1.1                          A bill for an act 
  1.2             relating to taxation; making policy and administrative 
  1.3             changes to certain tax provisions; amending Minnesota 
  1.4             Statutes 1998, sections 272.115, subdivision 1; 
  1.5             289A.35; 290.01, by adding a subdivision; 290.17, 
  1.6             subdivision 2; 295.50, subdivision 9b; 297F.01, 
  1.7             subdivision 17; 297F.08, subdivisions 2, 5, 8, and 9; 
  1.8             and 297F.21, subdivisions 1 and 3; Minnesota Statutes 
  1.9             1999 Supplement, sections 16D.09, subdivision 2; 
  1.10            270.65; 289A.02, subdivision 7; 290.01, subdivisions 
  1.11            19 and 31; 290.091, subdivision 2; 290A.03, 
  1.12            subdivision 15; 291.005, subdivision 1; 295.53, 
  1.13            subdivision 1; and 297F.08, subdivision 8a; repealing 
  1.14            Minnesota Rules, part 8160.0300, subpart 4. 
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16                             ARTICLE 1
  1.17                     INCOME AND FRANCHISE TAXES
  1.18     Section 1.  Minnesota Statutes 1998, section 290.01, is 
  1.19  amended by adding a subdivision to read: 
  1.20     Subd. 33.  [DOMICILE.] For corporations, "domicile" means 
  1.21  the principal place from which the trade or business of the 
  1.22  taxpayer is directed or managed. 
  1.23     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  1.24  290.091, subdivision 2, is amended to read: 
  1.25     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  1.26  this section, the following terms have the meanings given: 
  1.27     (a) "Alternative minimum taxable income" means the sum of 
  1.28  the following for the taxable year: 
  1.29     (1) the taxpayer's federal alternative minimum taxable 
  1.30  income as defined in section 55(b)(2) of the Internal Revenue 
  2.1   Code; 
  2.2      (2) the taxpayer's itemized deductions allowed in computing 
  2.3   federal alternative minimum taxable income, but excluding: 
  2.4      (i) the Minnesota charitable contribution deduction; 
  2.5      (ii) the medical expense deduction; 
  2.6      (iii) the casualty, theft, and disaster loss deduction; 
  2.7      (iv) the impairment-related work expenses of a disabled 
  2.8   person; and 
  2.9      (v) holocaust victims' settlement payments to the extent 
  2.10  allowed under section 290.01, subdivision 19b; 
  2.11     (3) for depletion allowances computed under section 613A(c) 
  2.12  of the Internal Revenue Code, with respect to each property (as 
  2.13  defined in section 614 of the Internal Revenue Code), to the 
  2.14  extent not included in federal alternative minimum taxable 
  2.15  income, the excess of the deduction for depletion allowable 
  2.16  under section 611 of the Internal Revenue Code for the taxable 
  2.17  year over the adjusted basis of the property at the end of the 
  2.18  taxable year (determined without regard to the depletion 
  2.19  deduction for the taxable year); 
  2.20     (4) to the extent not included in federal alternative 
  2.21  minimum taxable income, the amount of the tax preference for 
  2.22  intangible drilling cost under section 57(a)(2) of the Internal 
  2.23  Revenue Code determined without regard to subparagraph (E); and 
  2.24     (5) to the extent not included in federal alternative 
  2.25  minimum taxable income, the amount of interest income as 
  2.26  provided by section 290.01, subdivision 19a, clause (1); 
  2.27     less the sum of the amounts determined under the following: 
  2.28     (1) interest income as defined in section 290.01, 
  2.29  subdivision 19b, clause (1); 
  2.30     (2) an overpayment of state income tax as provided by 
  2.31  section 290.01, subdivision 19b, clause (2), to the extent 
  2.32  included in federal alternative minimum taxable income; and 
  2.33     (3) the amount of investment interest paid or accrued 
  2.34  within the taxable year on indebtedness to the extent that the 
  2.35  amount does not exceed net investment income, as defined in 
  2.36  section 163(d)(4) of the Internal Revenue Code.  Interest does 
  3.1   not include amounts deducted in computing federal adjusted gross 
  3.2   income; and 
  3.3      (4) amounts subtracted from federal taxable income as 
  3.4   provided by section 290.01, subdivision 19b, clauses (4) and (6).
  3.5      In the case of an estate or trust, alternative minimum 
  3.6   taxable income must be computed as provided in section 59(c) of 
  3.7   the Internal Revenue Code. 
  3.8      (b) "Investment interest" means investment interest as 
  3.9   defined in section 163(d)(3) of the Internal Revenue Code. 
  3.10     (c) "Tentative minimum tax" equals 6.5 percent of 
  3.11  alternative minimum taxable income after subtracting the 
  3.12  exemption amount determined under subdivision 3. 
  3.13     (d) "Regular tax" means the tax that would be imposed under 
  3.14  this chapter (without regard to this section and section 
  3.15  290.032), reduced by the sum of the nonrefundable credits 
  3.16  allowed under this chapter.  
  3.17     (e) "Net minimum tax" means the minimum tax imposed by this 
  3.18  section. 
  3.19     (f) "Minnesota charitable contribution deduction" means a 
  3.20  charitable contribution deduction under section 170 of the 
  3.21  Internal Revenue Code to or for the use of an entity described 
  3.22  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
  3.23  federal deduction for charitable contributions is limited under 
  3.24  section 170(b) of the Internal Revenue Code, the allowable 
  3.25  contributions in the year of contribution are deemed to be first 
  3.26  contributions to entities described in section 290.21, 
  3.27  subdivision 3, clauses (a) to (e). 
  3.28     Sec. 3.  Minnesota Statutes 1998, section 290.17, 
  3.29  subdivision 2, is amended to read: 
  3.30     Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
  3.31  BUSINESS.] The income of a taxpayer subject to the allocation 
  3.32  rules that is not derived from the conduct of a trade or 
  3.33  business must be assigned in accordance with paragraphs (a) to 
  3.34  (f):  
  3.35     (a)(1) Subject to paragraphs (a)(2) and (a)(3), income from 
  3.36  labor or personal or professional services wages as defined in 
  4.1   section 3401(a) and (f) of the Internal Revenue Code is assigned 
  4.2   to this state if, and to the extent that, the labor or services 
  4.3   are work of the employee is performed within it; all other 
  4.4   income from such sources is treated as income from sources 
  4.5   without this state.  
  4.6      Severance pay shall be considered income from labor or 
  4.7   personal or professional services. 
  4.8      (2) In the case of an individual who is a nonresident of 
  4.9   Minnesota and who is an athlete or entertainer, income from 
  4.10  compensation for labor or personal services performed within 
  4.11  this state shall be determined in the following manner:  
  4.12     (i) The amount of income to be assigned to Minnesota for an 
  4.13  individual who is a nonresident salaried athletic team employee 
  4.14  shall be determined by using a fraction in which the denominator 
  4.15  contains the total number of days in which the individual is 
  4.16  under a duty to perform for the employer, and the numerator is 
  4.17  the total number of those days spent in Minnesota.  For purposes 
  4.18  of this paragraph, off-season training activities, unless 
  4.19  conducted at the team's facilities as part of a team imposed 
  4.20  program, are not included in the total number of duty days.  
  4.21  Bonuses earned as a result of play during the regular season or 
  4.22  for participation in championship, play-off, or all-star games 
  4.23  must be allocated under the formula.  Signing bonuses are not 
  4.24  subject to allocation under the formula if they are not 
  4.25  conditional on playing any games for the team, are payable 
  4.26  separately from any other compensation, and are nonrefundable; 
  4.27  and 
  4.28     (ii) The amount of income to be assigned to Minnesota for 
  4.29  an individual who is a nonresident, and who is an athlete or 
  4.30  entertainer not listed in clause (i), for that person's athletic 
  4.31  or entertainment performance in Minnesota shall be determined by 
  4.32  assigning to this state all income from performances or athletic 
  4.33  contests in this state.  
  4.34     (3) For purposes of this section, amounts received by a 
  4.35  nonresident as "retirement income" as defined in section (b)(1) 
  4.36  of the State Income Taxation of Pension Income Act, Public Law 
  5.1   Number 104-95, are not considered income derived from carrying 
  5.2   on a trade or business or from performing personal or 
  5.3   professional services in Minnesota, and are not taxable under 
  5.4   this chapter.  
  5.5      (b) Income or gains from tangible property located in this 
  5.6   state that is not employed in the business of the recipient of 
  5.7   the income or gains must be assigned to this state. 
  5.8      (c) Income or gains from intangible personal property not 
  5.9   employed in the business of the recipient of the income or gains 
  5.10  must be assigned to this state if the recipient of the income or 
  5.11  gains is a resident of this state or is a resident trust or 
  5.12  estate.  
  5.13     Gain on the sale of a partnership interest is allocable to 
  5.14  this state in the ratio of the original cost of partnership 
  5.15  tangible property in this state to the original cost of 
  5.16  partnership tangible property everywhere, determined at the time 
  5.17  of the sale.  If more than 50 percent of the value of the 
  5.18  partnership's assets consists of intangibles, gain or loss from 
  5.19  the sale of the partnership interest is allocated to this state 
  5.20  in accordance with the sales factor of the partnership for its 
  5.21  first full tax period immediately preceding the tax period of 
  5.22  the partnership during which the partnership interest was sold. 
  5.23     Gain on the sale of goodwill or income from a covenant not 
  5.24  to compete that is connected with a business operating all or 
  5.25  partially in Minnesota is allocated to this state to the extent 
  5.26  that the income from the business in the year preceding the year 
  5.27  of sale was assignable to Minnesota under subdivision 3.  
  5.28     When an employer pays an employee for a covenant not to 
  5.29  compete, the income allocated to this state is in the ratio of 
  5.30  the employee's service in Minnesota in the calendar year 
  5.31  preceding leaving the employment of the employer over the total 
  5.32  services performed by the employee for the employer in that year.
  5.33     (d) Income from winnings on Minnesota pari-mutuel betting 
  5.34  tickets, the Minnesota state lottery, and lawful gambling as 
  5.35  defined in section 349.12, subdivision 24, conducted within the 
  5.36  boundaries of the state of Minnesota shall be assigned to this 
  6.1   state.  
  6.2      (e) All items of gross income not covered in paragraphs (a) 
  6.3   to (d) and not part of the taxpayer's income from a trade or 
  6.4   business shall be assigned to the taxpayer's domicile. 
  6.5      (f) For the purposes of this section, working as an 
  6.6   employee shall not be considered to be conducting a trade or 
  6.7   business. 
  6.8      Sec. 4.  [EFFECTIVE DATES.] 
  6.9      Sections 1 and 2 are effective retroactively for tax years 
  6.10  beginning after December 31, 1999.  Section 3 is effective for 
  6.11  wages paid after the date of final enactment of this act, except 
  6.12  that to the extent section 3 impacts an employer's requirement 
  6.13  to withhold Minnesota tax under Minnesota Statutes, section 
  6.14  290.92, subdivision 4a, the requirement to withhold is effective 
  6.15  for wages paid after December 31, 2000.  
  6.16                             ARTICLE 2
  6.17                           FEDERAL UPDATE
  6.18     Section 1.  Minnesota Statutes 1999 Supplement, section 
  6.19  289A.02, subdivision 7, is amended to read: 
  6.20     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
  6.21  defined otherwise, "Internal Revenue Code" means the Internal 
  6.22  Revenue Code of 1986, as amended through December 31, 1998 1999. 
  6.23     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  6.24  290.01, subdivision 19, is amended to read: 
  6.25     Subd. 19.  [NET INCOME.] The term "net income" means the 
  6.26  federal taxable income, as defined in section 63 of the Internal 
  6.27  Revenue Code of 1986, as amended through the date named in this 
  6.28  subdivision, incorporating any elections made by the taxpayer in 
  6.29  accordance with the Internal Revenue Code in determining federal 
  6.30  taxable income for federal income tax purposes, and with the 
  6.31  modifications provided in subdivisions 19a to 19f. 
  6.32     In the case of a regulated investment company or a fund 
  6.33  thereof, as defined in section 851(a) or 851(g) of the Internal 
  6.34  Revenue Code, federal taxable income means investment company 
  6.35  taxable income as defined in section 852(b)(2) of the Internal 
  6.36  Revenue Code, except that:  
  7.1      (1) the exclusion of net capital gain provided in section 
  7.2   852(b)(2)(A) of the Internal Revenue Code does not apply; 
  7.3      (2) the deduction for dividends paid under section 
  7.4   852(b)(2)(D) of the Internal Revenue Code must be applied by 
  7.5   allowing a deduction for capital gain dividends and 
  7.6   exempt-interest dividends as defined in sections 852(b)(3)(C) 
  7.7   and 852(b)(5) of the Internal Revenue Code; and 
  7.8      (3) the deduction for dividends paid must also be applied 
  7.9   in the amount of any undistributed capital gains which the 
  7.10  regulated investment company elects to have treated as provided 
  7.11  in section 852(b)(3)(D) of the Internal Revenue Code.  
  7.12     The net income of a real estate investment trust as defined 
  7.13  and limited by section 856(a), (b), and (c) of the Internal 
  7.14  Revenue Code means the real estate investment trust taxable 
  7.15  income as defined in section 857(b)(2) of the Internal Revenue 
  7.16  Code.  
  7.17     The net income of a designated settlement fund as defined 
  7.18  in section 468B(d) of the Internal Revenue Code means the gross 
  7.19  income as defined in section 468B(b) of the Internal Revenue 
  7.20  Code. 
  7.21     The Internal Revenue Code of 1986, as amended through 
  7.22  December 31, 1986, shall be in effect for taxable years 
  7.23  beginning after December 31, 1986.  The provisions of sections 
  7.24  10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 
  7.25  10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 
  7.26  Omnibus Budget Reconciliation Act of 1987, Public Law Number 
  7.27  100-203, the provisions of sections 1001, 1002, 1003, 1004, 
  7.28  1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 
  7.29  1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 
  7.30  6277, and 6282 of the Technical and Miscellaneous Revenue Act of 
  7.31  1988, Public Law Number 100-647, the provisions of sections 
  7.32  7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 
  7.33  1989, Public Law Number 101-239, the provisions of sections 
  7.34  1305, 1704(r), and 1704(e)(1) of the Small Business Job 
  7.35  Protection Act, Public Law Number 104-188, and the provisions of 
  7.36  sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act 
  8.1   of 1997, Public Law Number 105-34, and the provisions of section 
  8.2   4004 of the Omnibus Consolidated and Emergency Supplemental 
  8.3   Appropriations Act, 1999, Public Law Number 105-277 shall be 
  8.4   effective at the time they become effective for federal income 
  8.5   tax purposes.  
  8.6      The Internal Revenue Code of 1986, as amended through 
  8.7   December 31, 1987, shall be in effect for taxable years 
  8.8   beginning after December 31, 1987.  The provisions of sections 
  8.9   4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 
  8.10  6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 
  8.11  6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 
  8.12  Act of 1988, Public Law Number 100-647, the provisions of 
  8.13  sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 
  8.14  of 1989, Public Law Number 101-239, and the provisions of 
  8.15  section 11702 of the Revenue Reconciliation Act of 1990, Public 
  8.16  Law Number 101-508, shall become effective at the time they 
  8.17  become effective for federal tax purposes.  
  8.18     The Internal Revenue Code of 1986, as amended through 
  8.19  December 31, 1988, shall be in effect for taxable years 
  8.20  beginning after December 31, 1988.  The provisions of sections 
  8.21  7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 
  8.22  7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 
  8.23  7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 
  8.24  Reconciliation Act of 1989, Public Law Number 101-239, the 
  8.25  provision of section 1401 of the Financial Institutions Reform, 
  8.26  Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 
  8.27  the provisions of sections 11701 and 11703 of the Revenue 
  8.28  Reconciliation Act of 1990, Public Law Number 101-508, and the 
  8.29  provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 
  8.30  Small Business Job Protection Act, Public Law Number 104-188, 
  8.31  shall become effective at the time they become effective for 
  8.32  federal tax purposes.  
  8.33     The Internal Revenue Code of 1986, as amended through 
  8.34  December 31, 1989, shall be in effect for taxable years 
  8.35  beginning after December 31, 1989.  The provisions of sections 
  8.36  11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 
  9.1   the Revenue Reconciliation Act of 1990, Public Law Number 
  9.2   101-508, and the provisions of sections 13224 and 13261 of the 
  9.3   Omnibus Budget Reconciliation Act of 1993, Public Law Number 
  9.4   103-66, shall become effective at the time they become effective 
  9.5   for federal purposes.  
  9.6      The Internal Revenue Code of 1986, as amended through 
  9.7   December 31, 1990, shall be in effect for taxable years 
  9.8   beginning after December 31, 1990. 
  9.9      The provisions of section 13431 of the Omnibus Budget 
  9.10  Reconciliation Act of 1993, Public Law Number 103-66, shall 
  9.11  become effective at the time they became effective for federal 
  9.12  purposes.  
  9.13     The Internal Revenue Code of 1986, as amended through 
  9.14  December 31, 1991, shall be in effect for taxable years 
  9.15  beginning after December 31, 1991.  
  9.16     The provisions of sections 1936 and 1937 of the 
  9.17  Comprehensive National Energy Policy Act of 1992, Public Law 
  9.18  Number 102-486, the provisions of sections 13101, 13114, 13122, 
  9.19  13141, 13150, 13151, 13174, 13239, 13301, and 13442 of the 
  9.20  Omnibus Budget Reconciliation Act of 1993, Public Law Number 
  9.21  103-66, and the provisions of section 1604(a)(1), (2), and (3) 
  9.22  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
  9.23  shall become effective at the time they become effective for 
  9.24  federal purposes.  
  9.25     The Internal Revenue Code of 1986, as amended through 
  9.26  December 31, 1992, shall be in effect for taxable years 
  9.27  beginning after December 31, 1992.  
  9.28     The provisions of sections 13116, 13121, 13206, 13210, 
  9.29  13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 
  9.30  the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
  9.31  103-66, the provisions of sections 1703(a), 1703(d), 1703(i), 
  9.32  1703(l), and 1703(m) of the Small Business Job Protection Act, 
  9.33  Public Law Number 104-188, and the provision of section 1604(c) 
  9.34  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
  9.35  shall become effective at the time they become effective for 
  9.36  federal purposes. 
 10.1      The Internal Revenue Code of 1986, as amended through 
 10.2   December 31, 1993, shall be in effect for taxable years 
 10.3   beginning after December 31, 1993. 
 10.4      The provision of section 741 of Legislation to Implement 
 10.5   Uruguay Round of General Agreement on Tariffs and Trade, Public 
 10.6   Law Number 103-465, the provisions of sections 1, 2, and 3, of 
 10.7   the Self-Employed Health Insurance Act of 1995, Public Law 
 10.8   Number 104-7, the provision of section 501(b)(2) of the Health 
 10.9   Insurance Portability and Accountability Act, Public Law Number 
 10.10  104-191, the provisions of sections 1604 and 1704(p)(1) and (2) 
 10.11  of the Small Business Job Protection Act, Public Law Number 
 10.12  104-188, and the provisions of sections 1011, 1211(b)(1), and 
 10.13  1602(f) of the Taxpayer Relief Act of 1997, Public Law Number 
 10.14  105-34, shall become effective at the time they become effective 
 10.15  for federal purposes. 
 10.16     The Internal Revenue Code of 1986, as amended through 
 10.17  December 31, 1994, shall be in effect for taxable years 
 10.18  beginning after December 31, 1994. 
 10.19     The provisions of sections 1119(a), 1120, 1121, 1202(a), 
 10.20  1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 
 10.21  Business Job Protection Act, Public Law Number 104-188, the 
 10.22  provision of section 511 of the Health Insurance Portability and 
 10.23  Accountability Act, Public Law Number 104-191, and the 
 10.24  provisions of sections 1174 and 1601(i)(2) of the Taxpayer 
 10.25  Relief Act of 1997, Public Law Number 105-34, shall become 
 10.26  effective at the time they become effective for federal purposes.
 10.27     The Internal Revenue Code of 1986, as amended through March 
 10.28  22, 1996, is in effect for taxable years beginning after 
 10.29  December 31, 1995. 
 10.30     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 10.31  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 10.32  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 10.33  Protection Act, Public Law Number 104-188, the provisions of 
 10.34  Public Law Number 104-117, the provisions of sections 313(a) and 
 10.35  (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
 10.36  1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
 11.1   1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
 11.2   and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
 11.3   Public Law Number 105-34, the provisions of section 6010 of the 
 11.4   Internal Revenue Service Restructuring and Reform Act of 1998, 
 11.5   Public Law Number 105-206, and the provisions of section 4003 of 
 11.6   the Omnibus Consolidated and Emergency Supplemental 
 11.7   Appropriations Act, 1999, Public Law Number 105-277, shall 
 11.8   become effective at the time they become effective for federal 
 11.9   purposes. 
 11.10     The Internal Revenue Code of 1986, as amended through 
 11.11  December 31, 1996, shall be in effect for taxable years 
 11.12  beginning after December 31, 1996. 
 11.13     The provisions of sections 202(a) and (b), 221(a), 225, 
 11.14  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 11.15  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 11.16  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 11.17  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 11.18  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
 11.19  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
 11.20  7002, and 7003 of the Internal Revenue Service Restructuring and 
 11.21  Reform Act of 1998, Public Law Number 105-206, and the 
 11.22  provisions of section 3001 of the Omnibus Consolidated and 
 11.23  Emergency Supplemental Appropriations Act, 1999, Public Law 
 11.24  Number 105-277, and the provisions of section 3001 of the 
 11.25  Miscellaneous Trade and Technical Corrections Act of 1999, 
 11.26  Public Law Number 106-36, shall become effective at the time 
 11.27  they become effective for federal purposes. 
 11.28     The Internal Revenue Code of 1986, as amended through 
 11.29  December 31, 1997, shall be in effect for taxable years 
 11.30  beginning after December 31, 1997. 
 11.31     The provisions of sections 5002, 6009, 6011, and 7001 of 
 11.32  the Internal Revenue Service Restructuring and Reform Act of 
 11.33  1998, Public Law Number 105-206, the provisions of section 9010 
 11.34  of the Transportation Equity Act for the 21st Century, Public 
 11.35  Law Number 105-178, the provisions of sections 1004, 4002, and 
 11.36  5301 of the Omnibus Consolidation and Emergency Supplemental 
 12.1   Appropriations Act, 1999, Public Law Number 105-277, and the 
 12.2   provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
 12.3   Act of 1998, Public Law Number 105-369, and the provisions of 
 12.4   sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
 12.5   Work Incentives Improvement Act of 1999, Public Law Number 
 12.6   160-170, shall become effective at the time they become 
 12.7   effective for federal purposes. 
 12.8      The Internal Revenue Code of 1986, as amended through 
 12.9   December 31, 1998, shall be in effect for taxable years 
 12.10  beginning after December 31, 1998. 
 12.11     The Internal Revenue Code of 1986, as amended through 
 12.12  December 31, 1999, shall be in effect for taxable years 
 12.13  beginning after December 31, 1999. 
 12.14     Except as otherwise provided, references to the Internal 
 12.15  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 12.16  for purposes of determining net income for the applicable year. 
 12.17     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
 12.18  290.01, subdivision 31, is amended to read: 
 12.19     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 12.20  defined otherwise, "Internal Revenue Code" means the Internal 
 12.21  Revenue Code of 1986, as amended through December 31, 1998 1999. 
 12.22     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
 12.23  290A.03, subdivision 15, is amended to read: 
 12.24     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 12.25  means the Internal Revenue Code of 1986, as amended through 
 12.26  December 31, 1998 1999. 
 12.27     Sec. 5.  Minnesota Statutes 1999 Supplement, section 
 12.28  291.005, subdivision 1, is amended to read: 
 12.29     Subdivision 1.  Unless the context otherwise clearly 
 12.30  requires, the following terms used in this chapter shall have 
 12.31  the following meanings: 
 12.32     (1) "Federal gross estate" means the gross estate of a 
 12.33  decedent as valued and otherwise determined for federal estate 
 12.34  tax purposes by federal taxing authorities pursuant to the 
 12.35  provisions of the Internal Revenue Code. 
 12.36     (2) "Minnesota gross estate" means the federal gross estate 
 13.1   of a decedent after (a) excluding therefrom any property 
 13.2   included therein which has its situs outside Minnesota and (b) 
 13.3   including therein any property omitted from the federal gross 
 13.4   estate which is includable therein, has its situs in Minnesota, 
 13.5   and was not disclosed to federal taxing authorities.  
 13.6      (3) "Personal representative" means the executor, 
 13.7   administrator or other person appointed by the court to 
 13.8   administer and dispose of the property of the decedent.  If 
 13.9   there is no executor, administrator or other person appointed, 
 13.10  qualified, and acting within this state, then any person in 
 13.11  actual or constructive possession of any property having a situs 
 13.12  in this state which is included in the federal gross estate of 
 13.13  the decedent shall be deemed to be a personal representative to 
 13.14  the extent of the property and the Minnesota estate tax due with 
 13.15  respect to the property. 
 13.16     (4) "Resident decedent" means an individual whose domicile 
 13.17  at the time of death was in Minnesota. 
 13.18     (5) "Nonresident decedent" means an individual whose 
 13.19  domicile at the time of death was not in Minnesota. 
 13.20     (6) "Situs of property" means, with respect to real 
 13.21  property, the state or country in which it is located; with 
 13.22  respect to tangible personal property, the state or country in 
 13.23  which it was normally kept or located at the time of the 
 13.24  decedent's death; and with respect to intangible personal 
 13.25  property, the state or country in which the decedent was 
 13.26  domiciled at death. 
 13.27     (7) "Commissioner" means the commissioner of revenue or any 
 13.28  person to whom the commissioner has delegated functions under 
 13.29  this chapter. 
 13.30     (8) "Internal Revenue Code" means the United States 
 13.31  Internal Revenue Code of 1986, as amended through December 31, 
 13.32  1998 1999. 
 13.33     Sec. 6.  [EFFECTIVE DATE.] 
 13.34     Sections 1, 2, 4, and 5 are effective the day following 
 13.35  final enactment, except that the striking of language in section 
 13.36  2 is effective for tax years beginning after December 31, 1999.  
 14.1      Section 3 is effective for tax years beginning after 
 14.2   December 31, 1999. 
 14.3                              ARTICLE 3
 14.4                            PROPERTY TAXES
 14.5      Section 1.  Minnesota Statutes 1998, section 272.115, 
 14.6   subdivision 1, is amended to read: 
 14.7      Subdivision 1.  [REQUIREMENT.] Except as otherwise provided 
 14.8   in subdivision 5, whenever any real estate is sold for a 
 14.9   consideration in excess of $1,000, whether by warranty deed, 
 14.10  quitclaim deed, contract for deed or any other method of sale, 
 14.11  the grantor, grantee or the legal agent of either shall file a 
 14.12  certificate of value with the county auditor in the county in 
 14.13  which the property is located when the deed or other document is 
 14.14  presented for recording.  This subdivision does not apply to a 
 14.15  deed or other document which has been dated and acknowledged on 
 14.16  or before December 31, 1997.  Contract for deeds are subject to 
 14.17  recording under section 507.235, subdivision 1.  Value shall, in 
 14.18  the case of any deed not a gift, be the amount of the full 
 14.19  actual consideration thereof, paid or to be paid, including the 
 14.20  amount of any lien or liens assumed.  The items and value of 
 14.21  personal property transferred with the real property must be 
 14.22  listed and deducted from the sale price.  The certificate of 
 14.23  value shall include the classification to which the property 
 14.24  belongs for the purpose of determining the fair market value of 
 14.25  the property.  The certificate shall include financing terms and 
 14.26  conditions of the sale which are necessary to determine the 
 14.27  actual, present value of the sale price for purposes of the 
 14.28  sales ratio study.  The commissioner of revenue shall promulgate 
 14.29  administrative rules specifying the financing terms and 
 14.30  conditions which must be included on the certificate.  Pursuant 
 14.31  to the authority of the commissioner of revenue in section 
 14.32  270.066, the certificate of value must include the social 
 14.33  security number or the federal employer identification number of 
 14.34  the grantors and grantees.  The identification numbers of the 
 14.35  grantors and grantees are private data on individuals or 
 14.36  nonpublic data as defined in section 13.02, subdivisions 9 and 
 15.1   12, but, notwithstanding that section, the private or nonpublic 
 15.2   data may be disclosed to the commissioner of revenue for 
 15.3   purposes of tax administration.  The information required to be 
 15.4   shown on the certificate of value is limited to the information 
 15.5   required as of the date of the acknowledgment on the deed or 
 15.6   other document to be recorded. 
 15.7                              ARTICLE 4 
 15.8                            SPECIAL TAXES 
 15.9      Section 1.  Minnesota Statutes 1998, section 297F.01, 
 15.10  subdivision 17, is amended to read: 
 15.11     Subd. 17.  [STAMP.] "Stamp" means the adhesive stamp 
 15.12  supplied by the commissioner of revenue for use on cigarette 
 15.13  packages or any other indicia adopted by the commissioner to 
 15.14  indicate that the tax has been paid. 
 15.15     Sec. 2.  Minnesota Statutes 1998, section 297F.08, 
 15.16  subdivision 2, is amended to read: 
 15.17     Subd. 2.  [TAX DUE; CIGARETTES.] Notwithstanding any other 
 15.18  provisions of this chapter, the tax due on the return is based 
 15.19  upon actual heat-applied stamps purchased during the reporting 
 15.20  period. 
 15.21     Sec. 3.  Minnesota Statutes 1998, section 297F.08, 
 15.22  subdivision 5, is amended to read: 
 15.23     Subd. 5.  [DEPOSIT OF PROCEEDS.] The commissioner shall use 
 15.24  the amounts appropriated by law to purchase heat-applied stamps 
 15.25  for resale.  The commissioner shall charge the purchasers for 
 15.26  the costs of the stamps along with the tax value plus shipping 
 15.27  costs.  The costs recovered along with shipping costs must be 
 15.28  deposited into the general fund. 
 15.29     Sec. 4.  Minnesota Statutes 1998, section 297F.08, 
 15.30  subdivision 8, is amended to read: 
 15.31     Subd. 8.  [SALE OF STAMPS.] The commissioner may sell 
 15.32  heat-applied stamps on a credit basis under conditions 
 15.33  prescribed by the commissioner.  The commissioner shall sell the 
 15.34  stamps at a price which includes the tax after giving effect to 
 15.35  the discount provided in subdivision 7.  The commissioner shall 
 15.36  recover the actual costs of the stamps from the distributor.  
 16.1   The commissioner shall annually establish the maximum amount of 
 16.2   heat-applied stamps that may be purchased each month. 
 16.3      Sec. 5.  Minnesota Statutes 1999 Supplement, section 
 16.4   297F.08, subdivision 8a, is amended to read: 
 16.5      Subd. 8a.  [REVOLVING ACCOUNT.] A heat-applied cigarette 
 16.6   tax stamp revolving account is created.  The commissioner shall 
 16.7   use the amounts in this fund to purchase heat-applied stamps for 
 16.8   resale.  The commissioner shall charge distributors for the tax 
 16.9   value of the stamps they receive along with the commissioner's 
 16.10  cost to purchase the stamps and ship them to the distributor.  
 16.11  The stamp purchase and shipping costs recovered must be credited 
 16.12  to the revolving account and are appropriated to the 
 16.13  commissioner for the further purchases and shipping costs.  The 
 16.14  revolving account is initially funded by a $40,000 transfer from 
 16.15  the department of revenue. 
 16.16     Sec. 6.  Minnesota Statutes 1998, section 297F.08, 
 16.17  subdivision 9, is amended to read: 
 16.18     Subd. 9.  [TAX STAMPING MACHINES.] The commissioner shall 
 16.19  require any person licensed as a distributor to stamp packages 
 16.20  with a heat-applied tax stamping machine, approved by the 
 16.21  commissioner, which shall be provided by the distributor.  The 
 16.22  commissioner shall also supervise and check the operation of the 
 16.23  machines and shall provide for the payment of the tax on any 
 16.24  package so stamped, subject to the discount provided in 
 16.25  subdivision 7.  If the commissioner finds that a stamping 
 16.26  machine is not affixing a legible stamp on the package, the 
 16.27  commissioner may order the distributor to immediately cease the 
 16.28  stamping process until the machine is functioning properly. 
 16.29     Sec. 7.  [EFFECTIVE DATE.] 
 16.30     Sections 1 to 6 are effective the day following final 
 16.31  enactment.  
 16.32                             ARTICLE 5
 16.33                           MISCELLANEOUS
 16.34     Section 1.  Minnesota Statutes 1999 Supplement, section 
 16.35  16D.09, subdivision 2, is amended to read: 
 16.36     Subd. 2.  [NOTIFICATION OF ACTION BY DEPARTMENT OF 
 17.1   REVENUE.] When the department of revenue has determined that a 
 17.2   debt is uncollectible and has written off that debt as provided 
 17.3   in subdivision 1, the commissioner of revenue must make a 
 17.4   reasonable attempt to notify the debtor of that action and of 
 17.5   the release of any liens imposed under section 270.69 related to 
 17.6   that debt, within 30 days after the determination has been 
 17.7   reported to the commissioner of finance.  A lien imposed under 
 17.8   section 270.69 need not be released unless after the write-off 
 17.9   of uncollectible debt there is no remaining collectible 
 17.10  liability recorded on the lien. 
 17.11     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
 17.12  270.65, is amended to read: 
 17.13     270.65 [DATE OF ASSESSMENT; DEFINITION.] 
 17.14     For purposes of taxes administered by the commissioner, the 
 17.15  term "date of assessment" means the date a liability reported on 
 17.16  a return was filed entered into the records of the commissioner 
 17.17  or the date a return should have been filed, whichever is later; 
 17.18  or, in the case of taxes determined by the commissioner, "date 
 17.19  of assessment" means the date of the order assessing taxes or 
 17.20  date of the return made by the commissioner; or, in the case of 
 17.21  an amended return filed by the taxpayer, the assessment date is 
 17.22  the date additional liability reported on the return, if any, 
 17.23  was filed with entered into the records of the commissioner; or, 
 17.24  in the case of a check from a taxpayer that is dishonored and 
 17.25  results in an erroneous refund being given to the taxpayer, 
 17.26  remittance of the check is deemed to be an assessment and the 
 17.27  "date of assessment" is the date the check was received by the 
 17.28  commissioner. 
 17.29     Sec. 3.  Minnesota Statutes 1998, section 289A.35, is 
 17.30  amended to read: 
 17.31     289A.35 [ASSESSMENTS; COMMISSIONER FILED RETURNS.] 
 17.32     The commissioner shall has the authority to make 
 17.33  determinations, corrections, and assessments with respect to 
 17.34  state taxes, including interest, additions to taxes, and 
 17.35  assessable penalties.  The commissioner may audit and adjust the 
 17.36  taxpayer's computation of federal taxable income, items of 
 18.1   federal tax preferences, or federal credit amounts to make them 
 18.2   conform with the provisions of chapter 290 or section 298.01.  
 18.3   If a taxpayer fails to file a required return, the commissioner, 
 18.4   from information in the commissioner's possession or obtainable 
 18.5   by the commissioner, may make a return for the taxpayer.  The 
 18.6   return will be prima facie correct and valid.  If a return has 
 18.7   been filed, the commissioner shall examine enter the liability 
 18.8   reported on the return and may make any audit or investigation 
 18.9   that is considered necessary.  The commissioner may use 
 18.10  statistical or other sampling techniques consistent with 
 18.11  generally accepted auditing standards in examining returns or 
 18.12  records and making assessments. 
 18.13     Sec. 4.  Minnesota Statutes 1998, section 295.50, 
 18.14  subdivision 9b, is amended to read: 
 18.15     Subd. 9b.  [PATIENT SERVICES.] (a) "Patient services" means 
 18.16  inpatient and outpatient services and other goods and services 
 18.17  provided by hospitals, surgical centers, or health care 
 18.18  providers.  They include the following health care goods and 
 18.19  services provided to a patient or consumer: 
 18.20     (1) bed and board; 
 18.21     (2) nursing services and other related services; 
 18.22     (3) use of hospitals, surgical centers, or health care 
 18.23  provider facilities; 
 18.24     (4) medical social services; 
 18.25     (5) drugs, biologicals, supplies, appliances, and 
 18.26  equipment; 
 18.27     (6) other diagnostic or therapeutic items or services; 
 18.28     (7) medical or surgical services; 
 18.29     (8) items and services furnished to ambulatory patients not 
 18.30  requiring emergency care; 
 18.31     (9) emergency services; and 
 18.32     (10) covered services listed in section 256B.0625 and in 
 18.33  Minnesota Rules, parts 9505.0170 to 9505.0475. 
 18.34     (b) "Patient services" does not include:  
 18.35     (1) services provided to nursing homes licensed under 
 18.36  chapter 144A; and 
 19.1      (2) examinations for purposes of utilization reviews, 
 19.2   insurance claims or eligibility, litigation, and employment, 
 19.3   including reviews of medical records for those purposes. 
 19.4      Sec. 5.  Minnesota Statutes 1999 Supplement, section 
 19.5   295.53, subdivision 1, is amended to read: 
 19.6      Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
 19.7   are excluded from the gross revenues subject to the hospital, 
 19.8   surgical center, or health care provider taxes under sections 
 19.9   295.50 to 295.57: 
 19.10     (1) payments received for services provided under the 
 19.11  Medicare program, including payments received from the 
 19.12  government, and organizations governed by sections 1833 and 1876 
 19.13  of title XVIII of the federal Social Security Act, United States 
 19.14  Code, title 42, section 1395, and enrollee deductibles, 
 19.15  coinsurance, and copayments, whether paid by the Medicare 
 19.16  enrollee or by a Medicare supplemental coverage as defined in 
 19.17  section 62A.011, subdivision 3, clause (10).  Payments for 
 19.18  services not covered by Medicare are taxable; 
 19.19     (2) medical assistance payments including payments received 
 19.20  directly from the government or from a prepaid plan; 
 19.21     (3) payments received for home health care services; 
 19.22     (4) payments received from hospitals or surgical centers 
 19.23  for goods and services on which liability for tax is imposed 
 19.24  under section 295.52 or the source of funds for the payment is 
 19.25  exempt under clause (1), (2), (7), (8), (10), or (13), or (20); 
 19.26     (5) payments received from health care providers for goods 
 19.27  and services on which liability for tax is imposed under this 
 19.28  chapter or the source of funds for the payment is exempt under 
 19.29  clause (1), (2), (7), (8), (10), or (13), or (20); 
 19.30     (6) amounts paid for legend drugs, other than nutritional 
 19.31  products, to a wholesale drug distributor who is subject to tax 
 19.32  under section 295.52, subdivision 3, reduced by reimbursements 
 19.33  received for legend drugs under clauses (1), (2), (7), and (8); 
 19.34     (7) payments received under the general assistance medical 
 19.35  care program including payments received directly from the 
 19.36  government or from a prepaid plan; 
 20.1      (8) payments received for providing services under the 
 20.2   MinnesotaCare program including payments received directly from 
 20.3   the government or from a prepaid plan and enrollee deductibles, 
 20.4   coinsurance, and copayments.  For purposes of this clause, 
 20.5   coinsurance means the portion of payment that the enrollee is 
 20.6   required to pay for the covered service; 
 20.7      (9) payments received by a health care provider or the 
 20.8   wholly owned subsidiary of a health care provider for care 
 20.9   provided outside Minnesota; 
 20.10     (10) payments received from the chemical dependency fund 
 20.11  under chapter 254B; 
 20.12     (11) payments received in the nature of charitable 
 20.13  donations that are not designated for providing patient services 
 20.14  to a specific individual or group; 
 20.15     (12) payments received for providing patient services 
 20.16  incurred through a formal program of health care research 
 20.17  conducted in conformity with federal regulations governing 
 20.18  research on human subjects.  Payments received from patients or 
 20.19  from other persons paying on behalf of the patients are subject 
 20.20  to tax; 
 20.21     (13) payments received from any governmental agency for 
 20.22  services benefiting the public, not including payments made by 
 20.23  the government in its capacity as an employer or insurer; 
 20.24     (14) payments received for services provided by community 
 20.25  residential mental health facilities licensed under Minnesota 
 20.26  Rules, parts 9520.0500 to 9520.0690, community support programs 
 20.27  and family community support programs approved under Minnesota 
 20.28  Rules, parts 9535.1700 to 9535.1760, and community mental health 
 20.29  centers as defined in section 245.62, subdivision 2; 
 20.30     (15) government payments received by a regional treatment 
 20.31  center; 
 20.32     (16) payments received for hospice care services; 
 20.33     (17) payments received by a health care provider for 
 20.34  hearing aids and related equipment or prescription eyewear 
 20.35  delivered outside of Minnesota; 
 20.36     (18) payments received by an educational institution from 
 21.1   student tuition, student activity fees, health care service 
 21.2   fees, government appropriations, donations, or grants.  Fee for 
 21.3   service payments and payments for extended coverage are taxable; 
 21.4      (19) payments received for services provided by:  assisted 
 21.5   living programs and congregate housing programs; and 
 21.6      (20) payments received from nursing homes licensed under 
 21.7   chapter 144A for services provided to a nursing home; and 
 21.8      (21) payments received for examinations for purposes of 
 21.9   utilization reviews, insurance claims or eligibility, 
 21.10  litigation, and employment, including reviews of medical records 
 21.11  for those purposes. 
 21.12     (20) payments received under the federal Employees Health 
 21.13  Benefits Act, United States Code, title 5, section 8909(f), as 
 21.14  amended by the Omnibus Reconciliation Act of 1990. 
 21.15     (b) Payments received by wholesale drug distributors for 
 21.16  legend drugs sold directly to veterinarians or veterinary bulk 
 21.17  purchasing organizations are excluded from the gross revenues 
 21.18  subject to the wholesale drug distributor tax under sections 
 21.19  295.50 to 295.59. 
 21.20     Sec. 6.  Minnesota Statutes 1998, section 297F.21, 
 21.21  subdivision 1, is amended to read: 
 21.22     Subdivision 1.  [CONTRABAND DEFINED.] The following are 
 21.23  declared to be contraband and therefore subject to civil and 
 21.24  criminal penalties under this chapter: 
 21.25     (a) Cigarette packages which do not have stamps affixed to 
 21.26  them as provided in this chapter, including but not limited to 
 21.27  (i) packages with illegible stamps and packages with stamps that 
 21.28  are not complete or whole even if the stamps are legible, and 
 21.29  (ii) all devices for the vending of cigarettes in which packages 
 21.30  as defined in item (i) are found, including all contents 
 21.31  contained within the devices. 
 21.32     (b) A device for the vending of cigarettes and all packages 
 21.33  of cigarettes, where the device does not afford at least partial 
 21.34  visibility of contents.  Where any package exposed to view does 
 21.35  not carry the stamp required by this chapter, it shall be 
 21.36  presumed that all packages contained in the device are unstamped 
 22.1   and contraband. 
 22.2      (c) A device for the vending of cigarettes to which the 
 22.3   commissioner or authorized agents have been denied access for 
 22.4   the inspection of contents.  In lieu of seizure, the 
 22.5   commissioner or an agent may seal the device to prevent its use 
 22.6   until inspection of contents is permitted. 
 22.7      (d) A device for the vending of cigarettes which does not 
 22.8   carry the name and address of the owner, plainly marked and 
 22.9   visible from the front of the machine. 
 22.10     (e) A device including, but not limited to, motor vehicles, 
 22.11  trailers, snowmobiles, airplanes, and boats used with the 
 22.12  knowledge of the owner or of a person operating with the consent 
 22.13  of the owner for the storage or transportation of more than 
 22.14  5,000 cigarettes which are contraband under this subdivision.  
 22.15  When cigarettes are being transported in the course of 
 22.16  interstate commerce, or are in movement from either a public 
 22.17  warehouse to a distributor upon orders from a manufacturer or 
 22.18  distributor, or from one distributor to another, the cigarettes 
 22.19  are not contraband, notwithstanding the provisions of clause (a).
 22.20     (f) Cigarette packages or tobacco products obtained from an 
 22.21  unlicensed seller. 
 22.22     (g) Cigarette packages offered for sale or held as 
 22.23  inventory in violation of section 297F.20, subdivision 7. 
 22.24     (h) Tobacco products on which the tax has not been paid by 
 22.25  a licensed distributor. 
 22.26     (i) Any cigarette packages or tobacco products offered for 
 22.27  sale or held as inventory for which there is not an invoice from 
 22.28  a licensed seller as required under section 297F.13, subdivision 
 22.29  4.  
 22.30     (j) Cigarette packages which have been imported into the 
 22.31  United States in violation of United States Code, title 26, 
 22.32  section 5754.  All cigarettes held in violation of that section 
 22.33  shall be presumed to have entered the United States after 
 22.34  December 31, 1999, in the absence of proof to the contrary. 
 22.35     Sec. 7.  Minnesota Statutes 1998, section 297F.21, 
 22.36  subdivision 3, is amended to read: 
 23.1      Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
 23.2   DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
 23.3   seizure of any alleged contraband, the person making the seizure 
 23.4   shall make available an inventory of the property seized to the 
 23.5   person from whom the seizure was made, if known, and file a copy 
 23.6   with the commissioner.  Within ten days after the date of 
 23.7   service of the inventory, the person from whom the property was 
 23.8   seized or any person claiming an interest in the property may 
 23.9   file with the commissioner a demand for a judicial determination 
 23.10  of the question as to whether the property was lawfully subject 
 23.11  to seizure and forfeiture.  The commissioner, within 60 days, 
 23.12  shall institute an action in the district court of the county 
 23.13  where the seizure was made to determine the issue of 
 23.14  forfeiture.  The court shall decide whether the alleged 
 23.15  contraband is contraband, as defined in subdivision 1. 
 23.16     (b) The action must be brought in the name of the state and 
 23.17  must be prosecuted by the county attorney or by the attorney 
 23.18  general.  The court shall hear the action without a jury and 
 23.19  shall try and determine the issues of fact and law involved. 
 23.20     (c) When a judgment of forfeiture is entered, the 
 23.21  commissioner may, unless the judgment is stayed pending an 
 23.22  appeal, either: 
 23.23     (1) deliver the forfeited property to the commissioner of 
 23.24  human services for use by patients in state institutions; 
 23.25     (2) cause it to be destroyed; or 
 23.26     (3) cause it to be sold at public auction as provided by 
 23.27  law. 
 23.28     (d) If a demand for judicial determination is made and no 
 23.29  action commenced as provided in this subdivision, the property 
 23.30  must be released by the commissioner and returned to the person 
 23.31  entitled to it.  If no demand is made, the property seized is 
 23.32  considered forfeited to the state by operation of law and may be 
 23.33  disposed of by the commissioner as provided in the case of a 
 23.34  judgment of forfeiture.  When the commissioner is satisfied that 
 23.35  a person from whom property is seized was acting in good faith 
 23.36  and without intent to evade the tax imposed by this chapter, the 
 24.1   commissioner shall release the property seized without further 
 24.2   legal proceedings. 
 24.3      Sec. 8.  [REPEALER.] 
 24.4      Minnesota Rules, part 8160.0300, subpart 4, is repealed. 
 24.5      Sec. 9.  [EFFECTIVE DATES.] 
 24.6      Section 1 is effective for debts written off on or after 
 24.7   the day following final enactment.  Sections 2 and 8 are 
 24.8   effective for assessments made on or after the day following 
 24.9   final enactment.  Section 3 is effective the day following final 
 24.10  enactment.  Sections 4 and 5 are effective for payments received 
 24.11  on or after January 1, 2000.  Section 6, paragraph (i), is 
 24.12  effective July 1, 2000, and section 6, paragraph (j), is 
 24.13  effective the day following final enactment.  Section 7 is 
 24.14  effective for alleged contraband seized on or after the day 
 24.15  following final enactment.