1.1                          A bill for an act 
  1.2             relating to financing state and local government; 
  1.3             providing a sales tax rebate; extending the time to 
  1.4             qualify for and making certain other changes to the 
  1.5             1999 sales tax rebate; providing agricultural 
  1.6             assistance; reducing individual income tax rates; 
  1.7             making changes to income, franchise, withholding, 
  1.8             sales and use, property, motor vehicle sales and 
  1.9             registration, mortgage registry, health care provider, 
  1.10            motor fuels, cigarette and tobacco, liquor, insurance 
  1.11            premiums, lawful gambling, taconite production, solid 
  1.12            waste, estate, and special taxes; changing and 
  1.13            allowing tax credits, subtractions, and exemptions; 
  1.14            conforming with changes in federal income tax 
  1.15            provisions; providing for allocation and apportionment 
  1.16            of income; changing property tax valuation, 
  1.17            assessment, levy, classification, homestead, credit, 
  1.18            aid, exemption, deferral, review, appeal, abatement, 
  1.19            and distribution provisions; extending levy limits and 
  1.20            changing levy authority; reducing rates of health care 
  1.21            provider taxes; reducing rates on lawful gambling and 
  1.22            solid waste management taxes; changing tax increment 
  1.23            financing provisions; providing special authority for 
  1.24            certain political subdivisions; changing and 
  1.25            clarifying tax administration, collection, 
  1.26            enforcement, interest, and penalty provisions; 
  1.27            changing revenue recapture provisions; freezing the 
  1.28            taconite production tax; regulating state and local 
  1.29            business subsidies; modifying certain aids to local 
  1.30            units of government; recodifying sales and use taxes; 
  1.31            recodifying insurance tax laws; establishing a 
  1.32            legislative budget office; validating corporations 
  1.33            established by political subdivisions and regulating 
  1.34            their financing; changing county reporting 
  1.35            requirements; providing certain duties and powers to 
  1.36            the commissioner of revenue, the state auditor, and to 
  1.37            the attorney general; defining terms; classifying 
  1.38            data; requiring studies; appropriating money; amending 
  1.39            Minnesota Statutes 1998, sections 3.98, subdivision 3; 
  1.40            8.30; 16A.46; 37.13; 43A.316, subdivision 9; 43A.317, 
  1.41            subdivision 8; 60A.15, subdivision 1; 60A.19, 
  1.42            subdivision 8; 60A.198, subdivision 3; 60A.208, 
  1.43            subdivision 8; 60A.209, subdivision 3; 60C.17; 60E.04, 
  1.44            subdivision 4; 60E.095; 61B.30, subdivision 1; 62C.01, 
  1.45            subdivision 3; 62E.10, subdivision 1; 62E.13, 
  1.46            subdivision 10; 62L.13, subdivision 3; 62T.10; 64B.24; 
  2.1             71A.04, subdivision 1; 79.252, subdivision 4; 79.34, 
  2.2             subdivision 1a; 115A.55, subdivision 3; 115A.69, 
  2.3             subdivision 6; 116A.25; 126C.01, by adding a 
  2.4             subdivision; 126C.17, subdivision 10; 176A.08; 238.08, 
  2.5             subdivision 3; 270.063, by adding a subdivision; 
  2.6             270.072, subdivision 2, and by adding a subdivision; 
  2.7             270A.03, subdivision 7; 270A.07, subdivision 1; 
  2.8             273.111, subdivision 3; 273.124, by adding a 
  2.9             subdivision; 273.125, subdivision 8; 273.1398, by 
  2.10            adding a subdivision; 273.37, subdivision 3; 275.065, 
  2.11            subdivisions 3, 6, 8, and by adding a subdivision; 
  2.12            275.07, subdivision 1; 275.08, subdivision 1b; 275.70, 
  2.13            by adding a subdivision; 275.72, subdivisions 1 and 3; 
  2.14            276.19, subdivision 1; 289A.08, by adding a 
  2.15            subdivision; 289A.20, subdivision 2; 289A.26, 
  2.16            subdivision 1; 289A.31, subdivision 7; 289A.35; 
  2.17            289A.60, subdivisions 1 and 14; 290.01, subdivisions 
  2.18            19c and 19d; 290.015, subdivisions 1, 3, and 4; 
  2.19            290.06, subdivision 22, and by adding a subdivision; 
  2.20            290.0671, subdivision 6; 290.0672, subdivisions 1 and 
  2.21            2; 290.0673, subdivision 8; 290.17, subdivision 2; 
  2.22            290.35, subdivisions 2, 3, and 6; 290.92, subdivisions 
  2.23            3, 28, and 29; 290B.04, by adding a subdivision; 
  2.24            290B.05, subdivision 3; 290B.07; 290B.08, subdivisions 
  2.25            1 and 2; 290B.09, subdivision 2; 295.50, subdivision 
  2.26            9b; 295.58; 296A.03, subdivision 5; 296A.21, 
  2.27            subdivisions 2 and 3; 296A.22, subdivision 6; 297A.01, 
  2.28            subdivisions 13, 15, 16, and by adding a subdivision; 
  2.29            297A.15, by adding a subdivision; 297A.25, 
  2.30            subdivisions 5, 16, 34, 62, 76, and by adding 
  2.31            subdivisions; 297B.01, subdivision 7; 297B.03; 
  2.32            297E.02, subdivision 2; 297F.01, subdivisions 7, 14, 
  2.33            17, and by adding subdivisions; 297F.08, subdivisions 
  2.34            2, 5, 8, and 9; 297F.13, subdivision 4; 297F.21, 
  2.35            subdivisions 1 and 3; 297G.01, by adding a 
  2.36            subdivision; 297G.03, subdivision 1; 297H.02, 
  2.37            subdivision 2; 297H.03, subdivision 2; 297H.04, 
  2.38            subdivision 2; 297H.13, subdivisions 2, 4, and by 
  2.39            adding a subdivision; 360.035; 424.165; 429.011, 
  2.40            subdivisions 2a and 5; 429.021, subdivision 1; 
  2.41            429.031, subdivision 1; 458A.09; 458A.30; 458D.23; 
  2.42            469.040, by adding a subdivision; 469.115; 469.127; 
  2.43            469.1734, subdivision 4; 469.174, subdivisions 9, 10, 
  2.44            11, 12, 14, and 22; 469.175, subdivisions 1a, 2, 2a, 
  2.45            3, 4, 5, and 6; 469.176, subdivisions 1b and 4d; 
  2.46            469.1761, subdivision 4; 469.1763, subdivision 2, and 
  2.47            by adding a subdivision; 469.177, subdivision 1; 
  2.48            469.1813, subdivision 4; 473.388, subdivisions 4 and 
  2.49            7; 473.446, subdivision 1, and by adding a 
  2.50            subdivision; 473.448; 473.545; 473.608, subdivision 2; 
  2.51            and 477A.06, subdivision 3; Minnesota Statutes 1999 
  2.52            Supplement, sections 16D.09, subdivision 2; 43A.23, 
  2.53            subdivision 1; 60A.19, subdivision 6; 116J.993, 
  2.54            subdivision 3; 116J.994, subdivisions 1, 3, 4, 5, 6, 
  2.55            7, 8, and 9; 116J.995; 168.012, subdivision 1; 270.65; 
  2.56            270A.03, subdivision 2; 270A.07, subdivision 2; 
  2.57            272.02, subdivision 39, and by adding a subdivision; 
  2.58            273.11, subdivision 1a; 273.124, subdivisions 1, 8, 
  2.59            and 14; 273.13, subdivisions 22, 23, 24, 25, and 31; 
  2.60            273.1382, subdivisions 1, 1a, and 1b; 273.1398, 
  2.61            subdivision 1a; 275.065, subdivision 5a; 275.70, 
  2.62            subdivision 5; 275.71, subdivisions 2, 3, and 4; 
  2.63            287.01, subdivision 2; 289A.02, subdivision 7; 
  2.64            289A.20, subdivision 4; 289A.55, subdivision 9; 
  2.65            290.01, subdivisions 19, 19b, and 31; 290.06, 
  2.66            subdivisions 2c, 2d, and by adding a subdivision; 
  2.67            290.0671, subdivision 1; 290.0674, subdivision 2; 
  2.68            290.0675, subdivisions 1, 2, and 3; 290.091, 
  2.69            subdivisions 1, 2, and 6; 290.191, subdivisions 2 and 
  2.70            3; 290.9725; 290A.03, subdivision 15; 290B.03, 
  2.71            subdivision 1; 290B.05, subdivision 1; 291.005, 
  3.1             subdivision 1; 295.52, subdivision 7; 295.53, 
  3.2             subdivision 1; 297A.25, subdivisions 9 and 11; 
  3.3             297E.02, subdivisions 1, 4, and 6; 297F.08, 
  3.4             subdivision 8a; 297H.05; 298.24, subdivision 1; 
  3.5             383D.74, subdivision 2; 469.101, subdivision 2; 
  3.6             469.1771, subdivision 1; 469.1813, subdivisions 1 and 
  3.7             6; 477A.011, subdivision 36; 477A.03, subdivision 2; 
  3.8             477A.06, subdivision 1; and 505.08, subdivision 3; 
  3.9             Laws 1987, chapter 402, section 2, subdivisions 1, 4, 
  3.10            and 5; Laws 1988, chapter 645, section 3, as amended; 
  3.11            Laws 1995, First Special Session chapter 3, article 
  3.12            15, section 25; Laws 1997, chapter 231, article 1, 
  3.13            section 19, subdivisions 1, as amended, and 3; Laws 
  3.14            1999, chapter 112, section 1, subdivision 1; Laws 
  3.15            1999, chapter 243, article 1, section 2; article 6, 
  3.16            section 18; proposing coding for new law in Minnesota 
  3.17            Statutes, chapters 3; 273; 278; 297A; 465; and 473; 
  3.18            proposing coding for new law as Minnesota Statutes, 
  3.19            chapter 297I; repealing Minnesota Statutes 1998, 
  3.20            sections 60A.15; 60A.152; 60A.198, subdivision 6; 
  3.21            60A.199, subdivisions 2, 3, 4, 5, 6, 6a, 7, 8, 9, 10, 
  3.22            and 11; 60A.209, subdivisions 4 and 5; 69.54; 69.55; 
  3.23            69.56; 69.57; 69.58; 69.59; 69.60; 69.61; 71A.04, 
  3.24            subdivision 2; 270.072, subdivision 5; 270.075, 
  3.25            subdivisions 3 and 4; 273.127; 273.1316; 297A.01; 
  3.26            297A.02; 297A.022; 297A.023; 297A.03; 297A.04; 
  3.27            297A.041; 297A.06; 297A.065; 297A.07; 297A.09; 
  3.28            297A.10; 297A.11; 297A.12; 297A.13; 297A.135; 297A.14; 
  3.29            297A.141; 297A.15, subdivision 7; 297A.16; 297A.17; 
  3.30            297A.18; 297A.21; 297A.211; 297A.213; 297A.22; 
  3.31            297A.23; 297A.24; 297A.25; 297A.2531; 297A.2545; 
  3.32            297A.255; 297A.256; 297A.2571; 297A.2572; 297A.2573; 
  3.33            297A.259; 297A.26; 297A.28; 297A.33, subdivision 2; 
  3.34            297A.44, subdivision 1; 297A.46; 297A.47; 297A.48; 
  3.35            299F.21; 299F.22; 299F.23; 299F.24; 299F.25; 299F.26; 
  3.36            465.715, subdivisions 1, 2, and 3; 469.055, 
  3.37            subdivision 5; 469.101, subdivision 21; 469.135; 
  3.38            469.136; 469.137; 469.138; 469.139; 469.140; 469.174, 
  3.39            subdivision 13; 469.175, subdivision 6a; and 469.176, 
  3.40            subdivision 4a; Minnesota Statutes 1999 Supplement, 
  3.41            sections 290.06, subdivision 26; 290.9726, subdivision 
  3.42            7; and 465.715, subdivision 1a; Minnesota Rules, parts 
  3.43            2765.1500, subpart 6; and 8160.0300, subpart 4. 
  3.44  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.45                             ARTICLE 1
  3.46                       2000 SALES TAX REBATE
  3.47     Section 1.  [STATEMENT OF PURPOSE.] 
  3.48     (a) The state of Minnesota derives revenues from a variety 
  3.49  of taxes, fees, and other sources, including the state sales tax.
  3.50     (b) It is fair and reasonable to refund the existing state 
  3.51  budget surplus in the form of a rebate of nonbusiness consumer 
  3.52  sales taxes paid by individuals in calendar year 1998. 
  3.53     (c) Information concerning the amount of sales tax paid at 
  3.54  various income levels is contained in the Minnesota tax 
  3.55  incidence report, which is written by the commissioner of 
  3.56  revenue and presented to the legislature according to Minnesota 
  3.57  Statutes, section 270.0682. 
  4.1      (d) It is fair and reasonable to use information contained 
  4.2   in the Minnesota tax incidence report, updated to calendar year 
  4.3   1998, to determine the proportionate share of the sales tax 
  4.4   rebate due each eligible taxpayer since no effective or 
  4.5   practical mechanism exists for determining the amount of actual 
  4.6   sales tax paid by each eligible individual. 
  4.7      Sec. 2.  [SALES TAX REBATE.] 
  4.8      (a) An individual who: 
  4.9      (1) was eligible for a credit under Laws 1998, chapter 389, 
  4.10  article 1, section 1, and who filed for or received that credit 
  4.11  on or before November 30, 2000; or 
  4.12     (2) was a resident of Minnesota for any part of 1998, and 
  4.13  filed a 1998 Minnesota income tax return on or before June 15, 
  4.14  2000, and had a tax liability before refundable credits on that 
  4.15  return of at least $1 but did not file the claim for credit 
  4.16  authorized under Laws 1998, chapter 389, article 1, section 1, 
  4.17  as amended, and who was not allowed to be claimed as a dependent 
  4.18  on a 1998 federal income tax return filed by another person; or 
  4.19     (3) had the property taxes payable on his or her homestead 
  4.20  abated to zero under Laws 1998, chapter 383, section 20, shall 
  4.21  receive a sales tax rebate. 
  4.22     (b) The sales tax rebate for taxpayers who qualify under 
  4.23  paragraph (a) as married filing joint or head of household must 
  4.24  be computed according to the following schedule: 
  4.25       Income                                Sales Tax Rebate
  4.26   less than $2,500                                $129
  4.27   at least $2,500 but less than $5,000            $166
  4.28   at least $5,000 but less than $10,000           $177
  4.29   at least $10,000 but less than $15,000          $194
  4.30   at least $15,000 but less than $20,000          $211
  4.31   at least $20,000 but less than $25,000          $229
  4.32   at least $25,000 but less than $30,000          $239
  4.33   at least $30,000 but less than $35,000          $259
  4.34   at least $35,000 but less than $40,000          $284
  4.35   at least $40,000 but less than $45,000          $304
  4.36   at least $45,000 but less than $50,000          $320
  5.1    at least $50,000 but less than $60,000          $341
  5.2    at least $60,000 but less than $70,000          $365
  5.3    at least $70,000 but less than $80,000          $402
  5.4    at least $80,000 but less than $90,000          $431
  5.5    at least $90,000 but less than $100,000         $476
  5.6    at least $100,000 but less than $120,000        $515
  5.7    at least $120,000 but less than $140,000        $565
  5.8    at least $140,000 but less than $160,000        $610
  5.9    at least $160,000 but less than $180,000        $653
  5.10   at least $180,000 but less than $200,000        $694
  5.11   at least $200,000 but less than $400,000        $888
  5.12   at least $400,000 but less than $600,000      $1,168
  5.13   at least $600,000 but less than $800,000      $1,402
  5.14   at least $800,000 but less than $1,000,000    $1,607
  5.15   $1,000,000 and over                           $1,860
  5.16     (c) The sales tax rebate for individuals who qualify under 
  5.17  paragraph (a) as single or married filing separately must be 
  5.18  computed according to the following schedule: 
  5.19   Income                                    Sales Tax Rebate
  5.20   less than $2,500                                $73
  5.21   at least $2,500 but less than $5,000            $89
  5.22   at least $5,000 but less than $10,000          $105
  5.23   at least $10,000 but less than $15,000         $141
  5.24   at least $15,000 but less than $20,000         $161
  5.25   at least $20,000 but less than $25,000         $175
  5.26   at least $25,000 but less than $30,000         $182
  5.27   at least $30,000 but less than $40,000         $199
  5.28   at least $40,000 but less than $50,000         $223
  5.29   at least $50,000 but less than $70,000         $263
  5.30   at least $70,000 but less than $100,000        $334
  5.31   at least $100,000 but less than $140,000       $402
  5.32   at least $140,000 but less than $200,000       $485
  5.33   at least $200,000 but less than $400,000       $658
  5.34   at least $400,000 but less than $600,000       $866
  5.35   $600,000 and over                              $930
  5.36     (d) Individuals who were not residents of Minnesota for any 
  6.1   part of 1998 and who paid more than $10 in Minnesota sales tax 
  6.2   on nonbusiness consumer purchases in that year qualify for a 
  6.3   rebate under this paragraph only.  Qualifying nonresidents must 
  6.4   file a claim for rebate on a form prescribed by the commissioner 
  6.5   before the later of November 30, 2000, or 30 days after the date 
  6.6   of enactment of this act.  The claim must include receipts 
  6.7   showing the Minnesota sales tax paid and the date of the sale.  
  6.8   Taxes paid on purchases allowed in the computation of federal 
  6.9   taxable income or reimbursed by an employer are not eligible for 
  6.10  the rebate.  The commissioner shall determine the qualifying 
  6.11  taxes paid and rebate the lesser of: 
  6.12     (1) 22.8 percent of that amount; or 
  6.13     (2) the maximum amount for which the claimant would have 
  6.14  been eligible as determined under paragraph (b) if the taxpayer 
  6.15  filed the 1998 federal income tax return as a married taxpayer 
  6.16  filing jointly or head of household, or as determined under 
  6.17  paragraph (c) for other taxpayers. 
  6.18     (e) "Income," for purposes of this section other than 
  6.19  paragraph (d), is taxable income as defined in section 63 of the 
  6.20  Internal Revenue Code of 1986, as amended through December 31, 
  6.21  1997, plus the sum of any additions to federal taxable income 
  6.22  for the taxpayer under Minnesota Statutes, section 290.01, 
  6.23  subdivision 19a, and reported on the original 1998 income tax 
  6.24  return, including subsequent adjustments to that return made 
  6.25  within the time limits specified in paragraph (k).  For an 
  6.26  individual who was a resident of Minnesota for less than the 
  6.27  entire year, the sales tax rebate equals the sales tax rebate 
  6.28  calculated under paragraph (b) or (c) multiplied by the 
  6.29  percentage determined pursuant to Minnesota Statutes, section 
  6.30  290.06, subdivision 2c, paragraph (e), as calculated on the 
  6.31  original 1998 income tax return, including subsequent 
  6.32  adjustments to that return made within the time limits specified 
  6.33  in paragraph (k).  For purposes of paragraph (d), "income" is 
  6.34  taxable income as defined in section 63 of the Internal Revenue 
  6.35  Code of 1986, as amended through December 31, 1997, and reported 
  6.36  on the taxpayer's original federal tax return for the first 
  7.1   taxable year beginning after December 31, 1997. 
  7.2      (f) Individuals who were residents of Minnesota for all of 
  7.3   1998, were not eligible for a rebate under paragraph (a), were 
  7.4   not claimed as a dependent on the 1998 federal income tax return 
  7.5   of another, and received in 1998 social security benefits as 
  7.6   defined in section 86(d)(1) of the Internal Revenue Code of 
  7.7   1986, as amended through December 31, 1999, are entitled to a 
  7.8   rebate of $73.  If the Social Security Administration or 
  7.9   Railroad Retirement Board is paying benefits to a recipient by 
  7.10  electronic funds transfers in 2000, the rebate under this 
  7.11  paragraph must be paid by the commissioner through electronic 
  7.12  funds transfer to the same financial institution and into the 
  7.13  same account into which the Social Security Administration or 
  7.14  Railroad Retirement Board transfers social security benefits in 
  7.15  calendar year 2000. 
  7.16     (g) Individuals who claimed exemptions in 1998 under 
  7.17  section 152 of the Internal Revenue Code for one or more 
  7.18  qualifying dependents are eligible for an additional rebate.  
  7.19  The additional rebate equals the greater of (i) $20 for each 
  7.20  qualifying dependent or (ii) the difference between the rebate 
  7.21  allowed under the schedule in paragraph (b) based on the sum of 
  7.22  the individual's income and the income of all qualifying 
  7.23  dependents and the rebate allowed under the schedule in 
  7.24  paragraph (b) based solely on the individual's income.  Rebates 
  7.25  paid to individuals who qualify for an additional rebate under 
  7.26  this paragraph must indicate the amount of additional rebate 
  7.27  paid for each qualifying dependent.  For purposes of this 
  7.28  paragraph, "qualifying dependent" is a dependent who filed a 
  7.29  1998 Minnesota income tax return on or before June 15, 2000, and 
  7.30  had tax liability before refundable credits on that return of at 
  7.31  least $1, and "amount of additional rebate paid for each 
  7.32  qualifying dependent" is the total additional rebate multiplied 
  7.33  by the ratio of each qualifying dependent's income to the income 
  7.34  of all qualifying dependents but the total must be apportioned 
  7.35  among the qualified dependents so that the amount for each 
  7.36  dependent is not less than $20. 
  8.1      (h) For a fiscal year taxpayer, the June 15, 2000 dates in 
  8.2   paragraphs (a) through (d) are extended one month for each month 
  8.3   in calendar year 1998 that occurred prior to the start of the 
  8.4   individual's 1998 fiscal tax year. 
  8.5      (i) Before payment, the commissioner of revenue shall 
  8.6   adjust the rebate as follows: 
  8.7      the rebates calculated in paragraphs (b), (c), (d), (f), 
  8.8   and (g) must be proportionately reduced to account for (i) 
  8.9   additional rebates under paragraph (g) and (ii) 1998 income tax 
  8.10  returns that are filed on or after January 1, 2000, but before 
  8.11  July 1, 2000, so that the amount of sales tax rebates payable 
  8.12  under paragraphs (b), (c), (d), (f), and (g) does not exceed 
  8.13  $485,400,000.  The adjustment under this paragraph is not a rule 
  8.14  subject to Minnesota Statutes, chapter 14. 
  8.15     (j) The commissioner of revenue may begin making sales tax 
  8.16  rebates by August 1, 2000.  Sales tax rebates not paid by 
  8.17  October 1, 2000, bear interest at the rate specified in 
  8.18  Minnesota Statutes, section 270.75.  Unpaid sales tax rebates 
  8.19  payable under paragraph (f) bear interest only beginning January 
  8.20  1, 2001. 
  8.21     (k) A sales tax rebate shall not be adjusted based on 
  8.22  changes to a 1998 income tax return that are made by order of 
  8.23  assessment after June 15, 2000, or made by the taxpayer that are 
  8.24  filed with the commissioner of revenue after June 15, 2000. 
  8.25     (l) Individuals who filed a joint income tax return for 
  8.26  1998 shall receive a joint sales tax rebate.  After the sales 
  8.27  tax rebate has been issued, but before the check has been 
  8.28  cashed, either joint claimant may request a separate check for 
  8.29  one-half of the joint sales tax rebate.  Notwithstanding 
  8.30  anything in this section to the contrary, if prior to payment, 
  8.31  the commissioner has been notified that persons who filed a 
  8.32  joint 1998 income tax return are living at separate addresses, 
  8.33  as indicated on their 1999 income tax return or otherwise, the 
  8.34  commissioner may issue separate checks to each person.  The 
  8.35  amount payable to each person is one-half of the total joint 
  8.36  rebate. 
  9.1      (m) If a rebate is received by the estate of a deceased 
  9.2   individual after the probate estate has been closed, and if the 
  9.3   original rebate check is returned to the commissioner with a 
  9.4   copy of the decree of descent or final account of the estate, 
  9.5   social security numbers, and addresses of the beneficiaries, the 
  9.6   commissioner may issue separate checks in proportion to their 
  9.7   share in the residuary estate in the names of the residuary 
  9.8   beneficiaries of the estate. 
  9.9      (n) The sales tax rebate is a "Minnesota tax law" for 
  9.10  purposes of Minnesota Statutes, section 270B.01, subdivision 8. 
  9.11     (o) The sales tax rebate is "an overpayment of any tax 
  9.12  collected by the commissioner" for purposes of Minnesota 
  9.13  Statutes, section 270.07, subdivision 5.  For purposes of this 
  9.14  paragraph, a joint sales tax rebate is payable to each spouse 
  9.15  equally. 
  9.16     (p) If the commissioner of revenue cannot locate an 
  9.17  individual entitled to a sales tax rebate by July 1, 2002, or if 
  9.18  an individual to whom a sales tax rebate was issued has not 
  9.19  cashed the check by July 1, 2002, the right to the sales tax 
  9.20  rebate lapses and the check must be deposited in the general 
  9.21  fund. 
  9.22     (q) Individuals entitled to a sales tax rebate pursuant to 
  9.23  paragraph (a) or (f), but who did not receive one, individuals 
  9.24  entitled to an additional rebate under paragraph (g), but who 
  9.25  did not receive one, and individuals who receive a sales tax 
  9.26  rebate that was not correctly computed, must file a claim with 
  9.27  the commissioner before July 1, 2001, in a form prescribed by 
  9.28  the commissioner.  These claims must be treated as if they are a 
  9.29  claim for refund under Minnesota Statutes, section 289A.50, 
  9.30  subdivisions 4 and 7. 
  9.31     (r) The sales tax rebate is a refund subject to revenue 
  9.32  recapture under Minnesota Statutes, chapter 270A.  The 
  9.33  commissioner of revenue shall remit the entire refund to the 
  9.34  claimant agency, which shall, upon the request of the spouse who 
  9.35  does not owe the debt, refund one-half of the joint sales tax 
  9.36  rebate to the spouse who does not owe the debt. 
 10.1      (s) The rebate is a reduction of fiscal year 2000 sales tax 
 10.2   revenues.  The amount necessary to make the sales tax rebates 
 10.3   and interest provided in this section is appropriated from the 
 10.4   general fund to the commissioner of revenue in fiscal year 2000 
 10.5   and is available until June 30, 2002. 
 10.6      (t) If a sales tax rebate check is cashed by someone other 
 10.7   than the payee or payees of the check, and the commissioner of 
 10.8   revenue determines that the check has been forged or improperly 
 10.9   endorsed or the commissioner determines that a rebate was 
 10.10  overstated or erroneously issued, the commissioner may issue an 
 10.11  order of assessment for the amount of the check or the amount 
 10.12  the check is overstated against the person or persons cashing 
 10.13  it.  The assessment must be made within two years after the 
 10.14  check is cashed, but if cashing the check constitutes theft 
 10.15  under Minnesota Statutes, section 609.52, or forgery under 
 10.16  Minnesota Statutes, section 609.631, the assessment can be made 
 10.17  at any time.  The assessment may be appealed administratively 
 10.18  and judicially.  The commissioner may take action to collect the 
 10.19  assessment in the same manner as provided by Minnesota Statutes, 
 10.20  chapter 289A, for any other order of the commissioner assessing 
 10.21  tax. 
 10.22     (u) Notwithstanding Minnesota Statutes, sections 9.031, 
 10.23  16A.40, 16B.49, 16B.50, and any other law to the contrary, the 
 10.24  commissioner of revenue may take whatever actions the 
 10.25  commissioner deems necessary to pay the rebates required by this 
 10.26  section, and may, in consultation with the commissioner of 
 10.27  finance and the state treasurer, contract with a private vendor 
 10.28  or vendors to process, print, and mail the rebate checks or 
 10.29  warrants required under this section and receive and disburse 
 10.30  state funds to pay those checks or warrants. 
 10.31     (v) The commissioner may pay rebates required by this 
 10.32  section by electronic funds transfer to individuals who 
 10.33  requested that their 1999 individual income tax refund be paid 
 10.34  through electronic funds transfer.  The commissioner may make 
 10.35  the electronic funds transfer payments to the same financial 
 10.36  institution and into the same account as the 1999 individual 
 11.1   income tax refund. 
 11.2      Sec. 3.  [APPROPRIATION.] 
 11.3      $1,659,000 is appropriated from the general fund to the 
 11.4   commissioner of revenue to administer the sales tax rebate for 
 11.5   fiscal year 2000.  Any unencumbered balance remaining on June 
 11.6   30, 2000, does not cancel but is available for expenditure by 
 11.7   the commissioner of revenue until June 30, 2002.  This is a 
 11.8   one-time appropriation and may not be added to the agency's 
 11.9   budget base. 
 11.10     Sec. 4.  [EFFECTIVE DATE.] 
 11.11     Sections 1 to 3 are effective the day following final 
 11.12  enactment. 
 11.13                             ARTICLE 2 
 11.14                      AGRICULTURAL ASSISTANCE 
 11.15     Section 1.  [AGRICULTURAL ASSISTANCE IN 2000.] 
 11.16     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
 11.17  subdivision apply to this section. 
 11.18     (b) "Acre" means an acre of effective agricultural use land 
 11.19  within a qualified county as reported to the Farm Service Agency 
 11.20  on form 156EZ. 
 11.21     (c) "Commissioner" means the commissioner of revenue. 
 11.22     (d) "Effective agricultural use land" means the land 
 11.23  suitable for growing an agricultural crop and excludes land 
 11.24  enrolled in the conservation reserve program established by 
 11.25  Minnesota Statutes, section 103F.515, or the water bank program 
 11.26  established by Minnesota Statutes, section 103F.601. 
 11.27     (e) "Farm" or "farm operation" means an agricultural 
 11.28  production operation with a unique farm number as reported on 
 11.29  form 156EZ to the Farm Service Agency, which includes at least 
 11.30  40 acres of effective agricultural use land. 
 11.31     (f) "Farm operator" means a person who is identified as the 
 11.32  operator of a farm on form 156EZ filed with the Farm Service 
 11.33  Agency. 
 11.34     (g) "Farm Service Agency" means the United States Farm 
 11.35  Service Agency. 
 11.36     (h) "Farmer" or "farmer at risk" means a person who 
 12.1   produces an agricultural crop and is reported to the Farm 
 12.2   Service Agency as bearing a percentage of the risk for the farm 
 12.3   operation. 
 12.4      (i) "Person" includes individuals, fiduciaries, estates, 
 12.5   trusts, partnerships, joint ventures, and corporations. 
 12.6      (j) "Qualified counties" means the counties of Kittson, 
 12.7   Marshall, Pennington, Polk, Red Lake, and Roseau, which were 
 12.8   declared as disaster counties in Minnesota by presidential 
 12.9   declaration on August 26, 1999. 
 12.10     Subd. 2.  [PAYMENT TO FARMERS.] Every farm operator may 
 12.11  apply on a separate form for each farm that they operate in a 
 12.12  qualified county to the commissioner for payments as provided 
 12.13  under this subdivision.  The payment must be made to each farmer 
 12.14  at risk for a farm operation and equals $4, multiplied by the 
 12.15  number of acres of the farm operation, multiplied by the 
 12.16  percentage of the risk borne by that farmer for that farm 
 12.17  operation.  If total payments for a farm to all farmers at risk 
 12.18  for that farm would exceed $5,600, the payment to each farmer at 
 12.19  risk shall be prorated so that the total payments to all farmers 
 12.20  at risk for that farm do not exceed $5,600. 
 12.21     Applications must be based on information reported to the 
 12.22  Farm Service Agency for crop year 1999 by December 31, 1999.  
 12.23  The applications must include the social security number or 
 12.24  federal employer identification number or a producer number 
 12.25  assigned by the Farm Service Agency for each farmer and the Farm 
 12.26  Service Agency farm number from form 156EZ.  The commissioner 
 12.27  shall prepare application forms for the payment and ensure that 
 12.28  they are available throughout the state.  The commissioner shall 
 12.29  make payments by June 30, 2000, to each eligible farmer who 
 12.30  applies by May 31, 2000, or within 30 days of the application if 
 12.31  the application is received after May 31, 2000.  In no case will 
 12.32  applications be accepted after September 30, 2000. 
 12.33     Subd. 3.  [LIMIT.] No person may receive a payment under 
 12.34  subdivision 2 that exceeds $5,600. 
 12.35     Subd. 4.  [APPLICATION OF OTHER LAWS.] The payments under 
 12.36  subdivision 2 are a "Minnesota tax law" for purposes of 
 13.1   Minnesota Statutes, section 270B.01, subdivision 8. 
 13.2      Subd. 5.  [REMEDIES.] A farmer denied a refund may appeal 
 13.3   that denial under Minnesota Statutes, section 289A.50, 
 13.4   subdivision 7. 
 13.5      Subd. 6.  [INTEREST.] Payments under subdivision 2 bear 
 13.6   interest at the rate specified in Minnesota Statutes, section 
 13.7   289A.55, subdivision 1, from the later of the payment dates 
 13.8   specified under subdivision 2 or 75 days after a complete 
 13.9   payment application was filed with the commissioner. 
 13.10     Subd. 7.  [PENALTIES.] If the commissioner determines that 
 13.11  claims for payments under subdivision 2 are or were excessive 
 13.12  and were filed with fraudulent intent, the claim must be 
 13.13  disallowed in full.  If the claim has been paid, the amount 
 13.14  disallowed must be recovered by assessment and collection under 
 13.15  Minnesota Statutes, chapter 289A.  The assessment must be made 
 13.16  within two years after a check is cashed, but if cashing a check 
 13.17  constitutes theft under Minnesota Statutes, section 609.52, or 
 13.18  forgery under Minnesota Statutes, section 609.631, the 
 13.19  assessment may be made at any time.  The assessment may be 
 13.20  appealed administratively and judicially. 
 13.21     <b>EFFECTIVE DATE:</b>  This section is effective the day 
 13.22  following final enactment. 
 13.23     Sec. 2.  Laws 1999, chapter 112, section 1, subdivision 1, 
 13.24  is amended to read: 
 13.25     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
 13.26  subdivision apply to this section. 
 13.27     (b) "Acre" means an acre of effective agricultural use land 
 13.28  within the state of Minnesota as reported to the farm service 
 13.29  agency on form 156EZ. 
 13.30     (c) "Commissioner" means the commissioner of revenue. 
 13.31     (d) "Effective agricultural use land" means the land 
 13.32  suitable for growing an agricultural crop and excludes land 
 13.33  enrolled in the conservation reserve program established by 
 13.34  Minnesota Statutes, section 103F.515, or the water bank program 
 13.35  established by Minnesota Statutes, section 103F.601. 
 13.36     (e) "Farm" or "farm operation" means an agricultural 
 14.1   production operation with a unique farm number as reported on 
 14.2   form 156EZ to the farm service agency, which includes at least 
 14.3   40 acres of effective agricultural use land. 
 14.4      (f) "Farm operator" means a person who is identified as the 
 14.5   operator of a farm on form 156EZ filed with the farm service 
 14.6   agency. 
 14.7      (g) "Farm service agency" means the United States Farm 
 14.8   Service Agency. 
 14.9      (h) "Farmer" or "farmer at risk" means a person who 
 14.10  produces an agricultural crop or livestock and is reported to 
 14.11  the farm service agency as bearing a percentage of the risk for 
 14.12  the farm operation. 
 14.13     (i) "Livestock" means cattle, hogs, poultry, and sheep. 
 14.14     (j) "Livestock production facility" means a farm that has 
 14.15  produced at least a total of $10,000 in sales of unprocessed 
 14.16  livestock or unprocessed dairy products or receipts from the 
 14.17  care of another farmer's livestock as reported on schedule F or 
 14.18  form 1065 or form 1120 or 1120S of the farmer's federal income 
 14.19  tax return for either taxable years beginning in calendar year 
 14.20  1997 or 1998. 
 14.21     (k) "Person" includes individuals, fiduciaries, estates, 
 14.22  trusts, partnerships, joint ventures, and corporations. 
 14.23     <b>EFFECTIVE DATE:</b>  This section is effective retroactively to 
 14.24  April 23, 1999. 
 14.25     Sec. 3.  [APPROPRIATION.] 
 14.26     The amount necessary to fund the payments required under 
 14.27  section 1, subdivision 2, is appropriated in fiscal year 2000 
 14.28  from the general fund to the commissioner of revenue.  This 
 14.29  appropriation is available until June 30, 2001. 
 14.30     <b>EFFECTIVE DATE:</b>  This section is effective the day 
 14.31  following final enactment. 
 14.32                             ARTICLE 3 
 14.33                       1999 SALES TAX REBATE
 14.34     Section 1.  Laws 1999, chapter 243, article 1, section 2, 
 14.35  is amended to read: 
 14.36     Sec. 2.  [SALES TAX REBATE.] 
 15.1      (a) An individual who: 
 15.2      (1) was eligible for a credit under Laws 1997, chapter 231, 
 15.3   article 1, section 16, as amended by Laws 1997, First Special 
 15.4   Session chapter 5, section 35, and Laws 1997, Third Special 
 15.5   Session chapter 3, section 11, and Laws 1998, chapter 304, and 
 15.6   Laws 1998, chapter 389, article 1, section 3, and who filed for 
 15.7   or received that credit on or before June 15, 1999; or 
 15.8      (2) was a resident of Minnesota for any part of 1997, and 
 15.9   filed a 1997 Minnesota income tax return on or before June 15, 
 15.10  1999, and had a tax liability before refundable credits on that 
 15.11  return of at least $1 but did not file the claim for credit 
 15.12  authorized under Laws 1997, chapter 231, article 1, section 16, 
 15.13  as amended, and who was not allowed to be claimed as a dependent 
 15.14  on a 1997 federal income tax return filed by another person; or 
 15.15     (3) had the property taxes payable on his or her homestead 
 15.16  abated to zero under Laws 1997, chapter 231, article 2, section 
 15.17  64, 
 15.18  shall receive a sales tax rebate. 
 15.19     (b) The sales tax rebate for taxpayers who qualify under 
 15.20  paragraph (a) as married filing joint or head of household must 
 15.21  be computed according to the following schedule: 
 15.22       Income                             Sales Tax Rebate
 15.23   less than $2,500                              $  358
 15.24   at least $2,500 but less than $5,000          $  469
 15.25   at least $5,000 but less than $10,000         $  502
 15.26   at least $10,000 but less than $15,000        $  549
 15.27   at least $15,000 but less than $20,000        $  604
 15.28   at least $20,000 but less than $25,000        $  641
 15.29   at least $25,000 but less than $30,000        $  690
 15.30   at least $30,000 but less than $35,000        $  762
 15.31   at least $35,000 but less than $40,000        $  820
 15.32   at least $40,000 but less than $45,000        $  874
 15.33   at least $45,000 but less than $50,000        $  921
 15.34   at least $50,000 but less than $60,000        $  969
 15.35   at least $60,000 but less than $70,000        $1,071
 15.36   at least $70,000 but less than $80,000        $1,162
 16.1    at least $80,000 but less than $90,000        $1,276
 16.2    at least $90,000 but less than $100,000       $1,417
 16.3    at least $100,000 but less than $120,000      $1,535
 16.4    at least $120,000 but less than $140,000      $1,682
 16.5    at least $140,000 but less than $160,000      $1,818
 16.6    at least $160,000 but less than $180,000      $1,946
 16.7    at least $180,000 but less than $200,000      $2,067
 16.8    at least $200,000 but less than $400,000      $2,644
 16.9    at least $400,000 but less than $600,000      $3,479
 16.10   at least $600,000 but less than $800,000      $4,175
 16.11   at least $800,000 but less than $1,000,000    $4,785
 16.12   $1,000,000 and over                           $5,000
 16.13     (c) The sales tax rebate for individuals who qualify under 
 16.14  paragraph (a) as single or married filing separately must be 
 16.15  computed according to the following schedule: 
 16.16        Income                                 Sales Tax Rebate
 16.17   less than $2,500                              $  204
 16.18   at least $2,500 but less than $5,000          $  249
 16.19   at least $5,000 but less than $10,000         $  299
 16.20   at least $10,000 but less than $15,000        $  408
 16.21   at least $15,000 but less than $20,000        $  464
 16.22   at least $20,000 but less than $25,000        $  496
 16.23   at least $25,000 but less than $30,000        $  515
 16.24   at least $30,000 but less than $40,000        $  570
 16.25   at least $40,000 but less than $50,000        $  649
 16.26   at least $50,000 but less than $70,000        $  776
 16.27   at least $70,000 but less than $100,000       $  958
 16.28   at least $100,000 but less than $140,000      $1,154
 16.29   at least $140,000 but less than $200,000      $1,394
 16.30   at least $200,000 but less than $400,000      $1,889
 16.31   at least $400,000 but less than $600,000      $2,485
 16.32   $600,000 and over                             $2,500
 16.33     (d) Individuals who were not residents of Minnesota for any 
 16.34  part of 1997 and who paid more than $10 in Minnesota sales tax 
 16.35  on nonbusiness consumer purchases in that year qualify for a 
 16.36  rebate under this paragraph only.  Qualifying nonresidents must 
 17.1   file a claim for rebate on a form prescribed by the commissioner 
 17.2   before the later of June 15, 1999, or 30 days after the date of 
 17.3   enactment of this act.  The claim must include receipts showing 
 17.4   the Minnesota sales tax paid and the date of the sale.  Taxes 
 17.5   paid on purchases allowed in the computation of federal taxable 
 17.6   income or reimbursed by an employer are not eligible for the 
 17.7   rebate.  The commissioner shall determine the qualifying taxes 
 17.8   paid and rebate the lesser of: 
 17.9      (1) 69.0 percent of that amount; or 
 17.10     (2) the maximum amount for which the claimant would have 
 17.11  been eligible as determined under paragraph (b) if the taxpayer 
 17.12  filed the 1997 federal income tax return as a married taxpayer 
 17.13  filing jointly or head of household, or as determined under 
 17.14  paragraph (c) for other taxpayers. 
 17.15     (e) "Income," for purposes of this section other than 
 17.16  paragraph (d), is taxable income as defined in section 63 of the 
 17.17  Internal Revenue Code of 1986, as amended through December 31, 
 17.18  1996, plus the sum of any additions to federal taxable income 
 17.19  for the taxpayer under Minnesota Statutes, section 290.01, 
 17.20  subdivision 19a, and reported on the original 1997 income tax 
 17.21  return including subsequent adjustments to that return made 
 17.22  within the time limits specified in paragraph (h).  For an 
 17.23  individual who was a resident of Minnesota for less than the 
 17.24  entire year, the sales tax rebate equals the sales tax rebate 
 17.25  calculated under paragraph (b) or (c) multiplied by the 
 17.26  percentage determined pursuant to Minnesota Statutes, section 
 17.27  290.06, subdivision 2c, paragraph (e), as calculated on the 
 17.28  original 1997 income tax return including subsequent adjustments 
 17.29  to that return made within the time limits specified in 
 17.30  paragraph (h).  For purposes of paragraph (d), "income" is 
 17.31  taxable income as defined in section 63 of the Internal Revenue 
 17.32  Code of 1986, as amended through December 31, 1996, and reported 
 17.33  on the taxpayer's original federal tax return for the first 
 17.34  taxable year beginning after December 31, 1996. 
 17.35     (f) An individual who would have been eligible for a rebate 
 17.36  under paragraph (a), clause (1) or (2), or (d) had the 
 18.1   individual filed a 1997 Minnesota income tax return or claim 
 18.2   form by June 15, 1999, who files the return or claim form by 
 18.3   June 15, 2000, is eligible for the rebate, except the maximum 
 18.4   rebate is $212 if the individual is single or married filing 
 18.5   separately and the maximum rebate is $371 if the individuals are 
 18.6   married filing joint or head of household. 
 18.7      (g) For a fiscal year taxpayer, the June 15, 1999, dates in 
 18.8   paragraphs (a) through (d) are extended one month for each month 
 18.9   in calendar year 1997 that occurred prior to the start of the 
 18.10  individual's 1997 fiscal tax year. 
 18.11     (h) Before payment, the commissioner of revenue shall 
 18.12  adjust the rebate as follows: 
 18.13     (1) the rebates calculated in paragraphs (b), (c), and (d) 
 18.14  must be proportionately reduced to account for 1997 income tax 
 18.15  returns that are filed on or after January 1, 1999, but before 
 18.16  July 1, 1999, so that the amount of sales tax rebates payable 
 18.17  under paragraphs (b), (c), and (d) does not exceed 
 18.18  $1,250,000,000; and 
 18.19     (2) the commissioner of finance shall certify by July 15, 
 18.20  1999, preliminary fiscal year 1999 general fund net nondedicated 
 18.21  revenues.  The certification shall exclude the impact of any 
 18.22  legislation enacted during the 1999 regular session.  If 
 18.23  certified net nondedicated revenues exceed the amount forecast 
 18.24  in February 1999, up to $50,000,000 of the increase shall be 
 18.25  added to the total amount rebated.  The commissioner of revenue 
 18.26  shall adjust all rebates proportionally to reflect any 
 18.27  increases.  The total amount of the rebate shall not exceed 
 18.28  $1,300,000,000. 
 18.29  The adjustments under this paragraph are not rules subject to 
 18.30  Minnesota Statutes, chapter 14. 
 18.31     (g) (i) The commissioner of revenue may begin making sales 
 18.32  tax rebates by August 1, 1999.  Sales tax rebates not paid by 
 18.33  October 1, 1999, bear interest at the rate specified in 
 18.34  Minnesota Statutes, section 270.75.  Sales tax rebates paid to 
 18.35  (1) taxpayers who file their original 1997 Minnesota income tax 
 18.36  return after June 15, 1999, and (2) qualifying nonresidents who 
 19.1   file a claim for rebate after June 15, 1999, 
 19.2   bear interest at the rate specified in Minnesota Statutes, 
 19.3   section 270.75, beginning October 1, 2000. 
 19.4      (h) (j) A sales tax rebate shall not be adjusted based on 
 19.5   changes to a 1997 income tax return that are made by order of 
 19.6   assessment after June 15, 1999 2000, or made by the taxpayer 
 19.7   that are filed with the commissioner of revenue after June 
 19.8   15, 1999 2000. 
 19.9      (i) (k) Individuals who filed a joint income tax return for 
 19.10  1997 shall receive a joint sales tax rebate.  After the sales 
 19.11  tax rebate has been issued, but before the check has been 
 19.12  cashed, either joint claimant may request a separate check for 
 19.13  one-half of the joint sales tax rebate.  Notwithstanding 
 19.14  anything in this section to the contrary, if prior to payment, 
 19.15  the commissioner has been notified that persons who filed a 
 19.16  joint 1997 income tax return are living at separate addresses, 
 19.17  as indicated on their 1998 income tax return or otherwise, the 
 19.18  commissioner may issue separate checks to each person.  The 
 19.19  amount payable to each person is one-half of the total joint 
 19.20  rebate.  If a rebate is received by the estate of a deceased 
 19.21  individual after the probate estate has been closed, and if the 
 19.22  original rebate check is returned to the commissioner with a 
 19.23  copy of the decree of descent or final account of the estate, 
 19.24  social security numbers, and addresses of the beneficiaries, the 
 19.25  commissioner may issue separate checks in proportion to their 
 19.26  share in the residuary estate in the names of the residuary 
 19.27  beneficiaries of the estate. 
 19.28     (j) (l) The sales tax rebate is a "Minnesota tax law" for 
 19.29  purposes of Minnesota Statutes, section 270B.01, subdivision 8. 
 19.30     (k) (m) The sales tax rebate is "an overpayment of any tax 
 19.31  collected by the commissioner" for purposes of Minnesota 
 19.32  Statutes, section 270.07, subdivision 5.  For purposes of this 
 19.33  paragraph, a joint sales tax rebate is payable to each spouse 
 19.34  equally. 
 19.35     (l) (n) If the commissioner of revenue cannot locate an 
 19.36  individual entitled to a sales tax rebate by July 1, 2001, or if 
 20.1   an individual to whom a sales tax rebate was issued has not 
 20.2   cashed the check by July 1, 2001, the right to the sales tax 
 20.3   rebate lapses and the check must be deposited in the general 
 20.4   fund. 
 20.5      (m) (o) Individuals entitled to a sales tax rebate pursuant 
 20.6   to paragraph (a), but who did not receive one, and individuals 
 20.7   who receive a sales tax rebate that was not correctly computed, 
 20.8   must file a claim with the commissioner before July 1, 2000, in 
 20.9   a form prescribed by the commissioner.  Taxpayers who file their 
 20.10  original 1997 Minnesota income tax return after June 15, 1999, 
 20.11  taxpayers who file an amended 1997 Minnesota income tax return 
 20.12  after June 15, 1999, and qualifying nonresidents who file a 
 20.13  claim for rebate after June 15, 1999, and who do not receive it 
 20.14  or who receive a sales tax rebate that was not correctly 
 20.15  computed, must file a claim with the commissioner before July 1, 
 20.16  2001, in a form prescribed by the commissioner.  These claims 
 20.17  must be treated as if they are a claim for refund under 
 20.18  Minnesota Statutes, section 289A.50, subdivisions 4 and 7. 
 20.19     (n) (p) The sales tax rebate is a refund subject to revenue 
 20.20  recapture under Minnesota Statutes, chapter 270A.  The 
 20.21  commissioner of revenue shall remit the entire refund to the 
 20.22  claimant agency, which shall, upon the request of the spouse who 
 20.23  does not owe the debt, refund one-half of the joint sales tax 
 20.24  rebate to the spouse who does not owe the debt. 
 20.25     (o) (q) The rebate is a reduction of fiscal year 1999 sales 
 20.26  tax revenues.  The amount necessary to make the sales tax 
 20.27  rebates and interest provided in this section is appropriated 
 20.28  from the general fund to the commissioner of revenue in fiscal 
 20.29  year 1999 and is available until June 30, 2001. 
 20.30     (p) (r) If a sales tax rebate check is cashed by someone 
 20.31  other than the payee or payees of the check, and the 
 20.32  commissioner of revenue determines that the check has been 
 20.33  forged or improperly endorsed or the commissioner determines 
 20.34  that a rebate was overstated or erroneously issued, the 
 20.35  commissioner may issue an order of assessment for the amount of 
 20.36  the check or the amount the check is overstated against the 
 21.1   person or persons cashing it.  The assessment must be made 
 21.2   within two years after the check is cashed, but if cashing the 
 21.3   check constitutes theft under Minnesota Statutes, section 
 21.4   609.52, or forgery under Minnesota Statutes, section 609.631, 
 21.5   the assessment can be made at any time.  The assessment may be 
 21.6   appealed administratively and judicially.  The commissioner may 
 21.7   take action to collect the assessment in the same manner as 
 21.8   provided by Minnesota Statutes, chapter 289A, for any other 
 21.9   order of the commissioner assessing tax. 
 21.10     (q) (s) Notwithstanding Minnesota Statutes, sections 9.031, 
 21.11  16A.40, 16B.49, 16B.50, and any other law to the contrary, the 
 21.12  commissioner of revenue may take whatever actions the 
 21.13  commissioner deems necessary to pay the rebates required by this 
 21.14  section, and may, in consultation with the commissioner of 
 21.15  finance and the state treasurer, contract with a private vendor 
 21.16  or vendors to process, print, and mail the rebate checks or 
 21.17  warrants required under this section and receive and disburse 
 21.18  state funds to pay those checks or warrants. 
 21.19     (r) (t) The commissioner may pay rebates required by this 
 21.20  section by electronic funds transfer to individuals who 
 21.21  requested that their 1998 individual income tax refund be paid 
 21.22  through electronic funds transfer.  The commissioner may make 
 21.23  the electronic funds transfer payments to the same financial 
 21.24  institution and into the same account as the 1998 individual 
 21.25  income tax refund. 
 21.26     <b>EFFECTIVE DATE:</b>  This section is effective the day 
 21.27  following final enactment. 
 21.28     Sec. 2.  [APPLICATION OF LAW.] 
 21.29     The limitation on the total amount of rebates in Laws 1999, 
 21.30  chapter 243, article 1, section 2, paragraph (f), does not apply 
 21.31  to rebates issued under section 1.  To the extent applicable, 
 21.32  all other provisions of Laws 1999, chapter 243, article 1, 
 21.33  section 2, apply to the rebates paid under section 1.  
 21.34     <b>EFFECTIVE DATE:</b>  This section is effective the day 
 21.35  following final enactment. 
 21.36     Sec. 3.  [APPROPRIATION.] 
 22.1      The amount necessary to pay the rebates under section 1 is 
 22.2   appropriated from the general fund to the commissioner of 
 22.3   revenue for fiscal years 2000 and 2001. 
 22.4      <b>EFFECTIVE DATE:</b>  This section is effective the day 
 22.5   following final enactment. 
 22.6                              ARTICLE 4 
 22.7                      INCOME AND FRANCHISE TAXES 
 22.8      Section 1.  Minnesota Statutes 1998, section 289A.08, is 
 22.9   amended by adding a subdivision to read: 
 22.10     Subd. 16.  [TAX REFUND OR RETURN PREPARERS.] (a) A "tax 
 22.11  refund or return preparer," as defined in section 289A.60, 
 22.12  subdivision 13, paragraph (g), who prepared more than 500 
 22.13  Minnesota individual income tax returns for the prior calendar 
 22.14  year must file all Minnesota individual income tax returns 
 22.15  prepared for the current calendar year by electronic means. 
 22.16     (b) For tax returns prepared for the tax year beginning in 
 22.17  2001, the "500" in paragraph (a) is reduced to 250. 
 22.18     (c) For tax returns prepared for tax years beginning after 
 22.19  December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
 22.20     (d) Paragraph (a) does not apply to a return if the 
 22.21  taxpayer has indicated on the return that the taxpayer did not 
 22.22  want the return filed by electronic means. 
 22.23     <b>EFFECTIVE DATE:</b>  This section is effective for tax returns 
 22.24  prepared for taxable years beginning after December 31, 1999. 
 22.25     Sec. 2.  Minnesota Statutes 1998, section 289A.20, 
 22.26  subdivision 2, is amended to read: 
 22.27     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
 22.28  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
 22.29  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
 22.30  (a) A tax required to be deducted and withheld during the 
 22.31  quarterly period must be paid on or before the last day of the 
 22.32  month following the close of the quarterly period, unless an 
 22.33  earlier time for payment is provided.  A tax required to be 
 22.34  deducted and withheld from compensation of an entertainer and 
 22.35  from a payment to an out-of-state contractor must be paid on or 
 22.36  before the date the return for such tax must be filed under 
 23.1   section 289A.18, subdivision 2.  Taxes required to be deducted 
 23.2   and withheld by partnerships and S corporations must be paid on 
 23.3   or before the date the return must be filed under section 
 23.4   289A.18, subdivision 2. 
 23.5      (b) An employer who, during the previous quarter, withheld 
 23.6   more than $1,500 of tax under section 290.92, subdivision 2a or 
 23.7   3, or 290.923, subdivision 2, must deposit tax withheld under 
 23.8   those sections with the commissioner within the time allowed to 
 23.9   deposit the employer's federal withheld employment taxes under 
 23.10  Treasury Regulation, section 31.6302-1, without regard to the 
 23.11  safe harbor or de minimis rules in subparagraph (f) or the 
 23.12  one-day rule in subsection (c), clause (3).  Taxpayers must 
 23.13  submit a copy of their federal notice of deposit status to the 
 23.14  commissioner upon request by the commissioner. 
 23.15     (c) The commissioner may prescribe by rule other return 
 23.16  periods or deposit requirements.  In prescribing the reporting 
 23.17  period, the commissioner may classify payors according to the 
 23.18  amount of their tax liability and may adopt an appropriate 
 23.19  reporting period for the class that the commissioner judges to 
 23.20  be consistent with efficient tax collection.  In no event will 
 23.21  the duration of the reporting period be more than one year. 
 23.22     (d) If less than the correct amount of tax is paid to the 
 23.23  commissioner, proper adjustments with respect to both the tax 
 23.24  and the amount to be deducted must be made, without interest, in 
 23.25  the manner and at the times the commissioner prescribes.  If the 
 23.26  underpayment cannot be adjusted, the amount of the underpayment 
 23.27  will be assessed and collected in the manner and at the times 
 23.28  the commissioner prescribes. 
 23.29     (e) If the aggregate amount of the tax withheld during a 
 23.30  fiscal year ending June 30 under section 290.92, subdivision 2a 
 23.31  or 3, is equal to or exceeds the amounts established for 
 23.32  remitting federal withheld taxes pursuant to the regulations 
 23.33  promulgated under section 6302(h) of the Internal Revenue Code, 
 23.34  the employer must remit each required deposit for wages paid in 
 23.35  the subsequent calendar year by means of a funds transfer as 
 23.36  defined in section 336.4A-104, paragraph (a).  The funds 
 24.1   transfer payment date, as defined in section 336.4A-401, must be 
 24.2   on or before the date the deposit is due.  If the date the 
 24.3   deposit is due is not a funds transfer business day, as defined 
 24.4   in section 336.4A-105, paragraph (a), clause (4), the payment 
 24.5   date must be on or before the funds transfer business day next 
 24.6   following the date the deposit is due. 
 24.7      (f) A third-party bulk filer as defined in section 290.92, 
 24.8   subdivision 30, paragraph (a), clause (2), who remits 
 24.9   withholding deposits must remit all deposits by means of a funds 
 24.10  transfer as provided in paragraph (e), regardless of the 
 24.11  aggregate amount of tax withheld during a fiscal year for all of 
 24.12  the employers.  
 24.13     <b>EFFECTIVE DATE:</b>  This section is effective for wages paid 
 24.14  after December 31, 1999. 
 24.15     Sec. 3.  Minnesota Statutes 1998, section 289A.26, 
 24.16  subdivision 1, is amended to read: 
 24.17     Subdivision 1.  [MINIMUM LIABILITY.] A corporation subject 
 24.18  to taxation under chapter 290 (excluding section 290.92) or an 
 24.19  entity subject to taxation under section 290.05, subdivision 3, 
 24.20  must make payment of estimated tax for the taxable year if its 
 24.21  tax liability so computed can reasonably be expected to exceed 
 24.22  $500, or in accordance with rules prescribed by the commissioner 
 24.23  for an affiliated group of corporations electing to file filing 
 24.24  one return as permitted under section 289A.08, subdivision 3. 
 24.25     <b>EFFECTIVE DATE:</b>  This section is effective the day 
 24.26  following final enactment. 
 24.27     Sec. 4.  Minnesota Statutes 1998, section 289A.60, 
 24.28  subdivision 1, is amended to read: 
 24.29     Subdivision 1.  [PENALTY FOR FAILURE TO PAY TAX.] (a) If a 
 24.30  tax other than a withholding or sales or use tax is not paid 
 24.31  within the time specified for payment, a penalty must be added 
 24.32  to the amount required to be shown as tax.  The penalty is three 
 24.33  percent of the tax not paid on or before the date specified for 
 24.34  payment of the tax if the failure is for not more than 30 days, 
 24.35  with an additional penalty of three percent of the amount of tax 
 24.36  remaining unpaid during each additional 30 days or fraction of 
 25.1   30 days during which the failure continues, not exceeding 24 
 25.2   percent in the aggregate. 
 25.3      If an individual files a state individual income tax return 
 25.4   and pays all of the state individual income tax with the filing 
 25.5   of a return within six months of the date the return is due and 
 25.6   the amount paid by the due date of the return is at least 90 
 25.7   percent of the amount of tax due, as shown on the return, the 
 25.8   individual is presumed to have reasonable cause for the late 
 25.9   payment. 
 25.10     (b) If a withholding or sales or use tax is not paid within 
 25.11  the time specified for payment, a penalty must be added to the 
 25.12  amount required to be shown as tax.  The penalty is five percent 
 25.13  of the tax not paid on or before the date specified for payment 
 25.14  of the tax if the failure is for not more than 30 days, with an 
 25.15  additional penalty of five percent of the amount of tax 
 25.16  remaining unpaid during each additional 30 days or fraction of 
 25.17  30 days during which the failure continues, not exceeding 15 
 25.18  percent in the aggregate. 
 25.19     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 25.20  years beginning after December 31, 1999. 
 25.21     Sec. 5.  Minnesota Statutes 1999 Supplement, section 
 25.22  290.01, subdivision 19b, is amended to read: 
 25.23     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 25.24  individuals, estates, and trusts, there shall be subtracted from 
 25.25  federal taxable income: 
 25.26     (1) interest income on obligations of any authority, 
 25.27  commission, or instrumentality of the United States to the 
 25.28  extent includable in taxable income for federal income tax 
 25.29  purposes but exempt from state income tax under the laws of the 
 25.30  United States; 
 25.31     (2) if included in federal taxable income, the amount of 
 25.32  any overpayment of income tax to Minnesota or to any other 
 25.33  state, for any previous taxable year, whether the amount is 
 25.34  received as a refund or as a credit to another taxable year's 
 25.35  income tax liability; 
 25.36     (3) the amount paid to others, less the credit allowed 
 26.1   under section 290.0674, not to exceed $1,625 for each qualifying 
 26.2   child in grades kindergarten to 6 and $2,500 for each qualifying 
 26.3   child in grades 7 to 12, for tuition, textbooks, and 
 26.4   transportation of each qualifying child in attending an 
 26.5   elementary or secondary school situated in Minnesota, North 
 26.6   Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
 26.7   this state may legally fulfill the state's compulsory attendance 
 26.8   laws, which is not operated for profit, and which adheres to the 
 26.9   provisions of the Civil Rights Act of 1964 and chapter 363.  For 
 26.10  the purposes of this clause, "tuition" includes fees or tuition 
 26.11  as defined in section 290.0674, subdivision 1, clause (1).  As 
 26.12  used in this clause, "textbooks" includes books and other 
 26.13  instructional materials and equipment used in elementary and 
 26.14  secondary schools in teaching only those subjects legally and 
 26.15  commonly taught in public elementary and secondary schools in 
 26.16  this state.  Equipment expenses qualifying for deduction 
 26.17  includes expenses as defined and limited in section 290.0674, 
 26.18  subdivision 1, clause (3).  "Textbooks" does not include 
 26.19  instructional books and materials used in the teaching of 
 26.20  religious tenets, doctrines, or worship, the purpose of which is 
 26.21  to instill such tenets, doctrines, or worship, nor does it 
 26.22  include books or materials for, or transportation to, 
 26.23  extracurricular activities including sporting events, musical or 
 26.24  dramatic events, speech activities, driver's education, or 
 26.25  similar programs.  For purposes of the subtraction provided by 
 26.26  this clause, "qualifying child" has the meaning given in section 
 26.27  32(c)(3) of the Internal Revenue Code; 
 26.28     (4) contributions made in taxable years beginning after 
 26.29  December 31, 1981, and before January 1, 1985, to a qualified 
 26.30  governmental pension plan, an individual retirement account, 
 26.31  simplified employee pension, or qualified plan covering a 
 26.32  self-employed person that were included in Minnesota gross 
 26.33  income in the taxable year for which the contributions were made 
 26.34  but were deducted or were not included in the computation of 
 26.35  federal adjusted gross income, less any amount allowed to be 
 26.36  subtracted as a distribution under this subdivision or a 
 27.1   predecessor provision in taxable years that began before January 
 27.2   1, 2000.  This subtraction applies only for taxable years 
 27.3   beginning after December 31, 1999, and before January 1, 2001.  
 27.4   If an individual's subtraction under this clause exceeds the 
 27.5   individual's taxable income, the excess may be carried forward 
 27.6   to taxable years beginning after December 31, 2000, and before 
 27.7   January 1, 2002; 
 27.8      (5) income as provided under section 290.0802; 
 27.9      (6) the amount of unrecovered accelerated cost recovery 
 27.10  system deductions allowed under subdivision 19g; 
 27.11     (7) to the extent included in federal adjusted gross 
 27.12  income, income realized on disposition of property exempt from 
 27.13  tax under section 290.491; 
 27.14     (8) to the extent not deducted in determining federal 
 27.15  taxable income or used to claim the long-term care insurance 
 27.16  credit under section 290.0672, the amount paid by individuals 
 27.17  for health insurance of self-employed individuals as determined 
 27.18  under section 162(l) of the Internal Revenue Code, except that 
 27.19  the percent limit does not apply as defined in section 213(d) of 
 27.20  the Internal Revenue Code.  If the taxpayer individual deducted 
 27.21  insurance payments under section 213 of the Internal Revenue 
 27.22  Code of 1986, the subtraction under this clause must be reduced 
 27.23  by the lesser of: 
 27.24     (i) the total itemized deductions allowed under section 
 27.25  63(d) of the Internal Revenue Code, less state, local, and 
 27.26  foreign income taxes deductible under section 164 of the 
 27.27  Internal Revenue Code and the standard deduction under section 
 27.28  63(c) of the Internal Revenue Code; or 
 27.29     (ii) the lesser of (A) the amount of insurance qualifying 
 27.30  as "medical care" under section 213(d) of the Internal Revenue 
 27.31  Code to the extent not deducted under section 162(1) of the 
 27.32  Internal Revenue Code or excluded from income or (B) the total 
 27.33  amount deductible for medical care under section 213(a); 
 27.34     (9) the exemption amount allowed under Laws 1995, chapter 
 27.35  255, article 3, section 2, subdivision 3; 
 27.36     (10) to the extent included in federal taxable income, 
 28.1   postservice benefits for youth community service under section 
 28.2   124D.42 for volunteer service under United States Code, title 
 28.3   42, section 5011(d), as amended; 
 28.4      (11) to the extent not deducted in determining federal 
 28.5   taxable income by an individual who does not itemize deductions 
 28.6   for federal income tax purposes for the taxable year, an amount 
 28.7   equal to 50 percent of the excess of charitable contributions 
 28.8   allowable as a deduction for the taxable year under section 
 28.9   170(a) of the Internal Revenue Code over $500; and 
 28.10     (12) to the extent included in federal taxable income, 
 28.11  holocaust victims' settlement payments for any injury incurred 
 28.12  as a result of the holocaust, if received by an individual who 
 28.13  was persecuted for racial or religious reasons by Nazi Germany 
 28.14  or any other Axis regime or an heir of such a person; 
 28.15     (13) for taxable years beginning before January 1, 2008, 
 28.16  the amount of the federal small ethanol producer credit allowed 
 28.17  under section 40(a)(3) of the Internal Revenue Code which is 
 28.18  included in gross income under section 87 of the Internal 
 28.19  Revenue Code. 
 28.20     <b>EFFECTIVE DATE:</b>  (a) Clause (8) of this section is 
 28.21  effective for taxable years beginning after December 31, 2000. 
 28.22     (b) Clauses (4) and (13) of this section are effective for 
 28.23  taxable years beginning after December 31, 1999. 
 28.24     Sec. 6.  Minnesota Statutes 1998, section 290.01, 
 28.25  subdivision 19c, is amended to read: 
 28.26     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 28.27  INCOME.] For corporations, there shall be added to federal 
 28.28  taxable income: 
 28.29     (1) the amount of any deduction taken for federal income 
 28.30  tax purposes for income, excise, or franchise taxes based on net 
 28.31  income or related minimum taxes, including but not limited to 
 28.32  the tax imposed under section 290.0922, paid by the corporation 
 28.33  to Minnesota, another state, a political subdivision of another 
 28.34  state, the District of Columbia, or any foreign country or 
 28.35  possession of the United States; 
 28.36     (2) interest not subject to federal tax upon obligations 
 29.1   of:  the United States, its possessions, its agencies, or its 
 29.2   instrumentalities; the state of Minnesota or any other state, 
 29.3   any of its political or governmental subdivisions, any of its 
 29.4   municipalities, or any of its governmental agencies or 
 29.5   instrumentalities; the District of Columbia; or Indian tribal 
 29.6   governments; 
 29.7      (3) exempt-interest dividends received as defined in 
 29.8   section 852(b)(5) of the Internal Revenue Code; 
 29.9      (4) the amount of any net operating loss deduction taken 
 29.10  for federal income tax purposes under section 172 or 832(c)(10) 
 29.11  of the Internal Revenue Code or operations loss deduction under 
 29.12  section 810 of the Internal Revenue Code; 
 29.13     (5) the amount of any special deductions taken for federal 
 29.14  income tax purposes under sections 241 to 247 of the Internal 
 29.15  Revenue Code; 
 29.16     (6) losses from the business of mining, as defined in 
 29.17  section 290.05, subdivision 1, clause (a), that are not subject 
 29.18  to Minnesota income tax; 
 29.19     (7) the amount of any capital losses deducted for federal 
 29.20  income tax purposes under sections 1211 and 1212 of the Internal 
 29.21  Revenue Code; 
 29.22     (8) the amount of any charitable contributions deducted for 
 29.23  federal income tax purposes under section 170 of the Internal 
 29.24  Revenue Code; 
 29.25     (9) the exempt foreign trade income of a foreign sales 
 29.26  corporation under sections 921(a) and 291 of the Internal 
 29.27  Revenue Code; 
 29.28     (10) the amount of percentage depletion deducted under 
 29.29  sections 611 through 614 and 291 of the Internal Revenue Code; 
 29.30     (11) for certified pollution control facilities placed in 
 29.31  service in a taxable year beginning before December 31, 1986, 
 29.32  and for which amortization deductions were elected under section 
 29.33  169 of the Internal Revenue Code of 1954, as amended through 
 29.34  December 31, 1985, the amount of the amortization deduction 
 29.35  allowed in computing federal taxable income for those 
 29.36  facilities; 
 30.1      (12) the amount of any deemed dividend from a foreign 
 30.2   operating corporation determined pursuant to section 290.17, 
 30.3   subdivision 4, paragraph (g); 
 30.4      (13) the amount of any environmental tax paid under section 
 30.5   59(a) of the Internal Revenue Code; and 
 30.6      (14) the amount of a partner's pro rata share of net income 
 30.7   which does not flow through to the partner because the 
 30.8   partnership elected to pay the tax on the income under section 
 30.9   6242(a)(2) of the Internal Revenue Code. 
 30.10     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 30.11  years beginning after December 31, 1999. 
 30.12     Sec. 7.  Minnesota Statutes 1998, section 290.01, 
 30.13  subdivision 19d, is amended to read: 
 30.14     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 30.15  TAXABLE INCOME.] For corporations, there shall be subtracted 
 30.16  from federal taxable income after the increases provided in 
 30.17  subdivision 19c:  
 30.18     (1) the amount of foreign dividend gross-up added to gross 
 30.19  income for federal income tax purposes under section 78 of the 
 30.20  Internal Revenue Code; 
 30.21     (2) the amount of salary expense not allowed for federal 
 30.22  income tax purposes due to claiming the federal jobs credit 
 30.23  under section 51 of the Internal Revenue Code; 
 30.24     (3) any dividend (not including any distribution in 
 30.25  liquidation) paid within the taxable year by a national or state 
 30.26  bank to the United States, or to any instrumentality of the 
 30.27  United States exempt from federal income taxes, on the preferred 
 30.28  stock of the bank owned by the United States or the 
 30.29  instrumentality; 
 30.30     (4) amounts disallowed for intangible drilling costs due to 
 30.31  differences between this chapter and the Internal Revenue Code 
 30.32  in taxable years beginning before January 1, 1987, as follows: 
 30.33     (i) to the extent the disallowed costs are represented by 
 30.34  physical property, an amount equal to the allowance for 
 30.35  depreciation under Minnesota Statutes 1986, section 290.09, 
 30.36  subdivision 7, subject to the modifications contained in 
 31.1   subdivision 19e; and 
 31.2      (ii) to the extent the disallowed costs are not represented 
 31.3   by physical property, an amount equal to the allowance for cost 
 31.4   depletion under Minnesota Statutes 1986, section 290.09, 
 31.5   subdivision 8; 
 31.6      (5) the deduction for capital losses pursuant to sections 
 31.7   1211 and 1212 of the Internal Revenue Code, except that: 
 31.8      (i) for capital losses incurred in taxable years beginning 
 31.9   after December 31, 1986, capital loss carrybacks shall not be 
 31.10  allowed; 
 31.11     (ii) for capital losses incurred in taxable years beginning 
 31.12  after December 31, 1986, a capital loss carryover to each of the 
 31.13  15 taxable years succeeding the loss year shall be allowed; 
 31.14     (iii) for capital losses incurred in taxable years 
 31.15  beginning before January 1, 1987, a capital loss carryback to 
 31.16  each of the three taxable years preceding the loss year, subject 
 31.17  to the provisions of Minnesota Statutes 1986, section 290.16, 
 31.18  shall be allowed; and 
 31.19     (iv) for capital losses incurred in taxable years beginning 
 31.20  before January 1, 1987, a capital loss carryover to each of the 
 31.21  five taxable years succeeding the loss year to the extent such 
 31.22  loss was not used in a prior taxable year and subject to the 
 31.23  provisions of Minnesota Statutes 1986, section 290.16, shall be 
 31.24  allowed; 
 31.25     (6) an amount for interest and expenses relating to income 
 31.26  not taxable for federal income tax purposes, if (i) the income 
 31.27  is taxable under this chapter and (ii) the interest and expenses 
 31.28  were disallowed as deductions under the provisions of section 
 31.29  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 31.30  federal taxable income; 
 31.31     (7) in the case of mines, oil and gas wells, other natural 
 31.32  deposits, and timber for which percentage depletion was 
 31.33  disallowed pursuant to subdivision 19c, clause (11), a 
 31.34  reasonable allowance for depletion based on actual cost.  In the 
 31.35  case of leases the deduction must be apportioned between the 
 31.36  lessor and lessee in accordance with rules prescribed by the 
 32.1   commissioner.  In the case of property held in trust, the 
 32.2   allowable deduction must be apportioned between the income 
 32.3   beneficiaries and the trustee in accordance with the pertinent 
 32.4   provisions of the trust, or if there is no provision in the 
 32.5   instrument, on the basis of the trust's income allocable to 
 32.6   each; 
 32.7      (8) for certified pollution control facilities placed in 
 32.8   service in a taxable year beginning before December 31, 1986, 
 32.9   and for which amortization deductions were elected under section 
 32.10  169 of the Internal Revenue Code of 1954, as amended through 
 32.11  December 31, 1985, an amount equal to the allowance for 
 32.12  depreciation under Minnesota Statutes 1986, section 290.09, 
 32.13  subdivision 7; 
 32.14     (9) the amount included in federal taxable income 
 32.15  attributable to the credits provided in Minnesota Statutes 1986, 
 32.16  section 273.1314, subdivision 9, or Minnesota Statutes, section 
 32.17  469.171, subdivision 6; 
 32.18     (10) amounts included in federal taxable income that are 
 32.19  due to refunds of income, excise, or franchise taxes based on 
 32.20  net income or related minimum taxes paid by the corporation to 
 32.21  Minnesota, another state, a political subdivision of another 
 32.22  state, the District of Columbia, or a foreign country or 
 32.23  possession of the United States to the extent that the taxes 
 32.24  were added to federal taxable income under section 290.01, 
 32.25  subdivision 19c, clause (1), in a prior taxable year; 
 32.26     (11) 80 percent of royalties, fees, or other like income 
 32.27  accrued or received from a foreign operating corporation or a 
 32.28  foreign corporation which is part of the same unitary business 
 32.29  as the receiving corporation; 
 32.30     (12) income or gains from the business of mining as defined 
 32.31  in section 290.05, subdivision 1, clause (a), that are not 
 32.32  subject to Minnesota franchise tax; 
 32.33     (13) the amount of handicap access expenditures in the 
 32.34  taxable year which are not allowed to be deducted or capitalized 
 32.35  under section 44(d)(7) of the Internal Revenue Code; 
 32.36     (14) the amount of qualified research expenses not allowed 
 33.1   for federal income tax purposes under section 280C(c) of the 
 33.2   Internal Revenue Code, but only to the extent that the amount 
 33.3   exceeds the amount of the credit allowed under section 290.068; 
 33.4      (15) the amount of salary expenses not allowed for federal 
 33.5   income tax purposes due to claiming the Indian employment credit 
 33.6   under section 45A(a) of the Internal Revenue Code; and 
 33.7      (16) the amount of any refund of environmental taxes paid 
 33.8   under section 59A of the Internal Revenue Code; and 
 33.9      (17) for taxable years beginning before January 1, 2008, 
 33.10  the amount of the federal small ethanol producer credit allowed 
 33.11  under section 40(a)(3) of the Internal Revenue Code which is 
 33.12  included in gross income under section 87 of the Internal 
 33.13  Revenue Code. 
 33.14     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 33.15  years beginning after December 31, 1999. 
 33.16     Sec. 8.  Minnesota Statutes 1998, section 290.015, 
 33.17  subdivision 1, is amended to read: 
 33.18     Subdivision 1.  [GENERAL RULE.] (a) Except as provided in 
 33.19  subdivision 3, a person that conducts a trade or business that 
 33.20  has a place of business in this state, regularly has employees 
 33.21  or independent contractors conducting business activities on its 
 33.22  behalf in this state, or owns or leases real property that is 
 33.23  located in this state or tangible personal property located, 
 33.24  including but not limited to mobile property, that is present in 
 33.25  this state as defined in section 290.191, subdivision 6, 
 33.26  paragraph (e), is subject to the taxes imposed by this chapter. 
 33.27     (b) Except as provided in subdivision 3, a person that 
 33.28  conducts a trade or business not described in paragraph (a) is 
 33.29  subject to the taxes imposed by this chapter if the trade or 
 33.30  business obtains or regularly solicits business from within this 
 33.31  state, without regard to physical presence in this state. 
 33.32     (c) For purposes of paragraph (b), business from within 
 33.33  this state includes, but is not limited to: 
 33.34     (1) sales of products or services of any kind or nature to 
 33.35  customers in this state who receive the product or service in 
 33.36  this state; 
 34.1      (2) sales of services which are performed from outside this 
 34.2   state but the services are received in this state; 
 34.3      (3) transactions with customers in this state that involve 
 34.4   intangible property and result in income flowing to the person 
 34.5   from within receipts attributed to this state as provided in 
 34.6   section 290.191, subdivision 5 or 6; 
 34.7      (4) leases of tangible personal property that is located in 
 34.8   this state as defined in section 290.191, subdivision 5, 
 34.9   paragraph (g), or 6, paragraph (e); and 
 34.10     (5) sales and leases of real property located in this 
 34.11  state; and 
 34.12     (6) if a financial institution, deposits received from 
 34.13  customers in this state.  
 34.14     (d) For purposes of paragraph (b), solicitation includes, 
 34.15  but is not limited to: 
 34.16     (1) the distribution, by mail or otherwise, without regard 
 34.17  to the state from which such distribution originated or in which 
 34.18  the materials were prepared, of catalogs, periodicals, 
 34.19  advertising flyers, or other written solicitations of business 
 34.20  to customers in this state; 
 34.21     (2) display of advertisements on billboards or other 
 34.22  outdoor advertising in this state; 
 34.23     (3) advertisements in newspapers published in this state; 
 34.24     (4) advertisements in trade journals or other periodicals, 
 34.25  the circulation of which is primarily within this state; 
 34.26     (5) advertisements in a Minnesota edition of a national or 
 34.27  regional publication or a limited regional edition of which this 
 34.28  state is included of a broader regional or national publication 
 34.29  which are not placed in other geographically defined editions of 
 34.30  the same issue of the same publication; 
 34.31     (6) advertisements in regional or national publications in 
 34.32  an edition which is not by its contents geographically targeted 
 34.33  to Minnesota, but which is sold over the counter in Minnesota or 
 34.34  by subscription to Minnesota residents; 
 34.35     (7) advertisements broadcast on a radio or television 
 34.36  station located in Minnesota; or 
 35.1      (8) any other solicitation by telegraph, telephone, 
 35.2   computer database, cable, optic, microwave, or other 
 35.3   communication system. 
 35.4      <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 35.5   years beginning after December 31, 1999. 
 35.6      Sec. 9.  Minnesota Statutes 1998, section 290.015, 
 35.7   subdivision 3, is amended to read: 
 35.8      Subd. 3.  [EXCEPTIONS.] (a) A person is not subject to tax 
 35.9   under this chapter if the person is engaged in the business of 
 35.10  selling tangible personal property and taxation of that person 
 35.11  under this chapter is precluded by Public Law Number 86-272, 
 35.12  United States Code, title 15, sections 381 to 384, or would be 
 35.13  so precluded except for the fact that the person stored tangible 
 35.14  personal property in a state licensed facility under chapter 231.
 35.15     (b) Ownership of an interest in the following types of 
 35.16  property (including those contacts with this state reasonably 
 35.17  required to evaluate and complete the acquisition or disposition 
 35.18  of the property, the servicing of the property or the income 
 35.19  from it, the collection of income from the property, or the 
 35.20  acquisition or liquidation of collateral relating to the 
 35.21  property) shall not be a factor in determining whether the owner 
 35.22  is subject to tax under this chapter: 
 35.23     (1) an interest in a real estate mortgage investment 
 35.24  conduit, a real estate investment trust, a financial asset 
 35.25  securitization investment trust, or a regulated investment 
 35.26  company or a fund of a regulated investment company, as those 
 35.27  terms are defined in the Internal Revenue Code; 
 35.28     (2) an interest in money market instruments or securities 
 35.29  as defined in section 290.191, subdivision 6, paragraphs (c) and 
 35.30  (d); 
 35.31     (3) an interest in a loan-backed, mortgage-backed, or 
 35.32  receivable-backed security representing either:  (i) ownership 
 35.33  in a pool of promissory notes, mortgages, or receivables or 
 35.34  certificates of interest or participation in such notes, 
 35.35  mortgages, or receivables, or (ii) debt obligations or equity 
 35.36  interests which provide for payments in relation to payments or 
 36.1   reasonable projections of payments on the notes, mortgages, or 
 36.2   receivables; 
 36.3      (4) an interest acquired from a person in assets described 
 36.4   in section 290.191, subdivision 11, paragraphs (e) to (l), 
 36.5   subject to the provisions of paragraph (c), clause (2)(A); 
 36.6      (5) an interest acquired from a person in the right to 
 36.7   service, or collect income from any assets described in section 
 36.8   290.191, subdivision 11, paragraphs (e) to (l), subject to the 
 36.9   provisions of paragraph (c), clause (2)(A); 
 36.10     (6) an interest acquired from a person in a funded or 
 36.11  unfunded agreement to extend or guarantee credit whether 
 36.12  conditional, mandatory, temporary, standby, secured, or 
 36.13  otherwise, subject to the provisions of paragraph (c), clause 
 36.14  (2)(A); 
 36.15     (7) an interest of a person other than an individual, 
 36.16  estate, or trust, in any intangible, tangible, real, or personal 
 36.17  property acquired in satisfaction, whether in whole or in part, 
 36.18  of any asset embodying a payment obligation which is in default, 
 36.19  whether secured or unsecured, the ownership of an interest in 
 36.20  which would be exempt under the preceding provisions of this 
 36.21  subdivision, provided the property is disposed of within a 
 36.22  reasonable period of time; or 
 36.23     (8) amounts held in escrow or trust accounts, pursuant to 
 36.24  and in accordance with the terms of property described in this 
 36.25  subdivision. 
 36.26     (c)(1) For purposes of paragraph (b), clauses (4) to (6), 
 36.27  an interest in the type of assets or credit agreements described 
 36.28  is deemed to exist at the time the owner becomes legally 
 36.29  obligated, conditionally or unconditionally, to fund, acquire, 
 36.30  renew, extend, amend, or otherwise enter into the credit 
 36.31  arrangement. 
 36.32     (2)(A) An owner has acquired an interest from a person in 
 36.33  paragraph (b), clauses (4) to (6), assets if:  
 36.34     (i) the owner at the time of the acquisition of the asset 
 36.35  does not own, directly or indirectly, 15 percent or more of the 
 36.36  outstanding stock or in the case of a partnership 15 percent or 
 37.1   more of the capital or profit interests of the person from whom 
 37.2   it acquired the asset; 
 37.3      (ii) the person from whom the owner acquired the asset 
 37.4   regularly sells, assigns, or transfers interests in paragraph 
 37.5   (b), clauses (4) to (6), assets during the 12 calendar months 
 37.6   immediately preceding the month of acquisition to three or more 
 37.7   persons; and 
 37.8      (iii) the person from whom the owner acquired the asset 
 37.9   does not sell, assign, or transfer 75 percent or more of its 
 37.10  paragraph (b), clauses (4) to (6), assets during the 12 calendar 
 37.11  months immediately preceding the month of acquisition to the 
 37.12  owner. 
 37.13  For purposes of determining indirect ownership under item (i), 
 37.14  the owner is deemed to own all stock, capital, or profit 
 37.15  interests owned by another person if the owner directly owns 15 
 37.16  percent or more of the stock, capital, or profit interests in 
 37.17  the other person.  The owner is also deemed to own through any 
 37.18  intermediary parties all stock, capital, and profit interests 
 37.19  directly owned by a person to the extent there exists a 15 
 37.20  percent or more chain of ownership of stock, capital, or profit 
 37.21  interests between the owner, intermediary parties and the person.
 37.22     (B) If the owner of the asset is a member of the a unitary 
 37.23  group business, paragraph (b), clauses (4) to (8), do not apply 
 37.24  to an interest acquired from another member of the unitary group 
 37.25  business.  If the interest in the asset was originally acquired 
 37.26  from a nonunitary member and at that time qualified as a section 
 37.27  290.015, subdivision 3, paragraph (b), asset, the foregoing 
 37.28  limitation does not apply. 
 37.29     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 37.30  years beginning after December 31, 1999. 
 37.31     Sec. 10.  Minnesota Statutes 1998, section 290.015, 
 37.32  subdivision 4, is amended to read: 
 37.33     Subd. 4.  [LIMITATIONS.] (a) This section does not subject 
 37.34  a trade or business to any regulation, including any tax, of any 
 37.35  local unit of government or subdivision of this state if the 
 37.36  trade or business does not own or lease tangible or real 
 38.1   property located within this state and has no employees or 
 38.2   independent contractors present in this state to assist in the 
 38.3   carrying on of the business. 
 38.4      (b) The purchase of tangible personal property or 
 38.5   intangible property or services by a person that conducts a 
 38.6   trade or business with the principal place of business outside 
 38.7   of Minnesota, referred to as the "non-Minnesota person", from a 
 38.8   person within Minnesota shall not be taken into account in 
 38.9   determining whether the non-Minnesota person is subject to the 
 38.10  taxes imposed by this chapter, except for services involving 
 38.11  either the direct solicitation of Minnesota customers or 
 38.12  relationships with Minnesota customers after sales are made.  
 38.13  This paragraph is subject to the limitations contained in 
 38.14  subdivision 3, paragraph (b), clauses (4) to (6). 
 38.15     (c) No Contact with any Minnesota financial institution by 
 38.16  any financial institution with its principal place of business 
 38.17  outside Minnesota with respect to transactions described in 
 38.18  subdivision 3, or with respect to deposits received from or by a 
 38.19  Minnesota financial institution, shall not be taken into account 
 38.20  in determining whether such a financial institution is subject 
 38.21  to the taxes imposed by this chapter.  The fact of Participation 
 38.22  by a Minnesota financial institution in a transaction which also 
 38.23  involves a borrower and a financial institution that conducts a 
 38.24  trade or business with its principal place of business outside 
 38.25  of Minnesota shall not be a factor in determining whether such 
 38.26  financial institution is subject to the taxes imposed by this 
 38.27  chapter.  This paragraph does not apply to transactions between 
 38.28  or among members of the same unitary group business. 
 38.29     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 38.30  years beginning after December 31, 1999. 
 38.31     Sec. 11.  Minnesota Statutes 1999 Supplement, section 
 38.32  290.06, subdivision 2c, is amended to read: 
 38.33     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 38.34  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 38.35  married individuals filing joint returns and surviving spouses 
 38.36  as defined in section 2(a) of the Internal Revenue Code must be 
 39.1   computed by applying to their taxable net income the following 
 39.2   schedule of rates: 
 39.3      (1) On the first $25,220 $25,680, 5.5 5 percent; 
 39.4      (2) On all over $25,220 $25,680, but not over 
 39.5   $100,200 $102,030, 7.25 6.5 percent; 
 39.6      (3) On all over $100,200 $102,030, 8 7.5 percent. 
 39.7      Married individuals filing separate returns, estates, and 
 39.8   trusts must compute their income tax by applying the above rates 
 39.9   to their taxable income, except that the income brackets will be 
 39.10  one-half of the above amounts.  
 39.11     (b) The income taxes imposed by this chapter upon unmarried 
 39.12  individuals must be computed by applying to taxable net income 
 39.13  the following schedule of rates: 
 39.14     (1) On the first $17,250 $17,570, 5.5 5 percent; 
 39.15     (2) On all over $17,250 $17,570, but not over 
 39.16  $56,680 $57,710, 7.25 6.5 percent; 
 39.17     (3) On all over $56,680 $57,710, 8 7.5 percent. 
 39.18     (c) The income taxes imposed by this chapter upon unmarried 
 39.19  individuals qualifying as a head of household as defined in 
 39.20  section 2(b) of the Internal Revenue Code must be computed by 
 39.21  applying to taxable net income the following schedule of rates: 
 39.22     (1) On the first $21,240 $21,630, 5.5 5 percent; 
 39.23     (2) On all over $21,240 $21,630, but not 
 39.24  over $85,350 $86,910, 7.25 6.5 percent; 
 39.25     (3) On all over $85,350 $86,910, 8 7.5 percent. 
 39.26     (d) In lieu of a tax computed according to the rates set 
 39.27  forth in this subdivision, the tax of any individual taxpayer 
 39.28  whose taxable net income for the taxable year is less than an 
 39.29  amount determined by the commissioner must be computed in 
 39.30  accordance with tables prepared and issued by the commissioner 
 39.31  of revenue based on income brackets of not more than $100.  The 
 39.32  amount of tax for each bracket shall be computed at the rates 
 39.33  set forth in this subdivision, provided that the commissioner 
 39.34  may disregard a fractional part of a dollar unless it amounts to 
 39.35  50 cents or more, in which case it may be increased to $1. 
 39.36     (e) An individual who is not a Minnesota resident for the 
 40.1   entire year must compute the individual's Minnesota income tax 
 40.2   as provided in this subdivision.  After the application of the 
 40.3   nonrefundable credits provided in this chapter, the tax 
 40.4   liability must then be multiplied by a fraction in which:  
 40.5      (1) the numerator is the individual's Minnesota source 
 40.6   federal adjusted gross income as defined in section 62 of the 
 40.7   Internal Revenue Code and increased by the additions required 
 40.8   under section 290.01, subdivision 19a, clauses (1) and (6), 
 40.9   after applying the allocation and assignability provisions of 
 40.10  section 290.081, clause (a), or 290.17; and 
 40.11     (2) the denominator is the individual's federal adjusted 
 40.12  gross income as defined in section 62 of the Internal Revenue 
 40.13  Code of 1986, increased by the amounts specified in section 
 40.14  290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
 40.15  amounts specified in section 290.01, subdivision 19b, clause (1).
 40.16     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 40.17  years beginning after December 31, 1999. 
 40.18     Sec. 12.  Minnesota Statutes 1999 Supplement, section 
 40.19  290.06, subdivision 2d, is amended to read: 
 40.20     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
 40.21  taxable years beginning after December 31, 1999 2000, the 
 40.22  minimum and maximum dollar amounts for each rate bracket for 
 40.23  which a tax is imposed in subdivision 2c shall be adjusted for 
 40.24  inflation by the percentage determined under paragraph (b).  For 
 40.25  the purpose of making the adjustment as provided in this 
 40.26  subdivision all of the rate brackets provided in subdivision 2c 
 40.27  shall be the rate brackets as they existed for taxable years 
 40.28  beginning after December 31, 1998 1999, and before January 
 40.29  1, 2000 2001.  The rate applicable to any rate bracket must not 
 40.30  be changed.  The dollar amounts setting forth the tax shall be 
 40.31  adjusted to reflect the changes in the rate brackets.  The rate 
 40.32  brackets as adjusted must be rounded to the nearest $10 amount.  
 40.33  If the rate bracket ends in $5, it must be rounded up to the 
 40.34  nearest $10 amount.  
 40.35     (b) The commissioner shall adjust the rate brackets and by 
 40.36  the percentage determined pursuant to the provisions of section 
 41.1   1(f) of the Internal Revenue Code, except that in section 
 41.2   1(f)(3)(B) the word "1998 1999" shall be substituted for the 
 41.3   word "1992."  For 2000 2001, the commissioner shall then 
 41.4   determine the percent change from the 12 months ending on August 
 41.5   31, 1998 1999, to the 12 months ending on August 31, 1999 2000, 
 41.6   and in each subsequent year, from the 12 months ending on August 
 41.7   31, 1998 1999, to the 12 months ending on August 31 of the year 
 41.8   preceding the taxable year.  The determination of the 
 41.9   commissioner pursuant to this subdivision shall not be 
 41.10  considered a "rule" and shall not be subject to the 
 41.11  Administrative Procedure Act contained in chapter 14.  
 41.12     No later than December 15 of each year, the commissioner 
 41.13  shall announce the specific percentage that will be used to 
 41.14  adjust the tax rate brackets. 
 41.15     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 41.16  years beginning after December 31, 1999. 
 41.17     Sec. 13.  Minnesota Statutes 1998, section 290.06, 
 41.18  subdivision 22, is amended to read: 
 41.19     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
 41.20  taxpayer who is liable for taxes on or measured by net income to 
 41.21  another state or province or territory of Canada, as provided in 
 41.22  paragraphs (b) through (f), upon income allocated or apportioned 
 41.23  to Minnesota, is entitled to a credit for the tax paid to 
 41.24  another state or province or territory of Canada if the tax is 
 41.25  actually paid in the taxable year or a subsequent taxable year.  
 41.26  A taxpayer who is a resident of this state pursuant to section 
 41.27  290.01, subdivision 7, clause (2), and who is subject to income 
 41.28  tax as a resident in the state of the individual's domicile is 
 41.29  not allowed this credit unless the state of domicile does not 
 41.30  allow a similar credit. 
 41.31     (b) For an individual, estate, or trust, the credit is 
 41.32  determined by multiplying the tax payable under this chapter by 
 41.33  the ratio derived by dividing the income subject to tax in the 
 41.34  other state or province or territory of Canada that is also 
 41.35  subject to tax in Minnesota while a resident of Minnesota by the 
 41.36  taxpayer's federal adjusted gross income, as defined in section 
 42.1   62 of the Internal Revenue Code, modified by the addition 
 42.2   required by section 290.01, subdivision 19a, clause (1), and the 
 42.3   subtraction allowed by section 290.01, subdivision 19b, clause 
 42.4   (1), to the extent the income is allocated or assigned to 
 42.5   Minnesota under sections 290.081 and 290.17.  
 42.6      (c) If the taxpayer is an athletic team that apportions all 
 42.7   of its income under section 290.17, subdivision 5, paragraph 
 42.8   (c), the credit is determined by multiplying the tax payable 
 42.9   under this chapter by the ratio derived from dividing the total 
 42.10  net income subject to tax in the other state or province or 
 42.11  territory of Canada by the taxpayer's Minnesota taxable income. 
 42.12     (d) The credit determined under paragraph (b) or (c) shall 
 42.13  not exceed the amount of tax so paid to the other state or 
 42.14  province or territory of Canada on the gross income earned 
 42.15  within the other state or province or territory of Canada 
 42.16  subject to tax under this chapter, nor shall the allowance of 
 42.17  the credit reduce the taxes paid under this chapter to an amount 
 42.18  less than what would be assessed if such income amount was 
 42.19  excluded from taxable net income. 
 42.20     (e) In the case of the tax assessed on a lump sum 
 42.21  distribution under section 290.032, the credit allowed under 
 42.22  paragraph (a) is the tax assessed by the other state or province 
 42.23  or territory of Canada on the lump sum distribution that is also 
 42.24  subject to tax under section 290.032, and shall not exceed the 
 42.25  tax assessed under section 290.032.  To the extent the total 
 42.26  lump sum distribution defined in section 290.032, subdivision 1, 
 42.27  includes lump sum distributions received in prior years or is 
 42.28  all or in part an annuity contract, the reduction to the tax on 
 42.29  the lump sum distribution allowed under section 290.032, 
 42.30  subdivision 2, includes tax paid to another state that is 
 42.31  properly apportioned to that distribution. 
 42.32     (f) If a Minnesota resident reported an item of income to 
 42.33  Minnesota and is assessed tax in such other state or province or 
 42.34  territory of Canada on that same income after the Minnesota 
 42.35  statute of limitations has expired, the taxpayer shall receive a 
 42.36  credit for that year under paragraph (a), notwithstanding any 
 43.1   statute of limitations to the contrary.  The claim for the 
 43.2   credit must be submitted within one year from the date the taxes 
 43.3   were paid to the other state or province or territory of 
 43.4   Canada.  The taxpayer must submit sufficient proof to show 
 43.5   entitlement to a credit. 
 43.6      (g) For the purposes of this subdivision, a resident 
 43.7   shareholder of a corporation treated as an "S" corporation under 
 43.8   section 290.9725, must be considered to have paid a tax imposed 
 43.9   on the shareholder in an amount equal to the shareholder's pro 
 43.10  rata share of any net income tax paid by the S corporation to 
 43.11  another state.  For the purposes of the preceding sentence, the 
 43.12  term "net income tax" means any tax imposed on or measured by a 
 43.13  corporation's net income. 
 43.14     (h) For the purposes of this subdivision, a resident 
 43.15  partner of an entity taxed as a partnership under the Internal 
 43.16  Revenue Code must be considered to have paid a tax imposed on 
 43.17  the partner in an amount equal to the partner's pro rata share 
 43.18  of any net income tax paid by the partnership to another state.  
 43.19  For purposes of the preceding sentence, the term "net income" 
 43.20  tax means any tax imposed on or measured by a partnership's net 
 43.21  income. 
 43.22     (i) For the purposes of this subdivision, "another state" 
 43.23  includes the District of Columbia, but does not include Puerto 
 43.24  Rico or the several territories organized by Congress. 
 43.25     (j) The limitations on the credit in paragraphs (b), (c), 
 43.26  and (d), are imposed on a state by state basis. 
 43.27     <b>EFFECTIVE DATE:</b>  This section is effective the day 
 43.28  following final enactment. 
 43.29     Sec. 14.  Minnesota Statutes 1998, section 290.06, is 
 43.30  amended by adding a subdivision to read: 
 43.31     Subd. 22a.  [NONRESIDENT'S CREDIT FOR TAXES PAID TO STATE 
 43.32  OF DOMICILE.] (a) Notwithstanding subdivision 22, a nonresident 
 43.33  who is subject to tax in this state on the gain on the sale of a 
 43.34  partnership interest, which is allocable to this state under 
 43.35  section 290.17, subdivision 2, paragraph (c), is allowed a 
 43.36  credit for the tax paid to the state of the individual's 
 44.1   domicile upon the gain in the taxable year or a subsequent 
 44.2   taxable year.  This credit is only allowed if the state of 
 44.3   domicile does not allow a credit for the tax paid to Minnesota 
 44.4   on the gain. 
 44.5      (b) For purposes of this subdivision, the credit equals the 
 44.6   tax paid to the state of domicile multiplied by the ratio 
 44.7   derived by dividing the amount of gain on the sale of the 
 44.8   partnership interest subject to tax in the other state that is 
 44.9   also subject to tax in Minnesota by the taxpayer's federal 
 44.10  adjusted gross income, as defined in section 62 of the Internal 
 44.11  Revenue Code.  The credit allowed may not reduce the taxes paid 
 44.12  under this chapter to an amount less than the tax that would 
 44.13  apply if the gain were excluded from taxable net income. 
 44.14     (c) If a nonresident taxpayer reported the gain to 
 44.15  Minnesota and is assessed tax in the state of domicile on that 
 44.16  same income after the Minnesota statute of limitations has 
 44.17  expired, the taxpayer is allowed a credit for that year, 
 44.18  notwithstanding any statute of limitations to the contrary.  The 
 44.19  claim for the credit must be submitted within one year from the 
 44.20  date the taxes were paid to the state of domicile and the 
 44.21  taxpayer must submit sufficient proof to show entitlement to a 
 44.22  credit. 
 44.23     (d) For the purposes of this subdivision, "another state" 
 44.24  includes the District of Columbia, but does not include Puerto 
 44.25  Rico or the several territories organized by Congress. 
 44.26     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 44.27  years beginning after December 31, 1999. 
 44.28     Sec. 15. Minnesota Statutes 1999 Supplement, section 
 44.29  290.06, is amended by adding a subdivision to read: 
 44.30     Subd. 28.  [CREDIT FOR TRANSIT PASSES.] A taxpayer may take 
 44.31  a credit against the tax due under this chapter equal to 30 
 44.32  percent of the expense incurred by the taxpayer to provide 
 44.33  transit passes to employees of the taxpayer.  As used in this 
 44.34  subdivision, "transit pass" has the meaning given in section 
 44.35  132(f)(5)(A) of the Internal Revenue Code.  If the taxpayer 
 44.36  purchases the transit passes from the transit system operator, 
 45.1   and resells them to the employees, the credit is based on the 
 45.2   amount of the difference between the price paid for the passes 
 45.3   by the employer and the amount charged to employees. 
 45.4      <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 45.5   years beginning after December 31, 1999. 
 45.6      Sec. 16.  Minnesota Statutes 1999 Supplement, section 
 45.7   290.0671, subdivision 1, is amended to read: 
 45.8      Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
 45.9   allowed a credit against the tax imposed by this chapter equal 
 45.10  to a percentage of earned income.  To receive a credit, a 
 45.11  taxpayer must be eligible for a credit under section 32 of the 
 45.12  Internal Revenue Code.  
 45.13     (b) For individuals with no qualifying children, the credit 
 45.14  equals 1.1475 1.9125 percent of the first $4,460 of earned 
 45.15  income.  The credit is reduced by 1.1475 1.9125 percent of 
 45.16  earned income or modified adjusted gross income, whichever is 
 45.17  greater, in excess of $5,570, but in no case is the credit less 
 45.18  than zero. 
 45.19     (c) For individuals with one qualifying child, the credit 
 45.20  equals 7.45 8.5 percent of the first $6,680 of earned income and 
 45.21  8.5 percent of earned income over $11,650 but less than $12,990. 
 45.22  The credit is reduced by 5.13 5.73 percent of earned income or 
 45.23  modified adjusted gross income, whichever is greater, in excess 
 45.24  of $14,560, but in no case is the credit less than zero. 
 45.25     (d) For individuals with two or more qualifying children, 
 45.26  the credit equals 8.8 ten percent of the first $9,390 of earned 
 45.27  income and 20 percent of earned income over $14,350 but less 
 45.28  than $16,230.  The credit is reduced by 9.38 10.3 percent of 
 45.29  earned income or modified adjusted gross income, whichever is 
 45.30  greater, in excess of $17,280, but in no case is the credit less 
 45.31  than zero. 
 45.32     (e) For a nonresident or part-year resident, the credit 
 45.33  must be allocated based on the percentage calculated under 
 45.34  section 290.06, subdivision 2c, paragraph (e). 
 45.35     (f) For a person who was a resident for the entire tax year 
 45.36  and has earned income not subject to tax under this chapter, the 
 46.1   credit must be allocated based on the ratio of federal adjusted 
 46.2   gross income reduced by the earned income not subject to tax 
 46.3   under this chapter over federal adjusted gross income. 
 46.4      (g) The commissioner shall construct tables showing the 
 46.5   amount of the credit at various income levels and make them 
 46.6   available to taxpayers.  The tables shall follow the schedule 
 46.7   contained in this subdivision, except that the commissioner may 
 46.8   graduate the transition between income brackets. 
 46.9      <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 46.10  years beginning after December 31, 1999, and is not contingent 
 46.11  on the enactment of section 17. 
 46.12     Sec. 17.  Minnesota Statutes 1998, section 290.0671, 
 46.13  subdivision 6, is amended to read: 
 46.14     Subd. 6.  [APPROPRIATION.] An amount sufficient to pay the 
 46.15  refunds required by this section is appropriated to the 
 46.16  commissioner from the general fund.  An amount sufficient to pay 
 46.17  the additional refunds to United States citizens and qualified 
 46.18  legal noncitizens entailed by the expansion of the credit rates 
 46.19  for individuals with qualifying children over the rates provided 
 46.20  in Laws 1999, chapter 243, article 2, section 12, is 
 46.21  appropriated to the commissioner of human services from the 
 46.22  federal Temporary Assistance for Needy Families (TANF) block 
 46.23  grant funds, as authorized under section 256J.02, subdivision 2, 
 46.24  clause (1), for transfer to the commissioner of revenue.  
 46.25     Sec. 18.  Minnesota Statutes 1998, section 290.0672, 
 46.26  subdivision 1, is amended to read: 
 46.27     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 46.28  section, the following terms have the meanings given. 
 46.29     (b) "Long-term care insurance" means a policy that: 
 46.30     (1) qualifies for a deduction under section 213 of the 
 46.31  Internal Revenue Code, disregarding the 7.5 percent income test; 
 46.32  or meets the requirements given in section 62A.46; or provides 
 46.33  similar coverage issued under the laws of another jurisdiction; 
 46.34  and 
 46.35     (2) does not have has a lifetime long-term care benefit 
 46.36  limit of not less than $100,000; and 
 47.1      (3) includes inflation protection that meets or exceeds has 
 47.2   been offered in compliance with the inflation protection 
 47.3   requirements of the long-term care insurance model regulation 
 47.4   cited under section 7702B(g)(2)(A)(i)(x) of the Internal Revenue 
 47.5   Code section 62S.23. 
 47.6      (c) "Qualified beneficiary" means the taxpayer or the 
 47.7   taxpayer's spouse.  
 47.8      (d) "Premiums deducted in determining federal taxable 
 47.9   income" means the lesser of (1) long-term care insurance 
 47.10  premiums that qualify as deductions under section 213 of the 
 47.11  Internal Revenue Code; and (2) the total amount deductible for 
 47.12  medical care under section 213 of the Internal Revenue Code. 
 47.13     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 47.14  years beginning after December 31, 1999. 
 47.15     Sec. 19.  Minnesota Statutes 1998, section 290.0672, 
 47.16  subdivision 2, is amended to read: 
 47.17     Subd. 2.  [CREDIT.] A taxpayer is allowed a credit against 
 47.18  the tax imposed by this chapter for long-term care insurance 
 47.19  policy premiums paid during the tax year.  The credit for each 
 47.20  policy equals the lesser of (1) 25 percent of premiums paid to 
 47.21  the extent not deducted in determining federal taxable income; 
 47.22  or (2) $100.  A taxpayer may claim a credit for only one policy 
 47.23  for each qualified beneficiary.  Only one credit may be claimed 
 47.24  by any taxpayer for each policy.  A maximum of $100 applies to 
 47.25  each qualified beneficiary.  The maximum total credit allowed 
 47.26  per year is $200 for married couples filing joint returns and 
 47.27  $100 for all other filers.  For a nonresident or part-year 
 47.28  resident, the credit determined under this section must be 
 47.29  allocated based on the percentage calculated under section 
 47.30  290.06, subdivision 2c, paragraph (e). 
 47.31     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 47.32  years beginning after December 31, 1999. 
 47.33     Sec. 20.  Minnesota Statutes 1998, section 290.0673, 
 47.34  subdivision 8, is amended to read: 
 47.35     Subd. 8.  [EXPIRATION.] This section expires effective for 
 47.36  taxable years beginning after December 31, 2001 2002. 
 48.1      Sec. 21.  Minnesota Statutes 1999 Supplement, section 
 48.2   290.0674, subdivision 2, is amended to read: 
 48.3      Subd. 2.  [LIMITATIONS.] (a) For claimants with income not 
 48.4   greater than $33,500, the maximum credit allowed is $1,000 per 
 48.5   qualifying child and $2,000 per family. No credit is allowed for 
 48.6   education-related expenses for claimants with income greater 
 48.7   than $37,500.  The maximum credit for each claimant is $1,000 
 48.8   multiplied by the number of qualifying children for which the 
 48.9   individual claims the credit.  The maximum credit per child for 
 48.10  a claimant is reduced by $1 for each $4 of household income over 
 48.11  $33,500, and the maximum credit per family is reduced by $2 for 
 48.12  each $4 of household income over $33,500 for claimants with one 
 48.13  qualifying child, and by $2 for each $4 of household income over 
 48.14  $33,500 for all other claimants, but in no case is the credit 
 48.15  less than zero. 
 48.16     For purposes of this section "income" has the meaning given 
 48.17  in section 290.067, subdivision 2a.  In the case of a married 
 48.18  claimant, a credit is not allowed unless a joint income tax 
 48.19  return is filed. 
 48.20     (b) For a nonresident or part-year resident, the credit 
 48.21  determined under subdivision 1 and the maximum credit amount in 
 48.22  paragraph (a) must be allocated using the percentage calculated 
 48.23  in section 290.06, subdivision 2c, paragraph (e). 
 48.24     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 48.25  years beginning after December 31, 1999. 
 48.26     Sec. 22.  Minnesota Statutes 1999 Supplement, section 
 48.27  290.0675, subdivision 1, is amended to read: 
 48.28     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 48.29  section the following terms have the meanings given. 
 48.30     (b) "Earned income" means the sum of the following: 
 48.31     (1) earned income as defined in section 32(c)(2) of the 
 48.32  Internal Revenue Code; 
 48.33     (2) to the extent included in the Minnesota taxable income, 
 48.34  income received from a retirement pension, profit-sharing, stock 
 48.35  bonus, or annuity plan; and 
 48.36     (3) to the extent included in Minnesota taxable income, 
 49.1   social security benefits as defined in section 86(d)(1) of the 
 49.2   Internal Revenue Code. 
 49.3      (c) "Taxable income" means net income as defined in section 
 49.4   290.01, subdivision 19. 
 49.5      (d) "Earned income of lesser-earning spouse" means the 
 49.6   earned income of the spouse with the lesser amount of earned 
 49.7   income as defined in paragraph (b) for the taxable year.  
 49.8      Sec. 23.  Minnesota Statutes 1999 Supplement, section 
 49.9   290.0675, subdivision 2, is amended to read: 
 49.10     Subd. 2.  [CREDIT ALLOWED.] A married couple filing a joint 
 49.11  return is allowed a credit against the tax imposed under section 
 49.12  290.06.  
 49.13     The minimum taxable income for the married couple to be 
 49.14  eligible for the credit is $25,000 $25,680, and the minimum 
 49.15  earned income in order for the couple to be eligible for the 
 49.16  credit is $14,000 $14,250 for each spouse. 
 49.17     Sec. 24.  Minnesota Statutes 1999 Supplement, section 
 49.18  290.0675, subdivision 3, is amended to read: 
 49.19     Subd. 3.  [CREDIT AMOUNT.] The credit amount is as shown in 
 49.20  the table in this subdivision, based on the couple's taxable 
 49.21  income for the tax year and on the earned income of the 
 49.22  lesser-earning spouse. 
 49.23                               Credit For          Credit For
 49.24    Earned Income of           Taxable Income      Taxable Income
 49.25    Lesser Earning Spouse      $25,000-$99,999     $100,000-over
 49.26    $14,000 - $14,999          $9                  $0    
 49.27    $15,000 - $15,999          $27                 $0    
 49.28    $16,000 - $16,999          $44                 $0    
 49.29    $17,000 - $17,999          $62                 $0    
 49.30    $18,000 - $18,999          $79                 $0    
 49.31    $19,000 - $19,999          $97                 $0  
 49.32    $20,000 - $20,999          $114                $0  
 49.33    $21,000 - $21,999          $132                $0 
 49.34    $22,000 - $22,999          $149                $0
 49.35    $23,000 - $23,999          $162                $0 
 49.36    $24,000 - $24,999          $162                $0   
 50.1     $25,000 - $25,999          $162                $0  
 50.2     $26,000 - $26,999          $162                $0   
 50.3     $27,000 - $27,999          $162                $0
 50.4     $28,000 - $28,999          $162                $9
 50.5     $29,000 - $29,999          $162                $16
 50.6     $30,000 - $30,999          $162                $24
 50.7     $31,000 - $31,999          $162                $31
 50.8     $32,000 - $32,999          $162                $39
 50.9     $33,000 - $33,999          $162                $46
 50.10    $34,000 - $34,999          $162                $54
 50.11    $35,000 - $35,999          $162                $61
 50.12    $36,000 - $36,999          $162                $69
 50.13    $37,000 - $37,999          $162                $76
 50.14    $38,000 - $38,999          $162                $84
 50.15    $39,000 - $39,999          $162                $91
 50.16    $40,000 - $40,999          $162                $99
 50.17    $41,000 - $41,999          $162                $106
 50.18    $42,000 - $42,999          $162                $114
 50.19    $43,000 - $43,999          $162                $121
 50.20    $44,000 - $44,999          $162                $129
 50.21    $45,000 - $45,999          $162                $136
 50.22    $46,000 - $46,999          $162                $144
 50.23    $47,000 - $47,999          $162                $151
 50.24    $48,000 - $48,999          $162                $159
 50.25    $49,000 - $49,999          $162                $166
 50.26    $50,000 - $50,999          $162                $174
 50.27    $51,000 - $51,999          $162                $181
 50.28    $52,000 - $52,999          $162                $189
 50.29    $53,000 - $53,999          $162                $196
 50.30    $54,000 - $54,999          $162                $204
 50.31    $55,000 - $55,999          $162                $211
 50.32    $56,000 - $56,999          $162                $219
 50.33    $57,000 - $57,999          $162                $226
 50.34    $58,000 - $58,999          $162                $234
 50.35    $59,000 - $59,999          $162                $241
 50.36    $60,000 - $60,999          $162                $249
 51.1     $61,000 - $61,999          $162                $256
 51.2     $62,000 and over           $162                $261
 51.3                                Credit For          Credit For
 51.4     Earned Income of           Taxable Income      Taxable Income
 51.5     Lesser Earning Spouse      $25,680-$102,029    $102,030-over
 51.6     $14,250 - $15,249          $6                  $0    
 51.7     $15,250 - $16,249          $21                 $0    
 51.8     $16,250 - $17,249          $36                 $0    
 51.9     $17,250 - $18,249          $51                 $0    
 51.10    $18,250 - $19,249          $66                 $0    
 51.11    $19,250 - $20,249          $81                 $0  
 51.12    $20,250 - $21,249          $96                 $0  
 51.13    $21,250 - $22,249          $111                $0 
 51.14    $22,250 - $23,249          $126                $0
 51.15    $23,250 - $24,249          $141                $0 
 51.16    $24,250 - $25,249          $141                $0   
 51.17    $25,250 - $26,249          $141                $0  
 51.18    $26,250 - $27,249          $141                $0   
 51.19    $27,250 - $28,249          $141                $0
 51.20    $28,250 - $29,249          $141                $0
 51.21    $29,250 - $30,249          $141                $0
 51.22    $30,250 - $31,249          $141                $0
 51.23    $31,250 - $32,249          $141                $0
 51.24    $32,250 - $33,249          $141                $0
 51.25    $33,250 - $34,249          $141                $0
 51.26    $34,250 - $35,249          $141                $0
 51.27    $35,250 - $36,249          $141                $0
 51.28    $36,250 - $37,249          $141                $4
 51.29    $37,250 - $38,249          $141                $14
 51.30    $38,250 - $39,249          $141                $24
 51.31    $39,250 - $40,249          $141                $34
 51.32    $40,250 - $41,249          $141                $44
 51.33    $41,250 - $42,249          $141                $54
 51.34    $42,250 - $43,249          $141                $64
 51.35    $43,250 - $44,249          $141                $74
 51.36    $44,250 - $45,249          $141                $84
 52.1     $45,250 - $46,249          $141                $94
 52.2     $46,250 - $47,249          $141                $104
 52.3     $47,250 - $48,249          $141                $114
 52.4     $48,250 - $49,249          $141                $124
 52.5     $49,250 - $50,249          $141                $134
 52.6     $50,250 - $51,249          $141                $144
 52.7     $51,250 - $52,249          $141                $154
 52.8     $52,250 - $53,249          $141                $164
 52.9     $53,250 - $54,249          $141                $174
 52.10    $54,250 - $55,249          $141                $184
 52.11    $55,250 - $56,249          $141                $194
 52.12    $56,250 - $57,249          $141                $204
 52.13    $57,250 - $58,249          $141                $214
 52.14    $58,250 - $59,249          $141                $224
 52.15    $59,250 - $60,249          $141                $234
 52.16    $60,250 - $61,249          $141                $244
 52.17    $61,250 - $62,249          $141                $254
 52.18    $62,250 - $63,249          $141                $264
 52.19    $63,250 - $64,249          $141                $274
 52.20    $64,250 and over           $141                $276
 52.21     For taxable years beginning after December 31, 2000, the 
 52.22  commissioner shall update the table as necessary to provide a 
 52.23  credit that reflects the relationship between the marginal tax 
 52.24  rates imposed under section 290.06, subdivision 2c. 
 52.25     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 52.26  years beginning after December 31, 1999. 
 52.27     Sec. 25.  Minnesota Statutes 1999 Supplement, section 
 52.28  290.091, subdivision 1, is amended to read: 
 52.29     Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
 52.30  other taxes imposed by this chapter a tax is imposed on 
 52.31  individuals, estates, and trusts equal to the excess (if any) of 
 52.32     (a) an amount equal to 6.5 5.9 percent of alternative 
 52.33  minimum taxable income after subtracting the exemption amount, 
 52.34  over 
 52.35     (b) the regular tax for the taxable year. 
 52.36     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 53.1   years beginning after December 31, 1999. 
 53.2      Sec. 26.  Minnesota Statutes 1999 Supplement, section 
 53.3   290.091, subdivision 2, is amended to read: 
 53.4      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 53.5   this section, the following terms have the meanings given: 
 53.6      (a) "Alternative minimum taxable income" means the sum of 
 53.7   the following for the taxable year: 
 53.8      (1) the taxpayer's federal alternative minimum taxable 
 53.9   income as defined in section 55(b)(2) of the Internal Revenue 
 53.10  Code; 
 53.11     (2) the taxpayer's itemized deductions allowed in computing 
 53.12  federal alternative minimum taxable income, but excluding: 
 53.13     (i) the Minnesota charitable contribution deduction; 
 53.14     (ii) the medical expense deduction; 
 53.15     (iii) the casualty, theft, and disaster loss deduction; 
 53.16     (iv) the impairment-related work expenses of a disabled 
 53.17  person; and 
 53.18     (v) holocaust victims' settlement payments to the extent 
 53.19  allowed under section 290.01, subdivision 19b; 
 53.20     (3) for depletion allowances computed under section 613A(c) 
 53.21  of the Internal Revenue Code, with respect to each property (as 
 53.22  defined in section 614 of the Internal Revenue Code), to the 
 53.23  extent not included in federal alternative minimum taxable 
 53.24  income, the excess of the deduction for depletion allowable 
 53.25  under section 611 of the Internal Revenue Code for the taxable 
 53.26  year over the adjusted basis of the property at the end of the 
 53.27  taxable year (determined without regard to the depletion 
 53.28  deduction for the taxable year); 
 53.29     (4) to the extent not included in federal alternative 
 53.30  minimum taxable income, the amount of the tax preference for 
 53.31  intangible drilling cost under section 57(a)(2) of the Internal 
 53.32  Revenue Code determined without regard to subparagraph (E); and 
 53.33     (5) to the extent not included in federal alternative 
 53.34  minimum taxable income, the amount of interest income as 
 53.35  provided by section 290.01, subdivision 19a, clause (1); 
 53.36     less the sum of the amounts determined under the following: 
 54.1      (1) interest income as defined in section 290.01, 
 54.2   subdivision 19b, clause (1); 
 54.3      (2) an overpayment of state income tax as provided by 
 54.4   section 290.01, subdivision 19b, clause (2), to the extent 
 54.5   included in federal alternative minimum taxable income; and 
 54.6      (3) the amount of investment interest paid or accrued 
 54.7   within the taxable year on indebtedness to the extent that the 
 54.8   amount does not exceed net investment income, as defined in 
 54.9   section 163(d)(4) of the Internal Revenue Code.  Interest does 
 54.10  not include amounts deducted in computing federal adjusted gross 
 54.11  income; and 
 54.12     (4) amounts subtracted from federal taxable income as 
 54.13  provided by section 290.01, subdivision 19b, clauses (4) and (6).
 54.14     In the case of an estate or trust, alternative minimum 
 54.15  taxable income must be computed as provided in section 59(c) of 
 54.16  the Internal Revenue Code. 
 54.17     (b) "Investment interest" means investment interest as 
 54.18  defined in section 163(d)(3) of the Internal Revenue Code. 
 54.19     (c) "Tentative minimum tax" equals 6.5 5.9 percent of 
 54.20  alternative minimum taxable income after subtracting the 
 54.21  exemption amount determined under subdivision 3. 
 54.22     (d) "Regular tax" means the tax that would be imposed under 
 54.23  this chapter (without regard to this section and section 
 54.24  290.032), reduced by the sum of the nonrefundable credits 
 54.25  allowed under this chapter.  
 54.26     (e) "Net minimum tax" means the minimum tax imposed by this 
 54.27  section. 
 54.28     (f) "Minnesota charitable contribution deduction" means a 
 54.29  charitable contribution deduction under section 170 of the 
 54.30  Internal Revenue Code to or for the use of an entity described 
 54.31  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 54.32  federal deduction for charitable contributions is limited under 
 54.33  section 170(b) of the Internal Revenue Code, the allowable 
 54.34  contributions in the year of contribution are deemed to be first 
 54.35  contributions to entities described in section 290.21, 
 54.36  subdivision 3, clauses (a) to (e). 
 55.1      <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 55.2   years beginning after December 31, 1999. 
 55.3      Sec. 27.  Minnesota Statutes 1999 Supplement, section 
 55.4   290.091, subdivision 6, is amended to read: 
 55.5      Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
 55.6   is allowed against the tax imposed by this chapter on 
 55.7   individuals, trusts, and estates equal to the minimum tax credit 
 55.8   for the taxable year.  The minimum tax credit equals the 
 55.9   adjusted net minimum tax for taxable years beginning after 
 55.10  December 31, 1988, reduced by the minimum tax credits allowed in 
 55.11  a prior taxable year.  The credit may not exceed the excess (if 
 55.12  any) for the taxable year of 
 55.13     (1) the regular tax, over 
 55.14     (2) the greater of (i) the tentative alternative minimum 
 55.15  tax, or (ii) zero. 
 55.16     (b) The adjusted net minimum tax for a taxable year equals 
 55.17  the lesser of the net minimum tax or the excess (if any) of 
 55.18     (1) the tentative minimum tax, over 
 55.19     (2) 6.5 5.9 percent of the sum of 
 55.20     (i) adjusted gross income as defined in section 62 of the 
 55.21  Internal Revenue Code, 
 55.22     (ii) interest income as defined in section 290.01, 
 55.23  subdivision 19a, clause (1), 
 55.24     (iii) interest on specified private activity bonds, as 
 55.25  defined in section 57(a)(5) of the Internal Revenue Code, to the 
 55.26  extent not included under clause (ii), 
 55.27     (iv) depletion as defined in section 57(a)(1), determined 
 55.28  without regard to the last sentence of paragraph (1), of the 
 55.29  Internal Revenue Code, less 
 55.30     (v) the deductions allowed in computing alternative minimum 
 55.31  taxable income provided in subdivision 2, paragraph (a), clause 
 55.32  (2) of the first series of clauses and clauses (1), (2), and (3) 
 55.33  of the second series of clauses, and 
 55.34     (vi) the exemption amount determined under subdivision 3. 
 55.35     In the case of an individual who is not a Minnesota 
 55.36  resident for the entire year, adjusted net minimum tax must be 
 56.1   multiplied by the fraction defined in section 290.06, 
 56.2   subdivision 2c, paragraph (e).  In the case of a trust or 
 56.3   estate, adjusted net minimum tax must be multiplied by the 
 56.4   fraction defined under subdivision 4, paragraph (b). 
 56.5      <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 56.6   years beginning after December 31, 1999. 
 56.7      Sec. 28.  Minnesota Statutes 1998, section 290.17, 
 56.8   subdivision 2, is amended to read: 
 56.9      Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
 56.10  BUSINESS.] The income of a taxpayer subject to the allocation 
 56.11  rules that is not derived from the conduct of a trade or 
 56.12  business must be assigned in accordance with paragraphs (a) to 
 56.13  (f):  
 56.14     (a)(1) Subject to paragraphs (a)(2) and, (a)(3), and 
 56.15  (a)(4), income from labor or personal or professional services 
 56.16  wages as defined in section 3401(a) and (f) of the Internal 
 56.17  Revenue Code is assigned to this state if, and to the extent 
 56.18  that, the labor or services are work of the employee is 
 56.19  performed within it; all other income from such sources is 
 56.20  treated as income from sources without this state.  
 56.21     Severance pay shall be considered income from labor or 
 56.22  personal or professional services. 
 56.23     (2) In the case of an individual who is a nonresident of 
 56.24  Minnesota and who is an athlete or entertainer, income from 
 56.25  compensation for labor or personal services performed within 
 56.26  this state shall be determined in the following manner:  
 56.27     (i) The amount of income to be assigned to Minnesota for an 
 56.28  individual who is a nonresident salaried athletic team employee 
 56.29  shall be determined by using a fraction in which the denominator 
 56.30  contains the total number of days in which the individual is 
 56.31  under a duty to perform for the employer, and the numerator is 
 56.32  the total number of those days spent in Minnesota.  For purposes 
 56.33  of this paragraph, off-season training activities, unless 
 56.34  conducted at the team's facilities as part of a team imposed 
 56.35  program, are not included in the total number of duty days.  
 56.36  Bonuses earned as a result of play during the regular season or 
 57.1   for participation in championship, play-off, or all-star games 
 57.2   must be allocated under the formula.  Signing bonuses are not 
 57.3   subject to allocation under the formula if they are not 
 57.4   conditional on playing any games for the team, are payable 
 57.5   separately from any other compensation, and are nonrefundable; 
 57.6   and 
 57.7      (ii) The amount of income to be assigned to Minnesota for 
 57.8   an individual who is a nonresident, and who is an athlete or 
 57.9   entertainer not listed in clause (i), for that person's athletic 
 57.10  or entertainment performance in Minnesota shall be determined by 
 57.11  assigning to this state all income from performances or athletic 
 57.12  contests in this state.  
 57.13     (3) For purposes of this section, amounts received by a 
 57.14  nonresident as "retirement income" as defined in section (b)(1) 
 57.15  of the State Income Taxation of Pension Income Act, Public Law 
 57.16  Number 104-95, are not considered income derived from carrying 
 57.17  on a trade or business or from performing personal or 
 57.18  professional services wages or other compensation for work an 
 57.19  employee performed in Minnesota, and are not taxable under this 
 57.20  chapter.  
 57.21     (4) Wages, otherwise assigned to this state under clause 
 57.22  (1) and not qualifying under clause (3), are not taxable under 
 57.23  this chapter if the following conditions are met: 
 57.24     (i) The recipient was not a resident of this state for any 
 57.25  part of the taxable year in which the wages were received or for 
 57.26  any part of one of the three immediately preceding taxable 
 57.27  years; and 
 57.28     (ii) The wages are for work performed while the recipient 
 57.29  was a resident or part year resident of this state. 
 57.30     (b) Income or gains from tangible property located in this 
 57.31  state that is not employed in the business of the recipient of 
 57.32  the income or gains must be assigned to this state. 
 57.33     (c) Income or gains from intangible personal property not 
 57.34  employed in the business of the recipient of the income or gains 
 57.35  must be assigned to this state if the recipient of the income or 
 57.36  gains is a resident of this state or is a resident trust or 
 58.1   estate.  
 58.2      Gain on the sale of a partnership interest is allocable to 
 58.3   this state in the ratio of the original cost of partnership 
 58.4   tangible property in this state to the original cost of 
 58.5   partnership tangible property everywhere, determined at the time 
 58.6   of the sale.  If more than 50 percent of the value of the 
 58.7   partnership's assets consists of intangibles, gain or loss from 
 58.8   the sale of the partnership interest is allocated to this state 
 58.9   in accordance with the sales factor of the partnership for its 
 58.10  first full tax period immediately preceding the tax period of 
 58.11  the partnership during which the partnership interest was sold. 
 58.12     Gain on the sale of goodwill or income from a covenant not 
 58.13  to compete that is connected with a business operating all or 
 58.14  partially in Minnesota is allocated to this state to the extent 
 58.15  that the income from the business in the year preceding the year 
 58.16  of sale was assignable to Minnesota under subdivision 3.  
 58.17     When an employer pays an employee for a covenant not to 
 58.18  compete, the income allocated to this state is in the ratio of 
 58.19  the employee's service in Minnesota in the calendar year 
 58.20  preceding leaving the employment of the employer over the total 
 58.21  services performed by the employee for the employer in that year.
 58.22     (d) Income from winnings on Minnesota pari-mutuel betting 
 58.23  tickets, the Minnesota state lottery, and lawful gambling as 
 58.24  defined in section 349.12, subdivision 24, conducted within the 
 58.25  boundaries of the state of Minnesota shall be assigned to this 
 58.26  state.  
 58.27     (e) All items of gross income not covered in paragraphs (a) 
 58.28  to (d) and not part of the taxpayer's income from a trade or 
 58.29  business shall be assigned to the taxpayer's domicile. 
 58.30     (f) For the purposes of this section, working as an 
 58.31  employee shall not be considered to be conducting a trade or 
 58.32  business. 
 58.33     <b>EFFECTIVE DATE:</b>  This section is effective for wages earned 
 58.34  after the day following final enactment, except that to the 
 58.35  extent this section impacts an employer's requirement to 
 58.36  withhold Minnesota tax under section 290.92, subdivision 41, the 
 59.1   requirement to withhold is effective for wages paid after 
 59.2   December 31, 2000. 
 59.3      Sec. 29.  Minnesota Statutes 1999 Supplement, section 
 59.4   290.191, subdivision 2, is amended to read: 
 59.5      Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
 59.6   Except for those trades or businesses required to use a 
 59.7   different formula under subdivision 3 or section 290.35 or 
 59.8   290.36, and for those trades or businesses that receive 
 59.9   permission to use some other method under section 290.20 or 
 59.10  under subdivision 4, a trade or business required to apportion 
 59.11  its net income must apportion its income to this state on the 
 59.12  basis of the percentage obtained by taking the sum of:  
 59.13     (1) 75 for taxable years beginning after December 31, 1999, 
 59.14  and before January 1, 2001, 80 percent of; for taxable years 
 59.15  beginning after December 31, 2000, 90 percent of the percentage 
 59.16  which the sales made within this state in connection with the 
 59.17  trade or business during the tax period are of the total sales 
 59.18  wherever made in connection with the trade or business during 
 59.19  the tax period; 
 59.20     (2) 12.5 for taxable years beginning after December 31, 
 59.21  1999, and before January 1, 2001, ten percent of; for taxable 
 59.22  years beginning after December 31, 2000, five percent of the 
 59.23  percentage which the total tangible property used by the 
 59.24  taxpayer in this state in connection with the trade or business 
 59.25  during the tax period is of the total tangible property, 
 59.26  wherever located, used by the taxpayer in connection with the 
 59.27  trade or business during the tax period; and 
 59.28     (3) 12.5 for taxable years beginning after December 31, 
 59.29  1999, and before January 1, 2001, ten percent of; for taxable 
 59.30  years beginning after December 31, 2000, five percent of the 
 59.31  percentage which the taxpayer's total payrolls paid or incurred 
 59.32  in this state or paid in respect to labor performed in this 
 59.33  state in connection with the trade or business during the tax 
 59.34  period are of the taxpayer's total payrolls paid or incurred in 
 59.35  connection with the trade or business during the tax period.  
 59.36     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 60.1   years beginning after December 31, 1999.  This section 
 60.2   supersedes Laws 1999, chapter 243, article 2, sections 24 and 
 60.3   32, paragraph (g). 
 60.4      Sec. 30.  Minnesota Statutes 1999 Supplement, section 
 60.5   290.191, subdivision 3, is amended to read: 
 60.6      Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
 60.7   INSTITUTIONS.] Except for an investment company required to 
 60.8   apportion its income under section 290.36, a financial 
 60.9   institution that is required to apportion its net income must 
 60.10  apportion its net income to this state on the basis of the 
 60.11  percentage obtained by taking the sum of:  
 60.12     (1) 75 for taxable years beginning after December 31, 1999, 
 60.13  and before January 1, 2001, 80 percent of; for taxable years 
 60.14  beginning after December 31, 2000, 90 percent of the percentage 
 60.15  which the receipts from within this state in connection with the 
 60.16  trade or business during the tax period are of the total 
 60.17  receipts in connection with the trade or business during the tax 
 60.18  period, from wherever derived; 
 60.19     (2) 12.5 for taxable years beginning after December 31, 
 60.20  1999, and before January 1, 2001, ten percent of; for taxable 
 60.21  years beginning after December 31, 2000, five percent of the 
 60.22  percentage which the sum of the total tangible property used by 
 60.23  the taxpayer in this state and the intangible property owned by 
 60.24  the taxpayer and attributed to this state in connection with the 
 60.25  trade or business during the tax period is of the sum of the 
 60.26  total tangible property, wherever located, used by the taxpayer 
 60.27  and the intangible property owned by the taxpayer and attributed 
 60.28  to all states in connection with the trade or business during 
 60.29  the tax period; and 
 60.30     (3) 12.5 for taxable years beginning after December 31, 
 60.31  1999, and before January 1, 2001, ten percent of; for taxable 
 60.32  years beginning after December 31, 2000, five percent of the 
 60.33  percentage which the taxpayer's total payrolls paid or incurred 
 60.34  in this state or paid in respect to labor performed in this 
 60.35  state in connection with the trade or business during the tax 
 60.36  period are of the taxpayer's total payrolls paid or incurred in 
 61.1   connection with the trade or business during the tax period. 
 61.2      <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 61.3   years beginning after December 31, 1999.  This section 
 61.4   supersedes Laws 1999, chapter 243, article 2, sections 25 and 
 61.5   32, paragraph (g). 
 61.6      Sec. 31.  Minnesota Statutes 1998, section 290.92, 
 61.7   subdivision 3, is amended to read: 
 61.8      Subd. 3.  [WITHHOLDING, IRREGULAR PERIOD.] If payment of 
 61.9   wages is made to an employee by an employer 
 61.10     (a) With respect to a payroll period or other period, any 
 61.11  part of which is included in a payroll period or other period 
 61.12  with respect to which wages are also paid to such employees by 
 61.13  such employer, or 
 61.14     (b) Without regard to any payroll period or other period, 
 61.15  but on or prior to the expiration of a payroll period or other 
 61.16  period with respect to which wages are also paid to such 
 61.17  employee by such employer, or 
 61.18     (c) With respect to a period beginning in one and ending in 
 61.19  another calendar year, or 
 61.20     (d) Through an agent, fiduciary, or other person who also 
 61.21  has the control, receipt, custody, or disposal of or pays, the 
 61.22  wages payable by another employer to such employee. 
 61.23     The manner of withholding and the amount to be deducted and 
 61.24  withheld under subdivision 2a shall be determined in accordance 
 61.25  with rules prescribed by the commissioner under which the 
 61.26  withholding exemption allowed to the employee in any calendar 
 61.27  year shall approximate the withholding exemption allowable with 
 61.28  respect to an annual payroll period, except that if supplemental 
 61.29  wages are not paid concurrent with a payroll period the employer 
 61.30  shall withhold tax on the supplemental payment at the rate of 
 61.31  six percent as if no exemption had been claimed. 
 61.32     <b>EFFECTIVE DATE:</b>  This section is effective for wages paid 
 61.33  after December 31, 2000. 
 61.34     Sec. 32.  Minnesota Statutes 1998, section 290.92, 
 61.35  subdivision 28, is amended to read: 
 61.36     Subd. 28.  [PAYMENTS TO HORSERACING LICENSE HOLDERS.] 
 62.1   Effective with payments made after April 1, 1988, any holder of 
 62.2   a license issued by the Minnesota racing commission who makes a 
 62.3   payment for personal or professional services to a holder of a 
 62.4   class C license issued by the commission, except an amount paid 
 62.5   as a purse, shall deduct from the payment and withhold seven six 
 62.6   percent of the amount as Minnesota withholding tax when the 
 62.7   amount paid to that individual by the same person during the 
 62.8   calendar year exceeds $600.  For purposes of the provisions of 
 62.9   this section, a payment to any person which is subject to 
 62.10  withholding under this subdivision must be treated as if the 
 62.11  payment was a wage paid by an employer to an employee.  Every 
 62.12  individual who is to receive a payment which is subject to 
 62.13  withholding under this subdivision shall furnish the license 
 62.14  holder with a statement, made under the penalties of perjury, 
 62.15  containing the name, address, and social security account number 
 62.16  of the person receiving the payment.  No withholding is required 
 62.17  if the individual presents a signed certificate from the 
 62.18  individual's employer which states that the individual is an 
 62.19  employee of that employer.  A nonresident individual who holds a 
 62.20  class C license must be treated as an athlete for purposes of 
 62.21  applying the provisions of sections 290.17, subdivision 
 62.22  2(1)(b)(ii) and 290.92, subdivision 4a.  
 62.23     <b>EFFECTIVE DATE:</b>  This section applies to payments made 
 62.24  after the date of final enactment. 
 62.25     Sec. 33.  Minnesota Statutes 1998, section 290.92, 
 62.26  subdivision 29, is amended to read: 
 62.27     Subd. 29.  [LOTTERY PRIZES.] Eight seven percent of the 
 62.28  payment of Minnesota state lottery winnings which are subject to 
 62.29  withholding must be withheld as Minnesota withholding tax.  For 
 62.30  purposes of this subdivision, the term "winnings which are 
 62.31  subject to withholding" has the meaning given in section 
 62.32  3402(q)(3) of the Internal Revenue Code.  For purposes of the 
 62.33  provisions of this section, a payment to any person of winnings 
 62.34  which are subject to withholding must be treated as if the 
 62.35  payment was a wage paid by an employer to an employee.  Every 
 62.36  individual who is to receive a payment of winnings which are 
 63.1   subject to withholding shall furnish the state lottery with a 
 63.2   statement, made under the penalties of perjury, containing the 
 63.3   name, address, and social security account number of the person 
 63.4   receiving the payment.  The Minnesota state lottery is liable 
 63.5   for the payment of the tax required to be withheld under this 
 63.6   subdivision but is not liable to any person for the amount of 
 63.7   the payment. 
 63.8      <b>EFFECTIVE DATE:</b>  This section applies to winnings paid 
 63.9   after the date of final enactment. 
 63.10     Sec. 34.  Minnesota Statutes 1999 Supplement, section 
 63.11  290.9725, is amended to read: 
 63.12     290.9725 [S CORPORATION.] 
 63.13     For purposes of this chapter, the term "S corporation" 
 63.14  means any corporation having a valid election in effect for the 
 63.15  taxable year under section 1362 of the Internal Revenue Code.  
 63.16  An S corporation shall not be subject to the taxes imposed by 
 63.17  this chapter, except:  
 63.18     (1) the taxes imposed under sections 290.0922, 290.92, 
 63.19  290.9727, 290.9728, and 290.9729; and 
 63.20     (2) the tax under sections 290.06, subdivision 1, and 
 63.21  290.0921 apply to a financial institution to which either 
 63.22  section 585 or 593 of the Internal Revenue Code applies or that 
 63.23  has a wholly owned subsidiary as described in section 
 63.24  1361(b)(3)(B) of the Internal Revenue Code which is a financial 
 63.25  institution under section 585 or 593 of the Internal Revenue 
 63.26  Code. 
 63.27     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 63.28  years beginning after December 31, 1999. 
 63.29     Sec. 35.  Minnesota Statutes 1998, section 469.1734, 
 63.30  subdivision 4, is amended to read: 
 63.31     Subd. 4.  [INCOME TAX.] (a) Upon application by the 
 63.32  qualifying business to the city, and approval of the city, a 
 63.33  qualifying business shall receive a credit against taxes imposed 
 63.34  under chapter 290, other than the tax imposed under section 
 63.35  290.92, based on the taxable net income of the qualified 
 63.36  business attributable to the border city, but outside the border 
 64.1   city development zone, multiplied by 9.8 percent in the case of 
 64.2   a taxpayer under section 290.02, and 8.5 7.5 percent in the case 
 64.3   of a taxpayer taxable under section 290.06, subdivision 2c.  The 
 64.4   attributable net income of a qualified business in the border 
 64.5   city is determined by multiplying the taxable net income of the 
 64.6   business entity, determined as if the business were a C 
 64.7   corporation, by a fraction: 
 64.8      (1) the numerator of which is: 
 64.9      (i) the ratio of the taxpayer's property factor under 
 64.10  section 290.191 located in the border city, but outside of the 
 64.11  border city development zone, for the taxable year over the 
 64.12  property factor numerator determined under section 290.191, plus 
 64.13     (ii) the ratio of the taxpayer's payroll factor under 
 64.14  section 290.191 located in the border city, but outside of the 
 64.15  border city development zone, for the taxable year over the 
 64.16  payroll factor numerator determined under section 290.191; and 
 64.17     (2) the denominator of which is two. 
 64.18     (b) The credit under this subdivision applies after any 
 64.19  credit allowed under subdivision 5. 
 64.20     (c) After any notice period required by subdivision 7, the 
 64.21  city council must determine whether granting the credit is in 
 64.22  the best interest of the city, and if it so determines, must 
 64.23  approve the granting of the credit and determine its amount. 
 64.24     (d) The credit under this subdivision may not exceed the 
 64.25  amount of the tax credit certificates received by the taxpayer 
 64.26  from the city, less any tax credit certificates used under 
 64.27  section 469.1732, subdivision 2, and subdivisions 5 and 6. 
 64.28     (e) No taxpayer may receive the credit under this 
 64.29  subdivision for more than five taxable years. 
 64.30     Sec. 36.  [TAX INFORMATION SAMPLE DATA STUDY.] 
 64.31     (a) One of the goals of a reengineered income tax system is 
 64.32  to reduce the administrative burden for both taxpayers and tax 
 64.33  administrators.  In order to reduce the cost of handling paper 
 64.34  returns and to explore electronic options for taxpayer filing of 
 64.35  tax data, the department of revenue will explore eliminating the 
 64.36  requirement of Minnesota Statutes, section 289A.08, subdivision 
 65.1   11, that the federal return be attached in filing a Minnesota 
 65.2   individual income tax return.  This federal return information 
 65.3   is used for the purposes of ensuring the accurate calculation of 
 65.4   individuals' Minnesota income tax liabilities and for the 
 65.5   purposes of preparing the microdata samples under Minnesota 
 65.6   Statutes, section 270.0681. 
 65.7      (b) To ensure the continued reliability of income tax data 
 65.8   samples and to evaluate ways in which the quality of samples may 
 65.9   be improved, the commissioner shall study and evaluate 
 65.10  alternatives to requiring taxpayers to attach a copy of their 
 65.11  federal return when filing Minnesota state income tax.  The 
 65.12  study must be prepared in consultation with the coordinating 
 65.13  committee established in Minnesota Statutes, section 270.0681, 
 65.14  subdivision 2.  The study must: 
 65.15     (1) evaluate the quality of federal electronic data 
 65.16  compared to sample data prepared from returns filed with the 
 65.17  department; 
 65.18     (2) evaluate alternative sampling methodology, including 
 65.19  preselection of sampled returns, panel data, and other sampling 
 65.20  methods; and 
 65.21     (3) evaluate and test whether alternative methods can 
 65.22     (i) provide a data sample that is as accurate and reliable 
 65.23  as one prepared from federal returns that are filed with or 
 65.24  attached to Minnesota individual income tax returns; and 
 65.25     (ii) result in a data sample that will continue to be 
 65.26  available to staff of both the department of finance and the 
 65.27  legislature on the same basis as one prepared from returns 
 65.28  required to be attached to or filed with the Minnesota tax 
 65.29  returns. 
 65.30     (c) The commissioner of revenue shall report the findings 
 65.31  of the study to the house tax committee chair, the senate tax 
 65.32  committee chair, and the commissioner of finance. 
 65.33     (d) The commissioner of revenue shall prepare a bill for 
 65.34  introduction in the 2001 legislative session that eliminates, 
 65.35  for some or all taxpayers, the requirement that a copy of the 
 65.36  federal return be filed with the individual income tax return, 
 66.1   if the commissioner determines as a result of the study that: 
 66.2      (1) an alternative method would provide a data sample that 
 66.3   is as accurate and reliable as one prepared from federal returns 
 66.4   required to be filed with the Minnesota return; and 
 66.5      (2) the sample will continue to be available to the staff 
 66.6   of both the department of finance and the legislature on the 
 66.7   same basis as one prepared from returns required to be filed 
 66.8   with Minnesota tax returns. 
 66.9      <b>EFFECTIVE DATE:</b>  This section is effective the day 
 66.10  following final enactment. 
 66.11     Sec. 37.  [COMMISSIONER OF REVENUE; TEMPORARY POWERS.] 
 66.12     Subdivision 1.  [APPLICABILITY.] This section gives the 
 66.13  commissioner of revenue certain temporary powers.  These powers 
 66.14  apply only to taxes imposed under Minnesota Statutes, sections 
 66.15  290.032, 290.06, and 290.091 administered by the commissioner 
 66.16  under Minnesota Statutes, chapters 289A and 290. 
 66.17     Subd. 2.  [PAYMENT OF TAXES.] The commissioner may 
 66.18  establish additional due dates, applicable to certain groups of 
 66.19  taxpayers, for the payment of taxes.  Unless the commissioner 
 66.20  has the written consent of the taxpayer, the additional payment 
 66.21  dates must not require the taxpayer to pay the tax earlier than 
 66.22  the payment dates provided by statute or rule.  The commissioner 
 66.23  may accept various forms of payment, including, but not limited 
 66.24  to, financial transaction cards and electronic funds transfer.  
 66.25     Subd. 3.  [FILING OF RETURN.] The commissioner may 
 66.26  establish additional due dates, applicable to certain groups of 
 66.27  taxpayers, for the filing of tax returns.  Unless the 
 66.28  commissioner has the written consent of the taxpayer, the return 
 66.29  due date must not be earlier than the due date provided by 
 66.30  statute or rule.  In conducting pilot studies, the commissioner 
 66.31  may use tax return forms with varying formats, accept electronic 
 66.32  filed returns, and waive the taxpayer signature requirements.  
 66.33     Subd. 4.  [AGREEMENTS.] The commissioner may enter written 
 66.34  agreements with taxpayers that provide for the payment of taxes 
 66.35  or the filing of returns at dates earlier than provided by 
 66.36  statute or rule.  The commissioner and the taxpayer may also 
 67.1   agree in writing to other changes from the statutory or rule 
 67.2   requirements related to the administration of these taxes.  If 
 67.3   the taxpayer agrees to pay taxes at a date earlier than that 
 67.4   provided by statute, the commissioner may negotiate payments to 
 67.5   the taxpayer to compensate in part or in full for the loss 
 67.6   incurred as a result of the accelerated payment.  
 67.7      Subd. 5.  [PROCEDURE; APPROVAL.] Pilot studies proposed 
 67.8   under these authorities must be presented to the chairs of the 
 67.9   house of representatives tax committee and the senate committee 
 67.10  on taxes and to the chairs of the committees on state government 
 67.11  finance of the house of representatives and the senate.  No 
 67.12  study may be undertaken without the approval of both tax 
 67.13  committee chairs.  If either chair fails to respond within 15 
 67.14  days after the proposal is presented, that chair is considered 
 67.15  to have approved the study.  If the study is approved, the 
 67.16  commissioner shall initially seek participation on a voluntary 
 67.17  basis from within the targeted taxpayer group. 
 67.18     Subd. 6.  [EXPIRATION DATE.] This section expires June 30, 
 67.19  2002, and all pilot projects under this section must be 
 67.20  completed by June 30, 2002. 
 67.21     <b>EFFECTIVE DATE:</b>  This section is effective the day 
 67.22  following final enactment. 
 67.23     Sec. 38.  [STUDY OF TAXPAYER ASSISTANCE SERVICES.] 
 67.24     The commissioner of revenue shall study the availability of 
 67.25  taxpayer assistance services throughout the state and provide a 
 67.26  written report to the legislature, in compliance with Minnesota 
 67.27  Statutes, sections 3.195 and 3.197, by January 15, 2001.  
 67.28  "Taxpayer assistance services" means accounting and tax 
 67.29  preparation services provided by volunteers to low-income and 
 67.30  disadvantaged Minnesota residents to help them file federal and 
 67.31  state income tax returns and Minnesota property tax refund 
 67.32  claims and to provide personal representation before the 
 67.33  department of revenue and the Internal Revenue Service.  The 
 67.34  study must evaluate: 
 67.35     (1) ways of establishing a measure to evaluate the 
 67.36  effectiveness of volunteers in achieving the department's 
 68.1   mission of achieving compliance with the tax laws; 
 68.2      (2) the geographic distribution and number of volunteer tax 
 68.3   preparation sites throughout the state, in comparison to the 
 68.4   distribution of low-income, elderly, and nonnative English 
 68.5   speakers; 
 68.6      (3) the income, language skills, and age-related screening 
 68.7   criteria used at volunteer tax preparations sites in determining 
 68.8   Minnesota residents' eligibility for taxpayer assistance 
 68.9   services; 
 68.10     (4) the level of training, support, and coordination that 
 68.11  the department provides to volunteers and the optimal level of 
 68.12  training for volunteers to have an adequate understanding of 
 68.13  Minnesota's tax forms; 
 68.14     (5) the effectiveness of grants awarded under Laws 1999, 
 68.15  chapter 243, article 2, section 31; and 
 68.16     (6) the availability of volunteers to assist taxpayers in 
 68.17  preparing Minnesota property tax refund claims after April 15. 
 68.18     The commissioner must invite testimony from organizations 
 68.19  and government entities concerned with taxpayer assistance, both 
 68.20  paid and volunteer.  Organizations receiving grants under Laws 
 68.21  1999, chapter 243, article 2, section 31, must provide 
 68.22  information necessary to the completion of the study to the 
 68.23  commissioner on request. 
 68.24     The study must consider the role of current economic 
 68.25  conditions, including the state unemployment rate, in training 
 68.26  and retaining qualified volunteers, the adequacy of current 
 68.27  taxpayer assistance services, the role of the department of 
 68.28  revenue in assisting low-income, elderly, and nonnative English 
 68.29  speakers, and must recommend ways for improving the availability 
 68.30  and the quality of taxpayer assistance services. 
 68.31     Sec. 39.  [REPEALER.] 
 68.32     Minnesota Statutes 1999 Supplement, sections 290.06, 
 68.33  subdivision 26; and 290.9726, subdivision 7, are repealed. 
 68.34     <b>EFFECTIVE DATE:</b>  This section is effective for taxable 
 68.35  years beginning after December 31, 1999. 
 68.36                             ARTICLE 5 
 69.1                            PROPERTY TAXES 
 69.2      Section 1.  Minnesota Statutes 1998, section 126C.01, is 
 69.3   amended by adding a subdivision to read: 
 69.4      Subd. 3a.  [NEW REFERENDUM MARKET VALUE.] "New referendum 
 69.5   market value" means the market value of all taxable property, 
 69.6   except that (i) any class of property, or any portion of a class 
 69.7   of property, with a class rate of less than one percent under 
 69.8   section 273.13 shall have a new referendum market value equal to 
 69.9   its net tax capacity multiplied by 100, and (ii) property 
 69.10  classified as noncommercial seasonal residential recreational 
 69.11  under section 273.13, subdivision 25, shall have a new 
 69.12  referendum market value equal to 50 percent of its taxable 
 69.13  market value. 
 69.14     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 69.15  payable in 2002 and thereafter. 
 69.16     Sec. 2.  Minnesota Statutes 1998, section 126C.17, 
 69.17  subdivision 10, is amended to read: 
 69.18     Subd. 10.  [SCHOOL REFERENDUM LEVY; MARKET VALUE.] 
 69.19  Notwithstanding the provisions of subdivision 9, a school 
 69.20  referendum levy approved after November 1, 1992, for taxes 
 69.21  payable in 1993 and thereafter before January 1, 2001, must be 
 69.22  levied against the referendum market value of all taxable 
 69.23  property as defined in section 126C.01, subdivision 
 69.24  3.  Notwithstanding the provisions of subdivision 9, a school 
 69.25  referendum levy approved after December 31, 2000, must be levied 
 69.26  against the new referendum market value of all taxable property 
 69.27  as defined in section 126C.01, subdivision 3a.  Any referendum 
 69.28  levy amount subject to the requirements of this subdivision must 
 69.29  be certified separately to the county auditor under section 
 69.30  275.07. 
 69.31     All other provisions of subdivision 9 that do not conflict 
 69.32  with this subdivision apply to referendum levies under this 
 69.33  subdivision.  
 69.34     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 69.35  payable in 2002 and thereafter. 
 69.36     Sec. 3.  Minnesota Statutes 1998, section 270.072, 
 70.1   subdivision 2, is amended to read: 
 70.2      Subd. 2.  [ASSESSMENT OF FLIGHT PROPERTY.] The flight 
 70.3   property of all airline companies operating in Minnesota shall 
 70.4   be assessed and appraised annually by the commissioner with 
 70.5   reference to its value on January 2 of the assessment year in 
 70.6   the manner prescribed by sections 270.071 to 270.079.  Aircraft 
 70.7   with a gross weight of less than 30,000 pounds and used on 
 70.8   intermittent or irregularly timed flights shall be excluded from 
 70.9   the provisions of sections 270.071 to 270.079. 
 70.10     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 70.11  payable in 2001 and thereafter. 
 70.12     Sec. 4.  Minnesota Statutes 1998, section 270.072, is 
 70.13  amended by adding a subdivision to read: 
 70.14     Subd. 6.  [AIRFLIGHT PROPERTY TAX LIEN.] The tax imposed 
 70.15  under sections 270.071 to 270.079 is a lien on all real and 
 70.16  personal property within this state of the airline company in 
 70.17  whose name the property is assessed.  For purposes of sections 
 70.18  270.65 and 270.69, the date of assessment for the tax imposed 
 70.19  under sections 270.071 to 270.079 is January 2 of each year for 
 70.20  the taxes payable in the following year.  
 70.21     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 70.22  payable in 2001 and thereafter. 
 70.23     Sec. 5.  Minnesota Statutes 1999 Supplement, section 
 70.24  272.02, subdivision 39, is amended to read: 
 70.25     Subd. 39.  [ECONOMIC DEVELOPMENT; PUBLIC PURPOSE.] The 
 70.26  holding of property by a political subdivision of the state for 
 70.27  later resale for economic development purposes shall be 
 70.28  considered a public purpose in accordance with subdivision 8 for 
 70.29  a period not to exceed eight years for political subdivisions 
 70.30  with a population of 10,000 and over, and ten years for 
 70.31  political subdivisions with a population of less than 10,000.  
 70.32  The holding of property by a political subdivision of the state 
 70.33  for later resale (1) which is purchased or held for housing 
 70.34  purposes, or (2) which meets the conditions described in section 
 70.35  469.174, subdivision 10, shall be considered a public purpose in 
 70.36  accordance with subdivision 8.  The governing body of the 
 71.1   political subdivision which acquires property which is subject 
 71.2   to this subdivision shall after the purchase of the property 
 71.3   certify to the city or county assessor whether the property is 
 71.4   held for economic development purposes or housing purposes, or 
 71.5   whether it meets the conditions of section 469.174, subdivision 
 71.6   10.  If the property is acquired for economic development 
 71.7   purposes and buildings or other improvements are constructed 
 71.8   after acquisition of the property, and if more than one-half of 
 71.9   the floor space of the buildings or improvements which is 
 71.10  available for lease to or use by a private individual, 
 71.11  corporation, or other entity is leased to or otherwise used by a 
 71.12  private individual, corporation, or other entity the provisions 
 71.13  of this subdivision shall not apply to the property.  This 
 71.14  subdivision shall not create an exemption from section 272.01, 
 71.15  subdivision 2; 272.68; 273.19; or 469.040, subdivision 3; or 
 71.16  other provision of law providing for the taxation of or for 
 71.17  payments in lieu of taxes for publicly held property which is 
 71.18  leased, loaned, or otherwise made available and used by a 
 71.19  private person.  For purposes of this section, "population" has 
 71.20  the meaning given in section 477A.011, subdivision 3. 
 71.21     <b>EFFECTIVE DATE:</b>  This section is effective beginning with 
 71.22  assessment year 2000. 
 71.23     Sec. 6.  Minnesota Statutes 1999 Supplement, section 
 71.24  272.02, is amended by adding a subdivision to read: 
 71.25     Subd. 44.  [ELECTRIC GENERATION FACILITY PERSONAL 
 71.26  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 71.27  machinery and other personal property which is part of a 
 71.28  simple-cycle combustion-turbine electric generation facility 
 71.29  that exceeds 250 megawatts of installed capacity and that meets 
 71.30  the requirements of this subdivision is exempt.  At the time of 
 71.31  construction, the facility must:  
 71.32     (1) utilize natural gas as a primary fuel; 
 71.33     (2) be located within 20 miles of parallel existing 16-inch 
 71.34  and 12-inch (outside diameter) natural gas pipelines and a 
 71.35  345-kilovolt high-voltage electric transmission line; and 
 71.36     (3) be designed to provide peaking, emergency backup, or 
 72.1   contingency services, and have received a certificate of need 
 72.2   pursuant to section 216B.243 demonstrating demand for its 
 72.3   capacity.  
 72.4   Construction of the facility must be commenced after January 1, 
 72.5   2000, and before January 1, 2004.  Property eligible for this 
 72.6   exemption does not include electric transmission lines and 
 72.7   interconnections or gas pipelines and interconnections 
 72.8   appurtenant to the property or the facility. 
 72.9      <b>EFFECTIVE DATE:</b>  This section is effective for assessment 
 72.10  year 2001 and thereafter.  
 72.11     Sec. 7.  Minnesota Statutes 1999 Supplement, section 
 72.12  273.11, subdivision 1a, is amended to read: 
 72.13     Subd. 1a.  [LIMITED MARKET VALUE.] In the case of all 
 72.14  property classified as agricultural homestead or nonhomestead, 
 72.15  residential homestead or nonhomestead, or noncommercial seasonal 
 72.16  recreational residential, the assessor shall compare the value 
 72.17  with that determined in the preceding assessment.  The amount of 
 72.18  the increase entered in the current assessment shall not exceed 
 72.19  the greater of (1) 8.5 seven percent of the value in the 
 72.20  preceding assessment, or (2) 15 percent of the difference 
 72.21  between the current assessment and the preceding assessment.  
 72.22  This limitation shall not apply to increases in value due to 
 72.23  improvements.  For purposes of this subdivision, the term 
 72.24  "assessment" means the value prior to any exclusion under 
 72.25  subdivision 16. 
 72.26     The provisions of this subdivision shall be in effect only 
 72.27  through assessment year 2001. 
 72.28     For purposes of the assessment/sales ratio study conducted 
 72.29  under section 127A.48, and the computation of state aids paid 
 72.30  under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 
 72.31  477A, estimated market values and net tax capacities value 
 72.32  assessment/sales ratios and taxable market value net tax 
 72.33  capacities determined under this subdivision and subdivision 16, 
 72.34  shall be used. 
 72.35     <b>EFFECTIVE DATE:</b>  This section is effective for assessment 
 72.36  years 2000 and 2001. 
 73.1      Sec. 8.  Minnesota Statutes 1998, section 273.111, 
 73.2   subdivision 3, is amended to read: 
 73.3      Subd. 3.  [REQUIREMENTS.] (a) Real estate consisting of ten 
 73.4   acres or more or a nursery or greenhouse, and qualifying for 
 73.5   classification as class 1b, 2a, or 2b under section 273.13, 
 73.6   subdivision 23, paragraph (d), shall be entitled to valuation 
 73.7   and tax deferment under this section only if it is primarily 
 73.8   devoted to agricultural use, and meets the qualifications in 
 73.9   subdivision 6, and either:  
 73.10     (1) is the homestead of the owner, or of a surviving 
 73.11  spouse, child, or sibling of the owner or is real estate which 
 73.12  is farmed with the real estate which contains the homestead 
 73.13  property; or 
 73.14     (2) has been in possession of the applicant, the 
 73.15  applicant's spouse, parent, or sibling, or any combination 
 73.16  thereof, for a period of at least seven years prior to 
 73.17  application for benefits under the provisions of this section, 
 73.18  or is real estate which is farmed with the real estate which 
 73.19  qualifies under this clause and is within two four townships or 
 73.20  cities or combination thereof from the qualifying real estate; 
 73.21  or 
 73.22     (3) is the homestead of a shareholder in a family farm 
 73.23  corporation as defined in section 500.24, notwithstanding the 
 73.24  fact that legal title to the real estate may be held in the name 
 73.25  of the family farm corporation; or 
 73.26     (4) is in the possession of a nursery or greenhouse or an 
 73.27  entity owned by a proprietor, partnership, or corporation which 
 73.28  also owns the nursery or greenhouse operations on the parcel or 
 73.29  parcels. 
 73.30     (b) Valuation of real estate under this section is limited 
 73.31  to parcels the ownership of which is in noncorporate entities 
 73.32  except for:  
 73.33     (1) family farm corporations organized pursuant to section 
 73.34  500.24; and 
 73.35     (2) corporations that derive 80 percent or more of their 
 73.36  gross receipts from the wholesale or retail sale of 
 74.1   horticultural or nursery stock.  
 74.2      Corporate entities who previously qualified for tax 
 74.3   deferment pursuant to this section and who continue to otherwise 
 74.4   qualify under subdivisions 3 and 6 for a period of at least 
 74.5   three years following the effective date of Laws 1983, chapter 
 74.6   222, section 8, will not be required to make payment of the 
 74.7   previously deferred taxes, notwithstanding the provisions of 
 74.8   subdivision 9.  Special assessments are payable at the end of 
 74.9   the three-year period or at time of sale, whichever comes first. 
 74.10     (c) Land that previously qualified for tax deferment under 
 74.11  this section and no longer qualifies because it is not primarily 
 74.12  used for agricultural purposes but would otherwise qualify under 
 74.13  subdivisions 3 and 6 for a period of at least three years will 
 74.14  not be required to make payment of the previously deferred 
 74.15  taxes, notwithstanding the provisions of subdivision 9.  Sale of 
 74.16  the land prior to the expiration of the three-year period 
 74.17  requires payment of deferred taxes as follows:  sale in the year 
 74.18  the land no longer qualifies requires payment of the current 
 74.19  year's deferred taxes plus payment of deferred taxes for the two 
 74.20  prior years; sale during the second year the land no longer 
 74.21  qualifies requires payment of the current year's deferred taxes 
 74.22  plus payment of the deferred taxes for the prior year; and sale 
 74.23  during the third year the land no longer qualifies requires 
 74.24  payment of the current year's deferred taxes.  Deferred taxes 
 74.25  shall be paid even if the land qualifies pursuant to subdivision 
 74.26  11a.  When such property is sold or no longer qualifies under 
 74.27  this paragraph, or at the end of the three-year period, 
 74.28  whichever comes first, all deferred special assessments plus 
 74.29  interest are payable in equal installments spread over the time 
 74.30  remaining until the last maturity date of the bonds issued to 
 74.31  finance the improvement for which the assessments were levied.  
 74.32  If the bonds have matured, the deferred special assessments plus 
 74.33  interest are payable within 90 days.  The provisions of section 
 74.34  429.061, subdivision 2, apply to the collection of these 
 74.35  installments.  Penalties are not imposed on any such special 
 74.36  assessments if timely paid. 
 75.1      <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 75.2   payable in 2000 and thereafter. 
 75.3      Sec. 9.  Minnesota Statutes 1999 Supplement, section 
 75.4   273.124, subdivision 1, is amended to read: 
 75.5      Subdivision 1.  [GENERAL RULE.] (a) Residential real estate 
 75.6   that is occupied and used for the purposes of a homestead by its 
 75.7   owner, who must be a Minnesota resident, is a residential 
 75.8   homestead.  
 75.9      Agricultural land, as defined in section 273.13, 
 75.10  subdivision 23, that is occupied and used as a homestead by its 
 75.11  owner, who must be a Minnesota resident, is an agricultural 
 75.12  homestead. 
 75.13     Dates for establishment of a homestead and homestead 
 75.14  treatment provided to particular types of property are as 
 75.15  provided in this section.  
 75.16     Property of held by a trustee, beneficiary, or grantor of 
 75.17  under a trust is not disqualified from receiving eligible for 
 75.18  homestead benefits classification if the homestead requirements 
 75.19  under this chapter are satisfied. 
 75.20     The assessor shall require proof, as provided in 
 75.21  subdivision 13, of the facts upon which classification as a 
 75.22  homestead may be determined.  Notwithstanding any other law, the 
 75.23  assessor may at any time require a homestead application to be 
 75.24  filed in order to verify that any property classified as a 
 75.25  homestead continues to be eligible for homestead status.  
 75.26  Notwithstanding any other law to the contrary, the department of 
 75.27  revenue may, upon request from an assessor, verify whether an 
 75.28  individual who is requesting or receiving homestead 
 75.29  classification has filed a Minnesota income tax return as a 
 75.30  resident for the most recent taxable year for which the 
 75.31  information is available. 
 75.32     When there is a name change or a transfer of homestead 
 75.33  property, the assessor may reclassify the property in the next 
 75.34  assessment unless a homestead application is filed to verify 
 75.35  that the property continues to qualify for homestead 
 75.36  classification. 
 76.1      (b) For purposes of this section, homestead property shall 
 76.2   include property which is used for purposes of the homestead but 
 76.3   is separated from the homestead by a road, street, lot, 
 76.4   waterway, or other similar intervening property.  The term "used 
 76.5   for purposes of the homestead" shall include but not be limited 
 76.6   to uses for gardens, garages, or other outbuildings commonly 
 76.7   associated with a homestead, but shall not include vacant land 
 76.8   held primarily for future development.  In order to receive 
 76.9   homestead treatment for the noncontiguous property, the owner 
 76.10  must use the property for the purposes of the homestead, and 
 76.11  must apply to the assessor, both by the deadlines given in 
 76.12  subdivision 9.  After initial qualification for the homestead 
 76.13  treatment, additional applications for subsequent years are not 
 76.14  required. 
 76.15     (c) Residential real estate that is occupied and used for 
 76.16  purposes of a homestead by a relative of the owner is a 
 76.17  homestead but only to the extent of the homestead treatment that 
 76.18  would be provided if the related owner occupied the property.  
 76.19  For purposes of this paragraph and paragraph (g), "relative" 
 76.20  means a parent, stepparent, child, stepchild, grandparent, 
 76.21  grandchild, brother, sister, uncle, aunt, nephew, or niece.  
 76.22  This relationship may be by blood or marriage.  Property that 
 76.23  has been classified as seasonal recreational residential 
 76.24  property at any time during which it has been owned by the 
 76.25  current owner or spouse of the current owner will not be 
 76.26  reclassified as a homestead unless it is occupied as a homestead 
 76.27  by the owner; this prohibition also applies to property that, in 
 76.28  the absence of this paragraph, would have been classified as 
 76.29  seasonal recreational residential property at the time when the 
 76.30  residence was constructed.  Neither the related occupant nor the 
 76.31  owner of the property may claim a property tax refund under 
 76.32  chapter 290A for a homestead occupied by a relative.  In the 
 76.33  case of a residence located on agricultural land, only the 
 76.34  house, garage, and immediately surrounding one acre of land 
 76.35  shall be classified as a homestead under this paragraph, except 
 76.36  as provided in paragraph (d). 
 77.1      (d) Agricultural property that is occupied and used for 
 77.2   purposes of a homestead by a relative of the owner, is a 
 77.3   homestead, only to the extent of the homestead treatment that 
 77.4   would be provided if the related owner occupied the property, 
 77.5   and only if all of the following criteria are met: 
 77.6      (1) the relative who is occupying the agricultural property 
 77.7   is a son, daughter, father, or mother of the owner of the 
 77.8   agricultural property or a son or daughter of the spouse of the 
 77.9   owner of the agricultural property; 
 77.10     (2) the owner of the agricultural property must be a 
 77.11  Minnesota resident; 
 77.12     (3) the owner of the agricultural property must not receive 
 77.13  homestead treatment on any other agricultural property in 
 77.14  Minnesota; and 
 77.15     (4) the owner of the agricultural property is limited to 
 77.16  only one agricultural homestead per family under this paragraph. 
 77.17     For purposes of this paragraph, a grandson or granddaughter 
 77.18  of the owner of the agricultural property may qualify instead of 
 77.19  the owner's son or daughter under clause (1), provided that the 
 77.20  owner's son or daughter is deceased or is permanently and 
 77.21  totally disabled and therefore cannot actively farm the 
 77.22  agricultural property, and that the grandson or granddaughter is 
 77.23  actively farming the owner's agricultural property. 
 77.24     Neither the related occupant nor the owner of the property 
 77.25  may claim a property tax refund under chapter 290A for a 
 77.26  homestead occupied by a relative qualifying under this 
 77.27  paragraph.  For purposes of this paragraph, "agricultural 
 77.28  property" means the house, garage, other farm buildings and 
 77.29  structures, and agricultural land. 
 77.30     Application must be made to the assessor by the owner of 
 77.31  the agricultural property to receive homestead benefits under 
 77.32  this paragraph.  The assessor may require the necessary proof 
 77.33  that the requirements under this paragraph have been met. 
 77.34     (e) In the case of property owned by a property owner who 
 77.35  is married, the assessor must not deny homestead treatment in 
 77.36  whole or in part if only one of the spouses occupies the 
 78.1   property and the other spouse is absent due to:  (1) marriage 
 78.2   dissolution proceedings, (2) legal separation, (3) employment or 
 78.3   self-employment in another location, or (4) other personal 
 78.4   circumstances causing the spouses to live separately, not 
 78.5   including an intent to obtain two homestead classifications for 
 78.6   property tax purposes.  To qualify under clause (3), the 
 78.7   spouse's place of employment or self-employment must be at least 
 78.8   50 miles distant from the other spouse's place of employment, 
 78.9   and the homesteads must be at least 50 miles distant from each 
 78.10  other.  Homestead treatment, in whole or in part, shall not be 
 78.11  denied to the owner's spouse who previously occupied the 
 78.12  residence with the owner if the absence of the owner is due to 
 78.13  one of the exceptions provided in this paragraph. 
 78.14     (f) The assessor must not deny homestead treatment in whole 
 78.15  or in part if: 
 78.16     (1) in the case of a property owner who is not married, the 
 78.17  owner is absent due to residence in a nursing home or boarding 
 78.18  care facility and the property is not otherwise occupied; or 
 78.19     (2) in the case of a property owner who is married, the 
 78.20  owner or the owner's spouse or both are absent due to residence 
 78.21  in a nursing home or boarding care facility and the property is 
 78.22  not occupied or is occupied only by the owner's spouse. 
 78.23     (g) If an individual is purchasing property with the intent 
 78.24  of claiming it as a homestead and is required by the terms of 
 78.25  the financing agreement to have a relative shown on the deed as 
 78.26  a coowner, the assessor shall allow a full homestead 
 78.27  classification.  This provision only applies to first-time 
 78.28  purchasers, whether married or single, or to a person who had 
 78.29  previously been married and is purchasing as a single individual 
 78.30  for the first time.  The application for homestead benefits must 
 78.31  be on a form prescribed by the commissioner and must contain the 
 78.32  data necessary for the assessor to determine if full homestead 
 78.33  benefits are warranted. 
 78.34     (h) If residential or agricultural real estate is occupied 
 78.35  and used for purposes of a homestead by a child of a deceased 
 78.36  owner and the property is subject to jurisdiction of probate 
 79.1   court, the child shall receive relative homestead classification 
 79.2   under paragraph (c) or (d) to the same extent they would be 
 79.3   entitled to it if the owner was still living, until the probate 
 79.4   is completed.  For purposes of this paragraph, "child" includes 
 79.5   a relationship by blood or by marriage. 
 79.6      <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 79.7   payable in 2001 and thereafter. 
 79.8      Sec. 10.  Minnesota Statutes 1999 Supplement, section 
 79.9   273.124, subdivision 8, is amended to read: 
 79.10     Subd. 8.  [HOMESTEAD OWNED BY FAMILY FARM CORPORATION, 
 79.11  JOINT FARM VENTURE OR PARTNERSHIP OR LEASED TO FAMILY FARM 
 79.12  CORPORATION, JOINT FARM VENTURE OR PARTNERSHIP.] (a) Each family 
 79.13  farm corporation, each joint farm venture, and each partnership 
 79.14  operating a family farm is entitled to class 1b under section 
 79.15  273.13, subdivision 22, paragraph (b), or class 2a assessment 
 79.16  for one homestead occupied by a shareholder or partner thereof 
 79.17  who is residing on the land except as provided in subdivision 
 79.18  14, paragraph (g), and actively engaged in farming of the land 
 79.19  owned by the corporation, joint farm venture, or partnership.  
 79.20  Homestead treatment applies even if legal title to the property 
 79.21  is in the name of the corporation, joint farm venture, or 
 79.22  partnership and not in the name of the person residing on it.  
 79.23  "Family farm corporation" and "family farm" have the meanings 
 79.24  given in section 500.24, except that the number of allowable 
 79.25  shareholders or partners under this subdivision shall not exceed 
 79.26  12. 
 79.27     (b) In addition to property specified in paragraph (a), any 
 79.28  other residences owned by corporations, joint farm ventures, or 
 79.29  partnerships described in paragraph (a) which are located on 
 79.30  agricultural land and occupied as homesteads by shareholders or 
 79.31  partners who are actively engaged in farming on behalf of the 
 79.32  corporation, joint farm venture, or partnership must also be 
 79.33  assessed as class 2a property or as class 1b property under 
 79.34  section 273.13, subdivision 22, paragraph (b). 
 79.35     (c) Agricultural property owned by a shareholder of a 
 79.36  family farm corporation or joint farm venture, as defined in 
 80.1   paragraph (a), or by a partner in a partnership operating a 
 80.2   family farm and leased to the family farm corporation by the 
 80.3   shareholder or to the partnership by the partner, is eligible 
 80.4   for classification as class 1b under section 273.13, subdivision 
 80.5   22, paragraph (b), or class 2a under section 273.13, subdivision 
 80.6   23, paragraph (a), if the owner is actually residing on the 
 80.7   property except as provided in subdivision 14, paragraph (g), 
 80.8   and is actually engaged in farming the land on behalf of the 
 80.9   corporation, joint farm venture, or partnership.  This paragraph 
 80.10  applies without regard to any legal possession rights of the 
 80.11  family farm corporation, joint farm venture, or partnership 
 80.12  operating a family farm under the lease. 
 80.13     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 80.14  payable in 2001 and thereafter. 
 80.15     Sec. 11.  Minnesota Statutes 1999 Supplement, section 
 80.16  273.124, subdivision 14, is amended to read: 
 80.17     Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
 80.18  (a) Real estate of less than ten acres that is the homestead of 
 80.19  its owner must be classified as class 2a under section 273.13, 
 80.20  subdivision 23, paragraph (a), if:  
 80.21     (1) the parcel on which the house is located is contiguous 
 80.22  on at least two sides to (i) agricultural land, (ii) land owned 
 80.23  or administered by the United States Fish and Wildlife Service, 
 80.24  or (iii) land administered by the department of natural 
 80.25  resources on which in lieu taxes are paid under sections 477A.11 
 80.26  to 477A.14; 
 80.27     (2) its owner also owns a noncontiguous parcel of 
 80.28  agricultural land that is at least 20 acres; 
 80.29     (3) the noncontiguous land is located not farther than four 
 80.30  townships or cities, or a combination of townships or cities 
 80.31  from the homestead; and 
 80.32     (4) the agricultural use value of the noncontiguous land 
 80.33  and farm buildings is equal to at least 50 percent of the market 
 80.34  value of the house, garage, and one acre of land. 
 80.35     Homesteads initially classified as class 2a under the 
 80.36  provisions of this paragraph shall remain classified as class 
 81.1   2a, irrespective of subsequent changes in the use of adjoining 
 81.2   properties, as long as the homestead remains under the same 
 81.3   ownership, the owner owns a noncontiguous parcel of agricultural 
 81.4   land that is at least 20 acres, and the agricultural use value 
 81.5   qualifies under clause (4).  Homestead classification under this 
 81.6   paragraph is limited to property that qualified under this 
 81.7   paragraph for the 1998 assessment. 
 81.8      (b) Agricultural property consisting of at least 40 acres 
 81.9   shall be classified homestead, to the same extent as other 
 81.10  agricultural homestead property, if all of the following 
 81.11  criteria are met: 
 81.12     (1) the owner, or the owner's son or daughter, is actively 
 81.13  farming the agricultural property; 
 81.14     (2) the owner of the agricultural property is a Minnesota 
 81.15  resident, and if the owner's son or daughter is actively farming 
 81.16  the agricultural property under clause (1), that person must 
 81.17  also be a Minnesota resident; 
 81.18     (3) neither the owner nor the spouse of the agricultural 
 81.19  property claims another agricultural homestead in Minnesota; and 
 81.20     (4) the owner does not live farther than four townships or 
 81.21  cities, or a combination of four townships or cities, from the 
 81.22  agricultural property, and if the owner's son or daughter is 
 81.23  actively farming the agricultural property under clause (1), 
 81.24  that person must also live within the four townships or cities, 
 81.25  or combination of four townships or cities from the agricultural 
 81.26  property. 
 81.27     The relationship under this paragraph may be either by 
 81.28  blood or marriage. 
 81.29     (c) Except as provided in paragraph (e), noncontiguous land 
 81.30  shall be included as part of a homestead under section 273.13, 
 81.31  subdivision 23, paragraph (a), only if the homestead is 
 81.32  classified as class 2a and the detached land is located in the 
 81.33  same township or city, or not farther than four townships or 
 81.34  cities or combination thereof from the homestead.  Any taxpayer 
 81.35  of these noncontiguous lands must notify the county assessor 
 81.36  that the noncontiguous land is part of the taxpayer's homestead, 
 82.1   and, if the homestead is located in another county, the taxpayer 
 82.2   must also notify the assessor of the other county. 
 82.3      (d) Agricultural land used for purposes of a homestead and 
 82.4   actively farmed by a person holding a vested remainder interest 
 82.5   in it must be classified as a homestead under section 273.13, 
 82.6   subdivision 23, paragraph (a).  If agricultural land is 
 82.7   classified class 2a, any other dwellings on the land used for 
 82.8   purposes of a homestead by persons holding vested remainder 
 82.9   interests who are actively engaged in farming the property, and 
 82.10  up to one acre of the land surrounding each homestead and 
 82.11  reasonably necessary for the use of the dwelling as a home, must 
 82.12  also be assessed class 2a. 
 82.13     (e) Agricultural land and buildings that were class 2a 
 82.14  homestead property under section 273.13, subdivision 23, 
 82.15  paragraph (a), for the 1997 assessment shall remain classified 
 82.16  as agricultural homesteads for subsequent assessments if:  
 82.17     (1) the property owner abandoned the homestead dwelling 
 82.18  located on the agricultural homestead as a result of the April 
 82.19  1997 floods; 
 82.20     (2) the property is located in the county of Polk, Clay, 
 82.21  Kittson, Marshall, Norman, or Wilkin; 
 82.22     (3) the agricultural land and buildings remain under the 
 82.23  same ownership for the current assessment year as existed for 
 82.24  the 1997 assessment year and continue to be used for 
 82.25  agricultural purposes; 
 82.26     (4) the dwelling occupied by the owner is located in 
 82.27  Minnesota and is within 30 miles of one of the parcels of 
 82.28  agricultural land that is owned by the taxpayer; and 
 82.29     (5) the owner notifies the county assessor that the 
 82.30  relocation was due to the 1997 floods, and the owner furnishes 
 82.31  the assessor any information deemed necessary by the assessor in 
 82.32  verifying the change in dwelling.  Further notifications to the 
 82.33  assessor are not required if the property continues to meet all 
 82.34  the requirements in this paragraph and any dwellings on the 
 82.35  agricultural land remain uninhabited. 
 82.36     (f) Agricultural land and buildings that were class 2a 
 83.1   homestead property under section 273.13, subdivision 23, 
 83.2   paragraph (a), for the 1998 assessment shall remain classified 
 83.3   agricultural homesteads for subsequent assessments if: 
 83.4      (1) the property owner abandoned the homestead dwelling 
 83.5   located on the agricultural homestead as a result of damage 
 83.6   caused by a March 29, 1998, tornado; 
 83.7      (2) the property is located in the county of Blue Earth, 
 83.8   Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 
 83.9      (3) the agricultural land and buildings remain under the 
 83.10  same ownership for the current assessment year as existed for 
 83.11  the 1998 assessment year; 
 83.12     (4) the dwelling occupied by the owner is located in this 
 83.13  state and is within 50 miles of one of the parcels of 
 83.14  agricultural land that is owned by the taxpayer; and 
 83.15     (5) the owner notifies the county assessor that the 
 83.16  relocation was due to a March 29, 1998, tornado, and the owner 
 83.17  furnishes the assessor any information deemed necessary by the 
 83.18  assessor in verifying the change in homestead dwelling.  For 
 83.19  taxes payable in 1999, the owner must notify the assessor by 
 83.20  December 1, 1998.  Further notifications to the assessor are not 
 83.21  required if the property continues to meet all the requirements 
 83.22  in this paragraph and any dwellings on the agricultural land 
 83.23  remain uninhabited. 
 83.24     (g) Agricultural property consisting of at least 40 acres 
 83.25  of a family farm corporation, partnership, or joint farm venture 
 83.26  as described under subdivision 8 shall be classified homestead, 
 83.27  to the same extent as other agricultural homestead property, if 
 83.28  all of the following criteria are met: 
 83.29     (1) the shareholder or the partner is actively farming the 
 83.30  agricultural property; 
 83.31     (2) the shareholder or the partner of the agricultural 
 83.32  property is a Minnesota resident; 
 83.33     (3) neither the shareholder nor the partner nor the 
 83.34  shareholder's or partner's spouse of the agricultural property 
 83.35  claims another agricultural homestead in Minnesota; and 
 83.36     (4) the shareholder or the partner does not live farther 
 84.1   than four townships or cities, or a combination of four 
 84.2   townships or cities, from the agricultural property. 
 84.3      <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 84.4   payable in 2001 and thereafter. 
 84.5      Sec. 12.  Minnesota Statutes 1998, section 273.124, is 
 84.6   amended by adding a subdivision to read: 
 84.7      Subd. 21.  [TRUST PROPERTY; HOMESTEAD.] Real property held 
 84.8   by a trustee under a trust is eligible for classification as 
 84.9   homestead property if: 
 84.10     (1) the grantor or surviving spouse of the grantor of the 
 84.11  trust occupies and uses the property as a homestead; 
 84.12     (2) a relative or surviving relative of the grantor who 
 84.13  meets the requirements of subdivision 1, paragraph (c), in the 
 84.14  case of residential real estate; or subdivision 1, paragraph 
 84.15  (d), in the case of agricultural property, occupies and uses the 
 84.16  property as a homestead; 
 84.17     (3) a family farm corporation, a partnership operating a 
 84.18  family farm, or a joint farm venture operating a family farm 
 84.19  rents the property held by a trustee under a trust, and a 
 84.20  shareholder or partner of the corporation, partnership, or joint 
 84.21  farm venture occupies and uses the property as a homestead, and 
 84.22  is actively farming the property on behalf of the corporation, 
 84.23  partnership, or joint farm venture; or 
 84.24     (4) a person who has received homestead classification for 
 84.25  property taxes payable in 2000 on the basis of an unqualified 
 84.26  legal right under the terms of the trust agreement to occupy the 
 84.27  property as that person's homestead and who continues to use the 
 84.28  property as a homestead. 
 84.29     For purposes of this subdivision, "grantor" is defined as 
 84.30  the person creating or establishing a testamentary, inter Vivos, 
 84.31  revocable or irrevocable trust by written instrument or through 
 84.32  the exercise of a power of appointment. 
 84.33     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 84.34  payable in 2001 and thereafter. 
 84.35     Sec. 13.  Minnesota Statutes 1998, section 273.125, 
 84.36  subdivision 8, is amended to read: 
 85.1      Subd. 8.  [MANUFACTURED HOMES; SECTIONAL STRUCTURES.] (a) 
 85.2   In this section, "manufactured home" means a structure 
 85.3   transportable in one or more sections, which is built on a 
 85.4   permanent chassis, and designed to be used as a dwelling with or 
 85.5   without a permanent foundation when connected to the required 
 85.6   utilities, and contains the plumbing, heating, air conditioning, 
 85.7   and electrical systems in it.  Manufactured home includes any 
 85.8   accessory structure that is an addition or supplement to the 
 85.9   manufactured home and, when installed, becomes a part of the 
 85.10  manufactured home.  
 85.11     (b) A manufactured home that meets each of the following 
 85.12  criteria must be valued and assessed as an improvement to real 
 85.13  property, the appropriate real property classification applies, 
 85.14  and the valuation is subject to review and the taxes payable in 
 85.15  the manner provided for real property:  
 85.16     (1) the owner of the unit holds title to the land on which 
 85.17  it is situated; 
 85.18     (2) the unit is affixed to the land by a permanent 
 85.19  foundation or is installed at its location in accordance with 
 85.20  the Manufactured Home Building Code in sections 327.31 to 
 85.21  327.34, and rules adopted under those sections, or is affixed to 
 85.22  the land like other real property in the taxing district; and 
 85.23     (3) the unit is connected to public utilities, has a well 
 85.24  and septic tank system, or is serviced by water and sewer 
 85.25  facilities comparable to other real property in the taxing 
 85.26  district.  
 85.27     (c) A manufactured home that meets each of the following 
 85.28  criteria must be assessed at the rate provided by the 
 85.29  appropriate real property classification but must be treated as 
 85.30  personal property, and the valuation is subject to review and 
 85.31  the taxes payable in the manner provided in this section: 
 85.32     (1) the owner of the unit is a lessee of the land under the 
 85.33  terms of a lease; 
 85.34     (2) the unit is affixed to the land by a permanent 
 85.35  foundation or is installed at its location in accordance with 
 85.36  the Manufactured Home Building Code contained in sections 327.31 
 86.1   to 327.34, and the rules adopted under those sections, or is 
 86.2   affixed to the land like other real property in the taxing 
 86.3   district; and 
 86.4      (3) the unit is connected to public utilities, has a well 
 86.5   and septic tank system, or is serviced by water and sewer 
 86.6   facilities comparable to other real property in the taxing 
 86.7   district.  
 86.8      (d) Sectional structures must be valued and assessed as an 
 86.9   improvement to real property if the owner of the structure holds 
 86.10  title to the land on which it is located or is a qualifying 
 86.11  lessee of the land under section 273.19.  In this paragraph 
 86.12  "sectional structure" means a building or structural unit that 
 86.13  has been in whole or substantial part manufactured or 
 86.14  constructed at an off-site location to be wholly or partially 
 86.15  assembled on-site alone or with other units and attached to a 
 86.16  permanent foundation.  
 86.17     (e) The commissioner of revenue may adopt rules under the 
 86.18  Administrative Procedure Act to establish additional criteria 
 86.19  for the classification of manufactured homes and sectional 
 86.20  structures under this subdivision. 
 86.21     (f) A storage shed, deck, or similar improvement 
 86.22  constructed on property that is leased or rented as a site for a 
 86.23  manufactured home, sectional structure, park trailer, or travel 
 86.24  trailer is taxable as provided in this section.  In the case of 
 86.25  property that is leased or rented as a site for a travel 
 86.26  trailer, a storage shed, deck, or similar improvement on the 
 86.27  site is taxable only if its estimated market value is $1,000 or 
 86.28  more.  The property is taxable as personal property to the 
 86.29  lessee of the site if it is not owned by the owner of the site.  
 86.30  The property is taxable as real estate if it is owned by the 
 86.31  owner of the site.  As a condition of permitting the owner of 
 86.32  the manufactured home, sectional structure, park trailer, or 
 86.33  travel trailer to construct improvements on the leased or rented 
 86.34  site, the owner of the site must obtain the permanent home 
 86.35  address of the lessee or user of the site.  The site owner must 
 86.36  provide the name and address to the assessor upon request. 
 87.1      <b>EFFECTIVE DATE:</b>  This section is effective for the 2000 
 87.2   assessment, for taxes payable in 2000 and thereafter. 
 87.3      Sec. 14.  Minnesota Statutes 1999 Supplement, section 
 87.4   273.13, subdivision 22, is amended to read: 
 87.5      Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 87.6   23, real estate which is residential and used for homestead 
 87.7   purposes is class 1.  The market value of class 1a property must 
 87.8   be determined based upon the value of the house, garage, and 
 87.9   land.  
 87.10     The first $76,000 tier of market value of class 1a property 
 87.11  has a net class rate of one percent of its market value; and the 
 87.12  remaining market value of class 1a property that exceeds $76,000 
 87.13  has a class rate of 1.65 1.5 percent of its market value.  For 
 87.14  the purposes of this subdivision, the first tier means the first 
 87.15  $76,000 of market value. 
 87.16     (b) Class 1b property includes homestead real estate or 
 87.17  homestead manufactured homes used for the purposes of a 
 87.18  homestead by 
 87.19     (1) any blind person, or the blind person and the blind 
 87.20  person's spouse; or 
 87.21     (2) any person, hereinafter referred to as "veteran," who: 
 87.22     (i) served in the active military or naval service of the 
 87.23  United States; and 
 87.24     (ii) is entitled to compensation under the laws and 
 87.25  regulations of the United States for permanent and total 
 87.26  service-connected disability due to the loss, or loss of use, by 
 87.27  reason of amputation, ankylosis, progressive muscular 
 87.28  dystrophies, or paralysis, of both lower extremities, such as to 
 87.29  preclude motion without the aid of braces, crutches, canes, or a 
 87.30  wheelchair; and 
 87.31     (iii) has acquired a special housing unit with special 
 87.32  fixtures or movable facilities made necessary by the nature of 
 87.33  the veteran's disability, or the surviving spouse of the 
 87.34  deceased veteran for as long as the surviving spouse retains the 
 87.35  special housing unit as a homestead; or 
 87.36     (3) any person who: 
 88.1      (i) is permanently and totally disabled and 
 88.2      (ii) receives 90 percent or more of total household income, 
 88.3   as defined in section 290A.03, subdivision 5, from 
 88.4      (A) aid from any state as a result of that disability; or 
 88.5      (B) supplemental security income for the disabled; or 
 88.6      (C) workers' compensation based on a finding of total and 
 88.7   permanent disability; or 
 88.8      (D) social security disability, including the amount of a 
 88.9   disability insurance benefit which is converted to an old age 
 88.10  insurance benefit and any subsequent cost of living increases; 
 88.11  or 
 88.12     (E) aid under the federal Railroad Retirement Act of 1937, 
 88.13  United States Code Annotated, title 45, section 228b(a)5; or 
 88.14     (F) a pension from any local government retirement fund 
 88.15  located in the state of Minnesota as a result of that 
 88.16  disability; or 
 88.17     (G) pension, annuity, or other income paid as a result of 
 88.18  that disability from a private pension or disability plan, 
 88.19  including employer, employee, union, and insurance plans and 
 88.20     (iii) has household income as defined in section 290A.03, 
 88.21  subdivision 5, of $50,000 or less; or 
 88.22     (4) any person who is permanently and totally disabled and 
 88.23  whose household income as defined in section 290A.03, 
 88.24  subdivision 5, is 275 percent or less of the federal poverty 
 88.25  level. 
 88.26     Property is classified and assessed under clause (4) only 
 88.27  if the government agency or income-providing source certifies, 
 88.28  upon the request of the homestead occupant, that the homestead 
 88.29  occupant satisfies the disability requirements of this paragraph.
 88.30     Property is classified and assessed pursuant to clause (1) 
 88.31  only if the commissioner of economic security certifies to the 
 88.32  assessor that the homestead occupant satisfies the requirements 
 88.33  of this paragraph.  
 88.34     Permanently and totally disabled for the purpose of this 
 88.35  subdivision means a condition which is permanent in nature and 
 88.36  totally incapacitates the person from working at an occupation 
 89.1   which brings the person an income.  The first $32,000 $35,000 
 89.2   market value of class 1b property has a net class rate 
 89.3   of .45 0.5 percent of its market value.  The remaining market 
 89.4   value of class 1b property has a net class rate using the rates 
 89.5   for class 1 or class 2a property, whichever is appropriate, of 
 89.6   similar market value.  
 89.7      (c) Class 1c property is commercial use real property that 
 89.8   abuts a lakeshore line and is devoted to temporary and seasonal 
 89.9   residential occupancy for recreational purposes but not devoted 
 89.10  to commercial purposes for more than 250 days in the year 
 89.11  preceding the year of assessment, and that includes a portion 
 89.12  used as a homestead by the owner, which includes a dwelling 
 89.13  occupied as a homestead by a shareholder of a corporation that 
 89.14  owns the resort or a partner in a partnership that owns the 
 89.15  resort, even if the title to the homestead is held by the 
 89.16  corporation or partnership.  For purposes of this clause, 
 89.17  property is devoted to a commercial purpose on a specific day if 
 89.18  any portion of the property, excluding the portion used 
 89.19  exclusively as a homestead, is used for residential occupancy 
 89.20  and a fee is charged for residential occupancy.  Class 1c 
 89.21  property has a class rate of one percent of total market value 
 89.22  with the following limitation:  the area of the property must 
 89.23  not exceed 100 feet of lakeshore footage for each cabin or 
 89.24  campsite located on the property up to a total of 800 feet and 
 89.25  500 feet in depth, measured away from the lakeshore.  If any 
 89.26  portion of the class 1c resort property is classified as class 
 89.27  4c under subdivision 25, the entire property must meet the 
 89.28  requirements of subdivision 25, paragraph (d), clause (1), to 
 89.29  qualify for class 1c treatment under this paragraph. 
 89.30     (d) Class 1d property includes structures that meet all of 
 89.31  the following criteria: 
 89.32     (1) the structure is located on property that is classified 
 89.33  as agricultural property under section 273.13, subdivision 23; 
 89.34     (2) the structure is occupied exclusively by seasonal farm 
 89.35  workers during the time when they work on that farm, and the 
 89.36  occupants are not charged rent for the privilege of occupying 
 90.1   the property, provided that use of the structure for storage of 
 90.2   farm equipment and produce does not disqualify the property from 
 90.3   classification under this paragraph; 
 90.4      (3) the structure meets all applicable health and safety 
 90.5   requirements for the appropriate season; and 
 90.6      (4) the structure is not salable as residential property 
 90.7   because it does not comply with local ordinances relating to 
 90.8   location in relation to streets or roads. 
 90.9      The market value of class 1d property has the same class 
 90.10  rates as class 1a property under paragraph (a). 
 90.11     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 90.12  payable in 2001 and thereafter. 
 90.13     Sec. 15.  Minnesota Statutes 1999 Supplement, section 
 90.14  273.13, subdivision 23, is amended to read: 
 90.15     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 90.16  land including any improvements that is homesteaded.  The market 
 90.17  value of the house and garage and immediately surrounding one 
 90.18  acre of land has the same class rates as class 1a property under 
 90.19  subdivision 22.  The value of the remaining land including 
 90.20  improvements up to $115,000 has a net class rate of 0.35 percent 
 90.21  of market value.  The value of class 2a property over $115,000 
 90.22  of market value up to and including $600,000 market value has a 
 90.23  net class rate of 0.8 0.5 percent of market value.  The 
 90.24  remaining property over $600,000 market value has a class rate 
 90.25  of 1.20 one percent of market value. 
 90.26     (b) Class 2b property is (1) real estate, rural in 
 90.27  character and used exclusively for growing trees for timber, 
 90.28  lumber, and wood and wood products; (2) real estate that is not 
 90.29  improved with a structure and is used exclusively for growing 
 90.30  trees for timber, lumber, and wood and wood products, if the 
 90.31  owner has participated or is participating in a cost-sharing 
 90.32  program for afforestation, reforestation, or timber stand 
 90.33  improvement on that particular property, administered or 
 90.34  coordinated by the commissioner of natural resources; (3) real 
 90.35  estate that is nonhomestead agricultural land; or (4) a landing 
 90.36  area or public access area of a privately owned public use 
 91.1   airport.  Class 2b property has a net class rate of 1.20 one 
 91.2   percent of market value. 
 91.3      (c) Agricultural land as used in this section means 
 91.4   contiguous acreage of ten acres or more, used during the 
 91.5   preceding year for agricultural purposes.  "Agricultural 
 91.6   purposes" as used in this section means the raising or 
 91.7   cultivation of agricultural products or enrollment in the 
 91.8   Reinvest in Minnesota program under sections 103F.501 to 
 91.9   103F.535 or the federal Conservation Reserve Program as 
 91.10  contained in Public Law Number 99-198.  Contiguous acreage on 
 91.11  the same parcel, or contiguous acreage on an immediately 
 91.12  adjacent parcel under the same ownership, may also qualify as 
 91.13  agricultural land, but only if it is pasture, timber, waste, 
 91.14  unusable wild land, or land included in state or federal farm 
 91.15  programs.  Agricultural classification for property shall be 
 91.16  determined excluding the house, garage, and immediately 
 91.17  surrounding one acre of land, and shall not be based upon the 
 91.18  market value of any residential structures on the parcel or 
 91.19  contiguous parcels under the same ownership. 
 91.20     (d) Real estate, excluding the house, garage, and 
 91.21  immediately surrounding one acre of land, of less than ten acres 
 91.22  which is exclusively and intensively used for raising or 
 91.23  cultivating agricultural products, shall be considered as 
 91.24  agricultural land.  
 91.25     Land shall be classified as agricultural even if all or a 
 91.26  portion of the agricultural use of that property is the leasing 
 91.27  to, or use by another person for agricultural purposes. 
 91.28     Classification under this subdivision is not determinative 
 91.29  for qualifying under section 273.111. 
 91.30     The property classification under this section supersedes, 
 91.31  for property tax purposes only, any locally administered 
 91.32  agricultural policies or land use restrictions that define 
 91.33  minimum or maximum farm acreage. 
 91.34     (e) The term "agricultural products" as used in this 
 91.35  subdivision includes production for sale of:  
 91.36     (1) livestock, dairy animals, dairy products, poultry and 
 92.1   poultry products, fur-bearing animals, horticultural and nursery 
 92.2   stock described in sections 18.44 to 18.61, fruit of all kinds, 
 92.3   vegetables, forage, grains, bees, and apiary products by the 
 92.4   owner; 
 92.5      (2) fish bred for sale and consumption if the fish breeding 
 92.6   occurs on land zoned for agricultural use; 
 92.7      (3) the commercial boarding of horses if the boarding is 
 92.8   done in conjunction with raising or cultivating agricultural 
 92.9   products as defined in clause (1); 
 92.10     (4) property which is owned and operated by nonprofit 
 92.11  organizations used for equestrian activities, excluding racing; 
 92.12     (5) game birds and waterfowl bred and raised for use on a 
 92.13  shooting preserve licensed under section 97A.115; 
 92.14     (6) insects primarily bred to be used as food for animals; 
 92.15  and 
 92.16     (7) trees, grown for sale as a crop, and not sold for 
 92.17  timber, lumber, wood, or wood products. 
 92.18     (f) If a parcel used for agricultural purposes is also used 
 92.19  for commercial or industrial purposes, including but not limited 
 92.20  to:  
 92.21     (1) wholesale and retail sales; 
 92.22     (2) processing of raw agricultural products or other goods; 
 92.23     (3) warehousing or storage of processed goods; and 
 92.24     (4) office facilities for the support of the activities 
 92.25  enumerated in clauses (1), (2), and (3), 
 92.26  the assessor shall classify the part of the parcel used for 
 92.27  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 92.28  appropriate, and the remainder in the class appropriate to its 
 92.29  use.  The grading, sorting, and packaging of raw agricultural 
 92.30  products for first sale is considered an agricultural purpose.  
 92.31  A greenhouse or other building where horticultural or nursery 
 92.32  products are grown that is also used for the conduct of retail 
 92.33  sales must be classified as agricultural if it is primarily used 
 92.34  for the growing of horticultural or nursery products from seed, 
 92.35  cuttings, or roots and occasionally as a showroom for the retail 
 92.36  sale of those products.  Use of a greenhouse or building only 
 93.1   for the display of already grown horticultural or nursery 
 93.2   products does not qualify as an agricultural purpose.  
 93.3      The assessor shall determine and list separately on the 
 93.4   records the market value of the homestead dwelling and the one 
 93.5   acre of land on which that dwelling is located.  If any farm 
 93.6   buildings or structures are located on this homesteaded acre of 
 93.7   land, their market value shall not be included in this separate 
 93.8   determination.  
 93.9      (g) To qualify for classification under paragraph (b), 
 93.10  clause (4), a privately owned public use airport must be 
 93.11  licensed as a public airport under section 360.018.  For 
 93.12  purposes of paragraph (b), clause (4), "landing area" means that 
 93.13  part of a privately owned public use airport properly cleared, 
 93.14  regularly maintained, and made available to the public for use 
 93.15  by aircraft and includes runways, taxiways, aprons, and sites 
 93.16  upon which are situated landing or navigational aids.  A landing 
 93.17  area also includes land underlying both the primary surface and 
 93.18  the approach surfaces that comply with all of the following:  
 93.19     (i) the land is properly cleared and regularly maintained 
 93.20  for the primary purposes of the landing, taking off, and taxiing 
 93.21  of aircraft; but that portion of the land that contains 
 93.22  facilities for servicing, repair, or maintenance of aircraft is 
 93.23  not included as a landing area; 
 93.24     (ii) the land is part of the airport property; and 
 93.25     (iii) the land is not used for commercial or residential 
 93.26  purposes. 
 93.27  The land contained in a landing area under paragraph (b), clause 
 93.28  (4), must be described and certified by the commissioner of 
 93.29  transportation.  The certification is effective until it is 
 93.30  modified, or until the airport or landing area no longer meets 
 93.31  the requirements of paragraph (b), clause (4).  For purposes of 
 93.32  paragraph (b), clause (4), "public access area" means property 
 93.33  used as an aircraft parking ramp, apron, or storage hangar, or 
 93.34  an arrival and departure building in connection with the airport.
 93.35     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
 93.36  payable in 2001 and thereafter. 
 94.1      Sec. 16.  Minnesota Statutes 1999 Supplement, section 
 94.2   273.13, subdivision 24, is amended to read: 
 94.3      Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 94.4   property and utility real and personal property is class 3a.  
 94.5      (1) Except as otherwise provided, each parcel of 
 94.6   commercial, industrial, or utility real property has a class 
 94.7   rate of 2.4 two percent of the first tier of market value, and 
 94.8   3.4 three percent of the remaining market value, except that.  
 94.9   In the case of contiguous parcels of property owned by the same 
 94.10  person or entity, only the value equal to the first-tier value 
 94.11  of the contiguous parcels qualifies for the reduced class rate, 
 94.12  except that contiguous parcels owned by the same person or 
 94.13  entity shall be eligible for the first-tier value class rate on 
 94.14  each separate business operated by the owner, provided the 
 94.15  business is housed in a separate structure.  For the purposes of 
 94.16  this subdivision, the first tier means the first $150,000 of 
 94.17  market value.  Real property owned in fee by a utility for 
 94.18  transmission line right-of-way shall be classified at the class 
 94.19  rate for the higher tier.  All personal property shall be 
 94.20  classified at the class rate for the higher tier.  For purposes 
 94.21  of this subdivision "personal property" means tools, implements, 
 94.22  and machinery of an electric generating, transmission, or 
 94.23  distribution system, or a pipeline system transporting or 
 94.24  distributing water, gas, crude oil, or petroleum products or 
 94.25  mains and pipes used in the distribution of steam or hot or 
 94.26  chilled water for heating or cooling buildings, which are 
 94.27  fixtures. 
 94.28     For purposes of this paragraph, Parcels are considered to 
 94.29  be contiguous even if they are separated from each other by a 
 94.30  road, street, vacant lot, waterway, or other similar intervening 
 94.31  type of property.  Property owners who have contiguous parcels 
 94.32  of property that constitute separate businesses that may qualify 
 94.33  for the first-tier class rate shall notify the county assessor 
 94.34  by July 1, for treatment beginning in the following taxes 
 94.35  payable year.  Connections between parcels that consist of power 
 94.36  lines or pipelines do not cause the parcels to be contiguous. 
 95.1      (2) Personal property that is:  (i) part of an electric 
 95.2   generation, transmission, or distribution system; or (ii) part 
 95.3   of a pipeline system transporting or distributing water, gas, 
 95.4   crude oil, or petroleum products; and (iii) not described in 
 95.5   clause (3), has a class rate of 2.4 percent of the first tier of 
 95.6   market value and 3.4 percent of the remaining market value.  In 
 95.7   the case of multiple parcels in one county that are owned by one 
 95.8   person or entity, only one first tier amount is eligible for the 
 95.9   reduced rate.  
 95.10     (3) Personal property that is:  (i) tools, implements, and 
 95.11  machinery of an electric generation, transmission, or 
 95.12  distribution system; (ii) tools, implements, and machinery of a 
 95.13  pipeline system transporting or distributing water, gas, crude 
 95.14  oil, or petroleum products; or (iii) the mains and pipes used in 
 95.15  the distribution of steam or hot or chilled water for heating or 
 95.16  cooling buildings, has a class rate of 3.4 percent. 
 95.17     (b) Employment property defined in section 469.166, during 
 95.18  the period provided in section 469.170, shall constitute class 
 95.19  3b.  The class rates for class 3b property are determined under 
 95.20  paragraph (a). 
 95.21     (c)(1) Subject to the limitations of clause (2), structures 
 95.22  which are (i) located on property classified as class 3a, (ii) 
 95.23  constructed under an initial building permit issued after 
 95.24  January 2, 1996, (iii) located in a transit zone as defined 
 95.25  under section 473.3915, subdivision 3, (iv) located within the 
 95.26  boundaries of a school district, and (v) not primarily used for 
 95.27  retail or transient lodging purposes, shall have a class rate 
 95.28  equal to the lesser of 2.975 percent or the class rate of the 
 95.29  second tier of the commercial property rate under paragraph (a) 
 95.30  on any portion of the market value that does not qualify for the 
 95.31  first tier class rate under paragraph (a).  As used in item (v), 
 95.32  a structure is primarily used for retail or transient lodging 
 95.33  purposes if over 50 percent of its square footage is used for 
 95.34  those purposes.  A class rate equal to the lesser of 2.975 
 95.35  percent or the class rate of the second tier of the commercial 
 95.36  property class rate under paragraph (a) shall also apply to 
 96.1   improvements to existing structures that meet the requirements 
 96.2   of items (i) to (v) if the improvements are constructed under an 
 96.3   initial building permit issued after January 2, 1996, even if 
 96.4   the remainder of the structure was constructed prior to January 
 96.5   2, 1996.  For the purposes of this paragraph, a structure shall 
 96.6   be considered to be located in a transit zone if any portion of 
 96.7   the structure lies within the zone.  If any property once 
 96.8   eligible for treatment under this paragraph ceases to remain 
 96.9   eligible due to revisions in transit zone boundaries, the 
 96.10  property shall continue to receive treatment under this 
 96.11  paragraph for a period of three years. 
 96.12     (2) This clause applies to any structure qualifying for the 
 96.13  transit zone reduced class rate under clause (1) on January 2, 
 96.14  1999, or any structure meeting any of the qualification criteria 
 96.15  in item (i) and otherwise qualifying for the transit zone 
 96.16  reduced class rate under clause (1).  Such a structure continues 
 96.17  to receive the transit zone reduced class rate until the 
 96.18  occurrence of one of the events in item (ii).  Property 
 96.19  qualifying under item (i)(D), that is located outside of a city 
 96.20  of the first class, qualifies for the transit zone reduced class 
 96.21  rate as provided in that item.  Property qualifying under item 
 96.22  (i)(E) qualifies for the transit zone reduced class rate as 
 96.23  provided in that item. 
 96.24     (i) A structure qualifies for the rate in this clause if it 
 96.25  is: 
 96.26     (A) property for which a building permit was issued before 
 96.27  December 31, 1998; or 
 96.28     (B) property for which a building permit was issued before 
 96.29  June 30, 2001, if: 
 96.30     (I) at least 50 percent of the land on which the structure 
 96.31  is to be built has been acquired or is the subject of signed 
 96.32  purchase agreements or signed options as of March 15, 1998, by 
 96.33  the entity that proposes construction of the project or an 
 96.34  affiliate of the entity; 
 96.35     (II) signed agreements have been entered into with one 
 96.36  entity or with affiliated entities to lease for the account of 
 97.1   the entity or affiliated entities at least 50 percent of the 
 97.2   square footage of the structure or the owner of the structure 
 97.3   will occupy at least 50 percent of the square footage of the 
 97.4   structure; and 
 97.5      (III) one of the following requirements is met: 
 97.6      the project proposer has submitted the completed data 
 97.7   portions of an environmental assessment worksheet by December 
 97.8   31, 1998; or 
 97.9      a notice of determination of adequacy of an environmental 
 97.10  impact statement has been published by April 1, 1999; or 
 97.11     an alternative urban areawide review has been completed by 
 97.12  April 1, 1999; or 
 97.13     (C) property for which a building permit is issued before 
 97.14  July 30, 1999, if: 
 97.15     (I) at least 50 percent of the land on which the structure 
 97.16  is to be built has been acquired or is the subject of signed 
 97.17  purchase agreements as of March 31, 1998, by the entity that 
 97.18  proposes construction of the project or an affiliate of the 
 97.19  entity; 
 97.20     (II) a signed agreement has been entered into between the 
 97.21  building developer and a tenant to lease for its own account at 
 97.22  least 200,000 square feet of space in the building; 
 97.23     (III) a signed letter of intent is entered into by July 1, 
 97.24  1998, between the building developer and the tenant to lease the 
 97.25  space for its own account; and 
 97.26     (IV) the environmental review process required by state law 
 97.27  was commenced by December 31, 1998; 
 97.28     (D) property for which an irrevocable letter of credit with 
 97.29  a housing and redevelopment authority was signed before December 
 97.30  31, 1998.  The structure shall receive the transit zone reduced 
 97.31  class rate during construction and for the duration of time that 
 97.32  the original tenants remain in the building.  Any unoccupied net 
 97.33  leasable square footage that is not leased within 36 months 
 97.34  after the certificate of occupancy has been issued for the 
 97.35  building shall not be eligible to receive the reduced class 
 97.36  rate.  This reduced class rate applies only if the a qualifying 
 98.1   entity that constructed the structure continues to own the 
 98.2   property; 
 98.3      (E) property, located in a city of the first class, and for 
 98.4   which the building permits for the excavation, the parking ramp, 
 98.5   and the office tower were issued prior to April 1, 1999, shall 
 98.6   receive the reduced class rate during construction and for the 
 98.7   first five assessment years immediately following its initial 
 98.8   occupancy provided that, when completed, at least 25 percent of 
 98.9   the net leasable square footage must be occupied by the a 
 98.10  qualifying entity or the parent entity constructing the 
 98.11  structure each year during this time period.  In order to 
 98.12  receive the reduced class rate on the structure in any 
 98.13  subsequent assessment years, at least 50 percent of the rentable 
 98.14  square footage must be occupied by the a qualifying entity or 
 98.15  the parent entity that constructed the structure.  This reduced 
 98.16  class rate applies only if the entity or the parent entity that 
 98.17  constructed the structure continues to own the property. 
 98.18     (ii) A structure specified by this clause, other than a 
 98.19  structure qualifying under clause (i)(D) or (E), shall continue 
 98.20  to receive the transit zone reduced class rate until the 
 98.21  occurrence of one of the following events: 
 98.22     (A) if the structure upon initial occupancy will be owner 
 98.23  occupied by the entity initially constructing the structure or 
 98.24  an affiliated entity, the structure receives the reduced class 
 98.25  rate until the structure ceases to be at least 50 percent 
 98.26  occupied by the entity or an affiliated entity, provided, if the 
 98.27  portion of the structure occupied by that entity or an affiliate 
 98.28  of the entity is less than 85 percent, the transit zone class 
 98.29  rate reduction for the portion of structure not so occupied 
 98.30  terminates upon the leasing of such space to any nonaffiliated 
 98.31  entity; or 
 98.32     (B) if the structure is leased by a single entity or 
 98.33  affiliated entity at the time of initial occupancy, the 
 98.34  structure shall receive the reduced class rate until the 
 98.35  structure ceases to be at least 50 percent occupied by the 
 98.36  entity or an affiliated entity, provided, if the portion of the 
 99.1   structure occupied by that entity or an affiliate of the entity 
 99.2   is less than 85 percent, the transit zone class rate reduction 
 99.3   for the portion of structure not so occupied shall terminate 
 99.4   upon the leasing of such space to any nonaffiliated entity; or 
 99.5      (C) if the structure meets the criteria in item (i)(C), the 
 99.6   structure shall receive the reduced class rate until the 
 99.7   expiration of the initial lease term of the applicable tenants. 
 99.8      Percentages occupied or leased shall be determined based 
 99.9   upon net leasable square footage in the structure.  The assessor 
 99.10  shall allocate the value of the structure in the same fashion as 
 99.11  provided in the general law for portions of any structure 
 99.12  receiving and not receiving the transit tax class reduction as a 
 99.13  result of this clause. 
 99.14     (3) For purposes of this paragraph, "qualifying entity" 
 99.15  means the entity owning the property on September 1, 2000, or an 
 99.16  affiliate of an entity that owned the property on September 1, 
 99.17  2000. 
 99.18     <b>EFFECTIVE DATE:</b>  That portion of this section relating to 
 99.19  the description of real and personal utility property is 
 99.20  effective for taxes payable in 2000 and thereafter.  The changes 
 99.21  in class rates, transit zones, and contiguous parcels are 
 99.22  effective for taxes payable in 2001 and thereafter.  
 99.23     Sec. 17.  Minnesota Statutes 1999 Supplement, section 
 99.24  273.13, subdivision 25, is amended to read: 
 99.25     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 99.26  estate containing four or more units and used or held for use by 
 99.27  the owner or by the tenants or lessees of the owner as a 
 99.28  residence for rental periods of 30 days or more.  Class 4a also 
 99.29  includes hospitals licensed under sections 144.50 to 144.56, 
 99.30  other than hospitals exempt under section 272.02, and contiguous 
 99.31  property used for hospital purposes, without regard to whether 
 99.32  the property has been platted or subdivided.  Class 4a property 
 99.33  in a city with a population of 5,000 or less, that is (1) 
 99.34  located outside of the metropolitan area, as defined in section 
 99.35  473.121, subdivision 2, or outside any county contiguous to the 
 99.36  metropolitan area, and (2) whose city boundary is at least 15 
100.1   miles from the boundary of any city with a population greater 
100.2   than 5,000 has a class rate of 2.15 percent of market value.  
100.3   All other class 4a property has a class rate of 2.4 two percent 
100.4   of market value.  For purposes of this paragraph, population has 
100.5   the same meaning given in section 477A.011, subdivision 3. 
100.6      (b) Class 4b includes: 
100.7      (1) residential real estate containing less than four units 
100.8   that does not qualify as class 4bb, other than seasonal 
100.9   residential, and recreational; 
100.10     (2) manufactured homes not classified under any other 
100.11  provision; 
100.12     (3) a dwelling, garage, and surrounding one acre of 
100.13  property on a nonhomestead farm classified under subdivision 23, 
100.14  paragraph (b) containing two or three units; 
100.15     (4) unimproved property that is classified residential as 
100.16  determined under subdivision 33.  
100.17     Class 4b property has a class rate of 1.65 1.5 percent of 
100.18  market value.  
100.19     (c) Class 4bb includes: 
100.20     (1) nonhomestead residential real estate containing one 
100.21  unit, other than seasonal residential, and recreational; and 
100.22     (2) a single family dwelling, garage, and surrounding one 
100.23  acre of property on a nonhomestead farm classified under 
100.24  subdivision 23, paragraph (b). 
100.25     Class 4bb has a class rate of 1.2 one percent on the first 
100.26  $76,000 of market value and a class rate of 1.65 1.5 percent of 
100.27  its market value that exceeds $76,000. 
100.28     Property that has been classified as seasonal recreational 
100.29  residential property at any time during which it has been owned 
100.30  by the current owner or spouse of the current owner does not 
100.31  qualify for class 4bb. 
100.32     (d) Class 4c property includes: 
100.33     (1) except as provided in subdivision 22, paragraph (c), 
100.34  real property devoted to temporary and seasonal residential 
100.35  occupancy for recreation purposes, including real property 
100.36  devoted to temporary and seasonal residential occupancy for 
101.1   recreation purposes and not devoted to commercial purposes for 
101.2   more than 250 days in the year preceding the year of 
101.3   assessment.  For purposes of this clause, property is devoted to 
101.4   a commercial purpose on a specific day if any portion of the 
101.5   property is used for residential occupancy, and a fee is charged 
101.6   for residential occupancy.  In order for a property to be 
101.7   classified as class 4c, seasonal recreational residential for 
101.8   commercial purposes, at least 40 percent of the annual gross 
101.9   lodging receipts related to the property must be from business 
101.10  conducted during 90 consecutive days and either (i) at least 60 
101.11  percent of all paid bookings by lodging guests during the year 
101.12  must be for periods of at least two consecutive nights; or (ii) 
101.13  at least 20 percent of the annual gross receipts must be from 
101.14  charges for rental of fish houses, boats and motors, 
101.15  snowmobiles, downhill or cross-country ski equipment, or charges 
101.16  for marina services, launch services, and guide services, or the 
101.17  sale of bait and fishing tackle.  For purposes of this 
101.18  determination, a paid booking of five or more nights shall be 
101.19  counted as two bookings.  Class 4c also includes commercial use 
101.20  real property used exclusively for recreational purposes in 
101.21  conjunction with class 4c property devoted to temporary and 
101.22  seasonal residential occupancy for recreational purposes, up to 
101.23  a total of two acres, provided the property is not devoted to 
101.24  commercial recreational use for more than 250 days in the year 
101.25  preceding the year of assessment and is located within two miles 
101.26  of the class 4c property with which it is used.  Class 4c 
101.27  property classified in this clause also includes the remainder 
101.28  of class 1c resorts provided that the entire property including 
101.29  that portion of the property classified as class 1c also meets 
101.30  the requirements for class 4c under this clause; otherwise the 
101.31  entire property is classified as class 3.  Owners of real 
101.32  property devoted to temporary and seasonal residential occupancy 
101.33  for recreation purposes and all or a portion of which was 
101.34  devoted to commercial purposes for not more than 250 days in the 
101.35  year preceding the year of assessment desiring classification as 
101.36  class 1c or 4c, must submit a declaration to the assessor 
102.1   designating the cabins or units occupied for 250 days or less in 
102.2   the year preceding the year of assessment by January 15 of the 
102.3   assessment year.  Those cabins or units and a proportionate 
102.4   share of the land on which they are located will be designated 
102.5   class 1c or 4c as otherwise provided.  The remainder of the 
102.6   cabins or units and a proportionate share of the land on which 
102.7   they are located will be designated as class 3a.  The owner of 
102.8   property desiring designation as class 1c or 4c property must 
102.9   provide guest registers or other records demonstrating that the 
102.10  units for which class 1c or 4c designation is sought were not 
102.11  occupied for more than 250 days in the year preceding the 
102.12  assessment if so requested.  The portion of a property operated 
102.13  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
102.14  nonresidential facility operated on a commercial basis not 
102.15  directly related to temporary and seasonal residential occupancy 
102.16  for recreation purposes shall not qualify for class 1c or 4c; 
102.17     (2) qualified property used as a golf course if: 
102.18     (i) it is open to the public on a daily fee basis.  It may 
102.19  charge membership fees or dues, but a membership fee may not be 
102.20  required in order to use the property for golfing, and its green 
102.21  fees for golfing must be comparable to green fees typically 
102.22  charged by municipal courses; and 
102.23     (ii) it meets the requirements of section 273.112, 
102.24  subdivision 3, paragraph (d). 
102.25     A structure used as a clubhouse, restaurant, or place of 
102.26  refreshment in conjunction with the golf course is classified as 
102.27  class 3a property; 
102.28     (3) real property up to a maximum of one acre of land owned 
102.29  by a nonprofit community service oriented organization; provided 
102.30  that the property is not used for a revenue-producing activity 
102.31  for more than six days in the calendar year preceding the year 
102.32  of assessment and the property is not used for residential 
102.33  purposes on either a temporary or permanent basis.  For purposes 
102.34  of this clause, a "nonprofit community service oriented 
102.35  organization" means any corporation, society, association, 
102.36  foundation, or institution organized and operated exclusively 
103.1   for charitable, religious, fraternal, civic, or educational 
103.2   purposes, and which is exempt from federal income taxation 
103.3   pursuant to section 501(c)(3), (10), or (19) of the Internal 
103.4   Revenue Code of 1986, as amended through December 31, 1990.  For 
103.5   purposes of this clause, "revenue-producing activities" shall 
103.6   include but not be limited to property or that portion of the 
103.7   property that is used as an on-sale intoxicating liquor or 3.2 
103.8   percent malt liquor establishment licensed under chapter 340A, a 
103.9   restaurant open to the public, bowling alley, a retail store, 
103.10  gambling conducted by organizations licensed under chapter 349, 
103.11  an insurance business, or office or other space leased or rented 
103.12  to a lessee who conducts a for-profit enterprise on the 
103.13  premises.  Any portion of the property which is used for 
103.14  revenue-producing activities for more than six days in the 
103.15  calendar year preceding the year of assessment shall be assessed 
103.16  as class 3a.  The use of the property for social events open 
103.17  exclusively to members and their guests for periods of less than 
103.18  24 hours, when an admission is not charged nor any revenues are 
103.19  received by the organization shall not be considered a 
103.20  revenue-producing activity; 
103.21     (4) post-secondary student housing of not more than one 
103.22  acre of land that is owned by a nonprofit corporation organized 
103.23  under chapter 317A and is used exclusively by a student 
103.24  cooperative, sorority, or fraternity for on-campus housing or 
103.25  housing located within two miles of the border of a college 
103.26  campus; 
103.27     (5) manufactured home parks as defined in section 327.14, 
103.28  subdivision 3; and 
103.29     (6) real property that is actively and exclusively devoted 
103.30  to indoor fitness, health, social, recreational, and related 
103.31  uses, is owned and operated by a not-for-profit corporation, and 
103.32  is located within the metropolitan area as defined in section 
103.33  473.121, subdivision 2; and 
103.34     (7) a leased or privately owned noncommercial aircraft 
103.35  storage hangar and the land on which it is located, provided 
103.36  that: 
104.1      (i) the land is on an airport owned or operated by a city, 
104.2   town, county, metropolitan airports commission, or group 
104.3   thereof, and 
104.4      (ii) the land lease, or any ordinance or other signed 
104.5   agreement restricting the use of the leased premise, prohibits 
104.6   commercial activity performed at the hangar. 
104.7      If a hangar classified under this clause is sold after the 
104.8   effective date of this act, a bill of sale must be filed by the 
104.9   new owner with the county assessor of the county where the 
104.10  property is located within 60 days of the sale. 
104.11     Class 4c property has a class rate of 1.65 1.5 percent of 
104.12  market value, except that (i) each parcel of seasonal 
104.13  residential recreational property not used for commercial 
104.14  purposes has the same class rates as class 4bb property, (ii) 
104.15  manufactured home parks assessed under clause (5) have the same 
104.16  class rate as class 4b property, and (iii) property described in 
104.17  paragraph (d), clause (4), has the same class rate as the rate 
104.18  applicable to the first tier of class 4bb nonhomestead 
104.19  residential real estate under paragraph (c).  
104.20     (e) Class 4d property is qualifying low-income rental 
104.21  housing certified to the assessor by the housing finance agency 
104.22  under sections 273.126 and 462A.071.  Class 4d includes land in 
104.23  proportion to the total market value of the building that is 
104.24  qualifying low-income rental housing.  For all properties 
104.25  qualifying as class 4d, the market value determined by the 
104.26  assessor must be based on the normal approach to value using 
104.27  normal unrestricted rents. 
104.28     Class 4d property has a class rate of one percent of market 
104.29  value.  
104.30     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
104.31  payable in 2001 and thereafter. 
104.32     Sec. 18.  Minnesota Statutes 1999 Supplement, section 
104.33  273.13, subdivision 31, is amended to read: 
104.34     Subd. 31.  [CLASS 5.] Class 5 property includes:  
104.35     (1) unmined iron ore and low-grade iron-bearing formations 
104.36  as defined in section 273.14; and 
105.1      (2) all other property not otherwise classified. 
105.2      Class 5 property has a class rate of 3.4 three percent of 
105.3   market value. 
105.4      <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
105.5   payable in 2001 and thereafter. 
105.6      Sec. 19.  Minnesota Statutes 1999 Supplement, section 
105.7   273.1382, subdivision 1, is amended to read: 
105.8      Subdivision 1.  [EDUCATION CREDIT TAX RATE.] Each year, the 
105.9   respective county auditors shall determine the general education 
105.10  credit tax rate for each school district as the sum of:  (i) the 
105.11  district's initial tax rate for each school district for the 
105.12  general education levy certified under section 126C.13, 
105.13  subdivision 2 or 3.  That rate plus; (ii) the school district's 
105.14  education homestead credit tax rate adjustment under section 
105.15  275.08, subdivision 1e, shall be the general education credit 
105.16  tax rate for the district; and (iii) the rate obtained by 
105.17  dividing an amount equal to 12 percent of the district's 
105.18  adjusted net tax capacity by the district's taxable net tax 
105.19  capacity plus its distribution net tax capacity, if any, under 
105.20  chapter 276A or 473F.  
105.21     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
105.22  payable in 2001 and thereafter. 
105.23     Sec. 20.  Minnesota Statutes 1999 Supplement, section 
105.24  273.1382, subdivision 1a, is amended to read: 
105.25     Subd. 1a.  [EDUCATION HOMESTEAD CREDIT.] Each county 
105.26  auditor shall determine a general education homestead credit for 
105.27  each homestead within the county equal to 66.2 percent for taxes 
105.28  payable in 1999 and 83 88 percent for taxes payable in 2000 and 
105.29  thereafter of the education credit tax rate times the net tax 
105.30  capacity of the homestead for the taxes payable year.  The 
105.31  amount of general education homestead credit for a homestead may 
105.32  not exceed $320 for taxes payable in 1999 and $390 for taxes 
105.33  payable in 2000 and thereafter $535.  In the case of an 
105.34  agricultural homestead, only the net tax capacity of the house, 
105.35  garage, and surrounding one acre of land shall be used in 
105.36  determining the property's education homestead credit. 
106.1      <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
106.2   payable in 2001 and thereafter. 
106.3      Sec. 21.  Minnesota Statutes 1999 Supplement, section 
106.4   273.1382, subdivision 1b, is amended to read: 
106.5      Subd. 1b.  [EDUCATION AGRICULTURAL CREDIT.] Property 
106.6   classified as class 2a agricultural homestead or class 2b 
106.7   agricultural nonhomestead or timberland is eligible for 
106.8   education agricultural credit.  The credit is equal to 54 66 
106.9   percent, in the case of agricultural homestead property up to 
106.10  $600,000 in market value, or 50 percent, in the case of all 
106.11  other agricultural nonhomestead property or timberland, of the 
106.12  property's net tax capacity times the education credit tax rate 
106.13  determined in subdivision 1.  The net tax capacity of class 2a 
106.14  property attributable to the house, garage, and surrounding one 
106.15  acre of land is not eligible for the credit under this 
106.16  subdivision. 
106.17     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
106.18  payable in 2001 and thereafter. 
106.19     Sec. 22.  Minnesota Statutes 1999 Supplement, section 
106.20  273.1398, subdivision 1a, is amended to read: 
106.21     Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
106.22  2000, the tax base differential is: 
106.23     (1) 0.45 percent of the assessment year 1998 taxable market 
106.24  value of class 2a agricultural homestead property, excluding the 
106.25  house, garage, and surrounding one acre of land, between 
106.26  $115,000 and $600,000 and over 320 acres, minus the value over 
106.27  $600,000 that is less than 320 acres; plus 
106.28     (2) 0.5 percent of the assessment year 1998 taxable market 
106.29  value of noncommercial seasonal recreational residential 
106.30  property over $75,000 in value; plus 
106.31     (3) for purposes of computing the fiscal disparity 
106.32  adjustment only, 0.2 percent of the assessment year 1998 taxable 
106.33  market value of class 3 commercial-industrial property over 
106.34  $150,000. 
106.35     (b) For the purposes of the distribution of homestead and 
106.36  agricultural credit aid for aids payable in 2000, the 
107.1   commissioner of revenue shall use the best information available 
107.2   as of June 30, 1999, to make an estimate of the value described 
107.3   in paragraph (a), clause (1).  The commissioner shall adjust the 
107.4   distribution of homestead and agricultural credit aid for aids 
107.5   payable in 2001 and subsequent years if new information 
107.6   regarding the value described in paragraph (a), clause (1), 
107.7   becomes available after June 30, 1999. 
107.8      (c) For aids payable in 2001, the tax base differential is 
107.9   0.2 percent of the assessment year 1999 taxable market value of 
107.10  class 2a agricultural homestead property, excluding the house, 
107.11  garage, and surrounding one acre of land, between $115,000 and 
107.12  $600,000 of market value. 
107.13     Sec. 23.  Minnesota Statutes 1998, section 273.37, 
107.14  subdivision 3, is amended to read: 
107.15     Subd. 3.  Taxable wind energy conversion systems, as 
107.16  defined in section 216C.06, subdivision 12, which are not owned, 
107.17  operated, and exclusively controlled by the owner of the land 
107.18  upon which the system is situated, must be listed and assessed 
107.19  by the commissioner of revenue as personal property in the name 
107.20  of the owner of the system in the taxing district where it is 
107.21  situated. 
107.22     <b>EFFECTIVE DATE:</b>  This section is effective for the 2000 
107.23  assessment and thereafter. 
107.24     Sec. 24.  [273.372] [PROCEEDINGS AND APPEALS; UTILITY 
107.25  VALUATIONS.] 
107.26     An appeal by a utility company concerning the exemption, 
107.27  valuation, or classification on property for which the 
107.28  commissioner of revenue has provided the county with 
107.29  commissioner's orders or recommended values must be brought 
107.30  against the commissioner in tax court or in district court of 
107.31  the county where the property is located, and not against the 
107.32  county or taxing district where the property is located.  If the 
107.33  appeal to a court is of an order of the commissioner, it must be 
107.34  brought under chapter 271.  If the appeal is brought under 
107.35  chapter 278, the procedures in that chapter apply.  This 
107.36  provision applies to the property contained under sections 
108.1   273.33, 273.35, 273.36, and 273.37, but only if the appealed 
108.2   values have remained unchanged from those provided to the county 
108.3   by the commissioner.  If the exemption, valuation, or 
108.4   classification being appealed has been changed by the county, 
108.5   then the action must be brought under chapter 278 in the county 
108.6   where the property is located. 
108.7      Upon filing of any appeal by a utility company against the 
108.8   commissioner, the commissioner shall give notice by first class 
108.9   mail to each county which would be affected by the appeal. 
108.10     Companies that submit the reports under section 273.371 by 
108.11  the date specified in that section, or by the date specified by 
108.12  the commissioner in an extension, may appeal administratively to 
108.13  the commissioner under the procedures in section 270.11, 
108.14  subdivision 6, prior to bringing an action in tax court or in 
108.15  district court, however, instituting an administrative appeal 
108.16  with the commissioner does not change or modify the deadline in 
108.17  section 278.01 for bringing an action in tax court or district 
108.18  court. 
108.19     <b>EFFECTIVE DATE:</b>  This section is effective for appeals made 
108.20  on property for assessment year 1999 and thereafter. 
108.21     Sec. 25.  Minnesota Statutes 1998, section 275.065, 
108.22  subdivision 3, is amended to read: 
108.23     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
108.24  county auditor shall prepare and the county treasurer shall 
108.25  deliver after November 10 and on or before November 24 each 
108.26  year, by first class mail to each taxpayer at the address listed 
108.27  on the county's current year's assessment roll, a notice of 
108.28  proposed property taxes.  
108.29     (b) The commissioner of revenue shall prescribe the form of 
108.30  the notice. 
108.31     (c) The notice must inform taxpayers that it contains the 
108.32  amount of property taxes each taxing authority proposes to 
108.33  collect for taxes payable the following year.  In the case of a 
108.34  town, or in the case of the state determined portion of the 
108.35  school district levy, the final tax amount will be its proposed 
108.36  tax.  The notice must clearly state that each taxing authority, 
109.1   including regional library districts established under section 
109.2   134.201, and including the metropolitan taxing districts as 
109.3   defined in paragraph (i), but excluding all other special taxing 
109.4   districts and towns, will hold a public meeting to receive 
109.5   public testimony on the proposed budget and proposed or final 
109.6   property tax levy, or, in case of a school district, on the 
109.7   current budget and proposed property tax levy.  It must clearly 
109.8   state the time and place of each taxing authority's meeting and 
109.9   an address where comments will be received by mail.  
109.10     (d) The notice must state for each parcel: 
109.11     (1) the market value of the property as determined under 
109.12  section 273.11, and used for computing property taxes payable in 
109.13  the following year and for taxes payable in the current year as 
109.14  each appears in the records of the county assessor on November 1 
109.15  of the current year; and, in the case of residential property, 
109.16  whether the property is classified as homestead or 
109.17  nonhomestead.  The notice must clearly inform taxpayers of the 
109.18  years to which the market values apply and that the values are 
109.19  final values; 
109.20     (2) the items listed below, shown separately by county, 
109.21  city or town, state determined school tax net of the education 
109.22  homestead credit under section 273.1382, voter approved school 
109.23  levy, other local school levy, and the sum of the special taxing 
109.24  districts, and as a total of all taxing authorities:  
109.25     (i) the actual tax for taxes payable in the current year; 
109.26     (ii) the tax change due to spending factors, defined as the 
109.27  proposed tax minus the constant spending tax amount; 
109.28     (iii) the tax change due to other factors, defined as the 
109.29  constant spending tax amount minus the actual current year tax; 
109.30  and 
109.31     (iv) the proposed tax amount. 
109.32     In the case of a town or the state determined school tax, 
109.33  the final tax shall also be its proposed tax unless the town 
109.34  changes its levy at a special town meeting under section 
109.35  365.52.  If a school district has certified under section 
109.36  126C.17, subdivision 9, that a referendum will be held in the 
110.1   school district at the November general election, the county 
110.2   auditor must note next to the school district's proposed amount 
110.3   that a referendum is pending and that, if approved by the 
110.4   voters, the tax amount may be higher than shown on the notice.  
110.5   In the case of the city of Minneapolis, the levy for the 
110.6   Minneapolis library board and the levy for Minneapolis park and 
110.7   recreation shall be listed separately from the remaining amount 
110.8   of the city's levy.  In the case of a parcel where tax increment 
110.9   or the fiscal disparities areawide tax under chapter 276A or 
110.10  473F applies, the proposed tax levy on the captured value or the 
110.11  proposed tax levy on the tax capacity subject to the areawide 
110.12  tax must each be stated separately and not included in the sum 
110.13  of the special taxing districts; and 
110.14     (3) the increase or decrease between the total taxes 
110.15  payable in the current year and the total proposed taxes, 
110.16  expressed as a percentage. 
110.17     For purposes of this section, the amount of the tax on 
110.18  homesteads qualifying under the senior citizens' property tax 
110.19  deferral program under chapter 290B is the total amount of 
110.20  property tax before subtraction of the deferred property tax 
110.21  amount. 
110.22     (e) The notice must clearly state that the proposed or 
110.23  final taxes do not include the following: 
110.24     (1) special assessments; 
110.25     (2) levies approved by the voters after the date the 
110.26  proposed taxes are certified, including bond referenda, school 
110.27  district levy referenda, and levy limit increase referenda; 
110.28     (3) amounts necessary to pay cleanup or other costs due to 
110.29  a natural disaster occurring after the date the proposed taxes 
110.30  are certified; 
110.31     (4) amounts necessary to pay tort judgments against the 
110.32  taxing authority that become final after the date the proposed 
110.33  taxes are certified; and 
110.34     (5) the contamination tax imposed on properties which 
110.35  received market value reductions for contamination. 
110.36     (f) Except as provided in subdivision 7, failure of the 
111.1   county auditor to prepare or the county treasurer to deliver the 
111.2   notice as required in this section does not invalidate the 
111.3   proposed or final tax levy or the taxes payable pursuant to the 
111.4   tax levy. 
111.5      (g) If the notice the taxpayer receives under this section 
111.6   lists the property as nonhomestead, and satisfactory 
111.7   documentation is provided to the county assessor by the 
111.8   applicable deadline, and the property qualifies for the 
111.9   homestead classification in that assessment year, the assessor 
111.10  shall reclassify the property to homestead for taxes payable in 
111.11  the following year. 
111.12     (h) In the case of class 4 residential property used as a 
111.13  residence for lease or rental periods of 30 days or more, the 
111.14  taxpayer must either: 
111.15     (1) mail or deliver a copy of the notice of proposed 
111.16  property taxes to each tenant, renter, or lessee; or 
111.17     (2) post a copy of the notice in a conspicuous place on the 
111.18  premises of the property.  
111.19     The notice must be mailed or posted by the taxpayer by 
111.20  November 27 or within three days of receipt of the notice, 
111.21  whichever is later.  A taxpayer may notify the county treasurer 
111.22  of the address of the taxpayer, agent, caretaker, or manager of 
111.23  the premises to which the notice must be mailed in order to 
111.24  fulfill the requirements of this paragraph. 
111.25     (i) For purposes of this subdivision, subdivisions 5a and 
111.26  6, "metropolitan special taxing districts" means the following 
111.27  taxing districts in the seven-county metropolitan area that levy 
111.28  a property tax for any of the specified purposes listed below: 
111.29     (1) metropolitan council under section 473.132, 473.167, 
111.30  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
111.31     (2) metropolitan airports commission under section 473.667, 
111.32  473.671, or 473.672; and 
111.33     (3) metropolitan mosquito control commission under section 
111.34  473.711. 
111.35     For purposes of this section, any levies made by the 
111.36  regional rail authorities in the county of Anoka, Carver, 
112.1   Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
112.2   398A shall be included with the appropriate county's levy and 
112.3   shall be discussed at that county's public hearing. 
112.4      (j) If a statutory or home rule charter city or a town has 
112.5   exercised the local levy option provided by section 473.388, 
112.6   subdivision 7, it may include in the notice of its proposed 
112.7   taxes the amount of its proposed taxes attributable to its 
112.8   exercise of the option.  In the first year of the city or town's 
112.9   exercise of this option, the statement shall include an estimate 
112.10  of the reduction of the metropolitan council's tax on the parcel 
112.11  due to exercise of that option.  The metropolitan council's levy 
112.12  shall be adjusted accordingly. 
112.13     <b>EFFECTIVE DATE:</b>  This section is effective for notices 
112.14  prepared in 2000 for taxes payable in 2001 and thereafter. 
112.15     Sec. 26.  Minnesota Statutes 1998, section 275.08, 
112.16  subdivision 1b, is amended to read: 
112.17     Subd. 1b.  [COMPUTATION OF TAX RATES.] (a) The amounts 
112.18  certified to be levied against net tax capacity under section 
112.19  275.07 by an individual local government unit shall be divided 
112.20  by the total net tax capacity of all taxable properties within 
112.21  the local government unit's taxing jurisdiction.  The resulting 
112.22  ratio, the local government's local tax rate, multiplied by each 
112.23  property's net tax capacity shall be each property's net tax 
112.24  capacity tax for that local government unit before reduction by 
112.25  any credits.  
112.26     (b) Any amount referendum levy certified to the county 
112.27  auditor to be levied against market value for the first time 
112.28  before January 1, 2001, shall be divided by the total referendum 
112.29  market value of all taxable properties within the taxing 
112.30  district.  The resulting ratio, the taxing district's new market 
112.31  value referendum tax rate, multiplied by each property's 
112.32  referendum market value shall be each property's new market 
112.33  value referendum tax before reduction by any credits.  For the 
112.34  purposes of this subdivision, "referendum market value" means 
112.35  the market value as defined in section 126C.01, subdivision 3. 
112.36     (c) Any new referendum levy certified to the county auditor 
113.1   to be levied against market value for the first time after 
113.2   December 31, 2000, shall be divided by the total new referendum 
113.3   market value of all taxable properties within the taxing 
113.4   district.  The resulting ratio, the taxing district's new market 
113.5   value referendum tax rate, multiplied by each property's new 
113.6   referendum market value shall be each property's new market 
113.7   value referendum tax before reduction by any credits.  For the 
113.8   purposes of this subdivision, "new referendum market value" 
113.9   means the market value as defined in section 126C.01, 
113.10  subdivision 3a. 
113.11     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
113.12  payable in 2002 and thereafter. 
113.13     Sec. 27.  Minnesota Statutes 1998, section 276.19, 
113.14  subdivision 1, is amended to read: 
113.15     Subdivision 1.  [NOTICE OF OVERPAYMENT.] If an overpayment 
113.16  of property tax arises on a parcel for any reason due to receipt 
113.17  of a payment that exceeds the total amount of the tax required 
113.18  to be paid on the property tax statement, the responsible county 
113.19  official shall promptly notify the payer by regular mail that 
113.20  the overpayment has occurred.  The notice must state the amount 
113.21  of overpayment and identify the parcel on which the overpayment 
113.22  occurred.  The notice must also instruct the payer how to claim 
113.23  the overpayment and advise that the overpayment is subject to 
113.24  forfeiture under this section.  If the name or address of the 
113.25  payer is not known, the notice of unclaimed overpayment must be 
113.26  mailed to the taxpayer of record in the office of the county 
113.27  auditor.  
113.28     <b>EFFECTIVE DATE:</b>  This section is effective for overpayment 
113.29  of taxes made the day following final enactment and thereafter, 
113.30  and applies only to taxes levied in 1999, payable in 2000, and 
113.31  thereafter. 
113.32     Sec. 28.  [278.14] [REFUNDS OF MISTAKENLY BILLED TAXES.] 
113.33     Subdivision 1.  [APPLICABILITY.] A county must pay a refund 
113.34  of a mistakenly billed tax as provided in this section.  As used 
113.35  in this section, "mistakenly billed tax" means an amount of 
113.36  property tax that was billed, to the extent the amount billed 
114.1   exceeds the accurate tax amount due to a misclassification of 
114.2   property or a mathematical error in the calculation of the tax, 
114.3   together with any penalty or interest paid on that amount.  This 
114.4   section applies only to taxes payable in the current year and 
114.5   the two prior years.  As used in this section, "mathematical 
114.6   error" is limited to an error in: 
114.7      (1) converting the market value of a property to tax 
114.8   capacity; 
114.9      (2) application of the tax rate to the property's tax 
114.10  capacity; or 
114.11     (3) calculation of or eligibility for a credit. 
114.12     Subd. 2.  [PROCEDURE.] A refund of mistakenly billed tax 
114.13  must be paid upon verification of a claim made in a written 
114.14  application by the owner of the property or upon discovery of 
114.15  the mistakenly billed tax by the county.  Refunds of 
114.16  overpayments will be made as provided in section 278.12. 
114.17     Subd. 3.  [APPEALS.] If the county rejects a claim by a 
114.18  property owner under subdivision 2, it must notify the property 
114.19  owner of that decision within 90 days of receipt of the claim.  
114.20  The property owner may appeal that decision to the tax court 
114.21  within 60 days after receipt of a notice from the county of the 
114.22  decision.  Relief granted by the tax court is limited to current 
114.23  year taxes, and taxes in the two prior years. 
114.24     <b>EFFECTIVE DATE:</b>  This section is effective for overpayment 
114.25  of taxes made the day following final enactment and thereafter, 
114.26  and applies only to taxes levied in 1999, payable in 2000, and 
114.27  thereafter. 
114.28     Sec. 29.  Minnesota Statutes 1999 Supplement, section 
114.29  290B.03, subdivision 1, is amended to read: 
114.30     Subdivision 1.  [PROGRAM QUALIFICATIONS.] The 
114.31  qualifications for the senior citizens' property tax deferral 
114.32  program are as follows: 
114.33     (1) the property must be owned and occupied as a homestead 
114.34  by a person 65 years of age or older.  In the case of a married 
114.35  couple, both of the spouses must be at least 65 years old at the 
114.36  time the first property tax deferral is granted, regardless of 
115.1   whether the property is titled in the name of one spouse or both 
115.2   spouses, or titled in another way that permits the property to 
115.3   have homestead status; 
115.4      (2) the total household income of the qualifying 
115.5   homeowners, as defined in section 290A.03, subdivision 5, for 
115.6   the calendar year preceding the year of the initial application 
115.7   may not exceed $60,000; 
115.8      (3) the homestead must have been owned and occupied as the 
115.9   homestead of at least one of the qualifying homeowners for at 
115.10  least 15 years prior to the year the initial application is 
115.11  filed; 
115.12     (4) there are no delinquent property taxes, penalties, or 
115.13  interest on the homesteaded property; 
115.14     (5) there are no delinquent special assessments on the 
115.15  homesteaded property; 
115.16     (6) there are no state or federal tax liens or judgment 
115.17  liens on the homesteaded property; 
115.18     (7) (5) there are no mortgages or other liens on the 
115.19  property that secure future advances, except for those subject 
115.20  to credit limits that result in compliance with clause (8) (6); 
115.21  and 
115.22     (8) (6) the total unpaid balances of debts secured by 
115.23  mortgages and other liens on the property, including unpaid and 
115.24  delinquent special assessments, and any delinquent property 
115.25  taxes, penalties, and interest, but not including property taxes 
115.26  payable during the year, does not exceed 30 75 percent of the 
115.27  assessor's estimated market value for the year. 
115.28     <b>EFFECTIVE DATE:</b>  This section applies to all homeowners and 
115.29  all property taxes deferred beginning in payable 2001, including 
115.30  those homeowners who initially qualified under this program for 
115.31  taxes payable in 1999 or 2000, except that if a homeowner did 
115.32  not qualify for a property tax deferral for payable 2000 because 
115.33  of the percentage threshold in Minnesota Statutes 1999 
115.34  Supplement, section 290B.03, subdivision 1, paragraph (8), and 
115.35  now qualifies for the program with the change in the percentage 
115.36  threshold in paragraph (6) of this section, the homeowner may 
116.1   apply to the commissioner by July 1, 2000, and request a 
116.2   retroactive qualification into the program for taxes payable in 
116.3   2000.  The commissioner of revenue shall notify the county 
116.4   auditor of such eligible taxpayers.  The commissioner shall make 
116.5   payment to the county for the appropriate amount due for taxes 
116.6   payable in 2000, and the county treasurer shall refund the 
116.7   taxpayer for any excess tax amount that the taxpayer has paid to 
116.8   the county. 
116.9      Sec. 30.  Minnesota Statutes 1998, section 290B.04, is 
116.10  amended by adding a subdivision to read: 
116.11     Subd. 7.  [DELINQUENT TAXES AND SPECIAL ASSESSMENTS.] Upon 
116.12  approval of a senior citizen's initial application the 
116.13  commissioner of revenue shall pay to the auditor of the 
116.14  appropriate county the amount of any delinquent property taxes, 
116.15  penalties, and interest, and delinquent special assessments on 
116.16  the property, at the same time as the deferred taxes are paid. 
116.17     <b>EFFECTIVE DATE:</b>  This section applies to all homeowners and 
116.18  all property taxes deferred beginning in payable 2001. 
116.19     Sec. 31.  Minnesota Statutes 1999 Supplement, section 
116.20  290B.05, subdivision 1, is amended to read: 
116.21     Subdivision 1.  [DETERMINATION BY COMMISSIONER.] The 
116.22  commissioner shall determine each qualifying homeowner's "annual 
116.23  maximum property tax amount" following approval of the 
116.24  homeowner's initial application and following the receipt of a 
116.25  resumption of eligibility certification.  The "annual maximum 
116.26  property tax amount" equals three percent of the homeowner's 
116.27  total household income for the year preceding either the initial 
116.28  application or the resumption of eligibility certification, 
116.29  whichever is applicable.  Following approval of the initial 
116.30  application, the commissioner shall determine the qualifying 
116.31  homeowner's "maximum allowable deferral."  No tax may be 
116.32  deferred relative to the appropriate assessment year for any 
116.33  homeowner whose total household income for the previous year 
116.34  exceeds $60,000.  No tax shall be deferred in any year in which 
116.35  the homeowner does not meet the program qualifications in 
116.36  section 290B.03.  The maximum allowable total deferral is equal 
117.1   to 75 percent of the assessor's estimated market value for the 
117.2   year, less the balance of any mortgage loans and other amounts 
117.3   secured by liens against the property at the time of 
117.4   application, including any unpaid and delinquent special 
117.5   assessments and any delinquent property taxes, penalties, and 
117.6   interest, but not including property taxes payable during the 
117.7   year. 
117.8      <b>EFFECTIVE DATE:</b>  This section applies to all homeowners and 
117.9   all property taxes deferred beginning in payable 2001. 
117.10     Sec. 32.  Minnesota Statutes 1998, section 290B.05, 
117.11  subdivision 3, is amended to read: 
117.12     Subd. 3.  [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 
117.13  When final property tax amounts for the following year have been 
117.14  determined, the county auditor shall calculate the "deferred 
117.15  property tax amount."  The deferred property tax amount is equal 
117.16  to the lesser of (1) the maximum allowable deferral for the 
117.17  year; or (2) the difference between the total amount of property 
117.18  taxes levied upon the qualifying homestead by all taxing 
117.19  jurisdictions and the maximum property tax amount.  Any special 
117.20  assessments levied by any local unit of government must not be 
117.21  included in the total tax used to calculate the deferred tax 
117.22  amount.  No deferral of the current year's property taxes is 
117.23  allowed if there are any delinquent property taxes or delinquent 
117.24  special assessments for any previous year.  Any tax attributable 
117.25  to new improvements made to the property after the initial 
117.26  application has been approved under section 290B.04, subdivision 
117.27  2, must be excluded when determining any subsequent deferred 
117.28  property tax amount.  The county auditor shall annually, on or 
117.29  before April 15, certify to the commissioner of revenue the 
117.30  property tax deferral amounts determined under this subdivision 
117.31  by property and by owner.  
117.32     <b>EFFECTIVE DATE:</b>  This section applies to all homeowners and 
117.33  all property taxes deferred beginning in payable 2001. 
117.34     Sec. 33.  Minnesota Statutes 1998, section 290B.07, is 
117.35  amended to read: 
117.36     290B.07 [LIEN; DEFERRED PORTION.] 
118.1      (a) Payment by the state to the county treasurer 
118.2   of property taxes, penalties, interest, or special assessments 
118.3   deferred under this section chapter is deemed a loan from the 
118.4   state to the program participant.  The commissioner must compute 
118.5   the interest as provided in section 270.75, subdivision 5, but 
118.6   not to exceed five percent, and maintain records of the total 
118.7   deferred amount and interest for each participant.  Interest 
118.8   shall accrue beginning September 1 of the payable year for which 
118.9   the taxes are deferred.  Any deferral made under this chapter 
118.10  shall not be construed as delinquent property taxes. 
118.11     The lien created under section 272.31 continues to secure 
118.12  payment by the taxpayer, or by the taxpayer's successors or 
118.13  assigns, of the amount deferred, including interest, with 
118.14  respect to all years for which amounts are deferred.  The lien 
118.15  for deferred taxes and interest has the same priority as any 
118.16  other lien under section 272.31, except that liens, including 
118.17  mortgages, recorded or filed prior to the recording or filing of 
118.18  the notice under section 290B.04, subdivision 2, have priority 
118.19  over the lien for deferred taxes and interest.  A seller's 
118.20  interest in a contract for deed, in which a qualifying homeowner 
118.21  is the purchaser or an assignee of the purchaser, has priority 
118.22  over deferred taxes and interest on deferred taxes, regardless 
118.23  of whether the contract for deed is recorded or filed.  The lien 
118.24  for deferred taxes and interest for future years has the same 
118.25  priority as the lien for deferred taxes and interest for the 
118.26  first year, which is always higher in priority than any 
118.27  mortgages or other liens filed, recorded, or created after the 
118.28  notice recorded or filed under section 290B.04, subdivision 2.  
118.29  The county treasurer or auditor shall maintain records of the 
118.30  deferred portion and shall list the amount of deferred taxes for 
118.31  the year and the cumulative deferral and interest for all 
118.32  previous years as a lien against the property.  In any 
118.33  certification of unpaid taxes for a tax parcel, the county 
118.34  auditor shall clearly distinguish between taxes payable in the 
118.35  current year, deferred taxes and interest, and delinquent 
118.36  taxes.  Payment of the deferred portion becomes due and owing at 
119.1   the time specified in section 290B.08.  Upon receipt of the 
119.2   payment, the commissioner shall issue a receipt for it to the 
119.3   person making the payment upon request and shall notify the 
119.4   auditor of the county in which the parcel is located, within ten 
119.5   days, identifying the parcel to which the payment applies.  Upon 
119.6   receipt by the commissioner of revenue of collected funds in the 
119.7   amount of the deferral, the state's loan to the program 
119.8   participant is deemed paid in full. 
119.9      (b) If property for which taxes have been deferred under 
119.10  this chapter forfeits under chapter 281 for nonpayment of a 
119.11  nondeferred property tax amount, or because of nonpayment of 
119.12  amounts previously deferred following a termination under 
119.13  section 290B.08, the lien for the taxes deferred under this 
119.14  chapter, plus interest and costs, shall be canceled by the 
119.15  county auditor as provided in section 282.07.  However, 
119.16  notwithstanding any other law to the contrary, any proceeds from 
119.17  a subsequent sale of the property under chapter 282 or another 
119.18  law, must be used to first reimburse the county's forfeited tax 
119.19  sale fund for any direct costs of selling the property or any 
119.20  costs directly related to preparing the property for sale, and 
119.21  then to reimburse the state for the amount of the canceled 
119.22  lien.  Within 90 days of the receipt of any sale proceed to 
119.23  which the state is entitled under these provisions, the county 
119.24  auditor must pay those funds to the commissioner of revenue by 
119.25  warrant for deposit in the general fund.  No other deposit, use, 
119.26  distribution, or release of gross sale proceeds or receipts may 
119.27  be made by the county until payments sufficient to fully 
119.28  reimburse the state for the canceled lien amount have been 
119.29  transmitted to the commissioner. 
119.30     <b>EFFECTIVE DATE:</b>  This section applies to all homeowners and 
119.31  all property taxes deferred beginning in payable 2001. 
119.32     Sec. 34.  Minnesota Statutes 1998, section 290B.08, 
119.33  subdivision 1, is amended to read: 
119.34     Subdivision 1.  [TERMINATION.] (a) The deferral of taxes 
119.35  granted under this chapter terminates when one of the following 
119.36  occurs: 
120.1      (1) the property is sold or transferred; 
120.2      (2) the death of the all qualifying 
120.3   homeowner(s) homeowners; 
120.4      (3) the homeowner notifies the commissioner in writing that 
120.5   the homeowner desires to discontinue the deferral; or 
120.6      (4) the property no longer qualifies as a homestead. 
120.7      (b) A property is not terminated from the program because 
120.8   no deferred property tax amount is determined on the homestead 
120.9   for any given year after the homestead's initial enrollment into 
120.10  the program. 
120.11     <b>EFFECTIVE DATE:</b>  This section applies to all homeowners and 
120.12  all property taxes deferred beginning in payable 2001, including 
120.13  those homeowners who initially qualified under this program for 
120.14  taxes payable in 1999 or 2000.  
120.15     Sec. 35.  Minnesota Statutes 1998, section 290B.08, 
120.16  subdivision 2, is amended to read: 
120.17     Subd. 2.  [PAYMENT UPON TERMINATION.] Upon the termination 
120.18  of the deferral under subdivision 1, the amount of deferred 
120.19  taxes and, penalties, interest, and special assessments plus the 
120.20  recording or filing fees under both section 290B.04, subdivision 
120.21  2, and this subdivision becomes due and payable to the 
120.22  commissioner within 90 days of termination of the deferral for 
120.23  terminations under subdivision 1, paragraph (a), clauses (1) and 
120.24  (2), and within one year of termination of the deferral for 
120.25  terminations under subdivision 1, paragraph (a), clauses (3) and 
120.26  (4).  No additional interest is due on the deferral if timely 
120.27  paid.  On receipt of payment, the commissioner shall within ten 
120.28  days notify the auditor of the county in which the parcel is 
120.29  located, identifying the parcel to which the payment applies and 
120.30  shall remit the recording or filing fees under section 290B.04, 
120.31  subdivision 2, and this subdivision to the auditor.  A notice of 
120.32  termination of deferral, containing the legal description and 
120.33  the recording or filing data for the notice of qualification for 
120.34  deferral under section 290B.04, subdivision 2, shall be prepared 
120.35  and recorded or filed by the county auditor in the same office 
120.36  in which the notice of qualification for deferral under section 
121.1   290B.04, subdivision 2, was recorded or filed, and the county 
121.2   auditor shall mail a copy of the notice of termination to the 
121.3   property owner.  The property owner shall pay the recording or 
121.4   filing fees.  Upon recording or filing of the notice of 
121.5   termination of deferral, the notice of qualification for 
121.6   deferral under section 290B.04, subdivision 2, and the lien 
121.7   created by it are discharged.  If the deferral is not timely 
121.8   paid, the penalty, interest, lien, forfeiture, and other rules 
121.9   for the collection of ad valorem property taxes apply. 
121.10     <b>EFFECTIVE DATE:</b>  This section applies to all homeowners and 
121.11  all property taxes deferred beginning in payable 2001. 
121.12     Sec. 36.  Minnesota Statutes 1998, section 290B.09, 
121.13  subdivision 2, is amended to read: 
121.14     Subd. 2.  [APPROPRIATION.] An amount sufficient to pay the 
121.15  total amount of property tax determined under subdivision 1, 
121.16  plus any amounts paid under section 290B.04, subdivision 7, is 
121.17  annually appropriated from the general fund to the commissioner 
121.18  of revenue. 
121.19     <b>EFFECTIVE DATE:</b>  This section applies to all homeowners and 
121.20  all property taxes deferred beginning in payable 2001. 
121.21     Sec. 37.  Minnesota Statutes 1999 Supplement, section 
121.22  383D.74, subdivision 2, is amended to read: 
121.23     Subd. 2.  [EXPIRATION.] The authority to impose a penalty 
121.24  under this section expires on December 31, 2000 2005. 
121.25     <b>EFFECTIVE DATE:</b>  This section is effective the day 
121.26  following final enactment. 
121.27     Sec. 38.  Minnesota Statutes 1998, section 429.011, 
121.28  subdivision 2a, is amended to read: 
121.29     Subd. 2a.  [MUNICIPALITY.] "Municipality" also includes a 
121.30  county in the case of construction, reconstruction, or 
121.31  improvement of a county state-aid highway or county highway as 
121.32  defined in section 160.02 including curbs and gutters and storm 
121.33  sewers and includes; a county exercising its powers and duties 
121.34  under section 444.075, subdivision 1; and a county for expenses 
121.35  not paid for under section 403.113, subdivision 3, paragraph 
121.36  (b), clause (3). 
122.1      <b>EFFECTIVE DATE:</b>  This section is effective the day 
122.2   following final enactment.  
122.3      Sec. 39.  Minnesota Statutes 1998, section 429.011, 
122.4   subdivision 5, is amended to read: 
122.5      Subd. 5.  [IMPROVEMENT.] "Improvement" means any type of 
122.6   improvement made under authority granted by section 429.021, and 
122.7   in the case of a county is limited to the construction, 
122.8   reconstruction, or improvement of a county state-aid highway or 
122.9   county highway including curbs and gutters and storm sewers, and 
122.10  to the purchase, installation, or maintenance of signs, posts, 
122.11  and markers for addressing related to the operation of enhanced 
122.12  911 telephone service. 
122.13     <b>EFFECTIVE DATE:</b>  This section is effective the day 
122.14  following final enactment.  
122.15     Sec. 40.  Minnesota Statutes 1998, section 429.021, 
122.16  subdivision 1, is amended to read: 
122.17     Subdivision 1.  [IMPROVEMENTS AUTHORIZED.] The council of a 
122.18  municipality shall have power to make the following improvements:
122.19     (1) To acquire, open, and widen any street, and to improve 
122.20  the same by constructing, reconstructing, and maintaining 
122.21  sidewalks, pavement, gutters, curbs, and vehicle parking strips 
122.22  of any material, or by grading, graveling, oiling, or otherwise 
122.23  improving the same, including the beautification thereof and 
122.24  including storm sewers or other street drainage and connections 
122.25  from sewer, water, or similar mains to curb lines. 
122.26     (2) To acquire, develop, construct, reconstruct, extend, 
122.27  and maintain storm and sanitary sewers and systems, including 
122.28  outlets, holding areas and ponds, treatment plants, pumps, lift 
122.29  stations, service connections, and other appurtenances of a 
122.30  sewer system, within and without the corporate limits. 
122.31     (3) To construct, reconstruct, extend, and maintain steam 
122.32  heating mains. 
122.33     (4) To install, replace, extend, and maintain street lights 
122.34  and street lighting systems and special lighting systems. 
122.35     (5) To acquire, improve, construct, reconstruct, extend, 
122.36  and maintain water works systems, including mains, valves, 
123.1   hydrants, service connections, wells, pumps, reservoirs, tanks, 
123.2   treatment plants, and other appurtenances of a water works 
123.3   system, within and without the corporate limits. 
123.4      (6) To acquire, improve and equip parks, open space areas, 
123.5   playgrounds, and recreational facilities within or without the 
123.6   corporate limits. 
123.7      (7) To plant trees on streets and provide for their 
123.8   trimming, care, and removal. 
123.9      (8) To abate nuisances and to drain swamps, marshes, and 
123.10  ponds on public or private property and to fill the same. 
123.11     (9) To construct, reconstruct, extend, and maintain dikes 
123.12  and other flood control works. 
123.13     (10) To construct, reconstruct, extend, and maintain 
123.14  retaining walls and area walls. 
123.15     (11) To acquire, construct, reconstruct, improve, alter, 
123.16  extend, operate, maintain, and promote a pedestrian skyway 
123.17  system.  Such improvement may be made upon a petition pursuant 
123.18  to section 429.031, subdivision 3.  
123.19     (12) To acquire, construct, reconstruct, extend, operate, 
123.20  maintain, and promote underground pedestrian concourses. 
123.21     (13) To acquire, construct, improve, alter, extend, 
123.22  operate, maintain, and promote public malls, plazas or 
123.23  courtyards. 
123.24     (14) To construct, reconstruct, extend, and maintain 
123.25  district heating systems.  
123.26     (15) To construct, reconstruct, alter, extend, operate, 
123.27  maintain, and promote fire protection systems in existing 
123.28  buildings, but only upon a petition pursuant to section 429.031, 
123.29  subdivision 3.  
123.30     (16) To acquire, construct, reconstruct, improve, alter, 
123.31  extend, and maintain highway sound barriers. 
123.32     (17) To improve, construct, reconstruct, extend, and 
123.33  maintain gas and electric distribution facilities owned by a 
123.34  municipal gas or electric utility. 
123.35     (18) To purchase, install, and maintain signs, posts, and 
123.36  other markers for addressing related to the operation of 
124.1   enhanced 911 telephone service. 
124.2      <b>EFFECTIVE DATE:</b>  This section is effective the day 
124.3   following final enactment.  
124.4      Sec. 41.  Minnesota Statutes 1998, section 429.031, 
124.5   subdivision 1, is amended to read: 
124.6      Subdivision 1.  [PREPARATION OF PLANS, NOTICE OF HEARING.] 
124.7   (a) Before the municipality awards a contract for an improvement 
124.8   or orders it made by day labor, or before the municipality may 
124.9   assess any portion of the cost of an improvement to be made 
124.10  under a cooperative agreement with the state or another 
124.11  political subdivision for sharing the cost of making the 
124.12  improvement, the council shall hold a public hearing on the 
124.13  proposed improvement following two publications in the newspaper 
124.14  of a notice stating the time and place of the hearing, the 
124.15  general nature of the improvement, the estimated cost, and the 
124.16  area proposed to be assessed.  The two publications must be a 
124.17  week apart, and the hearing must be at least three days after 
124.18  the second publication.  Not less than ten days before the 
124.19  hearing, notice of the hearing must also be mailed to the owner 
124.20  of each parcel within the area proposed to be assessed and must 
124.21  contain a statement that a reasonable estimate of the impact of 
124.22  the assessment will be available at the hearing , but failure to 
124.23  give mailed notice or any defects in the notice does not 
124.24  invalidate the proceedings.  For the purpose of giving mailed 
124.25  notice, owners are those shown as owners on the records of the 
124.26  county auditor or, in any county where tax statements are mailed 
124.27  by the county treasurer, on the records of the county treasurer; 
124.28  but other appropriate records may be used for this purpose.  For 
124.29  properties that are tax exempt or subject to taxation on a gross 
124.30  earnings basis and are not listed on the records of the county 
124.31  auditor or the county treasurer, the owners may be ascertained 
124.32  by any practicable means, and mailed notice must be given them 
124.33  as provided in this subdivision.  
124.34     (b) Before the adoption of a resolution ordering the 
124.35  improvement, the council shall secure from the city engineer or 
124.36  some other competent person of its selection a report advising 
125.1   it in a preliminary way as to whether the proposed improvement 
125.2   is necessary, cost-effective, and feasible and as to whether it 
125.3   should best be made as proposed or in connection with some other 
125.4   improvement.  The report must also include the estimated cost of 
125.5   the improvement as recommended .  A reasonable estimate of the 
125.6   total amount to be assessed, and a description of the 
125.7   methodology used to calculate individual assessments for 
125.8   affected parcels must be available at the hearing. No error or 
125.9   omission in the report invalidates the proceeding unless it 
125.10  materially prejudices the interests of an owner. 
125.11     (c) If the report is not prepared by an employee of a 
125.12  municipality, the compensation for preparing the report under 
125.13  this subdivision must be based on the following factors: 
125.14     (1) the time and labor required; 
125.15     (2) the experience and knowledge of the preparer; 
125.16     (3) the complexity and novelty of the problems involved; 
125.17  and 
125.18     (4) the extent of the responsibilities assumed. 
125.19     (d) The compensation must not be based primarily on a 
125.20  percentage of the estimated cost of the improvement. 
125.21     (e) The council may also take other steps prior to the 
125.22  hearing, including, among other things, the preparation of plans 
125.23  and specifications and the advertisement for bids that will in 
125.24  its judgment provide helpful information in determining the 
125.25  desirability and feasibility of the improvement.  
125.26     (f) The hearing may be adjourned from time to time, and a 
125.27  resolution ordering the improvement may be adopted at any time 
125.28  within six months after the date of the hearing by vote of a 
125.29  majority of all members of the council when the improvement has 
125.30  been petitioned for by the owners of not less than 35 percent in 
125.31  frontage of the real property abutting on the streets named in 
125.32  the petition as the location of the improvement.  When there has 
125.33  been no such petition, the resolution may be adopted only by 
125.34  vote of four-fifths of all members of the council; provided that 
125.35  if the mayor of the municipality is a member of the council but 
125.36  has no vote or votes only in case of a tie, the mayor is not 
126.1   deemed to be a member for the purpose of determining a 
126.2   four-fifths majority vote.  
126.3      (g) The resolution ordering the improvement may reduce, but 
126.4   not increase, the extent of the improvement as stated in the 
126.5   notice of hearing. 
126.6      <b>EFFECTIVE DATE:</b>  This section is effective for mailed 
126.7   notices and hearings held June 1, 2000, and thereafter.  
126.8      Sec. 42.  Minnesota Statutes 1998, section 469.040, is 
126.9   amended by adding a subdivision to read: 
126.10     Subd. 5.  [DESIGNATED HOUSING CORPORATION.] Property 
126.11  located within the exterior boundaries of the White Earth Indian 
126.12  reservation that is owned by the tribe's designated housing 
126.13  entity as defined in United States Code, title 25, section 
126.14  4103(21), and that is a housing project or a housing development 
126.15  project, as defined in section 469.002, subdivisions 13 and 15, 
126.16  is exempt from all real and personal property taxes of the city, 
126.17  the county, the state, or any political subdivision thereof, but 
126.18  the property is subject to subdivision 3.  A copy of those 
126.19  portions of the annual reports submitted on behalf of the 
126.20  housing entity to the Secretary of the United States Department 
126.21  of Housing and Urban Development for the project that contain 
126.22  information sufficient to determine the amount due under 
126.23  subdivision 3 satisfies the reporting requirements of 
126.24  subdivision 3 for the project. 
126.25     <b>EFFECTIVE DATE:</b>  This section is effective for the 2000 
126.26  assessment, taxes payable in 2001 and thereafter.  
126.27     Sec. 43.  Minnesota Statutes 1998, section 473.388, 
126.28  subdivision 4, is amended to read: 
126.29     Subd. 4.  [FINANCIAL ASSISTANCE.] The council may must 
126.30  grant the requested financial assistance if it determines that 
126.31  the proposed service is intended to replace the service to the 
126.32  applying city or town or combination thereof by the council and 
126.33  that the proposed service will meet the needs of the applicant 
126.34  at least as efficiently and effectively as the existing service. 
126.35     The amount of assistance which the council may provide 
126.36  under this section may not exceed the sum of be less than:  
127.1      (a) the portion of the available local transit funds which 
127.2   the applicant proposes to use to subsidize the proposed 
127.3   service the grants received under this subdivision by the 
127.4   applicant in calendar year 2000 and the tax revenues of the 
127.5   applicant for transit services for taxes payable in 2000; and 
127.6   times 
127.7      (b) an amount of financial assistance bearing an identical 
127.8   proportional relationship to the amount under clause (a) as the 
127.9   total amount of funds used by the council to fund its transit 
127.10  operations bears to the ratio of the total appropriation to the 
127.11  council for nondebt transit operations for the current calendar 
127.12  year, to the sum of the total appropriation to the council for 
127.13  nondebt transit operations in calendar year 2000 and the total 
127.14  amount of taxes collected by the council under section 
127.15  473.446 in calendar year 2000, including the portion of the 
127.16  council's homestead and agricultural credit aid under section 
127.17  273.1398 attributable to the nondebt transit levy.  The council 
127.18  shall pay the amount to be provided to the recipient from the 
127.19  funds the council would otherwise use to fund its transit 
127.20  operations.  
127.21     For purposes of this section, "available local transit 
127.22  funds" means 90 percent of the tax revenues which would accrue 
127.23  to the council from the tax it levies under section 473.446 in 
127.24  the applicant city or town or combination thereof.  
127.25     For purposes of this section, "tax revenues" in the city or 
127.26  town means the sum of the following: 
127.27     (1) the nondebt spread levy, which is the total of the 
127.28  taxes extended by application of the local tax rate for nondebt 
127.29  purposes on the taxable net tax capacity; 
127.30     (2) the portion of the fiscal disparity distribution levy 
127.31  under section 473F.08, subdivision 3, attributable to nondebt 
127.32  purposes; and 
127.33     (3) the portion of the homestead credit and agricultural 
127.34  credit aid and disparity reduction aid amounts under section 
127.35  273.1398, subdivisions 2 and 3, attributable to nondebt purposes.
127.36     Tax revenues do not include the state feathering 
128.1   reimbursement under section 473.446. 
128.2      <b>EFFECTIVE DATE:</b>  This section is effective for calendar 
128.3   year 2001.  
128.4      Sec. 44.  Minnesota Statutes 1998, section 473.388, 
128.5   subdivision 7, is amended to read: 
128.6      Subd. 7.  [LOCAL LEVY OPTION.] (a) A statutory or home rule 
128.7   charter city or town that is eligible for assistance under this 
128.8   section, in lieu of receiving the assistance, may levy a tax for 
128.9   payment of the operating and capital expenditures for transit 
128.10  and other related activities and to provide for payment of 
128.11  obligations issued by the municipality before May 1, 2000, 
128.12  for such purposes, provided that the tax must be sufficient to 
128.13  maintain the level of transit service provided in the 
128.14  municipality in the previous year capital expenditures for 
128.15  transit and other related activities, provided that property 
128.16  taxes were pledged to satisfy the obligations, and provided that 
128.17  legislative appropriations are insufficient to satisfy the 
128.18  obligations. 
128.19     (b) The transit tax revenues derived by the municipality 
128.20  may not exceed: 
128.21     (1) for the first transit levy year and any subsequent 
128.22  transit levy year immediately following a year in which the 
128.23  municipality declines to make the levy, the maximum available 
128.24  local transit funds for the municipality for taxes payable in 
128.25  the current year under section 473.446, calculated as if the 
128.26  percentage of transit tax revenues for the municipality were 88 
128.27  percent instead of 90 percent, and multiplied by the 
128.28  municipality's market value adjustment ratio; and 
128.29     (2) for taxes levied in any year that immediately follows a 
128.30  year in which the municipality elects to levy under this 
128.31  subdivision, the maximum transit tax that the municipality may 
128.32  have levied in the previous year under this subdivision, 
128.33  multiplied by the municipality's market value adjustment ratio. 
128.34     The commissioner of revenue shall certify the 
128.35  municipality's levy limitation under this subdivision to the 
128.36  municipality by June 1 of the levy year.  The tax must be 
129.1   accumulated and kept in a separate fund to be known as the 
129.2   "replacement transit fund." 
129.3      (c) To enable the municipality to receive revenues 
129.4   described in clauses (2) and (3) of the definition of "tax 
129.5   revenues" in subdivision 4, that would otherwise be lost if the 
129.6   municipality's transit tax levy was not treated as a successor 
129.7   levy to that made by the council under section 473.446: 
129.8      (1) in the first transit levy year and any subsequent 
129.9   transit levy year immediately following a year in which the 
129.10  municipality declined to make the levy, 88 percent of the 
129.11  council's nondebt spread levy for the current taxes payable year 
129.12  shall be treated as levied by the municipality, and not the 
129.13  council, for purposes of section 473F.08, subdivision 3, for the 
129.14  purpose of determining its local tax rate for the preceding 
129.15  year; and 
129.16     (2) 88 percent of the revenues described in clause (3) of 
129.17  the definition of "tax revenues" in subdivision 4, payable in 
129.18  the first transit levy year, or payable in any subsequent 
129.19  transit levy year following a year in which a municipality 
129.20  declined to make the levy, shall be permanently transferred from 
129.21  the council to the municipality.  If a municipality levies a tax 
129.22  under this subdivision in one year, but declines to levy in a 
129.23  subsequent year, the aid transferred under this clause shall be 
129.24  transferred back to the council. 
129.25     (d) Any transit taxes levied under this subdivision are not 
129.26  subject to, or counted towards, any limit hereafter imposed by 
129.27  law on the levy of taxes upon taxable property within any 
129.28  municipality unless the law specifically includes the transit 
129.29  tax. 
129.30     (e) This subdivision is consistent with the transit 
129.31  redesign plan.  Eligible municipalities opting to levy the 
129.32  transit tax under this subdivision shall continue to meet the 
129.33  regional performance standards established by the council. 
129.34     (f) Within the designated Americans with Disabilities Act 
129.35  area, metro mobility remains the obligation of the state. 
129.36     (g) For purposes of this subdivision, "transit levy year" 
130.1   is any year in which the municipality elects to levy under this 
130.2   subdivision. 
130.3      (h) A municipality may not levy taxes under this 
130.4   subdivision in any year unless it notifies the council and the 
130.5   commissioner of revenue of its intent to levy before July 1 of 
130.6   the levy year.  The notification must include the amount of the 
130.7   municipality's proposed transit tax for the current levy year.  
130.8   After June 30 in the levy year, a municipality's decision to 
130.9   levy or not levy taxes under this subdivision is irrevocable for 
130.10  that levy year. 
130.11     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
130.12  payable in 2001 and thereafter.  
130.13     Sec. 45.  [473.3992] [LIGHT RAIL TRANSIT; PROPERTY TAXES 
130.14  PROHIBITED.] 
130.15     Notwithstanding any other law to the contrary, a political 
130.16  subdivision or a public corporation is prohibited from levying a 
130.17  property tax for light rail transit, including, but not limited 
130.18  to, any property tax levy for the planning or design of the 
130.19  system, acquisition of property, construction and equipping of 
130.20  the system, relocation of persons or property, or operation or 
130.21  maintenance of the system, including any costs for management 
130.22  contracts.  A political subdivision or public corporation may 
130.23  not transfer funds from any accounts, reserves, or funds 
130.24  containing property tax revenues for any of the purposes for 
130.25  which a property tax levy is prohibited under this section.  
130.26  This prohibition also applies to a property tax levy to pay 
130.27  bonds or other debt used to finance any costs or expenditures 
130.28  enumerated in the section. 
130.29     Nothing in this section prohibits a political subdivision 
130.30  or public corporation from receiving and using federal or state 
130.31  funds specifically designated for light rail transit purposes, 
130.32  or from using fare or other operating revenues from a light rail 
130.33  transit system. 
130.34     This section applies only within the counties of Anoka, 
130.35  Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
130.36     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
131.1   payable in 2001 and thereafter.  
131.2      Sec. 46.  [473.444] [PROPERTY TAX REPLACEMENT AID.] 
131.3      Subdivision 1.  [OPERATING EXPENSES.] There is annually 
131.4   appropriated from the general fund to the metropolitan council 
131.5   an amount to pay the operating expenses of providing transit 
131.6   services under section 473.446.  The sum of $93,360,000 is 
131.7   appropriated in fiscal year 2002 for transit services in 
131.8   calendar year 2001.  For fiscal year 2003 and subsequent years, 
131.9   the amount under this subdivision is increased annually by a 
131.10  percentage equal to the lesser of (1) the percentage increase in 
131.11  the implicit price deflator for government consumption 
131.12  expenditures and gross investment for state and local 
131.13  governments prepared by the Bureau of Economic Analysis of the 
131.14  United States Department of Commerce for the 12-month period 
131.15  ending March 31 of the second previous fiscal year or (2) 125 
131.16  percent of the percentage increase in the consumer price index 
131.17  for urban consumers as prepared by the United States Bureau of 
131.18  Labor Statistics for the 12-month period ending March 31 of the 
131.19  second previous fiscal year. 
131.20     Subd. 2.  [DEBT SERVICE.] For fiscal year 2002 and 
131.21  subsequent years, the amount necessary to pay the costs of 
131.22  principal and interest on bonds issued by the metropolitan 
131.23  council related to the provision of transit services is annually 
131.24  appropriated from the general fund to the commissioner of 
131.25  finance.  The commissioner shall make grant payments to the 
131.26  metropolitan council for the payment of debt service on 
131.27  transit-related bonds as necessary. 
131.28     Sec. 47.  Minnesota Statutes 1998, section 473.446, 
131.29  subdivision 1, is amended to read: 
131.30     Subdivision 1.  [WITHIN TRANSIT TAXING DISTRICT.] For the 
131.31  purposes of sections 473.405 to 473.449 and the metropolitan 
131.32  transit system, except as otherwise provided in this subdivision 
131.33  and subdivision 1b, the council shall levy each year upon all 
131.34  taxable property within the metropolitan transit taxing 
131.35  district, defined in subdivision 2, a transit tax consisting of: 
131.36     (a) an amount which shall be used for payment of the 
132.1   expenses of operating transit and paratransit service and to 
132.2   provide for payment of obligations issued by the council under 
132.3   section 473.436, subdivision 6; 
132.4      (b) an additional amount, if any, the council determines to 
132.5   be necessary to provide for the full and timely payment of its 
132.6   certificates of indebtedness and other obligations outstanding 
132.7   on July 1, 1985, to which property taxes under this section have 
132.8   been pledged; and 
132.9      (c) (b) an additional amount necessary to provide full and 
132.10  timely payment of certificates of indebtedness, bonds, including 
132.11  refunding bonds or other obligations issued or to be issued 
132.12  before May 1, 2000, under section 473.39 by the council for 
132.13  purposes of acquisition and betterment of property and other 
132.14  improvements of a capital nature and to which the council has 
132.15  specifically pledged tax levies under this clause. 
132.16     The property tax levied by the council for general purposes 
132.17  under paragraph (a) must not exceed the following amount for the 
132.18  years specified: 
132.19     (1) for taxes payable in 1995, the council's property tax 
132.20  levy limitation for general transit purposes is equal to the 
132.21  former regional transit board's property tax levy limitation for 
132.22  general transit purposes under this subdivision, for taxes 
132.23  payable in 1994, multiplied by an index for market valuation 
132.24  changes equal to the total market valuation of all taxable 
132.25  property located within the metropolitan transit taxing district 
132.26  for the current taxes payable year divided by the total market 
132.27  valuation of all taxable property located within the 
132.28  metropolitan transit taxing district for the previous taxes 
132.29  payable year; and 
132.30     (2) for taxes payable in 1996 and subsequent years, the 
132.31  product of (i) the council's property tax levy limitation for 
132.32  general transit purposes for the previous year determined under 
132.33  this subdivision before reduction by the amount levied by any 
132.34  municipality in the previous year under section 473.388, 
132.35  subdivision 7, multiplied by (ii) an index for market valuation 
132.36  changes equal to the total market valuation of all taxable 
133.1   property located within the metropolitan transit taxing district 
133.2   for the current taxes payable year divided by the total market 
133.3   valuation of all taxable property located within the 
133.4   metropolitan transit taxing district for the previous taxes 
133.5   payable year, minus the amount levied by any municipality in the 
133.6   current levy year under section 473.388, subdivision 7. 
133.7      The portion of the property tax levy for transit district 
133.8   operating purposes attributable to a municipality that has 
133.9   exercised a local levy option under section 473.388, subdivision 
133.10  7, is the amount as determined under subdivision 1b.  The 
133.11  portion of the property tax levy for transit district operating 
133.12  purposes attributable to the remaining municipalities within the 
133.13  transit district is found by subtracting the portions 
133.14  attributable to the municipalities that have exercised a local 
133.15  levy option under section 473.388, subdivision 7. 
133.16     For the taxes payable year 1995, the index for market 
133.17  valuation changes shall be multiplied by an amount equal to the 
133.18  sum of the regional transit board's property tax levy limitation 
133.19  for the taxes payable year 1994 and $160,665.  The $160,665 
133.20  increase shall be a permanent adjustment to the levy limit base 
133.21  used in determining the regional transit board's property tax 
133.22  levy limitation for general purposes for subsequent taxes 
133.23  payable years. 
133.24     For the purpose of determining the council's property tax 
133.25  levy limitation for general transit purposes under this 
133.26  subdivision, "total market valuation" means the total market 
133.27  valuation of all taxable property within the metropolitan 
133.28  transit taxing district without valuation adjustments for fiscal 
133.29  disparities (chapter 473F), tax increment financing (sections 
133.30  469.174 to 469.179), and high voltage transmission lines 
133.31  (section 273.425). 
133.32     The county auditor shall reduce the tax levied pursuant to 
133.33  this section and section 473.388 on all property within 
133.34  statutory and home rule charter cities and towns that receive 
133.35  full-peak service and limited off-peak service by an amount 
133.36  equal to the tax levy that would be produced by applying a rate 
134.1   of 0.510 percent of net tax capacity on the property.  The 
134.2   county auditor shall reduce the tax levied pursuant to this 
134.3   section and section 473.388 on all property within statutory and 
134.4   home rule charter cities and towns that receive limited peak 
134.5   service by an amount equal to the tax levy that would be 
134.6   produced by applying a rate of 0.765 percent of net tax capacity 
134.7   on the property.  The amounts so computed by the county auditor 
134.8   shall be submitted to the commissioner of revenue as part of the 
134.9   abstracts of tax lists required to be filed with the 
134.10  commissioner under section 275.29.  Any prior year adjustments 
134.11  shall also be certified in the abstracts of tax lists.  The 
134.12  commissioner shall review the certifications to determine their 
134.13  accuracy and may make changes in the certification as necessary 
134.14  or return a certification to the county auditor for 
134.15  corrections.  The commissioner shall pay to the council and to 
134.16  the municipalities levying under section 473.388, subdivision 7, 
134.17  the amounts certified by the county auditors on the dates 
134.18  provided in section 273.1398, apportioned between the council 
134.19  and the municipality in the same proportion as the total transit 
134.20  levy is apportioned within the municipality.  There is annually 
134.21  appropriated from the general fund in the state treasury to the 
134.22  department of revenue the amounts necessary to make these 
134.23  payments.  
134.24     For the purposes of this subdivision, "full-peak and 
134.25  limited off-peak service" means peak period regular route 
134.26  service, plus weekday midday regular route service at intervals 
134.27  longer than 60 minutes on the route with the greatest frequency; 
134.28  and "limited peak period service" means peak period regular 
134.29  route service only.  
134.30     For the purposes of property taxes payable in the following 
134.31  year, the council shall annually determine which cities and 
134.32  towns qualify for the 0.510 percent or 0.765 percent tax 
134.33  capacity rate reduction and shall certify this list to the 
134.34  county auditor of the county wherein such cities and towns are 
134.35  located on or before September 15.  No changes may be made to 
134.36  the annual list after September 15. 
135.1      <b>EFFECTIVE DATE:</b>  This section is effective beginning with 
135.2   taxes payable in 2001. 
135.3      Sec. 48.  Minnesota Statutes 1998, section 473.446, is 
135.4   amended by adding a subdivision to read: 
135.5      Subd. 1c.  [TRANSIT LEVY AFTER 2000.] Notwithstanding any 
135.6   other provision, beginning with taxes payable in 2001, the 
135.7   council may levy the transit tax authorized under subdivisions 1 
135.8   or 1a only for the purpose of providing for the full and timely 
135.9   payment of bonds, certificates of indebtedness, and other 
135.10  obligations issued by the council before May 1, 2000, to which 
135.11  property taxes under this section have been pledged, and for 
135.12  which legislative appropriations are insufficient. 
135.13     <b>EFFECTIVE DATE:</b>  This section is effective beginning with 
135.14  taxes payable in 2001.  
135.15     Sec. 49.  Laws 1987, chapter 402, section 2, subdivision 1, 
135.16  is amended to read: 
135.17     Subdivision 1.  [AGREEMENT.] The city of Moose Lake and one 
135.18  or more of the towns of Moose Lake, Silver, and Windemere may by 
135.19  action of their city council and town boards establish the Moose 
135.20  Lake fire protection district.  The town of Silver may provide 
135.21  that only a described part of its territory be included within 
135.22  the district.  The district shall provide fire protection 
135.23  services throughout its territory and may exercise all the 
135.24  powers of the city and towns that relate to fire protection 
135.25  anywhere within its territory.  Any other contiguous town or 
135.26  home rule charter or statutory city may join the district with 
135.27  the agreement of the cities and towns that comprise the district 
135.28  at the time of its application to join.  Action to join the 
135.29  district may be taken by the city council or town board of the 
135.30  city or town.  
135.31     <b>EFFECTIVE DATE:</b>  Pursuant to Minnesota Statutes, section 
135.32  645.023, subdivision 1, clause (a), this section is effective 
135.33  without local approval the day following final enactment. 
135.34     Sec. 50.  Laws 1987, chapter 402, section 2, subdivision 4, 
135.35  is amended to read: 
135.36     Subd. 4.  [TAX.] The district may impose a property tax on 
136.1   real property in the district in an amount sufficient to 
136.2   discharge its operating expenses and debt payable in each year. 
136.3   The tax shall be disregarded in the calculation of any levies or 
136.4   limits on levies provided by Minnesota Statutes, chapter 275, or 
136.5   other law.  A city or town that joins the district may not incur 
136.6   expenses or debt for fire protection services for territory 
136.7   included in the district and may not impose taxes for that 
136.8   purpose.  The town of Silver may impose a property tax on 
136.9   territory not included in the district to discharge costs or 
136.10  debt incurred to provide fire protection services to that 
136.11  territory.  
136.12     <b>EFFECTIVE DATE:</b>  Pursuant to Minnesota Statutes, section 
136.13  645.023, subdivision 1, clause (a), this section is effective 
136.14  without local approval the day following final enactment. 
136.15     Sec. 51.  Laws 1987, chapter 402, section 2, subdivision 5, 
136.16  is amended to read: 
136.17     Subd. 5.  [PUBLIC INDEBTEDNESS.] The district may incur 
136.18  debt in the manner provided for a municipality by Minnesota 
136.19  Statutes, chapter 475, when necessary to accomplish a duty 
136.20  charged to it.  The district may also issue certificates of 
136.21  indebtedness subject to debt limits for the district to purchase 
136.22  capital equipment having an expected useful life at least as 
136.23  long as the terms of the certificates.  The certificates must be 
136.24  payable in not more than five years and must be issued on the 
136.25  terms and in the manner as the board may determine.  Before 
136.26  issuing certificates in an amount exceeding .25 percent of the 
136.27  taxable property of the district, the board shall publish a 
136.28  resolution indicating its intent to issue the certificates in a 
136.29  newspaper of general circulation in the district.  The 
136.30  certificates may be issued without an election unless within ten 
136.31  days of the publication a petition signed by the sum of at least 
136.32  ten percent of the voters in the member towns voting in the last 
136.33  regular town election and ten percent of the voters of the city 
136.34  voting in the last city general election requesting an election 
136.35  on their issuance is filed with the board.  If a petition is 
136.36  filed, the certificates may not be issued unless their issuance 
137.1   is approved by a majority of the voters at a general or special 
137.2   election in which all the residents of the city and member towns 
137.3   are eligible to vote.  A tax levy shall be made against all 
137.4   property in the district to pay the principal and interest on 
137.5   the certificates, in accordance with Minnesota Statutes, section 
137.6   475.61, as in the case of bonds.  
137.7      <b>EFFECTIVE DATE:</b>  Pursuant to Minnesota Statutes, section 
137.8   645.023, subdivision 1, clause (a), this section is effective 
137.9   without local approval the day following final enactment. 
137.10     Sec. 52.  Laws 1995, First Special Session chapter 3, 
137.11  article 15, section 25, is amended to read: 
137.12     Sec. 25.  [HOMESTEAD AND AGRICULTURAL CREDIT ADJUSTMENT.] 
137.13     (a) For the computation of homestead and agricultural aid 
137.14  for taxes payable in 1996, the commissioner of revenue shall 
137.15  reduce a school district's homestead and agricultural aid by an 
137.16  amount equal to the lesser of:  (1) 25 percent of the amount of 
137.17  the district's homestead and agricultural aid for calendar year 
137.18  1995; or (2) an amount equal to one percent times the district's 
137.19  adjusted net tax capacity for assessment year 1994. 
137.20     (b) Prior to the computation of homestead and agricultural 
137.21  aid for taxes payable in 1997, the commissioner of revenue shall 
137.22  reduce the school district's homestead and agricultural aid by 
137.23  an amount equal to the lesser of:  (1) 50 percent of the amount 
137.24  of the district's homestead and agricultural aid for calendar 
137.25  year 1995; or (2) an amount equal to one percent times the 
137.26  district's adjusted net tax capacity for assessment year 1994. 
137.27     (c) Prior to the computation of homestead and agricultural 
137.28  aid for taxes payable in 1998, the commissioner of revenue shall 
137.29  reduce a school district's homestead and agricultural aid by an 
137.30  amount equal to the lesser of:  (1) 75 percent of the amount of 
137.31  the district's homestead and agricultural aid for calendar year 
137.32  1995; or (2) an amount equal to one percent times the district's 
137.33  adjusted net tax capacity for assessment year 1994. 
137.34     (d) Prior to the computation of homestead and agricultural 
137.35  aid for taxes payable in 1999, the commissioner of revenue shall 
137.36  reduce a school district's homestead and agricultural aid by an 
138.1   amount equal to the lesser of:  (1) the amount of the district's 
138.2   homestead and agricultural aid for calendar year 1995; or (2) an 
138.3   amount equal to one percent times the district's adjusted net 
138.4   tax capacity for assessment year 1994. 
138.5      (e) Prior to the computation of homestead and agricultural 
138.6   aid for taxes payable in 2000 and later years, the commissioner 
138.7   of revenue shall reduce a school district's homestead and 
138.8   agricultural aid by an amount equal to the lesser of:  (1) any 
138.9   remaining amount of the district's homestead and agricultural 
138.10  aid; or (2) an amount equal to one percent times the district's 
138.11  adjusted net tax capacity for assessment year 1994. 
138.12     (f) Prior to the computation of homestead and agricultural 
138.13  credit aid for taxes payable in 2001 and later years, the 
138.14  commissioner of revenue shall reduce that portion of a school 
138.15  district's homestead and agricultural credit aid first paid to a 
138.16  district in calendar year 2000 or an earlier calendar year by an 
138.17  amount equal to the lesser of:  (1) any remaining amount of the 
138.18  portion of the district's homestead and agricultural credit aid 
138.19  first paid to a district in calendar year 2000 or an earlier 
138.20  calendar year; or (2) an amount equal to one percent times the 
138.21  district's adjusted net tax capacity for assessment year 1994. 
138.22     Sec. 53.  Laws 1997, chapter 231, article 1, section 19, 
138.23  subdivision 1, as amended by Laws 1999, chapter 243, article 10, 
138.24  section 16, is amended to read: 
138.25     Subdivision 1.  [TIF GRANTS.] (a) The commissioner of 
138.26  revenue shall pay grants to municipalities for deficits in tax 
138.27  increment financing districts caused by the changes in class 
138.28  rates under this act.  Municipalities must submit applications 
138.29  for the grants in a form prescribed by the commissioner by no 
138.30  later than August 1 for grants payable during the calendar 
138.31  year.  The maximum grant equals the lesser of: 
138.32     (1) for taxes payable in the year before the grant is paid, 
138.33  the reduction in the tax increment financing district's revenues 
138.34  derived from increment resulting from the class rate changes in 
138.35  this article, Laws 1998, chapter 389, article 2, and those 
138.36  enacted in the 1999 and 2000 regular legislative session 
139.1   sessions; or 
139.2      (2) the municipality's total tax increments, including 
139.3   unspent increments from previous years, less the amount due 
139.4   during the calendar year to pay (i) bonds issued and sold before 
139.5   the day following final enactment of this act and (ii) binding 
139.6   contracts entered into before the day following final enactment 
139.7   of this act. 
139.8      (b) The commissioner of revenue may require applicants for 
139.9   grants under this section to provide any information the 
139.10  commissioner deems appropriate.  The commissioner shall 
139.11  calculate the amount under paragraph (a), clause (2), based on 
139.12  the reports for the tax increment financing district or 
139.13  districts filed with the state auditor on or before August 1 of 
139.14  the year before the year in which the grant is to be paid. 
139.15     (c) This subdivision applies only to deficits in tax 
139.16  increment financing districts for which: 
139.17     (1) the request for certification was made before the 
139.18  enactment date of this act; and 
139.19     (2) all timely reports have been filed with the state 
139.20  auditor, as required by Minnesota Statutes, section 469.175. 
139.21     (d) The commissioner shall pay the grants under this 
139.22  subdivision by December 26 of the year. 
139.23     (e) $2,000,000 is appropriated to the commissioner of 
139.24  revenue to make grants under this section.  This appropriation 
139.25  is available until expended or this section expires under 
139.26  subdivision 3, whichever is earlier.  If the amount of grant 
139.27  entitlements for a year exceed the appropriation, the 
139.28  commissioner shall reduce each grant proportionately so the 
139.29  total equals the amount available.  
139.30     Sec. 54.  Laws 1997, chapter 231, article 1, section 19, 
139.31  subdivision 3, as amended by Laws 1999, chapter 243, article 10, 
139.32  section 17, is amended to read: 
139.33     Subd. 3.  [EXPIRATION.] This section expires on January 1, 
139.34  2002 2004. 
139.35     Sec. 55.  [HACA ADJUSTMENTS.] 
139.36     (a) Homestead and agricultural credit aid (HACA) under 
140.1   Minnesota Statutes, section 273.1398, is permanently reduced for 
140.2   each city and town for aids payable in 2001 and subsequent years 
140.3   by an amount equal to the tax rate levied within the 
140.4   municipality under Minnesota Statutes, section 473.446, 
140.5   subdivision 1 or 1a, or 473.388, subdivision 7, for taxes 
140.6   payable in 2000, multiplied by the municipality's taxable net 
140.7   tax capacity plus its fiscal disparities distribution net tax 
140.8   capacity for taxes payable in 2000. 
140.9      (b) HACA payments to the metropolitan council are 
140.10  permanently reduced for 2001 and subsequent years by the HACA 
140.11  attributable to transit levies for aids payable in 2000. 
140.12     (c) HACA payments to opt-out municipalities levying under 
140.13  Minnesota Statutes, section 473.388, subdivision 7, are 
140.14  permanently reduced for 2001 and subsequent years by the amount 
140.15  of the HACA attributable to the opt-out transit levy for aids 
140.16  payable in 2000. 
140.17     <b>EFFECTIVE DATE:</b>  This section is effective for calendar 
140.18  year 2001.  
140.19     Sec. 56.  [FISCAL DISPARITIES ADJUSTMENT.] 
140.20     The fiscal disparities distribution levy attributable to 
140.21  the metropolitan council's transit levy for taxes payable in 
140.22  2001 shall be instead distributed to the municipalities within 
140.23  the council's transit service district and area in proportion to 
140.24  each municipality's share of the fiscal disparities distribution 
140.25  net tax capacity times the metropolitan council transit tax rate 
140.26  within the municipality for taxes payable in 2000.  
140.27     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
140.28  payable in 2001 only.  
140.29     Sec. 57.  [SCHOOL DISTRICT LEVY ADJUSTMENTS.] 
140.30     Subdivision 1.  [REVENUE CONVERSION. ] The commissioner of 
140.31  children, families, and learning shall adjust each school 
140.32  district's revenue authority that is established as a rate times 
140.33  net tax capacity or adjusted net tax capacity under Minnesota 
140.34  Statutes, chapters 123B, 124D, and 126C, by multiplying each 
140.35  revenue amount by the ratio of the statewide tax capacity as 
140.36  calculated using the class rates in effect for taxes payable in 
141.1   2000 to the statewide tax capacity using the class rates in 
141.2   effect for taxes payable in 2001. 
141.3      Subd. 2.  [TAX RATE ADJUSTMENT.] The commissioner shall 
141.4   adjust each tax rate established under Minnesota Statutes, 
141.5   chapters 123B, 124D, and 126C, by multiplying the rate by the 
141.6   ratio of the statewide tax capacity as calculated using the 
141.7   class rates in effect for taxes payable in 2000 to the statewide 
141.8   tax capacity using the class rates in effect for taxes payable 
141.9   in 2001. 
141.10     Subd. 3.  [EQUALIZING FACTORS.] The commissioner shall 
141.11  adjust each equalizing factor established using adjusted net tax 
141.12  capacity per marginal cost pupil unit under Minnesota Statutes, 
141.13  chapters 123B, 124D, and 126C, by dividing the equalizing factor 
141.14  by the ratio of the statewide tax capacity as calculated using 
141.15  the class rates in effect for taxes payable in 2000 to the 
141.16  statewide tax capacity using the class rates in effect for taxes 
141.17  payable in 2001. 
141.18     Subd. 4.  [QUALIFYING RATE.] The commissioner shall adjust 
141.19  the qualifying rate under Minnesota Statutes, section 123B.53, 
141.20  subdivision 4, by multiplying the qualifying rate times the 
141.21  ratio of the statewide tax capacity as calculated using the 
141.22  class rates in effect for taxes payable in 2000 to the statewide 
141.23  tax capacity using the class rates in effect for taxes payable 
141.24  in 2001. 
141.25     Subd. 5.  [TAXES PAYABLE IN 2001 AND LATER.] The 
141.26  commissioner shall use these revenue amounts, tax rates, 
141.27  equalizing factors, and qualifying rates for computing school 
141.28  district taxes payable in 2001 and later. 
141.29     Sec. 58.  [EVELETH-GILBERT JOINT RECREATION BOARD TAX.] 
141.30     The cities and towns who participate in the Eveleth-Gilbert 
141.31  joint recreation board may levy a tax on the taxable property 
141.32  within their taxing jurisdictions situated within the boundaries 
141.33  of independent school district No. 2154, Eveleth-Gilbert, as 
141.34  provided in this act.  The maximum amount that may be levied by 
141.35  all participating cities and towns combined shall not exceed a 
141.36  total of $125,000 per year, for a maximum of eight years.  
142.1   Property within the school district may be made subject to the 
142.2   tax permitted by this act by the agreement of the governing body 
142.3   or town board of the city or town where the property is located. 
142.4   The agreement may be by resolution of a governing body or town 
142.5   board or by a joint powers agreement under Minnesota Statutes, 
142.6   section 471.59.  If levied, this tax is in addition to all other 
142.7   taxes permitted to be levied for park and recreation purposes by 
142.8   the participating cities and towns and must be itemized 
142.9   separately in the proposed property tax notice under Minnesota 
142.10  Statutes, section 276.065, subdivision 3.  It shall be 
142.11  disregarded in the calculation of all tax levy limitations 
142.12  imposed by charter and the levy limitations under Minnesota 
142.13  Statutes, sections 275.70 through 275.74.  A city or town may 
142.14  withdraw its agreement to future taxes by notice to the 
142.15  recreation board and the county auditor unless provided 
142.16  otherwise by a joint powers agreement.  The tax shall be 
142.17  collected by the St. Louis county treasurer and paid directly to 
142.18  the Eveleth-Gilbert joint recreation board.  
142.19     This act applies in the cities of Eveleth, Gilbert, 
142.20  Leonidas, McKinley, and Iron Junction, and in the towns of 
142.21  Biwabik, Clinton, and Fayal, all located in St. Louis county. 
142.22     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
142.23  payable in 2001 through taxes payable in 2008. 
142.24     Sec. 59.  [STUDY OF TAXATION OF FOREST LAND.] 
142.25     The commissioner of revenue, in cooperation with the 
142.26  Minnesota forest resources council, shall study the taxation of 
142.27  forest land in this state.  The study shall include a review of 
142.28  the current application of property taxes to these lands and a 
142.29  review and comparison with other forest land tax policies.  It 
142.30  shall also include recommendations for changes in tax policy: 
142.31     (1) to encourage forest productivity; 
142.32     (2) to maintain land in forest cover; 
142.33     (3) to encourage the application of sustainable site level 
142.34  forest management guidelines; 
142.35     (4) to address impacts on local government revenues; and 
142.36     (5) for changes in tax rates. 
143.1   The study shall be completed and transmitted to the chairs of 
143.2   the house and senate tax committees by December 1, 2000. 
143.3      <b>EFFECTIVE DATE:</b>  This section is effective the day 
143.4   following final enactment.  
143.5      Sec. 60.  [APPROPRIATION.] 
143.6      The sum of $755,840,000 is transferred from the property 
143.7   tax reform account to the general fund on July 1, 2000. 
143.8      Sec. 61.  [REPEALER.] 
143.9      (a) Minnesota Statutes 1998, sections 270.072, subdivision 
143.10  5; 270.075, subdivisions 3 and 4; and 273.13, subdivision 24a, 
143.11  are repealed. 
143.12     (b) Minnesota Statutes 1998, section 273.127, is repealed. 
143.13     (c) Minnesota Statutes 1998, section 273.1316, is repealed. 
143.14     <b>EFFECTIVE DATE:</b>  Paragraph (a) is effective for taxes 
143.15  payable in 2001 and thereafter.  Paragraph (b) is effective for 
143.16  taxes payable in 2000 and thereafter.  Paragraph (c) is 
143.17  effective the day following final enactment. 
143.18                             ARTICLE 6 
143.19                          LEVY LIMITS AND
143.20                     AIDS TO LOCAL GOVERNMENTS
143.21     Section 1.  Minnesota Statutes 1999 Supplement, section 
143.22  273.1398, subdivision 4a, is amended to read: 
143.23     Subd. 4a.  [AID OFFSET FOR COURT COSTS.] (a) By July 15, 
143.24  1999, the supreme court shall determine and certify to the 
143.25  commissioner of revenue for each county, other than counties 
143.26  located in the eighth judicial district, the county's share of 
143.27  the costs assumed under Laws 1999, chapter 216, article 7, 
143.28  during the fiscal year beginning July 1, 2000, less an amount 
143.29  equal to the county's share of transferred fines collected by 
143.30  the district courts in the county during calendar year 1998.  
143.31     (b) Payments to a county under subdivision 2 or section 
143.32  273.166 for calendar year 2000 must be permanently reduced by an 
143.33  amount equal to 75 percent of the net cost to the state for 
143.34  assumption of district court costs as certified in paragraph (a).
143.35     (c) Payments to a county under subdivision 2 or section 
143.36  273.166 for calendar year 2001 must be permanently reduced by an 
144.1   amount equal to 25 percent of the net cost to the state for 
144.2   assumption of district court costs as certified in paragraph (a).
144.3      (d) Payments to a county under subdivision 2 for calendar 
144.4   year 2001 are permanently increased by an amount equal to 7.5 
144.5   percent of the county's share of transferred fines collected by 
144.6   the district courts in the county during calendar year 1998, as 
144.7   determined under paragraph (a).  If the amount determined in 
144.8   paragraph (a) exceeds the amount of aid a county is scheduled to 
144.9   be paid under subdivision 2 in 2000, then the county shall not 
144.10  receive an aid increase under this paragraph. 
144.11     <b>EFFECTIVE DATE:</b>  This section is effective for aids payable 
144.12  in 2001 and thereafter. 
144.13     Sec. 2.  Minnesota Statutes 1998, section 275.70, is 
144.14  amended by adding a subdivision to read: 
144.15     Subd. 2a.  [CONSUMER PRICE INDEX.] "Consumer price index" 
144.16  means the consumer price index for urban consumers as prepared 
144.17  by the United States Bureau of Labor Statistics for the 12-month 
144.18  period ending March 31 of the levy year. 
144.19     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
144.20  275.70, subdivision 5, is amended to read: 
144.21     Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
144.22  portions of ad valorem taxes levied by a local governmental unit 
144.23  for the following purposes or in the following manner: 
144.24     (1) to pay the costs of the principal and interest on 
144.25  bonded indebtedness or to reimburse for the amount of liquor 
144.26  store revenues used to pay the principal and interest due on 
144.27  municipal liquor store bonds in the year preceding the year for 
144.28  which the levy limit is calculated; 
144.29     (2) to pay the costs of principal and interest on 
144.30  certificates of indebtedness issued for any corporate purpose 
144.31  except for the following: 
144.32     (i) tax anticipation or aid anticipation certificates of 
144.33  indebtedness; 
144.34     (ii) certificates of indebtedness issued under sections 
144.35  298.28 and 298.282; 
144.36     (iii) certificates of indebtedness used to fund current 
145.1   expenses or to pay the costs of extraordinary expenditures that 
145.2   result from a public emergency; or 
145.3      (iv) certificates of indebtedness used to fund an 
145.4   insufficiency in tax receipts or an insufficiency in other 
145.5   revenue sources; 
145.6      (3) to provide for the bonded indebtedness portion of 
145.7   payments made to another political subdivision of the state of 
145.8   Minnesota; 
145.9      (4) to fund payments made to the Minnesota state armory 
145.10  building commission under section 193.145, subdivision 2, to 
145.11  retire the principal and interest on armory construction bonds; 
145.12     (5) for unreimbursed expenses related to flooding that 
145.13  occurred during the first half of calendar year 1997, as allowed 
145.14  by the commissioner of revenue under section 275.74, paragraph 
145.15  (b); 
145.16     (6) for local units of government located in an area 
145.17  designated by the Federal Emergency Management Agency pursuant 
145.18  to a major disaster declaration issued for Minnesota by 
145.19  President Clinton after April 1, 1997, and before June 11, 1997, 
145.20  for the amount of tax dollars lost due to abatements authorized 
145.21  under section 273.123, subdivision 7, and Laws 1997, chapter 
145.22  231, article 2, section 64, to the extent that they are related 
145.23  to the major disaster and to the extent that neither the state 
145.24  or federal government reimburses the local government for the 
145.25  amount lost; 
145.26     (7) property taxes approved by voters which are levied 
145.27  against the referendum market value as provided under section 
145.28  275.61; 
145.29     (8) to fund matching requirements needed to qualify for 
145.30  federal or state grants or programs to the extent that either 
145.31  (i) the matching requirement exceeds the matching requirement in 
145.32  calendar year 1997, or (ii) it is a new matching requirement 
145.33  that didn't exist prior to 1998; 
145.34     (9) to pay the expenses reasonably and necessarily incurred 
145.35  in preparing for or repairing the effects of natural disaster 
145.36  including the occurrence or threat of widespread or severe 
146.1   damage, injury, or loss of life or property resulting from 
146.2   natural causes, in accordance with standards formulated by the 
146.3   emergency services division of the state department of public 
146.4   safety, as allowed by the commissioner of revenue under section 
146.5   275.74, paragraph (b); 
146.6      (10) for the amount of tax revenue lost due to abatements 
146.7   authorized under section 273.123, subdivision 7, for damage 
146.8   related to the tornadoes of March 29, 1998, to the extent that 
146.9   neither the state or federal government provides reimbursement 
146.10  for the amount lost; 
146.11     (11) pay amounts required to correct an error in the levy 
146.12  certified to the county auditor by a city or county in a levy 
146.13  year, but only to the extent that when added to the preceding 
146.14  year's levy it is not in excess of an applicable statutory, 
146.15  special law or charter limitation, or the limitation imposed on 
146.16  the governmental subdivision by sections 275.70 to 275.74 in the 
146.17  preceding levy year; 
146.18     (12) to pay an abatement under section 469.1815; 
146.19     (13) to pay the employer contribution to the local 
146.20  government correctional service retirement plan under section 
146.21  353E.03, subdivision 2, to the extent that the employer 
146.22  contribution exceeds 5.49 percent of total salary; and 
146.23     (14) to pay the operating or maintenance costs of a county 
146.24  jail as authorized in section 641.01 or 641.262, or of a 
146.25  correctional facility as defined in section 241.021, subdivision 
146.26  1, paragraph (5), to the extent that the county can demonstrate 
146.27  to the commissioner of revenue that the amount has been included 
146.28  in the county budget as a direct result of a rule, minimum 
146.29  requirement, minimum standard, or directive of the department of 
146.30  corrections, or to pay the operating or maintenance costs of a 
146.31  regional jail as authorized in section 641.262.  For purposes of 
146.32  this clause, a district court order is not a rule, minimum 
146.33  requirement, minimum standard, or directive of the department of 
146.34  corrections.  If the county utilizes this special levy, any 
146.35  amount levied by the county in the previous levy year for the 
146.36  purposes specified under this clause and included in the 
147.1   county's previous year's levy limitation computed under section 
147.2   275.71, shall be deducted from the levy limit base under section 
147.3   275.71, subdivision 2, when determining the county's current 
147.4   year levy limitation.  The county shall provide the necessary 
147.5   information to the commissioner of revenue for making this 
147.6   determination; and 
147.7      (15) for counties, to pay any increase in expenses due to 
147.8   the county electing to provide assessment of all taxable 
147.9   property in the county by the county assessor as provided in 
147.10  sections 273.052 and 273.053.  To use this special levy, the 
147.11  county shall have first elected to use its power under sections 
147.12  273.052 and 273.053 after December 31, 1999.  The county shall 
147.13  provide any information to the commissioner of revenue that the 
147.14  commissioner considers necessary to determine the appropriate 
147.15  amount to be levied under this clause. 
147.16     <b>EFFECTIVE DATE:</b>  Clause 14 of this section is effective for 
147.17  taxes levied in 2000, payable in 2001 and thereafter.  Clause 15 
147.18  of this section is effective beginning with taxes levied in 
147.19  2001, payable in 2002, provided that the provisions of sections 
147.20  275.70 to 275.74 are also extended to taxes levied in 2001 or 
147.21  beyond. 
147.22     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
147.23  275.71, subdivision 2, is amended to read: 
147.24     Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
147.25  local governmental unit for taxes levied in 1997 shall be equal 
147.26  to the sum of: 
147.27     (1) the amount the local governmental unit levied in 1996, 
147.28  less any amount levied for debt, as reported to the department 
147.29  of revenue under section 275.62, subdivision 1, clause (1), and 
147.30  less any tax levied in 1996 against market value as provided for 
147.31  in section 275.61; 
147.32     (2) the amount of aids the local governmental unit was 
147.33  certified to receive in calendar year 1997 under sections 
147.34  477A.011 to 477A.03 before any reductions for state tax 
147.35  increment financing aid under section 273.1399, subdivision 5; 
147.36     (3) the amount of homestead and agricultural credit aid the 
148.1   local governmental unit was certified to receive under section 
148.2   273.1398 in calendar year 1997 before any reductions for tax 
148.3   increment financing aid under section 273.1399, subdivision 5; 
148.4      (4) the amount of local performance aid the local 
148.5   governmental unit was certified to receive in calendar year 1997 
148.6   under section 477A.05; and 
148.7      (5) the amount of any payments certified to the local 
148.8   government unit in 1997 under sections 298.28 and 298.282. 
148.9      If a governmental unit was not required to report under 
148.10  section 275.62 for taxes levied in 1997, the commissioner shall 
148.11  request information on levies used for debt from the local 
148.12  governmental unit and adjust its levy limit base accordingly. 
148.13     (b) The levy limit base for a local governmental unit for 
148.14  taxes levied in 1998 is equal to its adjusted levy limit base in 
148.15  the previous year, subject to any adjustments under section 
148.16  275.72 and multiplied by the increase that would have occurred 
148.17  under subdivision 3, clause (3), if that clause had been in 
148.18  effect for taxes levied in 1997. 
148.19     (c) The levy limit base for a city with a population 
148.20  greater than 2,500 for taxes levied in 1999 2000 is limited 
148.21  equal to its adjusted levy limit base in the previous year, 
148.22  subject to adjustments under section 275.72. 
148.23     (d) (b) The levy limit base for a county for taxes levied 
148.24  in 1999 is limited to the difference between (1) its adjusted 
148.25  levy limit base in the previous year subject to adjustments 
148.26  under section 275.72, and (2) one-half of the county's share of 
148.27  the net cost to the state for assumption of district court 
148.28  costs, as reported by the supreme court to the commissioner of 
148.29  revenue under section 273.1398, subdivision 4a, paragraph (a). 
148.30     (c) The levy limit base for a county for taxes levied in 
148.31  2000 is limited to the following amount: 
148.32     (1) its adjusted levy limit base in the previous year, 
148.33  subject to adjustments under section 275.72, minus 
148.34     (2) one-half of the county's share of the net cost to the 
148.35  state for assumption of district court costs, as reported by the 
148.36  supreme court to the commissioner of revenue under section 
149.1   273.1398, subdivision 4a, paragraph (a), plus 
149.2      (3) the increase in its homestead and agricultural credit 
149.3   aid under section 273.1398, subdivision 4a, paragraph (d). 
149.4      <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
149.5   payable in 2001 and subsequent years. 
149.6      Sec. 5.  Minnesota Statutes 1999 Supplement, section 
149.7   275.71, subdivision 3, is amended to read: 
149.8      Subd. 3.  [ADJUSTED LEVY LIMIT BASE.] For taxes levied 
149.9   in 1998 and 1999 2000, the adjusted levy limit is equal to the 
149.10  levy limit base computed under subdivision 2 or section 275.72, 
149.11  multiplied by: 
149.12     (1) one plus a percentage equal to the lesser of the 
149.13  percentage growth in the implicit price deflator or 125 percent 
149.14  of the percentage growth in the consumer price index; and 
149.15     (2) for all cities and for counties outside of the 
149.16  seven-county metropolitan area, one plus a percentage equal to 
149.17  the percentage increase in number of households, if any, for the 
149.18  most recent 12-month period for which data is available; and for 
149.19  counties located in the seven-county metropolitan area, one plus 
149.20  a percentage equal to the greater of the percentage increase in 
149.21  the number of households in the county or the percentage 
149.22  increase in the number of households in the entire seven-county 
149.23  metropolitan area for the most recent 12-month period for which 
149.24  data is available; and 
149.25     (3) for all counties, cities of the first class, and cities 
149.26  outside the seven-county metropolitan area, one plus a 
149.27  percentage equal to the percentage increase in the taxable 
149.28  market value of the jurisdiction due to new construction of 
149.29  class 3 and class 5 property, as defined in section 273.13, 
149.30  subdivisions 24 and 31, for the most recent year for which data 
149.31  are available; and for all cities, except cities of the first 
149.32  class, located in the seven-county metropolitan area one plus a 
149.33  percentage equal to the greater of the percentage increase in 
149.34  the city or in the county in which the city is located of the 
149.35  taxable market value in the city or county due to new 
149.36  construction of class 3 and class 5 property, as defined in 
150.1   section 273.13, subdivisions 24 and 31, for the most recent year 
150.2   for which data is available. 
150.3      <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
150.4   payable in 2001 and subsequent years. 
150.5      Sec. 6.  Minnesota Statutes 1999 Supplement, section 
150.6   275.71, subdivision 4, is amended to read: 
150.7      Subd. 4.  [PROPERTY TAX LEVY LIMIT.] For taxes levied 
150.8   in 1998 and 1999 and 2000, the property tax levy limit for a 
150.9   local governmental unit is equal to its adjusted levy limit base 
150.10  determined under subdivision 3 plus any additional levy 
150.11  authorized under section 275.73, which is levied against net tax 
150.12  capacity, reduced by the sum of (1) the total amount of aids 
150.13  that the local governmental unit is certified to receive under 
150.14  sections 477A.011 to 477A.014, (2) homestead and agricultural 
150.15  aids it is certified to receive under section 273.1398, (3) 
150.16  local performance aid it is certified to receive under section 
150.17  477A.05, (4) taconite aids under sections 298.28 and 298.282 
150.18  including any aid which was required to be placed in a special 
150.19  fund for expenditure in the next succeeding year but excluding 
150.20  amounts allocated under section 298.28, subdivision 2, paragraph 
150.21  (b), (5) flood loss aid under section 273.1383, and (6) 
150.22  low-income housing aid under sections 477A.06 and 477A.065. 
150.23     <b>EFFECTIVE DATE:</b>  This section is effective for taxes levied 
150.24  in 1999, payable in 2000, and subsequent years. 
150.25     Sec. 7.  Minnesota Statutes 1998, section 275.72, 
150.26  subdivision 1, is amended to read: 
150.27     Subdivision 1.  [ADJUSTMENTS FOR CONSOLIDATION.] If all of 
150.28  the area included in two or more local governmental units is 
150.29  consolidated, merged, or otherwise combined to constitute a 
150.30  single governmental unit, the levy limit base for the resulting 
150.31  governmental unit in the first levy year in which the 
150.32  consolidation is effective shall be equal to (1) the 
150.33  highest average tax rate in any of the merging governmental 
150.34  units in for the previous current taxes payable year multiplied 
150.35  by the net tax capacity of all the merging governmental units in 
150.36  for the previous current taxes payable year, minus (2) the sum 
151.1   of all levies in the merging governmental units in for the 
151.2   previous current taxes payable year that qualify as special 
151.3   levies under section 275.70, subdivision 3.  The average tax 
151.4   rate of a governmental unit for the current taxes payable year 
151.5   shall be determined by (1) adding the governmental subdivision's 
151.6   final certified levy for the current taxes payable year and its 
151.7   property tax aids described in section 275.71, subdivision 4, 
151.8   for the current aid payment year, and dividing that result by 
151.9   (2) the sum of the governmental subdivision's total taxable net 
151.10  tax capacity and its total fiscal disparity distribution net tax 
151.11  capacity, if any, for the current taxes payable year.  The net 
151.12  tax capacity of all the merging governmental units for the 
151.13  purpose of this adjustment shall be the sum of their total 
151.14  taxable net tax capacity plus their total fiscal disparity 
151.15  distribution net tax capacity, if any, for the current taxes 
151.16  payable year.  
151.17     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
151.18  payable in 2000 and subsequent years. 
151.19     Sec. 8.  Minnesota Statutes 1998, section 275.72, 
151.20  subdivision 3, is amended to read: 
151.21     Subd. 3.  [TRANSFER OF GOVERNMENTAL FUNCTIONS.] (a) If a 
151.22  function or service of one local governmental unit is 
151.23  transferred to another local governmental unit, the levy limits 
151.24  established under section 275.71 shall be adjusted by the 
151.25  commissioner of revenue in such manner so as to fairly and 
151.26  equitably reflect the reduced or increased property tax burden 
151.27  resulting from the transfer.  The aggregate of the adjusted 
151.28  limitations shall not exceed the aggregate of the limitations 
151.29  prior to adjustment except as provided in paragraph (b). 
151.30     (b) If a county elects to provide assessment of all taxable 
151.31  property in the county by the county assessor as provided in 
151.32  sections 273.052 and 273.053 the county may special levy for the 
151.33  associated costs under section 275.70, subdivision 5, clause 
151.34  (15).  Any municipality subject to levy limits that is located 
151.35  in that county shall have its levy limit established under 
151.36  section 275.71 adjusted by the commissioner of revenue in such 
152.1   manner so as to fairly and equitably reflect the reduced or 
152.2   increased property tax burden resulting from the transfer.  The 
152.3   amounts by which the levy limits of the municipalities are 
152.4   reduced do not have to equal the amount that the county levies 
152.5   for this purpose. 
152.6      <b>EFFECTIVE DATE:</b>  This section is effective beginning with 
152.7   taxes levied in 2001, payable in 2002, provided that the 
152.8   provisions of sections 275.70 to 275.74 are also extended to 
152.9   taxes levied in 2001 or beyond. 
152.10     Sec. 9.  Minnesota Statutes 1999 Supplement, section 
152.11  477A.011, subdivision 36, is amended to read: 
152.12     Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
152.13  paragraphs (b) to (k) (m), "city aid base" means, for each city, 
152.14  the sum of the local government aid and equalization aid it was 
152.15  originally certified to receive in calendar year 1993 under 
152.16  Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 
152.17  and the amount of disparity reduction aid it received in 
152.18  calendar year 1993 under Minnesota Statutes 1992, section 
152.19  273.1398, subdivision 3. 
152.20     (b) For aids payable in 1996 and thereafter, a city that in 
152.21  1992 or 1993 transferred an amount from governmental funds to 
152.22  its sewer and water fund, which amount exceeded its net levy for 
152.23  taxes payable in the year in which the transfer occurred, has a 
152.24  "city aid base" equal to the sum of (i) its city aid base, as 
152.25  calculated under paragraph (a), and (ii) one-half of the 
152.26  difference between its city aid distribution under section 
152.27  477A.013, subdivision 9, for aids payable in 1995 and its city 
152.28  aid base for aids payable in 1995. 
152.29     (c) The city aid base for any city with a population less 
152.30  than 500 is increased by $40,000 for aids payable in calendar 
152.31  year 1995 and thereafter, and the maximum amount of total aid it 
152.32  may receive under section 477A.013, subdivision 9, paragraph 
152.33  (c), is also increased by $40,000 for aids payable in calendar 
152.34  year 1995 only, provided that: 
152.35     (i) the average total tax capacity rate for taxes payable 
152.36  in 1995 exceeds 200 percent; 
153.1      (ii) the city portion of the tax capacity rate exceeds 100 
153.2   percent; and 
153.3      (iii) its city aid base is less than $60 per capita. 
153.4      (d) The city aid base for a city is increased by $20,000 in 
153.5   1998 and thereafter and the maximum amount of total aid it may 
153.6   receive under section 477A.013, subdivision 9, paragraph (c), is 
153.7   also increased by $20,000 in calendar year 1998 only, provided 
153.8   that: 
153.9      (i) the city has a population in 1994 of 2,500 or more; 
153.10     (ii) the city is located in a county, outside of the 
153.11  metropolitan area, which contains a city of the first class; 
153.12     (iii) the city's net tax capacity used in calculating its 
153.13  1996 aid under section 477A.013 is less than $400 per capita; 
153.14  and 
153.15     (iv) at least four percent of the total net tax capacity, 
153.16  for taxes payable in 1996, of property located in the city is 
153.17  classified as railroad property. 
153.18     (e) The city aid base for a city is increased by $200,000 
153.19  in 1999 and thereafter and the maximum amount of total aid it 
153.20  may receive under section 477A.013, subdivision 9, paragraph 
153.21  (c), is also increased by $200,000 in calendar year 1999 only, 
153.22  provided that: 
153.23     (i) the city was incorporated as a statutory city after 
153.24  December 1, 1993; 
153.25     (ii) its city aid base does not exceed $5,600; and 
153.26     (iii) the city had a population in 1996 of 5,000 or more. 
153.27     (f) The city aid base for a city is increased by $450,000 
153.28  in 1999 to 2008 and the maximum amount of total aid it may 
153.29  receive under section 477A.013, subdivision 9, paragraph (c), is 
153.30  also increased by $450,000 in calendar year 1999 only, provided 
153.31  that: 
153.32     (i) the city had a population in 1996 of at least 50,000; 
153.33     (ii) its population had increased by at least 40 percent in 
153.34  the ten-year period ending in 1996; and 
153.35     (iii) its city's net tax capacity for aids payable in 1998 
153.36  is less than $700 per capita. 
154.1      (g) Beginning in 2002, the city aid base for a city is 
154.2   equal to the sum of its city aid base in 2001 and the amount of 
154.3   additional aid it was certified to receive under section 477A.06 
154.4   in 2001.  For 2002 only, the maximum amount of total aid a city 
154.5   may receive under section 477A.013, subdivision 9, paragraph 
154.6   (c), is also increased by the amount it was certified to receive 
154.7   under section 477A.06 in 2001. 
154.8      (h) The city aid base for a city is increased by $150,000 
154.9   for aids payable in 2000 and thereafter, and the maximum amount 
154.10  of total aid it may receive under section 477A.013, subdivision 
154.11  9, paragraph (c), is also increased by $150,000 in calendar year 
154.12  2000 only, provided that: 
154.13     (1) the city has a population that is greater than 1,000 
154.14  and less than 2,500; 
154.15     (2) its commercial and industrial percentage for aids 
154.16  payable in 1999 is greater than 45 percent; and 
154.17     (3) the total market value of all commercial and industrial 
154.18  property in the city for assessment year 1999 is at least 15 
154.19  percent less than the total market value of all commercial and 
154.20  industrial property in the city for assessment year 1998. 
154.21     (i) The city aid base for a city is increased by $200,000 
154.22  in 2000 and thereafter, and the maximum amount of total aid it 
154.23  may receive under section 477A.013, subdivision 9, paragraph 
154.24  (c), is also increased by $200,000 in calendar year 2000 only, 
154.25  provided that: 
154.26     (1) the city had a population in 1997 of 2,500 or more; 
154.27     (2) the net tax capacity of the city used in calculating 
154.28  its 1999 aid under section 477A.013 is less than $650 per 
154.29  capita; 
154.30     (3) the pre-1940 housing percentage of the city used in 
154.31  calculating 1999 aid under section 477A.013 is greater than 12 
154.32  percent; 
154.33     (4) the 1999 local government aid of the city under section 
154.34  477A.013 is less than 20 percent of the amount that the formula 
154.35  aid of the city would have been if the need increase percentage 
154.36  was 100 percent; and 
155.1      (5) the city aid base of the city used in calculating aid 
155.2   under section 477A.013 is less than $7 per capita. 
155.3      (j) The city aid base for a city is increased by $225,000 
155.4   in calendar years 2000 to 2002 and the maximum amount of total 
155.5   aid it may receive under section 477A.013, subdivision 9, 
155.6   paragraph (c), is also increased by $225,000 in calendar year 
155.7   2000 only, provided that: 
155.8      (1) the city had a population of at least 5,000; 
155.9      (2) its population had increased by at least 50 percent in 
155.10  the ten-year period ending in 1997; 
155.11     (3) the city is located outside of the Minneapolis-St. Paul 
155.12  metropolitan statistical area as defined by the United States 
155.13  Bureau of the Census; and 
155.14     (4) the city received less than $30 per capita in aid under 
155.15  section 477A.013, subdivision 9, for aids payable in 1999. 
155.16     (k) The city aid base for a city is increased by $102,000 
155.17  in 2000 and thereafter, and the maximum amount of total aid it 
155.18  may receive under section 477A.013, subdivision 9, paragraph 
155.19  (c), is also increased by $102,000 in calendar year 2000 only, 
155.20  provided that: 
155.21     (1) the city has a population in 1997 of 2,000 or more; 
155.22     (2) the net tax capacity of the city used in calculating 
155.23  its 1999 aid under section 477A.013 is less than $455 per 
155.24  capita; 
155.25     (3) the net levy of the city used in calculating 1999 aid 
155.26  under section 477A.013 is greater than $195 per capita; and 
155.27     (4) the 1999 local government aid of the city under section 
155.28  477A.013 is less than 38 percent of the amount that the formula 
155.29  aid of the city would have been if the need increase percentage 
155.30  was 100 percent. 
155.31     (l) The city aid base for a city is increased by $32,000 in 
155.32  2001 and thereafter, and the maximum amount of total aid it may 
155.33  receive under section 477A.013, subdivision 9, paragraph (c), is 
155.34  also increased by $32,000 in calendar year 2001 only, provided 
155.35  that: 
155.36     (1) the city has a population in 1998 that is greater than 
156.1   200 but less than 500; 
156.2      (2) the city's revenue need used in calculating aids 
156.3   payable in 2000 was greater than $200 per capita; 
156.4      (3) the city net tax capacity for the city used in 
156.5   calculating aids available in 2000 was equal to or less than 
156.6   $200 per capita; 
156.7      (4) the city aid base of the city used in calculating aid 
156.8   under section 477A.013 is less than $65 per capita; and 
156.9      (5) the city's formula aid for aids payable in 2000 was 
156.10  greater than zero. 
156.11     (m) The city aid base for a city is increased by $7,200 in 
156.12  2001 and thereafter, and the maximum amount of total aid it may 
156.13  receive under section 477A.013, subdivision 9, paragraph (c), is 
156.14  also increased by $7,200 in calendar year 2001 only, provided 
156.15  that: 
156.16     (1) the city had a population in 1998 that is greater than 
156.17  200 but less than 500; 
156.18     (2) the city's commercial industrial percentage used in 
156.19  calculating aids payable in 2000 was less than ten percent; 
156.20     (3) more than 25 percent of the city's population was 60 
156.21  years old or older according to the 1990 census; 
156.22     (4) the city aid base of the city used in calculating aid 
156.23  under section 477A.013 is less than $15 per capita; and 
156.24     (5) the city's formula aid for aids payable in 2000 was 
156.25  greater than zero. 
156.26     <b>EFFECTIVE DATE:</b>  This section is effective beginning with 
156.27  aids payable in 2001 and thereafter. 
156.28     Sec. 10.  Minnesota Statutes 1999 Supplement, section 
156.29  477A.03, subdivision 2, is amended to read: 
156.30     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
156.31  discharge the duties imposed by sections 477A.011 to 477A.014 is 
156.32  annually appropriated from the general fund to the commissioner 
156.33  of revenue.  
156.34     (b) Aid payments to counties under section 477A.0121 are 
156.35  limited to $20,265,000 in 1996.  Aid payments to counties under 
156.36  section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
157.1   payable in 1998 and thereafter, the total aids paid under 
157.2   section 477A.0121 are the amounts certified to be paid in the 
157.3   previous year, adjusted for inflation as provided under 
157.4   subdivision 3. 
157.5      (c)(i) For aids payable in 1998 and thereafter, the total 
157.6   aids paid to counties under section 477A.0122 are the amounts 
157.7   certified to be paid in the previous year, adjusted for 
157.8   inflation as provided under subdivision 3. 
157.9      (ii) Aid payments to counties under section 477A.0122 in 
157.10  2000 are further increased by an additional $20,000,000 in 2000. 
157.11     (d) Aid payments to cities in 1999 under section 477A.013, 
157.12  subdivision 9, are limited to $380,565,489.  For aids payable in 
157.13  2000 and 2001, the total aids paid under section 477A.013, 
157.14  subdivision 9, are the amounts paid in the previous year, 
157.15  adjusted for inflation as provided in subdivision 3, and 
157.16  increased by the amount necessary to effectuate Laws 1999, 
157.17  chapter 243, article 5, section 48, paragraph (b).  For aids 
157.18  payable in 2001 through 2003, the total aids paid under section 
157.19  477A.013, subdivision 9, are the amounts certified to be paid in 
157.20  the previous year, adjusted for inflation as provided under 
157.21  subdivision 3.  For aids payable in 2002 2004, the total aids 
157.22  paid under section 477A.013, subdivision 9, are the amounts 
157.23  certified to be paid in the previous year, adjusted for 
157.24  inflation as provided under subdivision 3, and increased by the 
157.25  amount certified to be paid in 2001 2003 under section 477A.06.  
157.26  For aids payable in 2003 2005 and thereafter, the total aids 
157.27  paid under section 477A.013, subdivision 9, are the amounts 
157.28  certified to be paid in the previous year, adjusted for 
157.29  inflation as provided under subdivision 3.  The additional 
157.30  amount authorized under subdivision 4 is not included when 
157.31  calculating the appropriation limits under this paragraph. 
157.32     <b>EFFECTIVE DATE:</b>  This section is effective for aids payable 
157.33  in 2000 and thereafter. 
157.34     Sec. 11.  Minnesota Statutes 1999 Supplement, section 
157.35  477A.06, subdivision 1, is amended to read: 
157.36     Subdivision 1.  [ELIGIBILITY.] (a) For assessment years 
158.1   1998, 1999, and 2000, 2001, and 2002, for all class 4d property 
158.2   on which construction was begun before January 1, 1999, the 
158.3   assessor shall determine the difference between the actual net 
158.4   tax capacity and the net tax capacity that would be determined 
158.5   for the property if the class rates for assessment year 1997 
158.6   were in effect. 
158.7      (b) In calendar years 1999, 2000, and 2001, 2002, and 2003, 
158.8   each city shall be eligible for aid equal to (i) the amount by 
158.9   which the sum of the differences determined in clause (a) for 
158.10  the corresponding assessment year exceeds two percent of the 
158.11  city's total taxable net tax capacity for taxes payable in 1998, 
158.12  multiplied by (ii) the city government's average local tax rate 
158.13  for taxes payable in 1998. 
158.14     Sec. 12.  Minnesota Statutes 1998, section 477A.06, 
158.15  subdivision 3, is amended to read: 
158.16     Subd. 3.  [APPROPRIATION; PAYMENT.] (a) The commissioner 
158.17  shall pay each city its qualifying aid amount on or before July 
158.18  20 of each year.  An amount sufficient to pay the aid authorized 
158.19  under this section is appropriated to the commissioner of 
158.20  revenue from the property tax reform account in fiscal years 
158.21  2000 and 2001, and from the general fund in fiscal year years 
158.22  2002, 2003, and 2004. 
158.23     (b) For fiscal years 2001 and 2002 through 2004, the amount 
158.24  of aid appropriated under this section may not exceed $1,500,000 
158.25  each year. 
158.26     (c) If the total amount of aid that would otherwise be 
158.27  payable under the formula in this section exceeds the maximum 
158.28  allowed under paragraph (b), the amount of aid for each city is 
158.29  reduced proportionately to equal the limit. 
158.30     Sec. 13.  Laws 1988, chapter 645, section 3, as amended by 
158.31  Laws 1999, chapter 243, article 6, section 9, is amended to read:
158.32     Sec. 3.  [TAX; PAYMENT OF EXPENSES.] 
158.33     (a) The tax levied by the hospital district under Minnesota 
158.34  Statutes, section 447.34, must not be levied at a rate that 
158.35  exceeds .0063 0.063 percent of taxable market value.  
158.36     (b) .0048 0.048 percent of taxable market value of tax in 
159.1   paragraph (a) may be used only for acquisition, betterment, and 
159.2   maintenance of the district's hospital and nursing home 
159.3   facilities and equipment, and not for administrative or salary 
159.4   expenses.  
159.5      (c) .0015 0.015 percent of taxable market value of the tax 
159.6   in paragraph (a) may be used solely for the purpose of capital 
159.7   expenditures as it relates to ambulance acquisitions for the 
159.8   Cook ambulance service and the Orr ambulance service and not for 
159.9   administrative or salary expenses.  
159.10     The part of the levy referred to in paragraph (c) must be 
159.11  administered by the Cook Hospital and passed on directly to the 
159.12  Cook area ambulance service board and the city of Orr to be held 
159.13  in trust until funding for a new ambulance is needed by either 
159.14  the Cook ambulance service or the Orr ambulance service. 
159.15     <b>EFFECTIVE DATE:</b>  This section is effective the day 
159.16  following final enactment. 
159.17     Sec. 14.  Laws 1999, chapter 243, article 6, section 18, is 
159.18  amended to read: 
159.19     Sec. 18.  [EFFECTIVE DATE.] 
159.20     Sections 3 to 6 and 10 are effective for taxes levied in 
159.21  1999, and payable in 2000.  Section 7 is effective the day 
159.22  following final enactment for taxes levied in 1999 and 
159.23  thereafter.  Sections 8 and 17 are effective for taxes levied in 
159.24  1999, payable in 2000, and thereafter.  
159.25     The .0015 0.063 percent of market value levy described in 
159.26  section 9, paragraph (a), and the 0.015 percent of taxable 
159.27  market value levy described in section 9, paragraph (c), is are 
159.28  effective for the cities of Cook and Orr and the counties of St. 
159.29  Louis and Koochiching for affected parts of those counties on 
159.30  January 1, 2000, to be requested for levies certified in the 
159.31  year 2000, with the first payment to be received and taxes 
159.32  payable in 2001 and thereafter.  The 0.048 percent market value 
159.33  levy described in section 9, paragraph (b), is effective for the 
159.34  cities of Cook and Orr and the counties of St. Louis and 
159.35  Koochiching for the affected parts of those counties on January 
159.36  1, 1999, for levies certified in 1999 and taxes payable in 2000 
160.1   and thereafter. 
160.2      <b>EFFECTIVE DATE:</b>  This section is effective the day 
160.3   following final enactment. 
160.4      Sec. 15.  [CAPITOL REGION WATERSHED DISTRICT LEVY LIMIT.] 
160.5      The capitol region watershed district managers may levy an 
160.6   annual ad valorem tax of 0.02418 percent of taxable market value 
160.7   or $200,000, whichever is less, under Minnesota Statutes, 
160.8   section 103D.905, subdivision 3, notwithstanding the maximum 
160.9   dollar limit for the administrative fund in that subdivision. 
160.10     <b>EFFECTIVE DATE:</b>  This section is effective for taxes levied 
160.11  in 2000, payable in 2001 and thereafter. 
160.12     Sec. 16.  [POLK COUNTY; LEVY LIMIT ADJUSTMENTS.] 
160.13     Subdivision 1.  [LEVY LIMIT BASE.] If property taxes remain 
160.14  subject to general levy limitations under state law for taxes 
160.15  levied in 2000, the levy limit base of Polk county for taxes 
160.16  levied in 2000 under Minnesota Statutes, section 275.71, 
160.17  subdivision 2, or a successor law, is increased by $500,000.  If 
160.18  property taxes remain subject to general levy limitations under 
160.19  state law for taxes levied in 2001, the levy limit base of Polk 
160.20  county for taxes levied in 2001 under Minnesota Statutes, 
160.21  section 275.71, subdivision 2, or a successor law, is increased 
160.22  by an additional $500,000. 
160.23     <b>EFFECTIVE DATE:</b>  This section is effective for taxes levied 
160.24  in 2000 and 2001 upon compliance with the governing body of Polk 
160.25  county with Minnesota Statutes, section 645.021, subdivision 3. 
160.26     Sec. 17.  [ADDITIONAL AID; LINCOLN COUNTY.] 
160.27     Subdivision 1.  [AID INCREASE.] For aids payable in 2000, 
160.28  Lincoln county shall receive an aid payment of up to $150,000 
160.29  under this section.  The entire amount of this additional aid 
160.30  shall be paid from the appropriation for reimbursement for 
160.31  court-ordered counsel under section 477A.0121, subdivision 4, 
160.32  with the December 26 payment of other aids paid under Minnesota 
160.33  Statutes, section 477A.015, and shall be equal to the estimated 
160.34  amount of the appropriation under Minnesota Statutes, section 
160.35  477A.0121, subdivision 4, up to $150,000, that will not be spent 
160.36  for public defender costs under Minnesota Statutes, section 
161.1   611.27, in that calendar year. 
161.2      For aids payable in 2001, Lincoln county shall receive an 
161.3   additional payment under this section of up to the difference 
161.4   between $150,000 and what the county received under this 
161.5   provision in the previous year.  The entire amount of this 
161.6   additional aid shall be paid from the appropriation for 
161.7   reimbursement for court-ordered counsel under section 477A.0121, 
161.8   subdivision 4, with the December 26 payment of other aids paid 
161.9   under Minnesota Statutes, section 477A.015, and shall be equal 
161.10  to the estimated amount of the appropriation under Minnesota 
161.11  Statutes, section 477A.0121, subdivision 4, up to the limit 
161.12  determined in this paragraph, that will not be spent for public 
161.13  defender costs under Minnesota Statutes, section 611.27, in that 
161.14  calendar year. 
161.15     The county is not limited to the purposes listed in 
161.16  Minnesota Statutes, section 477A.015, for spending this aid and 
161.17  may pay a portion of this aid to Lake Benson township to 
161.18  reimburse the township for losses due to the Wind Tower lawsuit 
161.19  settlement.  The aid under this section must not be included in 
161.20  calculating any aids or any limitations on levies or 
161.21  expenditures under law. 
161.22     <b>EFFECTIVE DATE:</b>  This section is effective the day after 
161.23  timely compliance by the governing body of Lincoln county and 
161.24  its chief clerical officer with Minnesota Statutes, section 
161.25  645.021, subdivisions 2 and 3. 
161.26     Sec. 18.  [LOCAL GOVERNMENT AID TO CITIES; THE CITY OF ST. 
161.27  CLOUD AND ST. AUGUSTA TOWNSHIP (THE CITY OF VENTURA).] 
161.28     Subdivision 1.  [ADDITIONAL LOCAL GOVERNMENT AID.] For aids 
161.29  payable in 2001 only, an additional payment of $32,000 shall be 
161.30  paid to the city of St. Cloud and an additional aid payment of 
161.31  $75,000 shall be paid to St. Augusta township or its succeeding 
161.32  municipal government (the city of Ventura).  This aid shall be 
161.33  paid out of the city aid appropriation under Minnesota Statutes, 
161.34  section 477A.03, subdivision 2, paragraph (d).  The aid under 
161.35  this section must not be included in calculating aid paid under 
161.36  Minnesota Statutes, section 477A.013, subdivision 9, or any 
162.1   other law, or of any limitations on levies or expenditures. 
162.2      <b>EFFECTIVE DATE:</b>  This section is effective for aids payable 
162.3   in calendar year 2001 only for the city of St. Cloud, upon 
162.4   timely compliance by its governing body and its chief clerical 
162.5   officer with Minnesota Statutes, section 645.021, subdivisions 2 
162.6   and 3.  This section is effective for aids payable in calendar 
162.7   year 2001 only for St. Augusta township (city of Ventura), upon 
162.8   timely compliance by its governing body and its chief clerical 
162.9   officer with Minnesota Statutes, section 645.021, subdivisions 2 
162.10  and 3. 
162.11                             ARTICLE 7
162.12                TRUTH IN TAXATION; REVERSE REFERENDA
162.13     Section 1.  Minnesota Statutes 1998, section 275.065, 
162.14  subdivision 3, is amended to read: 
162.15     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
162.16  county auditor shall prepare and the county treasurer shall 
162.17  deliver after November 10 and on or before November 24 17 each 
162.18  year, by first class mail to each taxpayer at the address listed 
162.19  on the county's current year's assessment roll, a notice of 
162.20  proposed property taxes.  
162.21     (b) The commissioner of revenue shall prescribe the form of 
162.22  the notice. 
162.23     (c) The notice must inform taxpayers that it contains the 
162.24  amount of property taxes each taxing authority proposes to 
162.25  collect for taxes payable the following year.  In the case of a 
162.26  town, or in the case of the state determined portion of the 
162.27  school district levy, the final tax amount will be its proposed 
162.28  tax.  The notice must clearly state that each taxing authority, 
162.29  including regional library districts established under section 
162.30  134.201, and including the metropolitan taxing districts as 
162.31  defined in paragraph (i), but excluding all other special taxing 
162.32  districts, cities of 500 population or less, and towns, will 
162.33  must hold a public meeting to receive public testimony on the 
162.34  proposed budget and proposed or final property tax levy, or, in 
162.35  case of a school district, on the current budget and proposed 
162.36  property tax levy.  It In the case of a county or a city over 
163.1   500 population, a public hearing is not required if the county's 
163.2   or city's proposed property tax levy has not increased over the 
163.3   levy amount certified by the county or city under section 
163.4   275.07, subdivision 1, for the previous year.  The notice must 
163.5   clearly state the time and place of each taxing authority's 
163.6   meeting and if one is to be held.  It must also state an address 
163.7   where comments will be received by mail, whether or not a public 
163.8   hearing is held.  
163.9      (d) The notice must state for each parcel: 
163.10     (1) the market value of the property as determined under 
163.11  section 273.11, and used for computing property taxes payable in 
163.12  the following year and for taxes payable in the current year as 
163.13  each appears in the records of the county assessor on November 1 
163.14  of the current year; and, in the case of residential property, 
163.15  whether the property is classified as homestead or 
163.16  nonhomestead.  The notice must clearly inform taxpayers of the 
163.17  years to which the market values apply and that the values are 
163.18  final values; 
163.19     (2) the items listed below, shown separately by county, 
163.20  city or town, state determined school tax net of the education 
163.21  homestead credit under section 273.1382, voter approved school 
163.22  levy, other local school levy, and the sum of the special taxing 
163.23  districts, and as a total of all taxing authorities:  
163.24     (i) the actual tax for taxes payable in the current year; 
163.25     (ii) the tax change due to spending factors, defined as the 
163.26  proposed tax minus the constant spending tax amount; 
163.27     (iii) the tax change due to other factors, defined as the 
163.28  constant spending tax amount minus the actual current year tax; 
163.29  and 
163.30     (iv) the proposed tax amount. 
163.31     In the case of a town or the state determined school tax, 
163.32  the final tax shall also be its proposed tax unless the town 
163.33  changes its levy at a special town meeting under section 
163.34  365.52.  If a school district has certified under section 
163.35  126C.17, subdivision 9, that a referendum will be held in the 
163.36  school district at the November general election, the county 
164.1   auditor must note next to the school district's proposed amount 
164.2   that a referendum is pending and that, if approved by the 
164.3   voters, the tax amount may be higher than shown on the notice.  
164.4   In the case of the city of Minneapolis, the levy for the 
164.5   Minneapolis library board and the levy for Minneapolis park and 
164.6   recreation shall be listed separately from the remaining amount 
164.7   of the city's levy.  In the case of a parcel where tax increment 
164.8   or the fiscal disparities areawide tax under chapter 276A or 
164.9   473F applies, the proposed tax levy on the captured value or the 
164.10  proposed tax levy on the tax capacity subject to the areawide 
164.11  tax must each be stated separately and not included in the sum 
164.12  of the special taxing districts; and 
164.13     (3) the increase or decrease between the total taxes 
164.14  payable in the current year and the total proposed taxes, 
164.15  expressed as a percentage. 
164.16     For purposes of this section, the amount of the tax on 
164.17  homesteads qualifying under the senior citizens' property tax 
164.18  deferral program under chapter 290B is the total amount of 
164.19  property tax before subtraction of the deferred property tax 
164.20  amount. 
164.21     (e) The notice must clearly state that the proposed or 
164.22  final taxes do not include the following: 
164.23     (1) special assessments; 
164.24     (2) levies approved by the voters after the date the 
164.25  proposed taxes are certified, including bond referenda, school 
164.26  district levy referenda, and levy limit increase referenda; 
164.27     (3) amounts necessary to pay cleanup or other costs due to 
164.28  a natural disaster occurring after the date the proposed taxes 
164.29  are certified; 
164.30     (4) amounts necessary to pay tort judgments against the 
164.31  taxing authority that become final after the date the proposed 
164.32  taxes are certified; and 
164.33     (5) the contamination tax imposed on properties which 
164.34  received market value reductions for contamination. 
164.35     (f) Except as provided in subdivision 7, failure of the 
164.36  county auditor to prepare or the county treasurer to deliver the 
165.1   notice as required in this section does not invalidate the 
165.2   proposed or final tax levy or the taxes payable pursuant to the 
165.3   tax levy. 
165.4      (g) If the notice the taxpayer receives under this section 
165.5   lists the property as nonhomestead, and satisfactory 
165.6   documentation is provided to the county assessor by the 
165.7   applicable deadline, and the property qualifies for the 
165.8   homestead classification in that assessment year, the assessor 
165.9   shall reclassify the property to homestead for taxes payable in 
165.10  the following year. 
165.11     (h) In the case of class 4 residential property used as a 
165.12  residence for lease or rental periods of 30 days or more, the 
165.13  taxpayer must either: 
165.14     (1) mail or deliver a copy of the notice of proposed 
165.15  property taxes to each tenant, renter, or lessee; or 
165.16     (2) post a copy of the notice in a conspicuous place on the 
165.17  premises of the property.  
165.18     The notice must be mailed or posted by the taxpayer by 
165.19  November 27 20 or within three days of receipt of the notice, 
165.20  whichever is later.  A taxpayer may notify the county treasurer 
165.21  of the address of the taxpayer, agent, caretaker, or manager of 
165.22  the premises to which the notice must be mailed in order to 
165.23  fulfill the requirements of this paragraph. 
165.24     (i) For purposes of this subdivision, subdivisions 5a and 
165.25  6, "metropolitan special taxing districts" means the following 
165.26  taxing districts in the seven-county metropolitan area that levy 
165.27  a property tax for any of the specified purposes listed below: 
165.28     (1) metropolitan council under section 473.132, 473.167, 
165.29  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
165.30     (2) metropolitan airports commission under section 473.667, 
165.31  473.671, or 473.672; and 
165.32     (3) metropolitan mosquito control commission under section 
165.33  473.711. 
165.34     For purposes of this section, any levies made by the 
165.35  regional rail authorities in the county of Anoka, Carver, 
165.36  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
166.1   398A shall be included with the appropriate county's levy and 
166.2   shall be discussed at that county's public hearing, if held. 
166.3      (j) If a statutory or home rule charter city or a town has 
166.4   exercised the local levy option provided by section 473.388, 
166.5   subdivision 7, it may include in the notice of its proposed 
166.6   taxes the amount of its proposed taxes attributable to its 
166.7   exercise of the option.  In the first year of the city or town's 
166.8   exercise of this option, the statement shall include an estimate 
166.9   of the reduction of the metropolitan council's tax on the parcel 
166.10  due to exercise of that option.  The metropolitan council's levy 
166.11  shall be adjusted accordingly. 
166.12     <b>EFFECTIVE DATE:</b>  This section is effective for notices 
166.13  prepared in 2000 and thereafter. 
166.14     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
166.15  275.065, subdivision 5a, is amended to read: 
166.16     Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
166.17  population of more than 2,500, county, a metropolitan special 
166.18  taxing district as defined in subdivision 3, paragraph (i), a 
166.19  regional library district established under section 134.201, or 
166.20  school district shall advertise in a newspaper a notice of its 
166.21  intent to adopt a budget and property tax levy or, in the case 
166.22  of a school district, to review its current budget and proposed 
166.23  property taxes payable in the following year, at a public 
166.24  hearing.  In the case of a county or a city that has a 
166.25  population over 2,500, if its proposed property tax levy has not 
166.26  increased over its levy amount certified under section 275.07, 
166.27  subdivision 1, for the previous year, no public hearing is 
166.28  required.  The notice must be published not less than two 
166.29  business days nor more than six business days before the 
166.30  hearing, if required due to a levy increase.  Even if a hearing 
166.31  is not required, counties and cities must continue to place an 
166.32  advertisement in the newspaper informing taxpayers of the 
166.33  proposed budget and levy amounts. 
166.34     The advertisement must be at least one-eighth page in size 
166.35  of a standard-size or a tabloid-size newspaper.  The 
166.36  advertisement must not be placed in the part of the newspaper 
167.1   where legal notices and classified advertisements appear.  The 
167.2   advertisement must be published in an official newspaper of 
167.3   general circulation in the taxing authority.  The newspaper 
167.4   selected must be one of general interest and readership in the 
167.5   community, and not one of limited subject matter.  The 
167.6   advertisement must appear in a newspaper that is published at 
167.7   least once per week.  
167.8      For purposes of this section, the metropolitan special 
167.9   taxing district's advertisement must only be published in the 
167.10  Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
167.11     (b) The advertisement for school districts, metropolitan 
167.12  special taxing districts, and regional library districts must be 
167.13  in the following form, except that the notice for a school 
167.14  district may include references to the current budget in regard 
167.15  to proposed property taxes. 
167.16                             "NOTICE OF
167.17                      PROPOSED PROPERTY TAXES
167.18                   (School District/Metropolitan
167.19                  Special Taxing District/Regional
167.20                   Library District) of .........
167.21  The governing body of ........ will soon hold budget hearings 
167.22  and vote on the property taxes for (metropolitan special taxing 
167.23  district/regional library district services that will be 
167.24  provided in (year)/school district services that will be 
167.25  provided in (year) and (year)). 
167.26                     NOTICE OF PUBLIC HEARING:
167.27  All concerned citizens are invited to attend a public hearing 
167.28  and express their opinions on the proposed (school 
167.29  district/metropolitan special taxing district/regional library 
167.30  district) budget and property taxes, or in the case of a school 
167.31  district, its current budget and proposed property taxes, 
167.32  payable in the following year.  The hearing will be held on 
167.33  (Month/Day/Year) at (Time) at (Location, Address)." 
167.34     (c)(i) If the city or county's proposed property tax levy 
167.35  has increased over its previous year's certified levy, the 
167.36  advertisement for cities and counties must be in the following 
168.1   form. 
168.2                         "NOTICE OF PROPOSED
168.3                   TOTAL BUDGET AND PROPERTY TAXES
168.4   The (city/county) governing body or board of commissioners will 
168.5   hold a public hearing to discuss the budget and to vote on the 
168.6   amount of property taxes to collect for services the 
168.7   (city/county) will provide in (year). 
168.8      
168.9   SPENDING:  The total budget amounts below compare 
168.10  (city's/county's) (year) total actual budget with the amount the 
168.11  (city/county) proposes to spend in (year). 
168.12     
168.13  (Year) Total          Proposed (Year)          Change from
168.14  Actual Budget             Budget               (Year)-(Year)
168.15     
168.16    $.......              $.......                ...%
168.17     
168.18  TAXES:  The property tax amounts below compare that portion of 
168.19  the current budget levied in property taxes in (city/county) for 
168.20  (year) with the property taxes the (city/county) proposes to 
168.21  collect in (year). 
168.22     
168.23  (Year) Property       Proposed (Year)          Change from
168.24      Taxes             Property Taxes          (Year)-(Year)
168.25     
168.26    $.......              $.......                ...% 
168.27     
168.28                     ATTEND THE PUBLIC HEARING
168.29  All (city/county) residents are invited to attend the public 
168.30  hearing of the (city/county) to express your opinions on the 
168.31  budget and the proposed amount of (year) property taxes.  The 
168.32  hearing will be held on: 
168.33                       (Month/Day/Year/Time)
168.34                         (Location/Address)
168.35  If the discussion of the budget cannot be completed, a time and 
168.36  place for continuing the discussion will be announced at the 
169.1   hearing.  You are also invited to send your written comments to: 
169.2                            (City/County)
169.3                         (Location/Address)"
169.4      (ii) If no hearing is required under this section for the 
169.5   city or county, its advertisement must be in the following 
169.6   form.  The advertisement must clearly state that because the 
169.7   proposed property tax levy amount is equal to or less than the 
169.8   taxing authority's previous year's actual property tax levy, no 
169.9   public hearing is required by law. 
169.10                       "NOTICE OF PROPOSED
169.11                 TOTAL BUDGET AND PROPERTY TAXES
169.12  Although no public hearing will be held, the (city/county) 
169.13  governing body or board of commissioners is planning to adopt 
169.14  the following budget and property tax levy. 
169.15     
169.16  SPENDING:  The total budget amounts below compare 
169.17  (city's/county's) (year) total actual budget with the amount the 
169.18  (city/county) proposes to spend in (year). 
169.19     
169.20  (Year) Total          Proposed (Year)          Change from
169.21  Actual Budget             Budget               (Year)-(Year)
169.22     
169.23    $.......              $.......                ...%
169.24     
169.25  TAXES:  The property tax amounts below compare that portion of 
169.26  the current budget levied in property taxes in (city/county) for 
169.27  (year) with the property taxes the (city/county) proposes to 
169.28  collect in (year). 
169.29     
169.30  (Year) Property       Proposed (Year)          Change from
169.31      Taxes              Property Taxes         (Year)-(Year)
169.32     
169.33    $.......              $.......                ...% 
169.34     Although no public hearing will be held, you are invited to 
169.35  send any written comments to: 
169.36                          (City/County)
170.1                        (Location/Address)"
170.2      (iii) If the city's governing body or county board of 
170.3   commissioners decide to hold a public hearing on the proposed 
170.4   budget and levy, even though the proposed levy is equal to or 
170.5   less than the previous year's certified levy amount, the 
170.6   advertisement format in clause (i) must be used. 
170.7      (d) For purposes of this subdivision, the budget amounts 
170.8   listed on the advertisement mean: 
170.9      (1) for cities, the total government fund expenditures, as 
170.10  defined by the state auditor under section 471.6965, less any 
170.11  expenditures for improvements or services that are specially 
170.12  assessed or charged under chapter 429, 430, 435, or the 
170.13  provisions of any other law or charter; and 
170.14     (2) for counties, the total government fund expenditures, 
170.15  as defined by the state auditor under section 375.169, less any 
170.16  expenditures for direct payments to recipients or providers for 
170.17  the human service aids listed below: 
170.18     (i) Minnesota family investment program under chapters 256J 
170.19  and 256K; 
170.20     (ii) medical assistance under sections 256B.041, 
170.21  subdivision 5, and 256B.19, subdivision 1; 
170.22     (iii) general assistance medical care under section 
170.23  256D.03, subdivision 6; 
170.24     (iv) general assistance under section 256D.03, subdivision 
170.25  2; 
170.26     (v) emergency assistance under section 256J.48; 
170.27     (vi) Minnesota supplemental aid under section 256D.36, 
170.28  subdivision 1; 
170.29     (vii) preadmission screening under section 256B.0911, and 
170.30  alternative care grants under section 256B.0913; 
170.31     (viii) general assistance medical care claims processing, 
170.32  medical transportation and related costs under section 256D.03, 
170.33  subdivision 4; 
170.34     (ix) medical transportation and related costs under section 
170.35  256B.0625, subdivisions 17 to 18a; 
170.36     (x) group residential housing under section 256I.05, 
171.1   subdivision 8, transferred from programs in clauses (iv) and 
171.2   (vi); or 
171.3      (xi) any successor programs to those listed in clauses (i) 
171.4   to (x). 
171.5      (e) A city with a population of over 500 but not more than 
171.6   2,500 must advertise by posted notice as defined in section 
171.7   645.12, subdivision 1.  The advertisement must be posted at the 
171.8   time provided in paragraph (a).  It must be in the form required 
171.9   in paragraph (b). 
171.10     (f) For purposes of this subdivision, the population of a 
171.11  city is the most recent population as determined by the state 
171.12  demographer under section 4A.02. 
171.13     (g) The commissioner of revenue, subject to the approval of 
171.14  the chairs of the house and senate tax committees, shall 
171.15  prescribe the form and format of the advertisement. 
171.16     <b>EFFECTIVE DATE:</b>  This section is effective for newspaper 
171.17  advertisements in 2000 and thereafter. 
171.18     Sec. 3.  Minnesota Statutes 1998, section 275.065, 
171.19  subdivision 6, is amended to read: 
171.20     Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
171.21  (a) For purposes of this section, the following terms shall have 
171.22  the meanings given: 
171.23     (1) "Initial hearing" means the first and primary hearing 
171.24  held to discuss the taxing authority's proposed budget and 
171.25  proposed property tax levy for taxes payable in the following 
171.26  year, or, for school districts, the current budget and the 
171.27  proposed property tax levy for taxes payable in the following 
171.28  year. 
171.29     (2) "Continuation hearing" means a hearing held to complete 
171.30  the initial hearing, if the initial hearing is not completed on 
171.31  its scheduled date. 
171.32     (3) "Subsequent hearing" means the hearing held to adopt 
171.33  the taxing authority's final property tax levy, and, in the case 
171.34  of taxing authorities other than school districts, the final 
171.35  budget, for taxes payable in the following year. 
171.36     (b) Except as provided in paragraph (g), between 
172.1   November 29 19 and December 20 10, the governing bodies of a 
172.2   city that has a population over 500, county, metropolitan 
172.3   special taxing districts as defined in subdivision 3, paragraph 
172.4   (i), and regional library districts shall each hold an initial 
172.5   public hearing to discuss and seek public comment on its final 
172.6   budget and property tax levy for taxes payable in the following 
172.7   year, and the governing body of the school district shall hold 
172.8   an initial public hearing to review its current budget and 
172.9   proposed property tax levy for taxes payable in the following 
172.10  year.  The metropolitan special taxing districts shall be 
172.11  required to hold only a single joint initial public hearing, the 
172.12  location of which will be determined by the affected 
172.13  metropolitan agencies. 
172.14     (c) The initial hearing must be held after 5:00 p.m. if 
172.15  scheduled on a day other than Saturday.  No initial hearing may 
172.16  be held on a Sunday.  
172.17     (d) At the initial hearing under this subdivision, the 
172.18  percentage increase in property taxes proposed by the taxing 
172.19  authority, if any, and the specific purposes for which property 
172.20  tax revenues are being increased must be discussed.  During the 
172.21  discussion, the governing body shall hear comments regarding a 
172.22  proposed increase and explain the reasons for the proposed 
172.23  increase.  The public shall be allowed to speak and to ask 
172.24  questions.  At the public hearing, the school district must also 
172.25  provide and discuss information on the distribution of its 
172.26  revenues by revenue source, and the distribution of its spending 
172.27  by program area.  
172.28     (e) If the initial hearing is not completed on its 
172.29  scheduled date, the taxing authority must announce, prior to 
172.30  adjournment of the hearing, the date, time, and place for the 
172.31  continuation of the hearing.  The continuation hearing must be 
172.32  held at least five three business days but no more than 14 seven 
172.33  business days after the initial hearing.  A continuation hearing 
172.34  may not be held later than December 20 10 except as provided in 
172.35  paragraphs (f) and (g).  A continuation hearing must be held 
172.36  after 5:00 p.m. if scheduled on a day other than Saturday.  No 
173.1   continuation hearing may be held on a Sunday. 
173.2      (f) The governing body of a county shall hold its initial 
173.3   hearing on the first Thursday third Tuesday in December November 
173.4   each year, and may hold additional initial hearings on other 
173.5   dates before December 20 10 if necessary for the convenience of 
173.6   county residents.  If the county needs a continuation of its 
173.7   hearing, the continuation hearing shall be held on the third 
173.8   Tuesday first Thursday in December.  If the third Tuesday in 
173.9   December falls on December 21, the county's continuation hearing 
173.10  shall be held on Monday, December 20.  
173.11     (g) The metropolitan special taxing districts shall hold a 
173.12  joint initial public hearing on the first Wednesday of 
173.13  December.  A continuation hearing, if necessary, shall be held 
173.14  on the second Wednesday of December even if that second 
173.15  Wednesday is after December 10. 
173.16     (h) The county auditor shall provide for the coordination 
173.17  of initial and continuation hearing dates for all school 
173.18  districts and cities within the county to prevent conflicts 
173.19  under clauses (i) and (j). 
173.20     (i) By August 10, each school board and the board of the 
173.21  regional library district shall certify to the county auditors 
173.22  of the counties in which the school district or regional library 
173.23  district is located the dates on which it elects to hold its 
173.24  initial hearing and any continuation hearing.  If a school board 
173.25  or regional library district does not certify these dates by 
173.26  August 10, the auditor will assign the initial and continuation 
173.27  hearing dates.  The dates elected or assigned must not conflict 
173.28  with the initial and continuation hearing dates of the county or 
173.29  the metropolitan special taxing districts.  
173.30     (j) By August 20, the county auditor shall notify the 
173.31  clerks of the cities within the county of the dates on which 
173.32  school districts and regional library districts have elected to 
173.33  hold their initial and continuation hearings.  At the time a 
173.34  city certifies its proposed levy under subdivision 1 it shall 
173.35  certify the dates on which it elects to hold its initial hearing 
173.36  and any continuation hearing.  Until September 15, the first and 
174.1   second Mondays fourth Monday of November and the first Monday of 
174.2   December are reserved for the use of the cities.  If a city does 
174.3   not certify its hearing dates by September 15, the auditor shall 
174.4   assign the initial and continuation hearing dates.  The dates 
174.5   elected or assigned for the initial hearing must not conflict 
174.6   with the initial hearing dates of the county, metropolitan 
174.7   special taxing districts, regional library districts, or school 
174.8   districts within which the city is located.  To the extent 
174.9   possible, the dates of the city's continuation hearing should 
174.10  not conflict with the continuation hearing dates of the county, 
174.11  metropolitan special taxing districts, regional library 
174.12  districts, or school districts within which the city is 
174.13  located.  This paragraph does not apply to cities of 500 
174.14  population or less. 
174.15     (k) The county initial hearing date and the city, 
174.16  metropolitan special taxing district, regional library district, 
174.17  and school district initial hearing dates must be designated on 
174.18  the notices required under subdivision 3.  The continuation 
174.19  hearing dates need not be stated on the notices.  
174.20     (l) At a subsequent hearing, each county, school district, 
174.21  city over 500 population, and metropolitan special taxing 
174.22  district may amend its proposed property tax levy and must adopt 
174.23  a final property tax levy.  Each county, city over 500 
174.24  population, and metropolitan special taxing district may also 
174.25  amend its proposed budget and must adopt a final budget at the 
174.26  subsequent hearing.  The final property tax levy must be adopted 
174.27  prior to adopting the final budget.  A school district is not 
174.28  required to adopt its final budget at the subsequent hearing.  
174.29  The subsequent hearing of a taxing authority must be held on a 
174.30  date subsequent to the date of the taxing authority's initial 
174.31  public hearing.  If a continuation hearing is held, the 
174.32  subsequent hearing must be held either immediately following the 
174.33  continuation hearing or on a date subsequent to the continuation 
174.34  hearing.  The subsequent hearing may be held at a regularly 
174.35  scheduled board or council meeting or at a special meeting 
174.36  scheduled for the purposes of the subsequent hearing.  The 
175.1   subsequent hearing of a taxing authority does not have to be 
175.2   coordinated by the county auditor to prevent a conflict with an 
175.3   initial hearing, a continuation hearing, or a subsequent hearing 
175.4   of any other taxing authority.  All subsequent hearings must be 
175.5   held prior to five working days after December 20 of the levy 
175.6   year.  The date, time, and place of the subsequent hearing must 
175.7   be announced at the initial public hearing or at the 
175.8   continuation hearing. 
175.9      (m) The property tax levy certified under section 275.07 by 
175.10  a city of any population, county, metropolitan special taxing 
175.11  district, regional library district, or school district must not 
175.12  exceed the proposed levy determined under subdivision 1, except 
175.13  by an amount up to the sum of the following amounts: 
175.14     (1) the amount of a school district levy whose voters 
175.15  approved a referendum to increase taxes under section 123B.63, 
175.16  subdivision 3, or 126C.17, subdivision 9, after the proposed 
175.17  levy was certified; 
175.18     (2) the amount of a city or county levy approved by the 
175.19  voters after the proposed levy was certified; 
175.20     (3) the amount of a levy to pay principal and interest on 
175.21  bonds approved by the voters under section 475.58 after the 
175.22  proposed levy was certified; 
175.23     (4) the amount of a levy to pay costs due to a natural 
175.24  disaster occurring after the proposed levy was certified, if 
175.25  that amount is approved by the commissioner of revenue under 
175.26  subdivision 6a; 
175.27     (5) the amount of a levy to pay tort judgments against a 
175.28  taxing authority that become final after the proposed levy was 
175.29  certified, if the amount is approved by the commissioner of 
175.30  revenue under subdivision 6a; 
175.31     (6) the amount of an increase in levy limits certified to 
175.32  the taxing authority by the commissioner of children, families, 
175.33  and learning or the commissioner of revenue after the proposed 
175.34  levy was certified; and 
175.35     (7) the amount required under section 126C.55. 
175.36     (n) This subdivision does not apply to towns and, special 
176.1   taxing districts other than regional library districts and 
176.2   metropolitan special taxing districts, cities under 500 
176.3   population, and any counties or cities over 500 population whose 
176.4   proposed property tax levy is less than or equal to its levy 
176.5   certified under section 275.07, subdivision 1, for the previous 
176.6   year. 
176.7      (o) Notwithstanding the requirements of this section, the 
176.8   employer is required to meet and negotiate over employee 
176.9   compensation as provided for in chapter 179A.  
176.10     <b>EFFECTIVE DATE:</b>  This section is effective for public 
176.11  hearings held in 2000 and thereafter, for levies payable in 2001 
176.12  and thereafter. 
176.13     Sec. 4.  Minnesota Statutes 1998, section 275.065, 
176.14  subdivision 8, is amended to read: 
176.15     Subd. 8.  [HEARING.] Notwithstanding any other provision of 
176.16  law, Ramsey county, the city of St. Paul, and independent school 
176.17  district No. 625 are authorized to and shall hold their initial 
176.18  public hearing jointly.  The hearing must be held on the second 
176.19  fourth Tuesday of December November each year.  The 
176.20  advertisement required in subdivision 5a may be a joint 
176.21  advertisement.  The hearing is otherwise subject to the 
176.22  requirements of this section. 
176.23     Ramsey county is authorized to hold an additional initial 
176.24  hearing or hearings as provided under this section, provided 
176.25  that any additional hearings must not conflict with the initial 
176.26  or continuation hearing dates of the other taxing districts.  
176.27  However, if Ramsey county elects not to hold such additional 
176.28  initial hearing or hearings, the joint initial hearing required 
176.29  by this subdivision must be held in a St. Paul location 
176.30  convenient to residents of Ramsey county. 
176.31     <b>EFFECTIVE DATE:</b>  This section is effective for hearings 
176.32  held in 2000 and thereafter, for taxes payable in 2001 and 
176.33  thereafter.  
176.34     Sec. 5.  Minnesota Statutes 1998, section 275.065, is 
176.35  amended by adding a subdivision to read: 
176.36     Subd. 9.  [REVERSE REFERENDUM.] (a) The reverse referendum 
177.1   procedure in this subdivision applies only in the case of a 
177.2   county, or a city that has a population of more than 2,500, that 
177.3   has adopted a property tax levy increase over the levy amount 
177.4   certified under section 275.07, subdivision 1, for the previous 
177.5   year that exceeds the greater of (1) two percent, or (2) a 
177.6   percentage increase equal to the sum of the percentage increase 
177.7   in the implicit price deflator and the percentage increase in 
177.8   the number of households for that county or city, as calculated 
177.9   under section 275.71, subdivision 3, clauses (1) and (2), for 
177.10  taxes levied in the current year.  By September 1 the 
177.11  commissioner of revenue shall certify to the county the 
177.12  percentage increase allowed for each local government located in 
177.13  the county that is subject to this subdivision. 
177.14     (b) If within 14 calendar days after the public hearing and 
177.15  adoption of a levy under subdivision 6, a petition signed by 
177.16  voters equal in number to five percent of the registered voters 
177.17  in the county or city in the last general election requesting a 
177.18  referendum on the levy increase is filed with the county 
177.19  auditor, or the city clerk, the levy increase shall not be 
177.20  effective until it has been submitted to the voters at a special 
177.21  election to be held on the last Tuesday in January, and a 
177.22  majority of votes cast on the question of approving the levy 
177.23  increase are in the affirmative.  The commissioner of revenue 
177.24  shall prepare the form of the question to be presented at the 
177.25  referendum, which shall reference only the amount of the 
177.26  property tax levy increase over the previous year. 
177.27     (c) The county or city shall notify the county auditor of 
177.28  the results of the referendum.  If the majority of the votes 
177.29  cast on the question are in the affirmative, the levy adopted 
177.30  under subdivision 6 shall be certified to the county auditor 
177.31  under section 275.07, subdivision 1.  If the majority of the 
177.32  votes cast on the question are in the negative, an amount equal 
177.33  to the preceding year's levy multiplied by one plus the 
177.34  percentage increase allowed under paragraph (a) shall be 
177.35  certified to the county auditor for purposes of section 275.07, 
177.36  subdivision 1. 
178.1      (d) For purposes of this subdivision, "property tax levy" 
178.2   does not include a levy to pay general obligation bonds, as 
178.3   certified to the county under section 475.61 or other applicable 
178.4   law. 
178.5      <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
178.6   payable in 2001 and thereafter. 
178.7      Sec. 6.  Minnesota Statutes 1998, section 275.07, 
178.8   subdivision 1, is amended to read: 
178.9      Subdivision 1.  [CERTIFICATION OF LEVY.] Except as 
178.10  otherwise provided in this subdivision, the taxes voted by 
178.11  cities, counties, school districts, and special districts shall 
178.12  be certified by the proper authorities to the county auditor on 
178.13  or before five working days after December 20 in each year.  A 
178.14  county or city to which the reverse referendum provisions under 
178.15  section 275.065, subdivision 9, apply shall certify the taxes to 
178.16  the county auditor by January 5, except that any county or city 
178.17  for which a petition has been filed under section 275.065, 
178.18  subdivision 9, must certify the day immediately following the 
178.19  election under that section.  A town must certify the levy 
178.20  adopted by the town board to the county auditor by September 15 
178.21  each year.  If the town board modifies the levy at a special 
178.22  town meeting after September 15, the town board must recertify 
178.23  its levy to the county auditor on or before five working days 
178.24  after December 20.  The taxes certified shall not be reduced by 
178.25  the county auditor by the aid received under section 273.1398, 
178.26  subdivision 2, but shall be reduced by the county auditor by the 
178.27  aid received under section 273.1398, subdivision 3.  If a city, 
178.28  town, county, school district, or special district fails to 
178.29  certify its levy by that date, its levy shall be the amount 
178.30  levied by it for the preceding year. 
178.31     <b>EFFECTIVE DATE:</b>  This section is effective for property 
178.32  taxes payable in 2001 and thereafter. 
178.33     Sec. 7.  [DEFINITION OF A PROPERTY TAX LEVY INCREASE FOR 
178.34  TAXES LEVIED IN 2000.] 
178.35     For taxes levied in 2000, payable in 2001 only, an increase 
178.36  in a proposed or certified property tax levy for a city shall 
179.1   not be considered an increase under sections 1 to 6 provided 
179.2   that the increase in levy does not exceed the reduction in the 
179.3   city's homestead and agricultural credit aid for aids payable in 
179.4   2001 under article 5, section 55, paragraph (a). 
179.5                              ARTICLE 8 
179.6                         SALES AND USE TAXES 
179.7      Section 1.  Minnesota Statutes 1999 Supplement, section 
179.8   289A.20, subdivision 4, is amended to read: 
179.9      Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
179.10  chapter 297A are due and payable to the commissioner monthly on 
179.11  or before the 20th day of the month following the month in which 
179.12  the taxable event occurred, or following another reporting 
179.13  period as the commissioner prescribes or as allowed under 
179.14  section 289A.18, subdivision 4, paragraph (f), except that use 
179.15  taxes due on an annual use tax return as provided under section 
179.16  289A.11, subdivision 1, are payable by April 15 following the 
179.17  close of the calendar year. 
179.18     (b) A vendor having a liability of $120,000 or more during 
179.19  a fiscal year ending June 30 must remit the June liability for 
179.20  the next year in the following manner: 
179.21     (1) Two business days before June 30 of the year, the 
179.22  vendor must remit 75 percent of the estimated June liability to 
179.23  the commissioner.  
179.24     (2) On or before August 14 of the year, the vendor must pay 
179.25  any additional amount of tax not remitted in June. 
179.26     (c) A vendor having a liability of $120,000 or more during 
179.27  a fiscal year ending June 30 must remit all liabilities on 
179.28  returns due for periods beginning in the subsequent calendar 
179.29  year by means of a funds transfer as defined in section 
179.30  336.4A-104, paragraph (a).  The funds transfer payment date, as 
179.31  defined in section 336.4A-401, must be on or before the 14th day 
179.32  of the month following the month in which the taxable event 
179.33  occurred, or on or before the 14th day of the month following 
179.34  the month in which the sale is reported under section 289A.18, 
179.35  subdivision 4, except for 75 percent of the estimated June 
179.36  liability, which is due two business days before June 30.  The 
180.1   remaining amount of the June liability is due on August 14.  If 
180.2   the date the tax is due is not a funds transfer business day, as 
180.3   defined in section 336.4A-105, paragraph (a), clause (4), the 
180.4   payment date must be on or before the funds transfer business 
180.5   day next following the date the tax is due. 
180.6      (d) If the vendor required to remit by electronic funds 
180.7   transfer as provided in paragraph (c) is unable due to 
180.8   reasonable cause to determine the actual sales and use tax due 
180.9   on or before the due date for payment, the vendor may remit an 
180.10  estimate of the tax owed using one of the following options: 
180.11     (1) 100 percent of the tax reported on the previous month's 
180.12  sales and use tax return; 
180.13     (2) 100 percent of the tax reported on the sales and use 
180.14  tax return for the same month in the previous calendar year; or 
180.15     (3) 95 percent of the actual tax due. 
180.16     Any additional amount of tax that is not remitted on or 
180.17  before the due date for payment, must be remitted with the 
180.18  return.  If a vendor fails to remit the actual liability or does 
180.19  not remit using one of the estimate options by the due date for 
180.20  payment, the vendor must remit actual liability as provided in 
180.21  paragraph (c) in all subsequent periods.  This paragraph does 
180.22  not apply to the June sales and use tax liability. 
180.23     <b>EFFECTIVE DATE:</b>  This section is effective the day 
180.24  following final enactment.  
180.25     Sec. 2.  Minnesota Statutes 1998, section 289A.60, 
180.26  subdivision 14, is amended to read: 
180.27     Subd. 14.  [PENALTY FOR USE OF SALES TAX EXEMPTION 
180.28  CERTIFICATES TO EVADE TAX.] A person who uses an exemption 
180.29  certificate to buy property or purchase services that will be 
180.30  used for purposes other than the exemption claimed, with the 
180.31  intent to evade payment of sales tax to the seller, is subject 
180.32  to a penalty of $100 for each transaction where that use of an 
180.33  exemption certificate has occurred.  
180.34     <b>EFFECTIVE DATE:</b>  This section is effective for exemption 
180.35  certificates used on or after July 1, 2000.  
180.36     Sec. 3.  Minnesota Statutes 1998, section 297A.01, 
181.1   subdivision 13, is amended to read: 
181.2      Subd. 13.  "Agricultural production," as used in section 
181.3   297A.25, subdivision 9, includes, but is not limited to, 
181.4   horticulture; floriculture; maple syrup harvesting; raising of 
181.5   pets, fur bearing animals, research animals, farmed cervidae, as 
181.6   defined in section 17.451, subdivision 2, llamas, as defined in 
181.7   section 17.455, subdivision 2, ratitae, as defined in section 
181.8   17.453, subdivision 3, and horses. 
181.9      <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
181.10  purchases made after June 30, 2000. 
181.11     Sec. 4.  Minnesota Statutes 1998, section 297A.01, 
181.12  subdivision 15, is amended to read: 
181.13     Subd. 15.  "Farm machinery" means new or used machinery, 
181.14  equipment, implements, accessories, and contrivances used 
181.15  directly and principally in the production for sale, but not 
181.16  including the processing, of livestock, dairy animals, dairy 
181.17  products, poultry and poultry products, fruits, 
181.18  vegetables, trees and shrubs including nursery stock, forage, 
181.19  grains and bees and apiary products.  "Farm machinery" includes: 
181.20     (1) machinery for the preparation, seeding or cultivation 
181.21  of soil for growing agricultural crops and sod, harvesting and 
181.22  threshing of agricultural products, harvesting or mowing of sod, 
181.23  and certain machinery for dairy, livestock and poultry farms; 
181.24     (2) barn cleaners, milking systems, grain dryers, automatic 
181.25  feeding systems and similar installations, whether or not the 
181.26  equipment is installed by the seller and becomes part of the 
181.27  real property; 
181.28     (3) irrigation equipment sold for exclusively agricultural 
181.29  use, including pumps, pipe fittings, valves, sprinklers and 
181.30  other equipment necessary to the operation of an irrigation 
181.31  system when sold as part of an irrigation system, whether or not 
181.32  the equipment is installed by the seller and becomes part of the 
181.33  real property; 
181.34     (4) logging equipment, including chain saws used for 
181.35  commercial logging; 
181.36     (5) fencing used for the containment of farmed cervidae, as 
182.1   defined in section 17.451, subdivision 2; 
182.2      (6) primary and backup generator units used to generate 
182.3   electricity for the purpose of operating farm machinery, as 
182.4   defined in this subdivision, or providing light or space heating 
182.5   necessary for the production of livestock, dairy animals, dairy 
182.6   products, or poultry and poultry products; and 
182.7      (7) aquaculture production equipment as defined in 
182.8   subdivision 19; and 
182.9      (8) equipment used for maple syrup harvesting.  
182.10     Repair or replacement parts for farm machinery shall not be 
182.11  included in the definition of farm machinery.  
182.12     Tools, shop equipment, grain bins, feed bunks, fencing 
182.13  material except fencing material covered by clause (5), 
182.14  communication equipment and other farm supplies shall not be 
182.15  considered to be farm machinery.  "Farm machinery" does not 
182.16  include motor vehicles taxed under chapter 297B, snowmobiles, 
182.17  snow blowers, lawn mowers except those used in the production of 
182.18  sod for sale, garden-type tractors or garden tillers and the 
182.19  repair and replacement parts for those vehicles and machines. 
182.20     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
182.21  purchases made after June 30, 2000. 
182.22     Sec. 5.  Minnesota Statutes 1998, section 297A.01, 
182.23  subdivision 16, is amended to read: 
182.24     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
182.25  machinery and equipment purchased or leased for use in this 
182.26  state and used by the purchaser or lessee primarily for 
182.27  manufacturing, fabricating, mining, or refining tangible 
182.28  personal property to be sold ultimately at retail and for 
182.29  electronically transmitting results retrieved by a customer of 
182.30  an on-line computerized data retrieval system.  Capital 
182.31  equipment also means equipment used by health clubs, as defined 
182.32  in subdivision 23, to the extent they are used directly in 
182.33  providing opportunities for exercise. 
182.34     (b) Capital equipment includes all machinery and equipment 
182.35  that is essential to the integrated production process.  Capital 
182.36  equipment includes, but is not limited to: 
183.1      (1) machinery and equipment used or required to operate, 
183.2   control, or regulate the production equipment; 
183.3      (2) machinery and equipment used for research and 
183.4   development, design, quality control, and testing activities; 
183.5      (3) environmental control devices that are used to maintain 
183.6   conditions such as temperature, humidity, light, or air pressure 
183.7   when those conditions are essential to and are part of the 
183.8   production process; 
183.9      (4) materials and supplies necessary to construct and 
183.10  install machinery or equipment; 
183.11     (5) repair and replacement parts, including accessories, 
183.12  whether purchased as spare parts, repair parts, or as upgrades 
183.13  or modifications to machinery or equipment; 
183.14     (6) materials used for foundations that support machinery 
183.15  or equipment; 
183.16     (7) materials used to construct and install special purpose 
183.17  buildings used in the production process; or 
183.18     (8) ready-mixed concrete trucks in which the ready-mixed 
183.19  concrete is mixed as part of the delivery process. 
183.20     (c) Capital equipment does not include the following: 
183.21     (1) motor vehicles taxed under chapter 297B; 
183.22     (2) machinery or equipment used to receive or store raw 
183.23  materials; 
183.24     (3) building materials; 
183.25     (4) machinery or equipment used for nonproduction purposes, 
183.26  including, but not limited to, the following:  machinery and 
183.27  equipment used for plant security, fire prevention, first aid, 
183.28  and hospital stations; machinery and equipment used in support 
183.29  operations or for administrative purposes; machinery and 
183.30  equipment used solely for pollution control, prevention, or 
183.31  abatement; and machinery and equipment used in plant cleaning, 
183.32  disposal of scrap and waste, plant communications, space 
183.33  heating, lighting, or safety; 
183.34     (5) "farm machinery" as defined by subdivision 15, and 
183.35  "aquaculture production equipment" as defined by subdivision 19; 
183.36  or 
184.1      (6) any other item that is not essential to the integrated 
184.2   process of manufacturing, fabricating, mining, or refining. 
184.3      (d) For purposes of this subdivision: 
184.4      (1) "Equipment" means independent devices or tools separate 
184.5   from machinery but essential to an integrated production 
184.6   process, including computers and software, used in operating, 
184.7   controlling, or regulating machinery and equipment; and any 
184.8   subunit or assembly comprising a component of any machinery or 
184.9   accessory or attachment parts of machinery, such as tools, dies, 
184.10  jigs, patterns, and molds. 
184.11     (2) "Fabricating" means to make, build, create, produce, or 
184.12  assemble components or property to work in a new or different 
184.13  manner. 
184.14     (3) "Machinery" means mechanical, electronic, or electrical 
184.15  devices, including computers and software, that are purchased or 
184.16  constructed to be used for the activities set forth in paragraph 
184.17  (a), beginning with the removal of raw materials from inventory 
184.18  through the completion of the product, including packaging of 
184.19  the product. 
184.20     (4) "Manufacturing" means an operation or series of 
184.21  operations where raw materials are changed in form, composition, 
184.22  or condition by machinery and equipment and which results in the 
184.23  production of a new article of tangible personal property.  For 
184.24  purposes of this subdivision, "manufacturing" includes the 
184.25  generation of electricity or steam to be sold at retail. 
184.26     (5) "Mining" means the extraction of minerals, ores, stone, 
184.27  and peat. 
184.28     (6) "On-line data retrieval system" means a system whose 
184.29  cumulation of information is equally available and accessible to 
184.30  all its customers. 
184.31     (7) "Pollution control equipment" means machinery and 
184.32  equipment used to eliminate, prevent, or reduce pollution 
184.33  resulting from an activity described in paragraph (a). 
184.34     (8) "Primarily" means machinery and equipment used 50 
184.35  percent or more of the time in an activity described in 
184.36  paragraph (a). 
185.1      (9) "Refining" means the process of converting a natural 
185.2   resource to a product, including the treatment of water to be 
185.3   sold at retail. 
185.4      (e) For purposes of this subdivision the requirement that 
185.5   the machinery or equipment "must be used by the purchaser or 
185.6   lessee" means that the person who purchases or leases the 
185.7   machinery or equipment must be the one who uses it for the 
185.8   qualifying purpose.  When a contractor buys and installs 
185.9   machinery or equipment as part of an improvement to real 
185.10  property, only the contractor is considered the purchaser. 
185.11     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
185.12  purchases made after June 30, 2000. 
185.13     Sec. 6.  Minnesota Statutes 1998, section 297A.01, is 
185.14  amended by adding a subdivision to read: 
185.15     Subd. 23.  [HEALTH CLUB.] "Health club" means an 
185.16  organization, whether or not incorporated, whose primary 
185.17  business purpose is to provide access to equipment and services 
185.18  for aerobic and anaerobic exercise for the promotion of health 
185.19  and fitness which is not member governed or member controlled. 
185.20     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
185.21  purchases made after June 30, 2000. 
185.22     Sec. 7.  Minnesota Statutes 1998, section 297A.15, is 
185.23  amended by adding a subdivision to read: 
185.24     Subd. 8.  [REFUND; APPROPRIATION; AGRICULTURAL PROCESSING 
185.25  FACILITIES.] The tax on the gross receipts from the sale of 
185.26  items exempt under section 297A.25, subdivision 90 or 91, must 
185.27  be imposed and collected as if the sale were taxable and the 
185.28  rate under section 297A.02, subdivision 1, applied. 
185.29     Upon application by the owner of the property on forms 
185.30  prescribed by the commissioner, a refund equal to the tax paid 
185.31  on the gross receipts of the building materials and equipment 
185.32  must be paid to the owner.  In the case of materials and 
185.33  equipment in which the tax was paid by a contractor, application 
185.34  must be made by the owner for the sales tax paid by the 
185.35  contractor.  The application must include sufficient information 
185.36  to permit the commissioner to verify the sales tax paid for the 
186.1   project.  The contractor must furnish to the owner a statement 
186.2   of the cost of building materials and equipment and the sales 
186.3   taxes paid on these items.  The amount required to make the 
186.4   refunds is annually appropriated to the commissioner.  Interest 
186.5   must be paid on the refund at the rate in section 270.76 from 60 
186.6   days after the date the refund claim is filed with the 
186.7   commissioner. 
186.8      <b>EFFECTIVE DATE:</b>  This section is effective for applications 
186.9   for refund made after June 30, 2000. 
186.10     Sec. 8.  Minnesota Statutes 1998, section 297A.25, 
186.11  subdivision 5, is amended to read: 
186.12     Subd. 5.  [OUTSTATE TRANSPORT OR DELIVERY.] The gross 
186.13  receipts from the following sales of, and storage, use, or 
186.14  consumption of, tangible personal property are exempt:  
186.15     (1) property which, without intermediate use, is shipped or 
186.16  transported outside Minnesota by the purchaser and thereafter 
186.17  used in a trade or business or is stored, processed, fabricated 
186.18  or manufactured into, attached to or incorporated into other 
186.19  tangible personal property transported or shipped outside 
186.20  Minnesota and thereafter used in a trade or business outside 
186.21  Minnesota, and which is not thereafter returned to a point 
186.22  within Minnesota, except in the course of interstate commerce 
186.23  (storage shall not constitute intermediate use); provided that 
186.24  the property is not subject to tax in that state or country to 
186.25  which it is transported for storage or use and provided further 
186.26  that sales of tangible personal property to be used in other 
186.27  states or countries as part of a maintenance contract shall be 
186.28  specifically exempt; or 
186.29     (2) property which the seller delivers to a common carrier 
186.30  for delivery outside Minnesota, places in the United States mail 
186.31  or parcel post directed to the purchaser outside Minnesota, or 
186.32  delivers to the purchaser outside Minnesota by means of the 
186.33  seller's own delivery vehicles, and which is not thereafter 
186.34  returned to a point within Minnesota, except in the course of 
186.35  interstate commerce; or 
186.36     (3) aircraft, as defined in section 360.511 and approved by 
187.1   the Federal Aviation Administration, and which the seller 
187.2   delivers to a purchaser outside Minnesota or which, without 
187.3   intermediate use, is shipped or transported outside Minnesota by 
187.4   the purchaser, but only if the purchaser is not a resident of 
187.5   Minnesota and provided that the aircraft is not thereafter 
187.6   returned to a point within Minnesota, except in the course of 
187.7   interstate commerce or isolated and occasional use and will be 
187.8   registered in another state or country upon its removal from 
187.9   Minnesota; this exemption applies even if the purchaser takes 
187.10  possession of the aircraft in Minnesota and uses the aircraft in 
187.11  the state exclusively for training purposes for a period not to 
187.12  exceed ten days prior to removing the aircraft from this state. 
187.13     <b>EFFECTIVE DATE:</b>  This section is effective for purchases 
187.14  made after the date of final enactment. 
187.15     Sec. 9.  Minnesota Statutes 1999 Supplement, section 
187.16  297A.25, subdivision 9, is amended to read: 
187.17     Subd. 9.  [MATERIALS CONSUMED IN PRODUCTION.] The gross 
187.18  receipts from the sale of and the storage, use, or consumption 
187.19  of all materials, including chemicals, fuels, petroleum 
187.20  products, lubricants, packaging materials, including returnable 
187.21  containers used in packaging food and beverage products, feeds, 
187.22  seeds, fertilizers, electricity, gas and steam, used or consumed 
187.23  in agricultural or industrial production of personal property 
187.24  intended to be sold ultimately at retail, whether or not the 
187.25  item so used becomes an ingredient or constituent part of the 
187.26  property produced are exempt.  Seeds, trees, fertilizers, and 
187.27  herbicides purchased for use by farmers in the Conservation 
187.28  Reserve Program under United States Code, title 16, section 
187.29  590h, as amended through December 31, 1991, the Integrated Farm 
187.30  Management Program under section 1627 of Public Law Number 
187.31  101-624, the Wheat and Feed Grain Programs under sections 301 to 
187.32  305 and 401 to 405 of Public Law Number 101-624, and the 
187.33  conservation reserve program under sections 103F.505 to 
187.34  103F.531, are included in this exemption.  Sales to a 
187.35  veterinarian of materials used or consumed in the care, 
187.36  medication, and treatment of horses and agricultural production 
188.1   animals are exempt under this subdivision.  Chemicals used for 
188.2   cleaning food processing machinery and equipment are included in 
188.3   this exemption.  Materials, including chemicals, fuels, and 
188.4   electricity purchased by persons engaged in agricultural or 
188.5   industrial production to treat waste generated as a result of 
188.6   the production process are included in this exemption.  Such 
188.7   production shall include, but is not limited to, research, 
188.8   development, design or production of any tangible personal 
188.9   property, manufacturing, processing (other than by restaurants 
188.10  and consumers) of agricultural products whether vegetable or 
188.11  animal, commercial fishing, refining, smelting, reducing, 
188.12  brewing, distilling, printing, mining, quarrying, lumbering, 
188.13  generating electricity and the production of road building 
188.14  materials.  Such production shall not include painting, 
188.15  cleaning, repairing or similar processing of property except as 
188.16  part of the original manufacturing process.  Machinery, 
188.17  equipment, implements, tools, accessories, appliances, 
188.18  contrivances, furniture and fixtures, used in such production 
188.19  and fuel, electricity, gas or steam used for space heating or 
188.20  lighting, are not included within this exemption; however, 
188.21  accessory tools, equipment and other short lived items, which 
188.22  are separate detachable units used in producing a direct effect 
188.23  upon the product, where such items have an ordinary useful life 
188.24  of less than 12 months, are included within the exemption 
188.25  provided herein.  The following materials, tools, and equipment 
188.26  used in metalcasting are exempt under this subdivision: 
188.27  crucibles, thermocouple protection sheaths and tubes, stalk 
188.28  tubes, refractory materials, molten metal filters and filter 
188.29  boxes, and degassing lances, and base blocks.  Electricity used 
188.30  to make snow for outdoor use for ski hills, ski slopes, or ski 
188.31  trails is included in this exemption.  Petroleum and special 
188.32  fuels used in producing or generating power for propelling 
188.33  ready-mixed concrete trucks on the public highways of this state 
188.34  are not included in this exemption. 
188.35     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
188.36  purchases made after June 30, 2000. 
189.1      Sec. 10.  Minnesota Statutes 1999 Supplement, section 
189.2   297A.25, subdivision 11, is amended to read: 
189.3      Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
189.4   all sales, including sales in which title is retained by a 
189.5   seller or a vendor or is assigned to a third party under an 
189.6   installment sale or lease purchase agreement under section 
189.7   465.71, of tangible personal property to, and all storage, use 
189.8   or consumption of such property by, the United States and its 
189.9   agencies and instrumentalities, the University of Minnesota, 
189.10  state universities, community colleges, technical colleges, 
189.11  state academies, the Perpich center for arts education, an 
189.12  instrumentality of a political subdivision that is accredited as 
189.13  an optional/special function school by the North Central 
189.14  Association of Colleges and Schools, school districts, public 
189.15  libraries, public library systems, multicounty, multitype 
189.16  library systems as defined in section 134.001, county law 
189.17  libraries under chapter 134A, state agency libraries, the state 
189.18  library under section 480.09, and the legislative reference 
189.19  library are exempt. 
189.20     As used in this subdivision, "school districts" means 
189.21  public school entities and districts of every kind and nature 
189.22  organized under the laws of the state of Minnesota, including, 
189.23  without limitation, school districts, intermediate school 
189.24  districts, education districts, service cooperatives, secondary 
189.25  vocational cooperative centers, special education cooperatives, 
189.26  joint purchasing cooperatives, telecommunication cooperatives, 
189.27  regional management information centers, and any instrumentality 
189.28  of a school district, as defined in section 471.59. 
189.29     Sales exempted by this subdivision include sales under 
189.30  section 297A.01, subdivision 3, paragraph (f).  
189.31     Sales to hospitals and nursing homes owned and operated by 
189.32  political subdivisions of the state are exempt under this 
189.33  subdivision.  
189.34     Sales of supplies and equipment used in the operation of an 
189.35  ambulance service owned and operated by a political subdivision 
189.36  of the state are exempt under this subdivision provided that the 
190.1   supplies and equipment are used in the course of providing 
190.2   medical care.  Sales to a political subdivision of repair and 
190.3   replacement parts for emergency rescue vehicles and fire trucks 
190.4   and apparatus are exempt under this subdivision.  
190.5      Sales to a political subdivision of machinery and 
190.6   equipment, except for motor vehicles, used directly for mixed 
190.7   municipal solid waste management services at a solid waste 
190.8   disposal facility as defined in section 115A.03, subdivision 10, 
190.9   are exempt under this subdivision.  
190.10     Sales to political subdivisions of chore and homemaking 
190.11  services to be provided to elderly or disabled individuals are 
190.12  exempt. 
190.13     Sales to a county or town of gravel and of machinery, 
190.14  equipment, and accessories, except motor vehicles, used 
190.15  exclusively for road and bridge maintenance, and leases of motor 
190.16  vehicles exempt from tax under section 297B.03, clause (10), are 
190.17  exempt. 
190.18     Sales of telephone services to the department of 
190.19  administration that are used to provide telecommunications 
190.20  services through the intertechnologies revolving fund are exempt 
190.21  under this subdivision. 
190.22     This exemption shall not apply to building, construction or 
190.23  reconstruction materials purchased by a contractor or a 
190.24  subcontractor as a part of a lump-sum contract or similar type 
190.25  of contract with a guaranteed maximum price covering both labor 
190.26  and materials for use in the construction, alteration, or repair 
190.27  of a building or facility except for facilities the construction 
190.28  materials of which are exempt under subdivision 65.  This 
190.29  exemption does not apply to construction materials purchased by 
190.30  tax exempt entities or their contractors to be used in 
190.31  constructing buildings or facilities which will not be used 
190.32  principally by the tax exempt entities. 
190.33     This exemption does not apply to the leasing of a motor 
190.34  vehicle as defined in section 297B.01, subdivision 5, except for 
190.35  leases entered into by the United States or its agencies or 
190.36  instrumentalities. 
191.1      The tax imposed on sales to political subdivisions of the 
191.2   state under this section applies to all political subdivisions 
191.3   other than those explicitly exempted under this subdivision, 
191.4   notwithstanding section 115A.69, subdivision 6, 116A.25, 
191.5   360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
191.6   469.127, 473.448, 473.545, or 473.608 or any other law to the 
191.7   contrary enacted before 1992. 
191.8      Sales exempted by this subdivision include sales made to 
191.9   other states or political subdivisions of other states, if the 
191.10  sale would be exempt from taxation if it occurred in that state, 
191.11  but do not include sales under section 297A.01, subdivision 3, 
191.12  paragraphs (c) and (e). 
191.13     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
191.14  purchases occurring after June 30, 2000. 
191.15     Sec. 11.  Minnesota Statutes 1998, section 297A.25, 
191.16  subdivision 16, is amended to read: 
191.17     Subd. 16.  [SALES TO NONPROFIT GROUPS.] The gross receipts 
191.18  from the sale of tangible personal property to, and the storage, 
191.19  use or other consumption of such property by, any corporation, 
191.20  society, association, foundation, or institution organized and 
191.21  operated exclusively for charitable, religious, or educational 
191.22  purposes if the property purchased is to be used in the 
191.23  performance of charitable, religious, or educational functions, 
191.24  or any senior citizen group or association of groups that in 
191.25  general limits membership to persons who are either (1) age 55 
191.26  or older, or (2) physically disabled, and is organized and 
191.27  operated exclusively for pleasure, recreation, and other 
191.28  nonprofit purposes, no part of the net earnings of which inures 
191.29  to the benefit of any private shareholders, are exempt.  For 
191.30  purposes of this subdivision, charitable purpose includes the 
191.31  maintenance of a cemetery owned by a religious organization.  
191.32  Sales exempted by this subdivision include sales pursuant to 
191.33  section 297A.01, subdivision 3, paragraphs (d) and (f).  This 
191.34  exemption shall not apply to building, construction, or 
191.35  reconstruction materials purchased by a contractor or a 
191.36  subcontractor as a part of a lump-sum contract or similar type 
192.1   of contract with a guaranteed maximum price covering both labor 
192.2   and materials for use in the construction, alteration, or repair 
192.3   of a building or facility.  This exemption does not apply to 
192.4   construction materials purchased by tax exempt entities or their 
192.5   contractors to be used in constructing buildings or facilities 
192.6   which will not be used principally by the tax exempt entities.  
192.7   This exemption does not apply applies to the leasing of a motor 
192.8   vehicle as defined in section 297B.01, subdivision 5, only if 
192.9   the vehicle is: 
192.10     (1) a truck, as defined in section 168.011, a bus, as 
192.11  defined in section 168.011, or a passenger automobile, as 
192.12  defined in section 168.011, if the automobile is designed and 
192.13  used for carrying more than nine persons including the driver; 
192.14  and 
192.15     (2) intended to be used primarily to transport tangible 
192.16  personal property or individuals, other than employees, to whom 
192.17  the organization provides service in performing its charitable, 
192.18  religious, or educational purpose. 
192.19     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
192.20  purchases occurring after June 30, 2000. 
192.21     Sec. 12.  Minnesota Statutes 1998, section 297A.25, 
192.22  subdivision 34, is amended to read: 
192.23     Subd. 34.  [MOTOR VEHICLES.] The gross receipts from the 
192.24  sale or use of any motor vehicle taxable under the provisions of 
192.25  the sales tax on motor vehicles laws of Minnesota shall be 
192.26  exempt from taxation under this chapter.  Notwithstanding 
192.27  subdivision 11, the exemption provided under this subdivision 
192.28  remains in effect for motor vehicles purchased or leased by 
192.29  political subdivisions of the state if the vehicles are exempt 
192.30  from registration under section 168.012, subdivision 1, 
192.31  paragraph (b), or exempt from taxation under section 473.448. 
192.32     <b>EFFECTIVE DATE:</b>  This section is retroactively effective 
192.33  July 1, 1997.  
192.34     Sec. 13.  Minnesota Statutes 1998, section 297A.25, 
192.35  subdivision 62, is amended to read: 
192.36     Subd. 62.  [MATERIALS USED IN PROVIDING TAXABLE SERVICES.] 
193.1   (a) The gross receipts from the sale of and the storage, use, or 
193.2   consumption of all materials used or consumed in providing a 
193.3   taxable service intended to be sold ultimately at retail are 
193.4   exempt. 
193.5      (b) This exemption includes, but is not limited to: 
193.6      (1) chemicals, lubricants, packaging materials, seeds, 
193.7   trees, fertilizers, and herbicides, used or consumed in 
193.8   providing the taxable service; 
193.9      (2) chemicals used to treat waste generated as a result of 
193.10  providing the taxable service; and 
193.11     (3) accessory tools, equipment, and other items that are 
193.12  separate detachable units used in providing the service and that 
193.13  have an ordinary useful life of less than 12 months. 
193.14     (c) This exemption does not include: 
193.15     (1) machinery, equipment, implements, tools, accessories, 
193.16  appliances, contrivances, furniture, and fixtures used in 
193.17  providing the taxable service; and 
193.18     (2) fuel, electricity, gas, and steam used for space 
193.19  heating or lighting. 
193.20     (d) For purposes of this subdivision, "taxable services" 
193.21  means the services listed in section 297A.01, subdivision 3, 
193.22  paragraph (i), and services provided by health clubs as defined 
193.23  in section 297A.01, subdivision 23. 
193.24     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
193.25  purchases made after June 30, 2000. 
193.26     Sec. 14.  Minnesota Statutes 1998, section 297A.25, 
193.27  subdivision 76, is amended to read: 
193.28     Subd. 76.  [CONSTRUCTION MATERIALS FOR AN ENVIRONMENTAL 
193.29  LEARNING CENTER.] Construction materials and supplies are exempt 
193.30  from the tax imposed under this section, regardless of whether 
193.31  purchased by the owner or a contractor, subcontractor, or 
193.32  builder, if they are used or consumed in constructing or 
193.33  improving the Long Lake Conservation Center pursuant to the 
193.34  funding provided under Laws 1994, chapter 643, section 23, 
193.35  subdivision 28, as amended by Laws 1995, First Special Session 
193.36  chapter 2, article 1, section 48; and Laws 1996, chapter 463, 
194.1   section 7, subdivision 26.  The tax shall be calculated and paid 
194.2   as if the rate in section 297A.02, subdivision 1, was in effect 
194.3   and a refund applied for in the manner prescribed in Minnesota 
194.4   Statutes 1998, section 297A.15, subdivision 7. 
194.5      Sec. 15.  Minnesota Statutes 1998, section 297A.25, is 
194.6   amended by adding a subdivision to read: 
194.7      Subd. 84.  [MATERIALS USED TO MAKE RESIDENTIAL PROPERTY 
194.8   HANDICAPPED ACCESSIBLE.] The gross receipts from the sale to, 
194.9   and the storage, use, or consumption of building materials and 
194.10  equipment to a nonprofit organization is exempt if: 
194.11     (1) the materials and equipment are used or incorporated 
194.12  into modifying an existing residential structure to make it 
194.13  handicapped accessible; and 
194.14     (2) the materials and equipment used in the modification 
194.15  would qualify for an exemption under either subdivision 20 or 43 
194.16  if made by the current owner of the residence. 
194.17     For purposes of this subdivision, "nonprofit organization" 
194.18  means any nonprofit corporation, society, association, 
194.19  foundation, or institution organized and operated exclusively 
194.20  for charitable, religious, educational, or civic purposes; or a 
194.21  veterans' group exempt from federal taxation under section 
194.22  501(c), clause (19), of the Internal Revenue Code. 
194.23     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
194.24  purchases occurring after June 30, 2000. 
194.25     Sec. 16.  Minnesota Statutes 1998, section 297A.25, is 
194.26  amended by adding a subdivision to read: 
194.27     Subd. 85.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
194.28  related services used in the maintenance of cemetery grounds are 
194.29  exempt.  For purposes of this subdivision, "lawn care and 
194.30  related services" means the services listed in section 297A.01, 
194.31  subdivision 3, paragraph (i), clause (vi), and "cemetery" means 
194.32  a cemetery for human burial. 
194.33     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
194.34  purchases occurring after June 30, 2000. 
194.35     Sec. 17.  Minnesota Statutes 1998, section 297A.25, is 
194.36  amended by adding a subdivision to read: 
195.1      Subd. 86.  [PATENT, TRADEMARK, AND COPYRIGHT DRAWINGS AND 
195.2   DOCUMENTS.] The gross receipts from the sale of, and use, 
195.3   storage, distribution, or consumption of a drawing, diagram, or 
195.4   similar or related document or a copy of such a document are 
195.5   exempt if the document: 
195.6      (1) is produced and sold by a patent drafter; and 
195.7      (2) is for use in: 
195.8      (i) a patent, trademark, or copyright application to be 
195.9   filed with government agencies; 
195.10     (ii) an application to the federal Food and Drug 
195.11  Administration for approval of a medical device; or 
195.12     (iii) a judicial or quasi-judicial proceeding, including 
195.13  mediation and arbitration, relating to the validity of or legal 
195.14  rights under a patent, trademark, or copyright. 
195.15     For purposes of this subdivision, a "patent drafter" is a 
195.16  person who prepares illustrative documents required in the 
195.17  preparation of intellectual property applications. 
195.18     <b>EFFECTIVE DATE:</b>  This section is effective for sales, use, 
195.19  storage, distribution, or consumption occurring after June 30, 
195.20  2000. 
195.21     Sec. 18.  Minnesota Statutes 1998, section 297A.25, is 
195.22  amended by adding a subdivision to read: 
195.23     Subd. 87.  [SMOKING CESSATION DEVICES.] The gross receipts 
195.24  from the sale of and the storage, use, or consumption of items 
195.25  of personal property that are approved by the Federal Drug 
195.26  Administration for use exclusively to assist individuals to 
195.27  refrain from using tobacco, such as nicotine patches and 
195.28  nicotine gum, are exempt. 
195.29     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
195.30  purchases occurring after June 30, 2000. 
195.31     Sec. 19.  Minnesota Statutes 1998, section 297A.25, is 
195.32  amended by adding a subdivision to read: 
195.33     Subd. 88.  [MACHINERY AND EQUIPMENT FOR SKI AREAS.] The 
195.34  gross receipts from the sale, storage, use, or consumption of 
195.35  tangible personal property used or consumed primarily and 
195.36  directly for tramways or in snowmaking and snow-grooming 
196.1   operations at ski hills, ski slopes, or ski trails, including 
196.2   machinery, equipment, fuel, electricity, and water additives 
196.3   used in the production and maintenance of machine-made snow, are 
196.4   exempt. 
196.5      <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
196.6   purchases made after June 30, 2000. 
196.7      Sec. 20.  Minnesota Statutes 1998, section 297A.25, is 
196.8   amended by adding a subdivision to read: 
196.9      Subd. 89.  [FEED FOR POULTRY RAISED FOR HUMAN CONSUMPTION.] 
196.10  The gross receipts from the sale of, and storage, use, or 
196.11  consumption of poultry feed is exempt if the poultry is raised 
196.12  for human consumption. 
196.13     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
196.14  purchases made after June 30, 2000. 
196.15     Sec. 21.  Minnesota Statutes 1998, section 297A.25, is 
196.16  amended by adding a subdivision to read: 
196.17     Subd. 90.  [CONSTRUCTION MATERIALS AND EQUIPMENT; 
196.18  AGRICULTURAL PROCESSING FACILITY.] Materials, supplies, and 
196.19  equipment used or consumed in the construction and initial 
196.20  equipping of an agricultural pork processing facility are exempt 
196.21  from the tax imposed under this chapter provided that the 
196.22  following conditions are met: 
196.23     (1) the construction and equipping of the facility will be 
196.24  at least $4,000,000; 
196.25     (2) the facility is owned and operated by a cooperative 
196.26  organized under chapter 308A; and 
196.27     (3) the facility will have a maximum daily processing 
196.28  capacity of at least 400 hogs. 
196.29     The exemption applies regardless of whether the materials, 
196.30  supplies, and equipment are purchased by the owner or by a 
196.31  contractor, subcontractor, or builder.  The tax must be 
196.32  calculated and paid at the time of purchase and a refund applied 
196.33  for in the manner prescribed in section 297A.15, subdivision 8.  
196.34     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
196.35  purchases made after January 1, 2000, and before December 31, 
196.36  2000. 
197.1      Sec. 22.  Minnesota Statutes 1998, section 297A.25, is 
197.2   amended by adding a subdivision to read: 
197.3      Subd. 91.  [CONSTRUCTION MATERIALS AND EQUIPMENT; PORK AND 
197.4   BEEF AGRICULTURAL PROCESSING FACILITY.] Materials, supplies, and 
197.5   equipment used or consumed in the construction and initial 
197.6   equipping of an agricultural processing facility are exempt from 
197.7   the tax imposed under this chapter provided that the following 
197.8   conditions are met: 
197.9      (1) the construction and equipping of the facility will be 
197.10  at least $1,500,000; 
197.11     (2) the facility is owned and operated by a C corporation, 
197.12  as defined in section 1361(a)(2) of the Internal Revenue Code of 
197.13  1986, with fewer than 20 shareholders of which at least one-half 
197.14  of them are full-time or part-time farmers; 
197.15     (3) the facility will have a weekly processing capacity of 
197.16  at least 50 hogs and 30 beef animals.  The exemption applies 
197.17  regardless of whether the materials, supplies, and equipment are 
197.18  purchased by the owner or by a contractor, subcontractor, or 
197.19  builder.  The tax must be calculated and paid at the time of 
197.20  purchase and a refund applied for in the manner prescribed in 
197.21  section 297A.15, subdivision 8.  
197.22     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
197.23  purchases made after December 1, 1999, and before December 31, 
197.24  2000.  
197.25     Sec. 23.  Minnesota Statutes 1998, section 297B.01, 
197.26  subdivision 7, is amended to read: 
197.27     Subd. 7.  [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 
197.28  ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," 
197.29  or "acquired" means any transfer of title of any motor vehicle, 
197.30  whether absolutely or conditionally, for a consideration in 
197.31  money or by exchange or barter for any purpose other than resale 
197.32  in the regular course of business.  Any motor vehicle utilized 
197.33  by the owner only by leasing such vehicle to others or by 
197.34  holding it in an effort to so lease it, and which is put to no 
197.35  other use by the owner other than resale after such lease or 
197.36  effort to lease, shall be considered property purchased for 
198.1   resale.  The terms also shall include any transfer of title or 
198.2   ownership of a motor vehicle by way of gift or by any other 
198.3   manner or by any other means whatsoever, for or without 
198.4   consideration, except that these terms shall not include: 
198.5      (a) the acquisition of a motor vehicle by inheritance from 
198.6   or by bequest of, a decedent who owned it; 
198.7      (b) the transfer of a motor vehicle which was previously 
198.8   licensed in the names of two or more joint tenants and 
198.9   subsequently transferred without monetary consideration to one 
198.10  or more of the joint tenants; 
198.11     (c) the transfer of a motor vehicle by way of gift between 
198.12  a husband and wife or parent and child individuals, when the 
198.13  transfer is with no monetary or other consideration or 
198.14  expectation of consideration and the parties to the transfer 
198.15  submit an affidavit to that effect at the time the title 
198.16  transfer is recorded; 
198.17     (d) the voluntary or involuntary transfer of a motor 
198.18  vehicle between a husband and wife in a divorce proceeding; or 
198.19     (e) the transfer of a motor vehicle by way of a gift to an 
198.20  organization that is exempt from federal income taxation under 
198.21  section 501(c)(3) of the Internal Revenue Code, as amended 
198.22  through December 31, 1996, when the motor vehicle will be used 
198.23  exclusively for religious, charitable, or educational purposes. 
198.24     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000. 
198.25     Sec. 24.  Minnesota Statutes 1998, section 297B.03, is 
198.26  amended to read: 
198.27     297B.03 [EXEMPTIONS.] 
198.28     There is specifically exempted from the provisions of this 
198.29  chapter and from computation of the amount of tax imposed by it 
198.30  the following:  
198.31     (1) Purchase or use, including use under a lease purchase 
198.32  agreement or installment sales contract made pursuant to section 
198.33  465.71, of any motor vehicle by the United States and its 
198.34  agencies and instrumentalities and by any person described in 
198.35  and subject to the conditions provided in section 297A.25, 
198.36  subdivision 18.  
199.1      (2) Purchase or use of any motor vehicle by any person who 
199.2   was a resident of another state at the time of the purchase and 
199.3   who subsequently becomes a resident of Minnesota, provided the 
199.4   purchase occurred more than 60 days prior to the date such 
199.5   person began residing in the state of Minnesota.  
199.6      (3) Purchase or use of any motor vehicle by any person 
199.7   making a valid election to be taxed under the provisions of 
199.8   section 297A.211.  
199.9      (4) Purchase or use of any motor vehicle previously 
199.10  registered in the state of Minnesota when such transfer 
199.11  constitutes a transfer within the meaning of section 118, 331, 
199.12  332, 336, 337, 338, 351 or, 355, 368, 721, 731, 1031, 1033, or 
199.13  1563(a) of the Internal Revenue Code of 1986, as amended through 
199.14  December 31, 1988 1999.  
199.15     (5) Purchase or use of any vehicle owned by a resident of 
199.16  another state and leased to a Minnesota based private or for 
199.17  hire carrier for regular use in the transportation of persons or 
199.18  property in interstate commerce provided the vehicle is titled 
199.19  in the state of the owner or secured party, and that state does 
199.20  not impose a sales tax or sales tax on motor vehicles used in 
199.21  interstate commerce.  
199.22     (6) Purchase or use of a motor vehicle by a private 
199.23  nonprofit or public educational institution for use as an 
199.24  instructional aid in automotive training programs operated by 
199.25  the institution.  "Automotive training programs" includes motor 
199.26  vehicle body and mechanical repair courses but does not include 
199.27  driver education programs.  
199.28     (7) Purchase of a motor vehicle for use as an ambulance by 
199.29  an ambulance service licensed under section 144E.10. 
199.30     (8) Purchase of a motor vehicle by or for a public library, 
199.31  as defined in section 134.001, subdivision 2, as a bookmobile or 
199.32  library delivery vehicle. 
199.33     (9) Purchase of a ready-mixed concrete truck. 
199.34     (10) Purchase or use of a motor vehicle by a county or town 
199.35  for use exclusively for road maintenance, including snowplows 
199.36  and dump trucks, but not including automobiles, vans, or pickup 
200.1   trucks. 
200.2      (11) Purchase or use of a motor vehicle by a corporation, 
200.3   society, association, foundation, or institution organized and 
200.4   operated exclusively for charitable, religious, or educational 
200.5   purposes, but only if the vehicle is: 
200.6      (i) a truck, as defined in section 168.011, or a passenger 
200.7   automobile, as defined in section 168.011, if the automobile is 
200.8   designed and used for carrying more than nine persons including 
200.9   the driver; and 
200.10     (ii) intended to be used primarily to transport tangible 
200.11  personal property or individuals, other than employees, to whom 
200.12  the organization provides service in performing its charitable, 
200.13  religious, or educational purpose. 
200.14     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
200.15  purchases occurring after June 30, 2000, except that the new 
200.16  language in clause (4) is effective the day following final 
200.17  enactment. 
200.18     Sec. 25.  [LOCAL TAXES ON MOTOR VEHICLES.] 
200.19     Subdivision 1.  [SALES TAX PROHIBITED; PHASE-OUT.] (a) 
200.20  Except as provided in paragraph (b), after June 30, 2000, no 
200.21  home rule charter or statutory city, county, or other political 
200.22  subdivision may impose a tax on the sale, transfer, or use of a 
200.23  motor vehicle that exceeds the tax authorized under subdivision 
200.24  2. 
200.25     (b) If, on March 8, 2000, a tax was in effect in a home 
200.26  rule charter or statutory city, county, or other political 
200.27  subdivision that exceeded the limit imposed under subdivision 2, 
200.28  the rate of that tax is reduced as follows: 
200.29     (1) for sales or transfers after December 31, 2000, and 
200.30  before January 1, 2002, the tax rate in effect on March 8, 2000, 
200.31  is reduced by 25 percent; 
200.32     (2) for sales or transfers after December 31, 2001, and 
200.33  before January 1, 2003, the tax rate in effect on March 8, 2000, 
200.34  is reduced by 50 percent; and 
200.35     (3) for sales or transfers after December 31, 2002, and 
200.36  before January 1, 2004, the tax rate in effect on March 8, 2000, 
201.1   is reduced by 75 percent. 
201.2   For sales or transfers after December 31, 2003, the political 
201.3   subdivision may impose no tax except as authorized under 
201.4   subdivision 2. 
201.5      Subd. 2.  [EXCISE TAX ON MOTOR VEHICLES AUTHORIZED.] 
201.6   Notwithstanding Minnesota Statutes, section 477A.016, or any 
201.7   other provision of law, ordinance, or city charter, if a sales 
201.8   and use tax on motor vehicles that was imposed by a political 
201.9   subdivision is terminated under subdivision 1, the political 
201.10  subdivision may impose by ordinance an excise tax of up to $20 
201.11  per motor vehicle, as defined by ordinance, that was purchased 
201.12  or acquired from any person engaged within the territory of the 
201.13  political subdivision in the business of selling motor vehicles 
201.14  at retail.  The proceeds of the tax must be used for the 
201.15  purposes for which the tax terminated under subdivision 1 was 
201.16  used. 
201.17     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000. 
201.18     Sec. 26.  [DEVELOPMENT OF SALES AND USE TAX COLLECTION 
201.19  SYSTEM.] 
201.20     Subdivision 1.  [AUTHORIZATION TO ENTER INTO MULTISTATE 
201.21  DISCUSSIONS.] The commissioner of revenue may enter into 
201.22  discussions with states regarding development of a multistate, 
201.23  voluntary, streamlined system for sales and use tax collection 
201.24  and administration.  These discussions will focus on development 
201.25  of a system that is capable of determining whether a transaction 
201.26  is taxable or exempt, the appropriate tax rate applied to the 
201.27  transaction, and the total tax due on the transaction, and shall 
201.28  provide a method for collecting and remitting sales and use 
201.29  taxes to the state.  The system may provide compensation for the 
201.30  costs of collecting and remitting sales and use taxes.  
201.31  Discussions between the department and other states may result 
201.32  in developing and issuing a joint request for information from 
201.33  public and private potential parties.  The commissioner must 
201.34  publish the notices in the State Register. 
201.35     Subd. 2.  [LIMITED TEST AUTHORIZATION.] (a) The 
201.36  commissioner may participate in a sales tax pilot project with 
202.1   other states and selected businesses to test a means for 
202.2   simplifying sales and use tax administration, and may enter into 
202.3   joint agreements for that purpose. 
202.4      (b) Agreements to participate in the test will establish 
202.5   provisions for the administration, imposition, and collection of 
202.6   sales and use taxes resulting in revenues paid by the taxpayer 
202.7   that are the same as would be paid under existing law. 
202.8      (c) Parties to the agreements are excused from complying 
202.9   with the provisions of Minnesota Statutes, chapters 289A and 
202.10  297A, except for provisions setting tax rates and providing for 
202.11  tax exemptions, to the extent a different procedure is required 
202.12  by the agreements. 
202.13     (d) Agreements authorized under this section terminate no 
202.14  later than December 31, 2001. 
202.15     Subd. 3.  [DISCLOSURE.] Any agreements entered into under 
202.16  subdivision 1 or 2 are subject to the provisions of Minnesota 
202.17  Statutes, chapter 270B. 
202.18     Subd. 4.  [REPORT ON PROJECT.] By March 1, 2002, the 
202.19  commissioner shall report to the chairs of the house of 
202.20  representatives tax committee and the senate committee on 
202.21  taxes.  The report must describe the status of multistate 
202.22  discussions conducted under subdivision 1 and, if a proposed 
202.23  system has been agreed upon by participating states, must also 
202.24  recommend whether the state should participate in the system. 
202.25     <b>EFFECTIVE DATE:</b>  This section is effective the day 
202.26  following final enactment. 
202.27     Sec. 27.  [REPEALER.] 
202.28     Minnesota Statutes 1998, section 297A.15, subdivision 7, is 
202.29  repealed. 
202.30     <b>EFFECTIVE DATE:</b>  This section is effective for sales and 
202.31  purchases occurring after June 30, 2000. 
202.32                             ARTICLE 9 
202.33                         HEALTH CARE TAXES 
202.34     Section 1.  Minnesota Statutes 1998, section 60A.15, 
202.35  subdivision 1, is amended to read: 
202.36     Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
203.1   before April 1, June 1, and December 1 of each year, every 
203.2   domestic and foreign company, including town and farmers' mutual 
203.3   insurance companies, domestic mutual insurance companies, marine 
203.4   insurance companies, health maintenance organizations, community 
203.5   integrated service networks, and nonprofit health service plan 
203.6   corporations, shall pay to the commissioner of revenue 
203.7   installments equal to one-third of the insurer's total estimated 
203.8   tax for the current year.  Except as provided in paragraphs (d), 
203.9   (e), (h), and (i), installments must be based on a sum equal to 
203.10  two percent of the premiums described in paragraph (b). 
203.11     (b) Installments under paragraph (a), (d), or (e) are 
203.12  percentages of gross premiums less return premiums on all direct 
203.13  business received by the insurer in this state, or by its agents 
203.14  for it, in cash or otherwise, during such year. 
203.15     (c) Failure of a company to make payments of at least 
203.16  one-third of either (1) the total tax paid during the previous 
203.17  calendar year or (2) 80 percent of the actual tax for the 
203.18  current calendar year shall subject the company to the penalty 
203.19  and interest provided in this section, unless the total tax for 
203.20  the current tax year is $500 or less. 
203.21     (d) For health maintenance organizations, nonprofit health 
203.22  service plan corporations, and community integrated service 
203.23  networks, the installments must be based on an amount determined 
203.24  under paragraph (h) or (i). 
203.25     (e) For purposes of computing installments for town and 
203.26  farmers' mutual insurance companies and for mutual property 
203.27  casualty companies with total assets on December 31, 1989, of 
203.28  $1,600,000,000 or less, the following rates apply: 
203.29     (1) for all life insurance, two percent; 
203.30     (2) for town and farmers' mutual insurance companies and 
203.31  for mutual property and casualty companies with total assets of 
203.32  $5,000,000 or less, on all other coverages, one percent; and 
203.33     (3) for mutual property and casualty companies with total 
203.34  assets on December 31, 1989, of $1,600,000,000 or less, on all 
203.35  other coverages, 1.26 percent. 
203.36     (f) If the aggregate amount of premium tax payments under 
204.1   this section and the fire marshal tax payments under section 
204.2   299F.21 made during a calendar year is equal to or exceeds 
204.3   $120,000, all tax payments in the subsequent calendar year must 
204.4   be paid by means of a funds transfer as defined in section 
204.5   336.4A-104, paragraph (a).  The funds transfer payment date, as 
204.6   defined in section 336.4A-401, must be on or before the date the 
204.7   payment is due.  If the date the payment is due is not a funds 
204.8   transfer business day, as defined in section 336.4A-105, 
204.9   paragraph (a), clause (4), the payment date must be on or before 
204.10  the funds transfer business day next following the date the 
204.11  payment is due.  
204.12     (g) Premiums under medical assistance, general assistance 
204.13  medical care, the MinnesotaCare program, and the Minnesota 
204.14  comprehensive health insurance plan and all payments, revenues, 
204.15  and reimbursements received from the federal government for 
204.16  Medicare-related coverage as defined in section 62A.31, 
204.17  subdivision 3, paragraph (e), are not subject to tax under this 
204.18  section. 
204.19     (h) For calendar years 1997, 1998, and 1999, the 
204.20  installments for health maintenance organizations, community 
204.21  integrated service networks, and nonprofit health service plan 
204.22  corporations must be based on an amount equal to one percent of 
204.23  premiums described under paragraph (b).  Health maintenance 
204.24  organizations, community integrated service networks, and 
204.25  nonprofit health service plan corporations that have met the 
204.26  cost containment goals established under section 62J.04 in the 
204.27  individual and small employer market for calendar year 1996 are 
204.28  exempt from payment of the tax imposed under this section for 
204.29  premiums paid after March 30, 1997, and before April 1, 1998.  
204.30  Health maintenance organizations, community integrated service 
204.31  networks, and nonprofit health service plan corporations that 
204.32  have met the cost containment goals established under section 
204.33  62J.04 in the individual and small employer market for calendar 
204.34  year 1997 are exempt from payment of the tax imposed under this 
204.35  section for premiums paid after March 30, 1998, and before April 
204.36  1, 1999.  Health maintenance organizations, community integrated 
205.1   service networks, and nonprofit health service plan corporations 
205.2   that have met the cost containment goals established under 
205.3   section 62J.04 in the individual and small employer market for 
205.4   calendar year 1998 are exempt from payment of the tax imposed 
205.5   under this section for premiums paid after March 30, 1999, and 
205.6   before January 1, 2000 Health maintenance organizations, 
205.7   community integrated service networks, and nonprofit health 
205.8   service plan corporations are exempt from the tax imposed under 
205.9   this section on premiums received in calendar years 2001 and 
205.10  2002. 
205.11     (i) For calendar years after 1999 2002, the commissioner of 
205.12  finance shall determine the balance of the health care access 
205.13  fund on September 1 of each year beginning September 1, 1999.  
205.14  If the commissioner determines that there is no structural 
205.15  deficit for the next fiscal year, no tax shall be imposed under 
205.16  paragraph (d) for the following calendar year.  If the 
205.17  commissioner determines that there will be a structural deficit 
205.18  in the fund for the following fiscal year, then the 
205.19  commissioner, in consultation with the commissioner of revenue, 
205.20  shall determine the amount needed to eliminate the structural 
205.21  deficit and a tax shall be imposed under paragraph (d) for the 
205.22  following calendar year.  The commissioner shall determine the 
205.23  rate of the tax as either one-quarter of one percent, one-half 
205.24  of one percent, three-quarters of one percent, or one percent of 
205.25  premiums described in paragraph (b), whichever is the lowest of 
205.26  those rates that the commissioner determines will produce 
205.27  sufficient revenue to eliminate the projected structural 
205.28  deficit.  The commissioner of finance shall publish in the State 
205.29  Register by October 1 of each year the amount of tax to be 
205.30  imposed for the following calendar year.  In determining the 
205.31  structural balance of the health care access fund for fiscal 
205.32  years 2000 and 2001, the commissioner shall disregard the 
205.33  transfer amount from the health care access fund to the general 
205.34  fund for expenditures associated with the services provided to 
205.35  pregnant women and children under the age of two enrolled in the 
205.36  MinnesotaCare program a rate of one percent applies to premiums 
206.1   of health maintenance organizations, community-integrated 
206.2   service networks, and nonprofit health service plan corporations.
206.3      (j) In approving the premium rates as required in sections 
206.4   62L.08, subdivision 8, and 62A.65, subdivision 3, the 
206.5   commissioners of health and commerce shall ensure that any 
206.6   exemption from the tax as described in paragraphs (h) and (i) is 
206.7   reflected in the premium rate. 
206.8      <b>EFFECTIVE DATE:</b>  This section is effective for taxes on 
206.9   premiums received after December 31, 2000. 
206.10     Sec. 2.  Minnesota Statutes 1998, section 295.50, 
206.11  subdivision 9b, is amended to read: 
206.12     Subd. 9b.  [PATIENT SERVICES.] (a) "Patient services" means 
206.13  inpatient and outpatient services and other goods and services 
206.14  provided by hospitals, surgical centers, or health care 
206.15  providers.  They include the following health care goods and 
206.16  services provided to a patient or consumer: 
206.17     (1) bed and board; 
206.18     (2) nursing services and other related services; 
206.19     (3) use of hospitals, surgical centers, or health care 
206.20  provider facilities; 
206.21     (4) medical social services; 
206.22     (5) drugs, biologicals, supplies, appliances, and 
206.23  equipment; 
206.24     (6) other diagnostic or therapeutic items or services; 
206.25     (7) medical or surgical services; 
206.26     (8) items and services furnished to ambulatory patients not 
206.27  requiring emergency care; 
206.28     (9) emergency services; and 
206.29     (10) covered services listed in section 256B.0625 and in 
206.30  Minnesota Rules, parts 9505.0170 to 9505.0475. 
206.31     (b) "Patient services" does not include:  
206.32     (1) services provided to nursing homes licensed under 
206.33  chapter 144A; and 
206.34     (2) examinations for purposes of utilization reviews, 
206.35  insurance claims or eligibility, litigation, and employment, 
206.36  including reviews of medical records for those purposes. 
207.1      <b>EFFECTIVE DATE:</b>  This section is effective for payments 
207.2   received on or after January 1, 2000. 
207.3      Sec. 3.  Minnesota Statutes 1999 Supplement, section 
207.4   295.52, subdivision 7, is amended to read: 
207.5      Subd. 7.  [TAX REDUCTION.] Notwithstanding subdivisions 1, 
207.6   1a, 2, 3, and 4, the tax imposed under this section equals for 
207.7   calendar years 1998, 1999, 2000, and 2001, and 2002, 1.5 percent 
207.8   of the gross revenues received on or after January 1, 1998, and 
207.9   before January 1, 2002 2003. 
207.10     <b>EFFECTIVE DATE:</b>  This section is effective the day 
207.11  following final enactment.  
207.12     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
207.13  295.53, subdivision 1, is amended to read: 
207.14     Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
207.15  are excluded from the gross revenues subject to the hospital, 
207.16  surgical center, or health care provider taxes under sections 
207.17  295.50 to 295.57: 
207.18     (1) payments received for services provided under the 
207.19  Medicare program, including payments received from the 
207.20  government, and organizations governed by sections 1833 and 1876 
207.21  of title XVIII of the federal Social Security Act, United States 
207.22  Code, title 42, section 1395, and enrollee deductibles, 
207.23  coinsurance, and copayments, whether paid by the Medicare 
207.24  enrollee or by a Medicare supplemental coverage as defined in 
207.25  section 62A.011, subdivision 3, clause (10).  Payments for 
207.26  services not covered by Medicare are taxable; 
207.27     (2) medical assistance payments including payments received 
207.28  directly from the government or from a prepaid plan; 
207.29     (3) payments received for home health care services; 
207.30     (4) payments received from hospitals or surgical centers 
207.31  for goods and services on which liability for tax is imposed 
207.32  under section 295.52 or the source of funds for the payment is 
207.33  exempt under clause (1), (2), (7), (8), (10), or (13), or (20); 
207.34     (5) payments received from health care providers for goods 
207.35  and services on which liability for tax is imposed under this 
207.36  chapter or the source of funds for the payment is exempt under 
208.1   clause (1), (2), (7), (8), (10), or (13), or (20); 
208.2      (6) amounts paid for legend drugs, other than nutritional 
208.3   products, to a wholesale drug distributor who is subject to tax 
208.4   under section 295.52, subdivision 3, reduced by reimbursements 
208.5   received for legend drugs under clauses (1), (2), (7), and (8); 
208.6      (7) payments received under the general assistance medical 
208.7   care program including payments received directly from the 
208.8   government or from a prepaid plan; 
208.9      (8) payments received for providing services under the 
208.10  MinnesotaCare program including payments received directly from 
208.11  the government or from a prepaid plan and enrollee deductibles, 
208.12  coinsurance, and copayments.  For purposes of this clause, 
208.13  coinsurance means the portion of payment that the enrollee is 
208.14  required to pay for the covered service; 
208.15     (9) payments received by a health care provider or the 
208.16  wholly owned subsidiary of a health care provider for care 
208.17  provided outside Minnesota; 
208.18     (10) payments received from the chemical dependency fund 
208.19  under chapter 254B; 
208.20     (11) payments received in the nature of charitable 
208.21  donations that are not designated for providing patient services 
208.22  to a specific individual or group; 
208.23     (12) payments received for providing patient services 
208.24  incurred through a formal program of health care research 
208.25  conducted in conformity with federal regulations governing 
208.26  research on human subjects.  Payments received from patients or 
208.27  from other persons paying on behalf of the patients are subject 
208.28  to tax; 
208.29     (13) payments received from any governmental agency for 
208.30  services benefiting the public, not including payments made by 
208.31  the government in its capacity as an employer or insurer; 
208.32     (14) payments received for services provided by community 
208.33  residential mental health facilities licensed under Minnesota 
208.34  Rules, parts 9520.0500 to 9520.0690, community support programs 
208.35  and family community support programs approved under Minnesota 
208.36  Rules, parts 9535.1700 to 9535.1760, and community mental health 
209.1   centers as defined in section 245.62, subdivision 2; 
209.2      (15) government payments received by a regional treatment 
209.3   center; 
209.4      (16) payments received for hospice care services; 
209.5      (17) payments received by a health care provider for 
209.6   hearing aids and related equipment or prescription eyewear 
209.7   delivered outside of Minnesota; 
209.8      (18) payments received by an educational institution from 
209.9   student tuition, student activity fees, health care service 
209.10  fees, government appropriations, donations, or grants.  Fee for 
209.11  service payments and payments for extended coverage are taxable; 
209.12     (19) payments received for services provided by:  assisted 
209.13  living programs and congregate housing programs; and 
209.14     (20) payments received from nursing homes licensed under 
209.15  chapter 144A for services provided to a nursing home; and 
209.16     (21) payments received for examinations for purposes of 
209.17  utilization reviews, insurance claims or eligibility, 
209.18  litigation, and employment, including reviews of medical records 
209.19  for those purposes. 
209.20     (20) payments received under the federal Employees Health 
209.21  Benefits Act, United States Code, title 5, section 8909(f), as 
209.22  amended by the Omnibus Reconciliation Act of 1990. 
209.23     (b) Payments received by wholesale drug distributors for 
209.24  legend drugs sold directly to veterinarians or veterinary bulk 
209.25  purchasing organizations are excluded from the gross revenues 
209.26  subject to the wholesale drug distributor tax under sections 
209.27  295.50 to 295.59. 
209.28     <b>EFFECTIVE DATE:</b>  This section is effective for payments 
209.29  received on or after January 1, 2000. 
209.30     Sec. 5.  Minnesota Statutes 1998, section 295.58, is 
209.31  amended to read: 
209.32     295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 
209.33     The commissioner shall deposit all revenues, including 
209.34  penalties and interest, derived from the taxes imposed by 
209.35  sections 295.50 to 295.57 and from the insurance premiums tax on 
209.36  health maintenance organizations, community integrated service 
210.1   networks, and nonprofit health service plan corporations in the 
210.2   health care access fund in the state treasury.  Refunds of 
210.3   overpayments must be paid from the health care access fund in 
210.4   the state treasury.  There is annually appropriated from the 
210.5   health care access fund to the commissioner of revenue the 
210.6   amount necessary to make any refunds required under section 
210.7   295.54 this chapter. 
210.8      <b>EFFECTIVE DATE:</b>  This section is effective for refunds made 
210.9   on or after January 1, 1999. 
210.10                             ARTICLE 10 
210.11                           SPECIAL TAXES
210.12     Section 1.  Minnesota Statutes 1998, section 115A.557, 
210.13  subdivision 3, is amended to read: 
210.14     Subd. 3.  [ELIGIBILITY TO RECEIVE MONEY.] (a) To be 
210.15  eligible to receive money distributed by the director under this 
210.16  section, a county shall within one year of October 4, 1989: 
210.17     (1) create a separate account in its general fund to credit 
210.18  the money; and 
210.19     (2) set up accounting procedures to ensure that money in 
210.20  the separate account is spent only for the purposes in 
210.21  subdivision 2. 
210.22     (b) In each following year, each county shall also: 
210.23     (1) have in place an approved solid waste management plan 
210.24  or master plan including a recycling implementation strategy 
210.25  under section 115A.551, subdivision 7, and a household hazardous 
210.26  waste management plan under section 115A.96, subdivision 6, by 
210.27  the dates specified in those provisions; 
210.28     (2) submit a report by April 1 of each year to the director 
210.29  detailing for the previous calendar year: 
210.30     (i) how the money was spent including, but not limited to, 
210.31  specific information on the number of employees performing SCORE 
210.32  planning, oversight, and administration; the percentage of those 
210.33  employees' total work time allocated to SCORE planning, 
210.34  oversight, and administration; the specific duties and 
210.35  responsibilities of those employees; and the amount of staff 
210.36  salary for these SCORE duties and responsibilities of the 
211.1   employees; and (ii) the resulting gains achieved in solid waste 
211.2   management practices during the previous calendar year; and 
211.3      (3) provide evidence to the director that local revenue 
211.4   equal to 25 percent of the money sought for distribution under 
211.5   this section will be spent for the purposes in subdivision 2. 
211.6      (c) The director shall withhold all or part of the funds to 
211.7   be distributed to a county under this section if the county 
211.8   fails to comply with this subdivision and subdivision 2. 
211.9      Sec. 2.  Minnesota Statutes 1999 Supplement, section 
211.10  287.01, subdivision 2, is amended to read: 
211.11     Subd. 2.  [AMENDMENT.] "Amendment" means generally a 
211.12  document that alters an existing mortgage without securing a new 
211.13  debt, or increasing the amount of an existing debt; and, that 
211.14  does not, in the case of a multistate mortgage described in 
211.15  section 287.05, subdivision 1, paragraph (b), result in an 
211.16  increased percentage of the real property encumbered by the 
211.17  mortgage being located in this state.  Specifically, A document 
211.18  is considered an amendment to the extent it merely does if it 
211.19  meets the definition in this subdivision, including documents 
211.20  that do any one or any combination more of the following:  
211.21     (i) extends the time for payment of the unpaid portion of 
211.22  the original debt; 
211.23     (ii) changes the rate of interest applicable to the unpaid 
211.24  portion of the original debt; 
211.25     (iii) adds additional real property as security for the 
211.26  unpaid portion of the original debt; 
211.27     (iv) releases some but not all of the real property serving 
211.28  as security for the unpaid portion of the debt; 
211.29     (v) replaces all the real property serving as security for 
211.30  the unpaid portion of the debt with other real property 
211.31  regardless of value; 
211.32     (vi) replaces a party previously bound by the mortgage with 
211.33  a new party who becomes bound by the same amended mortgage; or 
211.34     (vii) reduces the amount of the debt secured by real 
211.35  property located in this state, or in the case of a multistate 
211.36  mortgage described in section 287.05, subdivision 1, paragraph 
212.1   (b), reduces the percentage of real property encumbered by the 
212.2   mortgage that is located in this state. 
212.3      <b>EFFECTIVE DATE:</b>  This section is effective the day 
212.4   following final enactment. 
212.5      Sec. 3.  Minnesota Statutes 1999 Supplement, section 
212.6   297E.02, subdivision 1, is amended to read: 
212.7      Subdivision 1.  [IMPOSITION.] A tax is imposed on all 
212.8   lawful gambling other than (1) pull-tab deals or games; (2) 
212.9   tipboard deals or games; and (3) items listed in section 
212.10  297E.01, subdivision 8, clauses (4) and (5), at the rate of 9 
212.11  8.25 percent on the gross receipts as defined in section 
212.12  297E.01, subdivision 8, less prizes actually paid.  The tax 
212.13  imposed by this subdivision is in lieu of the tax imposed by 
212.14  section 297A.02 and all local taxes and license fees except a 
212.15  fee authorized under section 349.16, subdivision 8, or a tax 
212.16  authorized under subdivision 5.  
212.17     The tax imposed under this subdivision is payable by the 
212.18  organization or party conducting, directly or indirectly, the 
212.19  gambling.  
212.20     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000. 
212.21     Sec. 4.  Minnesota Statutes 1998, section 297E.02, 
212.22  subdivision 2, is amended to read: 
212.23     Subd. 2.  [TAX-EXEMPT GAMBLING.] An organization's receipts 
212.24  from lawful gambling that are excluded or exempt from licensing 
212.25  under section 349.166, are not subject to the tax imposed by 
212.26  this section or section 297A.02.  This exclusion from tax is 
212.27  only valid if at the time of the event giving rise to the tax 
212.28  the organization either has an exclusion under section 349.166, 
212.29  subdivision 1, or has applied for and received a valid exemption 
212.30  from the lawful gambling control board. An organization's 
212.31  receipts from lawful gambling are not subject to the tax imposed 
212.32  by this section or section 297A.02 if: 
212.33     (1) the organization is excluded or exempt from licensing 
212.34  under section 349.166.  This exclusion from tax is only valid if 
212.35  at the time of the event giving rise to the tax the organization 
212.36  either has an exclusion under section 349.166, subdivision 1, or 
213.1   has applied for and received a valid exemption from the lawful 
213.2   gambling control board; or 
213.3      (2) the organization holds a raffle for the purpose of 
213.4   donating the net profits as defined in section 349.12, 
213.5   subdivision 27, to benefit the victims of illness, crime, 
213.6   accident, fire, or natural disaster.  
213.7      <b>EFFECTIVE DATE:</b>  This section is effective August 1, 2000. 
213.8      Sec. 5.  Minnesota Statutes 1999 Supplement, section 
213.9   297E.02, subdivision 4, is amended to read: 
213.10     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
213.11  on the sale of each deal of pull-tabs and tipboards sold by a 
213.12  distributor.  The rate of the tax is 1.8 1.65 percent of the 
213.13  ideal gross of the pull-tab or tipboard deal.  The sales tax 
213.14  imposed by chapter 297A on the sale of the pull-tabs and 
213.15  tipboards by the distributor is imposed on the retail sales 
213.16  price less the tax imposed by this subdivision.  The retail sale 
213.17  of pull-tabs or tipboards by the organization is exempt from 
213.18  taxes imposed by chapter 297A and is exempt from all local taxes 
213.19  and license fees except a fee authorized under section 349.16, 
213.20  subdivision 8.  
213.21     (b) The liability for the tax imposed by this section is 
213.22  incurred when the pull-tabs and tipboards are delivered by the 
213.23  distributor to the customer or to a common or contract carrier 
213.24  for delivery to the customer, or when received by the customer's 
213.25  authorized representative at the distributor's place of 
213.26  business, regardless of the distributor's method of accounting 
213.27  or the terms of the sale.  
213.28     The tax imposed by this subdivision is imposed on all sales 
213.29  of pull-tabs and tipboards, except the following:  
213.30     (1) sales to the governing body of an Indian tribal 
213.31  organization for use on an Indian reservation; 
213.32     (2) sales to distributors licensed under the laws of 
213.33  another state or of a province of Canada, as long as all 
213.34  statutory and regulatory requirements are met in the other state 
213.35  or province; 
213.36     (3) sales of promotional tickets as defined in section 
214.1   349.12; and 
214.2      (4) pull-tabs and tipboards sold to an organization that 
214.3   sells pull-tabs and tipboards under the exemption from licensing 
214.4   in section 349.166, subdivision 2.  A distributor shall require 
214.5   an organization conducting exempt gambling to show proof of its 
214.6   exempt status before making a tax-exempt sale of pull-tabs or 
214.7   tipboards to the organization.  A distributor shall identify, on 
214.8   all reports submitted to the commissioner, all sales of 
214.9   pull-tabs and tipboards that are exempt from tax under this 
214.10  subdivision.  
214.11     (c) A distributor having a liability of $120,000 or more 
214.12  during a fiscal year ending June 30 must remit all liabilities 
214.13  in the subsequent calendar year by a funds transfer as defined 
214.14  in section 336.4A-104, paragraph (a).  The funds transfer 
214.15  payment date, as defined in section 336.4A-401, must be on or 
214.16  before the date the tax is due.  If the date the tax is due is 
214.17  not a funds transfer business day, as defined in section 
214.18  336.4A-105, paragraph (a), clause (4), the payment date must be 
214.19  on or before the funds transfer business day next following the 
214.20  date the tax is due. 
214.21     (d) Any customer who purchases deals of pull-tabs or 
214.22  tipboards from a distributor may file an annual claim for a 
214.23  refund or credit of taxes paid pursuant to this subdivision for 
214.24  unsold pull-tab and tipboard tickets.  The claim must be filed 
214.25  with the commissioner on a form prescribed by the commissioner 
214.26  by March 20 of the year following the calendar year for which 
214.27  the refund is claimed.  The refund must be filed as part of the 
214.28  customer's February monthly return.  The refund or credit is 
214.29  equal to 1.8 1.65 percent of the face value of the unsold 
214.30  pull-tab or tipboard tickets, provided that the refund or credit 
214.31  will be 1.85 1.725 percent of the face value of the unsold 
214.32  pull-tab or tipboard tickets for claims for a refund or credit 
214.33  of taxes filed on the February 2000 2001 monthly return.  The 
214.34  refund claimed will be applied as a credit against tax owing 
214.35  under this chapter on the February monthly return.  If the 
214.36  refund claimed exceeds the tax owing on the February monthly 
215.1   return, that amount will be refunded.  The amount refunded will 
215.2   bear interest pursuant to section 270.76 from 90 days after the 
215.3   claim is filed.  
215.4      <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000. 
215.5      Sec. 6.  Minnesota Statutes 1999 Supplement, section 
215.6   297E.02, subdivision 6, is amended to read: 
215.7      Subd. 6.  [COMBINED RECEIPTS TAX.] In addition to the taxes 
215.8   imposed under subdivisions 1 and 4, a tax is imposed on the 
215.9   combined receipts of the organization.  As used in this section, 
215.10  "combined receipts" is the sum of the organization's gross 
215.11  receipts from lawful gambling less gross receipts directly 
215.12  derived from the conduct of bingo, raffles, and paddlewheels, as 
215.13  defined in section 297E.01, subdivision 8, for the fiscal year.  
215.14  The combined receipts of an organization are subject to a tax 
215.15  computed according to the following schedule: 
215.16     If the combined receipts for the          The tax is:
215.17     fiscal year are:
215.18     Not over $500,000                   zero
215.19     Over $500,000, but not over
215.20     $700,000                            1.8 1.65 percent of the 
215.21                                         amount over $500,000, but 
215.22                                         not over $700,000
215.23     Over $700,000, but not over
215.24     $900,000                            $3,600 $3,300 plus 3.6 
215.25                                         3.3 percent of the amount 
215.26                                         over $700,000, but 
215.27                                         not over $900,000
215.28     Over $900,000                       $10,800 $9,900 plus 5.4 
215.29                                         4.95 percent of the 
215.30                                         amount over $900,000
215.31     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000. 
215.32     Sec. 7.  Minnesota Statutes 1998, section 297F.01, 
215.33  subdivision 7, is amended to read: 
215.34     Subd. 7.  [CONSUMER.] "Consumer" means any person an 
215.35  individual who has title to or possession of cigarettes or 
215.36  tobacco products in storage, for use or other personal 
216.1   consumption in this state rather than for sale. 
216.2      <b>EFFECTIVE DATE:</b>  This section is effective the day 
216.3   following final enactment. 
216.4      Sec. 8.  Minnesota Statutes 1998, section 297F.01, is 
216.5   amended by adding a subdivision to read: 
216.6      Subd. 9a.  [INVOICE.] "Invoice" means a detailed list of 
216.7   cigarettes and tobacco products purchased or sold in this state 
216.8   that contains the following information: 
216.9      (1) name of seller; 
216.10     (2) name of purchaser; 
216.11     (3) date of sale; 
216.12     (4) invoice number; 
216.13     (5) itemized list of goods sold including brands of 
216.14  cigarettes and number of cartons of each brand, unit price, and 
216.15  identification of tobacco products by name, quantity, and unit 
216.16  price; and 
216.17     (6) any rebates, discounts, or other reductions. 
216.18     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000. 
216.19     Sec. 9.  Minnesota Statutes 1998, section 297F.01, 
216.20  subdivision 14, is amended to read: 
216.21     Subd. 14.  [RETAILER.] "Retailer" means a person required 
216.22  to be licensed under chapter 461 engaged in this state in the 
216.23  business of selling, or offering to sell, cigarettes or tobacco 
216.24  products to consumers. 
216.25     <b>EFFECTIVE DATE:</b>  This section is effective the day 
216.26  following final enactment. 
216.27     Sec. 10.  Minnesota Statutes 1998, section 297F.01, 
216.28  subdivision 17, is amended to read: 
216.29     Subd. 17.  [STAMP.] "Stamp" means the adhesive stamp 
216.30  supplied by the commissioner of revenue for use on cigarette 
216.31  packages or any other indicia adopted by the commissioner to 
216.32  indicate that the tax has been paid. 
216.33     <b>EFFECTIVE DATE:</b>  This section is effective the day 
216.34  following final enactment. 
216.35     Sec. 11.  Minnesota Statutes 1998, section 297F.01, is 
216.36  amended by adding a subdivision to read: 
217.1      Subd. 21a.  [UNLICENSED SELLER.] "Unlicensed seller" means 
217.2   anyone who is not licensed under section 297F.03 or 461.12 to 
217.3   sell the particular product to the purchaser or possessor of the 
217.4   product. 
217.5      <b>EFFECTIVE DATE:</b>  This section is effective the day 
217.6   following final enactment. 
217.7      Sec. 12.  Minnesota Statutes 1998, section 297F.13, 
217.8   subdivision 4, is amended to read: 
217.9      Subd. 4.  [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE 
217.10  INVOICES.] Every retailer and subjobber shall procure itemized 
217.11  invoices of all cigarettes or tobacco products purchased.  The 
217.12  invoices shall show the name and address of the seller and the 
217.13  date of purchase. 
217.14     The retailer and subjobber shall preserve a legible copy of 
217.15  each invoice for one year from the date of purchase the invoice. 
217.16  The retailer and subjobber shall preserve copies of the invoices 
217.17  at each retail location or at a central location provided that 
217.18  the invoice must be produced and made available at a retail 
217.19  location within one hour when requested by the commissioner or 
217.20  duly authorized agents and employees.  Copies should be numbered 
217.21  and kept in chronological order. 
217.22     To determine whether the business is in compliance with the 
217.23  provisions of this chapter and sections 325D.30 to 325D.42, at 
217.24  any time during usual business hours, the commissioner, or duly 
217.25  authorized agents and employees, may enter any place of business 
217.26  of a retailer or subjobber without a search warrant and inspect 
217.27  the premises, the records required to be kept under this 
217.28  chapter, and the packages of cigarettes, tobacco products, and 
217.29  vending devices contained on the premises. 
217.30     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000. 
217.31     Sec. 13.  Minnesota Statutes 1998, section 297F.08, 
217.32  subdivision 2, is amended to read: 
217.33     Subd. 2.  [TAX DUE; CIGARETTES.] Notwithstanding any other 
217.34  provisions of this chapter, the tax due on the return is based 
217.35  upon actual heat-applied stamps purchased during the reporting 
217.36  period. 
218.1      <b>EFFECTIVE DATE:</b>  This section is effective the day 
218.2   following final enactment. 
218.3      Sec. 14.  Minnesota Statutes 1998, section 297F.08, 
218.4   subdivision 5, is amended to read: 
218.5      Subd. 5.  [DEPOSIT OF PROCEEDS.] The commissioner shall use 
218.6   the amounts appropriated by law to purchase heat-applied stamps 
218.7   for resale.  The commissioner shall charge the purchasers for 
218.8   the costs of the stamps along with the tax value plus shipping 
218.9   costs.  The costs recovered along with shipping costs must be 
218.10  deposited into the general fund. 
218.11     <b>EFFECTIVE DATE:</b>  This section is effective the day 
218.12  following final enactment. 
218.13     Sec. 15.  Minnesota Statutes 1998, section 297F.08, 
218.14  subdivision 8, is amended to read: 
218.15     Subd. 8.  [SALE OF STAMPS.] The commissioner may sell 
218.16  heat-applied stamps on a credit basis under conditions 
218.17  prescribed by the commissioner.  The commissioner shall sell the 
218.18  stamps at a price which includes the tax after giving effect to 
218.19  the discount provided in subdivision 7.  The commissioner shall 
218.20  recover the actual costs of the stamps from the distributor.  
218.21  The commissioner shall annually establish the maximum amount of 
218.22  heat-applied stamps that may be purchased each month. 
218.23     <b>EFFECTIVE DATE:</b>  This section is effective the day 
218.24  following final enactment. 
218.25     Sec. 16.  Minnesota Statutes 1999 Supplement, section 
218.26  297F.08, subdivision 8a, is amended to read: 
218.27     Subd. 8a.  [REVOLVING ACCOUNT.] A heat-applied cigarette 
218.28  tax stamp revolving account is created.  The commissioner shall 
218.29  use the amounts in this fund to purchase heat-applied stamps for 
218.30  resale.  The commissioner shall charge distributors for the tax 
218.31  value of the stamps they receive along with the commissioner's 
218.32  cost to purchase the stamps and ship them to the distributor.  
218.33  The stamp purchase and shipping costs recovered must be credited 
218.34  to the revolving account and are appropriated to the 
218.35  commissioner for the further purchases and shipping costs.  The 
218.36  revolving account is initially funded by a $40,000 transfer from 
219.1   the department of revenue. 
219.2      <b>EFFECTIVE DATE:</b>  This section is effective the day 
219.3   following final enactment. 
219.4      Sec. 17.  Minnesota Statutes 1998, section 297F.08, 
219.5   subdivision 9, is amended to read: 
219.6      Subd. 9.  [TAX STAMPING MACHINES.] The commissioner shall 
219.7   require any person licensed as a distributor to stamp packages 
219.8   with a heat-applied tax stamping machine, approved by the 
219.9   commissioner, which shall be provided by the distributor.  The 
219.10  commissioner shall also supervise and check the operation of the 
219.11  machines and shall provide for the payment of the tax on any 
219.12  package so stamped, subject to the discount provided in 
219.13  subdivision 7.  If the commissioner finds that a stamping 
219.14  machine is not affixing a legible stamp on the package, the 
219.15  commissioner may order the distributor to immediately cease the 
219.16  stamping process until the machine is functioning properly. 
219.17     <b>EFFECTIVE DATE:</b>  This section is effective the day 
219.18  following final enactment. 
219.19     Sec. 18.  Minnesota Statutes 1998, section 297F.21, 
219.20  subdivision 1, is amended to read: 
219.21     Subdivision 1.  [CONTRABAND DEFINED.] The following are 
219.22  declared to be contraband and therefore subject to civil and 
219.23  criminal penalties under this chapter: 
219.24     (a) Cigarette packages which do not have stamps affixed to 
219.25  them as provided in this chapter, including but not limited to 
219.26  (i) packages with illegible stamps and packages with stamps that 
219.27  are not complete or whole even if the stamps are legible, and 
219.28  (ii) all devices for the vending of cigarettes in which packages 
219.29  as defined in item (i) are found, including all contents 
219.30  contained within the devices. 
219.31     (b) A device for the vending of cigarettes and all packages 
219.32  of cigarettes, where the device does not afford at least partial 
219.33  visibility of contents.  Where any package exposed to view does 
219.34  not carry the stamp required by this chapter, it shall be 
219.35  presumed that all packages contained in the device are unstamped 
219.36  and contraband. 
220.1      (c) A device for the vending of cigarettes to which the 
220.2   commissioner or authorized agents have been denied access for 
220.3   the inspection of contents.  In lieu of seizure, the 
220.4   commissioner or an agent may seal the device to prevent its use 
220.5   until inspection of contents is permitted. 
220.6      (d) A device for the vending of cigarettes which does not 
220.7   carry the name and address of the owner, plainly marked and 
220.8   visible from the front of the machine. 
220.9      (e) A device including, but not limited to, motor vehicles, 
220.10  trailers, snowmobiles, airplanes, and boats used with the 
220.11  knowledge of the owner or of a person operating with the consent 
220.12  of the owner for the storage or transportation of more than 
220.13  5,000 cigarettes which are contraband under this subdivision.  
220.14  When cigarettes are being transported in the course of 
220.15  interstate commerce, or are in movement from either a public 
220.16  warehouse to a distributor upon orders from a manufacturer or 
220.17  distributor, or from one distributor to another, the cigarettes 
220.18  are not contraband, notwithstanding the provisions of clause (a).
220.19     (f) Cigarette packages or tobacco products obtained from an 
220.20  unlicensed seller. 
220.21     (g) Cigarette packages offered for sale or held as 
220.22  inventory in violation of section 297F.20, subdivision 7. 
220.23     (h) Tobacco products on which the tax has not been paid by 
220.24  a licensed distributor. 
220.25     (i) Any cigarette packages or tobacco products offered for 
220.26  sale or held as inventory for which there is not an invoice from 
220.27  a licensed seller as required under section 297F.13, subdivision 
220.28  4. 
220.29     (j) Cigarette packages which have been imported into the 
220.30  United States in violation of United States Code, title 26, 
220.31  section 5754.  All cigarettes held in violation of that section 
220.32  shall be presumed to have entered the United States after 
220.33  December 31, 1999, in the absence of proof to the contrary. 
220.34     <b>EFFECTIVE DATE:</b>  This section, paragraph (i), is effective 
220.35  July 1, 2000.  This section, paragraph (j), is effective the day 
220.36  following final enactment. 
221.1      Sec. 19.  Minnesota Statutes 1998, section 297F.21, 
221.2   subdivision 3, is amended to read: 
221.3      Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
221.4   DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
221.5   seizure of any alleged contraband, the person making the seizure 
221.6   shall make available an inventory of the property seized to the 
221.7   person from whom the seizure was made, if known, and file a copy 
221.8   with the commissioner.  Within ten days after the date of 
221.9   service of the inventory, the person from whom the property was 
221.10  seized or any person claiming an interest in the property may 
221.11  file with the commissioner a demand for a judicial determination 
221.12  of the question as to whether the property was lawfully subject 
221.13  to seizure and forfeiture.  The commissioner, within 60 days, 
221.14  shall institute an action in the district court of the county 
221.15  where the seizure was made to determine the issue of 
221.16  forfeiture.  The court shall decide whether the alleged 
221.17  contraband is contraband, as defined in subdivision 1. 
221.18     (b) The action must be brought in the name of the state and 
221.19  must be prosecuted by the county attorney or by the attorney 
221.20  general.  The court shall hear the action without a jury and 
221.21  shall try and determine the issues of fact and law involved. 
221.22     (c) When a judgment of forfeiture is entered, the 
221.23  commissioner may, unless the judgment is stayed pending an 
221.24  appeal, either: 
221.25     (1) deliver the forfeited property to the commissioner of 
221.26  human services for use by patients in state institutions; 
221.27     (2) cause it to be destroyed; or 
221.28     (3) cause it to be sold at public auction as provided by 
221.29  law. 
221.30     (d) If a demand for judicial determination is made and no 
221.31  action commenced as provided in this subdivision, the property 
221.32  must be released by the commissioner and returned to the person 
221.33  entitled to it.  If no demand is made, the property seized is 
221.34  considered forfeited to the state by operation of law and may be 
221.35  disposed of by the commissioner as provided in the case of a 
221.36  judgment of forfeiture.  When the commissioner is satisfied that 
222.1   a person from whom property is seized was acting in good faith 
222.2   and without intent to evade the tax imposed by this chapter, the 
222.3   commissioner shall release the property seized without further 
222.4   legal proceedings. 
222.5      <b>EFFECTIVE DATE:</b>  This section is effective for alleged 
222.6   contraband seized on or after the day following final enactment. 
222.7      Sec. 20.  Minnesota Statutes 1998, section 297G.01, is 
222.8   amended by adding a subdivision to read: 
222.9      Subd. 21.  [LOW ALCOHOL DAIRY COCKTAILS.] "Low alcohol 
222.10  dairy cocktails" means premixed cocktails or any other products, 
222.11  other than liqueur-filled candy, that: 
222.12     (1) consist primarily of milk products; 
222.13     (2) are drinkable as a beverage or are promoted as an 
222.14  alcoholic product; and 
222.15     (3) contain not less than 0.5 percent alcohol by volume nor 
222.16  more than 3.2 percent alcohol by weight. 
222.17     <b>EFFECTIVE DATE:</b>  This section is effective for sales made 
222.18  after June 30, 2000. 
222.19     Sec. 21.  Minnesota Statutes 1998, section 297G.03, 
222.20  subdivision 1, is amended to read: 
222.21     Subdivision 1.  [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 
222.22  The following excise tax is imposed on all distilled spirits and 
222.23  wine manufactured, imported, sold, or possessed in this state: 
222.24                                  Standard             Metric
222.25  (a) Distilled spirits,      $5.03 per gallon   $1.33 per liter
222.26  liqueurs, cordials, 
222.27  and specialties regardless 
222.28  of alcohol content 
222.29  (excluding ethyl alcohol) 
222.30  (b) Low alcohol dairy      $ .08 per gallon   $ .02 per liter 
222.31  cocktails 
222.32  (b) (c) Wine containing     $ .30 per gallon   $ .08 per liter 
222.33  14 percent or less
222.34  alcohol by volume 
222.35  (except cider as defined 
222.36  in section 297G.01, 
223.1   subdivision 3a) 
223.2   (c) (d) Wine containing     $ .95 per gallon   $ .25 per liter
223.3   more than 14 percent 
223.4   but not more than 21
223.5   percent alcohol by volume 
223.6   (d) (e) Wine containing     $1.82 per gallon   $ .48 per liter
223.7   more than 21 percent but 
223.8   not more than 24 percent 
223.9   alcohol by volume 
223.10  (e) (f) Wine containing     $3.52 per gallon   $ .93 per liter
223.11  more than 24 percent 
223.12  alcohol by volume 
223.13  (f) (g) Natural and         $1.82 per gallon   $ .48 per liter
223.14  artificial sparkling wines
223.15  containing alcohol 
223.16  (g) (h) Cider as defined    $ .15 per gallon   $ .04 per liter
223.17  in section 297G.01, 
223.18  subdivision 3a 
223.19     In computing the tax on a package of distilled spirits or 
223.20  wine, a proportional tax at a like rate on all fractional parts 
223.21  of a gallon or liter must be paid, except that the tax on a 
223.22  fractional part of a gallon less than 1/16 of a gallon is the 
223.23  same as for 1/16 of a gallon. 
223.24     <b>EFFECTIVE DATE:</b>  This section is effective for sales made 
223.25  after June 30, 2000. 
223.26     Sec. 22.  Minnesota Statutes 1998, section 297H.02, 
223.27  subdivision 2, is amended to read: 
223.28     Subd. 2.  [RATES.] The rate of tax under this section is 
223.29  9.75 8.4 percent. 
223.30     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000, 
223.31  and thereafter. 
223.32     Sec. 23.  Minnesota Statutes 1998, section 297H.03, 
223.33  subdivision 2, is amended to read: 
223.34     Subd. 2.  [RATE.] The rate of the tax under this section is 
223.35  17 14.7 percent. 
223.36     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000, 
224.1   and thereafter. 
224.2      Sec. 24.  Minnesota Statutes 1998, section 297H.04, 
224.3   subdivision 2, is amended to read: 
224.4      Subd. 2.  [RATE.] (a) Commercial generators that generate 
224.5   non-mixed-municipal solid waste shall pay a solid waste 
224.6   management tax of 60 52 cents per noncompacted cubic yard of 
224.7   periodic waste collection capacity purchased by the generator, 
224.8   based on the size of the container for the non-mixed-municipal 
224.9   solid waste, the actual volume, or the weight-to-volume 
224.10  conversion schedule in paragraph (c).  However, the tax must be 
224.11  calculated by the waste management service provider using the 
224.12  same method for calculating the waste management service fee so 
224.13  that both are calculated according to container capacity, actual 
224.14  volume, or weight. 
224.15     (b) Notwithstanding section 297H.02, a residential 
224.16  generator that generates non-mixed-municipal solid waste shall 
224.17  pay a solid waste management tax in the same manner as provided 
224.18  in paragraph (a). 
224.19     (c) The weight-to-volume conversion schedule for: 
224.20     (1) construction debris as defined in section 115A.03, 
224.21  subdivision 7, is one ton equals 3.33 cubic yards, or $2 $1.73 
224.22  per ton; 
224.23     (2) industrial waste as defined in section 115A.03, 
224.24  subdivision 13a, is equal to 60 52 cents per cubic yard.  The 
224.25  commissioner of revenue after consultation with the commissioner 
224.26  of the pollution control agency, shall determine, and may 
224.27  publish by notice, a conversion schedule for various industrial 
224.28  wastes; and 
224.29     (3) infectious waste as defined in section 116.76, 
224.30  subdivision 12, and pathological waste as defined in section 
224.31  116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
224.32  60 52 cents per 150 pounds. 
224.33     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000, 
224.34  and thereafter.  
224.35     Sec. 25.  Minnesota Statutes 1999 Supplement, section 
224.36  297H.05, is amended to read: 
225.1      297H.05 [SELF-HAULERS.] 
225.2      (a) A self-hauler of mixed municipal solid waste shall pay 
225.3   the tax to the operator of the waste management facility to 
225.4   which the waste is delivered at the rate imposed under section 
225.5   297H.03, based on the sales price of the waste management 
225.6   services. 
225.7      (b) A self-hauler of non-mixed-municipal solid waste shall 
225.8   pay the tax to the operator of the waste management facility to 
225.9   which the waste is delivered at the rate imposed under section 
225.10  297H.04. 
225.11     (c) The tax imposed on the self-hauler of 
225.12  non-mixed-municipal solid waste may be based either on the 
225.13  capacity of the container, the actual volume, or the 
225.14  weight-to-volume conversion schedule in paragraph (d).  However, 
225.15  the tax must be calculated by the operator using the same method 
225.16  for calculating the tipping fee so that both are calculated 
225.17  according to container capacity, actual volume, or weight. 
225.18     (d) The weight-to-volume conversion schedule for: 
225.19     (1) construction debris as defined in section 115A.03, 
225.20  subdivision 7, is one ton equals 3.33 cubic yards, or $2 $1.73 
225.21  per ton; 
225.22     (2) industrial waste as defined in section 115A.03, 
225.23  subdivision 13a, is equal to 60 52 cents per cubic yard.  The 
225.24  commissioner of revenue, after consultation with the 
225.25  commissioner of the pollution control agency, shall determine, 
225.26  and may publish by notice, a conversion schedule for various 
225.27  industrial wastes; and 
225.28     (3) infectious waste as defined in section 116.76, 
225.29  subdivision 12, and pathological waste as defined in section 
225.30  116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
225.31  60 52 cents per 150 pounds. 
225.32     (e) For mixed municipal solid waste the tax is imposed upon 
225.33  the difference between the market price and the tip fee at a 
225.34  processing or disposal facility if the tip fee is less than the 
225.35  market price and the political subdivision subsidizes the cost 
225.36  of service at the facility.  The political subdivision is liable 
226.1   for the tax. 
226.2      <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000, 
226.3   and thereafter. 
226.4      Sec. 26.  Minnesota Statutes 1998, section 297H.13, 
226.5   subdivision 2, is amended to read: 
226.6      Subd. 2.  [ALLOCATION OF REVENUES.] (a) $22,000,000, or 50 
226.7   percent, whichever is greater, of the amounts remitted under 
226.8   this chapter must be credited to the solid waste fund 
226.9   established in section 115B.42. 
226.10     (b) The remainder must be deposited into the general fund. 
226.11     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000, 
226.12  and thereafter.  
226.13     Sec. 27.  Minnesota Statutes 1998, section 297H.13, 
226.14  subdivision 4, is amended to read: 
226.15     Subd. 4.  [EXCESS REVENUE ADJUSTMENT.] Beginning in 
226.16  calendar year 2001, if the total tax revenues collected from the 
226.17  taxes imposed under this chapter in fiscal the previous calendar 
226.18  year 1999 is projected to exceed $44,500,000 exceed $45,000,000, 
226.19  the commissioner of revenue shall decrease proportionately the 
226.20  amount of the tax under sections 297H.02, 297H.03, 297H.04, and 
226.21  297H.05, by an amount sufficient to eliminate the excess 
226.22  effective October 1, 1999, amount over $44,500,000 and shall 
226.23  provide notice of the decreased tax by August 1, 1999, of that 
226.24  year to waste management service providers.  The rate of tax 
226.25  determined by the commissioner shall be effective for waste 
226.26  management services provided after September 30 of that year. 
226.27     In determining whether an adjustment is necessary under 
226.28  this subdivision, the commissioner shall calculate the 
226.29  collections of the taxes imposed under this chapter in the 
226.30  preceding calendar year as if the most recent tax rates had been 
226.31  in effect for the entire calendar year. 
226.32     <b>EFFECTIVE DATE:</b>  This section is effective the day 
226.33  following final enactment. 
226.34     Sec. 28.  Minnesota Statutes 1998, section 297H.13, is 
226.35  amended by adding a subdivision to read: 
226.36     Subd. 7.  [NOTICE OF RATE CHANGE.] Waste management service 
227.1   providers shall provide notice to each customer of the rate 
227.2   decreases provided in this section no later than 90 days after 
227.3   the rate decreases take effect. 
227.4      <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2000, 
227.5   and thereafter. 
227.6                              ARTICLE 11 
227.7                       TAX INCREMENT FINANCING 
227.8      Section 1.  Minnesota Statutes 1998, section 469.115, is 
227.9   amended to read: 
227.10     469.115 [POWERS OF AGENCIES.] 
227.11     A local agency shall have all the powers necessary or 
227.12  convenient to carry out the purposes of sections 469.109 to 
227.13  469.123; except that the agencies shall not levy and collect 
227.14  taxes or special assessments, nor exercise the power of eminent 
227.15  domain unless the governing body of the municipality or 
227.16  municipalities, in the case of a joint exercise of power, shall 
227.17  by resolution have expressly conferred that power on the 
227.18  agency.  A local agency shall also have the following powers in 
227.19  addition to others granted in sections 469.109 to 469.123: 
227.20     (1) to sue and be sued, to have a seal, which shall be 
227.21  judicially noticed, and to alter the same at pleasure; to have 
227.22  perpetual succession; and to make, amend, and repeal rules and 
227.23  regulations not inconsistent with these sections; 
227.24     (2) to employ an executive director, technical experts, and 
227.25  officers, agents and employees, permanent and temporary, that it 
227.26  requires, and determine their qualifications, duties, and 
227.27  compensation; for legal service it may require, to call upon the 
227.28  chief law officer of the municipality or to employ its own 
227.29  counsel and legal staff; so far as practical, to use the 
227.30  services of local public bodies, in its area of operation.  
227.31  Those local bodies, if requested, shall make the services 
227.32  available; 
227.33     (3) to delegate to one or more of its agents or employees 
227.34  the powers or duties it deems proper; 
227.35     (4) upon proper application by a public body or private 
227.36  applicant, and after determining that the purpose of sections 
228.1   469.109 to 469.123 will be accomplished by the establishment of 
228.2   the project in the redevelopment area to approve a redevelopment 
228.3   project; 
228.4      (5) to sell, transfer, convey, or otherwise dispose of real 
228.5   or personal property or any interest therein, and to execute 
228.6   leases, deeds, conveyances, negotiable instruments, purchase 
228.7   agreements, and other contracts or instruments, and take action 
228.8   that is necessary or convenient to carry out the purposes of 
228.9   these sections; 
228.10     (6) within its area of operation to acquire real or 
228.11  personal property or any interest therein by gift, grant, 
228.12  purchase, exchange, lease, transfer, bequest, devise, or 
228.13  otherwise.  An agency may acquire real property which it deems 
228.14  necessary for its purposes by exercise of the power of eminent 
228.15  domain in the manner provided in chapter 117, after adoption of 
228.16  a resolution declaring that the acquisition of the real property 
228.17  is necessary to eliminate one or more of the conditions found to 
228.18  exist in the resolution adopted pursuant to section 469.111, 
228.19  subdivision 1; 
228.20     (7) to designate redevelopment areas; 
228.21     (8) to cooperate with industrial development corporations, 
228.22  state and federal agencies, and private persons or corporations 
228.23  in efforts to promote the expansion of recreational, commercial, 
228.24  industrial, and manufacturing activity in a redevelopment area; 
228.25     (9) upon proper application by any public body or private 
228.26  applicant, to determine whether the declared public purpose of 
228.27  these sections has been accomplished or will be accomplished by 
228.28  the establishment of a redevelopment project in a redevelopment 
228.29  area; 
228.30     (10) to obtain information necessary to the designation of 
228.31  a redevelopment area and the establishment of a redevelopment 
228.32  project therein; 
228.33     (11) to cooperate with or act as agent for the federal 
228.34  government, the state, or any state public body or any agency or 
228.35  instrumentality thereof in carrying out the provisions of these 
228.36  sections or of any other related federal, state, or local 
229.1   legislation; 
229.2      (12) to borrow money or other property and accept 
229.3   contributions, grants, gifts, services, or other assistance from 
229.4   the federal or state government to accomplish the purposes of 
229.5   sections 469.109 to 469.123; 
229.6      (13) to conduct mined underground space development 
229.7   pursuant to sections 469.135 to 469.141; 
229.8      (14) to include in any contract for financial assistance 
229.9   with the federal government any conditions which the federal 
229.10  government may attach to its financial aid of a redevelopment 
229.11  project; 
229.12     (15) (14) to issue bonds, notes, or other evidences of 
229.13  indebtedness as hereinafter provided, for any of its purposes 
229.14  and to secure them by mortgages upon property held or to be held 
229.15  by it, or by pledge of its revenues, including grants or 
229.16  contributions; and 
229.17     (16) (15) to invest any funds held in reserve or sinking 
229.18  funds, or any funds not required for immediate disbursement, in 
229.19  property or securities in which savings banks may legally invest 
229.20  funds subject to their control.  
229.21     <b>EFFECTIVE DATE:</b>  This section is effective the day 
229.22  following final enactment. 
229.23     Sec. 2.  Minnesota Statutes 1998, section 469.174, 
229.24  subdivision 9, is amended to read: 
229.25     Subd. 9.  [TAX INCREMENT FINANCING DISTRICT.] "Tax 
229.26  increment financing district" or "district" means a contiguous 
229.27  or noncontiguous geographic area within a project delineated in 
229.28  the tax increment financing plan, as provided by section 
229.29  469.175, subdivision 1, for the purpose of financing 
229.30  redevelopment, mined underground space development, housing or 
229.31  economic development in municipalities through the use of tax 
229.32  increment generated from the captured net tax capacity in the 
229.33  tax increment financing district.  
229.34     <b>EFFECTIVE DATE:</b>  This section is effective the day 
229.35  following final enactment. 
229.36     Sec. 3.  Minnesota Statutes 1998, section 469.174, 
230.1   subdivision 10, is amended to read: 
230.2      Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
230.3   district" means a type of tax increment financing district 
230.4   consisting of a project, or portions of a project, within which 
230.5   the authority finds by resolution that one or more of the 
230.6   following conditions, reasonably distributed throughout the 
230.7   district, exists: 
230.8      (1) parcels consisting of 70 percent of the area of the 
230.9   district are occupied by buildings, streets, utilities, or other 
230.10  improvements and more than 50 percent of the buildings, not 
230.11  including outbuildings, are structurally substandard to a degree 
230.12  requiring substantial renovation or clearance; or 
230.13     (2) the property consists of vacant, unused, underused, 
230.14  inappropriately used, or infrequently used railyards, rail 
230.15  storage facilities, or excessive or vacated railroad 
230.16  rights-of-way; or 
230.17     (3) tank facilities, or property whose immediately previous 
230.18  use was for tank facilities, as defined in section 115C.02, 
230.19  subdivision 15, if the tank facilities: 
230.20     (i) have or had a capacity of more than 1,000,000 gallons; 
230.21     (ii) are located adjacent to rail facilities; and 
230.22     (iii) have been removed or are unused, underused, 
230.23  inappropriately used, or infrequently used. 
230.24     (b) For purposes of this subdivision, "structurally 
230.25  substandard" shall mean containing defects in structural 
230.26  elements or a combination of deficiencies in essential utilities 
230.27  and facilities, light and ventilation, fire protection including 
230.28  adequate egress, layout and condition of interior partitions, or 
230.29  similar factors, which defects or deficiencies are of sufficient 
230.30  total significance to justify substantial renovation or 
230.31  clearance.  
230.32     (c) A building is not structurally substandard if it is in 
230.33  compliance with the building code applicable to new buildings or 
230.34  could be modified to satisfy the building code at a cost of less 
230.35  than 15 percent of the cost of constructing a new structure of 
230.36  the same square footage and type on the site.  The municipality 
231.1   may find that a building is not disqualified as structurally 
231.2   substandard under the preceding sentence on the basis of 
231.3   reasonably available evidence, such as the size, type, and age 
231.4   of the building, the average cost of plumbing, electrical, or 
231.5   structural repairs, or other similar reliable evidence.  The 
231.6   municipality may not make such a determination without an 
231.7   interior inspection of the property, but need not have an 
231.8   independent, expert appraisal prepared of the cost of repair and 
231.9   rehabilitation of the building.  An interior inspection of the 
231.10  property is not required, if the municipality finds that (1) the 
231.11  municipality or authority is unable to gain access to the 
231.12  property after using its best efforts to obtain permission from 
231.13  the party that owns or controls the property; and (2) the 
231.14  evidence otherwise supports a reasonable conclusion that the 
231.15  building is structurally substandard.  Items of evidence that 
231.16  support such a conclusion include recent fire or police 
231.17  inspections, on-site property tax appraisals or housing 
231.18  inspections, exterior evidence of deterioration, or other 
231.19  similar reliable evidence.  Written documentation of the 
231.20  findings and reasons why an interior inspection was not 
231.21  conducted must be made and retained under section 469.175, 
231.22  subdivision 3, clause (1). 
231.23     (d) A parcel is deemed to be occupied by a structurally 
231.24  substandard building for purposes of the finding under paragraph 
231.25  (a) if all of the following conditions are met: 
231.26     (1) the parcel was occupied by a substandard building 
231.27  within three years of the filing of the request for 
231.28  certification of the parcel as part of the district with the 
231.29  county auditor; 
231.30     (2) the substandard building was demolished or removed by 
231.31  the authority or the demolition or removal was financed by the 
231.32  authority or was done by a developer under a development 
231.33  agreement with the authority; 
231.34     (3) the authority found by resolution before the demolition 
231.35  or removal that the parcel was occupied by a structurally 
231.36  substandard building and that after demolition and clearance the 
232.1   authority intended to include the parcel within a district; and 
232.2      (4) upon filing the request for certification of the tax 
232.3   capacity of the parcel as part of a district, the authority 
232.4   notifies the county auditor that the original tax capacity of 
232.5   the parcel must be adjusted as provided by section 469.177, 
232.6   subdivision 1, paragraph (h). 
232.7      (e) For purposes of this subdivision, a parcel is not 
232.8   occupied by buildings, streets, utilities, or other improvements 
232.9   unless 15 percent of the area of the parcel contains 
232.10  improvements. 
232.11     (f) For districts consisting of two or more noncontiguous 
232.12  areas, each area must qualify as a redevelopment district under 
232.13  paragraph (a) to be included in the district, and the entire 
232.14  area of the district must satisfy paragraph (a). 
232.15     <b>EFFECTIVE DATE:</b>  This section is effective for districts or 
232.16  additions to the geographic area of an existing district for 
232.17  which the request for certification was received by the county 
232.18  auditor after June 30, 2000. 
232.19     Sec. 4.  Minnesota Statutes 1998, section 469.174, 
232.20  subdivision 11, is amended to read: 
232.21     Subd. 11.  [HOUSING DISTRICT.] "Housing district" means a 
232.22  type of tax increment financing district which consists of a 
232.23  project, or a portion of a project, intended for occupancy, in 
232.24  part, by persons or families of low and moderate income, as 
232.25  defined in chapter 462A, Title II of the National Housing Act of 
232.26  1934, the National Housing Act of 1959, the United States 
232.27  Housing Act of 1937, as amended, Title V of the Housing Act of 
232.28  1949, as amended, any other similar present or future federal, 
232.29  state, or municipal legislation, or the regulations promulgated 
232.30  under any of those acts.  A project does not qualify under this 
232.31  subdivision if the fair market value of the improvements which 
232.32  are constructed for commercial uses or for uses other than low 
232.33  and moderate income housing consists of more than 20 percent of 
232.34  the total fair market value of the planned improvements in the 
232.35  development plan or agreement.  The fair market value of the 
232.36  improvements may be determined using the cost of construction, 
233.1   capitalized income, or other appropriate method of estimating 
233.2   market value. 
233.3      <b>EFFECTIVE DATE:</b>  This section is effective for districts 
233.4   and amendments adding geographic area to an existing district 
233.5   for which the request for certification was filed with the 
233.6   county after May 1, 1988. 
233.7      Sec. 5.  Minnesota Statutes 1998, section 469.174, 
233.8   subdivision 12, is amended to read: 
233.9      Subd. 12.  [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 
233.10  development district" means a type of tax increment financing 
233.11  district which consists of any project, or portions of a 
233.12  project, not meeting the requirements found in the definition of 
233.13  redevelopment district, renewal and renovation district, soils 
233.14  condition district, mined underground space development 
233.15  district, or housing district, but which the authority finds to 
233.16  be in the public interest because: 
233.17     (1) it will discourage commerce, industry, or manufacturing 
233.18  from moving their operations to another state or municipality; 
233.19  or 
233.20     (2) it will result in increased employment in the state; or 
233.21     (3) it will result in preservation and enhancement of the 
233.22  tax base of the state. 
233.23     <b>EFFECTIVE DATE:</b>  This section is effective the day 
233.24  following final enactment. 
233.25     Sec. 6.  Minnesota Statutes 1998, section 469.174, 
233.26  subdivision 14, is amended to read: 
233.27     Subd. 14.  [ADMINISTRATIVE EXPENSES.] "Administrative 
233.28  expenses" means all expenditures of an authority other than: 
233.29     (1) amounts paid for the purchase of land or; 
233.30     (2) amounts paid to contractors or others providing 
233.31  materials and services, including architectural and engineering 
233.32  services, directly connected with the physical development of 
233.33  the real property in the district, project; 
233.34     (3) relocation benefits paid to or services provided for 
233.35  persons residing or businesses located in the district, 
233.36  or project; 
234.1      (4) amounts used to pay principal or interest on, fund a 
234.2   reserve for, or sell at a discount bonds issued pursuant to 
234.3   section 469.178; or 
234.4      (5) amounts used to pay other financial obligations to the 
234.5   extent those obligations were used to finance costs described in 
234.6   clauses (1) to (3). 
234.7      For districts for which the requests for certifications 
234.8   were made before August 1, 1979, or after June 30, 1982, 
234.9   "administrative expenses" includes amounts paid for services 
234.10  provided by bond counsel, fiscal consultants, and planning or 
234.11  economic development consultants.  
234.12     <b>EFFECTIVE DATE:</b>  This section is effective for all tax 
234.13  increment financing districts, regardless of when the request 
234.14  for certification was made. 
234.15     Sec. 7.  Minnesota Statutes 1998, section 469.174, 
234.16  subdivision 22, is amended to read: 
234.17     Subd. 22.  [TOURISM FACILITY.] "Tourism facility" means 
234.18  property that: 
234.19     (1) is located in a county where the median income is no 
234.20  more than 85 percent of the state median income; 
234.21     (2) is located in a county in which, excluding the cities 
234.22  of the first class in that county, the earnings on 
234.23  tourism-related activities are 15 percent or more of the total 
234.24  earnings in the county development region 2, 3, 4, or 5, as 
234.25  defined in section 462.385; 
234.26     (3) is located outside the metropolitan area defined in 
234.27  section 473.121, subdivision 2; 
234.28     (4) is not located in a city with a population in excess of 
234.29  20,000; and 
234.30     (5) (4) is acquired, constructed, or rehabilitated for use 
234.31  as a convention and meeting facility that is privately 
234.32  owned, amusement park, recreation facility, cultural facility, 
234.33  marina, park, hotel, motel, lodging facility, or nonhomestead 
234.34  dwelling unit that in each case is intended to serve primarily 
234.35  individuals from outside the county. 
234.36     <b>EFFECTIVE DATE:</b>  The amendment to clauses (2) and (3) in 
235.1   this section is effective for districts for which the request 
235.2   for certification is made after May 1, 1993. 
235.3      The amendment to clause (5) by this section is effective 
235.4   for all economic development tax increment financing districts, 
235.5   regardless of when the request for certification was made, but 
235.6   does not apply to (1) expenditures made before January 1, 2000; 
235.7   (2) expenditures made under a binding contract entered before 
235.8   January 1, 2000; or (3) expenditures made under a binding 
235.9   contract entered pursuant to a letter of intent with the 
235.10  developer or contractor if the letter of intent was entered 
235.11  before January 1, 2000. 
235.12     Sec. 8.  Minnesota Statutes 1998, section 469.175, 
235.13  subdivision 1a, is amended to read: 
235.14     Subd. 1a.  [INCLUSION OF COUNTY ROAD COSTS.] (a) The county 
235.15  board may require the authority to pay all or a portion of the 
235.16  cost of county road improvements out of increment revenues, if 
235.17  the following conditions occur: 
235.18     (1) the proposed tax increment financing plan or an 
235.19  amendment to the plan contemplates construction of a development 
235.20  that will, in the judgment of the county, substantially increase 
235.21  the use of county roads requiring construction of road 
235.22  improvements or other road costs; and 
235.23     (2) the road improvements or other road costs are not 
235.24  scheduled for construction within five years under the county 
235.25  capital improvement plan or other formally adopted county plan, 
235.26  and in the opinion of the county, would not reasonably be 
235.27  expected to be needed within the reasonably foreseeable future 
235.28  if the tax increment financing plan were not implemented. 
235.29     (b) If the county elects to use increments to finance the 
235.30  road improvements, the county must notify the authority and 
235.31  municipality within 30 60 days after receipt of the information 
235.32  on the proposed tax increment district financing plan under 
235.33  subdivision 2.  The notice must include the estimated cost of 
235.34  the road improvements and schedule for construction and payment 
235.35  of the cost.  The authority must include the improvements in the 
235.36  tax increment financing plan.  The improvements may be financed 
236.1   with the proceeds of tax increment bonds or the authority and 
236.2   the county may agree that the county will finance the 
236.3   improvements with county funds to be repaid in installments, 
236.4   with or without interest, out of increment revenues.  If the 
236.5   cost of the road improvements and other project costs exceed the 
236.6   projected amount of the increment revenues, the county and 
236.7   authority shall negotiate an agreement, modifying the 
236.8   development plan or proposed road improvements that will permit 
236.9   financing of the costs before the tax increment financing plan 
236.10  may be approved. 
236.11     <b>EFFECTIVE DATE:</b>  This section is effective for tax 
236.12  increment financing plans approved after July 1, 2000. 
236.13     Sec. 9.  Minnesota Statutes 1998, section 469.175, 
236.14  subdivision 2, is amended to read: 
236.15     Subd. 2.  [CONSULTATIONS; COMMENT AND FILING.] Before 
236.16  formation of a tax increment financing district, the authority 
236.17  shall provide an opportunity to the members of the county boards 
236.18  of commissioners of any county in which any portion of the 
236.19  proposed district is located and the members of the school board 
236.20  of any school district in which any portion of the proposed 
236.21  district is located to meet with the authority.  The authority 
236.22  shall present to the members of the county boards of 
236.23  commissioners and the school boards its the county auditor and 
236.24  clerk of the school board with the proposed tax increment 
236.25  financing plan for the district and the authority's estimate of 
236.26  the fiscal and economic implications of the proposed tax 
236.27  increment financing district.  The authority must provide the 
236.28  proposed tax increment financing plan and the information on the 
236.29  fiscal and economic implications of the plan must be provided to 
236.30  the county auditor and the clerk of the school district boards 
236.31  board at least 30 days before the public hearing required by 
236.32  subdivision 3.  The information on the fiscal and economic 
236.33  implications may be included in or as part of the tax increment 
236.34  financing plan.  The county auditor and clerk of the school 
236.35  board shall provide copies to the members of the boards, as 
236.36  directed by their respective boards.  The 30-day requirement is 
237.1   waived if the boards of the county and school district submit 
237.2   written comments on the proposal and any modification of the 
237.3   proposal to the authority after receipt of the information.  The 
237.4   members of the county boards of commissioners and the school 
237.5   boards may present their comments at the public hearing on the 
237.6   tax increment financing plan required by subdivision 3.  Upon 
237.7   adoption of the tax increment financing plan, the authority 
237.8   shall file a copy of the plan with the commissioner of revenue.  
237.9   The authority must also file with the commissioner a copy of the 
237.10  development plan for the project area. 
237.11     <b>EFFECTIVE DATE:</b>  This section is effective for tax 
237.12  increment financing plans approved after July 1, 2000. 
237.13     Sec. 10.  Minnesota Statutes 1998, section 469.175, 
237.14  subdivision 2a, is amended to read: 
237.15     Subd. 2a.  [HOUSING DISTRICTS; REDEVELOPMENT DISTRICTS.] In 
237.16  the case of a proposed housing district or redevelopment 
237.17  district, in addition to the requirements of subdivision 2, at 
237.18  least 30 days before the publication of the notice for public 
237.19  hearing under subdivision 3, the authority shall deliver written 
237.20  notice of the proposed district to each county commissioner who 
237.21  represents part of the area proposed to be included in the 
237.22  district.  The notice must contain a general description of the 
237.23  boundaries of the proposed district and the proposed activities 
237.24  to be financed by the district, an offer by the authority to 
237.25  meet and discuss the proposed district with the county 
237.26  commissioner, and a solicitation of the commissioner's comments 
237.27  with respect to the district.  The commissioner may waive the 
237.28  30-day requirement by submitting written comments on the 
237.29  proposal and any modification of the proposal to the authority 
237.30  after receipt of the information. 
237.31     <b>EFFECTIVE DATE:</b>  This section is effective for tax 
237.32  increment financing districts for which the requests for 
237.33  certification is made after May 31, 1993. 
237.34     Sec. 11.  Minnesota Statutes 1998, section 469.175, 
237.35  subdivision 3, is amended to read: 
237.36     Subd. 3.  [MUNICIPALITY APPROVAL.] A county auditor shall 
238.1   not certify the original net tax capacity of a tax increment 
238.2   financing district until the tax increment financing plan 
238.3   proposed for that district has been approved by the municipality 
238.4   in which the district is located.  If an authority that proposes 
238.5   to establish a tax increment financing district and the 
238.6   municipality are not the same, the authority shall apply to the 
238.7   municipality in which the district is proposed to be located and 
238.8   shall obtain the approval of its tax increment financing plan by 
238.9   the municipality before the authority may use tax increment 
238.10  financing.  The municipality shall approve the tax increment 
238.11  financing plan only after a public hearing thereon after 
238.12  published notice in a newspaper of general circulation in the 
238.13  municipality at least once not less than ten days nor more than 
238.14  30 days prior to the date of the hearing.  The published notice 
238.15  must include a map of the area of the district from which 
238.16  increments may be collected and, if the project area includes 
238.17  additional area, a map of the project area in which the 
238.18  increments may be expended.  The hearing may be held before or 
238.19  after the approval or creation of the project or it may be held 
238.20  in conjunction with a hearing to approve the project.  Before or 
238.21  at the time of approval of the tax increment financing plan, the 
238.22  municipality shall make the following findings, and shall set 
238.23  forth in writing the reasons and supporting facts for each 
238.24  determination: 
238.25     (1) that the proposed tax increment financing district is a 
238.26  redevelopment district, a renewal or renovation district, a 
238.27  mined underground space development district, a housing 
238.28  district, a soils condition district, or an economic development 
238.29  district; if the proposed district is a redevelopment district 
238.30  or a renewal or renovation district, the reasons and supporting 
238.31  facts for the determination that the district meets the criteria 
238.32  of section 469.174, subdivision 10, paragraph (a), clauses (1) 
238.33  and (2), or subdivision 10a, must be documented in writing and 
238.34  retained and made available to the public by the authority until 
238.35  the district has been terminated. 
238.36     (2) that the proposed development or redevelopment, in the 
239.1   opinion of the municipality, would not reasonably be expected to 
239.2   occur solely through private investment within the reasonably 
239.3   foreseeable future and that the increased market value of the 
239.4   site that could reasonably be expected to occur without the use 
239.5   of tax increment financing would be less than the increase in 
239.6   the market value estimated to result from the proposed 
239.7   development after subtracting the present value of the projected 
239.8   tax increments for the maximum duration of the district 
239.9   permitted by the plan.  The requirements of this clause do not 
239.10  apply if the district is a qualified housing district, as 
239.11  defined in section 273.1399, subdivision 1. 
239.12     (3) that the tax increment financing plan conforms to the 
239.13  general plan for the development or redevelopment of the 
239.14  municipality as a whole. 
239.15     (4) that the tax increment financing plan will afford 
239.16  maximum opportunity, consistent with the sound needs of the 
239.17  municipality as a whole, for the development or redevelopment of 
239.18  the project by private enterprise. 
239.19     (5) that the municipality elects the method of tax 
239.20  increment computation set forth in section 469.177, subdivision 
239.21  3, clause (b), if applicable. 
239.22     When the municipality and the authority are not the same, 
239.23  the municipality shall approve or disapprove the tax increment 
239.24  financing plan within 60 days of submission by the authority, or 
239.25  the plan shall be deemed approved.  When the municipality and 
239.26  the authority are not the same, the municipality may not amend 
239.27  or modify a tax increment financing plan except as proposed by 
239.28  the authority pursuant to subdivision 4.  Once approved, the 
239.29  determination of the authority to undertake the project through 
239.30  the use of tax increment financing and the resolution of the 
239.31  governing body shall be conclusive of the findings therein and 
239.32  of the public need for the financing. 
239.33     <b>EFFECTIVE DATE:</b>  This section is effective for tax 
239.34  increment financing plans approved after June 30, 2000. 
239.35     Sec. 12.  Minnesota Statutes 1998, section 469.175, 
239.36  subdivision 4, is amended to read: 
240.1      Subd. 4.  [MODIFICATION OF PLAN.] (a) A tax increment 
240.2   financing plan may be modified by an authority, provided that by 
240.3   resolution.  The geographic area of a tax increment financing 
240.4   district may be reduced, but may not be enlarged after five 
240.5   years following the date of certification of the original net 
240.6   tax capacity by the county auditor. 
240.7      (b) The following modifications may only be approved after 
240.8   the discussion, public hearing, and findings required for 
240.9   approval of the original plan: 
240.10     (1) any reduction or enlargement of geographic area of the 
240.11  project or tax increment financing district, unless the 
240.12  reduction meets the requirements of paragraph (e); 
240.13     (2) an increase in the amount of bonded indebtedness to be 
240.14  incurred, including a determination to capitalize interest on 
240.15  the debt if that determination was not a part of the original 
240.16  plan, or to increase or decrease the amount of interest on the 
240.17  debt to be capitalized,; 
240.18     (3) an increase in the portion of the captured net tax 
240.19  capacity to be retained by the authority,; 
240.20     (4) an increase in total estimated tax increment 
240.21  expenditures, unless the increase is made to include the cost of 
240.22  road improvements submitted by the county under subdivision 1a 
240.23  after approval of the original tax increment financing plan; or 
240.24     (5) designation of additional property to be acquired by 
240.25  the authority shall be approved upon the notice and after the 
240.26  discussion, public hearing, and findings required for approval 
240.27  of the original plan; provided that. 
240.28     (c) If an authority changes the type of district from 
240.29  housing, redevelopment, or economic development to another type 
240.30  of district, this change shall is not be considered a 
240.31  modification but shall require requires the authority to follow 
240.32  the procedure set forth in sections 469.174 to 469.179 for 
240.33  adoption of a new plan, including certification of the net tax 
240.34  capacity of the district by the county auditor.  
240.35     (d) If a redevelopment district or a renewal and renovation 
240.36  district is enlarged, the reasons and supporting facts for the 
241.1   determination that the addition to the district meets the 
241.2   criteria of section 469.174, subdivision 10, paragraph (a), 
241.3   clauses (1) and (2), or subdivision 10a, must be documented.  
241.4      (e) The requirements of this paragraph (b) do not apply to 
241.5   a reduction in the geographic area of a tax increment district 
241.6   if: 
241.7      (1) the only modification is elimination of parcels from 
241.8   the project or district; and 
241.9      (2)(A) the current net tax capacity of the parcels 
241.10  eliminated from the district equals or exceeds the net tax 
241.11  capacity of those parcels in the district's original net tax 
241.12  capacity or (B) the authority agrees that, notwithstanding 
241.13  section 469.177, subdivision 1, the original net tax capacity 
241.14  will be reduced by no more than the current net tax capacity of 
241.15  the parcels eliminated from the district.  
241.16     (f) The authority must notify the county auditor of any 
241.17  modification that reduces or enlarges the geographic area of a 
241.18  district or a project area.  
241.19     (b) The geographic area of a tax increment financing 
241.20  district may be reduced, but shall not be enlarged after five 
241.21  years following the date of certification of the original net 
241.22  tax capacity by the county auditor or after August 1, 1984, for 
241.23  tax increment financing districts authorized prior to August 1, 
241.24  1979. 
241.25     <b>EFFECTIVE DATE:</b>  This section is effective for 
241.26  modifications of tax increment financing plans adopted by the 
241.27  authority after June 30, 2000. 
241.28     Sec. 13.  Minnesota Statutes 1998, section 469.175, 
241.29  subdivision 5, is amended to read: 
241.30     Subd. 5.  [ANNUAL DISCLOSURE.] (a) The authority shall 
241.31  annually submit to the county board, the county auditor, the 
241.32  school board, state auditor and, if the authority is other than 
241.33  the municipality, the governing body of the municipality, a 
241.34  report of the status of the district.  The report shall include 
241.35  the following information:  the amount and the source of revenue 
241.36  in the account, the amount and purpose of expenditures from the 
242.1   account, the amount of any pledge of revenues, including 
242.2   principal and interest on any outstanding bonded indebtedness, 
242.3   the original net tax capacity of the district and any 
242.4   subdistrict, the captured net tax capacity retained by the 
242.5   authority, the captured net tax capacity shared with other 
242.6   taxing districts, the tax increment received, and any additional 
242.7   information necessary to demonstrate compliance with any 
242.8   applicable tax increment financing plan.  The authority must 
242.9   submit the annual report for a year on or before August 1 of the 
242.10  next year. 
242.11     (b) An annual statement showing the tax increment received 
242.12  and expended in that year, the original net tax capacity, 
242.13  captured net tax capacity, amount of outstanding bonded 
242.14  indebtedness, the amount of the district's and any subdistrict's 
242.15  increments paid to other governmental bodies, the amount paid 
242.16  for administrative costs, the sum of increments paid, directly 
242.17  or indirectly, for activities and improvements located outside 
242.18  of the district, for each district the information required to 
242.19  be reported under subdivision 6, paragraph (c), clauses (1), 
242.20  (2), (3), (11), (12), (21), and (22); the amounts of tax 
242.21  increment received and expended in the reporting period; and any 
242.22  additional information the authority deems necessary shall must 
242.23  be published in a newspaper of general circulation in the 
242.24  municipality that approved the tax increment financing plan.  If 
242.25  the fiscal disparities contribution under chapter 276A or 473F 
242.26  for the district is computed under section 469.177, subdivision 
242.27  3, paragraph (a), the annual statement must disclose that fact 
242.28  and indicate the amount of increased property tax imposed on 
242.29  other properties in the municipality as a result of the fiscal 
242.30  disparities contribution.  The commissioner of revenue shall 
242.31  prescribe the form of this statement and the method for 
242.32  calculating the increased property taxes.  The annual statement 
242.33  must inform readers that additional information regarding each 
242.34  district may be obtained from the authority, and must explain 
242.35  how the additional information may be requested.  The authority 
242.36  must publish the annual statement for a year no later than 
243.1   August 15 of the next year.  The authority must identify the 
243.2   newspaper of general circulation in the municipality to which 
243.3   the annual statement has been or will be submitted for 
243.4   publication and provide a copy of the annual statement to 
243.5   the county board, the county auditor, the school board, the 
243.6   state auditor, and, if the authority is other than the 
243.7   municipality, the governing body of the municipality on or 
243.8   before August 1 of the year in which the statement must be 
243.9   published.  
243.10     (c) The disclosure and reporting requirements imposed by 
243.11  this subdivision apply to districts certified before, on, or 
243.12  after August 1, 1979. 
243.13     <b>EFFECTIVE DATE:</b>  This section is effective for reports due 
243.14  beginning in 2001. 
243.15     Sec. 14.  Minnesota Statutes 1998, section 469.175, 
243.16  subdivision 6, is amended to read: 
243.17     Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
243.18  auditor shall develop a uniform system of accounting and 
243.19  financial reporting for tax increment financing districts.  The 
243.20  system of accounting and financial reporting shall, as nearly as 
243.21  possible: 
243.22     (1) provide for full disclosure of the sources and uses of 
243.23  public funds in the district; 
243.24     (2) permit comparison and reconciliation with the affected 
243.25  local government's accounts and financial reports; 
243.26     (3) permit auditing of the funds expended on behalf of a 
243.27  district, including a single district that is part of a 
243.28  multidistrict project or that is funded in part or whole through 
243.29  the use of a development account funded with tax increments from 
243.30  other districts or with other public money; 
243.31     (4) be consistent with generally accepted accounting 
243.32  principles. 
243.33     (b) The authority must annually submit to the state auditor 
243.34  a financial report in compliance with paragraph (a).  Copies of 
243.35  the report must also be provided to the county and school 
243.36  district boards auditor and to the governing body of the 
244.1   municipality, if the authority is not the municipality.  To the 
244.2   extent necessary to permit compliance with the requirement of 
244.3   financial reporting, the county and any other appropriate local 
244.4   government unit or private entity must provide the necessary 
244.5   records or information to the authority or the state auditor as 
244.6   provided by the system of accounting and financial reporting 
244.7   developed pursuant to paragraph (a).  The authority must submit 
244.8   the annual report for a year on or before August 1 of the next 
244.9   year. 
244.10     (c) The annual financial report must also include the 
244.11  following items: 
244.12     (1) the original net tax capacity of the district and any 
244.13  subdistrict under section 469.177, subdivision 1; 
244.14     (2) the net tax capacity for the reporting period of the 
244.15  district and any subdistrict; 
244.16     (3) the captured net tax capacity of the district, 
244.17  including the amount of any captured net tax capacity shared 
244.18  with other taxing districts; 
244.19     (3) (4) any fiscal disparity deduction from the captured 
244.20  net tax capacity under section 469.177, subdivision 3; 
244.21     (5) the captured net tax capacity retained for tax 
244.22  increment financing under section 469.177, subdivision 2, 
244.23  paragraph (a), clause (1); 
244.24     (6) any captured net tax capacity distributed among 
244.25  affected taxing districts under section 469.177, subdivision 2, 
244.26  paragraph (a), clause (2); 
244.27     (7) the type of district; 
244.28     (8) the date the municipality approved the tax increment 
244.29  financing plan and the date of approval of any modification of 
244.30  the tax increment financing plan, the approval of which requires 
244.31  notice, discussion, a public hearing, and findings under 
244.32  subdivision 4, paragraph (a); 
244.33     (9) the date the authority first requested certification of 
244.34  the original net tax capacity of the district and the date of 
244.35  the request for certification regarding any parcel added to the 
244.36  district; 
245.1      (10) the date the county auditor first certified the 
245.2   original net tax capacity of the district and the date of 
245.3   certification of the original net tax capacity of any parcel 
245.4   added to the district; 
245.5      (11) the month and year in which the authority has received 
245.6   or anticipates it will receive the first increment from the 
245.7   district; 
245.8      (12) the date the district must be decertified; 
245.9      (13) for the reporting period and prior years of the 
245.10  district, the actual amount received from, at least, the 
245.11  following categories: 
245.12     (i) tax increments paid by the captured net tax capacity 
245.13  retained for tax increment financing under section 469.177, 
245.14  subdivision 2, paragraph (a), clause (1), but excluding any 
245.15  excess taxes; 
245.16     (ii) tax increments that are interest or other investment 
245.17  earnings on or from tax increments; 
245.18     (iii) tax increments that are proceeds from the sale or 
245.19  lease of property, tangible or intangible, purchased by the 
245.20  authority with tax increments; 
245.21     (iv) tax increments that are repayments of loans or other 
245.22  advances made by the authority with tax increments; 
245.23     (v) bond or loan proceeds; 
245.24     (vi) special assessments; 
245.25     (vii) grants; and 
245.26     (viii) transfers from funds not exclusively associated with 
245.27  the district; 
245.28     (14) for the reporting period and for the duration prior 
245.29  years of the district, the amount budgeted under the tax 
245.30  increment financing plan, and the actual amount expended for, at 
245.31  least, the following categories: 
245.32     (i) acquisition of land and buildings through condemnation 
245.33  or purchase; 
245.34     (ii) site improvements or preparation costs; 
245.35     (iii) installation of public utilities, parking facilities, 
245.36  streets, roads, sidewalks, or other similar public improvements; 
246.1      (iv) administrative costs, including the allocated cost of 
246.2   the authority; 
246.3      (v) public park facilities, facilities for social, 
246.4   recreational, or conference purposes, or other similar public 
246.5   improvements; and 
246.6      (vi) transfers to funds not exclusively associated with the 
246.7   district; 
246.8      (4) (15) for properties sold to developers, the total cost 
246.9   of the property to the authority and the price paid by the 
246.10  developer; and 
246.11     (5) the amount of increments rebated or paid to developers 
246.12  or property owners for privately financed improvements or other 
246.13  qualifying costs. 
246.14     (16) the amount of any payments and the value of any 
246.15  in-kind benefits, such as physical improvements and the use of 
246.16  building space, that are paid or financed with tax increments 
246.17  and are provided to another governmental unit other than the 
246.18  municipality during the reporting period; 
246.19     (17) the amount of any payments for activities and 
246.20  improvements located outside of the district that are paid for 
246.21  or financed with tax increments; 
246.22     (18) the amount of payments of principal and interest that 
246.23  are made during the reporting period on any nondefeased: 
246.24     (i) general obligation tax increment financing bonds; 
246.25     (ii) other tax increment financing bonds; and 
246.26     (iii) notes and pay-as-you-go contracts; 
246.27     (19) the principal amount, at the end of the reporting 
246.28  period, of any nondefeased: 
246.29     (i) general obligation tax increment financing bonds; 
246.30     (ii) other tax increment financing bonds; and 
246.31     (iii) notes and pay-as-you-go contracts; 
246.32     (20) the amount of principal and interest payments that are 
246.33  due for the current calendar year on any nondefeased: 
246.34     (i) general obligation tax increment financing bonds; 
246.35     (ii) other tax increment financing bonds; and 
246.36     (iii) notes and pay-as-you-go contracts; 
247.1      (21) if the fiscal disparities contribution under chapter 
247.2   276A or 473F for the district is computed under section 469.177, 
247.3   subdivision 3, paragraph (a), the amount of increased property 
247.4   taxes imposed on other properties in the municipality that 
247.5   approved the tax increment financing plan as a result of the 
247.6   fiscal disparities contribution; 
247.7      (22) whether the tax increment financing plan or other 
247.8   governing document permits increment revenues to be expended: 
247.9      (i) to pay bonds, the proceeds of which were or may be 
247.10  expended on activities outside of the district; 
247.11     (ii) for deposit into a common bond fund from which money 
247.12  may be expended on activities located outside of the district; 
247.13  or 
247.14     (iii) to otherwise finance activities located outside of 
247.15  the tax increment financing district; and 
247.16     (23) any additional information the state auditor may 
247.17  require. 
247.18     (d) The commissioner of revenue shall prescribe the method 
247.19  of calculating the increased property taxes under paragraph (c), 
247.20  clause (21), and the form of the statement disclosing this 
247.21  information on the annual statement under subdivision 5. 
247.22     (e) The reporting requirements imposed by this subdivision 
247.23  apply to districts certified before, on, and after August 1, 
247.24  1979. 
247.25     <b>EFFECTIVE DATE:</b>  This section is effective for reports due 
247.26  beginning in 2001. 
247.27     Sec. 15.  Minnesota Statutes 1998, section 469.176, 
247.28  subdivision 1b, is amended to read: 
247.29     Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
247.30  shall in any event be paid to the authority 
247.31     (1) after 25 years from date of receipt by the authority of 
247.32  the first tax increment for a mined underground space 
247.33  development district, 
247.34     (2) after 15 years after receipt by the authority of the 
247.35  first increment for a renewal and renovation district, 
247.36     (3) (2) after 20 years after receipt by the authority of 
248.1   the first increment for a soils condition district, 
248.2      (4) (3) after nine eight years from the date of the 
248.3   after receipt, or 11 years from approval of the tax increment 
248.4   financing plan, whichever is less, by the authority of the first 
248.5   increment for an economic development district, 
248.6      (5) (4) for a housing district or a redevelopment district, 
248.7   after 20 years from the date of receipt by the authority of the 
248.8   first tax increment by the authority pursuant to section 
248.9   469.175, subdivision 1, paragraph (b); or, if no provision is 
248.10  made under section 469.175, subdivision 1, paragraph (b), after 
248.11  25 years from the date of receipt by the authority of the first 
248.12  increment. 
248.13     (b) For purposes of determining a duration limit under this 
248.14  subdivision or subdivision 1e that is based on the receipt of an 
248.15  increment, any increments from taxes payable in the year in 
248.16  which the district terminates shall be paid to the authority.  
248.17  This paragraph does not affect a duration limit calculated from 
248.18  the date of approval of the tax increment financing plan or 
248.19  based on the recovery of costs or to a duration limit under 
248.20  subdivision 1c.  This paragraph does not supersede the 
248.21  restrictions on payment of delinquent taxes in subdivision 1f. 
248.22     (c) Except as authorized by section 469.175, subdivision 1, 
248.23  paragraph (b), an action by the authority to waive or decline to 
248.24  accept an increment has no effect for purposes of computing a 
248.25  duration limit based on the receipt of increment under this 
248.26  subdivision or any other provision of law.  The authority is 
248.27  deemed to have received an increment for any year in which it 
248.28  waived or declined to accept an increment, regardless of whether 
248.29  the increment was paid to the authority. 
248.30     <b>EFFECTIVE DATE:</b>  This section is effective for districts 
248.31  for which the request for certification was received by the 
248.32  county auditor after June 30, 2000, and does not apply to 
248.33  amendments adding geographic area to a district for which the 
248.34  request for certification was received before July 1, 2000. 
248.35     Sec. 16.  Minnesota Statutes 1998, section 469.176, 
248.36  subdivision 4d, is amended to read: 
249.1      Subd. 4d.  [HOUSING DISTRICTS.] (a) Revenue derived from 
249.2   tax increment from a housing district must be used solely to 
249.3   finance the cost of: 
249.4      (1) housing projects as defined in section 469.174, 
249.5   subdivision 11 intended for occupancy by persons or families of 
249.6   low and moderate income, as defined in chapter 462A, Title II of 
249.7   the National Housing Act of 1934, the National Housing Act of 
249.8   1959, the United States Housing Act of 1937, as amended, Title V 
249.9   of the Housing Act of 1949, as amended, any other similar 
249.10  present or future federal, state, or municipal legislation, or 
249.11  the regulations promulgated under any of those acts; and 
249.12     (2) commercial uses or other facilities that do not satisfy 
249.13  the requirements of clause (1), but that meet the applicable 
249.14  percentage restrictions under paragraph (b) or (c) and that are 
249.15  part of or related to the housing qualifying under clause (1). 
249.16     (b) For housing districts with certification request dates 
249.17  after April 30, 1990, the percentage permitted to be used for 
249.18  facilities under paragraph (a), clause (2), may not exceed 20 
249.19  percent of the total fair market value of the planned 
249.20  improvements in the development plan or agreement. 
249.21     (c) For housing districts with certification request dates 
249.22  after May 1, 1988, and before May 1, 1990, the portion permitted 
249.23  to be used for facilities under paragraph (a), clause (2), may 
249.24  not exceed one-third of the total fair market value of the 
249.25  planned improvements in the development plan or agreement. 
249.26     (d) Under paragraphs (b) and (c), the fair market value of 
249.27  the improvements may be determined using the cost of 
249.28  construction, capitalized income, or other appropriate method of 
249.29  estimating market value.  The fair market value of improvements 
249.30  that serve both housing under paragraph (a), clause (1), and 
249.31  facilities under paragraph (a), clause (2), must be allocated 
249.32  between clause (1) housing and clause (2) facilities in 
249.33  proportion to their respective shares of total fair market value 
249.34  of planned improvements.  
249.35     (e) The cost of public improvements directly related to the 
249.36  housing projects and other uses permitted under paragraph (a) 
250.1   and the allocated administrative expenses of the authority may 
250.2   be included in the cost of a housing project. 
250.3      <b>EFFECTIVE DATE:</b>  This section is effective for districts 
250.4   and amendments adding geographic area to an existing district 
250.5   for which the request for certification was filed with the 
250.6   county after May 1, 1988. 
250.7      Sec. 17.  Minnesota Statutes 1998, section 469.1761, 
250.8   subdivision 4, is amended to read: 
250.9      Subd. 4.  [NONCOMPLIANCE; ENFORCEMENT.] Failure to comply 
250.10  with the requirements of this section results in application of 
250.11  the duration limits for economic development districts to the 
250.12  district.  If at the time of the noncompliance the district has 
250.13  exceeded the duration limits for an economic development 
250.14  district, the district must be decertified effective for taxes 
250.15  assessed in the next calendar year.  The commissioner of revenue 
250.16  shall enforce the provisions of this section is subject to 
250.17  section 469.1771.  The commissioner may waive insubstantial 
250.18  violations.  Appeal of the commissioner's orders of 
250.19  noncompliance must be made to the tax court in the manner 
250.20  provided in section 271.06. 
250.21     <b>EFFECTIVE DATE:</b>  This section is effective for violations 
250.22  occurring after July 1, 2000. 
250.23     Sec. 18.  Minnesota Statutes 1998, section 469.1763, 
250.24  subdivision 2, is amended to read: 
250.25     Subd. 2.  [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 
250.26  increment financing district, an amount equal to at least 75 
250.27  percent of the revenue derived from tax increments paid by 
250.28  properties in the district must be expended on activities in the 
250.29  district or to pay bonds, to the extent that the proceeds of the 
250.30  bonds were used to finance activities in the district or to pay, 
250.31  or secure payment of, debt service on credit enhanced bonds.  
250.32  For districts, other than redevelopment districts for which the 
250.33  request for certification was made after June 30, 1995, the 
250.34  in-district percentage for purposes of the preceding sentence is 
250.35  80 percent.  Not more than 25 percent of the revenue derived 
250.36  from tax increments paid by properties in the district may be 
251.1   expended, through a development fund or otherwise, on activities 
251.2   outside of the district but within the defined geographic area 
251.3   of the project except to pay, or secure payment of, debt service 
251.4   on credit enhanced bonds.  For districts, other than 
251.5   redevelopment districts for which the request for certification 
251.6   was made after June 30, 1995, the pooling percentage for 
251.7   purposes of the preceding sentence is 20 percent.  The revenue 
251.8   derived from tax increments for the district that are expended 
251.9   on costs under section 469.176, subdivision 4h, paragraph (b), 
251.10  may be deducted first before calculating the percentages that 
251.11  must be expended within and without the district.  
251.12     (b) In the case of a housing district, a housing project, 
251.13  as defined in section 469.174, subdivision 11, is expenditures 
251.14  meeting the requirements of section 469.176, subdivision 4d, are 
251.15  deemed to be for an activity in the district.  
251.16     (c) All administrative expenses are for activities outside 
251.17  of the district. 
251.18     <b>EFFECTIVE DATE:</b>  This section is effective for districts 
251.19  for which the request for certification was made after April 30, 
251.20  1990. 
251.21     Sec. 19.  Minnesota Statutes 1998, section 469.1763, is 
251.22  amended by adding a subdivision to read: 
251.23     Subd. 6.  [HOUSING DEVELOPMENTS.] (a) The restrictions in 
251.24  subdivisions 2 through 4 do not apply to increments spent 
251.25  exclusively to assist a housing development.  The authority 
251.26  under this subdivision is limited to no more than ten percent of 
251.27  the increments collected from a tax increment financing district.
251.28     (b) For purposes of this subdivision, the following terms 
251.29  have the meanings given. 
251.30     (1) "Housing development" or "development" means housing 
251.31  that meets the requirements for a qualified low-income building 
251.32  as that term is used in section 42 of the Internal Revenue Code. 
251.33     (2) "To assist" means amounts spent to: 
251.34     (i) acquire and prepare the site; 
251.35     (ii) acquire, construct, or rehabilitate buildings or other 
251.36  improvements; and 
252.1      (iii) make public improvements directly related to the 
252.2   development. 
252.3      (c) For a development, the amount of the tax increments 
252.4   that qualifies under this subdivision are limited to the 
252.5   qualified basis for the development, as defined under section 
252.6   42(c) of the Internal Revenue Code, less the amount of any tax 
252.7   credit the development is allowed under section 42 of the 
252.8   Internal Revenue Code. 
252.9      <b>EFFECTIVE DATE:</b>  This section applies to increments spent 
252.10  after July 1, 2000. 
252.11     Sec. 20.  Minnesota Statutes 1998, section 469.177, 
252.12  subdivision 1, is amended to read: 
252.13     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
252.14  after adoption of a tax increment financing plan, the auditor of 
252.15  any county in which the district is situated shall, upon request 
252.16  of the authority, certify the original net tax capacity of the 
252.17  tax increment financing district and that portion of the 
252.18  district overlying any subdistrict as described in the tax 
252.19  increment financing plan and shall certify in each year 
252.20  thereafter the amount by which the original net tax capacity has 
252.21  increased or decreased as a result of a change in tax exempt 
252.22  status of property within the district and any subdistrict, 
252.23  reduction or enlargement of the district or changes pursuant to 
252.24  subdivision 4.  
252.25     (b) In the case of a mined underground space development 
252.26  district the county auditor shall certify the original net tax 
252.27  capacity as zero, plus the net tax capacity, if any, previously 
252.28  assigned to any subsurface area included in the mined 
252.29  underground space development district pursuant to section 
252.30  272.04. 
252.31     (c) For districts approved under section 469.175, 
252.32  subdivision 3, or parcels added to existing districts after May 
252.33  1, 1988, if the classification under section 273.13 of property 
252.34  located in a district changes to a classification that has a 
252.35  different assessment ratio, the original net tax capacity of 
252.36  that property must be redetermined at the time when its use is 
253.1   changed as if the property had originally been classified in the 
253.2   same class in which it is classified after its use is changed. 
253.3      (d) (c) The amount to be added to the original net tax 
253.4   capacity of the district as a result of previously tax exempt 
253.5   real property within the district becoming taxable equals the 
253.6   net tax capacity of the real property as most recently assessed 
253.7   pursuant to section 273.18 or, if that assessment was made more 
253.8   than one year prior to the date of title transfer rendering the 
253.9   property taxable, the net tax capacity assessed by the assessor 
253.10  at the time of the transfer.  If substantial taxable 
253.11  improvements were made to a parcel after certification of the 
253.12  district and if the property later becomes tax exempt, in whole 
253.13  or part, as a result of the authority acquiring the property 
253.14  through foreclosure or exercise of remedies under a lease or 
253.15  other revenue agreement or as a result of tax forfeiture, the 
253.16  amount to be added to the original net tax capacity of the 
253.17  district as a result of the property again becoming taxable is 
253.18  the amount of the parcel's value that was included in original 
253.19  net tax capacity when the parcel was first certified.  The 
253.20  amount to be added to the original net tax capacity of the 
253.21  district as a result of enlargements equals the net tax capacity 
253.22  of the added real property as most recently certified by the 
253.23  commissioner of revenue as of the date of modification of the 
253.24  tax increment financing plan pursuant to section 469.175, 
253.25  subdivision 4. 
253.26     (e) (d) For districts approved under section 469.175, 
253.27  subdivision 3, or parcels added to existing districts after May 
253.28  1, 1988, if the net tax capacity of a property increases because 
253.29  the property no longer qualifies under the Minnesota 
253.30  Agricultural Property Tax Law, section 273.111; the Minnesota 
253.31  Open Space Property Tax Law, section 273.112; or the 
253.32  Metropolitan Agricultural Preserves Act, chapter 473H, or 
253.33  because platted, unimproved property is improved or three years 
253.34  pass after approval of the plat under section 273.11, 
253.35  subdivision 1, the increase in net tax capacity must be added to 
253.36  the original net tax capacity.  
254.1      (f) Each year the auditor shall also add to the original 
254.2   net tax capacity of each economic development district an amount 
254.3   equal to the original net tax capacity for the preceding year 
254.4   multiplied by the average percentage increase in the market 
254.5   value of all property included in the economic development 
254.6   district during the five years prior to certification of the 
254.7   district.  In computing the average percentage increase in 
254.8   market value, the auditor shall exclude the market value, as 
254.9   estimated by the assessor, that is attributable to new 
254.10  construction; extension of sewer, water, roads, or other public 
254.11  utilities; or platting of the land. 
254.12     (g) (e) The amount to be subtracted from the original net 
254.13  tax capacity of the district as a result of previously taxable 
254.14  real property within the district becoming tax exempt, or a 
254.15  reduction in the geographic area of the district, shall be the 
254.16  amount of original net tax capacity initially attributed to the 
254.17  property becoming tax exempt or being removed from the 
254.18  district.  If the net tax capacity of property located within 
254.19  the tax increment financing district is reduced by reason of a 
254.20  court-ordered abatement, stipulation agreement, voluntary 
254.21  abatement made by the assessor or auditor or by order of the 
254.22  commissioner of revenue, the reduction shall be applied to the 
254.23  original net tax capacity of the district when the property upon 
254.24  which the abatement is made has not been improved since the date 
254.25  of certification of the district and to the captured net tax 
254.26  capacity of the district in each year thereafter when the 
254.27  abatement relates to improvements made after the date of 
254.28  certification.  The county auditor may specify reasonable form 
254.29  and content of the request for certification of the authority 
254.30  and any modification thereof pursuant to section 469.175, 
254.31  subdivision 4.  
254.32     (h) (f) If a parcel of property contained a substandard 
254.33  building that was demolished or removed and if the authority 
254.34  elects to treat the parcel as occupied by a substandard building 
254.35  under section 469.174, subdivision 10, paragraph (b), the 
254.36  auditor shall certify the original net tax capacity of the 
255.1   parcel using the greater of (1) the current net tax capacity of 
255.2   the parcel, or (2) the estimated market value of the parcel for 
255.3   the year in which the building was demolished or removed, but 
255.4   applying the class rates for the current year. 
255.5      <b>EFFECTIVE DATE:</b>  This section is effective for districts 
255.6   for which the request for certification was received by the 
255.7   county auditor after June 30, 2000, and does not apply to 
255.8   amendments adding geographic area to a district for which the 
255.9   request for certification was received before July 1, 2000. 
255.10     Sec. 21.  Minnesota Statutes 1999 Supplement, section 
255.11  469.1771, subdivision 1, is amended to read: 
255.12     Subdivision 1.  [ENFORCEMENT.] (a) The owner of taxable 
255.13  property located in the city, town, school district, or county 
255.14  in which the tax increment financing district is located may 
255.15  bring suit for equitable relief or for damages, as provided in 
255.16  subdivisions 2, 3, and 4, arising out of a failure of a 
255.17  municipality or authority to comply with the provisions of 
255.18  sections 469.174 to 469.179, or related provisions of this 
255.19  chapter.  The prevailing party in a suit filed under the 
255.20  preceding sentence is entitled to costs, including reasonable 
255.21  attorney fees. 
255.22     (b) The state auditor may examine and audit political 
255.23  subdivisions' use of tax increment financing.  Without previous 
255.24  notice, the state auditor may examine or audit accounts and 
255.25  records on a random basis as the auditor deems to be in the 
255.26  public interest.  If the state auditor finds evidence that an 
255.27  authority or municipality has violated a provision of the law 
255.28  for which a remedy is provided under this section, the state 
255.29  auditor shall forward the relevant information to the county 
255.30  attorney.  The county attorney may bring an action to enforce 
255.31  the provisions of sections 469.174 to 469.179 or related 
255.32  provisions of this chapter, for matters referred by the state 
255.33  auditor or on behalf of the county.  If the county attorney 
255.34  determines not to bring an action or if the county attorney has 
255.35  not brought an action within 12 months after receipt of the 
255.36  initial notification by the state auditor of the violation, the 
256.1   county attorney shall notify the state auditor in writing. 
256.2      (c) If the state auditor finds an authority is not in 
256.3   compliance with sections 469.174 to 469.179 or related 
256.4   provisions of law, the auditor shall notify the governing body 
256.5   of the municipality that approved the tax increment financing 
256.6   district of its findings.  The governing body of the 
256.7   municipality must respond in writing to the state auditor within 
256.8   60 days after receiving the notification.  Its written response 
256.9   must state whether the municipality accepts, in whole or part, 
256.10  the auditor's findings.  If the municipality does not accept the 
256.11  findings, the statement must indicate the basis for its 
256.12  disagreement.  The state auditor shall annually summarize the 
256.13  responses it receives under this section and send the summary 
256.14  and copies of the responses to the chairs of the committees of 
256.15  the legislature with jurisdiction over tax increment financing. 
256.16     (d) The state auditor shall notify the attorney general in 
256.17  writing and provide supporting materials for a violation found 
256.18  by the auditor, if the: 
256.19     (1) auditor receives notification from the county attorney 
256.20  under paragraph (b) or receives no notification for a 12-month 
256.21  period after initially notifying the county attorney and the 
256.22  state auditor confirms with the county attorney or the 
256.23  municipality that no action has been brought regarding the 
256.24  matter; and 
256.25     (2) municipality or development authority have not 
256.26  eliminated or resolved the violation to the satisfaction of the 
256.27  state auditor. 
256.28  The auditor shall provide the municipality and development 
256.29  authority a copy of the notification sent to the attorney 
256.30  general. 
256.31     <b>EFFECTIVE DATE:</b>  This section is effective for violations 
256.32  occurring after December 31, 1990, but does not apply to pending 
256.33  litigation. 
256.34     Sec. 22.  Minnesota Statutes 1999 Supplement, section 
256.35  469.1813, subdivision 1, is amended to read: 
256.36     Subdivision 1.  [AUTHORITY.] The governing body of a 
257.1   political subdivision may grant an abatement of the taxes 
257.2   imposed by the political subdivision on a parcel of property, or 
257.3   defer the payments of the taxes and abate the interest and 
257.4   penalty that otherwise would apply, if: 
257.5      (a) it expects the benefits to the political subdivision of 
257.6   the proposed abatement agreement to at least equal the costs to 
257.7   the political subdivision of the proposed agreement or intends 
257.8   the abatement to phase in a property tax increase, as provided 
257.9   in clause (b)(7); and 
257.10     (b) it finds that doing so is in the public interest 
257.11  because it will: 
257.12     (1) increase or preserve tax base; 
257.13     (2) provide employment opportunities in the political 
257.14  subdivision; 
257.15     (3) provide or help acquire or construct public facilities; 
257.16     (4) help redevelop or renew blighted areas; 
257.17     (5) help provide access to services for residents of the 
257.18  political subdivision; or 
257.19     (6) finance or provide public infrastructure; or 
257.20     (7) phase in a property tax increase on the parcel 
257.21  resulting from an increase of 50 percent or more in one year on 
257.22  the estimated market value of the parcel, other than increase 
257.23  attributable to improvement of the parcel. 
257.24     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
257.25  payable in 2001. 
257.26     Sec. 23.  Minnesota Statutes 1998, section 469.1813, 
257.27  subdivision 4, is amended to read: 
257.28     Subd. 4.  [PROPERTY LOCATED IN TAX INCREMENT FINANCING 
257.29  DISTRICTS.] The governing body of a governmental political 
257.30  subdivision may not enter into a property tax abatement 
257.31  agreement under sections 469.1812 to 469.1815 if the property 
257.32  that provides for abatement of taxes on a parcel, if the 
257.33  abatement will occur while the parcel is located in a tax 
257.34  increment financing district. 
257.35     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
257.36  payable in 2001 and later years. 
258.1      Sec. 24.  Minnesota Statutes 1999 Supplement, section 
258.2   469.1813, subdivision 6, is amended to read: 
258.3      Subd. 6.  [DURATION LIMIT.] (a) A political subdivision may 
258.4   grant an abatement for a period no longer than ten years, except 
258.5   as provided under paragraph (b).  The subdivision may specify in 
258.6   the abatement resolution a shorter duration.  If the resolution 
258.7   does not specify a period of time, the abatement is for eight 
258.8   years.  If an abatement has been granted to a parcel of property 
258.9   and the period of the abatement has expired, the political 
258.10  subdivision that granted the abatement may not grant another 
258.11  abatement for eight years after the expiration of the first 
258.12  abatement.  This prohibition does not apply to improvements 
258.13  added after and not subject to the first abatement. 
258.14     (b) A political subdivision proposing to abate taxes for a 
258.15  parcel may request, in writing, that the other political 
258.16  subdivisions in which the parcel is located grant an abatement 
258.17  for the property.  If one of the other political subdivisions 
258.18  declines, in writing, to grant an abatement or if 90 days pass 
258.19  after receipt of the request to grant an abatement without a 
258.20  written response from one of the political subdivisions, the 
258.21  duration limit for an abatement for the parcel is increased to 
258.22  15 years.  If the political subdivision which declined to grant 
258.23  an abatement later grants an abatement for the parcel, the 
258.24  15-year duration limit is reduced by one year for each year that 
258.25  the declining political subdivision grants an abatement for the 
258.26  parcel during the period of the abatement granted by the 
258.27  requesting political subdivision.  The duration limit may not be 
258.28  reduced below the limit under paragraph (a).  
258.29     <b>EFFECTIVE DATE:</b>  This section is effective for taxes 
258.30  payable in 2001 and thereafter. 
258.31     Sec. 25.  [BROOKLYN PARK EDA; TIF DISTRICT NO. 18.] 
258.32     The 1998 amendments to Minnesota Statutes, section 469.176, 
258.33  subdivision 7, as set forth in Laws 1998, chapter 389, article 
258.34  11, section 6, apply to the Brooklyn Park economic development 
258.35  authority's tax increment financing district No. 18, 
258.36  notwithstanding the effective date of the amendments. 
259.1      <b>EFFECTIVE DATE:</b>  This section is effective the day after 
259.2   the governing body of the city of Brooklyn Park and its chief 
259.3   clerical officer timely complete their compliance with Minnesota 
259.4   Statutes, section 645.021, subdivisions 2 and 3. 
259.5      Sec. 26.  [CITY OF FOUNTAIN; TIF DURATION EXTENSION.] 
259.6      The governing body of the city of Fountain may extend the 
259.7   duration of tax increment financing district 1-1 through 
259.8   December 31, 2008, notwithstanding the provision of Minnesota 
259.9   Statutes, section 469.176, subdivision 1b.  The extension under 
259.10  this section is intended to correct an error in calculation of 
259.11  the increment after a division of a parcel in the tax increment 
259.12  financing district.  As a result, the provisions of Minnesota 
259.13  Statutes, section 469.1782, subdivision 1, do not apply to the 
259.14  district. 
259.15     <b>EFFECTIVE DATE:</b>  This section is effective the day after 
259.16  the governing bodies of the city, county, and school district, 
259.17  and their chief clerical officers, timely complete their 
259.18  compliance with Minnesota Statutes, sections 469.1782, 
259.19  subdivision 2; and 645.021, subdivisions 2 and 3. 
259.20     Sec. 27.  [REPEALER.] 
259.21     (a) Minnesota Statutes 1998, sections 469.055, subdivision 
259.22  5; 469.101, subdivision 21; 469.135; 469.136; 469.137; 469.138; 
259.23  469.139; 469.140; 469.174, subdivision 13; and 469.176, 
259.24  subdivision 4a, are repealed.  
259.25     (b) Minnesota Statutes 1998, section 469.175, subdivision 
259.26  6a, is repealed. 
259.27     <b>EFFECTIVE DATE:</b>  Paragraph (a) is effective the day 
259.28  following final enactment.  Paragraph (b) is effective for 
259.29  reports due beginning in 2001. 
259.30                             ARTICLE 12 
259.31                           FEDERAL UPDATE 
259.32     Section 1.  Minnesota Statutes 1999 Supplement, section 
259.33  289A.02, subdivision 7, is amended to read: 
259.34     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
259.35  defined otherwise, "Internal Revenue Code" means the Internal 
259.36  Revenue Code of 1986, as amended through December 31, 1998 1999. 
260.1      <b>EFFECTIVE DATE:</b>  This section is effective the day 
260.2   following final enactment. 
260.3      Sec. 2.  Minnesota Statutes 1999 Supplement, section 
260.4   290.01, subdivision 19, is amended to read: 
260.5      Subd. 19.  [NET INCOME.] The term "net income" means the 
260.6   federal taxable income, as defined in section 63 of the Internal 
260.7   Revenue Code of 1986, as amended through the date named in this 
260.8   subdivision, incorporating any elections made by the taxpayer in 
260.9   accordance with the Internal Revenue Code in determining federal 
260.10  taxable income for federal income tax purposes, and with the 
260.11  modifications provided in subdivisions 19a to 19f. 
260.12     In the case of a regulated investment company or a fund 
260.13  thereof, as defined in section 851(a) or 851(g) of the Internal 
260.14  Revenue Code, federal taxable income means investment company 
260.15  taxable income as defined in section 852(b)(2) of the Internal 
260.16  Revenue Code, except that:  
260.17     (1) the exclusion of net capital gain provided in section 
260.18  852(b)(2)(A) of the Internal Revenue Code does not apply; 
260.19     (2) the deduction for dividends paid under section 
260.20  852(b)(2)(D) of the Internal Revenue Code must be applied by 
260.21  allowing a deduction for capital gain dividends and 
260.22  exempt-interest dividends as defined in sections 852(b)(3)(C) 
260.23  and 852(b)(5) of the Internal Revenue Code; and 
260.24     (3) the deduction for dividends paid must also be applied 
260.25  in the amount of any undistributed capital gains which the 
260.26  regulated investment company elects to have treated as provided 
260.27  in section 852(b)(3)(D) of the Internal Revenue Code.  
260.28     The net income of a real estate investment trust as defined 
260.29  and limited by section 856(a), (b), and (c) of the Internal 
260.30  Revenue Code means the real estate investment trust taxable 
260.31  income as defined in section 857(b)(2) of the Internal Revenue 
260.32  Code.  
260.33     The net income of a designated settlement fund as defined 
260.34  in section 468B(d) of the Internal Revenue Code means the gross 
260.35  income as defined in section 468B(b) of the Internal Revenue 
260.36  Code. 
261.1      The Internal Revenue Code of 1986, as amended through 
261.2   December 31, 1986, shall be in effect for taxable years 
261.3   beginning after December 31, 1986.  The provisions of sections 
261.4   10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 
261.5   10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 
261.6   Omnibus Budget Reconciliation Act of 1987, Public Law Number 
261.7   100-203, the provisions of sections 1001, 1002, 1003, 1004, 
261.8   1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 
261.9   1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 
261.10  6277, and 6282 of the Technical and Miscellaneous Revenue Act of 
261.11  1988, Public Law Number 100-647, the provisions of sections 
261.12  7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 
261.13  1989, Public Law Number 101-239, the provisions of sections 
261.14  1305, 1704(r), and 1704(e)(1) of the Small Business Job 
261.15  Protection Act, Public Law Number 104-188, and the provisions of 
261.16  sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act 
261.17  of 1997, Public Law Number 105-34, and the provisions of section 
261.18  4004 of the Omnibus Consolidated and Emergency Supplemental 
261.19  Appropriations Act, 1999, Public Law Number 105-277 shall be 
261.20  effective at the time they become effective for federal income 
261.21  tax purposes.  
261.22     The Internal Revenue Code of 1986, as amended through 
261.23  December 31, 1987, shall be in effect for taxable years 
261.24  beginning after December 31, 1987.  The provisions of sections 
261.25  4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 
261.26  6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 
261.27  6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 
261.28  Act of 1988, Public Law Number 100-647, the provisions of 
261.29  sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 
261.30  of 1989, Public Law Number 101-239, and the provisions of 
261.31  section 11702 of the Revenue Reconciliation Act of 1990, Public 
261.32  Law Number 101-508, shall become effective at the time they 
261.33  become effective for federal tax purposes.  
261.34     The Internal Revenue Code of 1986, as amended through 
261.35  December 31, 1988, shall be in effect for taxable years 
261.36  beginning after December 31, 1988.  The provisions of sections 
262.1   7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 
262.2   7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 
262.3   7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 
262.4   Reconciliation Act of 1989, Public Law Number 101-239, the 
262.5   provision of section 1401 of the Financial Institutions Reform, 
262.6   Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 
262.7   the provisions of sections 11701 and 11703 of the Revenue 
262.8   Reconciliation Act of 1990, Public Law Number 101-508, and the 
262.9   provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 
262.10  Small Business Job Protection Act, Public Law Number 104-188, 
262.11  shall become effective at the time they become effective for 
262.12  federal tax purposes.  
262.13     The Internal Revenue Code of 1986, as amended through 
262.14  December 31, 1989, shall be in effect for taxable years 
262.15  beginning after December 31, 1989.  The provisions of sections 
262.16  11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 
262.17  the Revenue Reconciliation Act of 1990, Public Law Number 
262.18  101-508, and the provisions of sections 13224 and 13261 of the 
262.19  Omnibus Budget Reconciliation Act of 1993, Public Law Number 
262.20  103-66, shall become effective at the time they become effective 
262.21  for federal purposes.  
262.22     The Internal Revenue Code of 1986, as amended through 
262.23  December 31, 1990, shall be in effect for taxable years 
262.24  beginning after December 31, 1990. 
262.25     The provisions of section 13431 of the Omnibus Budget 
262.26  Reconciliation Act of 1993, Public Law Number 103-66, shall 
262.27  become effective at the time they became effective for federal 
262.28  purposes.  
262.29     The Internal Revenue Code of 1986, as amended through 
262.30  December 31, 1991, shall be in effect for taxable years 
262.31  beginning after December 31, 1991.  
262.32     The provisions of sections 1936 and 1937 of the 
262.33  Comprehensive National Energy Policy Act of 1992, Public Law 
262.34  Number 102-486, the provisions of sections 13101, 13114, 13122, 
262.35  13141, 13150, 13151, 13174, 13239, 13301, and 13442 of the 
262.36  Omnibus Budget Reconciliation Act of 1993, Public Law Number 
263.1   103-66, and the provisions of section 1604(a)(1), (2), and (3) 
263.2   of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
263.3   shall become effective at the time they become effective for 
263.4   federal purposes.  
263.5      The Internal Revenue Code of 1986, as amended through 
263.6   December 31, 1992, shall be in effect for taxable years 
263.7   beginning after December 31, 1992.  
263.8      The provisions of sections 13116, 13121, 13206, 13210, 
263.9   13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 
263.10  the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
263.11  103-66, the provisions of sections 1703(a), 1703(d), 1703(i), 
263.12  1703(l), and 1703(m) of the Small Business Job Protection Act, 
263.13  Public Law Number 104-188, and the provision of section 1604(c) 
263.14  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
263.15  shall become effective at the time they become effective for 
263.16  federal purposes. 
263.17     The Internal Revenue Code of 1986, as amended through 
263.18  December 31, 1993, shall be in effect for taxable years 
263.19  beginning after December 31, 1993. 
263.20     The provision of section 741 of Legislation to Implement 
263.21  Uruguay Round of General Agreement on Tariffs and Trade, Public 
263.22  Law Number 103-465, the provisions of sections 1, 2, and 3, of 
263.23  the Self-Employed Health Insurance Act of 1995, Public Law 
263.24  Number 104-7, the provision of section 501(b)(2) of the Health 
263.25  Insurance Portability and Accountability Act, Public Law Number 
263.26  104-191, the provisions of sections 1604 and 1704(p)(1) and (2) 
263.27  of the Small Business Job Protection Act, Public Law Number 
263.28  104-188, and the provisions of sections 1011, 1211(b)(1), and 
263.29  1602(f) of the Taxpayer Relief Act of 1997, Public Law Number 
263.30  105-34, shall become effective at the time they become effective 
263.31  for federal purposes. 
263.32     The Internal Revenue Code of 1986, as amended through 
263.33  December 31, 1994, shall be in effect for taxable years 
263.34  beginning after December 31, 1994. 
263.35     The provisions of sections 1119(a), 1120, 1121, 1202(a), 
263.36  1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 
264.1   Business Job Protection Act, Public Law Number 104-188, the 
264.2   provision of section 511 of the Health Insurance Portability and 
264.3   Accountability Act, Public Law Number 104-191, and the 
264.4   provisions of sections 1174 and 1601(i)(2) of the Taxpayer 
264.5   Relief Act of 1997, Public Law Number 105-34, shall become 
264.6   effective at the time they become effective for federal purposes.
264.7      The Internal Revenue Code of 1986, as amended through March 
264.8   22, 1996, is in effect for taxable years beginning after 
264.9   December 31, 1995. 
264.10     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
264.11  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
264.12  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
264.13  Protection Act, Public Law Number 104-188, the provisions of 
264.14  Public Law Number 104-117, the provisions of sections 313(a) and 
264.15  (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
264.16  1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
264.17  1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
264.18  and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
264.19  Public Law Number 105-34, the provisions of section 6010 of the 
264.20  Internal Revenue Service Restructuring and Reform Act of 1998, 
264.21  Public Law Number 105-206, and the provisions of section 4003 of 
264.22  the Omnibus Consolidated and Emergency Supplemental 
264.23  Appropriations Act, 1999, Public Law Number 105-277, shall 
264.24  become effective at the time they become effective for federal 
264.25  purposes. 
264.26     The Internal Revenue Code of 1986, as amended through 
264.27  December 31, 1996, shall be in effect for taxable years 
264.28  beginning after December 31, 1996. 
264.29     The provisions of sections 202(a) and (b), 221(a), 225, 
264.30  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
264.31  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
264.32  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
264.33  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
264.34  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
264.35  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
264.36  7002, and 7003 of the Internal Revenue Service Restructuring and 
265.1   Reform Act of 1998, Public Law Number 105-206, and the 
265.2   provisions of section 3001 of the Omnibus Consolidated and 
265.3   Emergency Supplemental Appropriations Act, 1999, Public Law 
265.4   Number 105-277, and the provisions of section 3001 of the 
265.5   Miscellaneous Trade and Technical Corrections Act of 1999, 
265.6   Public Law Number 106-36, shall become effective at the time 
265.7   they become effective for federal purposes. 
265.8      The Internal Revenue Code of 1986, as amended through 
265.9   December 31, 1997, shall be in effect for taxable years 
265.10  beginning after December 31, 1997. 
265.11     The provisions of sections 5002, 6009, 6011, and 7001 of 
265.12  the Internal Revenue Service Restructuring and Reform Act of 
265.13  1998, Public Law Number 105-206, the provisions of section 9010 
265.14  of the Transportation Equity Act for the 21st Century, Public 
265.15  Law Number 105-178, the provisions of sections 1004, 4002, and 
265.16  5301 of the Omnibus Consolidation and Emergency Supplemental 
265.17  Appropriations Act, 1999, Public Law Number 105-277, and the 
265.18  provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
265.19  Act of 1998, Public Law Number 105-369, and the provisions of 
265.20  sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
265.21  Work Incentives Improvement Act of 1999, Public Law Number 
265.22  160-170, shall become effective at the time they become 
265.23  effective for federal purposes. 
265.24     The Internal Revenue Code of 1986, as amended through 
265.25  December 31, 1998, shall be in effect for taxable years 
265.26  beginning after December 31, 1998. 
265.27     The Internal Revenue Code of 1986, as amended through 
265.28  December 31, 1999, shall be in effect for taxable years 
265.29  beginning after December 31, 1999. 
265.30     Except as otherwise provided, references to the Internal 
265.31  Revenue Code in subdivisions 19a to 19g mean the code in effect 
265.32  for purposes of determining net income for the applicable year. 
265.33     <b>EFFECTIVE DATE:</b>  This section is effective the day 
265.34  following final enactment except that the striking of text is 
265.35  effective for taxable years beginning after December 31, 1999. 
265.36     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
266.1   290.01, subdivision 31, is amended to read: 
266.2      Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
266.3   defined otherwise, "Internal Revenue Code" means the Internal 
266.4   Revenue Code of 1986, as amended through December 31, 1998 1999. 
266.5      <b>EFFECTIVE DATE:</b>  This section is effective for tax years 
266.6   beginning after December 31, 1999. 
266.7      Sec. 4.  Minnesota Statutes 1999 Supplement, section 
266.8   290A.03, subdivision 15, is amended to read: 
266.9      Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
266.10  means the Internal Revenue Code of 1986, as amended through 
266.11  December 31, 1998 1999. 
266.12     <b>EFFECTIVE DATE:</b>  This section is effective the day 
266.13  following final enactment. 
266.14     Sec. 5.  Minnesota Statutes 1999 Supplement, section 
266.15  291.005, subdivision 1, is amended to read: 
266.16     Subdivision 1.  Unless the context otherwise clearly 
266.17  requires, the following terms used in this chapter shall have 
266.18  the following meanings: 
266.19     (1) "Federal gross estate" means the gross estate of a 
266.20  decedent as valued and otherwise determined for federal estate 
266.21  tax purposes by federal taxing authorities pursuant to the 
266.22  provisions of the Internal Revenue Code. 
266.23     (2) "Minnesota gross estate" means the federal gross estate 
266.24  of a decedent after (a) excluding therefrom any property 
266.25  included therein which has its situs outside Minnesota and (b) 
266.26  including therein any property omitted from the federal gross 
266.27  estate which is includable therein, has its situs in Minnesota, 
266.28  and was not disclosed to federal taxing authorities.  
266.29     (3) "Personal representative" means the executor, 
266.30  administrator or other person appointed by the court to 
266.31  administer and dispose of the property of the decedent.  If 
266.32  there is no executor, administrator or other person appointed, 
266.33  qualified, and acting within this state, then any person in 
266.34  actual or constructive possession of any property having a situs 
266.35  in this state which is included in the federal gross estate of 
266.36  the decedent shall be deemed to be a personal representative to 
267.1   the extent of the property and the Minnesota estate tax due with 
267.2   respect to the property. 
267.3      (4) "Resident decedent" means an individual whose domicile 
267.4   at the time of death was in Minnesota. 
267.5      (5) "Nonresident decedent" means an individual whose 
267.6   domicile at the time of death was not in Minnesota. 
267.7      (6) "Situs of property" means, with respect to real 
267.8   property, the state or country in which it is located; with 
267.9   respect to tangible personal property, the state or country in 
267.10  which it was normally kept or located at the time of the 
267.11  decedent's death; and with respect to intangible personal 
267.12  property, the state or country in which the decedent was 
267.13  domiciled at death. 
267.14     (7) "Commissioner" means the commissioner of revenue or any 
267.15  person to whom the commissioner has delegated functions under 
267.16  this chapter. 
267.17     (8) "Internal Revenue Code" means the United States 
267.18  Internal Revenue Code of 1986, as amended through December 31, 
267.19  1998 1999. 
267.20     <b>EFFECTIVE DATE:</b>  This section is effective the day 
267.21  following final enactment. 
267.22                             ARTICLE 13 
267.23                         BUSINESS SUBSIDIES
267.24     Section 1.  Minnesota Statutes 1999 Supplement, section 
267.25  116J.993, subdivision 3, is amended to read: 
267.26     Subd. 3.  [BUSINESS SUBSIDY.] "Business subsidy" or 
267.27  "subsidy" means a state or local government agency grant, 
267.28  contribution of personal property, real property, 
267.29  infrastructure, the principal amount of a loan at rates below 
267.30  those commercially available to the recipient, any reduction or 
267.31  deferral of any tax or any fee, any guarantee of any payment 
267.32  under any loan, lease, or other obligation, or any preferential 
267.33  use of government facilities given to a business. 
267.34     The following forms of financial assistance are not a 
267.35  business subsidy: 
267.36     (1) a business subsidy of less than $25,000 $100,000; 
268.1      (2) assistance that is generally available to all 
268.2   businesses or to a general class of similar businesses, such as 
268.3   a line of business, size, location, or similar general criteria; 
268.4      (3) public improvements to buildings or lands owned by the 
268.5   state or local government that serve a public purpose and do not 
268.6   principally benefit a single business or defined group of 
268.7   businesses at the time the improvements are made; 
268.8      (4) redevelopment property polluted by contaminants as 
268.9   defined in section 116J.552, subdivision 3; 
268.10     (5) assistance provided for the sole purpose of renovating 
268.11  old or decaying building stock or bringing it up to code and 
268.12  assistance provided for designated historic preservation 
268.13  districts, provided that the assistance is equal to or less than 
268.14  50 percent of the total cost; 
268.15     (6) assistance provided to organizations whose primary 
268.16  mission is to provide job readiness and training services if the 
268.17  sole purpose of the assistance is to provide those services; 
268.18     (7) assistance for housing; 
268.19     (8) assistance for pollution control or abatement, 
268.20  including assistance for a tax increment financing hazardous 
268.21  substance subdistrict as defined under section 469.174, 
268.22  subdivision 23; 
268.23     (9) assistance for energy conservation; 
268.24     (10) tax reductions resulting from conformity with federal 
268.25  tax law; 
268.26     (11) workers' compensation and unemployment compensation; 
268.27     (12) benefits derived from regulation; 
268.28     (13) indirect benefits derived from assistance to 
268.29  educational institutions; 
268.30     (14) funds from bonds allocated under chapter 474A issued 
268.31  by government agencies on behalf of entities without actual 
268.32  direct financial assistance being provided by the issuing 
268.33  authority; 
268.34     (15) assistance for a collaboration between a Minnesota 
268.35  higher education institution and a business; 
268.36     (16) assistance for a tax increment financing soils 
269.1   condition district as defined under section 469.174, subdivision 
269.2   19; 
269.3      (17) redevelopment when the recipient's investment in the 
269.4   purchase of the site and in site preparation is 70 percent or 
269.5   more of the assessor's current year's estimated market 
269.6   value; and 
269.7      (18) general changes in tax increment financing law and 
269.8   other general tax law changes of a principally technical nature; 
269.9      (19) federal assistance until the assistance has been 
269.10  repaid to, and reinvested by, the state or local government 
269.11  agency; and 
269.12     (20) funds from dock and wharf bonds issued by a seaway 
269.13  port authority. 
269.14     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
269.15  116J.994, subdivision 1, is amended to read: 
269.16     Subdivision 1.  [PUBLIC PURPOSE.] A business subsidy must 
269.17  meet a public purpose other than which may include, but may not 
269.18  be limited to, increasing the tax base.  Job retention may only 
269.19  be used as a public purpose in cases where job loss is imminent 
269.20  specific and demonstrable. 
269.21     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
269.22  116J.994, subdivision 3, is amended to read: 
269.23     Subd. 3.  [SUBSIDY AGREEMENT.] (a) A recipient must enter 
269.24  into a subsidy agreement with the grantor of the subsidy that 
269.25  includes: 
269.26     (1) a description of the subsidy, including the amount and 
269.27  type of subsidy, and type of district if the subsidy is tax 
269.28  increment financing; 
269.29     (2) a statement of the public purposes for the subsidy; 
269.30     (3) measurable, specific, and tangible goals for the 
269.31  subsidy; 
269.32     (4) a description of the financial obligation of the 
269.33  recipient if the goals are not met; 
269.34     (5) a statement of why the subsidy is needed; 
269.35     (6) a commitment to continue operations at the site where 
269.36  the subsidy is used for at least five years after the benefit 
270.1   date; 
270.2      (7) the name and address of the parent corporation of the 
270.3   recipient, if any; and 
270.4      (8) a list of all financial assistance by all grantors for 
270.5   the project. 
270.6      (b) Business subsidies in the form of grants must be 
270.7   structured as forgivable loans.  If a business subsidy is not 
270.8   structured as a forgivable loan For other types of business 
270.9   subsidies, the agreement must state the fair market value of the 
270.10  subsidy to the recipient, including the value of conveying 
270.11  property at less than a fair market price, or other in-kind 
270.12  benefits to the recipient. 
270.13     (c) If a business subsidy benefits more than one recipient, 
270.14  the grantor must assign a proportion of the business subsidy to 
270.15  each recipient that signs a subsidy agreement.  The proportion 
270.16  assessed to each recipient must reflect a reasonable estimate of 
270.17  the recipient's share of the total benefits of the project. 
270.18     (d) The state or local government agency and the recipient 
270.19  must both sign the subsidy agreement and, if the grantor is a 
270.20  local government agency, the agreement must be approved by the 
270.21  local elected governing body, except for the St. Paul Port 
270.22  Authority and a seaway port authority. 
270.23     (e) Notwithstanding the provision in subdivision 6, a 
270.24  recipient may be authorized to move from the site where the 
270.25  subsidy is used within the five-year period after the benefit 
270.26  date if, after a public hearing, the grantor approves the 
270.27  recipient's request to move. 
270.28     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
270.29  116J.994, subdivision 4, is amended to read: 
270.30     Subd. 4.  [WAGE AND JOB GOALS.] The subsidy agreement, in 
270.31  addition to any other goals, must include:  (1) goals for the 
270.32  number of jobs created, which may include separate goals for the 
270.33  number of part-time or full-time jobs, or, in cases where job 
270.34  loss is imminent specific and demonstrable, goals for the number 
270.35  of jobs retained; and (2) wage goals for the jobs created or 
270.36  retained.  After a public hearing, if the creation or retention 
271.1   of jobs is determined not to be a goal, the wage and job goals 
271.2   may be set at zero. 
271.3      In addition to other specific goal time frames, the wage 
271.4   and job goals must contain specific goals to be attained within 
271.5   two years of the benefit date. 
271.6      Sec. 5.  Minnesota Statutes 1999 Supplement, section 
271.7   116J.994, subdivision 5, is amended to read: 
271.8      Subd. 5.  [PUBLIC NOTICE AND HEARING.] (a) Before granting 
271.9   a business subsidy that exceeds $500,000 for a state government 
271.10  grantor and $100,000 for a local government grantor, the grantor 
271.11  must provide public notice and a hearing on the subsidy.  A 
271.12  public hearing and notice under this subdivision is not required 
271.13  if a hearing and notice on the subsidy is otherwise required by 
271.14  law. 
271.15     (b) Public notice of a proposed business subsidy under this 
271.16  subdivision by a state government grantor, other than the iron 
271.17  range resources and rehabilitation board, must be published in 
271.18  the State Register.  Public notice of a proposed business 
271.19  subsidy under this subdivision by a local government grantor or 
271.20  the iron range resources and rehabilitation board must be 
271.21  published in a local newspaper of general circulation.  The 
271.22  public notice must identify the location at which information 
271.23  about the business subsidy, including a copy summary of 
271.24  the terms of the subsidy agreement, is available.  Published 
271.25  notice should be sufficiently conspicuous in size and placement 
271.26  to distinguish the notice from the surrounding text.  The 
271.27  grantor must make the information available in printed paper 
271.28  copies and, if possible, on the Internet.  The government agency 
271.29  must provide at least a ten-day notice for the public hearing. 
271.30     (c) The public notice must include the date, time, and 
271.31  place of the hearing. 
271.32     (d) The public hearing by a state government grantor other 
271.33  than the iron range resources and rehabilitation board must be 
271.34  held in St. Paul. 
271.35     (e) If more than one nonstate grantor provides a business 
271.36  subsidy to the same recipient, the nonstate grantors may 
272.1   designate one nonstate grantor to hold a single public hearing 
272.2   regarding the business subsidies provided by all nonstate 
272.3   grantors.  For the purposes of this paragraph, "nonstate 
272.4   grantor" includes the iron range resources and rehabilitation 
272.5   board. 
272.6      Sec. 6.  Minnesota Statutes 1999 Supplement, section 
272.7   116J.994, subdivision 6, is amended to read: 
272.8      Subd. 6.  [FAILURE TO MEET GOALS.] The subsidy agreement 
272.9   must specify the recipient's obligation if the recipient does 
272.10  not fulfill the agreement.  At a minimum, the agreement must 
272.11  require a recipient failing to meet subsidy agreement goals to 
272.12  pay back the assistance plus interest to the grantor or, at the 
272.13  grantor's option, to the account created under section 116J.551 
272.14  provided that repayment may be prorated to reflect partial 
272.15  fulfillment of goals.  The interest rate must be set at no less 
272.16  than the implicit price deflator as defined under section 
272.17  275.70, subdivision 2.  The grantor, after a public hearing, may 
272.18  extend for up to one year the period for meeting the goals 
272.19  provided in a subsidy agreement. 
272.20     A recipient that fails to meet the terms of a subsidy 
272.21  agreement may not receive a business subsidy from any grantor 
272.22  for a period of five years from the date of failure or until a 
272.23  recipient satisfies its repayment obligation under this 
272.24  subdivision, whichever occurs first.  
272.25     Before a grantor signs a business subsidy agreement, the 
272.26  grantor must check with the compilation and summary report 
272.27  required by this section to determine if the recipient is 
272.28  eligible to receive a business subsidy. 
272.29     Sec. 7.  Minnesota Statutes 1999 Supplement, section 
272.30  116J.994, subdivision 7, is amended to read: 
272.31     Subd. 7.  [REPORTS BY RECIPIENTS TO GRANTORS.] (a) A 
272.32  business subsidy grantor must monitor the progress by the 
272.33  recipient in achieving agreement goals. 
272.34     (b) A recipient must provide information regarding goals 
272.35  and results for two years after the benefit date or until the 
272.36  goals are met, whichever is later.  If the goals are not met, 
273.1   the recipient must continue to provide information on the 
273.2   subsidy until the subsidy is repaid.  The information must be 
273.3   filed on forms developed by the commissioner in cooperation with 
273.4   representatives of local government.  Copies of the completed 
273.5   forms must be sent to the commissioner and the local government 
273.6   agency that provided the business subsidy to the local 
273.7   government agency that provided the subsidy or to the 
273.8   commissioner if the grantor is a state agency.  The report must 
273.9   include: 
273.10     (1) the type, public purpose, and amount of subsidies and 
273.11  type of district, if the subsidy is tax increment financing; 
273.12     (2) the hourly wage of each job created with separate bands 
273.13  of wages; 
273.14     (3) the sum of the hourly wages and cost of health 
273.15  insurance provided by the employer with separate bands of wages; 
273.16     (4) the date the job and wage goals will be reached; 
273.17     (5) a statement of goals identified in the subsidy 
273.18  agreement and an update on achievement of those goals; 
273.19     (6) the location of the recipient prior to receiving the 
273.20  business subsidy; 
273.21     (7) why the recipient did not complete the project outlined 
273.22  in the subsidy agreement at their previous location, if the 
273.23  recipient was previously located at another site in Minnesota; 
273.24     (8) the name and address of the parent corporation of the 
273.25  recipient, if any; 
273.26     (9) a list of all financial assistance by all grantors for 
273.27  the project; and 
273.28     (10) other information the commissioner may request. 
273.29  A report must be filed no later than March 1 of each year for 
273.30  the previous year and within 30 days after the deadline for 
273.31  meeting the job and wage goals.  The local agency must forward 
273.32  copies of the reports received by recipients to the commissioner 
273.33  by April 1.  
273.34     (c) Financial assistance that is excluded from the 
273.35  definition of "business subsidy" by section 116J.993, 
273.36  subdivision 3, clauses (4), (5), (8), and (16) is subject to the 
274.1   reporting requirements of this subdivision, except that the 
274.2   report of the recipient must include instead:  
274.3      (1) the type, public purpose, and amount of the financial 
274.4   assistance, and type of district if the subsidy assistance is 
274.5   tax increment financing; 
274.6      (2) progress towards meeting goals stated in the subsidy 
274.7   assistance agreement and the public purpose of the assistance; 
274.8      (3) if the agreement includes job creation, the hourly wage 
274.9   of each job created with separate bands of wages; 
274.10     (4) if the agreement includes job creation, the sum of the 
274.11  hourly wages and cost of health insurance provided by the 
274.12  employer with separate bands of wages; 
274.13     (5) the location of the recipient prior to receiving the 
274.14  assistance; and 
274.15     (6) other information the grantor requests. 
274.16     (d) If the recipient does not submit its report, the local 
274.17  government agency must mail the recipient a warning within one 
274.18  week of the required filing date.  If, after 14 days of the 
274.19  postmarked date of the warning, the recipient fails to provide a 
274.20  report, the recipient must pay to the grantor a penalty of $100 
274.21  for each subsequent day until the report is filed.  The maximum 
274.22  penalty shall not exceed $1,000.  
274.23     Sec. 8.  Minnesota Statutes 1999 Supplement, section 
274.24  116J.994, subdivision 8, is amended to read: 
274.25     Subd. 8.  [REPORTS BY GRANTORS.] (a) Local government 
274.26  agencies of a local government with a population of more than 
274.27  2,500 and state government agencies, regardless of whether or 
274.28  not they have awarded any business subsidies, must file a report 
274.29  by April 1 of each year with the commissioner.  Local government 
274.30  agencies of a local government with a population of 2,500 or 
274.31  less are exempt from filing this report if they have not awarded 
274.32  a business subsidy in the past five years.  The local government 
274.33  agency report must include a list of recipients that did not 
274.34  complete the recipient report required under subdivision 7 and a 
274.35  list of recipients that have not met their job and wage goals 
274.36  within two years and the steps being taken to bring them into 
275.1   compliance or to recoup the subsidy.  
275.2      If the commissioner has not received the report by April 1 
275.3   from an entity required to report, the commissioner shall issue 
275.4   a warning to the government agency.  If the commissioner has 
275.5   still not received the report by June 1 of that same year from 
275.6   an entity required to report, then that government agency may 
275.7   not award any business subsidies until the report has been filed.
275.8      (b) The commissioner of trade and economic development must 
275.9   provide information on reporting requirements to state and local 
275.10  government agencies. 
275.11     Sec. 9.  Minnesota Statutes 1999 Supplement, section 
275.12  116J.994, subdivision 9, is amended to read: 
275.13     Subd. 9.  [COMPILATION AND SUMMARY REPORT.] The department 
275.14  of trade and economic development must publish a compilation and 
275.15  summary of the results of the reports for the previous calendar 
275.16  year by July August 1 of each year.  The reports of the 
275.17  government agencies to the department and the compilation and 
275.18  summary report of the department must be made available to the 
275.19  public. 
275.20     The commissioner must coordinate the production of reports 
275.21  so that useful comparisons across time periods and across 
275.22  grantors can be made.  The commissioner may add other 
275.23  information to the report as the commissioner deems necessary to 
275.24  evaluate business subsidies.  Among the information in the 
275.25  summary and compilation report, the commissioner must include: 
275.26     (1) total amount of subsidies awarded in each development 
275.27  region of the state; 
275.28     (2) distribution of business subsidy amounts by size of the 
275.29  business subsidy; 
275.30     (3) distribution of business subsidy amounts by time 
275.31  category, such as monthly or quarterly; 
275.32     (4) distribution of subsidies by type and by public 
275.33  purpose; 
275.34     (5) percent of all business subsidies that reached their 
275.35  goals; 
275.36     (6) percent of business subsidies that did not reach their 
276.1   goals by two years from the benefit date; 
276.2      (7) total dollar amount of business subsidies that did not 
276.3   meet their goals after two years from the benefit date; 
276.4      (8) percent of subsidies that did not meet their goals and 
276.5   that did not receive repayment; 
276.6      (9) list of recipients that have failed to meet the terms 
276.7   of a subsidy agreement in the past five years and have not 
276.8   satisfied their repayment obligations; 
276.9      (10) number of part-time and full-time jobs within separate 
276.10  bands of wages; and 
276.11     (11) benefits paid within separate bands of wages. 
276.12     Sec. 10.  Minnesota Statutes 1999 Supplement, section 
276.13  116J.995, is amended to read: 
276.14     116J.995 [ECONOMIC GRANTS.] 
276.15     An appropriation rider in an appropriation to the 
276.16  department of trade and economic development that specifies that 
276.17  the appropriation be granted to a particular business or class 
276.18  of businesses must contain a statement of the expected benefits 
276.19  associated with the grant.  At a minimum, the statement must 
276.20  include goals for the number of jobs created, wages paid, and 
276.21  the tax revenue increases due to the grant.  The wage and job 
276.22  goals must contain specific goals to be attained within two 
276.23  years of the benefit date.  The statement must specify the 
276.24  recipient's obligation if the recipient does not attain the 
276.25  goals.  At a minimum, the statement must require a recipient 
276.26  failing to meet the job and wage goals to pay back the 
276.27  assistance plus interest to the department of trade and economic 
276.28  development provided that repayment may be prorated to reflect 
276.29  partial fulfillment of goals.  The interest rate must be set at 
276.30  the implicit price deflator defined under section 275.70, 
276.31  subdivision 2.  The legislature, after a public hearing, may 
276.32  extend for up to one year the period for meeting the goals 
276.33  provided in the statement. 
276.34                             ARTICLE 14 
276.35                    INSURANCE TAX RECODIFICATION 
276.36     Section 1.  [297I.01] [DEFINITIONS.] 
277.1      Subdivision 1.  [TERMS.] Unless the language or context 
277.2   clearly indicates that a different meaning is intended, for the 
277.3   purposes of this chapter, the following terms have the meanings 
277.4   given them. 
277.5      Subd. 2.  [ASSOCIATION OR ASSOCIATIONS.] "Association" or 
277.6   "associations" has the meaning given in section 60A.02, 
277.7   subdivision 1a. 
277.8      Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
277.9   commissioner of revenue of the state of Minnesota. 
277.10     Subd. 4.  [COMMUNITY INTEGRATED SERVICE NETWORK.] 
277.11  "Community integrated service network" has the meaning given in 
277.12  section 62N.02, subdivision 4a. 
277.13     Subd. 5.  [COMPANY OR INSURANCE COMPANY.] "Company" or 
277.14  "insurance company" has the meaning given in section 60A.02, 
277.15  subdivision 4. 
277.16     Subd. 6.  [DEPARTMENT OF REVENUE.] "Department of revenue" 
277.17  means the Minnesota department of revenue or commissioner of 
277.18  revenue. 
277.19     Subd. 7.  [DOMESTIC.] "Domestic" has the meaning given in 
277.20  section 60A.02, subdivision 5. 
277.21     Subd. 8.  [FOREIGN.] "Foreign" has the meaning given in 
277.22  section 60A.02, subdivision 6. 
277.23     Subd. 9.  [GROSS PREMIUMS.] "Gross premiums" means total 
277.24  premiums paid by policyholders and applicants of policies, 
277.25  whether received in the form of money or other valuable 
277.26  consideration, on property, persons, lives, interests and other 
277.27  risks located, resident, or to be performed in this state, but 
277.28  excluding consideration and premiums for reinsurance assumed 
277.29  from other insurance companies.  The term "gross premiums" 
277.30  includes the total consideration paid to bail bond agents for 
277.31  bail bonds.  For title insurance companies, "gross premiums" 
277.32  means the charge for title insurance made by a title insurance 
277.33  company or its agents according to the company's rate filing 
277.34  approved by the commissioner of commerce without a deduction for 
277.35  commissions paid to or retained by the agent.  Gross premiums of 
277.36  a title insurance company does not include any other charge or 
278.1   fee for abstracting, searching, or examining the title, or 
278.2   escrow, closing, or other related services. 
278.3      Subd. 10.  [HEALTH MAINTENANCE ORGANIZATION.] "Health 
278.4   maintenance organization" has the meaning given in section 
278.5   62D.02, subdivision 4. 
278.6      Subd. 11.  [NONPROFIT HEALTH SERVICE PLAN CORPORATION.] 
278.7   "Nonprofit health service plan corporation" has the meaning 
278.8   given in section 62C.02, subdivision 6. 
278.9      Subd. 12.  [INSURANCE.] "Insurance" means the same as that 
278.10  term is defined in section 60A.02, subdivision 3. 
278.11     Subd. 13.  [INSURANCE AGENT OR INSURANCE 
278.12  AGENCY.] "Insurance agent or insurance agency" has the meaning 
278.13  given in section 60A.02, subdivision 7. 
278.14     Subd. 14.  [RETURN PREMIUMS DEFINED.] "Return premiums" 
278.15  means any dividend or any unused or unabsorbed portion of 
278.16  premium deposit or assessment that is applied toward the payment 
278.17  of any premium, premium deposit, or assessment due from the 
278.18  policyholder or member upon a continuance or renewal of the 
278.19  insurance on account of which the dividend was earned or premium 
278.20  deposit or assessment paid.  Return premiums also includes any 
278.21  portion of premium returned by the company upon cancellation or 
278.22  termination of a policy or membership, except surrender values 
278.23  paid upon the cancellation and surrender of policies or 
278.24  certificates of life insurance. 
278.25     Subd. 15.  [STATE.] "State" has the meaning given in 
278.26  section 60A.02, subdivision 18. 
278.27     Subd. 16.  [TAXPAYER.] "Taxpayer" means any insurance 
278.28  company, association, surplus lines licensee, automobile risk 
278.29  self-insurer, or insured or any other person or entity required 
278.30  to pay any amount due under this chapter. 
278.31     Sec. 2.  [297I.05] [TAX IMPOSED.] 
278.32     Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] Except as 
278.33  otherwise provided in this section, a tax is imposed on every 
278.34  domestic and foreign insurance company.  The rate of tax is 
278.35  equal to two percent of all gross premiums less return premiums 
278.36  on all direct business received by the insurer or agents of the 
279.1   insurer in Minnesota, in cash or otherwise, during the year. 
279.2      Subd. 2.  [TOWN AND FARMERS' MUTUAL INSURANCE.] A tax is 
279.3   imposed on town and farmers' mutual insurance companies.  The 
279.4   rate of tax is equal to one percent of gross premiums less 
279.5   return premiums on all direct business received by the insurer 
279.6   or agents of the insurer in Minnesota, in cash or otherwise, 
279.7   during the year. 
279.8      Subd. 3.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
279.9   ASSETS OF $5,000,000 OR LESS AT THE END OF THE CALENDAR YEAR.] A 
279.10  tax is imposed on mutual property and casualty companies with 
279.11  assets of $5,000,000 or less at the end of the calendar year.  
279.12  The rate of tax is equal to one percent of gross premiums less 
279.13  return premiums on all direct business received by the insurer 
279.14  or agents of the insurer in Minnesota, in cash or otherwise, 
279.15  during the year. 
279.16     Subd. 4.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
279.17  TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 
279.18  tax is imposed on mutual property and casualty companies that 
279.19  had total assets greater than $5,000,000 at the end of the 
279.20  calendar year but that had total assets less than $1,600,000,000 
279.21  on December 31, 1989.  The rate of tax is equal to: 
279.22     (1) two percent of gross premiums less return premiums on 
279.23  all direct business received by the insurer or agents of the 
279.24  insurer in Minnesota for life insurance, in cash or otherwise, 
279.25  during the year; and 
279.26     (2) 1.26 percent of gross premiums less return premiums on 
279.27  all other direct business received by the insurer or agents of 
279.28  the insurer in Minnesota, in cash or otherwise, during the year. 
279.29     Subd. 5.  [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 
279.30  HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 
279.31  SERVICE NETWORKS.] (a) The commissioner of finance shall 
279.32  determine the balance of the health care access fund on 
279.33  September 1 of each year. 
279.34     (b) If the commissioner of finance determines that there 
279.35  will not be a structural deficit for the next state fiscal year, 
279.36  no tax is imposed under this chapter on health maintenance 
280.1   organizations, nonprofit health service plan corporations, and 
280.2   community integrated service networks for the following calendar 
280.3   year. 
280.4      (c) If the commissioner of finance determines that there 
280.5   will be a structural deficit in the fund for the next state 
280.6   fiscal year, then the commissioner of finance, in consultation 
280.7   with the commissioner of revenue, shall determine the amount 
280.8   needed to eliminate the structural deficit, and a tax is imposed 
280.9   for the next calendar year.  The rate of tax is a percentage of 
280.10  gross premiums less return premiums on all direct business 
280.11  received by the insurer or agents of the insurer in Minnesota, 
280.12  in cash or otherwise, during the year.  The percentage rate is 
280.13  one-quarter of one percent, one-half of one percent, 
280.14  three-quarters of one percent, or one percent of the premiums, 
280.15  whichever is the lowest rate that will produce sufficient 
280.16  revenue to eliminate the projected structural deficit. 
280.17     (d) The commissioner of finance shall publish in the State 
280.18  Register by October 1 of each year the rate of tax to be imposed 
280.19  for the following calendar year.  
280.20     (e) In determining the structural balance of the health 
280.21  care access fund for fiscal year 2001, the commissioner of 
280.22  finance shall disregard the transfer amount from the health care 
280.23  access fund to the general fund for expenditures associated with 
280.24  the services provided to pregnant women and children under the 
280.25  age of two enrolled in the MinnesotaCare program. 
280.26     (f) In approving the premium rates as required in sections 
280.27  62L.08, subdivision 8, and 62A.65, subdivision 3, the 
280.28  commissioners of health and commerce shall ensure that to the 
280.29  extent that the tax imposed under this subdivision is less than 
280.30  one percent of gross premiums less return premiums, the premium 
280.31  rate reflects the difference between the amount of tax imposed 
280.32  and the amount that would have been collected if the rate was 
280.33  one percent. 
280.34     (g) The commissioner shall deposit all revenues, including 
280.35  penalties and interest, collected under this chapter from health 
280.36  maintenance organizations, community integrated service 
281.1   networks, and nonprofit health service plan corporations in the 
281.2   health care access fund.  Refunds of overpayments of tax imposed 
281.3   by this subdivision must be paid from the health care access 
281.4   fund.  There is annually appropriated from the health care 
281.5   access fund to the commissioner the amount necessary to make any 
281.6   refunds of the tax imposed under this subdivision. 
281.7      Subd. 6.  [FIRE MARSHAL TAX.] A tax is imposed on every 
281.8   licensed company, including reciprocals or interinsurance 
281.9   exchanges, doing business in this state, except farmers' mutual 
281.10  fire insurance companies and township fire insurance companies.  
281.11  The rate of tax is equal to one-half of one percent of the gross 
281.12  fire premiums and assessments, less return premiums, on all 
281.13  direct business received by the company in this state, or by its 
281.14  agents for it, in cash or otherwise, during the year.  "Gross 
281.15  fire premiums and assessments" includes premiums on policies 
281.16  covering fire risks only on automobiles, whether written under 
281.17  floater form or otherwise. 
281.18     Subd. 7.  [SURPLUS LINES TAX.] (a) A tax is imposed on 
281.19  surplus lines licensees.  The rate of tax is equal to three 
281.20  percent of the gross premiums less return premiums received by 
281.21  the licensee minus any licensee association operating 
281.22  assessments paid under section 60A.208. 
281.23     (b) If surplus lines insurance placed by a surplus lines 
281.24  licensee and taxed under this subdivision covers a subject of 
281.25  insurance residing, located, or to be performed outside this 
281.26  state, a proper pro rata portion of the entire premium payable 
281.27  for all of that insurance must be allocated according to the 
281.28  subjects of insurance residing, located, or to be performed in 
281.29  this state. 
281.30     Subd. 8.  [INSURANCE PREMIUM TAX EQUIVALENT PAYMENT BY 
281.31  AUTOMOBILE RISK SELF-INSURERS.] (a) The following terms, for the 
281.32  purposes of this subdivision, have the meanings given them. 
281.33     (1) "Automobile risks" means the risk of providing no-fault 
281.34  insurance under sections 65B.41 to 65B.71. 
281.35     (2) "Motor vehicle" has the meaning given in section 
281.36  65B.43, subdivision 2. 
282.1      (3) "Person" means an owner, as defined in section 65B.43, 
282.2   subdivision 4, but does not include the state or a political 
282.3   subdivision as defined in section 65B.43, subdivision 20. 
282.4      (4) "Self-insurance" means the condition of qualifying as a 
282.5   self-insurer by complying with section 65B.48, subdivisions 3 
282.6   and 3a. 
282.7      (5) "Self-insurer" means a person who has arranged 
282.8   self-insurance for the automobile risks associated with the 
282.9   person's motor vehicle. 
282.10     (b) Every self-insurer who owns, leases, or operates a 
282.11  motor vehicle required to be registered or licensed in this 
282.12  state or principally garaged in this state for at least two 
282.13  months in the calendar year shall pay an annual amount for each 
282.14  vehicle of: 
282.15     (1) $15 for a private passenger vehicle as defined in 
282.16  section 65B.001, subdivision 3, or a utility vehicle as defined 
282.17  in section 65B.001, subdivision 4, not including a taxi; or 
282.18     (2) $25 for a taxi or any other self-insured vehicle not 
282.19  covered by clause (1). 
282.20     (c) A self-insurer who is more than six months delinquent 
282.21  in paying the amount due under this subdivision must be referred 
282.22  by the commissioner to the commissioner of commerce for action.  
282.23  That action may include revocation of the self-insured's 
282.24  self-insurer status. 
282.25     (d) The amount paid under this subdivision must be 
282.26  deposited into the general fund to the credit of the account 
282.27  from which the police state aid provided for in sections 69.011 
282.28  to 69.051 is payable. 
282.29     Subd. 9.  [TAX ON PERSONS, FIRMS, OR CORPORATIONS LICENSED 
282.30  TO PROCURE INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] (a) A 
282.31  tax is imposed on any person, firm, or corporation licensed 
282.32  under section 60A.19, subdivision 8.  The rate of tax is equal 
282.33  to two percent of gross premiums paid in the year less return 
282.34  premiums received in the year. 
282.35     (b)(1) Money collected under this subdivision must be paid 
282.36  to a municipality or a fire department relief association if: 
283.1      (i) the money is attributable to fire, lightning, or 
283.2   sprinkler insurance premiums paid by an owner to insure 
283.3   property; and 
283.4      (ii) the property is in a municipality that has an 
283.5   organized fire department, a partly paid fire department, or a 
283.6   volunteer fire department. 
283.7   The money must be paid to the municipality where the insured 
283.8   property is located, or to the municipality's fire department 
283.9   relief association.  The money to be paid includes penalties and 
283.10  interest collected because a property owner failed to pay on 
283.11  time the taxes due under this subdivision.  
283.12     (2) This paragraph does not apply to taxes paid under this 
283.13  subdivision that are attributable to premiums paid on property 
283.14  if:  
283.15     (i) the property is owned and occupied exclusively as a 
283.16  homestead, and the owner carries insurance on the property; or 
283.17     (ii) the property is exempt under section 550.37 and the 
283.18  owner carries insurance on the property. 
283.19     Subd. 10.  [TAX ON PERSONS, FIRMS, OR CORPORATIONS 
283.20  PROCURING INSURANCE FROM AN INELIGIBLE COMPANY.] (a) A tax is 
283.21  imposed on each insured in this state who procures, causes to be 
283.22  procured, or continues or renews insurance with an ineligible 
283.23  surplus lines insurer or any self-insurer in this state who 
283.24  procures or continues excess of loss, catastrophe, or other 
283.25  insurance upon a subject of insurance resident, located, or to 
283.26  be performed within this state, other than insurance procured 
283.27  pursuant to section 60A.201 or 60A.209, subdivision 1, equal to 
283.28  two percent of gross premiums less return premiums paid for such 
283.29  insurance. 
283.30     (b) If the insurance described in paragraph (a) also covers 
283.31  a subject of insurance residing, located, or to be performed 
283.32  outside this state, for the purposes of this subdivision, a 
283.33  proper pro rata portion of the entire premium payable for all of 
283.34  that insurance must be allocated according to the subjects of 
283.35  insurance residing, located, or to be performed in this state. 
283.36     (c) For the purposes of this subdivision, insurance placed 
284.1   with an ineligible surplus lines insurer is considered to be 
284.2   procured, continued, or renewed in this state if: 
284.3      (1) it was procured through negotiations occurring in whole 
284.4   or in part within or from outside this state; 
284.5      (2) it was procured by an application made in whole or in 
284.6   part within or from outside this state; or 
284.7      (3) premiums for it are paid from within this state 
284.8   directly or indirectly, in whole or in part. 
284.9      Subd. 11.  [RETALIATORY PROVISIONS.] (a) If any other state 
284.10  or country imposes any taxes, fines, deposits, penalties, 
284.11  licenses, or fees upon any insurance companies of this state and 
284.12  their agents doing business in another state or country that are 
284.13  in addition to or in excess of those imposed by the laws of this 
284.14  state upon foreign insurance companies and their agents doing 
284.15  business in this state, the same taxes, fines, deposits, 
284.16  penalties, licenses, and fees are imposed upon every similar 
284.17  insurance company of that state or country and their agents 
284.18  doing or applying to do business in this state. 
284.19     (b) If any conditions precedent to the right to do business 
284.20  in any other state or country are imposed by the laws of that 
284.21  state or country, beyond those imposed upon foreign companies by 
284.22  the laws of this state, the same conditions precedent are 
284.23  imposed upon every similar insurance company of that state or 
284.24  country and their agents doing or applying to do business in 
284.25  that state. 
284.26     (c) For purposes of this subdivision, "taxes, fines, 
284.27  deposits, penalties, licenses, or fees" means an amount of money 
284.28  that is deposited in the general revenue fund of the state or 
284.29  other similar fund in another state or country and is not 
284.30  dedicated to a special purpose or use or money deposited in the 
284.31  general revenue fund of the state or other similar fund in 
284.32  another state or country and appropriated to the commissioner of 
284.33  commerce or insurance for the operation of the department of 
284.34  commerce or other similar agency with jurisdiction over 
284.35  insurance.  Taxes, fines, deposits, penalties, licenses, or fees 
284.36  do not include: 
285.1      (1) special purpose obligations or assessments imposed in 
285.2   connection with particular kinds of insurance, including but not 
285.3   limited to assessments imposed in connection with residual 
285.4   market mechanisms; or 
285.5      (2) assessments made by the insurance guaranty association, 
285.6   life and health guarantee association, or similar association. 
285.7      (d) This subdivision applies to taxes imposed under 
285.8   subdivisions 1, 3, 4, 6, and 12, paragraph (a), clauses (1) and 
285.9   (3). 
285.10     (e) This subdivision does not apply to insurance companies 
285.11  organized or domiciled in a state or country, the laws of which 
285.12  do not impose retaliatory taxes, fines, deposits, penalties, 
285.13  licenses, or fees or which grant, on a reciprocal basis, 
285.14  exemptions from retaliatory taxes, fines, deposits, penalties, 
285.15  licenses, or fees to insurance companies domiciled in this state.
285.16     Subd. 12.  [OTHER ENTITIES.] (a) A tax is imposed equal to 
285.17  two percent of: 
285.18     (1) gross premiums less return premiums written for risks 
285.19  resident or located in Minnesota by a risk retention group; 
285.20     (2) gross premiums less return premiums received by an 
285.21  attorney in fact acting in accordance with chapter 71A; 
285.22     (3) gross premiums less return premiums received pursuant 
285.23  to assigned risk policies and contracts of coverage under 
285.24  chapter 79; 
285.25     (4) the direct funded premium received by the reinsurance 
285.26  association under section 79.34 from self-insurers approved 
285.27  under section 176.181 and political subdivisions that 
285.28  self-insure; 
285.29     (5) gross premiums less return premiums received by a 
285.30  nonprofit health service plan corporation authorized under 
285.31  chapter 62C; and 
285.32     (6) gross premiums less return premiums paid to an insurer 
285.33  other than a licensed insurance company or a surplus lines 
285.34  licensee for coverage of risks resident or located in Minnesota 
285.35  by a purchasing group or any members of the purchasing group to 
285.36  a broker or agent for the purchasing group. 
286.1      (b) A tax is imposed on the state fund mutual insurance 
286.2   company established under chapter 176A.  The tax must be 
286.3   computed in the same manner as mutual insurance companies under 
286.4   subdivisions 1, 3, and 4. 
286.5      (c) A tax is imposed on a joint self-insurance plan 
286.6   operating under chapter 60F.  The rate of tax is equal to two 
286.7   percent of the total amount of claims paid during the fund year, 
286.8   with no deduction for claims wholly or partially reimbursed 
286.9   through stop-loss insurance. 
286.10     (d) A tax is imposed on a joint self-insurance plan 
286.11  operating under chapter 62H.  The rate of tax is equal to two 
286.12  percent of the total amount of claims paid during the fund's 
286.13  fiscal year, with no deduction for claims wholly or partially 
286.14  reimbursed through stop-loss insurance. 
286.15     (e) A tax is imposed equal to the tax imposed under section 
286.16  297I.05, subdivision 5, on the gross premiums less return 
286.17  premiums on all coverages received by an accountable provider 
286.18  network or agents of an accountable provider network in 
286.19  Minnesota, in cash or otherwise, during the year. 
286.20     Subd. 13.  [FUNDS DEPOSITED INTO GENERAL FUND.] Unless 
286.21  otherwise specified in this chapter, all amounts collected by 
286.22  the commissioner under this chapter must be deposited in the 
286.23  general fund. 
286.24     Sec. 3.  [297I.10] [SURCHARGE ON PREMIUMS TO RESTORE 
286.25  DEFICIENCY IN SPECIAL FUND.] 
286.26     Subdivision 1.  [CITIES OF THE FIRST CLASS.] (a) The 
286.27  commissioner shall order and direct a surcharge to be collected 
286.28  of two percent of the fire, lightning, and sprinkler leakage 
286.29  gross premiums, less return premiums, on all direct business 
286.30  received by any licensed foreign or domestic fire insurance 
286.31  company on property in a city of the first class, or by its 
286.32  agents for it, in cash or otherwise. 
286.33     (b) By July 31 and December 31 of each year the 
286.34  commissioner of finance shall pay to the relief association in 
286.35  each city a warrant for an amount equal to the total amount of 
286.36  the surcharge on the premiums collected within the city since 
287.1   the previous payment. 
287.2      (c) The treasurer of the relief association shall place the 
287.3   money received under this subdivision in the special fund of the 
287.4   relief association. 
287.5      Subd. 2.  [CITY OF THE SECOND CLASS.] (a) Upon receiving 
287.6   certification from a city of the second class pursuant to 
287.7   section 424.165, the commissioner shall direct a surcharge to be 
287.8   collected of two percent of the fire, lightning, and sprinkler 
287.9   leakage gross premiums, less return premiums, on all direct 
287.10  business received by any foreign or domestic fire insurance 
287.11  company on property in such city of the second class, or by its 
287.12  agents for it, in cash or otherwise. 
287.13     (b) The board of trustees of a firefighter's relief 
287.14  association of the city of the second class that has sent 
287.15  certification to the commissioner under paragraph (a) must 
287.16  notify the commissioner as soon as the balance in their special 
287.17  fund equals $50,000.  Upon receiving notice from the 
287.18  association, the commissioner shall notify the insurers subject 
287.19  to the surcharge that the surcharge is discontinued effective 15 
287.20  days after the balance reached $50,000. 
287.21     (c) By September 1 and March 1 of each year, the 
287.22  commissioner of finance shall pay to the firefighter's relief 
287.23  association of each city of the second class a warrant for an 
287.24  amount equal to the total amount of the surcharge on the 
287.25  premiums collected within the city since the previous payment. 
287.26     (d) The treasurer of the firefighter's relief association 
287.27  shall place the money received under this subdivision in the 
287.28  special fund of the relief association. 
287.29     Subd. 3.  [APPROPRIATION.] The amount necessary to make the 
287.30  payments required under this section is appropriated to the 
287.31  commissioner of finance from the general fund. 
287.32     Sec. 4.  [297I.15] [EXEMPTIONS FROM TAX] 
287.33     Subdivision 1.  [GOVERNMENT PAYMENTS.] Premiums under 
287.34  medical assistance, general assistance medical care, the 
287.35  MinnesotaCare program, and the Minnesota comprehensive health 
287.36  insurance plan and all payments, revenues, and reimbursements 
288.1   received from the federal government for medicare-related 
288.2   coverage as defined in section 62A.31, subdivision 3, are not 
288.3   subject to tax under this chapter. 
288.4      Subd. 2.  [MINNESOTA EMPLOYEES INSURANCE PROGRAM.] To the 
288.5   extent that the Minnesota employees insurance program under 
288.6   section 43A.317 operates as a self-insured group, the premiums 
288.7   paid to the program are exempt from the taxes imposed under this 
288.8   chapter, but are subject to a Minnesota comprehensive health 
288.9   association assessment under section 62E.11. 
288.10     Subd. 3.  [PUBLIC EMPLOYEES INSURANCE PROGRAM.] Premiums 
288.11  paid to the public employees insurance program under section 
288.12  43A.316 are exempt from the taxes imposed under this chapter. 
288.13     Subd. 4.  [PREMIUMS PAID TO HEALTH CARRIERS BY STATE.] A 
288.14  health carrier as defined in section 62A.011 is exempt from the 
288.15  taxes imposed under this chapter on premiums paid to it by the 
288.16  state. 
288.17     Subd. 5.  [MINNESOTA INSURANCE GUARANTY ASSOCIATION.] The 
288.18  Minnesota insurance guaranty association under chapter 60C is 
288.19  exempt from the taxes imposed under this chapter. 
288.20     Subd. 6.  [MINNESOTA LIFE AND HEALTH GUARANTY ASSOCIATION.] 
288.21  The Minnesota life and health guaranty association under chapter 
288.22  61B is exempt from the taxes imposed under this chapter. 
288.23     Subd. 7.  [MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION.] The 
288.24  Minnesota comprehensive health association under chapter 62E is 
288.25  exempt from the taxes imposed under this chapter. 
288.26     Subd. 8.  [WRITING CARRIER FOR THE COMPREHENSIVE HEALTH 
288.27  INSURANCE PLAN.] Premiums received by the writing carrier for 
288.28  the comprehensive health insurance plan established under 
288.29  section 62E.10 are exempt from the taxes imposed under this 
288.30  chapter. 
288.31     Subd. 9.  [HEALTH COVERAGE REINSURANCE ASSOCIATION.] The 
288.32  health coverage reinsurance association under chapter 62L is 
288.33  exempt from the taxes imposed under this chapter. 
288.34     Subd. 10.  [PREMIUMS PAID TO FRATERNAL BENEFITS SOCIETIES.] 
288.35  Premiums paid to fraternal benefits societies pursuant to 
288.36  chapter 64B are exempt from the taxes imposed under this chapter.
289.1      Sec. 5.  [297I.20] [GUARANTY ASSOCIATION ASSESSMENT 
289.2   OFFSET.] 
289.3      (a) An insurance company may offset against its premium tax 
289.4   liability to this state any amount paid for assessments made for 
289.5   insolvencies which occur after July 31, 1994, under sections 
289.6   60C.01 to 60C.22, and any amount paid for assessments made after 
289.7   July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 
289.8   61B.16, or 61B.18 to 61B.32 as follows: 
289.9      (1) Each such assessment shall give rise to an amount of 
289.10  offset equal to 20 percent of the amount of the assessment for 
289.11  each of the five calendar years following the year in which the 
289.12  assessment was paid. 
289.13     (2) The amount of offset initially determined for each 
289.14  taxable year is the sum of the amounts determined under clause 
289.15  (1) for that taxable year. 
289.16     (b)(1) Each year the commissioner shall compare total 
289.17  guaranty association assessments levied over the preceding five 
289.18  calendar years to the sum of all premium tax and corporate 
289.19  franchise tax revenues collected from insurance companies, 
289.20  without reduction for any guaranty association assessment offset 
289.21  in the preceding calendar year, referred to in this subdivision 
289.22  as "preceding year insurance tax revenues." 
289.23     (2) If total guaranty association assessments levied over 
289.24  the preceding five years exceed the preceding year insurance tax 
289.25  revenues, insurance companies must be allowed only a 
289.26  proportionate part of the premium tax offset calculated under 
289.27  paragraph (a) for the current calendar year. 
289.28     (3) The proportionate part of the premium tax offset 
289.29  allowed in the current calendar year is determined by 
289.30  multiplying the amount calculated under paragraph (a) by a 
289.31  fraction.  The numerator of the fraction equals the preceding 
289.32  year insurance tax revenues, and its denominator equals total 
289.33  guaranty association assessments levied over the preceding 
289.34  five-year period. 
289.35     (4) The proportionate part of the premium tax offset that 
289.36  is not allowed must be carried forward to subsequent tax years 
290.1   and added to the amount of premium tax offset calculated under 
290.2   paragraph (a) prior to application of the limitation imposed by 
290.3   this paragraph. 
290.4      (5) Any amount carried forward from prior years must be 
290.5   allowed before allowance of the offset for the current year 
290.6   calculated under paragraph (a). 
290.7      (6) The premium tax offset limitation must be calculated 
290.8   separately for (i) insurance companies subject to assessment 
290.9   under sections 60C.01 to 60C.22, and (ii) insurance companies 
290.10  subject to assessment under Minnesota Statutes 1992, sections 
290.11  61B.01 to 61B.16, or 61B.18 to 61B.32. 
290.12     (7) When the premium tax offset is limited by this 
290.13  provision, the commissioner shall notify affected insurance 
290.14  companies on a timely basis for purposes of completing premium 
290.15  and corporate franchise tax returns.  
290.16     (8) The guaranty associations created under sections 60C.01 
290.17  to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 
290.18  and 61B.18 to 61B.32, shall provide the commissioner with the 
290.19  necessary information on guaranty association assessments. 
290.20     (c)(1) If the offset determined by the application of 
290.21  paragraphs (a) and (b) exceeds the greater of the insurance 
290.22  company's premium tax liability under this section or its 
290.23  corporate franchise tax liability under chapter 290 prior to 
290.24  allowance of the credit for premium taxes, then the insurance 
290.25  company may carry forward the excess, referred to in this 
290.26  subdivision as the "carryforward credit" to subsequent taxable 
290.27  years. 
290.28     (2) The carryforward credit is allowed as an offset against 
290.29  premium tax liability for the first succeeding year to the 
290.30  extent that the premium tax liability for that year exceeds the 
290.31  amount of the allowable offset for the year determined under 
290.32  paragraphs (a) and (b). 
290.33     (3) The carryforward credit must be reduced, but not below 
290.34  zero, by the greater of the amount of the carryforward credit 
290.35  allowed as an offset against the premium tax under this 
290.36  paragraph or the amount of the carryforward credit allowed as an 
291.1   offset against the insurance company's corporate franchise tax 
291.2   liability under section 290.35, subdivision 6, paragraph (d).  
291.3   The remainder, if any, of the carryforward credit must be 
291.4   carried forward to succeeding taxable years until the entire 
291.5   carryforward credit has been credited against the insurance 
291.6   company's liability for premium tax under this chapter and 
291.7   corporate franchise tax under chapter 290 if applicable for that 
291.8   taxable year. 
291.9      (d) When an insurer has offset against taxes its payment of 
291.10  an assessment of the Minnesota life and health guaranty 
291.11  association, and the association pays the insurer a refund with 
291.12  respect to the assessment under Minnesota Statutes 1992, section 
291.13  61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 
291.14  reduces the insurer's carryforward credit under paragraph (c).  
291.15  If the refund exceeds the amount of the carryforward credit, the 
291.16  excess amount must be repaid to the state by the insurers to the 
291.17  extent of the offset in the manner the commissioner requires. 
291.18     Sec. 6.  [297I.25] [INFORMATION RETURNS.] 
291.19     Subdivision 1.  [LICENSED BROKERS OR AGENTS OF RISK 
291.20  RETENTION GROUPS.] To the extent licensed agents or brokers are 
291.21  utilized in accordance with section 60E.12, they shall report to 
291.22  the commissioner the premiums received for direct business for 
291.23  risks resident or located within this state which the licensees 
291.24  have placed with or on behalf of a risk retention group not 
291.25  chartered in this state. 
291.26     Subd. 2.  [FIRETOWN AND POLICE PREMIUM REPORTS.] To the 
291.27  extent required by section 69.021, each insurer shall file with 
291.28  the commissioner a Minnesota firetown premium report and 
291.29  Minnesota aid to police premium report. 
291.30     Sec. 7.  [297I.30] [DUE DATES FOR FILING RETURNS.] 
291.31     Subdivision 1.  [GENERAL RULE.] On or before March 1, every 
291.32  insurer subject to taxation under section 297I.05, subdivisions 
291.33  1 to 6, and 12, paragraphs (a), clauses (1) to (5), (b), and 
291.34  (e), shall file an annual return for the preceding calendar year 
291.35  setting forth such information as the commissioner may 
291.36  reasonably require on forms prescribed by the commissioner. 
292.1      Subd. 2.  [SURPLUS LINES LICENSEES AND PURCHASING 
292.2   GROUPS.] On or before February 15 and August 15 of each year, 
292.3   every surplus lines licensee subject to taxation under section 
292.4   297I.05, subdivision 7, and every purchasing group or member of 
292.5   a purchasing group subject to tax under section 297I.05, 
292.6   subdivision 12, paragraph (a), clause (6), shall file a return 
292.7   with the commissioner for the preceding six-month period ending 
292.8   December 31, or June 30, setting forth any information the 
292.9   commissioner reasonably prescribes on forms prescribed by the 
292.10  commissioner. 
292.11     Subd. 3.  [AUTOMOBILE RISK SELF-INSURERS.] On or before 
292.12  July 1 of each year, every self-insurer subject to taxation 
292.13  under section 297I.05, subdivision 8, shall file a return with 
292.14  the commissioner for the preceding calendar year setting forth 
292.15  any information the commissioner reasonably requires on forms 
292.16  prescribed by the commissioner. 
292.17     Subd. 4.  [PERSONS, FIRMS, OR CORPORATIONS LICENSED TO 
292.18  PROCURE INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] On or 
292.19  before 30 days following the expiration date of a license issued 
292.20  under section 297I.05, subdivision 9, a person, firm, or 
292.21  corporation licensed to obtain insurance from a company not 
292.22  authorized to do business in Minnesota shall file a return with 
292.23  the commissioner for the preceding 12-month period setting forth 
292.24  any information the commissioner reasonably requires on forms 
292.25  prescribed by the commissioner. 
292.26     Subd. 5.  [JOINT SELF-INSURANCE PLANS.] On or before 60 
292.27  days following the conclusion of their fiscal year, a plan 
292.28  subject to tax under 297I.05, subdivision 12, paragraph (c) or 
292.29  (d), shall file a return with the commissioner for the preceding 
292.30  fiscal year setting forth any information the commissioner 
292.31  reasonably requires on forms prescribed by the commissioner. 
292.32     Subd. 6.  [PERSONS, FIRMS, OR CORPORATIONS PROCURING 
292.33  INSURANCE FROM AN UNLICENSED FOREIGN COMPANY.] Within 30 days 
292.34  after the date the insurance was procured, continued, or 
292.35  renewed, a taxpayer required to pay the tax under section 
292.36  297I.05, subdivision 10, shall file a return setting forth any 
293.1   information the commissioner reasonably requires on forms 
293.2   prescribed by the commissioner. 
293.3      Subd. 7.  [SURCHARGE.] (a)(1) By April 30 of each year, 
293.4   every company required to pay the surcharge under section 
293.5   297I.10, subdivision 1, shall file a return for the five-month 
293.6   period ending March 31 setting forth any information the 
293.7   commissioner reasonably requires on forms prescribed by the 
293.8   commissioner. 
293.9      (2) By June 30 of each year, every company required to pay 
293.10  the surcharge under section 297I.10, subdivision 1, shall file a 
293.11  return for the two-month period ending May 31 setting forth any 
293.12  information the commissioner reasonably requires on forms 
293.13  prescribed by the commissioner. 
293.14     (3) By November 30 of each year, every company required to 
293.15  pay the surcharge under section 297I.10, subdivision 1, shall 
293.16  file a return for the five-month period ending October 31 
293.17  setting forth any information the commissioner reasonably 
293.18  requires on forms prescribed by the commissioner. 
293.19     (b) By February 15 and August 15 of each year, every 
293.20  company required to pay a surcharge under section 297I.10, 
293.21  subdivision 2, must file a return for the preceding six-month 
293.22  period ending December 31 and June 30. 
293.23     Sec. 8.  [297I.35] [PAYMENT OF TAX.] 
293.24     Subdivision 1.  [GENERAL RULE.] All taxes and surcharges 
293.25  imposed under this chapter must be paid to the commissioner by 
293.26  the date that the return must be filed under section 297I.30. 
293.27     Subd. 2.  [ELECTRONIC FUNDS TRANSFER.] If the aggregate 
293.28  amount of tax and surcharges due under this chapter during a 
293.29  calendar year is equal to or exceeds $120,000, or if the 
293.30  taxpayer is required to make payment of any other tax to the 
293.31  commissioner by means of electronic funds transfer as defined in 
293.32  section 336.4A-104, paragraph (a), then all tax and surcharge 
293.33  payments in the subsequent calendar year must be paid by means 
293.34  of a funds transfer as defined in section 336.4A-104, paragraph 
293.35  (a).  The funds transfer payment date, as defined in section 
293.36  336.4A-104, must be on or before the date the payment is due.  
294.1   If the date the payment is due is not a funds transfer business 
294.2   day, as defined in section 336.4A-105, paragraph (a), clause 
294.3   (4), the payment date must be on or before the funds transfer 
294.4   business day next following the date the payment is due. 
294.5      Sec. 9.  [297I.40] [ESTIMATED TAX.] 
294.6      Subdivision 1.  [REQUIREMENT TO PAY.] On or before April 1, 
294.7   June 1, and December 1 of each year, every taxpayer subject to 
294.8   tax under section 297I.05, subdivisions 1 to 6, and 12, 
294.9   paragraphs (a), clauses (1) to (5), (b), and (e), must pay to 
294.10  the commissioner an installment equal to one-third of the 
294.11  insurer's total estimated tax for the current year. 
294.12     Subd. 2.  [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 
294.13  any required installment is one-third of the lesser of 
294.14     (1) 80 percent of the tax imposed for the current year, or 
294.15     (2) 100 percent of the tax paid for the previous year. 
294.16     Subd. 3.  [NO ADDITION TO TAX WHERE THE TAX IS SMALL.] No 
294.17  addition to tax is imposed if the total tax for the current tax 
294.18  year is $500 or less. 
294.19     Subd. 4.  [ADDITION TO TAX.] (a) In case of any 
294.20  underpayment of installments by an insurer, there is added to, 
294.21  and collected as part of, the tax for the taxable year an amount 
294.22  determined at the rate specified in section 270.75 upon the 
294.23  amount of underpayment. 
294.24     (b) The amount of the underpayment is the excess of:  (1) 
294.25  the amount of the installment; over (2) the amount, if any, of 
294.26  the installment paid on or before the last date prescribed for 
294.27  payment.  
294.28     (c) The period of the underpayment runs from the date the 
294.29  installment was required to be paid to the earlier of:  
294.30     (1) March 1 of the year following the close of the taxable 
294.31  year; or 
294.32     (2) with respect to any portion of the underpayment, the 
294.33  date on which that portion is paid.  For purposes of this 
294.34  clause, a payment of estimated tax on any installment date is 
294.35  considered a payment of any previous underpayment only to the 
294.36  extent the payment exceeds the amount of the installment 
295.1   required to be made on that date. 
295.2      Subd. 5.  [DEFINITION OF TAX.] The term "tax" as used in 
295.3   this section means the tax imposed by section 297I.05, 
295.4   subdivisions 1 to 6, and 12, paragraphs (a), clauses (1) to (5), 
295.5   (b), and (e), without regard to the retaliatory provisions of 
295.6   section 297I.05, subdivision 11, and the offset in section 
295.7   297I.20. 
295.8      Subd. 6.  [FAILURE TO PAY ESTIMATED TAX.] When an insurer 
295.9   does not make any payments, the period of the underpayment runs 
295.10  from the three installment dates set forth in subdivision 1 to 
295.11  whichever of the periods in subdivision 4, paragraph (c), is the 
295.12  earlier. 
295.13     Subd. 7.  [APRIL ESTIMATED PAYMENT.] A taxpayer who claims 
295.14  a refund of an overpayment on an original return may elect to 
295.15  have all or any portion of the overpayment applied as a credit 
295.16  to the April 1 estimated tax payment for the year following the 
295.17  year of the return.  The credit is considered applied on April 
295.18  1.  Notwithstanding section 297I.80, the amount credited does 
295.19  not bear interest. 
295.20     Sec. 10.  [297I.45] [ASSESSMENTS.] 
295.21     The commissioner shall make determinations, corrections, 
295.22  and assessments with respect to taxes and surcharges, including 
295.23  interest, additions to tax, and penalties.  To determine the 
295.24  accuracy of a return, or in fixing liability for a tax or 
295.25  surcharge, the commissioner may make reasonable examinations or 
295.26  investigations of the taxpayer's records and accounts.  If a 
295.27  taxpayer fails to file a required return, the commissioner, from 
295.28  information in the commissioner's possession or obtainable by 
295.29  the commissioner, may make a return for the taxpayer. 
295.30     Sec. 11.  [297I.50] [ORDER OF ASSESSMENT.] 
295.31     Subdivision 1.  [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 
295.32  TAXPAYER.] (a) When a return has been filed and the commissioner 
295.33  determines that the tax or surcharge disclosed by the return is 
295.34  different than the tax or surcharge determined by the 
295.35  examination, the commissioner shall send an order of assessment 
295.36  to the taxpayer.  When no return has been filed, the 
296.1   commissioner may make a return for the taxpayer under section 
296.2   297I.45 or may send an order of assessment under this 
296.3   subdivision.  The order must explain the basis for the 
296.4   assessment and must explain the taxpayer's appeal rights.  An 
296.5   order of assessment is final when made but may be reconsidered 
296.6   by the commissioner under section 297I.95. 
296.7      (b) If a tax payment meets the requirements of this 
296.8   paragraph, the penalty under section 297I.85, subdivision 2, is 
296.9   not imposed, and the commissioner may not take any collection 
296.10  action, including the filing of liens under section 270.69.  
296.11     To meet the requirements, the taxpayer must first file a 
296.12  return for the tax or surcharge type on which the order is based 
296.13  and then pay the amount shown on the order within the following 
296.14  time limits: 
296.15     (1) If the taxpayer files an administrative appeal under 
296.16  section 297I.95 or a tax court appeal under chapter 271, and if 
296.17  the appeal is based on a constitutional challenge to the tax, 
296.18  the payment must be made within 60 days after final 
296.19  determination of the appeal. 
296.20     (2) If the appeal is not based on a constitutional 
296.21  challenge, the payment must be made when the decision of the tax 
296.22  court is made. 
296.23     (3) If the taxpayer does not file an appeal, the payment 
296.24  must be made within 60 days after the date the order is mailed 
296.25  to the taxpayer by the commissioner. 
296.26     Subd. 2.  [ERRONEOUS REFUNDS.] An erroneous refund is 
296.27  considered an underpayment of tax or surcharge on the date 
296.28  made.  An assessment of a deficiency arising out of an erroneous 
296.29  refund may be made at any time within two years from the making 
296.30  of the refund.  If part of the refund was induced by fraud or 
296.31  misrepresentation of a material fact, the assessment may be made 
296.32  at any time. 
296.33     Subd. 3.  [ASSESSMENT PRESUMED VALID.] A return or 
296.34  assessment of tax or surcharge made by the commissioner is prima 
296.35  facie correct and valid.  The taxpayer has the burden of 
296.36  establishing its incorrectness or invalidity in any related 
297.1   action or proceeding.  
297.2      Subd. 4.  [AGGREGATE REFUND OR ASSESSMENT.] The 
297.3   commissioner, on examining returns of a taxpayer for more than 
297.4   one year or period, may issue one order covering the period 
297.5   under examination that reflects the aggregate refund or 
297.6   additional tax or surcharge due. 
297.7      Subd. 5.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
297.8   sent postage prepaid by United States mail to the taxpayer at 
297.9   the taxpayer's last known address, is sufficient even if a 
297.10  corporation has terminated its existence, unless the department 
297.11  has been provided with a new address by a party authorized to 
297.12  received notices of assessment. 
297.13     Sec. 12.  [297I.55] [EXAMINATIONS; AUDITS AND COLLECTIONS.] 
297.14     Subdivision 1.  [EXAMINATION OF TAXPAYER.] To determine the 
297.15  accuracy of a return or report, or in fixing liability under 
297.16  this chapter, or for the purpose of collection, the commissioner 
297.17  may make reasonable examinations or investigations of a 
297.18  taxpayer's place of business; tangible personal property; 
297.19  equipment, computer systems and facilities; and pertinent books, 
297.20  records, papers, vouchers, computer printouts, accounts, and 
297.21  documents. 
297.22     Subd. 2.  [ACCESS TO RECORDS OF OTHER PERSONS IN CONNECTION 
297.23  WITH EXAMINATION OF TAXPAYER.] When conducting an investigation 
297.24  or an audit of a taxpayer, or for the purpose of collection, the 
297.25  commissioner may, except where privileged by law, examine the 
297.26  relevant records and files of any state agency as well as any 
297.27  person, business, institution, financial institution, agency of 
297.28  the United States government, or agency of any other state where 
297.29  permitted by statute, agreement, or reciprocity.  The 
297.30  commissioner may compel production of these records by subpoena. 
297.31  A subpoena may be served directly by the commissioner. 
297.32     Subd. 3.  [POWER TO COMPEL TESTIMONY.] In the 
297.33  administration of this chapter, the commissioner may: 
297.34     (1) administer oaths or affirmations and compel by subpoena 
297.35  the attendance of witnesses, testimony, and the production of a 
297.36  person's pertinent books, records, papers, or other data for 
298.1   inspection and copying; and 
298.2      (2) examine under oath or affirmation any person regarding 
298.3   the business of any taxpayer concerning any relevant matter 
298.4   incident to the administration of this chapter.  The fees of 
298.5   witnesses required by the commissioner to attend a hearing are 
298.6   equal to those allowed to witnesses appearing before courts of 
298.7   this state.  The fees must be paid in the manner provided for 
298.8   the payment of other expenses incident to the administration of 
298.9   state tax law. 
298.10     Subd. 4.  [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 
298.11  IS KNOWN.] An investigation may extend to a person that the 
298.12  commissioner determines has access to information that may be 
298.13  relevant to the examination or investigation.  When a subpoena 
298.14  requiring the production of records as described in subdivision 
298.15  2 is served on a third-party recordkeeper, written notice of the 
298.16  subpoena must be mailed to the taxpayer and to any other person 
298.17  who is identified in the subpoena.  The notices must be given 
298.18  within three days of the day on which the subpoena is served.  
298.19  Notice to the taxpayer required by this section is sufficient if 
298.20  it is mailed to the last address on record with the commissioner.
298.21     The provisions of this subdivision relating to notice to 
298.22  the taxpayer or other parties identified in the subpoena do not 
298.23  apply if there is reasonable cause to believe that the giving of 
298.24  notice may lead to attempts to conceal, destroy, or alter 
298.25  records or assets relevant to the examination, to prevent the 
298.26  communication of information from other persons through 
298.27  intimidation, bribery, or collusion, or to flee to avoid 
298.28  prosecution, testifying, or production of records. 
298.29     Subd. 5.  [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 
298.30  IS NOT KNOWN.] A subpoena that does not identify the person or 
298.31  persons whose tax or surcharge liability is being investigated 
298.32  may be served only if: 
298.33     (1) the subpoena relates to the investigation of a 
298.34  particular person or ascertainable group or class of persons; 
298.35     (2) there is a reasonable basis for believing that the 
298.36  person or group or class of persons may fail or may have failed 
299.1   to comply with laws administered by the commissioner; 
299.2      (3) the information sought to be obtained from the 
299.3   examination of the records, and the identity of the person or 
299.4   persons with respect to whose liability the subpoena is issued, 
299.5   is not readily available from other sources; 
299.6      (4) the subpoena is clear and specific concerning the 
299.7   information sought to be obtained; and 
299.8      (5) the information sought to be obtained is limited solely 
299.9   to the scope of the investigation. 
299.10     When a subpoena does not identify the person or persons 
299.11  with respect to whose tax or surcharge liability the subpoena is 
299.12  issued, the party served with the subpoena may petition for a 
299.13  determination concerning whether the commissioner has complied 
299.14  with clauses (1) to (5) and thus whether the subpoena is 
299.15  enforceable.  The petitions must be to the district court in 
299.16  which the party is located.  The petition must be filed within 
299.17  20 days after service of the subpoena.  If the party served does 
299.18  not petition within the time prescribed, the subpoena has the 
299.19  effect of a court order. 
299.20     Subd. 6.  [REQUEST BY TAXPAYER FOR SUBPOENA.] When the 
299.21  commissioner has the power to issue a subpoena for investigative 
299.22  or auditing purposes, the commissioner shall honor a reasonable 
299.23  request by the taxpayer to issue a subpoena on the taxpayer's 
299.24  behalf, if in connection with the investigation or audit. 
299.25     Subd. 7.  [APPLICATION TO COURT FOR ENFORCEMENT OF 
299.26  SUBPOENA.] Disobedience of subpoenas issued under this section 
299.27  is punishable by the district court of the district in which the 
299.28  party served with the subpoena is located, in the same manner as 
299.29  contempt of the district court. 
299.30     Subd. 8.  [COST OF PRODUCTION OF RECORDS.] The cost of 
299.31  producing records of a third party required by a subpoena must 
299.32  be paid by the taxpayer, if the taxpayer requests the subpoena 
299.33  to be issued, or if the taxpayer has the records available but 
299.34  has refused to provide them to the commissioner.  In other cases 
299.35  where the taxpayer cannot produce records and the commissioner 
299.36  then initiates a subpoena for third-party records, the 
300.1   commissioner shall pay the reasonable cost of producing the 
300.2   records.  The commissioner may later assess the reasonable costs 
300.3   against the taxpayer if the records contribute to the 
300.4   determination of an assessment of tax or surcharge against the 
300.5   taxpayer. 
300.6      Sec. 13.  [297I.60] [CLAIMS FOR REFUND.] 
300.7      Subdivision 1.  [GENERAL RIGHT TO REFUND.] (a) Subject to 
300.8   the requirements of this section and section 297I.70, if a 
300.9   taxpayer has paid a tax or surcharge in excess of the amount due 
300.10  and files a written claim for refund, the commissioner shall 
300.11  refund or credit the overpayment determined by the commissioner 
300.12  to be erroneously paid. 
300.13     (b) The claim must specify the name of the taxpayer, the 
300.14  date when and the period for which the tax or surcharge was 
300.15  paid, the kind of tax or surcharge paid, the amount that the 
300.16  taxpayer claims was erroneously paid, the grounds on which a 
300.17  refund is claimed, and other information relative to the payment.
300.18  The claim must be in the form required by the commissioner.  A 
300.19  return or amended return claiming an overpayment constitutes a 
300.20  claim for refund. 
300.21     (c) The commissioner shall determine the amount of refund, 
300.22  if any, that is due, and notify the taxpayer of the 
300.23  determination as soon as practicable after a claim has been 
300.24  filed.  Notice must be mailed to the taxpayer at the address 
300.25  stated upon the return or claim for refund. 
300.26     (d) If the amount of tax or surcharge paid by the taxpayer 
300.27  exceeds the amount of tax or surcharge imposed on the taxpayer, 
300.28  the amount of excess is considered an overpayment even if in 
300.29  fact there was no liability with respect to which the amount was 
300.30  paid. 
300.31     (e) When in the course of an examination and within the 
300.32  time for requesting a refund, the commissioner determines that 
300.33  there has been an overpayment of tax or surcharge, the 
300.34  commissioner shall refund or credit the amount of the 
300.35  overpayment to the taxpayer and no return is necessary. 
300.36     (f) Notwithstanding any law to the contrary, the 
301.1   commissioner is not required to refund or credit any overpayment 
301.2   of less than one dollar. 
301.3      (g) There is appropriated to the commissioner the amounts 
301.4   necessary to make refunds required by this section.  The funds 
301.5   are appropriated from the same fund to which the tax or 
301.6   surcharge being refunded was originally deposited. 
301.7      Subd. 2.  [REMEDIES.] (a) If the taxpayer is notified that 
301.8   the refund claim is denied in whole or in part, the taxpayer may 
301.9   contest the denial by: 
301.10     (1) filing an administrative appeal with the commissioner 
301.11  under section 297I.95; 
301.12     (2) filing an appeal in tax court within 60 days of the 
301.13  date of the notice of denial; or 
301.14     (3) filing an action in the district court to recover the 
301.15  refund. 
301.16     (b) An action in the district court must be brought with 18 
301.17  months following the date of the notice of denial.  An action 
301.18  for refund of tax or surcharge must be brought in the district 
301.19  court of the district in which lies the taxpayer's principal 
301.20  place of business or in the district court for Ramsey county.  
301.21  If a taxpayer files a claim for refund and the commissioner has 
301.22  not issued a denial of the claim, the taxpayer may bring an 
301.23  action in the district court or the tax court at any time after 
301.24  the expiration of six months of the time the claim was filed. 
301.25     Sec. 14.  [297I.65] [LIMITATIONS OF TIME FOR ASSESSMENT OF 
301.26  TAX.] 
301.27     Subdivision 1.  [GENERAL RULE.] Except as otherwise 
301.28  provided, the amount of taxes or surcharges assessable must be 
301.29  assessed within three and one-half years after the date the 
301.30  return is filed. 
301.31     Subd. 2.  [FILING DATE.] For purposes of this section, a 
301.32  return filed before the last day prescribed by law for filing 
301.33  the return is considered to be filed on the last day. 
301.34     Subd. 3.  [FALSE OR FRAUDULENT RETURN.] Notwithstanding the 
301.35  limitation under subdivision 1, the tax or surcharge may be 
301.36  assessed at any time if a false or fraudulent return is filed or 
302.1   when a taxpayer fails to file a return. 
302.2      Sec. 15.  [297I.70] [LIMITATION ON CLAIMS FOR REFUND.] 
302.3      Except as provided in section 297I.75, a claim for refund 
302.4   of an overpayment must be filed within 3-1/2 years from the date 
302.5   prescribed for filing the return, or one year from the date of 
302.6   an order assessing tax or surcharge, or one year from the date 
302.7   of a return filed by the commissioner, upon payment in full of 
302.8   the tax, surcharge, penalties, and interest shown on the order 
302.9   or return made by the commissioner, whichever period expires 
302.10  later.  Claims for refund filed after the 3-1/2-year period but 
302.11  within the one-year period are limited to the amount of tax, 
302.12  surcharge, penalties, and interest on the order or return made 
302.13  by the commissioner and to issues determined by the order or 
302.14  return made by the commissioner. 
302.15     Sec. 16.  [297I.75] [CONSENT TO EXTEND TIME.] 
302.16     If before the expiration of the time prescribed in sections 
302.17  297I.65 and 297I.70 for the assessment of tax or surcharge or 
302.18  the filing of a claim for refund, the commissioner and the 
302.19  taxpayer have consented in writing to the assessment or filing 
302.20  of a claim for refund after that time, the tax or surcharge may 
302.21  be assessed at any time before the expiration of the agreed-upon 
302.22  period and a claim for refund may be paid at any time before the 
302.23  expiration of the agreed-upon period plus six months.  The 
302.24  period may be extended by later agreements in writing before the 
302.25  expiration of the period previously agreed upon. 
302.26     Sec. 17.  [297I.80] [INTEREST.] 
302.27     Subdivision 1.  [PAYABLE TO THE COMMISSIONER.] (a) When 
302.28  interest is required under this section, interest is computed at 
302.29  the rate specified in section 270.75. 
302.30     (b) If a tax or surcharge is not paid within the time named 
302.31  by law for payment, the unpaid tax or surcharge bears interest 
302.32  from the date the tax or surcharge should have been paid until 
302.33  the date the tax or surcharge is paid. 
302.34     (c) Whenever a taxpayer is liable for additional tax or 
302.35  surcharge because of a redetermination by the commissioner or 
302.36  other reason, the additional tax or surcharge bears interest 
303.1   from the time the tax or surcharge should have been paid until 
303.2   the date the tax or surcharge is paid. 
303.3      (d) A penalty bears interest from the date the return or 
303.4   payment was required to be filed or paid to the date of payment 
303.5   of the penalty. 
303.6      Subd. 2.  [ON OVERPAYMENTS.] (a) When interest is required 
303.7   under this section, interest is computed at the rate specified 
303.8   in section 270.76. 
303.9      (b) Interest on an overpayment is computed from the date of 
303.10  the payment of the tax or surcharge until the date the refund is 
303.11  made.  For purposes of this subdivision, any payment made before 
303.12  the last day prescribed by law to make the payment, including 
303.13  any estimated tax payments, is considered paid on the last day 
303.14  prescribed by law for the payment.  A return filed before the 
303.15  due date is considered as filed on the due date. 
303.16     Sec. 18.  [297I.85] [CIVIL PENALTIES.] 
303.17     Subdivision 1.  [LATE FILING PENALTY.] If a taxpayer fails 
303.18  to file a return within the time prescribed, a penalty of five 
303.19  percent of the amount of tax or surcharge not timely paid is 
303.20  added to the tax or surcharge. 
303.21     Subd. 2.  [LATE PAYMENT PENALTY.] If a taxpayer fails to 
303.22  pay a tax or surcharge within the time specified for payment a 
303.23  penalty must be added to the amount required to be shown as tax 
303.24  or surcharge.  The penalty is five percent of the tax or 
303.25  surcharge not paid on or before the date specified for payment 
303.26  of the tax or surcharge if the failure is for not more than 30 
303.27  days, with an additional penalty of five percent of the amount 
303.28  of tax or surcharge remaining unpaid during each additional 30 
303.29  days or fraction of 30 days during which the failure continues, 
303.30  not exceeding 15 percent in the aggregate. 
303.31     Subd. 3.  [INTENT TO EVADE.] If a taxpayer, with intent to 
303.32  evade the tax or surcharge imposed by this chapter fails to file 
303.33  any return required by this chapter, or with such intent files a 
303.34  false or fraudulent return, a penalty is imposed on the 
303.35  taxpayer.  The penalty is equal to 50 percent of the tax or 
303.36  surcharge, less amounts paid by the taxpayer on the basis of the 
304.1   false or fraudulent return and is due for the period to which 
304.2   the return related. 
304.3      Subd. 4.  [NEGLIGENCE OR INTENTIONAL DISREGARD; 
304.4   PENALTY.] If any part of an additional assessment is due to 
304.5   negligence or intentional disregard of the statute or a rule but 
304.6   without intent to defraud, there is added to the tax or 
304.7   surcharge a penalty equal to ten percent of the additional 
304.8   assessment. 
304.9      Subd. 5.  [PAYMENT OF PENALTIES.] The penalties imposed by 
304.10  this section must be collected and paid in the same manner as 
304.11  taxes. 
304.12     Subd. 6.  [PENALTIES ARE ADDITIONAL.] The civil penalties 
304.13  imposed by this section are in addition to the criminal 
304.14  penalties imposed by this chapter. 
304.15     Subd. 7.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
304.16  ELECTRONIC FUNDS TRANSFER.] In addition to other applicable 
304.17  penalties imposed by this section, if the commissioner notifies 
304.18  the taxpayer that payments are required to be made by means of 
304.19  electronic funds transfer, and the payments are made by some 
304.20  other means, a penalty is imposed.  The amount of the penalty is 
304.21  equal to five percent of each payment that should have been paid 
304.22  electronically.  The penalty may be abated under the abatement 
304.23  procedures prescribed in section 270.07, subdivision 6, if the 
304.24  failure to pay electronically is due to reasonable cause. 
304.25     Sec. 19.  [297I.90] [CRIMINAL PENALTIES.] 
304.26     Subdivision 1.  [PENALTIES FOR KNOWING FAILURE TO FILE OR 
304.27  PAY; WILLFUL EVASION.] (a) If a person is required to file with 
304.28  the commissioner a return, report, or other document, and that 
304.29  person fails to file it when required and does so knowingly, 
304.30  rather than accidentally, inadvertently, or negligently, that 
304.31  person is guilty of a gross misdemeanor.  
304.32     (b) If a person is required to file with the commissioner a 
304.33  return, report, or other document, and that person willfully 
304.34  attempts in any manner to evade or defeat a tax or surcharge by 
304.35  failing to file it when required, that person is guilty of a 
304.36  felony.  
305.1      (c) If a person is required to pay or to collect and remit 
305.2   a tax or surcharge, and that person knowingly, rather than 
305.3   accidentally, inadvertently, or negligently fails to do so when 
305.4   required, that person is guilty of a gross misdemeanor.  
305.5      (d) If a person is required to pay or to collect and remit 
305.6   a tax or surcharge, and that person willfully attempts to evade 
305.7   or defeat a tax or surcharge by failing to do so when required, 
305.8   that person is guilty of a felony. 
305.9      Subd. 2.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
305.10  person who files with the commissioner a return, report, or 
305.11  other document known by the person to be fraudulent or false 
305.12  concerning a material matter is guilty of a felony. 
305.13     (b) A person who knowingly aids or assists in, or advises 
305.14  in the preparation or presentation of a return, report, or other 
305.15  document that is fraudulent or false concerning a material 
305.16  matter, whether or not the falsity or fraud committed is with 
305.17  the knowledge or consent of the person authorized or required to 
305.18  present the return, report, or other document, is guilty of a 
305.19  felony. 
305.20     Sec. 20.  [297I.95] [ADMINISTRATIVE APPEALS.] 
305.21     Subdivision 1.  [TAXPAYER RIGHT TO RECONSIDERATION.] A 
305.22  taxpayer may obtain the commissioner's reconsideration of an 
305.23  order assessing tax or surcharge, a denial of a request for 
305.24  abatement of penalty or interest, or a denial of a claim for 
305.25  refund by filing an administrative appeal under subdivision 4.  
305.26  No reconsideration is allowed under this section if the action 
305.27  taken by the commissioner is the outcome of an administrative 
305.28  appeal. 
305.29     Subd. 2.  [APPEAL BY TAXPAYER.] A taxpayer who wishes to 
305.30  seek administrative review must follow the procedures in 
305.31  subdivision 4.  
305.32     Subd. 3.  [NOTICE DATE.] For purposes of this section, the 
305.33  term "notice date" means the date of the order adjusting the tax 
305.34  or surcharge or order denying a request for abatement, or, in 
305.35  the case of a denied refund, the date of the notice of denial.  
305.36     Subd. 4.  [TIME AND CONTENT FOR ADMINISTRATIVE 
306.1   APPEAL.] Within 60 days after the notice date, the taxpayer must 
306.2   file a written appeal with the commissioner.  The appeal need 
306.3   not be in any particular form but must contain the following 
306.4   information:  
306.5      (1) name and address of the taxpayer; 
306.6      (2) if a corporation, the state of incorporation of the 
306.7   taxpayer, and the principal place of business of the 
306.8   corporation; 
306.9      (3) the Minnesota identification number or social security 
306.10  number of the taxpayer; 
306.11     (4) the type of tax or surcharge involved; 
306.12     (5) the date; 
306.13     (6) the tax years or periods involved and the amount of tax 
306.14  or surcharge involved for each year or period; 
306.15     (7) the findings in the notice that the taxpayer disputes; 
306.16     (8) a summary statement that the taxpayer relies on for 
306.17  each exception; and 
306.18     (9) the taxpayer's signature or signature of the taxpayer's 
306.19  duly authorized agent.  
306.20     Subd. 5.  [EXTENSIONS.] When requested in writing and 
306.21  within the time allowed for filing an administrative appeal, the 
306.22  commissioner may extend the time for filing an appeal for a 
306.23  period not more than 30 days after the expiration of the 60 days 
306.24  after the notice date. 
306.25     Subd. 6.  [DETERMINATION OF APPEAL.] Based on applicable 
306.26  law and available information, the commissioner shall determine 
306.27  whether the appeal is valid.  The commissioner shall find the 
306.28  appeal valid in whole, valid in part, or invalid, and shall 
306.29  notify the taxpayer of the decision.  This notice must be in 
306.30  writing and must state the reasons for the determination. 
306.31     Subd. 7.  [AGREEMENT DETERMINING TAX LIABILITY.] When it 
306.32  appears to be in the best interests of the state, the 
306.33  commissioner may settle any taxes, surcharges, penalties, or 
306.34  interest that the commissioner has under consideration by virtue 
306.35  of an appeal filed under this section.  An agreement must be in 
306.36  writing and signed by the commissioner and the taxpayer, or by 
307.1   the taxpayer's representative authorized by the taxpayer to 
307.2   enter into an agreement.  The agreement is final and, except 
307.3   upon a showing of fraud, malfeasance, or misrepresentation of a 
307.4   material fact, the case must not be reopened as to the matters 
307.5   agreed upon. 
307.6      Subd. 8.  [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 
307.7   After deciding an appeal, the commissioner shall issue an order 
307.8   reflecting that decision.  The order must be issued 
307.9   notwithstanding any statute of limitations for making 
307.10  assessments or other determinations.  If the statute of 
307.11  limitations for making assessments or other determinations would 
307.12  have expired before the issuance of this order, except for this 
307.13  section, the order is limited to issues or matters contained in 
307.14  the appealed determination.  The order is appealable to the 
307.15  Minnesota tax court under section 271.06. 
307.16     Subd. 9.  [APPEAL WHERE NO DETERMINATION.] If the 
307.17  commissioner does not make a determination within six months 
307.18  after the filing of an administrative appeal, the taxpayer may 
307.19  appeal to tax court.  
307.20     Subd. 10.  [EXEMPTION FROM ADMINISTRATIVE PROCEDURE 
307.21  ACT.] This section is not subject to the contested case 
307.22  procedures of chapter 14. 
307.23     Sec. 21.  [PURPOSE.] 
307.24     It is the intent of the legislature to simplify Minnesota's 
307.25  insurance tax laws by consolidating and recodifying tax 
307.26  administration and compliance provisions now contained 
307.27  throughout Minnesota Statutes, chapter 60A, and elsewhere.  Due 
307.28  to the complexity of the recodification, prior provisions are 
307.29  repealed on the effective date of the new provisions.  The 
307.30  repealed provisions, however, remain in effect until superseded 
307.31  by the analogous provision in the new law. 
307.32     Sec. 22.  [EFFECTIVE DATES.] 
307.33     Sections 1 and 16 are effective January 1, 2001. 
307.34     Sections 2 to 9 and 18 are effective for returns, taxes, 
307.35  surcharges, and estimated payments required to be filed or paid 
307.36  for tax years beginning on or after January 1, 2001. 
308.1      Sections 10 to 12 are effective for assessments made and 
308.2   examinations and audits commenced on or after January 1, 2001. 
308.3      Section 13 is effective for claims for refunds filed on or 
308.4   after January 1, 2001. 
308.5      Section 14 is effective for assessments that have not been 
308.6   made as of the day following final enactment.  The time period 
308.7   for making such assessments is the time period prescribed in the 
308.8   enacted section or one year after the day following final 
308.9   enactment, whichever is greater. 
308.10     Section 15 is effective for claims for refund which have 
308.11  not been filed as of the day following final enactment and in 
308.12  which the time period for filing the claim has not expired under 
308.13  the provisions in effect prior to the day following final 
308.14  enactment.  The time period for filing such claims is the time 
308.15  period prescribed in the enacted sections, or one year after the 
308.16  day following final enactment, whichever is greater. 
308.17     Section 17 is effective for all amounts due on or after 
308.18  January 1, 2001. 
308.19     Section 19 is effective for crimes committed on or after 
308.20  January 1, 2001. 
308.21     Section 20 is effective for assessments made or refund 
308.22  claims or abatements denied on or after January 1, 2001. 
308.23                             ARTICLE 15 
308.24                    INSURANCE TAX RECODIFICATION 
308.25                         TECHNICAL CHANGES 
308.26     Section 1.  Minnesota Statutes 1999 Supplement, section 
308.27  43A.23, subdivision 1, is amended to read: 
308.28     Subdivision 1.  [GENERAL.] The commissioner is authorized 
308.29  to request bids from carriers or to negotiate with carriers and 
308.30  to enter into contracts with carriers which in the judgment of 
308.31  the commissioner are best qualified to underwrite and service 
308.32  the benefit plans.  Contracts entered into with carriers are not 
308.33  subject to the requirements of sections 16C.16 to 16C.19.  The 
308.34  commissioner may negotiate premium rates and coverage provisions 
308.35  with all carriers licensed under chapters 62A, 62C, and 62D.  
308.36  The commissioner may also negotiate reasonable restrictions to 
309.1   be applied to all carriers under chapters 62A, 62C, and 62D.  
309.2   Contracts to underwrite the benefit plans must be bid or 
309.3   negotiated separately from contracts to service the benefit 
309.4   plans, which may be awarded only on the basis of competitive 
309.5   bids.  The commissioner shall consider the cost of the plans, 
309.6   conversion options relating to the contracts, service 
309.7   capabilities, character, financial position, and reputation of 
309.8   the carriers, and any other factors which the commissioner deems 
309.9   appropriate.  Each benefit contract must be for a uniform term 
309.10  of at least one year, but may be made automatically renewable 
309.11  from term to term in the absence of notice of termination by 
309.12  either party.  The commissioner shall, to the extent feasible, 
309.13  make hospital and medical benefits available from at least one 
309.14  carrier licensed to do business pursuant to each of chapters 
309.15  62A, 62C, and 62D.  The commissioner need not provide health 
309.16  maintenance organization services to an employee who resides in 
309.17  an area which is not served by a licensed health maintenance 
309.18  organization.  The commissioner may refuse to allow a health 
309.19  maintenance organization to continue as a carrier.  The 
309.20  commissioner may elect not to offer all three types of carriers 
309.21  if there are no bids or no acceptable bids by that type of 
309.22  carrier or if the offering of additional carriers would result 
309.23  in substantial additional administrative costs.  A carrier 
309.24  licensed under chapter 62A is exempt from the tax taxes imposed 
309.25  by section 60A.15 chapter 297I on premiums paid to it by the 
309.26  state. 
309.27     All self-insured hospital and medical service products must 
309.28  comply with coverage mandates, data reporting, and consumer 
309.29  protection requirements applicable to the licensed carrier 
309.30  administering the product, had the product been insured, 
309.31  including chapters 62J, 62M, and 62Q.  Any self-insured products 
309.32  that limit coverage to a network of providers or provide 
309.33  different levels of coverage between network and nonnetwork 
309.34  providers shall comply with section 62D.123 and geographic 
309.35  access standards for health maintenance organizations adopted by 
309.36  the commissioner of health in rule under chapter 62D. 
310.1      Sec. 2.  Minnesota Statutes 1998, section 43A.316, 
310.2   subdivision 9, is amended to read: 
310.3      Subd. 9.  [INSURANCE TRUST FUND.] The insurance trust fund 
310.4   in the state treasury consists of deposits of the premiums 
310.5   received from employers participating in the program and 
310.6   transfers before July 1, 1994, from the excess contributions 
310.7   holding account established by section 353.65, subdivision 7.  
310.8   All money in the fund is appropriated to the commissioner to pay 
310.9   insurance premiums, approved claims, refunds, administrative 
310.10  costs, and other related service costs.  Premiums paid by 
310.11  employers to the fund are exempt from the tax taxes imposed by 
310.12  sections 60A.15 and 60A.198 chapter 297I.  The commissioner 
310.13  shall reserve an amount of money to cover the estimated costs of 
310.14  claims incurred but unpaid.  The state board of investment shall 
310.15  invest the money according to section 11A.24.  Investment income 
310.16  and losses attributable to the fund must be credited to the fund.
310.17     Sec. 3.  Minnesota Statutes 1998, section 43A.317, 
310.18  subdivision 8, is amended to read: 
310.19     Subd. 8.  [PREMIUMS.] (a) [PAYMENTS.] Employers enrolled in 
310.20  the program shall pay premiums according to terms established by 
310.21  the commissioner.  If an employer fails to make the required 
310.22  payments, the commissioner may cancel coverage and pursue other 
310.23  civil remedies. 
310.24     (b) [RATING METHOD.] The commissioner shall determine the 
310.25  premium rates and rating method for the program.  The rating 
310.26  method for eligible small employers must meet or exceed the 
310.27  requirements of chapter 62L.  The rating methods must recover in 
310.28  premiums all of the ongoing costs for state administration and 
310.29  for maintenance of a premium stability and claim fluctuation 
310.30  reserve.  On June 30, 1999, after paying all necessary and 
310.31  reasonable expenses, the commissioner must apply up to 
310.32  $2,075,000 of any remaining balance in the Minnesota employees' 
310.33  insurance trust fund to repayment of any amounts drawn or 
310.34  expended for this program from the health care access fund. 
310.35     (c) [TAXES AND ASSESSMENTS.] To the extent that the program 
310.36  operates as a self-insured group, the premiums paid to the 
311.1   program are not subject to the premium taxes imposed by sections 
311.2   60A.15 and 60A.198 chapter 297I, but the program is subject to a 
311.3   Minnesota comprehensive health association assessment under 
311.4   section 62E.11. 
311.5      Sec. 4.  Minnesota Statutes 1999 Supplement, section 
311.6   60A.19, subdivision 6, is amended to read: 
311.7      Subd. 6.  [RETALIATORY PROVISIONS.] (1) When by the laws of 
311.8   any other state or country any taxes, fines, deposits, 
311.9   penalties, licenses, or fees, in addition to or in excess of 
311.10  those imposed by the laws of this state upon foreign insurance 
311.11  companies and their agents doing business in this state, are 
311.12  imposed on insurance companies of this state and their agents 
311.13  doing business in that state or country, or when any conditions 
311.14  precedent to the right to do business in that state are imposed 
311.15  by the laws thereof, beyond those imposed upon these foreign 
311.16  companies by the laws of this state, the same taxes, fines, 
311.17  deposits, penalties, licenses, fees, and conditions precedent 
311.18  shall be imposed upon every similar insurance company of that 
311.19  state or country and their agents doing or applying to do 
311.20  business in this state so long as these foreign laws remain in 
311.21  force.  Special purpose obligations or assessments, including 
311.22  assessments by an insurance guaranty association, joint 
311.23  underwriting association or similar organization, or assessments 
311.24  imposed in connection with particular kinds of insurance, are 
311.25  not taxes, licenses, or fees as these terms are used in this 
311.26  section. 
311.27     (2) In the event that a domestic insurance company, after 
311.28  complying with all reasonable laws and rulings of any other 
311.29  state or country, is refused permission by that state or country 
311.30  to transact business therein after the commissioner of commerce 
311.31  of Minnesota has determined that that company is solvent and 
311.32  properly managed and after the commissioner has so certified to 
311.33  the proper authority of that other state or country, then, and 
311.34  in every such case, the commissioner may forthwith suspend or 
311.35  cancel the certificate of authority of every insurance company 
311.36  organized under the laws of that other state or country to the 
312.1   extent that it insures, or seeks to insure, in this state 
312.2   against any of the risks or hazards which that domestic company 
312.3   seeks to insure against in that other state or country.  Without 
312.4   limiting the application of the foregoing provision, it is 
312.5   hereby determined that any law or ruling of any other state or 
312.6   country which prescribes to a Minnesota domestic insurance 
312.7   company the premium rate or rates for life insurance issued or 
312.8   to be issued outside that other state or country shall not be 
312.9   reasonable. 
312.10     (3) (2) This section does not apply to insurance companies 
312.11  organized or domiciled in a state or country, the laws of which 
312.12  do not impose retaliatory taxes, fines, deposits, penalties, 
312.13  licenses, or fees or which grant, on a reciprocal basis, 
312.14  exemptions from retaliatory taxes, fines, deposits, penalties, 
312.15  licenses, or fees to insurance companies domiciled in this state.
312.16     Sec. 5.  Minnesota Statutes 1998, section 60A.19, 
312.17  subdivision 8, is amended to read: 
312.18     Subd. 8.  [INSURANCE FROM UNLICENSED FOREIGN COMPANIES.] 
312.19  Any person, firm, or corporation desiring to obtain insurance 
312.20  upon any property, interests, or risks of any nature other than 
312.21  life insurance in this state in companies not authorized to do 
312.22  business therein shall give bond to the commissioner of commerce 
312.23  in such sum as the commissioner shall deem reasonable, with 
312.24  satisfactory resident sureties, conditioned that the obligors, 
312.25  on the expiration of a license to obtain such insurance, shall 
312.26  pay to the commissioner of revenue, for the use of the state, a 
312.27  tax of two percent upon the gross premiums paid by the 
312.28  licensee in the state must agree to file with the commissioner 
312.29  of revenue all returns required under chapter 297I and pay to 
312.30  the commissioner of revenue any amounts required to be paid 
312.31  under chapter 297I.  Thereupon Upon that agreement, the 
312.32  commissioner of commerce shall issue such a license, good for 
312.33  one year, and all.  Insurance procured thereunder shall be 
312.34  lawful and under the license is valid and the provisions of all 
312.35  the policies thereof shall be deemed are considered to be in 
312.36  accordance, and construed as if identical in effect, with the 
313.1   standard policy prescribed by the laws of this state and.  The 
313.2   insurers may enter the state to perform any act necessary or 
313.3   proper in the conduct of the business.  This bond may be 
313.4   enforced by the commissioner of commerce in the commissioner's 
313.5   name in any district court.  The licensee shall file with the 
313.6   commissioner of commerce on June 30 and December 31 annually a 
313.7   verified statement of the aggregate premiums paid and returned 
313.8   premiums received on account of such insurance. 
313.9      The commissioner of revenue, or duly authorized agents, may 
313.10  conduct investigations, inquiries, and hearings to enforce the 
313.11  tax imposed by this subdivision and, in connection with those 
313.12  investigations, inquiries, and hearings, the commissioner and 
313.13  duly authorized agents have all the powers conferred by section 
313.14  270.06. 
313.15     Sec. 6.  Minnesota Statutes 1998, section 60A.198, 
313.16  subdivision 3, is amended to read: 
313.17     Subd. 3.  [PROCEDURE FOR OBTAINING LICENSE.] A person 
313.18  licensed as an agent in this state pursuant to other law may 
313.19  obtain a surplus lines license by doing the following:  
313.20     (a) filing an application in the form and with the 
313.21  information the commissioner may reasonably require to determine 
313.22  the ability of the applicant to act in accordance with sections 
313.23  60A.195 to 60A.209; 
313.24     (b) maintaining an agent's license in this state; 
313.25     (c) delivering to the commissioner a financial guarantee 
313.26  bond from a surety acceptable to the commissioner for the 
313.27  greater of the following:  
313.28     (1) $5,000; or 
313.29     (2) the largest semiannual surplus lines premium tax 
313.30  liability incurred by the applicant in the immediately preceding 
313.31  five years; 
313.32     (d) agreeing to file with the commissioner of revenue no 
313.33  later than February 15 and August 15 annually, a sworn statement 
313.34  of the charges for insurance procured or placed and the amounts 
313.35  returned on the insurance canceled under the license for the 
313.36  preceding six-month period ending December 31 and June 30 
314.1   respectively, and at the time of the filing of this statement, 
314.2   paying the commissioner a tax on premiums equal to three percent 
314.3   of the total written premiums less cancellations; all returns 
314.4   required by chapter 297I and paying to the commissioner of 
314.5   revenue all amounts required under chapter 297I; and 
314.6      (e) (d) paying a fee as prescribed by section 60K.06, 
314.7   subdivision 2, paragraph (a), clause (4); and. 
314.8      (f) paying penalties imposed under section 289A.60, 
314.9   subdivision 1, as it relates to withholding and sales or use 
314.10  taxes, if the tax due under clause (d) is not timely paid. 
314.11     Sec. 7.  Minnesota Statutes 1998, section 60A.208, 
314.12  subdivision 8, is amended to read: 
314.13     Subd. 8.  [OPERATING ASSESSMENT.] (a) Upon request from the 
314.14  association, the commissioner may approve the levy of an 
314.15  assessment of not more than one-half of one percent of premiums 
314.16  charged pursuant to sections 60A.195 to 60A.209 for operation of 
314.17  the association to the extent that the operation relieves the 
314.18  commissioner of duties otherwise required of the commissioner 
314.19  pursuant to sections 60A.195 to 60A.209.  Any assessment so 
314.20  approved may be subtracted from the premium tax owed by the 
314.21  licensee under chapter 297I.  
314.22     (b) The association may revoke the membership and the 
314.23  commissioner may revoke the license in this state, of any 
314.24  licensee who fails to pay an assessment when due, if the 
314.25  assessment has been approved by the commissioner.  
314.26     Sec. 8.  Minnesota Statutes 1998, section 60A.209, 
314.27  subdivision 3, is amended to read: 
314.28     Subd. 3.  [DUTY TO REPORT.] Each insured in this state who 
314.29  procures, causes to be procured, or continues or renews 
314.30  insurance with an ineligible surplus lines insurer or any 
314.31  self-insurer in this state who procures or continues excess of 
314.32  loss, catastrophe, or other insurance upon a subject of 
314.33  insurance resident, located, or to be performed within this 
314.34  state, other than insurance procured pursuant to section 60A.201 
314.35  or subdivision 1 shall file a written report regarding the 
314.36  insurance with the commissioner of revenue on forms prescribed 
315.1   by the commissioner of revenue and furnished to the insured upon 
315.2   request.  The report shall be filed within 30 days after the 
315.3   date the insurance was procured, continued, or renewed and shall 
315.4   be accompanied by the tax on the premiums of two percent.  The 
315.5   report shall show all of the following:  
315.6      (a) The name and address of the insured; 
315.7      (b) The name and address of the insurer; 
315.8      (c) The subject of the insurance; 
315.9      (d) A general description of the coverage; 
315.10     (e) The amount of premium currently charged for the 
315.11  insurance; and 
315.12     (f) Any additional pertinent information reasonably 
315.13  requested by the commissioner of revenue must file with the 
315.14  commissioner of revenue all returns and pay to the commissioner 
315.15  of revenue all amounts required under chapter 297I. 
315.16     Sec. 9.  Minnesota Statutes 1998, section 60C.17, is 
315.17  amended to read: 
315.18     60C.17 [TAX EXEMPTION.] 
315.19     The association is exempt from payment of all taxes imposed 
315.20  under chapter 297I and all fees and all other taxes levied by 
315.21  this state or any of its subdivisions except taxes levied on 
315.22  real or personal property.  
315.23     Sec. 10.  Minnesota Statutes 1998, section 60E.04, 
315.24  subdivision 4, is amended to read: 
315.25     Subd. 4.  [TAXATION.] (a) Each risk retention group is 
315.26  liable for the payment of premium taxes and taxes on premiums of 
315.27  direct business for risks resident or located within this state, 
315.28  and shall report to the commissioner of revenue the net premiums 
315.29  written for risks resident or located within this state.  The 
315.30  risk retention group shall be subject to taxation, and any 
315.31  applicable taxation-related fines and penalties, on the same 
315.32  basis as a foreign admitted insurer must file with the 
315.33  commissioner of revenue all returns and pay to the commissioner 
315.34  of revenue all amounts required under chapter 297I. 
315.35     (b) To the extent licensed agents or brokers are utilized 
315.36  pursuant to in accordance with section 60E.12, they shall report 
316.1   to the commissioner of revenue the premiums for direct business 
316.2   for risks resident or located within this state which the 
316.3   licensees have placed with or on behalf of a risk retention 
316.4   group not chartered in this state. 
316.5      (c) To the extent that insurance agents or brokers are 
316.6   utilized pursuant to in accordance with section 60E.12, each 
316.7   agent or broker shall keep a complete and separate record of all 
316.8   policies procured from each risk retention group, which shall 
316.9   must be open to examination by the commissioner, as provided in 
316.10  section 60A.031 and by the commissioner of revenue.  These 
316.11  records shall must, for each policy and each kind of insurance 
316.12  provided, include the following: 
316.13     (1) the limit of liability; 
316.14     (2) the time period covered; 
316.15     (3) the effective date; 
316.16     (4) the name of the risk retention group which issued the 
316.17  policy; 
316.18     (5) the gross premium charged; and 
316.19     (6) the amount of return premiums, if any. 
316.20     Sec. 11.  Minnesota Statutes 1998, section 60E.095, is 
316.21  amended to read: 
316.22     60E.095 [PURCHASING GROUP TAXATION.] 
316.23     Premium taxes and taxes on premiums paid for coverage of 
316.24  risks resident or located in this state by a purchasing group or 
316.25  any members of the purchasing groups shall be: 
316.26     (1) imposed at the same rate and subject to the same 
316.27  interest, fines, and penalties as that applicable to premium 
316.28  taxes and taxes on premiums paid for similar coverage from a 
316.29  similar insurance source by other insureds; and 
316.30     (2) paid first by the insurance source, and if not by the 
316.31  source by the agent or broker for the purchasing group, and if 
316.32  not by the agent or broker then by the purchasing group, and if 
316.33  not by the purchasing group then by each of its members group 
316.34  must be paid to the commissioner of revenue as provided in 
316.35  chapter 297I. 
316.36     Sec. 12.  Minnesota Statutes 1998, section 61B.30, 
317.1   subdivision 1, is amended to read: 
317.2      Subdivision 1.  [STATE FEES AND TAXES.] The association is 
317.3   exempt from payment of all taxes imposed under chapter 297I and 
317.4   all fees and all other taxes levied by this state or its 
317.5   subdivisions, except taxes levied on real property. 
317.6      Sec. 13.  Minnesota Statutes 1998, section 62C.01, 
317.7   subdivision 3, is amended to read: 
317.8      Subd. 3.  [SCOPE.] Every foreign or domestic nonprofit 
317.9   corporation organized for the purpose of establishing or 
317.10  operating a health service plan in Minnesota whereby health 
317.11  services are provided to subscribers to the plan under a 
317.12  contract with the corporation shall be subject to and governed 
317.13  by Laws 1971, chapter 568, and shall not be subject to the laws 
317.14  of this state relating to insurance, except section 60A.15 the 
317.15  gross premiums tax provisions contained in chapter 297I and as 
317.16  otherwise specifically provided.  Laws 1971, chapter 568 shall 
317.17  apply to all health service plan corporations incorporated after 
317.18  August 1, 1971, and to all existing health service plan 
317.19  corporations, except as otherwise provided.  Nothing in sections 
317.20  62C.01 to 62C.23 shall apply to prepaid group practice plans.  A 
317.21  prepaid group practice plan is any plan or arrangement other 
317.22  than a service plan, whereby health services are rendered to 
317.23  certain patients by providers who devote their professional 
317.24  effort primarily to members or patients of the plan, and whereby 
317.25  the recipients of health services pay for the services on a 
317.26  regular, periodic basis, not on a fee for service basis.  
317.27     Sec. 14.  Minnesota Statutes 1998, section 62E.10, 
317.28  subdivision 1, is amended to read: 
317.29     Subdivision 1.  [CREATION; TAX EXEMPTION.] There is 
317.30  established a comprehensive health association to promote the 
317.31  public health and welfare of the state of Minnesota with 
317.32  membership consisting of all insurers; self-insurers; 
317.33  fraternals; joint self-insurance plans regulated under chapter 
317.34  62H; the Minnesota employees insurance program established in 
317.35  section 43A.317, effective July 1, 1993; health maintenance 
317.36  organizations; and community integrated service networks 
318.1   licensed or authorized to do business in this state.  The 
318.2   comprehensive health association shall be is exempt from 
318.3   taxation the taxes imposed under the chapter 297I and any other 
318.4   laws of this state and all property owned by the 
318.5   association shall be is exempt from taxation. 
318.6      Sec. 15.  Minnesota Statutes 1998, section 62E.13, 
318.7   subdivision 10, is amended to read: 
318.8      Subd. 10.  [PREMIUMS NOT SUBJECT TO TAX.] Premiums received 
318.9   by the writing carrier for the comprehensive health insurance 
318.10  plan are exempt from the provisions of section 60A.15 taxes 
318.11  imposed under chapter 297I. 
318.12     Sec. 16.  Minnesota Statutes 1998, section 62L.13, 
318.13  subdivision 3, is amended to read: 
318.14     Subd. 3.  [EXEMPTIONS.] The association, its transactions, 
318.15  and all property owned by it are exempt from taxation under the 
318.16  laws of this state or any of its subdivisions, including, but 
318.17  not limited to, premiums taxes imposed under chapter 297I, 
318.18  income tax, sales tax, use tax, and property tax. The 
318.19  association may seek exemption from payment of all fees and 
318.20  taxes levied by the federal government.  Except as otherwise 
318.21  provided in this chapter, the association is not subject to the 
318.22  provisions of chapters 13, 60A, 62A to 62H, and section 
318.23  471.705.  The association is not a public employer and is not 
318.24  subject to the provisions of chapters 179A and 353.  The board 
318.25  of directors and health carriers who are members of the 
318.26  association are exempt from sections 325D.49 to 325D.66 in the 
318.27  performance of their duties as directors and members of the 
318.28  association. 
318.29     Sec. 17.  Minnesota Statutes 1998, section 62T.10, is 
318.30  amended to read: 
318.31     62T.10 [MINNESOTACARE TAX.] 
318.32     An accountable provider network is subject to the premium 
318.33  tax established in section 60A.15 and must pay installments as 
318.34  described in section 60A.15, subdivision 1, paragraph (d) shall 
318.35  file with the commissioner of revenue all returns and pay to the 
318.36  commissioner of revenue all amounts required under chapter 297I. 
319.1      Sec. 18.  Minnesota Statutes 1998, section 64B.24, is 
319.2   amended to read: 
319.3      64B.24 [TAXATION.] 
319.4      Fraternal benefit societies are declared to be charitable 
319.5   institutions, and the property held and used for lodge purposes, 
319.6   and the funds of these societies shall be exempt from taxation 
319.7   under the general tax or revenue laws of this state, except that 
319.8   the real estate of the society shall be taxable.  Insurance 
319.9   premiums paid to a fraternal benefit society are exempt from the 
319.10  taxes imposed under chapter 297I. 
319.11     Sec. 19.  Minnesota Statutes 1998, section 71A.04, 
319.12  subdivision 1, is amended to read: 
319.13     Subdivision 1.  [PREMIUM TAX.] The attorney-in-fact, in 
319.14  lieu of all taxes, state, county, and municipal, shall pay to 
319.15  the state with the filing of each annual report on or before 
319.16  March 1 as an annual license fee two percent of the gross 
319.17  premiums or deposits for the preceding calendar year, deducting 
319.18  all amounts returned to subscribers or credited to their 
319.19  accounts; and the attorney shall pay a filing fee of $2 shall 
319.20  file with the commissioner of revenue all returns and pay to the 
319.21  commissioner of revenue all amounts required under chapter 297I. 
319.22     Sec. 20.  Minnesota Statutes 1998, section 79.252, 
319.23  subdivision 4, is amended to read: 
319.24     Subd. 4.  [RESPONSIBILITIES.] Assigned risk policies and 
319.25  contracts of coverage shall be are subject to premium tax 
319.26  pursuant to section 60A.15 taxation under chapter 297I, and 
319.27  special compensation fund assessments pursuant to under 
319.28  Minnesota Statutes 1990, section 176.131, subdivision 10.  The 
319.29  assigned risk plan shall be a member of the reinsurance 
319.30  association for the purposes of sections 79.34 to 79.40 and may 
319.31  select either retention limit provided in section 79.34, 
319.32  subdivision 2.  
319.33     Sec. 21.  Minnesota Statutes 1998, section 79.34, 
319.34  subdivision 1a, is amended to read: 
319.35     Subd. 1a.  [GROSS PREMIUMS TAX.] The direct funded premium 
319.36  premiums received by the reinsurance association is from 
320.1   self-insurers approved under section 176.181 and political 
320.2   subdivisions that self-insure are subject to the gross premium 
320.3   tax imposed by section 60A.15 taxation under chapter 297I.  Only 
320.4   direct funded premium payments made to the reinsurance 
320.5   association by self-insurers approved pursuant to section 
320.6   176.181 and each political subdivision that self-insures shall 
320.7   be subject to the gross premiums tax. 
320.8      Sec. 22.  Minnesota Statutes 1998, section 176A.08, is 
320.9   amended to read: 
320.10     176A.08 [EXEMPTION FROM AND APPLICABILITY OF CERTAIN LAWS.] 
320.11     The fund shall not be considered a state agency for any 
320.12  purpose including, but not limited to, chapters 13, 15, 15A, and 
320.13  43A.  However, the fund shall be subject to sections 179A.01 to 
320.14  179A.25.  The insurance operations of the fund are subject to 
320.15  all of the provisions of chapters 60A and 60B.  The commissioner 
320.16  of commerce has the same powers with respect to the board as the 
320.17  commissioner has with respect to a private workers' compensation 
320.18  insurer under chapters 60A and 60B.  The fund is considered an 
320.19  insurer for the purposes of chapters 60C, 72A, 79, and 176.  The 
320.20  fund is subject to the same tax liability as a mutual insurance 
320.21  company in this state pursuant to section 60A.15 under chapter 
320.22  297I.  As a condition of its authority to transact business in 
320.23  this state the fund shall be a member of the workers' 
320.24  compensation reinsurance association and is bound by its plan of 
320.25  operation. 
320.26     Sec. 23.  Minnesota Statutes 1998, section 290.35, 
320.27  subdivision 2, is amended to read: 
320.28     Subd. 2.  [APPORTIONMENT OF TAXABLE NET INCOME.] The 
320.29  commissioner shall compute therefrom the taxable net income of 
320.30  such companies by assigning to this state that proportion 
320.31  thereof which the gross premiums collected by them during the 
320.32  taxable year from old and new business within this state bears 
320.33  to the total gross premiums collected by them during that year 
320.34  from their entire old and new business, including reinsurance 
320.35  premiums; provided, the commissioner shall add to the taxable 
320.36  net income so apportioned to this state the amount of any taxes 
321.1   on premiums paid by the company by virtue of any law of this 
321.2   state (other than the surcharge on premiums imposed by sections 
321.3   69.54 to 69.56 section 297I.10 and the surcharge imposed by 
321.4   section 168A.40, subdivision 3) which shall have been deducted 
321.5   from gross income by the company in arriving at its total net 
321.6   income under the provisions of such act of Congress. 
321.7      (a) For purposes of determining the Minnesota apportionment 
321.8   percentage, premiums from reinsurance contracts in connection 
321.9   with property in or liability arising out of activity in, or in 
321.10  connection with the lives or health of Minnesota residents shall 
321.11  be assigned to Minnesota and premiums from reinsurance contracts 
321.12  in connection with property in or liability arising out of 
321.13  activity in, or in connection with the lives or health of 
321.14  non-Minnesota residents shall be assigned outside of Minnesota. 
321.15  Reinsurance premiums are presumed to be received for a Minnesota 
321.16  risk and are assigned to Minnesota, if:  
321.17     (1) the reinsurance contract is assumed for a company 
321.18  domiciled in Minnesota; and 
321.19     (2) the taxpayer, upon request of the commissioner, fails 
321.20  to provide reliable records indicating the reinsured contract 
321.21  covered non-Minnesota risks. 
321.22  For purposes of this paragraph, "Minnesota risk" means coverage 
321.23  in connection with property in or liability arising out of 
321.24  activity in Minnesota, or in connection with the lives or health 
321.25  of Minnesota residents. 
321.26     (b) The apportionment method prescribed by paragraph (a) 
321.27  shall be presumed to fairly and correctly determine the 
321.28  taxpayer's taxable net income.  If the method prescribed in 
321.29  paragraph (a) does not fairly reflect all or any part of taxable 
321.30  net income, the taxpayer may petition for or the commissioner 
321.31  may require the determination of taxable net income by use of 
321.32  another method if that method fairly reflects taxable net 
321.33  income.  A petition within the meaning of this section must be 
321.34  filed by the taxpayer on such form as the commissioner shall 
321.35  require. 
321.36     Sec. 24.  Minnesota Statutes 1998, section 290.35, 
322.1   subdivision 3, is amended to read: 
322.2      Subd. 3.  [CREDIT.] An insurance company shall receive a 
322.3   credit against the tax computed under sections 290.06, 
322.4   subdivision 1, and 290.0921, equal to any taxes based on 
322.5   premiums paid by it that are attributable to the period for 
322.6   which the tax under this chapter is imposed by virtue of any law 
322.7   of this state, other than the surcharge on premiums imposed by 
322.8   sections 69.54 to 69.56 section 297I.10. 
322.9      Sec. 25.  Minnesota Statutes 1998, section 290.35, 
322.10  subdivision 6, is amended to read: 
322.11     Subd. 6.  [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] (a) An 
322.12  insurance company may offset against its corporate franchise tax 
322.13  liability under this chapter any amount paid pursuant to 
322.14  assessments made for insolvencies which occur after July 31, 
322.15  1994, under sections 60C.01 to 60C.22, and any amount paid 
322.16  pursuant to assessments made after July 31, 1994, under 
322.17  Minnesota Statutes 1992, sections 61B.01 to 61B.16, or sections 
322.18  61B.18 to 61B.32, as follows: 
322.19     (a) (1) Each such assessment shall give rise to an amount 
322.20  of offset equal to 20 percent of the amount of the assessment 
322.21  for each of the five calendar years following the year in which 
322.22  the assessment was paid. 
322.23     (b) (2) The amount of offset initially determined for each 
322.24  taxable year is the sum of the amounts determined under 
322.25  paragraph (a) clause (1) for that taxable year. 
322.26     (c) (b)(1) Each year the commissioner of revenue shall 
322.27  compare total guaranty association assessments levied over the 
322.28  preceding five calendar years to the sum of all premium tax and 
322.29  corporate franchise tax revenues collected from insurance 
322.30  companies without reduction for any guaranty association 
322.31  assessment offset, in the preceding calendar year, referred to 
322.32  in this subdivision as "preceding year insurance tax revenues." 
322.33     (2) If total guaranty association assessments levied over 
322.34  the preceding five years exceed the preceding year insurance tax 
322.35  revenues, insurance companies shall be are allowed only a 
322.36  proportionate part of the corporate franchise tax offset 
323.1   calculated under paragraph (b) (a) for the current calendar year.
323.2      (3) The proportionate part of the corporate franchise tax 
323.3   offset allowed in the current calendar year is determined by 
323.4   multiplying the amount calculated under paragraph (b) (a) by a 
323.5   fraction, the numerator of which equals the preceding year 
323.6   insurance tax revenues and the denominator of which equals total 
323.7   guaranty association assessments levied over the preceding 
323.8   five-year period. 
323.9      (4) The proportionate part of the premium tax offset that 
323.10  is not allowed shall must be carried forward to subsequent tax 
323.11  years and added to the amount of corporate franchise tax offset 
323.12  calculated under paragraph (b) (a) before application of the 
323.13  limitation imposed by this paragraph. 
323.14     (5) Any amount carried forward from prior years must be 
323.15  allowed before allowance of the offset for the current year 
323.16  calculated under paragraph (b) (a). 
323.17     (6) The corporate franchise tax offset limitation must be 
323.18  calculated separately for (1) insurance companies subject to 
323.19  assessment under sections 60C.01 to 60C.22, and (2) insurance 
323.20  companies subject to assessment under Minnesota Statutes 1992, 
323.21  sections 61B.01 to 61B.16, or sections 61B.18 to 61B.32. 
323.22     (7) When the corporate franchise tax offset is limited by 
323.23  this provision, the commissioner of revenue will notify affected 
323.24  insurance companies on a timely basis for purposes of completing 
323.25  premium and corporate franchise tax returns. 
323.26     (8) The guaranty associations created under sections 60C.01 
323.27  to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 
323.28  and sections 61B.18 to 61B.32, shall provide the commissioner of 
323.29  revenue with the necessary information on guaranty association 
323.30  assessments.  The limitation in this paragraph is effective for 
323.31  offsets allowable in 1999 and thereafter. 
323.32     (d) (c)(1) If the offset determined by the application of 
323.33  paragraphs (a) to (c) and (b) exceeds the greater of the 
323.34  insurance company's corporate franchise tax liability under this 
323.35  chapter prior to allowance of the credit provided by subdivision 
323.36  3 or its premium tax liability under chapter 60A 297I, then the 
324.1   insurance company may carry forward the excess, referred to in 
324.2   this subdivision as the "carryforward credit," to subsequent 
324.3   taxable years. 
324.4      (2) The carryforward credit must be allowed as an offset 
324.5   against corporate franchise tax liability for the first 
324.6   succeeding year to the extent that the corporate franchise tax 
324.7   liability for that year exceeds the amount of the allowable 
324.8   offset for the year determined under paragraphs (a) to (c) and 
324.9   (b). 
324.10     (3) The carryforward credit shall must be reduced, but not 
324.11  below zero, by the greater of the amount of the carryforward 
324.12  credit allowed as an offset against the corporate franchise tax 
324.13  pursuant to this paragraph or the amount of the carryforward 
324.14  credit allowed as an offset against the insurance company's 
324.15  premium tax liability under chapter 60A 297I pursuant to section 
324.16  60A.15, subdivision 15, paragraph (d) 297I.20, paragraph (c).  
324.17  The remainder, if any, of the carryforward credit must be 
324.18  carried forward to succeeding taxable years until the entire 
324.19  carryforward credit has been credited against the insurance 
324.20  company's liability for corporate franchise tax under this 
324.21  chapter and premium tax under chapter 60A 297I. 
324.22     (e) (d) A refund paid by the Minnesota Life and Health 
324.23  Insurance Guaranty Association to member insurers under 
324.24  Minnesota Statutes 1992, section 61B.07, subdivision 6, or 
324.25  section 61B.24, subdivision 6, with respect to an assessment 
324.26  payment which has been offset against taxes shall reduce the 
324.27  carryforward credit determined under paragraph (d) and, if the 
324.28  refund exceeds the amount of the carryforward credit, shall be 
324.29  repaid by the insurers to the extent of the offset to the state 
324.30  in the manner the commissioner of revenue requires. When an 
324.31  insurer has offset against taxes its payment of an assessment of 
324.32  the Minnesota life and health guaranty association, and the 
324.33  association pays the insurer a refund with respect to the 
324.34  assessment under Minnesota Statutes 1992, section 61B.07, 
324.35  subdivision 6, or 61B.24, subdivision 6, then the refund reduces 
324.36  the insurer's carryforward credit under paragraph (c).  If the 
325.1   refund exceeds the amount of the carryforward credit, the excess 
325.2   amount must be repaid to the state by the insurers to the extent 
325.3   of the offset in the manner the commissioner requires. 
325.4      Sec. 26.  Minnesota Statutes 1998, section 295.58, is 
325.5   amended to read: 
325.6      295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 
325.7      The commissioner shall deposit all revenues, including 
325.8   penalties and interest, derived from the taxes imposed by 
325.9   sections 295.50 to 295.57 and from the insurance premiums 
325.10  tax imposed by section 297I.05, subdivision 5, on health 
325.11  maintenance organizations, community integrated service 
325.12  networks, and nonprofit health service plan corporations in the 
325.13  health care access fund in the state treasury.  Refunds of 
325.14  overpayments must be paid from the health care access fund in 
325.15  the state treasury.  There is annually appropriated from the 
325.16  health care access fund to the commissioner of revenue the 
325.17  amount necessary to make any refunds required under section 
325.18  295.54. 
325.19     Sec. 27.  Minnesota Statutes 1998, section 424.165, is 
325.20  amended to read: 
325.21     424.165 [SPECIAL FUND, MAINTENANCE.] 
325.22     Subdivision 1.  [SURCHARGE.] When the balance in the 
325.23  special fund of any firefighter's relief association in any city 
325.24  of the second class is less than $50,000 as determined by any 
325.25  such association's board of trustees, which fact shall be duly 
325.26  certified to by the state auditor, such board of trustees may 
325.27  thereupon file its duly verified petition for relief, 
325.28  accompanied by such certificate, with the commissioner of 
325.29  revenue.  The commissioner of revenue shall thereupon order and 
325.30  direct a surcharge to be collected of two percent of the fire, 
325.31  lightning and sprinkler leakage gross premiums, less return 
325.32  premiums, on all direct business received by any foreign or 
325.33  domestic fire insurance company on property in such city of the 
325.34  second class, or by its agents for it, in cash or otherwise, 
325.35  until the balance in the special funds of such relief 
325.36  association amounts to $50,000 and for a period of 15 days 
326.1   thereafter.  As soon as the balance in said special fund amounts 
326.2   to $50,000 the board of trustees of such relief association 
326.3   shall certify that fact to the commissioner of revenue and the 
326.4   commissioner of revenue shall forthwith issue an order ordering 
326.5   and directing that the collection of such surcharge shall be 
326.6   discontinued after the expiration of said 15-day period and 
326.7   shall forthwith mail a copy of the order last mentioned to each 
326.8   insurance company affected thereby.  Said surcharge shall be due 
326.9   and payable from such companies to the state treasurer in 
326.10  semiannual installments on June 30 and December 31 of each 
326.11  calendar year to be kept by the state treasurer in a separate 
326.12  fund and if not paid within 30 days after such dates a penalty 
326.13  of three percent shall accrue thereon and thereafter such sum 
326.14  and penalty shall draw interest at the rate of one percent per 
326.15  month until paid. 
326.16     Subd. 2.  [ISSUANCE OF WARRANT.] The commissioner of 
326.17  finance on July 31, 1938, and semiannually thereafter, shall 
326.18  issue and deliver to the treasurer of such relief association in 
326.19  such city a warrant upon the state treasurer for an amount equal 
326.20  to the total amount of said surcharge on said premiums within 
326.21  such city theretofore so collected and transmitted to the state 
326.22  treasurer by such insurance companies.  Said warrants shall be 
326.23  paid out of said separate fund hereinbefore provided for, and 
326.24  the payment in each case shall be made to the treasurer of the 
326.25  relief association presenting the warrant. 
326.26     There is hereby appropriated to such firefighter's relief 
326.27  association, from such fund or account in the state treasury to 
326.28  which the money was credited, such sums as may, from time to 
326.29  time, be necessary to pay these warrants. 
326.30     Subd. 3.  [FUNDS TO BE KEPT IN SPECIAL FUND.] The treasurer 
326.31  of such relief association shall place the money received in 
326.32  payment of any such warrant in the special fund of such relief 
326.33  association. 
326.34     Subd. 4.  [EMERGENCY DECLARED TO EXIST.] An emergency 
326.35  exists and this section shall be construed as a relief measure 
326.36  for firefighter's relief associations in any city of the second 
327.1   class. 
327.2      When the balance in the special fund of any firefighter's 
327.3   relief association in any city of the second class is less than 
327.4   $50,000 as determined by the board of trustees of the 
327.5   association, and as certified by the state auditor, the board of 
327.6   trustees may file with the commissioner a request to impose the 
327.7   surcharge on fire, lightning, and sprinkler leakage insurance 
327.8   premiums authorized under section 297I.10, subdivision 2. 
327.9      Sec. 28.  [REPEALER.] 
327.10     Minnesota Statutes 1998, sections 60A.15; 60A.152; 60A.198, 
327.11  subdivision 6; 60A.199, subdivisions 2, 3, 4, 5, 6, 6a, 7, 8, 9, 
327.12  10, and 11; 60A.209, subdivisions 4 and 5; 69.54; 69.55; 69.56; 
327.13  69.57; 69.58; 69.59; 69.60; 69.61; 71A.04, subdivision 2; 
327.14  299F.21; 299F.22; 299F.23; 299F.24; 299F.25; and 299F.26; and 
327.15  Minnesota Rules, part 2765.1500, subpart 6, are repealed. 
327.16     Sec. 29.  [EFFECTIVE DATE.] 
327.17     This article is effective January 1, 2001. 
327.18                             ARTICLE 16  
327.19                  SALES AND USE TAX RECODIFICATION
327.20     Section 1.  [PURPOSE AND EFFECT.] 
327.21     Subdivision 1.  [PURPOSE.] It is the intent of the 
327.22  legislature to recodify Minnesota Statutes, chapter 297A, by 
327.23  removing archaic, obsolete, and redundant language, and by 
327.24  improving the organization and readability of the chapter.  The 
327.25  provisions of this act may not be used to determine the law in 
327.26  effect prior to this act's effective date. 
327.27     Subd. 2.  [EFFECT.] Due to the complexity of the 
327.28  recodification, prior provisions are repealed on the effective 
327.29  date of the new provisions.  The repealed provisions, however, 
327.30  continue to remain in effect until superseded by the analogous 
327.31  provision in the new law. 
327.32     Sec. 2.  Minnesota Statutes 1998, section 37.13, is amended 
327.33  to read: 
327.34     37.13 [TITLE TO PROPERTY VESTED IN STATE.] 
327.35     Subdivision 1.  [USE OF MONEY.] The state owns all money 
327.36  and other property of the society in the name of the society and 
328.1   there may be no division of its assets among society members.  
328.2   Money received by the society must be used for holding its 
328.3   annual fair and for other exhibitions or expositions the society 
328.4   holds, for the improvement of the fairgrounds, for the payment 
328.5   of expenses, premiums, and purses, for the acquisition of real 
328.6   and personal property, for the use and benefit of the society, 
328.7   and for furnishing attractions and amusements the board of 
328.8   managers considers necessary for the success of its fairs and 
328.9   other exhibitions and expositions. 
328.10     Subd. 2.  [CAPITAL IMPROVEMENTS.] The society shall spend 
328.11  the amount of sales tax retained under section 289A.31, 
328.12  subdivision 7, paragraph (f), exclusively to make capital 
328.13  improvements to state-owned buildings and facilities on the 
328.14  state fairgrounds.  The society shall match the amount retained 
328.15  with an equal amount from proceeds from special assessments 
328.16  levied against commercial exhibits, concessions and rentals, and 
328.17  from other special user fees specifically designated for capital 
328.18  improvements. 
328.19     Sec. 3.  Minnesota Statutes 1998, section 289A.31, 
328.20  subdivision 7, is amended to read: 
328.21     Subd. 7.  [SALES AND USE TAX.] (a) The sales and use tax 
328.22  required to be collected by the retailer under chapter 297A 
328.23  constitutes a debt owed by the retailer to Minnesota, and the 
328.24  sums collected must be held as a special fund in trust for the 
328.25  state of Minnesota. 
328.26     A retailer who does not maintain a place of business within 
328.27  this state as defined by section 297A.21, subdivision 1, shall 
328.28  not be indebted to Minnesota for amounts of tax that it was 
328.29  required to collect but did not collect unless the retailer knew 
328.30  or had been advised by the commissioner of its obligation to 
328.31  collect the tax.  
328.32     (b) The use tax required to be paid by a purchaser is a 
328.33  debt owed by the purchaser to Minnesota. 
328.34     (c) The tax imposed by sections 297A.01 to 297A.44 chapter 
328.35  297A, and interest and penalties, is a personal debt of the 
328.36  individual required to file a return from the time the liability 
329.1   arises, irrespective of when the time for payment of that 
329.2   liability occurs.  The debt is, in the case of the executor or 
329.3   administrator of the estate of a decedent and in the case of a 
329.4   fiduciary, that of the individual in an official or fiduciary 
329.5   capacity unless the individual has voluntarily distributed the 
329.6   assets held in that capacity without reserving sufficient assets 
329.7   to pay the tax, interest, and penalties, in which case the 
329.8   individual is personally liable for the deficiency. 
329.9      (d) Liability for payment of sales and use taxes includes 
329.10  any responsible person or entity described in the personal 
329.11  liability provisions of section 270.101. 
329.12     (e) Any amounts collected, even if erroneously or illegally 
329.13  collected, from a purchaser under a representation that they are 
329.14  taxes imposed under chapter 297A are state funds from the time 
329.15  of collection and must be reported on a return filed with the 
329.16  commissioner.  The amounts collected are not subject to refund 
329.17  unless the seller submits written evidence to the commissioner 
329.18  that the tax and any interest earned on the tax has been or will 
329.19  be refunded or credited to the purchaser by the seller. 
329.20     (f) The tax imposed under chapter 297A on sales of tickets 
329.21  to the premises of or events sponsored by the state agricultural 
329.22  society and conducted on the state fairgrounds during the period 
329.23  of the annual state fair may be retained by the state 
329.24  agricultural society if the funds are used and matched as 
329.25  required under section 37.13, subdivision 2. 
329.26                            DEFINITIONS
329.27     Sec. 4.  [297A.61] [DEFINITIONS.] 
329.28     Subdivision 1.  [APPLICABILITY.] The following words, 
329.29  terms, and phrases when used in this chapter have the meanings 
329.30  given them in this section, unless the context clearly indicates 
329.31  a different meaning. 
329.32     Subd. 2.  [PERSON.] "Person" includes any individual, and 
329.33  any group or combination of individuals acting as a unit, and 
329.34  the plural as well as the singular number.  Person includes a 
329.35  firm, partnership, joint venture, limited liability company, 
329.36  association, cooperative, social club, fraternal organization, 
330.1   municipal or private corporation whether or not organized for 
330.2   profit, estates, trusts, business trusts, receiver, trustee, 
330.3   syndicate, the United States, and a state and its political 
330.4   subdivisions.  Person includes, but is not limited to, directors 
330.5   and officers of corporations, governors and managers of a 
330.6   limited liability company, or members of partnerships who, 
330.7   either individually or jointly with others, have the control, 
330.8   supervision, or responsibility of filing returns and making 
330.9   payment of the amount of tax imposed by this chapter.  Person 
330.10  also includes any agent or consignee of any individual or 
330.11  organization enumerated in this subdivision. 
330.12     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
330.13  include, but are not limited to, each of the transactions listed 
330.14  in this subdivision. 
330.15     (b) Sale and purchase include any transfer of title or 
330.16  possession, or both, of tangible personal property, whether 
330.17  absolutely or conditionally, and the leasing of or the granting 
330.18  of a license to use or consume, for a consideration, tangible 
330.19  personal property, other than a manufactured home used for 
330.20  residential purposes for a continuous period of 30 days or more. 
330.21     (c) Sale and purchase include the production, fabrication, 
330.22  printing, or processing of tangible personal property for a 
330.23  consideration for consumers who furnish either directly or 
330.24  indirectly the materials used in the production, fabrication, 
330.25  printing, or processing. 
330.26     (d) Sale and purchase include the furnishing, preparing, or 
330.27  serving for a consideration of food or drinks.  Notwithstanding 
330.28  section 297A.67, subdivision 2, taxable food or drinks include, 
330.29  but are not limited to, the following: 
330.30     (1) food or drinks sold by the retailer for immediate 
330.31  consumption on the retailer's premises.  Food and drinks sold 
330.32  within a building or grounds that require an admission charge 
330.33  for entrance are presumed to be sold for consumption on the 
330.34  premises; 
330.35     (2) food or drinks prepared by the retailer for immediate 
330.36  consumption either on or off the retailer's premises.  For 
331.1   purposes of this subdivision, "food or drinks prepared for 
331.2   immediate consumption" means any food product upon which an act 
331.3   of preparation including, but not limited to, cooking, mixing, 
331.4   sandwich making, blending, heating, or pouring has been 
331.5   performed by the retailer so the food product may be immediately 
331.6   consumed by the purchaser; 
331.7      (3) ice cream, ice milk, frozen yogurt products, or frozen 
331.8   novelties sold in single or individual servings including, but 
331.9   not limited to, cones, sundaes, and snow cones; 
331.10     (4) soft drinks and other beverages, including all 
331.11  carbonated and noncarbonated beverages or drinks sold in liquid 
331.12  form, but not including beverages or drinks which contain milk 
331.13  or milk products, beverages or drinks containing 15 or more 
331.14  percent fruit juice, and noncarbonated and noneffervescent 
331.15  bottled water sold in individual containers of one-half gallon 
331.16  or more in size; 
331.17     (5) gum, candy, and candy products; 
331.18     (6) ice; 
331.19     (7) all food sold from vending machines; 
331.20     (8) all food for immediate consumption sold from concession 
331.21  stands and vehicles; 
331.22     (9) party trays; 
331.23     (10) all meals and single servings of packaged snack food 
331.24  sold in restaurants and bars; and 
331.25     (11) bakery products that are: 
331.26     (i) prepared by the retailer for consumption on the 
331.27  retailer's premises; 
331.28     (ii) sold at a place that charges admission; 
331.29     (iii) sold from vending machines; or 
331.30     (iv) sold in single or individual servings from concession 
331.31  stands, vehicles, bars, and restaurants.  
331.32     For purposes of this paragraph, "single or individual 
331.33  servings" does not include products when sold in bulk containers 
331.34  or bulk packaging.  
331.35     For purposes of this paragraph, "premises" means the total 
331.36  space and facilities, including buildings, grounds, and parking 
332.1   lots that are made available or that are available for use by 
332.2   the retailer or customer for the purpose of sale or consumption 
332.3   of prepared food and drinks.  The premises of a caterer is the 
332.4   place where the catered food or drinks are served. 
332.5      (e) A sale and a purchase includes the furnishing for a 
332.6   consideration of electricity, gas, water, or steam for use or 
332.7   consumption within this state or local exchange telephone 
332.8   service, intrastate toll service, and interstate toll service, 
332.9   if that service originates from and is charged to a telephone 
332.10  located in this state.  Telephone service includes (1) paging 
332.11  services, and (2) private communication service, as defined in 
332.12  United States Code, title 26, section 4252(d), except for 
332.13  private communication service purchased by an agent acting on 
332.14  behalf of the state lottery.  Telephone service does not include 
332.15  services purchased with a prepaid telephone calling card.  The 
332.16  furnishing for a consideration of access to telephone services 
332.17  by a hotel to its guests is a sale.  The furnishing for a 
332.18  consideration of items listed in this paragraph by a municipal 
332.19  corporation is a sale. 
332.20     (f) A sale and a purchase includes the transfer for a 
332.21  consideration of computer software.  
332.22     (g) A sale and a purchase includes the furnishing for a 
332.23  consideration of taxable services as defined in subdivision 16. 
332.24     (h) A sale and a purchase includes the furnishing for a 
332.25  consideration of tangible personal property or taxable services 
332.26  by the United States or any of its agencies or 
332.27  instrumentalities, or the state of Minnesota, its agencies, 
332.28  instrumentalities, or political subdivisions. 
332.29     Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a sale 
332.30  for any purpose other than resale in the regular course of 
332.31  business.  
332.32     (b) A sale of property used by the owner only by leasing it 
332.33  to others or by holding it in an effort to lease it, and put to 
332.34  no use by the owner other than resale after the lease or effort 
332.35  to lease, is a sale of property for resale.  
332.36     (c) A sale of master computer software that is purchased 
333.1   and used to make copies for sale or lease is a sale of property 
333.2   for resale.  
333.3      (d) A sale of building materials, supplies and equipment to 
333.4   owners, contractors, subcontractors or builders for the erection 
333.5   of buildings or the alteration, repair, or improvement of real 
333.6   property is a retail sale in whatever quantity sold, whether the 
333.7   sale is for purposes of resale in the form of real property or 
333.8   otherwise.  
333.9      (e) A sale of carpeting, linoleum, or similar floor 
333.10  covering to a person who provides for installation of the floor 
333.11  covering is a retail sale and not a sale for resale since a sale 
333.12  of floor covering which includes installation is a contract for 
333.13  the improvement of real property. 
333.14     (f) A sale of shrubbery, plants, sod, trees, and similar 
333.15  items to a person who provides for installation of the items is 
333.16  a retail sale and not a sale for resale since a sale of 
333.17  shrubbery, plants, sod, trees, and similar items that includes 
333.18  installation is a contract for the improvement of real property. 
333.19     (g) A sale of tangible personal property that is awarded as 
333.20  prizes is a retail sale and is not considered a sale of property 
333.21  for resale. 
333.22     (h) A sale of tangible personal property utilized or 
333.23  employed in the furnishing or providing of services under 
333.24  subdivision 16, paragraph (b), including, but not limited to, 
333.25  property given as promotional items, is a retail sale and is not 
333.26  considered a sale of property for resale. 
333.27     (i) A sale of tangible personal property used in conducting 
333.28  lawful gambling under chapter 349 or the state lottery under 
333.29  chapter 349A, including, but not limited to, property given as 
333.30  promotional items, is a retail sale and is not considered a sale 
333.31  of property for resale. 
333.32     (j) A sale of machines, equipment, or devices that are used 
333.33  to furnish, provide, or dispense goods or services, including, 
333.34  but not limited to, coin-operated devices, is a retail sale and 
333.35  is not considered a sale of property for resale. 
333.36     (k) In the case of a lease, a retail sale occurs when an 
334.1   obligation to make a lease payment becomes due under the terms 
334.2   of the agreement or the trade practices of the lessor. 
334.3      (l) In the case of a conditional sales contract, a retail 
334.4   sale occurs upon the transfer of title or possession of the 
334.5   tangible personal property. 
334.6      Subd. 5.  [STORAGE.] "Storage" includes keeping or 
334.7   retaining tangible personal property in Minnesota for any 
334.8   purpose except sale in the regular course of business or 
334.9   subsequent use solely outside Minnesota of tangible personal 
334.10  property. 
334.11     Subd. 6.  [USE.] (a) "Use" includes the exercise of a right 
334.12  or power incident to the ownership of any interest in tangible 
334.13  personal property, or taxable services, purchased from a 
334.14  retailer, other than the sale of that property in the regular 
334.15  course of business.  
334.16     (b) Use includes the consumption of printed materials in 
334.17  the creation of nontaxable advertising that is distributed, 
334.18  either directly or indirectly, within Minnesota. 
334.19     Subd. 7.  [SALES PRICE.] (a) "Sales price" means the total 
334.20  consideration for a retail sale, valued in money, whether paid 
334.21  in money or by barter or exchange.  
334.22     (b) Sales price includes: 
334.23     (1) the cost of the property sold, cost of materials used, 
334.24  labor or service cost, interest, or discount allowed after the 
334.25  sale is consummated; 
334.26     (2) the cost of transportation incurred prior to the time 
334.27  of sale; 
334.28     (3) any amount for which credit is given by the seller to 
334.29  the purchaser; 
334.30     (4) charges for services that are part of a sale; or 
334.31     (5) any other expense whatsoever. 
334.32     (c) Sales price does not include the following: 
334.33     (1) an amount allowed as credit for tangible personal 
334.34  property taken in trade for resale; 
334.35     (2) charges of up to 15 percent in lieu of tips if the 
334.36  charges are separately stated; 
335.1      (3) interest, financing, or carrying charges if the charges 
335.2   are separately stated; 
335.3      (4) charges for labor or services used in installing or 
335.4   applying the property sold if the charges are separately stated; 
335.5      (5) transportation charges if the transportation occurs 
335.6   after the retail sale of the property if the charges are 
335.7   separately stated; 
335.8      (6) cash discounts allowed and taken on sales or the amount 
335.9   refunded either in cash or in credit for property returned by 
335.10  purchasers; 
335.11     (7) the rental motor vehicle tax imposed under section 
335.12  297A.64; or 
335.13     (8) the amount of any tax imposed by the United States on 
335.14  communications services under United States Code, title 26, 
335.15  section 4251(a). 
335.16     (d) Notwithstanding paragraph (c), "sales price," for 
335.17  purposes of sales of ready-mixed concrete sold from a 
335.18  ready-mixed concrete truck, includes any transportation, 
335.19  delivery, or other service charges, and no deduction is allowed 
335.20  for those charges, whether or not the charges are separately 
335.21  stated.  
335.22     Subd. 8.  [GROSS RECEIPTS.] "Gross receipts" means the 
335.23  total amount received, in money or by barter or exchange, for 
335.24  all sales at retail as measured by the sales price. 
335.25     Subd. 9.  [RETAILER.] "Retailer" means every person engaged 
335.26  in making retail sales. 
335.27     Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
335.28  personal property" means corporeal personal property of any 
335.29  kind, including property that is to become real property as a 
335.30  result of incorporation, attachment, or installation following 
335.31  its acquisition. 
335.32     (b) Tangible personal property includes, but is not limited 
335.33  to: 
335.34     (1) computer software, whether contained on tape, discs, 
335.35  cards, or other devices; and 
335.36     (2) prepaid telephone calling cards.  
336.1      (c) Personal property does not include: 
336.2      (1) large ponderous machinery and equipment used in a 
336.3   business or production activity which at common law would be 
336.4   considered to be real property; 
336.5      (2) property which is subject to an ad valorem property 
336.6   tax; 
336.7      (3) property described in section 272.02, subdivision 9, 
336.8   clauses (a) to (d); and 
336.9      (4) property described in section 272.03, subdivision 2, 
336.10  clauses (3) and (5). 
336.11     Subd. 11.  [COMMISSIONER.] "Commissioner" means the 
336.12  commissioner of revenue of the state of Minnesota. 
336.13     Subd. 12.  [FARM MACHINERY.] (a) "Farm machinery" means new 
336.14  or used machinery, equipment, implements, accessories, and 
336.15  contrivances used directly and principally in the production for 
336.16  sale, but not including the processing, of livestock, dairy 
336.17  animals, dairy products, poultry and poultry products, fruits, 
336.18  vegetables, forage, grains, and bees and apiary products.  
336.19     (b) Farm machinery includes: 
336.20     (1) machinery for the preparation, seeding, or cultivation 
336.21  of soil for growing agricultural crops and sod, for the 
336.22  harvesting and threshing of agricultural products, or for the 
336.23  harvesting or mowing of sod; 
336.24     (2) barn cleaners, milking systems, grain dryers, automatic 
336.25  feeding systems, and similar installations, whether or not the 
336.26  equipment is installed by the seller and becomes part of the 
336.27  real property; 
336.28     (3) irrigation equipment sold for exclusively agricultural 
336.29  use, including pumps, pipe fittings, valves, sprinklers, and 
336.30  other equipment necessary to the operation of an irrigation 
336.31  system when sold as part of an irrigation system, whether or not 
336.32  the equipment is installed by the seller and becomes part of the 
336.33  real property; 
336.34     (4) logging equipment, including chain saws used for 
336.35  commercial logging; 
336.36     (5) fencing used for the containment of farmed cervidae, as 
337.1   defined in section 17.451, subdivision 2; 
337.2      (6) primary and backup generator units used to generate 
337.3   electricity for the purpose of operating farm machinery, as 
337.4   defined in this subdivision, or providing light or space heating 
337.5   necessary for the production of livestock, dairy animals, dairy 
337.6   products, or poultry and poultry products; and 
337.7      (7) aquaculture production equipment as defined in 
337.8   subdivision 13.  
337.9      (c) Farm machinery does not include: 
337.10     (1) repair or replacement parts; 
337.11     (2) tools, shop equipment, grain bins, feed bunks, fencing 
337.12  material except fencing material covered by paragraph (b), 
337.13  clause (5), communication equipment and other farm supplies; 
337.14     (3) motor vehicles taxed under chapter 297B; 
337.15     (4) snowmobiles or snow blowers; or 
337.16     (5) lawn mowers except those used in the production of sod 
337.17  for sale, or garden-type tractors or garden tillers. 
337.18     Subd. 13.  [AQUACULTURE PRODUCTION EQUIPMENT.] (a) 
337.19  "Aquaculture production equipment" means new or used machinery, 
337.20  equipment, implements, accessories, and contrivances used 
337.21  directly and principally in aquaculture production.  
337.22     (b) Aquaculture production equipment includes augers and 
337.23  blowers, automatic feed systems, manual feeding equipment, 
337.24  shockers, gill nets, trap nets, seines, box traps, round nets 
337.25  and traps, net pens, dip nets, net washers, floating net 
337.26  supports, floating access walkways, net supports and walkways, 
337.27  growing tanks, holding tanks, troughs, raceways, transport 
337.28  tanks, egg taking equipment, egg hatcheries, egg incubators, egg 
337.29  baskets and troughs, egg graders, egg counting equipment, fish 
337.30  counting equipment, fish graders, fish pumps and loaders, fish 
337.31  elevators, air blowers, air compressors, oxygen generators, 
337.32  oxygen regulators, diffusers and injectors, air supply 
337.33  equipment, oxygenation columns, water coolers and heaters, heat 
337.34  exchangers, water filter systems, water purification systems, 
337.35  waste collection equipment, feed mills, portable scales, feed 
337.36  grinders, feed mixers, feed carts and trucks, power feed wagons, 
338.1   fertilizer spreaders, fertilizer tanks, forage collection 
338.2   equipment, land levelers, loaders, post hole diggers, disc, 
338.3   harrow, plow, and water diversion devices.  
338.4      (c) Aquaculture production equipment does not include 
338.5   repair or replacement parts for aquaculture production equipment.
338.6      Subd. 14.  [LEASING; LEASE.] "Leasing" includes all 
338.7   transfers of possession or the use of tangible personal property 
338.8   by the lessee for a consideration, if title remains with the 
338.9   lessor at the end of the lease.  For purposes of this chapter, a 
338.10  lease of tangible personal property is a series of sales 
338.11  transactions that impose upon the lessee multiple payment 
338.12  obligations.  "Leasing" does not include a transaction defined 
338.13  under subdivision 15.  
338.14     Subd. 15.  [CONDITIONAL SALES CONTRACT.] A "conditional 
338.15  sales contract" means a contract, whether or not the contract is 
338.16  designated as a lease, that provides that the purchaser or 
338.17  lessee is to obtain title to the property at the end of the term 
338.18  of the contract or has the option to purchase the property at 
338.19  the end of the term of the contract for a nominal amount.  For 
338.20  purposes of this paragraph, "nominal amount" means an amount so 
338.21  small, slight, or negligible that it is not economically 
338.22  significant and bears no relation to the real value of the item 
338.23  being purchased. 
338.24     Subd. 16.  [TAXABLE SERVICES.] (a) "Taxable services" means 
338.25  the services listed in this subdivision and other services 
338.26  listed in subdivision 3. 
338.27     (b) Taxable services includes the granting of the privilege 
338.28  of admission to places of amusement, recreational areas, or 
338.29  athletic events, and the making available of amusement devices, 
338.30  tanning facilities, reducing salons, steam baths, turkish baths, 
338.31  health clubs, and spas or athletic facilities. 
338.32     (c) Taxable services includes the furnishing of lodging and 
338.33  related services by a hotel, rooming house, resort, campground, 
338.34  motel, or trailer camp and the granting of any similar license 
338.35  to use real property other than the renting or leasing thereof 
338.36  for a continuous period of 30 days or more. 
339.1      (d) Taxable services includes the furnishing of cable 
339.2   television services or similar television services, including, 
339.3   but not limited to, charges for basic, premium, pay-per-view, 
339.4   and any other similar service. 
339.5      (e) Taxable services includes the furnishing of parking 
339.6   services, whether on a contractual, hourly, or other periodic 
339.7   basis, except for parking at a meter. 
339.8      (f) Taxable services includes the granting of membership in 
339.9   a club, association, or other organization if: 
339.10     (1) the club, association, or other organization makes 
339.11  available for the use of its members sports and athletic 
339.12  facilities, without regard to whether a separate charge is 
339.13  assessed for use of the facilities; and 
339.14     (2) use of the sports and athletic facility is not made 
339.15  available to the general public on the same basis as it is made 
339.16  available to members.  
339.17  Granting of membership means both one-time initiation fees and 
339.18  periodic membership dues.  Sports and athletic facilities 
339.19  include golf courses; tennis, racquetball, handball, and squash 
339.20  courts; basketball and volleyball facilities; running tracks; 
339.21  exercise equipment; swimming pools; and other similar athletic 
339.22  or sports facilities. 
339.23     (g) Taxable services includes the furnishing of the 
339.24  following services as provided in this paragraph: 
339.25     (1) laundry and dry cleaning services including cleaning, 
339.26  pressing, repairing, altering, and storing clothes, linen 
339.27  services and supply, cleaning and blocking hats, and carpet, 
339.28  drapery, upholstery, and industrial cleaning.  Laundry and dry 
339.29  cleaning services do not include services provided by coin 
339.30  operated facilities operated by the customer; 
339.31     (2) motor vehicle washing, waxing, and cleaning services, 
339.32  including services provided by coin operated facilities operated 
339.33  by the customer, and rustproofing, undercoating, and towing of 
339.34  motor vehicles; 
339.35     (3) building and residential cleaning, maintenance, and 
339.36  disinfecting and exterminating services; 
340.1      (4) detective, security, burglar, fire alarm, and armored 
340.2   car services; but not including services performed within the 
340.3   jurisdiction they serve by off-duty licensed peace officers as 
340.4   defined in section 626.84, subdivision 1, or services provided 
340.5   by a nonprofit organization for monitoring and electronic 
340.6   surveillance of persons placed on in-home detention pursuant to 
340.7   court order or under the direction of the Minnesota department 
340.8   of corrections; 
340.9      (5) pet grooming services; 
340.10     (6) lawn care, fertilizing, mowing, spraying and sprigging 
340.11  services; garden planting and maintenance; tree, bush, and shrub 
340.12  pruning, bracing, spraying, and surgery; indoor plant care; 
340.13  tree, bush, shrub, and stump removal; and tree trimming for 
340.14  public utility lines.  Services performed under a construction 
340.15  contract for the installation of shrubbery, plants, sod, trees, 
340.16  bushes, and similar items are not taxable; 
340.17     (7) massages, except when provided by a licensed health 
340.18  care facility or professional or upon written referral from a 
340.19  licensed health care facility or professional for treatment of 
340.20  illness, injury, or disease; and 
340.21     (8) the furnishing of lodging, board, and care services for 
340.22  animals in kennels and other similar arrangements, but excluding 
340.23  veterinary and horse boarding services. 
340.24     The services listed in this paragraph are taxable under 
340.25  section 297A.62 if the service is performed wholly within 
340.26  Minnesota or if the service is performed partly within and 
340.27  partly outside Minnesota and the greater proportion of the 
340.28  service is performed in Minnesota, based on the cost of 
340.29  performance.  In applying the provisions of this chapter, the 
340.30  terms "tangible personal property" and "sales at retail" include 
340.31  taxable services and the provision of taxable services, unless 
340.32  specifically provided otherwise.  Services performed by an 
340.33  employee for an employer are not taxable.  Services performed by 
340.34  a partnership or association for another partnership or 
340.35  association are not taxable if one of the entities owns or 
340.36  controls more than 80 percent of the voting power of the equity 
341.1   interest in the other entity.  Services performed between 
341.2   members of an affiliated group of corporations are not taxable.  
341.3   For purposes of this section, "affiliated group of corporations" 
341.4   includes those entities that would be classified as members of 
341.5   an affiliated group under United States Code, title 26, section 
341.6   1504, and that are eligible to file a consolidated tax return 
341.7   for federal income tax purposes. 
341.8      Subd. 17.  [COMPUTER SOFTWARE.] "Computer software" means a 
341.9   computer program, either in the form of written procedures or in 
341.10  the form of storage media on which, or in which, the program is 
341.11  recorded, or any required documentation or manuals designed to 
341.12  facilitate the use of the computer program.  For purposes of 
341.13  this subdivision: 
341.14     (1) "Storage media" includes punched cards, tapes, discs, 
341.15  diskettes, or drums on which computer programs may be embodied 
341.16  or stored; 
341.17     (2) "Computer" does not include tape-controlled automatic 
341.18  drilling, milling, or other manufacturing machinery or 
341.19  equipment; and 
341.20     (3) "Computer program" means information and directions 
341.21  that dictate the function performed by data processing 
341.22  equipment.  It includes the complete plan for the solution of a 
341.23  problem, such as the complete sequence of automatic data 
341.24  processing equipment instructions necessary to solve a problem 
341.25  and includes both systems and application programs and 
341.26  subdivisions, such as assemblers, compilers, routines, 
341.27  generators, and utility programs.  Computer program includes a 
341.28  "canned" or prewritten computer program that is held or existing 
341.29  for general or repeated sale or lease, even if the prewritten or 
341.30  "canned" program was initially developed on a custom basis or 
341.31  for in-house use. 
341.32     Subd. 18.  [HANDICAPPED.] "Handicapped" means an individual 
341.33  who has a permanent and total disability as defined in section 
341.34  273.13, subdivision 22. 
341.35     Subd. 19.  [COMMON CARRIER.] "Common carrier" means a 
341.36  person engaged in transportation for hire of tangible personal 
342.1   property by motor vehicle, if the person: 
342.2      (1) has a certificate or permit or has completed a 
342.3   registration process that authorizes for-hire transportation of 
342.4   property from the United States Department of Transportation, 
342.5   the transportation regulation board, or the department of 
342.6   transportation; 
342.7      (2) is transporting commodities defined as "exempt" in 
342.8   for-hire transportation; or 
342.9      (3) transports tangible personal property pursuant to a 
342.10  contract with a person described in clause (1) or (2). 
342.11     Subd. 20.  [PREPAID TELEPHONE CALLING CARD.] "Prepaid 
342.12  telephone calling card" means any card or other similar 
342.13  arrangement, including a prepaid authorization number, that 
342.14  permits its holder to obtain telephone services and pay for such 
342.15  services in advance. 
342.16     Subd. 21.  [NORMAL COURSE OF BUSINESS.] "Normal course of 
342.17  business" means activities that demonstrate a commercial 
342.18  continuity or consistency of making sales or performing services 
342.19  for the purposes of attaining profit or producing income.  
342.20  Factors that indicate that a person is acting in the normal 
342.21  course of business include: 
342.22     (1) systematic solicitation of sales through advertising 
342.23  media; 
342.24     (2) entering into contracts to perform services or provide 
342.25  tangible personal property; 
342.26     (3) maintaining a place of business; or 
342.27     (4) use of exemption certificates to purchase items exempt 
342.28  from the sales tax. 
342.29     Subd. 22.  [INTERNAL REVENUE CODE.] Unless specifically 
342.30  provided otherwise, "Internal Revenue Code" means the Internal 
342.31  Revenue Code of 1986, as amended through December 31, 1999.  
342.32     Subd. 23.  [UNITED STATES CODE.] Unless specifically 
342.33  provided otherwise, "United States Code" means the United States 
342.34  Code as amended through December 31, 1999. 
342.35                            TAXES; RATES
342.36     Sec. 5.  [297A.62] [SALES TAX IMPOSED; RATES.] 
343.1      Subdivision 1.  [GENERALLY.] Except as otherwise provided 
343.2   in subdivision 2 or 3 or in this chapter, a sales tax of 6.5 
343.3   percent is imposed on the gross receipts from retail sales as 
343.4   defined in section 297A.61, subdivision 4, made in this state or 
343.5   to a destination in this state by a person who is required to 
343.6   have or voluntarily obtains a permit under section 297A.83, 
343.7   subdivision 1.  
343.8      Subd. 2.  [LIQUOR AND BEER SALES.] The rate of the sales 
343.9   tax imposed is nine percent on the gross receipts from retail 
343.10  sales of: 
343.11     (1) intoxicating liquor, as defined in section 340A.101, 
343.12  subdivision 14; and 
343.13     (2) 3.2 percent malt liquor, as defined in section 
343.14  340A.101, subdivision 19, when sold at an on-sale or off-sale 
343.15  municipal liquor store or other establishment licensed to sell 
343.16  any type of intoxicating liquor.  
343.17     Subd. 3.  [MANUFACTURED HOUSING AND PARK TRAILERS.] For 
343.18  retail sales of manufactured homes as defined in section 327.31, 
343.19  subdivision 6, for residential uses, the sales tax under 
343.20  subdivision 1 is imposed on 65 percent of the dealer's cost of 
343.21  the manufactured home.  For retail sales of new or used park 
343.22  trailers, as defined in section 168.011, subdivision 8, 
343.23  paragraph (b), the sales tax under subdivision 1 is imposed on 
343.24  65 percent of the sales price of the park trailer.  
343.25     Sec. 6.  [297A.63] [USE TAXES IMPOSED; RATES.] 
343.26     Subdivision 1.  [USE OF TANGIBLE PERSONAL PROPERTY OR 
343.27  TAXABLE SERVICES.] (a) For the privilege of using, storing, 
343.28  distributing, or consuming in Minnesota tangible personal 
343.29  property or taxable services purchased for use, storage, 
343.30  distribution, or consumption in this state, a use tax is imposed 
343.31  on a person in Minnesota.  The tax is imposed on the sales price 
343.32  of retail sales of the tangible personal property or taxable 
343.33  services at the rate of tax imposed under section 297A.62. 
343.34     (b) No tax is imposed under paragraph (a) if the tax 
343.35  imposed by section 297A.62 was paid on the sales price of the 
343.36  tangible personal property or taxable services. 
344.1      (c) No tax is imposed under paragraph (a) if the purchase 
344.2   meets the requirements for exemption under section 297A.67, 
344.3   subdivision 21. 
344.4      Subd. 2.  [USE OF TANGIBLE PERSONAL PROPERTY MADE FROM 
344.5   MATERIALS.] (a) A use tax is imposed on a person who 
344.6   manufactures, fabricates, or assembles tangible personal 
344.7   property from materials, either within or outside this state and 
344.8   who uses, stores, distributes, or consumes the tangible personal 
344.9   property in Minnesota.  The tax is imposed on the sales price of 
344.10  retail sales of the materials contained in the tangible personal 
344.11  property at the rate of tax imposed under section 297A.62. 
344.12     (b) No tax is imposed under paragraph (a) if the tax 
344.13  imposed by section 297A.62 was paid on the sales price of 
344.14  materials contained in the tangible personal property.  
344.15     Sec. 7.  [297A.64] [RENTAL MOTOR VEHICLE TAX IMPOSED; 
344.16  RATE.] 
344.17     Subdivision 1.  [TAX IMPOSED.] A tax is imposed on the 
344.18  lease or rental in this state for not more than 28 days of a 
344.19  passenger automobile as defined in section 168.011, subdivision 
344.20  7, a van as defined in section 168.011, subdivision 28, or a 
344.21  pickup truck as defined in section 168.011, subdivision 29.  The 
344.22  rate of tax is 6.2 percent of the sales price.  The tax applies 
344.23  whether or not the vehicle is licensed in the state. 
344.24     Subd. 2.  [FEE IMPOSED.] A fee equal to three percent of 
344.25  the sales price is imposed on leases or rentals of vehicles 
344.26  subject to the tax under subdivision 1.  The lessor on the 
344.27  invoice to the customer may designate the fee as "a fee imposed 
344.28  by the State of Minnesota for the registration of rental cars." 
344.29     Subd. 3.  [ADMINISTRATION.] The retailer shall report and 
344.30  pay the tax imposed in subdivision 1 to the commissioner of 
344.31  revenue with the taxes imposed in this chapter.  The tax imposed 
344.32  in subdivision 1 and the fee imposed in subdivision 2 are 
344.33  subject to the same interest, penalty, and other provisions 
344.34  provided for sales and use taxes under chapter 289A and this 
344.35  chapter.  The commissioner has the same powers to assess and 
344.36  collect the tax and fee that are given the commissioner in 
345.1   chapters 270 and 289A and this chapter to assess and collect 
345.2   sales and use tax. 
345.3      Subd. 4.  [EXEMPTIONS.] (a) The tax and the fee imposed by 
345.4   this section do not apply to a lease or rental of (1) a vehicle 
345.5   to be used by the lessee to provide a licensed taxi service; (2) 
345.6   a hearse or limousine used in connection with a burial or 
345.7   funeral service; or (3) a van designed or adapted primarily for 
345.8   transporting property rather than passengers. 
345.9      (b) The lessor may elect not to charge the fee imposed in 
345.10  subdivision 2 if in the previous calendar year the lessor had no 
345.11  more than 20 vehicles available for lease that would have been 
345.12  subject to tax under this section, or no more than $50,000 in 
345.13  gross receipts that would have been subject to tax under this 
345.14  section.  
345.15     Subd. 5.  [PAYMENT OF EXCESS FEES.] On the first sales tax 
345.16  return due following the end of a calendar year during which a 
345.17  lessor has imposed a fee under subdivision 2, the lessor shall 
345.18  report to the commissioner of revenue, in the form required by 
345.19  the commissioner, the amount of the fee collected during the 
345.20  previous year and the amount of motor vehicle registration taxes 
345.21  paid during the previous year by the lessor under chapter 168 on 
345.22  vehicles subject to the fee under this section.  If the amount 
345.23  of the fees collected exceeds the amount of motor vehicle 
345.24  registration taxes paid, the lessor shall remit the excess to 
345.25  the commissioner of revenue at the time the report is submitted. 
345.26     Sec. 8.  [297A.65] [LOTTERY TICKETS; IN-LIEU TAX.] 
345.27     Sales of state lottery tickets are exempt from the tax 
345.28  imposed under section 297A.62.  The state lottery must on or 
345.29  before the 20th day of each month transmit to the commissioner 
345.30  of revenue an amount equal to the gross receipts from the sale 
345.31  of lottery tickets for the previous month multiplied by the tax 
345.32  rate under section 297A.62, subdivision 1.  The resulting 
345.33  payment is in lieu of the sales tax that otherwise would be 
345.34  imposed by this chapter.  The commissioner shall deposit the 
345.35  money transmitted as provided by section 297A.94 and the money 
345.36  must be treated as other proceeds of the sales tax.  For 
346.1   purposes of this section, "gross receipts" means the proceeds of 
346.2   the sale of tickets before deduction of a commission or other 
346.3   compensation paid to the vendor or retailer for selling tickets. 
346.4                   REQUIREMENT TO COLLECT AND REMIT 
346.5      Sec. 9.  [297A.66] [JURISDICTION TO REQUIRE COLLECTION AND 
346.6   REMITTANCE OF TAX BY RETAILER.] 
346.7      Subdivision 1.  [DEFINITIONS.] (a) "Retailer maintaining a 
346.8   place of business in this state," or a similar term, means a 
346.9   retailer: 
346.10     (1) having or maintaining within this state, directly or by 
346.11  a subsidiary, an office, place of distribution, sales or sample 
346.12  room or place, warehouse, or other place of business; or 
346.13     (2) having a representative, agent, salesperson, canvasser, 
346.14  or solicitor operating in this state under the authority of the 
346.15  retailer or its subsidiary, for any purpose, including the 
346.16  repairing, selling, delivering, installing, or soliciting of 
346.17  orders for the retailer's goods or services, or the leasing of 
346.18  tangible personal property located in this state, whether the 
346.19  place of business or agent, representative, salesperson, 
346.20  canvasser, or solicitor is located in the state permanently or 
346.21  temporarily, or whether or not the retailer or subsidiary is 
346.22  authorized to do business in this state. 
346.23     (b) "Destination of a sale" means the location to which the 
346.24  retailer makes delivery of the property sold, or causes the 
346.25  property to be delivered, to the purchaser of the property, or 
346.26  to the agent or designee of the purchaser.  The delivery may be 
346.27  made by any means, including the United States Postal Service, a 
346.28  common carrier, or a contract carrier. 
346.29     Subd. 2.  [RETAILER MAINTAINING A PLACE OF BUSINESS IN THIS 
346.30  STATE.] (a) A retailer maintaining a place of business in this 
346.31  state who makes retail sales in Minnesota or to a destination in 
346.32  Minnesota shall collect sales and use taxes and remit them to 
346.33  the commissioner under section 297A.77.  
346.34     Subd. 3.  [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 
346.35  THIS STATE.] (a) To the extent allowed by the United States 
346.36  Constitution and the laws of the United States, a retailer 
347.1   making retail sales from outside this state to a destination 
347.2   within this state and not maintaining a place of business in 
347.3   this state shall collect sales and use taxes and remit them to 
347.4   the commissioner under section 297A.77, if the retailer engages 
347.5   in the regular or systematic soliciting of sales from potential 
347.6   customers in this state by: 
347.7      (1) distribution, by mail or otherwise, of catalogs, 
347.8   periodicals, advertising flyers, or other written solicitations 
347.9   of business to customers in this state; 
347.10     (2) display of advertisements on billboards or other 
347.11  outdoor advertising in this state; 
347.12     (3) advertisements in newspapers published in this state; 
347.13     (4) advertisements in trade journals or other periodicals 
347.14  the circulation of which is primarily within this state; 
347.15     (5) advertisements in a Minnesota edition of a national or 
347.16  regional publication or a limited regional edition in which this 
347.17  state is included as part of a broader regional or national 
347.18  publication which are not placed in other geographically defined 
347.19  editions of the same issue of the same publication; 
347.20     (6) advertisements in regional or national publications in 
347.21  an edition which is not by its contents geographically targeted 
347.22  to Minnesota but which is sold over the counter in Minnesota or 
347.23  by subscription to Minnesota residents; 
347.24     (7) advertisements broadcast on a radio or television 
347.25  station located in Minnesota; or 
347.26     (8) any other solicitation by telegraphy, telephone, 
347.27  computer database, cable, optic, microwave, or other 
347.28  communication system. 
347.29     This paragraph (a) must be construed without regard to the 
347.30  state from which distribution of the materials originated or in 
347.31  which they were prepared.  
347.32     (b) The location of vendors independent of the retailer 
347.33  that provide products or services to the retailer in connection 
347.34  with its solicitation of customers within this state, including 
347.35  such products and services as creation of copy, printing, 
347.36  distribution, and recording, is not considered in determining 
348.1   whether the retailer is required to collect tax.  
348.2      (c) A retailer not maintaining a place of business in this 
348.3   state is presumed, subject to rebuttal, to be engaged in regular 
348.4   solicitation within this state if it engages in any of the 
348.5   activities in paragraph (a) and: 
348.6      (1) makes 100 or more retail sales from outside this state 
348.7   to destinations in this state during a period of 12 consecutive 
348.8   months; or 
348.9      (2) makes ten or more retail sales totaling more than 
348.10  $100,000 from outside this state to destinations in this state 
348.11  during a period of 12 consecutive months. 
348.12     Sec. 10.  [297A.665] [PRESUMPTION OF TAX; BURDEN OF PROOF.] 
348.13     (a) For the purpose of the proper administration of this 
348.14  chapter and to prevent evasion of the tax, until the contrary is 
348.15  established, it is presumed that:  
348.16     (1) all gross receipts are subject to the tax; and 
348.17     (2) all retail sales for delivery in Minnesota are for 
348.18  storage, use, or other consumption in Minnesota.  
348.19     (b) The burden of proving that a sale is not a retail sale 
348.20  is on the seller.  However, the seller may take from the 
348.21  purchaser at the time of the sale an exemption certificate 
348.22  claiming that the property purchased is for resale or that the 
348.23  sale is otherwise exempt from the tax imposed by this chapter.  
348.24  A seller claiming that certain sales are exempt, who does not 
348.25  possess the required exemption certificates, must acquire the 
348.26  certificates within 60 days after receiving written notice from 
348.27  the commissioner that the certificates are required.  If the 
348.28  certificates are not obtained within the 60-day period, the 
348.29  sales are considered taxable sales under this chapter. 
348.30     (c) A purchaser of tangible personal property or any items 
348.31  listed in section 297A.63 that are shipped or brought to 
348.32  Minnesota by the purchaser has the burden of proving that the 
348.33  property was not purchased from a retailer for storage, use, or 
348.34  consumption in Minnesota.  
348.35                             EXEMPTIONS
348.36     Sec. 11.  [297A.67] [GENERAL EXEMPTIONS.] 
349.1      Subdivision 1.  [SCOPE.] The gross receipts from the sale 
349.2   and purchase of, and storage, distribution, use, or consumption 
349.3   of the items contained in this section are specifically exempted 
349.4   from the taxes imposed by this chapter. 
349.5      Subd. 2.  [FOOD PRODUCTS.] Food products including, but not 
349.6   limited to, cereal and cereal products, butter, cheese, milk and 
349.7   milk products, oleomargarine, meat and meat products, fish and 
349.8   fish products, eggs and egg products, vegetables and vegetable 
349.9   products, fruit and fruit products, spices and salt, sugar and 
349.10  sugar products, coffee and coffee substitutes, tea, and cocoa 
349.11  and cocoa products are exempt.  
349.12     Subd. 3.  [FOOD STAMPS.] Tangible personal property 
349.13  purchased with food stamps, coupons, or vouchers issued by the 
349.14  federal government under the Food Stamp Program is exempt.  This 
349.15  exemption also applies to food purchased under the Special 
349.16  Supplemental Food Program for Women, Infants, and Children.  The 
349.17  exemption provided by this subdivision is effective and applies 
349.18  only to the extent required by federal law. 
349.19     Subd. 4.  [EXEMPT MEALS AT RESIDENTIAL FACILITIES.] Meals 
349.20  or drinks served to patients, inmates, or persons residing at 
349.21  hospitals, sanitariums, nursing homes, senior citizen homes, and 
349.22  correctional, detention, and detoxification facilities are 
349.23  exempt.  
349.24     Subd. 5.  [EXEMPT MEALS AT SCHOOLS.] Meals and lunches 
349.25  served at public and private schools, universities, or colleges 
349.26  are exempt. 
349.27     Subd. 6.  [OTHER EXEMPT MEALS.] Meals or drinks purchased 
349.28  for and served exclusively to individuals who are 60 years of 
349.29  age or over and their spouses or to handicapped persons and 
349.30  their spouses by governmental agencies, nonprofit organizations, 
349.31  or churches, or pursuant to any program funded in whole or in 
349.32  part through United States Code, title 42, sections 3001 through 
349.33  3045, wherever delivered, prepared, or served, are exempt.  
349.34     Subd. 7.  [MEDICINES; MEDICAL DEVICES.] (a) Prescribed 
349.35  drugs and medicine, and insulin, intended for internal or 
349.36  external use, in the cure, mitigation, treatment, or prevention 
350.1   of illness or disease in human beings are exempt.  "Prescribed 
350.2   drugs and medicine" includes over-the-counter drugs or medicine 
350.3   prescribed by a licensed physician. 
350.4      (b) Nonprescription medicines consisting principally 
350.5   (determined by the weight of all ingredients) of analgesics that 
350.6   are approved by the United States Food and Drug Administration 
350.7   for internal use by human beings are exempt.  For purposes of 
350.8   this subdivision, "principally" means greater than 50 percent 
350.9   analgesics by weight.  
350.10     (c) Prescription glasses, hospital beds, fever 
350.11  thermometers, reusable finger-pricking devices for the 
350.12  extraction of blood, blood glucose monitoring machines, and 
350.13  other diagnostic agents used in diagnosing, monitoring, or 
350.14  treating diabetes, and therapeutic and prosthetic devices are 
350.15  exempt.  "Therapeutic devices" means devices that are attached 
350.16  or applied to the human body to cure, heal, or alleviate injury, 
350.17  illness, or disease, either directly or by administering a 
350.18  curative agent.  "Prosthetic devices" means devices that replace 
350.19  injured, diseased, or missing parts of the human body, either 
350.20  temporarily or permanently.  
350.21     Subd. 8.  [CLOTHING.] Clothing and wearing apparel, 
350.22  including sewing materials to be directly incorporated into 
350.23  wearing apparel, are exempt.  For purposes of this subdivision, 
350.24  clothing and wearing apparel do not include the following: 
350.25     (1) articles designed primarily for use while engaging in a 
350.26  specific sport or recreational activity that are not also worn 
350.27  for general use; 
350.28     (2) articles designed primarily to provide safety or 
350.29  protection against injury while the user is engaged in 
350.30  industrial or general job activities; 
350.31     (3) all articles commonly or commercially known as jewelry 
350.32  including, but not limited to, watches; 
350.33     (4) nonprescription optical glasses of any sort; 
350.34     (5) articles made entirely of fur on the hide or pelt, or 
350.35  partially of such fur if the value of the fur is more than three 
350.36  times the value of the next most valuable component material; 
351.1      (6) perfume, lotions, creams, dyes, or other substances 
351.2   that are applied to the skin or the hair; and 
351.3      (7) luggage, bags, purses, wallets, or cases of any sort. 
351.4      Subd. 9.  [BABY PRODUCTS.] (a) Products, such as lotion, 
351.5   creams, ointments, oil, powder, or shampoo, and other articles 
351.6   designed for application to the hair or skin of babies are 
351.7   exempt. 
351.8      (b) Baby bottles and nipples, pacifiers, teething rings, 
351.9   thumb sucking preventatives, and infant syringes are exempt. 
351.10     Subd. 10.  [CASKETS; VAULTS.] Caskets and burial vaults for 
351.11  human burial are exempt.  
351.12     Subd. 11.  [AUTOMOBILES; DISABLED VETERANS.] Automobiles or 
351.13  other conveyances are exempt if the purchaser is assisted by a 
351.14  grant from the United States in accordance with United States 
351.15  Code, title 38, section 3902. 
351.16     Subd. 12.  [PARTS AND ACCESSORIES USED TO MAKE A MOTOR 
351.17  VEHICLE HANDICAPPED ACCESSIBLE.] Parts, accessories, and labor 
351.18  charges that are used solely to modify a motor vehicle to make 
351.19  it handicapped accessible are exempt. 
351.20     Subd. 13.  [TEXTBOOKS.] Textbooks that are prescribed for 
351.21  use in conjunction with a course of study in a school, college, 
351.22  university, and private career school to students who are 
351.23  regularly enrolled at such institutions are exempt.  For 
351.24  purposes of this subdivision (1) a "school" is as defined in 
351.25  section 120A.22, subdivision 4; and (2) "private career school" 
351.26  means a school licensed under section 141.25. 
351.27     Subd. 14.  [PERSONAL COMPUTERS PRESCRIBED FOR USE BY 
351.28  SCHOOL.] Personal computers and related computer software sold 
351.29  by a school, college, university, or private career school to 
351.30  students who are enrolled at the institutions are exempt if: 
351.31     (1) the use of the personal computer, or of a substantially 
351.32  similar model of computer, and the related computer software is 
351.33  prescribed by the institution in conjunction with a course of 
351.34  study; and 
351.35     (2) each student of the institution, or of a unit of the 
351.36  institution in which the student is enrolled, is required by the 
352.1   institution to have such a personal computer and related 
352.2   software as a condition of enrollment.  
352.3      For the purposes of this subdivision, "school" and "private 
352.4   career school" have the meanings given in subdivision 13. 
352.5      Subd. 15.  [RESIDENTIAL HEATING FUELS.] Residential heating 
352.6   fuels are exempt as follows: 
352.7      (1) all fuel oil, coal, wood, steam, hot water, propane 
352.8   gas, and L.P. gas sold to residential customers for residential 
352.9   use; 
352.10     (2) for the billing months of November, December, January, 
352.11  February, March, and April, natural gas sold for residential use 
352.12  to customers who are metered and billed as residential users and 
352.13  who use natural gas for their primary source of residential 
352.14  heat; and 
352.15     (3) for the billing months of November, December, January, 
352.16  February, March, and April, electricity sold for residential use 
352.17  to customers who are metered and billed as residential users and 
352.18  who use electricity for their primary source of residential heat.
352.19     Subd. 16.  [RESIDENTIAL WATER SERVICES.] Water services for 
352.20  residential use are exempt regardless of how the services are 
352.21  billed. 
352.22     Subd. 17.  [FEMININE HYGIENE PRODUCTS.] Sanitary napkins, 
352.23  tampons, or similar items used for feminine hygiene are exempt.  
352.24     Subd. 18.  [USED MOTOR OILS.] Used motor oils are exempt. 
352.25     Subd. 19.  [CROSS-COUNTRY SKI PASSES.] Cross-country ski 
352.26  passes issued under sections 85.40 to 85.43 are exempt. 
352.27     Subd. 20.  [MANUFACTURED HOMES.] Manufactured homes, as 
352.28  defined in section 327.31, subdivision 6, to be used by the 
352.29  purchaser for residential purposes are exempt, unless the sale 
352.30  is the first retail sale of the manufactured home in this state. 
352.31     Subd. 21.  [DE MINIMIS EXEMPTION.] A purchase subject to 
352.32  use tax under section 297A.63 is exempt if (1) the purchase is 
352.33  made by an individual for personal use, and (2) the total 
352.34  purchases that are subject to the use tax do not exceed $770 in 
352.35  the calendar year.  For purposes of this subdivision, "personal 
352.36  use" includes purchases for gifts.  If an individual makes 
353.1   purchases subject to use tax of more than $770 in the calendar 
353.2   year, the individual must pay the use tax on the entire amount.  
353.3   This exemption does not apply to purchases made from retailers 
353.4   who are required or registered to collect taxes under this 
353.5   chapter. 
353.6      Subd. 22.  [PROPERTY BROUGHT INTO MINNESOTA BY 
353.7   NONRESIDENT.] All articles of tangible personal property brought 
353.8   into Minnesota by a person who was a nonresident of this state 
353.9   immediately prior to bringing such property into this state for 
353.10  the person's use, storage, or consumption are exempt from the 
353.11  use tax imposed by section 297A.63. 
353.12     Subd. 23.  [OCCASIONAL SALES.] Isolated and occasional 
353.13  sales in Minnesota not made in the normal course of business, 
353.14  and the storage, use, or consumption of property or services 
353.15  resulting from such sales, are exempt. 
353.16     Subd. 24.  [CONSTITUTIONAL PROHIBITIONS.] The gross 
353.17  receipts from the sale of and the storage, use, or other 
353.18  consumption in Minnesota of tangible personal property, tickets, 
353.19  or admissions, electricity, gas, or local exchange telephone 
353.20  service, that the state of Minnesota is prohibited from taxing 
353.21  under the Constitution or laws of the United States or under the 
353.22  Constitution of Minnesota, are exempt. 
353.23     Sec. 12.  [297A.68] [BUSINESS EXEMPTIONS.] 
353.24     Subdivision 1.  [SCOPE.] The gross receipts from the sale 
353.25  of, and storage, distribution, use, or consumption of the items 
353.26  contained in this section are specifically exempted from the 
353.27  taxes imposed by this chapter.  
353.28     Subd. 2.  [MATERIALS CONSUMED IN PRODUCTION.] (a) Materials 
353.29  stored, used, or consumed in industrial production of personal 
353.30  property intended to be sold ultimately at retail are exempt, 
353.31  whether or not the item so used becomes an ingredient or 
353.32  constituent part of the property produced.  Materials that 
353.33  qualify for this exemption include, but are not limited to, the 
353.34  following: 
353.35     (1) chemicals, including chemicals used for cleaning food 
353.36  processing machinery and equipment; 
354.1      (2) materials, including chemicals, fuels, and electricity 
354.2   purchased by persons engaged in industrial production to treat 
354.3   waste generated as a result of the production process; 
354.4      (3) fuels, electricity, gas, and steam used or consumed in 
354.5   the production process, except that electricity, gas, or steam 
354.6   used for space heating or lighting is exempt only if it is 
354.7   necessary to produce that particular industrial product; 
354.8      (4) petroleum products and lubricants; 
354.9      (5) packaging materials, including returnable containers 
354.10  used in packaging food and beverage products; 
354.11     (6) accessory tools, equipment, and other items that are 
354.12  separate detachable units with an ordinary useful life of less 
354.13  than 12 months used in producing a direct effect upon the 
354.14  product; and 
354.15     (7) the following materials, tools, and equipment used in 
354.16  metalcasting:  crucibles, thermocouple protection sheaths and 
354.17  tubes, stalk tubes, refractory materials, molten metal filters 
354.18  and filter boxes, and degassing lances. 
354.19     (b) This exemption does not include: 
354.20     (1) machinery, equipment, implements, tools, accessories, 
354.21  appliances, contrivances and furniture and fixtures, except 
354.22  those listed in paragraph (a), clause (6); and 
354.23     (2) petroleum and special fuels used in producing or 
354.24  generating power for propelling ready-mixed concrete trucks on 
354.25  the public highways of this state. 
354.26     (c) Industrial production includes, but is not limited to, 
354.27  research, development, design or production of any tangible 
354.28  personal property, manufacturing, processing (other than by 
354.29  restaurants and consumers) of agricultural products (whether 
354.30  vegetable or animal), commercial fishing, refining, smelting, 
354.31  reducing, brewing, distilling, printing, mining, quarrying, 
354.32  lumbering, generating electricity and the production of road 
354.33  building materials.  Industrial production does not include 
354.34  painting, cleaning, repairing or similar processing of property 
354.35  except as part of the original manufacturing process.  
354.36     Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
355.1   SERVICES.] (a) Materials stored, used, or consumed in providing 
355.2   a taxable service listed in section 297A.61, subdivision 16, 
355.3   paragraph (g), intended to be sold ultimately at retail are 
355.4   exempt. 
355.5      (b) This exemption includes, but is not limited to: 
355.6      (1) chemicals, lubricants, packaging materials, seeds, 
355.7   trees, fertilizers, and herbicides, if these items are used or 
355.8   consumed in providing the taxable service; 
355.9      (2) chemicals used to treat waste generated as a result of 
355.10  providing the taxable service; 
355.11     (3) accessory tools, equipment, and other items that are 
355.12  separate detachable units used in providing the service and that 
355.13  have an ordinary useful life of less than 12 months; and 
355.14     (4) fuel, electricity, gas, and steam used or consumed in 
355.15  the production process, except that electricity, gas, or steam 
355.16  used for space heating or lighting is exempt only if it is 
355.17  necessary to produce that particular taxable service. 
355.18     (c) This exemption does not include machinery, equipment, 
355.19  implements, tools, accessories, appliances, contrivances, 
355.20  furniture, and fixtures used in providing the taxable service. 
355.21     Subd. 4.  [TACONITE PRODUCTION MATERIALS.] Mill liners, 
355.22  grinding rods, and grinding balls that are substantially 
355.23  consumed in the production of taconite are exempt when sold to 
355.24  or stored, used, or consumed by persons taxed under the in-lieu 
355.25  provisions of chapter 298.  
355.26     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
355.27  exempt.  The tax must be imposed and collected as if the rate 
355.28  under section 297A.62, subdivision 1, applied, and then refunded 
355.29  in the manner provided in section 297A.75. 
355.30     "Capital equipment" means machinery and equipment purchased 
355.31  or leased and used in this state by the purchaser or lessee 
355.32  primarily for manufacturing, fabricating, mining, or refining 
355.33  tangible personal property to be sold ultimately at retail. 
355.34     Capital equipment means machinery and equipment essential 
355.35  to the integrated production process.  Capital equipment also 
355.36  includes machinery and equipment used to electronically transmit 
356.1   results retrieved by a customer of an online computerized data 
356.2   retrieval system. 
356.3      (b) Capital equipment includes, but is not limited to: 
356.4      (1) machinery and equipment used to operate, control, or 
356.5   regulate the production equipment; 
356.6      (2) machinery and equipment used for research and 
356.7   development, design, quality control, and testing activities; 
356.8      (3) environmental control devices that are used to maintain 
356.9   conditions such as temperature, humidity, light, or air pressure 
356.10  when those conditions are essential to and are part of the 
356.11  production process; 
356.12     (4) materials and supplies used to construct and install 
356.13  machinery or equipment; 
356.14     (5) repair and replacement parts, including accessories, 
356.15  whether purchased as spare parts, repair parts, or as upgrades 
356.16  or modifications to machinery or equipment; 
356.17     (6) materials used for foundations that support machinery 
356.18  or equipment; 
356.19     (7) materials used to construct and install special purpose 
356.20  buildings used in the production process; and 
356.21     (8) ready-mixed concrete trucks in which the ready-mixed 
356.22  concrete is mixed as part of the delivery process.  
356.23     (c) Capital equipment does not include the following: 
356.24     (1) motor vehicles taxed under chapter 297B; 
356.25     (2) machinery or equipment used to receive or store raw 
356.26  materials; 
356.27     (3) building materials, except for materials included in 
356.28  paragraph (b), clauses (6) and (7); 
356.29     (4) machinery or equipment used for nonproduction purposes, 
356.30  including, but not limited to, the following:  plant security, 
356.31  fire prevention, first aid, and hospital stations; support 
356.32  operations or administration; pollution control; and plant 
356.33  cleaning, disposal of scrap and waste, plant communications, 
356.34  space heating, lighting, or safety; 
356.35     (5) farm machinery and aquaculture production equipment as 
356.36  defined by section 297A.61, subdivisions 12 and 13; 
357.1      (6) machinery or equipment purchased and installed by a 
357.2   contractor as part of an improvement to real property; or 
357.3      (7) any other item that is not essential to the integrated 
357.4   process of manufacturing, fabricating, mining, or refining. 
357.5      (d) For purposes of this subdivision: 
357.6      (1) "Machinery" means mechanical, electronic, or electrical 
357.7   devices, including computers and computer software, that are 
357.8   purchased or constructed to be used for the activities set forth 
357.9   in paragraph (a). 
357.10     (2) "Equipment" means independent devices or tools separate 
357.11  from machinery, including computers and computer software, used 
357.12  in operating, controlling, or regulating machinery and 
357.13  equipment; and any subunit or assembly comprising a component of 
357.14  any machinery or accessory or attachment parts of machinery, 
357.15  such as tools, dies, jigs, patterns, and molds.  
357.16     (3) "Primarily" means machinery and equipment used 50 
357.17  percent or more of the time in an activity described in 
357.18  paragraph (a). 
357.19     (4) "Manufacturing" means an operation or series of 
357.20  operations where raw materials are changed in form, composition, 
357.21  or condition by machinery and equipment and which results in the 
357.22  production of a new article of tangible personal property.  For 
357.23  purposes of this subdivision, "manufacturing" includes the 
357.24  generation of electricity or steam to be sold at retail. 
357.25     (5) "Fabricating" means to make, build, create, produce, or 
357.26  assemble components or property to work in a new or different 
357.27  manner. 
357.28     (6) "Mining" means the extraction of minerals, ores, stone, 
357.29  or peat. 
357.30     (7) "Refining" means the process of converting a natural 
357.31  resource to a product, including the treatment of water to be 
357.32  sold at retail. 
357.33     (8) "Integrated production process" means a process 
357.34  beginning with the removal of raw materials from inventory 
357.35  through the completion of the product, including packaging of 
357.36  the product. 
358.1      (9) "Online data retrieval system" means a system whose 
358.2   cumulation of information is equally available and accessible to 
358.3   all its customers. 
358.4      (10) "Machinery and equipment used for pollution control" 
358.5   means machinery and equipment used solely to eliminate, prevent, 
358.6   or reduce pollution resulting from an activity described in 
358.7   paragraph (a).  
358.8      Subd. 6.  [SPECIAL TOOLING.] Special tooling is exempt.  
358.9   "Special tooling" means tools, dies, jigs, patterns, gauges, and 
358.10  other special tools that have value and use only for the buyer 
358.11  and for the use for which they are made.  An item has value and 
358.12  use only to the buyer if the item is not standard enough to be 
358.13  stocked or ordered from a catalog or other sales literature, but 
358.14  must be produced in accordance with special requirements 
358.15  peculiar to the buyer and not common to someone else whose 
358.16  conditions for possible use of the material are reasonably 
358.17  similar to the buyer's.  
358.18     Subd. 7.  [AIR COOLING EQUIPMENT.] Equipment used for air 
358.19  cooling is exempt, if the equipment is purchased for conversion 
358.20  or replacement of an existing groundwater-based once-through 
358.21  cooling system as required under section 103G.271, subdivision 5.
358.22     Subd. 8.  [POLLUTION CONTROL EQUIPMENT.] Pollution control 
358.23  equipment purchased by a steel reprocessing firm is exempt if 
358.24  the equipment is necessary to meet state or federal emission 
358.25  standards.  For purposes of this subdivision: 
358.26     (1) "pollution control equipment" means equipment used for 
358.27  the purpose of eliminating, preventing, or reducing air, land, 
358.28  or water pollution during or as a result of the manufacturing 
358.29  process; and 
358.30     (2) "steel reprocessing firm" means a firm whose primary 
358.31  business is the recovery of steel from automobiles, appliances, 
358.32  and other steel products and the rerefining of this recovered 
358.33  metal into new steel products. 
358.34     Subd. 9.  [SUPER BOWL ADMISSIONS.] The granting of the 
358.35  privilege of admission to a world championship football game 
358.36  sponsored by the national football league is exempt. 
359.1      Subd. 10.  [PUBLICATIONS; PUBLICATION MATERIALS.] Tangible 
359.2   personal property that is used or consumed in producing any 
359.3   publication regularly issued at average intervals not exceeding 
359.4   three months is exempt, and any such publication is exempt.  
359.5   "Publication" includes, but is not limited to, a qualified 
359.6   newspaper as defined by section 331A.02, together with any 
359.7   supplements or enclosures.  "Publication" does not include 
359.8   magazines and periodicals sold over the counter.  Tangible 
359.9   personal property that is used or consumed in producing a 
359.10  publication does not include machinery, equipment, implements, 
359.11  tools, accessories, appliances, contrivances, furniture, and 
359.12  fixtures used in the publication, or fuel, electricity, gas, or 
359.13  steam used for space heating or lighting.  
359.14     Advertising contained in a publication is a nontaxable 
359.15  service and is exempt.  Persons who publish or sell newspapers 
359.16  are engaging in a nontaxable service with respect to gross 
359.17  receipts realized from such news-gathering or news-publishing 
359.18  activities, including the sale of advertising.  
359.19     Subd. 11.  [ADVERTISING MATERIALS.] Material designed to 
359.20  advertise and promote the sale of merchandise or services is 
359.21  exempt if the material is purchased and stored for the purpose 
359.22  of subsequently shipping or otherwise transferring outside the 
359.23  state by the purchaser for later use solely outside the state of 
359.24  Minnesota.  Mailing and reply envelopes and cards used 
359.25  exclusively in connection with these advertising and promotional 
359.26  materials are included in this exemption regardless of where the 
359.27  mailing occurs. 
359.28     Subd. 12.  [WIND ENERGY CONVERSION SYSTEMS.] Wind energy 
359.29  conversion systems, as defined in section 216C.06, subdivision 
359.30  12, that are used as an electric power source are exempt, and 
359.31  the materials used to manufacture, install, construct, repair, 
359.32  or replace them are exempt. 
359.33     Subd. 13.  [OUTSTATE TRANSPORT OR DELIVERY.] (a) Tangible 
359.34  personal property is exempt if the property, without 
359.35  intermediate use, is:  
359.36     (1) shipped or transported outside Minnesota by the 
360.1   purchaser or is stored, processed, fabricated or manufactured 
360.2   into, attached to or incorporated into other tangible personal 
360.3   property that is transported or shipped outside Minnesota; and 
360.4      (2) used in a trade or business outside Minnesota after 
360.5   being shipped or transported outside of Minnesota, and is not 
360.6   returned to Minnesota, except in the course of interstate 
360.7   commerce; and 
360.8      (3) either (i) not subject to tax in the state or country 
360.9   to which it is transported for storage or use, or (ii) to be 
360.10  used in other states or countries as part of a maintenance 
360.11  contract. 
360.12     (b) For purposes of this subdivision, storage or 
360.13  processing, fabricating, manufacturing, attaching to, or 
360.14  incorporating into other property is not intermediate use. 
360.15     Subd. 14.  [TEMPORARY STORAGE.] Tangible personal property 
360.16  is exempt if all of the following conditions are met: 
360.17     (1) it is shipped or brought into Minnesota by a common 
360.18  carrier; 
360.19     (2) without intermediate use, it is kept in a public 
360.20  warehouse; 
360.21     (3) it is kept for the purpose of being later transported 
360.22  outside Minnesota; and 
360.23     (4) after storage, it is used solely outside Minnesota, 
360.24  except in the course of interstate commerce. 
360.25     Subd. 15.  [OUTSTATE DELIVERY BY SELLER.] Property is 
360.26  exempt if:  
360.27     (1) it is delivered in one of the following ways: 
360.28     (i) delivery by the seller to a common carrier for delivery 
360.29  outside Minnesota; 
360.30     (ii) placement in the United States mail or parcel post 
360.31  directed to the purchaser outside Minnesota; or 
360.32     (iii) delivery to the purchaser outside Minnesota by means 
360.33  of the seller's own delivery vehicles; and 
360.34     (2) it is not later returned to a point within Minnesota, 
360.35  except in the course of interstate commerce. 
360.36     Subd. 16.  [PACKING MATERIALS.] Packing materials used to 
361.1   pack and ship household goods are exempt if the ultimate 
361.2   destination of the goods is outside Minnesota and if the goods 
361.3   are not later returned to a point within Minnesota, except in 
361.4   the course of interstate commerce.  
361.5      Subd. 17.  [SHIPS USED IN INTERSTATE COMMERCE.] Repair, 
361.6   replacement, and rebuilding parts and materials, and lubricants, 
361.7   for ships or vessels used or to be used principally in 
361.8   interstate or foreign commerce are exempt.  Vessels with a gross 
361.9   registered tonnage of at least 3,000 tons are exempt. 
361.10     Subd. 18.  [CUSTOM COMPUTER SOFTWARE.] The design, 
361.11  development, writing, translation, fabrication, lease, or 
361.12  transfer for a consideration of title or possession of a custom 
361.13  computer program is exempt.  "Custom computer program" means a 
361.14  computer program prepared to the special order of the customer, 
361.15  either in the form of written procedures or in the form of 
361.16  storage media on which, or in which, the program is recorded, or 
361.17  any required documentation or manuals designed to facilitate the 
361.18  use of the custom computer program transferred.  It includes 
361.19  those services represented by separately stated charges for 
361.20  modifications to an existing prewritten program that are 
361.21  prepared to the special order of the customer.  It does not 
361.22  include a "canned" or prewritten computer program that is held 
361.23  or existing for general or repeated sale or lease, even if the 
361.24  prewritten or "canned" program was initially developed on a 
361.25  custom basis or for in-house use.  Modification to an existing 
361.26  prewritten program to meet the customer's needs is custom 
361.27  computer programming only to the extent of the modification.  
361.28     Subd. 19.  [PETROLEUM PRODUCTS.] The following petroleum 
361.29  products are exempt: 
361.30     (1) products upon which a tax has been imposed and paid 
361.31  under chapter 296A, and for which no refund has been or will be 
361.32  allowed because the buyer used the fuel for nonhighway use; 
361.33     (2) products that are used in the improvement of 
361.34  agricultural land by constructing, maintaining, and repairing 
361.35  drainage ditches, tile drainage systems, grass waterways, water 
361.36  impoundment, and other erosion control structures; 
362.1      (3) products purchased by a transit system receiving 
362.2   financial assistance under section 174.24 or 473.384; 
362.3      (4) products used in a passenger snowmobile, as defined in 
362.4   section 296A.01, subdivision 39, for off-highway business use as 
362.5   part of the operations of a resort as provided under section 
362.6   296A.16, subdivision 2, clause (2); or 
362.7      (5) products purchased by a state or a political 
362.8   subdivision of a state for use in motor vehicles exempt from 
362.9   registration under section 168.012, subdivision 1, paragraph (b).
362.10     Subd. 20.  [NATURAL GAS IN VEHICLES.] Natural gas to be 
362.11  used as a fuel in vehicles propelled by natural gas is exempt. 
362.12     Subd. 21.  [SNOWMAKING.] Electricity used to make snow for 
362.13  outdoor use for ski hills, ski slopes, or ski trails is exempt. 
362.14     Subd. 22.  [COPIES OF COURT REPORTER DOCUMENTS.] 
362.15  Transcripts or copies of transcripts of verbatim testimony are 
362.16  exempt if produced and sold by court reporters or other 
362.17  transcribers of legal proceedings to individuals or entities 
362.18  that are parties to or representatives of parties to the 
362.19  proceeding to which the transcript relates. 
362.20     Subd. 23.  [AUTOMATIC FIRE-SAFETY SPRINKLER SYSTEMS.] 
362.21  Automatic fire-safety sprinkler systems described in section 
362.22  273.11, subdivision 6a, are exempt. 
362.23     Subd. 24.  [WASTE PROCESSING EQUIPMENT.] Equipment used for 
362.24  processing solid or hazardous waste at a resource recovery 
362.25  facility, as defined in section 115A.03, subdivision 28, is 
362.26  exempt, including pollution control equipment at a resource 
362.27  recovery facility that burns refuse-derived fuel or mixed 
362.28  municipal solid waste as its primary fuel. 
362.29     Subd. 25.  [OCCASIONAL SALES.] (a) Isolated or occasional 
362.30  sales of tangible personal property in Minnesota not made in the 
362.31  normal course of business of selling that kind of property are 
362.32  exempt.  The storage, use, or consumption of property acquired 
362.33  as a result of such a sale is exempt.  
362.34     (b) This exemption applies to a sale of tangible personal 
362.35  property primarily used in a trade or business only if one of 
362.36  the following conditions are satisfied:  (1) the sale occurs in 
363.1   a transaction subject to or described in section 118, 331, 332, 
363.2   336, 337, 338, 351, 355, 368, 721, 731, 1031, or 1033 of the 
363.3   Internal Revenue Code; (2) the sale is between members of a 
363.4   controlled group as defined in section 1563(a) of the Internal 
363.5   Revenue Code; (3) the sale is a sale of farm machinery; (4) the 
363.6   sale is a farm auction sale; (5) the sale is a sale of 
363.7   substantially all of the assets of a trade or business; or (6) 
363.8   the total amount of gross receipts from the sale of trade or 
363.9   business property made during the calendar month of the sale and 
363.10  the preceding 11 calendar months does not exceed $1,000. 
363.11     (c) For purposes of this subdivision, the following terms 
363.12  have the meanings given.  
363.13     (1) A "farm auction" is a public auction conducted by a 
363.14  licensed auctioneer if substantially all of the property sold 
363.15  consists of property used in the trade or business of farming 
363.16  and property not used primarily in a trade or business. 
363.17     (2) "Trade or business" includes the assets of a separate 
363.18  division, branch, or identifiable segment of a trade or business 
363.19  if, before the sale, the income and expenses attributable to the 
363.20  separate division, branch, or identifiable segment could be 
363.21  separately ascertained from the books of account or record (the 
363.22  lease or rental of an identifiable segment does not qualify for 
363.23  the exemption). 
363.24     (3) A "sale of substantially all of the assets of a trade 
363.25  or business" must occur as a single transaction or a series of 
363.26  related transactions within the 12-month period beginning on the 
363.27  date of the first sale of assets intended to qualify for the 
363.28  exemption provided in paragraph (b), clause (5). 
363.29     Subd. 26.  [INTERSTATE WATS LINES.] Long distance telephone 
363.30  services are exempt if the service (1) consists of a wide area 
363.31  telephone line that permits a long distance call to an 
363.32  individual or business located in Minnesota to be made from a 
363.33  location outside of Minnesota at no toll charge to the person 
363.34  placing the call; or (2) entitles a customer, upon payment of a 
363.35  periodic charge that is determined either as a flat amount or 
363.36  upon the basis of total elapsed transmission time, to the 
364.1   privilege of an unlimited number of long distance calls made 
364.2   from a location in Minnesota to a location outside of Minnesota 
364.3   if the customer is a qualified provider of telemarketing 
364.4   services.  As used in this subdivision, a "qualified provider of 
364.5   telemarketing services" is a telemarketing firm that derives at 
364.6   least 80 percent of its revenues from one or more of the 
364.7   following activities:  soliciting or providing information, 
364.8   soliciting sales or receiving orders, and conducting research by 
364.9   means of telegraph, telephone, computer database, fiber optic, 
364.10  microwave, or other communication system. 
364.11     Subd. 27.  [MOTOR VEHICLES.] Motor vehicles taxable under 
364.12  the provisions of chapter 297B are exempt. 
364.13     Subd. 28.  [MEDICAL SUPPLIES.] Medical supplies purchased 
364.14  by a licensed health care facility or licensed health care 
364.15  professional to provide medical treatment to residents or 
364.16  patients are exempt.  The exemption does not apply to medical 
364.17  equipment or components of medical equipment, laboratory 
364.18  supplies, radiological supplies, and other items used in 
364.19  providing medical services.  For purposes of this subdivision, 
364.20  "medical supplies" means adhesive and nonadhesive bandages, 
364.21  gauze pads and strips, cotton applicators, antiseptics, 
364.22  nonprescription drugs, eye solution, and other similar supplies 
364.23  used directly on the resident or patient in providing medical 
364.24  services. 
364.25     Subd. 29.  [PRIZES.] Tangible personal property that will 
364.26  be given as prizes to players in games of skill or chance is 
364.27  exempt if the games are conducted at events such as community 
364.28  festivals, fairs, and carnivals and if the events last less than 
364.29  six days.  This exemption does not apply to property awarded as 
364.30  prizes in connection with lawful gambling as defined in section 
364.31  349.12 or the state lottery. 
364.32     Subd. 30.  [TELEVISION COMMERCIALS.] Tangible personal 
364.33  property primarily used or consumed in the preproduction, 
364.34  production, or postproduction of a television commercial is 
364.35  exempt.  Any such commercial, regardless of the medium in which 
364.36  it is transferred, is exempt.  "Preproduction" and "production" 
365.1   include, but are not limited to, all activities related to the 
365.2   preparation for shooting and the shooting of television 
365.3   commercials, including film processing.  Equipment rented for 
365.4   the preproduction and production activities is exempt.  
365.5   "Postproduction" includes, but is not limited to, all activities 
365.6   related to the finishing and duplication of television 
365.7   commercials.  This exemption does not apply to tangible personal 
365.8   property used primarily in administration, general management, 
365.9   or marketing.  Machinery and equipment purchased for use in 
365.10  producing such commercials and fuel, electricity, gas, or steam 
365.11  used for space heating or lighting are not exempt under this 
365.12  subdivision. 
365.13     Subd. 31.  [WASTE MANAGEMENT CONTAINERS AND 
365.14  COMPACTORS.] Compactors and waste collection containers are 
365.15  exempt if they are purchased by a waste management service 
365.16  provider and are used in providing waste management services as 
365.17  defined in section 297H.01, subdivision 12.  A waste management 
365.18  service provider that does not remit tax on customer charges or 
365.19  lease or rental payments for compactors and waste collection 
365.20  containers under chapter 297H is ineligible for this exemption.  
365.21     Subd. 32.  [EVENTS LOCATED OUTSIDE MINNESOTA.] Tickets or 
365.22  admissions to places of amusement located outside Minnesota or 
365.23  to athletic events to be held outside Minnesota are exempt. 
365.24     Sec. 13.  [297A.69] [AGRICULTURAL EXEMPTIONS.] 
365.25     Subdivision 1.  [SCOPE.] The gross receipts from the sale 
365.26  of, and storage, distribution, use, or consumption of the items 
365.27  contained in this section are specifically exempted from the 
365.28  taxes imposed by this chapter.  
365.29     Subd. 2.  [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 
365.30  (a) Materials stored, used, or consumed in agricultural 
365.31  production of personal property intended to be sold ultimately 
365.32  at retail are exempt, whether or not the item becomes an 
365.33  ingredient or constituent part of the property produced.  
365.34  Materials that qualify for this exemption include, but are not 
365.35  limited to, the following: 
365.36     (1) feeds, seeds, trees, fertilizers, and herbicides, 
366.1   including when purchased for use by farmers in a federal or 
366.2   state farm or conservation program; 
366.3      (2) materials sold to a veterinarian to be used or consumed 
366.4   in the care, medication, and treatment of agricultural 
366.5   production animals and horses; 
366.6      (3) chemicals, including chemicals used for cleaning food 
366.7   processing machinery and equipment; 
366.8      (4) materials, including chemicals, fuels, and electricity 
366.9   purchased by persons engaged in agricultural production to treat 
366.10  waste generated as a result of the production process; 
366.11     (5) fuels, electricity, gas, and steam used or consumed in 
366.12  the production process, except that electricity, gas, or steam 
366.13  used for space heating or lighting is exempt only if it is 
366.14  necessary to produce that particular agricultural product; 
366.15     (6) petroleum products and lubricants; 
366.16     (7) packaging materials, including returnable containers 
366.17  used in packaging food and beverage products; and 
366.18     (8) accessory tools and equipment that are separate 
366.19  detachable units with an ordinary useful life of less than 12 
366.20  months used in producing a direct effect upon the product. 
366.21  Machinery, equipment, implements, tools, accessories, 
366.22  appliances, contrivances, and furniture and fixtures, except 
366.23  those listed in this clause are not included within this 
366.24  exemption. 
366.25     (b) For purposes of this subdivision, "agricultural 
366.26  production" includes, but is not limited to, horticulture, 
366.27  floriculture, and the raising of pets, fur-bearing animals, 
366.28  research animals, horses, farmed cervidae as defined in section 
366.29  17.451, subdivision 2, llamas as defined in section 17.455, 
366.30  subdivision 2, and ratitae as defined in section 17.453, 
366.31  subdivision 3. 
366.32     Subd. 3.  [FARM MACHINERY REPAIR PARTS.] Repair and 
366.33  replacement parts, except tires, used for maintenance or repair 
366.34  of farm machinery are exempt, if the part replaces a farm 
366.35  machinery part assigned a specific or generic part number by the 
366.36  manufacturer of the farm machinery.  
367.1      Subd. 4.  [FARM MACHINERY.] Farm machinery is exempt. 
367.2      Subd. 5.  [USED FARM TIRES.] The first $5,000 of gross 
367.3   receipts from the sales of used, remanufactured, or repaired 
367.4   tires for farm machinery, by a sole proprietor, in a calendar 
367.5   year are exempt if: 
367.6      (1) the seller had gross receipts from all sales of less 
367.7   than $10,000 in the previous year; and 
367.8      (2) the tires are not retreaded. 
367.9      Subd. 6.  [HORSES; RELATED MATERIALS.] (a) Horses, 
367.10  including racehorses, are exempt. 
367.11     (b) Materials, including feed and bedding, used or consumed 
367.12  in the breeding, raising, owning, boarding, and keeping of 
367.13  horses are exempt.  Machinery, equipment, implements, tools, 
367.14  appliances, furniture, and fixtures used in the breeding, 
367.15  raising, owning, boarding, and keeping of horses are not 
367.16  included within this exemption. 
367.17     Sec. 14.  [297A.70] [EXEMPTIONS FOR GOVERNMENTS AND 
367.18  NONPROFIT GROUPS.] 
367.19     Subdivision 1.  [SCOPE.] (a) The gross receipts from sales 
367.20  of items to or by, and storage, distribution, use, or 
367.21  consumption of items by the organizations listed in this section 
367.22  are specifically exempted from the taxes imposed by this chapter.
367.23     (b) Notwithstanding any law to the contrary enacted before 
367.24  1992, only sales to governments and political subdivisions 
367.25  listed in this section are exempt from the taxes imposed by this 
367.26  chapter.  
367.27     (c) "Sales" includes purchases under an installment 
367.28  contract or lease purchase agreement under section 465.71. 
367.29     Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
367.30  those listed in paragraph (b), to the following governments and 
367.31  political subdivisions, or to the listed agencies or 
367.32  instrumentalities of governments and political subdivisions, are 
367.33  exempt: 
367.34     (1) the United States and its agencies and 
367.35  instrumentalities; 
367.36     (2) school districts, the University of Minnesota, state 
368.1   universities, community colleges, technical colleges, state 
368.2   academies, the Perpich Minnesota center for arts education, and 
368.3   an instrumentality of a political subdivision that is accredited 
368.4   as an optional/special function school by the North Central 
368.5   Association of Colleges and Schools; 
368.6      (3) hospitals and nursing homes owned and operated by 
368.7   political subdivisions of the state; 
368.8      (4) other states or political subdivisions of other states, 
368.9   if the sale would be exempt from taxation if it occurred in that 
368.10  state; and 
368.11     (5) sales to public libraries, public library systems, 
368.12  multicounty, multitype library systems as defined in section 
368.13  134.001, county law libraries under chapter 134A, the state 
368.14  library under section 480.09, and the legislative reference 
368.15  library.  
368.16     (b) This exemption does not apply to the sales of the 
368.17  following products and services: 
368.18     (1) building, construction, or reconstruction materials 
368.19  purchased by a contractor or a subcontractor as a part of a 
368.20  lump-sum contract or similar type of contract with a guaranteed 
368.21  maximum price covering both labor and materials for use in the 
368.22  construction, alteration, or repair of a building or facility; 
368.23     (2) construction materials purchased by tax exempt entities 
368.24  or their contractors to be used in constructing buildings or 
368.25  facilities which will not be used principally by the tax exempt 
368.26  entities; 
368.27     (3) the leasing of a motor vehicle as defined in section 
368.28  297B.01, subdivision 5, except for leases entered into by the 
368.29  United States or its agencies or instrumentalities; or 
368.30     (4) meals and lodging as defined under section 297A.61, 
368.31  subdivisions 3, paragraph (d), and 15, paragraph (c), except for 
368.32  meals and lodging purchased directly by the United States or its 
368.33  agencies or instrumentalities. 
368.34     (c) As used in this subdivision, "school districts" means 
368.35  public school entities and districts of every kind and nature 
368.36  organized under the laws of the state of Minnesota, and any 
369.1   instrumentality of a school district, as defined in section 
369.2   471.59. 
369.3      Subd. 3.  [SALES OF CERTAIN GOODS AND SERVICES TO 
369.4   GOVERNMENT.] (a) The following sales to or use by the specified 
369.5   governments and political subdivisions of the state are exempt: 
369.6      (1) supplies and equipment used to provide medical care in 
369.7   the operation of an ambulance service owned and operated by a 
369.8   political subdivision of the state; 
369.9      (2) repair and replacement parts for emergency rescue 
369.10  vehicles, fire trucks, and fire apparatus to a political 
369.11  subdivision; 
369.12     (3) machinery and equipment, except for motor vehicles, 
369.13  used directly for mixed municipal solid waste management 
369.14  services at a solid waste disposal facility as defined in 
369.15  section 115A.03, subdivision 10; 
369.16     (4) chore and homemaking services to a political 
369.17  subdivision of the state to be provided to elderly or disabled 
369.18  individuals; 
369.19     (5) telephone services to the department of administration 
369.20  that are used to provide telecommunications services through the 
369.21  intertechnologies revolving fund; 
369.22     (6) firefighter personal protective equipment as defined in 
369.23  paragraph (b), if purchased or authorized by and for the use of 
369.24  an organized fire department, fire protection district, or fire 
369.25  company regularly charged with the responsibility of providing 
369.26  fire protection to the state or a political subdivision; 
369.27     (7) bullet-resistant body armor that provides the wearer 
369.28  with ballistic and trauma protection, if purchased by a law 
369.29  enforcement agency of the state or a political subdivision of 
369.30  the state, or a licensed peace officer, as defined in section 
369.31  626.84, subdivision 1; 
369.32     (8) motor vehicles purchased or leased by political 
369.33  subdivisions of the state if the vehicles are exempt from 
369.34  registration under section 168.012, subdivision 1, paragraph 
369.35  (b); 
369.36     (9) equipment designed to process, dewater, and recycle 
370.1   biosolids for wastewater treatment facilities of political 
370.2   subdivisions, and materials incidental to installation of that 
370.3   equipment; and materials used to construct buildings to house 
370.4   the equipment, if the materials are purchased after June 30, 
370.5   1998, and before July 1, 2001; and 
370.6      (10) sales to a town of gravel and of machinery, equipment, 
370.7   and accessories, except motor vehicles, used exclusively for 
370.8   road and bridge maintenance, and leases by a town of motor 
370.9   vehicles exempt from tax under section 297B.03, clause (10). 
370.10     (b) For purposes of this subdivision, "firefighters 
370.11  personal protective equipment" means helmets, including face 
370.12  shields, chin straps, and neck liners; bunker coats and pants, 
370.13  including pant suspenders; boots; gloves; head covers or hoods; 
370.14  wildfire jackets; protective coveralls; goggles; self-contained 
370.15  breathing apparatus; canister filter masks; personal alert 
370.16  safety systems; spanner belts; optical or thermal imaging search 
370.17  devices; and all safety equipment required by the Occupational 
370.18  Safety and Health Administration. 
370.19     Subd. 4.  [SALES TO NONPROFIT GROUPS.] (a) All sales, 
370.20  except those listed in paragraph (b), to the following 
370.21  "nonprofit organizations" are exempt: 
370.22     (1) an entity organized and operated exclusively for 
370.23  charitable, religious, or educational purposes if the item 
370.24  purchased is used in the performance of charitable, religious, 
370.25  or educational functions; 
370.26     (2) any senior citizen group or association of groups that: 
370.27     (i) in general limits membership to persons who are either 
370.28  age 55 or older, or physically disabled; and 
370.29     (ii) is organized and operated exclusively for pleasure, 
370.30  recreation, and other nonprofit purposes, no part of the net 
370.31  earnings of which inures to the benefit of any private 
370.32  shareholders; and 
370.33     (3) an entity organized and operated exclusively to 
370.34  maintain a cemetery owned by a religious organization. 
370.35     (b) This exemption does not apply to the following sales: 
370.36     (1) building, construction, or reconstruction materials 
371.1   purchased by a contractor or a subcontractor as a part of a 
371.2   lump-sum contract or similar type of contract with a guaranteed 
371.3   maximum price covering both labor and materials for use in the 
371.4   construction, alteration, or repair of a building or facility; 
371.5      (2) construction materials purchased by tax-exempt entities 
371.6   or their contractors to be used in constructing buildings or 
371.7   facilities that will not be used principally by the tax-exempt 
371.8   entities; and 
371.9      (3) meals and lodging as defined under section 297A.61, 
371.10  subdivisions 3, paragraph (d), and 15, paragraph (c); and 
371.11     (4) leasing of a motor vehicle as defined in section 
371.12  297B.01, subdivision 5. 
371.13     Subd. 5.  [VETERANS GROUPS.] Sales to an organization of 
371.14  military service veterans or an auxiliary unit of an 
371.15  organization of military service veterans are exempt if: 
371.16     (1) the organization or auxiliary unit is organized within 
371.17  the state of Minnesota and is exempt from federal taxation under 
371.18  section 501(c), clause (19), of the Internal Revenue Code; and 
371.19     (2) the tangible personal property is for charitable, 
371.20  civic, educational, or nonprofit uses and not for social, 
371.21  recreational, pleasure, or profit uses. 
371.22     Subd. 6.  [AMBULANCES.] The lease of a motor vehicle for 
371.23  use as an ambulance by an ambulance service licensed under 
371.24  section 144E.10 is exempt. 
371.25     Subd. 7.  [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 
371.26  Sales, except for those listed in paragraph (c), to a hospital 
371.27  are exempt, if the items purchased are used in providing 
371.28  hospital services.  For purposes of this subdivision, "hospital" 
371.29  means a hospital organized and operated for charitable purposes 
371.30  within the meaning of section 501(c)(3) of the Internal Revenue 
371.31  Code, and licensed under chapter 144 or by any other 
371.32  jurisdiction, and "hospital services" are services authorized or 
371.33  required to be performed by a "hospital" under chapter 144. 
371.34     (b) Sales, except for those listed in paragraph (c), to an 
371.35  outpatient surgical center are exempt, if the items purchased 
371.36  are used in providing outpatient surgical services.  For 
372.1   purposes of this subdivision, "outpatient surgical center" means 
372.2   an outpatient surgical center organized and operated for 
372.3   charitable purposes within the meaning or section 501(c)(3) of 
372.4   the Internal Revenue Code, and licensed under chapter 144 or by 
372.5   any other jurisdiction.  For the purposes of this subdivision, 
372.6   "outpatient surgical services" means:  (1) services authorized 
372.7   or required to be performed by an outpatient surgical center 
372.8   under chapter 144 or under the applicable licensure law of any 
372.9   other jurisdiction; and (2) urgent care.  For purposes of this 
372.10  subdivision, "urgent care" means health services furnished to a 
372.11  person whose medical condition is sufficiently acute to require 
372.12  treatment unavailable through, or inappropriate to be provided 
372.13  by, a clinic or physician's office, but not so acute as to 
372.14  require treatment in a hospital emergency room.  
372.15     (c) This exemption does not apply to the following products 
372.16  and services: 
372.17     (1) purchases made by a clinic, physician's office, or any 
372.18  other medical facility not operating as a hospital or outpatient 
372.19  surgical center, even though the clinic, office, or facility may 
372.20  be owned and operated by a hospital or outpatient surgical 
372.21  center; 
372.22     (2) sales under section 297A.61, subdivisions 3, paragraph 
372.23  (d), and 15, paragraph (c); 
372.24     (3) building and construction materials used in 
372.25  constructing buildings or facilities that will not be used 
372.26  principally by the hospital or outpatient surgical center; 
372.27     (4) building, construction, or reconstruction materials 
372.28  purchased by a contractor or a subcontractor as a part of a 
372.29  lump-sum contract or similar type of contract with a guaranteed 
372.30  maximum price covering both labor and materials for use in the 
372.31  construction, alteration, or repair of a hospital or outpatient 
372.32  surgical center; or 
372.33     (5) the leasing of a motor vehicle as defined in section 
372.34  297B.01, subdivision 5. 
372.35     Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
372.36  SYSTEM; PRODUCT AND SERVICES.] Products and services including, 
373.1   but not limited to, end user equipment used for construction, 
373.2   ownership, operation, maintenance, and enhancement of the 
373.3   backbone system of the regionwide public safety radio 
373.4   communication system established under sections 473.891 to 
373.5   473.905, are exempt.  For purposes of this subdivision, backbone 
373.6   system is defined in section 473.891, subdivision 9.  This 
373.7   subdivision is effective for purchases, sales, storage, use, or 
373.8   consumption occurring before August 1, 2003. 
373.9      Subd. 9.  [SACRAMENTAL WINE.] Wine for sacramental purposes 
373.10  in religious ceremonies, as described in section 340A.316, is 
373.11  exempt if the wine is purchased from a nonprofit religious 
373.12  organization meeting the requirements of subdivision 4 or from a 
373.13  person authorized to import sacramental wine without a license 
373.14  as provided in section 340A.316. 
373.15     Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 
373.16  admissions to the premises of or events sponsored by an 
373.17  organization that provides an opportunity for citizens of the 
373.18  state to participate in the creation, performance, or 
373.19  appreciation of the arts are exempt if the organization is 
373.20  either (1) a tax-exempt organization within the meaning of 
373.21  Minnesota Statutes 1980, section 290.05, subdivision 1, clause 
373.22  (i), or (2) a municipal board that promotes cultural and arts 
373.23  activities.  The exemption provided with respect to a municipal 
373.24  board applies only to tickets and admissions to events sponsored 
373.25  by the board. 
373.26     Subd. 11.  [SCHOOL TICKETS OR ADMISSIONS.] Tickets or 
373.27  admissions to regular season school games, events, and 
373.28  activities are exempt.  For purposes of this subdivision, 
373.29  "school" has the meaning given it in section 120A.22, 
373.30  subdivision 4. 
373.31     Subd. 12.  [YMCA, YWCA, AND JCC MEMBERSHIPS.] The sale of 
373.32  memberships, meaning both one-time initiation fees and periodic 
373.33  membership dues, to an association incorporated under section 
373.34  315.44 or an organization defined under section 315.51, are 
373.35  exempt.  However, all separate charges made for the privilege of 
373.36  having access to and the use of the association's sports and 
374.1   athletic facilities are taxable. 
374.2      Subd. 13.  [FUNDRAISING SALES BY OR FOR NONPROFIT 
374.3   GROUPS.] (a) The following sales by the specified organizations 
374.4   for fundraising purposes are exempt, subject to the limitations 
374.5   listed in paragraph (b): 
374.6      (1) all sales made by an organization that exists solely 
374.7   for the purpose of providing educational or social activities 
374.8   for young people primarily age 18 and under; 
374.9      (2) all sales made by an organization that is a senior 
374.10  citizen group or association of groups if (i) in general it 
374.11  limits membership to persons age 55 or older; (ii) it is 
374.12  organized and operated exclusively for pleasure, recreation, and 
374.13  other nonprofit purposes; and (iii) no part of its net earnings 
374.14  inures to the benefit of any private shareholders; 
374.15     (3) the sale or use of tickets or admissions to a golf 
374.16  tournament held in Minnesota if the beneficiary of the 
374.17  tournament's net proceeds qualifies as a tax-exempt organization 
374.18  under section 501(c)(3) of the Internal Revenue Code; and 
374.19     (4) sales of gum, candy, and candy products sold for 
374.20  fundraising purposes by a nonprofit organization that provides 
374.21  educational and social activities primarily for young people 18 
374.22  years of age and under. 
374.23     (b) The exemptions listed in paragraph (a) are limited in 
374.24  the following manner: 
374.25     (1) the exemption under paragraph (a), clauses (1) and (2), 
374.26  applies only if the gross annual receipts of the organization 
374.27  from fundraising do not exceed $10,000; and 
374.28     (2) the exemption under paragraph (a), clause (1), does not 
374.29  apply if the sales are derived from admission charges or from 
374.30  activities for which the money must be deposited with the school 
374.31  district treasurer under section 123B.49, subdivision 2, or be 
374.32  recorded in the same manner as other revenues or expenditures of 
374.33  the school district under section 123B.49, subdivision 4. 
374.34     (c) For purposes of this subdivision, a club, association, 
374.35  or other organization of elementary or secondary school students 
374.36  organized for the purpose of carrying on sports, educational, or 
375.1   other extracurricular activities is a separate organization from 
375.2   the school district or school for purposes of applying the 
375.3   $10,000 limit. 
375.4      Subd. 14.  [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 
375.5   GROUPS.] (a) Sales of tangible personal property at, and 
375.6   admission charges for fundraising events sponsored by, a 
375.7   nonprofit organization are exempt if the entire proceeds, less 
375.8   the necessary expenses for the event, will be used solely and 
375.9   exclusively for charitable, religious, or educational purposes.  
375.10  Exempt sales include the sale of food, meals, drinks, and 
375.11  taxable services at the fundraising event. 
375.12     (b) This exemption is limited in the following manner: 
375.13     (1) it does not apply to admission charges for events 
375.14  involving bingo or other gambling activities or to charges for 
375.15  use of amusement devices involving bingo or other gambling 
375.16  activities; 
375.17     (2) all gross receipts are taxable if the profits are not 
375.18  used solely and exclusively for charitable, religious, or 
375.19  educational purposes; 
375.20     (3) it does not apply unless the organization keeps a 
375.21  separate accounting record, including receipts and disbursements 
375.22  from each fundraising event that documents all deductions from 
375.23  gross receipts with receipts and other records; 
375.24     (4) it does not apply to any sale made by or in the name of 
375.25  a nonprofit corporation as the active or passive agent of a 
375.26  person that is not a nonprofit corporation; 
375.27     (5) all gross receipts are taxable if fundraising events 
375.28  exceed 24 days per year; and 
375.29     (6) it does not apply to fundraising events conducted on 
375.30  premises leased for more than five days but less than 30 days. 
375.31     (c) For purposes of this subdivision, a "nonprofit 
375.32  organization" means any unit of government, corporation, 
375.33  society, association, foundation, or institution organized and 
375.34  operated for charitable, religious, educational, civic, 
375.35  fraternal, and senior citizens' or veterans' purposes, no part 
375.36  of the net earnings of which inures to the benefit of a private 
376.1   individual. 
376.2      Subd. 15.  [STATEWIDE AMATEUR ATHLETIC GAMES.] 
376.3   Notwithstanding section 297A.61, subdivision 3, or any other 
376.4   provision of this chapter, the gross receipts from the following 
376.5   sales made to or by a nonprofit corporation designated by the 
376.6   Minnesota amateur sports commission to conduct a series of 
376.7   statewide amateur athletic games and related events, workshops, 
376.8   and clinics are exempt: 
376.9      (1) sales of tangible personal property to or the storage, 
376.10  use, or other consumption of tangible personal property by the 
376.11  nonprofit corporation; and 
376.12     (2) sales of tangible personal property, admission charges, 
376.13  and sales of food, meals, and drinks by the nonprofit 
376.14  corporation at fundraising events, athletic events, or athletic 
376.15  facilities. 
376.16     Subd. 16.  [CAMP FEES.] Camp fees to camps or other 
376.17  recreation facilities owned and operated by an exempt 
376.18  organization under section 501(c)(3) of the Internal Revenue 
376.19  Code are exempt if the camps or facilities provide educational 
376.20  and social activities for young people primarily age 18 and 
376.21  under. 
376.22     Sec. 15.  [297A.71] [CONSTRUCTION EXEMPTIONS.] 
376.23     Subdivision 1.  [SCOPE.] The gross receipts from the sale 
376.24  of, and storage, distribution, use, or consumption of the 
376.25  tangible personal property contained in this section are 
376.26  specifically exempted from the taxes imposed by this chapter.  
376.27  Building materials, equipment, and supplies and other items 
376.28  exempt under this section are exempt regardless of whether 
376.29  purchased by the owner or a contractor, subcontractor, or 
376.30  builder. 
376.31     Subd. 2.  [STATE CONVENTION CENTER.] Building materials and 
376.32  supplies for constructing improvements to a state convention 
376.33  center located in a city located outside the metropolitan area 
376.34  as defined in section 473.121, subdivision 2, and governed by an 
376.35  11-person board of which four are appointed by the governor are 
376.36  exempt if the improvements are financed in whole or in part by 
377.1   nonstate resources including, but not limited to, revenue or 
377.2   general obligations issued by the state convention center board 
377.3   of the city in which the center is located. 
377.4      Subd. 3.  [CORRECTIONAL FACILITIES.] Building materials and 
377.5   supplies for constructing or improving an adult or juvenile 
377.6   correctional facility by a county, home rule charter city, or 
377.7   statutory city are exempt if the project is mandated by state or 
377.8   federal law, rule, or regulation.  The tax must be imposed and 
377.9   collected as if the rate under section 297A.62, subdivision 1, 
377.10  applied and then refunded in the manner provided in section 
377.11  297A.75. 
377.12     Subd. 4.  [LAKE SUPERIOR CENTER.] Building materials and 
377.13  supplies for construction of the Lake Superior Center are exempt.
377.14     Subd. 5.  [SCIENCE MUSEUM.] Building materials and supplies 
377.15  for construction of the Science Museum of Minnesota are exempt. 
377.16     Subd. 6.  [BUSINESS INCUBATOR AND INDUSTRIAL PARK.] 
377.17  Building materials and supplies for construction of a facility 
377.18  that includes a business incubator and industrial park are 
377.19  exempt if the facility: 
377.20     (1) is owned and operated by a nonprofit charitable 
377.21  organization that qualifies for tax exemption under section 
377.22  501(c)(3) of the Internal Revenue Code; 
377.23     (2) is used for the development of nonretail businesses, 
377.24  offering access to equipment, space, services, and advice to the 
377.25  tenant businesses, for the purpose of encouraging economic 
377.26  development and job creation in the area served by the 
377.27  organization, and emphasizes development of businesses that 
377.28  manufacture products from materials found in the waste stream, 
377.29  or manufacture alternative energy and conservation systems, or 
377.30  make use of emerging environmental technologies; 
377.31     (3) includes in its structure systems of material and 
377.32  energy exchanges that use waste products from one industrial 
377.33  process as sources of energy and material for other processes; 
377.34  and 
377.35     (4) makes use of solar and wind energy technology and 
377.36  incorporates salvaged materials in its construction. 
378.1      Subd. 7.  [ALFALFA PROCESSING FACILITY.] Building materials 
378.2   and supplies for constructing a facility that either develops 
378.3   market-value agricultural products made from alfalfa leaf 
378.4   material, or produces biomass energy fuel or electricity from 
378.5   alfalfa stems in accordance with the biomass mandate imposed 
378.6   under section 216B.2424 are exempt if the total capital 
378.7   investment made in the value-added agricultural products and 
378.8   biomass electric generation facilities is at least $50,000,000. 
378.9      Subd. 8.  [WOOD WASTE COGENERATION FACILITY.] Building 
378.10  materials and supplies for constructing, equipping, or modifying 
378.11  a district heating and cooling system cogeneration facility are 
378.12  exempt if the facility: 
378.13     (1) utilizes wood waste as a primary fuel source; and 
378.14     (2) satisfies the requirements of the biomass mandate in 
378.15  section 216B.2424, subdivision 5. 
378.16     Subd. 9.  [DIRECT SATELLITE BROADCASTING FACILITY.] 
378.17  Building materials and supplies for constructing a new facility 
378.18  in Minnesota for providing federal communications commission 
378.19  licensed direct satellite broadcasting services using direct 
378.20  broadcast satellites operating in the 12-GHz. band or fixed 
378.21  satellite regional or national program services, as defined in 
378.22  section 272.02, subdivision 16, are exempt if construction of 
378.23  the facility was commenced after June 30, 1993.  All machinery, 
378.24  equipment, tools, accessories, appliances, contrivances, 
378.25  furniture, fixtures, and all technical equipment or tangible 
378.26  personal property of any other nature or description necessary 
378.27  to the construction and equipping of that facility in order to 
378.28  provide those services are also exempt. 
378.29     Subd. 10.  [AIRCRAFT HEAVY MAINTENANCE FACILITY.] 
378.30  Materials, equipment, and supplies used or consumed in 
378.31  constructing a heavy maintenance facility for aircraft that is 
378.32  to be owned by the state of Minnesota or one of its political 
378.33  subdivisions and leased by an airline company, or an aircraft 
378.34  engine repair facility described in section 116R.02, subdivision 
378.35  6, are exempt.  Except for equipment owned or leased by a 
378.36  contractor, all machinery, equipment, and tools necessary to the 
379.1   construction and equipping of that facility in order to provide 
379.2   those services are also exempt. 
379.3      Subd. 11.  [BUILDING MATERIALS; DISABLED VETERANS.] 
379.4   Building materials to be used in the construction or remodeling 
379.5   of a residence are exempt when the construction or remodeling is 
379.6   financed in whole or in part by the United States in accordance 
379.7   with United States Code, title 38, sections 2101 to 2105.  The 
379.8   tax must be imposed and collected as if the rate under section 
379.9   297A.62, subdivision 1, applied and then refunded in the manner 
379.10  provided in section 297A.75. 
379.11     Subd. 12.  [CHAIR LIFTS, RAMPS, ELEVATORS.] Chair lifts, 
379.12  ramps, and elevators and building materials used to install or 
379.13  construct them are exempt, if they are authorized by a physician 
379.14  and installed in or attached to the owner's homestead.  The tax 
379.15  must be imposed and collected as if the rate under section 
379.16  297A.62, subdivision 1, applied and then refunded in the manner 
379.17  provided in section 297A.75. 
379.18     Subd. 13.  [AGRICULTURE PROCESSING FACILITY MATERIALS.] 
379.19  Building materials and supplies for constructing an agriculture 
379.20  processing facility as defined in section 469.1811 in which the 
379.21  total capital investment in the processing facility is expected 
379.22  to exceed $100,000,000 are exempt.  The tax must be imposed and 
379.23  collected as if the rate under section 297A.62, subdivision 1, 
379.24  applied, and then refunded in the manner provided in section 
379.25  297A.75. 
379.26     Subd. 14.  [MINERAL PRODUCTION FACILITIES.] Building 
379.27  materials, equipment, and supplies used for the construction of 
379.28  the following mineral production facilities are exempt. 
379.29     The mineral production facilities that qualify for this 
379.30  exemption are: 
379.31     (1) a value added iron products plant, which may be either 
379.32  a new plant or a facility incorporated into an existing plant 
379.33  that produces iron upgraded to a minimum of 75 percent iron 
379.34  content or any iron alloy with a total minimum metallic content 
379.35  of 90 percent; 
379.36     (2) a facility used for the manufacture of fluxed taconite 
380.1   pellets as defined in section 298.24; 
380.2      (3) a new capital project that has a total cost of over 
380.3   $40,000,000 that is directly related to production, cost, or 
380.4   quality at an existing taconite facility that does not qualify 
380.5   under clause (1) or (2); and 
380.6      (4) a new mine or minerals processing plant for any mineral 
380.7   subject to the net proceeds tax imposed under section 298.015. 
380.8      The tax must be imposed and collected as if the rate under 
380.9   section 297A.62, subdivision 1, applied, and then refunded in 
380.10  the manner provided in section 297A.75. 
380.11     Subd. 15.  [MINNEAPOLIS CONVENTION CENTER.] Materials, 
380.12  supplies, or equipment used or consumed in the construction, 
380.13  equipment, improvement, or expansion of the Minneapolis 
380.14  convention center are exempt. 
380.15     Subd. 16.  [RIVERCENTRE ARENA.] Materials, supplies, or 
380.16  equipment used or consumed in the construction, equipment, 
380.17  improvement, or expansion of the RiverCentre arena complex in 
380.18  the city of St. Paul are exempt. 
380.19     Subd. 17.  [ENVIRONMENTAL LEARNING CENTER.] Construction 
380.20  materials and supplies are exempt if they are used or consumed 
380.21  in constructing or improving the Long Lake Conservation Center 
380.22  pursuant to the funding provided under Laws 1994, chapter 643, 
380.23  section 23, subdivision 28, as amended by Laws 1995, First 
380.24  Special Session chapter 2, article 1, section 48; Laws 1996, 
380.25  chapter 463, section 7, subdivision 26; and Laws 1997, chapter 
380.26  246, section 24.  The tax must be calculated and paid as if the 
380.27  rate in section 297A.62, subdivision 1, was in effect and a 
380.28  refund applied for in the manner prescribed in section 297A.75. 
380.29     Subd. 18.  [SOYBEAN OILSEED PROCESSING AND REFINING 
380.30  FACILITY.] Construction materials and supplies are exempt if: 
380.31     (1) the materials and supplies are used or consumed in 
380.32  constructing a facility for soybean oilseed processing and 
380.33  refining; 
380.34     (2) the total capital investment made in the facility is at 
380.35  least $60,000,000; and 
380.36     (3) the facility is constructed by a Minnesota-based 
381.1   cooperative, organized under chapter 308A. 
381.2      Subd. 19.  [EARLE BROWN HERITAGE CENTER.] Materials and 
381.3   supplies used or consumed in and equipment incorporated into the 
381.4   construction, improvement, or expansion of the Earle Brown 
381.5   Heritage Center in Brooklyn Center are exempt.  This subdivision 
381.6   is effective for purchases made before July 1, 2003. 
381.7      Subd. 20.  [CONSTRUCTION MATERIALS AND SUPPLIES; BEEF 
381.8   PROCESSING FACILITY.] Materials and supplies used or consumed 
381.9   in, and equipment incorporated into, the expansion, remodeling, 
381.10  or improvement of a facility used for cattle slaughtering are 
381.11  exempt if:  
381.12     (1) the cost of the project is expected to exceed 
381.13  $15,000,000; 
381.14     (2) the expansion, remodeling, or improvement of the 
381.15  facility will be used to fabricate beef; 
381.16     (3) the number of jobs at the facility is expected to 
381.17  increase by at least 150 when the project is completed; and 
381.18     (4) the project is expected to be completed by December 31, 
381.19  2001.  
381.20     Subd. 21.  [CONSTRUCTION MATERIALS AND EQUIPMENT; BIOMASS 
381.21  ELECTRICAL GENERATING FACILITY.] Materials and supplies used or 
381.22  consumed in, and equipment incorporated into, the construction, 
381.23  improvement, or expansion of a facility using biomass to 
381.24  generate electricity are exempt if: 
381.25     (1) the facility exclusively utilizes residue wood, 
381.26  sawdust, bark, chipped wood, or brush to generate electricity; 
381.27     (2) the facility utilizes a reciprocated grate combination 
381.28  system; and 
381.29     (3) the total gross capacity of the facility is 15 to 21 
381.30  megawatts.  
381.31                       EXEMPTION CERTIFICATES  
381.32     Sec. 16.  [297A.72] [EXEMPTION CERTIFICATES.] 
381.33     Subdivision 1.  [DUTY OF RETAILER.] An exemption 
381.34  certificate conclusively relieves the retailer from collecting 
381.35  and remitting the tax only if taken in good faith from the 
381.36  purchaser. 
382.1      Subd. 2.  [CONTENT AND FORM OF EXEMPTION CERTIFICATE.] An 
382.2   exemption certificate must be substantially in the form 
382.3   prescribed by the commissioner and: 
382.4      (1) be signed by the purchaser or meet the requirements of 
382.5   section 289A.07; 
382.6      (2) bear the name and address of the purchaser; 
382.7      (3) indicate the sales tax account number, if any, issued 
382.8   to the purchaser; 
382.9      (4) indicate the general character of the property sold by 
382.10  the purchaser in the regular course of business or the 
382.11  activities carried on by the organization; and 
382.12     (5) identify the property purchased.  
382.13     Sec. 17.  [297A.73] [IMPROPER USE OF ITEM OBTAINED WITH 
382.14  EXEMPTION CERTIFICATE.] 
382.15     If a purchaser who gives an exemption certificate makes any 
382.16  use of the item that is not for a purpose exempted under this 
382.17  chapter, that use is considered a retail sale by the purchaser 
382.18  and the sales price to the purchaser is considered the gross 
382.19  receipts.  If the sole use is rental while holding for sale, the 
382.20  purchaser shall include in the purchaser's gross receipts the 
382.21  amount of the rental charged.  Upon subsequent sale of the item, 
382.22  the seller shall include the entire amount of gross receipts 
382.23  received from the sale without deduction of amounts previously 
382.24  received as rentals. 
382.25     Sec. 18.  [297A.74] [COMMINGLING EXEMPTION CERTIFICATE 
382.26  ITEMS.] 
382.27     If a purchaser gives an exemption certificate for the 
382.28  purchase of fungible items and later commingles the items with 
382.29  similar fungible items not purchased exempt, sales from the 
382.30  commingled items are considered sales of items purchased exempt 
382.31  until a quantity has been sold that equals the quantity 
382.32  purchased exempt. 
382.33                         EXEMPTION REFUNDS
382.34     Sec. 19.  [297A.75] [REFUND; APPROPRIATION.] 
382.35     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
382.36  receipts from the sale of following exempt items must be imposed 
383.1   and collected as if the sale were taxable and the rate under 
383.2   section 297A.62, subdivision 1, applied.  The exempt items 
383.3   include: 
383.4      (1) capital equipment exempt under section 297A.68, 
383.5   subdivision 5; 
383.6      (2) building materials for an agricultural processing 
383.7   facility exempt under section 297A.71, subdivision 13; 
383.8      (3) building materials for mineral production facilities 
383.9   exempt under section 297A.71, subdivision 14; 
383.10     (4) building materials for correctional facilities under 
383.11  section 297A.71, subdivision 3; 
383.12     (5) building materials used in a residence for disabled 
383.13  veterans exempt under section 297A.71, subdivision 11; and 
383.14     (6) chair lifts, ramps, elevators, and associated building 
383.15  materials exempt under section 297A.71, subdivision 12. 
383.16     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
383.17  forms prescribed by the commissioner, a refund equal to the tax 
383.18  paid on the gross receipts of the exempt items must be paid to 
383.19  the applicant.  Only the following persons may apply for the 
383.20  refund: 
383.21     (1) for subdivision 1, clauses (1) to (3), the applicant 
383.22  must be the purchaser; 
383.23     (2) for subdivision 1, clause (4), the applicant must be 
383.24  the governmental subdivision; 
383.25     (3) for subdivision 1, clause (5), the applicant must be 
383.26  the recipient of the benefits provided in United States Code, 
383.27  title 38, chapter 21; and 
383.28     (4) for subdivision 1, clause (6), the applicant must be 
383.29  the owner of the homestead property.  
383.30     Subd. 3.  [APPLICATION.] (a) The application must include 
383.31  sufficient information to permit the commissioner to verify the 
383.32  tax paid.  If the tax was paid by a contractor, subcontractor, 
383.33  or builder, under subdivision 1, clause (4), (5), or (6), the 
383.34  contractor, subcontractor, or builder must furnish to the refund 
383.35  applicant a statement including the cost of the exempt items and 
383.36  the taxes paid on the items unless otherwise specifically 
384.1   provided by this subdivision.  The provisions of sections 
384.2   289A.40 and 289A.50 apply to refunds under this section. 
384.3      (b) An applicant may not file more than two applications 
384.4   per calendar year for refunds for taxes paid on capital 
384.5   equipment exempt under section 297A.68, subdivision 5.  
384.6      Subd. 4.  [INTEREST.] Interest must be paid on the refund 
384.7   at the rate in section 270.76 from the date the refund claim is 
384.8   filed for taxes paid under subdivision 1, clauses (1) to (3), 
384.9   and (5), and from 60 days after the date the refund claim is 
384.10  filed with the commissioner for claims filed under subdivision 
384.11  1, clauses (4) and (6). 
384.12     Subd. 5.  [APPROPRIATION.] The amount required to make the 
384.13  refunds is annually appropriated to the commissioner. 
384.14                COMPUTATION AND COLLECTION OF TAXES
384.15     Sec. 20.  [297A.76] [COMPUTATION OF SALES AND USE TAXES.] 
384.16     Subdivision 1.  [ROUNDING UP OR DOWN.] In computing the 
384.17  sales or use tax to be collected or remitted as the result of a 
384.18  transaction, amounts of tax less than one-half of one cent must 
384.19  be disregarded and amounts of tax of one-half cent or more must 
384.20  be considered an additional cent.  
384.21     Subd. 2.  [UNIFORM TAX COLLECTION METHODS; RULES.] 
384.22  Agreements between competitive retailers or the adoption of 
384.23  appropriate rules or regulations by organizations or 
384.24  associations of retailers to provide uniform methods for adding 
384.25  the sales tax or its average equivalent, which do not involve 
384.26  otherwise unlawful price fixing agreements, are expressly 
384.27  authorized and are not in violation of any Minnesota laws 
384.28  prohibiting such agreements.  The commissioner may prescribe 
384.29  rules for such agreements.  
384.30     Sec. 21.  [297A.77] [COLLECTION OF SALES AND USE TAXES.] 
384.31     Subdivision 1.  [COLLECTION OF TAX AT TIME OF SALE.] The 
384.32  tax must be stated and charged separately from the sales price 
384.33  or charge for service insofar as practicable and must be 
384.34  collected by the seller from the purchaser.  
384.35     Subd. 2.  [RECEIPT.] For use tax, the retailer shall give 
384.36  the purchaser a tax receipt.  The receipt must indicate the tax 
385.1   in the form of a notation on the sales slip or receipt for the 
385.2   sales price or in another form as prescribed by the commissioner.
385.3      Subd. 3.  [TAX MUST BE REMITTED.] The tax collected by a 
385.4   retailer under this section must be remitted to the commissioner 
385.5   as provided in chapter 289A and this chapter. 
385.6      Subd. 4.  [STATUS OF SALES AND USE TAXES AS DEBT.] Sales 
385.7   and use taxes that are required to be collected by a retailer 
385.8   are debts from the purchaser to the retailer recoverable at law 
385.9   in the same manner as other debts.  
385.10     Sec. 22.  [297A.78] [LIABILITY FOR USE TAX; RECEIPT AS 
385.11  EVIDENCE.] 
385.12     Liability for the payment of the use tax is not 
385.13  extinguished until the tax has been paid to Minnesota.  However, 
385.14  a receipt from a retailer given to the purchaser under section 
385.15  297A.77, subdivision 2, relieves the purchaser of further 
385.16  liability for the tax to which the receipt refers, unless the 
385.17  purchaser knows or has reason to know that the retailer did not 
385.18  have a permit to collect the tax. 
385.19     Sec. 23.  [297A.79] [REPORTING OF GROSS RECEIPTS.] 
385.20     At the option of the taxpayer, gross receipts from sales 
385.21  may be reported on the cash basis as the consideration is 
385.22  received or on the accrual basis as sales are made. 
385.23     Sec. 24.  [297A.80] [TAXES IN OTHER STATES; OFFSET AGAINST 
385.24  USE TAX.] 
385.25     If an article of tangible personal property or an item 
385.26  listed in section 297A.63 has already been taxed by another 
385.27  state for its sale, storage, use, or other consumption in an 
385.28  amount less than the tax imposed by this chapter, then as to the 
385.29  person who paid the tax in the other state, section 297A.63 
385.30  applies only at a rate measured by the difference between the 
385.31  rate imposed under section 297A.62 and the rate by which the 
385.32  previous tax was computed.  If the tax imposed in the other 
385.33  state is equal to or greater than the tax imposed in this state, 
385.34  then no tax is due from that person under section 297A.63. 
385.35     Sec. 25.  [297A.81] [UNCOLLECTIBLE DEBTS; OFFSET AGAINST 
385.36  OTHER TAXES.] 
386.1      The taxpayer may offset against the taxes payable for any 
386.2   reporting period the amount of taxes imposed by this chapter 
386.3   previously paid as a result of any transaction the consideration 
386.4   for which became a debt owed to the taxpayer that became 
386.5   uncollectible during the reporting period, but only in 
386.6   proportion to the portion of the debt that became 
386.7   uncollectible.  Section 289A.40, subdivision 2, applies to an 
386.8   offset under this section. 
386.9      Sec. 26.  [297A.82] [AIRCRAFT; FLIGHT EQUIPMENT; PAYMENT OF 
386.10  TAXES; EXEMPTIONS.] 
386.11     Subdivision 1.  [REQUIREMENTS FOR REGISTRATION.] An 
386.12  aircraft must not be registered or licensed in this state unless 
386.13  the applicant presents proof that the sales or use tax imposed 
386.14  by this chapter has been paid or that the transaction is exempt 
386.15  from the sales and use tax.  The exemption for an occasional 
386.16  sale under section 297A.67, subdivision 23, or 297A.68, 
386.17  subdivision 25, does not apply to the sale or purchase of an 
386.18  aircraft.  
386.19     Subd. 2.  [PAYMENT OF TAX TO DEALER.] If an aircraft is 
386.20  purchased from a dealer holding a valid sales and use tax permit 
386.21  under this chapter, the applicant shall present proof that the 
386.22  tax has been paid to the dealer.  
386.23     Subd. 3.  [PAYMENT OF TAX TO COMMISSIONER.] If the aircraft 
386.24  is purchased from a person who is not the holder of a valid 
386.25  sales and use tax permit under this chapter, the purchaser shall 
386.26  pay the tax to the commissioner of revenue prior to registering 
386.27  or licensing the aircraft in this state.  The commissioner of 
386.28  revenue shall issue a certificate stating that the sales and use 
386.29  tax in respect to the transaction has been paid.  
386.30     Subd. 4.  [EXEMPTIONS.] (a) The following transactions are 
386.31  exempt from the tax imposed in this chapter to the extent 
386.32  provided. 
386.33     (b) The purchase or use of aircraft previously registered 
386.34  in Minnesota by a corporation or partnership is exempt if the 
386.35  transfer constitutes a transfer within the meaning of section 
386.36  351 or 721 of the Internal Revenue Code. 
387.1      (c) The sale to or purchase, storage, use, or consumption 
387.2   by a licensed aircraft dealer of an aircraft for which a 
387.3   commercial use permit has been issued pursuant to section 
387.4   360.654 is exempt, if the aircraft is resold while the permit is 
387.5   in effect. 
387.6      (d) Airflight equipment when sold to, or purchased, stored, 
387.7   used, or consumed by airline companies, as defined in section 
387.8   270.071, subdivision 4, is exempt.  For purposes of this 
387.9   subdivision, "airflight equipment" includes airplanes and parts 
387.10  necessary for the repair and maintenance of such airflight 
387.11  equipment, and flight simulators, but does not include airplanes 
387.12  with a gross weight of less than 30,000 pounds that are used on 
387.13  intermittent or irregularly timed flights. 
387.14     Subd. 5.  [EXEMPT PURCHASE CERTIFICATE.] If the purchase of 
387.15  an aircraft is exempt under this chapter, the commissioner shall 
387.16  issue a certificate that no sales or use tax is due and owing in 
387.17  respect to the transaction.  
387.18     Subd. 6.  [SALES AND LEASES; TAX TREATMENT.] (a) A sale of 
387.19  aircraft and parts for the repair of aircraft purchased by a 
387.20  nonprofit, incorporated flying club or association utilized 
387.21  solely by the corporation by leasing the aircraft to 
387.22  shareholders of the corporation is exempt as property purchased 
387.23  for resale.  The leasing of the aircraft to the shareholders by 
387.24  the flying club or association is taxable as a retail sale. 
387.25     (b) A lease of aircraft utilized by a lessee for leasing to 
387.26  others, whether or not the lessee also utilizes the aircraft for 
387.27  charter service or for flight instruction if no separate charge 
387.28  is made for aircraft rental, is exempt as a purchase for resale. 
387.29  However, a proportionate share of the lease payment reflecting 
387.30  use for flight instruction or charter service is taxable under 
387.31  section 297A.63. 
387.32                              PERMITS
387.33     Sec. 27.  [297A.83] [APPLICATION FOR PERMIT.] 
387.34     Subdivision 1.  [PERSONS APPLYING.] (a) A retailer required 
387.35  to collect and remit sales taxes under section 297A.66 shall 
387.36  file with the commissioner an application for a permit. 
388.1      (b) A retailer making retail sales from outside this state 
388.2   to a destination within this state who is not required to obtain 
388.3   a permit under paragraph (a) may nevertheless voluntarily file 
388.4   an application for a permit. 
388.5      (c) The commissioner may require any person or class of 
388.6   persons obligated to file a use tax return under section 
388.7   289A.11, subdivision 3, to file an application for a permit.  
388.8      Subd. 2.  [APPLICATION REQUIREMENTS.] The application must 
388.9   be made on a form prescribed by the commissioner and indicate 
388.10  the name under which the applicant intends to transact business, 
388.11  the location of the applicant's place or places of business, and 
388.12  other information the commissioner may require.  The application 
388.13  must be filed by the owner, if a natural person; by a member or 
388.14  partner, if the owner is an association or partnership; or by a 
388.15  person authorized to file the application, if the owner is a 
388.16  corporation.  
388.17     Subd. 3.  [COMMISSIONER'S DISCRETION.] (a) The commissioner 
388.18  may decline to issue a permit to a retailer not maintaining a 
388.19  place of business in this state, or may cancel a permit 
388.20  previously issued to the retailer, if the commissioner believes 
388.21  that the tax can be collected more effectively from the persons 
388.22  using the property in this state.  A refusal to issue or 
388.23  cancellation of a permit on such grounds does not affect the 
388.24  retailer's right to make retail sales from outside this state to 
388.25  destinations within this state. 
388.26     (b) If the commissioner considers it necessary for the 
388.27  efficient administration of the tax to regard a salesperson, 
388.28  representative, trucker, peddler, or canvasser as the agent of 
388.29  the dealer, distributor, supervisor, employer, or other person 
388.30  under whom that person operates or from whom the person obtains 
388.31  the tangible personal property sold, whether making sales 
388.32  personally or in behalf of that dealer, distributor, supervisor, 
388.33  employer, or other person, the commissioner may regard the 
388.34  salesperson, representative, trucker, peddler, or canvasser as 
388.35  such agent, and may regard the dealer, distributor, supervisor, 
388.36  employer, or other person as a retailer for the purposes of 
389.1   collecting the tax. 
389.2      Sec. 28.  [297A.84] [PERMITS ISSUED.] 
389.3      The commissioner shall issue a permit to each applicant who 
389.4   has complied with section 297A.83, and with section 297A.92 if 
389.5   security is required.  A person is considered to have a permit 
389.6   if the person has a Minnesota tax identification number issued 
389.7   by the department that is currently active for taxes imposed by 
389.8   this chapter.  A permit is valid until canceled or revoked.  It 
389.9   is not assignable and is valid only for the person in whose name 
389.10  it is granted and for the transaction of business at the places 
389.11  designated on the permit.  
389.12     Sec. 29.  [297A.85] [CANCELLATION OF PERMITS.] 
389.13     The commissioner may cancel a permit if one of the 
389.14  following conditions occurs: 
389.15     (1) the permit holder has not filed a sales or use tax 
389.16  return for at least one year; 
389.17     (2) the permit holder has not reported any sales or use tax 
389.18  liability on the permit holder's returns for at least two years; 
389.19  or 
389.20     (3) the permit holder requests cancellation of the permit. 
389.21     Sec. 30.  [297A.86] [REVOCATION OF PERMITS.] 
389.22     Subdivision 1.  [NOTICE OF REVOCATION; HEARINGS.] (a) If a 
389.23  person fails to comply with this chapter or the sales and use 
389.24  tax provisions of chapter 289A or the rules adopted under either 
389.25  chapter, without reasonable cause, the commissioner may give the 
389.26  person 30 days' notice in writing, specifying the violations, 
389.27  and stating that based on the violations the commissioner 
389.28  intends to revoke the person's permit.  The notice must also 
389.29  advise the person of the right to contest the revocation under 
389.30  this subdivision.  It must also explain the general procedures 
389.31  for a contested case hearing under chapter 14.  The notice may 
389.32  be served personally or by mail in the manner prescribed for 
389.33  service of an order of assessment. 
389.34     (b) If the person does not request a hearing within 30 days 
389.35  after the date of the notice of intent, the commissioner may 
389.36  serve a notice of revocation of permit upon the person, and the 
390.1   permit is revoked.  If a hearing is timely requested, and held, 
390.2   the permit is revoked after the commissioner serves an order of 
390.3   revocation of permit under section 14.62, subdivision 1. 
390.4      Subd. 2.  [NEW PERMITS AFTER REVOCATION.] (a) The 
390.5   commissioner shall not issue a new permit after revocation or 
390.6   reinstate a revoked permit unless the taxpayer applies for a 
390.7   permit and provides reasonable evidence of intention to comply 
390.8   with the sales and use tax laws and rules.  The commissioner may 
390.9   require the applicant to provide security, in addition to that 
390.10  authorized by section 297A.92, in an amount reasonably necessary 
390.11  to ensure compliance with the sales and use tax laws and rules. 
390.12     (b) If a taxpayer has had a permit or permits revoked three 
390.13  times in a five-year period, the commissioner shall not issue a 
390.14  new permit or reinstate the revoked permit until 24 months have 
390.15  elapsed after revocation and the taxpayer has satisfied the 
390.16  conditions for reinstatement of a revoked permit or issuance of 
390.17  a new permit imposed by this section and rules adopted under 
390.18  this section. 
390.19     (c) For purposes of this subdivision, "taxpayer" means: 
390.20     (1) an individual, if a revoked permit was issued to or in 
390.21  the name of an individual, or a corporation or partnership, if a 
390.22  revoked permit was issued to or in the name of a corporation or 
390.23  partnership; and 
390.24     (2) an officer of a corporation, a member of a partnership, 
390.25  or an individual who is liable for delinquent sales taxes, 
390.26  either for the entity for which the new or reinstated permit is 
390.27  at issue, or for another entity for which a permit was 
390.28  previously revoked, or personally as a permit holder. 
390.29     Sec. 31.  [297A.87] [FLEA MARKETS, SHOWS, AND OTHER SELLING 
390.30  EVENTS.] 
390.31     Subdivision 1.  [EVENTS AFFECTED.] (a) This section applies 
390.32  to a flea market, craft show, antique show, coin show, stamp 
390.33  show, comic book show, convention exhibit area, or similar 
390.34  selling event. 
390.35     (b) To be subject to this section, the operator of an event 
390.36  described in paragraph (a) must rent or lease space on the sale 
391.1   premises to the seller, charge the seller a registration or 
391.2   participation fee, or receive a percentage of sales or other 
391.3   consideration from a seller as a condition to participation by a 
391.4   seller in the event.  
391.5      Subd. 2.  [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 
391.6   operator of an event under subdivision 1 shall obtain one of the 
391.7   following from a person who wishes to do business as a seller at 
391.8   the event: 
391.9      (1) evidence that the person holds a valid seller's permit 
391.10  under section 297A.84; or 
391.11     (2) a written statement that the person is not offering for 
391.12  sale any item that is taxable under this chapter. 
391.13     (b) The operator shall require the evidence or statement as 
391.14  a prerequisite to participating in the event as a seller. 
391.15     Subd. 3.  [OCCASIONAL SALE PROVISIONS NOT APPLICABLE.] The 
391.16  isolated and occasional sale provisions under section 297A.67, 
391.17  subdivision 23, or under section 297A.68, subdivision 25, do not 
391.18  apply to a seller at an event under this section. 
391.19                             DIRECT PAY 
391.20     Sec. 32.  [297A.89] [DIRECT PAYMENT BY PURCHASERS 
391.21  PERMITTED.] 
391.22     Subdivision 1.  [COMMISSIONER MAY PERMIT.] The commissioner 
391.23  may permit purchasers to pay taxes imposed by this chapter 
391.24  directly to the commissioner.  Any taxes paid by purchasers 
391.25  under this section are considered use taxes, except for local 
391.26  sales taxes when no corresponding local use tax is imposed.  
391.27     Subd. 2.  [RETAILER DOES NOT COLLECT.] The retailer shall 
391.28  not collect the tax from a purchaser who furnishes to the 
391.29  retailer a copy of a certificate issued by the commissioner 
391.30  authorizing the purchaser to pay any sales or use tax due on 
391.31  purchases made by the purchaser directly to the commissioner 
391.32  under subdivision 1. 
391.33     Sec. 33.  [297A.90] [INTERSTATE MOTOR CARRIERS AS 
391.34  RETAILERS.] 
391.35     Subdivision 1.  [REGISTRATION; RECORDS.] (a) A person who 
391.36  is engaged in interstate for-hire transportation of tangible 
392.1   personal property or passengers by motor vehicle may, under 
392.2   rules prescribed by the commissioner, register as a retailer and 
392.3   pay the taxes imposed by this chapter in accordance with this 
392.4   section.  Any taxes paid under this section are use taxes, 
392.5   except local sales taxes when no corresponding local use tax is 
392.6   imposed. 
392.7      (b) As used in this section, "person" means:  (1) one who 
392.8   possesses a certificate or permit or has completed a 
392.9   registration process that authorizes for-hire transportation of 
392.10  property or passengers from the United States Department of 
392.11  Transportation, the transportation regulation board, or the 
392.12  department of transportation; (2) one who transports commodities 
392.13  defined as "exempt" in for-hire transportation in interstate 
392.14  commerce; or (3) one who transports tangible personal property 
392.15  in interstate commerce, pursuant to contracts with persons 
392.16  described in clause (1) or (2).  Persons qualifying under clause 
392.17  (2) or (3) must maintain on a current basis the same type of 
392.18  mileage records that are required by persons specified in clause 
392.19  (1) by the United States Department of Transportation.  
392.20     (c) Persons who in the course of their business are 
392.21  transporting solely their own goods in interstate commerce may 
392.22  also register as retailers under rules prescribed by the 
392.23  commissioner and pay the taxes imposed by this chapter in 
392.24  accordance with this section.  
392.25     Subd. 2.  [PAYMENT OF TAX.] (a) Persons who are registered 
392.26  as retailers may make purchases in this state or import property 
392.27  into this state without payment of the sales or use taxes 
392.28  imposed by this chapter at the time of purchase or importation, 
392.29  if the purchases or importations come within the provisions of 
392.30  this section and are made in strict compliance with the rules of 
392.31  the commissioner. 
392.32     (b) A person described in subdivision 1 may elect to pay 
392.33  directly to the commissioner any sales or use tax that may be 
392.34  due under this chapter for the acquisition of mobile 
392.35  transportation equipment and parts and accessories attached or 
392.36  to be attached to such equipment registered under section 
393.1   168.187. 
393.2      (c) The total cost of such equipment and parts and 
393.3   accessories attached or to be attached to such equipment must be 
393.4   multiplied by a fraction.  The numerator of the fraction is the 
393.5   Minnesota mileage as reported on the current pro rata 
393.6   application provided for in section 168.187 and the denominator 
393.7   of the fraction is the total mileage reported on the current pro 
393.8   rata registration application.  The amount so determined must be 
393.9   multiplied by the tax rate to obtain the tax due. 
393.10  In computing the tax under this section "sales price" does not 
393.11  include the amount of any tax, except any manufacturer's or 
393.12  importer's excise tax, imposed by the United States upon or with 
393.13  respect to retail sales, whether imposed on the retailer or the 
393.14  consumer.  
393.15     (d) A retailer covered by this section shall make a return 
393.16  and remit to the commissioner the tax due for the preceding 
393.17  calendar month in accordance with sections 289A.11 and 289A.20, 
393.18  subdivision 4. 
393.19     Subd. 3.  [REGISTRATION SUBSEQUENT TO PAYMENT OF TAX.] A 
393.20  person who has paid the tax under this chapter or chapter 297B 
393.21  and who meets the requirements of this section at the time of 
393.22  the sale, but was not registered under this section at the time 
393.23  of the sale, may register as a retailer, make a return, and file 
393.24  for a refund of the difference between the tax calculated under 
393.25  this chapter or chapter 297B and the tax calculated under 
393.26  subdivision 2.  
393.27     Subd. 4.  [AGREEMENT WITH COMMISSIONER OF PUBLIC SAFETY.] 
393.28  Notwithstanding subdivisions 1 to 3, the commissioner may enter 
393.29  into an agreement with the commissioner of public safety 
393.30  whereby, upon approval of both commissioners, the commissioner 
393.31  of public safety shall collect the sales tax on motor vehicles 
393.32  from persons defined in subdivision 1.  For the purpose of 
393.33  collecting the tax, the commissioner of public safety shall act 
393.34  as the agent of the commissioner of revenue and shall be subject 
393.35  to all rules consistent with this chapter that may be prescribed 
393.36  by the commissioner. 
394.1                             ENFORCEMENT
394.2      Sec. 34.  [297A.91] [SEIZURE; COURT REVIEW.] 
394.3      Subdivision 1.  [SEIZURE OF PROPERTY USED IN ILLEGAL 
394.4   TRANSPORT.] (a) If the retailer does not have a sales or use tax 
394.5   permit and has been engaging in transporting personal property 
394.6   into the state without payment of the tax, the commissioner of 
394.7   revenue or the commissioner's agents may seize in the name of 
394.8   the state any truck, automobile, or means of transportation not 
394.9   owned or operated by a common carrier, used in the illegal 
394.10  importation and transportation of any tangible personal property 
394.11  by a retailer or the retailer's agent or employee.  The 
394.12  commissioner may demand the forfeiture and sale of the truck, 
394.13  automobile, or other means of transportation together with the 
394.14  property being transported illegally, unless the owner 
394.15  establishes to the satisfaction of the commissioner or the court 
394.16  that the owner had no notice or knowledge or reason to believe 
394.17  that the vehicle was used or intended to be used in any such 
394.18  violation. 
394.19     (b) Within two days after the seizure, the person making 
394.20  the seizure shall deliver an inventory of the vehicle and 
394.21  property seized to the person from whom the seizure was made, if 
394.22  known, and to any person known or believed to have any right, 
394.23  title, interest or lien on the vehicle or property.  The person 
394.24  making the seizure shall also file a copy of the inventory with 
394.25  the commissioner.  
394.26     Subd. 2.  [COURT REVIEW OF FORFEITURE.] (a) Within ten days 
394.27  after the date of service of the inventory, the person from whom 
394.28  the vehicle and property were seized or any person claiming an 
394.29  interest in the vehicle or property may file with the 
394.30  commissioner a demand for a judicial determination of the 
394.31  question of whether the vehicle or property was lawfully subject 
394.32  to seizure and forfeiture.  The commissioner, within 30 days, 
394.33  shall institute an action in the district court of the county 
394.34  where the seizure was made to determine the issue of forfeiture. 
394.35     (b) The action must be brought in the name of the state and 
394.36  prosecuted by the county attorney or the attorney general.  The 
395.1   court shall hear the action without a jury and shall determine 
395.2   the issues of fact and law involved.  If a judgment of 
395.3   forfeiture is entered and is not stayed pending an appeal, the 
395.4   commissioner may have the forfeited vehicle and property sold at 
395.5   public auction as provided by law.  
395.6      Subd. 3.  [TREATMENT OF SEIZED PROPERTY.] If a demand for 
395.7   judicial determination is made and no action is commenced as 
395.8   provided in this subdivision, the vehicle and property must be 
395.9   released by the commissioner and redelivered to the person 
395.10  entitled to it.  If no demand is made, the vehicle and property 
395.11  seized are considered forfeited to the state by operation of law 
395.12  and may be disposed of by the commissioner as if there was a 
395.13  judgment of forfeiture.  The forfeiture and sale of the 
395.14  automobile, truck, or other means of transportation, and of the 
395.15  property being transported illegally in it, are a penalty for 
395.16  the violation of this chapter.  After deducting the expense of 
395.17  keeping the vehicle and property, the fee for seizure, and the 
395.18  costs of the sale, the commissioner shall pay liens from the 
395.19  funds collected.  The commissioner shall pay all liens, 
395.20  according to their priority, that are established at the hearing 
395.21  as being bona fide and as existing without the lienor having any 
395.22  notice or knowledge that the vehicle or property was being used 
395.23  or was intended to be used for or in connection with any such 
395.24  violation as specified in the order of the court.  The 
395.25  commissioner shall pay the balance of the proceeds into the 
395.26  state treasury to be credited to the general fund.  The state is 
395.27  not liable for any liens in excess of the proceeds from the sale 
395.28  after allowable deductions.  A sale under this section frees the 
395.29  vehicle and property sold from all liens.  The order of the 
395.30  district court may be appealed as in other civil cases.  
395.31     Sec. 35.  [297A.92] [SECURITY.] 
395.32     Subdivision 1.  [AMOUNT OF SECURITY.] To ensure compliance 
395.33  with the taxes imposed by this chapter, the commissioner may 
395.34  require a retailer subject to this chapter to deposit security 
395.35  with the commissioner.  The security must be in the form and 
395.36  amount the commissioner requires, but not more than twice the 
396.1   retailer's estimated average liability for the period for which 
396.2   the returns are required to be filed, or $10,000, whichever is 
396.3   less.  The amount of security may be increased or decreased by 
396.4   the commissioner, subject to the limitations in this section.  
396.5      Subd. 2.  [AUCTIONS OF SECURITY.] The commissioner may sell 
396.6   property deposited as security at public auction if necessary to 
396.7   recover the amount required to be collected, including any 
396.8   interest and penalties.  Notice of the sale must be served upon 
396.9   the person who deposited the security.  It must be served 
396.10  personally, or by mail as prescribed for the service of a notice 
396.11  of a deficiency.  After a sale any surplus above the amount due 
396.12  not required as security under this section must be returned to 
396.13  the person who deposited the security.  
396.14     Subd. 3.  [BOND.] In lieu of security, the commissioner may 
396.15  require a retailer to file a bond.  The bond must be issued by a 
396.16  surety company authorized to transact business in this state and 
396.17  approved by the commissioner of commerce as to solvency and 
396.18  responsibility.  
396.19     Sec. 36.  [297A.93] [JEOPARDY ASSESSMENT AND COLLECTION.] 
396.20     (a) If the commissioner has reason to believe that the 
396.21  person required to file the return is about to leave the state 
396.22  or remove the person's property from this state with the purpose 
396.23  of evading the tax and penalties imposed by this chapter, or 
396.24  that the collection of the tax will be jeopardized by delays 
396.25  incident to other methods of collection, the commissioner may 
396.26  immediately declare the person's reporting period at an end and 
396.27  assess a tax on the basis of the commissioner's own knowledge or 
396.28  information available.  The commissioner may then demand 
396.29  immediate payment of the tax, and, if payment is not immediately 
396.30  made, collect the tax by any method prescribed in chapter 270. 
396.31     (b) It is not a defense to an assessment made under this 
396.32  section that the tax period has not terminated, that the time 
396.33  otherwise allowed by law for filing a return has not expired, 
396.34  that the notices otherwise required by law for making an 
396.35  assessment have not been given, or that the time otherwise 
396.36  allowed by law for taking or prosecuting an appeal or for paying 
397.1   the tax has not expired. 
397.2                         DEPOSIT OF REVENUES
397.3      Sec. 37.  [297A.94] [DEPOSIT OF REVENUES.] 
397.4      (a) Except as provided in this section, the commissioner 
397.5   shall deposit the revenues, including interest and penalties, 
397.6   derived from the taxes imposed by this chapter in the state 
397.7   treasury and credit them to the general fund.  
397.8      (b) The commissioner shall deposit taxes in the Minnesota 
397.9   agricultural and economic account in the special revenue fund if:
397.10     (1) the taxes are derived from sales and use of property 
397.11  and services purchased for the construction and operation of an 
397.12  agricultural resource project; and 
397.13     (2) the purchase was made on or after the date on which a 
397.14  conditional commitment was made for a loan guaranty for the 
397.15  project under section 41A.04, subdivision 3. 
397.16  The commissioner of finance shall certify to the commissioner 
397.17  the date on which the project received the conditional 
397.18  commitment.  The amount deposited in the loan guaranty account 
397.19  must be reduced by any refunds and by the costs incurred by the 
397.20  department of revenue to administer and enforce the assessment 
397.21  and collection of the taxes.  
397.22     (c) The commissioner shall deposit the revenues, including 
397.23  interest and penalties, derived from the taxes imposed on sales 
397.24  and purchases included in section 297A.61, subdivision 16, 
397.25  paragraphs (b) and (f), in the state treasury, and credit them 
397.26  as follows: 
397.27     (1) first to the general obligation special tax bond debt 
397.28  service account in each fiscal year the amount required by 
397.29  section 16A.661, subdivision 3, paragraph (b); and 
397.30     (2) after the requirements of clause (1) have been met, the 
397.31  balance to the general fund. 
397.32     (d) The commissioner shall deposit the revenues, including 
397.33  interest and penalties, collected under section 297A.64, 
397.34  subdivision 5, in the state treasury and credit them to the 
397.35  general fund.  By July 15 of each year the commissioner shall 
397.36  transfer to the highway user tax distribution fund an amount 
398.1   equal to the excess fees collected under section 297A.64, 
398.2   subdivision 5, for the previous calendar year. 
398.3                      LOCAL SALES AND USE TAXES
398.4      Sec. 38.  [297A.95] [COORDINATION OF STATE AND LOCAL SALES 
398.5   TAX RATES.] 
398.6      In preparing and distributing a sales tax schedule for use 
398.7   within a local jurisdiction with a separate general sales tax, 
398.8   the state department of revenue shall coordinate the state and 
398.9   local sales tax so that a sale of $1 reflects a tax equal to the 
398.10  combination of the state and local sales tax rates.  The 
398.11  combined sales tax on other sales amounts must also reflect the 
398.12  coordinated rather than the separate effects of the state and 
398.13  local sales taxes.  The schedule must be coordinated as long as 
398.14  the local sales tax is in effect.  If the sales tax percentage 
398.15  is changed for either of the taxes, the schedule must be 
398.16  adjusted to reflect the change. 
398.17     Sec. 39.  [297A.96] [LOCAL ADMISSIONS AND AMUSEMENT TAXES; 
398.18  EXEMPTION FOR ARTS ORGANIZATIONS.] 
398.19     If an event is sponsored by a nonprofit arts organization, 
398.20  then amounts charged for admission to the event or to the 
398.21  organization's premises are not subject to a tax imposed by a 
398.22  local unit of government or imposed on sales taking place in a 
398.23  single named local unit of government on sales of admissions or 
398.24  amusements, under a law other than a general sales tax law. 
398.25     Sec. 40.  [297A.97] [OUTSTATE RETAILERS; LOCAL TAX 
398.26  COLLECTION NOT REQUIRED.] 
398.27     A retailer not maintaining a place of business in this 
398.28  state is not required to collect taxes imposed by a political 
398.29  subdivision of this state.  
398.30     Sec. 41.  [297A.98] [LOCAL GOVERNMENTS EXEMPT FROM LOCAL 
398.31  SALES TAXES.] 
398.32     Notwithstanding any other law, ordinance, or charter 
398.33  provision, a political subdivision of the state is not required 
398.34  to pay any general sales tax imposed by a political subdivision 
398.35  of the state.  
398.36     Sec. 42.  [297A.99] [LOCAL SALES TAXES.] 
399.1      Subdivision 1.  [AUTHORIZATION; SCOPE.] (a) A political 
399.2   subdivision of this state may impose a general sales tax if 
399.3   permitted by special law or if the political subdivision enacted 
399.4   and imposed the tax before the effective date of section 
399.5   477A.016 and its predecessor provision. 
399.6      (b) This section governs the imposition of a general sales 
399.7   tax by the political subdivision.  The provisions of this 
399.8   section preempt the provisions of any special law: 
399.9      (1) enacted before June 2, 1997, or 
399.10     (2) enacted on or after June 2, 1997, that does not 
399.11  explicitly exempt the special law provision from this section's 
399.12  rules by reference. 
399.13     (c) This section does not apply to or preempt a sales tax 
399.14  on motor vehicles or a special excise tax on motor vehicles. 
399.15     Subd. 2.  [LOCAL RESOLUTION BEFORE APPLICATION FOR 
399.16  AUTHORITY.] Before the governing body of a political subdivision 
399.17  requests legislative approval of a special law for a local sales 
399.18  tax that is administered under this section, it shall adopt a 
399.19  resolution indicating its approval of the tax.  The resolution 
399.20  must include, at a minimum, information on the proposed tax 
399.21  rate, how the revenues will be used, the total revenue that will 
399.22  be raised before the tax expires, and the estimated length of 
399.23  time that the tax will be in effect.  This subdivision applies 
399.24  to local laws enacted after June 30, 1998.  
399.25     Subd. 3.  [REQUIREMENTS FOR ADOPTION, USE, TERMINATION.] (a)
399.26  Imposition of a local sales tax is subject to approval by voters 
399.27  of the political subdivision at a general election.  
399.28     (b) The proceeds of the tax must be dedicated exclusively 
399.29  to payment of the cost of a specific capital improvement which 
399.30  is designated at least 90 days before the referendum on 
399.31  imposition of the tax is conducted. 
399.32     (c) The tax must terminate after the improvement designated 
399.33  under paragraph (b) has been completed. 
399.34     (d) After a sales tax imposed by a political subdivision 
399.35  has expired or been terminated, the political subdivision is 
399.36  prohibited from imposing a local sales tax for a period of one 
400.1   year.  Notwithstanding subdivision 13, this paragraph applies to 
400.2   all local sales taxes in effect at the time of or imposed after 
400.3   the date of enactment of this section.  
400.4      Subd. 4.  [TAX BASE.] (a) The tax applies to sales taxable 
400.5   under this chapter that occur within the political subdivision. 
400.6      (b) Taxable services are subject to a political 
400.7   subdivision's sales tax, if they are performed either: 
400.8      (1) within the political subdivision, or 
400.9      (2) partly within and partly without the political 
400.10  subdivision and more of the service is performed within the 
400.11  political subdivision, based on the cost of performance. 
400.12     Subd. 5.  [TAX RATE.] (a) The tax rate is as specified in 
400.13  the special law authorization and as imposed by the political 
400.14  subdivision. 
400.15     (b) The full political subdivision rate applies to any 
400.16  sales that are taxed at a state rate less than or more than the 
400.17  state general sales and use tax rate. 
400.18     Subd. 6.  [USE TAX.] A compensating use tax applies, at the 
400.19  same rate as the sales tax, on the use, storage, distribution, 
400.20  or consumption of tangible personal property or taxable services.
400.21     Subd. 7.  [EXEMPTIONS.] (a) All goods or services that are 
400.22  otherwise exempt from taxation under this chapter are exempt 
400.23  from a political subdivision's tax. 
400.24     (b) The gross receipts from the sale of tangible personal 
400.25  property that meets the requirement of section 297A.68, 
400.26  subdivision 13 or 14, are exempt, except the qualification test 
400.27  applies based on the boundaries of the political subdivision 
400.28  instead of the state of Minnesota. 
400.29     (c) All mobile transportation equipment, and parts and 
400.30  accessories attached to or to be attached to the equipment are 
400.31  exempt, if purchased by a holder of a motor carrier direct pay 
400.32  permit under section 297A.90.  
400.33     Subd. 8.  [CREDIT FOR OTHER LOCAL TAXES.] If a person paid 
400.34  sales or use tax to another political subdivision of this state 
400.35  on an item subject to tax under this section, a credit applies 
400.36  against the tax imposed under this section.  The credit equals 
401.1   the tax the person paid to the other political subdivision for 
401.2   the item.  
401.3      Subd. 9.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 
401.4   (a) The commissioner of revenue shall collect the taxes subject 
401.5   to this section.  The commissioner may collect the tax with the 
401.6   state sales and use tax.  All taxes under this section are 
401.7   subject to the same penalties, interest, and enforcement 
401.8   provisions as apply to the state sales and use tax. 
401.9      (b) A request for a refund of state sales tax paid in 
401.10  excess of the amount of tax legally due includes a request for a 
401.11  refund of the political subdivision taxes paid on the goods or 
401.12  services.  The commissioner shall refund to the taxpayer the 
401.13  full amount of the political subdivision taxes paid on exempt 
401.14  sales or use. 
401.15     (c) A political subdivision that is collecting and 
401.16  administering its own sales and use tax before January 1, 1998, 
401.17  may elect to be exempt from this subdivision and subdivision 11. 
401.18     Subd. 10.  [USE OF ZIP CODE IN DETERMINING LOCATION OF 
401.19  SALE.] To determine whether to impose the local tax, the 
401.20  retailer may use zip codes if the zip code area is entirely 
401.21  within the political subdivision.  When a zip code area is not 
401.22  entirely within a political subdivision, the retailer shall not 
401.23  collect the local tax if the purchaser notifies the retailer 
401.24  that the purchaser's delivery address is outside of the 
401.25  political subdivision, unless the retailer verifies that the 
401.26  delivery address is in the political subdivision using a means 
401.27  other than the zip code.  Notwithstanding subdivision 13, this 
401.28  subdivision applies to all local sales taxes without regard to 
401.29  the date of authorization.  
401.30     Subd. 11.  [REVENUES; COST OF COLLECTION.] The commissioner 
401.31  shall remit the proceeds of the tax, less refunds and a 
401.32  proportionate share of the cost of collection, at least 
401.33  quarterly, to the political subdivision.  The commissioner shall 
401.34  deduct from the proceeds remitted an amount that equals 
401.35     (1) the direct and indirect costs of the department to 
401.36  administer, audit, and collect the political subdivision's tax, 
402.1   plus 
402.2      (2) the political subdivision's proportionate share of the 
402.3   indirect cost of administering all taxes under this section. 
402.4      Subd. 12.  [EFFECTIVE DATES; NOTIFICATION.] (a) A political 
402.5   subdivision may impose a tax under this section starting only on 
402.6   the first day of a calendar quarter.  A political subdivision 
402.7   may repeal a tax under this section stopping only on the last 
402.8   day of a calendar quarter. 
402.9      (b) The political subdivision shall notify the commissioner 
402.10  of revenue at least 90 days before imposing or repealing a tax 
402.11  under this section. 
402.12     Subd. 13.  [APPLICATION.] This section applies to all local 
402.13  sales taxes that were authorized before, on, or after June 2, 
402.14  1997. 
402.15     Sec. 43.  [297A.991] [REPORTING OF SALES TAX ON MINNESOTA 
402.16  GOVERNMENTS.] 
402.17     Subdivision 1.  [COMMISSIONER OF REVENUE TO REPORT.] For 
402.18  each fiscal year, the commissioner shall estimate the amount of 
402.19  revenues derived from imposing the tax under this chapter and 
402.20  chapter 297B on state agencies and political subdivisions.  The 
402.21  commissioner shall report this amount to the commissioner of 
402.22  finance before the time for filing reports for the fiscal year 
402.23  with the United States Department of Commerce. 
402.24     Subd. 2.  [COMMISSIONER OF FINANCE TO REPORT.] In reporting 
402.25  the sales tax and sales tax on motor vehicles collections to the 
402.26  United States Department of Commerce, the commissioner of 
402.27  finance shall exclude the estimated amount from the sales and 
402.28  motor vehicle collections.  Sales tax and sales tax on motor 
402.29  vehicles revenues received from political subdivisions must be 
402.30  reported as intergovernmental grants or similar 
402.31  intergovernmental revenue.  The amount of the sales tax and 
402.32  sales tax on motor vehicles paid by state agencies must be 
402.33  reported as reduced state expenditures. 
402.34     Sec. 44.  [REVISOR'S INSTRUCTIONS.] 
402.35     Subdivision 1.  [CODIFICATION OF LOCAL LAWS.] In the next 
402.36  edition of Minnesota Statutes, after consultation with the 
403.1   chairs of the house and senate tax committees and with the 
403.2   commissioner of revenue, the revisor of statutes may codify 
403.3   local laws authorizing the imposition of a general sales or 
403.4   general sales and use tax. 
403.5      Subd. 2.  [INTERNAL REFERENCES.] In the next edition of 
403.6   Minnesota Statutes, the revisor of statutes shall change any 
403.7   references to a repealed section in Minnesota Statutes, chapter 
403.8   297A, to the appropriate recodified section. 
403.9      Subd. 3.  [AMENDMENTS TO REPEALED 
403.10  SECTIONS.] Notwithstanding any law to the contrary, if a 
403.11  provision of a section of Minnesota Statutes repealed by this 
403.12  article is amended or repealed during the same legislative 
403.13  session, the amendment or repealer shall supersede the 
403.14  provisions of this article, and the revisor shall codify the 
403.15  amendment or repealer consistent with the recodification of the 
403.16  affected section by this article. 
403.17     Sec. 45.  [REPEALER.] 
403.18     Minnesota Statutes 1998, sections 297A.01; 297A.02; 
403.19  297A.022; 297A.023; 297A.03; 297A.04; 297A.041; 297A.06; 
403.20  297A.065; 297A.07; 297A.09; 297A.10; 297A.11; 297A.12; 297A.13; 
403.21  297A.135; 297A.14; 297A.141; 297A.15; 297A.16; 297A.17; 297A.18; 
403.22  297A.21; 297A.211; 297A.213; 297A.22; 297A.23; 297A.24; 297A.25; 
403.23  297A.2531; 297A.2545; 297A.255; 297A.256; 297A.2571; 297A.2572; 
403.24  297A.2573; 297A.259; 297A.26; 297A.28; 297A.33, subdivision 2; 
403.25  297A.44, subdivision 1; 297A.46; 297A.47; and 297A.48, are 
403.26  repealed. 
403.27     Sec. 46.  [EFFECTIVE DATE.] 
403.28     Sections 1 and 44, subdivisions 1 and 3 are effective the 
403.29  day following final enactment. 
403.30     Sections 2 and 3, paragraph (f), are effective for sales 
403.31  taxes retained after June 30, 2001. 
403.32     Section 3, paragraph (e), is effective for amounts 
403.33  collected after June 30, 2001. 
403.34     Sections 4 to 21 are effective for sales and purchases 
403.35  occurring after June 30, 2001. 
403.36     Section 22 is effective for use tax liabilities incurred 
404.1   after June 30, 2001. 
404.2      Section 23 is effective for gross receipts reported after 
404.3   June 30, 2001. 
404.4      Sections 24 and 25 are effective for offsets against taxes 
404.5   after June 30, 2001. 
404.6      Section 26 is effective for aircraft registered or licensed 
404.7   and for sales or purchases of aircraft after June 30, 2001. 
404.8      Sections 27 to 30 are effective for permits applied for, 
404.9   issued, canceled, or revoked after June 30, 2001. 
404.10     Section 31 is effective for selling events held after June 
404.11  30, 2001. 
404.12     Section 32 is effective for direct payment by purchasers 
404.13  after June 30, 2001. 
404.14     Section 33 is effective for registered motor carriers after 
404.15  June 30, 2001. 
404.16     Section 34 is effective for seizures after June 30, 2001. 
404.17     Section 35 is effective for security required, security 
404.18  auctions held, and security bonds required after June 30, 2001. 
404.19     Section 36 is effective for assessments after June 30, 2001.
404.20     Section 37 is effective for revenues deposited after June 
404.21  30, 2001. 
404.22     Section 38 is effective for sales tax schedules distributed 
404.23  after 30, 2001. 
404.24     Sections 39 to 42 are effective for local sales taxes 
404.25  collected after June 30, 2001. 
404.26     Section 43 is effective for sales taxes reported after June 
404.27  30, 2001. 
404.28     Sections 44, subdivision 2, and 45 are effective July 1, 
404.29  2001. 
404.30                             ARTICLE 17  
404.31                  SALES AND USE TAX RECODIFICATION 
404.32                         CONFORMING CHANGES 
404.33     Section 1.  Minnesota Statutes 1998, section 115A.69, 
404.34  subdivision 6, is amended to read: 
404.35     Subd. 6.  [PROPERTY EXEMPT FROM TAXATION.] Any real or 
404.36  personal property owned, used, or occupied by the district for 
405.1   any authorized purpose is declared to be acquired, owned, used 
405.2   and occupied for public and governmental purposes, and shall be 
405.3   exempted from taxation by the state or any political subdivision 
405.4   of the state, except to the extent that the property is subject 
405.5   to the sales and use tax under chapter 297A, provided that those 
405.6   properties shall be subject to special assessments levied by a 
405.7   political subdivision for a local improvement in amounts 
405.8   proportionate to and not exceeding the special benefit received 
405.9   by the properties from the improvement.  No possible use of the 
405.10  properties in any manner different from their use for solid 
405.11  waste management at the time shall be considered in determining 
405.12  the special benefit received by the properties.  
405.13     Sec. 2.  Minnesota Statutes 1998, section 116A.25, is 
405.14  amended to read: 
405.15     116A.25 [PROPERTY EXEMPT FROM TAXATION.] 
405.16     Any properties, real or personal, owned, leased, 
405.17  controlled, used, or occupied by a water or sewer or water and 
405.18  sewer commission or board for any purpose referred to in 
405.19  sections 116A.01 to 116A.26 are declared to be acquired, owned, 
405.20  leased, controlled, used and occupied for public, governmental, 
405.21  and municipal purposes, and shall be exempt from taxation by the 
405.22  state or any political subdivision of the state, except to the 
405.23  extent that the property is subject to the sales and use tax 
405.24  under chapter 297A, provided that such properties shall be 
405.25  subject to special assessments levied by a political subdivision 
405.26  for a local improvement in amounts proportionate to and not 
405.27  exceeding the special benefit received by the properties from 
405.28  such improvement.  No possible use of any such properties in any 
405.29  manner different from their use as part of a distribution or 
405.30  disposal system at the time shall be considered in determining 
405.31  the special benefit received by such properties.  All such 
405.32  assessments shall be subject to final confirmation by the county 
405.33  board or boards in whose jurisdiction the system is constructed 
405.34  and whose determination of the benefits shall be conclusive upon 
405.35  the political subdivision levying the assessment.  
405.36     Sec. 3.  Minnesota Statutes 1998, section 360.035, is 
406.1   amended to read: 
406.2      360.035 [EXEMPTION FROM TAXATION.] 
406.3      Any properties, real or personal, acquired, owned, leased, 
406.4   controlled, used, or occupied by a municipality for any of the 
406.5   purposes of sections 360.011 to 360.076, are declared to be 
406.6   acquired, owned, leased, controlled, used, or occupied for 
406.7   public, governmental, and municipal purposes, and shall be 
406.8   exempt from taxation by the state or any of its political 
406.9   subdivisions, except to the extent that the property is subject 
406.10  to the sales and use tax under chapter 297A.  Nothing contained 
406.11  in sections 360.011 to 360.076 shall be construed as exempting 
406.12  properties, real or personal, leased from the municipality to a 
406.13  tenant or lessee who is a private person, association, or 
406.14  corporation from assessments or taxes.  Leased municipal airport 
406.15  property that is not located at the airport operated by the 
406.16  metropolitan airports commission shall not be subject to payment 
406.17  of any portion of rentals under section 272.68, subdivision 3. 
406.18     Sec. 4.  Minnesota Statutes 1998, section 458A.09, is 
406.19  amended to read: 
406.20     458A.09 [EXEMPTION FROM TAXATION.] 
406.21     Notwithstanding any other provision of law to the contrary, 
406.22  the properties, moneys, and other assets of the commission, and 
406.23  all revenues or other income of the commission shall be exempt 
406.24  from all taxation, licenses, fees, or charges of any kind 
406.25  imposed by the state or by any county, municipality, political 
406.26  subdivision, taxing district, or other public agency or body of 
406.27  the state, except to the extent that the property is subject to 
406.28  the sales and use tax under chapter 297A. 
406.29     Sec. 5.  Minnesota Statutes 1998, section 458A.30, is 
406.30  amended to read: 
406.31     458A.30 [TAX EXEMPTION.] 
406.32     Notwithstanding any other provisions of law to the 
406.33  contrary, the property, moneys, and other assets of the 
406.34  authority, or revenues or other income of the authority, and all 
406.35  bonds, certificates of indebtedness, or other obligations issued 
406.36  by the authority, with the approval of the city council, and the 
407.1   interest thereon, shall be exempt from all taxation, licenses, 
407.2   fees, or charges of any kind imposed by the state of Minnesota, 
407.3   or by any county, municipality, political subdivision, taxing 
407.4   district, or other public agency or body of the state, including 
407.5   but not limited to the excise tax on gasoline or special fuel 
407.6   under chapter 296A, except to the extent that the property is 
407.7   subject to the sales and use tax under chapter 297A. 
407.8      Sec. 6.  Minnesota Statutes 1998, section 458D.23, is 
407.9   amended to read: 
407.10     458D.23 [PROPERTY EXEMPT FROM TAXATION.] 
407.11     Any properties, real or personal, owned, leased, 
407.12  controlled, used, or occupied by the sanitary sewer board for 
407.13  any purpose under sections 458D.01 to 458D.24 are declared to be 
407.14  acquired, owned, leased, controlled, used and occupied for 
407.15  public, governmental, and municipal purposes, and shall be 
407.16  exempt from taxation by the state or any political subdivision 
407.17  of the state, except to the extent that the property is subject 
407.18  to the sales and use tax under chapter 297A, provided that such 
407.19  properties shall be subject to special assessments levied by a 
407.20  political subdivision for a local improvement in amounts 
407.21  proportionate to and not exceeding the special benefit received 
407.22  by the properties from such improvement.  No possible use of any 
407.23  such properties in any manner different from their use as part 
407.24  of a disposal system at the time shall be considered in 
407.25  determining the special benefit received by such properties.  
407.26  All such assessments shall be subject to final approval by the 
407.27  board, whose determination of the benefits shall be conclusive 
407.28  upon the political subdivision levying the assessment.  All 
407.29  bonds, certificates of indebtedness or other obligations of the 
407.30  board, and the interest thereon, shall be exempt from taxation 
407.31  by the state or any political subdivision of the state. 
407.32     Sec. 7.  Minnesota Statutes 1999 Supplement, section 
407.33  469.101, subdivision 2, is amended to read: 
407.34     Subd. 2.  [ACQUIRE PROPERTY.] The economic development 
407.35  authority may acquire by lease, purchase, gift, devise, or 
407.36  condemnation proceedings the needed right, title, and interest 
408.1   in property to create economic development districts.  It shall 
408.2   pay for the property out of money it receives under sections 
408.3   469.090 to 469.108.  It may hold and dispose of the property 
408.4   subject to the limits and conditions in sections 469.090 to 
408.5   469.108.  The title to property acquired by condemnation or 
408.6   purchase must be in fee simple, absolute.  The authority may 
408.7   accept an interest in property acquired in another way subject 
408.8   to any condition of the grantor or donor.  The condition must be 
408.9   consistent with the proper use of the property under sections 
408.10  469.090 to 469.108.  Property acquired, owned, leased, 
408.11  controlled, used, or occupied by the authority for any of the 
408.12  purposes of this section is for public governmental and 
408.13  municipal purposes and is exempt from taxation by the state or 
408.14  by its political subdivisions, except to the extent that the 
408.15  property is subject to the sales and use tax under chapter 
408.16  297A.  The exemption applies only while the authority holds 
408.17  property for its own purpose.  The exemption is subject to the 
408.18  provisions of section 272.02, subdivision 39.  When the property 
408.19  is sold it becomes subject to taxation. 
408.20     Sec. 8.  Minnesota Statutes 1998, section 469.127, is 
408.21  amended to read: 
408.22     469.127 [TAX STATUS.] 
408.23     The pedestrian skyway system, underground pedestrian 
408.24  concourse, the people mover system, and publicly owned parking 
408.25  structures are declared to be public property to be used for 
408.26  essential public and governmental purposes.  They are exempt 
408.27  from all taxes and special assessments of the city, county, 
408.28  state, or any political subdivision thereof, except to the 
408.29  extent that the property is subject to the sales and use tax 
408.30  under chapter 297A.  Taxes do not include charges for utilities 
408.31  and special services such as heat, water, electricity, gas, 
408.32  sewage disposal, or garbage removal.  
408.33     Sec. 9.  Minnesota Statutes 1998, section 473.448, is 
408.34  amended to read: 
408.35     473.448 [TRANSIT ASSETS EXEMPT FROM TAX BUT MUST PAY 
408.36  ASSESSMENTS.] 
409.1      (a) Notwithstanding any other provision of law to the 
409.2   contrary, the properties, moneys, and other assets of the 
409.3   council used for transit operations or for special 
409.4   transportation services and all revenues or other income from 
409.5   the council's transit operations or special transportation 
409.6   services are exempt from all taxation, licenses, or fees imposed 
409.7   by the state or by any county, municipality, political 
409.8   subdivision, taxing district, or other public agency or body of 
409.9   the state, except to the extent that the property is subject to 
409.10  the sales and use tax under chapter 297A. 
409.11     (b) Notwithstanding paragraph (a), the council's transit 
409.12  properties are subject to special assessments levied by a 
409.13  political subdivision for a local improvement in amounts 
409.14  proportionate to and not exceeding the special benefit received 
409.15  by the properties from the improvement.  
409.16     Sec. 10.  Minnesota Statutes 1998, section 473.545, is 
409.17  amended to read: 
409.18     473.545 [PROPERTY EXEMPT FROM TAXATION.] 
409.19     Any properties, real or personal, owned, leased, 
409.20  controlled, used, or occupied by the council for any purpose 
409.21  referred to in Minnesota Statutes 1984, section 473.502, are 
409.22  declared to be acquired, owned, leased, controlled, used and 
409.23  occupied for public, governmental, and municipal purposes, and 
409.24  shall be exempt from taxation by the state or any political 
409.25  subdivision of the state, except to the extent that the property 
409.26  is subject to the sales and use tax under chapter 297A, provided 
409.27  that such properties shall be subject to special assessments 
409.28  levied by a political subdivision for a local improvement in 
409.29  amounts proportionate to and not exceeding the special benefit 
409.30  received by the properties from such improvement.  No possible 
409.31  use of any such properties in any manner different from their 
409.32  use as part of the metropolitan disposal system at the time 
409.33  shall be considered in determining the special benefit received 
409.34  by such properties.  All such assessments shall be subject to 
409.35  final confirmation by the metropolitan council, whose 
409.36  determination of the benefits shall be conclusive upon the 
410.1   political subdivision levying the assessment.  
410.2      Sec. 11.  Minnesota Statutes 1998, section 473.608, 
410.3   subdivision 2, is amended to read: 
410.4      Subd. 2.  [GETTING AIRPORT PROPERTY.] It may acquire by 
410.5   lease, purchase, gift, devise, or condemnation proceedings all 
410.6   necessary right, title, and interest in and to lands and 
410.7   personal property required for airports and all other real or 
410.8   personal property required for the purposes contemplated by 
410.9   sections 473.601 to 473.679, within the metropolitan area, pay 
410.10  therefor out of funds obtained as hereinafter provided, and hold 
410.11  and dispose of the same, subject to the limitations and 
410.12  conditions herein prescribed except that the corporation may not 
410.13  acquire by any means lands or personal property for a major new 
410.14  airport.  Title to any such property acquired by condemnation or 
410.15  purchase shall be in fee simple, absolute, unqualified in any 
410.16  way, but any such real or personal property or interest therein 
410.17  otherwise acquired may be so acquired or accepted subject to any 
410.18  condition which may be imposed thereon by the grantor or donor 
410.19  and agreed to by the corporation, not inconsistent with the 
410.20  proper use of the property by the corporation for the purposes 
410.21  herein provided.  Any properties, real or personal, acquired, 
410.22  owned, leased, controlled, used, and occupied by the corporation 
410.23  for any of the purposes of sections 473.601 to 473.679, are 
410.24  declared to be acquired, owned, leased, controlled, used, and 
410.25  occupied for public, governmental, and municipal purposes, and 
410.26  shall be exempt from taxation by the state or any of its 
410.27  political subdivisions, except to the extent that the property 
410.28  is subject to the sales and use tax under chapter 297A.  Nothing 
410.29  contained in sections 473.601 to 473.679, shall be construed as 
410.30  exempting properties, real or personal, leased from the 
410.31  metropolitan airports commission to a tenant or lessee who is a 
410.32  private person, association, or corporation from assessments or 
410.33  taxes. 
410.34                             ARTICLE 18 
410.35           CORPORATIONS CREATED BY POLITICAL SUBDIVISIONS
410.36     Section 1.  Minnesota Statutes 1998, section 238.08, 
411.1   subdivision 3, is amended to read: 
411.2      Subd. 3.  [MUNICIPAL OPERATION.] Nothing in this chapter 
411.3   shall be construed to limit any municipality from the right to 
411.4   construct, purchase, and operate a cable communications 
411.5   system systems, or, to operate facilities and channels for 
411.6   community television, including, but not limited to, public, 
411.7   educational, and governmental access and local origination 
411.8   programming.  Any municipal system, including the operation of 
411.9   community television by a municipality, shall be subject to this 
411.10  chapter to the same extent as would any nonpublic cable 
411.11  communications system. 
411.12     Sec. 2.  [465.717] [CREATION OF CORPORATIONS BY POLITICAL 
411.13  SUBDIVISIONS.] 
411.14     Subdivision 1.  [STATUTORY AUTHORIZATION REQUIRED.] A 
411.15  county, home rule charter city, statutory city, town, school 
411.16  district, or other political subdivision, including a joint 
411.17  powers entity operating under section 471.59, may not create a 
411.18  corporation, whether for profit or not for profit, unless 
411.19  explicitly authorized to do so by law.  
411.20     Subd. 2.  [AUTHORITY TO INCORPORATE A JOINT POWERS ENTITY.] 
411.21  A joint powers entity created under section 471.59 may 
411.22  incorporate itself as a nonprofit under chapter 317A.  A 
411.23  corporation created under this subdivision shall comply with 
411.24  every law that applies to the participating political 
411.25  subdivisions and shall possess no greater authority or power 
411.26  than that held by the joint powers entity itself. 
411.27     Sec. 3.  [465.719] [EXISTING CORPORATIONS CREATED BY 
411.28  POLITICAL SUBDIVISIONS.] 
411.29     Subdivision 1.  [DEFINITIONS.] The following definitions 
411.30  apply to this section: 
411.31     (a) "Political subdivision" means a county, a statutory or 
411.32  home rule charter city, a town, a school district, or other 
411.33  political subdivision of the state.  Political subdivision 
411.34  includes a political subdivision acting individually or jointly 
411.35  as provided under section 471.59. 
411.36     (b) "Corporation" means a corporation created by a 
412.1   political subdivision before May 31, 1997, in which (1) the 
412.2   corporation's articles of incorporation or bylaws provide for 
412.3   the governing body of the political subdivision to serve as a 
412.4   corporation's governing board; (2) the articles of incorporation 
412.5   or bylaws provide for appointed officials of the political 
412.6   subdivision or members of the governing body of the political 
412.7   subdivision or both to be automatically appointed to the board 
412.8   solely by virtue of their appointment or election to office and 
412.9   they constitute a majority of the corporation's board members; 
412.10  or (3) the governing body of the political subdivision approves 
412.11  the budget or expenditures of the corporation for purposes other 
412.12  than those related to oversight of public grants or loans made 
412.13  to the corporation under a competitive process for which other 
412.14  entities are eligible.  Corporation does not include: 
412.15     (1) a corporation established under chapters 453, 453A, or 
412.16  sections 119A.374 to 119A.376; 245.62 to 245.66; 
412.17     (2) a nonprofit corporation created to raise funds for use 
412.18  by a political subdivision if less than a majority of the board 
412.19  of directors of the corporation are members of the governing 
412.20  body of the political subdivision appointed to the board of 
412.21  directors by virtue of their election to office; or 
412.22     (3) a corporation created by a political subdivision 
412.23  pursuant to state statute or special law or federal law. 
412.24     Subd. 2.  [RESOLUTION REQUIRED.] In order to provide for 
412.25  the continued existence of a corporation created by a political 
412.26  subdivision, the political subdivision, or its successor, that 
412.27  created the corporation must adopt a resolution at a regularly 
412.28  scheduled meeting of the governing body of the political 
412.29  subdivision.  The resolution must include the information 
412.30  required in subdivisions 4 to 9.  A certified copy of the 
412.31  resolution must be filed with the secretary of state.  If a 
412.32  resolution is not adopted within three years of the effective 
412.33  date of this section, the board of directors of the corporation 
412.34  shall direct and authorize an officer or designee of the 
412.35  corporation to file with the secretary of state immediately a 
412.36  notice of intent to dissolve the corporation and then as soon as 
413.1   possible, complete dissolution of the corporation as provided in 
413.2   the corporation's articles of incorporation and bylaws, and the 
413.3   law under which the corporation was formed. 
413.4      Subd. 3.  [AMENDED ARTICLES OF INCORPORATION, BYLAWS.] If 
413.5   the political subdivision adopts a resolution under subdivision 
413.6   2, the board of directors of the corporation shall direct and 
413.7   authorize an officer or designee of the corporation to file 
413.8   amended articles of incorporation, if necessary, as soon as 
413.9   practicable after adoption of the resolution to make the 
413.10  articles of incorporation consistent with the resolution and to 
413.11  provide for the application of the laws under subdivision 9.  
413.12  Thereafter, the corporation may not amend its articles of 
413.13  incorporation unless the political subdivision adopts a 
413.14  resolution in support of the change as provided in subdivision 2 
413.15  for ratifying existing corporations and a certified copy of the 
413.16  resolution is attached to the amended articles of incorporation 
413.17  filed with the secretary of state. 
413.18     Subd. 4.  [EXISTING CONTRACTS.] If on the effective date of 
413.19  this section the corporation has contracts or other obligations 
413.20  that are inconsistent with any requirement of this section, the 
413.21  resolution may provide for the delayed application of that 
413.22  requirement for the time necessary to avoid a breach or 
413.23  impairment of the contract or obligation. 
413.24     Subd. 5.  [NEED FOR CORPORATION.] The resolution must make 
413.25  a detailed and specific finding regarding the purpose of the 
413.26  corporation, and why the corporation is the best alternative for 
413.27  accomplishing the purpose. 
413.28     Subd. 6.  [AUTHORITIES AND POWERS OF CORPORATION 
413.29  LIMITED.] The resolution must specify what authorities and 
413.30  powers the corporation possesses.  The authorities and powers of 
413.31  the corporation must not exceed the authorities and powers of 
413.32  the political subdivision that created it, except as otherwise 
413.33  authorized in this section. 
413.34     Subd. 7.  [BOARD MEMBERSHIP.] If a majority of the 
413.35  corporation's governing board includes elected or appointed 
413.36  officials of the political subdivision creating the corporation, 
414.1   the resolution must make a detailed and specific finding 
414.2   regarding the purpose of those officials serving on the board, 
414.3   and why the corporation cannot accomplish its purpose unless 
414.4   those officials serve on the board.  Alternatively, the 
414.5   resolution may provide for other board membership and the 
414.6   articles of incorporation amended to be consistent with the 
414.7   resolution. 
414.8      Subd. 8.  [ALLOCATION OF ASSETS AND LIABILITIES.] If the 
414.9   political subdivision that created the corporation is a joint 
414.10  powers board, the joint powers agreement and the resolution must 
414.11  specify how the assets and liabilities of the corporation are 
414.12  allocated or attributed to each member of the joint powers 
414.13  board, including, but not limited to, for the purposes of any 
414.14  applicable levy or debt limits.  If a corporation is created by 
414.15  more than one political subdivision, each political subdivision 
414.16  that ratifies creation of the corporation must adopt a 
414.17  resolution required by this section and, among other 
414.18  requirements, each resolution must specify and agree with the 
414.19  resolution of the other political subdivisions as to how the 
414.20  assets and liabilities of the corporation are allocated or 
414.21  attributed to each political subdivision, including, but not 
414.22  limited to, for the purposes of any applicable levy or debt 
414.23  limits. 
414.24     Subd. 9.  [APPLICATION OF OTHER LAWS.] A corporation 
414.25  created by a political subdivision under this section must 
414.26  comply with every law that applies to the political subdivision, 
414.27  as if the corporation is a part of the political subdivision, 
414.28  unless the resolution ratifying creation of the corporation 
414.29  specifically exempts the corporation from part or all of a law.  
414.30  If the resolution exempts the corporation from part or all of a 
414.31  law, the resolution must make a detailed and specific finding as 
414.32  to why the corporation cannot fulfill its purpose if the 
414.33  corporation is subject to that law.  A corporation may not be 
414.34  exempted from section 471.705, the Minnesota Open Meeting Law, 
414.35  sections 138.163 to 138.25, governing records management, or 
414.36  chapter 13, the Minnesota Government Data Practices Act.  Any 
415.1   affected or interested person may bring an action in district 
415.2   court to void the resolution on the grounds that the findings 
415.3   are not sufficiently detailed and specific, or that the 
415.4   corporation can fulfill its purpose if it is subject to the law 
415.5   from which the resolution exempts the corporation.  Laws that 
415.6   apply to a political subdivision that also apply to a 
415.7   corporation created by a political subdivision under this 
415.8   subdivision include, but are not limited to: 
415.9      (1) section 471.705, the Minnesota Open Meeting Law; 
415.10     (2) chapter 13, the Minnesota Government Data Practices 
415.11  Act; 
415.12     (3) section 471.345, the Uniform Municipal Contracting Law; 
415.13     (4) sections 43A.17, limiting the compensation of employees 
415.14  based on the governor's salary; 471.991 to 471.999, providing 
415.15  for equitable pay; and 465.72 and 465.722, governing severance 
415.16  pay; 
415.17     (5) section 275.065, providing for truth-in-taxation 
415.18  hearings.  If any tax revenues of the political subdivision will 
415.19  be appropriated to the corporation, the corporation's annual 
415.20  operating and capital budgets must be included in the 
415.21  truth-in-taxation hearing of the political subdivision that 
415.22  created the corporation; 
415.23     (6) if the corporation issues debt, its debt is included in 
415.24  the political subdivision's debt limit if it would be included 
415.25  if issued by the political subdivision, and issuance of the debt 
415.26  is subject to the election and other requirements of chapter 475 
415.27  and section 471.69; 
415.28     (7) section 471.895, prohibiting acceptance of gifts from 
415.29  interested parties, and sections 471.87 to 471.89, relating to 
415.30  interests in contracts; 
415.31     (8) chapter 466, relating to municipal tort liability; 
415.32     (9) chapter 118A, requiring deposit insurance or bond or 
415.33  pledged collateral for deposits; 
415.34     (10) chapter 118A, restricting investments; 
415.35     (11) section 471.346, requiring ownership of vehicles to be 
415.36  identified; 
416.1      (12) sections 471.38 to 471.41, requiring claims to be in 
416.2   writing, itemized, and approved by the governing board before 
416.3   payment can be made; and 
416.4      (13) the corporation cannot make advances of pay, make or 
416.5   guarantee loans to employees, or provide in-kind benefits unless 
416.6   authorized by law. 
416.7      Subd. 10.  [THREE-YEAR REVIEW OF APPLICABILITY OF OTHER 
416.8   LAWS.] At least every three years after adoption of a resolution 
416.9   that exempts a corporation from part or all of a law under 
416.10  subdivision 9, the political subdivision must review the 
416.11  activities of the corporation and whether the exemption should 
416.12  continue to apply to the corporation.  The political subdivision 
416.13  must conduct the review at a regularly scheduled meeting of its 
416.14  governing body.  The political subdivision must adopt a 
416.15  resolution to continue any exemption and a certified copy of the 
416.16  resolution must be filed with the secretary of state.  The 
416.17  political subdivision cannot exempt the corporation from a law 
416.18  for the first time under the review process of this subdivision. 
416.19     Subd. 11.  [TAXES USED FOR PUBLIC PURPOSE.] If the 
416.20  political subdivision has authority under other law to 
416.21  appropriate tax revenues for use by the corporation, those funds 
416.22  must be appropriated and used only for public purposes. 
416.23     Subd. 12.  [AUDIT.] A corporation created by a political 
416.24  subdivision that receives public money from the political 
416.25  subdivision, other than grants or loans made under a competitive 
416.26  process for which other entities are eligible, must be audited 
416.27  annually by either a certified public accountant or the state 
416.28  auditor.  Except as provided below, the audit report must be 
416.29  presented at a regularly scheduled meeting of the governing body 
416.30  of the political subdivision that created the corporation.  The 
416.31  audit report must be made available to individuals after 
416.32  presentation of the audit report to the governing body of the 
416.33  political subdivision.  The data classification of an audit 
416.34  performed by the office of the state auditor is governed by 
416.35  chapter 6. 
416.36     Subd. 13.  [STATE AUDITOR POWERS.] The state auditor has 
417.1   the same powers with regard to a corporation created by a 
417.2   political subdivision as the state auditor has with regard to 
417.3   the political subdivision that created the corporation. 
417.4      Subd. 14.  [DATA CLASSIFICATION.] The following data 
417.5   created, collected, or maintained by a corporation subject to 
417.6   this section are classified as private data under section 13.02, 
417.7   subdivision 12, or as nonpublic data under section 13.02, 
417.8   subdivision 9:  (1) proprietary data relating either (i) to 
417.9   private businesses, or (ii) to enterprises operated by the 
417.10  corporation that are in competition with entities offering 
417.11  similar goods and services, so long as the data are not 
417.12  generally known or readily ascertainable by proper means and 
417.13  disclosure of specific data would cause harm to the competitive 
417.14  position of the enterprise or private business, provided that 
417.15  the goods or services do not require a tax levy; and (2) any 
417.16  data identified in section 13.491 collected or received by a 
417.17  transit organization. 
417.18     Sec. 4.  [CLARIFICATION.] 
417.19     Existing corporations that reported to the state auditor 
417.20  under Minnesota Statutes 1998, section 465.715, subdivision 3, 
417.21  but do not meet the definition of a corporation under section 3, 
417.22  subdivision 1, paragraph (b), remain as established and are not 
417.23  affected by this act or by Minnesota Statutes, section 465.715. 
417.24     Sec. 5.  [REPEALER.] 
417.25     Minnesota Statutes 1998, section 465.715, subdivisions 1, 
417.26  2, and 3; and Minnesota Statutes 1999 Supplement, section 
417.27  465.715, subdivision 1a, are repealed. 
417.28                             ARTICLE 19 
417.29                           MISCELLANEOUS 
417.30     Section 1.  [3.901] [LEGISLATIVE BUDGET OFFICE.] 
417.31     Subdivision 1.  [ESTABLISHMENT; PURPOSE.] A legislative 
417.32  budget office is established under the control of the 
417.33  legislative coordinating commission to provide the house and 
417.34  senate with independent, accurate, and timely information and 
417.35  analysis regarding state revenues and expenditures.  The office 
417.36  shall provide information on request of a member of the 
418.1   legislature.  The office shall provide priority to requests of 
418.2   the chair of a standing committee or division of a standing 
418.3   committee of the legislature, the chair of a legislative 
418.4   commission, the speaker of the house, the president of the 
418.5   senate, or the majority or minority leader of the house or 
418.6   senate. 
418.7      Subd. 2.  [DUTIES.] The legislative budget office may: 
418.8      (1) provide research and analysis of current and projected 
418.9   state revenue, state expenditures, and state tax expenditures; 
418.10     (2) provide alternative revenue and expenditure projections 
418.11  on request; 
418.12     (3) conduct budget and tax studies and provide general 
418.13  fiscal and budgetary information; 
418.14     (4) recommend means to improve the efficiency of state and 
418.15  local government programs; 
418.16     (5) analyze state and local government capital expenditures 
418.17  and means of financing them; 
418.18     (6) prepare fiscal notes or review fiscal notes prepared by 
418.19  the executive branch; 
418.20     (7) assist standing committees with analysis of fiscal 
418.21  matters within their jurisdiction; and 
418.22     (8) provide other assistance as requested by the 
418.23  legislature, either house, or the legislative coordinating 
418.24  commission. 
418.25     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2001. 
418.26     Sec. 2.  [3.902] [EMPLOYEES; LEGISLATIVE BUDGET OFFICE.] 
418.27     Subdivision 1.  [DIRECTOR.] The legislative coordinating 
418.28  commission shall appoint a qualified director of the legislative 
418.29  budget office who serves at the pleasure of the commission.  The 
418.30  commission shall fix the director's compensation.  
418.31     Subd. 2.  [OTHER STAFF.] Subject to the approval of the 
418.32  commission, the director shall: 
418.33     (1) employ and fix the compensation of other staff 
418.34  necessary to efficiently perform the duties imposed upon the 
418.35  office; 
418.36     (2) buy necessary furniture, equipment, and supplies; and 
419.1      (3) enter into contracts for services as necessary to 
419.2   efficiently perform the duties imposed upon the office. 
419.3      <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2001.  
419.4      Sec. 3.  [3.903] [ACCESS TO DATA.] 
419.5      All departments and agencies of the executive and judicial 
419.6   branches must comply with requests from the director of the 
419.7   legislative budget office for information, data, estimates, and 
419.8   statistics on the funding, revenue, operation, and affairs of 
419.9   the department or agency.  The commissioner of finance and 
419.10  commissioner of revenue shall provide the director with full and 
419.11  free access to information, data, estimates, and statistics in 
419.12  the possession of the finance or revenue department on the state 
419.13  budget, revenue, expenditures, and tax expenditures, including 
419.14  access to computerized databases and computer systems. 
419.15     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2001. 
419.16     Sec. 4.  Minnesota Statutes 1998, section 3.98, subdivision 
419.17  3, is amended to read: 
419.18     Subd. 3.  A copy of the fiscal note shall be delivered to 
419.19  the chair of the appropriations ways and means committee of the 
419.20  house of representatives, the chair of the finance committee of 
419.21  the senate, the chair of the standing committee to which the 
419.22  bill has been referred, to the chief author of the bill, the 
419.23  director of the legislative budget office, and to the 
419.24  commissioner of finance. 
419.25     <b>EFFECTIVE DATE:</b>  This section is effective July 1, 2001.  
419.26     Sec.  5.  Minnesota Statutes 1998, section 8.30, is amended 
419.27  to read: 
419.28     8.30 [COMPROMISE OF TAX AND FEE CLAIMS.] 
419.29     Notwithstanding any other provisions of law to the 
419.30  contrary, the attorney general shall have authority to 
419.31  compromise taxes, fees, surcharges, assessments, penalties, and 
419.32  interest in any case referred to the attorney general by the 
419.33  commissioner of revenue, whether reduced to judgment or not, 
419.34  where, in the attorney general's opinion, it shall be in the 
419.35  best interests of the state to do so.  Such a compromise of a 
419.36  tax debt shall must be in such a form as prescribed by the 
420.1   attorney general shall prescribe and shall be in writing signed 
420.2   by the attorney general, the taxpayer or taxpayer's 
420.3   representative, and the commissioner of revenue.  
420.4      <b>EFFECTIVE DATE:</b>  This section is effective for compromises 
420.5   entered into after the day of final enactment. 
420.6      Sec. 6.  Minnesota Statutes 1998, section 16A.46, is 
420.7   amended to read: 
420.8      16A.46 [LOST OR DESTROYED WARRANT DUPLICATE; INDEMNITY.] 
420.9      The commissioner may issue a duplicate to an owner if the 
420.10  loss or destruction of an unpaid warrant is documented by 
420.11  affidavit.  When the duplicate is issued, the original is void.  
420.12  The commissioner may require an indemnity bond from the 
420.13  applicant to the state for double the amount of the warrant for 
420.14  anyone damaged by the issuance of the duplicate.  The 
420.15  commissioner may refuse to issue a duplicate of an unpaid state 
420.16  warrant.  If the commissioner acts in good faith the 
420.17  commissioner is not liable, whether the application is granted 
420.18  or denied.  For an unpaid refund or rebate issued under a tax 
420.19  law administered by the commissioner of revenue that has been 
420.20  lost or destroyed, an affidavit is not required for the 
420.21  commissioner to issue a duplicate if the duplicate is issued to 
420.22  the same name and social security number as the original warrant 
420.23  and that information is verified on a tax return filed by the 
420.24  recipient. 
420.25     <b>EFFECTIVE DATE:</b>  This section is effective the day 
420.26  following final enactment. 
420.27     Sec. 7.  Minnesota Statutes 1999 Supplement, section 
420.28  16D.09, subdivision 2, is amended to read: 
420.29     Subd. 2.  [NOTIFICATION OF ACTION BY DEPARTMENT OF 
420.30  REVENUE.] When the department of revenue has determined that a 
420.31  debt is uncollectible and has written off that debt as provided 
420.32  in subdivision 1, the commissioner of revenue must make a 
420.33  reasonable attempt to notify the debtor of that action and of 
420.34  the release of any liens imposed under section 270.69 related to 
420.35  that debt, within 30 days after the determination has been 
420.36  reported to the commissioner of finance.  A lien imposed under 
421.1   section 270.69 need not be released unless after the write-off 
421.2   of uncollectible debt there is no remaining collectible 
421.3   liability recorded on the lien. 
421.4      <b>EFFECTIVE DATE:</b>  This section is effective for debts 
421.5   written off on or after the day following final enactment. 
421.6      Sec. 8.  Minnesota Statutes 1999 Supplement, section 
421.7   168.012, subdivision 1, is amended to read: 
421.8      Subdivision 1.  [VEHICLES EXEMPT FROM TAX AND REGISTRATION 
421.9   FEES.] (a) The following vehicles are exempt from the provisions 
421.10  of this chapter requiring payment of tax and registration fees, 
421.11  except as provided in subdivision 1c:  
421.12     (1) vehicles owned and used solely in the transaction of 
421.13  official business by the federal government, the state, or any 
421.14  political subdivision; 
421.15     (2) vehicles owned and used exclusively by educational 
421.16  institutions and used solely in the transportation of pupils to 
421.17  and from such institutions; 
421.18     (3) vehicles used solely in driver education programs at 
421.19  nonpublic high schools; 
421.20     (4) vehicles owned by nonprofit charities and used 
421.21  exclusively to transport disabled persons for educational 
421.22  purposes; 
421.23     (5) vehicles owned and used by honorary consul; 
421.24     (6) ambulances owned by ambulance services licensed under 
421.25  section 144E.10, the general appearance of which is 
421.26  unmistakable; and 
421.27     (7) vehicles owned by a commercial driving school licensed 
421.28  under section 171.34, or an employee of a commercial driving 
421.29  school licensed under section 171.34, and the vehicle is used 
421.30  exclusively for driver education and training. 
421.31     (b) Vehicles owned by the federal government, municipal 
421.32  fire apparatuses including fire-suppression support vehicles, 
421.33  police patrols and ambulances, the general appearance of which 
421.34  is unmistakable, shall not be required to register or display 
421.35  number plates.  
421.36     (c) Unmarked vehicles used in general police work, liquor 
422.1   investigations, arson investigations, and passenger automobiles, 
422.2   pickup trucks, and buses owned or operated by the department of 
422.3   corrections shall be registered and shall display appropriate 
422.4   license number plates which shall be furnished by the registrar 
422.5   at cost.  Original and renewal applications for these license 
422.6   plates authorized for use in general police work and for use by 
422.7   the department of corrections must be accompanied by a 
422.8   certification signed by the appropriate chief of police if 
422.9   issued to a police vehicle, the appropriate sheriff if issued to 
422.10  a sheriff's vehicle, the commissioner of corrections if issued 
422.11  to a department of corrections vehicle, or the appropriate 
422.12  officer in charge if issued to a vehicle of any other law 
422.13  enforcement agency.  The certification must be on a form 
422.14  prescribed by the commissioner and state that the vehicle will 
422.15  be used exclusively for a purpose authorized by this section.  
422.16     (d) Unmarked vehicles used by the departments of revenue 
422.17  and labor and industry, fraud unit, in conducting seizures or 
422.18  criminal investigations must be registered and must display 
422.19  passenger vehicle classification license number plates which 
422.20  shall be furnished at cost by the registrar.  Original and 
422.21  renewal applications for these passenger vehicle license plates 
422.22  must be accompanied by a certification signed by the 
422.23  commissioner of revenue or the commissioner of labor and 
422.24  industry.  The certification must be on a form prescribed by the 
422.25  commissioner and state that the vehicles will be used 
422.26  exclusively for the purposes authorized by this section. 
422.27     (e) Unmarked vehicles used by the division of disease 
422.28  prevention and control of the department of health must be 
422.29  registered and must display passenger vehicle classification 
422.30  license number plates.  These plates must be furnished at cost 
422.31  by the registrar.  Original and renewal applications for these 
422.32  passenger vehicle license plates must be accompanied by a 
422.33  certification signed by the commissioner of health.  The 
422.34  certification must be on a form prescribed by the commissioner 
422.35  and state that the vehicles will be used exclusively for the 
422.36  official duties of the division of disease prevention and 
423.1   control.  
423.2      (f) All other motor vehicles shall be registered and 
423.3   display tax-exempt number plates which shall be furnished by the 
423.4   registrar at cost, except as provided in subdivision 1c.  All 
423.5   vehicles required to display tax-exempt number plates shall have 
423.6   the name of the state department or political subdivision, 
423.7   nonpublic high school operating a driver education program, or 
423.8   licensed commercial driving school, on the vehicle plainly 
423.9   displayed on both sides thereof in letters not less than 2-1/2 
423.10  inches high and one-half inch wide; except that each state 
423.11  hospital and institution for the mentally ill and mentally 
423.12  retarded may have one vehicle without the required 
423.13  identification on the sides of the vehicle, and county social 
423.14  service agencies may have vehicles used for child and vulnerable 
423.15  adult protective services without the required identification on 
423.16  the sides of the vehicle.  Such identification shall be in a 
423.17  color giving contrast with that of the part of the vehicle on 
423.18  which it is placed and shall endure throughout the term of the 
423.19  registration.  The identification must not be on a removable 
423.20  plate or placard and shall be kept clean and visible at all 
423.21  times; except that a removable plate or placard may be utilized 
423.22  on vehicles leased or loaned to a political subdivision or to a 
423.23  nonpublic high school driver education program. 
423.24     Sec. 9.  Minnesota Statutes 1998, section 270.063, is 
423.25  amended by adding a subdivision to read: 
423.26     Subd. 4.  [FEDERAL TAX REFUND OFFSET FEES.] For fees 
423.27  charged by the department of the treasury of the United States 
423.28  for the offset of federal tax refunds that are deducted from the 
423.29  refund amounts remitted to the commissioner, the unpaid debts of 
423.30  the taxpayers whose refunds are being offset to satisfy the 
423.31  debts are reduced only by the actual amount of the refund 
423.32  payments received by the commissioner. 
423.33     <b>EFFECTIVE DATE:</b>  This section is effective for offsets of 
423.34  refunds made on or after the day following final enactment.  
423.35     Sec. 10.  Minnesota Statutes 1999 Supplement, section 
423.36  270.65, is amended to read: 
424.1      270.65 [DATE OF ASSESSMENT; DEFINITION.] 
424.2      For purposes of taxes administered by the commissioner, the 
424.3   term "date of assessment" means the date a liability reported on 
424.4   a return was filed entered into the records of the commissioner 
424.5   or the date a return should have been filed, whichever is later; 
424.6   or, in the case of taxes determined by the commissioner, "date 
424.7   of assessment" means the date of the order assessing taxes or 
424.8   date of the return made by the commissioner; or, in the case of 
424.9   an amended return filed by the taxpayer, the assessment date is 
424.10  the date additional liability reported on the return, if any, 
424.11  was filed with entered into the records of the commissioner; or, 
424.12  in the case of a check from a taxpayer that is dishonored and 
424.13  results in an erroneous refund being given to the taxpayer, 
424.14  remittance of the check is deemed to be an assessment and the 
424.15  "date of assessment" is the date the check was received by the 
424.16  commissioner. 
424.17     <b>EFFECTIVE DATE:</b>  This section is effective for assessments 
424.18  made on or after the day following final enactment.  
424.19     Sec. 11.  Minnesota Statutes 1999 Supplement, section 
424.20  270A.03, subdivision 2, is amended to read: 
424.21     Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
424.22  state agency, as defined by section 14.02, subdivision 2, the 
424.23  regents of the University of Minnesota, any district court of 
424.24  the state, any county, any statutory or home rule charter city 
424.25  presenting a claim for a municipal hospital or a public 
424.26  library or a municipal ambulance service, a hospital district, a 
424.27  private nonprofit hospital that leases its building from the 
424.28  county in which it is located, any public agency responsible for 
424.29  child support enforcement, any public agency responsible for the 
424.30  collection of court-ordered restitution, and any public agency 
424.31  established by general or special law that is responsible for 
424.32  the administration of a low-income housing program. 
424.33     <b>EFFECTIVE DATE:</b>  This section is effective for claims 
424.34  submitted after June 30, 2000.  
424.35     Sec. 12.  Minnesota Statutes 1998, section 270A.03, 
424.36  subdivision 7, is amended to read: 
425.1      Subd. 7.  [REFUND.] "Refund" means an individual income tax 
425.2   refund or political contribution refund, pursuant to chapter 
425.3   290, or a property tax credit or refund, pursuant to chapter 
425.4   290A.  
425.5      For purposes of this chapter, lottery prizes, as set forth 
425.6   in section 349A.08, subdivision 8, and amounts granted to 
425.7   persons by the legislature on the recommendation of the joint 
425.8   senate-house of representatives subcommittee on claims shall be 
425.9   treated as refunds. 
425.10     In the case of a joint property tax refund payable to 
425.11  spouses under chapter 290A, the refund shall be considered as 
425.12  belonging to each spouse in the proportion of the total refund 
425.13  that equals each spouse's proportion of the total income 
425.14  determined under section 290A.03, subdivision 3.  In the case of 
425.15  a joint income tax refund under chapter 289A, the refund shall 
425.16  be considered as belonging to each spouse in the proportion of 
425.17  the total refund that equals each spouse's proportion of the 
425.18  total taxable income determined under section 290.01, 
425.19  subdivision 29.  The commissioner shall remit the entire refund 
425.20  to the claimant agency, which shall, upon the request of the 
425.21  spouse who does not owe the debt, determine the amount of the 
425.22  refund belonging to that spouse and refund the amount to that 
425.23  spouse.  For court fines, fees, and surcharges and court-ordered 
425.24  restitution under section 611A.04, subdivision 2, the notice 
425.25  provided by the commissioner of revenue under section 270A.07, 
425.26  subdivision 2, paragraph (b), serves as the appropriate legal 
425.27  notice to the spouse who does not owe the debt.  
425.28     <b>EFFECTIVE DATE:</b>  This section is effective for notices 
425.29  provided after June 30, 2000. 
425.30     Sec. 13.  Minnesota Statutes 1998, section 270A.07, 
425.31  subdivision 1, is amended to read: 
425.32     Subdivision 1.  [NOTIFICATION REQUIREMENT.] Any claimant 
425.33  agency, seeking collection of a debt through setoff against a 
425.34  refund due, shall submit to the commissioner information 
425.35  indicating the amount of each debt and information identifying 
425.36  the debtor, as required by section 270A.04, subdivision 3.  
426.1      For each setoff of a debt against a refund due, the 
426.2   commissioner shall charge a fee of $10.  The claimant agency may 
426.3   add the fee to the amount of the debt.  
426.4      The claimant agency shall notify the commissioner when a 
426.5   debt has been satisfied or reduced by at least $200 within 30 
426.6   days after satisfaction or reduction. 
426.7      <b>EFFECTIVE DATE:</b>  This section is effective the day 
426.8   following final enactment.  
426.9      Sec. 14.  Minnesota Statutes 1999 Supplement, section 
426.10  270A.07, subdivision 2, is amended to read: 
426.11     Subd. 2.  [SETOFF PROCEDURES.] (a) The commissioner, upon 
426.12  receipt of notification, shall initiate procedures to detect any 
426.13  refunds otherwise payable to the debtor.  When the commissioner 
426.14  determines that a refund is due to a debtor whose debt was 
426.15  submitted by a claimant agency, the commissioner shall first 
426.16  deduct the fee in subdivision 1 and then remit the refund or the 
426.17  amount claimed, whichever is less, to the agency.  In 
426.18  transferring or remitting moneys to the claimant agency, the 
426.19  commissioner shall provide information indicating the amount 
426.20  applied against each debtor's obligation and the debtor's 
426.21  address listed on the tax return.  
426.22     (b) The commissioner shall remit to the debtor the amount 
426.23  of any refund due in excess of the debt submitted for setoff by 
426.24  the claimant agency.  Notice of the amount setoff and address of 
426.25  the claimant agency shall accompany any disbursement to the 
426.26  debtor of the balance of a refund, or shall be sent to the 
426.27  debtor at the time of setoff if the entire refund is set off.  
426.28  The notice shall also advise the debtor of the right to contest 
426.29  the validity of the claim, other than a claim based upon child 
426.30  support under section 518.171, 518.54, 518.551, or chapter 518C 
426.31  at a hearing, subject to the restrictions in this paragraph.  
426.32  The debtor must assert this right by written request to the 
426.33  claimant agency, which request the claimant agency must receive 
426.34  within 45 days of the date of the notice.  This right does not 
426.35  apply to (1) issues relating to the validity of the claim that 
426.36  have been previously raised at a hearing under this section or 
427.1   section 270A.09; (2) issues relating to the validity of the 
427.2   claim that were not timely raised by the debtor under section 
427.3   270A.08, subdivision 2; (3) issues relating to the validity of 
427.4   the claim that have been previously raised at a hearing 
427.5   conducted under rules promulgated by the United States 
427.6   Department of Housing and Urban Development or any public agency 
427.7   that is responsible for the administration of a low-income 
427.8   housing program, or that were not timely raised by the debtor 
427.9   under those rules; or (4) issues relating to the validity of the 
427.10  claim for which a hearing is discretionary under section 
427.11  270A.09.  The notice shall include an explanation of the right 
427.12  of the spouse who does not owe the debt to request the claimant 
427.13  agency to repay the spouse's portion of a joint refund.  
427.14     <b>EFFECTIVE DATE:</b>  This section is effective for notices 
427.15  provided after June 30, 2000.  
427.16     Sec. 15.  Minnesota Statutes 1998, section 289A.35, is 
427.17  amended to read: 
427.18     289A.35 [ASSESSMENTS; COMMISSIONER FILED RETURNS.] 
427.19     The commissioner shall has the authority to make 
427.20  determinations, corrections, and assessments with respect to 
427.21  state taxes, including interest, additions to taxes, and 
427.22  assessable penalties.  The commissioner may audit and adjust the 
427.23  taxpayer's computation of federal taxable income, items of 
427.24  federal tax preferences, or federal credit amounts to make them 
427.25  conform with the provisions of chapter 290 or section 298.01.  
427.26  If a taxpayer fails to file a required return, the commissioner, 
427.27  from information in the commissioner's possession or obtainable 
427.28  by the commissioner, may make a return for the taxpayer.  The 
427.29  return will be prima facie correct and valid.  If a return has 
427.30  been filed, the commissioner shall examine enter the liability 
427.31  reported on the return and may make any audit or investigation 
427.32  that is considered necessary.  The commissioner may use 
427.33  statistical or other sampling techniques consistent with 
427.34  generally accepted auditing standards in examining returns or 
427.35  records and making assessments. 
427.36     <b>EFFECTIVE DATE:</b>  This section is effective the day 
428.1   following final enactment.  
428.2      Sec. 16.  Minnesota Statutes 1999 Supplement, section 
428.3   289A.55, subdivision 9, is amended to read: 
428.4      Subd. 9.  [INTEREST ON PENALTIES.] (a) A penalty imposed 
428.5   under section 289A.60, subdivision 1, 2, 3, 4, 5, 6, or 21 bears 
428.6   interest from the date the return or payment was required to be 
428.7   filed or paid, including any extensions, to the date of payment 
428.8   of the penalty. 
428.9      (b) A penalty not included in paragraph (a) bears interest 
428.10  only if it is not paid within ten 60 days from the date of 
428.11  notice.  In that case interest is imposed from the date of 
428.12  notice to the date of payment. 
428.13     <b>EFFECTIVE DATE:</b>  This section is effective for penalties 
428.14  assessed after the date of final enactment.  
428.15     Sec. 17.  Minnesota Statutes 1998, section 296A.03, 
428.16  subdivision 5, is amended to read: 
428.17     Subd. 5.  [FORM OF APPLICATION; BOND.] (a) A written 
428.18  application shall be made in the form and manner prescribed by 
428.19  the commissioner. 
428.20     (b) The commissioner shall also require the applicant or 
428.21  licensee to deposit with the state treasurer securities of the 
428.22  United States government or the state of Minnesota or to execute 
428.23  and file a bond, with a corporate surety approved by the 
428.24  commissioner, to the state of Minnesota in an amount to be 
428.25  determined by the commissioner and in a form to be fixed by the 
428.26  commissioner and approved by the attorney general, and which 
428.27  shall be conditioned for the payment when due of all excise 
428.28  taxes, inspection fees, penalties, and accrued interest arising 
428.29  in the ordinary course of business or by reason of any 
428.30  delinquent money which may be due the state.  The bond shall 
428.31  cover all places of business within the state where petroleum 
428.32  products are received by the licensee.  The applicant or 
428.33  licensee shall designate and maintain an agent in this state 
428.34  upon whom service may be made for all purposes of this section. 
428.35     (c) An initial applicant for a distributor's license shall 
428.36  furnish a bond in a minimum sum of $3,000 for the first year. 
429.1      (d) The commissioner, on reaching the opinion that the bond 
429.2   given by a licensee is inadequate in amount to fully protect the 
429.3   state, shall require an additional bond in such amount as the 
429.4   commissioner deems sufficient. 
429.5      (e) A licensee who desires to be exempt from depositing 
429.6   securities or furnishing such bond shall furnish to the 
429.7   commissioner an itemized financial statement showing the assets 
429.8   and the liabilities of the applicant.  If it appears to the 
429.9   commissioner, from the financial statement or otherwise, that 
429.10  the applicant is financially responsible, then the commissioner 
429.11  may exempt the applicant from depositing such securities or 
429.12  furnishing such bond until the commissioner otherwise orders. 
429.13     (f) When the surety upon any bond issued under the 
429.14  provisions of this chapter have fulfilled the conditions of such 
429.15  bond and compensated the state for any loss occasioned by any 
429.16  act or omission of any licensee under this chapter, such surety 
429.17  shall be subrogated to all the rights of the state in connection 
429.18  with the transaction where such loss occurred. 
429.19     <b>EFFECTIVE DATE:</b>  This section is effective the day 
429.20  following final enactment.  
429.21     Sec. 18.  Minnesota Statutes 1998, section 296A.21, 
429.22  subdivision 2, is amended to read: 
429.23     Subd. 2.  [COLLECTION.] No action shall be brought for the 
429.24  collection of delinquent taxes and inspection fees under section 
429.25  270.68 unless commenced within five years after the date of 
429.26  assessment of the taxes and fees. 
429.27     <b>EFFECTIVE DATE:</b>  This section is effective the day 
429.28  following final enactment.  
429.29     Sec. 19.  Minnesota Statutes 1998, section 296A.21, 
429.30  subdivision 3, is amended to read: 
429.31     Subd. 3.  [FALSE OR FRAUDULENT REPORT.] In the case of a 
429.32  false or fraudulent report with intent to evade tax taxes or 
429.33  inspection fee fees or of a failure to file a report, the taxes 
429.34  or fees may be assessed at any time, and a proceeding in court 
429.35  for their collection must be begun within five years after the 
429.36  assessment. 
430.1      <b>EFFECTIVE DATE:</b>  This section is effective the day 
430.2   following final enactment.  
430.3      Sec. 20.  Minnesota Statutes 1998, section 296A.22, 
430.4   subdivision 6, is amended to read: 
430.5      Subd. 6.  [SALE PROHIBITED UNDER CERTAIN CONDITIONS.] No 
430.6   petroleum product shall be unloaded or sold by any person or 
430.7   distributor whose tax and inspection fees are the basis for 
430.8   collection action under subdivision 2. 
430.9      <b>EFFECTIVE DATE:</b>  This section is effective the day 
430.10  following final enactment.  
430.11     Sec. 21.  Minnesota Statutes 1999 Supplement, section 
430.12  298.24, subdivision 1, is amended to read: 
430.13     Subdivision 1.  (a) For concentrate produced in 1999 2000 
430.14  and 2001, there is imposed upon taconite and iron sulphides, and 
430.15  upon the mining and quarrying thereof, and upon the production 
430.16  of iron ore concentrate therefrom, and upon the concentrate so 
430.17  produced, a tax of $2.141 per gross ton of merchantable iron ore 
430.18  concentrate produced therefrom.  
430.19     (b) For concentrates produced in 2000 2002 and subsequent 
430.20  years, the tax rate shall be equal to the preceding year's tax 
430.21  rate plus an amount equal to the preceding year's tax rate 
430.22  multiplied by the percentage increase in the implicit price 
430.23  deflator from the fourth quarter of the second preceding year to 
430.24  the fourth quarter of the preceding year.  "Implicit price 
430.25  deflator" for the gross national product means the implicit 
430.26  price deflator for the gross domestic product prepared by the 
430.27  bureau of economic analysis of the United States Department of 
430.28  Commerce.  
430.29     (c) On concentrates produced in 1997 and thereafter, an 
430.30  additional tax is imposed equal to three cents per gross ton of 
430.31  merchantable iron ore concentrate for each one percent that the 
430.32  iron content of the product exceeds 72 percent, when dried at 
430.33  212 degrees Fahrenheit. 
430.34     (d) The tax shall be imposed on the average of the 
430.35  production for the current year and the previous two years.  The 
430.36  rate of the tax imposed will be the current year's tax rate.  
431.1   This clause shall not apply in the case of the closing of a 
431.2   taconite facility if the property taxes on the facility would be 
431.3   higher if this clause and section 298.25 were not applicable.  
431.4      (e) If the tax or any part of the tax imposed by this 
431.5   subdivision is held to be unconstitutional, a tax of $2.141 per 
431.6   gross ton of merchantable iron ore concentrate produced shall be 
431.7   imposed.  
431.8      (f) Consistent with the intent of this subdivision to 
431.9   impose a tax based upon the weight of merchantable iron ore 
431.10  concentrate, the commissioner of revenue may indirectly 
431.11  determine the weight of merchantable iron ore concentrate 
431.12  included in fluxed pellets by subtracting the weight of the 
431.13  limestone, dolomite, or olivine derivatives or other basic flux 
431.14  additives included in the pellets from the weight of the 
431.15  pellets.  For purposes of this paragraph, "fluxed pellets" are 
431.16  pellets produced in a process in which limestone, dolomite, 
431.17  olivine, or other basic flux additives are combined with 
431.18  merchantable iron ore concentrate.  No subtraction from the 
431.19  weight of the pellets shall be allowed for binders, mineral and 
431.20  chemical additives other than basic flux additives, or moisture. 
431.21     (g)(1) Notwithstanding any other provision of this 
431.22  subdivision, for the first two years of a plant's production of 
431.23  direct reduced ore, no tax is imposed under this section.  As 
431.24  used in this paragraph, "direct reduced ore" is ore that results 
431.25  in a product that has an iron content of at least 75 percent.  
431.26  For the third year of a plant's production of direct reduced 
431.27  ore, the rate to be applied to direct reduced ore is 25 percent 
431.28  of the rate otherwise determined under this subdivision.  For 
431.29  the fourth such production year, the rate is 50 percent of the 
431.30  rate otherwise determined under this subdivision; for the fifth 
431.31  such production year, the rate is 75 percent of the rate 
431.32  otherwise determined under this subdivision; and for all 
431.33  subsequent production years, the full rate is imposed. 
431.34     (2) Subject to clause (1), production of direct reduced ore 
431.35  in this state is subject to the tax imposed by this section, but 
431.36  if that production is not produced by a producer of taconite or 
432.1   iron sulfides, the production of taconite or iron sulfides 
432.2   consumed in the production of direct reduced iron in this state 
432.3   is not subject to the tax imposed by this section on taconite or 
432.4   iron sulfides. 
432.5      <b>EFFECTIVE DATE:</b>  This section is effective for concentrates 
432.6   produced in 2000 and thereafter.  
432.7      Sec. 22.  Minnesota Statutes 1999 Supplement, section 
432.8   505.08, subdivision 3, is amended to read: 
432.9      Subd. 3.  [PREMATURE REFERENCE TO PLAT; FORFEITURE.] Any 
432.10  person who shall dispose of, or lease, or offer to sell any land 
432.11  included in a plat by reference to the plat before the same is 
432.12  recorded, shall forfeit to the county $100 for each lot, or part 
432.13  of a lot, so disposed of, or leased, or offered; and any 
432.14  official, land surveyor, or person whose duty it is to comply 
432.15  with any of the provisions of this chapter, shall forfeit not 
432.16  less than $100 for each month during which compliance is 
432.17  delayed.  All forfeitures under this chapter shall be recovered 
432.18  in an action brought in the name of the county.  Notwithstanding 
432.19  any provisions of this subdivision to the contrary, this 
432.20  subdivision shall not apply to an offer to sell or lease a unit 
432.21  in a proposed common interest community as defined in chapter 
432.22  515B. 
432.23     <b>EFFECTIVE DATE:</b>  This section is effective the day 
432.24  following final enactment.  
432.25     Sec. 23.  [ITASCA AND CASS COUNTIES; DISTRIBUTION OF CASINO 
432.26  TAX REVENUES.] 
432.27     Notwithstanding any contrary provision of law, in the case 
432.28  of one tribal government that operates three casinos, two of 
432.29  which are located in Cass county, and one of which is located in 
432.30  Itasca county, the payments to the counties under Minnesota 
432.31  Statutes, section 270.60, subdivision 4, attributable to 
432.32  agreements with that tribe, must be distributed, two-thirds to 
432.33  Cass county, and one-third to Itasca county.  This section 
432.34  applies to distributions in 2001, 2002, and 2003. 
432.35     <b>EFFECTIVE DATE:</b>  This section is effective upon approval by 
432.36  the governing bodies of both Itasca county and Cass county, and 
433.1   compliance by both of them with Minnesota Statutes, section 
433.2   645.021, subdivision 3. 
433.3      Sec. 24.  [REPEALER.] 
433.4      Minnesota Rules, part 8160.0300, subpart 4, is repealed. 
433.5      <b>EFFECTIVE DATE:</b>  This section is effective for assessments 
433.6   made on or after the day following final enactment.