1.1                          A bill for an act 
  1.2             relating to taxation; making technical, clarifying, 
  1.3             and administrative changes to certain taxes and tax 
  1.4             provisions, data disclosure provisions, local 
  1.5             government aid provisions, and sustainable forest 
  1.6             incentive provisions; changing civil penalties; 
  1.7             repealing obsolete rules; amending Minnesota Statutes 
  1.8             2002, sections 270.65; 270B.12, subdivision 9; 272.01, 
  1.9             subdivision 2; 272.02, subdivisions 1a, 7, by adding 
  1.10            subdivisions; 273.124, subdivision 8; 273.19, 
  1.11            subdivision 1a; 274.14; 275.065, subdivision 1a; 
  1.12            275.07, subdivisions 1, 4; 282.016; 282.21; 282.224; 
  1.13            282.301; 287.04; 289A.37, subdivision 5; 289A.38, 
  1.14            subdivision 6; 289A.60, subdivision 6; 290.06, 
  1.15            subdivision 22; 290.92, subdivision 1; 290C.05; 
  1.16            295.50, subdivision 4; 296A.22, by adding a 
  1.17            subdivision; 297E.01, subdivisions 5, 7, by adding 
  1.18            subdivisions; 297E.07; 297I.01, by adding a 
  1.19            subdivision; 297I.05, subdivision 4; 325D.33, 
  1.20            subdivision 6; 473.843, subdivision 5; Minnesota 
  1.21            Statutes 2003 Supplement, sections 168A.05, 
  1.22            subdivision 1a; 274.014, subdivision 3; 276.112; 
  1.23            289A.19, subdivision 4; 289A.40, subdivision 2; 
  1.24            290.01, subdivision 19a; 290.0674, subdivision 1; 
  1.25            297A.668, subdivisions 1, 3, 5; 297A.669, subdivision 
  1.26            16; 297A.68, subdivisions 2, 5, 39; 297F.08, 
  1.27            subdivision 12; 297F.09, subdivisions 1, 2; 477A.011, 
  1.28            subdivision 36; 477A.03, subdivision 2b; Laws 2003, 
  1.29            First Special Session chapter 21, article 5, section 
  1.30            13; Laws 2003, First Special Session chapter 21, 
  1.31            article 6, section 9; proposing coding for new law in 
  1.32            Minnesota Statutes, chapter 290C; repealing Minnesota 
  1.33            Statutes 2002, sections 273.19, subdivision 5; 275.15; 
  1.34            283.07; 297E.12, subdivision 10; Minnesota Rules, 
  1.35            parts 8093.2000; 8093.3000; 8130.0110, subpart 4; 
  1.36            8130.0200, subparts 5, 6; 8130.0400, subpart 9; 
  1.37            8130.1200, subparts 5, 6; 8130.2900; 8130.3100, 
  1.38            subpart 1; 8130.4000, subparts 1, 2; 8130.4200, 
  1.39            subpart 1; 8130.4400, subpart 3; 8130.5200; 8130.5600, 
  1.40            subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 5; 
  1.41            8130.8800, subpart 4. 
  1.42  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.43                             ARTICLE 1 
  2.1                         SALES AND USE TAXES 
  2.2      Section 1.  Minnesota Statutes 2002, section 289A.38, 
  2.3   subdivision 6, is amended to read: 
  2.4      Subd. 6.  [OMISSION IN EXCESS OF 25 PERCENT.] Additional 
  2.5   taxes may be assessed within 6-1/2 years after the due date of 
  2.6   the return or the date the return was filed, whichever is later, 
  2.7   if: 
  2.8      (1) the taxpayer omits from gross income an amount properly 
  2.9   includable in it that is in excess of 25 percent of the amount 
  2.10  of gross income stated in the return; 
  2.11     (2) the taxpayer omits from a sales, use, or withholding 
  2.12  tax return an amount of taxes in excess of 25 percent of the 
  2.13  taxes reported in the return; or 
  2.14     (3) the taxpayer omits from the gross estate assets in 
  2.15  excess of 25 percent of the gross estate reported in the return. 
  2.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  2.17  following final enactment. 
  2.18     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  2.19  289A.40, subdivision 2, is amended to read: 
  2.20     Subd. 2.  [BAD DEBT LOSS.] If a claim relates to an 
  2.21  overpayment because of a failure to deduct a loss due to a bad 
  2.22  debt or to a security becoming worthless, the claim is 
  2.23  considered timely if filed within seven years from the date 
  2.24  prescribed for the filing of the return.  A claim relating to an 
  2.25  overpayment of taxes under chapter 297A must be filed within 
  2.26  3-1/2 years from the date prescribed for filing the return, plus 
  2.27  any extensions granted for filing the return, but only if filed 
  2.28  within the extended time.  The refund or credit is limited to 
  2.29  the amount of overpayment attributable to the loss.  "Bad debt" 
  2.30  for purposes of this subdivision, has the same meaning as that 
  2.31  term is used in United States Code, title 26, section 166, 
  2.32  except that for a claim relating to an overpayment of taxes 
  2.33  under chapter 297A the following are excluded from the 
  2.34  calculation of bad debt:  financing charges or interest; sales 
  2.35  or use taxes charged on the purchase price; uncollectible 
  2.36  amounts on property that remain in the possession of the seller 
  3.1   until the full purchase price is paid; expenses incurred in 
  3.2   attempting to collect any debt; and repossessed property. 
  3.3      <b>[EFFECTIVE DATE.]</b> For claims relating to an overpayment of 
  3.4   taxes under chapter 297A, this section is effective for sales 
  3.5   and purchases made on or after January 1, 2004; for all other 
  3.6   bad debts or claims, this section is effective on or after July 
  3.7   1, 2003. 
  3.8      Sec. 3.  Minnesota Statutes 2003 Supplement, section 
  3.9   297A.668, subdivision 1, is amended to read: 
  3.10     Subdivision 1.  [ APPLICABILITY.] The provisions of this 
  3.11  section apply regardless of the characterization of a product as 
  3.12  tangible personal property, a digital good, or a service; but do 
  3.13  not apply to telecommunications services, or the sales of motor 
  3.14  vehicles, watercraft, aircraft, modular homes, manufactured 
  3.15  homes, or mobile homes.  These provisions only apply to 
  3.16  determine a seller's obligation to pay or collect and remit a 
  3.17  sales or use tax with respect to the seller's sale of a 
  3.18  product.  These provisions do not affect the obligation of a 
  3.19  seller as purchaser to remit tax on the use of the product. 
  3.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  3.21  following final enactment. 
  3.22     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
  3.23  297A.668, subdivision 3, is amended to read: 
  3.24     Subd. 3.  [LEASE OR RENTAL OF TANGIBLE PERSONAL PROPERTY.] 
  3.25  The lease or rental of tangible personal property, other than 
  3.26  property identified in subdivision 4 or 5, shall be sourced as 
  3.27  required in paragraphs (a) to (c). 
  3.28     (a) For a lease or rental that requires recurring periodic 
  3.29  payments, the first periodic payment is sourced the same as a 
  3.30  retail sale in accordance with the provisions of subdivision 6 2.
  3.31  Periodic payments made subsequent to the first payment are 
  3.32  sourced to the primary property location for each period covered 
  3.33  by the payment.  The primary property location must be as 
  3.34  indicated by an address for the property provided by the lessee 
  3.35  that is available to the lessor from its records maintained in 
  3.36  the ordinary course of business, when use of this address does 
  4.1   not constitute bad faith.  The property location must not be 
  4.2   altered by intermittent use at different locations, such as use 
  4.3   of business property that accompanies employees on business 
  4.4   trips and service calls. 
  4.5      (b) For a lease or rental that does not require recurring 
  4.6   periodic payments, the payment is sourced the same as a retail 
  4.7   sale in accordance with the provisions of subdivision 2. 
  4.8      (c) This subdivision does not affect the imposition or 
  4.9   computation of sales or use tax on leases or rentals based on a 
  4.10  lump sum or accelerated basis, or on the acquisition of property 
  4.11  for lease. 
  4.12     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
  4.13  purchases made on or after January 1, 2004. 
  4.14     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
  4.15  297A.668, subdivision 5, is amended to read: 
  4.16     Subd. 5.  [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 
  4.17  including lease or rental, of transportation equipment shall be 
  4.18  sourced the same as a retail sale in accordance with the 
  4.19  provisions of subdivision 2, notwithstanding the exclusion of 
  4.20  lease or rental in subdivision 2. 
  4.21     (b) "Transportation equipment" means any of the following: 
  4.22     (1) locomotives and railcars that are utilized for the 
  4.23  carriage of persons or property in interstate commerce; and/or 
  4.24     (2) trucks and truck-tractors with a gross vehicle weight 
  4.25  rating (GVWR) of 10,001 pounds or greater, trailers, 
  4.26  semitrailers, or passenger buses that are: 
  4.27     (i) registered through the international registration plan; 
  4.28  and 
  4.29     (ii) operated under authority of a carrier authorized and 
  4.30  certified by the United States Department of Transportation or 
  4.31  another federal authority to engage in the carriage of persons 
  4.32  or property in interstate commerce; 
  4.33     (3) aircraft that are operated by air carriers authorized 
  4.34  and certificated by the United States Department of 
  4.35  Transportation or another federal or a foreign authority to 
  4.36  engage in the carriage of persons or property in interstate 
  5.1   commerce; or 
  5.2      (4) containers designed for use on and component parts 
  5.3   attached or secured on the transportation equipment described in 
  5.4   items (1) through (3).  
  5.5      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
  5.6   purchases made on or after January 1, 2004. 
  5.7      Sec. 6.  Minnesota Statutes 2003 Supplement, section 
  5.8   297A.669, subdivision 16, is amended to read: 
  5.9      Subd. 16.  [SERVICE ADDRESS.] "Service address," for 
  5.10  purposes of this section, means: 
  5.11     (1) the location of the telecommunications equipment to 
  5.12  which a customer's call is charged and from which the call 
  5.13  originates or terminates, regardless of where the call is billed 
  5.14  or paid; 
  5.15     (2) if the location in paragraph (a) (1) is not known, 
  5.16  service address means the origination point of the signal of the 
  5.17  telecommunications services first identified by either the 
  5.18  seller's telecommunications system or in information received by 
  5.19  the seller from its service provider, where the system used to 
  5.20  transport the signals is not that of the seller; or 
  5.21     (3) if the location in paragraphs (a) (1) and (b) (2) is 
  5.22  not known, the service address means the location of the 
  5.23  customer's place of primary use. 
  5.24     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
  5.25  purchases made on or after January 1, 2004. 
  5.26     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
  5.27  297A.68, subdivision 2, is amended to read: 
  5.28     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
  5.29  (a) Materials stored, used, or consumed in industrial production 
  5.30  of personal property intended to be sold ultimately at retail 
  5.31  are exempt, whether or not the item so used becomes an 
  5.32  ingredient or constituent part of the property produced.  
  5.33  Materials that qualify for this exemption include, but are not 
  5.34  limited to, the following: 
  5.35     (1) chemicals, including chemicals used for cleaning food 
  5.36  processing machinery and equipment; 
  6.1      (2) materials, including chemicals, fuels, and electricity 
  6.2   purchased by persons engaged in industrial production to treat 
  6.3   waste generated as a result of the production process; 
  6.4      (3) fuels, electricity, gas, and steam used or consumed in 
  6.5   the production process, except that electricity, gas, or steam 
  6.6   used for space heating, cooling, or lighting is exempt if (i) it 
  6.7   is in excess of the average climate control or lighting for the 
  6.8   production area, and (ii) it is necessary to produce that 
  6.9   particular product; 
  6.10     (4) petroleum products and lubricants; 
  6.11     (5) packaging materials, including returnable containers 
  6.12  used in packaging food and beverage products; 
  6.13     (6) accessory tools, equipment, and other items that are 
  6.14  separate detachable units with an ordinary useful life of less 
  6.15  than 12 months used in producing a direct effect upon the 
  6.16  product; and 
  6.17     (7) the following materials, tools, and equipment used in 
  6.18  metalcasting:  crucibles, thermocouple protection sheaths and 
  6.19  tubes, stalk tubes, refractory materials, molten metal filters 
  6.20  and filter boxes, degassing lances, and base blocks. 
  6.21     (b) This exemption does not include: 
  6.22     (1) machinery, equipment, implements, tools, accessories, 
  6.23  appliances, contrivances and furniture and fixtures, except 
  6.24  those listed in paragraph (a), clause (6); and 
  6.25     (2) petroleum and special fuels used in producing or 
  6.26  generating power for propelling ready-mixed concrete trucks on 
  6.27  the public highways of this state. 
  6.28     (c) Industrial production includes, but is not limited to, 
  6.29  research, development, design or production of any tangible 
  6.30  personal property, manufacturing, processing (other than by 
  6.31  restaurants and consumers) of agricultural products (whether 
  6.32  vegetable or animal), commercial fishing, refining, smelting, 
  6.33  reducing, brewing, distilling, printing, mining, quarrying, 
  6.34  lumbering, generating electricity, the production of road 
  6.35  building materials, and the research, development, design, or 
  6.36  production of computer software.  Industrial production does not 
  7.1   include painting, cleaning, repairing or similar processing of 
  7.2   property except as part of the original manufacturing process.  
  7.3   Industrial production does not include the furnishing of 
  7.4   services listed in section 297A.61, subdivision 3, paragraph 
  7.5   (g), clause (6), items (i) to (vi) and (viii). 
  7.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  7.7   following final enactment. 
  7.8      Sec. 8.  Minnesota Statutes 2003 Supplement, section 
  7.9   297A.68, subdivision 5, is amended to read: 
  7.10     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
  7.11  exempt.  The tax must be imposed and collected as if the rate 
  7.12  under section 297A.62, subdivision 1, applied, and then refunded 
  7.13  in the manner provided in section 297A.75. 
  7.14     "Capital equipment" means machinery and equipment purchased 
  7.15  or leased, and used in this state by the purchaser or lessee 
  7.16  primarily for manufacturing, fabricating, mining, or refining 
  7.17  tangible personal property to be sold ultimately at retail if 
  7.18  the machinery and equipment are essential to the integrated 
  7.19  production process of manufacturing, fabricating, mining, or 
  7.20  refining.  Capital equipment also includes machinery and 
  7.21  equipment used primarily to electronically transmit results 
  7.22  retrieved by a customer of an on-line computerized data 
  7.23  retrieval system. 
  7.24     (b) Capital equipment includes, but is not limited to: 
  7.25     (1) machinery and equipment used to operate, control, or 
  7.26  regulate the production equipment; 
  7.27     (2) machinery and equipment used for research and 
  7.28  development, design, quality control, and testing activities; 
  7.29     (3) environmental control devices that are used to maintain 
  7.30  conditions such as temperature, humidity, light, or air pressure 
  7.31  when those conditions are essential to and are part of the 
  7.32  production process; 
  7.33     (4) materials and supplies used to construct and install 
  7.34  machinery or equipment; 
  7.35     (5) repair and replacement parts, including accessories, 
  7.36  whether purchased as spare parts, repair parts, or as upgrades 
  8.1   or modifications to machinery or equipment; 
  8.2      (6) materials used for foundations that support machinery 
  8.3   or equipment; 
  8.4      (7) materials used to construct and install special purpose 
  8.5   buildings used in the production process; 
  8.6      (8) ready-mixed concrete equipment in which the ready-mixed 
  8.7   concrete is mixed as part of the delivery process regardless if 
  8.8   mounted on a chassis and leases of ready-mixed concrete trucks; 
  8.9   and 
  8.10     (9) machinery or equipment used for research, development, 
  8.11  design, or production of computer software.  
  8.12     (c) Capital equipment does not include the following: 
  8.13     (1) motor vehicles taxed under chapter 297B; 
  8.14     (2) machinery or equipment used to receive or store raw 
  8.15  materials; 
  8.16     (3) building materials, except for materials included in 
  8.17  paragraph (b), clauses (6) and (7); 
  8.18     (4) machinery or equipment used for nonproduction purposes, 
  8.19  including, but not limited to, the following:  plant security, 
  8.20  fire prevention, first aid, and hospital stations; support 
  8.21  operations or administration; pollution control; and plant 
  8.22  cleaning, disposal of scrap and waste, plant communications, 
  8.23  space heating, cooling, lighting, or safety; 
  8.24     (5) farm machinery and aquaculture production equipment as 
  8.25  defined by section 297A.61, subdivisions 12 and 13; 
  8.26     (6) machinery or equipment purchased and installed by a 
  8.27  contractor as part of an improvement to real property; or 
  8.28     (7) machinery and equipment used by restaurants in the 
  8.29  furnishing, preparing, or serving of prepared foods as defined 
  8.30  in section 297A.61, subdivision 31; 
  8.31     (8) machinery and equipment used to furnish the services 
  8.32  listed in section 297A.61, subdivision 3, paragraph (g), clause 
  8.33  (6), items (i) to (vi) and (viii); or 
  8.34     (9) any other item that is not essential to the integrated 
  8.35  process of manufacturing, fabricating, mining, or refining. 
  8.36     (d) For purposes of this subdivision: 
  9.1      (1) "Equipment" means independent devices or tools separate 
  9.2   from machinery but essential to an integrated production 
  9.3   process, including computers and computer software, used in 
  9.4   operating, controlling, or regulating machinery and equipment; 
  9.5   and any subunit or assembly comprising a component of any 
  9.6   machinery or accessory or attachment parts of machinery, such as 
  9.7   tools, dies, jigs, patterns, and molds.  
  9.8      (2) "Fabricating" means to make, build, create, produce, or 
  9.9   assemble components or property to work in a new or different 
  9.10  manner. 
  9.11     (3) "Integrated production process" means a process or 
  9.12  series of operations through which tangible personal property is 
  9.13  manufactured, fabricated, mined, or refined.  For purposes of 
  9.14  this clause, (i) manufacturing begins with the removal of raw 
  9.15  materials from inventory and ends when the last process prior to 
  9.16  loading for shipment has been completed; (ii) fabricating begins 
  9.17  with the removal from storage or inventory of the property to be 
  9.18  assembled, processed, altered, or modified and ends with the 
  9.19  creation or production of the new or changed product; (iii) 
  9.20  mining begins with the removal of overburden from the site of 
  9.21  the ores, minerals, stone, peat deposit, or surface materials 
  9.22  and ends when the last process before stockpiling is completed; 
  9.23  and (iv) refining begins with the removal from inventory or 
  9.24  storage of a natural resource and ends with the conversion of 
  9.25  the item to its completed form. 
  9.26     (4) "Machinery" means mechanical, electronic, or electrical 
  9.27  devices, including computers and computer software, that are 
  9.28  purchased or constructed to be used for the activities set forth 
  9.29  in paragraph (a), beginning with the removal of raw materials 
  9.30  from inventory through completion of the product, including 
  9.31  packaging of the product. 
  9.32     (5) "Machinery and equipment used for pollution control" 
  9.33  means machinery and equipment used solely to eliminate, prevent, 
  9.34  or reduce pollution resulting from an activity described in 
  9.35  paragraph (a).  
  9.36     (6) "Manufacturing" means an operation or series of 
 10.1   operations where raw materials are changed in form, composition, 
 10.2   or condition by machinery and equipment and which results in the 
 10.3   production of a new article of tangible personal property.  For 
 10.4   purposes of this subdivision, "manufacturing" includes the 
 10.5   generation of electricity or steam to be sold at retail. 
 10.6      (7) "Mining" means the extraction of minerals, ores, stone, 
 10.7   or peat. 
 10.8      (8) "On-line data retrieval system" means a system whose 
 10.9   cumulation of information is equally available and accessible to 
 10.10  all its customers. 
 10.11     (9) "Primarily" means machinery and equipment used 50 
 10.12  percent or more of the time in an activity described in 
 10.13  paragraph (a). 
 10.14     (10) "Refining" means the process of converting a natural 
 10.15  resource to an intermediate or finished product, including the 
 10.16  treatment of water to be sold at retail. 
 10.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 10.18  following final enactment. 
 10.19     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 10.20  297A.68, subdivision 39, is amended to read: 
 10.21     Subd. 39.  [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 
 10.22  tangible personal property or services is exempt from tax or a 
 10.23  tax rate increase for a period of six months from the effective 
 10.24  date of the law change that results in the imposition of the tax 
 10.25  or the tax rate increase under this chapter if: 
 10.26     (1) the act imposing the tax or increasing the tax rate 
 10.27  does not have transitional effective date language for existing 
 10.28  construction contracts and construction bids; and 
 10.29     (2) the requirements of paragraph (b) are met. 
 10.30     (b) A sale is tax exempt under paragraph (a) if it meets 
 10.31  the requirements of either clause (1) or (2): 
 10.32     (1) For a construction contract: 
 10.33     (i) the goods or services sold must be used for the 
 10.34  performance of a bona fide written lump sum or fixed price 
 10.35  construction contract; 
 10.36     (ii) the contract must be entered into before the date the 
 11.1   goods or services become subject to the sales tax or the tax 
 11.2   rate was increased; 
 11.3      (iii) the contract must not provide for allocation of 
 11.4   future taxes; and 
 11.5      (iv) for each qualifying contract the contractor must give 
 11.6   the seller documentation of the contract on which an exemption 
 11.7   is to be claimed. 
 11.8      (2) For a construction bid: 
 11.9      (i) the goods or services sold must be used pursuant to an 
 11.10  obligation of a bid or bids; 
 11.11     (ii) the bid or bids must be submitted and accepted before 
 11.12  the date the goods or services became subject to the sales 
 11.13  tax or the tax rate was increased; 
 11.14     (iii) the bid or bids must not be able to be withdrawn, 
 11.15  modified, or changed without forfeiting a bond; and 
 11.16     (iv) for each qualifying bid, the contractor must give the 
 11.17  seller documentation of the bid on which an exemption is to be 
 11.18  claimed. 
 11.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 11.20  following final enactment. 
 11.21     Sec. 10.  [REPEALER.] 
 11.22     Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, 
 11.23  subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5 
 11.24  and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1 
 11.25  and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 
 11.26  8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 
 11.27  5; and 8130.8800, subpart 4, are repealed. 
 11.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 11.29  following final enactment. 
 11.30                             ARTICLE 2 
 11.31                           SPECIAL TAXES 
 11.32     Section 1.  Minnesota Statutes 2002, section 287.04, is 
 11.33  amended to read: 
 11.34     287.04 [EXEMPTIONS.] 
 11.35     The tax imposed by section 287.035 does not apply to:  
 11.36     (a) A decree of marriage dissolution or an instrument made 
 12.1   pursuant to it.  
 12.2      (b) A mortgage given to correct a misdescription of the 
 12.3   mortgaged property. 
 12.4      (c) A mortgage or other instrument that adds additional 
 12.5   security for the same debt for which mortgage registry tax has 
 12.6   been paid.  
 12.7      (d) A contract for the conveyance of any interest in real 
 12.8   property, including a contract for deed. 
 12.9      (e) A mortgage secured by real property subject to the 
 12.10  minerals production tax of sections 298.24 to 298.28. 
 12.11     (f) The principal amount of a mortgage loan made under a 
 12.12  low and moderate income or other affordable housing program, if 
 12.13  the mortgagee is a federal, state, or local government agency. 
 12.14     (g) Mortgages granted by fraternal benefit societies 
 12.15  subject to section 64B.24. 
 12.16     (h) A mortgage amendment or extension, as defined in 
 12.17  section 287.01. 
 12.18     (i) An agricultural mortgage if the proceeds of the loan 
 12.19  secured by the mortgage are used to acquire or improve real 
 12.20  property classified under section 273.13, subdivision 23, 
 12.21  paragraph (a), or (b), clause (1), (2), or (3). 
 12.22     (j) A mortgage on an armory building as set forth in 
 12.23  section 193.147. 
 12.24     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 12.25  following final enactment. 
 12.26     Sec. 2.  Minnesota Statutes 2002, section 295.50, 
 12.27  subdivision 4, is amended to read: 
 12.28     Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
 12.29  provider" means: 
 12.30     (1) a person whose health care occupation is regulated or 
 12.31  required to be regulated by the state of Minnesota furnishing 
 12.32  any or all of the following goods or services directly to a 
 12.33  patient or consumer:  medical, surgical, optical, visual, 
 12.34  dental, hearing, nursing services, drugs, laboratory, diagnostic 
 12.35  or therapeutic services; 
 12.36     (2) a person who provides goods and services not listed in 
 13.1   clause (1) that qualify for reimbursement under the medical 
 13.2   assistance program provided under chapter 256B; 
 13.3      (3) a staff model health plan company; 
 13.4      (4) an ambulance service required to be licensed; or 
 13.5      (5) a person who sells or repairs hearing aids and related 
 13.6   equipment or prescription eyewear. 
 13.7      (b) Health care provider does not include: 
 13.8      (1) hospitals; medical supplies distributors, except as 
 13.9   specified under paragraph (a), clause (5); nursing homes 
 13.10  licensed under chapter 144A or licensed in any other 
 13.11  jurisdiction; pharmacies; surgical centers; bus and taxicab 
 13.12  transportation, or any other providers of transportation 
 13.13  services other than ambulance services required to be licensed; 
 13.14  supervised living facilities for persons with mental retardation 
 13.15  or related conditions, licensed under Minnesota Rules, parts 
 13.16  4665.0100 to 4665.9900; residential care homes licensed under 
 13.17  chapter 144B housing with services establishments required to be 
 13.18  registered under chapter 144D; board and lodging establishments 
 13.19  providing only custodial services that are licensed under 
 13.20  chapter 157 and registered under section 157.17 to provide 
 13.21  supportive services or health supervision services; adult foster 
 13.22  homes as defined in Minnesota Rules, part 9555.5105; day 
 13.23  training and habilitation services for adults with mental 
 13.24  retardation and related conditions as defined in section 252.41, 
 13.25  subdivision 3; boarding care homes, as defined in Minnesota 
 13.26  Rules, part 4655.0100; and adult day care centers as defined in 
 13.27  Minnesota Rules, part 9555.9600; 
 13.28     (2) home health agencies as defined in Minnesota Rules, 
 13.29  part 9505.0175, subpart 15; a person providing personal care 
 13.30  services and supervision of personal care services as defined in 
 13.31  Minnesota Rules, part 9505.0335; a person providing private duty 
 13.32  nursing services as defined in Minnesota Rules, part 9505.0360; 
 13.33  and home care providers required to be licensed under chapter 
 13.34  144A; 
 13.35     (3) a person who employs health care providers solely for 
 13.36  the purpose of providing patient services to its employees; and 
 14.1      (4) an educational institution that employs health care 
 14.2   providers solely for the purpose of providing patient services 
 14.3   to its students if the institution does not receive fee for 
 14.4   service payments or payments for extended coverage. 
 14.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 14.6   following final enactment. 
 14.7      Sec. 3.  Minnesota Statutes 2002, section 296A.22, is 
 14.8   amended by adding a subdivision to read: 
 14.9      Subd. 9.  [ABATEMENT OF PENALTY.] (a) The commissioner may 
 14.10  by written order abate any penalty imposed under this section, 
 14.11  if in the commissioner's opinion there is reasonable cause to do 
 14.12  so. 
 14.13     (b) A request for abatement of penalty must be filed with 
 14.14  the commissioner within 60 days of the date the notice stating 
 14.15  that a penalty has been imposed was mailed to the taxpayer's 
 14.16  last known address. 
 14.17     (c) If the commissioner issues an order denying a request 
 14.18  for abatement of penalty, the taxpayer may file an 
 14.19  administrative appeal as provided in section 296A.25 or appeal 
 14.20  to tax court as provided in section 271.06.  If the commissioner 
 14.21  does not issue an order on the abatement request within 60 days 
 14.22  from the date the request is received, the taxpayer may appeal 
 14.23  to tax court as provided in section 271.06. 
 14.24     <b>[EFFECTIVE DATE.]</b> This section is effective for penalties 
 14.25  imposed on or after the day following final enactment. 
 14.26     Sec. 4.  Minnesota Statutes 2002, section 297E.01, 
 14.27  subdivision 5, is amended to read: 
 14.28     Subd. 5.  [DISTRIBUTOR.] "Distributor" means a distributor 
 14.29  as defined in section 349.12, subdivision 11, or a person or 
 14.30  linked bingo game provider who markets, sells, or provides 
 14.31  gambling product to a person or entity for resale or use at the 
 14.32  retail level.  
 14.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 14.34  following final enactment. 
 14.35     Sec. 5.  Minnesota Statutes 2002, section 297E.01, 
 14.36  subdivision 7, is amended to read: 
 15.1      Subd. 7.  [GAMBLING PRODUCT.] "Gambling product" means 
 15.2   bingo hard cards, bingo paper, or sheets, or linked bingo paper 
 15.3   sheets; pull-tabs; tipboards; paddletickets and paddleticket 
 15.4   cards; raffle tickets; or any other ticket, card, board, 
 15.5   placard, device, or token that represents a chance, for which 
 15.6   consideration is paid, to win a prize.  
 15.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 15.8   following final enactment. 
 15.9      Sec. 6.  Minnesota Statutes 2002, section 297E.01, is 
 15.10  amended by adding a subdivision to read: 
 15.11     Subd. 9a.  [LINKED BINGO GAME.] "Linked bingo game" means a 
 15.12  bingo game played at two or more locations where licensed 
 15.13  organizations are authorized to conduct bingo, when there is a 
 15.14  common prize pool and a common selection of numbers or symbols 
 15.15  conducted at one location, and when the results of the selection 
 15.16  are transmitted to all participating locations by satellite, 
 15.17  telephone, or other means by a linked bingo game provider. 
 15.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 15.19  following final enactment. 
 15.20     Sec. 7.  Minnesota Statutes 2002, section 297E.01, is 
 15.21  amended by adding a subdivision to read: 
 15.22     Subd. 9b.  [LINKED BINGO GAME PROVIDER.] "Linked bingo game 
 15.23  provider" means any person who provides the means to link bingo 
 15.24  prizes in a linked bingo game, who provides linked bingo paper 
 15.25  sheets to the participating organizations, who provides linked 
 15.26  bingo prize management, and who provides the linked bingo game 
 15.27  system. 
 15.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 15.29  following final enactment. 
 15.30     Sec. 8.  Minnesota Statutes 2002, section 297E.07, is 
 15.31  amended to read: 
 15.32     297E.07 [INSPECTION RIGHTS.] 
 15.33     At any reasonable time, without notice and without a search 
 15.34  warrant, the commissioner may enter a place of business of a 
 15.35  manufacturer, distributor, or organization, or linked bingo game 
 15.36  provider; any site from which pull-tabs or tipboards or other 
 16.1   gambling equipment or gambling product are being manufactured, 
 16.2   stored, or sold; or any site at which lawful gambling is being 
 16.3   conducted, and inspect the premises, books, records, and other 
 16.4   documents required to be kept under this chapter to determine 
 16.5   whether or not this chapter is being fully complied with.  If 
 16.6   the commissioner is denied free access to or is hindered or 
 16.7   interfered with in making an inspection of the place of 
 16.8   business, books, or records, the permit of the distributor may 
 16.9   be revoked by the commissioner, and the license of the 
 16.10  manufacturer, the distributor, or the organization, or linked 
 16.11  bingo game provider may be revoked by the board. 
 16.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 16.13  following final enactment. 
 16.14     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 16.15  297F.08, subdivision 12, is amended to read: 
 16.16     Subd. 12.  [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 
 16.17  person may not transport or cause to be transported from this 
 16.18  state cigarettes for sale in another state without first 
 16.19  affixing to the cigarettes the stamp required by the state in 
 16.20  which the cigarettes are to be sold or paying any other excise 
 16.21  tax on the cigarettes imposed by the state in which the 
 16.22  cigarettes are to be sold. 
 16.23     (b) A person may not affix to cigarettes the stamp required 
 16.24  by another state or pay any other excise tax on the cigarettes 
 16.25  imposed by another state if the other state prohibits stamps 
 16.26  from being affixed to the cigarettes, prohibits the payment of 
 16.27  any other excise tax on the cigarettes, or prohibits the sale of 
 16.28  the cigarettes. 
 16.29     (c) Not later than 15 days after the end of each calendar 
 16.30  quarter, a person who transports or causes to be transported 
 16.31  from this state cigarettes for sale in another state shall 
 16.32  submit to the commissioner a report identifying the quantity and 
 16.33  style of each brand of the cigarettes transported or caused to 
 16.34  be transported in the preceding calendar quarter, and the name 
 16.35  and address of each recipient of the cigarettes.  This reporting 
 16.36  requirement only relates to cigarettes manufactured by companies 
 17.1   that are not original or subsequent participating manufacturers 
 17.2   in the Master Settlement Agreement with other states. 
 17.3      (d) For purposes of this section, "person" has the meaning 
 17.4   given in section 297F.01, subdivision 12.  Person does not 
 17.5   include any common or contract carrier, or public warehouse that 
 17.6   is not owned, in whole or in part, directly or indirectly by 
 17.7   such person, and does not include a manufacturer that has 
 17.8   entered into is an original or subsequent participating 
 17.9   manufacturer in the Master Settlement Agreement with other 
 17.10  states. 
 17.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 17.12  following final enactment. 
 17.13     Sec. 10.  Minnesota Statutes 2003 Supplement, section 
 17.14  297F.09, subdivision 1, is amended to read: 
 17.15     Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
 17.16  or before the 18th day of each calendar month, a distributor 
 17.17  with a place of business in this state shall file a return with 
 17.18  the commissioner showing the quantity of cigarettes manufactured 
 17.19  or brought in from outside the state or purchased during the 
 17.20  preceding calendar month and the quantity of cigarettes sold or 
 17.21  otherwise disposed of in this state and outside this state 
 17.22  during that month.  A licensed distributor outside this state 
 17.23  shall in like manner file a return showing the quantity of 
 17.24  cigarettes shipped or transported into this state during the 
 17.25  preceding calendar month.  Returns must be made in the form and 
 17.26  manner prescribed by the commissioner and must contain any other 
 17.27  information required by the commissioner.  The return must be 
 17.28  accompanied by a remittance for the full unpaid tax liability 
 17.29  shown by it.  The return for the May liability and 85 percent of 
 17.30  the estimated June liability is due on the date payment of the 
 17.31  tax is due.  For distributors subject to the accelerated tax 
 17.32  payment requirements in subdivision 10, the return for the May 
 17.33  liability is due two business days before June 30th of the year 
 17.34  and the return for the June liability is due on or before August 
 17.35  18th of the year. 
 17.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 18.1   following final enactment. 
 18.2      Sec. 11.  Minnesota Statutes 2003 Supplement, section 
 18.3   297F.09, subdivision 2, is amended to read: 
 18.4      Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
 18.5   On or before the 18th day of each calendar month, a distributor 
 18.6   with a place of business in this state shall file a return with 
 18.7   the commissioner showing the quantity and wholesale sales price 
 18.8   of each tobacco product: 
 18.9      (1) brought, or caused to be brought, into this state for 
 18.10  sale; and 
 18.11     (2) made, manufactured, or fabricated in this state for 
 18.12  sale in this state, during the preceding calendar month.  
 18.13  Every licensed distributor outside this state shall in like 
 18.14  manner file a return showing the quantity and wholesale sales 
 18.15  price of each tobacco product shipped or transported to 
 18.16  retailers in this state to be sold by those retailers, during 
 18.17  the preceding calendar month.  Returns must be made in the form 
 18.18  and manner prescribed by the commissioner and must contain any 
 18.19  other information required by the commissioner.  The return must 
 18.20  be accompanied by a remittance for the full tax liability 
 18.21  shown.  The return for the May liability and 85 percent of the 
 18.22  estimated June liability is due on the date payment of the tax 
 18.23  is due.  For distributors subject to the accelerated tax payment 
 18.24  requirements in subdivision 10, the return for the May liability 
 18.25  is due two business days before June 30th of the year and the 
 18.26  return for the June liability is due on or before August 18th of 
 18.27  the year. 
 18.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 18.29  following final enactment. 
 18.30     Sec. 12.  Minnesota Statutes 2002, section 297I.01, is 
 18.31  amended by adding a subdivision to read: 
 18.32     Subd. 13a.  [REINSURANCE.] "Reinsurance" is insurance 
 18.33  whereby an insurance company, for a consideration, agrees to 
 18.34  indemnify another insurance company against all or part of the 
 18.35  loss which the latter may sustain under the policy or policies 
 18.36  which it has issued. 
 19.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 19.2   following final enactment. 
 19.3      Sec. 13.  Minnesota Statutes 2002, section 297I.05, 
 19.4   subdivision 4, is amended to read: 
 19.5      Subd. 4.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
 19.6   TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 
 19.7   tax is imposed on mutual property and casualty companies that 
 19.8   had total assets greater than $5,000,000 at the end of the 
 19.9   calendar year but that had total assets less than $1,600,000,000 
 19.10  on December 31, 1989.  The rate of tax is equal to: 
 19.11     (1) two percent of gross premiums less return premiums on 
 19.12  all direct business received by the insurer or agents of the 
 19.13  insurer in Minnesota for life insurance, in cash or otherwise, 
 19.14  during the year; and 
 19.15     (2) 1.26 percent of gross premiums less return premiums on 
 19.16  all other direct business received by the insurer or agents of 
 19.17  the insurer in Minnesota, in cash or otherwise, during the year. 
 19.18     <b>[EFFECTIVE DATE.]</b> This section is effective for returns, 
 19.19  taxes, surcharges, and estimated payments required to be filed 
 19.20  or paid for tax years beginning on or after January 1, 2004. 
 19.21     Sec. 14.  [REPEALER.] 
 19.22     Minnesota Statutes 2002, section 297E.12, subdivision 10, 
 19.23  is repealed effective the day following final enactment. 
 19.24                             ARTICLE 3 
 19.25                      PROPERTY TAXES AND AIDS 
 19.26     Section 1.  Minnesota Statutes 2003 Supplement, section 
 19.27  168A.05, subdivision 1a, is amended to read: 
 19.28     Subd. 1a.  [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 
 19.29  PAYMENT.] In the case of a manufactured home as defined in 
 19.30  section 327.31, subdivision 6, the department shall not issue a 
 19.31  certificate of title unless the application under section 
 19.32  168A.04 is accompanied with a statement from the county auditor 
 19.33  or county treasurer where the manufactured home is presently 
 19.34  located, stating that all manufactured home personal property 
 19.35  taxes levied on the unit in the name of the current owner at the 
 19.36  time of transfer have been paid.  For this purpose, manufactured 
 20.1   home personal property taxes are treated as levied on January 1 
 20.2   of the payable year. 
 20.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 20.4   following final enactment. 
 20.5      Sec. 2.  Minnesota Statutes 2002, section 270B.12, 
 20.6   subdivision 9, is amended to read: 
 20.7      Subd. 9.  [COUNTY ASSESSORS; HOMESTEAD APPLICATION, 
 20.8   DETERMINATION, AND INCOME TAX STATUS.] (a) If, as a result of an 
 20.9   audit, the commissioner determines that a person is a Minnesota 
 20.10  nonresident or part-year resident for income tax purposes, the 
 20.11  commissioner may disclose the person's name, address, and Social 
 20.12  Security number to the assessor of any political subdivision in 
 20.13  the state, when there is reason to believe that the person may 
 20.14  have claimed or received homestead property tax benefits for a 
 20.15  corresponding assessment year in regard to property apparently 
 20.16  located in the assessor's jurisdiction. 
 20.17     (b) To the extent permitted by section 273.124, subdivision 
 20.18  1, paragraph (a), the Department of Revenue may verify to a 
 20.19  county assessor whether an individual who is requesting or 
 20.20  receiving a homestead classification has filed a Minnesota 
 20.21  income tax return as a resident for the most recent taxable year 
 20.22  for which the information is available. 
 20.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 20.24  following final enactment. 
 20.25     Sec. 3.  Minnesota Statutes 2002, section 272.01, 
 20.26  subdivision 2, is amended to read: 
 20.27     Subd. 2.  (a) When any real or personal property which is 
 20.28  exempt from ad valorem taxes, and taxes in lieu thereof, is 
 20.29  leased, loaned, or otherwise made available and used by a 
 20.30  private individual, association, or corporation in connection 
 20.31  with a business conducted for profit, there shall be imposed a 
 20.32  tax, for the privilege of so using or possessing such real or 
 20.33  personal property, in the same amount and to the same extent as 
 20.34  though the lessee or user was the owner of such property. 
 20.35     (b) The tax imposed by this subdivision shall not apply to: 
 20.36     (1) property leased or used as a concession in or relative 
 21.1   to the use in whole or part of a public park, market, 
 21.2   fairgrounds, port authority, economic development authority 
 21.3   established under chapter 469, municipal auditorium, municipal 
 21.4   parking facility, municipal museum, or municipal stadium; 
 21.5      (2) property of an airport owned by a city, town, county, 
 21.6   or group thereof which is:  
 21.7      (i) leased to or used by any person or entity including a 
 21.8   fixed base operator; and 
 21.9      (ii) used as a hangar for the storage or repair of aircraft 
 21.10  or to provide aviation goods, services, or facilities to the 
 21.11  airport or general public; 
 21.12  the exception from taxation provided in this clause does not 
 21.13  apply to: 
 21.14     (i) property located at an airport owned or operated by the 
 21.15  Metropolitan Airports Commission or by a city of over 50,000 
 21.16  population according to the most recent federal census or such a 
 21.17  city's airport authority; 
 21.18     (ii) hangars leased by a private individual, association, 
 21.19  or corporation in connection with a business conducted for 
 21.20  profit other than an aviation-related business; or 
 21.21     (iii) facilities leased by a private individual, 
 21.22  association, or corporation in connection with a business for 
 21.23  profit, that consists of a major jet engine repair facility 
 21.24  financed, in whole or part, with the proceeds of state bonds and 
 21.25  located in a tax increment financing district; 
 21.26     (3) property constituting or used as a public pedestrian 
 21.27  ramp or concourse in connection with a public airport; or 
 21.28     (4) property constituting or used as a passenger check-in 
 21.29  area or ticket sale counter, boarding area, or luggage claim 
 21.30  area in connection with a public airport but not the airports 
 21.31  owned or operated by the Metropolitan Airports Commission or 
 21.32  cities of over 50,000 population or an airport authority 
 21.33  therein.  Real estate owned by a municipality in connection with 
 21.34  the operation of a public airport and leased or used for 
 21.35  agricultural purposes is not exempt; 
 21.36     (5) property leased, loaned, or otherwise made available to 
 22.1   a private individual, corporation, or association under a 
 22.2   cooperative farming agreement made pursuant to section 97A.135; 
 22.3   or 
 22.4      (6) property leased, loaned, or otherwise made available to 
 22.5   a private individual, corporation, or association under section 
 22.6   272.68, subdivision 4. 
 22.7      (c) Taxes imposed by this subdivision are payable as in the 
 22.8   case of personal property taxes and shall be assessed to the 
 22.9   lessees or users of real or personal property in the same manner 
 22.10  as taxes assessed to owners of real or personal property, except 
 22.11  that such taxes shall not become a lien against the property.  
 22.12  When due, the taxes shall constitute a debt due from the lessee 
 22.13  or user to the state, township, city, county, and school 
 22.14  district for which the taxes were assessed and shall be 
 22.15  collected in the same manner as personal property taxes.  If 
 22.16  property subject to the tax imposed by this subdivision is 
 22.17  leased or used jointly by two or more persons, each lessee or 
 22.18  user shall be jointly and severally liable for payment of the 
 22.19  tax. 
 22.20     (d) The tax on real property of the state or any of its 
 22.21  political subdivisions that is leased by a private individual, 
 22.22  association, or corporation and becomes taxable under this 
 22.23  subdivision or other provision of law must be assessed and 
 22.24  collected as a personal property assessment.  The taxes do not 
 22.25  become a lien against the real property. 
 22.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 22.27  following final enactment. 
 22.28     Sec. 4.  Minnesota Statutes 2002, section 272.02, 
 22.29  subdivision 1a, is amended to read: 
 22.30     Subd. 1a.  [LIMITATIONS ON EXEMPTIONS.] The exemptions 
 22.31  granted by subdivision 1 are subject to the limits contained in 
 22.32  the other subdivisions of this section, section 272.025, or 
 22.33  273.13, subdivision 25, paragraph (c), clause (1) or (2), or 
 22.34  paragraph (d), clause (2) and all other provisions of applicable 
 22.35  law.  
 22.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 23.1   following final enactment. 
 23.2      Sec. 5.  Minnesota Statutes 2002, section 272.02, 
 23.3   subdivision 7, is amended to read: 
 23.4      Subd. 7.  [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of 
 23.5   purely public charity are exempt except parcels of property 
 23.6   containing structures and the structures described in section 
 23.7   273.13, subdivision 25, paragraph (e), other than those that 
 23.8   qualify for exemption under subdivision 26.  In determining 
 23.9   whether rental housing property qualifies for exemption under 
 23.10  this subdivision, the following are not gifts or donations to 
 23.11  the owner of the rental housing: 
 23.12     (1) rent assistance provided by the government to or on 
 23.13  behalf of tenants, and 
 23.14     (2) financing assistance or tax credits provided by the 
 23.15  government to the owner on condition that specific units or a 
 23.16  specific quantity of units be set aside for persons or families 
 23.17  with certain income characteristics. 
 23.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 23.19  payable in 2004 and thereafter. 
 23.20     Sec. 6.  Minnesota Statutes 2002, section 272.02, is 
 23.21  amended by adding a subdivision to read: 
 23.22     Subd. 68.  [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR 
 23.23  NET PROCEEDS TAX.] (a) Except for mineral interests taxed under 
 23.24  section 273.165, and except for lands taxed under section 
 23.25  298.26, real and personal property described in section 298.25 
 23.26  is exempt to the extent the tax on taconite and iron sulphides 
 23.27  under section 298.24 is described in section 298.25 as being in 
 23.28  lieu of other taxes on such property.  This exemption applies 
 23.29  for taxes payable in each year that the tax under section 298.24 
 23.30  is payable with respect to such property. 
 23.31     (b) Except for mineral interests taxed under section 
 23.32  273.165, deposits of mineral, metal, or energy resources the 
 23.33  mining of which is subject to taxation under section 298.015 are 
 23.34  exempt.  This exemption applies for taxes payable in each year 
 23.35  that the tax under section 298.015 is payable with respect to 
 23.36  such property. 
 24.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 24.2   following final enactment. 
 24.3      Sec. 7.  Minnesota Statutes 2002, section 272.02, is 
 24.4   amended by adding a subdivision to read: 
 24.5      Subd. 69.  [RELIGIOUS CORPORATIONS.] Personal and real 
 24.6   property that a religious corporation, formed under section 
 24.7   317A.909, necessarily uses for a religious purpose is exempt to 
 24.8   the extent provided in section 317A.909, subdivision 3. 
 24.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 24.10  following final enactment. 
 24.11     Sec. 8.  Minnesota Statutes 2002, section 272.02, is 
 24.12  amended by adding a subdivision to read: 
 24.13     Subd. 70.  [CHILDREN'S HOMES.] Personal and real property 
 24.14  owned by a corporation formed under section 317A.907 is exempt 
 24.15  to the extent provided in section 317A.907, subdivision 7. 
 24.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 24.17  following final enactment. 
 24.18     Sec. 9.  Minnesota Statutes 2002, section 272.02, is 
 24.19  amended by adding a subdivision to read: 
 24.20     Subd. 71.  [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL 
 24.21  HOUSING AUTHORITY PROPERTY.] Property owned by a housing and 
 24.22  redevelopment authority described in chapter 469, or by a 
 24.23  designated housing authority described in section 469.040, 
 24.24  subdivision 5, is exempt to the extent provided in chapter 469. 
 24.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 24.26  following final enactment. 
 24.27     Sec. 10.  Minnesota Statutes 2002, section 273.124, 
 24.28  subdivision 8, is amended to read: 
 24.29     Subd. 8.  [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 
 24.30  CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 
 24.31  PARTNERSHIP.] (a) Each family farm corporation, each; each joint 
 24.32  family farm venture,; and each limited liability company, and 
 24.33  each or partnership operating which operates a family farm; is 
 24.34  entitled to class 1b under section 273.13, subdivision 22, 
 24.35  paragraph (b), or class 2a assessment for one homestead occupied 
 24.36  by a shareholder, member, or partner thereof who is residing on 
 25.1   the land, and actively engaged in farming of the land owned by 
 25.2   the family farm corporation, joint family farm venture, limited 
 25.3   liability company, or partnership operating a family farm.  
 25.4   Homestead treatment applies even if legal title to the property 
 25.5   is in the name of the family farm corporation, joint family farm 
 25.6   venture, limited liability company, or partnership operating the 
 25.7   family farm, and not in the name of the person residing on it. 
 25.8      "Family farm corporation," "family farm," and "partnership 
 25.9   operating a family farm" have the meanings given in section 
 25.10  500.24, except that the number of allowable shareholders, 
 25.11  members, or partners under this subdivision shall not exceed 
 25.12  12.  "Limited liability company" has the meaning contained in 
 25.13  sections 322B.03, subdivision 28, and 500.24, subdivision 2, 
 25.14  paragraphs (l) and (m).  "Joint family farm venture" means a 
 25.15  cooperative agreement among two or more farm enterprises 
 25.16  authorized to operate a family farm under section 500.24. 
 25.17     (b) In addition to property specified in paragraph (a), any 
 25.18  other residences owned by family farm corporations, joint family 
 25.19  farm ventures, limited liability companies, or partnerships 
 25.20  operating a family farm described in paragraph (a) which are 
 25.21  located on agricultural land and occupied as homesteads by its 
 25.22  shareholders, members, or partners who are actively engaged in 
 25.23  farming on behalf of that corporation, joint farm venture, 
 25.24  limited liability company, or partnership must also be assessed 
 25.25  as class 2a property or as class 1b property under section 
 25.26  273.13. 
 25.27     (c) Agricultural property that is owned by a member, 
 25.28  partner, or shareholder of a family farm corporation or joint 
 25.29  family farm venture, limited liability company operating a 
 25.30  family farm, or by a partnership operating a family farm and 
 25.31  leased to the family farm corporation, limited liability 
 25.32  company, or partnership operating a family farm, or joint farm 
 25.33  venture, as defined in paragraph (a), is eligible for 
 25.34  classification as class 1b or class 2a under section 273.13, if 
 25.35  the owner is actually residing on the property, and is actually 
 25.36  engaged in farming the land on behalf of that corporation, joint 
 26.1   farm venture, limited liability company, or partnership.  This 
 26.2   paragraph applies without regard to any legal possession rights 
 26.3   of the family farm corporation, joint family farm venture, 
 26.4   limited liability company, or partnership operating a family 
 26.5   farm under the lease. 
 26.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 26.7   following final enactment. 
 26.8      Sec. 11.  Minnesota Statutes 2002, section 273.19, 
 26.9   subdivision 1a, is amended to read: 
 26.10     Subd. 1a.  For purposes of this section, a lease includes 
 26.11  any agreement, except a cooperative farming agreement pursuant 
 26.12  to section 97A.135, subdivision 3, or a lease executed pursuant 
 26.13  to section 272.68, subdivision 4, permitting a nonexempt person 
 26.14  or entity to use the property, regardless of whether the 
 26.15  agreement is characterized as a lease.  A lease has a "term of 
 26.16  at least one year" if the term is for a period of less than one 
 26.17  year and the lease permits the parties to renew the lease 
 26.18  without requiring that similar terms for leasing the property 
 26.19  will be offered to other applicants or bidders through a 
 26.20  competitive bidding or other form of offer to potential lessees 
 26.21  or users. 
 26.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 26.23  following final enactment. 
 26.24     Sec. 12.  Minnesota Statutes 2003 Supplement, section 
 26.25  274.014, subdivision 3, is amended to read: 
 26.26     Subd. 3.  [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] Any 
 26.27  city or town that does not provide proof to the county assessor 
 26.28  by December 1, 2006, and each year thereafter, that it is in 
 26.29  compliance with the requirements of subdivision 2, and that it 
 26.30  had a quorum at each meeting of the board of appeal and 
 26.31  equalization in the prior current year, is deemed to have 
 26.32  transferred its board of appeal and equalization powers to the 
 26.33  county under section 274.01, subdivision 3, for the following 
 26.34  year's assessment. 
 26.35     The county shall notify the taxpayers when the board of 
 26.36  appeal and equalization for a city or town has been transferred 
 27.1   to the county under this subdivision and, prior to the meeting 
 27.2   time of the county board of equalization, the county shall make 
 27.3   available to those taxpayers a procedure for a review of the 
 27.4   assessments, including, but not limited to, open book meetings.  
 27.5   This alternate review process shall take place in April and May. 
 27.6      A local board whose powers are transferred to the county 
 27.7   under this subdivision may be reinstated by resolution of the 
 27.8   governing body of the city or town and upon proof of compliance 
 27.9   with the requirements of subdivision 2.  The resolution and 
 27.10  proofs must be provided to the county assessor by December 1 in 
 27.11  order to be effective for the following year's assessment. 
 27.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 27.13  following final enactment. 
 27.14     Sec. 13.  Minnesota Statutes 2002, section 274.14, is 
 27.15  amended to read: 
 27.16     274.14 [LENGTH OF SESSION; RECORD.] 
 27.17     The county board of equalization or the special board of 
 27.18  equalization appointed by it shall meet during the last ten 
 27.19  meeting days in June.  For this purpose, "meeting days" are 
 27.20  defined as any day of the week excluding Saturday and Sunday.  
 27.21  The board may meet on any ten consecutive meeting days in June, 
 27.22  after the second Friday in June, if.  The actual meeting dates 
 27.23  are must be contained on the valuation notices mailed to each 
 27.24  property owner in the county under as provided in section 
 27.25  273.121.  For this purpose, "meeting days" is defined as any day 
 27.26  of the week excluding Saturday and Sunday.  No action taken by 
 27.27  the county board of review after June 30 is valid, except for 
 27.28  corrections permitted in sections 273.01 and 274.01.  The county 
 27.29  auditor shall keep an accurate record of the proceedings and 
 27.30  orders of the board.  The record must be published like other 
 27.31  proceedings of county commissioners.  A copy of the published 
 27.32  record must be sent to the commissioner of revenue, with the 
 27.33  abstract of assessment required by section 274.16.  
 27.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 27.35  following final enactment. 
 27.36     Sec. 14.  Minnesota Statutes 2002, section 275.065, 
 28.1   subdivision 1a, is amended to read: 
 28.2      Subd. 1a.  [OVERLAPPING JURISDICTIONS.] In the case of a 
 28.3   taxing authority lying in two or more counties, the home county 
 28.4   auditor shall certify the proposed levy and the proposed local 
 28.5   tax rate to the other county auditor by September 20 October 5.  
 28.6   The home county auditor must estimate the levy or rate in 
 28.7   preparing the notices required in subdivision 3, if the other 
 28.8   county has not certified the appropriate information.  If 
 28.9   requested by the home county auditor, the other county auditor 
 28.10  must furnish an estimate to the home county auditor. 
 28.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 28.12  following final enactment. 
 28.13     Sec. 15.  Minnesota Statutes 2002, section 275.07, 
 28.14  subdivision 1, is amended to read: 
 28.15     Subdivision 1.  [CERTIFICATION OF LEVY.] (a) Except as 
 28.16  provided under paragraph (b), the taxes voted by cities, 
 28.17  counties, school districts, and special districts shall be 
 28.18  certified by the proper authorities to the county auditor on or 
 28.19  before five working days after December 20 in each year.  A town 
 28.20  must certify the levy adopted by the town board to the county 
 28.21  auditor by September 15 each year.  If the town board modifies 
 28.22  the levy at a special town meeting after September 15, the town 
 28.23  board must recertify its levy to the county auditor on or before 
 28.24  five working days after December 20.  The taxes certified shall 
 28.25  not be reduced by the county auditor by the aid received under 
 28.26  section 273.1398, subdivision 2, but shall be reduced by the 
 28.27  county auditor by the aid received under section 273.1398, 
 28.28  subdivision 3.  If a city, town, county, school district, or 
 28.29  special district fails to certify its levy by that date, its 
 28.30  levy shall be the amount levied by it for the preceding year. 
 28.31     (b)(i) The taxes voted by counties under sections 103B.241, 
 28.32  103B.245, and 103B.251 shall be separately certified by the 
 28.33  county to the county auditor on or before five working days 
 28.34  after December 20 in each year.  The taxes certified shall not 
 28.35  be reduced by the county auditor by the aid received under 
 28.36  section 273.1398, subdivisions 2 and 3.  If a county fails to 
 29.1   certify its levy by that date, its levy shall be the amount 
 29.2   levied by it for the preceding year.  
 29.3      (ii) For purposes of the proposed property tax notice under 
 29.4   section 275.065 and the property tax statement under section 
 29.5   276.04, for the first year in which the county implements the 
 29.6   provisions of this paragraph, the county auditor shall reduce 
 29.7   the county's levy for the preceding year to reflect any amount 
 29.8   levied for water management purposes under clause (i) included 
 29.9   in the county's levy. 
 29.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 29.11  following final enactment. 
 29.12     Sec. 16.  Minnesota Statutes 2002, section 275.07, 
 29.13  subdivision 4, is amended to read: 
 29.14     Subd. 4.  [REPORT TO COMMISSIONER.] (a) On or before 
 29.15  October 8 of each year, the county auditor shall report to the 
 29.16  commissioner of revenue the proposed levy certified by local 
 29.17  units of government under section 275.065, subdivision 1.  If 
 29.18  any taxing authorities have notified the county auditor that 
 29.19  they are in the process of negotiating an agreement for sharing, 
 29.20  merging, or consolidating services but that when the proposed 
 29.21  levy was certified under section 275.065, subdivision 1c, the 
 29.22  agreement was not yet finalized, the county auditor shall supply 
 29.23  that information to the commissioner when filing the report 
 29.24  under this section and shall recertify the affected levies as 
 29.25  soon as practical after October 10. 
 29.26     (b) On or before January 15 of each year, the county 
 29.27  auditor shall report to the commissioner of revenue the final 
 29.28  levy certified by local units of government under subdivision 1. 
 29.29     (c) The levies must be reported in the manner prescribed by 
 29.30  the commissioner.  The reports must show a total levy and the 
 29.31  amount of each special levy. 
 29.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 29.33  following final enactment. 
 29.34     Sec. 17.  Minnesota Statutes 2003 Supplement, section 
 29.35  276.112, is amended to read: 
 29.36     276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.] 
 30.1      On or before January 25 each year, for the period ending 
 30.2   December 31 of the prior year, and on or before two business 
 30.3   days before June 29 30 each year, for the period ending on the 
 30.4   most recent settlement day determined in section 276.09, and on 
 30.5   or before December 2 each year, for the period ending November 
 30.6   20, the county treasurer must make full settlement with the 
 30.7   county auditor according to sections 276.09, 276.10, and 276.111 
 30.8   for all receipts of state property taxes levied under section 
 30.9   275.025, and must transmit those receipts to the commissioner of 
 30.10  revenue by electronic means. 
 30.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 30.12  following final enactment. 
 30.13     Sec. 18.  Minnesota Statutes 2002, section 282.016, is 
 30.14  amended to read: 
 30.15     282.016 [PROHIBITED PURCHASERS.] 
 30.16     No (a) A county auditor, county treasurer, court 
 30.17  administrator of the district court, or county assessor or, 
 30.18  supervisor of assessments, or deputy or clerk or an employee of 
 30.19  such officer, and no a commissioner for tax-forfeited lands or 
 30.20  an assistant to such commissioner may, must not become a 
 30.21  purchaser, either personally or as an agent or attorney for 
 30.22  another person, of the properties offered for sale under the 
 30.23  provisions of this chapter, either personally, or as agent or 
 30.24  attorney for any other person, except that in the county for 
 30.25  which the person performs duties. 
 30.26     (b) Notwithstanding paragraph (a), such officer, deputy, 
 30.27  court administrator clerk, or employee or commissioner for 
 30.28  tax-forfeited lands or assistant to such commissioner may (1) 
 30.29  purchase lands owned by that official at the time the state 
 30.30  became the absolute owner thereof or (2) bid upon and purchase 
 30.31  forfeited property offered for sale under the alternate sale 
 30.32  procedure described in section 282.01, subdivision 7a. 
 30.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 30.34  following final enactment. 
 30.35     Sec. 19.  Minnesota Statutes 2002, section 282.21, is 
 30.36  amended to read: 
 31.1      282.21 [FORM OF CONVEYANCE.] 
 31.2      When any sale has been made under sections 282.14 to 
 31.3   282.22, upon payment in full of the purchase price, appropriate 
 31.4   conveyance in fee in such form as may be prescribed by the 
 31.5   attorney general shall be issued by the commissioner of finance 
 31.6   to the purchaser or the purchaser's assigns and this conveyance 
 31.7   shall have the force and effect of a patent from the state.  
 31.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 31.9   following final enactment. 
 31.10     Sec. 20.  Minnesota Statutes 2002, section 282.224, is 
 31.11  amended to read: 
 31.12     282.224 [FORM OF CONVEYANCE.] 
 31.13     When any sale has been made under sections 282.221 to 
 31.14  282.226, upon payment in full of the purchase price, appropriate 
 31.15  conveyance in fee, in such form as may be prescribed by the 
 31.16  attorney general, shall be issued by the commissioner of natural 
 31.17  resources to the purchaser or the purchaser's assignee, and the 
 31.18  conveyance shall have the force and effect of a patent from the 
 31.19  state.  
 31.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 31.21  following final enactment. 
 31.22     Sec. 21.  Minnesota Statutes 2002, section 282.301, is 
 31.23  amended to read: 
 31.24     282.301 [RECEIPTS FOR PAYMENTS.] 
 31.25     When any sale has been made under sections 282.012 and 
 31.26  282.241 to 282.324, the purchaser shall receive from the county 
 31.27  auditor at the time of repurchase a receipt, in such form as may 
 31.28  be prescribed by the attorney general.  When the purchase price 
 31.29  of a parcel of land shall be paid in full, the following facts 
 31.30  shall be certified by the county auditor to the commissioner of 
 31.31  revenue of the state of Minnesota:  the description of land, the 
 31.32  date of sale, the name of the purchaser or the purchaser's 
 31.33  assignee, and the date when the final installment of the 
 31.34  purchase price was paid.  Upon payment in full of the purchase 
 31.35  price, the purchaser or the assignee shall receive a quitclaim 
 31.36  deed from the state, to be executed by the commissioner of 
 32.1   revenue.  The deed must be sent to the county auditor who shall 
 32.2   have it recorded before it is forwarded to the purchaser.  
 32.3   Failure to make any payment herein required shall constitute 
 32.4   default and upon such default and cancellation in accord with 
 32.5   section 282.40, the right, title and interest of the purchaser 
 32.6   or the purchaser's heirs, representatives, or assigns in such 
 32.7   parcel shall terminate.  
 32.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 32.9   following final enactment. 
 32.10     Sec. 22.  Minnesota Statutes 2003 Supplement, section 
 32.11  477A.011, subdivision 36, is amended to read: 
 32.12     Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
 32.13  provided in this subdivision, "city aid base" is zero. 
 32.14     (b) The city aid base for any city with a population less 
 32.15  than 500 is increased by $40,000 for aids payable in calendar 
 32.16  year 1995 and thereafter, and the maximum amount of total aid it 
 32.17  may receive under section 477A.013, subdivision 9, paragraph 
 32.18  (c), is also increased by $40,000 for aids payable in calendar 
 32.19  year 1995 only, provided that: 
 32.20     (i) the average total tax capacity rate for taxes payable 
 32.21  in 1995 exceeds 200 percent; 
 32.22     (ii) the city portion of the tax capacity rate exceeds 100 
 32.23  percent; and 
 32.24     (iii) its city aid base is less than $60 per capita. 
 32.25     (c) The city aid base for a city is increased by $20,000 in 
 32.26  1998 and thereafter and the maximum amount of total aid it may 
 32.27  receive under section 477A.013, subdivision 9, paragraph (c), is 
 32.28  also increased by $20,000 in calendar year 1998 only, provided 
 32.29  that: 
 32.30     (i) the city has a population in 1994 of 2,500 or more; 
 32.31     (ii) the city is located in a county, outside of the 
 32.32  metropolitan area, which contains a city of the first class; 
 32.33     (iii) the city's net tax capacity used in calculating its 
 32.34  1996 aid under section 477A.013 is less than $400 per capita; 
 32.35  and 
 32.36     (iv) at least four percent of the total net tax capacity, 
 33.1   for taxes payable in 1996, of property located in the city is 
 33.2   classified as railroad property. 
 33.3      (d) The city aid base for a city is increased by $200,000 
 33.4   in 1999 and thereafter and the maximum amount of total aid it 
 33.5   may receive under section 477A.013, subdivision 9, paragraph 
 33.6   (c), is also increased by $200,000 in calendar year 1999 only, 
 33.7   provided that: 
 33.8      (i) the city was incorporated as a statutory city after 
 33.9   December 1, 1993; 
 33.10     (ii) its city aid base does not exceed $5,600; and 
 33.11     (iii) the city had a population in 1996 of 5,000 or more. 
 33.12     (e) The city aid base for a city is increased by $450,000 
 33.13  in 1999 to 2008 and the maximum amount of total aid it may 
 33.14  receive under section 477A.013, subdivision 9, paragraph (c), is 
 33.15  also increased by $450,000 in calendar year 1999 only, provided 
 33.16  that: 
 33.17     (i) the city had a population in 1996 of at least 50,000; 
 33.18     (ii) its population had increased by at least 40 percent in 
 33.19  the ten-year period ending in 1996; and 
 33.20     (iii) its city's net tax capacity for aids payable in 1998 
 33.21  is less than $700 per capita. 
 33.22     (f) Beginning in 2004, the city aid base for a city is 
 33.23  equal to the sum of its city aid base in 2003 and the amount of 
 33.24  additional aid it was certified to receive under section 477A.06 
 33.25  in 2003.  For 2004 only, the maximum amount of total aid a city 
 33.26  may receive under section 477A.013, subdivision 9, paragraph 
 33.27  (c), is also increased by the amount it was certified to receive 
 33.28  under section 477A.06 in 2003. 
 33.29     (g) The city aid base for a city is increased by $150,000 
 33.30  for aids payable in 2000 and thereafter, and the maximum amount 
 33.31  of total aid it may receive under section 477A.013, subdivision 
 33.32  9, paragraph (c), is also increased by $150,000 in calendar year 
 33.33  2000 only, provided that: 
 33.34     (1) the city has a population that is greater than 1,000 
 33.35  and less than 2,500; 
 33.36     (2) its commercial and industrial percentage for aids 
 34.1   payable in 1999 is greater than 45 percent; and 
 34.2      (3) the total market value of all commercial and industrial 
 34.3   property in the city for assessment year 1999 is at least 15 
 34.4   percent less than the total market value of all commercial and 
 34.5   industrial property in the city for assessment year 1998. 
 34.6      (h) (g) The city aid base for a city is increased by 
 34.7   $200,000 in 2000 and thereafter, and the maximum amount of total 
 34.8   aid it may receive under section 477A.013, subdivision 9, 
 34.9   paragraph (c), is also increased by $200,000 in calendar year 
 34.10  2000 only, provided that: 
 34.11     (1) the city had a population in 1997 of 2,500 or more; 
 34.12     (2) the net tax capacity of the city used in calculating 
 34.13  its 1999 aid under section 477A.013 is less than $650 per 
 34.14  capita; 
 34.15     (3) the pre-1940 housing percentage of the city used in 
 34.16  calculating 1999 aid under section 477A.013 is greater than 12 
 34.17  percent; 
 34.18     (4) the 1999 local government aid of the city under section 
 34.19  477A.013 is less than 20 percent of the amount that the formula 
 34.20  aid of the city would have been if the need increase percentage 
 34.21  was 100 percent; and 
 34.22     (5) the city aid base of the city used in calculating aid 
 34.23  under section 477A.013 is less than $7 per capita. 
 34.24     (i) (h) The city aid base for a city is increased by 
 34.25  $102,000 in 2000 and thereafter, and the maximum amount of total 
 34.26  aid it may receive under section 477A.013, subdivision 9, 
 34.27  paragraph (c), is also increased by $102,000 in calendar year 
 34.28  2000 only, provided that: 
 34.29     (1) the city has a population in 1997 of 2,000 or more; 
 34.30     (2) the net tax capacity of the city used in calculating 
 34.31  its 1999 aid under section 477A.013 is less than $455 per 
 34.32  capita; 
 34.33     (3) the net levy of the city used in calculating 1999 aid 
 34.34  under section 477A.013 is greater than $195 per capita; and 
 34.35     (4) the 1999 local government aid of the city under section 
 34.36  477A.013 is less than 38 percent of the amount that the formula 
 35.1   aid of the city would have been if the need increase percentage 
 35.2   was 100 percent. 
 35.3      (j) (i) The city aid base for a city is increased by 
 35.4   $32,000 in 2001 and thereafter, and the maximum amount of total 
 35.5   aid it may receive under section 477A.013, subdivision 9, 
 35.6   paragraph (c), is also increased by $32,000 in calendar year 
 35.7   2001 only, provided that: 
 35.8      (1) the city has a population in 1998 that is greater than 
 35.9   200 but less than 500; 
 35.10     (2) the city's revenue need used in calculating aids 
 35.11  payable in 2000 was greater than $200 per capita; 
 35.12     (3) the city net tax capacity for the city used in 
 35.13  calculating aids available in 2000 was equal to or less than 
 35.14  $200 per capita; 
 35.15     (4) the city aid base of the city used in calculating aid 
 35.16  under section 477A.013 is less than $65 per capita; and 
 35.17     (5) the city's formula aid for aids payable in 2000 was 
 35.18  greater than zero. 
 35.19     (k) (j) The city aid base for a city is increased by $7,200 
 35.20  in 2001 and thereafter, and the maximum amount of total aid it 
 35.21  may receive under section 477A.013, subdivision 9, paragraph 
 35.22  (c), is also increased by $7,200 in calendar year 2001 only, 
 35.23  provided that: 
 35.24     (1) the city had a population in 1998 that is greater than 
 35.25  200 but less than 500; 
 35.26     (2) the city's commercial industrial percentage used in 
 35.27  calculating aids payable in 2000 was less than ten percent; 
 35.28     (3) more than 25 percent of the city's population was 60 
 35.29  years old or older according to the 1990 census; 
 35.30     (4) the city aid base of the city used in calculating aid 
 35.31  under section 477A.013 is less than $15 per capita; and 
 35.32     (5) the city's formula aid for aids payable in 2000 was 
 35.33  greater than zero. 
 35.34     (l) (k) The city aid base for a city is increased by 
 35.35  $45,000 in 2001 and thereafter and by an additional $50,000 in 
 35.36  calendar years 2002 to 2011, and the maximum amount of total aid 
 36.1   it may receive under section 477A.013, subdivision 9, paragraph 
 36.2   (c), is also increased by $45,000 in calendar year 2001 only, 
 36.3   and by $50,000 in calendar year 2002 only, provided that: 
 36.4      (1) the net tax capacity of the city used in calculating 
 36.5   its 2000 aid under section 477A.013 is less than $810 per 
 36.6   capita; 
 36.7      (2) the population of the city declined more than two 
 36.8   percent between 1988 and 1998; 
 36.9      (3) the net levy of the city used in calculating 2000 aid 
 36.10  under section 477A.013 is greater than $240 per capita; and 
 36.11     (4) the city received less than $36 per capita in aid under 
 36.12  section 477A.013, subdivision 9, for aids payable in 2000. 
 36.13     (m) (l) The city aid base for a city with a population of 
 36.14  10,000 or more which is located outside of the seven-county 
 36.15  metropolitan area is increased in 2002 and thereafter, and the 
 36.16  maximum amount of total aid it may receive under section 
 36.17  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
 36.18  in calendar year 2002 only, by an amount equal to the lesser of: 
 36.19     (1)(i) the total population of the city, as determined by 
 36.20  the United States Bureau of the Census, in the 2000 census, (ii) 
 36.21  minus 5,000, (iii) times 60; or 
 36.22     (2) $2,500,000. 
 36.23     (n) (m) The city aid base is increased by $50,000 in 2002 
 36.24  and thereafter, and the maximum amount of total aid it may 
 36.25  receive under section 477A.013, subdivision 9, paragraph (c), is 
 36.26  also increased by $50,000 in calendar year 2002 only, provided 
 36.27  that: 
 36.28     (1) the city is located in the seven-county metropolitan 
 36.29  area; 
 36.30     (2) its population in 2000 is between 10,000 and 20,000; 
 36.31  and 
 36.32     (3) its commercial industrial percentage, as calculated for 
 36.33  city aid payable in 2001, was greater than 25 percent. 
 36.34     (o) (n) The city aid base for a city is increased by 
 36.35  $150,000 in calendar years 2002 to 2011 and the maximum amount 
 36.36  of total aid it may receive under section 477A.013, subdivision 
 37.1   9, paragraph (c), is also increased by $150,000 in calendar year 
 37.2   2002 only, provided that: 
 37.3      (1) the city had a population of at least 3,000 but no more 
 37.4   than 4,000 in 1999; 
 37.5      (2) its home county is located within the seven-county 
 37.6   metropolitan area; 
 37.7      (3) its pre-1940 housing percentage is less than 15 
 37.8   percent; and 
 37.9      (4) its city net tax capacity per capita for taxes payable 
 37.10  in 2000 is less than $900 per capita. 
 37.11     (p) (o) The city aid base for a city is increased by 
 37.12  $200,000 beginning in calendar year 2003 and the maximum amount 
 37.13  of total aid it may receive under section 477A.013, subdivision 
 37.14  9, paragraph (c), is also increased by $200,000 in calendar year 
 37.15  2003 only, provided that the city qualified for an increase in 
 37.16  homestead and agricultural credit aid under Laws 1995, chapter 
 37.17  264, article 8, section 18. 
 37.18     (q) (p) The city aid base for a city is increased by 
 37.19  $200,000 in 2004 only and the maximum amount of total aid it may 
 37.20  receive under section 477A.013, subdivision 9, is also increased 
 37.21  by $200,000 in calendar year 2004 only, if the city is the site 
 37.22  of a nuclear dry cask storage facility. 
 37.23     (r) (q) The city aid base for a city is increased by 
 37.24  $10,000 in 2004 and thereafter and the maximum total aid it may 
 37.25  receive under section 477A.013, subdivision 9, is also increased 
 37.26  by $10,000 in calendar year 2004 only, if the city was included 
 37.27  in a federal major disaster designation issued on April 1, 1998, 
 37.28  and its pre-1940 housing stock was decreased by more than 40 
 37.29  percent between 1990 and 2000. 
 37.30     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 37.31  aids payable in 2004. 
 37.32     Sec. 23.  Minnesota Statutes 2003 Supplement, section 
 37.33  477A.03, subdivision 2b, is amended to read: 
 37.34     Subd. 2b.  [COUNTIES.] (a) For aids payable in calendar 
 37.35  year 2005 and thereafter, the total aids paid to counties under 
 37.36  section 477A.0124, subdivision 3, are limited to $100,500,000.  
 38.1   Each calendar year, $500,000 shall be retained by the 
 38.2   commissioner of revenue to make reimbursements to the 
 38.3   commissioner of finance for payments made under section 611.27.  
 38.4   For calendar year 2004, the amount shall be $500,000 is 
 38.5   appropriated from the general fund for this purpose in addition 
 38.6   to the payments authorized under section 477A.0124, subdivision 
 38.7   1.  For calendar year 2005 and subsequent years, the amount 
 38.8   shall be deducted from the appropriation under this paragraph 
 38.9   for section 477A.0124, subdivision 1.  The reimbursements shall 
 38.10  be to defray the additional costs associated with court-ordered 
 38.11  counsel under section 611.27.  Any retained amounts not used for 
 38.12  reimbursement in a year shall be included in the next 
 38.13  distribution of county need aid that is certified to the county 
 38.14  auditors for the purpose of property tax reduction for the next 
 38.15  taxes payable year. 
 38.16     (b) For aids payable in 2005 and thereafter, the total aids 
 38.17  under section 477A.0124, subdivision 4, are limited to 
 38.18  $105,000,000.  The commissioner of finance shall bill the 
 38.19  commissioner of revenue for the cost of preparation of local 
 38.20  impact notes as required by section 3.987, not to exceed 
 38.21  $207,000 in fiscal year 2004 and thereafter.  The commissioner 
 38.22  of education shall bill the commissioner of revenue for the cost 
 38.23  of preparation of local impact notes for school districts as 
 38.24  required by section 3.987, not to exceed $7,000 in fiscal year 
 38.25  2004 and thereafter.  For aids payable in 2004, $214,000 is 
 38.26  appropriated from the general fund for this purpose.  For aids 
 38.27  payable in 2005 and thereafter, the commissioner of revenue 
 38.28  shall deduct the amounts billed under this paragraph from the 
 38.29  appropriation under this paragraph section for section 
 38.30  477A.0124, subdivision 4.  The amounts deducted are appropriated 
 38.31  to the commissioner of finance and the commissioner of education 
 38.32  for the preparation of local impact notes. 
 38.33     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 38.34  payable in 2004 and thereafter. 
 38.35     Sec. 24.  Laws 2003, First Special Session chapter 21, 
 38.36  article 5, section 13, is amended to read: 
 39.1      Sec. 13.  [2004 CITY AID REDUCTIONS.] 
 39.2      The commissioner of revenue shall compute an aid reduction 
 39.3   amount for 2004 for each city as provided in this section. 
 39.4      The initial aid reduction amount for each city is the 
 39.5   amount by which the city's aid distribution under Minnesota 
 39.6   Statutes, section 477A.013, and related provisions payable in 
 39.7   2003 exceeds the city's 2004 distribution under those provisions.
 39.8      The minimum aid reduction amount for a city is the amount 
 39.9   of its reduction in 2003 under section 12.  If a city receives 
 39.10  an increase to its city aid base under Minnesota Statutes, 
 39.11  section 477A.011, subdivision 36, its minimum aid reduction is 
 39.12  reduced by an equal amount. 
 39.13     The maximum aid reduction amount for a city is an amount 
 39.14  equal to 14 percent of the city's total 2004 levy plus aid 
 39.15  revenue base, except that if the city has a city net tax 
 39.16  capacity for aids payable in 2004, as defined in Minnesota 
 39.17  Statutes, section 477A.011, subdivision 20, of $700 per capita 
 39.18  or less, the maximum aid reduction shall not exceed an amount 
 39.19  equal to 13 percent of the city's total 2004 levy plus aid 
 39.20  revenue base. 
 39.21     If the initial aid reduction amount for a city is less than 
 39.22  the minimum aid reduction amount for that city, the final aid 
 39.23  reduction amount for the city is the sum of the initial aid 
 39.24  reduction amount and the lesser of the amount of the city's 
 39.25  payable 2004 reimbursement under Minnesota Statutes, section 
 39.26  273.1384, or the difference between the minimum and initial aid 
 39.27  reduction amounts for the city, and the amount of the final aid 
 39.28  reduction in excess of the initial aid reduction is deducted 
 39.29  from the city's reimbursements pursuant to Minnesota Statutes, 
 39.30  section 273.1384. 
 39.31     If the initial aid reduction amount for a city is greater 
 39.32  than the maximum aid reduction amount for the city, the city 
 39.33  receives an additional distribution under this section equal to 
 39.34  the result of subtracting the maximum aid reduction amount from 
 39.35  the initial aid reduction amount.  This distribution shall be 
 39.36  paid in equal installments in 2004 on the dates specified in 
 40.1   Minnesota Statutes, section 477A.015.  The amount necessary for 
 40.2   these additional distributions is appropriated to the 
 40.3   commissioner of revenue from the general fund in fiscal year 
 40.4   2005. 
 40.5      The initial aid reduction is applied to the city's 
 40.6   distribution pursuant to Minnesota Statutes, section 477A.013, 
 40.7   and any aid reduction in excess of the initial aid reduction is 
 40.8   applied to the city's reimbursements pursuant to Minnesota 
 40.9   Statutes, section 273.1384. 
 40.10     To the extent that sufficient information is available on 
 40.11  each payment date in 2004, the commissioner of revenue shall pay 
 40.12  the reimbursements reduced under this section in equal 
 40.13  installments on the payment dates provided in law. 
 40.14     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 40.15  payable in 2004. 
 40.16     Sec. 25.  Laws 2003, First Special Session chapter 21, 
 40.17  article 6, section 9, is amended to read: 
 40.18     Sec. 9.  [DEFINITIONS.] 
 40.19     (a) For purposes of sections 9 to 15, the following terms 
 40.20  have the meanings given them in this section. 
 40.21     (b) The 2003 and 2004 "levy plus aid revenue base" for a 
 40.22  county is the sum of that county's certified property tax levy 
 40.23  for taxes payable in 2003, plus the sum of the amounts the 
 40.24  county was certified to receive in the designated calendar year 
 40.25  as: 
 40.26     (1) homestead and agricultural credit aid under Minnesota 
 40.27  Statutes, section 273.1398, subdivision 2, plus any additional 
 40.28  aid under section 16, minus the amount calculated under section 
 40.29  273.1398, subdivision 4a, paragraph (b), for counties in 
 40.30  judicial districts one, three, six, and ten, and 25 percent of 
 40.31  the amount calculated under section 273.1398, subdivision 4a, 
 40.32  paragraph (b), for counties in judicial districts two and four; 
 40.33     (2) the amount of county manufactured home homestead and 
 40.34  agricultural credit aid computed for the county for payment in 
 40.35  2003 under section 273.166; 
 40.36     (3) criminal justice aid under Minnesota Statutes, section 
 41.1   477A.0121; 
 41.2      (4) family preservation aid under Minnesota Statutes, 
 41.3   section 477A.0122; 
 41.4      (5) taconite aids under Minnesota Statutes, sections 298.28 
 41.5   and 298.282, including any aid which was required to be placed 
 41.6   in a special fund for expenditure in the next succeeding year; 
 41.7   and 
 41.8      (6) county program aid under section 477A.0124, exclusive 
 41.9   of the attached machinery aid component. 
 41.10     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 41.11  payable in 2004. 
 41.12     Sec. 26.  [REPEALER.] 
 41.13     Minnesota Statutes 2002, sections 273.19, subdivision 5; 
 41.14  275.15; and 283.07, are repealed effective the day following 
 41.15  final enactment. 
 41.16                             ARTICLE 4 
 41.17                           MISCELLANEOUS 
 41.18     Section 1.  Minnesota Statutes 2002, section 270.65, is 
 41.19  amended to read: 
 41.20     270.65 [DATE OF ASSESSMENT; DEFINITION.] 
 41.21     For purposes of taxes administered by the commissioner, the 
 41.22  term "date of assessment" means the date a liability reported on 
 41.23  a return was entered into the records of the commissioner or the 
 41.24  date a return should have been filed, whichever is later; or, in 
 41.25  the case of taxes determined by the commissioner, "date of 
 41.26  assessment" means the date of the order assessing taxes or date 
 41.27  of the return made by the commissioner; or, in the case of an 
 41.28  amended return filed by the taxpayer, the assessment date is the 
 41.29  date additional liability reported on the return, if any, was 
 41.30  entered into the records of the commissioner; or, in the case of 
 41.31  a consent agreement signed by the taxpayer under section 270.67, 
 41.32  subdivision 3, the assessment date is the notice date shown on 
 41.33  the agreement; or, in the case of a check from a taxpayer that 
 41.34  is dishonored and results in an erroneous refund being given to 
 41.35  the taxpayer, remittance of the check is deemed to be an 
 41.36  assessment and the "date of assessment" is the date the check 
 42.1   was received by the commissioner. 
 42.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 42.3   following final enactment. 
 42.4      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
 42.5   289A.19, subdivision 4, is amended to read: 
 42.6      Subd. 4.  [ESTATE TAX RETURNS.] When in the commissioner's 
 42.7   judgment good cause exists, the commissioner may extend the time 
 42.8   for filing an estate tax return for not more than six months.  
 42.9   When an extension to file the federal estate tax return has been 
 42.10  granted under section 6081 of the Internal Revenue Code, the 
 42.11  time for filing the estate tax return is extended for that 
 42.12  period.  If the estate requests an extension to file an estate 
 42.13  tax return within the time provided in section 289A.18, 
 42.14  subdivision 3, the commissioner shall extend the time for filing 
 42.15  the estate tax return for six months. 
 42.16     <b>[EFFECTIVE DATE.]</b> This section is effective for estates of 
 42.17  decedents dying after December 31, 2003. 
 42.18     Sec. 3.  Minnesota Statutes 2002, section 289A.37, 
 42.19  subdivision 5, is amended to read: 
 42.20     Subd. 5.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
 42.21  sent postage prepaid by United States mail to the taxpayer at 
 42.22  the taxpayer's last known address, or sent by electronic mail to 
 42.23  the taxpayer's last known electronic mailing address as provided 
 42.24  for in section 325L.08, is sufficient even if the taxpayer is 
 42.25  deceased or is under a legal disability, or, in the case of a 
 42.26  corporation, has terminated its existence, unless the department 
 42.27  has been provided with a new address by a party authorized to 
 42.28  receive notices of assessment. 
 42.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 42.30  following final enactment. 
 42.31     Sec. 4.  Minnesota Statutes 2002, section 289A.60, 
 42.32  subdivision 6, is amended to read: 
 42.33     Subd. 6.  [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT 
 42.34  RETURN, EVASION.] If a person, with intent to evade or defeat a 
 42.35  tax or payment of tax, fails to file a return, files a false or 
 42.36  fraudulent return, or attempts in any other manner to evade or 
 43.1   defeat a tax or payment of tax, there is imposed on the person a 
 43.2   penalty equal to 50 percent of the tax, less amounts paid by the 
 43.3   person on the basis of the false or fraudulent return, if any, 
 43.4   due for the period to which the return related.  
 43.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 43.6   following final enactment. 
 43.7      Sec. 5.  Minnesota Statutes 2003 Supplement, section 
 43.8   290.01, subdivision 19a, is amended to read: 
 43.9      Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 43.10  individuals, estates, and trusts, there shall be added to 
 43.11  federal taxable income: 
 43.12     (1)(i) interest income on obligations of any state other 
 43.13  than Minnesota or a political or governmental subdivision, 
 43.14  municipality, or governmental agency or instrumentality of any 
 43.15  state other than Minnesota exempt from federal income taxes 
 43.16  under the Internal Revenue Code or any other federal statute; 
 43.17  and 
 43.18     (ii) exempt-interest dividends as defined in section 
 43.19  852(b)(5) of the Internal Revenue Code, except the portion of 
 43.20  the exempt-interest dividends derived from interest income on 
 43.21  obligations of the state of Minnesota or its political or 
 43.22  governmental subdivisions, municipalities, governmental agencies 
 43.23  or instrumentalities, but only if the portion of the 
 43.24  exempt-interest dividends from such Minnesota sources paid to 
 43.25  all shareholders represents 95 percent or more of the 
 43.26  exempt-interest dividends that are paid by the regulated 
 43.27  investment company as defined in section 851(a) of the Internal 
 43.28  Revenue Code, or the fund of the regulated investment company as 
 43.29  defined in section 851(g) of the Internal Revenue Code, making 
 43.30  the payment; and 
 43.31     (iii) for the purposes of items (i) and (ii), interest on 
 43.32  obligations of an Indian tribal government described in section 
 43.33  7871(c) of the Internal Revenue Code shall be treated as 
 43.34  interest income on obligations of the state in which the tribe 
 43.35  is located; 
 43.36     (2) the amount of income taxes paid or accrued within the 
 44.1   taxable year under this chapter and income the amount of taxes 
 44.2   based on net income paid to any other state or to any province 
 44.3   or territory of Canada, to the extent allowed as a deduction 
 44.4   under section 63(d) of the Internal Revenue Code, but the 
 44.5   addition may not be more than the amount by which the itemized 
 44.6   deductions as allowed under section 63(d) of the Internal 
 44.7   Revenue Code exceeds the amount of the standard deduction as 
 44.8   defined in section 63(c) of the Internal Revenue Code.  For the 
 44.9   purpose of this paragraph, the disallowance of itemized 
 44.10  deductions under section 68 of the Internal Revenue Code of 
 44.11  1986, income tax is the last itemized deduction disallowed; 
 44.12     (3) the capital gain amount of a lump sum distribution to 
 44.13  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 44.14  Reform Act of 1986, Public Law 99-514, applies; 
 44.15     (4) the amount of income taxes paid or accrued within the 
 44.16  taxable year under this chapter and income taxes based on net 
 44.17  income paid to any other state or any province or territory of 
 44.18  Canada, to the extent allowed as a deduction in determining 
 44.19  federal adjusted gross income.  For the purpose of this 
 44.20  paragraph, income taxes do not include the taxes imposed by 
 44.21  sections 290.0922, subdivision 1, paragraph (b), 290.9727, 
 44.22  290.9728, and 290.9729; 
 44.23     (5) the amount of expense, interest, or taxes disallowed 
 44.24  pursuant to section 290.10; 
 44.25     (6) the amount of a partner's pro rata share of net income 
 44.26  which does not flow through to the partner because the 
 44.27  partnership elected to pay the tax on the income under section 
 44.28  6242(a)(2) of the Internal Revenue Code; and 
 44.29     (7) 80 percent of the depreciation deduction allowed under 
 44.30  section 168(k) of the Internal Revenue Code.  For purposes of 
 44.31  this clause, if the taxpayer has an activity that in the taxable 
 44.32  year generates a deduction for depreciation under section 168(k) 
 44.33  and the activity generates a loss for the taxable year that the 
 44.34  taxpayer is not allowed to claim for the taxable year, "the 
 44.35  depreciation allowed under section 168(k)" for the taxable year 
 44.36  is limited to excess of the depreciation claimed by the activity 
 45.1   under section 168(k) over the amount of the loss from the 
 45.2   activity that is not allowed in the taxable year.  In succeeding 
 45.3   taxable years when the losses not allowed in the taxable year 
 45.4   are allowed, the depreciation under section 168(k) is allowed. 
 45.5      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 45.6   beginning after December 31, 2003. 
 45.7      Sec. 6.  Minnesota Statutes 2002, section 290.06, 
 45.8   subdivision 22, is amended to read: 
 45.9      Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
 45.10  taxpayer who is liable for taxes based on or measured by net 
 45.11  income to another state, as provided in paragraphs (b) through 
 45.12  (f), upon income allocated or apportioned to Minnesota, is 
 45.13  entitled to a credit for the tax paid to another state if the 
 45.14  tax is actually paid in the taxable year or a subsequent taxable 
 45.15  year.  A taxpayer who is a resident of this state pursuant to 
 45.16  section 290.01, subdivision 7, clause (2) paragraph (b), and who 
 45.17  is subject to income tax as a resident in the state of the 
 45.18  individual's domicile is not allowed this credit unless the 
 45.19  state of domicile does not allow a similar credit. 
 45.20     (b) For an individual, estate, or trust, the credit is 
 45.21  determined by multiplying the tax payable under this chapter by 
 45.22  the ratio derived by dividing the income subject to tax in the 
 45.23  other state that is also subject to tax in Minnesota while a 
 45.24  resident of Minnesota by the taxpayer's federal adjusted gross 
 45.25  income, as defined in section 62 of the Internal Revenue Code, 
 45.26  modified by the addition required by section 290.01, subdivision 
 45.27  19a, clause (1), and the subtraction allowed by section 290.01, 
 45.28  subdivision 19b, clause (1), to the extent the income is 
 45.29  allocated or assigned to Minnesota under sections 290.081 and 
 45.30  290.17.  
 45.31     (c) If the taxpayer is an athletic team that apportions all 
 45.32  of its income under section 290.17, subdivision 5, the credit is 
 45.33  determined by multiplying the tax payable under this chapter by 
 45.34  the ratio derived from dividing the total net income subject to 
 45.35  tax in the other state by the taxpayer's Minnesota taxable 
 45.36  income. 
 46.1      (d) The credit determined under paragraph (b) or (c) shall 
 46.2   not exceed the amount of tax so paid to the other state on the 
 46.3   gross income earned within the other state subject to tax under 
 46.4   this chapter, nor shall the allowance of the credit reduce the 
 46.5   taxes paid under this chapter to an amount less than what would 
 46.6   be assessed if such income amount was excluded from taxable net 
 46.7   income. 
 46.8      (e) In the case of the tax assessed on a lump sum 
 46.9   distribution under section 290.032, the credit allowed under 
 46.10  paragraph (a) is the tax assessed by the other state on the lump 
 46.11  sum distribution that is also subject to tax under section 
 46.12  290.032, and shall not exceed the tax assessed under section 
 46.13  290.032.  To the extent the total lump sum distribution defined 
 46.14  in section 290.032, subdivision 1, includes lump sum 
 46.15  distributions received in prior years or is all or in part an 
 46.16  annuity contract, the reduction to the tax on the lump sum 
 46.17  distribution allowed under section 290.032, subdivision 2, 
 46.18  includes tax paid to another state that is properly apportioned 
 46.19  to that distribution. 
 46.20     (f) If a Minnesota resident reported an item of income to 
 46.21  Minnesota and is assessed tax in such other state on that same 
 46.22  income after the Minnesota statute of limitations has expired, 
 46.23  the taxpayer shall receive a credit for that year under 
 46.24  paragraph (a), notwithstanding any statute of limitations to the 
 46.25  contrary.  The claim for the credit must be submitted within one 
 46.26  year from the date the taxes were paid to the other state.  The 
 46.27  taxpayer must submit sufficient proof to show entitlement to a 
 46.28  credit. 
 46.29     (g) For the purposes of this subdivision, a resident 
 46.30  shareholder of a corporation treated as an "S" corporation under 
 46.31  section 290.9725, must be considered to have paid a tax imposed 
 46.32  on the shareholder in an amount equal to the shareholder's pro 
 46.33  rata share of any net income tax paid by the S corporation to 
 46.34  another state.  For the purposes of the preceding sentence, the 
 46.35  term "net income tax" means any tax imposed on or measured by a 
 46.36  corporation's net income. 
 47.1      (h) For the purposes of this subdivision, a resident 
 47.2   partner of an entity taxed as a partnership under the Internal 
 47.3   Revenue Code must be considered to have paid a tax imposed on 
 47.4   the partner in an amount equal to the partner's pro rata share 
 47.5   of any net income tax paid by the partnership to another state.  
 47.6   For purposes of the preceding sentence, the term "net income" 
 47.7   tax means any tax imposed on or measured by a partnership's net 
 47.8   income. 
 47.9      (i) For the purposes of this subdivision, "another state": 
 47.10     (1) includes: 
 47.11     (i) the District of Columbia; and 
 47.12     (ii) a province or territory of Canada; but 
 47.13     (2) excludes Puerto Rico and the several territories 
 47.14  organized by Congress. 
 47.15     (j) The limitations on the credit in paragraphs (b), (c), 
 47.16  and (d), are imposed on a state by state basis. 
 47.17     (k) For a tax imposed by a province or territory of Canada, 
 47.18  the tax for purposes of this subdivision is the excess of the 
 47.19  tax over the amount of the foreign tax credit allowed under 
 47.20  section 27 of the Internal Revenue Code.  In determining the 
 47.21  amount of the foreign tax credit allowed, the net income taxes 
 47.22  imposed by Canada on the income are deducted first.  Any 
 47.23  remaining amount of the allowable foreign tax credit reduces the 
 47.24  provincial or territorial tax that qualifies for the credit 
 47.25  under this subdivision. 
 47.26     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 47.27  beginning after December 31, 2003. 
 47.28     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
 47.29  290.0674, subdivision 1, is amended to read: 
 47.30     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
 47.31  a credit against the tax imposed by this chapter in an amount 
 47.32  equal to 75 percent of the amount paid for education-related 
 47.33  expenses for a qualifying child in kindergarten through grade 
 47.34  12.  For purposes of this section, "education-related expenses" 
 47.35  means: 
 47.36     (1) fees or tuition for instruction by an instructor under 
 48.1   section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 
 48.2   (5), or a member of the Minnesota Music Teachers Association, 
 48.3   and who is not a lineal ancestor or sibling of the dependent for 
 48.4   instruction outside the regular school day or school year, 
 48.5   including tutoring, driver's education offered as part of school 
 48.6   curriculum, regardless of whether it is taken from a public or 
 48.7   private entity or summer camps, in grade or age appropriate 
 48.8   curricula that supplement curricula and instruction available 
 48.9   during the regular school year, that assists a dependent to 
 48.10  improve knowledge of core curriculum areas or to expand 
 48.11  knowledge and skills under the graduation rule under section 
 48.12  120B.02, paragraph (e), clauses (1) to (7), (9), and (10) 
 48.13  required academic standards under section 120B.021, subdivision 
 48.14  1, and the elective standard under section 120B.022, subdivision 
 48.15  1, clause (3), and that do not include the teaching of religious 
 48.16  tenets, doctrines, or worship, the purpose of which is to 
 48.17  instill such tenets, doctrines, or worship; 
 48.18     (2) expenses for textbooks, including books and other 
 48.19  instructional materials and equipment purchased or leased for 
 48.20  use in elementary and secondary schools in teaching only those 
 48.21  subjects legally and commonly taught in public elementary and 
 48.22  secondary schools in this state.  "Textbooks" does not include 
 48.23  instructional books and materials used in the teaching of 
 48.24  religious tenets, doctrines, or worship, the purpose of which is 
 48.25  to instill such tenets, doctrines, or worship, nor does it 
 48.26  include books or materials for extracurricular activities 
 48.27  including sporting events, musical or dramatic events, speech 
 48.28  activities, driver's education, or similar programs; 
 48.29     (3) a maximum expense of $200 per family for personal 
 48.30  computer hardware, excluding single purpose processors, and 
 48.31  educational software that assists a dependent to improve 
 48.32  knowledge of core curriculum areas or to expand knowledge and 
 48.33  skills under the graduation rule under section 120B.02 required 
 48.34  academic standards under section 120B.021, subdivision 1, and 
 48.35  the elective standard under section 120B.022, subdivision 1, 
 48.36  clause (3), purchased for use in the taxpayer's home and not 
 49.1   used in a trade or business regardless of whether the computer 
 49.2   is required by the dependent's school; and 
 49.3      (4) the amount paid to others for transportation of a 
 49.4   qualifying child attending an elementary or secondary school 
 49.5   situated in Minnesota, North Dakota, South Dakota, Iowa, or 
 49.6   Wisconsin, wherein a resident of this state may legally fulfill 
 49.7   the state's compulsory attendance laws, which is not operated 
 49.8   for profit, and which adheres to the provisions of the Civil 
 49.9   Rights Act of 1964 and chapter 363A. 
 49.10     For purposes of this section, "qualifying child" has the 
 49.11  meaning given in section 32(c)(3) of the Internal Revenue Code. 
 49.12     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 49.13  beginning after December 31, 2003. 
 49.14     Sec. 8.  Minnesota Statutes 2002, section 290.92, 
 49.15  subdivision 1, is amended to read: 
 49.16     Subdivision 1.  [DEFINITIONS.] (1)  [WAGES.] For purposes 
 49.17  of this section, the term "wages" means the same as that term is 
 49.18  defined in section 3401(a) and (f) of the Internal Revenue Code. 
 49.19     (2)  [PAYROLL PERIOD.] For purposes of this section the 
 49.20  term "payroll period" means a period for which a payment of 
 49.21  wages is ordinarily made to the employee by the employee's 
 49.22  employer, and the term "miscellaneous payroll period" means a 
 49.23  payroll period other than a daily, weekly, biweekly, 
 49.24  semimonthly, monthly, quarterly, semiannual, or annual payroll 
 49.25  period. 
 49.26     (3)  [EMPLOYEE.] For purposes of this section the term 
 49.27  "employee" means any resident individual performing services for 
 49.28  an employer, either within or without, or both within and 
 49.29  without the state of Minnesota, and every nonresident individual 
 49.30  performing services within the state of Minnesota, the 
 49.31  performance of which services constitute, establish, and 
 49.32  determine the relationship between the parties as that of 
 49.33  employer and employee.  As used in the preceding sentence, the 
 49.34  term "employee" includes an officer of a corporation, and an 
 49.35  officer, employee, or elected official of the United States, a 
 49.36  state, or any political subdivision thereof, or the District of 
 50.1   Columbia, or any agency or instrumentality of any one or more of 
 50.2   the foregoing. 
 50.3      (4)  [EMPLOYER.] For purposes of this section the term 
 50.4   "employer" means any person, including individuals, fiduciaries, 
 50.5   estates, trusts, partnerships, limited liability companies, and 
 50.6   corporations transacting business in or deriving any income from 
 50.7   sources within the state of Minnesota for whom an individual 
 50.8   performs or performed any service, of whatever nature, as the 
 50.9   employee of such person, except that if the person for whom the 
 50.10  individual performs or performed the services does not have 
 50.11  legal control of the payment of the wages for such services, the 
 50.12  term "employer," except for purposes of paragraph (1), means the 
 50.13  person having legal control of the payment of such wages.  As 
 50.14  used in the preceding sentence, the term "employer" includes any 
 50.15  corporation, individual, estate, trust, or organization which is 
 50.16  exempt from taxation under section 290.05 and further includes, 
 50.17  but is not limited to, officers of corporations who have legal 
 50.18  control, either individually or jointly with another or others, 
 50.19  of the payment of the wages. 
 50.20     (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 
 50.21  purposes of this section, the term "number of withholding 
 50.22  exemptions claimed" means the number of withholding exemptions 
 50.23  claimed in a withholding exemption certificate in effect under 
 50.24  subdivision 5, except that if no such certificate is in effect, 
 50.25  the number of withholding exemptions claimed shall be considered 
 50.26  to be zero. 
 50.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 50.28  following final enactment. 
 50.29     Sec. 9.  Minnesota Statutes 2002, section 290C.05, is 
 50.30  amended to read: 
 50.31     290C.05 [ANNUAL CERTIFICATION.] 
 50.32     On or before July 1 of each year, beginning with the year 
 50.33  after the claimant has received an approved application, the 
 50.34  commissioner shall send each claimant enrolled under the 
 50.35  sustainable forest incentive program a certification form.  The 
 50.36  claimant must sign the certification, attesting that the 
 51.1   requirements and conditions for continued enrollment in the 
 51.2   program are currently being met, and must return the signed 
 51.3   certification form to the commissioner by August 15 of that same 
 51.4   year.  Failure to If the claimant does not return an annual 
 51.5   certification form by the due date shall result in removal of 
 51.6   the lands from the provisions of the sustainable forest 
 51.7   incentive program, and the imposition of any applicable removal 
 51.8   penalty, the provisions in section 290C.11 apply.  The claimant 
 51.9   may appeal the removal and any associated penalty according to 
 51.10  the procedures and within the time allowed under this chapter. 
 51.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 51.12  following final enactment. 
 51.13     Sec. 10.  [290C.055] [LENGTH OF COVENANT.] 
 51.14     The covenant remains in effect for a minimum of eight 
 51.15  years.  If land is removed from the program after it has been 
 51.16  enrolled for less than four years, the covenant remains in 
 51.17  effect for eight years from the date recorded. 
 51.18     In the case of land that has been enrolled for more than 
 51.19  four years and is removed from the program for any reason, there 
 51.20  is a four-year waiting period to end the covenant.  The covenant 
 51.21  remains in effect until January 1 of the fifth calendar year 
 51.22  that begins after the date that: 
 51.23     (1) the commissioner receives notification from the 
 51.24  claimant that the claimant wishes to be removed from the program 
 51.25  under section 290C.10, or 
 51.26     (2) the date that land is removed from the program under 
 51.27  section 290C.11. 
 51.28     Notwithstanding the other provisions of this section, the 
 51.29  covenant is terminated at the same time that land is removed 
 51.30  from the program due to acquisition of title or possession for a 
 51.31  public purpose under section 290C.10. 
 51.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 51.33  following final enactment. 
 51.34     Sec. 11.  Minnesota Statutes 2002, section 325D.33, 
 51.35  subdivision 6, is amended to read: 
 51.36     Subd. 6.  [VIOLATIONS.] If the commissioner determines that 
 52.1   a distributor is violating any provision of this chapter, the 
 52.2   commissioner must give the distributor a written warning 
 52.3   explaining the violation and an explanation of what must be done 
 52.4   to comply with this chapter.  Within ten days of issuance of the 
 52.5   warning, the distributor must notify the commissioner that the 
 52.6   distributor has complied with the commissioner's recommendation 
 52.7   or request that the commissioner set the issue for a hearing 
 52.8   pursuant to chapter 14.  If a hearing is requested, the hearing 
 52.9   shall be scheduled within 20 days of the request and the 
 52.10  recommendation of the administrative law judge shall be issued 
 52.11  within five working days of the close of the hearing.  The 
 52.12  commissioner's final determination shall be issued within five 
 52.13  working days of the receipt of the administrative law judge's 
 52.14  recommendation.  If the commissioner's final determination is 
 52.15  adverse to the distributor and the distributor does not comply 
 52.16  within ten days of receipt of the commissioner's final 
 52.17  determination, the commissioner may order the distributor to 
 52.18  immediately cease the stamping of cigarettes.  As soon as 
 52.19  practicable after the order, the commissioner must remove the 
 52.20  meter and any unapplied cigarette stamps from the premises of 
 52.21  the distributor. 
 52.22     If within ten days of issuance of the written warning the 
 52.23  distributor has not complied with the commissioner's 
 52.24  recommendation or requested a hearing, the commissioner may 
 52.25  order the distributor to immediately cease the stamping of 
 52.26  cigarettes and remove the meter and unapplied stamps from the 
 52.27  distributor's premises. 
 52.28     If, within any 12-month period, the commissioner has issued 
 52.29  three written warnings to any distributor, even if the 
 52.30  distributor has complied within ten days, the commissioner shall 
 52.31  notify the distributor of the commissioner's intent to revoke 
 52.32  the distributor's license for a continuing course of conduct 
 52.33  contrary to this chapter.  For purposes of this paragraph, a 
 52.34  written warning that was ultimately resolved by removal of the 
 52.35  warning by the commissioner is not deemed to be a warning.  The 
 52.36  commissioner must notify the distributor of the date and time of 
 53.1   a hearing pursuant to chapter 14 at least 20 days before the 
 53.2   hearing is held.  The hearing must provide an opportunity for 
 53.3   the distributor to show cause why the license should not be 
 53.4   revoked.  If the commissioner revokes a distributor's license, 
 53.5   the commissioner shall not issue a new license to that 
 53.6   distributor for 180 days. 
 53.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 53.8   following final enactment. 
 53.9      Sec. 12.  Minnesota Statutes 2002, section 473.843, 
 53.10  subdivision 5, is amended to read: 
 53.11     Subd. 5.  [PENALTIES; ENFORCEMENT.] The audit, penalty, and 
 53.12  enforcement provisions applicable to corporate franchise taxes 
 53.13  imposed under chapter 290 apply to the fees imposed under this 
 53.14  section.  The commissioner of revenue shall administer the 
 53.15  provisions.  
 53.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 53.17  following final enactment. 
 53.18     Sec. 13.  [REPEALER.] 
 53.19     Minnesota Rules, parts 8093.2000 and 8093.3000, are 
 53.20  repealed. 
 53.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 53.22  following final enactment.