10  a building permit process, a building permit must have been 
 80.11  issued prior to commencement of the improvement.  Any 
 80.12  improvement must add at least $1,000 to the value of the 
 80.13  property to be eligible for exclusion under this subdivision.  
 80.14  Only improvements to the structure which is the residence of the 
 80.15  qualifying homesteader or construction of or improvements to no 
 80.16  more than one two-car garage per residence qualify for the 
 80.17  provisions of this subdivision.  If an improvement was begun 
 80.18  between January 2, 1992, and January 2, 1993, any value added 
 80.19  from that improvement for the January 1994 and subsequent 
 80.20  assessments shall qualify for exclusion under this subdivision 
 80.21  provided that a building permit was obtained for the improvement 
 80.22  between January 2, 1992, and January 2, 1993.  Whenever a 
 80.23  building permit is issued for property currently classified as 
 80.24  homestead, the issuing jurisdiction shall notify the property 
 80.25  owner of the possibility of valuation exclusion under this 
 80.26  subdivision.  The assessor shall require an application, 
 80.27  including documentation of the age of the house from the owner, 
 80.28  if unknown by the assessor.  The application may be filed 
 80.29  subsequent to the date of the building permit provided that the 
 80.30  application must be filed ~~prior to July 1 of the assessment year~~ 
 80.31  ~~in which the market value from the qualifying improvement is~~ 
 80.32  ~~added to that property's assessment~~ within three years of the 
 80.33  date the building permit was issued for the improvement.  If the 
 80.34  property lies in a jurisdiction which is not subject to a 
 80.35  building permit process, the application must be filed within 
 80.36  three years of the date the improvement was made.  The assessor 
 81.1   may require proof from the taxpayer of the date the improvement 
 81.2   was made.  Applications must be received prior to July 1 of any 
 81.3   year in order to be effective for taxes payable in the following 
 81.4   year. 
 81.5      ~~After the adjournment of the 1994 county board of~~ 
 81.6   ~~equalization meetings,~~ No exclusion may be granted for an 
 81.7   improvement by a local board of review or county board of 
 81.8   equalization and no abatement of the taxes for qualifying 
 81.9   improvements may be granted by the county board unless (1) a 
 81.10  building permit was issued prior to the commencement of the 
 81.11  improvement if the jurisdiction requires a building permit, and 
 81.12  (2) an application was completed ~~on a timely basis.  No~~ 
 81.13  ~~abatement of the taxes for qualifying improvements may be~~ 
 81.14  ~~granted by a county board unless (1) a building permit was~~ 
 81.15  ~~issued prior to commencement of the improvement if the~~ 
 81.16  ~~jurisdiction requires a building permit, and (2) an application~~ 
 81.17  ~~was completed on a timely basis~~. 
 81.18     The assessor shall note the qualifying value of each 
 81.19  improvement on the property's record, and the sum of those 
 81.20  amounts shall be subtracted from the value of the property in 
 81.21  each year for ten years after the improvement has been made, at 
 81.22  which time an amount equal to 20 percent of the qualifying value 
 81.23  shall be added back in each of the five subsequent assessment 
 81.24  years.  If an application is filed after the first assessment 
 81.25  date at which an improvement could have been subject to the 
 81.26  valuation exclusion under this subdivision, the ten-year period 
 81.27  during which the value is subject to exclusion is reduced by the 
 81.28  number of years that have elapsed since the property would have 
 81.29  qualified initially.  The valuation exclusion shall terminate 
 81.30  whenever (1) the property is sold, or (2) the property is 
 81.31  reclassified to a class which does not qualify for treatment 
 81.32  under this subdivision. Improvements made by an occupant who is 
 81.33  the purchaser of the property under a conditional purchase 
 81.34  contract do not qualify under this subdivision unless the seller 
 81.35  of the property is a governmental entity.  The qualifying value 
 81.36  of the property shall be computed based upon the increase from 
 82.1   that structure's market value as of January 2 preceding the 
 82.2   acquisition of the property by the governmental entity. 
 82.3      The total qualifying value for a homestead may not exceed 
 82.4   $50,000.  The total qualifying value for a homestead with a 
 82.5   house that is less than 70 years old may not exceed $25,000.  
 82.6   The term "qualifying value" means the increase in estimated 
 82.7   market value resulting from the improvement if the improvement 
 82.8   occurs when the house is at least 70 years old, or one-half of 
 82.9   the increase in estimated market value resulting from the 
 82.10  improvement otherwise.  The $25,000 and $50,000 maximum 
 82.11  qualifying value under this subdivision may result from up to 
 82.12  three separate improvements to the homestead.  The application 
 82.13  shall state, in clear language, that if more than three 
 82.14  improvements are made to the qualifying property, a taxpayer may 
 82.15  choose which three improvements are eligible, provided that 
 82.16  after the taxpayer has made the choice and any valuation 
 82.17  attributable to those improvements has been excluded from 
 82.18  taxation, no further changes can be made by the taxpayer. 
 82.19     If 50 percent or more of the square footage of a structure 
 82.20  is voluntarily razed or removed, the valuation increase 
 82.21  attributable to any subsequent improvements to the remaining 
 82.22  structure does not qualify for the exclusion under this 
 82.23  subdivision.  If a structure is unintentionally or accidentally 
 82.24  destroyed by a natural disaster, the property is eligible for an 
 82.25  exclusion under this subdivision provided that the structure was 
 82.26  not completely destroyed.  The qualifying value on property 
 82.27  destroyed by a natural disaster shall be computed based upon the 
 82.28  increase from that structure's market value as determined on 
 82.29  January 2 of the year in which the disaster occurred.  A 
 82.30  property receiving benefits under the homestead disaster 
 82.31  provisions under section 273.123 is not disqualified from 
 82.32  receiving an exclusion under this subdivision.  If any 
 82.33  combination of improvements made to a structure after January 1, 
 82.34  1993, increases the size of the structure by 100 percent or 
 82.35  more, the valuation increase attributable to the portion of the 
 82.36  improvement that causes the structure's size to exceed 100 
 83.1   percent does not qualify for exclusion under this subdivision. 
 83.2      Sec. 10.  Minnesota Statutes 1994, section 273.111, 
 83.3   subdivision 3, is amended to read: 
 83.4      Subd. 3.  (a) Real estate consisting of ten acres or more 
 83.5   or a nursery or greenhouse, and qualifying for classification as 
 83.6   class 1b, 2a, or 2b under section 273.13, subdivision 23, 
 83.7   paragraph (d), shall be entitled to valuation and tax deferment 
 83.8   under this section only if it is actively and exclusively 
 83.9   devoted to agricultural use as defined in subdivision 6 and 
 83.10  either:  
 83.11     (1) is the homestead of the owner, or of a surviving 
 83.12  spouse, child, or sibling of the owner or is real estate which 
 83.13  is farmed with the real estate which contains the homestead 
 83.14  property; or 
 83.15     (2) has been in possession of the applicant, the 
 83.16  applicant's spouse, parent, or sibling, or any combination 
 83.17  thereof, for a period of at least seven years prior to 
 83.18  application for benefits under the provisions of this section, 
 83.19  or is real estate which is farmed with the real estate which 
 83.20  qualifies under this clause and is within two townships or 
 83.21  cities or combination thereof from the qualifying real estate; 
 83.22  or 
 83.23     (3) is the homestead of a shareholder in a family farm 
 83.24  corporation as defined in section 500.24, notwithstanding the 
 83.25  fact that legal title to the real estate may be held in the name 
 83.26  of the family farm corporation; or 
 83.27     (4) is in the possession of a nursery or greenhouse or an 
 83.28  entity owned by a proprietor, partnership, or corporation which 
 83.29  also owns the nursery or greenhouse operations on the parcel or 
 83.30  parcels. 
 83.31     (b) Valuation of real estate under this section is limited 
 83.32  to parcels the ownership of which is in noncorporate entities 
 83.33  except for:  
 83.34     (1) family farm corporations organized pursuant to section 
 83.35  500.24; and 
 83.36     (2) corporations that derive 80 percent or more of their 
 84.1   gross receipts from the wholesale or retail sale of 
 84.2   horticultural or nursery stock.  
 84.3      Corporate entities who previously qualified for tax 
 84.4   deferment pursuant to this section and who continue to otherwise 
 84.5   qualify under subdivisions 3 and 6 for a period of at least 
 84.6   three years following the effective date of Laws 1983, chapter 
 84.7   222, section 8, will not be required to make payment of the 
 84.8   previously deferred taxes, notwithstanding the provisions of 
 84.9   subdivision 9.  ~~Sale of the land prior to the expiration of the~~ 
 84.10  ~~three-year period shall result in payment of deferred taxes as~~ 
 84.11  ~~follows:  sale within the first year requires payment of payable~~ 
 84.12  ~~1980, 1981, and 1982 deferred taxes; sale during the second year~~ 
 84.13  ~~requires payment of payable 1981 and 1982 taxes deferred; and~~ 
 84.14  ~~sale at any time during the third year will require payment of~~ 
 84.15  ~~payable 1983 taxes deferred.  Deferred taxes shall be paid even~~ 
 84.16  ~~if the land qualifies pursuant to subdivision 11a.~~  Special 
 84.17  assessments are payable at the end of the three-year period or 
 84.18  at time of sale, whichever comes first.  
 84.19     (c) Land that previously qualified for tax deferment 
 84.20  pursuant to this section and no longer qualifies because it is 
 84.21  not classified as agricultural land but would otherwise qualify 
 84.22  under subdivisions 3 and 6 for a period of at least three years 
 84.23  will not be required to make payment of the previously deferred 
 84.24  taxes, notwithstanding the provisions of subdivision 9.  Sale of 
 84.25  the land prior to the expiration of the three-year period 
 84.26  requires payment of deferred taxes as follows:  sale in the year 
 84.27  the land no longer qualifies requires payment of the current 
 84.28  year's deferred taxes plus payment of deferred taxes for the two 
 84.29  prior years; sale during the second year the land no longer 
 84.30  qualifies requires payment of the current year's deferred taxes 
 84.31  plus payment of the deferred taxes for the prior year; and sale 
 84.32  during the third year the land no longer qualifies requires 
 84.33  payment of the current year's deferred taxes.  Deferred taxes 
 84.34  shall be paid even if the land qualifies pursuant to subdivision 
 84.35  11a.  When such property is sold or no longer qualifies under 
 84.36  this paragraph, or at the end of the three-year period, 
 85.1   whichever comes first, all deferred special assessments plus 
 85.2   interest are payable in equal installments spread over the time 
 85.3   remaining until the last maturity date of the bonds issued to 
 85.4   finance the improvement for which the assessments were levied.  
 85.5   If the bonds have matured, the deferred special assessments plus 
 85.6   interest are payable within 90 days.  The provisions of section 
 85.7   429.061, subdivision 2, apply to the collection of these 
 85.8   installments.  Penalties are not imposed on any such special 
 85.9   assessments if timely paid. 
 85.10     Sec. 11.  Minnesota Statutes 1994, section 273.111, 
 85.11  subdivision 6, is amended to read: 
 85.12     Subd. 6.  Real property shall be considered to be in 
 85.13  agricultural use provided that annually: 
 85.14     (1) at least 33-1/3 percent of the total family income of 
 85.15  the owner is derived therefrom, or the total value of production 
 85.16  ~~income including rental~~ from the property is ~~$300~~ $600 plus 
 85.17  ~~$10~~ $20 per tillable acre; and 
 85.18     (2) it is devoted to the production for sale of 
 85.19  agricultural products as defined in section 273.13, subdivision 
 85.20  23, paragraph (e). 
 85.21     Slough, wasteland, and woodland contiguous to or surrounded 
 85.22  by land that is entitled to valuation and tax deferment under 
 85.23  this section is considered to be in agricultural use if under 
 85.24  the same ownership and management. 
 85.25     Sec. 12.  Minnesota Statutes 1995 Supplement, section 
 85.26  273.124, subdivision 3, is amended to read: 
 85.27     Subd. 3.  [COOPERATIVES AND CHARITABLE CORPORATIONS; 
 85.28  HOMESTEAD AND OTHER PROPERTY.] (a) When ~~one or more dwellings,~~ 
 85.29  ~~or one or more buildings which each contain several dwelling~~ 
 85.30  ~~units, are~~ property is owned by a corporation or association 
 85.31  organized under chapter 308A, and each person who owns a share 
 85.32  or shares in the corporation or association is entitled to 
 85.33  occupy a ~~dwelling~~ building on the property, or ~~dwelling~~ a unit 
 85.34  ~~in the~~ within a building on the property, the corporation or 
 85.35  association may claim homestead treatment for each dwelling, or 
 85.36  for each unit in the case of a building containing several 
 86.1   dwelling units, ~~for the dwelling~~ or for the part of the value of 
 86.2   the building occupied by a shareholder.  Each ~~dwelling~~ building 
 86.3   or unit must be designated by legal description or number~~, and~~.  
 86.4   The net tax capacity of each ~~dwelling~~ building or unit that 
 86.5   qualifies for assessment as a homestead under this subdivision 
 86.6   must include not more than one-half acre of land, if platted, 
 86.7   nor more than 80 acres if unplatted.  The net tax capacity of 
 86.8   the ~~building or buildings containing several dwelling~~ 
 86.9   ~~units~~ property is the sum of the net tax capacities of each of 
 86.10  the respective buildings or units comprising the ~~building~~ 
 86.11  property, including the net tax capacity of each unit's or 
 86.12  building's proportionate share of the land and any common 
 86.13  buildings.  To qualify for the treatment provided by this 
 86.14  subdivision, the corporation or association must be wholly owned 
 86.15  by persons having a right to occupy a ~~dwelling~~ building or 
 86.16  ~~dwelling~~ unit owned by the corporation or association.  A 
 86.17  charitable corporation organized under the laws of Minnesota and 
 86.18  not otherwise exempt thereunder with no outstanding stock 
 86.19  qualifies for homestead treatment with respect to member 
 86.20  residents of the dwelling units who have purchased and hold 
 86.21  residential participation warrants entitling them to occupy the 
 86.22  units. 
 86.23     (b) To the extent provided in paragraph (a), a cooperative 
 86.24  or corporation organized under chapter 308A may obtain separate 
 86.25  assessment and valuation, and separate property tax statements 
 86.26  for each residential homestead, residential nonhomestead, or for 
 86.27  each seasonal residential recreational building or unit not used 
 86.28  for commercial purposes.  The appropriate class rates under 
 86.29  section 273.13 shall be applicable as if each building or unit 
 86.30  were a separate tax parcel; provided, however, that the tax 
 86.31  parcel which exists at the time the cooperative or corporation 
 86.32  makes application under this subdivision shall be a single 
 86.33  parcel for purposes of property taxes or the enforcement and 
 86.34  collection thereof, other than as provided in paragraph (a) or 
 86.35  (b). 
 86.36     (c) A member of a corporation or association may initially 
 87.1   obtain the separate assessment and valuation and separate 
 87.2   property tax statements, as provided in paragraph (b), by 
 87.3   applying to the assessor by June 30 of the assessment year. 
 87.4      (d) When a building, or dwelling units within a building, 
 87.5   no longer qualify under ~~this subdivision~~ paragraph (a) or (b), 
 87.6   the current owner must notify the assessor within ~~60~~ 30 days.  
 87.7   Failure to notify the assessor within ~~60~~ 30 days shall result in 
 87.8   the loss of benefits under ~~this subdivision~~ paragraph (a) or (b) 
 87.9   for taxes payable in the year that the failure is discovered.  
 87.10  For these purposes, "benefits under ~~this subdivision~~ paragraph 
 87.11  (a) or (b)" means the difference in the net tax capacity of 
 87.12  the building or units which no longer qualify as computed 
 87.13  under ~~this subdivision~~ paragraph (a) or (b) and as computed 
 87.14  under the otherwise applicable law, times the local tax rate 
 87.15  applicable to the building for that taxes payable year.  Upon 
 87.16  discovery of a failure to notify, the assessor shall inform the 
 87.17  auditor of the difference in net tax capacity for the building 
 87.18  or buildings in which units no longer qualify, and the auditor 
 87.19  shall calculate the benefits under ~~this subdivision~~ paragraph 
 87.20  (a) or (b).  Such amount, plus a penalty equal to 100 percent of 
 87.21  that amount, shall then be demanded of the building's owner.  
 87.22  The property owner may appeal the county's determination by 
 87.23  serving copies of a petition for review with county officials as 
 87.24  provided in section 278.01 and filing a proof of service as 
 87.25  provided in section 278.01 with the Minnesota tax court within 
 87.26  60 days of the date of the notice from the county.  The appeal 
 87.27  shall be governed by the tax court procedures provided in 
 87.28  chapter 271, for cases relating to the tax laws as defined in 
 87.29  section 271.01, subdivision 5; disregarding sections 273.125, 
 87.30  subdivision 5, and 278.03, but including section 278.05, 
 87.31  subdivision 2.  If the amount of the benefits under ~~this~~ 
 87.32  ~~subdivision~~ paragraph (a) or (b) and penalty are not paid within 
 87.33  60 days, and if no appeal has been filed, the county auditor 
 87.34  shall certify the amount of the benefit and penalty to the 
 87.35  succeeding year's tax list to be collected as part of the 
 87.36  property taxes on the affected ~~buildings~~ property. 
 88.1      Sec. 13.  Minnesota Statutes 1995 Supplement, section 
 88.2   273.124, subdivision 13, is amended to read: 
 88.3      Subd. 13.  [HOMESTEAD APPLICATION.] (a) A person who meets 
 88.4   the homestead requirements under subdivision 1 must file a 
 88.5   homestead application with the county assessor to initially 
 88.6   obtain homestead classification. 
 88.7      (b) On or before January 2, 1993, each county assessor 
 88.8   shall mail a homestead application to the owner of each parcel 
 88.9   of property within the county which was classified as homestead 
 88.10  for the 1992 assessment year.  The format and contents of a 
 88.11  uniform homestead application shall be prescribed by the 
 88.12  commissioner of revenue.  The commissioner shall consult with 
 88.13  the chairs of the house and senate tax committees on the 
 88.14  contents of the homestead application form.  The application 
 88.15  must clearly inform the taxpayer that this application must be 
 88.16  signed by all owners who occupy the property or by the 
 88.17  qualifying relative and returned to the county assessor in order 
 88.18  for the property to continue receiving homestead treatment.  The 
 88.19  envelope containing the homestead application shall clearly 
 88.20  identify its contents and alert the taxpayer of its necessary 
 88.21  immediate response. 
 88.22     (c) Every property owner applying for homestead 
 88.23  classification must furnish to the county assessor the social 
 88.24  security number of each occupant who is listed as an owner of 
 88.25  the property on the deed of record, the name and address of each 
 88.26  owner who does not occupy the property, and the name and social 
 88.27  security number of each owner's spouse who occupies the 
 88.28  property.  The application must be signed by each owner who 
 88.29  occupies the property and by each owner's spouse who occupies 
 88.30  the property, or, in the case of property that qualifies as a 
 88.31  homestead under subdivision 1, paragraph (c), by the qualifying 
 88.32  relative. 
 88.33     If a property owner occupies a homestead, the property 
 88.34  owner's spouse may not claim another property as a homestead 
 88.35  unless the property owner and the property owner's spouse file 
 88.36  with the assessor an affidavit or other proof required by the 
 89.1   assessor stating that the property qualifies as a homestead 
 89.2   under subdivision 1, paragraph (e). 
 89.3      Owners or spouses occupying residences owned by their 
 89.4   spouses and previously occupied with the other spouse, either of 
 89.5   whom fail to include the other spouse's name and social security 
 89.6   number on the homestead application or provide the affidavits or 
 89.7   other proof requested, will be deemed to have elected to receive 
 89.8   only partial homestead treatment of their residence.  The 
 89.9   remainder of the residence will be classified as nonhomestead 
 89.10  residential.  When an owner or spouse's name and social security 
 89.11  number appear on homestead applications for two separate 
 89.12  residences and only one application is signed, the owner or 
 89.13  spouse will be deemed to have elected to homestead the residence 
 89.14  for which the application was signed. 
 89.15     The social security numbers or affidavits or other proofs 
 89.16  of the property owners and spouses are private data on 
 89.17  individuals as defined by section 13.02, subdivision 12, but, 
 89.18  notwithstanding that section, the private data may be disclosed 
 89.19  to the commissioner of revenue, or, for purposes of proceeding 
 89.20  under the revenue recapture act to recover personal property 
 89.21  taxes owing, to the county treasurer. 
 89.22     (d) If residential real estate is occupied and used for 
 89.23  purposes of a homestead by a relative of the owner and qualifies 
 89.24  for a homestead under subdivision 1, paragraph (c), in order for 
 89.25  the property to receive homestead status, a homestead 
 89.26  application must be filed with the assessor.  The social 
 89.27  security number of each relative occupying the property and the 
 89.28  social security number of each owner who is related to an 
 89.29  occupant of the property shall be required on the homestead 
 89.30  application filed under this subdivision.  If a different 
 89.31  relative of the owner subsequently occupies the property, the 
 89.32  owner of the property must notify the assessor within 30 days of 
 89.33  the change in occupancy.  The social security number of a 
 89.34  relative occupying the property is private data on individuals 
 89.35  as defined by section 13.02, subdivision 12, but may be 
 89.36  disclosed to the commissioner of revenue.  
 90.1      (e) The homestead application shall also notify the 
 90.2   property owners that the application filed under this section 
 90.3   will not be mailed annually and that if the property is granted 
 90.4   homestead status for the 1993 assessment, or any assessment year 
 90.5   thereafter, that same property shall remain classified as 
 90.6   homestead until the property is sold or transferred to another 
 90.7   person, or the owners, the spouse of the owner, or the relatives 
 90.8   no longer use the property as their homestead.  Upon the sale or 
 90.9   transfer of the homestead property, a certificate of value must 
 90.10  be timely filed with the county auditor as provided under 
 90.11  section 272.115.  Failure to notify the assessor within 30 days 
 90.12  that the property has been sold, transferred, or that the owner, 
 90.13  the spouse of the owner, or the relative is no longer occupying 
 90.14  the property as a homestead, shall result in the penalty 
 90.15  provided under this subdivision and the property will lose its 
 90.16  current homestead status. 
 90.17     (f) If the homestead application is not returned within 30 
 90.18  days, the county will send a second application to the present 
 90.19  owners of record.  The notice of proposed property taxes 
 90.20  prepared under section 275.065, subdivision 3, shall reflect the 
 90.21  property's classification.  Beginning with assessment year 1993 
 90.22  for all properties, If a homestead application has not been 
 90.23  filed with the county by December 15, the assessor shall 
 90.24  classify the property as nonhomestead for the current assessment 
 90.25  year for taxes payable in the following year, provided that the 
 90.26  owner may be entitled to receive the homestead classification by 
 90.27  proper application under section 375.192. 
 90.28     (g) At the request of the commissioner, each county must 
 90.29  give the commissioner a list that includes the name and social 
 90.30  security number of each property owner and the property owner's 
 90.31  spouse occupying the property, or relative of a property owner, 
 90.32  applying for homestead classification under this subdivision.  
 90.33  The commissioner shall use the information provided on the lists 
 90.34  as appropriate under the law, including for the detection of 
 90.35  improper claims by owners, or relatives of owners, under chapter 
 90.36  290A.  
 91.1      (h) If~~, in comparing the lists supplied by the counties,~~ 
 91.2   the commissioner finds that a property owner may be claiming a 
 91.3   fraudulent homestead, the commissioner shall notify the 
 91.4   appropriate counties.  Within 90 days of the notification, the 
 91.5   county assessor shall investigate to determine if the homestead 
 91.6   classification was properly claimed.  If the property owner does 
 91.7   not qualify, the county assessor shall notify the county auditor 
 91.8   who will determine the amount of homestead benefits that had 
 91.9   been improperly allowed.  For the purpose of this section, 
 91.10  "homestead benefits" means the tax reduction resulting from the 
 91.11  classification as a homestead under section 273.13, the taconite 
 91.12  homestead credit under section 273.135, and the supplemental 
 91.13  homestead credit under section 273.1391. 
 91.14     The county auditor shall send a notice to the person who 
 91.15  owned the ~~owners of the~~ affected property at the time the 
 91.16  homestead application related to the improper homestead was 
 91.17  filed, demanding reimbursement of the homestead benefits plus a 
 91.18  penalty equal to 100 percent of the homestead benefits.  
 91.19  The ~~property owners~~ person notified may appeal the county's 
 91.20  determination by ~~filing a notice of appeal~~ serving copies of a 
 91.21  petition for review with county officials as provided in section 
 91.22  278.01 and filing proof of service as provided in section 278.01 
 91.23  with the Minnesota tax court within 60 days of the date of the 
 91.24  notice from the county.  Procedurally, the appeal is governed by 
 91.25  the provisions in chapter 271 which apply to the appeal of a 
 91.26  property tax assessment or levy, but without requiring any 
 91.27  prepayment of the amount in controversy.  If the amount of 
 91.28  homestead benefits and penalty is not paid within 60 days, and 
 91.29  if no appeal has been filed, the county auditor shall certify 
 91.30  the amount of taxes and penalty to the ~~succeeding year's tax~~ 
 91.31  ~~list to be collected as part of the property taxes.  In the case~~ 
 91.32  ~~of a manufactured home, the amount shall be certified to the~~ 
 91.33  ~~current year's tax list for collection~~ county treasurer.  The 
 91.34  county treasurer will add interest to the unpaid homestead 
 91.35  benefits and penalty amounts at the rate provided for delinquent 
 91.36  personal property taxes for the period beginning 60 days after 
 92.1   demand for payment was made until payment.  If the person 
 92.2   notified is the current owner of the property, the treasurer may 
 92.3   add the total amount of benefits, penalty, interest, and costs 
 92.4   to the real estate taxes otherwise payable on the property in 
 92.5   the following year.  If the person notified is not the current 
 92.6   owner of the property, the treasurer may collect the amounts due 
 92.7   under the revenue recapture act in chapter 270A, or use any of 
 92.8   the powers granted in sections 277.20 and 277.21 without 
 92.9   exclusion, to enforce payment of the benefits, penalty, 
 92.10  interest, and costs, as if those amounts were delinquent tax 
 92.11  obligations of the person who owned the property at the time the 
 92.12  application related to the improperly allowed homestead was 
 92.13  filed.  The treasurer may relieve a prior owner of personal 
 92.14  liability for the benefits, penalty, interest, and costs, and 
 92.15  instead extend those amounts on the tax lists against the 
 92.16  property for taxes payable in the following year to the extent 
 92.17  that the current owner agrees in writing. 
 92.18     (i) Any amount of homestead benefits recovered by the 
 92.19  county from the property owner shall be distributed to the 
 92.20  county, city or town, and school district where the property is 
 92.21  located in the same proportion that each taxing district's levy 
 92.22  was to the total of the three taxing districts' levy for the 
 92.23  current year.  Any amount recovered attributable to taconite 
 92.24  homestead credit shall be transmitted to the St. Louis county 
 92.25  auditor to be deposited in the taconite property tax relief 
 92.26  account.  Any amount recovered that is attributable to 
 92.27  supplemental homestead credit is to be transmitted to the 
 92.28  commissioner of revenue for deposit in the general fund of the 
 92.29  state treasury.  The total amount of penalty collected must be 
 92.30  deposited in the county general fund. 
 92.31     (j) If a property owner has applied for more than one 
 92.32  homestead and the county assessors cannot determine which 
 92.33  property should be classified as homestead, the county assessors 
 92.34  will refer the information to the commissioner.  The 
 92.35  commissioner shall make the determination and notify the 
 92.36  counties within 60 days. 
 93.1      (k) In addition to lists of homestead properties, the 
 93.2   commissioner may ask the counties to furnish lists of all 
 93.3   properties and the record owners. 
 93.4      Sec. 14.  Minnesota Statutes 1994, section 273.13, 
 93.5   subdivision 22, is amended to read: 
 93.6      Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 93.7   23, real estate which is residential and used for homestead 
 93.8   purposes is class 1.  The market value of class 1a property must 
 93.9   be determined based upon the value of the house, garage, and 
 93.10  land.  
 93.11     The first $72,000 of market value of class 1a property has 
 93.12  a net class rate of ~~one~~ 0.95 percent of its market value and a 
 93.13  gross class rate of 2.17 percent of its market value.  ~~For taxes~~ 
 93.14  ~~payable in 1992, the market value of class 1a property that~~ 
 93.15  ~~exceeds $72,000 but does not exceed $115,000 has a class rate of~~ 
 93.16  ~~two percent of its market value; and the market value of class~~ 
 93.17  ~~1a property that exceeds $115,000 has a class rate of 2.5~~ 
 93.18  ~~percent of its market value.  For taxes payable in 1993 and~~ 
 93.19  ~~thereafter,~~ The market value of class 1a property that exceeds 
 93.20  $72,000 has a class rate of ~~two~~ 1.90 percent. 
 93.21     (b) Class 1b property includes homestead real estate or 
 93.22  homestead manufactured homes used for the purposes of a 
 93.23  homestead by 
 93.24     (1) any blind person, or the blind person and the blind 
 93.25  person's spouse; or 
 93.26     (2) any person, hereinafter referred to as "veteran," who: 
 93.27     (i) served in the active military or naval service of the 
 93.28  United States; and 
 93.29     (ii) is entitled to compensation under the laws and 
 93.30  regulations of the United States for permanent and total 
 93.31  service-connected disability due to the loss, or loss of use, by 
 93.32  reason of amputation, ankylosis, progressive muscular 
 93.33  dystrophies, or paralysis, of both lower extremities, such as to 
 93.34  preclude motion without the aid of braces, crutches, canes, or a 
 93.35  wheelchair; and 
 93.36     (iii) has acquired a special housing unit with special 
 94.1   fixtures or movable facilities made necessary by the nature of 
 94.2   the veteran's disability, or the surviving spouse of the 
 94.3   deceased veteran for as long as the surviving spouse retains the 
 94.4   special housing unit as a homestead; or 
 94.5      (3) any person who: 
 94.6      (i) is permanently and totally disabled and 
 94.7      (ii) receives 90 percent or more of total income from 
 94.8      (A) aid from any state as a result of that disability; or 
 94.9      (B) supplemental security income for the disabled; or 
 94.10     (C) workers' compensation based on a finding of total and 
 94.11  permanent disability; or 
 94.12     (D) social security disability, including the amount of a 
 94.13  disability insurance benefit which is converted to an old age 
 94.14  insurance benefit and any subsequent cost of living increases; 
 94.15  or 
 94.16     (E) aid under the federal Railroad Retirement Act of 1937, 
 94.17  United States Code Annotated, title 45, section 228b(a)5; or 
 94.18     (F) a pension from any local government retirement fund 
 94.19  located in the state of Minnesota as a result of that 
 94.20  disability; or 
 94.21     (G) pension, annuity, or other income paid as a result of 
 94.22  that disability from a private pension or disability plan, 
 94.23  including employer, employee, union, and insurance plans and 
 94.24     (iii) has household income as defined in section 290A.03, 
 94.25  subdivision 5, of $50,000 or less; or 
 94.26     (4) any person who is permanently and totally disabled and 
 94.27  whose household income as defined in section 290A.03, 
 94.28  subdivision 5, is 150 percent or less of the federal poverty 
 94.29  level. 
 94.30     Property is classified and assessed under clause (4) only 
 94.31  if the government agency or income-providing source certifies, 
 94.32  upon the request of the homestead occupant, that the homestead 
 94.33  occupant satisfies the disability requirements of this paragraph.
 94.34     Property is classified and assessed pursuant to clause (1) 
 94.35  only if the commissioner of economic security certifies to the 
 94.36  assessor that the homestead occupant satisfies the requirements 
 95.1   of this paragraph.  
 95.2      Permanently and totally disabled for the purpose of this 
 95.3   subdivision means a condition which is permanent in nature and 
 95.4   totally incapacitates the person from working at an occupation 
 95.5   which brings the person an income.  The first $32,000 market 
 95.6   value of class 1b property has a net class rate of .45 percent 
 95.7   of its market value and a gross class rate of .87 percent of its 
 95.8   market value.  The remaining market value of class 1b property 
 95.9   has a gross or net class rate using the rates for class 1 or 
 95.10  class 2a property, whichever is appropriate, of similar market 
 95.11  value.  
 95.12     (c) Class 1c property is commercial use real property that 
 95.13  abuts a lakeshore line and is devoted to temporary and seasonal 
 95.14  residential occupancy for recreational purposes but not devoted 
 95.15  to commercial purposes for more than 250 days in the year 
 95.16  preceding the year of assessment, and that includes a portion 
 95.17  used as a homestead by the owner, which includes a dwelling 
 95.18  occupied as a homestead by a shareholder of a corporation that 
 95.19  owns the resort or a partner in a partnership that owns the 
 95.20  resort, even if the title to the homestead is held by the 
 95.21  corporation or partnership.  For purposes of this clause, 
 95.22  property is devoted to a commercial purpose on a specific day if 
 95.23  any portion of the property, excluding the portion used 
 95.24  exclusively as a homestead, is used for residential occupancy 
 95.25  and a fee is charged for residential occupancy.  Class 1c 
 95.26  property has a class rate of one percent of total market value 
 95.27  for taxes payable in 1993 and thereafter with the following 
 95.28  limitation:  the area of the property must not exceed 100 feet 
 95.29  of lakeshore footage for each cabin or campsite located on the 
 95.30  property up to a total of 800 feet and 500 feet in depth, 
 95.31  measured away from the lakeshore. 
 95.32     Sec. 15.  Minnesota Statutes 1994, section 273.13, 
 95.33  subdivision 23, is amended to read: 
 95.34     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 95.35  land including any improvements that is homesteaded.  The market 
 95.36  value of the house and garage and immediately surrounding one 
 96.1   acre of land has the same class rates as class 1a property under 
 96.2   subdivision 22.  The value of the remaining land including 
 96.3   improvements up to $115,000 has a net class rate of ~~.45~~ .40 
 96.4   percent of market value and a gross class rate of 1.75 percent 
 96.5   of market value.  The remaining value of class 2a property over 
 96.6   $115,000 of market value that does not exceed 320 acres has a 
 96.7   net class rate of ~~one~~ 0.95 percent of market value, and a gross 
 96.8   class rate of 2.25 percent of market value.  The remaining 
 96.9   property over the $115,000 market value in excess of 320 acres 
 96.10  has a class rate of ~~1.5~~ 1.45 percent of market value, and a 
 96.11  gross class rate of 2.25 percent of market value.  
 96.12     (b) Class 2b property is (1) real estate, rural in 
 96.13  character and used exclusively for growing trees for timber, 
 96.14  lumber, and wood and wood products; (2) real estate that is not 
 96.15  improved with a structure and is used exclusively for growing 
 96.16  trees for timber, lumber, and wood and wood products, if the 
 96.17  owner has participated or is participating in a cost-sharing 
 96.18  program for afforestation, reforestation, or timber stand 
 96.19  improvement on that particular property, administered or 
 96.20  coordinated by the commissioner of natural resources; (3) real 
 96.21  estate that is nonhomestead agricultural land; or (4) a landing 
 96.22  area or public access area of a privately owned public use 
 96.23  airport.  Class 2b property has a net class rate of ~~1.5~~ 1.45 
 96.24  percent of market value, and a gross class rate of 2.25 percent 
 96.25  of market value.  
 96.26     (c) Agricultural land as used in this section means 
 96.27  contiguous acreage of ten acres or more, primarily used during 
 96.28  the preceding year for agricultural purposes.  Agricultural use 
 96.29  may include pasture, timber, waste, unusable wild land, and land 
 96.30  included in state or federal farm or conservation programs.  
 96.31  "Agricultural purposes" as used in this section means the 
 96.32  raising or cultivation of agricultural products.  Land enrolled 
 96.33  in the Reinvest in Minnesota program under sections 103F.505 to 
 96.34  103F.531 or the federal Conservation Reserve Program as 
 96.35  contained in Public Law Number 99-198, and consisting of a 
 96.36  minimum of ten contiguous acres, shall be classified as 
 97.1   agricultural.  Agricultural classification for property shall be 
 97.2   determined with respect to the use of the whole parcel, and not 
 97.3   based upon the market value of any residential structures on the 
 97.4   parcel or contiguous parcels under the same ownership. 
 97.5      (d) Real estate of less than ten acres used principally for 
 97.6   raising or cultivating agricultural products, shall be 
 97.7   considered as agricultural land, if it is not used primarily for 
 97.8   residential purposes.  
 97.9      (e) The term "agricultural products" as used in this 
 97.10  subdivision includes:  
 97.11     (1) livestock, dairy animals, dairy products, poultry and 
 97.12  poultry products, fur-bearing animals, horticultural and nursery 
 97.13  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 97.14  vegetables, forage, grains, bees, and apiary products by the 
 97.15  owner; 
 97.16     (2) fish bred for sale and consumption if the fish breeding 
 97.17  occurs on land zoned for agricultural use; 
 97.18     (3) the commercial boarding of horses if the boarding is 
 97.19  done in conjunction with raising or cultivating agricultural 
 97.20  products as defined in clause (1); 
 97.21     (4) property which is owned and operated by nonprofit 
 97.22  organizations used for equestrian activities, excluding racing; 
 97.23  and 
 97.24     (5) game birds and waterfowl bred and raised for use on a 
 97.25  shooting preserve licensed under section 97A.115.  
 97.26     (f) If a parcel used for agricultural purposes is also used 
 97.27  for commercial or industrial purposes, including but not limited 
 97.28  to:  
 97.29     (1) wholesale and retail sales; 
 97.30     (2) processing of raw agricultural products or other goods; 
 97.31     (3) warehousing or storage of processed goods; and 
 97.32     (4) office facilities for the support of the activities 
 97.33  enumerated in clauses (1), (2), and (3), 
 97.34  the assessor shall classify the part of the parcel used for 
 97.35  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 97.36  appropriate, and the remainder in the class appropriate to its 
 98.1   use.  The grading, sorting, and packaging of raw agricultural 
 98.2   products for first sale is considered an agricultural purpose.  
 98.3   A greenhouse or other building where horticultural or nursery 
 98.4   products are grown that is also used for the conduct of retail 
 98.5   sales must be classified as agricultural if it is primarily used 
 98.6   for the growing of horticultural or nursery products from seed, 
 98.7   cuttings, or roots and occasionally as a showroom for the retail 
 98.8   sale of those products.  Use of a greenhouse or building only 
 98.9   for the display of already grown horticultural or nursery 
 98.10  products does not qualify as an agricultural purpose.  
 98.11     The assessor shall determine and list separately on the 
 98.12  records the market value of the homestead dwelling and the one 
 98.13  acre of land on which that dwelling is located.  If any farm 
 98.14  buildings or structures are located on this homesteaded acre of 
 98.15  land, their market value shall not be included in this separate 
 98.16  determination.  
 98.17     (g) To qualify for classification under paragraph (b), 
 98.18  clause (4), a privately owned public use airport must be 
 98.19  licensed as a public airport under section 360.018.  For 
 98.20  purposes of paragraph (b), clause (4), "landing area" means that 
 98.21  part of a privately owned public use airport properly cleared, 
 98.22  regularly maintained, and made available to the public for use 
 98.23  by aircraft and includes runways, taxiways, aprons, and sites 
 98.24  upon which are situated landing or navigational aids.  A landing 
 98.25  area also includes land underlying both the primary surface and 
 98.26  the approach surfaces that comply with all of the following:  
 98.27     (i) the land is properly cleared and regularly maintained 
 98.28  for the primary purposes of the landing, taking off, and taxiing 
 98.29  of aircraft; but that portion of the land that contains 
 98.30  facilities for servicing, repair, or maintenance of aircraft is 
 98.31  not included as a landing area; 
 98.32     (ii) the land is part of the airport property; and 
 98.33     (iii) the land is not used for commercial or residential 
 98.34  purposes. 
 98.35  The land contained in a landing area under paragraph (b), clause 
 98.36  (4), must be described and certified by the commissioner of 
 99.1   transportation.  The certification is effective until it is 
 99.2   modified, or until the airport or landing area no longer meets 
 99.3   the requirements of paragraph (b), clause (4).  For purposes of 
 99.4   paragraph (b), clause (4), "public access area" means property 
 99.5   used as an aircraft parking ramp, apron, or storage hangar, or 
 99.6   an arrival and departure building in connection with the airport.
 99.7      Sec. 16.  Minnesota Statutes 1995 Supplement, section 
 99.8   273.13, subdivision 24, is amended to read: 
 99.9      Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 99.10  property and utility real and personal property, except class 5 
 99.11  property as identified in subdivision 31, clause (1), is class 
 99.12  3a.  It has a class rate of ~~three~~ 2.9 percent of the first 
 99.13  $100,000 of market value for taxes payable in ~~1993~~ 1997 and 
 99.14  thereafter, and 5.06 percent of the market value over $100,000.  
 99.15  In the case of state-assessed commercial, industrial, and 
 99.16  utility property owned by one person or entity, only one parcel 
 99.17  has a reduced class rate on the first $100,000 of market value.  
 99.18  In the case of other commercial, industrial, and utility 
 99.19  property owned by one person or entity, only one parcel in each 
 99.20  county has a reduced class rate on the first $100,000 of market 
 99.21  value, except that: 
 99.22     (1) if the market value of the parcel is less than 
 99.23  $100,000, and additional parcels are owned by the same person or 
 99.24  entity in the same city or town within that county, the reduced 
 99.25  class rate shall be applied up to a combined total market value 
 99.26  of $100,000 for all parcels owned by the same person or entity 
 99.27  in the same city or town within the county; 
 99.28     (2) in the case of retail supply facilities owned by a 
 99.29  cooperative that does not have other cooperatives as members, 
 99.30  and grain, fertilizer, and feed elevator facilities, as defined 
 99.31  in section 18C.305, subdivision 1, or 232.21, subdivision 8, the 
 99.32  limitation to one parcel per owner per county for the reduced 
 99.33  class rate shall not apply, but there shall be a limit of 
 99.34  $100,000 of preferential value per site of contiguous parcels 
 99.35  owned by the same person or entity and for a cooperative owning 
 99.36  retail supply facilities the exemption from the limitation shall