HF 3967

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; changing accelerated sales tax, cigarette and tobacco tax, and
liquor tax liability; creating Surplus Lines Association of Minnesota; changing
the rent percentage for purposes of property tax refund; abolishing political
contribution refund; creating a tax debtor matching system; requiring certain tax
withholding by contractors; changing income apportionment; providing income
tax subtractions for certain retirement pay for service in the armed forces and for
certain compensation for active duty performed in the state; modifying taxation
of foreign operating corporations; providing a regional investment credit;
providing a direct sales tax exemption for small businesses; providing income
tax additions; changing the computation of unrefunded gas tax on all-terrain
vehicles; reducing the general sales and use tax rate; modifying definition of
retail sale and other sales and use tax definitions; modifying job opportunity
building zone duration limits; imposing levy limits; providing tax base
adjustments; providing transition aid for certain local governments; conforming
to certain changes in the Internal Revenue Code; appropriating money; amending
Minnesota Statutes 2006, sections 60A.196; 116J.03, by adding a subdivision;
270A.03, subdivision 7; 270B.085, by adding a subdivision; 275.70, subdivision
5, by adding a subdivision; 275.71, subdivisions 1, 2, 4, 5; 289A.02, subdivision
7; 289A.20, subdivision 4; 289A.50, subdivision 1; 289A.60, subdivision 15;
290.01, subdivisions 6, 6b, 19a, 19c, 19d; 290.06, subdivision 2c, by adding
a subdivision; 290.091, subdivision 2; 290.191, subdivisions 5, 6; 290.92, by
adding a subdivision; 290A.03, subdivisions 11, 13; 291.005, subdivision
1; 296A.18, subdivision 4; 297A.61, subdivision 4, by adding subdivisions;
297A.63, subdivision 1; 297A.67, subdivision 8; 297B.02, subdivision 1;
297F.09, subdivision 10; 297G.09, subdivision 9; 469.312, subdivision 5;
Minnesota Statutes 2007 Supplement, sections 290.01, subdivisions 19, 19b, 31;
290A.03, subdivision 15; 297A.62, subdivision 1; proposing coding for new law
in Minnesota Statutes, chapters 13B; 60A; 116J; repealing Minnesota Statutes
2006, sections 10A.322, subdivision 4; 290.06, subdivision 23; 295.60.

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

Section 1.

new text begin [13B.07] TAX DEBTOR DATA MATCHES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin The definitions in this subdivision apply to this section.
new text end

new text begin (a) "Account" means demand deposit account, checking account, negotiable order of
withdrawal account, savings account, time deposit account, money market mutual fund
account, or certificate of deposit account, and any funds or property held by a financial
institution, as defined in paragraph (e).
new text end

new text begin (b) "Account information" means the type of account, the account number, whether
the account is singly or jointly owned, and in the case of jointly owned accounts the name
and address of the nondebtor account owner if available.
new text end

new text begin (c) "Commissioner" means the commissioner of revenue.
new text end

new text begin (d) "Debtor" means a person whose property is subject to a tax lien and a notice of
lien has been filed by the commissioner as provided by section 270C.63, subdivision 2.
new text end

new text begin (e) "Financial institution" means any of the following that do business in this state:
new text end

new text begin (1) federal or state commercial banks and federal or state savings banks, including
savings and loan associations and cooperative banks;
new text end

new text begin (2) federal and state chartered credit unions;
new text end

new text begin (3) benefit associations;
new text end

new text begin (4) life insurance companies;
new text end

new text begin (5) safe deposit companies;
new text end

new text begin (6) money market mutual funds; or
new text end

new text begin (7) a similar entity that holds property or maintains accounts reflecting property
belonging to others.
new text end

new text begin (f) "Person" means a person as defined in section 270C.01, subdivision 6.
new text end

new text begin Subd. 2. new text end

new text begin Data match system established. new text end

new text begin The commissioner shall establish a
process for the comparison of account information data held by financial institutions with
the Department of Revenue's database of debtors. The commissioner shall inform the
financial industry of the requirements of this section and the means by which financial
institutions can comply.
new text end

new text begin Subd. 3. new text end

new text begin Duty to provide data. new text end

new text begin Within 30 days of a request by the commissioner,
a financial institution shall provide to the commissioner the name, address, and account
information for each debtor who maintains an account at the financial institution. The
commissioner may request from a financial institution the data concerning any debtor
not more than four times a year.
new text end

new text begin Subd. 4. new text end

new text begin Method to provide data. new text end

new text begin The commissioner must provide an electronic
list of debtors to the financial institution that includes debtors' name, address, and if an
individual, the last four digits of the Social Security number. The financial institution must
compare that data to the data maintained at the financial institution to identify which of the
listed debtors maintains an account at the financial institution.
new text end

new text begin Subd. 5. new text end

new text begin Means to provide data. new text end

new text begin A financial institution must provide the required
data in encrypted form by secure electronic means authorized by the commissioner.
new text end

new text begin Subd. 6. new text end

new text begin Access to data. new text end

new text begin (a) With regard to data on debtors provided by the
commissioner to a financial institution under subdivision 4, the financial institution shall
retain the reported information only until the financial institution's database is compared
against the commissioner's database. Data that does not pertain to an account holder at
the financial institution must be immediately destroyed, and no retention or publication
of that data shall be made by the financial institution. None of the data provided by the
commissioner may be used for solicitation or other commercial purposes by the financial
institutions or other commercial entities.
new text end

new text begin (b) All account information provided by a financial institution that pertains to a
debtor listed in the commissioner's database must be incorporated into the commissioner's
database. Access to that data is governed by chapters 13 and 270B. Notwithstanding
section 16D.06, data collected pursuant to this section is available for the collection of
delinquent taxes only and is not available for other debt collection activities undertaken by
the state.
new text end

new text begin Subd. 7. new text end

new text begin Fees. new text end

new text begin A financial institution may charge and collect a fee from the
commissioner for providing account information to the commissioner. The commissioner
may pay a financial institution up to $150 each quarter. The commissioner shall develop
procedures for the financial institutions to charge and collect the fee. Payment of the fee
is limited by the amount of the appropriation for this purpose. If the appropriation is
insufficient, or if fund availability in the fourth quarter would allow payments for actual
costs in excess of $150, the commissioner shall prorate the available funds among the
financial institutions that have submitted a claim for the fee. No financial institution shall
charge or collect a fee that exceeds its actual costs of complying with this section.
new text end

new text begin Subd. 8. new text end

new text begin Failure to respond to request for information. new text end

new text begin The commissioner shall
send a written notice of noncompliance to a financial institution that fails to respond to a
first written request for information under this section. The notice must be sent by certified
mail and must explain the requirements of this section and advise the financial institution
of the penalty for noncompliance. A financial institution that receives a second notice of
noncompliance is subject to a civil penalty of $1,000 for its failure to comply. A financial
institution that continues to fail to comply with this section is subject to a civil penalty of
$5,000 for the third and each subsequent failure to comply. These penalties are imposed
and collected under section 270C.33, subdivision 4, paragraph (a), clause (5).
new text end

new text begin Subd. 9. new text end

new text begin Confidentiality. new text end

new text begin A financial institution furnishing a report to the
commissioner under this section is prohibited from disclosing to a debtor that the name of
the debtor has been received from or furnished to the commissioner.
new text end

new text begin Subd. 10. new text end

new text begin Immunity. new text end

new text begin A financial institution that provides or reasonably attempts to
provide information to the commissioner in compliance with this section is not liable to
any person for disclosing the information or for taking any other action in good faith as
authorized by this section.
new text end

new text begin Subd. 11. new text end

new text begin Civil action for unauthorized disclosure by financial institution. new text end

new text begin (a)
An account holder may bring a civil action in district court against a financial institution
for unauthorized disclosure of data received from the commissioner under subdivision 4.
A financial institution found to have violated this subdivision shall be liable as provided in
paragraph (b) or (c).
new text end

new text begin (b) Any financial institution that willfully and maliciously discloses data received
from the commissioner under subdivision 4 is liable to that account holder in an amount
equal to the sum of:
new text end

new text begin (1) any actual damages sustained by the account holder as a result of the disclosure;
and
new text end

new text begin (2) in the case of any successful action to enforce any liability under this subdivision,
the costs of the action taken plus reasonable attorney fees as determined by the court.
new text end

new text begin (c) Any financial institution that negligently discloses data received from the
commissioner under subdivision 4 is liable to that account holder in an amount equal to
any actual damages sustained by the account holder as a result of the disclosure.
new text end

new text begin (d) A financial institution shall not be held liable in any action brought under this
subdivision if the financial institution shows, by a preponderance of evidence, that the
disclosure was not intentional and resulted from a bona fide error notwithstanding the
maintenance of procedures reasonably adopted to avoid any error.
new text end

new text begin Subd. 12. new text end

new text begin Financial institution data match and payment of fees and
administrative costs. new text end

new text begin $250,000 is appropriated annually from the general fund to the
commissioner of revenue to make payments to financial institutions in exchange for
performing data matches between account information held by financial institutions and
the commissioner's database of tax debtors as authorized by section 13B.07, subdivision 7.
$110,000 is appropriated annually from the general fund to the commissioner of revenue
for the costs of administering the data match system under section 13B.07.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 2.

Minnesota Statutes 2006, section 60A.196, is amended to read:

60A.196 DEFINITIONS.

Unless the context otherwise requires, the following terms have the meanings given
them for the purposes of sections 60A.195 to 60A.209:

(a) "Surplus lines insurance" means insurance placed with an insurer permitted
to transact the business of insurance in this state only pursuant to sections 60A.195 to
60A.209.

(b) "Eligible surplus lines insurer" means an insurer recognized as eligible to write
insurance business under sections 60A.195 to 60A.209 but not licensed by any other
Minnesota law to transact the business of insurance.

(c) "Ineligible surplus lines insurer" means an insurer not recognized as an eligible
surplus lines insurer pursuant to sections 60A.195 to 60A.209 and not licensed by any
other Minnesota law to transact the business of insurance. "Ineligible surplus lines
insurer" includes a risk retention group as defined under the Liability Risk Retention
Act, Public Law 99-563.

(d) "Surplus lines licensee" or "licensee" means a person licensed under sections
60A.195 to 60A.209 to place insurance with an eligible or ineligible surplus lines insurer.

(e) "Association" means an association registered under section 60A.208.

(f) "Alien insurer" means any insurer which is incorporated or otherwise organized
outside of the United States.

(g) "Insurance laws" means chapters 60 to 79 inclusive.

new text begin (h) "Stamping" means electronically assigning a unique identifying number that is
specific to a submitted policy, contract, or insurance document.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to policies written or renewed on or after that date.
new text end

Sec. 3.

new text begin [60A.2085] SURPLUS LINES ASSOCIATION OF MINNESOTA.
new text end

new text begin Subdivision 1. new text end

new text begin Association created; duties. new text end

new text begin There is hereby created a nonprofit
association to be known as the Surplus Lines Association of Minnesota. All surplus lines
licensees are members of this association. Section 60A.208, subdivision 5, does not apply
to the provisions of this section. The association shall perform its functions under the
plan of operation established under subdivision 3 and must exercise its powers through a
board of directors established under subdivision 2. The association shall be authorized
and have the duty to:
new text end

new text begin (1) receive, record, and stamp all surplus lines insurance documents that surplus
lines licensees are required to file with the association;
new text end

new text begin (2) prepare and deliver monthly to the commissioners of revenue and commerce a
report regarding surplus lines business. The report must include a list of all the business
procured during the preceding month, in the form the commissioners prescribe;
new text end

new text begin (3) educate its members regarding the surplus lines law of this state including
insurance tax responsibilities and the rules and regulations of the commissioners of
revenue and commerce relative to surplus lines insurance;
new text end

new text begin (4) communicate with organizations of agents, brokers, and admitted insurers with
respect to the proper use of the surplus lines market;
new text end

new text begin (5) employ and retain persons necessary to carry out the duties of the association;
new text end

new text begin (6) borrow money necessary to effect the purposes of the association;
new text end

new text begin (7) enter contracts necessary to effect the purposes of the association;
new text end

new text begin (8) provide other services to its members that are incidental or related to the
purposes of the association; and
new text end

new text begin (9) take other actions reasonably required to implement the provisions of this section.
new text end

new text begin Subd. 2. new text end

new text begin Board of directors. new text end

new text begin (a) The commissioner shall appoint an interim board
of five directors within 30 days of enactment of this section. The interim board must:
new text end

new text begin (1) establish a plan of operation within 60 days after the appointment of the interim
board;
new text end

new text begin (2) create a stamping office that is operational no later than December 31, 2008; and
new text end

new text begin (3) conduct an election for a board of directors by the membership after December
31, 2008, and no later than one year after the appointment of the interim board.
new text end

new text begin (b) Once the responsibilities of the interim board in paragraph (a) are fulfilled, the
association shall function through a board of directors composed of the following:
new text end

new text begin (1) one director appointed by the commissioner of revenue;
new text end

new text begin (2) one director appointed by the commissioner of commerce; and
new text end

new text begin (3) at least five but no more than seven directors elected by the members. The
elected directors must be members of the association.
new text end

new text begin Directors may serve until their successors are appointed or elected and their terms
are completed as outlined in the plan of operation.
new text end

new text begin Subd. 3. new text end

new text begin Plan of operation. new text end

new text begin (a) The plan of operation shall provide for the
formation, operation, and governance of the association. The plan of operation must
provide for the election of a board of directors by the members of the association. The
board of directors shall elect officers as provided for in the plan of operation. The plan
of operation shall establish the manner of voting and may weigh each member's vote to
reflect the annual surplus lines insurance premium written by the member. Members
employed by the same or affiliated employers may consolidate their premiums written
and delegate an individual officer or partner to represent the member in the exercise of
association affairs, including service on the board of directors.
new text end

new text begin (b) The plan of operation shall provide for an independent audit once each year of all
the books and records of the association and a report of such independent audit shall be
made to the board of directors, the commissioner of revenue, and the commissioner of
commerce, with a copy made available to each member to review at the association office.
new text end

new text begin (c) The plan of operation and any amendments to the plan of operation shall be
submitted to the commissioner and shall be effective upon approval in writing by the
commissioner. The association and all members shall comply with the plan of operation or
any amendments to it. Failure to comply with the plan of operation or any amendments
shall constitute a violation for which the commissioner may issue an order requiring
discontinuance of the violation.
new text end

new text begin (d) If the interim board of directors fails to submit a suitable plan of operation
within 60 days following the creation of the interim board, or if at any time thereafter the
association fails to submit required amendments to the plan, the commissioner may submit
to the association a plan of operation or amendments to the plan, which the association
must follow. The plan of operation or amendments submitted by the commissioner shall
continue in force until amended by the commissioner or superseded by a plan of operation
or amendment submitted by the association and approved by the commissioner. A plan
of operation or an amendment submitted by the commissioner constitutes an order of
the commissioner.
new text end

new text begin Subd. 4. new text end

new text begin Reporting requirement. new text end

new text begin The association shall file with the commissioner:
new text end

new text begin (1) a copy of its plan of operation and any amendments to it;
new text end

new text begin (2) a current list of its members revised at least annually; and
new text end

new text begin (3) the name and address of a member of the board residing in this state upon
whom notices or orders of the commissioner or processes issued at the direction of the
commissioner may be served.
new text end

new text begin Subd. 5. new text end

new text begin Examination. new text end

new text begin The commissioner shall, at such times as deemed necessary,
make or cause to be made an examination of the association. The officers, managers,
agents, and employees of the association may be examined at any time, under oath, and
shall exhibit all books, records, accounts, documents, or agreements governing its method
of operation. The commissioner shall furnish a copy of the examination report to the
association. If the commissioner finds the association to be in violation of this section, the
commissioner may issue an order requiring the discontinuance of the violation.
new text end

new text begin Subd. 6. new text end

new text begin Immunity. new text end

new text begin There shall be no liability on the part of and no causes of action
of any nature shall arise against the association, its directors, officers, agents, or employees
for any action taken or omitted by them in the performance of their powers and duties
under this section, absent gross negligence or willful misconduct.
new text end

new text begin Subd. 7. new text end

new text begin Stamping fee. new text end

new text begin The services performed by the association shall be
funded by a stamping fee assessed for each premium-bearing document submitted to
the association. The stamping fee shall be established by the board of directors of the
association from time to time. The stamping fee shall be paid by the insured to the surplus
lines licensee and remitted electronically to the association by the surplus lines licensee.
new text end

new text begin Subd. 8. new text end

new text begin Data classification. new text end

new text begin Unless otherwise classified by statute, a temporary
classification under section 13.06, or federal law, information obtained by the
commissioner from the association is public, except that any data identifying insureds is
private data on individuals or nonpublic data as defined in section 13.02, subdivisions
9 and 12.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to policies written or renewed on or after that date.
new text end

Sec. 4.

new text begin [60A.2086] LICENSEE'S DUTY TO SUBMIT DOCUMENTS; PENALTY.
new text end

new text begin Subdivision 1. new text end

new text begin Submission of documents to the Surplus Lines Association
of Minnesota; certification. new text end

new text begin (a) A surplus lines licensee shall submit every insurance
policy or contract issued under the licensee's license to the Surplus Lines Association of
Minnesota for recording and stamping. The submission and stamping must be effected
through electronic means. The submission must include:
new text end

new text begin (1) the name of the insured;
new text end

new text begin (2) a description and location of the insured property or risk;
new text end

new text begin (3) the amount insured;
new text end

new text begin (4) the gross premiums charged or returned;
new text end

new text begin (5) the name of the surplus lines insurer from whom coverage has been procured;
new text end

new text begin (6) the kind or kinds of insurance procured; and
new text end

new text begin (7) the amount of premium subject to tax.
new text end

new text begin (b) The submission of insurance policies or contracts to the Surplus Lines
Association of Minnesota constitutes a certification by the surplus lines licensee, or by the
insurance producer who presented the risk to the surplus lines licensee for placement as a
surplus lines risk, that the insurance policies or contracts were procured in accordance
with sections 60A.195 to 60A.209.
new text end

new text begin Subd. 2. new text end

new text begin Stamping requirement; penalty. new text end

new text begin (a) It shall be unlawful for an insurance
agent, broker, or surplus lines licensee to deliver in this state any surplus lines insurance
policy or contract unless the insurance document is stamped by the association. A
licensee's failure to comply with the requirements of this subdivision shall not affect the
validity of the coverage.
new text end

new text begin (b) Any insurance agent, broker, or surplus lines licensee who delivers in this state
any insurance policy or contract that has not been stamped by the association shall be
subject to a penalty payable to the commissioner as follows:
new text end

new text begin (1) $50 for delivery of the first unstamped policy;
new text end

new text begin (2) $250 for delivery of a second unstamped policy; and
new text end

new text begin (3) $1,000 per policy for delivery of any additional unstamped policies.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2009, and applies to
policies written or renewed after December 31, 2008.
new text end

Sec. 5.

Minnesota Statutes 2006, section 116J.03, is amended by adding a subdivision
to read:

new text begin Subd. 4. new text end

new text begin Targeted rural opportunity community. new text end

new text begin "Targeted rural opportunity
community" means a city or township in a county that either lost population from 1980
to 2000 according to the decennial census or had an unemployment rate higher than the
Minnesota state annual average in 2006 according to local area unemployment statistics
published by the Department of Employment and Economic Development.
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. 6.

new text begin [116J.8746] REGIONAL EMERGING BUSINESS INVESTMENT TAX
CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the following terms
have the meanings given:
new text end

new text begin (1) "Qualifying small business" means a business that:
new text end

new text begin (i) for a business with five or more employees, pays wages and benefits, measured
on a full-time equivalent basis, to 75 percent or more of its employees in excess of the first
five employees, equal to 110 percent of the federal poverty level for a family of four;
new text end

new text begin (ii) 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 (iii) 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 (iv) has its headquarters in Minnesota;
new text end

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

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

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

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

new text begin (x) has not previously received more than $1,000,000 in investments that have
qualified for and received tax credits under this section; and
new text end

new text begin (2) "regional investment fund" means a pooled investment fund that:
new text end

new text begin (i) invests in qualifying small businesses located in the region of the state that is the
focus of the fund;
new text end

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

new text begin (iii) has no fewer than five separate investors, each not owning more than 25 percent
of the outstanding ownership interests in the fund. For purposes of determining the number
of investors and the ownership interest of an investor under this clause, the ownership
interests of an investor include those of the investor's spouse, children, and siblings, and
any of the investor's corporations, partnerships, and trusts in which the investor has a
controlling equity interest or in which the investor exercises management control.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer is allowed a credit against the tax imposed
under chapter 290 for qualifying investment made in the year by a qualifying regional
investment fund. The credit equals 25 percent of the taxpayer's investment made in the
fund, 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; and
new text end

new text begin (2) the amount of the certificate provided to the taxpayer by the fund under
subdivision 4.
new text end

new text begin Subd. 3. new text end

new text begin Qualifying regional investment fund requirements. new text end

new text begin (a) To be certified as
a qualifying regional investment fund for 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, or plans to invest, to qualified
small businesses within the region.
new text end

new text begin (b) Investments from other regional investment funds into the qualified small
business shall count toward the allocation in paragraph (a), clause (2).
new text end

new text begin (c) new text end new text begin 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 of employment and economic development for certification as a qualified
regional investment fund. The application must be in the form and made under the
procedures specified by the commissioner.
new text end

new text begin (b) The commissioner may certify up to 20 funds. Certifications shall be awarded
in the order of qualifying applications received. Of the 20 funds, the commissioner may
certify no more than three funds that seek business investment opportunities that may
qualify for and receive tax credits under this section in more than 15 Minnesota counties,
no more than five funds 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, and no more than three funds that seek business investment
opportunities that may qualify for and receive tax credits under this subdivision in the
same region of the state.
new text end

new text begin (c) new text end new text begin The commissioner may provide certificates entitling investors in a certified fund
to credits under this provision of up to $600,000 for each fund upon receipt of a report
from the fund showing evidence of compliance with the agreement under subdivision 5,
including investment in a qualifying small business. The commissioner may not issue a
total amount of certificates for all funds of more than $3,000,000 in fiscal year 2009. If
less than $3,000,000 of certificates are issued, the remaining funds may be carried over
to the following two fiscal years. Certificates may only be issued for investments made
by qualified funds in qualifying small businesses located in the region in which the fund
operates.
new text end

new text begin Subd. 5. new text end

new text begin Fund requirements. new text end

new text begin The commissioner of employment and economic
development shall enter into an agreement with each of the qualifying regional investment
funds certified under subdivision 4. Each agreement must include a provision requiring
the qualifying regional investment fund to report on the employment figures, wages,
and benefits paid by the businesses in which investments are made, or are planned to
be made, and a provision stating the specific manner in which the regional investment
fund agrees to satisfy the requirement to allocate at least 60 percent of its investments to
qualified small businesses within the region. The commissioner shall define "region"
for the purposes of this section.
new text end

new text begin Subd. 6. new text end

new text begin Limitations. new text end

new text begin The taxpayer must claim the credit in the same tax year
for which the fund receives the tax credit certificate under subdivision 4. The credit is
allowed only for investments made in qualifying regional investment funds after the
fund is certified by the commissioner of employment and economic development under
subdivision 4.
new text end

new text begin Subd. 7. new text end

new text begin Statement of credit share. new text end

new text begin Each fund must provide to each investor
a statement indicating the investor's share of the credit certified to the fund under
subdivision 4, based on the investor's pro rata investment in the fund at the time of the
investment in the qualified small business.
new text end

new text begin Subd. 8. new text end

new text begin Carryover. new text end

new text begin If the amount of the credit under this section for any taxable
year exceeds the amount reached under subdivision 2, clause (1), 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. 9. new text end

new text begin False applications. new text end

new text begin (a) A taxpayer who has received a credit under this act
for an investment in a regional investment fund forfeits any unused credit if:
new text end

new text begin (1) the regional investment fund does not meet the conditions of subdivision 3; or
new text end

new text begin (2) the small business invested in by the fund does not meet the conditions in
subdivision 1.
new text end

new text begin (b) Any credits taken on a tax return shall be returned to the commissioner of
revenue as an underpayment of tax, if:
new text end

new text begin (1) the regional investment fund does not meet the conditions of subdivision 3; or
new text end

new text begin (2) the small business invested in by the fund does not meet the conditions in
subdivision 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008, for taxable years
beginning after December 31, 2007, and only applies to investments made after the fund
has been certified by the commissioner of employment and economic development.
new text end

Sec. 7.

Minnesota Statutes 2006, section 270A.03, subdivision 7, is amended to read:

Subd. 7.

Refund.

"Refund" means an individual income tax refund deleted text begin or political
contribution refund deleted text end , pursuant to chapter 290, or a property tax credit or refund, pursuant to
chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.

For purposes of this chapter, lottery prizes, as set forth in section 349A.08,
subdivision 8, and amounts granted to persons by the legislature on the recommendation
of the joint senate-house of representatives Subcommittee on Claims shall be treated
as refunds.

In the case of a joint property tax refund payable to spouses under chapter 290A,
the refund shall be considered as belonging to each spouse in the proportion of the total
refund that equals each spouse's proportion of the total income determined under section
290A.03, subdivision 3. In the case of a joint income tax refund under chapter 289A, the
refund shall be considered as belonging to each spouse in the proportion of the total
refund that equals each spouse's proportion of the total taxable income determined under
section 290.01, subdivision 29. The commissioner shall remit the entire refund to the
claimant agency, which shall, upon the request of the spouse who does not owe the debt,
determine the amount of the refund belonging to that spouse and refund the amount to
that spouse. For court fines, fees, and surcharges and court-ordered restitution under
section 611A.04, subdivision 2, the notice provided by the commissioner of revenue under
section 270A.07, subdivision 2, paragraph (b), serves as the appropriate legal notice
to the spouse who does not owe the debt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for political contribution refund
claims based on contributions that are made after June 30, 2008.
new text end

Sec. 8.

Minnesota Statutes 2006, section 270B.085, is amended by adding a
subdivision to read:

new text begin Subd. 4. new text end

new text begin Data matching program for collection of tax debts. new text end

new text begin The commissioner
may disclose the name, last known address, and Social Security number of taxpayers who
owe delinquent state taxes for the purpose of administering the tax debt data matching
program with financial institutions under section 13B.07.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 9.

Minnesota Statutes 2006, section 275.70, subdivision 5, is amended to read:

Subd. 5.

Special levies.

"Special levies" means those portions of ad valorem taxes
levied by a local governmental unit for the following purposes or in the following manner:

(1) to pay the costs of the principal and interest on bonded indebtedness or to
reimburse for the amount of liquor store revenues used to pay the principal and interest
due on municipal liquor store bonds in the year preceding the year for which the levy
limit is calculated;

(2) to pay the costs of principal and interest on certificates of indebtedness issued for
any corporate purpose except for the following:

(i) tax anticipation or aid anticipation certificates of indebtedness;

(ii) certificates of indebtedness issued under sections 298.28 and 298.282;

(iii) certificates of indebtedness used to fund current expenses or to pay the costs of
extraordinary expenditures that result from a public emergency; or

(iv) certificates of indebtedness used to fund an insufficiency in tax receipts or
an insufficiency in other revenue sources;

(3) to provide for the bonded indebtedness portion of payments made to another
political subdivision of the state of Minnesota;

(4) to fund payments made to the Minnesota State Armory Building Commission
under section 193.145, subdivision 2, to retire the principal and interest on armory
construction bonds;

(5) property taxes approved by voters which are levied against the referendum
market value as provided under section 275.61;

(6) to fund matching requirements needed to qualify for federal or state grants or
programs to the extent that either (i) the matching requirement exceeds the matching
requirement in calendar year deleted text begin 2001 deleted text end new text begin 2008 new text end , or (ii) it is a new matching requirement that
did not exist prior to deleted text begin 2002 deleted text end new text begin 2009 new text end ;

(7) to pay the expenses reasonably and necessarily incurred in preparing for or
repairing the effects of natural disaster including the occurrence or threat of widespread
or severe damage, injury, or loss of life or property resulting from natural causes, in
accordance with standards formulated by the Emergency Services Division of the state
Department of Public Safety, as allowed by the commissioner of revenue under section
275.74, subdivision 2;

(8) pay amounts required to correct an error in the levy certified to the county
auditor by a city or county in a levy year, but only to the extent that when added to the
preceding year's levy it is not in excess of an applicable statutory, special law or charter
limitation, or the limitation imposed on the governmental subdivision by sections 275.70
to 275.74 in the preceding levy year;

(9) to pay an abatement under section 469.1815;

(10) to pay any costs attributable to increases in the employer contribution rates
under chapter 353 that are effective after June 30, deleted text begin 2001 deleted text end new text begin 2008 new text end ;

(11) to pay the operating or maintenance costs of a county jail as authorized in
section 641.01 or 641.262, or of a correctional facility as defined in section 241.021,
subdivision 1, paragraph (f), to the extent that the county can demonstrate to the
commissioner of revenue that the amount has been included in the county budget as
a direct result of a rule, minimum requirement, minimum standard, or directive of the
Department of Corrections, or to pay the operating or maintenance costs of a regional jail
as authorized in section 641.262. For purposes of this clause, a district court order is
not a rule, minimum requirement, minimum standard, or directive of the Department of
Corrections. If the county utilizes this special levy, except to pay operating or maintenance
costs of a new regional jail facility under sections 641.262 to 641.264 which will not
replace an existing jail facility, any amount levied by the county in the previous levy year
for the purposes specified under this clause and included in the county's previous year's
levy limitation computed under section 275.71, shall be deducted from the levy limit
base under section 275.71, subdivision 2, when determining the county's current year
levy limitation. The county shall provide the necessary information to the commissioner
of revenue for making this determination;

(12) to pay for operation of a lake improvement district, as authorized under section
103B.555. If the county utilizes this special levy, any amount levied by the county in the
previous levy year for the purposes specified under this clause and included in the county's
previous year's levy limitation computed under section 275.71 shall be deducted from
the levy limit base under section 275.71, subdivision 2, when determining the county's
current year levy limitation. The county shall provide the necessary information to the
commissioner of revenue for making this determination;

(13) to repay a state or federal loan used to fund the direct or indirect required
spending by the local government due to a state or federal transportation project or other
state or federal capital project. This authority may only be used if the project is not a
local government initiative;

(14) to pay for court administration costs as required under section 273.1398,
subdivision 4b, less the deleted text begin (i) deleted text end county's share of transferred fines and fees collected by the
district courts in the county deleted text begin for deleted text end new text begin in the prior new text end calendar year deleted text begin 2001 and (ii) the aid amount
certified to be paid to the county in 2004 under section 273.1398, subdivision 4c; however,
for taxes levied to pay for these costs in the year in which the court financing is transferred
to the state, the amount under this clause is limited to the amount of aid the county is
certified to receive under section 273.1398, subdivision 4a deleted text end ;

(15) to fund a police or firefighters relief association as required under section 69.77
to the extent that the required amount exceeds the amount levied for this purpose in deleted text begin 2001 deleted text end new text begin
the prior year new text end ;

(16) for purposes of a storm sewer improvement district under section 444.20; and

(17) to pay for the maintenance and support of a city or county society for the
prevention of cruelty to animals under section 343.11. If the city or county uses this
special levy, any amount levied by the city or county in the previous levy year for the
purposes specified in this clause and included in the city's or county's previous year's levy
limit computed under section 275.71, must be deducted from the levy limit base under
section 275.71, subdivision 2, in determining the city's or county's current year levy limit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 10.

Minnesota Statutes 2006, section 275.70, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Levy year. new text end

new text begin A reference in sections 275.70 to 275.74 to a "levy year," or a
year in which taxes are levied, refers to the year in which property tax levies are certified
under section 275.07 for taxes payable in the following year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 11.

Minnesota Statutes 2006, section 275.71, subdivision 1, is amended to read:

Subdivision 1.

Limit on levies.

Notwithstanding any other provision of law or
municipal charter to the contrary which authorize ad valorem taxes in excess of the limits
established by sections 275.70 to 275.74, the provisions of deleted text begin this section deleted text end new text begin sections 275.70
to 275.74 new text end apply to local governmental units for all purposes other than those for which
special levies and special assessments are made.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 12.

Minnesota Statutes 2006, section 275.71, subdivision 2, is amended to read:

Subd. 2.

Levy limit base.

The levy limit base for a local governmental unit for
taxes levied in deleted text begin 2003 deleted text end new text begin 2008 and thereafter new text end is equal to deleted text begin its adjusted levy limit base in the
previous year, deleted text end new text begin the amount it levied in the prior year new text end subject to any adjustments under
section 275.72 deleted text begin , plus any aid amounts received in 2003 under section 273.138 or 273.166,
minus the difference between its levy limit under subdivision 5 for taxes levied in 2002
and the amount it actually levied under that subdivision in that year, and certified property
tax replacement aid payable in 2003 under section 174.242 deleted text end new text begin less the amounts it levied in
the prior year as special levies. For taxes levied in 2008 only, the amount of the reduction
for special levies may include amounts that could have been levied as special levies new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 13.

Minnesota Statutes 2006, section 275.71, subdivision 4, is amended to read:

Subd. 4.

Adjusted levy limit base.

deleted text begin (a) deleted text end For taxes levied in deleted text begin 2003 deleted text end new text begin 2008 and thereafter new text end ,
the adjusted levy limit base new text begin for a local government unit new text end is equal to the levy limit base
computed under deleted text begin subdivisions deleted text end new text begin subdivision new text end 2 deleted text begin and 3 deleted text end or section 275.72, deleted text begin reduced by 40 percent
of the difference between (1) the sum of 2003 certified aid payments, under sections
273.138, 273.1398 except for amounts certified under subdivision 4a, paragraph (b),
273.166, 477A.011 to 477A.03, 477A.06, and 477A.07, before any reduction under Laws
2003, First Special Session chapter 21, articles 5 and 6, and (2) the sum of the aids paid
in 2004 under those same sections, after any reductions in 2004 under Laws 2003, First
Special Session chapter 21, articles 5 and 6. deleted text end

deleted text begin (b) For taxes levied in 2003 only, the adjusted levy limit base is increased by 60
percent of the difference between a jurisdiction's market value credit in 2003 before any
reductions under Laws 2003, First Special Session chapter 21, articles 5 and 6, and its
market value credit in 2004 after reductions in Laws 2003, First Special Session chapter
21, articles 5 and 6. deleted text end new text begin for that government unit for the same levy year, multiplied by the
sum of 100 percent plus:
new text end

new text begin (1) the percentage increase in the number of households, if any, for the most recent
12-month period for which data is available; and
new text end

new text begin (2) the lesser of (i) three percent or (ii) the percentage growth in the implicit price
deflator.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 14.

Minnesota Statutes 2006, section 275.71, subdivision 5, is amended to read:

Subd. 5.

Property tax levy limit.

For taxes levied in deleted text begin 2003 deleted text end new text begin 2008 and thereafter new text end , the
property tax levy limit for a local governmental unit is equal to its adjusted levy limit base
determined under subdivision 4 plus any additional levy authorized under section 275.73,
which is levied against net tax capacity deleted text begin , reduced by the sum of (i) the total amount of aids
and reimbursements that the local governmental unit is certified to receive under sections
477A.011 to 477A.014, except for the increases in city aid bases in calendar year 2002
under section 477A.011, subdivision 36, paragraphs (l), (n), and (o), (ii) homestead and
agricultural aids it is certified to receive under section 273.1398, (iii) taconite aids under
sections 298.28 and 298.282 including any aid which was required to be placed in a
special fund for expenditure in the next succeeding year, (iv) temporary court aid under
section 273.1398, subdivision 4a, and (v) estimated payments to the local governmental
unit under section 272.029, adjusted for any error in estimation in the preceding year deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2009 and
thereafter.
new text end

Sec. 15.

Minnesota Statutes 2006, section 289A.02, subdivision 7, is amended to read:

Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin May 18,
2006 deleted text end new text begin February 13, 2008 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. 16.

Minnesota Statutes 2006, section 289A.20, subdivision 4, is amended to read:

Subd. 4.

Sales and use tax.

(a) The taxes imposed by chapter 297A are due and
payable to the commissioner monthly on or before the 20th day of the month following the
month in which the taxable event occurred, or following another reporting period as the
commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph
(f) or (g), except that use taxes due on an annual use tax return as provided under section
289A.11, subdivision 1, are payable by April 15 following the close of the calendar year.

(b) A vendor having a liability of $120,000 or more during a fiscal year ending June
30 must remit the June liability for the next year in the following manner:

(1) Two business days before June 30 of the year, the vendor must remit deleted text begin 78 deleted text end new text begin 85 new text end
percent of the estimated June liability to the commissioner.

(2) On or before August 20 of the year, the vendor must pay any additional amount
of tax not remitted in June.

(c) A vendor having a liability of:

(1) $20,000 or more in the fiscal year ending June 30, 2005; or

(2) $10,000 or more in the fiscal year ending June 30, 2006, and fiscal years
thereafter,

must remit all liabilities on returns due for periods beginning in the subsequent calendar
year by electronic means on or before the 20th day of the month following the month in
which the taxable event occurred, or on or before the 20th day of the month following the
month in which the sale is reported under section 289A.18, subdivision 4, except for deleted text begin 78 deleted text end new text begin 85 new text end
percent of the estimated June liability, which is due two business days before June 30. The
remaining amount of the June liability is due on August 20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales tax payments in June 2009
and thereafter.
new text end

Sec. 17.

Minnesota Statutes 2006, 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, estate tax, or corporate franchise tax 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. deleted text begin The refund allowed by section 290.06, subdivision 23, is also
considered an overpayment. deleted text end 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 political contribution refund
claims based on contributions made after June 30, 2008.
new text end

Sec. 18.

Minnesota Statutes 2006, section 289A.60, subdivision 15, is amended to read:

Subd. 15.

Accelerated payment of June sales tax liability; penalty for
underpayment.

For payments made after December 31, deleted text begin 2006 deleted text end new text begin 2008 new text end , if a vendor is
required by law to submit an estimation of June sales tax liabilities and deleted text begin 78 deleted text end new text begin 85 new text end percent
payment by a certain date, the vendor shall pay a penalty equal to ten percent of the
amount of actual June liability required to be paid in June less the amount remitted in
June. The penalty must not be imposed, however, if the amount remitted in June equals
the lesser of deleted text begin 78 deleted text end new text begin 85 new text end percent of the preceding May's liability or deleted text begin 78 deleted text end new text begin 85 new text end percent of the average
monthly liability for the previous calendar year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales tax payments in June 2009
and thereafter.
new text end

Sec. 19.

Minnesota Statutes 2006, section 290.01, subdivision 6, is amended to read:

Subd. 6.

Taxpayer.

The term "taxpayer" means any person or corporation subject to
a tax imposed by this chapter. deleted text begin For purposes of section 290.06, subdivision 23, the term
"taxpayer" means an individual eligible to vote in Minnesota under section 201.014. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for political contribution refund
claims based on contributions made after June 30, 2008.
new text end

Sec. 20.

Minnesota Statutes 2006, section 290.01, subdivision 6b, is amended to read:

Subd. 6b.

Foreign operating corporation.

The term "foreign operating
corporation," when applied to a corporation, means a domestic corporation with the
following characteristics:

(1) it is part of a unitary business at least one member of which is taxable in this state;

(2) it is not a foreign sales corporation under section 922 of the Internal Revenue
Code, as amended through December 31, 1999, for the taxable year;

(3) new text begin either new text end (i) deleted text begin the average of the percentages of its property and payrolls, including
the pro rata share of its unitary partnerships' property and payrolls, assigned to locations
outside the United States, where the United States includes the District of Columbia and
excludes the commonwealth of Puerto Rico and possessions of the United States, as
determined under section 290.191 or 290.20, is 80 percent or more; or (ii) deleted text end it has in effect a
valid election under section 936 of the Internal Revenue Code; new text begin or (ii) at least 80 percent
of the gross income from all sources of the corporation in the tax year is active foreign
business income; new text end and

(4) deleted text begin it has $1,000,000 of payroll and $2,000,000 of property, as determined under
section 290.191 or 290.20, that are located outside the United States. If the domestic
corporation does not have payroll as determined under section 290.191 or 290.20, but it
or its partnerships have paid $1,000,000 for work, performed directly for the domestic
corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not
require payrolls to be included in the average calculation deleted text end new text begin for purposes of this subdivision,
active foreign business income means gross income that is (i) derived from sources
without the United States, as defined in subtitle A, chapter 1, subchapter N, part 1, of the
Internal Revenue Code; and (ii) attributable to the active conduct of a trade or business in
a foreign country new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 21.

Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19, is
amended to read:

Subd. 19.

Net income.

The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through deleted text begin May 18, 2006 deleted text end new text begin February
13, 2008 new text end , shall be in effect for taxable years beginning after December 31, 1996 deleted text begin , and
before January 1, 2006, and for taxable years beginning after December 31, 2006. The
Internal Revenue Code of 1986, as amended through December 31, 2006, is in effect for
taxable years beginning after December 31, 2005, and before January 1, 2007 deleted text end .

Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
except the changes incorporated by federal changes are effective at the same time as the
changes were effective for federal purposes.
new text end

Sec. 22.

Minnesota Statutes 2006, 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 or sales and use taxes paid or accrued within the taxable
year under this chapter and the amount of taxes based on net income paid or sales and use
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. For the purpose of this paragraph, the
disallowance of itemized deductions under section 68 of the Internal Revenue Code of
1986, income or sales and use tax is the last itemized deduction 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) 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; deleted text begin and
deleted text end

(10) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans deleted text begin . deleted text end new text begin ;
new text end

new text begin (11) the amount deducted for qualified tuition and related expenses under section
222 of the Internal Revenue Code, to the extent deducted from gross income; and
new text end

new text begin (12) 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.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is retroactively effective for taxable years
beginning after December 31, 2006.
new text end

Sec. 23.

Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b,
is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
under the provisions of Public Law 109-1;

(7) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(8) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(9) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

(10) job opportunity building zone income as provided under section 469.316;

(11) new text begin to the extent included in federal taxable income, new text end the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service deleted text begin performed in Minnesota, excluding compensation
for services performed under the Active Guard Reserve (AGR) program deleted text end . For purposes of
this clause, "active service" means (i) state active service as defined in section 190.05,
subdivision 5a, clause (1); new text begin or new text end (ii) federally funded state active service as defined in
section 190.05, subdivision 5b deleted text begin ; or (iii) federal active service as defined in section 190.05,
subdivision 5c, but "active service" excludes services performed exclusively for purposes
of basic combat training, advanced individual training, annual training, and periodic
inactive duty training; special training periodically made available to reserve members;
and service performed in accordance with section 190.08, subdivision 3 deleted text end ;

deleted text begin (12) the amount of compensation paid to Minnesota residents who are members
of the armed forces of the United States or United Nations for active duty performed
outside Minnesota;
deleted text end

deleted text begin (13) deleted text end new text begin (12) new text end an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

deleted text begin (14) deleted text end new text begin (13) new text end in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

deleted text begin (15) deleted text end new text begin (14) new text end to the extent included in federal taxable income, compensation paid to deleted text begin a
nonresident who is deleted text end a service member as defined in United States Code, title 10, section
101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
Law 108-189, section 101(2); deleted text begin and
deleted text end

deleted text begin (16) deleted text end new text begin (15) new text end international economic development zone income as provided under
section 469.325 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (16) to the extent included in federal taxable income, a percentage of compensation
received from a pension or other retirement pay from the government for service in the
armed forces of the United States. For taxable years beginning after December 31, 2008,
and before January 1, 2010, the percentage is 25 percent up to a maximum subtraction
of $7,500; for taxable years beginning after December 31, 2009, and before January 1,
2011, the percentage is 50 percent up to a maximum subtraction of $15,000; for taxable
years beginning after December 31, 2010, and before January 1, 2012, the percentage is
75 percent up to a maximum subtraction of $22,500; and for taxable years beginning
after December 31, 2011, the percentage is 100 percent up to a maximum subtraction of
$30,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2008, except the change in clause (11) to the extent it applies to training
conducted outside of Minnesota is retroactive to taxable years beginning after December
31, 2004.
new text end

Sec. 24.

Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g) new text begin . The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (19), (20),
(21), and (22) new text end ;

(12) 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;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of section 103 of Public Law 109-222;

(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) 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)(1)(A) and (k)(4)(A) 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)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) 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)(1)(A) and (k)(4)(A) is allowed;

(16) 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;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code; deleted text begin and
deleted text end

(18) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans new text begin ;
new text end

new text begin (19) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a corporation that is a member of the taxpayer's unitary business group that qualifies
as a foreign operating corporation. For purposes of this clause, intangible expenses and
costs include:
new text end

new text begin (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;
new text end

new text begin (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar expenses and costs new text end .

new text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
new text end

new text begin This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to such item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;
new text end

new text begin (20) except as already included in the taxpayer's taxable income pursuant to clause
(19), any interest income and income generated from intangible property received or
accrued by a foreign operating corporation that is a member of the taxpayer's unitary
group. For purposes of this clause, income generated from intangible property includes:
new text end

new text begin (i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;
new text end

new text begin (ii) income from factoring transactions or discounting transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar income.
new text end

new text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
new text end

new text begin This clause does not apply to any item of interest or intangible income received or accrued
by a foreign operating corporation with respect to such item of income to the extent that
the income is income from sources without the United States as defined in subtitle A,
chapter 1, subchapter N, part 1, of the Internal Revenue Code;
new text end

new text begin (21) the dividends attributable to the income of a foreign operating corporation that
is a member of the taxpayer's unitary group in an amount that is equal to the dividends
paid deduction of a real estate investment trust under section 561(a) of the Internal
Revenue Code for amounts paid or accrued by the real estate investment trust to the
foreign operating corporation; and
new text end

new text begin (22) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 25.

Minnesota Statutes 2006, section 290.01, subdivision 19d, is amended to read:

Subd. 19d.

Corporations; modifications decreasing federal taxable income.

For
corporations, there shall be subtracted from federal taxable income after the increases
provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal
income tax purposes under section 78 of the Internal Revenue Code;

(2) the amount of salary expense not allowed for federal income tax purposes due to
claiming the federal jobs credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the
taxable year by a national or state bank to the United States, or to any instrumentality of
the United States exempt from federal income taxes, on the preferred stock of the bank
owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between
this chapter and the Internal Revenue Code in taxable years beginning before January
1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount
equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an
amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986,
capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986,
a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
capital loss carryback to each of the three taxable years preceding the loss year, subject to
the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987,
a capital loss carryover to each of the five taxable years succeeding the loss year to the
extent such loss was not used in a prior taxable year and subject to the provisions of
Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal
income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;

(8) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
1986, section 290.09, subdivision 7;

(9) amounts included in federal taxable income that are due to refunds of income,
excise, or franchise taxes based on net income or related minimum taxes paid by the
corporation to Minnesota, another state, a political subdivision of another state, the
District of Columbia, or a foreign country or possession of the United States to the extent
that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
clause (1), in a prior taxable year;

(10) deleted text begin 80 deleted text end new text begin 90 new text end percent of royalties, fees, or other like income accrued or received from a
foreign operating corporation or a foreign corporation which is part of the same unitary
business as the receiving corporation new text begin , unless the income resulting from such payments or
accruals is income from sources within the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code new text end ;

(11) income or gains from the business of mining as defined in section 290.05,
subdivision 1, clause (a), that are not subject to Minnesota franchise tax;

(12) the amount of disability access expenditures in the taxable year which are not
allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;

(13) the amount of qualified research expenses not allowed for federal income tax
purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
the amount exceeds the amount of the credit allowed under section 290.068;

(14) the amount of salary expenses not allowed for federal income tax purposes due
to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
Code;

(15) the amount of any refund of environmental taxes paid under section 59A of the
Internal Revenue Code;

(16) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(17) for a corporation whose foreign sales corporation, as defined in section 922
of the Internal Revenue Code, constituted a foreign operating corporation during any
taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
claiming the deduction under section 290.21, subdivision 4, for income received from
the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
income excluded under section 114 of the Internal Revenue Code, provided the income is
not income of a foreign operating company;

(18) any decrease in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of section 614 of Public Law 107-147;

(19) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
resulting delayed depreciation cannot be less than zero; and

(20) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the
amount of the addition.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 26.

Minnesota Statutes 2007 Supplement, section 290.01, subdivision 31, is
amended to read:

Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, deleted text begin for
taxable years beginning before January 1, 2006, and after December 31, 2006, deleted text end "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin May 18,
2006; and for taxable years beginning after December 31, 2005, and before January 1,
2007, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
through December 31, 2006 deleted text end new text begin February 13, 2008 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
except the changes incorporated by federal changes are effective at the same time as the
changes were effective for federal purposes.
new text end

Sec. 27.

Minnesota Statutes 2006, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:

(1) On the first $25,680, 5.35 percent;

(2) On all over $25,680, but not over $102,030, 7.05 percent;

(3) On all over $102,030, 7.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $17,570, 5.35 percent;

(2) On all over $17,570, but not over $57,710, 7.05 percent;

(3) On all over $57,710, 7.85 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $21,630, 5.35 percent;

(2) On all over $21,630, but not over $86,910, 7.05 percent;

(3) On all over $86,910, 7.85 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), deleted text begin and deleted text end (9), new text begin (11),
and (12), new text end and reduced by the Minnesota assignable portion of the subtraction for United
States government interest under section 290.01, subdivision 19b, clause (1), and the
subtractions under section 290.01, subdivision 19b, clauses (9), (10), new text begin (11), (13), new text end (14), (15),
and (16), after applying the allocation and assignability provisions of section 290.081,
clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), deleted text begin and deleted text end (9), new text begin (11), and (12), new text end and
reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (9), (10),
new text begin (11), (13), new text end (14), (15), and (16).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years
beginning after December 31, 2006.
new text end

Sec. 28.

Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 34. new text end

new text begin Regional emerging business investment tax credit. new text end

new text begin A taxpayer is
allowed a credit as determined under section 116J.8746 against the tax imposed by this
chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008, for taxable years
beginning after December 31, 2007, and only applies to investments made after the fund
has been certified by the commissioner of employment and economic development.
new text end

Sec. 29.

Minnesota Statutes 2006, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for
the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative
minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue
Code:

(A) for taxable years beginning before January 1, 2006, to the extent that the
deduction exceeds 1.0 percent of adjusted gross income;

(B) for taxable years beginning after December 31, 2005, to the full extent of the
deduction.

For purposes of this clause, "adjusted gross income" has the meaning given in
section 62 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal
Revenue Code, with respect to each property (as defined in section 614 of the Internal
Revenue Code), to the extent not included in federal alternative minimum taxable income,
the excess of the deduction for depletion allowable under section 611 of the Internal
Revenue Code for the taxable year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the
amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the
amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7),
(8), deleted text begin and deleted text end (9) new text begin , (10), (11), and (12) new text end ;

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision
19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as
defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
amounts deducted in computing federal adjusted gross income; and

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b, clauses (9) to (16).

In the case of an estate or trust, alternative minimum taxable income must be
computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3)
of the Internal Revenue Code.

(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under this chapter (without
regard to this section and section 290.032), reduced by the sum of the nonrefundable
credits allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is retroactively effective for taxable years
beginning after December 31, 2006.
new text end

Sec. 30.

Minnesota Statutes 2006, section 290.191, subdivision 5, is amended to read:

Subd. 5.

Determination of sales factor.

For purposes of this section, the following
rules apply in determining the sales factor.

(a) The sales factor includes all sales, gross earnings, or receipts received in the
ordinary course of the business, except that the following types of income are not included
in the sales factor:

(1) interest;

(2) dividends;

(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;

(4) sales of property used in the trade or business, except sales of leased property of
a type which is regularly sold as well as leased;

(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
Code or sales of stock; and

(6) royalties, fees, or other like income of a type which qualify for a subtraction from
federal taxable income under section 290.01, subdivision 19d(10).

(b) Sales of tangible personal property are made within this state if the property is
received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
of the property.

(c) Tangible personal property delivered to a common or contract carrier or foreign
vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
regardless of f.o.b. point or other conditions of the sale.

(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
licensed by a state or political subdivision to resell this property only within the state of
ultimate destination, the sale is made in that state.

(e) Sales made by or through a corporation that is qualified as a domestic
international sales corporation under section 992 of the Internal Revenue Code are not
considered to have been made within this state.

(f) Sales, rents, royalties, and other income in connection with real property is
attributed to the state in which the property is located.

(g) Receipts from the lease or rental of tangible personal property, including finance
leases and true leases, must be attributed to this state if the property is located in this
state and to other states if the property is not located in this state. Receipts from the
lease or rental of moving property including, but not limited to, motor vehicles, rolling
stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
factor to the extent that the property is used in this state. The extent of the use of moving
property is determined as follows:

(1) A motor vehicle is used wholly in the state in which it is registered.

(2) The extent that rolling stock is used in this state is determined by multiplying
the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
which is the miles traveled within this state by the leased or rented rolling stock and the
denominator of which is the total miles traveled by the leased or rented rolling stock.

(3) The extent that an aircraft is used in this state is determined by multiplying the
receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
the number of landings of the aircraft in this state and the denominator of which is the
total number of landings of the aircraft.

(4) The extent that a vessel, mobile equipment, or other mobile property is used in
the state is determined by multiplying the receipts from the lease or rental of the property
by a fraction, the numerator of which is the number of days during the taxable year the
property was in this state and the denominator of which is the total days in the taxable year.

(h) Royalties and other income not described in paragraph (a), clause (6), received
for the use of or for the privilege of using intangible property, including patents,
know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
state in which the property is used by the purchaser. If the property is used in more
than one state, the royalties or other income must be apportioned to this state pro rata
according to the portion of use in this state. If the portion of use in this state cannot be
determined, the royalties or other income must be excluded from both the numerator
and the denominator. Intangible property is used in this state if the purchaser uses the
intangible property or the rights therein in the regular course of its business operations in
this state, regardless of the location of the purchaser's customers.

(i) Sales of intangible property are made within the state in which the property is
used by the purchaser. If the property is used in more than one state, the sales must be
apportioned to this state pro rata according to the portion of use in this state. If the
portion of use in this state cannot be determined, the sale must be excluded from both the
numerator and the denominator of the sales factor. Intangible property is used in this
state if the purchaser used the intangible property in the regular course of its business
operations in this state.

(j) Receipts from the performance of services must be attributed to the state where
the services are received. For the purposes of this section, receipts from the performance
of services provided to a corporation, partnership, or trust may only be attributed to a state
where it has a fixed place of doing business. If the state where the services are received is
not readily determinable or is a state where the corporation, partnership, or trust receiving
the service does not have a fixed place of doing business, the services shall be deemed
to be received at the location of the office of the customer from which the services were
ordered in the regular course of the customer's trade or business. If the ordering office
cannot be determined, the services shall be deemed to be received at the office of the
customer to which the services are billed.

new text begin (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
from management, distribution, or administrative services performed by a corporation
or trust for a fund of a corporation or trust regulated under United States Code, title 15,
sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
the fund resides. Under this paragraph, receipts for services attributed to shareholders are
determined on the basis of the ratio of: (1) the average of the outstanding shares in the
fund owned by shareholders residing within Minnesota at the beginning and end of each
year; and (2) the average of the total number of outstanding shares in the fund at the
beginning and end of each year. Residence of the shareholder, in the case of an individual,
is determined by the mailing address furnished by the shareholder to the fund. Residence
of the shareholder, when the shares are held by an insurance company as a depositor for
the insurance company policyholders, is the mailing address of the policyholders. In
the case of an insurance company holding the shares as a depositor for the insurance
company policyholders, if the mailing address of the policyholders cannot be determined
by the taxpayer, the receipts must be excluded from both the numerator and denominator.
Residence of other shareholders is the mailing address of the shareholder.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 31.

Minnesota Statutes 2006, section 290.191, subdivision 6, is amended to read:

Subd. 6.

Determination of receipts factor for financial institutions.

(a) For
purposes of this section, the rules in this subdivision and deleted text begin subdivision deleted text end new text begin subdivisions 5,
paragraph (k), and new text end 8 apply in determining the receipts factor for financial institutions.

(b) "Receipts" for this purpose means gross income, including net taxable gain on
disposition of assets, including securities and money market instruments, when derived
from transactions and activities in the regular course of the taxpayer's trade or business.

(c) "Money market instruments" means federal funds sold and securities purchased
under agreements to resell, commercial paper, banker's acceptances, and purchased
certificates of deposit and similar instruments to the extent that the instruments are
reflected as assets under generally accepted accounting principles.

(d) "Securities" means United States Treasury securities, obligations of United States
government agencies and corporations, obligations of state and political subdivisions,
corporate stock, bonds, and other securities, participations in securities backed by
mortgages held by United States or state government agencies, loan-backed securities and
similar investments to the extent the investments are reflected as assets under generally
accepted accounting principles.

(e) Receipts from the lease or rental of real or tangible personal property, including
both finance leases and true leases, must be attributed to this state if the property is
located in this state. Receipts from the lease or rental of tangible personal property that is
characteristically moving property, including, but not limited to, motor vehicles, rolling
stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
factor to the extent that the property is used in this state. The extent of the use of moving
property is determined as follows:

(1) A motor vehicle is used wholly in the state in which it is registered.

(2) The extent that rolling stock is used in this state is determined by multiplying
the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
which is the miles traveled within this state by the leased or rented rolling stock and the
denominator of which is the total miles traveled by the leased or rented rolling stock.

(3) The extent that an aircraft is used in this state is determined by multiplying the
receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
the number of landings of the aircraft in this state and the denominator of which is the
total number of landings of the aircraft.

(4) The extent that a vessel, mobile equipment, or other mobile property is used in
the state is determined by multiplying the receipts from the lease or rental of property by a
fraction, the numerator of which is the number of days during the taxable year the property
was in this state and the denominator of which is the total days in the taxable year.

(f) Interest income and other receipts from assets in the nature of loans that are
secured primarily by real estate or tangible personal property must be attributed to this state
if the security property is located in this state under the principles stated in paragraph (e).

(g) Interest income and other receipts from consumer loans not secured by real or
tangible personal property that are made to residents of this state, whether at a place
of business, by traveling loan officer, by mail, by telephone or other electronic means,
must be attributed to this state.

(h) Interest income and other receipts from commercial loans and installment
obligations that are unsecured by real or tangible personal property or secured by
intangible property must be attributed to this state if the proceeds of the loan are to be
applied in this state. If it cannot be determined where the funds are to be applied, the
income and receipts are attributed to the state in which the office of the borrower from
which the application would be made in the regular course of business is located. If this
cannot be determined, the transaction is disregarded in the apportionment formula.

(i) Interest income and other receipts from a participating financial institution's
portion of participation and syndication loans must be attributed under paragraphs (e) to
(h). A participation loan is an arrangement in which a lender makes a loan to a borrower
and then sells, assigns, or otherwise transfers all or a part of the loan to a purchasing
financial institution. A syndication loan is a loan transaction involving multiple financial
institutions in which all the lenders are named as parties to the loan documentation, are
known to the borrower, and have privity of contract with the borrower.

(j) Interest income and other receipts including service charges from financial
institution credit card and travel and entertainment credit card receivables and credit
card holders' fees must be attributed to the state to which the card charges and fees are
regularly billed.

(k) Merchant discount income derived from financial institution credit card holder
transactions with a merchant must be attributed to the state in which the merchant is
located. In the case of merchants located within and outside the state, only receipts from
merchant discounts attributable to sales made from locations within the state are attributed
to this state. It is presumed, subject to rebuttal, that the location of a merchant is the
address shown on the invoice submitted by the merchant to the taxpayer.

(l) Receipts from the performance of fiduciary and other services must be attributed
to the state in which the services are received. For the purposes of this section, services
provided to a corporation, partnership, or trust must be attributed to a state where it has a
fixed place of doing business. If the state where the services are received is not readily
determinable or is a state where the corporation, partnership, or trust does not have a fixed
place of doing business, the services shall be deemed to be received at the location of the
office of the customer from which the services were ordered in the regular course of the
customer's trade or business. If the ordering office cannot be determined, the services shall
be deemed to be received at the office of the customer to which the services are billed.

(m) Receipts from the issuance of travelers checks and money orders must be
attributed to the state in which the checks and money orders are purchased.

(n) Receipts from investments of a financial institution in securities and from money
market instruments must be apportioned to this state based on the ratio that total deposits
from this state, its residents, including any business with an office or other place of
business in this state, its political subdivisions, agencies, and instrumentalities bear to the
total deposits from all states, their residents, their political subdivisions, agencies, and
instrumentalities. In the case of an unregulated financial institution subject to this section,
these receipts are apportioned to this state based on the ratio that its gross business income,
excluding such receipts, earned from sources within this state bears to gross business
income, excluding such receipts, earned from sources within all states. For purposes
of this subdivision, deposits made by this state, its residents, its political subdivisions,
agencies, and instrumentalities must be attributed to this state, whether or not the deposits
are accepted or maintained by the taxpayer at locations within this state.

(o) A financial institution's interest in property described in section 290.015,
subdivision 3, paragraph (b), is included in the receipts factor in the same manner as assets
in the nature of securities or money market instruments are included in paragraph (n).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 32.

Minnesota Statutes 2006, section 290.92, is amended by adding a subdivision
to read:

new text begin Subd. 31. new text end

new text begin Payments to persons who are not employees. new text end

new text begin (a) For purposes of this
subdivision, "contractor" means a person carrying on a trade or business described in
industry code numbers 23 through 238990 of the North American Industry Classification
System.
new text end

new text begin (b) A contractor who makes payments to an individual, carrying on a trade or
business described in paragraph (a) as a sole proprietorship, must deduct and withhold two
percent of the payment as Minnesota withholding tax when the amount the contractor paid
to that individual during the calendar year exceeds $600.
new text end

new text begin (c) A payment subject to withholding under this subdivision must be treated as if
the payment were a wage paid by an employer to an employee. The requirements in the
definitions of "employee" and "employer" in subdivision 1 relating to geographic location
apply in determining whether withholding tax applies under this subdivision, but without
regard to whether the contractor or the individual otherwise satisfy the definition of an
employer or an employee. Each recipient of a payment subject to withholding under this
subdivision must furnish the contractor with a statement of the recipient's name, address,
and Social Security account number.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made after December
31, 2008.
new text end

Sec. 33.

Minnesota Statutes 2006, section 290A.03, subdivision 11, is amended to read:

Subd. 11.

Rent constituting property taxes.

"Rent constituting property taxes"
means deleted text begin 19 deleted text end new text begin 16 new text end percent of the gross rent actually paid in cash, or its equivalent, or the portion
of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
of occupancy of the claimant's Minnesota homestead in the calendar year, and which
rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
chapter by the claimant.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on rent paid in
2008 and thereafter.
new text end

Sec. 34.

Minnesota Statutes 2006, section 290A.03, subdivision 13, is amended to read:

Subd. 13.

Property taxes payable.

"Property taxes payable" means the property tax
exclusive of special assessments, penalties, and interest payable on a claimant's homestead
after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
and any other state paid property tax credits in any calendar year, and after any refund
claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
the year that the property tax is payable. In the case of a claimant who makes ground
lease payments, "property taxes payable" includes the amount of the payments directly
attributable to the property taxes assessed against the parcel on which the house is located.
No apportionment or reduction of the "property taxes payable" shall be required for the
use of a portion of the claimant's homestead for a business purpose if the claimant does not
deduct any business depreciation expenses for the use of a portion of the homestead in the
determination of federal adjusted gross income. For homesteads which are manufactured
homes as defined in section 273.125, subdivision 8, and for homesteads which are park
trailers taxed as manufactured homes under section 168.012, subdivision 9, "property
taxes payable" shall also include deleted text begin 19 deleted text end new text begin 16 new text end percent of the gross rent paid in the preceding
year for the site on which the homestead is located. When a homestead is owned by
two or more persons as joint tenants or tenants in common, such tenants shall determine
between them which tenant may claim the property taxes payable on the homestead. If
they are unable to agree, the matter shall be referred to the commissioner of revenue
whose decision shall be final. Property taxes are considered payable in the year prescribed
by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have
owned and occupied the homestead on January 2 of the year in which the tax is payable
and (i) the property must have been classified as homestead property pursuant to section
273.124, on or before December 15 of the assessment year to which the "property taxes
payable" relate; or (ii) the claimant must provide documentation from the local assessor
that application for homestead classification has been made on or before December 15
of the year in which the "property taxes payable" were payable and that the assessor has
approved the application.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on gross rent
paid in 2008 and thereafter.
new text end

Sec. 35.

Minnesota Statutes 2007 Supplement, section 290A.03, subdivision 15,
is amended to read:

Subd. 15.

Internal Revenue Code.

deleted text begin For taxable years beginning before January 1,
2006, and after December 31, 2006, deleted text end "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through deleted text begin May 18, 2006; and for taxable years beginning after
December 31, 2005, and before January 1, 2007, "Internal Revenue Code" means the
Internal Revenue Code of 1986, as amended through December 31, 2006 deleted text end new text begin February 13,
2008 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on
property taxes payable on or after December 31, 2007, and rent paid on or after December
31, 2006.
new text end

Sec. 36.

Minnesota Statutes 2006, section 291.005, subdivision 1, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following
terms used in this chapter shall have the following meanings:

(1) "Federal gross estate" means the gross estate of a decedent as valued and
otherwise determined for federal estate tax purposes by federal taxing authorities pursuant
to the provisions of the Internal Revenue Code.

(2) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included therein which has its situs outside Minnesota,
and (b) including therein any property omitted from the federal gross estate which is
includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
authorities.

(3) "Personal representative" means the executor, administrator or other person
appointed by the court to administer and dispose of the property of the decedent. If there
is no executor, administrator or other person appointed, qualified, and acting within this
state, then any person in actual or constructive possession of any property having a situs in
this state which is included in the federal gross estate of the decedent shall be deemed
to be a personal representative to the extent of the property and the Minnesota estate tax
due with respect to the property.

(4) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota.

(5) "Nonresident decedent" means an individual whose domicile at the time of
death was not in Minnesota.

(6) "Situs of property" means, with respect to real property, the state or country in
which it is located; with respect to tangible personal property, the state or country in which
it was normally kept or located at the time of the decedent's death; and with respect to
intangible personal property, the state or country in which the decedent was domiciled
at death.

(7) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(8) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through deleted text begin May 18, 2006 deleted text end new text begin February 13, 2008 new text end .

(9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of
deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

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

Sec. 37.

Minnesota Statutes 2006, section 296A.18, subdivision 4, is amended to read:

Subd. 4.

All-terrain vehicle.

Approximately deleted text begin 0.15 deleted text end new text begin 0.27 new text end of one percent of all gasoline
received in or produced or brought into this state, except gasoline used for aviation
purposes, is being used for the operation of all-terrain vehicles in this state, and of the total
revenue derived from the imposition of the gasoline fuel tax, deleted text begin 0.15 deleted text end new text begin 0.27 new text end of one percent is
the amount of tax on fuel used in all-terrain vehicles operated in this state.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue received after June
30, 2008.
new text end

Sec. 38.

Minnesota Statutes 2006, section 297A.61, subdivision 4, is amended to read:

Subd. 4.

Retail sale.

(a) A "retail sale" means any sale, lease, or rental for any
purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
course of business as defined in subdivision 21.

(b) A sale of property used by the owner only by leasing it to others or by holding it
in an effort to lease it, and put to no use by the owner other than resale after the lease or
effort to lease, is a sale of property for resale.

(c) A sale of master computer software that is purchased and used to make copies for
sale or lease is a sale of property for resale.

(d) A sale of building materials, supplies, and equipment to owners, contractors,
subcontractors, or builders for the erection of buildings or the alteration, repair, or
improvement of real property is a retail sale in whatever quantity sold, whether the sale is
for purposes of resale in the form of real property or otherwise.

(e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
for installation of the floor covering is a retail sale and not a sale for resale since a sale
of floor covering which includes installation is a contract for the improvement of real
property.

(f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
for installation of the items is a retail sale and not a sale for resale since a sale of
shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
the improvement of real property.

(g) A sale of tangible personal property that is awarded as prizes is a retail sale and
is not considered a sale of property for resale.

(h) A sale of tangible personal property utilized or employed in the furnishing or
providing of services under subdivision 3, paragraph (g), clause (1), including, but not
limited to, property given as promotional items, is a retail sale and is not considered a
sale of property for resale.

(i) A sale of tangible personal property used in conducting lawful gambling under
chapter 349 or the State Lottery under chapter 349A, including, but not limited to,
property given as promotional items, is a retail sale and is not considered a sale of
property for resale.

(j) A sale of machines, equipment, or devices that are used to furnish, provide, or
dispense goods or services, including, but not limited to, coin-operated devices, is a retail
sale and is not considered a sale of property for resale.

(k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
payment becomes due under the terms of the agreement or the trade practices of the
lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01,
subdivision 5, but excluding vehicles with a manufacturer's gross vehicle weight rating
greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time
the lease is executed.

(l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
title or possession of the tangible personal property.

new text begin (m) A sale of a bundled transaction in which one or more of the products included
in the bundle is a taxable product is a retail sale, except that if one of the products
is a telecommunication service, ancillary service, Internet access, or audio or video
programming service, and the seller has maintained books and records identifying through
reasonable and verifiable standards the portions of the price that are attributable to the
distinct and separately identifiable products, then the products are not considered part of a
bundled transaction. For purposes of this paragraph:
new text end

new text begin (1) the books and records maintained by the seller must be maintained in the regular
course of business, and do not include books and records created and maintained by the
seller primarily for tax purposes;
new text end

new text begin (2) books and records maintained in the regular course of business include, but are
not limited to, financial statements, general ledgers, invoicing and billing systems and
reports, and reports for regulatory tariffs and other regulatory matters; and
new text end

new text begin (3) books and records are maintained primarily for tax purposes when the books
and records identify taxable and nontaxable portions of the price, but the seller maintains
other books and records that identify different prices attributable to the distinct products
included in the same bundled transaction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after December 31, 2007.
new text end

Sec. 39.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 38. new text end

new text begin Bundled transaction. new text end

new text begin (a) "Bundled transaction" means the retail sale
of two or more products when the products are otherwise distinct and identifiable, and
the products are sold for one nonitemized price. As used in this subdivision, "product"
includes tangible personal property, services, intangibles, and digital goods, but does not
include real property or services to real property. A bundled transaction does not include
the sale of any products in which the sales price varies, or is negotiable, based on the
selection by the purchaser of the products included in the transaction.
new text end

new text begin (b) For purposes of this subdivision, "distinct and identifiable" products does not
include:
new text end

new text begin (1) packaging and other materials, such as containers, boxes, sacks, bags, and
bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the
products and are incidental or immaterial to the retail sale. Examples of packaging that are
incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags,
and express delivery envelopes and boxes;
new text end

new text begin (2) a promotional product provided free of charge with the required purchase of
another product. A promotional product is provided free of charge if the sales price of
another product, which is required to be purchased in order to receive the promotional
product, does not vary depending on the inclusion of the promotional product; and
new text end

new text begin (3) items included in the definition of sales price.
new text end

new text begin (c) For purposes of this subdivision, the term "one nonitemized price" does not
include a price that is separately identified by product on binding sales or other supporting
sales-related documentation made available to the customer in paper or electronic form
including, but not limited to an invoice, bill of sale, receipt, contract, service agreement,
lease agreement, periodic notice of rates and services, rate card, or price list.
new text end

new text begin (d) A transaction that otherwise meets the definition of a bundled transaction is
not a bundled transaction if it is:
new text end

new text begin (1) the retail sale of tangible personal property and a service and the tangible
personal property is essential to the use of the service, and is provided exclusively in
connection with the service, and the true object of the transaction is the service;
new text end

new text begin (2) the retail sale of services if one service is provided that is essential to the use or
receipt of a second service and the first service is provided exclusively in connection with
the second service and the true object of the transaction is the second service;
new text end

new text begin (3) a transaction that includes taxable products and nontaxable products and the
purchase price or sales price of the taxable products is de minimis; or
new text end

new text begin (4) the retail sale of exempt tangible personal property and taxable tangible personal
property if:
new text end

new text begin (i) the transaction includes food and food ingredients, drugs, durable medical
equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices,
or medical supplies; and
new text end

new text begin (ii) the seller's purchase price or sales price of the taxable tangible personal property
is 50 percent or less of the total purchase price or sales price of the bundled tangible
personal property. Sellers must not use a combination of the purchase price and sales
price of the tangible personal property when making the 50 percent determination for
a transaction.
new text end

new text begin (e) For purposes of this subdivision, "purchase price" means the measure subject to
use tax on purchases made by the seller, and "de minimis" means that the seller's purchase
price or sales price of the taxable products is ten percent or less of the total purchase
price or sales price of the bundled products. Sellers shall use either the purchase price
or the sales price of the products to determine if the taxable products are de minimis.
Sellers must not use a combination of the purchase price and sales price of the products
to determine if the taxable products are de minimis. Sellers shall use the full term of a
service contract to determine if the taxable products are de minimis.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after December 31, 2007.
new text end

Sec. 40.

Minnesota Statutes 2006, section 297A.61, is amended by adding a
subdivision to read:

new text begin Subd. 39. new text end

new text begin Fur clothing. new text end

new text begin "Fur clothing" means human wearing apparel that is
required by the Federal Fur Products Labeling Act, United States Code, title 15, section
69, to be labeled as a fur product, and the value of the fur components in the product
is more than three times the value of the next most valuable tangible component. For
purposes of this subdivision, "fur" means any animal skin or part of an animal skin with
hair, fleece, or fur fibers attached to it, either in its raw or processed state, but does not
include animal skins that have been converted into leather or suede, or from which the
hair, fleece, or fur fiber has been completely removed in processing the skins.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2008.
new text end

Sec. 41.

Minnesota Statutes 2007 Supplement, section 297A.62, subdivision 1, is
amended to read:

Subdivision 1.

Generally.

Except as otherwise provided in subdivision 3 or in this
chapter, a sales tax of deleted text begin 6.5 deleted text end new text begin 6.375 new text end percent is imposed on the gross receipts from retail sales
as defined in section 297A.61, subdivision 4, made in this state or to a destination in this
state by a person who is required to have or voluntarily obtains a permit under section
297A.83, subdivision 1.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2008.
new text end

Sec. 42.

Minnesota Statutes 2006, section 297A.63, subdivision 1, is amended to read:

Subdivision 1.

Use of tangible personal property or taxable services.

(a) For the
privilege of using, storing, distributing, or consuming in Minnesota tangible personal
property or taxable services purchased for use, storage, distribution, or consumption in
this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the
purchase price of retail sales of the tangible personal property or taxable services at the
rate of tax imposed under section 297A.62. A person that purchases property from a
Minnesota retailer and returns the tangible personal property to a point within Minnesota,
except in the course of interstate commerce, after it was delivered outside of Minnesota,
is subject to the use tax.

(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
was paid on the sales price of the tangible personal property or taxable services.

(c) No tax is imposed under paragraph (a) if the purchase meets the requirements for
exemption under section 297A.67, subdivision 21.

new text begin (d) When a transaction otherwise meets the definition of a bundled transaction, but
is not a bundled transaction under section 297A.61, subdivision 38, paragraph (d), and
the seller's purchase price of the taxable product or taxable tangible personal property is
equal to or greater than $100, then use tax is imposed on the purchase price of the taxable
product or taxable personal property. For purposes of this paragraph, "purchase price"
means the measure subject to use tax on purchases made by the seller.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after December 31, 2007.
new text end

Sec. 43.

Minnesota Statutes 2006, section 297A.67, subdivision 8, is amended to read:

Subd. 8.

Clothing.

(a) Clothing is exempt. For purposes of this subdivision,
"clothing" means all human wearing apparel suitable for general use.

(b) Clothing includes, but is not limited to, aprons, household and shop; athletic
supporters; baby receiving blankets; bathing suits and caps; beach capes and coats; belts
and suspenders; boots; coats and jackets; costumes; children and adult diapers, including
disposable; ear muffs; footlets; formal wear; garters and garter belts; girdles; gloves and
mittens for general use; hats and caps; hosiery; insoles for shoes; lab coats; neckties;
overshoes; pantyhose; rainwear; rubber pants; sandals; scarves; shoes and shoe laces;
slippers; sneakers; socks and stockings; steel-toed boots; underwear; uniforms, athletic
and nonathletic; and wedding apparel.

(c) Clothing does not include the following:

(1) belt buckles sold separately;

(2) costume masks sold separately;

(3) patches and emblems sold separately;

(4) sewing equipment and supplies, including but not limited to, knitting needles,
patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles;

(5) sewing materials that become part of clothing, including but not limited to,
buttons, fabric, lace, thread, yarn, and zippers;

(6) clothing accessories or equipment;

(7) sports or recreational equipment; and

(8) protective equipment.

Clothing also does not include deleted text begin apparel made from fur if a uniform definition of "apparel
made from fur" is developed by the member states of the Streamlined Sales and Use Tax
Agreement deleted text end new text begin "fur clothing" as defined in section 297A.61, subdivision 39 new text end .

For purposes of this subdivision, "clothing accessories or equipment" means
incidental items worn on the person or in conjunction with clothing. Clothing accessories
and equipment include, but are not limited to, briefcases; cosmetics; hair notions, including
barrettes, hair bows, and hairnets; handbags; handkerchiefs; jewelry; nonprescription
sunglasses; umbrellas; wallets; watches; and wigs and hairpieces. "Sports or recreational
equipment" means items designed for human use and worn in conjunction with an athletic
or recreational activity that are not suitable for general use. Sports and recreational
equipment includes, but is not limited to, ballet and tap shoes; cleated or spiked athletic
shoes; gloves, including, but not limited to, baseball, bowling, boxing, hockey, and golf
gloves; goggles; hand and elbow guards; life preservers and vests; mouth guards; roller
and ice skates; shin guards; shoulder pads; ski boots; waders; and wetsuits and fins.
"Protective equipment" means items for human wear and designed as protection of the
wearer against injury or disease or as protection against damage or injury of other persons
or property but not suitable for general use. Protective equipment includes, but is not
limited to, breathing masks; clean room apparel and equipment; ear and hearing protectors;
face shields; finger guards; hard hats; helmets; paint or dust respirators; protective gloves;
safety glasses and goggles; safety belts; tool belts; and welders gloves and masks.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2008.
new text end

Sec. 44.

Minnesota Statutes 2006, section 297B.02, subdivision 1, is amended to read:

Subdivision 1.

Rate.

There is imposed an excise tax at the rate deleted text begin provided in chapter
297A deleted text end new text begin of 6.5 percent new text end on the purchase price of any motor vehicle purchased or acquired,
either in or outside of the state of Minnesota, which is required to be registered under
the laws of this state.

The excise tax is also imposed on the purchase price of motor vehicles purchased
or acquired on Indian reservations when the tribal council has entered into a sales tax on
motor vehicles refund agreement with the state of Minnesota.

new text begin EFFECTIVE DATE. new text end

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

Sec. 45.

Minnesota Statutes 2006, section 297F.09, subdivision 10, is amended to read:

Subd. 10.

Accelerated tax payment; cigarette or tobacco products distributor.

A cigarette or tobacco products distributor having a liability of $120,000 or more during a
fiscal year ending June 30, shall remit the June liability for the next year in the following
manner:

(a) Two business days before June 30 of the year, the distributor shall remit the
actual May liability and deleted text begin 78 deleted text end new text begin 85 new text end percent of the estimated June liability to the commissioner
and file the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the distributor shall submit a return showing
the actual June liability and pay any additional amount of tax not remitted in June. A
penalty is imposed equal to ten percent of the amount of June liability required to be paid
in June, less the amount remitted in June. However, the penalty is not imposed if the
amount remitted in June equals the lesser of:

(1) deleted text begin 78 deleted text end new text begin 85 new text end percent of the actual June liability; or

(2) deleted text begin 78 deleted text end new text begin 85 new text end percent of the preceding May's liability.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax payments in June 2009 and
thereafter.
new text end

Sec. 46.

Minnesota Statutes 2006, section 297G.09, subdivision 9, is amended to read:

Subd. 9.

Accelerated tax payment; penalty.

A person liable for tax under this
chapter having a liability of $120,000 or more during a fiscal year ending June 30, shall
remit the June liability for the next year in the following manner:

(a) Two business days before June 30 of the year, the taxpayer shall remit the actual
May liability and deleted text begin 78 deleted text end new text begin 85 new text end percent of the estimated June liability to the commissioner and file
the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the taxpayer shall submit a return showing
the actual June liability and pay any additional amount of tax not remitted in June. A
penalty is imposed equal to ten percent of the amount of June liability required to be paid
in June less the amount remitted in June. However, the penalty is not imposed if the
amount remitted in June equals the lesser of:

(1) deleted text begin 78 deleted text end new text begin 85 new text end percent of the actual June liability; or

(2) deleted text begin 78 deleted text end new text begin 85 new text end percent of the preceding May liability.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax payments in June 2009 and
thereafter.
new text end

Sec. 47.

Minnesota Statutes 2006, section 469.312, subdivision 5, is amended to read:

Subd. 5.

Duration limit.

(a) The maximum duration of a zone is 12 years. The
applicant may request a shorter duration. The commissioner may specify a shorter
duration, regardless of the requested duration.

(b) The duration limit under this subdivision and the duration of the zone for
purposes of allowance of tax incentives described in section 469.315 is extended by three
calendar years for each parcel of property that meets the following requirements:

(1) the qualified business operates an ethanol plant, as defined in section 41A.09, on
the site that includes the parcel; and

(2) the business subsidy agreement was executed after April 30, 2006.

new text begin (c) (1) Notwithstanding the 12-year zone limitation, all qualified businesses that sign
a business subsidy agreement, as required under sections 469.310, subdivision 11, and
469.313, before December 31, 2015, are entitled to claim the tax benefits for which they
qualify under section 469.315 for the year in which the business subsidy agreement is
signed and ten additional years.
new text end

new text begin (2) Notwithstanding the 12-year zone limitation, all qualified businesses that sign
a business subsidy agreement, as required under sections 469.310, subdivision 11, and
469.313, before December 31, 2015, and are located in a targeted rural opportunity
community, as defined under section 116J.03, subdivision 4, are entitled to claim the tax
benefits for which they qualify under section 469.315 for the year in which the business
subsidy agreement is signed and 12 additional years.
new text end

new text begin (3) This paragraph does not apply to:
new text end

new text begin (i) any acreage designated as a job opportunity building zone for which any person
has fully executed a business subsidy agreement before this paragraph became effective; or
new text end

new text begin (ii) any trade or business that relocated as defined in section 469.310, subdivision
12, and received benefits under section 469.315 prior to the relocation.
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. 48. new text begin FUR TAX PAYMENTS.
new text end

new text begin (a) Furriers must file the annual return, required by Minnesota Statutes, section
295.60, subdivision 5, which otherwise would be due March 15, 2009, by September
15, 2008.
new text end

new text begin (b) If a furrier is required by Minnesota Statutes, section 295.60, subdivision 3, to
make installments of quarterly estimates, then the furrier shall make the last installment by
July 15, 2008.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008, for sales and purchases
made prior to July 1, 2008.
new text end

Sec. 49.

new text begin TRANSITION AID FOR COUNTIES, CITIES, AND TOWNS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) When used in this section, the following terms have
the meanings indicated in this subdivision.
new text end

new text begin (b) "Local unit" means a county, a home rule charter or statutory city, or a town;
provided that the local unit has not, as of July 1, 2008, entered into an agreement pursuant
to section 469.1813, subdivision 1, clause (2), item (vii). To receive transition aid under
this section, a local unit must not enter into such an agreement for either taxes payable in
2009 or 2010, and must annually certify to the commissioner of revenue that it has not
entered into such an agreement. The certifications must be executed after July 1 in 2008
and 2009 and be received by the commissioner on or before July 13 in 2008 and 2009.
new text end

new text begin (c) "Net tax capacity" means the total net tax capacity of all taxable properties
within the local unit's taxing jurisdiction for taxes payable in 2008. Net tax capacity must
be determined by the commissioner of revenue based on information and data available
to the commissioner as of July 1, 2008.
new text end

new text begin (d) "Adjusted net tax capacity" means the local unit's net tax capacity for taxes
payable in 2008, excluding the phase-in provisions of Minnesota Rules, part 8100.0800.
Adjusted net tax capacity must be determined by the commissioner of revenue based on
information and data available to the commissioner as of July 1, 2008.
new text end

new text begin (e) "Net tax capacity differential" means the positive difference, if any, by which the
local unit's net tax capacity exceeds its adjusted net tax capacity.
new text end

new text begin (f) "Baseline revenue" means the sum of the local unit's: (1) property tax levy
amounts certified under section 275.07 for taxes payable in 2008, including levies
extended against net tax capacity and levies extended against referendum market value;
(2) city aid amounts under section 477A.013 that were certified in 2007 for payment in
2008; and (3) county aid amounts under section 477A.0124 that were certified in 2007 for
payment in 2008. Baseline revenue must be determined by the commissioner of revenue
based on information and data available to the commissioner as of July 1, 2008.
new text end

new text begin (g) "Adjusted revenue" means the local unit's baseline revenue computed as if:
(1) local tax rates did not change; but, (2) the phase-in provisions of Minnesota Rules,
part 8100.0800, were not effective for taxes payable in 2008. Adjusted revenue must be
determined by the commissioner of revenue in cooperation with the commissioner of
education based on information and data available as of July 1, 2008.
new text end

new text begin (h) "Revenue differential" means the positive difference, if any, by which the local
unit's baseline revenue exceeds its adjusted revenue.
new text end

new text begin Subd. 2. new text end

new text begin Aid eligibility; payment. new text end

new text begin (a) If the net tax capacity differential of the local
unit exceeds five percent of its net tax capacity, the local unit is eligible for transition aid
computed under paragraphs (b) and (c).
new text end

new text begin (b) Transition aid under this section for an eligible local unit equals the product of:
(1) the positive amount, if any, by which the revenue differential of the local unit exceeds
five percent of its baseline revenues; and (2) 50 percent for aid payable in 2009, and 100
percent for aid payable in 2010.
new text end

new text begin (c) The commissioner of revenue shall compute the amount of transition aid payable
to each local unit under this section. On or before August 1, 2008, the commissioner shall
certify the amount of transition aid computed for payment in 2009 and 2010 for each
recipient local unit. The commissioner shall pay transition aid to local units annually at
the times provided in section 477A.015.
new text end

new text begin Subd. 3. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay transition aid under this
section in 2009 and 2010 is appropriated to the commissioner of revenue from the general
fund.
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. 50. new text begin TAX BASE ADJUSTMENTS FOR CALCULATION OF SCHOOL
DISTRICT LEVY LIMITATIONS.
new text end

new text begin (a) For purposes of calculating the aid and levy share of equalized school revenue
under Minnesota Statutes, chapters 122A to 126C for fiscal years 2010 and 2011 only, the
commissioner of revenue shall make an adjustment to the adjusted net tax capacity and
referendum market value of school districts according to paragraphs (b) and (c).
new text end

new text begin (b) Adjusted net tax capacity for calendar years 2007 and 2008 as defined by section
126C.01, subdivision 2, shall be computed by the commissioner of revenue as if the
phase-in provisions of Minnesota Rules, part 8100.0800, were effective one year earlier.
new text end

new text begin (c) Referendum market value for calendar years 2007 and 2008 as defined by section
126C.01, subdivision 3, shall be computed by the commissioner of revenue as if the
phase-in provisions of Minnesota Rules, part 8100.0800, were effective one year earlier.
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. 51. new text begin TAX BASE ADJUSTMENTS FOR CALCULATION OF COUNTY
AND CITY AIDS.
new text end

new text begin For purposes of calculating aid for cities under section 477A.013, and for counties
under section 477A.0124, for payment in 2009 and 2010 only, the commissioner of
revenue shall adjust the adjusted net tax capacity of cities and counties as required in
this paragraph. Adjusted net tax capacity and city net tax capacity for calendar years
2007 and 2008 as defined in sections 477A.011 and 477A.0124 shall be computed by
the commissioner of revenue as if the phase-in provisions of Minnesota Rules, part
8100.0800, were effective one year earlier.
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. 52. new text begin PURPOSE AND EFFECT.
new text end

new text begin It is the intent of the legislature that the provisions of sections 20, 24, and 25 must
not be construed as supplanting any existing Minnesota law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 53. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 10A.322, subdivision 4; 290.06, subdivision 23;
and 295.60, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The repeal of Minnesota Statutes 2006, section 10A.322,
subdivision 4, is effective June 30, 2008. The repeal of Minnesota Statutes 2006, section
290.06, subdivision 23, is effective for refund claims based on contributions made after
June 30, 2008. The repeal of Minnesota Statutes, section 295.60, is effective for sales
and purchases made after June 30, 2008.
new text end