1.1 	A bill for an act
1.2 	relating to human services; making changes to child care provider rates and 
1.3 	parent fees; eliminating certain health care co-pays; increasing the MFIP 
1.4 	transitional standard; reinstating health care benefits for certain noncitizens; 
1.5 	repealing MFIP housing and SSI penalties; modifying foreign operating 
1.6 	corporation tax provision; appropriating money from the tax relief account;
1.7 	amending Minnesota Statutes 2004, sections 119B.13, by adding a subdivision; 
1.8 	256J.24, by adding a subdivision; 290.34, subdivision 1; Minnesota Statutes 
1.9 	2005 Supplement, sections 119B.09, subdivision 1; 256D.03, subdivisions 3, 
1.10 	4; 256J.21, subdivision 2; 289A.38, subdivision 6; 290.01, subdivisions 6b, 
1.11 	19c, 19d; proposing coding for new law in Minnesota Statutes, chapter 119B; 
1.12 	repealing Minnesota Statutes 2004, sections 256B.0631, subdivisions 2, 4; 
1.13 	256J.37, subdivision 3a; 256L.04, subdivision 10; Minnesota Statutes 2005 
1.14 	Supplement, sections 256B.0631, subdivisions 1, 3; 256J.37, subdivision 3b; 
1.15 	Laws 2005, First Special Session chapter 4, article 3, section 19.
1.16 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.17 	ARTICLE 1
1.18 	WELFARE REFORM ARTICLE

1.19 	Section 1. Minnesota Statutes 2005 Supplement, section 119B.09, subdivision 1, is 
1.20 	amended to read:
1.21 		Subdivision 1.General eligibility requirements for all applicants for child 
1.22 	care assistance. (a) Child care services must be available to families who need child 
1.23 	care to find or keep employment or to obtain the training or education necessary to find 
1.24 	employment and who:
1.25 	(1) have household income less than or equal to 250 percent of the federal poverty 
1.26 	guidelines, adjusted for family size, and meet the requirements of section 119B.05; 
1.27 	receive MFIP assistance; and are participating in employment and training services under 
1.28 	chapter 256J or 256K; or
2.1 	(2) have household income less than or equal to ~~175~~ 200 percent of the federal 
2.2 	poverty guidelines, adjusted for family size, at program entry and less than 250 percent of 
2.3 	the federal poverty guidelines, adjusted for family size, at program exit.
2.4 	(b) Child care services must be made available as in-kind services.
2.5 	(c) All applicants for child care assistance and families currently receiving child care 
2.6 	assistance must be assisted and required to cooperate in establishment of paternity and 
2.7 	enforcement of child support obligations for all children in the family as a condition 
2.8 	of program eligibility. For purposes of this section, a family is considered to meet the 
2.9 	requirement for cooperation when the family complies with the requirements of section 
2.10 	256.741.

2.11 	Sec. 2. [119B.095] CO-PAYMENT FEE FOR FAMILIES WITH ANNUAL 
2.12 	INCOMES THAT EXCEED THE FEDERAL POVERTY LEVEL.
2.13 	(a) The monthly family co-payment fee for families with annual incomes greater than 
2.14 	the federal poverty level, adjusted for family size, is determined in paragraphs (b) and (c):
2.15 	(b) The family's annual gross income is converted into a percentage of state median 
2.16 	income (SMI) for a family of four, adjusted for family size, by dividing the family's 
2.17 	annual gross income by 100 percent of the SMI for a family of four, adjusted for family 
2.18 	size. The percentage must be carried out to the nearest 100th of a percent.
2.19 	(c) If the family's annual gross income is less than or equal to 75 percent of the 
2.20 	SMI for a family of four, adjusted for family size, the family's monthly co-payment fee 
2.21 	is the fixed percentage established for the family's income range in clauses (1) to (60), 
2.22 	multiplied by the highest possible income within that income range, divided by 12, and 
2.23 	rounded to the nearest whole dollar.

2.24 | | Percent of SMI | Percent
2.25 | (1) | less than 35.01 | 2.20
2.26 | (2) | 35.01 to 42.00 | 2.70
2.27 | (3) | 42.01 to 43.00 | 3.75
2.28 | (4) | 43.01 to 44.00 | 4.00
2.29 | (5) | 44.01 to 45.00 | 4.25
2.30 | (6) | 45.01 to 46.00 | 4.50
2.31 | (7) | 46.01 to 47.00 | 4.75
2.32 | (8) | 47.01 to 48.00 | 5.00
2.33 | (9) | 48.01 to 49.00 | 5.25
3.1 | (10) | 49.01 to 50.00 | 5.50
3.2 | (11) | 50.01 to 50.50 | 5.75
3.3 | (12) | 50.51 to 51.00 | 6.00
3.4 | (13) | 51.01 to 51.50 | 6.25
3.5 | (14) | 51.51 to 52.00 | 6.50
3.6 | (15) | 52.01 to 52.50 | 6.75
3.7 | (16) | 52.51 to 53.00 | 7.00
3.8 | (17) | 53.01 to 53.50 | 7.25
3.9 | (18) | 53.51 to 54.00 | 7.50
3.10 | (19) | 54.01 to 54.50 | 7.75
3.11 | (20) | 54.51 to 55.00 | 8.00
3.12 | (21) | 55.01 to 55.50 | 8.30
3.13 | (22) | 55.51 to 56.00 | 8.60
3.14 | (23) | 56.01 to 56.50 | 8.90
3.15 | (24) | 56.51 to 57.00 | 9.20
3.16 | (25) | 57.01 to 57.50 | 9.50
3.17 | (26) | 57.51 to 58.00 | 9.80
3.18 | (27) | 58.01 to 58.50 | 10.10
3.19 | (28) | 58.51 to 59.00 | 10.40
3.20 | (29) | 59.01 to 59.50 | 10.70
3.21 | (30) | 59.51 to 60.00 | 11.00
3.22 | (31) | 60.01 to 60.50 | 11.30
3.23 | (32) | 60.51 to 61.00 | 11.60
3.24 | (33) | 61.01 to 61.50 | 11.90
3.25 | (34) | 61.51 to 62.00 | 12.20
3.26 | (35) | 62.01 to 62.50 | 12.50
3.27 | (36) | 62.51 to 63.00 | 12.80
3.28 | (37) | 63.01 to 63.50 | 13.10
3.29 | (38) | 63.51 to 64.00 | 13.40
4.1 | (39) | 64.01 to 64.50 | 13.70
4.2 | (40) | 64.51 to 65.00 | 14.00
4.3 | (41) | 65.01 to 65.50 | 14.30
4.4 | (42) | 65.51 to 66.00 | 14.60
4.5 | (43) | 66.01 to 66.50 | 14.90
4.6 | (44) | 66.51 to 67.00 | 15.20
4.7 | (45) | 67.01 to 67.50 | 15.50
4.8 | (46) | 67.51 to 68.00 | 15.80
4.9 | (47) | 68.01 to 68.50 | 16.10
4.10 | (48) | 68.51 to 69.00 | 16.40
4.11 | (49) | 69.01 to 69.50 | 16.70
4.12 | (50) | 69.51 to 70.00 | 17.00
4.13 | (51) | 70.01 to 70.50 | 17.30
4.14 | (52) | 70.51 to 71.00 | 17.60
4.15 | (53) | 71.01 to 71.50 | 17.90
4.16 | (54) | 71.51 to 72.00 | 18.20
4.17 | (55) | 72.01 to 72.50 | 18.50
4.18 | (56) | 72.51 to 73.00 | 18.80
4.19 | (57) | 73.01 to 73.50 | 19.10
4.20 | (58) | 73.51 to 74.00 | 19.40
4.21 | (59) | 74.01 to 74.50 | 19.70
4.22 | (60) | 74.51 to 75.00 | 20.00

4.23 	Sec. 3. Minnesota Statutes 2004, section 119B.13, is amended by adding a subdivision 
4.24 	to read:
4.25 		Subd. 8.Cost of living increase. In addition to the provider rates specified under 
4.26 	this section, the commissioner shall provide a two percent cost of living rate increase to 
4.27 	providers.

4.28 	Sec. 4. Minnesota Statutes 2005 Supplement, section 256D.03, subdivision 3, is 
4.29 	amended to read:
5.1 		Subd. 3.General assistance medical care; eligibility. (a) General assistance 
5.2 	medical care may be paid for any person who is not eligible for medical assistance under 
5.3 	chapter 256B, including eligibility for medical assistance based on a spenddown of excess 
5.4 	income according to section 256B.056, subdivision 5, or MinnesotaCare as defined in 
5.5 	paragraph (b), except as provided in paragraph (c), and:
5.6 	(1) who is receiving assistance under section 256D.05, except for families with 
5.7 	children who are eligible under Minnesota family investment program (MFIP), or who is 
5.8 	having a payment made on the person's behalf under sections 256I.01 to 256I.06; or
5.9 	(2) who is a resident of Minnesota; and
5.10 	(i) who has gross countable income not in excess of 75 percent of the federal poverty 
5.11 	guidelines for the family size, using a six-month budget period and whose equity in assets 
5.12 	is not in excess of $1,000 per assistance unit. Exempt assets, the reduction of excess 
5.13 	assets, and the waiver of excess assets must conform to the medical assistance program in 
5.14 	section 256B.056, subdivision 3, with the following exception: the maximum amount of 
5.15 	undistributed funds in a trust that could be distributed to or on behalf of the beneficiary by 
5.16 	the trustee, assuming the full exercise of the trustee's discretion under the terms of the 
5.17 	trust, must be applied toward the asset maximum;
5.18 	(ii) who has gross countable income above 75 percent of the federal poverty 
5.19 	guidelines but not in excess of 175 percent of the federal poverty guidelines for the 
5.20 	family size, using a six-month budget period, whose equity in assets is not in excess 
5.21 	of the limits in section 256B.056, subdivision 3c, and who applies during an inpatient 
5.22 	hospitalization; or
5.23 	(iii) the commissioner shall adjust the income standards under this section each July 
5.24 	1 by the annual update of the federal poverty guidelines following publication by the 
5.25 	United States Department of Health and Human Services.
5.26 	(b) Effective for applications and renewals processed on or after September 1, 2006, 
5.27 	general assistance medical care may not be paid for applicants or recipients who are adults 
5.28 	with dependent children under 21 whose gross family income is equal to or less than 275 
5.29 	percent of the federal poverty guidelines who are not described in paragraph (e).
5.30 	(c) Effective for applications and renewals processed on or after September 1, 2006, 
5.31 	general assistance medical care may be paid for applicants and recipients who meet all 
5.32 	eligibility requirements of paragraph (a), clause (2), item (i), for a temporary period 
5.33 	beginning the date of application. Immediately following approval of general assistance 
5.34 	medical care, enrollees shall be enrolled in MinnesotaCare under section 256L.04, 
5.35 	subdivision 7, with covered services as provided in section 256L.03 for the rest of the 
5.36 	six-month eligibility period, until their six-month renewal.
6.1 	(d) To be eligible for general assistance medical care following enrollment in 
6.2 	MinnesotaCare as required by paragraph (c), an individual must complete a new 
6.3 	application.
6.4 	(e) Applicants and recipients eligible under paragraph (a), clause (1), or who have 
6.5 	applied for and are awaiting a determination of blindness or disability by the state medical 
6.6 	review team or a determination of eligibility for Supplemental Security Income or Social 
6.7 	Security Disability Insurance by the Social Security Administration, or who fail to meet 
6.8 	the requirements of section 256L.09, subdivision 2, are exempt from the MinnesotaCare 
6.9 	enrollment requirements of this subdivision.
6.10 	(f) For applications received on or after October 1, 2003, eligibility may begin no 
6.11 	earlier than the date of application. For individuals eligible under paragraph (a), clause 
6.12 	(2), item (i), a redetermination of eligibility must occur every 12 months. Individuals are 
6.13 	eligible under paragraph (a), clause (2), item (ii), only during inpatient hospitalization but 
6.14 	may reapply if there is a subsequent period of inpatient hospitalization.
6.15 	(g) Beginning September 1, 2006, Minnesota health care program applications and 
6.16 	renewals completed by recipients and applicants who are persons described in paragraph 
6.17 	(c) and submitted to the county agency shall be determined for MinnesotaCare eligibility 
6.18 	by the county agency. If all other eligibility requirements of this subdivision are met, 
6.19 	eligibility for general assistance medical care shall be available in any month during which 
6.20 	MinnesotaCare enrollment is pending. Upon notification of eligibility for MinnesotaCare, 
6.21 	notice of termination for eligibility for general assistance medical care shall be sent to 
6.22 	an applicant or recipient. If all other eligibility requirements of this subdivision are 
6.23 	met, eligibility for general assistance medical care shall be available until enrollment in 
6.24 	MinnesotaCare subject to the provisions of paragraphs (c), (e), and (f).
6.25 	(h) The date of an initial Minnesota health care program application necessary to 
6.26 	begin a determination of eligibility shall be the date the applicant has provided a name, 
6.27 	address, and Social Security number, signed and dated, to the county agency or the 
6.28 	Department of Human Services. If the applicant is unable to provide a name, address, 
6.29 	Social Security number, and signature when health care is delivered due to a medical 
6.30 	condition or disability, a health care provider may act on an applicant's behalf to establish 
6.31 	the date of an initial Minnesota health care program application by providing the county 
6.32 	agency or Department of Human Services with provider identification and a temporary 
6.33 	unique identifier for the applicant. The applicant must complete the remainder of the 
6.34 	application and provide necessary verification before eligibility can be determined. The 
6.35 	county agency must assist the applicant in obtaining verification if necessary.
7.1 	(i) County agencies are authorized to use all automated databases containing 
7.2 	information regarding recipients' or applicants' income in order to determine eligibility 
7.3 	for general assistance medical care or MinnesotaCare. Such use shall be considered 
7.4 	sufficient in order to determine eligibility and premium payments by the county agency.
7.5 	(j) General assistance medical care is not available for a person in a correctional 
7.6 	facility unless the person is detained by law for less than one year in a county correctional 
7.7 	or detention facility as a person accused or convicted of a crime, or admitted as an 
7.8 	inpatient to a hospital on a criminal hold order, and the person is a recipient of general 
7.9 	assistance medical care at the time the person is detained by law or admitted on a criminal 
7.10 	hold order and as long as the person continues to meet other eligibility requirements 
7.11 	of this subdivision.
7.12 	(k) General assistance medical care is not available for applicants or recipients who 
7.13 	do not cooperate with the county agency to meet the requirements of medical assistance.
7.14 	(l) In determining the amount of assets of an individual eligible under paragraph 
7.15 	(a), clause (2), item (i), there shall be included any asset or interest in an asset, including 
7.16 	an asset excluded under paragraph (a), that was given away, sold, or disposed of for 
7.17 	less than fair market value within the 60 months preceding application for general 
7.18 	assistance medical care or during the period of eligibility. Any transfer described in this 
7.19 	paragraph shall be presumed to have been for the purpose of establishing eligibility for 
7.20 	general assistance medical care, unless the individual furnishes convincing evidence to 
7.21 	establish that the transaction was exclusively for another purpose. For purposes of this 
7.22 	paragraph, the value of the asset or interest shall be the fair market value at the time it 
7.23 	was given away, sold, or disposed of, less the amount of compensation received. For any 
7.24 	uncompensated transfer, the number of months of ineligibility, including partial months, 
7.25 	shall be calculated by dividing the uncompensated transfer amount by the average monthly 
7.26 	per person payment made by the medical assistance program to skilled nursing facilities 
7.27 	for the previous calendar year. The individual shall remain ineligible until this fixed period 
7.28 	has expired. The period of ineligibility may exceed 30 months, and a reapplication for 
7.29 	benefits after 30 months from the date of the transfer shall not result in eligibility unless 
7.30 	and until the period of ineligibility has expired. The period of ineligibility begins in the 
7.31 	month the transfer was reported to the county agency, or if the transfer was not reported, 
7.32 	the month in which the county agency discovered the transfer, whichever comes first. For 
7.33 	applicants, the period of ineligibility begins on the date of the first approved application.
7.34 	(m) When determining eligibility for any state benefits under this subdivision, 
7.35 	the income and resources of all noncitizens shall be deemed to include their sponsor's 
7.36 	income and resources as defined in the Personal Responsibility and Work Opportunity 
8.1 	Reconciliation Act of 1996, title IV, Public Law 104-193, sections 421 and 422, and 
8.2 	subsequently set out in federal rules.
8.3 	(n) (1) An undocumented ~~noncitizens and nonimmigrants are~~ noncitizen or a 
8.4 	nonimmigrant is  ineligible for general assistance medical care other than emergency 
8.5 	services. For purposes of this subdivision, a nonimmigrant is an individual in one or 
8.6 	more of the classes listed in United States Code, title 8, section 1101(a)(15), and an 
8.7 	undocumented noncitizen is an individual who resides in the United States without the 
8.8 	approval or acquiescence of the Immigration and Naturalization Service.
8.9 	(2) This paragraph does not apply to a child under age 18; to a Cuban or Haitian 
8.10 	entrant as defined in Public Law 96-422, section 501(e)(1) or (2)(a); or to a noncitizen 
8.11 	who is aged, blind, or disabled as defined in Code of Federal Regulations, title 42, 
8.12 	sections 435.520, 435.530, 435.531, 435.540, and 435.541, who cooperates with United 
8.13 	States Citizenship and Immigration Services to pursue any applicable immigration status, 
8.14 	including citizenship, that would qualify the individual for medical assistance with federal 
8.15 	financial participation. 
8.16 	(3) For purposes of this paragraph, "emergency services" has the meaning given in 
8.17 	Code of Federal Regulations, title 42, section 440.255(b)(1), except that it also means 
8.18 	services rendered because of suspected or actual pesticide poisoning. 
8.19 	(o) Notwithstanding any other provision of law, a noncitizen who is ineligible for 
8.20 	medical assistance due to the deeming of a sponsor's income and resources, is ineligible 
8.21 	for general assistance medical care.
8.22 	~~(p) Effective July 1, 2003, general assistance medical care emergency services end.~~

8.23 	Sec. 5. Minnesota Statutes 2005 Supplement, section 256D.03, subdivision 4, is 
8.24 	amended to read:
8.25 		Subd. 4.General assistance medical care; services. (a)(i) For a person who is 
8.26 	eligible under subdivision 3, paragraph (a), clause (2), item (i), general assistance medical 
8.27 	care covers, except as provided in paragraph (c):
8.28 	(1) inpatient hospital services;
8.29 	(2) outpatient hospital services;
8.30 	(3) services provided by Medicare certified rehabilitation agencies;
8.31 	(4) prescription drugs and other products recommended through the process 
8.32 	established in section 256B.0625, subdivision 13;
8.33 	(5) equipment necessary to administer insulin and diagnostic supplies and equipment 
8.34 	for diabetics to monitor blood sugar level;
8.35 	(6) eyeglasses and eye examinations provided by a physician or optometrist;
9.1 	(7) hearing aids;
9.2 	(8) prosthetic devices;
9.3 	(9) laboratory and X-ray services;
9.4 	(10) physician's services;
9.5 	(11) medical transportation except special transportation;
9.6 	(12) chiropractic services as covered under the medical assistance program;
9.7 	(13) podiatric services;
9.8 	(14) dental services as covered under the medical assistance program;
9.9 	(15) outpatient services provided by a mental health center or clinic that is under 
9.10 	contract with the county board and is established under section 245.62;
9.11 	(16) day treatment services for mental illness provided under contract with the 
9.12 	county board;
9.13 	(17) prescribed medications for persons who have been diagnosed as mentally ill as 
9.14 	necessary to prevent more restrictive institutionalization;
9.15 	(18) psychological services, medical supplies and equipment, and Medicare 
9.16 	premiums, coinsurance and deductible payments;
9.17 	(19) medical equipment not specifically listed in this paragraph when the use of 
9.18 	the equipment will prevent the need for costlier services that are reimbursable under 
9.19 	this subdivision;
9.20 	(20) services performed by a certified pediatric nurse practitioner, a certified family 
9.21 	nurse practitioner, a certified adult nurse practitioner, a certified obstetric/gynecological 
9.22 	nurse practitioner, a certified neonatal nurse practitioner, or a certified geriatric nurse 
9.23 	practitioner in independent practice, if (1) the service is otherwise covered under this 
9.24 	chapter as a physician service, (2) the service provided on an inpatient basis is not included 
9.25 	as part of the cost for inpatient services included in the operating payment rate, and (3) the 
9.26 	service is within the scope of practice of the nurse practitioner's license as a registered 
9.27 	nurse, as defined in section 148.171;
9.28 	(21) services of a certified public health nurse or a registered nurse practicing in 
9.29 	a public health nursing clinic that is a department of, or that operates under the direct 
9.30 	authority of, a unit of government, if the service is within the scope of practice of the 
9.31 	public health nurse's license as a registered nurse, as defined in section 148.171;
9.32 	(22) telemedicine consultations, to the extent they are covered under section 
9.33 	256B.0625, subdivision 3b; and
9.34 	(23) mental health telemedicine and psychiatric consultation as covered under 
9.35 	section 256B.0625, subdivisions 46 and 48.
10.1 	(ii) Effective October 1, 2003, for a person who is eligible under subdivision 3, 
10.2 	paragraph (a), clause (2), item (ii), general assistance medical care coverage is limited 
10.3 	to inpatient hospital services, including physician services provided during the inpatient 
10.4 	hospital stay. A $1,000 deductible is required for each inpatient hospitalization.
10.5 	(b) Effective August 1, 2005, sex reassignment surgery is not covered under this 
10.6 	subdivision.
10.7 	(c) In order to contain costs, the commissioner of human services shall select 
10.8 	vendors of medical care who can provide the most economical care consistent with high 
10.9 	medical standards and shall where possible contract with organizations on a prepaid 
10.10 	capitation basis to provide these services. The commissioner shall consider proposals by 
10.11 	counties and vendors for prepaid health plans, competitive bidding programs, block grants, 
10.12 	or other vendor payment mechanisms designed to provide services in an economical 
10.13 	manner or to control utilization, with safeguards to ensure that necessary services are 
10.14 	provided. Before implementing prepaid programs in counties with a county operated or 
10.15 	affiliated public teaching hospital or a hospital or clinic operated by the University of 
10.16 	Minnesota, the commissioner shall consider the risks the prepaid program creates for the 
10.17 	hospital and allow the county or hospital the opportunity to participate in the program in a 
10.18 	manner that reflects the risk of adverse selection and the nature of the patients served by 
10.19 	the hospital, provided the terms of participation in the program are competitive with the 
10.20 	terms of other participants considering the nature of the population served. Payment for 
10.21 	services provided pursuant to this subdivision shall be as provided to medical assistance 
10.22 	vendors of these services under sections 256B.02, subdivision 8, and 256B.0625. For 
10.23 	payments made during fiscal year 1990 and later years, the commissioner shall consult 
10.24 	with an independent actuary in establishing prepayment rates, but shall retain final control 
10.25 	over the rate methodology.
10.26 	~~(d) Recipients eligible under subdivision 3, paragraph (a), shall pay the following~~ 
10.27 	~~co-payments for services provided on or after October 1, 2003:~~
10.28 	~~(1) $25 for eyeglasses;~~
10.29 	~~(2) $25 for nonemergency visits to a hospital-based emergency room;~~
10.30 	~~(3) $3 per brand-name drug prescription and $1 per generic drug prescription,~~ 
10.31 	~~subject to a $12 per month maximum for prescription drug co-payments. No co-payments~~ 
10.32 	~~shall apply to antipsychotic drugs when used for the treatment of mental illness; and~~
10.33 	~~(4) 50 percent coinsurance on restorative dental services.~~
10.34 	~~(e) Co-payments shall be limited to one per day per provider for nonpreventive visits,~~ 
10.35 	~~eyeglasses, and nonemergency visits to a hospital-based emergency room. Recipients of~~ 
10.36 	~~general assistance medical care are responsible for all co-payments in this subdivision.~~ 
11.1 	~~The general assistance medical care reimbursement to the provider shall be reduced by~~ 
11.2 	~~the amount of the co-payment, except that reimbursement for prescription drugs shall not~~ 
11.3 	~~be reduced once a recipient has reached the $12 per month maximum for prescription~~ 
11.4 	~~drug co-payments. The provider collects the co-payment from the recipient. Providers~~ 
11.5 	~~may not deny services to recipients who are unable to pay the co-payment, except as~~ 
11.6 	~~provided in paragraph (f).~~
11.7 	~~(f) If it is the routine business practice of a provider to refuse service to an individual~~ 
11.8 	~~with uncollected debt, the provider may include uncollected co-payments under this~~ 
11.9 	~~section. A provider must give advance notice to a recipient with uncollected debt before~~ 
11.10 	~~services can be denied.~~
11.11 	~~(g)~~  (d) Any county may, from its own resources, provide medical payments for 
11.12 	which state payments are not made.
11.13 	~~(h)~~(e) Chemical dependency services that are reimbursed under chapter 254B must 
11.14 	not be reimbursed under general assistance medical care.
11.15 	~~(i)~~(f) The maximum payment for new vendors enrolled in the general assistance 
11.16 	medical care program after the base year shall be determined from the average usual and 
11.17 	customary charge of the same vendor type enrolled in the base year.
11.18 	~~(j)~~(g) The conditions of payment for services under this subdivision are the same 
11.19 	as the conditions specified in rules adopted under chapter 256B governing the medical 
11.20 	assistance program, unless otherwise provided by statute or rule.
11.21 	~~(k)~~(h) Inpatient and outpatient payments shall be reduced by five percent, effective 
11.22 	July 1, 2003. This reduction is in addition to the five percent reduction effective July 1, 
11.23 	2003, and incorporated by reference in paragraph ~~(i)~~ (f).
11.24 	~~(l)~~ (i) Payments for all other health services except inpatient, outpatient, and 
11.25 	pharmacy services shall be reduced by five percent, effective July 1, 2003.
11.26 	~~(m)~~ (j) Payments to managed care plans shall be reduced by five percent for services 
11.27 	provided on or after October 1, 2003.
11.28 	~~(n)~~ (k) A hospital receiving a reduced payment as a result of this section may apply 
11.29 	the unpaid balance toward satisfaction of the hospital's bad debts.
11.30 	~~(o) Fee-for-service payments for nonpreventive visits shall be reduced by $3~~ 
11.31 	~~for services provided on or after January 1, 2006. For purposes of this subdivision, a~~ 
11.32 	~~visit means an episode of service which is required because of a recipient's symptoms,~~ 
11.33 	~~diagnosis, or established illness, and which is delivered in an ambulatory setting by~~ 
11.34 	~~a physician or physician ancillary, chiropractor, podiatrist, advance practice nurse,~~ 
11.35 	~~audiologist, optician, or optometrist.~~
12.1 	~~(p) Payments to managed care plans shall not be increased as a result of the removal~~ 
12.2 	~~of the $3 nonpreventive visit co-payment effective January 1, 2006.~~

12.3 	Sec. 6. Minnesota Statutes 2005 Supplement, section 256J.21, subdivision 2, is 
12.4 	amended to read:
12.5 		Subd. 2.Income exclusions. The following must be excluded in determining a 
12.6 	family's available income:
12.7 	(1) payments for basic care, difficulty of care, and clothing allowances received for 
12.8 	providing family foster care to children or adults under Minnesota Rules, parts 9555.5050 
12.9 	to 9555.6265, 9560.0521, and 9560.0650 to 9560.0655, and payments received and used 
12.10 	for care and maintenance of a third-party beneficiary who is not a household member;
12.11 	(2) reimbursements for employment training received through the Workforce 
12.12 	Investment Act of 1998, United States Code, title 20, chapter 73, section 9201;
12.13 	(3) reimbursement for out-of-pocket expenses incurred while performing volunteer 
12.14 	services, jury duty, employment, or informal carpooling arrangements directly related to 
12.15 	employment;
12.16 	(4) all educational assistance, except the county agency must count graduate student 
12.17 	teaching assistantships, fellowships, and other similar paid work as earned income and, 
12.18 	after allowing deductions for any unmet and necessary educational expenses, shall 
12.19 	count scholarships or grants awarded to graduate students that do not require teaching 
12.20 	or research as unearned income;
12.21 	(5) loans, regardless of purpose, from public or private lending institutions, 
12.22 	governmental lending institutions, or governmental agencies;
12.23 	(6) loans from private individuals, regardless of purpose, provided an applicant or 
12.24 	participant documents that the lender expects repayment;
12.25 	(7)(i) state income tax refunds; and
12.26 	(ii) federal income tax refunds;
12.27 	(8)(i) federal earned income credits;
12.28 	(ii) Minnesota working family credits;
12.29 	(iii) state homeowners and renters credits under chapter 290A; and
12.30 	(iv) federal or state tax rebates;
12.31 	(9) funds received for reimbursement, replacement, or rebate of personal or real 
12.32 	property when these payments are made by public agencies, awarded by a court, solicited 
12.33 	through public appeal, or made as a grant by a federal agency, state or local government, 
12.34 	or disaster assistance organizations, subsequent to a presidential declaration of disaster;
13.1 	(10) the portion of an insurance settlement that is used to pay medical, funeral, and 
13.2 	burial expenses, or to repair or replace insured property;
13.3 	(11) reimbursements for medical expenses that cannot be paid by medical assistance;
13.4 	(12) payments by a vocational rehabilitation program administered by the state 
13.5 	under chapter 268A, except those payments that are for current living expenses;
13.6 	(13) in-kind income, including any payments directly made by a third party to a 
13.7 	provider of goods and services;
13.8 	(14) assistance payments to correct underpayments, but only for the month in which 
13.9 	the payment is received;
13.10 	(15) payments for short-term emergency needs under section 256J.626, subdivision 
13.11 	2;
13.12 	(16) funeral and cemetery payments as provided by section 256.935;
13.13 	(17) nonrecurring cash gifts of $30 or less, not exceeding $30 per participant in 
13.14 	a calendar month;
13.15 	(18) any form of energy assistance payment made through Public Law 97-35, 
13.16 	Low-Income Home Energy Assistance Act of 1981, payments made directly to energy 
13.17 	providers by other public and private agencies, and any form of credit or rebate payment 
13.18 	issued by energy providers;
13.19 	(19) Supplemental Security Income (SSI), including retroactive SSI payments and 
13.20 	other income of an SSI recipient~~, except as described in section 256J.37, subdivision 3b~~;
13.21 	(20) Minnesota supplemental aid, including retroactive payments;
13.22 	(21) proceeds from the sale of real or personal property;
13.23 	(22) state adoption assistance payments under section 259.67, and up to an equal 
13.24 	amount of county adoption assistance payments;
13.25 	(23) state-funded family subsidy program payments made under section 252.32 to 
13.26 	help families care for children with mental retardation or related conditions, consumer 
13.27 	support grant funds under section 256.476, and resources and services for a disabled 
13.28 	household member under one of the home and community-based waiver services 
13.29 	programs under chapter 256B;
13.30 	(24) interest payments and dividends from property that is not excluded from and 
13.31 	that does not exceed the asset limit;
13.32 	(25) rent rebates;
13.33 	(26) income earned by a minor caregiver, minor child through age 6, or a minor 
13.34 	child who is at least a half-time student in an approved elementary or secondary education 
13.35 	program;
14.1 	(27) income earned by a caregiver under age 20 who is at least a half-time student in 
14.2 	an approved elementary or secondary education program;
14.3 	(28) MFIP child care payments under section 119B.05;
14.4 	(29) all other payments made through MFIP to support a caregiver's pursuit of 
14.5 	greater economic stability;
14.6 	(30) income a participant receives related to shared living expenses;
14.7 	(31) reverse mortgages;
14.8 	(32) benefits provided by the Child Nutrition Act of 1966, United States Code, title 
14.9 	42, chapter 13A, sections 1771 to 1790;
14.10 	(33) benefits provided by the women, infants, and children (WIC) nutrition program, 
14.11 	United States Code, title 42, chapter 13A, section 1786;
14.12 	(34) benefits from the National School Lunch Act, United States Code, title 42, 
14.13 	chapter 13, sections 1751 to 1769e;
14.14 	(35) relocation assistance for displaced persons under the Uniform Relocation 
14.15 	Assistance and Real Property Acquisition Policies Act of 1970, United States Code, title 
14.16 	42, chapter 61, subchapter II, section 4636, or the National Housing Act, United States 
14.17 	Code, title 12, chapter 13, sections 1701 to 1750jj;
14.18 	(36) benefits from the Trade Act of 1974, United States Code, title 19, chapter 
14.19 	12, part 2, sections 2271 to 2322;
14.20 	(37) war reparations payments to Japanese Americans and Aleuts under United 
14.21 	States Code, title 50, sections 1989 to 1989d;
14.22 	(38) payments to veterans or their dependents as a result of legal settlements 
14.23 	regarding Agent Orange or other chemical exposure under Public Law 101-239, section 
14.24 	10405, paragraph (a)(2)(E);
14.25 	(39) income that is otherwise specifically excluded from MFIP consideration in 
14.26 	federal law, state law, or federal regulation;
14.27 	(40) security and utility deposit refunds;
14.28 	(41) American Indian tribal land settlements excluded under Public Laws 98-123, 
14.29 	98-124, and 99-377 to the Mississippi Band Chippewa Indians of White Earth, Leech 
14.30 	Lake, and Mille Lacs reservations and payments to members of the White Earth Band, 
14.31 	under United States Code, title 25, chapter 9, section 331, and chapter 16, section 1407;
14.32 	(42) all income of the minor parent's parents and stepparents when determining the 
14.33 	grant for the minor parent in households that include a minor parent living with parents or 
14.34 	stepparents on MFIP with other children;
14.35 	(43) income of the minor parent's parents and stepparents equal to 200 percent of the 
14.36 	federal poverty guideline for a family size not including the minor parent and the minor 
15.1 	parent's child in households that include a minor parent living with parents or stepparents 
15.2 	not on MFIP when determining the grant for the minor parent. The remainder of income is 
15.3 	deemed as specified in section 256J.37, subdivision 1b;
15.4 	(44) payments made to children eligible for relative custody assistance under section 
15.5 	257.85;
15.6 	(45) vendor payments for goods and services made on behalf of a client unless the 
15.7 	client has the option of receiving the payment in cash; and
15.8 	(46) the principal portion of a contract for deed payment.

15.9 	Sec. 7. Minnesota Statutes 2004, section 256J.24, is amended by adding a subdivision 
15.10 	to read:
15.11 		Subd. 5b.Cost of living increase. The commissioner shall provide a ten percent 
15.12 	cost of living increase to the cash portion of the transitional standard.

15.13 	Sec. 8.  REPEALER.
 15.14 	(a) Minnesota Statutes 2004, sections 256B.0631, subdivisions 2 and 4; 256J.37, 
15.15 	subdivision 3a; and 256L.04, subdivision 10, are repealed.
15.16 	(b) Minnesota Statutes 2005 Supplement, sections 256B.0631, subdivisions 1 and 3; 
15.17 	and 256J.37, subdivision 3b, are repealed.
15.18 	(c) Laws 2005, First Special Session chapter 4, article 3, section 19, is repealed.

15.19 	ARTICLE 2
15.20 	TAX ARTICLE

15.21 	Section 1. Minnesota Statutes 2005 Supplement, section 289A.38, subdivision 6, 
15.22 	is amended to read:
15.23 		Subd. 6.Omission in excess of 25 percent. Additional taxes may be assessed 
15.24 	within 6-1/2 years after the due date of the return or the date the return was filed, 
15.25 	whichever is later, if:
15.26 	(1) the taxpayer omits from ~~gross~~taxable income an amount properly includable 
15.27 	in it that is in excess of 25 percent of the amount of ~~gross~~taxable income ~~stated in the~~ 
15.28 	~~return~~ that would have been reported but for the omission;
15.29 	(2) the taxpayer omits from a sales, use, or withholding tax return an amount of taxes 
15.30 	in excess of 25 percent of the taxes reported in the return; or
15.31 	(3) the taxpayer omits from the gross estate assets in excess of 25 percent of the 
15.32 	gross estate reported in the return.

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

16.2 	Sec. 2. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 6b, is 
16.3 	amended to read:
16.4 		Subd. 6b.Foreign operating corporation. The term "foreign operating 
16.5 	corporation," when applied to a corporation, means a domestic corporation with the 
16.6 	following characteristics:
16.7 	(1) it is part of a unitary business at least one member of which is taxable in this state;
16.8 	(2) it is not a foreign sales corporation under section 922 of the Internal Revenue 
16.9 	Code, as amended through December 31, 1999, for the taxable year;
16.10 	(3) either (i) ~~the average of the percentages of its property and payrolls, including~~ 
16.11 	~~the pro rata share of its unitary partnerships' property and payrolls, assigned to locations~~ 
16.12 	~~outside the United States, where the United States includes the District of Columbia and~~ 
16.13 	~~excludes the commonwealth of Puerto Rico and possessions of the United States, as~~ 
16.14 	~~determined under section 290.191 or 290.20, is 80 percent or more; or (ii)~~ it has in effect a 
16.15 	valid election under section 936 of the Internal Revenue Code; or (ii) at least 80 percent 
16.16 	of the gross income from all sources of the corporation in the tax year is active foreign 
16.17 	business income; and
16.18 	(4) ~~it has $1,000,000 of payroll and $2,000,000 of property, as determined under~~ 
16.19 	~~section 290.191 or 290.20, that are located outside the United States. If the domestic~~ 
16.20 	~~corporation does not have payroll as determined under section 290.191 or 290.20, but it~~ 
16.21 	~~or its partnerships have paid $1,000,000 for work, performed directly for the domestic~~ 
16.22 	~~corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not~~ 
16.23 	~~require payrolls to be included in the average calculation~~ for purposes of this subdivision, 
16.24 	active foreign business income means gross income that is (i) derived from sources 
16.25 	without the United States, as defined in subtitle A, chapter 1, subchapter N, part 1, of the 
16.26 	Internal Revenue Code; and (ii) attributable to the active conduct of a trade or business in 
16.27 	a foreign country.

16.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
16.29 	December 31, 2005.

16.30 	Sec. 3. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19c, is 
16.31 	amended to read:
16.32 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
16.33 	there shall be added to federal taxable income:
17.1 	(1) the amount of any deduction taken for federal income tax purposes for income, 
17.2 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
17.3 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
17.4 	another state, a political subdivision of another state, the District of Columbia, or any 
17.5 	foreign country or possession of the United States;
17.6 	(2) interest not subject to federal tax upon obligations of: the United States, its 
17.7 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
17.8 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
17.9 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
17.10 	tribal governments;
17.11 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
17.12 	Revenue Code;
17.13 	(4) the amount of any net operating loss deduction taken for federal income tax 
17.14 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
17.15 	deduction under section 810 of the Internal Revenue Code;
17.16 	(5) the amount of any special deductions taken for federal income tax purposes 
17.17 	under sections 241 to 247 of the Internal Revenue Code;
17.18 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
17.19 	clause (a), that are not subject to Minnesota income tax;
17.20 	(7) the amount of any capital losses deducted for federal income tax purposes under 
17.21 	sections 1211 and 1212 of the Internal Revenue Code;
17.22 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
17.23 	921(a) and 291 of the Internal Revenue Code;
17.24 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
17.25 	291 of the Internal Revenue Code;
17.26 	(10) for certified pollution control facilities placed in service in a taxable year 
17.27 	beginning before December 31, 1986, and for which amortization deductions were elected 
17.28 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
17.29 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
17.30 	income for those facilities;
17.31 	(11) the amount of any deemed dividend from a foreign operating corporation 
17.32 	determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend 
17.33 	shall be reduced by the amount of the addition to income required by clauses (19), (20), 
17.34 	(21), and (22);
18.1 	(12) the amount of a partner's pro rata share of net income which does not flow 
18.2 	through to the partner because the partnership elected to pay the tax on the income under 
18.3 	section 6242(a)(2) of the Internal Revenue Code;
18.4 	(13) the amount of net income excluded under section 114 of the Internal Revenue 
18.5 	Code;
18.6 	(14) any increase in subpart F income, as defined in section 952(a) of the Internal 
18.7 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
18.8 	to the provisions of section 614 of Public Law 107-147;
18.9 	(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
18.10 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
18.11 	has an activity that in the taxable year generates a deduction for depreciation under 
18.12 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
18.13 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
18.14 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
18.15 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
18.16 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
18.17 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
18.18 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
18.19 	(16) 80 percent of the amount by which the deduction allowed by section 179 of the 
18.20 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
18.21 	Revenue Code of 1986, as amended through December 31, 2003;
18.22 	(17) to the extent deducted in computing federal taxable income, the amount of the 
18.23 	deduction allowable under section 199 of the Internal Revenue Code; ~~and~~
18.24 	(18) the exclusion allowed under section 139A of the Internal Revenue Code for 
18.25 	federal subsidies for prescription drug plans~~.~~;
18.26 	(19) an amount equal to the interest and intangible expenses, losses, and costs paid, 
18.27 	accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 
18.28 	of a corporation that is a member of the taxpayer's unitary business group that qualifies 
18.29 	as a foreign operating corporation. For purposes of this clause, intangible expenses and 
18.30 	costs include:
18.31 	(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 
18.32 	use, maintenance or management, ownership, sale, exchange, or any other disposition of 
18.33 	intangible property;
18.34 	(ii) losses incurred, directly or indirectly, from factoring transactions or discounting 
18.35 	transactions;
18.36 	(iii) royalty, patent, technical, and copyright fees;
19.1 	(iv) licensing fees; and
19.2 	(v) other similar expenses and costs.
19.3 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
19.4 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
19.5 	secrets, and similar types of intangible assets.
19.6 	This clause does not apply to any item of interest or intangible expenses or costs paid, 
19.7 	accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 
19.8 	to such item of income to the extent that the income to the foreign operating corporation 
19.9 	is income from sources without the United States as defined in subtitle A, chapter 1, 
19.10 	subchapter N, part 1, of the Internal Revenue Code;
19.11 	(20) except as already included in the taxpayer's taxable income pursuant to clause 
19.12 	(19), any interest income and income generated from intangible property received or 
19.13 	accrued by a foreign operating corporation that is a member of the taxpayer's unitary 
19.14 	group. For purposes of this clause, income generated from intangible property includes:
19.15 	(i) income related to the direct or indirect acquisition, use, maintenance or 
19.16 	management, ownership, sale, exchange, or any other disposition of intangible property;
19.17 	(ii) income from factoring transactions or discounting transactions;
19.18 	(iii) royalty, patent, technical, and copyright fees;
19.19 	(iv) licensing fees; and
19.20 	(v) other similar income.
19.21 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
19.22 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
19.23 	secrets, and similar types of intangible assets. 
19.24 	This clause does not apply to any item of interest or intangible income received or accrued 
19.25 	by a foreign operating corporation with respect to such item of income to the extent that 
19.26 	the income is income from sources without the United States as defined in subtitle A, 
19.27 	chapter 1, subchapter N, part 1, of the Internal Revenue Code;
19.28 	(21) the dividends attributable to the income of a foreign operating corporation that 
19.29 	is a member of the taxpayer's unitary group in an amount that is equal to the dividends 
19.30 	paid deduction of a real estate investment trust under section 561(a) of the Internal 
19.31 	Revenue Code for amounts paid or accrued by the real estate investment trust to the 
19.32 	foreign operating corporation; and
19.33 	(22) the income of a foreign operating corporation that is a member of the taxpayer's 
19.34 	unitary group in an amount that is equal to gains derived from the sale of real or personal 
19.35 	property located in the United States.

20.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
20.2 	December 31, 2005.

20.3 	Sec. 4. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19d, is 
20.4 	amended to read:
20.5 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
20.6 	corporations, there shall be subtracted from federal taxable income after the increases 
20.7 	provided in subdivision 19c:
20.8 	(1) the amount of foreign dividend gross-up added to gross income for federal 
20.9 	income tax purposes under section 78 of the Internal Revenue Code;
20.10 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
20.11 	claiming the federal jobs credit under section 51 of the Internal Revenue Code;
20.12 	(3) any dividend (not including any distribution in liquidation) paid within the 
20.13 	taxable year by a national or state bank to the United States, or to any instrumentality of 
20.14 	the United States exempt from federal income taxes, on the preferred stock of the bank 
20.15 	owned by the United States or the instrumentality;
20.16 	(4) amounts disallowed for intangible drilling costs due to differences between 
20.17 	this chapter and the Internal Revenue Code in taxable years beginning before January 
20.18 	1, 1987, as follows:
20.19 	(i) to the extent the disallowed costs are represented by physical property, an amount 
20.20 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
20.21 	subdivision 7, subject to the modifications contained in subdivision 19e; and
20.22 	(ii) to the extent the disallowed costs are not represented by physical property, an 
20.23 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
20.24 	290.09, subdivision 8;
20.25 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
20.26 	Internal Revenue Code, except that:
20.27 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
20.28 	capital loss carrybacks shall not be allowed;
20.29 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
20.30 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
20.31 	allowed;
20.32 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
20.33 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
20.34 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
21.1 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
21.2 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
21.3 	extent such loss was not used in a prior taxable year and subject to the provisions of 
21.4 	Minnesota Statutes 1986, section 290.16, shall be allowed;
21.5 	(6) an amount for interest and expenses relating to income not taxable for federal 
21.6 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
21.7 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
21.8 	291 of the Internal Revenue Code in computing federal taxable income;
21.9 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
21.10 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a 
21.11 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
21.12 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
21.13 	by the commissioner. In the case of property held in trust, the allowable deduction must 
21.14 	be apportioned between the income beneficiaries and the trustee in accordance with the 
21.15 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
21.16 	of the trust's income allocable to each;
21.17 	(8) for certified pollution control facilities placed in service in a taxable year 
21.18 	beginning before December 31, 1986, and for which amortization deductions were elected 
21.19 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
21.20 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
21.21 	1986, section 290.09, subdivision 7;
21.22 	(9) amounts included in federal taxable income that are due to refunds of income, 
21.23 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
21.24 	corporation to Minnesota, another state, a political subdivision of another state, the 
21.25 	District of Columbia, or a foreign country or possession of the United States to the extent 
21.26 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
21.27 	clause (1), in a prior taxable year;
21.28 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
21.29 	foreign operating corporation or a foreign corporation which is part of the same unitary 
21.30 	business as the receiving corporation, unless the income resulting from such payments or 
21.31 	accruals is income from sources within the United States as defined in subtitle A, chapter 
21.32 	1, subchapter N, part 1, of the Internal Revenue Code;
21.33 	(11) income or gains from the business of mining as defined in section 290.05, 
21.34 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
21.35 	(12) the amount of handicap access expenditures in the taxable year which are not 
21.36 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
22.1 	(13) the amount of qualified research expenses not allowed for federal income tax 
22.2 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
22.3 	the amount exceeds the amount of the credit allowed under section 290.068;
22.4 	(14) the amount of salary expenses not allowed for federal income tax purposes due 
22.5 	to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
22.6 	Code;
22.7 	(15) the amount of any refund of environmental taxes paid under section 59A of the 
22.8 	Internal Revenue Code;
22.9 	(16) for taxable years beginning before January 1, 2008, the amount of the federal 
22.10 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
22.11 	which is included in gross income under section 87 of the Internal Revenue Code;
22.12 	(17) for a corporation whose foreign sales corporation, as defined in section 922 
22.13 	of the Internal Revenue Code, constituted a foreign operating corporation during any 
22.14 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
22.15 	claiming the deduction under section 290.21, subdivision 4, for income received from 
22.16 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
22.17 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
22.18 	not income of a foreign operating company;
22.19 	(18) any decrease in subpart F income, as defined in section 952(a) of the Internal 
22.20 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
22.21 	to the provisions of section 614 of Public Law 107-147;
22.22 	(19) in each of the five tax years immediately following the tax year in which an 
22.23 	addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of 
22.24 	the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
22.25 	amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 
22.26 	resulting delayed depreciation cannot be less than zero; and
22.27 	(20) in each of the five tax years immediately following the tax year in which an 
22.28 	addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the 
22.29 	amount of the addition.

22.30 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
22.31 	December 31, 2005.

22.32 	Sec. 5. Minnesota Statutes 2004, section 290.34, subdivision 1, is amended to read:
22.33 		Subdivision 1.Business conducted in such a way as to create losses or improper 
22.34 	taxable net income. (a) When any corporation liable to taxation under this chapter 
22.35 	conducts its business in such a manner as, directly or indirectly, to benefit its members 
23.1 	or stockholders or any person or corporation interested in such business or to reduce the 
23.2 	income attributable to this state by selling the commodities or services in which it deals 
23.3 	at less than the fair price which might be obtained therefor, or buying such commodities 
23.4 	or services at more than the fair price for which they might have been obtained, or when 
23.5 	any corporation, a substantial portion of whose shares is owned directly or indirectly by 
23.6 	another corporation, deals in the commodities or services of the latter corporation in such 
23.7 	a manner as to create a loss or improper net income or to reduce the taxable net income 
23.8 	attributable to this state, the commissioner of revenue may determine the amount of its 
23.9 	income so as to reflect what would have been its reasonable taxable net income but for the 
23.10 	arrangements causing the understatement of its taxable net income or the overstatement of 
23.11 	its losses, having regard to the fair profits which, but for any agreement, arrangement, or 
23.12 	understanding, might have been or could have been obtained from such business.
23.13 	(b) When any corporation engages in a transaction or series of transactions whose 
23.14 	primary business purpose is the avoidance of tax, or engages in a transaction or series of 
23.15 	transactions without economic substance, that transaction or series of transactions shall be 
23.16 	disregarded and the commissioner shall determine taxable net income without regard for 
23.17 	any such transaction or series of transactions.

23.18 	Sec. 6. INTENT OF LEGISLATURE.
 23.19 	Section 5 does not change Minnesota law, but merely clarifies the legislature's 
23.20 	intention with respect to transactions without economic substance or business purpose.