Legislative Session number- 84

Bill Name: SF3131

3E Relating to taxation

ARTICLE 1 - INCOME TAX

Providing income tax credits
for beginning farmers participating in a financial management program approved
by the rural finance authority, requiring authority approval and certification;
providing an income tax subtraction for certain military pension or retirement
income; allowing a refund for the transit pass income tax credit for certain
employers; providing a refundable income tax credit for certain film production
qualifying expenses, limit; providing an income tax credits for active military
service after a certain date in a designated area, bovine tuberculosis testing
expenses, qualifying investments in dairy operations; and costs incurred for the
rehabilitation of certain certified historic structures; disallowing trade or
business expense income tax deductions for fines, penalties, damages or expenses
paid to governmental units; defining fine, penalty, damages or expenses

ARTICLE
2 - SALES AND USE TAX

Making permissive commissioner of revenue authority to
revoke sales tax permits to certain taxpayers; exempting from the sales and use
tax milk sold through vending machines, certain re-refined motor oils, recycled
copier and printing papers; exempting from the sales tax products purchased for
use as (diesel) fuel for commuter rail systems, requiring payment and later
refund; exempting from the sales tax materials, supplies and equipment used in
the construction, equipment or improvement of commuter rail transportation
systems, county purchase of voting machines, public safety radio communication
products and services to include Itasca county, construction materials for low
income housing to sole general partner limited partnership nonprofit
corporations, and materials and supplies used in the construction of certain
hydroelectric generating facilities; authorizing the city of Duluth to increase
the rate of tax on the sales of food and beverages; authorizing the use of
proceeds of the tax for a new arena at the Duluth entertainment and convention
center (DECC); expanding the authority of the city of Hermantown to impose a
local sales tax to a local use tax and expanding required uses of the proceeds;
requiring referenda on tax rate increases under certain conditions, providing
for termination of the additional taxing authority; authorizing and providing
for the city of Proctor to impose sales and use tax to be used for construction
of and improvements to city streets, public utilities, sidewalks, bikeways and
trails; allowing the city of Winona to use sales and use taxes for flood control
projects; modifying the date for the local sales tax referendum in Worthington;
authorizing and providing for the city of Austin to impose a sales and use tax
to finance the capital and administrative costs of flood mitigation projects in
the city of Austin, providing for termination of the taxes; authorizing and
providing for the cities of Baxter and Brainerd to impose a sales and use tax
and a sales tax on motor vehicles and to issue bonds to finance certain Baxter
projects relating to acquisition and betterment of water and wastewater
facilities, a fire substation and the Paul Bunyan bridge over Excelsior road,
certain Brainerd projects relating to constructing an upgraded wastewater
treatment facility to serve the cities of Brainerd and Baxter, water
infrastructure improvements and trail development, providing for termination of
the taxes; authorizing and providing for the city of Breezy Point to impose a
sales and use tax and a sales tax on motor vehicles to finance sanitary sewer,
storm sewer, street infrastructure and public safety improvements, providing for
termination of the taxes; authorizing and providing for the city of Cloquet to
impose a sales and use tax and a sales tax on motor vehicles to construct and
complete certain park improvement projects, the extension of utilities and other
improvements for construction of a city industrial park, providing for
termination of the taxes; authorizing and providing for the city of Ely to
impose a sales and use tax for certain improvements, providing for termination
of the taxes; authorizing and providing for the city of Luverne to impose a
sales and use tax and a sales tax on motor vehicles to finance capital
improvements and renovation of the Historic Palace theatre and a vacated
community hospital for the Minnesota West community and technical college,
providing for termination of the taxes; authorizing and providing for the city
of Medford to impose a sales and use tax to improve the wastewater system and
the wastewater treatment plant, providing for termination of the taxes;
authorizing and providing for the city of North Mankato to impose a sales and
use tax with voter approval to pay all or part of the capital costs of the city
share of the marked trunk highway #14 and county state aid highway #41
interchange project, development of regional parks and hiking and biking trails,
expansion of the North Mankato Taylor library, redevelopment of the central
business district and lake improvement projects, providing for termination of
the taxes; authorizing and providing for the city of Owatonna with voter
approval to impose a sales and use tax and a sales tax on motor vehicles to
finance the capital costs of certain transportation projects, regional parks and
trail developments, West Hills complex, fire hall and library improvement
projects and a public safety radio system, providing for termination of the
taxes; authorizing the city of Park Rapids to impose by ordinance a sales and
use tax to finance the cost of construction and operation of a community center,
capital improvement projects and park improvements, specifying certain
authorized expenditures and requiring voter approval, providing for termination
of the tax; authorizing the city of Thief River Falls to incorporate a nonprofit
corporation to operate a community center in the city, exemption from sales and
use tax payment on materials, equipment, and supplies used for
construction

ARTICLE 3 - FOREIGN OPERATING CORPORATIONS

Modifying the
definition of foreign operating corporation; modifying the treatment of certain
income from foreign operations

ARTICLE 4 - PROPERTY TAXES

Modifying the
property tax abatement process for certain electric generating facilities;
increasing school district equalized debt service levy and the debt service
appropriation under the debt service equalization program; increasing the
operating capital equalizing factor; increasing emergency medical services
special taxing districts levy authority; permitting a property tax exemption for
pasture land used for livestock grazing under certain conditions; extending the
eligibility period for biomass electrical generation facility construction
commencement for property tax exemption purposes; extending the exemption from
the property tax personal property of certain small biomass generation
facilities, governing body approval contingency; modifying the exemption from
the property tax personal property of a certain innovative energy project
electric generation facility, modifying certain facility qualification
requirements, requiring local government approval and owner payment; authorizing
a personal property tax exemption for certain attached machinery part of run of
river hydroelectric generation facility; indexing the property tax brackets for
agricultural homestead property based on first tier valuation limits;
establishing an aggregate resource preservation property tax program for the
valuation and classification of property containing certain unmined commercial
aggregate deposit; specifying qualifying property and certain affidavit and
valuation deferment application requirements, requiring a covenant restricting
use; providing for county assessor determination of value as agricultural
property; subjecting property no longer qualifying to certain additional taxes,
additional taxes to be a lien on the property; requiring property owner filing
of supplemental affidavits upon the start of mining activity, requiring removal
of the property from the program, failure to file to result in loss of the
valuation deferment; providing for continuation of the deferment upon sale of
the property; modifying the homestead property tax treatment for members of the
armed forces to members absent due to active duty, qualification requirement;
requiring registration of certain relative homestead properties under
agricultural homestead property tax treatment provisions; extending the
application of 4d property classification for low income rental property;
expanding the definition of agricultural products for property tax
classification purposes to short rotation woody crops cultivated using
agricultural practices to produce timber or forest products; expanding proposed
property tax notice content requirements relating to taxpayer eligibility for
special property tax refund from the state; allowing certain counties with
qualifying hospitals to receive reimbursement of a portion of gross charges for
uncompensated care, formula; extending the date for independent school district
(ISD) 535, Rochester, to certify the proposed property tax levy to the county
auditor; authorizing independent school districts #750, Rocori and #656,
Faribault to lease administrative space under certain conditions; specifying
certain levy authority requirements; requiring the commissioner of education to
increase the operating capital equalizing factor to reduce the operating capital
levy

ARTICLE 5 - DEPARTMENT OF REVENUE PROPERTY TAXES AND AIDS

Removing the
requirement for certain lakeshore property to be occupied by the owner to
receive homestead (1a) classification; modifying the definition of class 4c
property; modifying the residential homestead market value credit and the
agricultural homestead market value credit; modifying disparity reduction aid
and credit; removing the filing requirement for redemption of lands certificates
with the county auditor; specifying calculations for purposes of local
government aid payments under conditions of changes in boundaries or form of
government and annexation

ARTICLE 6 - DEPARTMENT OF REVENUE SALES AND USE
TAXES

Making certain technical corrections relating to sales and purchase, farm
machinery, computer, electronic and computer software definitions; defining
logging equipment; clarifying tangible personal property sales tax provisions;
eliminating the sales tax on prepared food, candy and soft drinks under certain
conditions; limiting the total amount of aerial camera package exemption
refunded to all taxpayers for all fiscal years; extending the sales tax
exemption for sales of certain goods and services to the removal of trees,
bushes or shrubs for the construction and maintenance of roads, trails, and
firebreaks; modifying the content and form of the sales tax exemption
certificate; including equipment and materials used for the generation,
transmission and distribution of electrical energy and aerial camera packages
and tangible personal property and taxable services and construction materials,
supplies and equipment under sales tax exemption refund provisions; prohibiting
the transfer of motor vehicle lease credits to others; modifying a certain
effective date relating to land clearing contracts; repealing provisions
relating to business exemptions and certain rules

ARTICLE 7 - DEPARTMENT OF
REVENUE SPECIAL TAXES AND FEES

Authorizing and providing for dry cleaner
registration fees to be paid in installments; establishing the deed tax for real
property transfers to builders or contractors to obtain financing under certain
conditions; modifying the definition of health care provider, eliminating
residential care homes and adding housing with services; adding wholesale drug
distributor to the list prohibited from separately listing state tax
liabilities; defining weighted average retail price for cigarette and tobacco
tax purposes; modifying the definition of distilled spirits and defining
flavored malt beverage for liquor tax purposes

ARTICLE 8 - DEPARTMENT OF
REVENUE MISCELLANEOUS

Modifying the definition of electronic means to include
the use of a touch tone telephone to transmit return information in a manner
prescribed by the
commissioner of revenue; modifying commissioner assessment
procedures; clarifying the authority of the commissioner to assess liability
against successor businesses; exempting certain property from commissioner
authority to collect assessments; clarifying provisions relating to tax court
orders, providing for interest from date of accrual; clarifying extended due
date provisions relating to reportable transactions for tax shelters; clarifying
the scope of allocation rules for income tax deduction purposes

ARTICLE 9 -
PUBLIC FINANCE

Modifying terms and conditions related to the sale of definitive
drainage bonds; conforming the maturity date for bonds issued for rural public
water or sewer systems to the maturity date for bonds issued for municipal water
and wastewater treatment systems; modifying municipal bonds limitations on
amounts; modifying the definition of market value for net debt limit
determinations; specifying certain town proceedings for the creation of a
subordinate service districts; modifying the definition of debt obligation;
providing for the authorization of interfund loans; increasing the bonding
authority of the metropolitan council to issue certificates of indebtedness,
bonds or other obligations for metropolitan area transit and paratransit capital
expenditures for the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott
and Washington, limit; modifying the higher education services office (HESO)
exemption from the 120-day issuance and carryforward requirements for student
loan bonds; modifying certain limits on issuance of capitol improvement bonds;
imposing a time limit and modifying certain conditions for the issuance of the
proceeds of revenue bonds for school districts grants by the commissioner of the
iron range resources and rehabilitation (IRRRB), authorizing grants to
independent school districts #511, Aitkin, #695, Chisholm, #166, Cook County,
#182, Crosby-Ironton, #696, Ely, #2154, Eveleth-Gilbert, #318, Grand Rapids,
#316, Greenway, #701, Hibbing, #381, Lake Superior, #2711, Mesabi East, #712,
Mt. Iron-Buhl, #319, Nashwauk/Keewatin, #2142, St. Louis County, and #706,
Virginia; renaming the Carver county housing and redevelopment authority the
Carver county community development agency; authorizing the city of Winsted to
issue bonds for a public works facility and a city hall, community center and
police station facility; modifying office of higher education bond allocations
temporary priority from the unified pool; specifying certain unified pool
allocation award temporary priority requirements and unified pool total
allocations; authorizing the city of Pennock to acquire a certain parcel of real
estate and appurtenant building and to expend city funds to improve the
building; authorizing the city to convey the improved building and parcel by
sale or lease to a private party under certain conditions

ARTICLE 10 -
LOCAL DEVELOPMENT

Extending the expiration date for the authority of Hennepin
and Ramsey counties to impose mortgage registry and deed taxes; authorizing St.
Louis, Dakota and Anoka counties to impose a mortgage registry and deed tax;
authorizing St. Louis, Dakota and Anoka counties environmental response fund;
prohibiting administrative expenses and consulting costs incurred prior to tax
increment financing (TIF) district certification to be paid from tax increments;
modifying certain TIF provisions; extending the duration limit for job
opportunity building zones for ethanol plants under certain conditions;
extending the duration of an economic development tax increment financing (TIF)
district in the city of Brooklyn Park; extending the duration of a certain tax
increment financing (TIF) districts in the city of Bloomington; authorizing the
city of Burnsville to create certain tax increment financing (TIF) districts
subject to certain special rules and limits; extending the duration of a the
heart of the city tax increment financing district; authorizing and providing
for the city of Detroit Lakes to create a redevelopment tax increment financing
(TIF) district subject to certain special rules, sunset provision; authorizing
the cities of Elgin, Eyota, Byron and Oronoco to act as small cities for tax
increment financing (TIF) district revenues use purposes, prohibiting exceeding
of the population limit; authorizing the city of Minneapolis to establish a
homeless assistance tax increment finance district, specifying qualifications;
authorizing the city of New Brighton to expend tax increments outside a TIF
district under certain conditions; authorizing the city of Ramsey to create a
tax increment financing (TIF) district subject to certain special rules;
authorizing the city of St. Michael to create a redevelopment tax increment
financing (TIF) district subject to certain restrictions and rules; including
certain food service businesses in a small declining population county in the
definition of qualified business for job opportunity building zones (JOBZ)
purposes; repealing the distribution of certain Burnsville tax increments and
certain limitations on the use of TIF or the city of Bloomington

ARTICLE 11 -
AIDS AND CREDITS

Modifying the city aid base, city formula aid and city aid
distribution for local government aid (LGA) purposes; providing for onetime 2006
additional city aid; providing for county targeted case management aid;
appropriating money to the commissioner of revenue to make payments to Mahnomen
county and the city of Mahnomen to compensate for the loss of property tax
revenue due to the placement of land in trust status; providing for a
contingency appropriation to counties for the cost of preparing ballots for
constitutional amendments; appropriating money to the commissioner of
transportation (DOT) for distribution to the cities of Nisswa and Pequot Lakes
to pay for the local share of trunk highway improvement projects

ARTICLE
12 - MINERALS

Defining producer; modifying the occupation tax; requiring the
gross income for each mineral, metal or energy resource to be determined
separately; requiring the allowable deductions for each mineral, metal or energy
resource to be determined separately; modifying the distribution of occupation
taxes to the Minnesota minerals 21st century fund; expanding the purpose of the
taconite environmental protection fund to include local renewable energy
investments undertaken in cooperation with local units of government and
mineland areas reforestation, reclamation and development projects, requiring
approval by the IRRRB; modifying the distribution of the proceeds of post 2005
increases; modifying distribution of grant and loan fund, requiring a certain
amount to be paid to St. Louis county for deposit in the county road and bridge
fund for the relocation of St. Louis county road #715 (Pike River road);
establishing a public works and local economic development fund for certain
specified purposes; authorizing the town of Sylvan in Cass county to impose an
aggregate material (gravel) removal tax under certain conditions; authorizing
each person with an alternative minimum tax credit to take the credit against
the occupation tax; repealing the alternative minimum tax

ARTICLE 13 -
MISCELLANEOUS

Modifying the definition of claimant agency under the revenue
recapture act; requiring the commissioner of revenue to enter into agreements
with the IRS to participate in a tax processing program to electronically
process state and federal returns together; increasing the hospital or health
care provider credit for research; delaying the final designation of the
international economic development zone; delaying the beginning of the zone
duration; authorizing cities, counties, towns and other political subdivisions
to apply for foreign trade zone powers; prohibiting the commissioner of revenue
from disallowing a property tax refund claim for failure to include the cash
value of a postsecondary education institution tuition discount, requiring
refunds; requiring the commissioners of revenue and employee relations in
consultation with affected bargaining units to study the competitiveness of
compensation of tax compliance auditors within the department of revenue by a
certain date and implement recommendations; requiring the commissioner of
revenue to study and implement procedures and services to assist sales and use
taxpayers of limited English proficiency in complying with sale and use tax
laws, requiring a report to the legislature by a certain date; transferring any
money in the tax relief account to the general fund; appropriating money to the
commissioner of public safety to reimburse state and local law enforcement
agencies for additional law enforcement efforts focused on downtown
Minneapolis
(rt)