1.1 	A bill for an act
1.2 	relating to taxation; reducing corporate income tax rate; providing green job 
1.3 	incentives; establishing small business investment company credit and job 
1.4 	growth investment credit; abolishing political contribution refund; changing rent 
1.5 	percentage for purposes of property tax refund; modifying capital equipment 
1.6 	sales tax exemption; modifying incentive payment for sustainable forest resource 
1.7 	management program; providing a federal update; providing for green job 
1.8 	opportunity building zones; providing tax credits; allowing tax benefits; making 
1.9 	changes to local government aid, the market value homestead credit, income, 
1.10 	franchise, property, sales and use, minerals, and other taxes and tax-related 
1.11 	provisions; appropriating money;amending Minnesota Statutes 2008, sections 
1.12 	268.19, subdivision 1; 270A.03, subdivision 7; 270B.14, subdivision 3; 
1.13 	270B.15; 272.02, by adding a subdivision; 272.029, subdivision 7; 273.1384, 
1.14 	subdivision 4; 289A.02, subdivision 7; 289A.12, by adding a subdivision; 
1.15 	289A.50, subdivision 1; 290.01, subdivisions 6, 19, 19a, 19b, 19c, 19d, 29, 31; 
1.16 	290.06, subdivisions 1, 2c, by adding subdivisions; 290.067, subdivisions 1, 2a; 
1.17 	290.0671, subdivision 1; 290.091, subdivision 2; 290.0921, subdivisions 1, 3; 
1.18 	290.0922, subdivisions 2, 3; 290.095, subdivisions 2, 11; 290A.03, subdivisions 
1.19 	3, 11, 13, 15; 290C.07; 291.005, subdivision 1; 297A.68, subdivision 5, by 
1.20 	adding a subdivision; 297A.75, subdivision 1; 298.285; 477A.0124, by adding 
1.21 	a subdivision; 477A.013, subdivision 9, by adding a subdivision; 477A.03, 
1.22 	subdivisions 2a, 2b; 477A.12, subdivision 1; 477A.14, subdivision 1; proposing 
1.23 	coding for new law in Minnesota Statutes, chapters 116J; 297I; 469; 477A; 
1.24 	repealing Minnesota Statutes 2008, sections 10A.322, subdivision 4; 290.06, 
1.25 	subdivision 23; 477A.03, subdivision 5.
1.26 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.27 	ARTICLE 1
1.28 	JOB INCENTIVES AND ECONOMIC STIMULUS

1.29 	Section 1. Minnesota Statutes 2008, section 270A.03, subdivision 7, is amended to 
1.30 	read:
2.1 		Subd. 7.Refund. "Refund" means an individual income tax refund ~~or political~~ 
2.2 	~~contribution refund,~~ pursuant to chapter 290, ~~or~~ a property tax credit or refund~~,~~ pursuant to 
2.3 	chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.
2.4 	For purposes of this chapter, lottery prizes, as set forth in section 349A.08, 
2.5 	subdivision 8, and amounts granted to persons by the legislature on the recommendation 
2.6 	of the joint senate-house of representatives Subcommittee on Claims shall be treated 
2.7 	as refunds.
2.8 	In the case of a joint property tax refund payable to spouses under chapter 290A, 
2.9 	the refund shall be considered as belonging to each spouse in the proportion of the total 
2.10 	refund that equals each spouse's proportion of the total income determined under section 
2.11 	290A.03, subdivision 3. In the case of a joint income tax refund under chapter 289A, the 
2.12 	refund shall be considered as belonging to each spouse in the proportion of the total 
2.13 	refund that equals each spouse's proportion of the total taxable income determined under 
2.14 	section 290.01, subdivision 29. The commissioner shall remit the entire refund to the 
2.15 	claimant agency, which shall, upon the request of the spouse who does not owe the debt, 
2.16 	determine the amount of the refund belonging to that spouse and refund the amount to 
2.17 	that spouse. For court fines, fees, and surcharges and court-ordered restitution under 
2.18 	section 611A.04, subdivision 2, the notice provided by the commissioner of revenue under 
2.19 	section 270A.07, subdivision 2, paragraph (b), serves as the appropriate legal notice 
2.20 	to the spouse who does not owe the debt.

2.21 	EFFECTIVE DATE. This section is effective for political contribution refund 
2.22 	claims based on contributions made after June 30, 2009.

2.23 	Sec. 2. Minnesota Statutes 2008, section 289A.50, subdivision 1, is amended to read:
2.24 		Subdivision 1.General right to refund. (a) Subject to the requirements of this 
2.25 	section and section 289A.40, a taxpayer who has paid a tax in excess of the taxes lawfully 
2.26 	due and who files a written claim for refund will be refunded or credited the overpayment 
2.27 	of the tax determined by the commissioner to be erroneously paid.
2.28 	(b) The claim must specify the name of the taxpayer, the date when and the period 
2.29 	for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer 
2.30 	claims was erroneously paid, the grounds on which a refund is claimed, and other 
2.31 	information relative to the payment and in the form required by the commissioner. An 
2.32 	income tax, estate tax, or corporate franchise tax return, or amended return claiming an 
2.33 	overpayment constitutes a claim for refund.
2.34 	(c) When, in the course of an examination, and within the time for requesting a 
2.35 	refund, the commissioner determines that there has been an overpayment of tax, the 
3.1 	commissioner shall refund or credit the overpayment to the taxpayer and no demand 
3.2 	is necessary. If the overpayment exceeds $1, the amount of the overpayment must 
3.3 	be refunded to the taxpayer. If the amount of the overpayment is less than $1, the 
3.4 	commissioner is not required to refund. In these situations, the commissioner does not 
3.5 	have to make written findings or serve notice by mail to the taxpayer.
3.6 	(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent 
3.7 	care exceeds the tax against which the credit is allowable, the amount of the excess is 
3.8 	considered an overpayment. ~~The refund allowed by section 290.06, subdivision 23, is also~~ 
3.9 	~~considered an overpayment.~~ The requirements of section 270C.33 do not apply to the 
3.10 	refunding of such an overpayment shown on the original return filed by a taxpayer.
3.11 	(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes, 
3.12 	penalties, and interest reported in the return of the entertainment entity or imposed by 
3.13 	section 290.9201, the excess must be refunded to the entertainment entity. If the excess is 
3.14 	less than $1, the commissioner need not refund that amount.
3.15 	(f) If the surety deposit required for a construction contract exceeds the liability of 
3.16 	the out-of-state contractor, the commissioner shall refund the difference to the contractor.
3.17 	(g) An action of the commissioner in refunding the amount of the overpayment does 
3.18 	not constitute a determination of the correctness of the return of the taxpayer.
3.19 	(h) There is appropriated from the general fund to the commissioner of revenue the 
3.20 	amount necessary to pay refunds allowed under this section.

3.21 	EFFECTIVE DATE. This section is effective for political contribution refund 
3.22 	claims based on contributions made after June 30, 2009.

3.23 	Sec. 3. Minnesota Statutes 2008, section 290.01, subdivision 6, is amended to read:
3.24 		Subd. 6.Taxpayer. ~~The term~~ "Taxpayer" means any person or corporation subject 
3.25 	to a tax imposed by this chapter. ~~For purposes of section 290.06, subdivision 23, the term~~ 
3.26 	~~"taxpayer" means an individual eligible to vote in Minnesota under section 201.014.~~

3.27 	EFFECTIVE DATE. This section is effective for political contribution refund 
3.28 	claims based on contributions made after June 30, 2009.

3.29 	Sec. 4. Minnesota Statutes 2008, section 290.01, subdivision 19a, is amended to read:
3.30 		Subd. 19a.Additions to federal taxable income. For individuals, estates, and 
3.31 	trusts, there shall be added to federal taxable income:
3.32 	(1)(i) interest income on obligations of any state other than Minnesota or a political 
3.33 	or governmental subdivision, municipality, or governmental agency or instrumentality 
4.1 	of any state other than Minnesota exempt from federal income taxes under the Internal 
4.2 	Revenue Code or any other federal statute; and
4.3 	(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
4.4 	Code, except the portion of the exempt-interest dividends derived from interest income 
4.5 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
4.6 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
4.7 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
4.8 	95 percent or more of the exempt-interest dividends that are paid by the regulated 
4.9 	investment company as defined in section 851(a) of the Internal Revenue Code, or the 
4.10 	fund of the regulated investment company as defined in section 851(g) of the Internal 
4.11 	Revenue Code, making the payment; and
4.12 	(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
4.13 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
4.14 	interest income on obligations of the state in which the tribe is located;
4.15 	(2) the amount of income or sales and use taxes paid or accrued within the taxable 
4.16 	year under this chapter and the amount of taxes based on net income paid or sales and use 
4.17 	taxes paid to any other state or to any province or territory of Canada, to the extent allowed 
4.18 	as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not 
4.19 	be more than the amount by which the itemized deductions as allowed under section 63(d) 
4.20 	of the Internal Revenue Code exceeds the amount of the standard deduction as defined 
4.21 	in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the 
4.22 	disallowance of itemized deductions under section 68 of the Internal Revenue Code of 
4.23 	1986, income or sales and use tax is the last itemized deduction disallowed;
4.24 	(3) the capital gain amount of a lump-sum distribution to which the special tax under 
4.25 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
4.26 	(4) the amount of income taxes paid or accrued within the taxable year under this 
4.27 	chapter and taxes based on net income paid to any other state or any province or territory 
4.28 	of Canada, to the extent allowed as a deduction in determining federal adjusted gross 
4.29 	income. For the purpose of this paragraph, income taxes do not include the taxes imposed 
4.30 	by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
4.31 	(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 
4.32 	other than expenses or interest used in computing net interest income for the subtraction 
4.33 	allowed under subdivision 19b, clause (1);
4.34 	(6) the amount of a partner's pro rata share of net income which does not flow 
4.35 	through to the partner because the partnership elected to pay the tax on the income under 
4.36 	section 6242(a)(2) of the Internal Revenue Code;
5.1 	(7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
5.2 	Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 
5.3 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
5.4 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
5.5 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
5.6 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
5.7 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
5.8 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
5.9 	under section 168(k) is allowed;
5.10 	(8) for property placed in service before January 1, 2009, 80 percent of the amount 
5.11 	by which the deduction allowed by section 179 of the Internal Revenue Code exceeds the 
5.12 	deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended 
5.13 	through December 31, 2003;
5.14 	(9) to the extent deducted in computing federal taxable income, the amount of the 
5.15 	deduction allowable under section 199 of the Internal Revenue Code;
5.16 	(10) the exclusion allowed under section 139A of the Internal Revenue Code for 
5.17 	federal subsidies for prescription drug plans;
5.18 	(11) the amount of expenses disallowed under section 290.10, subdivision 2;
5.19 	(12) for taxable years beginning after December 31, 2006, and before January 1, 
5.20 	2008, the amount deducted for qualified tuition and related expenses under section 222 of 
5.21 	the Internal Revenue Code, to the extent deducted from gross income; and
5.22 	(13) for taxable years beginning after December 31, 2006, and before January 1, 
5.23 	2008, the amount deducted for certain expenses of elementary and secondary school 
5.24 	teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted 
5.25 	from gross income.

5.26 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
5.27 	December 31, 2008.

5.28 	Sec. 5. Minnesota Statutes 2008, section 290.01, subdivision 19b, is amended to read:
5.29 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
5.30 	and trusts, there shall be subtracted from federal taxable income:
5.31 	(1) net interest income on obligations of any authority, commission, or 
5.32 	instrumentality of the United States to the extent includable in taxable income for federal 
5.33 	income tax purposes but exempt from state income tax under the laws of the United States;
6.1 	(2) if included in federal taxable income, the amount of any overpayment of income 
6.2 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
6.3 	is received as a refund or as a credit to another taxable year's income tax liability;
6.4 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
6.5 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
6.6 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
6.7 	transportation of each qualifying child in attending an elementary or secondary school 
6.8 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
6.9 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
6.10 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
6.11 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
6.12 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
6.13 	"textbooks" includes books and other instructional materials and equipment purchased 
6.14 	or leased for use in elementary and secondary schools in teaching only those subjects 
6.15 	legally and commonly taught in public elementary and secondary schools in this state. 
6.16 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
6.17 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
6.18 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
6.19 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
6.20 	or materials for, or transportation to, extracurricular activities including sporting events, 
6.21 	musical or dramatic events, speech activities, driver's education, or similar programs. For 
6.22 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
6.23 	given in section 32(c)(3) of the Internal Revenue Code;
6.24 	(4) income as provided under section 290.0802;
6.25 	(5) to the extent included in federal adjusted gross income, income realized on 
6.26 	disposition of property exempt from tax under section 290.491;
6.27 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
6.28 	of the Internal Revenue Code in determining federal taxable income by an individual 
6.29 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
6.30 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
6.31 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 
6.32 	under the provisions of Public Law 109-1;
6.33 	(7) for taxable years beginning before January 1, 2008, the amount of the federal 
6.34 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
6.35 	which is included in gross income under section 87 of the Internal Revenue Code;
7.1 	(8) for individuals who are allowed a federal foreign tax credit for taxes that do not 
7.2 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
7.3 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
7.4 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
7.5 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
7.6 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
7.7 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
7.8 	the extent they exceed the federal foreign tax credit;
7.9 	(9) in each of the five tax years immediately following the tax year in which an 
7.10 	addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 
7.11 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
7.12 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
7.13 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
7.14 	subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 
7.15 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
7.16 	generated for the tax year of the addition. The resulting delayed depreciation cannot be 
7.17 	less than zero;
7.18 	(10) job opportunity building zone income as provided under section 469.316;
7.19 	(11) to the extent included in federal taxable income, the amount of compensation 
7.20 	paid to members of the Minnesota National Guard or other reserve components of the 
7.21 	United States military for active service performed in Minnesota, excluding compensation 
7.22 	for services performed under the Active Guard Reserve (AGR) program. For purposes of 
7.23 	this clause, "active service" means (i) state active service as defined in section 190.05, 
7.24 	subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 
7.25 	190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, 
7.26 	subdivision 5c, but "active service" excludes service performed in accordance with section 
7.27 	190.08, subdivision 3;
7.28 	(12) to the extent included in federal taxable income, the amount of compensation 
7.29 	paid to Minnesota residents who are members of the armed forces of the United States or 
7.30 	United Nations for active duty performed outside Minnesota under United States Code, 
7.31 	title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 
7.32 	the United Nations;
7.33 	(13) an amount, not to exceed $10,000, equal to qualified expenses related to a 
7.34 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
7.35 	to another person for human organ transplantation. For purposes of this clause, "organ" 
7.36 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
8.1 	"human organ transplantation" means the medical procedure by which transfer of a human 
8.2 	organ is made from the body of one person to the body of another person; "qualified 
8.3 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
8.4 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
8.5 	may be subtracted under this clause only once; and "qualified donor" means the individual 
8.6 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
8.7 	individual may claim the subtraction in this clause for each instance of organ donation for 
8.8 	transplantation during the taxable year in which the qualified expenses occur;
8.9 	(14) in each of the five tax years immediately following the tax year in which an 
8.10 	addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 
8.11 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
8.12 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 
8.13 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
8.14 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
8.15 	tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 
8.16 	subtraction is not allowed under this clause;
8.17 	(15) to the extent included in federal taxable income, compensation paid to a service 
8.18 	member as defined in United States Code, title 10, section 101(a)(5), for military service 
8.19 	as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);
8.20 	(16) international economic development zone income as provided under section 
8.21 	469.325; ~~and~~
8.22 	(17) to the extent included in federal taxable income, the amount of national service 
8.23 	educational awards received from the National Service Trust under United States Code, 
8.24 	title 42, sections 12601 to 12604, for service in an approved Americorps National Service 
8.25 	program~~.~~; and
8.26 	(18) 50 percent of the amount of gain under section 1221 of the Internal Revenue 
8.27 	Code on the sale of small business stock assigned to Minnesota pursuant to section 290.17, 
8.28 	subdivision 2, paragraph (c). "Small business stock" means an equity interest purchased 
8.29 	for money or property, not including stock or payment for services, held directly or 
8.30 	indirectly, of less than 100 percent in a corporation or limited liability company or less 
8.31 	than 50 percent in a partnership that:
8.32 	(i) at the time of purchase, has fewer than 100 employees employed by the unitary 
8.33 	business and has not issued stock listed on the New York Stock Exchange, American Stock 
8.34 	Exchange, or National Association of Securities Dealers automated quotation system;
8.35 	(ii) in the year of purchase, has more than 50 percent of its property and payroll, 
8.36 	as determined under section 290.191 or 290.20, within this state and derived less than 
9.1 	$25,000 in gross receipts from rents, interest, dividends, and the sale of intangible 
9.2 	investment assets;
9.3 	(iii) is not a trade or business involving the performance of services in the fields of 
9.4 	health, law, engineering, architecture, accounting, actuarial science, performing arts, 
9.5 	consulting, athletics, financial services, brokerage services, or any trade or business where 
9.6 	the principal asset of the trade or business is the reputation or skill of one or more of 
9.7 	its employees;
9.8 	(iv) is not a trade or business involving banking, insurance, financing, leasing, 
9.9 	investing, or similar business;
9.10 	(v) is not a regulated investment company, real estate investment trust, or real estate 
9.11 	mortgage investment conduit;
9.12 	(vi) is not a cooperative; and
9.13 	(vii) did not liquidate its assets in whole or in part for the purpose of fulfilling the 
9.14 	requirements of this clause.
9.15 	The small business stock must be held for more than five years to qualify for this 
9.16 	subtraction.

9.17 	EFFECTIVE DATE. This section is effective for purchases of small business 
9.18 	stock that take place after June 30, 2009.

9.19 	Sec. 6. Minnesota Statutes 2008, section 290.01, subdivision 19c, is amended to read:
9.20 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
9.21 	there shall be added to federal taxable income:
9.22 	(1) the amount of any deduction taken for federal income tax purposes for income, 
9.23 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
9.24 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
9.25 	another state, a political subdivision of another state, the District of Columbia, or any 
9.26 	foreign country or possession of the United States;
9.27 	(2) interest not subject to federal tax upon obligations of: the United States, its 
9.28 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
9.29 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
9.30 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
9.31 	tribal governments;
9.32 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
9.33 	Revenue Code;
10.1 	(4) the amount of any net operating loss deduction taken for federal income tax 
10.2 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
10.3 	deduction under section 810 of the Internal Revenue Code;
10.4 	(5) the amount of any special deductions taken for federal income tax purposes 
10.5 	under sections 241 to 247 and 965 of the Internal Revenue Code;
10.6 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
10.7 	clause (a), that are not subject to Minnesota income tax;
10.8 	(7) the amount of any capital losses deducted for federal income tax purposes under 
10.9 	sections 1211 and 1212 of the Internal Revenue Code;
10.10 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
10.11 	921(a) and 291 of the Internal Revenue Code;
10.12 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
10.13 	291 of the Internal Revenue Code;
10.14 	(10) for certified pollution control facilities placed in service in a taxable year 
10.15 	beginning before December 31, 1986, and for which amortization deductions were elected 
10.16 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
10.17 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
10.18 	income for those facilities;
10.19 	(11) the amount of any deemed dividend from a foreign operating corporation 
10.20 	determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend 
10.21 	shall be reduced by the amount of the addition to income required by clauses (20), (21), 
10.22 	(22), and (23);
10.23 	(12) the amount of a partner's pro rata share of net income which does not flow 
10.24 	through to the partner because the partnership elected to pay the tax on the income under 
10.25 	section 6242(a)(2) of the Internal Revenue Code;
10.26 	(13) the amount of net income excluded under section 114 of the Internal Revenue 
10.27 	Code;
10.28 	(14) any increase in subpart F income, as defined in section 952(a) of the Internal 
10.29 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
10.30 	to the provisions of section 103 of Public Law 109-222;
10.31 	(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
10.32 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
10.33 	has an activity that in the taxable year generates a deduction for depreciation under 
10.34 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
10.35 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
10.36 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
11.1 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
11.2 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
11.3 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
11.4 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
11.5 	(16) for property placed in service before January 1, 2009, 80 percent of the amount 
11.6 	by which the deduction allowed by section 179 of the Internal Revenue Code exceeds the 
11.7 	deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended 
11.8 	through December 31, 2003;
11.9 	(17) to the extent deducted in computing federal taxable income, the amount of the 
11.10 	deduction allowable under section 199 of the Internal Revenue Code;
11.11 	(18) the exclusion allowed under section 139A of the Internal Revenue Code for 
11.12 	federal subsidies for prescription drug plans;
11.13 	(19) the amount of expenses disallowed under section 290.10, subdivision 2;
11.14 	(20) an amount equal to the interest and intangible expenses, losses, and costs paid, 
11.15 	accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 
11.16 	of a corporation that is a member of the taxpayer's unitary business group that qualifies 
11.17 	as a foreign operating corporation. For purposes of this clause, intangible expenses and 
11.18 	costs include:
11.19 	(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 
11.20 	use, maintenance or management, ownership, sale, exchange, or any other disposition of 
11.21 	intangible property;
11.22 	(ii) losses incurred, directly or indirectly, from factoring transactions or discounting 
11.23 	transactions;
11.24 	(iii) royalty, patent, technical, and copyright fees;
11.25 	(iv) licensing fees; and
11.26 	(v) other similar expenses and costs.
11.27 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
11.28 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
11.29 	secrets, and similar types of intangible assets.
11.30 	This clause does not apply to any item of interest or intangible expenses or costs paid, 
11.31 	accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 
11.32 	to such item of income to the extent that the income to the foreign operating corporation 
11.33 	is income from sources without the United States as defined in subtitle A, chapter 1, 
11.34 	subchapter N, part 1, of the Internal Revenue Code;
11.35 	(21) except as already included in the taxpayer's taxable income pursuant to clause 
11.36 	(20), any interest income and income generated from intangible property received or 
12.1 	accrued by a foreign operating corporation that is a member of the taxpayer's unitary 
12.2 	group. For purposes of this clause, income generated from intangible property includes:
12.3 	(i) income related to the direct or indirect acquisition, use, maintenance or 
12.4 	management, ownership, sale, exchange, or any other disposition of intangible property;
12.5 	(ii) income from factoring transactions or discounting transactions;
12.6 	(iii) royalty, patent, technical, and copyright fees;
12.7 	(iv) licensing fees; and
12.8 	(v) other similar income.
12.9 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
12.10 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
12.11 	secrets, and similar types of intangible assets.
12.12 	This clause does not apply to any item of interest or intangible income received or accrued 
12.13 	by a foreign operating corporation with respect to such item of income to the extent that 
12.14 	the income is income from sources without the United States as defined in subtitle A, 
12.15 	chapter 1, subchapter N, part 1, of the Internal Revenue Code;
12.16 	(22) the dividends attributable to the income of a foreign operating corporation that 
12.17 	is a member of the taxpayer's unitary group in an amount that is equal to the dividends 
12.18 	paid deduction of a real estate investment trust under section 561(a) of the Internal 
12.19 	Revenue Code for amounts paid or accrued by the real estate investment trust to the 
12.20 	foreign operating corporation;
12.21 	(23) the income of a foreign operating corporation that is a member of the taxpayer's 
12.22 	unitary group in an amount that is equal to gains derived from the sale of real or personal 
12.23 	property located in the United States; and
12.24 	(24) for taxable years beginning after December 31, 2006, and before January 1, 
12.25 	2008, the additional amount allowed as a deduction for donation of computer technology 
12.26 	and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent 
12.27 	deducted from taxable income.

12.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
12.29 	December 31, 2008.

12.30 	Sec. 7. Minnesota Statutes 2008, section 290.01, subdivision 19d, is amended to read:
12.31 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
12.32 	corporations, there shall be subtracted from federal taxable income after the increases 
12.33 	provided in subdivision 19c:
13.1 	(1) the amount of foreign dividend gross-up added to gross income for federal 
13.2 	income tax purposes under section 78 of the Internal Revenue Code;
13.3 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
13.4 	claiming the work opportunity credit under section 51 of the Internal Revenue Code;
13.5 	(3) any dividend (not including any distribution in liquidation) paid within the 
13.6 	taxable year by a national or state bank to the United States, or to any instrumentality of 
13.7 	the United States exempt from federal income taxes, on the preferred stock of the bank 
13.8 	owned by the United States or the instrumentality;
13.9 	(4) amounts disallowed for intangible drilling costs due to differences between 
13.10 	this chapter and the Internal Revenue Code in taxable years beginning before January 
13.11 	1, 1987, as follows:
13.12 	(i) to the extent the disallowed costs are represented by physical property, an amount 
13.13 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
13.14 	subdivision 7, subject to the modifications contained in subdivision 19e; and
13.15 	(ii) to the extent the disallowed costs are not represented by physical property, an 
13.16 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
13.17 	290.09, subdivision 8;
13.18 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
13.19 	Internal Revenue Code, except that:
13.20 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
13.21 	capital loss carrybacks shall not be allowed;
13.22 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
13.23 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
13.24 	allowed;
13.25 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
13.26 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
13.27 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
13.28 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
13.29 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
13.30 	extent such loss was not used in a prior taxable year and subject to the provisions of 
13.31 	Minnesota Statutes 1986, section 290.16, shall be allowed;
13.32 	(6) an amount for interest and expenses relating to income not taxable for federal 
13.33 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
13.34 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
13.35 	291 of the Internal Revenue Code in computing federal taxable income;
14.1 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
14.2 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a 
14.3 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
14.4 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
14.5 	by the commissioner. In the case of property held in trust, the allowable deduction must 
14.6 	be apportioned between the income beneficiaries and the trustee in accordance with the 
14.7 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
14.8 	of the trust's income allocable to each;
14.9 	(8) for certified pollution control facilities placed in service in a taxable year 
14.10 	beginning before December 31, 1986, and for which amortization deductions were elected 
14.11 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
14.12 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
14.13 	1986, section 290.09, subdivision 7;
14.14 	(9) amounts included in federal taxable income that are due to refunds of income, 
14.15 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
14.16 	corporation to Minnesota, another state, a political subdivision of another state, the 
14.17 	District of Columbia, or a foreign country or possession of the United States to the extent 
14.18 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
14.19 	clause (1), in a prior taxable year;
14.20 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
14.21 	foreign operating corporation or a foreign corporation which is part of the same unitary 
14.22 	business as the receiving corporation, unless the income resulting from such payments or 
14.23 	accruals is income from sources within the United States as defined in subtitle A, chapter 
14.24 	1, subchapter N, part 1, of the Internal Revenue Code;
14.25 	(11) income or gains from the business of mining as defined in section 290.05, 
14.26 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
14.27 	(12) the amount of disability access expenditures in the taxable year which are not 
14.28 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
14.29 	(13) the amount of qualified research expenses not allowed for federal income tax 
14.30 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
14.31 	the amount exceeds the amount of the credit allowed under section 290.068;
14.32 	(14) the amount of salary expenses not allowed for federal income tax purposes due 
14.33 	to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
14.34 	Code;
15.1 	(15) for taxable years beginning before January 1, 2008, the amount of the federal 
15.2 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
15.3 	which is included in gross income under section 87 of the Internal Revenue Code;
15.4 	(16) for a corporation whose foreign sales corporation, as defined in section 922 
15.5 	of the Internal Revenue Code, constituted a foreign operating corporation during any 
15.6 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
15.7 	claiming the deduction under section 290.21, subdivision 4, for income received from 
15.8 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
15.9 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
15.10 	not income of a foreign operating company;
15.11 	(17) any decrease in subpart F income, as defined in section 952(a) of the Internal 
15.12 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
15.13 	to the provisions of section 103 of Public Law 109-222;
15.14 	(18) in each of the five tax years immediately following the tax year in which an 
15.15 	addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of 
15.16 	the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
15.17 	amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 
15.18 	resulting delayed depreciation cannot be less than zero; ~~and~~
15.19 	(19) in each of the five tax years immediately following the tax year in which an 
15.20 	addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of 
15.21 	the amount of the addition~~.~~; and
15.22 	(20) 50 percent of the amount of gain under section 1221 of the Internal Revenue 
15.23 	Code on the sale of small business stock assigned to or apportioned to Minnesota. "Small 
15.24 	business stock" means an equity interest purchased for money or property, not including 
15.25 	stock or payment for services, held directly or indirectly, of less than 100 percent in a 
15.26 	corporation or limited liability company or less than 50 percent in a partnership that:
15.27 	(i) is not part of the unitary business;
15.28 	(ii) at the time of purchase has fewer than 100 employees employed by the unitary 
15.29 	business and has not issued stock listed on the New York Stock Exchange, American Stock 
15.30 	Exchange, or National Association of Securities Dealers automated quotation system;
15.31 	(iii) in the year of purchase, has more than 50 percent of its property and payroll, 
15.32 	as determined under section 290.191 or 290.20, within this state and derived less than 
15.33 	$25,000 in gross receipts from rents, interest, dividends, and the sale of intangible 
15.34 	investment assets;
15.35 	(iv) is not a trade or business involving the performance of services in the fields of 
15.36 	health, law, engineering, architecture, accounting, actuarial science, performing arts, 
16.1 	consulting, athletics, financial services, brokerage services, or any trade or business where 
16.2 	the principal asset of the trade or business is the reputation or skill of one or more of 
16.3 	its employees;
16.4 	(v) is not a trade or business involving banking, insurance, financing, leasing, 
16.5 	investing, or similar business;
16.6 	(vi) is not a regulated investment company, real estate investment trust, or real 
16.7 	estate mortgage investment conduit;
16.8 	(vii) is not a cooperative; and
16.9 	(viii) did not liquidate its assets in whole or in part for the purpose of fulfilling 
16.10 	the requirements of this clause.
16.11 	The small business stock must be held for more than five years to qualify for this 
16.12 	subtraction.

16.13 	EFFECTIVE DATE. This section is effective for purchases of small business 
16.14 	stock that take place after June 30, 2009.

16.15 	Sec. 8. Minnesota Statutes 2008, section 290.06, subdivision 1, is amended to read:
16.16 		Subdivision 1.Computation, corporations. For taxable years beginning before 
16.17 	January 1, 2010, the franchise tax imposed upon corporations shall be computed by 
16.18 	applying to their taxable income the rate of 9.8 percent.
16.19 	For taxable years beginning after December 31, 2009, but before January 1, 2011, 
16.20 	the corporate franchise tax rate shall be 8.8 percent of taxable income.
16.21 	For taxable years beginning after December 31, 2010, but before January 1, 2012, 
16.22 	the corporate franchise tax rate shall be 7.8 percent of taxable income.
16.23 	For taxable years beginning after December 31, 2011, but before January 1, 2013, 
16.24 	the corporate franchise tax rate shall be 7.3 percent of taxable income.
16.25 	For taxable years beginning after December 31, 2012, but before January 1, 2014, 
16.26 	the corporate franchise tax rate shall be 6.8 percent of taxable income.
16.27 	For taxable years beginning after December 31, 2013, but before January 1, 2015, 
16.28 	the corporate franchise tax rate shall be 5.8 percent of taxable income.
16.29 	For taxable years beginning after December 31, 2014, the corporate franchise tax 
16.30 	rate shall be 4.8 percent of taxable income.

16.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

16.32 	Sec. 9. Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision 
16.33 	to read:
17.1 		Subd. 36.Refund of qualified purchases by small businesses. (a) A qualified 
17.2 	taxpayer who purchased qualified property between July 1, 2009, and September 30, 
17.3 	2009, may claim a refund equal to:
17.4 	(1) the lesser of $5,000 or 25 percent of the cost of such property for businesses with 
17.5 	100 employees or less employed by the unitary business;
17.6 	(2) the lesser of $5,000 or 20 percent of the cost of such property for businesses with 
17.7 	101 to 110 employees employed by the unitary business;
17.8 	(3) the lesser of $5,000 or 15 percent of the cost of such property for businesses with 
17.9 	111 to 120 employees employed by the unitary business;
17.10 	(4) the lesser of $5,000 or ten percent of the cost of such property for businesses 
17.11 	with 121 to 130 employees employed by the unitary business; or
17.12 	(5) the lesser of $5,000 or five percent of the cost of such property for businesses 
17.13 	with 131 to 140 employees employed by the unitary business.
17.14 	(b) For purposes of this subdivision, a qualified taxpayer is a business that for tax 
17.15 	year 2008 had fewer than 140 employees employed by the unitary business and more than 
17.16 	50 percent of its property and payroll, as determined under section 290.191 or 290.20, 
17.17 	within this state. A pass-through entity that purchases qualified property is considered the 
17.18 	taxpayer for purposes of claiming the refund provided under this subdivision.
17.19 	(c) For purposes of this subdivision, "qualified property" means (1) property located 
17.20 	in Minnesota and described under section 179(d) of the Internal Revenue Code, or (2) 
17.21 	tangible real property improvements located in Minnesota and described under section 
17.22 	1250(c) of the Internal Revenue Code.
17.23 	(d) The refund provided under this subdivision must be claimed in a manner 
17.24 	prescribed by the commissioner. The commissioner may require refunds claimed under 
17.25 	this subdivision to be filed by electronic means and may require information necessary 
17.26 	for payment by electronic means.
17.27 	(e) Claims for refunds provided under this subdivision must be filed before 
17.28 	November 1, 2009.
17.29 	(f) If the actual amount claimed under this subdivision exceeds $50,000,000, the 
17.30 	commissioner shall adjust the percentages under paragraph (a) to the nearest one-half 
17.31 	percent so that refunds paid under this subdivision will most closely equal but not exceed 
17.32 	$50,000,000.

17.33 	EFFECTIVE DATE. This section is effective the day following final enactment.

17.34 	Sec. 10. Minnesota Statutes 2008, section 290.0921, subdivision 1, is amended to read:
18.1 		Subdivision 1.Tax imposed. (a) For taxable years beginning before January 1, 
18.2 	2010, in addition to the taxes computed under this chapter without regard to this section, 
18.3 	the franchise tax imposed on corporations includes a tax equal to the excess, if any, for 
18.4 	the taxable year of:
18.5 	(1) 5.8 percent of Minnesota alternative minimum taxable income; over
18.6 	(2) the tax imposed under section 290.06, subdivision 1, without regard to this 
18.7 	section. 
18.8 	(b) For taxable years beginning after December 31, 2009, and before January 1, 
18.9 	2011, in addition to the taxes computed under this chapter without regard to this section, 
18.10 	the franchise tax imposed on corporations includes a tax equal to the excess, if any, for 
18.11 	the taxable year of:
18.12 	(1) 5.3 percent of Minnesota alternative minimum taxable income; over
18.13 	(2) the tax imposed under section 290.06, subdivision 1, without regard to this 
18.14 	section.
18.15 	(c) For taxable years beginning after December 31, 2010, and before January 1, 
18.16 	2012, in addition to the taxes computed under this chapter without regard to this section, 
18.17 	the franchise tax imposed on corporations includes a tax equal to the excess, if any, for 
18.18 	the taxable year of:
18.19 	(1) 4.7 percent of Minnesota alternative minimum taxable income; over
18.20 	(2) the tax imposed under section 290.06, subdivision 1, without regard to this 
18.21 	section.
18.22 	(d) For taxable years beginning after December 31, 2011, and before January 1, 
18.23 	2013, in addition to the taxes computed under this chapter without regard to this section, 
18.24 	the franchise tax imposed on corporations includes a tax equal to the excess, if any, for 
18.25 	the taxable year of:
18.26 	(1) 4.4 percent of Minnesota alternative minimum taxable income; over
18.27 	(2) the tax imposed under section 290.06, subdivision 1, without regard to this 
18.28 	section.
18.29 	(e) For taxable years beginning after December 31, 2012, and before January 1, 
18.30 	2014, in addition to the taxes computed under this chapter without regard to this section, 
18.31 	the franchise tax imposed on corporations includes a tax equal to the excess, if any, for 
18.32 	the taxable year of:
18.33 	(1) 4.1 percent of Minnesota alternative minimum taxable income; over
18.34 	(2) the tax imposed under section 290.06, subdivision 1, without regard to this 
18.35 	section.
19.1 	(f) For taxable years beginning after December 31, 2013, and before January 1, 
19.2 	2015, in addition to the taxes computed under this chapter without regard to this section, 
19.3 	the franchise tax imposed on corporations includes a tax equal to the excess, if any, for 
19.4 	the taxable year of:
19.5 	(1) 3.5 percent of Minnesota alternative minimum taxable income; over
19.6 	(2) the tax imposed under section 290.06, subdivision 1, without regard to this 
19.7 	section.
19.8 	(g) For taxable years beginning after December 31, 2014, and thereafter, in addition 
19.9 	to the taxes computed under this chapter without regard to this section, the franchise tax 
19.10 	imposed on corporations includes a tax equal to the excess, if any, for the taxable year of:
19.11 	(1) 2.9 percent of Minnesota alternative minimum taxable income; over
19.12 	(2) the tax imposed under section 290.06, subdivision 1, without regard to this 
19.13 	section.

19.14 	EFFECTIVE DATE. This section is effective the day following final enactment.

19.15 	Sec. 11. Minnesota Statutes 2008, section 290A.03, subdivision 11, is amended to read:
19.16 		Subd. 11.Rent constituting property taxes. "Rent constituting property taxes" 
19.17 	means ~~19~~ 15 percent of the gross rent actually paid in cash, or its equivalent, or the portion 
19.18 	of rent paid in lieu of property taxes, in any calendar year by a claimant for the right 
19.19 	of occupancy of the claimant's Minnesota homestead in the calendar year, and which 
19.20 	rent constitutes the basis, in the succeeding calendar year of a claim for relief under this 
19.21 	chapter by the claimant.

19.22 	EFFECTIVE DATE. This section is effective for property tax refunds based on 
19.23 	rent paid after December 31, 2008.

19.24 	Sec. 12. Minnesota Statutes 2008, section 290A.03, subdivision 13, is amended to read:
19.25 		Subd. 13.Property taxes payable. "Property taxes payable" means the property tax 
19.26 	exclusive of special assessments, penalties, and interest payable on a claimant's homestead 
19.27 	after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2, 
19.28 	and any other state paid property tax credits in any calendar year, and after any refund 
19.29 	claimed and allowable under section 290A.04, subdivision 2h, that is first payable in 
19.30 	the year that the property tax is payable. In the case of a claimant who makes ground 
19.31 	lease payments, "property taxes payable" includes the amount of the payments directly 
19.32 	attributable to the property taxes assessed against the parcel on which the house is located. 
19.33 	No apportionment or reduction of the "property taxes payable" shall be required for the 
20.1 	use of a portion of the claimant's homestead for a business purpose if the claimant does not 
20.2 	deduct any business depreciation expenses for the use of a portion of the homestead in the 
20.3 	determination of federal adjusted gross income. For homesteads which are manufactured 
20.4 	homes as defined in section 273.125, subdivision 8, and for homesteads which are park 
20.5 	trailers taxed as manufactured homes under section 168.012, subdivision 9, "property 
20.6 	taxes payable" shall also include ~~19~~ 15 percent of the gross rent paid in the preceding 
20.7 	year for the site on which the homestead is located. When a homestead is owned by 
20.8 	two or more persons as joint tenants or tenants in common, such tenants shall determine 
20.9 	between them which tenant may claim the property taxes payable on the homestead. If 
20.10 	they are unable to agree, the matter shall be referred to the commissioner of revenue 
20.11 	whose decision shall be final. Property taxes are considered payable in the year prescribed 
20.12 	by law for payment of the taxes.
20.13 	In the case of a claim relating to "property taxes payable," the claimant must have 
20.14 	owned and occupied the homestead on January 2 of the year in which the tax is payable 
20.15 	and (i) the property must have been classified as homestead property pursuant to section 
20.16 	273.124, on or before December 15 of the assessment year to which the "property taxes 
20.17 	payable" relate; or (ii) the claimant must provide documentation from the local assessor 
20.18 	that application for homestead classification has been made on or before December 15 
20.19 	of the year in which the "property taxes payable" were payable and that the assessor has 
20.20 	approved the application.

20.21 	EFFECTIVE DATE. This section is effective for property tax refunds based on 
20.22 	rent paid after December 31, 2008.

20.23 	Sec. 13. Minnesota Statutes 2008, section 290C.07, is amended to read:
20.24 	290C.07 CALCULATION OF INCENTIVE PAYMENT.
20.25 	An approved claimant under the sustainable forest incentive program is eligible to 
20.26 	receive an annual payment. The payment shall equal the greater of:
20.27 	(1) the difference between the property tax that would be paid on the land using the 
20.28 	previous year's statewide average total township tax rate and the class rate for class 2b 
20.29 	timberland under section 273.13, subdivision 23, paragraph (b), if the land were valued 
20.30 	at (i) the average statewide timberland market value per acre calculated under section 
20.31 	290C.06, and (ii) the average statewide timberland current use value per acre calculated 
20.32 	under section 290C.02, subdivision 5; or
20.33 	(2) two-thirds of the property tax amount determined by using the previous year's 
20.34 	statewide average total township tax rate, the estimated market value per acre as calculated 
21.1 	in section 290C.06, and the class rate for 2b timberland under section 273.13, subdivision 
21.2 	23, paragraph (b), provided that the payment shall be no less than $7 per acre for each 
21.3 	acre enrolled in the sustainable forest incentive program and the maximum payment per 
21.4 	each Social Security number or state or federal business tax identification number shall 
21.5 	not exceed $100,000.

21.6 	EFFECTIVE DATE. This section is effective for payments made after June 30, 
21.7 	2010, based on certifications due on or after August 15, 2010.

21.8 	Sec. 14. Minnesota Statutes 2008, section 297A.68, subdivision 5, is amended to read:
21.9 		Subd. 5.Capital equipment. (a) Capital equipment is exempt. For purchases prior 
21.10 	to January 1, 2010, the tax must be imposed and collected as if the rate under section 
21.11 	297A.62, subdivision 1, applied, and then refunded in the manner provided in section 
21.12 	297A.75.
21.13 	"Capital equipment" means machinery and equipment purchased or leased, and used 
21.14 	in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, 
21.15 	or refining tangible personal property to be sold ultimately at retail if the machinery and 
21.16 	equipment are essential to the integrated production process of manufacturing, fabricating, 
21.17 	mining, or refining. Capital equipment also includes machinery and equipment 
21.18 	used primarily to electronically transmit results retrieved by a customer of an online 
21.19 	computerized data retrieval system.
21.20 	(b) Capital equipment includes, but is not limited to:
21.21 	(1) machinery and equipment used to operate, control, or regulate the production 
21.22 	equipment;
21.23 	(2) machinery and equipment used for research and development, design, quality 
21.24 	control, and testing activities;
21.25 	(3) environmental control devices that are used to maintain conditions such as 
21.26 	temperature, humidity, light, or air pressure when those conditions are essential to and are 
21.27 	part of the production process;
21.28 	(4) materials and supplies used to construct and install machinery or equipment;
21.29 	(5) repair and replacement parts, including accessories, whether purchased as spare 
21.30 	parts, repair parts, or as upgrades or modifications to machinery or equipment;
21.31 	(6) materials used for foundations that support machinery or equipment;
21.32 	(7) materials used to construct and install special purpose buildings used in the 
21.33 	production process;
22.1 	(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed 
22.2 	as part of the delivery process regardless if mounted on a chassis, repair parts for 
22.3 	ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
22.4 	(9) machinery or equipment used for research, development, design, or production 
22.5 	of computer software.
22.6 	(c) Capital equipment does not include the following:
22.7 	(1) motor vehicles taxed under chapter 297B;
22.8 	(2) machinery or equipment used to receive or store raw materials;
22.9 	(3) building materials, except for materials included in paragraph (b), clauses (6) 
22.10 	and (7);
22.11 	(4) machinery or equipment used for nonproduction purposes, including, but not 
22.12 	limited to, the following: plant security, fire prevention, first aid, and hospital stations; 
22.13 	support operations or administration; pollution control; and plant cleaning, disposal of 
22.14 	scrap and waste, plant communications, space heating, cooling, lighting, or safety;
22.15 	(5) farm machinery and aquaculture production equipment as defined by section 
22.16 	297A.61, subdivisions 12 and 13;
22.17 	(6) machinery or equipment purchased and installed by a contractor as part of an 
22.18 	improvement to real property;
22.19 	(7) machinery and equipment used by restaurants in the furnishing, preparing, or 
22.20 	serving of prepared foods as defined in section 297A.61, subdivision 31;
22.21 	(8) machinery and equipment used to furnish the services listed in section 297A.61, 
22.22 	subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii);
22.23 	(9) machinery or equipment used in the transportation, transmission, or distribution 
22.24 	of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines, 
22.25 	tanks, mains, or other means of transporting those products. This clause does not apply to 
22.26 	machinery or equipment used to blend petroleum or biodiesel fuel as defined in section 
22.27 	239.77; or
22.28 	(10) any other item that is not essential to the integrated process of manufacturing, 
22.29 	fabricating, mining, or refining.
22.30 	(d) For purposes of this subdivision:
22.31 	(1) "Equipment" means independent devices or tools separate from machinery but 
22.32 	essential to an integrated production process, including computers and computer software, 
22.33 	used in operating, controlling, or regulating machinery and equipment; and any subunit or 
22.34 	assembly comprising a component of any machinery or accessory or attachment parts of 
22.35 	machinery, such as tools, dies, jigs, patterns, and molds.
23.1 	(2) "Fabricating" means to make, build, create, produce, or assemble components or 
23.2 	property to work in a new or different manner.
23.3 	(3) "Integrated production process" means a process or series of operations through 
23.4 	which tangible personal property is manufactured, fabricated, mined, or refined. For 
23.5 	purposes of this clause, (i) manufacturing begins with the removal of raw materials 
23.6 	from inventory and ends when the last process prior to loading for shipment has been 
23.7 	completed; (ii) fabricating begins with the removal from storage or inventory of the 
23.8 	property to be assembled, processed, altered, or modified and ends with the creation 
23.9 	or production of the new or changed product; (iii) mining begins with the removal of 
23.10 	overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and 
23.11 	ends when the last process before stockpiling is completed; and (iv) refining begins with 
23.12 	the removal from inventory or storage of a natural resource and ends with the conversion 
23.13 	of the item to its completed form.
23.14 	(4) "Machinery" means mechanical, electronic, or electrical devices, including 
23.15 	computers and computer software, that are purchased or constructed to be used for the 
23.16 	activities set forth in paragraph (a), beginning with the removal of raw materials from 
23.17 	inventory through completion of the product, including packaging of the product.
23.18 	(5) "Machinery and equipment used for pollution control" means machinery and 
23.19 	equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity 
23.20 	described in paragraph (a).
23.21 	(6) "Manufacturing" means an operation or series of operations where raw materials 
23.22 	are changed in form, composition, or condition by machinery and equipment and which 
23.23 	results in the production of a new article of tangible personal property. For purposes of 
23.24 	this subdivision, "manufacturing" includes the generation of electricity or steam to be 
23.25 	sold at retail.
23.26 	(7) "Mining" means the extraction of minerals, ores, stone, or peat.
23.27 	(8) "Online data retrieval system" means a system whose cumulation of information 
23.28 	is equally available and accessible to all its customers.
23.29 	(9) "Primarily" means machinery and equipment used 50 percent or more of the time 
23.30 	in an activity described in paragraph (a).
23.31 	(10) "Refining" means the process of converting a natural resource to an intermediate 
23.32 	or finished product, including the treatment of water to be sold at retail.
23.33 	(11) This subdivision does not apply to telecommunications equipment as 
23.34 	provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit 
23.35 	for telecommunications services.

24.1 	EFFECTIVE DATE. This section is effective for sales and purchases after 
24.2 	December 31, 2009.

24.3 	Sec. 15. Minnesota Statutes 2008, section 297A.75, subdivision 1, is amended to read:
24.4 		Subdivision 1.Tax collected. The tax on the gross receipts from the sale of the 
24.5 	following exempt items must be imposed and collected as if the sale were taxable and the 
24.6 	rate under section 297A.62, subdivision 1, applied. The exempt items include:
24.7 	(1) capital equipment exempt under section 297A.68, subdivision 5, and purchased 
24.8 	prior to January 1, 2010;
24.9 	(2) building materials for an agricultural processing facility exempt under section 
24.10 	297A.71, subdivision 13;
24.11 	(3) building materials for mineral production facilities exempt under section 
24.12 	297A.71, subdivision 14;
24.13 	(4) building materials for correctional facilities under section 297A.71, subdivision 
24.14 	3;
24.15 	(5) building materials used in a residence for disabled veterans exempt under section 
24.16 	297A.71, subdivision 11;
24.17 	(6) elevators and building materials exempt under section 297A.71, subdivision 12;
24.18 	(7) building materials for the Long Lake Conservation Center exempt under section 
24.19 	297A.71, subdivision 17;
24.20 	(8) materials, supplies, fixtures, furnishings, and equipment for a county law 
24.21 	enforcement and family service center under section 297A.71, subdivision 26;
24.22 	(9) materials and supplies for qualified low-income housing under section 297A.71, 
24.23 	subdivision 23;
24.24 	(10) materials, supplies, and equipment for municipal electric utility facilities under 
24.25 	section 297A.71, subdivision 35;
24.26 	(11) equipment and materials used for the generation, transmission, and distribution 
24.27 	of electrical energy and an aerial camera package exempt under section 297A.68, 
24.28 	subdivision 37;
24.29 	(12) tangible personal property and taxable services and construction materials, 
24.30 	supplies, and equipment exempt under section 297A.68, subdivision 41;
24.31 	(13) commuter rail vehicle and repair parts under section 297A.70, subdivision 
24.32 	3, clause (11); and
24.33 	(14) materials, supplies, and equipment for construction or improvement of projects 
24.34 	and facilities under section 297A.71, subdivision 40.

24.35 	EFFECTIVE DATE. This section is effective the day following final enactment.

25.1 	Sec. 16. Minnesota Statutes 2008, section 298.285, is amended to read:
25.2 	298.285 STATE AID AMOUNT; APPROPRIATION.
25.3 	The commissioner of revenue shall determine a state aid amount equal to a tax of ~~33~~ 
25.4 	~~cents per taxable ton of iron ore concentrates for production year 2001 and 22~~ seven cents 
25.5 	per taxable ton of iron ore concentrates for production years ~~2002~~ 2008 and thereafter. 
25.6 	There is appropriated from the general fund to the commissioner an amount equal to the 
25.7 	state aid determined under this section. It must be distributed under section 298.28, as 
25.8 	if the aid were production tax revenues.

25.9 	EFFECTIVE DATE. This section is effective for distributions under Minnesota 
25.10 	Statutes, section 298.28, in calendar year 2009 and thereafter.

25.11 	Sec. 17.  REPEALER.
 25.12 	(a) Minnesota Statutes 2008, section 10A.322, subdivision 4, is repealed.
25.13 	(b) Minnesota Statutes 2008, section 290.06, subdivision 23, is repealed.

25.14 	EFFECTIVE DATE. Paragraph (a) is effective June 30, 2009. Paragraph (b) is 
25.15 	effective for refund claims based on contributions made after June 30, 2009.

25.16 	ARTICLE 2
25.17 	GREEN JOB OPPORTUNITY BUILDING ZONES

25.18 	Section 1. Minnesota Statutes 2008, section 268.19, subdivision 1, is amended to read:
25.19 		Subdivision 1. Use of data. (a) Except as provided by this section, data gathered 
25.20 	from any person under the administration of the Minnesota Unemployment Insurance Law 
25.21 	are private data on individuals or nonpublic data not on individuals as defined in section 
25.22 	13.02, subdivisions 9 and 12, and may not be disclosed except according to a district court 
25.23 	order or section 13.05. A subpoena is not considered a district court order. These data 
25.24 	may be disseminated to and used by the following agencies without the consent of the 
25.25 	subject of the data: 
25.26 	(1) state and federal agencies specifically authorized access to the data by state 
25.27 	or federal law; 
25.28 	(2) any agency of any other state or any federal agency charged with the 
25.29 	administration of an unemployment insurance program; 
25.30 	(3) any agency responsible for the maintenance of a system of public employment 
25.31 	offices for the purpose of assisting individuals in obtaining employment; 
25.32 	(4) the public authority responsible for child support in Minnesota or any other 
25.33 	state in accordance with section 256.978; 
26.1 	(5) human rights agencies within Minnesota that have enforcement powers; 
26.2 	(6) the Department of Revenue to the extent necessary for its duties under Minnesota 
26.3 	laws; 
26.4 	(7) public and private agencies responsible for administering publicly financed 
26.5 	assistance programs for the purpose of monitoring the eligibility of the program's 
26.6 	recipients; 
26.7 	(8) the Department of Labor and Industry and the Division of Insurance Fraud 
26.8 	Prevention in the Department of Commerce for uses consistent with the administration of 
26.9 	their duties under Minnesota law; 
26.10 	(9) local and state welfare agencies for monitoring the eligibility of the data subject 
26.11 	for assistance programs, or for any employment or training program administered by those 
26.12 	agencies, whether alone, in combination with another welfare agency, or in conjunction 
26.13 	with the department or to monitor and evaluate the statewide Minnesota family investment 
26.14 	program by providing data on recipients and former recipients of food stamps or food 
26.15 	support, cash assistance under chapter 256, 256D, 256J, or 256K, child care assistance 
26.16 	under chapter 119B, or medical programs under chapter 256B, 256D, or 256L; 
26.17 	(10) local and state welfare agencies for the purpose of identifying employment, 
26.18 	wages, and other information to assist in the collection of an overpayment debt in an 
26.19 	assistance program; 
26.20 	(11) local, state, and federal law enforcement agencies for the purpose of ascertaining 
26.21 	the last known address and employment location of an individual who is the subject of 
26.22 	a criminal investigation; 
26.23 	(12) the United States Citizenship and Immigration Services has access to data on 
26.24 	specific individuals and specific employers provided the specific individual or specific 
26.25 	employer is the subject of an investigation by that agency; 
26.26 	(13) the Department of Health for the purposes of epidemiologic investigations; 
26.27 	(14) the Department of Corrections for the purpose of preconfinement and 
26.28 	postconfinement employment tracking of committed offenders for the purpose of case 
26.29 	planning; ~~and~~
26.30 	(15) the state auditor to the extent necessary to conduct audits of job opportunity 
26.31 	building zones and green job opportunity building zones as required under ~~section~~ sections
26.32 	469.3201~~.~~ and 469.3701; and
26.33 	(16) any agency responsible for monitoring compliance with job opportunity 
26.34 	building zones or green job opportunity building zones business subsidy agreements.
26.35 	(b) Data on individuals and employers that are collected, maintained, or used by 
26.36 	the department in an investigation under section 268.182 are confidential as to data 
27.1 	on individuals and protected nonpublic data not on individuals as defined in section 
27.2 	13.02, subdivisions 3 and 13, and must not be disclosed except under statute or district 
27.3 	court order or to a party named in a criminal proceeding, administrative or judicial, for 
27.4 	preparation of a defense. 
27.5 	(c) Data gathered by the department in the administration of the Minnesota 
27.6 	unemployment insurance program must not be made the subject or the basis for any 
27.7 	suit in any civil proceedings, administrative or judicial, unless the action is initiated by 
27.8 	the department. 

27.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

27.10 	Sec. 2. Minnesota Statutes 2008, section 270B.14, subdivision 3, is amended to read:
27.11 		Subd. 3.Administration of enterprise, job opportunity, ~~and~~ biotechnology and 
27.12 	health sciences industry zone, and green job opportunity building zone  programs.
 27.13 	The commissioner may disclose return information relating to the taxes imposed by 
27.14 	chapters 290 and 297A to the Department of Employment and Economic Development or 
27.15 	a municipality receiving an enterprise zone designation under section 469.169 but only as 
27.16 	necessary to administer the funding limitations under section 469.169, subdivision 7, or 
27.17 	to the Department of Employment and Economic Development and appropriate officials 
27.18 	from the local government units in which a qualified business is located but only as 
27.19 	necessary to enforce the job opportunity building zone benefits under section 469.315, ~~or~~
27.20 	biotechnology and health sciences industry zone benefits under section 469.336, or green 
27.21 	job opportunity building zone benefits under section 469.365. 

27.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

27.23 	Sec. 3. Minnesota Statutes 2008, section 270B.15, is amended to read:
27.24 	270B.15 DISCLOSURE TO LEGISLATIVE AUDITOR AND STATE 
27.25 	AUDITOR.
27.26 	(a) Returns and return information must be disclosed to the legislative auditor to the 
27.27 	extent necessary for the legislative auditor to carry out sections 3.97 to 3.979. 
27.28 	(b) The commissioner must disclose return information, including the report 
27.29 	required under section 289A.12, subdivision 15, to the state auditor to the extent necessary 
27.30 	to conduct audits of job opportunity building zones as required under section 469.3201, 
27.31 	and audits of green job opportunity building zones and business subsidy agreements 
27.32 	under section 469.3701.

28.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

28.2 	Sec. 4. Minnesota Statutes 2008, section 272.02, is amended by adding a subdivision 
28.3 	to read:
28.4 		Subd. 90.Green job opportunity building zone property. (a) Improvements to 
28.5 	real property and personal property classified under section 273.13, subdivision 24, and 
28.6 	located within a green job opportunity building zone, as defined under section 469.360, 
28.7 	are exempt from ad valorem taxes levied under chapter 275.
28.8 	(b) For property to qualify for exemption under paragraph (a), the occupant must be 
28.9 	a qualified business as defined in section 469.360, subdivision 9.
28.10 	(c) The exemption applies beginning for the first assessment year after designation 
28.11 	of the green job opportunity building zone by the commissioner of employment and 
28.12 	economic development. The exemption applies to each assessment year that begins during 
28.13 	the duration of the green job opportunity building zone. To be exempt, the property must 
28.14 	be occupied by July 1 of the assessment year by a qualified business that has signed the 
28.15 	business subsidy by July 1 of the assessment year.
28.16 	(d) A business must notify the county assessor in writing of eligibility under this 
28.17 	subdivision by July 1 in order to begin receiving the exemption under this subdivision 
28.18 	for taxes payable in the following year. The business need not annually notify the county 
28.19 	assessor of its continued exemption under this subdivision, but must notify the county 
28.20 	assessor immediately if the exemption no longer applies.

28.21 	EFFECTIVE DATE. This section is effective July 1, 2009.

28.22 	Sec. 5. Minnesota Statutes 2008, section 272.029, subdivision 7, is amended to read:
28.23 		Subd. 7.Exemption. The tax imposed under this section does not apply to 
28.24 	electricity produced by wind energy conversion systems owned or operated by a qualified 
28.25 	business located in a job opportunity building zone, designated under section 469.314, or 
28.26 	a green job opportunity building zone as defined under section 469.360 for the duration of 
28.27 	the zone. The exemption applies beginning for the first calendar year after designation of 
28.28 	the zone and applies to each calendar year that begins during the designation of the zone. 

28.29 	EFFECTIVE DATE. This section is effective July 1, 2009.

28.30 	Sec. 6. Minnesota Statutes 2008, section 289A.12, is amended by adding a subdivision 
28.31 	to read:
29.1 		Subd. 16.Report of green job opportunity building zone benefits; penalty 
29.2 	for failure to file report. (a) By October 15 of each year, every qualified business, as 
29.3 	defined under section 469.360, subdivision 9, must file with the commissioner, on a form 
29.4 	prescribed by the commissioner, a report listing the tax benefits under section 469.365 
29.5 	received by the business for the previous year.
29.6 	(b) The commissioner shall send notice to each business that fails to timely submit 
29.7 	the report required under paragraph (a). The notice shall demand that the business 
29.8 	submit the report within 60 days. Where good cause exists, the commissioner may 
29.9 	extend the period for submitting the report as long as a request for extension is filed by 
29.10 	the business before the expiration of the 60-day period. The commissioner shall notify 
29.11 	the commissioner of employment and economic development and the appropriate green 
29.12 	job opportunity building zone local administrator whenever notice is sent to a business 
29.13 	under this paragraph.
29.14 	(c) A business that fails to submit the report as required under paragraph (b) is no 
29.15 	longer a qualified business under section 469.360, subdivision 9, and is subject to the 
29.16 	repayment provisions of section 469.369.

29.17 	EFFECTIVE DATE. This section is effective July 1, 2009.

29.18 	Sec. 7. Minnesota Statutes 2008, section 290.01, subdivision 19b, is amended to read:
29.19 		Subd. 19b. Subtractions from federal taxable income. For individuals, estates, 
29.20 	and trusts, there shall be subtracted from federal taxable income: 
29.21 	(1) net interest income on obligations of any authority, commission, or 
29.22 	instrumentality of the United States to the extent includable in taxable income for federal 
29.23 	income tax purposes but exempt from state income tax under the laws of the United States; 
29.24 	(2) if included in federal taxable income, the amount of any overpayment of income 
29.25 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
29.26 	is received as a refund or as a credit to another taxable year's income tax liability; 
29.27 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
29.28 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
29.29 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
29.30 	transportation of each qualifying child in attending an elementary or secondary school 
29.31 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
29.32 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
29.33 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
29.34 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
29.35 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
30.1 	"textbooks" includes books and other instructional materials and equipment purchased 
30.2 	or leased for use in elementary and secondary schools in teaching only those subjects 
30.3 	legally and commonly taught in public elementary and secondary schools in this state. 
30.4 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
30.5 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
30.6 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
30.7 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
30.8 	or materials for, or transportation to, extracurricular activities including sporting events, 
30.9 	musical or dramatic events, speech activities, driver's education, or similar programs. For 
30.10 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
30.11 	given in section 32(c)(3) of the Internal Revenue Code; 
30.12 	(4) income as provided under section 290.0802; 
30.13 	(5) to the extent included in federal adjusted gross income, income realized on 
30.14 	disposition of property exempt from tax under section 290.491; 
30.15 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
30.16 	of the Internal Revenue Code in determining federal taxable income by an individual 
30.17 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
30.18 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
30.19 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 
30.20 	under the provisions of Public Law 109-1; 
30.21 	(7) for taxable years beginning before January 1, 2008, the amount of the federal 
30.22 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
30.23 	which is included in gross income under section 87 of the Internal Revenue Code; 
30.24 	(8) for individuals who are allowed a federal foreign tax credit for taxes that do not 
30.25 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
30.26 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
30.27 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
30.28 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
30.29 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
30.30 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
30.31 	the extent they exceed the federal foreign tax credit; 
30.32 	(9) in each of the five tax years immediately following the tax year in which an 
30.33 	addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 
30.34 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
30.35 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
30.36 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
31.1 	subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 
31.2 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
31.3 	generated for the tax year of the addition. The resulting delayed depreciation cannot be 
31.4 	less than zero; 
31.5 	(10) job opportunity building zone income as provided under section 469.316; 
31.6 	(11) to the extent included in federal taxable income, the amount of compensation 
31.7 	paid to members of the Minnesota National Guard or other reserve components of the 
31.8 	United States military for active service performed in Minnesota, excluding compensation 
31.9 	for services performed under the Active Guard Reserve (AGR) program. For purposes of 
31.10 	this clause, "active service" means (i) state active service as defined in section 190.05, 
31.11 	subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 
31.12 	190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, 
31.13 	subdivision 5c, but "active service" excludes service performed in accordance with section 
31.14 	190.08, subdivision 3; 
31.15 	(12) to the extent included in federal taxable income, the amount of compensation 
31.16 	paid to Minnesota residents who are members of the armed forces of the United States or 
31.17 	United Nations for active duty performed outside Minnesota under United States Code, 
31.18 	title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 
31.19 	the United Nations; 
31.20 	(13) an amount, not to exceed $10,000, equal to qualified expenses related to a 
31.21 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
31.22 	to another person for human organ transplantation. For purposes of this clause, "organ" 
31.23 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
31.24 	"human organ transplantation" means the medical procedure by which transfer of a human 
31.25 	organ is made from the body of one person to the body of another person; "qualified 
31.26 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
31.27 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
31.28 	may be subtracted under this clause only once; and "qualified donor" means the individual 
31.29 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
31.30 	individual may claim the subtraction in this clause for each instance of organ donation for 
31.31 	transplantation during the taxable year in which the qualified expenses occur; 
31.32 	(14) in each of the five tax years immediately following the tax year in which an 
31.33 	addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 
31.34 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
31.35 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 
31.36 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
32.1 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
32.2 	tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 
32.3 	subtraction is not allowed under this clause; 
32.4 	(15) to the extent included in federal taxable income, compensation paid to a service 
32.5 	member as defined in United States Code, title 10, section 101(a)(5), for military service 
32.6 	as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2); 
32.7 	(16) international economic development zone income as provided under section 
32.8 	469.325; ~~and~~
32.9 	(17) to the extent included in federal taxable income, the amount of national service 
32.10 	educational awards received from the National Service Trust under United States Code, 
32.11 	title 42, sections 12601 to 12604, for service in an approved Americorps National Service 
32.12 	program~~.~~; and
32.13 	(18) green job opportunity building zone income as provided under section 469.366.

32.14 	EFFECTIVE DATE. This section is effective July 1, 2009.

32.15 	Sec. 8. Minnesota Statutes 2008, section 290.01, subdivision 29, is amended to read:
32.16 		Subd. 29.Taxable income. The term "taxable income" means:
32.17 	(1) for individuals, estates, and trusts, the same as taxable net income;
32.18 	(2) for corporations, the taxable net income less
32.19 	(i) the net operating loss deduction under section 290.095;
32.20 	(ii) the dividends received deduction under section 290.21, subdivision 4;
32.21 	(iii) the exemption for operating in a job opportunity building zone under section 
32.22 	469.317;
32.23 	(iv) the exemption for operating in a biotechnology and health sciences industry 
32.24 	zone under section 469.337; ~~and~~
32.25 	(v) the exemption for operating in an international economic development zone 
32.26 	under section 469.326~~.~~; and
32.27 	(vi) the exemption for operating in a green job opportunity building zone under 
32.28 	section 469.367.

32.29 	EFFECTIVE DATE. This section is effective July 1, 2009.

32.30 	Sec. 9. Minnesota Statutes 2008, section 290.06, subdivision 2c, is amended to read:
32.31 		Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income 
32.32 	taxes imposed by this chapter upon married individuals filing joint returns and surviving 
33.1 	spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
33.2 	applying to their taxable net income the following schedule of rates: 
33.3 	(1) On the first $25,680, 5.35 percent; 
33.4 	(2) On all over $25,680, but not over $102,030, 7.05 percent; 
33.5 	(3) On all over $102,030, 7.85 percent. 
33.6 	Married individuals filing separate returns, estates, and trusts must compute their 
33.7 	income tax by applying the above rates to their taxable income, except that the income 
33.8 	brackets will be one-half of the above amounts. 
33.9 	(b) The income taxes imposed by this chapter upon unmarried individuals must be 
33.10 	computed by applying to taxable net income the following schedule of rates: 
33.11 	(1) On the first $17,570, 5.35 percent; 
33.12 	(2) On all over $17,570, but not over $57,710, 7.05 percent; 
33.13 	(3) On all over $57,710, 7.85 percent. 
33.14 	(c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
33.15 	as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
33.16 	computed by applying to taxable net income the following schedule of rates: 
33.17 	(1) On the first $21,630, 5.35 percent; 
33.18 	(2) On all over $21,630, but not over $86,910, 7.05 percent; 
33.19 	(3) On all over $86,910, 7.85 percent. 
33.20 	(d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
33.21 	tax of any individual taxpayer whose taxable net income for the taxable year is less than 
33.22 	an amount determined by the commissioner must be computed in accordance with tables 
33.23 	prepared and issued by the commissioner of revenue based on income brackets of not 
33.24 	more than $100. The amount of tax for each bracket shall be computed at the rates set 
33.25 	forth in this subdivision, provided that the commissioner may disregard a fractional part of 
33.26 	a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1. 
33.27 	(e) An individual who is not a Minnesota resident for the entire year must compute 
33.28 	the individual's Minnesota income tax as provided in this subdivision. After the 
33.29 	application of the nonrefundable credits provided in this chapter, the tax liability must 
33.30 	then be multiplied by a fraction in which: 
33.31 	(1) the numerator is the individual's Minnesota source federal adjusted gross income 
33.32 	as defined in section 62 of the Internal Revenue Code and increased by the additions 
33.33 	required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), 
33.34 	and (13) and reduced by the Minnesota assignable portion of the subtraction for United 
33.35 	States government interest under section 290.01, subdivision 19b, clause (1), and the 
33.36 	subtractions under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), ~~and~~ (16), 
34.1 	and (18), after applying the allocation and assignability provisions of section 290.081, 
34.2 	clause (a), or 290.17; and 
34.3 	(2) the denominator is the individual's federal adjusted gross income as defined in 
34.4 	section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
34.5 	section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), and (13) and 
34.6 	reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (9), 
34.7 	(10), (14), (15), ~~and~~ (16), and (18). 

34.8 	EFFECTIVE DATE. This section is effective July 1, 2009.

34.9 	Sec. 10. Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision 
34.10 	to read:
34.11 		Subd. 37.Green job opportunity building zone jobs credit. A taxpayer that is 
34.12 	a qualified business, as defined in section 469.360, subdivision 9, is allowed a credit as 
34.13 	determined under section 469.368 against the tax imposed by this chapter.

34.14 	EFFECTIVE DATE. This section is effective July 1, 2009.

34.15 	Sec. 11. Minnesota Statutes 2008, section 290.067, subdivision 1, is amended to read:
34.16 		Subdivision 1.Amount of credit. (a) A taxpayer may take as a credit against the 
34.17 	tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the 
34.18 	dependent care credit for which the taxpayer is eligible pursuant to the provisions of 
34.19 	section 21 of the Internal Revenue Code subject to the limitations provided in subdivision 
34.20 	2 except that in determining whether the child qualified as a dependent, income received 
34.21 	as a Minnesota family investment program grant or allowance to or on behalf of the child 
34.22 	must not be taken into account in determining whether the child received more than half 
34.23 	of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of 
34.24 	the Internal Revenue Code do not apply.
34.25 	(b) If a child who has not attained the age of six years at the close of the taxable year 
34.26 	is cared for at a licensed family day care home operated by the child's parent, the taxpayer 
34.27 	is deemed to have paid employment-related expenses. If the child is 16 months old or 
34.28 	younger at the close of the taxable year, the amount of expenses deemed to have been paid 
34.29 	equals the maximum limit for one qualified individual under section 21(c) and (d) of the 
34.30 	Internal Revenue Code. If the child is older than 16 months of age but has not attained the 
34.31 	age of six years at the close of the taxable year, the amount of expenses deemed to have 
34.32 	been paid equals the amount the licensee would charge for the care of a child of the same 
34.33 	age for the same number of hours of care.
35.1 	(c) If a married couple:
35.2 	(1) has a child who has not attained the age of one year at the close of the taxable 
35.3 	year;
35.4 	(2) files a joint tax return for the taxable year; and
35.5 	(3) does not participate in a dependent care assistance program as defined in section 
35.6 	129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid 
35.7 	for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of 
35.8 	(i) the combined earned income of the couple or (ii) the amount of the maximum limit for 
35.9 	one qualified individual under section 21(c) and (d) of the Internal Revenue Code will 
35.10 	be deemed to be the employment related expense paid for that child. The earned income 
35.11 	limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed 
35.12 	amount. These deemed amounts apply regardless of whether any employment-related 
35.13 	expenses have been paid.
35.14 	(d) If the taxpayer is not required and does not file a federal individual income tax 
35.15 	return for the tax year, no credit is allowed for any amount paid to any person unless:
35.16 	(1) the name, address, and taxpayer identification number of the person are included 
35.17 	on the return claiming the credit; or
35.18 	(2) if the person is an organization described in section 501(c)(3) of the Internal 
35.19 	Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, 
35.20 	the name and address of the person are included on the return claiming the credit.
35.21 	In the case of a failure to provide the information required under the preceding sentence, 
35.22 	the preceding sentence does not apply if it is shown that the taxpayer exercised due 
35.23 	diligence in attempting to provide the information required.
35.24 	In the case of a nonresident, part-year resident, or a person who has earned income 
35.25 	not subject to tax under this chapter including earned income excluded pursuant to section 
35.26 	290.01, subdivision 19b, clause (10) ~~or~~, (16), or (18), the credit determined under section 
35.27 	21 of the Internal Revenue Code must be allocated based on the ratio by which the earned 
35.28 	income of the claimant and the claimant's spouse from Minnesota sources bears to the 
35.29 	total earned income of the claimant and the claimant's spouse.
35.30 	For residents of Minnesota, the subtractions for military pay under section 290.01, 
35.31 	subdivision 19b, clauses (11) and (12), are not considered "earned income not subject to 
35.32 	tax under this chapter."
35.33 	For residents of Minnesota, the exclusion of combat pay under section 112 of the 
35.34 	Internal Revenue Code is not considered "earned income not subject to tax under this 
35.35 	chapter."

36.1 	EFFECTIVE DATE. This section is effective July 1, 2009.

36.2 	Sec. 12. Minnesota Statutes 2008, section 290.0671, subdivision 1, is amended to read:
36.3 		Subdivision 1.Credit allowed. (a) An individual is allowed a credit against the tax 
36.4 	imposed by this chapter equal to a percentage of earned income. To receive a credit, a 
36.5 	taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
36.6 	(b) For individuals with no qualifying children, the credit equals 1.9125 percent of 
36.7 	the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned 
36.8 	income or adjusted gross income, whichever is greater, in excess of $5,770, but in no 
36.9 	case is the credit less than zero.
36.10 	(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first 
36.11 	$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than 
36.12 	$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income, 
36.13 	whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
36.14 	(d) For individuals with two or more qualifying children, the credit equals ten 
36.15 	percent of the first $9,720 of earned income and 20 percent of earned income over 
36.16 	$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income 
36.17 	or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is 
36.18 	the credit less than zero.
36.19 	(e) For a nonresident or part-year resident, the credit must be allocated based on the 
36.20 	percentage calculated under section 290.06, subdivision 2c, paragraph (e).
36.21 	(f) For a person who was a resident for the entire tax year and has earned income 
36.22 	not subject to tax under this chapter, including income excluded under section 290.01, 
36.23 	subdivision 19b, clause (10) ~~or~~, (16), or (18), the credit must be allocated based on the 
36.24 	ratio of federal adjusted gross income reduced by the earned income not subject to tax 
36.25 	under this chapter over federal adjusted gross income. For purposes of this paragraph, the 
36.26 	subtractions for military pay under section 290.01, subdivision 19b, clauses (11) and (12), 
36.27 	are not considered "earned income not subject to tax under this chapter."
36.28 	For the purposes of this paragraph, the exclusion of combat pay under section 112 
36.29 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
36.30 	this chapter."
36.31 	(g) For tax years beginning after December 31, 2001, and before December 31, 
36.32 	2004, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 
36.33 	paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by 
36.34 	$1,000 for married taxpayers filing joint returns.
37.1 	(h) For tax years beginning after December 31, 2004, and before December 31, 
37.2 	2007, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 
37.3 	paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by 
37.4 	$2,000 for married taxpayers filing joint returns.
37.5 	(i) For tax years beginning after December 31, 2007, and before December 31, 2010, 
37.6 	the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph 
37.7 	(d), after being adjusted for inflation under subdivision 7, are each increased by $3,000 for 
37.8 	married taxpayers filing joint returns. For tax years beginning after December 31, 2008, 
37.9 	the $3,000 is adjusted annually for inflation under subdivision 7.
37.10 	(j) The commissioner shall construct tables showing the amount of the credit at 
37.11 	various income levels and make them available to taxpayers. The tables shall follow 
37.12 	the schedule contained in this subdivision, except that the commissioner may graduate 
37.13 	the transition between income brackets.

37.14 	EFFECTIVE DATE. This section is effective July 1, 2009.

37.15 	Sec. 13. Minnesota Statutes 2008, section 290.091, subdivision 2, is amended to read:
37.16 		Subd. 2. Definitions. For purposes of the tax imposed by this section, the following 
37.17 	terms have the meanings given: 
37.18 	(a) "Alternative minimum taxable income" means the sum of the following for 
37.19 	the taxable year: 
37.20 	(1) the taxpayer's federal alternative minimum taxable income as defined in section 
37.21 	55(b)(2) of the Internal Revenue Code; 
37.22 	(2) the taxpayer's itemized deductions allowed in computing federal alternative 
37.23 	minimum taxable income, but excluding: 
37.24 	(i) the charitable contribution deduction under section 170 of the Internal Revenue 
37.25 	Code;
37.26 	(ii) the medical expense deduction; 
37.27 	(iii) the casualty, theft, and disaster loss deduction; and 
37.28 	(iv) the impairment-related work expenses of a disabled person; 
37.29 	(3) for depletion allowances computed under section 613A(c) of the Internal 
37.30 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
37.31 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
37.32 	the excess of the deduction for depletion allowable under section 611 of the Internal 
37.33 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
37.34 	taxable year (determined without regard to the depletion deduction for the taxable year); 
38.1 	(4) to the extent not included in federal alternative minimum taxable income, the 
38.2 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
38.3 	Internal Revenue Code determined without regard to subparagraph (E); 
38.4 	(5) to the extent not included in federal alternative minimum taxable income, the 
38.5 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and 
38.6 	(6) the amount of addition required by section 290.01, subdivision 19a, clauses 
38.7 	(7) to (9), (12), and (13); 
38.8 	less the sum of the amounts determined under the following: 
38.9 	(1) interest income as defined in section 290.01, subdivision 19b, clause (1); 
38.10 	(2) an overpayment of state income tax as provided by section 290.01, subdivision 
38.11 	19b, clause (2), to the extent included in federal alternative minimum taxable income; 
38.12 	(3) the amount of investment interest paid or accrued within the taxable year on 
38.13 	indebtedness to the extent that the amount does not exceed net investment income, as 
38.14 	defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 
38.15 	amounts deducted in computing federal adjusted gross income; and 
38.16 	(4) amounts subtracted from federal taxable income as provided by section 290.01, 
38.17 	subdivision 19b, clauses (6) ~~and~~, (9) to (16), and (18). 
38.18 	In the case of an estate or trust, alternative minimum taxable income must be 
38.19 	computed as provided in section 59(c) of the Internal Revenue Code. 
38.20 	(b) "Investment interest" means investment interest as defined in section 163(d)(3) 
38.21 	of the Internal Revenue Code. 
38.22 	(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 
38.23 	income after subtracting the exemption amount determined under subdivision 3. 
38.24 	(d) "Regular tax" means the tax that would be imposed under this chapter (without 
38.25 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
38.26 	credits allowed under this chapter. 
38.27 	(e) "Net minimum tax" means the minimum tax imposed by this section. 

38.28 	EFFECTIVE DATE. This section is effective July 1, 2009.

38.29 	Sec. 14. Minnesota Statutes 2008, section 290.0921, subdivision 3, is amended to read:
38.30 		Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable 
38.31 	income" is Minnesota net income as defined in section 290.01, subdivision 19, and 
38.32 	includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), 
38.33 	(f), and (h) of the Internal Revenue Code. If a corporation files a separate company 
38.34 	Minnesota tax return, the minimum tax must be computed on a separate company basis. 
39.1 	If a corporation is part of a tax group filing a unitary return, the minimum tax must be 
39.2 	computed on a unitary basis. The following adjustments must be made. 
39.3 	(1) For purposes of the depreciation adjustments under section 56(a)(1) and 
39.4 	56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in 
39.5 	service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal 
39.6 	income tax purposes, including any modification made in a taxable year under section 
39.7 	290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, 
39.8 	paragraph (c). 
39.9 	For taxable years beginning after December 31, 2000, the amount of any remaining 
39.10 	modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986, 
39.11 	section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation 
39.12 	allowance in the first taxable year after December 31, 2000. 
39.13 	(2) The portion of the depreciation deduction allowed for federal income tax 
39.14 	purposes under section 168(k) of the Internal Revenue Code that is required as an 
39.15 	addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining 
39.16 	alternative minimum taxable income. 
39.17 	(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d, 
39.18 	clause (18), is allowed as a depreciation deduction in determining alternative minimum 
39.19 	taxable income. 
39.20 	(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) 
39.21 	of the Internal Revenue Code does not apply. 
39.22 	(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal 
39.23 	Revenue Code does not apply. 
39.24 	(6) The special rule for dividends from section 936 companies under section 
39.25 	56(g)(4)(C)(iii) does not apply. 
39.26 	(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue 
39.27 	Code does not apply. 
39.28 	(8) The tax preference for intangible drilling costs under section 57(a)(2) of the 
39.29 	Internal Revenue Code must be calculated without regard to subparagraph (E) and the 
39.30 	subtraction under section 290.01, subdivision 19d, clause (4). 
39.31 	(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal 
39.32 	Revenue Code does not apply. 
39.33 	(10) The tax preference for charitable contributions of appreciated property under 
39.34 	section 57(a)(6) of the Internal Revenue Code does not apply. 
39.35 	(11) For purposes of calculating the tax preference for accelerated depreciation or 
39.36 	amortization on certain property placed in service before January 1, 1987, under section 
40.1 	57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the 
40.2 	deduction allowed under section 290.01, subdivision 19e. 
40.3 	For taxable years beginning after December 31, 2000, the amount of any remaining 
40.4 	modification made under section 290.01, subdivision 19e, not previously deducted is a 
40.5 	depreciation or amortization allowance in the first taxable year after December 31, 2004. 
40.6 	(12) For purposes of calculating the adjustment for adjusted current earnings in 
40.7 	section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable 
40.8 	income" as it is used in section 56(g) of the Internal Revenue Code, means alternative 
40.9 	minimum taxable income as defined in this subdivision, determined without regard to the 
40.10 	adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code. 
40.11 	(13) For purposes of determining the amount of adjusted current earnings under 
40.12 	section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 
40.13 	56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend 
40.14 	gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the 
40.15 	amount of refunds of income, excise, or franchise taxes subtracted as provided in section 
40.16 	290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other like 
40.17 	income subtracted as provided in section 290.01, subdivision 19d, clause (10). 
40.18 	(14) Alternative minimum taxable income excludes the income from operating in a 
40.19 	job opportunity building zone as provided under section 469.317. 
40.20 	(15) Alternative minimum taxable income excludes the income from operating in a 
40.21 	biotechnology and health sciences industry zone as provided under section 469.337. 
40.22 	(16) Alternative minimum taxable income excludes the income from operating in an 
40.23 	international economic development zone as provided under section 469.326. 
40.24 	(17) Alternative minimum taxable income excludes the income from operating in a 
40.25 	green job opportunity building zone as provided under section 469.367.
40.26 	Items of tax preference must not be reduced below zero as a result of the 
40.27 	modifications in this subdivision. 

40.28 	EFFECTIVE DATE. This section is effective July 1, 2009.

40.29 	Sec. 15. Minnesota Statutes 2008, section 290.0922, subdivision 2, is amended to read:
40.30 		Subd. 2.Exemptions. The following entities are exempt from the tax imposed 
40.31 	by this section:
40.32 	(1) corporations exempt from tax under section 290.05;
40.33 	(2) real estate investment trusts;
40.34 	(3) regulated investment companies or a fund thereof; and
41.1 	(4) entities having a valid election in effect under section 860D(b) of the Internal 
41.2 	Revenue Code;
41.3 	(5) town and farmers' mutual insurance companies;
41.4 	(6) cooperatives organized under chapter 308A or 308B that provide housing 
41.5 	exclusively to persons age 55 and over and are classified as homesteads under section 
41.6 	273.124, subdivision 3;
41.7 	(7) an entity, if for the taxable year all of its property is located in a job opportunity 
41.8 	building zone designated under section 469.314 and all of its payroll is a job opportunity 
41.9 	building zone payroll under section 469.310; ~~and~~
41.10 	(8) an entity, if for the taxable year all of its property is located in an international 
41.11 	economic development zone designated under section 469.322, and all of its payroll is 
41.12 	international economic development zone payroll under section 469.321. The exemption 
41.13 	under this clause applies to taxable years beginning during the duration of the international 
41.14 	economic development zone~~.~~; and
41.15 	(9) an entity, if for the taxable year all of its property is located in a green job 
41.16 	opportunity building zone under section 469.360, subdivision 4, and all of its payroll is 
41.17 	green job opportunity building zone payroll under section 469.360, subdivision 5.
41.18 	Entities not specifically exempted by this subdivision are subject to tax under this 
41.19 	section, notwithstanding section 290.05.

41.20 	EFFECTIVE DATE. This section is effective July 1, 2009.

41.21 	Sec. 16. Minnesota Statutes 2008, section 290.0922, subdivision 3, is amended to read:
41.22 		Subd. 3.Definitions. (a) "Minnesota sales or receipts" means the total sales 
41.23 	apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts 
41.24 	attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the 
41.25 	total sales or receipts apportioned or attributed to Minnesota pursuant to any other 
41.26 	apportionment formula applicable to the taxpayer.
41.27 	(b) "Minnesota property" means total Minnesota tangible property as provided in 
41.28 	section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota, 
41.29 	but does not include: (1) property located in a job opportunity building zone designated 
41.30 	under section 469.314, (2) property of a qualified business located in a biotechnology 
41.31 	and health sciences industry zone designated under section 469.334, ~~or~~ (3) for taxable 
41.32 	years beginning during the duration of the zone, property of a qualified business located 
41.33 	in the international economic development zone designated under section 469.322, or 
41.34 	(4) property of a qualified business located in a green job opportunity building zone as 
41.35 	defined under section 469.360. Intangible property shall not be included in Minnesota 
42.1 	property for purposes of this section. Taxpayers who do not utilize tangible property to 
42.2 	apportion income shall nevertheless include Minnesota property for purposes of this 
42.3 	section. On a return for a short taxable year, the amount of Minnesota property owned, 
42.4 	as determined under section 290.191, shall be included in Minnesota property based on 
42.5 	a fraction in which the numerator is the number of days in the short taxable year and 
42.6 	the denominator is 365.
42.7 	(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section 
42.8 	290.191, subdivision 12, but does not include: (1) job opportunity building zone payrolls 
42.9 	under section 469.310, subdivision 8, (2) biotechnology and health sciences industry zone 
42.10 	payrolls under section 469.330, subdivision 8, ~~or~~ (3) for taxable years beginning during 
42.11 	the duration of the zone, international economic development zone payrolls under section 
42.12 	469.321, subdivision 9, (4) green job opportunity building zone payroll under section 
42.13 	469.360, subdivision 5. Taxpayers who do not utilize payrolls to apportion income shall 
42.14 	nevertheless include Minnesota payrolls for purposes of this section.

42.15 	EFFECTIVE DATE. This section is effective July 1, 2009.

42.16 	Sec. 17. Minnesota Statutes 2008, section 297A.68, is amended by adding a 
42.17 	subdivision to read:
42.18 		Subd. 42.Green job opportunity building zones. (a) Purchases of tangible 
42.19 	personal property or taxable services by a qualified business, as defined in section 469.360, 
42.20 	are exempt if the property or services are primarily used or consumed in a green job 
42.21 	opportunity building zone as defined in section 469.360.
42.22 	(b) Purchase and use of construction materials and supplies used or consumed in, 
42.23 	and equipment incorporated into, the construction of improvements to real property in a 
42.24 	green job opportunity building zone are exempt if the improvements after completion of 
42.25 	construction are to be used in the conduct of a qualified business, as defined in section 
42.26 	469.360. This exemption applies regardless of whether the purchases are made by the 
42.27 	business or a contractor.
42.28 	(c) The exemptions under this subdivision apply to a local sales and use tax 
42.29 	regardless of whether the local sales tax is imposed on the sales taxable as defined under 
42.30 	this chapter.
42.31 	(d) This subdivision applies to sales, if the purchase was made and delivery received 
42.32 	during the duration of the zone.

42.33 	EFFECTIVE DATE. This section is effective July 1, 2009.

43.1 	Sec. 18. [469.360] DEFINITIONS.
43.2 		Subdivision 1.Scope. For purposes of sections 469.360 to 469.3693, the following 
43.3 	terms have the meanings given.
43.4 		Subd. 2.Applicant. "Applicant" means a local government unit or units applying 
43.5 	for designation of an area as a green job opportunity building zone or a joint powers board, 
43.6 	established under section 471.59, acting on behalf of two or more local government units.
43.7 		Subd. 3.Commissioner. "Commissioner" means the commissioner of employment 
43.8 	and economic development.
43.9 		Subd. 4.Green job opportunity building zone, green JOBZ, or zone. "Green 
43.10 	job opportunity building zone," "green JOBZ," or "zone" means a zone designated by 
43.11 	the commissioner under section 469.364.
43.12 		Subd. 5.Green job opportunity building zone payroll factor. "Green job 
43.13 	opportunity building zone payroll factor" or "green job opportunity building zone payroll" 
43.14 	is that portion of the payroll factor under section 290.191 that represents:
43.15 	(1) wages or salaries paid to an individual for services performed in a green job 
43.16 	opportunity building zone; or
43.17 	(2) wages or salaries paid to individuals working from offices within a green job 
43.18 	opportunity building zone if their employment requires them to work outside the zone 
43.19 	and the work is incidental to the work performed by the individual within the zone. 
43.20 	However, in no case does zone payroll include wages paid for work performed outside 
43.21 	the zone of an employee who performs more than ten percent of total services for the 
43.22 	employer outside the zone.
43.23 		Subd. 6.Green job opportunity building zone percentage or zone percentage.
 43.24 	"Green job opportunity building zone percentage" or "zone percentage" means the 
43.25 	following fraction reduced to a percentage:
43.26 	(1) the numerator of the fraction is:
43.27 	(i) the ratio of the taxpayer's property factor under section 290.191 located in the 
43.28 	zone for the taxable year over the property factor numerator determined under section 
43.29 	290.191, plus
43.30 	(ii) the ratio of the taxpayer's green job opportunity building zone payroll factor 
43.31 	under subdivision 5 over the payroll factor numerator determined under section 290.191; 
43.32 	and
43.33 	(2) the denominator of the fraction is two.
43.34 	When calculating the zone percentage for a business that is part of a unitary business 
43.35 	as defined under section 290.17, subdivision 4, the denominator of the payroll and 
44.1 	property factors is the Minnesota payroll and property of the unitary business as reported 
44.2 	on the combined report under section 290.17, subdivision 4, paragraph (j).
44.3 		Subd. 7.Local government unit. "Local government unit" means a statutory or 
44.4 	home rule charter city, county, town, Iron Range resources and rehabilitation agency, 
44.5 	regional development commission, or a federally designated economic development 
44.6 	district.
44.7 		Subd. 8.Person. "Person" includes an individual, corporation, partnership, limited 
44.8 	liability company, association, or any other entity.
44.9 		Subd. 9.Qualified business. (a) A person carrying on a trade or business at a place 
44.10 	of business located within a green job opportunity building zone is a qualified business 
44.11 	for the purposes of sections 469.360 to 469.3693 according to the criteria in paragraphs 
44.12 	(b) to (f).
44.13 	(b) A person is a qualified business only on those parcels of land for which the 
44.14 	person has entered into a business subsidy agreement approved by the commissioner, as 
44.15 	required under section 469.363, with the appropriate local government unit in which the 
44.16 	parcels are located.
44.17 	(c) A person is not a qualified business unless the business meets all of the 
44.18 	requirements of paragraph (b) and either meets the green economy definition specified in 
44.19 	section 116J.437 or:
44.20 	(1) is predominantly engaged in one or more of the following industry sectors:
44.21 	(i) green products: businesses related to the manufacture of products, used by 
44.22 	the building, transport, consumer products and industrial products sectors, that reduce 
44.23 	environmental impact and increase the efficiency of the use of resources such as energy, 
44.24 	water, and materials;
44.25 	(ii) renewable energy: businesses related to the production of energy from natural 
44.26 	resources such as solar, wind, hydropower, geothermal, biomass (including but not limited 
44.27 	to animal waste and crop waste) and biofuels (including but not limited to ethanol and 
44.28 	biodiesel), as well as from waste heat recovery and from the use of biomass for energy 
44.29 	production including cogeneration;
44.30 	(iii) green services: businesses that provide services that help other businesses or 
44.31 	consumers utilize green products and technologies, build energy infrastructure, recycle, 
44.32 	and manage waste; or
44.33 	(iv) environmental conservation: businesses related to the conservation of energy, 
44.34 	air, water, and land, including air emissions control, environmental monitoring and 
44.35 	compliance, water conservation, wastewater treatment, land management (including but 
44.36 	not limited to prairie), natural pesticides, aquaculture, and organic farming;
45.1 	(2) is a new facility in Minnesota, not a relocation of an existing Minnesota facility; 
45.2 	and
45.3 	(3) enters a business subsidy agreement that:
45.4 	(i) provides for repayment of all tax benefits enumerated under section 469.365
45.5 	to the business under the procedures in section 469.369, if the requirements of this 
45.6 	subdivision are not met for the taxable year or for taxes payable during the year in which 
45.7 	the requirements were not met; and
45.8 	(ii) contains any other terms the commissioner determines appropriate.
45.9 	(d) A business is not a qualified business if, at its location or locations in the zone, 
45.10 	the business is primarily engaged in making retail sales to purchasers who are physically 
45.11 	present at the business's zone location.
45.12 	(e) A qualifying business must pay each employee compensation, including benefits 
45.13 	not mandated by law, that on an annualized basis is equal to at least 110 percent of the 
45.14 	federal poverty level for a family of four.
45.15 	(f) A qualifying business must pay prevailing wage for construction, installation, 
45.16 	remodeling, and repair as required by section 116J.871.
45.17 		Subd. 10.Relocation. (a) "Relocation" means that the trade or business:
45.18 	(1) ceases one or more operations or functions at another location in Minnesota 
45.19 	and begins performing substantially the same operations or functions at a location in a 
45.20 	green job opportunity building zone; or
45.21 	(2) reduces employment at another location in Minnesota during a period starting 
45.22 	one year before and ending one year after it begins operations in a green job opportunity 
45.23 	building zone and its employees in the zone are engaged in the same line of business as 
45.24 	the employees at the location where it reduced employment.
45.25 	(b) "Relocation" does not include establishing a new facility by a business that does 
45.26 	not replace or supplant an existing operation or employment, in whole or in part.
45.27 	(c) "Trade or business" means any business entity that is substantially similar in 
45.28 	operation or ownership to the business entity seeking to be a qualified business under 
45.29 	this section.

45.30 	EFFECTIVE DATE. This section is effective the day following final enactment.

45.31 	Sec. 19. [469.361] GREEN JOB OPPORTUNITY BUILDING ZONES; 
45.32 	LIMITATIONS.
45.33 		Subdivision. 1.Zones. The area of a green job opportunity building zone must 
45.34 	consist of defined property boundaries specified in the business subsidy agreement.
46.1 		Subd. 2.Location. A green job opportunity building zone may be located anywhere 
46.2 	in Minnesota.
46.3 		Subd. 3.Border city development zones. (a) The area of a green job opportunity 
46.4 	building zone must not include the area of a border city development zone designated 
46.5 	under section 469.1731. The city must remove property from a border city development 
46.6 	zone contingent upon the area being designated as a green job opportunity building zone. 
46.7 	Before removing a parcel of property from a border city development zone, the city must 
46.8 	obtain the written consent to the removal from each recipient that is located on the parcel 
46.9 	and receives incentives under the border city development zone. Consent of any other 
46.10 	property owner or taxpayer in the border city development zone is not required.
46.11 	(b) A city must not provide tax incentives under section 469.1734 to individuals or 
46.12 	businesses for operations or activity in a green job opportunity building zone.
46.13 		Subd. 4.Duration limit. (a) The maximum duration of a zone is 12 years. The 
46.14 	local government unit may request a shorter duration. The commissioner may specify a 
46.15 	shorter duration, regardless of the requested duration, in order to ensure that benefits 
46.16 	to the state outweigh the costs.
46.17 	(b) The commissioner may not approve any business subsidy agreements after 
46.18 	December 31, 2015.

46.19 	EFFECTIVE DATE. This section is effective the day following final enactment.

46.20 	Sec. 20. [469.362] APPLICATION FOR DESIGNATION.
46.21 		Subdivision 1.Eligibility. One or more local government units, or a joint powers 
46.22 	board under section 471.59, acting on behalf of two or more units, may apply for 
46.23 	designation of an area as a green job opportunity building zone. All or part of the area 
46.24 	proposed for designation as a zone must be located within the boundaries of each of 
46.25 	the governmental units.
46.26 		Subd. 2.Application. In order to receive designation for a green job opportunity 
46.27 	building zone, a local government unit must submit an application to the commissioner 
46.28 	in the form and manner designated by the commissioner.
46.29 		Subd. 3.State review criteria. (a) The commissioner may only approve an 
46.30 	application after considering:
46.31 	(1) whether the business has local or Minnesota competitors that will be significantly 
46.32 	and adversely effected by the business subsidy agreement;
46.33 	(2) whether the proposed job creation, job retention, and capital investment is 
46.34 	commensurate with the estimated tax benefits provided to the business by participating 
46.35 	in green JOBZ; and
47.1 	(3) whether other financial assistance is available.
47.2 	(b) Additionally, the commissioner may only approve a business subsidy agreement 
47.3 	after considering if without the estimated tax benefits, the business:
47.4 	(1) would not have begun operations within Minnesota;
47.5 	(2) would not have relocated from outside the state to Minnesota;
47.6 	(3) would have moved to another state or expanded in another state rather than 
47.7 	remaining or expanding in Minnesota; or
47.8 	(4) would not have opened a new facility in Minnesota.
47.9 	(c) The local government unit and the qualified business must provide the 
47.10 	commissioner with the information that the commissioner needs to review a business 
47.11 	subsidy agreement under paragraphs (a) and (b). The information must be in the form 
47.12 	and manner required by the commissioner.

47.13 	EFFECTIVE DATE. This section is effective the day following final enactment.

47.14 	Sec. 21. [469.363] BUSINESS SUBSIDY AGREEMENTS; REPORTS.
47.15 		Subdivision 1.Green JOBZ business subsidy agreement. A business subsidy 
47.16 	agreement required under section 469.360, subdivision 9, paragraph (c), clause (3), must 
47.17 	comply with this section.
47.18 		Subd. 2.Business subsidy agreement requirements. A business subsidy 
47.19 	agreement is not effective until the commissioner has approved the agreement in writing. 
47.20 	The commissioner may not approve an agreement that violates sections 116J.993 to 
47.21 	116J.995 or 469.360 to 469.3701. The commissioner may not approve an agreement 
47.22 	unless:
47.23 	(1) the qualified business is required to create or retain a minimum number of jobs;
47.24 	(2) the agreement defines "jobs" for purposes of determining compliance with wage 
47.25 	and job goals as all jobs that constitute "employment" for purposes of state unemployment 
47.26 	insurance;
47.27 	(3) the qualified business is required to report all jobs created or retained because of 
47.28 	green JOBZ as a separate business location for purposes of section 268.044; and
47.29 	(4) the qualified business agrees to provide the appropriate data practices release so 
47.30 	that the commissioner of revenue and the commissioner of employment and economic 
47.31 	development can monitor compliance with the terms of the agreement.
47.32 		Subd. 3.Standard agreement. The commissioner must develop and require the 
47.33 	use of a standard business subsidy agreement that imposes definitive and enforceable 
47.34 	obligations on the qualified business.
48.1 		Subd. 4.Business subsidy reports. (a) A local government unit must report to the 
48.2 	commissioner on the two-year anniversary date of the business subsidy agreement on the 
48.3 	progress of the qualified business in meeting the goals listed in the business subsidy 
48.4 	agreement.
48.5 	(b) A local government unit must annually report to the commissioner on the 
48.6 	progress of the qualified business in meeting the goals listed in the business subsidy 
48.7 	agreement as required under section 116J.994, subdivisions 7 and 8.
48.8 	(c) The commissioner must hold a qualified business out of compliance or remove 
48.9 	the business from the program if the qualified business fails to provide the information 
48.10 	requested by the local government unit for the report under paragraph (a) within 30 days 
48.11 	of written notice that the information is overdue.
48.12 		Subd. 5.Public notice and hearing. A local government unit must provide public 
48.13 	notice and hearing as required under section 116J.994, subdivision 5, before approving a 
48.14 	business subsidy agreement. Public notice of a proposed business subsidy agreement must 
48.15 	be published in a local newspaper of general circulation. The public hearing must be held 
48.16 	in a location specified by the local government unit. Notwithstanding the requirements of 
48.17 	section 116J.994, subdivision 5, the commissioner is not required to provide an additional 
48.18 	public notice and hearing when entering into a business subsidy agreement with a local 
48.19 	government unit and a qualified business.

48.20 	EFFECTIVE DATE. This section is effective the day following final enactment.

48.21 	Sec. 22. [469.364] DESIGNATION OF GREEN JOB OPPORTUNITY 
48.22 	BUILDING ZONES.
48.23 		Subdivision 1.Designation schedule. Green job opportunity building zones are 
48.24 	designated continuously upon approval of an application by the commissioner. The 
48.25 	duration of the zone, as defined in section 469.361, subdivision 4, starts from the date the 
48.26 	commissioner approves the business subsidy agreement.
48.27 		Subd. 2.Geographic distribution. The commissioner shall have as a goal the 
48.28 	geographic distribution of zones around the state.
48.29 		Subd. 3.Rulemaking exemption. The commissioner's actions in establishing 
48.30 	procedures, requirements, and making determinations to administer sections 469.360 to 
48.31 	469.3693 are not a rule for purposes of chapter 14 and are not subject to the Administrative 
48.32 	Procedure Act contained in chapter 14 and are not subject to section 14.386.

48.33 	EFFECTIVE DATE. This section is effective the day following final enactment.

49.1 	Sec. 23. [469.365] TAX INCENTIVES AVAILABLE IN ZONES.
49.2 	Qualified businesses that operate in a green job opportunity building zone, 
49.3 	individuals who invest in a qualified business that operates in a green job opportunity 
49.4 	building zone, and property located in a green job opportunity building zone qualify for:
49.5 	(1) exemption from individual income taxes as provided under section 469.366;
49.6 	(2) exemption from corporate franchise taxes as provided under section 469.367;
49.7 	(3) exemption from the state sales and use tax and any local sales and use taxes on 
49.8 	qualifying purchases as provided in section 297A.68, subdivision 42;
49.9 	(4) exemption from the property tax as provided in section 272.02, subdivision 90;
49.10 	(5) exemption from the wind energy production tax under section 272.029, 
49.11 	subdivision 7; and
49.12 	(6) the jobs credit allowed under section 469.368.

49.13 	EFFECTIVE DATE. This section is effective July 1, 2009.

49.14 	Sec. 24. [469.366] INDIVIDUAL INCOME TAX EXEMPTION.
49.15 		Subdivision 1.Application. An individual, estate, or trust operating a trade or 
49.16 	business in a green job opportunity building zone, and an individual, estate, or trust 
49.17 	making a qualifying investment in a qualified business operating in a green job opportunity 
49.18 	building zone qualifies for the exemptions from taxes imposed under chapter 290, as 
49.19 	provided in this section. The exemptions provided under this section apply only to the 
49.20 	extent that the income otherwise would be taxable under chapter 290. Subtractions under 
49.21 	this section from federal taxable income, alternative minimum taxable income, or any 
49.22 	other base subject to tax are limited to the amount that otherwise would be included in 
49.23 	the tax base absent the exemption under this section. This section applies only to taxable 
49.24 	years beginning during the duration of the green job opportunity building zone.
49.25 		Subd. 2.Rents. An individual, estate, or trust is exempt from the taxes imposed 
49.26 	under chapter 290 on net rents derived from real or tangible personal property used 
49.27 	by a qualified business and located in a zone for a taxable year in which the zone was 
49.28 	designated a green job opportunity building zone. If tangible personal property was used 
49.29 	both within and outside of the zone by the qualified business, the exemption amount for 
49.30 	the net rental income must be multiplied by a fraction, the numerator of which is the 
49.31 	number of days the property was used in the zone and the denominator of which is the 
49.32 	total days the property is rented by the qualified business.
49.33 		Subd. 3.Business income. An individual, estate, or trust is exempt from the taxes 
49.34 	imposed under chapter 290 on net income from the operation of a qualified business in 
49.35 	a green job opportunity building zone. If the trade or business is carried on within and 
50.1 	without the zone and the individual is not a resident of Minnesota, or the taxpayer is an 
50.2 	estate or trust, the exemption must be apportioned based on the zone percentage and the 
50.3 	relocation payroll percentage for the taxable year. If the trade or business is carried on 
50.4 	within and without the zone and the individual is a resident of Minnesota, the exemption 
50.5 	must be apportioned based on the zone percentage and the relocation payroll percentage 
50.6 	for the taxable year, except the ratios under section 469.360, subdivision 6, clause (1), 
50.7 	items (i) and (ii), must use the denominators of the property and payroll factors determined 
50.8 	under section 290.191. No subtraction is allowed under this subdivision in excess of 20 
50.9 	percent of the sum of the green job opportunity building zone payroll and the adjusted 
50.10 	basis of the property at the time that the property is first used in the green job opportunity 
50.11 	building zone by the business.
50.12 		Subd. 4.Capital gains. (a) An individual, estate, or trust is exempt from the taxes 
50.13 	imposed under chapter 290 on:
50.14 	(1) net gain derived on a sale or exchange of real property located in the zone and 
50.15 	used by a qualified business. If the property was held by the individual, estate, or trust 
50.16 	during a period when the zone was not designated, the gain must be prorated based on 
50.17 	the percentage of time, measured in calendar days, that the real property was held by the 
50.18 	individual, estate, or trust during the period the zone designation was in effect to the total 
50.19 	period of time the real property was held by the individual;
50.20 	(2) net gain derived on a sale or exchange of tangible personal property used by a 
50.21 	qualified business in the zone. If the property was held by the individual, estate, or trust 
50.22 	during a period when the zone was not designated, the gain must be prorated based on 
50.23 	the percentage of time, measured in calendar days, that the property was held by the 
50.24 	individual, estate, or trust during the period the zone designation was in effect to the total 
50.25 	period of time the property was held by the individual. If the tangible personal property 
50.26 	was used outside of the zone during the period of the zone's designation, the exemption 
50.27 	must be multiplied by a fraction, the numerator of which is the number of days the 
50.28 	property was used in the zone during the time of the designation and the denominator of 
50.29 	which is the total days the property was held during the time of the designation; and
50.30 	(3) net gain derived on a sale of an ownership interest in a qualified business 
50.31 	operating in the green job opportunity building zone, meeting the requirements of 
50.32 	paragraph (b). The exemption on the gain must be multiplied by the zone percentage of 
50.33 	the business for the taxable year prior to the sale.
50.34 	(b) A qualified business meets the requirements of paragraph (a), clause (3), if it is 
50.35 	a corporation, an S corporation, or a partnership, and for the taxable year its green job 
50.36 	opportunity building zone percentage exceeds 25 percent. For purposes of paragraph 
51.1 	(a), clause (3), the zone percentage must be calculated by modifying the ratios under 
51.2 	section 469.360, subdivision  6, clause (1), items (i) and (ii), to use the denominators of 
51.3 	the property and payroll factors determined under section 290.191. Upon the request of 
51.4 	an individual, estate, or trust holding an ownership interest in the entity, the entity must 
51.5 	certify to the owner, in writing, the green job opportunity building zone percentage needed 
51.6 	to determine the exemption.

51.7 	EFFECTIVE DATE. This section is effective July 1, 2009.

51.8 	Sec. 25. [469.367] CORPORATE FRANCHISE TAX EXEMPTION.
51.9 	(a) A qualified business is exempt from taxation under section 290.02, the alternative 
51.10 	minimum tax under section 290.0921, and the minimum fee under section 290.0922, 
51.11 	on the portion of its income attributable to operations within the zone. This exemption 
51.12 	is determined as follows:
51.13 	(1) for purposes of the tax imposed under section 290.02, by multiplying its taxable 
51.14 	net income by its zone percentage and by its relocation payroll percentage and subtracting 
51.15 	the result in determining taxable income;
51.16 	(2) for purposes of the alternative minimum tax under section 290.0921, by 
51.17 	multiplying its alternative minimum taxable income by its zone percentage and by its 
51.18 	relocation payroll percentage and reducing alternative minimum taxable income by this 
51.19 	amount; and
51.20 	(3) for purposes of the minimum fee under section 290.0922, by excluding property 
51.21 	and payroll in the zone from the computations of the fee or by exempting the entity under 
51.22 	section 290.0922, subdivision 2, clause (9).
51.23 	(b) No subtraction is allowed under paragraph (a), clauses (1) and (2), in excess of 
51.24 	20 percent of the sum of the corporation's green job opportunity building zone payroll and 
51.25 	the adjusted basis of the property at the time that the property is first used in the green job 
51.26 	opportunity building zone by the corporation.
51.27 	(c) This section applies only to taxable years beginning during the duration of the 
51.28 	green job opportunity building zone.

51.29 	EFFECTIVE DATE. This section is effective July 1, 2009.

51.30 	Sec. 26. [469.368] GREEN JOBS CREDIT.
51.31 		Subdivision 1.Credit allowed. A qualified business is allowed a credit against the 
51.32 	taxes imposed under chapter 290. The credit equals seven percent of the:
51.33 	(1) zone payroll for the taxable year; minus
52.1 	(2) the job opportunity zone wage threshold for the taxable year determined under 
52.2 	section 469.318, subdivision 1, clause (2), and subdivision 3, multiplied by the number 
52.3 	of full-time equivalent employees that the qualified business employs in the green job 
52.4 	opportunity building zone for the taxable year.
52.5 		Subd. 2.Definitions. (a) For purposes of this section, the following terms have 
52.6 	the meanings given.
52.7 	(b) "Full-time equivalent employees" means the equivalent of annualized expected 
52.8 	hours of work equal to 2,080 hours.
52.9 	(c) "Zone payroll" means wages or salaries used to determine the zone payroll factor 
52.10 	for the qualified business, less the amount of compensation attributable to any employee 
52.11 	that exceeds the ceiling calculated for the taxable year under section 469.318, subdivisions 
52.12 	2, paragraph (e), and 3.
52.13 		Subd. 3.Refundable. If the amount of the credit exceeds the liability for tax under 
52.14 	chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
52.15 		Subd. 4.Appropriation. An amount sufficient to pay the refunds authorized by this 
52.16 	section is appropriated to the commissioner of revenue from the general fund.

52.17 	EFFECTIVE DATE. This section is effective July 1, 2009.

52.18 	Sec. 27. [469.369] REPAYMENT OF TAX BENEFITS BY BUSINESSES THAT 
52.19 	NO LONGER OPERATE IN A ZONE.
52.20 		Subdivision 1.Repayment obligation. A business must repay the total tax benefits 
52.21 	listed in section 469.365 received during the two years immediately before it (1) ceased to 
52.22 	perform a substantial level of activities described in the business subsidy agreement, or (2) 
52.23 	otherwise ceased to be a qualified business, other than those subject to the provisions of 
52.24 	section 469.3691.
52.25 		Subd. 1a.Repayment obligation of businesses not operating in zone. Persons 
52.26 	that receive benefits without operating a business in a zone are subject to repayment 
52.27 	under this section if the business for which those benefits relate is subject to repayment 
52.28 	under this section. Such persons are deemed to have ceased performing in the zone on 
52.29 	the same day that the qualified business for which the benefits relate becomes subject to 
52.30 	repayment under subdivision 1.
52.31 		Subd. 2.Definitions. (a) For purposes of this section, the following terms have 
52.32 	the meanings given.
52.33 	(b) "Business" means any person that received tax benefits enumerated in section 
52.34 	469.365.
52.35 	(c) "Commissioner" means the commissioner of revenue.
53.1 	(d) "Persons that receive benefits without operating a business in a zone" means 
53.2 	persons that claim benefits under section 469.366, subdivision 2 or 4, as well as persons 
53.3 	that own property leased by a qualified business and are eligible for benefits under section 
53.4 	272.02, subdivision 90, or 297A.68, subdivision 42, paragraph (b).
53.5 		Subd. 3.Disposition of repayment. The repayment must be paid to the state to 
53.6 	the extent it represents a state tax reduction and to the county to the extent it represents a 
53.7 	property tax reduction. Any amount repaid to the state must be deposited in the general 
53.8 	fund. Any amount repaid to the county for the property tax exemption must be distributed 
53.9 	to the taxing authorities with authority to levy taxes in the zone in the same manner 
53.10 	provided for distribution of payment of delinquent property taxes. Any repayment of 
53.11 	local sales taxes must be repaid to the commissioner for distribution to the city or county 
53.12 	imposing the local sales tax.
53.13 		Subd. 4.Repayment procedures. (a) For the repayment of taxes imposed under 
53.14 	chapter 290 or 297A or local taxes collected pursuant to section 297A.99, a business must 
53.15 	file an amended return with the commissioner of revenue and pay any taxes required 
53.16 	to be repaid within 30 days after becoming subject to repayment under this section. 
53.17 	The amount required to be repaid is determined by calculating the tax for the period or 
53.18 	periods for which repayment is required without regard to the exemptions and credits 
53.19 	allowed under section 469.365.
53.20 	(b) For the repayment of property taxes, the county auditor shall prepare a tax 
53.21 	statement for the business, applying the applicable tax extension rates for each payable 
53.22 	year and provide a copy to the business and to the taxpayer of record. The business must 
53.23 	pay the taxes to the county treasurer within 30 days after receipt of the tax statement. The 
53.24 	business or the taxpayer of record may appeal the valuation and determination of the 
53.25 	property tax to the Tax Court within 30 days after receipt of the tax statement.
53.26 	(c) The provisions of chapters 270C and 289A relating to the commissioner's 
53.27 	authority to audit, assess, and collect the tax and to hear appeals are applicable to the 
53.28 	repayment required under paragraph (a). The commissioner may impose civil penalties as 
53.29 	provided in chapter 289A, and the additional tax and penalties are subject to interest at the 
53.30 	rate provided in section 270C.40, from 30 days after becoming subject to repayment under 
53.31 	this section until the date the tax is paid.
53.32 	(d) If a property tax is not repaid under paragraph (b), the county treasurer shall 
53.33 	add the amount required to be repaid to the property taxes assessed against the property 
53.34 	for payment in the year following the year in which the auditor provided the statement 
53.35 	under paragraph (b).
54.1 	(e) For determining the tax required to be repaid, a reduction of a state or local 
54.2 	sales or use tax is deemed to have been received on the date that the good or service was 
54.3 	purchased or first put to a taxable use. In the case of an income tax or franchise tax, 
54.4 	including the credit payable under section 469.368, a reduction of tax is deemed to have 
54.5 	been received for the two most recent tax years that have ended prior to the date that the 
54.6 	business became subject to repayment under this section. In the case of a property tax, a 
54.7 	reduction of tax is deemed to have been received for the taxes payable in the year that 
54.8 	the business became subject to repayment under this section and for the taxes payable in 
54.9 	the prior year.
54.10 	(f) The commissioner may assess the repayment of taxes under paragraph (c) any 
54.11 	time within two years after the business becomes subject to repayment under subdivision 
54.12 	1, or within any period of limitations for the assessment of tax under section 289A.38, 
54.13 	whichever period is later. The county auditor may send the statement under paragraph 
54.14 	(b) any time within three years after the business becomes subject to repayment under 
54.15 	subdivision 1.
54.16 	(g) A business is not entitled to any income tax or franchise tax benefits, including 
54.17 	refundable credits, for any part of the year in which the business becomes subject to 
54.18 	repayment under this section nor for any year thereafter. Property is not exempt from tax 
54.19 	under section 272.02, subdivision 90, for any taxes payable in the year following the year 
54.20 	in which the property became subject to repayment under this section nor for any year 
54.21 	thereafter. A business is not eligible for any sales tax benefits beginning with goods 
54.22 	or services purchased or first put to a taxable use on the day that the business becomes 
54.23 	subject to repayment under this section.
54.24 		Subd. 5.Waiver authority. (a) The commissioner may waive all or part of a 
54.25 	repayment required under subdivision 1, if the commissioner, in consultation with 
54.26 	the commissioner of employment and economic development and appropriate officials 
54.27 	from the local government units in which the qualified business is located, determines 
54.28 	that requiring repayment of the tax is not in the best interest of the state or the local 
54.29 	government units and the business ceased operating as a result of circumstances beyond 
54.30 	its control including, but not limited to:
54.31 	(1) a natural disaster;
54.32 	(2) unforeseen industry trends; or
54.33 	(3) loss of a major supplier or customer.
54.34 	(b)(1) The commissioner shall waive repayment required under subdivision 1a if 
54.35 	the commissioner has waived repayment by the operating business under subdivision 1, 
54.36 	unless the person that received benefits without having to operate a business in the zone 
55.1 	was a contributing factor in the qualified business becoming subject to repayment under 
55.2 	subdivision 1;
55.3 	(2) the commissioner shall waive the repayment required under subdivision 1a, even 
55.4 	if the repayment has not been waived for the operating business if:
55.5 	(i) the person that received benefits without having to operate a business in the zone 
55.6 	and the business that operated in the zone are not related parties as defined in section 
55.7 	267(b) of the Internal Revenue Code of 1986, as amended through December 31, 2007; and
55.8 	(ii) actions of the person were not a contributing factor in the qualified business 
55.9 	becoming subject to repayment under subdivision 1.
55.10 		Subd. 6.Reconciliation. Where this section is inconsistent with section 116J.994, 
55.11 	subdivision 3, paragraph (e), or 6, or any other provisions of sections 116J.993 to 
55.12 	116J.995, this section prevails.

55.13 	EFFECTIVE DATE. This section is effective July 1, 2009.

55.14 	Sec. 28. [469.3691] BREACH OF AGREEMENTS BY BUSINESSES THAT 
55.15 	CONTINUE TO OPERATE IN ZONE.
55.16 	(a) A "business in violation of its business subsidy agreement but not subject to 
55.17 	section 469.369" means a business that is operating in violation of the business subsidy 
55.18 	agreement but maintains a level of operations in the zone that does not subject it to the 
55.19 	repayment provisions of section 469.369, subdivision 1.
55.20 	(b) A business described in paragraph (a) that does not sign a new or amended 
55.21 	business subsidy agreement, as authorized under paragraph (h), is subject to repayment 
55.22 	of benefits under section 469.369 from the day that it ceases to perform in the zone a 
55.23 	substantial level of activities described in the business subsidy agreement.
55.24 	(c) A business described in paragraph (a) ceases being a qualified business after the 
55.25 	last day that it has to meet the goals stated in the agreement. The commissioner may 
55.26 	extend for up to one year the period for meeting any goals provided in an agreement.
55.27 	(d) A business is not entitled to any income tax or franchise tax benefits, including 
55.28 	refundable credits, for any part of the year in which the business is no longer a qualified 
55.29 	business under paragraph (c), and thereafter. A business is not eligible for sales tax 
55.30 	benefits beginning with goods or services purchased or put to a taxable use on the day that 
55.31 	it is no longer a qualified business under paragraph (c). Property is not exempt from tax 
55.32 	under section 272.02, subdivision 90, for any taxes payable in the year following the year 
55.33 	in which the business is no longer a qualified business under paragraph (c), and thereafter.
55.34 	(e) A business described in paragraph (a) that wants to resume eligibility for benefits 
55.35 	under section 469.365 must request that the commissioner of employment and economic 
56.1 	development determine the length of time that the business is ineligible for benefits. The 
56.2 	commissioner shall determine the length of ineligibility by applying the proportionate 
56.3 	level of performance under the agreement to the total duration of the zone as measured 
56.4 	from the date that the business subsidy agreement was executed. The length of time 
56.5 	must not be less than one full year for each tax benefit listed in section 469.365. The 
56.6 	commissioner of employment and economic development and the appropriate local 
56.7 	government officials shall consult with the commissioner of revenue to ensure that the 
56.8 	period of ineligibility includes at least one full year of benefits for each tax.
56.9 	(f) The length of ineligibility determined under paragraph (e) must be applied by 
56.10 	reducing the zone duration for the property by the duration of the ineligibility.
56.11 	(g) The zone duration of property that has been adjusted under paragraph (f) must 
56.12 	not be altered again to permit the business additional benefits under section 469.365.
56.13 	(h) A business described in paragraph (a) becomes eligible for benefits available 
56.14 	under section 469.365 by entering into a new or amended business subsidy agreement, to 
56.15 	be approved by the commissioner, with the appropriate local government unit. The new or 
56.16 	amended agreement must cover a period beginning from the date of ineligibility under 
56.17 	the original business subsidy agreement, through the zone duration determined by the 
56.18 	commissioner under paragraph (f). No exemption of property taxes under section 272.02, 
56.19 	subdivision 90, is available under the new or amended agreement for property taxes due or 
56.20 	paid before the date of the final execution of the new or amended agreement, but unpaid 
56.21 	taxes due after that date need not be paid.
56.22 	(i) A business that violates the terms of an agreement authorized under paragraph 
56.23 	(h) is permanently barred from seeking benefits under section 469.365 and is subject to 
56.24 	the repayment provisions under section 469.369 effective from the day that the business 
56.25 	ceases to operate as a qualified business in the zone under the second agreement.

56.26 	EFFECTIVE DATE. This section is effective July 1, 2009.

56.27 	Sec. 29. [469.3692] PROHIBITION AGAINST AMENDMENTS TO BUSINESS 
56.28 	SUBSIDY AGREEMENT.
56.29 	Except as authorized under section 469.3691, under no circumstance shall terms 
56.30 	of any agreement required as a condition for eligibility for benefits listed under section 
56.31 	469.365 be amended to change job creation, job retention, or wage goals included in 
56.32 	the agreement.

56.33 	EFFECTIVE DATE. This section is effective July 1, 2009.

57.1 	Sec. 30. [469.3693] CERTIFICATION OF CONTINUING ELIGIBILITY FOR 
57.2 	GREEN JOBZ BENEFITS.
57.3 	(a) By October 15 of each year, every qualified business must certify to the 
57.4 	commissioner of revenue, on a form prescribed by the commissioner of revenue, whether 
57.5 	it is in compliance with any agreement required as a condition for eligibility for benefits 
57.6 	listed under section 469.365. A business that fails to submit the certification, or any 
57.7 	business, including those still operating in the zone, that submits a certification that 
57.8 	the commissioner of revenue later determines materially misrepresents the business's 
57.9 	compliance with the agreement, is subject to the repayment provisions under section 
57.10 	469.369 from January 1 of the year in which the report is due or the date that the business 
57.11 	became subject to section 469.369, whichever is earlier. Any such business is permanently 
57.12 	barred from obtaining benefits under section 469.365. For purposes of this section, the bar 
57.13 	applies to an entity and also applies to any individuals or entities that have an ownership 
57.14 	interest of at least 20 percent of the entity.
57.15 	(b) Before the sanctions under paragraph (a) apply to a business that fails to 
57.16 	submit the certification, the commissioner of revenue shall send notice to the business, 
57.17 	demanding that the certification be submitted within 30 days and advising the business 
57.18 	of the consequences for failing to do so. The commissioner of revenue shall notify the 
57.19 	commissioner of employment and economic development and the appropriate green 
57.20 	job opportunity subzone administrator whenever notice is sent to a business under this 
57.21 	paragraph.
57.22 	(c) The certification required under this section is public.
57.23 	(d) The commissioner of revenue shall promptly notify the commissioner of 
57.24 	employment and economic development of all businesses that certify that they are not 
57.25 	in compliance with the terms of their business subsidy agreement and all businesses 
57.26 	that fail to file the certification.

57.27 	EFFECTIVE DATE. This section is effective July 1, 2009.

57.28 	Sec. 31. [469.3701] STATE AUDITOR; AUDITS OF GREEN JOB 
57.29 	OPPORTUNITY BUILDING ZONES AND BUSINESS SUBSIDY AGREEMENTS.
57.30 	The Office of the State Auditor may annually audit the creation and operation of all 
57.31 	green job opportunity building zones and business subsidy agreements entered into under 
57.32 	Minnesota Statutes, sections 469.360 to 469.3693. To the extent necessary to perform 
57.33 	this audit, the state auditor may request from the commissioner of revenue tax return 
57.34 	information of taxpayers who are eligible to receive tax benefits authorized under section 
57.35 	469.365. To the extent necessary to perform this audit, the state auditor may request 
58.1 	from the commissioner of employment and economic development wage detail report 
58.2 	information required under section 268.044 of taxpayers eligible to receive tax benefits 
58.3 	authorized under section 469.365.

58.4 	EFFECTIVE DATE. This section is effective the day following final enactment.

58.5 	ARTICLE 3
58.6 	MINNESOTA SMALL BUSINESS INVESTMENT COMPANY CREDIT

58.7 	Section 1. [116J.8735] MINNESOTA SMALL BUSINESS INVESTMENT 
58.8 	COMPANY CREDIT.
58.9 		Subdivision 1.Definitions. (a) For purposes of this section, the following terms 
58.10 	have the meanings given.
58.11 	(b) "Affiliate" means:
58.12 	(1) a person who, directly or indirectly, beneficially owns, controls, or holds power 
58.13 	to vote 15 percent or more of the outstanding voting securities or other voting ownership 
58.14 	interests of a Minnesota small business investment company or insurance company;
58.15 	(2) a person, 15 percent or more of whose outstanding voting securities or other 
58.16 	voting ownership interests are directly or indirectly beneficially owned, controlled, or held 
58.17 	with power to vote by a Minnesota small business investment company or insurance 
58.18 	company;
58.19 	(3) a person who, directly or indirectly, controls, is controlled by, or is under common 
58.20 	control with a Minnesota small business investment company or insurance company;
58.21 	(4) a partnership or limited liability company in which a Minnesota small business 
58.22 	investment company or insurance company is a general partner, member, or managing 
58.23 	member; or
58.24 	(5) a person who is an officer, director, employee, or agent of a Minnesota small 
58.25 	business investment company or insurance company, or an immediate family member 
58.26 	of an officer, director, employee, or agent.
58.27 	Notwithstanding this subdivision, an investment by a certified investor in a 
58.28 	Minnesota small business investment company pursuant to an allocation of premium 
58.29 	tax credits under this section does not cause that Minnesota small business investment 
58.30 	company to become an affiliate of that certified investor.
58.31 	(c) "Allocation date" means the date on which credits under section 297I.23 are 
58.32 	allocated to the investors of a Minnesota small business investment company under this 
58.33 	section.
58.34 	(d) "Designated capital" means an amount of money that:
59.1 	(1) is invested by a certified investor in a Minnesota small business investment 
59.2 	company; and
59.3 	(2) fully funds the purchase price of either or both certified investor's equity interest 
59.4 	in a Minnesota small business investment company or a qualified debt instrument issued 
59.5 	by a Minnesota small business investment company.
59.6 	(e) "Minnesota small business investment company" means a partnership, 
59.7 	corporation, trust, or limited liability company, organized on a for-profit basis, that:
59.8 	(1) has its principal office located or is headquartered in Minnesota;
59.9 	(2) has as its primary business activity the investment of cash in qualified businesses 
59.10 	and qualified green businesses; and
59.11 	(3) is certified by the Department of Employment and Economic Development as 
59.12 	meeting the criteria in this section.
59.13 	(f) "Certified investor" means any insurer as defined in section 60A.02, subdivision 
59.14 	4, that contributes designated capital pursuant to this section.
59.15 	(g) "Person" means a natural person or entity, including, but not limited to, a 
59.16 	corporation, general or limited partnership, trust, or limited liability company.
59.17 	(h) (1) "Qualified business" means a business that is independently owned and 
59.18 	operated and the business:
59.19 	(i) is headquartered in this state, its principal business operations are located in this 
59.20 	state, and at least 51 percent of its employees are employed in this state;
59.21 	(ii) has no more than 100 employees;
59.22 	(iii) is not a subsidiary or an affiliate of a business which employs more than 100 
59.23 	employees computed by aggregating all of the employees of the business entities affiliated 
59.24 	with the business;
59.25 	(iv) is predominantly engaged in biotechnology, technology, manufacturing, 
59.26 	processing or assembling products, conducting research and development, or developing a 
59.27 	new product or business process;
59.28 	(v) is not predominantly engaged in:
59.29 	(A) professional services provided by accountants, doctors, or lawyers;
59.30 	(B) banking or lending;
59.31 	(C) real estate development;
59.32 	(D) insurance;
59.33 	(E) oil and gas exploration;
59.34 	(F) political consulting or lobbying;
59.35 	(G) direct gambling activities; or
60.1 	(H) making loans to or investments in Minnesota small business investment 
60.2 	companies or affiliates;
60.3 	(vi) is not a franchise of and has not been organized by a Minnesota small business 
60.4 	investment company or an affiliate of a Minnesota small business investment company, 
60.5 	and has no financial relationship with a Minnesota small business investment company 
60.6 	or any affiliate of a Minnesota small business investment company prior to a Minnesota 
60.7 	small business investment company's first qualified investment in the business and will not 
60.8 	have any relationship after the initial qualified investment other than as created by that 
60.9 	investment and any subsequent investments in the business made by a Minnesota small 
60.10 	business investment company or its affiliates; and
60.11 	(vii) if the business has five or more employees, measured on a full-time equivalent 
60.12 	basis, provides:
60.13 	(A) wages and benefits to 75 percent or more of its employees in excess of the 
60.14 	first five employees, equal to or greater than 175 percent of the federal poverty level 
60.15 	for a family of four; and
60.16 	(B) wages and benefits to the remaining 25 percent or fewer of its employees in 
60.17 	excess of the first five employees, equal to or greater than 110 percent of the federal 
60.18 	poverty level for a family of four.
60.19 	(2) "Qualified green business" means a business that satisfies all of the requirements 
60.20 	of clause (1), with the exception of item (iv), and is predominantly engaged in one or more 
60.21 	of the following industry sectors:
60.22 	(i) green products: businesses related to the manufacture of products used by 
60.23 	the building, transport, consumer products, and industrial products sectors, that reduce 
60.24 	environmental impact and increase the efficiency of the use of resources such as energy, 
60.25 	water, and materials;
60.26 	(ii) renewable energy: businesses related to the production of energy from natural 
60.27 	resources such as solar, wind, hydropower, geothermal, biomass (including but not limited 
60.28 	to animal waste and crop waste), and biofuels (including but not limited to ethanol and 
60.29 	biodiesel), as well as from waste heat recovery and from the use of biomass for energy 
60.30 	production, including cogeneration;
60.31 	(iii) green services: businesses that provide services that help other businesses or 
60.32 	consumers utilize green products and technologies, build energy infrastructure, recycle, 
60.33 	and manage waste; or
60.34 	(iv) environmental conservation: businesses related to the conservation of energy, 
60.35 	air, water, and land, including air emissions control, environmental monitoring and 
61.1 	compliance, water conservation, wastewater treatment, land management (including but 
61.2 	not limited to prairie), natural pesticides, aquaculture, and organic farming.
61.3 	(3) A business classified as a qualified business or a qualified green business at the 
61.4 	time of the first qualified investment in the business will remain classified as a qualified 
61.5 	business or a qualified green business and may receive continuing qualified investments 
61.6 	from any Minnesota small business investment company.
61.7 	Continuing investments must be qualified investments even though the business may 
61.8 	not meet the definition of a qualified business or a qualified green business at the time of 
61.9 	such continuing investments, except the business shall not be eligible to receive further 
61.10 	qualified investments, if it has:
61.11 	(i) relocated its headquarters or principal business operations outside of this state; or
61.12 	(ii) not expended substantially all of its prior qualified investments to establish and 
61.13 	support its Minnesota operations, except for advertising, promotions, and sales purposes, 
61.14 	which may be conducted outside of Minnesota.
61.15 	(i) "Qualified debt instrument" means a debt instrument issued by a Minnesota small 
61.16 	business investment company, at par value or a premium, with an original maturity date of 
61.17 	at least three years from the date of issuance, a repayment schedule which is not faster 
61.18 	than a level principal amortization over four years, provided that the payments, whether 
61.19 	of principal, interest, or a combination of principal and interest, must not exceed, in any 
61.20 	one year, one-fourth of Minnesota small business capital invested by the debt holder in a 
61.21 	Minnesota small business investment company, on the debt instrument unless the qualified 
61.22 	debt instrument or the issuer of the qualified debt instrument is in default with respect to 
61.23 	the terms of the investment and must be rated within the top three rating categories of a 
61.24 	rating agency that has been designated as a nationally recognized statistical rating agency 
61.25 	by the United States Securities and Exchange Commission.
61.26 	(j) "Qualified distribution" means any distribution or payment not made to a certified 
61.27 	investor or affiliate of a certified investor by a Minnesota small business investment 
61.28 	company in connection with the following:
61.29 	(1) reasonable costs and expenses of forming, syndicating, and organizing the 
61.30 	Minnesota small business investment company, including reasonable and necessary fees 
61.31 	paid for professional services, including, but not limited to, legal and accounting services 
61.32 	related to the formation of a Minnesota small business investment company, and the 
61.33 	costs of financing and insuring the obligations of a Minnesota small business investment 
61.34 	company;
62.1 	(2) reasonable costs and expenses of managing and operating a Minnesota small 
62.2 	business investment company, including any management fee, which in the aggregate 
62.3 	must not exceed two percent of designated capital;
62.4 	(3) reasonable and necessary fees in accordance with industry custom for 
62.5 	professional services, including, but not limited to, legal and accounting services related 
62.6 	to the operation of a Minnesota small business investment company, not including any 
62.7 	lobbying or governmental relations;
62.8 	(4) any increase or projected increase in federal or state taxes, including penalties and 
62.9 	related interest of the equity owners of a Minnesota small business investment company 
62.10 	resulting from the earnings or other tax liability of a Minnesota small business investment 
62.11 	company to the extent that the increase is related to the ownership, management, or 
62.12 	operation of a Minnesota small business investment company; or
62.13 	(5) payments to debt holders of a Minnesota small business investment company 
62.14 	may be made without restriction with respect to repayments of principal and interest on 
62.15 	indebtedness owed to them by a Minnesota small business investment company, including 
62.16 	indebtedness of the Minnesota small business investment company on which certified 
62.17 	investors earned tax credits. A debt holder that is also a certified investor or equity holder 
62.18 	of a Minnesota small business investment company may receive payments with respect to 
62.19 	the debt without any restriction whatsoever.
62.20 	(k) "Qualified investment" means the investment of money by a Minnesota small 
62.21 	business investment company in qualified businesses or qualified green businesses, with 
62.22 	at least 50 percent of the investments to be made in qualified green businesses, subject 
62.23 	to determination by the department made pursuant to subdivision 5, paragraph (b). The 
62.24 	investment must be for the purchase of any debt, debt participation, equity, or hybrid 
62.25 	security, of any nature and description whatsoever, including a debt instrument or security 
62.26 	that has the characteristics of debt but which provides for conversion into equity or equity 
62.27 	participation instruments such as options or warrants. Any qualified investment in the 
62.28 	form of a debt instrument, including those owned through debt participations, must have 
62.29 	a final stated maturity of at least two years from the date of issuance and a repayment 
62.30 	schedule that is no faster than level principal amortization over two years, however, this 
62.31 	does not prohibit the qualified business or the qualified green business from voluntarily 
62.32 	prepaying a qualified investment at any time, or a Minnesota small business investment 
62.33 	company from exercising any of its rights as a creditor, including the acceleration of 
62.34 	the debt owned upon a default by the qualified business or the qualified green business 
62.35 	under the terms of the debt instrument or upon the acquisition, merger, or sale of all or 
62.36 	substantially all of the assets of the qualified business.
63.1 	(l) "Qualified underserved area business" means a business that otherwise would 
63.2 	meet the criteria of a qualified business or a qualified green business, but is located:
63.3 	(1) outside the metropolitan area, as defined by section 473.121, subdivision 2; or
63.4 	(2) in a low-income community of Minnesota as defined in section 45D(e) of the 
63.5 	Internal Revenue Code.
63.6 	(m) "State premium tax liability" means liability incurred by an insurance company 
63.7 	under the provisions of section 297I.05.
63.8 	(n) "Qualified seed fund" means a qualifying regional investment fund certified by 
63.9 	the department under section 116J.8737, a regional investment fund designated by the 
63.10 	department, or a business incubator program established at the University of Minnesota.
63.11 		Subd. 2.Certification. (a) The commissioner must provide a standardized format 
63.12 	for applying for the small business investment credit under section 297I.23.
63.13 	(b) An applicant is required to:
63.14 	(1) file an application with the department;
63.15 	(2) pay a nonrefundable application fee of $7,500 to the department at the time 
63.16 	of filing the application. Fees are appropriated to the commissioner for personnel and 
63.17 	administrative expenses related to administering the program;
63.18 	(3) submit as part of its application an audited balance sheet that contains an 
63.19 	unqualified opinion of an independent certified public accountant issued not more than 
63.20 	35 days before the application date that states whether the applicant has an equity 
63.21 	capitalization of $500,000 or more in the form of unencumbered cash, marketable 
63.22 	securities, or other liquid assets; and
63.23 	(4) have at least two principals or persons, at least one of whom is located in and a 
63.24 	resident of Minnesota, employed to manage the funds each of whom have a minimum 
63.25 	of five years of money management experience in the venture capital or small business 
63.26 	investment industry.
63.27 	(c) The department may certify partnerships, corporations, trusts, or limited liability 
63.28 	companies, organized on a for-profit basis, which submit an application to be designated as 
63.29 	a Minnesota small business investment company if the applicant is located, headquartered, 
63.30 	and licensed or registered to conduct business in Minnesota, has as its primary business 
63.31 	activity the investment of cash in qualified businesses and qualified green businesses, and 
63.32 	meets the other criteria set forth in this section.
63.33 	(d) The department must review the organizational documents of each applicant for 
63.34 	certification and the business history of each applicant, determine whether the applicant 
63.35 	has satisfied the requirements of this section, and determine whether the officers and the 
64.1 	board of directors, general partners, trustees, managers, or members are trustworthy and 
64.2 	are thoroughly acquainted with the requirements of this section.
64.3 	(e) Within 60 days after the receipt of an application, the department must issue the 
64.4 	certification or refuse the certification and communicate in detail to the applicant the 
64.5 	grounds for refusal, including suggestions for the removal of the grounds.
64.6 	(f) The department must begin accepting applications to become a Minnesota 
64.7 	small business investment company as defined under section 116J.8735, subdivision 
64.8 	1, paragraph (e) by September 30, 2009.
64.9 		Subd. 3.Requirements. (a) An insurance company or affiliate of an insurance 
64.10 	company must not, directly or indirectly:
64.11 	(1) beneficially own, whether through rights, options, convertible interest, or 
64.12 	otherwise, 15 percent or more of the voting securities or other voting ownership interest of 
64.13 	a Minnesota small business investment company;
64.14 	(2) manage a Minnesota small business investment company; or
64.15 	(3) control the direction of investments for a Minnesota small business investment 
64.16 	company.
64.17 	(b) A Minnesota small business investment company may obtain one or more 
64.18 	guaranties, indemnities, bonds, insurance policies, or other payment undertakings for the 
64.19 	benefit of its certified investors from any entity, except that in no case can more than one 
64.20 	certified investor of a Minnesota small business investment company on an aggregate basis 
64.21 	with all affiliates of the certified investor be entitled to provide the guaranties, indemnities, 
64.22 	bonds, insurance policies, or other payment undertakings in favor of the certified investors 
64.23 	of a Minnesota small business investment company and its affiliates in this state.
64.24 	(c) This subdivision does not preclude a certified investor, insurance company, or 
64.25 	other party from exercising its legal rights and remedies, including, without limitation, 
64.26 	interim management of a Minnesota small business investment company, in the event that 
64.27 	a Minnesota small business investment company is in default of its statutory obligations 
64.28 	or its contractual obligations to the certified investor, insurance company, or other party, 
64.29 	or from monitoring a Minnesota small business investment company to ensure its 
64.30 	compliance with this section or disallowing any investments that have not been approved 
64.31 	by the department.
64.32 	(d) The department may contract with an independent third party to review, 
64.33 	investigate, and certify that the applications comply with the provisions of this section.
64.34 		Subd. 4.Aggregate limitations on investment credits; allocation. (a) The 
64.35 	aggregate amount of investment tax credits to be allocated to all participating investors 
64.36 	of Minnesota small business investment companies under this section shall not exceed 
65.1 	$38,000,000. No Minnesota small business investment company, on an aggregate basis 
65.2 	with its affiliates, may file credit allocation claims that exceed 25 percent of the total 
65.3 	credits to be allocated.
65.4 	(b) Credits must be allocated to certified investors in the order that the credit 
65.5 	allocation claims are filed with the department. All credit allocation claims filed with the 
65.6 	department on the same day must be treated as having been filed contemporaneously. Any 
65.7 	credit allocation claims filed with the department prior to the credit allocation claim filing 
65.8 	date will be deemed to have been filed on the initial credit allocation claim filing date. The 
65.9 	department will set the initial credit allocation claim filing date to be within 150 days after 
65.10 	the department begins to accept applications.
65.11 	(c) In the event that two or more Minnesota small business investment companies 
65.12 	file credit allocation claims with the department on behalf of their respective certified 
65.13 	investors on the same day, and the aggregate amount of credit allocation claims exceeds 
65.14 	the aggregate limit of credits under this section or the lesser amount of credits that remain 
65.15 	unallocated on that day, then the credits shall be allocated among the certified investors 
65.16 	who filed on that day on a pro rata basis with respect to the amounts claimed. The pro rata 
65.17 	allocation for any one certified investor is the product obtained by multiplying a fraction, 
65.18 	the numerator of which is the amount of the credit allocation claim filed on behalf of a 
65.19 	certified investor and the denominator of which is the total of all credit allocation claims 
65.20 	filed on behalf of all certified investors on that day, by the aggregate limit of credits under 
65.21 	this section or the lesser amount of credits that remain unallocated on that day.
65.22 	(d) Within 20 business days after the department receives a credit allocation claim 
65.23 	filed by a Minnesota small business investment company on behalf of one or more of its 
65.24 	certified investors, the department must notify the Minnesota small business investment 
65.25 	company of the amount of credits allocated to each of the certified investors of that 
65.26 	Minnesota small business investment company. In the event a Minnesota small business 
65.27 	investment company does not receive aggregate investments of designated capital equaling 
65.28 	the amount of credits allocated to its certified investors within ten business days of the 
65.29 	Minnesota small business investment company's receipt of notice of allocation, it shall 
65.30 	notify the department on or before the next business day and that portion of the credits 
65.31 	allocated to the certified investors of the Minnesota small business investment company 
65.32 	in excess of the amount of designated capital invested in the Minnesota small business 
65.33 	investment company by that date shall be forfeited. The department may then reallocate 
65.34 	those forfeited credits among the certified investors of the other Minnesota small business 
65.35 	investment companies on a pro rata basis with respect to the credit allocation claims 
65.36 	filed on behalf of the certified investors. The commissioner is authorized to levy a fine 
66.1 	of not more than $50,000 on any certified investor that does not invest the full amount 
66.2 	of designated capital allocated by the department to the investor in accordance with the 
66.3 	credit allocation claim filed on its behalf.
66.4 	(e) No participating investor, on an aggregate basis, may file an allocation claim for 
66.5 	more than 25 percent of the maximum amount of investment tax credits authorized under 
66.6 	this subdivision, regardless of whether the claim is made in connection with one or more 
66.7 	Minnesota small business investment companies.
66.8 		Subd. 5.Requirements for continuance of certification. (a) To continue to be 
66.9 	eligible for certification, a Minnesota small business investment company must make 
66.10 	qualified investments as follows:
66.11 	(1) within two years after the allocation date, an amount equal to at least 35 percent 
66.12 	of the designated capital allocable to a Minnesota small business investment company 
66.13 	must be placed in qualified investments; and
66.14 	(2) within three years after the allocation date, an amount equal to at least 50 percent 
66.15 	of the designated capital allocable to a Minnesota small business investment company 
66.16 	must be placed in qualified investments;
66.17 	(3) within five years after the allocation date, an amount equal to at least 65 percent 
66.18 	of the designated capital allocable to a Minnesota small business investment company 
66.19 	must be placed in qualified investments; and
66.20 	(4) within ten years after the allocation date, an amount equal to at least 100 percent 
66.21 	of the designated capital allocable to a Minnesota small business investment company 
66.22 	must be placed in qualified investments.
66.23 	The aggregate cumulative amount of all qualified investments made by a Minnesota 
66.24 	small business investment company from an allocation date must be considered in the 
66.25 	calculation of these percentage requirements.
66.26 	(b) Prior to making a proposed qualified investment in a specific business, a 
66.27 	Minnesota small business investment company must request from the department a written 
66.28 	determination that the proposed investment will qualify as a qualified investment in a 
66.29 	qualified business. The department shall notify a Minnesota small business investment 
66.30 	company within 20 business days from the receipt of a request of its determination and 
66.31 	an explanation of the determination. If the department determines that the proposed 
66.32 	investment does not meet the definition of a qualified investment, a qualified business, 
66.33 	or a qualified green business, the department may nevertheless consider the proposed 
66.34 	investment a qualified investment, or the business a qualified business or qualified green 
66.35 	business, if the department determines that the proposed investment will further state 
66.36 	economic development.
67.1 	(c) All designated capital not placed in qualified investments by the Minnesota 
67.2 	small business investment company may be held or invested in the manner the Minnesota 
67.3 	small business investment company, in its discretion, deems appropriate. The proceeds 
67.4 	of all designated capital returned to a Minnesota small business investment company 
67.5 	after being originally placed in qualified investments may be placed again in qualified 
67.6 	investments and counts toward any requirement of this section with respect to placing 
67.7 	designated capital in qualified investments.
67.8 	(d) If, within four years after its allocation date, a Minnesota small business 
67.9 	investment company has not placed at least 60 percent of the designated capital allocable 
67.10 	to it in qualified investments, the Minnesota small business investment company is no 
67.11 	longer permitted to receive management fees.
67.12 	(e) If, within six years after its allocation date, a Minnesota small business 
67.13 	investment company has not placed at least 100 percent of the designated capital allocable 
67.14 	to it in qualified investments, the Minnesota small business investment company is no 
67.15 	longer permitted to receive management fees.
67.16 	(f) A Minnesota small business investment company must not make a qualified 
67.17 	investment without the specific approval of the department if after the Minnesota small 
67.18 	business investment company's qualified investment, on an aggregate basis with its 
67.19 	affiliates, would own more than 49 percent of the common equity or voting interests of 
67.20 	the qualified business. Nothing in this subdivision precludes a Minnesota small business 
67.21 	investment company from exercising any right or remedy upon a default by the qualified 
67.22 	business pursuant to an investment contract or antidilution or preemptive rights it may 
67.23 	have been granted in connection with an initial qualified investment that can be exercised 
67.24 	upon an investment in the business by a party other than the Minnesota small business 
67.25 	investment company or an affiliate of the Minnesota small business investment company.
67.26 	(g) A Minnesota small business investment company must not invest where 
67.27 	investment would cause the company's total qualified investment outstanding with 
67.28 	respect to the qualified business receiving the investment to exceed 15 percent of the 
67.29 	total designated capital of the Minnesota small business investment company at the time 
67.30 	of the investment.
67.31 	(h) The aggregate cumulative amount of all qualified investments made by a 
67.32 	Minnesota small business investment company will be considered in the calculation of the 
67.33 	percentage requirements under this section. The following must not be considered in any 
67.34 	percentage calculations under this section:
67.35 	(1) commitment fees, closing fees, or other similar fees, excluding reimbursement 
67.36 	of out-of-pocket expenses including legal fees and accounting fees, in excess of one 
68.1 	percent of the Minnesota small business investment company's investment in the qualified 
68.2 	business; or
68.3 	(2) license fees, royalties, or similar charges.
68.4 		Subd. 6.Minnesota small business investment company reporting requirements.
 68.5 	(a) Each Minnesota small business investment company must report the following to 
68.6 	the department:
68.7 	(1) within ten business days after the receipt of designated capital:
68.8 	(i) the name of each certified investor from which the designated capital was 
68.9 	received, including the certified investor's insurance tax identification number;
68.10 	(ii) the amount of each certified investor's investment of designated capital; and
68.11 	(iii) the date on which the designated capital was received;
68.12 	(2) on an annual basis, on or before January 31 of each year:
68.13 	(i) the amount of the Minnesota small business investment company's designated 
68.14 	capital at the end of the immediately preceding taxable year;
68.15 	(ii) whether or not the Minnesota small business investment company has invested 
68.16 	more than 15 percent of its total designated capital in any one business;
68.17 	(iii) all qualified investments that the Minnesota small business investment company 
68.18 	has made in the previous taxable year, including the number of employees and the average 
68.19 	annual wage per employee of each qualified business or qualified green business in 
68.20 	which it has made investments at the time of the investment and as of December 1 of 
68.21 	the preceding taxable year; and
68.22 	(iv) for any qualified business or qualified green business where the Minnesota small 
68.23 	business investment company no longer has an investment, the Minnesota small business 
68.24 	investment company must provide employment and wage figures for that company as of 
68.25 	the last day before the investment was terminated;
68.26 	(3) other information that the department may reasonably request that will help the 
68.27 	department ascertain the impact of the Minnesota small business investment companies 
68.28 	both directly and indirectly on the economy of the state of Minnesota, including, but not 
68.29 	limited to, the number of jobs created, average annual wages paid by qualified businesses, 
68.30 	or qualified green businesses that have received qualified investments;
68.31 	(4) annual audited financial statements, which must include the opinion of an 
68.32 	independent certified public accountant, within 90 days of the close of its fiscal year; and
68.33 	(5) an "agreed upon procedures report" or equivalent regarding the operations of the 
68.34 	Minnesota small business investment company.
68.35 	(b) A Minnesota small business investment company must pay to the department an 
68.36 	annual, nonrefundable certification fee of $5,000 on or before April 1, or $10,000 if later. 
69.1 	Fees are appropriated to the commissioner for personnel and administrative expenses 
69.2 	related to administering the program. No fee is required within six months of the date a 
69.3 	Minnesota small business investment company is first certified by the department.
69.4 	(c) Upon receiving notification and documentation by a Minnesota small business 
69.5 	investment company that it has satisfied the requirements of subdivision 5, paragraph 
69.6 	(a), clauses (1), (2), (3), or (4), and that it has invested the percentage of its designated 
69.7 	capital as delineated by subdivision 5, paragraph (a), the department shall notify a 
69.8 	Minnesota small business investment company that it has or has not met the requirement 
69.9 	of subdivision 5, paragraph (a), within 60 business days.
69.10 		Subd. 7.Distributions. (a) A Minnesota small business investment company 
69.11 	may make qualified distributions at any time. In order for a Minnesota small business 
69.12 	investment company to make a distribution other than a qualified distribution to its equity 
69.13 	holders, the aggregate cumulative amount of all qualified investments of the Minnesota 
69.14 	small business investment company must equal or exceed 100 percent of its designated 
69.15 	capital, and of those investments, an amount equal to or exceeding 25 percent must have 
69.16 	been invested in qualified underserved area businesses.
69.17 	(b) A business is deemed to have relocated its principal business operations outside 
69.18 	Minnesota, unless it maintains its headquarters or the primary workplace of more than 50 
69.19 	percent of the employees within the state. In the event that a business in which a qualified 
69.20 	investment is made relocates its principal business operations to another state, either during 
69.21 	an investment or within four years of the time of any investment, whichever is greater, 
69.22 	the cumulative amount of qualified investments made by a Minnesota small business 
69.23 	investment company must be reduced by the amount of the qualified investment, unless:
69.24 	(1) the Minnesota small business investment company invests an amount at least 
69.25 	equal to the investment of designated capital in the relocated business in a qualified 
69.26 	business or a qualified green business located in Minnesota within six months of the 
69.27 	relocation; or
69.28 	(2) the business demonstrates that it has returned its principal business operations to 
69.29 	Minnesota within three months of the relocation.
69.30 	(c) A Minnesota small business investment company must pay to a qualified 
69.31 	seed fund an amount equal to five percent of all distributions to the equity holders of a 
69.32 	Minnesota small business investment company, other than qualified distributions and 
69.33 	distributions of all equity contributed to a Minnesota small business investment company 
69.34 	by the equity holders. A Minnesota small business investment company must make all 
69.35 	payments required under this paragraph concurrently with distributions to its equity 
69.36 	owners. Nothing contained in this paragraph affects qualified distributions.
70.1 		Subd. 8.Audit; state participation. (a) Cumulative distributions from a Minnesota 
70.2 	small business investment company to its certified investors and equity holders, other than 
70.3 	qualified distributions, in excess of the Minnesota small business investment company's 
70.4 	original certified capital and any additional capital contributions to the Minnesota small 
70.5 	business investment company may be audited by a nationally recognized certified public 
70.6 	accounting firm, at the expense of the Minnesota small business investment company, if the 
70.7 	department directs such audit be conducted. The audit shall determine whether aggregate 
70.8 	cumulative distributions from the Minnesota small business investment company to all 
70.9 	certified investors and equity holders, other than qualified distributions, have equaled the 
70.10 	sum of the Minnesota small business investment company's original certified capital and 
70.11 	any additional capital contributions to the Minnesota small business investment company. 
70.12 	(b) If at the time of any distribution made by the Minnesota small business 
70.13 	investment company, the distribution taken together with all other distributions made by 
70.14 	the Minnesota small business investment company, other than qualified distributions, 
70.15 	exceeds in aggregate the sum of the Minnesota small business investment company's 
70.16 	original certified capital and any other capital contributions to the Minnesota small 
70.17 	business investment company, as determined by the audit, the Minnesota small business 
70.18 	investment company shall pay to the department ten percent of the portion of such 
70.19 	distribution in excess of such amount. Payments are appropriated to the commissioner 
70.20 	for personnel and administrative expenses related to administering the program and other 
70.21 	programs related to encouraging investments in small emerging businesses in the state. 
70.22 	Payments to the department by a Minnesota small business investment company under 
70.23 	this paragraph shall not exceed the aggregate amount of tax credits used by all certified 
70.24 	investors in the Minnesota small business investment company.
70.25 		Subd. 9.Decertification. (a) The department shall conduct an annual review of 
70.26 	each Minnesota small business investment company to determine if a Minnesota small 
70.27 	business investment company is abiding by the requirements of certification, to advise the 
70.28 	Minnesota small business investment company as to the eligibility status of its qualified 
70.29 	investments, and to ensure that no investment has been made in violation of this section. 
70.30 	The cost of the annual review must be paid by each Minnesota small business investment 
70.31 	company according to a reasonable fee schedule adopted by the department.
70.32 	(b) Any material violation of this section is grounds for decertification of a 
70.33 	Minnesota small business investment company and the recapture of tax credits previously 
70.34 	taken and the forfeiture of future tax credits to be claimed under section 297I.23.
70.35 	(c) Once a Minnesota small business investment company has invested an amount 
70.36 	cumulatively equal to 100 percent of its designated capital in qualified investments and 
71.1 	has met all other requirements under this section, the Minnesota small business investment 
71.2 	company is no longer subject to regulation by the department or the reporting requirements 
71.3 	under subdivision 5. Upon receiving documented certification by a Minnesota small 
71.4 	business investment company that it has invested an amount equal to 100 percent of its 
71.5 	designated capital, the department shall notify a Minnesota small business investment 
71.6 	company within 60 business days that it has or has not met the requirements with a reason 
71.7 	for the determination if it has not.
71.8 	(d) The department must send written notice of a decertification to the commissioner 
71.9 	of revenue and to the address of each certified investor whose tax credit has been subject 
71.10 	to recapture or forfeiture, using the address shown on the last filing submitted to the 
71.11 	department.
71.12 		Subd. 10.Revocation of certification. The department may revoke the certification 
71.13 	of a Minnesota small business investment company if any material representation to the 
71.14 	department in connection with the application process proves to have been falsely made, 
71.15 	if the application materially violates any requirements established by the department 
71.16 	under this section, the small business investment company fails to file an annual report, 
71.17 	or the small business investment company files an annual report that contains material 
71.18 	misrepresentations.
71.19 		Subd. 11.Registration requirements. All investments for which tax credits are 
71.20 	allowable under this section must be registered or specifically exempt from registration.
71.21 		Subd. 12.Reporting. The department shall prepare an annual report which includes:
71.22 	(1) the number of Minnesota small business investment companies holding 
71.23 	designated capital;
71.24 	(2) the amount of designated capital invested in each Minnesota small business 
71.25 	investment company;
71.26 	(3) the cumulative amount that each Minnesota small business investment company 
71.27 	has invested as of January 1, 2010, and the cumulative total each year thereafter;
71.28 	(4) the cumulative amount that the investments of each Minnesota small business 
71.29 	investment company have leveraged in terms of capital invested by other sources of 
71.30 	capital in qualified businesses at the same time or subsequent to investments made by a 
71.31 	Minnesota small business investment company in those businesses;
71.32 	(5) the total amount of credits granted under this section for each year the credits 
71.33 	have been awarded;
71.34 	(6) the performance of each Minnesota small business investment company with 
71.35 	regard to the requirements for continued certification;
72.1 	(7) the classification of the companies in which each Minnesota small business 
72.2 	investment company has invested according to industrial sector and size of company;
72.3 	(8) the total gross number of jobs and their average wage created by investments 
72.4 	made by each Minnesota small business investment company using designated capital 
72.5 	and the number of jobs retained;
72.6 	(9) the location of the companies in which each Minnesota small business investment 
72.7 	company has invested;
72.8 	(10) the total amount invested in qualified seed funds, the number of small 
72.9 	businesses that received financial assistance from these organizations, and the number of 
72.10 	jobs created and retained by those businesses;
72.11 	(11) those Minnesota small business investment companies that have been 
72.12 	decertified, or have had their certification revoked, including the reasons for decertification 
72.13 	or revocation; and
72.14 	(12) other related information necessary to evaluate the effect of this section on 
72.15 	economic development.
72.16 		Subd. 13.Rules. The commissioner's actions in establishing procedures and 
72.17 	requirements and in making determinations and certifications to administer this section are 
72.18 	not a rule for purposes of chapter 14, are not subject to the Administrative Procedure Act 
72.19 	contained in chapter 14, and are not subject to section 14.386.

72.20 	EFFECTIVE DATE. This section is effective the day following final enactment.

72.21 	Sec. 2. [297I.23] MINNESOTA SMALL BUSINESS INVESTMENT COMPANY 
72.22 	CREDIT.
72.23 		Subdivision 1.Credit allowed. (a) A certified investor as defined under section 
72.24 	116J.8735, subdivision 1, is allowed a credit against the tax imposed in section 297I.05 
72.25 	equal to 60 percent of the certified investor's qualified investment of designated capital. 
72.26 	Twenty-five percent of the total credit must be claimed in each consecutive year beginning 
72.27 	with the third year after the qualified investment.
72.28 	(b) The credit for the taxable year must not exceed the liability for tax under section 
72.29 	297I.05. If the amount of the credit determined under this section for any taxable year 
72.30 	exceeds the liability for tax under section 297I.05 for that year, the excess shall be an 
72.31 	investment credit carryover to each of the succeeding taxable years and must be carried 
72.32 	forward to each succeeding taxable year until the entire carryforward credit has been 
72.33 	credited against the insurance company's liability for tax under section 297I.05.
72.34 	(c) A certified investor claiming a credit under this section is not required to pay any 
72.35 	additional retaliatory tax levied as a result of claiming the credit.
73.1 		Subd. 2.Repayment of tax benefits received. (a) Decertification of a Minnesota 
73.2 	small business investment company or revocation of certification under section 116J.8735 
73.3 	will result in the disallowance to certified investors of any credits for that tax year or 
73.4 	future tax years and the certified investor will be required to repay any credits claimed 
73.5 	for the previous year. Repayment must be made within 60 days of the decertification or 
73.6 	of the revocation of certification.
73.7 	(b) The provisions of chapters 270C and 297I relating to audit, assessment, refund, 
73.8 	collection, and appeals are applicable to credits claimed and repayments required under 
73.9 	this section. The commissioner may impose civil penalties as provided in section 297I.85, 
73.10 	and additional tax and penalties are subject to interest at the rate provided in section 
73.11 	270C.40 from the date payment was due.

73.12 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
73.13 	December 31, 2009.

73.14 	ARTICLE 4
73.15 	JOB GROWTH INVESTMENT TAX CREDIT

73.16 	Section 1. [116J.8737] JOB GROWTH INVESTMENT TAX CREDIT.
73.17 		Subdivision 1.Definitions. (a) For the purposes of this section, the following terms 
73.18 	have the meanings given.
73.19 	(b) "Qualifying small business" means a business that:
73.20 	(1) is engaged in, or is committed to engage in, biotechnology, technology, 
73.21 	manufacturing, agriculture, processing or assembling products, conducting research and 
73.22 	development, or developing a new product or business process;
73.23 	(2) is not engaged in real estate development, insurance, banking, lobbying, political 
73.24 	consulting, wholesale or retail trade, leisure, hospitality, construction, or professional 
73.25 	services provided by attorneys, accountants, business consultants, physicians, or health 
73.26 	care consultants;
73.27 	(3) has its headquarters in Minnesota;
73.28 	(4) employs at least 51 percent of the business's employees in Minnesota;
73.29 	(5) has less than 100 employees;
73.30 	(6) has less than $2,000,000 in annual gross sales receipts for the previous year;
73.31 	(7) is not a subsidiary or an affiliate of a business which employs more than 100 
73.32 	employees or has total gross sales receipts for the previous year of more than $2,000,000, 
73.33 	computed by aggregating all of the employees and gross sales receipts of the business 
73.34 	entities affiliated with the business;
74.1 	(8) has not previously received more than $2,000,000 in private equity investments;
74.2 	(9) has not previously received more than $500,000 in investments that have 
74.3 	qualified for and received tax credits under this section; and
74.4 	(10) for a business with five or more employees, measured on a full-time equivalent 
74.5 	basis:
74.6 	(i) provides wages and benefits to at least 75 percent of its employees in excess of 
74.7 	the first five employees, equal to or greater than 175 percent of the federal poverty level 
74.8 	for a family of four; and
74.9 	(ii) provides wages and benefits to its employees in excess of the first five employees, 
74.10 	equal to or greater than 110 percent of the federal poverty level for a family of four.
74.11 	(c) "Qualifying green job small business" means a business that satisfies all of the 
74.12 	requirements of paragraph (b), except clause (1), and is predominantly engaged in one 
74.13 	or more of the following industry sectors:
74.14 	(1) green products: businesses related to the manufacture of products used by 
74.15 	the building, transport, consumer products, and industrial products sectors, that reduce 
74.16 	environmental impact and increase the efficiency of the use of resources such as energy, 
74.17 	water, and materials;
74.18 	(2) renewable energy: businesses related to the production of energy from natural 
74.19 	resources such as solar, wind, hydropower, geothermal, biomass (including but not limited 
74.20 	to animal waste and crop waste), and biofuels (including but not limited to ethanol and 
74.21 	biodiesel), as well as from waste heat recovery and from the use of biomass for energy 
74.22 	production including cogeneration;
74.23 	(3) green services: businesses that provide services that help other businesses or 
74.24 	consumers utilize green products and technologies, build energy infrastructure, recycle, 
74.25 	and manage waste; or
74.26 	(4) environmental conservation: businesses related to the conservation of energy, 
74.27 	air, water, and land, including air emissions control, environmental monitoring and 
74.28 	compliance, water conservation, wastewater treatment, land management (including but 
74.29 	not limited to prairie), natural pesticides, aquaculture, and organic farming.
74.30 	(d) "Regional investment fund" means a pooled investment fund that:
74.31 	(1) invests in qualifying small businesses;
74.32 	(2) invests in qualifying green job small businesses;
74.33 	(3) is organized as a limited liability company or other pass-through entity; and
74.34 	(4) has no fewer than five separate investors, each of whom is a qualified taxpayer, as 
74.35 	defined in paragraph (e), and owns no more than 20 percent of the outstanding ownership 
74.36 	interests in the fund.
75.1 	For purposes of determining the number of investors and the ownership interests of 
75.2 	an investor under this clause, the ownership interests of an investor include those of the 
75.3 	investor's spouse, children, or siblings, and any corporation, limited liability company, 
75.4 	partnership, or trust in which the investor has a controlling equity interest or in which the 
75.5 	investor exercises management control.
75.6 	(e) "Qualified taxpayer" means:
75.7 	(1) an accredited investor, within the meaning of Regulation D of the Securities and 
75.8 	Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether 
75.9 	part of a pass-through entity or not, who:
75.10 	(i) does not own, control, or hold power to vote 20 percent or more of the outstanding 
75.11 	securities of the qualifying small business or the qualifying green job small business in 
75.12 	which the eligible investment is proposed; or
75.13 	(ii) does not receive more than 50 percent of the gross annual income from the 
75.14 	qualifying small business or the qualifying green job small business in which the eligible 
75.15 	investment is proposed.
75.16 	(2) A member of the immediate family of a taxpayer disqualified by this subdivision 
75.17 	is not eligible for a credit under this section. For purposes of this subdivision, "immediate 
75.18 	family" means the taxpayer's spouse, parent, sibling, or child, or the spouse of any person 
75.19 	listed in this paragraph.
75.20 		Subd. 2.Credit allowed, holding period, limitations, and carryover. (a) A 
75.21 	qualified taxpayer is allowed a credit against the tax imposed under chapter 290 for 
75.22 	investments made in a qualified regional investment fund, a qualifying small business, 
75.23 	or a qualifying green job small business. The credit equals 25 percent of the qualified 
75.24 	taxpayer's investment in the business, but not to exceed the lesser of:
75.25 	(1) the liability for tax under chapter 290, including the applicable alternative 
75.26 	minimum tax, but excluding the minimum fee under section 290.0922, and:
75.27 	(2)(i) the amount of the certificate provided to the taxpayer under subdivision 
75.28 	4, paragraph (c); or
75.29 	(ii) the amount of the certificate provided to the qualified individual investor under 
75.30 	subdivision 6, paragraph (d).
75.31 	(b) No taxpayer may receive more than $100,000 in provisional credits under this 
75.32 	section in any one year.
75.33 	(c) A qualified taxpayer must claim the credit in the third tax year after which the 
75.34 	investment in the qualified regional investment fund, the qualifying small business, or the 
75.35 	qualifying green job small business was made. The credit is allowed only for investments 
75.36 	made in:
76.1 	(1) a qualified regional investment fund that remains invested for at least three 
76.2 	years and that are made after the fund has been certified by the commissioner under 
76.3 	subdivision 4;
76.4 	(2) a qualifying small business that remains invested for at least three years and that 
76.5 	are made after the qualified individual investor has been certified by the commissioner 
76.6 	under subdivision 6; or
76.7 	(3) a qualifying green job small business that remains invested for at least three 
76.8 	years and that are made after the qualified individual investor has been certified by the 
76.9 	commissioner under subdivision 6.
76.10 	(d) The three-year investment holding period required by paragraph (c) does not 
76.11 	apply if:
76.12 	(1) the investment by the qualified regional investment fund or the qualified 
76.13 	individual investor becomes worthless before the end of the three-year period; or
76.14 	(2) the qualifying small business or qualifying green job small business is sold 
76.15 	before the end of the three-year period.
76.16 	(e) If the amount of the credit under this subdivision for any taxable year exceeds 
76.17 	the limitations under paragraph (a), the excess is a credit carryover to each of the ten 
76.18 	succeeding taxable years. The entire amount of the excess unused credit for the taxable 
76.19 	year must be carried first to the earliest of the taxable years to which the credit may be 
76.20 	carried. The amount of the unused credit that may be added under this paragraph may not 
76.21 	exceed the taxpayer's liability for tax less the credit for the taxable year.
76.22 		Subd. 3.Qualified regional investment fund; requirements. (a) To be certified as 
76.23 	a qualified regional investment fund for the purposes of this section, a regional investment 
76.24 	fund must:
76.25 	(1) have a minimum of two-thirds of the regional investment fund's members, 
76.26 	shareholders, or partners be residents of the region that is the focus of the fund;
76.27 	(2) allocate at least 60 percent of the funds it invests to qualifying small businesses 
76.28 	or to qualifying green job small businesses within its region of focus; and
76.29 	(3) allocate at least 50 percent of the funds it invests to qualifying green job small 
76.30 	businesses.
76.31 	(b) The allocations in paragraph (a), clauses (2) and (3), need not be exclusive.
76.32 	(c) Investments from other qualified regional investment funds into the qualifying 
76.33 	small businesses or qualifying green job small businesses that are the recipients of the 
76.34 	qualified regional investment fund's investment shall count toward the allocations in 
76.35 	paragraph (a), clauses (2) and (3).
77.1 	(d) Investments in the fund may consist of equity investments or notes that pay 
77.2 	interest or other fixed amounts, or any combination of both, as the fund's governing body 
77.3 	determines appropriate.
77.4 		Subd. 4.Certification of funds. (a) Regional investment funds may apply to the 
77.5 	commissioner for certification as a qualified regional investment fund. The application 
77.6 	must be in the form and be made under the procedures specified by the commissioner, 
77.7 	accompanied by an application fee of $1,250. Fees are appropriated to the commissioner 
77.8 	for personnel and administrative expenses related to administering the program.
77.9 	(b) The commissioner may certify up to 20 regional investment funds per year. 
77.10 	Certifications shall be awarded in the order of the qualifying applications received, subject 
77.11 	to the following limitations:
77.12 	(1) the commissioner may certify no more than three regional investment funds per 
77.13 	year that seek business investment opportunities that may qualify for and receive tax 
77.14 	credits under this section in more than 15 Minnesota counties; and
77.15 	(2) the commissioner may certify no more than five regional investment funds 
77.16 	per year that seek business investment opportunities that may qualify for and receive 
77.17 	tax credits under this section in the metropolitan area, as defined in section 473.121, 
77.18 	subdivision 2.
77.19 	(c) The commissioner shall provide provisional credit certificates to investors in a 
77.20 	qualified regional fund to credits under this section, in proportion to the investment of 
77.21 	the investor in the fund and upon a showing by the fund of an investment in a qualifying 
77.22 	small business or qualifying green job small business, of no more than $500,000 per fund 
77.23 	per year. The commissioner may not issue a total of more than $2,000,000 per year in 
77.24 	provisional credit certificates to fund investors in fiscal years 2010, 2011, 2012, and 2013.
77.25 	(d) The commissioner shall provide a final credit certificate to investors in the fund 
77.26 	upon a showing by the fund that the holding requirements of subdivision 2, paragraph (b), 
77.27 	have been met and that the investors in the fund are otherwise eligible for the credit.
77.28 		Subd. 5.Fund requirements. The commissioner shall enter into an agreement 
77.29 	with each of the qualified regional investment funds certified under subdivision 4. Each 
77.30 	agreement must include a provision requiring the qualified regional investment fund to 
77.31 	annually report on the employment figures and wages and benefits paid by the businesses 
77.32 	in which investments are made and a provision stating the specific manner in which 
77.33 	the qualified regional investment fund will comply or is complying with the allocation 
77.34 	requirements under subdivision 3, paragraph (a), clauses (2) and (3).
77.35 		Subd. 6.Certification of individual investors. (a) Qualified taxpayers may apply 
77.36 	to the commissioner of employment and economic development for certification as a 
78.1 	qualified individual investor. The application must be in the form and be made under the 
78.2 	procedures specified by the commissioner, accompanied by an application fee of $250. 
78.3 	Fees are appropriated to the commissioner for personnel and administrative expenses 
78.4 	related to administering the program.
78.5 	(b) The commissioner may certify up to 40 qualified individual investors per year. 
78.6 	Certifications shall be awarded in the order of qualifying applications received, however 
78.7 	the commissioner may certify no more than ten qualified individual investors per year that 
78.8 	seek business investment opportunities that may qualify for and receive tax credits under 
78.9 	this section in the metropolitan area, as defined in section 473.121, subdivision 2.
78.10 	(c) The commissioner shall provide provisional credit certificates to qualified 
78.11 	individual investors, upon a showing by the qualified individual investor of investments of 
78.12 	at least $25,000 in qualifying small businesses or qualifying green job small businesses; at 
78.13 	least one-half of the investments made by the investor must be in qualifying green job 
78.14 	businesses. The commissioner may not issue more than $100,000 in provisional credit 
78.15 	certificates per qualified individual investor per year. The commissioner may not issue 
78.16 	a total of more than $1,000,000 per year in provisional credit certificates to qualified 
78.17 	individual investors in fiscal years 2010, 2011, 2012, and 2013.
78.18 	(d) The commissioner shall provide a final credit certificate to the qualified individual 
78.19 	investor upon a showing by the investor that the holding requirements of subdivision 2, 
78.20 	paragraph (c), have been met and that the investor is otherwise eligible for the credit.
78.21 		Subd. 7.Qualified individual investor requirements. The commissioner shall 
78.22 	enter into an agreement with each qualified individual investor certified under subdivision 
78.23 	6. Each agreement must include a provision requiring the qualified individual investor to 
78.24 	annually report on the employment figures and wages and benefits paid by the businesses 
78.25 	in which investments are made and a provision stating the specific manner in which the 
78.26 	qualified individual investor will comply or is complying with the allocation requirements 
78.27 	under subdivision 6, paragraph (c).
78.28 		Subd. 8.Rulemaking. The commissioner's actions in establishing procedures and 
78.29 	requirements and in making determinations and certifications to administer this section are 
78.30 	not a rule for purposes of chapter 14, are not subject to the Administrative Procedures Act 
78.31 	contained in chapter 14, and are not subject to section 14.386.

78.32 	EFFECTIVE DATE. This section is effective July 1, 2009, for taxable years 
78.33 	beginning after December 31, 2008, and only applies to investments made after the 
78.34 	qualified regional investment fund or qualified individual investor has been certified by 
78.35 	the commissioner of economic development.

79.1 	Sec. 2. Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision 
79.2 	to read:
79.3 		Subd. 36.Job growth investment tax credit. A taxpayer is allowed a credit 
79.4 	as determined under section 116J.8737 against the tax imposed by this chapter. 
79.5 	Notwithstanding the certification eligibility issued by the commissioner of the Department 
79.6 	of Employment and Economic Development under section 116J.8737, the commissioner 
79.7 	may utilize any audit and examination powers under chapters 270C or 289A to the extent 
79.8 	necessary to verify that the taxpayer is eligible for the credit and to assess for the amount 
79.9 	of any improperly claimed credit.

79.10 	EFFECTIVE DATE. This section is effective July 1, 2009, for taxable years 
79.11 	beginning after December 31, 2008, and only applies to investments made after the 
79.12 	qualified regional investment fund or qualified individual investor has been certified by 
79.13 	the commissioner of employment and economic development.

79.14 	ARTICLE 5
79.15 	AIDS TO LOCAL GOVERNMENTS

79.16 	Section 1. Minnesota Statutes 2008, section 273.1384, subdivision 4, is amended to 
79.17 	read:
79.18 		Subd. 4.Payment. (a) The commissioner of revenue shall reimburse each local 
79.19 	taxing jurisdiction, other than school districts, for the tax reductions granted under this 
79.20 	section in two equal installments on October 31 and December 26 of the taxes payable 
79.21 	year for which the reductions are granted, including in each payment the prior year 
79.22 	adjustments certified on the abstracts for that taxes payable year. The reimbursements 
79.23 	related to tax increments shall be issued in one installment each year on December 26.
79.24 	(b) The commissioner of revenue shall certify the total of the tax reductions 
79.25 	granted under this section for each taxes payable year within each school district to the 
79.26 	commissioner of the Department of Education and the commissioner of education shall 
79.27 	pay the reimbursement amounts to each school district as provided in section 273.1392.
79.28 	(c) The market value credit reimbursements payable to a town under this section 
79.29 	in 2009, 2010, 2011, and 2012 are zero.
79.30 	(d) The market value credit reimbursements payable in 2011 and 2012 for each 
79.31 	city and each county under this section are reduced by the dollar amount of the 2010 
79.32 	reduction in market value credit reimbursements for that city under section 477A.013, 
79.33 	subdivision 11, and for that county under section 477A.0124, subdivision 6. The payable 
80.1 	2011 or 2012 market value credit reimbursement for a city or county is not reduced to 
80.2 	less than zero by this paragraph.

80.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

80.4 	Sec. 2. Minnesota Statutes 2008, section 477A.0124, is amended by adding a 
80.5 	subdivision to read:
80.6 		Subd. 6.Aid adjustments. (a) For aid payable in 2010 only, each county's total 
80.7 	distribution amount under this section is equal to its distribution amount under this 
80.8 	section for aid payable in 2009 prior to the reductions under section 477A.0133, minus 
80.9 	an aid reduction amount equal to 2.8 percent of the county's 2009 levy plus aid revenue 
80.10 	base determined under section 477A.0133, subdivision 2. If, by June 15, 2010, the 
80.11 	commissioner of human services does not certify to the commissioner of revenue, as 
80.12 	required under section 402A.20, that a county is in compliance with section 402A.10, 
80.13 	subdivision 5, clause (2), of the Regional Human Service Authority Act, the commissioner 
80.14 	of revenue must recompute the aid reduction for that county as equal to 3.98 percent of the 
80.15 	county's 2009 levy plus aid revenue base.
80.16 	Each county's reduction amount is limited to the sum of the county's payable 2010 
80.17 	distributions under this section and section 273.1384 before the reductions under this 
80.18 	paragraph.
80.19 	The aid reduction is applied first to the county's distributions under this section, and 
80.20 	then, if necessary, to reduce the county's reimbursements under section 273.1384.
80.21 	(b) For aid payable in 2011 and thereafter, each county's distribution amount under 
80.22 	the remainder of this section is reduced by an amount equal to 1.17 percent of the county's 
80.23 	2009 levy plus aid revenue base determined under section 477A.0133, subdivision 2, if 
80.24 	by June 15 of the aid payment year the commissioner of human services has not certified 
80.25 	to the commissioner of revenue, as required by section 402A.20, that the county is in 
80.26 	compliance with section 402A.10, subdivision 5, clause (3) or (4), of the Regional Human 
80.27 	Service Authority Act.

80.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

80.29 	Sec. 3. Minnesota Statutes 2008, section 477A.013, subdivision 9, is amended to read:
80.30 		Subd. 9.City aid distribution. (a) In calendar year 2009 ~~and thereafter~~, each 
80.31 	city shall receive an aid distribution equal to the sum of (1) the city formula aid under 
80.32 	subdivision 8, and (2) its city aid base. In calendar year 2010, each city receives an aid 
80.33 	distribution under this section, before the reductions under subdivision 11, equal to the 
81.1 	amount of aid under this section that it was certified to receive in 2009. In calendar year 
81.2 	2011 and thereafter, each city receives an aid distribution under this section equal to the 
81.3 	sum of (1) the city formula aid under subdivision 8, and (2) its city aid base.
81.4 	(b) For aids payable in 2009 only, the total aid for any city shall not exceed the sum 
81.5 	of (1) 35 percent of the city's net levy for the year prior to the aid distribution, plus (2) 
81.6 	its total aid in the previous year.
81.7 	(c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed 
81.8 	the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution 
81.9 	plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total 
81.10 	aid for any city with a population of 2,500 or more may not be less than its total aid under 
81.11 	this section in the previous year minus the lesser of $10 multiplied by its population, or ten 
81.12 	percent of its net levy in the year prior to the aid distribution.
81.13 	(d) For aids payable in 2010 and thereafter, the total aid for a city with a population 
81.14 	less than 2,500 must not be less than the amount it was certified to receive in the 
81.15 	previous year minus the lesser of $10 multiplied by its population, or five percent of its 
81.16 	2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a 
81.17 	population less than 2,500 must not be less than what it received under this section in the 
81.18 	previous year unless its total aid in calendar year 2008 was aid under section 477A.011, 
81.19 	subdivision 36, paragraph (s), in which case its minimum aid is zero.
81.20 	(e) A city's aid loss under this section may not exceed $300,000 in any year in 
81.21 	which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or 
81.22 	greater than the appropriation under that subdivision in the previous year, unless the 
81.23 	city has an adjustment in its city net tax capacity under the process described in section 
81.24 	469.174, subdivision 28.
81.25 	(f) If a city's net tax capacity used in calculating aid under this section has decreased 
81.26 	in any year by more than 25 percent from its net tax capacity in the previous year due to 
81.27 	property becoming tax-exempt Indian land, the city's maximum allowed aid increase 
81.28 	under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the 
81.29 	year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease 
81.30 	resulting from the property becoming tax exempt.

81.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

81.32 	Sec. 4. Minnesota Statutes 2008, section 477A.013, is amended by adding a 
81.33 	subdivision to read:
82.1 		Subd. 11.2010 city aid. For aid payable in 2010 only, each city's distribution 
82.2 	amount under subdivision 9 is reduced by an amount equal to 10.55 percent of the city's 
82.3 	2009 levy plus aid revenue base determined under section 477A.0133.
82.4 	The reduction is limited to the sum of the city's payable 2010 distribution under 
82.5 	this section and the city's payable 2010 reimbursement under section 273.1384 before 
82.6 	the reductions in this subdivision.
82.7 	The reduction is applied first to the city's distribution under this section, and then, if 
82.8 	necessary, to the city's reimbursements under section 273.1384.

82.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

82.10 	Sec. 5. [477A.0133] 2009 CITY AND COUNTY AID REDUCTIONS.
82.11 		Subdivision 1.City aid. The commissioner of revenue shall compute an aid 
82.12 	reduction amount for each city for aid payable in 2009 equal to 5.05 percent of the city's 
82.13 	2009 levy plus aid revenue base.
82.14 	The "2009 levy plus aid revenue base" for a city is the sum of that city's certified 
82.15 	property tax levy for taxes payable in 2009, plus the sum of the amounts the city was 
82.16 	certified to receive in 2009 as:
82.17 	(1) local government aid under section 477A.013; and
82.18 	(2) taconite aids under sections 298.28 and 298.282, including any aid which was 
82.19 	required to be placed in a special fund for expenditure in the next succeeding year.
82.20 	The reduction is limited to the sum of the city's payable 2009 distributions, prior to 
82.21 	the reductions under this subdivision, under sections 273.1384 and 477A.013.
82.22 	The reduction is applied first to the city's distribution under section 477A.013, and 
82.23 	then, if necessary, to the city's reimbursements under section 273.1384.
82.24 	To the extent that sufficient information is available on each successive payment date 
82.25 	within the year, the commissioner of revenue shall pay any remaining 2009 distribution or 
82.26 	reimbursement amount that is reduced under this subdivision in equal installments on the 
82.27 	payment dates provided by law.
82.28 		Subd. 2.County aid. The commissioner of revenue shall compute an aid reduction 
82.29 	amount for each county for aid payable in 2009 equal to 1.53 percent of the county's 
82.30 	2009 levy plus aid revenue base. If, by November 15, 2009, the commissioner of human 
82.31 	services does not certify to the commissioner of revenue, as required under section 
82.32 	402A.20, that a county is in compliance with section 402A.10, subdivision 5, clause 
82.33 	(1), of the Regional Human Service Authority Act, the commissioner of revenue must 
82.34 	recompute the aid reduction for that county as equal to 2.41 percent of the county's 2009 
82.35 	levy plus aid revenue base.
83.1 	The "2009 levy plus aid revenue base" for a county is the sum of that county's 
83.2 	certified property tax levy for taxes payable in 2009, plus the sum of the amounts the 
83.3 	county was certified to receive in 2009 as:
83.4 	(1) county program aid under section 477A.0124; and
83.5 	(2) taconite aids under sections 298.28 and 298.282, including any aid which was 
83.6 	required to be placed in a special fund for expenditure in the next succeeding year.
83.7 	The reduction is limited to the sum of the county's payable 2009 distributions under 
83.8 	sections 273.1384 and 477A.0124.
83.9 	The aid reduction is applied first to the county's distributions under section 
83.10 	477A.0124, and then, if necessary, to reduce the county's reimbursements under section 
83.11 	273.1384.
83.12 	To the extent that sufficient information is available on each payment date in 2009, 
83.13 	the commissioner of revenue shall pay any remaining 2009 distribution or reimbursement 
83.14 	amount that is reduced under this section in equal installments on the payment dates 
83.15 	provided by law.

83.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

83.17 	Sec. 6. Minnesota Statutes 2008, section 477A.03, subdivision 2a, is amended to read:
83.18 		Subd. 2a.Cities. For aids payable in 2009 ~~and thereafter~~, the total aid paid under 
83.19 	section 477A.013, subdivision 9, is $526,148,487~~, subject to adjustment in subdivision~~ 
83.20 	~~5~~. For aid payable in 2010, the total aid paid under section 477A.013, subdivision 9, 
83.21 	prior to the reductions under section 477A.013, subdivision 11, is $526,148,487. For aid 
83.22 	payable in 2011 and thereafter, the total aid paid under section 477A.013, subdivision 
83.23 	9, is $428,638,315.

83.24 	EFFECTIVE DATE. This section is effective for aid paid in 2010 and thereafter.

83.25 	Sec. 7. Minnesota Statutes 2008, section 477A.03, subdivision 2b, is amended to read:
83.26 		Subd. 2b.Counties. (a) For aids payable in 2009 ~~and thereafter~~, the total aid 
83.27 	payable under section 477A.0124, subdivision 3, is $111,500,000 minus one-half of the 
83.28 	total aid amount determined under section 477A.0124, subdivision 5, paragraph (b), 
83.29 	subject to adjustment in subdivision 5. For aid payable in 2010, the total aid payable 
83.30 	under section 477A.0124, subdivision 3, prior to the reductions under section 477A.0124, 
83.31 	subdivision 6, is $111,500,000. For aid payable in 2011 and thereafter, the total aid 
83.32 	payable under section 477A.0124, subdivision 3, prior to the reductions under section 
83.33 	477A.0124, subdivision 6, is $85,329,200. Each calendar year, $500,000 shall be 
84.1 	retained by the commissioner of revenue to make reimbursements to the commissioner 
84.2 	of finance for payments made under section 611.27. For calendar year 2004, the amount 
84.3 	shall be in addition to the payments authorized under section 477A.0124, subdivision 1. 
84.4 	For calendar year 2005 and subsequent years, the amount shall be deducted from the 
84.5 	appropriation under this paragraph. The reimbursements shall be to defray the additional 
84.6 	costs associated with court-ordered counsel under section 611.27. Any retained amounts 
84.7 	not used for reimbursement in a year shall be included in the next distribution of county 
84.8 	need aid that is certified to the county auditors for the purpose of property tax reduction 
84.9 	for the next taxes payable year.
84.10 	(b) For aids payable in 2009 ~~and thereafter~~, the total aid under section 477A.0124, 
84.11 	subdivision 4, is $116,132,923 minus one-half of the total aid amount determined under 
84.12 	section 477A.0124, subdivision 5, paragraph (b)~~, subject to adjustment in subdivision 5~~.
84.13 	For aid payable in 2010, the total aid payable under section 477A.0124, subdivision 4, 
84.14 	prior to the reductions under section 477A.0124, subdivision 6, is $116,132,923. For aid 
84.15 	payable in 2011 and thereafter, the total aid payable under section 477A.0124, subdivision 
84.16 	4, prior to the reductions under section 477A.0124, subdivision 6, is $90,243,804. The 
84.17 	commissioner of finance shall bill the commissioner of revenue for the cost of preparation 
84.18 	of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year 
84.19 	2004 and thereafter. The commissioner of education shall bill the commissioner of 
84.20 	revenue for the cost of preparation of local impact notes for school districts as required by 
84.21 	section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner 
84.22 	of revenue shall deduct the amounts billed under this paragraph from the appropriation 
84.23 	under this paragraph, or in the case of aid payable in 2010, from the appropriation under 
84.24 	this subdivision. The amounts deducted are appropriated to the commissioner of finance 
84.25 	and the commissioner of education for the preparation of local impact notes.

84.26 	EFFECTIVE DATE. This section is effective for aid paid in 2010 and thereafter.

84.27 	Sec. 8. Minnesota Statutes 2008, section 477A.12, subdivision 1, is amended to read:
84.28 		Subdivision 1.Types of land; payments. (a) As an offset for expenses incurred 
84.29 	by counties and towns in support of natural resources lands, beginning with the payment 
84.30 	made in 2009, the following amounts are annually appropriated to the commissioner of 
84.31 	natural resources from the general fund for transfer to the commissioner of revenue. 
84.32 	The commissioner of revenue shall pay the transferred funds to counties as required by 
84.33 	sections 477A.11 to 477A.145~~. The amounts are~~ in amounts equal to 80 percent of the 
84.34 	following payment rates:
85.1 	(1) for acquired natural resources land, $3, as adjusted for inflation under section 
85.2 	477A.145, multiplied by the total number of acres of acquired natural resources land or, 
85.3 	at the county's option three-fourths of one percent of the appraised value of all acquired 
85.4 	natural resources land in the county, whichever is greater;
85.5 	(2) 75 cents, as adjusted for inflation under section 477A.145, multiplied by the 
85.6 	number of acres of county-administered other natural resources land;
85.7 	(3) 75 cents, as adjusted for inflation under section 477A.145, multiplied by the total 
85.8 	number of acres of land utilization project land; and
85.9 	(4) 37.5 cents, as adjusted for inflation under section 477A.145, multiplied by the 
85.10 	number of acres of commissioner-administered other natural resources land located in 
85.11 	each county as of July 1 of each year prior to the payment year.
85.12 	(b) The amount determined under paragraph (a), clause (1), is payable for land 
85.13 	that is acquired from a private owner and owned by the Department of Transportation 
85.14 	for the purpose of replacing wetland losses caused by transportation projects, but only 
85.15 	if the county contains more than 500 acres of such land at the time the certification is 
85.16 	made under subdivision 2.

85.17 	EFFECTIVE DATE. This section is effective the day following final enactment.

85.18 	Sec. 9. Minnesota Statutes 2008, section 477A.14, subdivision 1, is amended to read:
85.19 		Subdivision 1.General distribution. Except as provided in subdivision 2 or in 
85.20 	section 97A.061, subdivision 5, 40 percent of the total payment to the county shall be 
85.21 	deposited in the county general revenue fund to be used to provide property tax levy 
85.22 	reduction. Beginning with the payment made in 2009, the remainder shall be distributed 
85.23 	by the county in the following priority and in amounts equal to 80 percent of the following 
85.24 	payment rates:
85.25 	(a) 37.5 cents, as adjusted for inflation under section 477A.145, for each acre 
85.26 	of county-administered other natural resources land shall be deposited in a resource 
85.27 	development fund to be created within the county treasury for use in resource 
85.28 	development, forest management, game and fish habitat improvement, and recreational 
85.29 	development and maintenance of county-administered other natural resources land. Any 
85.30 	county receiving less than $5,000 annually for the resource development fund may elect to 
85.31 	deposit that amount in the county general revenue fund;
85.32 	(b) From the funds remaining, within 30 days of receipt of the payment to the county, 
85.33 	the county treasurer shall pay each organized township 30 cents, as adjusted for inflation 
85.34 	under section 477A.145, for each acre of acquired natural resources land and each acre of 
85.35 	land described in section 477A.12, subdivision 1, paragraph (b), and 7.5 cents, as adjusted 
86.1 	for inflation under section 477A.145, for each acre of other natural resources land and each 
86.2 	acre of land utilization project land located within its boundaries. Payments for natural 
86.3 	resources lands not located in an organized township shall be deposited in the county 
86.4 	general revenue fund. Payments to counties and townships pursuant to this paragraph shall 
86.5 	be used to provide property tax levy reduction, except that of the payments for natural 
86.6 	resources lands not located in an organized township, the county may allocate the amount 
86.7 	determined to be necessary for maintenance of roads in unorganized townships. Provided 
86.8 	that, if the total payment to the county pursuant to section 477A.12 is not sufficient to fully 
86.9 	fund the distribution provided for in this clause, the amount available shall be distributed 
86.10 	to each township and the county general revenue fund on a pro rata basis; and
86.11 	(c) Any remaining funds shall be deposited in the county general revenue fund. 
86.12 	Provided that, if the distribution to the county general revenue fund exceeds $35,000, the 
86.13 	excess shall be used to provide property tax levy reduction.

86.14 	EFFECTIVE DATE. This section is effective the day following final enactment.

86.15 	Sec. 10.  REPEALER.
 86.16 	Minnesota Statutes 2008, section 477A.03, subdivision 5, is repealed.

86.17 	EFFECTIVE DATE. This section is effective for aid paid in 2010 and thereafter.

86.18 	ARTICLE 6
86.19 	FEDERAL UPDATE

86.20 	Section 1. Minnesota Statutes 2008, section 289A.02, subdivision 7, is amended to 
86.21 	read:
86.22 		Subd. 7.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
86.23 	Revenue Code" means the Internal Revenue Code of 1986, as amended through ~~February~~ 
86.24 	~~13, 2008~~ December 31, 2008.

86.25 	EFFECTIVE DATE. This section is effective July 1, 2009. After the effective date 
86.26 	of this section, the changes incorporated by federal changes are effective at the same time 
86.27 	as the changes were effective for federal purposes.

86.28 	Sec. 2. Minnesota Statutes 2008, section 290.01, subdivision 19, is amended to read:
86.29 		Subd. 19.Net income. The term "net income" means the federal taxable income, 
86.30 	as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
86.31 	date named in this subdivision, incorporating the federal effective dates of changes to the 
87.1 	Internal Revenue Code and any elections made by the taxpayer in accordance with the 
87.2 	Internal Revenue Code in determining federal taxable income for federal income tax 
87.3 	purposes, and with the modifications provided in subdivisions 19a to 19f.
87.4 	In the case of a regulated investment company or a fund thereof, as defined in section 
87.5 	851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
87.6 	company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
87.7 	except that:
87.8 	(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
87.9 	Revenue Code does not apply;
87.10 	(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
87.11 	Revenue Code must be applied by allowing a deduction for capital gain dividends and 
87.12 	exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
87.13 	Revenue Code; and
87.14 	(3) the deduction for dividends paid must also be applied in the amount of any 
87.15 	undistributed capital gains which the regulated investment company elects to have treated 
87.16 	as provided in section 852(b)(3)(D) of the Internal Revenue Code.
87.17 	The net income of a real estate investment trust as defined and limited by section 
87.18 	856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
87.19 	taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
87.20 	The net income of a designated settlement fund as defined in section 468B(d) of 
87.21 	the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
87.22 	Internal Revenue Code.
87.23 	The Internal Revenue Code of 1986, as amended through ~~February 13, 2008~~
87.24 	December 31, 2008, shall be in effect for taxable years beginning after December 31, 1996.
87.25 	Except as otherwise provided, references to the Internal Revenue Code in 
87.26 	subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 
87.27 	the applicable year.

87.28 	EFFECTIVE DATE. This section is effective July 1, 2009.

87.29 	Sec. 3. Minnesota Statutes 2008, section 290.01, subdivision 19a, is amended to read:
87.30 		Subd. 19a.Additions to federal taxable income. For individuals, estates, and 
87.31 	trusts, there shall be added to federal taxable income:
87.32 	(1)(i) interest income on obligations of any state other than Minnesota or a political 
87.33 	or governmental subdivision, municipality, or governmental agency or instrumentality 
87.34 	of any state other than Minnesota exempt from federal income taxes under the Internal 
87.35 	Revenue Code or any other federal statute; and
88.1 	(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
88.2 	Code, except the portion of the exempt-interest dividends derived from interest income 
88.3 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
88.4 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
88.5 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
88.6 	95 percent or more of the exempt-interest dividends that are paid by the regulated 
88.7 	investment company as defined in section 851(a) of the Internal Revenue Code, or the 
88.8 	fund of the regulated investment company as defined in section 851(g) of the Internal 
88.9 	Revenue Code, making the payment; and
88.10 	(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
88.11 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
88.12 	interest income on obligations of the state in which the tribe is located;
88.13 	(2) the amount of income or sales and use taxes paid or accrued within the taxable 
88.14 	year under this chapter and the amount of taxes based on net income paid or sales 
88.15 	and use taxes paid to any other state or to any province or territory of Canada, to the 
88.16 	extent allowed as a deduction under section 63(d) of the Internal Revenue Code, but the 
88.17 	addition may not be more than the amount by which the itemized deductions as allowed 
88.18 	under section 63(d) of the Internal Revenue Code exceeds the amount of the standard 
88.19 	deduction as defined in section 63(c) of the Internal Revenue Code, disregarding the 
88.20 	amounts allowed under section 63(c)(1)(C) and (D) of the Internal Revenue Code. For 
88.21 	the purpose of this paragraph, the disallowance of itemized deductions under section 68 
88.22 	of the Internal Revenue Code of 1986, income or sales and use tax is the last itemized 
88.23 	deduction disallowed;
88.24 	(3) the capital gain amount of a lump-sum distribution to which the special tax under 
88.25 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
88.26 	(4) the amount of income taxes paid or accrued within the taxable year under this 
88.27 	chapter and taxes based on net income paid to any other state or any province or territory 
88.28 	of Canada, to the extent allowed as a deduction in determining federal adjusted gross 
88.29 	income. For the purpose of this paragraph, income taxes do not include the taxes imposed 
88.30 	by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
88.31 	(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 
88.32 	other than expenses or interest used in computing net interest income for the subtraction 
88.33 	allowed under subdivision 19b, clause (1);
88.34 	(6) the amount of a partner's pro rata share of net income which does not flow 
88.35 	through to the partner because the partnership elected to pay the tax on the income under 
88.36 	section 6242(a)(2) of the Internal Revenue Code;
89.1 	(7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
89.2 	Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 
89.3 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
89.4 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
89.5 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
89.6 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
89.7 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
89.8 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
89.9 	under section 168(k) is allowed;
89.10 	(8) 80 percent of the amount by which the deduction allowed by section 179 of the 
89.11 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
89.12 	Revenue Code of 1986, as amended through December 31, 2003;
89.13 	(9) to the extent deducted in computing federal taxable income, the amount of the 
89.14 	deduction allowable under section 199 of the Internal Revenue Code;
89.15 	(10) the exclusion allowed under section 139A of the Internal Revenue Code for 
89.16 	federal subsidies for prescription drug plans;
89.17 	(11) the amount of expenses disallowed under section 290.10, subdivision 2;
89.18 	(12) ~~for taxable years beginning after December 31, 2006, and before January 1,~~ 
89.19 	~~2008,~~ the amount deducted for qualified tuition and related expenses under section 222 of 
89.20 	the Internal Revenue Code, to the extent deducted from gross income; ~~and~~
89.21 	(13) ~~for taxable years beginning after December 31, 2006, and before January 1,~~ 
89.22 	~~2008,~~ the amount deducted for certain expenses of elementary and secondary school 
89.23 	teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted 
89.24 	from gross income~~.~~;
89.25 	(14) the additional standard deduction for property taxes payable that is allowable 
89.26 	under section 63(c)(1)(C) of the Internal Revenue Code; and
89.27 	(15) the amount by which losses from the sale or transfer of capital assets exceed 
89.28 	the maximum allowable loss allowed under section 1211 of the Internal Revenue Code. 
89.29 	For purposes of this clause, losses from the sale or transfer of certain preferred stock 
89.30 	treated by the taxpayer as ordinary losses pursuant to Title III, Division A, section 301 
89.31 	of Public Law 110-343, are capital losses.

89.32 	EFFECTIVE DATE. This section is effective July 1, 2009. Clause (15) applies to 
89.33 	taxable years beginning after July 30, 2007. The remaining amendments apply to taxable 
89.34 	years beginning after December 31, 2007.

89.35 	Sec. 4. Minnesota Statutes 2008, section 290.01, subdivision 19b, is amended to read:
90.1 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
90.2 	and trusts, there shall be subtracted from federal taxable income:
90.3 	(1) net interest income on obligations of any authority, commission, or 
90.4 	instrumentality of the United States to the extent includable in taxable income for federal 
90.5 	income tax purposes but exempt from state income tax under the laws of the United States;
90.6 	(2) if included in federal taxable income, the amount of any overpayment of income 
90.7 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
90.8 	is received as a refund or as a credit to another taxable year's income tax liability;
90.9 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
90.10 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
90.11 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
90.12 	transportation of each qualifying child in attending an elementary or secondary school 
90.13 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
90.14 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
90.15 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
90.16 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
90.17 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
90.18 	"textbooks" includes books and other instructional materials and equipment purchased 
90.19 	or leased for use in elementary and secondary schools in teaching only those subjects 
90.20 	legally and commonly taught in public elementary and secondary schools in this state. 
90.21 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
90.22 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
90.23 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
90.24 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
90.25 	or materials for, or transportation to, extracurricular activities including sporting events, 
90.26 	musical or dramatic events, speech activities, driver's education, or similar programs. For 
90.27 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
90.28 	given in section 32(c)(3) of the Internal Revenue Code;
90.29 	(4) income as provided under section 290.0802;
90.30 	(5) to the extent included in federal adjusted gross income, income realized on 
90.31 	disposition of property exempt from tax under section 290.491;
90.32 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
90.33 	of the Internal Revenue Code in determining federal taxable income by an individual 
90.34 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
90.35 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
91.1 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 
91.2 	under the provisions of Public Law 109-1;
91.3 	(7) for taxable years beginning before January 1, 2008, the amount of the federal 
91.4 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
91.5 	which is included in gross income under section 87 of the Internal Revenue Code;
91.6 	(8) for individuals who are allowed a federal foreign tax credit for taxes that do not 
91.7 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
91.8 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
91.9 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
91.10 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
91.11 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
91.12 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
91.13 	the extent they exceed the federal foreign tax credit;
91.14 	(9) in each of the five tax years immediately following the tax year in which an 
91.15 	addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 
91.16 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
91.17 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
91.18 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
91.19 	subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 
91.20 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
91.21 	generated for the tax year of the addition. The resulting delayed depreciation cannot be 
91.22 	less than zero;
91.23 	(10) job opportunity building zone income as provided under section 469.316;
91.24 	(11) to the extent included in federal taxable income, the amount of compensation 
91.25 	paid to members of the Minnesota National Guard or other reserve components of the 
91.26 	United States military for active service performed in Minnesota, excluding compensation 
91.27 	for services performed under the Active Guard Reserve (AGR) program. For purposes of 
91.28 	this clause, "active service" means (i) state active service as defined in section 190.05, 
91.29 	subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 
91.30 	190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, 
91.31 	subdivision 5c, but "active service" excludes service performed in accordance with section 
91.32 	190.08, subdivision 3;
91.33 	(12) to the extent included in federal taxable income, the amount of compensation 
91.34 	paid to Minnesota residents who are members of the armed forces of the United States or 
91.35 	United Nations for active duty performed outside Minnesota under United States Code, 
92.1 	title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 
92.2 	the United Nations;
92.3 	(13) an amount, not to exceed $10,000, equal to qualified expenses related to a 
92.4 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
92.5 	to another person for human organ transplantation. For purposes of this clause, "organ" 
92.6 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
92.7 	"human organ transplantation" means the medical procedure by which transfer of a human 
92.8 	organ is made from the body of one person to the body of another person; "qualified 
92.9 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
92.10 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
92.11 	may be subtracted under this clause only once; and "qualified donor" means the individual 
92.12 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
92.13 	individual may claim the subtraction in this clause for each instance of organ donation for 
92.14 	transplantation during the taxable year in which the qualified expenses occur;
92.15 	(14) in each of the five tax years immediately following the tax year in which an 
92.16 	addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 
92.17 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
92.18 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 
92.19 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
92.20 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
92.21 	tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 
92.22 	subtraction is not allowed under this clause;
92.23 	(15) to the extent included in federal taxable income, compensation paid to a service 
92.24 	member as defined in United States Code, title 10, section 101(a)(5), for military service 
92.25 	as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);
92.26 	(16) international economic development zone income as provided under section 
92.27 	469.325; ~~and~~
92.28 	(17) to the extent included in federal taxable income, the amount of national service 
92.29 	educational awards received from the National Service Trust under United States Code, 
92.30 	title 42, sections 12601 to 12604, for service in an approved Americorps National Service 
92.31 	program~~.~~; and
92.32 	(18) the unused portion of the addition required under subdivision 19a, clause (15). 
92.33 	The subtraction equals the difference between (i) the net income or loss determined under 
92.34 	sections 1211 and 1212 of the Internal Revenue Code and included in net income in the 
92.35 	taxable year and (ii) the net income or loss determined under sections 1211 and 1212 of 
92.36 	the Internal Revenue Code that would be included in net income if the unused portion of 
93.1 	the addition was considered a capital loss carryover under section 1212 of the Internal 
93.2 	Revenue Code. For purposes of this clause, "unused portion of the addition required 
93.3 	under subdivision 19a, clause (15)" is the aggregate amount of the additions required in 
93.4 	prior years under subdivision 19a, clause (15), minus any subtraction previously allowed 
93.5 	under this clause.

93.6 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to taxable 
93.7 	years beginning after December 31, 2007.

93.8 	Sec. 5. Minnesota Statutes 2008, section 290.01, subdivision 19c, is amended to read:
93.9 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
93.10 	there shall be added to federal taxable income:
93.11 	(1) the amount of any deduction taken for federal income tax purposes for income, 
93.12 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
93.13 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
93.14 	another state, a political subdivision of another state, the District of Columbia, or any 
93.15 	foreign country or possession of the United States;
93.16 	(2) interest not subject to federal tax upon obligations of: the United States, its 
93.17 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
93.18 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
93.19 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
93.20 	tribal governments;
93.21 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
93.22 	Revenue Code;
93.23 	(4) the amount of any net operating loss deduction taken for federal income tax 
93.24 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
93.25 	deduction under section 810 of the Internal Revenue Code;
93.26 	(5) the amount of any special deductions taken for federal income tax purposes 
93.27 	under sections 241 to 247 and 965 of the Internal Revenue Code;
93.28 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
93.29 	clause (a), that are not subject to Minnesota income tax;
93.30 	(7) the amount of any capital losses deducted for federal income tax purposes 
93.31 	under sections 1211 and 1212 of the Internal Revenue Code, including losses considered 
93.32 	ordinary losses pursuant to Title III, Division A, section 301 of Public Law 110-343;
93.33 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
93.34 	921(a) and 291 of the Internal Revenue Code;
94.1 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
94.2 	291 of the Internal Revenue Code;
94.3 	(10) for certified pollution control facilities placed in service in a taxable year 
94.4 	beginning before December 31, 1986, and for which amortization deductions were elected 
94.5 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
94.6 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
94.7 	income for those facilities;
94.8 	(11) the amount of any deemed dividend from a foreign operating corporation 
94.9 	determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend 
94.10 	shall be reduced by the amount of the addition to income required by clauses (20), (21), 
94.11 	(22), and (23);
94.12 	(12) the amount of a partner's pro rata share of net income which does not flow 
94.13 	through to the partner because the partnership elected to pay the tax on the income under 
94.14 	section 6242(a)(2) of the Internal Revenue Code;
94.15 	(13) the amount of net income excluded under section 114 of the Internal Revenue 
94.16 	Code;
94.17 	(14) any increase in subpart F income, as defined in section 952(a) of the Internal 
94.18 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
94.19 	to the provisions of ~~section 103 of Public Law 109-222~~ Title III, Division C, section 
94.20 	303a(1)-(2) of Public Law 110-343;
94.21 	(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
94.22 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
94.23 	has an activity that in the taxable year generates a deduction for depreciation under 
94.24 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
94.25 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
94.26 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
94.27 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
94.28 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
94.29 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
94.30 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
94.31 	(16) 80 percent of the amount by which the deduction allowed by section 179 of the 
94.32 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
94.33 	Revenue Code of 1986, as amended through December 31, 2003;
94.34 	(17) to the extent deducted in computing federal taxable income, the amount of the 
94.35 	deduction allowable under section 199 of the Internal Revenue Code;
95.1 	(18) the exclusion allowed under section 139A of the Internal Revenue Code for 
95.2 	federal subsidies for prescription drug plans;
95.3 	(19) the amount of expenses disallowed under section 290.10, subdivision 2;
95.4 	(20) an amount equal to the interest and intangible expenses, losses, and costs paid, 
95.5 	accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 
95.6 	of a corporation that is a member of the taxpayer's unitary business group that qualifies 
95.7 	as a foreign operating corporation. For purposes of this clause, intangible expenses and 
95.8 	costs include:
95.9 	(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 
95.10 	use, maintenance or management, ownership, sale, exchange, or any other disposition of 
95.11 	intangible property;
95.12 	(ii) losses incurred, directly or indirectly, from factoring transactions or discounting 
95.13 	transactions;
95.14 	(iii) royalty, patent, technical, and copyright fees;
95.15 	(iv) licensing fees; and
95.16 	(v) other similar expenses and costs.
95.17 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
95.18 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
95.19 	secrets, and similar types of intangible assets.
95.20 	This clause does not apply to any item of interest or intangible expenses or costs paid, 
95.21 	accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 
95.22 	to such item of income to the extent that the income to the foreign operating corporation 
95.23 	is income from sources without the United States as defined in subtitle A, chapter 1, 
95.24 	subchapter N, part 1, of the Internal Revenue Code;
95.25 	(21) except as already included in the taxpayer's taxable income pursuant to clause 
95.26 	(20), any interest income and income generated from intangible property received or 
95.27 	accrued by a foreign operating corporation that is a member of the taxpayer's unitary 
95.28 	group. For purposes of this clause, income generated from intangible property includes:
95.29 	(i) income related to the direct or indirect acquisition, use, maintenance or 
95.30 	management, ownership, sale, exchange, or any other disposition of intangible property;
95.31 	(ii) income from factoring transactions or discounting transactions;
95.32 	(iii) royalty, patent, technical, and copyright fees;
95.33 	(iv) licensing fees; and
95.34 	(v) other similar income.
96.1 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
96.2 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
96.3 	secrets, and similar types of intangible assets.
96.4 	This clause does not apply to any item of interest or intangible income received or accrued 
96.5 	by a foreign operating corporation with respect to such item of income to the extent that 
96.6 	the income is income from sources without the United States as defined in subtitle A, 
96.7 	chapter 1, subchapter N, part 1, of the Internal Revenue Code;
96.8 	(22) the dividends attributable to the income of a foreign operating corporation that 
96.9 	is a member of the taxpayer's unitary group in an amount that is equal to the dividends 
96.10 	paid deduction of a real estate investment trust under section 561(a) of the Internal 
96.11 	Revenue Code for amounts paid or accrued by the real estate investment trust to the 
96.12 	foreign operating corporation;
96.13 	(23) the income of a foreign operating corporation that is a member of the taxpayer's 
96.14 	unitary group in an amount that is equal to gains derived from the sale of real or personal 
96.15 	property located in the United States; and
96.16 	(24) for taxable years beginning after December 31, 2006, and before January 1, 
96.17 	2008, the additional amount allowed as a deduction for donation of computer technology 
96.18 	and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent 
96.19 	deducted from taxable income.

96.20 	EFFECTIVE DATE. This section is effective July 1, 2009. The amendment to 
96.21 	clause (7) applies to taxable years beginning after July 30, 2007. The amendment to clause 
96.22 	(14) applies to taxable years beginning after December 31, 2007.

96.23 	Sec. 6. Minnesota Statutes 2008, section 290.01, subdivision 19d, is amended to read:
96.24 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
96.25 	corporations, there shall be subtracted from federal taxable income after the increases 
96.26 	provided in subdivision 19c:
96.27 	(1) the amount of foreign dividend gross-up added to gross income for federal 
96.28 	income tax purposes under section 78 of the Internal Revenue Code;
96.29 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
96.30 	claiming the work opportunity credit under section 51 of the Internal Revenue Code;
96.31 	(3) any dividend (not including any distribution in liquidation) paid within the 
96.32 	taxable year by a national or state bank to the United States, or to any instrumentality of 
96.33 	the United States exempt from federal income taxes, on the preferred stock of the bank 
96.34 	owned by the United States or the instrumentality;
97.1 	(4) amounts disallowed for intangible drilling costs due to differences between 
97.2 	this chapter and the Internal Revenue Code in taxable years beginning before January 
97.3 	1, 1987, as follows:
97.4 	(i) to the extent the disallowed costs are represented by physical property, an amount 
97.5 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
97.6 	subdivision 7, subject to the modifications contained in subdivision 19e; and
97.7 	(ii) to the extent the disallowed costs are not represented by physical property, an 
97.8 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
97.9 	290.09, subdivision 8;
97.10 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
97.11 	Internal Revenue Code, except that:
97.12 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
97.13 	capital loss carrybacks shall not be allowed;
97.14 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
97.15 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
97.16 	allowed;
97.17 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
97.18 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
97.19 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
97.20 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
97.21 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
97.22 	extent such loss was not used in a prior taxable year and subject to the provisions of 
97.23 	Minnesota Statutes 1986, section 290.16, shall be allowed;
97.24 	For purposes of this clause, the addition to income for losses from the sale or transfer 
97.25 	of certain preferred stock under subdivision 19c, clause (27), shall be considered to be 
97.26 	capital losses pursuant to sections 1211 and 1212 of the Internal Revenue Code incurred in 
97.27 	the year of the sale or transfer;
97.28 	(6) an amount for interest and expenses relating to income not taxable for federal 
97.29 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
97.30 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
97.31 	291 of the Internal Revenue Code in computing federal taxable income;
97.32 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
97.33 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a 
97.34 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
97.35 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
97.36 	by the commissioner. In the case of property held in trust, the allowable deduction must 
98.1 	be apportioned between the income beneficiaries and the trustee in accordance with the 
98.2 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
98.3 	of the trust's income allocable to each;
98.4 	(8) for certified pollution control facilities placed in service in a taxable year 
98.5 	beginning before December 31, 1986, and for which amortization deductions were elected 
98.6 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
98.7 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
98.8 	1986, section 290.09, subdivision 7;
98.9 	(9) amounts included in federal taxable income that are due to refunds of income, 
98.10 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
98.11 	corporation to Minnesota, another state, a political subdivision of another state, the 
98.12 	District of Columbia, or a foreign country or possession of the United States to the extent 
98.13 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
98.14 	clause (1), in a prior taxable year;
98.15 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
98.16 	foreign operating corporation or a foreign corporation which is part of the same unitary 
98.17 	business as the receiving corporation, unless the income resulting from such payments or 
98.18 	accruals is income from sources within the United States as defined in subtitle A, chapter 
98.19 	1, subchapter N, part 1, of the Internal Revenue Code;
98.20 	(11) income or gains from the business of mining as defined in section 290.05, 
98.21 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
98.22 	(12) the amount of disability access expenditures in the taxable year which are not 
98.23 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
98.24 	(13) the amount of qualified research expenses not allowed for federal income tax 
98.25 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
98.26 	the amount exceeds the amount of the credit allowed under section 290.068;
98.27 	(14) the amount of salary expenses not allowed for federal income tax purposes due 
98.28 	to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
98.29 	Code;
98.30 	(15) for taxable years beginning before January 1, 2008, the amount of the federal 
98.31 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
98.32 	which is included in gross income under section 87 of the Internal Revenue Code;
98.33 	(16) for a corporation whose foreign sales corporation, as defined in section 922 
98.34 	of the Internal Revenue Code, constituted a foreign operating corporation during any 
98.35 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
98.36 	claiming the deduction under section 290.21, subdivision 4, for income received from 
99.1 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
99.2 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
99.3 	not income of a foreign operating company;
99.4 	(17) any decrease in subpart F income, as defined in section 952(a) of the Internal 
99.5 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
99.6 	to the provisions of ~~section 103 of Public Law 109-222~~ Title III, Division C, section 
99.7 	303a(1)-(2) of Public Law 110-343;
99.8 	(18) in each of the five tax years immediately following the tax year in which an 
99.9 	addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of 
99.10 	the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
99.11 	amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 
99.12 	resulting delayed depreciation cannot be less than zero; and
99.13 	(19) in each of the five tax years immediately following the tax year in which an 
99.14 	addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the 
99.15 	amount of the addition.

99.16 	EFFECTIVE DATE. This section is effective July 1, 2009. The amendments to 
99.17 	clause (5) apply to taxable years beginning after July 30, 2007. The amendments to clause 
99.18 	(17) apply to taxable years beginning after December 31, 2007.

99.19 	Sec. 7. Minnesota Statutes 2008, section 290.01, subdivision 31, is amended to read:
99.20 		Subd. 31.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
99.21 	Revenue Code" means the Internal Revenue Code of 1986, as amended through ~~February~~ 
99.22 	~~13, 2008~~ December 31, 2008. "Internal Revenue Code" also includes any uncodified 
99.23 	provision in federal law that relates to provisions of the Internal Revenue Code that are 
99.24 	incorporated into Minnesota law.

99.25 	EFFECTIVE DATE. This section is effective July 1, 2009. After the effective date 
99.26 	of this section, the changes incorporated by federal changes are effective at the same time 
99.27 	as the changes were effective for federal purposes.

99.28 	Sec. 8. Minnesota Statutes 2008, section 290.067, subdivision 2a, is amended to read:
99.29 		Subd. 2a.Income. (a) For purposes of this section, "income" means the sum of 
99.30 	the following:
99.31 	(1) federal adjusted gross income as defined in section 62 of the Internal Revenue 
99.32 	Code; and
99.33 	(2) the sum of the following amounts to the extent not included in clause (1):
100.1 	(i) all nontaxable income;
100.2 	(ii) the amount of a passive activity loss that is not disallowed as a result of section 
100.3 	469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity 
100.4 	loss carryover allowed under section 469(b) of the Internal Revenue Code;
100.5 	(iii) an amount equal to the total of any discharge of qualified farm indebtedness 
100.6 	of a solvent individual excluded from gross income under section 108(g) of the Internal 
100.7 	Revenue Code;
100.8 	(iv) cash public assistance and relief;
100.9 	(v) any pension or annuity (including railroad retirement benefits, all payments 
100.10 	received under the federal Social Security Act, supplemental security income, and veterans 
100.11 	benefits), which was not exclusively funded by the claimant or spouse, or which was 
100.12 	funded exclusively by the claimant or spouse and which funding payments were excluded 
100.13 	from federal adjusted gross income in the years when the payments were made;
100.14 	(vi) interest received from the federal or a state government or any instrumentality 
100.15 	or political subdivision thereof;
100.16 	(vii) workers' compensation;
100.17 	(viii) nontaxable strike benefits;
100.18 	(ix) the gross amounts of payments received in the nature of disability income or 
100.19 	sick pay as a result of accident, sickness, or other disability, whether funded through 
100.20 	insurance or otherwise;
100.21 	(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 
100.22 	1986, as amended through December 31, 1995;
100.23 	(xi) contributions made by the claimant to an individual retirement account, 
100.24 	including a qualified voluntary employee contribution; simplified employee pension plan; 
100.25 	self-employed retirement plan; cash or deferred arrangement plan under section 401(k) 
100.26 	of the Internal Revenue Code; or deferred compensation plan under section 457 of the 
100.27 	Internal Revenue Code;
100.28 	(xii) nontaxable scholarship or fellowship grants;
100.29 	(xiii) the amount of deduction allowed under section 199 of the Internal Revenue 
100.30 	Code; ~~and~~
100.31 	(xiv) the amount of deduction allowed under section 220 or 223 of the Internal 
100.32 	Revenue Code~~.~~; and
100.33 	(xv) the amount of tuition expenses and educator expenses required to be added to 
100.34 	income under section 290.01, subdivision 19a, clauses (12) and (13).
100.35 	In the case of an individual who files an income tax return on a fiscal year basis, the 
100.36 	term "federal adjusted gross income" means federal adjusted gross income reflected in the 
101.1 	fiscal year ending in the next calendar year. Federal adjusted gross income may not be 
101.2 	reduced by the amount of a net operating loss carryback or carryforward or a capital loss 
101.3 	carryback or carryforward allowed for the year.
101.4 	(b) "Income" does not include:
101.5 	(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 
101.6 	102;
101.7 	(2) amounts of any pension or annuity that were exclusively funded by the claimant 
101.8 	or spouse if the funding payments were not excluded from federal adjusted gross income 
101.9 	in the years when the payments were made;
101.10 	(3) surplus food or other relief in kind supplied by a governmental agency;
101.11 	(4) relief granted under chapter 290A;
101.12 	(5) child support payments received under a temporary or final decree of dissolution 
101.13 	or legal separation; and
101.14 	(6) restitution payments received by eligible individuals and excludable interest as 
101.15 	defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 
101.16 	2001, Public Law 107-16.

101.17 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to taxable 
101.18 	years beginning after December 31, 2007.

101.19 	Sec. 9. Minnesota Statutes 2008, section 290.091, subdivision 2, is amended to read:
101.20 		Subd. 2.Definitions. For purposes of the tax imposed by this section, the following 
101.21 	terms have the meanings given:
101.22 	(a) "Alternative minimum taxable income" means the sum of the following for 
101.23 	the taxable year:
101.24 	(1) the taxpayer's federal alternative minimum taxable income as defined in section 
101.25 	55(b)(2) of the Internal Revenue Code;
101.26 	(2) the taxpayer's itemized deductions allowed in computing federal alternative 
101.27 	minimum taxable income, but excluding:
101.28 	(i) the charitable contribution deduction under section 170 of the Internal Revenue 
101.29 	Code;
101.30 	(ii) the medical expense deduction;
101.31 	(iii) the casualty, theft, and disaster loss deduction; and
101.32 	(iv) the impairment-related work expenses of a disabled person;
101.33 	(3) for depletion allowances computed under section 613A(c) of the Internal 
101.34 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
101.35 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
102.1 	the excess of the deduction for depletion allowable under section 611 of the Internal 
102.2 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
102.3 	taxable year (determined without regard to the depletion deduction for the taxable year);
102.4 	(4) to the extent not included in federal alternative minimum taxable income, the 
102.5 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
102.6 	Internal Revenue Code determined without regard to subparagraph (E);
102.7 	(5) to the extent not included in federal alternative minimum taxable income, the 
102.8 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
102.9 	(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7) 
102.10 	to (9), (12), ~~and~~ (13), and (15);
102.11 	less the sum of the amounts determined under the following:
102.12 	(1) interest income as defined in section 290.01, subdivision 19b, clause (1);
102.13 	(2) an overpayment of state income tax as provided by section 290.01, subdivision 
102.14 	19b, clause (2), to the extent included in federal alternative minimum taxable income;
102.15 	(3) the amount of investment interest paid or accrued within the taxable year on 
102.16 	indebtedness to the extent that the amount does not exceed net investment income, as 
102.17 	defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 
102.18 	amounts deducted in computing federal adjusted gross income; and
102.19 	(4) amounts subtracted from federal taxable income as provided by section 290.01, 
102.20 	subdivision 19b, clauses (6) ~~and~~, (9) to (16), and (18).
102.21 	In the case of an estate or trust, alternative minimum taxable income must be 
102.22 	computed as provided in section 59(c) of the Internal Revenue Code.
102.23 	(b) "Investment interest" means investment interest as defined in section 163(d)(3) 
102.24 	of the Internal Revenue Code.
102.25 	(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 
102.26 	income after subtracting the exemption amount determined under subdivision 3.
102.27 	(d) "Regular tax" means the tax that would be imposed under this chapter (without 
102.28 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
102.29 	credits allowed under this chapter.
102.30 	(e) "Net minimum tax" means the minimum tax imposed by this section.

102.31 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to taxable 
102.32 	years beginning after December 31, 2007.

102.33 	Sec. 10. Minnesota Statutes 2008, section 290.0921, subdivision 3, is amended to read:
102.34 		Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable 
102.35 	income" is Minnesota net income as defined in section 290.01, subdivision 19, and 
103.1 	includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), 
103.2 	(f), and (h) of the Internal Revenue Code. If a corporation files a separate company 
103.3 	Minnesota tax return, the minimum tax must be computed on a separate company basis. 
103.4 	If a corporation is part of a tax group filing a unitary return, the minimum tax must be 
103.5 	computed on a unitary basis. The following adjustments must be made. 
103.6 	(1) For purposes of the depreciation adjustments under section 56(a)(1) and 
103.7 	56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in 
103.8 	service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal 
103.9 	income tax purposes, including any modification made in a taxable year under section 
103.10 	290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, 
103.11 	paragraph (c). 
103.12 	For taxable years beginning after December 31, 2000, the amount of any remaining 
103.13 	modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986, 
103.14 	section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation 
103.15 	allowance in the first taxable year after December 31, 2000. 
103.16 	(2) The portion of the depreciation deduction allowed for federal income tax 
103.17 	purposes under section 168(k) of the Internal Revenue Code that is required as an 
103.18 	addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining 
103.19 	alternative minimum taxable income. 
103.20 	(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d, 
103.21 	clause (18), is allowed as a depreciation deduction in determining alternative minimum 
103.22 	taxable income. 
103.23 	(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) 
103.24 	of the Internal Revenue Code does not apply. 
103.25 	(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal 
103.26 	Revenue Code does not apply. 
103.27 	(6) The special rule for dividends from section 936 companies under section 
103.28 	56(g)(4)(C)(iii) does not apply. 
103.29 	(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue 
103.30 	Code does not apply. 
103.31 	(8) The tax preference for intangible drilling costs under section 57(a)(2) of the 
103.32 	Internal Revenue Code must be calculated without regard to subparagraph (E) and the 
103.33 	subtraction under section 290.01, subdivision 19d, clause (4). 
103.34 	(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal 
103.35 	Revenue Code does not apply. 
104.1 	(10) The tax preference for charitable contributions of appreciated property under 
104.2 	section 57(a)(6) of the Internal Revenue Code does not apply. 
104.3 	(11) For purposes of calculating the tax preference for accelerated depreciation or 
104.4 	amortization on certain property placed in service before January 1, 1987, under section 
104.5 	57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the 
104.6 	deduction allowed under section 290.01, subdivision 19e. 
104.7 	For taxable years beginning after December 31, 2000, the amount of any remaining 
104.8 	modification made under section 290.01, subdivision 19e, not previously deducted is a 
104.9 	depreciation or amortization allowance in the first taxable year after December 31, 2004. 
104.10 	(12) For purposes of calculating the adjustment for adjusted current earnings in 
104.11 	section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable 
104.12 	income" as it is used in section 56(g) of the Internal Revenue Code, means alternative 
104.13 	minimum taxable income as defined in this subdivision, determined without regard to the 
104.14 	adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code. 
104.15 	(13) For purposes of determining the amount of adjusted current earnings under 
104.16 	section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 
104.17 	56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend 
104.18 	gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the 
104.19 	amount of refunds of income, excise, or franchise taxes subtracted as provided in section 
104.20 	290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other like 
104.21 	income subtracted as provided in section 290.01, subdivision 19d, clause (10). 
104.22 	(14) Alternative minimum taxable income excludes the income from operating in a 
104.23 	job opportunity building zone as provided under section 469.317. 
104.24 	(15) Alternative minimum taxable income excludes the income from operating in a 
104.25 	biotechnology and health sciences industry zone as provided under section 469.337. 
104.26 	(16) Alternative minimum taxable income excludes the income from operating in an 
104.27 	international economic development zone as provided under section 469.326. 
104.28 	(17) Alternative minimum taxable income includes losses added to income under 
104.29 	section 290.01, subdivision 19c, clause (7), to the extent attributable to losses not treated 
104.30 	as capital losses under section 301, Division A, Title III, of Public Law 110-343.
104.31 	(18) Alternative minimum taxable income excludes the deduction allowed under 
104.32 	section 290.01, subdivision 19d, clause (5), to the extent attributable to losses not treated 
104.33 	as capital losses under section 301, Division A, Title III, of Public Law 110-343.
104.34 	Items of tax preference must not be reduced below zero as a result of the 
104.35 	modifications in this subdivision. 

105.1 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to taxable 
105.2 	years beginning after July 30, 2007.

105.3 	Sec. 11. Minnesota Statutes 2008, section 290.095, subdivision 2, is amended to read:
105.4 		Subd. 2.Defined and limited. (a) The term "net operating loss" as used in this 
105.5 	section shall mean a net operating loss as defined in section 172(c) of the Internal Revenue 
105.6 	Code, with the modifications specified in subdivision 4. The deductions provided in 
105.7 	section 290.21 and the modification provided in section 290.01, subdivision 19d, clause 
105.8 	(10), cannot be used in the determination of a net operating loss. 
105.9 	(b) The term "net operating loss deduction" as used in this section means the 
105.10 	aggregate of the net operating loss carryovers to the taxable year, computed in accordance 
105.11 	with subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating 
105.12 	to the carryback of net operating losses, do not apply.
105.13 	(c) Losses treated as ordinary losses pursuant to Title III, Division A, section 301 of 
105.14 	Public Law 110-343, cannot be used in the determination of a net operating loss.

105.15 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to losses 
105.16 	incurred after December 31, 2007.

105.17 	Sec. 12. Minnesota Statutes 2008, section 290.095, subdivision 11, is amended to read:
105.18 		Subd. 11.Carryback or carryover adjustments. (a) Except as provided in 
105.19 	subdivision 2, paragraph (c), for individuals, estates, and trusts the amount of a net 
105.20 	operating loss that may be carried back or carried over shall be the same dollar amount 
105.21 	allowable in the determination of federal taxable income, provided that, notwithstanding 
105.22 	any other provision, estates and trusts must apply the following adjustments to the amount 
105.23 	of the net operating loss that may be carried back or carried over:
105.24 	(1) Nonassignable income or losses as required by section 290.17. 
105.25 	(2) Deductions not allocable to Minnesota under section 290.17. 
105.26 	(b) The net operating loss carryback or carryover applied as a deduction in the taxable 
105.27 	year to which the net operating loss is carried back or carried over shall be equal to the 
105.28 	net operating loss carryback or carryover applied in the taxable year in arriving at federal 
105.29 	taxable income provided that trusts and estates must apply the following modifications:
105.30 	(1) Increase the amount of carryback or carryover applied in the taxable year by 
105.31 	the amount of losses and interest, taxes and other expenses not assignable or allowable 
105.32 	to Minnesota incurred in the taxable year.
105.33 	(2) Decrease the amount of carryback or carryover applied in the taxable year by 
105.34 	the amount of income not assignable to Minnesota earned in the taxable year. For estates 
106.1 	and trusts, the net operating loss carryback or carryover to the next consecutive taxable 
106.2 	year shall be the net operating loss carryback or carryover as calculated in clause (b) 
106.3 	less the amount applied in the earlier taxable year(s). No additional net operating loss 
106.4 	carryback or carryover shall be allowed to estates and trusts if the entire amount has been 
106.5 	used to offset Minnesota income in a year earlier than was possible on the federal return. 
106.6 	However, if a net operating loss carryback or carryover was allowed to offset federal 
106.7 	income in a year earlier than was possible on the Minnesota return, an estate or trust 
106.8 	shall still be allowed to offset Minnesota income but only if the loss was assignable to 
106.9 	Minnesota in the year the loss occurred.

106.10 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to losses 
106.11 	incurred after December 31, 2007.

106.12 	Sec. 13. Minnesota Statutes 2008, section 290A.03, subdivision 3, is amended to read:
106.13 		Subd. 3.Income. (1) "Income" means the sum of the following:
106.14 	(a) federal adjusted gross income as defined in the Internal Revenue Code; and
106.15 	(b) the sum of the following amounts to the extent not included in clause (a):
106.16 	(i) all nontaxable income;
106.17 	(ii) the amount of a passive activity loss that is not disallowed as a result of section 
106.18 	469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity 
106.19 	loss carryover allowed under section 469(b) of the Internal Revenue Code;
106.20 	(iii) an amount equal to the total of any discharge of qualified farm indebtedness 
106.21 	of a solvent individual excluded from gross income under section 108(g) of the Internal 
106.22 	Revenue Code;
106.23 	(iv) cash public assistance and relief;
106.24 	(v) any pension or annuity (including railroad retirement benefits, all payments 
106.25 	received under the federal Social Security Act, Supplemental Security Income, and 
106.26 	veterans benefits), which was not exclusively funded by the claimant or spouse, or which 
106.27 	was funded exclusively by the claimant or spouse and which funding payments were 
106.28 	excluded from federal adjusted gross income in the years when the payments were made;
106.29 	(vi) interest received from the federal or a state government or any instrumentality 
106.30 	or political subdivision thereof;
106.31 	(vii) workers' compensation;
106.32 	(viii) nontaxable strike benefits;
106.33 	(ix) the gross amounts of payments received in the nature of disability income or 
106.34 	sick pay as a result of accident, sickness, or other disability, whether funded through 
106.35 	insurance or otherwise;
107.1 	(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 
107.2 	1986, as amended through December 31, 1995;
107.3 	(xi) contributions made by the claimant to an individual retirement account, 
107.4 	including a qualified voluntary employee contribution; simplified employee pension plan; 
107.5 	self-employed retirement plan; cash or deferred arrangement plan under section 401(k) 
107.6 	of the Internal Revenue Code; or deferred compensation plan under section 457 of the 
107.7 	Internal Revenue Code;
107.8 	(xii) nontaxable scholarship or fellowship grants;
107.9 	(xiii) the amount of deduction allowed under section 199 of the Internal Revenue 
107.10 	Code; ~~and~~
107.11 	(xiv) the amount of deduction allowed under section 220 or 223 of the Internal 
107.12 	Revenue Code~~.~~; and
107.13 	(xv) the amount of tuition expenses and educator expenses required to be added to 
107.14 	income under section 290.01, subdivision 19a, clauses (12) and (13).
107.15 	In the case of an individual who files an income tax return on a fiscal year basis, the 
107.16 	term "federal adjusted gross income" shall mean federal adjusted gross income reflected 
107.17 	in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be 
107.18 	reduced by the amount of a net operating loss carryback or carryforward or a capital loss 
107.19 	carryback or carryforward allowed for the year.
107.20 	(2) "Income" does not include:
107.21 	(a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 
107.22 	102;
107.23 	(b) amounts of any pension or annuity which was exclusively funded by the claimant 
107.24 	or spouse and which funding payments were not excluded from federal adjusted gross 
107.25 	income in the years when the payments were made;
107.26 	(c) surplus food or other relief in kind supplied by a governmental agency;
107.27 	(d) relief granted under this chapter;
107.28 	(e) child support payments received under a temporary or final decree of dissolution 
107.29 	or legal separation; or
107.30 	(f) restitution payments received by eligible individuals and excludable interest as 
107.31 	defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 
107.32 	2001, Public Law 107-16.
107.33 	(3) The sum of the following amounts may be subtracted from income:
107.34 	(a) for the claimant's first dependent, the exemption amount multiplied by 1.4;
107.35 	(b) for the claimant's second dependent, the exemption amount multiplied by 1.3;
107.36 	(c) for the claimant's third dependent, the exemption amount multiplied by 1.2;
108.1 	(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;
108.2 	(e) for the claimant's fifth dependent, the exemption amount; and
108.3 	(f) if the claimant or claimant's spouse was disabled or attained the age of 65 
108.4 	on or before December 31 of the year for which the taxes were levied or rent paid, the 
108.5 	exemption amount.
108.6 	For purposes of this subdivision, the "exemption amount" means the exemption 
108.7 	amount under section 151(d) of the Internal Revenue Code for the taxable year for which 
108.8 	the income is reported.

108.9 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to property 
108.10 	tax refunds based on property taxes payable after December 31, 2008, and rent paid after 
108.11 	December 31, 2007.

108.12 	Sec. 14. Minnesota Statutes 2008, section 290A.03, subdivision 15, is amended to read:
108.13 		Subd. 15.Internal Revenue Code.  "Internal Revenue Code" means the Internal 
108.14 	Revenue Code of 1986, as amended through ~~February 13, 2008~~ December 31, 2008.

108.15 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to property 
108.16 	tax refunds based on property taxes payable after December 31, 2008, and rent paid after 
108.17 	December 31, 2007.

108.18 	Sec. 15. Minnesota Statutes 2008, section 291.005, subdivision 1, is amended to read:
108.19 		Subdivision 1.Scope. Unless the context otherwise clearly requires, the following 
108.20 	terms used in this chapter shall have the following meanings:
108.21 	(1) "Federal gross estate" means the gross estate of a decedent as valued and 
108.22 	otherwise determined for federal estate tax purposes by federal taxing authorities pursuant 
108.23 	to the provisions of the Internal Revenue Code.
108.24 	(2) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 
108.25 	excluding therefrom any property included therein which has its situs outside Minnesota, 
108.26 	and (b) including therein any property omitted from the federal gross estate which is 
108.27 	includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 
108.28 	authorities.
108.29 	(3) "Personal representative" means the executor, administrator or other person 
108.30 	appointed by the court to administer and dispose of the property of the decedent. If there 
108.31 	is no executor, administrator or other person appointed, qualified, and acting within this 
108.32 	state, then any person in actual or constructive possession of any property having a situs in 
108.33 	this state which is included in the federal gross estate of the decedent shall be deemed 
109.1 	to be a personal representative to the extent of the property and the Minnesota estate tax 
109.2 	due with respect to the property.
109.3 	(4) "Resident decedent" means an individual whose domicile at the time of death 
109.4 	was in Minnesota.
109.5 	(5) "Nonresident decedent" means an individual whose domicile at the time of 
109.6 	death was not in Minnesota.
109.7 	(6) "Situs of property" means, with respect to real property, the state or country in 
109.8 	which it is located; with respect to tangible personal property, the state or country in which 
109.9 	it was normally kept or located at the time of the decedent's death; and with respect to 
109.10 	intangible personal property, the state or country in which the decedent was domiciled 
109.11 	at death.
109.12 	(7) "Commissioner" means the commissioner of revenue or any person to whom the 
109.13 	commissioner has delegated functions under this chapter.
109.14 	(8) "Internal Revenue Code" means the United States Internal Revenue Code of 
109.15 	1986, as amended through ~~February 13, 2008~~ December 31, 2008.
109.16 	(9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 
109.17 	defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of 
109.18 	deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.

109.19 	EFFECTIVE DATE. This section is effective July 1, 2009. After the effective date 
109.20 	of this section, the changes incorporated by federal changes are effective at the same time 
109.21 	as the changes were effective for federal purposes.

109.22 	Sec. 16. WITHHOLDING ON DIFFERENTIAL PAY.
 109.23 	The commissioner must not assess tax, penalty, or interest against an employer for 
109.24 	failing to withhold tax from differential wages, as defined in section 3401(h)(2) of the 
109.25 	Internal Revenue Code, paid before January 1, 2010, to an employee who has been called 
109.26 	to active duty in the military services.

109.27 	EFFECTIVE DATE. This section is effective July 1, 2009, and applies to any 
109.28 	failure to withhold that occurs after December 31, 2008, but before January 1, 2010.