1.1                          A bill for an act 
  1.2             relating to taxation; making tax policy, collection, 
  1.3             and administrative changes; imposing penalties; 
  1.4             amending Minnesota Statutes 1994, sections 60A.15, 
  1.5             subdivision 12; 60A.199, subdivisions 8 and 10; 
  1.6             270.72, subdivisions 1, 2, and 3; 273.124, 
  1.7             subdivisions 3 and 6; 274.14; 289A.18, subdivision 2; 
  1.8             289A.20, subdivision 2; 289A.38, subdivision 7; 
  1.9             289A.40, subdivision 1; 289A.43; 289A.55, subdivision 
  1.10            7; 289A.60, subdivisions 2, 12, and by adding a 
  1.11            subdivision; 290.01, subdivision 7b; 290.015, 
  1.12            subdivision 1; 290.191, subdivisions 1, 5, and 6; 
  1.13            290.92, subdivisions 1 and 23; 290.9201, subdivision 
  1.14            3; 294.09, subdivisions 1 and 4; 295.53, subdivision 
  1.15            2; 296.12, subdivisions 3, 4, and 11; 296.141, 
  1.16            subdivisions 1, 2, and 6; 296.17, subdivisions 1, 3, 
  1.17            5, and 11; 296.18, subdivisions 1, 2, and 5; 297.08, 
  1.18            subdivisions 1 and 3; 297.35, subdivision 1; 297.43, 
  1.19            subdivision 2; 297C.02, subdivision 2; 297C.07; 
  1.20            297C.14, subdivision 2; 297E.11, subdivision 4; 
  1.21            297E.12, subdivision 2; 299F.26, subdivisions 1 and 4; 
  1.22            proposing coding for new law in Minnesota Statutes, 
  1.23            chapters 270; 296; and 340A; repealing Minnesota 
  1.24            Statutes 1994, sections 270.70, subdivisions 8, 9, and 
  1.25            10; 297A.212; and 297A.38. 
  1.26  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.27                             ARTICLE 1
  1.28                   INCOME TAX AND BUSINESS TAXES
  1.29     Section 1.  Minnesota Statutes 1994, section 289A.18, 
  1.30  subdivision 2, is amended to read: 
  1.31     Subd. 2.  [WITHHOLDING RETURNS, ENTERTAINER WITHHOLDING 
  1.32  RETURNS, RETURNS FOR WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE 
  1.33  CONTRACTORS, AND WITHHOLDING RETURNS FROM PARTNERSHIPS AND S 
  1.34  CORPORATIONS.] Withholding returns are due on or before the last 
  1.35  day of the month following the close of the quarterly period.  
  2.1   However, if the return shows timely deposits in full payment of 
  2.2   the taxes due for that period, the return returns for the first, 
  2.3   second, and third quarters may be filed on or before the tenth 
  2.4   day of the second calendar month following the period and the 
  2.5   return for the fourth quarter may be filed on or before the 28th 
  2.6   day of the second calendar month following the period.  An 
  2.7   employer, in preparing a quarterly return, may take credit for 
  2.8   monthly deposits previously made for that quarter.  Entertainer 
  2.9   withholding tax returns are due within 30 days after each 
  2.10  performance.  Returns for withholding from payments to 
  2.11  out-of-state contractors are due within 30 days after the 
  2.12  payment to the contractor.  Returns for withholding by 
  2.13  partnerships are due on or before the due date specified for 
  2.14  filing partnership returns.  Returns for withholding by S 
  2.15  corporations are due on or before the due date specified for 
  2.16  filing corporate franchise tax returns. 
  2.17     Sec. 2.  Minnesota Statutes 1994, section 289A.20, 
  2.18  subdivision 2, is amended to read: 
  2.19     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
  2.20  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
  2.21  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
  2.22  (a) A tax required to be deducted and withheld during the 
  2.23  quarterly period must be paid on or before the last day of the 
  2.24  month following the close of the quarterly period, unless an 
  2.25  earlier time for payment is provided.  A tax required to be 
  2.26  deducted and withheld from compensation of an entertainer and 
  2.27  from a payment to an out-of-state contractor must be paid on or 
  2.28  before the date the return for such tax must be filed under 
  2.29  section 289A.18, subdivision 2.  Taxes required to be deducted 
  2.30  and withheld by partnerships and S corporations must be paid on 
  2.31  or before the date the return must be filed under section 
  2.32  289A.18, subdivision 2. 
  2.33     (b) An employer who, during the previous quarter, withheld 
  2.34  more than $500 $1,500 of tax under section 290.92, subdivision 
  2.35  2a or 3, or 290.923, subdivision 2, must deposit tax withheld 
  2.36  under those sections with the commissioner within the time 
  3.1   allowed to deposit the employer's federal withheld employment 
  3.2   taxes under Treasury Regulation, section 31.6302-1, without 
  3.3   regard to the safe harbor or de minimus rules in subparagraph 
  3.4   (f) or the one-day rule in subsection (c), clause (3).  
  3.5   Taxpayers must submit a copy of their federal notice of deposit 
  3.6   status to the commissioner upon request by the commissioner. 
  3.7      (c) The commissioner may prescribe by rule other return 
  3.8   periods or deposit requirements.  In prescribing the reporting 
  3.9   period, the commissioner may classify payors according to the 
  3.10  amount of their tax liability and may adopt an appropriate 
  3.11  reporting period for the class that the commissioner judges to 
  3.12  be consistent with efficient tax collection.  In no event will 
  3.13  the duration of the reporting period be more than one year. 
  3.14     (d) If less than the correct amount of tax is paid to the 
  3.15  commissioner, proper adjustments with respect to both the tax 
  3.16  and the amount to be deducted must be made, without interest, in 
  3.17  the manner and at the times the commissioner prescribes.  If the 
  3.18  underpayment cannot be adjusted, the amount of the underpayment 
  3.19  will be assessed and collected in the manner and at the times 
  3.20  the commissioner prescribes. 
  3.21     (e) If the aggregate amount of the tax withheld during a 
  3.22  fiscal year ending June 30 under section 290.92, subdivision 2a 
  3.23  or 3, is equal to or exceeds $120,000 $50,000, the employer must 
  3.24  remit each required deposit in the subsequent calendar year by 
  3.25  means of a funds transfer as defined in section 336.4A-104, 
  3.26  paragraph (a).  The funds transfer payment date, as defined in 
  3.27  section 336.4A-401, must be on or before the date the deposit is 
  3.28  due.  If the date the deposit is due is not a funds transfer 
  3.29  business day, as defined in section 336.4A-105, paragraph (a), 
  3.30  clause (4), the payment date must be on or before the funds 
  3.31  transfer business day next following the date the deposit is due.
  3.32     (f) Providers of payroll services who remit withholding 
  3.33  deposits on behalf of 50 or more employers, or on behalf of any 
  3.34  employer with aggregate amounts over the threshold in paragraph 
  3.35  (e), must remit all deposits by means of a funds transfer as 
  3.36  provided in paragraph (e), regardless of the aggregate amount of 
  4.1   tax withheld during a fiscal year for all of the employers. 
  4.2      Sec. 3.  Minnesota Statutes 1994, section 289A.38, 
  4.3   subdivision 7, is amended to read: 
  4.4      Subd. 7.  [FEDERAL TAX CHANGES.] If the amount of income, 
  4.5   items of tax preference, deductions, or credits for any year of 
  4.6   a taxpayer as reported to the Internal Revenue Service is 
  4.7   changed or corrected by the commissioner of Internal Revenue or 
  4.8   other officer of the United States or other competent authority, 
  4.9   or where a renegotiation of a contract or subcontract with the 
  4.10  United States results in a change in income, items of tax 
  4.11  preference, deductions, or credits, or, in the case of estate 
  4.12  tax, where there are adjustments to the taxable estate resulting 
  4.13  in a change to the credit for state death taxes, the taxpayer 
  4.14  shall report the change or correction or renegotiation results 
  4.15  in writing to the commissioner, in the form required by the 
  4.16  commissioner.  The report must be submitted within 90 180 days 
  4.17  after the final determination and must concede the accuracy of 
  4.18  the determination or state how it is wrong be in the form of 
  4.19  either an amended Minnesota return conceding the accuracy of the 
  4.20  federal determination or a letter detailing how the federal 
  4.21  determination is incorrect or does not change the Minnesota 
  4.22  tax.  A taxpayer filing an amended federal tax return must also 
  4.23  file a copy of the amended return with the commissioner of 
  4.24  revenue within 90 180 days after filing the amended return. 
  4.25     Sec. 4.  Minnesota Statutes 1994, section 289A.55, 
  4.26  subdivision 7, is amended to read: 
  4.27     Subd. 7.  [INSTALLMENT PAYMENTS; ESTATE TAX.] Interest must 
  4.28  be paid on unpaid installment payments of the tax authorized 
  4.29  under section 289A.30, subdivision 2, beginning on the date the 
  4.30  tax was due without regard to extensions allowed or extensions 
  4.31  elected, at the rate of interest in effect under given in 
  4.32  section 270.75, nine months following the date of death. 
  4.33     Sec. 5.  Minnesota Statutes 1994, section 289A.60, is 
  4.34  amended by adding a subdivision to read: 
  4.35     Subd. 24.  [PENALTY FOR FAILURE TO NOTIFY OF FEDERAL 
  4.36  CHANGE.] If a person fails to report to the commissioner a 
  5.1   change or correction of the person's federal return in the 
  5.2   manner and time prescribed in section 289A.38, subdivision 7, 
  5.3   there must be added to the tax an amount equal to ten percent of 
  5.4   the amount of any underpayment of Minnesota tax attributable to 
  5.5   the federal change. 
  5.6      Sec. 6.  Minnesota Statutes 1994, section 290.01, 
  5.7   subdivision 7b, is amended to read: 
  5.8      Subd. 7b.  [RESIDENT TRUST.] Resident trust means a trust, 
  5.9   except a grantor type trust, which is administered in this state 
  5.10  either (1) was created by a will of a decedent who at his or her 
  5.11  death was domiciled in this state or (2) is an irrevocable 
  5.12  trust, the grantor of which was domiciled in this state at the 
  5.13  time the trust became irrevocable.  For the purpose of this 
  5.14  subdivision, a trust is considered irrevocable to the extent the 
  5.15  grantor is not treated as the owner thereof under sections 671 
  5.16  to 678 of the Internal Revenue Code.  The term "grantor type 
  5.17  trust" means a trust where the income or gains of the trust are 
  5.18  taxable to the grantor or others treated as substantial owners 
  5.19  under sections 671 to 678 of the Internal Revenue Code. 
  5.20     Sec. 7.  Minnesota Statutes 1994, section 290.015, 
  5.21  subdivision 1, is amended to read: 
  5.22     Subdivision 1.  [GENERAL RULE.] (a) Except as provided in 
  5.23  subdivision 3, a person that conducts a trade or business that 
  5.24  has a place of business in this state, regularly has employees 
  5.25  or independent contractors conducting business activities on its 
  5.26  behalf in this state, or owns or leases real property located in 
  5.27  this state or tangible personal property located in this state 
  5.28  as defined in section 290.191, subdivision 6, paragraph (e), is 
  5.29  subject to the taxes imposed by this chapter. 
  5.30     (b) Except as provided in subdivision 3, a person that 
  5.31  conducts a trade or business not described in paragraph (a) is 
  5.32  subject to the taxes imposed by this chapter if the trade or 
  5.33  business obtains or regularly solicits business from within this 
  5.34  state, without regard to physical presence in this state. 
  5.35     (c) For purposes of paragraph (b), business from within 
  5.36  this state includes, but is not limited to: 
  6.1      (1) sales of products or services of any kind or nature to 
  6.2   customers in this state who receive the product or service in 
  6.3   this state; 
  6.4      (2) sales of services which are performed from outside this 
  6.5   state but the benefits of which services are consumed received 
  6.6   in this state; 
  6.7      (3) transactions with customers in this state that involve 
  6.8   intangible property and result in income flowing to the person 
  6.9   from within this state as provided in section 290.191; 
  6.10     (4) leases of tangible personal property that is located in 
  6.11  this state as defined in section 290.191, subdivision 6, 
  6.12  paragraph (e); 
  6.13     (5) sales and leases of real property located in this 
  6.14  state; and 
  6.15     (6) if a financial institution, deposits received from 
  6.16  customers in this state.  
  6.17     (d) For purposes of paragraph (b), solicitation includes, 
  6.18  but is not limited to: 
  6.19     (1) the distribution, by mail or otherwise, without regard 
  6.20  to the state from which such distribution originated or in which 
  6.21  the materials were prepared, of catalogs, periodicals, 
  6.22  advertising flyers, or other written solicitations of business 
  6.23  to customers in this state; 
  6.24     (2) display of advertisements on billboards or other 
  6.25  outdoor advertising in this state; 
  6.26     (3) advertisements in newspapers published in this state; 
  6.27     (4) advertisements in trade journals or other periodicals, 
  6.28  the circulation of which is primarily within this state; 
  6.29     (5) advertisements in a Minnesota edition of a national or 
  6.30  regional publication or a limited regional edition of which this 
  6.31  state is included of a broader regional or national publication 
  6.32  which are not placed in other geographically defined editions of 
  6.33  the same issue of the same publication; 
  6.34     (6) advertisements in regional or national publications in 
  6.35  an edition which is not by its contents geographically targeted 
  6.36  to Minnesota, but which is sold over the counter in Minnesota or 
  7.1   by subscription to Minnesota residents; 
  7.2      (7) advertisements broadcast on a radio or television 
  7.3   station located in Minnesota; or 
  7.4      (8) any other solicitation by telegraph, telephone, 
  7.5   computer database, cable, optic, microwave, or other 
  7.6   communication system. 
  7.7      Sec. 8.  Minnesota Statutes 1994, section 290.191, 
  7.8   subdivision 1, is amended to read: 
  7.9      Subdivision 1.  [GENERAL RULE.] (a) Except as otherwise 
  7.10  provided in section 290.17, subdivision 5, the net income from a 
  7.11  trade or business carried on partly within and partly without 
  7.12  this state must be apportioned to this state as provided in this 
  7.13  section.  
  7.14     (b) For purposes of this section, "state" means a state of 
  7.15  the United States, the District of Columbia, the commonwealth of 
  7.16  Puerto Rico, or any territory or possession of the United States 
  7.17  or any foreign country. 
  7.18     Sec. 9.  Minnesota Statutes 1994, section 290.191, 
  7.19  subdivision 5, is amended to read: 
  7.20     Subd. 5.  [DETERMINATION OF SALES FACTOR.] For purposes of 
  7.21  this section, the following rules apply in determining the sales 
  7.22  factor.  
  7.23     (a) The sales factor includes all sales, gross earnings, or 
  7.24  receipts received in the ordinary course of the business, except 
  7.25  that the following types of income are not included in the sales 
  7.26  factor: 
  7.27     (1) interest; 
  7.28     (2) dividends; 
  7.29     (3) sales of capital assets as defined in section 1221 of 
  7.30  the Internal Revenue Code; 
  7.31     (4) sales of property used in the trade or business, except 
  7.32  sales of leased property of a type which is regularly sold as 
  7.33  well as leased; 
  7.34     (5) sales of debt instruments as defined in section 
  7.35  1275(a)(1) of the Internal Revenue Code or sales of stock; and 
  7.36     (6) royalties, fees, or other like income of a type which 
  8.1   qualify for a subtraction from federal taxable income under 
  8.2   section 290.01, subdivision 19(d)(11).  
  8.3      (b) Sales of tangible personal property are made within 
  8.4   this state if the property is received by a purchaser at a point 
  8.5   within this state, and the taxpayer is taxable in this state, 
  8.6   regardless of the f.o.b. point, other conditions of the sale, or 
  8.7   the ultimate destination of the property. 
  8.8      (c) Tangible personal property delivered to a common or 
  8.9   contract carrier or foreign vessel for delivery to a purchaser 
  8.10  in another state or nation is a sale in that state or nation, 
  8.11  regardless of f.o.b. point or other conditions of the sale.  
  8.12     (d) Notwithstanding paragraphs (b) and (c), when 
  8.13  intoxicating liquor, wine, fermented malt beverages, cigarettes, 
  8.14  or tobacco products are sold to a purchaser who is licensed by a 
  8.15  state or political subdivision to resell this property only 
  8.16  within the state of ultimate destination, the sale is made in 
  8.17  that state.  
  8.18     (e) Sales made by or through a corporation that is 
  8.19  qualified as a domestic international sales corporation under 
  8.20  section 992 of the Internal Revenue Code are not considered to 
  8.21  have been made within this state.  
  8.22     (f) Sales, rents, royalties, and other income in connection 
  8.23  with real property is attributed to the state in which the 
  8.24  property is located.  
  8.25     (g) Receipts from the lease or rental of tangible personal 
  8.26  property, including finance leases and true leases, must be 
  8.27  attributed to this state if the property is located in this 
  8.28  state and to other states if the property is not located in this 
  8.29  state.  Moving property including, but not limited to, motor 
  8.30  vehicles, rolling stock, aircraft, vessels, or mobile equipment 
  8.31  is located in this state if: 
  8.32     (1) the operation of the property is entirely within this 
  8.33  state; or 
  8.34     (2) the operation of the property is in two or more states 
  8.35  and the principal base of operations from which the property is 
  8.36  sent out is in this state. 
  9.1      (h) Royalties and other income not described in paragraph 
  9.2   (a), clause (6), received for the use of or for the privilege of 
  9.3   using intangible property, including patents, know-how, 
  9.4   formulas, designs, processes, patterns, copyrights, trade names, 
  9.5   service names, franchises, licenses, contracts, customer lists, 
  9.6   or similar items, must be attributed to the state in which the 
  9.7   property is used by the purchaser.  If the property is used in 
  9.8   more than one state, the royalties or other income must be 
  9.9   apportioned to this state pro rata according to the portion of 
  9.10  use in this state.  If the portion of use in this state cannot 
  9.11  be determined, the royalties or other income must be excluded 
  9.12  from both the numerator and the denominator.  Intangible 
  9.13  property is used in this state if the purchaser uses the 
  9.14  intangible property or the rights therein in the regular course 
  9.15  of its business operations in this state, regardless of the 
  9.16  location of the purchaser's customers. 
  9.17     (i) Sales of intangible property are made within the state 
  9.18  in which the property is used by the purchaser.  If the property 
  9.19  is used in more than one state, the sales must be apportioned to 
  9.20  this state pro rata according to the portion of use in this 
  9.21  state.  If the portion of use in this state cannot be 
  9.22  determined, the sale must be excluded from both the numerator 
  9.23  and the denominator of the sales factor.  Intangible property is 
  9.24  used in this state if the purchaser used the intangible property 
  9.25  in the regular course of its business operations in this state. 
  9.26     (j) Receipts from the performance of services must be 
  9.27  attributed to the state in which the benefits of where the 
  9.28  services are consumed received.  If the benefits are consumed in 
  9.29  more than one state, the receipts from those benefits must be 
  9.30  apportioned to this state pro rata according to the portion of 
  9.31  the benefits consumed in this state. If the extent to which the 
  9.32  benefits of services are consumed in this state is not readily 
  9.33  determinable, the benefits of the For the purposes of this 
  9.34  section, receipts from the performance of services provided to a 
  9.35  corporation, partnership, or trust may only be attributed to a 
  9.36  state where it has a fixed place of doing business.  If the 
 10.1   state where the services are received is not readily 
 10.2   determinable or is a state where the corporation, partnership, 
 10.3   or trust receiving the service does not have a fixed place of 
 10.4   doing business, the services shall be deemed to be consumed 
 10.5   received at the location of the office of the customer from 
 10.6   which the services were ordered in the regular course of the 
 10.7   customer's trade or business.  If the ordering office cannot be 
 10.8   determined, the benefits of the services shall be deemed to be 
 10.9   consumed received at the office of the customer to which the 
 10.10  services are billed.  
 10.11     Sec. 10.  Minnesota Statutes 1994, section 290.191, 
 10.12  subdivision 6, is amended to read: 
 10.13     Subd. 6.  [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL 
 10.14  INSTITUTIONS.] (a) For purposes of this section, the rules in 
 10.15  this subdivision and subdivisions 7 and subdivision 8 apply in 
 10.16  determining the receipts factor for financial institutions.  
 10.17     (b) "Receipts" for this purpose means gross income, 
 10.18  including net taxable gain on disposition of assets, including 
 10.19  securities and money market instruments, when derived from 
 10.20  transactions and activities in the regular course of the 
 10.21  taxpayer's trade or business.  
 10.22     (c) "Money market instruments" means federal funds sold and 
 10.23  securities purchased under agreements to resell, commercial 
 10.24  paper, banker's acceptances, and purchased certificates of 
 10.25  deposit and similar instruments to the extent that the 
 10.26  instruments are reflected as assets under generally accepted 
 10.27  accounting principles.  
 10.28     (d) "Securities" means United States Treasury securities, 
 10.29  obligations of United States government agencies and 
 10.30  corporations, obligations of state and political subdivisions, 
 10.31  corporate stock, bonds, and other securities, participations in 
 10.32  securities backed by mortgages held by United States or state 
 10.33  government agencies, loan-backed securities and similar 
 10.34  investments to the extent the investments are reflected as 
 10.35  assets under generally accepted accounting principles.  
 10.36     (e) Receipts from the lease or rental of real or tangible 
 11.1   personal property, including both finance leases and true 
 11.2   leases, must be attributed to this state if the property is 
 11.3   located in this state.  Tangible personal property that is 
 11.4   characteristically moving property, such as motor vehicles, 
 11.5   rolling stock, aircraft, vessels, mobile equipment, and the 
 11.6   like, is considered to be located in a state if: 
 11.7      (1) the operation of the property is entirely within the 
 11.8   state; or 
 11.9      (2) the operation of the property is in two or more states, 
 11.10  but the principal base of operations from which the property is 
 11.11  sent out is in the state. 
 11.12     (f) Interest income and other receipts from assets in the 
 11.13  nature of loans that are secured primarily by real estate or 
 11.14  tangible personal property must be attributed to this state if 
 11.15  the security property is located in this state under the 
 11.16  principles stated in paragraph (e).  
 11.17     (g) Interest income and other receipts from consumer loans 
 11.18  not secured by real or tangible personal property that are made 
 11.19  to residents of this state, whether at a place of business, by 
 11.20  traveling loan officer, by mail, by telephone or other 
 11.21  electronic means, must be attributed to this state.  
 11.22     (h) Interest income and other receipts from commercial 
 11.23  loans and installment obligations that are unsecured by real or 
 11.24  tangible personal property or secured by intangible property 
 11.25  must be attributed to this state if the proceeds of the loan are 
 11.26  to be applied in this state.  If it cannot be determined where 
 11.27  the funds are to be applied, the income and receipts are 
 11.28  attributed to the state in which the office of the borrower from 
 11.29  which the application would be made in the regular course of 
 11.30  business is located.  If this cannot be determined, the 
 11.31  transaction is disregarded in the apportionment formula. 
 11.32     (i) Interest income and other receipts from a participating 
 11.33  financial institution's portion of participation and syndication 
 11.34  loans must be attributed under paragraphs (e) to (h).  A 
 11.35  participation loan is an arrangement in which a lender makes a 
 11.36  loan to a borrower and then sells, assigns, or otherwise 
 12.1   transfers all or a part of the loan to a purchasing financial 
 12.2   institution.  A syndication loan is a loan transaction involving 
 12.3   multiple financial institutions in which all the lenders are 
 12.4   named as parties to the loan documentation, are known to the 
 12.5   borrower, and have privity of contract with the borrower.  
 12.6      (j) Interest income and other receipts including service 
 12.7   charges from financial institution credit card and travel and 
 12.8   entertainment credit card receivables and credit card holders' 
 12.9   fees must be attributed to the state to which the card charges 
 12.10  and fees are regularly billed.  
 12.11     (k) Merchant discount income derived from financial 
 12.12  institution credit card holder transactions with a merchant must 
 12.13  be attributed to the state in which the merchant is located.  In 
 12.14  the case of merchants located within and outside the state, only 
 12.15  receipts from merchant discounts attributable to sales made from 
 12.16  locations within the state are attributed to this state.  It is 
 12.17  presumed, subject to rebuttal, that the location of a merchant 
 12.18  is the address shown on the invoice submitted by the merchant to 
 12.19  the taxpayer. 
 12.20     (l) Receipts from the performance of fiduciary and other 
 12.21  services must be attributed to the state in which the benefits 
 12.22  of the services are consumed received.  If the benefits are 
 12.23  consumed in more than one state, the receipts from those 
 12.24  benefits must be apportioned to this state pro rata according to 
 12.25  the portion of the benefits consumed in this state.  For the 
 12.26  purposes of this section, services provided to a corporation, 
 12.27  partnership, or trust must be attributed to a state where it has 
 12.28  a fixed place of doing business.  If the extent to which the 
 12.29  benefits of state where the services are consumed in this state 
 12.30  received is not readily determinable or is a state where the 
 12.31  corporation, partnership, or trust does not have a fixed place 
 12.32  of doing business, the benefits of the services shall be deemed 
 12.33  to be consumed received at the location of the office of the 
 12.34  customer from which the services were ordered in the regular 
 12.35  course of the customer's trade or business.  If the ordering 
 12.36  office cannot be determined, the benefits of the services shall 
 13.1   be deemed to be consumed received at the office of the customer 
 13.2   to which the services are billed.  
 13.3      (m) Receipts from the issuance of travelers checks and 
 13.4   money orders must be attributed to the state in which the checks 
 13.5   and money orders are purchased.  
 13.6      (n) Receipts from investments of a financial institution in 
 13.7   securities and from money market instruments must be apportioned 
 13.8   to this state based on the ratio that total deposits from this 
 13.9   state, its residents, including any business with an office or 
 13.10  other place of business in this state, its political 
 13.11  subdivisions, agencies, and instrumentalities bear to the total 
 13.12  deposits from all states, their residents, their political 
 13.13  subdivisions, agencies, and instrumentalities.  In the case of 
 13.14  an unregulated financial institution subject to this section, 
 13.15  these receipts are apportioned to this state based on the ratio 
 13.16  that its gross business income, excluding such receipts, earned 
 13.17  from sources within this state bears to gross business income, 
 13.18  excluding such receipts, earned from sources within all states.  
 13.19  For purposes of this subdivision, deposits made by this state, 
 13.20  its residents, its political subdivisions, agencies, and 
 13.21  instrumentalities must be attributed to this state, whether or 
 13.22  not the deposits are accepted or maintained by the taxpayer at 
 13.23  locations within this state. 
 13.24     (o) A financial institution's interest in property 
 13.25  described in section 290.015, subdivision 3, paragraph (b), is 
 13.26  included in the receipts factor in the same manner as assets in 
 13.27  the nature of securities or money market instruments are 
 13.28  included in paragraph (n).  
 13.29     Sec. 11.  Minnesota Statutes 1994, section 290.92, 
 13.30  subdivision 1, is amended to read: 
 13.31     Subdivision 1.  [DEFINITIONS.] (1)  [WAGES.] For purposes 
 13.32  of this section, the term "wages" means the same as that term is 
 13.33  defined in section 3401(a) and (f) of the Internal Revenue Code, 
 13.34  except wages shall not include agricultural labor as defined in 
 13.35  section 3121(g) of the Internal Revenue Code. 
 13.36     (2)  [PAYROLL PERIOD.] For purposes of this section the 
 14.1   term "payroll period" means a period for which a payment of 
 14.2   wages is ordinarily made to the employee by the employee's 
 14.3   employer, and the term "miscellaneous payroll period" means a 
 14.4   payroll period other than a daily, weekly, biweekly, 
 14.5   semimonthly, monthly, quarterly, semiannual, or annual payroll 
 14.6   period. 
 14.7      (3)  [EMPLOYEE.] For purposes of this section the term 
 14.8   "employee" means any resident individual performing services for 
 14.9   an employer, either within or without, or both within and 
 14.10  without the state of Minnesota, and every nonresident individual 
 14.11  performing services within the state of Minnesota, the 
 14.12  performance of which services constitute, establish, and 
 14.13  determine the relationship between the parties as that of 
 14.14  employer and employee.  As used in the preceding sentence, the 
 14.15  term "employee" includes an officer of a corporation, and an 
 14.16  officer, employee, or elected official of the United States, a 
 14.17  state, or any political subdivision thereof, or the District of 
 14.18  Columbia, or any agency or instrumentality of any one or more of 
 14.19  the foregoing. 
 14.20     (4)  [EMPLOYER.] For purposes of this section the term 
 14.21  "employer" means any person, including individuals, fiduciaries, 
 14.22  estates, trusts, partnerships, limited liability companies, and 
 14.23  corporations transacting business in or deriving any income from 
 14.24  sources within the state of Minnesota for whom an individual 
 14.25  performs or performed any service, of whatever nature, as the 
 14.26  employee of such person, except that if the person for whom the 
 14.27  individual performs or performed the services does not have 
 14.28  legal control of the payment of the wages for such services, the 
 14.29  term "employer," except for purposes of paragraph (1), means the 
 14.30  person having legal control of the payment of such wages.  As 
 14.31  used in the preceding sentence, the term "employer" includes any 
 14.32  corporation, individual, estate, trust, or organization which is 
 14.33  exempt from taxation under section 290.05 and further includes, 
 14.34  but is not limited to, officers of corporations who have legal 
 14.35  control, either individually or jointly with another or others, 
 14.36  of the payment of the wages. 
 15.1      (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 
 15.2   purposes of this section, the term "number of withholding 
 15.3   exemptions claimed" means the number of withholding exemptions 
 15.4   claimed in a withholding exemption certificate in effect under 
 15.5   subdivision 5, except that if no such certificate is in effect, 
 15.6   the number of withholding exemptions claimed shall be considered 
 15.7   to be zero. 
 15.8      Sec. 12.  Minnesota Statutes 1994, section 290.9201, 
 15.9   subdivision 3, is amended to read: 
 15.10     Subd. 3.  [CREDIT AGAINST TAX.] Each calendar year an 
 15.11  entertainment entity may take a nonrefundable credit 
 15.12  of $100 $120 against the tax imposed by this section. 
 15.13     Sec. 13.  [OMISSIONS FROM INHERITANCE OR ESTATE TAX 
 15.14  RETURN.] 
 15.15     Effective for decedents dying before August 1, 1990, the 
 15.16  provisions of Minnesota Statutes, section 289A.38, subdivision 
 15.17  6, apply to assets omitted from an inheritance tax return or 
 15.18  estate tax return rather than the provisions of Minnesota 
 15.19  Statutes 1988, section 291.11, subdivision 1, clause (2)(c). 
 15.20     Sec. 14.  [EFFECTIVE DATE.] 
 15.21     Section 1 is effective for returns due after December 31, 
 15.22  1995.  Section 2 as it relates to quarterly withholding deposits 
 15.23  is effective for withholding done after December 31, 1995, and 
 15.24  the remainder of section 2 is effective for payments due after 
 15.25  December 31, 1995.  Sections 3 and 5 are effective for federal 
 15.26  determinations after December 31, 1995.  Section 4 is effective 
 15.27  for estates of decedents dying after the date of final 
 15.28  enactment.  Section 6 is effective for deaths after December 31, 
 15.29  1995, and trusts that become irrevocable after December 31, 
 15.30  1995.  Sections 7 to 10 are effective for tax years beginning 
 15.31  after December 31, 1995.  Section 11 is effective for wages paid 
 15.32  after December 31, 1995.  Section 12 is effective for tax years 
 15.33  beginning after December 31, 1994. 
 15.34                             ARTICLE 2
 15.35               PROPERTY TAX AND PROPERTY TAX REFUNDS
 15.36     Section 1.  Minnesota Statutes 1994, section 273.124, 
 16.1   subdivision 3, is amended to read: 
 16.2      Subd. 3.  [COOPERATIVES AND CHARITABLE CORPORATIONS.] When 
 16.3   one or more dwellings, or one or more buildings which each 
 16.4   contain several dwelling units, are owned by a corporation or 
 16.5   association organized under chapter 308A, and each person who 
 16.6   owns a share or shares in the corporation or association is 
 16.7   entitled to occupy a dwelling, or dwelling unit in the building, 
 16.8   the corporation or association may claim homestead treatment for 
 16.9   each dwelling, or for each unit in case of a building containing 
 16.10  several dwelling units, for the dwelling or for the part of the 
 16.11  value of the building occupied by a shareholder.  Each dwelling 
 16.12  or unit must be designated by legal description or number, and 
 16.13  the net tax capacity of each dwelling that qualifies for 
 16.14  assessment under this subdivision must include not more than 
 16.15  one-half acre of land, if platted, nor more than 80 acres if 
 16.16  unplatted.  The net tax capacity of the building or buildings 
 16.17  containing several dwelling units is the sum of the net tax 
 16.18  capacities of each of the respective units comprising the 
 16.19  building.  To qualify for the treatment provided by this 
 16.20  subdivision, the corporation or association must be wholly owned 
 16.21  by persons having a right to occupy a dwelling or dwelling unit 
 16.22  owned by the corporation or association.  A charitable 
 16.23  corporation organized under the laws of Minnesota and not 
 16.24  otherwise exempt thereunder with no outstanding stock qualifies 
 16.25  for homestead treatment with respect to member residents of the 
 16.26  dwelling units who have purchased and hold residential 
 16.27  participation warrants entitling them to occupy the units. 
 16.28     When dwelling units no longer qualify under this 
 16.29  subdivision, the current owner must notify the assessor within 
 16.30  60 days.  Failure to notify the assessor within 60 days shall 
 16.31  result in the loss of benefits under this subdivision for taxes 
 16.32  payable in the year that the failure is discovered.  For these 
 16.33  purposes, "benefits under this subdivision" means the difference 
 16.34  in the net tax capacity of the units which no longer qualify as 
 16.35  computed under this subdivision and as computed under the 
 16.36  otherwise applicable law, times the local tax rate applicable to 
 17.1   the building for that taxes payable year.  Upon discovery of a 
 17.2   failure to notify, the assessor shall inform the auditor of the 
 17.3   difference in net tax capacity for the building or buildings in 
 17.4   which units no longer qualify, and the auditor shall calculate 
 17.5   the benefits under this subdivision.  Such amount, plus a 
 17.6   penalty equal to 100 percent of that amount, shall then be 
 17.7   demanded of the building's owner.  The property owner may appeal 
 17.8   the county's determination by filing a notice of appeal with the 
 17.9   Minnesota tax court within 60 days of the date of the notice 
 17.10  from the county.  Unless inconsistent with the provisions of 
 17.11  this subdivision, and except for the provisions of section 
 17.12  278.03 requiring partial payments, the tax court shall treat the 
 17.13  appeal as a chapter 278 property tax appeal.  If the amount of 
 17.14  the benefits under this subdivision and penalty are not paid 
 17.15  within 60 days, and if no appeal has been filed, the county 
 17.16  auditor shall certify the amount of the benefit and penalty to 
 17.17  the succeeding year's tax list to be collected as part of the 
 17.18  property taxes on the affected buildings. 
 17.19     Sec. 2.  Minnesota Statutes 1994, section 273.124, 
 17.20  subdivision 6, is amended to read: 
 17.21     Subd. 6.  [LEASEHOLD COOPERATIVES.] When one or more 
 17.22  dwellings or one or more buildings which each contain several 
 17.23  dwelling units is owned by a nonprofit corporation subject to 
 17.24  the provisions of chapter 317A and qualifying under section 
 17.25  501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as 
 17.26  amended through December 31, 1990, or a limited partnership 
 17.27  which corporation or partnership operates the property in 
 17.28  conjunction with a cooperative association, and has received 
 17.29  public financing, homestead treatment may be claimed by the 
 17.30  cooperative association on behalf of the members of the 
 17.31  cooperative for each dwelling unit occupied by a member of the 
 17.32  cooperative.  The cooperative association must provide the 
 17.33  assessor with the social security numbers of those members.  To 
 17.34  qualify for the treatment provided by this subdivision, the 
 17.35  following conditions must be met:  
 17.36     (a) the cooperative association must be organized under 
 18.1   chapter 308A and all voting members of the board of directors 
 18.2   must be resident tenants of the cooperative and must be elected 
 18.3   by the resident tenants of the cooperative; 
 18.4      (b) the cooperative association must have a lease for 
 18.5   occupancy of the property for a term of at least 20 years, which 
 18.6   permits the cooperative association, while not in default on the 
 18.7   lease, to participate materially in the management of the 
 18.8   property, including material participation in establishing 
 18.9   budgets, setting rent levels, and hiring and supervising a 
 18.10  management agent; 
 18.11     (c) to the extent permitted under state or federal law, the 
 18.12  cooperative association must have a right under a written 
 18.13  agreement with the owner to purchase the property if the owner 
 18.14  proposes to sell it; if the cooperative association does not 
 18.15  purchase the property it is offered for sale, the owner may not 
 18.16  subsequently sell the property to another purchaser at a price 
 18.17  lower than the price at which it was offered for sale to the 
 18.18  cooperative association unless the cooperative association 
 18.19  approves the sale; 
 18.20     (d) a minimum of 40 percent of the cooperative 
 18.21  association's members must have incomes at or less than 60 
 18.22  percent of area median gross income as determined by the United 
 18.23  States Secretary of Housing and Urban Development under section 
 18.24  142(d)(2)(B) of the Internal Revenue Code of 1986, as amended 
 18.25  through December 31, 1991.  For purposes of this clause, "member 
 18.26  income" means the income of a member existing at the time the 
 18.27  member acquires cooperative membership; 
 18.28     (e) if a limited partnership owns the property, it must 
 18.29  include as the managing general partner a nonprofit organization 
 18.30  operating under the provisions of chapter 317A and qualifying 
 18.31  under section 501(c)(3) or 501(c)(4) of the Internal Revenue 
 18.32  Code of 1986, as amended through December 31, 1990, and the 
 18.33  limited partnership agreement must provide that the managing 
 18.34  general partner have sufficient powers so that it materially 
 18.35  participates in the management and control of the limited 
 18.36  partnership; 
 19.1      (f) prior to becoming a member of a leasehold cooperative 
 19.2   described in this subdivision, a person must have received 
 19.3   notice that (1) describes leasehold cooperative property in 
 19.4   plain language, including but not limited to the effects of 
 19.5   classification under this subdivision on rents, property taxes 
 19.6   and tax credits or refunds, and operating expenses, and (2) 
 19.7   states that copies of the articles of incorporation and bylaws 
 19.8   of the cooperative association, the lease between the owner and 
 19.9   the cooperative association, a sample sublease between the 
 19.10  cooperative association and a tenant, and, if the owner is a 
 19.11  partnership, a copy of the limited partnership agreement, can be 
 19.12  obtained upon written request at no charge from the owner, and 
 19.13  the owner must send or deliver the materials within seven days 
 19.14  after receiving any request; 
 19.15     (g) if a dwelling unit of a building was occupied on the 
 19.16  60th day prior to the date on which the unit became leasehold 
 19.17  cooperative property described in this subdivision, the notice 
 19.18  described in paragraph (f) must have been sent by first class 
 19.19  mail to the occupant of the unit at least 60 days prior to the 
 19.20  date on which the unit became leasehold cooperative property.  
 19.21  For purposes of the notice under this paragraph, the copies of 
 19.22  the documents referred to in paragraph (f) may be in proposed 
 19.23  version, provided that any subsequent material alteration of 
 19.24  those documents made after the occupant has requested a copy 
 19.25  shall be disclosed to any occupant who has requested a copy of 
 19.26  the document.  Copies of the articles of incorporation and 
 19.27  certificate of limited partnership shall be filed with the 
 19.28  secretary of state after the expiration of the 60-day period 
 19.29  unless the change to leasehold cooperative status does not 
 19.30  proceed; 
 19.31     (h) the county attorney of the county in which the property 
 19.32  is located must certify to the assessor that the property meets 
 19.33  the requirements of this subdivision; 
 19.34     (i) the public financing received must be from at least one 
 19.35  of the following sources: 
 19.36     (1) tax increment financing proceeds used for the 
 20.1   acquisition or rehabilitation of the building or interest rate 
 20.2   write-downs relating to the acquisition of the building; 
 20.3      (2) government issued bonds exempt from taxes under section 
 20.4   103 of the Internal Revenue Code of 1986, as amended through 
 20.5   December 31, 1991, the proceeds of which are used for the 
 20.6   acquisition or rehabilitation of the building; 
 20.7      (3) programs under section 221(d)(3), 202, or 236, of Title 
 20.8   II of the National Housing Act; 
 20.9      (4) rental housing program funds under Section 8 of the 
 20.10  United States Housing Act of 1937 or the market rate family 
 20.11  graduated payment mortgage program funds administered by the 
 20.12  Minnesota housing finance agency that are used for the 
 20.13  acquisition or rehabilitation of the building; 
 20.14     (5) low-income housing credit under section 42 of the 
 20.15  Internal Revenue Code of 1986, as amended through December 31, 
 20.16  1991; 
 20.17     (6) public financing provided by a local government used 
 20.18  for the acquisition or rehabilitation of the building, including 
 20.19  grants or loans from (i) federal community development block 
 20.20  grants; (ii) HOME block grants; or (iii) residential rental 
 20.21  bonds issued under chapter 474A; or 
 20.22     (7) other rental housing program funds provided by the 
 20.23  Minnesota housing finance agency for the acquisition or 
 20.24  rehabilitation of the building; 
 20.25     (j) at the time of the initial request for homestead 
 20.26  classification or of any transfer of ownership of the property, 
 20.27  the governing body of the municipality in which the property is 
 20.28  located must hold a public hearing and make the following 
 20.29  findings: 
 20.30     (1) that the granting of the homestead treatment of the 
 20.31  apartment's units will facilitate safe, clean, affordable 
 20.32  housing for the cooperative members that would otherwise not be 
 20.33  available absent the homestead designation; 
 20.34     (2) that the owner has presented information satisfactory 
 20.35  to the governing body showing that the savings garnered from the 
 20.36  homestead designation of the units will be used to reduce 
 21.1   tenant's rents or provide a level of furnishing or maintenance 
 21.2   not possible absent the designation; and 
 21.3      (3) that the requirements of paragraphs (b), (d), and (i) 
 21.4   have been met. 
 21.5      Homestead treatment must be afforded to units occupied by 
 21.6   members of the cooperative association and the units must be 
 21.7   assessed as provided in subdivision 3, provided that any unit 
 21.8   not so occupied shall be classified and assessed pursuant to the 
 21.9   appropriate class.  No more than three acres of land may, for 
 21.10  assessment purposes, be included with each dwelling unit that 
 21.11  qualifies for homestead treatment under this subdivision. 
 21.12     When dwelling units no longer qualify under this 
 21.13  subdivision, the current owner must notify the assessor within 
 21.14  60 days.  Failure to notify the assessor within 60 days shall 
 21.15  result in the loss of benefits under this subdivision for taxes 
 21.16  payable in the year that the failure is discovered.  For these 
 21.17  purposes, "benefits under this subdivision" means the difference 
 21.18  in the net tax capacity of the units which no longer qualify as 
 21.19  computed under this subdivision and as computed under the 
 21.20  otherwise applicable law, times the local tax rate applicable to 
 21.21  the building for that taxes payable year.  Upon discovery of a 
 21.22  failure to notify, the assessor shall inform the auditor of the 
 21.23  difference in net tax capacity for the building or buildings in 
 21.24  which units no longer qualify, and the auditor shall calculate 
 21.25  the benefits under this subdivision.  Such amount, plus a 
 21.26  penalty equal to 100 percent of that amount, shall then be 
 21.27  demanded of the building's owner.  The property owner may appeal 
 21.28  the county's determination by filing a notice of appeal with the 
 21.29  Minnesota tax court within 60 days of the date of the notice 
 21.30  from the county.  Unless inconsistent with the provisions of 
 21.31  this subdivision, and except for the provisions of section 
 21.32  278.03 requiring partial payments, the tax court shall treat the 
 21.33  appeal as a chapter 278 property tax appeal.  If the amount of 
 21.34  the benefits under this subdivision and penalty are not paid 
 21.35  within 60 days, and if no appeal has been filed, the county 
 21.36  auditor shall certify the amount of the benefit and penalty to 
 22.1   the succeeding year's tax list to be collected as part of the 
 22.2   property taxes on the affected buildings. 
 22.3      Sec. 3.  Minnesota Statutes 1994, section 274.14, is 
 22.4   amended to read: 
 22.5      274.14 [LENGTH OF SESSION; RECORD.] 
 22.6      The county board of equalization or the special board of 
 22.7   equalization appointed by it shall meet during the last two 
 22.8   weeks in June that contain ten meeting days, in June.  For this 
 22.9   purpose, "meeting days" are defined as any day of the week 
 22.10  excluding Saturday and Sunday.  No action taken by the county 
 22.11  board of review after June 30 is valid, except for corrections 
 22.12  permitted in sections 273.01 and 274.01.  The county auditor 
 22.13  shall keep an accurate record of the proceedings and orders of 
 22.14  the board.  The record must be published like other proceedings 
 22.15  of county commissioners.  A copy of the published record must be 
 22.16  sent to the commissioner of revenue, with the abstract of 
 22.17  assessment required by section 274.16. 
 22.18     Sec. 4.  Minnesota Statutes 1994, section 289A.60, 
 22.19  subdivision 12, is amended to read: 
 22.20     Subd. 12.  [PENALTIES RELATING TO PROPERTY TAX REFUNDS.] 
 22.21  (a) If the commissioner determines that a property tax refund 
 22.22  claim is or was excessive and was filed with fraudulent intent, 
 22.23  the claim must be disallowed in full.  If the claim has been 
 22.24  paid, the amount disallowed may be recovered by assessment and 
 22.25  collection. 
 22.26     (b) If it is determined that a property tax refund claim is 
 22.27  excessive and was negligently prepared, ten percent of the 
 22.28  corrected claim must be disallowed.  If the claim has been paid, 
 22.29  the amount disallowed must be recovered by assessment and 
 22.30  collection.  
 22.31     (c) An owner or managing agent who knowingly without 
 22.32  reasonable cause fails to give a certificate of rent 
 22.33  constituting property tax to a renter, as required by section 
 22.34  290A.19, paragraph (a), is liable to the commissioner for a 
 22.35  penalty of $100 for each failure. 
 22.36     (d) If the owner or managing agent knowingly gives rent 
 23.1   certificates that report total rent constituting property taxes 
 23.2   in excess of the amount of actual rent constituting property 
 23.3   taxes paid on the rented part of a property, the owner or 
 23.4   managing agent is liable for a penalty equal to the greater of 
 23.5   (1) $100 or (2) 50 percent of the excess that is reported.  An 
 23.6   overstatement of rent constituting property taxes is presumed to 
 23.7   be knowingly made if it exceeds by ten percent or more the 
 23.8   actual rent constituting property taxes. 
 23.9      (e) No claim is allowed if the initial claim is filed more 
 23.10  than one year after the original due date for filing the claim.  
 23.11     Sec. 5.  [EFFECTIVE DATE.] 
 23.12     Section 3 is effective for taxes payable in 1997 and 
 23.13  thereafter.  Sections 1 and 2 are effective January 1, 1996, and 
 23.14  thereafter.  Section 4 is effective for certificates of rent 
 23.15  paid required after the date of final enactment.  
 23.16                             ARTICLE 3
 23.17                      SALES AND SPECIAL TAXES
 23.18     Section 1.  Minnesota Statutes 1994, section 297.08, 
 23.19  subdivision 1, is amended to read: 
 23.20     Subdivision 1.  [CONTRABAND DEFINED.] The following are 
 23.21  declared to be contraband: 
 23.22     (1) All packages which do not have stamps affixed to them 
 23.23  as provided in sections 297.01 to 297.13, including but not 
 23.24  limited to (i) packages with illegible stamps and packages with 
 23.25  stamps that are not complete or whole even if the stamps are 
 23.26  legible, and (ii) all devices for the vending of cigarettes in 
 23.27  which such unstamped packages as defined in item (i) are found, 
 23.28  including all contents contained within the devices. 
 23.29     (2) Any device for the vending of cigarettes and all 
 23.30  packages of cigarettes contained therein, where the device does 
 23.31  not afford at least partial visibility of contents.  Where any 
 23.32  package exposed to view does not carry the stamp required by 
 23.33  sections 297.01 to 297.13, it shall be presumed that all 
 23.34  packages contained in the device are unstamped and contraband. 
 23.35     (3) Any device for the vending of cigarettes to which the 
 23.36  commissioner or authorized agents have been denied access for 
 24.1   the inspection of contents.  In lieu of seizure, the 
 24.2   commissioner or an agent may seal the device to prevent its use 
 24.3   until inspection of contents is permitted. 
 24.4      (4) Any device for the vending of cigarettes which does not 
 24.5   carry the name and address of the owner, plainly marked and 
 24.6   visible from the front of the machine. 
 24.7      (5) Any device including, but not limited to, motor 
 24.8   vehicles, trailers, snowmobiles, airplanes, and boats used with 
 24.9   the knowledge of the owner or of a person operating with the 
 24.10  consent of the owner for the storage or transportation of more 
 24.11  than 5,000 cigarettes which are contraband under this 
 24.12  subdivision.  When cigarettes are being transported in the 
 24.13  course of interstate commerce, or are in movement from either a 
 24.14  public warehouse to a distributor upon orders from a 
 24.15  manufacturer or distributor, or from one distributor to another, 
 24.16  the cigarettes are not contraband, notwithstanding the 
 24.17  provisions of clause (1). 
 24.18     (6) All packages obtained in violation of section 297.11, 
 24.19  subdivision 6. 
 24.20     (7) All packages offered for sale or held as inventory in 
 24.21  violation of section 297.11, subdivision 7. 
 24.22     Sec. 2.  Minnesota Statutes 1994, section 297.08, 
 24.23  subdivision 3, is amended to read: 
 24.24     Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
 24.25  DISPOSITION OF SEIZED PROPERTY.] Within two days after the 
 24.26  seizure of any alleged contraband, the person making the seizure 
 24.27  shall deliver an inventory of the property seized to the person 
 24.28  from whom the seizure was made, if known, and file a copy with 
 24.29  the commissioner.  Within ten days after the date of service of 
 24.30  the inventory, the person from whom the property was seized or 
 24.31  any person claiming an ownership or security interest in the 
 24.32  property may file with the commissioner a demand for a judicial 
 24.33  determination of the question as to whether the property was 
 24.34  lawfully subject to seizure and forfeiture.  The commissioner, 
 24.35  within 30 days, shall institute an action in the district court 
 24.36  of the county where the seizure was made to determine the issue 
 25.1   of forfeiture.  The only issue to be decided by the court is 
 25.2   whether the alleged contraband is contraband, as defined in 
 25.3   subdivision 1.  The action shall be brought in the name of the 
 25.4   state and shall be prosecuted by the county attorney or by the 
 25.5   attorney general.  The court shall hear the action without a 
 25.6   jury and shall try and determine the issues of fact and law 
 25.7   involved.  Whenever a judgment of forfeiture is entered, the 
 25.8   commissioner may, unless the judgment is stayed pending an 
 25.9   appeal, either (1) deliver the forfeited property to the 
 25.10  commissioner of human services for use by patients in state 
 25.11  institutions; (2) cause it to be destroyed; or (3) cause it to 
 25.12  be sold at public auction as provided by law.  If a demand for 
 25.13  judicial determination is made and no action is commenced as 
 25.14  provided in this subdivision, the property shall be released by 
 25.15  the commissioner and redelivered to the person entitled to it.  
 25.16  If no demand is made, the property seized shall be deemed 
 25.17  forfeited to the state by operation of law and may be disposed 
 25.18  of by the commissioner as provided where there has been a 
 25.19  judgment of forfeiture.  Whenever the commissioner is satisfied 
 25.20  that any person from whom property is seized under sections 
 25.21  297.01 to 297.13 was acting in good faith and without intent to 
 25.22  evade the tax imposed by sections 297.01 to 297.13, the 
 25.23  commissioner shall release the property seized, without further 
 25.24  legal proceedings. 
 25.25     Sec. 3.  Minnesota Statutes 1994, section 297C.02, 
 25.26  subdivision 2, is amended to read: 
 25.27     Subd. 2.  [FERMENTED MALT BEVERAGES.] There is imposed 
 25.28  on the direct or indirect sale of fermented malt beverages all 
 25.29  fermented malt beverages that are imported, directly or 
 25.30  indirectly sold, or possessed in this state the following excise 
 25.31  tax:  
 25.32     (1) on fermented malt beverages containing not more than 
 25.33  3.2 percent alcohol by weight, $2.40 per barrel of 31 gallons; 
 25.34     (2) on fermented malt beverages containing more than 3.2 
 25.35  percent alcohol by weight, $4.60 per barrel of 31 gallons.  
 25.36     The tax is at a proportional rate for fractions of a barrel 
 26.1   of 31 gallons. 
 26.2      Sec. 4.  Minnesota Statutes 1994, section 297C.07, is 
 26.3   amended to read: 
 26.4      297C.07 [EXCEPTIONS.] 
 26.5      The following are not subject to the excise tax: 
 26.6      (1) Sales by a manufacturer, brewer, or wholesaler for 
 26.7   shipment outside the state in interstate commerce. 
 26.8      (2) Sales of wine for sacramental purposes under section 
 26.9   340A.316. 
 26.10     (3) Fruit juices naturally fermented or beer naturally 
 26.11  brewed in the home for family use. 
 26.12     (4) Malt beverages served by a brewery for on-premise 
 26.13  consumption at no charge, or distributed to brewery employees 
 26.14  for on-premise consumption under a labor contract. 
 26.15     (5) Alcoholic beverages sold to authorized manufacturers of 
 26.16  food products or pharmaceutical firms.  The alcoholic beverage 
 26.17  must be used exclusively in the manufacture of food products or 
 26.18  medicines.  For purposes of this part, "manufacturer" means a 
 26.19  manufacturer of food products intended for sale to wholesalers 
 26.20  or retailers for ultimate sale to the consumer. 
 26.21     (6) Sales to common carriers engaged in interstate 
 26.22  transportation of passengers and qualified approved military 
 26.23  clubs, except as provided in section 297C.17.  
 26.24     (7) Alcoholic beverages sold or transferred between 
 26.25  Minnesota wholesalers.  
 26.26     (8) Sales to a federal agency, that the state of Minnesota 
 26.27  is prohibited from taxing under the constitution or laws of the 
 26.28  United States or under the constitution of Minnesota. 
 26.29     (9) Shipments of wine to Minnesota residents under section 
 26.30  340A.417. 
 26.31     (10) One liter of intoxicating liquor or 288 ounces of malt 
 26.32  liquor per calendar month imported or possessed by a person 
 26.33  entering Minnesota from another state, provided the alcoholic 
 26.34  beverages accompany the person into this state and will not be 
 26.35  offered for sale or used for any commercial purpose. 
 26.36     (11) Four liters of intoxicating liquor or ten quarts (320 
 27.1   ounces) of malt liquor per calendar month imported or possessed 
 27.2   by a person entering Minnesota from a foreign country, provided 
 27.3   the alcoholic beverages accompany the person into this state and 
 27.4   will not be offered for sale or used for any commercial purpose. 
 27.5      (12) The alcoholic beverage contained in 12 or fewer 
 27.6   commemorative bottles per calendar month imported into this 
 27.7   state, provided the bottles accompany a collector of 
 27.8   commemorative bottles into this state. 
 27.9      Sec. 5.  [REPEALER.] 
 27.10     Minnesota Statutes 1994, section 297A.212, is repealed. 
 27.11     Sec. 6.  [EFFECTIVE DATE.] 
 27.12     Sections 1, 2, 3, 4, and 5, are effective the day following 
 27.13  final enactment. 
 27.14                             ARTICLE 4
 27.15                     COLLECTIONS AND COMPLIANCE
 27.16     Section 1.  Minnesota Statutes 1994, section 60A.15, 
 27.17  subdivision 12, is amended to read: 
 27.18     Subd. 12.  [OVERPAYMENTS, CLAIMS FOR REFUND.] (1) 
 27.19  [PROCEDURE, TIME LIMIT, APPROPRIATION.] A company who has paid, 
 27.20  voluntarily or otherwise, or from whom there has been collected 
 27.21  an amount of tax for any year in excess of the amount legally 
 27.22  due for that year, may file with the commissioner of revenue a 
 27.23  claim for a refund of the excess.  Except as provided in 
 27.24  subdivision 11, no claim or refund shall be allowed or made 
 27.25  after 3-1/2 years from the date prescribed for filing the return 
 27.26  (plus any extension of time granted for filing the return but 
 27.27  only if filed within the extended time) or after two years from 
 27.28  the date of overpayment, whichever period is longer, unless 
 27.29  before the expiration of the period a claim is filed by the 
 27.30  company the period prescribed in section 289A.40, subdivision 1. 
 27.31  For this purpose, a return or amended return claiming an 
 27.32  overpayment constitutes a claim for refund. 
 27.33     Upon the filing of a claim, the commissioner shall examine 
 27.34  it, shall make and file written findings denying or allowing the 
 27.35  claim in whole or in part, and shall mail a notice thereof to 
 27.36  the company at the address stated upon the return.  If the claim 
 28.1   is allowed in whole or in part, the commissioner shall issue a 
 28.2   certificate for the refundment of the excess paid by the 
 28.3   company, with interest at the rate specified in section 270.76 
 28.4   computed from the date of the payment of the tax until the date 
 28.5   the refund is paid or the credit is made to the company.  The 
 28.6   commissioner of finance shall pay the refund out of the proceeds 
 28.7   of the taxes imposed by this section, as other state moneys are 
 28.8   expended.  As much of the proceeds of the taxes as necessary are 
 28.9   appropriated for that purpose. 
 28.10     (2) [DENIAL OF CLAIM, COURT PROCEEDINGS.] If the claim is 
 28.11  denied in whole or in part, the commissioner shall mail an order 
 28.12  of denial to the company in the manner prescribed in subdivision 
 28.13  8.  An appeal from this order may be taken to the Minnesota tax 
 28.14  court in the manner prescribed in section 271.06, or the company 
 28.15  may commence an action against the commissioner to recover the 
 28.16  denied overpayment.  The action may be brought in the district 
 28.17  court of the district in the county of its principal place of 
 28.18  business, or in the district court for Ramsey county.  The 
 28.19  action in the district court must be commenced within 18 months 
 28.20  following the mailing of the order of denial to the company.  If 
 28.21  a claim for refund is filed by a company and no order of denial 
 28.22  is issued within six months of the filing, the company may 
 28.23  commence an action in the district court as in the case of a 
 28.24  denial, but the action must be commenced within two years of the 
 28.25  date that the claim for refund was filed. 
 28.26     (3) [CONSENT TO EXTEND TIME.] If the commissioner and the 
 28.27  company have, within the periods prescribed in clause (1), 
 28.28  consented in writing to any extension of time for the assessment 
 28.29  of the tax, the period within which a claim for refund may be 
 28.30  filed, or a refund may be made or allowed, if no claim is filed, 
 28.31  shall be the period within which the commissioner and the 
 28.32  company have consented to an extension for the assessment of the 
 28.33  tax and six months thereafter.  The period within which a claim 
 28.34  for refund may be filed shall not expire prior to two years 
 28.35  after the tax was paid. 
 28.36     (4) [OVERPAYMENTS; REFUNDS.] If the amount determined to be 
 29.1   an overpayment exceeds the taxes imposed by this section, the 
 29.2   amount of excess shall be considered an overpayment.  An amount 
 29.3   paid as tax constitutes an overpayment even if in fact there was 
 29.4   no tax liability with respect to which the amount was paid. 
 29.5      Notwithstanding any other provision of law to the contrary, 
 29.6   in the case of any overpayment, the commissioner, within the 
 29.7   applicable period of limitations, shall refund any balance of 
 29.8   more than one dollar to the company if the company requests the 
 29.9   refund. 
 29.10     Sec. 2.  Minnesota Statutes 1994, section 60A.199, 
 29.11  subdivision 8, is amended to read: 
 29.12     Subd. 8.  [REFUND PROCEDURE; TIME LIMIT; APPROPRIATION.] A 
 29.13  licensee which has paid, voluntarily or otherwise, or from which 
 29.14  there was collected an amount of tax for any year in excess of 
 29.15  the amount legally due for that year, may file with the 
 29.16  commissioner of revenue a claim for a refund of the excess. 
 29.17  Except as provided in subdivision 3, no claim or refund shall be 
 29.18  allowed or made after 3-1/2 years from the date prescribed for 
 29.19  filing the return (plus any extension of time granted for filing 
 29.20  the return but only if filed within the extended time) or after 
 29.21  two years from the date of overpayment, whichever period is 
 29.22  longer, unless before the expiration of the period a claim is 
 29.23  filed by the licensee the period prescribed in section 289A.40, 
 29.24  subdivision 1.  For this purpose, a return or amended return 
 29.25  claiming an overpayment constitutes a claim for refund.  
 29.26     Upon the filing of a claim the commissioner shall examine 
 29.27  it, shall make written findings thereon denying or allowing the 
 29.28  claim in whole or in part, and shall mail a notice thereof to 
 29.29  the licensee at the address stated upon the return.  If the 
 29.30  claim is allowed in whole or in part, the commissioner shall 
 29.31  issue a certificate for a refund of the excess paid by the 
 29.32  licensee, with interest at the rate specified in section 270.76 
 29.33  computed from the date of the payment of the tax until the date 
 29.34  the refund is paid or credit is made to the licensee.  The 
 29.35  commissioner of finance shall cause the refund to be paid as 
 29.36  other state moneys are expended.  So much of the proceeds of the 
 30.1   taxes as is necessary are appropriated for that purpose.  
 30.2      Sec. 3.  Minnesota Statutes 1994, section 60A.199, 
 30.3   subdivision 10, is amended to read: 
 30.4      Subd. 10.  [CONSENT TO EXTEND TIME.] If the commissioner 
 30.5   and the licensee have, within the periods prescribed by this 
 30.6   section, consented in writing to any extension of time for the 
 30.7   assessment of the tax, the period within which a claim for 
 30.8   refund may be filed, or a refund may be made or allowed, if no 
 30.9   claim is filed, is the period within which the commissioner and 
 30.10  the licensee have consented to an extension for the assessment 
 30.11  of the tax and six months thereafter, the period within which a 
 30.12  claim for refund may be filed shall not expire prior to two 
 30.13  years after the tax was paid. 
 30.14     Sec. 4.  [270.7002] [PERSONAL LIABILITY FOR FAILURE TO 
 30.15  HONOR A LEVY.] 
 30.16     Subdivision 1.  [SURRENDER OF PROPERTY SUBJECT TO LEVY.] A 
 30.17  person who fails or refuses to surrender property or rights to 
 30.18  property subject to a levy served on the person under section 
 30.19  270.70, 270.7001, or 290.92, subdivision 23, is liable in an 
 30.20  amount equal to the value of the property or rights not 
 30.21  surrendered, or the amount of taxes, penalties, and interest for 
 30.22  the collection of which the levy was made, whichever is less.  A 
 30.23  financial institution need not surrender funds on deposit until 
 30.24  ten days after service of the levy. 
 30.25     Subd. 2.  [PENALTY.] In addition to the personal liability 
 30.26  imposed by subdivision 1, if a person required to surrender 
 30.27  property or rights to property fails to do so without reasonable 
 30.28  cause, the person is liable for a penalty equal to 25 percent of 
 30.29  the amount under subdivision 1. 
 30.30     Subd. 3.  [PERSON DEFINED.] The term "person" as used in 
 30.31  this section includes an officer or employee of a corporation or 
 30.32  a member or employee of a partnership, who as such officer, 
 30.33  employee, or member is under a duty to surrender the property or 
 30.34  rights to property or to respond to the levy. 
 30.35     Subd. 4.  [ORDER ASSESSING LIABILITY.] The liability 
 30.36  imposed by this section may, after demand to honor a levy has 
 31.1   been made, be assessed by the commissioner within 60 days after 
 31.2   service of the demand.  The assessment may be based on 
 31.3   information available to the commissioner.  The assessment is 
 31.4   presumed to be valid, and the burden is on the person assessed 
 31.5   to show it is incorrect or invalid.  An order assessing 
 31.6   liability for failure to honor a levy is reviewable 
 31.7   administratively under section 289A.65, and is appealable to tax 
 31.8   court under chapter 271.  The amount assessed, plus interest at 
 31.9   the rate specified in section 270.75, may be collected by any 
 31.10  remedy available to the commissioner for the collection of 
 31.11  taxes.  The proceeds collected are applied first to the 
 31.12  liability of the original taxpayer to the extent of the 
 31.13  liability under subdivision 1 plus interest, and then to the 
 31.14  penalty under subdivision 2. 
 31.15     Sec. 5.  Minnesota Statutes 1994, section 270.72, 
 31.16  subdivision 1, is amended to read: 
 31.17     Subdivision 1.  [TAX CLEARANCE REQUIRED.] The state or a 
 31.18  political subdivision of the state may not issue, transfer, or 
 31.19  renew, and must revoke, a license for the conduct of a 
 31.20  profession, occupation, trade, or business, if the commissioner 
 31.21  notifies the licensing authority that the applicant owes the 
 31.22  state delinquent taxes, penalties, or interest.  The 
 31.23  commissioner may not notify the licensing authority unless the 
 31.24  applicant taxpayer owes $500 or more in delinquent taxes or has 
 31.25  not filed returns.  If the applicant taxpayer does not owe 
 31.26  delinquent taxes but has not filed returns, the commissioner may 
 31.27  not notify the licensing authority unless the taxpayer has been 
 31.28  given 90 days' written notice to file the returns or show that 
 31.29  the returns are not required to be filed.  A licensing authority 
 31.30  that has received a notice from the commissioner may issue, 
 31.31  transfer, or renew, or not revoke the applicant's license only 
 31.32  if (a) the commissioner issues a tax clearance certificate and 
 31.33  (b) the commissioner or the applicant forwards a copy of the 
 31.34  clearance to the authority.  The commissioner may issue a 
 31.35  clearance certificate only if the applicant does not owe the 
 31.36  state any uncontested delinquent taxes, penalties, or interest 
 32.1   and has filed all required returns. 
 32.2      Sec. 6.  Minnesota Statutes 1994, section 270.72, 
 32.3   subdivision 2, is amended to read: 
 32.4      Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
 32.5   following terms have the meanings given.  
 32.6      (a) "Taxes" are all taxes payable to the commissioner 
 32.7   including penalties and interest due on the taxes. 
 32.8      (b) "Delinquent taxes" do not include a tax liability if 
 32.9   (i) an administrative or court action which contests the amount 
 32.10  or validity of the liability has been filed or served, (ii) the 
 32.11  appeal period to contest the tax liability has not expired, or 
 32.12  (iii) the applicant has entered into a payment agreement and is 
 32.13  current with the payments.  
 32.14     (c) "Applicant" means an individual if the license is 
 32.15  issued to or in the name of an individual or the corporation or 
 32.16  partnership if the license is issued to or in the name of a 
 32.17  corporation or partnership.  "Applicant" also means an officer 
 32.18  of a corporation, a member of a partnership, or an individual 
 32.19  who is liable for delinquent taxes, either for the entity for 
 32.20  which the license is at issue or for another entity for which 
 32.21  the liability was incurred, or personally as a licensee.  In the 
 32.22  case of a license transfer, "applicant" also means both the 
 32.23  transferor and the transferee of the license.  "Applicant" also 
 32.24  means any holder of a license. 
 32.25     (d) "License" includes a contract for space rental at the 
 32.26  Minnesota state fair. 
 32.27     (e) "Licensing authority" includes the Minnesota state fair 
 32.28  board. 
 32.29     Sec. 7.  Minnesota Statutes 1994, section 270.72, 
 32.30  subdivision 3, is amended to read: 
 32.31     Subd. 3.  [NOTICE AND HEARING.] (a) The commissioner, on 
 32.32  notifying a licensing authority pursuant to subdivision 1 not to 
 32.33  issue, transfer, or renew a license, must send a copy of the 
 32.34  notice to the applicant.  If the applicant requests, in writing, 
 32.35  within 30 days of the date of the notice a hearing, a contested 
 32.36  case hearing must be held.  The hearing must be held within 45 
 33.1   days of the date the commissioner refers the case to the office 
 33.2   of administrative hearings.  Notwithstanding any law to the 
 33.3   contrary, the applicant must be served with 20 days' notice in 
 33.4   writing specifying the time and place of the hearing and the 
 33.5   allegations against the applicant.  The notice may be served 
 33.6   personally or by mail.  
 33.7      (b) Prior to notifying a licensing authority pursuant to 
 33.8   subdivision 1 to revoke a license, the commissioner must send a 
 33.9   notice to the applicant of the commissioner's intent to require 
 33.10  revocation of the license and of the applicant's right to a 
 33.11  hearing under paragraph (a).  A license is subject to revocation 
 33.12  when 30 days have passed following the date of the notice in 
 33.13  this paragraph without the applicant requesting a hearing, or, 
 33.14  if a hearing is timely requested, upon final determination of 
 33.15  the hearing under section 14.62, subdivision 1.  A license shall 
 33.16  be revoked by the licensing authority within 30 days after 
 33.17  receiving notice from the commissioner to revoke. 
 33.18     (c) A hearing under this subdivision is in lieu of any 
 33.19  other hearing or proceeding provided by law arising from any 
 33.20  action taken under subdivision 1. 
 33.21     Sec. 8.  [270.721] [REVOCATION OF CORPORATE CERTIFICATES OF 
 33.22  AUTHORITY TO DO BUSINESS IN THIS STATE.] 
 33.23     When a foreign corporation authorized to do business in 
 33.24  this state under chapter 303 fails to comply with any tax laws 
 33.25  administered by the commissioner of revenue, the commissioner 
 33.26  may serve the secretary of state with a certified copy of an 
 33.27  order finding such failure to comply.  The secretary of state, 
 33.28  upon receipt of the order, shall revoke the certificate of 
 33.29  authority of the corporation to do business in this state, and 
 33.30  shall reinstate the certificate under section 303.19 only when 
 33.31  the corporation has obtained from the commissioner an order 
 33.32  finding that the corporation is in compliance with state tax 
 33.33  law.  An order requiring revocation of a certificate shall not 
 33.34  be issued unless the commissioner gives the corporation 30 days' 
 33.35  written notice of the proposed order, specifying the violations 
 33.36  of state tax law, and affording the corporation an opportunity 
 34.1   to request a contested case hearing under chapter 14. 
 34.2      Sec. 9.  Minnesota Statutes 1994, section 289A.40, 
 34.3   subdivision 1, is amended to read: 
 34.4      Subdivision 1.  [TIME LIMIT; GENERALLY.] Unless otherwise 
 34.5   provided in this chapter, a claim for a refund of an overpayment 
 34.6   of state tax must be filed within 3-1/2 years from the date 
 34.7   prescribed for filing the return, plus any extension of time 
 34.8   granted for filing the return, but only if filed within the 
 34.9   extended time, or two years one year from the time date of an 
 34.10  order assessing tax under section 289A.37, subdivision 1, upon 
 34.11  payment in full of the tax is paid in full, penalties, and 
 34.12  interest shown on the order, whichever period expires 
 34.13  later.  Claims for refund filed after the 3-1/2 year period but 
 34.14  within the one-year period are limited to the amount of the tax, 
 34.15  penalties, and interest on the order and to issues determined by 
 34.16  the order. 
 34.17     Sec. 10.  Minnesota Statutes 1994, section 289A.60, 
 34.18  subdivision 2, is amended to read: 
 34.19     Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
 34.20  a taxpayer fails to make and file a return other than an income 
 34.21  tax return of an individual, a withholding return, or sales or 
 34.22  use tax return, within the time prescribed or an extension, a 
 34.23  penalty is added to the tax.  The penalty is three percent of 
 34.24  the amount of tax not paid on or before the date prescribed for 
 34.25  payment of the tax including any extensions if the failure is 
 34.26  for not more than 30 days, with an additional five percent of 
 34.27  the amount of tax remaining unpaid during each additional 30 
 34.28  days or fraction of 30 days, during which the failure continues, 
 34.29  not exceeding 23 percent in the aggregate. 
 34.30     If a taxpayer fails to file a return, other than an income 
 34.31  tax return of an individual, within 60 days of the date 
 34.32  prescribed for filing of the return (determined with regard to 
 34.33  any extension of time for filing), the addition to tax under 
 34.34  this subdivision must not be less than the lesser of:  (1) $200; 
 34.35  or (2) the greater of (a) 25 percent of the amount required to 
 34.36  be shown as tax on the return without reduction for any payments 
 35.1   made or refundable credits allowable against the tax, or (b) $50.
 35.2      If a taxpayer fails to file an individual income tax return 
 35.3   within six months after the date prescribed for filing of the 
 35.4   return, a penalty of ten percent of the amount of tax not paid 
 35.5   by the end of that six-month period is added to the tax.  
 35.6      If a taxpayer fails to file a withholding or sales or use 
 35.7   tax return within the time prescribed, including an extension, a 
 35.8   penalty of five percent of the amount of tax not timely paid is 
 35.9   added to the tax.  
 35.10     Sec. 11.  Minnesota Statutes 1994, section 290.92, 
 35.11  subdivision 23, is amended to read: 
 35.12     Subd. 23.  [WITHHOLDING BY EMPLOYER OF DELINQUENT TAXES.] 
 35.13  (1) The commissioner may, within five years after the date of 
 35.14  assessment of the tax, or if a lien has been filed under section 
 35.15  270.69, within the statutory period for enforcement of the lien, 
 35.16  give notice to any employer deriving income which has a taxable 
 35.17  situs in this state regardless of whether the income is exempt 
 35.18  from taxation, that an employee of that employer is delinquent 
 35.19  in a certain amount with respect to any state taxes, including 
 35.20  penalties, interest, and costs.  The commissioner can proceed 
 35.21  under this subdivision only if the tax is uncontested or if the 
 35.22  time for appeal of the tax has expired.  The commissioner shall 
 35.23  not proceed under this subdivision until the expiration of 30 
 35.24  days after mailing to the taxpayer, at the taxpayer's last known 
 35.25  address, a written notice of (a) the amount of taxes, interest, 
 35.26  and penalties due from the taxpayer and demand for their 
 35.27  payment, and (b) the commissioner's intention to require 
 35.28  additional withholding by the taxpayer's employer pursuant to 
 35.29  this subdivision.  The effect of the notice shall expire 180 
 35.30  days after it has been mailed to the taxpayer provided that the 
 35.31  notice may be renewed by mailing a new notice which is in 
 35.32  accordance with this subdivision.  The renewed notice shall have 
 35.33  the effect of reinstating the priority of the original claim.  
 35.34  The notice to the taxpayer shall be in substantially the same 
 35.35  form as that provided in section 571.72.  The notice shall 
 35.36  further inform the taxpayer of the wage exemptions contained in 
 36.1   section 550.37, subdivision 14.  If no statement of exemption is 
 36.2   received by the commissioner within 30 days from the mailing of 
 36.3   the notice, the commissioner may proceed under this 
 36.4   subdivision.  The notice to the taxpayer's employer may be 
 36.5   served by mail or by delivery by an employee of the department 
 36.6   of revenue and shall be in substantially the same form as 
 36.7   provided in section 571.75.  Upon receipt of notice, the 
 36.8   employer shall withhold from compensation due or to become due 
 36.9   to the employee, the total amount shown by the notice, subject 
 36.10  to the provisions of section 571.922.  The employer shall 
 36.11  continue to withhold each pay period until the notice is 
 36.12  released by the commissioner under section 270.709.  Upon 
 36.13  receipt of notice by the employer, the claim of the state of 
 36.14  Minnesota shall have priority over any subsequent garnishments 
 36.15  or wage assignments.  The commissioner may arrange between the 
 36.16  employer and the employee for withholding a portion of the total 
 36.17  amount due the employee each pay period, until the total amount 
 36.18  shown by the notice plus accrued interest has been withheld.  
 36.19     The "compensation due" any employee is defined in 
 36.20  accordance with the provisions of section 571.921.  The maximum 
 36.21  withholding allowed under this subdivision for any one pay 
 36.22  period shall be decreased by any amounts payable pursuant to a 
 36.23  garnishment action with respect to which the employer was served 
 36.24  prior to being served with the notice of delinquency and any 
 36.25  amounts covered by any irrevocable and previously effective 
 36.26  assignment of wages; the employer shall give notice to the 
 36.27  department of the amounts and the facts relating to such 
 36.28  assignments within ten days after the service of the notice of 
 36.29  delinquency on the form provided by the department of revenue as 
 36.30  noted in this subdivision.  
 36.31     (2) If the employee ceases to be employed by the employer 
 36.32  before the full amount set forth in a notice of delinquency plus 
 36.33  accrued interest has been withheld, the employer shall 
 36.34  immediately notify the commissioner in writing of the 
 36.35  termination date of the employee and the total amount withheld.  
 36.36  No employer may discharge any employee by reason of the fact 
 37.1   that the commissioner has proceeded under this subdivision.  If 
 37.2   an employer discharges an employee in violation of this 
 37.3   provision, the employee shall have the same remedy as provided 
 37.4   in section 571.927, subdivision 2.  
 37.5      (3) Within ten days after the expiration of such pay 
 37.6   period, the employer shall remit to the commissioner, on a form 
 37.7   and in the manner prescribed by the commissioner, the amount 
 37.8   withheld during each pay period under this subdivision.  Should 
 37.9   any employer, after notice, willfully fail to withhold in 
 37.10  accordance with the notice and this subdivision, or willfully 
 37.11  fail to remit any amount withheld as required by this 
 37.12  subdivision, the employer shall be liable for the total amount 
 37.13  set forth in the notice together with accrued interest which may 
 37.14  be collected by any means provided by law relating to taxation.  
 37.15  Any amount collected from the employer for failure to withhold 
 37.16  or for failure to remit under this subdivision shall be credited 
 37.17  to the employee's account in the following manner:  penalties, 
 37.18  interest, tax, and costs.  
 37.19     (4) Clauses (1), (2), and (3), except provisions imposing a 
 37.20  liability on the employer for failure to withhold or remit, 
 37.21  shall apply to cases in which the employer is the United States 
 37.22  or any instrumentality thereof or this state or any municipality 
 37.23  or other subordinate unit thereof.  
 37.24     (5) The commissioner shall refund to the employee excess 
 37.25  amounts withheld from the employee under this subdivision.  If 
 37.26  any excess results from payments by the employer because of 
 37.27  willful failure to withhold or remit as prescribed in clause 
 37.28  (3), the excess attributable to the employer's payment shall be 
 37.29  refunded to the employer.  
 37.30     (6) Employers required to withhold delinquent taxes, 
 37.31  penalties, interest, and costs under this subdivision shall not 
 37.32  be required to compute any additional interest, costs or other 
 37.33  charges to be withheld.  
 37.34     (7) The collection remedy provided to the commissioner by 
 37.35  this subdivision shall have the same legal effect as if it were 
 37.36  a levy made pursuant to section 270.70.  
 38.1      Sec. 12.  Minnesota Statutes 1994, section 294.09, 
 38.2   subdivision 1, is amended to read: 
 38.3      Subdivision 1.  [PROCEDURES; TIME LIMIT.] A company, joint 
 38.4   stock association, copartnership, corporation, or individual who 
 38.5   has paid, voluntarily or otherwise, or from whom there has been 
 38.6   collected (other than by proceedings instituted by the attorney 
 38.7   general under sections 294.06 and 294.08, subdivision 3) an 
 38.8   amount of gross earnings tax for any year in excess of the 
 38.9   amount legally due for that year, may file with the commissioner 
 38.10  of revenue a claim for a refund of such excess.  Except as 
 38.11  provided in subdivision 4, no such claim shall be entertained 
 38.12  unless filed within two years after such tax was paid or 
 38.13  collected, or within 3-1/2 years from the filing of the return, 
 38.14  whichever period is the longer the period prescribed in section 
 38.15  289A.40, subdivision 1.  Upon the filing of a claim the 
 38.16  commissioner shall examine the same and shall make and file 
 38.17  written findings thereon denying or allowing the claim in whole 
 38.18  or in part and shall mail a notice thereof to such company, 
 38.19  joint stock association, copartnership, corporation, or 
 38.20  individual at the address stated upon the return.  If such claim 
 38.21  is allowed in whole or in part, the commissioner shall credit 
 38.22  the amount of the allowance against any tax due the state from 
 38.23  the claimant and for the balance of said allowance, if any, the 
 38.24  commissioner shall issue a certificate for the refundment of the 
 38.25  excess paid.  The commissioner of finance shall cause such 
 38.26  refund to be paid out of the proceeds of the gross earnings 
 38.27  taxes imposed by Minnesota Statutes 1967, chapters 294 and 295 
 38.28  as other state moneys are expended.  So much of the proceeds as 
 38.29  may be necessary are hereby appropriated for that purpose.  Any 
 38.30  allowance so made by the commissioner shall include interest at 
 38.31  the rate specified in section 270.76 computed from the date of 
 38.32  payment or collection of the tax until the date the refund is 
 38.33  paid to the claimant.  
 38.34     Sec. 13.  Minnesota Statutes 1994, section 294.09, 
 38.35  subdivision 4, is amended to read: 
 38.36     Subd. 4.  [CONSENT TO EXTEND TIME.] If the commissioner and 
 39.1   the taxpayer have within the periods prescribed in subdivision 1 
 39.2   consented in writing to any extension of time for the assessment 
 39.3   of the tax under the provisions of section 294.08, subdivision 
 39.4   4, the period within which a claim for refund may be filed, or a 
 39.5   refund may be made or allowed, if no claim is filed, shall be 
 39.6   the period within which the commissioner and the taxpayer have 
 39.7   consented to an extension for the assessment of the tax and six 
 39.8   months thereafter, provided, however, that the period within 
 39.9   which a claim for refund may be filed shall not expire prior to 
 39.10  two years after the tax was paid. 
 39.11     Sec. 14.  Minnesota Statutes 1994, section 297.35, 
 39.12  subdivision 1, is amended to read: 
 39.13     Subdivision 1.  On or before the 18th day of each calendar 
 39.14  month every distributor with a place of business in this state 
 39.15  shall file a return with the commissioner showing the quantity 
 39.16  and wholesale sales price of each tobacco product (1) brought, 
 39.17  or caused to be brought, into this state for sale; and (2) made, 
 39.18  manufactured, or fabricated in this state for sale in this 
 39.19  state, during the preceding calendar month.  Every licensed 
 39.20  distributor outside this state shall in like manner file a 
 39.21  return showing the quantity and wholesale sales price of each 
 39.22  tobacco product shipped or transported to retailers in this 
 39.23  state to be sold by those retailers, during the preceding 
 39.24  calendar month.  Returns shall be made upon forms furnished and 
 39.25  prescribed by the commissioner and shall contain such other 
 39.26  information as the commissioner may require.  Each return shall 
 39.27  be accompanied by a remittance for the full tax liability shown 
 39.28  therein, less 1.5 percent of such liability as compensation to 
 39.29  reimburse the distributor for expenses incurred in the 
 39.30  administration of sections 297.31 to 297.39.  The return for the 
 39.31  May liability and 75 percent of the estimated June liability is 
 39.32  due on the date payment of the tax is due. 
 39.33     A distributor having a liability of $120,000 or more during 
 39.34  a calendar fiscal year ending June 30 must remit all liabilities 
 39.35  in the subsequent fiscal calendar year ending June 30 by means 
 39.36  of a funds transfer as defined in section 336.4A-104, paragraph 
 40.1   (a).  The funds transfer payment date, as defined in section 
 40.2   336.4A-401, must be on or before the date the tax is due.  If 
 40.3   the date the tax is due is not a funds transfer business day, as 
 40.4   defined in section 336.4A-105, paragraph (a), clause (4), the 
 40.5   payment date must be on or before the funds transfer business 
 40.6   day next following the date the tax is due. 
 40.7      Sec. 15.  Minnesota Statutes 1994, section 297.43, 
 40.8   subdivision 2, is amended to read: 
 40.9      Subd. 2.  [PENALTY FOR FAILURE TO FILE.] If a person fails 
 40.10  to make and file a return within the time required under 
 40.11  sections 297.07, 297.23, and 297.35, there shall be added to the 
 40.12  tax five percent of the amount of tax not paid on or before the 
 40.13  date prescribed for payment of the tax.  The amount so added to 
 40.14  any tax under this subdivision and subdivision 1 shall be 
 40.15  collected at the same time and in the same manner and as a part 
 40.16  of the tax and shall bear interest at the rate specified in 
 40.17  section 270.75 from the time the tax should have been paid, 
 40.18  unless the tax has been paid before the discovery of the 
 40.19  negligence, in which case the amount so added shall be collected 
 40.20  in the same manner as the tax. 
 40.21     In the case of a failure to file a return within 60 days of 
 40.22  the date prescribed for filing of the return (determined with 
 40.23  regard to any extension of time for filing), the addition to tax 
 40.24  under this subdivision shall not be less than the lesser of (i) 
 40.25  $200; or (ii) the greater of (a) 25 percent of the amount 
 40.26  required to be shown as tax on the return without reduction for 
 40.27  any payments made or refundable credits allowable against the 
 40.28  tax; or (b) $50.  
 40.29     Sec. 16.  Minnesota Statutes 1994, section 297C.14, 
 40.30  subdivision 2, is amended to read: 
 40.31     Subd. 2.  [PENALTY FOR FAILURE TO FILE.] If a person fails 
 40.32  to make and file a return within the time required by this 
 40.33  chapter or an extension of time, there shall be added to the tax 
 40.34  five percent of the amount of tax not paid on or before the date 
 40.35  prescribed for payment of the tax.  The amount so added to any 
 40.36  tax under subdivisions 1 and 2 shall be collected at the same 
 41.1   time and in the same manner and as a part of the tax and shall 
 41.2   bear interest at the rate specified in section 270.75 from the 
 41.3   time the tax should have been paid, unless the tax has been paid 
 41.4   before the discovery of the negligence, in which case the amount 
 41.5   so added shall be collected in the same manner as the tax. 
 41.6      In the case of a failure to file a return within 60 days of 
 41.7   the date prescribed for filing of the return (determined with 
 41.8   regard to any extension of time for filing), the addition to tax 
 41.9   under this subdivision shall not be less than the lesser of (i) 
 41.10  $200; or (ii) the greater of (a) 25 percent of the amount 
 41.11  required to be shown as tax on the return without reduction for 
 41.12  any payments made or refundable credits allowable against the 
 41.13  tax; or (b) $50.  
 41.14     Sec. 17.  Minnesota Statutes 1994, section 297E.11, 
 41.15  subdivision 4, is amended to read: 
 41.16     Subd. 4.  [TIME LIMIT FOR REFUNDS.] Unless otherwise 
 41.17  provided in this chapter, a claim for a refund of an overpayment 
 41.18  of tax must be filed within 3-1/2 years from the date prescribed 
 41.19  for filing the return, plus any extension of time granted for 
 41.20  filing the return, but only if filed within the extended time, 
 41.21  or two years from the time the tax is paid, whichever period 
 41.22  expires later the period prescribed in section 289A.40, 
 41.23  subdivision 1.  Interest on refunds must be computed at the rate 
 41.24  specified in section 270.76 from the date of payment to the date 
 41.25  the refund is paid or credited.  For purposes of this 
 41.26  subdivision, the date of payment is the later of the date the 
 41.27  tax was finally due or was paid.  
 41.28     Sec. 18.  Minnesota Statutes 1994, section 297E.12, 
 41.29  subdivision 2, is amended to read: 
 41.30     Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
 41.31  a taxpayer fails to make and file a return within the time 
 41.32  prescribed or an extension, a penalty is added to the tax.  The 
 41.33  penalty is five percent of the amount of tax not paid on or 
 41.34  before the date prescribed for payment of the tax. 
 41.35     If a taxpayer fails to file a return within 60 days of the 
 41.36  date prescribed for filing of the return (determined with regard 
 42.1   to any extension of time for filing), the addition to tax under 
 42.2   this subdivision must be at least the lesser of:  (1) $200; or 
 42.3   (2) the greater of (i) 25 percent of the amount required to be 
 42.4   shown as tax on the return without reduction for any payments 
 42.5   made or refundable credits allowable against the tax, or (ii) 
 42.6   $50. 
 42.7      Sec. 19.  Minnesota Statutes 1994, section 299F.26, 
 42.8   subdivision 1, is amended to read: 
 42.9      Subdivision 1.  [PROCEDURE, TIME LIMIT, APPROPRIATION.] A 
 42.10  company which has paid, voluntarily or otherwise, or from which 
 42.11  there was collected an amount of tax for any year in excess of 
 42.12  the amount legally due for that year, may file with the 
 42.13  commissioner of revenue a claim for a refund of the excess.  
 42.14  Except as provided in subdivision 4, no claim or refund shall be 
 42.15  allowed or made after 3-1/2 years from the date prescribed for 
 42.16  filing the return (plus any extension of time granted for filing 
 42.17  the return but only if filed within the extended time) or after 
 42.18  two years from the date of overpayment, whichever period is 
 42.19  longer, unless before the expiration of the period a claim is 
 42.20  filed by the company the period prescribed in section 289A.40, 
 42.21  subdivision 1.  For this purpose a return or amended return 
 42.22  claiming an overpayment constitutes a claim for refund. 
 42.23     Upon the filing of a claim the commissioner shall examine 
 42.24  the same and shall make and file written findings thereon 
 42.25  denying or allowing the claim in whole or in part and shall mail 
 42.26  a notice thereof to the company at the address stated upon the 
 42.27  return.  If such claim is allowed in whole or in part, the 
 42.28  commissioner shall issue a certificate for the refundment of the 
 42.29  excess paid by the company, with interest at the rate specified 
 42.30  in section 270.76 computed from the date of the payment of the 
 42.31  tax until the date the refund is paid or the credit is made to 
 42.32  the company, and the commissioner of finance shall cause the 
 42.33  refund to be paid as other state moneys are expended.  So much 
 42.34  of the proceeds of the taxes as is necessary are appropriated 
 42.35  for that purpose. 
 42.36     Sec. 20.  Minnesota Statutes 1994, section 299F.26, 
 43.1   subdivision 4, is amended to read: 
 43.2      Subd. 4.  [CONSENT TO EXTEND TIME.] If the commissioner and 
 43.3   the company have within the periods prescribed in subdivision 1, 
 43.4   consented in writing to any extension of time for the assessment 
 43.5   of the tax, the period within a claim for refund may be filed, 
 43.6   or a refund may be made or allowed, if no claim is filed, shall 
 43.7   be the period within which the commissioner and the company have 
 43.8   consented to an extension for the assessment of the tax and six 
 43.9   months thereafter, provided, however, that the period within 
 43.10  which a claim for refund may be filed shall not expire prior to 
 43.11  two years after the tax was paid. 
 43.12     Sec. 21.  [REPEALER.] 
 43.13     Minnesota Statutes 1994, sections 270.70, subdivisions 8, 
 43.14  9, and 10; and 297A.38, are repealed. 
 43.15     Sec. 22.  [EFFECTIVE DATE.] 
 43.16     Sections 1, 2, 9, 12, 17, and 19 are effective for claims 
 43.17  for refund which have not been filed as of the day following 
 43.18  final enactment and in which the time period for filing the 
 43.19  claim has not expired under the provisions in effect prior to 
 43.20  the day following final enactment.  The time period for filing 
 43.21  such claims is the time period prescribed in the enacted 
 43.22  sections, or one year after the day following final enactment, 
 43.23  whichever is greater. 
 43.24     Sections 3, 13, and 20, and the provisions in section 1 
 43.25  pertaining to consents to extend time, are effective for 
 43.26  consents to extend time for filing claims for refund entered 
 43.27  into on or after the day following final enactment. 
 43.28     Sections 4, 8, 10, 11, 14 to 16, 18, and 21 are effective 
 43.29  the day following final enactment. 
 43.30     Sections 5 to 7 are effective July 1, 1995. 
 43.31                             ARTICLE 5
 43.32                         CRIMINAL PENALTIES
 43.33     Section 1.  [340A.7035] [CONSUMER IMPORTATION; ILLEGAL 
 43.34  ACTS.] 
 43.35     A person who enters Minnesota from another state and who 
 43.36  imports or possesses alcoholic beverages in excess of the 
 44.1   tax-exempt quantities provided for in section 297C.07, 
 44.2   paragraphs (10), (11), and (12), is guilty of a misdemeanor.  A 
 44.3   person who enters Minnesota from a foreign country who imports 
 44.4   or possesses alcoholic beverages on which the excise tax imposed 
 44.5   by sections 297C.02 and 297C.09 has not been paid, other than 
 44.6   the tax-exempt quantities provided for in section 297C.07, 
 44.7   paragraphs (10), (11), and (12), is guilty of a misdemeanor.  A 
 44.8   peace officer, the commissioner of public safety, and employees 
 44.9   designated by the commissioner of public safety may seize 
 44.10  alcoholic beverages imported or possessed in violation of this 
 44.11  section.  This section does not apply to the consignments of 
 44.12  alcoholic beverages shipped into this state by holders of 
 44.13  Minnesota import licenses or Minnesota manufacturers and 
 44.14  wholesalers when licensed by the commissioner of public safety 
 44.15  or to common carriers with licenses to sell alcoholic beverages 
 44.16  in more than one state when licensed by the commissioner of 
 44.17  public safety to sell alcoholic beverages in this state. 
 44.18     Sec. 2.  [EFFECTIVE DATE.] 
 44.19     Section 1 is effective the day following final enactment. 
 44.20                             ARTICLE 6
 44.21                           MISCELLANEOUS
 44.22     Section 1.  Minnesota Statutes 1994, section 289A.43, is 
 44.23  amended to read: 
 44.24     289A.43 [PROHIBITION OF SUITS TO RESTRAIN ASSESSMENT OR 
 44.25  COLLECTION.] 
 44.26     Except for the express procedures in this chapter, chapters 
 44.27  270 and 271, and any other tax statutes for contesting the 
 44.28  assessment or collection of taxes, penalties, or interest 
 44.29  administered by the commissioner of revenue, and except for an 
 44.30  action challenging the constitutionality of a tax statute on its 
 44.31  face, if it is demonstrated to the court by clear and convincing 
 44.32  evidence that under no circumstances would the commissioner 
 44.33  ultimately prevail and that the taxpayer will suffer irreparable 
 44.34  harm if the relief sought is not granted, no suit to restrain 
 44.35  assessment or collection, including a declaratory judgment 
 44.36  action, can be maintained in any court by any person.  
 45.1      Sec. 2.  Minnesota Statutes 1994, section 295.53, 
 45.2   subdivision 2, is amended to read: 
 45.3      Subd. 2.  [DEDUCTIONS FOR STAFF MODEL HEALTH PLAN COMPANY.] 
 45.4   In addition to the exemptions allowed under subdivision 1, a 
 45.5   staff model health plan company may deduct from its gross 
 45.6   revenues for the year: 
 45.7      (1) amounts paid to hospitals, surgical centers, and health 
 45.8   care providers that are not employees of the staff model health 
 45.9   plan company for services on which liability for the tax is 
 45.10  imposed under section 295.52; 
 45.11     (2) net amounts added to reserves, if to the extent that 
 45.12  the amounts added do not cause total reserves do not to exceed 
 45.13  200 percent of the statutory net worth requirement, the 
 45.14  calculation of which may be determined on a consolidated basis, 
 45.15  taking into account the amounts held in reserve by affiliated 
 45.16  staff model health plan companies; 
 45.17     (3) assessments for the comprehensive health insurance plan 
 45.18  under section 62E.11; and 
 45.19     (4) amounts spent for administration as reported as total 
 45.20  administration to the department of health in the statement of 
 45.21  revenues, expenses, and net worth pursuant to section 62D.08, 
 45.22  subdivision 3, clause (a). 
 45.23     Sec. 3.  [296.041] [ELECTRONICALLY FILED RETURNS OR 
 45.24  REPORTS; SIGNATURES.] 
 45.25     For purposes of this chapter, the name of the taxpayer, the 
 45.26  name of the taxpayer's authorized agent, or the taxpayer's 
 45.27  identification number constitutes a signature when transmitted 
 45.28  as part of the information on returns or reports filed by 
 45.29  electronic means by the taxpayer or at the taxpayer's 
 45.30  direction.  "Electronic means" includes, but is not limited to, 
 45.31  the use of a touch-tone telephone to transmit return or report 
 45.32  information in a manner prescribed by the commissioner. 
 45.33     Sec. 4.  Minnesota Statutes 1994, section 296.12, 
 45.34  subdivision 3, is amended to read: 
 45.35     Subd. 3.  [TAX COLLECTION, REPORTING AND PAYMENT.] (a) For 
 45.36  clear diesel fuel, the tax is imposed on the distributor who 
 46.1   receives the fuel. 
 46.2      (b) For all other special fuels, the tax is imposed on the 
 46.3   distributor, bulk purchaser, or special fuel dealer.  The tax 
 46.4   may be paid upon receipt or sale as follows:  
 46.5      (1) Distributors and special fuel dealers may, subject to 
 46.6   the approval of the commissioner, elect to pay to the 
 46.7   commissioner the special fuel excise tax on all special fuel 
 46.8   delivered or sold into the supply tank of an aircraft or a 
 46.9   licensed motor vehicle.  Under this option an invoice must be 
 46.10  issued at the time of each delivery showing the name and address 
 46.11  of the purchaser, date of sale, number of gallons, price per 
 46.12  gallon and total amount of sale.  A separate sales ticket book 
 46.13  shall be maintained for special fuel sales; and 
 46.14     (2) Bulk purchasers shall report and pay the excise tax on 
 46.15  all special fuel purchased by them for storage, to the 
 46.16  commissioner in the form and manner prescribed by the 
 46.17  commissioner. 
 46.18     (c) Any person delivering special fuel on which the excise 
 46.19  tax has not previously been paid, into the supply tank of an 
 46.20  aircraft or a licensed motor vehicle shall report such delivery 
 46.21  and pay the excise tax on the special fuel so delivered, to the 
 46.22  commissioner. 
 46.23     Sec. 5.  Minnesota Statutes 1994, section 296.12, 
 46.24  subdivision 4, is amended to read: 
 46.25     Subd. 4.  [MONTHLY REPORTS; SHRINKAGE ALLOWANCE.] On or 
 46.26  before the 23rd day of each month, the persons subject to the 
 46.27  provisions of this section shall file in the office of the 
 46.28  commissioner at St. Paul, Minnesota, a report in the following 
 46.29  manner form and manner prescribed by the commissioner.  Reports 
 46.30  shall contain information as follows: 
 46.31     (1) Distributors of clear diesel fuel must file a monthly 
 46.32  tax return with the department listing all purchases or receipts 
 46.33  of clear diesel fuel.  Distributors may be allowed to take a 
 46.34  credit or credits under section 296.14, subdivision 2.  
 46.35     (2) Distributors and dealers of special fuel other than 
 46.36  clear diesel fuel shall report the total number of gallons 
 47.1   delivered to them during the preceding calendar month and shall 
 47.2   pay the special fuel excise tax due thereon to the commissioner. 
 47.3   The invoice must show the true and correct name and address of 
 47.4   the purchaser, and the purchaser's signature.  The report shall 
 47.5   contain such other information as the commissioner may require.  
 47.6      (3) Distributors and dealers of special fuel other than 
 47.7   clear diesel fuel who have elected to pay the special fuel 
 47.8   excise tax on all special fuel delivered into the supply tank of 
 47.9   an aircraft or licensed motor vehicle as provided in subdivision 
 47.10  3, shall report the total number of gallons delivered into the 
 47.11  supply tank of an aircraft or licensed motor vehicle during the 
 47.12  preceding calendar month and shall pay the special fuel excise 
 47.13  tax due thereon to the commissioner.  
 47.14     (4) Bulk purchasers shall report and pay the special fuel 
 47.15  excise tax on all special fuel except clear diesel fuel 
 47.16  purchased by them for storage, during the preceding calendar 
 47.17  month.  In such cases as the commissioner may permit, credit for 
 47.18  the excise tax due or previously paid on special fuel not used 
 47.19  in aircraft or licensed motor vehicles, may be allowed in 
 47.20  computing tax liability.  The report shall contain such other 
 47.21  information as the commissioner may require. 
 47.22     (5) In computing the special fuel excise tax due, a 
 47.23  deduction of one percent of the quantity of special fuel on 
 47.24  which tax is due shall be made for evaporation and loss.  
 47.25     (6) Each report shall contain a confession of judgment for 
 47.26  the amount of the tax shown due thereon to the extent not timely 
 47.27  paid.  
 47.28     Sec. 6.  Minnesota Statutes 1994, section 296.12, 
 47.29  subdivision 11, is amended to read: 
 47.30     Subd. 11.  [QUALIFIED BULK PURCHASERS.] Notwithstanding any 
 47.31  other provision of law to the contrary, the commissioner of 
 47.32  revenue may allow any bulk purchaser who receives special fuel 
 47.33  other than clear diesel fuel in bulk storage for subsequent 
 47.34  delivery into the supply tank of licensed motor vehicles or 
 47.35  aircraft operated by the bulk purchaser to purchase bulk special 
 47.36  fuel on a tax paid basis from any consenting supplier licensed 
 48.1   as a distributor or special fuel dealer under this section or 
 48.2   section 296.06.  Bulk purchasers qualifying under this provision 
 48.3   must become registered in a manner approved by the commissioner 
 48.4   but shall be exempt from the bulk purchaser license 
 48.5   requirements.  Every licensed distributor or special fuel dealer 
 48.6   who sells or delivers special fuel other than clear diesel fuel 
 48.7   on a tax paid basis to persons registered under this provision 
 48.8   must report on or before the 23rd day of each month sales made 
 48.9   during the preceding calendar month and shall pay the special 
 48.10  fuel excise tax due thereon to the commissioner.  The report 
 48.11  shall be in the form and manner prescribed by the commissioner, 
 48.12  and shall contain information as the commissioner may require.  
 48.13     Sec. 7.  Minnesota Statutes 1994, section 296.141, 
 48.14  subdivision 1, is amended to read: 
 48.15     Subdivision 1.  [PAYMENT OF GASOLINE TAX AND PETROLEUM TANK 
 48.16  RELEASE CLEANUP FEE; SHRINKAGE ALLOWANCE.] On or before the 23rd 
 48.17  day of each month, every person who is required to pay a 
 48.18  gasoline tax shall file in the office of with the commissioner 
 48.19  at St. Paul, Minnesota, a report, in a the form and manner 
 48.20  approved by the commissioner, showing the number of gallons of 
 48.21  petroleum products received by the reporter during the preceding 
 48.22  calendar month, and other information the commissioner may 
 48.23  require.  The number of gallons of gasoline must be reported in 
 48.24  United States standard liquid gallons (231 cubic inches), except 
 48.25  that the commissioner may upon written application and for cause 
 48.26  shown permit the distributor to report the number of gallons of 
 48.27  gasoline as corrected to a 60 degree Fahrenheit temperature.  If 
 48.28  the application is granted, all gasoline covered in the 
 48.29  application and allowed by the commissioner must continue to be 
 48.30  reported by the distributor on the adjusted basis for a period 
 48.31  of one year from the date of the granting of the application.  
 48.32  The number of gallons of petroleum products other than gasoline 
 48.33  must be reported as originally invoiced. 
 48.34     Each report must show separately the number of gallons of 
 48.35  aviation gasoline received by the reporter during such calendar 
 48.36  month. 
 49.1      Each report must include the amount of gasoline tax on 
 49.2   gasoline received by the reporter during the preceding month; 
 49.3   provided that in computing the tax a deduction of three percent 
 49.4   of the quantity of gasoline received by a distributor shall be 
 49.5   made for evaporation and loss; provided further that at the time 
 49.6   of reporting, the distributor shall submit satisfactory evidence 
 49.7   that one-third of the three percent deduction has been credited 
 49.8   or paid to dealers on quantities sold to them.  The A written 
 49.9   report is deemed to have been filed as required in this 
 49.10  subdivision if postmarked on or before the 23rd day of the month 
 49.11  in which payable. 
 49.12     Sec. 8.  Minnesota Statutes 1994, section 296.141, 
 49.13  subdivision 2, is amended to read: 
 49.14     Subd. 2.  [INSPECTION FEES.] Persons required to pay an 
 49.15  inspection fee under section 239.101 must file a report.  Each 
 49.16  report must include the amount of inspection fees due on 
 49.17  petroleum products.  The Reports must be filed with the 
 49.18  commissioner in the form and manner the commissioner 
 49.19  prescribes.  A written report is considered filed as required if 
 49.20  postmarked on or before the 23rd day of the month in which 
 49.21  payable. 
 49.22     Sec. 9.  Minnesota Statutes 1994, section 296.141, 
 49.23  subdivision 6, is amended to read: 
 49.24     Subd. 6.  [ON-FARM BULK STORAGE OF GASOLINE OR SPECIAL 
 49.25  FUEL; ETHYL ALCOHOL FOR PERSONAL USE.] Notwithstanding the 
 49.26  provisions of this section, the producer of ethyl alcohol which 
 49.27  is produced for personal use and not for sale in the usual 
 49.28  course of business and a farmer who uses gasoline or any special 
 49.29  fuel on which a tax has not been paid shall report and pay the 
 49.30  tax on all ethyl alcohol, gasoline, or special fuel delivered 
 49.31  into the supply tank of a licensed motor vehicle during the 
 49.32  preceding calendar year.  The tax must be reported in the form 
 49.33  and manner prescribed by the commissioner and paid together with 
 49.34  any refund claim filed by the taxpayer under section 296.18.  If 
 49.35  no refund claim is filed, the tax must be reported and paid 
 49.36  annually by March 15 or more frequently, as the commissioner may 
 50.1   prescribe.  Any producer qualifying under this subdivision is 
 50.2   exempt from the licensing requirements contained in section 
 50.3   296.06, subdivision 1. 
 50.4      Sec. 10.  Minnesota Statutes 1994, section 296.17, 
 50.5   subdivision 1, is amended to read: 
 50.6      Subdivision 1.  [UNREPORTED FUEL.] It shall be the duty of 
 50.7   every distributor, dealer, and person who sells or uses gasoline 
 50.8   manufactured, produced, received, or stored by the distributor, 
 50.9   dealer, or person, and of every person using gasoline in motor 
 50.10  vehicles or special fuel in licensed motor vehicles, if the same 
 50.11  has not been reported or if the tax on account thereof has not 
 50.12  been paid to the commissioner, to report to the commissioner in 
 50.13  the form and manner prescribed by the commissioner, the quantity 
 50.14  of such gasoline so sold or used or such special fuel used, and 
 50.15  such person shall become liable for the payment of the tax.  All 
 50.16  provisions of sections 296.01 to 296.421 relating to the 
 50.17  calculation, collection and payment of the tax shall be 
 50.18  applicable to any such person, dealer or distributor. 
 50.19     Sec. 11.  Minnesota Statutes 1994, section 296.17, 
 50.20  subdivision 3, is amended to read: 
 50.21     Subd. 3.  [REFUNDS ON FUEL USED IN OTHER STATES.] Every 
 50.22  person regularly or habitually operating motor vehicles upon the 
 50.23  public highways of any other state or states and using in said 
 50.24  motor vehicles gasoline or special fuel purchased or obtained in 
 50.25  this state, shall be allowed a credit or refund equal to the tax 
 50.26  on said gasoline or special fuel paid to this state on the 
 50.27  gasoline or special fuel actually used in the other state or 
 50.28  states.  No credit or refund shall be allowed under this 
 50.29  subdivision for taxes paid to any state which imposes a tax upon 
 50.30  gasoline or special fuel purchased or obtained in this state and 
 50.31  used on the highways of such other state, and which does not 
 50.32  allow a similar credit or refund for the tax paid to this state 
 50.33  on gasoline or special fuel purchased or acquired in such other 
 50.34  state and used on the highways of this state.  Every person 
 50.35  claiming a credit or refund under this subdivision shall file a 
 50.36  claim on a in the form and manner prescribed by the commissioner 
 51.1   or take the credit on a subsequent tax return within one year of 
 51.2   the last day of the month following the end of the quarter when 
 51.3   the overpayment occurred.  
 51.4      Sec. 12.  Minnesota Statutes 1994, section 296.17, 
 51.5   subdivision 5, is amended to read: 
 51.6      Subd. 5.  [UNREPORTED AVIATION GASOLINE.] The provisions of 
 51.7   subdivision 1 do not apply to aviation gasoline.  It shall be 
 51.8   the duty of every distributor, dealer, and person who receives, 
 51.9   sells, stores, or withdraws from storage in this state aviation 
 51.10  gasoline manufactured, produced, received, or stored by the 
 51.11  distributor, dealer, or person, if the same has not been 
 51.12  reported or if a tax provided for in section 296.02 on account 
 51.13  thereof, has not been paid to the commissioner, to report to the 
 51.14  commissioner, in the form and manner prescribed by the 
 51.15  commissioner, the quantity of such gasoline so received, sold, 
 51.16  stored, or withdrawn from storage, and such person shall become 
 51.17  liable for the payment of the tax. 
 51.18     All provisions of sections 296.01 to 296.421 relating to 
 51.19  the calculation, collections, and payment of the tax shall be 
 51.20  applicable to any such person, dealer, or distributor. 
 51.21     Sec. 13.  Minnesota Statutes 1994, section 296.17, 
 51.22  subdivision 11, is amended to read: 
 51.23     Subd. 11.  [MOTOR CARRIER REPORTS.] Every motor carrier 
 51.24  subject to the road tax shall, on or before the last day of 
 51.25  April, July, October, and January, file with the commissioner 
 51.26  such in the form and manner prescribed by the commissioner, 
 51.27  reports of operations during the previous three months as the 
 51.28  commissioner may require, and such other reports from time to 
 51.29  time as the commissioner may deem necessary.  The commissioner 
 51.30  by rule may exempt from the quarterly reporting requirements of 
 51.31  this section those motor carriers whose mileage is all or 
 51.32  substantially all and those motor carriers whose mileage is 
 51.33  minimal within this state, or states with which Minnesota has 
 51.34  reciprocity and require in such instances an annual report 
 51.35  reflecting the operations of the carrier during the previous 
 51.36  year along with payment of any taxes due. 
 52.1      Each report shall contain a confession of judgment for the 
 52.2   amount of the tax shown due thereon to the extent not timely 
 52.3   paid. 
 52.4      Sec. 14.  Minnesota Statutes 1994, section 296.18, 
 52.5   subdivision 1, is amended to read: 
 52.6      Subdivision 1.  [CLAIM; FUEL USED IN OTHER VEHICLES.] Any 
 52.7   person who shall buy and use gasoline for a qualifying purpose 
 52.8   other than use in motor vehicles, snowmobiles except as provided 
 52.9   in clause (2), or motorboats, or special fuel for a qualifying 
 52.10  purpose other than use in licensed motor vehicles, and who shall 
 52.11  have paid the Minnesota excise tax directly or indirectly 
 52.12  through the amount of the tax being included in the price of the 
 52.13  gasoline or special fuel, or otherwise, shall be reimbursed and 
 52.14  repaid the amount of the tax paid upon filing with the 
 52.15  commissioner a signed claim in writing in the form and manner 
 52.16  prescribed by the commissioner, and containing the information 
 52.17  the commissioner shall require and accompanied by the original 
 52.18  invoice thereof.  By signing any such claim which is false or 
 52.19  fraudulent, the applicant shall be subject to the penalties 
 52.20  provided in this section for knowingly making a false claim.  
 52.21  The claim shall set forth the total amount of the gasoline so 
 52.22  purchased and used by the applicant other than in motor 
 52.23  vehicles, or special fuel so purchased and used by the applicant 
 52.24  other than in licensed motor vehicles, and shall state when and 
 52.25  for what purpose it was used.  When a claim contains an error in 
 52.26  computation or preparation, the commissioner is authorized to 
 52.27  adjust the claim in accordance with the evidence shown on the 
 52.28  claim or other information available to the commissioner.  The 
 52.29  commissioner, on being satisfied that the claimant is entitled 
 52.30  to the payments, shall approve the claim and transmit it to the 
 52.31  commissioner of finance.  No repayment shall be made unless the 
 52.32  claim and invoice shall be filed with the commissioner within 
 52.33  one year from the date of the purchase.  The postmark on the 
 52.34  envelope in which the a written claim is mailed shall determine 
 52.35  the its date of filing.  The words "gasoline" or "special fuel" 
 52.36  as used in this subdivision do not include aviation gasoline or 
 53.1   special fuel for aircraft.  Gasoline or special fuel bought and 
 53.2   used for a "qualifying purpose" means: 
 53.3      (1) Gasoline or special fuel used in carrying on a trade or 
 53.4   business, used on a farm situated in Minnesota, and used for a 
 53.5   farming purpose.  "Farm" and "farming purpose" have the meanings 
 53.6   given them in section 6420(c)(2), (3), and (4) of the Internal 
 53.7   Revenue Code of 1986, as amended through December 31, 1988.  
 53.8      (2) Gasoline or special fuel used for off-highway business 
 53.9   use.  "Off-highway business use" means any use by a person in 
 53.10  that person's trade, business, or activity for the production of 
 53.11  income.  "Off-highway business use" includes use of a passenger 
 53.12  snowmobile off the public highways as part of the operations of 
 53.13  a resort as defined in section 157.01, subdivision 1.  
 53.14  "Off-highway business use" does not include use as a fuel in a 
 53.15  motor vehicle which, at the time of use, is registered or is 
 53.16  required to be registered for highway use under the laws of any 
 53.17  state or foreign country.  
 53.18     (3) Gasoline or special fuel placed in the fuel tanks of 
 53.19  new motor vehicles, manufactured in Minnesota, and shipped by 
 53.20  interstate carrier to destinations in other states or foreign 
 53.21  countries. 
 53.22     Sec. 15.  Minnesota Statutes 1994, section 296.18, 
 53.23  subdivision 2, is amended to read: 
 53.24     Subd. 2.  [FAILURE TO USE OR SELL FOR INTENDED PURPOSE; 
 53.25  REPORTS REQUIRED.] (1) Any person who shall buy aviation 
 53.26  gasoline or special fuel for aircraft use and who shall have 
 53.27  paid the excise taxes due thereon directly or indirectly through 
 53.28  the amount of the tax being included in the price thereof, or 
 53.29  otherwise, and shall use said gasoline or special fuel in motor 
 53.30  vehicles or shall knowingly sell it to any person for use in 
 53.31  motor vehicles shall, on or before the twenty-third day of the 
 53.32  month following that in which such gasoline or special fuel was 
 53.33  so used or sold, report the fact of such use or sale to the 
 53.34  commissioner in such form and manner as the commissioner may 
 53.35  prescribe. 
 53.36     (2) Any person who shall buy gasoline other than aviation 
 54.1   gasoline and who shall have paid the motor vehicle gasoline 
 54.2   excise tax directly or indirectly through the amount of the tax 
 54.3   being included in the price of the gasoline, or otherwise, who 
 54.4   shall knowingly sell such gasoline to any person to be used for 
 54.5   the purpose of producing or generating power for propelling 
 54.6   aircraft, or who shall receive, store, or withdraw from storage 
 54.7   such gasoline to be used for that purpose, shall, on or before 
 54.8   the 23rd day of the month following that in which such gasoline 
 54.9   was so sold, stored, or withdrawn from storage, report the fact 
 54.10  of such sale, storage, or withdrawal from storage to the 
 54.11  commissioner in such form and manner as the commissioner may 
 54.12  prescribe. 
 54.13     (3) Any person who shall buy aviation gasoline or special 
 54.14  fuel for aircraft use and who shall have paid the excise taxes 
 54.15  directly or indirectly through the amount of the tax being 
 54.16  included in the price thereof, or otherwise, who shall not use 
 54.17  it in motor vehicles or receive, sell, store, or withdraw it 
 54.18  from storage for the purpose of producing or generating power 
 54.19  for propelling aircraft, shall be reimbursed and repaid the 
 54.20  amount of the tax paid upon filing with the commissioner a 
 54.21  signed claim in writing in such form and containing such 
 54.22  information as the commissioner shall require and accompanied by 
 54.23  the original invoice thereof manner as the commissioner may 
 54.24  prescribe.  By signing any such filing a claim which is false or 
 54.25  fraudulent, the applicant shall be subject to the penalties 
 54.26  provided in section 296.25 for knowingly or willfully making a 
 54.27  false claim.  The claim shall set forth the total amount of the 
 54.28  aviation gasoline or special fuel for aircraft use so purchased 
 54.29  and used by the applicant, and shall state when and for what 
 54.30  purpose it was used.  When a claim contains an error in 
 54.31  computation or preparation, the commissioner is authorized to 
 54.32  adjust the claim in accordance with the evidence shown on the 
 54.33  claim or other information available to the commissioner.  The 
 54.34  commissioner, on being satisfied that the claimant is entitled 
 54.35  to payment, shall approve the claim and transmit it to the 
 54.36  commissioner of finance.  No repayment shall be made unless the 
 55.1   claim and invoice shall be filed with the commissioner within 
 55.2   one year from the date of the purchase.  The postmark on the 
 55.3   envelope in which the a written claim is mailed shall determine 
 55.4   the its date of filing. 
 55.5      Sec. 16.  Minnesota Statutes 1994, section 296.18, 
 55.6   subdivision 5, is amended to read: 
 55.7      Subd. 5.  [GRADUATED REDUCTION-BASIS REFUND CLAIM, 
 55.8   REQUIREMENTS.] Any distributor or other person claiming to be 
 55.9   entitled to any refund provided for in subdivision 4 shall 
 55.10  receive such refund upon filing with the commissioner a verified 
 55.11  claim in such form and manner, and, containing such information, 
 55.12  and accompanied by such invoices or other proof as the 
 55.13  commissioner shall require.  The claim shall set forth, among 
 55.14  other things, the total number of gallons of aviation gasoline 
 55.15  or special fuel for aircraft use upon which the claimant has 
 55.16  directly or indirectly paid the excise tax provided for in 
 55.17  sections 296.02, subdivision 2, or 296.025, subdivision 2, 
 55.18  during the calendar year, which has been received, stored, or 
 55.19  withdrawn from storage by the claimant in this state and not 
 55.20  sold or otherwise disposed of to others.  The commissioner, on 
 55.21  being satisfied that the claimant is entitled to the refund, 
 55.22  shall approve the claim and transmit it to the commissioner of 
 55.23  finance, and it shall be paid as provided for in section 
 55.24  296.421, subdivision 2.  All claims for refunds under this 
 55.25  subdivision shall be made on or before April 15 following the 
 55.26  end of the calendar year for which the refund is claimed.  
 55.27  Claims for aviation gasoline and special fuel tax refund filed 
 55.28  within 15 days beyond the due date prescribed by this 
 55.29  subdivision shall be honored by the commissioner less a penalty 
 55.30  of 25 percent of the amount of the approved claim. 
 55.31     Sec. 17.  [EFFECTIVE DATE.] 
 55.32     Section 1 is effective for lawsuits initiated on or after 
 55.33  the day following final enactment.  Sections 2 to 16 are 
 55.34  effective the day following final enactment.