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HF 785

1st Unofficial Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
KEY: ~~stricken~~ = removed, old language.
underscored = added, new language.
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Engrossments
Introduction		Posted on 02/07/2005
1st Engrossment		Posted on 05/09/2005
2nd Engrossment		Posted on 05/10/2005
3rd Engrossment		Posted on 05/12/2005
4th Engrossment		Posted on 05/21/2006
Unofficial Engrossments
1st Unofficial Engrossment		Posted on 05/13/2005
Conference Committee Reports
CCR-HF0785		Posted on 05/21/2006
  1.1                          A bill for an act 
  1.2             relating to financing and operation of state and local 
  1.3             government; making policy, technical, administrative, 
  1.4             enforcement, collection, refund, and other changes to 
  1.5             income, franchise, property, sales and use, health 
  1.6             care provider, cigarette and tobacco products, 
  1.7             insurance premiums, aggregate removal, occupation, net 
  1.8             proceeds, and production taxes, and other taxes and 
  1.9             tax-related provisions; requiring withholding; 
  1.10            modifying income tax rates and providing income tax 
  1.11            credits; modifying taxation of certain trusts; 
  1.12            modifying taxation of certain compensation paid to 
  1.13            nonresidents; providing for taxation of foreign 
  1.14            operating corporations; providing tax shelter and 
  1.15            compliance initiatives; providing an income tax 
  1.16            checkoff; providing a refund for transit passes; 
  1.17            modifying and authorizing sales tax exemptions; 
  1.18            providing for taxation of liquor and rented vehicles; 
  1.19            modifying and authorizing local government sales 
  1.20            taxes; modifying the homestead market value credit; 
  1.21            modifying certain levies; changing and providing 
  1.22            property tax exemptions and value exclusions; 
  1.23            modifying the state general levy and providing for 
  1.24            deposit of revenues; providing a property tax freeze; 
  1.25            providing for aids to local governments; providing for 
  1.26            an international economic development zone; conveying 
  1.27            certain powers and providing tax incentives in the 
  1.28            zone; clarifying the effect of certain statements of 
  1.29            taxpayer rights by commissioner of revenue; limiting 
  1.30            agricultural processing zone property tax exemption in 
  1.31            certain circumstances; defining term "tax"; extending 
  1.32            a petrofund fee exemption; extending fiscal disparity 
  1.33            computation for city of Bloomington; authorizing 
  1.34            distributions of tax proceeds; changing provisions 
  1.35            relating to fiscal disparities, education financing, 
  1.36            state debt collection procedures, sustainable forest 
  1.37            incentives programs, and business subsidy provisions; 
  1.38            conforming provisions to certain changes in federal 
  1.39            law; changing and imposing powers, duties, and 
  1.40            requirements on certain local governments and 
  1.41            authorities and state departments or agencies; 
  1.42            providing for issuance of obligations by local 
  1.43            governments, and use of the proceeds of the debt; 
  1.44            requiring transfer of a parking facility; changing tax 
  1.45            increment financing and abatement provisions, and 
  1.46            providing authorities to certain districts; changing 
  2.1             provisions relating to tax preparers and providing for 
  2.2             exchange of data; providing for publication of tax 
  2.3             preparers subject to penalties; changing provisions 
  2.4             relating to certificates of title of motor vehicles 
  2.5             and manufactured homes; changing electronic filing 
  2.6             provisions; prohibiting misrepresentation of 
  2.7             employment; imposing requirements related to JOBZ; 
  2.8             prohibiting state contracts with certain vendors; 
  2.9             providing for certain payments to certain cities and 
  2.10            counties; providing for studies and reports; providing 
  2.11            penalties; creating an education reserve account; 
  2.12            providing for allocation and transfers of funds; 
  2.13            reducing appropriations; appropriating money; amending 
  2.14            Minnesota Statutes 2004, sections 4A.02; 15.06, 
  2.15            subdivision 6; 16A.152, subdivision 2; 16C.03, by 
  2.16            adding a subdivision; 16D.10; 103C.331, subdivision 
  2.17            16; 116J.993, subdivision 3, by adding a subdivision; 
  2.18            116J.994, subdivisions 4, 5, 9, by adding a 
  2.19            subdivision; 118A.05, subdivision 5; 123B.53, 
  2.20            subdivisions 4, 5, by adding a subdivision; 123B.55; 
  2.21            123B.71, subdivision 9; 126C.01, by adding a 
  2.22            subdivision; 126C.17, subdivisions 6, 7, 9, by adding 
  2.23            subdivisions; 127A.48, by adding a subdivision; 
  2.24            161.1231, by adding a subdivision; 168A.05, 
  2.25            subdivisions 1a, 1b; 254B.02, subdivision 3; 270.0603, 
  2.26            subdivision 3; 270.0682, subdivision 1; 270.11, 
  2.27            subdivision 2; 270.16, subdivision 2; 270.30, 
  2.28            subdivisions 1, 5, 6, 8, by adding subdivisions; 
  2.29            270.65; 270.67, subdivision 4; 270.69, subdivision 4; 
  2.30            270A.03, subdivision 5; 272.01, subdivision 2; 272.02, 
  2.31            subdivisions 1a, 7, 22, 47, 53, 56, 64, by adding 
  2.32            subdivisions; 272.0211, subdivisions 1, 2; 272.0212, 
  2.33            subdivisions 1, 2; 272.029, subdivisions 4, 6; 273.11, 
  2.34            subdivisions 1a, 8, by adding subdivisions; 273.112, 
  2.35            subdivision 3; 273.123, by adding a subdivision; 
  2.36            273.124, subdivisions 1, 3, 6, 8, 13, 14, 21; 273.13, 
  2.37            subdivisions 22, 23, 25; 273.1315; 273.1384, 
  2.38            subdivisions 1, 3; 273.19, subdivision 1a; 273.372; 
  2.39            274.014, subdivisions 2, 3; 274.14; 275.025, 
  2.40            subdivision 1; 275.065, subdivisions 1a, 3, by adding 
  2.41            subdivisions; 275.066; 275.07, subdivisions 1, 4; 
  2.42            275.70, subdivision 5; 276.04, subdivision 2; 276.112; 
  2.43            276A.01, subdivision 7; 278.03, subdivision 1; 279.01, 
  2.44            subdivision 1, by adding a subdivision; 282.016; 
  2.45            282.08; 282.15; 282.21; 282.224; 282.301; 287.04; 
  2.46            289A.02, subdivision 7; 289A.08, subdivisions 3, 7, 
  2.47            16; 289A.11, subdivision 1; 289A.18, subdivisions 1, 
  2.48            4, by adding a subdivision; 289A.19, subdivision 4; 
  2.49            289A.20, subdivisions 2, 4; 289A.31, subdivision 2; 
  2.50            289A.37, subdivision 5; 289A.38, subdivisions 6, 7, by 
  2.51            adding subdivisions; 289A.39, subdivision 1; 289A.40, 
  2.52            subdivision 2, by adding subdivisions; 289A.50, 
  2.53            subdivision 1a; 289A.60, subdivisions 2a, 6, 11, 12, 
  2.54            13, by adding a subdivision; 290.01, subdivisions 6b, 
  2.55            7, 7b, 19, 19a, as amended, if enacted, 19b, 19c, 19d, 
  2.56            31; 290.032, subdivisions 1, 2; 290.05, subdivision 1; 
  2.57            290.06, subdivisions 2c, 2d, 22, 28, by adding 
  2.58            subdivisions; 290.067, subdivisions 1, 2a; 290.0671, 
  2.59            subdivision 1; 290.0674, subdivisions 1, 2; 290.0675, 
  2.60            subdivision 1; 290.091, subdivisions 2, 3; 290.0922, 
  2.61            subdivision 2; 290.10; 290.17, subdivisions 2, 4; 
  2.62            290.191, subdivision 1; 290.92, subdivisions 1, 4b, by 
  2.63            adding a subdivision; 290A.03, subdivisions 3, 15; 
  2.64            290A.07, by adding a subdivision; 290A.19; 290B.05, 
  2.65            subdivision 3; 290C.05; 290C.10; 291.005, subdivision 
  2.66            1; 291.03, subdivision 1; 295.50, subdivision 3, by 
  2.67            adding a subdivision; 295.53, subdivision 1; 295.60, 
  2.68            subdivision 3; 296A.09, by adding a subdivision; 
  2.69            296A.22, by adding a subdivision; 297A.61, 
  2.70            subdivisions 3, 4, by adding subdivisions; 297A.64, 
  2.71            subdivision 4; 297A.668, subdivisions 1, 5; 297A.67, 
  3.1             subdivisions 2, 6, 7, 8, 29, by adding subdivisions; 
  3.2             297A.68, subdivisions 2, 4, 5, 19, 28, 35, 39, by 
  3.3             adding subdivisions; 297A.70, subdivision 8, by adding 
  3.4             a subdivision; 297A.71, subdivision 12, by adding 
  3.5             subdivisions; 297A.75, subdivisions 1, 2, 3; 297A.83, 
  3.6             subdivision 1; 297A.87, subdivisions 2, 3; 297A.99, 
  3.7             subdivisions 4, 7; 297B.03; 297E.01, subdivisions 5, 
  3.8             7, by adding subdivisions; 297E.02, subdivision 4; 
  3.9             297E.06, subdivision 2; 297E.07; 297F.01, by adding a 
  3.10            subdivision; 297F.08, subdivision 12, by adding a 
  3.11            subdivision; 297F.09, subdivisions 1, 2, by adding a 
  3.12            subdivision; 297F.14, subdivision 4; 297G.09, by 
  3.13            adding a subdivision; 297I.01, by adding a 
  3.14            subdivision; 297I.05, subdivisions 4, 5, by adding a 
  3.15            subdivision; 298.001, by adding subdivisions; 298.01, 
  3.16            subdivisions 3, 3a, 4; 298.015, subdivisions 1, 2; 
  3.17            298.016, subdivision 4; 298.018; 298.223, subdivision 
  3.18            1; 298.24, subdivision 1; 298.28, subdivisions 9b, 10; 
  3.19            298.2961, by adding a subdivision; 298.75, 
  3.20            subdivisions 1, 2; 325D.33, subdivision 6; 343.11; 
  3.21            366.011; 366.012; 373.01, subdivision 3; 373.40, 
  3.22            subdivision 1; 373.45, subdivision 7; 400.04, by 
  3.23            adding a subdivision; 410.32; 412.301; 428A.101; 
  3.24            428A.21; 429.021, subdivision 1; 429.031, by adding a 
  3.25            subdivision; 429.051; 469.015, subdivision 4; 469.033, 
  3.26            subdivision 6; 469.034, subdivision 2; 469.158; 
  3.27            469.169, by adding a subdivision; 469.1735, 
  3.28            subdivision 3; 469.174, by adding a subdivision; 
  3.29            469.175, subdivisions 1, 2, 4, 6; 469.176, subdivision 
  3.30            1c, by adding subdivisions; 469.1761, by adding a 
  3.31            subdivision; 469.1763, subdivision 2; 469.1792; 
  3.32            469.310, subdivision 11; 473.39, by adding a 
  3.33            subdivision; 473.843, subdivisions 3, 5; 473F.02, 
  3.34            subdivision 7; 473F.08, subdivision 3a, by adding 
  3.35            subdivisions; 474A.061, subdivision 2c; 474A.131, 
  3.36            subdivision 1; 475.51, subdivision 4; 475.52, 
  3.37            subdivisions 1, 3, 4; 475.521, subdivisions 1, 2, 3, 
  3.38            4; 475.58, subdivision 3b; 477A.011, subdivisions 3, 
  3.39            34, 36, as amended, 38; 477A.0124, subdivisions 2, 4; 
  3.40            477A.013, subdivisions 8, 9; 477A.03, subdivisions 2a, 
  3.41            2b; 477A.11, subdivision 4, by adding a subdivision; 
  3.42            477A.12, subdivisions 1, 2; 477A.14, subdivision 1; 
  3.43            645.44, by adding a subdivision; Laws 1991, chapter 
  3.44            291, article 8, section 27, subdivision 4; Laws 1993, 
  3.45            chapter 375, article 9, section 46, subdivision 2, as 
  3.46            amended; Laws 1994, chapter 587, article 9, section 8, 
  3.47            subdivision 1; Laws 1994, chapter 587, article 9, 
  3.48            section 20, subdivision 1; Laws 1994, chapter 587, 
  3.49            article 9, section 20, subdivision 2; Laws 1996, 
  3.50            chapter 471, article 2, section 29; Laws 1998, chapter 
  3.51            389, article 3, section 41; Laws 1998, chapter 389, 
  3.52            article 3, section 42, subdivision 2, as amended; Laws 
  3.53            1998, chapter 389, article 8, section 43, subdivision 
  3.54            3; Laws 1998, chapter 389, article 8, section 43, 
  3.55            subdivision 4; Laws 1998, chapter 389, article 11, 
  3.56            section 19, subdivision 3; Laws 1999, chapter 243, 
  3.57            article 4, section 18, subdivision 1; Laws 1999, 
  3.58            chapter 243, article 4, section 18, subdivision 3; 
  3.59            Laws 1999, chapter 243, article 4, section 18, 
  3.60            subdivision 4; Laws 2001, First Special Session 
  3.61            chapter 5, article 3, section 8; Laws 2001, First 
  3.62            Special Session chapter 5, article 12, section 44, the 
  3.63            effective date; Laws 2001, First Special Session 
  3.64            chapter 5, article 12, section 67; Laws 2001, First 
  3.65            Special Session chapter 5, article 12, section 82, as 
  3.66            amended; Laws 2001, First Special Session chapter 5, 
  3.67            article 12, section 95; Laws 2002, chapter 377, 
  3.68            article 3, section 4; Laws 2002, chapter 377, article 
  3.69            12, section 16, subdivision 1; Laws 2003, chapter 127, 
  3.70            article 5, section 27; Laws 2003, chapter 127, article 
  3.71            5, section 28; Laws 2003, chapter 127, article 12, 
  4.1             section 38; Laws 2003, chapter 128, article 1, section 
  4.2             172; Laws 2003, First Special Session chapter 21, 
  4.3             article 4, section 12, subdivision 11; Laws 2003, 
  4.4             First Special Session chapter 21, article 5, section 
  4.5             13; Laws 2003, First Special Session chapter 21, 
  4.6             article 6, section 9; 2005 S.F. No. 467, section 1, if 
  4.7             enacted; proposing coding for new law in Minnesota 
  4.8             Statutes, chapters 103C; 174; 270; 273; 278; 289A; 
  4.9             290; 290C; 295; 297A; 297F; 298; 325D; 325F; 462A; 
  4.10            469; 473; 477A; repealing Minnesota Statutes 2004, 
  4.11            sections 273.19, subdivision 5; 274.05; 275.15; 
  4.12            275.61, subdivision 2; 283.07; 289A.26, subdivision 
  4.13            2a; 289A.60, subdivision 21; 295.55, subdivision 4; 
  4.14            295.60, subdivision 4; 297A.99, subdivision 13; 
  4.15            297E.12, subdivision 10; 297F.09, subdivision 7; 
  4.16            297G.09, subdivision 6; 297I.35, subdivision 2; 
  4.17            297I.85, subdivision 7; 298.01, subdivisions 3c, 3d, 
  4.18            4d, 4e; 298.017; 473.39, subdivision 1f; Laws 1975, 
  4.19            chapter 287, section 5; Laws 1994, chapter 587, 
  4.20            article 9, section 20, subdivision 4; Laws 2003, 
  4.21            chapter 127, article 9, section 9, subdivision 4; 
  4.22            Minnesota Rules, parts 8093.2000; 8093.3000; 
  4.23            8130.0110, subpart 4; 8130.0200, subparts 5, 6; 
  4.24            8130.0400, subpart 9; 8130.1200, subparts 5, 6; 
  4.25            8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 
  4.26            1, 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 
  4.27            8130.5200; 8130.5600, subpart 3; 8130.5800, subpart 5; 
  4.28            8130.7300, subpart 5; 8130.8800, subpart 4. 
  4.29  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  4.30                             ARTICLE 1 
  4.31           INCOME AND CORPORATE FRANCHISE TAXES - SF1209
  4.32     Section 1.  Minnesota Statutes 2004, section 289A.20, 
  4.33  subdivision 2, is amended to read: 
  4.34     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
  4.35  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
  4.36  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
  4.37  (a) A tax required to be deducted and withheld during the 
  4.38  quarterly period must be paid on or before the last day of the 
  4.39  month following the close of the quarterly period, unless an 
  4.40  earlier time for payment is provided.  A tax required to be 
  4.41  deducted and withheld from compensation of an entertainer and 
  4.42  from a payment to an out-of-state contractor must be paid on or 
  4.43  before the date the return for such tax must be filed under 
  4.44  section 289A.18, subdivision 2.  Taxes required to be deducted 
  4.45  and withheld by partnerships and, S corporations, and trusts 
  4.46  must be paid on or before the date the return must be filed 
  4.47  under section 289A.18, subdivision 2 a quarterly basis as 
  4.48  estimated taxes under section 289A.25 for partnerships and 
  4.49  trusts and under section 289A.26 for S corporations. 
  5.1      (b) An employer who, during the previous quarter, withheld 
  5.2   more than $1,500 of tax under section 290.92, subdivision 2a or 
  5.3   3, or 290.923, subdivision 2, must deposit tax withheld under 
  5.4   those sections with the commissioner within the time allowed to 
  5.5   deposit the employer's federal withheld employment taxes under 
  5.6   Code of Federal Regulations, title 26, section 31.6302-1, as 
  5.7   amended through December 31, 2001, without regard to the safe 
  5.8   harbor or de minimis rules in subparagraph (f) or the one-day 
  5.9   rule in subsection (c), clause (3).  Taxpayers must submit a 
  5.10  copy of their federal notice of deposit status to the 
  5.11  commissioner upon request by the commissioner. 
  5.12     (c) The commissioner may prescribe by rule other return 
  5.13  periods or deposit requirements.  In prescribing the reporting 
  5.14  period, the commissioner may classify payors according to the 
  5.15  amount of their tax liability and may adopt an appropriate 
  5.16  reporting period for the class that the commissioner judges to 
  5.17  be consistent with efficient tax collection.  In no event will 
  5.18  the duration of the reporting period be more than one year. 
  5.19     (d) If less than the correct amount of tax is paid to the 
  5.20  commissioner, proper adjustments with respect to both the tax 
  5.21  and the amount to be deducted must be made, without interest, in 
  5.22  the manner and at the times the commissioner prescribes.  If the 
  5.23  underpayment cannot be adjusted, the amount of the underpayment 
  5.24  will be assessed and collected in the manner and at the times 
  5.25  the commissioner prescribes. 
  5.26     (e) If the aggregate amount of the tax withheld during a 
  5.27  fiscal year ending June 30 under section 290.92, subdivision 2a 
  5.28  or 3, is equal to or exceeds the amounts established for 
  5.29  remitting federal withheld taxes pursuant to the regulations 
  5.30  promulgated under section 6302(h) of the Internal Revenue Code, 
  5.31  the employer must remit each required deposit for wages paid in 
  5.32  the subsequent calendar year by electronic means. 
  5.33     (f) A third-party bulk filer as defined in section 290.92, 
  5.34  subdivision 30, paragraph (a), clause (2), who remits 
  5.35  withholding deposits must remit all deposits by electronic means 
  5.36  as provided in paragraph (e), regardless of the aggregate amount 
  6.1   of tax withheld during a fiscal year for all of the employers.  
  6.2      [EFFECTIVE DATE.] This section is effective for tax years 
  6.3   beginning after December 31, 2005. 
  6.4      Sec. 2.  Minnesota Statutes 2004, section 290.92, is 
  6.5   amended by adding a subdivision to read: 
  6.6      Subd. 31.  [PAYMENTS TO PERSONS WHO ARE NOT EMPLOYEES; 
  6.7   WITHHOLDING.] Any person engaged in a trade or business who in 
  6.8   the course of such trade or business makes payments to an 
  6.9   individual, who is not an employee of the person, for work 
  6.10  described in industry code numbers 23 through 238990 of the 
  6.11  North American Industry Classification System, shall deduct from 
  6.12  the payment and withhold two percent of the amount as Minnesota 
  6.13  withholding tax when the amount paid to that individual by the 
  6.14  same person during the calendar year exceeds $600.  For purposes 
  6.15  of this section, a payment to any person that is subject to 
  6.16  withholding under this subdivision must be treated as if the 
  6.17  payment was a wage paid by an employer to an employee.  Every 
  6.18  individual who is to receive a payment that is subject to 
  6.19  withholding under this subdivision shall furnish the contracting 
  6.20  person with a statement, containing the name, address, and 
  6.21  Social Security account number of the person receiving the 
  6.22  payment. 
  6.23     [EFFECTIVE DATE.] This section is effective for payments 
  6.24  made after July 31, 2005. 
  6.25                             ARTICLE 2 
  6.26                      FEDERAL UPDATE - SF1209
  6.27     Section 1.  Minnesota Statutes 2004, section 290.01, 
  6.28  subdivision 19, is amended to read: 
  6.29     Subd. 19.  [NET INCOME.] The term "net income" means the 
  6.30  federal taxable income, as defined in section 63 of the Internal 
  6.31  Revenue Code of 1986, as amended through the date named in this 
  6.32  subdivision, incorporating any elections made by the taxpayer in 
  6.33  accordance with the Internal Revenue Code in determining federal 
  6.34  taxable income for federal income tax purposes, and with the 
  6.35  modifications provided in subdivisions 19a to 19f. 
  6.36     In the case of a regulated investment company or a fund 
  7.1   thereof, as defined in section 851(a) or 851(g) of the Internal 
  7.2   Revenue Code, federal taxable income means investment company 
  7.3   taxable income as defined in section 852(b)(2) of the Internal 
  7.4   Revenue Code, except that:  
  7.5      (1) the exclusion of net capital gain provided in section 
  7.6   852(b)(2)(A) of the Internal Revenue Code does not apply; 
  7.7      (2) the deduction for dividends paid under section 
  7.8   852(b)(2)(D) of the Internal Revenue Code must be applied by 
  7.9   allowing a deduction for capital gain dividends and 
  7.10  exempt-interest dividends as defined in sections 852(b)(3)(C) 
  7.11  and 852(b)(5) of the Internal Revenue Code; and 
  7.12     (3) the deduction for dividends paid must also be applied 
  7.13  in the amount of any undistributed capital gains which the 
  7.14  regulated investment company elects to have treated as provided 
  7.15  in section 852(b)(3)(D) of the Internal Revenue Code.  
  7.16     The net income of a real estate investment trust as defined 
  7.17  and limited by section 856(a), (b), and (c) of the Internal 
  7.18  Revenue Code means the real estate investment trust taxable 
  7.19  income as defined in section 857(b)(2) of the Internal Revenue 
  7.20  Code.  
  7.21     The net income of a designated settlement fund as defined 
  7.22  in section 468B(d) of the Internal Revenue Code means the gross 
  7.23  income as defined in section 468B(b) of the Internal Revenue 
  7.24  Code. 
  7.25     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
  7.26  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
  7.27  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
  7.28  Protection Act, Public Law 104-188, the provisions of Public Law 
  7.29  104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
  7.30  913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
  7.31  1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
  7.32  and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
  7.33  1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
  7.34  105-34, the provisions of section 6010 of the Internal Revenue 
  7.35  Service Restructuring and Reform Act of 1998, Public Law 
  7.36  105-206, the provisions of section 4003 of the Omnibus 
  8.1   Consolidated and Emergency Supplemental Appropriations Act, 
  8.2   1999, Public Law 105-277, and the provisions of section 318 of 
  8.3   the Consolidated Appropriation Act of 2001, Public Law 106-554, 
  8.4   shall become effective at the time they become effective for 
  8.5   federal purposes. 
  8.6      The Internal Revenue Code of 1986, as amended through 
  8.7   December 31, 1996, shall be in effect for taxable years 
  8.8   beginning after December 31, 1996. 
  8.9      The provisions of sections 202(a) and (b), 221(a), 225, 
  8.10  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
  8.11  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
  8.12  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
  8.13  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
  8.14  of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
  8.15  provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
  8.16  and 7003 of the Internal Revenue Service Restructuring and 
  8.17  Reform Act of 1998, Public Law 105-206, the provisions of 
  8.18  section 3001 of the Omnibus Consolidated and Emergency 
  8.19  Supplemental Appropriations Act, 1999, Public Law 105-277, the 
  8.20  provisions of section 3001 of the Miscellaneous Trade and 
  8.21  Technical Corrections Act of 1999, Public Law 106-36, and the 
  8.22  provisions of section 316 of the Consolidated Appropriation Act 
  8.23  of 2001, Public Law 106-554, shall become effective at the time 
  8.24  they become effective for federal purposes. 
  8.25     The Internal Revenue Code of 1986, as amended through 
  8.26  December 31, 1997, shall be in effect for taxable years 
  8.27  beginning after December 31, 1997. 
  8.28     The provisions of sections 5002, 6009, 6011, and 7001 of 
  8.29  the Internal Revenue Service Restructuring and Reform Act of 
  8.30  1998, Public Law 105-206, the provisions of section 9010 of the 
  8.31  Transportation Equity Act for the 21st Century, Public Law 
  8.32  105-178, the provisions of sections 1004, 4002, and 5301 of the 
  8.33  Omnibus Consolidation and Emergency Supplemental Appropriations 
  8.34  Act, 1999, Public Law 105-277, the provision of section 303 of 
  8.35  the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
  8.36  105-369, the provisions of sections 532, 534, 536, 537, and 538 
  9.1   of the Ticket to Work and Work Incentives Improvement Act of 
  9.2   1999, Public Law 106-170, the provisions of the Installment Tax 
  9.3   Correction Act of 2000, Public Law 106-573, and the provisions 
  9.4   of section 309 of the Consolidated Appropriation Act of 2001, 
  9.5   Public Law 106-554, shall become effective at the time they 
  9.6   become effective for federal purposes. 
  9.7      The Internal Revenue Code of 1986, as amended through 
  9.8   December 31, 1998, shall be in effect for taxable years 
  9.9   beginning after December 31, 1998.  
  9.10     The provisions of the FSC Repeal and Extraterritorial 
  9.11  Income Exclusion Act of 2000, Public Law 106-519, and the 
  9.12  provision of section 412 of the Job Creation and Worker 
  9.13  Assistance Act of 2002, Public Law 107-147, shall become 
  9.14  effective at the time it became effective for federal purposes. 
  9.15     The Internal Revenue Code of 1986, as amended through 
  9.16  December 31, 1999, shall be in effect for taxable years 
  9.17  beginning after December 31, 1999.  The provisions of sections 
  9.18  306 and 401 of the Consolidated Appropriation Act of 2001, 
  9.19  Public Law 106-554, and the provision of section 632(b)(2)(A) of 
  9.20  the Economic Growth and Tax Relief Reconciliation Act of 2001, 
  9.21  Public Law 107-16, and provisions of sections 101 and 402 of the 
  9.22  Job Creation and Worker Assistance Act of 2002, Public Law 
  9.23  107-147, shall become effective at the same time it became 
  9.24  effective for federal purposes. 
  9.25     The Internal Revenue Code of 1986, as amended through 
  9.26  December 31, 2000, shall be in effect for taxable years 
  9.27  beginning after December 31, 2000.  The provisions of sections 
  9.28  659a and 671 of the Economic Growth and Tax Relief 
  9.29  Reconciliation Act of 2001, Public Law 107-16, the provisions of 
  9.30  sections 104, 105, and 111 of the Victims of Terrorism Tax 
  9.31  Relief Act of 2001, Public Law 107-134, and the provisions of 
  9.32  sections 201, 403, 413, and 606 of the Job Creation and Worker 
  9.33  Assistance Act of 2002, Public Law 107-147, shall become 
  9.34  effective at the same time it became effective for federal 
  9.35  purposes. 
  9.36     The Internal Revenue Code of 1986, as amended through March 
 10.1   15, 2002, shall be in effect for taxable years beginning after 
 10.2   December 31, 2001. 
 10.3      The provisions of sections 101 and 102 of the Victims of 
 10.4   Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
 10.5   become effective at the same time it becomes effective for 
 10.6   federal purposes. 
 10.7      The Internal Revenue Code of 1986, as amended through June 
 10.8   15, 2003, shall be in effect for taxable years beginning after 
 10.9   December 31, 2002, provided that the provisions of the American 
 10.10  Jobs Creation Act of 2004, Public Law 108-435, are effective at 
 10.11  the same time they became effective for federal income tax 
 10.12  purposes.  The provisions of section 201 of the Jobs and Growth 
 10.13  Tax Relief and Reconciliation Act of 2003, H.R. 2, if it is 
 10.14  enacted into law, are effective at the same time it became 
 10.15  effective for federal purposes. 
 10.16     Except as otherwise provided, references to the Internal 
 10.17  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 10.18  for purposes of determining net income for the applicable year. 
 10.19     Sec. 2.  Minnesota Statutes 2004, section 290.01, 
 10.20  subdivision 19a, is amended to read: 
 10.21     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 10.22  individuals, estates, and trusts, there shall be added to 
 10.23  federal taxable income: 
 10.24     (1)(i) interest income on obligations of any state other 
 10.25  than Minnesota or a political or governmental subdivision, 
 10.26  municipality, or governmental agency or instrumentality of any 
 10.27  state other than Minnesota exempt from federal income taxes 
 10.28  under the Internal Revenue Code or any other federal statute; 
 10.29  and 
 10.30     (ii) exempt-interest dividends as defined in section 
 10.31  852(b)(5) of the Internal Revenue Code, except the portion of 
 10.32  the exempt-interest dividends derived from interest income on 
 10.33  obligations of the state of Minnesota or its political or 
 10.34  governmental subdivisions, municipalities, governmental agencies 
 10.35  or instrumentalities, but only if the portion of the 
 10.36  exempt-interest dividends from such Minnesota sources paid to 
 11.1   all shareholders represents 95 percent or more of the 
 11.2   exempt-interest dividends that are paid by the regulated 
 11.3   investment company as defined in section 851(a) of the Internal 
 11.4   Revenue Code, or the fund of the regulated investment company as 
 11.5   defined in section 851(g) of the Internal Revenue Code, making 
 11.6   the payment; and 
 11.7      (iii) for the purposes of items (i) and (ii), interest on 
 11.8   obligations of an Indian tribal government described in section 
 11.9   7871(c) of the Internal Revenue Code shall be treated as 
 11.10  interest income on obligations of the state in which the tribe 
 11.11  is located; 
 11.12     (2) the amount of income or sales and use taxes paid or 
 11.13  accrued within the taxable year under this chapter and income or 
 11.14  sales and use taxes paid to any other state or to any province 
 11.15  or territory of Canada, to the extent allowed as a deduction 
 11.16  under section 63(d) of the Internal Revenue Code of 1986, as 
 11.17  amended through June 15, 2003, but the addition may not be more 
 11.18  than the amount by which the itemized deductions as allowed 
 11.19  under section 63(d) of the Internal Revenue Code exceeds the 
 11.20  amount of the standard deduction as defined in section 63(c) of 
 11.21  the Internal Revenue Code.  For the purpose of this paragraph, 
 11.22  the disallowance of itemized deductions under section 68 of the 
 11.23  Internal Revenue Code of 1986, income or sales and use tax is 
 11.24  the last itemized deduction disallowed; 
 11.25     (3) the capital gain amount of a lump sum distribution to 
 11.26  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 11.27  Reform Act of 1986, Public Law 99-514, applies; 
 11.28     (4) the amount of income taxes paid or accrued within the 
 11.29  taxable year under this chapter and income taxes paid to any 
 11.30  other state or any province or territory of Canada, to the 
 11.31  extent allowed as a deduction in determining federal adjusted 
 11.32  gross income.  For the purpose of this paragraph, income taxes 
 11.33  do not include the taxes imposed by sections 290.0922, 
 11.34  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 11.35     (5) the amount of expense, interest, or taxes disallowed 
 11.36  pursuant to section 290.10; 
 12.1      (6) the amount of a partner's pro rata share of net income 
 12.2   which does not flow through to the partner because the 
 12.3   partnership elected to pay the tax on the income under section 
 12.4   6242(a)(2) of the Internal Revenue Code; and 
 12.5      (7) 80 percent of the depreciation deduction allowed under 
 12.6   section 168(k) of the Internal Revenue Code.  For purposes of 
 12.7   this clause, if the taxpayer has an activity that in the taxable 
 12.8   year generates a deduction for depreciation under section 168(k) 
 12.9   and the activity generates a loss for the taxable year that the 
 12.10  taxpayer is not allowed to claim for the taxable year, "the 
 12.11  depreciation allowed under section 168(k)" for the taxable year 
 12.12  is limited to excess of the depreciation claimed by the activity 
 12.13  under section 168(k) over the amount of the loss from the 
 12.14  activity that is not allowed in the taxable year.  In succeeding 
 12.15  taxable years when the losses not allowed in the taxable year 
 12.16  are allowed, the depreciation under section 168(k) is allowed; 
 12.17     (8) 80 percent of the amount by which the deduction allowed 
 12.18  by section 179 of the Internal Revenue Code exceeds the 
 12.19  deduction allowable by section 179 of the Internal Revenue Code 
 12.20  of 1986, as amended through December 31, 2003; and 
 12.21     (9) to the extent deducted in computing federal taxable 
 12.22  income, the amount of the deduction allowable under section 199 
 12.23  of the Internal Revenue Code. 
 12.24     [EFFECTIVE DATE.] This section is effective for tax years 
 12.25  beginning after December 31, 2004, except the changes in clause 
 12.26  (2) are effective for tax years beginning after December 31, 
 12.27  2003. 
 12.28     Sec. 3.  Minnesota Statutes 2004, section 290.01, 
 12.29  subdivision 19b, is amended to read: 
 12.30     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 12.31  individuals, estates, and trusts, there shall be subtracted from 
 12.32  federal taxable income: 
 12.33     (1) interest income on obligations of any authority, 
 12.34  commission, or instrumentality of the United States to the 
 12.35  extent includable in taxable income for federal income tax 
 12.36  purposes but exempt from state income tax under the laws of the 
 13.1   United States; 
 13.2      (2) if included in federal taxable income, the amount of 
 13.3   any overpayment of income tax to Minnesota or to any other 
 13.4   state, for any previous taxable year, whether the amount is 
 13.5   received as a refund or as a credit to another taxable year's 
 13.6   income tax liability; 
 13.7      (3) the amount paid to others, less the amount used to 
 13.8   claim the credit allowed under section 290.0674, not to exceed 
 13.9   $1,625 for each qualifying child in grades kindergarten to 6 and 
 13.10  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 13.11  textbooks, and transportation of each qualifying child in 
 13.12  attending an elementary or secondary school situated in 
 13.13  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 13.14  wherein a resident of this state may legally fulfill the state's 
 13.15  compulsory attendance laws, which is not operated for profit, 
 13.16  and which adheres to the provisions of the Civil Rights Act of 
 13.17  1964 and chapter 363A.  For the purposes of this clause, 
 13.18  "tuition" includes fees or tuition as defined in section 
 13.19  290.0674, subdivision 1, clause (1).  As used in this clause, 
 13.20  "textbooks" includes books and other instructional materials and 
 13.21  equipment purchased or leased for use in elementary and 
 13.22  secondary schools in teaching only those subjects legally and 
 13.23  commonly taught in public elementary and secondary schools in 
 13.24  this state.  Equipment expenses qualifying for deduction 
 13.25  includes expenses as defined and limited in section 290.0674, 
 13.26  subdivision 1, clause (3).  "Textbooks" does not include 
 13.27  instructional books and materials used in the teaching of 
 13.28  religious tenets, doctrines, or worship, the purpose of which is 
 13.29  to instill such tenets, doctrines, or worship, nor does it 
 13.30  include books or materials for, or transportation to, 
 13.31  extracurricular activities including sporting events, musical or 
 13.32  dramatic events, speech activities, driver's education, or 
 13.33  similar programs.  For purposes of the subtraction provided by 
 13.34  this clause, "qualifying child" has the meaning given in section 
 13.35  32(c)(3) of the Internal Revenue Code; 
 13.36     (4) income as provided under section 290.0802; 
 14.1      (5) to the extent included in federal adjusted gross 
 14.2   income, income realized on disposition of property exempt from 
 14.3   tax under section 290.491; 
 14.4      (6) to the extent included in federal taxable income, 
 14.5   postservice benefits for youth community service under section 
 14.6   124D.42 for volunteer service under United States Code, title 
 14.7   42, sections 12601 to 12604; 
 14.8      (7) to the extent not deducted in determining federal 
 14.9   taxable income by an individual who does not itemize deductions 
 14.10  for federal income tax purposes for the taxable year, an amount 
 14.11  equal to 50 percent of the excess of charitable contributions 
 14.12  allowable as a deduction for the taxable year under section 
 14.13  170(a) of the Internal Revenue Code over $500; 
 14.14     (8) for taxable years beginning before January 1, 2008, the 
 14.15  amount of the federal small ethanol producer credit allowed 
 14.16  under section 40(a)(3) of the Internal Revenue Code which is 
 14.17  included in gross income under section 87 of the Internal 
 14.18  Revenue Code; 
 14.19     (9) for individuals who are allowed a federal foreign tax 
 14.20  credit for taxes that do not qualify for a credit under section 
 14.21  290.06, subdivision 22, an amount equal to the carryover of 
 14.22  subnational foreign taxes for the taxable year, but not to 
 14.23  exceed the total subnational foreign taxes reported in claiming 
 14.24  the foreign tax credit.  For purposes of this clause, "federal 
 14.25  foreign tax credit" means the credit allowed under section 27 of 
 14.26  the Internal Revenue Code, and "carryover of subnational foreign 
 14.27  taxes" equals the carryover allowed under section 904(c) of the 
 14.28  Internal Revenue Code minus national level foreign taxes to the 
 14.29  extent they exceed the federal foreign tax credit; 
 14.30     (10) in each of the five tax years immediately following 
 14.31  the tax year in which an addition is required under subdivision 
 14.32  19a, clause (7), an amount equal to one-fifth of the delayed 
 14.33  depreciation.  For purposes of this clause, "delayed 
 14.34  depreciation" means the amount of the addition made by the 
 14.35  taxpayer under subdivision 19a, clause (7), minus the positive 
 14.36  value of any net operating loss under section 172 of the 
 15.1   Internal Revenue Code generated for the tax year of the 
 15.2   addition.  The resulting delayed depreciation cannot be less 
 15.3   than zero; and 
 15.4      (11) job opportunity building zone income as provided under 
 15.5   section 469.316; and 
 15.6      (12) in each of the five tax years immediately following 
 15.7   the tax year in which an addition is required under subdivision 
 15.8   19a, clause (8), or 19c, clause (17), in the case of a 
 15.9   shareholder of a corporation that is an S corporation, an amount 
 15.10  equal to one-fifth of the addition made by the taxpayer under 
 15.11  subdivision 19a, clause (8), or 19c, clause (17), in the case of 
 15.12  a shareholder of a corporation that is an S corporation, minus 
 15.13  the positive value of any net operating loss under section 172 
 15.14  of the Internal Revenue Code generated for the tax year of the 
 15.15  addition.  If the net operating loss exceeds the addition for 
 15.16  the tax year, a subtraction is not allowed under this clause. 
 15.17     [EFFECTIVE DATE.] This section is effective for tax years 
 15.18  beginning after December 31, 2004. 
 15.19     Sec. 4.  Minnesota Statutes 2004, section 290.01, 
 15.20  subdivision 19c, is amended to read: 
 15.21     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 15.22  INCOME.] For corporations, there shall be added to federal 
 15.23  taxable income: 
 15.24     (1) the amount of any deduction taken for federal income 
 15.25  tax purposes for income, excise, or franchise taxes based on net 
 15.26  income or related minimum taxes, including but not limited to 
 15.27  the tax imposed under section 290.0922, paid by the corporation 
 15.28  to Minnesota, another state, a political subdivision of another 
 15.29  state, the District of Columbia, or any foreign country or 
 15.30  possession of the United States; 
 15.31     (2) interest not subject to federal tax upon obligations 
 15.32  of:  the United States, its possessions, its agencies, or its 
 15.33  instrumentalities; the state of Minnesota or any other state, 
 15.34  any of its political or governmental subdivisions, any of its 
 15.35  municipalities, or any of its governmental agencies or 
 15.36  instrumentalities; the District of Columbia; or Indian tribal 
 16.1   governments; 
 16.2      (3) exempt-interest dividends received as defined in 
 16.3   section 852(b)(5) of the Internal Revenue Code; 
 16.4      (4) the amount of any net operating loss deduction taken 
 16.5   for federal income tax purposes under section 172 or 832(c)(10) 
 16.6   of the Internal Revenue Code or operations loss deduction under 
 16.7   section 810 of the Internal Revenue Code; 
 16.8      (5) the amount of any special deductions taken for federal 
 16.9   income tax purposes under sections 241 to 247 of the Internal 
 16.10  Revenue Code; 
 16.11     (6) losses from the business of mining, as defined in 
 16.12  section 290.05, subdivision 1, clause (a), that are not subject 
 16.13  to Minnesota income tax; 
 16.14     (7) the amount of any capital losses deducted for federal 
 16.15  income tax purposes under sections 1211 and 1212 of the Internal 
 16.16  Revenue Code; 
 16.17     (8) the exempt foreign trade income of a foreign sales 
 16.18  corporation under sections 921(a) and 291 of the Internal 
 16.19  Revenue Code; 
 16.20     (9) the amount of percentage depletion deducted under 
 16.21  sections 611 through 614 and 291 of the Internal Revenue Code; 
 16.22     (10) for certified pollution control facilities placed in 
 16.23  service in a taxable year beginning before December 31, 1986, 
 16.24  and for which amortization deductions were elected under section 
 16.25  169 of the Internal Revenue Code of 1954, as amended through 
 16.26  December 31, 1985, the amount of the amortization deduction 
 16.27  allowed in computing federal taxable income for those 
 16.28  facilities; 
 16.29     (11) the amount of any deemed dividend from a foreign 
 16.30  operating corporation determined pursuant to section 290.17, 
 16.31  subdivision 4, paragraph (g); 
 16.32     (12) the amount of any environmental tax paid under section 
 16.33  59(a) of the Internal Revenue Code; 
 16.34     (13) the amount of a partner's pro rata share of net income 
 16.35  which does not flow through to the partner because the 
 16.36  partnership elected to pay the tax on the income under section 
 17.1   6242(a)(2) of the Internal Revenue Code; 
 17.2      (14) the amount of net income excluded under section 114 of 
 17.3   the Internal Revenue Code; 
 17.4      (15) any increase in subpart F income, as defined in 
 17.5   section 952(a) of the Internal Revenue Code, for the taxable 
 17.6   year when subpart F income is calculated without regard to the 
 17.7   provisions of section 614 of Public Law 107-147; and 
 17.8      (16) 80 percent of the depreciation deduction allowed under 
 17.9   section 168(k) of the Internal Revenue Code.  For purposes of 
 17.10  this clause, if the taxpayer has an activity that in the taxable 
 17.11  year generates a deduction for depreciation under section 168(k) 
 17.12  and the activity generates a loss for the taxable year that the 
 17.13  taxpayer is not allowed to claim for the taxable year, "the 
 17.14  depreciation allowed under section 168(k)" for the taxable year 
 17.15  is limited to excess of the depreciation claimed by the activity 
 17.16  under section 168(k) over the amount of the loss from the 
 17.17  activity that is not allowed in the taxable year.  In succeeding 
 17.18  taxable years when the losses not allowed in the taxable year 
 17.19  are allowed, the depreciation under section 168(k) is allowed; 
 17.20     (17) 80 percent of the amount by which the deduction 
 17.21  allowed by section 179 of the Internal Revenue Code exceeds the 
 17.22  deduction allowable by section 179 of the Internal Revenue Code 
 17.23  of 1986, as amended through December 31, 2003; and 
 17.24     (18) to the extent deducted in computing federal taxable 
 17.25  income, the amount of the deduction allowable under section 199 
 17.26  of the Internal Revenue Code. 
 17.27     [EFFECTIVE DATE.] This section is effective for tax years 
 17.28  beginning after December 31, 2004. 
 17.29     Sec. 5.  Minnesota Statutes 2004, section 290.01, 
 17.30  subdivision 19d, is amended to read: 
 17.31     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 17.32  TAXABLE INCOME.] For corporations, there shall be subtracted 
 17.33  from federal taxable income after the increases provided in 
 17.34  subdivision 19c:  
 17.35     (1) the amount of foreign dividend gross-up added to gross 
 17.36  income for federal income tax purposes under section 78 of the 
 18.1   Internal Revenue Code; 
 18.2      (2) the amount of salary expense not allowed for federal 
 18.3   income tax purposes due to claiming the federal jobs credit 
 18.4   under section 51 of the Internal Revenue Code; 
 18.5      (3) any dividend (not including any distribution in 
 18.6   liquidation) paid within the taxable year by a national or state 
 18.7   bank to the United States, or to any instrumentality of the 
 18.8   United States exempt from federal income taxes, on the preferred 
 18.9   stock of the bank owned by the United States or the 
 18.10  instrumentality; 
 18.11     (4) amounts disallowed for intangible drilling costs due to 
 18.12  differences between this chapter and the Internal Revenue Code 
 18.13  in taxable years beginning before January 1, 1987, as follows: 
 18.14     (i) to the extent the disallowed costs are represented by 
 18.15  physical property, an amount equal to the allowance for 
 18.16  depreciation under Minnesota Statutes 1986, section 290.09, 
 18.17  subdivision 7, subject to the modifications contained in 
 18.18  subdivision 19e; and 
 18.19     (ii) to the extent the disallowed costs are not represented 
 18.20  by physical property, an amount equal to the allowance for cost 
 18.21  depletion under Minnesota Statutes 1986, section 290.09, 
 18.22  subdivision 8; 
 18.23     (5) the deduction for capital losses pursuant to sections 
 18.24  1211 and 1212 of the Internal Revenue Code, except that: 
 18.25     (i) for capital losses incurred in taxable years beginning 
 18.26  after December 31, 1986, capital loss carrybacks shall not be 
 18.27  allowed; 
 18.28     (ii) for capital losses incurred in taxable years beginning
 18.29  after December 31, 1986, a capital loss carryover to each of the 
 18.30  15 taxable years succeeding the loss year shall be allowed; 
 18.31     (iii) for capital losses incurred in taxable years 
 18.32  beginning before January 1, 1987, a capital loss carryback to 
 18.33  each of the three taxable years preceding the loss year, subject 
 18.34  to the provisions of Minnesota Statutes 1986, section 290.16, 
 18.35  shall be allowed; and 
 18.36     (iv) for capital losses incurred in taxable years beginning
 19.1   before January 1, 1987, a capital loss carryover to each of the 
 19.2   five taxable years succeeding the loss year to the extent such 
 19.3   loss was not used in a prior taxable year and subject to the 
 19.4   provisions of Minnesota Statutes 1986, section 290.16, shall be 
 19.5   allowed; 
 19.6      (6) an amount for interest and expenses relating to income 
 19.7   not taxable for federal income tax purposes, if (i) the income 
 19.8   is taxable under this chapter and (ii) the interest and expenses 
 19.9   were disallowed as deductions under the provisions of section 
 19.10  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 19.11  federal taxable income; 
 19.12     (7) in the case of mines, oil and gas wells, other natural 
 19.13  deposits, and timber for which percentage depletion was 
 19.14  disallowed pursuant to subdivision 19c, clause (11), a 
 19.15  reasonable allowance for depletion based on actual cost.  In the 
 19.16  case of leases the deduction must be apportioned between the 
 19.17  lessor and lessee in accordance with rules prescribed by the 
 19.18  commissioner.  In the case of property held in trust, the 
 19.19  allowable deduction must be apportioned between the income 
 19.20  beneficiaries and the trustee in accordance with the pertinent 
 19.21  provisions of the trust, or if there is no provision in the 
 19.22  instrument, on the basis of the trust's income allocable to 
 19.23  each; 
 19.24     (8) for certified pollution control facilities placed in 
 19.25  service in a taxable year beginning before December 31, 1986, 
 19.26  and for which amortization deductions were elected under section 
 19.27  169 of the Internal Revenue Code of 1954, as amended through 
 19.28  December 31, 1985, an amount equal to the allowance for 
 19.29  depreciation under Minnesota Statutes 1986, section 290.09, 
 19.30  subdivision 7; 
 19.31     (9) amounts included in federal taxable income that are due 
 19.32  to refunds of income, excise, or franchise taxes based on net 
 19.33  income or related minimum taxes paid by the corporation to 
 19.34  Minnesota, another state, a political subdivision of another 
 19.35  state, the District of Columbia, or a foreign country or 
 19.36  possession of the United States to the extent that the taxes 
 20.1   were added to federal taxable income under section 290.01, 
 20.2   subdivision 19c, clause (1), in a prior taxable year; 
 20.3      (10) 80 percent of royalties, fees, or other like income 
 20.4   accrued or received from a foreign operating corporation or a 
 20.5   foreign corporation which is part of the same unitary business 
 20.6   as the receiving corporation; 
 20.7      (11) income or gains from the business of mining as defined 
 20.8   in section 290.05, subdivision 1, clause (a), that are not 
 20.9   subject to Minnesota franchise tax; 
 20.10     (12) the amount of handicap access expenditures in the 
 20.11  taxable year which are not allowed to be deducted or capitalized 
 20.12  under section 44(d)(7) of the Internal Revenue Code; 
 20.13     (13) the amount of qualified research expenses not allowed 
 20.14  for federal income tax purposes under section 280C(c) of the 
 20.15  Internal Revenue Code, but only to the extent that the amount 
 20.16  exceeds the amount of the credit allowed under section 290.068; 
 20.17     (14) the amount of salary expenses not allowed for federal 
 20.18  income tax purposes due to claiming the Indian employment credit 
 20.19  under section 45A(a) of the Internal Revenue Code; 
 20.20     (15) the amount of any refund of environmental taxes paid 
 20.21  under section 59A of the Internal Revenue Code; 
 20.22     (16) for taxable years beginning before January 1, 2008, 
 20.23  the amount of the federal small ethanol producer credit allowed 
 20.24  under section 40(a)(3) of the Internal Revenue Code which is 
 20.25  included in gross income under section 87 of the Internal 
 20.26  Revenue Code; 
 20.27     (17) for a corporation whose foreign sales corporation, as 
 20.28  defined in section 922 of the Internal Revenue Code, constituted 
 20.29  a foreign operating corporation during any taxable year ending 
 20.30  before January 1, 1995, and a return was filed by August 15, 
 20.31  1996, claiming the deduction under section 290.21, subdivision 
 20.32  4, for income received from the foreign operating corporation, 
 20.33  an amount equal to 1.23 multiplied by the amount of income 
 20.34  excluded under section 114 of the Internal Revenue Code, 
 20.35  provided the income is not income of a foreign operating 
 20.36  company; 
 21.1      (18) any decrease in subpart F income, as defined in 
 21.2   section 952(a) of the Internal Revenue Code, for the taxable 
 21.3   year when subpart F income is calculated without regard to the 
 21.4   provisions of section 614 of Public Law 107-147; and 
 21.5      (19) in each of the five tax years immediately following 
 21.6   the tax year in which an addition is required under subdivision 
 21.7   19c, clause (16), an amount equal to one-fifth of the delayed 
 21.8   depreciation.  For purposes of this clause, "delayed 
 21.9   depreciation" means the amount of the addition made by the 
 21.10  taxpayer under subdivision 19c, clause (16).  The resulting 
 21.11  delayed depreciation cannot be less than zero; and 
 21.12     (20) in each of the five tax years immediately following 
 21.13  the tax year in which an addition is required under subdivision 
 21.14  19c, clause (17), an amount equal to one-fifth of the amount of 
 21.15  the addition. 
 21.16     [EFFECTIVE DATE.] This section is effective for tax years 
 21.17  beginning after December 31, 2004. 
 21.18     Sec. 6.  Minnesota Statutes 2004, section 290.01, 
 21.19  subdivision 31, is amended to read: 
 21.20     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 21.21  defined otherwise, "Internal Revenue Code" means the Internal 
 21.22  Revenue Code of 1986, as amended through June 15, 2003, and as 
 21.23  further amended by the American Jobs Creation Act of 2004, 
 21.24  Public Law 108-435. 
 21.25     [EFFECTIVE DATE.] This section is effective the day 
 21.26  following final enactment except the changes incorporated by 
 21.27  federal changes are effective at the same times as the changes 
 21.28  were effective for federal purposes. 
 21.29     Sec. 7.  Minnesota Statutes 2004, section 290.06, 
 21.30  subdivision 2c, is amended to read: 
 21.31     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 21.32  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 21.33  married individuals filing joint returns and surviving spouses 
 21.34  as defined in section 2(a) of the Internal Revenue Code must be 
 21.35  computed by applying to their taxable net income the following 
 21.36  schedule of rates: 
 22.1      (1) On the first $25,680, 5.35 percent; 
 22.2      (2) On all over $25,680, but not over $102,030, 7.05 
 22.3   percent; 
 22.4      (3) On all over $102,030, 7.85 percent. 
 22.5      Married individuals filing separate returns, estates, and 
 22.6   trusts must compute their income tax by applying the above rates 
 22.7   to their taxable income, except that the income brackets will be 
 22.8   one-half of the above amounts.  
 22.9      (b) The income taxes imposed by this chapter upon unmarried 
 22.10  individuals must be computed by applying to taxable net income 
 22.11  the following schedule of rates: 
 22.12     (1) On the first $17,570, 5.35 percent; 
 22.13     (2) On all over $17,570, but not over $57,710, 7.05 
 22.14  percent; 
 22.15     (3) On all over $57,710, 7.85 percent. 
 22.16     (c) The income taxes imposed by this chapter upon unmarried 
 22.17  individuals qualifying as a head of household as defined in 
 22.18  section 2(b) of the Internal Revenue Code must be computed by 
 22.19  applying to taxable net income the following schedule of rates: 
 22.20     (1) On the first $21,630, 5.35 percent; 
 22.21     (2) On all over $21,630, but not over $86,910, 7.05 
 22.22  percent; 
 22.23     (3) On all over $86,910, 7.85 percent. 
 22.24     (d) In lieu of a tax computed according to the rates set 
 22.25  forth in this subdivision, the tax of any individual taxpayer 
 22.26  whose taxable net income for the taxable year is less than an 
 22.27  amount determined by the commissioner must be computed in 
 22.28  accordance with tables prepared and issued by the commissioner 
 22.29  of revenue based on income brackets of not more than $100.  The 
 22.30  amount of tax for each bracket shall be computed at the rates 
 22.31  set forth in this subdivision, provided that the commissioner 
 22.32  may disregard a fractional part of a dollar unless it amounts to 
 22.33  50 cents or more, in which case it may be increased to $1. 
 22.34     (e) An individual who is not a Minnesota resident for the 
 22.35  entire year must compute the individual's Minnesota income tax 
 22.36  as provided in this subdivision.  After the application of the 
 23.1   nonrefundable credits provided in this chapter, the tax 
 23.2   liability must then be multiplied by a fraction in which:  
 23.3      (1) the numerator is the individual's Minnesota source 
 23.4   federal adjusted gross income as defined in section 62 of the 
 23.5   Internal Revenue Code and increased by the additions required 
 23.6   under section 290.01, subdivision 19a, clauses (1), (5), and 
 23.7   (6), (7), (8), and (9), and reduced by the subtraction under 
 23.8   section 290.01, subdivision 19b, clause (11), and the Minnesota 
 23.9   assignable portion of the subtraction for United States 
 23.10  government interest under section 290.01, subdivision 19b, 
 23.11  clause (1), and the subtractions under clauses (10), (11), and 
 23.12  (12), after applying the allocation and assignability provisions 
 23.13  of section 290.081, clause (a), or 290.17; and 
 23.14     (2) the denominator is the individual's federal adjusted 
 23.15  gross income as defined in section 62 of the Internal Revenue 
 23.16  Code of 1986, increased by the amounts specified in section 
 23.17  290.01, subdivision 19a, clauses (1), (5), and (6), (7), (8), 
 23.18  and (9), and reduced by the amounts specified in section 290.01, 
 23.19  subdivision 19b, clauses (1) and, (10), (11), and (12). 
 23.20     [EFFECTIVE DATE.] This section is effective for tax years 
 23.21  beginning after December 31, 2004. 
 23.22     Sec. 8.  Minnesota Statutes 2004, section 290.067, 
 23.23  subdivision 2a, is amended to read: 
 23.24     Subd. 2a.  [INCOME.] (a) For purposes of this section, 
 23.25  "income" means the sum of the following: 
 23.26     (1) federal adjusted gross income as defined in section 62 
 23.27  of the Internal Revenue Code; and 
 23.28     (2) the sum of the following amounts to the extent not 
 23.29  included in clause (1): 
 23.30     (i) all nontaxable income; 
 23.31     (ii) the amount of a passive activity loss that is not 
 23.32  disallowed as a result of section 469, paragraph (i) or (m) of 
 23.33  the Internal Revenue Code and the amount of passive activity 
 23.34  loss carryover allowed under section 469(b) of the Internal 
 23.35  Revenue Code; 
 23.36     (iii) an amount equal to the total of any discharge of 
 24.1   qualified farm indebtedness of a solvent individual excluded 
 24.2   from gross income under section 108(g) of the Internal Revenue 
 24.3   Code; 
 24.4      (iv) cash public assistance and relief; 
 24.5      (v) any pension or annuity (including railroad retirement 
 24.6   benefits, all payments received under the federal Social 
 24.7   Security Act, supplemental security income, and veterans 
 24.8   benefits), which was not exclusively funded by the claimant or 
 24.9   spouse, or which was funded exclusively by the claimant or 
 24.10  spouse and which funding payments were excluded from federal 
 24.11  adjusted gross income in the years when the payments were made; 
 24.12     (vi) interest received from the federal or a state 
 24.13  government or any instrumentality or political subdivision 
 24.14  thereof; 
 24.15     (vii) workers' compensation; 
 24.16     (viii) nontaxable strike benefits; 
 24.17     (ix) the gross amounts of payments received in the nature 
 24.18  of disability income or sick pay as a result of accident, 
 24.19  sickness, or other disability, whether funded through insurance 
 24.20  or otherwise; 
 24.21     (x) a lump sum distribution under section 402(e)(3) of the 
 24.22  Internal Revenue Code of 1986, as amended through December 31, 
 24.23  1995; 
 24.24     (xi) contributions made by the claimant to an individual 
 24.25  retirement account, including a qualified voluntary employee 
 24.26  contribution; simplified employee pension plan; self-employed 
 24.27  retirement plan; cash or deferred arrangement plan under section 
 24.28  401(k) of the Internal Revenue Code; or deferred compensation 
 24.29  plan under section 457 of the Internal Revenue Code; and 
 24.30     (xii) nontaxable scholarship or fellowship grants; and 
 24.31     (xiii) the amount of deduction allowed under section 199 of 
 24.32  the Internal Revenue Code. 
 24.33     In the case of an individual who files an income tax return 
 24.34  on a fiscal year basis, the term "federal adjusted gross income" 
 24.35  means federal adjusted gross income reflected in the fiscal year 
 24.36  ending in the next calendar year.  Federal adjusted gross income 
 25.1   may not be reduced by the amount of a net operating loss 
 25.2   carryback or carryforward or a capital loss carryback or 
 25.3   carryforward allowed for the year. 
 25.4      (b) "Income" does not include: 
 25.5      (1) amounts excluded pursuant to the Internal Revenue Code, 
 25.6   sections 101(a) and 102; 
 25.7      (2) amounts of any pension or annuity that were exclusively 
 25.8   funded by the claimant or spouse if the funding payments were 
 25.9   not excluded from federal adjusted gross income in the years 
 25.10  when the payments were made; 
 25.11     (3) surplus food or other relief in kind supplied by a 
 25.12  governmental agency; 
 25.13     (4) relief granted under chapter 290A; 
 25.14     (5) child support payments received under a temporary or 
 25.15  final decree of dissolution or legal separation; and 
 25.16     (6) restitution payments received by eligible individuals 
 25.17  and excludable interest as defined in section 803 of the 
 25.18  Economic Growth and Tax Relief Reconciliation Act of 2001, 
 25.19  Public Law 107-16. 
 25.20     [EFFECTIVE DATE.] This section is effective for tax years 
 25.21  beginning after December 31, 2003. 
 25.22     Sec. 9.  Minnesota Statutes 2004, section 290.091, 
 25.23  subdivision 2, is amended to read: 
 25.24     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 25.25  this section, the following terms have the meanings given: 
 25.26     (a) "Alternative minimum taxable income" means the sum of 
 25.27  the following for the taxable year: 
 25.28     (1) the taxpayer's federal alternative minimum taxable 
 25.29  income as defined in section 55(b)(2) of the Internal Revenue 
 25.30  Code; 
 25.31     (2) the taxpayer's itemized deductions allowed in computing 
 25.32  federal alternative minimum taxable income, but excluding: 
 25.33     (i) the charitable contribution deduction under section 170 
 25.34  of the Internal Revenue Code to the extent that the deduction 
 25.35  exceeds 1.0 percent of adjusted gross income, as defined in 
 25.36  section 62 of the Internal Revenue Code; 
 26.1      (ii) the medical expense deduction; 
 26.2      (iii) the casualty, theft, and disaster loss deduction; and 
 26.3      (iv) the impairment-related work expenses of a disabled 
 26.4   person; 
 26.5      (3) for depletion allowances computed under section 613A(c) 
 26.6   of the Internal Revenue Code, with respect to each property (as 
 26.7   defined in section 614 of the Internal Revenue Code), to the 
 26.8   extent not included in federal alternative minimum taxable 
 26.9   income, the excess of the deduction for depletion allowable 
 26.10  under section 611 of the Internal Revenue Code for the taxable 
 26.11  year over the adjusted basis of the property at the end of the 
 26.12  taxable year (determined without regard to the depletion 
 26.13  deduction for the taxable year); 
 26.14     (4) to the extent not included in federal alternative 
 26.15  minimum taxable income, the amount of the tax preference for 
 26.16  intangible drilling cost under section 57(a)(2) of the Internal 
 26.17  Revenue Code determined without regard to subparagraph (E); 
 26.18     (5) to the extent not included in federal alternative 
 26.19  minimum taxable income, the amount of interest income as 
 26.20  provided by section 290.01, subdivision 19a, clause (1); and 
 26.21     (6) the amount of addition required by section 290.01, 
 26.22  subdivision 19a, clause clauses (7), (8), and (9); 
 26.23     less the sum of the amounts determined under the following: 
 26.24     (1) interest income as defined in section 290.01, 
 26.25  subdivision 19b, clause (1); 
 26.26     (2) an overpayment of state income tax as provided by 
 26.27  section 290.01, subdivision 19b, clause (2), to the extent 
 26.28  included in federal alternative minimum taxable income; 
 26.29     (3) the amount of investment interest paid or accrued 
 26.30  within the taxable year on indebtedness to the extent that the 
 26.31  amount does not exceed net investment income, as defined in 
 26.32  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 26.33  not include amounts deducted in computing federal adjusted gross 
 26.34  income; and 
 26.35     (4) amounts subtracted from federal taxable income as 
 26.36  provided by section 290.01, subdivision 19b, clauses (10) and, 
 27.1   (11), and (12). 
 27.2      In the case of an estate or trust, alternative minimum 
 27.3   taxable income must be computed as provided in section 59(c) of 
 27.4   the Internal Revenue Code. 
 27.5      (b) "Investment interest" means investment interest as 
 27.6   defined in section 163(d)(3) of the Internal Revenue Code. 
 27.7      (c) "Tentative minimum tax" equals 6.4 percent of 
 27.8   alternative minimum taxable income after subtracting the 
 27.9   exemption amount determined under subdivision 3. 
 27.10     (d) "Regular tax" means the tax that would be imposed under 
 27.11  this chapter (without regard to this section and section 
 27.12  290.032), reduced by the sum of the nonrefundable credits 
 27.13  allowed under this chapter.  
 27.14     (e) "Net minimum tax" means the minimum tax imposed by this 
 27.15  section. 
 27.16     [EFFECTIVE DATE.] This section is effective for tax years 
 27.17  beginning after December 31, 2004. 
 27.18     Sec. 10.  Minnesota Statutes 2004, section 290A.03, 
 27.19  subdivision 3, is amended to read: 
 27.20     Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
 27.21  following:  
 27.22     (a) federal adjusted gross income as defined in the 
 27.23  Internal Revenue Code; and 
 27.24     (b) the sum of the following amounts to the extent not 
 27.25  included in clause (a):  
 27.26     (i) all nontaxable income; 
 27.27     (ii) the amount of a passive activity loss that is not 
 27.28  disallowed as a result of section 469, paragraph (i) or (m) of 
 27.29  the Internal Revenue Code and the amount of passive activity 
 27.30  loss carryover allowed under section 469(b) of the Internal 
 27.31  Revenue Code; 
 27.32     (iii) an amount equal to the total of any discharge of 
 27.33  qualified farm indebtedness of a solvent individual excluded 
 27.34  from gross income under section 108(g) of the Internal Revenue 
 27.35  Code; 
 27.36     (iv) cash public assistance and relief; 
 28.1      (v) any pension or annuity (including railroad retirement 
 28.2   benefits, all payments received under the federal Social 
 28.3   Security Act, supplemental security income, and veterans 
 28.4   benefits), which was not exclusively funded by the claimant or 
 28.5   spouse, or which was funded exclusively by the claimant or 
 28.6   spouse and which funding payments were excluded from federal 
 28.7   adjusted gross income in the years when the payments were made; 
 28.8      (vi) interest received from the federal or a state 
 28.9   government or any instrumentality or political subdivision 
 28.10  thereof; 
 28.11     (vii) workers' compensation; 
 28.12     (viii) nontaxable strike benefits; 
 28.13     (ix) the gross amounts of payments received in the nature 
 28.14  of disability income or sick pay as a result of accident, 
 28.15  sickness, or other disability, whether funded through insurance 
 28.16  or otherwise; 
 28.17     (x) a lump sum distribution under section 402(e)(3) of the 
 28.18  Internal Revenue Code of 1986, as amended through December 31, 
 28.19  1995; 
 28.20     (xi) contributions made by the claimant to an individual 
 28.21  retirement account, including a qualified voluntary employee 
 28.22  contribution; simplified employee pension plan; self-employed 
 28.23  retirement plan; cash or deferred arrangement plan under section 
 28.24  401(k) of the Internal Revenue Code; or deferred compensation 
 28.25  plan under section 457 of the Internal Revenue Code; and 
 28.26     (xii) nontaxable scholarship or fellowship grants; and 
 28.27     (xiii) the amount of deduction allowed under section 199 of 
 28.28  the Internal Revenue Code. 
 28.29     In the case of an individual who files an income tax return 
 28.30  on a fiscal year basis, the term "federal adjusted gross income" 
 28.31  shall mean federal adjusted gross income reflected in the fiscal 
 28.32  year ending in the calendar year.  Federal adjusted gross income 
 28.33  shall not be reduced by the amount of a net operating loss 
 28.34  carryback or carryforward or a capital loss carryback or 
 28.35  carryforward allowed for the year.  
 28.36     (2) "Income" does not include:  
 29.1      (a) amounts excluded pursuant to the Internal Revenue Code, 
 29.2   sections 101(a) and 102; 
 29.3      (b) amounts of any pension or annuity which was exclusively 
 29.4   funded by the claimant or spouse and which funding payments were 
 29.5   not excluded from federal adjusted gross income in the years 
 29.6   when the payments were made; 
 29.7      (c) surplus food or other relief in kind supplied by a 
 29.8   governmental agency; 
 29.9      (d) relief granted under this chapter; 
 29.10     (e) child support payments received under a temporary or 
 29.11  final decree of dissolution or legal separation; or 
 29.12     (f) restitution payments received by eligible individuals 
 29.13  and excludable interest as defined in section 803 of the 
 29.14  Economic Growth and Tax Relief Reconciliation Act of 2001, 
 29.15  Public Law 107-16.  
 29.16     (3) The sum of the following amounts may be subtracted from 
 29.17  income:  
 29.18     (a) for the claimant's first dependent, the exemption 
 29.19  amount multiplied by 1.4; 
 29.20     (b) for the claimant's second dependent, the exemption 
 29.21  amount multiplied by 1.3; 
 29.22     (c) for the claimant's third dependent, the exemption 
 29.23  amount multiplied by 1.2; 
 29.24     (d) for the claimant's fourth dependent, the exemption 
 29.25  amount multiplied by 1.1; 
 29.26     (e) for the claimant's fifth dependent, the exemption 
 29.27  amount; and 
 29.28     (f) if the claimant or claimant's spouse was disabled or 
 29.29  attained the age of 65 on or before December 31 of the year for 
 29.30  which the taxes were levied or rent paid, the exemption amount.  
 29.31     For purposes of this subdivision, the "exemption amount" 
 29.32  means the exemption amount under section 151(d) of the Internal 
 29.33  Revenue Code for the taxable year for which the income is 
 29.34  reported.  
 29.35     [EFFECTIVE DATE.] This section is effective for property 
 29.36  tax refunds based on household income for 2004 and thereafter. 
 30.1      Sec. 11.  Minnesota Statutes 2004, section 290A.03, 
 30.2   subdivision 15, is amended to read: 
 30.3      Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 30.4   means the Internal Revenue Code of 1986, as amended through June 
 30.5   15, 2003, and as further amended by the American Jobs Creation 
 30.6   Act of 2004, Public Law 108-435. 
 30.7      [EFFECTIVE DATE.] This section is effective for property 
 30.8   tax refunds based on property taxes payable on or after December 
 30.9   31, 2004, and rent paid on or after December 31, 2003. 
 30.10                             ARTICLE 3 
 30.11               SALES, USE, AND SPECIAL TAXES - SF1209
 30.12     Section 1.  Minnesota Statutes 2004, section 16C.03, is 
 30.13  amended by adding a subdivision to read: 
 30.14     Subd. 18.  [CONTRACTS WITH FOREIGN VENDORS.] (a) The 
 30.15  commissioner and other agencies to which this section applies 
 30.16  and the legislative branch of government shall, subject to 
 30.17  paragraph (d), cancel a contract for goods or services from a 
 30.18  vendor or an affiliate of a vendor or suspend or debar a vendor 
 30.19  or an affiliate of a vendor from future contracts upon 
 30.20  notification from the commissioner of revenue that the vendor or 
 30.21  an affiliate of the vendor has not registered to collect the 
 30.22  sales and use tax imposed under chapter 297A on its sales in 
 30.23  Minnesota or to a destination in Minnesota.  This subdivision 
 30.24  shall not apply to state colleges and universities, the courts, 
 30.25  and any agency in the judicial branch of government.  For 
 30.26  purposes of this subdivision, the term "affiliate" means any 
 30.27  person or entity that is controlled by, or is under common 
 30.28  control of, a vendor through stock ownership or other 
 30.29  affiliation. 
 30.30     (b) Beginning January 1, 2006, each vendor or affiliate of 
 30.31  a vendor selling goods or services, subject to tax under chapter 
 30.32  297A, to an agency or the legislature must provide its Minnesota 
 30.33  sales and use tax business identification number, upon request, 
 30.34  to show that the vendor is registered to collect Minnesota sales 
 30.35  or use tax. 
 30.36     (c) The commissioner of revenue shall periodically provide 
 31.1   to the commissioner and the legislative branch a list of vendors 
 31.2   who have not registered to collect Minnesota sales and use tax 
 31.3   and who are subject to being suspended or debarred as vendors or 
 31.4   having their contracts canceled. 
 31.5      (d) The provisions of this subdivision may be waived by the 
 31.6   commissioner or the legislative branch when the vendor is the 
 31.7   single source of such goods or services, in the event of an 
 31.8   emergency, or when it is in the best interests of the state as 
 31.9   determined by the commissioner in consultation with the 
 31.10  commissioner of revenue.  Such consultation is not a disclosure 
 31.11  violation under chapter 270B. 
 31.12     [EFFECTIVE DATE.] This section is effective for all 
 31.13  contracts entered into after December 31, 2005. 
 31.14     Sec. 2.  [295.75] [LIQUOR GROSS RECEIPTS TAX.] 
 31.15     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 31.16  section, the following terms have the meanings given. 
 31.17     (b) "Commissioner" means the commissioner of revenue.  
 31.18     (c) "Gross receipts" means the total amount received, in 
 31.19  money or by barter or exchange, for all liquor sales at retail 
 31.20  as measured by the sales price, but does not include any taxes 
 31.21  imposed directly on the consumer that are separately stated on 
 31.22  the invoice, bill of sale, or similar document given to the 
 31.23  purchaser. 
 31.24     (d) "Liquor" means:  
 31.25     (1) intoxicating liquor, as defined in section 340A.101, 
 31.26  subdivision 14; 
 31.27     (2) beverage containing intoxicating liquor; and 
 31.28     (3) 3.2 percent malt liquor, as defined in section 
 31.29  340A.101, subdivision 19, when sold at an on-sale or off-sale 
 31.30  municipal liquor store or other establishment licensed to sell 
 31.31  any type of intoxicating liquor. 
 31.32     (e) "Liquor retailer" means a retailer that sells liquor.  
 31.33     (f) "Retail sale" has the meaning given in section 297A.61, 
 31.34  subdivision 4.  
 31.35     Subd. 2.  [GROSS RECEIPTS TAX IMPOSED.] A tax is imposed on 
 31.36  each liquor retailer equal to 2.5 percent of gross receipts from 
 32.1   retail sales in Minnesota of liquor.  
 32.2      Subd. 3.  [USE TAX IMPOSED; CREDIT FOR TAXES PAID.] (a) A 
 32.3   person that receives liquor for use or storage in Minnesota, 
 32.4   other than from a liquor retailer that paid the tax under 
 32.5   subdivision 2, is subject to tax at the rate imposed under 
 32.6   subdivision 2.  Liability for the tax is incurred when the 
 32.7   person has possession of the liquor in Minnesota.  The tax must 
 32.8   be remitted to the commissioner in the same manner prescribed 
 32.9   for the taxes imposed under chapter 297A. 
 32.10     (b) A person that has paid taxes to another jurisdiction on 
 32.11  the same transaction and is subject to tax under this section is 
 32.12  entitled to a credit for the tax legally due and paid to another 
 32.13  jurisdiction to the extent of the lesser of (1) the tax actually 
 32.14  paid to the other jurisdiction, or (2) the amount of tax imposed 
 32.15  by Minnesota on the transaction subject to tax in the other 
 32.16  jurisdiction. 
 32.17     Subd. 4.  [TAX COLLECTION REQUIRED.] A liquor retailer with 
 32.18  nexus in Minnesota, who is not subject to tax under subdivision 
 32.19  2, is required to collect the tax imposed under subdivision 3 
 32.20  from the purchaser of the liquor and give the purchaser a 
 32.21  receipt for the tax paid.  The tax collected must be remitted to 
 32.22  the commissioner in the same manner prescribed for the taxes 
 32.23  imposed under chapter 297A.  
 32.24     Subd. 5.  [TAXES PAID TO ANOTHER JURISDICTION; CREDIT.] A 
 32.25  liquor retailer that has paid taxes to another jurisdiction 
 32.26  measured by gross receipts and is subject to tax under this 
 32.27  section on the same gross receipts is entitled to a credit for 
 32.28  the tax legally due and paid to another jurisdiction to the 
 32.29  extent of the lesser of (1) the tax actually paid to the other 
 32.30  jurisdiction, or (2) the amount of tax imposed by Minnesota on 
 32.31  the gross receipts subject to tax in the other taxing 
 32.32  jurisdictions. 
 32.33     Subd. 6.  [EXEMPTIONS.] All of the exemptions applicable to 
 32.34  the taxes imposed under chapter 297A are applicable to the taxes 
 32.35  imposed under this section. 
 32.36     Subd. 7.  [SOURCING OF SALES.] All of the provisions of 
 33.1   section 297A.668 apply to the taxes imposed by this section. 
 33.2      Subd. 8.  [PAYMENT; REPORTING.] A liquor retailer shall 
 33.3   report the tax on a return prescribed by the commissioner of 
 33.4   revenue, and shall remit the tax with the return.  The return 
 33.5   and the tax must be filed and paid using the filing cycle and 
 33.6   due dates provided for taxes imposed under chapter 297A. 
 33.7      Subd. 9.  [ADMINISTRATION.] Unless specifically provided 
 33.8   otherwise by this section, the audit, assessment, refund, 
 33.9   penalty, interest, enforcement, collection remedies, appeal, and 
 33.10  administrative provisions of chapters 270 and 289A that are 
 33.11  applicable to taxes imposed under chapter 297A apply to taxes 
 33.12  imposed under this section.  
 33.13     Subd. 10.  [INTEREST ON OVERPAYMENTS.] Interest must be 
 33.14  paid on an overpayment refunded or credited to the taxpayer from 
 33.15  the date of payment of the tax until the date the refund is paid 
 33.16  or credited.  For purposes of this subdivision, the date of 
 33.17  payment is the due date of the return or the date of actual 
 33.18  payment of the tax, whichever is later. 
 33.19     Subd. 11.  [DEPOSIT OF REVENUES.] The commissioner shall 
 33.20  deposit all revenues, including penalties and interest, derived 
 33.21  from the tax imposed by this section in the general fund. 
 33.22     [EFFECTIVE DATE.] This section is effective for sales and 
 33.23  purchases occurring on or after January 1, 2006. 
 33.24     Sec. 3.  Minnesota Statutes 2004, section 297A.68, 
 33.25  subdivision 2, is amended to read: 
 33.26     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
 33.27  (a) Materials stored, used, or consumed in industrial production 
 33.28  of personal property intended to be sold ultimately at retail 
 33.29  are exempt, whether or not the item so used becomes an 
 33.30  ingredient or constituent part of the property produced.  
 33.31  Materials that qualify for this exemption include, but are not 
 33.32  limited to, the following: 
 33.33     (1) chemicals, including chemicals used for cleaning food 
 33.34  processing machinery and equipment; 
 33.35     (2) materials, including chemicals, fuels, and electricity 
 33.36  purchased by persons engaged in industrial production to treat 
 34.1   waste generated as a result of the production process; 
 34.2      (3) fuels, electricity, gas, and steam used or consumed in 
 34.3   the production process, except that electricity, gas, or steam 
 34.4   used for space heating, cooling, or lighting is exempt if (i) it 
 34.5   is in excess of the average climate control or lighting for the 
 34.6   production area, and (ii) it is necessary to produce that 
 34.7   particular product; 
 34.8      (4) petroleum products and lubricants; 
 34.9      (5) packaging materials, including returnable containers 
 34.10  used in packaging food and beverage products; 
 34.11     (6) accessory tools, equipment, and other items that are 
 34.12  separate detachable units with an ordinary useful life of less 
 34.13  than 12 months used in producing a direct effect upon the 
 34.14  product; and 
 34.15     (7) the following materials, tools, and equipment used in 
 34.16  metalcasting:  crucibles, thermocouple protection sheaths and 
 34.17  tubes, stalk tubes, refractory materials, molten metal filters 
 34.18  and filter boxes, degassing lances, and base blocks. 
 34.19     (b) This exemption does not include: 
 34.20     (1) machinery, equipment, implements, tools, accessories, 
 34.21  appliances, contrivances and furniture and fixtures, except 
 34.22  those listed in paragraph (a), clause (6); and 
 34.23     (2) petroleum and special fuels used in producing or 
 34.24  generating power for propelling ready-mixed concrete trucks on 
 34.25  the public highways of this state. 
 34.26     (c) Industrial production includes, but is not limited to, 
 34.27  research, development, design or production of any tangible 
 34.28  personal property, manufacturing, processing (other than by 
 34.29  restaurants and consumers) of agricultural products (whether 
 34.30  vegetable or animal), commercial fishing, refining, smelting, 
 34.31  reducing, brewing, distilling, printing, mining, quarrying, 
 34.32  lumbering, generating electricity, the production of road 
 34.33  building materials, and the research, development, design, or 
 34.34  production of computer software.  Industrial production does not 
 34.35  include painting, cleaning, repairing or similar processing of 
 34.36  property except as part of the original manufacturing process.  
 35.1   Industrial production does not include the transportation, 
 35.2   transmission, or distribution of petroleum, liquefied gas, 
 35.3   natural gas, water, or steam, in, by, or through pipes, lines, 
 35.4   tanks, mains, or other means of transporting those products.  
 35.5   For purposes of this paragraph, "transportation, transmission, 
 35.6   or distribution" does not include blending of petroleum or 
 35.7   biodiesel fuel as defined in section 239.77. 
 35.8      [EFFECTIVE DATE.] This section is effective for sales and 
 35.9   purchases made after June 30, 2005. 
 35.10     Sec. 4.  Minnesota Statutes 2004, section 297A.68, 
 35.11  subdivision 5, is amended to read: 
 35.12     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
 35.13  exempt.  The tax must be imposed and collected as if the rate 
 35.14  under section 297A.62, subdivision 1, applied, and then refunded 
 35.15  in the manner provided in section 297A.75. 
 35.16     "Capital equipment" means machinery and equipment purchased 
 35.17  or leased, and used in this state by the purchaser or lessee 
 35.18  primarily for manufacturing, fabricating, mining, or refining 
 35.19  tangible personal property to be sold ultimately at retail if 
 35.20  the machinery and equipment are essential to the integrated 
 35.21  production process of manufacturing, fabricating, mining, or 
 35.22  refining.  Capital equipment also includes machinery and 
 35.23  equipment used to electronically transmit results retrieved by a 
 35.24  customer of an on-line computerized data retrieval system. 
 35.25     (b) Capital equipment includes, but is not limited to: 
 35.26     (1) machinery and equipment used to operate, control, or 
 35.27  regulate the production equipment; 
 35.28     (2) machinery and equipment used for research and 
 35.29  development, design, quality control, and testing activities; 
 35.30     (3) environmental control devices that are used to maintain 
 35.31  conditions such as temperature, humidity, light, or air pressure 
 35.32  when those conditions are essential to and are part of the 
 35.33  production process; 
 35.34     (4) materials and supplies used to construct and install 
 35.35  machinery or equipment; 
 35.36     (5) repair and replacement parts, including accessories, 
 36.1   whether purchased as spare parts, repair parts, or as upgrades 
 36.2   or modifications to machinery or equipment; 
 36.3      (6) materials used for foundations that support machinery 
 36.4   or equipment; 
 36.5      (7) materials used to construct and install special purpose 
 36.6   buildings used in the production process; 
 36.7      (8) ready-mixed concrete equipment in which the ready-mixed 
 36.8   concrete is mixed as part of the delivery process regardless if 
 36.9   mounted on a chassis and leases of ready-mixed concrete trucks; 
 36.10  and 
 36.11     (9) machinery or equipment used for research, development, 
 36.12  design, or production of computer software.  
 36.13     (c) Capital equipment does not include the following: 
 36.14     (1) motor vehicles taxed under chapter 297B; 
 36.15     (2) machinery or equipment used to receive or store raw 
 36.16  materials; 
 36.17     (3) building materials, except for materials included in 
 36.18  paragraph (b), clauses (6) and (7); 
 36.19     (4) machinery or equipment used for nonproduction purposes, 
 36.20  including, but not limited to, the following:  plant security, 
 36.21  fire prevention, first aid, and hospital stations; support 
 36.22  operations or administration; pollution control; and plant 
 36.23  cleaning, disposal of scrap and waste, plant communications, 
 36.24  space heating, cooling, lighting, or safety; 
 36.25     (5) farm machinery and aquaculture production equipment as 
 36.26  defined by section 297A.61, subdivisions 12 and 13; 
 36.27     (6) machinery or equipment purchased and installed by a 
 36.28  contractor as part of an improvement to real property; or 
 36.29     (7) machinery or equipment used in the transportation, 
 36.30  transmission, or distribution of petroleum, liquefied gas, 
 36.31  natural gas, water, or steam, in, by, or through pipes, lines, 
 36.32  tanks, mains, or other means of transporting those products.  
 36.33  This clause does not apply to machinery or equipment used to 
 36.34  blend petroleum or biodiesel fuel as defined in section 239.77; 
 36.35  or 
 36.36     (8) any other item that is not essential to the integrated 
 37.1   process of manufacturing, fabricating, mining, or refining. 
 37.2      (d) For purposes of this subdivision: 
 37.3      (1) "Equipment" means independent devices or tools separate 
 37.4   from machinery but essential to an integrated production 
 37.5   process, including computers and computer software, used in 
 37.6   operating, controlling, or regulating machinery and equipment; 
 37.7   and any subunit or assembly comprising a component of any 
 37.8   machinery or accessory or attachment parts of machinery, such as 
 37.9   tools, dies, jigs, patterns, and molds.  
 37.10     (2) "Fabricating" means to make, build, create, produce, or 
 37.11  assemble components or property to work in a new or different 
 37.12  manner. 
 37.13     (3) "Integrated production process" means a process or 
 37.14  series of operations through which tangible personal property is 
 37.15  manufactured, fabricated, mined, or refined.  For purposes of 
 37.16  this clause, (i) manufacturing begins with the removal of raw 
 37.17  materials from inventory and ends when the last process prior to 
 37.18  loading for shipment has been completed; (ii) fabricating begins 
 37.19  with the removal from storage or inventory of the property to be 
 37.20  assembled, processed, altered, or modified and ends with the 
 37.21  creation or production of the new or changed product; (iii) 
 37.22  mining begins with the removal of overburden from the site of 
 37.23  the ores, minerals, stone, peat deposit, or surface materials 
 37.24  and ends when the last process before stockpiling is completed; 
 37.25  and (iv) refining begins with the removal from inventory or 
 37.26  storage of a natural resource and ends with the conversion of 
 37.27  the item to its completed form. 
 37.28     (4) "Machinery" means mechanical, electronic, or electrical 
 37.29  devices, including computers and computer software, that are 
 37.30  purchased or constructed to be used for the activities set forth 
 37.31  in paragraph (a), beginning with the removal of raw materials 
 37.32  from inventory through completion of the product, including 
 37.33  packaging of the product. 
 37.34     (5) "Machinery and equipment used for pollution control" 
 37.35  means machinery and equipment used solely to eliminate, prevent, 
 37.36  or reduce pollution resulting from an activity described in 
 38.1   paragraph (a).  
 38.2      (6) "Manufacturing" means an operation or series of 
 38.3   operations where raw materials are changed in form, composition, 
 38.4   or condition by machinery and equipment and which results in the 
 38.5   production of a new article of tangible personal property.  For 
 38.6   purposes of this subdivision, "manufacturing" includes the 
 38.7   generation of electricity or steam to be sold at retail. 
 38.8      (7) "Mining" means the extraction of minerals, ores, stone, 
 38.9   or peat. 
 38.10     (8) "On-line data retrieval system" means a system whose 
 38.11  cumulation of information is equally available and accessible to 
 38.12  all its customers. 
 38.13     (9) "Primarily" means machinery and equipment used 50 
 38.14  percent or more of the time in an activity described in 
 38.15  paragraph (a). 
 38.16     (10) "Refining" means the process of converting a natural 
 38.17  resource to an intermediate or finished product, including the 
 38.18  treatment of water to be sold at retail. 
 38.19     [EFFECTIVE DATE.] This section is effective for sales and 
 38.20  purchases made after June 30, 2005. 
 38.21     Sec. 5.  Minnesota Statutes 2004, section 297I.01, is 
 38.22  amended by adding a subdivision to read: 
 38.23     Subd. 6a.  [DIRECT BUSINESS.] (a) "Direct business" means 
 38.24  all insurance provided by an insurance company or its agents, 
 38.25  and specifically includes stop-loss insurance purchased in 
 38.26  connection with a self-insurance plan for employee health 
 38.27  benefits or for other purposes, but excludes: 
 38.28     (1) reinsurance in which an insurance company assumes the 
 38.29  liability of another insurance company; and 
 38.30     (2) self-insurance. 
 38.31     (b) For purposes of this subdivision, an insurance company 
 38.32  includes a nonprofit health service corporation, health 
 38.33  maintenance organization, and community integrated service 
 38.34  network. 
 38.35     [EFFECTIVE DATE.] This section is effective for insurance 
 38.36  premiums received after December 31, 2005. 
 39.1      Sec. 6.  Laws 2001, First Special Session chapter 5, 
 39.2   article 12, section 95, is amended to read:  
 39.3      Sec. 95.  [REPEALER.] 
 39.4      (a) Minnesota Statutes 2000, sections 297A.61, subdivision 
 39.5   16; 297A.68, subdivision 21; and 297A.71, subdivisions 2 and 16, 
 39.6   are repealed effective for sales and purchases occurring after 
 39.7   June 30, 2001, except that the repeal of section 297A.61, 
 39.8   subdivision 16, paragraph (d), is effective for sales and 
 39.9   purchases occurring after July 31, 2001. 
 39.10     (b) Minnesota Statutes 2000, sections section 297A.62, 
 39.11  subdivision 2, and 297A.64, subdivision 1, are is repealed 
 39.12  effective for sales and purchases made after December 31, 2005. 
 39.13     (c) Minnesota Statutes 2000, section 297A.71, subdivision 
 39.14  15, is repealed effective for sales and purchases made after 
 39.15  June 30, 2002. 
 39.16     (d) Minnesota Statutes 2000, section 289A.60, subdivision 
 39.17  15, is repealed effective for liabilities after January 1, 2003. 
 39.18     [EFFECTIVE DATE.] This section is effective the day 
 39.19  following final enactment. 
 39.20                             ARTICLE 4 
 39.21                       MISCELLANEOUS - SF1209
 39.22     Section 1.  Minnesota Statutes 2004, section 273.1384, 
 39.23  subdivision 1, is amended to read: 
 39.24     Subdivision 1.  [RESIDENTIAL HOMESTEAD MARKET VALUE 
 39.25  CREDIT.] Each county auditor shall determine a homestead credit 
 39.26  for each class 1a, 1b, 1c, and 2a homestead property within the 
 39.27  county equal to 0.4 percent of the first $76,000 of market value 
 39.28  of the property.  The amount of homestead credit for a homestead 
 39.29  may not exceed $304 and is reduced by minus .09 percent of the 
 39.30  market value in excess of $76,000.  The credit amount may not be 
 39.31  less than zero.  In the case of an agricultural or resort 
 39.32  homestead, only the market value of the house, garage, and 
 39.33  immediately surrounding one acre of land is eligible in 
 39.34  determining the property's homestead credit.  In the case of a 
 39.35  property which is classified as part homestead and part 
 39.36  nonhomestead, (i) the credit shall apply only to the homestead 
 40.1   portion of the property., but (ii) if a portion of a property is 
 40.2   classified as nonhomestead solely because not all the owners 
 40.3   occupy the property, or solely because both spouses do not 
 40.4   occupy the property, the credit amount shall be initially 
 40.5   computed as if that nonhomestead portion were also in the 
 40.6   homestead class and then prorated to the owner-occupant's 
 40.7   percentage of ownership or prorated to one-half if both spouses 
 40.8   do not occupy the property. 
 40.9      [EFFECTIVE DATE.] This section is effective for taxes 
 40.10  payable in 2006 and thereafter. 
 40.11     Sec. 2.  [CITY AID PAYMENTS.] 
 40.12     In 2005 and 2006, market value credit reimbursements for 
 40.13  each city payable under Minnesota Statutes, section 273.1384, 
 40.14  are reduced by the dollar amount of the 2003 reduction in market 
 40.15  value credit reimbursements for that city due to Laws 2003, 
 40.16  First Special Session chapter 21, article 5, section 12.  No 
 40.17  city's market value credit reimbursements are reduced to less 
 40.18  than zero under this section.  To the extent sufficient 
 40.19  information is available on each payment date, the commissioner 
 40.20  shall pay the annual 2005 and 2006 market value credit 
 40.21  reimbursement amounts, after reduction under this section, to 
 40.22  cities in equal installments on the dates specified in Minnesota 
 40.23  Statutes, section 273.1384. 
 40.24     [EFFECTIVE DATE.] This section is effective the day 
 40.25  following final enactment. 
 40.26                             ARTICLE 5
 40.27                        INCOME TAX - SF1683 
 40.28     Section 1.  Minnesota Statutes 2004, section 289A.39, 
 40.29  subdivision 1, is amended to read: 
 40.30     Subdivision 1.  [EXTENSIONS FOR SERVICE MEMBERS.] (a) The 
 40.31  limitations of time provided by this chapter, chapter 290 
 40.32  relating to income taxes, chapter 271 relating to the Tax Court 
 40.33  for filing returns, paying taxes, claiming refunds, commencing 
 40.34  action thereon, appealing to the Tax Court from orders relating 
 40.35  to income taxes, and the filing of petitions under chapter 278 
 40.36  that would otherwise be due May 15, 1996 May 1, 2004, and 
 41.1   appealing to the Supreme Court from decisions of the Tax Court 
 41.2   relating to income taxes are extended, as provided in section 
 41.3   7508 of the Internal Revenue Code. 
 41.4      (b) If a member of the National Guard or reserves is called 
 41.5   to active duty in the armed forces, the limitations of time 
 41.6   provided by this chapter and chapters 290 and 290A relating to 
 41.7   income taxes and claims for property tax refunds are extended by 
 41.8   the following period of time: 
 41.9      (1) in the case of an individual whose active service is in 
 41.10  the United States, six months; or 
 41.11     (2) in the case of an individual whose active service 
 41.12  includes service abroad, the period of initial service plus six 
 41.13  months. 
 41.14     Nothing in this paragraph reduces the time within which an 
 41.15  act is required or permitted under paragraph (a). 
 41.16     (c) If an individual entitled to the benefit of paragraph 
 41.17  (a) files a return during the period disregarded under paragraph 
 41.18  (a), interest must be paid on an overpayment or refundable 
 41.19  credit from the due date of the return, notwithstanding section 
 41.20  289A.56, subdivision 2.  
 41.21     (d) The provisions of this subdivision apply to the spouse 
 41.22  of an individual entitled to the benefits of this subdivision 
 41.23  with respect to a joint return filed by the spouses.  
 41.24     [EFFECTIVE DATE.] This section is effective for taxable 
 41.25  years beginning after December 31, 2002, and for property taxes 
 41.26  payable after 2003. 
 41.27     Sec. 2.  Minnesota Statutes 2004, section 290.01, 
 41.28  subdivision 7, is amended to read: 
 41.29     Subd. 7.  [RESIDENT.] (a) The term "resident" means any 
 41.30  individual domiciled in Minnesota, except that an individual is 
 41.31  not a "resident" for the period of time that the individual is 
 41.32  either: 
 41.33     (1) on active duty stationed outside of Minnesota while in 
 41.34  the armed forces of the United States or the United Nations; or 
 41.35     (2) a "qualified individual" as defined in section 
 41.36  911(d)(1) of the Internal Revenue Code, if the qualified 
 42.1   individual notifies the county within three months of moving out 
 42.2   of the country that homestead status be revoked for the 
 42.3   Minnesota residence of the qualified individual, and the 
 42.4   property is not classified as a homestead while the individual 
 42.5   remains a qualified individual. 
 42.6      (b) "Resident" also means any individual domiciled outside 
 42.7   the state who maintains a place of abode in the state and spends 
 42.8   in the aggregate more than one-half of the tax year in 
 42.9   Minnesota, unless: 
 42.10     (1) the individual or the spouse of the individual is in 
 42.11  the armed forces of the United States; or 
 42.12     (2) the individual is covered under the reciprocity 
 42.13  provisions in section 290.081. 
 42.14     For purposes of this subdivision, presence within the state 
 42.15  for any part of a calendar day constitutes a day spent in the 
 42.16  state.  Individuals shall keep adequate records to substantiate 
 42.17  the days spent outside the state. 
 42.18     The term "abode" means a dwelling maintained by an 
 42.19  individual, whether or not owned by the individual and whether 
 42.20  or not occupied by the individual, and includes a dwelling place 
 42.21  owned or leased by the individual's spouse. 
 42.22     (c) Neither the commissioner nor any court shall consider 
 42.23  charitable contributions made by an individual within or without 
 42.24  the state in determining if the individual is domiciled in 
 42.25  Minnesota. 
 42.26     [EFFECTIVE DATE.] This section is effective for taxable 
 42.27  years beginning after December 31, 2004. 
 42.28     Sec. 3.  Minnesota Statutes 2004, section 290.01, 
 42.29  subdivision 19a, is amended to read: 
 42.30     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 42.31  individuals, estates, and trusts, there shall be added to 
 42.32  federal taxable income: 
 42.33     (1)(i) interest income on obligations of any state other 
 42.34  than Minnesota or a political or governmental subdivision, 
 42.35  municipality, or governmental agency or instrumentality of any 
 42.36  state other than Minnesota exempt from federal income taxes 
 43.1   under the Internal Revenue Code or any other federal statute; 
 43.2   and 
 43.3      (ii) exempt-interest dividends as defined in section 
 43.4   852(b)(5) of the Internal Revenue Code, except the portion of 
 43.5   the exempt-interest dividends derived from interest income on 
 43.6   obligations of the state of Minnesota or its political or 
 43.7   governmental subdivisions, municipalities, governmental agencies 
 43.8   or instrumentalities, but only if the portion of the 
 43.9   exempt-interest dividends from such Minnesota sources paid to 
 43.10  all shareholders represents 95 percent or more of the 
 43.11  exempt-interest dividends that are paid by the regulated 
 43.12  investment company as defined in section 851(a) of the Internal 
 43.13  Revenue Code, or the fund of the regulated investment company as 
 43.14  defined in section 851(g) of the Internal Revenue Code, making 
 43.15  the payment; and 
 43.16     (iii) for the purposes of items (i) and (ii), interest on 
 43.17  obligations of an Indian tribal government described in section 
 43.18  7871(c) of the Internal Revenue Code shall be treated as 
 43.19  interest income on obligations of the state in which the tribe 
 43.20  is located; 
 43.21     (2) the amount of income taxes paid or accrued within the 
 43.22  taxable year under this chapter and income taxes paid to any 
 43.23  other state or to any province or territory of Canada, to the 
 43.24  extent allowed as a deduction under section 63(d) of the 
 43.25  Internal Revenue Code, but the addition may not be more than the 
 43.26  amount by which the itemized deductions as allowed under section 
 43.27  63(d) of the Internal Revenue Code exceeds the amount of the 
 43.28  standard deduction as defined in section 63(c) of the Internal 
 43.29  Revenue Code.  For the purpose of this paragraph, the 
 43.30  disallowance of itemized deductions under section 68 of the 
 43.31  Internal Revenue Code of 1986, income tax is the last itemized 
 43.32  deduction disallowed; 
 43.33     (3) the capital gain amount of a lump sum distribution to 
 43.34  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 43.35  Reform Act of 1986, Public Law 99-514, applies; 
 43.36     (4) the amount of income taxes paid or accrued within the 
 44.1   taxable year under this chapter and income taxes paid to any 
 44.2   other state or any province or territory of Canada, to the 
 44.3   extent allowed as a deduction in determining federal adjusted 
 44.4   gross income.  For the purpose of this paragraph, income taxes 
 44.5   do not include the taxes imposed by sections 290.0922, 
 44.6   subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 44.7      (5) the amount of expense, interest, or taxes disallowed 
 44.8   pursuant to section 290.10; 
 44.9      (6) the amount of a partner's pro rata share of net income 
 44.10  which does not flow through to the partner because the 
 44.11  partnership elected to pay the tax on the income under section 
 44.12  6242(a)(2) of the Internal Revenue Code; and 
 44.13     (7) 80 percent of the depreciation deduction allowed under 
 44.14  section 168(k) of the Internal Revenue Code.  For purposes of 
 44.15  this clause, if the taxpayer has an activity that in the taxable 
 44.16  year generates a deduction for depreciation under section 168(k) 
 44.17  and the activity generates a loss for the taxable year that the 
 44.18  taxpayer is not allowed to claim for the taxable year, "the 
 44.19  depreciation allowed under section 168(k)" for the taxable year 
 44.20  is limited to excess of the depreciation claimed by the activity 
 44.21  under section 168(k) over the amount of the loss from the 
 44.22  activity that is not allowed in the taxable year.  In succeeding 
 44.23  taxable years when the losses not allowed in the taxable year 
 44.24  are allowed, the depreciation under section 168(k) is allowed; 
 44.25  and 
 44.26     (8) the amount of expenses disallowed under section 290.10, 
 44.27  subdivision 2. 
 44.28     [EFFECTIVE DATE.] This section is effective for taxable 
 44.29  years beginning after December 31, 2004. 
 44.30     Sec. 4.  Minnesota Statutes 2004, section 290.01, 
 44.31  subdivision 19b, is amended to read: 
 44.32     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 44.33  individuals, estates, and trusts, there shall be subtracted from 
 44.34  federal taxable income: 
 44.35     (1) interest income on obligations of any authority, 
 44.36  commission, or instrumentality of the United States to the 
 45.1   extent includable in taxable income for federal income tax 
 45.2   purposes but exempt from state income tax under the laws of the 
 45.3   United States; 
 45.4      (2) if included in federal taxable income, the amount of 
 45.5   any overpayment of income tax to Minnesota or to any other 
 45.6   state, for any previous taxable year, whether the amount is 
 45.7   received as a refund or as a credit to another taxable year's 
 45.8   income tax liability; 
 45.9      (3) the amount paid to others, less the amount used to 
 45.10  claim the credit allowed under section 290.0674, not to exceed 
 45.11  $1,625 for each qualifying child in grades kindergarten to 6 and 
 45.12  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 45.13  textbooks, and transportation of each qualifying child in 
 45.14  attending an elementary or secondary school situated in 
 45.15  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 45.16  wherein a resident of this state may legally fulfill the state's 
 45.17  compulsory attendance laws, which is not operated for profit, 
 45.18  and which adheres to the provisions of the Civil Rights Act of 
 45.19  1964 and chapter 363A.  For the purposes of this clause, 
 45.20  "tuition" includes fees or tuition as defined in section 
 45.21  290.0674, subdivision 1, clause (1).  As used in this clause, 
 45.22  "textbooks" includes books and other instructional materials and 
 45.23  equipment purchased or leased for use in elementary and 
 45.24  secondary schools in teaching only those subjects legally and 
 45.25  commonly taught in public elementary and secondary schools in 
 45.26  this state.  Equipment expenses qualifying for deduction 
 45.27  includes expenses as defined and limited in section 290.0674, 
 45.28  subdivision 1, clause (3).  "Textbooks" does not include 
 45.29  instructional books and materials used in the teaching of 
 45.30  religious tenets, doctrines, or worship, the purpose of which is 
 45.31  to instill such tenets, doctrines, or worship, nor does it 
 45.32  include books or materials for, or transportation to, 
 45.33  extracurricular activities including sporting events, musical or 
 45.34  dramatic events, speech activities, driver's education, or 
 45.35  similar programs.  For purposes of the subtraction provided by 
 45.36  this clause, "qualifying child" has the meaning given in section 
 46.1   32(c)(3) of the Internal Revenue Code; 
 46.2      (4) income as provided under section 290.0802; 
 46.3      (5) to the extent included in federal adjusted gross 
 46.4   income, income realized on disposition of property exempt from 
 46.5   tax under section 290.491; 
 46.6      (6) to the extent included in federal taxable income, 
 46.7   postservice benefits for youth community service under section 
 46.8   124D.42 for volunteer service under United States Code, title 
 46.9   42, sections 12601 to 12604; 
 46.10     (7) to the extent not deducted in determining federal 
 46.11  taxable income by an individual who does not itemize deductions 
 46.12  for federal income tax purposes for the taxable year, an amount 
 46.13  equal to 50 percent of the excess of charitable contributions 
 46.14  allowable as a deduction for the taxable year under section 
 46.15  170(a) of the Internal Revenue Code over $500; 
 46.16     (8) for taxable years beginning before January 1, 2008, the 
 46.17  amount of the federal small ethanol producer credit allowed 
 46.18  under section 40(a)(3) of the Internal Revenue Code which is 
 46.19  included in gross income under section 87 of the Internal 
 46.20  Revenue Code; 
 46.21     (9) for individuals who are allowed a federal foreign tax 
 46.22  credit for taxes that do not qualify for a credit under section 
 46.23  290.06, subdivision 22, an amount equal to the carryover of 
 46.24  subnational foreign taxes for the taxable year, but not to 
 46.25  exceed the total subnational foreign taxes reported in claiming 
 46.26  the foreign tax credit.  For purposes of this clause, "federal 
 46.27  foreign tax credit" means the credit allowed under section 27 of 
 46.28  the Internal Revenue Code, and "carryover of subnational foreign 
 46.29  taxes" equals the carryover allowed under section 904(c) of the 
 46.30  Internal Revenue Code minus national level foreign taxes to the 
 46.31  extent they exceed the federal foreign tax credit; 
 46.32     (10) in each of the five tax years immediately following 
 46.33  the tax year in which an addition is required under subdivision 
 46.34  19a, clause (7), an amount equal to one-fifth of the delayed 
 46.35  depreciation.  For purposes of this clause, "delayed 
 46.36  depreciation" means the amount of the addition made by the 
 47.1   taxpayer under subdivision 19a, clause (7), minus the positive 
 47.2   value of any net operating loss under section 172 of the 
 47.3   Internal Revenue Code generated for the tax year of the 
 47.4   addition.  The resulting delayed depreciation cannot be less 
 47.5   than zero; and 
 47.6      (11) job opportunity building zone income as provided under 
 47.7   section 469.316; 
 47.8      (12) to the extent included in federal taxable income, an 
 47.9   amount, not to exceed $10,000, equal to an individual's 
 47.10  unreimbursed expenses for travel, lodging, and lost wages net of 
 47.11  sick pay related to the individual's donation of one or more of 
 47.12  the individual's organs to another person for human organ 
 47.13  transplantation.  For purposes of determining the extent to 
 47.14  which expenses are included in federal taxable income, expenses 
 47.15  qualifying under this paragraph are the first expenses 
 47.16  considered in determining the medical expense deduction allowed 
 47.17  under section 213 of the Internal Revenue Code.  For purposes of 
 47.18  this clause, "organ" means all or part of an individual's liver, 
 47.19  pancreas, kidney, intestine, lung, or bone marrow, and "human 
 47.20  organ transplantation" means the medical procedure by which 
 47.21  transfer of a human organ is made from the body of one person to 
 47.22  the body of another person.  An individual may claim the 
 47.23  subtraction in this clause for each instance of organ donation 
 47.24  for transplantation, during the taxable year in which the 
 47.25  expenses or lost wages occur; 
 47.26     (13) the amount of compensation paid to members of the 
 47.27  Minnesota National Guard or other reserve components of the 
 47.28  United States military for active service performed in 
 47.29  Minnesota, excluding compensation for services performed under 
 47.30  the Active Guard Reserve (AGR) program.  For purposes of this 
 47.31  clause, "active service" means (i) state active service as 
 47.32  defined in section 190.05, subdivision 5a, clause (1); (ii) 
 47.33  federally funded state active service as defined in section 
 47.34  190.05, subdivision 5b; or (iii) federal active service as 
 47.35  defined in section 190.05, subdivision 5c, but "active service" 
 47.36  excludes services performed exclusively for purposes of basic 
 48.1   combat training, advanced individual training, annual training, 
 48.2   and periodic inactive duty training; special training 
 48.3   periodically made available to reserve members; and service 
 48.4   performed in accordance with section 190.08, subdivision 3; and 
 48.5      (14) the amount of compensation paid to members of the 
 48.6   armed forces of the United States or United Nations for active 
 48.7   duty performed outside Minnesota. 
 48.8      [EFFECTIVE DATE.] This section is effective for taxable 
 48.9   years beginning after December 31, 2004. 
 48.10     Sec. 5.  Minnesota Statutes 2004, section 290.01, 
 48.11  subdivision 19c, is amended to read: 
 48.12     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 48.13  INCOME.] For corporations, there shall be added to federal 
 48.14  taxable income: 
 48.15     (1) the amount of any deduction taken for federal income 
 48.16  tax purposes for income, excise, or franchise taxes based on net 
 48.17  income or related minimum taxes, including but not limited to 
 48.18  the tax imposed under section 290.0922, paid by the corporation 
 48.19  to Minnesota, another state, a political subdivision of another 
 48.20  state, the District of Columbia, or any foreign country or 
 48.21  possession of the United States; 
 48.22     (2) interest not subject to federal tax upon obligations 
 48.23  of:  the United States, its possessions, its agencies, or its 
 48.24  instrumentalities; the state of Minnesota or any other state, 
 48.25  any of its political or governmental subdivisions, any of its 
 48.26  municipalities, or any of its governmental agencies or 
 48.27  instrumentalities; the District of Columbia; or Indian tribal 
 48.28  governments; 
 48.29     (3) exempt-interest dividends received as defined in 
 48.30  section 852(b)(5) of the Internal Revenue Code; 
 48.31     (4) the amount of any net operating loss deduction taken 
 48.32  for federal income tax purposes under section 172 or 832(c)(10) 
 48.33  of the Internal Revenue Code or operations loss deduction under 
 48.34  section 810 of the Internal Revenue Code; 
 48.35     (5) the amount of any special deductions taken for federal 
 48.36  income tax purposes under sections 241 to 247 of the Internal 
 49.1   Revenue Code; 
 49.2      (6) losses from the business of mining, as defined in 
 49.3   section 290.05, subdivision 1, clause (a), that are not subject 
 49.4   to Minnesota income tax; 
 49.5      (7) the amount of any capital losses deducted for federal 
 49.6   income tax purposes under sections 1211 and 1212 of the Internal 
 49.7   Revenue Code; 
 49.8      (8) the exempt foreign trade income of a foreign sales 
 49.9   corporation under sections 921(a) and 291 of the Internal 
 49.10  Revenue Code; 
 49.11     (9) the amount of percentage depletion deducted under 
 49.12  sections 611 through 614 and 291 of the Internal Revenue Code; 
 49.13     (10) for certified pollution control facilities placed in 
 49.14  service in a taxable year beginning before December 31, 1986, 
 49.15  and for which amortization deductions were elected under section 
 49.16  169 of the Internal Revenue Code of 1954, as amended through 
 49.17  December 31, 1985, the amount of the amortization deduction 
 49.18  allowed in computing federal taxable income for those 
 49.19  facilities; 
 49.20     (11) the amount of any deemed dividend from a foreign 
 49.21  operating corporation determined pursuant to section 290.17, 
 49.22  subdivision 4, paragraph (g); 
 49.23     (12) the amount of any environmental tax paid under section 
 49.24  59(a) of the Internal Revenue Code; 
 49.25     (13) the amount of a partner's pro rata share of net income 
 49.26  which does not flow through to the partner because the 
 49.27  partnership elected to pay the tax on the income under section 
 49.28  6242(a)(2) of the Internal Revenue Code; 
 49.29     (14) the amount of net income excluded under section 114 of 
 49.30  the Internal Revenue Code; 
 49.31     (15) any increase in subpart F income, as defined in 
 49.32  section 952(a) of the Internal Revenue Code, for the taxable 
 49.33  year when subpart F income is calculated without regard to the 
 49.34  provisions of section 614 of Public Law 107-147; and 
 49.35     (16) 80 percent of the depreciation deduction allowed under 
 49.36  section 168(k) of the Internal Revenue Code.  For purposes of 
 50.1   this clause, if the taxpayer has an activity that in the taxable 
 50.2   year generates a deduction for depreciation under section 168(k) 
 50.3   and the activity generates a loss for the taxable year that the 
 50.4   taxpayer is not allowed to claim for the taxable year, "the 
 50.5   depreciation allowed under section 168(k)" for the taxable year 
 50.6   is limited to excess of the depreciation claimed by the activity 
 50.7   under section 168(k) over the amount of the loss from the 
 50.8   activity that is not allowed in the taxable year.  In succeeding 
 50.9   taxable years when the losses not allowed in the taxable year 
 50.10  are allowed, the depreciation under section 168(k) is allowed; 
 50.11  and 
 50.12     (17) the amount of expenses disallowed under section 
 50.13  290.10, subdivision 2. 
 50.14     [EFFECTIVE DATE.] This section is effective for taxable 
 50.15  years beginning after December 31, 2004. 
 50.16     Sec. 6.  Minnesota Statutes 2004, section 290.05, 
 50.17  subdivision 1, is amended to read: 
 50.18     Subdivision 1.  [EXEMPT ENTITIES.] The following 
 50.19  corporations, individuals, estates, trusts, and organizations 
 50.20  shall be exempted from taxation under this chapter, provided 
 50.21  that every such person or corporation claiming exemption under 
 50.22  this chapter, in whole or in part, must establish to the 
 50.23  satisfaction of the commissioner the taxable status of any 
 50.24  income or activity: 
 50.25     (a) corporations, individuals, estates, and trusts engaged 
 50.26  in the business of mining or producing iron ore and other ores 
 50.27  the mining or production of which is subject to the occupation 
 50.28  tax imposed by section 298.01; but if any such corporation, 
 50.29  individual, estate, or trust engages in any other business or 
 50.30  activity or has income from any property not used in such 
 50.31  business it shall be subject to this tax computed on the net 
 50.32  income from such property or such other business or activity.  
 50.33  Royalty shall not be considered as income from the business of 
 50.34  mining or producing iron ore within the meaning of this section; 
 50.35     (b) the United States of America, the state of Minnesota or 
 50.36  any political subdivision of either agencies or 
 51.1   instrumentalities, whether engaged in the discharge of 
 51.2   governmental or proprietary functions; and 
 51.3      (c) any insurance company; and 
 51.4      (d) a corporation engaged in the business of operating a 
 51.5   personal rapid transit system, as defined in section 297A.61, 
 51.6   subdivision 37, in this state, independent of any government 
 51.7   subsidies, but if the corporation engages in any other business 
 51.8   or activity or has income from any property not used in the 
 51.9   business of operating a personal rapid transit system, it is 
 51.10  subject to this tax computed on the net income from the property 
 51.11  or business or activity. 
 51.12     [EFFECTIVE DATE.] This section is effective for taxable 
 51.13  years beginning after December 31, 2008. 
 51.14     Sec. 7.  Minnesota Statutes 2004, section 290.06, 
 51.15  subdivision 2c, is amended to read: 
 51.16     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 51.17  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 51.18  married individuals filing joint returns and surviving spouses 
 51.19  as defined in section 2(a) of the Internal Revenue Code must be 
 51.20  computed by applying to their taxable net income the following 
 51.21  schedule of rates: 
 51.22     (1) On the first $25,680, 5.35 percent; 
 51.23     (2) On all over $25,680, but not over $102,030, 7.05 
 51.24  percent; 
 51.25     (3) On all over $102,030, 7.85 8.0 percent. 
 51.26     Married individuals filing separate returns, estates, and 
 51.27  trusts must compute their income tax by applying the above rates 
 51.28  to their taxable income, except that the income brackets will be 
 51.29  one-half of the above amounts.  
 51.30     (b) The income taxes imposed by this chapter upon unmarried 
 51.31  individuals must be computed by applying to taxable net income 
 51.32  the following schedule of rates: 
 51.33     (1) On the first $17,570, 5.35 percent; 
 51.34     (2) On all over $17,570, but not over $57,710, 7.05 
 51.35  percent; 
 51.36     (3) On all over $57,710, 7.85 8.0 percent. 
 52.1      (c) The income taxes imposed by this chapter upon unmarried 
 52.2   individuals qualifying as a head of household as defined in 
 52.3   section 2(b) of the Internal Revenue Code must be computed by 
 52.4   applying to taxable net income the following schedule of rates: 
 52.5      (1) On the first $21,630, 5.35 percent; 
 52.6      (2) On all over $21,630, but not over $86,910, 7.05 
 52.7   percent; 
 52.8      (3) On all over $86,910, 7.85 8.0 percent. 
 52.9      (d) In lieu of a tax computed according to the rates set 
 52.10  forth in this subdivision, the tax of any individual taxpayer 
 52.11  whose taxable net income for the taxable year is less than an 
 52.12  amount determined by the commissioner must be computed in 
 52.13  accordance with tables prepared and issued by the commissioner 
 52.14  of revenue based on income brackets of not more than $100.  The 
 52.15  amount of tax for each bracket shall be computed at the rates 
 52.16  set forth in this subdivision, provided that the commissioner 
 52.17  may disregard a fractional part of a dollar unless it amounts to 
 52.18  50 cents or more, in which case it may be increased to $1. 
 52.19     (e) An individual who is not a Minnesota resident for the 
 52.20  entire year must compute the individual's Minnesota income tax 
 52.21  as provided in this subdivision.  After the application of the 
 52.22  nonrefundable credits provided in this chapter, the tax 
 52.23  liability must then be multiplied by a fraction in which:  
 52.24     (1) the numerator is the individual's Minnesota source 
 52.25  federal adjusted gross income as defined in section 62 of the 
 52.26  Internal Revenue Code and increased by the additions required 
 52.27  under section 290.01, subdivision 19a, clauses (1), (5), and 
 52.28  (6), and reduced by the subtraction under section 290.01, 
 52.29  subdivision 19b, clause (11), and the Minnesota assignable 
 52.30  portion of the subtraction for United States government interest 
 52.31  under section 290.01, subdivision 19b, clause (1), after 
 52.32  applying the allocation and assignability provisions of section 
 52.33  290.081, clause (a), or 290.17; and 
 52.34     (2) the denominator is the individual's federal adjusted 
 52.35  gross income as defined in section 62 of the Internal Revenue 
 52.36  Code of 1986, increased by the amounts specified in section 
 53.1   290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 
 53.2   by the amounts specified in section 290.01, subdivision 19b, 
 53.3   clauses (1) and (11). 
 53.4      [EFFECTIVE DATE.] This section is effective only if 
 53.5   sections 13 and 14 of this article are enacted for taxable years 
 53.6   beginning after December 31, 2004. 
 53.7      Sec. 8.  Minnesota Statutes 2004, section 290.06, 
 53.8   subdivision 28, is amended to read: 
 53.9      Subd. 28.  [CREDIT REFUNDS FOR TRANSIT PASSES.] A taxpayer 
 53.10  (a) An employer may take a credit against the tax due under this 
 53.11  chapter claim a refund equal to 30 percent of the expense 
 53.12  incurred by the taxpayer employer to provide transit passes, for 
 53.13  use in Minnesota, to employees of the taxpayer.  
 53.14     (b) As used in this subdivision, the following terms have 
 53.15  the meanings given: 
 53.16     (1) "employer" means an individual or entity subject to tax 
 53.17  under this chapter or an entity that is exempt from taxation 
 53.18  under section 290.05, but excluding entities enumerated in 
 53.19  section 290.05, subdivision 1, paragraph (b); and 
 53.20     (2) "transit pass" has the meaning given in section 
 53.21  132(f)(5)(A) of the Internal Revenue Code.  
 53.22     (c) If the taxpayer employer purchases the transit passes 
 53.23  from the transit system operator, and resells them to the 
 53.24  employees, the credit refund is based on the amount of the 
 53.25  difference between the price paid for the passes by the employer 
 53.26  and the amount charged to employees. 
 53.27     (d) The commissioner shall prescribe the forms for and the 
 53.28  manner in which the refund may be claimed.  The commissioner 
 53.29  must provide for paying refunds at least quarterly.  The 
 53.30  commissioner may set a minimum amount of qualifying expenses 
 53.31  that must be incurred before a refund may be claimed. 
 53.32     (e) An amount sufficient to pay the refunds required by 
 53.33  this subdivision is appropriated to the commissioner of revenue. 
 53.34     [EFFECTIVE DATE.] This section is effective for transit 
 53.35  passes purchased after December 31, 2005. 
 53.36     Sec. 9.  Minnesota Statutes 2004, section 290.06, is 
 54.1   amended by adding a subdivision to read: 
 54.2      Subd. 32.  [CARSHARING CREDIT.] (a) For purposes of this 
 54.3   subdivision, a "carsharing organization"  means an organization 
 54.4   that:  
 54.5      (1) is described in section 501(c) of the Internal Revenue 
 54.6   Code; 
 54.7      (2) is comprised of members who purchase the use of a motor 
 54.8   vehicle from the organization; 
 54.9      (3) owns or leases a fleet of motor vehicles that are 
 54.10  available to members of the organization to pay for the use of a 
 54.11  vehicle on an hourly or per trip basis; and 
 54.12     (4) does not assign exclusive rights of use of specific 
 54.13  vehicles to individual members or allow individual members to 
 54.14  keep a vehicle in the member's sole possession.  
 54.15     (b) A taxpayer may take a credit against the tax due under 
 54.16  this chapter for the expenses incurred by the taxpayer to 
 54.17  purchase a membership and pay monthly dues to a carsharing 
 54.18  organization or to provide memberships and pay monthly dues to a 
 54.19  carsharing organization for employees of the taxpayer.  The 
 54.20  amount of the credit is equal to the lesser of the actual cost 
 54.21  of the membership fee and the monthly dues, or $390.  If an 
 54.22  employer purchases the membership or pays the monthly dues to 
 54.23  the nonprofit carsharing organization and resells the membership 
 54.24  to its employees or charges the monthly dues to its employees, 
 54.25  the credit allowed to the employer is the amount of the 
 54.26  difference between the amount paid by the employer and the 
 54.27  amount charged to the employee. 
 54.28     (c) A taxpayer who owns a parking facility that charges 
 54.29  customers an amount to park vehicles at the facility and 
 54.30  provides dedicated parking space at no charge to a nonprofit 
 54.31  carsharing organization to park the motor vehicles that are used 
 54.32  by the members of the organization on an hourly or per-trip 
 54.33  basis, may take a credit against the tax due under this chapter 
 54.34  for the value of the dedicated parking space provided to the 
 54.35  nonprofit carsharing organization.  The value of the dedicated 
 54.36  parking space is equal to the lowest amount charged to customers 
 55.1   who pay to park at the facility calculated on an hourly, daily, 
 55.2   or other long-term rate that results in the lowest total cost. 
 55.3      [EFFECTIVE DATE.] This section is effective for taxable 
 55.4   years beginning after December 31, 2005. 
 55.5      Sec. 10.  Minnesota Statutes 2004, section 290.06, is 
 55.6   amended by adding a subdivision to read: 
 55.7      Subd. 33.  [REGIONAL INVESTMENT CREDIT.] (a) A credit is 
 55.8   allowed against the tax imposed by this chapter for investment 
 55.9   in a qualifying regional angel investment network fund.  The 
 55.10  credit equals 25 percent of the taxpayer's investment made in 
 55.11  the fund for the taxable year, but not to exceed the lesser of: 
 55.12     (1) the liability for tax under this chapter; or 
 55.13     (2) the amount of the certificate under paragraph (c) 
 55.14  provided to the taxpayer by the fund.  The taxpayer must claim 
 55.15  the credit the same tax year in which the investment to the fund 
 55.16  is made.  The credit is allowed only for investments made to a 
 55.17  fund that are made after the fund has been certified by the 
 55.18  commissioner of employment and economic development under 
 55.19  paragraph (c). 
 55.20     (b) For purposes of this subdivision, a regional angel 
 55.21  investment network fund means a pool investment fund that: 
 55.22     (1) is organized as a limited liability company and 
 55.23  consists of members who are accredited investors within the 
 55.24  meaning of Regulation D of the Securities and Exchange 
 55.25  Commission, Code of Federal Regulations, title 17, section 
 55.26  230.501(a), or consists of members that are not accredited 
 55.27  investors that make equity investments or investments in notes 
 55.28  that pay interest or other fixed amounts or any combination of 
 55.29  both; 
 55.30     (2) primarily makes equity investments in emerging and 
 55.31  expanding small businesses as defined by the Small Business 
 55.32  Administration, or cooperative associations as defined in 
 55.33  chapter 308B, that are located in local communities in Minnesota 
 55.34  outside of the metropolitan area as defined in section 473.121, 
 55.35  subdivision 2, and does not make investments in residential real 
 55.36  estate; and 
 56.1      (3) has no fewer than five individual investors who are not 
 56.2   affiliates with no single investor and affiliates of that 
 56.3   investor together owning a total of more than 25 percent 
 56.4   ownership interests outstanding in the fund.  For purposes of 
 56.5   this subdivision, "affiliate" means a spouse, child, or sibling 
 56.6   of an investor or a corporation, partnership, or trust in which 
 56.7   an investor has a controlling equity interest or in which an 
 56.8   investor exercises management control. 
 56.9      (c) Regional angel investment network funds may apply to 
 56.10  the commissioner of employment and economic development for 
 56.11  certification as a qualifying regional angel investment network 
 56.12  fund.  The application must be in the form and made under 
 56.13  procedures specified by the commissioner of employment and 
 56.14  economic development.  The commissioner of employment and 
 56.15  economic development may certify up to 20 qualifying funds and 
 56.16  provide certificates entitling investors in the funds to credits 
 56.17  under this subdivision of up to $500,000 for each fund.  The 
 56.18  commissioner of employment and economic development must not 
 56.19  issue a total amount of certificates for all funds of more than 
 56.20  $10,000,000.  In awarding certificates under this paragraph, the 
 56.21  commissioner of employment and economic development shall 
 56.22  generally award them to qualified applicants in the order in 
 56.23  which the applications are received, but shall also seek to 
 56.24  certify funds that are broadly dispersed across the entire state 
 56.25  outside of the metropolitan area, as defined in section 473.121, 
 56.26  subdivision 2.  The commissioner of employment and economic 
 56.27  development must award three certificates to a pooled investment 
 56.28  fund that invests in qualifying small businesses located in the 
 56.29  region of the state that is the focus of the fund and allocates 
 56.30  at least 20 percent of its investments to qualified small 
 56.31  businesses that meet local community needs.  To be a qualifying 
 56.32  small business, a business must satisfy the following 
 56.33  requirements: 
 56.34     (1) 51 percent of the ownership interests in the business, 
 56.35  excluding any equity interest of the fund, must be held by 
 56.36  residents of the region; and 
 57.1      (2) the business must pay wages and benefits, measured on a 
 57.2   full-time equivalent basis, to 75 percent or more of its 
 57.3   employees equal to 175 percent of the federal poverty level for 
 57.4   a family of four.  This requirement does not apply if fewer than 
 57.5   three pooled investment funds that would otherwise qualify under 
 57.6   this subdivision apply for a certificate. 
 57.7      (d) Each fund must provide each investor a statement 
 57.8   indicating the investor's share of the credit amount certified 
 57.9   to the fund under paragraph (c) based on the order in which 
 57.10  their investment is made in the fund. 
 57.11     (e) If the amount of the credit under this subdivision for 
 57.12  any taxable year exceeds the limitation under paragraph (a), 
 57.13  clause (1), the excess is a credit carryover to each of the 15 
 57.14  succeeding taxable years.  The entire amount of the excess 
 57.15  unused credit for the taxable year must be carried first to the 
 57.16  earliest of the taxable years to which the credit may be carried 
 57.17  and then to each successive year to which the credit may be 
 57.18  carried.  The amount of the unused credit which may be added 
 57.19  under this paragraph may not exceed the taxpayer's liability for 
 57.20  tax for the taxable year. 
 57.21     [EFFECTIVE DATE.] This section is effective the day 
 57.22  following final enactment, for taxable years beginning after 
 57.23  December 31, 2005.  It applies to investments made after the 
 57.24  fund has been certified by the commissioner of employment and 
 57.25  economic development. 
 57.26     Sec. 11.  Minnesota Statutes 2004, section 290.0674, 
 57.27  subdivision 2, is amended to read: 
 57.28     Subd. 2.  [LIMITATIONS.] (a) For claimants with income not 
 57.29  greater than $33,500, the maximum credit allowed is $1,000 per 
 57.30  multiplied by the number of claimant's qualifying child and 
 57.31  $2,000 per family children in grades kindergarten through grade 
 57.32  12.  No credit is allowed for education-related expenses for 
 57.33  claimants with income greater than $37,500.  The maximum credit 
 57.34  per child claimant is reduced by $1 for each $4 of household 
 57.35  income over $33,500, and the maximum credit per family is 
 57.36  reduced by $2 for each $4 of household income over $33,500, but 
 58.1   in no case is the credit less than zero. 
 58.2      For purposes of this section "income" has the meaning given 
 58.3   in section 290.067, subdivision 2a.  In the case of a married 
 58.4   claimant, a credit is not allowed unless a joint income tax 
 58.5   return is filed. 
 58.6      (b) For a nonresident or part-year resident, the credit 
 58.7   determined under subdivision 1 and the maximum credit amount in 
 58.8   paragraph (a) must be allocated using the percentage calculated 
 58.9   in section 290.06, subdivision 2c, paragraph (e). 
 58.10     [EFFECTIVE DATE.] This section is effective for tax years 
 58.11  beginning after December 31, 2005. 
 58.12     Sec. 12.  [290.0676] [CREDIT FOR HISTORIC STRUCTURE 
 58.13  REHABILITATION.] 
 58.14     Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
 58.15  the terms defined in this subdivision have the meanings given. 
 58.16     (b) "Certified historic structure" means a property located 
 58.17  in Minnesota and listed individually on the National Register of 
 58.18  Historic Places or a historic property designated by either a 
 58.19  certified local government or a heritage preservation commission 
 58.20  created under the National Historic Preservation Act of 1966 and 
 58.21  whose designation is approved by the state historic preservation 
 58.22  officer. 
 58.23     (c) "Eligible property" means a certified historic 
 58.24  structure or a structure in a certified historic district that 
 58.25  is offered or used for residential or business purposes. 
 58.26     (d) "Structure in a certified historic district" means a 
 58.27  structure located in Minnesota that is certified by the State 
 58.28  Historic Preservation Office as contributing to the historic 
 58.29  significance of a certified historic district listed on the 
 58.30  National Register of Historic Places or a local district that 
 58.31  has been certified by the United States Department of the 
 58.32  Interior.  
 58.33     Subd. 2.  [CREDIT ALLOWED.] A taxpayer who incurs costs for 
 58.34  the rehabilitation of eligible property may take a credit 
 58.35  against the tax imposed under this chapter in an amount equal to 
 58.36  ten percent of the total costs of rehabilitation.  Costs of 
 59.1   rehabilitation include, but are not limited to, qualified 
 59.2   rehabilitation expenditures as defined under section 47(c)(2)(A) 
 59.3   of the Internal Revenue Code, provided that the costs of 
 59.4   rehabilitation must exceed 50 percent of the total basis in the 
 59.5   property at the time the rehabilitation activity begins and the 
 59.6   rehabilitation must meet standards consistent with the standards 
 59.7   of the Secretary of the Interior for rehabilitation as 
 59.8   determined by the State Historic Preservation Office of the 
 59.9   Minnesota Historical Society. 
 59.10     Subd. 3.  [CARRYBACK AND CARRYFORWARD.] If the amount of 
 59.11  the credit under subdivision 2 exceeds the tax liability under 
 59.12  this chapter for the year in which the cost is incurred, the 
 59.13  amount that exceeds the tax liability may be carried back to any 
 59.14  of the three preceding taxable years or carried forward to each 
 59.15  of the ten taxable years succeeding the taxable year in which 
 59.16  the expense was incurred.  The entire amount of the credit must 
 59.17  be carried to the earliest taxable year to which the amount may 
 59.18  be carried.  The unused portion of the credit must be carried to 
 59.19  the following taxable year. 
 59.20     Subd. 4.  [PARTNERSHIPS; MULTIPLE OWNERS; TRANSFERS.] (a) 
 59.21  Credits granted to a partnership, a limited liability company 
 59.22  taxed as a partnership, or multiple owners of property shall be 
 59.23  passed through to the partners, members, or owners, 
 59.24  respectively, pro rata or pursuant to an executed agreement 
 59.25  among the partners, members, or owners documenting an alternate 
 59.26  distribution method. 
 59.27     (b) Taxpayers eligible for credits may transfer, sell, or 
 59.28  assign the credits in whole or part.  Any assignee may use 
 59.29  acquired credits to offset up to 100 percent of the taxes 
 59.30  otherwise imposed by this chapter.  The assignee shall perfect 
 59.31  such transfer by notifying the Department of Revenue in writing 
 59.32  within 30 calendar days following the effective date of the 
 59.33  transfer in such form and manner as shall be prescribed by the 
 59.34  Department of Revenue.  The proceeds of any sale or assignment 
 59.35  of a credit shall be exempt from taxation under this chapter. 
 59.36     Subd. 5.  [PROCESS.] To claim the credit, the taxpayer must 
 60.1   apply to the State Historic Preservation Office of the Minnesota 
 60.2   Historical Society before a historic rehabilitation project 
 60.3   begins.  The State Historic Preservation Office shall determine 
 60.4   the amount of eligible rehabilitation costs and whether the 
 60.5   rehabilitation meets the standards of the United States 
 60.6   Department of the Interior.  The State Historic Preservation 
 60.7   Office shall issue certificates verifying eligibility for and 
 60.8   the amount of credit.  The taxpayer shall attach the certificate 
 60.9   to any income tax return on which the credit is claimed.  The 
 60.10  State Historic Preservation Office of the Minnesota Historical 
 60.11  Society may collect fees for applications for the historic 
 60.12  preservation tax credit.  Fees shall be set at an amount that 
 60.13  does not exceed the costs of administering the tax credit 
 60.14  program. 
 60.15     Subd. 6.  [MORTGAGE CERTIFICATES; CREDIT FOR LENDING 
 60.16  INSTITUTIONS.] (a) The taxpayer may elect, in lieu of the credit 
 60.17  otherwise allowed under this section, to receive a historic 
 60.18  rehabilitation mortgage credit certificate. 
 60.19     (b) For purposes of this subdivision, a historic 
 60.20  rehabilitation mortgage credit is a certificate that is issued 
 60.21  to the taxpayer according to procedures prescribed by the State 
 60.22  Historic Preservation Office with respect to the certified 
 60.23  rehabilitation and which meets the requirements of this 
 60.24  paragraph.  The face amount of the certificate must be equal to 
 60.25  the credit that would be allowable under subdivision 2 to the 
 60.26  taxpayer with respect to the rehabilitation.  The certificate 
 60.27  may only be transferred by the taxpayer to a lending 
 60.28  institution, including a nondepository home mortgage lending 
 60.29  institution, in connection with a loan: 
 60.30     (1) that is secured by the building with respect to which 
 60.31  the credit is issued; and 
 60.32     (2) the proceeds of which may not be used for any purpose 
 60.33  other than the acquisition or rehabilitation of the building.  
 60.34     (c) In exchange for the certificate, the lending 
 60.35  institution must provide to the taxpayer an amount equal to the 
 60.36  face amount of the certificate discounted by the amount by which 
 61.1   the federal income tax liability of the lending institution is 
 61.2   increased due to its use of the certificate in the manner 
 61.3   provided in this section.  That amount must be applied, as 
 61.4   directed by the taxpayer, in whole or in part, to reduce: 
 61.5      (1) the principal amount of the loan; 
 61.6      (2) the rate of interest on the loan; or 
 61.7      (3) the taxpayer's cost of purchasing the building, but 
 61.8   only in the case of a qualified historic home that is located in 
 61.9   a poverty-impacted area as designated by the State Historic 
 61.10  Preservation Office. 
 61.11     The lending institution may take as a credit against the 
 61.12  tax due under this chapter an amount equal to the amount 
 61.13  specified in the certificate.  If the amount of the discount 
 61.14  retained by the lender exceeds the amount by which the lending 
 61.15  institution's federal income tax liability is increased due to 
 61.16  the use of a mortgage credit certificate, the excess shall be 
 61.17  refunded to the borrower with interest at the rate prescribed by 
 61.18  the State Historic Preservation Office.  The lending institution 
 61.19  may carry forward all unused credits under this subdivision 
 61.20  until exhausted.  Nothing in this subdivision requires a lending 
 61.21  institution to accept a historic rehabilitation certificate from 
 61.22  any person. 
 61.23     [EFFECTIVE DATE.] This section is effective for taxable 
 61.24  years beginning after December 31, 2004. 
 61.25     Sec. 13.  Minnesota Statutes 2004, section 290.091, 
 61.26  subdivision 2, is amended to read: 
 61.27     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 61.28  this section, the following terms have the meanings given: 
 61.29     (a) "Alternative minimum taxable income" means the sum of 
 61.30  the following for the taxable year: 
 61.31     (1) the taxpayer's federal alternative minimum taxable 
 61.32  income as defined in section 55(b)(2) of the Internal Revenue 
 61.33  Code; 
 61.34     (2) the taxpayer's itemized deductions allowed in computing 
 61.35  federal alternative minimum taxable income, but excluding: 
 61.36     (i) the charitable contribution deduction under section 170 
 62.1   of the Internal Revenue Code to the extent that the deduction 
 62.2   exceeds 1.0 percent of adjusted gross income, as defined in 
 62.3   section 62 of the Internal Revenue Code; 
 62.4      (ii) the medical expense deduction; 
 62.5      (iii) the casualty, theft, and disaster loss deduction; and 
 62.6      (iv) the impairment-related work expenses of a disabled 
 62.7   person; and 
 62.8      (v) the amount of the exemption allowed the taxpayer under 
 62.9   section 151(c) of the Internal Revenue Code; 
 62.10     (3) for depletion allowances computed under section 613A(c) 
 62.11  of the Internal Revenue Code, with respect to each property (as 
 62.12  defined in section 614 of the Internal Revenue Code), to the 
 62.13  extent not included in federal alternative minimum taxable 
 62.14  income, the excess of the deduction for depletion allowable 
 62.15  under section 611 of the Internal Revenue Code for the taxable 
 62.16  year over the adjusted basis of the property at the end of the 
 62.17  taxable year (determined without regard to the depletion 
 62.18  deduction for the taxable year); 
 62.19     (4) to the extent not included in federal alternative 
 62.20  minimum taxable income, the amount of the tax preference for 
 62.21  intangible drilling cost under section 57(a)(2) of the Internal 
 62.22  Revenue Code determined without regard to subparagraph (E); 
 62.23     (5) to the extent not included in federal alternative 
 62.24  minimum taxable income, the amount of interest income as 
 62.25  provided by section 290.01, subdivision 19a, clause (1); and 
 62.26     (6) the amount of addition required by section 290.01, 
 62.27  subdivision 19a, clause (7); 
 62.28     less the sum of the amounts determined under the following: 
 62.29     (1) interest income as defined in section 290.01, 
 62.30  subdivision 19b, clause (1); 
 62.31     (2) an overpayment of state income tax as provided by 
 62.32  section 290.01, subdivision 19b, clause (2), to the extent 
 62.33  included in federal alternative minimum taxable income; 
 62.34     (3) the amount of investment interest paid or accrued 
 62.35  within the taxable year on indebtedness to the extent that the 
 62.36  amount does not exceed net investment income, as defined in 
 63.1   section 163(d)(4) of the Internal Revenue Code.  Interest does 
 63.2   not include amounts deducted in computing federal adjusted gross 
 63.3   income; and 
 63.4      (4) amounts subtracted from federal taxable income as 
 63.5   provided by section 290.01, subdivision 19b, clauses (10) and 
 63.6   (11) to (12). 
 63.7      In the case of an estate or trust, alternative minimum 
 63.8   taxable income must be computed as provided in section 59(c) of 
 63.9   the Internal Revenue Code. 
 63.10     (b) "Investment interest" means investment interest as 
 63.11  defined in section 163(d)(3) of the Internal Revenue Code. 
 63.12     (c) "Tentative minimum tax" equals 6.4 percent of 
 63.13  alternative minimum taxable income after subtracting the 
 63.14  exemption amount determined under subdivision 3. 
 63.15     (d) "Regular tax" means the tax that would be imposed under 
 63.16  this chapter (without regard to this section and section 
 63.17  290.032), reduced by the sum of the nonrefundable credits 
 63.18  allowed under this chapter.  
 63.19     (e) "Net minimum tax" means the minimum tax imposed by this 
 63.20  section. 
 63.21     [EFFECTIVE DATE.] This section is effective only if section 
 63.22  7 of this article is enacted for taxable years beginning after 
 63.23  December 31, 2004. 
 63.24     Sec. 14.  Minnesota Statutes 2004, section 290.091, 
 63.25  subdivision 3, is amended to read: 
 63.26     Subd. 3.  [EXEMPTION AMOUNT.] (a) For purposes of computing 
 63.27  the alternative minimum tax, the exemption amount is the 
 63.28  exemption determined under section 55(d) of the Internal Revenue 
 63.29  Code, as amended through December 31, 1992, except that 
 63.30  alternative minimum taxable income as determined under this 
 63.31  section must be substituted in the computation of the phase out 
 63.32  under section 55(d)(3) $66,300 for married individuals filing 
 63.33  joint returns; and $33,150 for married individuals filing 
 63.34  separate returns, single individuals, and head of household 
 63.35  filers. 
 63.36     (b) The exemption amount determined under this subdivision 
 64.1   is reduced by an amount equal to 25 percent of the amount by 
 64.2   which the alternative minimum income exceeds $248,600 for 
 64.3   married individuals filing joint returns; and $124,300 for 
 64.4   married individuals filing separate returns, single individuals, 
 64.5   and head of household filers. 
 64.6      (c) For taxable years beginning after December 31, 2006, 
 64.7   the exemption amounts under paragraph (a), and the income 
 64.8   amounts in paragraph (b), must be adjusted for inflation.  The 
 64.9   commissioner shall make the inflation adjustments in accordance 
 64.10  with section 1(f) of the Internal Revenue Code except that for 
 64.11  the purposes of this subdivision the percentage increase must be 
 64.12  determined from the year starting September 1, 2005, and ending 
 64.13  August 31, 2006, as the base year for adjusting for inflation 
 64.14  for the tax year beginning after December 31, 2006.  The 
 64.15  determination of the commissioner under this subdivision is not 
 64.16  a rule under the Administrative Procedure Act. 
 64.17     [EFFECTIVE DATE.] This section is effective only if section 
 64.18  7 of this article is enacted for taxable years beginning after 
 64.19  December 31, 2004. 
 64.20     Sec. 15.  Minnesota Statutes 2004, section 290.10, is 
 64.21  amended to read: 
 64.22     290.10 [NONDEDUCTIBLE ITEMS.] 
 64.23     Subdivision 1.  [EXPENSES, INTEREST, AND TAXES.] Except as 
 64.24  provided in section 290.17, subdivision 4, paragraph (i), in 
 64.25  computing the net income of a taxpayer no deduction shall in any 
 64.26  case be allowed for expenses, interest and taxes connected with 
 64.27  or allocable against the production or receipt of all income not 
 64.28  included in the measure of the tax imposed by this chapter, 
 64.29  except that for corporations engaged in the business of mining 
 64.30  or producing iron ore, the mining of which is subject to the 
 64.31  occupation tax imposed by section 298.01, subdivision 4, this 
 64.32  shall not prevent the deduction of expenses and other items to 
 64.33  the extent that the expenses and other items are allowable under 
 64.34  this chapter and are not deductible, capitalizable, retainable 
 64.35  in basis, or taken into account by allowance or otherwise in 
 64.36  computing the occupation tax and do not exceed the amounts taken 
 65.1   for federal income tax purposes for that year.  Occupation taxes 
 65.2   imposed under chapter 298, royalty taxes imposed under chapter 
 65.3   299, or depletion expenses may not be deducted under this clause.
 65.4      Subd. 2.  [FINES, PENALTIES, DAMAGES, AND EXPENSES.] (a) No 
 65.5   deduction from taxable income for a trade or business expense 
 65.6   under section 162(a) of the Internal Revenue Code shall be 
 65.7   allowed for any fine, penalty, damages, or expenses paid to: 
 65.8      (1) the government of the United States, a state, a 
 65.9   territory or possession of the United States, the District of 
 65.10  Columbia, or the Commonwealth of Puerto Rico; 
 65.11     (2) the government of a foreign country; or 
 65.12     (3) a political subdivision of, or corporation or other 
 65.13  entity serving as an agency or instrumentality of, any 
 65.14  government described in clause (1) or (2). 
 65.15     (b) For purposes of this subdivision, "fine, penalty, 
 65.16  damages, or expenses" include, but are not limited to, any 
 65.17  amount: 
 65.18     (1) paid pursuant to a conviction or a plea of guilty or 
 65.19  nolo contendere for any crime in a criminal proceeding; 
 65.20     (2) paid as a civil penalty imposed by federal, state, or 
 65.21  local law, including tax penalties and interest; 
 65.22     (3) paid in settlement of the taxpayer's actual or 
 65.23  potential liability for a civil or criminal fine or penalty; 
 65.24     (4) forfeited as collateral posted in connection with a 
 65.25  proceeding that could result in imposition of a fine or penalty; 
 65.26  or 
 65.27     (5) legal fees and related expenses paid or incurred in the 
 65.28  prosecution or civil action arising from a violation of the law 
 65.29  imposing the fine or civil penalty, court costs assessed against 
 65.30  the taxpayer, or stenographic and printing charges, compensatory 
 65.31  damages, punitive damages, or restitution. 
 65.32     [EFFECTIVE DATE.] This section is effective for taxable 
 65.33  years beginning after December 31, 2004. 
 65.34     Sec. 16.  [290.433] [GLOBAL WAR ON TERRORISM CHECKOFF.] 
 65.35     Every individual who files an income tax return or property 
 65.36  tax refund claim, and every corporation that files an income tax 
 66.1   return, may designate on their return that $1 or more shall be 
 66.2   added to the tax or deducted from the refund that would 
 66.3   otherwise be payable by or to that individual or corporation and 
 66.4   paid into an account to be established for the purpose of paying 
 66.5   bonuses to residents of this state who are veterans of the 
 66.6   global war on terrorism.  The commissioner shall, on the income 
 66.7   tax returns and the property tax refund claim form, notify 
 66.8   filers of their right to designate that a portion of their tax 
 66.9   or refund shall be paid into the account for veterans of the 
 66.10  global war on terrorism.  The amounts designated under this 
 66.11  section shall be annually appropriated to the commissioner of 
 66.12  the Department of Veterans Affairs to pay bonuses to veterans of 
 66.13  the global war on terrorism as determined by law.  All interest 
 66.14  earned on money accrued shall be credited to the account by the 
 66.15  commissioner of finance. 
 66.16     [EFFECTIVE DATE.] This section is effective for taxable 
 66.17  years beginning after December 31, 2004, and for property tax 
 66.18  refund claims for property taxes payable after December 31, 2004.
 66.19     Sec. 17.  Minnesota Statutes 2004, section 290.92, 
 66.20  subdivision 4b, is amended to read: 
 66.21     Subd. 4b.  [WITHHOLDING BY PARTNERSHIPS.] (a) A partnership 
 66.22  shall deduct and withhold a tax as provided in paragraph (b) for 
 66.23  nonresident individual partners based on their distributive 
 66.24  shares of partnership income for a taxable year of the 
 66.25  partnership. 
 66.26     (b) The amount of tax withheld is determined by multiplying 
 66.27  the partner's distributive share allocable to Minnesota under 
 66.28  section 290.17, paid or credited during the taxable year by the 
 66.29  highest rate used to determine the income tax liability for an 
 66.30  individual under section 290.06, subdivision 2c, except that the 
 66.31  amount of tax withheld may be determined by the commissioner if 
 66.32  the partner submits a withholding exemption certificate under 
 66.33  subdivision 5. 
 66.34     (c) The commissioner may reduce or abate the tax withheld 
 66.35  under this subdivision if the partnership had reasonable cause 
 66.36  to believe that no tax was due under this section. 
 67.1      (d) Notwithstanding paragraph (a), a partnership is not 
 67.2   required to deduct and withhold tax for a nonresident partner if:
 67.3      (1) the partner elects to have the tax due paid as part of 
 67.4   the partnership's composite return under section 289A.08, 
 67.5   subdivision 7; 
 67.6      (2) the partner has Minnesota assignable federal adjusted 
 67.7   gross income from the partnership of less than $1,000; or 
 67.8      (3) the partnership is liquidated or terminated, the income 
 67.9   was generated by a transaction related to the termination or 
 67.10  liquidation, and no cash or other property was distributed in 
 67.11  the current or prior taxable year; or 
 67.12     (4) the distributive shares of partnership income are 
 67.13  attributable to: 
 67.14     (i) income required to be recognized because of discharge 
 67.15  of indebtedness; 
 67.16     (ii) income recognized because of a sale, exchange, or 
 67.17  other disposition of real estate, depreciable property, or 
 67.18  property described in section 179 of the Internal Revenue Code; 
 67.19  or 
 67.20     (iii) income recognized on the sale, exchange, or other 
 67.21  disposition of any property that has been the subject of a basis 
 67.22  reduction pursuant to section 108, 734, 743, 754, or 1017 of the 
 67.23  Internal Revenue Code 
 67.24  to the extent that the income does not include cash received or 
 67.25  receivable or, if there is cash received or receivable, to the 
 67.26  extent that the cash is required to be used to pay indebtedness 
 67.27  by the partnership or a secured debt on partnership property; or 
 67.28     (5) the partnership is a publicly traded partnership, as 
 67.29  defined in section 7704(b) of the Internal Revenue Code. 
 67.30     (e) For purposes of subdivision 6a, and sections 289A.09, 
 67.31  subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50, 
 67.32  289A.56, 289A.60, and 289A.63, a partnership is considered an 
 67.33  employer.  
 67.34     (f) To the extent that income is exempt from withholding 
 67.35  under paragraph (d), clause (4), the commissioner has a lien in 
 67.36  an amount up to the amount that would be required to be withheld 
 68.1   with respect to the income of the partner attributable to the 
 68.2   partnership interest, but for the application of paragraph (d), 
 68.3   clause (4).  The lien arises under section 270.69 from the date 
 68.4   of assessment of the tax against the partner, and attaches to 
 68.5   that partner's share of the profits and any other money due or 
 68.6   to become due to that partner in respect of the partnership.  
 68.7   Notice of the lien may be sent by mail to the partnership, 
 68.8   without the necessity for recording the lien.  The notice has 
 68.9   the force and effect of a levy under section 270.70, and is 
 68.10  enforceable against the partnership in the manner provided by 
 68.11  that section.  Upon payment in full of the liability subsequent 
 68.12  to the notice of lien, the partnership must be notified that the 
 68.13  lien has been satisfied.  
 68.14     [EFFECTIVE DATE.] This section is effective for taxable 
 68.15  years beginning after December 31, 2004. 
 68.16     Sec. 18.  [DETERMINATION OF ECONOMIC IMPACT.] 
 68.17     The Minnesota Historical Society shall annually determine 
 68.18  the economic impact to the state from the rehabilitation of 
 68.19  eligible property for which credits are provided under section 
 68.20  12 and report on the impact to the committees on taxes of the 
 68.21  senate and house of representatives. 
 68.22     Sec. 19.  [STUDY; CORPORATE FRANCHISE TAX.] 
 68.23     The commissioners of the Departments of Finance and Revenue 
 68.24  shall conduct a comprehensive study to identify the reasons for 
 68.25  the decline in corporate tax receipts.  The study shall include 
 68.26  an analysis of the current and future effect of existing 
 68.27  corporate tax provisions, both independently and interactively 
 68.28  with other provisions; how tax provisions are changing business 
 68.29  practices; and the impact of outsourcing or relocation of 
 68.30  business operations and jobs.  On or before February 1, 2006, 
 68.31  the commissioners shall report to the chairpersons of the house 
 68.32  and senate tax committees the results of the study and shall 
 68.33  include recommendations for changes to the tax laws that would 
 68.34  reduce tax incentives for businesses to outsource or relocate 
 68.35  business operations or jobs. 
 68.36                             ARTICLE 6 
 69.1                       FEDERAL UPDATE - SF1683 
 69.2      Section 1.  Minnesota Statutes 2004, section 289A.02, 
 69.3   subdivision 7, is amended to read: 
 69.4      Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
 69.5   defined otherwise, "Internal Revenue Code" means the Internal 
 69.6   Revenue Code of 1986, as amended through June 15, 2003 December 
 69.7   31, 2004. 
 69.8      [EFFECTIVE DATE.] This section is effective the day 
 69.9   following final enactment. 
 69.10     Sec. 2.  Minnesota Statutes 2004, section 290.01, 
 69.11  subdivision 19, is amended to read: 
 69.12     Subd. 19.  [NET INCOME.] The term "net income" means the 
 69.13  federal taxable income, as defined in section 63 of the Internal 
 69.14  Revenue Code of 1986, as amended through the date named in this 
 69.15  subdivision, incorporating the federal effective dates of 
 69.16  changes to the Internal Revenue Code and any elections made by 
 69.17  the taxpayer in accordance with the Internal Revenue Code in 
 69.18  determining federal taxable income for federal income tax 
 69.19  purposes, and with the modifications provided in subdivisions 
 69.20  19a to 19f. 
 69.21     In the case of a regulated investment company or a fund 
 69.22  thereof, as defined in section 851(a) or 851(g) of the Internal 
 69.23  Revenue Code, federal taxable income means investment company 
 69.24  taxable income as defined in section 852(b)(2) of the Internal 
 69.25  Revenue Code, except that:  
 69.26     (1) the exclusion of net capital gain provided in section 
 69.27  852(b)(2)(A) of the Internal Revenue Code does not apply; 
 69.28     (2) the deduction for dividends paid under section 
 69.29  852(b)(2)(D) of the Internal Revenue Code must be applied by 
 69.30  allowing a deduction for capital gain dividends and 
 69.31  exempt-interest dividends as defined in sections 852(b)(3)(C) 
 69.32  and 852(b)(5) of the Internal Revenue Code; and 
 69.33     (3) the deduction for dividends paid must also be applied 
 69.34  in the amount of any undistributed capital gains which the 
 69.35  regulated investment company elects to have treated as provided 
 69.36  in section 852(b)(3)(D) of the Internal Revenue Code.  
 70.1      The net income of a real estate investment trust as defined 
 70.2   and limited by section 856(a), (b), and (c) of the Internal 
 70.3   Revenue Code means the real estate investment trust taxable 
 70.4   income as defined in section 857(b)(2) of the Internal Revenue 
 70.5   Code.  
 70.6      The net income of a designated settlement fund as defined 
 70.7   in section 468B(d) of the Internal Revenue Code means the gross 
 70.8   income as defined in section 468B(b) of the Internal Revenue 
 70.9   Code. 
 70.10     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 70.11  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 70.12  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 70.13  Protection Act, Public Law 104-188, the provisions of Public Law 
 70.14  104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
 70.15  913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
 70.16  1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
 70.17  and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
 70.18  1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
 70.19  105-34, the provisions of section 6010 of the Internal Revenue 
 70.20  Service Restructuring and Reform Act of 1998, Public Law 
 70.21  105-206, the provisions of section 4003 of the Omnibus 
 70.22  Consolidated and Emergency Supplemental Appropriations Act, 
 70.23  1999, Public Law 105-277, and the provisions of section 318 of 
 70.24  the Consolidated Appropriation Act of 2001, Public Law 106-554, 
 70.25  shall become effective at the time they become effective for 
 70.26  federal purposes. 
 70.27     The Internal Revenue Code of 1986, as amended through 
 70.28  December 31, 1996 2004, shall be in effect for taxable years 
 70.29  beginning after December 31, 1996.  The provisions of Public Law 
 70.30  109-1, shall be effective for tax years beginning after December 
 70.31  31, 2003. 
 70.32     The provisions of sections 202(a) and (b), 221(a), 225, 
 70.33  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 70.34  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 70.35  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 70.36  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 71.1   of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
 71.2   provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
 71.3   and 7003 of the Internal Revenue Service Restructuring and 
 71.4   Reform Act of 1998, Public Law 105-206, the provisions of 
 71.5   section 3001 of the Omnibus Consolidated and Emergency 
 71.6   Supplemental Appropriations Act, 1999, Public Law 105-277, the 
 71.7   provisions of section 3001 of the Miscellaneous Trade and 
 71.8   Technical Corrections Act of 1999, Public Law 106-36, and the 
 71.9   provisions of section 316 of the Consolidated Appropriation Act 
 71.10  of 2001, Public Law 106-554, shall become effective at the time 
 71.11  they become effective for federal purposes. 
 71.12     The Internal Revenue Code of 1986, as amended through 
 71.13  December 31, 1997, shall be in effect for taxable years 
 71.14  beginning after December 31, 1997. 
 71.15     The provisions of sections 5002, 6009, 6011, and 7001 of 
 71.16  the Internal Revenue Service Restructuring and Reform Act of 
 71.17  1998, Public Law 105-206, the provisions of section 9010 of the 
 71.18  Transportation Equity Act for the 21st Century, Public Law 
 71.19  105-178, the provisions of sections 1004, 4002, and 5301 of the 
 71.20  Omnibus Consolidation and Emergency Supplemental Appropriations 
 71.21  Act, 1999, Public Law 105-277, the provision of section 303 of 
 71.22  the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
 71.23  105-369, the provisions of sections 532, 534, 536, 537, and 538 
 71.24  of the Ticket to Work and Work Incentives Improvement Act of 
 71.25  1999, Public Law 106-170, the provisions of the Installment Tax 
 71.26  Correction Act of 2000, Public Law 106-573, and the provisions 
 71.27  of section 309 of the Consolidated Appropriation Act of 2001, 
 71.28  Public Law 106-554, shall become effective at the time they 
 71.29  become effective for federal purposes. 
 71.30     The Internal Revenue Code of 1986, as amended through 
 71.31  December 31, 1998, shall be in effect for taxable years 
 71.32  beginning after December 31, 1998.  
 71.33     The provisions of the FSC Repeal and Extraterritorial 
 71.34  Income Exclusion Act of 2000, Public Law 106-519, and the 
 71.35  provision of section 412 of the Job Creation and Worker 
 71.36  Assistance Act of 2002, Public Law 107-147, shall become 
 72.1   effective at the time it became effective for federal purposes. 
 72.2      The Internal Revenue Code of 1986, as amended through 
 72.3   December 31, 1999, shall be in effect for taxable years 
 72.4   beginning after December 31, 1999.  The provisions of sections 
 72.5   306 and 401 of the Consolidated Appropriation Act of 2001, 
 72.6   Public Law 106-554, and the provision of section 632(b)(2)(A) of 
 72.7   the Economic Growth and Tax Relief Reconciliation Act of 2001, 
 72.8   Public Law 107-16, and provisions of sections 101 and 402 of the 
 72.9   Job Creation and Worker Assistance Act of 2002, Public Law 
 72.10  107-147, shall become effective at the same time it became 
 72.11  effective for federal purposes. 
 72.12     The Internal Revenue Code of 1986, as amended through 
 72.13  December 31, 2000, shall be in effect for taxable years 
 72.14  beginning after December 31, 2000.  The provisions of sections 
 72.15  659a and 671 of the Economic Growth and Tax Relief 
 72.16  Reconciliation Act of 2001, Public Law 107-16, the provisions of 
 72.17  sections 104, 105, and 111 of the Victims of Terrorism Tax 
 72.18  Relief Act of 2001, Public Law 107-134, and the provisions of 
 72.19  sections 201, 403, 413, and 606 of the Job Creation and Worker 
 72.20  Assistance Act of 2002, Public Law 107-147, shall become 
 72.21  effective at the same time it became effective for federal 
 72.22  purposes. 
 72.23     The Internal Revenue Code of 1986, as amended through March 
 72.24  15, 2002, shall be in effect for taxable years beginning after 
 72.25  December 31, 2001. 
 72.26     The provisions of sections 101 and 102 of the Victims of 
 72.27  Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
 72.28  become effective at the same time it becomes effective for 
 72.29  federal purposes. 
 72.30     The Internal Revenue Code of 1986, as amended through June 
 72.31  15, 2003, shall be in effect for taxable years beginning after 
 72.32  December 31, 2002.  The provisions of section 201 of the Jobs 
 72.33  and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if 
 72.34  it is enacted into law, are effective at the same time it became 
 72.35  effective for federal purposes. 
 72.36     Except as otherwise provided, references to the Internal 
 73.1   Revenue Code in subdivisions 19a 19 to 19g 19f mean the code in 
 73.2   effect for purposes of determining net income for the applicable 
 73.3   year. 
 73.4      [EFFECTIVE DATE.] This section is effective the day 
 73.5   following final enactment. 
 73.6      Sec. 3.  Minnesota Statutes 2004, section 290.01, 
 73.7   subdivision 19a, is amended to read: 
 73.8      Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 73.9   individuals, estates, and trusts, there shall be added to 
 73.10  federal taxable income: 
 73.11     (1)(i) interest income on obligations of any state other 
 73.12  than Minnesota or a political or governmental subdivision, 
 73.13  municipality, or governmental agency or instrumentality of any 
 73.14  state other than Minnesota exempt from federal income taxes 
 73.15  under the Internal Revenue Code or any other federal statute; 
 73.16  and 
 73.17     (ii) exempt-interest dividends as defined in section 
 73.18  852(b)(5) of the Internal Revenue Code, except the portion of 
 73.19  the exempt-interest dividends derived from interest income on 
 73.20  obligations of the state of Minnesota or its political or 
 73.21  governmental subdivisions, municipalities, governmental agencies 
 73.22  or instrumentalities, but only if the portion of the 
 73.23  exempt-interest dividends from such Minnesota sources paid to 
 73.24  all shareholders represents 95 percent or more of the 
 73.25  exempt-interest dividends that are paid by the regulated 
 73.26  investment company as defined in section 851(a) of the Internal 
 73.27  Revenue Code, or the fund of the regulated investment company as 
 73.28  defined in section 851(g) of the Internal Revenue Code, making 
 73.29  the payment; and 
 73.30     (iii) for the purposes of items (i) and (ii), interest on 
 73.31  obligations of an Indian tribal government described in section 
 73.32  7871(c) of the Internal Revenue Code shall be treated as 
 73.33  interest income on obligations of the state in which the tribe 
 73.34  is located; 
 73.35     (2) the amount of income or sales and use taxes paid or 
 73.36  accrued within the taxable year under this chapter and income or 
 74.1   sales and use taxes paid to any other state or to any province 
 74.2   or territory of Canada, to the extent allowed as a deduction 
 74.3   under section 63(d) of the Internal Revenue Code, but the 
 74.4   addition may not be more than the amount by which the itemized 
 74.5   deductions as allowed under section 63(d) of the Internal 
 74.6   Revenue Code exceeds the amount of the standard deduction as 
 74.7   defined in section 63(c) of the Internal Revenue Code of 1986, 
 74.8   as amended through June 15, 2003.  For the purpose of this 
 74.9   paragraph, the disallowance of itemized deductions under section 
 74.10  68 of the Internal Revenue Code of 1986, income or sales and use 
 74.11  tax is the last itemized deduction disallowed; 
 74.12     (3) the capital gain amount of a lump sum distribution to 
 74.13  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 74.14  Reform Act of 1986, Public Law 99-514, applies; 
 74.15     (4) the amount of income taxes paid or accrued within the 
 74.16  taxable year under this chapter and income taxes paid to any 
 74.17  other state or any province or territory of Canada, to the 
 74.18  extent allowed as a deduction in determining federal adjusted 
 74.19  gross income.  For the purpose of this paragraph, income taxes 
 74.20  do not include the taxes imposed by sections 290.0922, 
 74.21  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 74.22     (5) the amount of expense, interest, or taxes disallowed 
 74.23  pursuant to section 290.10; 
 74.24     (6) the amount of a partner's pro rata share of net income 
 74.25  which does not flow through to the partner because the 
 74.26  partnership elected to pay the tax on the income under section 
 74.27  6242(a)(2) of the Internal Revenue Code; and 
 74.28     (7) 80 percent of the depreciation deduction allowed under 
 74.29  section 168(k) of the Internal Revenue Code.  For purposes of 
 74.30  this clause, if the taxpayer has an activity that in the taxable 
 74.31  year generates a deduction for depreciation under section 168(k) 
 74.32  and the activity generates a loss for the taxable year that the 
 74.33  taxpayer is not allowed to claim for the taxable year, "the 
 74.34  depreciation allowed under section 168(k)" for the taxable year 
 74.35  is limited to excess of the depreciation claimed by the activity 
 74.36  under section 168(k) over the amount of the loss from the 
 75.1   activity that is not allowed in the taxable year.  In succeeding 
 75.2   taxable years when the losses not allowed in the taxable year 
 75.3   are allowed, the depreciation under section 168(k) is allowed; 
 75.4      (8) 80 percent of the amount by which the deduction allowed 
 75.5   by section 179 of the Internal Revenue Code exceeds the 
 75.6   deduction allowable by section 179 of the Internal Revenue Code 
 75.7   of 1986, as amended through December 31, 2003; 
 75.8      (9) to the extent deducted in computing federal taxable 
 75.9   income, the amount of the deduction allowable under section 199 
 75.10  of the Internal Revenue Code; 
 75.11     (10) to the extent deducted in computing federal taxable 
 75.12  income, the amount by which the standard deduction allowed under 
 75.13  section 63(c) of the Internal Revenue Code exceeds the standard 
 75.14  deduction allowable under section 63(c) of the Internal Revenue 
 75.15  Code of 1986, as amended through December 31, 2003; 
 75.16     (11) the exclusion allowed under section 139A of the 
 75.17  Internal Revenue Code for federal subsidies for prescription 
 75.18  drug plans; and 
 75.19     (12) the deduction or exclusion allowed under section 223 
 75.20  of the Internal Revenue Code for contributions to health savings 
 75.21  accounts. 
 75.22     [EFFECTIVE DATE.] This section is effective for tax years 
 75.23  beginning after December 31, 2004, except the changes in clause 
 75.24  (2) are effective for tax years beginning after December 31, 
 75.25  2003. 
 75.26     Sec. 4.  Minnesota Statutes 2004, section 290.01, 
 75.27  subdivision 19b, is amended to read: 
 75.28     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 75.29  individuals, estates, and trusts, there shall be subtracted from 
 75.30  federal taxable income: 
 75.31     (1) interest income on obligations of any authority, 
 75.32  commission, or instrumentality of the United States to the 
 75.33  extent includable in taxable income for federal income tax 
 75.34  purposes but exempt from state income tax under the laws of the 
 75.35  United States; 
 75.36     (2) if included in federal taxable income, the amount of 
 76.1   any overpayment of income tax to Minnesota or to any other 
 76.2   state, for any previous taxable year, whether the amount is 
 76.3   received as a refund or as a credit to another taxable year's 
 76.4   income tax liability; 
 76.5      (3) the amount paid to others, less the amount used to 
 76.6   claim the credit allowed under section 290.0674, not to exceed 
 76.7   $1,625 for each qualifying child in grades kindergarten to 6 and 
 76.8   $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 76.9   textbooks, and transportation of each qualifying child in 
 76.10  attending an elementary or secondary school situated in 
 76.11  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 76.12  wherein a resident of this state may legally fulfill the state's 
 76.13  compulsory attendance laws, which is not operated for profit, 
 76.14  and which adheres to the provisions of the Civil Rights Act of 
 76.15  1964 and chapter 363A.  For the purposes of this clause, 
 76.16  "tuition" includes fees or tuition as defined in section 
 76.17  290.0674, subdivision 1, clause (1).  As used in this clause, 
 76.18  "textbooks" includes books and other instructional materials and 
 76.19  equipment purchased or leased for use in elementary and 
 76.20  secondary schools in teaching only those subjects legally and 
 76.21  commonly taught in public elementary and secondary schools in 
 76.22  this state.  Equipment expenses qualifying for deduction 
 76.23  includes expenses as defined and limited in section 290.0674, 
 76.24  subdivision 1, clause (3).  "Textbooks" does not include 
 76.25  instructional books and materials used in the teaching of 
 76.26  religious tenets, doctrines, or worship, the purpose of which is 
 76.27  to instill such tenets, doctrines, or worship, nor does it 
 76.28  include books or materials for, or transportation to, 
 76.29  extracurricular activities including sporting events, musical or 
 76.30  dramatic events, speech activities, driver's education, or 
 76.31  similar programs.  For purposes of the subtraction provided by 
 76.32  this clause, "qualifying child" has the meaning given in section 
 76.33  32(c)(3) of the Internal Revenue Code; 
 76.34     (4) income as provided under section 290.0802; 
 76.35     (5) to the extent included in federal adjusted gross 
 76.36  income, income realized on disposition of property exempt from 
 77.1   tax under section 290.491; 
 77.2      (6) to the extent included in federal taxable income, 
 77.3   postservice benefits for youth community service under section 
 77.4   124D.42 for volunteer service under United States Code, title 
 77.5   42, sections 12601 to 12604; 
 77.6      (7) to the extent not deducted in determining federal 
 77.7   taxable income by an individual who does not itemize deductions 
 77.8   for federal income tax purposes for the taxable year, an amount 
 77.9   equal to 50 percent of the excess of charitable contributions 
 77.10  over $500 allowable as a deduction for the taxable year under 
 77.11  section 170(a) of the Internal Revenue Code over $500 and under 
 77.12  the provisions of Public Law 109-1; 
 77.13     (8) for taxable years beginning before January 1, 2008, the 
 77.14  amount of the federal small ethanol producer credit allowed 
 77.15  under section 40(a)(3) of the Internal Revenue Code which is 
 77.16  included in gross income under section 87 of the Internal 
 77.17  Revenue Code; 
 77.18     (9) for individuals who are allowed a federal foreign tax 
 77.19  credit for taxes that do not qualify for a credit under section 
 77.20  290.06, subdivision 22, an amount equal to the carryover of 
 77.21  subnational foreign taxes for the taxable year, but not to 
 77.22  exceed the total subnational foreign taxes reported in claiming 
 77.23  the foreign tax credit.  For purposes of this clause, "federal 
 77.24  foreign tax credit" means the credit allowed under section 27 of 
 77.25  the Internal Revenue Code, and "carryover of subnational foreign 
 77.26  taxes" equals the carryover allowed under section 904(c) of the 
 77.27  Internal Revenue Code minus national level foreign taxes to the 
 77.28  extent they exceed the federal foreign tax credit; 
 77.29     (10) in each of the five tax years immediately following 
 77.30  the tax year in which an addition is required under subdivision 
 77.31  19a, clause (7), an amount equal to one-fifth of the delayed 
 77.32  depreciation.  For purposes of this clause, "delayed 
 77.33  depreciation" means the amount of the addition made by the 
 77.34  taxpayer under subdivision 19a, clause (7), minus the positive 
 77.35  value of any net operating loss under section 172 of the 
 77.36  Internal Revenue Code generated for the tax year of the 
 78.1   addition.  The resulting delayed depreciation cannot be less 
 78.2   than zero; and 
 78.3      (11) job opportunity building zone income as provided under 
 78.4   section 469.316.; 
 78.5      (12) in each of the five tax years immediately following 
 78.6   the tax year in which an addition is required under subdivision 
 78.7   19a, clause (8), or 19c, clause (17), in the case of a 
 78.8   shareholder of a corporation that is an S corporation, an amount 
 78.9   equal to one-fifth of the addition made by the taxpayer under 
 78.10  subdivision 19a, clause (8), or 19c, clause (17), in the case of 
 78.11  a shareholder of a corporation that is an S corporation, minus 
 78.12  the positive value of any net operating loss under section 172 
 78.13  of the Internal Revenue Code generated for the tax year of the 
 78.14  addition.  If the net operating loss exceeds the addition for 
 78.15  the tax year, a subtraction is not allowed under this clause; 
 78.16     (13) to the extent included in federal taxable income, 
 78.17  compensation paid to a service member as defined in United 
 78.18  States Code, title 10, section 101(a)(5), for military service 
 78.19  as defined in the Service Member Civil Relief Act, Public Law 
 78.20  108-189, section 101(2), and compensation paid for state active 
 78.21  service as defined in section 190.05, subdivision 5a, clauses 
 78.22  (1) and (3), or federally funded state active service as defined 
 78.23  in section 190.05, subdivision 5b.  This subtraction does not 
 78.24  apply to retirement income as defined in section 290.17, 
 78.25  subdivision 2, paragraph (a), clause (3); and 
 78.26     (14) distributions from a health savings account to the 
 78.27  extent the distributions are for the return of amounts added 
 78.28  back under subdivision 19a, clause (12), but only to the extent 
 78.29  that the amount of the distribution would have been deductible 
 78.30  under section 213 of the Internal Revenue Code for that taxable 
 78.31  year.  For the purposes of this clause, distributions are 
 78.32  considered to be made from contributions subject to the add-back.
 78.33     [EFFECTIVE DATE.] This section is effective for tax years 
 78.34  beginning after December 31, 2004, except the change to clause 
 78.35  (7) is effective for tax years beginning after December 31, 2003.
 78.36     Sec. 5.  Minnesota Statutes 2004, section 290.01, 
 79.1   subdivision 19c, is amended to read: 
 79.2      Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 79.3   INCOME.] For corporations, there shall be added to federal 
 79.4   taxable income: 
 79.5      (1) the amount of any deduction taken for federal income 
 79.6   tax purposes for income, excise, or franchise taxes based on net 
 79.7   income or related minimum taxes, including but not limited to 
 79.8   the tax imposed under section 290.0922, paid by the corporation 
 79.9   to Minnesota, another state, a political subdivision of another 
 79.10  state, the District of Columbia, or any foreign country or 
 79.11  possession of the United States; 
 79.12     (2) interest not subject to federal tax upon obligations 
 79.13  of:  the United States, its possessions, its agencies, or its 
 79.14  instrumentalities; the state of Minnesota or any other state, 
 79.15  any of its political or governmental subdivisions, any of its 
 79.16  municipalities, or any of its governmental agencies or 
 79.17  instrumentalities; the District of Columbia; or Indian tribal 
 79.18  governments; 
 79.19     (3) exempt-interest dividends received as defined in 
 79.20  section 852(b)(5) of the Internal Revenue Code; 
 79.21     (4) the amount of any net operating loss deduction taken 
 79.22  for federal income tax purposes under section 172 or 832(c)(10) 
 79.23  of the Internal Revenue Code or operations loss deduction under 
 79.24  section 810 of the Internal Revenue Code; 
 79.25     (5) the amount of any special deductions taken for federal 
 79.26  income tax purposes under sections 241 to 247 of the Internal 
 79.27  Revenue Code; 
 79.28     (6) losses from the business of mining, as defined in 
 79.29  section 290.05, subdivision 1, clause (a), that are not subject 
 79.30  to Minnesota income tax; 
 79.31     (7) the amount of any capital losses deducted for federal 
 79.32  income tax purposes under sections 1211 and 1212 of the Internal 
 79.33  Revenue Code; 
 79.34     (8) the exempt foreign trade income of a foreign sales 
 79.35  corporation under sections 921(a) and 291 of the Internal 
 79.36  Revenue Code; 
 80.1      (9) the amount of percentage depletion deducted under 
 80.2   sections 611 through 614 and 291 of the Internal Revenue Code; 
 80.3      (10) for certified pollution control facilities placed in 
 80.4   service in a taxable year beginning before December 31, 1986, 
 80.5   and for which amortization deductions were elected under section 
 80.6   169 of the Internal Revenue Code of 1954, as amended through 
 80.7   December 31, 1985, the amount of the amortization deduction 
 80.8   allowed in computing federal taxable income for those 
 80.9   facilities; 
 80.10     (11) the amount of any deemed dividend from a foreign 
 80.11  operating corporation determined pursuant to section 290.17, 
 80.12  subdivision 4, paragraph (g); 
 80.13     (12) the amount of any environmental tax paid under section 
 80.14  59(a) of the Internal Revenue Code; 
 80.15     (13) the amount of a partner's pro rata share of net income 
 80.16  which does not flow through to the partner because the 
 80.17  partnership elected to pay the tax on the income under section 
 80.18  6242(a)(2) of the Internal Revenue Code; 
 80.19     (14) the amount of net income excluded under section 114 of 
 80.20  the Internal Revenue Code; 
 80.21     (15) any increase in subpart F income, as defined in 
 80.22  section 952(a) of the Internal Revenue Code, for the taxable 
 80.23  year when subpart F income is calculated without regard to the 
 80.24  provisions of section 614 of Public Law 107-147; and 
 80.25     (16) 80 percent of the depreciation deduction allowed under 
 80.26  section 168(k) of the Internal Revenue Code.  For purposes of 
 80.27  this clause, if the taxpayer has an activity that in the taxable 
 80.28  year generates a deduction for depreciation under section 168(k) 
 80.29  and the activity generates a loss for the taxable year that the 
 80.30  taxpayer is not allowed to claim for the taxable year, "the 
 80.31  depreciation allowed under section 168(k)" for the taxable year 
 80.32  is limited to excess of the depreciation claimed by the activity 
 80.33  under section 168(k) over the amount of the loss from the 
 80.34  activity that is not allowed in the taxable year.  In succeeding 
 80.35  taxable years when the losses not allowed in the taxable year 
 80.36  are allowed, the depreciation under section 168(k) is allowed; 
 81.1      (17) 80 percent of the amount by which the deduction 
 81.2   allowed by section 179 of the Internal Revenue Code exceeds the 
 81.3   deduction allowable by section 179 of the Internal Revenue Code 
 81.4   of 1986, as amended through December 31, 2003; and 
 81.5      (18) to the extent deducted in computing federal taxable 
 81.6   income, the amount of the deduction allowable under section 199 
 81.7   of the Internal Revenue Code. 
 81.8      [EFFECTIVE DATE.] This section is effective for tax years 
 81.9   beginning after December 31, 2004. 
 81.10     Sec. 6.  Minnesota Statutes 2004, section 290.01, 
 81.11  subdivision 19d, is amended to read: 
 81.12     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 81.13  TAXABLE INCOME.] For corporations, there shall be subtracted 
 81.14  from federal taxable income after the increases provided in 
 81.15  subdivision 19c:  
 81.16     (1) the amount of foreign dividend gross-up added to gross 
 81.17  income for federal income tax purposes under section 78 of the 
 81.18  Internal Revenue Code; 
 81.19     (2) the amount of salary expense not allowed for federal 
 81.20  income tax purposes due to claiming the federal jobs credit 
 81.21  under section 51 of the Internal Revenue Code; 
 81.22     (3) any dividend (not including any distribution in 
 81.23  liquidation) paid within the taxable year by a national or state 
 81.24  bank to the United States, or to any instrumentality of the 
 81.25  United States exempt from federal income taxes, on the preferred 
 81.26  stock of the bank owned by the United States or the 
 81.27  instrumentality; 
 81.28     (4) amounts disallowed for intangible drilling costs due to 
 81.29  differences between this chapter and the Internal Revenue Code 
 81.30  in taxable years beginning before January 1, 1987, as follows: 
 81.31     (i) to the extent the disallowed costs are represented by 
 81.32  physical property, an amount equal to the allowance for 
 81.33  depreciation under Minnesota Statutes 1986, section 290.09, 
 81.34  subdivision 7, subject to the modifications contained in 
 81.35  subdivision 19e; and 
 81.36     (ii) to the extent the disallowed costs are not represented 
 82.1   by physical property, an amount equal to the allowance for cost 
 82.2   depletion under Minnesota Statutes 1986, section 290.09, 
 82.3   subdivision 8; 
 82.4      (5) the deduction for capital losses pursuant to sections 
 82.5   1211 and 1212 of the Internal Revenue Code, except that: 
 82.6      (i) for capital losses incurred in taxable years beginning 
 82.7   after December 31, 1986, capital loss carrybacks shall not be 
 82.8   allowed; 
 82.9      (ii) for capital losses incurred in taxable years beginning
 82.10  after December 31, 1986, a capital loss carryover to each of the 
 82.11  15 taxable years succeeding the loss year shall be allowed; 
 82.12     (iii) for capital losses incurred in taxable years 
 82.13  beginning before January 1, 1987, a capital loss carryback to 
 82.14  each of the three taxable years preceding the loss year, subject 
 82.15  to the provisions of Minnesota Statutes 1986, section 290.16, 
 82.16  shall be allowed; and 
 82.17     (iv) for capital losses incurred in taxable years beginning
 82.18  before January 1, 1987, a capital loss carryover to each of the 
 82.19  five taxable years succeeding the loss year to the extent such 
 82.20  loss was not used in a prior taxable year and subject to the 
 82.21  provisions of Minnesota Statutes 1986, section 290.16, shall be 
 82.22  allowed; 
 82.23     (6) an amount for interest and expenses relating to income 
 82.24  not taxable for federal income tax purposes, if (i) the income 
 82.25  is taxable under this chapter and (ii) the interest and expenses 
 82.26  were disallowed as deductions under the provisions of section 
 82.27  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 82.28  federal taxable income; 
 82.29     (7) in the case of mines, oil and gas wells, other natural 
 82.30  deposits, and timber for which percentage depletion was 
 82.31  disallowed pursuant to subdivision 19c, clause (11), a 
 82.32  reasonable allowance for depletion based on actual cost.  In the 
 82.33  case of leases the deduction must be apportioned between the 
 82.34  lessor and lessee in accordance with rules prescribed by the 
 82.35  commissioner.  In the case of property held in trust, the 
 82.36  allowable deduction must be apportioned between the income 
 83.1   beneficiaries and the trustee in accordance with the pertinent 
 83.2   provisions of the trust, or if there is no provision in the 
 83.3   instrument, on the basis of the trust's income allocable to 
 83.4   each; 
 83.5      (8) for certified pollution control facilities placed in 
 83.6   service in a taxable year beginning before December 31, 1986, 
 83.7   and for which amortization deductions were elected under section 
 83.8   169 of the Internal Revenue Code of 1954, as amended through 
 83.9   December 31, 1985, an amount equal to the allowance for 
 83.10  depreciation under Minnesota Statutes 1986, section 290.09, 
 83.11  subdivision 7; 
 83.12     (9) amounts included in federal taxable income that are due 
 83.13  to refunds of income, excise, or franchise taxes based on net 
 83.14  income or related minimum taxes paid by the corporation to 
 83.15  Minnesota, another state, a political subdivision of another 
 83.16  state, the District of Columbia, or a foreign country or 
 83.17  possession of the United States to the extent that the taxes 
 83.18  were added to federal taxable income under section 290.01, 
 83.19  subdivision 19c, clause (1), in a prior taxable year; 
 83.20     (10) 80 percent of royalties, fees, or other like income 
 83.21  accrued or received from a foreign operating corporation or a 
 83.22  foreign corporation which is part of the same unitary business 
 83.23  as the receiving corporation; 
 83.24     (11) income or gains from the business of mining as defined 
 83.25  in section 290.05, subdivision 1, clause (a), that are not 
 83.26  subject to Minnesota franchise tax; 
 83.27     (12) the amount of handicap access expenditures in the 
 83.28  taxable year which are not allowed to be deducted or capitalized 
 83.29  under section 44(d)(7) of the Internal Revenue Code; 
 83.30     (13) the amount of qualified research expenses not allowed 
 83.31  for federal income tax purposes under section 280C(c) of the 
 83.32  Internal Revenue Code, but only to the extent that the amount 
 83.33  exceeds the amount of the credit allowed under section 290.068; 
 83.34     (14) the amount of salary expenses not allowed for federal 
 83.35  income tax purposes due to claiming the Indian employment credit 
 83.36  under section 45A(a) of the Internal Revenue Code; 
 84.1      (15) the amount of any refund of environmental taxes paid 
 84.2   under section 59A of the Internal Revenue Code; 
 84.3      (16) for taxable years beginning before January 1, 2008, 
 84.4   the amount of the federal small ethanol producer credit allowed 
 84.5   under section 40(a)(3) of the Internal Revenue Code which is 
 84.6   included in gross income under section 87 of the Internal 
 84.7   Revenue Code; 
 84.8      (17) for a corporation whose foreign sales corporation, as 
 84.9   defined in section 922 of the Internal Revenue Code, constituted 
 84.10  a foreign operating corporation during any taxable year ending 
 84.11  before January 1, 1995, and a return was filed by August 15, 
 84.12  1996, claiming the deduction under section 290.21, subdivision 
 84.13  4, for income received from the foreign operating corporation, 
 84.14  an amount equal to 1.23 multiplied by the amount of income 
 84.15  excluded under section 114 of the Internal Revenue Code, 
 84.16  provided the income is not income of a foreign operating 
 84.17  company; 
 84.18     (18) any decrease in subpart F income, as defined in 
 84.19  section 952(a) of the Internal Revenue Code, for the taxable 
 84.20  year when subpart F income is calculated without regard to the 
 84.21  provisions of section 614 of Public Law 107-147; and 
 84.22     (19) in each of the five tax years immediately following 
 84.23  the tax year in which an addition is required under subdivision 
 84.24  19c, clause (16), an amount equal to one-fifth of the delayed 
 84.25  depreciation.  For purposes of this clause, "delayed 
 84.26  depreciation" means the amount of the addition made by the 
 84.27  taxpayer under subdivision 19c, clause (16).  The resulting 
 84.28  delayed depreciation cannot be less than zero; and 
 84.29     (20) in each of the five tax years immediately following 
 84.30  the tax year in which an addition is required under subdivision 
 84.31  19c, clause (17), an amount equal to one-fifth of the amount of 
 84.32  the addition. 
 84.33     [EFFECTIVE DATE.] This section is effective for tax years 
 84.34  beginning after December 31, 2004. 
 84.35     Sec. 7.  Minnesota Statutes 2004, section 290.01, 
 84.36  subdivision 31, is amended to read: 
 85.1      Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 85.2   defined otherwise, "Internal Revenue Code" means the Internal 
 85.3   Revenue Code of 1986, as amended through June 15, 2003 December 
 85.4   31, 2004. 
 85.5      [EFFECTIVE DATE.] This section is effective the day 
 85.6   following final enactment except the changes incorporated by 
 85.7   federal changes are effective at the same times as the changes 
 85.8   were effective for federal purposes. 
 85.9      Sec. 8.  Minnesota Statutes 2004, section 290.032, 
 85.10  subdivision 1, is amended to read: 
 85.11     Subdivision 1.  [IMPOSITION.] There is hereby imposed as an 
 85.12  addition to the annual income tax for a taxable year of a 
 85.13  taxpayer in the classes described in section 290.03 a tax with 
 85.14  respect to any distribution received by such taxpayer that is 
 85.15  treated as a lump sum distribution under section 402(d) of the 
 85.16  Internal Revenue Code 1401(c)(2) of the Small Business Job 
 85.17  Protection Act, Public Law 104-188 and that is subject to tax 
 85.18  for such taxable year under section 402(d) of the Internal 
 85.19  Revenue Code 1401(c)(2) of the Small Business Job Protection 
 85.20  Act, Public Law 104-188. 
 85.21     [EFFECTIVE DATE.] This section is effective for tax years 
 85.22  beginning after December 31, 1999. 
 85.23     Sec. 9.  Minnesota Statutes 2004, section 290.032, 
 85.24  subdivision 2, is amended to read: 
 85.25     Subd. 2.  [COMPUTATION.] The amount of tax imposed by 
 85.26  subdivision 1 shall be computed in the same way as the tax 
 85.27  imposed under section 402(d) of the Internal Revenue Code of 
 85.28  1986, as amended through December 31, 1995, except that the 
 85.29  initial separate tax shall be an amount equal to five times the 
 85.30  tax which would be imposed by section 290.06, subdivision 2c, if 
 85.31  the recipient was an unmarried individual, and the taxable net 
 85.32  income was an amount equal to one-fifth of the excess of 
 85.33     (i) the total taxable amount of the lump sum distribution 
 85.34  for the year, over 
 85.35     (ii) the minimum distribution allowance, and except that 
 85.36  references in section 402(d) of the Internal Revenue Code of 
 86.1   1986, as amended through December 31, 1995, to paragraph (1)(A) 
 86.2   thereof shall instead be references to subdivision 1, and the 
 86.3   excess, if any, of the subtraction base amount over federal 
 86.4   taxable income for a qualified individual as provided under 
 86.5   section 290.0802, subdivision 2. 
 86.6      [EFFECTIVE DATE.] This section is effective for tax years 
 86.7   beginning after December 31, 1999. 
 86.8      Sec. 10.  Minnesota Statutes 2004, section 290.06, 
 86.9   subdivision 2c, is amended to read: 
 86.10     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 86.11  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 86.12  married individuals filing joint returns and surviving spouses 
 86.13  as defined in section 2(a) of the Internal Revenue Code must be 
 86.14  computed by applying to their taxable net income the following 
 86.15  schedule of rates: 
 86.16     (1) On the first $25,680, 5.35 percent; 
 86.17     (2) On all over $25,680, but not over $102,030, 7.05 
 86.18  percent; 
 86.19     (3) On all over $102,030, 7.85 percent. 
 86.20     Married individuals filing separate returns, estates, and 
 86.21  trusts must compute their income tax by applying the above rates 
 86.22  to their taxable income, except that the income brackets will be 
 86.23  one-half of the above amounts.  
 86.24     (b) The income taxes imposed by this chapter upon unmarried 
 86.25  individuals must be computed by applying to taxable net income 
 86.26  the following schedule of rates: 
 86.27     (1) On the first $17,570, 5.35 percent; 
 86.28     (2) On all over $17,570, but not over $57,710, 7.05 
 86.29  percent; 
 86.30     (3) On all over $57,710, 7.85 percent. 
 86.31     (c) The income taxes imposed by this chapter upon unmarried 
 86.32  individuals qualifying as a head of household as defined in 
 86.33  section 2(b) of the Internal Revenue Code must be computed by 
 86.34  applying to taxable net income the following schedule of rates: 
 86.35     (1) On the first $21,630, 5.35 percent; 
 86.36     (2) On all over $21,630, but not over $86,910, 7.05 
 87.1   percent; 
 87.2      (3) On all over $86,910, 7.85 percent. 
 87.3      (d) In lieu of a tax computed according to the rates set 
 87.4   forth in this subdivision, the tax of any individual taxpayer 
 87.5   whose taxable net income for the taxable year is less than an 
 87.6   amount determined by the commissioner must be computed in 
 87.7   accordance with tables prepared and issued by the commissioner 
 87.8   of revenue based on income brackets of not more than $100.  The 
 87.9   amount of tax for each bracket shall be computed at the rates 
 87.10  set forth in this subdivision, provided that the commissioner 
 87.11  may disregard a fractional part of a dollar unless it amounts to 
 87.12  50 cents or more, in which case it may be increased to $1. 
 87.13     (e) An individual who is not a Minnesota resident for the 
 87.14  entire year must compute the individual's Minnesota income tax 
 87.15  as provided in this subdivision.  After the application of the 
 87.16  nonrefundable credits provided in this chapter, the tax 
 87.17  liability must then be multiplied by a fraction in which:  
 87.18     (1) the numerator is the individual's Minnesota source 
 87.19  federal adjusted gross income as defined in section 62 of the 
 87.20  Internal Revenue Code and increased by the additions required 
 87.21  under section 290.01, subdivision 19a, clauses (1), (5), and 
 87.22  (6), (7), (8), and (9), and reduced by the subtraction under 
 87.23  section 290.01, subdivision 19b, clause (11), and the Minnesota 
 87.24  assignable portion of the subtraction for United States 
 87.25  government interest under section 290.01, subdivision 19b, 
 87.26  clause (1), and the subtractions under clauses (10), (11), (12), 
 87.27  and (13), after applying the allocation and assignability 
 87.28  provisions of section 290.081, clause (a), or 290.17; and 
 87.29     (2) the denominator is the individual's federal adjusted 
 87.30  gross income as defined in section 62 of the Internal Revenue 
 87.31  Code of 1986, increased by the amounts specified in section 
 87.32  290.01, subdivision 19a, clauses (1), (5), and (6), (7), (8), 
 87.33  and (9), and reduced by the amounts specified in section 290.01, 
 87.34  subdivision 19b, clauses (1) and, (10), (11), (12), and (13). 
 87.35     [EFFECTIVE DATE.] This section is effective for tax years 
 87.36  beginning after December 31, 2004. 
 88.1      Sec. 11.  Minnesota Statutes 2004, section 290.067, 
 88.2   subdivision 1, is amended to read: 
 88.3      Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
 88.4   as a credit against the tax due from the taxpayer and a spouse, 
 88.5   if any, under this chapter an amount equal to the dependent care 
 88.6   credit for which the taxpayer is eligible pursuant to the 
 88.7   provisions of section 21 of the Internal Revenue Code subject to 
 88.8   the limitations provided in subdivision 2 except that in 
 88.9   determining whether the child qualified as a dependent, income 
 88.10  received as a Minnesota family investment program grant or 
 88.11  allowance to or on behalf of the child must not be taken into 
 88.12  account in determining whether the child received more than half 
 88.13  of the child's support from the taxpayer, and the provisions of 
 88.14  section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
 88.15     (b) If a child who has not attained the age of six years at 
 88.16  the close of the taxable year is cared for at a licensed family 
 88.17  day care home operated by the child's parent, the taxpayer is 
 88.18  deemed to have paid employment-related expenses.  If the child 
 88.19  is 16 months old or younger at the close of the taxable year, 
 88.20  the amount of expenses deemed to have been paid equals the 
 88.21  maximum limit for one qualified individual under section 21(c) 
 88.22  and (d) of the Internal Revenue Code.  If the child is older 
 88.23  than 16 months of age but has not attained the age of six years 
 88.24  at the close of the taxable year, the amount of expenses deemed 
 88.25  to have been paid equals the amount the licensee would charge 
 88.26  for the care of a child of the same age for the same number of 
 88.27  hours of care.  
 88.28     (c) If a married couple: 
 88.29     (1) has a child who has not attained the age of one year at 
 88.30  the close of the taxable year; 
 88.31     (2) files a joint tax return for the taxable year; and 
 88.32     (3) does not participate in a dependent care assistance 
 88.33  program as defined in section 129 of the Internal Revenue Code, 
 88.34  in lieu of the actual employment related expenses paid for that 
 88.35  child under paragraph (a) or the deemed amount under paragraph 
 88.36  (b), the lesser of (i) the combined earned income of the couple 
 89.1   or (ii) the amount of the maximum limit for one qualified 
 89.2   individual under section 21(c) and (d) of the Internal Revenue 
 89.3   Code will be deemed to be the employment related expense paid 
 89.4   for that child.  The earned income limitation of section 21(d) 
 89.5   of the Internal Revenue Code shall not apply to this deemed 
 89.6   amount.  These deemed amounts apply regardless of whether any 
 89.7   employment-related expenses have been paid.  
 89.8      (d) If the taxpayer is not required and does not file a 
 89.9   federal individual income tax return for the tax year, no credit 
 89.10  is allowed for any amount paid to any person unless: 
 89.11     (1) the name, address, and taxpayer identification number 
 89.12  of the person are included on the return claiming the credit; or 
 89.13     (2) if the person is an organization described in section 
 89.14  501(c)(3) of the Internal Revenue Code and exempt from tax under 
 89.15  section 501(a) of the Internal Revenue Code, the name and 
 89.16  address of the person are included on the return claiming the 
 89.17  credit.  
 89.18  In the case of a failure to provide the information required 
 89.19  under the preceding sentence, the preceding sentence does not 
 89.20  apply if it is shown that the taxpayer exercised due diligence 
 89.21  in attempting to provide the information required. 
 89.22     In the case of a nonresident, part-year resident, or a 
 89.23  person who has earned income not subject to tax under this 
 89.24  chapter including earned income excluded pursuant to section 
 89.25  290.01, subdivision 19b, clause (11), the credit determined 
 89.26  under section 21 of the Internal Revenue Code must be allocated 
 89.27  based on the ratio by which the earned income of the claimant 
 89.28  and the claimant's spouse from Minnesota sources bears to the 
 89.29  total earned income of the claimant and the claimant's spouse. 
 89.30     For residents of Minnesota, the exclusion of combat pay 
 89.31  under section 112 of the Internal Revenue Code and the 
 89.32  subtraction for military pay under section 290.01, subdivision 
 89.33  19b, clause (13), are not considered "earned income not subject 
 89.34  to tax under this chapter." 
 89.35     [EFFECTIVE DATE.] This section is effective for tax years 
 89.36  beginning after December 31, 2004. 
 90.1      Sec. 12.  Minnesota Statutes 2004, section 290.067, 
 90.2   subdivision 2a, is amended to read: 
 90.3      Subd. 2a.  [INCOME.] (a) For purposes of this section, 
 90.4   "income" means the sum of the following: 
 90.5      (1) federal adjusted gross income as defined in section 62 
 90.6   of the Internal Revenue Code; and 
 90.7      (2) the sum of the following amounts to the extent not 
 90.8   included in clause (1): 
 90.9      (i) all nontaxable income; 
 90.10     (ii) the amount of a passive activity loss that is not 
 90.11  disallowed as a result of section 469, paragraph (i) or (m) of 
 90.12  the Internal Revenue Code and the amount of passive activity 
 90.13  loss carryover allowed under section 469(b) of the Internal 
 90.14  Revenue Code; 
 90.15     (iii) an amount equal to the total of any discharge of 
 90.16  qualified farm indebtedness of a solvent individual excluded 
 90.17  from gross income under section 108(g) of the Internal Revenue 
 90.18  Code; 
 90.19     (iv) cash public assistance and relief; 
 90.20     (v) any pension or annuity (including railroad retirement 
 90.21  benefits, all payments received under the federal Social 
 90.22  Security Act, supplemental security income, and veterans 
 90.23  benefits), which was not exclusively funded by the claimant or 
 90.24  spouse, or which was funded exclusively by the claimant or 
 90.25  spouse and which funding payments were excluded from federal 
 90.26  adjusted gross income in the years when the payments were made; 
 90.27     (vi) interest received from the federal or a state 
 90.28  government or any instrumentality or political subdivision 
 90.29  thereof; 
 90.30     (vii) workers' compensation; 
 90.31     (viii) nontaxable strike benefits; 
 90.32     (ix) the gross amounts of payments received in the nature 
 90.33  of disability income or sick pay as a result of accident, 
 90.34  sickness, or other disability, whether funded through insurance 
 90.35  or otherwise; 
 90.36     (x) a lump sum distribution under section 402(e)(3) of the 
 91.1   Internal Revenue Code of 1986, as amended through December 31, 
 91.2   1995; 
 91.3      (xi) contributions made by the claimant to an individual 
 91.4   retirement account, including a qualified voluntary employee 
 91.5   contribution; simplified employee pension plan; self-employed 
 91.6   retirement plan; cash or deferred arrangement plan under section 
 91.7   401(k) of the Internal Revenue Code; or deferred compensation 
 91.8   plan under section 457 of the Internal Revenue Code; and 
 91.9      (xii) nontaxable scholarship or fellowship grants; 
 91.10     (xiii) the amount of deduction allowed under section 199 of 
 91.11  the Internal Revenue Code; and 
 91.12     (xiv) the amount of deduction allowed under section 220 or 
 91.13  223 of the Internal Revenue Code. 
 91.14     In the case of an individual who files an income tax return 
 91.15  on a fiscal year basis, the term "federal adjusted gross income" 
 91.16  means federal adjusted gross income reflected in the fiscal year 
 91.17  ending in the next calendar year.  Federal adjusted gross income 
 91.18  may not be reduced by the amount of a net operating loss 
 91.19  carryback or carryforward or a capital loss carryback or 
 91.20  carryforward allowed for the year. 
 91.21     (b) "Income" does not include: 
 91.22     (1) amounts excluded pursuant to the Internal Revenue Code, 
 91.23  sections 101(a) and 102; 
 91.24     (2) amounts of any pension or annuity that were exclusively 
 91.25  funded by the claimant or spouse if the funding payments were 
 91.26  not excluded from federal adjusted gross income in the years 
 91.27  when the payments were made; 
 91.28     (3) surplus food or other relief in kind supplied by a 
 91.29  governmental agency; 
 91.30     (4) relief granted under chapter 290A; 
 91.31     (5) child support payments received under a temporary or 
 91.32  final decree of dissolution or legal separation; and 
 91.33     (6) restitution payments received by eligible individuals 
 91.34  and excludable interest as defined in section 803 of the 
 91.35  Economic Growth and Tax Relief Reconciliation Act of 2001, 
 91.36  Public Law 107-16. 
 92.1      [EFFECTIVE DATE.] This section is effective for tax years 
 92.2   beginning after December 31, 2003. 
 92.3      Sec. 13.  Minnesota Statutes 2004, section 290.0671, 
 92.4   subdivision 1, is amended to read: 
 92.5      Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
 92.6   allowed a credit against the tax imposed by this chapter equal 
 92.7   to a percentage of earned income.  To receive a credit, a 
 92.8   taxpayer must be eligible for a credit under section 32 of the 
 92.9   Internal Revenue Code.  
 92.10     (b) For individuals with no qualifying children, the credit 
 92.11  equals 1.9125 percent of the first $4,620 of earned income.  The 
 92.12  credit is reduced by 1.9125 percent of earned income or modified 
 92.13  adjusted gross income, whichever is greater, in excess of 
 92.14  $5,770, but in no case is the credit less than zero. 
 92.15     (c) For individuals with one qualifying child, the credit 
 92.16  equals 8.5 percent of the first $6,920 of earned income and 8.5 
 92.17  percent of earned income over $12,080 but less than $13,450.  
 92.18  The credit is reduced by 5.73 percent of earned income or 
 92.19  modified adjusted gross income, whichever is greater, in excess 
 92.20  of $15,080, but in no case is the credit less than zero. 
 92.21     (d) For individuals with two or more qualifying children, 
 92.22  the credit equals ten percent of the first $9,720 of earned 
 92.23  income and 20 percent of earned income over $14,860 but less 
 92.24  than $16,800.  The credit is reduced by 10.3 percent of earned 
 92.25  income or modified adjusted gross income, whichever is greater, 
 92.26  in excess of $17,890, but in no case is the credit less than 
 92.27  zero. 
 92.28     (e) For a nonresident or part-year resident, the credit 
 92.29  must be allocated based on the percentage calculated under 
 92.30  section 290.06, subdivision 2c, paragraph (e). 
 92.31     (f) For a person who was a resident for the entire tax year 
 92.32  and has earned income not subject to tax under this chapter, 
 92.33  including income excluded under section 290.01, subdivision 19b, 
 92.34  clause (11), the credit must be allocated based on the ratio of 
 92.35  federal adjusted gross income reduced by the earned income not 
 92.36  subject to tax under this chapter over federal adjusted gross 
 93.1   income.  For the purposes of this paragraph, the exclusion of 
 93.2   combat pay under section 112 of the Internal Revenue Code and 
 93.3   the subtraction for military pay under section 290.01, 
 93.4   subdivision 19b, clause (13), are not considered "earned income 
 93.5   not subject to tax under this chapter." 
 93.6      (g) For tax years beginning after December 31, 2001, and 
 93.7   before December 31, 2004, the $5,770 in paragraph (b), the 
 93.8   $15,080 in paragraph (c), and the $17,890 in paragraph (d), 
 93.9   after being adjusted for inflation under subdivision 7, are each 
 93.10  increased by $1,000 for married taxpayers filing joint returns. 
 93.11     (h) For tax years beginning after December 31, 2004, and 
 93.12  before December 31, 2007, the $5,770 in paragraph (b), the 
 93.13  $15,080 in paragraph (c), and the $17,890 in paragraph (d), 
 93.14  after being adjusted for inflation under subdivision 7, are each 
 93.15  increased by $2,000 for married taxpayers filing joint returns. 
 93.16     (i) For tax years beginning after December 31, 2007, and 
 93.17  before December 31, 2010, the $5,770 in paragraph (b), the 
 93.18  $15,080 in paragraph (c), and the $17,890 in paragraph (d), 
 93.19  after being adjusted for inflation under subdivision 7, are each 
 93.20  increased by $3,000 for married taxpayers filing joint returns.  
 93.21  For tax years beginning after December 31, 2008, the $3,000 is 
 93.22  adjusted annually for inflation under subdivision 7. 
 93.23     (j) The commissioner shall construct tables showing the 
 93.24  amount of the credit at various income levels and make them 
 93.25  available to taxpayers.  The tables shall follow the schedule 
 93.26  contained in this subdivision, except that the commissioner may 
 93.27  graduate the transition between income brackets. 
 93.28     [EFFECTIVE DATE.] This section is effective for tax years 
 93.29  beginning after December 31, 2004. 
 93.30     Sec. 14.  Minnesota Statutes 2004, section 290.0675, 
 93.31  subdivision 1, is amended to read: 
 93.32     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 93.33  section the following terms have the meanings given. 
 93.34     (b) "Earned income" means the sum of the following, to the 
 93.35  extent included in Minnesota taxable income: 
 93.36     (1) earned income as defined in section 32(c)(2) of the 
 94.1   Internal Revenue Code; 
 94.2      (2) income received from a retirement pension, 
 94.3   profit-sharing, stock bonus, or annuity plan; and 
 94.4      (3) Social Security benefits as defined in section 86(d)(1) 
 94.5   of the Internal Revenue Code. 
 94.6      (c) "Taxable income" means net income as defined in section 
 94.7   290.01, subdivision 19. 
 94.8      (d) "Earned income of lesser-earning spouse" means the 
 94.9   earned income of the spouse with the lesser amount of earned 
 94.10  income as defined in paragraph (b) for the taxable year minus 
 94.11  the sum of (i) the amount for one exemption under section 151(d) 
 94.12  of the Internal Revenue Code and (ii) one-half the amount of the 
 94.13  standard deduction under section 63(c)(2)(A) and (4) of the 
 94.14  Internal Revenue Code of 1986, as amended through December 31, 
 94.15  2003.  
 94.16     [EFFECTIVE DATE.] This section is effective for tax years 
 94.17  beginning after December 31, 2004. 
 94.18     Sec. 15.  Minnesota Statutes 2004, section 290.091, 
 94.19  subdivision 2, is amended to read: 
 94.20     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 94.21  this section, the following terms have the meanings given: 
 94.22     (a) "Alternative minimum taxable income" means the sum of 
 94.23  the following for the taxable year: 
 94.24     (1) the taxpayer's federal alternative minimum taxable 
 94.25  income as defined in section 55(b)(2) of the Internal Revenue 
 94.26  Code; 
 94.27     (2) the taxpayer's itemized deductions allowed in computing 
 94.28  federal alternative minimum taxable income, but excluding: 
 94.29     (i) the charitable contribution deduction under section 170 
 94.30  of the Internal Revenue Code to the extent that the deduction 
 94.31  exceeds 1.0 percent of adjusted gross income, as defined in 
 94.32  section 62 of the Internal Revenue Code; 
 94.33     (ii) the medical expense deduction; 
 94.34     (iii) the casualty, theft, and disaster loss deduction; and 
 94.35     (iv) the impairment-related work expenses of a disabled 
 94.36  person; 
 95.1      (3) for depletion allowances computed under section 613A(c) 
 95.2   of the Internal Revenue Code, with respect to each property (as 
 95.3   defined in section 614 of the Internal Revenue Code), to the 
 95.4   extent not included in federal alternative minimum taxable 
 95.5   income, the excess of the deduction for depletion allowable 
 95.6   under section 611 of the Internal Revenue Code for the taxable 
 95.7   year over the adjusted basis of the property at the end of the 
 95.8   taxable year (determined without regard to the depletion 
 95.9   deduction for the taxable year); 
 95.10     (4) to the extent not included in federal alternative 
 95.11  minimum taxable income, the amount of the tax preference for 
 95.12  intangible drilling cost under section 57(a)(2) of the Internal 
 95.13  Revenue Code determined without regard to subparagraph (E); 
 95.14     (5) to the extent not included in federal alternative 
 95.15  minimum taxable income, the amount of interest income as 
 95.16  provided by section 290.01, subdivision 19a, clause (1); and 
 95.17     (6) the amount of addition required by section 290.01, 
 95.18  subdivision 19a, clause clauses (7), (8), and (9); 
 95.19     less the sum of the amounts determined under the following: 
 95.20     (1) interest income as defined in section 290.01, 
 95.21  subdivision 19b, clause (1); 
 95.22     (2) an overpayment of state income tax as provided by 
 95.23  section 290.01, subdivision 19b, clause (2), to the extent 
 95.24  included in federal alternative minimum taxable income; 
 95.25     (3) the amount of investment interest paid or accrued 
 95.26  within the taxable year on indebtedness to the extent that the 
 95.27  amount does not exceed net investment income, as defined in 
 95.28  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 95.29  not include amounts deducted in computing federal adjusted gross 
 95.30  income; and 
 95.31     (4) amounts subtracted from federal taxable income as 
 95.32  provided by section 290.01, subdivision 19b, clauses (10) and, 
 95.33  (11), (12), and (13). 
 95.34     In the case of an estate or trust, alternative minimum 
 95.35  taxable income must be computed as provided in section 59(c) of 
 95.36  the Internal Revenue Code. 
 96.1      (b) "Investment interest" means investment interest as 
 96.2   defined in section 163(d)(3) of the Internal Revenue Code. 
 96.3      (c) "Tentative minimum tax" equals 6.4 percent of 
 96.4   alternative minimum taxable income after subtracting the 
 96.5   exemption amount determined under subdivision 3. 
 96.6      (d) "Regular tax" means the tax that would be imposed under 
 96.7   this chapter (without regard to this section and section 
 96.8   290.032), reduced by the sum of the nonrefundable credits 
 96.9   allowed under this chapter.  
 96.10     (e) "Net minimum tax" means the minimum tax imposed by this 
 96.11  section. 
 96.12     [EFFECTIVE DATE.] This section is effective for tax years 
 96.13  beginning after December 31, 2004. 
 96.14     Sec. 16.  Minnesota Statutes 2004, section 290A.03, 
 96.15  subdivision 3, is amended to read: 
 96.16     Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
 96.17  following:  
 96.18     (a) federal adjusted gross income as defined in the 
 96.19  Internal Revenue Code; and 
 96.20     (b) the sum of the following amounts to the extent not 
 96.21  included in clause (a):  
 96.22     (i) all nontaxable income; 
 96.23     (ii) the amount of a passive activity loss that is not 
 96.24  disallowed as a result of section 469, paragraph (i) or (m) of 
 96.25  the Internal Revenue Code and the amount of passive activity 
 96.26  loss carryover allowed under section 469(b) of the Internal 
 96.27  Revenue Code; 
 96.28     (iii) an amount equal to the total of any discharge of 
 96.29  qualified farm indebtedness of a solvent individual excluded 
 96.30  from gross income under section 108(g) of the Internal Revenue 
 96.31  Code; 
 96.32     (iv) cash public assistance and relief; 
 96.33     (v) any pension or annuity (including railroad retirement 
 96.34  benefits, all payments received under the federal Social 
 96.35  Security Act, supplemental security income, and veterans 
 96.36  benefits), which was not exclusively funded by the claimant or 
 97.1   spouse, or which was funded exclusively by the claimant or 
 97.2   spouse and which funding payments were excluded from federal 
 97.3   adjusted gross income in the years when the payments were made; 
 97.4      (vi) interest received from the federal or a state 
 97.5   government or any instrumentality or political subdivision 
 97.6   thereof; 
 97.7      (vii) workers' compensation; 
 97.8      (viii) nontaxable strike benefits; 
 97.9      (ix) the gross amounts of payments received in the nature 
 97.10  of disability income or sick pay as a result of accident, 
 97.11  sickness, or other disability, whether funded through insurance 
 97.12  or otherwise; 
 97.13     (x) a lump sum distribution under section 402(e)(3) of the 
 97.14  Internal Revenue Code of 1986, as amended through December 31, 
 97.15  1995; 
 97.16     (xi) contributions made by the claimant to an individual 
 97.17  retirement account, including a qualified voluntary employee 
 97.18  contribution; simplified employee pension plan; self-employed 
 97.19  retirement plan; cash or deferred arrangement plan under section 
 97.20  401(k) of the Internal Revenue Code; or deferred compensation 
 97.21  plan under section 457 of the Internal Revenue Code; and 
 97.22     (xii) nontaxable scholarship or fellowship grants; 
 97.23     (xiii) the amount of deduction allowed under section 199 of 
 97.24  the Internal Revenue Code; and 
 97.25     (xiv) the amount of deduction allowed under section 220 or 
 97.26  223 of the Internal Revenue Code.  
 97.27     In the case of an individual who files an income tax return 
 97.28  on a fiscal year basis, the term "federal adjusted gross income" 
 97.29  shall mean federal adjusted gross income reflected in the fiscal 
 97.30  year ending in the calendar year.  Federal adjusted gross income 
 97.31  shall not be reduced by the amount of a net operating loss 
 97.32  carryback or carryforward or a capital loss carryback or 
 97.33  carryforward allowed for the year.  
 97.34     (2) "Income" does not include:  
 97.35     (a) amounts excluded pursuant to the Internal Revenue Code, 
 97.36  sections 101(a) and 102; 
 98.1      (b) amounts of any pension or annuity which was exclusively 
 98.2   funded by the claimant or spouse and which funding payments were 
 98.3   not excluded from federal adjusted gross income in the years 
 98.4   when the payments were made; 
 98.5      (c) surplus food or other relief in kind supplied by a 
 98.6   governmental agency; 
 98.7      (d) relief granted under this chapter; 
 98.8      (e) child support payments received under a temporary or 
 98.9   final decree of dissolution or legal separation; or 
 98.10     (f) restitution payments received by eligible individuals 
 98.11  and excludable interest as defined in section 803 of the 
 98.12  Economic Growth and Tax Relief Reconciliation Act of 2001, 
 98.13  Public Law 107-16.  
 98.14     (3) The sum of the following amounts may be subtracted from 
 98.15  income:  
 98.16     (a) for the claimant's first dependent, the exemption 
 98.17  amount multiplied by 1.4; 
 98.18     (b) for the claimant's second dependent, the exemption 
 98.19  amount multiplied by 1.3; 
 98.20     (c) for the claimant's third dependent, the exemption 
 98.21  amount multiplied by 1.2; 
 98.22     (d) for the claimant's fourth dependent, the exemption 
 98.23  amount multiplied by 1.1; 
 98.24     (e) for the claimant's fifth dependent, the exemption 
 98.25  amount; and 
 98.26     (f) if the claimant or claimant's spouse was disabled or 
 98.27  attained the age of 65 on or before December 31 of the year for 
 98.28  which the taxes were levied or rent paid, the exemption amount.  
 98.29     For purposes of this subdivision, the "exemption amount" 
 98.30  means the exemption amount under section 151(d) of the Internal 
 98.31  Revenue Code for the taxable year for which the income is 
 98.32  reported.  
 98.33     [EFFECTIVE DATE.] This section is effective for property 
 98.34  tax refunds based on household income for 2004 and thereafter. 
 98.35     Sec. 17.  Minnesota Statutes 2004, section 290A.03, 
 98.36  subdivision 15, is amended to read: 
 99.1      Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 99.2   means the Internal Revenue Code of 1986, as amended through June 
 99.3   15, 2003 December 31, 2004. 
 99.4      [EFFECTIVE DATE.] This section is effective for property 
 99.5   tax refunds based on property taxes payable on or after December 
 99.6   31, 2004, and rent paid on or after December 31, 2003. 
 99.7      Sec. 18.  [PREEMPTION.] 
 99.8      If a bill styled as S.F. No. 1209 is enacted during the 
 99.9   2005 legislative session, and includes federal update 
 99.10  provisions, the provisions of that act relating to federal 
 99.11  updates are repealed. 
 99.12                             ARTICLE 7
 99.13                         SALES TAX - SF1683 
 99.14     Section 1.  Minnesota Statutes 2004, section 289A.11, 
 99.15  subdivision 1, is amended to read: 
 99.16     Subdivision 1.  [RETURN REQUIRED.] Except as provided in 
 99.17  section 289A.18, subdivision subdivisions 4 and 4a, for the 
 99.18  month in which taxes imposed by chapter 297A are payable, or for 
 99.19  which a return is due, a return for the preceding reporting 
 99.20  period must be filed with the commissioner in the form and 
 99.21  manner the commissioner prescribes.  A person making sales at 
 99.22  retail at two or more places of business may file a consolidated 
 99.23  return subject to rules prescribed by the commissioner.  In 
 99.24  computing the dollar amount of items on the return, the amounts 
 99.25  are rounded off to the nearest whole dollar, disregarding 
 99.26  amounts less than 50 cents and increasing amounts of 50 cents to 
 99.27  99 cents to the next highest dollar. 
 99.28     Notwithstanding this subdivision, a person who is not 
 99.29  required to hold a sales tax permit under chapter 297A and who 
 99.30  makes annual purchases of less than $18,500 that are subject to 
 99.31  the use tax imposed by section 297A.63, may file an annual use 
 99.32  tax return on a form prescribed by the commissioner.  If a 
 99.33  person who qualifies for an annual use tax reporting period is 
 99.34  required to obtain a sales tax permit or makes use tax purchases 
 99.35  in excess of $18,500 during the calendar year, the reporting 
 99.36  period must be considered ended at the end of the month in which 
100.1   the permit is applied for or the purchase in excess of $18,500 
100.2   is made and a return must be filed for the preceding reporting 
100.3   period. 
100.4      [EFFECTIVE DATE.] This section is effective for purchases 
100.5   made on and after July 1, 2005. 
100.6      Sec. 2.  Minnesota Statutes 2004, section 289A.18, 
100.7   subdivision 4, is amended to read: 
100.8      Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
100.9   tax returns must be filed on or before the 20th day of the month 
100.10  following the close of the preceding reporting period, 
100.11  except that annual use tax returns provided for under section 
100.12  289A.11, subdivision 1, must be filed by April 15 following the 
100.13  close of the calendar year subdivision 4a, in the case of 
100.14  individuals.  Annual use tax returns of businesses, including 
100.15  sole proprietorships, and annual sales tax returns must be filed 
100.16  by February 5 following the close of the calendar year.  
100.17     (b) Returns for the June reporting period filed by 
100.18  retailers required to remit their June liability under section 
100.19  289A.20, subdivision 4, paragraph (b), are due on or before 
100.20  August 20.  
100.21     (c) If a retailer has an average sales and use tax 
100.22  liability, including local sales and use taxes administered by 
100.23  the commissioner, equal to or less than $500 per month in any 
100.24  quarter of a calendar year, and has substantially complied with 
100.25  the tax laws during the preceding four calendar quarters, the 
100.26  retailer may request authorization to file and pay the taxes 
100.27  quarterly in subsequent calendar quarters.  The authorization 
100.28  remains in effect during the period in which the retailer's 
100.29  quarterly returns reflect sales and use tax liabilities of less 
100.30  than $1,500 and there is continued compliance with state tax 
100.31  laws. 
100.32     (d) If a retailer has an average sales and use tax 
100.33  liability, including local sales and use taxes administered by 
100.34  the commissioner, equal to or less than $100 per month during a 
100.35  calendar year, and has substantially complied with the tax laws 
100.36  during that period, the retailer may request authorization to 
101.1   file and pay the taxes annually in subsequent years.  The 
101.2   authorization remains in effect during the period in which the 
101.3   retailer's annual returns reflect sales and use tax liabilities 
101.4   of less than $1,200 and there is continued compliance with state 
101.5   tax laws. 
101.6      (e) The commissioner may also grant quarterly or annual 
101.7   filing and payment authorizations to retailers if the 
101.8   commissioner concludes that the retailers' future tax 
101.9   liabilities will be less than the monthly totals identified in 
101.10  paragraphs (c) and (d).  An authorization granted under this 
101.11  paragraph is subject to the same conditions as an authorization 
101.12  granted under paragraphs (c) and (d). 
101.13     (f) A taxpayer who is a materials supplier may report gross 
101.14  receipts either on: 
101.15     (1) the cash basis as the consideration is received; or 
101.16     (2) the accrual basis as sales are made.  
101.17  As used in this paragraph, "materials supplier" means a person 
101.18  who provides materials for the improvement of real property; who 
101.19  is primarily engaged in the sale of lumber and building 
101.20  materials-related products to owners, contractors, 
101.21  subcontractors, repairers, or consumers; who is authorized to 
101.22  file a mechanics lien upon real property and improvements under 
101.23  chapter 514; and who files with the commissioner an election to 
101.24  file sales and use tax returns on the basis of this paragraph.  
101.25     (g) Notwithstanding paragraphs (a) to (f), a seller that is 
101.26  not a Model 1, 2, or 3 seller, as those terms are used in the 
101.27  Streamlined Sales and Use Tax Agreement, that does not have a 
101.28  legal requirement to register in Minnesota, and that is 
101.29  registered under the agreement, must file a return by February 5 
101.30  following the close of the calendar year in which the seller 
101.31  initially registers, and must file subsequent returns on 
101.32  February 5 on an annual basis in succeeding years.  
101.33  Additionally, a return must be submitted on or before the 20th 
101.34  day of the month following any month by which sellers have 
101.35  accumulated state and local tax funds for the state in the 
101.36  amount of $1,000 or more.  
102.1      [EFFECTIVE DATE.] This section is effective for purchases 
102.2   on and after July 1, 2005. 
102.3      Sec. 3.  Minnesota Statutes 2004, section 289A.18, is 
102.4   amended by adding a subdivision to read: 
102.5      Subd. 4a.  [USE TAX RETURNS FOR INDIVIDUALS.] Individuals 
102.6   who are subject to the use tax imposed under section 297A.63 may 
102.7   file and pay use tax owed on purchases for personal use under 
102.8   their Social Security number as follows: 
102.9      (1) on the individual income tax return for the calendar 
102.10  year in which the purchases are made; 
102.11     (2) on the form for making payments of the individual 
102.12  income tax estimated payments under section 289A.25 for the 
102.13  calendar quarter in which the purchases are made; or 
102.14     (3) on the individual use tax return, in the form 
102.15  prescribed by the commissioner, for purchases made in a calendar 
102.16  quarter, to be filed on or before the 20th day of the month 
102.17  following the close of the preceding quarter. 
102.18     [EFFECTIVE DATE.] This section is effective for purchases 
102.19  made on and after July 1, 2005, and for income tax returns 
102.20  required to be filed for tax years beginning after December 31, 
102.21  2004. 
102.22     Sec. 4.  Minnesota Statutes 2004, section 297A.61, is 
102.23  amended by adding a subdivision to read: 
102.24     Subd. 37.  [PERSONAL RAPID TRANSIT SYSTEM.] "Personal rapid 
102.25  transit system" means a transportation system of small, 
102.26  computer-controlled vehicles, transporting one to three 
102.27  passengers on elevated guideways in a transportation network 
102.28  operating on demand and nonstop directly to any stations in the 
102.29  network.  The system shall provide service on a regular and 
102.30  continuing basis and operate independent of any government 
102.31  subsidies. 
102.32     [EFFECTIVE DATE.] This section is effective for sales and 
102.33  purchases made after June 30, 2008. 
102.34     Sec. 5.  Minnesota Statutes 2004, section 297A.67, is 
102.35  amended by adding a subdivision to read: 
102.36     Subd. 32.  [GEOTHERMAL EQUIPMENT.] The loop field 
103.1   collection system and the heat pump of a geothermal heating and 
103.2   cooling system is exempt.  
103.3      [EFFECTIVE DATE.] This section is effective for sales and 
103.4   purchases occurring after June 30, 2005. 
103.5      Sec. 6.  Minnesota Statutes 2004, section 297A.67, is 
103.6   amended by adding a subdivision to read: 
103.7      Subd. 33.  [BIOMASS FUEL STOVES.] Stoves designed to burn 
103.8   fuel pellets made from biomass materials are exempt. 
103.9      [EFFECTIVE DATE.] This section is effective for sales and 
103.10  purchases made after June 30, 2005. 
103.11     Sec. 7.  Minnesota Statutes 2004, section 297A.68, 
103.12  subdivision 5, is amended to read: 
103.13     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
103.14  exempt.  The tax must be imposed and collected as if the rate 
103.15  under section 297A.62, subdivision 1, applied, and then refunded 
103.16  in the manner provided in section 297A.75. 
103.17     "Capital equipment" means machinery and equipment purchased 
103.18  or leased, and used in this state by the purchaser or lessee 
103.19  primarily for manufacturing, fabricating, mining, or refining 
103.20  tangible personal property to be sold ultimately at retail if 
103.21  the machinery and equipment are essential to the integrated 
103.22  production process of manufacturing, fabricating, mining, or 
103.23  refining.  Capital equipment also includes machinery and 
103.24  equipment used to electronically transmit results retrieved by a 
103.25  customer of an on-line computerized data retrieval system. 
103.26     (b) Capital equipment includes, but is not limited to: 
103.27     (1) machinery and equipment used to operate, control, or 
103.28  regulate the production equipment; 
103.29     (2) machinery and equipment used for research and 
103.30  development, design, quality control, and testing activities; 
103.31     (3) environmental control devices that are used to maintain 
103.32  conditions such as temperature, humidity, light, or air pressure 
103.33  when those conditions are essential to and are part of the 
103.34  production process; 
103.35     (4) materials and supplies used to construct and install 
103.36  machinery or equipment; 
104.1      (5) repair and replacement parts, including accessories, 
104.2   whether purchased as spare parts, repair parts, or as upgrades 
104.3   or modifications to machinery or equipment; 
104.4      (6) materials used for foundations that support machinery 
104.5   or equipment; 
104.6      (7) materials used to construct and install special purpose 
104.7   buildings used in the production process; 
104.8      (8) ready-mixed concrete equipment in which the ready-mixed 
104.9   concrete is mixed as part of the delivery process regardless if 
104.10  mounted on a chassis and leases of ready-mixed concrete trucks; 
104.11  and 
104.12     (9) machinery or equipment used for research, development, 
104.13  design, or production of computer software.  
104.14     (c) Capital equipment does not include the following: 
104.15     (1) motor vehicles taxed under chapter 297B; 
104.16     (2) machinery or equipment used to receive or store raw 
104.17  materials; 
104.18     (3) building materials, except for materials included in 
104.19  paragraph (b), clauses (6) and (7); 
104.20     (4) machinery or equipment used for nonproduction purposes, 
104.21  including, but not limited to, the following:  plant security, 
104.22  fire prevention, first aid, and hospital stations; support 
104.23  operations or administration; pollution control; and plant 
104.24  cleaning, disposal of scrap and waste, plant communications, 
104.25  space heating, cooling, lighting, or safety; 
104.26     (5) farm machinery and aquaculture production equipment as 
104.27  defined by section 297A.61, subdivisions 12 and 13; 
104.28     (6) machinery or equipment purchased and installed by a 
104.29  contractor as part of an improvement to real property; or 
104.30     (7) any other item that is not essential to the integrated 
104.31  process of manufacturing, fabricating, mining, or refining. 
104.32     (d) For purposes of this subdivision: 
104.33     (1) "Equipment" means independent devices or tools separate 
104.34  from machinery but essential to an integrated production 
104.35  process, including computers and computer software, used in 
104.36  operating, controlling, or regulating machinery and equipment; 
105.1   and any subunit or assembly comprising a component of any 
105.2   machinery or accessory or attachment parts of machinery, such as 
105.3   tools, dies, jigs, patterns, and molds.  
105.4      (2) "Fabricating" means to make, build, create, produce, or 
105.5   assemble components or property to work in a new or different 
105.6   manner. 
105.7      (3) "Integrated production process" means a process or 
105.8   series of operations through which tangible personal property is 
105.9   manufactured, fabricated, mined, or refined.  For purposes of 
105.10  this clause, (i) manufacturing begins with the removal of raw 
105.11  materials from inventory and ends when the last process prior to 
105.12  loading for shipment has been completed; (ii) fabricating begins 
105.13  with the removal from storage or inventory of the property to be 
105.14  assembled, processed, altered, or modified and ends with the 
105.15  creation or production of the new or changed product; (iii) 
105.16  mining begins with the removal of overburden from the site of 
105.17  the ores, minerals, stone, peat deposit, or surface materials 
105.18  and ends when the last process before stockpiling is completed; 
105.19  and (iv) refining begins with the removal from inventory or 
105.20  storage of a natural resource and ends with the conversion of 
105.21  the item to its completed form. 
105.22     (4) "Machinery" means mechanical, electronic, or electrical 
105.23  devices, including computers and computer software, that are 
105.24  purchased or constructed to be used for the activities set forth 
105.25  in paragraph (a), beginning with the removal of raw materials 
105.26  from inventory through completion of the product, including 
105.27  packaging of the product. 
105.28     (5) "Machinery and equipment used for pollution control" 
105.29  means machinery and equipment used solely to eliminate, prevent, 
105.30  or reduce pollution resulting from an activity described in 
105.31  paragraph (a).  
105.32     (6) "Manufacturing" means an operation or series of 
105.33  operations where raw materials are changed in form, composition, 
105.34  or condition by machinery and equipment and which results in the 
105.35  production of a new article of tangible personal property.  For 
105.36  purposes of this subdivision, "manufacturing" includes the 
106.1   generation of electricity or steam to be sold at retail. 
106.2      (7) "Mining" means the extraction of minerals, ores, stone, 
106.3   or peat. 
106.4      (8) "On-line data retrieval system" means a system whose 
106.5   cumulation of information is equally available and accessible to 
106.6   all its customers. 
106.7      (9) "Primarily" means machinery and equipment used 50 
106.8   percent or more of the time in an activity described in 
106.9   paragraph (a). 
106.10     (10) "Refining" means the process of converting a natural 
106.11  resource to an intermediate or finished product, including the 
106.12  treatment of water to be sold at retail. 
106.13     (11) This subdivision does not apply to telecommunications 
106.14  equipment as provided in subdivision 35, and does not apply to 
106.15  wire, cable, fiber, poles, or conduit for telecommunications 
106.16  services. 
106.17     [EFFECTIVE DATE.] This section is effective for purchases 
106.18  made after July 31, 2005, and before July 1, 2008. 
106.19     Sec. 8.  Minnesota Statutes 2004, section 297A.68, 
106.20  subdivision 19, is amended to read: 
106.21     Subd. 19.  [PETROLEUM PRODUCTS.] The following petroleum 
106.22  products are exempt: 
106.23     (1) products upon which a tax has been imposed and paid 
106.24  under chapter 296A, and for which no refund has been or will be 
106.25  allowed because the buyer used the fuel for nonhighway use; 
106.26     (2) products that are used in the improvement of 
106.27  agricultural land by constructing, maintaining, and repairing 
106.28  drainage ditches, tile drainage systems, grass waterways, water 
106.29  impoundment, and other erosion control structures; 
106.30     (3) products purchased by a transit system receiving 
106.31  financial assistance under section 174.24, 256B.0625, 
106.32  subdivision 17, or 473.384; 
106.33     (4) products purchased by an ambulance service licensed 
106.34  under chapter 144E; 
106.35     (5) products used in a passenger snowmobile, as defined in 
106.36  section 296A.01, subdivision 39, for off-highway business use as 
107.1   part of the operations of a resort as provided under section 
107.2   296A.16, subdivision 2, clause (2); or 
107.3      (6) products purchased by a state or a political 
107.4   subdivision of a state for use in motor vehicles exempt from 
107.5   registration under section 168.012, subdivision 1, paragraph 
107.6   (b); or 
107.7      (7) products purchased for use as fuel for a commuter rail 
107.8   system operating under sections 174.80 to 174.90.  The tax must 
107.9   be imposed and collected as if the rate under section 297A.62, 
107.10  subdivision 1, applied, and then refunded in the manner provided 
107.11  in section 297A.75. 
107.12     [EFFECTIVE DATE.] This section is effective for purchases 
107.13  made after June 30, 2005, and terminates when the commissioner 
107.14  of revenue determines that the cost of the exemption under this 
107.15  subdivision to that point in time totals $20,000. 
107.16     Sec. 9.  Minnesota Statutes 2004, section 297A.68, is 
107.17  amended by adding a subdivision to read: 
107.18     Subd. 40.  [MOVIES AND TELEVISION; INPUTS TO PRODUCTION.] 
107.19  The sale of tangible personal property primarily used or 
107.20  consumed directly in the preproduction, production, and 
107.21  postproduction of movies and television shows that are produced 
107.22  for domestic and international commercial distribution are 
107.23  exempt. "Preproduction" and "production" include all the 
107.24  activities related to the preparation of shooting and the 
107.25  shooting of movies and television shows, including film 
107.26  processing.  Equipment rented for preproduction and production 
107.27  activities are exempt.  "Postproduction" includes all activities 
107.28  related to editing and finishing of the movie or television 
107.29  show.  This exemption does not apply to tangible personal 
107.30  property or services used primarily in administration, general 
107.31  management, or marketing.  Machinery and equipment purchased for 
107.32  use in producing movies and television shows, fuel, electricity, 
107.33  gas, or steam used for space heating and lighting, food, 
107.34  lodging, and any property or service for the personal use of any 
107.35  individual are not exempt under this subdivision. 
107.36     [EFFECTIVE DATE.] This section is effective for sales and 
108.1   purchases made after June 30, 2005. 
108.2      Sec. 10.  Minnesota Statutes 2004, section 297A.68, is 
108.3   amended by adding a subdivision to read: 
108.4      Subd. 41.  [PERSONAL RAPID TRANSIT SYSTEM.] (a) Machinery, 
108.5   equipment, and supplies purchased or leased, and used by the 
108.6   purchaser or lessee in this state directly in the provision of a 
108.7   personal rapid transit system as defined in section 297A.61, 
108.8   subdivision 37, are exempt.  Machinery, equipment, and supplies 
108.9   that qualify for this exemption include, but are not limited to, 
108.10  the following: 
108.11     (1) vehicles, guideways, and related parts used directly in 
108.12  the transit system; 
108.13     (2) computers and equipment used primarily for operating, 
108.14  controlling, and regulating the system; 
108.15     (3) machinery, equipment, furniture, and fixtures necessary 
108.16  for the functioning of system stations; 
108.17     (4) machinery, equipment, implements, tools, and supplies 
108.18  used to maintain vehicles, guideways, and stations; and 
108.19     (5) electricity and other fuels used in the provision of 
108.20  the transit service, including heating, cooling, and lighting of 
108.21  system stations. 
108.22     (b) This exemption does not include machinery, equipment, 
108.23  and supplies used for support and administration operations. 
108.24     [EFFECTIVE DATE.] This section is effective for sales and 
108.25  purchases made after June 30, 2008. 
108.26     Sec. 11.  Minnesota Statutes 2004, section 297A.70, 
108.27  subdivision 8, is amended to read: 
108.28     Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
108.29  SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 
108.30  but not limited to, end user equipment used for construction, 
108.31  ownership, operation, maintenance, and enhancement of the 
108.32  backbone system of the regionwide public safety radio 
108.33  communication system established under sections 403.21 to 
108.34  403.34, are exempt.  For purposes of this subdivision, backbone 
108.35  system is defined in section 403.21, subdivision 9.  This 
108.36  subdivision is effective for purchases, sales, storage, use, or 
109.1   consumption occurring before August 1, 2005, in the counties of 
109.2   Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and 
109.3   Washington for use in the first and second phases of the system, 
109.4   as defined in section 403.21, subdivisions 3, 10, and 11, and 
109.5   that portion of the third phase of the system that is located in 
109.6   the southeast district of the State Patrol and the counties of 
109.7   Benton, Sherburne, Stearns, and Wright. 
109.8      [EFFECTIVE DATE.] This section is effective for sales after 
109.9   April 30, 2005, and terminates when the commissioner of revenue 
109.10  determines that the cost of the exemption under this subdivision 
109.11  to that point in time totals $4,800,000.  
109.12     Sec. 12.  Minnesota Statutes 2004, section 297A.70, is 
109.13  amended by adding a subdivision to read: 
109.14     Subd. 17.  [DONATED MEALS.] Meals that are normally sold at 
109.15  retail in the ordinary business activities of the taxpayer are 
109.16  exempt if the meals are donated to a nonprofit group as defined 
109.17  in subdivision 4 for fund-raising purposes. 
109.18     [EFFECTIVE DATE.] This section is effective for donations 
109.19  made after June 30, 2005. 
109.20     Sec. 13.  Minnesota Statutes 2004, section 297A.71, is 
109.21  amended by adding a subdivision to read: 
109.22     Subd. 33.  [COMMUTER RAIL MATERIAL, SUPPLIES, AND 
109.23  EQUIPMENT.] Materials and supplies consumed in, and equipment 
109.24  incorporated in the construction, equipment, or improvement of a 
109.25  commuter rail transportation system operated under sections 
109.26  174.80 and 174.90 are exempt.  This exemption includes railroad 
109.27  cars and engines and related equipment. 
109.28     [EFFECTIVE DATE.] This section is effective for purchases 
109.29  made after June 30, 2005, and terminates when the commissioner 
109.30  of revenue determines that the cost of the exemption for sales 
109.31  to that point in time totals $8,600,000. 
109.32     Sec. 14.  Minnesota Statutes 2004, section 297A.71, is 
109.33  amended by adding a subdivision to read: 
109.34     Subd. 34.  [WASTE RECOVERY FACILITY.] Materials and 
109.35  supplies used or consumed in, and equipment incorporated into, 
109.36  the construction, improvement, or expansion of a waste-to-energy 
110.1   resource recovery facility are exempt if the facility uses 
110.2   biomass or mixed municipal solid waste as a primary fuel to 
110.3   generate steam or electricity. 
110.4      [EFFECTIVE DATE.] This section is effective for sales and 
110.5   purchases made after June 30, 2005. 
110.6      Sec. 15.  Minnesota Statutes 2004, section 297A.71, is 
110.7   amended by adding a subdivision to read: 
110.8      Subd. 35.  [PERSONAL RAPID TRANSIT SYSTEM.] Materials and 
110.9   supplies used or consumed in, and equipment incorporated into 
110.10  the construction, expansion, or improvement of a personal rapid 
110.11  transit system as defined in section 297A.61, subdivision 37, 
110.12  are exempt. 
110.13     [EFFECTIVE DATE.] This section is effective for sales and 
110.14  purchases made after June 30, 2005, and terminates when the 
110.15  commissioner of revenue determines that the cost of the 
110.16  exemption under this subdivision to that point in time totals 
110.17  $200,000. 
110.18     Sec. 16.  Minnesota Statutes 2004, section 297A.71, is 
110.19  amended by adding a subdivision to read: 
110.20     Subd. 36.  [ST. MARY'S DULUTH CLINIC HEALTH 
110.21  SYSTEM.] Materials and supplies used or consumed in and 
110.22  equipment incorporated into the construction of the hospital 
110.23  portion of the St. Mary's Duluth Clinic Health System are exempt.
110.24     [EFFECTIVE DATE.] This section is effective for purchases 
110.25  made on or after March 1, 2004, and on or before December 31, 
110.26  2006.  For purchases made on or after March 1, 2004, and before 
110.27  the day following final enactment of this act, for which the 
110.28  sales tax was paid, the commissioner of revenue shall refund the 
110.29  tax.  Except as otherwise provided in this paragraph, the 
110.30  provisions of section 297A.75, subdivisions 2, 3, 4, and 5, 
110.31  apply to a refund under this paragraph.  The applicant must be 
110.32  the owner of the St. Mary's Duluth Clinic Health System.  If the 
110.33  tax was paid by the contractor, subcontractor, or builder, the 
110.34  contractor, subcontractor, or builder must furnish to the owner 
110.35  a statement indicating the cost of the exempt items and the 
110.36  taxes paid on the items. 
111.1      Sec. 17.  Minnesota Statutes 2004, section 297A.71, is 
111.2   amended by adding a subdivision to read: 
111.3      Subd. 37.  [MUNICIPAL UTILITIES.] Materials and supplies 
111.4   used or consumed in, and equipment incorporated into, the 
111.5   construction, improvement, or expansion of electric generation 
111.6   and related facilities used pursuant to a joint power purchase 
111.7   agreement to meet the biomass energy mandate in section 
111.8   216B.2424 are exempt if the owner or owners of the facilities 
111.9   are a municipal electric utility or utilities or a joint venture 
111.10  of municipal electric utilities.  The tax must be imposed and 
111.11  collected as if the rate under section 297A.62, subdivision 1, 
111.12  applied and then refunded under section 297A.75. 
111.13     [EFFECTIVE DATE.] This section is effective for sales and 
111.14  purchases made after January 1, 2005. 
111.15     Sec. 18.  Minnesota Statutes 2004, section 297A.71, is 
111.16  amended by adding a subdivision to read: 
111.17     Subd. 38.  [CHATFIELD WASTEWATER TREATMENT 
111.18  FACILITY.] Materials and supplies used in and equipment 
111.19  incorporated into the construction, improvement, or expansion of 
111.20  a wastewater treatment facility owned by the city of Chatfield 
111.21  are exempt.  This exemption is effective for purchases made 
111.22  before December 31, 2007. 
111.23     [EFFECTIVE DATE.] This section is effective for sales and 
111.24  purchases made on or after June 1, 2005. 
111.25     Sec. 19.  Minnesota Statutes 2004, section 297A.75, 
111.26  subdivision 1, is amended to read: 
111.27     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
111.28  receipts from the sale of the following exempt items must be 
111.29  imposed and collected as if the sale were taxable and the rate 
111.30  under section 297A.62, subdivision 1, applied.  The exempt items 
111.31  include: 
111.32     (1) capital equipment exempt under section 297A.68, 
111.33  subdivision 5; 
111.34     (2) building materials for an agricultural processing 
111.35  facility exempt under section 297A.71, subdivision 13; 
111.36     (3) building materials for mineral production facilities 
112.1   exempt under section 297A.71, subdivision 14; 
112.2      (4) building materials for correctional facilities under 
112.3   section 297A.71, subdivision 3; 
112.4      (5) building materials used in a residence for disabled 
112.5   veterans exempt under section 297A.71, subdivision 11; 
112.6      (6) chair lifts, ramps, elevators, and associated building 
112.7   materials exempt under section 297A.71, subdivision 12; 
112.8      (7) building materials for the Long Lake Conservation 
112.9   Center exempt under section 297A.71, subdivision 17; 
112.10     (8) materials, supplies, fixtures, furnishings, and 
112.11  equipment for a county law enforcement and family service center 
112.12  under section 297A.71, subdivision 26; and 
112.13     (9) materials and supplies for qualified low-income housing 
112.14  under section 297A.71, subdivision 23; 
112.15     (10) fuel purchased for commuter rail systems under section 
112.16  297A.68, subdivision 19, clause (7); and 
112.17     (11) materials, supplies, and equipment for municipal 
112.18  electric utility facilities under section 297A.71, subdivision 
112.19  37. 
112.20     [EFFECTIVE DATE.] Clause (10) is effective for purchases 
112.21  made after June 30, 2005, and clause (11) is effective for 
112.22  purchases made after December 31, 2004. 
112.23     Sec. 20.  Minnesota Statutes 2004, section 297A.75, 
112.24  subdivision 2, is amended to read: 
112.25     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
112.26  forms prescribed by the commissioner, a refund equal to the tax 
112.27  paid on the gross receipts of the exempt items must be paid to 
112.28  the applicant.  Only the following persons may apply for the 
112.29  refund: 
112.30     (1) for subdivision 1, clauses (1) to (3), the applicant 
112.31  must be the purchaser; 
112.32     (2) for subdivision 1, clauses (4), (7), and (8), the 
112.33  applicant must be the governmental subdivision; 
112.34     (3) for subdivision 1, clause (5), the applicant must be 
112.35  the recipient of the benefits provided in United States Code, 
112.36  title 38, chapter 21; 
113.1      (4) for subdivision 1, clause (6), the applicant must be 
113.2   the owner of the homestead property; and 
113.3      (5) for subdivision 1, clause (9), the owner of the 
113.4   qualified low-income housing project; 
113.5      (6) for subdivision 1, clause (10), the operator of the 
113.6   commuter rail system; and 
113.7      (7) for subdivision 1, clause (11), the applicant must be a 
113.8   municipal electric utility or a joint venture of municipal 
113.9   electric utilities. 
113.10     [EFFECTIVE DATE.] Clause (6) is effective for purchases 
113.11  made after June 30, 2005.  Clause (7) is effective for purchases 
113.12  made after December 31, 2004. 
113.13     Sec. 21.  Minnesota Statutes 2004, section 297A.75, 
113.14  subdivision 3, is amended to read: 
113.15     Subd. 3.  [APPLICATION.] (a) The application must include 
113.16  sufficient information to permit the commissioner to verify the 
113.17  tax paid.  If the tax was paid by a contractor, subcontractor, 
113.18  or builder, under subdivision 1, clause (4), (5), (6), (7), (8), 
113.19  or (9), or (11), the contractor, subcontractor, or builder must 
113.20  furnish to the refund applicant a statement including the cost 
113.21  of the exempt items and the taxes paid on the items unless 
113.22  otherwise specifically provided by this subdivision.  The 
113.23  provisions of sections 289A.40 and 289A.50 apply to refunds 
113.24  under this section. 
113.25     (b) An applicant may not file more than two applications 
113.26  per calendar year for refunds for taxes paid on capital 
113.27  equipment exempt under section 297A.68, subdivision 5.  
113.28     [EFFECTIVE DATE.] This section is effective for sales and 
113.29  purchases made after December 31, 2004. 
113.30     Sec. 22.  Minnesota Statutes 2004, section 297A.83, 
113.31  subdivision 1, is amended to read: 
113.32     Subdivision 1.  [PERSONS APPLYING.] (a) A retailer required 
113.33  to collect and remit sales taxes under section 297A.66 shall 
113.34  file with the commissioner an application for a permit. 
113.35     (b) A retailer making retail sales from outside this state 
113.36  to a destination within this state who is not required to obtain 
114.1   a permit under paragraph (a) may nevertheless voluntarily file 
114.2   an application for a permit. 
114.3      (c) The commissioner may require any person or class of 
114.4   persons obligated to file a use tax return under section 
114.5   289A.11, subdivision 3, to file an application for a permit, 
114.6   except an individual allowed to file and pay use tax under 
114.7   section 289A.18, subdivision 4a, is not required to obtain a 
114.8   permit.  
114.9      [EFFECTIVE DATE.] This section is effective for purchases 
114.10  on and after July 1, 2005. 
114.11     Sec. 23.  Minnesota Statutes 2004, section 297A.87, 
114.12  subdivision 2, is amended to read: 
114.13     Subd. 2.  [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 
114.14  operator of an event under subdivision 1 shall obtain one of the 
114.15  following from a person who wishes to do business as a seller at 
114.16  the event: 
114.17     (1) evidence that the person holds a valid seller's permit 
114.18  under section 297A.84; or 
114.19     (2) a written statement that the person is not offering for 
114.20  sale any item that is taxable under this chapter; or 
114.21     (3) a written statement that this is the only selling event 
114.22  that the person will be participating in for that calendar year, 
114.23  that the person will be participating for three or fewer days, 
114.24  and that the person will make $500 or less in total sales in the 
114.25  calendar year.  The written statement shall include the person's 
114.26  name, address, and telephone number. 
114.27     (b) The operator shall require the evidence or statement as 
114.28  a prerequisite to participating in the event as a seller. 
114.29     [EFFECTIVE DATE.] This section is effective for selling 
114.30  events occurring after June 30, 2005. 
114.31     Sec. 24.  Minnesota Statutes 2004, section 297A.87, 
114.32  subdivision 3, is amended to read: 
114.33     Subd. 3.  [OCCASIONAL SALE PROVISIONS NOT APPLICABLE UNDER 
114.34  LIMITED CIRCUMSTANCES.] The isolated and occasional 
114.35  sale provisions provision under section 297A.67, subdivision 23, 
114.36  or applies, provided that the seller only participates for three 
115.1   or fewer days in one event per calendar year, makes $500 or less 
115.2   in sales in the calendar year, and provides the written 
115.3   statement required in subdivision 2, paragraph (a), clause (3).  
115.4   The isolated and occasional sales provision under section 
115.5   297A.68, subdivision 25, do does not apply to a seller at an 
115.6   event under this section. 
115.7      [EFFECTIVE DATE.] This section is effective for selling 
115.8   events occurring after June 30, 2005. 
115.9      Sec. 25.  Minnesota Statutes 2004, section 297B.03, is 
115.10  amended to read: 
115.11     297B.03 [EXEMPTIONS.] 
115.12     There is specifically exempted from the provisions of this 
115.13  chapter and from computation of the amount of tax imposed by it 
115.14  the following:  
115.15     (1) purchase or use, including use under a lease purchase 
115.16  agreement or installment sales contract made pursuant to section 
115.17  465.71, of any motor vehicle by the United States and its 
115.18  agencies and instrumentalities and by any person described in 
115.19  and subject to the conditions provided in section 297A.67, 
115.20  subdivision 11; 
115.21     (2) purchase or use of any motor vehicle by any person who 
115.22  was a resident of another state or country at the time of the 
115.23  purchase and who subsequently becomes a resident of Minnesota, 
115.24  provided the purchase occurred more than 60 days prior to the 
115.25  date such person began residing in the state of Minnesota and 
115.26  the motor vehicle was registered in the person's name in the 
115.27  other state or country; 
115.28     (3) purchase or use of any motor vehicle by any person 
115.29  making a valid election to be taxed under the provisions of 
115.30  section 297A.90; 
115.31     (4) purchase or use of any motor vehicle previously 
115.32  registered in the state of Minnesota when such transfer 
115.33  constitutes a transfer within the meaning of section 118, 331, 
115.34  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
115.35  1563(a) of the Internal Revenue Code of 1986, as amended through 
115.36  December 31, 1999; 
116.1      (5) purchase or use of any vehicle owned by a resident of 
116.2   another state and leased to a Minnesota-based private or 
116.3   for-hire carrier for regular use in the transportation of 
116.4   persons or property in interstate commerce provided the vehicle 
116.5   is titled in the state of the owner or secured party, and that 
116.6   state does not impose a sales tax or sales tax on motor vehicles 
116.7   used in interstate commerce; 
116.8      (6) purchase or use of a motor vehicle by a private 
116.9   nonprofit or public educational institution for use as an 
116.10  instructional aid in automotive training programs operated by 
116.11  the institution.  "Automotive training programs" includes motor 
116.12  vehicle body and mechanical repair courses but does not include 
116.13  driver education programs; 
116.14     (7) purchase of a motor vehicle for use as an ambulance by 
116.15  an ambulance service licensed under section 144E.10; 
116.16     (8) purchase of a motor vehicle by or for a public library, 
116.17  as defined in section 134.001, subdivision 2, as a bookmobile or 
116.18  library delivery vehicle; 
116.19     (9) purchase of a ready-mixed concrete truck; 
116.20     (10) purchase or use of a motor vehicle by a town for use 
116.21  exclusively for road maintenance, including snowplows and dump 
116.22  trucks, but not including automobiles, vans, or pickup trucks; 
116.23     (11) purchase or use of a motor vehicle by a corporation, 
116.24  society, association, foundation, or institution organized and 
116.25  operated exclusively for charitable, religious, or educational 
116.26  purposes, except a public school, university, or library, but 
116.27  only if the vehicle is: 
116.28     (i) a truck, as defined in section 168.011, a bus, as 
116.29  defined in section 168.011, or a passenger automobile, as 
116.30  defined in section 168.011, if the automobile is designed and 
116.31  used for carrying more than nine persons including the driver; 
116.32  and 
116.33     (ii) intended to be used primarily to transport tangible 
116.34  personal property or individuals, other than employees, to whom 
116.35  the organization provides service in performing its charitable, 
116.36  religious, or educational purpose; 
117.1      (12) purchase of a motor vehicle for use by a transit 
117.2   provider exclusively to provide transit service is exempt if the 
117.3   transit provider is either (i) receiving financial assistance or 
117.4   reimbursement under section 174.24 or 473.384, or (ii) operating 
117.5   under section 174.29, 473.388, or 473.405; 
117.6      (13) purchase or use of a motor vehicle by a qualified 
117.7   business, as defined in section 469.310, located in a job 
117.8   opportunity building zone, if the motor vehicle is principally 
117.9   garaged in the job opportunity building zone and is primarily 
117.10  used as part of or in direct support of the person's operations 
117.11  carried on in the job opportunity building zone.  The exemption 
117.12  under this clause applies to sales, if the purchase was made and 
117.13  delivery received during the duration of the job opportunity 
117.14  building zone.  The exemption under this clause also applies to 
117.15  any local sales and use tax; 
117.16     (14) purchase or use after June 30, 2005, and before July 
117.17  1, 2008, of a motor vehicle by a state agency or political 
117.18  subdivision, provided that the motor vehicle has a fuel 
117.19  efficiency greater than 45 miles per gallon in highway use, and 
117.20  greater than 35 miles per gallon in city use, as certified by 
117.21  the United States Environmental Protection Agency. 
117.22     [EFFECTIVE DATE.] This section is effective for sales and 
117.23  transfers made after June 30, 2005, and before July 1, 2008. 
117.24     Sec. 26.  Laws 1991, chapter 291, article 8, section 27, 
117.25  subdivision 4, is amended to read: 
117.26     Subd. 4.  [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 
117.27  LIMITATION.] The authority granted by subdivisions 1 and 2 to 
117.28  the city to impose a sales tax and an excise tax shall expire on 
117.29  the earlier of (1) December 31, 2018; (2) when the principal and 
117.30  interest on any bonds or obligations issued to finance 
117.31  construction of Riverfront 2000 and related facilities have been 
117.32  paid; or (3) at an earlier time as the city shall, by ordinance, 
117.33  determine.  The total capital, administrative, and operating 
117.34  expenditures payable from bond proceeds and revenues received 
117.35  from the taxes authorized by subdivisions 1 and 2, excluding 
117.36  investment earnings on bond proceeds and revenues, shall not 
118.1   exceed $25,000,000 for Riverfront 2000 and related facilities. 
118.2      [EFFECTIVE DATE.] This section is effective upon compliance 
118.3   by the Mankato City Council with the provisions in section 43 
118.4   and, if required under section 43, approval of the voters at a 
118.5   general or special election. 
118.6      Sec. 27.  Laws 1996, chapter 471, article 2, section 29, is 
118.7   amended to read: 
118.8      Sec. 29.  [CITY OF HERMANTOWN; SALES AND USE TAX.] 
118.9      Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] (a) 
118.10  Notwithstanding Minnesota Statutes, section 477A.016, or any 
118.11  other contrary provision of law, ordinance, or city charter, the 
118.12  city of Hermantown may, by ordinance, impose an additional sales 
118.13  and use tax of up to one percent on sales transactions, storage, 
118.14  and use taxable pursuant to Minnesota Statutes, chapter 297A, 
118.15  that occur within the city. 
118.16     (b) The proceeds of the first one-half of one percent of 
118.17  tax imposed under this section must be used to meet the costs of 
118.18  by the city for the following projects: 
118.19     (1) extending a sewer interceptor line; 
118.20     (2) construction of a booster pump station, reservoirs, and 
118.21  related improvements to the water system; and 
118.22     (3) construction of a police and fire station. 
118.23     (c) Revenues received from the remaining one-half of one 
118.24  percent of the tax authorized under this section must be used by 
118.25  the city to pay all or part of the capital and administrative 
118.26  costs of developing, acquiring, constructing, and initially 
118.27  furnishing and equipping for the following projects: 
118.28     (1) construction of a city hall to be connected to the 
118.29  existing public safety facility; 
118.30     (2) construction of a new facility or purchase of an 
118.31  existing facility to be used as a public works facility; 
118.32     (3) construction, signalization, and rehabilitation of 
118.33  primary collector roads and commercial frontage roads, within 
118.34  the city; and 
118.35     (4) extension of a sewer interceptor line. 
118.36     (d) Authorized expenses include, but are not limited to, 
119.1   acquiring property; paying construction, administrative, and 
119.2   operating expenses related to the development of the projects 
119.3   listed in paragraph (c); paying debt service on bonds or other 
119.4   obligations, including lease obligations, issued to finance 
119.5   construction, expansion, or improvement of the projects listed 
119.6   in paragraph (c); and other compatible uses, including but not 
119.7   limited to, parking, lighting, and landscaping. 
119.8      Subd. 2.  [REFERENDUM.] (a) If the Hermantown city council 
119.9   proposes to impose the sales tax authorized by this section, it 
119.10  shall conduct a referendum on the issue. 
119.11     (b) If the Hermantown city council initially imposes the 
119.12  tax at a rate that is less than one percent and proposes 
119.13  increasing the tax rate at a later date up to the full one 
119.14  percent, it shall conduct a referendum on the increase. 
119.15     (c) The question of imposing or increasing the tax must be 
119.16  submitted to the voters at a special or general election.  The 
119.17  tax may not be imposed unless a majority of votes cast on the 
119.18  question of imposing the tax are in the affirmative.  The 
119.19  commissioner of revenue shall prepare a suggested form of 
119.20  question to be presented at the election.  This subdivision 
119.21  applies notwithstanding any city charter provision to the 
119.22  contrary. 
119.23     Subd. 3.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 
119.24  TAXES.] A sales tax imposed under this section must be reported 
119.25  and paid to the commissioner of revenue with the state sales 
119.26  taxes, and be subject to the same penalties, interest, and 
119.27  enforcement provisions.  The proceeds of the tax, less refunds 
119.28  and a proportionate share of the cost of collection, shall be 
119.29  remitted at least quarterly to the city.  The commissioner shall 
119.30  deduct from the proceeds remitted an amount that equals the 
119.31  indirect statewide cost as well as the direct and indirect 
119.32  department costs necessary to administer, audit, and collect the 
119.33  tax.  The amount deducted shall be deposited in the state 
119.34  general fund. 
119.35     Subd. 3a.  [BONDING AUTHORITY.] (a) The city may issue 
119.36  general obligation bonds under Minnesota Statutes, chapter 475, 
120.1   to finance the costs in subdivision 1, paragraph (c).  The total 
120.2   amount of bonds issued for the projects under subdivision 1, 
120.3   paragraph (c), may not exceed $13,000,000 in the aggregate.  An 
120.4   election to approve the bonds is not required. 
120.5      (b) The bonds are not included in computing any debt 
120.6   limitation applicable to the city and the levy of taxes under 
120.7   Minnesota Statutes, section 475.61, to pay principal of and 
120.8   interest on the bonds is not subject to any levy limitation. 
120.9      (c) The taxes authorized under this section may be pledged 
120.10  to and used for the payment of the bonds and any bonds issued to 
120.11  refund them. 
120.12     Subd. 4.  [TERMINATION.] The portion of the tax authorized 
120.13  under this section to finance the improvements described in 
120.14  subdivision 1, paragraph (b), terminates at the later of (1) ten 
120.15  years after the date of initial imposition of the tax, or (2) on 
120.16  the first day of the second month next succeeding a 
120.17  determination by the city council that sufficient funds have 
120.18  been received from that portion of the tax dedicated to finance 
120.19  the those improvements described in subdivision 1, clauses (1) 
120.20  to (3), and to prepay or retire at maturity the principal, 
120.21  interest, and premium due on any bonds issued for the 
120.22  improvements.  The portion of the tax authorized to finance the 
120.23  improvements described in subdivision 1, paragraph (c), 
120.24  terminates when the revenues raised are sufficient to finance 
120.25  those improvements, up to an amount equal to $13,000,000 plus 
120.26  any interest, premium, and other costs associated with the bonds 
120.27  issued under subdivision 3a.  The city council may terminate 
120.28  this portion of the tax earlier.  Any funds remaining after 
120.29  completion of the improvements and retirement or redemption of 
120.30  the bonds may be placed in the general fund of the city. 
120.31     Subd. 5.  [LOCAL APPROVAL; EFFECTIVE DATE.] This section is 
120.32  effective the day after final enactment, upon compliance with 
120.33  Minnesota Statutes, section 645.021, subdivision 3, by the city 
120.34  of Hermantown. 
120.35     [EFFECTIVE DATE.] This section is effective the day after 
120.36  the governing body of the city of Hermantown and its chief 
121.1   clerical officer comply with Minnesota Statutes, section 
121.2   645.021, subdivisions 2 and 3. 
121.3      Sec. 28.  Laws 1998, chapter 389, article 8, section 43, 
121.4   subdivision 3, is amended to read: 
121.5      Subd. 3.  [USE OF REVENUES.] Revenues received from the 
121.6   taxes authorized by subdivisions 1 and 2 must be used by the 
121.7   city to pay for the cost of collecting and administering the 
121.8   taxes and to pay for the following projects: 
121.9      (1) transportation infrastructure improvements including 
121.10  both regional highway and airport improvements; 
121.11     (2) improvements to the civic center complex; 
121.12     (3) a municipal water, sewer, and storm sewer project 
121.13  necessary to improve regional ground water quality; and 
121.14     (4) construction of a regional recreation and sports center 
121.15  and associated other higher education facilities available for 
121.16  both community and student use, located at or adjacent to the 
121.17  Rochester center. 
121.18  The total amount of capital expenditures or bonds for these 
121.19  projects that may be paid from the revenues raised from the 
121.20  taxes authorized in this section may not exceed 
121.21  $71,500,000 $111,500,000.  The total amount of capital 
121.22  expenditures or bonds for the project in clause (4) that may be 
121.23  paid from the revenues raised from the taxes authorized in this 
121.24  section may not exceed $20,000,000 $28,000,000. 
121.25     [EFFECTIVE DATE.] This section is effective the day 
121.26  following final enactment. 
121.27     Sec. 29.  Laws 1998, chapter 389, article 8, section 43, 
121.28  subdivision 4, is amended to read: 
121.29     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
121.30  under Minnesota Statutes, chapter 475, to finance the capital 
121.31  expenditure and improvement projects.  An election to approve 
121.32  the bonds under Minnesota Statutes, section 475.58, may be held 
121.33  in combination with the election to authorize imposition of the 
121.34  tax under subdivision 1.  Whether to permit imposition of the 
121.35  tax and issuance of bonds may be posed to the voters as a single 
121.36  question.  The question must state that the sales tax revenues 
122.1   are pledged to pay the bonds, but that the bonds are general 
122.2   obligations and will be guaranteed by the city's property 
122.3   taxes.  No election is required for the issuance of bonds under 
122.4   this subdivision, other than the election held by the city on 
122.5   June 23, 1998. 
122.6      The city may enter into an agreement with Olmsted County 
122.7   under which the city and the county agree to jointly undertake 
122.8   and finance certain roadway infrastructure improvements.  The 
122.9   agreement may provide that the city will make available to the 
122.10  county a portion of the sales tax revenues collected pursuant to 
122.11  the authority granted in this section and the bonding authority 
122.12  provided in this subdivision.  The county may, pursuant to the 
122.13  agreement, issue its general obligation bonds in a principal 
122.14  amount not exceeding the amount authorized by its agreement with 
122.15  the city payable primarily from the sales tax revenues from the 
122.16  city under the agreement.  The county's bonds must be issued in 
122.17  accordance with the provisions of Minnesota Statutes, chapter 
122.18  475, except that no election is required for the issuance of the 
122.19  bonds and the bonds shall not be included in the net debt of the 
122.20  county.  
122.21     (b) The issuance of bonds under this subdivision is not 
122.22  subject to Minnesota Statutes, section 275.60. 
122.23     (c) The bonds are not included in computing any debt 
122.24  limitation applicable to the city, and the levy of taxes under 
122.25  Minnesota Statutes, section 475.61, to pay principal of and 
122.26  interest on the bonds is not subject to any levy limitation. 
122.27  The aggregate principal amount of bonds, plus the aggregate of 
122.28  the taxes used directly to pay eligible capital expenditures and 
122.29  improvements may not exceed $71,500,000 $111,500,000, plus an 
122.30  amount equal to the costs related to issuance of the bonds. 
122.31     (d) The taxes may be pledged to and used for the payment of 
122.32  the bonds and any bonds issued to refund them, only if the bonds 
122.33  and any refunding bonds are general obligations of the city. 
122.34     [EFFECTIVE DATE.] This section is effective the day 
122.35  following final enactment. 
122.36     Sec. 30.  Laws 1999, chapter 243, article 4, section 18, 
123.1   subdivision 1, is amended to read:  
123.2      Subdivision 1.  [SALES AND USE TAX.] (a) Notwithstanding 
123.3   Minnesota Statutes, section 297A.48, subdivision 1a, 477A.016, 
123.4   or any other provision of law, ordinance, or city charter, if 
123.5   approved by the city voters at the first municipal general 
123.6   election held after the date of final enactment of this act or 
123.7   at a special election held November 2, 1999, the city of Proctor 
123.8   may impose by ordinance a sales and use tax of up to one-half of 
123.9   one percent for the purposes specified in subdivision 3, 
123.10  paragraph (a).  The provisions of Minnesota Statutes, 
123.11  section 297A.48 297A.99, govern the imposition, administration, 
123.12  collection, and enforcement of the tax authorized under this 
123.13  subdivision. 
123.14     (b) The city of Proctor may impose by ordinance an 
123.15  additional sales and use tax of up to one-half of one percent if 
123.16  approved by the city voters at a general election or at a 
123.17  special election held for this purpose.  The revenues received 
123.18  from this additional tax must be used for the purposes specified 
123.19  in subdivision 3, paragraph (b).  
123.20     [EFFECTIVE DATE.] This section is effective the day 
123.21  following final enactment, upon compliance by the city of 
123.22  Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
123.23     Sec. 31.  Laws 1999, chapter 243, article 4, section 18, 
123.24  subdivision 3, is amended to read:  
123.25     Subd. 3.  [USE OF REVENUES.] (a) Revenues received from 
123.26  taxes authorized by subdivisions 1, paragraph (a), and 2 must be 
123.27  used by the city to pay the cost of collecting the taxes and to 
123.28  pay for construction and improvement of the following city 
123.29  facilities: 
123.30     (1) streets; and 
123.31     (2) constructing and equipping the Proctor community 
123.32  activity center. 
123.33     Authorized expenses include, but are not limited to, 
123.34  acquiring property, paying construction and operating expenses 
123.35  related to the development of an authorized facility, and paying 
123.36  debt service on bonds or other obligations, including lease 
124.1   obligations, issued to finance the construction, expansion, or 
124.2   improvement of an authorized facility.  The capital expenses for 
124.3   all projects authorized under this paragraph that may be paid 
124.4   with these taxes is limited to $3,600,000, plus an amount equal 
124.5   to the costs related to issuance of the bonds. 
124.6      (b) Revenues received from taxes authorized by subdivision 
124.7   1, paragraph (b), must be used by the city to pay the cost of 
124.8   collecting the taxes and for construction and improvements of 
124.9   city streets, public utilities, sidewalks, bikeways, and trails. 
124.10     [EFFECTIVE DATE.] This section is effective the day 
124.11  following final enactment, upon compliance by the city of 
124.12  Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
124.13     Sec. 32.  Laws 1999, chapter 243, article 4, section 18, 
124.14  subdivision 4, is amended to read:  
124.15     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
124.16  under Minnesota Statutes, chapter 475, to finance the capital 
124.17  expenditure and improvement projects described in subdivision 
124.18  3.  An election to approve the bonds under Minnesota Statutes, 
124.19  section 475.58, is not required. 
124.20     (b) The issuance of bonds under this subdivision is not 
124.21  subject to Minnesota Statutes, sections 275.60 and 279.61 275.61.
124.22     (c) The bonds are not included in computing any debt 
124.23  limitation applicable to the city, and the levy of taxes under 
124.24  Minnesota Statutes, section 475.61, to pay principal of and 
124.25  interest on the bonds is not subject to any levy limitation.  
124.26     (d) For projects described in subdivision 3, paragraph (a), 
124.27  the aggregate principal amount of bonds, plus the aggregate of 
124.28  the taxes used directly to pay eligible capital expenditures and 
124.29  improvements, may not exceed $3,600,000, plus an amount equal to 
124.30  the costs related to issuance of the bonds, including interest 
124.31  on the bonds.  For projects described in subdivision 3, 
124.32  paragraph (b), the aggregate principal amount of bonds may not 
124.33  exceed $7,200,000, plus an amount equal to the costs related to 
124.34  issuance of the bonds, including interest on the bonds.  
124.35     (e) The sales and use and excise taxes authorized in this 
124.36  section may be pledged to and used for the payment of the bonds 
125.1   and any bonds issued to refund them only if the bonds and any 
125.2   refunding bonds are general obligations of the city. 
125.3      [EFFECTIVE DATE.] This section is effective the day 
125.4   following final enactment, upon compliance by the city of 
125.5   Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
125.6      Sec. 33.  Laws 2001, First Special Session chapter 5, 
125.7   article 12, section 67, the effective date, is amended to read: 
125.8      [EFFECTIVE DATE.] This section is effective for purchases 
125.9   and sales made after June 30, 2001, and before January 1, 2003 
125.10  July 1, 2007. 
125.11     [EFFECTIVE DATE.] This section is effective the day 
125.12  following final enactment. 
125.13     Sec. 34.  Laws 2001, First Special Session chapter 5, 
125.14  article 12, section 82, the effective date, as amended by Laws 
125.15  2002, chapter 377, article 3, section 23, is amended to read: 
125.16     [EFFECTIVE DATE.] This section is effective for sales and 
125.17  purchases made after December 31, 2005 2007, or until the State 
125.18  of Minnesota is found to be out of compliance with the 
125.19  streamlined sales tax project only to the extent of the change 
125.20  in this act and for no other reason, if that finding is made 
125.21  before December 31, 2007. 
125.22     Sec. 35.  Laws 2002, chapter 377, article 3, section 4, the 
125.23  effective date, is amended to read: 
125.24     [EFFECTIVE DATE.] With the exception of clause (2), item 
125.25  (ii), This section is effective for sales and purchases made 
125.26  after June 30, 2002.  Clause (2), item (ii), is effective for 
125.27  sales and purchases made after June 30, 2002, and before January 
125.28  1, 2006. 
125.29     Sec. 36.  Laws 2002, chapter 377, article 12, section 16, 
125.30  subdivision 1, is amended to read: 
125.31     Subdivision 1.  [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 
125.32  The city of Thief River Falls may incorporate or authorize the 
125.33  incorporation of a nonprofit corporation to operate a community 
125.34  or regional center in the city.  A nonprofit corporation 
125.35  incorporated under this section is exempt from payment of sales 
125.36  and use tax on materials, equipment, and supplies consumed or 
126.1   incorporated into the construction of the community or regional 
126.2   center.  The exemption under this section applies to purchases 
126.3   by the nonprofit corporation, a contractor, subcontractor, or 
126.4   builder.  A contractor, subcontractor, or builder that does not 
126.5   pay sales tax on purchases for construction of the community or 
126.6   regional center shall not charge sales or use tax to the 
126.7   nonprofit corporation. The nonprofit corporation may file a 
126.8   claim for refund for any sales taxes paid on the construction 
126.9   costs of the community or regional center, and the commissioner 
126.10  of revenue shall pay the refunded amount directly to the 
126.11  nonprofit corporation. 
126.12     [EFFECTIVE DATE.] This section is effective retroactively 
126.13  for purchases made on and after July 1, 2002. 
126.14     Sec. 37.  [CITY OF ALBERT LEA; SALES AND USE TAX.] 
126.15     Subdivision 1.  [SALES AND USE TAX 
126.16  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
126.17  477A.016, or any other provision of law, ordinance, or city 
126.18  charter, the city of Albert Lea may, by ordinance, impose a 
126.19  sales and use tax of one-half of one percent for the purposes 
126.20  specified in subdivision 2.  The provisions of Minnesota 
126.21  Statutes, section 297A.99, govern the imposition, 
126.22  administration, collection, and enforcement of the tax 
126.23  authorized under this subdivision. 
126.24     Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
126.25  imposed under this section shall be used to pay for lake 
126.26  improvement projects as detailed in the Shell Rock River 
126.27  watershed plan. 
126.28     Subd. 3.  [REFERENDUM.] If the Albert Lea City Council 
126.29  proposes to impose the tax authorized by this section, the 
126.30  question of imposing the tax must be submitted to the voters at 
126.31  the next general election. 
126.32     Subd. 4.  [TERMINATION OF TAXES.] The taxes imposed under 
126.33  this section expire at the earlier of (1) ten years after the 
126.34  taxes are first imposed, or (2) when the city council first 
126.35  determines that the amount of revenues raised to pay for the 
126.36  projects under subdivision 2, shall meet or exceed the sum of 
127.1   $15,000,000.  Any funds remaining after completion of the 
127.2   projects may be placed in the general fund of the city. 
127.3      [EFFECTIVE DATE.] This section is effective the day after 
127.4   compliance by the governing body of the city of Albert Lea with 
127.5   Minnesota Statutes, section 645.021, subdivision 3. 
127.6      Sec. 38.  [CITY OF BAXTER; TAXES AUTHORIZED.] 
127.7      Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
127.8   Notwithstanding Minnesota Statutes, section 477A.016, or any 
127.9   other provision of law, ordinance, or city charter, pursuant to 
127.10  the approval of the voters on November 2, 2004, and pursuant to 
127.11  Minnesota Statutes, section 297A.99, the city of Baxter may 
127.12  impose by ordinance a sales and use tax of one-half of one 
127.13  percent for the purposes specified in subdivision 3.  The 
127.14  provisions of Minnesota Statutes, section 297A.99, govern the 
127.15  imposition, administration, collection, and enforcement of the 
127.16  tax authorized under this subdivision. 
127.17     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
127.18  Minnesota Statutes, section 477A.016, or any other contrary 
127.19  provision of law, ordinance, or city charter, the city of Baxter 
127.20  may impose by ordinance, for the purposes specified in 
127.21  subdivision 3, an excise tax of up to $20 per motor vehicle, as 
127.22  defined by ordinance, purchased or acquired from any person 
127.23  engaged within the city in the business of selling motor 
127.24  vehicles at retail. 
127.25     Subd. 3.  [USE OF REVENUES.] Revenues received from the 
127.26  taxes authorized by subdivisions 1 and 2 must be used to pay the 
127.27  cost of collecting and administering the tax and to finance the 
127.28  acquisition and betterment of water and waste water facilities, 
127.29  a fire substation, and the Paul Bunyan Bridge over Excelsior 
127.30  Road, as approved by the voters at the referendum authorizing 
127.31  the tax.  Authorized costs include, but are not limited to, 
127.32  acquiring property and paying construction, legal, and 
127.33  engineering costs related to the projects. 
127.34     Subd. 4.  [BONDS.] The city of Baxter, pursuant to the 
127.35  approval of the voters at the referendum authorizing the 
127.36  imposition of the taxes in this section, may issue general 
128.1   obligation bonds of the city, in one or more series, in the 
128.2   aggregate principal amount not to exceed $15,000,000 to finance 
128.3   the projects listed in subdivision 3.  The debt represented by 
128.4   the bonds is not included in computing any debt limitations 
128.5   applicable to the city, and the levy of taxes required by 
128.6   Minnesota Statutes, section 475.61, to pay the principal of and 
128.7   interest on the bonds is not subject to any levy limitation or 
128.8   included in computing or applying any levy limitation applicable 
128.9   to the city. 
128.10     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
128.11  subdivisions 1 and 2 expire at the earlier of 12 years after the 
128.12  imposition of the tax or when the city council first determines 
128.13  that the amount of revenues raised from the taxes to pay for the 
128.14  projects equals or exceeds $15,000,000 plus any interest on 
128.15  bonds issued for the projects under subdivision 4.  Any funds 
128.16  remaining after expiration of the taxes and retirement of the 
128.17  bonds shall be placed in a capital project fund of the city.  
128.18  The taxes imposed under subdivisions 1 and 2 may expire at an 
128.19  earlier time if the city so determines by ordinance. 
128.20     [EFFECTIVE DATE.] This section is effective the day after 
128.21  compliance by the governing body of the city of Baxter with 
128.22  Minnesota Statutes, section 645.021, subdivision 3. 
128.23     Sec. 39.  [CITY OF BEAVER BAY; TAXES AUTHORIZED.] 
128.24     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
128.25  Minnesota Statutes, section 477A.016, or any other provision of 
128.26  law or ordinance, if approved by the voters of the city at the 
128.27  next general election held after the date of final enactment of 
128.28  this act, the city of Beaver Bay may impose by ordinance a sales 
128.29  and use tax at a rate of up to one percent for the purposes 
128.30  specified in subdivision 2.  The provisions of Minnesota 
128.31  Statutes, section 297A.99, govern the imposition, 
128.32  administration, collection, and enforcement of the tax 
128.33  authorized under this subdivision. 
128.34     Subd. 2.  [USE OF REVENUES.] The revenues received from 
128.35  taxes authorized by subdivision 1 must be used to pay the bonded 
128.36  indebtedness on the city community building and to provide 
129.1   funding for recreational facilities, the upgrading of the water 
129.2   and sewer system, upgrading and replacement of fire equipment, 
129.3   and improvement of streets. 
129.4      Subd. 3.  [TERMINATION OF TAXES.] The authority granted 
129.5   under subdivision 1 to the city of Beaver Bay to impose sales 
129.6   and use taxes expires when the city council determines that the 
129.7   amount of revenue received to pay the costs of the projects 
129.8   described in subdivision 2 shall meet or exceed $1,500,000.  Any 
129.9   funds remaining after completion of the projects may be placed 
129.10  in the general fund of the city.  The tax imposed under 
129.11  subdivision 1 may expire at an earlier time if the city so 
129.12  determines by ordinance. 
129.13     [EFFECTIVE DATE.] This section is effective the day after 
129.14  the governing body of the city of Beaver Bay and its chief 
129.15  clerical officer timely comply with Minnesota Statutes, section 
129.16  645.021, subdivisions 2 and 3. 
129.17     Sec. 40.  [CITY OF BEMIDJI.] 
129.18     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
129.19  Notwithstanding Minnesota Statutes, section 477A.016, or any 
129.20  other provision of law, ordinance, or city charter, pursuant to 
129.21  the approval of the city voters at the general election held on 
129.22  November 5, 2002, the city of Bemidji may impose by ordinance a 
129.23  sales and use tax of one-half of one percent for the purposes 
129.24  specified in subdivision 2.  The provisions of Minnesota 
129.25  Statutes, section 297A.99, govern the imposition, 
129.26  administration, collection, and enforcement of the tax 
129.27  authorized under this subdivision. 
129.28     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
129.29  authorized by subdivision 1 must be used for the cost of 
129.30  collecting and administering the tax and to pay all or part of 
129.31  the capital or administrative costs of the acquisition, 
129.32  construction, and improvement of parks and trails within the 
129.33  city, as provided for in the city of Bemidji's parks, open 
129.34  space, and trail system plan, adopted by the Bemidji City 
129.35  Council on November 21, 2001.  Authorized expenses include, but 
129.36  are not limited to, acquiring property, paying construction 
130.1   expenses related to the development of these facilities and 
130.2   improvements, and securing and paying debt service on bonds or 
130.3   other obligations issued to finance acquisition, construction, 
130.4   improvement, or development of parks and trails within the city 
130.5   of Bemidji. 
130.6      Subd. 3.  [BONDS.] Pursuant to the approval of the city 
130.7   voters at the general election held on November 5, 2002, the 
130.8   city of Bemidji may issue, without an additional election, 
130.9   general obligation bonds of the city in an amount not to exceed 
130.10  $9,826,000 to pay capital and administrative expenses for the 
130.11  acquisition, construction, improvement, and development of parks 
130.12  and trails as specified in subdivision 2.  The debt represented 
130.13  by the bonds must not be included in computing any debt 
130.14  limitations applicable to the city, and the levy of taxes 
130.15  required by Minnesota Statutes, section 475.61, to pay the 
130.16  principal of any interest on the bonds must not be subject to 
130.17  any levy limitations or be included in computing or applying any 
130.18  levy limitation applicable to the city. 
130.19     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
130.20  subdivision 1 expires when the Bemidji City Council determines 
130.21  that the amount described in subdivision 3 has been received 
130.22  from the tax to finance the capital and administrative costs for 
130.23  acquisition, construction, improvement, and development of parks 
130.24  and trails and to repay or retire at maturity the principal, 
130.25  interest, and premium due on any bonds issued for the park and 
130.26  trail improvements under subdivision 3.  Any funds remaining 
130.27  after completion of the park and trail improvements and 
130.28  retirement or redemption of the bonds may be placed in the 
130.29  general fund of the city.  The tax imposed under subdivision 1 
130.30  may expire at an earlier time if the city so determines by 
130.31  ordinance. 
130.32     [EFFECTIVE DATE.] This section is effective the day after 
130.33  compliance by the governing body of the city of Bemidji with 
130.34  Minnesota Statutes, section 645.021, subdivision 3. 
130.35     Sec. 41.  [CITY OF CLOQUET; TAXES AUTHORIZED.] 
130.36     Subdivision 1.  [SALES AND USE TAX.] Notwithstanding 
131.1   Minnesota Statutes, section 477A.016, or any other provision of 
131.2   law, ordinance, or city charter, if approved by the voters 
131.3   pursuant to Minnesota Statutes, section 297A.99, the city of 
131.4   Cloquet may impose by ordinance a sales and use tax of up to 
131.5   one-half of one percent for the purpose specified in subdivision 
131.6   3.  The provisions of Minnesota Statutes, section 297A.99, 
131.7   govern the imposition, administration, collection, and 
131.8   enforcement of the tax authorized under this subdivision. 
131.9      Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
131.10  Minnesota Statutes, section 477A.016, or any other provision of 
131.11  law, ordinance, or city charter, the city of Cloquet may impose 
131.12  by ordinance, for the purposes specified in subdivision 3, an 
131.13  excise tax of up to $20 per motor vehicle, as defined by 
131.14  ordinance, purchased or acquired from any person engaged within 
131.15  the city in the business of selling motor vehicles at retail. 
131.16     Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
131.17  authorized by subdivisions 1 and 2 must be used by the city to 
131.18  pay the cost of collecting the taxes and to pay for the 
131.19  following projects: 
131.20     (1) construction and implementation of riverfront task 
131.21  force park improvements including Veteran's Park; 
131.22     (2) extension of water and sewer lines and other 
131.23  improvements to city infrastructure necessary for construction 
131.24  of a city industrial park; and 
131.25     (3) costs associated with the closure of the Cloquet 
131.26  Municipal Landfill. 
131.27     Authorized expenses include, but are not limited to, 
131.28  acquiring property and paying construction expenses related to 
131.29  these improvements, and paying debt service on bonds or other 
131.30  obligations issued to finance acquisition and construction of 
131.31  these improvements. 
131.32     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
131.33  under Minnesota Statutes, chapter 475, to pay capital and 
131.34  administrative expenses for the improvements described in 
131.35  subdivision 3 in an amount that does not exceed $7,000,000.  An 
131.36  election to approve the bonds under Minnesota Statutes, section 
132.1   475.58, is not required. 
132.2      (b) The issuance of bonds under this subdivision is not 
132.3   subject to Minnesota Statutes, sections 275.60 and 275.61. 
132.4      (c) The debt represented by the bonds is not included in 
132.5   computing any debt limitation applicable to the city, and any 
132.6   levy of taxes under Minnesota Statutes, section 475.61, to pay 
132.7   principal of and interest on the bonds is not subject to any 
132.8   levy limitation.  
132.9      Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
132.10  subdivisions 1 and 2 expire at the earlier of (1) 14 years, or 
132.11  (2) when the city council determines that sufficient funds have 
132.12  been received from the taxes to finance the capital and 
132.13  administrative costs of the improvements described in 
132.14  subdivision 3, plus the additional amount needed to pay the 
132.15  costs related to issuance of bonds under subdivision 4, 
132.16  including interest on the bonds.  Any funds remaining after 
132.17  completion of the project and retirement or redemption of the 
132.18  bonds may be placed in the general fund of the city.  The taxes 
132.19  imposed under subdivisions 1 and 2 may expire at an earlier time 
132.20  if the city so determines by ordinance. 
132.21     [EFFECTIVE DATE.] This section is effective the day after 
132.22  the governing body of the city of Cloquet and its chief clerical 
132.23  officer timely comply with Minnesota Statutes, section 645.021, 
132.24  subdivisions 2 and 3. 
132.25     Sec. 42.  [CITY OF CLEARWATER.] 
132.26     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
132.27  Notwithstanding Minnesota Statutes, section 477A.016, or any 
132.28  other provision of law, ordinance, or city charter, pursuant to 
132.29  the approval of the city voters at the next general election or 
132.30  at a special election held for this purpose, the city of 
132.31  Clearwater may impose by ordinance a sales and use tax of 
132.32  one-half of one percent for the purposes specified in 
132.33  subdivision 2.  The provisions of Minnesota Statutes, section 
132.34  297A.99, govern the imposition, administration, collection, and 
132.35  enforcement of the tax authorized under this subdivision. 
132.36     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
133.1   authorized by subdivision 1 must be used for the cost of 
133.2   collecting and administering the tax and to pay all or part of 
133.3   the capital or administrative costs of the development, 
133.4   acquisition, construction, and improvement of parks, trails, 
133.5   parkland, open space, and land and buildings for a regional 
133.6   community and recreation center.  Authorized expenses include, 
133.7   but are not limited to, acquiring property, paying construction 
133.8   expenses related to the development of these facilities and 
133.9   improvements, and securing and paying debt service on bonds or 
133.10  other obligations issued to finance acquisition, construction, 
133.11  improvement, or development. 
133.12     Subd. 3.  [BONDS.] Pursuant to the approval of the city 
133.13  voters to impose the tax authorized in subdivision 1, the city 
133.14  of Clearwater may issue without an additional election general 
133.15  obligation bonds of the city in an amount not to exceed 
133.16  $3,000,000 to pay capital and administrative expenses for the 
133.17  acquisition, construction, improvement, and development of the 
133.18  projects specified in subdivision 2.  The debt represented by 
133.19  the bonds must not be included in computing any debt limitations 
133.20  applicable to the city, and the levy of taxes required by 
133.21  Minnesota Statutes, section 475.61, to pay the principal or any 
133.22  interest on the bonds must not be subject to any levy 
133.23  limitations or be included in computing or applying any levy 
133.24  limitation applicable to the city. 
133.25     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
133.26  subdivision 1 expires when the Clearwater City Council 
133.27  determines that the amount described in subdivision 3 has been 
133.28  received from the tax to finance the capital and administrative 
133.29  costs for acquisition, construction, improvement, and 
133.30  development of the projects specified in subdivision 2 and to 
133.31  repay or retire at maturity the principal, interest, and premium 
133.32  due on any bonds issued for the projects under subdivision 3.  
133.33  Any funds remaining after completion of the projects specified 
133.34  in subdivision 2 and retirement or redemption of the bonds may 
133.35  be placed in the general fund of the city.  The tax imposed 
133.36  under subdivision 1 may expire at an earlier time if the city so 
134.1   determines by ordinance. 
134.2      [EFFECTIVE DATE.] This section is effective the day after 
134.3   compliance by the governing body of the city of Clearwater with 
134.4   Minnesota Statutes, section 645.021, subdivision 3. 
134.5      Sec. 43.  [REVERSE REFERENDUM; CHANGE IN MANKATO SALES TAX 
134.6   EXPIRATION DATE.] 
134.7      For the change in section 26 to be effective, the Mankato 
134.8   City Council must pass a resolution stating that they intend to 
134.9   implement the change in the expiration date of the local sales 
134.10  tax authorized under section 26.  The resolution must indicate 
134.11  when the sales tax would expire under the law before any change, 
134.12  and when it will expire under the authorized change in the law. 
134.13  The resolution must be published for two successive weeks in the 
134.14  official newspaper of the city or, if there is no official 
134.15  newspaper, in a newspaper of general circulation in the city, 
134.16  together with a notice fixing a date for a public hearing on the 
134.17  matter.  The hearing must be held at least two weeks but no more 
134.18  than four weeks after the first publication of the resolution.  
134.19  Following the public hearing, the city may determine to take no 
134.20  further action or adopt a resolution confirming its intention to 
134.21  extend the expiration date of the sales tax.  That resolution 
134.22  must also be published in the official newspaper of the city or, 
134.23  if there is no official newspaper, in a newspaper of general 
134.24  circulation in the city.  If within 30 days of publication of 
134.25  the resolution a petition signed by voters equal in number to at 
134.26  least ten percent of the votes cast in the city in the last 
134.27  general election requesting a vote on the resolution is filed 
134.28  with the county, the resolution is not effective until it has 
134.29  been submitted to the voters at a general or special election 
134.30  and a majority of votes cast on the question of approving the 
134.31  resolution are in the affirmative.  The commissioner of revenue 
134.32  shall prepare a suggested form of question to be presented at 
134.33  the election.  The notices, hearing, and any required referendum 
134.34  must be held before December 31, 2005. 
134.35     Notwithstanding any other law or charter provision, the 
134.36  taxes imposed under Laws 1991, chapter 291, article 8, section 
135.1   27, shall not expire before December 31, 2005.  However, if the 
135.2   city has not met the requirements in this section for adopting 
135.3   the change in the effective date allowed in section 26, the tax 
135.4   shall expire after December 31, 2005, as soon as is feasible 
135.5   under Minnesota Statutes, section 297A.99, subdivision 12. 
135.6      [EFFECTIVE DATE.] This section is effective the day after 
135.7   compliance by the city of Mankato with Minnesota Statutes, 
135.8   section 645.021, subdivision 3. 
135.9      Sec. 44.  [CITY OF MEDFORD; SALES AND USE TAX.] 
135.10     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
135.11  Notwithstanding Minnesota Statutes, section 477A.016, or any 
135.12  other provision of law, ordinance, or city charter, the city of 
135.13  Medford may, by ordinance, impose a sales and use tax of 
135.14  one-half of one percent for the purposes specified in 
135.15  subdivision 2.  Except as otherwise specifically provided, the 
135.16  provisions of Minnesota Statutes, section 297A.99, govern the 
135.17  imposition, administration, collection, and enforcement of the 
135.18  tax authorized under this subdivision. 
135.19     Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
135.20  imposed under this section must be used to pay up to $5,000,000 
135.21  in costs related to improving the city's wastewater system and 
135.22  wastewater treatment plant. 
135.23     Subd. 3.  [REFERENDUM.] If the Medford City Council 
135.24  proposes to impose the tax authorized by this section, the 
135.25  question of imposing the tax must be submitted to the voters at 
135.26  the next general election.  The tax may not be imposed unless 
135.27  the majority of votes cast on the question of imposing the tax 
135.28  are in the affirmative.  The commissioner of revenue shall 
135.29  prepare a suggested form of the question to be presented at the 
135.30  election.  The question must state that the sales tax revenues 
135.31  would be pledged to pay any bonds issued under subdivision 4 and 
135.32  that these bonds are guaranteed by the city's property taxes. 
135.33     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
135.34  under Minnesota Statutes, chapter 475, to finance the capital 
135.35  expenditure and improvement projects authorized under 
135.36  subdivision 2.  The total amount of bonds issued for the 
136.1   projects listed in subdivision 2 may not exceed $5,000,000 in 
136.2   aggregate.  An election to approve the bonds, as required under 
136.3   Minnesota Statutes, section 475.58, is not required. 
136.4      (b) The issuance of the bonds under this subdivision is not 
136.5   subject to Minnesota Statutes, sections 275.60 and 275.61. 
136.6      (c) The bonds are not included in computing any debt 
136.7   limitation applicable to the city, and the levy of taxes under 
136.8   Minnesota Statutes, section 475.61, to pay the principal of and 
136.9   interest on the bonds is not subject to any levy limitation. 
136.10     (d) The taxes authorized under this section may be pledged 
136.11  to and used for the payment of the bonds and any bonds issued to 
136.12  refund them only if the bonds and any refunding bonds are 
136.13  general obligations of the city. 
136.14     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
136.15  this section expire at the earlier of (1) 20 years after the 
136.16  taxes are first imposed, or (2) when the city council first 
136.17  determines that the amount of revenues raised to pay for the 
136.18  projects under subdivision 2 shall meet or exceed the sum of 
136.19  $5,000,000, plus an amount equal to the costs related to the 
136.20  issuance of bonds under subdivision 4.  Any funds remaining 
136.21  after completion of the projects and retirement or redemption of 
136.22  the bonds may be placed in the general funds of the city. 
136.23     [EFFECTIVE DATE.] This section is effective the day after 
136.24  compliance with the governing body of the city of Medford with 
136.25  Minnesota Statutes, section 645.021, subdivision 3. 
136.26     Sec. 45.  [CITY OF PARK RAPIDS.] 
136.27     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
136.28  Notwithstanding Minnesota Statutes, section 477A.016, or any 
136.29  other provision of law, ordinance, or city charter, pursuant to 
136.30  the approval of the city voters at the next general election or 
136.31  at a special election held for this purpose, the city of Park 
136.32  Rapids may impose by ordinance a sales and use tax of one 
136.33  percent for the purposes specified in subdivision 2.  The 
136.34  provisions of Minnesota Statutes, section 297A.99, govern the 
136.35  imposition, administration, collection, and enforcement of the 
136.36  tax authorized under this subdivision. 
137.1      Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
137.2   authorized by subdivision 1 must be used for the cost of 
137.3   collecting and administering the tax and to pay all or part of 
137.4   the capital or administrative costs of the development, 
137.5   acquisition, construction, and improvement of the following 
137.6   projects:  
137.7      (1) two-thirds of the cost of construction and operation of 
137.8   a community center that may include a senior citizen center, 
137.9   fitness center, swimming pool, meeting rooms, indoor track, and 
137.10  racquetball, basketball, and tennis courts, provided that an 
137.11  amount equal to one-third of the cost of construction is 
137.12  received from private sources; 
137.13     (2) capital improvement projects including, but not limited 
137.14  to, installation of water, sewer, storm sewer, street 
137.15  improvements, new city water tower and well, costs related to 
137.16  improvements to marked trunk highway 34; and 
137.17     (3) park improvements. 
137.18     Authorized expenses include, but are not limited to, 
137.19  acquiring property, paying construction expenses related to the 
137.20  development of these facilities and improvements, and securing 
137.21  and paying debt service on bonds or other obligations issued to 
137.22  finance acquisition, construction, improvement, or development. 
137.23     Subd. 3.  [BONDS.] Pursuant to the approval of the city 
137.24  voters to impose the tax authorized in subdivision 1, the city 
137.25  of Park Rapids may issue without an additional election general 
137.26  obligation bonds of the city to pay capital and administrative 
137.27  expenses for the acquisition, construction, improvement, and 
137.28  development of the projects specified in subdivision 2.  The 
137.29  debt represented by the bonds must not be included in computing 
137.30  any debt limitations applicable to the city, and the levy of 
137.31  taxes required by Minnesota Statutes, section 475.61, to pay the 
137.32  principal or any interest on the bonds must not be subject to 
137.33  any levy limitations or be included in computing or applying any 
137.34  levy limitation applicable to the city. 
137.35     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
137.36  subdivision 1 expires the earlier of July 1, 2023, or when the 
138.1   city council determines that sufficient revenues have been 
138.2   received to retire the bonds in subdivision 3.  Any funds 
138.3   remaining after completion of the projects specified in 
138.4   subdivision 2 and retirement or redemption of the bonds may be 
138.5   placed in the general fund of the city.  The tax imposed under 
138.6   subdivision 1 may expire at an earlier time if the city so 
138.7   determines by ordinance. 
138.8      [EFFECTIVE DATE.] This section is effective the day after 
138.9   compliance by the governing body of the city of Park Rapids with 
138.10  Minnesota Statutes, section 645.021, subdivision 3. 
138.11     Sec. 46.  [CITY OF PROCTOR; LODGING TAX.] 
138.12     The city of Proctor may use up to ten percent of the 
138.13  revenues received from the lodging tax imposed by the city under 
138.14  Minnesota Statutes, section 469.190, for preservation of the 
138.15  Caboose and the Baldwin Locomotive, Class M3 Mallet, Number 225, 
138.16  donated to the city by the Duluth, Missabe and Iron Range 
138.17  Railway Company, and the F-101F aircraft, serial number 59-0407, 
138.18  donated to the city by the Department of the Air Force. 
138.19     [EFFECTIVE DATE.] This section is effective the day 
138.20  following final enactment. 
138.21     Sec. 47.  [ST. CLOUD AREA CITIES; SALES AND USE TAX 
138.22  AUTHORIZED.] 
138.23     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] (a) 
138.24  Notwithstanding Minnesota Statutes, sections 297A.99, 
138.25  subdivision 3, paragraph (d), and 477A.016, or any other 
138.26  provision of law, ordinance, or city charter, the following 
138.27  cities may, by ordinance, impose a sales and use tax of one half 
138.28  of one percent for the purposes specified in subdivision 2: 
138.29     (1) the city of St. Cloud, pursuant to the approval of the 
138.30  city voters at the general election held on November 2, 2004: 
138.31     (2) the city of St. Joseph, pursuant to the approval of the 
138.32  city voters at the general election on November 2, 2004; 
138.33     (3) the city of Waite Park, pursuant to the approval of the 
138.34  city voters at the general election held on November 4, 2003, 
138.35  and any additional approval by the voters of that city at the 
138.36  next general election; 
139.1      (4) the city of Sartell, pursuant to the approval of the 
139.2   city voters at the general election held on November 2, 1999, 
139.3   and any additional approval at the next general election; and 
139.4      (5) the cities of Sauk Rapids and St. Augusta, pursuant to 
139.5   the approval of the voters of that city at the next general 
139.6   election. 
139.7      (b) The provisions of Minnesota Statutes, section 297A.99, 
139.8   except subdivision 3, paragraph (d), govern the imposition, 
139.9   administration, collection, and enforcement of the tax 
139.10  authorized under this subdivision. 
139.11     Subd. 2.  [USE OF REVENUES.] (a) Revenues received from the 
139.12  tax authorized under subdivision 1 must be used for collecting 
139.13  and administering the taxes and to pay all or part of the 
139.14  capital and administrative costs of the acquisition, 
139.15  construction, and improvement of a new regional library located 
139.16  in the city of St. Cloud.  Authorized expenses include, but are 
139.17  not limited to, acquiring property, paying construction expenses 
139.18  related to the development of the library, and securing and 
139.19  paying debt service issued to finance construction or 
139.20  improvement of the authorized facility.  The total amount that 
139.21  may be spent on this project may not exceed $30,000,000 plus any 
139.22  debt service costs. 
139.23     (b) If revenues collected from the taxes imposed under 
139.24  subdivision 1 are greater than the amount needed to meet 
139.25  obligations under paragraph (a) in any year, the surplus may be 
139.26  returned to the cities in a manner agreed upon by the 
139.27  participating cities under an applicable joint powers 
139.28  agreement.  Cities must use revenues received under this 
139.29  paragraph to fund projects that have been approved by the voters 
139.30  at the referendum authorizing the tax.  Authorized expenses 
139.31  include, but are not limited to, acquiring property, paying 
139.32  construction expenses related to the development of the 
139.33  authorized facility, and securing and paying debt service issued 
139.34  to finance construction or improvement of the authorized 
139.35  facility. 
139.36     (c) Notwithstanding any provisions to the contrary 
140.1   contained in a referendum authorizing the imposition of the tax, 
140.2   projects that may be funded from revenues distributed under 
140.3   paragraph (b) are limited to the following: 
140.4      (1) the St. Cloud Regional Airport; 
140.5      (2) regional transportation improvements; 
140.6      (3) community and aquatics centers; 
140.7      (4) regional public libraries; and 
140.8      (5) acquisition and improvement of regional park land, 
140.9   trails, and open space. 
140.10     (d) The cities of Waite Park and Sartell may use revenues 
140.11  from the tax imposed in subdivision 1 to fund the library under 
140.12  paragraph (a) without additional approval by city voters; 
140.13  however, each city must seek approval of its voters to fund any 
140.14  other project not approved by the voters at the referendum held 
140.15  on November 4, 2003, and November 2, 1999, respectively. 
140.16     Subd. 3.  [ALLOCATION OF SALES AND USE TAX REVENUES TO 
140.17  CITIES.] Revenues collected from the taxes authorized by 
140.18  subdivision 1, after paying the cost of collecting and 
140.19  administering the tax, shall be allocated to cities imposing the 
140.20  tax as follows: 
140.21     (1) the first $900,000 of revenues collected annually, 
140.22  indexed annually to the Consumer Price Index, to the city of St. 
140.23  Cloud for the construction and relocation of a regional library 
140.24  located in the city; and 
140.25     (2) the revenues collected from the taxes imposed under 
140.26  subdivision 1 that exceed the amount needed to meet the 
140.27  obligations under clause (1) in any year shall be returned to 
140.28  the cities pursuant to a joint powers agreement allocating sales 
140.29  tax revenues among the cities. 
140.30     Subd. 4.  [CITY BONDING AUTHORIZED.] The city imposing a 
140.31  tax under subdivision 1 may issue general obligation bonds to 
140.32  pay the costs of the projects specified in subdivision 2, 
140.33  pursuant to the approval of the projects by the city voters at 
140.34  the election authorizing the imposition of the tax.  The bonds 
140.35  issued for each project are limited to the amount authorized to 
140.36  be spent on the project in the referendum.  The debt represented 
141.1   by the bonds must not be included in computing any debt 
141.2   limitations applicable to the city, and the levy of taxes 
141.3   required by Minnesota Statutes, section 475.61, to pay the 
141.4   principal or any interest on the bonds must not be subject to 
141.5   any levy limitations or be included in computing or applying any 
141.6   levy limitation applicable to the city. 
141.7      Subd. 5.  [TERMINATION OF TAX.] The tax imposed in a city 
141.8   under subdivision 1 expires when the city council determines 
141.9   that sufficient funds have been collected from the tax to retire 
141.10  or redeem the bonds and obligations authorized under subdivision 
141.11  2, but no later than 17 years after the date the tax is first 
141.12  imposed.  Any funds remaining after completion of the projects 
141.13  specified in subdivision 2 and retirement or redemption of the 
141.14  bonds may be placed in the general fund of the city.  The tax 
141.15  imposed under subdivision 1 may expire at an earlier time if the 
141.16  city so determines by ordinance. 
141.17     [EFFECTIVE DATE.] This section is effective the day after 
141.18  compliance by the governing body of the city with Minnesota 
141.19  Statutes, section 645.021, subdivision 3, for sales and 
141.20  purchases made on and after January 1, 2006. 
141.21     Sec. 48.  [SALES AND USE TAX COMPLIANCE GAP.] 
141.22     The commissioner must reduce the amount of the compliance 
141.23  gap in the payment of sales and use tax by 25 percent before 
141.24  December 31, 2007; and must reduce the compliance gap in the 
141.25  payment of sales and use tax by an additional 25 percent before 
141.26  December 31, 2009.  The commissioner must establish an effective 
141.27  method to allow individuals who purchase taxable products or 
141.28  services and have not paid the tax at the time of the purchase 
141.29  to pay the tax.  The commissioner must advise residents of this 
141.30  state how to pay sales and use tax. 
141.31     [EFFECTIVE DATE.] This section is effective the day 
141.32  following final enactment. 
141.33     Sec. 49.  [CITY OF WASECA; SALES AND USE TAX.] 
141.34     Subdivision 1.  [SALES AND USE TAX 
141.35  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
141.36  477A.016, or any other provision of law, ordinance, or city 
142.1   charter, the city of Waseca may, by ordinance, impose a sales 
142.2   and use tax of one-half of one percent for the purposes 
142.3   specified in subdivision 2.  The provisions of Minnesota 
142.4   Statutes, section 297A.99, govern the imposition, 
142.5   administration, collection, and enforcement of the tax 
142.6   authorized under this subdivision. 
142.7      Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
142.8   imposed under this section must be used to pay for up to 
142.9   $1,820,000 in costs related to one or more of the following 
142.10  capital projects as described in the referendum in subdivision 3:
142.11     (1) water quality and lake improvements; 
142.12     (2) community center improvements; 
142.13     (3) an industrial incubator; and 
142.14     (4) downtown improvements, including a theatre and blighted 
142.15  property acquisition. 
142.16     Subd. 3.  [REFERENDUM.] If the Waseca city council proposes 
142.17  to impose the tax authorized by this section, the question of 
142.18  imposing the tax must be submitted to the voters at the next 
142.19  general election.  The tax may not be imposed unless the 
142.20  majority of votes cast on the question of imposing the tax are 
142.21  in the affirmative.  The specific projects to be funded by the 
142.22  tax must be identified at least 90 days before the referendum is 
142.23  held and included in the question presented at the election.  
142.24  The question must state that the sales tax revenues would be 
142.25  pledged to pay any bonds issued under subdivision 4 and that 
142.26  these bonds are guaranteed by the city's property taxes. 
142.27     Subd. 4.  [BONDING AUTHORITY.] The city may issue bonds 
142.28  under Minnesota Statutes, chapter 475, to finance the capital 
142.29  expenditure and improvement projects authorized under 
142.30  subdivision 2 and approved under subdivision 3.  The total 
142.31  amount of bonds issued for the projects approved in subdivision 
142.32  3 may not exceed $1,820,000 in aggregate.  An election to 
142.33  approve the bonds, as required under Minnesota Statutes, section 
142.34  475.58, is not required. 
142.35     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
142.36  this section expire at the earlier of (1) ten years after the 
143.1   taxes are first imposed, or (2) when the city council first 
143.2   determines that the amount of revenues raised is sufficient to 
143.3   finance the capital projects approved under subdivision 3 and to 
143.4   prepay or retire at maturity the principal, interest, and 
143.5   premium due on any bonds issued under subdivision 4.  Any funds 
143.6   remaining after completion of the projects may be placed in the 
143.7   general funds of the city. 
143.8      [EFFECTIVE DATE.] This section is effective the day after 
143.9   compliance with the governing body of the city of Waseca with 
143.10  Minnesota Statutes, section 645.021, subdivision 3. 
143.11     Sec. 50.  [CITY OF WILLMAR.] 
143.12     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
143.13  Notwithstanding Minnesota Statutes, section 477A.016, or any 
143.14  other provision of law, ordinance, or city charter, pursuant to 
143.15  the approval of the city voters at the general election held on 
143.16  November 2, 2004, the city of Willmar may impose by ordinance a 
143.17  sales and use tax of one-half of one percent for the purposes 
143.18  specified in subdivision 2.  The provisions of Minnesota 
143.19  Statutes, section 297A.99, govern the imposition, 
143.20  administration, collection, and enforcement of the tax 
143.21  authorized under this subdivision. 
143.22     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
143.23  authorized by subdivision 1 must be used for the cost of 
143.24  collecting and administering the tax and to pay all or part of 
143.25  the capital or administrative costs of the development, 
143.26  acquisition, construction, and improvement of the following 
143.27  projects: 
143.28     (1) completion and expansion of the airport/industrial 
143.29  park; 
143.30     (2) hiking and biking trails; 
143.31     (3) connection of the Blue Line and Civic Center buildings; 
143.32  and 
143.33     (4) purchase of that portion of the Willmar Regional 
143.34  Treatment Center campus located west of Marked Trunk Highway 71. 
143.35     Authorized expenses include, but are not limited to, 
143.36  acquiring property, paying construction expenses related to the 
144.1   development of these facilities and improvements, and securing 
144.2   and paying debt service on bonds or other obligations issued to 
144.3   finance acquisition, construction, improvement, or development 
144.4   of these projects. 
144.5      Subd. 3.  [BONDS.] The city of Willmar may issue without an 
144.6   additional election general obligation bonds of the city in an 
144.7   amount not to exceed $8,000,000 to pay capital and 
144.8   administrative expenses for the acquisition, construction, 
144.9   improvement, and development of the projects listed in 
144.10  subdivision 2.  The debt represented by the bonds must not be 
144.11  included in computing any debt limitations applicable to the 
144.12  city, and the levy of taxes required by Minnesota Statutes, 
144.13  section 475.61, to pay the principal or any interest on the 
144.14  bonds, and must not be subject to any levy limitations or be 
144.15  included in computing or applying any levy limitation applicable 
144.16  to the city. 
144.17     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
144.18  subdivision 1 expires at the later of (1) seven years after the 
144.19  date the tax is first imposed, or (2) when the Willmar City 
144.20  Council determines that the amount described in subdivision 3 
144.21  has been received from the tax to finance the capital and 
144.22  administrative costs, and to repay or retire at maturity the 
144.23  principal, interest, and premium due on any bonds issued under 
144.24  subdivision 3.  Any funds remaining after completion of the 
144.25  projects listed in subdivision 2 and retirement or redemption of 
144.26  the bonds may be placed in the general fund of the city.  The 
144.27  tax imposed under subdivision 1 may expire at an earlier time if 
144.28  the city so determines by ordinance. 
144.29     [EFFECTIVE DATE.] This section is effective the day after 
144.30  compliance by the governing body of the city of Willmar with 
144.31  Minnesota Statutes, section 645.021, subdivision 3. 
144.32     Sec. 51.  [CITY OF WINONA; TAXES AUTHORIZED.] 
144.33     Subdivision 1.  [SALES AND USE TAX 
144.34  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
144.35  477A.016, or any other provision of law, ordinance, or city 
144.36  charter, if approved by the voters pursuant to Minnesota 
145.1   Statutes, section 297A.99, the city of Winona may impose by 
145.2   ordinance a sales and use tax of one-half of one percent for the 
145.3   purposes specified in subdivision 3.  The provisions of 
145.4   Minnesota Statutes, section 297A.99, govern the imposition, 
145.5   administration, collection, and enforcement of the tax 
145.6   authorized under this subdivision. 
145.7      Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
145.8   Minnesota Statutes, section 477A.016, or any other contrary 
145.9   provision of law, ordinance, or city charter, the city of Winona 
145.10  may impose by ordinance, for the purposes specified in 
145.11  subdivision 3, an excise tax of up to $20 per motor vehicle, as 
145.12  defined by ordinance, purchased or acquired from any person 
145.13  engaged within the city in the business of selling motor 
145.14  vehicles at retail. 
145.15     Subd. 3.  [USE OF REVENUES.] Revenues received from the 
145.16  taxes authorized by subdivisions 1 and 2 must be used to pay all 
145.17  or part of the capital costs of transportation, cultural, or 
145.18  library projects located within the city, including securing or 
145.19  paying debt service on bonds issued under subdivision 4, for the 
145.20  transportation, cultural, or library projects and to pay the 
145.21  cost of collecting and administering the tax.  Authorized costs 
145.22  include, but are not limited to, acquiring property and paying 
145.23  construction and engineering costs related to the projects. 
145.24     Subd. 4.  [BONDS.] The city of Winona, if approved by 
145.25  voters pursuant to Minnesota Statutes, section 297A.99, may 
145.26  issue general obligation bonds of the city, in one or more 
145.27  series, in the aggregate principal amount not to exceed 
145.28  $20,000,000 to pay capital and administrative costs of the 
145.29  transportation, cultural, or library projects.  The debt 
145.30  represented by the bonds is not included in computing any debt 
145.31  limitations applicable to the city, and the levy of taxes 
145.32  required by Minnesota Statutes, section 475.61, to pay the 
145.33  principal of and interest on the bonds is not subject to any 
145.34  levy limitation or included in computing or applying any levy 
145.35  limitation applicable to the city. 
145.36     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
146.1   subdivisions 1 and 2 expire at the later of 15 years after the 
146.2   imposition of the tax or when the Winona city council determines 
146.3   that sufficient funds have been received from the taxes to 
146.4   prepay or retire at maturity the principal, interest, and 
146.5   premium due on any bonds issued for the projects under 
146.6   subdivision 4.  Any funds remaining after expiration of the 
146.7   taxes and retirement of the bonds may be placed in a capital 
146.8   project fund of the city.  The taxes imposed under subdivisions 
146.9   1 and 2 may expire at an earlier time if the city so determines 
146.10  by ordinance. 
146.11     [EFFECTIVE DATE.] This section is effective the day after 
146.12  compliance by the governing body of the city of Winona with 
146.13  Minnesota Statutes, section 645.021, subdivision 3. 
146.14     Sec. 52.  [LODGING TAX; HUBBARD COUNTY AUTHORITY.] 
146.15     Notwithstanding Minnesota Statutes, section 469.190, 
146.16  subdivisions 1 and 4, Hubbard County may impose the local 
146.17  lodging tax authorized in that section in all towns and 
146.18  unorganized territories within the county, and no town located 
146.19  in the county may impose the local lodging tax.  Any local 
146.20  lodging tax imposed by a town in Hubbard County prior to the 
146.21  effective date of this section expires the day that a county tax 
146.22  is imposed under this section. 
146.23     If the county board exercises the authority under this 
146.24  section, it must determine by resolution that imposition of the 
146.25  tax is in the county's interest.  The resolution is subject to 
146.26  the notice and reverse referendum requirements that would apply 
146.27  under Minnesota Statutes, section 469.190, subdivision 5, if the 
146.28  county was imposing the tax in an unorganized territory.  The 
146.29  provisions of Minnesota Statutes, section 469.190, subdivisions 
146.30  2, 3, 6, and 7, apply to a tax imposed under this section. 
146.31     [EFFECTIVE DATE.] This section is effective the day after 
146.32  the governing body of Hubbard County and its chief clerical 
146.33  officer comply with Minnesota Statutes, section 645.021, 
146.34  subdivisions 2 and 3. 
146.35     Sec. 53.  [USE TAX ENFORCEMENT.] 
146.36     The commissioner shall establish a use tax enforcement unit 
147.1   within the Department of Revenue to conduct direct compliance 
147.2   activities that will increase payment of use tax.  The 
147.3   commissioner shall inform and educate taxpayers about the 
147.4   requirement to pay use tax.  The commissioner shall also conduct 
147.5   an information campaign targeted to higher income individuals, 
147.6   attorneys, accountants, and tax preparers to advise individuals 
147.7   and tax professionals of the obligation to report and pay use 
147.8   tax. 
147.9      [EFFECTIVE DATE.] This section is effective July 1, 2005. 
147.10     Sec. 54.  [REPEALER.] 
147.11     Minnesota Statutes 2004, section 297A.99, subdivision 13, 
147.12  is repealed effective July 1, 2005. 
147.13                             ARTICLE 8
147.14                      PROPERTY TAXES - SF1683 
147.15     Section 1.  Minnesota Statutes 2004, section 103C.331, 
147.16  subdivision 16, is amended to read: 
147.17     Subd. 16.  [BUDGET.] The district board shall annually 
147.18  present a budget consisting of an itemized statement of district 
147.19  expenses for the ensuing calendar year to the boards of county 
147.20  commissioners of the counties in which the district is located.  
147.21  The county boards may levy an annual tax on all taxable real 
147.22  property in the district or annually authorize district levies, 
147.23  as provided in section 103C.332, for the amount that the boards 
147.24  determine is necessary to meet the requirements of the 
147.25  district.  The amount levied shall be collected and distributed 
147.26  to the district as prescribed by chapter 276.  The amount may be 
147.27  spent by the district board for a district purpose authorized by 
147.28  law.  
147.29     Sec. 2.  [103C.332] [DISTRICT FUNDS AND LEVIES.] 
147.30     Subdivision 1.  [GENERAL FUND.] (a) A district shall create 
147.31  a general fund consisting of: 
147.32     (1) an ad valorem tax levy, authorized by a county board 
147.33  under section 103C.331, subdivision 16, that may not exceed 
147.34  0.048 percent of taxable market value, or $750,000, whichever is 
147.35  less; and 
147.36     (2) revenue received from the county for administration of 
148.1   the district under section 103C.331, subdivision 16. 
148.2      (b) The money in the fund shall be used for general 
148.3   administrative expenses.  The supervisors may make an annual 
148.4   levy for the general fund as provided in subdivision 6. 
148.5      Subd. 2.  [IMPLEMENTATION AND PROJECT MATCH FUND.] A 
148.6   district shall create an implementation fund to supply funds for 
148.7   the implementation of the projects of the district or to match 
148.8   grants from outside sources consisting of: 
148.9      (1) ad valorem tax levies or fees levied or to be levied 
148.10  for the implementation of projects of the district or to match 
148.11  grants, authorized by the county board under section 103C.331, 
148.12  subdivision 16; and 
148.13     (2) revenue received from the county under section 
148.14  103C.331, subdivision 16, for the implementation of projects of 
148.15  the district or to match grants. 
148.16     Subd. 3.  [BUDGET HEARING.] (a) Before adopting a budget 
148.17  when levies are authorized by the county board under section 
148.18  103C.331, subdivision 16, the supervisors shall hold a public 
148.19  hearing on the proposed budget. 
148.20     (b) The supervisors shall publish a notice of the hearing 
148.21  with a summary of the proposed budget in one or more newspapers 
148.22  of general circulation in each county consisting of part of the 
148.23  district.  The notice and summary shall be published once each 
148.24  week for two successive weeks before the hearing.  The last 
148.25  publication shall be at least two days before the hearing. 
148.26     Subd. 4.  [BUDGET ADOPTION.] On or before September 1 of 
148.27  each year, the supervisors shall adopt a budget for the next 
148.28  year and decide on the total amount necessary to be raised from 
148.29  ad valorem tax levies to meet the district's budget. 
148.30     Subd. 5.  [CERTIFICATION TO AUDITOR.] After adoption of the 
148.31  budget and no later than September 1, the district shall certify 
148.32  to the auditor of each county within the district, the county's 
148.33  share of an authorized tax, which shall be an amount bearing the 
148.34  same proportion to the total levy as the net tax capacity of the 
148.35  area of the county within the district bears to the net tax 
148.36  capacity of the entire district.  The maximum amount of a levy 
149.1   may not exceed the amount provided in subdivisions 1 and 2. 
149.2      Subd. 6.  [LEVY.] The auditor of each county in the 
149.3   district shall add the amount of an authorized levy made by the 
149.4   supervisors to the other tax levies on the property of the 
149.5   county within the district for collection by the county 
149.6   treasurer with other taxes.  The county treasurer shall make 
149.7   settlement of the taxes collected with the treasurer of the 
149.8   district in the same manner as other taxes are distributed to 
149.9   the other political subdivisions.  The levy authorized by this 
149.10  section is in addition to other county taxes authorized by law. 
149.11     Sec. 3.  Minnesota Statutes 2004, section 123B.53, is 
149.12  amended by adding a subdivision to read: 
149.13     Subd. 1a.  [DEBT SERVICE LEVIES; CHOICE OF TAX BASE.] A 
149.14  school board may by resolution elect to levy the debt service 
149.15  for a bond issued after July 1, 2005, against the referendum 
149.16  market value of the district, as defined under section 126C.01, 
149.17  subdivision 3, rather than the net tax capacity of the district, 
149.18  except that for purposes of this subdivision, noncommercial 4c(1)
149.19  property under section 273.13 is valued at its market value.  A 
149.20  resolution to levy against referendum market value must be 
149.21  passed at an open meeting of the board, at least 60 days prior 
149.22  to the referendum election. 
149.23     [EFFECTIVE DATE.] This section is effective the day 
149.24  following final enactment.  
149.25     Sec. 4.  Minnesota Statutes 2004, section 123B.53, 
149.26  subdivision 4, is amended to read: 
149.27     Subd. 4.  [DEBT SERVICE EQUALIZATION REVENUE.] (a) The debt 
149.28  service equalization revenue of a district equals the sum of the 
149.29  first tier debt service equalization revenue and the second tier 
149.30  debt service equalization revenue. 
149.31     (b) The first tier debt service equalization revenue of a 
149.32  district equals the greater of zero or the eligible debt service 
149.33  revenue minus the amount raised by a levy of 15 percent times 
149.34  the adjusted net tax capacity of the district minus the second 
149.35  tier debt service equalization revenue of the district. 
149.36     (c) The second tier debt service equalization revenue of a 
150.1   district equals the greater of zero or the eligible debt service 
150.2   revenue, excluding alternative facilities levies under section 
150.3   123B.59, subdivision 5, minus the amount raised by a levy of 25 
150.4   percent times the adjusted net tax capacity of the district. 
150.5      (d) Debt service equalization revenue is determined as 
150.6   provided under this subdivision regardless of whether the debt 
150.7   service is being levied against net tax capacity or referendum 
150.8   market value. 
150.9      [EFFECTIVE DATE.] This section is effective July 1, 2005. 
150.10     Sec. 5.  Minnesota Statutes 2004, section 123B.55, is 
150.11  amended to read: 
150.12     123B.55 [DEBT SERVICE LEVY.] 
150.13     Subdivision 1.  [LEVY AMOUNT.] A district may levy the 
150.14  amounts necessary to make payments for bonds issued and for 
150.15  interest on them, including the bonds and interest on them, 
150.16  issued as authorized by Minnesota Statutes 1974, section 
150.17  275.125, subdivision 3, clause (7)(C); and the amounts necessary 
150.18  for repayment of debt service loans and capital loans, minus the 
150.19  amount of debt service equalization revenue of the district. 
150.20     Subd. 2.  [AID APPORTIONMENT.] A district's debt service 
150.21  equalization aid shall be apportioned between the net tax 
150.22  capacity debt service levy and the referendum market value debt 
150.23  service levy in the same proportions as eligible debt service 
150.24  revenues resulting from bonds issued against net tax capacity 
150.25  are to eligible debt service revenues resulting from bonds 
150.26  issued against referendum market value. 
150.27     Subd. 3.  [NET TAX CAPACITY DEBT SERVICE LEVY.] The levy 
150.28  amount determined under subdivision 1, plus the eligible debt 
150.29  service revenues resulting from bonds issued against net tax 
150.30  capacity, minus the debt service equalization aid apportioned to 
150.31  the net tax capacity debt service levy, must be levied against 
150.32  the net tax capacity of the district as determined under section 
150.33  273.13 and must be included with the other net tax capacity 
150.34  levies certified to the county auditor under section 275.07. 
150.35     Subd. 4.  [REFERENDUM MARKET VALUE DEBT SERVICE LEVY.] The 
150.36  eligible debt service revenues resulting from bonds issued 
151.1   against referendum market value, minus the debt service 
151.2   equalization aid apportioned to the referendum market value debt 
151.3   service levy, must be levied against the referendum market value 
151.4   of the district as defined in section 126C.01, subdivision 3, 
151.5   and must be separately certified to the county auditor under 
151.6   section 275.07. 
151.7      [EFFECTIVE DATE.] This section is effective beginning with 
151.8   taxes payable in 2006. 
151.9      Sec. 6.  Minnesota Statutes 2004, section 123B.71, 
151.10  subdivision 9, is amended to read: 
151.11     Subd. 9.  [INFORMATION REQUIRED.] A school board proposing 
151.12  to construct a facility described in subdivision 8 shall submit 
151.13  to the commissioner a proposal containing information including 
151.14  at least the following: 
151.15     (1) the geographic area and population to be served, 
151.16  preschool through grade 12 student enrollments for the past five 
151.17  years, and student enrollment projections for the next five 
151.18  years; 
151.19     (2) a list of existing facilities by year constructed, 
151.20  their uses, and an assessment of the extent to which alternate 
151.21  facilities are available within the school district boundaries 
151.22  and in adjacent school districts; 
151.23     (3) a list of the specific deficiencies of the facility 
151.24  that demonstrate the need for a new or renovated facility to be 
151.25  provided, and a list of the specific benefits that the new or 
151.26  renovated facility will provide to the students, teachers, and 
151.27  community users served by the facility; 
151.28     (4) the relationship of the project to any priorities 
151.29  established by the school district, educational cooperatives 
151.30  that provide support services, or other public bodies in the 
151.31  service area; 
151.32     (5) a specification of how the project will increase 
151.33  community use of the facility and whether and how the project 
151.34  will increase collaboration with other governmental or nonprofit 
151.35  entities; 
151.36     (6) a description of the project, including the 
152.1   specification of site and outdoor space acreage and square 
152.2   footage allocations for classrooms, laboratories, and support 
152.3   spaces; estimated expenditures for the major portions of the 
152.4   project; and the dates the project will begin and be completed; 
152.5      (7) a specification of the source of financing the project; 
152.6   the scheduled date for a bond issue or school board action; a 
152.7   schedule of payments, including debt service equalization aid; 
152.8   whether the debt service will be levied against net tax capacity 
152.9   or referendum market value; and the effect of a bond issue on 
152.10  local property taxes by the property class and valuation; 
152.11     (8) an analysis of how the proposed new or remodeled 
152.12  facility will affect school district operational or 
152.13  administrative staffing costs, and how the district's operating 
152.14  budget will cover any increased operational or administrative 
152.15  staffing costs; 
152.16     (9) a description of the consultation with local or state 
152.17  road and transportation officials on school site access and 
152.18  safety issues, and the ways that the project will address those 
152.19  issues; 
152.20     (10) a description of how indoor air quality issues have 
152.21  been considered and a certification that the architects and 
152.22  engineers designing the facility will have professional 
152.23  liability insurance; 
152.24     (11) as required under section 123B.72, for buildings 
152.25  coming into service after July 1, 2002, a certification that the 
152.26  plans and designs for the extensively renovated or new 
152.27  facility's heating, ventilation, and air conditioning systems 
152.28  will meet or exceed code standards; will provide for the 
152.29  monitoring of outdoor airflow and total airflow of ventilation 
152.30  systems; and will provide an indoor air quality filtration 
152.31  system that meets ASHRAE standard 52.1; 
152.32     (12) a specification of any desegregation requirements that 
152.33  cannot be met by any other reasonable means; and 
152.34     (13) a specification, if applicable, of how the facility 
152.35  will utilize environmentally sustainable school facility design 
152.36  concepts. 
153.1      [EFFECTIVE DATE.] This section is effective July 1, 2005. 
153.2      Sec. 7.  Minnesota Statutes 2004, section 126C.17, 
153.3   subdivision 6, is amended to read: 
153.4      Subd. 6.  [REFERENDUM EQUALIZATION LEVY.] (a) For fiscal 
153.5   year 2003 and later through 2007, a district's referendum 
153.6   equalization levy equals the sum of the first tier referendum 
153.7   equalization levy and the second tier referendum equalization 
153.8   levy. 
153.9      (b) A district's first tier referendum equalization levy 
153.10  equals the district's first tier referendum equalization revenue 
153.11  times the lesser of one or the ratio of the district's 
153.12  referendum market value per resident marginal cost pupil unit to 
153.13  $476,000. 
153.14     (c) A district's second tier referendum equalization levy 
153.15  equals the district's second tier referendum equalization 
153.16  revenue times the lesser of one or the ratio of the district's 
153.17  referendum market value per resident marginal cost pupil unit to 
153.18  $270,000. 
153.19     Sec. 8.  Minnesota Statutes 2004, section 126C.17, is 
153.20  amended by adding a subdivision to read: 
153.21     Subd. 6a.  [LOCAL EFFORT LEVEL.] (a) For fiscal year 2008 
153.22  and later, a district's local effort level equals the sum of the 
153.23  first tier referendum equalization level and the second tier 
153.24  referendum local effort level. 
153.25     (b) A district's first tier referendum local effort level 
153.26  equals the district's first tier referendum equalization revenue 
153.27  times the lesser of one or the ratio of the district's 
153.28  referendum market value per resident marginal cost pupil unit to 
153.29  $476,000. 
153.30     (c) A district's second tier referendum local effort level 
153.31  equals the district's second tier referendum equalization 
153.32  revenue times the lesser of one or the ratio of the district's 
153.33  referendum market value per resident marginal cost pupil unit to 
153.34  $270,000. 
153.35     Sec. 9.  Minnesota Statutes 2004, section 126C.17, is 
153.36  amended by adding a subdivision to read: 
154.1      Subd. 6b.  [LOCAL EFFORT REVENUE.] (a) For fiscal years 
154.2   2008 and later, a school district's local effort revenue is 
154.3   equal to its local effort level for that year. 
154.4      (b) For referenda authorized under subdivision 9 prior to 
154.5   June 30, 2006, a school district's local effort revenue must be 
154.6   levied against the district's referendum market value according 
154.7   to subdivision 10. 
154.8      (c) For referenda authorized or renewed under subdivision 9 
154.9   after June 30, 2006, that have been approved to be levied 
154.10  against referendum market value, the local effort revenue must 
154.11  be levied against the district's referendum market value 
154.12  according to subdivision 10. 
154.13     (d) For referenda authorized or renewed under subdivision 9 
154.14  after June 30, 2006, that have been approved to be imposed as a 
154.15  school referendum tax according to section 290.0621, the local 
154.16  effort revenue must be raised as a tax against income liability 
154.17  according to section 290.0621. 
154.18     Sec. 10.  Minnesota Statutes 2004, section 126C.17, 
154.19  subdivision 7, is amended to read: 
154.20     Subd. 7.  [REFERENDUM EQUALIZATION AID.] (a) For fiscal 
154.21  years 2005 through 2007, a district's referendum equalization 
154.22  aid equals the difference between its referendum equalization 
154.23  revenue and levy.  For fiscal years 2008 and later, a district's 
154.24  referendum equalization aid equals the difference between its 
154.25  referendum equalization revenue and its local effort revenue. 
154.26     (b) If a district's actual levy for first or second tier 
154.27  referendum equalization revenue in fiscal years 2005 through 
154.28  2007 is less than its maximum levy limit for that tier, aid 
154.29  shall be proportionately reduced.  If a district's actual local 
154.30  effort revenue for first or second tier referendum equalization 
154.31  revenue in fiscal years 2008 and later is less than its maximum 
154.32  local effort revenue limit for that tier, aid shall be 
154.33  proportionately reduced. 
154.34     (c) Notwithstanding paragraph (a), the referendum 
154.35  equalization aid for a district, where the referendum 
154.36  equalization aid under paragraph (a) exceeds 90 percent of the 
155.1   referendum revenue, must not exceed 18.6 percent of the formula 
155.2   allowance times the district's resident marginal cost pupil 
155.3   units.  For fiscal years 2005 through 2007, a district's 
155.4   referendum levy is increased by the amount of any reduction in 
155.5   referendum aid under this paragraph.  For fiscal years 2008 and 
155.6   later, a district's local effort level is increased by the 
155.7   amount of any reduction in referendum aid under this paragraph. 
155.8      Sec. 11.  Minnesota Statutes 2004, section 126C.17, 
155.9   subdivision 9, is amended to read: 
155.10     Subd. 9.  [REFERENDUM REVENUE.] (a) The revenue authorized 
155.11  by section 126C.10, subdivision 1, may be increased in the 
155.12  amount approved by the voters of the district at a referendum 
155.13  called for the purpose.  The referendum may be called by the 
155.14  board or shall be called by the board upon written petition of 
155.15  qualified voters of the district.  The referendum must be 
155.16  conducted one or two calendar years before the increased levy 
155.17  authority, if approved, first becomes payable.  Only one 
155.18  election to approve an increase may be held in a calendar year.  
155.19  Unless the referendum is conducted by mail under paragraph (g), 
155.20  the referendum must be held on the first Tuesday after the first 
155.21  Monday in November.  The ballot must state the maximum amount of 
155.22  the increased revenue per resident marginal cost pupil unit, the 
155.23  estimated referendum tax rate as a percentage of referendum 
155.24  market value in the first year it is to be levied, and that the 
155.25  revenue must be used to finance school operations.  The ballot 
155.26  may state a schedule, determined by the board, of increased 
155.27  revenue per resident marginal cost pupil unit that differs from 
155.28  year to year over the number of years for which the increased 
155.29  revenue is authorized.  If the ballot contains a schedule 
155.30  showing different amounts, it must also indicate the estimated 
155.31  referendum tax rate as a percent of referendum market value for 
155.32  the amount specified for the first year and for the maximum 
155.33  amount specified in the schedule.  The ballot, including a 
155.34  ballot on the question to revoke or reduce the increased revenue 
155.35  amount under paragraph (c), must abbreviate the term "per 
155.36  resident marginal cost pupil unit" as "per pupil unit."  The 
156.1   ballot may state that existing referendum levy taxing authority 
156.2   is expiring.  In this case, if the referendum authority is based 
156.3   on a property tax levy, the ballot may also compare the proposed 
156.4   levy authority to the existing expiring levy authority, and 
156.5   express the proposed increase as the amount, if any, over the 
156.6   expiring referendum levy authority.  The ballot must designate 
156.7   the specific number of years, not to exceed ten, for which the 
156.8   referendum authorization applies.  The notice required under 
156.9   section 275.60 may be modified to read, in cases of renewing 
156.10  existing levies: 
156.11     "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
156.12     FOR A PROPERTY TAX INCREASE." 
156.13     If the referendum is on a proposed income tax under section 
156.14  290.0621, the notice must read: 
156.15     "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
156.16  FOR AN INCOME TAX INCREASE." 
156.17     The ballot may contain a textual portion with the 
156.18  information required in this subdivision and a question stating 
156.19  substantially the following:  
156.20     "Shall the increase in the revenue proposed by (petition 
156.21  to) the board of ........., School District No. .., be approved?"
156.22     If approved, an amount equal to the approved revenue per 
156.23  resident marginal cost pupil unit times the resident marginal 
156.24  cost pupil units for the school year beginning in the year after 
156.25  the levy is certified or the income tax is imposed shall be 
156.26  authorized for certification for the number of years approved, 
156.27  if applicable, or until revoked or reduced by the voters of the 
156.28  district at a subsequent referendum.  A referendum may be 
156.29  conducted on the question of converting an existing referendum 
156.30  property tax levy to a school referendum income tax to be 
156.31  imposed under section 290.0621. 
156.32     (b) The board must prepare and deliver by first class mail 
156.33  at least 15 days but no more than 30 days before the day of the 
156.34  referendum to each taxpayer a notice of the referendum and the 
156.35  proposed revenue increase.  The board need not mail more than 
156.36  one notice to any taxpayer.  For the purpose of giving mailed 
157.1   notice under this subdivision for a referendum based on a 
157.2   property tax levy, owners must be those shown to be owners on 
157.3   the records of the county auditor or, in any county where tax 
157.4   statements are mailed by the county treasurer, on the records of 
157.5   the county treasurer.  Every property owner whose name does not 
157.6   appear on the records of the county auditor or the county 
157.7   treasurer is deemed to have waived this mailed notice unless the 
157.8   owner has requested in writing that the county auditor or county 
157.9   treasurer, as the case may be, include the name on the records 
157.10  for this purpose.  The notice for a referendum based on a 
157.11  property tax levy must project the anticipated amount of tax 
157.12  increase in annual dollars and annual percentage for typical 
157.13  residential homesteads, agricultural homesteads, apartments, and 
157.14  commercial-industrial property within the school district.  For 
157.15  the purpose of giving mailed notice under this subdivision, for 
157.16  a referendum based on an income tax under section 290.0621, 
157.17  taxpayers must be those shown to be domiciled in the school 
157.18  district as indicated on the space which must be provided for 
157.19  this information on the Minnesota individual income tax form for 
157.20  the taxable year ending before the calendar year when the 
157.21  referendum is conducted.  Every individual whose domicile is in 
157.22  the school district whose name does not appear on the income tax 
157.23  return as having a domicile in the district is deemed to have 
157.24  waived this mailed notice unless the individual has requested in 
157.25  writing that the county auditor or county treasurer, as the case 
157.26  may be, include the individual's name on the records for this 
157.27  purpose.  The notice must project the anticipated amount of tax 
157.28  increase in annual dollars and annual percentage for typical 
157.29  family incomes within the school district. 
157.30     The notice for a referendum based on a property tax levy 
157.31  may state that an existing referendum levy is expiring and 
157.32  project the anticipated amount of increase over the existing 
157.33  referendum levy in the first year, if any, in annual dollars and 
157.34  annual percentage for typical residential homesteads, 
157.35  agricultural homesteads, apartments, and commercial-industrial 
157.36  property within the district. 
158.1      The notice must include the following statement:  "Passage 
158.2   of this referendum will result in an increase in your property 
158.3   taxes."  However, in cases of renewing existing levies, the 
158.4   notice may include the following statement:  "Passage of this 
158.5   referendum may result in an increase in your property taxes." 
158.6      The notice for a referendum based on income tax may state 
158.7   that an existing income tax referendum authority is expiring and 
158.8   project the anticipated amount of increase over the existing 
158.9   referendum levy in the first year, if any, in annual dollars and 
158.10  annual percentage for typical family incomes within the district.
158.11     The notice must include the following statement:  "Passage 
158.12  of this referendum will result in an increase in your personal 
158.13  income taxes."  However, in cases of renewing existing income 
158.14  tax referendum authorities, the notice may include the following 
158.15  statement:  "Passage of this referendum may result in an 
158.16  increase in your personal income taxes." 
158.17     (c) A referendum on the question of revoking or reducing 
158.18  the increased revenue amount authorized pursuant to paragraph 
158.19  (a) may be called by the board and shall be called by the board 
158.20  upon the written petition of qualified voters of the district.  
158.21  A referendum to revoke or reduce the revenue amount must state 
158.22  the amount per resident marginal cost pupil unit by which the 
158.23  authority is to be reduced.  Revenue authority approved by the 
158.24  voters of the district pursuant to paragraph (a) must be 
158.25  available to the school district at least once before it is 
158.26  subject to a referendum on its revocation or reduction for 
158.27  subsequent years.  Only one revocation or reduction referendum 
158.28  may be held to revoke or reduce referendum revenue for any 
158.29  specific year and for years thereafter. 
158.30     (d) A petition authorized by paragraph (a) or (c) is 
158.31  effective if signed by a number of qualified voters in excess of 
158.32  15 percent of the registered voters of the district on the day 
158.33  the petition is filed with the board.  A referendum invoked by 
158.34  petition must be held on the date specified in paragraph (a). 
158.35     (e) The approval of 50 percent plus one of those voting on 
158.36  the question is required to pass a referendum authorized by this 
159.1   subdivision. 
159.2      (f) At least 15 days before the day of the referendum, the 
159.3   district must submit a copy of the notice required under 
159.4   paragraph (b) to the commissioner and to the county auditor of 
159.5   each county in which the district is located.  Within 15 days 
159.6   after the results of the referendum have been certified by the 
159.7   board, or in the case of a recount, the certification of the 
159.8   results of the recount by the canvassing board, the district 
159.9   must notify the commissioner of the results of the referendum. 
159.10     [EFFECTIVE DATE.] This section is effective for referenda 
159.11  conducted on or after July 1, 2005. 
159.12     Sec. 12.  Minnesota Statutes 2004, section 168A.05, 
159.13  subdivision 1b, is amended to read: 
159.14     Subd. 1b.  [MANUFACTURED HOME; EXEMPTION.] The provisions 
159.15  of subdivision 1a shall not apply to (1) a manufactured home 
159.16  which is sold or otherwise disposed of pursuant to section 
159.17  504B.271 by the owner of a manufactured home park as defined in 
159.18  section 327.14, subdivision 3, or (2) a manufactured home which 
159.19  is sold pursuant to section 504B.265 by the owner of a 
159.20  manufactured home park.  The department shall not require a 
159.21  manufactured home park owner to satisfy the delinquent or 
159.22  current year's personal property taxes owed as condition of the 
159.23  title transfer to the park owner.  
159.24     [EFFECTIVE DATE.] This section is effective the day 
159.25  following final enactment. 
159.26     Sec. 13.  [174.11] [COMMISSIONER TO NOTIFY COUNTY AUDITOR 
159.27  OF PROPERTY ACQUISITIONS.] 
159.28     Upon acquisition of any taxable real property, the 
159.29  commissioner must notify the county auditor of the county where 
159.30  the property is located that the property has been acquired. 
159.31     Sec. 14.  Minnesota Statutes 2004, section 272.02, 
159.32  subdivision 22, is amended to read: 
159.33     Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] All real and 
159.34  personal property of a wind energy conversion system as defined 
159.35  in section 272.029, subdivision 2, is exempt from property tax 
159.36  except that the land on which the property is located remains 
160.1   taxable.  If approved by the county where the property is 
160.2   located, the value of the land on which the wind energy 
160.3   conversion system is located shall not be increased or 
160.4   decreased, but shall be valued in the same manner as similar 
160.5   land that has not been improved with a wind energy conversion 
160.6   system.  The land shall be classified based on the most probable 
160.7   use of the property if it were not improved with a wind energy 
160.8   conversion system. 
160.9      [EFFECTIVE DATE.] This section is effective for assessment 
160.10  year 2005 and thereafter, for taxes payable in 2006 and 
160.11  thereafter. 
160.12     Sec. 15.  Minnesota Statutes 2004, section 272.02, 
160.13  subdivision 47, is amended to read: 
160.14     Subd. 47.  [POULTRY LITTER BIOMASS GENERATION FACILITY; 
160.15  PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
160.16  attached machinery and other personal property which is part of 
160.17  an electrical generating facility that meets the requirements of 
160.18  this subdivision is exempt.  At the time of construction, the 
160.19  facility must: 
160.20     (1) be designed to utilize poultry litter as a primary fuel 
160.21  source; and 
160.22     (2) be constructed for the purpose of generating power at 
160.23  the facility that will be sold pursuant to a contract approved 
160.24  by the Public Utilities Commission in accordance with the 
160.25  biomass mandate imposed under section 216B.2424. 
160.26     Construction of the facility must be commenced after 
160.27  January 1, 2003, and before December 31, 2003 2005.  Property 
160.28  eligible for this exemption does not include electric 
160.29  transmission lines and interconnections or gas pipelines and 
160.30  interconnections appurtenant to the property or the facility. 
160.31     [EFFECTIVE DATE.] This section is effective for taxes 
160.32  levied in 2005, payable in 2006, and thereafter. 
160.33     Sec. 16.  Minnesota Statutes 2004, section 272.02, 
160.34  subdivision 56, is amended to read: 
160.35     Subd. 56.  [ELECTRIC GENERATION FACILITY; PERSONAL 
160.36  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
161.1   attached machinery and other personal property which is part of 
161.2   a combined-cycle combustion-turbine electric generation facility 
161.3   that exceeds 550 300 megawatts of installed capacity and that 
161.4   meets the requirements of this subdivision is exempt.  At the 
161.5   time of construction, the facility must: 
161.6      (1) be designed to utilize natural gas as a primary fuel; 
161.7      (2) not be owned by a public utility as defined in section 
161.8   216B.02, subdivision 4; 
161.9      (3) be located within five miles of an existing natural gas 
161.10  pipeline and within four miles of an existing electrical 
161.11  transmission substation; 
161.12     (4) be located outside the metropolitan area as defined 
161.13  under section 473.121, subdivision 2; and 
161.14     (5) be designed to provide energy and ancillary services 
161.15  and have received a certificate of need under section 216B.243. 
161.16     (b) Construction of the facility must be commenced after 
161.17  January 1, 2004, and before January 1, 2007, except that 
161.18  property eligible for this exemption includes any expansion of 
161.19  the facility that also meets the requirements of paragraph (a), 
161.20  clauses (1) to (5), without regard to the date that construction 
161.21  of the expansion commences.  Property eligible for this 
161.22  exemption does not include electric transmission lines and 
161.23  interconnections or gas pipelines and interconnections 
161.24  appurtenant to the property or the facility. 
161.25     [EFFECTIVE DATE.] This section is effective for taxes 
161.26  levied in 2005, payable in 2006, and thereafter. 
161.27     Sec. 17.  Minnesota Statutes 2004, section 272.02, is 
161.28  amended by adding a subdivision to read: 
161.29     Subd. 68.  [ELECTRIC GENERATION FACILITY; PERSONAL 
161.30  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
161.31  attached machinery and other personal property which is part of 
161.32  a simple-cycle combustion-turbine electric generation facility 
161.33  that exceeds 290 megawatts of installed capacity and that meets 
161.34  the requirements of this subdivision is exempt.  At the time of 
161.35  construction, the facility must: 
161.36     (1) be designed to utilize natural gas as a primary fuel; 
162.1      (2) not be owned by a public utility as defined in section 
162.2   216B.02, subdivision 4; 
162.3      (3) be located within five miles of an existing natural gas 
162.4   pipeline and within five miles of an existing electrical 
162.5   transmission substation; 
162.6      (4) be located outside the metropolitan area as defined 
162.7   under section 473.121, subdivision 2; 
162.8      (5) be designed to provide peaking capacity energy and 
162.9   ancillary services and have satisfied all of the requirements 
162.10  under section 216B.243; and 
162.11     (6) have received, by resolution, the approval from the 
162.12  governing body of the county, city, and school district in which 
162.13  the proposed facility is to be located for the exemption of 
162.14  personal property under this subdivision. 
162.15     (b) Construction of the facility must be commenced after 
162.16  January 1, 2005, and before January 1, 2009.  Property eligible 
162.17  for this exemption does not include electric transmission lines 
162.18  and interconnections or gas pipelines and interconnections 
162.19  appurtenant to the property or the facility. 
162.20     [EFFECTIVE DATE.] This section is effective for assessment 
162.21  year 2006, taxes payable in 2007, and thereafter. 
162.22     Sec. 18.  Minnesota Statutes 2004, section 272.02, is 
162.23  amended by adding a subdivision to read: 
162.24     Subd. 69.  [ELECTRIC GENERATION FACILITY PERSONAL 
162.25  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), and 
162.26  section 453.54, subdivision 20, attached machinery and other 
162.27  personal property which is part of an electric generation 
162.28  facility that exceeds 150 megawatts of installed capacity and 
162.29  meets the requirements of this subdivision is exempt.  At the 
162.30  time of construction, the facility must: 
162.31     (1) be designed to utilize natural gas as a primary fuel; 
162.32     (2) be owned and operated by a municipal power agency as 
162.33  defined in section 453.52, subdivision 8; 
162.34     (3) have received the certificate of need under section 
162.35  216B.243; 
162.36     (4) be located outside the metropolitan area as defined 
163.1   under section 473.121, subdivision 2; and 
163.2      (5) be designed to be a combined-cycle facility, although 
163.3   initially the facility will be operated as a simple-cycle 
163.4   combustion turbine. 
163.5      (b) To qualify under this subdivision, an agreement must be 
163.6   negotiated between the municipal power agency and the host city, 
163.7   for a payment in lieu of property taxes to the host city. 
163.8      (c) Construction of the facility must be commenced after 
163.9   January 1, 2004, and before January 1, 2006.  Property eligible 
163.10  for this exemption does not include electric transmission lines 
163.11  and interconnections or gas pipelines and interconnections 
163.12  appurtenant to the property or the facility. 
163.13     [EFFECTIVE DATE.] This section is effective for assessment 
163.14  year 2005, taxes payable in 2006, and thereafter. 
163.15     Sec. 19.  Minnesota Statutes 2004, section 272.02, is 
163.16  amended by adding a subdivision to read: 
163.17     Subd. 70.  [BIOMASS ELECTRIC GENERATION FACILITY; PERSONAL 
163.18  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
163.19  attached machinery and other personal property which is a part 
163.20  of an electric generation facility, including remote boilers 
163.21  that comprise part of the district heating system, generating up 
163.22  to 30 megawatts of installed capacity and that meets the 
163.23  requirements of this subdivision is exempt.  At the time of 
163.24  construction, the facility must: 
163.25     (1) be designed to utilize a minimum 90 percent waste 
163.26  biomass as a fuel; 
163.27     (2) not be owned by a public utility as defined in section 
163.28  216B.02, subdivision 4; 
163.29     (3) be located within a city of the first class and have 
163.30  its primary location at a former garbage transfer station; and 
163.31     (4) be designed to have capability to provide baseload 
163.32  energy and district heating. 
163.33     (b) Construction of the facility must be commenced after 
163.34  January 1, 2004, and before January 1, 2008.  Property eligible 
163.35  for this exemption does not include electric transmission lines 
163.36  and interconnections or gas pipelines and interconnections 
164.1   appurtenant to the property or the facility. 
164.2      [EFFECTIVE DATE.] This section is effective for assessment 
164.3   year 2005, taxes payable in 2006, and thereafter. 
164.4      Sec. 20.  Minnesota Statutes 2004, section 272.02, is 
164.5   amended by adding a subdivision to read: 
164.6      Subd. 71.  [ELECTRIC GENERATION FACILITY; PERSONAL 
164.7   PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
164.8   attached machinery and other personal property that is part of 
164.9   either a simple-cycle, combustion-turbine electric generation 
164.10  facility that equals or exceeds 150 megawatts of installed 
164.11  capacity, or a combined-cycle, combustion-turbine electric 
164.12  generation facility that equals or exceeds 225 megawatts of 
164.13  installed capacity, and that in either case meets the 
164.14  requirements of this subdivision, is exempt.  At the time of 
164.15  construction, the facility must: 
164.16     (1) be designed to utilize natural gas as a primary fuel; 
164.17     (2) not be owned by a public utility as defined in section 
164.18  216B.02, subdivision 4; 
164.19     (3) be located in a metropolitan county defined in section 
164.20  473.121, subdivision 4, that has a population greater than 
164.21  190,000 and less than 225,000 in the most recent federal 
164.22  decennial census, within one mile of an existing natural gas 
164.23  pipeline, and within one mile of an existing electrical 
164.24  transmission substation; and 
164.25     (4) be designed to provide energy and ancillary services 
164.26  and have received a certificate of need under section 216B.243. 
164.27     (b) Construction of the facility must be commenced after 
164.28  January 1, 2005, and before January 1, 2008.  Property eligible 
164.29  for this exemption does not include electric transmission lines 
164.30  and interconnections or gas pipelines and interconnections 
164.31  appurtenant to the property or the facility. 
164.32     [EFFECTIVE DATE.] This section is effective for taxes 
164.33  levied in 2005, payable in 2006, and thereafter. 
164.34     Sec. 21.  Minnesota Statutes 2004, section 272.02, is 
164.35  amended by adding a subdivision to read: 
164.36     Subd. 72.  [PERSONAL RAPID TRANSIT SYSTEM.] All property 
165.1   used in the operation and support of a personal rapid transit 
165.2   system as defined in section 297A.61, subdivision 37, that 
165.3   provides service to the public on a regular and continuing 
165.4   basis, is exempt, provided that it is operated independent of 
165.5   any government subsidies. 
165.6      [EFFECTIVE DATE.] This section is effective for taxes 
165.7   levied in 2005, payable in 2006, and thereafter. 
165.8      Sec. 22.  Minnesota Statutes 2004, section 272.02, is 
165.9   amended by adding a subdivision to read: 
165.10     Subd. 73.  [QUALIFIED ELDERLY LIVING FACILITY.] An elderly 
165.11  living facility is exempt from taxation if it meets all of the 
165.12  following requirements: 
165.13     (1) the facility is located in a city of the first class 
165.14  with a population of more than 350,000; 
165.15     (2) the facility is owned and operated by a nonprofit 
165.16  corporation organized under chapter 317A or by a limited 
165.17  liability company formed under chapter 322B, the sole member of 
165.18  which is a nonprofit corporation organized under chapter 317A; 
165.19     (3) the facility consists of no more than 60 living units; 
165.20     (4) the owner of the facility is an affiliate of entities 
165.21  that own and operate assisted living and skilled nursing 
165.22  facilities that: 
165.23     (i) are located across a street from the facility; 
165.24     (ii) are adjacent to a church that is exempt from taxation 
165.25  under subdivision 6; 
165.26     (iii) include a congregate dining program; and 
165.27     (iv) provide assisted living or similar social and physical 
165.28  support; 
165.29     (5) the residents of the facility must be: 
165.30     (i) at least 62 years of age; or 
165.31     (ii) handicapped; and 
165.32     (6) at least 20 percent of the units in the facility are 
165.33  occupied by persons whose annual income does not exceed 50 
165.34  percent of median family income for the area or, in the 
165.35  alternative, 40 percent of the units in the facility are 
165.36  occupied by persons whose annual income does not exceed 60 
166.1   percent of median family income for the area. 
166.2      For purposes of this subdivision, "affiliate" means any 
166.3   entity directly or indirectly controlling or controlled by or 
166.4   under direct or indirect common control with an entity.  For 
166.5   this purpose, "control" means the power to direct management and 
166.6   policies through membership or ownership of voting securities. 
166.7      The property is exempt under this subdivision for taxes 
166.8   levied in each year or partial year of the term of the 
166.9   facility's initial permanent financing or 25 years, whichever is 
166.10  later. 
166.11     [EFFECTIVE DATE.] This section is effective for taxes 
166.12  levied in 2005, payable in 2006, and thereafter. 
166.13     Sec. 23.  Minnesota Statutes 2004, section 272.02, is 
166.14  amended by adding a subdivision to read: 
166.15     Subd. 74.  [ELECTRIC GENERATION FACILITY; PERSONAL 
166.16  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
166.17  attached machinery and other personal property which is part of 
166.18  a simple-cycle combustion-turbine electric generation facility 
166.19  that exceeds 150 megawatts of installed capacity and that meets 
166.20  the requirements of this subdivision is exempt.  At the time of 
166.21  construction, the facility must: 
166.22     (1) utilize natural gas as a primary fuel; 
166.23     (2) be owned by an electric generation and transmission 
166.24  cooperative; 
166.25     (3) be located within five miles of parallel existing 
166.26  12-inch and 16-inch natural gas pipelines and a 69-kilovolt 
166.27  high-voltage electric transmission line; 
166.28     (4) be designed to provide peaking, emergency backup, or 
166.29  contingency services; 
166.30     (5) have received a certificate of need under section 
166.31  216B.243 demonstrating demand for its capacity; and 
166.32     (6) have received by resolution the approval from the 
166.33  governing body of the county and township in which the proposed 
166.34  facility is to be located for the exemption of personal property 
166.35  under this subdivision. 
166.36     (b) Construction of the facility must be commenced after 
167.1   July 1, 2005, and before January 1, 2009.  Property eligible for 
167.2   this exemption does not include electric transmission lines and 
167.3   interconnections or gas pipelines and interconnections 
167.4   appurtenant to the property or the facility. 
167.5      [EFFECTIVE DATE.] This section is effective for assessment 
167.6   year 2006 and thereafter, for taxes payable in 2007 and 
167.7   thereafter. 
167.8      Sec. 24.  Minnesota Statutes 2004, section 272.02, is 
167.9   amended by adding a subdivision to read: 
167.10     Subd. 75.  [ELECTRIC GENERATION FACILITY; PERSONAL 
167.11  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
167.12  machinery and other personal property which is part of an 
167.13  existing simple-cycle, combustion-turbine electric generation 
167.14  facility that exceeds 300 megawatts of installed capacity and 
167.15  that meets the requirements of this subdivision is exempt.  At 
167.16  the time of the construction, the facility must: 
167.17     (1) be designed to utilize natural gas as a primary fuel; 
167.18     (2) be owned by a public utility as defined in section 
167.19  216B.02, subdivision 4, and be located at or interconnected with 
167.20  an existing generating plant of the utility; 
167.21     (3) be designed to provide peaking, emergency backup, or 
167.22  contingency services; 
167.23     (4) satisfy a resource need identified in an approved 
167.24  integrated resource plan filed under section 216B.2422; and 
167.25     (5) have received, by resolution, the approval from the 
167.26  governing body of the county and the city for the exemption of 
167.27  personal property under this subdivision. 
167.28     Construction of the facility expansion must be commenced 
167.29  after January 1, 2004, and before January 1, 2005.  Property 
167.30  eligible for this exemption does not include electric 
167.31  transmission lines and interconnections or gas pipelines and 
167.32  interconnections appurtenant to the property or the facility. 
167.33     [EFFECTIVE DATE.] This section is effective beginning with 
167.34  assessment year 2005, for taxes payable in 2006 and thereafter. 
167.35     Sec. 25.  Minnesota Statutes 2004, section 272.02, is 
167.36  amended by adding a subdivision to read: 
168.1      Subd. 76.  [ELECTRIC GENERATION FACILITY; PERSONAL 
168.2   PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
168.3   attached machinery and other personal property which is part of 
168.4   a simple-cycle combustion-turbine electric generation facility 
168.5   that exceeds 290 megawatts of installed capacity and that meets 
168.6   the requirements of this subdivision is exempt.  At the time of 
168.7   construction, the facility must: 
168.8      (1) be designed to utilize natural gas as a primary fuel; 
168.9      (2) not be owned by a public utility as defined in section 
168.10  216B.02, subdivision 4; 
168.11     (3) be located within 15 miles of the mainline existing 
168.12  interstate natural gas pipeline and within five miles of an 
168.13  existing electrical transmission substation; 
168.14     (4) be located outside the metropolitan area as defined 
168.15  under section 473.121, subdivision 2; and 
168.16     (5) be designed to provide peaking capacity energy and 
168.17  ancillary services and have satisfied all of the requirements 
168.18  under section 216B.243. 
168.19     (b) Construction of the facility must be commenced after 
168.20  January 1, 2005, and before January 1, 2009.  Property eligible 
168.21  for this exemption does not include electric transmission lines 
168.22  and interconnections or gas pipelines and interconnections 
168.23  appurtenant to the property or the facility. 
168.24     [EFFECTIVE DATE.] This section is effective for taxes 
168.25  levied in 2006, payable in 2007, and thereafter. 
168.26     Sec. 26.  Minnesota Statutes 2004, section 272.029, 
168.27  subdivision 4, is amended to read: 
168.28     Subd. 4.  [REPORTS.] (a) An owner of a wind energy 
168.29  conversion system subject to tax under subdivision 3 shall file 
168.30  a report with the commissioner of revenue annually on or before 
168.31  March 1 February 1 detailing the amount of electricity in 
168.32  kilowatt-hours that was produced by the wind energy conversion 
168.33  system for the previous calendar year.  The commissioner shall 
168.34  prescribe the form of the report.  The report must contain the 
168.35  information required by the commissioner to determine the tax 
168.36  due to each county under this section for the current year.  If 
169.1   an owner of a wind energy conversion system subject to taxation 
169.2   under this section fails to file the report by the due date, the 
169.3   commissioner of revenue shall determine the tax based upon the 
169.4   nameplate capacity of the system multiplied by a capacity factor 
169.5   of 40 percent. 
169.6      (b) On or before March 31 February 28, the commissioner of 
169.7   revenue shall notify the owner of the wind energy conversion 
169.8   systems of the tax due to each county for the current year and 
169.9   shall certify to the county auditor of each county in which the 
169.10  systems are located the tax due from each owner for the current 
169.11  year. 
169.12     [EFFECTIVE DATE.] This section is effective for taxes 
169.13  payable in 2006 and thereafter. 
169.14     Sec. 27.  Minnesota Statutes 2004, section 272.029, 
169.15  subdivision 6, is amended to read: 
169.16     Subd. 6.  [DISTRIBUTION OF REVENUES.] Revenues from the 
169.17  taxes imposed under subdivision 5 must be part of the settlement 
169.18  between the county treasurer and the county auditor under 
169.19  section 276.09.  The revenue must be distributed by the county 
169.20  auditor or the county treasurer to all local taxing 
169.21  jurisdictions in which the wind energy conversion system is 
169.22  located, in the same proportion that each of the taxing 
169.23  jurisdiction's current previous year's net tax capacity based 
169.24  tax rate is to the current previous year's total local net tax 
169.25  capacity based rate. 
169.26     [EFFECTIVE DATE.] This section is effective for taxes 
169.27  payable in 2005 and thereafter. 
169.28     Sec. 28.  Minnesota Statutes 2004, section 273.11, 
169.29  subdivision 1a, is amended to read: 
169.30     Subd. 1a.  [LIMITED MARKET VALUE.] In the case of all 
169.31  property classified as agricultural homestead or nonhomestead, 
169.32  residential homestead or nonhomestead, timber, or noncommercial 
169.33  seasonal residential recreational, or class 1c resort property, 
169.34  the assessor shall compare the value with the taxable portion of 
169.35  the value determined in the preceding assessment except that for 
169.36  class 1c resort property for assessment year 2005, the assessor 
170.1   shall determine the limited market value as provided in 
170.2   subdivision 1b. 
170.3      For assessment year 2002, the amount of the increase shall 
170.4   not exceed the greater of (1) ten percent of the value in the 
170.5   preceding assessment, or (2) 15 percent of the difference 
170.6   between the current assessment and the preceding assessment. 
170.7      For assessment year 2003, the amount of the increase shall 
170.8   not exceed the greater of (1) 12 percent of the value in the 
170.9   preceding assessment, or (2) 20 percent of the difference 
170.10  between the current assessment and the preceding assessment. 
170.11     For assessment year 2004 and thereafter, the amount of the 
170.12  increase shall not exceed the greater of (1) 15 percent of the 
170.13  value in the preceding assessment, or (2) 25 percent of the 
170.14  difference between the current assessment and the preceding 
170.15  assessment. 
170.16     For assessment year 2005, the amount of the increase shall 
170.17  not exceed the greater of (1) 15 percent of the value in the 
170.18  preceding assessment, or (2) 33 percent of the difference 
170.19  between the current assessment and the preceding assessment.  
170.20     For assessment year 2006, the amount of the increase shall 
170.21  not exceed the greater of (1) 15 percent of the value in the 
170.22  preceding assessment, or (2) 50 percent of the difference 
170.23  between the current assessment and the preceding assessment. 
170.24     This limitation shall not apply to increases in value due 
170.25  to improvements.  For purposes of this subdivision, the term 
170.26  "assessment" means the value prior to any exclusion under 
170.27  subdivision 16. 
170.28     The provisions of this subdivision shall be in effect 
170.29  through assessment year 2006 as provided in this subdivision. 
170.30     For purposes of this subdivision and subdivision 1b, "class 
170.31  1c resort property" includes the portion of the property 
170.32  classified class 1a or 1b homestead, the portion of the property 
170.33  classified 1c, plus any remaining portion of the resort that is 
170.34  classified 4c under section 273.13, subdivision 25, paragraph 
170.35  (d), clause (1). 
170.36     For purposes of the assessment/sales ratio study conducted 
171.1   under section 127A.48, and the computation of state aids paid 
171.2   under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 
171.3   477A, market values and net tax capacities determined under this 
171.4   subdivision and subdivision 16, shall be used. 
171.5      [EFFECTIVE DATE.] This section is effective the day 
171.6   following final enactment for assessment year 2005, and 
171.7   thereafter. 
171.8      Sec. 29.  Minnesota Statutes 2004, section 273.11, is 
171.9   amended by adding a subdivision to read: 
171.10     Subd. 1b.  [CLASS 1C RESORTS; 2005 ASSESSMENT ONLY.] For 
171.11  assessment year 2005, the valuation increase on class 1c resort 
171.12  property shall not exceed the greater of (1) 15 percent of the 
171.13  value of its 2003 assessment, or (2) 25 percent of the 
171.14  difference in value between its 2005 assessment and its 2003 
171.15  assessment.  The valuation increase on class 1c resort property 
171.16  for the 2006 and subsequent assessment years shall be determined 
171.17  based upon the schedule contained in subdivision 1a.  
171.18     [EFFECTIVE DATE.] This section is effective the day 
171.19  following final enactment. 
171.20     Sec. 30.  Minnesota Statutes 2004, section 273.11, is 
171.21  amended by adding a subdivision to read: 
171.22     Subd. 21.  [VALUATION EXCLUSION FOR SEWAGE TREATMENT SYSTEM 
171.23  IMPROVEMENTS.] Owners of property classified as class 1a, 1b, 
171.24  1c, 2a, 4b, 4bb, or noncommercial 4c under section 273.13 may 
171.25  apply for a valuation exclusion under this subdivision, provided 
171.26  that the property is located in a county which has authorized 
171.27  valuation exclusions under this subdivision, and provided that 
171.28  the following conditions are met: 
171.29     (1) a notice of noncompliance has been issued by a licensed 
171.30  compliance inspector with regard to the individual sewage 
171.31  treatment system serving the property under section 115.55, 
171.32  subdivision 5b; 
171.33     (2) the owner of the property furnishes documentation to 
171.34  the satisfaction of the assessor that the property's individual 
171.35  sewage treatment system has been replaced or refurbished, 
171.36  including replacement of the individual system with a community 
172.1   or cluster system, between May 1, 2005, and December 31, 2007; 
172.2   and 
172.3      (3) a certificate of compliance has been issued for the new 
172.4   or refurbished system under section 115.55, subdivision 5. 
172.5      Application must be made to the assessor on a form 
172.6   prescribed by the commissioner of revenue.  Property meeting the 
172.7   requirements of this subdivision is eligible for a valuation 
172.8   exclusion equal to 50 percent of the actual costs incurred, to a 
172.9   maximum exclusion of $7,500, for a period of five years, after 
172.10  which the amount of the exclusion will be added to the estimated 
172.11  market value of the property.  The valuation exclusion 
172.12  terminates upon the sale of the property.  If a property owner 
172.13  applies for exclusion under this subdivision between January 1 
172.14  and June 30 of any year, the exclusion first applies for taxes 
172.15  payable in the following year.  If a property owner applies for 
172.16  exclusion under this subdivision between July 1 and December 31 
172.17  of any year, the exclusion first applies for taxes payable in 
172.18  the second following year. 
172.19     [EFFECTIVE DATE.] This section is effective for taxes 
172.20  payable in 2006 and subsequent years. 
172.21     Sec. 31.  Minnesota Statutes 2004, section 273.11, is 
172.22  amended by adding a subdivision to read: 
172.23     Subd. 22.  [VALUATION EXCLUSION FOR LEAD HAZARD REDUCTION.] 
172.24  Owners of property classified as class 1a, 1b, 1c, 2a, 4b, or 
172.25  4bb under section 273.13 may apply for a valuation exclusion for 
172.26  lead hazard reduction, provided that the property is located in 
172.27  a city which has authorized valuation exclusions under this 
172.28  subdivision.  A city which authorizes valuation exclusions under 
172.29  this subdivision must establish guidelines for qualifying lead 
172.30  hazard reduction projects and must designate an agency within 
172.31  the city to issue certificates of completion of qualifying 
172.32  projects.  For purposes of this subdivision, "lead hazard 
172.33  reduction" has the same meaning as in section 144.9501, 
172.34  subdivision 17. 
172.35     The property owner must obtain a certificate from the city 
172.36  stating that the project has been completed and stating the cost 
173.1   incurred by the owner in completing the project.  Only projects 
173.2   originating after April 30, 2005, may qualify for exclusion 
173.3   under this subdivision.  The property owner shall apply for a 
173.4   valuation exclusion to the assessor on a form prescribed by the 
173.5   commissioner of revenue. 
173.6      A qualifying property is eligible for a valuation exclusion 
173.7   equal to 50 percent of the actual costs incurred, to a maximum 
173.8   exclusion of $15,000, for a period of five years, after which 
173.9   the amount of the exclusion will be added to the estimated 
173.10  market value of the property.  The valuation exclusion shall 
173.11  terminate upon the sale of the property.  If a property owner 
173.12  applies for exclusion under this subdivision between January 1 
173.13  and June 30 of any year, the exclusion shall first apply for 
173.14  taxes payable in the following year.  If a property owner 
173.15  applies for exclusion under this subdivision between July 1 and 
173.16  December 31 of any year, the exclusion shall first apply for 
173.17  taxes payable in the second following year. 
173.18     [EFFECTIVE DATE.] This section is effective for taxes 
173.19  payable in 2006 and subsequent years. 
173.20     Sec. 32.  Minnesota Statutes 2004, section 273.11, is 
173.21  amended by adding a subdivision to read: 
173.22     Subd. 23.  [VALUATION OF ENERGY-EFFICIENT COMMERCIAL 
173.23  PROPERTIES.] (a) The market value of certain energy-efficient 
173.24  property classified under section 273.13, subdivision 24, that 
173.25  is used for commercial purposes, is reduced as provided in this 
173.26  subdivision. 
173.27     (b) To be eligible for a valuation reduction under this 
173.28  subdivision, property must be certified by a qualified inspector 
173.29  as having been constructed in a manner that will achieve a level 
173.30  of energy consumption that is at least 20 percent lower than the 
173.31  standard set in the state energy code rules.  The percentage 
173.32  reduction in the market value of a qualifying property is 
173.33  determined as follows: 
173.34  percentage of energy consumption          percentage of
173.35  below energy code requirement          market value reduction
173.36           20-30                                  5
174.1            31-50                                 10
174.2            over 50                               15
174.3   The reductions will remain in effect for the first ten 
174.4   assessment years after the property has been certified as 
174.5   qualifying under this subdivision. 
174.6      (c) The Department of Commerce must establish a process for 
174.7   determining eligibility for the valuation reduction under this 
174.8   subdivision, including certification of persons who are 
174.9   qualified to perform this function. 
174.10     (d) To claim a valuation reduction under this subdivision, 
174.11  the owner of the commercial property must obtain a certification 
174.12  of the level of qualification determined under paragraph (b), 
174.13  which must be prepared by a person certified as provided in 
174.14  paragraph (c).  The property owner must furnish this 
174.15  certification to the assessor by May 1 of the assessment year in 
174.16  order to qualify for the valuation reduction for taxes payable 
174.17  in the following year. 
174.18     [EFFECTIVE DATE.] This section is effective for assessments 
174.19  in 2006, taxes payable in 2007, and thereafter. 
174.20     Sec. 33.  [273.1115] [AGGREGATE RESOURCE PRESERVATION 
174.21  PROPERTY TAX LAW.] 
174.22     Subdivision 1.  [REQUIREMENTS.] Real estate is entitled to 
174.23  valuation under this section only if all of the following 
174.24  requirements are met: 
174.25     (1) the property is classified 1a, 1b, 2a, or 2b property 
174.26  under section 273.13, subdivisions 22 and 23; 
174.27     (2) the property is at least ten contiguous acres, when the 
174.28  application is filed under subdivision 2; 
174.29     (3) the owner has filed a completed application for 
174.30  deferment as specified in subdivision 2 with the county assessor 
174.31  in the county in which the property is located; 
174.32     (4) there are no delinquent taxes on the property; and 
174.33     (5) a covenant on the land restricts its use as provided in 
174.34  subdivision 2, clause (4). 
174.35     Subd. 2.  [APPLICATION.] Application for valuation 
174.36  deferment under this section must be filed by May 1 of the 
175.1   assessment year.  Any application filed and granted continues in 
175.2   effect for subsequent years until the property no longer 
175.3   qualifies, provided that supplemental affidavits under 
175.4   subdivision 6 are timely filed.  The application must be filed 
175.5   with the assessor of the county in which the real property is 
175.6   located on such form as may be prescribed by the commissioner of 
175.7   revenue.  The application must be executed and acknowledged in 
175.8   the manner required by law to execute and acknowledge a deed and 
175.9   must contain at least the following information and any other 
175.10  information the commissioner deems necessary: 
175.11     (1) the legal description of the area; 
175.12     (2) the name and address of owner; 
175.13     (3) a copy of the affidavit filed under section 273.13, 
175.14  subdivision 23, paragraph (h), in the case of property 
175.15  classified class 2b, clause (5); or in the case of property 
175.16  classified 1a, 1b, 2a, and 2b, clauses (1) to (3), the 
175.17  application must include a similar document with the same 
175.18  information as contained in the affidavit under section 273.13, 
175.19  subdivision 23, paragraph (h); and 
175.20     (4) a statement of proof from the owner that the land 
175.21  contains a restrictive covenant limiting its use for the 
175.22  property's surface to that which exists on the date of the 
175.23  application and limiting its future use to the preparation and 
175.24  removal of the aggregate commercial deposit under its surface. 
175.25     To qualify under this clause, the covenant must be binding 
175.26  on the owner or the owner's successor or assignee, and run with 
175.27  the land, except as provided in subdivision 4 allowing for the 
175.28  cancellation of the covenant under certain conditions. 
175.29     Subd. 3.  [DETERMINATION OF VALUE.] Upon timely application 
175.30  by the owner as provided in subdivision 2, notwithstanding 
175.31  sections 272.03, subdivision 8, and 273.11, the value of any 
175.32  qualifying land described in subdivision 2 must be valued as if 
175.33  it were agricultural property, using a per acre valuation equal 
175.34  to the current year's per acre valuation of agricultural land in 
175.35  the county.  The assessor shall not consider any additional 
175.36  value resulting from potential alternative and future uses of 
176.1   the property.  The buildings located on the land shall be valued 
176.2   by the assessor in the normal manner. 
176.3      Subd. 4.  [CANCELLATION OF COVENANT.] The covenant required 
176.4   under subdivision 2 may be canceled in two ways:  
176.5      (1) by the owner beginning with the next subsequent 
176.6   assessment year provided that the additional taxes as determined 
176.7   under subdivision 5 are paid by the owner at the time of 
176.8   cancellation; and 
176.9      (2) by the city or town in which the property is located 
176.10  beginning with the next subsequent assessment year, if the city 
176.11  council or town board: 
176.12     (i) changes the conditional use of the property; 
176.13     (ii) revokes the mining permit; or 
176.14     (iii) changes the zoning to disallow mining.  
176.15     No additional taxes are imposed on the property under this 
176.16  clause. 
176.17     Subd. 4a.  [COUNTY TERMINATION.] Within two years of the 
176.18  effective date of this section, a county may, following notice 
176.19  and public hearing, terminate application of this section in the 
176.20  county.  The termination is effective upon adoption of a 
176.21  resolution of the county board.  A termination applies 
176.22  prospectively and does not affect property enrolled under this 
176.23  section prior to the termination date.  A county may reauthorize 
176.24  application of this section by a resolution of the county board 
176.25  revoking the termination. 
176.26     Subd. 5.  [ADDITIONAL TAXES.] When real property which has 
176.27  been valued and assessed under this section no longer qualifies, 
176.28  the portion of the land classified under subdivision 1, clause 
176.29  (1), is subject to additional taxes.  The additional tax amount 
176.30  is determined by: 
176.31     (1) computing the difference between (i) the current year's 
176.32  taxes determined in accordance with subdivision 5, and (ii) an 
176.33  amount as determined by the assessor based upon the property's 
176.34  current year's estimated market value of like real estate at its 
176.35  highest and best use and the appropriate local tax rate; and 
176.36     (2) multiplying the amount determined in clause (1) by the 
177.1   number of years the land was in the program under this section.  
177.2      The current year's estimated market value as determined by 
177.3   the assessor must not exceed the market value that would result 
177.4   if the property was sold in an arms-length transaction and must 
177.5   not be greater than it would have been had the actual bona fide 
177.6   sale price of the property been used in lieu of that market 
177.7   value.  The additional taxes must be extended against the 
177.8   property on the tax list for the current year, except that 
177.9   interest or penalties must not be levied on such additional 
177.10  taxes if timely paid. 
177.11     The additional tax under this subdivision must not be 
177.12  imposed on that portion of the property which has actively been 
177.13  mined and has been removed from the program based upon the 
177.14  supplemental affidavits filed under subdivision 6. 
177.15     Subd. 6.  [SUPPLEMENTAL AFFIDAVITS; MINING ACTIVITY ON 
177.16  LAND.] When any portion of the property begins to be actively 
177.17  mined, the owner must file a supplemental affidavit within 60 
177.18  days from the day any aggregate is removed stating the number of 
177.19  acres of the property that is actively being mined.  The acres 
177.20  actively being mined shall be (1) valued and classified under 
177.21  section 273.13, subdivision 24, in the next subsequent 
177.22  assessment year, and (2) removed from the aggregate resource 
177.23  preservation property tax program under this section.  The 
177.24  additional taxes under subdivision 5 must not be imposed on the 
177.25  acres that are actively being mined and have been removed from 
177.26  the program under this section. 
177.27     Copies of the original affidavit and all supplemental 
177.28  affidavits must be filed with the county assessor, the local 
177.29  zoning administrator, and the Department of Natural Resources, 
177.30  Division of Land and Minerals.  A supplemental affidavit must be 
177.31  filed each time a subsequent portion of the property is actively 
177.32  mined, provided that the minimum acreage change is five acres, 
177.33  even if the actual mining activity constitutes less than five 
177.34  acres.  Failure to file the affidavits timely shall result in 
177.35  the property losing its valuation deferment under this section, 
177.36  and additional taxes must be imposed as calculated under 
178.1   subdivision 5. 
178.2      Subd. 7.  [LIEN.] The additional tax imposed by this 
178.3   section is a lien upon the property assessed to the same extent 
178.4   and for the same duration as other taxes imposed upon property 
178.5   within this state and, when collected, must be distributed in 
178.6   the manner provided by law for the collection and distribution 
178.7   of other property taxes. 
178.8      Subd. 8.  [CONTINUATION OF TAX TREATMENT UPON SALE.] When 
178.9   real property qualifying under subdivision 1 is sold, additional 
178.10  taxes must not be extended against the property if the property 
178.11  continues to qualify under subdivision 1, and the new owner 
178.12  files an application with the assessor for continued deferment 
178.13  within 30 days after the sale. 
178.14     Subd. 9.  [DEFINITIONS.] For purposes of this section, 
178.15  "commercial aggregate deposit" and "actively mined" have the 
178.16  meanings given them in section 273.13, subdivision 23, paragraph 
178.17  (h). 
178.18     [EFFECTIVE DATE.] This section is effective for taxes 
178.19  levied in 2005, payable in 2006, and thereafter, except that for 
178.20  the 2005 assessment year, the application date under subdivision 
178.21  4 shall be September 1, 2005, and subdivision 4a is effective 
178.22  the day following final enactment. 
178.23     Sec. 34.  [273.1116] [HOMESTEAD RESORTS; VALUATION AND 
178.24  DEFERMENT.] 
178.25     Subdivision 1.  [REQUIREMENTS.] Real property qualifying 
178.26  for classification as class 1c under section 273.13, subdivision 
178.27  22, paragraph (c), is entitled to valuation and tax deferment 
178.28  under this section, provided that if part of a resort is not 
178.29  classified as class 1c, only that portion of the value of the 
178.30  property that is classified as class 1c property qualifies under 
178.31  this section. 
178.32     Subd. 2.  [DETERMINATION OF VALUE.] Upon timely application 
178.33  by the owner, as provided in subdivision 4, the value of real 
178.34  property described in subdivision 1 must be determined by the 
178.35  assessor solely with reference to its classification value as 
178.36  class 1c property, notwithstanding sections 272.03, subdivision 
179.1   8, and 273.11.  The owner must furnish information on the income 
179.2   generated by the property and other information required by the 
179.3   assessor to determine the value of the property.  The assessor 
179.4   shall not consider any added values resulting from other factors.
179.5      Subd. 3.  [SEPARATE DETERMINATION OF MARKET VALUE AND TAX.] 
179.6   The assessor shall, however, make a separate determination of 
179.7   the market value of the real estate.  The assessor shall record 
179.8   on the property assessment records the tax based upon the 
179.9   appropriate local tax rate applicable to the property in the 
179.10  taxing district. 
179.11     Subd. 4.  [APPLICATION.] Application for deferment of taxes 
179.12  and assessment under this section must be filed by May 1 of the 
179.13  year prior to the year in which the taxes are payable.  The 
179.14  application must be filed with the assessor of the taxing 
179.15  district in which the real property is located on a form 
179.16  prescribed by the commissioner of revenue.  The assessor may 
179.17  require proof by affidavit or otherwise that the property 
179.18  qualifies under subdivision 1.  An application approved by the 
179.19  assessor continues in effect for subsequent years until the 
179.20  property no longer qualifies under subdivision 1. 
179.21     Subd. 5.  [ADDITIONAL TAXES.] When real property valued and 
179.22  assessed under this section no longer qualifies under 
179.23  subdivision 1, the portion no longer qualifying is subject to 
179.24  additional taxes, in the amount equal to the difference between 
179.25  the taxes determined in accordance with subdivision 2, and the 
179.26  amount determined under subdivision 3, provided, however, that 
179.27  the amount determined under subdivision 3 must not be greater 
179.28  than it would have been had the actual bona fide sale price of 
179.29  the real property at an arms-length transaction been used in 
179.30  lieu of the market value determined under subdivision 3.  The 
179.31  additional taxes must be extended against the property on the 
179.32  tax list for the current year, except that no interest or 
179.33  penalties may be levied on the additional taxes if timely paid, 
179.34  and except that the additional taxes must only be levied with 
179.35  respect to the last seven years that the property has been 
179.36  valued and assessed under this section. 
180.1      Subd. 6.  [LIEN.] The tax imposed by this section is a lien 
180.2   on the property assessed to the same extent and for the same 
180.3   duration as other taxes imposed on property within this state.  
180.4   The tax must be annually extended by the county auditor and when 
180.5   payable must be collected and distributed in the manner provided 
180.6   by law for the collection and distribution of other property 
180.7   taxes. 
180.8      Subd. 7.  [SPECIAL LOCAL ASSESSMENTS.] The payment of 
180.9   special local assessments levied after June 30, 2005, for 
180.10  improvements made to any real property described in subdivision 
180.11  2, together with the interest thereon must, on timely 
180.12  application under subdivision 4, be deferred as long as the 
180.13  property qualifies under subdivision 1.  If special assessments 
180.14  against the property have been deferred under this subdivision, 
180.15  the governmental unit shall file with the county recorder in the 
180.16  county in which the property is located a certificate containing 
180.17  the legal description of the affected property and of the amount 
180.18  deferred.  When the property no longer qualifies under 
180.19  subdivision 1, all deferred special assessments plus interest 
180.20  are payable in equal installments spread over the time remaining 
180.21  until the last maturity date of the bonds issued to finance the 
180.22  improvement for which the assessments were levied.  If the bonds 
180.23  have matured, the deferred special assessments plus interest are 
180.24  payable within 90 days.  The provisions of section 429.061, 
180.25  subdivision 2, apply to the collection of these installments.  
180.26  Penalty must not be levied on the special assessments if timely 
180.27  paid. 
180.28     Subd. 8.  [CONTINUATION OF TAX TREATMENT UPON SALE.] When 
180.29  real property qualifying under subdivision 1 is sold, no 
180.30  additional taxes or deferred special assessments plus interest 
180.31  may be extended against the property if: 
180.32     (1) the property continues to qualify pursuant to 
180.33  subdivision 1; and 
180.34     (2) the new owner files an application for continued 
180.35  deferment within 30 days after the sale. 
180.36     Subd. 9.  [APPLICABILITY OF SPECIAL ASSESSMENT PROVISIONS.] 
181.1   This section applies to special local assessments levied after 
181.2   June 30, 2005, and payable in the years thereafter, but shall 
181.3   not apply to any special assessments levied at any time by a 
181.4   county or district court under the provisions of chapter 116A. 
181.5      [EFFECTIVE DATE.] This section is effective for taxes 
181.6   levied in 2005, payable in 2006, and thereafter.  For 
181.7   applications for taxes payable in 2006 only, the application 
181.8   deadline in subdivision 4 is extended to August 1, 2005. 
181.9      Sec. 35.  Minnesota Statutes 2004, section 273.112, 
181.10  subdivision 3, is amended to read: 
181.11     Subd. 3.  [REQUIREMENTS.] Real estate shall be entitled to 
181.12  valuation and tax deferment under this section only if it is: 
181.13     (a) actively and exclusively devoted to golf, skiing, lawn 
181.14  bowling, croquet, polo, or archery or firearms range 
181.15  recreational use or other recreational uses carried on at the 
181.16  establishment; 
181.17     (b) five acres in size or more, except in the case of a 
181.18  lawn bowling or croquet green or an archery or firearms range; 
181.19     (c)(1) operated by private individuals or, in the case of a 
181.20  lawn bowling or croquet green, by private individuals or 
181.21  corporations, and open to the public; or 
181.22     (2) operated by firms or corporations for the benefit of 
181.23  employees or guests; or 
181.24     (3) operated by private clubs having a membership of 50 or 
181.25  more or open to the public, provided that the club does not 
181.26  discriminate in membership requirements or selection on the 
181.27  basis of sex or marital status; and 
181.28     (d) made available for use in the case of real estate 
181.29  devoted to golf without discrimination on the basis of sex 
181.30  during the time when the facility is open to use by the public 
181.31  or by members, except that use for golf may be restricted on the 
181.32  basis of sex no more frequently than one, or part of one, 
181.33  weekend each calendar month for each sex and no more than two, 
181.34  or part of two, weekdays each week for each sex.  
181.35     If a golf club membership allows use of golf course 
181.36  facilities by more than one adult per membership, the use must 
182.1   be equally available to all adults entitled to use of the golf 
182.2   course under the membership, except that use may be restricted 
182.3   on the basis of sex as permitted in this section.  Memberships 
182.4   that permit play during restricted times may be allowed only if 
182.5   the restricted times apply to all adults using the membership.  
182.6   A golf club may not offer a membership or golfing privileges to 
182.7   a spouse of a member that provides greater or less access to the 
182.8   golf course than is provided to that person's spouse under the 
182.9   same or a separate membership in that club, except that the 
182.10  terms of a membership may provide that one spouse may have no 
182.11  right to use the golf course at any time while the other spouse 
182.12  may have either limited or unlimited access to the golf course.  
182.13     A golf club may have or create an individual membership 
182.14  category which entitles a member for a reduced rate to play 
182.15  during restricted hours as established by the club.  The club 
182.16  must have on record a written request by the member for such 
182.17  membership.  
182.18     A golf club that has food or beverage facilities or 
182.19  services must allow equal access to those facilities and 
182.20  services for both men and women members in all membership 
182.21  categories at all times.  Nothing in this paragraph shall be 
182.22  construed to require service or access to facilities to persons 
182.23  under the age of 21 years or require any act that would violate 
182.24  law or ordinance regarding sale, consumption, or regulation of 
182.25  alcoholic beverages. 
182.26     For purposes of this subdivision and subdivision 7a, 
182.27  discrimination means a pattern or course of conduct and not 
182.28  linked to an isolated incident. 
182.29     [EFFECTIVE DATE.] This section is effective for taxes 
182.30  levied in 2005, payable in 2006, and thereafter. 
182.31     Sec. 36.  Minnesota Statutes 2004, section 273.123, is 
182.32  amended by adding a subdivision to read: 
182.33     Subd. 8.  [HOMESTEAD PROPERTY DAMAGED BY MOLD.] (a) The 
182.34  owner of homestead property not qualifying for an adjustment in 
182.35  valuation under subdivisions 1 to 5 must receive a reduction in 
182.36  the amount of taxes payable on the property if all of the 
183.1   following conditions are met: 
183.2      (1) the owner of the property makes written application to 
183.3   the county assessor for tax treatment under this subdivision; 
183.4      (2) the county assessor determines that the homestead 
183.5   dwelling is uninhabitable because all or part of it has been 
183.6   contaminated by mold; and 
183.7      (3) the owner of the property makes written application to 
183.8   the county board. 
183.9      (b) If all of the conditions in paragraph (a) are met, the 
183.10  county board must grant a reduction in the amount of property 
183.11  tax payable on the homestead dwelling.  The reduction must be 
183.12  made for taxes payable in the year that the assessor determines 
183.13  that the requirements in paragraph (a), clause (2), have been 
183.14  met and in the following year. 
183.15     (c) The reduction in the amount of tax payable must be 
183.16  calculated based upon the number of months that the homestead is 
183.17  uninhabitable.  The amount of net tax due from the taxpayer 
183.18  shall be multiplied by a fraction, the numerator of which is the 
183.19  number of months the dwelling was occupied by that taxpayer, and 
183.20  the denominator of which is 12.  For purposes of this 
183.21  subdivision, if a homestead dwelling is occupied or used for a 
183.22  fraction of a month, it is considered a month.  "Net tax" is 
183.23  defined as the amount of tax after the subtraction of all of the 
183.24  state paid property tax credits.  If the reduction is granted 
183.25  after all property taxes due for the year have been paid, the 
183.26  amount of the reduction must be refunded to the taxpayer by the 
183.27  county treasurer as soon as practical.  
183.28     (d) Any reductions or refunds under this section are not 
183.29  subject to approval by the commissioner of revenue. 
183.30     (e) A denial of a reduction or refund under this section by 
183.31  the county board may be appealed to the tax court.  If the 
183.32  county board takes no action on the application within 60 days 
183.33  after its receipt, it is considered a denial. 
183.34     [EFFECTIVE DATE.] This section is effective for property 
183.35  taxes payable in 2005 and thereafter. 
183.36     Sec. 37.  Minnesota Statutes 2004, section 273.124, 
184.1   subdivision 1, is amended to read: 
184.2      Subdivision 1.  [GENERAL RULE.] (a) Residential real estate 
184.3   that is occupied and used for the purposes of a homestead by its 
184.4   owner, who must be a Minnesota resident, is a residential 
184.5   homestead.  
184.6      Agricultural land, as defined in section 273.13, 
184.7   subdivision 23, that is occupied and used as a homestead by its 
184.8   owner, who must be a Minnesota resident, is an agricultural 
184.9   homestead. 
184.10     Dates for establishment of a homestead and homestead 
184.11  treatment provided to particular types of property are as 
184.12  provided in this section.  
184.13     Property held by a trustee under a trust is eligible for 
184.14  homestead classification if the requirements under this chapter 
184.15  are satisfied. 
184.16     The assessor shall require proof, as provided in 
184.17  subdivision 13, of the facts upon which classification as a 
184.18  homestead may be determined.  Notwithstanding any other law, the 
184.19  assessor may at any time require a homestead application to be 
184.20  filed in order to verify that any property classified as a 
184.21  homestead continues to be eligible for homestead status.  
184.22  Notwithstanding any other law to the contrary, the Department of 
184.23  Revenue may, upon request from an assessor, verify whether an 
184.24  individual who is requesting or receiving homestead 
184.25  classification has filed a Minnesota income tax return as a 
184.26  resident for the most recent taxable year for which the 
184.27  information is available. 
184.28     When there is a name change or a transfer of homestead 
184.29  property, the assessor may reclassify the property in the next 
184.30  assessment unless a homestead application is filed to verify 
184.31  that the property continues to qualify for homestead 
184.32  classification. 
184.33     (b) For purposes of this section, homestead property shall 
184.34  include property which is used for purposes of the homestead but 
184.35  is separated from the homestead by a road, street, lot, 
184.36  waterway, or other similar intervening property.  The term "used 
185.1   for purposes of the homestead" shall include but not be limited 
185.2   to uses for gardens, garages, or other outbuildings commonly 
185.3   associated with a homestead, but shall not include vacant land 
185.4   held primarily for future development.  In order to receive 
185.5   homestead treatment for the noncontiguous property, the owner 
185.6   must use the property for the purposes of the homestead, and 
185.7   must apply to the assessor, both by the deadlines given in 
185.8   subdivision 9.  After initial qualification for the homestead 
185.9   treatment, additional applications for subsequent years are not 
185.10  required. 
185.11     (c) Residential real estate that is occupied and used for 
185.12  purposes of a homestead by a relative of the owner is a 
185.13  homestead but only to the extent of the homestead treatment that 
185.14  would be provided if the related owner occupied the property.  
185.15  For purposes of this paragraph and paragraph (g), "relative" 
185.16  means a parent, stepparent, child, stepchild, grandparent, 
185.17  grandchild, brother, sister, uncle, aunt, nephew, or niece.  
185.18  This relationship may be by blood or marriage.  Property that 
185.19  has been classified as seasonal residential recreational 
185.20  property at any time during which it has been owned by the 
185.21  current owner or spouse of the current owner will not be 
185.22  reclassified as a homestead unless it is occupied as a homestead 
185.23  by the owner; this prohibition also applies to property that, in 
185.24  the absence of this paragraph, would have been classified as 
185.25  seasonal residential recreational property at the time when the 
185.26  residence was constructed.  Neither the related occupant nor the 
185.27  owner of the property may claim a property tax refund under 
185.28  chapter 290A for a homestead occupied by a relative.  In the 
185.29  case of a residence located on agricultural land, only the 
185.30  house, garage, and immediately surrounding one acre of land 
185.31  shall be classified as a homestead under this paragraph, except 
185.32  as provided in paragraph (d). 
185.33     (d) Agricultural property that is occupied and used for 
185.34  purposes of a homestead by a relative of the owner, is a 
185.35  homestead, only to the extent of the homestead treatment that 
185.36  would be provided if the related owner occupied the property, 
186.1   and only if all of the following criteria are met: 
186.2      (1) the relative who is occupying the agricultural property 
186.3   is a son, daughter, grandson, granddaughter, father, or mother 
186.4   of the owner of the agricultural property or a son, daughter, 
186.5   grandson, or granddaughter of the spouse of the owner of the 
186.6   agricultural property; 
186.7      (2) the owner of the agricultural property must be a 
186.8   Minnesota resident; 
186.9      (3) the owner of the agricultural property must not receive 
186.10  homestead treatment on any other agricultural property in 
186.11  Minnesota; and 
186.12     (4) the owner of the agricultural property is limited to 
186.13  only one agricultural homestead per family under this paragraph. 
186.14     Neither the related occupant nor the owner of the property 
186.15  may claim a property tax refund under chapter 290A for a 
186.16  homestead occupied by a relative qualifying under this 
186.17  paragraph.  For purposes of this paragraph, "agricultural 
186.18  property" means the house, garage, other farm buildings and 
186.19  structures, and agricultural land. 
186.20     Application must be made to the assessor by the owner of 
186.21  the agricultural property to receive homestead benefits under 
186.22  this paragraph.  The assessor may require the necessary proof 
186.23  that the requirements under this paragraph have been met. 
186.24     (e) In the case of property owned by a property owner who 
186.25  is married, the assessor must not deny homestead treatment in 
186.26  whole or in part if only one of the spouses occupies the 
186.27  property and the other spouse is absent due to:  (1) marriage 
186.28  dissolution proceedings, (2) legal separation, (3) employment or 
186.29  self-employment in another location, or (4) other personal 
186.30  circumstances causing the spouses to live separately, not 
186.31  including an intent to obtain two homestead classifications for 
186.32  property tax purposes.  To qualify under clause (3), the 
186.33  spouse's place of employment or self-employment must be at least 
186.34  50 miles distant from the other spouse's place of employment, 
186.35  and the homesteads must be at least 50 miles distant from each 
186.36  other.  Homestead treatment, in whole or in part, shall not be 
187.1   denied to the owner's spouse who previously occupied the 
187.2   residence with the owner if the absence of the owner is due to 
187.3   one of the exceptions provided in this paragraph. 
187.4      (f) The assessor must not deny homestead treatment in whole 
187.5   or in part if: 
187.6      (1) in the case of a property owner who is not married, the 
187.7   owner is absent due to residence in a nursing home, boarding 
187.8   care facility, or an elderly assisted living facility property 
187.9   as defined in section 273.13, subdivision 25a, and the property 
187.10  is not otherwise occupied; or 
187.11     (2) in the case of a property owner who is married, the 
187.12  owner or the owner's spouse or both are absent due to residence 
187.13  in a nursing home, boarding care facility, or an elderly 
187.14  assisted living facility property as defined in section 273.13, 
187.15  subdivision 25a, and the property is not occupied or is occupied 
187.16  only by the owner's spouse. 
187.17     (g) If an individual is purchasing property with the intent 
187.18  of claiming it as a homestead and is required by the terms of 
187.19  the financing agreement to have a relative shown on the deed as 
187.20  a co-owner, the assessor shall allow a full homestead 
187.21  classification.  This provision only applies to first-time 
187.22  purchasers, whether married or single, or to a person who had 
187.23  previously been married and is purchasing as a single individual 
187.24  for the first time.  The application for homestead benefits must 
187.25  be on a form prescribed by the commissioner and must contain the 
187.26  data necessary for the assessor to determine if full homestead 
187.27  benefits are warranted. 
187.28     (h) If residential or agricultural real estate is occupied 
187.29  and used for purposes of a homestead by a child of a deceased 
187.30  owner and the property is subject to jurisdiction of probate 
187.31  court, the child shall receive relative homestead classification 
187.32  under paragraph (c) or (d) to the same extent they would be 
187.33  entitled to it if the owner was still living, until the probate 
187.34  is completed.  For purposes of this paragraph, "child" includes 
187.35  a relationship by blood or by marriage. 
187.36     (i) If a single family home, duplex, or triplex classified 
188.1   as either residential homestead or agricultural homestead is 
188.2   also used to provide licensed child care, the portion of the 
188.3   property used for licensed child care must be classified as 
188.4   homestead property. 
188.5      [EFFECTIVE DATE.] This section is effective in assessment 
188.6   year 2005 and thereafter, for taxes payable in 2006, and 
188.7   thereafter. 
188.8      Sec. 38.  Minnesota Statutes 2004, section 273.124, 
188.9   subdivision 14, is amended to read: 
188.10     Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
188.11  (a) Real estate of less than ten acres that is the homestead of 
188.12  its owner must be classified as class 2a under section 273.13, 
188.13  subdivision 23, paragraph (a), if:  
188.14     (1) the parcel on which the house is located is contiguous 
188.15  on at least two sides to (i) agricultural land, (ii) land owned 
188.16  or administered by the United States Fish and Wildlife Service, 
188.17  or (iii) land administered by the Department of Natural 
188.18  Resources on which in lieu taxes are paid under sections 477A.11 
188.19  to 477A.14; 
188.20     (2) its owner also owns a noncontiguous parcel of 
188.21  agricultural land that is at least 20 acres; 
188.22     (3) the noncontiguous land is located not farther than four 
188.23  townships or cities, or a combination of townships or cities 
188.24  from the homestead; and 
188.25     (4) the agricultural use value of the noncontiguous land 
188.26  and farm buildings is equal to at least 50 percent of the market 
188.27  value of the house, garage, and one acre of land. 
188.28     Homesteads initially classified as class 2a under the 
188.29  provisions of this paragraph shall remain classified as class 
188.30  2a, irrespective of subsequent changes in the use of adjoining 
188.31  properties, as long as the homestead remains under the same 
188.32  ownership, the owner owns a noncontiguous parcel of agricultural 
188.33  land that is at least 20 acres, and the agricultural use value 
188.34  qualifies under clause (4).  Homestead classification under this 
188.35  paragraph is limited to property that qualified under this 
188.36  paragraph for the 1998 assessment. 
189.1      (b)(i) Agricultural property consisting of at least 40 
189.2   acres shall be classified as the owner's homestead, to the same 
189.3   extent as other agricultural homestead property, if all of the 
189.4   following criteria are met: 
189.5      (1) the owner, the owner's spouse, or the son or daughter 
189.6   of the owner or owner's spouse, or the grandson or granddaughter 
189.7   of the owner or the owner's spouse, is actively farming the 
189.8   agricultural property, either on the person's own behalf as an 
189.9   individual or on behalf of a partnership operating a family 
189.10  farm, family farm corporation, joint family farm venture, or 
189.11  limited liability company of which the person is a partner, 
189.12  shareholder, or member; 
189.13     (2) both the owner of the agricultural property and the 
189.14  person who is actively farming the agricultural property under 
189.15  clause (1), are Minnesota residents; 
189.16     (3) neither the owner nor the spouse of the owner claims 
189.17  another agricultural homestead in Minnesota; and 
189.18     (4) neither the owner nor the person actively farming the 
189.19  property lives farther than four townships or cities, or a 
189.20  combination of four townships or cities, from the agricultural 
189.21  property, except that if the owner or the owner's spouse is 
189.22  required to live in employer-provided housing, the owner or 
189.23  owner's spouse, whichever is actively farming the agricultural 
189.24  property, may live more than four townships or cities, or 
189.25  combination of four townships or cities from the agricultural 
189.26  property. 
189.27     The relationship under this paragraph may be either by 
189.28  blood or marriage. 
189.29     (ii) Real property held by a trustee under a trust is 
189.30  eligible for agricultural homestead classification under this 
189.31  paragraph if the qualifications in clause (i) are met, except 
189.32  that "owner" means the grantor of the trust. 
189.33     (iii) Property containing the residence of an owner who 
189.34  owns qualified property under clause (i) shall be classified as 
189.35  part of the owner's agricultural homestead, if that property is 
189.36  also used for noncommercial storage or drying of agricultural 
190.1   crops. 
190.2      (c) Noncontiguous land shall be included as part of a 
190.3   homestead under section 273.13, subdivision 23, paragraph (a), 
190.4   only if the homestead is classified as class 2a and the detached 
190.5   land is located in the same township or city, or not farther 
190.6   than four townships or cities or combination thereof from the 
190.7   homestead.  Any taxpayer of these noncontiguous lands must 
190.8   notify the county assessor that the noncontiguous land is part 
190.9   of the taxpayer's homestead, and, if the homestead is located in 
190.10  another county, the taxpayer must also notify the assessor of 
190.11  the other county. 
190.12     (d) Agricultural land used for purposes of a homestead and 
190.13  actively farmed by a person holding a vested remainder interest 
190.14  in it must be classified as a homestead under section 273.13, 
190.15  subdivision 23, paragraph (a).  If agricultural land is 
190.16  classified class 2a, any other dwellings on the land used for 
190.17  purposes of a homestead by persons holding vested remainder 
190.18  interests who are actively engaged in farming the property, and 
190.19  up to one acre of the land surrounding each homestead and 
190.20  reasonably necessary for the use of the dwelling as a home, must 
190.21  also be assessed class 2a. 
190.22     (e) Agricultural land and buildings that were class 2a 
190.23  homestead property under section 273.13, subdivision 23, 
190.24  paragraph (a), for the 1997 assessment shall remain classified 
190.25  as agricultural homesteads for subsequent assessments if:  
190.26     (1) the property owner abandoned the homestead dwelling 
190.27  located on the agricultural homestead as a result of the April 
190.28  1997 floods; 
190.29     (2) the property is located in the county of Polk, Clay, 
190.30  Kittson, Marshall, Norman, or Wilkin; 
190.31     (3) the agricultural land and buildings remain under the 
190.32  same ownership for the current assessment year as existed for 
190.33  the 1997 assessment year and continue to be used for 
190.34  agricultural purposes; 
190.35     (4) the dwelling occupied by the owner is located in 
190.36  Minnesota and is within 30 miles of one of the parcels of 
191.1   agricultural land that is owned by the taxpayer; and 
191.2      (5) the owner notifies the county assessor that the 
191.3   relocation was due to the 1997 floods, and the owner furnishes 
191.4   the assessor any information deemed necessary by the assessor in 
191.5   verifying the change in dwelling.  Further notifications to the 
191.6   assessor are not required if the property continues to meet all 
191.7   the requirements in this paragraph and any dwellings on the 
191.8   agricultural land remain uninhabited. 
191.9      (f) Agricultural land and buildings that were class 2a 
191.10  homestead property under section 273.13, subdivision 23, 
191.11  paragraph (a), for the 1998 assessment shall remain classified 
191.12  agricultural homesteads for subsequent assessments if: 
191.13     (1) the property owner abandoned the homestead dwelling 
191.14  located on the agricultural homestead as a result of damage 
191.15  caused by a March 29, 1998, tornado; 
191.16     (2) the property is located in the county of Blue Earth, 
191.17  Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 
191.18     (3) the agricultural land and buildings remain under the 
191.19  same ownership for the current assessment year as existed for 
191.20  the 1998 assessment year; 
191.21     (4) the dwelling occupied by the owner is located in this 
191.22  state and is within 50 miles of one of the parcels of 
191.23  agricultural land that is owned by the taxpayer; and 
191.24     (5) the owner notifies the county assessor that the 
191.25  relocation was due to a March 29, 1998, tornado, and the owner 
191.26  furnishes the assessor any information deemed necessary by the 
191.27  assessor in verifying the change in homestead dwelling.  For 
191.28  taxes payable in 1999, the owner must notify the assessor by 
191.29  December 1, 1998.  Further notifications to the assessor are not 
191.30  required if the property continues to meet all the requirements 
191.31  in this paragraph and any dwellings on the agricultural land 
191.32  remain uninhabited. 
191.33     (g) Agricultural property consisting of at least 40 acres 
191.34  of a family farm corporation, joint family farm venture, family 
191.35  farm limited liability company, or partnership operating a 
191.36  family farm as described under subdivision 8 shall be classified 
192.1   homestead, to the same extent as other agricultural homestead 
192.2   property, if all of the following criteria are met: 
192.3      (1) a shareholder, member, or partner of that entity is 
192.4   actively farming the agricultural property; 
192.5      (2) that shareholder, member, or partner who is actively 
192.6   farming the agricultural property is a Minnesota resident; 
192.7      (3) neither that shareholder, member, or partner, nor the 
192.8   spouse of that shareholder, member, or partner claims another 
192.9   agricultural homestead in Minnesota; and 
192.10     (4) that shareholder, member, or partner does not live 
192.11  farther than four townships or cities, or a combination of four 
192.12  townships or cities, from the agricultural property. 
192.13     Homestead treatment applies under this paragraph for 
192.14  property leased to a family farm corporation, joint farm 
192.15  venture, limited liability company, or partnership operating a 
192.16  family farm if legal title to the property is in the name of an 
192.17  individual who is a member, shareholder, or partner in the 
192.18  entity. 
192.19     (h) To be eligible for the special agricultural homestead 
192.20  under this subdivision, an initial full application must be 
192.21  submitted to the county assessor where the property is located.  
192.22  Owners and the persons who are actively farming the property 
192.23  shall be required to complete only a one-page abbreviated 
192.24  version of the application in each subsequent year provided that 
192.25  none of the following items have changed since the initial 
192.26  application: 
192.27     (1) the day-to-day operation, administration, and financial 
192.28  risks remain the same; 
192.29     (2) the owners and the persons actively farming the 
192.30  property continue to live within the four townships or city 
192.31  criteria and are Minnesota residents; 
192.32     (3) the same operator of the agricultural property is 
192.33  listed with the Farm Service Agency; 
192.34     (4) a Schedule F or equivalent income tax form was filed 
192.35  for the most recent year; 
192.36     (5) the property's acreage is unchanged; and 
193.1      (6) none of the property's acres have been enrolled in a 
193.2   federal or state farm program since the initial application. 
193.3      The owners and any persons who are actively farming the 
193.4   property must include the appropriate Social Security numbers, 
193.5   and sign and date the application.  If any of the specified 
193.6   information has changed since the full application was filed, 
193.7   the owner must notify the assessor, and must complete a new 
193.8   application to determine if the property continues to qualify 
193.9   for the special agricultural homestead.  The commissioner of 
193.10  revenue shall prepare a standard reapplication form for use by 
193.11  the assessors. 
193.12     [EFFECTIVE DATE.] This section is effective for assessment 
193.13  year 2004 and thereafter, for taxes payable in 2005 and 
193.14  thereafter. 
193.15     Sec. 39.  Minnesota Statutes 2004, section 273.13, 
193.16  subdivision 22, is amended to read: 
193.17     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
193.18  23 and in paragraphs (b) and (c), real estate which is 
193.19  residential and used for homestead purposes is class 1a.  In the 
193.20  case of a duplex or triplex in which one of the units is used 
193.21  for homestead purposes, the entire property is deemed to be used 
193.22  for homestead purposes.  The market value of class 1a property 
193.23  must be determined based upon the value of the house, garage, 
193.24  and land.  
193.25     The first $500,000 of market value of class 1a property has 
193.26  a net class rate of one percent of its market value; and the 
193.27  market value of class 1a property that exceeds $500,000 has a 
193.28  class rate of 1.25 percent of its market value. 
193.29     (b) Class 1b property includes homestead real estate or 
193.30  homestead manufactured homes used for the purposes of a 
193.31  homestead by 
193.32     (1) any person who is blind as defined in section 256D.35, 
193.33  or the blind person and the blind person's spouse; or 
193.34     (2) any person, hereinafter referred to as "veteran," who: 
193.35     (i) served in the active military or naval service of the 
193.36  United States; and 
194.1      (ii) is entitled to compensation under the laws and 
194.2   regulations of the United States for permanent and total 
194.3   service-connected disability due to the loss, or loss of use, by 
194.4   reason of amputation, ankylosis, progressive muscular 
194.5   dystrophies, or paralysis, of both lower extremities, such as to 
194.6   preclude motion without the aid of braces, crutches, canes, or a 
194.7   wheelchair; and 
194.8      (iii) has acquired a special housing unit with special 
194.9   fixtures or movable facilities made necessary by the nature of 
194.10  the veteran's disability, or the surviving spouse of the 
194.11  deceased veteran for as long as the surviving spouse retains the 
194.12  special housing unit as a homestead; or 
194.13     (3) any person who is permanently and totally disabled. 
194.14     Property is classified and assessed under clause (3) only 
194.15  if the government agency or income-providing source certifies, 
194.16  upon the request of the homestead occupant, that the homestead 
194.17  occupant satisfies the disability requirements of this paragraph.
194.18     Property is classified and assessed pursuant to clause (1) 
194.19  only if the commissioner of revenue certifies to the assessor 
194.20  that the homestead occupant satisfies the requirements of this 
194.21  paragraph.  
194.22     Permanently and totally disabled for the purpose of this 
194.23  subdivision means a condition which is permanent in nature and 
194.24  totally incapacitates the person from working at an occupation 
194.25  which brings the person an income.  The first $32,000 market 
194.26  value of class 1b property has a net class rate of .45 percent 
194.27  of its market value.  The remaining market value of class 1b 
194.28  property has a class rate using the rates for class 1a or class 
194.29  2a property, whichever is appropriate, of similar market value.  
194.30     (c) Class 1c property is commercial use real property that 
194.31  abuts a lakeshore line and is devoted to temporary and seasonal 
194.32  residential occupancy for recreational purposes but not devoted 
194.33  to commercial purposes for more than 250 days in the year 
194.34  preceding the year of assessment, and that includes a portion 
194.35  used as a homestead by the owner, which includes a dwelling 
194.36  occupied as a homestead by a shareholder of a corporation that 
195.1   owns the resort, a partner in a partnership that owns the 
195.2   resort, or a member of a limited liability company that owns the 
195.3   resort even if the title to the homestead is held by the 
195.4   corporation, partnership, or limited liability company.  For 
195.5   purposes of this clause, property is devoted to a commercial 
195.6   purpose on a specific day if any portion of the property, 
195.7   excluding the portion used exclusively as a homestead, is used 
195.8   for residential occupancy and a fee is charged for residential 
195.9   occupancy.  The first $500,000 $600,000 of market value of class 
195.10  1c property has a class rate of one 0.55 percent, the market 
195.11  value that exceeds $600,000 but does not exceed $1,600,000 has a 
195.12  class rate of one percent, and the remaining market value of 
195.13  class 1c the property has a class rate of one percent, with the 
195.14  following limitation:  the area of the property must not exceed 
195.15  100 feet of lakeshore footage for each cabin or campsite located 
195.16  on the property up to a total of 800 feet and 500 feet in depth, 
195.17  measured away from the lakeshore is classified as class 4c.  If 
195.18  any portion of the class 1c resort property is classified as 
195.19  class 4c under subdivision 25, the entire property must meet the 
195.20  requirements of subdivision 25, paragraph (d), clause (1), to 
195.21  qualify for class 1c treatment under this paragraph. 
195.22     (d) Class 1d property includes structures that meet all of 
195.23  the following criteria: 
195.24     (1) the structure is located on property that is classified 
195.25  as agricultural property under section 273.13, subdivision 23; 
195.26     (2) the structure is occupied exclusively by seasonal farm 
195.27  workers during the time when they work on that farm, and the 
195.28  occupants are not charged rent for the privilege of occupying 
195.29  the property, provided that use of the structure for storage of 
195.30  farm equipment and produce does not disqualify the property from 
195.31  classification under this paragraph; 
195.32     (3) the structure meets all applicable health and safety 
195.33  requirements for the appropriate season; and 
195.34     (4) the structure is not salable as residential property 
195.35  because it does not comply with local ordinances relating to 
195.36  location in relation to streets or roads. 
196.1      The market value of class 1d property has the same class 
196.2   rates as class 1a property under paragraph (a). 
196.3      [EFFECTIVE DATE.] This section is effective for taxes 
196.4   levied in 2005, payable in 2006, and thereafter. 
196.5      Sec. 40.  Minnesota Statutes 2004, section 273.13, 
196.6   subdivision 23, is amended to read: 
196.7      Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
196.8   land including any improvements that is homesteaded.  The market 
196.9   value of the house and garage and immediately surrounding one 
196.10  acre of land has the same class rates as class 1a property under 
196.11  subdivision 22.  The value of the remaining land including 
196.12  improvements up to and including $600,000 market value has a net 
196.13  class rate of 0.55 percent of market value.  The remaining 
196.14  property over $600,000 market value has a class rate of one 
196.15  percent of market value. 
196.16     (b) Class 2b property is (1) real estate, rural in 
196.17  character and used exclusively for growing trees for timber, 
196.18  lumber, and wood and wood products; (2) real estate that is not 
196.19  improved with a structure and is used exclusively for growing 
196.20  trees for timber, lumber, and wood and wood products, if the 
196.21  owner has participated or is participating in a cost-sharing 
196.22  program for afforestation, reforestation, or timber stand 
196.23  improvement on that particular property, administered or 
196.24  coordinated by the commissioner of natural resources; (3) real 
196.25  estate that is nonhomestead agricultural land; or (4) a landing 
196.26  area or public access area of a privately owned public use 
196.27  airport; or (5) land with a commercial aggregate deposit that is 
196.28  not actively being mined and is not otherwise classified as 
196.29  class 2a or 2b, clauses (1) to (3).  Class 2b property has a net 
196.30  class rate of one percent of market value. 
196.31     (c) Agricultural land as used in this section means 
196.32  contiguous acreage of ten acres or more, used during the 
196.33  preceding year for agricultural purposes.  "Agricultural 
196.34  purposes" as used in this section means the raising or 
196.35  cultivation of agricultural products.  "Agricultural purposes" 
196.36  also includes enrollment in the Reinvest in Minnesota program 
197.1   under sections 103F.501 to 103F.535 or the federal Conservation 
197.2   Reserve Program as contained in Public Law 99-198 if the 
197.3   property was classified as agricultural (i) under this 
197.4   subdivision for the assessment year 2002 or (ii) in the year 
197.5   prior to its enrollment.  Contiguous acreage on the same parcel, 
197.6   or contiguous acreage on an immediately adjacent parcel under 
197.7   the same ownership, may also qualify as agricultural land, but 
197.8   only if it is pasture, timber, waste, unusable wild land, or 
197.9   land included in state or federal farm programs.  Agricultural 
197.10  classification for property shall be determined excluding the 
197.11  house, garage, and immediately surrounding one acre of land, and 
197.12  shall not be based upon the market value of any residential 
197.13  structures on the parcel or contiguous parcels under the same 
197.14  ownership. 
197.15     (d) Real estate, excluding the house, garage, and 
197.16  immediately surrounding one acre of land, of less than ten acres 
197.17  which is exclusively and intensively used for raising or 
197.18  cultivating agricultural products, shall be considered as 
197.19  agricultural land.  
197.20     Land shall be classified as agricultural even if all or a 
197.21  portion of the agricultural use of that property is the leasing 
197.22  to, or use by another person for agricultural purposes. 
197.23     Classification under this subdivision is not determinative 
197.24  for qualifying under section 273.111. 
197.25     The property classification under this section supersedes, 
197.26  for property tax purposes only, any locally administered 
197.27  agricultural policies or land use restrictions that define 
197.28  minimum or maximum farm acreage. 
197.29     (e) The term "agricultural products" as used in this 
197.30  subdivision includes production for sale of:  
197.31     (1) livestock, dairy animals, dairy products, poultry and 
197.32  poultry products, fur-bearing animals, horticultural and nursery 
197.33  stock, fruit of all kinds, vegetables, forage, grains, bees, and 
197.34  apiary products by the owner; 
197.35     (2) fish bred for sale and consumption if the fish breeding 
197.36  occurs on land zoned for agricultural use; 
198.1      (3) the commercial boarding of horses if the boarding is 
198.2   done in conjunction with raising or cultivating agricultural 
198.3   products as defined in clause (1); 
198.4      (4) property which is owned and operated by nonprofit 
198.5   organizations used for equestrian activities, excluding racing; 
198.6      (5) game birds and waterfowl bred and raised for use on a 
198.7   shooting preserve licensed under section 97A.115; 
198.8      (6) insects primarily bred to be used as food for animals; 
198.9      (7) trees, grown for sale as a crop, and not sold for 
198.10  timber, lumber, wood, or wood products, except that short 
198.11  rotation woody crops that are cultivated using agricultural 
198.12  practices on land that had previously been assessed as 
198.13  agricultural land to produce timber or forest products are 
198.14  agricultural products; and 
198.15     (8) maple syrup taken from trees grown by a person licensed 
198.16  by the Minnesota Department of Agriculture under chapter 28A as 
198.17  a food processor. 
198.18     (f) If a parcel used for agricultural purposes is also used 
198.19  for commercial or industrial purposes, including but not limited 
198.20  to:  
198.21     (1) wholesale and retail sales; 
198.22     (2) processing of raw agricultural products or other goods; 
198.23     (3) warehousing or storage of processed goods; and 
198.24     (4) office facilities for the support of the activities 
198.25  enumerated in clauses (1), (2), and (3), 
198.26  the assessor shall classify the part of the parcel used for 
198.27  agricultural purposes as class 1b, 2a, or 2b, whichever is 
198.28  appropriate, and the remainder in the class appropriate to its 
198.29  use.  The grading, sorting, and packaging of raw agricultural 
198.30  products for first sale is considered an agricultural purpose.  
198.31  A greenhouse or other building where horticultural or nursery 
198.32  products are grown that is also used for the conduct of retail 
198.33  sales must be classified as agricultural if it is primarily used 
198.34  for the growing of horticultural or nursery products from seed, 
198.35  cuttings, or roots and occasionally as a showroom for the retail 
198.36  sale of those products.  Use of a greenhouse or building only 
199.1   for the display of already grown horticultural or nursery 
199.2   products does not qualify as an agricultural purpose.  
199.3      The assessor shall determine and list separately on the 
199.4   records the market value of the homestead dwelling and the one 
199.5   acre of land on which that dwelling is located.  If any farm 
199.6   buildings or structures are located on this homesteaded acre of 
199.7   land, their market value shall not be included in this separate 
199.8   determination.  
199.9      (g) To qualify for classification under paragraph (b), 
199.10  clause (4), a privately owned public use airport must be 
199.11  licensed as a public airport under section 360.018.  For 
199.12  purposes of paragraph (b), clause (4), "landing area" means that 
199.13  part of a privately owned public use airport properly cleared, 
199.14  regularly maintained, and made available to the public for use 
199.15  by aircraft and includes runways, taxiways, aprons, and sites 
199.16  upon which are situated landing or navigational aids.  A landing 
199.17  area also includes land underlying both the primary surface and 
199.18  the approach surfaces that comply with all of the following:  
199.19     (i) the land is properly cleared and regularly maintained 
199.20  for the primary purposes of the landing, taking off, and taxiing 
199.21  of aircraft; but that portion of the land that contains 
199.22  facilities for servicing, repair, or maintenance of aircraft is 
199.23  not included as a landing area; 
199.24     (ii) the land is part of the airport property; and 
199.25     (iii) the land is not used for commercial or residential 
199.26  purposes. 
199.27  The land contained in a landing area under paragraph (b), clause 
199.28  (4), must be described and certified by the commissioner of 
199.29  transportation.  The certification is effective until it is 
199.30  modified, or until the airport or landing area no longer meets 
199.31  the requirements of paragraph (b), clause (4).  For purposes of 
199.32  paragraph (b), clause (4), "public access area" means property 
199.33  used as an aircraft parking ramp, apron, or storage hangar, or 
199.34  an arrival and departure building in connection with the airport.
199.35     (h) To qualify for classification under paragraph (b), 
199.36  clause (5), the property must be at least ten contiguous acres 
200.1   in size and the owner of the property must record with the 
200.2   county recorder of the county in which the property is located 
200.3   an affidavit containing: 
200.4      (1) a legal description of the property; 
200.5      (2) a disclosure that the property contains a commercial 
200.6   aggregate deposit that is not actively being mined; 
200.7      (3) documentation that the conditional use under the county 
200.8   or local zoning ordinance of this property is for mining; and 
200.9      (4) documentation that a permit has been issued by the 
200.10  local unit of government or the mining activity is allowed under 
200.11  local ordinance.  The disclosure must include a statement from a 
200.12  registered professional geologist, engineer, or soil scientist 
200.13  delineating the deposit and certifying that it is a commercial 
200.14  aggregate deposit.  
200.15     For purposes of this section and section 273.1115, 
200.16  "commercial aggregate deposit" means a deposit that will yield 
200.17  crushed stone or sand and gravel that is suitable for use as a 
200.18  construction aggregate; and "actively mined" means the removal 
200.19  of top soil and overburden in preparation for excavation or 
200.20  excavation of a commercial deposit. 
200.21     (i) When any portion of the property under this subdivision 
200.22  or section 273.13, subdivision 22, begins to be actively mined, 
200.23  the owner must file a supplemental affidavit within 60 days from 
200.24  the day any aggregate is removed stating the number of acres of 
200.25  the property that is actively being mined.  The acres actively 
200.26  being mined must be (1) valued and classified under section 
200.27  273.13, subdivision 24, in the next subsequent assessment year, 
200.28  and (2) removed from the aggregate resource preservation 
200.29  property tax program under section 273.1115, if the land was 
200.30  enrolled in that program.  Copies of the original affidavit and 
200.31  all supplemental affidavits must be filed with the county 
200.32  assessor, the local zoning administrator, and the Department of 
200.33  Natural Resources, Division of Land and Minerals.  A 
200.34  supplemental affidavit must be filed each time a subsequent 
200.35  portion of the property is actively mined, provided that the 
200.36  minimum acreage change is five acres, even if the actual mining 
201.1   activity constitutes less than five acres.  
201.2      [EFFECTIVE DATE.] This section is effective for taxes 
201.3   levied in 2005, payable in 2006, and thereafter. 
201.4      Sec. 41.  Minnesota Statutes 2004, section 273.13, 
201.5   subdivision 25, is amended to read: 
201.6      Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
201.7   estate containing four or more units and used or held for use by 
201.8   the owner or by the tenants or lessees of the owner as a 
201.9   residence for rental periods of 30 days or more.  Class 4a also 
201.10  includes hospitals licensed under sections 144.50 to 144.56, 
201.11  other than hospitals exempt under section 272.02, and contiguous 
201.12  property used for hospital purposes, without regard to whether 
201.13  the property has been platted or subdivided.  The market value 
201.14  of class 4a property has a class rate of 1.8 percent for taxes 
201.15  payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 
201.16  percent for taxes payable in 2004 and thereafter, except that 
201.17  class 4a property consisting of a structure for which 
201.18  construction commenced after June 30, 2001, has a class rate of 
201.19  1.25 percent of market value for taxes payable in 2003 and 
201.20  subsequent years. 
201.21     (b) Class 4b includes: 
201.22     (1) residential real estate containing less than four units 
201.23  that does not qualify as class 4bb, other than seasonal 
201.24  residential recreational property; 
201.25     (2) manufactured homes not classified under any other 
201.26  provision; 
201.27     (3) a dwelling, garage, and surrounding one acre of 
201.28  property on a nonhomestead farm classified under subdivision 23, 
201.29  paragraph (b) containing two or three units; and 
201.30     (4) unimproved property that is classified residential as 
201.31  determined under subdivision 33.  
201.32     The market value of class 4b property has a class rate of 
201.33  1.5 percent for taxes payable in 2002, and 1.25 percent for 
201.34  taxes payable in 2003 and thereafter. 
201.35     (c) Class 4bb includes: 
201.36     (1) nonhomestead residential real estate containing one 
202.1   unit, other than seasonal residential recreational property; and 
202.2      (2) a single family dwelling, garage, and surrounding one 
202.3   acre of property on a nonhomestead farm classified under 
202.4   subdivision 23, paragraph (b). 
202.5      Class 4bb property has the same class rates as class 1a 
202.6   property under subdivision 22. 
202.7      Property that has been classified as seasonal residential 
202.8   recreational property at any time during which it has been owned 
202.9   by the current owner or spouse of the current owner does not 
202.10  qualify for class 4bb. 
202.11     (d) Class 4c property includes: 
202.12     (1) except as provided in subdivision 22, paragraph (c), 
202.13  real property devoted to temporary and seasonal residential 
202.14  occupancy for recreation purposes, including real property 
202.15  devoted to temporary and seasonal residential occupancy for 
202.16  recreation purposes and not devoted to commercial purposes for 
202.17  more than 250 days in the year preceding the year of 
202.18  assessment.  For purposes of this clause, property is devoted to 
202.19  a commercial purpose on a specific day if any portion of the 
202.20  property is used for residential occupancy, and a fee is charged 
202.21  for residential occupancy.  In order for a property to be 
202.22  classified as class 4c, seasonal residential recreational for 
202.23  commercial purposes, at least 40 percent of the annual gross 
202.24  lodging receipts related to the property must be from business 
202.25  conducted during 90 consecutive days and either (i) at least 60 
202.26  percent of all paid bookings by lodging guests during the year 
202.27  must be for periods of at least two consecutive nights; or (ii) 
202.28  at least 20 percent of the annual gross receipts must be from 
202.29  charges for rental of fish houses, boats and motors, 
202.30  snowmobiles, downhill or cross-country ski equipment, or charges 
202.31  for marina services, launch services, and guide services, or the 
202.32  sale of bait and fishing tackle.  For purposes of this 
202.33  determination, a paid booking of five or more nights shall be 
202.34  counted as two bookings.  Class 4c also includes commercial use 
202.35  real property used exclusively for recreational purposes in 
202.36  conjunction with class 4c property devoted to temporary and 
203.1   seasonal residential occupancy for recreational purposes, up to 
203.2   a total of two acres, provided the property is not devoted to 
203.3   commercial recreational use for more than 250 days in the year 
203.4   preceding the year of assessment and is located within two miles 
203.5   of the class 4c property with which it is used.  Class 4c 
203.6   property classified in this clause also includes the remainder 
203.7   of class 1c resorts provided that the entire property including 
203.8   that portion of the property classified as class 1c also meets 
203.9   the requirements for class 4c under this clause; otherwise the 
203.10  entire property is classified as class 3.  Owners of real 
203.11  property devoted to temporary and seasonal residential occupancy 
203.12  for recreation purposes and all or a portion of which was 
203.13  devoted to commercial purposes for not more than 250 days in the 
203.14  year preceding the year of assessment desiring classification as 
203.15  class 1c or 4c, must submit a declaration to the assessor 
203.16  designating the cabins or units occupied for 250 days or less in 
203.17  the year preceding the year of assessment by January 15 of the 
203.18  assessment year.  Those cabins or units and a proportionate 
203.19  share of the land on which they are located will be designated 
203.20  class 1c or 4c as otherwise provided.  The remainder of the 
203.21  cabins or units and a proportionate share of the land on which 
203.22  they are located will be designated as class 3a.  The owner of 
203.23  property desiring designation as class 1c or 4c property must 
203.24  provide guest registers or other records demonstrating that the 
203.25  units for which class 1c or 4c designation is sought were not 
203.26  occupied for more than 250 days in the year preceding the 
203.27  assessment if so requested.  The portion of a property operated 
203.28  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
203.29  nonresidential facility operated on a commercial basis not 
203.30  directly related to temporary and seasonal residential occupancy 
203.31  for recreation purposes shall not qualify for class 1c or 4c; 
203.32     (2) qualified property used as a golf course if: 
203.33     (i) it is open to the public on a daily fee basis.  It may 
203.34  charge membership fees or dues, but a membership fee may not be 
203.35  required in order to use the property for golfing, and its green 
203.36  fees for golfing must be comparable to green fees typically 
204.1   charged by municipal courses; and 
204.2      (ii) it meets the requirements of section 273.112, 
204.3   subdivision 3, paragraph (d). 
204.4      A structure used as a clubhouse, restaurant, or place of 
204.5   refreshment in conjunction with the golf course is classified as 
204.6   class 3a property; 
204.7      (3) real property up to a maximum of one acre of land owned 
204.8   by a nonprofit community service oriented organization; provided 
204.9   that the property is not used for a revenue-producing activity 
204.10  for more than six days in the calendar year preceding the year 
204.11  of assessment and the property is not used for residential 
204.12  purposes on either a temporary or permanent basis.  For purposes 
204.13  of this clause, a "nonprofit community service oriented 
204.14  organization" means any corporation, society, association, 
204.15  foundation, or institution organized and operated exclusively 
204.16  for charitable, religious, fraternal, civic, or educational 
204.17  purposes, and which is exempt from federal income taxation 
204.18  pursuant to section 501(c)(3), (10), or (19) of the Internal 
204.19  Revenue Code of 1986, as amended through December 31, 1990.  For 
204.20  purposes of this clause, "revenue-producing activities" shall 
204.21  include but not be limited to property or that portion of the 
204.22  property that is used as an on-sale intoxicating liquor or 3.2 
204.23  percent malt liquor establishment licensed under chapter 340A, a 
204.24  restaurant open to the public, bowling alley, a retail store, 
204.25  gambling conducted by organizations licensed under chapter 349, 
204.26  an insurance business, or office or other space leased or rented 
204.27  to a lessee who conducts a for-profit enterprise on the 
204.28  premises.  Any portion of the property which is used for 
204.29  revenue-producing activities for more than six days in the 
204.30  calendar year preceding the year of assessment shall be assessed 
204.31  as class 3a.  The use of the property for social events open 
204.32  exclusively to members and their guests for periods of less than 
204.33  24 hours, when an admission is not charged nor any revenues are 
204.34  received by the organization shall not be considered a 
204.35  revenue-producing activity; 
204.36     (4) postsecondary student housing of not more than one acre 
205.1   of land that is owned by a nonprofit corporation organized under 
205.2   chapter 317A and is used exclusively by a student cooperative, 
205.3   sorority, or fraternity for on-campus housing or housing located 
205.4   within two miles of the border of a college campus; 
205.5      (5) manufactured home parks as defined in section 327.14, 
205.6   subdivision 3; 
205.7      (6) real property that is actively and exclusively devoted 
205.8   to indoor fitness, health, social, recreational, and related 
205.9   uses, is owned and operated by a not-for-profit corporation, and 
205.10  is located within the metropolitan area as defined in section 
205.11  473.121, subdivision 2; 
205.12     (7) a leased or privately owned noncommercial aircraft 
205.13  storage hangar not exempt under section 272.01, subdivision 2, 
205.14  and the land on which it is located, provided that: 
205.15     (i) the land is on an airport owned or operated by a city, 
205.16  town, county, Metropolitan Airports Commission, or group 
205.17  thereof; and 
205.18     (ii) the land lease, or any ordinance or signed agreement 
205.19  restricting the use of the leased premise, prohibits commercial 
205.20  activity performed at the hangar. 
205.21     If a hangar classified under this clause is sold after June 
205.22  30, 2000, a bill of sale must be filed by the new owner with the 
205.23  assessor of the county where the property is located within 60 
205.24  days of the sale; and 
205.25     (8) a privately owned noncommercial aircraft storage hangar 
205.26  not exempt under section 272.01, subdivision 2, and the land on 
205.27  which it is located, provided that: 
205.28     (i) the land abuts a public airport; and 
205.29     (ii) the owner of the aircraft storage hangar provides the 
205.30  assessor with a signed agreement restricting the use of the 
205.31  premises, prohibiting commercial use or activity performed at 
205.32  the hangar; and 
205.33     (9) residential real estate, a portion of which is used by 
205.34  the owner for homestead purposes, and that is also a place of 
205.35  lodging, if all of the following criteria are met: 
205.36     (i) rooms are provided for rent to transient guests that 
206.1   generally stay for periods of 14 or fewer days; 
206.2      (ii) meals are provided to persons who rent rooms, the cost 
206.3   of which is incorporated in the basic room rate; 
206.4      (iii) meals are not provided to the general public except 
206.5   for special events on fewer than seven days in the calendar year 
206.6   preceding the year of the assessment; and 
206.7      (iv) the owner is the operator of the property. 
206.8   The market value subject to the 4c classification under this 
206.9   clause is limited to five rental units.  Any rental units on the 
206.10  property in excess of five, must be valued and assessed as class 
206.11  3a.  The portion of the property used for purposes of a 
206.12  homestead by the owner must be classified as class 1a property 
206.13  under subdivision 22. 
206.14     Class 4c property has a class rate of 1.5 percent of market 
206.15  value, except that (i) each parcel of seasonal residential 
206.16  recreational property not used for commercial purposes has the 
206.17  same class rates as class 4bb property, (ii) manufactured home 
206.18  parks assessed under clause (5) have the same class rate as 
206.19  class 4b property, (iii) commercial-use seasonal residential 
206.20  recreational property has a class rate of one percent for the 
206.21  first $500,000 of market value, which includes any market value 
206.22  receiving the 0.55 or one percent rate under subdivision 22, and 
206.23  1.25 percent for the remaining market value, (iv) the market 
206.24  value of property described in clause (4) has a class rate of 
206.25  one percent, (v) the market value of property described in 
206.26  clauses (2) and (6) has a class rate of 1.25 percent, and (vi) 
206.27  that portion of the market value of property in clause (8) 
206.28  qualifying for class 4c property has a class rate of 1.25 
206.29  percent.  
206.30     (e) Class 4d property is qualifying low-income rental 
206.31  housing certified to the assessor by the Housing Finance Agency 
206.32  under section 273.1321.  Class 4d includes land in proportion to 
206.33  the total market value of the building that is qualifying 
206.34  low-income rental housing. 
206.35     Class 4d property has a class rate of 0.55 percent for 
206.36  taxes payable in 2007 and thereafter. 
207.1      Sec. 42.  [273.1321] [VALUATION OF LOW-INCOME RENTAL 
207.2   PROPERTY; CAPITALIZED VALUE OF NET OPERATING INCOME.] 
207.3      Subdivision 1.  [REQUIREMENT.] Low-income rental property 
207.4   classified as class 4d under section 273.13, subdivision 25, is 
207.5   entitled to valuation under this section if at least 75 percent 
207.6   of the units in the rental housing property meet any of the 
207.7   following qualifications: 
207.8      (1) the units are subject to a housing assistance payments 
207.9   contract under section 8 of the United States Housing Act of 
207.10  1937, as amended; 
207.11     (2) the units are rent-restricted and income-restricted 
207.12  units of a qualified low-income housing project receiving tax 
207.13  credits under section 42(g) of the Internal Revenue Code of 
207.14  1986, as amended; 
207.15     (3) the units are financed by the Rural Housing Service of 
207.16  the United States Department of Agriculture and receive payments 
207.17  under the rental assistance program pursuant to section 521(a) 
207.18  of the Housing Act of 1949, as amended; or 
207.19     (4) the units are subject to rent and income restrictions 
207.20  under the terms of financial assistance provided to the rental 
207.21  housing property by a federal, state, or local unit of 
207.22  government as evidenced by a document recorded against the 
207.23  property. 
207.24     The restrictions must require assisted units to be occupied 
207.25  by residents whose household income at the time of initial 
207.26  occupancy does not exceed 60 percent of the greater of area or 
207.27  state median income, adjusted for family size, as determined by 
207.28  the United States Department of Housing and Urban Development.  
207.29  The restriction must also require the rents for assisted units 
207.30  to not exceed 30 percent of 60 percent of the greater of area or 
207.31  state median income, adjusted for family size, as determined by 
207.32  the United States Department of Housing and Urban Development. 
207.33     Subd. 2.  [DETERMINATION OF VALUE.] (a) The value of any 
207.34  rental housing property meeting the qualifications of 
207.35  subdivision 1 shall be determined, upon timely application by 
207.36  the owner in the manner provided in subdivision 3, on the basis 
208.1   of the restricted use of the property, notwithstanding sections 
208.2   272.03, subdivision 8, and 273.11, by capitalizing the net 
208.3   operating income prior to the payment of debt service. 
208.4      (b) Net operating income prior to payment of debt service 
208.5   must be the amounts shown in a financial statement prepared by 
208.6   an independent certified public accountant or firm.  The 
208.7   financial statement must show the revenues, expenses, cash 
208.8   flows, assets, liabilities, and net assets for the property for 
208.9   which an application is made under this section. 
208.10     (c) The capitalization rate applied to net operating income 
208.11  shall be established jointly by the commissioner and the Housing 
208.12  Finance Agency based on market data and industry standards.  The 
208.13  commissioner and the Housing Finance Agency shall jointly 
208.14  establish separate rates based on types of rental housing 
208.15  properties and their locations. 
208.16     Subd. 3.  [APPLICATION.] (a) Application for assessment 
208.17  under this section must be filed by February 28 of the levy 
208.18  year, or at a later date the Housing Finance Agency deems 
208.19  practicable.  The application must be filed with the Housing 
208.20  Finance Agency, on a form prescribed by the agency, and must 
208.21  contain the information required by the Housing Finance Agency. 
208.22     (b) Each application must include: 
208.23     (1) the property tax identification number; 
208.24     (2) evidence that the property meets the requirements of 
208.25  subdivision 1; and 
208.26     (3) a true and correct copy of the financial statement 
208.27  related to the property. 
208.28     (c) The applicant must pay an application fee to be set by 
208.29  the Housing Finance Agency.  The application fee charged by the 
208.30  agency must approximately equal the costs of processing and 
208.31  reviewing the applications.  The fee must be deposited in the 
208.32  housing development fund. 
208.33     Subd. 4.  [CERTIFICATION.] By June 1 of each levy year, the 
208.34  Housing Finance Agency must certify to local assessors the 
208.35  valuation, as determined under this section, of rental 
208.36  properties that apply and are qualified for valuation under this 
209.1   section.  In making the certification, the Housing Finance 
209.2   Agency may rely on the application and supporting information 
209.3   supplied by the property owner. 
209.4      [EFFECTIVE DATE.] This section is effective for taxes 
209.5   levied in 2006, payable in 2007, and thereafter. 
209.6      Sec. 43.  [273.1322] [VACANT COMMERCIAL-INDUSTRIAL 
209.7   PROPERTIES.] 
209.8      Subdivision 1.  [AUTHORITY.] A city may establish, by 
209.9   ordinance, a program to encourage redevelopment, provide for 
209.10  better utilization of commercial-industrial property, and 
209.11  eliminate blighting influences by revoking the eligibility of 
209.12  individual commercial-industrial properties to receive the 
209.13  credit authorized under section 273.1398, subdivision 4.  The 
209.14  program may revoke eligibility only if the property has been 
209.15  vacant, as defined in subdivision 3, clauses (1) to (3), for 
209.16  three or more consecutive years prior to the current assessment 
209.17  year, or under subdivision 3, clause (4), for five or more 
209.18  consecutive years prior to the current assessment year. 
209.19     Subd. 2.  [MINIMUM REQUIREMENTS.] The program must provide: 
209.20     (1) standards for determining whether a property is vacant; 
209.21     (2) written assessment notice by the city or county to the 
209.22  property owner informing the owner that the property's 
209.23  eligibility will be revoked; 
209.24     (3) opportunity for the property owner to appeal the 
209.25  revocation at the board of equalization; 
209.26     (4) timely notice to the county assessor of the property's 
209.27  eligibility revocation, if the city has a city assessor and the 
209.28  city assessor has revoked the property's eligibility; and 
209.29     (5) any other provisions the city determines are necessary 
209.30  or appropriate to the operation of the program to achieve its 
209.31  purposes. 
209.32     Subd. 3.  [DEFINITION OF VACANT.] A program established 
209.33  under this section may provide that a property is vacant if the 
209.34  property is: 
209.35     (1) condemned, dangerous, or having multiple building code 
209.36  violations; 
210.1      (2) condemned and illegally occupied; 
210.2      (3) either occupied or unoccupied, during which time the 
210.3   enforcement officer for the municipality has issued multiple 
210.4   orders to correct nuisance conditions; or 
210.5      (4) unoccupied and not utilized for a commercial or 
210.6   industrial purpose.  
210.7      Subd. 4.  [NOTICE TO PROPERTY OWNER.] The municipality 
210.8   shall give notice to the property owner requiring that any 
210.9   conditions in subdivision 3, clauses (1) to (3), be remedied, 
210.10  and that the property be occupied and used for a commercial or 
210.11  industrial purpose for at least 180 days during the next 
210.12  12-month period, or else the property may cease to be eligible 
210.13  for the credit under section 273.1398, subdivision 4. 
210.14     [EFFECTIVE DATE.] This section is effective for taxes 
210.15  payable in 2007 and thereafter. 
210.16     Sec. 44.  Minnesota Statutes 2004, section 273.1384, 
210.17  subdivision 3, is amended to read: 
210.18     Subd. 3.  [CREDIT REIMBURSEMENTS.] (a) The county auditor 
210.19  shall determine the tax reductions allowed under this section 
210.20  within the county for each taxes payable year and shall certify 
210.21  that amount to the commissioner of revenue as a part of the 
210.22  abstracts of tax lists submitted by the county auditors under 
210.23  section 275.29.  
210.24     (b) In the case of class 1a, class lc, or class 2a 
210.25  homestead property which is located within a city, the county 
210.26  auditor shall determine whether the net tax on each parcel is 
210.27  less than the applicable percentage of its taxable market value 
210.28  provided in this paragraph for the year.  For taxes payable in 
210.29  2007 and 2008, if the net tax on the property is less than 0.7 
210.30  percent of its taxable market value, the county auditor shall 
210.31  reduce the reimbursement to the county and the city for the 
210.32  credit allowed under subdivision 1 by the amount of the 
210.33  difference.  For taxes payable in 2009 and 2010, if the net tax 
210.34  on the property is less than 0.8 percent of its taxable market 
210.35  value, the county auditor shall reduce the reimbursement to the 
210.36  county and the city for the credit allowed under subdivision 1 
211.1   by the amount of the difference.  For taxes payable in 2011 and 
211.2   2012, if the net tax on the property is less than 0.9 percent of 
211.3   its taxable market value, the county auditor shall reduce the 
211.4   reimbursement to the county and the city for the credit allowed 
211.5   under subdivision 1 by the amount of the difference.  For taxes 
211.6   payable in 2013 and thereafter, if the net tax on the property 
211.7   is less than one percent of its taxable market value, the county 
211.8   auditor shall reduce the reimbursement to the county and the 
211.9   city for the credit allowed under subdivision 1 by the amount of 
211.10  the difference.  The market value credit reimbursement cannot be 
211.11  less than zero.  
211.12     (c) Any prior year adjustments shall also be certified on 
211.13  the abstracts of tax lists.  The commissioner shall review the 
211.14  certifications for accuracy, and may make such changes as are 
211.15  deemed necessary, or return the certification to the county 
211.16  auditor for correction.  If there is no reduction of the 
211.17  reimbursements under paragraph (b), the credits under this 
211.18  section must be used to proportionately reduce the net tax 
211.19  capacity-based property tax payable to each local taxing 
211.20  jurisdiction as provided in section 273.1393.  If there is a 
211.21  reduction under paragraph (b), the reimbursements paid to the 
211.22  city and county must be reduced in proportion to the amount of 
211.23  their levies. 
211.24     [EFFECTIVE DATE.] This section is effective for taxes 
211.25  levied in 2006, payable in 2007, and thereafter. 
211.26     Sec. 45.  [273.323] [EFFECTIVE DATE FOR RULES FOR VALUATION 
211.27  OF ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.] 
211.28     Rules adopted by the commissioner that prescribe the method 
211.29  of valuing property of electric and transmission pipeline 
211.30  utilities may not take effect before the end of the regular 
211.31  legislative session in the calendar year following adoption of 
211.32  the rules. 
211.33     [EFFECTIVE DATE.] This section is effective the day 
211.34  following final enactment. 
211.35     Sec. 46.  Minnesota Statutes 2004, section 275.065, 
211.36  subdivision 3, is amended to read: 
212.1      Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
212.2   county auditor shall prepare and the county treasurer shall 
212.3   deliver after November 10 and on or before November 24 each 
212.4   year, by first class mail to each taxpayer at the address listed 
212.5   on the county's current year's assessment roll, a notice of 
212.6   proposed property taxes.  
212.7      (b) The commissioner of revenue shall prescribe the form of 
212.8   the notice. 
212.9      (c) The notice must inform taxpayers that it contains the 
212.10  amount of property taxes each taxing authority proposes to 
212.11  collect for taxes payable the following year.  In the case of a 
212.12  town, or in the case of the state general tax, the final tax 
212.13  amount will be its proposed tax.  In the case of taxing 
212.14  authorities required to hold a public meeting under subdivision 
212.15  6, the notice must clearly state that each taxing authority, 
212.16  including regional library districts established under section 
212.17  134.201, and including the metropolitan taxing districts as 
212.18  defined in paragraph (i), but excluding all other special taxing 
212.19  districts and towns, will hold a public meeting to receive 
212.20  public testimony on the proposed budget and proposed or final 
212.21  property tax levy, or, in case of a school district, on the 
212.22  current budget and proposed property tax levy.  It must clearly 
212.23  state the time and place of each taxing authority's meeting, a 
212.24  telephone number for the taxing authority that taxpayers may 
212.25  call if they have questions related to the notice, and an 
212.26  address where comments will be received by mail.  
212.27     (d) The notice must state for each parcel: 
212.28     (1) the market value of the property as determined under 
212.29  section 273.11, and used for computing property taxes payable in 
212.30  the following year and for taxes payable in the current year as 
212.31  each appears in the records of the county assessor on November 1 
212.32  of the current year; and, in the case of residential property, 
212.33  whether the property is classified as homestead or 
212.34  nonhomestead.  The notice must clearly inform taxpayers of the 
212.35  years to which the market values apply and that the values are 
212.36  final values; 
213.1      (2) the items listed below, shown separately by county, 
213.2   city or town, and state general tax, net of the residential and 
213.3   agricultural homestead credit under section 273.1384, voter 
213.4   approved school levy, other local school levy, and the sum of 
213.5   the special taxing districts, and as a total of all taxing 
213.6   authorities:  
213.7      (i) the actual tax for taxes payable in the current year; 
213.8   and 
213.9      (ii) the proposed tax amount. 
213.10     If the county levy under clause (2) includes an amount for 
213.11  a lake improvement district as defined under sections 103B.501 
213.12  to 103B.581, the amount attributable for that purpose must be 
213.13  separately stated from the remaining county levy amount.  
213.14     In the case of a town or the state general tax, the final 
213.15  tax shall also be its proposed tax unless the town changes its 
213.16  levy at a special town meeting under section 365.52.  If a 
213.17  school district has certified under section 126C.17, subdivision 
213.18  9, that a referendum will be held in the school district at the 
213.19  November general election, the county auditor must note next to 
213.20  the school district's proposed amount that a referendum is 
213.21  pending and that, if approved by the voters, the tax amount may 
213.22  be higher than shown on the notice.  In the case of the city of 
213.23  Minneapolis, the levy for the Minneapolis Library Board and the 
213.24  levy for Minneapolis Park and Recreation shall be listed 
213.25  separately from the remaining amount of the city's levy.  In the 
213.26  case of the city of St. Paul, the levy for the St. Paul Library 
213.27  Agency must be listed separately from the remaining amount of 
213.28  the city's levy.  In the case of Ramsey County, any amount 
213.29  levied under section 134.07 may be listed separately from the 
213.30  remaining amount of the county's levy.  In the case of a parcel 
213.31  where tax increment or the fiscal disparities areawide tax under 
213.32  chapter 276A or 473F applies, the proposed tax levy on the 
213.33  captured value or the proposed tax levy on the tax capacity 
213.34  subject to the areawide tax must each be stated separately and 
213.35  not included in the sum of the special taxing districts; and 
213.36     (3) the increase or decrease between the total taxes 
214.1   payable in the current year and the total proposed taxes, 
214.2   expressed as a percentage. 
214.3      For purposes of this section, the amount of the tax on 
214.4   homesteads qualifying under the senior citizens' property tax 
214.5   deferral program under chapter 290B is the total amount of 
214.6   property tax before subtraction of the deferred property tax 
214.7   amount. 
214.8      (e) The notice must clearly state that the proposed or 
214.9   final taxes do not include the following: 
214.10     (1) special assessments; 
214.11     (2) levies approved by the voters after the date the 
214.12  proposed taxes are certified, including bond referenda and 
214.13  school district levy referenda; 
214.14     (3) a levy limit increase approved by the voters by the 
214.15  first Tuesday after the first Monday in November of the levy 
214.16  year as provided under section 275.73; 
214.17     (4) amounts necessary to pay cleanup or other costs due to 
214.18  a natural disaster occurring after the date the proposed taxes 
214.19  are certified; 
214.20     (5) amounts necessary to pay tort judgments against the 
214.21  taxing authority that become final after the date the proposed 
214.22  taxes are certified; and 
214.23     (6) the contamination tax imposed on properties which 
214.24  received market value reductions for contamination. 
214.25     (f) Except as provided in subdivision 7, failure of the 
214.26  county auditor to prepare or the county treasurer to deliver the 
214.27  notice as required in this section does not invalidate the 
214.28  proposed or final tax levy or the taxes payable pursuant to the 
214.29  tax levy. 
214.30     (g) If the notice the taxpayer receives under this section 
214.31  lists the property as nonhomestead, and satisfactory 
214.32  documentation is provided to the county assessor by the 
214.33  applicable deadline, and the property qualifies for the 
214.34  homestead classification in that assessment year, the assessor 
214.35  shall reclassify the property to homestead for taxes payable in 
214.36  the following year. 
215.1      (h) In the case of class 4 residential property used as a 
215.2   residence for lease or rental periods of 30 days or more, the 
215.3   taxpayer must either: 
215.4      (1) mail or deliver a copy of the notice of proposed 
215.5   property taxes to each tenant, renter, or lessee; or 
215.6      (2) post a copy of the notice in a conspicuous place on the 
215.7   premises of the property.  
215.8      The notice must be mailed or posted by the taxpayer by 
215.9   November 27 or within three days of receipt of the notice, 
215.10  whichever is later.  A taxpayer may notify the county treasurer 
215.11  of the address of the taxpayer, agent, caretaker, or manager of 
215.12  the premises to which the notice must be mailed in order to 
215.13  fulfill the requirements of this paragraph. 
215.14     (i) For purposes of this subdivision, subdivisions 5a and 
215.15  6, "metropolitan special taxing districts" means the following 
215.16  taxing districts in the seven-county metropolitan area that levy 
215.17  a property tax for any of the specified purposes listed below: 
215.18     (1) Metropolitan Council under section 473.132, 473.167, 
215.19  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
215.20     (2) Metropolitan Airports Commission under section 473.667, 
215.21  473.671, or 473.672; and 
215.22     (3) Metropolitan Mosquito Control Commission under section 
215.23  473.711. 
215.24     For purposes of this section, any levies made by the 
215.25  regional rail authorities in the county of Anoka, Carver, 
215.26  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
215.27  398A shall be included with the appropriate county's levy and 
215.28  shall be discussed at that county's public hearing. 
215.29     [EFFECTIVE DATE.] This section is effective for notices for 
215.30  property taxes levied in 2005, payable in 2006, and thereafter. 
215.31     Sec. 47.  Minnesota Statutes 2004, section 275.065, is 
215.32  amended by adding a subdivision to read: 
215.33     Subd. 9.  [AITKIN COUNTY AND SCHOOL DISTRICT 
215.34  HEARING.] Notwithstanding any other law, Aitkin County and 
215.35  Independent School District No. 1, and the city of Aitkin, or 
215.36  any two of them, may hold their initial public hearing jointly.  
216.1   The hearing must be held on the second Tuesday of December each 
216.2   year.  The advertisement required in subdivision 5a may be a 
216.3   joint advertisement.  The hearing is otherwise subject to the 
216.4   requirements of this section. 
216.5      [EFFECTIVE DATE.] This section is effective for hearings 
216.6   conducted in 2005 and subsequent years. 
216.7      Sec. 48.  Minnesota Statutes 2004, section 275.065, is 
216.8   amended by adding a subdivision to read: 
216.9      Subd. 10.  [NOBLES COUNTY; JOINT INITIAL PUBLIC 
216.10  HEARING.] Notwithstanding any other law, Nobles County, the city 
216.11  of Worthington, and Independent School District No. 518, 
216.12  Worthington, or any two of them, may hold their initial public 
216.13  hearing jointly.  The hearing must be held on the second Tuesday 
216.14  of December each year.  The advertisement required in 
216.15  subdivision 5a may be a joint advertisement.  The hearing is 
216.16  otherwise subject to the requirements of this section. 
216.17     [EFFECTIVE DATE.] This section is effective for hearings 
216.18  conducted in 2005 and subsequent years. 
216.19     Sec. 49.  Minnesota Statutes 2004, section 275.066, is 
216.20  amended to read: 
216.21     275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 
216.22     For the purposes of property taxation and property tax 
216.23  state aids, the term "special taxing districts" includes the 
216.24  following entities: 
216.25     (1) watershed districts under chapter 103D; 
216.26     (2) sanitary districts under sections 115.18 to 115.37; 
216.27     (3) regional sanitary sewer districts under sections 115.61 
216.28  to 115.67; 
216.29     (4) regional public library districts under section 
216.30  134.201; 
216.31     (5) park districts under chapter 398; 
216.32     (6) regional railroad authorities under chapter 398A; 
216.33     (7) hospital districts under sections 447.31 to 447.38; 
216.34     (8) St. Cloud Metropolitan Transit Commission under 
216.35  sections 458A.01 to 458A.15; 
216.36     (9) Duluth Transit Authority under sections 458A.21 to 
217.1   458A.37; 
217.2      (10) regional development commissions under sections 
217.3   462.381 to 462.398; 
217.4      (11) housing and redevelopment authorities under sections 
217.5   469.001 to 469.047; 
217.6      (12) port authorities under sections 469.048 to 469.068; 
217.7      (13) economic development authorities under sections 
217.8   469.090 to 469.1081; 
217.9      (14) Metropolitan Council under sections 473.123 to 
217.10  473.549; 
217.11     (15) Metropolitan Airports Commission under sections 
217.12  473.601 to 473.680; 
217.13     (16) Metropolitan Mosquito Control Commission under 
217.14  sections 473.701 to 473.716; 
217.15     (17) Morrison County Rural Development Financing Authority 
217.16  under Laws 1982, chapter 437, section 1; 
217.17     (18) Croft Historical Park District under Laws 1984, 
217.18  chapter 502, article 13, section 6; 
217.19     (19) East Lake County Medical Clinic District under Laws 
217.20  1989, chapter 211, sections 1 to 6; 
217.21     (20) Floodwood Area Ambulance District under Laws 1993, 
217.22  chapter 375, article 5, section 39; 
217.23     (21) Middle Mississippi River Watershed Management 
217.24  Organization under sections 103B.211 and 103B.241; 
217.25     (22) emergency medical services special taxing districts 
217.26  under section 144F.01; 
217.27     (23) a county levying under the authority of section 
217.28  103B.241, 103B.245, or 103B.251; 
217.29     (24) Southern St. Louis County Special Taxing District; 
217.30  Chris Jensen Nursing Home under Laws 2003, First Special Session 
217.31  chapter 21, article 4, section 12; and 
217.32     (25) soil and water conservation districts under chapter 
217.33  103C; and 
217.34     (26) any other political subdivision of the state of 
217.35  Minnesota, excluding counties, school districts, cities, and 
217.36  towns, that has the power to adopt and certify a property tax 
218.1   levy to the county auditor, as determined by the commissioner of 
218.2   revenue. 
218.3      Sec. 50.  Minnesota Statutes 2004, section 275.70, 
218.4   subdivision 5, is amended to read: 
218.5      Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
218.6   portions of ad valorem taxes levied by a local governmental unit 
218.7   for the following purposes or in the following manner: 
218.8      (1) to pay the costs of the principal and interest on 
218.9   bonded indebtedness or to reimburse for the amount of liquor 
218.10  store revenues used to pay the principal and interest due on 
218.11  municipal liquor store bonds in the year preceding the year for 
218.12  which the levy limit is calculated; 
218.13     (2) to pay the costs of principal and interest on 
218.14  certificates of indebtedness issued for any corporate purpose 
218.15  except for the following: 
218.16     (i) tax anticipation or aid anticipation certificates of 
218.17  indebtedness; 
218.18     (ii) certificates of indebtedness issued under sections 
218.19  298.28 and 298.282; 
218.20     (iii) certificates of indebtedness used to fund current 
218.21  expenses or to pay the costs of extraordinary expenditures that 
218.22  result from a public emergency; or 
218.23     (iv) certificates of indebtedness used to fund an 
218.24  insufficiency in tax receipts or an insufficiency in other 
218.25  revenue sources; 
218.26     (3) to provide for the bonded indebtedness portion of 
218.27  payments made to another political subdivision of the state of 
218.28  Minnesota; 
218.29     (4) to fund payments made to the Minnesota State Armory 
218.30  Building Commission under section 193.145, subdivision 2, to 
218.31  retire the principal and interest on armory construction bonds; 
218.32     (5) property taxes approved by voters which are levied 
218.33  against the referendum market value as provided under section 
218.34  275.61; 
218.35     (6) to fund matching requirements needed to qualify for 
218.36  federal or state grants or programs to the extent that either 
219.1   (i) the matching requirement exceeds the matching requirement in 
219.2   calendar year 2001, or (ii) it is a new matching requirement 
219.3   that did not exist prior to 2002; 
219.4      (7) to pay the expenses reasonably and necessarily incurred 
219.5   in preparing for or repairing the effects of natural disaster 
219.6   including the occurrence or threat of widespread or severe 
219.7   damage, injury, or loss of life or property resulting from 
219.8   natural causes, in accordance with standards formulated by the 
219.9   Emergency Services Division of the state Department of Public 
219.10  Safety, as allowed by the commissioner of revenue under section 
219.11  275.74, subdivision 2; 
219.12     (8) pay amounts required to correct an error in the levy 
219.13  certified to the county auditor by a city or county in a levy 
219.14  year, but only to the extent that when added to the preceding 
219.15  year's levy it is not in excess of an applicable statutory, 
219.16  special law or charter limitation, or the limitation imposed on 
219.17  the governmental subdivision by sections 275.70 to 275.74 in the 
219.18  preceding levy year; 
219.19     (9) to pay an abatement under section 469.1815; 
219.20     (10) to pay any costs attributable to increases in the 
219.21  employer contribution rates under chapter 353 that are effective 
219.22  after June 30, 2001; 
219.23     (11) to pay the operating or maintenance costs of a county 
219.24  jail as authorized in section 641.01 or 641.262, or of a 
219.25  correctional facility as defined in section 241.021, subdivision 
219.26  1, paragraph (f), to the extent that the county can demonstrate 
219.27  to the commissioner of revenue that the amount has been included 
219.28  in the county budget as a direct result of a rule, minimum 
219.29  requirement, minimum standard, or directive of the Department of 
219.30  Corrections, or to pay the operating or maintenance costs of a 
219.31  regional jail as authorized in section 641.262.  For purposes of 
219.32  this clause, a district court order is not a rule, minimum 
219.33  requirement, minimum standard, or directive of the Department of 
219.34  Corrections.  If the county utilizes this special levy, except 
219.35  to pay operating or maintenance costs of a new regional jail 
219.36  facility under sections 641.262 to 641.264 which will not 
220.1   replace an existing jail facility, any amount levied by the 
220.2   county in the previous levy year for the purposes specified 
220.3   under this clause and included in the county's previous year's 
220.4   levy limitation computed under section 275.71, shall be deducted 
220.5   from the levy limit base under section 275.71, subdivision 2, 
220.6   when determining the county's current year levy limitation.  The 
220.7   county shall provide the necessary information to the 
220.8   commissioner of revenue for making this determination; 
220.9      (12) to pay for operation of a lake improvement district, 
220.10  as authorized under section 103B.555.  If the county utilizes 
220.11  this special levy, any amount levied by the county in the 
220.12  previous levy year for the purposes specified under this clause 
220.13  and included in the county's previous year's levy limitation 
220.14  computed under section 275.71 shall be deducted from the levy 
220.15  limit base under section 275.71, subdivision 2, when determining 
220.16  the county's current year levy limitation.  The county shall 
220.17  provide the necessary information to the commissioner of revenue 
220.18  for making this determination; 
220.19     (13) to repay a state or federal loan used to fund the 
220.20  direct or indirect required spending by the local government due 
220.21  to a state or federal transportation project or other state or 
220.22  federal capital project.  This authority may only be used if the 
220.23  project is not a local government initiative; 
220.24     (14) to pay for court administration costs as required 
220.25  under section 273.1398, subdivision 4b, less the (i) county's 
220.26  share of transferred fines and fees collected by the district 
220.27  courts in the county for calendar year 2001 and (ii) the aid 
220.28  amount certified to be paid to the county in 2004 under section 
220.29  273.1398, subdivision 4c; however, for taxes levied to pay for 
220.30  these costs in the year in which the court financing is 
220.31  transferred to the state, the amount under this clause is 
220.32  limited to the amount of aid the county is certified to receive 
220.33  under section 273.1398, subdivision 4a; and 
220.34     (15) to fund a police or firefighters relief association as 
220.35  required under section 69.77 to the extent that the required 
220.36  amount exceeds the amount levied for this purpose in 2001; and 
221.1      (16) to pay for the maintenance and support of a city or 
221.2   county society for the prevention of cruelty to animals under 
221.3   section 343.11.  If the city or county uses this special levy, 
221.4   any amount levied by the city or county in the previous levy 
221.5   year for the purposes specified in this clause and included in 
221.6   the city's or county's previous year's levy limit computed under 
221.7   section 275.71, must be deducted from the levy limit base under 
221.8   section 275.71, subdivision 2, in determining the city's or 
221.9   county's current year levy limit. 
221.10     [EFFECTIVE DATE.] This section is effective for taxes 
221.11  levied in 2005, payable in 2006, and thereafter. 
221.12     Sec. 51.  Minnesota Statutes 2004, section 276.04, 
221.13  subdivision 2, is amended to read: 
221.14     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
221.15  shall provide for the printing of the tax statements.  The 
221.16  commissioner of revenue shall prescribe the form of the property 
221.17  tax statement and its contents.  The statement must contain a 
221.18  tabulated statement of the dollar amount due to each taxing 
221.19  authority and the amount of the state tax from the parcel of 
221.20  real property for which a particular tax statement is prepared.  
221.21  The dollar amounts attributable to the county, the state tax, 
221.22  the voter approved school tax, the other local school tax, the 
221.23  township or municipality, and the total of the metropolitan 
221.24  special taxing districts as defined in section 275.065, 
221.25  subdivision 3, paragraph (i), must be separately stated.  The 
221.26  amounts due all other special taxing districts, if any, may be 
221.27  aggregated.  If the county levy under this paragraph includes an 
221.28  amount for a lake improvement district as defined under sections 
221.29  103B.501 to 103B.581, the amount attributable for that purpose 
221.30  must be separately stated from the remaining county levy 
221.31  amount.  In the case of Ramsey County, if the county levy under 
221.32  this paragraph includes an amount for public library service 
221.33  under section 134.07, the amount attributable for that purpose 
221.34  may be separately stated from the remaining county levy amount.  
221.35  The amount of the tax on homesteads qualifying under the senior 
221.36  citizens' property tax deferral program under chapter 290B is 
222.1   the total amount of property tax before subtraction of the 
222.2   deferred property tax amount.  The amount of the tax on 
222.3   contamination value imposed under sections 270.91 to 270.98, if 
222.4   any, must also be separately stated.  The dollar amounts, 
222.5   including the dollar amount of any special assessments, may be 
222.6   rounded to the nearest even whole dollar.  For purposes of this 
222.7   section whole odd-numbered dollars may be adjusted to the next 
222.8   higher even-numbered dollar.  The amount of market value 
222.9   excluded under section 273.11, subdivision 16, if any, must also 
222.10  be listed on the tax statement. 
222.11     (b) The property tax statements for manufactured homes and 
222.12  sectional structures taxed as personal property shall contain 
222.13  the same information that is required on the tax statements for 
222.14  real property.  
222.15     (c) Real and personal property tax statements must contain 
222.16  the following information in the order given in this paragraph.  
222.17  The information must contain the current year tax information in 
222.18  the right column with the corresponding information for the 
222.19  previous year in a column on the left: 
222.20     (1) the property's estimated market value under section 
222.21  273.11, subdivision 1; 
222.22     (2) the property's taxable market value after reductions 
222.23  under section 273.11, subdivisions 1a and 16; 
222.24     (3) the property's gross tax, calculated by adding the 
222.25  property's total property tax to the sum of the aids enumerated 
222.26  in clause (4); 
222.27     (4) a total of the following aids: 
222.28     (i) education aids payable under chapters 122A, 123A, 123B, 
222.29  124D, 125A, 126C, and 127A; 
222.30     (ii) local government aids for cities, towns, and counties 
222.31  under chapter 477A; and 
222.32     (iii) disparity reduction aid under section 273.1398; 
222.33     (5) for homestead residential and agricultural properties, 
222.34  the credits under section 273.1384; 
222.35     (6) any credits received under sections 273.119; 273.123; 
222.36  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
223.1   473H.10, except that the amount of credit received under section 
223.2   273.135 must be separately stated and identified as "taconite 
223.3   tax relief"; and 
223.4      (7) the net tax payable in the manner required in paragraph 
223.5   (a). 
223.6      (d) If the county uses envelopes for mailing property tax 
223.7   statements and if the county agrees, a taxing district may 
223.8   include a notice with the property tax statement notifying 
223.9   taxpayers when the taxing district will begin its budget 
223.10  deliberations for the current year, and encouraging taxpayers to 
223.11  attend the hearings.  If the county allows notices to be 
223.12  included in the envelope containing the property tax statement, 
223.13  and if more than one taxing district relative to a given 
223.14  property decides to include a notice with the tax statement, the 
223.15  county treasurer or auditor must coordinate the process and may 
223.16  combine the information on a single announcement.  
223.17     The commissioner of revenue shall certify to the county 
223.18  auditor the actual or estimated aids enumerated in clause (4) 
223.19  that local governments will receive in the following year.  The 
223.20  commissioner must certify this amount by January 1 of each year. 
223.21     [EFFECTIVE DATE.] This section is effective for property 
223.22  tax statements for taxes payable in 2006 and thereafter. 
223.23     Sec. 52.  [278.021] [PETITIONS INVOLVING LOW-INCOME RENTAL 
223.24  HOUSING PROPERTY.] 
223.25     Notwithstanding section 278.02, in the case of real 
223.26  property that meets the definition of qualifying low-income 
223.27  housing rental property established in Minnesota Statutes 2000, 
223.28  section 273.126, the petition may include any and all such 
223.29  parcels of real property in which the petitioner has an estate, 
223.30  right, title, interest, or lien, except that all such parcels 
223.31  included in the petition must be located in the same county.  
223.32  Contiguous qualifying low-income rental housing property 
223.33  overlapping county boundaries may be included in the same 
223.34  petition. 
223.35     Sec. 53.  Minnesota Statutes 2004, section 278.03, 
223.36  subdivision 1, is amended to read: 
224.1      Subdivision 1.  [REAL PROPERTY.] In the case of real 
224.2   property, If the proceedings instituted by the filing of the 
224.3   petition have not been completed before the 16th day of May next 
224.4   following the filing or, in the case of class 1c property or 
224.5   class 4c resort property before the 16th day of June for taxes 
224.6   payable in 2006 and 2007 only, the petitioner shall pay to the 
224.7   county treasurer 50 percent of the tax levied for such year 
224.8   against the property involved, unless permission to continue 
224.9   prosecution of the petition without such payment is obtained as 
224.10  herein provided. If the proceedings instituted by the filing of 
224.11  the petition have not been completed by the next October 16, or, 
224.12  in the case of class 1b agricultural homestead, class 2a 
224.13  agricultural homestead, and class 2b(2) agricultural 
224.14  nonhomestead property, November 16, the petitioner shall pay to 
224.15  the county treasurer 50 percent of the unpaid balance of the 
224.16  taxes levied for the year against the property involved if the 
224.17  unpaid balance is $2,000 or less and 80 percent of the unpaid 
224.18  balance if the unpaid balance is over $2,000, unless permission 
224.19  to continue prosecution of the petition without payment is 
224.20  obtained as herein provided.  The petitioner, upon ten days' 
224.21  notice to the county attorney and to the county auditor, given 
224.22  at least ten days prior to the 16th day of May or, in the case 
224.23  of class 1c or class 4c resort property, the 16th day of June 
224.24  for taxes payable in 2006 and 2007 only, or the 16th day of 
224.25  October, or, in the case of class 1b agricultural homestead, 
224.26  class 2a agricultural homestead, and class 2b(2) agricultural 
224.27  nonhomestead property, the 16th day of November, may apply to 
224.28  the court for permission to continue prosecution of the petition 
224.29  without payment; and, if it is made to appear 
224.30     (1) that the proposed review is to be taken in good faith; 
224.31     (2) that there is probable cause to believe that the 
224.32  property may be held exempt from the tax levied or that the tax 
224.33  may be determined to be less than 50 percent of the amount 
224.34  levied; and 
224.35     (3) that it would work a hardship upon petitioner to pay 
224.36  the taxes due, 
225.1      the court may permit the petitioner to continue prosecution 
225.2   of the petition without payment, or may fix a lesser amount to 
225.3   be paid as a condition of continuing the prosecution of the 
225.4   petition. 
225.5      Failure to make payment of the amount required when due 
225.6   shall operate automatically to dismiss the petition and all 
225.7   proceedings thereunder unless the payment is waived by an order 
225.8   of the court permitting the petitioner to continue prosecution 
225.9   of the petition without payment.  The petition shall be 
225.10  automatically reinstated upon payment of the entire tax plus 
225.11  interest and penalty if the payment is made within one year of 
225.12  the dismissal.  The county treasurer shall, upon request of the 
225.13  petitioner, issue duplicate receipts for the tax payment, one of 
225.14  which shall be filed by the petitioner in the proceeding. 
225.15     Sec. 54.  Minnesota Statutes 2004, section 279.01, 
225.16  subdivision 1, is amended to read: 
225.17     Subdivision 1.  [DUE DATES; PENALTIES.] Except as provided 
225.18  in subdivision 3 or 4 this section, on May 16 or 21 days after 
225.19  the postmark date on the envelope containing the property tax 
225.20  statement, whichever is later, a penalty shall accrue and 
225.21  thereafter be charged upon all unpaid taxes on real estate on 
225.22  the current lists in the hands of the county treasurer.  The 
225.23  penalty shall be at a rate of two percent on homestead property 
225.24  until May 31 and four percent on June 1.  The penalty on 
225.25  nonhomestead property shall be at a rate of four percent until 
225.26  May 31 and eight percent on June 1.  This penalty shall not 
225.27  accrue until June 1 of each year, or 21 days after the postmark 
225.28  date on the envelope containing the property tax statements, 
225.29  whichever is later, on commercial use real property used for 
225.30  seasonal residential recreational purposes and classified as 
225.31  class 1c or 4c, and on other commercial use real property 
225.32  classified as class 3a, provided that over 60 percent of the 
225.33  gross income earned by the enterprise on the class 3a property 
225.34  is earned during the months of May, June, July, and August.  Any 
225.35  property owner of such class 3a property who pays the first half 
225.36  of the tax due on the property after May 15 and before June 1, 
226.1   or 21 days after the postmark date on the envelope containing 
226.2   the property tax statement, whichever is later, shall attach an 
226.3   affidavit to the payment attesting to compliance with the income 
226.4   provision of this subdivision.  Thereafter, for both homestead 
226.5   and nonhomestead property, on the first day of each month 
226.6   beginning July 1, up to and including October 1 following, an 
226.7   additional penalty of one percent for each month shall accrue 
226.8   and be charged on all such unpaid taxes provided that if the due 
226.9   date was extended beyond May 15 as the result of any delay in 
226.10  mailing property tax statements no additional penalty shall 
226.11  accrue if the tax is paid by the extended due date.  If the tax 
226.12  is not paid by the extended due date, then all penalties that 
226.13  would have accrued if the due date had been May 15 shall be 
226.14  charged.  When the taxes against any tract or lot exceed $50, 
226.15  one-half thereof may be paid prior to May 16 or 21 days after 
226.16  the postmark date on the envelope containing the property tax 
226.17  statement, whichever is later; and, if so paid, no penalty shall 
226.18  attach; the remaining one-half shall be paid at any time prior 
226.19  to October 16 following, without penalty; but, if not so paid, 
226.20  then a penalty of two percent shall accrue thereon for homestead 
226.21  property and a penalty of four percent on nonhomestead 
226.22  property.  Thereafter, for homestead property, on the first day 
226.23  of November an additional penalty of four percent shall accrue 
226.24  and on the first day of December following, an additional 
226.25  penalty of two percent shall accrue and be charged on all such 
226.26  unpaid taxes.  Thereafter, for nonhomestead property, on the 
226.27  first day of November and December following, an additional 
226.28  penalty of four percent for each month shall accrue and be 
226.29  charged on all such unpaid taxes.  If one-half of such taxes 
226.30  shall not be paid prior to May 16 or 21 days after the postmark 
226.31  date on the envelope containing the property tax statement, 
226.32  whichever is later, the same may be paid at any time prior to 
226.33  October 16, with accrued penalties to the date of payment added, 
226.34  and thereupon no penalty shall attach to the remaining one-half 
226.35  until October 16 following.  
226.36     This section applies to payment of personal property taxes 
227.1   assessed against improvements to leased property, except as 
227.2   provided by section 277.01, subdivision 3. 
227.3      A county may provide by resolution that in the case of a 
227.4   property owner that has multiple tracts or parcels with 
227.5   aggregate taxes exceeding $50, payments may be made in 
227.6   installments as provided in this subdivision. 
227.7      The county treasurer may accept payments of more or less 
227.8   than the exact amount of a tax installment due.  If the accepted 
227.9   payment is less than the amount due, payments must be applied 
227.10  first to the penalty accrued for the year the payment is made.  
227.11  Acceptance of partial payment of tax does not constitute a 
227.12  waiver of the minimum payment required as a condition for filing 
227.13  an appeal under section 278.03 or any other law, nor does it 
227.14  affect the order of payment of delinquent taxes under section 
227.15  280.39. 
227.16     Sec. 55.  Minnesota Statutes 2004, section 279.01, is 
227.17  amended by adding a subdivision to read: 
227.18     Subd. 5.  [SEASONAL RESIDENTIAL RECREATIONAL PROPERTY USED 
227.19  FOR COMMERCIAL PURPOSES.] For taxes payable in 2006 and 2007 
227.20  only, in the case of class 1c property and class 4c seasonal 
227.21  residential recreational property used for commercial purposes, 
227.22  no penalties shall accrue to the first one-half property tax 
227.23  payment as provided in this section if paid by June 15.  On June 
227.24  16, a penalty shall accrue and thereafter be charged upon all 
227.25  unpaid taxes.  On class 1c property the penalty is at a rate of 
227.26  two percent until June 31, and four percent on July 1.  On class 
227.27  4c seasonal residential recreational property used for 
227.28  commercial purposes, the penalty is four percent until June 31 
227.29  and eight percent on July 1.  Thereafter, for both class 1c and 
227.30  class 4c seasonal residential recreational property used for 
227.31  commercial purposes, on the first day of September and on the 
227.32  first day of October, an additional penalty of one percent shall 
227.33  accrue and be charged on unpaid taxes.  The remaining one-half 
227.34  property taxes must be paid and penalties accrue as provided in 
227.35  subdivision 1. 
227.36     Sec. 56.  [290.0621] [SCHOOL REFERENDUM TAX.] 
228.1      Subdivision 1.  [IMPOSITION.] In addition to all other 
228.2   taxes imposed by this chapter, a tax is imposed on individuals 
228.3   who are domiciled on the last day of the taxable year within the 
228.4   territory of a school district in which the voters approved an 
228.5   income tax increase at a referendum conducted under section 
228.6   126C.17, subdivision 9, for that purpose in 2006 or a subsequent 
228.7   year.  This tax does not apply to referendums on bond issues.  
228.8   Individuals domiciled in the district on the last day of the 
228.9   taxable year are subject to the tax. 
228.10     Subd. 2.  [RATE.] The commissioner of revenue shall 
228.11  annually determine the rate of the tax imposed under this 
228.12  section as a percentage of the state income tax liability of 
228.13  individuals subject to the tax by each district.  The school 
228.14  referendum tax rate is equal to the ratio of (i) the district's 
228.15  local effort revenue under section 126C.17, subdivision 6b, to 
228.16  (ii) the state income tax liability of all individuals domiciled 
228.17  in the district on the last day of the previous taxable year. 
228.18     Subd. 3.  [REVENUE DISTRIBUTION.] Revenue raised in 
228.19  subdivision 1 must be placed in a special account in the general 
228.20  fund.  The amount necessary to make payments to school districts 
228.21  under this section is annually appropriated from the general 
228.22  fund to the commissioner of education and must be paid to school 
228.23  districts according to section 127A.45. 
228.24     Sec. 57.  Minnesota Statutes 2004, section 343.11, is 
228.25  amended to read: 
228.26     343.11 [ACQUISITION OF PROPERTY, APPROPRIATIONS.] 
228.27     Every county and district society for the prevention of 
228.28  cruelty to animals may acquire, by purchase, gift, grant, or 
228.29  devise, and hold, use, or convey, real estate and personal 
228.30  property, and lease, mortgage, sell, or use the same in any 
228.31  manner conducive to its interest, to the same extent as natural 
228.32  persons.  The county board of any county, or the council of any 
228.33  city, in which such societies exist, may, in its discretion, 
228.34  appropriate for the maintenance and support of such societies in 
228.35  the transaction of the work for which they are organized, any 
228.36  sums of money not otherwise appropriated, not to exceed in any 
229.1   one year the sum of $4,800 or the sum of 50 cents $1 per capita 
229.2   based upon the county's or city's population as of the most 
229.3   recent federal census, whichever is greater; provided, that no 
229.4   part of the appropriation shall be expended for the payment of 
229.5   the salary of any officer of the society. 
229.6      [EFFECTIVE DATE.] This section is effective January 1, 2006.
229.7      Sec. 58.  [462A.0715] [SECTION 8, TAX CREDIT, AND RURAL 
229.8   HOUSING SERVICE UNITS.] 
229.9      (a) The agency may deem units as meeting the requirements 
229.10  of section 273.126 and this section, if the units meet the 
229.11  requirements provided in section 273.1321, subdivision 1. 
229.12     (b) The agency may certify these deemed units under 
229.13  subdivision 1 based on a simplified application procedure that 
229.14  verifies the unit's qualifications under paragraph (a). 
229.15     Sec. 59.  Minnesota Statutes 2004, section 473F.08, is 
229.16  amended by adding a subdivision to read: 
229.17     Subd. 3c.  [UNCOMPENSATED CARE REIMBURSEMENT.] (a) As used 
229.18  in this subdivision, the following terms have the meanings given 
229.19  in this paragraph. 
229.20     (1) "Uncompensated care" means the sum of (i) the amount 
229.21  that would have been charged by a facility for rendering free or 
229.22  discounted care to persons who cannot afford to pay and for 
229.23  which the facility did not expect payment and (ii) the amount 
229.24  that had been charged by a facility for rendering care to 
229.25  persons and billed to that person or a third-party payer for 
229.26  which the facility expected but did not receive payment.  
229.27  Uncompensated care does not include contractual write-offs. 
229.28     (2) A "qualifying hospital" means a hospital in the area 
229.29  that is: 
229.30     (i) owned or operated by a local unit of government, or 
229.31  formerly owned by a university or is a private nonprofit 
229.32  hospital that leases its building from the county in which it is 
229.33  located; and 
229.34     (ii) has a licensed bed capacity greater than 400.  
229.35     (b) A county that contains a qualifying hospital is 
229.36  eligible for reimbursement of that portion of gross charges for 
230.1   uncompensated care determined by multiplying the hospital's 
230.2   gross charges during the base year by the percentage of 
230.3   uncompensated care provided by the hospital during the base year 
230.4   minus one-half of one percent of those gross charges, dividing 
230.5   the result by two, and adjusting to cost by multiplying that 
230.6   result by the hospital's cost-to-charge ratio during the base 
230.7   year.  By July 15, 2006, and each subsequent year, the county 
230.8   shall notify its county auditor, as well as the administrative 
230.9   auditor, of the amount of qualifying uncompensated care 
230.10  provided, adjusted to cost using the hospital's cost-to-charge 
230.11  ratio, during the 12-month period ending on June 30 of the 
230.12  current year. 
230.13     (c) The amount certified under paragraph (b) shall be 
230.14  certified annually by the county auditor to the administrative 
230.15  auditor as an addition to the county's areawide levy under 
230.16  subdivision 5. 
230.17     (d) The administrative auditor shall pay one-half of the 
230.18  reimbursement to the county auditor of the county that contains 
230.19  the qualifying hospital on or before June 15 and the remaining 
230.20  one-half of the reimbursement on or before November 15.  The 
230.21  county auditor receiving the payment shall disburse the 
230.22  reimbursement to the qualifying hospital within 15 days of 
230.23  receipt of the reimbursement. 
230.24     (e) Prior to the reporting specified in paragraph (b) 
230.25  above, all qualifying hospitals that participate in this program 
230.26  shall agree upon and implement a common standard for reporting 
230.27  uncompensated care, and a common standard for determining 
230.28  eligibility for uncompensated care for all participating 
230.29  hospitals. 
230.30     [EFFECTIVE DATE.] This section is effective for fiscal 
230.31  disparities contribution and distribution tax capacities for 
230.32  taxes payable in 2007 and 2008 only. 
230.33     Sec. 60.  Minnesota Statutes 2004, section 473F.08, is 
230.34  amended by adding a subdivision to read: 
230.35     Subd. 3d.  [HENNEPIN COUNTY PUBLIC DEFENDER COST 
230.36  REIMBURSEMENT.] (a) Hennepin County is eligible for 
231.1   reimbursement of costs incurred by the county under section 
231.2   611.26, subdivision 3a, paragraph (c).  By July 15, 2006, and 
231.3   each subsequent year, the county shall notify the county auditor 
231.4   and the administrative auditor, of the amount of that cost 
231.5   incurred by the county during the 12-month period ending on June 
231.6   30 of the current year. 
231.7      (b) The reimbursement under this subdivision for costs 
231.8   incurred during the 12-month period ending June 30, 2006, is 
231.9   equal to 25 percent of those costs.  The reimbursement under 
231.10  this subdivision for costs incurred during the 12-month period 
231.11  ending June 30, 2007, is equal to 50 percent of those costs.  
231.12     (c) The amount certified under paragraph (b) shall be 
231.13  certified annually by the Hennepin County auditor to the 
231.14  administrative auditor as an addition to the county's areawide 
231.15  levy under subdivision 5. 
231.16     (d) The administrative auditor shall pay one-half of the 
231.17  reimbursement to the Hennepin County auditor on or before June 
231.18  15 and the remaining one-half of the reimbursement on or before 
231.19  November 15. 
231.20     [EFFECTIVE DATE.] This section is effective for fiscal 
231.21  disparities contribution and distribution tax capacities for 
231.22  taxes payable in 2007 and 2008 only. 
231.23     Sec. 61.  Minnesota Statutes 2004, section 477A.011, 
231.24  subdivision 36, is amended to read: 
231.25     Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
231.26  provided in this subdivision, "city aid base" is zero. 
231.27     (b) The city aid base for any city with a population less 
231.28  than 500 is increased by $40,000 for aids payable in calendar 
231.29  year 1995 and thereafter, and the maximum amount of total aid it 
231.30  may receive under section 477A.013, subdivision 9, paragraph 
231.31  (c), is also increased by $40,000 for aids payable in calendar 
231.32  year 1995 only, provided that: 
231.33     (i) the average total tax capacity rate for taxes payable 
231.34  in 1995 exceeds 200 percent; 
231.35     (ii) the city portion of the tax capacity rate exceeds 100 
231.36  percent; and 
232.1      (iii) its city aid base is less than $60 per capita. 
232.2      (c) The city aid base for a city is increased by $20,000 in 
232.3   1998 and thereafter and the maximum amount of total aid it may 
232.4   receive under section 477A.013, subdivision 9, paragraph (c), is 
232.5   also increased by $20,000 in calendar year 1998 only, provided 
232.6   that: 
232.7      (i) the city has a population in 1994 of 2,500 or more; 
232.8      (ii) the city is located in a county, outside of the 
232.9   metropolitan area, which contains a city of the first class; 
232.10     (iii) the city's net tax capacity used in calculating its 
232.11  1996 aid under section 477A.013 is less than $400 per capita; 
232.12  and 
232.13     (iv) at least four percent of the total net tax capacity, 
232.14  for taxes payable in 1996, of property located in the city is 
232.15  classified as railroad property. 
232.16     (d) The city aid base for a city is increased by $200,000 
232.17  in 1999 and thereafter and the maximum amount of total aid it 
232.18  may receive under section 477A.013, subdivision 9, paragraph 
232.19  (c), is also increased by $200,000 in calendar year 1999 only, 
232.20  provided that: 
232.21     (i) the city was incorporated as a statutory city after 
232.22  December 1, 1993; 
232.23     (ii) its city aid base does not exceed $5,600; and 
232.24     (iii) the city had a population in 1996 of 5,000 or more. 
232.25     (e) The city aid base for a city is increased by $450,000 
232.26  in 1999 to 2008 and the maximum amount of total aid it may 
232.27  receive under section 477A.013, subdivision 9, paragraph (c), is 
232.28  also increased by $450,000 in calendar year 1999 only, provided 
232.29  that: 
232.30     (i) the city had a population in 1996 of at least 50,000; 
232.31     (ii) its population had increased by at least 40 percent in 
232.32  the ten-year period ending in 1996; and 
232.33     (iii) its city's net tax capacity for aids payable in 1998 
232.34  is less than $700 per capita. 
232.35     (f) Beginning in 2004, the city aid base for a city is 
232.36  equal to the sum of its city aid base in 2003 and the amount of 
233.1   additional aid it was certified to receive under section 477A.06 
233.2   in 2003.  For 2004 only, the maximum amount of total aid a city 
233.3   may receive under section 477A.013, subdivision 9, paragraph 
233.4   (c), is also increased by the amount it was certified to receive 
233.5   under section 477A.06 in 2003. 
233.6      (g) The city aid base for a city is increased by $150,000 
233.7   for aids payable in 2000 and thereafter, and the maximum amount 
233.8   of total aid it may receive under section 477A.013, subdivision 
233.9   9, paragraph (c), is also increased by $150,000 in calendar year 
233.10  2000 only, provided that: 
233.11     (1) the city has a population that is greater than 1,000 
233.12  and less than 2,500; 
233.13     (2) its commercial and industrial percentage for aids 
233.14  payable in 1999 is greater than 45 percent; and 
233.15     (3) the total market value of all commercial and industrial 
233.16  property in the city for assessment year 1999 is at least 15 
233.17  percent less than the total market value of all commercial and 
233.18  industrial property in the city for assessment year 1998. 
233.19     (h) The city aid base for a city is increased by $200,000 
233.20  in 2000 and thereafter, and the maximum amount of total aid it 
233.21  may receive under section 477A.013, subdivision 9, paragraph 
233.22  (c), is also increased by $200,000 in calendar year 2000 only, 
233.23  provided that: 
233.24     (1) the city had a population in 1997 of 2,500 or more; 
233.25     (2) the net tax capacity of the city used in calculating 
233.26  its 1999 aid under section 477A.013 is less than $650 per 
233.27  capita; 
233.28     (3) the pre-1940 housing percentage of the city used in 
233.29  calculating 1999 aid under section 477A.013 is greater than 12 
233.30  percent; 
233.31     (4) the 1999 local government aid of the city under section 
233.32  477A.013 is less than 20 percent of the amount that the formula 
233.33  aid of the city would have been if the need increase percentage 
233.34  was 100 percent; and 
233.35     (5) the city aid base of the city used in calculating aid 
233.36  under section 477A.013 is less than $7 per capita. 
234.1      (i) The city aid base for a city is increased by $102,000 
234.2   in 2000 and thereafter, and the maximum amount of total aid it 
234.3   may receive under section 477A.013, subdivision 9, paragraph 
234.4   (c), is also increased by $102,000 in calendar year 2000 only, 
234.5   provided that: 
234.6      (1) the city has a population in 1997 of 2,000 or more; 
234.7      (2) the net tax capacity of the city used in calculating 
234.8   its 1999 aid under section 477A.013 is less than $455 per 
234.9   capita; 
234.10     (3) the net levy of the city used in calculating 1999 aid 
234.11  under section 477A.013 is greater than $195 per capita; and 
234.12     (4) the 1999 local government aid of the city under section 
234.13  477A.013 is less than 38 percent of the amount that the formula 
234.14  aid of the city would have been if the need increase percentage 
234.15  was 100 percent. 
234.16     (j) The city aid base for a city is increased by $32,000 in 
234.17  2001 and thereafter, and the maximum amount of total aid it may 
234.18  receive under section 477A.013, subdivision 9, paragraph (c), is 
234.19  also increased by $32,000 in calendar year 2001 only, provided 
234.20  that: 
234.21     (1) the city has a population in 1998 that is greater than 
234.22  200 but less than 500; 
234.23     (2) the city's revenue need used in calculating aids 
234.24  payable in 2000 was greater than $200 per capita; 
234.25     (3) the city net tax capacity for the city used in 
234.26  calculating aids available in 2000 was equal to or less than 
234.27  $200 per capita; 
234.28     (4) the city aid base of the city used in calculating aid 
234.29  under section 477A.013 is less than $65 per capita; and 
234.30     (5) the city's formula aid for aids payable in 2000 was 
234.31  greater than zero. 
234.32     (k) The city aid base for a city is increased by $7,200 in 
234.33  2001 and thereafter, and the maximum amount of total aid it may 
234.34  receive under section 477A.013, subdivision 9, paragraph (c), is 
234.35  also increased by $7,200 in calendar year 2001 only, provided 
234.36  that: 
235.1      (1) the city had a population in 1998 that is greater than 
235.2   200 but less than 500; 
235.3      (2) the city's commercial industrial percentage used in 
235.4   calculating aids payable in 2000 was less than ten percent; 
235.5      (3) more than 25 percent of the city's population was 60 
235.6   years old or older according to the 1990 census; 
235.7      (4) the city aid base of the city used in calculating aid 
235.8   under section 477A.013 is less than $15 per capita; and 
235.9      (5) the city's formula aid for aids payable in 2000 was 
235.10  greater than zero. 
235.11     (l) The city aid base for a city is increased by $45,000 in 
235.12  2001 and thereafter and by an additional $50,000 in calendar 
235.13  years 2002 to 2011, and the maximum amount of total aid it may 
235.14  receive under section 477A.013, subdivision 9, paragraph (c), is 
235.15  also increased by $45,000 in calendar year 2001 only, and by 
235.16  $50,000 in calendar year 2002 only, provided that: 
235.17     (1) the net tax capacity of the city used in calculating 
235.18  its 2000 aid under section 477A.013 is less than $810 per 
235.19  capita; 
235.20     (2) the population of the city declined more than two 
235.21  percent between 1988 and 1998; 
235.22     (3) the net levy of the city used in calculating 2000 aid 
235.23  under section 477A.013 is greater than $240 per capita; and 
235.24     (4) the city received less than $36 per capita in aid under 
235.25  section 477A.013, subdivision 9, for aids payable in 2000. 
235.26     The city aid base for a city described in this paragraph is 
235.27  also increased by $250,000 in calendar years 2006 to 2015, and 
235.28  the maximum amount of total aid it may receive under section 
235.29  477A.013, subdivision 9, paragraph (c), is also increased by 
235.30  $250,000 in calendar year 2006 only. 
235.31     (m) The city aid base for a city with a population of 
235.32  10,000 or more which is located outside of the seven-county 
235.33  metropolitan area is increased in 2002 and thereafter, and the 
235.34  maximum amount of total aid it may receive under section 
235.35  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
235.36  in calendar year 2002 only, by an amount equal to the lesser of: 
236.1      (1)(i) the total population of the city, as determined by 
236.2   the United States Bureau of the Census, in the 2000 census, (ii) 
236.3   minus 5,000, (iii) times 60; or 
236.4      (2) $2,500,000. 
236.5      (n) The city aid base is increased by $50,000 in 2002 and 
236.6   thereafter, and the maximum amount of total aid it may receive 
236.7   under section 477A.013, subdivision 9, paragraph (c), is also 
236.8   increased by $50,000 in calendar year 2002 only, provided that: 
236.9      (1) the city is located in the seven-county metropolitan 
236.10  area; 
236.11     (2) its population in 2000 is between 10,000 and 20,000; 
236.12  and 
236.13     (3) its commercial industrial percentage, as calculated for 
236.14  city aid payable in 2001, was greater than 25 percent. 
236.15     (o) The city aid base for a city is increased by $150,000 
236.16  in calendar years 2002 to 2011 and the maximum amount of total 
236.17  aid it may receive under section 477A.013, subdivision 9, 
236.18  paragraph (c), is also increased by $150,000 in calendar year 
236.19  2002 only, provided that: 
236.20     (1) the city had a population of at least 3,000 but no more 
236.21  than 4,000 in 1999; 
236.22     (2) its home county is located within the seven-county 
236.23  metropolitan area; 
236.24     (3) its pre-1940 housing percentage is less than 15 
236.25  percent; and 
236.26     (4) its city net tax capacity per capita for taxes payable 
236.27  in 2000 is less than $900 per capita. 
236.28     (p) The city aid base for a city is increased by $200,000 
236.29  beginning in calendar year 2003 and the maximum amount of total 
236.30  aid it may receive under section 477A.013, subdivision 9, 
236.31  paragraph (c), is also increased by $200,000 in calendar year 
236.32  2003 only, provided that the city qualified for an increase in 
236.33  homestead and agricultural credit aid under Laws 1995, chapter 
236.34  264, article 8, section 18. 
236.35     (q) The city aid base for a city is increased by $200,000 
236.36  in 2004 only and the maximum amount of total aid it may receive 
237.1   under section 477A.013, subdivision 9, is also increased by 
237.2   $200,000 in calendar year 2004 only, if the city is the site of 
237.3   a nuclear dry cask storage facility. 
237.4      (r) The city aid base for a city is increased by $10,000 in 
237.5   2004 and thereafter and the maximum total aid it may receive 
237.6   under section 477A.013, subdivision 9, is also increased by 
237.7   $10,000 in calendar year 2004 only, if the city was included in 
237.8   a federal major disaster designation issued on April 1, 1998, 
237.9   and its pre-1940 housing stock was decreased by more than 40 
237.10  percent between 1990 and 2000. 
237.11     Sec. 62.  Minnesota Statutes 2004, section 477A.11, 
237.12  subdivision 4, is amended to read: 
237.13     Subd. 4.  [OTHER NATURAL RESOURCES LAND.] "Other natural 
237.14  resources land" means:  
237.15     (1) any other land presently owned in fee title by the 
237.16  state and administered by the commissioner, or any tax-forfeited 
237.17  land, other than platted lots within a city or those lands 
237.18  described under subdivision 3, clause (2), which is owned by the 
237.19  state and administered by the commissioner or by the county in 
237.20  which it is located; and 
237.21     (2) land leased by the state from the United States of 
237.22  America through the United States Secretary of Agriculture 
237.23  pursuant to Title III of the Bankhead Jones Farm Tenant Act, 
237.24  which land is commonly referred to as land utilization project 
237.25  land that is administered by the commissioner. 
237.26     [EFFECTIVE DATE.] This section is effective for aids 
237.27  payable in 2006 and thereafter. 
237.28     Sec. 63.  Minnesota Statutes 2004, section 477A.11, is 
237.29  amended by adding a subdivision to read: 
237.30     Subd. 5.  [LAND UTILIZATION PROJECT LAND.] "Land 
237.31  utilization project land" means land that is leased by the state 
237.32  from the United States through the United States Secretary of 
237.33  Agriculture according to Title III of the Bankhead Jones Farm 
237.34  Tenant Act and that is administered by the commissioner. 
237.35     Sec. 64.  Minnesota Statutes 2004, section 477A.12, 
237.36  subdivision 1, is amended to read: 
238.1      Subdivision 1.  [TYPES OF LAND; PAYMENTS.] (a) As an offset 
238.2   for expenses incurred by counties and towns in support of 
238.3   natural resources lands, the following amounts are annually 
238.4   appropriated to the commissioner of natural resources from the 
238.5   general fund for transfer to the commissioner of revenue.  The 
238.6   commissioner of revenue shall pay the transferred funds to 
238.7   counties as required by sections 477A.11 to 477A.145.  The 
238.8   amounts are: 
238.9      (1) for acquired natural resources land, $3, as adjusted 
238.10  for inflation under section 477A.145, multiplied by the total 
238.11  number of acres of acquired natural resources land or, at the 
238.12  county's option three-fourths of one percent of the appraised 
238.13  value of all acquired natural resources land in the county, 
238.14  whichever is greater; 
238.15     (2) $3, as adjusted for inflation under section 477A.145, 
238.16  multiplied by the total number of acres of land utilization 
238.17  project land; 
238.18     (3) 75 cents, as adjusted for inflation under section 
238.19  477A.145, multiplied by the number of acres of 
238.20  county-administered other natural resources land; and 
238.21     (3) (4) 37.5 cents, as adjusted for inflation under section 
238.22  477A.145, multiplied by the number of acres of 
238.23  commissioner-administered other natural resources land located 
238.24  in each county as of July 1 of each year prior to the payment 
238.25  year. 
238.26     (b) The amount determined under paragraph (a), clause (1), 
238.27  is payable for land that is acquired from a private owner and 
238.28  owned by the Department of Transportation for the purpose of 
238.29  replacing wetland losses caused by transportation projects, but 
238.30  only if the county contains more than 500 acres of such land at 
238.31  the time the certification is made under subdivision 2. 
238.32     [EFFECTIVE DATE.] This section is effective for aids 
238.33  payable in 2006 and thereafter. 
238.34     Sec. 65.  Minnesota Statutes 2004, section 477A.12, 
238.35  subdivision 2, is amended to read: 
238.36     Subd. 2.  [PROCEDURE.] Lands for which payments in lieu are 
239.1   made pursuant to section 97A.061, subdivision 3, and Laws 1973, 
239.2   chapter 567, shall not be eligible for payments under this 
239.3   section.  Each county auditor shall certify to the Department of 
239.4   Natural Resources during July of each year prior to the payment 
239.5   year the number of acres of county-administered other natural 
239.6   resources land within the county.  The Department of Natural 
239.7   resources may, in addition to the certification of acreage, 
239.8   require descriptive lists of land so certified.  The 
239.9   commissioner of natural resources shall determine and certify to 
239.10  the commissioner of revenue by March 1 of the payment year:  
239.11     (1) the number of acres and most recent appraised value of 
239.12  acquired natural resources land within each county; 
239.13     (2) the number of acres of commissioner-administered 
239.14  natural resources land within each county; and 
239.15     (3) the number of acres of county-administered other 
239.16  natural resources land within each county, based on the reports 
239.17  filed by each county auditor with the commissioner of natural 
239.18  resources; and 
239.19     (4) the number of acres of land utilization project land 
239.20  within each county and the net proceeds from timber sales on 
239.21  land utilization project lands in each county. 
239.22     The commissioner of transportation shall determine and 
239.23  certify to the commissioner of revenue by March 1 of the payment 
239.24  year the number of acres of land and the appraised value of the 
239.25  land described in subdivision 1, paragraph (b), but only if it 
239.26  exceeds 500 acres. 
239.27     The commissioner of revenue shall determine the 
239.28  distributions provided for in this section using the number of 
239.29  acres and appraised values certified by the commissioner of 
239.30  natural resources and the commissioner of transportation by 
239.31  March 1 of the payment year. 
239.32     [EFFECTIVE DATE.] This section is effective for aids 
239.33  payable in 2006 and thereafter. 
239.34     Sec. 66.  Minnesota Statutes 2004, section 477A.14, 
239.35  subdivision 1, is amended to read: 
239.36     Subdivision 1.  [GENERAL DISTRIBUTION.] Except as provided 
240.1   in subdivision 2 or in section 97A.061, subdivision 5, 40 
240.2   percent of the total payment to the county shall be deposited in 
240.3   the county general revenue fund to be used to provide property 
240.4   tax levy reduction.  The remainder shall be distributed by the 
240.5   county in the following priority:  
240.6      (a) 37.5 cents, as adjusted for inflation under section 
240.7   477A.145, for each acre of county-administered other natural 
240.8   resources land shall be deposited in a resource development fund 
240.9   to be created within the county treasury for use in resource 
240.10  development, forest management, game and fish habitat 
240.11  improvement, and recreational development and maintenance of 
240.12  county-administered other natural resources land.  Any county 
240.13  receiving less than $5,000 annually for the resource development 
240.14  fund may elect to deposit that amount in the county general 
240.15  revenue fund; 
240.16     (b) From the funds remaining, within 30 days of receipt of 
240.17  the payment to the county, the county treasurer shall pay each 
240.18  organized township 30 cents, as adjusted for inflation under 
240.19  section 477A.145, for each acre of acquired natural resources 
240.20  land, each acre of land utilization project land, and each acre 
240.21  of land described in section 477A.12, subdivision 1, paragraph 
240.22  (b), and 7.5 cents, as adjusted for inflation under section 
240.23  477A.145, for each acre of other natural resources land located 
240.24  within its boundaries.  Payments for natural resources lands not 
240.25  located in an organized township shall be deposited in the 
240.26  county general revenue fund.  Payments to counties and townships 
240.27  pursuant to this paragraph shall be used to provide property tax 
240.28  levy reduction, except that of the payments for natural 
240.29  resources lands not located in an organized township, the county 
240.30  may allocate the amount determined to be necessary for 
240.31  maintenance of roads in unorganized townships.  Provided that, 
240.32  if the total payment to the county pursuant to section 477A.12 
240.33  is not sufficient to fully fund the distribution provided for in 
240.34  this clause, the amount available shall be distributed to each 
240.35  township and the county general revenue fund on a pro rata 
240.36  basis; and 
241.1      (c) Any remaining funds shall be deposited in the county 
241.2   general revenue fund.  Provided that, if the distribution to the 
241.3   county general revenue fund exceeds $35,000, the excess shall be 
241.4   used to provide property tax levy reduction. 
241.5      [EFFECTIVE DATE.] This section is effective for aids 
241.6   payable in 2006 and thereafter. 
241.7      Sec. 67.  Laws 1998, chapter 389, article 3, section 41, is 
241.8   amended to read: 
241.9      Sec. 41.  [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.] 
241.10     Notwithstanding Minnesota Statutes, chapter 429, a city may 
241.11  defer the payment of any special assessment levied against a 
241.12  property qualifying under section 38 as determined by the city.  
241.13  Any special assessment, the payment of which has been deferred 
241.14  by the city, must be paid in full or a payment agreement may be 
241.15  approved by the city if the ownership of property is transferred 
241.16  to anyone or any entity.  Payment or a payment agreement must be 
241.17  made within 60 days of the transfer of ownership. 
241.18     [EFFECTIVE DATE.] This section is effective the day 
241.19  following final enactment.  
241.20     Sec. 68.  Laws 1998, chapter 389, article 3, section 42, 
241.21  subdivision 2, as amended by Laws 2002, chapter 377, article 4, 
241.22  section 24, is amended to read: 
241.23     Subd. 2.  [RECAPTURE.] (a) Property or any portion thereof 
241.24  qualifying under section 38 is subject to additional taxes if: 
241.25     (1) ownership of the property is transferred to anyone 
241.26  other than the spouse or child of the current owner; 
241.27     (2) the current owner or the spouse or child of the current 
241.28  owner has not conveyed or entered into a contract before July 1, 
241.29  2007, to convey for ownership or public easement rights, (i) a 
241.30  portion of the property to a one or more nonprofit foundation 
241.31  foundations or corporation operating corporations; and (ii) a 
241.32  portion of the property to one or more local governments; and 
241.33  those entities shall separately or jointly operate the property 
241.34  as an art park providing the services included in section 38, 
241.35  clauses (2) to (5), and may also use some of the property for 
241.36  other public purposes as determined by the local governments; or 
242.1      (3) the nonprofit foundation or corporation to which a 
242.2   portion of the property was transferred ceases to provide the 
242.3   services included in section 38, clauses (2) to (5), earlier 
242.4   than ten years following the effective date of the conveyance 
242.5   conveyances or of the execution of the contract contracts to 
242.6   convey. 
242.7      (b) The additional taxes are imposed at the earlier of (1) 
242.8   the year following transfer of ownership to anyone other than 
242.9   the spouse or child of the current owner or a nonprofit 
242.10  foundation or corporation or local government operating the 
242.11  property as an art park and used for other public purposes, or 
242.12  (2) for taxes payable in 2008, or (3) in the event the nonprofit 
242.13  foundation or corporation to which a portion of the property was 
242.14  conveyed ceases to provide the required services within ten 
242.15  years after the conveyance, for taxes payable in the year 
242.16  following the year when it ceased to do so.  
242.17     The county board, with the approval of the city council, 
242.18  shall determine the amount of the additional taxes due on the 
242.19  portion of property which is no longer utilized as an art park; 
242.20  provided, however, that the additional taxes are equal to must 
242.21  not be greater than the difference between the taxes determined 
242.22  on that portion of the property utilized as an art park under 
242.23  sections 39 and 40 and the amount determined under subdivision 1 
242.24  for all years that the property qualified under section 38.  The 
242.25  additional taxes must be extended against the property on the 
242.26  tax list for the current year; provided, however, that No 
242.27  interest or penalties may be levied on the additional taxes if 
242.28  timely paid amount provided that it is paid within 30 days of 
242.29  the county's notice. 
242.30     [EFFECTIVE DATE.] This section is effective the day 
242.31  following final enactment. 
242.32     Sec. 69.  Laws 2001, First Special Session chapter 5, 
242.33  article 3, section 8, the effective date, is amended to read: 
242.34     [EFFECTIVE DATE.] This section is effective for taxes 
242.35  levied in 2002, payable in 2003, through taxes levied in 2007 
242.36  2009, payable in 2008 2010. 
243.1      Sec. 70.  Laws 2003, chapter 127, article 12, section 38, 
243.2   is amended to read: 
243.3      Sec. 38.  [MEMBERS MUST AUTHORITY TO LEVY TAXES FOR 
243.4   AUTHORITY.] 
243.5      (a) A member shall, at the request of the authority, levy a 
243.6   tax in any year for the benefit of the authority.  The authority 
243.7   is a special taxing district as defined in Minnesota Statutes, 
243.8   section 275.066, clause (13), with the power to adopt and 
243.9   certify a property tax levy to the county auditor.  The 
243.10  authority may levy a tax in any year for the benefit of the 
243.11  authority.  The tax is, for each member, is a pro rata portion 
243.12  of the total amount of tax requested by the authority based on 
243.13  the taxable market value within a the member's jurisdiction, but 
243.14  in no event may the tax in any year exceed 0.01813 percent of 
243.15  taxable market value.  For purposes of this section, "taxable 
243.16  market value" has the meaning as given in Minnesota Statutes, 
243.17  section 273.032. 
243.18     (b) The treasurer of each member city or town shall, within 
243.19  15 days after receiving the property tax settlements from the 
243.20  county treasurer, pay to the treasurer of the authority the 
243.21  amount collected for this purpose.  The money must be used by 
243.22  the authority for the purposes provided by sections 35 to 41. 
243.23     [EFFECTIVE DATE.] This section is effective for taxes 
243.24  levied in 2005, payable in 2006, and thereafter. 
243.25     Sec. 71.  Laws 2003, First Special Session chapter 21, 
243.26  article 4, section 12, subdivision 11, is amended to read: 
243.27     Subd. 11.  [EFFECTIVE DATE; LOCAL APPROVAL.] This section 
243.28  is effective the day after the governing body of St. Louis 
243.29  county and its chief clerical officer timely complete their 
243.30  compliance with Minnesota Statutes, section 645.021, 
243.31  subdivisions 2 and 3, provided that the certificate of approval 
243.32  is filed with the secretary of state before January 1, 2006. 
243.33     If effective before September 1, 2003, the first levy is 
243.34  the payable 2004 levy; If effective between September 1, 2003, 
243.35  and September 1, 2004, the first levy is the payable 2005 levy; 
243.36  If effective after August 31, 2004, before September 1, 2005, 
244.1   the first levy is the payable 2006 levy; and if effective after 
244.2   August 31, 2005, the first levy is the payable 2007 levy. 
244.3      Sec. 72.  [PROPERTY USED FOR EDUCATIONAL INSTRUCTION.] 
244.4      Notwithstanding Minnesota Statutes, section 272.02, 
244.5   subdivision 38, paragraph (b), the following property is exempt 
244.6   from taxation for assessment year 2004, for taxes payable in 
244.7   2005, if it meets all the following criteria: 
244.8      (1) is used to provide direct educational instruction for 
244.9   grades 7 through 10; 
244.10     (2) is located in a city of the first class that has a 
244.11  population greater than 250,000 and less than 350,000; 
244.12     (3) was purchased after July 1, 2004, by a nonprofit that 
244.13  is exempt from federal income tax under section 501(c)(3) of the 
244.14  Internal Revenue Code; and 
244.15     (4) is leased and operated by two nonprofit corporations 
244.16  organized under Minnesota Statutes, chapter 317A. 
244.17     [EFFECTIVE DATE.] This section is effective the day 
244.18  following final enactment. 
244.19     Sec. 73.  [EDUCATION RESERVE ACCOUNT; APPROPRIATION.] 
244.20     (a) There is created in the state treasury an education 
244.21  reserve account as a special revenue fund for deposit of 
244.22  appropriations and other receipts as provided by law. 
244.23     (b) $24,961,000 is appropriated from the general fund to 
244.24  the education reserve account in fiscal year 2006.  Beginning 
244.25  with taxes payable in 2008, the commissioner of finance shall 
244.26  deposit in the education reserve account the increased amount of 
244.27  the state general levy for that year over the state general levy 
244.28  base amount for taxes payable in 2002, under Minnesota Statutes, 
244.29  section 275.025. 
244.30     (c) Each year, one-half of the annual amount will be 
244.31  deposited in the education reserve account in the state fiscal 
244.32  year corresponding to the first six months of the calendar year, 
244.33  and the other half will be deposited in the state fiscal year 
244.34  corresponding to the last six months of the calendar year.  The 
244.35  amounts in the education reserve account do not lapse or cancel 
244.36  each year, but remain until appropriated by law for E-12 
245.1   education or higher education funding. 
245.2      Sec. 74.  [STUDY OF POLLUTION CONTROL EXEMPTION.] 
245.3      The commissioner of revenue must study the application of 
245.4   the property tax exemption provided under Minnesota Statutes, 
245.5   section 272.02, subdivision 10, to personal property used for 
245.6   pollution control as part of an electric generation system.  The 
245.7   commissioner must present a recommendation to the legislature by 
245.8   January 15, 2006, that would limit the exemption to property 
245.9   that is directly and exclusively used for pollution control 
245.10  purposes. 
245.11     Sec. 75.  [SAUK RIVER WATERSHED DISTRICT.] 
245.12     Notwithstanding Minnesota Statutes, section 103D.905, 
245.13  subdivision 3, the Sauk River Watershed District may annually 
245.14  levy up to 0.01 percent of taxable market value for its 
245.15  administrative fund. 
245.16     [EFFECTIVE DATE.] This section is effective, without local 
245.17  approval, for taxes levied in 2005, payable in 2006, and 
245.18  thereafter. 
245.19     Sec. 76.  [COMMERCIAL-INDUSTRIAL LAND VALUE TAXATION; LOCAL 
245.20  OPTION.] 
245.21     The governing body of any municipality that has a 
245.22  population in excess of 70,000, or any municipality located in 
245.23  the taconite tax relief area defined in Minnesota Statutes, 
245.24  section 273.134, may by resolution adopt a system of valuing 
245.25  commercial-industrial property in its jurisdiction that is based 
245.26  on the value of the land, not including improvements.  The 
245.27  governing body may make the election under this section if it 
245.28  finds that implementation of the land value system will enhance 
245.29  economic development in the city.  An election under this 
245.30  section must be made by December 31, 2005.  If any municipality 
245.31  makes the election, it must notify the commissioner of revenue 
245.32  of the election and the legislature must enact during the 2006 
245.33  legislative session the legislation necessary to implement the 
245.34  system for taxes levied in 2006, payable in 2007, and thereafter.
245.35     Sec. 77.  [STUDY REQUIRED.] 
245.36     By February 1, 2006, the fiscal staff of the house of 
246.1   representatives and senate shall conduct a study of the 
246.2   metropolitan revenue distribution program contained in Minnesota 
246.3   Statutes, chapter 473F, commonly known as the fiscal disparities 
246.4   program, and shall make a report by March 1, 2006, to the chairs 
246.5   of the house and senate tax committees consisting of the 
246.6   findings of the study and any recommendations resulting from the 
246.7   study.  
246.8      The study shall primarily address the question of whether 
246.9   the program is achieving the purposes for which it was created.  
246.10  Additionally, the study shall address the following questions: 
246.11     (1) How has the program affected property tax disparities 
246.12  across the Twin Cities metropolitan area? 
246.13     (2) Is the formula for contributing tax base to the 
246.14  areawide pool reasonable?  Should certain commercial-industrial 
246.15  tax base continue to be exempt from contribution to the areawide 
246.16  pool, such as tax base in existence prior to 1979, tax base in 
246.17  tax increment financing districts established before 1979, and 
246.18  tax base located at the Minneapolis-St. Paul International 
246.19  Airport?  Should contribution amounts be adjusted for 
246.20  differences in sales ratios between communities? 
246.21     (3) Is the formula for distributing tax base from the 
246.22  areawide pool reasonable?  Should the formula reflect measures 
246.23  of need in addition to population?  Should the distribution 
246.24  formula be based on tax capacity rather than market value? 
246.25     (4) Does the program help promote orderly growth and 
246.26  encourage environmentally sound land use? 
246.27     (5) Does the program reduce competition for 
246.28  commercial-industrial tax base between communities?  Is reduced 
246.29  competition for commercial-industrial tax base desirable? 
246.30     (6) Do local governments derive sufficient tax revenues 
246.31  from commercial-industrial property to cover the costs of 
246.32  providing services to the property, considering the tax base 
246.33  that must be contributed to the areawide pool? 
246.34     (7) Could improvements be made in the administration of the 
246.35  program? 
246.36     [EFFECTIVE DATE.] This section is effective July 1, 2005. 
247.1      Sec. 78.  [FEE STUDIES.] 
247.2      Subdivision 1.  [STATE AGENCY FEES.] The commissioner of 
247.3   each state agency that imposes any fee on individuals or 
247.4   businesses in this state must report to the commissioner of 
247.5   revenue by January 15, 2006, on the type and amount of fees 
247.6   imposed, amount and type of fee increases since January 1, 2003, 
247.7   the revenues derived from each fee for each of the most recent 
247.8   four fiscal years, and the use of the revenues from the fees.  
247.9   The commissioner of revenue shall compile this information and 
247.10  provide a comprehensive report on all state agency fees to the 
247.11  finance and tax committees of the senate and the appropriations 
247.12  and tax committees of the house of representatives by February 
247.13  15, 2006. 
247.14     Subd. 2.  [SCHOOL FEES.] By January 15, 2006, the 
247.15  Department of Education shall provide the house and senate 
247.16  education finance divisions and tax committees with a report 
247.17  that examines the total annual fees collected under Minnesota 
247.18  Public School Fee Law, Minnesota Statutes, sections 123B.34 to 
247.19  123B.39, in fiscal years 2002 to 2005.  The report must detail 
247.20  all different types of fees charged to Minnesota students under 
247.21  the law.  The report must report total fees statewide as well as 
247.22  by school district and charter school. 
247.23     Subd. 3.  [CITY FEES.] Each home rule charter or statutory 
247.24  city must report to the commissioner of revenue by January 15, 
247.25  2006, on the type and amount of fees it imposes, amount and type 
247.26  of fee increases since January 1, 2003, the revenues derived 
247.27  from each fee for each of the most recent four calendar years, 
247.28  and the use of the revenues from the fees.  The commissioner of 
247.29  revenue shall compile this information and provide a 
247.30  comprehensive report on all city fees to the finance and tax 
247.31  committees of the senate and the appropriations and tax 
247.32  committees of the house of representatives by February 15, 2006. 
247.33                             ARTICLE 9
247.34                     LOCAL DEVELOPMENT - SF1683 
247.35     Section 1.  Minnesota Statutes 2004, section 116J.993, 
247.36  subdivision 3, is amended to read: 
248.1      Subd. 3.  [BUSINESS SUBSIDY.] "Business subsidy" or 
248.2   "subsidy" means a state or local government agency grant, 
248.3   contribution of personal property, real property, 
248.4   infrastructure, the principal amount of a loan at rates below 
248.5   those commercially available to the recipient, any reduction or 
248.6   deferral of any tax or any fee, any guarantee of any payment 
248.7   under any loan, lease, or other obligation, or any preferential 
248.8   use of government facilities given to a business. 
248.9      The following forms of financial assistance are not a 
248.10  business subsidy: 
248.11     (1) a business subsidy of less than $25,000; 
248.12     (2) assistance that is generally available to all 
248.13  businesses or to a general class of similar businesses, such as 
248.14  a line of business, size, location, or similar general criteria; 
248.15     (3) public improvements to buildings or lands owned by the 
248.16  state or local government that serve a public purpose and do not 
248.17  principally benefit a single business or defined group of 
248.18  businesses at the time the improvements are made; 
248.19     (4) redevelopment property polluted by contaminants as 
248.20  defined in section 116J.552, subdivision 3; 
248.21     (5) assistance provided for the sole purpose of renovating 
248.22  old or decaying building stock or bringing it up to code and 
248.23  assistance provided for designated historic preservation 
248.24  districts, provided that the assistance is equal to or less than 
248.25  50 percent of the total cost; 
248.26     (6) assistance to provide job readiness and training 
248.27  services if the sole purpose of the assistance is to provide 
248.28  those services, except when such assistance is paid for by 
248.29  expenditures of tax increments under section 469.176, 
248.30  subdivision 4m; 
248.31     (7) assistance for housing; 
248.32     (8) assistance for pollution control or abatement, 
248.33  including assistance for a tax increment financing hazardous 
248.34  substance subdistrict as defined under section 469.174, 
248.35  subdivision 23; 
248.36     (9) assistance for energy conservation; 
249.1      (10) tax reductions resulting from conformity with federal 
249.2   tax law; 
249.3      (11) workers' compensation and unemployment insurance; 
249.4      (12) benefits derived from regulation; 
249.5      (13) indirect benefits derived from assistance to 
249.6   educational institutions; 
249.7      (14) funds from bonds allocated under chapter 474A, bonds 
249.8   issued to refund outstanding bonds, and bonds issued for the 
249.9   benefit of an organization described in section 501(c)(3) of the 
249.10  Internal Revenue Code of 1986, as amended through December 31, 
249.11  1999; 
249.12     (15) assistance for a collaboration between a Minnesota 
249.13  higher education institution and a business; 
249.14     (16) assistance for a tax increment financing soils 
249.15  condition district as defined under section 469.174, subdivision 
249.16  19; 
249.17     (17) redevelopment when the recipient's investment in the 
249.18  purchase of the site and in site preparation is 70 percent or 
249.19  more of the assessor's current year's estimated market value; 
249.20     (18) general changes in tax increment financing law and 
249.21  other general tax law changes of a principally technical nature; 
249.22     (19) federal assistance until the assistance has been 
249.23  repaid to, and reinvested by, the state or local government 
249.24  agency; 
249.25     (20) funds from dock and wharf bonds issued by a seaway 
249.26  port authority; 
249.27     (21) business loans and loan guarantees of $75,000 or less; 
249.28  and 
249.29     (22) federal loan funds provided through the United States 
249.30  Department of Commerce, Economic Development Administration. 
249.31     Sec. 2.  Minnesota Statutes 2004, section 116J.993, is 
249.32  amended by adding a subdivision to read: 
249.33     Subd. 8.  [RESIDENCE.] "Residence" means the place where an 
249.34  individual has established a permanent home from which the 
249.35  individual has no present intention of moving. 
249.36     Sec. 3.  Minnesota Statutes 2004, section 116J.994, 
250.1   subdivision 4, is amended to read: 
250.2      Subd. 4.  [WAGE AND JOB GOALS.] The subsidy agreement, in 
250.3   addition to any other goals, must include:  (1) goals for the 
250.4   number of jobs created, which may include separate goals for the 
250.5   number of part-time or full-time jobs, or, in cases where job 
250.6   loss is specific and demonstrable, goals for the number of jobs 
250.7   retained; (2) wage goals for any jobs created or retained; and 
250.8   (3) wage goals for any jobs to be enhanced through increased 
250.9   wages.  After a public hearing, if the creation or retention of 
250.10  jobs is determined not to be a goal, the wage and job goals may 
250.11  be set at zero.  The goals for the number of jobs to be created 
250.12  or retained must result in job creation or retention by the 
250.13  recipient within the granting jurisdiction overall. 
250.14     In addition to other specific goal time frames, the wage 
250.15  and job goals must contain specific goals to be attained within 
250.16  two years of the benefit date. 
250.17     [EFFECTIVE DATE.] This section is effective August 1, 2005, 
250.18  and applies to subsidy agreements entered into on or after that 
250.19  date. 
250.20     Sec. 4.  Minnesota Statutes 2004, section 116J.994, 
250.21  subdivision 5, is amended to read: 
250.22     Subd. 5.  [PUBLIC NOTICE AND HEARING.] (a) Before granting 
250.23  a business subsidy that exceeds $500,000 for a state government 
250.24  grantor and $100,000 for a local government grantor, the grantor 
250.25  must provide public notice and a hearing on the subsidy.  A 
250.26  public hearing and notice under this subdivision is not required 
250.27  if a hearing and notice on the subsidy is otherwise required by 
250.28  law. 
250.29     (b) Public notice of a proposed business subsidy under this 
250.30  subdivision by a state government grantor, other than the Iron 
250.31  Range Resources and Rehabilitation Board, must be published in 
250.32  the State Register.  Public notice of a proposed business 
250.33  subsidy under this subdivision by a local government grantor or 
250.34  the Iron Range Resources and Rehabilitation Board must be 
250.35  published in a local newspaper of general circulation.  The 
250.36  public notice must identify the location at which information 
251.1   about the business subsidy, including a summary of the terms of 
251.2   the subsidy, is available.  Published notice should be 
251.3   sufficiently conspicuous in size and placement to distinguish 
251.4   the notice from the surrounding text.  The grantor must make the 
251.5   information available in printed paper copies and, if possible, 
251.6   on the Internet.  The government agency must provide at least a 
251.7   ten-day notice for the public hearing. 
251.8      (c) The public notice must include the date, time, and 
251.9   place of the hearing. 
251.10     (d) The public hearing by a state government grantor other 
251.11  than the Iron Range Resources and Rehabilitation Board must be 
251.12  held in St. Paul. 
251.13     (e) If more than one nonstate grantor provides a business 
251.14  subsidy to the same recipient, the nonstate grantors may 
251.15  designate one nonstate grantor to hold a single public hearing 
251.16  regarding the business subsidies provided by all nonstate 
251.17  grantors.  For the purposes of this paragraph, "nonstate 
251.18  grantor" includes the iron range resources and rehabilitation 
251.19  board. 
251.20     (f) The public notice of any public meeting about a 
251.21  business subsidy agreement, including those required by this 
251.22  subdivision and by subdivision 4, must include notice that a 
251.23  person with residence in or the owner of taxable property in the 
251.24  granting jurisdiction may file a written complaint with the 
251.25  grantor if the grantor fails to comply with sections 116J.993 to 
251.26  116J.995, and that no action may be filed against the grantor 
251.27  for such failure to comply unless a written complaint is filed. 
251.28     Sec. 5.  Minnesota Statutes 2004, section 116J.994, 
251.29  subdivision 9, is amended to read: 
251.30     Subd. 9.  [COMPILATION AND SUMMARY REPORT.] The Department 
251.31  of Employment and Economic Development must publish a 
251.32  compilation and summary of the results of the reports for the 
251.33  previous two calendar years by December 1 of 2004 and every 
251.34  other year thereafter.  The reports of the government agencies 
251.35  to the department and the compilation and summary report of the 
251.36  department must be made available to the public.  The 
252.1   commissioner must make copies of all business subsidy reports 
252.2   submitted by local and state granting agencies available on the 
252.3   department's Web site by October 1 of the year in which they 
252.4   were submitted. 
252.5      The commissioner must coordinate the production of reports 
252.6   so that useful comparisons across time periods and across 
252.7   grantors can be made.  The commissioner may add other 
252.8   information to the report as the commissioner deems necessary to 
252.9   evaluate business subsidies.  Among the information in the 
252.10  summary and compilation report, the commissioner must include: 
252.11     (1) total amount of subsidies awarded in each development 
252.12  region of the state; 
252.13     (2) distribution of business subsidy amounts by size of the 
252.14  business subsidy; 
252.15     (3) distribution of business subsidy amounts by time 
252.16  category; 
252.17     (4) distribution of subsidies by type and by public 
252.18  purpose; 
252.19     (5) percent of all business subsidies that reached their 
252.20  goals; 
252.21     (6) percent of business subsidies that did not reach their 
252.22  goals by two years from the benefit date; 
252.23     (7) total dollar amount of business subsidies that did not 
252.24  meet their goals after two years from the benefit date; 
252.25     (8) percent of subsidies that did not meet their goals and 
252.26  that did not receive repayment; 
252.27     (9) list of recipients that have failed to meet the terms 
252.28  of a subsidy agreement in the past five years and have not 
252.29  satisfied their repayment obligations; 
252.30     (10) number of part-time and full-time jobs within separate 
252.31  bands of wages; and 
252.32     (11) benefits paid within separate bands of wages.  
252.33     Sec. 6.  Minnesota Statutes 2004, section 116J.994, is 
252.34  amended by adding a subdivision to read: 
252.35     Subd. 11.  [ENFORCEMENT.] (a) A person with residence in or 
252.36  an owner of taxable property located in the jurisdiction of the 
253.1   grantor may bring an action for equitable relief arising out of 
253.2   the failure of the grantor to comply with sections 116J.993 to 
253.3   116J.995.  The court may award a prevailing party in an action 
253.4   under this subdivision costs and reasonable attorney fees. 
253.5      (b) Prior to bringing an action, the party must file a 
253.6   written complaint with the grantor stating the alleged violation 
253.7   and proposing a remedy.  The grantor has up to 30 days to reply 
253.8   to the complaint in writing and may take action to comply with 
253.9   sections 116J.993 to 116J.995. 
253.10     (c) The written complaint under this subdivision for 
253.11  failure to comply with subdivisions 1 to 5, must be filed with 
253.12  the grantor within 180 days after approval of the subsidy 
253.13  agreement under subdivision 3, paragraph (d).  An action under 
253.14  this subdivision must be commenced within 30 days following 
253.15  receipt of the grantor's reply, or within 180 days after 
253.16  approval of the subsidy agreement under subdivision 3, paragraph 
253.17  (d), whichever is later. 
253.18     [EFFECTIVE DATE.] This section is effective August 1, 2005, 
253.19  and applies to subsidy agreements entered into on or after that 
253.20  date. 
253.21     Sec. 7.  Minnesota Statutes 2004, section 161.1231, is 
253.22  amended by adding a subdivision to read: 
253.23     Subd. 11.  [TRANSFER OF OWNERSHIP.] The commissioner shall, 
253.24  at the earliest feasible date after receiving payment, transfer 
253.25  ownership of the parking facilities to the city of Minneapolis.  
253.26  The payment must be equal to the amount of state funds spent by 
253.27  the commissioner for construction of the facilities.  Upon 
253.28  assuming ownership of the facilities, the city shall operate the 
253.29  facilities in accordance with the rules adopted by the 
253.30  commissioner under subdivision 2.  Upon assumption of ownership, 
253.31  the city shall assume the authority to collect fees for use of 
253.32  the facilities under subdivision 5.  The commissioner shall take 
253.33  no action under this section that would result in federal 
253.34  sanctions against Minnesota or require the repayment of any 
253.35  state funds to the federal government.  The commissioner shall 
253.36  deposit all money received under this subdivision in the trunk 
254.1   highway fund. 
254.2      [EFFECTIVE DATE.] This section is effective the day after 
254.3   the governing body of the city of Minneapolis and its chief 
254.4   clerical officer comply with Minnesota Statutes, section 
254.5   645.021, subdivisions 2 and 3. 
254.6      Sec. 8.  Minnesota Statutes 2004, section 272.0212, 
254.7   subdivision 1, is amended to read: 
254.8      Subdivision 1.  [EXEMPTION.] All qualified property in a 
254.9   zone is exempt to the extent and for a period up to the duration 
254.10  provided by the zone designation and under sections 469.1731 to 
254.11  469.1735. 
254.12     [EFFECTIVE DATE.] This section is effective for development 
254.13  agreements approved after the day following final enactment and 
254.14  beginning for property taxes payable in 2006. 
254.15     Sec. 9.  Minnesota Statutes 2004, section 272.0212, 
254.16  subdivision 2, is amended to read: 
254.17     Subd. 2.  [LIMITS ON EXEMPTION.] (a) Property in a zone is 
254.18  not exempt under this section from the following: 
254.19     (1) special assessments; 
254.20     (2) ad valorem property taxes specifically levied for the 
254.21  payment of principal and interest on debt obligations; and 
254.22     (3) all taxes levied by a school district, except school 
254.23  referendum levies as defined in section 126C.17. 
254.24     (b) The city may limit the property tax exemption to a 
254.25  shorter period than the duration of the zone or to a percentage 
254.26  of the property taxes payable or both. 
254.27     [EFFECTIVE DATE.] This section is effective for development 
254.28  agreements approved after the day following final enactment and 
254.29  beginning for property taxes payable in 2006. 
254.30     Sec. 10.  Minnesota Statutes 2004, section 469.034, 
254.31  subdivision 2, is amended to read: 
254.32     Subd. 2.  [GENERAL OBLIGATION REVENUE BONDS.] (a) An 
254.33  authority may pledge the general obligation of the general 
254.34  jurisdiction governmental unit as additional security for bonds 
254.35  payable from income or revenues of the project or the 
254.36  authority.  The authority must find that the pledged revenues 
255.1   will equal or exceed 110 percent of the principal and interest 
255.2   due on the bonds for each year.  The proceeds of the bonds must 
255.3   be used for a qualified housing development project or 
255.4   projects.  The obligations must be issued and sold in the manner 
255.5   and following the procedures provided by chapter 475, except the 
255.6   obligations are not subject to approval by the electors and the 
255.7   maturities may extend to not more than 30 years from the 
255.8   estimated date of completion of the project.  The authority is 
255.9   the municipality for purposes of chapter 475.  
255.10     (b) The principal amount of the issue must be approved by 
255.11  the governing body of the general jurisdiction governmental unit 
255.12  whose general obligation is pledged.  Public hearings must be 
255.13  held on issuance of the obligations by both the authority and 
255.14  the general jurisdiction governmental unit.  The hearings must 
255.15  be held at least 15 days, but not more than 120 days, before the 
255.16  sale of the obligations. 
255.17     (c) The maximum amount of general obligation bonds that may 
255.18  be issued and outstanding under this section equals the greater 
255.19  of (1) one-half of one percent of the taxable market value of 
255.20  the general jurisdiction governmental unit whose general 
255.21  obligation which includes a tax on property is pledged, or (2) 
255.22  $3,000,000.  In the case of county or multicounty general 
255.23  obligation bonds, the outstanding general obligation bonds of 
255.24  all cities in the county or counties issued under this 
255.25  subdivision must be added in calculating the limit under clause 
255.26  (1). 
255.27     (d) "General jurisdiction governmental unit" means the city 
255.28  in which the housing development project is located.  In the 
255.29  case of a county or multicounty authority, the county or 
255.30  counties may act as the general jurisdiction governmental unit.  
255.31  In the case of a multicounty authority, the pledge of the 
255.32  general obligation is a pledge of a tax on the taxable property 
255.33  in each of the counties. 
255.34     (e) "Qualified housing development project" means a housing 
255.35  development project providing housing either for the elderly or 
255.36  for individuals and families with incomes not greater than 80 
256.1   percent of the median family income as estimated by the United 
256.2   States Department of Housing and Urban Development for the 
256.3   standard metropolitan statistical area or the nonmetropolitan 
256.4   county in which the project is located, and will.  The project 
256.5   must be owned for the term of the bonds either by the authority 
256.6   for the term of the bonds or by a limited partnership or other 
256.7   entity in which the authority or another entity under the sole 
256.8   control of the authority is the sole general partner.  The 
256.9   partnership or other entity must receive either:  (1) an 
256.10  allocation from the Department of Finance or an entitlement 
256.11  issuer of tax-exempt bonding authority for the project and a 
256.12  preliminary determination by the Minnesota Housing Finance 
256.13  Agency or the applicable suballocator of tax credits that the 
256.14  project will qualify for four percent low-income housing tax 
256.15  credits; or (2) a reservation of nine percent low-income housing 
256.16  tax credits from the Minnesota Housing Finance Agency or a 
256.17  suballocator of tax credits for the project.  A qualified 
256.18  housing development project may admit nonelderly individuals and 
256.19  families with higher incomes if: 
256.20     (1) three years have passed since initial occupancy; 
256.21     (2) the authority finds the project is experiencing 
256.22  unanticipated vacancies resulting in insufficient revenues, 
256.23  because of changes in population or other unforeseen 
256.24  circumstances that occurred after the initial finding of 
256.25  adequate revenues; and 
256.26     (3) the authority finds a tax levy or payment from general 
256.27  assets of the general jurisdiction governmental unit will be 
256.28  necessary to pay debt service on the bonds if higher income 
256.29  individuals or families are not admitted. 
256.30     [EFFECTIVE DATE.] This section is effective for bonds 
256.31  issued after the day following final enactment. 
256.32     Sec. 11.  Minnesota Statutes 2004, section 469.169, is 
256.33  amended by adding a subdivision to read: 
256.34     Subd. 17.  [ADDITIONAL BORDER CITY ALLOCATIONS.] (a) In 
256.35  addition to tax reductions authorized in subdivisions 7 to 16, 
256.36  the commissioner shall allocate $750,000 for tax reductions to 
257.1   border city enterprise zones in cities located on the western 
257.2   border of the state.  The commissioner shall make allocations to 
257.3   zones in cities on the western border on a per capita basis.  
257.4   Allocations made under this subdivision may be used for tax 
257.5   reductions as provided in section 469.171, or for other offsets 
257.6   of taxes imposed on or remitted by businesses located in the 
257.7   enterprise zone, but only if the municipality determines that 
257.8   the granting of the tax reduction or offset is necessary in 
257.9   order to retain a business within or attract a business to the 
257.10  zone.  Any portion of the allocation provided in this paragraph 
257.11  may alternatively be used for tax reductions under section 
257.12  469.1732 or 469.1734. 
257.13     (b) The commissioner shall allocate $750,000 for tax 
257.14  reductions under section 469.1732 or 469.1734 to cities with 
257.15  border city enterprise zones located on the western border of 
257.16  the state.  The commissioner shall allocate this amount among 
257.17  the cities on a per capita basis.  Any portion of the allocation 
257.18  provided in this paragraph may alternatively be used for tax 
257.19  reductions as provided in section 469.171.  
257.20     [EFFECTIVE DATE.] This section is effective the day 
257.21  following final enactment. 
257.22     Sec. 12.  Minnesota Statutes 2004, section 469.174, is 
257.23  amended by adding a subdivision to read: 
257.24     Subd. 30.  [URBAN RENEWAL AREA.] "Urban renewal area" means 
257.25  a contiguous geographic area designated within a project and 
257.26  within which all parcels must be eligible for inclusion in a 
257.27  redevelopment, renewal and renovation, or soils condition 
257.28  district or are currently located within a redevelopment, 
257.29  renewal and renovation, or soils condition district certified 
257.30  within ten years before or after the date of approval of the 
257.31  urban renewal area by the city or county, whichever is later.  
257.32  In determining eligibility for inclusion in a district, each 
257.33  parcel may only be considered as a part of one district. 
257.34     [EFFECTIVE DATE.] This section is effective for urban 
257.35  renewal areas established on or after the date of final 
257.36  enactment. 
258.1      Sec. 13.  Minnesota Statutes 2004, section 469.175, 
258.2   subdivision 1, is amended to read: 
258.3      Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] A tax 
258.4   increment financing plan shall contain:  
258.5      (1) a statement of objectives of an authority for the 
258.6   improvement of a project; 
258.7      (2) a statement as to the development program for the 
258.8   project, including the property within the project, if any, that 
258.9   the authority intends to acquire; 
258.10     (3) a list of any development activities that the plan 
258.11  proposes to take place within the project, for which contracts 
258.12  have been entered into at the time of the preparation of the 
258.13  plan, including the names of the parties to the contract, the 
258.14  activity governed by the contract, the cost stated in the 
258.15  contract, and the expected date of completion of that activity; 
258.16     (4) identification or description of the type of any other 
258.17  specific development reasonably expected to take place within 
258.18  the project, and the date when the development is likely to 
258.19  occur; 
258.20     (5) estimates of the following:  
258.21     (i) cost of the project, including administrative expenses, 
258.22  except that if part of the cost of the project is paid or 
258.23  financed with increment from the tax increment financing 
258.24  district, the tax increment financing plan for the district must 
258.25  contain an estimate of the amount of the cost of the project, 
258.26  including administrative expenses, that will be paid or financed 
258.27  with tax increments from the district; 
258.28     (ii) amount of bonded indebtedness to be incurred; 
258.29     (iii) sources of revenue to finance or otherwise pay public 
258.30  costs; 
258.31     (iv) the most recent net tax capacity of taxable real 
258.32  property within the tax increment financing district and within 
258.33  any subdistrict; 
258.34     (v) the estimated captured net tax capacity of the tax 
258.35  increment financing district at completion; and 
258.36     (vi) the duration of the tax increment financing district's 
259.1   and any subdistrict's existence; 
259.2      (6) statements of the authority's alternate estimates of 
259.3   the impact of tax increment financing on the net tax capacities 
259.4   of all taxing jurisdictions in which the tax increment financing 
259.5   district is located in whole or in part.  For purposes of one 
259.6   statement, the authority shall assume that the estimated 
259.7   captured net tax capacity would be available to the taxing 
259.8   jurisdictions without creation of the district, and for purposes 
259.9   of the second statement, the authority shall assume that none of 
259.10  the estimated captured net tax capacity would be available to 
259.11  the taxing jurisdictions without creation of the district or 
259.12  subdistrict; 
259.13     (7) identification and description of studies and analyses 
259.14  used to make the determination set forth in subdivision 3, 
259.15  clause (2); and 
259.16     (8) identification of all parcels to be included in the 
259.17  district or any subdistrict; and 
259.18     (9) identification of any job training costs intended to be 
259.19  paid by use of tax increments, including the name of the 
259.20  employer whose employees will be trained and the nature and cost 
259.21  of the training.  The plan is not required to identify the 
259.22  provider of the job training. 
259.23     [EFFECTIVE DATE.] This section applies to districts for 
259.24  which the request for certification was made after July 31, 
259.25  1979, and is effective for tax increment financing plans 
259.26  approved after June 30, 2005.  
259.27     Sec. 14.  Minnesota Statutes 2004, section 469.175, 
259.28  subdivision 4, is amended to read: 
259.29     Subd. 4.  [MODIFICATION OF PLAN.] (a) A tax increment 
259.30  financing plan may be modified by an authority. 
259.31     (b) The authority may make the following modifications only 
259.32  upon the notice and after the discussion, public hearing, and 
259.33  findings required for approval of the original plan: 
259.34     (1) any reduction or enlargement of geographic area of the 
259.35  project or tax increment financing district that does not meet 
259.36  the requirements of paragraph (e); 
260.1      (2) increase in amount of bonded indebtedness to be 
260.2   incurred; 
260.3      (3) a determination to capitalize interest on the debt if 
260.4   that determination was not a part of the original plan, or to 
260.5   increase or decrease the amount of interest on the debt to be 
260.6   capitalized; 
260.7      (4) increase in the portion of the captured net tax 
260.8   capacity to be retained by the authority; 
260.9      (5) increase in the estimate of the cost of the project, 
260.10  including administrative expenses, that will be paid or financed 
260.11  with tax increment from the district; or 
260.12     (6) designation of additional property to be acquired by 
260.13  the authority; or 
260.14     (7) a decision to pay for job training for employees of a 
260.15  business located in the district that was not a part of the 
260.16  original plan. 
260.17     (c) If an authority changes the type of district to another 
260.18  type of district, this change is not a modification but requires 
260.19  the authority to follow the procedure set forth in sections 
260.20  469.174 to 469.179 for adoption of a new plan, including 
260.21  certification of the net tax capacity of the district by the 
260.22  county auditor.  
260.23     (d) If a redevelopment district or a renewal and renovation 
260.24  district is enlarged, the reasons and supporting facts for the 
260.25  determination that the addition to the district meets the 
260.26  criteria of section 469.174, subdivision 10, paragraph (a), 
260.27  clauses (1) and (2), or subdivision 10a, must be documented.  
260.28     (e) The requirements of paragraph (b) do not apply if (1) 
260.29  the only modification is elimination of parcels from the project 
260.30  or district and (2)(A) the current net tax capacity of the 
260.31  parcels eliminated from the district equals or exceeds the net 
260.32  tax capacity of those parcels in the district's original net tax 
260.33  capacity or (B) the authority agrees that, notwithstanding 
260.34  section 469.177, subdivision 1, the original net tax capacity 
260.35  will be reduced by no more than the current net tax capacity of 
260.36  the parcels eliminated from the district.  The authority must 
261.1   notify the county auditor of any modification that reduces or 
261.2   enlarges the geographic area of a district or a project area.  
261.3      (f) The geographic area of a tax increment financing 
261.4   district may be reduced, but shall not be enlarged after five 
261.5   years following the date of certification of the original net 
261.6   tax capacity by the county auditor or after August 1, 1984, for 
261.7   tax increment financing districts authorized prior to August 1, 
261.8   1979. 
261.9      [EFFECTIVE DATE.] This section is effective for districts 
261.10  for which the request for certification was made after July 31, 
261.11  1979, and is effective for modifications made after June 30, 
261.12  2005. 
261.13     Sec. 15.  Minnesota Statutes 2004, section 469.175, 
261.14  subdivision 6, is amended to read: 
261.15     Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
261.16  auditor shall develop a uniform system of accounting and 
261.17  financial reporting for tax increment financing districts.  The 
261.18  system of accounting and financial reporting shall, as nearly as 
261.19  possible: 
261.20     (1) provide for full disclosure of the sources and uses of 
261.21  public funds in the district; 
261.22     (2) permit comparison and reconciliation with the affected 
261.23  local government's accounts and financial reports; 
261.24     (3) permit auditing of the funds expended on behalf of a 
261.25  district, including a single district that is part of a 
261.26  multidistrict project or that is funded in part or whole through 
261.27  the use of a development account funded with tax increments from 
261.28  other districts or with other public money; 
261.29     (4) be consistent with generally accepted accounting 
261.30  principles. 
261.31     (b) The authority must annually submit to the state auditor 
261.32  a financial report in compliance with paragraph (a).  Copies of 
261.33  the report must also be provided to the county auditor and to 
261.34  the governing body of the municipality, if the authority is not 
261.35  the municipality.  To the extent necessary to permit compliance 
261.36  with the requirement of financial reporting, the county and any 
262.1   other appropriate local government unit or private entity must 
262.2   provide the necessary records or information to the authority or 
262.3   the state auditor as provided by the system of accounting and 
262.4   financial reporting developed pursuant to paragraph (a).  The 
262.5   authority must submit the annual report for a year on or before 
262.6   August 1 of the next year. 
262.7      (c) The annual financial report must also include the 
262.8   following items: 
262.9      (1) the original net tax capacity of the district and any 
262.10  subdistrict under section 469.177, subdivision 1; 
262.11     (2) the net tax capacity for the reporting period of the 
262.12  district and any subdistrict; 
262.13     (3) the captured net tax capacity of the district; 
262.14     (4) any fiscal disparity deduction from the captured net 
262.15  tax capacity under section 469.177, subdivision 3; 
262.16     (5) the captured net tax capacity retained for tax 
262.17  increment financing under section 469.177, subdivision 2, 
262.18  paragraph (a), clause (1); 
262.19     (6) any captured net tax capacity distributed among 
262.20  affected taxing districts under section 469.177, subdivision 2, 
262.21  paragraph (a), clause (2); 
262.22     (7) the type of district; 
262.23     (8) the date the municipality approved the tax increment 
262.24  financing plan and the date of approval of any modification of 
262.25  the tax increment financing plan, the approval of which requires 
262.26  notice, discussion, a public hearing, and findings under 
262.27  subdivision 4, paragraph (a); 
262.28     (9) the date the authority first requested certification of 
262.29  the original net tax capacity of the district and the date of 
262.30  the request for certification regarding any parcel added to the 
262.31  district; 
262.32     (10) the date the county auditor first certified the 
262.33  original net tax capacity of the district and the date of 
262.34  certification of the original net tax capacity of any parcel 
262.35  added to the district; 
262.36     (11) the month and year in which the authority has received 
263.1   or anticipates it will receive the first increment from the 
263.2   district; 
263.3      (12) the date the district must be decertified; 
263.4      (13) for the reporting period and prior years of the 
263.5   district, the actual amount received from, at least, the 
263.6   following categories: 
263.7      (i) tax increments paid by the captured net tax capacity 
263.8   retained for tax increment financing under section 469.177, 
263.9   subdivision 2, paragraph (a), clause (1), but excluding any 
263.10  excess taxes; 
263.11     (ii) tax increments that are interest or other investment 
263.12  earnings on or from tax increments; 
263.13     (iii) tax increments that are proceeds from the sale or 
263.14  lease of property, tangible or intangible, purchased by the 
263.15  authority with tax increments; 
263.16     (iv) tax increments that are repayments of loans or other 
263.17  advances made by the authority with tax increments; 
263.18     (v) bond or loan proceeds; 
263.19     (vi) special assessments; 
263.20     (vii) grants; and 
263.21     (viii) transfers from funds not exclusively associated with 
263.22  the district; 
263.23     (14) for the reporting period and for the prior years of 
263.24  the district, the actual amount expended for, at least, the 
263.25  following categories: 
263.26     (i) acquisition of land and buildings through condemnation 
263.27  or purchase; 
263.28     (ii)  site improvements or preparation costs; 
263.29     (iii) installation of public utilities, parking facilities, 
263.30  streets, roads, sidewalks, or other similar public improvements; 
263.31     (iv) administrative costs, including the allocated cost of 
263.32  the authority; 
263.33     (v) public park facilities, facilities for social, 
263.34  recreational, or conference purposes, or other similar public 
263.35  improvements; and 
263.36     (vi) transfers to funds not exclusively associated with the 
264.1   district; and 
264.2      (vii) job training as permitted under section 469.176, 
264.3   subdivision 4m; 
264.4      (15) for properties sold to developers, the total cost of 
264.5   the property to the authority and the price paid by the 
264.6   developer; 
264.7      (16) the amount of any payments and the value of any 
264.8   in-kind benefits, such as physical improvements and the use of 
264.9   building space, that are paid or financed with tax increments 
264.10  and are provided to another governmental unit other than the 
264.11  municipality during the reporting period; 
264.12     (17) the amount of any payments for activities and 
264.13  improvements located outside of the district that are paid for 
264.14  or financed with tax increments; 
264.15     (18) the amount of payments of principal and interest that 
264.16  are made during the reporting period on any nondefeased: 
264.17     (i) general obligation tax increment financing bonds; 
264.18     (ii) other tax increment financing bonds; and 
264.19     (iii) notes and pay-as-you-go contracts; 
264.20     (19) the principal amount, at the end of the reporting 
264.21  period, of any nondefeased: 
264.22     (i) general obligation tax increment financing bonds; 
264.23     (ii) other tax increment financing bonds; and 
264.24     (iii) notes and pay-as-you-go contracts; 
264.25     (20) the amount of principal and interest payments that are 
264.26  due for the current calendar year on any nondefeased: 
264.27     (i) general obligation tax increment financing bonds; 
264.28     (ii) other tax increment financing bonds; and 
264.29     (iii) notes and pay-as-you-go contracts; 
264.30     (21) if the fiscal disparities contribution under chapter 
264.31  276A or 473F for the district is computed under section 469.177, 
264.32  subdivision 3, paragraph (a), the amount of increased property 
264.33  taxes imposed on other properties in the municipality that 
264.34  approved the tax increment financing plan as a result of the 
264.35  fiscal disparities contribution; 
264.36     (22) whether the tax increment financing plan or other 
265.1   governing document permits increment revenues to be expended: 
265.2      (i) to pay bonds, the proceeds of which were or may be 
265.3   expended on activities outside of the district; 
265.4      (ii) for deposit into a common bond fund from which money 
265.5   may be expended on activities located outside of the district; 
265.6   or 
265.7      (iii) to otherwise finance activities located outside of 
265.8   the tax increment financing district; 
265.9      (23) the estimate, if any, contained in the tax increment 
265.10  financing plan of the amount of the cost of the project, 
265.11  including administrative expenses, that will be paid or financed 
265.12  with tax increment; and 
265.13     (24) any additional information the state auditor may 
265.14  require. 
265.15     (d) The commissioner of revenue shall prescribe the method 
265.16  of calculating the increased property taxes under paragraph (c), 
265.17  clause (21), and the form of the statement disclosing this 
265.18  information on the annual statement under subdivision 5. 
265.19     (e) The reporting requirements imposed by this subdivision 
265.20  apply to districts certified before, on, and after August 1, 
265.21  1979. 
265.22     [EFFECTIVE DATE.] This section is effective for reports 
265.23  filed in 2006 and thereafter. 
265.24     Sec. 16.  Minnesota Statutes 2004, section 469.176, 
265.25  subdivision 1c, is amended to read: 
265.26     Subd. 1c.  [DURATION LIMITS; PRE-1979 DISTRICTS.] (a) For 
265.27  tax increment financing districts created prior to August 1, 
265.28  1979, no tax increment shall be paid to the authority after 
265.29  April 1, 2001, or the term of a nondefeased bond or obligation 
265.30  outstanding on April 1, 1990, secured by increments from the 
265.31  district or project area, whichever time is greater, provided 
265.32  that in no case will a tax increment be paid to an authority 
265.33  after August 1, 2009, from such a district.  If a district's 
265.34  termination date is extended beyond April 1, 2001, because bonds 
265.35  were outstanding on April 1, 1990, with maturities extending 
265.36  beyond April 1, 2001, the following restrictions apply.  No 
266.1   increment collected from the district may be expended after 
266.2   April 1, 2001, except to pay or repay: 
266.3      (1) bonds issued before April 1, 1990; 
266.4      (2) bonds issued to refund the principal of the outstanding 
266.5   bonds and pay associated issuance costs; 
266.6      (3) administrative expenses of the district required to be 
266.7   paid under section 469.176, subdivision 4h, paragraph (a); 
266.8      (4) transfers of increment permitted under section 
266.9   469.1763, subdivision 6; and 
266.10     (5) any advance or payment made by the municipality or the 
266.11  authority after June 1, 2002, to pay any bonds listed in clause 
266.12  (1) or (2); and 
266.13     (6) amounts authorized under paragraph (d). 
266.14     (b) Each year, any increments from a district subject to 
266.15  this subdivision must be first applied to pay obligations listed 
266.16  under paragraph (a), clauses (1) and (2), and administrative 
266.17  expenses under paragraph (a), clause (3).  Any remaining 
266.18  increments may be used for transfers of increments permitted 
266.19  under section 469.1763, subdivision 6, and to make payments 
266.20  under paragraph paragraphs (a), clause (5), and (d). 
266.21     (c) When sufficient money has been received to pay in full 
266.22  or defease obligations under paragraph (a), clauses (1), (2), 
266.23  and (5), and no spending is permitted by paragraph (d) for the 
266.24  year, the tax increment project or district must be decertified. 
266.25     (d) In addition to the expenditures authorized under 
266.26  paragraph (a), clauses (1) to (5), a city may expend increments 
266.27  from a tax increment financing district subject to this 
266.28  subdivision after April 1, 2001, if all of the following 
266.29  conditions are met: 
266.30     (1) the captured tax capacity for all tax increment 
266.31  financing districts constituted less than six percent of the 
266.32  city's total tax capacity for taxes payable in 2003; and 
266.33     (2) the population of the city exceeds 50,000. 
266.34     [EFFECTIVE DATE.] This section is effective for tax 
266.35  increment financing districts for which the request for 
266.36  certification was made before August 1, 1979. 
267.1      Sec. 17.  Minnesota Statutes 2004, section 469.176, is 
267.2   amended by adding a subdivision to read: 
267.3      Subd. 4m.  [USE OF INCREMENTS FOR JOB 
267.4   TRAINING.] Notwithstanding the limits on use of increments in 
267.5   subdivision 4, 4b, 4c, or 4j, increments may be expended for job 
267.6   training that is intended to result in new job growth within a 
267.7   tax increment financing district.  The authority may expend 
267.8   increments directly for the cost of the job training or may 
267.9   reimburse an employer located within the district or a 
267.10  municipality in which the district is located for job training 
267.11  expenditures.  Increments may be expended only for job training 
267.12  programs that are approved for this purpose by the local 
267.13  workforce council established under section 116L.666 that has 
267.14  jurisdiction over the workforce service area that includes the 
267.15  tax increment financing district.  For purposes of section 
267.16  469.1763, increments expended under this subdivision are 
267.17  considered to be expended on activities in the district.  
267.18     [EFFECTIVE DATE.] This section is effective for districts 
267.19  for which the request for certification was made after July 31, 
267.20  1979, provided that districts for which the request for 
267.21  certification was made before the effective date of this act 
267.22  must modify their plans to provide for this expenditure. 
267.23     Sec. 18.  Minnesota Statutes 2004, section 469.176, is 
267.24  amended by adding a subdivision to read: 
267.25     Subd. 8.  [URBAN RENEWAL AREA.] (a) An authority may create 
267.26  an urban renewal area only upon the notice and after the 
267.27  discussion, public hearing, and findings required for approval 
267.28  of the original project.  In addition, the authority must obtain 
267.29  written approval from the county in which the urban renewal area 
267.30  is to be located.  After approval by the city and county, the 
267.31  authority shall notify the commissioner of revenue of the 
267.32  approved urban renewal area. 
267.33     (b) All provisions of sections 469.174 through 469.1799 
267.34  apply except: 
267.35     (1) the five-year rule under section 469.1763, subdivision 
267.36  3, is extended to ten years; 
268.1      (2) the limitation on spending increment outside of the 
268.2   district under section 469.1763, subdivision 2, does not apply, 
268.3   provided that increments may only be expended on improvements or 
268.4   activities within the urban renewal area, and increments from a 
268.5   soils condition district must be expended as provided under 
268.6   subdivision 4b; and 
268.7      (3) the local tax rate certification required under section 
268.8   469.177, subdivision 1a, does not apply. 
268.9      [EFFECTIVE DATE.] This section is effective for urban 
268.10  renewal areas established on or after the date of final 
268.11  enactment. 
268.12     Sec. 19.  Minnesota Statutes 2004, section 469.1761, is 
268.13  amended by adding a subdivision to read: 
268.14     Subd. 3a.  [MIXED-INCOME OCCUPANCY PROJECTS.] (a) 
268.15  Notwithstanding the income requirements in subdivisions 2 and 3, 
268.16  or section 469.174, subdivision 11, an authority may create 
268.17  housing districts for developments that contain both 
268.18  owner-occupied and residential rental units for mixed-income 
268.19  occupancy.  Such a district consists of a project, or a portion 
268.20  of a project, intended for occupancy, in part, by persons of low 
268.21  and moderate income as defined in chapter 462A, title II, of the 
268.22  National Housing Act of 1934; the National Housing Act of 1959; 
268.23  the United States Housing Act of 1937, as amended; title V of 
268.24  the Housing Act of 1949, as amended; any other similar present 
268.25  or future federal, state, or municipal legislation, or the 
268.26  regulations promulgated under any of those acts, as further 
268.27  specified in this section.  Twenty percent of the units in the 
268.28  development in the housing district must be occupied by 
268.29  individuals whose family income is equal to or less than 50 
268.30  percent of area median gross income, and an additional 60 
268.31  percent of the units in the development in the housing district 
268.32  must be occupied by individuals whose family income is equal to 
268.33  or less than 115 percent of area median gross income.  Twenty 
268.34  percent of the units in the development in the housing district 
268.35  are not required to be subject to any income limitations. 
268.36     (b) For purposes of this subdivision, "family income" means 
269.1   the median gross income for the area as determined under section 
269.2   42 of the Internal Revenue Code of 1986, as amended.  The income 
269.3   requirements of this subdivision are satisfied if the sum of 
269.4   qualified owner-occupied units and qualified residential rental 
269.5   units equals the required total number of qualified units.  
269.6   Owner-occupied units must be initially purchased and occupied by 
269.7   individuals whose family income satisfies the income 
269.8   requirements of this subdivision.  For residential rental 
269.9   property, the income requirements of this subdivision apply for 
269.10  the duration of the tax increment district.  
269.11     (c) The development in the housing district, but not the 
269.12  project, does not qualify under this subdivision if the fair 
269.13  market value of the improvements that are constructed for 
269.14  commercial uses or for uses other than owner-occupied and rental 
269.15  mixed-income housing consists of more than 20 percent of the 
269.16  total fair market value of the planned improvements in the 
269.17  development plan or agreement.  The fair market value of the 
269.18  improvements may be determined using the cost of construction, 
269.19  capitalized income, or other appropriate method of estimating 
269.20  market value. 
269.21     [EFFECTIVE DATE.] This section is effective for districts 
269.22  for which certification is requested after July 31, 2005. 
269.23     Sec. 20.  Minnesota Statutes 2004, section 469.1763, 
269.24  subdivision 2, is amended to read: 
269.25     Subd. 2.  [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 
269.26  increment financing district, an amount equal to at least 75 
269.27  percent of the total revenue derived from tax increments paid by 
269.28  properties in the district must be expended on activities in the 
269.29  district or to pay bonds, to the extent that the proceeds of the 
269.30  bonds were used to finance activities in the district or to pay, 
269.31  or secure payment of, debt service on credit enhanced bonds.  
269.32  For districts, other than redevelopment districts for which the 
269.33  request for certification was made after June 30, 1995, the 
269.34  in-district percentage for purposes of the preceding sentence is 
269.35  80 percent.  Not more than 25 percent of the total revenue 
269.36  derived from tax increments paid by properties in the district 
270.1   may be expended, through a development fund or otherwise, on 
270.2   activities outside of the district but within the defined 
270.3   geographic area of the project except to pay, or secure payment 
270.4   of, debt service on credit enhanced bonds.  For districts, other 
270.5   than redevelopment districts for which the request for 
270.6   certification was made after June 30, 1995, the pooling 
270.7   percentage for purposes of the preceding sentence is 20 
270.8   percent.  The revenue derived from tax increments for the 
270.9   district that are expended on costs under section 469.176, 
270.10  subdivision 4h, paragraph (b), may be deducted first before 
270.11  calculating the percentages that must be expended within and 
270.12  without the district.  
270.13     (b) In the case of a housing district, a housing project, 
270.14  as defined in section 469.174, subdivision 11, is an activity in 
270.15  the district.  
270.16     (c) All administrative expenses are for activities outside 
270.17  of the district, except that if the only expenses for activities 
270.18  outside of the district under this subdivision are for the 
270.19  purposes described in paragraph (d), administrative expenses 
270.20  will be considered as expenditures for activities in the 
270.21  district. 
270.22     (d) The authority may elect, in the tax increment financing 
270.23  plan for the district, to increase by up to ten percentage 
270.24  points the permitted amount of expenditures for activities 
270.25  located outside the geographic area of the district under 
270.26  paragraph (a).  As permitted by section 469.176, subdivision 4k, 
270.27  the expenditures, including the permitted expenditures under 
270.28  paragraph (a), need not be made within the geographic area of 
270.29  the project.  Expenditures that meet the requirements of this 
270.30  paragraph are legally permitted expenditures of the district, 
270.31  notwithstanding section 469.176, subdivisions 4b, 4c, and 4j.  
270.32  To qualify for the increase under this paragraph, the 
270.33  expenditures must: 
270.34     (1) be used exclusively to assist housing that meets the 
270.35  requirement for a qualified low-income building, as that term is 
270.36  used in section 42 of the Internal Revenue Code; 
271.1      (2) not exceed the qualified basis of the housing, as 
271.2   defined under section 42(c) of the Internal Revenue Code, less 
271.3   the amount of any credit allowed under section 42 of the 
271.4   Internal Revenue Code; and 
271.5      (3) be used to: 
271.6      (i) acquire and prepare the site of the housing; 
271.7      (ii) acquire, construct, or rehabilitate the housing; or 
271.8      (iii) make public improvements directly related to the 
271.9   housing. 
271.10     (e) For a district created within a biotechnology and 
271.11  health sciences industry zone as defined in section 469.330, 
271.12  subdivision 6, tax increment derived from such a district may be 
271.13  expended outside of the district but within the zone only for 
271.14  expenditures required for the construction of public 
271.15  infrastructure necessary to support the activities of the zone. 
271.16     Sec. 21.  Minnesota Statutes 2004, section 469.1792, is 
271.17  amended to read: 
271.18     469.1792 [SPECIAL DEFICIT AUTHORITY.] 
271.19     Subdivision 1.  [SCOPE.] This section applies only to an 
271.20  authority with a preexisting district for which: 
271.21     (1) the increments from the district were insufficient to 
271.22  pay preexisting obligations as a result of the class rate 
271.23  changes or the elimination of the state-determined general 
271.24  education property tax levy under this act, or both; or 
271.25     (2)(i) the development authority has a binding contract, 
271.26  entered into before August 1, 2001, with a person requiring the 
271.27  authority to pay to the person an amount that may not exceed the 
271.28  increment from the district or a specific development within the 
271.29  district; and 
271.30     (ii) the authority is unable to pay the full amount under 
271.31  the contract from the pledged increments or other increments 
271.32  from the district that would have been due if the class rate 
271.33  changes or elimination of the state-determined general education 
271.34  property tax levy or both had not been made under Laws 2001, 
271.35  First Special Session chapter 5; 
271.36     (3) the authority amends its tax increment financing plan 
272.1   to establish an affordable housing account to which increments 
272.2   are pledged; or 
272.3      (4) the authority amends its tax increment financing plan 
272.4   to establish a hazardous substance, pollutant, or contaminant 
272.5   remediation account to which increments are pledged. 
272.6      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
272.7   the following terms have the meanings given. 
272.8      (b) "Affordable housing account" means an account in which 
272.9   increment is deposited solely for affordable housing activities 
272.10  as defined in section 469.174, subdivision 11.  
272.11     (c) "Hazardous substance, pollutant, or contaminant 
272.12  remediation account" means an account in which increment is 
272.13  deposited solely for removal or remediation activities described 
272.14  in section 469.174, subdivisions 16 to 19.  
272.15     (d) "Preexisting district" means a tax increment financing 
272.16  district for which the request for certification was made before 
272.17  August 1, 2001. 
272.18     (c) (e) "Preexisting obligation" means a bond or binding 
272.19  contract that: 
272.20     (1)(i) was issued or approved before August 1, 2001, or was 
272.21  issued pursuant to a binding contract entered into before July 
272.22  1, 2001; or 
272.23     (ii) was issued to refinance an obligation under item (i), 
272.24  if the refinancing does not increase the present value of the 
272.25  debt service; and 
272.26     (2) is secured by increments from a preexisting district. 
272.27     Subd. 3.  [ACTIONS AUTHORIZED.] (a) An authority with a 
272.28  district qualifying under this section may take either or both 
272.29  of the following actions for any or all of its preexisting 
272.30  districts: 
272.31     (1) the authority may elect that the original local tax 
272.32  rate under section 469.177, subdivision 1a, does not apply to 
272.33  the district; and 
272.34     (2) the authority may elect the fiscal disparities 
272.35  contribution will be computed under section 469.177, subdivision 
272.36  3, paragraph (a), regardless of the election that was made for 
273.1   the district or if the district is an economic development 
273.2   district for which the request for certification was made after 
273.3   June 30, 1997. 
273.4      (b) The authority may take action under this subdivision 
273.5   only after the municipality approves the action, by resolution, 
273.6   after notice and public hearing in the manner provided under 
273.7   section 469.175, subdivision 3.  To be effective for taxes 
273.8   payable in the following year, the resolution must be adopted 
273.9   and the county auditor must be notified of the adoption on or 
273.10  before July 1. 
273.11     Subd. 4.  [EXPENDITURES FROM AFFORDABLE HOUSING 
273.12  ACCOUNTS.] Increment from an affordable housing account may be 
273.13  spent by an authority anywhere within its area of operation.  
273.14  Notwithstanding the definition of a project under section 
273.15  469.174, increments may be spent to assist housing that meets 
273.16  the requirements under section 469.1761.  The limitation imposed 
273.17  by section 469.1763, subdivision 2, does not apply to any 
273.18  transfers of increment to the affordable housing account to the 
273.19  extent that the amount transferred to the account under this 
273.20  subdivision does not exceed ten percent of the revenue derived 
273.21  from tax increments paid by properties in the district in the 
273.22  year. 
273.23     Subd. 5.  [EXPENDITURES FROM HAZARDOUS SUBSTANCE, 
273.24  POLLUTANT, OR CONTAMINANT REMEDIATION ACCOUNT.] Increment from a 
273.25  hazardous substance, pollutant, or contaminant remediation 
273.26  account may be spent by an authority anywhere within its area of 
273.27  operation.  Notwithstanding the definition of a project under 
273.28  section 469.174, increments may be expended to remediation and 
273.29  removal activities that meet the requirements of section 
273.30  469.176, subdivision 4b or 4e.  The limitation imposed by 
273.31  section 469.1763, subdivision 2, does not apply to any transfers 
273.32  of increment to the hazardous substance, pollutant, or 
273.33  contaminant remediation account to the extent that the amount 
273.34  transferred to the account under this subdivision does not 
273.35  exceed ten percent of the revenue derived from tax increments 
273.36  paid by properties in the district in the year. 
274.1      [EFFECTIVE DATE.] This section is effective for actions 
274.2   taken and resolutions approved after June 30, 2005. 
274.3      Sec. 22.  Minnesota Statutes 2004, section 469.310, 
274.4   subdivision 11, is amended to read: 
274.5      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
274.6   means a person carrying on a trade or business at a place of 
274.7   business located within a job opportunity building zone. 
274.8      (b) A person that relocates a trade or business from 
274.9   outside a job opportunity building zone into a zone is not a 
274.10  qualified business, unless the business: 
274.11     (1)(i) increases full-time employment in the first full 
274.12  year of operation within the job opportunity building zone by at 
274.13  least 20 percent measured relative to the operations that were 
274.14  relocated and maintains the required level of employment for 
274.15  each year the zone designation applies; or 
274.16     (ii) makes a capital investment in the property located 
274.17  within a zone equivalent to ten percent of the gross revenues of 
274.18  operation that were relocated in the immediately preceding 
274.19  taxable year; and 
274.20     (2) enters a binding written agreement with the 
274.21  commissioner that: 
274.22     (i) pledges the business will meet the requirements of 
274.23  clause (1); 
274.24     (ii) provides for repayment of all tax benefits enumerated 
274.25  under section 469.315 to the business under the procedures in 
274.26  section 469.319, if the requirements of clause (1) are not met 
274.27  for the taxable year or for taxes payable during the year in 
274.28  which the requirements were not met; and 
274.29     (iii) contains any other terms the commissioner determines 
274.30  appropriate. 
274.31     (c) A business is not a qualified business if at its 
274.32  location or locations in the zone, the business is primarily 
274.33  engaged in making retail sales to purchasers who are physically 
274.34  present at the business's zone location.  
274.35     [EFFECTIVE DATE.] This section is effective the day 
274.36  following final enactment and applies to any business entering a 
275.1   business subsidy agreement for a job opportunity development 
275.2   zone after that date. 
275.3      Sec. 23.  Laws 1994, chapter 587, article 9, section 20, 
275.4   subdivision 1, is amended to read: 
275.5      Subdivision 1.  [ESTABLISHMENT.] The city of Brooklyn Park 
275.6   may establish an economic development tax increment financing 
275.7   district in which 15 percent all of the revenue generated from 
275.8   tax increment in any year that is not expended pursuant to a 
275.9   pledge given or encumbrance created before January 1, 2005, is 
275.10  deposited in the housing development account of the authority 
275.11  and expended according to the tax increment financing plan. 
275.12     Sec. 24.  Laws 1994, chapter 587, article 9, section 20, 
275.13  subdivision 2, is amended to read: 
275.14     Subd. 2.  [ELIGIBLE ACTIVITIES.] The authority must 
275.15  identify in the plan the housing activities that will be 
275.16  assisted by the housing development account.  Housing activities 
275.17  may include rehabilitation, acquisition, demolition, and 
275.18  financing of new or existing single family or multifamily 
275.19  housing.  Housing activities listed in the plan need not be 
275.20  located within the district or project area but must be 
275.21  activities that meet the requirements of a qualified housing 
275.22  district under Minnesota Statutes, section 273.1399 or 469.1761, 
275.23  subdivision 2, for owner-occupied housing or section 469.174, 
275.24  subdivision 29, clause (1), for rental housing. 
275.25     Sec. 25.  Laws 1998, chapter 389, article 11, section 19, 
275.26  subdivision 3, is amended to read: 
275.27     Subd. 3.  [DURATION OF DISTRICT.] Notwithstanding the 
275.28  provisions of Minnesota Statutes, section 469.176, subdivision 
275.29  1b, no tax increment may be paid to the authority or the city 
275.30  after 18 years from the date of receipt by the authority of the 
275.31  first increment generated from the final phase of 
275.32  redevelopment.  In no case may increments be paid to the 
275.33  authority after 30 years from approval of the tax increment 
275.34  plan.  "Final phase of redevelopment" means that phase of 
275.35  redevelopment activity which completes the rehabilitation of the 
275.36  Lake Street site. 
276.1      [EFFECTIVE DATE.] This section is effective upon compliance 
276.2   with Minnesota Statutes, sections 469.1782, subdivision 2, and 
276.3   645.021, subdivision 2. 
276.4      Sec. 26.  [ANOKA COUNTY REGIONAL RAILROAD AUTHORITY 
276.5   POWERS.] 
276.6      Subdivision 1.  [ECONOMIC DEVELOPMENT POWERS AND 
276.7   DUTIES.] The Anoka County Regional Railroad Authority may 
276.8   exercise any of the powers and duties of an economic development 
276.9   authority under Minnesota Statutes, sections 469.090, 469.098, 
276.10  and 469.101 to 469.106.  The Anoka County Regional Railroad 
276.11  Authority may exercise the powers under Minnesota Statutes, 
276.12  sections 469.001 to 469.047, for the purpose of transit-oriented 
276.13  development, except that the Anoka County Regional Railroad 
276.14  Authority must not exercise the power to tax under Minnesota 
276.15  Statutes, section 469.033, subdivision 6.  In applying Minnesota 
276.16  Statutes, sections 469.001 to 469.047, 469.090, 469.098, and 
276.17  469.101 to 469.106, to the Anoka County Regional Railroad 
276.18  Authority, the county is considered to be the city and the 
276.19  county board is considered to be the city council. 
276.20     Subd. 2.  [RELATION TO LOCAL AUTHORITIES.] Nothing in 
276.21  subdivision 1 shall change or impair the powers or duties of a 
276.22  city, town, municipal housing and redevelopment authority, or 
276.23  municipal economic development authority. 
276.24     Subd. 3.  [LOCAL APPROVAL.] If any economic development 
276.25  project is constructed in the county pursuant to the 
276.26  authorization in this section, the project must be approved by 
276.27  the governing body of each city or town within which the project 
276.28  will be constructed. 
276.29     [EFFECTIVE DATE.] This section is effective the day after 
276.30  the governing body of the Anoka County Regional Railroad 
276.31  Authority and its chief clerical officer timely complete their 
276.32  compliance with Minnesota Statutes, section 645.021, 
276.33  subdivisions 2 and 3. 
276.34     Sec. 27.  [CITY OF BEMIDJI; DURATION EXTENSION FOR TAX 
276.35  ABATEMENT.] 
276.36     Notwithstanding the limitation in Minnesota Statutes, 
277.1   section 469.1813, subdivision 6, the city of Bemidji may extend 
277.2   the duration of the tax abatement given to support development 
277.3   within the fairgrounds district of the city for an additional 
277.4   four years beyond the duration permitted under that section. 
277.5      Sec. 28.  [CITY OF BROOKLYN CENTER; EXTENSION OF TIME TO 
277.6   EXPEND TAX INCREMENT.] 
277.7      For tax increment financing district number 3, established 
277.8   on December 19, 1994, by Brooklyn Center Resolution No. 94-273, 
277.9   Minnesota Statutes, section 469.1763, subdivision 3, applies to 
277.10  the district by permitting a period of 13 years for commencement 
277.11  of activities within the district. 
277.12     [EFFECTIVE DATE.] This section is effective upon approval 
277.13  by the governing body of the city of Brooklyn Center and 
277.14  compliance with Minnesota Statutes, section 645.021, subdivision 
277.15  3. 
277.16     Sec. 29.  [CITY OF BROOKLYN PARK TAX INCREMENT FINANCING 
277.17  DISTRICT EXTENSION.] 
277.18     Notwithstanding Minnesota Statutes, section 469.176, 
277.19  subdivision 1b, or any other law to the contrary, the duration 
277.20  limit that applies to the economic development tax increment 
277.21  financing district established under Laws 1994, chapter 587, 
277.22  article 9, section 20, is extended to December 31, 2020. 
277.23     Sec. 30.  [CITY OF DETROIT LAKES; REDEVELOPMENT TAX 
277.24  INCREMENT FINANCING DISTRICT.] 
277.25     Subdivision 1.  [AUTHORIZATION.] At the election of the 
277.26  governing body of the city of Detroit Lakes, upon adoption of 
277.27  the tax increment financing plan for the district described in 
277.28  this section, the rules provided under this section apply to 
277.29  each such district. 
277.30     Subd. 2.  [DEFINITION.] In this section, "district" means a 
277.31  redevelopment district established by the city of Detroit Lakes 
277.32  or the Detroit Lakes Development Authority within the following 
277.33  area:  
277.34  Beginning at the intersection of Washington Avenue and the 
277.35  Burlington Northern Santa Fe Railroad then east to the 
277.36  intersection of Roosevelt Avenue then south to the intersection 
278.1   of Highway 10/Frazee Street then west to the intersection of 
278.2   Frazee Street and the alley that parallels Washington Avenue 
278.3   then north to the point of beginning. 
278.4      More than one district may be created under this act. 
278.5      Subd. 3.  [QUALIFICATION AS REDEVELOPMENT DISTRICT; SPECIAL 
278.6   RULES.] The district shall be a redevelopment district under 
278.7   Minnesota Statutes, section 469.174, subdivision 10.  All 
278.8   buildings that are removed to facilitate the Highway 10 
278.9   Realignment Project are deemed to be "structurally 
278.10  substandard."  The three-year limit after demolition of the 
278.11  buildings to request tax increment financing certification 
278.12  provided in Minnesota Statutes, section 469.174, subdivision 10, 
278.13  paragraph (d), clause (1), does not apply. 
278.14     Subd. 4.  [EXPIRATION.] The authority to approve tax 
278.15  increment financing plans to establish a tax increment financing 
278.16  redevelopment district subject to this section expires on 
278.17  December 31, 2014. 
278.18     Subd. 5.  [EFFECTIVE DATE.] This section is effective upon 
278.19  approval of the governing body of the city of Detroit Lakes and 
278.20  compliance with Minnesota Statutes, section 645.021, subdivision 
278.21  3. 
278.22     Sec. 31.  [CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 
278.23  INCREMENT FINANCING DISTRICTS.] 
278.24     Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
278.25  mileage limitation in Minnesota Statutes, section 469.174, 
278.26  subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 
278.27  are deemed to be small cities for purposes of Minnesota 
278.28  Statutes, sections 469.174 to 469.1799, as long as they do not 
278.29  exceed the population limit in that section. 
278.30     Subd. 2.  [LOCAL APPROVAL.] This section is effective for 
278.31  each of the cities of Elgin, Eyota, Byron, and Oronoco upon 
278.32  approval of that city's governing body and compliance with 
278.33  Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
278.34     Sec. 32.  [CITY OF FAIRMONT; TAX INCREMENT FINANCING 
278.35  DISTRICT.] 
278.36     Subdivision 1.  [AUTHORITY TO REDUCE ORIGINAL VALUE.] The 
279.1   city of Fairmont may elect to reduce the original tax capacity 
279.2   of a previously tax-exempt parcel, consisting of property 
279.3   formerly owned by the United States Post Office, in tax 
279.4   increment financing district No. 20, to the value of the land. 
279.5      Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
279.6   compliance by the city of Fairmont with the requirements of 
279.7   Minnesota Statutes, section 645.021. 
279.8      Sec. 33.  [CITY OF FERGUS FALLS; ECONOMIC DEVELOPMENT 
279.9   PROPERTY.] 
279.10     The provisions of Minnesota Statutes, section 272.02, 
279.11  subdivision 39, apply to property located in the city of Fergus 
279.12  Falls as if the city had a population of 5,000 or less. 
279.13     [EFFECTIVE DATE.] This section is effective for taxes 
279.14  levied in 2005, payable in 2006, and thereafter. 
279.15     Sec. 34.  [CITY OF RAMSEY; HOUSING TAX INCREMENT DISTRICT.] 
279.16     Subdivision 1.  [AUTHORIZATION.] The governing body of the 
279.17  city of Ramsey may create a housing tax increment financing 
279.18  district as provided in this section.  The city or its economic 
279.19  development authority may be the "authority" for the purposes of 
279.20  Minnesota Statutes, sections 469.174 to 469.179. 
279.21     Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
279.22  section, the terms defined in this subdivision have the meanings 
279.23  given them. 
279.24     (b) "Development parcel" means the property in the city of 
279.25  Ramsey generally described as the easterly 4.1 acres of Outlot 
279.26  AA, Ramsey Town Center Addition. 
279.27     (c) "Low and moderate income persons" means: 
279.28     (1) persons or families of low and moderate income, as 
279.29  defined in Minnesota Statutes, chapter 462A, Title II of the 
279.30  National Housing Act of 1934, the National Housing Act of 1959, 
279.31  the United States Housing Act of 1937, as amended, Title V of 
279.32  the Housing Act of 1949, as amended, any other similar present 
279.33  or future federal, state, or municipal legislation, or the 
279.34  regulations promulgated under any of those acts; 
279.35     (2) disabled persons; and 
279.36     (3) persons over the age of 55 years. 
280.1      Subd. 3.  [SPECIAL RULES.] (a) The district established 
280.2   under this section is subject to the provisions of Minnesota 
280.3   Statutes, sections 469.174 to 469.179, except as provided in 
280.4   this subdivision. 
280.5      (b) The district may consist of all or a portion of the 
280.6   development parcel. 
280.7      (c) The housing district shall be as described in Minnesota 
280.8   Statutes, section 469.174, subdivision 11, provided that the 
280.9   definition in subdivision 2, paragraph (c), applies to all 
280.10  references to "low and moderate income persons" in that 
280.11  provision.  All improvements constructed within the district 
280.12  will be considered to be made for the benefit of low and 
280.13  moderate income persons. 
280.14     (d) Minnesota Statutes, section 469.176, subdivision 7, 
280.15  does not apply to the housing district authorized in this 
280.16  section. 
280.17     (e) The income limitations in Minnesota Statutes, section 
280.18  469.1761, shall not apply to persons meeting the requirements of 
280.19  clauses (2) and (3) of subdivision 2, paragraph (c). 
280.20     [EFFECTIVE DATE.] This section is effective the day 
280.21  following final enactment, upon compliance with Minnesota 
280.22  Statutes, section 645.021. 
280.23     Sec. 35.  [CITY OF RICHFIELD; TAX INCREMENT FINANCING 
280.24  DISTRICT.] 
280.25     Subdivision 1.  [AUTHORIZATION.] The city of Richfield may 
280.26  create a tax increment financing district consisting of an area 
280.27  lying west of Trunk Highway 77 extending:  to 16th Avenue 
280.28  between Crosstown Highway 62 and 66th Street; to 17th Avenue 
280.29  between 66th and 69th Streets; and to 18th Avenue between 69th 
280.30  and 72nd Streets.  The city or its housing and redevelopment 
280.31  authority may be the authority for the purposes of Minnesota 
280.32  Statutes, sections 469.174 to 469.179. 
280.33     Subd. 2.  [DISTRICT IS REDEVELOPMENT DISTRICT.] The 
280.34  redevelopment tax increment district created pursuant to 
280.35  subdivision 1, within which housing is not a compatible use due 
280.36  to the presence of extraordinary low frequency noise and 
281.1   vibration impacts, is deemed to be a redevelopment district and 
281.2   is subject to Minnesota Statutes, sections 469.174 to 469.179, 
281.3   except that: 
281.4      (1) expenditures for activities as defined in Minnesota 
281.5   Statutes, section 469.1763, subdivision 1, paragraph (b), 
281.6   anywhere in the district are deemed to be the costs of 
281.7   correcting conditions that allow the designation of 
281.8   redevelopment districts pursuant to Minnesota Statutes, section 
281.9   469.174, subdivision 10; and 
281.10     (2) the five-year rule under Minnesota Statutes, section 
281.11  469.1763, subdivision 3, does not apply. 
281.12     [EFFECTIVE DATE.] This section is effective upon local 
281.13  approval by the city of Richfield in compliance with Minnesota 
281.14  Statutes, section 645.021. 
281.15     Sec. 36.  [CITY OF ST. MICHAEL; TAX INCREMENT FINANCING 
281.16  DISTRICT.] 
281.17     Subdivision 1.  [ESTABLISHMENT OF DISTRICT.] The city of St.
281.18  Michael may establish a redevelopment tax increment financing 
281.19  district subject to Minnesota Statutes, sections 469.174 to 
281.20  469.179, except as provided in this section.  The district must 
281.21  be established within an area that includes the downtown and 
281.22  town center areas as designated by the city as well as all 
281.23  parcels adjacent to marked Trunk Highway 241 within the city. 
281.24     Subd. 2.  [SPECIAL RULES.] (a) Notwithstanding the 
281.25  requirements of Minnesota Statutes, section 469.174, subdivision 
281.26  10, the district may be established and operated as a 
281.27  redevelopment district. 
281.28     (b) Notwithstanding the restrictions of Minnesota Statutes, 
281.29  sections 469.176, subdivisions 4 and 4j, and 469.1763, 
281.30  subdivision 2, revenues derived from tax increments from the 
281.31  district created under this section may be used to meet the cost 
281.32  of land acquisition, removal of buildings in the right-of-way 
281.33  acquisition area, and other costs incurred by the city of St. 
281.34  Michael in the expansion and improvement of marked Trunk Highway 
281.35  241 within the city. 
281.36     (c) Minnesota Statutes, section 469.176, subdivision 5, 
282.1   does not apply to the district. 
282.2      [EFFECTIVE DATE.] This section is effective the day after 
282.3   the governing body of the city of St. Michael complies with 
282.4   Minnesota Statutes, section 645.021, subdivision 3. 
282.5      Sec. 37.  [ST. PAUL; HOUSING AND REDEVELOPMENT AUTHORITY.] 
282.6      Subdivision 1.  [HOUSING AND REDEVELOPMENT 
282.7   SUBDISTRICTS.] For its tax increment financing districts 
282.8   identified in subdivision 2, the Housing and Redevelopment 
282.9   Authority of the city of St. Paul may establish subdistricts up 
282.10  to the number set forth for each tax increment financing 
282.11  district in subdivision 2.  The subdistricts shall be treated as 
282.12  set forth in subdivision 3, notwithstanding the provisions of 
282.13  any other law to the contrary. 
282.14     Subd. 2.  [DIVISION INTO SUBDISTRICTS; AUTHORITY.] The tax 
282.15  increment financing districts with the following Ramsey County 
282.16  identification numbers may be divided into a number of 
282.17  subdistricts not to exceed the number set forth as follows:  No. 
282.18  224/233, six subdistricts; No. 225, six subdistricts; No. 228, 
282.19  three subdistricts; and No. 234, two subdistricts. 
282.20     Subd. 3.  [DESIGNATION OF PARCELS.] All parcels in a tax 
282.21  increment financing district listed in subdivision 2 must be 
282.22  assigned to a subdistrict.  Each subdistrict established 
282.23  pursuant to this section shall consist of those parcels in the 
282.24  tax increment financing district which are designated by the 
282.25  commissioners of the Housing and Redevelopment Authority of the 
282.26  city of St. Paul by resolution, which parcels need not be 
282.27  contiguous.  For purposes of determining tax increments and the 
282.28  parcels treated as paying tax increments, each subdistrict shall 
282.29  be treated as a separate tax increment district. 
282.30     [EFFECTIVE DATE.] This section is effective the day after 
282.31  the governing body of St. Paul and its chief clerical officer 
282.32  comply with Minnesota Statutes, section 645.021, subdivisions 2 
282.33  and 3. 
282.34     Sec. 38.  [WABASHA TAX INCREMENT FINANCING DISTRICT.] 
282.35     Subdivision 1.  [DISTRICT EXTENSION.] The governing body of 
282.36  the city of Wabasha may elect to extend the duration of its 
283.1   redevelopment tax increment financing district number 3 by up to 
283.2   five additional years. 
283.3      Subd. 2.  [FIVE-YEAR RULE.] The requirements of Minnesota 
283.4   Statutes, section 469.1763, subdivision 3, that activities must 
283.5   be undertaken within a five-year period from the date of 
283.6   certification of a tax increment financing district must be 
283.7   considered to be met for the city of Wabasha redevelopment tax 
283.8   increment district number 3, if the activities are undertaken 
283.9   within ten years from the date of certification of the district. 
283.10     Subd. 3.  [NATIONAL EAGLE CENTER.] Notwithstanding the 
283.11  provisions of Minnesota Statutes, section 469.176, subdivision 
283.12  4l, or any other law, the city of Wabasha may spend the proceeds 
283.13  of tax increment bonds issued prior to January 1, 2000, to pay 
283.14  the costs of acquiring and constructing a National Eagle Center 
283.15  in the city.  The city of Wabasha may also use tax increment 
283.16  from its tax increment districts to pay the debt service on such 
283.17  bonds, or any bonds issued to refund such bonds, subject to 
283.18  legal restrictions on the pooling of tax increment. 
283.19     [EFFECTIVE DATE.] Subdivision 1 is effective upon 
283.20  compliance with the provisions of Minnesota Statutes, sections 
283.21  469.1782, subdivision 2, and 645.021.  Subdivisions 2 and 3 are 
283.22  effective upon compliance by the governing body of the city of 
283.23  Wabasha with the provisions of Minnesota Statutes, section 
283.24  645.021. 
283.25     Sec. 39.  [WINONA; EXTENSION OF DURATION OF TAX INCREMENT 
283.26  DISTRICT.] 
283.27     Subdivision 1.  [DURATION.] Notwithstanding the provisions 
283.28  of Minnesota Statutes, section 469.176, subdivision 1b, the 
283.29  duration of riverfront tax increment financing district number 
283.30  2, approved by the port authority of Winona on July 15, 1980, is 
283.31  extended to December 31, 2020.  Any tax increment received after 
283.32  December 31, 2005, must be used solely to pay capital and 
283.33  administrative costs of transportation improvements related to 
283.34  the Pelzer Street project. 
283.35     Subd. 2.  [EXCEPTION.] The provisions of Minnesota 
283.36  Statutes, section 469.1782, subdivision 2, do not apply to this 
284.1   section. 
284.2      [EFFECTIVE DATE.] This section is effective upon approval 
284.3   by the governing body of the port authority of Winona and 
284.4   compliance with Minnesota Statutes, section 645.021. 
284.5      Sec. 40.  [JOBZ EXPENDITURE LIMITATIONS; AUDITS.] 
284.6      Subdivision 1.  [DETERMINATION OF TAX EXPENDITURES.] By 
284.7   September 1, 2005, the commissioner of revenue, with the 
284.8   assistance of the commissioner of employment and economic 
284.9   development, must estimate the total amount of tax expenditures 
284.10  projected to have been obligated for all job opportunity 
284.11  building zone projects that have been approved before June 1, 
284.12  2005.  If the commissioner of revenue determines that the 
284.13  estimated amount of tax expenditures for fiscal years 2005-2007 
284.14  exceeds $13,780,000, the commissioner of revenue must inform the 
284.15  chairs of the house of representatives and senate tax committees.
284.16     Subd. 2.  [AUDITS.] The Tax Increment Financing, Investment 
284.17  and Finance Division of the Office of the State Auditor must 
284.18  annually audit the creation and operation of all job opportunity 
284.19  building zones and business subsidy agreements entered into 
284.20  under Minnesota Statutes, sections 469.310 to 469.320. 
284.21     Sec. 41.  [REPEALER.] 
284.22     Laws 1994, chapter 587, article 9, section 20, subdivision 
284.23  4, is repealed. 
284.24                             ARTICLE 10
284.25                      PUBLIC FINANCE - SF1683
284.26     Section 1.  Minnesota Statutes 2004, section 118A.05, 
284.27  subdivision 5, is amended to read: 
284.28     Subd. 5.  [GUARANTEED INVESTMENT CONTRACTS.] Agreements or 
284.29  contracts for guaranteed investment contracts may be entered 
284.30  into if they are issued or guaranteed by United States 
284.31  commercial banks, domestic branches of foreign banks, United 
284.32  States insurance companies, or their Canadian subsidiaries, or 
284.33  the domestic affiliates of any of the foregoing.  The credit 
284.34  quality of the issuer's or guarantor's short- and long-term 
284.35  unsecured debt must be rated in one of the two highest 
284.36  categories by a nationally recognized rating agency.  Should the 
285.1   issuer's or guarantor's credit quality be downgraded below "A", 
285.2   the government entity must have withdrawal rights. 
285.3      Sec. 2.  Minnesota Statutes 2004, section 275.70, 
285.4   subdivision 5, is amended to read: 
285.5      Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
285.6   portions of ad valorem taxes levied by a local governmental unit 
285.7   for the following purposes or in the following manner: 
285.8      (1) to pay the costs of the principal and interest on 
285.9   bonded indebtedness or to reimburse for the amount of liquor 
285.10  store revenues used to pay the principal and interest due on 
285.11  municipal liquor store bonds in the year preceding the year for 
285.12  which the levy limit is calculated; 
285.13     (2) to pay the costs of principal and interest on 
285.14  certificates of indebtedness issued for any corporate purpose 
285.15  except for the following: 
285.16     (i) tax anticipation or aid anticipation certificates of 
285.17  indebtedness; 
285.18     (ii) certificates of indebtedness issued under sections 
285.19  298.28 and 298.282; 
285.20     (iii) certificates of indebtedness used to fund current 
285.21  expenses or to pay the costs of extraordinary expenditures that 
285.22  result from a public emergency; or 
285.23     (iv) certificates of indebtedness used to fund an 
285.24  insufficiency in tax receipts or an insufficiency in other 
285.25  revenue sources; 
285.26     (3) to provide for the bonded indebtedness portion of 
285.27  payments made to another political subdivision of the state of 
285.28  Minnesota; 
285.29     (4) to fund payments made to the Minnesota State Armory 
285.30  Building Commission under section 193.145, subdivision 2, to 
285.31  retire the principal and interest on armory construction bonds; 
285.32     (5) property taxes approved by voters which are levied 
285.33  against the referendum market value as provided under section 
285.34  275.61; 
285.35     (6) to fund matching requirements needed to qualify for 
285.36  federal or state grants or programs to the extent that either 
286.1   (i) the matching requirement exceeds the matching requirement in 
286.2   calendar year 2001, or (ii) it is a new matching requirement 
286.3   that did not exist prior to 2002; 
286.4      (7) to pay the expenses reasonably and necessarily incurred 
286.5   in preparing for or repairing the effects of natural disaster 
286.6   including the occurrence or threat of widespread or severe 
286.7   damage, injury, or loss of life or property resulting from 
286.8   natural causes, in accordance with standards formulated by the 
286.9   Emergency Services Division of the state Department of Public 
286.10  Safety, as allowed by the commissioner of revenue under section 
286.11  275.74, subdivision 2; 
286.12     (8) pay amounts required to correct an error in the levy 
286.13  certified to the county auditor by a city or county in a levy 
286.14  year, but only to the extent that when added to the preceding 
286.15  year's levy it is not in excess of an applicable statutory, 
286.16  special law or charter limitation, or the limitation imposed on 
286.17  the governmental subdivision by sections 275.70 to 275.74 in the 
286.18  preceding levy year; 
286.19     (9) to pay an abatement under section 469.1815; 
286.20     (10) to pay any costs attributable to increases in the 
286.21  employer contribution rates under chapter 353 that are effective 
286.22  after June 30, 2001; 
286.23     (11) to pay the operating or maintenance costs of a county 
286.24  jail as authorized in section 641.01 or 641.262, or of a 
286.25  correctional facility as defined in section 241.021, subdivision 
286.26  1, paragraph (f), to the extent that the county can demonstrate 
286.27  to the commissioner of revenue that the amount has been included 
286.28  in the county budget as a direct result of a rule, minimum 
286.29  requirement, minimum standard, or directive of the Department of 
286.30  Corrections, or to pay the operating or maintenance costs of a 
286.31  regional jail as authorized in section 641.262.  For purposes of 
286.32  this clause, a district court order is not a rule, minimum 
286.33  requirement, minimum standard, or directive of the Department of 
286.34  Corrections.  If the county utilizes this special levy, except 
286.35  to pay operating or maintenance costs of a new regional jail 
286.36  facility under sections 641.262 to 641.264 which will not 
287.1   replace an existing jail facility, any amount levied by the 
287.2   county in the previous levy year for the purposes specified 
287.3   under this clause and included in the county's previous year's 
287.4   levy limitation computed under section 275.71, shall be deducted 
287.5   from the levy limit base under section 275.71, subdivision 2, 
287.6   when determining the county's current year levy limitation.  The 
287.7   county shall provide the necessary information to the 
287.8   commissioner of revenue for making this determination; 
287.9      (12) to pay for operation of a lake improvement district, 
287.10  as authorized under section 103B.555.  If the county utilizes 
287.11  this special levy, any amount levied by the county in the 
287.12  previous levy year for the purposes specified under this clause 
287.13  and included in the county's previous year's levy limitation 
287.14  computed under section 275.71 shall be deducted from the levy 
287.15  limit base under section 275.71, subdivision 2, when determining 
287.16  the county's current year levy limitation.  The county shall 
287.17  provide the necessary information to the commissioner of revenue 
287.18  for making this determination; 
287.19     (13) to repay a state or federal loan used to fund the 
287.20  direct or indirect required spending by the local government due 
287.21  to a state or federal transportation project or other state or 
287.22  federal capital project.  This authority may only be used if the 
287.23  project is not a local government initiative; 
287.24     (14) to pay for court administration costs as required 
287.25  under section 273.1398, subdivision 4b, less the (i) county's 
287.26  share of transferred fines and fees collected by the district 
287.27  courts in the county for calendar year 2001 and (ii) the aid 
287.28  amount certified to be paid to the county in 2004 under section 
287.29  273.1398, subdivision 4c; however, for taxes levied to pay for 
287.30  these costs in the year in which the court financing is 
287.31  transferred to the state, the amount under this clause is 
287.32  limited to the amount of aid the county is certified to receive 
287.33  under section 273.1398, subdivision 4a; and 
287.34     (15) to fund a police or firefighters relief association as 
287.35  required under section 69.77 to the extent that the required 
287.36  amount exceeds the amount levied for this purpose in 2001; and 
288.1      (16) for purposes of a storm sewer improvement district, 
288.2   pursuant to section 444.20. 
288.3      Sec. 3.  Minnesota Statutes 2004, section 373.01, 
288.4   subdivision 3, is amended to read: 
288.5      Subd. 3.  [CAPITAL NOTES.] (a) A county board may, by 
288.6   resolution and without referendum, issue capital notes subject 
288.7   to the county debt limit to purchase capital equipment useful 
288.8   for county purposes that has an expected useful life at least 
288.9   equal to the term of the notes.  The notes shall be payable in 
288.10  not more than five ten years and shall be issued on terms and in 
288.11  a manner the board determines.  A tax levy shall be made for 
288.12  payment of the principal and interest on the notes, in 
288.13  accordance with section 475.61, as in the case of bonds.  
288.14     (b) For purposes of this subdivision, "capital equipment" 
288.15  means: 
288.16     (1) public safety, ambulance, road construction or 
288.17  maintenance, and medical equipment,; and 
288.18     (2) computer hardware and original operating system 
288.19  software, whether bundled with machinery or equipment or 
288.20  unbundled, together with application development services and 
288.21  training related to the use of the computer or software.  The 
288.22  authority to issue capital notes for original operating systems 
288.23  computer software and related services expires on July 1, 2005 
288.24  2007. 
288.25     Sec. 4.  Minnesota Statutes 2004, section 373.40, 
288.26  subdivision 1, is amended to read: 
288.27     Subdivision 1.  [DEFINITIONS.] For purposes of this 
288.28  section, the following terms have the meanings given. 
288.29     (a) "Bonds" means an obligation as defined under section 
288.30  475.51. 
288.31     (b) "Capital improvement" means acquisition or betterment 
288.32  of public lands, development rights in the form of conservation 
288.33  easements under chapter 84C, buildings, or other improvements 
288.34  within the county for the purpose of a county courthouse, 
288.35  administrative building, health or social service facility, 
288.36  correctional facility, jail, law enforcement center, hospital, 
289.1   morgue, library, park, qualified indoor ice arena, and roads and 
289.2   bridges, and the acquisition of development rights in the form 
289.3   of conservation easements under chapter 84C.  An improvement 
289.4   must have an expected useful life of five years or more to 
289.5   qualify.  "Capital improvement" does not include light rail 
289.6   transit or any activity related to it or a recreation or sports 
289.7   facility building (such as, but not limited to, a gymnasium, ice 
289.8   arena, racquet sports facility, swimming pool, exercise room or 
289.9   health spa), unless the building is part of an outdoor park 
289.10  facility and is incidental to the primary purpose of outdoor 
289.11  recreation. 
289.12     (c) "Commissioner" means the commissioner of employment and 
289.13  economic development. 
289.14     (d) "Metropolitan county" means a county located in the 
289.15  seven-county metropolitan area as defined in section 473.121 or 
289.16  a county with a population of 90,000 or more. 
289.17     (e) "Population" means the population established by the 
289.18  most recent of the following (determined as of the date the 
289.19  resolution authorizing the bonds was adopted): 
289.20     (1) the federal decennial census, 
289.21     (2) a special census conducted under contract by the United 
289.22  States Bureau of the Census, or 
289.23     (3) a population estimate made either by the Metropolitan 
289.24  Council or by the state demographer under section 4A.02. 
289.25     (f) "Qualified indoor ice arena" means a facility that 
289.26  meets the requirements of section 373.43. 
289.27     (g) "Tax capacity" means total taxable market value, but 
289.28  does not include captured market value. 
289.29     Sec. 5.  Minnesota Statutes 2004, section 400.04, is 
289.30  amended by adding a subdivision to read: 
289.31     Subd. 4a.  [PERFORMANCE BOND WAIVER OR 
289.32  ALTERNATIVE.] Notwithstanding the requirements of section 574.26 
289.33  or any other public works bond requirements for a solid waste 
289.34  facilities project established under an agreement authorized 
289.35  under chapter 115A or chapter 400, the county may waive the 
289.36  requirement for performance bonds or accept another form of 
290.1   financial guarantee in any amount acceptable to the county, if 
290.2   the project is partially or fully funded by a county, and the 
290.3   county is not liable for financial acceptance until performance 
290.4   guarantees or other standards established under the agreement 
290.5   have been satisfied. 
290.6      Sec. 6.  Minnesota Statutes 2004, section 410.32, is 
290.7   amended to read: 
290.8      410.32 [CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL 
290.9   EQUIPMENT.] 
290.10     (a) Notwithstanding any contrary provision of other law or 
290.11  charter, a home rule charter city may, by resolution and without 
290.12  public referendum, issue capital notes subject to the city debt 
290.13  limit to purchase capital equipment. 
290.14     (b) For purposes of this section, "capital equipment" means:
290.15     (1) public safety equipment, ambulance and other medical 
290.16  equipment, road construction and maintenance equipment, and 
290.17  other capital equipment; and 
290.18     (2) computer hardware and original operating system 
290.19  software, provided whether bundled with machinery or equipment 
290.20  or unbundled, together with application development services and 
290.21  training related to the use of the computer or software. 
290.22     (c) The equipment or software has must have an expected 
290.23  useful life at least as long as the term of the notes.  The 
290.24  authority to issue capital notes for original operating system 
290.25  computer software and related services expires on July 1, 2005 
290.26  2007.  
290.27     (d) The notes shall be payable in not more than five ten 
290.28  years and be issued on terms and in the manner the city 
290.29  determines.  The total principal amount of the capital notes 
290.30  issued in a fiscal year shall not exceed 0.03 percent of the 
290.31  market value of taxable property in the city for that year.  
290.32     (e) A tax levy shall be made for the payment of the 
290.33  principal and interest on the notes, in accordance with section 
290.34  475.61, as in the case of bonds.  
290.35     (f) Notes issued under this section shall require an 
290.36  affirmative vote of two-thirds of the governing body of the city.
291.1      (g) Notwithstanding a contrary provision of other law or 
291.2   charter, a home rule charter city may also issue capital notes 
291.3   subject to its debt limit in the manner and subject to the 
291.4   limitations applicable to statutory cities pursuant to section 
291.5   412.301. 
291.6      Sec. 7.  Minnesota Statutes 2004, section 412.301, is 
291.7   amended to read: 
291.8      412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 
291.9      (a) The council may issue certificates of indebtedness or 
291.10  capital notes subject to the city debt limits to 
291.11  purchase capital equipment. 
291.12     (b) For purposes of this section, "capital equipment" means:
291.13     (1) public safety equipment, ambulance and other medical 
291.14  equipment, road construction or and maintenance equipment, and 
291.15  other capital equipment; and 
291.16     (2) computer hardware and original operating system 
291.17  software, provided whether bundled with machinery or equipment 
291.18  or unbundled, together with application development services and 
291.19  training related to the use of the computer or software. 
291.20     (c) The equipment or software has must have an expected 
291.21  useful life at least as long as the terms of the certificates or 
291.22  notes.  The authority to issue capital notes for original 
291.23  operating system software expires on July 1, 2005 2007.  
291.24     (d) Such certificates or notes shall be payable in not more 
291.25  than five ten years and shall be issued on such terms and in 
291.26  such manner as the council may determine.  
291.27     (e) If the amount of the certificates or notes to be issued 
291.28  to finance any such purchase exceeds 0.25 percent of the market 
291.29  value of taxable property in the city, they shall not be issued 
291.30  for at least ten days after publication in the official 
291.31  newspaper of a council resolution determining to issue them; and 
291.32  if before the end of that time, a petition asking for an 
291.33  election on the proposition signed by voters equal to ten 
291.34  percent of the number of voters at the last regular municipal 
291.35  election is filed with the clerk, such certificates or notes 
291.36  shall not be issued until the proposition of their issuance has 
292.1   been approved by a majority of the votes cast on the question at 
292.2   a regular or special election.  
292.3      (f) A tax levy shall be made for the payment of the 
292.4   principal and interest on such certificates or notes, in 
292.5   accordance with section 475.61, as in the case of bonds.  
292.6      Sec. 8.  Minnesota Statutes 2004, section 428A.101, is 
292.7   amended to read: 
292.8      428A.101 [DEADLINE FOR SPECIAL SERVICE DISTRICT DISTRICTS 
292.9   UNDER GENERAL LAW.] 
292.10     The establishment of a new special service district after 
292.11  June 30, 2005 2009, requires enactment of a special law 
292.12  authorizing the establishment of the area. 
292.13     Sec. 9.  Minnesota Statutes 2004, section 428A.21, is 
292.14  amended to read: 
292.15     428A.21 [SUNSET DEADLINE FOR HOUSING IMPROVEMENT DISTRICTS 
292.16  UNDER GENERAL LAW.] 
292.17     No The establishment of a new housing improvement areas may 
292.18  be established under sections 428A.11 to 428A.20 area after June 
292.19  30, 2005.  After June 30, 2005, a city may establish a housing 
292.20  improvement area, provided that it receives enabling legislation 
292.21  2009, requires enactment of a special law authorizing the 
292.22  establishment of the area. 
292.23     Sec. 10.  Minnesota Statutes 2004, section 429.031, is 
292.24  amended by adding a subdivision to read: 
292.25     Subd. 4.  [IMPROVEMENTS; ORDERLY ANNEXATION.] An 
292.26  improvement may be made by a municipality in an area that is the 
292.27  subject of an orderly annexation agreement under section 
292.28  414.0325 to which the municipality is a party.  The municipality 
292.29  may subsequently reimburse itself for all or any part of the 
292.30  cost of such an improvement by levying assessments on the 
292.31  property subject to the orderly annexation agreement, when 
292.32  annexed, in the manner provided in section 429.051, but only if 
292.33  the orderly annexation agreement includes a statement that the 
292.34  municipality intends to do so and notice has been provided to 
292.35  the property owner as provided in subdivision 1. 
292.36     Sec. 11.  Minnesota Statutes 2004, section 429.051, is 
293.1   amended to read: 
293.2      429.051 [APPORTIONMENT OF COST.] 
293.3      The cost of any improvement, or any part thereof, may be 
293.4   assessed upon property benefited by the improvement, based upon 
293.5   the benefits received, whether or not the property abuts on the 
293.6   improvement and whether or not any part of the cost of the 
293.7   improvement is paid from the county state-aid highway fund, the 
293.8   municipal state-aid street fund, or the trunk highway fund.  The 
293.9   area assessed may be less than but may not exceed the area 
293.10  proposed to be assessed as stated in the notice of hearing on 
293.11  the improvement, except as provided below.  The municipality may 
293.12  pay such portion of the cost of the improvement as the council 
293.13  may determine from general ad valorem tax levies or from other 
293.14  revenues or funds of the municipality available for the 
293.15  purpose.  The municipality may subsequently reimburse itself for 
293.16  all or any of the portion of the cost of a water, storm sewer, 
293.17  or sanitary sewer an improvement so paid by levying additional 
293.18  assessments upon any properties abutting on but not previously 
293.19  assessed for the improvement, on notice and hearing as provided 
293.20  for the assessments initially made.  To the extent that such an 
293.21  improvement benefits nonabutting properties which may be served 
293.22  by the improvement when one or more later extensions or 
293.23  improvements are made but which are not initially assessed 
293.24  therefor, the municipality may also reimburse itself by adding 
293.25  all or any of the portion of the cost so paid to the assessments 
293.26  levied for any of such later extensions or improvements, 
293.27  provided that notice that such additional amount will be 
293.28  assessed is included in the notice of hearing on the making of 
293.29  such extensions or improvements.  The additional assessments 
293.30  herein authorized may be made whether or not the properties 
293.31  assessed were included in the area described in the notice of 
293.32  hearing on the making of the original improvement.  
293.33     In any city of the fourth class electing to proceed under a 
293.34  home rule charter as provided in this chapter, which charter 
293.35  provides for a board of water commissioners and authorizes such 
293.36  board to assess a water frontage tax to defray the cost of 
294.1   construction of water mains, such board may assess the tax based 
294.2   upon the benefits received and without regard to any charter 
294.3   limitation on the amount that may be assessed for each lineal 
294.4   foot of property abutting on the water main.  The water frontage 
294.5   tax shall be imposed according to the procedure and, except as 
294.6   herein provided, subject to the limitations of the charter of 
294.7   the city.  
294.8      Sec. 12.  Minnesota Statutes 2004, section 469.034, 
294.9   subdivision 2, is amended to read: 
294.10     Subd. 2.  [GENERAL OBLIGATION REVENUE BONDS.] (a) An 
294.11  authority may pledge the general obligation of the general 
294.12  jurisdiction governmental unit as additional security for bonds 
294.13  payable from income or revenues of the project or the 
294.14  authority.  The authority must find that the pledged revenues 
294.15  will equal or exceed 110 percent of the principal and interest 
294.16  due on the bonds for each year.  The proceeds of the bonds must 
294.17  be used for a qualified housing development project or 
294.18  projects.  The obligations must be issued and sold in the manner 
294.19  and following the procedures provided by chapter 475, except the 
294.20  obligations are not subject to approval by the electors, and the 
294.21  maturities may extend to not more than 30 35 years from the 
294.22  estimated date of completion of the project for obligations sold 
294.23  to finance housing for the elderly and 40 years for other 
294.24  obligations issued under this subdivision.  The authority is the 
294.25  municipality for purposes of chapter 475.  
294.26     (b) The principal amount of the issue must be approved by 
294.27  the governing body of the general jurisdiction governmental unit 
294.28  whose general obligation is pledged.  Public hearings must be 
294.29  held on issuance of the obligations by both the authority and 
294.30  the general jurisdiction governmental unit.  The hearings must 
294.31  be held at least 15 days, but not more than 120 days, before the 
294.32  sale of the obligations. 
294.33     (c) The maximum amount of general obligation bonds that may 
294.34  be issued and outstanding under this section equals the greater 
294.35  of (1) one-half of one percent of the taxable market value of 
294.36  the general jurisdiction governmental unit whose general 
295.1   obligation which includes a tax on property is pledged, or (2) 
295.2   $3,000,000.  In the case of county or multicounty general 
295.3   obligation bonds, the outstanding general obligation bonds of 
295.4   all cities in the county or counties issued under this 
295.5   subdivision must be added in calculating the limit under clause 
295.6   (1). 
295.7      (d) "General jurisdiction governmental unit" means the city 
295.8   in which the housing development project is located.  In the 
295.9   case of a county or multicounty authority, the county or 
295.10  counties may act as the general jurisdiction governmental unit.  
295.11  In the case of a multicounty authority, the pledge of the 
295.12  general obligation is a pledge of a tax on the taxable property 
295.13  in each of the counties. 
295.14     (e) "Qualified housing development project" means a housing 
295.15  development project providing housing either for the elderly or 
295.16  for individuals and families with incomes not greater than 80 
295.17  percent of the median family income as estimated by the United 
295.18  States Department of Housing and Urban Development for the 
295.19  standard metropolitan statistical area or the nonmetropolitan 
295.20  county in which the project is located, and will be owned by the 
295.21  authority for the term of the bonds.  A qualified housing 
295.22  development project may admit nonelderly individuals and 
295.23  families with higher incomes if: 
295.24     (1) three years have passed since initial occupancy; 
295.25     (2) the authority finds the project is experiencing 
295.26  unanticipated vacancies resulting in insufficient revenues, 
295.27  because of changes in population or other unforeseen 
295.28  circumstances that occurred after the initial finding of 
295.29  adequate revenues; and 
295.30     (3) the authority finds a tax levy or payment from general 
295.31  assets of the general jurisdiction governmental unit will be 
295.32  necessary to pay debt service on the bonds if higher income 
295.33  individuals or families are not admitted. 
295.34     Sec. 13.  Minnesota Statutes 2004, section 469.158, is 
295.35  amended to read: 
295.36     469.158 [MANNER OF ISSUANCE OF BONDS; INTEREST RATE.] 
296.1      Bonds authorized under sections 469.152 to 469.165 must be 
296.2   issued in accordance with the provisions of chapter 475 relating 
296.3   to bonds payable from income of revenue producing conveniences, 
296.4   except that public sale is not required, the provisions of 
296.5   sections 475.62 and 475.63 do not apply, and the bonds may 
296.6   mature at the time or times, in the amount or amounts, within 30 
296.7   years, or in the case of bonds issued to finance dormitories or 
296.8   other types of student housing, 40 years from date of issue, and 
296.9   may be sold at a price equal to the percentage of the par value 
296.10  thereof, plus accrued interest, and bearing interest at the rate 
296.11  or rates agreed by the contracting party, the purchaser, and the 
296.12  municipality or redevelopment agency, notwithstanding any 
296.13  limitation of interest rate or cost or of the amounts of annual 
296.14  maturities contained in any other law.  Bonds issued to refund 
296.15  bonds previously issued pursuant to sections 469.152 to 469.165 
296.16  may be issued in amounts determined by the municipality or 
296.17  redevelopment agency notwithstanding the provisions of section 
296.18  475.67, subdivision 3. 
296.19     Sec. 14.  Minnesota Statutes 2004, section 473.39, is 
296.20  amended by adding a subdivision to read: 
296.21     Subd. 1k.  [OBLIGATIONS.] After July 1, 2005, in addition 
296.22  to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 
296.23  and 1j, the council may issue certificates of indebtedness, 
296.24  bonds, or other obligations under this section in an amount not 
296.25  exceeding $64,000,000 for capital expenditures as prescribed in 
296.26  the council's regional transit master plan and transit capital 
296.27  improvement program and for related costs, including the costs 
296.28  of issuance and sale of the obligations. 
296.29     Sec. 15.  Minnesota Statutes 2004, section 474A.061, 
296.30  subdivision 2c, is amended to read: 
296.31     Subd. 2c.  [PUBLIC FACILITIES POOL ALLOCATION.] From the 
296.32  beginning of the calendar year and continuing for a period of 
296.33  120 days, the commissioner shall reserve $3,000,000 $5,000,000 
296.34  of the available bonding authority from the public facilities 
296.35  pool for applications for public facilities projects to be 
296.36  financed by the Western Lake Superior Sanitary District.  
297.1   Commencing on the second Tuesday in January and continuing on 
297.2   each Monday through the last Monday in July, the commissioner 
297.3   shall allocate available bonding authority from the public 
297.4   facilities pool to applications for eligible public facilities 
297.5   projects received on or before the Monday of the preceding 
297.6   week.  If there are two or more applications for public 
297.7   facilities projects from the pool and there is insufficient 
297.8   available bonding authority to provide allocations for all 
297.9   projects in any one week, the available bonding authority shall 
297.10  be awarded by lot unless otherwise agreed to by the respective 
297.11  issuers. 
297.12     Sec. 16.  Minnesota Statutes 2004, section 474A.131, 
297.13  subdivision 1, is amended to read: 
297.14     Subdivision 1.  [NOTICE OF ISSUE.] Each issuer that issues 
297.15  bonds with an allocation received under this chapter shall 
297.16  provide a notice of issue to the department on forms provided by 
297.17  the department stating: 
297.18     (1) the date of issuance of the bonds; 
297.19     (2) the title of the issue; 
297.20     (3) the principal amount of the bonds; 
297.21     (4) the type of qualified bonds under federal tax law; 
297.22     (5) the dollar amount of the bonds issued that were subject 
297.23  to the annual volume cap; and 
297.24     (6) for entitlement issuers, whether the allocation is from 
297.25  current year entitlement authority or is from carryforward 
297.26  authority. 
297.27     For obligations that are issued as a part of a series of 
297.28  obligations, a notice must be provided for each series.  A 
297.29  penalty of one-half of the amount of the application deposit not 
297.30  to exceed $5,000 shall apply to any issue of obligations for 
297.31  which a notice of issue is not provided to the department within 
297.32  five business days after issuance or before the last Monday 4:30 
297.33  p.m. on the last business day in December, whichever occurs 
297.34  first.  Within 30 days after receipt of a notice of issue the 
297.35  department shall refund a portion of the application deposit 
297.36  equal to one percent of the amount of the bonding authority 
298.1   actually issued if a one percent application deposit was made, 
298.2   or equal to two percent of the amount of the bonding authority 
298.3   actually issued if a two percent application deposit was made, 
298.4   less any penalty amount. 
298.5      Sec. 17.  Minnesota Statutes 2004, section 475.51, 
298.6   subdivision 4, is amended to read: 
298.7      Subd. 4.  [NET DEBT.] "Net debt" means the amount remaining 
298.8   after deducting from its gross debt the amount of current 
298.9   revenues which are applicable within the current fiscal year to 
298.10  the payment of any debt and the aggregate of the principal of 
298.11  the following: 
298.12     (1) Obligations issued for improvements which are payable 
298.13  wholly or partly from the proceeds of special assessments levied 
298.14  upon property specially benefited thereby, including those which 
298.15  are general obligations of the municipality issuing them, if the 
298.16  municipality is entitled to reimbursement in whole or in part 
298.17  from the proceeds of the special assessments. 
298.18     (2) Warrants or orders having no definite or fixed maturity.
298.19     (3) Obligations payable wholly from the income from revenue 
298.20  producing conveniences. 
298.21     (4) Obligations issued to create or maintain a permanent 
298.22  improvement revolving fund. 
298.23     (5) Obligations issued for the acquisition, and betterment 
298.24  of public waterworks systems, and public lighting, heating or 
298.25  power systems, and of any combination thereof or for any other 
298.26  public convenience from which a revenue is or may be derived. 
298.27     (6) Debt service loans and capital loans made to a school 
298.28  district under the provisions of sections 126C.68 and 126C.69. 
298.29     (7) Amount of all money and the face value of all 
298.30  securities held as a debt service fund for the extinguishment of 
298.31  obligations other than those deductible under this subdivision. 
298.32     (8) Obligations to repay loans made under section 216C.37.  
298.33     (9) Obligations to repay loans made from money received 
298.34  from litigation or settlement of alleged violations of federal 
298.35  petroleum pricing regulations. 
298.36     (10) Obligations issued to pay pension fund liabilities 
299.1   under section 475.52, subdivision 6, or any charter authority. 
299.2      (11) Obligations issued to pay judgments against the 
299.3   municipality under section 475.52, subdivision 6, or any charter 
299.4   authority. 
299.5      (12) All other obligations which under the provisions of 
299.6   law authorizing their issuance are not to be included in 
299.7   computing the net debt of the municipality. 
299.8      Sec. 18.  Minnesota Statutes 2004, section 475.52, 
299.9   subdivision 1, is amended to read: 
299.10     Subdivision 1.  [STATUTORY CITIES.] Any statutory city may 
299.11  issue bonds or other obligations for the acquisition or 
299.12  betterment of public buildings, means of garbage disposal, 
299.13  hospitals, nursing homes, homes for the aged, schools, 
299.14  libraries, museums, art galleries, parks, playgrounds, stadia, 
299.15  sewers, sewage disposal plants, subways, streets, sidewalks, 
299.16  warning systems; for any utility or other public convenience 
299.17  from which a revenue is or may be derived; for a permanent 
299.18  improvement revolving fund; for changing, controlling or 
299.19  bridging streams and other waterways; for the acquisition and 
299.20  betterment of bridges and roads within two miles of the 
299.21  corporate limits; for the acquisition of development rights in 
299.22  the form of conservation easements under chapter 84C; and for 
299.23  acquisition of equipment for snow removal, street construction 
299.24  and maintenance, or fire fighting.  Without limitation by the 
299.25  foregoing the city may issue bonds to provide money for any 
299.26  authorized corporate purpose except current expenses. 
299.27     Sec. 19.  Minnesota Statutes 2004, section 475.52, 
299.28  subdivision 3, is amended to read: 
299.29     Subd. 3.  [COUNTIES.] Any county may issue bonds for the 
299.30  acquisition or betterment of courthouses, county administrative 
299.31  buildings, health or social service facilities, correctional 
299.32  facilities, law enforcement centers, jails, morgues, libraries, 
299.33  parks, and hospitals, for roads and bridges within the county or 
299.34  bordering thereon and for road equipment and machinery and for 
299.35  ambulances and related equipment; for the acquisition of 
299.36  development rights in the form of conservation easements under 
300.1   chapter 84C, and for capital equipment for the administration 
300.2   and conduct of elections providing the equipment is uniform 
300.3   countywide, except that the power of counties to issue bonds in 
300.4   connection with a library shall not exist in Hennepin County. 
300.5      Sec. 20.  Minnesota Statutes 2004, section 475.52, 
300.6   subdivision 4, is amended to read: 
300.7      Subd. 4.  [TOWNS.] Any town may issue bonds for the 
300.8   acquisition and betterment of town halls, town roads and 
300.9   bridges, nursing homes and homes for the aged, and for 
300.10  acquisition of equipment for snow removal, road construction or 
300.11  maintenance, and fire fighting; for the acquisition of 
300.12  development rights in the form of conservation easements under 
300.13  chapter 84C; and for the acquisition and betterment of any 
300.14  buildings to house and maintain town equipment. 
300.15     Sec. 21.  Minnesota Statutes 2004, section 475.521, 
300.16  subdivision 1, is amended to read: 
300.17     Subdivision 1.  [DEFINITIONS.] For purposes of this 
300.18  section, the following terms have the meanings given. 
300.19     (a) "Bonds" mean an obligation defined under section 475.51.
300.20     (b) "Capital improvement" means acquisition or betterment 
300.21  of public lands, buildings or other improvements for the purpose 
300.22  of a city hall, town hall, library, public safety facility, and 
300.23  public works facility.  An improvement must have an expected 
300.24  useful life of five years or more to qualify.  Capital 
300.25  improvement does not include light rail transit or any activity 
300.26  related to it, or a park, library, road, bridge, administrative 
300.27  building other than a city or town hall, or land for any of 
300.28  those facilities. 
300.29     (c) "City" "Municipality" means a home rule charter or 
300.30  statutory city or a town. 
300.31     Sec. 22.  Minnesota Statutes 2004, section 475.521, 
300.32  subdivision 2, is amended to read: 
300.33     Subd. 2.  [ELECTION REQUIREMENT.] (a) Bonds issued by a 
300.34  city municipality to finance capital improvements under an 
300.35  approved capital improvements plan are not subject to the 
300.36  election requirements of section 475.58.  The bonds are subject 
301.1   to the net debt limits under section 475.53.  The bonds must be 
301.2   approved by an affirmative vote of three-fifths of the members 
301.3   of a five-member city council governing body.  In the case of 
301.4   a city council governing body having more or less than five 
301.5   members, the bonds must be approved by a vote of at least 
301.6   two-thirds of the city council members of the governing body. 
301.7      (b) Before the issuance of bonds qualifying under this 
301.8   section, the city municipality must publish a notice of its 
301.9   intention to issue the bonds and the date and time of the 
301.10  hearing to obtain public comment on the matter.  The notice must 
301.11  be published in the official newspaper of the city municipality 
301.12  or in a newspaper of general circulation in the city 
301.13  municipality.  Additionally, the notice may be posted on the 
301.14  official Web site, if any, of the city municipality.  The notice 
301.15  must be published at least 14 but not more than 28 days before 
301.16  the date of the hearing. 
301.17     (c) A city municipality may issue the bonds only after 
301.18  obtaining the approval of a majority of the voters voting on the 
301.19  question of issuing the obligations, if a petition requesting a 
301.20  vote on the issuance is signed by voters equal to five percent 
301.21  of the votes cast in the city municipality in the last general 
301.22  election and is filed with the city clerk within 30 days after 
301.23  the public hearing.  The commissioner of revenue shall prepare a 
301.24  suggested form of the question to be presented at the election. 
301.25     Sec. 23.  Minnesota Statutes 2004, section 475.521, 
301.26  subdivision 3, is amended to read: 
301.27     Subd. 3.  [CAPITAL IMPROVEMENT PLAN.] (a) A city 
301.28  municipality may adopt a capital improvement plan.  The plan 
301.29  must cover at least a five-year period beginning with the date 
301.30  of its adoption.  The plan must set forth the estimated 
301.31  schedule, timing, and details of specific capital improvements 
301.32  by year, together with the estimated cost, the need for the 
301.33  improvement, and sources of revenue to pay for the improvement.  
301.34  In preparing the capital improvement plan, the city council 
301.35  governing body must consider for each project and for the 
301.36  overall plan: 
302.1      (1) the condition of the city's municipality's existing 
302.2   infrastructure, including the projected need for repair or 
302.3   replacement; 
302.4      (2) the likely demand for the improvement; 
302.5      (3) the estimated cost of the improvement; 
302.6      (4) the available public resources; 
302.7      (5) the level of overlapping debt in the city municipality; 
302.8      (6) the relative benefits and costs of alternative uses of 
302.9   the funds; 
302.10     (7) operating costs of the proposed improvements; and 
302.11     (8) alternatives for providing services most efficiently 
302.12  through shared facilities with other cities municipalities or 
302.13  local government units. 
302.14     (b) The capital improvement plan and annual amendments to 
302.15  it must be approved by the city council governing body after 
302.16  public hearing. 
302.17     Sec. 24.  Minnesota Statutes 2004, section 475.521, 
302.18  subdivision 4, is amended to read: 
302.19     Subd. 4.  [LIMITATIONS ON AMOUNT.] A city municipality may 
302.20  not issue bonds under this section if the maximum amount of 
302.21  principal and interest to become due in any year on all the 
302.22  outstanding bonds issued under this section, including the bonds 
302.23  to be issued, will equal or exceed 0.05367 0.16 percent of the 
302.24  taxable market value of property in the county municipality.  
302.25  Calculation of the limit must be made using the taxable market 
302.26  value for the taxes payable year in which the obligations are 
302.27  issued and sold.  In the case of a municipality with a 
302.28  population of 2,500 or more, the bonds are subject to the net 
302.29  debt limits under section 475.53.  In the case of a shared 
302.30  facility in which more than one municipality participates, upon 
302.31  compliance by each participating municipality with the 
302.32  requirements of subdivision 2, the limitations in this 
302.33  subdivision and the net debt represented by the bonds shall be 
302.34  allocated to each participating municipality in proportion to 
302.35  its required financial contribution to the financing of the 
302.36  shared facility, as set forth in the joint powers agreement 
303.1   relating to the shared facility.  This section does not limit 
303.2   the authority to issue bonds under any other special or general 
303.3   law. 
303.4      Sec. 25.  Minnesota Statutes 2004, section 475.58, 
303.5   subdivision 3b, is amended to read: 
303.6      Subd. 3b.  [STREET RECONSTRUCTION.] (a) A municipality may, 
303.7   without regard to the election requirement under subdivision 1, 
303.8   issue and sell obligations for street reconstruction, if the 
303.9   following conditions are met: 
303.10     (1) the streets are reconstructed under a street 
303.11  reconstruction plan that describes the streets to be 
303.12  reconstructed, the estimated costs, and any planned 
303.13  reconstruction of other streets in the municipality over the 
303.14  next five years, and the plan and issuance of the obligations 
303.15  has been approved by a vote of all of the members of the 
303.16  governing body following a public hearing for which notice has 
303.17  been published in the official newspaper at least ten days but 
303.18  not more than 28 days prior to the hearing; and 
303.19     (2) if a petition requesting a vote on the issuance is 
303.20  signed by voters equal to five percent of the votes cast in the 
303.21  last municipal general election and is filed with the municipal 
303.22  clerk within 30 days of the public hearing, the municipality may 
303.23  issue the bonds only after obtaining the approval of a majority 
303.24  of the voters voting on the question of the issuance of the 
303.25  obligations. 
303.26     (b) Obligations issued under this subdivision are subject 
303.27  to the debt limit of the municipality and are not excluded from 
303.28  net debt under section 475.51, subdivision 4. 
303.29     (c) For purposes of this subdivision, street reconstruction 
303.30  includes utility replacement and relocation and other activities 
303.31  incidental to the street reconstruction, but turn lanes and 
303.32  other improvements having a substantial public safety function, 
303.33  realignments, other modifications to intersect with state and 
303.34  county roads, and the local share of state and county road 
303.35  projects. 
303.36     (d) Except in the case of turn lanes, safety improvements, 
304.1   realignments, intersection modifications, and the local share of 
304.2   state and county road projects, street reconstruction does not 
304.3   include the portion of project cost allocable to widening a 
304.4   street or adding curbs and gutters where none previously existed.
304.5      Sec. 26.  [CITY OF ST. PAUL; RIVERCENTRE COMPLEX 
304.6   OPERATION.] 
304.7      Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
304.8   section, the terms defined in this subdivision have the meanings 
304.9   given them. 
304.10     (b) "City" means the city of St. Paul, its mayor, city 
304.11  council, and any other board, authority, commission, or officer 
304.12  authorized by law, charter, or ordinance to exercise city powers 
304.13  of the nature referred to in this section. 
304.14     (c) "RiverCentre complex" means collectively the 
304.15  auditorium, convention, conference and education center, arena, 
304.16  and parking ramp facilities presently and commonly known as the 
304.17  Roy Wilkins Auditorium, St. Paul RiverCentre, Xcel Energy 
304.18  Center, and RiverCentre Parking Ramp, including all property, 
304.19  real or personal, tangible or intangible, located in the city, 
304.20  intended to be used as part of the RiverCentre complex or 
304.21  additions to or extensions of it. 
304.22     Subd. 2.  [CREATION OF NONPROFIT ORGANIZATION.] As required 
304.23  under Minnesota Statutes, section 465.717, and notwithstanding 
304.24  any other law, city charter provision, or ordinance to the 
304.25  contrary, the city of St. Paul may participate in the creation 
304.26  of a nonprofit organization for the purposes provided in this 
304.27  section. 
304.28     Subd. 3.  [GOVERNING BOARD.] (a) The mayor of the city, 
304.29  subject to approval by the city council, shall appoint a 
304.30  majority of the members of the governing board of the nonprofit 
304.31  organization performing all or a part of the activities 
304.32  necessary to carry out the purposes specified in this section.  
304.33  The mayor may designate any officer or employee of the city to 
304.34  serve as a member of the governing board of any nonprofit 
304.35  organization. 
304.36     (b) In addition to the appointments made by the mayor under 
305.1   paragraph (a), the mayor shall designate three members of the 
305.2   city council to serve on the governing board of the nonprofit 
305.3   organization. 
305.4      (c) Notwithstanding any provision contained in the articles 
305.5   of incorporation and bylaws of the nonprofit organization, any 
305.6   member of the governing board appointed by the mayor may be 
305.7   removed only by the mayor for cause. 
305.8      (d) The governing board of the nonprofit organization shall 
305.9   select, subject to the approval of the mayor, a president to 
305.10  serve as chief executive officer and general manager of the 
305.11  nonprofit organization. 
305.12     (e) The procedures in Minnesota Statutes, section 317A.255, 
305.13  subdivision 1, paragraph (b), relating to director conflicts of 
305.14  interest, are not required if the contract or other transaction 
305.15  is between the city and the nonprofit organization. 
305.16     Subd. 4.  [RIVERCENTRE MANAGEMENT; AUTHORITY TO CONTRACT 
305.17  WITH NONPROFIT ORGANIZATION.] The city may enter into an 
305.18  agreement with the nonprofit organization created in subdivision 
305.19  2 to equip, maintain, manage, and operate all or a portion of 
305.20  the RiverCentre complex and to manage and operate a convention 
305.21  bureau to market and promote the city as a tourist or convention 
305.22  center.  Except as otherwise provided in this section, the 
305.23  nonprofit organization may only contract and utilize and expend 
305.24  funds for these purposes under the direction of its governing 
305.25  board, subject to the accounting, financial reporting, and other 
305.26  conditions that the city may prescribe in a contract made under 
305.27  this section between the city and the nonprofit organization.  
305.28  The nonprofit organization may use the services of the office of 
305.29  the city attorney and the city's purchasing department.  All 
305.30  activities performed to carry out these purposes are deemed to 
305.31  be for a public purpose. 
305.32     Subd. 5.  [BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX 
305.33  EXEMPTIONS PRESERVED.] (a) The city must protect the rights of 
305.34  holders of bonds issued for the RiverCentre complex, including 
305.35  preserving the tax-exempt status of the bonds. 
305.36     (b) The use and operation of the RiverCentre complex by the 
306.1   nonprofit organization with which the city contracts under this 
306.2   act is a use, lease, or occupancy for public, governmental, and 
306.3   municipal purposes, and the complex is exempt from taxation by 
306.4   the state or any political subdivision of the state during such 
306.5   use, to the extent it would be exempt if the complex was 
306.6   equipped, maintained, managed, and operated by the city. 
306.7      (c) Gross receipts of tickets and admissions to events at 
306.8   the RiverCentre complex sponsored by the nonprofit organization 
306.9   created in this section do not qualify for the sales tax 
306.10  exemption under Minnesota Statutes, section 297A.70, subdivision 
306.11  10. 
306.12     Subd. 6.  [APPLICABLE GENERAL LAWS.] The following statutes 
306.13  apply to the nonprofit organization with which the city 
306.14  contracts under this section the same as they apply to the city, 
306.15  to the extent practicable: 
306.16     (1) Minnesota Statutes, chapter 13D, the Minnesota Open 
306.17  Meeting Law; and 
306.18     (2) Minnesota Statutes, chapter 13, the Government Data 
306.19  Practices Act. 
306.20     Subd. 7.  [SUCCESSION.] The nonprofit organization with 
306.21  which the city contracts under this section is the successor to 
306.22  all powers, rights, assets, privileges, and interests held and 
306.23  enjoyed by the RiverCentre authority on the effective date of 
306.24  this section, and established by the provisions of Laws 1967, 
306.25  chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 3, 
306.26  clause (3), as amended; Laws 1982, chapter 523, article 25, 
306.27  sections 4 and 5, as amended; Laws 1998, chapter 404, sections 
306.28  81 and 82; and Minnesota Statutes, section 297A.98.  On the 
306.29  effective date of the contract between the city and the 
306.30  nonprofit organization authorized by this section, the 
306.31  RiverCentre authority ceases to exist for only so long as the 
306.32  contract is in effect, and all other laws or provisions 
306.33  specifically relating to the RiverCentre authority and the 
306.34  RiverCentre complex that are not otherwise referenced in this 
306.35  section, do not apply to the nonprofit organization. 
306.36     Subd. 8.  [LIABILITY.] The nonprofit organization with 
307.1   which the city contracts under this section is a "municipality," 
307.2   and the officers, directors, employees, and agents of the 
307.3   nonprofit organization are "employees, officers, or agents," 
307.4   under Minnesota Statutes, chapter 466, relating to tort 
307.5   liability.  The city must defend, save harmless, and indemnify 
307.6   the nonprofit organization, including the nonprofit's officers, 
307.7   directors, employees, and agents, against any claim or demand 
307.8   arising out of the nonprofit organization's performance under 
307.9   the contract. 
307.10     [EFFECTIVE DATE.] This section is effective the day after 
307.11  the city council and the chief clerical officer of the city of 
307.12  St. Paul have timely completed their compliance with Minnesota 
307.13  Statutes, section 645.023, subdivisions 2 and 3. 
307.14     Sec. 27.  [TRANSFER OF MHFA BONDING AUTHORITY TO HESO.] 
307.15     Notwithstanding Minnesota Statutes, section 474A.03, 
307.16  subdivision 2a, clause (b), the Minnesota Housing Finance Agency 
307.17  may enter into an agreement with the Higher Education Services 
307.18  Office under which the Higher Education Services Office issues 
307.19  qualified student loan bonds, up to $50,000,000 of which are 
307.20  issued pursuant to bonding authority allocated to the Minnesota 
307.21  Housing Finance Agency in 2004 under Minnesota Statutes, section 
307.22  474A.03, subdivision 2a, clause (a).  This amount is in addition 
307.23  to the bonding authority otherwise allocated to the Higher 
307.24  Education Services Office under Minnesota Statutes, chapter 
307.25  474A.  Notwithstanding Minnesota Statutes, section 474A.04, 
307.26  subdivision 1a, 474A.061, or 474A.091, subdivision 2, bonding 
307.27  authority carried forward by the Minnesota Housing Financing 
307.28  Agency from its allocation for 2004 under Minnesota Statutes, 
307.29  section 474A.03, subdivision 2a, clause (b), are exempt from the 
307.30  requirement that the bonding authority be permanently issued by 
307.31  December 31 of the next succeeding calendar year. 
307.32     Sec. 28.  [APPLICATION.] 
307.33     Section 14 applies in the counties of Anoka, Carver, 
307.34  Dakota, Hennepin, Ramsey, Scott, and Washington. 
307.35     Sec. 29.  [REPEALER.] 
307.36     Minnesota Statutes 2004, section 473.39, subdivision 1f, is 
308.1   repealed. 
308.2      Sec. 30.  [EFFECTIVE DATE.] 
308.3      This article is effective the day following final enactment.
308.4                              ARTICLE 11
308.5                     MINERALS; AGGREGATE - SF1683 
308.6      Section 1.  Minnesota Statutes 2004, section 272.02, is 
308.7   amended by adding a subdivision to read: 
308.8      Subd. 68.  [PROPERTY USED IN THE BUSINESS OF MINING SUBJECT 
308.9   TO THE NET PROCEEDS TAX.] The following property used in the 
308.10  business of mining subject to the net proceeds tax under section 
308.11  298.015 is exempt: 
308.12     (1) deposits of ores, metals, and minerals and the lands in 
308.13  which they are contained; 
308.14     (2) all real and personal property used in mining, 
308.15  quarrying, producing, or refining ores, minerals, or metals, 
308.16  including lands occupied by or used in connection with the 
308.17  mining, quarrying, production, or refining facilities; and 
308.18     (3) concentrate or direct reduced ore. 
308.19  This exemption applies for each year that a person subject to 
308.20  tax under section 298.015 uses the property for mining, 
308.21  quarrying, producing, or refining ores, metals, or minerals. 
308.22     [EFFECTIVE DATE.] This section is effective for taxes 
308.23  payable in 2006 and thereafter. 
308.24     Sec. 2.  Minnesota Statutes 2004, section 290.05, 
308.25  subdivision 1, is amended to read: 
308.26     Subdivision 1.  [EXEMPT ENTITIES.] The following 
308.27  corporations, individuals, estates, trusts, and organizations 
308.28  shall be exempted from taxation under this chapter, provided 
308.29  that every such person or corporation claiming exemption under 
308.30  this chapter, in whole or in part, must establish to the 
308.31  satisfaction of the commissioner the taxable status of any 
308.32  income or activity: 
308.33     (a) corporations, individuals, estates, and trusts engaged 
308.34  in the business of mining or producing iron ore and mining, 
308.35  producing, or refining other ores, metals, and minerals, the 
308.36  mining or, production, or refining of which is subject to the 
309.1   occupation tax imposed by section 298.01; but if any such 
309.2   corporation, individual, estate, or trust engages in any other 
309.3   business or activity or has income from any property not used in 
309.4   such business it shall be subject to this tax computed on the 
309.5   net income from such property or such other business or 
309.6   activity.  Royalty shall not be considered as income from the 
309.7   business of mining or producing iron ore within the meaning of 
309.8   this section; 
309.9      (b) the United States of America, the state of Minnesota or 
309.10  any political subdivision of either agencies or 
309.11  instrumentalities, whether engaged in the discharge of 
309.12  governmental or proprietary functions; and 
309.13     (c) any insurance company. 
309.14     [EFFECTIVE DATE.] This section is effective for taxable 
309.15  years beginning after December 31, 2004. 
309.16     Sec. 3.  Minnesota Statutes 2004, section 290.17, 
309.17  subdivision 4, is amended to read: 
309.18     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
309.19  business conducted wholly within this state or partly within and 
309.20  partly without this state is part of a unitary business, the 
309.21  entire income of the unitary business is subject to 
309.22  apportionment pursuant to section 290.191.  Notwithstanding 
309.23  subdivision 2, paragraph (c), none of the income of a unitary 
309.24  business is considered to be derived from any particular source 
309.25  and none may be allocated to a particular place except as 
309.26  provided by the applicable apportionment formula.  The 
309.27  provisions of this subdivision do not apply to business income 
309.28  subject to subdivision 5, income of an insurance company, or 
309.29  income of an investment company determined under section 290.36, 
309.30  or income of a mine or mineral processing facility subject to 
309.31  tax under section 298.01. 
309.32     (b) The term "unitary business" means business activities 
309.33  or operations which result in a flow of value between them.  The 
309.34  term may be applied within a single legal entity or between 
309.35  multiple entities and without regard to whether each entity is a 
309.36  sole proprietorship, a corporation, a partnership or a trust.  
310.1      (c) Unity is presumed whenever there is unity of ownership, 
310.2   operation, and use, evidenced by centralized management or 
310.3   executive force, centralized purchasing, advertising, 
310.4   accounting, or other controlled interaction, but the absence of 
310.5   these centralized activities will not necessarily evidence a 
310.6   nonunitary business.  Unity is also presumed when business 
310.7   activities or operations are of mutual benefit, dependent upon 
310.8   or contributory to one another, either individually or as a 
310.9   group. 
310.10     (d) Where a business operation conducted in Minnesota is 
310.11  owned by a business entity that carries on business activity 
310.12  outside the state different in kind from that conducted within 
310.13  this state, and the other business is conducted entirely outside 
310.14  the state, it is presumed that the two business operations are 
310.15  unitary in nature, interrelated, connected, and interdependent 
310.16  unless it can be shown to the contrary.  
310.17     (e) Unity of ownership is not deemed to exist when a 
310.18  corporation is involved unless that corporation is a member of a 
310.19  group of two or more business entities and more than 50 percent 
310.20  of the voting stock of each member of the group is directly or 
310.21  indirectly owned by a common owner or by common owners, either 
310.22  corporate or noncorporate, or by one or more of the member 
310.23  corporations of the group.  For this purpose, the term "voting 
310.24  stock" shall include membership interests of mutual insurance 
310.25  holding companies formed under section 60A.077.  
310.26     (f) The net income and apportionment factors under section 
310.27  290.191 or 290.20 of foreign corporations and other foreign 
310.28  entities which are part of a unitary business shall not be 
310.29  included in the net income or the apportionment factors of the 
310.30  unitary business.  A foreign corporation or other foreign entity 
310.31  which is required to file a return under this chapter shall file 
310.32  on a separate return basis.  The net income and apportionment 
310.33  factors under section 290.191 or 290.20 of foreign operating 
310.34  corporations shall not be included in the net income or the 
310.35  apportionment factors of the unitary business except as provided 
310.36  in paragraph (g). 
311.1      (g) The adjusted net income of a foreign operating 
311.2   corporation shall be deemed to be paid as a dividend on the last 
311.3   day of its taxable year to each shareholder thereof, in 
311.4   proportion to each shareholder's ownership, with which such 
311.5   corporation is engaged in a unitary business.  Such deemed 
311.6   dividend shall be treated as a dividend under section 290.21, 
311.7   subdivision 4. 
311.8      Dividends actually paid by a foreign operating corporation 
311.9   to a corporate shareholder which is a member of the same unitary 
311.10  business as the foreign operating corporation shall be 
311.11  eliminated from the net income of the unitary business in 
311.12  preparing a combined report for the unitary business.  The 
311.13  adjusted net income of a foreign operating corporation shall be 
311.14  its net income adjusted as follows: 
311.15     (1) any taxes paid or accrued to a foreign country, the 
311.16  commonwealth of Puerto Rico, or a United States possession or 
311.17  political subdivision of any of the foregoing shall be a 
311.18  deduction; and 
311.19     (2) the subtraction from federal taxable income for 
311.20  payments received from foreign corporations or foreign operating 
311.21  corporations under section 290.01, subdivision 19d, clause (10), 
311.22  shall not be allowed. 
311.23     If a foreign operating corporation incurs a net loss, 
311.24  neither income nor deduction from that corporation shall be 
311.25  included in determining the net income of the unitary business. 
311.26     (h) For purposes of determining the net income of a unitary 
311.27  business and the factors to be used in the apportionment of net 
311.28  income pursuant to section 290.191 or 290.20, there must be 
311.29  included only the income and apportionment factors of domestic 
311.30  corporations or other domestic entities other than foreign 
311.31  operating corporations that are determined to be part of the 
311.32  unitary business pursuant to this subdivision, notwithstanding 
311.33  that foreign corporations or other foreign entities might be 
311.34  included in the unitary business.  
311.35     (i) Deductions for expenses, interest, or taxes otherwise 
311.36  allowable under this chapter that are connected with or 
312.1   allocable against dividends, deemed dividends described in 
312.2   paragraph (g), or royalties, fees, or other like income 
312.3   described in section 290.01, subdivision 19d, clause (10), shall 
312.4   not be disallowed. 
312.5      (j) Each corporation or other entity, except a sole 
312.6   proprietorship, that is part of a unitary business must file 
312.7   combined reports as the commissioner determines.  On the 
312.8   reports, all intercompany transactions between entities included 
312.9   pursuant to paragraph (h) must be eliminated and the entire net 
312.10  income of the unitary business determined in accordance with 
312.11  this subdivision is apportioned among the entities by using each 
312.12  entity's Minnesota factors for apportionment purposes in the 
312.13  numerators of the apportionment formula and the total factors 
312.14  for apportionment purposes of all entities included pursuant to 
312.15  paragraph (h) in the denominators of the apportionment formula. 
312.16     (k) If a corporation has been divested from a unitary 
312.17  business and is included in a combined report for a fractional 
312.18  part of the common accounting period of the combined report:  
312.19     (1) its income includable in the combined report is its 
312.20  income incurred for that part of the year determined by 
312.21  proration or separate accounting; and 
312.22     (2) its sales, property, and payroll included in the 
312.23  apportionment formula must be prorated or accounted for 
312.24  separately. 
312.25     [EFFECTIVE DATE.] This section is effective for taxable 
312.26  years beginning after December 31, 2004. 
312.27     Sec. 4.  Minnesota Statutes 2004, section 290.191, 
312.28  subdivision 1, is amended to read: 
312.29     Subdivision 1.  [GENERAL RULE.] (a) Except as otherwise 
312.30  provided in section 290.17, subdivision 5, the net income from a 
312.31  trade or business carried on partly within and partly without 
312.32  this state must be apportioned to this state as provided in this 
312.33  section.  To the extent that an entity is exempt from taxation 
312.34  under this chapter as provided in section 290.05, the 
312.35  apportionment factors associated with the entity's exempt 
312.36  activities are excluded from the apportionment formula under 
313.1   this section. 
313.2      (b) For purposes of this section, "state" means a state of 
313.3   the United States, the District of Columbia, the commonwealth of 
313.4   Puerto Rico, or any territory or possession of the United States 
313.5   or any foreign country. 
313.6      [EFFECTIVE DATE.] This section is effective for taxable 
313.7   years beginning after December 31, 2004. 
313.8      Sec. 5.  Minnesota Statutes 2004, section 297A.68, 
313.9   subdivision 4, is amended to read: 
313.10     Subd. 4.  [TACONITE, OTHER ORES, METALS, OR MINERALS; 
313.11  PRODUCTION MATERIALS.] Mill liners, grinding rods, and grinding 
313.12  balls that are substantially consumed in the production of 
313.13  taconite or other ores, metals, or minerals are exempt when sold 
313.14  to or stored, used, or consumed by persons taxed under the 
313.15  in-lieu provisions of chapter 298.  
313.16     [EFFECTIVE DATE.] This section is effective for sales and 
313.17  purchases made after June 30, 2005. 
313.18     Sec. 6.  Minnesota Statutes 2004, section 298.001, is 
313.19  amended by adding a subdivision to read: 
313.20     Subd. 9.  [REFINING.] "Refining" means and is limited to 
313.21  refining: 
313.22     (1) of ores, metals, or mineral products, the mining, 
313.23  extraction, or quarrying of which were subject to tax under 
313.24  section 298.015; and 
313.25     (2) carried on by the entity, or an affiliated entity, that 
313.26  mined, extracted, or quarried the metal or mineral products. 
313.27     [EFFECTIVE DATE.] This section is effective for taxable 
313.28  years beginning after December 31, 2004. 
313.29     Sec. 7.  Minnesota Statutes 2004, section 298.001, is 
313.30  amended by adding a subdivision to read: 
313.31     Subd. 10.  [PRECIOUS MINERALS TAX RELIEF AREA.] The 
313.32  "precious minerals tax relief area" means the area of the 
313.33  following Independent School Districts: 
313.34     (1) No. 166, Cook County; 
313.35     (2) No. 316, Coleraine; 
313.36     (3) No. 318, Grand Rapids; 
314.1      (4) No. 319, Nashwauk-Keewatin; 
314.2      (5) No. 381, Lake Superior; 
314.3      (6) No. 695, Chisholm; 
314.4      (7) No. 696, Ely; 
314.5      (8) No. 701, Hibbing; 
314.6      (9) No. 706, Virginia; 
314.7      (10) No. 712, Mountain Iron-Buhl; 
314.8      (11) No. 2711, Mesabi East; 
314.9      (12) No. 2142, St. Louis County; and 
314.10     (13) No. 2154, Eveleth-Gilbert.  
314.11     [EFFECTIVE DATE.] This section is effective for taxable 
314.12  years beginning after December 31, 2004.  
314.13     Sec. 8.  Minnesota Statutes 2004, section 298.01, 
314.14  subdivision 3, is amended to read: 
314.15     Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
314.16  engaged in the business of mining, refining, or producing ores, 
314.17  metals, or minerals in this state, except iron ore or taconite 
314.18  concentrates, shall pay an occupation tax to the state of 
314.19  Minnesota as provided in this subdivision.  For purposes of this 
314.20  subdivision, mining includes the application of 
314.21  hydrometallurgical processes.  The tax is determined in the same 
314.22  manner as the tax imposed by section 290.02, except that 
314.23  sections 290.05, subdivision 1, clause (a), 290.0921, and 
314.24  290.17, subdivision 4, do not apply.  Except as provided in 
314.25  section 290.05, subdivision 1, paragraph (a), the tax is in 
314.26  addition to all other taxes. 
314.27     [EFFECTIVE DATE.] This section is effective for taxable 
314.28  years beginning after December 31, 2004. 
314.29     Sec. 9.  Minnesota Statutes 2004, section 298.01, 
314.30  subdivision 3a, is amended to read: 
314.31     Subd. 3a.  [GROSS INCOME.] (a) For purposes of determining 
314.32  a person's taxable income under subdivision 3, gross income is 
314.33  determined by the amount of gross proceeds from mining in this 
314.34  state under section 298.016 and includes any gain or loss 
314.35  recognized from the sale or disposition of assets used in the 
314.36  business in this state. 
315.1      (b) In applying section 290.191, subdivision 5, transfers 
315.2   of ores, metals, or minerals that are subject to tax under this 
315.3   chapter are deemed to be sales outside this state if the ores, 
315.4   metals, or minerals are transported out of this state for 
315.5   further processing or refining by the person engaged in mining 
315.6   after the ores, metals, or minerals have been converted to a 
315.7   marketable quality. 
315.8      (c) In applying section 290.191, subdivision 5, transfers 
315.9   of ores, metals, or minerals that are subject to tax under this 
315.10  chapter are deemed to be sales within this state if the ores, 
315.11  metals, or minerals are received by a purchaser at a point 
315.12  within this state, and the taxpayer is taxable in this state, 
315.13  regardless of the f.o.b. point, or other conditions of the sale, 
315.14  or the ultimate destination of the property. 
315.15     [EFFECTIVE DATE.] This section is effective for taxable 
315.16  years beginning after December 31, 2004. 
315.17     Sec. 10.  Minnesota Statutes 2004, section 298.01, 
315.18  subdivision 4, is amended to read: 
315.19     Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
315.20  CONCENTRATES.] A person engaged in the business of mining or 
315.21  producing of iron ore, taconite concentrates or direct reduced 
315.22  ore in this state shall pay an occupation tax to the state of 
315.23  Minnesota.  The tax is determined in the same manner as the tax 
315.24  imposed by section 290.02, except that sections 290.05, 
315.25  subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 
315.26  do not apply.  The tax is in addition to all other taxes. 
315.27     [EFFECTIVE DATE.] This section is effective for taxable 
315.28  years beginning after December 31, 2004. 
315.29     Sec. 11.  Minnesota Statutes 2004, section 298.015, 
315.30  subdivision 1, is amended to read: 
315.31     Subdivision 1.  [TAX IMPOSED.] A person engaged in the 
315.32  business of mining shall pay to the state of Minnesota for 
315.33  distribution as provided in section 298.018 a net proceeds tax 
315.34  equal to two four percent of the net proceeds from mining in 
315.35  Minnesota.  The tax applies to all mineral and energy resources 
315.36  ores, metals, and minerals mined or, extracted, produced, or 
316.1   refined within the state of Minnesota except for sand, silica 
316.2   sand, gravel, building stone, crushed rock, limestone, granite, 
316.3   dimension granite, dimension stone, horticultural peat, clay, 
316.4   soil, iron ore, and taconite concentrates.  Except as provided 
316.5   in section 272.02, subdivision 68, the tax is in addition to all 
316.6   other taxes provided for by law.  
316.7      [EFFECTIVE DATE.] This section is effective for taxes 
316.8   payable in 2006 and thereafter. 
316.9      Sec. 12.  Minnesota Statutes 2004, section 298.015, 
316.10  subdivision 2, is amended to read: 
316.11     Subd. 2.  [NET PROCEEDS.] For purposes of this section, the 
316.12  term "net proceeds" means the gross proceeds from mining, as 
316.13  defined in section 298.016, less the same deductions allowed in 
316.14  section 298.017 for purposes of determining taxable income under 
316.15  section 298.01, subdivision 3b.  No other credits or deductions 
316.16  shall apply to this tax except for those provided in section 
316.17  298.017.  
316.18     [EFFECTIVE DATE.] This section is effective for taxes 
316.19  payable in 2006 and thereafter. 
316.20     Sec. 13.  Minnesota Statutes 2004, section 298.016, 
316.21  subdivision 4, is amended to read: 
316.22     Subd. 4.  [DEFINITIONS.] For the purposes of sections 
316.23  298.015 and 298.017, the terms defined in this subdivision have 
316.24  the meaning given them unless the context clearly indicates 
316.25  otherwise.  
316.26     (a) "Metal or mineral products" means all those mineral and 
316.27  energy resources ores, metals, and minerals subject to the tax 
316.28  provided in section 298.015. 
316.29     (b) "Exploration" means activities designed and engaged in 
316.30  to ascertain the existence, location, extent, or quality of any 
316.31  deposit of metal or mineral products prior to the development of 
316.32  a mining site.  
316.33     (c) "Development" means activities designed and engaged in 
316.34  to prepare or develop a potential mining site for mining after 
316.35  the existence of metal or mineral products in commercially 
316.36  marketable quantities has been disclosed including, but not 
317.1   limited to, the clearing of forestation, the building of roads, 
317.2   removal of overburden, or the sinking of shafts.  
317.3      (d) "Research" means activities designed and engaged in to 
317.4   create new or improved methods of mining, producing, processing, 
317.5   beneficiating, smelting, or refining metal or mineral products.  
317.6      [EFFECTIVE DATE.] This section is effective for taxable 
317.7   years beginning after December 31, 2005. 
317.8      Sec. 14.  Minnesota Statutes 2004, section 298.018, is 
317.9   amended to read: 
317.10     298.018 [DISTRIBUTION OF PROCEEDS.] 
317.11     Subdivision 1.  [WITHIN THE TACONITE PRECIOUS MINERALS 
317.12  ASSISTANCE AREA.] The proceeds of the tax paid under sections 
317.13  298.015 to 298.017 on ores, metals, and minerals and energy 
317.14  resources mined or extracted within the taconite precious 
317.15  minerals assistance area defined in section 273.1341, shall be 
317.16  allocated as follows: 
317.17     (1) five percent to the city or town within which the ores, 
317.18  metals, or minerals or energy resources are mined or extracted; 
317.19     (2) ten percent to the taconite municipal aid account to be 
317.20  distributed as provided in section 298.282 to qualifying 
317.21  municipalities, as defined in section 298.282 and located in the 
317.22  precious minerals assistance area; 
317.23     (3) ten percent to the school district within which the 
317.24  ores, metals, or minerals or energy resources are mined or 
317.25  extracted; 
317.26     (4) 20 30 percent to a group of school districts comprised 
317.27  of those school districts wherein the mineral or energy resource 
317.28  was mined or extracted or in which there is a qualifying 
317.29  municipality as defined by section 273.134, paragraph (b), in 
317.30  direct proportion to school district indexes as follows:  for 
317.31  each school district, its pupil units determined under section 
317.32  126C.05 for the prior school year shall be multiplied by the 
317.33  ratio of the average adjusted net tax capacity per pupil unit 
317.34  for school districts receiving aid under this clause as 
317.35  calculated pursuant to chapters 122A, 126C, and 127A for the 
317.36  school year ending prior to distribution to the adjusted net tax 
318.1   capacity per pupil unit of the district.  Each district shall 
318.2   receive that portion of the distribution which its index bears 
318.3   to the sum of the indices for all school districts that receive 
318.4   the distributions the state general fund to represent the 
318.5   portion of the tax that is in lieu of the state general tax 
318.6   under section 275.025; 
318.7      (5) 20 percent to the county within which the ores, metals, 
318.8   or minerals or energy resources are mined or extracted; 
318.9      (6) 20 percent to St. Louis County acting as the counties' 
318.10  fiscal agent to be distributed as provided in sections 273.134 
318.11  to 273.136; 
318.12     (7) five percent to the Iron Range Resources and 
318.13  Rehabilitation Board for the purposes of section 298.22; 
318.14     (8) five (7) ten percent to the Douglas J. Johnson economic 
318.15  protection trust fund; and 
318.16     (9) five (8) ten percent to the taconite environmental 
318.17  protection fund. 
318.18     The proceeds of the tax shall be distributed on July 15 
318.19  each year. 
318.20     Subd. 2.  [OUTSIDE THE TACONITE PRECIOUS MINERALS 
318.21  ASSISTANCE AREA.] The proceeds of the tax paid under sections 
318.22  298.015 to 298.017 on ores, metals, or minerals and energy 
318.23  resources mined or extracted outside of the taconite precious 
318.24  minerals assistance area defined in section 273.1341, shall be 
318.25  deposited in the general fund. 
318.26     Subd. 3.  [SEGREGATION OF FUNDS.] The proceeds of the tax 
318.27  allocated under subdivision 1, clauses (2), (6), (7), and (8), 
318.28  including any investment earnings on them, must be segregated 
318.29  and separately accounted for in the respective funds or account 
318.30  to which they are allocated.  These amounts must only be 
318.31  distributed to municipalities within the precious minerals 
318.32  assistance area or used for projects located in the precious 
318.33  minerals assistance area.  
318.34     [EFFECTIVE DATE.] This section is effective for 
318.35  distribution of net proceeds tax revenues made after July 1, 
318.36  2005.  
319.1      Sec. 15.  [298.021] [ROYALTY TAX.] 
319.2      In addition to any other taxes imposed by law, a tax is 
319.3   imposed on a royalty, as defined in section 290.923, subdivision 
319.4   1, paid on ore, other than iron ore, taconite, iron sulphides, 
319.5   or semitaconite.  The tax equals 12 percent of the amount of the 
319.6   royalty paid.  The person paying the royalty shall withhold the 
319.7   tax from the payment and remit the payment to the commissioner 
319.8   at the times and under the procedures provided under section 
319.9   290.923.  The commissioner shall deposit proceeds in the general 
319.10  fund and allocate the proceeds as provided under section 
319.11  298.018, subdivision 1.  
319.12     [EFFECTIVE DATE.] This section is effective for royalties 
319.13  paid after June 30, 2005.  
319.14     Sec. 16.  Minnesota Statutes 2004, section 298.223, 
319.15  subdivision 1, is amended to read: 
319.16     Subdivision 1.  [CREATION; PURPOSES.] A fund called the 
319.17  taconite environmental protection fund is created for the 
319.18  purpose of reclaiming, restoring and enhancing those areas of 
319.19  northeast Minnesota located within the taconite assistance area 
319.20  defined in section 273.1341, that are adversely affected by the 
319.21  environmentally damaging operations involved in mining taconite 
319.22  and iron ore and producing iron ore concentrate and for the 
319.23  purpose of promoting the economic development of northeast 
319.24  Minnesota.  The taconite environmental protection fund shall be 
319.25  used for the following purposes: 
319.26     (a) to initiate investigations into matters the Iron Range 
319.27  Resources and Rehabilitation Board determines are in need of 
319.28  study and which will determine the environmental problems 
319.29  requiring remedial action; 
319.30     (b) reclamation, restoration, or reforestation of minelands 
319.31  not otherwise provided for by state law; 
319.32     (c) local economic development projects including 
319.33  construction of sewer and water systems, and other but only if 
319.34  those projects are approved by the board, and public works, 
319.35  including construction of sewer and water systems located within 
319.36  the taconite assistance area defined in section 273.1341; 
320.1      (d) monitoring of mineral industry related health problems 
320.2   among mining employees. 
320.3      [EFFECTIVE DATE.] This section is effective the day 
320.4   following final enactment. 
320.5      Sec. 17.  Minnesota Statutes 2004, section 298.24, 
320.6   subdivision 1, is amended to read: 
320.7      Subdivision 1.  (a) For concentrate produced in 2001, 2002, 
320.8   and 2003, there is imposed upon taconite and iron sulphides, and 
320.9   upon the mining and quarrying thereof, and upon the production 
320.10  of iron ore concentrate therefrom, and upon the concentrate so 
320.11  produced, a tax of $2.103 per gross ton of merchantable iron ore 
320.12  concentrate produced therefrom.  For concentrates produced in 
320.13  2005 and 2006, the tax rate is the same rate imposed for 
320.14  concentrates produced in 2004. 
320.15     (b) For concentrates produced in 2004, 2007, and subsequent 
320.16  years, the tax rate shall be equal to the preceding year's tax 
320.17  rate plus an amount equal to the preceding year's tax rate 
320.18  multiplied by the percentage increase in the implicit price 
320.19  deflator from the fourth quarter of the second preceding year to 
320.20  the fourth quarter of the preceding year.  "Implicit price 
320.21  deflator" means the implicit price deflator for the gross 
320.22  domestic product prepared by the Bureau of Economic Analysis of 
320.23  the United States Department of Commerce.  
320.24     (c) On concentrates produced in 1997 and thereafter, an 
320.25  additional tax is imposed equal to three cents per gross ton of 
320.26  merchantable iron ore concentrate for each one percent that the 
320.27  iron content of the product exceeds 72 percent, when dried at 
320.28  212 degrees Fahrenheit. 
320.29     (d) Except for taxes payable in 2006 through 2008, the tax 
320.30  shall be imposed on the average of the production for the 
320.31  current year and the previous two years.  The rate of the tax 
320.32  imposed will be the current year's tax rate.  This clause shall 
320.33  not apply in the case of the closing of a taconite facility if 
320.34  the property taxes on the facility would be higher if this 
320.35  clause and section 298.25 were not applicable.  
320.36     (e) If the tax or any part of the tax imposed by this 
321.1   subdivision is held to be unconstitutional, a tax of $2.103 per 
321.2   gross ton of merchantable iron ore concentrate produced shall be 
321.3   imposed.  
321.4      (f) Consistent with the intent of this subdivision to 
321.5   impose a tax based upon the weight of merchantable iron ore 
321.6   concentrate, the commissioner of revenue may indirectly 
321.7   determine the weight of merchantable iron ore concentrate 
321.8   included in fluxed pellets by subtracting the weight of the 
321.9   limestone, dolomite, or olivine derivatives or other basic flux 
321.10  additives included in the pellets from the weight of the 
321.11  pellets.  For purposes of this paragraph, "fluxed pellets" are 
321.12  pellets produced in a process in which limestone, dolomite, 
321.13  olivine, or other basic flux additives are combined with 
321.14  merchantable iron ore concentrate.  No subtraction from the 
321.15  weight of the pellets shall be allowed for binders, mineral and 
321.16  chemical additives other than basic flux additives, or moisture. 
321.17     (g)(1) Notwithstanding any other provision of this 
321.18  subdivision, for the first two years of a plant's commercial 
321.19  production of direct reduced ore, no tax is imposed under this 
321.20  section.  As used in this paragraph, "commercial production" is 
321.21  production of more than 50,000 tons of direct reduced ore in the 
321.22  current year or in any prior year, noncommercial production is 
321.23  production of 50,000 tons or less of direct reduced ore in any 
321.24  year, and "direct reduced ore" is ore that results in a product 
321.25  that has an iron content of at least 75 percent.  For the third 
321.26  year of a plant's commercial production of direct reduced ore, 
321.27  the rate to be applied to direct reduced ore is 25 percent of 
321.28  the rate otherwise determined under this subdivision.  For the 
321.29  fourth such commercial production year, the rate is 50 percent 
321.30  of the rate otherwise determined under this subdivision; for the 
321.31  fifth such commercial production year, the rate is 75 percent of 
321.32  the rate otherwise determined under this subdivision; and for 
321.33  all subsequent commercial production years, the full rate is 
321.34  imposed. 
321.35     (2) Subject to clause (1), production of direct reduced ore 
321.36  in this state is subject to the tax imposed by this section, but 
322.1   if that production is not produced by a producer of taconite or 
322.2   iron sulfides, the production of taconite or iron sulfides 
322.3   consumed in the production of direct reduced iron in this state 
322.4   is not subject to the tax imposed by this section on taconite or 
322.5   iron sulfides. 
322.6      (3) Notwithstanding any other provision of this 
322.7   subdivision, no tax is imposed on direct reduced ore under this 
322.8   section during the facility's noncommercial production of direct 
322.9   reduced ore.  The taconite or iron sulphides consumed in the 
322.10  noncommercial production of direct reduced ore is subject to the 
322.11  tax imposed by this section on taconite and iron sulphides.  
322.12  Three-year average production of direct reduced ore does not 
322.13  include production of direct reduced ore in any noncommercial 
322.14  year.  Three-year average production for a direct reduced ore 
322.15  facility that has noncommercial production is the average of the 
322.16  commercial production of direct reduced ore for the current year 
322.17  and the previous two commercial years.  
322.18     [EFFECTIVE DATE.] This section is effective for direct 
322.19  reduced ore produced after the date of final enactment. 
322.20     Sec. 18.  Minnesota Statutes 2004, section 298.28, 
322.21  subdivision 9b, is amended to read: 
322.22     Subd. 9b.  [TACONITE ENVIRONMENTAL FUND.] Five cents per 
322.23  ton for distributions in 1999, 2000, 2001, 2002, and 2003 must 
322.24  be paid to the taconite environmental fund for use under section 
322.25  298.2961, subdivision 4.  
322.26     [EFFECTIVE DATE.] This section is effective for 
322.27  distributions in 2005 and later years. 
322.28     Sec. 19.  Minnesota Statutes 2004, section 298.28, 
322.29  subdivision 10, is amended to read: 
322.30     Subd. 10.  [INCREASE.] (a) Except as provided in paragraph 
322.31  (b), beginning with distributions in 2000, the amount determined 
322.32  under subdivision 9 shall be increased in the same proportion as 
322.33  the increase in the implicit price deflator as provided in 
322.34  section 298.24, subdivision 1.  Beginning with distributions in 
322.35  2003, the amount determined under subdivision 6, paragraph (a), 
322.36  shall be increased in the same proportion as the increase in the 
323.1   implicit price deflator as provided in section 298.24, 
323.2   subdivision 1.  
323.3      (b) For distributions in 2005 and subsequent years, an 
323.4   amount equal to the increased tax proceeds attributable to the 
323.5   increase in the implicit price deflator as provided in section 
323.6   298.24, subdivision 1, for taxes paid in 2005, except for the 
323.7   amount of revenue increases provided in subdivision 4, paragraph 
323.8   (d), is distributed to the grant and loan fund established in 
323.9   section 298.2961, subdivision 4. 
323.10     Sec. 20.  Minnesota Statutes 2004, section 298.2961, is 
323.11  amended by adding a subdivision to read: 
323.12     Subd. 4.  [GRANT AND LOAN FUND.] (a) A fund is established 
323.13  to receive distributions under section 298.28, subdivision 9b, 
323.14  and to make grants or loans as provided in this subdivision.  
323.15  Any grant or loan made under this subdivision must be approved 
323.16  by a majority of the members of the Iron Range Resources and 
323.17  Rehabilitation Board, established under section 298.22. 
323.18     (b) Distributions received in calendar year 2005 are 
323.19  allocated to the city of Virginia for improvements and repairs 
323.20  to the city's steam heating system. 
323.21     (c) Distributions received in calendar year 2006 are 
323.22  allocated to a project of the public utilities commissions of 
323.23  the cities of Hibbing and Virginia to convert their electrical 
323.24  generating plants to the use of biomass products, such as wood. 
323.25     (d) Distributions received in calendar year 2007 must be 
323.26  paid to the city of Tower to be used for the East Two Rivers 
323.27  project in or near the city of Tower, including replacement of 
323.28  the Marked Trunk Highway 169 bridge over East Two Rivers, 
323.29  demolition of the present Marked Trunk Highway 135 bridge over 
323.30  East Two Rivers, and rerouting of Marked Trunk Highway 135, 
323.31  associated trunk highway construction and reconstruction, and 
323.32  associated marina development. 
323.33     (e) For distributions received in 2008 and later, amounts 
323.34  may be allocated to joint ventures with mining companies for 
323.35  reclamation of lands containing abandoned or worked out mines to 
323.36  convert these lands to marketable properties for residential, 
324.1   recreational, commercial, or other valuable uses. 
324.2      [EFFECTIVE DATE.] This section is effective the day 
324.3   following final enactment. 
324.4      Sec. 21.  Minnesota Statutes 2004, section 298.75, 
324.5   subdivision 1, is amended to read: 
324.6      Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
324.7   provided, the following words, when used in this section, shall 
324.8   have the meanings herein ascribed to them.  
324.9      (1) "Aggregate material" shall mean nonmetallic natural 
324.10  mineral aggregate including, but not limited to sand, silica 
324.11  sand, gravel, crushed rock, limestone, granite, and borrow, but 
324.12  only if the borrow is transported on a public road, street, or 
324.13  highway.  Aggregate material shall not include dimension stone 
324.14  and dimension granite.  Aggregate material must be measured or 
324.15  weighed after it has been extracted from the pit, quarry, or 
324.16  deposit.  
324.17     (2) "Person" shall mean any individual, firm, partnership, 
324.18  corporation, organization, trustee, association, or other entity.
324.19     (3) "Operator" shall mean any person engaged in the 
324.20  business of removing aggregate material from the surface or 
324.21  subsurface of the soil, for the purpose of sale, either directly 
324.22  or indirectly, through the use of the aggregate material in a 
324.23  marketable product or service; except that operator does not 
324.24  include persons engaged in a transaction in which the aggregate 
324.25  is moved within a project's construction limits to other 
324.26  locations within that same project's construction limits.  
324.27     (4) "Extraction site" shall mean a pit, quarry, or deposit 
324.28  containing aggregate material and any contiguous property to the 
324.29  pit, quarry, or deposit which is used by the operator for 
324.30  stockpiling the aggregate material.  
324.31     (5) "Importer" shall mean any person who buys aggregate 
324.32  material produced from a county not listed in paragraph (6) or 
324.33  another state and causes the aggregate material to be imported 
324.34  into a county in this state which imposes a tax on aggregate 
324.35  material.  
324.36     (6) "County" shall mean the counties of Pope, Stearns, 
325.1   Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 
325.2   Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 
325.3   Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 
325.4   Sibley, Hennepin, Washington, Chisago, and Ramsey.  County also 
325.5   means any other county whose board has voted after a public 
325.6   hearing to impose the tax under this section and has notified 
325.7   the commissioner of revenue of the imposition of the tax. 
325.8      (7) "Borrow" shall mean granular borrow, consisting of 
325.9   durable particles of gravel and sand, crushed quarry or mine 
325.10  rock, crushed gravel or stone, or any combination thereof, the 
325.11  ratio of the portion passing the (#200) sieve divided by the 
325.12  portion passing the (1 inch) sieve may not exceed 20 percent by 
325.13  mass. 
325.14     [EFFECTIVE DATE.] This section is effective for aggregate 
325.15  sold, imported, transported, or used from a stockpile after June 
325.16  30, 2005. 
325.17     Sec. 22.  Minnesota Statutes 2004, section 298.75, 
325.18  subdivision 2, is amended to read: 
325.19     Subd. 2.  [TAX IMPOSED.] A county shall impose upon every 
325.20  importer and operator a production tax up to ten cents per cubic 
325.21  yard or up to seven cents per ton of aggregate material removed 
325.22  except that the county board may decide not to impose this tax 
325.23  if it determines that in the previous year operators removed 
325.24  less than 20,000 tons or 14,000 cubic yards of aggregate 
325.25  material from that county.  A county or town may exempt an 
325.26  operator from the tax if the operator has removed less than 
325.27  2,500 tons or 1,750 yards from the county in the year that the 
325.28  tax is due and no other aggregate operator has removed material 
325.29  from the same site in the same year.  The tax shall be imposed 
325.30  on aggregate material produced in the county when the aggregate 
325.31  material is transported from the extraction site or sold.  When 
325.32  aggregate material is stored in a stockpile within the state of 
325.33  Minnesota and a public highway, road or street is not used for 
325.34  transporting the aggregate material, the tax shall be imposed 
325.35  either when the aggregate material is sold, or when it is 
325.36  transported from the stockpile site, or when it is used from the 
326.1   stockpile, whichever occurs first.  The tax shall be imposed on 
326.2   an importer when the aggregate material is imported into the 
326.3   county that imposes the tax.  
326.4      If the aggregate material is transported directly from the 
326.5   extraction site to a waterway, railway, or another mode of 
326.6   transportation other than a highway, road or street, the tax 
326.7   imposed by this section shall be apportioned equally between the 
326.8   county where the aggregate material is extracted and the county 
326.9   to which the aggregate material is originally transported.  If 
326.10  that destination is not located in Minnesota, then the county 
326.11  where the aggregate material was extracted shall receive all of 
326.12  the proceeds of the tax.  
326.13     [EFFECTIVE DATE.] This section is effective the day 
326.14  following final enactment. 
326.15     Sec. 23.  [IRON RANGE RESOURCES AND REHABILITATION 
326.16  COMMISSIONER; BONDS AUTHORIZED.] 
326.17     Subdivision 1.  [ISSUANCE; PURPOSE.] Notwithstanding any 
326.18  provision of Minnesota Statutes, chapter 298, to the contrary, 
326.19  the commissioner of Iron Range resources and rehabilitation may 
326.20  issue revenue bonds in a principal amount of $15,000,000 in one 
326.21  or more series, and bonds to refund those bonds.  The proceeds 
326.22  of the bonds must be used to make grants to school districts 
326.23  located in the taconite tax relief area defined in Minnesota 
326.24  Statutes, section 273.134, or the taconite assistance area 
326.25  defined in Minnesota Statutes, section 273.1341, to be used by 
326.26  the school districts to pay for health, safety, and maintenance 
326.27  improvements but only if the school district has levied the 
326.28  maximum amount allowable under law for those purposes. 
326.29     Subd. 2.  [APPROPRIATION.] There is annually appropriated 
326.30  from the distribution of taconite production tax revenues to the 
326.31  taconite environmental protection fund pursuant to Minnesota 
326.32  Statutes, section 298.28, subdivision 11, and to the Douglas J. 
326.33  Johnson economic protection trust pursuant to Minnesota 
326.34  Statutes, section 298.28, subdivisions 9 and 11, in equal 
326.35  shares, an amount sufficient to pay when due the principal and 
326.36  interest on the bonds issued pursuant to subdivision 1.  If the 
327.1   annual distribution to the Douglas J. Johnson economic 
327.2   protection trust is insufficient to pay its share after 
327.3   fulfilling any obligations of the trust under Minnesota 
327.4   Statutes, section 298.225 or 298.293, the deficiency shall be 
327.5   appropriated from the taconite environmental protection fund.  
327.6   The appropriation under this subdivision terminates upon payment 
327.7   or maturity of the last of the bonds issued under this section. 
327.8      Subd. 3.  [CREDIT ENHANCEMENT.] The bonds issued under this 
327.9   section shall be "debt obligations" and the commissioner of Iron 
327.10  Range resources and rehabilitation shall be a "district" for 
327.11  purposes of Minnesota Statutes, section 126C.55, provided that 
327.12  advances made under subdivision 2 of Minnesota Statutes, section 
327.13  126C.55, shall not be subject to subdivisions 4 to 7 of 
327.14  Minnesota Statutes, section 126C.55. 
327.15     Sec. 24.  [TRANSITION PROVISION.] 
327.16     Each person with an alternative minimum tax credit on 
327.17  December 31, 2004, pursuant to Minnesota Statutes 2004, section 
327.18  298.01, may take that credit against occupation tax under the 
327.19  provisions of Minnesota Statutes 2004, section 298.01, 
327.20  subdivision 3d or 4e. 
327.21     [EFFECTIVE DATE.] This section is effective the day 
327.22  following final enactment. 
327.23     Sec. 25.  [REPEALER.] 
327.24     (a) Minnesota Statutes 2004, section 298.01, subdivisions 
327.25  3c, 3d, 4d, and 4e, are repealed effective for taxable years 
327.26  beginning after December 31, 2004. 
327.27     (b) Minnesota Statutes 2004, section 298.017, is repealed 
327.28  effective for taxes payable in 2006 and thereafter. 
327.29                             ARTICLE 12 
327.30                       MISCELLANEOUS - SF1683 
327.31     Section 1.  Minnesota Statutes 2004, section 270.30, 
327.32  subdivision 1, is amended to read: 
327.33     Subdivision 1.  [SCOPE.] (a) This section applies to a 
327.34  person who offers, provides, or facilitates the provision of 
327.35  refund anticipation loans, as part of or in connection with the 
327.36  provision of tax preparation services. 
328.1      (b) This section does not apply to: 
328.2      (1) a tax preparer who provides tax preparation services 
328.3   for fewer than six clients in a calendar year; 
328.4      (2) the provision by a person of tax preparation services 
328.5   to a spouse, parent, grandparent, child, or sibling; and 
328.6      (3) the provision of services by an employee for an 
328.7   employer. 
328.8      Sec. 2.  Minnesota Statutes 2004, section 270.30, 
328.9   subdivision 5, is amended to read: 
328.10     Subd. 5.  [ITEMIZED BILL REQUIRED.] A tax preparer who 
328.11  provides services for a fee or other consideration must provide 
328.12  an itemized statement of the charges for services, at least 
328.13  separately stating the charges for: 
328.14     (1) return preparation; and 
328.15     (2) electronic filing; and 
328.16     (3) providing or facilitating a refund anticipation loan. 
328.17     Sec. 3.  Minnesota Statutes 2004, section 270.30, 
328.18  subdivision 6, is amended to read: 
328.19     Subd. 6.  [ENFORCEMENT; PENALTIES.] The commissioner may 
328.20  impose an administrative penalty of not more than $1,000 per 
328.21  violation of subdivision 3, 4, or 5.  The commissioner may 
328.22  terminate a tax preparer's authority to transmit returns 
328.23  electronically to the state, if the commissioner determines the 
328.24  tax preparer engaged in a pattern and practice of violating this 
328.25  section.  Imposition of a penalty under this subdivision is 
328.26  subject to the contested case procedure under chapter 14.  The 
328.27  commissioner shall collect the penalty in the same manner as the 
328.28  income tax.  Penalties imposed under this subdivision are public 
328.29  data. 
328.30     Sec. 4.  Minnesota Statutes 2004, section 270.30, is 
328.31  amended by adding a subdivision to read: 
328.32     Subd. 6a.  [EXCHANGE OF DATA; STATE BOARD OF 
328.33  ACCOUNTANCY.] The State Board of Accountancy shall refer to the 
328.34  commissioner complaints it receives about tax preparers who are 
328.35  not subject to the jurisdiction of the State Board of 
328.36  Accountancy and who are alleged to have violated the provisions 
329.1   of subdivisions 3 to 5.  
329.2      Sec. 5.  Minnesota Statutes 2004, section 270.30, is 
329.3   amended by adding a subdivision to read: 
329.4      Subd. 6b.  [EXCHANGE OF DATA; LAWYERS BOARD OF PROFESSIONAL 
329.5   RESPONSIBILITY.] The Lawyers Board of Professional 
329.6   Responsibility may refer to the commissioner complaints it 
329.7   receives about tax preparers who are not subject to its 
329.8   jurisdiction and who are alleged to have violated the provisions 
329.9   of subdivisions 3 to 5. 
329.10     Sec. 6.  Minnesota Statutes 2004, section 270.30, is 
329.11  amended by adding a subdivision to read: 
329.12     Subd. 6c.  [EXCHANGE OF DATA; COMMISSIONER.] The 
329.13  commissioner shall refer complaints about tax preparers who are 
329.14  alleged to have violated the provisions of subdivisions 3 to 5 
329.15  to: 
329.16     (1) the State Board of Accountancy, if the tax preparer is 
329.17  under its jurisdiction; and 
329.18     (2) the Lawyers Board of Professional Responsibility, if 
329.19  the tax preparer is under its jurisdiction. 
329.20     Sec. 7.  Minnesota Statutes 2004, section 270.30, is 
329.21  amended by adding a subdivision to read: 
329.22     Subd. 6d.  [DATA PRIVATE.] Information exchanged on 
329.23  individuals under subdivisions 6a to 6c are private data under 
329.24  section 13.02, subdivision 12, until such time as a penalty is 
329.25  imposed as provided in section 326A.08 or by the Lawyers Board 
329.26  of Professional Responsibility. 
329.27     Sec. 8.  Minnesota Statutes 2004, section 270.30, 
329.28  subdivision 8, is amended to read: 
329.29     Subd. 8.  [EXEMPTIONS; ENFORCEMENT PROVISIONS.] (a) The 
329.30  provisions of subdivisions 6 and 7 this section, except for 
329.31  subdivision 4, do not apply to: 
329.32     (1) an attorney admitted to practice under section 481.01; 
329.33     (2) a certified public accountant holding a certificate 
329.34  under section 326A.04 or a person issued a permit to practice 
329.35  under section 326A.05 or other person who is subject to the 
329.36  jurisdiction of the State Board of Accountancy; and 
330.1      (3) a person designated as a registered accounting 
330.2   practitioner under Minnesota Rules, part 1105.6600, or a 
330.3   registered accounting practitioner firm issued a permit under 
330.4   Minnesota Rules, part 1105.7100; 
330.5      (4) an enrolled agent who has passed the special enrollment 
330.6   examination administered by the Internal Revenue Service; and. 
330.7      (b) The provisions of this section do not apply to: 
330.8      (5) (1) any fiduciary, or the regular employees of a 
330.9   fiduciary, while acting on behalf of the fiduciary estate, the 
330.10  testator, trustor, grantor, or beneficiaries of them; 
330.11     (2) a tax preparer who provides tax preparation services 
330.12  for fewer than six clients in a calendar year; 
330.13     (3) tax preparation services to a spouse, parent, 
330.14  grandparent, child, or sibling of the tax preparer; and 
330.15     (4) the preparation by an employee of the tax return of the 
330.16  employee's employer. 
330.17     Sec. 9.  [270.301] [PUBLICATION OF NAMES OF TAX PREPARERS 
330.18  SUBJECT TO PENALTIES.] 
330.19     Subdivision 1.  [PUBLICATION OF LIST.] Notwithstanding any 
330.20  other law, the commissioner must publish as provided in this 
330.21  section a list or lists of tax preparers subject to penalties. 
330.22     Subd. 2.  [REQUIRED AND EXCLUDED TAX PREPARERS.] (a) 
330.23  Subject to the limitations of paragraphs (b) and (c), the 
330.24  commissioner must publish lists of the tax preparers described 
330.25  in subdivision 1.  The list must include:  
330.26     (1) the tax preparers who have been assessed penalties 
330.27  under section 289A.60, subdivision 13, or who have been 
330.28  convicted under section 289A.63; 
330.29     (2) tax preparers against whom cumulative penalties of 
330.30  $1,000 or more have been assessed under section 270.30, 
330.31  subdivision 6; and 
330.32     (3) tax preparers whose authority to transmit returns 
330.33  electronically has been terminated under section 270.30, 
330.34  subdivision 6, or under section 289A.60, subdivision 13.  
330.35  The list may include tax preparers against whom cumulative 
330.36  penalties of less than $1,000 have been assessed. 
331.1      (b) For the purposes of this section, a penalty was not 
331.2   assessed if: 
331.3      (1) an administrative or court action contesting the 
331.4   penalty has been filed or served and is unresolved at the time 
331.5   when notice would be given under subdivision 3; or 
331.6      (2) an appeal period to contest the penalty has not expired.
331.7      (c) Penalties are not subject to publication if: 
331.8      (1) the commissioner is in the process of reviewing or 
331.9   adjusting the penalty; or 
331.10     (2) the commissioner has been notified that the tax 
331.11  preparer is deceased. 
331.12     Subd. 3.  [NOTICE TO TAX PREPARER.] (a) At least 30 days 
331.13  before publishing the name of a tax preparer subject to penalty, 
331.14  the commissioner shall mail a written notice to the tax 
331.15  preparer, detailing the amount and nature of each penalty and 
331.16  the intended publication of the information listed in 
331.17  subdivision 4 related to the penalty.  The notice must be mailed 
331.18  by first class and certified mail addressed to the last known 
331.19  address of the tax preparer.  The notice must include 
331.20  information regarding the exceptions listed in subdivision 2 and 
331.21  must state that the tax preparer's information will not be 
331.22  published if the tax preparer provides information establishing 
331.23  that subdivision 2 prohibits publication of the tax preparer's 
331.24  name. 
331.25     (b) After at least 30 days has elapsed since the notice was 
331.26  mailed and the tax preparer has not proved to the commissioner 
331.27  that subdivision 2 prohibits publication, the commissioner may 
331.28  publish in a list of tax preparers subject to penalty the 
331.29  information about the tax preparer that is listed in subdivision 
331.30  4. 
331.31     Subd. 4.  [FORM OF LIST.] The list may be published by any 
331.32  medium or method.  The list must contain the name, associated 
331.33  business name or names, address or addresses, and violation or 
331.34  violations for which a penalty was imposed of each tax preparer 
331.35  subject to administrative penalty. 
331.36     Subd. 5.  [REMOVAL FROM LIST.] The commissioner shall 
332.1   remove the name of a tax preparer from the list of tax preparers 
332.2   published under this section when: 
332.3      (1) the commissioner determines that the name was included 
332.4   on the list in error; 
332.5      (2) 90 days have elapsed since the preparer has fully paid 
332.6   all fines imposed, served any suspension, and demonstrated to 
332.7   the satisfaction of the commissioner that the preparer has 
332.8   successfully completed any remedial actions required by the 
332.9   commissioner, the State Board of Accountancy, or the Lawyers 
332.10  Board of Professional Responsibility; or 
332.11     (3) the commissioner has been notified that the tax 
332.12  preparer is deceased. 
332.13     Subd. 6.  [NAMES PUBLISHED IN ERROR.] If the commissioner 
332.14  publishes a name under subdivision 1 in error, the tax preparer 
332.15  whose name was erroneously published has a right to request a 
332.16  retraction and apology.  If the tax preparer so requests, the 
332.17  commissioner shall publish a retraction and apology 
332.18  acknowledging that the tax preparer's name was published in 
332.19  error.  The retraction and apology must appear in the same 
332.20  medium and the same format as the original list that contained 
332.21  the name listed in error. 
332.22     Subd. 7.  [PAYMENT OF DAMAGES.] Actions against the 
332.23  commissioner of revenue or the state of Minnesota arising out of 
332.24  the implementation of this program must be brought under section 
332.25  270.276. 
332.26     [EFFECTIVE DATE.] The requirement of subdivision 2, 
332.27  paragraph (a), clause (2), is effective for crimes committed on 
332.28  or after August 1, 2005.  The remainder of subdivision 2 is 
332.29  effective for tax preparers engaging in conduct described in 
332.30  subdivision 2, paragraph (a), clause (1) or (3), on or after 
332.31  August 1, 2005. 
332.32     Sec. 10.  Minnesota Statutes 2004, section 270A.03, 
332.33  subdivision 5, is amended to read: 
332.34     Subd. 5.  [DEBT.] "Debt" means a legal obligation of a 
332.35  natural person to pay a fixed and certain amount of money, which 
332.36  equals or exceeds $25 and which is due and payable to a claimant 
333.1   agency.  The term includes criminal fines imposed under section 
333.2   609.10 or 609.125, fines imposed for petty misdemeanors as 
333.3   defined in section 609.02, subdivision 4a, and restitution.  The 
333.4   term also includes the co-payment for the appointment of a 
333.5   district public defender imposed under section 611.17, paragraph 
333.6   (c).  A debt may arise under a contractual or statutory 
333.7   obligation, a court order, or other legal obligation, but need 
333.8   not have been reduced to judgment.  
333.9      A debt includes any legal obligation of a current recipient 
333.10  of assistance which is based on overpayment of an assistance 
333.11  grant where that payment is based on a client waiver or an 
333.12  administrative or judicial finding of an intentional program 
333.13  violation; or where the debt is owed to a program wherein the 
333.14  debtor is not a client at the time notification is provided to 
333.15  initiate recovery under this chapter and the debtor is not a 
333.16  current recipient of food support, transitional child care, or 
333.17  transitional medical assistance. 
333.18     A debt does not include any legal obligation to pay a 
333.19  claimant agency for medical care, including hospitalization if 
333.20  the income of the debtor at the time when the medical care was 
333.21  rendered does not exceed the following amount: 
333.22     (1) for an unmarried debtor, an income of $8,800 or less; 
333.23     (2) for a debtor with one dependent, an income of $11,270 
333.24  or less; 
333.25     (3) for a debtor with two dependents, an income of $13,330 
333.26  or less; 
333.27     (4) for a debtor with three dependents, an income of 
333.28  $15,120 or less; 
333.29     (5) for a debtor with four dependents, an income of $15,950 
333.30  or less; and 
333.31     (6) for a debtor with five or more dependents, an income of 
333.32  $16,630 or less.  
333.33     The income amounts in this subdivision shall be adjusted 
333.34  for inflation for debts incurred in calendar years 2001 and 
333.35  thereafter.  The dollar amount of each income level that applied 
333.36  to debts incurred in the prior year shall be increased in the 
334.1   same manner as provided in section 1(f) of the Internal Revenue 
334.2   Code of 1986, as amended through December 31, 2000, except that 
334.3   for the purposes of this subdivision the percentage increase 
334.4   shall be determined from the year starting September 1, 1999, 
334.5   and ending August 31, 2000, as the base year for adjusting for 
334.6   inflation for debts incurred after December 31, 2000. 
334.7      Debt also includes an agreement to pay a MinnesotaCare 
334.8   premium, regardless of the dollar amount of the premium 
334.9   authorized under section 256L.15, subdivision 1a. 
334.10     Sec. 11.  Minnesota Statutes 2004, section 289A.08, 
334.11  subdivision 16, is amended to read: 
334.12     Subd. 16.  [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 
334.13  FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 
334.14  preparer," as defined in section 289A.60, subdivision 13, 
334.15  paragraph (g) (h), who prepared more than 500 100 Minnesota 
334.16  individual income tax returns for the prior calendar year must 
334.17  file all Minnesota individual income tax returns prepared for 
334.18  the current calendar year by electronic means. 
334.19     (b) For tax returns prepared for the tax year beginning in 
334.20  2001, the "500" in paragraph (a) is reduced to 250. 
334.21     (c) For tax returns prepared for tax years beginning after 
334.22  December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
334.23     (d) Paragraph (a) does not apply to a return if the 
334.24  taxpayer has indicated on the return that the taxpayer did not 
334.25  want the return filed by electronic means. 
334.26     (e) (c) For each return that is not filed electronically by 
334.27  a tax refund or return preparer under this subdivision, 
334.28  including returns filed under paragraph (d), a paper filing fee 
334.29  of $5 is imposed upon the preparer.  The fee is collected from 
334.30  the preparer in the same manner as income tax.  The fee does not 
334.31  apply to returns that the commissioner requires to be filed in 
334.32  paper form. 
334.33     Sec. 12.  Minnesota Statutes 2004, section 289A.60, 
334.34  subdivision 13, is amended to read: 
334.35     Subd. 13.  [PENALTIES FOR TAX RETURN PREPARERS.] (a) If an 
334.36  understatement of liability with respect to a return or claim 
335.1   for refund is due to a willful attempt in any manner to 
335.2   understate the liability for a tax by a person who is a tax 
335.3   return preparer with respect to the return or claim, the person 
335.4   shall pay to the commissioner a penalty of $500.  If a part of a 
335.5   property tax refund claim is excessive due to a willful attempt 
335.6   in any manner to overstate the claim for relief allowed under 
335.7   chapter 290A by a person who is a tax refund or return preparer, 
335.8   the person shall pay to the commissioner a penalty of $500 with 
335.9   respect to the claim.  These penalties may not be assessed 
335.10  against the employer of a tax return preparer unless the 
335.11  employer was actively involved in the willful attempt to 
335.12  understate the liability for a tax or to overstate the claim for 
335.13  refund.  These penalties are income tax liabilities and may be 
335.14  assessed at any time as provided in section 289A.38, subdivision 
335.15  5. 
335.16     (b) A civil action in the name of the state of Minnesota 
335.17  may be commenced to enjoin any person who is a tax return 
335.18  preparer doing business in this state from further engaging in 
335.19  any conduct described in paragraph (c).  An action under this 
335.20  paragraph must be brought by the attorney general in the 
335.21  district court for the judicial district of the tax return 
335.22  preparer's residence or principal place of business, or in which 
335.23  the taxpayer with respect to whose tax return the action is 
335.24  brought resides.  The court may exercise its jurisdiction over 
335.25  the action separate and apart from any other action brought by 
335.26  the state of Minnesota against the tax return preparer or any 
335.27  taxpayer. 
335.28     (c) In an action under paragraph (b), if the court finds 
335.29  that a tax return preparer has: 
335.30     (1) engaged in any conduct subject to a civil penalty under 
335.31  section 289A.60 or a criminal penalty under section 289A.63; 
335.32     (2) misrepresented the preparer's eligibility to practice 
335.33  before the Department of Revenue, or otherwise misrepresented 
335.34  the preparer's experience or education as a tax return preparer; 
335.35     (3) guaranteed the payment of any tax refund or the 
335.36  allowance of any tax credit; or 
336.1      (4) engaged in any other fraudulent or deceptive conduct 
336.2   that substantially interferes with the proper administration of 
336.3   state tax law, and injunctive relief is appropriate to prevent 
336.4   the recurrence of that conduct, 
336.5   the court may enjoin the person from further engaging in that 
336.6   conduct. 
336.7      (d) If the court finds that a tax return preparer has 
336.8   continually or repeatedly engaged in conduct described in 
336.9   paragraph (c), and that an injunction prohibiting that conduct 
336.10  would not be sufficient to prevent the person's interference 
336.11  with the proper administration of state tax laws, the court may 
336.12  enjoin the person from acting as a tax return preparer.  The 
336.13  court may not enjoin the employer of a tax return preparer for 
336.14  conduct described in paragraph (c) engaged in by one or more of 
336.15  the employer's employees unless the employer was also actively 
336.16  involved in that conduct. 
336.17     (e) The commissioner may terminate or suspend a tax 
336.18  preparer's authority to transmit returns electronically to the 
336.19  state, if the commissioner determines that the tax preparer has 
336.20  engaged in a pattern and practice of conduct in violation of 
336.21  this subdivision or of section 289A.63. 
336.22     (f) For purposes of this subdivision, the term 
336.23  "understatement of liability" means an understatement of the net 
336.24  amount payable with respect to a tax imposed by state tax law, 
336.25  or an overstatement of the net amount creditable or refundable 
336.26  with respect to a tax.  The determination of whether or not 
336.27  there is an understatement of liability must be made without 
336.28  regard to any administrative or judicial action involving the 
336.29  taxpayer.  For purposes of this subdivision, the amount 
336.30  determined for underpayment of estimated tax under either 
336.31  section 289A.25 or 289A.26 is not considered an understatement 
336.32  of liability. 
336.33     (f) (g) For purposes of this subdivision, the term 
336.34  "overstatement of claim" means an overstatement of the net 
336.35  amount refundable with respect to a claim for property tax 
336.36  relief provided by chapter 290A.  The determination of whether 
337.1   or not there is an overstatement of a claim must be made without 
337.2   regard to administrative or judicial action involving the 
337.3   claimant. 
337.4      (g) (h) For purposes of this section, the term "tax refund 
337.5   or return preparer" means an individual who prepares for 
337.6   compensation, or who employs one or more individuals to prepare 
337.7   for compensation, a return of tax, or a claim for refund of 
337.8   tax.  The preparation of a substantial part of a return or claim 
337.9   for refund is treated as if it were the preparation of the 
337.10  entire return or claim for refund.  An individual is not 
337.11  considered a tax return preparer merely because the individual: 
337.12     (1) gives typing, reproducing, or other mechanical 
337.13  assistance; 
337.14     (2) prepares a return or claim for refund of the employer, 
337.15  or an officer or employee of the employer, by whom the 
337.16  individual is regularly and continuously employed; 
337.17     (3) prepares a return or claim for refund of any person as 
337.18  a fiduciary for that person; or 
337.19     (4) prepares a claim for refund for a taxpayer in response 
337.20  to a tax order issued to the taxpayer. 
337.21     Sec. 13.  Minnesota Statutes 2004, section 290A.07, is 
337.22  amended by adding a subdivision to read: 
337.23     Subd. 5.  [EARLY PAYMENT; E-FILE CLAIMS.] The commissioner 
337.24  may pay a claim up to 30 days earlier than the first permitted 
337.25  date under subdivision 2a or 3 if the claim is submitted by 
337.26  electronic means. 
337.27     [EFFECTIVE DATE.] This section is effective the day 
337.28  following final enactment. 
337.29     Sec. 14.  Minnesota Statutes 2004, section 297A.61, 
337.30  subdivision 4, is amended to read: 
337.31     Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means any 
337.32  sale, lease, or rental for any purpose other than resale, 
337.33  sublease, or subrent.  
337.34     (b) A sale of property used by the owner only by leasing it 
337.35  to others or by holding it in an effort to lease it, and put to 
337.36  no use by the owner other than resale after the lease or effort 
338.1   to lease, is a sale of property for resale.  
338.2      (c) A sale of master computer software that is purchased 
338.3   and used to make copies for sale or lease is a sale of property 
338.4   for resale.  
338.5      (d) A sale of building materials, supplies, and equipment 
338.6   to owners, contractors, subcontractors, or builders for the 
338.7   erection of buildings or the alteration, repair, or improvement 
338.8   of real property is a retail sale in whatever quantity sold, 
338.9   whether the sale is for purposes of resale in the form of real 
338.10  property or otherwise.  
338.11     (e) A sale of carpeting, linoleum, or similar floor 
338.12  covering to a person who provides for installation of the floor 
338.13  covering is a retail sale and not a sale for resale since a sale 
338.14  of floor covering which includes installation is a contract for 
338.15  the improvement of real property. 
338.16     (f) A sale of shrubbery, plants, sod, trees, and similar 
338.17  items to a person who provides for installation of the items is 
338.18  a retail sale and not a sale for resale since a sale of 
338.19  shrubbery, plants, sod, trees, and similar items that includes 
338.20  installation is a contract for the improvement of real property. 
338.21     (g) A sale of tangible personal property that is awarded as 
338.22  prizes is a retail sale and is not considered a sale of property 
338.23  for resale. 
338.24     (h) A sale of tangible personal property utilized or 
338.25  employed in the furnishing or providing of services under 
338.26  subdivision 3, paragraph (g), clause (1), including, but not 
338.27  limited to, property given as promotional items, is a retail 
338.28  sale and is not considered a sale of property for resale. 
338.29     (i) A sale of tangible personal property used in conducting 
338.30  lawful gambling under chapter 349 or the state lottery under 
338.31  chapter 349A, including, but not limited to, property given as 
338.32  promotional items, is a retail sale and is not considered a sale 
338.33  of property for resale. 
338.34     (j) A sale of machines, equipment, or devices that are used 
338.35  to furnish, provide, or dispense goods or services, including, 
338.36  but not limited to, coin-operated devices, is a retail sale and 
339.1   is not considered a sale of property for resale. 
339.2      (k) In the case of a lease, a retail sale occurs (1) when 
339.3   an obligation to make a lease payment becomes due under the 
339.4   terms of the agreement or the trade practices of the lessor or 
339.5   (2) in the case of a lease of a motor vehicle, as defined in 
339.6   section 297B.01, subdivision 5, but excluding vehicles with a 
339.7   manufacturer's gross vehicle weight rating greater than 10,000 
339.8   pounds and rentals of vehicles for not more than 28 days, at the 
339.9   time the lease is executed. 
339.10     (l) In the case of a conditional sales contract, a retail 
339.11  sale occurs upon the transfer of title or possession of the 
339.12  tangible personal property. 
339.13     [EFFECTIVE DATE.] This section is effective for leases 
339.14  entered into after September 30, 2005. 
339.15     Sec. 15.  Minnesota Statutes 2004, section 297A.67, is 
339.16  amended by adding a subdivision to read: 
339.17     Subd. 32.  [CIGARETTES.] Cigarettes upon which a tax has 
339.18  been imposed under section 297F.25 are exempt. 
339.19     [EFFECTIVE DATE.] This section is effective for sales and 
339.20  purchases made after July 31, 2005. 
339.21     Sec. 16.  [297A.825] [MOTOR VEHICLE LEASES.] 
339.22     Subdivision 1.  [MOTOR VEHICLE LEASE PRICE; PAYMENT.] (a) 
339.23  In the case of a lease of a motor vehicle as provided in section 
339.24  297A.61, subdivision 4, paragraph (k), clause (2), the tax is 
339.25  imposed on the total amount to be paid by the lessee under the 
339.26  lease agreement.  The lessor shall collect the tax in full at 
339.27  the time the lease is executed or, if the tax is included in the 
339.28  lease and the lease is assigned, the tax is due from the 
339.29  original lessor at the time the lease is assigned.  The total 
339.30  amount to be paid by the lessee under the lease agreement equals 
339.31  the agreed-upon value of the vehicle less manufacturer's 
339.32  rebates, the stated residual value of the leased vehicle, and 
339.33  the total value allowed for a vehicle owned by the lessee taken 
339.34  in trade by the lessor, plus the price of any taxable goods and 
339.35  services included in the lease and the rent charge as provided 
339.36  by Code of Federal Regulations, title 12, section 213.4, 
340.1   excluding any rent charge related to the capitalization of the 
340.2   tax. 
340.3      (b) If the total amount paid by the lessee for use of the 
340.4   leased vehicle includes amounts that are not calculated at the 
340.5   time the lease is executed, the tax is imposed and must be 
340.6   collected by the lessor at the time the amounts are paid by the 
340.7   lessee.  In the case of a lease which by its terms may be 
340.8   renewed, the sales tax is due and payable on the total amount to 
340.9   be paid during the initial term of the lease, and then for each 
340.10  subsequent renewal period on the total amount to be paid during 
340.11  the renewal period. 
340.12     (c) If a lease is canceled or rescinded on or before 90 
340.13  days of its execution or if a vehicle is returned to the 
340.14  manufacturer under section 325F.665, the lessor may file a claim 
340.15  for a refund of the total tax paid minus the amount of tax due 
340.16  for the period the vehicle is used by the lessee. 
340.17     (d) If a lessee's obligation to make payments on a lease is 
340.18  canceled more than 90 days after its execution, a credit is 
340.19  allowed against sales tax or motor vehicle sales tax due on a 
340.20  subsequent lease or purchase of a motor vehicle if that lease or 
340.21  purchase is consummated within 30 days of the date the prior 
340.22  lease was canceled.  The amount of the credit shall be equal to 
340.23  (1) the sales tax paid at the inception of the lease, multiplied 
340.24  by (2) the ratio of the number of full months remaining in the 
340.25  lease at the time of termination compared to the term of the 
340.26  lease used in calculating sales tax paid at the inception of the 
340.27  lease. 
340.28     Subd. 2.  [LEASE OF MOTOR VEHICLES.] When the lease of a 
340.29  motor vehicle as defined in section 297A.61, subdivision 4, 
340.30  paragraph (k), clause (2), originates in another state, the 
340.31  sales tax under subdivision 1 shall be calculated by the lessor 
340.32  on the total amount that is due under the lease agreement after 
340.33  the vehicle is required to be registered in Minnesota.  If the 
340.34  total amount to be paid by the lessee under the lease agreement 
340.35  has already been subjected to tax by another state, a credit for 
340.36  taxes paid in the other state is allowed as provided in section 
341.1   297A.80. 
341.2      [EFFECTIVE DATE.] Subdivision 1 of this section is 
341.3   effective for leases entered into after September 30, 2005.  
341.4   Subdivision 2 of this section is effective for vehicles 
341.5   registering in Minnesota after September 30, 2005. 
341.6      Sec. 17.  Minnesota Statutes 2004, section 297F.01, is 
341.7   amended by adding a subdivision to read: 
341.8      Subd. 10a.  [OUT-OF-STATE RETAILER.] "Out-of-state retailer"
341.9   means a person engaged outside of this state in the business of 
341.10  selling, or offering to sell, cigarettes or tobacco products to 
341.11  consumers located in this state. 
341.12     [EFFECTIVE DATE.] This section is effective the day 
341.13  following final enactment. 
341.14     Sec. 18.  [297F.031] [REGISTRATION REQUIREMENT.] 
341.15     Prior to making delivery sales or shipping cigarettes or 
341.16  tobacco products in connection with any sales, an out-of-state 
341.17  retailer shall file with the Department of Revenue a statement 
341.18  setting forth the out-of-state retailer's name, trade name, and 
341.19  the address of the out-of-state retailer's principal place of 
341.20  business and any other place of business. 
341.21     Sec. 19.  Minnesota Statutes 2004, section 297F.09, is 
341.22  amended by adding a subdivision to read: 
341.23     Subd. 4a.  [REPORTING REQUIREMENTS.] No later than the 18th 
341.24  day of each calendar month, an out-of-state retailer that has 
341.25  made a delivery of cigarettes or tobacco products or shipped or 
341.26  delivered cigarettes or tobacco products into the state in a 
341.27  delivery sale in the previous calendar month shall file with the 
341.28  Department of Revenue reports in the form and in the manner 
341.29  prescribed by the commissioner of revenue that provides for each 
341.30  delivery sale, the name and address of the purchaser and the 
341.31  brand or brands and quantity of cigarettes or tobacco products 
341.32  sold.  A tobacco retailer that meets the requirements of United 
341.33  States Code, title 15, section 375 et seq. satisfies the 
341.34  requirements of this subdivision. 
341.35     Sec. 20.  Minnesota Statutes 2004, section 297F.14, 
341.36  subdivision 4, is amended to read: 
342.1      Subd. 4.  [BAD DEBT.] The commissioner may adopt rules 
342.2   providing a refund of the tax paid under this chapter if the tax 
342.3   paid qualifies as a bad debt under section 166(a) of the 
342.4   Internal Revenue Code.  For any reporting period, a taxpayer may 
342.5   offset against taxes payable under this chapter the amount of 
342.6   taxes previously paid under this chapter that is attributable to 
342.7   a bad debt.  The taxes must have been included in a transaction 
342.8   the consideration for which was a debt owed to the taxpayer and 
342.9   which became uncollectible, but only in proportion to the 
342.10  portion of debt that became uncollectible.  To qualify for 
342.11  offset under this subdivision, the debt must have qualified as a 
342.12  bad debt under section 166(a) of the Internal Revenue Code.  The 
342.13  taxpayer may claim the offset within the time period prescribed 
342.14  in section 297F.17, subdivision 6.  If the taxpayer is no longer 
342.15  liable for taxes imposed under this chapter, the commissioner 
342.16  shall refund to the taxpayer the amount of the taxes 
342.17  attributable to the bad debt.  Any recovery of the tax claimed 
342.18  as a refund or credit must be reported to the commissioner on 
342.19  the tax return for the month in which the recovery is made.  If 
342.20  the taxpayer is no longer required to file returns under this 
342.21  chapter, the taxpayer must reimburse the commissioner for tax 
342.22  recovered in the month following the recovery. 
342.23     [EFFECTIVE DATE.] This section is effective for claims 
342.24  filed on or after July 1, 2005. 
342.25     Sec. 21.  [297F.25] [CIGARETTE SALES TAX.] 
342.26     Subdivision 1.  [IMPOSITION.] A tax is imposed on 
342.27  distributors on the sale of cigarettes by a cigarette 
342.28  distributor to a retailer or cigarette subjobber for resale in 
342.29  this state.  The tax is equal to 6.5 percent of the weighted 
342.30  average retail price.  The weighted average retail price must be 
342.31  expressed in cents per pack when rounded to the nearest 
342.32  one-tenth of a cent.  The weighted average retail price must be 
342.33  determined annually, with new rates published by May 1, and 
342.34  effective for sales on or after July 1.  The weighted average 
342.35  retail price must be established by surveying cigarette 
342.36  retailers statewide in a manner and time determined by the 
343.1   commissioner.  The determination of the commissioner pursuant to 
343.2   this subdivision is not a "rule" and is not subject to the 
343.3   Administrative Procedure Act contained in chapter 14.  As of 
343.4   August 1, 2005, the tax is 21 cents per pack of 20 cigarettes.  
343.5   For packs of cigarettes with other than 20 cigarettes, the tax 
343.6   must be adjusted proportionally. 
343.7      Subd. 2.  [PAYMENT.] Each taxpayer must remit payments of 
343.8   the taxes to the commissioner on the same dates prescribed under 
343.9   section 297F.09, subdivision 1, for cigarette tax returns, 
343.10  including the accelerated remittance of the June liability. 
343.11     Subd. 3.  [RETURN.] A taxpayer must file a return with the 
343.12  commissioner on the same dates prescribed under section 297F.09, 
343.13  subdivision 1, for cigarette tax returns.  Notwithstanding any 
343.14  other provisions of this chapter, the tax due on the return is 
343.15  based upon actual stamps purchased during the reporting period. 
343.16     Subd. 4.  [FORM OF RETURN.] The return must contain the 
343.17  information and be in the form prescribed by the commissioner. 
343.18     Subd. 5.  [TAX AS DEBT.] The tax that is required to be 
343.19  paid by the distributor is a debt from the retailer or cigarette 
343.20  subjobber to the distributor recoverable at law in the same 
343.21  manner as other debts.  A cigarette retailer or subjobber must 
343.22  pay the tax imposed under subdivision 1 to the distributor 
343.23  before the 12th day of the month following the month in which 
343.24  the cigarettes were purchased from the distributor. 
343.25     Subd. 6.  [SALES TAX STAMP.] Payment of the tax imposed 
343.26  under section 297F.05 and by this section must be evidenced by a 
343.27  dual-purpose single stamp affixed to each package. 
343.28     Subd. 7.  [ADMINISTRATION.] The stamping, audit, 
343.29  assessment, interest, penalty, appeal, refund, and collection 
343.30  provisions applicable to the taxes imposed under this chapter 
343.31  apply to taxes imposed under this section. 
343.32     Subd. 8.  [DEPOSIT OF REVENUES.] Notwithstanding the 
343.33  provisions of section 297F.10, the commissioner shall deposit 
343.34  all revenues, including penalties and interest, derived from the 
343.35  tax imposed by this section, in the general fund. 
343.36     [EFFECTIVE DATE.] This section is effective for all sales 
344.1   made on or after August 1, 2005. 
344.2      Sec. 22.  Minnesota Statutes 2004, section 297I.05, 
344.3   subdivision 4, is amended to read: 
344.4      Subd. 4.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
344.5   TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 
344.6   tax is imposed on mutual insurance companies that sell both 
344.7   property and casualty companies insurance that had total assets 
344.8   greater than $5,000,000 at the end of the calendar year but that 
344.9   had total assets less than $1,600,000,000 on December 31, 1989.  
344.10  The rate of tax is equal to: 
344.11     (1) two percent of gross premiums less return premiums on 
344.12  all direct business received by the insurer or agents of the 
344.13  insurer in Minnesota for life insurance, in cash or otherwise, 
344.14  during the year; and 
344.15     (2) 1.26 percent of gross premiums less return premiums on 
344.16  all other direct business received by the insurer or agents of 
344.17  the insurer in Minnesota, in cash or otherwise, during the year, 
344.18  except for life insurance as provided in subdivision 14. 
344.19     [EFFECTIVE DATE.] This section is effective for premiums 
344.20  received after December 31, 2005. 
344.21     Sec. 23.  Minnesota Statutes 2004, section 297I.05, is 
344.22  amended by adding a subdivision to read: 
344.23     Subd. 14.  [LIFE INSURANCE.] A tax is imposed on life 
344.24  insurance.  The rate of tax equals 1.50 percent of gross 
344.25  premiums less return premiums on all direct business received by 
344.26  the insurer or agents of the insurer in Minnesota for life 
344.27  insurance, in cash or otherwise, during the year. 
344.28     [EFFECTIVE DATE.] This section is effective for premiums 
344.29  received after December 31, 2005. 
344.30     Sec. 24.  [325D.125] [EMPLOYERS NOT TO MISREPRESENT STATUS 
344.31  OF EMPLOYEES.] 
344.32     Subdivision 1.  [MISREPRESENTATION PROHIBITED.] No employer 
344.33  shall misrepresent the nature of its employment relationship 
344.34  with its employees to any federal, state, or local government 
344.35  unit, to other employers or to its employees.  An employer 
344.36  misrepresents the nature of its employment relationship with its 
345.1   employees if it makes any statement regarding the nature of the 
345.2   relationship that the employer does not in good faith believe to 
345.3   be true or if it fails to report individuals as employees when 
345.4   legally required to do so. 
345.5      Subd. 2.  [EMPLOYEE COERCION PROHIBITED.] No employer shall 
345.6   require or request any employee to enter into any agreement, or 
345.7   sign any document, that results in misclassification of the 
345.8   employee as an independent contractor or otherwise does not 
345.9   accurately reflect the employment relationship with the employer.
345.10     Subd. 3.  [VIOLATIONS.] Any court finding any person guilty 
345.11  of violating this section shall transmit a copy of the 
345.12  documentation of the finding of guilt to the commissioner of 
345.13  labor and industry.  The commissioner of labor and industry 
345.14  shall report the finding of guilt to relevant state and federal 
345.15  agencies, including at least the commissioner of commerce, the 
345.16  commissioner of economic security, the commissioner of revenue, 
345.17  the federal Internal Revenue Service, and the United States 
345.18  Department of Labor. 
345.19     [EFFECTIVE DATE.] This section is effective the day 
345.20  following final enactment. 
345.21     Sec. 25.  [325F.781] [REQUIREMENTS; TOBACCO PRODUCT 
345.22  DELIVERY SALES.] 
345.23     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
345.24  section, the following terms have the meanings given, unless the 
345.25  language or context clearly provides otherwise. 
345.26     (b) "Consumer" means an individual who purchases, receives, 
345.27  or possesses tobacco products for personal consumption and not 
345.28  for resale. 
345.29     (c) "Delivery sale" means: 
345.30     (1) a sale of tobacco products to a consumer in this state 
345.31  when: 
345.32     (i) the purchaser submits the order for the sale by means 
345.33  of a telephonic or other method of voice transmission, the mail 
345.34  or any other delivery service, or the Internet or other on-line 
345.35  service; or 
345.36     (ii) the tobacco products are delivered by use of the mail 
346.1   or other delivery service; or 
346.2      (2) a sale of tobacco products that satisfies the criteria 
346.3   in clause (1), item (i), regardless of whether the seller is 
346.4   located inside or outside of the state. 
346.5      A sale of tobacco products to an individual in this state 
346.6   must be treated as a sale to a consumer, unless the individual 
346.7   is licensed as a distributor or retailer of tobacco products. 
346.8      (d) "Delivery service" means a person, including the United 
346.9   States Postal Service, that is engaged in the commercial 
346.10  delivery of letters, packages, or other containers. 
346.11     (e) "Distributor" means a person, whether located inside or 
346.12  outside of this state, other than a retailer, who sells or 
346.13  distributes tobacco products in the state.  Distributor does not 
346.14  include a tobacco products manufacturer, export warehouse 
346.15  proprietor, or importer with a valid permit under United States 
346.16  Code, title 26, section 5712 (1997), if the person sells or 
346.17  distributes tobacco products in this state only to distributors 
346.18  who hold valid and current licenses under the laws of a state, 
346.19  or to an export warehouse proprietor or another manufacturer.  
346.20  Distributor does not include a common or contract carrier that 
346.21  is transporting tobacco products under a proper bill of lading 
346.22  or freight bill that states the quantity, source, and 
346.23  destination of tobacco products, or a person who ships tobacco 
346.24  products through this state by common or contract carrier under 
346.25  a bill of lading or freight bill. 
346.26     (f) "Retailer" means a person, whether located inside or 
346.27  outside this state, who sells or distributes tobacco products to 
346.28  a consumer in this state. 
346.29     (g) "Tobacco products" means: 
346.30     (1) cigarettes, as defined in section 297F.01, subdivision 
346.31  3; and 
346.32     (2) smokeless tobacco as defined in section 325F.76. 
346.33     Subd. 2.  [REQUIREMENTS FOR ACCEPTING ORDER FOR DELIVERY 
346.34  SALE.] (a) This subdivision applies to acceptance of an order 
346.35  for a delivery sale of tobacco products. 
346.36     (b) When accepting the first order for a delivery sale from 
347.1   a consumer, the tobacco retailer shall obtain the following 
347.2   information from the person placing the order: 
347.3      (1) a copy of a valid government-issued document that 
347.4   provides the person's name, current address, photograph, and 
347.5   date of birth; and 
347.6      (2) an original written statement signed by the person 
347.7   documenting that the person: 
347.8      (i) is of legal age to purchase tobacco products in the 
347.9   state; 
347.10     (ii) has made a choice whether to receive mailings from a 
347.11  tobacco retailer; 
347.12     (iii) understands that providing false information may be a 
347.13  violation of law; and 
347.14     (iv) understands that it is a violation of law to purchase 
347.15  tobacco products for subsequent resale or for delivery to 
347.16  persons who are under the legal age to purchase tobacco products.
347.17     (c) If an order is made as a result of advertisement over 
347.18  the Internet, the tobacco retailer shall request the e-mail 
347.19  address of the purchaser and shall receive payment by credit 
347.20  card or check prior to shipping. 
347.21     (d) Prior to shipping the tobacco products, the tobacco 
347.22  retailer shall verify the information provided under paragraph 
347.23  (b) against a commercially available database.  Any such 
347.24  database or databases may also include age and identity 
347.25  information from other government or validated commercial 
347.26  sources, if that additional information is regularly used by 
347.27  government and businesses for the purpose of identity 
347.28  verification and authentication, and if the additional 
347.29  information is used only to supplement and not to replace the 
347.30  government-issued identification data in the age and identity 
347.31  verification process. 
347.32     Subd. 3.  [REQUIREMENTS FOR SHIPPING A DELIVERY SALE.] (a) 
347.33  This subdivision applies to a tobacco retailer shipping tobacco 
347.34  products pursuant to a delivery sale. 
347.35     (b) The tobacco retailer shall clearly mark the outside of 
347.36  the package of tobacco products to be shipped "tobacco products -
348.1   adult signature required" and to show the name of the tobacco 
348.2   retailer. 
348.3      (c) The tobacco retailer shall utilize a delivery service 
348.4   that imposes the following requirements: 
348.5      (1) an adult must sign for the delivery; and 
348.6      (2) the person signing for the delivery must show valid 
348.7   government-issued identification that contains a photograph of 
348.8   the person signing for the delivery and indicates that the 
348.9   person signing for the delivery is of legal age to purchase 
348.10  tobacco products and resides at the delivery address. 
348.11     (d) The retailer must provide delivery instructions that 
348.12  clearly indicate the requirements of this subdivision and must 
348.13  declare that state law requires compliance with the requirements.
348.14     (e) No criminal penalty may be imposed on a person for a 
348.15  violation of this section other than a violation described in 
348.16  paragraph (f) or (g).  Whenever it appears to the commissioner 
348.17  that any person has engaged in any act or practice constituting 
348.18  a violation of this section, and the violation is not within two 
348.19  years of any previous violation of this section, the 
348.20  commissioner shall issue and cause to be served upon the person 
348.21  an order requiring the person to cease and desist from violating 
348.22  this section.  The order must give reasonable notice of the 
348.23  rights of the person to request a hearing and must state the 
348.24  reason for the entry of the order.  Unless otherwise agreed 
348.25  between the parties, a hearing shall be held not later than 
348.26  seven days after the request for the hearing is received by the 
348.27  commissioner after which and within 20 days after the receipt of 
348.28  the administrative law judge's report and subsequent exceptions 
348.29  and argument, the commissioner shall issue an order vacating the 
348.30  cease and desist order, modifying it, or making it permanent as 
348.31  the facts require.  If no hearing is requested within 30 days of 
348.32  the service of the order, the order becomes final and remains in 
348.33  effect until modified or vacated by the commissioner.  All 
348.34  hearings shall be conducted in accordance with the provisions of 
348.35  chapter 14.  If the person to whom a cease and desist order is 
348.36  issued fails to appear at the hearing after being duly notified, 
349.1   the person shall be deemed in default, and the proceeding may be 
349.2   determined against the person upon consideration of the cease 
349.3   and desist order, the allegations of which may be deemed to be 
349.4   true. 
349.5      (f) Any person who violates this section within two years 
349.6   of a violation for which a cease and desist order was issued 
349.7   under paragraph (e), is guilty of a misdemeanor. 
349.8      (g) Any person who commits a third or subsequent violation 
349.9   of this section, including a violation for which a cease and 
349.10  desist order was issued under paragraph (c), within any 
349.11  subsequent two-year period is guilty of a gross misdemeanor. 
349.12     Subd. 4.  [COMMON CARRIERS.] This section may not be 
349.13  construed as imposing liability upon any common carrier, or 
349.14  officers or employees of the common carrier, when acting within 
349.15  the scope of business of the common carrier. 
349.16     Subd. 5.  [REGISTRATION REQUIREMENT.] Prior to making 
349.17  delivery sales or shipping tobacco products in connection with 
349.18  any sales, an out-of-state retailer must meet the requirements 
349.19  of section 297F.031. 
349.20     Subd. 6.  [COLLECTION OF TAXES.] (a) Prior to shipping any 
349.21  tobacco products to a purchaser in this state, the out-of-state 
349.22  retailer shall comply with all requirements of chapter 297F and 
349.23  shall ensure that all state excise taxes and fees that apply to 
349.24  such tobacco products have been collected and paid to the state 
349.25  and that all related state excise tax stamps or other indicators 
349.26  of state excise tax payment have been properly affixed to those 
349.27  tobacco products. 
349.28     (b) In addition to any penalties under chapter 297F, a 
349.29  distributor who fails to pay any tax due according to paragraph 
349.30  (a) shall pay, in addition to any other penalty, a penalty of 50 
349.31  percent of the tax due but unpaid. 
349.32     Subd. 7.  [APPLICATION OF STATE LAWS.] All state laws that 
349.33  apply to in-state tobacco product retailers shall apply to 
349.34  Internet and mail-order sellers that sell into this state. 
349.35     Subd. 8.  [FORFEITURE.] Any tobacco product sold or 
349.36  attempted to be sold in a delivery sale that does not meet the 
350.1   requirements of this section is deemed to be contraband and is 
350.2   subject to forfeiture in the same manner as and in accordance 
350.3   with the provisions of section 297F.21. 
350.4      Subd. 9.  [CIVIL PENALTIES.] A tobacco retailer or 
350.5   distributor who violates this section or rules adopted under 
350.6   this section is subject to the following fines: 
350.7      (1) for the first violation, a fine of not more than 
350.8   $1,000; and 
350.9      (2) for the second and any subsequent violation, a fine of 
350.10  not more than $5,000. 
350.11     Subd. 10.  [ENFORCEMENT.] The attorney general may bring an 
350.12  action to enforce this section and may seek injunctive relief, 
350.13  including a preliminary or final injunction, and fines, 
350.14  penalties, and equitable relief and may seek to prevent or 
350.15  restrain actions in violation of this section by any person or 
350.16  any person controlling such person.  In addition, a violation of 
350.17  this section is a violation of the Unlawful Trade Practices Act, 
350.18  sections 325D.09 to 325D.16. 
350.19     [EFFECTIVE DATE.] This section is effective the day 
350.20  following final enactment. 
350.21     Sec. 26.  Minnesota Statutes 2004, section 366.011, is 
350.22  amended to read: 
350.23     366.011 [CHARGES FOR EMERGENCY SERVICES; COLLECTION.] 
350.24     A town may impose a reasonable service charge for emergency 
350.25  services, including fire, rescue, medical, and related services 
350.26  provided by the town or contracted for by the town.  If the 
350.27  service charge remains unpaid 30 days after a notice of 
350.28  delinquency is sent to the recipient of the service or the 
350.29  recipient's representative or estate, the town or its contractor 
350.30  on behalf of the town may use any lawful means allowed to a 
350.31  private party for the collection of an unsecured delinquent 
350.32  debt.  The town may also use the authority of section 366.012 to 
350.33  collect unpaid service charges of this kind from delinquent 
350.34  recipients of services who are owners of taxable real property 
350.35  in the town state. 
350.36     The powers conferred by this section are in addition and 
351.1   supplemental to the powers conferred by any other law for a town 
351.2   to impose a service charge or assessment for a service provided 
351.3   by the town or contracted for by the town. 
351.4      Sec. 27.  Minnesota Statutes 2004, section 366.012, is 
351.5   amended to read: 
351.6      366.012 [COLLECTION OF UNPAID SERVICE CHARGES.] 
351.7      If a town is authorized to impose a service charge on the 
351.8   owner, lessee, or occupant of property, or any of them, for a 
351.9   governmental service provided by the town, the town board may 
351.10  certify to the county auditor of the county in which the 
351.11  recipient of the services owns real property, on or before 
351.12  October 15 for each year, any unpaid service charges which shall 
351.13  then be collected together with property taxes levied against 
351.14  the property.  The county auditor shall remit to the town all 
351.15  service charges collected by the auditor on behalf of the town.  
351.16  A charge may be certified to the auditor only if, on or before 
351.17  September 15, the town has given written notice to the property 
351.18  owner of its intention to certify the charge to the auditor.  
351.19  The service charges shall be subject to the same penalties, 
351.20  interest, and other conditions provided for the collection of 
351.21  property taxes.  This section is in addition to other law 
351.22  authorizing the collection of unpaid costs and service charges. 
351.23     Sec. 28.  [COMPACTS; RETALIATORY TAXES.] 
351.24     The commissioner of revenue may enter into compact 
351.25  agreements with other states for the purpose of eliminating 
351.26  retaliatory insurance premiums tax provisions between this state 
351.27  and other states.  The commissioner shall report to the 
351.28  chairpersons of the house and senate tax committees, on or 
351.29  before February 1, 2006, on the actions the commissioner has 
351.30  taken to enter into compact agreements with other states. 
351.31     Sec. 29.  [FLOOR STOCKS TAX.] 
351.32     Subdivision 1.  [CIGARETTES.] A floor stocks cigarette 
351.33  sales tax is imposed on every person engaged in the business in 
351.34  this state as a distributor, retailer, subjobber, vendor, 
351.35  manufacturer, or manufacturer's representative of cigarettes, on 
351.36  the stamped cigarettes and unaffixed stamps in the person's 
352.1   possession or under the person's control at 12:01 a.m. on August 
352.2   1, 2005.  The tax is imposed at the rate of 21 cents per pack of 
352.3   20 cigarettes.  For packs of cigarettes with other than 20 
352.4   cigarettes, the tax shall be adjusted proportionally. 
352.5      Each distributor, by August 10, 2005, shall file a return 
352.6   with the commissioner, in the form the commissioner prescribes, 
352.7   showing the stamped cigarettes and unaffixed stamps on hand at 
352.8   12:01 a.m. on August 1, 2005, and the amount of tax due on the 
352.9   cigarettes and unaffixed stamps.  The tax imposed by this 
352.10  section is due and payable by September 7, 2005, and after that 
352.11  date bears interest at the rate of one percent a month. 
352.12     Each retailer, subjobber, vendor, manufacturer, or 
352.13  manufacturer's representative, by August 10, 2005, shall file a 
352.14  return with the commissioner, in the form the commissioner 
352.15  prescribes, showing the cigarettes on hand at 12:01 a.m. on 
352.16  August 1, 2005, and the amount of tax due on the cigarettes.  
352.17  The tax imposed by this section is due and payable by September 
352.18  7, 2005, and after that date bears interest at the rate of one 
352.19  percent a month. 
352.20     Subd. 2.  [AUDIT AND ENFORCEMENT.] The tax imposed by this 
352.21  section is subject to the audit, assessment, penalty, and 
352.22  collection provisions applicable to the taxes imposed under 
352.23  Minnesota Statutes, chapter 297F.  The commissioner may require 
352.24  a distributor to receive and maintain copies of floor stocks tax 
352.25  returns filed by all persons requesting a credit for returned 
352.26  cigarettes. 
352.27     Subd. 3.  [DEPOSIT OF PROCEEDS.] The revenue from the tax 
352.28  imposed under this section shall be deposited by the 
352.29  commissioner in the state treasury and credited to the general 
352.30  fund. 
352.31     [EFFECTIVE DATE.] This section is effective August 1, 2005. 
352.32                             ARTICLE 13 
352.33                       DEPARTMENT OF REVENUE
352.34       INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES - SF1683
352.35     Section 1.  Minnesota Statutes 2004, section 289A.08, 
352.36  subdivision 3, is amended to read: 
353.1      Subd. 3.  [CORPORATIONS.] A corporation that is subject to 
353.2   the state's jurisdiction to tax under section 290.014, 
353.3   subdivision 5, must file a return, except that a foreign 
353.4   operating corporation as defined in section 290.01, subdivision 
353.5   6b, is not required to file a return.  The commissioner shall 
353.6   adopt rules for the filing of one return on behalf of the 
353.7   members of an affiliated group of corporations that are required 
353.8   to file a combined report.  All members of an affiliated group 
353.9   that are required to file a combined report must file one return 
353.10  on behalf of the members of the group under rules adopted by the 
353.11  commissioner.  If a corporation claims on a return that it has 
353.12  paid tax in excess of the amount of taxes lawfully due, that 
353.13  corporation may include on that return information necessary for 
353.14  payment of the tax in excess of the amount lawfully due by 
353.15  electronic means. 
353.16     [EFFECTIVE DATE.] This section is effective for returns 
353.17  filed after December 31, 2005. 
353.18     Sec. 2.  Minnesota Statutes 2004, section 289A.08, 
353.19  subdivision 7, is amended to read: 
353.20     Subd. 7.  [COMPOSITE INCOME TAX RETURNS FOR NONRESIDENT 
353.21  PARTNERS, SHAREHOLDERS, AND BENEFICIARIES.] (a) The commissioner 
353.22  may allow a partnership with nonresident partners to file a 
353.23  composite return and to pay the tax on behalf of nonresident 
353.24  partners who have no other Minnesota source income.  This 
353.25  composite return must include the names, addresses, Social 
353.26  Security numbers, income allocation, and tax liability for the 
353.27  nonresident partners electing to be covered by the composite 
353.28  return.  
353.29     (b) The computation of a partner's tax liability must be 
353.30  determined by multiplying the income allocated to that partner 
353.31  by the highest rate used to determine the tax liability for 
353.32  individuals under section 290.06, subdivision 2c.  Nonbusiness 
353.33  deductions, standard deductions, or personal exemptions are not 
353.34  allowed. 
353.35     (c) The partnership must submit a request to use this 
353.36  composite return filing method for nonresident partners.  The 
354.1   requesting partnership must file a composite return in the form 
354.2   prescribed by the commissioner of revenue.  The filing of a 
354.3   composite return is considered a request to use the composite 
354.4   return filing method. 
354.5      (d) The electing partner must not have any Minnesota source 
354.6   income other than the income from the partnership and other 
354.7   electing partnerships.  If it is determined that the electing 
354.8   partner has other Minnesota source income, the inclusion of the 
354.9   income and tax liability for that partner under this provision 
354.10  will not constitute a return to satisfy the requirements of 
354.11  subdivision 1.  The tax paid for the individual as part of the 
354.12  composite return is allowed as a payment of the tax by the 
354.13  individual on the date on which the composite return payment was 
354.14  made.  If the electing nonresident partner has no other 
354.15  Minnesota source income, filing of the composite return is a 
354.16  return for purposes of subdivision 1. 
354.17     (e) This subdivision does not negate the requirement that 
354.18  an individual pay estimated tax if the individual's liability 
354.19  would exceed the requirements set forth in section 289A.25.  A 
354.20  composite estimate may, however, be filed in a manner similar to 
354.21  and containing the information required under paragraph (a). 
354.22     (f) If an electing partner's share of the partnership's 
354.23  gross income from Minnesota sources is less than the filing 
354.24  requirements for a nonresident under this subdivision, the tax 
354.25  liability is zero.  However, a statement showing the partner's 
354.26  share of gross income must be included as part of the composite 
354.27  return. 
354.28     (g) The election provided in this subdivision is not only 
354.29  available to any a partner other than who has no other Minnesota 
354.30  source income and who is either (1) a full-year nonresident 
354.31  individual who has no other Minnesota source income or (2) a 
354.32  trust or estate that does not claim a deduction under either 
354.33  section 651 or 661 of the Internal Revenue Code. 
354.34     (h) A corporation defined in section 290.9725 and its 
354.35  nonresident shareholders may make an election under this 
354.36  paragraph.  The provisions covering the partnership apply to the 
355.1   corporation and the provisions applying to the partner apply to 
355.2   the shareholder. 
355.3      (i) Estates and trusts distributing current income only and 
355.4   the nonresident individual beneficiaries of the estates or 
355.5   trusts may make an election under this paragraph.  The 
355.6   provisions covering the partnership apply to the estate or 
355.7   trust.  The provisions applying to the partner apply to the 
355.8   beneficiary.  
355.9      (j) For the purposes of this subdivision, "income" means 
355.10  the partner's share of federal adjusted gross income from the 
355.11  partnership modified by the additions provided in section 
355.12  290.01, subdivision 19a, clauses (6) and (7), and the 
355.13  subtractions provided in section 290.01, subdivision 19b, clause 
355.14  (11), to the extent the amount is assignable or allocable to 
355.15  Minnesota under section 290.17.  The subtraction allowed under 
355.16  section 290.01, subdivision 19b, clause (11), is only allowed on 
355.17  the composite tax computation to the extent the electing partner 
355.18  would have been allowed the subtraction. 
355.19     [EFFECTIVE DATE.] This section is effective for tax years 
355.20  beginning after December 31, 2004. 
355.21     Sec. 3.  Minnesota Statutes 2004, section 289A.18, 
355.22  subdivision 1, is amended to read: 
355.23     Subdivision 1.  [INDIVIDUAL INCOME, FIDUCIARY INCOME, 
355.24  CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES; PARTNERSHIP AND S 
355.25  CORPORATION RETURNS; INFORMATION RETURNS; MINING COMPANY 
355.26  RETURNS.] The returns required to be made under sections 289A.08 
355.27  and 289A.12 must be filed at the following times: 
355.28     (1) returns made on the basis of the calendar year must be 
355.29  filed on April 15 following the close of the calendar year, 
355.30  except that returns of corporations must be filed on March 15 
355.31  following the close of the calendar year; 
355.32     (2) returns made on the basis of the fiscal year must be 
355.33  filed on the 15th day of the fourth month following the close of 
355.34  the fiscal year, except that returns of corporations must be 
355.35  filed on the 15th day of the third month following the close of 
355.36  the fiscal year; 
356.1      (3) returns for a fractional part of a year must be filed 
356.2   on the 15th day of the fourth month following the end of the 
356.3   month in which falls the last day of the period for which the 
356.4   return is made, except that the returns of corporations must be 
356.5   filed on the 15th day of the third month following the end of 
356.6   the month tax year of the unitary group in which falls the last 
356.7   day of the period for which the return is made; 
356.8      (4) in the case of a final return of a decedent for a 
356.9   fractional part of a year, the return must be filed on the 15th 
356.10  day of the fourth month following the close of the 12-month 
356.11  period that began with the first day of that fractional part of 
356.12  a year; 
356.13     (5) in the case of the return of a cooperative association, 
356.14  returns must be filed on or before the 15th day of the ninth 
356.15  month following the close of the taxable year; 
356.16     (6) if a corporation has been divested from a unitary group 
356.17  and files a return for a fractional part of a year in which it 
356.18  was a member of a unitary business that files a combined report 
356.19  under section 290.34, subdivision 2, the divested corporation's 
356.20  return must be filed on the 15th day of the third month 
356.21  following the close of the common accounting period that 
356.22  includes the fractional year; 
356.23     (7) returns of entertainment entities must be filed on 
356.24  April 15 following the close of the calendar year; 
356.25     (8) returns required to be filed under section 289A.08, 
356.26  subdivision 4, must be filed on the 15th day of the fifth month 
356.27  following the close of the taxable year; 
356.28     (9) returns of mining companies must be filed on May 1 
356.29  following the close of the calendar year; and 
356.30     (10) returns required to be filed with the commissioner 
356.31  under section 289A.12, subdivision 2, 4 to 10, or 14, must be 
356.32  filed within 30 days after being demanded by the commissioner. 
356.33     [EFFECTIVE DATE.] This section is effective for fractional 
356.34  years closing after December 31, 2004. 
356.35     Sec. 4.  Minnesota Statutes 2004, section 289A.38, 
356.36  subdivision 7, is amended to read: 
357.1      Subd. 7.  [FEDERAL TAX CHANGES.] If the amount of income, 
357.2   items of tax preference, deductions, or credits for any year of 
357.3   a taxpayer as reported to the Internal Revenue Service is 
357.4   changed or corrected by the commissioner of Internal Revenue or 
357.5   other officer of the United States or other competent authority, 
357.6   or where a renegotiation of a contract or subcontract with the 
357.7   United States results in a change in income, items of tax 
357.8   preference, deductions, credits, or withholding tax, or, in the 
357.9   case of estate tax, where there are adjustments to the taxable 
357.10  estate resulting in a change to the credit for state death 
357.11  taxes, the taxpayer shall report the change or correction or 
357.12  renegotiation results in writing to the commissioner.  The 
357.13  report must be submitted within 180 days after the final 
357.14  determination and must be in the form of either an amended 
357.15  Minnesota estate, withholding tax, corporate franchise tax, or 
357.16  income tax return conceding the accuracy of the federal 
357.17  determination or a letter detailing how the federal 
357.18  determination is incorrect or does not change the Minnesota 
357.19  tax.  An amended Minnesota income tax return must be accompanied 
357.20  by an amended property tax refund return, if necessary.  A 
357.21  taxpayer filing an amended federal tax return must also file a 
357.22  copy of the amended return with the commissioner of revenue 
357.23  within 180 days after filing the amended return. 
357.24     [EFFECTIVE DATE.] This section is effective the day 
357.25  following final enactment. 
357.26     Sec. 5.  Minnesota Statutes 2004, section 289A.50, 
357.27  subdivision 1a, is amended to read: 
357.28     Subd. 1a.  [REFUND FORM.] On or before January 1, 2000, the 
357.29  commissioner of revenue shall prepare and make available to 
357.30  taxpayers a form for filing claims for refund of taxes paid in 
357.31  excess of the amount due.  If the commissioner fails to prepare 
357.32  a form under this subdivision by January 1, 2000, any claims for 
357.33  refund made after January 1, 2000, and up to ten days after the 
357.34  form is made available to taxpayers are deemed to be made in 
357.35  compliance with the requirement of the form.  The commissioner 
357.36  may request corporate franchise taxpayers claiming a refund of 
358.1   corporate franchise taxes paid in excess of the amount lawfully 
358.2   due to include on the claim for refund or amended return 
358.3   information necessary for payment of the taxes paid in excess of 
358.4   taxes lawfully due by electronic means. 
358.5      [EFFECTIVE DATE.] This section is effective for claims for 
358.6   refund filed after December 31, 2005. 
358.7      Sec. 6.  Minnesota Statutes 2004, section 289A.60, 
358.8   subdivision 6, is amended to read: 
358.9      Subd. 6.  [PENALTY FOR FALSE OR FRAUDULENT RETURN, 
358.10  EVASION.] If a person files a false or fraudulent return, or 
358.11  claim for refund or attempts in any manner to evade or defeat a 
358.12  tax or payment of tax, there is imposed on the person a penalty 
358.13  equal to the sum of (1) 50 percent of the tax, less amounts paid 
358.14  by the person on the basis of the false or fraudulent return, 
358.15  due for the period to which the return related and (2) 50 
358.16  percent of the portion of any refund claimed that is 
358.17  attributable to fraud.  
358.18     [EFFECTIVE DATE.] This section is effective for returns 
358.19  filed after December 31, 2005. 
358.20     Sec. 7.  Minnesota Statutes 2004, section 289A.60, 
358.21  subdivision 12, is amended to read: 
358.22     Subd. 12.  [PENALTIES RELATING TO PROPERTY TAX REFUNDS.] 
358.23  (a) If the commissioner determines that a property tax refund 
358.24  claim is or was excessive and was filed with fraudulent intent, 
358.25  the claim must be disallowed in full.  If the claim has been 
358.26  paid, the amount disallowed may be recovered by assessment and 
358.27  collection. 
358.28     (b) If it is determined that a property tax refund claim is 
358.29  excessive and was negligently prepared, ten percent of the 
358.30  corrected claim must be disallowed.  If the claim has been paid, 
358.31  the amount disallowed must be recovered by assessment and 
358.32  collection.  
358.33     (c) (b) An owner who without reasonable cause fails to give 
358.34  a certificate of rent constituting property tax to a renter, as 
358.35  required by section 290A.19, paragraph (a), is liable to the 
358.36  commissioner for a penalty of $100 for each failure. 
359.1      (d) (c) If the owner or managing agent knowingly gives rent 
359.2   certificates that report total rent constituting property taxes 
359.3   in excess of the amount of actual rent constituting property 
359.4   taxes paid on the rented part of a property, the owner or 
359.5   managing agent is liable for a penalty equal to the greater of 
359.6   (1) $100 or (2) 50 percent of the excess that is reported.  An 
359.7   overstatement of rent constituting property taxes is presumed to 
359.8   be knowingly made if it exceeds by ten percent or more the 
359.9   actual rent constituting property taxes. 
359.10     [EFFECTIVE DATE.] This section is effective for returns 
359.11  filed after December 31, 2005. 
359.12     Sec. 8.  Minnesota Statutes 2004, section 290.01, 
359.13  subdivision 19a, is amended to read: 
359.14     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
359.15  individuals, estates, and trusts, there shall be added to 
359.16  federal taxable income: 
359.17     (1)(i) interest income on obligations of any state other 
359.18  than Minnesota or a political or governmental subdivision, 
359.19  municipality, or governmental agency or instrumentality of any 
359.20  state other than Minnesota exempt from federal income taxes 
359.21  under the Internal Revenue Code or any other federal statute; 
359.22  and 
359.23     (ii) exempt-interest dividends as defined in section 
359.24  852(b)(5) of the Internal Revenue Code, except the portion of 
359.25  the exempt-interest dividends derived from interest income on 
359.26  obligations of the state of Minnesota or its political or 
359.27  governmental subdivisions, municipalities, governmental agencies 
359.28  or instrumentalities, but only if the portion of the 
359.29  exempt-interest dividends from such Minnesota sources paid to 
359.30  all shareholders represents 95 percent or more of the 
359.31  exempt-interest dividends that are paid by the regulated 
359.32  investment company as defined in section 851(a) of the Internal 
359.33  Revenue Code, or the fund of the regulated investment company as 
359.34  defined in section 851(g) of the Internal Revenue Code, making 
359.35  the payment; and 
359.36     (iii) for the purposes of items (i) and (ii), interest on 
360.1   obligations of an Indian tribal government described in section 
360.2   7871(c) of the Internal Revenue Code shall be treated as 
360.3   interest income on obligations of the state in which the tribe 
360.4   is located; 
360.5      (2) the amount of income taxes paid or accrued within the 
360.6   taxable year under this chapter and income the amount of taxes 
360.7   based on net income paid to any other state or to any province 
360.8   or territory of Canada, to the extent allowed as a deduction 
360.9   under section 63(d) of the Internal Revenue Code, but the 
360.10  addition may not be more than the amount by which the itemized 
360.11  deductions as allowed under section 63(d) of the Internal 
360.12  Revenue Code exceeds the amount of the standard deduction as 
360.13  defined in section 63(c) of the Internal Revenue Code.  For the 
360.14  purpose of this paragraph, the disallowance of itemized 
360.15  deductions under section 68 of the Internal Revenue Code of 
360.16  1986, income tax is the last itemized deduction disallowed; 
360.17     (3) the capital gain amount of a lump sum distribution to 
360.18  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
360.19  Reform Act of 1986, Public Law 99-514, applies; 
360.20     (4) the amount of income taxes paid or accrued within the 
360.21  taxable year under this chapter and income taxes based on net 
360.22  income paid to any other state or any province or territory of 
360.23  Canada, to the extent allowed as a deduction in determining 
360.24  federal adjusted gross income.  For the purpose of this 
360.25  paragraph, income taxes do not include the taxes imposed by 
360.26  sections 290.0922, subdivision 1, paragraph (b), 290.9727, 
360.27  290.9728, and 290.9729; 
360.28     (5) the amount of expense, interest, or taxes disallowed 
360.29  pursuant to section 290.10 other than expenses or interest used 
360.30  in computing net interest income for the subtraction allowed 
360.31  under subdivision 19b, clause (1); 
360.32     (6) the amount of a partner's pro rata share of net income 
360.33  which does not flow through to the partner because the 
360.34  partnership elected to pay the tax on the income under section 
360.35  6242(a)(2) of the Internal Revenue Code; and 
360.36     (7) 80 percent of the depreciation deduction allowed under 
361.1   section 168(k) of the Internal Revenue Code.  For purposes of 
361.2   this clause, if the taxpayer has an activity that in the taxable 
361.3   year generates a deduction for depreciation under section 168(k) 
361.4   and the activity generates a loss for the taxable year that the 
361.5   taxpayer is not allowed to claim for the taxable year, "the 
361.6   depreciation allowed under section 168(k)" for the taxable year 
361.7   is limited to excess of the depreciation claimed by the activity 
361.8   under section 168(k) over the amount of the loss from the 
361.9   activity that is not allowed in the taxable year.  In succeeding 
361.10  taxable years when the losses not allowed in the taxable year 
361.11  are allowed, the depreciation under section 168(k) is allowed. 
361.12     [EFFECTIVE DATE.] This section is effective for tax years 
361.13  beginning after December 31, 2004. 
361.14     Sec. 9.  Minnesota Statutes 2004, section 290.01, 
361.15  subdivision 19b, is amended to read: 
361.16     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
361.17  individuals, estates, and trusts, there shall be subtracted from 
361.18  federal taxable income: 
361.19     (1) net interest income on obligations of any authority, 
361.20  commission, or instrumentality of the United States to the 
361.21  extent includable in taxable income for federal income tax 
361.22  purposes but exempt from state income tax under the laws of the 
361.23  United States; 
361.24     (2) if included in federal taxable income, the amount of 
361.25  any overpayment of income tax to Minnesota or to any other 
361.26  state, for any previous taxable year, whether the amount is 
361.27  received as a refund or as a credit to another taxable year's 
361.28  income tax liability; 
361.29     (3) the amount paid to others, less the amount used to 
361.30  claim the credit allowed under section 290.0674, not to exceed 
361.31  $1,625 for each qualifying child in grades kindergarten to 6 and 
361.32  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
361.33  textbooks, and transportation of each qualifying child in 
361.34  attending an elementary or secondary school situated in 
361.35  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
361.36  wherein a resident of this state may legally fulfill the state's 
362.1   compulsory attendance laws, which is not operated for profit, 
362.2   and which adheres to the provisions of the Civil Rights Act of 
362.3   1964 and chapter 363A.  For the purposes of this clause, 
362.4   "tuition" includes fees or tuition as defined in section 
362.5   290.0674, subdivision 1, clause (1).  As used in this clause, 
362.6   "textbooks" includes books and other instructional materials and 
362.7   equipment purchased or leased for use in elementary and 
362.8   secondary schools in teaching only those subjects legally and 
362.9   commonly taught in public elementary and secondary schools in 
362.10  this state.  Equipment expenses qualifying for deduction 
362.11  includes expenses as defined and limited in section 290.0674, 
362.12  subdivision 1, clause (3).  "Textbooks" does not include 
362.13  instructional books and materials used in the teaching of 
362.14  religious tenets, doctrines, or worship, the purpose of which is 
362.15  to instill such tenets, doctrines, or worship, nor does it 
362.16  include books or materials for, or transportation to, 
362.17  extracurricular activities including sporting events, musical or 
362.18  dramatic events, speech activities, driver's education, or 
362.19  similar programs.  For purposes of the subtraction provided by 
362.20  this clause, "qualifying child" has the meaning given in section 
362.21  32(c)(3) of the Internal Revenue Code; 
362.22     (4) income as provided under section 290.0802; 
362.23     (5) to the extent included in federal adjusted gross 
362.24  income, income realized on disposition of property exempt from 
362.25  tax under section 290.491; 
362.26     (6) to the extent included in federal taxable income, 
362.27  postservice benefits for youth community service under section 
362.28  124D.42 for volunteer service under United States Code, title 
362.29  42, sections 12601 to 12604; 
362.30     (7) to the extent not deducted in determining federal 
362.31  taxable income by an individual who does not itemize deductions 
362.32  for federal income tax purposes for the taxable year, an amount 
362.33  equal to 50 percent of the excess of charitable contributions 
362.34  allowable as a deduction for the taxable year under section 
362.35  170(a) of the Internal Revenue Code over $500; 
362.36     (8) (7) for taxable years beginning before January 1, 2008, 
363.1   the amount of the federal small ethanol producer credit allowed 
363.2   under section 40(a)(3) of the Internal Revenue Code which is 
363.3   included in gross income under section 87 of the Internal 
363.4   Revenue Code; 
363.5      (9) (8) for individuals who are allowed a federal foreign 
363.6   tax credit for taxes that do not qualify for a credit under 
363.7   section 290.06, subdivision 22, an amount equal to the carryover 
363.8   of subnational foreign taxes for the taxable year, but not to 
363.9   exceed the total subnational foreign taxes reported in claiming 
363.10  the foreign tax credit.  For purposes of this clause, "federal 
363.11  foreign tax credit" means the credit allowed under section 27 of 
363.12  the Internal Revenue Code, and "carryover of subnational foreign 
363.13  taxes" equals the carryover allowed under section 904(c) of the 
363.14  Internal Revenue Code minus national level foreign taxes to the 
363.15  extent they exceed the federal foreign tax credit; 
363.16     (10) (9) in each of the five tax years immediately 
363.17  following the tax year in which an addition is required under 
363.18  subdivision 19a, clause (7), or 19c, clause (15), in the case of 
363.19  a shareholder of a corporation that is an S corporation, an 
363.20  amount equal to one-fifth of the delayed depreciation.  For 
363.21  purposes of this clause, "delayed depreciation" means the amount 
363.22  of the addition made by the taxpayer under subdivision 19a, 
363.23  clause (7), or subdivision 19c, clause (15), in the case of a 
363.24  shareholder of an S corporation, minus the positive value of any 
363.25  net operating loss under section 172 of the Internal Revenue 
363.26  Code generated for the tax year of the addition.  The resulting 
363.27  delayed depreciation cannot be less than zero; and 
363.28     (11) (10) job opportunity building zone income as provided 
363.29  under section 469.316. 
363.30     [EFFECTIVE DATE.] The amendment to clause (9) is effective 
363.31  retroactively for tax years beginning after December 31, 2001.  
363.32  The rest of this section is effective for the tax years 
363.33  beginning after December 31, 2004. 
363.34     Sec. 10.  Minnesota Statutes 2004, section 290.01, 
363.35  subdivision 19c, is amended to read: 
363.36     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
364.1   INCOME.] For corporations, there shall be added to federal 
364.2   taxable income: 
364.3      (1) the amount of any deduction taken for federal income 
364.4   tax purposes for income, excise, or franchise taxes based on net 
364.5   income or related minimum taxes, including but not limited to 
364.6   the tax imposed under section 290.0922, paid by the corporation 
364.7   to Minnesota, another state, a political subdivision of another 
364.8   state, the District of Columbia, or any foreign country or 
364.9   possession of the United States; 
364.10     (2) interest not subject to federal tax upon obligations 
364.11  of:  the United States, its possessions, its agencies, or its 
364.12  instrumentalities; the state of Minnesota or any other state, 
364.13  any of its political or governmental subdivisions, any of its 
364.14  municipalities, or any of its governmental agencies or 
364.15  instrumentalities; the District of Columbia; or Indian tribal 
364.16  governments; 
364.17     (3) exempt-interest dividends received as defined in 
364.18  section 852(b)(5) of the Internal Revenue Code; 
364.19     (4) the amount of any net operating loss deduction taken 
364.20  for federal income tax purposes under section 172 or 832(c)(10) 
364.21  of the Internal Revenue Code or operations loss deduction under 
364.22  section 810 of the Internal Revenue Code; 
364.23     (5) the amount of any special deductions taken for federal 
364.24  income tax purposes under sections 241 to 247 of the Internal 
364.25  Revenue Code; 
364.26     (6) losses from the business of mining, as defined in 
364.27  section 290.05, subdivision 1, clause (a), that are not subject 
364.28  to Minnesota income tax; 
364.29     (7) the amount of any capital losses deducted for federal 
364.30  income tax purposes under sections 1211 and 1212 of the Internal 
364.31  Revenue Code; 
364.32     (8) the exempt foreign trade income of a foreign sales 
364.33  corporation under sections 921(a) and 291 of the Internal 
364.34  Revenue Code; 
364.35     (9) the amount of percentage depletion deducted under 
364.36  sections 611 through 614 and 291 of the Internal Revenue Code; 
365.1      (10) for certified pollution control facilities placed in 
365.2   service in a taxable year beginning before December 31, 1986, 
365.3   and for which amortization deductions were elected under section 
365.4   169 of the Internal Revenue Code of 1954, as amended through 
365.5   December 31, 1985, the amount of the amortization deduction 
365.6   allowed in computing federal taxable income for those 
365.7   facilities; 
365.8      (11) the amount of any deemed dividend from a foreign 
365.9   operating corporation determined pursuant to section 290.17, 
365.10  subdivision 4, paragraph (g); 
365.11     (12) the amount of any environmental tax paid under section 
365.12  59(a) of the Internal Revenue Code; 
365.13     (13) the amount of a partner's pro rata share of net income 
365.14  which does not flow through to the partner because the 
365.15  partnership elected to pay the tax on the income under section 
365.16  6242(a)(2) of the Internal Revenue Code; 
365.17     (14) (13) the amount of net income excluded under section 
365.18  114 of the Internal Revenue Code; 
365.19     (15) (14) any increase in subpart F income, as defined in 
365.20  section 952(a) of the Internal Revenue Code, for the taxable 
365.21  year when subpart F income is calculated without regard to the 
365.22  provisions of section 614 of Public Law 107-147; and 
365.23     (16) (15) 80 percent of the depreciation deduction allowed 
365.24  under section 168(k)(1)(A) and (k)(4)(A) of the Internal Revenue 
365.25  Code.  For purposes of this clause, if the taxpayer has an 
365.26  activity that in the taxable year generates a deduction for 
365.27  depreciation under section 168(k)(1)(A) and (k)(4)(A) and the 
365.28  activity generates a loss for the taxable year that the taxpayer 
365.29  is not allowed to claim for the taxable year, "the depreciation 
365.30  allowed under section 168(k)(1)(A) and (k)(4)(A)" for the 
365.31  taxable year is limited to excess of the depreciation claimed by 
365.32  the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
365.33  amount of the loss from the activity that is not allowed in the 
365.34  taxable year.  In succeeding taxable years when the losses not 
365.35  allowed in the taxable year are allowed, the depreciation under 
365.36  section 168(k)(1)(A) and (k)(4)(A) is allowed. 
366.1      [EFFECTIVE DATE.] This section is effective the day 
366.2   following final enactment. 
366.3      Sec. 11.  Minnesota Statutes 2004, section 290.06, 
366.4   subdivision 22, is amended to read: 
366.5      Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
366.6   taxpayer who is liable for taxes based on or measured by net 
366.7   income to another state, as provided in paragraphs (b) through 
366.8   (f), upon income allocated or apportioned to Minnesota, is 
366.9   entitled to a credit for the tax paid to another state if the 
366.10  tax is actually paid in the taxable year or a subsequent taxable 
366.11  year.  A taxpayer who is a resident of this state pursuant to 
366.12  section 290.01, subdivision 7, clause (2) paragraph (b), and who 
366.13  is subject to income tax as a resident in the state of the 
366.14  individual's domicile is not allowed this credit unless the 
366.15  state of domicile does not allow a similar credit. 
366.16     (b) For an individual, estate, or trust, the credit is 
366.17  determined by multiplying the tax payable under this chapter by 
366.18  the ratio derived by dividing the income subject to tax in the 
366.19  other state that is also subject to tax in Minnesota while a 
366.20  resident of Minnesota by the taxpayer's federal adjusted gross 
366.21  income, as defined in section 62 of the Internal Revenue Code, 
366.22  modified by the addition required by section 290.01, subdivision 
366.23  19a, clause (1), and the subtraction allowed by section 290.01, 
366.24  subdivision 19b, clause (1), to the extent the income is 
366.25  allocated or assigned to Minnesota under sections 290.081 and 
366.26  290.17.  
366.27     (c) If the taxpayer is an athletic team that apportions all 
366.28  of its income under section 290.17, subdivision 5, the credit is 
366.29  determined by multiplying the tax payable under this chapter by 
366.30  the ratio derived from dividing the total net income subject to 
366.31  tax in the other state by the taxpayer's Minnesota taxable 
366.32  income. 
366.33     (d) The credit determined under paragraph (b) or (c) shall 
366.34  not exceed the amount of tax so paid to the other state on the 
366.35  gross income earned within the other state subject to tax under 
366.36  this chapter, nor shall the allowance of the credit reduce the 
367.1   taxes paid under this chapter to an amount less than what would 
367.2   be assessed if such income amount was excluded from taxable net 
367.3   income. 
367.4      (e) In the case of the tax assessed on a lump sum 
367.5   distribution under section 290.032, the credit allowed under 
367.6   paragraph (a) is the tax assessed by the other state on the lump 
367.7   sum distribution that is also subject to tax under section 
367.8   290.032, and shall not exceed the tax assessed under section 
367.9   290.032.  To the extent the total lump sum distribution defined 
367.10  in section 290.032, subdivision 1, includes lump sum 
367.11  distributions received in prior years or is all or in part an 
367.12  annuity contract, the reduction to the tax on the lump sum 
367.13  distribution allowed under section 290.032, subdivision 2, 
367.14  includes tax paid to another state that is properly apportioned 
367.15  to that distribution. 
367.16     (f) If a Minnesota resident reported an item of income to 
367.17  Minnesota and is assessed tax in such other state on that same 
367.18  income after the Minnesota statute of limitations has expired, 
367.19  the taxpayer shall receive a credit for that year under 
367.20  paragraph (a), notwithstanding any statute of limitations to the 
367.21  contrary.  The claim for the credit must be submitted within one 
367.22  year from the date the taxes were paid to the other state.  The 
367.23  taxpayer must submit sufficient proof to show entitlement to a 
367.24  credit. 
367.25     (g) For the purposes of this subdivision, a resident 
367.26  shareholder of a corporation treated as an "S" corporation under 
367.27  section 290.9725, must be considered to have paid a tax imposed 
367.28  on the shareholder in an amount equal to the shareholder's pro 
367.29  rata share of any net income tax paid by the S corporation to 
367.30  another state.  For the purposes of the preceding sentence, the 
367.31  term "net income tax" means any tax imposed on or measured by a 
367.32  corporation's net income. 
367.33     (h) For the purposes of this subdivision, a resident 
367.34  partner of an entity taxed as a partnership under the Internal 
367.35  Revenue Code must be considered to have paid a tax imposed on 
367.36  the partner in an amount equal to the partner's pro rata share 
368.1   of any net income tax paid by the partnership to another state.  
368.2   For purposes of the preceding sentence, the term "net income" 
368.3   tax means any tax imposed on or measured by a partnership's net 
368.4   income. 
368.5      (i) For the purposes of this subdivision, "another state": 
368.6      (1) includes: 
368.7      (i) the District of Columbia; and 
368.8      (ii) a province or territory of Canada; but 
368.9      (2) excludes Puerto Rico and the several territories 
368.10  organized by Congress. 
368.11     (j) The limitations on the credit in paragraphs (b), (c), 
368.12  and (d), are imposed on a state by state basis. 
368.13     (k) For a tax imposed by a province or territory of Canada, 
368.14  the tax for purposes of this subdivision is the excess of the 
368.15  tax over the amount of the foreign tax credit allowed under 
368.16  section 27 of the Internal Revenue Code.  In determining the 
368.17  amount of the foreign tax credit allowed, the net income taxes 
368.18  imposed by Canada on the income are deducted first.  Any 
368.19  remaining amount of the allowable foreign tax credit reduces the 
368.20  provincial or territorial tax that qualifies for the credit 
368.21  under this subdivision. 
368.22     [EFFECTIVE DATE.] This section is effective for tax years 
368.23  beginning after December 31, 2004. 
368.24     Sec. 12.  Minnesota Statutes 2004, section 290.0674, 
368.25  subdivision 1, is amended to read: 
368.26     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
368.27  a credit against the tax imposed by this chapter in an amount 
368.28  equal to 75 percent of the amount paid for education-related 
368.29  expenses for a qualifying child in kindergarten through grade 
368.30  12.  For purposes of this section, "education-related expenses" 
368.31  means: 
368.32     (1) fees or tuition for instruction by an instructor under 
368.33  section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 
368.34  (5), or a member of the Minnesota Music Teachers Association, 
368.35  and who is not a lineal ancestor or sibling of the dependent for 
368.36  instruction outside the regular school day or school year, 
369.1   including tutoring, driver's education offered as part of school 
369.2   curriculum, regardless of whether it is taken from a public or 
369.3   private entity or summer camps, in grade or age appropriate 
369.4   curricula that supplement curricula and instruction available 
369.5   during the regular school year, that assists a dependent to 
369.6   improve knowledge of core curriculum areas or to expand 
369.7   knowledge and skills under the graduation rule under section 
369.8   120B.02, paragraph (e), clauses (1) to (7), (9), and (10) 
369.9   required academic standards under section 120B.021, subdivision 
369.10  1, and the elective standard under section 120B.022, subdivision 
369.11  1, clause (2), and that do not include the teaching of religious 
369.12  tenets, doctrines, or worship, the purpose of which is to 
369.13  instill such tenets, doctrines, or worship; 
369.14     (2) expenses for textbooks, including books and other 
369.15  instructional materials and equipment purchased or leased for 
369.16  use in elementary and secondary schools in teaching only those 
369.17  subjects legally and commonly taught in public elementary and 
369.18  secondary schools in this state.  "Textbooks" does not include 
369.19  instructional books and materials used in the teaching of 
369.20  religious tenets, doctrines, or worship, the purpose of which is 
369.21  to instill such tenets, doctrines, or worship, nor does it 
369.22  include books or materials for extracurricular activities 
369.23  including sporting events, musical or dramatic events, speech 
369.24  activities, driver's education, or similar programs; 
369.25     (3) a maximum expense of $200 per family for personal 
369.26  computer hardware, excluding single purpose processors, and 
369.27  educational software that assists a dependent to improve 
369.28  knowledge of core curriculum areas or to expand knowledge and 
369.29  skills under the graduation rule under section 120B.02 required 
369.30  academic standards under section 120B.021, subdivision 1, and 
369.31  the elective standard under section 120B.022, subdivision 1, 
369.32  clause (2), purchased for use in the taxpayer's home and not 
369.33  used in a trade or business regardless of whether the computer 
369.34  is required by the dependent's school; and 
369.35     (4) the amount paid to others for transportation of a 
369.36  qualifying child attending an elementary or secondary school 
370.1   situated in Minnesota, North Dakota, South Dakota, Iowa, or 
370.2   Wisconsin, wherein a resident of this state may legally fulfill 
370.3   the state's compulsory attendance laws, which is not operated 
370.4   for profit, and which adheres to the provisions of the Civil 
370.5   Rights Act of 1964 and chapter 363A. 
370.6      For purposes of this section, "qualifying child" has the 
370.7   meaning given in section 32(c)(3) of the Internal Revenue Code. 
370.8      [EFFECTIVE DATE.] This section is effective for tax years 
370.9   beginning after December 31, 2004. 
370.10     Sec. 13.  Minnesota Statutes 2004, section 290.0922, 
370.11  subdivision 2, is amended to read: 
370.12     Subd. 2.  [EXEMPTIONS.] The following entities are exempt 
370.13  from the tax imposed by this section: 
370.14     (1) corporations exempt from tax under section 290.05; 
370.15     (2) real estate investment trusts; 
370.16     (3) regulated investment companies or a fund thereof; and 
370.17     (4) entities having a valid election in effect under 
370.18  section 860D(b) of the Internal Revenue Code; 
370.19     (5) town and farmers' mutual insurance companies; 
370.20     (6) cooperatives organized under chapter 308A or 308B that 
370.21  provide housing exclusively to persons age 55 and over and are 
370.22  classified as homesteads under section 273.124, subdivision 3; 
370.23  and 
370.24     (7) an entity, if for the taxable year all of its property 
370.25  is located in a job opportunity building zone designated under 
370.26  section 469.314 and all of its payroll is a job opportunity 
370.27  building zone payroll under section 469.310. 
370.28     Entities not specifically exempted by this subdivision are 
370.29  subject to tax under this section, notwithstanding section 
370.30  290.05.  
370.31     [EFFECTIVE DATE.] This section is effective for tax years 
370.32  beginning after December 31, 2004. 
370.33     Sec. 14.  Minnesota Statutes 2004, section 291.005, 
370.34  subdivision 1, is amended to read: 
370.35     Subdivision 1.  [SCOPE.] Unless the context otherwise 
370.36  clearly requires, the following terms used in this chapter shall 
371.1   have the following meanings: 
371.2      (1) "Federal gross estate" means the gross estate of a 
371.3   decedent as valued and otherwise determined for federal estate 
371.4   tax purposes by federal taxing authorities pursuant to the 
371.5   provisions of the Internal Revenue Code. 
371.6      (2) "Minnesota gross estate" means the federal gross estate 
371.7   of a decedent after (a) excluding therefrom any property 
371.8   included therein which has its situs outside Minnesota, and (b) 
371.9   including therein any property omitted from the federal gross 
371.10  estate which is includable therein, has its situs in Minnesota, 
371.11  and was not disclosed to federal taxing authorities.  
371.12     (3) "Personal representative" means the executor, 
371.13  administrator or other person appointed by the court to 
371.14  administer and dispose of the property of the decedent.  If 
371.15  there is no executor, administrator or other person appointed, 
371.16  qualified, and acting within this state, then any person in 
371.17  actual or constructive possession of any property having a situs 
371.18  in this state which is included in the federal gross estate of 
371.19  the decedent shall be deemed to be a personal representative to 
371.20  the extent of the property and the Minnesota estate tax due with 
371.21  respect to the property. 
371.22     (4) "Resident decedent" means an individual whose domicile 
371.23  at the time of death was in Minnesota. 
371.24     (5) "Nonresident decedent" means an individual whose 
371.25  domicile at the time of death was not in Minnesota. 
371.26     (6) "Situs of property" means, with respect to real 
371.27  property, the state or country in which it is located; with 
371.28  respect to tangible personal property, the state or country in 
371.29  which it was normally kept or located at the time of the 
371.30  decedent's death; and with respect to intangible personal 
371.31  property, the state or country in which the decedent was 
371.32  domiciled at death. 
371.33     (7) "Commissioner" means the commissioner of revenue or any 
371.34  person to whom the commissioner has delegated functions under 
371.35  this chapter. 
371.36     (8) "Internal Revenue Code" means the United States 
372.1   Internal Revenue Code of 1986, as amended through December 31, 
372.2   2002 2004. 
372.3      (9) "Minnesota adjusted taxable estate" means federal 
372.4   adjusted taxable estate as defined by section 2011(b)(3) of the 
372.5   Internal Revenue Code, increased by the amount of deduction for 
372.6   state death taxes allowed under section 2058 of the Internal 
372.7   Revenue Code. 
372.8      [EFFECTIVE DATE.] This section is effective for estates of 
372.9   decedents dying after December 31, 2004. 
372.10     Sec. 15.  Minnesota Statutes 2004, section 291.03, 
372.11  subdivision 1, is amended to read: 
372.12     Subdivision 1.  [TAX AMOUNT.] The tax imposed shall be an 
372.13  amount equal to the proportion of the maximum credit for state 
372.14  death taxes computed under section 2011 of the Internal Revenue 
372.15  Code, as amended through December 31, 2000, for state death 
372.16  taxes but using Minnesota adjusted taxable estate instead of 
372.17  federal adjusted taxable estate, as the Minnesota gross estate 
372.18  bears to the value of the federal gross estate.  The tax 
372.19  determined under this paragraph shall not be greater than the 
372.20  federal estate tax amount computed by applying the rates and 
372.21  brackets under section 2001(c) of the Internal Revenue Code 
372.22  after the allowance of to the Minnesota adjusted gross estate 
372.23  and subtracting the federal credits credit allowed under section 
372.24  2010 of the Internal Revenue Code of 1986, as amended through 
372.25  December 31, 2000.  For the purposes of this section, expenses 
372.26  which are deducted for federal income tax purposes under section 
372.27  642(g) of the Internal Revenue Code as amended through December 
372.28  31, 2002, are not allowable in computing the tax under this 
372.29  chapter. 
372.30     [EFFECTIVE DATE.] This section is effective for estates of 
372.31  decedents dying after December 31, 2004. 
372.32     Sec. 16.  [REPEALER.] 
372.33     Minnesota Rules, parts 8093.2000 and 8093.3000, are 
372.34  repealed effective the day following final enactment. 
372.35                             ARTICLE 14
372.36                       DEPARTMENT OF REVENUE
373.1                       PROPERTY TAXES - SF1683
373.2      Section 1.  Minnesota Statutes 2004, section 4A.02, is 
373.3   amended to read: 
373.4      4A.02 [STATE DEMOGRAPHER.] 
373.5      (a) The director shall appoint a state demographer.  The 
373.6   demographer must be professionally competent in demography and 
373.7   must possess demonstrated ability based upon past performance.  
373.8      (b) The demographer shall: 
373.9      (1) continuously gather and develop demographic data 
373.10  relevant to the state; 
373.11     (2) design and test methods of research and data 
373.12  collection; 
373.13     (3) periodically prepare population projections for the 
373.14  state and designated regions and periodically prepare 
373.15  projections for each county or other political subdivision of 
373.16  the state as necessary to carry out the purposes of this 
373.17  section; 
373.18     (4) review, comment on, and prepare analysis of population 
373.19  estimates and projections made by state agencies, political 
373.20  subdivisions, other states, federal agencies, or nongovernmental 
373.21  persons, institutions, or commissions; 
373.22     (5) serve as the state liaison with the United States 
373.23  Bureau of the Census, coordinate state and federal demographic 
373.24  activities to the fullest extent possible, and aid the 
373.25  legislature in preparing a census data plan and form for each 
373.26  decennial census; 
373.27     (6) compile an annual study of population estimates on the 
373.28  basis of county, regional, or other political or geographical 
373.29  subdivisions as necessary to carry out the purposes of this 
373.30  section and section 4A.03; 
373.31     (7) by January 1 of each year, issue a report to the 
373.32  legislature containing an analysis of the demographic 
373.33  implications of the annual population study and population 
373.34  projections; 
373.35     (8) prepare maps for all counties in the state, all 
373.36  municipalities with a population of 10,000 or more, and other 
374.1   municipalities as needed for census purposes, according to scale 
374.2   and detail recommended by the United States Bureau of the 
374.3   Census, with the maps of cities showing precinct boundaries; 
374.4      (9) prepare an estimate of population and of the number of 
374.5   households for each governmental subdivision for which the 
374.6   Metropolitan Council does not prepare an annual estimate, and an 
374.7   estimate of population over age 65 for each county for which the 
374.8   Metropolitan Council does not prepare an annual estimate, and 
374.9   convey the estimates to the governing body of each political 
374.10  subdivision by May June 1 of each year; 
374.11     (10) direct, under section 414.01, subdivision 14, and 
374.12  certify population and household estimates of annexed or 
374.13  detached areas of municipalities or towns after being notified 
374.14  of the order or letter of approval by the director; 
374.15     (11) prepare, for any purpose for which a population 
374.16  estimate is required by law or needed to implement a law, a 
374.17  population estimate of a municipality or town whose population 
374.18  is affected by action under section 379.02 or 414.01, 
374.19  subdivision 14; and 
374.20     (12) prepare an estimate of average household size for each 
374.21  statutory or home rule charter city with a population of 2,500 
374.22  or more for which the Metropolitan Council does not prepare an 
374.23  annual estimate, and convey the estimate to the governing body 
374.24  of each affected city by May June 1 of each year. 
374.25     (c) A governing body may challenge an estimate made under 
374.26  paragraph (b) by filing their specific objections in writing 
374.27  with the state demographer by June 10 24.  If the challenge does 
374.28  not result in an acceptable estimate by June 24, the governing 
374.29  body may have a special census conducted by the United States 
374.30  Bureau of the Census.  The political subdivision must notify the 
374.31  state demographer by July 1 of its intent to have the special 
374.32  census conducted.  The political subdivision must bear all costs 
374.33  of the special census.  Results of the special census must be 
374.34  received by the state demographer by the next April 15 to be 
374.35  used in that year's May June 1 estimate to the political 
374.36  subdivision under paragraph (b). 
375.1      (d) The state demographer shall certify the estimates of 
375.2   population and household size to the commissioner of revenue by 
375.3   July 15 each year, including any estimates still under objection.
375.4      [EFFECTIVE DATE.] This section is effective the day 
375.5   following final enactment. 
375.6      Sec. 2.  Minnesota Statutes 2004, section 168A.05, 
375.7   subdivision 1a, is amended to read: 
375.8      Subd. 1a.  [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 
375.9   PAYMENT.] In the case of a manufactured home as defined in 
375.10  section 327.31, subdivision 6, the department shall not issue a 
375.11  certificate of title unless the application under section 
375.12  168A.04 is accompanied with a statement from the county auditor 
375.13  or county treasurer where the manufactured home is presently 
375.14  located, stating that all manufactured home personal property 
375.15  taxes levied on the unit in the name of the current owner at the 
375.16  time of transfer have been paid.  For this purpose, manufactured 
375.17  home personal property taxes are treated as levied on January 1 
375.18  of the payable year. 
375.19     [EFFECTIVE DATE.] This section is effective the day 
375.20  following final enactment. 
375.21     Sec. 3.  Minnesota Statutes 2004, section 270.11, 
375.22  subdivision 2, is amended to read: 
375.23     Subd. 2.  [COUNTY ASSESSOR'S REPORTS OF ASSESSMENT FILED 
375.24  WITH COMMISSIONER.] Each county assessor shall file by April 1 
375.25  with the commissioner of revenue a copy of the abstract that 
375.26  will be acted upon by the local and county boards of review.  
375.27  The abstract must list the real and personal property in the 
375.28  county itemized by assessment districts.  The assessor of each 
375.29  county in the state shall file with the commissioner, within ten 
375.30  working days following final action of the local board of review 
375.31  or equalization and within five days following final action of 
375.32  the county board of equalization, any changes made by the local 
375.33  or county board.  The information must be filed in the manner 
375.34  prescribed by the commissioner.  It must be accompanied by a 
375.35  printed or typewritten copy of the proceedings of the 
375.36  appropriate board. 
376.1      The final abstract of assessments after adjustments by the 
376.2   State Board of Equalization and inclusion of any omitted 
376.3   property shall be submitted to the commissioner of revenue on or 
376.4   before September 1 of each calendar year.  The final abstract 
376.5   must separately report the captured tax capacity of tax 
376.6   increment financing districts under section 469.177, subdivision 
376.7   2, the metropolitan revenue areawide net tax capacity 
376.8   contribution value values determined under section sections 
376.9   276A.05, subdivision 1, and 473F.07, subdivision 1, and the 
376.10  value subject to the power line credit under section 273.42. 
376.11     [EFFECTIVE DATE.] This section is effective the day 
376.12  following final enactment. 
376.13     Sec. 4.  Minnesota Statutes 2004, section 270.16, 
376.14  subdivision 2, is amended to read: 
376.15     Subd. 2.  [FAILURE TO APPRAISE.] When an assessor has 
376.16  failed to properly appraise at least one-quarter one-fifth of 
376.17  the parcels of property in a district or county as provided in 
376.18  section 273.01, the commissioner of revenue shall appoint a 
376.19  special assessor and deputy assessor as necessary and cause a 
376.20  reappraisal to be made of the property due for reassessment in 
376.21  accordance with law. 
376.22     [EFFECTIVE DATE.] This section is effective the day 
376.23  following final enactment. 
376.24     Sec. 5.  Minnesota Statutes 2004, section 272.01, 
376.25  subdivision 2, is amended to read: 
376.26     Subd. 2.  [EXEMPT PROPERTY USED BY PRIVATE ENTITY FOR 
376.27  PROFIT.] (a) When any real or personal property which is exempt 
376.28  from ad valorem taxes, and taxes in lieu thereof, is leased, 
376.29  loaned, or otherwise made available and used by a private 
376.30  individual, association, or corporation in connection with a 
376.31  business conducted for profit, there shall be imposed a tax, for 
376.32  the privilege of so using or possessing such real or personal 
376.33  property, in the same amount and to the same extent as though 
376.34  the lessee or user was the owner of such property. 
376.35     (b) The tax imposed by this subdivision shall not apply to: 
376.36     (1) property leased or used as a concession in or relative 
377.1   to the use in whole or part of a public park, market, 
377.2   fairgrounds, port authority, economic development authority 
377.3   established under chapter 469, municipal auditorium, municipal 
377.4   parking facility, municipal museum, or municipal stadium; 
377.5      (2) property of an airport owned by a city, town, county, 
377.6   or group thereof which is:  
377.7      (i) leased to or used by any person or entity including a 
377.8   fixed base operator; and 
377.9      (ii) used as a hangar for the storage or repair of aircraft 
377.10  or to provide aviation goods, services, or facilities to the 
377.11  airport or general public; 
377.12  the exception from taxation provided in this clause does not 
377.13  apply to: 
377.14     (i) property located at an airport owned or operated by the 
377.15  Metropolitan Airports Commission or by a city of over 50,000 
377.16  population according to the most recent federal census or such a 
377.17  city's airport authority; 
377.18     (ii) hangars leased by a private individual, association, 
377.19  or corporation in connection with a business conducted for 
377.20  profit other than an aviation-related business; or 
377.21     (iii) facilities leased by a private individual, 
377.22  association, or corporation in connection with a business for 
377.23  profit, that consists of a major jet engine repair facility 
377.24  financed, in whole or part, with the proceeds of state bonds and 
377.25  located in a tax increment financing district; 
377.26     (3) property constituting or used as a public pedestrian 
377.27  ramp or concourse in connection with a public airport; or 
377.28     (4) property constituting or used as a passenger check-in 
377.29  area or ticket sale counter, boarding area, or luggage claim 
377.30  area in connection with a public airport but not the airports 
377.31  owned or operated by the Metropolitan Airports Commission or 
377.32  cities of over 50,000 population or an airport authority 
377.33  therein.  Real estate owned by a municipality in connection with 
377.34  the operation of a public airport and leased or used for 
377.35  agricultural purposes is not exempt; 
377.36     (5) property leased, loaned, or otherwise made available to 
378.1   a private individual, corporation, or association under a 
378.2   cooperative farming agreement made pursuant to section 97A.135; 
378.3   or 
378.4      (6) property leased, loaned, or otherwise made available to 
378.5   a private individual, corporation, or association under section 
378.6   272.68, subdivision 4. 
378.7      (c) Taxes imposed by this subdivision are payable as in the 
378.8   case of personal property taxes and shall be assessed to the 
378.9   lessees or users of real or personal property in the same manner 
378.10  as taxes assessed to owners of real or personal property, except 
378.11  that such taxes shall not become a lien against the property.  
378.12  When due, the taxes shall constitute a debt due from the lessee 
378.13  or user to the state, township, city, county, and school 
378.14  district for which the taxes were assessed and shall be 
378.15  collected in the same manner as personal property taxes.  If 
378.16  property subject to the tax imposed by this subdivision is 
378.17  leased or used jointly by two or more persons, each lessee or 
378.18  user shall be jointly and severally liable for payment of the 
378.19  tax. 
378.20     (d) The tax on real property of the state or any of its 
378.21  political subdivisions that is leased by a private individual, 
378.22  association, or corporation and becomes taxable under this 
378.23  subdivision or other provision of law must be assessed and 
378.24  collected as a personal property assessment.  The taxes do not 
378.25  become a lien against the real property. 
378.26     [EFFECTIVE DATE.] This section is effective the day 
378.27  following final enactment. 
378.28     Sec. 6.  Minnesota Statutes 2004, section 272.02, 
378.29  subdivision 1a, is amended to read: 
378.30     Subd. 1a.  [LIMITATIONS ON EXEMPTIONS.] The exemptions 
378.31  granted by subdivision 1 are subject to the limits contained in 
378.32  the other subdivisions of this section, section 272.025, or 
378.33  273.13, subdivision 25, paragraph (c), clause (1) or (2), or 
378.34  paragraph (d), clause (2) and all other provisions of applicable 
378.35  law.  
378.36     [EFFECTIVE DATE.] This section is effective the day 
379.1   following final enactment. 
379.2      Sec. 7.  Minnesota Statutes 2004, section 272.02, 
379.3   subdivision 7, is amended to read: 
379.4      Subd. 7.  [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of 
379.5   purely public charity are exempt except parcels of property 
379.6   containing structures and the structures described in section 
379.7   273.13, subdivision 25, paragraph (e), other than those that 
379.8   qualify for exemption under subdivision 26.  In determining 
379.9   whether rental housing property qualifies for exemption under 
379.10  this subdivision, the following are not gifts or donations to 
379.11  the owner of the rental housing: 
379.12     (1) rent assistance provided by the government to or on 
379.13  behalf of tenants, and 
379.14     (2) financing assistance or tax credits provided by the 
379.15  government to the owner on condition that specific units or a 
379.16  specific quantity of units be set aside for persons or families 
379.17  with certain income characteristics. 
379.18  The items described in clauses (1) and (2) may, however, be 
379.19  considered when making other determinations related to an 
379.20  exemption under this subdivision, including, without limitation, 
379.21  for the purpose of determining whether the recipient of housing 
379.22  or housing services is required to pay in whole or in part for 
379.23  the housing. 
379.24     [EFFECTIVE DATE.] This section is effective for taxes 
379.25  payable in 2004 and thereafter. 
379.26     Sec. 8.  Minnesota Statutes 2004, section 272.02, is 
379.27  amended by adding a subdivision to read: 
379.28     Subd. 68.  [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR 
379.29  NET PROCEEDS TAX.] (a) Real and personal property described in 
379.30  section 298.25 is exempt to the extent the tax on taconite and 
379.31  iron sulphides under section 298.24 is described in section 
379.32  298.25 as being in lieu of other taxes on such property.  This 
379.33  exemption applies for taxes payable in each year that the tax 
379.34  under section 298.24 is payable with respect to such property. 
379.35     (b) Deposits of mineral, metal, or energy resources the 
379.36  mining of which is subject to taxation under section 298.015 are 
380.1   exempt.  This exemption applies for taxes payable in each year 
380.2   that the tax under section 298.015 is payable with respect to 
380.3   such property. 
380.4      [EFFECTIVE DATE.] This section is effective the day 
380.5   following final enactment. 
380.6      Sec. 9.  Minnesota Statutes 2004, section 272.02, is 
380.7   amended by adding a subdivision to read: 
380.8      Subd. 69.  [RELIGIOUS CORPORATIONS.] Personal and real 
380.9   property that a religious corporation, formed under section 
380.10  317A.909, necessarily uses for a religious purpose is exempt to 
380.11  the extent provided in section 317A.909, subdivision 3. 
380.12     [EFFECTIVE DATE.] This section is effective the day 
380.13  following final enactment. 
380.14     Sec. 10.  Minnesota Statutes 2004, section 272.02, is 
380.15  amended by adding a subdivision to read: 
380.16     Subd. 70.  [CHILDREN'S HOMES.] Personal and real property 
380.17  owned by a corporation formed under section 317A.907 is exempt 
380.18  to the extent provided in section 317A.907, subdivision 7. 
380.19     [EFFECTIVE DATE.] This section is effective the day 
380.20  following final enactment. 
380.21     Sec. 11.  Minnesota Statutes 2004, section 272.02, is 
380.22  amended by adding a subdivision to read: 
380.23     Subd. 71.  [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL 
380.24  HOUSING AUTHORITY PROPERTY.] Property owned by a housing and 
380.25  redevelopment authority described in chapter 469, or by a 
380.26  designated housing authority described in section 469.040, 
380.27  subdivision 5, is exempt to the extent provided in chapter 469. 
380.28     [EFFECTIVE DATE.] This section is effective the day 
380.29  following final enactment. 
380.30     Sec. 12.  Minnesota Statutes 2004, section 272.02, is 
380.31  amended by adding a subdivision to read: 
380.32     Subd. 72.  [PROPERTY OF HOUSING AND REDEVELOPMENT 
380.33  AUTHORITIES.] Property of projects of housing and redevelopment 
380.34  authorities are exempt to the extent permitted by sections 
380.35  469.042, subdivision 1, and 469.043, subdivisions 2 and 5. 
380.36     [EFFECTIVE DATE.] This section is effective the day 
381.1   following final enactment. 
381.2      Sec. 13.  Minnesota Statutes 2004, section 272.02, is 
381.3   amended by adding a subdivision to read: 
381.4      Subd. 73.  [PROPERTY OF REGIONAL RAIL AUTHORITY.] Property 
381.5   of a regional rail authority as defined in chapter 398A is 
381.6   exempt to the extent permitted by section 398A.05. 
381.7      [EFFECTIVE DATE.] This section is effective the day 
381.8   following final enactment. 
381.9      Sec. 14.  Minnesota Statutes 2004, section 272.02, is 
381.10  amended by adding a subdivision to read: 
381.11     Subd. 74.  [SPIRIT MOUNTAIN RECREATION AREA 
381.12  AUTHORITY.] Property owned by the Spirit Mountain Recreation 
381.13  Area Authority is exempt from taxation to the extent provided in 
381.14  Laws 1973, chapter 327, section 6. 
381.15     Sec. 15.  Minnesota Statutes 2004, section 272.02, is 
381.16  amended by adding a subdivision to read: 
381.17     Subd. 75.  [INSTALLED CAPACITY DEFINED.] For purposes of 
381.18  this section, the term "installed capacity" means generator 
381.19  nameplate capacity. 
381.20     [EFFECTIVE DATE.] This section is effective the day 
381.21  following final enactment. 
381.22     Sec. 16.  Minnesota Statutes 2004, section 272.029, 
381.23  subdivision 4, is amended to read: 
381.24     Subd. 4.  [REPORTS.] (a) An owner of a wind energy 
381.25  conversion system subject to tax under subdivision 3 shall file 
381.26  a report with the commissioner of revenue annually on or before 
381.27  March February 1 detailing the amount of electricity in 
381.28  kilowatt-hours that was produced by the wind energy conversion 
381.29  system for the previous calendar year.  The commissioner shall 
381.30  prescribe the form of the report.  The report must contain the 
381.31  information required by the commissioner to determine the tax 
381.32  due to each county under this section for the current year.  If 
381.33  an owner of a wind energy conversion system subject to taxation 
381.34  under this section fails to file the report by the due date, the 
381.35  commissioner of revenue shall determine the tax based upon the 
381.36  nameplate capacity of the system multiplied by a capacity factor 
382.1   of 40 percent. 
382.2      (b) On or before March 31 February 28, the commissioner of 
382.3   revenue shall notify the owner of the wind energy conversion 
382.4   systems of the tax due to each county for the current year and 
382.5   shall certify to the county auditor of each county in which the 
382.6   systems are located the tax due from each owner for the current 
382.7   year. 
382.8      [EFFECTIVE DATE.] This section is effective for reports and 
382.9   certifications due in 2006 and thereafter. 
382.10     Sec. 17.  Minnesota Statutes 2004, section 272.029, 
382.11  subdivision 6, is amended to read: 
382.12     Subd. 6.  [DISTRIBUTION OF REVENUES.] Revenues from the 
382.13  taxes imposed under subdivision 5 must be part of the settlement 
382.14  between the county treasurer and the county auditor under 
382.15  section 276.09.  The revenue must be distributed by the county 
382.16  auditor or the county treasurer to all local taxing 
382.17  jurisdictions in which the wind energy conversion system is 
382.18  located, as follows:  beginning with distributions in 2006, 80 
382.19  percent to counties; 14 percent to cities and townships; and six 
382.20  percent to school districts; and for distributions occurring in 
382.21  2004 and 2005 in the same proportion that each of the local 
382.22  taxing jurisdiction's current year's net tax capacity based tax 
382.23  rate is to the current year's total local net tax capacity based 
382.24  rate. 
382.25     [EFFECTIVE DATE.] This section is effective the day 
382.26  following final enactment. 
382.27     Sec. 18.  Minnesota Statutes 2004, section 273.11, 
382.28  subdivision 8, is amended to read: 
382.29     Subd. 8.  [LIMITED EQUITY COOPERATIVE APARTMENTS.] For the 
382.30  purposes of this subdivision, the terms defined in this 
382.31  subdivision have the meanings given them.  
382.32     A "limited equity cooperative" is a corporation organized 
382.33  under chapter 308A or 308B, which has as its primary purpose the 
382.34  provision of housing and related services to its members which 
382.35  meets one of the following criteria with respect to the income 
382.36  of its members:  (1) a minimum of 75 percent of members must 
383.1   have incomes at or less than 90 percent of area median income, 
383.2   (2) a minimum of 40 percent of members must have incomes at or 
383.3   less than 60 percent of area median income, or (3) a minimum of 
383.4   20 percent of members must have incomes at or less than 50 
383.5   percent of area median income.  For purposes of this clause, 
383.6   "member income" shall mean the income of a member existing at 
383.7   the time the member acquires cooperative membership, and median 
383.8   income shall mean the St. Paul-Minneapolis metropolitan area 
383.9   median income as determined by the United States Department of 
383.10  Housing and Urban Development.  It must also meet the following 
383.11  requirements:  
383.12     (a) The articles of incorporation set the sale price of 
383.13  occupancy entitling cooperative shares or memberships at no more 
383.14  than a transfer value determined as provided in the articles. 
383.15  That value may not exceed the sum of the following:  
383.16     (1) the consideration paid for the membership or shares by 
383.17  the first occupant of the unit, as shown in the records of the 
383.18  corporation; 
383.19     (2) the fair market value, as shown in the records of the 
383.20  corporation, of any improvements to the real property that were 
383.21  installed at the sole expense of the member with the prior 
383.22  approval of the board of directors; 
383.23     (3) accumulated interest, or an inflation allowance not to 
383.24  exceed the greater of a ten percent annual noncompounded 
383.25  increase on the consideration paid for the membership or share 
383.26  by the first occupant of the unit, or the amount that would have 
383.27  been paid on that consideration if interest had been paid on it 
383.28  at the rate of the percentage increase in the revised Consumer 
383.29  Price Index for All Urban Consumers for the Minneapolis-St. Paul 
383.30  metropolitan area prepared by the United States Department of 
383.31  Labor, provided that the amount determined pursuant to this 
383.32  clause may not exceed $500 for each year or fraction of a year 
383.33  the membership or share was owned; plus 
383.34     (4) real property capital contributions shown in the 
383.35  records of the corporation to have been paid by the transferor 
383.36  member and previous holders of the same membership, or of 
384.1   separate memberships that had entitled occupancy to the unit of 
384.2   the member involved.  These contributions include contributions 
384.3   to a corporate reserve account the use of which is restricted to 
384.4   real property improvements or acquisitions, contributions to the 
384.5   corporation which are used for real property improvements or 
384.6   acquisitions, and the amount of principal amortized by the 
384.7   corporation on its indebtedness due to the financing of real 
384.8   property acquisition or improvement or the averaging of 
384.9   principal paid by the corporation over the term of its real 
384.10  property-related indebtedness. 
384.11     (b) The articles of incorporation require that the board of 
384.12  directors limit the purchase price of stock or membership 
384.13  interests for new member-occupants or resident shareholders to 
384.14  an amount which does not exceed the transfer value for the 
384.15  membership or stock as defined in clause (a).  
384.16     (c) The articles of incorporation require that the total 
384.17  distribution out of capital to a member shall not exceed that 
384.18  transfer value. 
384.19     (d) The articles of incorporation require that upon 
384.20  liquidation of the corporation any assets remaining after 
384.21  retirement of corporate debts and distribution to members will 
384.22  be conveyed to a charitable organization described in section 
384.23  501(c)(3) of the Internal Revenue Code of 1986, as amended 
384.24  through December 31, 1992, or a public agency.  
384.25     A "limited equity cooperative apartment" is a dwelling unit 
384.26  owned by a limited equity cooperative.  
384.27     "Occupancy entitling cooperative share or membership" is 
384.28  the ownership interest in a cooperative organization which 
384.29  entitles the holder to an exclusive right to occupy a dwelling 
384.30  unit owned or leased by the cooperative.  
384.31     For purposes of taxation, the assessor shall value a unit 
384.32  owned by a limited equity cooperative at the lesser of its 
384.33  market value or the value determined by capitalizing the net 
384.34  operating income of a comparable apartment operated on a rental 
384.35  basis at the capitalization rate used in valuing comparable 
384.36  buildings that are not limited equity cooperatives.  If a 
385.1   cooperative fails to operate in accordance with the provisions 
385.2   of clauses (a) to (d), the property shall be subject to 
385.3   additional property taxes in the amount of the difference 
385.4   between the taxes determined in accordance with this subdivision 
385.5   for the last ten years that the property had been assessed 
385.6   pursuant to this subdivision and the amount that would have been 
385.7   paid if the provisions of this subdivision had not applied to 
385.8   it.  The additional taxes, plus interest at the rate specified 
385.9   in section 549.09, shall be extended against the property on the 
385.10  tax list for the current year. 
385.11     [EFFECTIVE DATE.] This section is effective for taxes 
385.12  payable in 2004 and thereafter. 
385.13     Sec. 19.  Minnesota Statutes 2004, section 273.124, 
385.14  subdivision 3, is amended to read: 
385.15     Subd. 3.  [COOPERATIVES AND CHARITABLE CORPORATIONS; 
385.16  HOMESTEAD AND OTHER PROPERTY.] (a) When property is owned by a 
385.17  corporation or association organized under chapter 308A or 308B, 
385.18  and each person who owns a share or shares in the corporation or 
385.19  association is entitled to occupy a building on the property, or 
385.20  a unit within a building on the property, the corporation or 
385.21  association may claim homestead treatment for each dwelling, or 
385.22  for each unit in the case of a building containing several 
385.23  dwelling units, or for the part of the value of the building 
385.24  occupied by a shareholder.  Each building or unit must be 
385.25  designated by legal description or number.  The net tax capacity 
385.26  of each building or unit that qualifies for assessment as a 
385.27  homestead under this subdivision must include not more than 
385.28  one-half acre of land, if platted, nor more than 80 acres if 
385.29  unplatted.  The net tax capacity of the property is the sum of 
385.30  the net tax capacities of each of the respective buildings or 
385.31  units comprising the property, including the net tax capacity of 
385.32  each unit's or building's proportionate share of the land and 
385.33  any common buildings.  To qualify for the treatment provided by 
385.34  this subdivision, the corporation or association must be wholly 
385.35  owned by persons having a right to occupy a building or unit 
385.36  owned by the corporation or association.  A charitable 
386.1   corporation organized under the laws of Minnesota and not 
386.2   otherwise exempt thereunder with no outstanding stock qualifies 
386.3   for homestead treatment with respect to member residents of the 
386.4   dwelling units who have purchased and hold residential 
386.5   participation warrants entitling them to occupy the units. 
386.6      (b) To the extent provided in paragraph (a), a cooperative 
386.7   or corporation organized under chapter 308A may obtain separate 
386.8   assessment and valuation, and separate property tax statements 
386.9   for each residential homestead, residential nonhomestead, or for 
386.10  each seasonal residential recreational building or unit not used 
386.11  for commercial purposes.  The appropriate class rates under 
386.12  section 273.13 shall be applicable as if each building or unit 
386.13  were a separate tax parcel; provided, however, that the tax 
386.14  parcel which exists at the time the cooperative or corporation 
386.15  makes application under this subdivision shall be a single 
386.16  parcel for purposes of property taxes or the enforcement and 
386.17  collection thereof, other than as provided in paragraph (a) or 
386.18  this paragraph. 
386.19     (c) A member of a corporation or association may initially 
386.20  obtain the separate assessment and valuation and separate 
386.21  property tax statements, as provided in paragraph (b), by 
386.22  applying to the assessor by June 30 of the assessment year. 
386.23     (d) When a building, or dwelling units within a building, 
386.24  no longer qualify under paragraph (a) or (b), the current owner 
386.25  must notify the assessor within 30 days.  Failure to notify the 
386.26  assessor within 30 days shall result in the loss of benefits 
386.27  under paragraph (a) or (b) for taxes payable in the year that 
386.28  the failure is discovered.  For these purposes, "benefits under 
386.29  paragraph (a) or (b)" means the difference in the net tax 
386.30  capacity of the building or units which no longer qualify as 
386.31  computed under paragraph (a) or (b) and as computed under the 
386.32  otherwise applicable law, times the local tax rate applicable to 
386.33  the building for that taxes payable year.  Upon discovery of a 
386.34  failure to notify, the assessor shall inform the auditor of the 
386.35  difference in net tax capacity for the building or buildings in 
386.36  which units no longer qualify, and the auditor shall calculate 
387.1   the benefits under paragraph (a) or (b).  Such amount, plus a 
387.2   penalty equal to 100 percent of that amount, shall then be 
387.3   demanded of the building's owner.  The property owner may appeal 
387.4   the county's determination by serving copies of a petition for 
387.5   review with county officials as provided in section 278.01 and 
387.6   filing a proof of service as provided in section 278.01 with the 
387.7   Minnesota Tax Court within 60 days of the date of the notice 
387.8   from the county.  The appeal shall be governed by the Tax Court 
387.9   procedures provided in chapter 271, for cases relating to the 
387.10  tax laws as defined in section 271.01, subdivision 5; 
387.11  disregarding sections 273.125, subdivision 5, and 278.03, but 
387.12  including section 278.05, subdivision 2.  If the amount of the 
387.13  benefits under paragraph (a) or (b) and penalty are not paid 
387.14  within 60 days, and if no appeal has been filed, the county 
387.15  auditor shall certify the amount of the benefit and penalty to 
387.16  the succeeding year's tax list to be collected as part of the 
387.17  property taxes on the affected property. 
387.18     [EFFECTIVE DATE.] This section is effective for taxes 
387.19  payable in 2004 and thereafter. 
387.20     Sec. 20.  Minnesota Statutes 2004, section 273.124, 
387.21  subdivision 6, is amended to read: 
387.22     Subd. 6.  [LEASEHOLD COOPERATIVES.] When one or more 
387.23  dwellings or one or more buildings which each contain several 
387.24  dwelling units is owned by a nonprofit corporation subject to 
387.25  the provisions of chapter 317A and qualifying under section 
387.26  501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as 
387.27  amended through December 31, 1990, or a limited partnership 
387.28  which corporation or partnership operates the property in 
387.29  conjunction with a cooperative association, and has received 
387.30  public financing, homestead treatment may be claimed by the 
387.31  cooperative association on behalf of the members of the 
387.32  cooperative for each dwelling unit occupied by a member of the 
387.33  cooperative.  The cooperative association must provide the 
387.34  assessor with the Social Security numbers of those members.  To 
387.35  qualify for the treatment provided by this subdivision, the 
387.36  following conditions must be met:  
388.1      (a) the cooperative association must be organized under 
388.2   chapter 308A or 308B and all voting members of the board of 
388.3   directors must be resident tenants of the cooperative and must 
388.4   be elected by the resident tenants of the cooperative; 
388.5      (b) the cooperative association must have a lease for 
388.6   occupancy of the property for a term of at least 20 years, which 
388.7   permits the cooperative association, while not in default on the 
388.8   lease, to participate materially in the management of the 
388.9   property, including material participation in establishing 
388.10  budgets, setting rent levels, and hiring and supervising a 
388.11  management agent; 
388.12     (c) to the extent permitted under state or federal law, the 
388.13  cooperative association must have a right under a written 
388.14  agreement with the owner to purchase the property if the owner 
388.15  proposes to sell it; if the cooperative association does not 
388.16  purchase the property it is offered for sale, the owner may not 
388.17  subsequently sell the property to another purchaser at a price 
388.18  lower than the price at which it was offered for sale to the 
388.19  cooperative association unless the cooperative association 
388.20  approves the sale; 
388.21     (d) a minimum of 40 percent of the cooperative 
388.22  association's members must have incomes at or less than 60 
388.23  percent of area median gross income as determined by the United 
388.24  States Secretary of Housing and Urban Development under section 
388.25  142(d)(2)(B) of the Internal Revenue Code of 1986, as amended 
388.26  through December 31, 1991.  For purposes of this clause, "member 
388.27  income" means the income of a member existing at the time the 
388.28  member acquires cooperative membership; 
388.29     (e) if a limited partnership owns the property, it must 
388.30  include as the managing general partner a nonprofit organization 
388.31  operating under the provisions of chapter 317A and qualifying 
388.32  under section 501(c)(3) or 501(c)(4) of the Internal Revenue 
388.33  Code of 1986, as amended through December 31, 1990, and the 
388.34  limited partnership agreement must provide that the managing 
388.35  general partner have sufficient powers so that it materially 
388.36  participates in the management and control of the limited 
389.1   partnership; 
389.2      (f) prior to becoming a member of a leasehold cooperative 
389.3   described in this subdivision, a person must have received 
389.4   notice that (1) describes leasehold cooperative property in 
389.5   plain language, including but not limited to the effects of 
389.6   classification under this subdivision on rents, property taxes 
389.7   and tax credits or refunds, and operating expenses, and (2) 
389.8   states that copies of the articles of incorporation and bylaws 
389.9   of the cooperative association, the lease between the owner and 
389.10  the cooperative association, a sample sublease between the 
389.11  cooperative association and a tenant, and, if the owner is a 
389.12  partnership, a copy of the limited partnership agreement, can be 
389.13  obtained upon written request at no charge from the owner, and 
389.14  the owner must send or deliver the materials within seven days 
389.15  after receiving any request; 
389.16     (g) if a dwelling unit of a building was occupied on the 
389.17  60th day prior to the date on which the unit became leasehold 
389.18  cooperative property described in this subdivision, the notice 
389.19  described in paragraph (f) must have been sent by first class 
389.20  mail to the occupant of the unit at least 60 days prior to the 
389.21  date on which the unit became leasehold cooperative property.  
389.22  For purposes of the notice under this paragraph, the copies of 
389.23  the documents referred to in paragraph (f) may be in proposed 
389.24  version, provided that any subsequent material alteration of 
389.25  those documents made after the occupant has requested a copy 
389.26  shall be disclosed to any occupant who has requested a copy of 
389.27  the document.  Copies of the articles of incorporation and 
389.28  certificate of limited partnership shall be filed with the 
389.29  secretary of state after the expiration of the 60-day period 
389.30  unless the change to leasehold cooperative status does not 
389.31  proceed; 
389.32     (h) the county attorney of the county in which the property 
389.33  is located must certify to the assessor that the property meets 
389.34  the requirements of this subdivision; 
389.35     (i) the public financing received must be from at least one 
389.36  of the following sources: 
390.1      (1) tax increment financing proceeds used for the 
390.2   acquisition or rehabilitation of the building or interest rate 
390.3   write-downs relating to the acquisition of the building; 
390.4      (2) government issued bonds exempt from taxes under section 
390.5   103 of the Internal Revenue Code of 1986, as amended through 
390.6   December 31, 1991, the proceeds of which are used for the 
390.7   acquisition or rehabilitation of the building; 
390.8      (3) programs under section 221(d)(3), 202, or 236, of Title 
390.9   II of the National Housing Act; 
390.10     (4) rental housing program funds under Section 8 of the 
390.11  United States Housing Act of 1937 or the market rate family 
390.12  graduated payment mortgage program funds administered by the 
390.13  Minnesota Housing Finance Agency that are used for the 
390.14  acquisition or rehabilitation of the building; 
390.15     (5) low-income housing credit under section 42 of the 
390.16  Internal Revenue Code of 1986, as amended through December 31, 
390.17  1991; 
390.18     (6) public financing provided by a local government used 
390.19  for the acquisition or rehabilitation of the building, including 
390.20  grants or loans from (i) federal community development block 
390.21  grants; (ii) HOME block grants; or (iii) residential rental 
390.22  bonds issued under chapter 474A; or 
390.23     (7) other rental housing program funds provided by the 
390.24  Minnesota Housing Finance Agency for the acquisition or 
390.25  rehabilitation of the building; 
390.26     (j) at the time of the initial request for homestead 
390.27  classification or of any transfer of ownership of the property, 
390.28  the governing body of the municipality in which the property is 
390.29  located must hold a public hearing and make the following 
390.30  findings: 
390.31     (1) that the granting of the homestead treatment of the 
390.32  apartment's units will facilitate safe, clean, affordable 
390.33  housing for the cooperative members that would otherwise not be 
390.34  available absent the homestead designation; 
390.35     (2) that the owner has presented information satisfactory 
390.36  to the governing body showing that the savings garnered from the 
391.1   homestead designation of the units will be used to reduce 
391.2   tenant's rents or provide a level of furnishing or maintenance 
391.3   not possible absent the designation; and 
391.4      (3) that the requirements of paragraphs (b), (d), and (i) 
391.5   have been met. 
391.6      Homestead treatment must be afforded to units occupied by 
391.7   members of the cooperative association and the units must be 
391.8   assessed as provided in subdivision 3, provided that any unit 
391.9   not so occupied shall be classified and assessed pursuant to the 
391.10  appropriate class.  No more than three acres of land may, for 
391.11  assessment purposes, be included with each dwelling unit that 
391.12  qualifies for homestead treatment under this subdivision. 
391.13     When dwelling units no longer qualify under this 
391.14  subdivision, the current owner must notify the assessor within 
391.15  60 days.  Failure to notify the assessor within 60 days shall 
391.16  result in the loss of benefits under this subdivision for taxes 
391.17  payable in the year that the failure is discovered.  For these 
391.18  purposes, "benefits under this subdivision" means the difference 
391.19  in the net tax capacity of the units which no longer qualify as 
391.20  computed under this subdivision and as computed under the 
391.21  otherwise applicable law, times the local tax rate applicable to 
391.22  the building for that taxes payable year.  Upon discovery of a 
391.23  failure to notify, the assessor shall inform the auditor of the 
391.24  difference in net tax capacity for the building or buildings in 
391.25  which units no longer qualify, and the auditor shall calculate 
391.26  the benefits under this subdivision.  Such amount, plus a 
391.27  penalty equal to 100 percent of that amount, shall then be 
391.28  demanded of the building's owner.  The property owner may appeal 
391.29  the county's determination by serving copies of a petition for 
391.30  review with county officials as provided in section 278.01 and 
391.31  filing a proof of service as provided in section 278.01 with the 
391.32  Minnesota Tax Court within 60 days of the date of the notice 
391.33  from the county.  The appeal shall be governed by the Tax Court 
391.34  procedures provided in chapter 271, for cases relating to the 
391.35  tax laws as defined in section 271.01, subdivision 5; 
391.36  disregarding sections 273.125, subdivision 5, and 278.03, but 
392.1   including section 278.05, subdivision 2.  If the amount of the 
392.2   benefits under this subdivision and penalty are not paid within 
392.3   60 days, and if no appeal has been filed, the county auditor 
392.4   shall certify the amount of the benefit and penalty to the 
392.5   succeeding year's tax list to be collected as part of the 
392.6   property taxes on the affected buildings. 
392.7      [EFFECTIVE DATE.] This section is effective for taxes 
392.8   payable in 2004 and thereafter. 
392.9      Sec. 21.  Minnesota Statutes 2004, section 273.124, 
392.10  subdivision 8, is amended to read: 
392.11     Subd. 8.  [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 
392.12  CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 
392.13  PARTNERSHIP.] (a) Each family farm corporation, each; each joint 
392.14  family farm venture,; and each limited liability company, and 
392.15  each or partnership operating which operates a family farm; is 
392.16  entitled to class 1b under section 273.13, subdivision 22, 
392.17  paragraph (b), or class 2a assessment for one homestead occupied 
392.18  by a shareholder, member, or partner thereof who is residing on 
392.19  the land, and actively engaged in farming of the land owned by 
392.20  the family farm corporation, joint family farm venture, limited 
392.21  liability company, or partnership operating a family farm.  
392.22  Homestead treatment applies even if legal title to the property 
392.23  is in the name of the family farm corporation, joint family farm 
392.24  venture, limited liability company, or partnership operating the 
392.25  family farm, and not in the name of the person residing on it. 
392.26     "Family farm corporation," "family farm," and "partnership 
392.27  operating a family farm" have the meanings given in section 
392.28  500.24, except that the number of allowable shareholders, 
392.29  members, or partners under this subdivision shall not exceed 
392.30  12.  "Limited liability company" has the meaning contained in 
392.31  sections 322B.03, subdivision 28, and 500.24, subdivision 2, 
392.32  paragraphs (l) and (m).  "Joint family farm venture" means a 
392.33  cooperative agreement among two or more farm enterprises 
392.34  authorized to operate a family farm under section 500.24. 
392.35     (b) In addition to property specified in paragraph (a), any 
392.36  other residences owned by family farm corporations, joint family 
393.1   farm ventures, limited liability companies, or partnerships 
393.2   operating a family farm described in paragraph (a) which are 
393.3   located on agricultural land and occupied as homesteads by its 
393.4   shareholders, members, or partners who are actively engaged in 
393.5   farming on behalf of that corporation, joint farm venture, 
393.6   limited liability company, or partnership must also be assessed 
393.7   as class 2a property or as class 1b property under section 
393.8   273.13. 
393.9      (c) Agricultural property that is owned by a member, 
393.10  partner, or shareholder of a family farm corporation or joint 
393.11  family farm venture, limited liability company operating a 
393.12  family farm, or by a partnership operating a family farm and 
393.13  leased to the family farm corporation, limited liability 
393.14  company, or partnership operating a family farm, or joint farm 
393.15  venture, as defined in paragraph (a), is eligible for 
393.16  classification as class 1b or class 2a under section 273.13, if 
393.17  the owner is actually residing on the property, and is actually 
393.18  engaged in farming the land on behalf of that corporation, joint 
393.19  farm venture, limited liability company, or partnership.  This 
393.20  paragraph applies without regard to any legal possession rights 
393.21  of the family farm corporation, joint family farm venture, 
393.22  limited liability company, or partnership operating a family 
393.23  farm under the lease. 
393.24     [EFFECTIVE DATE.] This section is effective the day 
393.25  following final enactment. 
393.26     Sec. 22.  Minnesota Statutes 2004, section 273.124, 
393.27  subdivision 13, is amended to read: 
393.28     Subd. 13.  [HOMESTEAD APPLICATION.] (a) A person who meets 
393.29  the homestead requirements under subdivision 1 must file a 
393.30  homestead application with the county assessor to initially 
393.31  obtain homestead classification. 
393.32     (b) On or before January 2, 1993, each county assessor 
393.33  shall mail a homestead application to the owner of each parcel 
393.34  of property within the county which was classified as homestead 
393.35  for the 1992 assessment year.  The format and contents of a 
393.36  uniform homestead application shall be prescribed by the 
394.1   commissioner of revenue.  The commissioner shall consult with 
394.2   the chairs of the house and senate tax committees on the 
394.3   contents of the homestead application form.  The application 
394.4   must clearly inform the taxpayer that this application must be 
394.5   signed by all owners who occupy the property or by the 
394.6   qualifying relative and returned to the county assessor in order 
394.7   for the property to continue receiving homestead treatment.  The 
394.8   envelope containing the homestead application shall clearly 
394.9   identify its contents and alert the taxpayer of its necessary 
394.10  immediate response. 
394.11     (c) Every property owner applying for homestead 
394.12  classification must furnish to the county assessor the Social 
394.13  Security number of each occupant who is listed as an owner of 
394.14  the property on the deed of record, the name and address of each 
394.15  owner who does not occupy the property, and the name and Social 
394.16  Security number of each owner's spouse who occupies the 
394.17  property.  The application must be signed by each owner who 
394.18  occupies the property and by each owner's spouse who occupies 
394.19  the property, or, in the case of property that qualifies as a 
394.20  homestead under subdivision 1, paragraph (c), by the qualifying 
394.21  relative. 
394.22     If a property owner occupies a homestead, the property 
394.23  owner's spouse may not claim another property as a homestead 
394.24  unless the property owner and the property owner's spouse file 
394.25  with the assessor an affidavit or other proof required by the 
394.26  assessor stating that the property qualifies as a homestead 
394.27  under subdivision 1, paragraph (e). 
394.28     Owners or spouses occupying residences owned by their 
394.29  spouses and previously occupied with the other spouse, either of 
394.30  whom fail to include the other spouse's name and Social Security 
394.31  number on the homestead application or provide the affidavits or 
394.32  other proof requested, will be deemed to have elected to receive 
394.33  only partial homestead treatment of their residence.  The 
394.34  remainder of the residence will be classified as nonhomestead 
394.35  residential.  When an owner or spouse's name and Social Security 
394.36  number appear on homestead applications for two separate 
395.1   residences and only one application is signed, the owner or 
395.2   spouse will be deemed to have elected to homestead the residence 
395.3   for which the application was signed. 
395.4      The Social Security numbers or affidavits or other proofs 
395.5   of the property owners and spouses are private data on 
395.6   individuals as defined by section 13.02, subdivision 12, but, 
395.7   notwithstanding that section, the private data may be disclosed 
395.8   to the commissioner of revenue, or, for purposes of proceeding 
395.9   under the Revenue Recapture Act to recover personal property 
395.10  taxes owing, to the county treasurer. 
395.11     (d) If residential real estate is occupied and used for 
395.12  purposes of a homestead by a relative of the owner and qualifies 
395.13  for a homestead under subdivision 1, paragraph (c), in order for 
395.14  the property to receive homestead status, a homestead 
395.15  application must be filed with the assessor.  The Social 
395.16  Security number of each relative occupying the property and the 
395.17  Social Security number of each owner who is related to an 
395.18  occupant of the property shall be required on the homestead 
395.19  application filed under this subdivision.  If a different 
395.20  relative of the owner subsequently occupies the property, the 
395.21  owner of the property must notify the assessor within 30 days of 
395.22  the change in occupancy.  The Social Security number of a 
395.23  relative occupying the property is private data on individuals 
395.24  as defined by section 13.02, subdivision 12, but may be 
395.25  disclosed to the commissioner of revenue.  
395.26     (e) The homestead application shall also notify the 
395.27  property owners that the application filed under this section 
395.28  will not be mailed annually and that if the property is granted 
395.29  homestead status for the 1993 assessment, or any assessment year 
395.30  thereafter, that same property shall remain classified as 
395.31  homestead until the property is sold or transferred to another 
395.32  person, or the owners, the spouse of the owner, or the relatives 
395.33  no longer use the property as their homestead.  Upon the sale or 
395.34  transfer of the homestead property, a certificate of value must 
395.35  be timely filed with the county auditor as provided under 
395.36  section 272.115.  Failure to notify the assessor within 30 days 
396.1   that the property has been sold, transferred, or that the owner, 
396.2   the spouse of the owner, or the relative is no longer occupying 
396.3   the property as a homestead, shall result in (i) a requirement 
396.4   to repay homestead benefits related to assessment dates after 
396.5   the ownership or occupancy change, except for years for which a 
396.6   new and valid homestead application was effective, and limited 
396.7   to benefits for taxes payable in the current year and the five 
396.8   prior years; (ii) the penalty provided under this subdivision 
396.9   paragraph (h) for each of the same years, if applicable; and 
396.10  (iii) the property will lose its current homestead status for 
396.11  the current assessment year unless a new homestead application 
396.12  is effective for that assessment.  The provisions of section 
396.13  273.02 with regard to property erroneously classified as a 
396.14  homestead do not apply.  The person to be notified of the 
396.15  reimbursement requirement and of the penalty under the 
396.16  procedures in paragraph (h) is the owner who sold or transferred 
396.17  the property or whose relative is no longer occupying the 
396.18  property as a homestead. 
396.19     (f) If the homestead application is not returned within 30 
396.20  days, the county will send a second application to the present 
396.21  owners of record.  The notice of proposed property taxes 
396.22  prepared under section 275.065, subdivision 3, shall reflect the 
396.23  property's classification.  Beginning with assessment year 1993 
396.24  for all properties, if a homestead application has not been 
396.25  filed with the county by December 15, the assessor shall 
396.26  classify the property as nonhomestead for the current assessment 
396.27  year for taxes payable in the following year, provided that the 
396.28  owner may be entitled to receive the homestead classification by 
396.29  proper application under section 375.192. 
396.30     (g) At the request of the commissioner, each county must 
396.31  give the commissioner a list that includes the name and Social 
396.32  Security number of each property owner and the property owner's 
396.33  spouse occupying the property, or relative of a property owner, 
396.34  applying for homestead classification under this subdivision.  
396.35  The commissioner shall use the information provided on the lists 
396.36  as appropriate under the law, including for the detection of 
397.1   improper claims by owners, or relatives of owners, under chapter 
397.2   290A.  
397.3      (h) If the commissioner a city or county assessor finds 
397.4   that a property owner may be claiming a fraudulent is receiving 
397.5   homestead benefits that are not allowable under the law, 
397.6   the commissioner shall notify the appropriate counties.  Within 
397.7   90 days of the notification, the county assessor shall 
397.8   investigate to determine if the homestead classification was 
397.9   properly claimed.  If the property owner does not qualify, the 
397.10  county assessor shall notify the county auditor who will 
397.11  determine the amount of homestead benefits that had been 
397.12  improperly allowed for taxes payable in the current year and in 
397.13  each of the five prior years.  For the purpose of this section, 
397.14  "homestead benefits" means the tax reduction resulting from the 
397.15  classification as a homestead under section 273.13, the taconite 
397.16  homestead credit under section 273.135, the residential 
397.17  homestead and agricultural homestead credits under section 
397.18  273.1384, and the supplemental homestead credit under section 
397.19  273.1391. 
397.20     The county auditor shall send a notice to the person who 
397.21  owned the affected property at the time the homestead 
397.22  application related to the improper homestead was filed, 
397.23  demanding reimbursement of the homestead benefits not allowable 
397.24  under the law for taxes payable in the current year and the five 
397.25  prior years.  The notice shall demand reimbursement of those 
397.26  homestead benefits, plus a penalty equal to 100 either: 
397.27     (i) ten percent of the homestead benefits if the owner 
397.28  acted with negligent or intentional disregard of the applicable 
397.29  tax laws and rules but without intent to defraud; or 
397.30     (ii) 50 percent of the homestead benefits if the owner 
397.31  fraudulently attempted in any manner to evade or defeat the 
397.32  proper tax. 
397.33     If the penalty provided in this paragraph is imposed and 
397.34  the assessor becomes aware that the property is improperly 
397.35  classified as a homestead for the current assessment year, the 
397.36  assessor shall reclassify the property for that assessment, and 
398.1   the provisions of section 273.02 with regard to property 
398.2   erroneously classified as a homestead do not apply.  
398.3      A penalty under this section shall be abated under section 
398.4   375.192 upon a determination that the improper classification 
398.5   was due to reasonable cause.  The person notified may appeal the 
398.6   county's determination by serving copies of a petition for 
398.7   review with county officials as provided in section 278.01 and 
398.8   filing proof of service as provided in section 278.01 with the 
398.9   Minnesota Tax Court within 60 days of the date of the notice 
398.10  from the county.  Procedurally, the appeal is governed by the 
398.11  provisions in chapter 271 which apply to the appeal of a 
398.12  property tax assessment or levy, but without requiring any 
398.13  prepayment of the amount in controversy.  If the amount of 
398.14  homestead benefits and penalty is not paid within 60 days, and 
398.15  if no appeal has been filed, the county auditor shall certify 
398.16  the amount of taxes and penalty to the county treasurer.  The 
398.17  county treasurer will add interest to the unpaid homestead 
398.18  benefits and penalty amounts at the rate provided in section 
398.19  279.03 for real property taxes becoming delinquent in the 
398.20  calendar year during which the amount remains unpaid.  Interest 
398.21  may be assessed for the period beginning 60 days after demand 
398.22  for payment was made. 
398.23     If the person notified is the current owner of the 
398.24  property, the treasurer may add the total amount of homestead 
398.25  benefits, penalty, interest, and costs to the ad valorem taxes 
398.26  otherwise payable on the property by including the amounts on 
398.27  the property tax statements under section 276.04, subdivision 
398.28  3.  The amounts added under this paragraph to the ad valorem 
398.29  taxes shall include interest accrued through December 31 of the 
398.30  year preceding the taxes payable year for which the amounts are 
398.31  first added.  These amounts, when added to the property tax 
398.32  statement, become subject to all the laws for the enforcement of 
398.33  real or personal property taxes for that year, and for any 
398.34  subsequent year. 
398.35     If the person notified is not the current owner of the 
398.36  property, the treasurer may collect the amounts due under the 
399.1   Revenue Recapture Act in chapter 270A, or use any of the powers 
399.2   granted in sections 277.20 and 277.21 without exclusion, to 
399.3   enforce payment of the homestead benefits, penalty, interest, 
399.4   and costs, as if those amounts were delinquent tax obligations 
399.5   of the person who owned the property at the time the application 
399.6   related to the improperly allowed homestead was filed.  The 
399.7   treasurer may relieve a prior owner of personal liability for 
399.8   the homestead benefits, penalty, interest, and costs, and 
399.9   instead extend those amounts on the tax lists against the 
399.10  property as provided in this paragraph to the extent that the 
399.11  current owner agrees in writing.  On all demands, billings, 
399.12  property tax statements, and related correspondence, the county 
399.13  must list and state separately the amounts of homestead 
399.14  benefits, penalty, interest and costs being demanded, billed or 
399.15  assessed. 
399.16     (i) Any amount of homestead benefits recovered by the 
399.17  county from the property owner shall be distributed to the 
399.18  county, city or town, and school district where the property is 
399.19  located in the same proportion that each taxing district's levy 
399.20  was to the total of the three taxing districts' levy for the 
399.21  current year.  Any amount recovered attributable to taconite 
399.22  homestead credit shall be transmitted to the St. Louis County 
399.23  auditor to be deposited in the taconite property tax relief 
399.24  account.  Any amount recovered that is attributable to 
399.25  supplemental homestead credit is to be transmitted to the 
399.26  commissioner of revenue for deposit in the general fund of the 
399.27  state treasury.  The total amount of penalty collected must be 
399.28  deposited in the county general fund. 
399.29     (j) If a property owner has applied for more than one 
399.30  homestead and the county assessors cannot determine which 
399.31  property should be classified as homestead, the county assessors 
399.32  will refer the information to the commissioner.  The 
399.33  commissioner shall make the determination and notify the 
399.34  counties within 60 days. 
399.35     (k) In addition to lists of homestead properties, the 
399.36  commissioner may ask the counties to furnish lists of all 
400.1   properties and the record owners.  The Social Security numbers 
400.2   and federal identification numbers that are maintained by a 
400.3   county or city assessor for property tax administration 
400.4   purposes, and that may appear on the lists retain their 
400.5   classification as private or nonpublic data; but may be viewed, 
400.6   accessed, and used by the county auditor or treasurer of the 
400.7   same county for the limited purpose of assisting the 
400.8   commissioner in the preparation of microdata samples under 
400.9   section 270.0681. 
400.10     (l) On or before April 30 each year, each county must 
400.11  provide the commissioner with the following data for each parcel 
400.12  of homestead property by electronic means as defined in section 
400.13  289A.02, subdivision 8: 
400.14     (i) the property identification number assigned to the 
400.15  parcel for purposes of taxes payable in the current year; 
400.16     (ii) the name and Social Security number of each property 
400.17  owner and property owner's spouse, as shown on the tax rolls for 
400.18  the current and the prior assessment year; 
400.19     (iii) the classification of the property under section 
400.20  273.13 for taxes payable in the current year and in the prior 
400.21  year; 
400.22     (iv) an indication of whether the property was classified 
400.23  as a homestead for taxes payable in the current year or for 
400.24  taxes payable in the prior year because of occupancy by a 
400.25  relative of the owner or by a spouse of a relative; 
400.26     (v) the property taxes payable as defined in section 
400.27  290A.03, subdivision 13, for the current year and the prior 
400.28  year; 
400.29     (vi) the market value of improvements to the property first 
400.30  assessed for tax purposes for taxes payable in the current year; 
400.31     (vii) the assessor's estimated market value assigned to the 
400.32  property for taxes payable in the current year and the prior 
400.33  year; 
400.34     (viii) the taxable market value assigned to the property 
400.35  for taxes payable in the current year and the prior year; 
400.36     (ix) whether there are delinquent property taxes owing on 
401.1   the homestead; 
401.2      (x) the unique taxing district in which the property is 
401.3   located; and 
401.4      (xi) such other information as the commissioner decides is 
401.5   necessary. 
401.6      The commissioner shall use the information provided on the 
401.7   lists as appropriate under the law, including for the detection 
401.8   of improper claims by owners, or relatives of owners, under 
401.9   chapter 290A. 
401.10     [EFFECTIVE DATE.] This section is generally effective July 
401.11  1, 2005, and thereafter, except the changes in paragraphs (e) 
401.12  and (h) are effective only for notices initially sent out under 
401.13  those paragraphs on or after July 1, 2005. 
401.14     Sec. 23.  Minnesota Statutes 2004, section 273.124, 
401.15  subdivision 21, is amended to read: 
401.16     Subd. 21.  [TRUST PROPERTY; HOMESTEAD.] Real property held 
401.17  by a trustee under a trust is eligible for classification as 
401.18  homestead property if: 
401.19     (1) the grantor or surviving spouse of the grantor of the 
401.20  trust occupies and uses the property as a homestead; 
401.21     (2) a relative or surviving relative of the grantor who 
401.22  meets the requirements of subdivision 1, paragraph (c), in the 
401.23  case of residential real estate; or subdivision 1, paragraph 
401.24  (d), in the case of agricultural property, occupies and uses the 
401.25  property as a homestead; 
401.26     (3) a family farm corporation, joint farm venture, limited 
401.27  liability company, or partnership operating a family farm rents 
401.28  the property held by a trustee under a trust, and the grantor, 
401.29  the spouse of the grantor, or the son or daughter of the 
401.30  grantor, who is also a shareholder, member, or partner of the 
401.31  corporation, joint farm venture, limited liability company, or 
401.32  partnership occupies and uses the property as a homestead, and 
401.33  or is actively farming the property on behalf of the 
401.34  corporation, joint farm venture, limited liability company, or 
401.35  partnership; or 
401.36     (4) a person who has received homestead classification for 
402.1   property taxes payable in 2000 on the basis of an unqualified 
402.2   legal right under the terms of the trust agreement to occupy the 
402.3   property as that person's homestead and who continues to use the 
402.4   property as a homestead or a person who received the homestead 
402.5   classification for taxes payable in 2005 under clause (3) who 
402.6   does not qualify under clause (3) for taxes payable in 2006 or 
402.7   thereafter but who continues to qualify under clause (3) as it 
402.8   existed for taxes payable in 2005. 
402.9      For purposes of this subdivision, "grantor" is defined as 
402.10  the person creating or establishing a testamentary, inter Vivos, 
402.11  revocable or irrevocable trust by written instrument or through 
402.12  the exercise of a power of appointment. 
402.13     [EFFECTIVE DATE.] This section is effective for taxes 
402.14  payable in 2006 and thereafter. 
402.15     Sec. 24.  Minnesota Statutes 2004, section 273.1315, is 
402.16  amended to read: 
402.17     273.1315 [CERTIFICATION OF 1B PROPERTY.] 
402.18     Any property owner seeking classification and assessment of 
402.19  the owner's homestead as class 1b property pursuant to section 
402.20  273.13, subdivision 22, paragraph (b), shall file with the 
402.21  commissioner of revenue a 1b homestead declaration, on a form 
402.22  prescribed by the commissioner.  The declaration shall contain 
402.23  the following information:  
402.24     (a) the information necessary to verify that on or before 
402.25  June 30 of the filing year, the property owner or the owner's 
402.26  spouse satisfies the requirements of section 273.13, subdivision 
402.27  22, paragraph (b), for 1b classification; and 
402.28     (b) any additional information prescribed by the 
402.29  commissioner.  
402.30     The declaration must be filed on or before October 1 to be 
402.31  effective for property taxes payable during the succeeding 
402.32  calendar year.  The declaration and any supplementary 
402.33  information received from the property owner pursuant to this 
402.34  section shall be subject to chapter 270B.  If approved by the 
402.35  commissioner, the declaration remains in effect until the 
402.36  property no longer qualifies under section 273.13, subdivision 
403.1   22, paragraph (b).  Failure to notify the commissioner within 30 
403.2   days that the property no longer qualifies under that paragraph 
403.3   because of a sale, change in occupancy, or change in the status 
403.4   or condition of an occupant shall result in the penalty provided 
403.5   in section 273.124, subdivision 13, computed on the basis of the 
403.6   class 1b benefits for the property, and the property shall lose 
403.7   its current class 1b classification. 
403.8      The commissioner shall provide to the assessor on or before 
403.9   November 1 a listing of the parcels of property qualifying for 
403.10  1b classification.  
403.11     [EFFECTIVE DATE.] This section is effective the day 
403.12  following final enactment. 
403.13     Sec. 25.  Minnesota Statutes 2004, section 273.19, 
403.14  subdivision 1a, is amended to read: 
403.15     Subd. 1a.  [LEASE DESCRIBED.] For purposes of this section, 
403.16  a lease includes any agreement, except a cooperative farming 
403.17  agreement pursuant to section 97A.135, subdivision 3, or a lease 
403.18  executed pursuant to section 272.68, subdivision 4, permitting a 
403.19  nonexempt person or entity to use the property, regardless of 
403.20  whether the agreement is characterized as a lease.  A lease has 
403.21  a "term of at least one year" if the term is for a period of 
403.22  less than one year and the lease permits the parties to renew 
403.23  the lease without requiring that similar terms for leasing the 
403.24  property will be offered to other applicants or bidders through 
403.25  a competitive bidding or other form of offer to potential 
403.26  lessees or users. 
403.27     [EFFECTIVE DATE.] This section is effective the day 
403.28  following final enactment. 
403.29     Sec. 26.  Minnesota Statutes 2004, section 273.372, is 
403.30  amended to read: 
403.31     273.372 [PROCEEDINGS AND APPEALS; UTILITY OR RAILROAD 
403.32  VALUATIONS.] 
403.33     An appeal by a utility or railroad company concerning the 
403.34  exemption, valuation, or classification of property for which 
403.35  the commissioner of revenue has provided the city or county 
403.36  assessor with valuations by order, or for which the commissioner 
404.1   has recommended values to the city or county assessor, must be 
404.2   brought against the commissioner in Tax Court or in district 
404.3   court of the county where the property is located, and not 
404.4   against the county or taxing district where the property is 
404.5   located.  Subdivision 1.  [SCOPE.] This section governs judicial 
404.6   review of a claim that public utility property or railroad 
404.7   operating property has been partially, unfairly, or unequally 
404.8   assessed, or assessed at a valuation greater than its real or 
404.9   actual value, or that the property is exempt.  However, this 
404.10  section applies only to property described in sections 273.33, 
404.11  273.35, and 273.37, and only if the net tax capacity has not 
404.12  been changed from that provided to the city or a county by the 
404.13  commissioner.  If the net tax capacity being appealed is not the 
404.14  net tax capacity established by the commissioner through order 
404.15  or recommendation, or if the petition claims that the tax levied 
404.16  against the parcel is illegal, in whole or in part, or if the 
404.17  petition claims the tax has been paid, the action must be 
404.18  brought under chapter 278 without regard to this section in each 
404.19  county where the property is located and proper service must be 
404.20  made upon the local officials specified in section 278.01, 
404.21  subdivision 1. 
404.22     Subd. 2.  [CONTENTS AND FILING OF PETITION.] In all cases 
404.23  under this section, the petition must be served on the 
404.24  commissioner and must be filed with the Tax Court in Ramsey 
404.25  County.  In all cases under this section that directly challenge 
404.26  an order of the commissioner, the petition must include all the 
404.27  parcels encompassed by that order which the petitioner claims 
404.28  have been partially, unfairly, or unequally assessed, assessed 
404.29  at a valuation greater than their real or actual value, or are 
404.30  exempt.  In all cases under this section not directly 
404.31  challenging a commissioner's order, the petition must include 
404.32  either all the utility parcels or all the railroad parcels in 
404.33  the state in which the petitioner claims an interest and which 
404.34  the petitioner claims have been partially, unfairly, or 
404.35  unequally assessed, assessed at a valuation greater than their 
404.36  real or actual value, or are exempt. 
405.1      Subd. 3.  [APPLICABILITY OF OTHER LAWS.] If the appeal to 
405.2   court is from governed by this section directly challenges an 
405.3   order of the commissioner, it the appeal must be brought under 
405.4   chapter 271, except that when the provisions of this section 
405.5   conflict with chapter 271, this section prevails.  If the an 
405.6   appeal governed by this section is from the exemption, 
405.7   valuation, classification, or tax that results from 
405.8   implementation of the a commissioner's order or recommendation, 
405.9   it must be brought under the provisions of chapter 278, and the 
405.10  provisions in that chapter apply, except that service shall be 
405.11  on the commissioner only and not on the county local officials 
405.12  specified in section 278.01, subdivision 1, and if any other 
405.13  provision of this section conflicts with chapter 278, this 
405.14  section prevails.  
405.15     This provision applies to the property described in 
405.16  sections 273.33, 273.35, 273.36, and 273.37, but only if the 
405.17  appealed values have remained unchanged from those provided to 
405.18  the city or county by the commissioner.  If the exemption, 
405.19  valuation, or classification being appealed has been changed by 
405.20  the city or county, then the action must be brought under 
405.21  chapter 278 in the county where the property is located and 
405.22  proper service must be made upon the county officials as 
405.23  specified in section 278.01, subdivision 1. 
405.24     Subd. 4.  [NOTICE.] Upon filing of any appeal by a utility 
405.25  company or railroad against the commissioner under this section, 
405.26  the commissioner shall give notice by first class mail to each 
405.27  county which would be affected by the appeal. 
405.28     Subd. 5.  [ADMINISTRATIVE APPEALS.] Companies that submit 
405.29  the reports under section 270.82 or 273.371 by the date 
405.30  specified in that section, or by the date specified by the 
405.31  commissioner in an extension, may appeal administratively to the 
405.32  commissioner under the procedures in section 270.11, subdivision 
405.33  6, prior to bringing an action in Tax Court or in district 
405.34  court, however, instituting an administrative appeal with the 
405.35  commissioner does not change or modify the deadline in section 
405.36  271.06 for appealing an order of the commissioner in Tax Court 
406.1   or the deadline in section 278.01 for filing a property tax 
406.2   claim or objection in Tax Court or district court. 
406.3      [EFFECTIVE DATE.] This section is effective for petitions 
406.4   served and filed on or after September 1, 2005. 
406.5      Sec. 27.  Minnesota Statutes 2004, section 274.014, 
406.6   subdivision 2, is amended to read: 
406.7      Subd. 2.  [APPEALS AND EQUALIZATION COURSE.] By no later 
406.8   than January 1, Beginning in 2006, and each year thereafter, 
406.9   there must be at least one member at each meeting of a local 
406.10  board of appeal and equalization who has attended an appeals and 
406.11  equalization course developed or approved by the commissioner 
406.12  within the last four years, as certified by the commissioner.  
406.13  The course may be offered in conjunction with a meeting of the 
406.14  Minnesota League of Cities or the Minnesota Association of 
406.15  Townships.  The course content must include, but need not be 
406.16  limited to, a review of the handbook developed by the 
406.17  commissioner under subdivision 1. 
406.18     [EFFECTIVE DATE.] This section is effective the day 
406.19  following final enactment. 
406.20     Sec. 28.  Minnesota Statutes 2004, section 274.014, 
406.21  subdivision 3, is amended to read: 
406.22     Subd. 3.  [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] (a) 
406.23  Any city or town that does not conducts local boards of appeal 
406.24  and equalization meetings must provide proof to the county 
406.25  assessor by December 1, 2006, and each year thereafter, that it 
406.26  is in compliance with the requirements of subdivision 2, and 
406.27  that it had.  Beginning in 2006, this notice must also verify 
406.28  that there was a quorum of voting members at each meeting of the 
406.29  board of appeal and equalization in the prior current year,.  A 
406.30  city or town that does not comply with these requirements is 
406.31  deemed to have transferred its board of appeal and equalization 
406.32  powers to the county under section 274.01, subdivision 3, 
406.33  for beginning with the following year's assessment and 
406.34  continuing unless the powers are reinstated under paragraph (c). 
406.35     (b) The county shall notify the taxpayers when the board of 
406.36  appeal and equalization for a city or town has been transferred 
407.1   to the county under this subdivision and, prior to the meeting 
407.2   time of the county board of equalization, the county shall make 
407.3   available to those taxpayers a procedure for a review of the 
407.4   assessments, including, but not limited to, open book meetings.  
407.5   This alternate review process shall take place in April and May. 
407.6      (c) A local board whose powers are transferred to the 
407.7   county under this subdivision may be reinstated by resolution of 
407.8   the governing body of the city or town and upon proof of 
407.9   compliance with the requirements of subdivision 2.  The 
407.10  resolution and proofs must be provided to the county assessor by 
407.11  December 1 in order to be effective for the following year's 
407.12  assessment. 
407.13     [EFFECTIVE DATE.] This section is effective the day 
407.14  following final enactment. 
407.15     Sec. 29.  Minnesota Statutes 2004, section 274.14, is 
407.16  amended to read: 
407.17     274.14 [LENGTH OF SESSION; RECORD.] 
407.18     The county board of equalization or the special board of 
407.19  equalization appointed by it shall meet during the last ten 
407.20  meeting days in June.  For this purpose, "meeting days" are 
407.21  defined as any day of the week excluding Saturday and Sunday.  
407.22  The board may meet on any ten consecutive meeting days in June, 
407.23  after the second Friday in June, if.  The actual meeting dates 
407.24  are must be contained on the valuation notices mailed to each 
407.25  property owner in the county under as provided in section 
407.26  273.121.  For this purpose, "meeting days" is defined as any day 
407.27  of the week excluding Saturday and Sunday.  No action taken by 
407.28  the county board of review after June 30 is valid, except for 
407.29  corrections permitted in sections 273.01 and 274.01.  The county 
407.30  auditor shall keep an accurate record of the proceedings and 
407.31  orders of the board.  The record must be published like other 
407.32  proceedings of county commissioners.  A copy of the published 
407.33  record must be sent to the commissioner of revenue, with the 
407.34  abstract of assessment required by section 274.16.  
407.35     [EFFECTIVE DATE.] This section is effective the day 
407.36  following final enactment. 
408.1      Sec. 30.  Minnesota Statutes 2004, section 275.065, 
408.2   subdivision 1a, is amended to read: 
408.3      Subd. 1a.  [OVERLAPPING JURISDICTIONS.] In the case of a 
408.4   taxing authority lying in two or more counties, the home county 
408.5   auditor shall certify the proposed levy and the proposed local 
408.6   tax rate to the other county auditor by September 20 October 5.  
408.7   The home county auditor must estimate the levy or rate in 
408.8   preparing the notices required in subdivision 3, if the other 
408.9   county has not certified the appropriate information.  If 
408.10  requested by the home county auditor, the other county auditor 
408.11  must furnish an estimate to the home county auditor. 
408.12     [EFFECTIVE DATE.] This section is effective the day 
408.13  following final enactment. 
408.14     Sec. 31.  Minnesota Statutes 2004, section 275.07, 
408.15  subdivision 1, is amended to read: 
408.16     Subdivision 1.  [CERTIFICATION OF LEVY.] (a) Except as 
408.17  provided under paragraph (b), the taxes voted by cities, 
408.18  counties, school districts, and special districts shall be 
408.19  certified by the proper authorities to the county auditor on or 
408.20  before five working days after December 20 in each year.  A town 
408.21  must certify the levy adopted by the town board to the county 
408.22  auditor by September 15 each year.  If the town board modifies 
408.23  the levy at a special town meeting after September 15, the town 
408.24  board must recertify its levy to the county auditor on or before 
408.25  five working days after December 20.  The taxes certified shall 
408.26  be reduced by the county auditor by the aid received under 
408.27  section 273.1398, subdivision 3.  If a city, town, county, 
408.28  school district, or special district fails to certify its levy 
408.29  by that date, its levy shall be the amount levied by it for the 
408.30  preceding year. 
408.31     (b)(i) The taxes voted by counties under sections 103B.241, 
408.32  103B.245, and 103B.251 shall be separately certified by the 
408.33  county to the county auditor on or before five working days 
408.34  after December 20 in each year.  The taxes certified shall not 
408.35  be reduced by the county auditor by the aid received under 
408.36  section 273.1398, subdivision 3.  If a county fails to certify 
409.1   its levy by that date, its levy shall be the amount levied by it 
409.2   for the preceding year.  
409.3      (ii) For purposes of the proposed property tax notice under 
409.4   section 275.065 and the property tax statement under section 
409.5   276.04, for the first year in which the county implements the 
409.6   provisions of this paragraph, the county auditor shall reduce 
409.7   the county's levy for the preceding year to reflect any amount 
409.8   levied for water management purposes under clause (i) included 
409.9   in the county's levy. 
409.10     [EFFECTIVE DATE.] This section is effective the day 
409.11  following final enactment. 
409.12     Sec. 32.  Minnesota Statutes 2004, section 275.07, 
409.13  subdivision 4, is amended to read: 
409.14     Subd. 4.  [REPORT TO COMMISSIONER.] (a) On or before 
409.15  October 8 of each year, the county auditor shall report to the 
409.16  commissioner of revenue the proposed levy certified by local 
409.17  units of government under section 275.065, subdivision 1.  If 
409.18  any taxing authorities have notified the county auditor that 
409.19  they are in the process of negotiating an agreement for sharing, 
409.20  merging, or consolidating services but that when the proposed 
409.21  levy was certified under section 275.065, subdivision 1c, the 
409.22  agreement was not yet finalized, the county auditor shall supply 
409.23  that information to the commissioner when filing the report 
409.24  under this section and shall recertify the affected levies as 
409.25  soon as practical after October 10. 
409.26     (b) On or before January 15 of each year, the county 
409.27  auditor shall report to the commissioner of revenue the final 
409.28  levy certified by local units of government under subdivision 1. 
409.29     (c) The levies must be reported in the manner prescribed by 
409.30  the commissioner.  The reports must show a total levy and the 
409.31  amount of each special levy. 
409.32     [EFFECTIVE DATE.] This section is effective the day 
409.33  following final enactment. 
409.34     Sec. 33.  Minnesota Statutes 2004, section 276.04, 
409.35  subdivision 2, is amended to read: 
409.36     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
410.1   shall provide for the printing of the tax statements.  The 
410.2   commissioner of revenue shall prescribe the form of the property 
410.3   tax statement and its contents.  The statement must contain a 
410.4   tabulated statement of the dollar amount due to each taxing 
410.5   authority and the amount of the state tax from the parcel of 
410.6   real property for which a particular tax statement is prepared.  
410.7   The dollar amounts attributable to the county, the state tax, 
410.8   the voter approved school tax, the other local school tax, the 
410.9   township or municipality, and the total of the metropolitan 
410.10  special taxing districts as defined in section 275.065, 
410.11  subdivision 3, paragraph (i), must be separately stated.  The 
410.12  amounts due all other special taxing districts, if any, may be 
410.13  aggregated.  If the county levy under this paragraph includes an 
410.14  amount for a lake improvement district as defined under sections 
410.15  103B.501 to 103B.581, the amount attributable for that purpose 
410.16  must be separately stated from the remaining county levy 
410.17  amount.  The amount of the tax on homesteads qualifying under 
410.18  the senior citizens' property tax deferral program under chapter 
410.19  290B is the total amount of property tax before subtraction of 
410.20  the deferred property tax amount.  The amount of the tax on 
410.21  contamination value imposed under sections 270.91 to 270.98, if 
410.22  any, must also be separately stated.  The dollar amounts, 
410.23  including the dollar amount of any special assessments, may be 
410.24  rounded to the nearest even whole dollar.  For purposes of this 
410.25  section whole odd-numbered dollars may be adjusted to the next 
410.26  higher even-numbered dollar.  The amount of market value 
410.27  excluded under section 273.11, subdivision 16, if any, must also 
410.28  be listed on the tax statement. 
410.29     (b) The property tax statements for manufactured homes and 
410.30  sectional structures taxed as personal property shall contain 
410.31  the same information that is required on the tax statements for 
410.32  real property.  
410.33     (c) Real and personal property tax statements must contain 
410.34  the following information in the order given in this paragraph.  
410.35  The information must contain the current year tax information in 
410.36  the right column with the corresponding information for the 
411.1   previous year in a column on the left: 
411.2      (1) the property's estimated market value under section 
411.3   273.11, subdivision 1; 
411.4      (2) the property's taxable market value after reductions 
411.5   under section 273.11, subdivisions 1a and 16; 
411.6      (3) the property's gross tax, calculated by adding the 
411.7   property's total property tax to the sum of the aids enumerated 
411.8   in clause (4); 
411.9      (4) a total of the following aids: 
411.10     (i) education aids payable under chapters 122A, 123A, 123B, 
411.11  124D, 125A, 126C, and 127A; 
411.12     (ii) local government aids for cities, towns, and counties 
411.13  under chapter 477A sections 477A.011 to 477A.014; and 
411.14     (iii) disparity reduction aid under section 273.1398; 
411.15     (5) for homestead residential and agricultural properties, 
411.16  the credits under section 273.1384; 
411.17     (6) any credits received under sections 273.119; 273.123; 
411.18  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
411.19  473H.10, except that the amount of credit received under section 
411.20  273.135 must be separately stated and identified as "taconite 
411.21  tax relief"; and 
411.22     (7) the net tax payable in the manner required in paragraph 
411.23  (a). 
411.24     (d) If the county uses envelopes for mailing property tax 
411.25  statements and if the county agrees, a taxing district may 
411.26  include a notice with the property tax statement notifying 
411.27  taxpayers when the taxing district will begin its budget 
411.28  deliberations for the current year, and encouraging taxpayers to 
411.29  attend the hearings.  If the county allows notices to be 
411.30  included in the envelope containing the property tax statement, 
411.31  and if more than one taxing district relative to a given 
411.32  property decides to include a notice with the tax statement, the 
411.33  county treasurer or auditor must coordinate the process and may 
411.34  combine the information on a single announcement.  
411.35     The commissioner of revenue shall certify to the county 
411.36  auditor the actual or estimated aids enumerated in clause (4) 
412.1   that local governments will receive in the following year.  The 
412.2   commissioner must certify this amount by January 1 of each year. 
412.3      [EFFECTIVE DATE.] This section is effective the day 
412.4   following final enactment. 
412.5      Sec. 34.  Minnesota Statutes 2004, section 276.112, is 
412.6   amended to read: 
412.7      276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.] 
412.8      On or before January 25 each year, for the period ending 
412.9   December 31 of the prior year, and on or before June 29 28 each 
412.10  year, for the period ending on the most recent settlement day 
412.11  determined in section 276.09, and on or before December 2 each 
412.12  year, for the period ending November 20, the county treasurer 
412.13  must make full settlement with the county auditor according to 
412.14  sections 276.09, 276.10, and 276.111 for all receipts of state 
412.15  property taxes levied under section 275.025, and must transmit 
412.16  those receipts to the commissioner of revenue by electronic 
412.17  means. 
412.18     [EFFECTIVE DATE.] This section is effective the day 
412.19  following final enactment. 
412.20     Sec. 35.  Minnesota Statutes 2004, section 276A.01, 
412.21  subdivision 7, is amended to read: 
412.22     Subd. 7.  [POPULATION.] "Population" means the most recent 
412.23  estimate of the population of a municipality made by the state 
412.24  demographer and filed with the commissioner of revenue as of 
412.25  July 1 15 of the year in which a municipality's distribution net 
412.26  tax capacity is calculated.  The state demographer shall 
412.27  annually estimate the population of each municipality and, in 
412.28  the case of a municipality which is located partly within and 
412.29  partly without the area, the proportion of the total which 
412.30  resides within the area, and shall file the estimates with the 
412.31  commissioner of revenue. 
412.32     [EFFECTIVE DATE.] This section is effective the day 
412.33  following final enactment. 
412.34     Sec. 36.  Minnesota Statutes 2004, section 282.016, is 
412.35  amended to read: 
412.36     282.016 [PROHIBITED PURCHASERS.] 
413.1      No (a) A county auditor, county treasurer, county attorney, 
413.2   court administrator of the district court, or county assessor 
413.3   or, supervisor of assessments, or deputy or clerk or an employee 
413.4   of such officer, and no a commissioner for tax-forfeited lands 
413.5   or an assistant to such commissioner may, must not become a 
413.6   purchaser, either personally or as an agent or attorney for 
413.7   another person, of the properties offered for sale under the 
413.8   provisions of this chapter, either personally, or as agent or 
413.9   attorney for any other person, except that in the county for 
413.10  which the person performs duties.  
413.11     (b) Notwithstanding paragraph (a), such officer, deputy, 
413.12  court administrator clerk, or employee or commissioner for 
413.13  tax-forfeited lands or assistant to such commissioner may (1) 
413.14  purchase lands owned by that official at the time the state 
413.15  became the absolute owner thereof or (2) bid upon and purchase 
413.16  forfeited property offered for sale under the alternate sale 
413.17  procedure described in section 282.01, subdivision 7a. 
413.18     [EFFECTIVE DATE.] This section is effective the day 
413.19  following final enactment. 
413.20     Sec. 37.  Minnesota Statutes 2004, section 282.08, is 
413.21  amended to read: 
413.22     282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 
413.23     The net proceeds from the sale or rental of any parcel of 
413.24  forfeited land, or from the sale of products from the forfeited 
413.25  land, must be apportioned by the county auditor to the taxing 
413.26  districts interested in the land, as follows: 
413.27     (1) the amounts necessary to pay the state general tax levy 
413.28  against the parcel for taxes payable in the year for which the 
413.29  tax judgment was entered, and for each subsequent payable year 
413.30  up to and including the year of forfeiture, must be apportioned 
413.31  to the state; 
413.32     (2) the portion required to pay any amounts included in the 
413.33  appraised value under section 282.01, subdivision 3, as 
413.34  representing increased value due to any public improvement made 
413.35  after forfeiture of the parcel to the state, but not exceeding 
413.36  the amount certified by the clerk of the municipality must be 
414.1   apportioned to the municipal subdivision entitled to it; 
414.2      (3) (2) the portion required to pay any amount included in 
414.3   the appraised value under section 282.019, subdivision 5, 
414.4   representing increased value due to response actions taken after 
414.5   forfeiture of the parcel to the state, but not exceeding the 
414.6   amount of expenses certified by the Pollution Control Agency or 
414.7   the commissioner of agriculture, must be apportioned to the 
414.8   agency or the commissioner of agriculture and deposited in the 
414.9   fund from which the expenses were paid; 
414.10     (4) (3) the portion of the remainder required to discharge 
414.11  any special assessment chargeable against the parcel for 
414.12  drainage or other purpose whether due or deferred at the time of 
414.13  forfeiture, must be apportioned to the municipal subdivision 
414.14  entitled to it; and 
414.15     (5) (4) any balance must be apportioned as follows: 
414.16     (i) The county board may annually by resolution set aside 
414.17  no more than 30 percent of the receipts remaining to be used for 
414.18  timber development on tax-forfeited land and dedicated memorial 
414.19  forests, to be expended under the supervision of the county 
414.20  board.  It must be expended only on projects approved by the 
414.21  commissioner of natural resources. 
414.22     (ii) The county board may annually by resolution set aside 
414.23  no more than 20 percent of the receipts remaining to be used for 
414.24  the acquisition and maintenance of county parks or recreational 
414.25  areas as defined in sections 398.31 to 398.36, to be expended 
414.26  under the supervision of the county board. 
414.27     (iii) Any balance remaining must be apportioned as 
414.28  follows:  county, 40 percent; town or city, 20 percent; and 
414.29  school district, 40 percent, provided, however, that in 
414.30  unorganized territory that portion which would have accrued to 
414.31  the township must be administered by the county board of 
414.32  commissioners. 
414.33     [EFFECTIVE DATE.] This section is effective the day 
414.34  following final enactment for state general tax levy amounts 
414.35  payable in 2004 and thereafter. 
414.36     Sec. 38.  Minnesota Statutes 2004, section 282.15, is 
415.1   amended to read: 
415.2      282.15 [SALES OF FORFEITED AGRICULTURAL LANDS.] 
415.3      The sale shall be conducted by the auditor of the county in 
415.4   which the parcels lie.  The parcels shall be sold to the highest 
415.5   bidder but not for less than the appraised value.  The sales 
415.6   shall be for cash or on the following terms:  The appraised 
415.7   value of all merchantable timber on agricultural lands shall be 
415.8   paid for in full at the date of sale.  At least 15 percent of 
415.9   the purchase price of the land shall be paid in cash at the time 
415.10  of purchase.  The balance shall be paid in not more than 20 
415.11  equal annual installments, with interest at a rate equal to the 
415.12  rate in effect at the time under section 549.09 on the unpaid 
415.13  balance each year.  Both principal and interest are due and 
415.14  payable on December 31 each year following that in which the 
415.15  purchase was made.  The purchaser may pay any number of 
415.16  installments of principal and interest on or before their due 
415.17  date.  When the sale is on terms other than for cash in full, 
415.18  the purchaser shall receive from the county auditor a contract 
415.19  for deed, in a form prescribed by the attorney general.  The 
415.20  county auditor shall make a report to the commissioner of 
415.21  natural resources not more than 30 days after each public sale 
415.22  showing the lands sold at the sales, and submit a copy of each 
415.23  contract of sale. 
415.24     All lands sold pursuant to this section shall, on the 
415.25  second day of January following the date of the sale, must be 
415.26  restored to the tax rolls and become subject to taxation in the 
415.27  same manner as they were assessed and taxed before becoming the 
415.28  absolute property of the state for the assessment year 
415.29  determined under section 272.02, subdivision 38, paragraph (c).  
415.30     [EFFECTIVE DATE.] This section is effective for sales 
415.31  occurring on or after July 1, 2005. 
415.32     Sec. 39.  Minnesota Statutes 2004, section 282.21, is 
415.33  amended to read: 
415.34     282.21 [FORM OF CONVEYANCE.] 
415.35     When any sale has been made under sections 282.14 to 
415.36  282.22, upon payment in full of the purchase price, appropriate 
416.1   conveyance in fee in such form as may be prescribed by the 
416.2   attorney general shall be issued by the commissioner of finance 
416.3   natural resources to the purchaser or the purchaser's assigns 
416.4   and this conveyance shall have the force and effect of a patent 
416.5   from the state.  
416.6      [EFFECTIVE DATE.] This section is effective the day 
416.7   following final enactment. 
416.8      Sec. 40.  Minnesota Statutes 2004, section 282.224, is 
416.9   amended to read: 
416.10     282.224 [FORM OF CONVEYANCE.] 
416.11     When any sale has been made under sections 282.221 to 
416.12  282.226, upon payment in full of the purchase price, appropriate 
416.13  conveyance in fee, in such form as may be prescribed by the 
416.14  attorney general, shall be issued by the commissioner of natural 
416.15  resources to the purchaser or the purchaser's assignee, and the 
416.16  conveyance shall have the force and effect of a patent from the 
416.17  state.  
416.18     [EFFECTIVE DATE.] This section is effective the day 
416.19  following final enactment. 
416.20     Sec. 41.  Minnesota Statutes 2004, section 282.301, is 
416.21  amended to read: 
416.22     282.301 [RECEIPTS FOR PAYMENTS.] 
416.23     When any sale has been made under sections 282.012 and 
416.24  282.241 to 282.324, the purchaser shall receive from the county 
416.25  auditor at the time of repurchase a receipt, in such form as may 
416.26  be prescribed by the attorney general.  When the purchase price 
416.27  of a parcel of land shall be paid in full, the following facts 
416.28  shall be certified by the county auditor to the commissioner of 
416.29  revenue of the state of Minnesota:  the description of land, the 
416.30  date of sale, the name of the purchaser or the purchaser's 
416.31  assignee, and the date when the final installment of the 
416.32  purchase price was paid.  Upon payment in full of the purchase 
416.33  price, the purchaser or the assignee shall receive a quitclaim 
416.34  deed from the state, to be executed by the commissioner of 
416.35  revenue.  The deed must be sent to the county auditor who shall 
416.36  have it recorded before it is forwarded to the purchaser.  
417.1   Failure to make any payment herein required shall constitute 
417.2   default and upon such default and cancellation in accord with 
417.3   section 282.40, the right, title and interest of the purchaser 
417.4   or the purchaser's heirs, representatives, or assigns in such 
417.5   parcel shall terminate.  
417.6      [EFFECTIVE DATE.] This section is effective the day 
417.7   following final enactment. 
417.8      Sec. 42.  Minnesota Statutes 2004, section 290A.19, is 
417.9   amended to read: 
417.10     290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 
417.11  CERTIFICATE.] 
417.12     (a) The owner or managing agent of any property for which 
417.13  rent is paid for occupancy as a homestead must furnish a 
417.14  certificate of rent paid to a person who is a renter on December 
417.15  31, in the form prescribed by the commissioner.  If the renter 
417.16  moves before December 31, the owner or managing agent may give 
417.17  the certificate to the renter at the time of moving, or mail the 
417.18  certificate to the forwarding address if an address has been 
417.19  provided by the renter.  The certificate must be made available 
417.20  to the renter before February 1 of the year following the year 
417.21  in which the rent was paid.  The owner or managing agent must 
417.22  retain a duplicate of each certificate or an equivalent record 
417.23  showing the same information for a period of three years.  The 
417.24  duplicate or other record must be made available to the 
417.25  commissioner upon request.  For the purposes of this section, 
417.26  "owner" includes a park owner as defined under section 327C.01, 
417.27  subdivision 6, and "property" includes a lot as defined under 
417.28  section 327C.01, subdivision 3. 
417.29     (b) The commissioner may require the owner or managing 
417.30  agent to file a copy of the certificate of rent paid with the 
417.31  commissioner by April 15 of the year following the year in which 
417.32  the rent was paid.  The copy must be submitted to the 
417.33  commissioner by electronic means as that term is defined in 
417.34  section 289A.02, subdivision 8. This paragraph does not apply to 
417.35  any owner or managing agent that is required to issue 
417.36  certificates to renters of fewer than 100 units. 
418.1      [EFFECTIVE DATE.] This section is effective for 
418.2   certificates of rent paid that are issued for rent paid after 
418.3   December 31, 2005. 
418.4      Sec. 43.  Minnesota Statutes 2004, section 290B.05, 
418.5   subdivision 3, is amended to read: 
418.6      Subd. 3.  [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 
418.7   When final property tax amounts for the following year have been 
418.8   determined, the county auditor shall calculate the "deferred 
418.9   property tax amount."  The deferred property tax amount is equal 
418.10  to the lesser of (1) the maximum allowable deferral for the 
418.11  year; or (2) the difference between (i) the total amount of 
418.12  property taxes and special assessments levied upon the 
418.13  qualifying homestead by all taxing jurisdictions and (ii) the 
418.14  maximum property tax amount.  Any special assessments levied by 
418.15  any local unit of government must not be included in the total 
418.16  tax used to calculate the deferred tax amount. For this purpose 
418.17  "special assessments" includes any assessment, fee, or other 
418.18  charge that may by law, and which does, appear on the property 
418.19  tax statement for the property for collection under the laws 
418.20  applicable to the enforcement of real estate taxes.  Any tax 
418.21  attributable to new improvements made to the property after the 
418.22  initial application has been approved under section 290B.04, 
418.23  subdivision 2, must be excluded when determining any subsequent 
418.24  deferred property tax amount.  The county auditor shall 
418.25  annually, on or before April 15, certify to the commissioner of 
418.26  revenue the property tax deferral amounts determined under this 
418.27  subdivision by property and by owner.  
418.28     [EFFECTIVE DATE.] This section is effective for amounts 
418.29  deferred in 2006 and thereafter. 
418.30     Sec. 44.  Minnesota Statutes 2004, section 373.45, 
418.31  subdivision 7, is amended to read: 
418.32     Subd. 7.  [AID REDUCTION FOR REPAYMENT.] (a) Except as 
418.33  provided in paragraph (b), the commissioner may reduce, by the 
418.34  amount paid by the state under this section on behalf of the 
418.35  county, plus the interest due on the state payments, the 
418.36  following aids payable to the county:  
419.1      (1) homestead and agricultural credit aid and disparity 
419.2   reduction aid payable under section 273.1398; 
419.3      (2) county criminal justice aid payable under section 
419.4   477A.0121; and 
419.5      (3) family preservation aid payable under section 477A.0122 
419.6   county program aid under section 477A.0124. 
419.7   The amount of any aid reduction reverts from the appropriate 
419.8   account to the state general fund.  
419.9      (b) If, after review of the financial situation of the 
419.10  county, the authority advises the commissioner that a total 
419.11  reduction of the aids would cause an undue hardship on the 
419.12  county, the authority, with the approval of the commissioner, 
419.13  may establish a different schedule for reduction of aids to 
419.14  repay the state.  The amount of aids to be reduced are decreased 
419.15  by any amounts repaid to the state by the county from other 
419.16  revenue sources. 
419.17     [EFFECTIVE DATE.] This section is effective for aid payable 
419.18  in 2005 and thereafter. 
419.19     Sec. 45.  Minnesota Statutes 2004, section 469.1735, 
419.20  subdivision 3, is amended to read: 
419.21     Subd. 3.  [TRANSFER AUTHORITY FOR PROPERTY TAX.] (a) A city 
419.22  may elect to use all or part of its allocation under subdivision 
419.23  2 to reimburse the city or county or both for property tax 
419.24  reductions under section 272.0212.  To elect this option, the 
419.25  city must notify the commissioner of revenue by October 1 of 
419.26  each calendar year of the amount of the property tax 
419.27  reductions for which it seeks reimbursements for taxes payable 
419.28  during the following current year and the governmental units to 
419.29  which the amounts will be paid.  The commissioner may require 
419.30  the city to provide information substantiating the amount of the 
419.31  reductions granted or any other information necessary to 
419.32  administer this provision.  The commissioner shall pay the 
419.33  reimbursements by December 26 of the taxes payable year.  Any 
419.34  amount transferred under this authority reduces the amount of 
419.35  tax credit certificates available under subdivisions 1 and 2. 
419.36     (b) The amount elected by the city under paragraph (a) is 
420.1   appropriated to the commissioner of revenue from the general 
420.2   fund to reimburse the city or county for tax reductions under 
420.3   section 272.0212.  The amount appropriated may not exceed the 
420.4   maximum amounts allocated to a city under subdivision 2, 
420.5   paragraph (b), less the amount of certificates issued by the 
420.6   city under subdivision 1, and is available until expended.  
420.7      [EFFECTIVE DATE.] This section is effective for 
420.8   reimbursements of taxes payable in 2005 and thereafter. 
420.9      Sec. 46.  [473.24] [POPULATION ESTIMATES.] 
420.10     (a) The Metropolitan Council shall annually prepare an 
420.11  estimate of population for each county, city, and town in the 
420.12  metropolitan area and an estimate of the number of households 
420.13  and average household size for each city in the metropolitan 
420.14  area with a population of 2,500 or more, and an estimate of 
420.15  population over age 65 for each county in the metropolitan area, 
420.16  and convey the estimates to the governing body of each county, 
420.17  city, or town by June 1 each year.  In the case of a city or 
420.18  town that is located partly within and partly without the 
420.19  metropolitan area, the Metropolitan Council shall estimate the 
420.20  proportion of the total population and the average size of 
420.21  households that reside within the area.  The Metropolitan 
420.22  Council may prepare an estimate of the population and of the 
420.23  average household size for any other political subdivision 
420.24  located in the metropolitan area. 
420.25     (b) A governing body may challenge an estimate made under 
420.26  this section by filing its specific objections in writing with 
420.27  the Metropolitan Council by June 24.  If the challenge does not 
420.28  result in an acceptable estimate, the governing body may have a 
420.29  special census conducted by the United States Bureau of the 
420.30  Census.  The political subdivision must notify the Metropolitan 
420.31  Council on or before July 1 of its intent to have the special 
420.32  census conducted.  The political subdivision must bear all costs 
420.33  of the special census.  Results of the special census must be 
420.34  received by the Metropolitan Council by the next April 15 to be 
420.35  used in that year's June 1 estimate under this section.  The 
420.36  Metropolitan Council shall certify the estimates of population 
421.1   and the average household size to the state demographer and to 
421.2   the commissioner of revenue by July 15 each year, including any 
421.3   estimates still under objection.  
421.4      [EFFECTIVE DATE.] This section is effective the day 
421.5   following final enactment. 
421.6      Sec. 47.  Minnesota Statutes 2004, section 473F.02, 
421.7   subdivision 7, is amended to read: 
421.8      Subd. 7.  [POPULATION.] "Population" means the most recent 
421.9   estimate of the population of a municipality made by the 
421.10  Metropolitan Council under section 473.24 and filed with the 
421.11  commissioner of revenue as of July 1 15 of the year in which a 
421.12  municipality's distribution net tax capacity is calculated.  The 
421.13  council shall annually estimate the population of each 
421.14  municipality as of a date which it determines and, in the case 
421.15  of a municipality which is located partly within and partly 
421.16  without the area, the proportion of the total which resides 
421.17  within the area, and shall promptly thereafter file its 
421.18  estimates with the commissioner of revenue. 
421.19     [EFFECTIVE DATE.] This section is effective the day 
421.20  following final enactment. 
421.21     Sec. 48.  Minnesota Statutes 2004, section 477A.011, 
421.22  subdivision 3, is amended to read: 
421.23     Subd. 3.  [POPULATION.] "Population" means the 
421.24  population estimated or established as of July 1 15 in an aid 
421.25  calculation year by the most recent federal census, by a special 
421.26  census conducted under contract with the United States Bureau of 
421.27  the Census, by a population estimate made by the Metropolitan 
421.28  Council pursuant to section 473.24, or by a population estimate 
421.29  of the state demographer made pursuant to section 4A.02, 
421.30  whichever is the most recent as to the stated date of the count 
421.31  or estimate for the preceding calendar year, and which has been 
421.32  certified to the commissioner of revenue on or before July 15 of 
421.33  the aid calculation year.  The term "per capita" refers to 
421.34  population as defined by this subdivision.  A revision of an 
421.35  estimate or count is effective for these purposes only if it is 
421.36  certified to the commissioner on or before July 15 of the aid 
422.1   calculation year.  Clerical errors in the certification or use 
422.2   of the estimates and counts established as of July 15 in the aid 
422.3   calculation year are subject to correction within the time 
422.4   periods allowed under section 477A.014. 
422.5      [EFFECTIVE DATE.] This section is effective the day 
422.6   following final enactment. 
422.7      Sec. 49.  Minnesota Statutes 2004, section 477A.011, 
422.8   subdivision 36, is amended to read: 
422.9      Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
422.10  provided in this subdivision, "city aid base" is zero. 
422.11     (b) The city aid base for any city with a population less 
422.12  than 500 is increased by $40,000 for aids payable in calendar 
422.13  year 1995 and thereafter, and the maximum amount of total aid it 
422.14  may receive under section 477A.013, subdivision 9, paragraph 
422.15  (c), is also increased by $40,000 for aids payable in calendar 
422.16  year 1995 only, provided that: 
422.17     (i) the average total tax capacity rate for taxes payable 
422.18  in 1995 exceeds 200 percent; 
422.19     (ii) the city portion of the tax capacity rate exceeds 100 
422.20  percent; and 
422.21     (iii) its city aid base is less than $60 per capita. 
422.22     (c) The city aid base for a city is increased by $20,000 in 
422.23  1998 and thereafter and the maximum amount of total aid it may 
422.24  receive under section 477A.013, subdivision 9, paragraph (c), is 
422.25  also increased by $20,000 in calendar year 1998 only, provided 
422.26  that: 
422.27     (i) the city has a population in 1994 of 2,500 or more; 
422.28     (ii) the city is located in a county, outside of the 
422.29  metropolitan area, which contains a city of the first class; 
422.30     (iii) the city's net tax capacity used in calculating its 
422.31  1996 aid under section 477A.013 is less than $400 per capita; 
422.32  and 
422.33     (iv) at least four percent of the total net tax capacity, 
422.34  for taxes payable in 1996, of property located in the city is 
422.35  classified as railroad property. 
422.36     (d) The city aid base for a city is increased by $200,000 
423.1   in 1999 and thereafter and the maximum amount of total aid it 
423.2   may receive under section 477A.013, subdivision 9, paragraph 
423.3   (c), is also increased by $200,000 in calendar year 1999 only, 
423.4   provided that: 
423.5      (i) the city was incorporated as a statutory city after 
423.6   December 1, 1993; 
423.7      (ii) its city aid base does not exceed $5,600; and 
423.8      (iii) the city had a population in 1996 of 5,000 or more. 
423.9      (e) The city aid base for a city is increased by $450,000 
423.10  in 1999 to 2008 and the maximum amount of total aid it may 
423.11  receive under section 477A.013, subdivision 9, paragraph (c), is 
423.12  also increased by $450,000 in calendar year 1999 only, provided 
423.13  that: 
423.14     (i) the city had a population in 1996 of at least 50,000; 
423.15     (ii) its population had increased by at least 40 percent in 
423.16  the ten-year period ending in 1996; and 
423.17     (iii) its city's net tax capacity for aids payable in 1998 
423.18  is less than $700 per capita. 
423.19     (f) Beginning in 2004, the city aid base for a city is 
423.20  equal to the sum of its city aid base in 2003 and the amount of 
423.21  additional aid it was certified to receive under section 477A.06 
423.22  in 2003.  For 2004 only, the maximum amount of total aid a city 
423.23  may receive under section 477A.013, subdivision 9, paragraph 
423.24  (c), is also increased by the amount it was certified to receive 
423.25  under section 477A.06 in 2003. 
423.26     (g) The city aid base for a city is increased by $150,000 
423.27  for aids payable in 2000 and thereafter, and the maximum amount 
423.28  of total aid it may receive under section 477A.013, subdivision 
423.29  9, paragraph (c), is also increased by $150,000 in calendar year 
423.30  2000 only, provided that: 
423.31     (1) the city has a population that is greater than 1,000 
423.32  and less than 2,500; 
423.33     (2) its commercial and industrial percentage for aids 
423.34  payable in 1999 is greater than 45 percent; and 
423.35     (3) the total market value of all commercial and industrial 
423.36  property in the city for assessment year 1999 is at least 15 
424.1   percent less than the total market value of all commercial and 
424.2   industrial property in the city for assessment year 1998. 
424.3      (h) (g) The city aid base for a city is increased by 
424.4   $200,000 in 2000 and thereafter, and the maximum amount of total 
424.5   aid it may receive under section 477A.013, subdivision 9, 
424.6   paragraph (c), is also increased by $200,000 in calendar year 
424.7   2000 only, provided that: 
424.8      (1) the city had a population in 1997 of 2,500 or more; 
424.9      (2) the net tax capacity of the city used in calculating 
424.10  its 1999 aid under section 477A.013 is less than $650 per 
424.11  capita; 
424.12     (3) the pre-1940 housing percentage of the city used in 
424.13  calculating 1999 aid under section 477A.013 is greater than 12 
424.14  percent; 
424.15     (4) the 1999 local government aid of the city under section 
424.16  477A.013 is less than 20 percent of the amount that the formula 
424.17  aid of the city would have been if the need increase percentage 
424.18  was 100 percent; and 
424.19     (5) the city aid base of the city used in calculating aid 
424.20  under section 477A.013 is less than $7 per capita. 
424.21     (i) (h) The city aid base for a city is increased by 
424.22  $102,000 in 2000 and thereafter, and the maximum amount of total 
424.23  aid it may receive under section 477A.013, subdivision 9, 
424.24  paragraph (c), is also increased by $102,000 in calendar year 
424.25  2000 only, provided that: 
424.26     (1) the city has a population in 1997 of 2,000 or more; 
424.27     (2) the net tax capacity of the city used in calculating 
424.28  its 1999 aid under section 477A.013 is less than $455 per 
424.29  capita; 
424.30     (3) the net levy of the city used in calculating 1999 aid 
424.31  under section 477A.013 is greater than $195 per capita; and 
424.32     (4) the 1999 local government aid of the city under section 
424.33  477A.013 is less than 38 percent of the amount that the formula 
424.34  aid of the city would have been if the need increase percentage 
424.35  was 100 percent. 
424.36     (j) (i) The city aid base for a city is increased by 
425.1   $32,000 in 2001 and thereafter, and the maximum amount of total 
425.2   aid it may receive under section 477A.013, subdivision 9, 
425.3   paragraph (c), is also increased by $32,000 in calendar year 
425.4   2001 only, provided that: 
425.5      (1) the city has a population in 1998 that is greater than 
425.6   200 but less than 500; 
425.7      (2) the city's revenue need used in calculating aids 
425.8   payable in 2000 was greater than $200 per capita; 
425.9      (3) the city net tax capacity for the city used in 
425.10  calculating aids available in 2000 was equal to or less than 
425.11  $200 per capita; 
425.12     (4) the city aid base of the city used in calculating aid 
425.13  under section 477A.013 is less than $65 per capita; and 
425.14     (5) the city's formula aid for aids payable in 2000 was 
425.15  greater than zero. 
425.16     (k) (j) The city aid base for a city is increased by $7,200 
425.17  in 2001 and thereafter, and the maximum amount of total aid it 
425.18  may receive under section 477A.013, subdivision 9, paragraph 
425.19  (c), is also increased by $7,200 in calendar year 2001 only, 
425.20  provided that: 
425.21     (1) the city had a population in 1998 that is greater than 
425.22  200 but less than 500; 
425.23     (2) the city's commercial industrial percentage used in 
425.24  calculating aids payable in 2000 was less than ten percent; 
425.25     (3) more than 25 percent of the city's population was 60 
425.26  years old or older according to the 1990 census; 
425.27     (4) the city aid base of the city used in calculating aid 
425.28  under section 477A.013 is less than $15 per capita; and 
425.29     (5) the city's formula aid for aids payable in 2000 was 
425.30  greater than zero. 
425.31     (l) (k) The city aid base for a city is increased by 
425.32  $45,000 in 2001 and thereafter and by an additional $50,000 in 
425.33  calendar years 2002 to 2011, and the maximum amount of total aid 
425.34  it may receive under section 477A.013, subdivision 9, paragraph 
425.35  (c), is also increased by $45,000 in calendar year 2001 only, 
425.36  and by $50,000 in calendar year 2002 only, provided that: 
426.1      (1) the net tax capacity of the city used in calculating 
426.2   its 2000 aid under section 477A.013 is less than $810 per 
426.3   capita; 
426.4      (2) the population of the city declined more than two 
426.5   percent between 1988 and 1998; 
426.6      (3) the net levy of the city used in calculating 2000 aid 
426.7   under section 477A.013 is greater than $240 per capita; and 
426.8      (4) the city received less than $36 per capita in aid under 
426.9   section 477A.013, subdivision 9, for aids payable in 2000. 
426.10     (m) (l) The city aid base for a city with a population of 
426.11  10,000 or more which is located outside of the seven-county 
426.12  metropolitan area is increased in 2002 and thereafter, and the 
426.13  maximum amount of total aid it may receive under section 
426.14  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
426.15  in calendar year 2002 only, by an amount equal to the lesser of: 
426.16     (1)(i) the total population of the city, as determined by 
426.17  the United States Bureau of the Census, in the 2000 census, (ii) 
426.18  minus 5,000, (iii) times 60; or 
426.19     (2) $2,500,000. 
426.20     (n) (m) The city aid base is increased by $50,000 in 2002 
426.21  and thereafter, and the maximum amount of total aid it may 
426.22  receive under section 477A.013, subdivision 9, paragraph (c), is 
426.23  also increased by $50,000 in calendar year 2002 only, provided 
426.24  that: 
426.25     (1) the city is located in the seven-county metropolitan 
426.26  area; 
426.27     (2) its population in 2000 is between 10,000 and 20,000; 
426.28  and 
426.29     (3) its commercial industrial percentage, as calculated for 
426.30  city aid payable in 2001, was greater than 25 percent. 
426.31     (o) (n) The city aid base for a city is increased by 
426.32  $150,000 in calendar years 2002 to 2011 and the maximum amount 
426.33  of total aid it may receive under section 477A.013, subdivision 
426.34  9, paragraph (c), is also increased by $150,000 in calendar year 
426.35  2002 only, provided that: 
426.36     (1) the city had a population of at least 3,000 but no more 
427.1   than 4,000 in 1999; 
427.2      (2) its home county is located within the seven-county 
427.3   metropolitan area; 
427.4      (3) its pre-1940 housing percentage is less than 15 
427.5   percent; and 
427.6      (4) its city net tax capacity per capita for taxes payable 
427.7   in 2000 is less than $900 per capita. 
427.8      (p) (o) The city aid base for a city is increased by 
427.9   $200,000 beginning in calendar year 2003 and the maximum amount 
427.10  of total aid it may receive under section 477A.013, subdivision 
427.11  9, paragraph (c), is also increased by $200,000 in calendar year 
427.12  2003 only, provided that the city qualified for an increase in 
427.13  homestead and agricultural credit aid under Laws 1995, chapter 
427.14  264, article 8, section 18. 
427.15     (q) (p) The city aid base for a city is increased by 
427.16  $200,000 in 2004 only and the maximum amount of total aid it may 
427.17  receive under section 477A.013, subdivision 9, is also increased 
427.18  by $200,000 in calendar year 2004 only, if the city is the site 
427.19  of a nuclear dry cask storage facility. 
427.20     (r) (q) The city aid base for a city is increased by 
427.21  $10,000 in 2004 and thereafter and the maximum total aid it may 
427.22  receive under section 477A.013, subdivision 9, is also increased 
427.23  by $10,000 in calendar year 2004 only, if the city was included 
427.24  in a federal major disaster designation issued on April 1, 1998, 
427.25  and its pre-1940 housing stock was decreased by more than 40 
427.26  percent between 1990 and 2000. 
427.27     [EFFECTIVE DATE.] This section is effective beginning with 
427.28  aids payable in 2004. 
427.29     Sec. 50.  Minnesota Statutes 2004, section 477A.011, 
427.30  subdivision 38, is amended to read: 
427.31     Subd. 38.  [HOUSEHOLD SIZE.] "Household size" means the 
427.32  average number of persons per household in the jurisdiction as 
427.33  most recently estimated and reported by the state 
427.34  demographer and Metropolitan Council as of July 1 15 of the aid 
427.35  calculation year.  A revision to an estimate or enumeration is 
427.36  effective for these purposes only if it is certified to the 
428.1   commissioner on or before July 15 of the aid calculation year.  
428.2   Clerical errors in the certification or use of estimates and 
428.3   counts established as of July 15 in the aid calculation year are 
428.4   subject to correction within the time periods allowed under 
428.5   section 477A.014. 
428.6      [EFFECTIVE DATE.] This section is effective the day 
428.7   following final enactment. 
428.8      Sec. 51.  Minnesota Statutes 2004, section 477A.0124, 
428.9   subdivision 2, is amended to read: 
428.10     Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
428.11  section, the following terms have the meanings given them. 
428.12     (b) "County program aid" means the sum of "county need aid,"
428.13  "county tax base equalization aid," and "county transition aid." 
428.14     (c) "Age-adjusted population" means a county's population 
428.15  multiplied by the county age index. 
428.16     (d) "County age index" means the percentage of the 
428.17  population over age 65 within the county divided by the 
428.18  percentage of the population over age 65 within the state, 
428.19  except that the age index for any county may not be greater than 
428.20  1.8 nor less than 0.8. 
428.21     (e) "Population over age 65" means the population over age 
428.22  65 established as of July 1 15 in an aid calculation year by the 
428.23  most recent federal census, by a special census conducted under 
428.24  contract with the United States Bureau of the Census, by a 
428.25  population estimate made by the Metropolitan Council, or by a 
428.26  population estimate of the state demographer made pursuant to 
428.27  section 4A.02, whichever is the most recent as to the stated 
428.28  date of the count or estimate for the preceding calendar 
428.29  year and which has been certified to the commissioner of revenue 
428.30  on or before July 15 of the aid calculation year.  A revision to 
428.31  an estimate or count is effective for these purposes only if 
428.32  certified to the commissioner on or before July 15 of the aid 
428.33  calculation year.  Clerical errors in the certification or use 
428.34  of estimates and counts established as of July 15 in the aid 
428.35  calculation year are subject to correction within the time 
428.36  periods allowed under section 477A.014. 
429.1      (f) "Part I crimes" means the three-year average annual 
429.2   number of Part I crimes reported for each county by the 
429.3   Department of Public Safety for the most recent years available. 
429.4   By July 1 of each year, the commissioner of public safety shall 
429.5   certify to the commissioner of revenue the number of Part I 
429.6   crimes reported for each county for the three most recent 
429.7   calendar years available. 
429.8      (g) "Households receiving food stamps" means the average 
429.9   monthly number of households receiving food stamps for the three 
429.10  most recent years for which data is available.  By July 1 of 
429.11  each year, the commissioner of human services must certify to 
429.12  the commissioner of revenue the average monthly number of 
429.13  households in the state and in each county that receive food 
429.14  stamps, for the three most recent calendar years available. 
429.15     (h) "County net tax capacity" means the net tax capacity of 
429.16  the county, computed analogously to city net tax capacity under 
429.17  section 477A.011, subdivision 20. 
429.18     [EFFECTIVE DATE.] This section is effective the day 
429.19  following final enactment. 
429.20     Sec. 52.  Laws 2003, chapter 127, article 5, section 27, 
429.21  the effective date, is amended to read: 
429.22     [EFFECTIVE DATE.] This section is effective for taxes 
429.23  payable in 2004 and thereafter distributions occurring on or 
429.24  after June 10, 2003. 
429.25     Sec. 53.  Laws 2003, chapter 127, article 5, section 28, 
429.26  the effective date, is amended to read: 
429.27     [EFFECTIVE DATE.] This section is effective for taxes 
429.28  payable in 2004 and thereafter distributions occurring on or 
429.29  after June 10, 2003. 
429.30     Sec. 54.  Laws 2003, First Special Session chapter 21, 
429.31  article 5, section 13, is amended to read: 
429.32     Sec. 13.  [2004 CITY AID REDUCTIONS.] 
429.33     The commissioner of revenue shall compute an aid reduction 
429.34  amount for 2004 for each city as provided in this section. 
429.35     The initial aid reduction amount for each city is the 
429.36  amount by which the city's aid distribution under Minnesota 
430.1   Statutes, section 477A.013, and related provisions payable in 
430.2   2003 exceeds the city's 2004 distribution under those provisions.
430.3      The minimum aid reduction amount for a city is the amount 
430.4   of its reduction in 2003 under section 12.  If a city receives 
430.5   an increase to its city aid base under Minnesota Statutes, 
430.6   section 477A.011, subdivision 36, its minimum aid reduction is 
430.7   reduced by an equal amount. 
430.8      The maximum aid reduction amount for a city is an amount 
430.9   equal to 14 percent of the city's total 2004 levy plus aid 
430.10  revenue base, except that if the city has a city net tax 
430.11  capacity for aids payable in 2004, as defined in Minnesota 
430.12  Statutes, section 477A.011, subdivision 20, of $700 per capita 
430.13  or less, the maximum aid reduction shall not exceed an amount 
430.14  equal to 13 percent of the city's total 2004 levy plus aid 
430.15  revenue base. 
430.16     If the initial aid reduction amount for a city is less than 
430.17  the minimum aid reduction amount for that city, the final aid 
430.18  reduction amount for the city is the sum of the initial aid 
430.19  reduction amount and the lesser of the amount of the city's 
430.20  payable 2004 reimbursement under Minnesota Statutes, section 
430.21  273.1384, or the difference between the minimum and initial aid 
430.22  reduction amounts for the city, and the amount of the final aid 
430.23  reduction in excess of the initial aid reduction is deducted 
430.24  from the city's reimbursements pursuant to Minnesota Statutes, 
430.25  section 273.1384. 
430.26     If the initial aid reduction amount for a city is greater 
430.27  than the maximum aid reduction amount for the city, the city 
430.28  receives an additional distribution under this section equal to 
430.29  the result of subtracting the maximum aid reduction amount from 
430.30  the initial aid reduction amount.  This distribution shall be 
430.31  paid in equal installments in 2004 on the dates specified in 
430.32  Minnesota Statutes, section 477A.015.  The amount necessary for 
430.33  these additional distributions is appropriated to the 
430.34  commissioner of revenue from the general fund in fiscal year 
430.35  2005. 
430.36     The initial aid reduction is applied to the city's 
431.1   distribution pursuant to Minnesota Statutes, section 477A.013, 
431.2   and any aid reduction in excess of the initial aid reduction is 
431.3   applied to the city's reimbursements pursuant to Minnesota 
431.4   Statutes, section 273.1384. 
431.5      To the extent that sufficient information is available on 
431.6   each payment date in 2004, the commissioner of revenue shall pay 
431.7   the reimbursements reduced under this section in equal 
431.8   installments on the payment dates provided in law. 
431.9      [EFFECTIVE DATE.] This section is effective for aids 
431.10  payable in 2004. 
431.11     Sec. 55.  Laws 2003, First Special Session chapter 21, 
431.12  article 6, section 9, is amended to read: 
431.13     Sec. 9.  [DEFINITIONS.] 
431.14     (a) For purposes of sections 9 to 15, the following terms 
431.15  have the meanings given them in this section. 
431.16     (b) The 2003 and 2004 "levy plus aid revenue base" for a 
431.17  county is the sum of that county's certified property tax levy 
431.18  for taxes payable in 2003, plus the sum of the amounts the 
431.19  county was certified to receive in the designated calendar year 
431.20  as: 
431.21     (1) homestead and agricultural credit aid under Minnesota 
431.22  Statutes, section 273.1398, subdivision 2, plus any additional 
431.23  aid under section 16, minus the amount calculated under section 
431.24  273.1398, subdivision 4a, paragraph (b), for counties in 
431.25  judicial districts one, three, six, and ten, and 25 percent of 
431.26  the amount calculated under section 273.1398, subdivision 4a, 
431.27  paragraph (b), for counties in judicial districts two and four; 
431.28     (2) the amount of county manufactured home homestead and 
431.29  agricultural credit aid computed for the county for payment in 
431.30  2003 under section 273.166; 
431.31     (3) criminal justice aid under Minnesota Statutes, section 
431.32  477A.0121; 
431.33     (4) family preservation aid under Minnesota Statutes, 
431.34  section 477A.0122; 
431.35     (5) taconite aids under Minnesota Statutes, sections 298.28 
431.36  and 298.282, including any aid which was required to be placed 
432.1   in a special fund for expenditure in the next succeeding year; 
432.2   and 
432.3      (6) county program aid under section 477A.0124, exclusive 
432.4   of the attached machinery aid component. 
432.5      [EFFECTIVE DATE.] This section is effective for aids 
432.6   payable in 2004. 
432.7      Sec. 56.  [LINCOLN AND PIPESTONE COUNTIES; TOWN LEVY 
432.8   ADJUSTMENT FOR WIND ENERGY PRODUCTION TAX.] 
432.9      Notwithstanding the deadlines in Minnesota Statutes, 
432.10  section 275.07, towns located in Lincoln or Pipestone County are 
432.11  authorized to adjust their payable 2004 levy for all or a 
432.12  portion of their estimated wind energy production tax amounts 
432.13  for 2004, as computed by the commissioner of revenue from 
432.14  reports filed under Minnesota Statutes, section 272.029, 
432.15  subdivision 4.  The Lincoln and Pipestone County auditors may 
432.16  adjust the payable 2004 levy certifications under Minnesota 
432.17  Statutes, section 275.07, subdivision 1, based upon the towns 
432.18  that have recertified their levies under this section by March 
432.19  15, 2004. 
432.20     [EFFECTIVE DATE.] This section is effective for taxes 
432.21  payable in 2004. 
432.22     Sec. 57.  [REPEALER.] 
432.23     (a) Minnesota Statutes 2004, sections 273.19, subdivision 
432.24  5; 274.05; 275.15; 275.61, subdivision 2; and 283.07, are 
432.25  repealed effective the day following final enactment. 
432.26     (b) Laws 1975, chapter 287, section 5, and Laws 2003, 
432.27  chapter 127, article 9, section 9, subdivision 4, are repealed 
432.28  effective without local approval for taxes payable in 2006 and 
432.29  thereafter. 
432.30                             ARTICLE 15
432.31                       DEPARTMENT OF REVENUE
432.32                    SALES AND USE TAXES - SF1683 
432.33     Section 1.  Minnesota Statutes 2004, section 289A.38, 
432.34  subdivision 6, is amended to read: 
432.35     Subd. 6.  [OMISSION IN EXCESS OF 25 PERCENT.] Additional 
432.36  taxes may be assessed within 6-1/2 years after the due date of 
433.1   the return or the date the return was filed, whichever is later, 
433.2   if: 
433.3      (1) the taxpayer omits from gross income an amount properly 
433.4   includable in it that is in excess of 25 percent of the amount 
433.5   of gross income stated in the return; 
433.6      (2) the taxpayer omits from a sales, use, or withholding 
433.7   tax return an amount of taxes in excess of 25 percent of the 
433.8   taxes reported in the return; or 
433.9      (3) the taxpayer omits from the gross estate assets in 
433.10  excess of 25 percent of the gross estate reported in the return. 
433.11     [EFFECTIVE DATE.] This section is effective the day 
433.12  following final enactment. 
433.13     Sec. 2.  Minnesota Statutes 2004, section 289A.38, is 
433.14  amended by adding a subdivision to read: 
433.15     Subd. 15.  [PURCHASER FILED REFUND CLAIMS.] If a purchaser 
433.16  refund claim is filed under section 289A.50, subdivision 2a, and 
433.17  the basis for the claim is that the purchaser was improperly 
433.18  charged tax on an improvement to real property or on the 
433.19  purchase of nontaxable services, sales or use tax may be 
433.20  assessed for the cost of materials used to make the real 
433.21  property improvement or to perform the nontaxable service.  The 
433.22  assessment may be made against the person making the improvement 
433.23  to real property or the sale of nontaxable services, within the 
433.24  period prescribed in subdivision 1, or within one year after the 
433.25  date of the refund order, whichever is later. 
433.26     [EFFECTIVE DATE.] This section is effective for purchaser 
433.27  refund claims filed on or after July 1, 2005. 
433.28     Sec. 3.  Minnesota Statutes 2004, section 289A.40, 
433.29  subdivision 2, is amended to read: 
433.30     Subd. 2.  [BAD DEBT LOSS.] If a claim relates to an 
433.31  overpayment because of a failure to deduct a loss due to a bad 
433.32  debt or to a security becoming worthless, the claim is 
433.33  considered timely if filed within seven years from the date 
433.34  prescribed for the filing of the return.  A claim relating to an 
433.35  overpayment of taxes under chapter 297A must be filed within 
433.36  3-1/2 years from the date prescribed for filing the return, plus 
434.1   any extensions granted for filing the return, but only if filed 
434.2   within the extended time.  The refund or credit is limited to 
434.3   the amount of overpayment attributable to the loss.  "Bad debt" 
434.4   for purposes of this subdivision, has the same meaning as that 
434.5   term is used in United States Code, title 26, section 166, 
434.6   except that for a claim relating to an overpayment of taxes 
434.7   under chapter 297A the following are excluded from the 
434.8   calculation of bad debt:  financing charges or interest; sales 
434.9   or use taxes charged on the purchase price; uncollectible 
434.10  amounts on property that remain in the possession of the seller 
434.11  until the full purchase price is paid; expenses incurred in 
434.12  attempting to collect any debt; and repossessed property. 
434.13     [EFFECTIVE DATE.] For claims relating to an overpayment of 
434.14  taxes under chapter 297A, this section is effective for sales 
434.15  and purchases made on or after January 1, 2004; for all other 
434.16  bad debts or claims, this section is effective on or after July 
434.17  1, 2003. 
434.18     Sec. 4.  Minnesota Statutes 2004, section 289A.40, is 
434.19  amended by adding a subdivision to read: 
434.20     Subd. 5.  [PURCHASER FILED REFUND CLAIMS.] A claim for 
434.21  refund of taxes paid on a transaction not subject to tax under 
434.22  chapter 297A, where the purchaser may apply directly to the 
434.23  commissioner under section 289A.50, subdivision 2a, must be 
434.24  filed within 3-1/2 years from the 20th day of the month 
434.25  following the month of the invoice date for the purchase. 
434.26     [EFFECTIVE DATE.] This section is effective for claims 
434.27  filed on or after the day following final enactment. 
434.28     Sec. 5.  Minnesota Statutes 2004, section 289A.40, is 
434.29  amended by adding a subdivision to read: 
434.30     Subd. 6.  [CAPITAL EQUIPMENT REFUND CLAIMS.] A claim for 
434.31  refund for taxes paid under chapter 297A on capital equipment 
434.32  must be filed within 3-1/2 years from the 20th day of the month 
434.33  following the month of the invoice date for the purchase of the 
434.34  capital equipment.  A claim for refund for taxes imposed on 
434.35  capital equipment under section 297A.63 must be filed within 
434.36  3-1/2 years from the date prescribed for filing the return, or 
435.1   one year from the date of an order assessing tax under section 
435.2   289A.37, subdivision 1, upon payment in full of the tax, 
435.3   penalties, and interest shown on the order, whichever period 
435.4   expires later. 
435.5      [EFFECTIVE DATE.] This section is effective for claims 
435.6   filed on or after the day following final enactment. 
435.7      Sec. 6.  Minnesota Statutes 2004, section 297A.61, 
435.8   subdivision 3, is amended to read: 
435.9      Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
435.10  include, but are not limited to, each of the transactions listed 
435.11  in this subdivision. 
435.12     (b) Sale and purchase include: 
435.13     (1) any transfer of title or possession, or both, of 
435.14  tangible personal property, whether absolutely or conditionally, 
435.15  for a consideration in money or by exchange or barter; and 
435.16     (2) the leasing of or the granting of a license to use or 
435.17  consume, for a consideration in money or by exchange or barter, 
435.18  tangible personal property, other than a manufactured home used 
435.19  for residential purposes for a continuous period of 30 days or 
435.20  more. 
435.21     (c) Sale and purchase include the production, fabrication, 
435.22  printing, or processing of tangible personal property for a 
435.23  consideration for consumers who furnish either directly or 
435.24  indirectly the materials used in the production, fabrication, 
435.25  printing, or processing. 
435.26     (d) Sale and purchase include the preparing for a 
435.27  consideration of food.  Notwithstanding section 297A.67, 
435.28  subdivision 2, taxable food includes, but is not limited to, the 
435.29  following: 
435.30     (1) prepared food sold by the retailer; 
435.31     (2) soft drinks; 
435.32     (3) candy; and 
435.33     (4) dietary supplements; and 
435.34     (5) all food sold through vending machines. 
435.35     (e) A sale and a purchase includes the furnishing for a 
435.36  consideration of electricity, gas, water, or steam for use or 
436.1   consumption within this state. 
436.2      (f) A sale and a purchase includes the transfer for a 
436.3   consideration of prewritten computer software whether delivered 
436.4   electronically, by load and leave, or otherwise.  
436.5      (g) A sale and a purchase includes the furnishing for a 
436.6   consideration of the following services: 
436.7      (1) the privilege of admission to places of amusement, 
436.8   recreational areas, or athletic events, and the making available 
436.9   of amusement devices, tanning facilities, reducing salons, steam 
436.10  baths, turkish baths, health clubs, and spas or athletic 
436.11  facilities; 
436.12     (2) lodging and related services by a hotel, rooming house, 
436.13  resort, campground, motel, or trailer camp and the granting of 
436.14  any similar license to use real property in a specific facility, 
436.15  other than the renting or leasing of it for a continuous period 
436.16  of 30 days or more under an enforceable written agreement that 
436.17  may not be terminated without prior notice; 
436.18     (3) nonresidential parking services, whether on a 
436.19  contractual, hourly, or other periodic basis, except for parking 
436.20  at a meter; 
436.21     (4) the granting of membership in a club, association, or 
436.22  other organization if: 
436.23     (i) the club, association, or other organization makes 
436.24  available for the use of its members sports and athletic 
436.25  facilities, without regard to whether a separate charge is 
436.26  assessed for use of the facilities; and 
436.27     (ii) use of the sports and athletic facility is not made 
436.28  available to the general public on the same basis as it is made 
436.29  available to members.  
436.30  Granting of membership means both onetime initiation fees and 
436.31  periodic membership dues.  Sports and athletic facilities 
436.32  include golf courses; tennis, racquetball, handball, and squash 
436.33  courts; basketball and volleyball facilities; running tracks; 
436.34  exercise equipment; swimming pools; and other similar athletic 
436.35  or sports facilities; 
436.36     (5) delivery of aggregate materials and concrete block by a 
437.1   third party if the delivery would be subject to the sales tax if 
437.2   provided by the seller of the aggregate material or concrete 
437.3   block; and 
437.4      (6) services as provided in this clause: 
437.5      (i) laundry and dry cleaning services including cleaning, 
437.6   pressing, repairing, altering, and storing clothes, linen 
437.7   services and supply, cleaning and blocking hats, and carpet, 
437.8   drapery, upholstery, and industrial cleaning.  Laundry and dry 
437.9   cleaning services do not include services provided by coin 
437.10  operated facilities operated by the customer; 
437.11     (ii) motor vehicle washing, waxing, and cleaning services, 
437.12  including services provided by coin operated facilities operated 
437.13  by the customer, and rustproofing, undercoating, and towing of 
437.14  motor vehicles; 
437.15     (iii) building and residential cleaning, maintenance, and 
437.16  disinfecting and exterminating services; 
437.17     (iv) detective, security, burglar, fire alarm, and armored 
437.18  car services; but not including services performed within the 
437.19  jurisdiction they serve by off-duty licensed peace officers as 
437.20  defined in section 626.84, subdivision 1, or services provided 
437.21  by a nonprofit organization for monitoring and electronic 
437.22  surveillance of persons placed on in-home detention pursuant to 
437.23  court order or under the direction of the Minnesota Department 
437.24  of Corrections; 
437.25     (v) pet grooming services; 
437.26     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
437.27  services; garden planting and maintenance; tree, bush, and shrub 
437.28  pruning, bracing, spraying, and surgery; indoor plant care; 
437.29  tree, bush, shrub, and stump removal; and tree trimming for 
437.30  public utility lines.  Services performed under a construction 
437.31  contract for the installation of shrubbery, plants, sod, trees, 
437.32  bushes, and similar items are not taxable; 
437.33     (vii) massages, except when provided by a licensed health 
437.34  care facility or professional or upon written referral from a 
437.35  licensed health care facility or professional for treatment of 
437.36  illness, injury, or disease; and 
438.1      (viii) the furnishing of lodging, board, and care services 
438.2   for animals in kennels and other similar arrangements, but 
438.3   excluding veterinary and horse boarding services. 
438.4      In applying the provisions of this chapter, the terms 
438.5   "tangible personal property" and "sales at retail" include 
438.6   taxable services listed in clause (6), items (i) to (vi) and 
438.7   (viii), and the provision of these taxable services, unless 
438.8   specifically provided otherwise.  Services performed by an 
438.9   employee for an employer are not taxable.  Services performed by 
438.10  a partnership or association for another partnership or 
438.11  association are not taxable if one of the entities owns or 
438.12  controls more than 80 percent of the voting power of the equity 
438.13  interest in the other entity.  Services performed between 
438.14  members of an affiliated group of corporations are not taxable.  
438.15  For purposes of the preceding sentence, "affiliated group of 
438.16  corporations" includes those entities that would be classified 
438.17  as members of an affiliated group under United States Code, 
438.18  title 26, section 1504, and that are eligible to file a 
438.19  consolidated tax return for federal income tax purposes. 
438.20     (h) A sale and a purchase includes the furnishing for a 
438.21  consideration of tangible personal property or taxable services 
438.22  by the United States or any of its agencies or 
438.23  instrumentalities, or the state of Minnesota, its agencies, 
438.24  instrumentalities, or political subdivisions. 
438.25     (i) A sale and a purchase includes the furnishing for a 
438.26  consideration of telecommunications services, including cable 
438.27  television services and direct satellite services.  
438.28  Telecommunications services are taxed to the extent allowed 
438.29  under federal law.  
438.30     (j) A sale and a purchase includes the furnishing for a 
438.31  consideration of installation if the installation charges would 
438.32  be subject to the sales tax if the installation were provided by 
438.33  the seller of the item being installed. 
438.34     (k) A sale and a purchase includes the rental of a vehicle 
438.35  by a motor vehicle dealer to a customer when (1) the vehicle is 
438.36  rented by the customer for a consideration, or (2) the motor 
439.1   vehicle dealer is reimbursed pursuant to a service contract as 
439.2   defined in section 65B.29, subdivision 1, clause (1). 
439.3      [EFFECTIVE DATE.] This section is effective the day 
439.4   following final enactment. 
439.5      Sec. 7.  Minnesota Statutes 2004, section 297A.61, 
439.6   subdivision 4, is amended to read: 
439.7      Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means any 
439.8   sale, lease, or rental for any purpose, other than resale, 
439.9   sublease, or subrent of items by the purchaser in the normal 
439.10  course of business as defined in subdivision 21.  
439.11     (b) A sale of property used by the owner only by leasing it 
439.12  to others or by holding it in an effort to lease it, and put to 
439.13  no use by the owner other than resale after the lease or effort 
439.14  to lease, is a sale of property for resale.  
439.15     (c) A sale of master computer software that is purchased 
439.16  and used to make copies for sale or lease is a sale of property 
439.17  for resale.  
439.18     (d) A sale of building materials, supplies, and equipment 
439.19  to owners, contractors, subcontractors, or builders for the 
439.20  erection of buildings or the alteration, repair, or improvement 
439.21  of real property is a retail sale in whatever quantity sold, 
439.22  whether the sale is for purposes of resale in the form of real 
439.23  property or otherwise.  
439.24     (e) A sale of carpeting, linoleum, or similar floor 
439.25  covering to a person who provides for installation of the floor 
439.26  covering is a retail sale and not a sale for resale since a sale 
439.27  of floor covering which includes installation is a contract for 
439.28  the improvement of real property. 
439.29     (f) A sale of shrubbery, plants, sod, trees, and similar 
439.30  items to a person who provides for installation of the items is 
439.31  a retail sale and not a sale for resale since a sale of 
439.32  shrubbery, plants, sod, trees, and similar items that includes 
439.33  installation is a contract for the improvement of real property. 
439.34     (g) A sale of tangible personal property that is awarded as 
439.35  prizes is a retail sale and is not considered a sale of property 
439.36  for resale. 
440.1      (h) A sale of tangible personal property utilized or 
440.2   employed in the furnishing or providing of services under 
440.3   subdivision 3, paragraph (g), clause (1), including, but not 
440.4   limited to, property given as promotional items, is a retail 
440.5   sale and is not considered a sale of property for resale. 
440.6      (i) A sale of tangible personal property used in conducting 
440.7   lawful gambling under chapter 349 or the state lottery under 
440.8   chapter 349A, including, but not limited to, property given as 
440.9   promotional items, is a retail sale and is not considered a sale 
440.10  of property for resale. 
440.11     (j) A sale of machines, equipment, or devices that are used 
440.12  to furnish, provide, or dispense goods or services, including, 
440.13  but not limited to, coin-operated devices, is a retail sale and 
440.14  is not considered a sale of property for resale. 
440.15     (k) In the case of a lease, a retail sale occurs when an 
440.16  obligation to make a lease payment becomes due under the terms 
440.17  of the agreement or the trade practices of the lessor. 
440.18     (l) In the case of a conditional sales contract, a retail 
440.19  sale occurs upon the transfer of title or possession of the 
440.20  tangible personal property. 
440.21     [EFFECTIVE DATE.] This section is effective the day 
440.22  following final enactment. 
440.23     Sec. 8.  Minnesota Statutes 2004, section 297A.64, 
440.24  subdivision 4, is amended to read: 
440.25     Subd. 4.  [EXEMPTIONS.] (a) The tax and the fee imposed by 
440.26  this section do not apply to a lease or rental of (1) a vehicle 
440.27  to be used by the lessee to provide a licensed taxi service; (2) 
440.28  a hearse or limousine used in connection with a burial or 
440.29  funeral service; or (3) a van designed or adapted primarily for 
440.30  transporting property rather than passengers.  The tax and the 
440.31  fee imposed under this section do not apply when the lease or 
440.32  rental of a vehicle is exempt from the tax imposed under section 
440.33  297A.62, subdivision 1. 
440.34     (b) The lessor may elect not to charge the fee imposed in 
440.35  subdivision 2 if in the previous calendar year the lessor had no 
440.36  more than 20 vehicles available for lease that would have been 
441.1   subject to tax under this section, or no more than $50,000 in 
441.2   gross receipts that would have been subject to tax under this 
441.3   section.  
441.4      [EFFECTIVE DATE.] This section is effective the day 
441.5   following final enactment. 
441.6      Sec. 9.  Minnesota Statutes 2004, section 297A.668, 
441.7   subdivision 1, is amended to read: 
441.8      Subdivision 1.  [ APPLICABILITY.] The provisions of this 
441.9   section apply regardless of the characterization of a product as 
441.10  tangible personal property, a digital good, or a service; but do 
441.11  not apply to telecommunications services, or the sales of motor 
441.12  vehicles, watercraft, aircraft, modular homes, manufactured 
441.13  homes, or mobile homes.  These provisions only apply to 
441.14  determine a seller's obligation to pay or collect and remit a 
441.15  sales or use tax with respect to the seller's sale of a 
441.16  product.  These provisions do not affect the obligation of a 
441.17  seller as purchaser to remit tax on the use of the product. 
441.18     [EFFECTIVE DATE.] This section is effective the day 
441.19  following final enactment. 
441.20     Sec. 10.  Minnesota Statutes 2004, section 297A.668, 
441.21  subdivision 5, is amended to read: 
441.22     Subd. 5.  [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 
441.23  including lease or rental, of transportation equipment shall be 
441.24  sourced the same as a retail sale in accordance with the 
441.25  provisions of subdivision 2, notwithstanding the exclusion of 
441.26  lease or rental in subdivision 2. 
441.27     (b) "Transportation equipment" means any of the following: 
441.28     (1) locomotives and railcars that are utilized for the 
441.29  carriage of persons or property in interstate commerce; and/or 
441.30     (2) trucks and truck-tractors with a gross vehicle weight 
441.31  rating (GVWR) of 10,001 pounds or greater, trailers, 
441.32  semitrailers, or passenger buses that are: 
441.33     (i) registered through the international registration plan; 
441.34  and 
441.35     (ii) operated under authority of a carrier authorized and 
441.36  certified by the United States Department of Transportation or 
442.1   another federal authority to engage in the carriage of persons 
442.2   or property in interstate commerce; 
442.3      (3) aircraft that are operated by air carriers authorized 
442.4   and certificated by the United States Department of 
442.5   Transportation or another federal or a foreign authority to 
442.6   engage in the carriage of persons or property in interstate 
442.7   commerce; or 
442.8      (4) containers designed for use on and component parts 
442.9   attached or secured on the transportation equipment described in 
442.10  items (1) through (3).  
442.11     [EFFECTIVE DATE.] This section is effective for sales and 
442.12  purchases made on or after January 1, 2004. 
442.13     Sec. 11.  Minnesota Statutes 2004, section 297A.67, 
442.14  subdivision 2, is amended to read: 
442.15     Subd. 2.  [FOOD AND FOOD INGREDIENTS.] Except as otherwise 
442.16  provided in this subdivision, food and food ingredients are 
442.17  exempt.  For purposes of this subdivision, "food" and "food 
442.18  ingredients" mean substances, whether in liquid, concentrated, 
442.19  solid, frozen, dried, or dehydrated form, that are sold for 
442.20  ingestion or chewing by humans and are consumed for their taste 
442.21  or nutritional value.  Food and food ingredients exempt under 
442.22  this subdivision do not include candy, soft drinks, food sold 
442.23  through vending machines, dietary supplements, and prepared 
442.24  foods.  Food and food ingredients do not include alcoholic 
442.25  beverages, dietary supplements, and tobacco.  For purposes of 
442.26  this subdivision, "alcoholic beverages" means beverages that are 
442.27  suitable for human consumption and contain one-half of one 
442.28  percent or more of alcohol by volume.  For purposes of this 
442.29  subdivision, "tobacco" means cigarettes, cigars, chewing or pipe 
442.30  tobacco, or any other item that contains tobacco.  For purposes 
442.31  of this subdivision, "dietary supplements" means any product, 
442.32  other than tobacco, intended to supplement the diet that: 
442.33     (1) contains one or more of the following dietary 
442.34  ingredients: 
442.35     (i) a vitamin; 
442.36     (ii) a mineral; 
443.1      (iii) an herb or other botanical; 
443.2      (iv) an amino acid; 
443.3      (v) a dietary substance for use by humans to supplement the 
443.4   diet by increasing the total dietary intake; and 
443.5      (vi) a concentrate, metabolite, constituent, extract, or 
443.6   combination of any ingredient described in items (i) to (v); 
443.7      (2) is intended for ingestion in tablet, capsule, powder, 
443.8   softgel, gelcap, or liquid form, or if not intended for 
443.9   ingestion in such form, is not represented as conventional food 
443.10  and is not represented for use as a sole item of a meal or of 
443.11  the diet; and 
443.12     (3) is required to be labeled as a dietary supplement, 
443.13  identifiable by the supplement facts box found on the label and 
443.14  as required pursuant to Code of Federal Regulations, title 21, 
443.15  section 101.36. 
443.16     [EFFECTIVE DATE.] This section is effective for sales made 
443.17  on or after the day following final enactment. 
443.18     Sec. 12.  Minnesota Statutes 2004, section 297A.68, 
443.19  subdivision 2, is amended to read: 
443.20     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
443.21  (a) Materials stored, used, or consumed in industrial production 
443.22  of personal property intended to be sold ultimately at retail 
443.23  are exempt, whether or not the item so used becomes an 
443.24  ingredient or constituent part of the property produced.  
443.25  Materials that qualify for this exemption include, but are not 
443.26  limited to, the following: 
443.27     (1) chemicals, including chemicals used for cleaning food 
443.28  processing machinery and equipment; 
443.29     (2) materials, including chemicals, fuels, and electricity 
443.30  purchased by persons engaged in industrial production to treat 
443.31  waste generated as a result of the production process; 
443.32     (3) fuels, electricity, gas, and steam used or consumed in 
443.33  the production process, except that electricity, gas, or steam 
443.34  used for space heating, cooling, or lighting is exempt if (i) it 
443.35  is in excess of the average climate control or lighting for the 
443.36  production area, and (ii) it is necessary to produce that 
444.1   particular product; 
444.2      (4) petroleum products and lubricants; 
444.3      (5) packaging materials, including returnable containers 
444.4   used in packaging food and beverage products; 
444.5      (6) accessory tools, equipment, and other items that are 
444.6   separate detachable units with an ordinary useful life of less 
444.7   than 12 months used in producing a direct effect upon the 
444.8   product; and 
444.9      (7) the following materials, tools, and equipment used in 
444.10  metalcasting:  crucibles, thermocouple protection sheaths and 
444.11  tubes, stalk tubes, refractory materials, molten metal filters 
444.12  and filter boxes, degassing lances, and base blocks. 
444.13     (b) This exemption does not include: 
444.14     (1) machinery, equipment, implements, tools, accessories, 
444.15  appliances, contrivances and furniture and fixtures, except 
444.16  those listed in paragraph (a), clause (6); and 
444.17     (2) petroleum and special fuels used in producing or 
444.18  generating power for propelling ready-mixed concrete trucks on 
444.19  the public highways of this state. 
444.20     (c) Industrial production includes, but is not limited to, 
444.21  research, development, design or production of any tangible 
444.22  personal property, manufacturing, processing (other than by 
444.23  restaurants and consumers) of agricultural products (whether 
444.24  vegetable or animal), commercial fishing, refining, smelting, 
444.25  reducing, brewing, distilling, printing, mining, quarrying, 
444.26  lumbering, generating electricity, the production of road 
444.27  building materials, and the research, development, design, or 
444.28  production of computer software.  Industrial production does not 
444.29  include painting, cleaning, repairing or similar processing of 
444.30  property except as part of the original manufacturing process.  
444.31  Industrial production does not include the furnishing of 
444.32  services listed in section 297A.61, subdivision 3, paragraph 
444.33  (g), clause (6), items (i) to (vi) and (viii). 
444.34     [EFFECTIVE DATE.] This section is effective the day 
444.35  following final enactment. 
444.36     Sec. 13.  Minnesota Statutes 2004, section 297A.68, 
445.1   subdivision 5, is amended to read: 
445.2      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
445.3   exempt.  The tax must be imposed and collected as if the rate 
445.4   under section 297A.62, subdivision 1, applied, and then refunded 
445.5   in the manner provided in section 297A.75. 
445.6      "Capital equipment" means machinery and equipment purchased 
445.7   or leased, and used in this state by the purchaser or lessee 
445.8   primarily for manufacturing, fabricating, mining, or refining 
445.9   tangible personal property to be sold ultimately at retail if 
445.10  the machinery and equipment are essential to the integrated 
445.11  production process of manufacturing, fabricating, mining, or 
445.12  refining.  Capital equipment also includes machinery and 
445.13  equipment used primarily to electronically transmit results 
445.14  retrieved by a customer of an on-line computerized data 
445.15  retrieval system. 
445.16     (b) Capital equipment includes, but is not limited to: 
445.17     (1) machinery and equipment used to operate, control, or 
445.18  regulate the production equipment; 
445.19     (2) machinery and equipment used for research and 
445.20  development, design, quality control, and testing activities; 
445.21     (3) environmental control devices that are used to maintain 
445.22  conditions such as temperature, humidity, light, or air pressure 
445.23  when those conditions are essential to and are part of the 
445.24  production process; 
445.25     (4) materials and supplies used to construct and install 
445.26  machinery or equipment; 
445.27     (5) repair and replacement parts, including accessories, 
445.28  whether purchased as spare parts, repair parts, or as upgrades 
445.29  or modifications to machinery or equipment; 
445.30     (6) materials used for foundations that support machinery 
445.31  or equipment; 
445.32     (7) materials used to construct and install special purpose 
445.33  buildings used in the production process; 
445.34     (8) ready-mixed concrete equipment in which the ready-mixed 
445.35  concrete is mixed as part of the delivery process regardless if 
445.36  mounted on a chassis, repair parts for ready-mixed concrete 
446.1   trucks, and leases of ready-mixed concrete trucks; and 
446.2      (9) machinery or equipment used for research, development, 
446.3   design, or production of computer software.  
446.4      (c) Capital equipment does not include the following: 
446.5      (1) motor vehicles taxed under chapter 297B; 
446.6      (2) machinery or equipment used to receive or store raw 
446.7   materials; 
446.8      (3) building materials, except for materials included in 
446.9   paragraph (b), clauses (6) and (7); 
446.10     (4) machinery or equipment used for nonproduction purposes, 
446.11  including, but not limited to, the following:  plant security, 
446.12  fire prevention, first aid, and hospital stations; support 
446.13  operations or administration; pollution control; and plant 
446.14  cleaning, disposal of scrap and waste, plant communications, 
446.15  space heating, cooling, lighting, or safety; 
446.16     (5) farm machinery and aquaculture production equipment as 
446.17  defined by section 297A.61, subdivisions 12 and 13; 
446.18     (6) machinery or equipment purchased and installed by a 
446.19  contractor as part of an improvement to real property; or 
446.20     (7) machinery and equipment used by restaurants in the 
446.21  furnishing, preparing, or serving of prepared foods as defined 
446.22  in section 297A.61, subdivision 31; 
446.23     (8) machinery and equipment used to furnish the services 
446.24  listed in section 297A.61, subdivision 3, paragraph (g), clause 
446.25  (6), items (i) to (vi) and (viii); or 
446.26     (9) any other item that is not essential to the integrated 
446.27  process of manufacturing, fabricating, mining, or refining. 
446.28     (d) For purposes of this subdivision: 
446.29     (1) "Equipment" means independent devices or tools separate 
446.30  from machinery but essential to an integrated production 
446.31  process, including computers and computer software, used in 
446.32  operating, controlling, or regulating machinery and equipment; 
446.33  and any subunit or assembly comprising a component of any 
446.34  machinery or accessory or attachment parts of machinery, such as 
446.35  tools, dies, jigs, patterns, and molds.  
446.36     (2) "Fabricating" means to make, build, create, produce, or 
447.1   assemble components or property to work in a new or different 
447.2   manner. 
447.3      (3) "Integrated production process" means a process or 
447.4   series of operations through which tangible personal property is 
447.5   manufactured, fabricated, mined, or refined.  For purposes of 
447.6   this clause, (i) manufacturing begins with the removal of raw 
447.7   materials from inventory and ends when the last process prior to 
447.8   loading for shipment has been completed; (ii) fabricating begins 
447.9   with the removal from storage or inventory of the property to be 
447.10  assembled, processed, altered, or modified and ends with the 
447.11  creation or production of the new or changed product; (iii) 
447.12  mining begins with the removal of overburden from the site of 
447.13  the ores, minerals, stone, peat deposit, or surface materials 
447.14  and ends when the last process before stockpiling is completed; 
447.15  and (iv) refining begins with the removal from inventory or 
447.16  storage of a natural resource and ends with the conversion of 
447.17  the item to its completed form. 
447.18     (4) "Machinery" means mechanical, electronic, or electrical 
447.19  devices, including computers and computer software, that are 
447.20  purchased or constructed to be used for the activities set forth 
447.21  in paragraph (a), beginning with the removal of raw materials 
447.22  from inventory through completion of the product, including 
447.23  packaging of the product. 
447.24     (5) "Machinery and equipment used for pollution control" 
447.25  means machinery and equipment used solely to eliminate, prevent, 
447.26  or reduce pollution resulting from an activity described in 
447.27  paragraph (a).  
447.28     (6) "Manufacturing" means an operation or series of 
447.29  operations where raw materials are changed in form, composition, 
447.30  or condition by machinery and equipment and which results in the 
447.31  production of a new article of tangible personal property.  For 
447.32  purposes of this subdivision, "manufacturing" includes the 
447.33  generation of electricity or steam to be sold at retail. 
447.34     (7) "Mining" means the extraction of minerals, ores, stone, 
447.35  or peat. 
447.36     (8) "On-line data retrieval system" means a system whose 
448.1   cumulation of information is equally available and accessible to 
448.2   all its customers. 
448.3      (9) "Primarily" means machinery and equipment used 50 
448.4   percent or more of the time in an activity described in 
448.5   paragraph (a). 
448.6      (10) "Refining" means the process of converting a natural 
448.7   resource to an intermediate or finished product, including the 
448.8   treatment of water to be sold at retail. 
448.9      [EFFECTIVE DATE.] This section is effective the day 
448.10  following final enactment. 
448.11     Sec. 14.  Minnesota Statutes 2004, section 297A.68, 
448.12  subdivision 35, is amended to read: 
448.13     Subd. 35.  [TELECOMMUNICATIONS EQUIPMENT.] (a) 
448.14  Telecommunications machinery and equipment purchased or leased 
448.15  for use directly by a telecommunications service provider 
448.16  primarily in the provision of telecommunications services that 
448.17  are ultimately to be sold at retail are exempt, regardless of 
448.18  whether purchased by the owner, a contractor, or a subcontractor.
448.19     (b) For purposes of this subdivision, "telecommunications 
448.20  machinery and equipment" includes, but is not limited to: 
448.21     (1) machinery, equipment, and fixtures utilized in 
448.22  receiving, initiating, amplifying, processing, transmitting, 
448.23  retransmitting, recording, switching, or monitoring 
448.24  telecommunications services, such as computers, transformers, 
448.25  amplifiers, routers, bridges, repeaters, multiplexers, and other 
448.26  items performing comparable functions; 
448.27     (2) machinery, equipment, and fixtures used in the 
448.28  transportation of telecommunications services, radio 
448.29  transmitters and receivers, satellite equipment, microwave 
448.30  equipment, and other transporting media, but not wire, cable, 
448.31  fiber, poles, or conduit; 
448.32     (3) ancillary machinery, equipment, and fixtures that 
448.33  regulate, control, protect, or enable the machinery in clauses 
448.34  (1) and (2) to accomplish its intended function, such as 
448.35  auxiliary power supply, test equipment, towers, heating, 
448.36  ventilating, and air conditioning equipment necessary to the 
449.1   operation of the telecommunications equipment; and software 
449.2   necessary to the operation of the telecommunications equipment; 
449.3   and 
449.4      (4) repair and replacement parts, including accessories, 
449.5   whether purchased as spare parts, repair parts, or as upgrades 
449.6   or modifications to qualified machinery or equipment. 
449.7      (c) For purposes of this subdivision, "telecommunications 
449.8   services" means telecommunications services as defined in 
449.9   section 297A.61, subdivision 24, paragraph paragraphs (a), only 
449.10  (c), and (d). 
449.11     [EFFECTIVE DATE.] This section is effective the day 
449.12  following final enactment. 
449.13     Sec. 15.  Minnesota Statutes 2004, section 297A.68, 
449.14  subdivision 39, is amended to read: 
449.15     Subd. 39.  [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 
449.16  tangible personal property or services is exempt from tax or a 
449.17  tax rate increase for a period of six months from the effective 
449.18  date of the law change that results in the imposition of the tax 
449.19  or the tax rate increase under this chapter if: 
449.20     (1) the act imposing the tax or increasing the tax rate 
449.21  does not have transitional effective date language for existing 
449.22  construction contracts and construction bids; and 
449.23     (2) the requirements of paragraph (b) are met. 
449.24     (b) A sale is tax exempt under paragraph (a) if it meets 
449.25  the requirements of either clause (1) or (2): 
449.26     (1) For a construction contract: 
449.27     (i) the goods or services sold must be used for the 
449.28  performance of a bona fide written lump sum or fixed price 
449.29  construction contract; 
449.30     (ii) the contract must be entered into before the date the 
449.31  goods or services become subject to the sales tax or the tax 
449.32  rate was increased; 
449.33     (iii) the contract must not provide for allocation of 
449.34  future taxes; and 
449.35     (iv) for each qualifying contract the contractor must give 
449.36  the seller documentation of the contract on which an exemption 
450.1   is to be claimed. 
450.2      (2) For a construction bid: 
450.3      (i) the goods or services sold must be used pursuant to an 
450.4   obligation of a bid or bids; 
450.5      (ii) the bid or bids must be submitted and accepted before 
450.6   the date the goods or services became subject to the sales 
450.7   tax or the tax rate was increased; 
450.8      (iii) the bid or bids must not be able to be withdrawn, 
450.9   modified, or changed without forfeiting a bond; and 
450.10     (iv) for each qualifying bid, the contractor must give the 
450.11  seller documentation of the bid on which an exemption is to be 
450.12  claimed. 
450.13     [EFFECTIVE DATE.] This section is effective the day 
450.14  following final enactment. 
450.15     Sec. 16.  Minnesota Statutes 2004, section 297A.99, 
450.16  subdivision 4, is amended to read: 
450.17     Subd. 4.  [TAX BASE.] (a) The tax applies to sales taxable 
450.18  under this chapter that occur within the political subdivision. 
450.19     (b) Taxable goods or services are subject to a political 
450.20  subdivision's sales tax, if they are performed either: 
450.21     (1) within the political subdivision, or 
450.22     (2) partly within and partly without the political 
450.23  subdivision and more of the service is performed within the 
450.24  political subdivision, based on the cost of performance sourced 
450.25  to the political subdivision pursuant to section 297A.668. 
450.26     [EFFECTIVE DATE.] This section is effective for sales made 
450.27  on or after January 1, 2004. 
450.28     Sec. 17.  Minnesota Statutes 2004, section 297A.99, 
450.29  subdivision 7, is amended to read: 
450.30     Subd. 7.  [EXEMPTIONS.] (a) All goods or services that are 
450.31  otherwise exempt from taxation under this chapter are exempt 
450.32  from a political subdivision's tax. 
450.33     (b) The gross receipts from the sale of tangible personal 
450.34  property that meets the requirement requirements of section 
450.35  297A.68, subdivision subdivisions 11, 15, and 16 are exempt, 
450.36  except the qualification test applies based on the boundaries of 
451.1   the political subdivision instead of the state of Minnesota. 
451.2      (c) All mobile transportation equipment, and parts and 
451.3   accessories attached to or to be attached to the equipment are 
451.4   exempt, if purchased by a holder of a motor carrier direct pay 
451.5   permit under section 297A.90.  
451.6      [EFFECTIVE DATE.] This section is effective the day 
451.7   following final enactment. 
451.8      Sec. 18.  [REPEALER.] 
451.9      Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, 
451.10  subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5 
451.11  and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1 
451.12  and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 
451.13  8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 
451.14  5; and 8130.8800, subpart 4, are repealed. 
451.15     [EFFECTIVE DATE.] This section is effective the day 
451.16  following final enactment. 
451.17                             ARTICLE 16
451.18                       DEPARTMENT OF REVENUE
451.19                       SPECIAL TAXES - SF1683 
451.20     Section 1.  Minnesota Statutes 2004, section 287.04, is 
451.21  amended to read: 
451.22     287.04 [EXEMPTIONS.] 
451.23     The tax imposed by section 287.035 does not apply to:  
451.24     (a) A decree of marriage dissolution or an instrument made 
451.25  pursuant to it.  
451.26     (b) A mortgage given to correct a misdescription of the 
451.27  mortgaged property. 
451.28     (c) A mortgage or other instrument that adds additional 
451.29  security for the same debt for which mortgage registry tax has 
451.30  been paid.  
451.31     (d) A contract for the conveyance of any interest in real 
451.32  property, including a contract for deed. 
451.33     (e) A mortgage secured by real property subject to the 
451.34  minerals production tax of sections 298.24 to 298.28. 
451.35     (f) The principal amount of a mortgage loan made under a 
451.36  low and moderate income or other affordable housing program, if 
452.1   the mortgagee is a federal, state, or local government agency. 
452.2      (g) Mortgages granted by fraternal benefit societies 
452.3   subject to section 64B.24. 
452.4      (h) A mortgage amendment or extension, as defined in 
452.5   section 287.01. 
452.6      (i) An agricultural mortgage if the proceeds of the loan 
452.7   secured by the mortgage are used to acquire or improve real 
452.8   property classified under section 273.13, subdivision 23, 
452.9   paragraph (a), or (b), clause (1), (2), or (3). 
452.10     (j) A mortgage on an armory building as set forth in 
452.11  section 193.147. 
452.12     [EFFECTIVE DATE.] This section is effective the day 
452.13  following final enactment. 
452.14     Sec. 2.  Minnesota Statutes 2004, section 295.50, is 
452.15  amended by adding a subdivision to read: 
452.16     Subd. 1a.  [BLOOD COMPONENTS.] "Blood components" means the 
452.17  parts of the blood that are separated from blood by physical or 
452.18  mechanical means and are intended for transfusion.  Blood 
452.19  components do not include blood derivatives. 
452.20     [EFFECTIVE DATE.] This section is effective for gross 
452.21  revenues received after December 31, 2004. 
452.22     Sec. 3.  Minnesota Statutes 2004, section 295.50, 
452.23  subdivision 3, is amended to read: 
452.24     Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
452.25  amounts received in money or otherwise by: 
452.26     (1) a hospital for patient services; 
452.27     (2) a surgical center for patient services; 
452.28     (3) a health care provider, other than a staff model health 
452.29  carrier, for patient services; 
452.30     (4) a wholesale drug distributor for sale or distribution 
452.31  of legend drugs that are delivered in Minnesota by the wholesale 
452.32  drug distributor, by common carrier, or by mail, unless the 
452.33  legend drugs are delivered to another wholesale drug distributor 
452.34  who sells legend drugs exclusively at wholesale.  Legend drugs 
452.35  do not include nutritional products as defined in Minnesota 
452.36  Rules, part 9505.0325, and blood and blood components; and 
453.1      (5) a staff model health plan company as gross premiums for 
453.2   enrollees, co-payments, deductibles, coinsurance, and fees for 
453.3   patient services. 
453.4      [EFFECTIVE DATE.] This section is effective for gross 
453.5   revenues received after December 31, 2004. 
453.6      Sec. 4.  Minnesota Statutes 2004, section 295.53, 
453.7   subdivision 1, is amended to read: 
453.8      Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
453.9   are excluded from the gross revenues subject to the hospital, 
453.10  surgical center, or health care provider taxes under sections 
453.11  295.50 to 295.59: 
453.12     (1) payments received for services provided under the 
453.13  Medicare program, including payments received from the 
453.14  government, and organizations governed by sections 1833 and 1876 
453.15  of title XVIII of the federal Social Security Act, United States 
453.16  Code, title 42, section 1395, and enrollee deductibles, 
453.17  coinsurance, and co-payments, whether paid by the Medicare 
453.18  enrollee or by a Medicare supplemental coverage as defined in 
453.19  section 62A.011, subdivision 3, clause (10), or by Medicaid 
453.20  payments under title XIX of the federal Social Security Act.  
453.21  Payments for services not covered by Medicare are taxable; 
453.22     (2) payments received for home health care services; 
453.23     (3) payments received from hospitals or surgical centers 
453.24  for goods and services on which liability for tax is imposed 
453.25  under section 295.52 or the source of funds for the payment is 
453.26  exempt under clause (1), (7), (10), or (14); 
453.27     (4) payments received from health care providers for goods 
453.28  and services on which liability for tax is imposed under this 
453.29  chapter or the source of funds for the payment is exempt under 
453.30  clause (1), (7), (10), or (14); 
453.31     (5) amounts paid for legend drugs, other than nutritional 
453.32  products and blood and blood components, to a wholesale drug 
453.33  distributor who is subject to tax under section 295.52, 
453.34  subdivision 3, reduced by reimbursements received for legend 
453.35  drugs otherwise exempt under this chapter; 
453.36     (6) payments received by a health care provider or the 
454.1   wholly owned subsidiary of a health care provider for care 
454.2   provided outside Minnesota; 
454.3      (7) payments received from the chemical dependency fund 
454.4   under chapter 254B; 
454.5      (8) payments received in the nature of charitable donations 
454.6   that are not designated for providing patient services to a 
454.7   specific individual or group; 
454.8      (9) payments received for providing patient services 
454.9   incurred through a formal program of health care research 
454.10  conducted in conformity with federal regulations governing 
454.11  research on human subjects.  Payments received from patients or 
454.12  from other persons paying on behalf of the patients are subject 
454.13  to tax; 
454.14     (10) payments received from any governmental agency for 
454.15  services benefiting the public, not including payments made by 
454.16  the government in its capacity as an employer or insurer or 
454.17  payments made by the government for services provided under 
454.18  general assistance medical care, the MinnesotaCare program, or 
454.19  the medical assistance program governed by title XIX of the 
454.20  federal Social Security Act, United States Code, title 42, 
454.21  sections 1396 to 1396v; 
454.22     (11) government payments received by the commissioner of 
454.23  human services for state-operated services; 
454.24     (12) payments received by a health care provider for 
454.25  hearing aids and related equipment or prescription eyewear 
454.26  delivered outside of Minnesota; 
454.27     (13) payments received by an educational institution from 
454.28  student tuition, student activity fees, health care service 
454.29  fees, government appropriations, donations, or grants, and for 
454.30  services identified in and provided under an individualized 
454.31  education plan as defined in section 256B.0625 or Code of 
454.32  Federal Regulations, chapter 34, section 300.340(a).  Fee for 
454.33  service payments and payments for extended coverage are taxable; 
454.34  and 
454.35     (14) payments received under the federal Employees Health 
454.36  Benefits Act, United States Code, title 5, section 8909(f), as 
455.1   amended by the Omnibus Reconciliation Act of 1990.  Enrollee 
455.2   deductibles, coinsurance, and co-payments are subject to tax. 
455.3      (b) Payments received by wholesale drug distributors for 
455.4   legend drugs sold directly to veterinarians or veterinary bulk 
455.5   purchasing organizations are excluded from the gross revenues 
455.6   subject to the wholesale drug distributor tax under sections 
455.7   295.50 to 295.59. 
455.8      [EFFECTIVE DATE.] The change made to paragraph (a), clause 
455.9   (5), of this section is effective for amounts paid for blood and 
455.10  blood components after December 31, 2004.  The change made to 
455.11  paragraph (a), clause (14), of this section is effective for 
455.12  enrollee deductibles, coinsurance, and co-payments received 
455.13  under the federal Employees Health Benefits Act on or after the 
455.14  day following final enactment. 
455.15     Sec. 5.  Minnesota Statutes 2004, section 295.60, 
455.16  subdivision 3, is amended to read: 
455.17     Subd. 3.  [PAYMENT.] (a) Each furrier shall make estimated 
455.18  payments of the taxes for the calendar year in quarterly 
455.19  installments to the commissioner by April 15, July 15, October 
455.20  15, and January 15 of the following calendar year. 
455.21     (b) Estimated tax payments are not required if: 
455.22     (1) the tax for the current calendar year is less than 
455.23  $500; or 
455.24     (2) the tax for the previous calendar year is less than 
455.25  $500, if the taxpayer had a tax liability and was doing business 
455.26  the entire year. 
455.27     (c) Underpayment of estimated installments bear interest at 
455.28  the rate specified in section 270.75, from the due date of the 
455.29  payment until paid or until the due date of the annual return, 
455.30  whichever comes first.  An underpayment of an estimated 
455.31  installment is the difference between the amount paid and the 
455.32  lesser of (1) 90 percent of one-quarter of the tax for the 
455.33  calendar year the tax for the actual gross revenues received 
455.34  during the quarter, or (2) one-quarter of the total tax for the 
455.35  previous calendar year if the taxpayer had a tax liability and 
455.36  was doing business the entire year. 
456.1      [EFFECTIVE DATE.] This section is effective for gross 
456.2   revenues received after December 31, 2005. 
456.3      Sec. 6.  Minnesota Statutes 2004, section 296A.09, is 
456.4   amended by adding a subdivision to read: 
456.5      Subd. 6.  [EXEMPTIONS.] The provisions of subdivisions 1 
456.6   and 2 do not apply to aviation gasoline or jet fuel purchased by 
456.7   an ambulance service licensed under chapter 144E. 
456.8      [EFFECTIVE DATE.] This section is effective for purchases 
456.9   made on or after July 1, 2005. 
456.10     Sec. 7.  Minnesota Statutes 2004, section 296A.22, is 
456.11  amended by adding a subdivision to read: 
456.12     Subd. 9.  [ABATEMENT OF PENALTY.] (a) The commissioner may 
456.13  by written order abate any penalty imposed under this section, 
456.14  if in the commissioner's opinion there is reasonable cause to do 
456.15  so. 
456.16     (b) A request for abatement of penalty must be filed with 
456.17  the commissioner within 60 days of the date the notice stating 
456.18  that a penalty has been imposed was mailed to the taxpayer's 
456.19  last known address. 
456.20     (c) If the commissioner issues an order denying a request 
456.21  for abatement of penalty, the taxpayer may file an 
456.22  administrative appeal as provided in section 296A.25 or appeal 
456.23  to Tax Court as provided in section 271.06.  If the commissioner 
456.24  does not issue an order on the abatement request within 60 days 
456.25  from the date the request is received, the taxpayer may appeal 
456.26  to Tax Court as provided in section 271.06. 
456.27     [EFFECTIVE DATE.] This section is effective for penalties 
456.28  imposed on or after the day following final enactment. 
456.29     Sec. 8.  Minnesota Statutes 2004, section 297E.01, 
456.30  subdivision 5, is amended to read: 
456.31     Subd. 5.  [DISTRIBUTOR.] "Distributor" means a distributor 
456.32  as defined in section 349.12, subdivision 11, or a person or 
456.33  linked bingo game provider who markets, sells, or provides 
456.34  gambling product to a person or entity for resale or use at the 
456.35  retail level.  
456.36     [EFFECTIVE DATE.] This section is effective the day 
457.1   following final enactment. 
457.2      Sec. 9.  Minnesota Statutes 2004, section 297E.01, 
457.3   subdivision 7, is amended to read: 
457.4      Subd. 7.  [GAMBLING PRODUCT.] "Gambling product" means 
457.5   bingo hard cards, bingo paper, or sheets, or linked bingo paper 
457.6   sheets; pull-tabs; tipboards; paddletickets and paddleticket 
457.7   cards; raffle tickets; or any other ticket, card, board, 
457.8   placard, device, or token that represents a chance, for which 
457.9   consideration is paid, to win a prize.  
457.10     [EFFECTIVE DATE.] This section is effective the day 
457.11  following final enactment. 
457.12     Sec. 10.  Minnesota Statutes 2004, section 297E.01, is 
457.13  amended by adding a subdivision to read: 
457.14     Subd. 9a.  [LINKED BINGO GAME.] "Linked bingo game" means a 
457.15  bingo game played at two or more locations where licensed 
457.16  organizations are authorized to conduct bingo, when there is a 
457.17  common prize pool and a common selection of numbers or symbols 
457.18  conducted at one location, and when the results of the selection 
457.19  are transmitted to all participating locations by satellite, 
457.20  telephone, or other means by a linked bingo game provider. 
457.21     [EFFECTIVE DATE.] This section is effective the day 
457.22  following final enactment. 
457.23     Sec. 11.  Minnesota Statutes 2004, section 297E.01, is 
457.24  amended by adding a subdivision to read: 
457.25     Subd. 9b.  [LINKED BINGO GAME PROVIDER.] "Linked bingo game 
457.26  provider" means any person who provides the means to link bingo 
457.27  prizes in a linked bingo game, who provides linked bingo paper 
457.28  sheets to the participating organizations, who provides linked 
457.29  bingo prize management, and who provides the linked bingo game 
457.30  system. 
457.31     [EFFECTIVE DATE.] This section is effective the day 
457.32  following final enactment. 
457.33     Sec. 12.  Minnesota Statutes 2004, section 297E.06, 
457.34  subdivision 2, is amended to read: 
457.35     Subd. 2.  [BUSINESS RECORDS.] An organization shall 
457.36  maintain records supporting the gambling activity reported to 
458.1   the commissioner.  Records include, but are not limited to, the 
458.2   following items:  
458.3      (1) all winning and unsold tickets, cards, or stubs for 
458.4   pull-tab, tipboard, paddlewheel, and raffle games; 
458.5      (2) all reports and statements, including checker's 
458.6   records, for each bingo occasion; 
458.7      (3) all cash journals and ledgers, deposit slips, register 
458.8   tapes, and bank statements supporting gambling activity 
458.9   receipts; 
458.10     (4) all invoices that represent purchases of gambling 
458.11  product; 
458.12     (5) all canceled checks or copies of substitute checks as 
458.13  defined in Public Law 108-100, section 3, check recorders, 
458.14  journals and ledgers, vouchers, invoices, bank statements, and 
458.15  other documents supporting gambling activity expenditures; and 
458.16     (6) all organizational meeting minutes.  
458.17     All records required to be kept by this section must be 
458.18  preserved by the organization for at least 3-1/2 years and may 
458.19  be inspected by the commissioner of revenue at any reasonable 
458.20  time without notice or a search warrant.  
458.21     [EFFECTIVE DATE.] This section is effective July 1, 2005. 
458.22     Sec. 13.  Minnesota Statutes 2004, section 297E.07, is 
458.23  amended to read: 
458.24     297E.07 [INSPECTION RIGHTS.] 
458.25     At any reasonable time, without notice and without a search 
458.26  warrant, the commissioner may enter a place of business of a 
458.27  manufacturer, distributor, or organization, or linked bingo game 
458.28  provider; any site from which pull-tabs or tipboards or other 
458.29  gambling equipment or gambling product are being manufactured, 
458.30  stored, or sold; or any site at which lawful gambling is being 
458.31  conducted, and inspect the premises, books, records, and other 
458.32  documents required to be kept under this chapter to determine 
458.33  whether or not this chapter is being fully complied with.  If 
458.34  the commissioner is denied free access to or is hindered or 
458.35  interfered with in making an inspection of the place of 
458.36  business, books, or records, the permit of the distributor may 
459.1   be revoked by the commissioner, and the license of the 
459.2   manufacturer, the distributor, or the organization, or linked 
459.3   bingo game provider may be revoked by the board. 
459.4      [EFFECTIVE DATE.] This section is effective the day 
459.5   following final enactment. 
459.6      Sec. 14.  Minnesota Statutes 2004, section 297F.08, 
459.7   subdivision 12, is amended to read: 
459.8      Subd. 12.  [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 
459.9   person may not transport or cause to be transported from this 
459.10  state cigarettes for sale in another state without first 
459.11  affixing to the cigarettes the stamp required by the state in 
459.12  which the cigarettes are to be sold or paying any other excise 
459.13  tax on the cigarettes imposed by the state in which the 
459.14  cigarettes are to be sold. 
459.15     (b) A person may not affix to cigarettes the stamp required 
459.16  by another state or pay any other excise tax on the cigarettes 
459.17  imposed by another state if the other state prohibits stamps 
459.18  from being affixed to the cigarettes, prohibits the payment of 
459.19  any other excise tax on the cigarettes, or prohibits the sale of 
459.20  the cigarettes. 
459.21     (c) Not later than 15 days after the end of each calendar 
459.22  quarter, a person who transports or causes to be transported 
459.23  from this state cigarettes for sale in another state shall 
459.24  submit to the commissioner a report identifying the quantity and 
459.25  style of each brand of the cigarettes transported or caused to 
459.26  be transported in the preceding calendar quarter, and the name 
459.27  and address of each recipient of the cigarettes.  This reporting 
459.28  requirement only applies to cigarettes manufactured by companies 
459.29  that are not original or subsequent participating manufacturers 
459.30  in the Master Settlement Agreement with other states. 
459.31     (d) For purposes of this section, "person" has the meaning 
459.32  given in section 297F.01, subdivision 12.  Person does not 
459.33  include any common or contract carrier, or public warehouse that 
459.34  is not owned, in whole or in part, directly or indirectly by 
459.35  such person, and does not include a manufacturer that has 
459.36  entered into is an original or subsequent participating 
460.1   manufacturer in the Master Settlement Agreement with other 
460.2   states. 
460.3      [EFFECTIVE DATE.] This section is effective the day 
460.4   following final enactment. 
460.5      Sec. 15.  Minnesota Statutes 2004, section 297F.08, is 
460.6   amended by adding a subdivision to read: 
460.7      Subd. 13.  [BOND.] The commissioner may require the 
460.8   furnishing of a corporate surety bond or a certified check in an 
460.9   amount suitable to guarantee payment of the tax stamps purchased 
460.10  by a distributor.  The bond or certified check may be required 
460.11  when the commissioner determines that a distributor is (1) 
460.12  delinquent in the filing of any return required under this 
460.13  chapter, or (2) delinquent in the payment of any uncontested tax 
460.14  liability under this chapter.  The distributor shall furnish the 
460.15  bond or certified check for a period of two years, after which, 
460.16  if the distributor has not been delinquent in the filing of any 
460.17  returns required under this chapter, or delinquent in the paying 
460.18  of any tax under this chapter, a bond or certified check is no 
460.19  longer required.  The commissioner at any time may apply the 
460.20  bond or certified check to any unpaid taxes or fees, including 
460.21  interest and penalties, owed to the department by the 
460.22  distributor. 
460.23     [EFFECTIVE DATE.] This section is effective the day 
460.24  following final enactment. 
460.25     Sec. 16.  Minnesota Statutes 2004, section 297F.09, 
460.26  subdivision 1, is amended to read: 
460.27     Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
460.28  or before the 18th day of each calendar month, a distributor 
460.29  with a place of business in this state shall file a return with 
460.30  the commissioner showing the quantity of cigarettes manufactured 
460.31  or brought in from outside the state or purchased during the 
460.32  preceding calendar month and the quantity of cigarettes sold or 
460.33  otherwise disposed of in this state and outside this state 
460.34  during that month.  A licensed distributor outside this state 
460.35  shall in like manner file a return showing the quantity of 
460.36  cigarettes shipped or transported into this state during the 
461.1   preceding calendar month.  Returns must be made in the form and 
461.2   manner prescribed by the commissioner and must contain any other 
461.3   information required by the commissioner.  The return must be 
461.4   accompanied by a remittance for the full unpaid tax liability 
461.5   shown by it.  The return for the May liability and 85 percent of 
461.6   the estimated June liability is due on the date payment of the 
461.7   tax is due.  For distributors subject to the accelerated tax 
461.8   payment requirements in subdivision 10, the return for the May 
461.9   liability is due two business days before June 30th of the year 
461.10  and the return for the June liability is due on or before August 
461.11  18th of the year. 
461.12     [EFFECTIVE DATE.] This section is effective the day 
461.13  following final enactment. 
461.14     Sec. 17.  Minnesota Statutes 2004, section 297F.09, 
461.15  subdivision 2, is amended to read: 
461.16     Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
461.17  On or before the 18th day of each calendar month, a distributor 
461.18  with a place of business in this state shall file a return with 
461.19  the commissioner showing the quantity and wholesale sales price 
461.20  of each tobacco product: 
461.21     (1) brought, or caused to be brought, into this state for 
461.22  sale; and 
461.23     (2) made, manufactured, or fabricated in this state for 
461.24  sale in this state, during the preceding calendar month.  
461.25  Every licensed distributor outside this state shall in like 
461.26  manner file a return showing the quantity and wholesale sales 
461.27  price of each tobacco product shipped or transported to 
461.28  retailers in this state to be sold by those retailers, during 
461.29  the preceding calendar month.  Returns must be made in the form 
461.30  and manner prescribed by the commissioner and must contain any 
461.31  other information required by the commissioner.  The return must 
461.32  be accompanied by a remittance for the full tax liability 
461.33  shown.  The return for the May liability and 85 percent of the 
461.34  estimated June liability is due on the date payment of the tax 
461.35  is due.  For distributors subject to the accelerated tax payment 
461.36  requirements in subdivision 10, the return for the May liability 
462.1   is due two business days before June 30th of the year and the 
462.2   return for the June liability is due on or before August 18th of 
462.3   the year. 
462.4      [EFFECTIVE DATE.] This section is effective the day 
462.5   following final enactment. 
462.6      Sec. 18.  Minnesota Statutes 2004, section 297G.09, is 
462.7   amended by adding a subdivision to read: 
462.8      Subd. 10.  [QUARTERLY AND ANNUAL PAYMENTS AND RETURNS.] (a) 
462.9   If a manufacturer, wholesaler, brewer, or importer has an 
462.10  average liquor tax liability equal to or less than $500 per 
462.11  month in any quarter of a calendar year, and has substantially 
462.12  complied with the state tax laws during the preceding four 
462.13  calendar quarters, the manufacturer, wholesaler, brewer, or 
462.14  importer may request authorization to file and pay the taxes 
462.15  quarterly in subsequent calendar quarters.  The authorization 
462.16  remains in effect during the period in which the manufacturer's, 
462.17  wholesaler's, brewer's, or importer's quarterly returns reflect 
462.18  liquor tax liabilities of less than $1,500 and there is 
462.19  continued compliance with state tax laws. 
462.20     (b) If a manufacturer, wholesaler, brewer, or importer has 
462.21  an average liquor tax liability equal to or less than $100 per 
462.22  month during a calendar year, and has substantially complied 
462.23  with the state tax laws during that period, the manufacturer, 
462.24  wholesaler, brewer, or importer may request authorization to 
462.25  file and pay the taxes annually in subsequent years.  The 
462.26  authorization remains in effect during the period in which the 
462.27  manufacturer's, wholesaler's, brewer's, or importer's annual 
462.28  returns reflect liquor tax liabilities of less than $1,200 and 
462.29  there is continued compliance with state tax laws. 
462.30     (c) The commissioner may also grant quarterly or annual 
462.31  filing and payment authorizations to manufacturers, wholesalers, 
462.32  brewers, or importers if the commissioner concludes that the 
462.33  manufacturer's, wholesaler's, brewer's, or importer's future tax 
462.34  liabilities will be less than the monthly totals identified in 
462.35  paragraphs (a) and (b).  An authorization granted under this 
462.36  paragraph is subject to the same conditions as an authorization 
463.1   granted under paragraphs (a) and (b). 
463.2      (d) The annual tax return and payments must be filed and 
463.3   paid on or before the 18th day of January following the calendar 
463.4   year.  The quarterly returns and payments must be filed and paid 
463.5   on or before April 18 for the quarter ending March 31, on or 
463.6   before July 18 for the quarter ending June 30, on or before 
463.7   October 18 for the quarter ending September 30, and on or before 
463.8   January 18 for the quarter ending December 31. 
463.9      [EFFECTIVE DATE.] This section is effective for tax returns 
463.10  and payments due on or after January 1, 2006. 
463.11     Sec. 19.  Minnesota Statutes 2004, section 297I.01, is 
463.12  amended by adding a subdivision to read: 
463.13     Subd. 13a.  [REINSURANCE.] "Reinsurance" is insurance 
463.14  whereby an insurance company, for a consideration, agrees to 
463.15  indemnify another insurance company against all or part of the 
463.16  loss which the latter may sustain under the policy or policies 
463.17  which it has issued. 
463.18     [EFFECTIVE DATE.] This section is effective the day 
463.19  following final enactment. 
463.20     Sec. 20.  Minnesota Statutes 2004, section 297I.05, 
463.21  subdivision 5, is amended to read: 
463.22     Subd. 5.  [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 
463.23  HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 
463.24  SERVICE NETWORKS.] (a) Health maintenance organizations, 
463.25  community integrated service networks, and nonprofit health care 
463.26  service plan corporations are exempt from the tax imposed under 
463.27  this section for premiums received in calendar years 2001 to 
463.28  2003. 
463.29     (b) For calendar years after 2003, A tax is imposed on 
463.30  health maintenance organizations, community integrated service 
463.31  networks, and nonprofit health care service plan corporations.  
463.32  The rate of tax is equal to one percent of gross premiums less 
463.33  return premiums on all direct business received by the 
463.34  organization, network, or corporation or its agents in 
463.35  Minnesota, in cash or otherwise, in the calendar year. 
463.36     (c) In approving the premium rates as required in sections 
464.1   62L.08, subdivision 8, and 62A.65, subdivision 3, the 
464.2   commissioners of health and commerce shall ensure that any 
464.3   exemption from tax as described in paragraph (a) is reflected in 
464.4   the premium rate. 
464.5      (d) (b) The commissioner shall deposit all revenues, 
464.6   including penalties and interest, collected under this chapter 
464.7   from health maintenance organizations, community integrated 
464.8   service networks, and nonprofit health service plan corporations 
464.9   in the health care access fund.  Refunds of overpayments of tax 
464.10  imposed by this subdivision must be paid from the health care 
464.11  access fund.  There is annually appropriated from the health 
464.12  care access fund to the commissioner the amount necessary to 
464.13  make any refunds of the tax imposed under this subdivision. 
464.14     [EFFECTIVE DATE.] This section is effective January 1, 2005.
464.15     Sec. 21.  [REPEALER.] 
464.16     Minnesota Statutes 2004, section 297E.12, subdivision 10, 
464.17  is repealed effective the day following final enactment. 
464.18                             ARTICLE 17
464.19                       DEPARTMENT OF REVENUE
464.20                    ELECTRONIC PAYMENTS - SF1683
464.21     Section 1.  [270.772] [MINIMUM DOLLAR REQUIREMENT FOR 
464.22  ELECTRONIC PAYMENT OF TAXES AND FEES.] 
464.23     (a) Except as provided in paragraph (b), payments of every 
464.24  tax, fee, or surcharge administered by and payable to the 
464.25  commissioner in a calendar year, including deposits and 
464.26  estimated payments, must be remitted electronically if the 
464.27  liability of the taxpayer or payer for the tax, fee, or 
464.28  surcharge is: 
464.29     (1) $20,000 or more in the preceding fiscal year ending 
464.30  June 30, 2005; and 
464.31     (2) $10,000 or more in the preceding fiscal year ending 
464.32  June 30, 2006, and preceding fiscal years thereafter. 
464.33     (b) This section does not apply to individual income, 
464.34  estate, fiduciary, and airflight property taxes, and it does not 
464.35  apply to any law requiring all payments for a specific type of 
464.36  tax, fee, or surcharge, or from a specific group of taxpayers or 
465.1   payers, to be made electronically regardless of dollar amount. 
465.2      Sec. 2.  Minnesota Statutes 2004, section 289A.20, 
465.3   subdivision 2, is amended to read: 
465.4      Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
465.5   WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
465.6   WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
465.7   (a) A tax required to be deducted and withheld during the 
465.8   quarterly period must be paid on or before the last day of the 
465.9   month following the close of the quarterly period, unless an 
465.10  earlier time for payment is provided.  A tax required to be 
465.11  deducted and withheld from compensation of an entertainer and 
465.12  from a payment to an out-of-state contractor must be paid on or 
465.13  before the date the return for such tax must be filed under 
465.14  section 289A.18, subdivision 2.  Taxes required to be deducted 
465.15  and withheld by partnerships and S corporations must be paid on 
465.16  or before the date the return must be filed under section 
465.17  289A.18, subdivision 2. 
465.18     (b) An employer who, during the previous quarter, withheld 
465.19  more than $1,500 of tax under section 290.92, subdivision 2a or 
465.20  3, or 290.923, subdivision 2, must deposit tax withheld under 
465.21  those sections with the commissioner within the time allowed to 
465.22  deposit the employer's federal withheld employment taxes under 
465.23  Code of Federal Regulations, title 26, section 31.6302-1, as 
465.24  amended through December 31, 2001, without regard to the safe 
465.25  harbor or de minimis rules in subparagraph (f) or the one-day 
465.26  rule in subsection (c), clause (3).  Taxpayers must submit a 
465.27  copy of their federal notice of deposit status to the 
465.28  commissioner upon request by the commissioner. 
465.29     (c) The commissioner may prescribe by rule other return 
465.30  periods or deposit requirements.  In prescribing the reporting 
465.31  period, the commissioner may classify payors according to the 
465.32  amount of their tax liability and may adopt an appropriate 
465.33  reporting period for the class that the commissioner judges to 
465.34  be consistent with efficient tax collection.  In no event will 
465.35  the duration of the reporting period be more than one year. 
465.36     (d) If less than the correct amount of tax is paid to the 
466.1   commissioner, proper adjustments with respect to both the tax 
466.2   and the amount to be deducted must be made, without interest, in 
466.3   the manner and at the times the commissioner prescribes.  If the 
466.4   underpayment cannot be adjusted, the amount of the underpayment 
466.5   will be assessed and collected in the manner and at the times 
466.6   the commissioner prescribes. 
466.7      (e) If the aggregate amount of the tax withheld during a 
466.8   fiscal year ending June 30 under section 290.92, subdivision 2a 
466.9   or 3, is equal to or exceeds the amounts established for 
466.10  remitting federal withheld taxes pursuant to the regulations 
466.11  promulgated under section 6302(h) of the Internal Revenue Code, 
466.12  the employer must remit each required deposit for wages paid in 
466.13  the subsequent calendar year by electronic means. 
466.14     (f) A third-party bulk filer as defined in section 290.92, 
466.15  subdivision 30, paragraph (a), clause (2), who remits 
466.16  withholding deposits must remit all deposits by electronic means 
466.17  as provided in paragraph (e), regardless of the aggregate amount 
466.18  of tax withheld during a fiscal year for all of the employers.  
466.19     Sec. 3.  Minnesota Statutes 2004, section 289A.20, 
466.20  subdivision 4, is amended to read: 
466.21     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
466.22  chapter 297A are due and payable to the commissioner monthly on 
466.23  or before the 20th day of the month following the month in which 
466.24  the taxable event occurred, or following another reporting 
466.25  period as the commissioner prescribes or as allowed under 
466.26  section 289A.18, subdivision 4, paragraph (f) or (g), except 
466.27  that use taxes due on an annual use tax return as provided under 
466.28  section 289A.11, subdivision 1, are payable by April 15 
466.29  following the close of the calendar year. 
466.30     (b) A vendor having a liability of $120,000 or more during 
466.31  a fiscal year ending June 30 must remit the June liability for 
466.32  the next year in the following manner: 
466.33     (1) Two business days before June 30 of the year, the 
466.34  vendor must remit 85 percent of the estimated June liability to 
466.35  the commissioner.  
466.36     (2) On or before August 20 of the year, the vendor must pay 
467.1   any additional amount of tax not remitted in June. 
467.2      (c) A vendor having a liability of $120,000 or more during 
467.3   a fiscal year ending June 30 must remit all liabilities on 
467.4   returns due for periods beginning in the subsequent calendar 
467.5   year by electronic means on or before the 20th day of the month 
467.6   following the month in which the taxable event occurred, or on 
467.7   or before the 20th day of the month following the month in which 
467.8   the sale is reported under section 289A.18, subdivision 4, 
467.9   except for 85 percent of the estimated June liability, which is 
467.10  due two business days before June 30.  The remaining amount of 
467.11  the June liability is due on August 20.  
467.12     Sec. 4.  Minnesota Statutes 2004, section 297E.02, 
467.13  subdivision 4, is amended to read: 
467.14     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
467.15  on the sale of each deal of pull-tabs and tipboards sold by a 
467.16  distributor.  The rate of the tax is 1.7 percent of the ideal 
467.17  gross of the pull-tab or tipboard deal.  The sales tax imposed 
467.18  by chapter 297A on the sale of the pull-tabs and tipboards by 
467.19  the distributor is imposed on the retail sales price less the 
467.20  tax imposed by this subdivision.  The retail sale of pull-tabs 
467.21  or tipboards by the organization is exempt from taxes imposed by 
467.22  chapter 297A and is exempt from all local taxes and license fees 
467.23  except a fee authorized under section 349.16, subdivision 8.  
467.24     (b) The liability for the tax imposed by this section is 
467.25  incurred when the pull-tabs and tipboards are delivered by the 
467.26  distributor to the customer or to a common or contract carrier 
467.27  for delivery to the customer, or when received by the customer's 
467.28  authorized representative at the distributor's place of 
467.29  business, regardless of the distributor's method of accounting 
467.30  or the terms of the sale.  
467.31     The tax imposed by this subdivision is imposed on all sales 
467.32  of pull-tabs and tipboards, except the following:  
467.33     (1) sales to the governing body of an Indian tribal 
467.34  organization for use on an Indian reservation; 
467.35     (2) sales to distributors licensed under the laws of 
467.36  another state or of a province of Canada, as long as all 
468.1   statutory and regulatory requirements are met in the other state 
468.2   or province; 
468.3      (3) sales of promotional tickets as defined in section 
468.4   349.12; and 
468.5      (4) pull-tabs and tipboards sold to an organization that 
468.6   sells pull-tabs and tipboards under the exemption from licensing 
468.7   in section 349.166, subdivision 2.  A distributor shall require 
468.8   an organization conducting exempt gambling to show proof of its 
468.9   exempt status before making a tax-exempt sale of pull-tabs or 
468.10  tipboards to the organization.  A distributor shall identify, on 
468.11  all reports submitted to the commissioner, all sales of 
468.12  pull-tabs and tipboards that are exempt from tax under this 
468.13  subdivision.  
468.14     (c) A distributor having a liability of $120,000 or more 
468.15  during a fiscal year ending June 30 must remit all liabilities 
468.16  in the subsequent calendar year by electronic means. 
468.17     (d) Any customer who purchases deals of pull-tabs or 
468.18  tipboards from a distributor may file an annual claim for a 
468.19  refund or credit of taxes paid pursuant to this subdivision for 
468.20  unsold pull-tab and tipboard tickets.  The claim must be filed 
468.21  with the commissioner on a form prescribed by the commissioner 
468.22  by March 20 of the year following the calendar year for which 
468.23  the refund is claimed.  The refund must be filed as part of the 
468.24  customer's February monthly return.  The refund or credit is 
468.25  equal to 1.7 percent of the face value of the unsold pull-tab or 
468.26  tipboard tickets, provided that the refund or credit will be 
468.27  1.75 percent of the face value of the unsold pull-tab or 
468.28  tipboard tickets for claims for a refund or credit of taxes 
468.29  filed on the February 2001 monthly return.  The refund claimed 
468.30  will be applied as a credit against tax owing under this chapter 
468.31  on the February monthly return.  If the refund claimed exceeds 
468.32  the tax owing on the February monthly return, that amount will 
468.33  be refunded.  The amount refunded will bear interest pursuant to 
468.34  section 270.76 from 90 days after the claim is filed.  
468.35     Sec. 5.  Minnesota Statutes 2004, section 473.843, 
468.36  subdivision 3, is amended to read: 
469.1      Subd. 3.  [PAYMENT OF FEE.] On or before the 20th day of 
469.2   each month each operator shall pay the fee due under this 
469.3   section for the previous month, using a form provided by the 
469.4   commissioner of revenue.  
469.5      An operator having a fee of $120,000 or more during a 
469.6   fiscal year ending June 30 must pay all fees in the subsequent 
469.7   calendar year by electronic means. 
469.8      Sec. 6.  [REPEALER.] 
469.9      Minnesota Statutes 2004, sections 289A.26, subdivision 2a; 
469.10  289A.60, subdivision 21; 295.55, subdivision 4; 295.60, 
469.11  subdivision 4; 297F.09, subdivision 7; 297G.09, subdivision 6; 
469.12  297I.35, subdivision 2; and 297I.85, subdivision 7, are repealed.
469.13     Sec. 7.  [EFFECTIVE DATE.] 
469.14     This article is effective for payments due in calendar year 
469.15  2006, and in calendar years thereafter, based upon liabilities 
469.16  incurred in the fiscal year ending June 30, 2005, and in fiscal 
469.17  years thereafter. 
469.18                             ARTICLE 18
469.19                       DEPARTMENT OF REVENUE
469.20                       MISCELLANEOUS - SF1683 
469.21     Section 1.  Minnesota Statutes 2004, section 15.06, 
469.22  subdivision 6, is amended to read: 
469.23     Subd. 6.  [GENERAL POWERS OF COMMISSIONERS.] Except as 
469.24  otherwise expressly provided by law, a commissioner shall have 
469.25  the following powers: 
469.26     (1) to delegate to any subordinate employee the exercise of 
469.27  specified statutory powers or duties as the commissioner may 
469.28  deem advisable, subject to the commissioner's control; provided, 
469.29  that every delegation shall be made by written order, filed with 
469.30  the secretary of state; and further provided that only a deputy 
469.31  commissioner may have all the powers or duties of the 
469.32  commissioner.  A commissioner who delegates the exercise of 
469.33  identical powers or duties to ten or more subordinate employees, 
469.34  may combine the delegation to these employees in one written 
469.35  order.  A delegation of authority granted by a commissioner 
469.36  remains in effect until revoked by the commissioner, revoked by 
470.1   a successor commissioner, or termination of the employees' 
470.2   employment.  A successor commissioner may continue to grant the 
470.3   same delegations of authority that were granted by a previous 
470.4   commissioner, by issuing a written order that is filed with the 
470.5   secretary of state and lists the names of the subordinate 
470.6   employees that have orders of delegations of authority, the date 
470.7   the order was signed, and the date the order was filed with the 
470.8   secretary of state; 
470.9      (2) to appoint all subordinate employees and to prescribe 
470.10  their duties; provided, that all departments and agencies shall 
470.11  be subject to the provisions of chapter 43A; 
470.12     (3) with the approval of the commissioner of 
470.13  administration, to organize the department or agency as deemed 
470.14  advisable in the interest of economy and efficiency; and 
470.15     (4) to prescribe procedures for the internal management of 
470.16  the department or agency to the extent that the procedures do 
470.17  not directly affect the rights of or procedure available to the 
470.18  public. 
470.19     [EFFECTIVE DATE.] This section is effective the day 
470.20  following final enactment. 
470.21     Sec. 2.  Minnesota Statutes 2004, section 16D.10, is 
470.22  amended to read: 
470.23     16D.10 [CASE REVIEWER.] 
470.24     Subdivision 1.  [DUTIES.] The commissioner shall make a 
470.25  case reviewer available to debtors.  The reviewer must be 
470.26  available to answer a debtor's questions concerning the 
470.27  collection process and to review the collection activity taken.  
470.28  If the reviewer reasonably believes that the particular action 
470.29  being taken is unreasonable or unfair, the reviewer may make 
470.30  recommendations to the commissioner in regard to the collection 
470.31  action.  
470.32     Subd. 2.  [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On 
470.33  application filed by a debtor with the case reviewer, in the 
470.34  form, manner, and in the time prescribed by the commissioner, 
470.35  and after thorough investigation, the case reviewer may issue a 
470.36  debtor assistance order if, in the determination of the case 
471.1   reviewer, the manner in which the state debt collection laws are 
471.2   being administered is creating or will create an unjust and 
471.3   inequitable result for the debtor.  Debtor assistance orders are 
471.4   governed by the provisions relating to taxpayer assistance 
471.5   orders under section 270.273. 
471.6      Subd. 3.  [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.] 
471.7   All duties and authority of the case reviewer under subdivisions 
471.8   1 and 2 are transferred to the taxpayer rights advocate. 
471.9      [EFFECTIVE DATE.] This section is effective the day 
471.10  following final enactment. 
471.11     Sec. 3.  Minnesota Statutes 2004, section 270.65, is 
471.12  amended to read: 
471.13     270.65 [DATE OF ASSESSMENT; DEFINITION.] 
471.14     For purposes of taxes administered by the commissioner, the 
471.15  term "date of assessment" means the date a liability reported on 
471.16  a return was entered into the records of the commissioner or the 
471.17  date a return should have been filed, whichever is later; or, in 
471.18  the case of taxes determined by the commissioner, "date of 
471.19  assessment" means the date of the order assessing taxes or date 
471.20  of the return made by the commissioner; or, in the case of an 
471.21  amended return filed by the taxpayer, the assessment date is the 
471.22  date additional liability reported on the return, if any, was 
471.23  entered into the records of the commissioner; or, in the case of 
471.24  a consent agreement signed by the taxpayer under section 270.67, 
471.25  subdivision 3, the assessment date is the notice date shown on 
471.26  the agreement; or, in the case of a check from a taxpayer that 
471.27  is dishonored and results in an erroneous refund being given to 
471.28  the taxpayer, remittance of the check is deemed to be an 
471.29  assessment and the "date of assessment" is the date the check 
471.30  was received by the commissioner. 
471.31     [EFFECTIVE DATE.] This section is effective the day 
471.32  following final enactment. 
471.33     Sec. 4.  Minnesota Statutes 2004, section 270.67, 
471.34  subdivision 4, is amended to read: 
471.35     Subd. 4.  [OFFER-IN-COMPROMISE AND INSTALLMENT PAYMENT 
471.36  PROGRAM.] (a) In implementing the authority provided in 
472.1   subdivision 2 or in sections 8.30 and 16D.15 to accept offers of 
472.2   installment payments or offers-in-compromise of tax liabilities, 
472.3   the commissioner of revenue shall prescribe guidelines for 
472.4   employees of the Department of Revenue to determine whether an 
472.5   offer-in-compromise or an offer to make installment payments is 
472.6   adequate and should be accepted to resolve a dispute.  In 
472.7   prescribing the guidelines, the commissioner shall develop and 
472.8   publish schedules of national and local allowances designed to 
472.9   provide that taxpayers entering into a compromise or payment 
472.10  agreement have an adequate means to provide for basic living 
472.11  expenses.  The guidelines must provide that the taxpayer's 
472.12  ownership interest in a motor vehicle, to the extent of the 
472.13  value allowed in section 550.37, will not be considered as an 
472.14  asset; in the case of an offer related to a joint tax liability 
472.15  of spouses, that value of two motor vehicles must be excluded.  
472.16  The guidelines must provide that employees of the department 
472.17  shall determine, on the basis of the facts and circumstances of 
472.18  each taxpayer, whether the use of the schedules is appropriate 
472.19  and that employees must not use the schedules to the extent the 
472.20  use would result in the taxpayer not having adequate means to 
472.21  provide for basic living expenses.  The guidelines must provide 
472.22  that: 
472.23     (1) an employee of the department shall not reject an 
472.24  offer-in-compromise or an offer to make installment payments 
472.25  from a low-income taxpayer solely on the basis of the amount of 
472.26  the offer; and 
472.27     (2) in the case of an offer-in-compromise which relates 
472.28  only to issues of liability of the taxpayer: 
472.29     (i) the offer must not be rejected solely because the 
472.30  commissioner is unable to locate the taxpayer's return or return 
472.31  information for verification of the liability; and 
472.32     (ii) the taxpayer shall not be required to provide an 
472.33  audited, reviewed, or compiled financial statement. 
472.34     (b) The commissioner shall establish procedures: 
472.35     (1) that require presentation of a counteroffer or a 
472.36  written rejection of the offer by the commissioner if the amount 
473.1   offered by the taxpayer in an offer-in-compromise or an offer to 
473.2   make installment payments is not accepted by the commissioner; 
473.3      (2) for an administrative review of any written rejection 
473.4   of a proposed offer-in-compromise or installment agreement made 
473.5   by a taxpayer under this section before the rejection is 
473.6   communicated to the taxpayer; 
473.7      (3) that allow a taxpayer to request reconsideration of any 
473.8   written rejection of the offer or agreement to the commissioner 
473.9   of revenue to determine whether the rejection is reasonable and 
473.10  appropriate under the circumstances; and 
473.11     (4) that provide for notification to the taxpayer when an 
473.12  offer-in-compromise has been accepted, and issuance of 
473.13  certificates of release of any liens imposed under section 
473.14  270.69 related to the liability which is the subject of the 
473.15  compromise. 
473.16     (c) Each compromise proposal must be accompanied by a 
473.17  nonrefundable payment of $250.  If the compromise proposal is 
473.18  accepted, the payment must be applied to the accepted compromise 
473.19  amount.  If the compromise is rejected, the payment must be 
473.20  applied to the outstanding tax debts of the taxpayer pursuant to 
473.21  section 270.652.  In cases of financial hardship, upon 
473.22  presentation of information establishing an inability to make 
473.23  the $250 payment, the commissioner may waive this requirement. 
473.24     [EFFECTIVE DATE.] This section is effective for offers in 
473.25  compromise submitted after August 31, 2005. 
473.26     Sec. 5.  Minnesota Statutes 2004, section 270.69, 
473.27  subdivision 4, is amended to read: 
473.28     Subd. 4.  [PERIOD OF LIMITATIONS.] The lien imposed by this 
473.29  section shall, notwithstanding any other provision of law to the 
473.30  contrary, be enforceable from the time the lien arises and for 
473.31  ten years from the date of filing the notice of lien, which must 
473.32  be filed by the commissioner within five years after the date of 
473.33  assessment of the tax or final administrative or judicial 
473.34  determination of the assessment.  A notice of lien filed in one 
473.35  county may be transcribed to the secretary of state or to any 
473.36  other county within ten years after the date of its filing, but 
474.1   the transcription shall not extend the period during which the 
474.2   lien is enforceable.  A notice of lien may be renewed by the 
474.3   commissioner before the expiration of the ten-year period for an 
474.4   additional ten years.  The taxpayer must receive written notice 
474.5   of the renewal. 
474.6      [EFFECTIVE DATE.] This section is effective the day 
474.7   following final enactment. 
474.8      Sec. 6.  Minnesota Statutes 2004, section 289A.19, 
474.9   subdivision 4, is amended to read: 
474.10     Subd. 4.  [ESTATE TAX RETURNS.] When in the commissioner's 
474.11  judgment good cause exists, the commissioner may extend the time 
474.12  for filing an estate tax return for not more than six months.  
474.13  When an extension to file the federal estate tax return has been 
474.14  granted under section 6081 of the Internal Revenue Code, the 
474.15  time for filing the estate tax return is extended for that 
474.16  period.  If the estate requests an extension to file an estate 
474.17  tax return within the time provided in section 289A.18, 
474.18  subdivision 3, the commissioner shall extend the time for filing 
474.19  the estate tax return for six months. 
474.20     [EFFECTIVE DATE.] This section is effective for estates of 
474.21  decedents dying after December 31, 2004. 
474.22     Sec. 7.  Minnesota Statutes 2004, section 289A.31, 
474.23  subdivision 2, is amended to read: 
474.24     Subd. 2.  [JOINT INCOME TAX RETURNS.] (a) If a joint income 
474.25  tax return is made by a husband and wife, the liability for the 
474.26  tax is joint and several.  A spouse who qualifies for relief 
474.27  from a liability attributable to an underpayment under section 
474.28  6015(b) of the Internal Revenue Code is relieved of the state 
474.29  income tax liability on the underpayment.  
474.30     (b) In the case of individuals who were a husband and wife 
474.31  prior to the dissolution of their marriage or their legal 
474.32  separation, or prior to the death of one of the individuals, for 
474.33  tax liabilities reported on a joint or combined return, the 
474.34  liability of each person is limited to the proportion of the tax 
474.35  due on the return that equals that person's proportion of the 
474.36  total tax due if the husband and wife filed separate returns for 
475.1   the taxable year.  This provision is effective only when the 
475.2   commissioner receives written notice of the marriage 
475.3   dissolution, legal separation, or death of a spouse from the 
475.4   husband or wife.  No refund may be claimed by an ex-spouse, 
475.5   legally separated or widowed spouse for any taxes paid more than 
475.6   60 days before receipt by the commissioner of the written notice.
475.7      (c) A request for calculation of separate liability 
475.8   pursuant to paragraph (b) for taxes reported on a return must be 
475.9   made within six years after the due date of the return.  For 
475.10  calculation of separate liability for taxes assessed by the 
475.11  commissioner under section 289A.35 or 289A.37, the request must 
475.12  be made within six years after the date of assessment.  The 
475.13  commissioner is not required to calculate separate liability if 
475.14  the remaining unpaid liability for which recalculation is 
475.15  requested is $100 or less. 
475.16     [EFFECTIVE DATE.] This section is effective for requests 
475.17  for relief made on or after the day following final enactment. 
475.18     Sec. 8.  Minnesota Statutes 2004, section 289A.37, 
475.19  subdivision 5, is amended to read: 
475.20     Subd. 5.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
475.21  sent postage prepaid by United States mail to the taxpayer at 
475.22  the taxpayer's last known address, or sent by electronic mail to 
475.23  the taxpayer's last known electronic mailing address as provided 
475.24  for in section 325L.08, is sufficient even if the taxpayer is 
475.25  deceased or is under a legal disability, or, in the case of a 
475.26  corporation, has terminated its existence, unless the department 
475.27  has been provided with a new address by a party authorized to 
475.28  receive notices of assessment. 
475.29     [EFFECTIVE DATE.] This section is effective the day 
475.30  following final enactment. 
475.31     Sec. 9.  Minnesota Statutes 2004, section 289A.60, 
475.32  subdivision 2a, is amended to read: 
475.33     Subd. 2a.  [PENALTIES FOR EXTENDED DELINQUENCY.] (a) If an 
475.34  individual income tax is not paid within 180 days after the date 
475.35  of filing of a return or, in the case of taxes assessed by the 
475.36  commissioner, within 180 days after the assessment date or, if 
476.1   appealed, within 180 days after final resolution of the appeal, 
476.2   an extended delinquency penalty of five percent of the tax 
476.3   remaining unpaid is added to the amount due.  
476.4      (b) If a corporate franchise, fiduciary income, mining 
476.5   company, estate, partnership, S corporation, or nonresident 
476.6   entertainer tax return is not filed within 30 days after written 
476.7   demand for the filing of a delinquent return, an extended 
476.8   delinquency penalty of five percent of the tax not paid prior to 
476.9   the demand is added to the tax, or in the case of an individual 
476.10  income tax return, a minimum penalty of $100 or the five percent 
476.11  penalty is imposed, whichever amount is greater. 
476.12     [EFFECTIVE DATE.] This section is effective for returns 
476.13  originally due on or after August 1, 2005. 
476.14     Sec. 10.  Minnesota Statutes 2004, section 289A.60, 
476.15  subdivision 6, is amended to read: 
476.16     Subd. 6.  [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT 
476.17  RETURN, EVASION.] If a person, with intent to evade or defeat a 
476.18  tax or payment of tax, fails to file a return, files a false or 
476.19  fraudulent return, or attempts in any other manner to evade or 
476.20  defeat a tax or payment of tax, there is imposed on the person a 
476.21  penalty equal to 50 percent of the tax, less amounts paid by the 
476.22  person on the basis of the false or fraudulent return, if any, 
476.23  due for the period to which the return related.  
476.24     [EFFECTIVE DATE.] This section is effective the day 
476.25  following final enactment. 
476.26     Sec. 11.  Minnesota Statutes 2004, section 289A.60, 
476.27  subdivision 11, is amended to read: 
476.28     Subd. 11.  [PENALTIES RELATING TO INFORMATION REPORTS, 
476.29  WITHHOLDING.] (a) When a person required under section 289A.09, 
476.30  subdivision 2, to give a statement to an employee or payee and a 
476.31  duplicate statement to the commissioner, or to give a 
476.32  reconciliation of the statements and quarterly returns to the 
476.33  commissioner, gives a false or fraudulent statement to an 
476.34  employee or payee or a false or fraudulent duplicate statement 
476.35  or reconciliation of statements and quarterly returns to the 
476.36  commissioner, or fails to give a statement or the reconciliation 
477.1   in the manner, when due, and showing the information required by 
477.2   section 289A.09, subdivision 2, or rules prescribed by the 
477.3   commissioner under that section, that person is liable for a 
477.4   penalty of $50 for an act or failure to act.  The total amount 
477.5   imposed on the delinquent person for failures during a calendar 
477.6   year must not exceed $25,000.  
477.7      (b) In addition to any other penalty provided by law, an 
477.8   employee who gives a withholding exemption certificate or a 
477.9   residency affidavit to an employer that the employee has reason 
477.10  to know contains a materially incorrect statement decreases the 
477.11  amount withheld under section 290.92 and as of the time the 
477.12  certificate or affidavit was given to the employer there was no 
477.13  reasonable basis for the statements in the certificate or 
477.14  affidavit is liable to the commissioner of revenue for a penalty 
477.15  of $500 for each instance.  
477.16     (c) In addition to any other penalty provided by law, an 
477.17  employer who fails to submit a copy of a withholding exemption 
477.18  certificate or a residency affidavit required by section 290.92, 
477.19  subdivision 5a, clause (1)(a), (1)(b), or (2) is liable to the 
477.20  commissioner of revenue for a penalty of $50 for each instance.  
477.21     (d) An employer or payor who fails to file an application 
477.22  for a withholding account number, as required by section 290.92, 
477.23  subdivision 24, is liable to the commissioner for a penalty of 
477.24  $100.  
477.25     [EFFECTIVE DATE.] This section is effective for 
477.26  certificates and affidavits given to employers after December 
477.27  31, 2005. 
477.28     Sec. 12.  Minnesota Statutes 2004, section 290.92, 
477.29  subdivision 1, is amended to read: 
477.30     Subdivision 1.  [DEFINITIONS.] (1)  [WAGES.] For purposes 
477.31  of this section, the term "wages" means the same as that term is 
477.32  defined in section 3401(a) and (f) of the Internal Revenue Code. 
477.33     (2)  [PAYROLL PERIOD.] For purposes of this section the 
477.34  term "payroll period" means a period for which a payment of 
477.35  wages is ordinarily made to the employee by the employee's 
477.36  employer, and the term "miscellaneous payroll period" means a 
478.1   payroll period other than a daily, weekly, biweekly, 
478.2   semimonthly, monthly, quarterly, semiannual, or annual payroll 
478.3   period. 
478.4      (3)  [EMPLOYEE.] For purposes of this section the term 
478.5   "employee" means any resident individual performing services for 
478.6   an employer, either within or without, or both within and 
478.7   without the state of Minnesota, and every nonresident individual 
478.8   performing services within the state of Minnesota, the 
478.9   performance of which services constitute, establish, and 
478.10  determine the relationship between the parties as that of 
478.11  employer and employee.  As used in the preceding sentence, the 
478.12  term "employee" includes an officer of a corporation, and an 
478.13  officer, employee, or elected official of the United States, a 
478.14  state, or any political subdivision thereof, or the District of 
478.15  Columbia, or any agency or instrumentality of any one or more of 
478.16  the foregoing. 
478.17     (4)  [EMPLOYER.] For purposes of this section the term 
478.18  "employer" means any person, including individuals, fiduciaries, 
478.19  estates, trusts, partnerships, limited liability companies, and 
478.20  corporations transacting business in or deriving any income from 
478.21  sources within the state of Minnesota for whom an individual 
478.22  performs or performed any service, of whatever nature, as the 
478.23  employee of such person, except that if the person for whom the 
478.24  individual performs or performed the services does not have 
478.25  legal control of the payment of the wages for such services, the 
478.26  term "employer," except for purposes of paragraph (1), means the 
478.27  person having legal control of the payment of such wages.  As 
478.28  used in the preceding sentence, the term "employer" includes any 
478.29  corporation, individual, estate, trust, or organization which is 
478.30  exempt from taxation under section 290.05 and further includes, 
478.31  but is not limited to, officers of corporations who have legal 
478.32  control, either individually or jointly with another or others, 
478.33  of the payment of the wages. 
478.34     (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 
478.35  purposes of this section, the term "number of withholding 
478.36  exemptions claimed" means the number of withholding exemptions 
479.1   claimed in a withholding exemption certificate in effect under 
479.2   subdivision 5, except that if no such certificate is in effect, 
479.3   the number of withholding exemptions claimed shall be considered 
479.4   to be zero. 
479.5      [EFFECTIVE DATE.] This section is effective the day 
479.6   following final enactment. 
479.7      Sec. 13.  Minnesota Statutes 2004, section 290C.05, is 
479.8   amended to read: 
479.9      290C.05 [ANNUAL CERTIFICATION.] 
479.10     On or before July 1 of each year, beginning with the year 
479.11  after the claimant has received an approved application, the 
479.12  commissioner shall send each claimant enrolled under the 
479.13  sustainable forest incentive program a certification form.  The 
479.14  claimant must sign the certification, attesting that the 
479.15  requirements and conditions for continued enrollment in the 
479.16  program are currently being met, and must return the signed 
479.17  certification form to the commissioner by August 15 of that same 
479.18  year.  Failure to If the claimant does not return an annual 
479.19  certification form by the due date shall result in removal of 
479.20  the lands from the provisions of the sustainable forest 
479.21  incentive program, and the imposition of any applicable removal 
479.22  penalty, the provisions in section 290C.11 apply.  The claimant 
479.23  may appeal the removal and any associated penalty according to 
479.24  the procedures and within the time allowed under this chapter. 
479.25     [EFFECTIVE DATE.] This section is effective the day 
479.26  following final enactment. 
479.27     Sec. 14.  [290C.055] [LENGTH OF COVENANT.] 
479.28     The covenant remains in effect for a minimum of eight 
479.29  years.  If land is removed from the program before it has been 
479.30  enrolled for four years, the covenant remains in effect for 
479.31  eight years from the date recorded. 
479.32     If land that has been enrolled for four years or more is 
479.33  removed from the program for any reason, there is a waiting 
479.34  period before the covenant terminates.  The covenant terminates 
479.35  on January 1 of the fifth calendar year that begins after the 
479.36  date that: 
480.1      (1) the commissioner receives notification from the 
480.2   claimant that the claimant wishes to remove the land from the 
480.3   program under section 290C.10; or 
480.4      (2) the date that the land is removed from the program 
480.5   under section 290C.11. 
480.6      Notwithstanding the other provisions of this section, the 
480.7   covenant is terminated at the same time that the land is removed 
480.8   from the program due to acquisition of title or possession for a 
480.9   public purpose under section 290C.10. 
480.10     [EFFECTIVE DATE.] This section is effective the day 
480.11  following final enactment. 
480.12     Sec. 15.  Minnesota Statutes 2004, section 290C.10, is 
480.13  amended to read: 
480.14     290C.10 [WITHDRAWAL PROCEDURES.] 
480.15     An approved claimant under the sustainable forest incentive 
480.16  program for a minimum of four years may notify the commissioner 
480.17  of the intent to terminate enrollment.  Within 90 days of 
480.18  receipt of notice to terminate enrollment, the commissioner 
480.19  shall inform the claimant in writing, acknowledging receipt of 
480.20  this notice and indicating the effective date of termination 
480.21  from the sustainable forest incentive program.  Termination of 
480.22  enrollment in the sustainable forest incentive program occurs on 
480.23  January 1 of the fifth calendar year that begins after receipt 
480.24  by the commissioner of the termination notice.  After the 
480.25  commissioner issues an effective date of termination, a claimant 
480.26  wishing to continue the land's enrollment in the sustainable 
480.27  forest incentive program beyond the termination date must apply 
480.28  for enrollment as prescribed in section 290C.04.  A claimant who 
480.29  withdraws a parcel of land from this program may not reenroll 
480.30  the parcel for a period of three years.  Within 90 days after 
480.31  the termination date, the commissioner shall execute and 
480.32  acknowledge a document releasing the land from the covenant 
480.33  required under this chapter.  The document must be mailed to the 
480.34  claimant and is entitled to be recorded.  The commissioner may 
480.35  allow early withdrawal from the Sustainable Forest Incentive Act 
480.36  without penalty in cases of condemnation when the state of 
481.1   Minnesota, any local government unit, or any other entity which 
481.2   has the right of eminent domain acquires title or possession to 
481.3   the land for a public purpose notwithstanding the provisions of 
481.4   this section.  In the case of such acquisition, the commissioner 
481.5   shall execute and acknowledge a document releasing the land 
481.6   acquired by the state, local government unit, or other entity 
481.7   from the covenant.  All other enrolled land must remain in the 
481.8   program. 
481.9      [EFFECTIVE DATE.] This section is effective the day 
481.10  following final enactment. 
481.11     Sec. 16.  Minnesota Statutes 2004, section 325D.33, 
481.12  subdivision 6, is amended to read: 
481.13     Subd. 6.  [VIOLATIONS.] If the commissioner determines that 
481.14  a distributor is violating any provision of this chapter, the 
481.15  commissioner must give the distributor a written warning 
481.16  explaining the violation and an explanation of what must be done 
481.17  to comply with this chapter.  Within ten days of issuance of the 
481.18  warning, the distributor must notify the commissioner that the 
481.19  distributor has complied with the commissioner's recommendation 
481.20  or request that the commissioner set the issue for a hearing 
481.21  pursuant to chapter 14.  If a hearing is requested, the hearing 
481.22  shall be scheduled within 20 days of the request and the 
481.23  recommendation of the administrative law judge shall be issued 
481.24  within five working days of the close of the hearing.  The 
481.25  commissioner's final determination shall be issued within five 
481.26  working days of the receipt of the administrative law judge's 
481.27  recommendation.  If the commissioner's final determination is 
481.28  adverse to the distributor and the distributor does not comply 
481.29  within ten days of receipt of the commissioner's final 
481.30  determination, the commissioner may order the distributor to 
481.31  immediately cease the stamping of cigarettes.  As soon as 
481.32  practicable after the order, the commissioner must remove the 
481.33  meter and any unapplied cigarette stamps from the premises of 
481.34  the distributor. 
481.35     If within ten days of issuance of the written warning the 
481.36  distributor has not complied with the commissioner's 
482.1   recommendation or requested a hearing, the commissioner may 
482.2   order the distributor to immediately cease the stamping of 
482.3   cigarettes and remove the meter and unapplied stamps from the 
482.4   distributor's premises. 
482.5      If, within any 12-month period, the commissioner has issued 
482.6   three written warnings to any distributor, even if the 
482.7   distributor has complied within ten days, the commissioner shall 
482.8   notify the distributor of the commissioner's intent to revoke 
482.9   the distributor's license for a continuing course of conduct 
482.10  contrary to this chapter.  For purposes of this paragraph, a 
482.11  written warning that was ultimately resolved by removal of the 
482.12  warning by the commissioner is not deemed to be a warning.  The 
482.13  commissioner must notify the distributor of the date and time of 
482.14  a hearing pursuant to chapter 14 at least 20 days before the 
482.15  hearing is held.  The hearing must provide an opportunity for 
482.16  the distributor to show cause why the license should not be 
482.17  revoked.  If the commissioner revokes a distributor's license, 
482.18  the commissioner shall not issue a new license to that 
482.19  distributor for 180 days. 
482.20     [EFFECTIVE DATE.] This section is effective the day 
482.21  following final enactment. 
482.22     Sec. 17.  Minnesota Statutes 2004, section 473.843, 
482.23  subdivision 5, is amended to read: 
482.24     Subd. 5.  [PENALTIES; ENFORCEMENT.] The audit, penalty, and 
482.25  enforcement provisions applicable to corporate franchise taxes 
482.26  imposed under chapter 290 apply to the fees imposed under this 
482.27  section.  The commissioner of revenue shall administer the 
482.28  provisions.  
482.29     [EFFECTIVE DATE.] This section is effective the day 
482.30  following final enactment. 
482.31                             ARTICLE 19
482.32                   INDIVIDUAL INCOME TAX - SF2206 
482.33     Section 1.  Minnesota Statutes 2004, section 16A.152, 
482.34  subdivision 2, is amended to read: 
482.35     Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] (a) If on the 
482.36  basis of a forecast of general fund revenues and expenditures, 
483.1   the commissioner of finance determines that there will be a 
483.2   positive unrestricted budgetary general fund balance at the 
483.3   close of the biennium, the commissioner of finance must allocate 
483.4   money to the following accounts and purposes in priority order: 
483.5      (1) the cash flow account established in subdivision 1 
483.6   until that account reaches $350,000,000; 
483.7      (2) the budget reserve account established in subdivision 
483.8   1a until that account reaches $653,000,000; 
483.9      (3) the amount necessary to increase the aid payment 
483.10  schedule for school district aids and credits payments in 
483.11  section 127A.45 to not more than 90 percent; and 
483.12     (4) the amount necessary to restore all or a portion of the 
483.13  net aid reductions under section 127A.441 and to reduce the 
483.14  property tax revenue recognition shift under section 123B.75, 
483.15  subdivision 5, paragraph (c), and Laws 2003, First Special 
483.16  Session chapter 9, article 5, section 34, as amended by Laws 
483.17  2003, First Special Session chapter 23, section 20, by the same 
483.18  amount; 
483.19     (5) the amount necessary to eliminate requirements for 
483.20  accelerated payments of June tax liabilities under sections 
483.21  287.12; 287.29; 289A.20, subdivision 4; 297F.09, subdivision 10, 
483.22  and 297G.09, subdivision 9; 
483.23     (6) the amount necessary to provide that interest is 
483.24  payable on claims for refunds of the sales tax paid on exempt 
483.25  capital equipment from the date the claim is filed with the 
483.26  commissioner and on other exempt items as provided in Minnesota 
483.27  Statutes 2002, section 297A.75, subdivision 4; and 
483.28     (7) the amount necessary to make payments of local 
483.29  government aids and taconite aid reimbursements in four 
483.30  installments in each of the months of March, July, September, 
483.31  and November as provided in Minnesota Statutes 1980, section 
483.32  477A.01. 
483.33     (b) The amounts necessary to meet the requirements of this 
483.34  section are appropriated from the general fund within two weeks 
483.35  after the forecast is released or, in the case of transfers 
483.36  under paragraph (a), clauses (3) and (4), as necessary to meet 
484.1   the appropriations schedules otherwise established in statute. 
484.2      (c) To the extent that a positive unrestricted budgetary 
484.3   general fund balance is projected, appropriations under this 
484.4   section must be made before any transfer is made under section 
484.5   16A.1522. 
484.6      (d) The commissioner of finance shall certify the total 
484.7   dollar amount of the reductions under paragraph (a), clauses (3) 
484.8   and (4), to the commissioner of education.  The commissioner of 
484.9   education shall increase the aid payment percentage and reduce 
484.10  the property tax shift percentage by these amounts and apply 
484.11  those reductions to the current fiscal year and thereafter. 
484.12     Sec. 2.  Minnesota Statutes 2004, section 290.01, 
484.13  subdivision 7b, is amended to read: 
484.14     Subd. 7b.  [RESIDENT TRUST.] (a) Resident trust means a 
484.15  trust, except a grantor type trust, which either (1) was created 
484.16  by a will of a decedent who at death was domiciled in this state 
484.17  or (2) is an irrevocable trust, the grantor of which was 
484.18  domiciled in this state at the time the trust became 
484.19  irrevocable.  For the purpose of this subdivision, a trust is 
484.20  considered irrevocable to the extent the grantor is not treated 
484.21  as the owner thereof under sections 671 to 678 of the Internal 
484.22  Revenue Code.  The term "grantor type trust" means a trust where 
484.23  the income or gains of the trust are taxable to the grantor or 
484.24  others treated as substantial owners under sections 671 to 678 
484.25  of the Internal Revenue Code. 
484.26     (b)(1) A trust, other than a grantor type trust, that 
484.27  became irrevocable before January 1, 1996, or that was 
484.28  administered in Minnesota before January 1, 1996, is a resident 
484.29  trust only if two or more of the following conditions are 
484.30  satisfied: 
484.31     (i) a majority of the discretionary decisions of the 
484.32  trustees relative to the investment of trust assets are made in 
484.33  Minnesota; 
484.34     (ii) a majority of the discretionary decisions of the 
484.35  trustees relative to the distributions of trust income and 
484.36  principal are made in Minnesota; 
485.1      (iii) the official books and records of the trust, 
485.2   consisting of the original minutes of trustee meetings and the 
485.3   original trust instruments, are located in Minnesota. 
485.4      (2) For purposes of this paragraph, if the trustees 
485.5   delegate decisions and actions to an agent or custodian, the 
485.6   actions and decisions of the agent or custodian must not be 
485.7   taken into account in determining whether the trust is 
485.8   administered in Minnesota, if: 
485.9      (i) the delegation was permitted under the trust agreement; 
485.10     (ii) the trustees retain the power to revoke the delegation 
485.11  on reasonable notice; and 
485.12     (iii) the trustees monitor and evaluate the performance of 
485.13  the agent or custodian on a regular basis as is reasonably 
485.14  determined by the trustees. 
485.15     [EFFECTIVE DATE.] This section is effective the day 
485.16  following final enactment. 
485.17     Sec. 3.  Minnesota Statutes 2004, section 290.01, 
485.18  subdivision 19a, as amended by 2005 S.F. No. 1683, article 2, 
485.19  section 3, if enacted, is amended to read: 
485.20     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
485.21  individuals, estates, and trusts, there shall be added to 
485.22  federal taxable income: 
485.23     (1)(i) interest income on obligations of any state other 
485.24  than Minnesota or a political or governmental subdivision, 
485.25  municipality, or governmental agency or instrumentality of any 
485.26  state other than Minnesota exempt from federal income taxes 
485.27  under the Internal Revenue Code or any other federal statute; 
485.28  and 
485.29     (ii) exempt-interest dividends as defined in section 
485.30  852(b)(5) of the Internal Revenue Code, except the portion of 
485.31  the exempt-interest dividends derived from interest income on 
485.32  obligations of the state of Minnesota or its political or 
485.33  governmental subdivisions, municipalities, governmental agencies 
485.34  or instrumentalities, but only if the portion of the 
485.35  exempt-interest dividends from such Minnesota sources paid to 
485.36  all shareholders represents 95 percent or more of the 
486.1   exempt-interest dividends that are paid by the regulated 
486.2   investment company as defined in section 851(a) of the Internal 
486.3   Revenue Code, or the fund of the regulated investment company as 
486.4   defined in section 851(g) of the Internal Revenue Code, making 
486.5   the payment; and 
486.6      (iii) for the purposes of items (i) and (ii), interest on 
486.7   obligations of an Indian tribal government described in section 
486.8   7871(c) of the Internal Revenue Code shall be treated as 
486.9   interest income on obligations of the state in which the tribe 
486.10  is located; 
486.11     (2) the amount of income or sales and use taxes paid or 
486.12  accrued within the taxable year under this chapter and income or 
486.13  sales and use taxes paid to any other state or to any province 
486.14  or territory of Canada, to the extent allowed as a deduction 
486.15  under section 63(d) of the Internal Revenue Code, but the 
486.16  addition may not be more than the amount by which the itemized 
486.17  deductions as allowed under section 63(d) of the Internal 
486.18  Revenue Code exceeds the amount of the standard deduction as 
486.19  defined in section 63(c) of the Internal Revenue Code of 1986, 
486.20  as amended through June 15, 2003.  For the purpose of this 
486.21  paragraph, the disallowance of itemized deductions under section 
486.22  68 of the Internal Revenue Code of 1986, income or sales and use 
486.23  tax is the last itemized deduction disallowed; 
486.24     (3) the capital gain amount of a lump sum distribution to 
486.25  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
486.26  Reform Act of 1986, Public Law 99-514, applies; 
486.27     (4) the amount of income taxes paid or accrued within the 
486.28  taxable year under this chapter and income taxes paid to any 
486.29  other state or any province or territory of Canada, to the 
486.30  extent allowed as a deduction in determining federal adjusted 
486.31  gross income.  For the purpose of this paragraph, income taxes 
486.32  do not include the taxes imposed by sections 290.0922, 
486.33  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
486.34     (5) the amount of expense, interest, or taxes disallowed 
486.35  pursuant to section 290.10; 
486.36     (6) the amount of a partner's pro rata share of net income 
487.1   which does not flow through to the partner because the 
487.2   partnership elected to pay the tax on the income under section 
487.3   6242(a)(2) of the Internal Revenue Code; and 
487.4      (7) 80 percent of the depreciation deduction allowed under 
487.5   section 168(k) of the Internal Revenue Code.  For purposes of 
487.6   this clause, if the taxpayer has an activity that in the taxable 
487.7   year generates a deduction for depreciation under section 168(k) 
487.8   and the activity generates a loss for the taxable year that the 
487.9   taxpayer is not allowed to claim for the taxable year, "the 
487.10  depreciation allowed under section 168(k)" for the taxable year 
487.11  is limited to excess of the depreciation claimed by the activity 
487.12  under section 168(k) over the amount of the loss from the 
487.13  activity that is not allowed in the taxable year.  In succeeding 
487.14  taxable years when the losses not allowed in the taxable year 
487.15  are allowed, the depreciation under section 168(k) is allowed; 
487.16     (8) 80 percent of the amount by which the deduction allowed 
487.17  by section 179 of the Internal Revenue Code exceeds the 
487.18  deduction allowable by section 179 of the Internal Revenue Code 
487.19  of 1986, as amended through December 31, 2003; 
487.20     (9) to the extent deducted in computing federal taxable 
487.21  income, the amount of the deduction allowable under section 199 
487.22  of the Internal Revenue Code; 
487.23     (10) to the extent deducted in computing federal taxable 
487.24  income, the amount by which the standard deduction allowed under 
487.25  section 63(c) of the Internal Revenue Code exceeds the standard 
487.26  deduction allowable under section 63(c) of the Internal Revenue 
487.27  Code of 1986, as amended through December 31, 2003; 
487.28     (11) the exclusion allowed under section 139A of the 
487.29  Internal Revenue Code for federal subsidies for prescription 
487.30  drug plans; and 
487.31     (12) (11) the deduction or exclusion allowed under section 
487.32  223 of the Internal Revenue Code for contributions to health 
487.33  savings accounts. 
487.34     [EFFECTIVE DATE.] This section is effective for tax years 
487.35  beginning after December 31, 2004. 
487.36     Sec. 4.  Minnesota Statutes 2004, section 290.06, 
488.1   subdivision 2c, is amended to read: 
488.2      Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
488.3   AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
488.4   married individuals filing joint returns and surviving spouses 
488.5   as defined in section 2(a) of the Internal Revenue Code must be 
488.6   computed by applying to their taxable net income the following 
488.7   schedule of rates: 
488.8      (1) On the first $25,680 $29,070, 5.35 percent; 
488.9      (2) On all over $25,680 $29,070, but not 
488.10  over $102,030 $115,510, 7.05 percent; 
488.11     (3) On all over $102,030 $115,510, but not over $250,000, 
488.12  7.85 percent; and 
488.13     (4) On all over $250,000, 10.65 percent for taxable years 
488.14  beginning after December 31, 2004, and before the fourth bracket 
488.15  termination year as defined in paragraph (f).  For the fourth 
488.16  bracket termination year and subsequent taxable years, the 
488.17  income included in this clause will be subject to the rate in 
488.18  clause (3). 
488.19     Married individuals filing separate returns, estates, and 
488.20  trusts must compute their income tax by applying the above rates 
488.21  to their taxable income, except that the income brackets will be 
488.22  one-half of the above amounts.  
488.23     (b) The income taxes imposed by this chapter upon unmarried 
488.24  individuals must be computed by applying to taxable net income 
488.25  the following schedule of rates: 
488.26     (1) On the first $17,570 $19,890, 5.35 percent; 
488.27     (2) On all over $17,570 $19,890, but not 
488.28  over $57,710 $65,330, 7.05 percent; 
488.29     (3) On all over $57,710 $65,330, but not over $166,665, 
488.30  7.85 percent; and 
488.31     (4) On all over $166,665, 10.65 percent for taxable years 
488.32  beginning after December 31, 2004, and before the fourth bracket 
488.33  termination year as defined in paragraph (f).  For the fourth 
488.34  bracket termination year and subsequent taxable years, the 
488.35  income included in this clause will be subject to the rate in 
488.36  clause (3). 
489.1      (c) The income taxes imposed by this chapter upon unmarried 
489.2   individuals qualifying as a head of household as defined in 
489.3   section 2(b) of the Internal Revenue Code must be computed by 
489.4   applying to taxable net income the following schedule of rates: 
489.5      (1) On the first $21,630 $24,490, 5.35 percent; 
489.6      (2) On all over $21,630 $24,490, but not 
489.7   over $86,910 $98,390, 7.05 percent; 
489.8      (3) On all over $86,910 $98,390, but not over $208,330, 
489.9   7.85 percent; and 
489.10     (4) On all over $208,330, 10.65 percent for taxable years 
489.11  beginning after December 31, 2004, and before the fourth bracket 
489.12  termination year as defined in paragraph (f).  For the fourth 
489.13  bracket termination year and subsequent taxable years, the 
489.14  income included in this clause will be subject to the rate in 
489.15  clause (3). 
489.16     (d) In lieu of a tax computed according to the rates set 
489.17  forth in this subdivision, the tax of any individual taxpayer 
489.18  whose taxable net income for the taxable year is less than an 
489.19  amount determined by the commissioner must be computed in 
489.20  accordance with tables prepared and issued by the commissioner 
489.21  of revenue based on income brackets of not more than $100.  The 
489.22  amount of tax for each bracket shall be computed at the rates 
489.23  set forth in this subdivision, provided that the commissioner 
489.24  may disregard a fractional part of a dollar unless it amounts to 
489.25  50 cents or more, in which case it may be increased to $1. 
489.26     (e) An individual who is not a Minnesota resident for the 
489.27  entire year must compute the individual's Minnesota income tax 
489.28  as provided in this subdivision.  After the application of the 
489.29  nonrefundable credits provided in this chapter, the tax 
489.30  liability must then be multiplied by a fraction in which:  
489.31     (1) the numerator is the individual's Minnesota source 
489.32  federal adjusted gross income as defined in section 62 of the 
489.33  Internal Revenue Code and increased by the additions required 
489.34  under section 290.01, subdivision 19a, clauses (1), (5), and 
489.35  (6), and reduced by the subtraction under section 290.01, 
489.36  subdivision 19b, clause (11), and the Minnesota assignable 
490.1   portion of the subtraction for United States government interest 
490.2   under section 290.01, subdivision 19b, clause (1), after 
490.3   applying the allocation and assignability provisions of section 
490.4   290.081, clause (a), or 290.17; and 
490.5      (2) the denominator is the individual's federal adjusted 
490.6   gross income as defined in section 62 of the Internal Revenue 
490.7   Code of 1986, increased by the amounts specified in section 
490.8   290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 
490.9   by the amounts specified in section 290.01, subdivision 19b, 
490.10  clauses (1) and (11). 
490.11     (f) In this subdivision, the fourth bracket termination 
490.12  year is the first taxable year beginning after the commissioner 
490.13  of finance has determined that there will be a positive 
490.14  unrestricted budgeting general fund balance at the close of the 
490.15  biennium that is sufficient to complete the allocations required 
490.16  under section 16A.152, subdivision 2. 
490.17     [EFFECTIVE DATE.] This section is effective for taxable 
490.18  years beginning after December 31, 2004. 
490.19     Sec. 5.  Minnesota Statutes 2004, section 290.06, 
490.20  subdivision 2d, is amended to read: 
490.21     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
490.22  taxable years beginning after December 31, 2000 2005, the 
490.23  minimum and maximum dollar amounts for each rate bracket for 
490.24  which a tax is imposed in subdivision 2c shall be adjusted for 
490.25  inflation by the percentage determined under paragraph (b).  For 
490.26  the purpose of making the adjustment as provided in this 
490.27  subdivision all of the rate brackets provided in subdivision 2c 
490.28  shall be the rate brackets as they existed for taxable years 
490.29  beginning after December 31, 1999 2004, and before January 
490.30  1, 2001 2006.  The rate applicable to any rate bracket must not 
490.31  be changed.  The dollar amounts setting forth the tax shall be 
490.32  adjusted to reflect the changes in the rate brackets.  The rate 
490.33  brackets as adjusted must be rounded to the nearest $10 amount.  
490.34  If the rate bracket ends in $5, it must be rounded up to the 
490.35  nearest $10 amount.  
490.36     (b) The commissioner shall adjust the rate brackets and by 
491.1   the percentage determined pursuant to the provisions of section 
491.2   1(f) of the Internal Revenue Code, except that in section 
491.3   1(f)(3)(B) the word "1999 2004" shall be substituted for the 
491.4   word "1992."  For 2001 2006, the commissioner shall then 
491.5   determine the percent change from the 12 months ending on August 
491.6   31, 1999 2004, to the 12 months ending on August 31, 2000 2005, 
491.7   and in each subsequent year, from the 12 months ending on August 
491.8   31, 1999 2004, to the 12 months ending on August 31 of the year 
491.9   preceding the taxable year.  The determination of the 
491.10  commissioner pursuant to this subdivision shall not be 
491.11  considered a "rule" and shall not be subject to the 
491.12  Administrative Procedure Act contained in chapter 14.  
491.13     No later than December 15 of each year, the commissioner 
491.14  shall announce the specific percentage that will be used to 
491.15  adjust the tax rate brackets. 
491.16     Sec. 6.  Minnesota Statutes 2004, section 290.06, is 
491.17  amended by adding a subdivision to read: 
491.18     Subd. 32.  [DAIRY INVESTMENT CREDIT.] (a) A dairy 
491.19  investment credit is allowed against the tax computed under this 
491.20  chapter equal to the credit amount in the table, based on the 
491.21  amount paid or incurred by the taxpayer in the tax year and 
491.22  certified by the commissioner of agriculture under paragraph 
491.23  (f), for qualifying expenditures: 
491.24            Amount of   
491.25     qualifying expenditures              Credit amount 
491.26      up to $500,000                  ten percent of 
491.27                                      qualifying expenditures 
491.28      over $500,000, but not          $50,000, plus nine percent 
491.29      more than $600,000              of the amount of qualified 
491.30                                      expenditures in excess of 
491.31                                      $500,000 
491.32      over $600,000, but not          $59,000, plus seven percent 
491.33      more than $700,000              of the amount of qualified 
491.34                                      expenditures in excess of 
491.35                                      $600,000 
491.36      over $700,000, but not          $66,000, plus five percent 
491.37      more than $800,000              of the amount of qualified 
491.38                                      expenditures in excess of 
491.39                                      $700,000 
491.40      over $800,000, but not          $71,000, plus three percent 
491.41      more than $900,000              of the amount of qualified 
491.42                                      expenditures in excess of 
491.43                                      $800,000 
492.1       over $900,000, but not          $74,000, plus one percent 
492.2       more than $1,000,000            of the amount of qualified 
492.3                                       expenditures in excess of 
492.4                                       $900,000 
492.5       $1,000,000 or more              $75,000 
492.6      (b) "Qualifying expenditures," for purposes of this 
492.7   subdivision, means the expenses incurred for dairy animals for 
492.8   the construction or improvement of buildings or facilities, or 
492.9   the acquisition of equipment, for dairy animal housing, 
492.10  confinement, animal feeding, milk production, and waste 
492.11  management, including, but not limited to, the following: 
492.12     (1) freestall barns; 
492.13     (2) fences; 
492.14     (3) watering facilities; 
492.15     (4) feed storage and handling equipment; 
492.16     (5) milking parlors; 
492.17     (6) robotic equipment; 
492.18     (7) scales; 
492.19     (8) milk storage and cooling facilities; 
492.20     (9) bulk tanks; 
492.21     (10) manure handling equipment and storage facilities; 
492.22     (11) digesters; 
492.23     (12) equipment used to produce energy; and 
492.24     (13) on-farm processing. 
492.25  Qualifying expenditures only include amounts that are 
492.26  capitalized and deducted under either section 167 or 179 of the 
492.27  Internal Revenue Code in computing federal taxable income. 
492.28     (c) The credit is limited to the liability for tax, as 
492.29  computed under this section for the taxable year for which the 
492.30  credit certificate is issued.  If the amount of the credit 
492.31  determined under this section for any taxable year exceeds this 
492.32  limitation, the excess is a dairy investment credit carryover to 
492.33  each of the 15 succeeding taxable years.  The entire amount of 
492.34  the excess unused credit for the taxable year is carried first 
492.35  to the earliest of the taxable years to which the credit may be 
492.36  carried and then to each successive year to which the credit may 
492.37  be carried.  The amount of the unused credit which may be added 
493.1   under this paragraph shall not exceed the taxpayer's liability 
493.2   for tax less the dairy investment credit for the taxable year. 
493.3      (d) For a partnership or S corporation, the maximum amount 
493.4   of the credit applies to the entity, not the individual partner 
493.5   or shareholder. 
493.6      (e) To be eligible for the dairy investment credit in this 
493.7   subdivision, a taxpayer must apply to the commissioner of 
493.8   agriculture for a tax credit certificate.  The application must 
493.9   be made on forms prescribed by the commissioner of agriculture 
493.10  and must include a statement of the qualifying expenditures by 
493.11  the taxpayer. 
493.12     (f) The commissioner of agriculture shall certify credits 
493.13  in the order the forms required under paragraph (e) are received 
493.14  and approved by the commissioner of agriculture, until the 
493.15  maximum credit amount for the taxable year has been reached.  
493.16  The maximum credit amount is $900,000 for tax years beginning 
493.17  after December 31, 2004, and before January 1, 2006; $2,000,000 
493.18  for tax years beginning after December 31, 2005, and before 
493.19  January 1, 2007; $3,500,000 for tax years beginning after 
493.20  December 31, 2006, and before January 1, 2008; and $4,000,000 
493.21  per year for tax years beginning after December 31, 2007. 
493.22     Any eligible applications for which certificates are not 
493.23  issued in a tax year because the commissioner of agriculture has 
493.24  issued certificates totaling the maximum credit amount for that 
493.25  tax year remain eligible for a credit certificate in subsequent 
493.26  tax years, in the order in which the forms were received by the 
493.27  commissioner of agriculture. 
493.28     [EFFECTIVE DATE.] This section is effective for assets 
493.29  placed in service in taxable years beginning after December 31, 
493.30  2004. 
493.31     Sec. 7.  Minnesota Statutes 2004, section 290.17, 
493.32  subdivision 2, is amended to read: 
493.33     Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
493.34  BUSINESS.] The income of a taxpayer subject to the allocation 
493.35  rules that is not derived from the conduct of a trade or 
493.36  business must be assigned in accordance with paragraphs (a) to 
494.1   (f):  
494.2      (a)(1) Subject to paragraphs (a)(2), and (a)(3), and 
494.3   (a)(4), income from wages as defined in section 3401(a) and (f) 
494.4   of the Internal Revenue Code is assigned to this state if, and 
494.5   to the extent that, the work of the employee is performed within 
494.6   it; all other income from such sources is treated as income from 
494.7   sources without this state.  
494.8      Severance pay shall be considered income from labor or 
494.9   personal or professional services. 
494.10     (2) In the case of an individual who is a nonresident of 
494.11  Minnesota and who is an athlete or entertainer, income from 
494.12  compensation for labor or personal services performed within 
494.13  this state shall be determined in the following manner:  
494.14     (i) The amount of income to be assigned to Minnesota for an 
494.15  individual who is a nonresident salaried athletic team employee 
494.16  shall be determined by using a fraction in which the denominator 
494.17  contains the total number of days in which the individual is 
494.18  under a duty to perform for the employer, and the numerator is 
494.19  the total number of those days spent in Minnesota.  For purposes 
494.20  of this paragraph, off-season training activities, unless 
494.21  conducted at the team's facilities as part of a team imposed 
494.22  program, are not included in the total number of duty days.  
494.23  Bonuses earned as a result of play during the regular season or 
494.24  for participation in championship, play-off, or all-star games 
494.25  must be allocated under the formula.  Signing bonuses are not 
494.26  subject to allocation under the formula if they are not 
494.27  conditional on playing any games for the team, are payable 
494.28  separately from any other compensation, and are nonrefundable; 
494.29  and 
494.30     (ii) The amount of income to be assigned to Minnesota for 
494.31  an individual who is a nonresident, and who is an athlete or 
494.32  entertainer not listed in clause (i), for that person's athletic 
494.33  or entertainment performance in Minnesota shall be determined by 
494.34  assigning to this state all income from performances or athletic 
494.35  contests in this state.  
494.36     (3) For purposes of this section, amounts received by a 
495.1   nonresident as "retirement income" as defined in section (b)(1) 
495.2   of the State Income Taxation of Pension Income Act, Public Law 
495.3   104-95, are not considered income derived from carrying on a 
495.4   trade or business or from wages or other compensation for work 
495.5   an employee performed in Minnesota, and are not taxable under 
495.6   this chapter.  
495.7      (4) Wages, otherwise assigned to this state under clause 
495.8   (1) and not qualifying under clause (3), are not taxable under 
495.9   this chapter if the following conditions are met: 
495.10     (i) the recipient was not a resident of this state for any 
495.11  part of the taxable year in which the wages were received; and 
495.12     (ii) the wages are for work performed while the recipient 
495.13  was a resident of this state. 
495.14     (b) Income or gains from tangible property located in this 
495.15  state that is not employed in the business of the recipient of 
495.16  the income or gains must be assigned to this state. 
495.17     (c) Income or gains from intangible personal property not 
495.18  employed in the business of the recipient of the income or gains 
495.19  must be assigned to this state if the recipient of the income or 
495.20  gains is a resident of this state or is a resident trust or 
495.21  estate.  
495.22     Gain on the sale of a partnership interest is allocable to 
495.23  this state in the ratio of the original cost of partnership 
495.24  tangible property in this state to the original cost of 
495.25  partnership tangible property everywhere, determined at the time 
495.26  of the sale.  If more than 50 percent of the value of the 
495.27  partnership's assets consists of intangibles, gain or loss from 
495.28  the sale of the partnership interest is allocated to this state 
495.29  in accordance with the sales factor of the partnership for its 
495.30  first full tax period immediately preceding the tax period of 
495.31  the partnership during which the partnership interest was sold. 
495.32     Gain on the sale of goodwill or income from a covenant not 
495.33  to compete that is connected with a business operating all or 
495.34  partially in Minnesota is allocated to this state to the extent 
495.35  that the income from the business in the year preceding the year 
495.36  of sale was assignable to Minnesota under subdivision 3.  
496.1      When an employer pays an employee for a covenant not to 
496.2   compete, the income allocated to this state is in the ratio of 
496.3   the employee's service in Minnesota in the calendar year 
496.4   preceding leaving the employment of the employer over the total 
496.5   services performed by the employee for the employer in that year.
496.6      (d) Income from winnings on a bet made by an individual 
496.7   while in Minnesota is assigned to this state.  In this 
496.8   paragraph, "bet" has the meaning given in section 609.75, 
496.9   subdivision 2, as limited by section 609.75, subdivision 3, 
496.10  clauses (1), (2), and (3).  
496.11     (e) All items of gross income not covered in paragraphs (a) 
496.12  to (d) and not part of the taxpayer's income from a trade or 
496.13  business shall be assigned to the taxpayer's domicile. 
496.14     (f) For the purposes of this section, working as an 
496.15  employee shall not be considered to be conducting a trade or 
496.16  business. 
496.17     [EFFECTIVE DATE.] This section is effective for tax years 
496.18  beginning after December 31, 2005. 
496.19                             ARTICLE 20
496.20                  CORPORATE FRANCHISE TAX - SF2206 
496.21     Section 1.  Minnesota Statutes 2004, section 290.01, 
496.22  subdivision 6b, is amended to read: 
496.23     Subd. 6b.  [FOREIGN OPERATING CORPORATION.] The term 
496.24  "foreign operating corporation," when applied to a corporation, 
496.25  means a domestic corporation with the following characteristics: 
496.26     (1) it is part of a unitary business at least one member of 
496.27  which is taxable in this state; 
496.28     (2) it is not a foreign sales corporation under section 922 
496.29  of the Internal Revenue Code, as amended through December 31, 
496.30  1999, for the taxable year; and 
496.31     (3) either (i) the average of the percentages of its 
496.32  property and payrolls assigned to locations inside outside the 
496.33  United States and the District of Columbia, excluding the 
496.34  commonwealth of Puerto Rico and possessions of the United 
496.35  States, as determined under section 290.191 or 290.20, is 20 80 
496.36  percent or less greater and it has at least $2,000,000 of 
497.1   property and $1,000,000 of payroll as determined under section 
497.2   290.191 or 290.20; or (ii) it has in effect a valid election 
497.3   under section 936 of the Internal Revenue Code. 
497.4      [EFFECTIVE DATE.] This section is effective for tax years 
497.5   beginning after December 31, 2004. 
497.6      Sec. 2.  Minnesota Statutes 2004, section 290.01, 
497.7   subdivision 19d, is amended to read: 
497.8      Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
497.9   TAXABLE INCOME.] For corporations, there shall be subtracted 
497.10  from federal taxable income after the increases provided in 
497.11  subdivision 19c:  
497.12     (1) the amount of foreign dividend gross-up added to gross 
497.13  income for federal income tax purposes under section 78 of the 
497.14  Internal Revenue Code; 
497.15     (2) the amount of salary expense not allowed for federal 
497.16  income tax purposes due to claiming the federal jobs credit 
497.17  under section 51 of the Internal Revenue Code; 
497.18     (3) any dividend (not including any distribution in 
497.19  liquidation) paid within the taxable year by a national or state 
497.20  bank to the United States, or to any instrumentality of the 
497.21  United States exempt from federal income taxes, on the preferred 
497.22  stock of the bank owned by the United States or the 
497.23  instrumentality; 
497.24     (4) amounts disallowed for intangible drilling costs due to 
497.25  differences between this chapter and the Internal Revenue Code 
497.26  in taxable years beginning before January 1, 1987, as follows: 
497.27     (i) to the extent the disallowed costs are represented by 
497.28  physical property, an amount equal to the allowance for 
497.29  depreciation under Minnesota Statutes 1986, section 290.09, 
497.30  subdivision 7, subject to the modifications contained in 
497.31  subdivision 19e; and 
497.32     (ii) to the extent the disallowed costs are not represented 
497.33  by physical property, an amount equal to the allowance for cost 
497.34  depletion under Minnesota Statutes 1986, section 290.09, 
497.35  subdivision 8; 
497.36     (5) the deduction for capital losses pursuant to sections 
498.1   1211 and 1212 of the Internal Revenue Code, except that: 
498.2      (i) for capital losses incurred in taxable years beginning 
498.3   after December 31, 1986, capital loss carrybacks shall not be 
498.4   allowed; 
498.5      (ii) for capital losses incurred in taxable years beginning
498.6   after December 31, 1986, a capital loss carryover to each of the 
498.7   15 taxable years succeeding the loss year shall be allowed; 
498.8      (iii) for capital losses incurred in taxable years 
498.9   beginning before January 1, 1987, a capital loss carryback to 
498.10  each of the three taxable years preceding the loss year, subject 
498.11  to the provisions of Minnesota Statutes 1986, section 290.16, 
498.12  shall be allowed; and 
498.13     (iv) for capital losses incurred in taxable years beginning
498.14  before January 1, 1987, a capital loss carryover to each of the 
498.15  five taxable years succeeding the loss year to the extent such 
498.16  loss was not used in a prior taxable year and subject to the 
498.17  provisions of Minnesota Statutes 1986, section 290.16, shall be 
498.18  allowed; 
498.19     (6) an amount for interest and expenses relating to income 
498.20  not taxable for federal income tax purposes, if (i) the income 
498.21  is taxable under this chapter and (ii) the interest and expenses 
498.22  were disallowed as deductions under the provisions of section 
498.23  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
498.24  federal taxable income; 
498.25     (7) in the case of mines, oil and gas wells, other natural 
498.26  deposits, and timber for which percentage depletion was 
498.27  disallowed pursuant to subdivision 19c, clause (11), a 
498.28  reasonable allowance for depletion based on actual cost.  In the 
498.29  case of leases the deduction must be apportioned between the 
498.30  lessor and lessee in accordance with rules prescribed by the 
498.31  commissioner.  In the case of property held in trust, the 
498.32  allowable deduction must be apportioned between the income 
498.33  beneficiaries and the trustee in accordance with the pertinent 
498.34  provisions of the trust, or if there is no provision in the 
498.35  instrument, on the basis of the trust's income allocable to 
498.36  each; 
499.1      (8) for certified pollution control facilities placed in 
499.2   service in a taxable year beginning before December 31, 1986, 
499.3   and for which amortization deductions were elected under section 
499.4   169 of the Internal Revenue Code of 1954, as amended through 
499.5   December 31, 1985, an amount equal to the allowance for 
499.6   depreciation under Minnesota Statutes 1986, section 290.09, 
499.7   subdivision 7; 
499.8      (9) amounts included in federal taxable income that are due 
499.9   to refunds of income, excise, or franchise taxes based on net 
499.10  income or related minimum taxes paid by the corporation to 
499.11  Minnesota, another state, a political subdivision of another 
499.12  state, the District of Columbia, or a foreign country or 
499.13  possession of the United States to the extent that the taxes 
499.14  were added to federal taxable income under section 290.01, 
499.15  subdivision 19c, clause (1), in a prior taxable year; 
499.16     (10) 80 percent of royalties, fees, or other like income 
499.17  accrued or received from a foreign operating corporation or a 
499.18  foreign corporation which is part of the same unitary business 
499.19  as the receiving corporation; 
499.20     (11) income or gains from the business of mining as defined 
499.21  in section 290.05, subdivision 1, clause (a), that are not 
499.22  subject to Minnesota franchise tax; 
499.23     (12) (11) the amount of handicap access expenditures in the 
499.24  taxable year which are not allowed to be deducted or capitalized 
499.25  under section 44(d)(7) of the Internal Revenue Code; 
499.26     (13) (12) the amount of qualified research expenses not 
499.27  allowed for federal income tax purposes under section 280C(c) of 
499.28  the Internal Revenue Code, but only to the extent that the 
499.29  amount exceeds the amount of the credit allowed under section 
499.30  290.068; 
499.31     (14) (13) the amount of salary expenses not allowed for 
499.32  federal income tax purposes due to claiming the Indian 
499.33  employment credit under section 45A(a) of the Internal Revenue 
499.34  Code; 
499.35     (15) (14) the amount of any refund of environmental taxes 
499.36  paid under section 59A of the Internal Revenue Code; 
500.1      (16) (15) for taxable years beginning before January 1, 
500.2   2008, the amount of the federal small ethanol producer credit 
500.3   allowed under section 40(a)(3) of the Internal Revenue Code 
500.4   which is included in gross income under section 87 of the 
500.5   Internal Revenue Code; 
500.6      (17) (16) for a corporation whose foreign sales 
500.7   corporation, as defined in section 922 of the Internal Revenue 
500.8   Code, constituted a foreign operating corporation during any 
500.9   taxable year ending before January 1, 1995, and a return was 
500.10  filed by August 15, 1996, claiming the deduction under section 
500.11  290.21, subdivision 4, for income received from the foreign 
500.12  operating corporation, an amount equal to 1.23 multiplied by the 
500.13  amount of income excluded under section 114 of the Internal 
500.14  Revenue Code, provided the income is not income of a foreign 
500.15  operating company; 
500.16     (18) (17) any decrease in subpart F income, as defined in 
500.17  section 952(a) of the Internal Revenue Code, for the taxable 
500.18  year when subpart F income is calculated without regard to the 
500.19  provisions of section 614 of Public Law 107-147; and 
500.20     (19) (18) in each of the five tax years immediately 
500.21  following the tax year in which an addition is required under 
500.22  subdivision 19c, clause (16), an amount equal to one-fifth of 
500.23  the delayed depreciation.  For purposes of this clause, "delayed 
500.24  depreciation" means the amount of the addition made by the 
500.25  taxpayer under subdivision 19c, clause (16).  The resulting 
500.26  delayed depreciation cannot be less than zero. 
500.27     [EFFECTIVE DATE.] This section is effective for tax years 
500.28  beginning after December 31, 2004. 
500.29     Sec. 3.  Minnesota Statutes 2004, section 290.17, 
500.30  subdivision 4, is amended to read: 
500.31     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
500.32  business conducted wholly within this state or partly within and 
500.33  partly without this state is part of a unitary business, the 
500.34  entire income of the unitary business is subject to 
500.35  apportionment pursuant to section 290.191.  Notwithstanding 
500.36  subdivision 2, paragraph (c), none of the income of a unitary 
501.1   business is considered to be derived from any particular source 
501.2   and none may be allocated to a particular place except as 
501.3   provided by the applicable apportionment formula.  The 
501.4   provisions of this subdivision do not apply to business income 
501.5   subject to subdivision 5, income of an insurance company, or 
501.6   income of an investment company determined under section 290.36. 
501.7      (b) The term "unitary business" means business activities 
501.8   or operations which result in a flow of value between them.  The 
501.9   term may be applied within a single legal entity or between 
501.10  multiple entities and without regard to whether each entity is a 
501.11  sole proprietorship, a corporation, a partnership or a trust.  
501.12     (c) Unity is presumed whenever there is unity of ownership, 
501.13  operation, and use, evidenced by centralized management or 
501.14  executive force, centralized purchasing, advertising, 
501.15  accounting, or other controlled interaction, but the absence of 
501.16  these centralized activities will not necessarily evidence a 
501.17  nonunitary business.  Unity is also presumed when business 
501.18  activities or operations are of mutual benefit, dependent upon 
501.19  or contributory to one another, either individually or as a 
501.20  group. 
501.21     (d) Where a business operation conducted in Minnesota is 
501.22  owned by a business entity that carries on business activity 
501.23  outside the state different in kind from that conducted within 
501.24  this state, and the other business is conducted entirely outside 
501.25  the state, it is presumed that the two business operations are 
501.26  unitary in nature, interrelated, connected, and interdependent 
501.27  unless it can be shown to the contrary.  
501.28     (e) Unity of ownership is not deemed to exist when a 
501.29  corporation is involved unless that corporation is a member of a 
501.30  group of two or more business entities and more than 50 percent 
501.31  of the voting stock of each member of the group is directly or 
501.32  indirectly owned by a common owner or by common owners, either 
501.33  corporate or noncorporate, or by one or more of the member 
501.34  corporations of the group.  For this purpose, the term "voting 
501.35  stock" shall include membership interests of mutual insurance 
501.36  holding companies formed under section 60A.077.  
502.1      (f) The net income and apportionment factors under section 
502.2   290.191 or 290.20 of foreign corporations and other foreign 
502.3   entities which are part of a unitary business shall not be 
502.4   included in the net income or the apportionment factors of the 
502.5   unitary business.  A foreign corporation or other foreign entity 
502.6   which is required to file a return under this chapter shall file 
502.7   on a separate return basis.  The net income and apportionment 
502.8   factors under section 290.191 or 290.20 of foreign operating 
502.9   corporations shall not be included in the net income or the 
502.10  apportionment factors of the unitary business except as provided 
502.11  in paragraph (g). 
502.12     (g) The adjusted net income of a foreign operating 
502.13  corporation shall be deemed to be paid as a dividend on the last 
502.14  day of its taxable year to each shareholder thereof, in 
502.15  proportion to each shareholder's ownership, with which such 
502.16  corporation is engaged in a unitary business.  Such deemed 
502.17  dividend shall be treated as a dividend under section 290.21, 
502.18  subdivision 4.  The dividends-received deduction must not be 
502.19  allowed on dividends, interest, royalties, or capital gains 
502.20  received by the foreign operating corporation included in the 
502.21  deemed dividend. 
502.22     Dividends actually paid by a foreign operating corporation 
502.23  to a corporate shareholder which is a member of the same unitary 
502.24  business as the foreign operating corporation shall be 
502.25  eliminated from the net income of the unitary business in 
502.26  preparing a combined report for the unitary business.  The 
502.27  adjusted net income of a foreign operating corporation shall be 
502.28  its net income adjusted as follows: 
502.29     (1) any taxes paid or accrued to a foreign country, the 
502.30  commonwealth of Puerto Rico, or a United States possession or 
502.31  political subdivision of any of the foregoing shall be a 
502.32  deduction; and 
502.33     (2) the subtraction from federal taxable income for 
502.34  payments received from foreign corporations or foreign operating 
502.35  corporations under section 290.01, subdivision 19d, clause (10), 
502.36  shall not be allowed. 
503.1      If a foreign operating corporation incurs a net loss, 
503.2   neither income nor deduction from that corporation shall be 
503.3   included in determining the net income of the unitary business. 
503.4      (h) For purposes of determining the net income of a unitary 
503.5   business and the factors to be used in the apportionment of net 
503.6   income pursuant to section 290.191 or 290.20, there must be 
503.7   included only the income and apportionment factors of domestic 
503.8   corporations or other domestic entities other than foreign 
503.9   operating corporations that are determined to be part of the 
503.10  unitary business pursuant to this subdivision, notwithstanding 
503.11  that foreign corporations or other foreign entities might be 
503.12  included in the unitary business.  
503.13     (i) Deductions for expenses, interest, or taxes otherwise 
503.14  allowable under this chapter that are connected with or 
503.15  allocable against dividends, deemed dividends described in 
503.16  paragraph (g), or royalties, fees, or other like income 
503.17  described in section 290.01, subdivision 19d, clause (10), shall 
503.18  not be disallowed. 
503.19     (j) Each corporation or other entity, except a sole 
503.20  proprietorship, that is part of a unitary business must file 
503.21  combined reports as the commissioner determines.  On the 
503.22  reports, all intercompany transactions between entities included 
503.23  pursuant to paragraph (h) must be eliminated and the entire net 
503.24  income of the unitary business determined in accordance with 
503.25  this subdivision is apportioned among the entities by using each 
503.26  entity's Minnesota factors for apportionment purposes in the 
503.27  numerators of the apportionment formula and the total factors 
503.28  for apportionment purposes of all entities included pursuant to 
503.29  paragraph (h) in the denominators of the apportionment formula. 
503.30     (k) If a corporation has been divested from a unitary 
503.31  business and is included in a combined report for a fractional 
503.32  part of the common accounting period of the combined report:  
503.33     (1) its income includable in the combined report is its 
503.34  income incurred for that part of the year determined by 
503.35  proration or separate accounting; and 
503.36     (2) its sales, property, and payroll included in the 
504.1   apportionment formula must be prorated or accounted for 
504.2   separately. 
504.3      [EFFECTIVE DATE.] This section is effective for tax years 
504.4   beginning after December 31, 2004. 
504.5                              ARTICLE 21 
504.6                          SALES TAX - SF2206 
504.7      Section 1.  Minnesota Statutes 2004, section 297A.61, is 
504.8   amended by adding a subdivision to read: 
504.9      Subd. 37.  [EVENT SOUVENIR CLOTHING.] "Event souvenir 
504.10  clothing" is clothing that is sold at a state-subsidized 
504.11  facility and that bears a name, image, or logo of the 
504.12  entertainer, athlete, or team that performs at the facility.  As 
504.13  used in this subdivision, a "state-subsidized facility" means 
504.14  the Metrodome financed under section 473.581, the basketball 
504.15  arena that receives payments from the Amateur Sports Commission 
504.16  under section 473.556, subdivision 16, the hockey arena that 
504.17  received a loan of state funds under Laws 1998, chapter 404, 
504.18  section 23, subdivision 6, and the entertainment and convention 
504.19  center that received a grant under Laws 1998, chapter 404, 
504.20  section 23, subdivision 9. 
504.21     [EFFECTIVE DATE.] This section is effective for sales after 
504.22  June 30, 2005. 
504.23     Sec. 2.  Minnesota Statutes 2004, section 297A.67, 
504.24  subdivision 6, is amended to read: 
504.25     Subd. 6.  [OTHER EXEMPT MEALS.] (a) Meals or drinks 
504.26  purchased for and served exclusively to individuals who are 60 
504.27  years of age or over and their spouses or to handicapped persons 
504.28  and their spouses by governmental agencies, nonprofit 
504.29  organizations, or churches, or pursuant to any program funded in 
504.30  whole or in part through United States Code, title 42, sections 
504.31  3001 through 3045, wherever delivered, prepared, or served, are 
504.32  exempt.  
504.33     (b) Meals or drinks purchased for and served exclusively to 
504.34  children who are less than 14 years of age or disabled children 
504.35  who are less than 16 years of age and who are attending a child 
504.36  care or early childhood education program, are exempt if they 
505.1   are: 
505.2      (1) purchased by a nonprofit child care facility that is 
505.3   exempt under section 297A.70, subdivision 4, and that primarily 
505.4   serves families with income of 250 percent or less of federal 
505.5   poverty guidelines; and 
505.6      (2) prepared at the site of the child care facility. 
505.7      [EFFECTIVE DATE.] This section is effective for sales after 
505.8   December 31, 1997. 
505.9      Sec. 3.  Minnesota Statutes 2004, section 297A.67, 
505.10  subdivision 7, is amended to read: 
505.11     Subd. 7.  [MEDICINES DRUGS; MEDICAL DEVICES.] 
505.12  (a) Prescribed Sales of the following drugs and medical devices 
505.13  are exempt: 
505.14     (1) drugs and medicine, and insulin, intended for internal 
505.15  or external use, in the cure, mitigation, treatment, or 
505.16  prevention of illness or disease in human beings are exempt.  
505.17  "Prescribed drugs and medicine" includes use, including 
505.18  over-the-counter drugs or medicine prescribed by a licensed 
505.19  health care professional. 
505.20     (b) Nonprescription medicines consisting principally 
505.21  (determined by the weight of all ingredients) of analgesics that 
505.22  are approved by the United States Food and Drug Administration 
505.23  for internal use by human beings are exempt.  For purposes of 
505.24  this subdivision, "principally" means greater than 50 percent 
505.25  analgesics by weight.  
505.26     (c) Prescription glasses, hospital beds, fever 
505.27  thermometers, reusable; 
505.28     (2) single-use finger-pricking devices for the extraction 
505.29  of blood, blood glucose monitoring machines, and 
505.30  other single-use devices and single-use diagnostic agents used 
505.31  in diagnosing, monitoring, or treating diabetes, and therapeutic 
505.32  and; 
505.33     (3) insulin and medical oxygen for human use, regardless of 
505.34  whether prescribed or sold over the counter; 
505.35     (4) prosthetic devices are exempt.  "Therapeutic devices" 
505.36  means devices that are attached or applied to the human body to 
506.1   cure, heal, or alleviate injury, illness, or disease, either 
506.2   directly or by administering a curative agent.  "Prosthetic 
506.3   devices" means devices that replace injured, diseased, or 
506.4   missing parts of the human body, either temporarily or 
506.5   permanently; 
506.6      (5) durable medical equipment for home use only; 
506.7      (6) mobility enhancing equipment; and 
506.8      (7) prescription corrective eyeglasses. 
506.9      (b) For purposes of this subdivision: 
506.10     (1) "Drug" means a compound, substance, or preparation, and 
506.11  any component of a compound, substance, or preparation, other 
506.12  than food and food ingredients, dietary supplements, or 
506.13  alcoholic beverages that is: 
506.14     (i) recognized in the official United States Pharmacopoeia, 
506.15  official Homeopathic Pharmacopoeia of the United States, or 
506.16  official National Formulary, and supplement to any of them; 
506.17     (ii) intended for use in the diagnosis, cure, mitigation, 
506.18  treatment, or prevention of disease; or 
506.19     (iii) intended to affect the structure or any function of 
506.20  the body. 
506.21     (2) "Durable medical equipment" means equipment, including 
506.22  repair and replacement parts, but not including mobility 
506.23  enhancing equipment, that: 
506.24     (i) can withstand repeated use; 
506.25     (ii) is primarily and customarily used to serve a medical 
506.26  purpose; 
506.27     (iii) generally is not useful to a person in the absence of 
506.28  illness or injury; and 
506.29     (iv) is not worn in or on the body. 
506.30     (3) "Mobility enhancing equipment" means equipment, 
506.31  including repair and replacement parts, but not including 
506.32  durable medical equipment, that: 
506.33     (i) is primarily and customarily used to provide or 
506.34  increase the ability to move from one place to another and that 
506.35  is appropriate for use either in a home or a motor vehicle; 
506.36     (ii) is not generally used by persons with normal mobility; 
507.1   and 
507.2      (iii) does not include any motor vehicle or equipment on a 
507.3   motor vehicle normally provided by a motor vehicle manufacturer. 
507.4      (4) "Over-the-counter drug" means a drug that contains a 
507.5   label that identifies the product as a drug as required by Code 
507.6   of Federal Regulations, title 21, section 201.66.  The label 
507.7   must include a "drug facts" panel or a statement of the active 
507.8   ingredients with a list of those ingredients contained in the 
507.9   compound, substance, or preparation.  Over-the-counter drugs do 
507.10  not include grooming and hygiene products, regardless of whether 
507.11  they otherwise meet the definition.  "Grooming and hygiene 
507.12  products" are soaps, cleaning solutions, shampoo, toothpaste, 
507.13  mouthwash, antiperspirants, and suntan lotions and sunscreens. 
507.14     (5) "Prescribed" and "prescription" means a direction in 
507.15  the form of an order, formula, or recipe issued in any form of 
507.16  oral, written, electronic, or other means of transmission by a 
507.17  duly licensed health care professional. 
507.18     (6) "Prosthetic device" means a replacement, corrective, or 
507.19  supportive device, including repair and replacement parts, worn 
507.20  on or in the body to: 
507.21     (i) artificially replace a missing portion of the body; 
507.22     (ii) prevent or correct physical deformity or malfunction; 
507.23  or 
507.24     (iii) support a weak or deformed portion of the body. 
507.25  Prosthetic device does not include corrective eyeglasses. 
507.26     [EFFECTIVE DATE.] This section is effective for sales and 
507.27  purchases made after June 30, 2005. 
507.28     Sec. 4.  Minnesota Statutes 2004, section 297A.67, 
507.29  subdivision 8, is amended to read: 
507.30     Subd. 8.  [CLOTHING.] (a) Clothing is exempt.  For purposes 
507.31  of this subdivision, "clothing" means all human wearing apparel 
507.32  suitable for general use. 
507.33     (b) Clothing includes, but is not limited to, aprons, 
507.34  household and shop; athletic supporters; baby receiving 
507.35  blankets; bathing suits and caps; beach capes and coats; belts 
507.36  and suspenders; boots; coats and jackets; costumes; children and 
508.1   adult diapers, including disposable; ear muffs; footlets; formal 
508.2   wear; garters and garter belts; girdles; gloves and mittens for 
508.3   general use; hats and caps; hosiery; insoles for shoes; lab 
508.4   coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 
508.5   sandals; scarves; shoes and shoe laces; slippers; sneakers; 
508.6   socks and stockings; steel-toed boots; underwear; uniforms, 
508.7   athletic and nonathletic; and wedding apparel. 
508.8      (c) Clothing does not include the following: 
508.9      (1) belt buckles sold separately; 
508.10     (2) costume masks sold separately; 
508.11     (3) patches and emblems sold separately; 
508.12     (4) sewing equipment and supplies, including but not 
508.13  limited to, knitting needles, patterns, pins, scissors, sewing 
508.14  machines, sewing needles, tape measures, and thimbles; 
508.15     (5) sewing materials that become part of clothing, 
508.16  including but not limited to, buttons, fabric, lace, thread, 
508.17  yarn, and zippers; 
508.18     (6) clothing accessories or equipment; 
508.19     (7) sports or recreational equipment; and 
508.20     (8) protective equipment; and 
508.21     (9) event souvenir clothing. 
508.22  Clothing also does not include apparel made from fur if a 
508.23  uniform definition of "apparel made from fur" is developed by 
508.24  the member states of the Streamlined Sales and Use Tax Agreement.
508.25     For purposes of this subdivision, "clothing accessories or 
508.26  equipment" means incidental items worn on the person or in 
508.27  conjunction with clothing.  Clothing accessories and equipment 
508.28  include, but are not limited to, briefcases; cosmetics; hair 
508.29  notions, including barrettes, hair bows, and hairnets; handbags; 
508.30  handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 
508.31  wallets; watches; and wigs and hairpieces.  "Sports or 
508.32  recreational equipment" means items designed for human use and 
508.33  worn in conjunction with an athletic or recreational activity 
508.34  that are not suitable for general use.  Sports and recreational 
508.35  equipment includes, but is not limited to, ballet and tap shoes; 
508.36  cleated or spiked athletic shoes; gloves, including, but not 
509.1   limited to, baseball, bowling, boxing, hockey, and golf gloves; 
509.2   goggles; hand and elbow guards; life preservers and vests; mouth 
509.3   guards; roller and ice skates; shin guards; shoulder pads; ski 
509.4   boots; waders; and wetsuits and fins.  "Protective equipment" 
509.5   means items for human wear and designed as protection of the 
509.6   wearer against injury or disease or as protection against damage 
509.7   or injury of other persons or property but not suitable for 
509.8   general use.  Protective equipment includes, but is not limited 
509.9   to, breathing masks; clean room apparel and equipment; ear and 
509.10  hearing protectors; face shields; finger guards; hard hats; 
509.11  helmets; paint or dust respirators; protective gloves; safety 
509.12  glasses and goggles; safety belts; tool belts; and welders 
509.13  gloves and masks. 
509.14     [EFFECTIVE DATE.] This section is effective for sales after 
509.15  June 30, 2005. 
509.16     Sec. 5.  Minnesota Statutes 2004, section 297A.67, 
509.17  subdivision 29, is amended to read: 
509.18     Subd. 29.  [SOLAR ENERGY EFFICIENT PRODUCTS.] (a) A 
509.19  residential lighting fixture or a compact fluorescent bulb is 
509.20  exempt if it has an energy star label. 
509.21     (b) The following products are exempt if they have an 
509.22  energyguide label that indicates that the product meets or 
509.23  exceeds the standards listed below: 
509.24     (1) an electric heat pump hot water heater with an energy 
509.25  factor of at least 1.9; 
509.26     (2) a natural gas water heater with an energy factor of at 
509.27  least 0.62; 
509.28     (3) a propane gas or fuel oil water heater with an energy 
509.29  factor of at least 0.62; 
509.30     (4) a natural gas furnace with an annual fuel utilization 
509.31  efficiency greater than 92 percent; and 
509.32     (5) a propane gas or fuel oil furnace with an annual fuel 
509.33  utilization efficiency greater than 92 percent. 
509.34     (c) A photovoltaic device solar energy system, as defined 
509.35  in section 216C.06, subdivision 17, is exempt.  For purposes of 
509.36  this subdivision, "photovoltaic device" means a solid-state 
510.1   electrical device, such as a solar module, that converts light 
510.2   directly into direct current electricity of voltage-current 
510.3   characteristics that are a function of the characteristics of 
510.4   the light source and the materials in and design of the device.  
510.5   A "solar module" is a photovoltaic device that produces a 
510.6   specified power output under defined test conditions, usually 
510.7   composed of groups of solar cells connected in series, in 
510.8   parallel, or in series-parallel combinations. 
510.9      (d) For purposes of this subdivision, "energy star label" 
510.10  means the label granted to certain products that meet United 
510.11  States Environmental Protection Agency and United States 
510.12  Department of Energy criteria for energy efficiency.  For 
510.13  purposes of this subdivision, "energyguide label" means the 
510.14  label that the United States Federal Trade Commissioner requires 
510.15  manufacturers to apply to certain appliances under United States 
510.16  Code, title 16, part 305. 
510.17     [EFFECTIVE DATE.] This section is effective for sales and 
510.18  purchases made on or after August 1, 2005. 
510.19     Sec. 6.  Minnesota Statutes 2004, section 297A.68, 
510.20  subdivision 28, is amended to read: 
510.21     Subd. 28.  [MEDICAL SUPPLIES.] Medical supplies purchased 
510.22  by a licensed health care facility or licensed health care 
510.23  professional to provide medical treatment to residents or 
510.24  patients are exempt.  The exemption does not apply to durable 
510.25  medical equipment or components of durable medical equipment, 
510.26  laboratory supplies, radiological supplies, and other items used 
510.27  in providing medical services.  For purposes of this 
510.28  subdivision, "medical supplies" means adhesive and nonadhesive 
510.29  bandages, gauze pads and strips, cotton applicators, 
510.30  antiseptics, nonprescription drugs, eye solution, and other 
510.31  similar supplies used directly on the resident or patient in 
510.32  providing medical services. 
510.33     [EFFECTIVE DATE.] This section is effective for sales and 
510.34  purchases made after June 30, 2005. 
510.35     Sec. 7.  Minnesota Statutes 2004, section 297A.71, 
510.36  subdivision 12, is amended to read: 
511.1      Subd. 12.  [CHAIR LIFTS, RAMPS, ELEVATORS.] Chair lifts, 
511.2   ramps, and Elevators and building materials used to install or 
511.3   construct them chair lifts, ramps, and elevators are exempt, if 
511.4   they are authorized by a physician and installed in or attached 
511.5   to the owner's homestead.  The tax must be imposed and collected 
511.6   as if the rate under section 297A.62, subdivision 1, applied and 
511.7   then refunded in the manner provided in section 297A.75. 
511.8      [EFFECTIVE DATE.] This section is effective for sales and 
511.9   purchases made after June 30, 2005. 
511.10     Sec. 8.  Minnesota Statutes 2004, section 297A.71, is 
511.11  amended by adding a subdivision to read: 
511.12     Subd. 33.  [HYDROELECTRIC GENERATING FACILITY.] Materials 
511.13  and supplies used or consumed in the construction of a 
511.14  hydroelectric generating facility that meets the requirements of 
511.15  this subdivision are exempt.  To qualify for the exemption under 
511.16  this subdivision, a hydroelectric generating facility must: 
511.17     (1) utilize two turbine generators at a dam site existing 
511.18  on March 31, 1994; 
511.19     (2) be located on land within 1,500 feet of a 13.8 kilovolt 
511.20  distribution circuit; and 
511.21     (3) be eligible to receive a renewable energy production 
511.22  incentive payment under section 216C.41. 
511.23     [EFFECTIVE DATE.] This section is effective for sales made 
511.24  after December 31, 2004, and on or before December 31, 2007. 
511.25     Sec. 9.  Laws 1993, chapter 375, article 9, section 46, 
511.26  subdivision 2, as amended by Laws 1997, chapter 231, article 7, 
511.27  section 40, and Laws 1998, chapter 389, article 8, section 30, 
511.28  and Laws 2003 First Special Session chapter 21, article 8, 
511.29  section 13, is amended to read: 
511.30     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
511.31  authorized by subdivision 1 may only be used by the city to pay 
511.32  the cost of collecting the tax, and to pay for the following 
511.33  projects or to secure or pay any principal, premium, or interest 
511.34  on bonds issued in accordance with subdivision 3 for the 
511.35  following projects.  
511.36     (a) To pay all or a portion of the capital expenses of 
512.1   construction, equipment and acquisition costs for the expansion 
512.2   and remodeling of the St. Paul Civic Center complex, including 
512.3   the demolition of the existing arena and the construction and 
512.4   equipping of a new arena. 
512.5      (b) The remainder of the funds must be spent for: 
512.6      (1) capital projects to further residential, cultural, 
512.7   commercial, and economic development in both downtown St. Paul 
512.8   and St. Paul neighborhoods ; and 
512.9      (2) capital and operating expenses of cultural 
512.10  organizations in the city, provided that the amount spent under 
512.11  this clause must equal ten percent of the total amount spent 
512.12  under this paragraph in any year.  
512.13     (c) The amount apportioned under paragraph (b) shall be no 
512.14  less than 60 percent of the revenues derived from the tax each 
512.15  year, except to the extent that a portion of that amount is 
512.16  required to pay debt service on (1) bonds issued for the 
512.17  purposes of paragraph (a) prior to March 1, 1998; or (2) bonds 
512.18  issued for the purposes of paragraph (a) after March 1, 1998, 
512.19  but only if the city council determines that 40 percent of the 
512.20  revenues derived from the tax together with other revenues 
512.21  pledged to the payment of the bonds, including the proceeds of 
512.22  definitive bonds, is expected to exceed the annual debt service 
512.23  on the bonds. 
512.24     (d) If in any year more than 40 percent of the revenue 
512.25  derived from the tax authorized by subdivision 1 is used to pay 
512.26  debt service on the bonds issued for the purposes of paragraph 
512.27  (a) and to fund a reserve for the bonds, the amount of the debt 
512.28  service payment that exceeds 40 percent of the revenue must be 
512.29  determined for that year.  In any year when 40 percent of the 
512.30  revenue produced by the sales tax exceeds the amount required to 
512.31  pay debt service on the bonds and to fund a reserve for the 
512.32  bonds under paragraph (a), the amount of the excess must be made 
512.33  available for capital projects to further residential, cultural, 
512.34  commercial, and economic development in the neighborhoods and 
512.35  downtown until the cumulative amounts determined for all years 
512.36  under the preceding sentence have been made available under this 
513.1   sentence.  The amount made available as reimbursement in the 
513.2   preceding sentence is not included in the 60 percent determined 
513.3   under paragraph (c). 
513.4      (e) No revenues from the tax authorized by subdivision 1 
513.5   may be used to pay principal, premium, or interest on any bonds 
513.6   or other obligations except the bonds issued under subdivision 3.
513.7      (e) (f) By January 15 of each odd-numbered year, the mayor 
513.8   and the city council must report to the legislature on the use 
513.9   of sales tax revenues during the preceding two-year period. 
513.10     [EFFECTIVE DATE.] This section is effective the day 
513.11  following final enactment. 
513.12     Sec. 10.  Laws 2001, First Special Session chapter 5, 
513.13  article 12, section 44, the effective date, is amended to read: 
513.14     [EFFECTIVE DATE.] This section is effective for sales and 
513.15  purchases made after July 31, 2001, and before August 1, 2005. 
513.16     Sec. 11.  [COUNTY OF MOWER; SALES AND USE TAX.] 
513.17     Subdivision 1.  [SALES AND USE TAX 
513.18  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
513.19  477A.016, or any other provision of law or ordinance, the county 
513.20  of Mower may, by resolution, impose a sales and use tax of up to 
513.21  one-half percent for the purposes specified in subdivision 2.  
513.22  Except as otherwise provided in this section, the provisions of 
513.23  Minnesota Statutes, section 297A.99, govern the imposition, 
513.24  administration, collection, and enforcement of the tax 
513.25  authorized under this subdivision. 
513.26     Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
513.27  imposed under this section must be solely used to pay for costs 
513.28  associated with a Criminal Justice Center for Mower County.  
513.29  Government functions to be located in the facility for which 
513.30  proceeds of the tax may be used include, but are not limited to, 
513.31  jail, law enforcement, dispatch, courts, court administration, 
513.32  correctional services, and county attorney. 
513.33     Authorized expenses include, but are not limited to, site 
513.34  acquisition, infrastructure, construction, and professional fees 
513.35  related to the project. 
513.36     Subd. 3.  [BONDING AUTHORITY.] (a) The county may issue 
514.1   bonds under Minnesota Statutes, chapter 475, to finance the 
514.2   capital expenditures and improvements authorized by the 
514.3   referendum under subdivision 4.  An election to approve the 
514.4   bonds under Minnesota Statutes, section 475.58, is not required. 
514.5      (b) The bonds are not included in computing any debt limits 
514.6   applicable to the county, and the levy of taxes under Minnesota 
514.7   Statutes, section 475.61, to pay principal and interest on the 
514.8   bonds is not subject to levy limits. 
514.9      Subd. 4.  [REFERENDUM.] If the county of Mower proposes to 
514.10  impose the tax authorized by this section, the question of 
514.11  imposing the tax must be submitted to the voters at either a 
514.12  special election held before January 1, 2006, or at the next 
514.13  general election. 
514.14     Subd. 5.  [TERMINATION OF TAXES.] The tax imposed under 
514.15  this section expires when the county board first determines that 
514.16  the amount of revenues raised to pay for the Criminal Justice 
514.17  Center project under subdivision 2 meet or exceed approved 
514.18  project costs.  Any funds remaining after completion of the 
514.19  projects may be placed in the general funds of the county.  The 
514.20  county may rescind the tax imposed under this section at an 
514.21  earlier time by ordinance.  
514.22     [EFFECTIVE DATE.] This section is effective the day after 
514.23  compliance by the governing body of the county of Mower with 
514.24  Minnesota Statutes, section 645.021, subdivision 3. 
514.25     Sec. 12.  [CITY OF WORTHINGTON; TAXES AUTHORIZED.] 
514.26     Subdivision 1.  [SALES AND USE TAX.] Notwithstanding 
514.27  Minnesota Statutes, section 477A.016, or any other provision of 
514.28  law, ordinance, or city charter, if approved by the voters 
514.29  pursuant to Minnesota Statutes, section 297A.99, at the next 
514.30  general election, the city of Worthington may impose by 
514.31  ordinance a sales and use tax of up to one-half of one percent 
514.32  for the purpose specified in subdivision 3.  Except as otherwise 
514.33  provided in this section, the provisions of Minnesota Statutes, 
514.34  section 297A.99, govern the imposition, administration, 
514.35  collection, and enforcement of the tax authorized under this 
514.36  subdivision. 
515.1      Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
515.2   Minnesota Statutes, section 477A.016, or any other provision of 
515.3   law, ordinance, or city charter, the city of Worthington may 
515.4   impose by ordinance, for the purposes specified in subdivision 
515.5   3, an excise tax of up to $20 per motor vehicle, as defined by 
515.6   ordinance, purchased or acquired from any person engaged within 
515.7   the city in the business of selling motor vehicles at retail. 
515.8      Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
515.9   authorized by subdivisions 1 and 2 must be used by the city to 
515.10  pay the cost of collecting and administering the taxes and to 
515.11  pay for the costs of a multipurpose city facility to include 
515.12  meeting rooms, a swimming pool, and a senior citizen center, and 
515.13  to make renovations to the Memorial Auditorium.  Authorized 
515.14  expenses include, but are not limited to, acquiring property and 
515.15  paying construction expenses related to these improvements, and 
515.16  paying debt service on bonds or other obligations issued to 
515.17  finance acquisition and construction of these improvements. 
515.18     Subd. 4.  [BONDING AUTHORITY.] (a) If the tax authorized 
515.19  under subdivision 1 is approved by the voters, the city may 
515.20  issue bonds under Minnesota Statutes, chapter 475, to pay 
515.21  capital and administrative expenses for the improvements 
515.22  described in subdivision 3 in an amount that does not exceed 
515.23  $7,800,000.  An election to approve the bonds under Minnesota 
515.24  Statutes, section 475.58, is not required. 
515.25     (b) The debt represented by the bonds is not included in 
515.26  computing any debt limitation applicable to the city, and any 
515.27  levy of taxes under Minnesota Statutes, section 475.61, to pay 
515.28  principal of and interest on the bonds is not subject to any 
515.29  levy limitation.  
515.30     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
515.31  subdivisions 1 and 2 expire at the earlier of (1) ten years, or 
515.32  (2) when the city council determines that the amount of revenue 
515.33  received from the taxes to pay for the projects under 
515.34  subdivision 3 equals or exceeds $7,800,000 plus the additional 
515.35  amount needed to pay the costs related to issuance of bonds 
515.36  under subdivision 4, including interest on the bonds.  Any funds 
516.1   remaining after completion of the project and retirement or 
516.2   redemption of the bonds shall be placed in a capital project 
516.3   fund of the city.  The taxes imposed under subdivisions 1 and 2 
516.4   may expire at an earlier time if the city so determines by 
516.5   ordinance. 
516.6      [EFFECTIVE DATE.] This section is effective the day after 
516.7   the governing body of the city of Worthington and its chief 
516.8   clerical officer timely comply with Minnesota Statutes, section 
516.9   645.021, subdivisions 2 and 3. 
516.10                             ARTICLE 22
516.11                   PROPERTY TAX AND AIDS - SF2206 
516.12     Section 1.  Minnesota Statutes 2004, section 123B.53, 
516.13  subdivision 5, is amended to read: 
516.14     Subd. 5.  [EQUALIZED DEBT SERVICE LEVY.] (a) The equalized 
516.15  debt service levy of a district equals the sum of the first tier 
516.16  equalized debt service levy and the second tier equalized debt 
516.17  service levy. 
516.18     (b) A district's first tier equalized debt service levy 
516.19  equals the district's first tier debt service equalization 
516.20  revenue times the lesser of one or the ratio of: 
516.21     (1) the quotient derived by dividing the adjusted debt 
516.22  service net tax capacity of the district for the year before the 
516.23  year the levy is certified by the adjusted pupil units in the 
516.24  district for the school year ending in the year prior to the 
516.25  year the levy is certified; to 
516.26     (2) $3,200. 
516.27     (c) A district's second tier equalized debt service levy 
516.28  equals the district's second tier debt service equalization 
516.29  revenue times the lesser of one or the ratio of: 
516.30     (1) the quotient derived by dividing the adjusted debt 
516.31  service net tax capacity of the district for the year before the 
516.32  year the levy is certified by the adjusted pupil units in the 
516.33  district for the school year ending in the year prior to the 
516.34  year the levy is certified; to 
516.35     (2) $8,000. 
516.36     [EFFECTIVE DATE.] This section is effective for taxes 
517.1   payable in 2006. 
517.2      Sec. 2.  Minnesota Statutes 2004, section 126C.01, is 
517.3   amended by adding a subdivision to read: 
517.4      Subd. 2a.  [DEBT SERVICE NET TAX CAPACITY.] A school 
517.5   district's debt service net tax capacity means the net tax 
517.6   capacity of the taxable property of the district as adjusted by 
517.7   the commissioner of revenue under section 127A.48, subdivision 
517.8   17.  The debt service net tax capacity for any given calendar 
517.9   year must be used to compute the debt service levy limitations 
517.10  for levies certified in the succeeding calendar year and aid for 
517.11  the school year beginning in the second succeeding calendar year.
517.12     [EFFECTIVE DATE.] This section is effective the day 
517.13  following final enactment for computing taxes payable in 2006. 
517.14     Sec. 3.  Minnesota Statutes 2004, section 127A.48, is 
517.15  amended by adding a subdivision to read: 
517.16     Subd. 17.  [DEBT SERVICE NET TAX CAPACITY.] To calculate 
517.17  each district's debt service net tax capacity, the commissioner 
517.18  of revenue must recompute the amounts in this section using an 
517.19  alternative sales ratio comparing the sales price to the 
517.20  estimated market value of the property. 
517.21     [EFFECTIVE DATE.] This section is effective the day 
517.22  following final enactment for computing taxes payable in 2006.  
517.23     Sec. 4.  Minnesota Statutes 2004, section 254B.02, 
517.24  subdivision 3, is amended to read: 
517.25     Subd. 3.  [RESERVE ACCOUNT.] The commissioner shall 
517.26  allocate money from the reserve account to counties that, during 
517.27  the current fiscal year, have met or exceeded the base level of 
517.28  expenditures for eligible chemical dependency services from 
517.29  local money.  The commissioner shall establish the base level 
517.30  for fiscal year 1988 as the amount of local money used for 
517.31  eligible services in calendar year 1986.  In later years, the 
517.32  base level must be increased in the same proportion as state 
517.33  appropriations to implement Laws 1986, chapter 394, sections 8 
517.34  to 20, are increased, except the base level shall not exceed 55 
517.35  percent of the county allocation provided in subdivision 1 for 
517.36  fiscal year 2006; 50 percent in fiscal year 2007; 45 percent in 
518.1   fiscal year 2008; and 40 percent in fiscal year 2009.  
518.2   Thereafter the maximum base level shall decrease by five percent 
518.3   each year until the maximum county match is 15 percent.  The 
518.4   base level must be decreased if the fund balance from which 
518.5   allocations are made under section 254B.02, subdivision 1, is 
518.6   decreased in later years.  The local match rate for the reserve 
518.7   account is the same rate as applied to the initial allocation.  
518.8   Reserve account payments must not be included when calculating 
518.9   the county adjustments made according to subdivision 2.  For 
518.10  counties providing medical assistance or general assistance 
518.11  medical care through managed care plans on January 1, 1996, the 
518.12  base year is fiscal year 1995.  For counties beginning provision 
518.13  of managed care after January 1, 1996, the base year is the most 
518.14  recent fiscal year before enrollment in managed care begins.  
518.15  For counties providing managed care, the base level will be 
518.16  increased or decreased in proportion to changes in the fund 
518.17  balance from which allocations are made under subdivision 2, but 
518.18  will be additionally increased or decreased in proportion to the 
518.19  change in county adjusted population made in subdivision 1, 
518.20  paragraphs (b) and (c).  Effective July 1, 2001, at the end of 
518.21  each biennium, any funds deposited in the reserve account funds 
518.22  in excess of those needed to meet obligations incurred under 
518.23  this section and sections 254B.06 and 254B.09 shall cancel to 
518.24  the general fund. 
518.25     Sec. 5.  Minnesota Statutes 2004, section 272.02, 
518.26  subdivision 53, is amended to read: 
518.27     Subd. 53.  [ELECTRIC GENERATION FACILITY; PERSONAL 
518.28  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
518.29  machinery and other personal property which is part of a 3.2 
518.30  megawatt run-of-the-river hydroelectric generation facility and 
518.31  that meets the requirements of this subdivision is exempt.  At 
518.32  the time of construction, the facility must: 
518.33     (1) utilize two turbine generators at a dam site existing 
518.34  on March 31, 1994; 
518.35     (2) be located on publicly owned land and within 1,500 feet 
518.36  of a 13.8 kilovolt distribution substation; and 
519.1      (3) be eligible to receive a renewable energy production 
519.2   incentive payment under section 216C.41. 
519.3      Construction of the facility must be commenced after 
519.4   January 1, 2002 December 31, 2004, and before January 1, 2005 
519.5   2007.  Property eligible for this exemption does not include 
519.6   electric transmission lines and interconnections or gas 
519.7   pipelines and interconnections appurtenant to the property or 
519.8   the facility. 
519.9      [EFFECTIVE DATE.] This section is effective for taxes 
519.10  levied in 2005, payable in 2006, and thereafter. 
519.11     Sec. 6.  Minnesota Statutes 2004, section 272.02, is 
519.12  amended by adding a subdivision to read: 
519.13     Subd. 68.  [ELECTRIC GENERATION FACILITY PERSONAL 
519.14  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
519.15  attached machinery and other personal property which is part of 
519.16  either a simple-cycle, combustion-turbine electric generation 
519.17  facility, or a combined-cycle, combustion-turbine electric 
519.18  generation facility that does not exceed 325 megawatts of 
519.19  installed capacity and that meets the requirements of this 
519.20  subdivision is exempt.  At the time of construction, the 
519.21  facility must: 
519.22     (1) utilize either a simple-cycle or a combined-cycle 
519.23  combustion-turbine generator fueled by natural gas; 
519.24     (2) be connected to an existing 115-kilovolt high-voltage 
519.25  electric transmission line that is within two miles of the 
519.26  facility; 
519.27     (3) be located on an underground natural gas storage 
519.28  aquifer; 
519.29     (4) be designed as either a peaking or intermediate load 
519.30  facility; and 
519.31     (5) have received, by resolution, the approval from the 
519.32  governing body of the county for the exemption of personal 
519.33  property under this subdivision. 
519.34     (b) Construction of the facility must be commenced after 
519.35  January 1, 2006, and before January 1, 2008.  Property eligible 
519.36  for this exemption does not include electric transmission lines 
520.1   and interconnections or gas pipelines and interconnections 
520.2   appurtenant to the property or the facility. 
520.3      [EFFECTIVE DATE.] This section is effective for assessment 
520.4   year 2005, taxes payable in 2006, and thereafter. 
520.5      Sec. 7.  Minnesota Statutes 2004, section 272.0211, 
520.6   subdivision 1, is amended to read: 
520.7      Subdivision 1.  [EFFICIENCY DETERMINATION AND 
520.8   CERTIFICATION.] An owner or operator of a new or existing 
520.9   electric power generation facility, excluding wind energy 
520.10  conversion systems, may apply to the commissioner of revenue for 
520.11  a market value exclusion on the property as provided for in this 
520.12  section.  This exclusion shall apply only to the market value of 
520.13  the equipment of the facility, and shall not apply to the 
520.14  structures and the land upon which the facility is located.  The 
520.15  commissioner of revenue shall prescribe the forms and procedures 
520.16  for this application.  Upon receiving the application, the 
520.17  commissioner of revenue shall request the commissioner of 
520.18  commerce to make a determination of the efficiency of the 
520.19  applicant's electric power generation facility.  In calculating 
520.20  the efficiency of a facility, The commissioner of commerce shall 
520.21  use a definition of calculate efficiency which calculates 
520.22  efficiency as the sum of: 
520.23     (1) the useful electrical power output; plus 
520.24     (2) the useful thermal energy output; plus 
520.25     (3) the fuel energy of the useful chemical products, 
520.26  all divided by the total energy input to the facility, expressed 
520.27  as a percentage as the ratio of useful energy outputs to energy 
520.28  inputs, expressed as a percentage, based on the performance of 
520.29  the facility's equipment during normal full load operation.  The 
520.30  commissioner must include in this formula the energy used in any 
520.31  on-site preparation of materials necessary to convert the 
520.32  materials into the fuel used to generate electricity, such as a 
520.33  process to gasify petroleum coke.  The commissioner shall use 
520.34  the high heating value Higher Heating Value (HHV) for all 
520.35  substances in the commissioner's efficiency calculations, except 
520.36  for wood for fuel in a biomass-eligible project under section 
521.1   216B.2424; for these instances, the commissioner shall adjust 
521.2   the heating value to allow for energy consumed for evaporation 
521.3   of the moisture in the wood.  The applicant shall provide the 
521.4   commissioner of commerce with whatever information the 
521.5   commissioner deems necessary to make the determination.  Within 
521.6   30 days of the receipt of the necessary information, the 
521.7   commissioner of commerce shall certify the findings of the 
521.8   efficiency determination to the commissioner of revenue and to 
521.9   the applicant.  The commissioner of commerce shall determine the 
521.10  efficiency of the facility and certify the findings of that 
521.11  determination to the commissioner of revenue every two years 
521.12  thereafter from the date of the original certification. 
521.13     [EFFECTIVE DATE.] This section is effective for assessment 
521.14  year 2005 and thereafter, for taxes payable in 2006 and 
521.15  thereafter. 
521.16     Sec. 8.  Minnesota Statutes 2004, section 272.0211, 
521.17  subdivision 2, is amended to read: 
521.18     Subd. 2.  [SLIDING SCALE EXCLUSION.] Based upon the 
521.19  efficiency determination provided by the commissioner of 
521.20  commerce as described in subdivision 1, the commissioner of 
521.21  revenue shall subtract five eight percent of the taxable market 
521.22  value of the qualifying property for each percentage point that 
521.23  the efficiency of the specific facility, as determined by the 
521.24  commissioner of commerce, is above 35 40 percent.  The reduction 
521.25  in taxable market value shall be reflected in the taxable market 
521.26  value of the facility beginning with the assessment year 
521.27  immediately following the determination.  For a facility that is 
521.28  assessed by the county in which the facility is located, the 
521.29  commissioner of revenue shall certify to the assessor of that 
521.30  county the percentage of the taxable market value of the 
521.31  facility to be excluded. 
521.32     [EFFECTIVE DATE.] This section is effective for assessment 
521.33  year 2005 and thereafter, for taxes payable in 2006 and 
521.34  thereafter. 
521.35     Sec. 9.  Minnesota Statutes 2004, section 273.11, 
521.36  subdivision 1a, is amended to read: 
522.1      Subd. 1a.  [LIMITED MARKET VALUE.] In the case of all 
522.2   property classified as agricultural homestead or nonhomestead, 
522.3   residential homestead or nonhomestead, timber, or noncommercial 
522.4   seasonal residential recreational, the assessor shall compare 
522.5   the value with the taxable portion of the value determined in 
522.6   the preceding assessment.  
522.7      For assessment year 2002, the amount of the increase shall 
522.8   not exceed the greater of (1) ten percent of the value in the 
522.9   preceding assessment, or (2) 15 percent of the difference 
522.10  between the current assessment and the preceding assessment. 
522.11     For assessment year 2003, the amount of the increase shall 
522.12  not exceed the greater of (1) 12 percent of the value in the 
522.13  preceding assessment, or (2) 20 percent of the difference 
522.14  between the current assessment and the preceding assessment. 
522.15     For assessment year 2004, the amount of the increase shall 
522.16  not exceed the greater of (1) 15 percent of the value in the 
522.17  preceding assessment, or (2) 25 percent of the difference 
522.18  between the current assessment and the preceding assessment. 
522.19     For assessment year 2005, the amount of the increase shall 
522.20  not exceed the greater of (1) 15 percent of the value in the 
522.21  preceding assessment, or (2) 33 percent of the difference 
522.22  between the current assessment and the preceding assessment.  
522.23     For assessment year 2006, the amount of the increase shall 
522.24  not exceed the greater of (1) 15 percent of the value in the 
522.25  preceding assessment, or (2) 50 percent of the difference 
522.26  between the current assessment and the preceding assessment. 
522.27     This limitation shall not apply to increases in value due 
522.28  to improvements.  For purposes of this subdivision, the term 
522.29  "assessment" means the value prior to any exclusion under 
522.30  subdivision 16. 
522.31     The provisions of this subdivision shall be in effect 
522.32  through assessment year 2006 as provided in this subdivision. 
522.33     For purposes of the assessment/sales ratio study conducted 
522.34  under section 127A.48, and the computation of state aids paid 
522.35  under chapters 122A, 123A, 123B, excluding section 123B.53, 
522.36  124D, 125A, 126C, 127A, and 477A, market values and net tax 
523.1   capacities determined under this subdivision and subdivision 16, 
523.2   shall be used. 
523.3      [EFFECTIVE DATE.] This section is effective the day 
523.4   following final enactment for computing taxes payable in 2006. 
523.5      Sec. 10.  Minnesota Statutes 2004, section 275.025, 
523.6   subdivision 1, is amended to read: 
523.7      Subdivision 1.  [LEVY AMOUNT.] (a) The state general levy 
523.8   is levied against commercial-industrial property and seasonal 
523.9   residential recreational property, as defined in this section.  
523.10  The state general levy base amount is $592,000,000 for taxes 
523.11  payable in 2002.  For taxes payable in subsequent years on 
523.12  seasonal residential recreational property, the levy base amount 
523.13  is increased each year by multiplying the levy base amount 
523.14  for that class of property for the prior year by the sum of one 
523.15  plus the rate of increase, if any, in the implicit price 
523.16  deflator for government consumption expenditures and gross 
523.17  investment for state and local governments prepared by the 
523.18  Bureau of Economic Analysts of the United States Department of 
523.19  Commerce for the 12-month period ending March 31 of the year 
523.20  prior to the year the taxes are payable.  For taxes payable in 
523.21  2006 and subsequent years on commercial-industrial property, the 
523.22  tax is imposed under this subdivision at the rate of the tax 
523.23  imposed under this subdivision for taxes payable in 2002.  The 
523.24  tax under this section is not treated as a local tax rate under 
523.25  section 469.177 and is not the levy of a governmental unit under 
523.26  chapters 276A and 473F.  
523.27     (b) Beginning with taxes payable in 2008, and in each year 
523.28  thereafter, the commissioner of finance shall deposit in the 
523.29  education reserve account established in 2005 S.F. No. 1683, 
523.30  article 4, section 73, if enacted, the increased amount of the 
523.31  state general levy for that year over the state general levy 
523.32  base amount for taxes payable in 2002.  
523.33     (c) The commissioner shall increase or decrease the 
523.34  preliminary or final rate for a year as necessary to account for 
523.35  errors and tax base changes that affected a preliminary or final 
523.36  rate for either of the two preceding years.  Adjustments are 
524.1   allowed to the extent that the necessary information is 
524.2   available to the commissioner at the time the rates for a year 
524.3   must be certified, and for the following reasons: 
524.4      (1) an erroneous report of taxable value by a local 
524.5   official; 
524.6      (2) an erroneous calculation by the commissioner; and 
524.7      (3) an increase or decrease in taxable value for 
524.8   commercial-industrial or seasonal residential recreational 
524.9   property reported on the abstracts of tax lists submitted under 
524.10  section 275.29 that was not reported on the abstracts of 
524.11  assessment submitted under section 270.11, subdivision 2, for 
524.12  the same year. 
524.13  The commissioner may, but need not, make adjustments if the 
524.14  total difference in the tax levied for the year would be less 
524.15  than $100,000. 
524.16     [EFFECTIVE DATE.] This section is effective for taxes 
524.17  payable in 2006 and subsequent years. 
524.18     Sec. 11.  Minnesota Statutes 2004, section 275.065, 
524.19  subdivision 3, is amended to read: 
524.20     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
524.21  county auditor shall prepare and the county treasurer shall 
524.22  deliver after November 10 and on or before November 24 each 
524.23  year, by first class mail to each taxpayer at the address listed 
524.24  on the county's current year's assessment roll, a notice of 
524.25  proposed property taxes.  
524.26     (b) The commissioner of revenue shall prescribe the form of 
524.27  the notice. 
524.28     (c) The notice must inform taxpayers that it contains the 
524.29  amount of property taxes each taxing authority proposes to 
524.30  collect for taxes payable the following year.  In the case of a 
524.31  town, or in the case of the state general tax, the final tax 
524.32  amount will be its proposed tax.  In the case of taxing 
524.33  authorities required to hold a public meeting under subdivision 
524.34  6, the notice must clearly state that each taxing authority, 
524.35  including regional library districts established under section 
524.36  134.201, and including the metropolitan taxing districts as 
525.1   defined in paragraph (i), but excluding all other special taxing 
525.2   districts and towns, will hold a public meeting to receive 
525.3   public testimony on the proposed budget and proposed or final 
525.4   property tax levy, or, in case of a school district, on the 
525.5   current budget and proposed property tax levy.  It must clearly 
525.6   state the time and place of each taxing authority's meeting, a 
525.7   telephone number for the taxing authority that taxpayers may 
525.8   call if they have questions related to the notice, and an 
525.9   address where comments will be received by mail.  
525.10     (d) The notice must state for each parcel: 
525.11     (1) the market value of the property as determined under 
525.12  section 273.11, and used for computing property taxes payable in 
525.13  the following year and for taxes payable in the current year as 
525.14  each appears in the records of the county assessor on November 1 
525.15  of the current year; and, in the case of residential property, 
525.16  whether the property is classified as homestead or 
525.17  nonhomestead.  The notice must clearly inform taxpayers of the 
525.18  years to which the market values apply and that the values are 
525.19  final values; 
525.20     (2) the items listed below, shown separately by county, 
525.21  city or town, and state general tax, net of the residential and 
525.22  agricultural homestead credit under section 273.1384, voter 
525.23  approved school levy, other local school levy, and the sum of 
525.24  the special taxing districts, and as a total of all taxing 
525.25  authorities:  
525.26     (i) the actual tax for taxes payable in the current year; 
525.27  and 
525.28     (ii) the proposed tax amount. 
525.29     If the county levy under clause (2) includes an amount for 
525.30  a lake improvement district as defined under sections 103B.501 
525.31  to 103B.581, the amount attributable for that purpose must be 
525.32  separately stated from the remaining county levy amount.  
525.33     In the case of a town or the state general tax, the final 
525.34  tax shall also be its proposed tax unless the town changes its 
525.35  levy at a special town meeting under section 365.52.  If a 
525.36  school district has certified under section 126C.17, subdivision 
526.1   9, that a referendum will be held in the school district at the 
526.2   November general election, the county auditor must note next to 
526.3   the school district's proposed amount that a referendum is 
526.4   pending and that, if approved by the voters, the tax amount may 
526.5   be higher than shown on the notice.  In the case of the city of 
526.6   Minneapolis, the levy for the Minneapolis Library Board and the 
526.7   levy for Minneapolis Park and Recreation shall be listed 
526.8   separately from the remaining amount of the city's levy.  In the 
526.9   case of the city of St. Paul, the levy for the St. Paul Library 
526.10  Agency must be listed separately from the remaining amount of 
526.11  the city's levy.  In the case of a parcel where tax increment or 
526.12  the fiscal disparities areawide tax under chapter 276A or 473F 
526.13  applies, the proposed tax levy on the captured value or the 
526.14  proposed tax levy on the tax capacity subject to the areawide 
526.15  tax must each be stated separately and not included in the sum 
526.16  of the special taxing districts; and 
526.17     (3) the increase or decrease between the total taxes 
526.18  payable in the current year and the total proposed taxes, 
526.19  expressed as a percentage. 
526.20     For purposes of this section, the amount of the tax on 
526.21  homesteads qualifying under the senior citizens' property tax 
526.22  deferral program under chapter 290B is the total amount of 
526.23  property tax before subtraction of the deferred property tax 
526.24  amount. 
526.25     (e) The notice must clearly state that the proposed or 
526.26  final taxes do not include the following: 
526.27     (1) special assessments; 
526.28     (2) levies approved by the voters after the date the 
526.29  proposed taxes are certified, including bond referenda and 
526.30  school district levy referenda; 
526.31     (3) a levy limit increase approved by the voters by the 
526.32  first Tuesday after the first Monday in November of the levy 
526.33  year as provided under section 275.73; 
526.34     (4) amounts necessary to pay cleanup or other costs due to 
526.35  a natural disaster occurring after the date the proposed taxes 
526.36  are certified; 
527.1      (5) amounts necessary to pay tort judgments against the 
527.2   taxing authority that become final after the date the proposed 
527.3   taxes are certified; and 
527.4      (6) the contamination tax imposed on properties which 
527.5   received market value reductions for contamination. 
527.6      (f) Except as provided in subdivision 7, failure of the 
527.7   county auditor to prepare or the county treasurer to deliver the 
527.8   notice as required in this section does not invalidate the 
527.9   proposed or final tax levy or the taxes payable pursuant to the 
527.10  tax levy. 
527.11     (g) If the notice the taxpayer receives under this section 
527.12  lists the property as nonhomestead, and satisfactory 
527.13  documentation is provided to the county assessor by the 
527.14  applicable deadline, and the property qualifies for the 
527.15  homestead classification in that assessment year, the assessor 
527.16  shall reclassify the property to homestead for taxes payable in 
527.17  the following year. 
527.18     (h) In the case of class 4 residential property used as a 
527.19  residence for lease or rental periods of 30 days or more, the 
527.20  taxpayer must either: 
527.21     (1) mail or deliver a copy of the notice of proposed 
527.22  property taxes to each tenant, renter, or lessee; or 
527.23     (2) post a copy of the notice in a conspicuous place on the 
527.24  premises of the property.  
527.25     The notice must be mailed or posted by the taxpayer by 
527.26  November 27 or within three days of receipt of the notice, 
527.27  whichever is later.  A taxpayer may notify the county treasurer 
527.28  of the address of the taxpayer, agent, caretaker, or manager of 
527.29  the premises to which the notice must be mailed in order to 
527.30  fulfill the requirements of this paragraph. 
527.31     (i) For purposes of this subdivision, subdivisions 5a and 
527.32  6, "metropolitan special taxing districts" means the following 
527.33  taxing districts in the seven-county metropolitan area that levy 
527.34  a property tax for any of the specified purposes listed below: 
527.35     (1) Metropolitan Council under section 473.132, 473.167, 
527.36  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
528.1      (2) Metropolitan Airports Commission under section 473.667, 
528.2   473.671, or 473.672; and 
528.3      (3) Metropolitan Mosquito Control Commission under section 
528.4   473.711. 
528.5      For purposes of this section, any levies made by the 
528.6   regional rail authorities in the county of Anoka, Carver, 
528.7   Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
528.8   398A shall be included with the appropriate county's levy and 
528.9   shall be discussed at that county's public hearing. 
528.10     (j) The governing body of a county, city, or school 
528.11  district may, with the consent of the county auditor, include 
528.12  supplemental information with the statement of proposed property 
528.13  taxes about the impact of state aid increases or decreases on 
528.14  property tax increases or decreases and on the level of services 
528.15  provided in the affected jurisdiction.  This supplemental 
528.16  information may include information for the following year, the 
528.17  current year, and for as many consecutive preceding years as 
528.18  deemed appropriate by the governing body of the county, city, or 
528.19  school district.  It may include only information regarding: 
528.20     (1) the impact of inflation as measured by the implicit 
528.21  price deflator for state and local government purchases; 
528.22     (2) population growth and decline; 
528.23     (3) state or federal government action; and 
528.24     (4) other financial factors that affect the level of 
528.25  property taxation and local services that the governing body of 
528.26  the county, city, or school district may deem appropriate to 
528.27  include. 
528.28     The information may be presented using tables, written 
528.29  narrative, and graphic representations and may contain 
528.30  instruction toward further sources of information or opportunity 
528.31  for comment. 
528.32     Sec. 12.  Minnesota Statutes 2004, section 469.033, 
528.33  subdivision 6, is amended to read: 
528.34     Subd. 6.  [OPERATION AREA AS TAXING DISTRICT, SPECIAL TAX.] 
528.35  All of the territory included within the area of operation of 
528.36  any authority shall constitute a taxing district for the purpose 
529.1   of levying and collecting special benefit taxes as provided in 
529.2   this subdivision.  All of the taxable property, both real and 
529.3   personal, within that taxing district shall be deemed to be 
529.4   benefited by projects to the extent of the special taxes levied 
529.5   under this subdivision.  Subject to the consent by resolution of 
529.6   the governing body of the city in and for which it was created, 
529.7   an authority may levy a tax upon all taxable property within 
529.8   that taxing district.  The tax shall be extended, spread, and 
529.9   included with and as a part of the general taxes for state, 
529.10  county, and municipal purposes by the county auditor, to be 
529.11  collected and enforced therewith, together with the penalty, 
529.12  interest, and costs.  As the tax, including any penalties, 
529.13  interest, and costs, is collected by the county treasurer it 
529.14  shall be accumulated and kept in a separate fund to be known as 
529.15  the "housing and redevelopment project fund."  The money in the 
529.16  fund shall be turned over to the authority at the same time and 
529.17  in the same manner that the tax collections for the city are 
529.18  turned over to the city, and shall be expended only for the 
529.19  purposes of sections 469.001 to 469.047.  It shall be paid out 
529.20  upon vouchers signed by the chair of the authority or an 
529.21  authorized representative.  The amount of the levy shall be an 
529.22  amount approved by the governing body of the city, but shall not 
529.23  exceed 0.0144 percent of taxable market value for the current 
529.24  levy year, notwithstanding section 273.032.  The authority shall 
529.25  each year formulate and file a budget in accordance with the 
529.26  budget procedure of the city in the same manner as required of 
529.27  executive departments of the city or, if no budgets are required 
529.28  to be filed, by August 1.  The amount of the tax levy for the 
529.29  following year shall be based on that budget. 
529.30     Sec. 13.  Minnesota Statutes 2004, section 473F.08, 
529.31  subdivision 3a, is amended to read: 
529.32     Subd. 3a.  [BLOOMINGTON COMPUTATION.] Beginning in 1987 and 
529.33  each subsequent year through 1998, the city of Bloomington shall 
529.34  determine the interest payments for that year for the bonds 
529.35  which have been sold for the highway improvements pursuant to 
529.36  Laws 1986, chapter 391, section 2, paragraph (g).  Effective for 
530.1   property taxes payable in 1988 through property taxes payable in 
530.2   1999, after the Hennepin County auditor has computed the 
530.3   areawide portion of the levy for the city of Bloomington 
530.4   pursuant to subdivision 3, clause (a), the auditor shall 
530.5   annually add a dollar amount to the city of Bloomington's 
530.6   areawide portion of the levy equal to the amount which has been 
530.7   certified to the auditor by the city of Bloomington for the 
530.8   interest payments for that year for the bonds which were sold 
530.9   for highway improvements.  The total areawide portion of the 
530.10  levy for the city of Bloomington including the additional amount 
530.11  for interest repayment certified pursuant to this subdivision 
530.12  shall be certified by the Hennepin County auditor to the 
530.13  administrative auditor pursuant to subdivision 5.  The Hennepin 
530.14  County auditor shall distribute to the city of Bloomington the 
530.15  additional areawide portion of the levy computed pursuant to 
530.16  this subdivision at the same time that payments are made to the 
530.17  other counties pursuant to subdivision 7a.  For property taxes 
530.18  payable from the year 2006 2014 through 2015 2023, the Hennepin 
530.19  County auditor shall adjust Bloomington's contribution to the 
530.20  areawide gross tax capacity upward each year by a value equal to 
530.21  ten percent of the total additional areawide levy distributed to 
530.22  Bloomington under this subdivision from 1988 to 1999, divided by 
530.23  the areawide tax rate for taxes payable in the previous year. 
530.24     [EFFECTIVE DATE.] This section is effective the day 
530.25  following final enactment. 
530.26     Sec. 14.  Minnesota Statutes 2004, section 477A.011, 
530.27  subdivision 34, is amended to read: 
530.28     Subd. 34.  [CITY REVENUE NEED.] (a) For a city with a 
530.29  population equal to or greater than 2,500, "city revenue need" 
530.30  is the sum of (1) 5.0734098 times the pre-1940 housing 
530.31  percentage; plus (2) 19.141678 times the population decline 
530.32  percentage; plus (3) 2504.06334 times the road accidents factor; 
530.33  plus (4) 355.0547; minus (5) the metropolitan area factor; minus 
530.34  (6) 49.10638 times the household size. 
530.35     (b) For a city with a population less than 2,500, "city 
530.36  revenue need" is the sum of (1) 2.387 times the pre-1940 housing 
531.1   percentage; plus (2) 2.67591 times the commercial industrial 
531.2   percentage; plus (3) 3.16042 times the population decline 
531.3   percentage; plus (4) 1.206 times the transformed population; 
531.4   minus (5) 62.772. 
531.5      (c) The city revenue need cannot be less than zero. 
531.6      (d) For calendar year 2005 and subsequent years, the city 
531.7   revenue need for a city, as determined in paragraphs (a) to (c), 
531.8   is multiplied by the ratio of the annual most recently available 
531.9   first quarter implicit price deflator for government consumption 
531.10  expenditures and gross investment for state and local 
531.11  governments as prepared by the United States Department of 
531.12  Commerce, for the most recently available year to the 2003 first 
531.13  quarter 2002 implicit price deflator for state and local 
531.14  government purchases. 
531.15     (e) For a city with a population of 2,500 or more and a 
531.16  population in one of the most recently available five years that 
531.17  was less than 2,500, "city revenue need" is the sum of (1) its 
531.18  city revenue need calculated under paragraph (a) multiplied by 
531.19  its transition factor; plus (2) its city revenue need calculated 
531.20  under the formula in paragraph (b) multiplied by the difference 
531.21  between one and its transition factor.  For purposes of this 
531.22  paragraph, a city's "transition factor" is equal to 0.2 
531.23  multiplied by the number of years that the city's population 
531.24  estimate has been 2,500 or more.  This provision only applies 
531.25  for aids payable in calendar years 2006 to 2008 to cities with a 
531.26  2002 population of less than 2,500.  It applies to any city for 
531.27  aids payable in 2009 and thereafter. 
531.28     [EFFECTIVE DATE.] This section is effective for aids 
531.29  payable in 2006 and thereafter. 
531.30     Sec. 15.  Minnesota Statutes 2004, section 477A.011, 
531.31  subdivision 36, as amended by Laws 2005, chapter 38, section 1, 
531.32  is amended to read: 
531.33     Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
531.34  provided in this subdivision, "city aid base" is zero. 
531.35     (b) The city aid base for any city with a population less 
531.36  than 500 is increased by $40,000 for aids payable in calendar 
532.1   year 1995 and thereafter, and the maximum amount of total aid it 
532.2   may receive under section 477A.013, subdivision 9, paragraph 
532.3   (c), is also increased by $40,000 for aids payable in calendar 
532.4   year 1995 only, provided that: 
532.5      (i) the average total tax capacity rate for taxes payable 
532.6   in 1995 exceeds 200 percent; 
532.7      (ii) the city portion of the tax capacity rate exceeds 100 
532.8   percent; and 
532.9      (iii) its city aid base is less than $60 per capita. 
532.10     (c) The city aid base for a city is increased by $20,000 in 
532.11  1998 and thereafter and the maximum amount of total aid it may 
532.12  receive under section 477A.013, subdivision 9, paragraph (c), is 
532.13  also increased by $20,000 in calendar year 1998 only, provided 
532.14  that: 
532.15     (i) the city has a population in 1994 of 2,500 or more; 
532.16     (ii) the city is located in a county, outside of the 
532.17  metropolitan area, which contains a city of the first class; 
532.18     (iii) the city's net tax capacity used in calculating its 
532.19  1996 aid under section 477A.013 is less than $400 per capita; 
532.20  and 
532.21     (iv) at least four percent of the total net tax capacity, 
532.22  for taxes payable in 1996, of property located in the city is 
532.23  classified as railroad property. 
532.24     (d) The city aid base for a city is increased by $200,000 
532.25  in 1999 and thereafter and the maximum amount of total aid it 
532.26  may receive under section 477A.013, subdivision 9, paragraph 
532.27  (c), is also increased by $200,000 in calendar year 1999 only, 
532.28  provided that: 
532.29     (i) the city was incorporated as a statutory city after 
532.30  December 1, 1993; 
532.31     (ii) its city aid base does not exceed $5,600; and 
532.32     (iii) the city had a population in 1996 of 5,000 or more. 
532.33     (e) The city aid base for a city is increased by $450,000 
532.34  in 1999 to 2008 and the maximum amount of total aid it may 
532.35  receive under section 477A.013, subdivision 9, paragraph (c), is 
532.36  also increased by $450,000 in calendar year 1999 only, provided 
533.1   that: 
533.2      (i) the city had a population in 1996 of at least 50,000; 
533.3      (ii) its population had increased by at least 40 percent in 
533.4   the ten-year period ending in 1996; and 
533.5      (iii) its city's net tax capacity for aids payable in 1998 
533.6   is less than $700 per capita. 
533.7      (f) The city aid base for a city is increased by $150,000 
533.8   for aids payable in 2000 and thereafter, and the maximum amount 
533.9   of total aid it may receive under section 477A.013, subdivision 
533.10  9, paragraph (c), is also increased by $150,000 in calendar year 
533.11  2000 only, provided that: 
533.12     (1) the city has a population that is greater than 1,000 
533.13  and less than 2,500; 
533.14     (2) its commercial and industrial percentage for aids 
533.15  payable in 1999 is greater than 45 percent; and 
533.16     (3) the total market value of all commercial and industrial 
533.17  property in the city for assessment year 1999 is at least 15 
533.18  percent less than the total market value of all commercial and 
533.19  industrial property in the city for assessment year 1998. 
533.20     (g) The city aid base for a city is increased by $200,000 
533.21  in 2000 and thereafter, and the maximum amount of total aid it 
533.22  may receive under section 477A.013, subdivision 9, paragraph 
533.23  (c), is also increased by $200,000 in calendar year 2000 only, 
533.24  provided that: 
533.25     (1) the city had a population in 1997 of 2,500 or more; 
533.26     (2) the net tax capacity of the city used in calculating 
533.27  its 1999 aid under section 477A.013 is less than $650 per 
533.28  capita; 
533.29     (3) the pre-1940 housing percentage of the city used in 
533.30  calculating 1999 aid under section 477A.013 is greater than 12 
533.31  percent; 
533.32     (4) the 1999 local government aid of the city under section 
533.33  477A.013 is less than 20 percent of the amount that the formula 
533.34  aid of the city would have been if the need increase percentage 
533.35  was 100 percent; and 
533.36     (5) the city aid base of the city used in calculating aid 
534.1   under section 477A.013 is less than $7 per capita. 
534.2      (h) The city aid base for a city is increased by $102,000 
534.3   in 2000 and thereafter, and the maximum amount of total aid it 
534.4   may receive under section 477A.013, subdivision 9, paragraph 
534.5   (c), is also increased by $102,000 in calendar year 2000 only, 
534.6   provided that: 
534.7      (1) the city has a population in 1997 of 2,000 or more; 
534.8      (2) the net tax capacity of the city used in calculating 
534.9   its 1999 aid under section 477A.013 is less than $455 per 
534.10  capita; 
534.11     (3) the net levy of the city used in calculating 1999 aid 
534.12  under section 477A.013 is greater than $195 per capita; and 
534.13     (4) the 1999 local government aid of the city under section 
534.14  477A.013 is less than 38 percent of the amount that the formula 
534.15  aid of the city would have been if the need increase percentage 
534.16  was 100 percent. 
534.17     (i) The city aid base for a city is increased by $32,000 in 
534.18  2001 and thereafter, and the maximum amount of total aid it may 
534.19  receive under section 477A.013, subdivision 9, paragraph (c), is 
534.20  also increased by $32,000 in calendar year 2001 only, provided 
534.21  that: 
534.22     (1) the city has a population in 1998 that is greater than 
534.23  200 but less than 500; 
534.24     (2) the city's revenue need used in calculating aids 
534.25  payable in 2000 was greater than $200 per capita; 
534.26     (3) the city net tax capacity for the city used in 
534.27  calculating aids available in 2000 was equal to or less than 
534.28  $200 per capita; 
534.29     (4) the city aid base of the city used in calculating aid 
534.30  under section 477A.013 is less than $65 per capita; and 
534.31     (5) the city's formula aid for aids payable in 2000 was 
534.32  greater than zero. 
534.33     (j) The city aid base for a city is increased by $7,200 in 
534.34  2001 and thereafter, and the maximum amount of total aid it may 
534.35  receive under section 477A.013, subdivision 9, paragraph (c), is 
534.36  also increased by $7,200 in calendar year 2001 only, provided 
535.1   that: 
535.2      (1) the city had a population in 1998 that is greater than 
535.3   200 but less than 500; 
535.4      (2) the city's commercial industrial percentage used in 
535.5   calculating aids payable in 2000 was less than ten percent; 
535.6      (3) more than 25 percent of the city's population was 60 
535.7   years old or older according to the 1990 census; 
535.8      (4) the city aid base of the city used in calculating aid 
535.9   under section 477A.013 is less than $15 per capita; and 
535.10     (5) the city's formula aid for aids payable in 2000 was 
535.11  greater than zero. 
535.12     (k) The city aid base for a city is increased by $45,000 in 
535.13  2001 and thereafter and by an additional $50,000 in calendar 
535.14  years 2002 to 2011, and the maximum amount of total aid it may 
535.15  receive under section 477A.013, subdivision 9, paragraph (c), is 
535.16  also increased by $45,000 in calendar year 2001 only, and by 
535.17  $50,000 in calendar year 2002 only, provided that: 
535.18     (1) the net tax capacity of the city used in calculating 
535.19  its 2000 aid under section 477A.013 is less than $810 per 
535.20  capita; 
535.21     (2) the population of the city declined more than two 
535.22  percent between 1988 and 1998; 
535.23     (3) the net levy of the city used in calculating 2000 aid 
535.24  under section 477A.013 is greater than $240 per capita; and 
535.25     (4) the city received less than $36 per capita in aid under 
535.26  section 477A.013, subdivision 9, for aids payable in 2000. 
535.27  The city aid base for a city described in this paragraph is also 
535.28  increased by $250,000 in calendar year 2006 and the maximum 
535.29  amount of total aid it may receive under section 477A.013, 
535.30  subdivision 9, paragraph (c), is also increased by $250,000 in 
535.31  calendar year 2006 only. 
535.32     (l) The city aid base for a city with a population of 
535.33  10,000 or more which is located outside of the seven-county 
535.34  metropolitan area is increased in 2002 and thereafter, and the 
535.35  maximum amount of total aid it may receive under section 
535.36  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
536.1   in calendar year 2002 only, by an amount equal to the lesser of: 
536.2      (1)(i) the total population of the city, as determined by 
536.3   the United States Bureau of the Census, in the 2000 census, (ii) 
536.4   minus 5,000, (iii) times 60; or 
536.5      (2) $2,500,000. 
536.6      (m) The city aid base is increased by $50,000 in 2002 and 
536.7   thereafter, and the maximum amount of total aid it may receive 
536.8   under section 477A.013, subdivision 9, paragraph (c), is also 
536.9   increased by $50,000 in calendar year 2002 only, provided that: 
536.10     (1) the city is located in the seven-county metropolitan 
536.11  area; 
536.12     (2) its population in 2000 is between 10,000 and 20,000; 
536.13  and 
536.14     (3) its commercial industrial percentage, as calculated for 
536.15  city aid payable in 2001, was greater than 25 percent. 
536.16     (n) The city aid base for a city is increased by $150,000 
536.17  in calendar years 2002 to 2011 and the maximum amount of total 
536.18  aid it may receive under section 477A.013, subdivision 9, 
536.19  paragraph (c), is also increased by $150,000 in calendar year 
536.20  2002 only, provided that: 
536.21     (1) the city had a population of at least 3,000 but no more 
536.22  than 4,000 in 1999; 
536.23     (2) its home county is located within the seven-county 
536.24  metropolitan area; 
536.25     (3) its pre-1940 housing percentage is less than 15 
536.26  percent; and 
536.27     (4) its city net tax capacity per capita for taxes payable 
536.28  in 2000 is less than $900 per capita. 
536.29     (o) The city aid base for a city is increased by $200,000 
536.30  beginning in calendar year 2003 and the maximum amount of total 
536.31  aid it may receive under section 477A.013, subdivision 9, 
536.32  paragraph (c), is also increased by $200,000 in calendar year 
536.33  2003 only, provided that the city qualified for an increase in 
536.34  homestead and agricultural credit aid under Laws 1995, chapter 
536.35  264, article 8, section 18. 
536.36     (p) The city aid base for a city is increased by $200,000 
537.1   in 2004 only and the maximum amount of total aid it may receive 
537.2   under section 477A.013, subdivision 9, is also increased by 
537.3   $200,000 in calendar year 2004 only, if the city is the site of 
537.4   a nuclear dry cask storage facility. 
537.5      (q) The city aid base for a city is increased by $10,000 in 
537.6   2004 and thereafter and the maximum total aid it may receive 
537.7   under section 477A.013, subdivision 9, is also increased by 
537.8   $10,000 in calendar year 2004 only, if the city was included in 
537.9   a federal major disaster designation issued on April 1, 1998, 
537.10  and its pre-1940 housing stock was decreased by more than 40 
537.11  percent between 1990 and 2000. 
537.12     (r) The city aid base for a city is increased by $25,000 in 
537.13  2006 only and the maximum total aid it may receive under section 
537.14  477A.013, subdivision 9, is also increased by $25,000 in 2006 
537.15  only, if the city (1) received no aid under section 477A.013 in 
537.16  2004; (2) had a population in 2002 greater than 20,000 and less 
537.17  than 50,000; and (3) had an adjusted net tax capacity of less 
537.18  than $750 per capita for aids payable in 2004. 
537.19     (s) The city aid base for a city is increased by $500,000 
537.20  in calendar year 2006 and thereafter, and the maximum amount of 
537.21  total aid the city may receive under section 477A.013, 
537.22  subdivision 9, paragraph (c), is also increased by $500,000 in 
537.23  calendar year 2006 only, provided that: 
537.24     (1) the city is located outside of the seven-county 
537.25  metropolitan area; 
537.26     (2) the city's 2000 population is between 10,000 and 
537.27  20,000; 
537.28     (3) the net levy of the city used in calculating 2005 aid 
537.29  under section 477A.013 is greater than $350 per capita; and 
537.30     (4) the city's commercial industrial percentage under 
537.31  subdivision 32, for aids payable in 2005, was at least 20 
537.32  percent. 
537.33     (t) The city aid base for a city is increased by $25,000 in 
537.34  2006 only and the maximum total aid it may receive under section 
537.35  477A.013, subdivision 9, is also increased by $25,000 in 
537.36  calendar year 2006 only if the city had a population in 2003 of 
538.1   at least 1,000 and has a state park for which the city provides 
538.2   rescue services and which comprised at least 14 percent of the 
538.3   total geographic area included within the city boundaries in 
538.4   2000. 
538.5      [EFFECTIVE DATE.] This section is effective beginning with 
538.6   aids payable in 2006, except that the striking of paragraph (f) 
538.7   is effective beginning with aids payable in 2004. 
538.8      Sec. 16.  Minnesota Statutes 2004, section 477A.0124, 
538.9   subdivision 4, is amended to read: 
538.10     Subd. 4.  [COUNTY TAX-BASE EQUALIZATION AID.] (a) For 
538.11  2005 2006 and subsequent years, the money appropriated to county 
538.12  tax-base equalization aid each calendar year, after the payment 
538.13  under paragraph (f), shall be apportioned among the counties 
538.14  according to each county's tax-base equalization aid factor. 
538.15     (b) A county's tax-base equalization aid factor is equal to 
538.16  the amount by which (i) $185 times the county's population, 
538.17  exceeds (ii) 9.45 percent of the county's net tax capacity. 
538.18     (c) In the case of a county with a population less than 
538.19  10,000, the factor determined in paragraph (b) shall be 
538.20  multiplied by a factor of three. 
538.21     (d) In the case of a county with a population greater than 
538.22  or equal to 10,000, but less than 12,500, the factor determined 
538.23  in paragraph (b) shall be multiplied by a factor of two. 
538.24     (e) In the case of a county with a population greater than 
538.25  500,000, the factor determined in paragraph (b) shall be 
538.26  multiplied by a factor of 0.25. 
538.27     (f) Before the money appropriated to county base 
538.28  equalization aid is apportioned among the counties as provided 
538.29  in paragraph (a), an amount up to $73,259 is allocated annually 
538.30  to Anoka County and up to $59,664 is annually allocated to 
538.31  Washington County for the county to pay postretirement costs of 
538.32  health insurance premiums for court employees.  The allocation 
538.33  under this paragraph is in addition to the allocations under 
538.34  paragraphs (a) to (e). 
538.35     [EFFECTIVE DATE.] This section is effective for aids 
538.36  payable in 2006 and thereafter. 
539.1      Sec. 17.  Minnesota Statutes 2004, section 477A.013, 
539.2   subdivision 8, is amended to read: 
539.3      Subd. 8.  [CITY FORMULA AID.] In calendar year 2004 and 
539.4   subsequent years, the formula aid for a city is equal to the 
539.5   need increase percentage multiplied by the difference between 
539.6   (1) the city's revenue need multiplied by its population, and 
539.7   (2) the sum of the city's net tax capacity multiplied by the tax 
539.8   effort rate, and the taconite aids under sections 298.28 and 
539.9   298.282, multiplied by the following percentages:  
539.10     (i) zero percent for aids payable in 2004; 
539.11     (ii) 25 percent for aids payable in 2005; 
539.12     (iii) 50 percent for aids payable in 2006; 
539.13     (iv) 75 percent for aids payable in 2007; and 
539.14     (v) 100 percent for aids payable in 2008 and thereafter.  
539.15  No city may have a formula aid amount less than zero.  The need 
539.16  increase percentage must be the same for all cities.  
539.17     The applicable need increase percentage must be calculated 
539.18  by the Department of Revenue so that the total of the aid under 
539.19  subdivision 9 equals the total amount available for aid under 
539.20  section 477A.03 after the subtraction under section 477A.014, 
539.21  subdivisions 4 and 5.  
539.22     [EFFECTIVE DATE.] This section is effective for aids 
539.23  payable in 2006 and thereafter. 
539.24     Sec. 18.  Minnesota Statutes 2004, section 477A.013, 
539.25  subdivision 9, is amended to read: 
539.26     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
539.27  2002 and thereafter, each city shall receive an aid distribution 
539.28  equal to the sum of (1) the city formula aid under subdivision 
539.29  8, and (2) its city aid base. 
539.30     (b) The aid for a city in calendar year 2004 shall not 
539.31  exceed the amount of its aid in calendar year 2003 after the 
539.32  reductions under Laws 2003, First Special Session chapter 21, 
539.33  article 5.  
539.34     (c) For aids payable in 2005 and thereafter, the total aid 
539.35  for any city shall not exceed the sum of (1) ten 50 percent of 
539.36  the city's net levy for the year prior to the aid distribution 
540.1   plus (2) its total aid in the previous year.  For aids payable 
540.2   in 2005 and thereafter, the total aid for any city with a 
540.3   population of 2,500 or more may not decrease from its total aid 
540.4   under this section in the previous year by an amount greater 
540.5   than ten percent of its net levy in the year prior to the aid 
540.6   distribution. 
540.7      (d) (c) For aids payable in 2004 only, the total aid for a 
540.8   city with a population less than 2,500 may not be less than the 
540.9   amount it was certified to receive in 2003 minus the greater of 
540.10  (1) the reduction to this aid payment in 2003 under Laws 2003, 
540.11  First Special Session chapter 21, article 5, or (2) five percent 
540.12  of its 2003 aid amount.  For aids payable in 2005 and 
540.13  thereafter, the total aid for a city with a population less than 
540.14  2,500 must not be less than the amount it was certified to 
540.15  receive in the previous year minus five percent of its 2003 
540.16  certified aid amount. 
540.17     (d) For aids payable in 2006 only, the total aid for a city 
540.18  with a population less than 1,000 must not be less than 105 
540.19  percent of the amount it was certified to receive in 2005. 
540.20     [EFFECTIVE DATE.] This section is effective for aids 
540.21  payable in 2006 and thereafter. 
540.22     Sec. 19.  [477A.0133] [COUNTY CRIMINAL JUSTICE AID.] 
540.23     Subdivision 1.  [PURPOSE.] County criminal justice aid is 
540.24  provided for the sole purpose of reducing the reliance of county 
540.25  criminal justice and corrections programs and associated costs 
540.26  on local property taxes. 
540.27     County criminal justice aids must be used to pay expenses 
540.28  associated with criminal justice activities, specifically 
540.29  probation and supervised release caseload reductions, chemical 
540.30  dependency treatment, mental health programs, and assistance to 
540.31  crime victims. 
540.32     Subd. 2.  [DEFINITIONS.] For the purposes of this section, 
540.33  the following definitions apply: 
540.34     (1) "population" means the population according to the most 
540.35  recent federal census, or according to the state demographer's 
540.36  most recent estimate if it has been issued subsequent to the 
541.1   most recent federal census; and 
541.2      (2) "Part I crimes" means the three-year average annual 
541.3   number of Part I crimes reported for each county by the 
541.4   Department of Public Safety for the most recent years 
541.5   available.  By July 1 of each year, the commissioner of public 
541.6   safety shall certify to the commissioner of revenue the number 
541.7   of Part I crimes reported for each county for the three most 
541.8   recent calendar years available. 
541.9      Subd. 3.  [FORMULA.] Each calendar year, the commissioner 
541.10  of revenue shall distribute county criminal justice aid to each 
541.11  county in an amount determined according to the following 
541.12  formula: 
541.13     (1) one-half shall be distributed to each county in the 
541.14  same proportion that the county's population is to the 
541.15  population of all counties in the state; and 
541.16     (2) one-half shall be distributed to each county in the 
541.17  same proportion that the county's Part I crimes are to the total 
541.18  Part I crimes for all counties in the state. 
541.19     Subd. 4.  [PAYMENT DATES.] The aid amounts for each 
541.20  calendar year shall be paid as provided in section 477A.015. 
541.21     Subd. 5.  [REPORT.] By March 15 of each year following the 
541.22  year in which criminal justice aids are received, each county 
541.23  must file a report with the commissioner of revenue describing 
541.24  how criminal justice aids were spent, and demonstrating that 
541.25  they were used for criminal justice purposes. 
541.26     Subd. 6.  [ANNUAL APPROPRIATION.] Aid payments to counties 
541.27  under this section are limited to $15,000,000 in 2006 and 2007 
541.28  only. 
541.29     Sec. 20.  Minnesota Statutes 2004, section 477A.03, 
541.30  subdivision 2a, is amended to read: 
541.31     Subd. 2a.  [CITIES.] For aids payable in 2004, the total 
541.32  aids paid under section 477A.013, subdivision 9, are limited to 
541.33  $429,000,000.  For aids payable in 2005 and thereafter 2006, the 
541.34  total aids paid under section 477A.013, subdivision 9, are 
541.35  increased to $437,052,000 $523,052,000.  For aids payable in 
541.36  2007 and subsequent years, the total aids paid under section 
542.1   477A.013, subdivision 9, are increased by one plus the 
542.2   percentage increase in the implicit price deflator for 
542.3   government consumption expenditures and gross investment for 
542.4   state and local governments prepared by the Bureau of Economic 
542.5   Analysis of the United States Department of Commerce for the 
542.6   12-month period ending March 31 of the previous year.  The 
542.7   percentage increase used in this subdivision shall be no less 
542.8   than 2.5 percent and no greater than 5.0 percent.  The total 
542.9   aids paid under section 477A.013, subdivision 9, shall not 
542.10  exceed the amount required for the need increase percentage to 
542.11  equal one.  It is the intention of the legislature that the 
542.12  increased aid provided to cities be used to pay for public 
542.13  safety functions. 
542.14     [EFFECTIVE DATE.] This section is effective for aids 
542.15  payable in 2006 and thereafter. 
542.16     Sec. 21.  Minnesota Statutes 2004, section 477A.03, 
542.17  subdivision 2b, is amended to read: 
542.18     Subd. 2b.  [COUNTIES.] (a) For aids payable in calendar 
542.19  year 2005 and thereafter, the total aids paid to counties under 
542.20  section 477A.0124, subdivision 3, are limited to $100,500,000.  
542.21  Each calendar year, $500,000 shall be retained by the 
542.22  commissioner of revenue to make reimbursements to the 
542.23  commissioner of finance for payments made under section 611.27.  
542.24  For calendar year 2004, the amount shall be in addition to the 
542.25  payments authorized under section 477A.0124, subdivision 1.  For 
542.26  calendar year 2005 and subsequent years, the amount shall be 
542.27  deducted from the appropriation under this paragraph.  The 
542.28  reimbursements shall be to defray the additional costs 
542.29  associated with court-ordered counsel under section 611.27.  Any 
542.30  retained amounts not used for reimbursement in a year shall be 
542.31  included in the next distribution of county need aid that is 
542.32  certified to the county auditors for the purpose of property tax 
542.33  reduction for the next taxes payable year. 
542.34     (b) For aids payable in 2005 and thereafter 2006, the total 
542.35  aids under section 477A.0124, subdivision 4, are limited to 
542.36  $105,000,000.  For aids payable in 2007 and thereafter, the 
543.1   total aid under section 477A.0124, subdivision 4, is limited to 
543.2   $105,132,923.  The commissioner of finance shall bill the 
543.3   commissioner of revenue for the cost of preparation of local 
543.4   impact notes as required by section 3.987, not to exceed 
543.5   $207,000 in fiscal year 2004 and thereafter.  The commissioner 
543.6   of education shall bill the commissioner of revenue for the cost 
543.7   of preparation of local impact notes for school districts as 
543.8   required by section 3.987, not to exceed $7,000 in fiscal year 
543.9   2004 and thereafter.  The commissioner of revenue shall deduct 
543.10  the amounts billed under this paragraph from the appropriation 
543.11  under this paragraph.  The amounts deducted are appropriated to 
543.12  the commissioner of finance and the commissioner of education 
543.13  for the preparation of local impact notes. 
543.14     [EFFECTIVE DATE.] This section is effective for aids 
543.15  payable in 2007 and thereafter. 
543.16     Sec. 22.  Laws 1994, chapter 587, article 9, section 8, 
543.17  subdivision 1, is amended to read: 
543.18     Subdivision 1.  [TAX LEVIES.] Notwithstanding Minnesota 
543.19  Statutes, section 471.24, each of the following cities or towns 
543.20  is authorized to levy a tax and make an appropriation not to 
543.21  exceed $15,000 $25,000 annually to the Lakeview Cemetery 
543.22  Association, operated by the town of Iron Range, for cemetery 
543.23  purposes:  the city of Coleraine, the city of Bovey, and each 
543.24  town which is a member of the cemetery association. 
543.25     [EFFECTIVE DATE.] This section is effective for taxes 
543.26  levied in 2005, payable in 2006, and thereafter. 
543.27     Sec. 23.  2005 S.F. No. 467, section 1, the effective date, 
543.28  if enacted, is amended to read: 
543.29     [EFFECTIVE DATE.] This section is effective for taxes 
543.30  levied in 2005 2004, payable in 2006 2005, and thereafter. 
543.31     Sec. 24.  [COURT AID ADJUSTMENT.] 
543.32     For aids payable in 2005 only, the amount of court aid paid 
543.33  to Anoka County under Minnesota Statutes, section 273.1398, 
543.34  subdivision 4, is increased by $36,630 for aids payable in 2005 
543.35  only and the amount paid to Washington County under Minnesota 
543.36  Statutes, section 273.1398, subdivision 4, is increased by 
544.1   $29,832 for aids payable in 2005 only. 
544.2      [EFFECTIVE DATE.] This section is effective for aids 
544.3   payable in 2005 only. 
544.4      Sec. 25.  [SUPREME COURT BUDGET.] 
544.5      The district courts general fund appropriation is reduced 
544.6   by $66,462 in fiscal year 2006 and $132,923 beginning in fiscal 
544.7   year 2007 to fund the amount transferred to county tax base 
544.8   equalization aid to fund the payments under Minnesota Statutes, 
544.9   section 477A.0124, subdivision 4, paragraph (f), and section 20. 
544.10     [EFFECTIVE DATE.] This section is effective the day 
544.11  following final enactment. 
544.12     Sec. 26.  [CROW WING COUNTY SEWER DISTRICT; PILOT PROJECT.] 
544.13     Subdivision 1.  [POWERS.] In addition to the powers granted 
544.14  in Minnesota Statutes, chapter 116A, the county board for Crow 
544.15  Wing County, by resolution, may grant the following powers to a 
544.16  sewer district created by the county board under Minnesota 
544.17  Statutes, chapter 116A: 
544.18     (1) provide that an authorized representative of the 
544.19  district, after presentation of credentials, may enter at 
544.20  reasonable times any premise to inspect or maintain an 
544.21  individual sewage treatment system, as defined in Minnesota 
544.22  Statutes, section 115.55, subdivision 1, paragraph (g); 
544.23     (2) include areas of the county within the sewer district 
544.24  that are not contiguous and establish different systems for 
544.25  wastewater treatment in specific areas of the county; 
544.26     (3) provide that each special service area that is managed 
544.27  by the sewer system or combination thereof constitutes a system 
544.28  under Minnesota Statutes, chapter 116A; 
544.29     (4) delegate to the sewer district, by resolution, all or a 
544.30  portion of its administrative and enforcement obligations with 
544.31  respect to individual sewage treatment systems under Minnesota 
544.32  Statutes, chapter 115, and rules adopted by the Pollution 
544.33  Control Agency; 
544.34     (5) modify any individual sewage treatment system to 
544.35  provide reasonable access to it for inspection and maintenance; 
544.36  and 
545.1      (6) neither the approval nor the waiver of the county 
545.2   board, nor confirmation by order of the district court, shall be 
545.3   required for the sewer commission to exercise the powers set 
545.4   forth in Minnesota Statutes, section 116A.24. 
545.5      Subd. 2.  [REPORT.] If the Crow Wing County Board exercises 
545.6   the additional powers granted under subdivision 1, the county 
545.7   shall provide a report by January 15, 2009, to the senate and 
545.8   house committees with jurisdiction over environmental policy and 
545.9   taxes on the establishment and operation of the sewer district.  
545.10  The report must include: 
545.11     (1) a description of the implementation of the additional 
545.12  powers granted under subdivision 1; 
545.13     (2) available information on the effectiveness of the 
545.14  additional powers to control pollution in the county; and 
545.15     (3) any recommendations for changes to Minnesota Statutes, 
545.16  chapter 116A, to broaden the authority for sewer districts to 
545.17  include any of the additional powers granted under subdivision 1.
545.18     [EFFECTIVE DATE.] This section is effective the day 
545.19  following compliance with Minnesota Statutes, section 645.021, 
545.20  subdivision 2. 
545.21     Sec. 27.  [DEVELOPMENT AUTHORIZED.] 
545.22     Dakota County Regional Railroad Authority may exercise the 
545.23  powers conferred by Minnesota Statutes, section 398A.04, to 
545.24  plan, establish, acquire, develop, construct, purchase, enlarge, 
545.25  extend, improve, maintain, equip, operate, regulate, and protect 
545.26  a bus rapid transit system located within the Cedar Avenue 
545.27  transitway corridor within Dakota County.  The authority may 
545.28  levy for this purpose under Minnesota Statutes, section 398A.04, 
545.29  subdivision 8, to the extent the levy authority under that 
545.30  subdivision is not required to be used for that levy year for 
545.31  railroad purposes. 
545.32     [EFFECTIVE DATE.] Pursuant to Minnesota Statutes, section 
545.33  645.023, subdivision 1, paragraph (a), this section is effective 
545.34  without local approval the day following final enactment. 
545.35     Sec. 28.  [CITY OF WHITE BEAR LAKE.] 
545.36     Subdivision 1.  [PAYMENT REQUIRED.] The commissioner of 
546.1   revenue must make payments of $52,482 on each of July 20, 2005, 
546.2   and December 26, 2005, to the city of White Bear Lake. 
546.3      Subd. 2.  [APPROPRIATION.] $104,964 is appropriated from 
546.4   the general fund to the commissioner of revenue to make the 
546.5   payments required in this section. 
546.6      Sec. 29.  [APPROPRIATION.] 
546.7      $1,287,000 in fiscal year 2006 and $1,933,000 in fiscal 
546.8   year 2007 is appropriated from the general fund to the 
546.9   commissioner of human services for the consolidated chemical 
546.10  dependency treatment fund. 
546.11                             ARTICLE 23
546.12          INTERNATIONAL ECONOMIC DEVELOPMENT ZONE - SF2206
546.13     Section 1.  Minnesota Statutes 2004, section 272.02, is 
546.14  amended by adding a subdivision to read: 
546.15     Subd. 69.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE 
546.16  PROPERTY.] (a) Improvements to real property, and personal 
546.17  property, classified under section 273.13, subdivision 24, and 
546.18  located within an international economic development zone 
546.19  designated under section 469.322, are exempt from ad valorem 
546.20  taxes levied under chapter 275, if the occupant of the property 
546.21  is a qualified business, as defined in section 469.321. 
546.22     (b) The exemption applies beginning for the first 
546.23  assessment year after designation of the international economic 
546.24  development zone.  The exemption applies to each assessment year 
546.25  that begins during the duration of the international economic 
546.26  development zone and to property occupied by July 1 of the 
546.27  assessment year by a qualified business.  This exemption does 
546.28  not apply to: 
546.29     (1) the levy under section 475.61 or similar levy 
546.30  provisions under any other law to pay general obligation bonds; 
546.31  or 
546.32     (2) a levy under section 126C.17, if the levy was approved 
546.33  by the voters before the designation of the zone. 
546.34     [EFFECTIVE DATE.] This section is effective beginning for 
546.35  property taxes assessed in 2006, payable in 2007. 
546.36     Sec. 2.  Minnesota Statutes 2004, section 290.06, is 
547.1   amended by adding a subdivision to read: 
547.2      Subd. 33.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE JOB 
547.3   CREDIT.] A taxpayer that is a qualified business, as defined in 
547.4   section 469.321, subdivision 6, is allowed a credit as 
547.5   determined under section 469.327 against the tax imposed by this 
547.6   chapter. 
547.7      [EFFECTIVE DATE.] This section is effective for taxable 
547.8   years beginning after December 31, 2005. 
547.9      Sec. 3.  Minnesota Statutes 2004, section 297A.68, is 
547.10  amended by adding a subdivision to read: 
547.11     Subd. 40.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a) 
547.12  Purchases of tangible personal property or taxable services by a 
547.13  qualified business, as defined in section 469.321, are exempt if 
547.14  the property or services are primarily used or consumed in an 
547.15  international economic development zone designated under section 
547.16  469.322. 
547.17     (b) Purchase and use of construction materials and supplies 
547.18  for construction of improvements to real property in an 
547.19  international economic development zone are exempt if the 
547.20  improvements after completion of construction are to be used in 
547.21  the conduct of a qualified business, as defined in section 
547.22  469.321.  This exemption applies regardless of whether the 
547.23  purchases are made by the business or a contractor. 
547.24     (c) The exemptions under this subdivision apply to a local 
547.25  sales and use tax, regardless of whether the local tax is 
547.26  imposed on sales taxable under this chapter or in another law, 
547.27  ordinance, or charter provision. 
547.28     (d) This subdivision applies to sales, if the purchase was 
547.29  made and delivery received during the period provided under 
547.30  section 469.324, subdivision 2. 
547.31     [EFFECTIVE DATE.] This section is effective for sales made 
547.32  after December 31, 2005. 
547.33     Sec. 4.  [469.321] [DEFINITIONS.] 
547.34     Subdivision 1.  [SCOPE.] For purposes of sections 469.321 
547.35  to 469.326, the following terms have the meanings given. 
547.36     Subd. 2.  [FOREIGN TRADE ZONE.] "Foreign trade zone" means 
548.1   a foreign trade zone designated pursuant to United States Code, 
548.2   title 19, section 81b, for the right to use the powers provided 
548.3   in United States Code, title 19, sections 81a to 81u, or a 
548.4   subzone authorized by the foreign trade zone. 
548.5      Subd. 3.  [FOREIGN TRADE ZONE AUTHORITY.] "Foreign trade 
548.6   zone authority" means the Greater Metropolitan Foreign Trade 
548.7   Zone Commission number 119, a joint powers authority created by 
548.8   the county of Hennepin, the cities of Minneapolis and 
548.9   Bloomington, and the Metropolitan Airports Commission, under the 
548.10  authority of section 469.059, 469.101, or 471.59, which includes 
548.11  any other political subdivisions that enter into the authority 
548.12  after its creation. 
548.13     Subd. 4.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE.] An 
548.14  "international economic development zone" or "zone" is a zone so 
548.15  designated under section 469.322. 
548.16     Subd. 5.  [PERSON.] "Person" includes an individual, 
548.17  corporation, partnership, limited liability company, 
548.18  association, or any other entity. 
548.19     Subd. 6.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
548.20  means a person carrying on a trade or business at a place of 
548.21  business located within an international economic development 
548.22  zone that is: 
548.23     (1) engaged in the furtherance of international export or 
548.24  import of goods; and 
548.25     (2) certified by the foreign trade zone authority as a 
548.26  trade or business that furthers the purpose of developing 
548.27  international distribution capacity and capability. 
548.28     (b) A person that relocates a trade or business from within 
548.29  Minnesota but outside an international economic development zone 
548.30  into an international economic development zone is not a 
548.31  qualified business, unless the business: 
548.32     (1)(i) increases full-time employment in the first full 
548.33  year of operation within the international economic development 
548.34  zone by at least 20 percent measured relative to the operations 
548.35  that were relocated and maintains the required level of 
548.36  employment for each year that tax incentives under section 
549.1   469.324 are claimed; or 
549.2      (ii) makes a capital investment in the property located 
549.3   within a zone equal to at least ten percent of the gross 
549.4   revenues of the operations that were relocated in the 
549.5   immediately proceeding taxable year; and 
549.6      (2) enters a binding written agreement with the foreign 
549.7   trade zone authority that: 
549.8      (i) pledges that the business will meet the requirements of 
549.9   clause (1); 
549.10     (ii) provides for repayment of all tax benefits enumerated 
549.11  under section 469.324 to the business under the procedures in 
549.12  section 469.328, if the requirements of clause (1) are not met 
549.13  for the taxable year or for taxes payable during a year in which 
549.14  the requirements were not met; and 
549.15     (iii) contains any other terms the foreign trade zone 
549.16  authority determines appropriate. 
549.17     Clause (1) of this paragraph does not apply to a freight 
549.18  forwarder. 
549.19     (c) A qualified business must pay each employee total 
549.20  compensation, including benefits not mandated by law, that on an 
549.21  annualized basis is equal to at least 110 percent of the federal 
549.22  poverty guidelines for a family of four. 
549.23     Subd. 7.  [REGIONAL DISTRIBUTION CENTER.] A "regional 
549.24  distribution center" is a distribution center developed within a 
549.25  foreign trade zone.  The regional distribution center must have 
549.26  as its primary purpose to facilitate gathering of freight for 
549.27  the purpose of centralizing the functions necessary for the 
549.28  shipment of freight in international commerce, including, but 
549.29  not limited to, security and customs functions. 
549.30     Subd. 8.  [RELOCATE.] (a) "Relocate" means that a trade or 
549.31  business: 
549.32     (1) ceases one or more operations or functions at another 
549.33  location in Minnesota and begins performing substantially the 
549.34  same operations or functions at a location in an international 
549.35  economic development zone; or 
549.36     (2) reduces employment at another location in Minnesota 
550.1   during a period starting one year before and ending one year 
550.2   after it begins operations in an international economic 
550.3   development zone and its employees in the international economic 
550.4   development zone are engaged in the same line of business as the 
550.5   employees at the location where it reduced employment. 
550.6      (b) "Relocate" does not include an expansion by a business 
550.7   that establishes a new facility that does not replace or 
550.8   supplant an existing operation or employment, in whole or in 
550.9   part. 
550.10     (c) "Trade or business" includes any business entity that 
550.11  is substantially similar in operation or ownership to the 
550.12  business entity seeking to be a qualified business under this 
550.13  section. 
550.14     Subd. 9.  [FREIGHT FORWARDER.] "Freight forwarder" is a 
550.15  business that, for compensation, ensures that goods produced or 
550.16  sold by another business move from point of origin to point of 
550.17  destination. 
550.18     [EFFECTIVE DATE.] This section is effective the day 
550.19  following final enactment. 
550.20     Sec. 5.  [469.322] [DESIGNATION OF INTERNATIONAL ECONOMIC 
550.21  DEVELOPMENT ZONE.] 
550.22     (a) An area designated as a foreign trade zone may be 
550.23  designated by the foreign trade zone authority as an 
550.24  international economic development zone if within the zone a 
550.25  regional distribution center is being developed pursuant to 
550.26  section 469.323.  The zone must be not less than 500 acres and 
550.27  not more than 1,000 acres in size. 
550.28     (b) In making the designation, the foreign trade zone 
550.29  authority, in consultation with the Minnesota Department of 
550.30  Transportation and the Metropolitan Council, shall consider 
550.31  access to major transportation routes, consistency with current 
550.32  state transportation and air cargo planning, adequacy of the 
550.33  size of the site, access to airport facilities, present and 
550.34  future capacity at the designated airport, the capability to 
550.35  meet integrated present and future air cargo, security, and 
550.36  inspection services, and access to other infrastructure and 
551.1   financial incentives.  The border of the international economic 
551.2   development zone must be no more than 60 miles distant or 90 
551.3   minutes drive time from the border of the Minneapolis-St. Paul 
551.4   International Airport.  The county in which the zone is located 
551.5   must be a member of the foreign trade zone authority. 
551.6      [EFFECTIVE DATE.] This section is effective the day 
551.7   following final enactment. 
551.8      Sec. 6.  [469.323] [FOREIGN TRADE ZONE AUTHORITY POWERS.] 
551.9      Subdivision 1.  [DEVELOPMENT OF REGIONAL DISTRIBUTION 
551.10  CENTER.] The foreign trade zone authority is responsible for 
551.11  creating a development plan for the regional distribution 
551.12  center.  The regional distribution center must be developed with 
551.13  the purpose of expanding, on a regional basis, international 
551.14  distribution capacity and capability.  The foreign trade zone 
551.15  authority shall consult with municipalities that have indicated 
551.16  to the authority an interest in locating the international 
551.17  economic development zone within their boundaries and a 
551.18  willingness to establish a tax increment financing district 
551.19  coterminous with the boundaries of the zone, as well as 
551.20  interested businesses, potential financiers, and appropriate 
551.21  state and federal agencies. 
551.22     Subd. 2.  [BUSINESS PLAN.] Before designation of an 
551.23  international economic development zone under section 469.322, 
551.24  the governing body of the foreign trade zone authority shall 
551.25  prepare a business plan.  The plan must include an analysis of 
551.26  the economic feasibility of the regional distribution center 
551.27  once it becomes operational and of the operations of freight 
551.28  forwarders and other businesses that choose to locate within the 
551.29  boundaries of the zone.  The analysis must provide profitability 
551.30  models that: 
551.31     (1) include the benefits of the incentives; 
551.32     (2) estimate the amount of time needed to achieve 
551.33  profitability; and 
551.34     (3) analyze the length of time incentives will be necessary 
551.35  to the economic viability of the regional distribution center. 
551.36     If the governing body of the foreign trade authority 
552.1   determines that the models do not establish the economic 
552.2   feasibility of the project, the regional distribution center 
552.3   does not meet the development requirements of this section and 
552.4   section 469.322. 
552.5      Subd. 3.  [PORT AUTHORITY POWERS.] The governing body of 
552.6   the foreign trade zone authority may establish a port authority 
552.7   that has the same powers as a port authority established under 
552.8   section 469.049.  If the foreign trade zone authority 
552.9   establishes a port authority, the governing body of the foreign 
552.10  trade zone authority may exercise all powers granted to a city 
552.11  by sections 469.048 to 469.068 within the area of the 
552.12  international economic development zone, except it may not 
552.13  impose or request imposition of a property tax levy under 
552.14  section 469.053 by any city. 
552.15     Subd. 4.  [BUSINESS SUBSIDY LAW.] Tax exemptions, job 
552.16  credits, and tax increment financing provided under this section 
552.17  are business subsidies for the purpose of sections 116J.993 to 
552.18  116J.995. 
552.19     [EFFECTIVE DATE.] This section is effective the day 
552.20  following final enactment. 
552.21     Sec. 7.  [469.324] [TAX INCENTIVES IN INTERNATIONAL 
552.22  ECONOMIC DEVELOPMENT ZONE.] 
552.23     Subdivision 1.  [AVAILABILITY.] Qualified businesses that 
552.24  operate in an international economic development zone, 
552.25  individuals who invest in a regional distribution center, or 
552.26  qualified businesses that operate in an international economic 
552.27  development zone qualify for: 
552.28     (1) exemption from the property tax as provided in section 
552.29  272.02, subdivision 69; 
552.30     (2) exemption from the state sales and use tax and any 
552.31  local sales and use taxes on qualifying purchases as provided in 
552.32  section 297A.68, subdivision 40; 
552.33     (3) the jobs credit allowed under section 469.327; and 
552.34     (4) tax increment financing as provided in this chapter. 
552.35     Subd. 2.  [DURATION.] (a) Except as provided in paragraph 
552.36  (b), the tax incentives described in subdivision 1, clauses (1) 
553.1   and (3), are available for no more than 12 consecutive taxable 
553.2   years for any taxpayer that claims them.  The tax incentives 
553.3   described in subdivision 1, clause (2), are available for each 
553.4   taxpayer that claims them for taxes otherwise payable on 
553.5   transactions during a period of 12 years from the date when the 
553.6   first exemption is claimed by that taxpayer under each 
553.7   exemption.  No exemptions described in subdivision 1, clauses 
553.8   (1) to (4), are available after December 31, 2020. 
553.9      (b) For taxpayers that are freight forwarders, the 
553.10  durations provided under paragraph (a) are reduced to six years. 
553.11     Subd. 3.  [QUALIFICATION.] To receive the tax incentives 
553.12  under this section, a qualified business must, by December 31 of 
553.13  each year, certify to the commissioner of revenue the percentage 
553.14  of its business activity within the zone that constitutes 
553.15  international business activity for the year, measured by value 
553.16  or volume of activity.  If the percentage is less than 100 
553.17  percent, the amount of the tax benefits provided under sections 
553.18  290.06, subdivision 33, and 469.327 are reduced in proportion to 
553.19  the percentage of business activity that is not international 
553.20  business activity.  The commissioner of revenue may audit the 
553.21  business activities of a qualifying business to determine its 
553.22  eligibility for tax benefits under this section. 
553.23     Sec. 8.  [469.325] [JOBS CREDIT.] 
553.24     Subdivision 1.  [CREDIT ALLOWED.] A qualified business is 
553.25  allowed a credit against the taxes imposed under chapter 290.  
553.26  The credit equals seven percent of the: 
553.27     (1) lesser of: 
553.28     (i) zone payroll for the taxable year, less the zone 
553.29  payroll for the base year; or 
553.30     (ii) total Minnesota payroll for the taxable year, less 
553.31  total Minnesota payroll for the base year; minus 
553.32     (2) $30,000 multiplied by the number of full-time 
553.33  equivalent employees that the qualified business employs in the 
553.34  international economic development zone for the taxable year, 
553.35  minus the number of full-time equivalent employees the business 
553.36  employed in the zone in the base year, but not less than zero. 
554.1      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
554.2   the following terms have the meanings given. 
554.3      (b) "Base year" means the taxable year beginning during the 
554.4   calendar year prior to the calendar year in which the zone 
554.5   designation took effect. 
554.6      (c) "Full-time equivalent employees" means the equivalent 
554.7   of annualized expected hours of work equal to 2,080 hours. 
554.8      (d) "Minnesota payroll" means the wages or salaries 
554.9   attributed to Minnesota under section 290.191, subdivision 12, 
554.10  for the qualified business or the unitary business of which the 
554.11  qualified business is a part, whichever is greater. 
554.12     (e) "Zone payroll" means wages or salaries used to 
554.13  determine the zone payroll factor for the qualified business, 
554.14  less the amount of compensation attributable to any employee 
554.15  that exceeds $70,000. 
554.16     Subd. 3.  [INFLATION ADJUSTMENT.] For taxable years 
554.17  beginning after December 31, 2006, the dollar amounts in 
554.18  subdivision 1, clause (2), and subdivision 2, paragraph (e), are 
554.19  annually adjusted for inflation.  The commissioner of revenue 
554.20  shall adjust the amounts by the percentage determined under 
554.21  section 290.06, subdivision 2d, for the taxable year. 
554.22     Subd. 4.  [REFUNDABLE.] If the amount of the credit exceeds 
554.23  the liability for tax under chapter 290, the commissioner of 
554.24  revenue shall refund the excess to the qualified business. 
554.25     Subd. 5.  [APPROPRIATION.] An amount sufficient to pay the 
554.26  refunds authorized by this section is appropriated to the 
554.27  commissioner of revenue from the general fund. 
554.28     [EFFECTIVE DATE.] This section is effective for taxable 
554.29  years beginning after December 31, 2005. 
554.30     Sec. 9.  [469.326] [REPAYMENT OF TAX BENEFITS.] 
554.31     Subdivision 1.  [REPAYMENT OBLIGATION.] A person must repay 
554.32  the amount of the tax reduction received under section 469.324, 
554.33  subdivision 1, clauses (2) and (3), and refund received under 
554.34  section 469.327, during the two years immediately before it 
554.35  ceased to operate in the zone, if the person ceased to operate 
554.36  its facility located within the zone or otherwise ceases to be 
555.1   or is not a qualified business. 
555.2      Subd. 2.  [DISPOSITION OF REPAYMENT.] The repayment must be 
555.3   paid to the state to the extent it represents a state tax 
555.4   reduction.  Any amount repaid to the state must be deposited in 
555.5   the general fund.  Any repayment of local sales or use taxes 
555.6   must be repaid to the jurisdiction imposing the local sales or 
555.7   use tax. 
555.8      Subd. 3.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
555.9   taxes imposed under chapter 290 or 297A or local taxes collected 
555.10  pursuant to section 297A.99, a person must file an amended 
555.11  return with the commissioner of revenue and pay any taxes 
555.12  required to be repaid within 30 days after ceasing to be a 
555.13  qualified business.  The amount required to be repaid is 
555.14  determined by calculating the tax for the period for which 
555.15  repayment is required without regard to the tax reductions 
555.16  allowed under section 469.324. 
555.17     (b) The provisions of chapters 270 and 289A relating to the 
555.18  commissioner of revenue's authority to audit, assess, and 
555.19  collect the tax and to hear appeals are applicable to the 
555.20  repayment required under paragraph (a).  The commissioner may 
555.21  impose civil penalties as provided in chapter 289A, and the 
555.22  additional tax and penalties are subject to interest at the rate 
555.23  provided in section 270.75, from 30 days after ceasing to do 
555.24  business in the zone until the date the tax is paid. 
555.25     (c) For determining the tax required to be repaid, a tax 
555.26  reduction is deemed to have been received on the date that the 
555.27  tax would have been due if the person had not been entitled to 
555.28  the tax reduction. 
555.29     (d) The commissioner of revenue may assess the repayment of 
555.30  taxes under paragraph (b) at any time within two years after the 
555.31  person ceases to be a qualified business, or within any period 
555.32  of limitations for the assessment of tax under section 289A.38, 
555.33  whichever is later. 
555.34     [EFFECTIVE DATE.] This section is effective the day 
555.35  following final enactment. 
555.36     Sec. 10.  [469.327] [ADDITIONAL BENEFITS CONTINGENT ON JOBZ 
556.1   DETERMINATIONS.] 
556.2      Notwithstanding section 469.312, subdivision 3, the 
556.3   governor may designate the international economic development 
556.4   zone as a job opportunity building zone if the governor reports 
556.5   to the tax committees of the senate and the house of 
556.6   representatives the following information: 
556.7      (1) the estimated cost of providing the additional tax 
556.8   incentives provided under sections 469.310 to 469.320 to the 
556.9   international economic development zone; and 
556.10     (2) the estimated cost of tax expenditures projected to 
556.11  have been obligated for all job opportunity building zone 
556.12  projects that have been approved before June 1, 2005. 
556.13     Sec. 11.  [DEPARTMENT OF EMPLOYMENT AND ECONOMIC 
556.14  DEVELOPMENT STUDY; INTERNATIONAL AIR FREIGHT.] 
556.15     The commissioner of employment and economic development 
556.16  must study and analyze the issue of whether the state would 
556.17  benefit from more than one international economic development 
556.18  zone as defined in Minnesota Statutes, section 469.321.  The 
556.19  commissioner shall solicit input on the issue from businesses, 
556.20  communities, and economic development organizations.  The 
556.21  commissioner must report the results of the study and analysis 
556.22  to the committees of the legislature having jurisdiction over 
556.23  economic development issues by December 1, 2005, along with any 
556.24  legislative recommendations. 
556.25                             ARTICLE 24
556.26                       MISCELLANEOUS - SF2206 
556.27     Section 1.  Minnesota Statutes 2004, section 270.0603, 
556.28  subdivision 3, is amended to read: 
556.29     Subd. 3.  [DISTRIBUTION.] The appropriate statement 
556.30  prepared in accordance with subdivisions 1 and 2 must be 
556.31  distributed by the commissioner to all taxpayers contacted with 
556.32  respect to the determination or collection of a tax, other than 
556.33  the providing of tax forms.  Failure to receive the statement 
556.34  does not invalidate the determination or collection action, nor 
556.35  does it affect, modify, or alter any statutory time limits 
556.36  applicable to the determination or collection action, including 
557.1   the time limit for filing a claim for refund. 
557.2      [EFFECTIVE DATE.] This section is effective the day 
557.3   following final enactment, except that for claims for refund, it 
557.4   is effective for claims filed after August 31, 2005. 
557.5      Sec. 2.  Minnesota Statutes 2004, section 270.0682, 
557.6   subdivision 1, is amended to read: 
557.7      Subdivision 1.  [BIENNIAL REPORT.] The commissioner of 
557.8   revenue shall report to the legislature by March 1 of each 
557.9   odd-numbered year on the overall incidence of the income tax, 
557.10  sales and excise taxes, and property tax taxes as defined in 
557.11  section 645.44, subdivision 19.  The report shall present 
557.12  information on the distribution of the tax burden (1) for the 
557.13  overall income distribution, using a systemwide incidence 
557.14  measure such as the Suits index or other appropriate measures of 
557.15  equality and inequality, (2) by income classes, including at a 
557.16  minimum deciles of the income distribution, and (3) by other 
557.17  appropriate taxpayer characteristics. 
557.18     Sec. 3.  Minnesota Statutes 2004, section 272.02, 
557.19  subdivision 64, is amended to read: 
557.20     Subd. 64.  [JOB OPPORTUNITY BUILDING ZONE PROPERTY.] (a) 
557.21  Improvements to real property, and personal property, classified 
557.22  under section 273.13, subdivision 24, and located within a job 
557.23  opportunity building zone, designated under section 469.314, are 
557.24  exempt from ad valorem taxes levied under chapter 275. 
557.25     (b) Improvements to real property, and tangible personal 
557.26  property, of an agricultural production facility located within 
557.27  an agricultural processing facility zone, designated under 
557.28  section 469.314, is exempt from ad valorem taxes levied under 
557.29  chapter 275. 
557.30     (c) For property to qualify for exemption under paragraph 
557.31  (a), the occupant must be a qualified business, as defined in 
557.32  section 469.310. 
557.33     (d) The exemption applies beginning for the first 
557.34  assessment year after designation of the job opportunity 
557.35  building zone by the commissioner of employment and economic 
557.36  development.  The exemption applies to each assessment year that 
558.1   begins during the duration of the job opportunity building zone 
558.2   and to property occupied by July 1 of the assessment year by a 
558.3   qualified business.  This exemption does not apply to: 
558.4      (1) the levy under section 475.61 or similar levy 
558.5   provisions under any other law to pay general obligation bonds; 
558.6   or 
558.7      (2) a levy under section 126C.17, if the levy was approved 
558.8   by the voters before the designation of the job opportunity 
558.9   building zone. 
558.10     (e) This subdivision does not apply to captured net tax 
558.11  capacity in a tax increment financing district to the extent 
558.12  necessary to meet the debt repayment obligations of the 
558.13  authority if the property is also located within an agricultural 
558.14  processing zone. 
558.15     [EFFECTIVE DATE.] This section is effective for taxes 
558.16  payable in 2005 and thereafter. 
558.17     Sec. 4.  Minnesota Statutes 2004, section 429.021, 
558.18  subdivision 1, is amended to read: 
558.19     Subdivision 1.  [IMPROVEMENTS AUTHORIZED.] The council of a 
558.20  municipality shall have power to make the following improvements:
558.21     (1) To acquire, open, and widen any street, and to improve 
558.22  the same by constructing, reconstructing, and maintaining 
558.23  sidewalks, pavement, gutters, curbs, and vehicle parking strips 
558.24  of any material, or by grading, graveling, oiling, or otherwise 
558.25  improving the same, including the beautification thereof and 
558.26  including storm sewers or other street drainage and connections 
558.27  from sewer, water, or similar mains to curb lines. 
558.28     (2) To acquire, develop, construct, reconstruct, extend, 
558.29  and maintain storm and sanitary sewers and systems, including 
558.30  outlets, holding areas and ponds, treatment plants, pumps, lift 
558.31  stations, service connections, and other appurtenances of a 
558.32  sewer system, within and without the corporate limits. 
558.33     (3) To construct, reconstruct, extend, and maintain steam 
558.34  heating mains. 
558.35     (4) To install, replace, extend, and maintain street lights 
558.36  and street lighting systems and special lighting systems. 
559.1      (5) To acquire, improve, construct, reconstruct, extend, 
559.2   and maintain water works systems, including mains, valves, 
559.3   hydrants, service connections, wells, pumps, reservoirs, tanks, 
559.4   treatment plants, and other appurtenances of a water works 
559.5   system, within and without the corporate limits. 
559.6      (6) To acquire, improve and equip parks, open space areas, 
559.7   playgrounds, and recreational facilities within or without the 
559.8   corporate limits. 
559.9      (7) To plant trees on streets and provide for their 
559.10  trimming, care, and removal. 
559.11     (8) To abate nuisances and to drain swamps, marshes, and 
559.12  ponds on public or private property and to fill the same. 
559.13     (9) To construct, reconstruct, extend, and maintain dikes 
559.14  and other flood control works. 
559.15     (10) To construct, reconstruct, extend, and maintain 
559.16  retaining walls and area walls. 
559.17     (11) To acquire, construct, reconstruct, improve, alter, 
559.18  extend, operate, maintain, and promote a pedestrian skyway 
559.19  system.  Such improvement may be made upon a petition pursuant 
559.20  to section 429.031, subdivision 3.  
559.21     (12) To acquire, construct, reconstruct, extend, operate, 
559.22  maintain, and promote underground pedestrian concourses. 
559.23     (13) To acquire, construct, improve, alter, extend, 
559.24  operate, maintain, and promote public malls, plazas or 
559.25  courtyards. 
559.26     (14) To construct, reconstruct, extend, and maintain 
559.27  district heating systems.  
559.28     (15) To construct, reconstruct, alter, extend, operate, 
559.29  maintain, and promote fire protection systems in existing 
559.30  buildings, but only upon a petition pursuant to section 429.031, 
559.31  subdivision 3.  
559.32     (16) To acquire, construct, reconstruct, improve, alter, 
559.33  extend, and maintain highway sound barriers. 
559.34     (17) To improve, construct, reconstruct, extend, and 
559.35  maintain gas and electric distribution facilities owned by a 
559.36  municipal gas or electric utility. 
560.1      (18) To purchase, install, and maintain signs, posts, and 
560.2   other markers for addressing related to the operation of 
560.3   enhanced 911 telephone service. 
560.4      (19) To improve, construct, extend, and maintain facilities 
560.5   for Internet access and other communications purposes, if the 
560.6   council finds that: 
560.7      (i) the facilities are necessary to make available Internet 
560.8   access or other communications services that are not and will 
560.9   not be available through other providers or the private market 
560.10  in the reasonably foreseeable future; and 
560.11     (ii) the service to be provided by the facilities will not 
560.12  compete with service provided by private entities. 
560.13     (20) To assess affected property owners for all or a 
560.14  portion of the costs agreed to with an electric utility, 
560.15  telecommunications carrier, or cable system operator to bury or 
560.16  alter a new or existing distribution system within the public 
560.17  right-of-way that exceeds the utility's design and construction 
560.18  standards, or those set by law, tariff, or franchise, but only 
560.19  upon petition under section 429.031, subdivision 3. 
560.20     Sec. 5.  Minnesota Statutes 2004, section 469.015, 
560.21  subdivision 4, is amended to read: 
560.22     Subd. 4.  [EXCEPTIONS.] (a) An authority need not require 
560.23  competitive bidding in the following circumstances:  
560.24     (1) in the case of a contract for the acquisition of a 
560.25  low-rent housing project: 
560.26     (i) for which financial assistance is provided by the 
560.27  federal government; 
560.28     (ii) which does not require any direct loan or grant of 
560.29  money from the municipality as a condition of the federal 
560.30  financial assistance; and 
560.31     (iii) for which the contract provides for the construction 
560.32  of the project upon land that is either owned by the authority 
560.33  for redevelopment purposes or not owned by the authority at the 
560.34  time of the contract but the contract provides for the 
560.35  conveyance or lease to the authority of the project or 
560.36  improvements upon completion of construction; 
561.1      (2) with respect to a structured parking facility: 
561.2      (i) constructed in conjunction with, and directly above or 
561.3   below, a development; and 
561.4      (ii) financed with the proceeds of tax increment or parking 
561.5   ramp general obligation or revenue bonds; and 
561.6      (3) until August 1, 2009, with respect to a facility built 
561.7   for the purpose of facilitating the operation of public transit 
561.8   or encouraging its use: 
561.9      (i) constructed in conjunction with, and directly above or 
561.10  below, a development; and 
561.11     (ii) financed with the proceeds of parking ramp general 
561.12  obligation or revenue bonds or with at least 60 percent of the 
561.13  construction cost being financed with funding provided by the 
561.14  federal government; and 
561.15     (4) in the case of any building in which at least 75 
561.16  percent of the usable square footage constitutes a housing 
561.17  development project if: 
561.18     (i) the project is financed with the proceeds of bonds 
561.19  issued under section 469.034 or from nongovernmental sources; 
561.20     (ii) the project is either located on land that is owned or 
561.21  is being acquired by the authority only for development 
561.22  purposes, or is not owned by the authority at the time the 
561.23  contract is entered into but the contract provides for 
561.24  conveyance or lease to the authority of the project or 
561.25  improvements upon completion of construction; and 
561.26     (iii) the authority finds and determines that elimination 
561.27  of the public bidding requirements is necessary in order for the 
561.28  housing development project to be economical and feasible. 
561.29     (b) An authority need not require a performance bond for 
561.30  the following projects: 
561.31     (1) a contract described in paragraph (a), clause (1); 
561.32     (2) a construction change order for a housing project in 
561.33  which 30 percent of the construction has been completed; 
561.34     (3) a construction contract for a single-family housing 
561.35  project in which the authority acts as the general construction 
561.36  contractor; or 
562.1      (4) a services or materials contract for a housing project. 
562.2      For purposes of this paragraph, "services or materials 
562.3   contract" does not include construction contracts. 
562.4      Sec. 6.  Minnesota Statutes 2004, section 469.175, 
562.5   subdivision 2, is amended to read: 
562.6      Subd. 2.  [CONSULTATIONS; COMMENT AND FILING.] (a) Before 
562.7   formation of a tax increment financing district, the authority 
562.8   shall provide the county auditor and clerk of the school board 
562.9   with the proposed tax increment financing plan for the district 
562.10  and the authority's estimate of the fiscal and economic 
562.11  implications of the proposed tax increment financing district.  
562.12  The authority must provide the proposed tax increment financing 
562.13  plan and the information on the fiscal and economic implications 
562.14  of the plan to the county auditor and the clerk of the school 
562.15  district board at least 30 days before the public hearing 
562.16  required by subdivision 3.  The information on the fiscal and 
562.17  economic implications may be included in or as part of the tax 
562.18  increment financing plan.  The county auditor and clerk of the 
562.19  school board shall provide copies to the members of the boards, 
562.20  as directed by their respective boards.  The 30-day requirement 
562.21  is waived if the boards of the county and school district submit 
562.22  written comments on the proposal and any modification of the 
562.23  proposal to the authority after receipt of the information.  
562.24     (b) For purposes of this subdivision, "fiscal and economic 
562.25  implications of the proposed tax increment financing district" 
562.26  includes: 
562.27     (1) an estimate of the total amount of tax increment that 
562.28  will be generated over the life of the district; 
562.29     (2) a description of the probable impact of the district on 
562.30  city-provided services such as police and fire protection, 
562.31  public infrastructure, and borrowing costs attributable to the 
562.32  district; 
562.33     (3) the estimated amount of tax increments over the life of 
562.34  the district that would be attributable to school district 
562.35  levies, assuming the school district's share of the total local 
562.36  tax rate for all taxing jurisdictions remained the same; 
563.1      (4) the estimated amount of tax increments over the life of 
563.2   the district that would be attributable to county levies, 
563.3   assuming the county's share of the total local tax rate for all 
563.4   taxing jurisdictions remained the same; and 
563.5      (5) any additional information requested by the county or 
563.6   the school district that would enable it to determine additional 
563.7   costs that will accrue to it due to the development proposed for 
563.8   the district. 
563.9      [EFFECTIVE DATE.] This section is effective for all 
563.10  districts for which certification is requested after December 
563.11  31, 2005. 
563.12     Sec. 7.  Minnesota Statutes 2004, section 645.44, is 
563.13  amended by adding a subdivision to read: 
563.14     Subd. 19.  [FEE AND TAX.] (a) "Tax" means any fee, charge, 
563.15  surcharge, or assessment imposed by a governmental entity on an 
563.16  individual, person, entity, transaction, good, service, or other 
563.17  thing.  It excludes: 
563.18     (1) a price that an individual or entity chooses 
563.19  voluntarily to pay in return for receipt of goods or services 
563.20  provided by the governmental entity; and 
563.21     (2) a fine or penalty imposed for violation of a state or 
563.22  local law or ordinance. 
563.23  A government good or service does not include access to or the 
563.24  authority to engage in private market transactions with a 
563.25  nongovernmental party, such as licenses to engage in a trade, 
563.26  profession, or business or to improve private property. 
563.27     (b) For purposes of applying the laws of this state, a 
563.28  "fee," "charge," or other similar term that satisfies the 
563.29  functional requirements of paragraph (a) must be treated as a 
563.30  tax for all purposes, regardless of whether the statute or law 
563.31  names or describes it as a tax.  The provisions of this 
563.32  subdivision do not preempt or supersede limitations under law 
563.33  that apply to fees, charges, or assessments. 
563.34     (c) This subdivision is not intended to extend or limit the 
563.35  application of article 4, section 18, of the Constitution of 
563.36  Minnesota. 
564.1      [EFFECTIVE DATE.] This section is effective the day 
564.2   following final enactment. 
564.3      Sec. 8.  Laws 2003, chapter 128, article 1, section 172, is 
564.4   amended to read: 
564.5      Sec. 172.  [TEMPORARY PETROFUND FEE EXEMPTION FOR MINNESOTA 
564.6   COMMERCIAL AIRLINES.] 
564.7      (a) A commercial airline providing regularly scheduled jet 
564.8   service and with its corporate headquarters in Minnesota is 
564.9   exempt from the fee established in Minnesota Statutes, section 
564.10  115C.08, subdivision 3, until July 1, 2005 2007, provided the 
564.11  airline develops a plan approved by the commissioner of commerce 
564.12  demonstrating that the savings from this exemption will go 
564.13  towards minimizing job losses in Minnesota, and to support the 
564.14  airline's efforts to avoid filing for federal bankruptcy 
564.15  protections. 
564.16     (b) A commercial airline exempted from the fee is 
564.17  ineligible to receive reimbursement under Minnesota Statutes, 
564.18  chapter 115C, until July 1, 2005 2007.  A commercial airline 
564.19  that has a release during the fee exemption period is ineligible 
564.20  to receive reimbursement under Minnesota Statutes, chapter 115C, 
564.21  for the costs incurred in response to that release. 
564.22     Sec. 9.  [CITY OF ROSEMOUNT; TAX INCREMENT FINANCING.] 
564.23     The city of Rosemount or a development authority of the 
564.24  city may spend increment from its Downtown - Brockway Tax 
564.25  Increment Financing (TIF) District to acquire parcels of 
564.26  property that the Department of Transportation or Dakota County 
564.27  acquired in connection with the realignment of marked Trunk 
564.28  Highway 3, notwithstanding the limits under Minnesota Statutes, 
564.29  section 469.1763, on the amount of increments that may be spent 
564.30  outside of the district or Minnesota Statutes, section 469.176, 
564.31  subdivision 4j, on the purposes for which increments may be 
564.32  spent. 
564.33     [EFFECTIVE DATE.] This section is effective upon local 
564.34  approval by the governing body of the city of Rosemount under 
564.35  Minnesota Statutes, section 645.021. 
564.36     Sec. 10.  [APPROPRIATION.] 
565.1      (a) $125,000 in fiscal year 2006, $125,000 in fiscal year 
565.2   2007, and $200,000 in each fiscal year thereafter, are 
565.3   appropriated from the general fund to the commissioner of 
565.4   revenue to make grants to one or more nonprofit organizations, 
565.5   qualifying under section 501(c)(3) of the Internal Revenue Code 
565.6   of 1986, to coordinate, facilitate, encourage, and aid in the 
565.7   provision of taxpayer assistance services. 
565.8      (b) "Taxpayer assistance services" mean accounting and tax 
565.9   preparation services provided by volunteers to low-income and 
565.10  disadvantaged Minnesota residents to help them file federal and 
565.11  state income tax returns and Minnesota property tax refund 
565.12  claims and to provide personal representation before the 
565.13  Department of Revenue and Internal Revenue Service. 
565.14     Sec. 11.  [APPROPRIATION.] 
565.15     $320,000 is appropriated from the general fund in fiscal 
565.16  year 2006 only to the commissioner of employment and economic 
565.17  development to be distributed to the city of Duluth to be used 
565.18  by the city for grants to enterprises related to environmental 
565.19  cleanup of Lake Superior and long-term community health care. 
565.20     Sec. 12.  [APPROPRIATION.] 
565.21     The following amounts are appropriated from the general 
565.22  fund to the commissioner of finance for transfer to the clean 
565.23  water legacy account in the environmental fund: 
565.24     (1) $31,500,000 in fiscal year 2006; 
565.25     (2) $3,000,000 in fiscal year 2007; and 
565.26     (3) $40,000,000 in fiscal year 2008 and $80,000,000 in 
565.27  fiscal year 2009 and subsequent years, but only after at least 
565.28  50 percent of the Minnesota Total Maximum Daily Loads (TMDLs) 
565.29  have been established and approved by the Environmental 
565.30  Protection Agency under the federal Clean Water Act. 
565.31     Sec. 13.  [APPROPRIATION; AID PAYMENT SHIFTS.] 
565.32     In fiscal year 2008, $25,000,000 is appropriated from the 
565.33  general fund to the commissioner of finance to be used to buy 
565.34  back the aid payment shift provided in Minnesota Statutes, 
565.35  section 16A.152, subdivision 2, clause (3). 
565.36     Sec. 14.  [DEFERRED MAINTENANCE AID.] 
566.1      For fiscal years 2006 and 2007 only, a district's deferred 
566.2   maintenance aid is equal to $13.25 multiplied times its adjusted 
566.3   average daily membership for that year.  Aid received under this 
566.4   section must be used for deferred maintenance, to make 
566.5   accessibility improvements, or to make fire, safety, or health 
566.6   repairs. 
566.7      Sec. 15.  [APPROPRIATIONS.] 
566.8      Subdivision 1.  [DEPARTMENT OF EDUCATION.] The sums 
566.9   indicated in this section are appropriated from the general fund 
566.10  to the Department of Education for the fiscal years designated. 
566.11     Subd. 2.  [DEFERRED MAINTENANCE AID.] For deferred 
566.12  maintenance revenue under section 14, $10,574,000 in fiscal year 
566.13  2006 and $10,416,000 in fiscal year 2007. 
566.14     Sec. 16.  [APPROPRIATION.] 
566.15     $2,000,000 is appropriated from the general fund on a 
566.16  onetime basis to the Higher Education Services Office.  The 
566.17  appropriation must be deposited into the Rochester higher 
566.18  education development account.  With the approval of the Higher 
566.19  Education Services Office, money in this account may be used to 
566.20  provide initial funding for academic program development for 
566.21  upperclass and graduate students.  This appropriation is 
566.22  intended to be expended when matched by tax-deductible 
566.23  contributions from individuals and corporate taxpayers. 
566.24                             ARTICLE 25
566.25     TAX SHELTER AND VOLUNTARY COMPLIANCE INITIATIVES - SF2206
566.26     Section 1.  [289A.121] [REGISTRATION OF TAX SHELTERS.] 
566.27     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
566.28  section, the following terms have the meanings given. 
566.29     (a) "Abusive tax avoidance transaction" means a Minnesota 
566.30  tax shelter or a reportable transaction. 
566.31     (b) "Material advisor" has the meaning given in section 
566.32  111(b)(1) of the Internal Revenue Code, and must be interpreted 
566.33  in accordance with any regulations or rulings adopted or issued 
566.34  by the Internal Revenue Service that govern that section. 
566.35     (c) "Minnesota tax shelter" means a transaction which is 
566.36  not a reportable transaction, which substantially reduces a tax 
567.1   imposed under chapter 290 and has one or more of the following 
567.2   characteristics: 
567.3      (1) it is offered to the taxpayer under conditions of 
567.4   confidentiality, as that term is defined in Treas. Reg. section 
567.5   1.6011-4(3)(ii), and for which the taxpayer has paid a fee; 
567.6      (2) the terms of the transaction offer the taxpayer or a 
567.7   related party the right to a full or partial refund of fees if 
567.8   all or part of the intended tax consequences of the transaction 
567.9   are not realized, or if fees are contingent upon the taxpayer 
567.10  realizing tax benefits; 
567.11     (3) it is a transaction or a series of related transactions 
567.12  that result in a corporation or a partnership with only 
567.13  corporate partners claiming a reduction in net income in excess 
567.14  of $10,000,000 in any combination of tax years; 
567.15     (4) it is a transaction or a series of related transactions 
567.16  that result in an individual, a partnership with one or more 
567.17  noncorporate partners, S corporation, or trust claiming a 
567.18  reduction in net income in excess of $4,000,000 in any 
567.19  combination of taxable years, whether or not any losses flow 
567.20  through to one or more shareholders or beneficiaries; or 
567.21     (5) it is a transaction or series of related transactions, 
567.22  identified as a Minnesota tax shelter in a rule promulgated by 
567.23  the commissioner of revenue, entered into after the date the 
567.24  rule becomes effective. 
567.25     (d) "Reportable transaction" has the meaning given in 
567.26  Treas. Reg. section 1.6011-4 between February 29, 2000, and 
567.27  January 1, 2006. 
567.28     Subd. 2.  [REPORTS BY MATERIAL ADVISORS.] (a) On the first 
567.29  day that a material advisor sells a Minnesota tax shelter or 
567.30  reportable transaction, the material advisor must file with the 
567.31  commissioner a copy of any federal tax shelter registration 
567.32  information relating to reportable transactions if that 
567.33  registration is applicable to any person subject to taxation 
567.34  under chapter 290. 
567.35     (b) On or before April 15, 2006, material advisors must 
567.36  report to the commissioner all federal tax shelters used by a 
568.1   person subject to tax under chapter 290 that the material 
568.2   advisor offered for sale between February 28, 2000, and January 
568.3   1, 2006, which were reportable transactions. 
568.4      (c) On or before April 15, 2006, material advisors must 
568.5   report to the commissioner all Minnesota tax shelters that the 
568.6   material advisor offered for sale between February 28, 2000, and 
568.7   January 1, 2006, if the transactions would have had to be 
568.8   disclosed under subdivision 3 had it been in effect at that time.
568.9      (d) In addition to the requirements set forth in paragraphs 
568.10  (a), (b), and (c), a material advisor must report to the 
568.11  commissioner any transactions entered into on or after April 15, 
568.12  2006, that become listed as reportable transactions or a 
568.13  Minnesota tax shelter. 
568.14     Subd. 3.  [MAINTAINING PARTICIPANT LISTS.] Any person 
568.15  organizing or selling Minnesota tax shelters or reportable 
568.16  transactions must maintain a list of participants that are 
568.17  subject to a tax imposed by chapter 290. 
568.18     Subd. 4.  [REPORTING.] All persons, including material 
568.19  advisors who organize or sell Minnesota tax shelters or 
568.20  reportable transactions, must provide the following information 
568.21  to the commissioner within 20 days from receiving a written 
568.22  request from the commissioner to provide the information: 
568.23     (1) legal name of the taxpayer; 
568.24     (2) Minnesota tax identification number; 
568.25     (3) federal tax identification number; and 
568.26     (4) description of the Minnesota tax shelter or reportable 
568.27  transaction. 
568.28     Subd. 5.  [DISCLOSURE STATEMENTS BY TAXPAYERS.] Every 
568.29  person subject to taxation under chapter 290 who has 
568.30  participated in a reportable transaction or a Minnesota tax 
568.31  shelter which resulted in a tax decrease must file a disclosure 
568.32  statement on a form prescribed by the commissioner.  The form 
568.33  must be filed with the tax return. 
568.34     Sec. 2.  Minnesota Statutes 2004, section 289A.38, is 
568.35  amended by adding a subdivision to read: 
568.36     Subd. 15.  [VOLUNTARY COMPLIANCE 
569.1   INITIATIVE.] Notwithstanding other limitations in the 
569.2   subdivision, an amount of tax related to a reportable 
569.3   transaction or a Minnesota tax shelter that is not reported in 
569.4   the voluntary compliance initiative described in section 4 may 
569.5   be assessed within eight and one-half years after the date the 
569.6   return is filed. 
569.7      Sec. 3.  Minnesota Statutes 2004, section 289A.60, is 
569.8   amended by adding a subdivision to read: 
569.9      Subd. 26.  [PENALTY FOR FAILURE TO REPORT A TAX 
569.10  SHELTER.] (a) A penalty of $15,000 is imposed on a person who 
569.11  fails to register a tax shelter as required under section 
569.12  289A.121 on or before the date prescribed. 
569.13     (b) A penalty of $10,000 is imposed on a person who fails 
569.14  to report to the commissioner a Minnesota tax shelter or a 
569.15  reportable transaction within 20 days of the date prescribed 
569.16  under section 289A.121.  For each day after the 20th day that 
569.17  the person organizing or selling the Minnesota tax shelter or 
569.18  reportable transaction failed to make the information required 
569.19  in section 289A.121, subdivision 2, available to the 
569.20  commissioner after the commissioner made a written request for 
569.21  the list, an additional $10,000 penalty is imposed on that 
569.22  person. 
569.23     (c) A penalty is imposed on a person who fails to make a 
569.24  report required by section 289A.121, subdivision 2, on or before 
569.25  the date prescribed.  The penalty is the greater of: 
569.26     (1) $100,000; or 
569.27     (2) 50 percent of the gross income that the person derived 
569.28  from the activity.  
569.29     (d) A penalty is imposed on a person who intentionally 
569.30  disregards the requirement to maintain and provide information 
569.31  required in section 289A.121.  The penalty is the greater of: 
569.32     (1) $100,000; or 
569.33     (2) 75 percent of the gross income that the person derived 
569.34  from the activity. 
569.35     (e) A penalty of $15,000 is imposed on a person who fails 
569.36  to provide a list required under section 289A.121, subdivision 
570.1   4, which does not contain all the information required in that 
570.2   section. 
570.3      Sec. 4.  [TAX SHELTER VOLUNTARY COMPLIANCE INITIATIVE.] 
570.4      Subdivision 1.  [COMMISSIONER TO INITIATE.] The 
570.5   commissioner of revenue shall develop and administer a Minnesota 
570.6   tax shelter voluntary compliance initiative for taxpayers 
570.7   subject to Minnesota Statutes, section 289A.60, subdivision 26, 
570.8   as provided in this chapter. 
570.9      Subd. 2.  [TERM; APPLICATION.] The Minnesota tax shelter 
570.10  voluntary compliance initiative shall be conducted from July 1, 
570.11  2005, to December 31, 2005, pursuant to Minnesota Statutes, 
570.12  section 270.07.  The Minnesota tax shelter voluntary compliance 
570.13  initiative shall apply to tax liabilities and penalties 
570.14  attributable to Minnesota tax shelters and reportable 
570.15  transactions for tax years beginning before January 1, 2005.  An 
570.16  abusive tax avoidance transaction means a Minnesota tax shelter 
570.17  or a reportable transaction as defined in Minnesota Statutes, 
570.18  section 289A.121, subdivision 1. 
570.19     Subd. 3.  [IMPLEMENTATION.] The commissioner of revenue may 
570.20  issue forms and instructions and take other actions necessary, 
570.21  including the use of agreements pursuant to Minnesota Statutes, 
570.22  section 270.67, to implement the Minnesota tax shelter voluntary 
570.23  compliance initiative. 
570.24     Subd. 4.  [PERSONS NOT ELIGIBLE TO PARTICIPATE.] (a) Any 
570.25  person is not eligible for participation in the Minnesota tax 
570.26  shelter voluntary compliance initiative, if: 
570.27     (1) the taxpayer was convicted of a crime in connection 
570.28  with an abusive tax avoidance transaction or transactions; 
570.29     (2) a criminal complaint was filed against the taxpayer in 
570.30  connection with an abusive tax avoidance transaction or 
570.31  transactions; 
570.32     (3) the taxpayer is the subject of a criminal investigation 
570.33  in connection with an abusive tax avoidance transaction or 
570.34  transactions; or 
570.35     (4) the taxpayer was eligible to participate in the 
570.36  Internal Revenue Service's Offshore Voluntary Compliance 
571.1   Initiative, as set forth in Revenue Procedure 2003-11. 
571.2      Subd. 5.  [ELIGIBLE PARTICIPANTS.] (a) Any person who is 
571.3   not ineligible to participate in the Minnesota tax shelter 
571.4   voluntary compliance initiative under subdivision 4, is eligible 
571.5   to participate in the Minnesota tax shelter voluntary compliance 
571.6   initiative. 
571.7      (b) A person participating in the Minnesota tax shelter 
571.8   voluntary compliance initiative waiving the right to an 
571.9   administrative appeal, a claim for refund, or an action in 
571.10  district court must do both of the following: 
571.11     (1) the participating person must file an amended return 
571.12  for each taxable year for which the taxpayer has filed a tax 
571.13  return using an abusive tax avoidance transaction to underreport 
571.14  the taxpayer's tax liability for that tax year.  Each amended 
571.15  return shall report all income from all sources, without regard 
571.16  to the abusive tax avoidance transaction; and 
571.17     (2) the participating person must pay taxes and interest 
571.18  due in full, except that the commissioner of revenue may enter 
571.19  into an installment payment agreement pursuant to Minnesota 
571.20  Statutes, section 270.67, prior to taxpayer filing an amended 
571.21  return. 
571.22     (c) The commissioner of revenue shall abate all penalties 
571.23  imposed under Minnesota Statutes, chapter 289A, which could have 
571.24  been assessed in connection with the use of an abusive tax 
571.25  avoidance transaction, for each taxable year for which the 
571.26  taxpayer elects to participate in the Minnesota tax shelter 
571.27  voluntary compliance initiative, to the extent those penalties 
571.28  are a result of underreporting of tax liabilities attributable 
571.29  to the use of abusive tax avoidance transactions, for which a 
571.30  participating person files an amended return in compliance with 
571.31  paragraph (b). 
571.32     (d) No criminal action shall be brought against a taxpayer 
571.33  for the taxable years reported under the Minnesota tax shelter 
571.34  voluntary compliance initiative with respect to the issues for 
571.35  which a taxpayer voluntarily complies under this chapter. 
571.36     (e) A person filing an amended return under this paragraph 
572.1   of the Minnesota tax shelter voluntary compliance initiative may 
572.2   not file a claim for refund, an administrative appeal, or an 
572.3   action in district court in regard to the amount of taxes or 
572.4   interest paid with the amended return. 
572.5      (f) A person participating in the Minnesota tax shelter 
572.6   voluntary compliance initiative not waiving the right to an 
572.7   administrative appeal, a claim for refund, or an action in 
572.8   district court must do both of the following: 
572.9      (1) the participating person must file an amended return 
572.10  for each taxable year for which the taxpayer has filed a tax 
572.11  return using an abusive tax avoidance transaction to underreport 
572.12  the taxpayer's tax liability for that tax year.  Each amended 
572.13  return shall report all income from all sources, without regard 
572.14  to the abusive tax avoidance transactions; and 
572.15     (2) the participating person must pay taxes and interest 
572.16  due in full, except that the commissioner of revenue may enter 
572.17  into an installment payment agreement pursuant to Minnesota 
572.18  Statutes, section 270.67, prior to taxpayer filing an amended 
572.19  return. 
572.20     (g) The commissioner of revenue shall abate all penalties 
572.21  imposed under Minnesota Statutes, chapter 289A, except for the 
572.22  penalty for intentional disregard of law or rules imposed under 
572.23  Minnesota Statutes, section 289A.60, subdivision 5, which could 
572.24  have been assessed in connection with the use of an abusive tax 
572.25  avoidance transaction, for each taxable year for which the 
572.26  taxpayer elects to participate in the Minnesota tax shelter 
572.27  voluntary compliance initiative, to the extent those penalties 
572.28  are a result of underreporting of tax liabilities attributable 
572.29  to the use of abusive tax avoidance transactions, for which a 
572.30  participating person files an amended return in compliance with 
572.31  paragraph (b). 
572.32     (h) No criminal action shall be brought against a taxpayer 
572.33  for the taxable years reported under the Minnesota tax shelter 
572.34  voluntary compliance initiative with respect to the issues for 
572.35  which a taxpayer voluntarily complies under this chapter. 
572.36     Sec. 5.  [COMMISSIONER ORDERS AND PENALTIES.] 
573.1      After December 31, 2005, the commissioner of revenue may 
573.2   issue an order of assessment within the time period permitted 
573.3   under Minnesota Statutes, section 289A.38, upon an amended 
573.4   return filed under this chapter for an underreported amount of 
573.5   tax, may impose penalties on an underreported amount of tax on 
573.6   an amended return filed under this chapter, or initiate a 
573.7   criminal action against any person based on any underreported 
573.8   amount of tax on an amended return filed under this chapter. 
573.9      A penalty is imposed upon any person who: 
573.10     (1) is not ineligible to file an amended return pursuant to 
573.11  this chapter; 
573.12     (2) has engaged in abusive tax shelter transactions; and 
573.13     (3) fails to voluntarily amend their tax returns for each 
573.14  taxable year for which an amended return may be filed and the 
573.15  person underreported income attributable to an abusive tax 
573.16  shelter transaction. 
573.17  The penalty is equal to 200 percent of the underreported tax 
573.18  that is attributable to the abusive tax shelter transaction. 
573.19                             ARTICLE 26
573.20                    PROPERTY TAX FREEZE - SF2206 
573.21     Section 1.  [CITATION.] 
573.22     This article may be cited as the "Truth and Fairness in 
573.23  Taxation Act" (TAFTA) or the "State/Local Fiscal Relations:  
573.24  Truth in Taxation Act." 
573.25     Sec. 2.  [STATEMENT OF PURPOSE.] 
573.26     The legislature finds that the state of Minnesota is 
573.27  continuing to experience a persistent budget deficit and that 
573.28  reductions in state spending have resulted in increased burdens 
573.29  on school districts, counties, cities, and other units of local 
573.30  government.  In order to maintain stability in state and local 
573.31  fiscal relations, the purpose of this act is to prevent property 
573.32  tax rate increases and to illuminate the impact of reductions in 
573.33  revenue to school districts, counties, cities, and other units 
573.34  of local government. 
573.35     Sec. 3.  [BENEFIT RATIO FOR RURAL SERVICE DISTRICTS.] 
573.36     Notwithstanding Minnesota Statutes, section 272.67, 
574.1   subdivision 6, the benefit ratio used for apportioning levies to 
574.2   a rural service district for taxes payable in 2006 and any 
574.3   subsequent year prior to the freeze termination year must not be 
574.4   greater than that in effect for taxes payable in 2005. 
574.5      Sec. 4.  [PROHIBITION AGAINST INCURRING NEW DEBT.] 
574.6      Subdivision 1.  [ACTIONS PROHIBITED.] After May 31, 2006, 
574.7   no municipality as defined in Minnesota Statutes, section 
574.8   475.51, or any special taxing district as defined in Minnesota 
574.9   Statutes, section 275.066, may sell obligations, certificates of 
574.10  indebtedness, or capital notes under Minnesota Statutes, section 
574.11  412.301, chapter 475, or any other law authorizing obligations, 
574.12  certificates of indebtedness, capital notes, or other debt 
574.13  instruments, or enter into installment purchase contracts or 
574.14  lease purchase agreements under Minnesota Statutes, section 
574.15  465.71, or any other law authorizing installment purchase 
574.16  contracts or lease purchase agreements, if issuing those debt 
574.17  instruments or entering into those contracts would require a 
574.18  levy first becoming payable in 2007 or any subsequent year prior 
574.19  to the freeze termination year.  
574.20     Subd. 2.  [EXCEPTIONS.] This prohibition does not apply to: 
574.21     (1) refunding bonds sold to refund bonds originally sold 
574.22  before June 1, 2006; 
574.23     (2) obligations for which the amount of the levy first 
574.24  becoming due in 2007 would not exceed the amount by which the 
574.25  municipality's total debt service levy for taxes payable in 2007 
574.26  prior to issuance of those obligations is less than the 
574.27  municipality's total debt service levy for taxes payable in 
574.28  2006; or 
574.29     (3) obligations with respect to which the municipality 
574.30  makes a finding at the time of the issuance of the obligations 
574.31  that no levy will be required for taxes payable in 2007 or any 
574.32  subsequent year prior to the freeze termination year or to pay 
574.33  the debt service on the obligations because sufficient funds are 
574.34  available from nonproperty tax sources to pay the debt service. 
574.35     As used in clauses (2) and (3), "obligations" includes 
574.36  certificates of indebtedness, capital notes, or other debt 
575.1   instruments or installment purchase contracts or lease purchase 
575.2   agreements. 
575.3      Subd. 3.  [DATE WHEN BONDS ARE DEEMED SOLD.] For purposes 
575.4   of this section, bonds will be deemed to have been sold before 
575.5   June 1, 2006, if: 
575.6      (1) an agreement has been entered into between the 
575.7   municipality and a purchaser or underwriter for the sale of the 
575.8   bonds by that date; 
575.9      (2) the issuing municipality is a party to a contract or 
575.10  letter of understanding entered into before June 1, 2006, with 
575.11  the federal government or the state government that requires the 
575.12  municipality to pay for a project, and the project will be 
575.13  funded with the proceeds of the bonds; or 
575.14     (3) the proceeds of the bonds will be used to fund a 
575.15  project or acquisition with respect to which the municipality 
575.16  has entered into a contract with a builder or supplier before 
575.17  June 1, 2006. 
575.18     Sec. 5.  [LEVY LIMITATION FOR TAXES PAYABLE IN 2007 AND 
575.19  SUBSEQUENT YEARS.] 
575.20     Subdivision 1.  [PROPOSED LEVY.] Notwithstanding any other 
575.21  law to the contrary, for purposes of the certification required 
575.22  by Minnesota Statutes, section 275.065, subdivision 1, in 2006 
575.23  and any subsequent year prior to the freeze termination year, no 
575.24  taxing authority, other than a school district, shall certify to 
575.25  the county auditor a proposed property tax levy or, in the case 
575.26  of a township, a final property tax levy, greater than the levy 
575.27  certified to the county auditor pursuant to Minnesota Statutes, 
575.28  section 275.07, subdivision 1, in the prior year, except as 
575.29  provided in this section. 
575.30     Subd. 2.  [FINAL LEVY.] Notwithstanding any other law to 
575.31  the contrary, for purposes of the certification required by 
575.32  Minnesota Statutes, section 275.07, subdivision 1, in 2006 and 
575.33  any subsequent year prior to the freeze termination year, no 
575.34  taxing authority, other than a school district, shall certify to 
575.35  the county auditor a property tax levy greater than the amount 
575.36  certified to the county auditor pursuant to Minnesota Statutes, 
576.1   section 275.07, subdivision 1, in the prior year, except as 
576.2   provided in this section. 
576.3      Subd. 3.  [DEBT SERVICE EXCEPTION.] If a levy for taxes 
576.4   payable in 2007 or any subsequent year prior to the freeze 
576.5   termination year, for debt service on obligations, certificates 
576.6   of indebtedness, capital notes, or other debt instruments sold 
576.7   prior to June 1, 2006, or to make payments on installment 
576.8   purchase contracts or lease purchase agreements entered into 
576.9   prior to June 1, 2006, exceeds the levy a taxing authority 
576.10  certified pursuant to Minnesota Statutes, section 275.07, 
576.11  subdivision 1, for taxes payable in 2006 for the same purpose, 
576.12  the excess may be levied notwithstanding the limitations of 
576.13  subdivisions 1 and 2. 
576.14     Subd. 4.  [ANNEXATION EXCEPTION.] The city tax rate for 
576.15  taxes payable in 2007 or any subsequent year prior to the freeze 
576.16  termination year on any property annexed under Minnesota 
576.17  Statutes, chapter 414, may not be increased over the city or 
576.18  township tax rate in effect on the property for taxes payable in 
576.19  2006, notwithstanding any law, municipal board order, or 
576.20  ordinance to the contrary.  The limit on the annexing city's 
576.21  levy under subdivisions 1 and 2 may be increased in excess of 
576.22  that limit by an amount equal to the net tax capacity of the 
576.23  property annexed times the city or township tax rate in effect 
576.24  on that property for taxes payable in 2006.  The levy limit of 
576.25  the city or township from which the property was annexed shall 
576.26  be reduced by the same amount. 
576.27     Subd. 5.  [SCHOOL DISTRICT EXCEPTIONS.] (a) For taxes 
576.28  payable in 2007 and subsequent years prior to the freeze 
576.29  termination year, no school district shall certify to the county 
576.30  auditor a property tax levy that exceeds the maximum levy that 
576.31  may be imposed by that district under 2005 S.F. No. 2267, if 
576.32  enacted, except as provided in paragraph (b). 
576.33     (b) A school district that is in statutory operating debt 
576.34  under Minnesota Statutes, section 123B.81, and has an approved 
576.35  plan under Minnesota Statutes, section 123B.83, that includes an 
576.36  increase to its referendum allowance under Minnesota Statutes, 
577.1   section 126C.17, is exempt from the levy freeze on referenda 
577.2   according to this section. 
577.3      Sec. 6.  [FREEZE ON LOCAL MATCH REQUIREMENTS.] 
577.4      Notwithstanding any other law to the contrary, the local 
577.5   funding or local match required from any city, town, or county 
577.6   for any state grant or program shall not be increased for 
577.7   calendar year 2007 or any subsequent year prior to the freeze 
577.8   termination year above the dollar amount of the local funding or 
577.9   local match required for the same grant or program in 2006, 
577.10  regardless of the level of state funding provided.  Any local 
577.11  match or local funding requirement that first becomes effective 
577.12  after December 31, 2006, for new or changed state grants or 
577.13  programs shall not be effective until the freeze has been 
577.14  terminated for that taxing jurisdiction under section 14.  
577.15  Nothing in this section shall affect the eligibility of a city, 
577.16  town, or county for the receipt of state grants or program funds 
577.17  in 2007 or any subsequent year prior to the freeze termination 
577.18  year, or reduce the amount of state funding a city, town, or 
577.19  county would otherwise receive in 2007 or any subsequent year 
577.20  prior to the freeze termination year if the local match 
577.21  requirements of the state grant or program were met in 2006. 
577.22     Sec. 7.  [SUSPENSION OF SALARY AND BUDGET APPEAL 
577.23  AUTHORIZATION.] 
577.24     After March 1, 2006, no county sheriff may exercise the 
577.25  authority granted under Minnesota Statutes, section 387.20, 
577.26  subdivision 7, and no county attorney may exercise the authority 
577.27  granted under Minnesota Statutes, section 388.18, subdivision 6, 
577.28  to the extent that the salary or budget increase sought in the 
577.29  appeal would result in an increase in county expenditures in 
577.30  calendar year 2007 or any subsequent year prior to the freeze 
577.31  termination year. 
577.32     Sec. 8.  [SUSPENSION OF PUBLICATION AND HEARING 
577.33  REQUIREMENTS.] 
577.34     A local taxing authority is not required to comply with the 
577.35  public advertisement notice of Minnesota Statutes, section 
577.36  275.065, subdivision 5a, or the public hearing requirement of 
578.1   Minnesota Statutes, section 275.065, subdivision 6, with respect 
578.2   to taxes payable in 2007 and any subsequent year prior to the 
578.3   freeze termination year. 
578.4      Sec. 9.  [TAX RATE FREEZE; REDUCTION OF LEVY.] 
578.5      If in the course of determining local tax rates for taxes 
578.6   payable in 2007 or any subsequent year prior to the freeze 
578.7   termination year after reductions for disparity reduction aid 
578.8   under Minnesota Statutes, section 275.08, subdivisions 1c and 
578.9   1d, the county auditor finds the local tax rate exceeds that in 
578.10  effect for taxes payable in 2006, the county auditor shall 
578.11  reduce the local government's levy so that the local tax rate 
578.12  does not exceed that in effect for taxes payable in 2006, 
578.13  adjusted as provided in section 5. 
578.14     Sec. 10.  [PENSION LIABILITIES.] 
578.15     Notwithstanding any other law or charter provision to the 
578.16  contrary, no levy for taxes payable in 2007 or any subsequent 
578.17  year prior to the freeze termination year for a local police and 
578.18  fire relief association for the purpose of amortizing an 
578.19  unfunded pension liability may exceed the levy for that purpose 
578.20  for taxes payable in 2006. 
578.21     Sec. 11.  [DUTIES OF TOWNSHIP BOARD OF SUPERVISORS.] 
578.22     Notwithstanding Minnesota Statutes, section 365.10, in 2006 
578.23  the township board of supervisors shall adjust the levy and in 
578.24  any subsequent year prior to the freeze termination year, the 
578.25  township board of supervisors may adjust the expenditures of a 
578.26  township below the level authorized by the electors to adjust 
578.27  for any reduction in the previously authorized levy of the 
578.28  township pursuant to section 5. 
578.29     Sec. 12.  [PROHIBITION ON NEW OR INCREASED FEES.] 
578.30     After March 1, 2006, no municipality as defined in 
578.31  Minnesota Statutes, section 475.51, or special taxing district 
578.32  as defined in Minnesota Statutes, section 275.066, and no 
578.33  executive branch state agency may impose a new fee or increase 
578.34  the rate or amount of an existing fee.  As used in this section, 
578.35  a fee is any charge for goods, services, regulations, or 
578.36  licensure, and includes charges for admission to or for use of 
579.1   public facilities. 
579.2      Sec. 13.  [SAVINGS CLAUSE.] 
579.3      Notwithstanding any provision in this article, nothing in 
579.4   this article constitutes an impairment of any obligations, 
579.5   certificates of indebtedness, capital notes, or other debt 
579.6   instruments, including installment purchase contracts or lease 
579.7   purchase agreements, issued before the date of final enactment 
579.8   of this act, by a municipality as defined in Minnesota Statutes, 
579.9   section 469.174, subdivision 6; a school district; or a special 
579.10  taxing district as defined in Minnesota Statutes, section 
579.11  275.066. 
579.12     Sec. 14.  [EFFECTIVE DATE; TERMINATION.] 
579.13     (a) This article is effective the day following final 
579.14  enactment and applies to taxes payable in 2007 and subsequent 
579.15  years prior to the termination date provided in paragraph (b), 
579.16  (c), (d), or (e) for the taxing jurisdiction described in each 
579.17  of those paragraphs. 
579.18     (b) For cities and towns, the termination date is the taxes 
579.19  payable year that is the calendar year when local government 
579.20  aids payable to cities under Minnesota Statutes, section 
579.21  477A.013, are sufficient to fully fund the formula without any 
579.22  reduction due to the limitation in Minnesota Statutes, section 
579.23  477A.03. 
579.24     (c) For counties, the termination date is the taxes payable 
579.25  year when the total amount to be paid to all counties under 
579.26  Minnesota Statutes, section 477A.0124, exceeds the amount paid 
579.27  to all counties under Minnesota Statutes 2002, sections 273.138; 
579.28  273.1398, subdivision 2, minus the amount certified under 
579.29  Minnesota Statutes, section 273.1398, subdivision 4a, paragraph 
579.30  (b), for counties in Judicial Districts One, Three, Six, and 
579.31  Ten, and by 25 percent of the amount certified under Minnesota 
579.32  Statutes, section 273.1398, subdivision 4a, paragraph (b), for 
579.33  counties located in Judicial Districts Two and Four; 273.166; 
579.34  477A.0121; and 477A.0122, increased by the rate of increase in 
579.35  the annual implicit price deflator for government consumption 
579.36  expenditures from 2003 to the current year. 
580.1      (d) For school districts, the termination date is the taxes 
580.2   payable year that is the year in which the state provides a real 
580.3   state aid inflationary increase to the basic formula allowance 
580.4   under Minnesota Statutes, section 126C.10, subdivision 2, over 
580.5   the amount paid in the prior year. 
580.6      (e) For special taxing districts, the termination date is 
580.7   the 2009 taxes payable year.
Minnesota House of Representatives · 100 Rev. Dr. Martin Luther King Jr. Blvd. Saint Paul, MN 55155 · Webmaster@house.mn
HF 785

Bill Text Versions
