HF 2971

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 05/11/2010 10:30am

A bill for an act
relating to taxation; making technical, administrative, and clarifying changes to
individual income, corporate franchise, estate, sales and use, gross receipts,
cigarette, tobacco, insurance, property, credits, payments, minerals, local
government aid, job opportunity building zones, emergency debt certificates,
and various taxes and tax-related provisions; amending Minnesota Statutes
2008, sections 60A.209, subdivision 1; 270C.34, subdivision 1; 270C.87;
272.029, subdivision 7; 273.113, subdivision 3; 273.1392; 275.71, subdivision
5; 279.37, subdivision 1; 289A.08, subdivision 7; 289A.12, subdivision 14;
289A.30, subdivision 2; 289A.60, subdivision 7; 290.067, subdivision 1;
290.0921, subdivision 3; 295.55, subdivisions 2, 3; 297A.62, by adding a
subdivision; 297A.665; 297A.68, subdivision 39; 297A.70, subdivision 13;
297F.07, subdivision 4; 297I.30, subdivisions 1, 2, 7, 8; 297I.40, subdivisions 1,
5; 298.282, subdivision 1; 469.319, subdivision 5; 469.3193; Minnesota Statutes
2009 Supplement, sections 134.34, subdivision 4; 273.114, subdivision 2;
275.065, subdivision 3; 275.70, subdivision 5; 289A.18, subdivision 1; 290.01,
subdivisions 19a, 19b, 19d; 290.06, subdivision 2c; 290.0671, subdivision 1;
290.091, subdivision 2; 297I.35, subdivision 2; 475.755; 477A.013, subdivision
8; Laws 2001, First Special Session chapter 5, article 3, section 50, as amended;
Laws 2009, chapter 88, article 4, section 5; repealing Minnesota Statutes 2008,
section 297I.30, subdivisions 4, 5, 6.

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

ARTICLE 1

INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2008, section 289A.08, subdivision 7, is amended to
read:

Subd. 7.

Composite income tax returns for nonresident partners, shareholders,
and beneficiaries.

(a) The commissioner may allow a partnership with nonresident
partners to file a composite return and to pay the tax on behalf of nonresident partners who
have no other Minnesota source income. This composite return must include the names,
addresses, Social Security numbers, income allocation, and tax liability for the nonresident
partners electing to be covered by the composite return.

(b) The computation of a partner's tax liability must be determined by multiplying
the income allocated to that partner by the highest rate used to determine the tax liability
for individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
deductions, or personal exemptions are not allowed.

(c) The partnership must submit a request to use this composite return filing method
for nonresident partners. The requesting partnership must file a composite return in the
form prescribed by the commissioner of revenue. The filing of a composite return is
considered a request to use the composite return filing method.

(d) The electing partner must not have any Minnesota source income other than
the income from the partnership and other electing partnerships. If it is determined that
the electing partner has other Minnesota source income, the inclusion of the income
and tax liability for that partner under this provision will not constitute a return to
satisfy the requirements of subdivision 1. The tax paid for the individual as part of the
composite return is allowed as a payment of the tax by the individual on the date on
which the composite return payment was made. If the electing nonresident partner has no
other Minnesota source income, filing of the composite return is a return for purposes of
subdivision 1.

(e) This subdivision does not negate the requirement that an individual pay estimated
tax if the individual's liability would exceed the requirements set forth in section 289A.25.
A composite estimate may, however, be filed in a manner similar to and containing the
information required under paragraph (a).

(f) If an electing partner's share of the partnership's gross income from Minnesota
sources is less than the filing requirements for a nonresident under this subdivision, the tax
liability is zero. However, a statement showing the partner's share of gross income must
be included as part of the composite return.

(g) The election provided in this subdivision is only available to a partner who has
no other Minnesota source income and who is either (1) a full-year nonresident individual
or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of
the Internal Revenue Code.

(h) A corporation defined in section 290.9725 and its nonresident shareholders may
make an election under this paragraph. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply to the shareholder.

(i) Estates and trusts distributing current income only and the nonresident individual
beneficiaries of the estates or trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or trust. The provisions applying to
the partner apply to the beneficiary.

(j) For the purposes of this subdivision, "income" means the partner's share of
federal adjusted gross income from the partnership modified by the additions provided in
section 290.01, subdivision 19a, clauses (6) to (10), and the subtractions provided in: (i)
section 290.01, subdivision 19b, clause deleted text begin (9) deleted text end new text begin (8) new text end , to the extent the amount is assignable or
allocable to Minnesota under section 290.17; and (ii) section 290.01, subdivision 19b,
clause deleted text begin (14) deleted text end new text begin (13) new text end . The subtraction allowed under section 290.01, subdivision 19b, clause
deleted text begin (9) deleted text end new text begin (8) new text end , is only allowed on the composite tax computation to the extent the electing partner
would have been allowed the subtraction.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2008, section 289A.12, subdivision 14, is amended to read:

Subd. 14.

Regulated investment companies; reporting exempt-interest
dividends.

(a) A regulated investment company paying $10 or more in exempt-interest
dividends to an individual who is a resident of Minnesota must make a return indicating
the amount of the exempt-interest dividends, the name, address, and Social Security
number of the recipient, and any other information that the commissioner specifies. The
return must be provided to the shareholder deleted text begin no later than 30 days after the close of the
taxable year deleted text end new text begin by February 15 of the year following the year of the payment new text end . The return
provided to the shareholder must include a clear statement, in the form prescribed by the
commissioner, that the exempt-interest dividends must be included in the computation of
Minnesota taxable income. deleted text begin The regulated investment company is required in a manner
prescribed by the commissioner to file a copy of the return with the commissioner. deleted text end new text begin By
June 1 of each year, the regulated investment company must file a copy of the return
with the commissioner.
new text end

(b) This subdivision applies to regulated investment companies required to register
under chapter 80A.

(c) For purposes of this subdivision, the following definitions apply.

(1) "Exempt-interest dividends" mean exempt-interest dividends as defined in
section 852(b)(5) of the Internal Revenue Code, but does not include the portion of
exempt-interest dividends that are not required to be added to federal taxable income
under section 290.01, subdivision 19a, clause (1)(ii).

(2) "Regulated investment company" means regulated investment company as
defined in section 851(a) of the Internal Revenue Code or a fund of the regulated
investment company as defined in section 851(g) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns due after December 31,
2010.
new text end

Sec. 3.

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

Subdivision 1.

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

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

(1) returns made on the basis of the calendar year must be filed on April 15
following the close of the calendar year, except that returns of corporations must be filed
on deleted text begin March 15 following the close of the calendar year deleted text end new text begin the due date for filing the federal
income tax return new text end ;

(2) returns made on the basis of the fiscal year must be filed on the 15th day of the
fourth month following the close of the fiscal year, except that returns of corporations
must be filed on the deleted text begin 15th day of the third month following the close of the fiscal year deleted text end new text begin due
date for filing the federal income tax return new text end ;

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

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

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2008, section 289A.30, subdivision 2, is amended to read:

Subd. 2.

Estate tax.

Where good cause exists, the commissioner may extend the
time for payment of estate tax for a period of not more than six months. If an extension to
pay the federal estate tax has been granted under section 6161 of the Internal Revenue
Code, the time for payment of the estate tax without penalty is extended for that period. A
taxpayer who owes at least $5,000 in taxes and who, under section 6161 or 6166 of the
Internal Revenue Code has been granted an extension for payment of the tax shown on the
return, may elect to pay the tax due to the commissioner in equal amounts at the same
time as required for federal purposes. A taxpayer electing to pay the tax in installments
new text begin shall defer a percentage of tax that does not exceed the percentage of federal tax deferred
and new text end must notify the commissioner in writing no later than nine months after the death of
the person whose estate is subject to taxation. If the taxpayer fails to pay an installment on
time, unless it is shown that the failure is due to reasonable cause, the election is revoked
and the entire amount of unpaid tax plus accrued interest is due and payable 90 days after
the date on which the installment was payable.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2008, section 289A.60, subdivision 7, is amended to read:

Subd. 7.

Penalty for frivolous return.

If a taxpayer files what purports to be
a tax return or a claim for refund but which does not contain information on which
the substantial correctness of the purported return or claim for refund may be judged
or contains information that on its face shows that the purported return or claim for
refund is substantially incorrect and the conduct is due to a position that is frivolous or
a desire that appears on the purported return or claim for refund to delay or impede the
administration of Minnesota tax laws, then the deleted text begin individual deleted text end new text begin taxpayer new text end shall pay a penalty of
the greater of $1,000 or 25 percent of the amount of tax required to be shown on the
return. In a proceeding involving the issue of whether or not a deleted text begin person deleted text end new text begin taxpayer new text end is liable for
this penalty, the burden of proof is on the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for returns filed after the day
following final enactment.
new text end

Sec. 6.

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

Subd. 19a.

Additions to federal taxable income.

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

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

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except new text begin : new text end

new text begin (A) the portion of the exempt-interest dividends exempt from state taxation under
the laws of the United States; and
new text end

new text begin (B) new text end 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 new text begin , including any dividends exempt
under subitem (A), new text end that are paid by the regulated investment company as defined in section
851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
defined in section 851(g) of the Internal Revenue Code, making the payment; and

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

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

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

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

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

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

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

(8) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

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

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

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

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2009 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. No
deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
the qualifying child's vehicle to provide such transportation for a qualifying child. 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;

deleted text begin (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;
deleted text end

deleted text begin (8) deleted text end new text begin (7) new text end 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;

deleted text begin (9) deleted text end new text begin (8) 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 (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;

deleted text begin (10) deleted text end new text begin (9) new text end job opportunity building zone income as provided under section 469.316;

deleted text begin (11) deleted text end new text begin (10) new text end to the extent included in federal taxable income, the amount of
compensation paid to members of the Minnesota National Guard or other reserve
components of the United States military for active service performed in Minnesota,
excluding compensation for services performed under the Active Guard Reserve (AGR)
program. For purposes of this clause, "active service" means (i) state active service as
defined in section 190.05, subdivision 5a, clause (1); (ii) federally funded state active
service as defined in section 190.05, subdivision 5b; or (iii) federal active service as
defined in section 190.05, subdivision 5c, but "active service" excludes service performed
in accordance with section 190.08, subdivision 3;

deleted text begin (12) deleted text end new text begin (11) new text end to the extent included in federal taxable income, 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 under United
States Code, title 10, section 101(d); United States Code, title 32, section 101(12); or the
authority of the United Nations;

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 a
service member as defined in United States Code, title 10, section 101(a)(5), for military
service as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section
101(2);

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 (17) deleted text end new text begin (16) new text end to the extent included in federal taxable income, the amount of national
service educational awards received from the National Service Trust under United States
Code, title 42, sections 12601 to 12604, for service in an approved Americorps National
Service program; and

deleted text begin (18) deleted text end new text begin (17) new text end to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19a, clause (16).

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2009 Supplement, 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 work opportunity 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 (9), 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) 80 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, 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;

(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;

deleted text begin (15) 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;
deleted text end

deleted text begin (16) deleted text end new text begin (15) new text end 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;

deleted text begin (17) deleted text end new text begin (16) new text end 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 Division C, title III, section 303(b) of Public Law 110-343;

deleted text begin (18) deleted text end new text begin (17) new text end 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;

deleted text begin (19) deleted text end new text begin (18) new text end 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; and

deleted text begin (20) deleted text end new text begin (19) new text end to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19c, clause (25).

new text begin EFFECTIVE DATE. new text end

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

Sec. 9.

Minnesota Statutes 2009 Supplement, 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), (9), (12),
(13), (16), and (17), 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 deleted text begin (9), (10), (14),
(15), (16), and (18) deleted text end new text begin (8), (9), (13), (14), (15), and (17) new text end , 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), (9), (12), (13), (16), and
(17), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1),
deleted text begin (9), (10), (14), (15), (16), and (18) deleted text end new text begin (8), (9), (13), (14), (15), and (17) 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. 10.

Minnesota Statutes 2008, section 290.067, subdivision 1, is amended to read:

Subdivision 1.

Amount of credit.

(a) A taxpayer may take as a credit against the
tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
dependent care credit for which the taxpayer is eligible pursuant to the provisions of
section 21 of the Internal Revenue Code subject to the limitations provided in subdivision
2 except that in determining whether the child qualified as a dependent, income received
as a Minnesota family investment program grant or allowance to or on behalf of the child
must not be taken into account in determining whether the child received more than half
of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of
the Internal Revenue Code do not apply.

(b) If a child who has not attained the age of six years at the close of the taxable year
is cared for at a licensed family day care home operated by the child's parent, the taxpayer
is deemed to have paid employment-related expenses. If the child is 16 months old or
younger at the close of the taxable year, the amount of expenses deemed to have been paid
equals the maximum limit for one qualified individual under section 21(c) and (d) of the
Internal Revenue Code. If the child is older than 16 months of age but has not attained the
age of six years at the close of the taxable year, the amount of expenses deemed to have
been paid equals the amount the licensee would charge for the care of a child of the same
age for the same number of hours of care.

(c) If a married couple:

(1) has a child who has not attained the age of one year at the close of the taxable
year;

(2) files a joint tax return for the taxable year; and

(3) does not participate in a dependent care assistance program as defined in section
129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid
for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of
(i) the combined earned income of the couple or (ii) the amount of the maximum limit for
one qualified individual under section 21(c) and (d) of the Internal Revenue Code will
be deemed to be the employment related expense paid for that child. The earned income
limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed
amount. These deemed amounts apply regardless of whether any employment-related
expenses have been paid.

(d) If the taxpayer is not required and does not file a federal individual income tax
return for the tax year, no credit is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number of the person are included
on the return claiming the credit; or

(2) if the person is an organization described in section 501(c)(3) of the Internal
Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code,
the name and address of the person are included on the return claiming the credit.

In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due
diligence in attempting to provide the information required.

In the case of a nonresident, part-year resident, or a person who has earned income
not subject to tax under this chapter including earned income excluded pursuant to section
290.01, subdivision 19b, clause deleted text begin (10) deleted text end new text begin (9) new text end or deleted text begin (16) deleted text end new text begin (15) new text end , the credit determined under section
21 of the Internal Revenue Code must be allocated based on the ratio by which the earned
income of the claimant and the claimant's spouse from Minnesota sources bears to the
total earned income of the claimant and the claimant's spouse.

For residents of Minnesota, the subtractions for military pay under section 290.01,
subdivision 19b, clauses deleted text begin (11) deleted text end new text begin (10) new text end and deleted text begin (12) deleted text end new text begin (11) new text end , are not considered "earned income not
subject to tax under this chapter."

For residents of Minnesota, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this
chapter."

new text begin EFFECTIVE DATE. new text end

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

Sec. 11.

Minnesota Statutes 2009 Supplement, section 290.0671, subdivision 1,
is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual is allowed a credit against the tax
imposed by this chapter equal to a percentage of earned income. To receive a credit, a
taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
whichever is greater, in excess of $15,080, but in no case is the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals ten
percent of the first $9,720 of earned income and 20 percent of earned income over
$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income
or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is
the credit less than zero.

(e) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, including income excluded under section 290.01,
subdivision 19b, clause deleted text begin (10) deleted text end new text begin (9) new text end or deleted text begin (16) deleted text end new text begin (15) new text end , the credit must be allocated based on the
ratio of federal adjusted gross income reduced by the earned income not subject to tax
under this chapter over federal adjusted gross income. For purposes of this paragraph, the
subtractions for military pay under section 290.01, subdivision 19b, clauses deleted text begin (11) deleted text end new text begin (10) new text end and
deleted text begin (12) deleted text end new text begin (11) new text end , are not considered "earned income not subject to tax under this chapter."

For the purposes of this paragraph, the exclusion of combat pay under section 112
of the Internal Revenue Code is not considered "earned income not subject to tax under
this chapter."

(g) For tax years beginning after December 31, 2007, and before December 31,
2010, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
$3,000 for married taxpayers filing joint returns. For tax years beginning after December
31, 2008, the commissioner shall annually adjust the $3,000 by the percentage determined
pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
section 1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009,
the commissioner shall then determine the percent change from the 12 months ending on
August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent
year, from the 12 months ending on August 31, 2007, to the 12 months ending on August
31 of the year preceding the taxable year. The earned income thresholds as adjusted
for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount
is rounded up to the nearest $10. The determination of the commissioner under this
subdivision is not a rule under the Administrative Procedure Act.

(h) The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow
the schedule contained in this subdivision, except that the commissioner may graduate
the transition between income brackets.

new text begin EFFECTIVE DATE. new text end

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

Sec. 12.

Minnesota Statutes 2009 Supplement, 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;

(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)
to (9), (12), (13), (16), and (17);

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 (6), deleted text begin (9) deleted text end new text begin (8) new text end to deleted text begin (16) deleted text end new text begin (15) new text end , and deleted text begin (18) deleted text end new text begin (17) new text end .

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 13.

Minnesota Statutes 2008, section 290.0921, subdivision 3, is amended to read:

Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable
income" is Minnesota net income as defined in section 290.01, subdivision 19, and
includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
Minnesota tax return, the minimum tax must be computed on a separate company basis.
If a corporation is part of a tax group filing a unitary return, the minimum tax must be
computed on a unitary basis. The following adjustments must be made.

(1) For purposes of the depreciation adjustments under section 56(a)(1) and
56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
income tax purposes, including any modification made in a taxable year under section
290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c).

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
allowance in the first taxable year after December 31, 2000.

(2) The portion of the depreciation deduction allowed for federal income tax
purposes under section 168(k) of the Internal Revenue Code that is required as an
addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining
alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision
19d, clause deleted text begin (18) deleted text end new text begin (17) new text end , is allowed as a depreciation deduction in determining alternative
minimum taxable income.

(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply.

(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply.

(6) The special rule for dividends from section 936 companies under section
56(g)(4)(C)(iii) does not apply.

(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
Code does not apply.

(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
Internal Revenue Code must be calculated without regard to subparagraph (E) and the
subtraction under section 290.01, subdivision 19d, clause (4).

(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply.

(10) The tax preference for charitable contributions of appreciated property under
section 57(a)(6) of the Internal Revenue Code does not apply.

(11) For purposes of calculating the tax preference for accelerated depreciation or
amortization on certain property placed in service before January 1, 1987, under section
57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
deduction allowed under section 290.01, subdivision 19e.

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, not previously deducted is a
depreciation or amortization allowance in the first taxable year after December 31, 2004.

(12) For purposes of calculating the adjustment for adjusted current earnings in
section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
minimum taxable income as defined in this subdivision, determined without regard to the
adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.

(13) For purposes of determining the amount of adjusted current earnings under
section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
amount of refunds of income, excise, or franchise taxes subtracted as provided in section
290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other like
income subtracted as provided in section 290.01, subdivision 19d, clause (10).

(14) Alternative minimum taxable income excludes the income from operating in a
job opportunity building zone as provided under section 469.317.

(15) Alternative minimum taxable income excludes the income from operating in a
biotechnology and health sciences industry zone as provided under section 469.337.

(16) Alternative minimum taxable income excludes the income from operating in an
international economic development zone as provided under section 469.326.

Items of tax preference must not be reduced below zero as a result of the
modifications in this subdivision.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 2

SALES AND USE TAXES

Section 1.

Minnesota Statutes 2008, section 297A.62, is amended by adding a
subdivision to read:

new text begin Subd. 4. new text end

new text begin Combined rates. new text end

new text begin In this chapter, wherever there is a reference to the
rate under subdivision 1, or to a combined rate under subdivisions 1 and 1a, the rate
to be applied is the combined rate under subdivisions 1 and 1a until the additional tax
imposed by subdivision 1a expires. This subdivision does not apply to either subdivision
3 or to section 297A.65.
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 June 30, 2009.
new text end

Sec. 2.

Minnesota Statutes 2008, section 297A.665, is amended to read:

297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.

(a) For the purpose of the proper administration of this chapter and to prevent
evasion of the tax, until the contrary is established, it is presumed that:

(1) all gross receipts are subject to the tax; and

(2) all retail sales for delivery in Minnesota are for storage, use, or other consumption
in Minnesota.

(b) The burden of proving that a sale is not a taxable retail sale is on the seller.
However, a seller is relieved of liability if:

(1) the seller obtains a fully completed exemption certificate or all the relevant
information required by section 297A.72, subdivision 2, at the time of the sale or within
90 days after the date of the sale; or

(2) if the seller has not obtained a fully completed exemption certificate or all the
relevant information required by section 297A.72, subdivision 2, within the time provided
in clause (1), within 120 days after a request for substantiation by the commissioner,
the seller either:

(i) obtains in good faith a fully completed exemption certificate or all the relevant
information required by section 297A.72, subdivision 2, from the purchaser; or

(ii) proves by other means that the transaction was not subject to tax.

(c) Notwithstanding paragraph (b), relief from liability does not apply to a seller who:

(1) fraudulently fails to collect the tax; or

(2) solicits purchasers to participate in the unlawful claim of an exemption.

(d) A certified service provider, as defined in section 297A.995, subdivision 2, is
relieved of liability under this section to the extent a seller who is its client is relieved of
liability.

(e) A purchaser of tangible personal property or any items listed in section 297A.63
that are shipped or brought to Minnesota by the purchaser has the burden of proving
that the property was not purchased from a retailer for storage, use, or consumption in
Minnesota.

new text begin (f) If a seller claiming that certain sales are exempt and does not provide the
certificate, information, or proof required by paragraph (b), clause (2), within 120 days
after the date of the commissioner's request for substantiation, then the exemptions
claimed by the seller that required substantiation are disallowed.
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. 3.

Minnesota Statutes 2008, section 297A.68, subdivision 39, is amended to read:

Subd. 39.

Preexisting bids or contracts.

(a) The sale of tangible personal property
or services is exempt from tax or a tax rate increase for a period of six months from
the effective date of the law change that results in the imposition of the tax or the tax
rate increase under this chapter if:

(1) the act imposing the tax or increasing the tax rate does not have transitional
effective date language for existing construction contracts and construction bids; and

(2) the requirements of paragraph (b) are met.

(b) A sale is tax exempt under paragraph (a) if it meets the requirements of either
clause (1) or (2):

(1) For a construction contract:

(i) the goods or services sold must be used for the performance of a bona fide written
lump sum or fixed price construction contract;

(ii) the contract must be entered into before the date the goods or services become
subject to the sales tax or the tax rate was increased;

(iii) the contract must not provide for allocation of future taxes; and

(iv) for each qualifying contract the contractor must deleted text begin give the seller deleted text end new text begin keep new text end
documentation of the contract on which an exemption is to be claimed.

(2) For a construction bid:

(i) the goods or services sold must be used pursuant to an obligation of a bid or bids;

(ii) the bid or bids must be submitted and accepted before the date the goods or
services became subject to the sales tax or the tax rate was increased;

(iii) the bid or bids must not be able to be withdrawn, modified, or changed without
forfeiting a bond; and

(iv) for each qualifying bid, the contractor must deleted text begin give the seller deleted text end new text begin keep new text end documentation
of the bid on which an exemption is to be claimed.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2008, section 297A.70, subdivision 13, is amended to read:

Subd. 13.

Fund-raising sales by or for nonprofit groups.

(a) The following
sales by the specified organizations for fund-raising purposes are exempt, subject to the
limitations listed in paragraph (b):

(1) all sales made by deleted text begin an deleted text end new text begin a nonprofit new text end organization that exists solely for the purpose of
providing educational or social activities for young people primarily age 18 and under;

(2) all sales made by an organization that is a senior citizen group or association of
groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii)
no part of its net earnings inures to the benefit of any private shareholders;

(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if
the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization
under section 501(c)(3) of the Internal Revenue Code; and

(4) sales of candy sold for fund-raising purposes by a nonprofit organization that
provides educational and social activities primarily for young people age 18 and under.

(b) The exemptions listed in paragraph (a) are limited in the following manner:

(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross
annual receipts of the organization from fund-raising do not exceed $10,000; and

(2) the exemption under paragraph (a), clause (1), does not apply if the sales are
derived from admission charges or from activities for which the money must be deposited
with the school district treasurer under section 123B.49, subdivision 2, or be recorded in
the same manner as other revenues or expenditures of the school district under section
123B.49, subdivision 4.

(c) Sales of tangible personal property are exempt if the entire proceeds, less the
necessary expenses for obtaining the property, will be contributed to a registered combined
charitable organization described in section 43A.50, to be used exclusively for charitable,
religious, or educational purposes, and the registered combined charitable organization
has given its written permission for the sale. Sales that occur over a period of more than
24 days per year are not exempt under this paragraph.

(d) For purposes of this subdivision, a club, association, or other organization of
elementary or secondary school students organized for the purpose of carrying on sports,
educational, or other extracurricular activities is a separate organization from the school
district or school for purposes of applying the $10,000 limit.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Laws 2009, chapter 88, article 4, section 5, the effective date, is amended to
read:

EFFECTIVE DATE.

This section is effective July 1, 2009, and applies to
deleted text begin registrations deleted text end new text begin leases or rentals new text end made or renewed on or after that date.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for leases or rentals
made or renewed after June 30, 2009.
new text end

ARTICLE 3

SPECIAL TAXES

Section 1.

Minnesota Statutes 2008, section 60A.209, subdivision 1, is amended to
read:

Subdivision 1.

Authorization; regulation.

A resident of this state may obtain
insurance from an ineligible surplus lines insurer in this state through a surplus lines
licensee. The licensee shall first attempt to place the insurance with a licensed insurer, or
if that is not possible, with an eligible surplus lines insurer. If coverage is not obtainable
from a licensed insurer or an eligible surplus lines insurer, the licensee shall certify to the
commissioner, on a form prescribed by the commissioner, that these attempts were made.
Upon obtaining coverage from an ineligible surplus lines insurer, the licensee shall:

(a) Have printed, typed, or stamped in red ink upon the face of the policy in
not less than 10-point type the following notice: "THIS INSURANCE IS ISSUED
PURSUANT TO THE MINNESOTA SURPLUS LINES INSURANCE ACT. THIS
INSURANCE IS PLACED WITH AN INSURER THAT IS NOT LICENSED BY THE
STATE NOR RECOGNIZED BY THE COMMISSIONER OF COMMERCE AS AN
ELIGIBLE SURPLUS LINES INSURER. IN CASE OF ANY DISPUTE RELATIVE
TO THE TERMS OR CONDITIONS OF THE POLICY OR THE PRACTICES OF
THE INSURER, THE COMMISSIONER OF COMMERCE WILL NOT BE ABLE TO
ASSIST IN THE DISPUTE. IN CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS
NOT GUARANTEED." The notice may not be covered or concealed in any manner; and

(b) Collect from the insured appropriate premium taxes new text begin , as provided under chapter
297I, new text end and report the transaction to the commissioner of revenue on a form prescribed by
the commissioner. If the insured fails to pay the taxes when due, the insured shall be
subject to a civil fine of not more than $3,000, plus accrued interest from the inception of
the insurance.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2008, section 295.55, subdivision 2, is amended to read:

Subd. 2.

Estimated tax; hospitals; surgical centers.

(a) Each hospital or surgical
center must make estimated payments of the taxes for the calendar year in monthly
installments to the commissioner within 15 days after the end of the month.

(b) Estimated tax payments are not required of hospitals or surgical centers if: (1)
the tax for the current calendar year is deleted text begin less than deleted text end $500 new text begin or less new text end ; or (2) the tax for the previous
calendar year is deleted text begin less than deleted text end $500 deleted text begin , if the taxpayer had a tax liability and was doing business
the entire year deleted text end new text begin or less new text end .

(c) Underpayment of estimated installments bear interest at the rate specified in
section 270C.40, from the due date of the payment until paid or until the due date of the
annual return whichever comes first. An underpayment of an estimated installment is the
difference between the amount paid and the lesser of (1) 90 percent of one-twelfth of the
tax for the calendar year or (2) one-twelfth of the total tax for the previous calendar year
deleted text begin if the taxpayer had a tax liability and was doing business the entire year deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2010.
new text end

Sec. 3.

Minnesota Statutes 2008, section 295.55, subdivision 3, is amended to read:

Subd. 3.

Estimated tax; other taxpayers.

(a) Each taxpayer, other than a hospital
or surgical center, must make estimated payments of the taxes for the calendar year in
quarterly installments to the commissioner by April 15, July 15, October 15, and January
15 of the following calendar year.

(b) Estimated tax payments are not required if: (1) the tax for the current calendar
year is deleted text begin less than deleted text end $500 new text begin or less new text end ; or (2) the tax for the previous calendar year is deleted text begin less than deleted text end
$500 deleted text begin , if the taxpayer had a tax liability and was doing business the entire year deleted text end new text begin or less new text end .

(c) Underpayment of estimated installments bear interest at the rate specified in
section 270C.40, from the due date of the payment until paid or until the due date of the
annual return whichever comes first. An underpayment of an estimated installment is the
difference between the amount paid and the lesser of (1) 90 percent of one-quarter of the
tax for the calendar year or (2) one-quarter of the total tax for the previous calendar year
deleted text begin if the taxpayer had a tax liability and was doing business the entire year deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2010.
new text end

Sec. 4.

Minnesota Statutes 2008, section 297F.07, subdivision 4, is amended to read:

Subd. 4.

Sales to nonqualified buyers.

A retailer who sells or otherwise disposes of
unstamped or untaxed stock other than to a qualified purchaser shall collect from the buyer
or transferee the tax imposed by section 297F.05, and remit the tax to the Department of
Revenue at the same time and manner as required by section 297F.09. If the retailer fails
to collect the tax from the buyer or transferee, or fails to remit the tax, the retailer is
personally responsible for the tax and the commissioner may seize any product destined to
be delivered to the retailer. The product so seized shall be considered contraband and be
subject to the procedures outlined in section 297F.21, subdivision 3. deleted text begin The proceeds of the
sale of the stock may be applied to any tax liability owed by the retailer after deducting all
costs and expenses. deleted text end

This section does not relieve the buyer or possessor of unstamped or untaxed stock
from personal liability for the tax.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2008, section 297I.30, subdivision 1, is amended to read:

Subdivision 1.

General rule.

On or before March 1, every deleted text begin insurer deleted text end new text begin taxpayer new text end subject
to taxation under section 297I.05, subdivisions 1 to deleted text begin 6 deleted text end new text begin 5 new text end , new text begin 9, 10, new text end deleted text begin and deleted text end 12, paragraphs (a),
clauses (1) to deleted text begin (5) deleted text end new text begin (4) new text end , deleted text begin and deleted text end (b), new text begin (c), and (d), and subdivision 14, new text end shall file an annual return
for the preceding calendar year deleted text begin setting forth such information as the commissioner may
reasonably require on forms deleted text end new text begin in the form new text end prescribed by the commissioner.

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.

Minnesota Statutes 2008, section 297I.30, subdivision 2, is amended to read:

Subd. 2.

Surplus lines licensees and purchasing groups.

On or before February 15
and August 15 of each year, every surplus lines licensee subject to taxation under section
297I.05, subdivision 7, and every purchasing group or member of a purchasing group
subject to tax under section 297I.05, subdivision 12, paragraph (a), clause deleted text begin (6) deleted text end new text begin (5) new text end , shall file
a return with the commissioner for the preceding six-month period ending December 31,
or June 30, deleted text begin setting forth any information the commissioner reasonably prescribes on forms deleted text end
new text begin in the form new text end prescribed by the commissioner.

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2008, section 297I.30, subdivision 7, is amended to read:

Subd. 7.

Surcharge.

(a) deleted text begin (1) deleted text end By April 30 of each year, every company required to pay
the surcharge under section 297I.10, subdivision 1, shall file a return for the five-month
period ending March 31 deleted text begin setting forth any information the commissioner reasonably
requires on forms deleted text end new text begin in the form new text end prescribed by the commissioner.

deleted text begin (2) deleted text end new text begin (b) new text end By June 30 of each year, every company required to pay the surcharge under
section 297I.10, subdivision 1, shall file a return for the two-month period ending May 31
deleted text begin setting forth any information the commissioner reasonably requires on forms deleted text end new text begin in the form
new text end prescribed by the commissioner.

deleted text begin (3) deleted text end new text begin (c) new text end By November 30 of each year, every company required to pay the surcharge
under section 297I.10, subdivision 1, shall file a return for the five-month period ending
October 31 deleted text begin setting forth any information the commissioner reasonably requires on forms deleted text end
new text begin in the form new text end prescribed by the commissioner.

deleted text begin (b) By February 15 and August 15 of each year, every company required to pay
a surcharge under section 297I.10, subdivision 2, must file a return for the preceding
six-month period ending December 31 and June 30.
deleted 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. 8.

Minnesota Statutes 2008, section 297I.30, subdivision 8, is amended to read:

Subd. 8.

Fire insurance surcharge.

On or before May 15, August 15, November
15, and February 15 of each year, every insurer required to pay the surcharge under
section 297I.06, subdivisions 1 and 2, shall file a return with the commissioner for the
preceding three-month period ending March 31, June 30, September 30, and December
31, deleted text begin setting forth any information the commissioner reasonably requires on forms deleted text end new text begin in the
form new text end prescribed by the commissioner.

new text begin EFFECTIVE DATE. new text end

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

Sec. 9.

Minnesota Statutes 2009 Supplement, section 297I.35, subdivision 2, is
amended to read:

Subd. 2.

Electronic payments.

If the aggregate amount of tax and surcharges
due under this chapter during a deleted text begin calendar deleted text end new text begin fiscal new text end year new text begin ending June 30 new text end is equal to or
exceeds $10,000, or if the taxpayer is required to make payment of any other tax to the
commissioner by electronic means, then all tax and surcharge payments in the subsequent
calendar year must be paid by electronic means.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments due in calendar year
2010 and thereafter, based upon liabilities incurred in the fiscal year ending June 30,
2009, and in fiscal years thereafter.
new text end

Sec. 10.

Minnesota Statutes 2008, section 297I.40, subdivision 1, is amended to read:

Subdivision 1.

Requirement to pay.

On or before March 15, June 15, September
15, and December 15 of the current year, every taxpayer subject to tax under section
297I.05, subdivisions 1 to deleted text begin 6 deleted text end new text begin 5 new text end , and 12, paragraphs (a), clauses (1) to deleted text begin (5), (b), and (e) deleted text end new text begin (4),
and subdivision 14 new text end , must pay to the commissioner an installment equal to one-fourth of
the insurer's total estimated tax for the current year.

new text begin EFFECTIVE DATE. new text end

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

Sec. 11.

Minnesota Statutes 2008, section 297I.40, subdivision 5, is amended to read:

Subd. 5.

Definition of tax.

The term "tax" as used in this section means the tax
imposed by section 297I.05, subdivisions 1 to deleted text begin 6 deleted text end new text begin 5 new text end , 11, and 12, paragraphs (a), clauses (1)
to deleted text begin (5) deleted text end new text begin (4) new text end , (b), and (d), new text begin and 14, new text end less any offset in section 297I.20.

new text begin EFFECTIVE DATE. new text end

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

Sec. 12.

Minnesota Statutes 2008, section 298.282, subdivision 1, is amended to read:

Subdivision 1.

Distribution of taconite municipal aid account.

The amount
deposited with the county as provided in section 298.28, subdivision 3, must be distributed
as provided by this section among: (1) the municipalities comprising a deleted text begin tax relief deleted text end new text begin taconite
assistance new text end area under section deleted text begin 273.134, paragraph (b) deleted text end new text begin 273.1341 new text end ; (2) a township that
contains a state park consisting primarily of an underground iron ore mine; and (3) a city
located within five miles of that state park, each being referred to in this section as a
qualifying municipality.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions made after the
day following final enactment.
new text end

Sec. 13. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, section 297I.30, subdivisions 4, 5, and 6, new text end new text begin are repealed.
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

ARTICLE 4

PROPERTY TAXES AND AIDS

Section 1.

Minnesota Statutes 2009 Supplement, section 134.34, subdivision 4, is
amended to read:

Subd. 4.

Limitation.

(a) For calendar year 2010 and later, a regional library
basic system support grant shall not be made to a regional public library system for a
participating city or county which decreases the dollar amount provided for support for
operating purposes of public library service below the amount provided by it for the
second, or third preceding year, whichever is less. For purposes of this subdivision and
subdivision 1, any funds provided under section 473.757, subdivision 2, for extending
library hours of operation shall not be considered amounts provided by a city or county for
support for operating purposes of public library service. This subdivision shall not apply
to participating cities or counties where the adjusted net tax capacity of that city or county
has decreased, if the dollar amount of the reduction in support is not greater than the dollar
amount by which support would be decreased if the reduction in support were made in
direct proportion to the decrease in adjusted net tax capacity.

(b) For calendar year 2009 and later, in any calendar year in which a city's or
county's aid under sections 477A.011 to 477A.014 or deleted text begin credits deleted text end new text begin credit reimbursement new text end under
section 273.1384 is reduced after the city or county has certified its levy payable in that
year, it may reduce its local support by the lesser of:

(1) ten percent; or

(2) a percent equal to the ratio of the aid and credit new text begin reimbursement new text end reductions to the
city's or county's revenue base, based on aids certified for the current calendar year. For
calendar year 2009 only, the reduction under this paragraph shall be based on 2008 aid and
credit new text begin reimbursement new text end reductions under the December 2008 unallotment, as well as any
aid and credit new text begin reimbursement new text end reductions in calendar year 2009. For pay 2009 only, the
commissioner of revenue will calculate the reductions under this paragraph and certify
them to the commissioner of education within 15 days of May 17, 2009.

(c) For taxes payable in 2010 and later, in any payable year in which the total
amounts certified for city or county aids under sections 477A.011 to 477A.014 are less
than the total amounts paid under those sections in the previous calendar year, a city or
county may reduce its local support by the lesser of:

(1) ten percent; or

(2) a percent equal to the ratio of:

(i) the difference between (A) the sum of the aid it was paid under sections 477A.011
to 477A.014 and the deleted text begin credits deleted text end new text begin credit reimbursement new text end it received under section deleted text begin 273.1398 deleted text end
in the previous calendar year and (B) the sum of the aid it is certified to be paid
in the current calendar year under sections 477A.011 to 477A.014 and the deleted text begin credits deleted text end new text begin credit
reimbursement new text end estimated to be paid under section deleted text begin 273.1398 deleted text end new text begin 273.1384 new text end ; to

(ii) its revenue base for the previous year, based on aids actually paid in the previous
calendar year. The commissioner of revenue shall calculate the percent aid cut for each
county and city under this paragraph and certify the percentage cuts to the commissioner
of education by August 1 of the year prior to the year in which the reduced aids and deleted text begin credits deleted text end
new text begin credit reimbursements new text end are to be paid. The percentage of reduction related to reductions to
deleted text begin credits deleted text end new text begin credit reimbursements new text end under section 273.1384 shall be based on the best estimation
available as of July 30.

(d) Notwithstanding paragraph (a), (b), or (c), no city or county shall reduce its
support for public libraries below the minimum level specified in subdivision 1.

(e) For purposes of this subdivision, "revenue base" means the sum of:

(1) its levy for taxes payable in the current calendar year, including the levy on
the fiscal disparities distribution under section 276A.06, subdivision 3, paragraph (a),
or 473F.08, subdivision 3, paragraph (a);

(2) its aid under sections 477A.011 to 477A.014 in the current calendar year; and

(3) its taconite aid in the current calendar year under sections 298.28 and 298.282.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for support in calendar
year 2009 and thereafter and for library grants paid in fiscal year 2010 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2008, section 270C.87, is amended to read:

270C.87 REVISION OF MINNESOTA ASSESSORS' MANUAL.

In accordance with the provisions of section deleted text begin 270C.06 deleted text end new text begin 270C.85 new text end , the commissioner
shall periodically revise the Minnesota assessors' manual.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2008, section 272.029, subdivision 7, is amended to read:

Subd. 7.

Exemption.

The tax imposed under this section does not apply to
electricity produced by wind energy conversion systems located in a job opportunity
building zone deleted text begin , designated under section 469.314, deleted text end for the duration of the zone. The
exemption applies beginning for the first calendar year after designation of the zone
and applies to each calendar year that begins during the designation of the zone. new text begin The
exemption only applies if the owner of the system is a qualified business under section
469.310, subdivision 11, who has entered into a business subsidy agreement that covers
the land on which the system is situated. 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. 4.

Minnesota Statutes 2008, section 273.113, subdivision 3, is amended to read:

Subd. 3.

Reimbursement for lost revenue.

The county auditor shall certify
to the commissioner of revenue, as part of the abstracts of tax lists required to be filed
with the commissioner under section 275.29, the amount of tax lost to the county from
the property tax credit under subdivision 2. Any prior year adjustments must also be
certified in the abstracts of tax lists. The commissioner of revenue shall review the
certifications to determine their accuracy. The commissioner may make the changes
in the certification that are considered necessary or return a certification to the county
auditor for corrections. The commissioner shall reimburse each taxing district new text begin , other than
school districts, new text end for the taxes lost. The payments must be made at the time provided in
section 473H.10 for payment to taxing jurisdictions in the same proportion that the ad
valorem tax is distributed. new text begin Reimbursements to school districts must be made as provided
in section 273.1392. new text end The amount necessary to make the reimbursements under this section
is annually appropriated from the general fund to the commissioner of revenue.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2009 Supplement, section 273.114, subdivision 2, is
amended to read:

Subd. 2.

Requirements.

Class 2a or 2b property that had been assessed under
Minnesota Statutes 2006, section 273.111, or that is part of an agricultural homestead
under Minnesota Statutes, section 273.13, subdivision 23, paragraph (a), is entitled to
valuation and tax deferment under this section if:

(1) the land consists of at least ten acres;

(2) a conservation management plan for the land must be prepared by an approved
plan writer and implemented during the period in which the land is subject to valuation
and deferment under this section;

(3) the land must be enrolled for a minimum of ten years; deleted text begin and
deleted text end

(4) there are no delinquent property taxes on the land deleted text begin . deleted text end new text begin ; and
new text end

deleted text begin Real estate may deleted text end new text begin (5) the property is new text end not deleted text begin be deleted text end new text begin also new text end enrolled for valuation and deferment
under deleted text begin this section and deleted text end section 273.111 deleted text begin , deleted text end new text begin or new text end 273.112, deleted text begin or 273.117, deleted text end or chapter 290C deleted text begin ,
concurrently deleted text end new text begin or 473H 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.

Minnesota Statutes 2008, section 273.1392, is amended to read:

273.1392 PAYMENT; SCHOOL DISTRICTS.

The amounts of new text begin bovine tuberculosis credit reimbursements under section 273.113;
new text end conservation tax credits under section 273.119; disaster or emergency reimbursement
under sections 273.1231 to 273.1235; homestead and agricultural credits under section
273.1384; aids and credits under section 273.1398; wetlands reimbursement under
section 275.295; enterprise zone property credit payments under section 469.171; and
metropolitan agricultural preserve reduction under section 473H.10 for school districts,
shall be certified to the Department of Education by the Department of Revenue. The
amounts so certified shall be paid according to section 127A.45, subdivisions 9 and 13.

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2009 Supplement, section 275.065, subdivision 3, is
amended to read:

Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare
and the county treasurer shall deliver after November 10 and on or before November 24
each year, by first class mail to each taxpayer at the address listed on the county's current
year's assessment roll, a notice of proposed property taxes. Upon written request by
the taxpayer, the treasurer may send the notice in electronic form or by electronic mail
instead of on paper or by ordinary mail.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes
each taxing authority proposes to collect for taxes payable the following year. In the
case of a town, or in the case of the state general tax, the final tax amount will be its
proposed tax. The notice must clearly state for each city new text begin that has a population over 500 new text end ,
county, school district, regional library authority established under section 134.201, and
metropolitan taxing districts as defined in paragraph (i), the time and place of deleted text begin the deleted text end new text begin a meeting
for each new text end taxing deleted text begin authorities' regularly scheduled meetings deleted text end new text begin authority new text end in which the budget
and levy will be discussed and new text begin public input allowed, prior to new text end the final budget and levy
deleted text begin determined, which must occur after November 24 deleted text end new text begin determination new text end . The taxing authorities
must provide the county auditor with the information to be included in the notice on or
before the time it certifies its proposed levy under subdivision 1. The public must be
allowed to speak at deleted text begin the meetings and the meetings shall deleted text end new text begin that meeting, which must occur
after November 24 and must new text end not be held before 6:00 p.m. It must provide a telephone
number for the taxing authority that taxpayers may call if they have questions related to
the notice and an address where comments will be received by mail.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used
for computing property taxes payable in the following year and for taxes payable in the
current year as each appears in the records of the county assessor on November 1 of the
current year; and, in the case of residential property, whether the property is classified as
homestead or nonhomestead. The notice must clearly inform taxpayers of the years to
which the market values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state general
tax, net of the residential and agricultural homestead credit under section 273.1384, voter
approved school levy, other local school levy, and the sum of the special taxing districts,
and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement
district as defined under sections 103B.501 to 103B.581, the amount attributable for that
purpose must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed
tax unless the town changes its levy at a special town meeting under section 365.52. If a
school district has certified under section 126C.17, subdivision 9, that a referendum will
be held in the school district at the November general election, the county auditor must
note next to the school district's proposed amount that a referendum is pending and that, if
approved by the voters, the tax amount may be higher than shown on the notice. In the
case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be
listed separately from the remaining amount of the city's levy. In the case of the city of
St. Paul, the levy for the St. Paul Library Agency must be listed separately from the
remaining amount of the city's levy. In the case of Ramsey County, any amount levied
under section 134.07 may be listed separately from the remaining amount of the county's
levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax
under chapter 276A or 473F applies, the proposed tax levy on the captured value or the
proposed tax levy on the tax capacity subject to the areawide tax must each be stated
separately and not included in the sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and
the total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under
the senior citizens' property tax deferral program under chapter 290B is the total amount
of property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include
the following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified,
including bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first
Monday in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster
occurring after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value
reductions for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or
the county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant,
renter, or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within
three days of receipt of the notice, whichever is later. A taxpayer may notify the county
treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to
which the notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing
districts" means the following taxing districts in the seven-county metropolitan area that
levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325,
473.446, 473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672;
and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the
county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
398A shall be included with the appropriate county's levy.

(j) The governing body of a county, city, or school district may, with the consent
of the county board, include supplemental information with the statement of proposed
property taxes about the impact of state aid increases or decreases on property tax
increases or decreases and on the level of services provided in the affected jurisdiction.
This supplemental information may include information for the following year, the current
year, and for as many consecutive preceding years as deemed appropriate by the governing
body of the county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and
local government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxes payable in
2010 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2009 Supplement, 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 new text begin , provided that nothing in this subdivision limits the
special levy authorized under section 475.755 new text end ;

(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 2001, or (ii) it is a new matching requirement that did not
exist prior to 2002;

(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, or locally administered pension plans, that are effective after June
30, 2001;

(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 (i) county's share of transferred fines and fees collected by the
district courts in the county for calendar year 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;

(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 2001;

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

(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, but not to exceed in any year
$4,800 or the sum of $1 per capita based on the county's or city's population as of the most
recent federal census, whichever is greater. 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;

(18) for counties, to pay for the increase in their share of health and human service
costs caused by reductions in federal health and human services grants effective after
September 30, 2007;

(19) for a city, for the costs reasonably and necessarily incurred for securing,
maintaining, or demolishing foreclosed or abandoned residential properties, as allowed by
the commissioner of revenue under section 275.74, subdivision 2. A city must have either
(i) a foreclosure rate of at least 1.4 percent in 2007, or (ii) a foreclosure rate in 2007 in
the city or in a zip code area of the city that is at least 50 percent higher than the average
foreclosure rate in the metropolitan area, as defined in section 473.121, subdivision 2,
to use this special levy. For purposes of this paragraph, "foreclosure rate" means the
number of foreclosures, as indicated by sheriff sales records, divided by the number of
households in the city in 2007;

(20) for a city, for the unreimbursed costs of redeployed traffic-control agents and
lost traffic citation revenue due to the collapse of the Interstate 35W bridge, as certified
to the Federal Highway Administration;

(21) to pay costs attributable to wages and benefits for sheriff, police, and fire
personnel. If a local governmental unit did not use this special levy in the previous year its
levy limit base under section 275.71 shall be reduced by the amount equal to the amount it
levied for the purposes specified in this clause in the previous year;

(22) an amount equal to any reductions in the certified aids or deleted text begin credits deleted text end new text begin credit
reimbursements new text end payable under sections 477A.011 to 477A.014, and section 273.1384,
due to unallotment under section 16A.152. The amount of the levy allowed under this
clause new text begin for each year new text end is deleted text begin equal deleted text end new text begin limited new text end to the amount unallotted deleted text begin in deleted text end new text begin from the aids and credit
reimbursements certified for payment in the year following new text end the calendar year in which the
tax new text begin levy new text end is deleted text begin levied deleted text end new text begin certified new text end unless the unallotment amount is not known by September 1 of
the levy new text begin certification new text end year, and the local government has not adjusted its levy under section
275.065, subdivision 6, or 275.07, subdivision 6, in which case deleted text begin the deleted text end new text begin that new text end unallotment
amount may be levied in the following year;

(23) to pay for the difference between one-half of the costs of confining sex offenders
undergoing the civil commitment process and any state payments for this purpose pursuant
to section 253B.185, subdivision 5;

(24) for a county to pay the costs of the first year of maintaining and operating a new
facility or new expansion, either of which contains courts, corrections, dispatch, criminal
investigation labs, or other public safety facilities and for which all or a portion of the
funding for the site acquisition, building design, site preparation, construction, and related
equipment was issued or authorized prior to the imposition of levy limits in 2008. The
levy limit base shall then be increased by an amount equal to the new facility's first full
year's operating costs as described in this clause; and

(25) for the estimated amount of reduction to credits under section 273.1384 for
credits payable in the year in which the levy is payable.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxes payable in
2010 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2008, section 275.71, subdivision 5, is amended to read:

Subd. 5.

Property tax levy limit.

new text begin (a) new text end For taxes levied in 2008 through 2010, 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, 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, (ii) 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, (iii) estimated payments to the local governmental unit under
section 272.029, adjusted for any error in estimation in the preceding year, and (iv) aids
under section 477A.16.

new text begin (b) If an aid, payment, or other amount used in paragraph (a) to reduce a local
government unit's levy limit is reduced by an unallotment under section 16A.152, the
amount of the aid, payment, or other amount prior to the unallotment is used in the
computations in paragraph (a). In order for a local government unit to levy outside of its
limit to offset the reduction in revenues attributable to an unallotment, it must do so under,
and to the extent authorized by, a special levy authorization.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxes payable in
2010 and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2008, section 279.37, subdivision 1, is amended to read:

Subdivision 1.

Composition into one item.

Delinquent taxes upon any parcel of real
estate may be composed into one item or amount by confession of judgment at any time
prior to the forfeiture of the parcel of land to the state for taxes, for the aggregate amount
of all the taxes, costs, penalties, and interest accrued against the parcel, as provided in this
section. Taxes upon property which, for the previous year's assessment, was classified
as mineral property, employment property, or commercial or industrial property are only
eligible to be composed into any confession of judgment under this section as provided in
subdivision 1a. Delinquent taxes for property that has been reclassified from 4bb to 4b
under section 273.1319 may not be composed into a confession of judgment under this
subdivision. Delinquent taxes on unimproved land are eligible to be composed into a
confession of judgment only if the land is classified new text begin under section 273.13 new text end as homestead,
agricultural, deleted text begin or timberland deleted text end new text begin rural vacant land, or managed forest land, new text end in the previous year
or is eligible for installment payment under subdivision 1a. The entire parcel is eligible
for the ten-year installment plan as provided in subdivision 2 if 25 percent or more of the
market value of the parcel is eligible for confession of judgment under this subdivision.

new text begin EFFECTIVE DATE. new text end

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

Sec. 11.

Minnesota Statutes 2009 Supplement, section 475.755, is amended to read:

475.755 EMERGENCY DEBT CERTIFICATES.

(a) If at any time during a fiscal year the receipts of a local government are
reasonably expected to be reduced below the amount provided in the local government's
budget when the final property tax levy to be collected during the fiscal year was certified
and the receipts are insufficient to meet the expenses incurred or to be incurred during the
fiscal year, the governing body of the local government may authorize and sell certificates
of indebtedness to mature within two years or less from the end of the fiscal year in which
the certificates are issued. The maximum principal amount of the certificates that it may
issue in a fiscal year is limited to the expected reduction in receipts plus the cost of
issuance. The certificates may be issued in the manner and on the terms the governing
body determines by resolution.

(b) The governing body of the local government shall levy taxes for the payment of
principal and interest on the certificates in accordance with section 475.61.

(c) The certificates are not to be included in the net debt of the issuing local
government.

(d) To the extent that a local government issues certificates under this section to fund
an unallotment or other reduction in its state aid, the local government deleted text begin may deleted text end new text begin must new text end not use deleted text begin a deleted text end
new text begin the new text end special levy new text begin authority new text end for deleted text begin the deleted text end aid deleted text begin reduction deleted text end new text begin reductions new text end under section 275.70, subdivision
5, clause (22), or a similar or successor provision deleted text begin . This provision does not affect the status
of the deleted text end new text begin , but must instead use the special levy authority for the repayment of indebtedness
under section 275.70, subdivision 5, clause (2), in order to new text end levy under section 475.61 to
deleted text begin pay deleted text end new text begin fund repayment of new text end the certificates deleted text begin as deleted text end new text begin with new text end a levy that is not subject to levy limits.

(e) For purposes of this section, the following terms have the meanings given:

(1) "Local government" means a statutory or home rule charter city, a town, or
a county.

(2) "Receipts" includes the following amounts scheduled to be received by the
local government for the fiscal year from:

(i) taxes;

(ii) aid payments previously certified by the state to be paid to the local government;

(iii) state reimbursement payments for property tax credits; and

(iv) any other source.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxes payable in
2010 and thereafter.
new text end

Sec. 12.

Minnesota Statutes 2009 Supplement, section 477A.013, subdivision 8,
is amended to read:

Subd. 8.

City formula aid.

deleted text begin (a) deleted text end deleted text begin In calendar year 2009, the formula aid for a city
is equal to the sum of (1) its city jobs base, (2) its small city aid base, and (3) the need
increase percentage multiplied by its unmet need.
deleted text end

deleted text begin (b) In calendar year 2010 and subsequent years, deleted text end The formula aid for a city is equal
to the sum of (1) its city jobs base, (2) its small city aid base, and (3) the need increase
percentage multiplied by the average of its unmet need for the most recently available
two years.

No city may have a formula aid amount less than zero. The need increase percentage
must be the same for all cities.

The applicable need increase percentage must be calculated by the Department of
Revenue so that the total of the aid under subdivision 9 equals the total amount available
for aid under section 477A.03. deleted text begin For aids payable in 2009 only, all data used in calculating
aid to cities under sections 477A.011 to 477A.013 will be based on the data available for
calculating aid to cities for aids payable in 2008. For aids payable in 2010 and thereafter, deleted text end
Data used in calculating aids to cities under sections 477A.011 to 477A.013 shall be the
most recently available data as of January 1 in the year in which the aid is calculated except
deleted text begin as provided in section 477A.011, subdivisions 3 and 35 deleted text end new text begin that the data used to compute "net
levy" in subdivision 9 is the data most recently available at the time of the aid computation new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid payable in 2010 and thereafter.
new text end

Sec. 13.

Laws 2001, First Special Session chapter 5, article 3, section 50, as amended
by Laws 2009, chapter 86, article 1, section 87, is amended to read:

EFFECTIVE DATE.

Clause (22) of this section is effective for taxes levied in 2002,
payable in 2003, deleted text begin through taxes levied in 2011, payable in 2012 deleted text end new text begin and thereafter new text end . Clause (23)
of this section is effective for taxes levied in 2001, payable in 2002, and thereafter.

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 5

MISCELLANEOUS

Section 1.

Minnesota Statutes 2008, section 270C.34, subdivision 1, is amended to read:

Subdivision 1.

Authority.

(a) The commissioner may abate, reduce, or refund any
penalty or interest that is imposed by a law administered by the commissioner new text begin , or imposed
by section 270.0725, subdivision 1 or 2, new text end as a result of the late payment of tax or late
filing of a return, if the failure to timely pay the tax or failure to timely file the return is
due to reasonable cause, or if the taxpayer is located in a presidentially declared disaster
new text begin or in a presidentially declared state of emergency new text end area new text begin or in an area declared to be in a
state of emergency by the governor under section 12.31 new text end .

(b) The commissioner shall abate any part of a penalty or additional tax charge
under section 289A.25, subdivision 2, or 289A.26, subdivision 4, attributable to erroneous
advice given to the taxpayer in writing by an employee of the department acting in
an official capacity, if the advice:

(1) was reasonably relied on and was in response to a specific written request of the
taxpayer; and

(2) was not the result of failure by the taxpayer to provide adequate or accurate
information.

deleted text begin (c) The commissioner may abate a penalty imposed under section 270.0725,
subdivision 1 or 2, if the failure to timely file is due to reasonable cause, or if the airline
company is located in a presidentially declared disaster area.
deleted 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. 2.

Minnesota Statutes 2008, section 469.319, subdivision 5, is amended to read:

Subd. 5.

Waiver authority.

(a) The commissioner may waive all or part of a
repayment required under subdivision 1, if the commissioner, in consultation with
the commissioner of employment and economic development and appropriate officials
from the local government units in which the qualified business is located, determines
that requiring repayment of the tax is not in the best interest of the state or the local
government units and the business ceased operating as a result of circumstances beyond
its control including, but not limited to:

(1) a natural disaster;

(2) unforeseen industry trends; or

(3) loss of a major supplier or customer.

(b)(1) The commissioner shall waive repayment required under subdivision 1a if
the commissioner has waived repayment by the operating business under subdivision 1,
unless the person that received benefits without having to operate a business in the zone
was a contributing factor in the qualified business becoming subject to repayment under
subdivision 1;

(2) the commissioner shall waive the repayment required under subdivision 1a, even
if the repayment has not been waived for the operating business if:

(i) the person that received benefits without having to operate a business in the zone
and the business that operated in the zone are not related parties as defined in section
267(b) of the Internal Revenue Code of 1986, as amended through December 31, 2007; and

(ii) actions of the person were not a contributing factor in the qualified business
becoming subject to repayment under subdivision 1.

new text begin (c) Requests for waiver must be made no later than 60 days after the notice date of
an order issued under subdivision 4, paragraph (d), or, in the case of property taxes, within
60 days of the date of a tax statement issued under subdivision 4, paragraph (c).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for waivers requested in response
to notices issued after the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2008, section 469.3193, is amended to read:

469.3193 CERTIFICATION OF CONTINUING ELIGIBILITY FOR JOBZ
BENEFITS.

(a) By deleted text begin December 1 deleted text end new text begin October 15 new text end of each year, every qualified business must certify
to the commissioner of revenue, on a form prescribed by the commissioner of revenue,
whether it is in compliance with any agreement required as a condition for eligibility for
benefits listed under section 469.315. A business that fails to submit the certification, or
any business, including those still operating in the zone, that submits a certification that
the commissioner of revenue later determines materially misrepresents the business's
compliance with the agreement, is subject to the repayment provisions under section
469.319 from January 1 of the year in which the report is due or the date that the business
became subject to section 469.319, whichever is earlier. Any such business is permanently
barred from obtaining benefits under section 469.315. For purposes of this section, the bar
applies to an entity and also applies to any individuals or entities that have an ownership
interest of at least 20 percent of the entity.

(b) Before the sanctions under paragraph (a) apply to a business that fails to
submit the certification, the commissioner of revenue shall send notice to the business,
demanding that the certification be submitted within 30 days and advising the business
of the consequences for failing to do so. The commissioner of revenue shall notify
the commissioner of employment and economic development and the appropriate job
opportunity subzone administrator whenever notice is sent to a business under this
paragraph.

(c) The certification required under this section is public.

(d) The commissioner of revenue shall promptly notify the commissioner of
employment and economic development of all businesses that certify that they are not
in compliance with the terms of their business subsidy agreement and all businesses
that fail to file the certification.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for certifications required to be
made in 2010 and thereafter.
new text end