HF 3720

as introduced - 86th Legislature (2009 - 2010) Posted on 03/22/2010 09:34am

A bill for an act
relating to the Minnesota business climate; permitting sales in this state of
health insurance permitted in another state under certain conditions; modifying
environmental review requirements; modifying payment of appropriations to
public postsecondary systems; modifying certain conditions of employment;
modifying the individual income, mining occupation, and property taxes;
allowing an angel investment credit; conforming to section 179 expensing
rules; reducing the commercial-industrial property tax class rate; repealing
the state general tax on commercial and industrial property; repealing the
corporate franchise tax; repealing prevailing wage requirement; amending
Minnesota Statutes 2008, sections 62A.047; 62L.056; 115A.31; 135A.031, by
adding subdivisions; 177.24, subdivision 2; 216B.243, subdivision 7; 273.13,
subdivision 24; 275.025, subdivisions 1, 4; 289A.20, subdivision 1; 289A.30,
subdivision 1; 289A.31, subdivision 1; 289A.38, subdivision 12; 289A.50,
subdivision 1; 289A.60, subdivisions 1, 4; 290.01, subdivisions 19f, 22, 29;
290.03; 290.04, subdivision 1; 290.06, subdivision 33; 290.0922, subdivision
1; 290.095, subdivision 3; 290.17, subdivisions 1, 4; 290.191, subdivision 4;
290.32; Minnesota Statutes 2009 Supplement, sections 62L.02, subdivision
26; 289A.18, subdivision 1; 289A.38, subdivision 7; 290.01, subdivision 19a;
proposing coding for new law in Minnesota Statutes, chapters 62Q; 116J; 179;
repealing Minnesota Statutes 2008, sections 62A.0411; 62A.149, subdivision
1; 62A.152; 62A.25; 62A.26; 62A.28; 62A.304; 62Q.47; 116C.01; 116C.02;
116C.03, subdivisions 1, 2, 2a, 3a, 4, 5, 6; 116C.04, subdivisions 1, 2, 3, 4, 7, 10,
11; 116C.06; 116C.08; 116D.04, subdivisions 1a, 2a, 2b, 3a, 4a, 5a, 6, 6a, 7, 8, 9,
10, 11, 12, 13; 116D.045, subdivisions 1, 2, 3, 4; 177.41; 177.42, subdivisions
1, 2, 3, 4, 5; 177.43, subdivisions 1, 2, 4, 5, 6, 6a, 7; 177.435; 177.44; 275.025,
subdivision 2; 289A.19, subdivision 2; 289A.26; 290.01, subdivisions 5,
5a, 6b, 19e; 290.014, subdivision 5; 290.02; 290.06, subdivisions 1, 24, 27;
290.068, subdivisions 1, 2, 3, 4, 5; 290.0921, subdivisions 1, 2, 3, 3a, 4, 6, 7,
8; 290.21, subdivisions 1, 4; 290.34, subdivisions 1, 2; 290.371, subdivisions
1, 2, 3, 4; 290.432; 298.01, subdivisions 3, 3a, 3b, 4, 4a, 4b, 4c, 5, 6; 298.17;
Minnesota Statutes 2009 Supplement, sections 177.42, subdivisions 6, 7; 177.43,
subdivision 3; 289A.08, subdivision 3; 290.01, subdivisions 19c, 19d; Minnesota
Rules, parts 4410.0200; 4410.0300; 4410.0400; 4410.0500; 4410.1000;
4410.1100; 4410.1200; 4410.1300; 4410.1400; 4410.1500; 4410.1600;
4410.1700; 4410.2000; 4410.2100; 4410.2200; 4410.2300; 4410.2400;
4410.2500; 4410.2600; 4410.2700; 4410.2800; 4410.2900; 4410.3000;
4410.3100; 4410.3600; 4410.3610; 4410.3700; 4410.3800; 4410.3900;
4410.4000; 4410.4300; 4410.4400; 4410.4500; 4410.4600; 4410.5000;
4410.5100; 4410.5200; 4410.5300; 4410.5400; 4410.5500; 4410.5600;
4410.6000; 4410.6100; 4410.6200; 4410.6410; 4410.6500; 4410.7055.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin TITLE.
new text end

new text begin This act may be cited as "The Minnesota Prosperity Act."
new text end

Sec. 2.

Minnesota Statutes 2008, section 62A.047, is amended to read:

62A.047 deleted text begin CHILDREN'S HEALTH SUPERVISION SERVICES AND deleted text end
PRENATAL CARE SERVICES.

A policy of individual or group health and accident insurance regulated under this
chapter, or individual or group subscriber contract regulated under chapter 62C, health
maintenance contract regulated under chapter 62D, or health benefit certificate regulated
under chapter 64B, issued, renewed, or continued to provide coverage to a Minnesota
resident, must provide coverage for deleted text begin child health supervision services and deleted text end prenatal care
services. The policy, contract, or certificate must specifically exempt reasonable and
customary charges for deleted text begin child health supervision services and deleted text end prenatal care services from
a deductible, co-payment, or other coinsurance or dollar limitation requirement. This
section does not prohibit the use of policy waiting periods or preexisting condition
limitations for these services. Minimum benefits may be limited to one visit payable to
one provider for all of the services provided at each visit cited in this section subject to the
schedule set forth in this section. Nothing in this section applies to a commercial health
insurance policy issued as a companion to a health maintenance organization contract, a
policy designed primarily to provide coverage payable on a per diem, fixed indemnity, or
nonexpense incurred basis, or a policy that provides only accident coverage.

deleted text begin "Child health supervision services" means pediatric preventive services, appropriate
immunizations, developmental assessments, and laboratory services appropriate to the age
of a child from birth to age six, and appropriate immunizations from ages six to 18, as
defined by Standards of Child Health Care issued by the American Academy of Pediatrics.
Reimbursement must be made for at least five child health supervision visits from birth
to 12 months, three child health supervision visits from 12 months to 24 months, once a
year from 24 months to 72 months.
deleted text end

"Prenatal care services" means the comprehensive package of medical and
psychosocial support provided throughout the pregnancy, including risk assessment,
serial surveillance, prenatal education, and use of specialized skills and technology,
when needed, as defined by Standards for Obstetric-Gynecologic Services issued by the
American College of Obstetricians and Gynecologists.

Sec. 3.

Minnesota Statutes 2009 Supplement, section 62L.02, subdivision 26, is
amended to read:

Subd. 26.

Small employer.

(a) "Small employer" means, with respect to a calendar
year and a plan year, a person, firm, corporation, partnership, association, or other entity
actively engaged in business in Minnesota, including a political subdivision of the state,
that employed an average of no fewer than two nor more than deleted text begin 50 deleted text end new text begin 150 new text end current employees
on business days during the preceding calendar year and that employs at least two current
employees on the first day of the plan year. If an employer has only one eligible employee
who has not waived coverage, the sale of a health plan to or for that eligible employee
is not a sale to a small employer and is not subject to this chapter and may be treated as
the sale of an individual health plan. A small employer plan may be offered through a
domiciled association to self-employed individuals and small employers who are members
of the association, even if the self-employed individual or small employer has fewer than
two current employees. Entities that are treated as a single employer under subsection (b),
(c), (m), or (o) of section 414 of the federal Internal Revenue Code are considered a single
employer for purposes of determining the number of current employees. Small employer
status must be determined on an annual basis as of the renewal date of the health benefit
plan. The provisions of this chapter continue to apply to an employer who no longer meets
the requirements of this definition until the annual renewal date of the employer's health
benefit plan. If an employer was not in existence throughout the preceding calendar year,
the determination of whether the employer is a small employer is based upon the average
number of current employees that it is reasonably expected that the employer will employ
on business days in the current calendar year. For purposes of this definition, the term
employer includes any predecessor of the employer. An employer that has more than deleted text begin 50 deleted text end new text begin
150 new text end current employees but has deleted text begin 50 deleted text end new text begin 150 new text end or fewer employees, as "employee" is defined under
United States Code, title 29, section 1002(6), is a small employer under this subdivision.

(b) Where an association, as defined in section 62L.045, comprised of employers
contracts with a health carrier to provide coverage to its members who are small employers,
the association and health benefit plans it provides to small employers, are subject to
section 62L.045, with respect to small employers in the association, even though the
association also provides coverage to its members that do not qualify as small employers.

(c) If an employer has employees covered under a trust specified in a collective
bargaining agreement under the federal Labor-Management Relations Act of 1947,
United States Code, title 29, section 141, et seq., as amended, or employees whose health
coverage is determined by a collective bargaining agreement and, as a result of the
collective bargaining agreement, is purchased separately from the health plan provided
to other employees, those employees are excluded in determining whether the employer
qualifies as a small employer. Those employees are considered to be a separate small
employer if they constitute a group that would qualify as a small employer in the absence
of the employees who are not subject to the collective bargaining agreement.

Sec. 4.

Minnesota Statutes 2008, section 62L.056, is amended to read:

62L.056 deleted text begin SMALL EMPLOYER deleted text end FLEXIBLE BENEFITS PLANS.

(a) Notwithstanding any provision of this chapter, new text begin chapter 62A, chapter 62Q, new text end chapter
363A, or any other law to the contrary, a health deleted text begin carrier deleted text end new text begin plan company new text end may offer, sell, issue,
and renew a health deleted text begin benefit deleted text end plan that is a flexible benefits plan under this section to deleted text begin a small
employer deleted text end new text begin an individual or employer of any size new text end if the following requirements are satisfied:

(1) the health deleted text begin benefit deleted text end plan must be offered in compliance with deleted text begin this chapter deleted text end new text begin the laws
of this state new text end , except as otherwise permitted in this section;

(2) the health deleted text begin benefit deleted text end plan to be offered must be designed to enable deleted text begin employers and deleted text end
covered persons to better manage costs and coverage options through the use of co-pays,
deductibles, and other cost-sharing arrangements;

(3) the health deleted text begin benefit deleted text end plan must be issued and administered in compliance with
sections 62E.141; 62L.03, subdivision 6; and 62L.12, subdivisions 3 and 4, new text begin as applicable, new text end
relating to prohibitions against enrolling in the Minnesota Comprehensive Health
Association persons eligible for employer group coverage;

(4) the health deleted text begin benefit deleted text end plan may modify or exclude any or all coverages of benefits
that would otherwise be required by law, except for maternity benefits and other benefits
required under federal law;

(5) each health deleted text begin benefit deleted text end plan must be approved by the commissioner of commerce,
but the commissioner may not disapprove a plan on the grounds of a modification or
exclusion permitted under clause (4); and

(6) prior to sale of the health deleted text begin benefit deleted text end plan, the deleted text begin small employer deleted text end new text begin purchaser new text end must be
given a written list of the coverages otherwise required by law that are modified or
excluded in the health deleted text begin benefit deleted text end plan. The list must include a description of each coverage
in the list and indicate whether the coverage is modified or excluded. If a coverage is
modified, the list must describe the modification. The list may, but need not, also list any
or all coverages otherwise required by law that are included in the health deleted text begin benefit deleted text end plan and
indicate that they are included. new text begin In the case of employer coverage, new text end the deleted text begin insurer deleted text end new text begin health plan
company new text end must require that a copy of this written list be provided, prior to the effective
date of the health deleted text begin benefit deleted text end plan, to each employee who is eligible for health coverage
under the employer's plan.

deleted text begin (b) The definitions in section 62L.02 apply to this section as modified by this section.
deleted text end

deleted text begin (c) deleted text end new text begin (b) new text end An employer may provide a health benefit plan permitted under this section
to its employees, the employees' dependents, and other persons eligible for coverage under
the employer's plan, notwithstanding chapter 363A or any other law to the contrary.

Sec. 5.

new text begin [62Q.022] HEALTH PLANS APPROVED IN OTHER STATES; SALE IN
MINNESOTA PERMITTED.
new text end

new text begin Subdivision 1. new text end

new text begin Sale permitted. new text end

new text begin An individual or group health plan, as defined in
section 62Q.01, subdivision 3, that meets the requirements of the laws of another state
may be offered, issued, sold, or renewed to a Minnesota resident or employer, regardless
of whether the health plan complies with the otherwise applicable requirements of this
state if it satisfies the requirements specified in this section.
new text end

new text begin Subd. 2. new text end

new text begin Requirements and exemptions. new text end

new text begin (a) An individual or group health plan
qualifies under subdivision 1 if the commissioner of commerce or commissioner of health,
whichever is appropriate for the type of health plan company, has determined that:
new text end

new text begin (1) the entity providing the health plan is a health plan company, as defined in
section 62Q.01, subdivision 4, that holds a certificate of authority under chapter 60A, 62C,
62D, 62H, 62N, or 64B authorizing it to do business as a health plan company in this state,
regardless of whether the health plan company is domiciled in this state;
new text end

new text begin (2) the state insurance regulator in the health plan company's state of domicile is
accredited by the National Association of Insurance Commissioners;
new text end

new text begin (3) the health plan company is not in a condition of insolvency, as defined in section
60B.03, subdivision 15, paragraph (b);
new text end

new text begin (4) the insurance regulator in the state of domicile has reviewed and approved
the policy form proposed to be used in this state for compliance with the laws of the
domiciliary state;
new text end

new text begin (5) the health plan provides that the health plan company will comply with sections
72A.20 and 72A.201, relating to regulation of trade practices and claims settlement
practices;
new text end

new text begin (6) the health plan and the health plan company comply with this state's underwriting,
premium rating bands, and minimum loss ratio requirements;
new text end

new text begin (7) the health plan will be sold through insurance producers licensed to sell health
plans in this state;
new text end

new text begin (8) the health plan company has agreed to pay, and does pay, the same taxes,
assessments, and other fees that apply to other health plan companies of the same type
doing business in this state, including assessments by the Minnesota Comprehensive
Health Association under chapter 62E and the Minnesota Life and Health Insurance
Guaranty Association under chapter 61B;
new text end

new text begin (9) the health plan complies with all applicable federal laws; and
new text end

new text begin (10) the health plan company's state of domicile is designated in rules adopted by the
Minnesota commissioner of commerce, in consultation with the commissioner of health, as
one of the top 25 states in effective regulation of health insurance products and companies
and in achieving efficient and high-quality health care outcomes for its residents.
new text end

new text begin (b) A health plan offered, issued, sold, or renewed under this section may, but is
not required to, provide coverage of specific benefits, care provided by specific types of
health care providers, and categories of dependents and other persons, otherwise required
to be covered under the laws of this state. If a health plan does not provide coverages
referenced in this paragraph, the health plan company must provide to the purchaser, at the
time of initial purchase and each renewal, a written disclosure of the otherwise-required
coverage that the health plan does not cover.
new text end

new text begin (c) A health plan company that qualifies under this section, except if it is a for-profit
health maintenance organization, is eligible for a certificate of authority from the
commissioner of health on the same basis as nonprofit entities for purposes of providing
health plan coverage under this section, notwithstanding section 62D.03, subdivision 1,
and other provisions requiring that health maintenance organizations that do business
in this state be nonprofit entities.
new text end

new text begin (d) The commissioner of commerce or the commissioner of health, whichever has
authority over the type of health plan company involved, shall enforce compliance with
this section.
new text end

new text begin Subd. 3. new text end

new text begin Conflict of laws. new text end

new text begin In the event of any conflict between this section and
other laws of this state, this section governs.
new text end

new text begin Subd. 4. new text end

new text begin Interstate compacts. new text end

new text begin The commissioner may seek to arrange one or more
interstate compacts to facilitate the operation of this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011, and applies to
coverage offered, issued, sold, or renewed on or after that date.
new text end

Sec. 6.

Minnesota Statutes 2008, section 115A.31, is amended to read:

115A.31 LOCAL GOVERNMENT DECISIONS; TIMELINES.

If a county applies for or requests approval of establishment of a solid waste facility
within the boundaries of a local government unit, the local government unit shall approve
or disapprove the application or request within 120 days following the delivery by the
county to the local government unit of the application or request completed in accordance
with the requirements of applicable local ordinances.

deleted text begin If the proposed facility is one for which an environmental impact statement or
environmental assessment worksheet is required under section 116D.04, the local
government unit shall approve or disapprove the application or request within 90 days
after the final determination of adequacy of the environmental impact statement or
environmental assessment worksheet. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2010.
new text end

Sec. 7.

new text begin [116J.8737] JOB GROWTH INVESTMENT TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Qualifying small business" means a business that:
new text end

new text begin (1) is engaged in, or is committed to engage in, biotechnology, technology,
manufacturing, agriculture, processing or assembling products, conducting research and
development, or developing a new product or business process;
new text end

new text begin (2) is not engaged in real estate development, insurance, banking, lobbying, political
consulting, wholesale or retail trade, leisure, hospitality, construction, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;
new text end

new text begin (3) has its headquarters in Minnesota;
new text end

new text begin (4) employs at least 51 percent of the business's employees in Minnesota;
new text end

new text begin (5) has less than 100 employees;
new text end

new text begin (6) has less than $2,000,000 in annual gross sales receipts for the previous year;
new text end

new text begin (7) is not a subsidiary or an affiliate of a business which employs more than 100
employees or has total gross sales receipts for the previous year of more than $2,000,000,
computed by aggregating all of the employees and gross sales receipts of the business
entities affiliated with the business;
new text end

new text begin (8) has not previously received more than $2,000,000 in private equity investments;
new text end

new text begin (9) has not previously received more than $500,000 in investments that have
qualified for and received tax credits under this section; and
new text end

new text begin (10) for a business with five or more employees, measured on a full-time equivalent
basis:
new text end

new text begin (i) provides wages and benefits to at least 75 percent of its employees in excess of
the first five employees, equal to or greater than 175 percent of the federal poverty level
for a family of four; and
new text end

new text begin (ii) provides wages and benefits to its employees in excess of the first five employees,
equal to or greater than 110 percent of the federal poverty level for a family of four.
new text end

new text begin (c) "Regional investment fund" means a pooled investment fund that:
new text end

new text begin (1) invests in qualifying small businesses;
new text end

new text begin (2) is organized as a limited liability company or other pass-through entity; and
new text end

new text begin (3) has no fewer than five separate investors, each of whom is a qualified taxpayer, as
defined in paragraph (d), and owns no more than 20 percent of the outstanding ownership
interests in the fund.
new text end

new text begin For purposes of determining the number of investors and the ownership interests of
an investor under this clause, the ownership interests of an investor include those of the
investor's spouse, children, or siblings, and any corporation, limited liability company,
partnership, or trust in which the investor has a controlling equity interest or in which the
investor exercises management control.
new text end

new text begin (d) "Qualified taxpayer" means:
new text end

new text begin (1) an accredited investor, within the meaning of Regulation D of the Securities and
Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether
part of a pass-through entity or not, who:
new text end

new text begin (i) does not own, control, or hold power to vote 20 percent or more of the outstanding
securities of the qualifying small business in which the eligible investment is proposed; or
new text end

new text begin (ii) does not receive more than 50 percent of the gross annual income from the
qualifying small business in which the eligible investment is proposed.
new text end

new text begin (2) A member of the immediate family of a taxpayer disqualified by this subdivision
is not eligible for a credit under this section. For purposes of this subdivision, "immediate
family" means the taxpayer's spouse, parent, sibling, or child, or the spouse of any person
listed in this clause.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed; limitations; carryover. new text end

new text begin (a) A qualified taxpayer is
allowed a credit against the tax imposed under chapter 290 for investments made in a
qualified regional investment fund or a qualifying small business. The credit equals 50
percent of the qualified taxpayer's investment in the business, but not to exceed the
lesser of:
new text end

new text begin (1) the liability for tax under chapter 290, including the applicable alternative
minimum tax, but excluding the minimum fee under section 290.0922; or
new text end

new text begin (2)(i) the amount of the certificate provided to the taxpayer under subdivision
4, paragraph (c); or
new text end

new text begin (ii) the amount of the certificate provided to the qualified individual investor under
subdivision 6.
new text end

new text begin (b) If the amount of the credit under this subdivision for any taxable year exceeds
the limitations under paragraph (a), the excess is a credit carryover to each of the ten
succeeding taxable years. The entire amount of the excess unused credit for the taxable
year must be carried first to the earliest of the taxable years to which the credit may be
carried. The amount of the unused credit that may be added under this paragraph may not
exceed the taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin Subd. 3. new text end

new text begin Qualified regional investment fund; requirements. new text end

new text begin (a) To be certified as
a qualified regional investment fund for the purposes of this section, a regional investment
fund must:
new text end

new text begin (1) have a minimum of two-thirds of the regional investment fund's members,
shareholders, or partners be residents of the region that is the focus of the fund; and
new text end

new text begin (2) allocate at least 60 percent of the funds it invests to qualifying small businesses
within its region of focus.
new text end

new text begin (b) Investments from other qualified regional investment funds into the qualifying
small businesses that are the recipients of the qualified regional investment fund's
investment shall count toward the allocations in paragraph (a), clause (2).
new text end

new text begin (c) Investments in the fund may consist of equity investments or notes that pay
interest or other fixed amounts, or any combination of both, as the fund's governing body
determines appropriate.
new text end

new text begin Subd. 4. new text end

new text begin Certification of funds. new text end

new text begin (a) Regional investment funds may apply to the
commissioner for certification as a qualified regional investment fund. The application
must be in the form and be made under the procedures specified by the commissioner,
accompanied by an application fee of $1,250. Fees are appropriated to the commissioner
for personnel and administrative expenses related to administering the program.
new text end

new text begin (b) The commissioner may certify up to 20 regional investment funds per year.
Certifications shall be awarded in the order of the qualifying applications received, subject
to the following limitations:
new text end

new text begin (1) the commissioner may certify no more than three regional investment funds per
year that seek business investment opportunities that may qualify for and receive tax
credits under this section in more than 15 Minnesota counties; and
new text end

new text begin (2) the commissioner may certify no more than five regional investment funds
per year that seek business investment opportunities that may qualify for and receive
tax credits under this section in the metropolitan area, as defined in section 473.121,
subdivision 2.
new text end

new text begin (c) The commissioner shall provide credit certificates to investors in a qualified
regional fund to credits under this section, in proportion to the investment of the investor
in the fund and upon a showing by the fund of an investment in a qualifying small
business, of no more than $500,000 per fund per year. The commissioner may not issue a
total of more than $15,000,000 per year in credit certificates to fund investors.
new text end

new text begin Subd. 5. new text end

new text begin Fund requirements. new text end

new text begin The commissioner shall enter into an agreement
with each of the qualified regional investment funds certified under subdivision 4. Each
agreement must include a provision requiring the qualified regional investment fund to
annually report on the employment figures and wages and benefits paid by the businesses
in which investments are made and a provision stating the specific manner in which
the qualified regional investment fund will comply or is complying with the allocation
requirements under subdivision 3, paragraph (a), clause (2).
new text end

new text begin Subd. 6. new text end

new text begin Certification of individual investors. new text end

new text begin (a) Qualified taxpayers may apply
to the commissioner of employment and economic development for certification as a
qualified individual investor. The application must be in the form and be made under the
procedures specified by the commissioner, accompanied by an application fee of $250.
Fees are appropriated to the commissioner for personnel and administrative expenses
related to administering the program.
new text end

new text begin (b) The commissioner may certify up to 40 qualified individual investors per year.
Certifications shall be awarded in the order of qualifying applications received; however,
the commissioner may certify no more than ten qualified individual investors per year that
seek business investment opportunities that may qualify for and receive tax credits under
this section in the metropolitan area, as defined in section 473.121, subdivision 2.
new text end

new text begin (c) The commissioner shall provide credit certificates to qualified individual
investors, upon a showing by the qualified individual investor of investments of at least
$25,000 in qualifying small businesses.
new text end

new text begin Subd. 7. new text end

new text begin Qualified individual investor requirements. new text end

new text begin The commissioner shall
enter into an agreement with each qualified individual investor certified under subdivision
6. Each agreement must include a provision requiring the qualified individual investor to
annually report on the employment figures and wages and benefits paid by the businesses
in which investments are made and a provision stating the specific manner in which the
qualified individual investor will comply or is complying with the allocation requirements
under subdivision 6, paragraph (c).
new text end

new text begin Subd. 8. new text end

new text begin Rulemaking. new text end

new text begin The commissioner's actions in establishing procedures and
requirements and in making determinations and certifications to administer this section are
not a rule for purposes of chapter 14, are not subject to the Administrative Procedure Act
contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
for taxable years beginning after December 31, 2009, and only applies to investments
made after the qualified regional investment fund or qualified individual investor has been
certified by the commissioner of economic development.
new text end

Sec. 8.

Minnesota Statutes 2008, section 135A.031, is amended by adding a
subdivision to read:

new text begin Subd. 8. new text end

new text begin Incentives for appropriations; University of Minnesota. new text end

new text begin (a) Beginning
in fiscal year 2012 and every fiscal year thereafter, .... percent of any general fund
appropriation to the Board of Regents for the operation and maintenance of the University
of Minnesota is available after the board demonstrates to the commissioner of management
and budget that its job placement goals have been achieved. Job placement goals for
graduates of the University of Minnesota must be submitted by the board to the governor
and the legislature as part of the biennial budget request. Specific job placement goals for
a biennium must be established in law for each fiscal year. Appropriations retained for a
fiscal year under this subdivision are payable after the goals have been achieved.
new text end

new text begin (b) Beginning in fiscal year 2012 and every fiscal year thereafter, an additional
general fund incentive payment may be made to the Board of Regents based on successful
commercialization of intellectual property through the university's Office for Technology
Commercialization or other university business development efforts. Measurements of
successful commercialization must be submitted to the governor and the legislature as
part of the biennial budget request. The criteria and the amount of the incentive payment
must be established in law and achievement of the criteria must be demonstrated to the
commissioner of management and budget prior to the incentive payment.
new text end

Sec. 9.

Minnesota Statutes 2008, section 135A.031, is amended by adding a
subdivision to read:

new text begin Subd. 9. new text end

new text begin Incentives for appropriations; Minnesota State Colleges and
Universities. new text end

new text begin Beginning in fiscal year 2012 and every fiscal year thereafter, ... percent
of any general fund appropriation to the board of trustees for the general operations of
the Minnesota State Colleges and Universities or one of its campuses is available after
the board demonstrates to the commissioner of management and budget that its job
placement goals have been achieved. Job placement goals for graduates of the Minnesota
State Colleges and Universities must be submitted by the board to the governor and the
legislature as part of the biennial budget request. Specific job placement goals for a
biennium must be established in law.
new text end

Sec. 10.

Minnesota Statutes 2008, section 177.24, subdivision 2, is amended to read:

Subd. 2.

Gratuities deleted text begin not deleted text end applied.

deleted text begin No employer may directly or indirectly credit,
apply, or utilize gratuities towards payment of the minimum wage set by this section or
federal law. deleted text end new text begin An employer may pay an employee engaged in an occupation in which the
employee customarily and regularly receives more than $30 per month in gratuities an
amount less than the applicable minimum wage under subdivision 1 if the employer can
establish that after adding the gratuities received by the employee to the wages paid by
the employer, no less than the minimum wage under subdivision 1 was received by the
employee. Regardless of the amount of gratuities received by the employee, no employer
may pay the employee less than $2.13 per hour. This subdivision shall not apply to any
employee unless the employee has been informed by the employer of the provisions
of this subdivision and all gratuities received by the employee have been retained by
the employee.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 11.

new text begin [179.87] COMPULSORY MEMBERSHIP IN LABOR ORGANIZATION
PROHIBITED.
new text end

new text begin Notwithstanding any other state law or rule to the contrary, no person, as a condition
of employment, is required to become a member of a labor union or pay any dues, fees,
assessments, or other charges of any kind to a labor union or to any charity or other third
party in lieu of such payments. Nothing in this section prevents a person from voluntarily
belonging or voluntarily providing financial support to a labor union. Any person who
directly or indirectly violates this section is guilty of a gross misdemeanor. This section
applies to all union employment contracts entered into after the effective date of this
section and applies to any renewal or extension of any existing contract. As used in
this section, labor union means any organization, agency, or employee representation
committee or organization that exists for the purpose, in whole or in part, of dealing
with employees concerning wages, rates of pay, hours of work, other conditions of
employment, or other forms of compensation; any organization that exists for the purpose
of collective bargaining or of dealing with employers concerning grievances; and any
organization providing other mutual aid or protection in connection with employment.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 12.

Minnesota Statutes 2008, section 216B.243, subdivision 7, is amended to read:

Subd. 7.

Participation by other agency or political subdivision.

(a) Other
state agencies authorized to issue permits for siting, construction or operation of large
energy facilities, and those state agencies authorized to participate in matters before the
commission involving utility rates and adequacy of utility services, shall present their
position regarding need and participate in the public hearing process prior to the issuance
or denial of a certificate of need. Issuance or denial of certificates of need shall be the sole
and exclusive prerogative of the commission and these determinations and certificates
shall be binding upon other state departments and agencies, regional, county, and local
governments and special purpose government districts except as provided in sections
116C.01 to 116C.08 deleted text begin and 116D.04, subdivision 9 deleted text end .

(b) An applicant for a certificate of need shall notify the commissioner of agriculture
if the proposed project will impact cultivated agricultural land, as that term is defined in
section 216G.01, subdivision 4. The commissioner may participate in any proceeding on
the application and advise the commission as to whether to grant the certificate of need,
and the best options for mitigating adverse impacts to agricultural lands if the certificate is
granted. The Department of Agriculture shall be the lead agency on the development of
any agricultural mitigation plan required for the project.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2010.
new text end

Sec. 13.

Minnesota Statutes 2008, section 273.13, subdivision 24, is amended to read:

Subd. 24.

Class 3.

deleted text begin (a) deleted text end Commercial and industrial property and utility real and
personal property is class 3a.

(1) deleted text begin Except as otherwise provided, deleted text end Each parcel of commercial, industrial, or utility
real property has a class rate of deleted text begin 1.5 percent of the first tier of market value, and 2.0 deleted text end new text begin one new text end
percent of deleted text begin the remaining deleted text end market value. deleted text begin In the case of contiguous parcels of property
owned by the same person or entity, only the value equal to the first-tier value of the
contiguous parcels qualifies for the reduced class rate, except that contiguous parcels
owned by the same person or entity shall be eligible for the first-tier value class rate on
each separate business operated by the owner of the property, provided the business is
housed in a separate structure. For the purposes of this subdivision, the first tier means the
first $150,000 of market value. Real property owned in fee by a utility for transmission
line right-of-way shall be classified at the class rate for the higher tier.
deleted text end

deleted text begin For purposes of this subdivision, parcels are considered to be contiguous even if
they are separated from each other by a road, street, waterway, or other similar intervening
type of property. Connections between parcels that consist of power lines or pipelines do
not cause the parcels to be contiguous. Property owners who have contiguous parcels of
property that constitute separate businesses that may qualify for the first-tier class rate shall
notify the assessor by July 1, for treatment beginning in the following taxes payable year.
deleted text end

(2) All personal property that is: (i) part of an electric generation, transmission, or
distribution system; or (ii) part of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; and (iii) not described in clause (3), and all railroad
operating property has a class rate as provided under clause (1) deleted text begin for the first tier of market
value and the remaining market value. In the case of multiple parcels in one county that
are owned by one person or entity, only one first tier amount is eligible for the reduced rate deleted text end .

(3) The entire market value of personal property that is: (i) tools, implements, and
machinery of an electric generation, transmission, or distribution system; (ii) tools,
implements, and machinery of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; or (iii) the mains and pipes used in the distribution of
steam or hot or chilled water for heating or cooling buildings, has a class rate as provided
under clause (1) deleted text begin for the remaining market value in excess of the first tier deleted text end .

deleted text begin (b) Employment property defined in section 469.166, during the period provided
in section 469.170, shall constitute class 3b. The class rates for class 3b property are
determined under paragraph (a).
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2011
and thereafter.
new text end

Sec. 14.

Minnesota Statutes 2008, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

The state general levy is levied against
deleted text begin commercial-industrial property and deleted text end seasonal residential recreational property, as defined
in this section. The state general levy base amount is deleted text begin $592,000,000 deleted text end new text begin $38,950,000 new text end for taxes
payable in deleted text begin 2002 deleted text end new text begin 2010 new text end . For taxes payable in subsequent years, the levy base amount is
increased each year by multiplying the levy base amount for the prior year by the sum
of one plus the rate of increase, if any, in the implicit price deflator for government
consumption expenditures and gross investment for state and local governments prepared
by the Bureau of Economic Analysts of the United States Department of Commerce for
the 12-month period ending March 31 of the year prior to the year the taxes are payable.
The tax under this section is not treated as a local tax rate under section 469.177 and is not
the levy of a governmental unit under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year
as necessary to account for errors and tax base changes that affected a preliminary or final
rate for either of the two preceding years. Adjustments are allowed to the extent that the
necessary information is available to the commissioner at the time the rates for a year must
be certified, and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for deleted text begin commercial-industrial or deleted text end seasonal
residential recreational property reported on the abstracts of tax lists submitted under
section 275.29 that was not reported on the abstracts of assessment submitted under
section 270C.89 for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2011 and
thereafter.
new text end

Sec. 15.

Minnesota Statutes 2008, section 275.025, subdivision 4, is amended to read:

Subd. 4.

Apportionment and levy of state general tax.

deleted text begin Ninety-five percent of the
state general tax must be levied by applying a uniform rate to all commercial-industrial tax
capacity and five percent of deleted text end The state general tax must be levied by applying a uniform
rate to all seasonal residential recreational tax capacity. On or before October 1 each year,
the commissioner of revenue shall certify the preliminary state general levy rates to each
county auditor that must be used to prepare the notices of proposed property taxes for taxes
payable in the following year. By January 1 of each year, the commissioner shall certify
the final state general levy rate to each county auditor that shall be used in spreading taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2011 and
thereafter.
new text end

Sec. 16.

Minnesota Statutes 2009 Supplement, section 289A.18, subdivision 1, is
amended to read:

Subdivision 1.

Individual income, fiduciary income, deleted text begin corporate franchise, deleted text end and
entertainment taxes; partnership and S corporation returns; information returns deleted text begin ;
mining company returns deleted text end .

The returns required to be made under sections 289A.08 and
289A.12 must be filed at the following times:

(1) returns made on the basis of the calendar year must be filed on April 15 following
the close of the calendar year deleted text begin , except that returns of corporations must be filed on March
15 following the close of the calendar year deleted text end ;

(2) returns made on the basis of the fiscal year must be filed on the 15th day of the
fourth month following the close of the fiscal year deleted text begin , except that returns of corporations
must be filed on the 15th day of the third month following the close of the fiscal year deleted text end ;

(3) returns for a fractional part of a year must be filed on the 15th day of the fourth
month following the end of the month in which falls the last day of the period for which
the return is made, except that the returns of corporations must be filed on the 15th day of
the third month following the end of the tax year; deleted text begin or, in the case of a corporation which is
a member of a unitary group, the return of the corporation must be filed on the 15th day of
the third month following the end of the tax year of the unitary group in which falls the
last day of the period for which the return is made;
deleted text end

(4) in the case of a final return of a decedent for a fractional part of a year, the return
must be filed on the 15th day of the fourth month following the close of the 12-month
period that began with the first day of that fractional part of a year;

(5) in the case of the return of a cooperative association, returns must be filed on or
before the 15th day of the ninth month following the close of the taxable year;

(6) deleted text begin if a corporation has been divested from a unitary group and files a return for
a fractional part of a year in which it was a member of a unitary business that files a
combined report under section 290.17, subdivision 4, the divested corporation's return
must be filed on the 15th day of the third month following the close of the common
accounting period that includes the fractional year;
deleted text end

deleted text begin (7) deleted text end returns of entertainment entities must be filed on April 15 following the close of
the calendar year;

deleted text begin (8) deleted text end new text begin (7) new text end returns required to be filed under section 289A.08, subdivision 4, must be
filed on the 15th day of the fifth month following the close of the taxable year;

deleted text begin (9) returns of mining companies must be filed on May 1 following the close of the
calendar year; deleted text end and

deleted text begin (10) deleted text end new text begin (8) new text end returns required to be filed with the commissioner under section 289A.12,
subdivision 2, 4 to 10, or 16 must be filed within 30 days after being demanded by the
commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 17.

Minnesota Statutes 2008, section 289A.20, subdivision 1, is amended to read:

Subdivision 1.

Individual income, fiduciary income, deleted text begin mining company, corporate
franchise, deleted text end and entertainment taxes.

(a) Individual income deleted text begin , deleted text end new text begin and new text end fiduciary deleted text begin , mining
company, and corporate franchise deleted text end taxes must be paid to the commissioner on or before the
date the return must be filed under section 289A.18, subdivision 1, or the extended due
date as provided in section 289A.19, unless an earlier date for payment is provided.

Notwithstanding any other law, a taxpayer whose unpaid liability for income or
corporate franchise taxes, as reflected upon the return, is $1 or less need not pay the tax.

(b) Entertainment taxes must be paid on or before the date the return must be filed
under section 289A.18, subdivision 1.

(c) If a fiduciary administers 100 or more trusts, fiduciary income taxes for all trusts
administered by the fiduciary must be paid by electronic means.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 18.

Minnesota Statutes 2008, section 289A.30, subdivision 1, is amended to read:

Subdivision 1.

Fiduciary income deleted text begin , corporate franchise deleted text end tax.

Where good cause
exists, the commissioner may extend the time for payment of the amount determined as a
fiduciary income tax deleted text begin or corporate franchise tax deleted text end by the taxpayer, or an amount determined
as a deficiency, for a period of not more than six months from the date prescribed for
the payment of the tax.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 19.

Minnesota Statutes 2008, section 289A.31, subdivision 1, is amended to read:

Subdivision 1.

Individual income, fiduciary income, deleted text begin mining company, corporate
franchise, deleted text end and entertainment taxes.

(a) Individual income deleted text begin , deleted text end new text begin and new text end fiduciary income deleted text begin , mining
company, and corporate franchise deleted text end taxes, and interest and penalties, must be paid by the
taxpayer upon whom the tax is imposed, except in the following cases:

(1) The tax due from a decedent for that part of the taxable year in which the
decedent died during which the decedent was alive and the taxes, interest, and penalty
due for the prior years must be paid by the decedent's personal representative, if any.
If there is no personal representative, the taxes, interest, and penalty must be paid by
the transferees, as defined in section 270C.58, subdivision 3, to the extent they receive
property from the decedent;

(2) The tax due from an infant or other incompetent person must be paid by the
person's guardian or other person authorized or permitted by law to act for the person;

(3) The tax due from the estate of a decedent must be paid by the estate's personal
representative;

(4) The tax due from a trust, including those within the definition of a corporation, as
defined in section 290.01, subdivision 4, must be paid by a trustee; and

(5) The tax due from a taxpayer whose business or property is in charge of a
receiver, trustee in bankruptcy, assignee, or other conservator, must be paid by the
person in charge of the business or property so far as the tax is due to the income from
the business or property.

(b) Entertainment taxes are the joint and several liability of the entertainer and the
entertainment entity. The payor is liable to the state for the payment of the tax required to
be deducted and withheld under section 290.9201, subdivision 7, and is not liable to the
entertainer for the amount of the payment.

(c) The tax imposed under section 290.0922 on partnerships is the joint and several
liability of the partnership and the general partners.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 20.

Minnesota Statutes 2009 Supplement, section 289A.38, subdivision 7, is
amended to read:

Subd. 7.

Federal tax changes.

If the amount of income, items of tax preference,
deductions, or credits for any year of a taxpayer, or the wages paid by a taxpayer for
any period, as reported to the Internal Revenue Service is changed or corrected by the
commissioner of Internal Revenue or other officer of the United States or other competent
authority, or where a renegotiation of a contract or subcontract with the United States
results in a change in income, items of tax preference, deductions, credits, or withholding
tax, or, in the case of estate tax, where there are adjustments to the taxable estate, the
taxpayer shall report the change or correction or renegotiation results in writing to the
commissioner. The report must be submitted within 180 days after the final determination
and must be in the form of either an amended Minnesota estate, withholding tax, deleted text begin corporate
franchise tax, deleted text end or income tax return conceding the accuracy of the federal determination
or a letter detailing how the federal determination is incorrect or does not change the
Minnesota tax. An amended Minnesota income tax return must be accompanied by an
amended property tax refund return, if necessary. A taxpayer filing an amended federal
tax return must also file a copy of the amended return with the commissioner of revenue
within 180 days after filing the amended return.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 21.

Minnesota Statutes 2008, section 289A.38, subdivision 12, is amended to read:

Subd. 12.

Request for early audit for individual income deleted text begin , deleted text end new text begin and new text end fiduciary income deleted text begin ,
mining company, and corporate franchise taxes deleted text end .

deleted text begin (a) deleted text end Tax must be assessed within
18 months after written request for an assessment has been made in the case of income
received (1) during the lifetime of a decedent, (2) by the decedent's estate during the
period of administration, new text begin or new text end (3) by a trustee of a terminating trust or other fiduciary
who, because of custody of assets, would be liable for the payment of tax under section
270C.58, subdivision 2 deleted text begin , or (4) by a mining company or a corporation deleted text end . A proceeding in
court for the collection of the tax must begin within two years after written request for the
assessment (filed after the return is made and in the form the commissioner prescribes) by
the personal representative or other fiduciary representing the estate of the decedent, or
by the trustee of a terminating trust or other fiduciary who, because of custody of assets,
would be liable for the payment of tax under section 270C.58, subdivision 2 deleted text begin , or by the
corporation deleted text end . Except as provided in section 289A.42, subdivision 1, an assessment must
not be made after the expiration of 3-1/2 years after the return was filed, and an action
must not be brought after the expiration of four years after the return was filed.

deleted text begin (b) Paragraph (a) only applies in the case of a mining company or a corporation if:
deleted text end

deleted text begin (1) the written request notifies the commissioner that the corporation contemplates
dissolution at or before the expiration of the 18-month period;
deleted text end

deleted text begin (2) the dissolution is begun in good faith before the expiration of the 18-month
period; and
deleted text end

deleted text begin (3) the dissolution is completed within the 18-month period.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 22.

Minnesota Statutes 2008, section 289A.50, subdivision 1, is amended to read:

Subdivision 1.

General right to refund.

(a) Subject to the requirements of this
section and section 289A.40, a taxpayer who has paid a tax in excess of the taxes lawfully
due and who files a written claim for refund will be refunded or credited the overpayment
of the tax determined by the commissioner to be erroneously paid.

(b) The claim must specify the name of the taxpayer, the date when and the period
for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
claims was erroneously paid, the grounds on which a refund is claimed, and other
information relative to the payment and in the form required by the commissioner. An
income tax deleted text begin , deleted text end new text begin or new text end estate tax deleted text begin , or corporate franchise tax deleted text end return, or amended return claiming an
overpayment constitutes a claim for refund.

(c) When, in the course of an examination, and within the time for requesting a
refund, the commissioner determines that there has been an overpayment of tax, the
commissioner shall refund or credit the overpayment to the taxpayer and no demand
is necessary. If the overpayment exceeds $1, the amount of the overpayment must
be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
commissioner is not required to refund. In these situations, the commissioner does not
have to make written findings or serve notice by mail to the taxpayer.

(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
care exceeds the tax against which the credit is allowable, the amount of the excess is
considered an overpayment. The refund allowed by section 290.06, subdivision 23, is also
considered an overpayment. The requirements of section 270C.33 do not apply to the
refunding of such an overpayment shown on the original return filed by a taxpayer.

(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
penalties, and interest reported in the return of the entertainment entity or imposed by
section 290.9201, the excess must be refunded to the entertainment entity. If the excess is
less than $1, the commissioner need not refund that amount.

(f) If the surety deposit required for a construction contract exceeds the liability of
the out-of-state contractor, the commissioner shall refund the difference to the contractor.

(g) An action of the commissioner in refunding the amount of the overpayment does
not constitute a determination of the correctness of the return of the taxpayer.

(h) There is appropriated from the general fund to the commissioner of revenue the
amount necessary to pay refunds allowed under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 23.

Minnesota Statutes 2008, section 289A.60, subdivision 1, is amended to read:

Subdivision 1.

Penalty for failure to pay tax.

(a) If a deleted text begin corporate franchise, deleted text end fiduciary
income, deleted text begin mining company, deleted text end estate, partnership, S corporation, or nonresident entertainer
tax is not paid within the time specified for payment, a penalty of six percent is added to
the unpaid tax deleted text begin , except that if a corporation or mining company meets the requirements of
section 289A.19, subdivision 2, the penalty is not imposed deleted text end .

(b) For the taxes listed in paragraph (a), in addition to the penalty in that paragraph,
whether imposed or not, if a return or amended return is filed after the due date, without
regard to extensions, and any tax reported as remaining due is not remitted with the return
or amended return, a penalty of five percent of the tax not paid is added to the tax. If the
commissioner issues an order assessing additional tax for a tax listed in paragraph (a),
and the tax is not paid within 60 days after the mailing of the order or, if appealed, within
60 days after final resolution of the appeal, a penalty of five percent of the unpaid tax
is added to the tax.

(c) If an individual income tax is not paid within the time specified for payment, a
penalty of four percent is added to the unpaid tax. There is a presumption of reasonable
cause for the late payment if the individual: (i) pays by the due date of the return at
least 90 percent of the amount of tax, after credits other than withholding and estimated
payments, shown owing on the return; (ii) files the return within six months after the due
date; and (iii) pays the remaining balance of the reported tax when the return is filed.

(d) If the commissioner issues an order assessing additional individual income tax,
and the tax is not paid within 60 days after the mailing of the order or, if appealed, within
60 days after final resolution of the appeal, a penalty of four percent of the unpaid tax
is added to the tax.

(e) If a withholding or sales or use tax is not paid within the time specified for
payment, a penalty must be added to the amount required to be shown as tax. The penalty
is five percent of the tax not paid on or before the date specified for payment of the tax
if the failure is for not more than 30 days, with an additional penalty of five percent of
the amount of tax remaining unpaid during each additional 30 days or fraction of 30 days
during which the failure continues, not exceeding 15 percent in the aggregate.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 24.

Minnesota Statutes 2008, section 289A.60, subdivision 4, is amended to read:

Subd. 4.

Substantial understatement of liability; penalty.

(a) The commissioner
of revenue shall impose a penalty for substantial understatement of any tax payable to the
commissioner, except a tax imposed under chapter 297A.

(b) There must be added to the tax an amount equal to 20 percent of the amount of any
underpayment attributable to the understatement. There is a substantial understatement of
tax for the period if the amount of the understatement for the period exceeds the greater of:

(1) ten percent of the tax required to be shown on the return for the period; or

(2) deleted text begin (i) $10,000 in the case of a mining company or a corporation, other than an S
corporation as defined in section 290.9725, when the tax is imposed by chapter 290 or
section 298.01 or 298.015, or
deleted text end

deleted text begin (ii) deleted text end $5,000 deleted text begin in the case of any other taxpayer, and in the case of a mining company or
a corporation any tax not imposed by chapter 290 or section 298.01 or 298.015 deleted text end .

(c) deleted text begin For a corporation, other than an S corporation, there is also a substantial
understatement of tax for any taxable year if the amount of the understatement for the
taxable year exceeds the lesser of:
deleted text end

deleted text begin (1) ten percent of the tax required to be shown on the return for the taxable year
(or, if greater, $10,000); or
deleted text end

deleted text begin (2) $10,000,000.
deleted text end

deleted text begin (d) deleted text end The term "understatement" means the excess of the amount of the tax required
to be shown on the return for the period, over the amount of the tax imposed that is
shown on the return. The excess must be determined without regard to items to which
subdivision 27 applies. The amount of the understatement shall be reduced by that part of
the understatement that is attributable to the tax treatment of any item by the taxpayer if
(1) there is or was substantial authority for the treatment, or (2)(i) any item with respect to
which the relevant facts affecting the item's tax treatment are adequately disclosed in the
return or in a statement attached to the return and (ii) there is a reasonable basis for the tax
treatment of the item. The exception for substantial authority under clause (1) does not
apply to positions listed by the Secretary of the Treasury under section 6662(d)(3) of the
Internal Revenue Code. deleted text begin A corporation does not have a reasonable basis for its tax treatment
of an item attributable to a multiple-party financing transaction if the treatment does not
clearly reflect the income of the corporation within the meaning of section 6662(d)(2)(B)
of the Internal Revenue Code. deleted text end The special rules in cases involving tax shelters provided in
section 6662(d)(2)(C) of the Internal Revenue Code shall apply and shall apply to a tax
shelter the principal purpose of which is the avoidance or evasion of state taxes.

deleted text begin (e) deleted text end new text begin (d) new text end The commissioner may abate all or any part of the addition to the tax
provided by this section on a showing by the taxpayer that there was reasonable cause for
the understatement, or part of it, and that the taxpayer acted in good faith. The additional
tax and penalty shall bear interest at the rate specified in section 270C.40 from the time
the tax should have been paid until paid.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 25.

Minnesota Statutes 2009 Supplement, section 290.01, subdivision 19a,
is amended to read:

Subd. 19a.

Additions to federal taxable income.

For individuals, estates, and
trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal Revenue Code, or the
fund of the regulated investment company as defined in section 851(g) of the Internal
Revenue Code, making the payment; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;

(2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
or accrued within the taxable year under this chapter and the amount of taxes based on
net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
state or to any province or territory of Canada, to the extent allowed as a deduction
under section 63(d) of the Internal Revenue Code, but the addition may not be more
than the amount by which the itemized deductions as allowed under section 63(d) of
the Internal Revenue Code exceeds the amount of the standard deduction as defined in
section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
this paragraph, the disallowance of itemized deductions under section 68 of the Internal
Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
the last itemized deductions disallowed;

(3) the capital gain amount of a lump-sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;

(8) new text begin for taxable years beginning before January 1, 2010, new text end 80 percent of the amount by
which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
through December 31, 2003;

(9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(10) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans;

(11) the amount of expenses disallowed under section 290.10, subdivision 2;

(12) the amount deducted for qualified tuition and related expenses under section
222 of the Internal Revenue Code, to the extent deducted from gross income;

(13) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
from gross income;

(14) the additional standard deduction for property taxes payable that is allowable
under section 63(c)(1)(C) of the Internal Revenue Code;

(15) the additional standard deduction for qualified motor vehicle sales taxes
allowable under section 63(c)(1)(E) of the Internal Revenue Code;

(16) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code; and

(17) the amount of unemployment compensation exempt from tax under section
85(c) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 26.

Minnesota Statutes 2008, section 290.01, subdivision 19f, is amended to read:

Subd. 19f.

Basis modifications affecting gain or loss on disposition of property.

(a) For individuals, estates, and trusts, the basis of property is its adjusted basis for
federal income tax purposes except as set forth in paragraphs (f), (g), and (m). deleted text begin For
corporations, the basis of property is its adjusted basis for federal income tax purposes,
without regard to the time when the property became subject to tax under this chapter or to
whether out-of-state losses or items of tax preference with respect to the property were not
deductible under this chapter, except that the modifications to the basis for federal income
tax purposes set forth in paragraphs (b) to (j) are allowed to corporations, and the resulting
modifications to federal taxable income must be made in the year in which gain or loss
on the sale or other disposition of property is recognized.
deleted text end

(b) The basis of property shall not be reduced to reflect federal investment tax credit.

(c) The basis of property subject to the accelerated cost recovery system under
section 168 of the Internal Revenue Code shall be modified to reflect the modifications in
depreciation with respect to the property provided for in subdivision 19e. For certified
pollution control facilities for which amortization deductions were elected under section
169 of the Internal Revenue Code of 1954, the basis of the property must be increased by
the amount of the amortization deduction not previously allowed under this chapter.

(d) For property acquired before January 1, 1933, the basis for computing a gain is
the fair market value of the property as of that date. The basis for determining a loss is
the cost of the property to the taxpayer less any depreciation, amortization, or depletion,
actually sustained before that date. If the adjusted cost exceeds the fair market value of the
property, then the basis is the adjusted cost regardless of whether there is a gain or loss.

(e) The basis is reduced by the allowance for amortization of bond premium if an
election to amortize was made pursuant to Minnesota Statutes 1986, section 290.09,
subdivision 13, and the allowance could have been deducted by the taxpayer under this
chapter during the period of the taxpayer's ownership of the property.

(f) deleted text begin For assets placed in service before January 1, 1987, corporations, partnerships,
or individuals engaged in the business of mining ores other than iron ore or taconite
concentrates subject to the occupation tax under chapter 298 must use the occupation
tax basis of property used in that business.
deleted text end

deleted text begin (g) For assets placed in service before January 1, 1990, corporations, partnerships, or
individuals engaged in the business of mining iron ore or taconite concentrates subject
to the occupation tax under chapter 298 must use the occupation tax basis of property
used in that business.
deleted text end

deleted text begin (h) deleted text end In applying the provisions of sections 301(c)(3)(B), 312(f) and (g), and 316(a)(1)
of the Internal Revenue Code, the dates December 31, 1932, and January 1, 1933, shall be
substituted for February 28, 1913, and March 1, 1913, respectively.

deleted text begin (i) In applying the provisions of section 362(a) and (c) of the Internal Revenue Code,
the date December 31, 1956, shall be substituted for June 22, 1954.
deleted text end

deleted text begin (j) deleted text end new text begin (g) new text end The basis of property shall be increased by the amount of intangible drilling
costs not previously allowed due to differences between this chapter and the Internal
Revenue Code.

deleted text begin (k) The adjusted basis of any corporate partner's interest in a partnership is the same
as the adjusted basis for federal income tax purposes modified as required to reflect the
basis modifications set forth in paragraphs (b) to (j). The adjusted basis of a partnership
in which the partner is an individual, estate, or trust is the same as the adjusted basis for
federal income tax purposes modified as required to reflect the basis modifications set
forth in paragraphs (f) and (g).
deleted text end

deleted text begin (l) deleted text end new text begin (h) new text end The modifications contained in paragraphs (b) to deleted text begin (j) deleted text end new text begin (g) new text end also apply to the basis
of property that is determined by reference to the basis of the same property in the hands
of a different taxpayer or by reference to the basis of different property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 27.

Minnesota Statutes 2008, section 290.01, subdivision 22, is amended to read:

Subd. 22.

Taxable net income.

For tax years beginning after December 31, 1986,
the term "taxable net income" means:

(1) for resident individuals the same as net income;

(2) for individuals who were not residents of Minnesota for the entire year, the same
as net income except that the tax is imposed only on the Minnesota apportioned share of
that income as determined pursuant to section 290.06, subdivision 2c, paragraph (e);

(3) for all other taxpayers, the part of net income that is allocable to Minnesota by
assignment or apportionment under one or more of sections 290.17, 290.191, 290.20,
and 290.36.

For tax years beginning before January 1, 1987, the term "taxable net income"
means the net income assignable to this state pursuant to sections 290.17 to 290.20. deleted text begin For
corporations, taxable net income is then reduced by the deductions contained in section
290.21. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 28.

Minnesota Statutes 2008, section 290.01, subdivision 29, is amended to read:

Subd. 29.

Taxable income.

The term "taxable income" means deleted text begin :
deleted text end

deleted text begin (1) for individuals, estates, and trusts, the same as deleted text end taxable net income deleted text begin ; deleted text end new text begin .
new text end

deleted text begin (2) for corporations, the taxable net income less
deleted text end

deleted text begin (i) the net operating loss deduction under section 290.095;
deleted text end

deleted text begin (ii) the dividends received deduction under section 290.21, subdivision 4;
deleted text end

deleted text begin (iii) the exemption for operating in a job opportunity building zone under section
469.317;
deleted text end

deleted text begin (iv) the exemption for operating in a biotechnology and health sciences industry
zone under section 469.337; and
deleted text end

deleted text begin (v) the exemption for operating in an international economic development zone
under section 469.326.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 29.

Minnesota Statutes 2008, section 290.03, is amended to read:

290.03 INCOME TAX; IMPOSITION, CLASSES OF TAXPAYERS.

An annual tax for each taxable year, computed in the manner and at the rates
hereinafter provided, is hereby imposed upon the taxable income for such year of the
following classes of taxpayers:

(1) Resident and nonresident individuals;

(2) Estates of decedents, dying domiciled within or without this state;

(3) Trusts deleted text begin (except those taxable as corporations) deleted text end however created by residents or
nonresidents or by domestic or foreign corporations.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 30.

Minnesota Statutes 2008, section 290.04, subdivision 1, is amended to read:

Subdivision 1.

Accrual.

deleted text begin The liability for the tax imposed by section 290.02 shall
arise upon the first day of the taxable year upon which a domestic corporation exercises
any of the privileges specified in section 290.02 or exists as a corporation, or on which
a foreign corporation is possessed of the privilege for the grant to it of the privilege of
transacting or for the actual transaction by it of any local business within this state during
any part of its taxable year, in corporate or organized form. deleted text end The liability for the tax
imposed by section 290.03 shall arise concurrently with the receipt or accrual of income
during the taxable year. The provisions shall in no way affect the determination of the
amount of such taxes, the time for making returns, and the time for paying such taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 31.

Minnesota Statutes 2008, section 290.06, subdivision 33, is amended to read:

Subd. 33.

Bovine testing credit.

(a) An owner of cattle in Minnesota may take a
credit against the tax due under this chapter for an amount equal to: (1) for deleted text begin corporate
filers, including deleted text end shareholders of an S corporation under section 290.9725, 25 percent of
the expenses incurred during the taxable year to conduct tuberculosis testing on those
cattle; and (2) for all other filers, one-half the expenses incurred during the taxable year to
conduct tuberculosis testing on those cattle.

(b) If the amount of credit which the taxpayer is eligible to receive under this
subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
revenue shall refund the excess to the taxpayer.

(c) The amount necessary to pay claims for the refund provided in this subdivision is
appropriated from the general fund to the commissioner of revenue.

(d) Expenses incurred in a calendar year in which tuberculosis testing of cattle in
Minnesota is not federally required are not allowed in claiming the credit under paragraph
(a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 32.

Minnesota Statutes 2008, section 290.0922, subdivision 1, is amended to read:

Subdivision 1.

Imposition.

deleted text begin (a) In addition to the tax imposed by this chapter without
regard to this section, the franchise tax imposed on a corporation required to file under
section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation
under section 290.9725 for the taxable year includes a tax equal to the following amounts:
deleted text end

deleted text begin If the sum of the corporation's Minnesota property, payrolls, and sales or receipts is: deleted text end							deleted text begin the tax equals: deleted text end
		deleted text begin less than deleted text end		deleted text begin $ deleted text end	deleted text begin 500,000 deleted text end		deleted text begin $ deleted text end	deleted text begin 0 deleted text end
	deleted text begin $ deleted text end	deleted text begin 500,000 deleted text end	deleted text begin to deleted text end	deleted text begin $ deleted text end	deleted text begin 999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 100 deleted text end
	deleted text begin $ deleted text end	deleted text begin 1,000,000 deleted text end	deleted text begin to deleted text end	deleted text begin $ deleted text end	deleted text begin 4,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 300 deleted text end
	deleted text begin $ deleted text end	deleted text begin 5,000,000 deleted text end	deleted text begin to deleted text end	deleted text begin $ deleted text end	deleted text begin 9,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 1,000 deleted text end
	deleted text begin $ deleted text end	deleted text begin 10,000,000 deleted text end	deleted text begin to deleted text end	deleted text begin $ deleted text end	deleted text begin 19,999,999 deleted text end		deleted text begin $ deleted text end	deleted text begin 2,000 deleted text end
	deleted text begin $ deleted text end	deleted text begin 20,000,000 deleted text end	deleted text begin or more deleted text end				deleted text begin $ deleted text end	deleted text begin 5,000 deleted text end

deleted text begin (b) deleted text end A tax is imposed for each taxable year on a corporation required to file a return
under section 289A.12, subdivision 3, that is treated as an "S" corporation under section
290.9725 and on a partnership required to file a return under section 289A.12, subdivision
3, other than a partnership that derives over 80 percent of its income from farming. The
tax imposed under this paragraph is due on or before the due date of the return for the
taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe
the return to be used for payment of this tax. The tax under this paragraph is equal to
the following amounts:

If the sum of the S corporation's or partnership's Minnesota property, payrolls, and sales or receipts is:							the tax equals:
		less than		$	500,000		$	0
	$	500,000	to	$	999,999		$	100
	$	1,000,000	to	$	4,999,999		$	300
	$	5,000,000	to	$	9,999,999		$	1,000
	$	10,000,000	to	$	19,999,999		$	2,000
	$	20,000,000	or more				$	5,000

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 33.

Minnesota Statutes 2008, section 290.095, subdivision 3, is amended to read:

Subd. 3.

Carryover.

(a) A net operating loss incurred in a taxable year: (i)
beginning after December 31, 1986, shall be a net operating loss carryover to each of the
15 taxable years following the taxable year of such loss; (ii) beginning before January 1,
1987, shall be a net operating loss carryover to each of the five taxable years following the
taxable year of such loss subject to the provisions of Minnesota Statutes 1986, section
290.095; and (iii) beginning before January 1, 1987, shall be a net operating loss carryback
to each of the three taxable years preceding the loss year subject to the provisions of
Minnesota Statutes 1986, section 290.095.

(b) The entire amount of the net operating loss for any taxable year shall be carried to
the earliest of the taxable years to which such loss may be carried. The portion of such loss
which shall be carried to each of the other taxable years shall be the excess, if any, of the
amount of such loss over the sum of the taxable net income, adjusted by the modifications
specified in subdivision 4, for each of the taxable years to which such loss may be carried.

deleted text begin (c) Where a corporation apportions its income under the provisions of section
290.191, the net operating loss deduction incurred in any taxable year shall be allowed
to the extent of the apportionment ratio of the loss year.
deleted text end

deleted text begin (d) The provisions of sections 381, 382, and 384 of the Internal Revenue Code apply
to carryovers in certain corporate acquisitions and special limitations on net operating loss
carryovers. The limitation amount determined under section 382 shall be applied to net
income, before apportionment, in each post change year to which a loss is carried.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 34.

Minnesota Statutes 2008, section 290.17, subdivision 1, is amended to read:

Subdivision 1.

Scope of allocation rules.

(a) The income of resident individuals
is not subject to allocation outside this state. The allocation rules apply to nonresident
individuals, estates, trusts, nonresident partners of partnerships, new text begin and new text end nonresident
shareholders of corporations treated as "S" corporations under section 290.9725 deleted text begin , and all
corporations not having such an election in effect deleted text end . If a partnership deleted text begin or corporation deleted text end would
not otherwise be subject to the allocation rules, but conducts a trade or business that is part
of a unitary business involving another legal entity that is subject to the allocation rules,
the partnership deleted text begin or corporation deleted text end is subject to the allocation rules.

(b) Expenses, losses, and other deductions (referred to collectively in this paragraph
as "deductions") must be allocated along with the item or class of gross income to which
they are definitely related for purposes of assignment under this section or apportionment
under section 290.191, 290.20, or 290.36. Deductions definitely related to any item of
gross income assigned under subdivision 2, paragraph (e), are assigned to the taxpayer's
domicile.

(c) In the case of an individual who is a resident for only part of a taxable year,
the individual's income, gains, losses, and deductions from the distributive share of a
partnership, S corporation, trust, or estate are not subject to allocation outside this state
to the extent of the distributive share multiplied by a ratio, the numerator of which is
the number of days the individual was a resident of this state during the tax year of the
partnership, S corporation, trust, or estate, and the denominator of which is the number of
days in the taxable year of the partnership, S corporation, trust, or estate.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 35.

Minnesota Statutes 2008, section 290.17, subdivision 4, is amended to read:

Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly
within this state or partly within and partly without this state is part of a unitary business,
the entire income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which
result in a flow of value between them. The term may be applied within a single legal
entity or between multiple entities and without regard to whether each entity is a sole
proprietorship, deleted text begin a corporation, deleted text end a partnership new text begin , new text end or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use,
evidenced by centralized management or executive force, centralized purchasing,
advertising, accounting, or other controlled interaction, but the absence of these
centralized activities will not necessarily evidence a nonunitary business. Unity is also
presumed when business activities or operations are of mutual benefit, dependent upon or
contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business
entity that carries on business activity outside the state different in kind from that
conducted within this state, and the other business is conducted entirely outside the state, it
is presumed that the two business operations are unitary in nature, interrelated, connected,
and interdependent unless it can be shown to the contrary.

(e) deleted text begin Unity of ownership is not deemed to exist when a corporation is involved unless
that corporation is a member of a group of two or more business entities and more than 50
percent of the voting stock of each member of the group is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one
or more of the member corporations of the group. For this purpose, the term "voting
stock" shall include membership interests of mutual insurance holding companies formed
under section 66A.40.
deleted text end

deleted text begin (f) deleted text end The net income and apportionment factors under section 290.191 or 290.20 of
deleted text begin foreign corporations and other deleted text end foreign entities which are part of a unitary business shall
not be included in the net income or the apportionment factors of the unitary business.
A deleted text begin foreign corporation or other deleted text end foreign entity which is required to file a return under this
chapter shall file on a separate return basis. deleted text begin The net income and apportionment factors
under section 290.191 or 290.20 of foreign operating corporations shall not be included in
the net income or the apportionment factors of the unitary business except as provided in
paragraph (g). deleted text end

deleted text begin (g) The adjusted net income of a foreign operating corporation shall be deemed to
be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
proportion to each shareholder's ownership, with which such corporation is engaged in
a unitary business. Such deemed dividend shall be treated as a dividend under section
290.21, subdivision 4.
deleted text end

deleted text begin Dividends actually paid by a foreign operating corporation to a corporate shareholder
which is a member of the same unitary business as the foreign operating corporation shall
be eliminated from the net income of the unitary business in preparing a combined report
for the unitary business. The adjusted net income of a foreign operating corporation
shall be its net income adjusted as follows:
deleted text end

deleted text begin (1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
Rico, or a United States possession or political subdivision of any of the foregoing shall
be a deduction; and
deleted text end

deleted text begin (2) the subtraction from federal taxable income for payments received from foreign
corporations or foreign operating corporations under section 290.01, subdivision 19d,
clause (10), shall not be allowed.
deleted text end

deleted text begin If a foreign operating corporation incurs a net loss, neither income nor deduction
from that corporation shall be included in determining the net income of the unitary
business.
deleted text end

deleted text begin (h) deleted text end new text begin (f) new text end For purposes of determining the net income of a unitary business and the
factors to be used in the apportionment of net income pursuant to section 290.191 or
290.20, there must be included only the income and apportionment factors of deleted text begin domestic
corporations or other deleted text end domestic entities other than foreign operating corporations that are
determined to be part of the unitary business pursuant to this subdivision, notwithstanding
that deleted text begin foreign corporations or other deleted text end foreign entities might be included in the unitary business.

deleted text begin (i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter
that are connected with or allocable against dividends, deemed dividends described
in paragraph (g), or royalties, fees, or other like income described in section 290.01,
subdivision 19d, clause (10), shall not be disallowed.
deleted text end

deleted text begin (j) deleted text end new text begin (g) new text end Each deleted text begin corporation or other deleted text end entity, except a sole proprietorship, that is part of
a unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph
deleted text begin (h) deleted text end new text begin (f) new text end must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant
to paragraph deleted text begin (h) deleted text end new text begin (f) new text end in the denominators of the apportionment formula.

deleted text begin (k) If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:
deleted text end

deleted text begin (1) its income includable in the combined report is its income incurred for that part
of the year determined by proration or separate accounting; and
deleted text end

deleted text begin (2) its sales, property, and payroll included in the apportionment formula must
be prorated or accounted for separately.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 36.

Minnesota Statutes 2008, section 290.191, subdivision 4, is amended to read:

Subd. 4.

Apportionment formula for certain mail order businesses.

If the
business of a deleted text begin corporation, deleted text end partnership deleted text begin , deleted text end or proprietorship consists exclusively of the
selling of tangible personal property and services at retail, as defined in section 297A.61,
subdivision 4, paragraph (a), in response to orders received by United States mail,
telephone, facsimile, or other electronic media, and 99 percent of the taxpayer's property
and payroll is within Minnesota, then the taxpayer may apportion net income to Minnesota
based solely upon the percentage that the sales made within this state in connection
with its trade or business during the tax period are of the total sales wherever made in
connection with the trade or business during the tax period. Property and payroll factors
are disregarded. In determining eligibility for this subdivision:

(1) the sale not in the ordinary course of business of tangible or intangible assets
used in conducting business activities must be disregarded; and

(2) property and payroll at a distribution center outside of Minnesota are disregarded
if the sole activity at the distribution center is the filling of orders, and no solicitation
of orders occurs at the distribution center.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 37.

Minnesota Statutes 2008, section 290.32, is amended to read:

290.32 TAXES FOR PART OF YEAR, COMPUTATION.

When under this chapter a taxpayer is permitted or required to make a return for a
fractional part of a year, the tax shall be computed in the same manner as if such fractional
part of a year were an entire year, except:

(1) A taxpayer who is permitted to change the basis for reporting income from a
fiscal to a calendar year shall make a separate return for the period between the close of
the taxpayer's last fiscal year and the following December 31st; if the change is from a
calendar to a fiscal year, a separate return shall be made for the period between the close
of the taxpayer's last calendar year and the date designated as the close of the fiscal year;
and if the change is from one fiscal year to another fiscal year, a separate return shall be
made for the period between the close of the former fiscal year and the date designated as
the close of the new fiscal year. deleted text begin The taxable net income, or for corporations the taxable
net income as reduced by the deductions contained in section 290.21, for any such period
shall be put on an annual basis by multiplying the amount thereof by 12 and dividing by
the number of months included in the period for which such separate return is made; and
the tax shall be that part of a tax, computed on the taxable net income put on such annual
basis which the number of months in such period bears to 12 months. deleted text end

(2) Where any of the enumerated changes in accounting period referred to in clause
(1) involve a 52-53 week fiscal year and any such change results in a short period of less
than seven days, such short period shall be added to and deemed a part of the following
taxable year. If the change results in a short period of seven or more days, but less than
359 days, the taxable net income, or for corporations the taxable net income as reduced
by the deductions contained in section 290.21, for any such period shall be placed on an
annual basis by multiplying such income by 365 and dividing the result by the same
number of days in the short period; and the tax shall be that part of a tax, computed on the
taxable net income placed on such annual basis which the number of days in such short
period bears to 365 days. Where the short period is 359 days or more, the tax shall be
computed in the same manner as if such short period were an entire year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 38. new text begin ENVIRONMENTAL QUALITY BOARD DUTIES TRANSFER
REPORT.
new text end

new text begin The commissioners of natural resources, agriculture, and the Pollution Control
Agency, and the Board of Water and Soil Resources shall review the duties of the
Environmental Quality Board and submit a report to the legislature, no later than January
15, 2011, with recommendation on how to transfer those duties to other state entities.
new text end

Sec. 39. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall recode Minnesota Statutes 2008, section 62L.056, as
Minnesota Statutes, section 62J.261.
new text end

Sec. 40. new text begin REPEALER.
new text end

new text begin Subdivision 1. new text end

new text begin Mental health, breast reconstruction, maternity hospital stay
minimum; elimination of overlap with federal laws. new text end

new text begin (a) new text end new text begin Minnesota Statutes 2008,
sections 62A.149, subdivision 1; 62A.152; and 62Q.47, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2008, section 62A.25, new text end new text begin is repealed.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2008, section 62A.0411, new text end new text begin is repealed.
new text end

new text begin Subd. 2. new text end

new text begin Phenylketonuria (PKU) treatment. new text end

new text begin Minnesota Statutes 2008, section
62A.26, new text end new text begin is repealed.
new text end

new text begin Subd. 3. new text end

new text begin Wigs. new text end

new text begin Minnesota Statutes 2008, section 62A.28, new text end new text begin is repealed.
new text end

new text begin Subd. 4. new text end

new text begin Port-wine stain removal. new text end

new text begin Minnesota Statutes 2008, section 62A.304, new text end new text begin is
repealed.
new text end

new text begin Subd. 5. new text end

new text begin Taxation; unemployment compensation. new text end

new text begin (a) new text end new text begin Minnesota Statutes 2008,
sections 275.025, subdivision 2; 289A.19, subdivision 2; 289A.26; 290.01, subdivisions
5, 5a, 6b, and 19e; 290.014, subdivision 5; 290.02; 290.06, subdivisions 1, 24, and 27;
290.068, subdivisions 1, 2, 3, 4, and 5; 290.0921, subdivisions 1, 2, 3, 3a, 4, 6, 7, and 8;
290.21, subdivisions 1 and 4; 290.34, subdivisions 1 and 2; 290.371, subdivisions 1, 2,
3, and 4; 290.432; 298.01, subdivisions 3, 3a, 3b, 4, 4a, 4b, 4c, 5, and 6; and 298.17, new text end new text begin
and new text end new text begin Minnesota Statutes 2009 Supplement, sections 289A.08, subdivision 3; and 290.01,
subdivisions 19c and 19d, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2008, sections 177.41; 177.42, subdivisions 1, 2, 3, 4, and 5;
177.43, subdivisions 1, 2, 4, 5, 6, 6a, and 7; 177.435; and 177.44, new text end new text begin and new text end new text begin Minnesota Statutes
2009 Supplement, sections 177.42, subdivisions 6 and 7; and 177.43, subdivision 3, new text end new text begin are
repealed.
new text end

new text begin Subd. 6. new text end

new text begin Environmental review; Environmental Quality Board. new text end

new text begin (a) new text end new text begin Minnesota
Statutes 2008, sections 116D.04, subdivisions 1a, 2a, 2b, 3a, 4a, 5a, 6, 6a, 7, 8, 9, 10,
11, 12, and 13; and 116D.045, subdivisions 1, 2, 3, and 4, new text end new text begin and new text end new text begin Minnesota Rules, parts
4410.0200; 4410.0300; 4410.0400; 4410.0500; 4410.1000; 4410.1100; 4410.1200;
4410.1300; 4410.1400; 4410.1500; 4410.1600; 4410.1700; 4410.2000; 4410.2100;
4410.2200; 4410.2300; 4410.2400; 4410.2500; 4410.2600; 4410.2700; 4410.2800;
4410.2900; 4410.3000; 4410.3100; 4410.3600; 4410.3610; 4410.3700; 4410.3800;
4410.3900; 4410.4000; 4410.4300; 4410.4400; 4410.4500; 4410.4600; 4410.5000;
4410.5100; 4410.5200; 4410.5300; 4410.5400; 4410.5500; 4410.5600; 4410.6000;
4410.6100; 4410.6200; 4410.6410; 4410.6500; and 4410.7055, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2008, sections 116C.01; 116C.02; 116C.03, subdivisions
1, 2, 2a, 3a, 4, 5, and 6; 116C.04, subdivisions 1, 2, 3, 4, 7, 10, and 11; 116C.06; and
116C.08, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The provisions of subdivision 5, paragraph (a), relating to
income, corporate franchise, and mining taxation are effective for taxable years beginning
after December 31, 2009. The provisions of subdivision 5, paragraph (a), relating to
property taxation are effective for taxes payable in 2011 and thereafter. The provisions of
subdivision 5, paragraph (b), are effective for contracts entered into after June 30, 2011.
new text end

new text begin Subdivision 6, paragraph (a), is effective July 1, 2010. Subdivision 6, paragraph (b),
is effective July 1, 2011.
new text end