Office of the Revisor of Statutes
SF 14
Introduction - 82nd Legislature, 2001 1st Special Session
Posted on 12/15/2009 12:00 a.m.
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to taxation; providing for property tax 1.3 reform; providing for income and corporate franchise 1.4 tax relief and reform; providing for sales, use, and 1.5 motor vehicle sales tax reform; reducing the motor 1.6 vehicle registration tax; changing and reforming 1.7 health care provider taxes, insurance premiums taxes, 1.8 mortgage registry and deed taxes, and gambling, 1.9 petroleum, mining, and liquor taxes; changing property 1.10 tax refunds; reforming property tax aids and local 1.11 government aids provisions; conforming to changes in 1.12 federal income tax provisions; changing certain tax 1.13 increment financing provisions; providing for 1.14 appointment, training, and education of assessors; 1.15 making policy, clarifying, administrative, 1.16 collections, refunds, and licensing changes to various 1.17 taxes and fees; changing administration of the 1.18 political contribution refund; giving certain powers 1.19 and duties to the commissioner of revenue; authorizing 1.20 the commissioner to publish names of certain 1.21 delinquent taxpayers; imposing a use tax on certain 1.22 solid waste generators and self-haulers; providing for 1.23 taxation of forest lands; requiring notice to 1.24 commissioner of city or town tobacco licenses; 1.25 changing health care funding and creating a health 1.26 care access fund reserve; providing for funding of the 1.27 highway user tax distribution fund; appropriating 1.28 money; amending Minnesota Statutes 2000, sections 1.29 84.922, by adding a subdivision; 126C.01, by adding 1.30 subdivisions; 126C.13, subdivisions 1, 2, 4; 126C.17, 1.31 subdivisions 5, 6, 7, 8, 9, 10; 127A.48, subdivision 1.32 1; 168.013, subdivision 1a; 239.101, subdivision 3; 1.33 270.60, by adding a subdivision; 270.70, subdivision 1.34 13; 270.73, subdivision 1; 270A.03, subdivision 7; 1.35 272.02, subdivisions 7, 10; 273.061, subdivisions 1, 1.36 2, 8; 273.11, subdivision 1a; 273.121; 273.124, 1.37 subdivision 13; 273.13, subdivisions 22, 23, 24, 25, 1.38 31, by adding subdivisions; 273.1392; 273.1393; 1.39 273.1398, subdivisions 1, 8, by adding a subdivision; 1.40 273.166, subdivisions 2, 3, 5; 273.42, by adding a 1.41 subdivision; 274.01, subdivision 1; 274.13, 1.42 subdivision 1; 275.011, by adding a subdivision; 1.43 275.02; 275.065, subdivisions 3, 5a, 6; 275.08, 1.44 subdivisions 1, 1a, 1b; 275.28, subdivision 1; 275.61; 1.45 276.04, subdivision 2; 276A.06, subdivision 3; 282.01, 1.46 subdivisions 1a, 1b; 282.08; 287.035; 287.08; 287.21, 2.1 subdivision 1; 287.28; 289A.02, subdivision 7; 2.2 289A.11, subdivision 1; 289A.18, subdivision 4, as 2.3 amended; 289A.20, subdivision 4; 289A.56, subdivision 2.4 4; 289A.60, subdivision 21, as amended; 290.01, 2.5 subdivisions 19, 19b, 19c, 19d, 29, 31, by adding a 2.6 subdivision; 290.02; 290.05, subdivisions 1, 3; 2.7 290.06, subdivisions 1, 2c, 23; 290.0671, subdivision 2.8 1; 290.0674, subdivisions 1, 2; 290.0675, subdivisions 2.9 1, 3; 290.068, subdivision 2, by adding a subdivision; 2.10 290.091, subdivisions 1, 6; 290.0921, subdivision 8, 2.11 by adding a subdivision; 290.0922, subdivision 2; 2.12 290.095, subdivision 2; 290.17, subdivision 4; 2.13 290.191, subdivisions 2, 3, 5; 290.32; 290.92, 2.14 subdivisions 3, 23, 28, 29; 290.9727, subdivision 3; 2.15 290.9728, subdivision 2; 290.9729, subdivision 2; 2.16 290A.03, subdivisions 12, 13, 15; 290A.04, 2.17 subdivisions 2, 2a, 2h, 4; 290A.15; 291.005, 2.18 subdivision 1; 295.50, subdivisions 3, 4; 295.52, 2.19 subdivisions 1, 1a, 2; 295.53, subdivisions 1, 3; 2.20 295.58; 295.582; 296A.15, subdivision 1; 296A.16, 2.21 subdivision 1; 297A.01, subdivision 5; 297A.07, 2.22 subdivision 3; 297A.61, subdivisions 3, 4, 6, 7, 10, 2.23 12, 16, by adding subdivisions; 297A.62, subdivision 2.24 1; 297A.64, subdivisions 3, 4; 297A.67, subdivisions 2.25 5, 7; 297A.68, subdivisions 2, 3, 5, 17, 19, by adding 2.26 subdivisions; 297A.69, subdivision 2; 297A.70, 2.27 subdivisions 1, 2, 4, 10, 13, 14; 297A.71, by adding a 2.28 subdivision; 297A.72, subdivision 1; 297A.75, 2.29 subdivisions 1, 2, 3, 4; 297A.80; 297A.82, 2.30 subdivisions 1, 3, 4, by adding a subdivision; 2.31 297A.86, subdivision 1; 297A.87, subdivision 3; 2.32 297A.94, as amended; 297B.01, subdivision 8; 297B.03; 2.33 297B.09, subdivision 1; 297E.02, subdivisions 1, 6; 2.34 297F.10, subdivision 1; 297I.15, by adding a 2.35 subdivision; 297I.40, subdivisions 1, 2, 7; 298.01, 2.36 subdivisions 3, 3a, 3b, 3d, 4, 4a, 4c, 4e; 298.24, 2.37 subdivision 1; 298.28, subdivisions 1, 4, 5, 6, 10, 2.38 11; 461.12, by adding a subdivision; 469.1763, 2.39 subdivision 6; 469.177, subdivisions 1a, 11; 473.446, 2.40 subdivision 1; 473F.08, subdivision 3; 473H.10, 2.41 subdivision 3; 477A.011, subdivisions 3, 34, by adding 2.42 subdivisions; 477A.013, subdivisions 1, 8, 9; 2.43 477A.015; 477A.03, subdivision 2; 477A.065, 2.44 subdivision 1; Laws 2000, chapter 490, article 7, 2.45 section 3; proposing coding for new law in Minnesota 2.46 Statutes, chapters 16A; 126C; 270; 273; 275; 297A; 2.47 297F; 297H; 469; proposing coding for new law as 2.48 Minnesota Statutes, chapter 290C; repealing Minnesota 2.49 Statutes 2000, sections 16A.76; 126C.13, subdivision 2.50 1; 126C.18, subdivision 1; 270.31; 270.32; 270.33; 2.51 270.34; 270.35; 270.36; 270.37; 270.38; 270.39; 2.52 273.13, subdivisions 21b, 24a; 273.138; 273.1382; 2.53 273.1399; 275.065, subdivision 3a; 275.078; 275.08, 2.54 subdivision 1e; 282.01, subdivisions 1c, 1d, 1e; 2.55 289A.60, subdivision 15; 290.01, subdivision 6b; 2.56 290.06, subdivision 25; 290.0673; 290.091, 2.57 subdivisions 1, 2, 3, 4, 5, 6; 290.0921, subdivisions 2.58 1, 2, 3, 4, 5, 6, 7; 290.21; 290.35, subdivisions 3, 2.59 4, 5; 295.50, subdivisions 10a, 14, 15; 295.51, 2.60 subdivision 1a; 295.52, subdivisions 3, 4, 4a, 7; 2.61 295.54, subdivisions 2, 3; 297A.64, subdivisions 2, 5; 2.62 297A.67, subdivisions 4, 6, 9, 10, 11, 12, 16, 17, 18, 2.63 19, 25; 297A.68, subdivisions 4, 6, 7, 8, 9, 10, 11, 2.64 12, 16, 18, 21, 22, 23, 24, 25, 26, 28, 29, 30, 31, 2.65 33, 34; 297A.69, subdivisions 3, 5, 6, 7; 297A.70, 2.66 subdivisions 3, 8, 11; 297A.82, subdivision 5; 2.67 297A.90; 297A.96; 297G.03, subdivision 4; 297G.07, 2.68 subdivision 3; 297I.05, subdivisions 5, 8; 297I.30, 2.69 subdivision 3; 298.01, subdivisions 3c, 4d; 469.132, 2.70 subdivision 2; 469.1734, subdivisions 4, 6; 477A.011, 2.71 subdivisions 30, 31, 32, 33, 36, 37; 477A.03, 3.1 subdivision 4. 3.2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.3 ARTICLE 1 3.4 INDIVIDUAL INCOME TAX REFORM AND RELIEF 3.5 Section 1. Minnesota Statutes 2000, section 290.01, 3.6 subdivision 19b, is amended to read: 3.7 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 3.8 individuals, estates, and trusts, there shall be subtracted from 3.9 federal taxable income: 3.10 (1) interest income on obligations of any authority, 3.11 commission, or instrumentality of the United States to the 3.12 extent includable in taxable income for federal income tax 3.13 purposes but exempt from state income tax under the laws of the 3.14 United States; 3.15 (2) if included in federal taxable income, the amount of 3.16 any overpayment of income tax to Minnesota or to any other 3.17 state, for any previous taxable year, whether the amount is 3.18 received as a refund or as a credit to another taxable year's 3.19 income tax liability; 3.20 (3) the amount paid to others, less the credit allowed 3.21 under section 290.0674, not to exceed $1,625 for each qualifying 3.22 child in grades kindergarten to 6 and $2,500 for each qualifying 3.23 child in grades 7 to 12, for tuition,and textbooks, and3.24transportationof each qualifying child in attending an 3.25 elementary or secondary school situated in Minnesota, North 3.26 Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 3.27 this state may legally fulfill the state's compulsory attendance 3.28 laws, which is not operated for profit, and which adheres to the 3.29 provisions of the Civil Rights Act of 1964 and chapter 363. For 3.30 the purposes of this clause, "tuition" includes fees or tuition 3.31 as defined in section 290.0674, subdivision 1, clause (1). As 3.32 used in this clause, "textbooks"includes books and other3.33instructional materials and equipmentis limited to 3.34 instructional books used in elementary and secondary schools in 3.35 teaching only those subjects legally and commonly taught in 3.36 public elementary and secondary schools in this state. 4.1 Equipment expenses qualifying for deduction includes expenses as 4.2 defined and limited in section 290.0674, subdivision 1, clause 4.3 (3). "Textbooks" does not include instructional booksand4.4materialsused in the teaching of religious tenets, doctrines, 4.5 or worship, the purpose of which is to instill such tenets, 4.6 doctrines, or worship, nor does it include booksor materials4.7 for, or transportation to,extracurricular activities including 4.8 sporting events, musical or dramatic events, speech activities, 4.9 driver's education, or similar programs. For purposes of the 4.10 subtraction provided by this clause, "qualifying child" has the 4.11 meaning given in section 32(c)(3) of the Internal Revenue Code; 4.12 (4)contributions made in taxable years beginning after4.13December 31, 1981, and before January 1, 1985, to a qualified4.14governmental pension plan, an individual retirement account,4.15simplified employee pension, or qualified plan covering a4.16self-employed person that were included in Minnesota gross4.17income in the taxable year for which the contributions were made4.18but were deducted or were not included in the computation of4.19federal adjusted gross income, less any amount allowed to be4.20subtracted as a distribution under this subdivision or a4.21predecessor provision in taxable years that began before January4.221, 2000. This subtraction applies only for taxable years4.23beginning after December 31, 1999, and before January 1, 2001.4.24If an individual's subtraction under this clause exceeds the4.25individual's taxable income, the excess may be carried forward4.26to taxable years beginning after December 31, 2000, and before4.27January 1, 2002;4.28(5)income as provided under section 290.0802; 4.29(6) the amount of unrecovered accelerated cost recovery4.30system deductions allowed under subdivision 19g;4.31(7)(5) to the extent included in federal adjusted gross 4.32 income, income realized on disposition of property exempt from 4.33 tax under section 290.491; 4.34(8)(6) to the extent not deducted in determining federal 4.35 taxable income or used to claim the long-term care insurance 4.36 credit under section 290.0672, the amount paid for health 5.1 insurance of self-employed individuals as determined under 5.2 section 162(l) of the Internal Revenue Code, except that the 5.3 percent limit does not apply. If the individual deducted 5.4 insurance payments under section 213 of the Internal Revenue 5.5 Code of 1986, the subtraction under this clause must be reduced 5.6 by the lesser of: 5.7 (i) the total itemized deductions allowed under section 5.8 63(d) of the Internal Revenue Code, less state, local, and 5.9 foreign income taxes deductible under section 164 of the 5.10 Internal Revenue Code and the standard deduction under section 5.11 63(c) of the Internal Revenue Code; or 5.12 (ii) the lesser of (A) the amount of insurance qualifying 5.13 as "medical care" under section 213(d) of the Internal Revenue 5.14 Code to the extent not deducted under section 162(1) of the 5.15 Internal Revenue Code or excluded from income or (B) the total 5.16 amount deductible for medical care under section 213(a); 5.17(9)(7) the exemption amount allowed under Laws 1995, 5.18 chapter 255, article 3, section 2, subdivision 3; 5.19(10)(8) to the extent included in federal taxable income, 5.20 postservice benefits for youth community service under section 5.21 124D.42 for volunteer service under United States Code, title 5.22 42, sections 12601 to 12604; 5.23(11)(9) to the extent not deducted in determining federal 5.24 taxable income by an individual who does not itemize deductions 5.25 for federal income tax purposes for the taxable year, an amount 5.26 equal to 50 percent of the excess of charitable contributions 5.27 allowable as a deduction for the taxable year under section 5.28 170(a) of the Internal Revenue Code over $500; 5.29(12)(10) to the extent included in federal taxable income, 5.30 holocaust victims' settlement payments for any injury incurred 5.31 as a result of the holocaust, if received by an individual who 5.32 was persecuted for racial or religious reasons by Nazi Germany 5.33 or any other Axis regime or an heir of such a person; and 5.34(13)(11) for taxable years beginning before January 1, 5.35 2008, the amount of the federal small ethanol producer credit 5.36 allowed under section 40(a)(3) of the Internal Revenue Code 6.1 which is included in gross income under section 87 of the 6.2 Internal Revenue Code. 6.3 [EFFECTIVE DATE.] This section is effective for tax years 6.4 beginning after December 31, 2001. 6.5 Sec. 2. Minnesota Statutes 2000, section 290.06, 6.6 subdivision 2c, is amended to read: 6.7 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 6.8 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 6.9 married individuals filing joint returns and surviving spouses 6.10 as defined in section 2(a) of the Internal Revenue Code must be 6.11 computed by applying to their taxable net income the following 6.12 schedule of rates: 6.13 (1) On the first $25,680,5.355.05 percent; 6.14 (2) On all over $25,680, but not over $102,030,7.056.75 6.15 percent; 6.16 (3) On all over $102,030,7.857.55 percent. 6.17 Married individuals filing separate returns, estates, and 6.18 trusts must compute their income tax by applying the above rates 6.19 to their taxable income, except that the income brackets will be 6.20 one-half of the above amounts. 6.21 (b) The income taxes imposed by this chapter upon unmarried 6.22 individuals must be computed by applying to taxable net income 6.23 the following schedule of rates: 6.24 (1) On the first $17,570,5.355.05 percent; 6.25 (2) On all over $17,570, but not over $57,710,7.056.75 6.26 percent; 6.27 (3) On all over $57,710,7.857.55 percent. 6.28 (c) The income taxes imposed by this chapter upon unmarried 6.29 individuals qualifying as a head of household as defined in 6.30 section 2(b) of the Internal Revenue Code must be computed by 6.31 applying to taxable net income the following schedule of rates: 6.32 (1) On the first $21,630,5.355.05 percent; 6.33 (2) On all over $21,630, but not over $86,910,7.056.75 6.34 percent; 6.35 (3) On all over $86,910,7.857.55 percent. 6.36 For tax years beginning after December 31, 2002, and before 7.1 January 1, 2004, all of the percentage rates in this section are 7.2 reduced by two-tenths of a percent. For tax years beginning 7.3 after December 31, 2003, all of the percentage rates in this 7.4 section are reduced by three-tenths of a percent. 7.5 (d) In lieu of a tax computed according to the rates set 7.6 forth in this subdivision, the tax of any individual taxpayer 7.7 whose taxable net income for the taxable year is less than an 7.8 amount determined by the commissioner must be computed in 7.9 accordance with tables prepared and issued by the commissioner 7.10 of revenue based on income brackets of not more than $100. The 7.11 amount of tax for each bracket shall be computed at the rates 7.12 set forth in this subdivision, provided that the commissioner 7.13 may disregard a fractional part of a dollar unless it amounts to 7.14 50 cents or more, in which case it may be increased to $1. 7.15 (e) An individual who is not a Minnesota resident for the 7.16 entire year must compute the individual's Minnesota income tax 7.17 as provided in this subdivision. After the application of the 7.18 nonrefundable credits provided in this chapter, the tax 7.19 liability must then be multiplied by a fraction in which: 7.20 (1) the numerator is the individual's Minnesota source 7.21 federal adjusted gross income as defined in section 62 of the 7.22 Internal Revenue Code and increased by the additions required 7.23 under section 290.01, subdivision 19a, clauses (1) and (6), and 7.24 reduced by the Minnesota assignable portion of the subtraction 7.25 for United States government interest under section 290.01, 7.26 subdivision 19b, clause (1), after applying the allocation and 7.27 assignability provisions of section 290.081, clause (a), or 7.28 290.17; and 7.29 (2) the denominator is the individual's federal adjusted 7.30 gross income as defined in section 62 of the Internal Revenue 7.31 Code of 1986, increased by the amounts specified in section 7.32 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 7.33 amounts specified in section 290.01, subdivision 19b, clause (1). 7.34 [EFFECTIVE DATE.] This section is effective for tax years 7.35 beginning after December 31, 2000. 7.36 Sec. 3. Minnesota Statutes 2000, section 290.0671, 8.1 subdivision 1, is amended to read: 8.2 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 8.3 allowed a credit against the tax imposed by this chapter equal 8.4 to a percentage of earned income. To receive a credit, a 8.5 taxpayer must be eligible for a credit under section 32 of the 8.6 Internal Revenue Code. 8.7 (b) For individuals with no qualifying children, the credit 8.8 equals1.91252.85 percent of the first $4,460 of earned income. 8.9 The credit is reduced by1.91252.85 percent of earned income or 8.10 modified adjusted gross income, whichever is greater, in excess 8.11 of $5,570, but in no case is the credit less than zero. 8.12 (c) For individuals with one qualifying child, the credit 8.13 equals8.512.75 percent of the first $6,680 of earned income 8.14 and 8.5 percent of earned income over $11,650 but less than 8.15 $12,990. The credit is reduced by5.738.11 percent of earned 8.16 income or modified adjusted gross income, whichever is greater, 8.17 in excess of $14,560, but in no case is the credit less than 8.18 zero. 8.19 (d) For individuals with two or more qualifying children, 8.20 the credit equalsten15 percent of the first $9,390 of earned 8.21 income and 20 percent of earned income over $14,350 but less 8.22 than $16,230. The credit is reduced by10.313.92 percent of 8.23 earned income or modified adjusted gross income, whichever is 8.24 greater, in excess of $17,280, but in no case is the credit less 8.25 than zero. 8.26 (e) For tax years beginning after December 31, 2000, and 8.27 before January 1, 2003, individuals who qualify for a credit of 8.28 at least $1 under paragraph (c), the credit is increased by 8.29 $100. For tax years beginning after December 31, 2002, for 8.30 individuals who qualify for a credit of at least $1 under 8.31 paragraph (c), the credit is increased by $200. 8.32 (f) For tax years beginning after December 31, 2000, and 8.33 before January 1, 2003, individuals who qualify for a credit of 8.34 at least $1 under paragraph (d), the credit is increased by 8.35 $200. For tax years beginning after December 31, 2002, 8.36 individuals who qualify for a credit of at least $1 under 9.1 paragraph (d), the credit is increased by $400. 9.2 (g) For a nonresident or part-year resident, the credit 9.3 must be allocated based on the percentage calculated under 9.4 section 290.06, subdivision 2c, paragraph (e). 9.5(f)(h) For a person who was a resident for the entire tax 9.6 year and has earned income not subject to tax under this 9.7 chapter, the credit must be allocated based on the ratio of 9.8 federal adjusted gross income reduced by the earned income not 9.9 subject to tax under this chapter over federal adjusted gross 9.10 income. 9.11(g)(i) The commissioner shall construct tables showing the 9.12 amount of the credit at various income levels and make them 9.13 available to taxpayers. The tables shall follow the schedule 9.14 contained in this subdivision, except that the commissioner may 9.15 graduate the transition between income brackets. 9.16 [EFFECTIVE DATE.] This section is effective for tax years 9.17 beginning after December 31, 2000, except the changes in 9.18 paragraphs (b), (c), and (d) are effective for tax years 9.19 beginning after December 31, 2002. 9.20 Sec. 4. Minnesota Statutes 2000, section 290.0674, 9.21 subdivision 1, is amended to read: 9.22 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed 9.23 a credit against the tax imposed by this chapter in an amount 9.24 equal to 75 percent of the amount paid for education-related 9.25 expenses for a qualifying child in kindergarten through grade 9.26 12. For purposes of this section, "education-related expenses" 9.27 means: 9.28 (1) fees or tuition for instruction by an instructorunder9.29 who meets one of the requirements of section 120A.22, 9.30 subdivision 10, clause (1), (2), (3), (4), or (5), orbywho is 9.31 a member of the Minnesota music teachers association, and is not 9.32 a lineal ancestor or sibling of the dependent for instruction 9.33 outside the regular school day or school year, including 9.34 tutoring, driver's education offered as part of school 9.35 curriculum, regardless of whether it is taken from a public or 9.36 private entity or summer camps, in grade or age appropriate 10.1 curricula that supplement curricula and instruction available 10.2 during the regular school year, that assists a dependent to 10.3 improve knowledge of core curriculum areasor to expand10.4knowledge and skills under the graduation rule under section10.5120B.02listed in section 120A.22, subdivision 9, clauses (1), 10.6 (2), and (3), and that do not include the teaching of religious 10.7 tenets, doctrines, or worship, the purpose of which is to 10.8 instill such tenets, doctrines, or worship; 10.9 (2) expenses for textbooks, including books and other10.10instructional materials and equipmentused in elementary and 10.11 secondary schools in teaching only those subjects legally and 10.12 commonly taught in public elementary and secondary schools in 10.13 this state. "Textbooks" does not include instructional books 10.14and materialsused in the teaching of religious tenets, 10.15 doctrines, or worship, the purpose of which is to instill such 10.16 tenets, doctrines, or worship, nor does it include books or 10.17 materials for extracurricular activities including sporting 10.18 events, musical or dramatic events, speech activities, driver's 10.19 education, or similar programs; and 10.20 (3) a maximum expense of $200 per family for personal 10.21 computer hardware, excluding single purpose processors,and10.22educational software that assists a dependent to improve10.23knowledge of core curriculum areas or to expand knowledge and10.24skills under the graduation rule under section 120B.02purchased 10.25 for use in the taxpayer's home and not used in a trade or 10.26 business regardless of whether the computer is required by the 10.27 dependent's school; and10.28(4) the amount paid to others for transportation of a10.29qualifying child attending an elementary or secondary school10.30situated in Minnesota, North Dakota, South Dakota, Iowa, or10.31Wisconsin, wherein a resident of this state may legally fulfill10.32the state's compulsory attendance laws, which is not operated10.33for profit, and which adheres to the provisions of the Civil10.34Rights Act of 1964 and chapter 363. 10.35 For purposes of this section, "qualifying child" has the 10.36 meaning given in section 32(c)(3) of the Internal Revenue Code. 11.1 [EFFECTIVE DATE.] This section is effective tax years 11.2 beginning after December 31, 2001. 11.3 Sec. 5. Minnesota Statutes 2000, section 290.0674, 11.4 subdivision 2, is amended to read: 11.5 Subd. 2. [LIMITATIONS.] (a) For claimants with income not 11.6 greater than $33,500, the maximum credit allowed is $1,000 per 11.7 qualifying child and $2,000 per family. No credit is allowed 11.8 for education-related expenses for claimants with income greater 11.9 than $37,500. The maximum credit per child is reduced by $1 for 11.10 each $4 of household income over $33,500, and the maximum credit 11.11 per family is reduced by $2 for each $4 of household income over 11.12 $33,500, but in no case is the credit less than zero. 11.13 For purposes of this section "income" has the meaning given 11.14 in section290.067, subdivision 2a290A.03, subdivision 3, 11.15 paragraphs (1) and (2). In the case of a married claimant, a 11.16 credit is not allowed unless a joint income tax return is filed. 11.17 (b) For a nonresident or part-year resident, the credit 11.18 determined under subdivision 1 and the maximum credit amount in 11.19 paragraph (a) must be allocated using the percentage calculated 11.20 in section 290.06, subdivision 2c, paragraph (e). 11.21 [EFFECTIVE DATE.] This section is effective for tax years 11.22 beginning after December 31, 2001. 11.23 Sec. 6. Minnesota Statutes 2000, section 290.0675, 11.24 subdivision 1, is amended to read: 11.25 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 11.26 section the following terms have the meanings given. 11.27 (b) "Earned income" means the sum of the following: 11.28 (1) to the extent included in Minnesota taxable income, 11.29 earned income as defined in section 32(c)(2) of the Internal 11.30 Revenue Code; 11.31 (2) to the extent included in Minnesota taxable income, 11.32 income received from a retirement pension, profit-sharing, stock 11.33 bonus, or annuity plan; and 11.34 (3) to the extent included in Minnesota taxable income, 11.35 social security benefits as defined in section 86(d)(1) of the 11.36 Internal Revenue Code. 12.1 (c) "Taxable income" means net income as defined in section 12.2 290.01, subdivision 19. 12.3 (d) "Earned income of lesser-earning spouse" means the 12.4 earned income of the spouse with the lesser amount of earned 12.5 income as defined in paragraph (b) for the taxable year. 12.6 [EFFECTIVE DATE.] This section is effective for tax years 12.7 beginning after December 31, 2000. 12.8 Sec. 7. Minnesota Statutes 2000, section 290.0675, 12.9 subdivision 3, is amended to read: 12.10 Subd. 3. [CREDIT AMOUNT.] The credit amount isas shown in12.11the table in this subdivision, based on the couple's taxable12.12income for the tax year and on the earned income of the12.13lesser-earning spousethe difference between the tax on the 12.14 couple's joint Minnesota taxable income under the rates in 12.15 section 290.06, subdivision 2c, paragraph (a), and the sum of 12.16 the tax under the rates of section 290.06, subdivision 2c, 12.17 paragraph (b), on the earned income of the lesser-earning 12.18 spouse, and the tax under the rates of section 290.06, 12.19 subdivision 2c, paragraph (b), on the couple's joint Minnesota 12.20 taxable income, minus the earned income of the lesser-earning 12.21 spouse. 12.22Credit ForCredit For12.23Earned Income ofTaxable IncomeTaxable Income12.24Lesser Earning Spouse$25,680-$102,029$102,030-over12.25$14,250 - $15,249$7$012.26$15,250 - $16,249$24$012.27$16,250 - $17,249$41$012.28$17,250 - $18,249$58$012.29$18,250 - $19,249$75$012.30$19,250 - $20,249$92$012.31$20,250 - $21,249$109$012.32$21,250 - $22,249$126$012.33$22,250 - $23,249$143$012.34$23,250 - $24,249$160$012.35$24,250 - $25,249$161$012.36$25,250 - $26,249$161$013.1$26,250 - $27,249$161$013.2$27,250 - $28,249$161$013.3$28,250 - $29,249$161$013.4$29,250 - $30,249$161$013.5$30,250 - $31,249$161$013.6$31,250 - $32,249$161$613.7$32,250 - $33,249$161$1413.8$33,250 - $34,249$161$2213.9$34,250 - $35,249$161$3013.10$35,250 - $36,249$161$3813.11$36,250 - $37,249$161$4613.12$37,250 - $38,249$161$5413.13$38,250 - $39,249$161$6213.14$39,250 - $40,249$161$7013.15$40,250 - $41,249$161$7813.16$41,250 - $42,249$161$8613.17$42,250 - $43,249$161$9413.18$43,250 - $44,249$161$10213.19$44,250 - $45,249$161$11013.20$45,250 - $46,249$161$11813.21$46,250 - $47,249$161$12613.22$47,250 - $48,249$161$13413.23$48,250 - $49,249$161$14213.24$49,250 - $50,249$161$15013.25$50,250 - $51,249$161$15813.26$51,250 - $52,249$161$16613.27$52,250 - $53,249$161$17413.28$53,250 - $54,249$161$18213.29$54,250 - $55,249$161$19013.30$55,250 - $56,249$161$19813.31$56,250 - $57,249$161$20613.32$57,250 - $58,249$161$21413.33$58,250 - $59,249$161$22213.34$59,250 - $60,249$161$23013.35$60,250 - $61,249$161$23813.36$61,250 - $62,249$161$24614.1$62,250 - $63,249$161$25414.2$63,250 - $64,249$161$26214.3$64,250 and over$161$26814.4 For taxable years beginning after December 31, 2001, the 14.5 commissioner of revenue shall construct and make available to 14.6 taxpayers a comprehensive table showing the credit under this 14.7 section at brackets of earnings of the lesser-earning spouse and 14.8 joint taxable income. The brackets of earnings shall not be 14.9 more than $2,000. 14.10 For taxable years beginning after December 31,20002002, 14.11 the commissioner shall update the table as necessary to provide 14.12 a credit that reflects the relationship between the marginal tax 14.13 rates imposed under section 290.06, subdivision 2c. 14.14 [EFFECTIVE DATE.] This section is effective for tax years 14.15 beginning after December 31, 2000. 14.16 Sec. 8. Minnesota Statutes 2000, section 290.091, 14.17 subdivision 1, is amended to read: 14.18 Subdivision 1. [IMPOSITION OF TAX.] In addition to all 14.19 other taxes imposed by this chapter a tax is imposed on 14.20 individuals, estates, and trusts equal to the excess (if any) of 14.21 (a) an amount equal to6.46.1 percent of alternative 14.22 minimum taxable income after subtracting the exemption amount, 14.23 over 14.24 (b) the regular tax for the taxable year. 14.25 [EFFECTIVE DATE.] This section is effective for tax years 14.26 beginning after December 31, 2000. 14.27 Sec. 9. Minnesota Statutes 2000, section 290.091, 14.28 subdivision 6, is amended to read: 14.29 Subd. 6. [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) For tax 14.30 years beginning after December 31, 2000, and before January 1, 14.31 2003, a credit is allowed against the tax imposed by this 14.32 chapter on individuals, trusts, and estates equal to the minimum 14.33 tax credit for the taxable year. The minimum tax credit equals 14.34 the adjusted net minimum tax for taxable years beginning after 14.35 December 31, 1988, reduced by the minimum tax credits allowed in 14.36 a prior taxable year. The credit may not exceed the excess (if 15.1 any) for the taxable year of 15.2 (1) the regular tax, over 15.3 (2) the greater of (i) the tentative alternative minimum 15.4 tax, or (ii) zero. 15.5 (b) The adjusted net minimum tax for a taxable year equals 15.6 the lesser of the net minimum tax or the excess (if any) of 15.7 (1) the tentative minimum tax, over 15.8 (2)6.46.1 percent of the sum of 15.9 (i) adjusted gross income as defined in section 62 of the 15.10 Internal Revenue Code, 15.11 (ii) interest income as defined in section 290.01, 15.12 subdivision 19a, clause (1), 15.13 (iii) interest on specified private activity bonds, as 15.14 defined in section 57(a)(5) of the Internal Revenue Code, to the 15.15 extent not included under clause (ii), 15.16 (iv) depletion as defined in section 57(a)(1), determined 15.17 without regard to the last sentence of paragraph (1), of the 15.18 Internal Revenue Code, less 15.19 (v) the deductions allowed in computing alternative minimum 15.20 taxable income provided in subdivision 2, paragraph (a), clause 15.21 (2) of the first series of clauses and clauses (1), (2), and (3) 15.22 of the second series of clauses, and 15.23 (vi) the exemption amount determined under subdivision 3. 15.24 In the case of an individual who is not a Minnesota 15.25 resident for the entire year, adjusted net minimum tax must be 15.26 multiplied by the fraction defined in section 290.06, 15.27 subdivision 2c, paragraph (e). In the case of a trust or 15.28 estate, adjusted net minimum tax must be multiplied by the 15.29 fraction defined under subdivision 4, paragraph (b). 15.30 (c) For tax years beginning after December 31, 2002, and 15.31 before January 1, 2005, a credit is allowed against the tax 15.32 imposed by this chapter on individuals, trusts, and estates 15.33 equal to the minimum tax credit for the taxable year. The 15.34 minimum tax credit equals the adjusted net minimum tax for 15.35 taxable years beginning after December 31, 1988, and before 15.36 January 1, 2002, reduced by the minimum tax credits allowed in a 16.1 prior taxable year. The credit may not exceed the tax imposed 16.2 by this chapter after the allowance of the credits in sections 16.3 290.06, subdivisions 22, 22a, 26, and 28; 290.0672; and 290.075. 16.4 [EFFECTIVE DATE.] This section is effective for tax years 16.5 beginning after December 31, 2000. 16.6 Sec. 10. Minnesota Statutes 2000, section 290.92, 16.7 subdivision 3, is amended to read: 16.8 Subd. 3. [WITHHOLDING, IRREGULAR PERIOD.] If payment of 16.9 wages is made to an employee by an employer 16.10 (a) With respect to a payroll period or other period, any 16.11 part of which is included in a payroll period or other period 16.12 with respect to which wages are also paid to such employees by 16.13 such employer, or 16.14 (b) Without regard to any payroll period or other period, 16.15 but on or prior to the expiration of a payroll period or other 16.16 period with respect to which wages are also paid to such 16.17 employee by such employer, or 16.18 (c) With respect to a period beginning in one and ending in 16.19 another calendar year, or 16.20 (d) Through an agent, fiduciary, or other person who also 16.21 has the control, receipt, custody, or disposal of or pays, the 16.22 wages payable by another employer to such employee. 16.23 The manner of withholding and the amount to be deducted and 16.24 withheld under subdivision 2a shall be determined in accordance 16.25 with rules prescribed by the commissioner under which the 16.26 withholding exemption allowed to the employee in any calendar 16.27 year shall approximate the withholding exemption allowable with 16.28 respect to an annual payroll period, except that if supplemental 16.29 wages are not paid concurrent with a payroll period the employer 16.30 shall withhold tax on the supplemental payment at the rate of 16.316.255.95 percent as if no exemption had been claimed. 16.32 [EFFECTIVE DATE.] This section is effective for wages paid 16.33 after July 1, 2001. 16.34 Sec. 11. Minnesota Statutes 2000, section 290.92, 16.35 subdivision 28, is amended to read: 16.36 Subd. 28. [PAYMENTS TO HORSE RACING LICENSE HOLDERS.] 17.1 Effective with payments made after April 1, 1988, any holder of 17.2 a license issued by the Minnesota racing commission who makes a 17.3 payment for personal or professional services to a holder of a 17.4 class C license issued by the commission, except an amount paid 17.5 as a purse, shall deduct from the payment and withhold6.255.95 17.6 percent of the amount as Minnesota withholding tax when the 17.7 amount paid to that individual by the same person during the 17.8 calendar year exceeds $600. For purposes of the provisions of 17.9 this section, a payment to any person which is subject to 17.10 withholding under this subdivision must be treated as if the 17.11 payment was a wage paid by an employer to an employee. Every 17.12 individual who is to receive a payment which is subject to 17.13 withholding under this subdivision shall furnish the license 17.14 holder with a statement, made under the penalties of perjury, 17.15 containing the name, address, and social security account number 17.16 of the person receiving the payment. No withholding is required 17.17 if the individual presents a signed certificate from the 17.18 individual's employer which states that the individual is an 17.19 employee of that employer. A nonresident individual who holds a 17.20 class C license must be treated as an athlete for purposes of 17.21 applying the provisions of sections 290.17, subdivision 17.22 2(1)(b)(ii) and 290.92, subdivision 4a. 17.23 [EFFECTIVE DATE.] This section is effective for payments 17.24 made after July 1, 2001. 17.25 Sec. 12. Minnesota Statutes 2000, section 290.92, 17.26 subdivision 29, is amended to read: 17.27 Subd. 29. [LOTTERY PRIZES.]7.256.95 percent of the 17.28 payment of Minnesota state lottery winnings which are subject to 17.29 withholding must be withheld as Minnesota withholding tax. For 17.30 purposes of this subdivision, the term "winnings which are 17.31 subject to withholding" has the meaning given in section 17.32 3402(q)(3) of the Internal Revenue Code. For purposes of the 17.33 provisions of this section, a payment to any person of winnings 17.34 which are subject to withholding must be treated as if the 17.35 payment was a wage paid by an employer to an employee. Every 17.36 individual who is to receive a payment of winnings which are 18.1 subject to withholding shall furnish the state lottery with a 18.2 statement, made under the penalties of perjury, containing the 18.3 name, address, and social security account number of the person 18.4 receiving the payment. The Minnesota state lottery is liable 18.5 for the payment of the tax required to be withheld under this 18.6 subdivision but is not liable to any person for the amount of 18.7 the payment. 18.8 [EFFECTIVE DATE.] This section is effective for winnings 18.9 paid after July 1, 2001. 18.10 Sec. 13. [REPEALER.] 18.11 Minnesota Statutes 2000, sections 290.06, subdivision 25; 18.12 and 290.091, subdivisions 1, 2, 3, 4, 5, and 6, are repealed. 18.13 [EFFECTIVE DATE.] This section is effective for tax years 18.14 beginning after December 31, 2001, except the repeal of section 18.15 290.091, subdivision 6, is effective for tax years beginning 18.16 after December 31, 2004, and the repeal of section 290.091, 18.17 subdivisions 1, 2, 3, 4, and 5, is effective for tax years 18.18 beginning after December 31, 2002. 18.19 ARTICLE 2 18.20 FEDERAL UPDATE 18.21 Section 1. Minnesota Statutes 2000, section 289A.02, 18.22 subdivision 7, is amended to read: 18.23 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 18.24 defined otherwise, "Internal Revenue Code" means the Internal 18.25 Revenue Code of 1986, as amended through December 31,19992000. 18.26 [EFFECTIVE DATE.] This section is effective the day 18.27 following final enactment. 18.28 Sec. 2. Minnesota Statutes 2000, section 290.01, 18.29 subdivision 19, is amended to read: 18.30 Subd. 19. [NET INCOME.] The term "net income" means the 18.31 federal taxable income, as defined in section 63 of the Internal 18.32 Revenue Code of 1986, as amended through the date named in this 18.33 subdivision, incorporating any elections made by the taxpayer in 18.34 accordance with the Internal Revenue Code in determining federal 18.35 taxable income for federal income tax purposes, and with the 18.36 modifications provided in subdivisions 19a to 19f. 19.1 In the case of a regulated investment company or a fund 19.2 thereof, as defined in section 851(a) or 851(g) of the Internal 19.3 Revenue Code, federal taxable income means investment company 19.4 taxable income as defined in section 852(b)(2) of the Internal 19.5 Revenue Code, except that: 19.6 (1) the exclusion of net capital gain provided in section 19.7 852(b)(2)(A) of the Internal Revenue Code does not apply; 19.8 (2) the deduction for dividends paid under section 19.9 852(b)(2)(D) of the Internal Revenue Code must be applied by 19.10 allowing a deduction for capital gain dividends and 19.11 exempt-interest dividends as defined in sections 852(b)(3)(C) 19.12 and 852(b)(5) of the Internal Revenue Code; and 19.13 (3) the deduction for dividends paid must also be applied 19.14 in the amount of any undistributed capital gains which the 19.15 regulated investment company elects to have treated as provided 19.16 in section 852(b)(3)(D) of the Internal Revenue Code. 19.17 The net income of a real estate investment trust as defined 19.18 and limited by section 856(a), (b), and (c) of the Internal 19.19 Revenue Code means the real estate investment trust taxable 19.20 income as defined in section 857(b)(2) of the Internal Revenue 19.21 Code. 19.22 The net income of a designated settlement fund as defined 19.23 in section 468B(d) of the Internal Revenue Code means the gross 19.24 income as defined in section 468B(b) of the Internal Revenue 19.25 Code. 19.26 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 19.27 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 19.28 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 19.29 Protection Act, Public Law Number 104-188, the provisions of 19.30 Public Law Number 104-117, the provisions of sections 313(a) and 19.31 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 19.32 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 19.33 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 19.34 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 19.35 Public Law Number 105-34, the provisions of section 6010 of the 19.36 Internal Revenue Service Restructuring and Reform Act of 1998, 20.1 Public Law Number 105-206, and the provisions of section 4003 of 20.2 the Omnibus Consolidated and Emergency Supplemental 20.3 Appropriations Act, 1999, Public Law Number 105-277, and the 20.4 provisions of section 318 of the Consolidated Appropriation Act 20.5 of 2001, Public Law Number 106-554, shall become effective at 20.6 the time they become effective for federal purposes. 20.7 The Internal Revenue Code of 1986, as amended through 20.8 December 31, 1996, shall be in effect for taxable years 20.9 beginning after December 31, 1996. 20.10 The provisions of sections 202(a) and (b), 221(a), 225, 20.11 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 20.12 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 20.13 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 20.14 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 20.15 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 20.16 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 20.17 7002, and 7003 of the Internal Revenue Service Restructuring and 20.18 Reform Act of 1998, Public Law Number 105-206, the provisions of 20.19 section 3001 of the Omnibus Consolidated and Emergency 20.20 Supplemental Appropriations Act, 1999, Public Law Number 20.21 105-277, and the provisions of section 3001 of the Miscellaneous 20.22 Trade and Technical Corrections Act of 1999, Public Law Number 20.23 106-36, and the provisions of section 316 of the Consolidated 20.24 Appropriation Act of 2001, Public Law Number 106-554, shall 20.25 become effective at the time they become effective for federal 20.26 purposes. 20.27 The Internal Revenue Code of 1986, as amended through 20.28 December 31, 1997, shall be in effect for taxable years 20.29 beginning after December 31, 1997. 20.30 The provisions of sections 5002, 6009, 6011, and 7001 of 20.31 the Internal Revenue Service Restructuring and Reform Act of 20.32 1998, Public Law Number 105-206, the provisions of section 9010 20.33 of the Transportation Equity Act for the 21st Century, Public 20.34 Law Number 105-178, the provisions of sections 1004, 4002, and 20.35 5301 of the Omnibus Consolidation and Emergency Supplemental 20.36 Appropriations Act, 1999, Public Law Number 105-277, the 21.1 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 21.2 Act of 1998, Public Law Number 105-369,andthe provisions of 21.3 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 21.4 Work Incentives Improvement Act of 1999, Public Law Number 21.5 106-170, the provisions of the Installment Tax Correction Act of 21.6 2000, Public Law Number 106-573, and the provisions of section 21.7 309 of the Consolidated Appropriation Act of 2001, Public Law 21.8 Number 106-554, shall become effective at the time they become 21.9 effective for federal purposes. 21.10 The Internal Revenue Code of 1986, as amended through 21.11 December 31, 1998, shall be in effect for taxable years 21.12 beginning after December 31, 1998. 21.13 The provisions of the FSC Repeal and Extraterritorial 21.14 Income Exclusion Act of 2000, Public Law Number 106-519, shall 21.15 become effective at the time it became effective for federal 21.16 purposes. 21.17 The Internal Revenue Code of 1986, as amended through 21.18 December 31, 1999, shall be in effect for taxable years 21.19 beginning after December 31, 1999. The provisions of sections 21.20 306 and 401 of the Consolidated Appropriation Act of 2001, 21.21 Public Law Number 106-554, shall become effective at the same 21.22 time it became effective for federal purposes. 21.23 The Internal Revenue Code of 1986, as amended through 21.24 December 31, 2000, shall be in effect for taxable years 21.25 beginning after December 31, 2000. 21.26 Except as otherwise provided, references to the Internal 21.27 Revenue Code in subdivisions 19a to 19g mean the code in effect 21.28 for purposes of determining net income for the applicable year. 21.29 [EFFECTIVE DATE.] This section is effective the day 21.30 following final enactment. 21.31 Sec. 3. Minnesota Statutes 2000, section 290.01, 21.32 subdivision 31, is amended to read: 21.33 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 21.34 defined otherwise, "Internal Revenue Code" means the Internal 21.35 Revenue Code of 1986, as amended through December 31,19992000. 21.36 [EFFECTIVE DATE.] This section is effective at the same 22.1 time and in the same manner as the federal changes made by the 22.2 FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 22.3 Public Law Number 106-519, and the Consolidated Appropriation 22.4 Act of 2001, Public Law Number 106-554, becomes effective. 22.5 Sec. 4. Minnesota Statutes 2000, section 290.191, 22.6 subdivision 5, is amended to read: 22.7 Subd. 5. [DETERMINATION OF SALES FACTOR.] For purposes of 22.8 this section, the following rules apply in determining the sales 22.9 factor. 22.10 (a) The sales factor includes all sales, gross earnings, or 22.11 receipts received in the ordinary course of the business, except 22.12 that the following types of income are not included in the sales 22.13 factor: 22.14 (1) interest; 22.15 (2) dividends; 22.16 (3) sales of capital assets as defined in section 1221 of 22.17 the Internal Revenue Code; 22.18 (4) sales of property used in the trade or business, except 22.19 sales of leased property of a type which is regularly sold as 22.20 well as leased; 22.21 (5) sales of debt instruments as defined in section 22.22 1275(a)(1) of the Internal Revenue Code or sales of stock; and 22.23 (6)royalties, fees, or other like income of a type which22.24qualify for a subtraction from federal taxable income under22.25section 290.01, subdivision 19(d)(11)all sales, gross earnings, 22.26 or receipts used to generate income excluded under section 114 22.27 of the Internal Revenue Code. 22.28 (b) Sales of tangible personal property are made within 22.29 this state if the property is received by a purchaser at a point 22.30 within this state, and the taxpayer is taxable in this state, 22.31 regardless of the f.o.b. point, other conditions of the sale, or 22.32 the ultimate destination of the property. 22.33 (c) Tangible personal property delivered to a common or 22.34 contract carrier or foreign vessel for delivery to a purchaser 22.35 in another state or nation is a sale in that state or nation, 22.36 regardless of f.o.b. point or other conditions of the sale. 23.1 (d) Notwithstanding paragraphs (b) and (c), when 23.2 intoxicating liquor, wine, fermented malt beverages, cigarettes, 23.3 or tobacco products are sold to a purchaser who is licensed by a 23.4 state or political subdivision to resell this property only 23.5 within the state of ultimate destination, the sale is made in 23.6 that state. 23.7 (e) Sales made by or through a corporation that is 23.8 qualified as a domestic international sales corporation under 23.9 section 992 of the Internal Revenue Code are not considered to 23.10 have been made within this state. 23.11 (f) Sales, rents, royalties, and other income in connection 23.12 with real property is attributed to the state in which the 23.13 property is located. 23.14 (g) Receipts from the lease or rental of tangible personal 23.15 property, including finance leases and true leases, must be 23.16 attributed to this state if the property is located in this 23.17 state and to other states if the property is not located in this 23.18 state. Receipts from the lease or rental of moving property 23.19 including, but not limited to, motor vehicles, rolling stock, 23.20 aircraft, vessels, or mobile equipment are included in the 23.21 numerator of the receipts factor to the extent that the property 23.22 is used in this state. The extent of the use of moving property 23.23 is determined as follows: 23.24 (1) A motor vehicle is used wholly in the state in which it 23.25 is registered. 23.26 (2) The extent that rolling stock is used in this state is 23.27 determined by multiplying the receipts from the lease or rental 23.28 of the rolling stock by a fraction, the numerator of which is 23.29 the miles traveled within this state by the leased or rented 23.30 rolling stock and the denominator of which is the total miles 23.31 traveled by the leased or rented rolling stock. 23.32 (3) The extent that an aircraft is used in this state is 23.33 determined by multiplying the receipts from the lease or rental 23.34 of the aircraft by a fraction, the numerator of which is the 23.35 number of landings of the aircraft in this state and the 23.36 denominator of which is the total number of landings of the 24.1 aircraft. 24.2 (4) The extent that a vessel, mobile equipment, or other 24.3 mobile property is used in the state is determined by 24.4 multiplying the receipts from the lease or rental of the 24.5 property by a fraction, the numerator of which is the number of 24.6 days during the taxable year the property was in this state and 24.7 the denominator of which is the total days in the taxable year. 24.8 (h) Royalties and other income not described in paragraph 24.9 (a), clause (6), received for the use of or for the privilege of 24.10 using intangible property, including patents, know-how, 24.11 formulas, designs, processes, patterns, copyrights, trade names, 24.12 service names, franchises, licenses, contracts, customer lists, 24.13 or similar items, must be attributed to the state in which the 24.14 property is used by the purchaser. If the property is used in 24.15 more than one state, the royalties or other income must be 24.16 apportioned to this state pro rata according to the portion of 24.17 use in this state. If the portion of use in this state cannot 24.18 be determined, the royalties or other income must be excluded 24.19 from both the numerator and the denominator. Intangible 24.20 property is used in this state if the purchaser uses the 24.21 intangible property or the rights therein in the regular course 24.22 of its business operations in this state, regardless of the 24.23 location of the purchaser's customers. 24.24 (i) Sales of intangible property are made within the state 24.25 in which the property is used by the purchaser. If the property 24.26 is used in more than one state, the sales must be apportioned to 24.27 this state pro rata according to the portion of use in this 24.28 state. If the portion of use in this state cannot be 24.29 determined, the sale must be excluded from both the numerator 24.30 and the denominator of the sales factor. Intangible property is 24.31 used in this state if the purchaser used the intangible property 24.32 in the regular course of its business operations in this state. 24.33 (j) Receipts from the performance of services must be 24.34 attributed to the state where the services are received. For 24.35 the purposes of this section, receipts from the performance of 24.36 services provided to a corporation, partnership, or trust may 25.1 only be attributed to a state where it has a fixed place of 25.2 doing business. If the state where the services are received is 25.3 not readily determinable or is a state where the corporation, 25.4 partnership, or trust receiving the service does not have a 25.5 fixed place of doing business, the services shall be deemed to 25.6 be received at the location of the office of the customer from 25.7 which the services were ordered in the regular course of the 25.8 customer's trade or business. If the ordering office cannot be 25.9 determined, the services shall be deemed to be received at the 25.10 office of the customer to which the services are billed. 25.11 [EFFECTIVE DATE.] This section is effective for 25.12 transactions after September 30, 2000. 25.13 Sec. 5. Minnesota Statutes 2000, section 290A.03, 25.14 subdivision 15, is amended to read: 25.15 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 25.16 means the Internal Revenue Code of 1986, as amended through 25.17 December 31,19992000. 25.18 [EFFECTIVE DATE.] This section is effective the day 25.19 following final enactment. 25.20 Sec. 6. Minnesota Statutes 2000, section 291.005, 25.21 subdivision 1, is amended to read: 25.22 Subdivision 1. Unless the context otherwise clearly 25.23 requires, the following terms used in this chapter shall have 25.24 the following meanings: 25.25 (1) "Federal gross estate" means the gross estate of a 25.26 decedent as valued and otherwise determined for federal estate 25.27 tax purposes by federal taxing authorities pursuant to the 25.28 provisions of the Internal Revenue Code. 25.29 (2) "Minnesota gross estate" means the federal gross estate 25.30 of a decedent after (a) excluding therefrom any property 25.31 included therein which has its situs outside Minnesota and (b) 25.32 including therein any property omitted from the federal gross 25.33 estate which is includable therein, has its situs in Minnesota, 25.34 and was not disclosed to federal taxing authorities. 25.35 (3) "Personal representative" means the executor, 25.36 administrator or other person appointed by the court to 26.1 administer and dispose of the property of the decedent. If 26.2 there is no executor, administrator or other person appointed, 26.3 qualified, and acting within this state, then any person in 26.4 actual or constructive possession of any property having a situs 26.5 in this state which is included in the federal gross estate of 26.6 the decedent shall be deemed to be a personal representative to 26.7 the extent of the property and the Minnesota estate tax due with 26.8 respect to the property. 26.9 (4) "Resident decedent" means an individual whose domicile 26.10 at the time of death was in Minnesota. 26.11 (5) "Nonresident decedent" means an individual whose 26.12 domicile at the time of death was not in Minnesota. 26.13 (6) "Situs of property" means, with respect to real 26.14 property, the state or country in which it is located; with 26.15 respect to tangible personal property, the state or country in 26.16 which it was normally kept or located at the time of the 26.17 decedent's death; and with respect to intangible personal 26.18 property, the state or country in which the decedent was 26.19 domiciled at death. 26.20 (7) "Commissioner" means the commissioner of revenue or any 26.21 person to whom the commissioner has delegated functions under 26.22 this chapter. 26.23 (8) "Internal Revenue Code" means the United States 26.24 Internal Revenue Code of 1986, as amended through December 31, 26.2519992000. 26.26 [EFFECTIVE DATE.] This section is effective the day 26.27 following final enactment. 26.28 ARTICLE 3 26.29 CORPORATE FRANCHISE TAX REFORM 26.30 Section 1. Minnesota Statutes 2000, section 290.01, is 26.31 amended by adding a subdivision to read: 26.32 Subd. 5b. [DEFINITION OF INSURANCE COMPANY.] The terms 26.33 "insurance company," "life insurance company," and "insurance 26.34 company other than life" have the meanings given in the Internal 26.35 Revenue Code. 26.36 [EFFECTIVE DATE.] This section is effective for tax years 27.1 beginning after December 31, 2000. 27.2 Sec. 2. Minnesota Statutes 2000, section 290.01, 27.3 subdivision 19c, is amended to read: 27.4 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 27.5 INCOME.] For corporations, there shall be added to federal 27.6 taxable income: 27.7 (1) the amount of any deduction taken for federal income 27.8 tax purposes for income, excise, or franchise taxes based on net 27.9 income or related minimum taxes, including but not limited to 27.10 the tax imposed under section 290.0922, paid by the corporation 27.11 to Minnesota, another state, a political subdivision of another 27.12 state, the District of Columbia, or any foreign country or 27.13 possession of the United States; 27.14 (2) interest not subject to federal tax upon obligations 27.15 of: the United States, its possessions, its agencies, or its 27.16 instrumentalities; the state of Minnesota or any other state, 27.17 any of its political or governmental subdivisions, any of its 27.18 municipalities, or any of its governmental agencies or 27.19 instrumentalities; the District of Columbia; or Indian tribal 27.20 governments; 27.21 (3) exempt-interest dividends received as defined in 27.22 section 852(b)(5) of the Internal Revenue Code; 27.23 (4) the amount of any net operating loss deduction taken 27.24 for federal income tax purposes under section 172 or 832(c)(10) 27.25 of the Internal Revenue Code or operations loss deduction under 27.26 section 810 of the Internal Revenue Code; 27.27(5) the amount of any special deductions taken for federal27.28income tax purposes under sections 241 to 247 of the Internal27.29Revenue Code;27.30(6)(5) losses from the business of mining, as defined in 27.31 section 290.05, subdivision 1, clause (a), that are not subject 27.32 to Minnesota income tax; 27.33(7)(6) the amount of any capital losses deducted for 27.34 federal income tax purposes under sections 1211 and 1212 of the 27.35 Internal Revenue Code; 27.36(8) the amount of any charitable contributions deducted for28.1federal income tax purposes under section 170 of the Internal28.2Revenue Code;28.3(9)(7) the exempt foreign trade income of a foreign sales 28.4 corporation under sections 921(a) and 291 of the Internal 28.5 Revenue Code; 28.6(10) the amount of percentage depletion deducted under28.7sections 611 through 614 and 291 of the Internal Revenue Code;28.8(11) for certified pollution control facilities placed in28.9service in a taxable year beginning before December 31, 1986,28.10and for which amortization deductions were elected under section28.11169 of the Internal Revenue Code of 1954, as amended through28.12December 31, 1985, the amount of the amortization deduction28.13allowed in computing federal taxable income for those28.14facilities;28.15(12) the amount of any deemed dividend from a foreign28.16operating corporation determined pursuant to section 290.17,28.17subdivision 4, paragraph (g);28.18(13) the amount of any environmental tax paid under section28.1959(a) of the Internal Revenue Code; and 28.20(14)(8) the amount of a partner's pro rata share of net 28.21 income which does not flow through to the partner because the 28.22 partnership elected to pay the tax on the income under section 28.23 6242(a)(2) of the Internal Revenue Code. 28.24 [EFFECTIVE DATE.] This section is effective for tax years 28.25 beginning after December 31, 2000. 28.26 Sec. 3. Minnesota Statutes 2000, section 290.01, 28.27 subdivision 19d, is amended to read: 28.28 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 28.29 TAXABLE INCOME.] For corporations, there shall be subtracted 28.30 from federal taxable income after the increases provided in 28.31 subdivision 19c: 28.32 (1) the amount of foreign dividend gross-up added to gross 28.33 income for federal income tax purposes under section 78 of the 28.34 Internal Revenue Code; 28.35 (2) the amount of salary expense not allowed for federal 28.36 income tax purposes due to claiming the federal jobs credit 29.1 under section 51 of the Internal Revenue Code; 29.2(3) any dividend (not including any distribution in29.3liquidation) paid within the taxable year by a national or state29.4bank to the United States, or to any instrumentality of the29.5United States exempt from federal income taxes, on the preferred29.6stock of the bank owned by the United States or the29.7instrumentality;29.8(4)(3) amounts disallowed for intangible drilling costs 29.9 due to differences between this chapter and the Internal Revenue 29.10 Code in taxable years beginning before January 1, 1987, as 29.11 follows: 29.12 (i) to the extent the disallowed costs are represented by 29.13 physical property, an amount equal to the allowance for 29.14 depreciation under Minnesota Statutes 1986, section 290.09, 29.15 subdivision 7, subject to the modifications contained in 29.16 subdivision 19e; and 29.17 (ii) to the extent the disallowed costs are not represented 29.18 by physical property, an amount equal to the allowance for cost 29.19 depletion under Minnesota Statutes 1986, section 290.09, 29.20 subdivision 8; except that 29.21 (iii) this subtraction is permitted for the tax year ending 29.22 before December 31, 2002. Disallowed amounts remaining after 29.23 the tax year ending December 31, 2000, must be subtracted from 29.24 federal taxable income under this subdivision in two equal 29.25 portions in tax years 2001 and 2002; 29.26(5)(4) the deduction for capital losses pursuant to 29.27 sections 1211 and 1212 of the Internal Revenue Code, except that: 29.28 (i) for capital losses incurred in taxable years beginning 29.29 after December 31, 1986, capital loss carrybacks shall not be 29.30 allowed; and 29.31 (ii) for capital losses incurred in taxable years beginning 29.32 after December 31, 1986, a capital loss carryover to each of the 29.33 15 taxable years succeeding the loss year shall be allowed; 29.34(iii) for capital losses incurred in taxable years29.35beginning before January 1, 1987, a capital loss carryback to29.36each of the three taxable years preceding the loss year, subject30.1to the provisions of Minnesota Statutes 1986, section 290.16,30.2shall be allowed; and30.3(iv) for capital losses incurred in taxable years beginning30.4before January 1, 1987, a capital loss carryover to each of the30.5five taxable years succeeding the loss year to the extent such30.6loss was not used in a prior taxable year and subject to the30.7provisions of Minnesota Statutes 1986, section 290.16, shall be30.8allowed;30.9(6)(5) an amount for interest and expenses relating to 30.10 income not taxable for federal income tax purposes, if (i) the 30.11 income is taxable under this chapter and (ii) the interest and 30.12 expenses were disallowed as deductions under the provisions of 30.13 section 171(a)(2), 265 or 291 of the Internal Revenue Code in 30.14 computing federal taxable income; 30.15(7) in the case of mines, oil and gas wells, other natural30.16deposits, and timber for which percentage depletion was30.17disallowed pursuant to subdivision 19c, clause (11), a30.18reasonable allowance for depletion based on actual cost. In the30.19case of leases the deduction must be apportioned between the30.20lessor and lessee in accordance with rules prescribed by the30.21commissioner. In the case of property held in trust, the30.22allowable deduction must be apportioned between the income30.23beneficiaries and the trustee in accordance with the pertinent30.24provisions of the trust, or if there is no provision in the30.25instrument, on the basis of the trust's income allocable to30.26each;30.27(8) for(6) certified pollution control facilitiesplaced30.28in service in a taxable year beginning before December 31, 1986,30.29and for which amortization deductions were elected under section30.30169 of the Internal Revenue Code of 1954, as amended through30.31December 31, 1985, an amount equal to the allowance for30.32depreciation under Minnesota Statutes 1986, section 290.09,30.33subdivision 7amortization deduction amounts remaining after the 30.34 tax year ending December 31, 2000, must be subtracted from 30.35 federal taxable income under this subdivision in two equal 30.36 portions in tax years 2001 and 2002; 31.1(9) the amount included in federal taxable income31.2attributable to the credits provided in Minnesota Statutes 1986,31.3section 273.1314, subdivision 9, or Minnesota Statutes, section31.4469.171, subdivision 6;31.5(10)(7) amounts included in federal taxable income that 31.6 are due to refunds of income, excise, or franchise taxes based 31.7 on net income or related minimum taxes paid by the corporation 31.8 to Minnesota, another state, a political subdivision of another 31.9 state, the District of Columbia, or a foreign country or 31.10 possession of the United States to the extent that the taxes 31.11 were added to federal taxable income under section 290.01, 31.12 subdivision 19c, clause (1), in a prior taxable year; 31.13(11) 80 percent of royalties, fees, or other like income31.14accrued or received from a foreign operating corporation or a31.15foreign corporation which is part of the same unitary business31.16as the receiving corporation;31.17(12)(8) income or gains from the business of mining as 31.18 defined in section 290.05, subdivision 1, clause (a), that are 31.19 not subject to Minnesota franchise tax; 31.20(13)(9) the amount of handicap access expenditures in the 31.21 taxable year which are not allowed to be deducted or capitalized 31.22 under section 44(d)(7) of the Internal Revenue Code; 31.23(14)(10) the amount of qualified research expenses not 31.24 allowed for federal income tax purposes under section 280C(c) of 31.25 the Internal Revenue Code, but only to the extent that the 31.26 amount exceeds the amount of the credit allowed under section 31.27 290.068; 31.28(15)(11) the amount of salary expenses not allowed for 31.29 federal income tax purposes due to claiming the Indian 31.30 employment credit under section 45A(a) of the Internal Revenue 31.31 Code; 31.32(16)(12) the amount of any refund of environmental taxes 31.33 paid under section 59A of the Internal Revenue Code;and31.34(17)(13) for taxable years beginning before January 1, 31.35 2008, the amount of the federal small ethanol producer credit 31.36 allowed under section 40(a)(3) of the Internal Revenue Code 32.1 which is included in gross income under section 87 of the 32.2 Internal Revenue Code; 32.3 (14) 80 percent of any dividend (including subpart F income 32.4 as defined in section 952 of the Internal Revenue Code) received 32.5 from a foreign corporation owned 20 percent or more by the 32.6 recipient of the dividend that is not subject to the special 32.7 deduction under section 243 of the Internal Revenue Code; and 32.8 (15) 70 percent of any dividend received from a foreign 32.9 corporation owned less than 20 percent by the recipient of the 32.10 dividend that is not subject to the special deduction under 32.11 section 243 of the Internal Revenue Code. 32.12 [EFFECTIVE DATE.] This section is effective for tax years 32.13 beginning after December 31, 2000. 32.14 Sec. 4. Minnesota Statutes 2000, section 290.01, 32.15 subdivision 29, is amended to read: 32.16 Subd. 29. [TAXABLE INCOME.]For tax years beginning after32.17December 31, 1986,The term "taxable income" means: 32.18 (1) for individuals, estates, and trusts, the same as 32.19 taxable net income; 32.20 (2) for corporations, including insurance companies, the 32.21 taxable net income less 32.22(i)the net operating loss deduction under section 290.095;32.23(ii) the dividends received deduction under section 290.21,32.24subdivision 4; and32.25(iii) the charitable contribution deduction under section32.26290.21, subdivision 3. 32.27 [EFFECTIVE DATE.] This section is effective for tax years 32.28 beginning after December 31, 2000. 32.29 Sec. 5. Minnesota Statutes 2000, section 290.02, is 32.30 amended to read: 32.31 290.02 [FRANCHISE TAX ON CORPORATIONS MEASURED BY NET 32.32 INCOME.] 32.33 An annual franchise tax on the exercise of the corporate 32.34 franchise to engage in contacts with this state that produce 32.35 gross income attributable to sources within this state is 32.36 imposed upon every corporation that so exercises its franchise 33.1 during the taxable year. 33.2 Contacts within this state do not include transportation in 33.3 interstate or foreign commerce, or both, by means of ships 33.4 navigating within or through waters that are made international 33.5 for navigation purposes by any treaty or agreement to which the 33.6 United States is a party. 33.7 The tax so imposed is measured by the corporations' taxable 33.8 incomeand alternative minimum taxable incomefor the taxable 33.9 year for which the tax is imposed, and computed in the manner 33.10 and at the rates provided in this chapter. 33.11 [EFFECTIVE DATE.] This section is effective for tax years 33.12 beginning after December 31, 2000. 33.13 Sec. 6. Minnesota Statutes 2000, section 290.05, 33.14 subdivision 1, is amended to read: 33.15 Subdivision 1. [EXEMPT ENTITIES.] The following 33.16 corporations, individuals, estates, trusts, and organizations 33.17 shall be exempted from taxation under this chapter, provided 33.18 that every such person or corporation claiming exemption under 33.19 this chapter, in whole or in part, must establish to the 33.20 satisfaction of the commissioner the taxable status of any 33.21 income or activity: 33.22 (a) corporations, individuals, estates, and trusts engaged 33.23 in the business of mining or producing iron ore and other ores 33.24 the mining or production of which is subject to the occupation 33.25 tax imposed by section 298.01; but if any such corporation, 33.26 individual, estate, or trust engages in any other business or 33.27 activity or has income from any property not used in such 33.28 business it shall be subject to this tax computed on the net 33.29 income from such property or such other business or activity. 33.30 Royalty shall not be considered as income from the business of 33.31 mining or producing iron ore within the meaning of this section; 33.32 (b) the United States of America, the state of Minnesota or 33.33 any political subdivision of either agencies or 33.34 instrumentalities, whether engaged in the discharge of 33.35 governmental or proprietary functions; 33.36 (c) any insurance company that is domiciled in a state or 34.1 country other than Minnesota that imposes retaliatory taxes, 34.2 fines, deposits, penalties, licenses, or fees and that does not 34.3 grant, on a reciprocal basis, exemption from such retaliatory 34.4 taxes to insurance companies or their agents domiciled in 34.5 Minnesota. "Retaliatory taxes" means taxes imposed on insurance 34.6 companies organized in another state or country that result from 34.7 the fact that an insurance company organized in the taxing 34.8 jurisdiction and doing business in the other jurisdiction is 34.9 subject to taxes, fines, deposits, penalties, licenses, or fees 34.10 in an amount exceeding that imposed by the taxing jurisdiction 34.11 upon an insurance company organized in the other state or 34.12 country and doing business to the same extent in the taxing 34.13 jurisdiction;and34.14 (d) town and farmers' mutual insurance companies and mutual 34.15 property and casualty insurance companies, other than those (1) 34.16 writing life insurance or (2) whose total assets on December 31, 34.17 1989, exceeded $1,600,000,000; and 34.18 (e) insurance companies that have a premium tax liability 34.19 under section 297I.05. 34.20 [EFFECTIVE DATE.] This section is effective for tax years 34.21 beginning after December 31, 2000. 34.22 Sec. 7. Minnesota Statutes 2000, section 290.05, 34.23 subdivision 3, is amended to read: 34.24 Subd. 3. [TAXES IMPOSED ON EXEMPT ENTITIES.] (a) An 34.25 organization exempt from taxation under subdivision 2 shall, 34.26 nevertheless, be subject to tax under this chapter to the extent 34.27 provided in the following provisions of the Internal Revenue 34.28 Code: 34.29 (i) section 527 (dealing with political organizations); 34.30 (ii) section 528 (dealing with certain homeowners 34.31 associations); 34.32 (iii) sections 511 to 515 (dealing with unrelated business 34.33 income); 34.34 (iv) section 521 (dealing with farmers' cooperatives); and 34.35 (v) section 6033(e)(2) (dealing with lobbying expense); but 34.36 notwithstanding this subdivision, shall be considered an 35.1 organization exempt from income tax for the purposes of any law 35.2 which refers to organizations exempt from income taxes. 35.3 (b) The tax shall be imposed on the taxable income of 35.4 political organizations or homeowner associations or the 35.5 unrelated business taxable income, as defined in section 512 of 35.6 the Internal Revenue Code, of organizations defined in section 35.7 511 of the Internal Revenue Code, provided that the tax is not 35.8 imposed on: 35.9 (1) advertising revenues from a newspaper published by an 35.10 organization described in section 501(c)(4) of the Internal 35.11 Revenue Code; or 35.12 (2) revenues from lawful gambling authorized under chapter 35.13 349 that are expended for purposes that qualify for the 35.14 deduction for charitable contributions under section 170 of the 35.15 Internal Revenue Code, disregarding the limitation under section 35.16 170(b)(2), but only to the extent the contributions are not 35.17 deductible in computing federal taxable income. 35.18 The tax shall be at the corporate rates. The tax shall 35.19 only be imposed on income and deductions assignable to this 35.20 state under sections 290.17 to 290.20.To the extent deducted35.21in computing federal taxable income, the deductions contained in35.22section 290.21 shall not be allowed in computing Minnesota35.23taxable net income.35.24 (c) The tax shall be imposed on organizations subject to 35.25 federal tax under section 6033(e)(2) of the Internal Revenue 35.26 Code, in an amount equal to the corporate tax rate multiplied by 35.27 the amount of lobbying expenses taxed under section 6033(e)(2) 35.28 which are attributable to lobbying the Minnesota state 35.29 government. 35.30 [EFFECTIVE DATE.] This section is effective for tax years 35.31 beginning after December 31, 2000. 35.32 Sec. 8. Minnesota Statutes 2000, section 290.06, 35.33 subdivision 1, is amended to read: 35.34 Subdivision 1. [COMPUTATION, CORPORATIONS.] The franchise 35.35 tax imposed upon corporations shall be computed by applying to 35.36 their taxable income the rate of9.89.4 percent. 36.1 [EFFECTIVE DATE.] This section is effective for tax years 36.2 beginning after December 31, 2000. 36.3 Sec. 9. Minnesota Statutes 2000, section 290.068, 36.4 subdivision 2, is amended to read: 36.5 Subd. 2. [DEFINITIONS.] For purposes of this section, the 36.6 following terms have the meanings given. 36.7 (a) "Qualified research expenses" means (i) qualified 36.8 research expenses and basic research payments as defined in 36.9 section 41(b) and (e) of the Internal Revenue Code, except it 36.10 does not include expenses incurred for qualified research or 36.11 basic research conducted outside the state of Minnesota pursuant 36.12 to section 41(d) and (e) of the Internal Revenue Code; and (ii) 36.13 contributions to a nonprofit corporation established and 36.14 operated pursuant to the provisions of chapter 317A for the 36.15 purpose of promoting the establishment and expansion of business 36.16 in this state, provided the contributions are invested by the 36.17 nonprofit corporation for the purpose of providing funds for 36.18 small, technologically innovative enterprises in Minnesota 36.19 during the early stages of their development. 36.20 (b) "Qualified research" means qualified research as 36.21 defined in section 41(d) of the Internal Revenue Code, except 36.22 that the term does not include qualified research conducted 36.23 outside the state of Minnesota. 36.24 (c) "Base amount" meansbase amount as defined in section36.2541(c) of the Internal Revenue Code, except that the average36.26annual gross receipts must be calculated using Minnesota sales36.27or receipts under section 290.191 and the definitions contained36.28in clauses (a) and (b) shall applythe average of qualified 36.29 research expenses as defined in paragraph (a) for the five 36.30 taxable years preceding the taxable year for which the credit is 36.31 being determined. 36.32 [EFFECTIVE DATE.] This section is effective for tax years 36.33 beginning after December 31, 2000. 36.34 Sec. 10. Minnesota Statutes 2000, section 290.068, is 36.35 amended by adding a subdivision to read: 36.36 Subd. 2a. [INITIAL RESEARCH EXPENSE.] In the first taxable 37.1 year in which a taxpayer has qualified research expenses, the 37.2 base amount equals "zero." In the second through the fifth 37.3 years, the base amount must be calculated using the average of 37.4 qualified research expenses for the taxable years which precede 37.5 the tax year for which the credit is being determined. 37.6 [EFFECTIVE DATE.] This section is effective for tax years 37.7 beginning after December 31, 2000. 37.8 Sec. 11. Minnesota Statutes 2000, section 290.0921, 37.9 subdivision 8, is amended to read: 37.10 Subd. 8. [CARRYOVER CREDIT.] (a) A corporation is allowed 37.11 a credit against qualified regular tax for qualified alternative 37.12 minimum tax previously paid. The credit is allowable only 37.13 ifthe corporation has no tax liability under this section for37.14the taxable year and ifthe corporation has an alternative 37.15 minimum tax credit carryover from a previous year. The credit 37.16 allowable in a taxable year equalsthe lesser of37.17(1) the excess of the qualified regular tax for the taxable37.18year over the amount computed under subdivision 1, clause (1),37.19for the taxable year or37.20(2)the carryover credit to the taxable year. 37.21 (b)For purposes of this subdivision, the following terms37.22have the meanings given.37.23(1) "Qualified alternative minimum tax" equals the amount37.24determined under subdivision 1 for the taxable year.37.25(2)"Qualified regular tax" means the tax imposed under 37.26 section 290.06, subdivision 1. 37.27 (c) The qualified alternative minimum tax for a taxable 37.28 year is an alternative minimum tax credit carryover to each of 37.29 the taxable years succeeding the taxable year. The entire 37.30 amount of the credit must be carried to the earliest taxable 37.31 year to which the amount may be carried. Any unused portion of 37.32 the credit must be carried to the following taxable year.No37.33credit may be carried to a taxable year in which alternative37.34minimum tax was paid.37.35 (d) An acquiring corporation may carry over this credit 37.36 from a transferor or distributor corporation in a corporate 38.1 acquisition. The provisions of section 381 of the Internal 38.2 Revenue Code apply in determining the amount of the carryover, 38.3 if any. 38.4 (e) Notwithstanding any provisions in this subdivision to 38.5 the contrary, this credit is only available through the tax year 38.6 ending December 31, 2002. This is not a refundable credit. 38.7 [EFFECTIVE DATE.] This section is effective for tax years 38.8 beginning after December 31, 2000. 38.9 Sec. 12. Minnesota Statutes 2000, section 290.0921, is 38.10 amended by adding a subdivision to read: 38.11 Subd. 9. [EXPIRATION.] This section expires effective for 38.12 taxable years beginning after December 31, 2002. 38.13 [EFFECTIVE DATE.] This section is effective for tax years 38.14 beginning after December 31, 2000. 38.15 Sec. 13. Minnesota Statutes 2000, section 290.0922, 38.16 subdivision 2, is amended to read: 38.17 Subd. 2. [EXEMPTIONS.] The following entities are exempt 38.18 from the tax imposed by this section: 38.19 (1) corporations exempt from tax under section 290.05other38.20than insurance companies exempt under subdivision 1, paragraph38.21(d); 38.22 (2) real estate investment trusts; 38.23 (3) regulated investment companies or a fund thereof; and 38.24 (4) entities having a valid election in effect under 38.25 section 860D(b) of the Internal Revenue Code; 38.26 (5) town and farmers' mutual insurance companies; and 38.27 (6) cooperatives organized under chapter 308A that provide 38.28 housing exclusively to persons age 55 and over and are 38.29 classified as homesteads under section 273.124, subdivision 3. 38.30 Entities not specifically exempted by this subdivision are 38.31 subject to tax under this section, notwithstanding section 38.32 290.05. 38.33 [EFFECTIVE DATE.] This section is effective for tax years 38.34 beginning after December 31, 2000. 38.35 Sec. 14. Minnesota Statutes 2000, section 290.095, 38.36 subdivision 2, is amended to read: 39.1 Subd. 2. [DEFINED AND LIMITED.] (a) The term "net 39.2 operating loss" as used in this section shall mean a net 39.3 operating loss as defined in section 172(c) or 810(a), in the 39.4 case of life insurance companies, of the Internal Revenue Code, 39.5 with the modifications specified in subdivision 4.The39.6deductions provided in section 290.21 and the modification39.7provided in section 290.01, subdivision 19d, clause (11), cannot39.8be used in the determination of a net operating loss.39.9 (b) The term "net operating loss deduction" as used in this 39.10 section means the aggregate of the net operating loss carryovers 39.11 to the taxable year, computed in accordance with subdivision 3. 39.12 The provisions of section 172(b) or 810(b), in the case of life 39.13 insurance companies, of the Internal Revenue Code relating to 39.14 the carryback of net operating losses, do not apply. 39.15 [EFFECTIVE DATE.] This section is effective for tax years 39.16 beginning after December 31, 2000. 39.17 Sec. 15. Minnesota Statutes 2000, section 290.17, 39.18 subdivision 4, is amended to read: 39.19 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 39.20 business conducted wholly within this state or partly within and 39.21 partly without this state is part of a unitary business, the 39.22 entire income of the unitary business is subject to 39.23 apportionment pursuant to section 290.191. Notwithstanding 39.24 subdivision 2, paragraph (c), none of the income of a unitary 39.25 business is considered to be derived from any particular source 39.26 and none may be allocated to a particular place except as 39.27 provided by the applicable apportionment formula. The 39.28 provisions of this subdivision do not apply to business income 39.29 subject to subdivision 5, income of an insurance company 39.30 determined under section 290.35, or income of an investment 39.31 company determined under section 290.36. 39.32 (b) The term "unitary business" means business activities 39.33 or operations which result in a flow of value between them. The 39.34 term may be applied within a single legal entity or between 39.35 multiple entities and without regard to whether each entity is a 39.36 sole proprietorship, a corporation, a partnership or a trust. 40.1 (c) Unity is presumed whenever there is unity of ownership, 40.2 operation, and use, evidenced by centralized management or 40.3 executive force, centralized purchasing, advertising, 40.4 accounting, or other controlled interaction, but the absence of 40.5 these centralized activities will not necessarily evidence a 40.6 nonunitary business. Unity is also presumed when business 40.7 activities or operations are of mutual benefit, dependent upon 40.8 or contributory to one another, either individually or as a 40.9 group. 40.10 (d) Where a business operation conducted in Minnesota is 40.11 owned by a business entity that carries on business activity 40.12 outside the state different in kind from that conducted within 40.13 this state, and the other business is conducted entirely outside 40.14 the state, it is presumed that the two business operations are 40.15 unitary in nature, interrelated, connected, and interdependent 40.16 unless it can be shown to the contrary. 40.17 (e) Unity of ownership is not deemed to exist when a 40.18 corporation is involved unless that corporation is a member of a 40.19 group of two or more business entities and more than 50 percent 40.20 of the voting stock of each member of the group is directly or 40.21 indirectly owned by a common owner or by common owners, either 40.22 corporate or noncorporate, or by one or more of the member 40.23 corporations of the group. For this purpose, the term "voting 40.24 stock" shall include membership interests of mutual insurance 40.25 holding companies formed under section 60A.077. 40.26 (f) The net income and apportionment factors under section 40.27 290.191 or 290.20 of foreign corporations and other foreign 40.28 entities which are part of a unitary business shall not be 40.29 included in the net income or the apportionment factors of the 40.30 unitary business. A foreign corporation or other foreign entity 40.31 which is required to file a return under this chapter shall file 40.32 on a separate return basis.The net income and apportionment40.33factors under section 290.191 or 290.20 of foreign operating40.34corporations shall not be included in the net income or the40.35apportionment factors of the unitary business except as provided40.36in paragraph (g).41.1(g) The adjusted net income of a foreign operating41.2corporation shall be deemed to be paid as a dividend on the last41.3day of its taxable year to each shareholder thereof, in41.4proportion to each shareholder's ownership, with which such41.5corporation is engaged in a unitary business. Such deemed41.6dividend shall be treated as a dividend under section 290.21,41.7subdivision 4.41.8Dividends actually paid by a foreign operating corporation41.9to a corporate shareholder which is a member of the same unitary41.10business as the foreign operating corporation shall be41.11eliminated from the net income of the unitary business in41.12preparing a combined report for the unitary business. The41.13adjusted net income of a foreign operating corporation shall be41.14its net income adjusted as follows:41.15(1) any taxes paid or accrued to a foreign country, the41.16commonwealth of Puerto Rico, or a United States possession or41.17political subdivision of any of the foregoing shall be a41.18deduction; and41.19(2) the subtraction from federal taxable income for41.20payments received from foreign corporations or foreign operating41.21corporations under section 290.01, subdivision 19d, clause (11),41.22shall not be allowed.41.23If a foreign operating corporation incurs a net loss,41.24neither income nor deduction from that corporation shall be41.25included in determining the net income of the unitary business.41.26(h)(g) For purposes of determining the net income of a 41.27 unitary business and the factors to be used in the apportionment 41.28 of net income pursuant to section 290.191 or 290.20, there must 41.29 be included only the income and apportionment factors of 41.30 domestic corporations or other domestic entitiesother than41.31foreign operating corporationsthat are determined to be part of 41.32 the unitary business pursuant to this subdivision, 41.33 notwithstanding that foreign corporations or other foreign 41.34 entities might be included in the unitary business. 41.35(i)(h) Deductions for expenses, interest, or taxes 41.36 otherwise allowable under this chapter that are connected with 42.1 or allocable against dividends, deemed dividends described in42.2paragraph (g), or royalties, fees, or other like income42.3described in section 290.01, subdivision 19d, clause (11),shall 42.4 not be disallowed. 42.5(j)(i) Each corporation or other entity, except a sole 42.6 proprietorship, that is part of a unitary business must file 42.7 combined reports as the commissioner determines. On the 42.8 reports, all intercompany transactions between entities included 42.9 pursuant to paragraph(h)(g) must be eliminated and the entire 42.10 net income of the unitary business determined in accordance with 42.11 this subdivision is apportioned among the entities by using each 42.12 entity's Minnesota factors for apportionment purposes in the 42.13 numerators of the apportionment formula and the total factors 42.14 for apportionment purposes of all entities included pursuant to 42.15 paragraph(h)(g) in the denominators of the apportionment 42.16 formula. 42.17(k)(j) If a corporation has been divested from a unitary 42.18 business and is included in a combined report for a fractional 42.19 part of the common accounting period of the combined report: 42.20 (1) its income includable in the combined report is its 42.21 income incurred for that part of the year determined by 42.22 proration or separate accounting; and 42.23 (2) its sales, property, and payroll included in the 42.24 apportionment formula must be prorated or accounted for 42.25 separately. 42.26 [EFFECTIVE DATE.] This section is effective for tax years 42.27 beginning after December 31, 2000. 42.28 Sec. 16. Minnesota Statutes 2000, section 290.191, 42.29 subdivision 2, is amended to read: 42.30 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 42.31 Except for those trades or businesses required to use a 42.32 different formula under subdivision 3 or section 290.35 or 42.33 290.36, and for those trades or businesses that receive 42.34 permission to use some other method under section 290.20 or 42.35 under subdivision 4, a trade or business required to apportion 42.36 its net income must apportion its income to this state on the 43.1 basis of the percentage obtained by taking the sum of: 43.2 (1)7590 percent of the percentage which the sales made 43.3 within this state in connection with the trade or business 43.4 during the tax period are of the total sales wherever made in 43.5 connection with the trade or business during the tax period; 43.6 (2)12.5five percent of the percentage which the total 43.7 tangible property used by the taxpayer in this state in 43.8 connection with the trade or business during the tax period is 43.9 of the total tangible property, wherever located, used by the 43.10 taxpayer in connection with the trade or business during the tax 43.11 period; and 43.12 (3)12.5five percent of the percentage which the 43.13 taxpayer's total payrolls paid or incurred in this state or paid 43.14 in respect to labor performed in this state in connection with 43.15 the trade or business during the tax period are of the 43.16 taxpayer's total payrolls paid or incurred in connection with 43.17 the trade or business during the tax period. 43.18 [EFFECTIVE DATE.] This section is effective for tax years 43.19 beginning after December 31, 2000. 43.20 Sec. 17. Minnesota Statutes 2000, section 290.191, 43.21 subdivision 3, is amended to read: 43.22 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL 43.23 INSTITUTIONS.] Except for an investment company required to 43.24 apportion its income under section 290.36, a financial 43.25 institution that is required to apportion its net income must 43.26 apportion its net income to this state on the basis of the 43.27 percentage obtained by taking the sum of: 43.28 (1)7590 percent of the percentage which the receipts from 43.29 within this state in connection with the trade or business 43.30 during the tax period are of the total receipts in connection 43.31 with the trade or business during the tax period, from wherever 43.32 derived; 43.33 (2)12.5five percent of the percentage which the sum of 43.34 the total tangible property used by the taxpayer in this state 43.35 and the intangible property owned by the taxpayer and attributed 43.36 to this state in connection with the trade or business during 44.1 the tax period is of the sum of the total tangible property, 44.2 wherever located, used by the taxpayer and the intangible 44.3 property owned by the taxpayer and attributed to all states in 44.4 connection with the trade or business during the tax period; and 44.5 (3)12.5five percent of the percentage which the 44.6 taxpayer's total payrolls paid or incurred in this state or paid 44.7 in respect to labor performed in this state in connection with 44.8 the trade or business during the tax period are of the 44.9 taxpayer's total payrolls paid or incurred in connection with 44.10 the trade or business during the tax period. 44.11 [EFFECTIVE DATE.] This section is effective for tax years 44.12 beginning after December 31, 2000. 44.13 Sec. 18. Minnesota Statutes 2000, section 290.32, is 44.14 amended to read: 44.15 290.32 [TAXES FOR PART OF YEAR, COMPUTATION.] 44.16 When under this chapter a taxpayer is permitted or required 44.17 to make a return for a fractional part of a year, the tax shall 44.18 be computed in the same manner as if such fractional part of a 44.19 year were an entire year, except: 44.20 (1) A taxpayer who is permitted to change the basis for 44.21 reporting income from a fiscal to a calendar year shall make a 44.22 separate return for the period between the close of the 44.23 taxpayer's last fiscal year and the following December 31st; if 44.24 the change is from a calendar to a fiscal year, a separate 44.25 return shall be made for the period between the close of the 44.26 taxpayer's last calendar year and the date designated as the 44.27 close of the fiscal year; and if the change is from one fiscal 44.28 year to another fiscal year, a separate return shall be made for 44.29 the period between the close of the former fiscal year and the 44.30 date designated as the close of the new fiscal year. The 44.31 taxable net income, or for corporations the taxable net income44.32as reduced by the deductions contained in section 290.21,for 44.33 any such period shall be put on an annual basis by multiplying 44.34 the amount thereof by 12 and dividing by the number of months 44.35 included in the period for which such separate return is made; 44.36 and the tax shall be that part of a tax, computed on the taxable 45.1 net income put on such annual basis which the number of months 45.2 in such period bears to 12 months. 45.3 (2) Where any of the enumerated changes in accounting 45.4 period referred to in clause (1) involve a 52-53 week fiscal 45.5 year and any such change results in a short period of less than 45.6 seven days, such short period shall be added to and deemed a 45.7 part of the following taxable year. If the change results in a 45.8 short period of seven or more days, but less than 359 days, the 45.9 taxable net income, or for corporations the taxable net income45.10as reduced by the deductions contained in section 290.21,for 45.11 any such period shall be placed on an annual basis by 45.12 multiplying such income by 365 and dividing the result by the 45.13 same number of days in the short period; and the tax shall be 45.14 that part of a tax, computed on the taxable net income placed on 45.15 such annual basis which the number of days in such short period 45.16 bears to 365 days. Where the short period is 359 days or more, 45.17 the tax shall be computed in the same manner as if such short 45.18 period were an entire year. 45.19 [EFFECTIVE DATE.] This section is effective for tax years 45.20 beginning after December 31, 2000. 45.21 Sec. 19. Minnesota Statutes 2000, section 290.9727, 45.22 subdivision 3, is amended to read: 45.23 Subd. 3. [TAXABLE NET INCOME.] For purposes of this 45.24 section, taxable net income means the lesser of: 45.25 (1) the recognized built-in gains of the S corporation for 45.26 the taxable year, as determined under section 1374 of the 45.27 Internal Revenue Code, subject to the modifications provided in 45.28 section 290.01, subdivision 19f, that are allocable to this 45.29 state under section 290.17, 290.191, or 290.20; or 45.30 (2) the amount of the S corporation's federal taxable 45.31 income, as determined under section 1374(d)(4) of the Internal 45.32 Revenue Code, subject to the provisions of section 290.01, 45.33 subdivisions 19c to 19f, that is allocable to this state under 45.34 section 290.17, 290.191, or 290.20, less the deduction for45.35charitable contributions in section 290.21, subdivision 3. 45.36 [EFFECTIVE DATE.] This section is effective for tax years 46.1 beginning after December 31, 2000. 46.2 Sec. 20. Minnesota Statutes 2000, section 290.9728, 46.3 subdivision 2, is amended to read: 46.4 Subd. 2. [TAXABLE INCOME.] For purposes of this section, 46.5 taxable income means the lesser of: 46.6 (1) the amount of the net capital gain of the S corporation 46.7 for the taxable year, as determined under sections 1222 and 1374 46.8 of the Internal Revenue Code, and subject to the modifications 46.9 provided in section 290.01, subdivisions 19e and 19f, in excess 46.10 of $25,000 that is allocable to this state under section 290.17, 46.11 290.191, or 290.20; or 46.12 (2) the amount of the S corporation's federal taxable 46.13 income, subject to the provisions of section 290.01, 46.14 subdivisions 19c to 19f, that is allocable to this state under 46.15 section 290.17, 290.191, or 290.20, less the deduction for46.16charitable contributions in section 290.21, subdivision 3. 46.17 [EFFECTIVE DATE.] This section is effective for tax years 46.18 beginning after December 31, 2000. 46.19 Sec. 21. Minnesota Statutes 2000, section 290.9729, 46.20 subdivision 2, is amended to read: 46.21 Subd. 2. [TAXABLE INCOME.] For the purposes of this 46.22 section, taxable income means the lesser of: 46.23 (1) the amount of the S corporation's excess net passive 46.24 income, as determined under section 1375 of the Internal Revenue 46.25 Code, subject to the provisions of section 290.01, subdivisions 46.26 19c to 19f, that is allocable to this state under section 46.27 290.17, 290.191, or 290.20; or 46.28 (2) the amount of the S corporation's federal taxable 46.29 income, as determined under section 1374(d)(4) of the Internal 46.30 Revenue Code, subject to the provisions of section 290.01, 46.31 subdivisions 19c to 19f, that is allocable to this state under 46.32 section 290.17, 290.191, or 290.20, less the deduction for46.33charitable contributions in section 290.21, subdivision 3. 46.34 [EFFECTIVE DATE.] This section is effective for tax years 46.35 beginning after December 31, 2000. 46.36 Sec. 22. Minnesota Statutes 2000, section 298.01, 47.1 subdivision 3b, is amended to read: 47.2 Subd. 3b. [DEDUCTIONS.](a)For purposes of determining 47.3 taxable income under subdivision 3, the deductions from gross 47.4 income include only those expenses necessary to convert raw ores 47.5 to marketable quality. Such expenses include costs associated 47.6 with refinement but do not include expenses such as 47.7 transportation, stockpiling, marketing, or marine insurance that 47.8 are incurred after marketable ores are produced, unless the 47.9 expenses are included in gross income. 47.10 (b) The provisions of section 290.01, subdivisions 19c, 47.11clauses (7) and (11)clause (5), and 19d,clauses (7) and47.12(12)clause (8), are not used to determine taxable income. 47.13 [EFFECTIVE DATE.] This section is effective for taxes 47.14 payable May 1, 2002, and thereafter. 47.15 Sec. 23. Minnesota Statutes 2000, section 298.01, 47.16 subdivision 3d, is amended to read: 47.17 Subd. 3d. [ALTERNATIVE MINIMUM TAX CREDIT.] A credit is 47.18 allowed against qualified regular tax for qualified alternative 47.19 minimum tax previously paid. The amount of the credit allowed 47.20 under this subdivision is determined under section 290.0921, 47.21 subdivision 8. For purposes of calculating this credit, the 47.22 following terms have the meanings given: 47.23 (a) "Qualified alternative minimum tax" means the amount of 47.24 alternative minimum tax determined under subdivision 3 and 47.25 Minnesota Statutes 2000, section 290.0921, subdivision 1. 47.26 (b) "Qualified regular tax" means the tax imposed under 47.27 subdivision 3 and section 290.06, subdivision 1. 47.28 Notwithstanding any provisions in this subdivision to the 47.29 contrary, this credit is only available through the tax year 47.30 ending December 31, 2002, for taxes payable on or before May 1, 47.31 2003. This is not a refundable credit. 47.32 [EFFECTIVE DATE.] This section is effective for taxes 47.33 payable May 1, 2002, and thereafter. 47.34 Sec. 24. Minnesota Statutes 2000, section 298.01, 47.35 subdivision 4c, is amended to read: 47.36 Subd. 4c. [SPECIAL DEDUCTIONSDEDUCTION FOR DEPRECIATION; 48.1 NET OPERATING LOSS.] (a) For purposes of determining taxable 48.2 income under subdivision 4, the following modifications are 48.3 allowed: 48.4 (1) the provisions of section 290.01, subdivisions 19c, 48.5clauses (7) and (11)clause (5), and 19d,clauses (7) and48.6(12)clause (8), are not used to determine taxable income; and 48.7 (2) for assets placed in service before January 1, 1990, 48.8 the deduction for depreciation will be the same amount allowed 48.9 under chapter 290, except that after an asset has been fully 48.10 depreciated for federal income tax purposes any remaining 48.11 depreciable basis is allowed as a deduction using the 48.12 straight-line method over the following number of years: 48.13 (i) three-year property, one year; 48.14 (ii) five- and seven-year property, two years; 48.15 (iii) ten-year property, five years; and 48.16 (iv) all other property, seven years. 48.17 No deduction is allowed if an asset is fully depreciated 48.18 for occupation tax purposes before January 1990. 48.19 (b) For purposes of determining the deduction allowed under 48.20 paragraph (a), clause (2), the remaining depreciable basis of 48.21 property placed in service before January 1, 1990, is calculated 48.22 as follows: 48.23 (1) the adjusted basis of the property on December 31, 48.24 1989, which was used to calculate the hypothetical corporate 48.25 franchise tax under Minnesota Statutes 1988, section 298.40, 48.26 including salvage value; less 48.27 (2) deductions for depreciation allowed under section 48.28 290.01, subdivision 19e. 48.29 (c) The basis for determining gain or loss on sale or 48.30 disposition of assets placed in service before January 1, 1990, 48.31 is the basis determined under paragraph (b), less the deductions 48.32 allowed under paragraph (a), clause (2). 48.33 (d) The amount of net operating loss incurred in a taxable 48.34 year beginning before January 1, 1990, that may be carried over 48.35 to a taxable year beginning after December 31, 1989, is the 48.36 amount of net operating loss carryover determined in the 49.1 calculation of the hypothetical corporate franchise tax under 49.2 Minnesota Statutes 1988, sections 298.40 and 298.402. 49.3 [EFFECTIVE DATE.] This section is effective for taxes 49.4 payable May 1, 2002, and thereafter. 49.5 Sec. 25. Minnesota Statutes 2000, section 298.01, 49.6 subdivision 4e, is amended to read: 49.7 Subd. 4e. [ALTERNATIVE MINIMUM TAX CREDIT.] A credit is 49.8 allowed against qualified regular tax for qualified alternative 49.9 minimum tax previously paid. The amount of the credit allowed 49.10 under this paragraph is determined under section 290.0921, 49.11 subdivision 8. For purposes of calculating this credit, the 49.12 following terms have the meanings given: 49.13 (1) "Qualified alternative minimum tax" means the amount of 49.14 alternative minimum tax determined under subdivision 4d 49.15 and Minnesota Statutes 2000, section 290.0921, subdivision 1. 49.16 (2) "Qualified regular tax" means the tax imposed under 49.17 subdivision 4 and section 290.06, subdivision 1. 49.18 Notwithstanding any provisions in this subdivision to the 49.19 contrary, this credit is only available through the tax year 49.20 ending December 31, 2002, for taxes payable on or before May 1, 49.21 2003. This is not a refundable credit. 49.22 [EFFECTIVE DATE.] This section is effective for taxes 49.23 payable May 1, 2002, and thereafter. 49.24 Sec. 26. [REPEALER.] 49.25 (a) Minnesota Statutes 2000, sections 290.01, subdivision 49.26 6b; 290.0673; 290.0921, subdivisions 1, 2, 3, 4, 5, 6, and 7; 49.27 290.21; and 290.35, subdivisions 3, 4, and 5, are repealed. 49.28 (b) Minnesota Statutes 2000, section 298.01, subdivisions 49.29 3c and 4d, are repealed. 49.30 (c) Minnesota Statutes 2000, sections 469.132, subdivision 49.31 2; and 469.1734, subdivision 4, are repealed. 49.32 [EFFECTIVE DATE.] This section, paragraph (a), is effective 49.33 for tax years beginning after December 31, 2000. This section, 49.34 paragraph (b), is effective for taxes payable May 1, 2002, and 49.35 thereafter. This section, paragraph (c), is effective the day 49.36 following final enactment. 50.1 ARTICLE 4 50.2 PROPERTY TAX REFORM 50.3 Section 1. Minnesota Statutes 2000, section 126C.01, is 50.4 amended by adding a subdivision to read: 50.5 Subd. 12. [RESIDENTIAL ASSESSED VALUE.] "Residential 50.6 assessed value" means the assessed value of the following 50.7 taxable properties located within the district, as defined in 50.8 section 273.13: class 1a, 1b, and 1c properties, the house, 50.9 garage, and immediately surrounding one acre of land of class 2a 50.10 properties, class 4a properties, class 4b(1) properties, class 50.11 4b(3) properties, class 4bb properties, and class 4d properties. 50.12 [EFFECTIVE DATE.] This section is effective for taxes 50.13 payable in 2002 and thereafter. 50.14 Sec. 2. Minnesota Statutes 2000, section 126C.01, is 50.15 amended by adding a subdivision to read: 50.16 Subd. 13. [ADJUSTED RESIDENTIAL ASSESSED VALUE.] "Adjusted 50.17 residential assessed value" means the residential assessed value 50.18 of property located within the district as adjusted by the 50.19 commissioner of revenue under section 127A.48. The adjusted 50.20 residential assessed value for a particular assessment year must 50.21 be used to compute referendum levy limitations under section 50.22 126C.17 for levies certified in the succeeding calendar year and 50.23 referendum aid for the school year beginning in the second 50.24 succeeding calendar year. 50.25 [EFFECTIVE DATE.] This section is effective for levies 50.26 certified in 2001 and aids payable for school years beginning in 50.27 2002, and thereafter. 50.28 Sec. 3. Minnesota Statutes 2000, section 126C.01, is 50.29 amended by adding a subdivision to read: 50.30 Subd. 14. [ADJUSTED ASSESSED VALUE.] "Adjusted assessed 50.31 value" means the assessed value of property located within the 50.32 district as adjusted by the commissioner of revenue under 50.33 section 127A.48. The adjusted assessed value for a particular 50.34 assessment year must be used to compute levy limitations for 50.35 levies certified in the succeeding calendar year and aid for the 50.36 school year beginning in the second succeeding calendar year. 51.1 [EFFECTIVE DATE.] This section is effective for levies 51.2 certified in 2001 and aid payable for school years beginning in 51.3 2002, and thereafter. 51.4 Sec. 4. [126C.02] [SCHOOL DISTRICT LEVY ADJUSTMENTS.] 51.5 Subdivision 1. [TRANSITION ADJUSTMENTS.] For taxes payable 51.6 in 2002 and thereafter, the commissioner of children, families, 51.7 and learning shall, in consultation with the commissioner of 51.8 revenue, make the adjustments required by this section. 51.9 Subd. 2. [REVENUE CONVERSION.] Each school district's 51.10 revenue authority that is established as a rate times net tax 51.11 capacity or adjusted net tax capacity under chapter 126C, shall 51.12 be adjusted by multiplying each revenue amount by the ratio of 51.13 the statewide net tax capacity as calculated using the class 51.14 rates in effect for assessment year 2001 to the statewide 51.15 assessed value using the class rates for the assessment year 51.16 related to the taxes payable year for which the revenue 51.17 authority is being determined. 51.18 Subd. 3. [TAX RATE ADJUSTMENT.] Each tax rate established 51.19 under chapters 123B and 124D shall be adjusted by multiplying 51.20 the rate by the ratio of the statewide tax capacity as 51.21 calculated using the class rates in effect for assessment year 51.22 2001 to the statewide assessed value using the class rates for 51.23 the assessment year related to the taxes payable year for which 51.24 the rate is being determined. 51.25 Subd. 4. [EQUALIZING FACTORS.] Each equalizing factor 51.26 established under chapters 123B, 124D, and 126C, excluding 51.27 sections 123B.53, subdivision 5, 126C.10, subdivision 21, and 51.28 126C.17, subdivision 6, shall be adjusted by dividing the 51.29 equalizing factor by the ratio of the statewide tax capacity as 51.30 calculated using the class rates in effect for assessment year 51.31 2001 to the statewide assessed value using the class rates for 51.32 the assessment year related to the taxes payable year for which 51.33 the factor is being determined. 51.34 [EFFECTIVE DATE.] This section is effective for taxes 51.35 payable in 2002 and thereafter. 51.36 Sec. 5. Minnesota Statutes 2000, section 126C.13, 52.1 subdivision 1, is amended to read: 52.2 Subdivision 1. [GENERAL EDUCATION TAX RATE.] The 52.3 commissioner must establish the general education tax rate by 52.4 July 1 of each year for levies payable in the following year. 52.5 The general education tax capacity rate must be a rate, rounded 52.6 up to the nearest hundredth of a percent, that, when applied to 52.7 the adjusted net tax capacity for all districts, raises the 52.8 amount specified in this subdivision. The general education tax 52.9 rate must be the rate that raises $1,330,000,000 for fiscal year 52.10 2001 and fiscal year 2002, and zero for later fiscal years. The 52.11 general education tax rate may not be changed due to changes or 52.12 corrections made to a district's adjusted net tax capacity after 52.13 the tax rate has been established. 52.14 [EFFECTIVE DATE.] This section is effective the day 52.15 following final enactment. 52.16 Sec. 6. Minnesota Statutes 2000, section 126C.13, 52.17 subdivision 2, is amended to read: 52.18 Subd. 2. [GENERAL EDUCATION LEVY.] To obtain general 52.19 education revenue, excluding transition revenue and supplemental 52.20 revenue, a district may levy an amount not to exceed the general 52.21 education tax rate times the adjusted net tax capacity of the 52.22 district for the preceding year. If the amount of the general 52.23 education levy would exceed the general education revenue, 52.24 excluding transition revenue and supplemental revenue, the 52.25 general education levy must be determined according to 52.26 subdivision 3. For taxes payable in 2002 and thereafter, the 52.27 general education levy amount authorized by this subdivision for 52.28 all districts is zero. 52.29 [EFFECTIVE DATE.] This section is effective for taxes 52.30 payable in 2002 and thereafter. 52.31 Sec. 7. Minnesota Statutes 2000, section 126C.13, 52.32 subdivision 4, is amended to read: 52.33 Subd. 4. [GENERAL EDUCATION AID.] (a) For fiscal year 52.34 2002, a district's general education aid is the sum of the 52.35 following amounts: 52.36 (1) the product of (i) the difference between the general 53.1 education revenue, excluding transition revenue and supplemental 53.2 revenue, and the general education levy, times (ii) the ratio of 53.3 the actual amount levied to the permitted levy; 53.4 (2) transition aid according to section 126C.10, 53.5 subdivision 22; 53.6 (3) supplemental aid according to section127A.49126C.10, 53.7 subdivision 11; 53.8 (4) shared time aid according to section 126C.01, 53.9 subdivision 7; and 53.10 (5) referendum aid according to section 126C.17. 53.11 (b) For fiscal year 2003 and later, a district's general 53.12 education aid is the sum of the following amounts: 53.13 (1) the general education revenue according to section 53.14 126C.10, subdivision 1, excluding transition revenue; 53.15 (2) transition aid according to section 126C.10, 53.16 subdivision 22; 53.17 (3) shared time aid according to section 126C.01, 53.18 subdivision 7; and 53.19 (4) referendum aid according to section 126C.17. 53.20 [EFFECTIVE DATE.] This section is effective July 1, 2001, 53.21 and thereafter. 53.22 Sec. 8. Minnesota Statutes 2000, section 126C.17, 53.23 subdivision 5, is amended to read: 53.24 Subd. 5. [REFERENDUM EQUALIZATION REVENUE.] (a) For fiscal 53.25 year 2002, a district's referendum equalization revenue equals 53.26 thereferendum equalization allowancelesser of the district's 53.27 referendum allowance under subdivision 1 or $415 times the 53.28 district's resident marginal cost pupil units for that 53.29 year. For fiscal year 2003 and later, a district's referendum 53.30 equalization revenue equals the sum of the first tier referendum 53.31 equalization revenue and the second tier referendum equalization 53.32 revenue. 53.33 (b)TheA district's first tier referendum equalization 53.34 revenue equals the district's first tier referendum equalization 53.35 allowance times the district's resident marginal cost pupil 53.36 units for that year. 54.1 (c) A district's first tier referendum equalization 54.2 allowance equals$350 for fiscal year 2000 and $415 for fiscal54.3year 2001 and later.54.4(c) Referendum equalization revenue must not exceed a54.5district's total referendum revenue for that yearthe lesser of 54.6 the district's referendum allowance under subdivision 1 or $600. 54.7 (d) A district's second tier referendum equalization 54.8 allowance equals the lesser of the district's referendum 54.9 allowance under subdivision 1 or 25 percent of the formula 54.10 allowance, minus the district's first tier referendum 54.11 equalization allowance. 54.12 (e) Notwithstanding paragraph (d), the second tier 54.13 referendum equalization allowance for a district qualifying for 54.14 secondary sparsity revenue under section 126C.10, subdivision 7, 54.15 or elementary sparsity revenue under section 126C.10, 54.16 subdivision 8, equals the district's referendum allowance under 54.17 subdivision 1, minus the district's first tier referendum 54.18 equalization allowance. 54.19 [EFFECTIVE DATE.] This section is effective for fiscal year 54.20 2002 and thereafter. 54.21 Sec. 9. Minnesota Statutes 2000, section 126C.17, 54.22 subdivision 6, is amended to read: 54.23 Subd. 6. [REFERENDUM EQUALIZATION LEVY.] (a) A district's 54.24 referendum equalization levy for areferendum levied against the54.25referendum market value of all taxable property as defined in54.26section 126C.01, subdivision 3fiscal year 2002, equals the 54.27 district's referendum equalization revenue times the lesser of 54.28 one or the ratio of the district's referendum market value per 54.29 resident marginal cost pupil unit to $476,000. 54.30 (b) For fiscal year 2003 and later, a district's referendum 54.31 equalization levyfor a referendum levied against the net tax54.32capacity of all taxable property equals the district's54.33referendum equalization revenue times the lesser of one or the54.34ratio of the district's adjusted net tax capacity per resident54.35marginal cost pupil unit to $8,404equals the sum of the first 54.36 tier referendum equalization levy and the second tier referendum 55.1 equalization levy. 55.2 (c) A district's first tier referendum equalization levy 55.3 equals the district's first tier referendum equalization revenue 55.4 times the lesser of one or the ratio of the district's adjusted 55.5 residential assessed value per resident marginal cost pupil unit 55.6 to $6,400. 55.7 (d) A district's second tier referendum equalization levy 55.8 equals the district's second tier revenue times the lesser of 55.9 one or the ratio of the district's adjusted residential assessed 55.10 value per resident marginal cost pupil unit to $4,265. 55.11 [EFFECTIVE DATE.] This section is effective for fiscal year 55.12 2002 and thereafter. 55.13 Sec. 10. Minnesota Statutes 2000, section 126C.17, 55.14 subdivision 7, is amended to read: 55.15 Subd. 7. [REFERENDUM EQUALIZATION AID.] (a) A district's 55.16 referendum equalization aid equals the difference between its 55.17 referendum equalization revenue and levy. 55.18 (b) If a district's actual levy for first or second tier 55.19 referendum equalization revenue is less than its maximum levy 55.20 limit for that tier, aid for that tier shall be proportionately 55.21 reduced. 55.22 [EFFECTIVE DATE.] This section is effective for fiscal year 55.23 2003 and thereafter. 55.24 Sec. 11. Minnesota Statutes 2000, section 126C.17, 55.25 subdivision 8, is amended to read: 55.26 Subd. 8. [UNEQUALIZED REFERENDUM LEVY.] Each year, a 55.27 district may levy an amount equal to the difference between its 55.28 total referendum revenue according to subdivision54 and its 55.29equalized referendum aid and levy according to subdivisions 655.30and 7referendum equalization revenue according to subdivision 5. 55.31 [EFFECTIVE DATE.] This section is effective for taxes 55.32 payable in 2002 and thereafter. 55.33 Sec. 12. Minnesota Statutes 2000, section 126C.17, 55.34 subdivision 9, is amended to read: 55.35 Subd. 9. [REFERENDUM REVENUE.] (a) The revenue authorized 55.36 by section 126C.10, subdivision 1, may be increased in the 56.1 amount approved by the voters of the district at a referendum 56.2 called for the purpose. The referendum may be called by the 56.3 board or shall be called by the board upon written petition of 56.4 qualified voters of the district. The referendum must be 56.5 conducted one or two calendar years before the increased levy 56.6 authority, if approved, first becomes payable. Only one 56.7 election to approve an increase may be held in a calendar year. 56.8 Unless the referendum is conducted by mail under paragraph (g), 56.9 the referendum must be held on the first Tuesday after the first 56.10 Monday in November. The ballot must state the maximum amount of 56.11 the increased revenue per resident marginal cost pupil unit, the 56.12 estimated referendum tax mill rateas a percentage of referendum56.13market valuein the first year it is to be levied, and that the 56.14 revenue must be used to finance school operations. The ballot 56.15 may state a schedule, determined by the board, of increased 56.16 revenue per resident marginal cost pupil unit that differs from 56.17 year to year over the number of years for which the increased 56.18 revenue is authorized. If the ballot contains a schedule 56.19 showing different amounts, it must also indicate the estimated 56.20 referendum tax mill rateas a percent of referendum market value56.21 for the amount specified for the first year and for the maximum 56.22 amount specified in the schedule. The ballot may state that 56.23 existing referendum levy authority is expiring. In this case, 56.24 the ballot may also compare the proposed levy authority to the 56.25 existing expiring levy authority, and express the proposed 56.26 increase as the amount, if any, over the expiring referendum 56.27 levy authority. The ballot must designate the specific number 56.28 of years, not to exceed ten, for which the referendum 56.29 authorization applies. The notice required under section 275.60 56.30 may be modified to read, in cases of renewing existing levies: 56.31 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 56.32 FOR A PROPERTY TAX INCREASE." 56.33 The ballot may contain a textual portion with the 56.34 information required in this subdivision and a question stating 56.35 substantially the following: 56.36 "Shall the increase in the revenue proposed by (petition 57.1 to) the board of ........., School District No. .., be approved?" 57.2 If approved, an amount equal to the approved revenue per 57.3 resident marginal cost pupil unit times the resident marginal 57.4 cost pupil units for the school year beginning in the year after 57.5 the levy is certified shall be authorized for certification for 57.6 the number of years approved, if applicable, or until revoked or 57.7 reduced by the voters of the district at a subsequent referendum. 57.8 (b) The board must prepare and deliver by first class mail 57.9 at least 15 days but no more than 30 days before the day of the 57.10 referendum to each taxpayer a notice of the referendum and the 57.11 proposed revenue increase. The board need not mail more than 57.12 one notice to any taxpayer. For the purpose of giving mailed 57.13 notice under this subdivision, owners must be those shown to be 57.14 owners on the records of the county auditor or, in any county 57.15 where tax statements are mailed by the county treasurer, on the 57.16 records of the county treasurer. Every property owner whose 57.17 name does not appear on the records of the county auditor or the 57.18 county treasurer is deemed to have waived this mailed notice 57.19 unless the owner has requested in writing that the county 57.20 auditor or county treasurer, as the case may be, include the 57.21 name on the records for this purpose. The notice must project 57.22 the anticipated amount of tax increase in annual dollars and 57.23 annualpercentagemill rates for typical residential homesteads, 57.24 agricultural homesteads, and apartments, and57.25commercial-industrial propertywithin the school district. 57.26 The notice for a referendum may state that an existing 57.27 referendum levy is expiring and project the anticipated amount 57.28 of increase over the existing referendum levy in the first year, 57.29 if any, in annual dollars and annualpercentagemill rates for 57.30 typical residential homesteads, agricultural homesteads, and 57.31 apartments, and commercial-industrial propertywithin the 57.32 district. 57.33 The notice must include the following statement: "Passage 57.34 of this referendum will result in an increase in your property 57.35 taxes." However, in cases of renewing existing levies, the 57.36 notice may include the following statement: "Passage of this 58.1 referendum may result in an increase in your property taxes." 58.2 (c) A referendum on the question of revoking or reducing 58.3 the increased revenue amount authorized pursuant to paragraph 58.4 (a) may be called by the board and shall be called by the board 58.5 upon the written petition of qualified voters of the district. 58.6 A referendum to revoke or reduce the levy amount must be based 58.7 upon the dollaramount, local tax rate, oramount per resident 58.8 marginal cost pupil unit, that was stated to be the basis for 58.9 the initial authorization. Revenue approved by the voters of 58.10 the district pursuant to paragraph (a) must be received at least 58.11 once before it is subject to a referendum on its revocation or 58.12 reduction for subsequent years. Only one revocation or 58.13 reduction referendum may be held to revoke or reduce referendum 58.14 revenue for any specific year and for years thereafter. 58.15 (d) A petition authorized by paragraph (a) or (c) is 58.16 effective if signed by a number of qualified voters in excess of 58.17 15 percent of the registered voters of the district on the day 58.18 the petition is filed with the board. A referendum invoked by 58.19 petition must be held on the date specified in paragraph (a). 58.20 (e) The approval of 50 percent plus one of those voting on 58.21 the question is required to pass a referendum authorized by this 58.22 subdivision. 58.23 (f) At least 15 days before the day of the referendum, the 58.24 district must submit a copy of the notice required under 58.25 paragraph (b) to the commissioner and to the county auditor of 58.26 each county in which the district is located. Within 15 days 58.27 after the results of the referendum have been certified by the 58.28 board, or in the case of a recount, the certification of the 58.29 results of the recount by the canvassing board, the district 58.30 must notify the commissioner of the results of the referendum. 58.31 (g) Except for a referendum held under subdivision 11, any 58.32 referendum under this section held on a day other than the first 58.33 Tuesday after the first Monday in November must be conducted by 58.34 mail in accordance with section 204B.46. Notwithstanding 58.35 paragraph (b) to the contrary, in the case of a referendum 58.36 conducted by mail under this paragraph, the notice required by 59.1 paragraph (b) must be prepared and delivered by first class mail 59.2 at least 20 days before the referendum. 59.3 [EFFECTIVE DATE.] This section is effective the day 59.4 following final enactment. 59.5 Sec. 13. Minnesota Statutes 2000, section 126C.17, 59.6 subdivision 10, is amended to read: 59.7 Subd. 10. [SCHOOL REFERENDUM LEVY;MARKETRESIDENTIAL 59.8 ASSESSED VALUE.] Notwithstanding the provisions of subdivision 59.9 9, a school referendum levyapproved after November 1, 1992,for 59.10 taxes payable in19932002 and thereafter, must be levied 59.11 against thereferendum market valueresidential assessed value 59.12 ofalltaxable property as defined in section 126C.01, 59.13 subdivision312. Any referendum levy amount subject to the 59.14 requirements of this subdivision must be certified separately to 59.15 the county auditor under section 275.07. 59.16 All other provisions of subdivision 9 that do not conflict 59.17 with this subdivision apply to referendum levies under this 59.18 subdivision. 59.19 [EFFECTIVE DATE.] This section is effective the day 59.20 following final enactment. 59.21 Sec. 14. Minnesota Statutes 2000, section 127A.48, 59.22 subdivision 1, is amended to read: 59.23 Subdivision 1. [COMPUTATION.] The department of revenue 59.24 must annually conduct an assessment/sales ratio study of the 59.25 taxable property in each school district in accordance with the 59.26 procedures in subdivisions 2 and 3. Based upon the results of 59.27 this assessment/sales ratio study, the department of revenue 59.28 must determine an aggregate equalizednet tax capacityassessed 59.29 value for the various classes of taxable property in each 59.30 district, whichtax capacityassessed value shall be designated 59.31 as the adjustednet tax capacityassessed value. The 59.32 adjustednet tax capacitiesassessed values shall be determined 59.33 using thenet tax capacity percentagesclass rates in effect for 59.34 the assessment year following the assessment year of the study. 59.35 The department of revenue must make whatever estimates are 59.36 necessary to account for changes in the classification system. 60.1 The department of revenue may incur the expense necessary to 60.2 make the determinations. The commissioner of revenue may 60.3 reimburse any county or governmental official for requested 60.4 services performed in ascertaining the adjustednet tax capacity60.5 assessed value. On or before March 15 annually, the department 60.6 of revenue shall file with the chair of the tax committee of the 60.7 house of representatives and the chair of the committee on taxes 60.8 and tax laws of the senate a report of adjustednet tax60.9capacitiesassessed values. On or before June 15 annually, the 60.10 department of revenue shall file its final report on the 60.11 adjustednet tax capacitiesassessed values established by the 60.12 previous year's assessments and the current year'snet tax60.13capacity percentagesclass rates with the commissioner of 60.14 children, families, and learning and each county auditor for 60.15 those districts for which the auditor has the responsibility for 60.16 determination of local tax rates. A copy of the report so filed 60.17 shall be mailed to the clerk of each district involved and to 60.18 the county assessor or supervisor of assessments of the county 60.19 or counties in which each district is located. 60.20 [EFFECTIVE DATE.] This section is effective the day 60.21 following final enactment. 60.22 Sec. 15. Minnesota Statutes 2000, section 270A.03, 60.23 subdivision 7, is amended to read: 60.24 Subd. 7. [REFUND.] "Refund" means an individual income tax 60.25 refund or political contribution refund,pursuant to chapter 60.26 290,ora property tax credit or refund,pursuant to chapter 60.27 290A, or a sustainable forest tax refund pursuant to chapter 60.28 290C. 60.29 For purposes of this chapter, lottery prizes, as set forth 60.30 in section 349A.08, subdivision 8, and amounts granted to 60.31 persons by the legislature on the recommendation of the joint 60.32 senate-house of representatives subcommittee on claims shall be 60.33 treated as refunds. 60.34 In the case of a joint property tax refund payable to 60.35 spouses under chapter 290A, the refund shall be considered as 60.36 belonging to each spouse in the proportion of the total refund 61.1 that equals each spouse's proportion of the total income 61.2 determined under section 290A.03, subdivision 3. In the case of 61.3 a joint income tax refund under chapter 289A, the refund shall 61.4 be considered as belonging to each spouse in the proportion of 61.5 the total refund that equals each spouse's proportion of the 61.6 total taxable income determined under section 290.01, 61.7 subdivision 29. The commissioner shall remit the entire refund 61.8 to the claimant agency, which shall, upon the request of the 61.9 spouse who does not owe the debt, determine the amount of the 61.10 refund belonging to that spouse and refund the amount to that 61.11 spouse. For court fines, fees, and surcharges and court-ordered 61.12 restitution under section 611A.04, subdivision 2, the notice 61.13 provided by the commissioner of revenue under section 270A.07, 61.14 subdivision 2, paragraph (b), serves as the appropriate legal 61.15 notice to the spouse who does not owe the debt. 61.16 [EFFECTIVE DATE.] This section is effective the day 61.17 following final enactment. 61.18 Sec. 16. Minnesota Statutes 2000, section 272.02, 61.19 subdivision 7, is amended to read: 61.20 Subd. 7. [INSTITUTIONS OF PUBLIC CHARITY.] 61.21InstitutionsProperty of an institution of purely public charity 61.22are, or property that would be listed for taxation in the name 61.23 of an institution of purely public charity under section 272.01, 61.24 subdivision 2, or 273.19, and that is used for the charitable 61.25 purposes of such institution, is exemptexcept parcels of61.26property containing structures and the. However, land and 61.27 structuresdescribed in sectionthat qualify, or that could 61.28 qualify under sections 273.13, subdivision 25, paragraph 61.29 (e), and 462A.071, other than those that qualify for exemption 61.30 under subdivision 26, are not exempt. 61.31 [EFFECTIVE DATE.] This section is effective for taxes 61.32 payable in 2002 and thereafter. 61.33 Sec. 17. Minnesota Statutes 2000, section 272.02, 61.34 subdivision 10, is amended to read: 61.35 Subd. 10. [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 61.36 Personal property used primarily for the abatement and control 62.1 of air, water, or land pollution is exempt to the extent that it 62.2 is so used, and real property is exempt if it is used primarily 62.3 for abatement and control of air, water, or land pollution as 62.4 part of an agricultural operation, as a part of a centralized 62.5 treatment and recovery facility operating under a permit issued 62.6 by the Minnesota pollution control agency pursuant to chapters 62.7 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 62.8 and 7045.0020 to 7045.1260, as a wastewater treatment facility 62.9 and for the treatment, recovery, and stabilization of metals, 62.10 oils, chemicals, water, sludges, or inorganic materials from 62.11 hazardous industrial wastes, or as part of an electric 62.12 generation system. For purposes of this subdivision, personal 62.13 property includes ponderous machinery and equipment used in a 62.14 business or production activity that at common law is considered 62.15 real property. 62.16 Any taxpayer requesting exemption of all or a portion of 62.17 any real property or any equipment or device, or part thereof, 62.18 operated primarily for the control or abatement of airor, 62.19 water, or land pollution shall file an application with the 62.20 commissioner of revenue.The equipment or device shall meet62.21standards, rules, or criteria prescribed by the Minnesota62.22pollution control agency, and must be installed or operated in62.23accordance with a permit or order issued by that agency.The 62.24 Minnesota pollution control agency shall upon request of the 62.25 commissioner furnish informationorand advice to the 62.26 commissioner. 62.27 The information and advice furnished by the Minnesota 62.28 pollution control agency must include statements as to whether 62.29 the equipment, device, or real property meets a standard, rule, 62.30 criteria, guideline, policy, or order of the Minnesota pollution 62.31 control agency, and whether the equipment, device, or real 62.32 property is installed or operated in accordance with it. On 62.33 determining that property qualifies for exemption, the 62.34 commissioner shall issue an order exempting the property from 62.35 taxation. The equipmentor, device, or real property shall 62.36 continue to be exempt from taxation as long as thepermitorder 63.1 issued by theMinnesota pollution control agencycommissioner 63.2 remains in effect. 63.3 [EFFECTIVE DATE.] This section is effective for exemption 63.4 applications received on or after July 1, 2001. 63.5 Sec. 18. Minnesota Statutes 2000, section 273.061, 63.6 subdivision 1, is amended to read: 63.7 Subdivision 1. [OFFICE CREATED; APPOINTMENT, 63.8 QUALIFICATIONS.] Every county in this state shall have a county 63.9 assessor. The county assessor shall be appointed by the board 63.10 of county commissioners. The assessor shall be selected and 63.11 appointed because of knowledge and training in the field of 63.12 property taxation and appointment shall be approved by the 63.13 commissioner of revenue before the same shall become effective. 63.14 Upon receipt by the county commissioners of the commissioner of 63.15 revenue's refusal to approve an appointment, the term of the 63.16 appointee shall terminate at the end of that day. 63.17 The commissioner of revenue may grant approval on a 63.18 probationary basis for a period of two years. The commissioner 63.19 must base the decision to impose a probationary period on 63.20 objective and consistent criteria. At the end of the two-year 63.21 probationary period, the commissioner may either refuse to 63.22 approve the person's appointment for the remainder of the 63.23 person's four-year term, approve the person's appointment but 63.24 only for another two-year probationary period, or 63.25 unconditionally approve the person's appointment for the 63.26 remainder of the four-year term for which the person was 63.27 originally appointed by the county board. The criteria shall 63.28 not be considered rules and are not subject to the 63.29 Administrative Procedure Act. 63.30 Notwithstanding any law to the contrary, a county assessor 63.31 must have senior accreditation from the state board of assessors 63.32 by January 1, 1992, or within two years of the assessor's first 63.33 appointment under this section, whichever is later. 63.34 [EFFECTIVE DATE.] This section is effective the day 63.35 following final enactment. 63.36 Sec. 19. Minnesota Statutes 2000, section 273.061, 64.1 subdivision 2, is amended to read: 64.2 Subd. 2. [TERM; VACANCY.] (a) The terms of county 64.3 assessors appointed under this section shall be four years. A 64.4 new term shall begin on January 1 of every fourth year after 64.5 1973. When any vacancy in the office occurs, the board of 64.6 county commissioners, within3090 days thereafter, shall fill 64.7 the same by appointment for the remainder of the term, following 64.8 the procedure prescribed in subdivision 1. The term of the 64.9 county assessor may be terminated by the board of county 64.10 commissioners at any time, on charges ofinefficiency or neglect64.11of dutymalfeasance, misfeasance, or nonfeasance by the 64.12 commissioner of revenue. If the board of county commissioners 64.13 does not intend to reappoint a county assessor who has been 64.14 certified by the state board of assessors, the board shall 64.15 present written notice to the county assessor not later than 90 64.16 days prior to the termination of the assessor's term, that it 64.17 does not intend to reappoint the assessor. If written notice is 64.18 not timely made, the county assessor will automatically be 64.19 reappointed by the board of county commissioners. 64.20 The commissioner of revenue may recommend to the state 64.21 board of assessors the nonrenewal, suspension, or revocation of 64.22 an assessor's license as provided in sections 270.41 to 270.53. 64.23 (b) In the event of a vacancy in the office of county 64.24 assessor, through death, resignation or other reasons, the 64.25 deputy (or chief deputy, if more than one) shall perform the 64.26 functions of the office. If there is no deputy, the county 64.27 auditor shall designate a person to perform the duties of the 64.28 office until an appointment is made as provided in clause (a). 64.29 Such person shall perform the duties of the office for a period 64.30 not exceeding3090 days during which the county board must 64.31 appoint a county assessor. Such30-day90-day period may, 64.32 however, be extended by written approval of the commissioner of 64.33 revenue. 64.34 (c) In the case of the first appointment under paragraph 64.35 (a) of a county assessor who is accredited but who does not have 64.36 senior accreditation, an approval of the appointment by the 65.1 commissioner shall be provisional, provided that a county 65.2 assessor appointed to a provisional term under this paragraph 65.3 must reapply to the commissioner at the end of the provisional 65.4 term. A provisional term may not exceed two years. The 65.5 commissioner shall not approve the appointment for the remainder 65.6 of the four-year term unless the assessor has obtained senior 65.7 accreditation. 65.8 [EFFECTIVE DATE.] This section is effective the day 65.9 following final enactment. 65.10 Sec. 20. Minnesota Statutes 2000, section 273.061, 65.11 subdivision 8, is amended to read: 65.12 Subd. 8. [POWERS AND DUTIES.] The county assessor shall 65.13 have the following powers and duties: 65.14 (1) To call upon and confer with the township and city 65.15 assessors in the county, and advise and give them the necessary 65.16 instructions and directions as to their duties under the laws of 65.17 this state, to the end that a uniform assessment of all real 65.18 property in the county will be attained. 65.19 (2) To assist and instruct the local assessors in the 65.20 preparation and proper use of land maps and record cards, in the 65.21 property classification of real and personal property, and in 65.22 the determination of proper standards of value. 65.23 (3) To keep the local assessors in the county advised of 65.24 all changes in assessment laws and all instructions which the 65.25 assessor receives from the commissioner of revenue relating to 65.26 their duties. 65.27 (4) Tohave authority torequire the attendance of groups 65.28 of local assessors at sectional meetings called by the assessor 65.29 for the purpose of giving them further assistance and 65.30 instruction as to their duties. 65.31 (5) To require the attendance of all licensed assessors 65.32 working in that county at instructional meetings attended by the 65.33 department of revenue regional representative to provide 65.34 assistance and instruction as to their duties under the law and 65.35 the proper implementation of assessment procedures. 65.36 (6) To immediately commence the preparation of a large 66.1 scale topographical land map of the county, in such form as may 66.2 be prescribed by the commissioner of revenue, showing thereon 66.3 the location of all railroads, highways and roads, bridges, 66.4 rivers and lakes, swamp areas, wooded tracts, stony ridges and 66.5 other features which might affect the value of the land. 66.6 Appropriate symbols shall be used to indicate the best, the 66.7 fair, and the poor land of the county. For use in connection 66.8 with the topographical land map, the assessor shall prepare and 66.9 keep available in the assessor's office tables showing fair 66.10 average minimum and maximum market values per acre of 66.11 cultivated, meadow, pasture, cutover, timber and waste lands of 66.12 each township. The assessor shall keep the map and tables 66.13 available in the office for the guidance of town assessors, 66.14 boards of review, and the county board of equalization. 66.15(6)(7) To also prepare and keep available in the office 66.16 for the guidance of town assessors, boards of review and the 66.17 county board of equalization, a land valuation map of the 66.18 county, in such form as may be prescribed by the commissioner of 66.19 revenue. This map, which shall include the bordering tier of 66.20 townships of each county adjoining, shall show the average 66.21 market value per acre, both with and without improvements, as 66.22 finally equalized in the last assessment of real estate, of all 66.23 land in each town or unorganized township which lies outside the 66.24 corporate limits of cities. 66.25(7)(8) To regularly examine all conveyances of land 66.26 outside the corporate limits of cities of the first and second 66.27 class, filed with the county recorder of the county, and keep a 66.28 file, by descriptions, of the considerations shown thereon. 66.29 From the information obtained by comparing the considerations 66.30 shown with the market values assessed, the assessor shall make 66.31 recommendations to the county board of equalization of necessary 66.32 changes in individual assessments or aggregate valuations. 66.33(8)(9) To become familiar with the values of the different 66.34 items of personal property so as to be in a position when called 66.35 upon to advise the boards of review and the county board of 66.36 equalization concerning property, market values thereof. 67.1(9)(10) While the county board of equalization is in 67.2 session, to give it every possible assistance to enable it to 67.3 perform its duties. The assessor shall furnish the board with 67.4 all necessary charts, tables, comparisons, and data which it 67.5 requires in its deliberations, and shall make whatever 67.6 investigations the board may desire. 67.7(10)(11) At the request of either the board of county 67.8 commissioners or the commissioner of revenue, to investigate 67.9 applications for reductions of valuation and abatements and 67.10 settlements of taxes, examine the real or personal property 67.11 involved, and submit written reports and recommendations with 67.12 respect to the applications, in such form as may be prescribed 67.13 by the board of county commissioners and commissioner of revenue. 67.14(11)(12) To make diligent search each year for real and 67.15 personal property which has been omitted from assessment in the 67.16 county, and report all such omissions to the county auditor. 67.17(12)(13) To regularly confer with county assessors in all 67.18 adjacent counties about the assessment of property in order to 67.19 uniformly assess and equalize the value of similar properties 67.20 and classes of property located in adjacent counties. The 67.21 conference shall emphasize the assessment of agricultural and 67.22 commercial and industrial property or other properties that may 67.23 have an inadequate number of sales in a single county. 67.24(13)(14) To render such other services pertaining to the 67.25 assessment of real and personal property in the county as are 67.26 not inconsistent with the duties set forth in this section, and 67.27 as may be required by the board of county commissioners or by 67.28 the commissioner of revenue. 67.29(14)(15) To maintain a record, in conjunction with other 67.30 county offices, of all transfers of property to assist in 67.31 determining the proper classification of property, including but 67.32 not limited to, transferring homestead property and name changes 67.33 on homestead property. 67.34(15)(16) To determine if a homestead application is 67.35 required due to the transfer of homestead property or an owner's 67.36 name change on homestead property. 68.1 [EFFECTIVE DATE.] This section is effective July 1, 2001, 68.2 and thereafter. 68.3 Sec. 21. [273.0755] [TRAINING AND EDUCATION OF PROPERTY 68.4 TAX PERSONNEL.] 68.5 (a) Beginning with the four-year period starting on July 1, 68.6 2000, every person licensed by the state board of assessors at 68.7 the Accredited Minnesota Assessor level or higher, shall 68.8 successfully complete a week-long Minnesota laws course 68.9 sponsored by the department of revenue at least once in every 68.10 four-year period. An assessor need not attend the course if 68.11 they successfully pass the test for the course. 68.12 (b) The commissioner of revenue may require that each 68.13 county, and each city for which the city assessor performs the 68.14 duties of county assessor, have (i) a person on the assessor's 68.15 staff who is certified by the department of revenue in sales 68.16 ratio calculations, (ii) an officer or employee who is certified 68.17 by the department of revenue in tax calculations, and (iii) an 68.18 officer or employee who is certified by the department of 68.19 revenue in the proper preparation of abstracts of assessment. 68.20 The commissioner of revenue may require that each county have an 68.21 officer or employee who is certified by the department of 68.22 revenue in the proper preparation of abstracts of tax lists. 68.23 [EFFECTIVE DATE.] This section is effective July 1, 2001, 68.24 and thereafter. 68.25 Sec. 22. Minnesota Statutes 2000, section 273.11, 68.26 subdivision 1a, is amended to read: 68.27 Subd. 1a. [LIMITED MARKET VALUE.] (a) In the case of all 68.28 property classified as agricultural homestead or nonhomestead, 68.29 residential homestead or nonhomestead, or noncommercial seasonal 68.30 recreational residential, the assessor shall compare the value 68.31 with that determined in the preceding assessment. The amount of 68.32 the increase entered in the current assessment shall not exceed 68.33 the greater of (1) 8.5 percent of the value in the preceding 68.34 assessment, or (2) 15 percent of the difference between the 68.35 current assessment and the preceding assessment. This 68.36 limitation shall not apply to increases in value due to 69.1 improvements. For purposes of thissubdivisionparagraph, the 69.2 term "assessment" means the value prior to any exclusion under 69.3 subdivision 16. 69.4 The provisions of thissubdivisionparagraph shall be in 69.5 effect only through assessment year 2001. 69.6 (b) For purposes of the assessment/sales ratio study 69.7 conducted under section 127A.48, and the computation of state 69.8 aids paid under chapters 122A, 123A, 123B, 124D, 125A, 126C, 69.9 127A, and 477A, market values andnet tax capacitiesassessed 69.10 values determined under this subdivision and subdivision 16, 69.11 shall be used. 69.12 (c) In each of the assessment years 2002, 2003, and 2004, 69.13 the assessor shall enter the sum of the following amounts for 69.14 the properties described in paragraph (a): (i) the value 69.15 entered for the preceding assessment; (ii) the entire amount of 69.16 the increase between the amount determined for the prior 69.17 assessment and the amount determined for the current assessment; 69.18 plus (iii) one-third of the difference between the value entered 69.19 for the 2001 assessment and the value determined for the 2001 69.20 assessment. This limitation does not apply to increases in 69.21 value due to new improvements. For purposes of this paragraph, 69.22 the term "assessment" means the value prior to any exclusions 69.23 under subdivision 16. 69.24 [EFFECTIVE DATE.] This section is effective the day 69.25 following final enactment. 69.26 Sec. 23. Minnesota Statutes 2000, section 273.121, is 69.27 amended to read: 69.28 273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 69.29 Any county assessor or city assessor having the powers of a 69.30 county assessor, valuing or classifying taxable real property 69.31 shall in each year notify those persons whose property is to be 69.32assessed or reclassifiedincluded on the assessment roll that 69.33 year if the person's address is known to the assessor, otherwise 69.34 the occupant of the property. The notice shall be in writing 69.35 and shall be sent by ordinary mail at least ten days before the 69.36 meeting of the local board of review or equalization under 70.1 section 274.01 or the review process established under section 70.2 274.13, subdivision 1c. The notice may not be mailed within 70.3 five working days of the mailing of the tax statements, unless 70.4 this restriction conflicts with the mailing dates in the 70.5 preceding sentence or in section 276.04 and the approval of the 70.6 commissioner of revenue is obtained for a mailing within the 70.7 five-day period. It shall contain: (1) the market value for 70.8 the current and the prior assessment, (2) the limited market 70.9 value under section 273.11, subdivision 1a for the current and 70.10 the prior assessment, (3) the qualifying amount of any 70.11 improvements under section 273.11, subdivision 16 for the 70.12 current assessment, (4) the market value subject to taxation 70.13 after subtracting the amount of any qualifying improvements for 70.14 the current assessment, (5) thenewclassification of the 70.15 property for the current and prior assessment, (6) a note that 70.16 if the property is homestead and at least 35 years old, 70.17 improvements made to the property may be eligible for a 70.18 valuation exclusion under section 273.11, subdivision 16, (7) 70.19 the assessor's office address, and (8) the dates, places, and 70.20 times set for the meetings of the local board of review or 70.21 equalization, the review process established under section 70.22 274.13, subdivision 1c, and the county board of appeal and 70.23 equalization.If the assessment roll is not complete, the70.24notice shall be sent by ordinary mail at least ten days prior to70.25the date on which the board of review has adjournedThe 70.26 commissioner of revenue shall specify the form of the notice. 70.27 The assessor shall attach to the assessment roll a statement 70.28 that the notices required by this section have been mailed. Any 70.29 assessor who is not provided sufficient funds from the 70.30 assessor's governing body to provide such notices, may make 70.31 application to the commissioner of revenue to finance such 70.32 notices. The commissioner of revenue shall conduct an 70.33 investigation and, if satisfied that the assessor does not have 70.34 the necessary funds, issue a certification to the commissioner 70.35 of finance of the amount necessary to provide such notices. The 70.36 commissioner of finance shall issue a warrant for such amount 71.1 and shall deduct such amount from any state payment to such 71.2 county or municipality. The necessary funds to make such 71.3 payments are hereby appropriated. Failure to receive the notice 71.4 shall in no way affect the validity of the assessment, the 71.5 resulting tax, the procedures of any board of review or 71.6 equalization, or the enforcement of delinquent taxes by 71.7 statutory means. 71.8 [EFFECTIVE DATE.] This section is effective for notices 71.9 required to be mailed in 2002 and thereafter. 71.10 Sec. 24. Minnesota Statutes 2000, section 273.124, 71.11 subdivision 13, is amended to read: 71.12 Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets 71.13 the homestead requirements under subdivision 1 must file a 71.14 homestead application with the county assessor to initially 71.15 obtain homestead classification. 71.16 (b) On or before January 2, 1993, each county assessor 71.17 shall mail a homestead application to the owner of each parcel 71.18 of property within the county which was classified as homestead 71.19 for the 1992 assessment year. The format and contents of a 71.20 uniform homestead application shall be prescribed by the 71.21 commissioner of revenue. The commissioner shall consult with 71.22 the chairs of the house and senate tax committees on the 71.23 contents of the homestead application form. The application 71.24 must clearly inform the taxpayer that this application must be 71.25 signed by all owners who occupy the property or by the 71.26 qualifying relative and returned to the county assessor in order 71.27 for the property to continue receiving homestead treatment. The 71.28 envelope containing the homestead application shall clearly 71.29 identify its contents and alert the taxpayer of its necessary 71.30 immediate response. 71.31 (c) Every property owner applying for homestead 71.32 classification must furnish to the county assessor the social 71.33 security number of each occupant who is listed as an owner of 71.34 the property on the deed of record, the name and address of each 71.35 owner who does not occupy the property, and the name and social 71.36 security number of each owner's spouse who occupies the 72.1 property. The application must be signed by each owner who 72.2 occupies the property and by each owner's spouse who occupies 72.3 the property, or, in the case of property that qualifies as a 72.4 homestead under subdivision 1, paragraph (c), by the qualifying 72.5 relative. 72.6 If a property owner occupies a homestead, the property 72.7 owner's spouse may not claim another property as a homestead 72.8 unless the property owner and the property owner's spouse file 72.9 with the assessor an affidavit or other proof required by the 72.10 assessor stating that the property qualifies as a homestead 72.11 under subdivision 1, paragraph (e). 72.12 Owners or spouses occupying residences owned by their 72.13 spouses and previously occupied with the other spouse, either of 72.14 whom fail to include the other spouse's name and social security 72.15 number on the homestead application or provide the affidavits or 72.16 other proof requested, will be deemed to have elected to receive 72.17 only partial homestead treatment of their residence. The 72.18 remainder of the residence will be classified as nonhomestead 72.19 residential. When an owner or spouse's name and social security 72.20 number appear on homestead applications for two separate 72.21 residences and only one application is signed, the owner or 72.22 spouse will be deemed to have elected to homestead the residence 72.23 for which the application was signed. 72.24 The social security numbers or affidavits or other proofs 72.25 of the property owners and spouses are private data on 72.26 individuals as defined by section 13.02, subdivision 12, but, 72.27 notwithstanding that section, the private data may be disclosed 72.28 to the commissioner of revenue, or, for purposes of proceeding 72.29 under the Revenue Recapture Act to recover personal property 72.30 taxes owing, to the county treasurer. 72.31 (d) If residential real estate is occupied and used for 72.32 purposes of a homestead by a relative of the owner and qualifies 72.33 for a homestead under subdivision 1, paragraph (c), in order for 72.34 the property to receive homestead status, a homestead 72.35 application must be filed with the assessor. The social 72.36 security number of each relative occupying the property and the 73.1 social security number of each owner who is related to an 73.2 occupant of the property shall be required on the homestead 73.3 application filed under this subdivision. If a different 73.4 relative of the owner subsequently occupies the property, the 73.5 owner of the property must notify the assessor within 30 days of 73.6 the change in occupancy. The social security number of a 73.7 relative occupying the property is private data on individuals 73.8 as defined by section 13.02, subdivision 12, but may be 73.9 disclosed to the commissioner of revenue. 73.10 (e) The homestead application shall also notify the 73.11 property owners that the application filed under this section 73.12 will not be mailed annually and that if the property is granted 73.13 homestead status for the 1993 assessment, or any assessment year 73.14 thereafter, that same property shall remain classified as 73.15 homestead until the property is sold or transferred to another 73.16 person, or the owners, the spouse of the owner, or the relatives 73.17 no longer use the property as their homestead. Upon the sale or 73.18 transfer of the homestead property, a certificate of value must 73.19 be timely filed with the county auditor as provided under 73.20 section 272.115. Failure to notify the assessor within 30 days 73.21 that the property has been sold, transferred, or that the owner, 73.22 the spouse of the owner, or the relative is no longer occupying 73.23 the property as a homestead, shall result in the penalty 73.24 provided under this subdivision and the property will lose its 73.25 current homestead status. 73.26 (f) If the homestead application is not returned within 30 73.27 days, the county will send a second application to the present 73.28 owners of record. The notice of proposed property taxes 73.29 prepared under section 275.065, subdivision 3, shall reflect the 73.30 property's classification. Beginning with assessment year 1993 73.31 for all properties, if a homestead application has not been 73.32 filed with the county by December 15, the assessor shall 73.33 classify the property as nonhomestead for the current assessment 73.34 year for taxes payable in the following year, provided that the 73.35 owner may be entitled to receive the homestead classification by 73.36 proper application under section 375.192. 74.1 (g) At the request of the commissioner, each county must 74.2 give the commissioner a list that includes the name and social 74.3 security number of each property owner and the property owner's 74.4 spouse occupying the property, or relative of a property owner, 74.5 applying for homestead classification under this subdivision. 74.6 The commissioner shall use the information provided on the lists 74.7 as appropriate under the law, including for the detection of 74.8 improper claims by owners, or relatives of owners, under chapter 74.9 290A. 74.10 (h) If the commissioner finds that a property owner may be 74.11 claiming a fraudulent homestead, the commissioner shall notify 74.12 the appropriate counties. Within 90 days of the notification, 74.13 the county assessor shall investigate to determine if the 74.14 homestead classification was properly claimed. If the property 74.15 owner does not qualify, the county assessor shall notify the 74.16 county auditor who will determine the amount of homestead 74.17 benefits that had been improperly allowed. For the purpose of 74.18 this section, "homestead benefits" means the tax reduction 74.19 resulting from the classification as a homestead under section 74.20 273.13, the taconite homestead credit under section 273.135, the 74.21 residential homestead and agricultural homestead credits under 74.22 section 273.1384, and the supplemental homestead credit under 74.23 section 273.1391. 74.24 The county auditor shall send a notice to the person who 74.25 owned the affected property at the time the homestead 74.26 application related to the improper homestead was filed, 74.27 demanding reimbursement of the homestead benefits plus a penalty 74.28 equal to 100 percent of the homestead benefits. The person 74.29 notified may appeal the county's determination by serving copies 74.30 of a petition for review with county officials as provided in 74.31 section 278.01 and filing proof of service as provided in 74.32 section 278.01 with the Minnesota tax court within 60 days of 74.33 the date of the notice from the county. Procedurally, the 74.34 appeal is governed by the provisions in chapter 271 which apply 74.35 to the appeal of a property tax assessment or levy, but without 74.36 requiring any prepayment of the amount in controversy. If the 75.1 amount of homestead benefits and penalty is not paid within 60 75.2 days, and if no appeal has been filed, the county auditor shall 75.3 certify the amount of taxes and penalty to the county 75.4 treasurer. The county treasurer will add interest to the unpaid 75.5 homestead benefits and penalty amounts at the rate provided in 75.6 section 279.03 for real property taxes becoming delinquent in 75.7 the calendar year during which the amount remains unpaid. 75.8 Interest may be assessed for the period beginning 60 days after 75.9 demand for payment was made. 75.10 If the person notified is the current owner of the 75.11 property, the treasurer may add the total amount of homestead 75.12 benefits, penalty, interest, and costs to the ad valorem taxes 75.13 otherwise payable on the property by including the amounts on 75.14 the property tax statements under section 276.04, subdivision 75.15 3. The amounts added under this paragraph to the ad valorem 75.16 taxes shall include interest accrued through December 31 of the 75.17 year preceding the taxes payable year for which the amounts are 75.18 first added. These amounts, when added to the property tax 75.19 statement, become subject to all the laws for the enforcement of 75.20 real or personal property taxes for that year, and for any 75.21 subsequent year. 75.22 If the person notified is not the current owner of the 75.23 property, the treasurer may collect the amounts due under the 75.24 Revenue Recapture Act in chapter 270A, or use any of the powers 75.25 granted in sections 277.20 and 277.21 without exclusion, to 75.26 enforce payment of the homestead benefits, penalty, interest, 75.27 and costs, as if those amounts were delinquent tax obligations 75.28 of the person who owned the property at the time the application 75.29 related to the improperly allowed homestead was filed. The 75.30 treasurer may relieve a prior owner of personal liability for 75.31 the homestead benefits, penalty, interest, and costs, and 75.32 instead extend those amounts on the tax lists against the 75.33 property as provided in this paragraph to the extent that the 75.34 current owner agrees in writing. On all demands, billings, 75.35 property tax statements, and related correspondence, the county 75.36 must list and state separately the amounts of homestead 76.1 benefits, penalty, interest and costs being demanded, billed or 76.2 assessed. 76.3 (i) Any amount of homestead benefits recovered by the 76.4 county from the property owner shall be distributed to the 76.5 county, city or town, and school district where the property is 76.6 located in the same proportion that each taxing district's levy 76.7 was to the total of the three taxing districts' levy for the 76.8 current year. Any amount recovered attributable to taconite 76.9 homestead credit shall be transmitted to the St. Louis county 76.10 auditor to be deposited in the taconite property tax relief 76.11 account. Any amount recovered that is attributable to 76.12 supplemental homestead credit is to be transmitted to the 76.13 commissioner of revenue for deposit in the general fund of the 76.14 state treasury. The total amount of penalty collected must be 76.15 deposited in the county general fund. 76.16 (j) If a property owner has applied for more than one 76.17 homestead and the county assessors cannot determine which 76.18 property should be classified as homestead, the county assessors 76.19 will refer the information to the commissioner. The 76.20 commissioner shall make the determination and notify the 76.21 counties within 60 days. 76.22 (k) In addition to lists of homestead properties, the 76.23 commissioner may ask the counties to furnish lists of all 76.24 properties and the record owners. The social security numbers 76.25 and federal identification numbers that are maintained by a 76.26 county or city assessor for property tax administration 76.27 purposes, and that may appear on the lists retain their 76.28 classification as private or nonpublic data; but may be viewed, 76.29 accessed, and used by the county auditor or treasurer of the 76.30 same county for the limited purpose of assisting the 76.31 commissioner in the preparation of microdata samples under 76.32 section 270.0681. 76.33 [EFFECTIVE DATE.] This section is effective for homestead 76.34 applications submitted on or after the day following final 76.35 enactment. 76.36 Sec. 25. Minnesota Statutes 2000, section 273.13, is 77.1 amended by adding a subdivision to read: 77.2 Subd. 21c. [ASSESSED VALUE.] "Assessed value" means the 77.3 product of the appropriate class rates in this section and 77.4 market values. 77.5 [EFFECTIVE DATE.] This section is effective for taxes 77.6 payable in 2002 and thereafter. 77.7 Sec. 26. Minnesota Statutes 2000, section 273.13, 77.8 subdivision 22, is amended to read: 77.9 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 77.10 23 and in paragraphs (b) and (c), real estate which is 77.11 residential and used for homestead purposes is class11a. The 77.12 market value of class 1a property must be determined based upon 77.13 the value of the house, garage, and land. 77.14 The first$76,000$200,000 of market value of class 1a 77.15 property has anetclass rate ofone percent of its market value77.16 0.50; and the market value of class 1a property that 77.17 exceeds$76,000$200,000 has a class rate of1.65 percent of its77.18market value0.75. 77.19 (b) Class 1b property includes homestead real estate or 77.20 homestead manufactured homes used for the purposes of a 77.21 homestead by 77.22 (1) any blind person, or the blind person and the blind 77.23 person's spouse; or 77.24 (2) any person, hereinafter referred to as "veteran," who: 77.25 (i) served in the active military or naval service of the 77.26 United States; and 77.27 (ii) is entitled to compensation under the laws and 77.28 regulations of the United States for permanent and total 77.29 service-connected disability due to the loss, or loss of use, by 77.30 reason of amputation, ankylosis, progressive muscular 77.31 dystrophies, or paralysis, of both lower extremities, such as to 77.32 preclude motion without the aid of braces, crutches, canes, or a 77.33 wheelchair; and 77.34 (iii) has acquired a special housing unit with special 77.35 fixtures or movable facilities made necessary by the nature of 77.36 the veteran's disability, or the surviving spouse of the 78.1 deceased veteran for as long as the surviving spouse retains the 78.2 special housing unit as a homestead; or 78.3 (3) any person who: 78.4 (i) is permanently and totally disabled and 78.5 (ii) receives 90 percent or more of total household income, 78.6 as defined in section 290A.03, subdivision 5, from 78.7 (A) aid from any state as a result of that disability; or 78.8 (B) supplemental security income for the disabled; or 78.9 (C) workers' compensation based on a finding of total and 78.10 permanent disability; or 78.11 (D) social security disability, including the amount of a 78.12 disability insurance benefit which is converted to an old age 78.13 insurance benefit and any subsequent cost of living increases; 78.14 or 78.15 (E) aid under the federal Railroad Retirement Act of 1937, 78.16 United States Code Annotated, title 45, section 228b(a)5; or 78.17 (F) a pension from any local government retirement fund 78.18 located in the state of Minnesota as a result of that 78.19 disability; or 78.20 (G) pension, annuity, or other income paid as a result of 78.21 that disability from a private pension or disability plan, 78.22 including employer, employee, union, and insurance plans and 78.23 (iii) has household income as defined in section 290A.03, 78.24 subdivision 5, of $50,000 or less; or 78.25 (4) any person who is permanently and totally disabled and 78.26 whose household income as defined in section 290A.03, 78.27 subdivision 5, is 275 percent or less of the federal poverty 78.28 level. 78.29 Property is classified and assessed under clause (4) only 78.30 if the government agency or income-providing source certifies, 78.31 upon the request of the homestead occupant, that the homestead 78.32 occupant satisfies the disability requirements of this paragraph. 78.33 Property is classified and assessed pursuant to clause (1) 78.34 only if the commissioner of economic security certifies to the 78.35 assessor that the homestead occupant satisfies the requirements 78.36 of this paragraph. 79.1 Permanently and totally disabled for the purpose of this 79.2 subdivision means a condition which is permanent in nature and 79.3 totally incapacitates the person from working at an occupation 79.4 which brings the person an income. The first $32,000 market 79.5 value of class 1b property has anetclass rate of.45 percent79.6of its market value0.225. The remaining market value of class 79.7 1b property has anetclass rate using the rates for class11a 79.8 or class 2a property, whichever is appropriate, of similar 79.9 market value. 79.10 (c) Class 1c property is commercial use real property that 79.11 abuts a lakeshore line and is devoted to temporary and seasonal 79.12 residential occupancy for recreational purposes but not devoted 79.13 to commercial purposes for more than 250 days in the year 79.14 preceding the year of assessment, and that includes a portion 79.15 used as a homestead by the owner, which includes a dwelling 79.16 occupied as a homestead by a shareholder of a corporation that 79.17 owns the resort or a partner in a partnership that owns the 79.18 resort, even if the title to the homestead is held by the 79.19 corporation or partnership. For purposes of this clause, 79.20 property is devoted to a commercial purpose on a specific day if 79.21 any portion of the property, excluding the portion used 79.22 exclusively as a homestead, is used for residential occupancy 79.23 and a fee is charged for residential occupancy. The first 79.24 $200,000 of market value of class 1c property has a class rate 79.25 ofone percent of total0.50, and the remaining market value of 79.26 class 1c property has a class rate of 0.75, with the following 79.27 limitation: the area of the property must not exceed 100 feet 79.28 of lakeshore footage for each cabin or campsite located on the 79.29 property up to a total of 800 feet and 500 feet in depth, 79.30 measured away from the lakeshore. If any portion of the class 79.31 1c resort property is classified as class 4c under subdivision 79.32 25, the entire property must meet the requirements of 79.33 subdivision 25, paragraph (d), clause (1), to qualify for class 79.34 1c treatment under this paragraph. 79.35 (d) Class 1d property includes structures that meet all of 79.36 the following criteria: 80.1 (1) the structure is located on property that is classified 80.2 as agricultural property under section 273.13, subdivision 23; 80.3 (2) the structure is occupied exclusively by seasonal farm 80.4 workers during the time when they work on that farm, and the 80.5 occupants are not charged rent for the privilege of occupying 80.6 the property, provided that use of the structure for storage of 80.7 farm equipment and produce does not disqualify the property from 80.8 classification under this paragraph; 80.9 (3) the structure meets all applicable health and safety 80.10 requirements for the appropriate season; and 80.11 (4) the structure is not salable as residential property 80.12 because it does not comply with local ordinances relating to 80.13 location in relation to streets or roads. 80.14 The market value of class 1d property has the same class 80.15 rates as class 1a property under paragraph (a). 80.16 [EFFECTIVE DATE.] This section is effective for taxes 80.17 payable in 2002 and thereafter. 80.18 Sec. 27. Minnesota Statutes 2000, section 273.13, 80.19 subdivision 23, is amended to read: 80.20 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 80.21 land including any improvements that is homesteaded. The market 80.22 value of the house and garage and immediately surrounding one 80.23 acre of land has the same class rates as class 1a property under 80.24 subdivision 22. The market value of the remaining land 80.25 including improvements up to$115,000$600,000 has anetclass 80.26 rate of0.35 percent of market value0.30. The market value of 80.27 class 2a property over$115,000 of market value up to and80.28including$600,000market valuehas anetclass rate of0.880.29percent of market value0.50.The remaining property over80.30$600,000 market value has a class rate of 1.20 percent of market80.31value.80.32 (b) Class 2b property is (1) real estate, rural in 80.33 character and used exclusively for growing trees for timber, 80.34 lumber, and wood and wood products; (2) real estate that is (i) 80.35 not improved with a structure and is used exclusively for 80.36 growing trees for timber, lumber, and wood and wood products, if 81.1 the owner has participated or is participating in a cost-sharing 81.2 program for afforestation, reforestation, or timber stand 81.3 improvement on that particular property, administered or 81.4 coordinated by the commissioner of natural resources, or (ii) 81.5 forest land, as defined in section 290C.02; (3) real estate that 81.6 is nonhomestead agricultural land; or (4) a landing area or 81.7 public access area of a privately owned public use airport. The 81.8 market value of class 2b property has anetclass rate of1.2081.9percent of market value0.50. 81.10 (c) Agricultural land as used in this section means 81.11 contiguous acreage of ten acres or more, used during the 81.12 preceding year for agricultural purposes. "Agricultural 81.13 purposes" as used in this section means the raising or 81.14 cultivation of agricultural products or enrollment in the 81.15 Reinvest in Minnesota program under sections 103F.501 to 81.16 103F.535 or the federal Conservation Reserve Program as 81.17 contained in Public Law Number 99-198. Contiguous acreage on 81.18 the same parcel, or contiguous acreage on an immediately 81.19 adjacent parcel under the same ownership, may also qualify as 81.20 agricultural land, but only if it is pasture, timber, waste, 81.21 unusable wild land, or land included in state or federal farm 81.22 programs. Agricultural classification for property shall be 81.23 determined excluding the house, garage, and immediately 81.24 surrounding one acre of land, and shall not be based upon the 81.25 market value of any residential structures on the parcel or 81.26 contiguous parcels under the same ownership. 81.27 (d) Real estate, excluding the house, garage, and 81.28 immediately surrounding one acre of land, of less than ten acres 81.29 which is exclusively and intensively used for raising or 81.30 cultivating agricultural products, shall be considered as 81.31 agricultural land. 81.32 Land shall be classified as agricultural even if all or a 81.33 portion of the agricultural use of that property is the leasing 81.34 to, or use by another person for agricultural purposes. 81.35 Classification under this subdivision is not determinative 81.36 for qualifying under section 273.111. 82.1 The property classification under this section supersedes, 82.2 for property tax purposes only, any locally administered 82.3 agricultural policies or land use restrictions that define 82.4 minimum or maximum farm acreage. 82.5 (e) The term "agricultural products" as used in this 82.6 subdivision includes production for sale of: 82.7 (1) livestock, dairy animals, dairy products, poultry and 82.8 poultry products, fur-bearing animals, horticultural and nursery 82.9 stock described in sections 18.44 to 18.61, fruit of all kinds, 82.10 vegetables, forage, grains, bees, and apiary products by the 82.11 owner; 82.12 (2) fish bred for sale and consumption if the fish breeding 82.13 occurs on land zoned for agricultural use; 82.14 (3) the commercial boarding of horses if the boarding is 82.15 done in conjunction with raising or cultivating agricultural 82.16 products as defined in clause (1); 82.17 (4) property which is owned and operated by nonprofit 82.18 organizations used for equestrian activities, excluding racing; 82.19 (5) game birds and waterfowl bred and raised for use on a 82.20 shooting preserve licensed under section 97A.115; 82.21 (6) insects primarily bred to be used as food for animals; 82.22 and 82.23 (7) trees, grown for sale as a crop, and not sold for 82.24 timber, lumber, wood, or wood products. 82.25 (f) If a parcel used for agricultural purposes is also used 82.26 for commercial or industrial purposes, including but not limited 82.27 to: 82.28 (1) wholesale and retail sales; 82.29 (2) processing of raw agricultural products or other goods; 82.30 (3) warehousing or storage of processed goods; and 82.31 (4) office facilities for the support of the activities 82.32 enumerated in clauses (1), (2), and (3), 82.33 the assessor shall classify the part of the parcel used for 82.34 agricultural purposes as class 1b, 2a, or 2b, whichever is 82.35 appropriate, and the remainder in the class appropriate to its 82.36 use. The grading, sorting, and packaging of raw agricultural 83.1 products for first sale is considered an agricultural purpose. 83.2 A greenhouse or other building where horticultural or nursery 83.3 products are grown that is also used for the conduct of retail 83.4 sales must be classified as agricultural if it is primarily used 83.5 for the growing of horticultural or nursery products from seed, 83.6 cuttings, or roots and occasionally as a showroom for the retail 83.7 sale of those products. Use of a greenhouse or building only 83.8 for the display of already grown horticultural or nursery 83.9 products does not qualify as an agricultural purpose. 83.10 The assessor shall determine and list separately on the 83.11 records the market value of the homestead dwelling and the one 83.12 acre of land on which that dwelling is located. If any farm 83.13 buildings or structures are located on this homesteaded acre of 83.14 land, their market value shall not be included in this separate 83.15 determination. 83.16 (g) To qualify for classification under paragraph (b), 83.17 clause (4), a privately owned public use airport must be 83.18 licensed as a public airport under section 360.018. For 83.19 purposes of paragraph (b), clause (4), "landing area" means that 83.20 part of a privately owned public use airport properly cleared, 83.21 regularly maintained, and made available to the public for use 83.22 by aircraft and includes runways, taxiways, aprons, and sites 83.23 upon which are situated landing or navigational aids. A landing 83.24 area also includes land underlying both the primary surface and 83.25 the approach surfaces that comply with all of the following: 83.26 (i) the land is properly cleared and regularly maintained 83.27 for the primary purposes of the landing, taking off, and taxiing 83.28 of aircraft; but that portion of the land that contains 83.29 facilities for servicing, repair, or maintenance of aircraft is 83.30 not included as a landing area; 83.31 (ii) the land is part of the airport property; and 83.32 (iii) the land is not used for commercial or residential 83.33 purposes. 83.34 The land contained in a landing area under paragraph (b), clause 83.35 (4), must be described and certified by the commissioner of 83.36 transportation. The certification is effective until it is 84.1 modified, or until the airport or landing area no longer meets 84.2 the requirements of paragraph (b), clause (4). For purposes of 84.3 paragraph (b), clause (4), "public access area" means property 84.4 used as an aircraft parking ramp, apron, or storage hangar, or 84.5 an arrival and departure building in connection with the airport. 84.6 [EFFECTIVE DATE.] This section is effective for taxes 84.7 payable in 2002 and thereafter, except that the classification 84.8 of property under paragraph (b), clause (2), item (ii), is 84.9 effective for taxes payable in 2003 and thereafter. 84.10 Sec. 28. Minnesota Statutes 2000, section 273.13, 84.11 subdivision 24, is amended to read: 84.12 Subd. 24. [CLASS 3.] (a) Commercial and industrial 84.13 property and utility real and personal property is class 3a. 84.14 (1) Except as otherwise provided, each parcel of 84.15 commercial, industrial, or utility real property has a class 84.16 rate of2.4 percent of0.75 for the first tier of market value, 84.17 and3.4 percent of1.0 for the remaining market value. In the 84.18 case of contiguous parcels of property owned by the same person 84.19 or entity, only the value equal to the first-tier value of the 84.20 contiguous parcels qualifies for the reduced class rate, except 84.21 that contiguous parcels owned by the same person or entity shall 84.22 be eligible for the first-tier value class rate on each separate 84.23 business operated by the owner of the property, provided the 84.24 business is housed in a separate structure. For the purposes of 84.25 this subdivision, the first tier means the 84.26 first$150,000$200,000 of market value. Real property owned in 84.27 fee by a utility for transmission line right-of-way shall be 84.28 classified at the class rate for the higher tier. 84.29 For purposes of this subdivision, parcels are considered to 84.30 be contiguous even if they are separated from each other by a 84.31 road, street, waterway, or other similar intervening type of 84.32 property. Connections between parcels that consist of power 84.33 lines or pipelines do not cause the parcels to be contiguous. 84.34 Property owners who have contiguous parcels of property that 84.35 constitute separate businesses that may qualify for the 84.36 first-tier class rate shall notify the assessor by July 1, for 85.1 treatment beginning in the following taxes payable year. 85.2 (2) Notwithstanding clauses (1) and (3), all railroad 85.3 operating property and all personal property that is: (i) part 85.4 of an electric generation, transmission, or distribution system; 85.5 or (ii) part of a pipeline system transporting or distributing 85.6 water, gas, crude oil, or petroleum products; and (iii) not 85.7 described in clause (3), has a class rateas provided under85.8clause (1) for the first tierof 0.75 for the first $200,000 of 85.9 market value and a class rate of 1.0 for the remaining market 85.10 value. In the case of multiple parcels in one county that are 85.11 owned by one person or entity, only one first tier amount is 85.12 eligible for the reduced rate. 85.13 (3) The entire market value of personal property that is: 85.14 (i) tools, implements, and machinery of an electric generation, 85.15 transmission, or distribution system; (ii) tools, implements, 85.16 and machinery of a pipeline system transporting or distributing 85.17 water, gas, crude oil, or petroleum products; or (iii) the mains 85.18 and pipes used in the distribution of steam or hot or chilled 85.19 water for heating or cooling buildings, has a class rate as 85.20 provided under clause (1) for the remaining market value in 85.21 excess of the first tier. 85.22 (b) Employment property defined in section 469.166, during 85.23 the period provided in section 469.170, shall constitute class 85.24 3b. The class rates for class 3b property are determined under 85.25 paragraph (a). 85.26(c)(1) Subject to the limitations of clause (2), structures85.27which are (i) located on property classified as class 3a, (ii)85.28constructed under an initial building permit issued after85.29January 2, 1996, (iii) located in a transit zone as defined85.30under section 473.3915, subdivision 3, (iv) located within the85.31boundaries of a school district, and (v) not primarily used for85.32retail or transient lodging purposes, shall have a class rate85.33equal to the lesser of 2.975 percent or the class rate of the85.34second tier of the commercial property rate under paragraph (a)85.35on any portion of the market value that does not qualify for the85.36first tier class rate under paragraph (a). As used in item (v),86.1a structure is primarily used for retail or transient lodging86.2purposes if over 50 percent of its square footage is used for86.3those purposes. A class rate equal to the lesser of 2.97586.4percent or the class rate of the second tier of the commercial86.5property class rate under paragraph (a) shall also apply to86.6improvements to existing structures that meet the requirements86.7of items (i) to (v) if the improvements are constructed under an86.8initial building permit issued after January 2, 1996, even if86.9the remainder of the structure was constructed prior to January86.102, 1996. For the purposes of this paragraph, a structure shall86.11be considered to be located in a transit zone if any portion of86.12the structure lies within the zone. If any property once86.13eligible for treatment under this paragraph ceases to remain86.14eligible due to revisions in transit zone boundaries, the86.15property shall continue to receive treatment under this86.16paragraph for a period of three years.86.17(2) This clause applies to any structure qualifying for the86.18transit zone reduced class rate under clause (1) on January 2,86.191999, or any structure meeting any of the qualification criteria86.20in item (i) and otherwise qualifying for the transit zone86.21reduced class rate under clause (1). Such a structure continues86.22to receive the transit zone reduced class rate until the86.23occurrence of one of the events in item (ii). Property86.24qualifying under item (i)(D), that is located outside of a city86.25of the first class, qualifies for the transit zone reduced class86.26rate as provided in that item. Property qualifying under item86.27(i)(E) qualifies for the transit zone reduced class rate as86.28provided in that item.86.29(i) A structure qualifies for the rate in this clause if it86.30is:86.31(A) property for which a building permit was issued before86.32December 31, 1998; or86.33(B) property for which a building permit was issued before86.34June 30, 2001, if:86.35(I) at least 50 percent of the land on which the structure86.36is to be built has been acquired or is the subject of signed87.1purchase agreements or signed options as of March 15, 1998, by87.2the entity that proposes construction of the project or an87.3affiliate of the entity;87.4(II) signed agreements have been entered into with one87.5entity or with affiliated entities to lease for the account of87.6the entity or affiliated entities at least 50 percent of the87.7square footage of the structure or the owner of the structure87.8will occupy at least 50 percent of the square footage of the87.9structure; and87.10(III) one of the following requirements is met:87.11the project proposer has submitted the completed data87.12portions of an environmental assessment worksheet by December87.1331, 1998; or87.14a notice of determination of adequacy of an environmental87.15impact statement has been published by April 1, 1999; or87.16an alternative urban areawide review has been completed by87.17April 1, 1999; or87.18(C) property for which a building permit is issued before87.19July 30, 1999, if:87.20(I) at least 50 percent of the land on which the structure87.21is to be built has been acquired or is the subject of signed87.22purchase agreements as of March 31, 1998, by the entity that87.23proposes construction of the project or an affiliate of the87.24entity;87.25(II) a signed agreement has been entered into between the87.26building developer and a tenant to lease for its own account at87.27least 200,000 square feet of space in the building;87.28(III) a signed letter of intent is entered into by July 1,87.291998, between the building developer and the tenant to lease the87.30space for its own account; and87.31(IV) the environmental review process required by state law87.32was commenced by December 31, 1998;87.33(D) property for which an irrevocable letter of credit with87.34a housing and redevelopment authority was signed before December87.3531, 1998. The structure shall receive the transit zone reduced87.36class rate during construction and for the duration of time that88.1the original tenants remain in the building. Any unoccupied net88.2leasable square footage that is not leased within 36 months88.3after the certificate of occupancy has been issued for the88.4building shall not be eligible to receive the reduced class88.5rate. This reduced class rate applies only if a qualifying88.6entity continues to own the property;88.7(E) property, located in a city of the first class, and for88.8which the building permits for the excavation, the parking ramp,88.9and the office tower were issued prior to April 1, 1999, shall88.10receive the reduced class rate during construction and for the88.11first five assessment years immediately following its initial88.12occupancy provided that, when completed, at least 25 percent of88.13the net leasable square footage must be occupied by a qualifying88.14entity each year during this time period. In order to receive88.15the reduced class rate on the structure in any subsequent88.16assessment years, at least 50 percent of the rentable square88.17footage must be occupied by a qualifying entity. This reduced88.18class rate applies only if a qualifying entity continues to own88.19the property.88.20(ii) A structure specified by this clause, other than a88.21structure qualifying under clause (i)(D) or (E), shall continue88.22to receive the transit zone reduced class rate until the88.23occurrence of one of the following events:88.24(A) if the structure upon initial occupancy will be owner88.25occupied by the entity initially constructing the structure or88.26an affiliated entity, the structure receives the reduced class88.27rate until the structure ceases to be at least 50 percent88.28occupied by the entity or an affiliated entity, provided, if the88.29portion of the structure occupied by that entity or an affiliate88.30of the entity is less than 85 percent, the transit zone class88.31rate reduction for the portion of structure not so occupied88.32terminates upon the leasing of such space to any nonaffiliated88.33entity; or88.34(B) if the structure is leased by a single entity or88.35affiliated entity at the time of initial occupancy, the88.36structure shall receive the reduced class rate until the89.1structure ceases to be at least 50 percent occupied by the89.2entity or an affiliated entity, provided, if the portion of the89.3structure occupied by that entity or an affiliate of the entity89.4is less than 85 percent, the transit zone class rate reduction89.5for the portion of structure not so occupied shall terminate89.6upon the leasing of such space to any nonaffiliated entity; or89.7(C) if the structure meets the criteria in item (i)(C), the89.8structure shall receive the reduced class rate until the89.9expiration of the initial lease term of the applicable tenants.89.10Percentages occupied or leased shall be determined based89.11upon net leasable square footage in the structure. The assessor89.12shall allocate the value of the structure in the same fashion as89.13provided in the general law for portions of any structure89.14receiving and not receiving the transit tax class reduction as a89.15result of this clause.89.16(3) For purposes of paragraph (c), "qualifying entity"89.17means the entity owning the property on September 1, 2000, or an89.18affiliate of an entity that owned the property on September 1,89.192000.89.20 [EFFECTIVE DATE.] This section is effective for taxes 89.21 payable in 2002 and thereafter. 89.22 Sec. 29. Minnesota Statutes 2000, section 273.13, 89.23 subdivision 25, is amended to read: 89.24 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 89.25 estate containing four or more units and used or held for use by 89.26 the owner or by the tenants or lessees of the owner as a 89.27 residence for rental periods of 30 days or more. Class 4a also 89.28 includes hospitals licensed under sections 144.50 to 144.56, 89.29 other than hospitals exempt under section 272.02, and contiguous 89.30 property used for hospital purposes, without regard to whether 89.31 the property has been platted or subdivided. The market value 89.32 of class 4a propertyin a city with a population of 5,000 or89.33less, that is (1) located outside of the metropolitan area, as89.34defined in section 473.121, subdivision 2, or outside any county89.35contiguous to the metropolitan area, and (2) whose city boundary89.36is at least 15 miles from the boundary of any city with a90.1population greater than 5,000 has a class rate of 2.15 percent90.2of market value. All other class 4a propertyhas a class rate 90.3 of2.4 percent of market value. For purposes of this paragraph,90.4population has the same meaning given in section 477A.011,90.5subdivision 30.75. 90.6 (b) Class 4b includes: 90.7 (1) residential real estate containing less than four units 90.8 that does not qualify as class 4bb, other than seasonal 90.9 residential, and recreational; 90.10 (2) manufactured homes not classified under any other 90.11 provision; 90.12 (3) a dwelling, garage, and surrounding one acre of 90.13 property on a nonhomestead farm classified under subdivision 23, 90.14 paragraph (b) containing two or three units; 90.15 (4) unimproved property that is classified residential as 90.16 determined under subdivision 33. 90.17 The market value of class 4b property has a class rate of 90.181.65 percent of market value0.75. 90.19 (c) Class 4bb includes: 90.20 (1) nonhomestead residential real estate containing one 90.21 unit, other than seasonal residential, and recreational; and 90.22 (2) a single family dwelling, garage, and surrounding one 90.23 acre of property on a nonhomestead farm classified under 90.24 subdivision 23, paragraph (b). 90.25 Class 4bb has a class rate of1.2 percent0.50 on the first 90.26$76,000$200,000 of market value and a class rate of1.6590.27percentof 0.75 for that portion of its market value that 90.28 exceeds$76,000$200,000. 90.29 Property that has been classified as seasonal recreational 90.30 residential property at any time during which it has been owned 90.31 by the current owner or spouse of the current owner does not 90.32 qualify for class 4bb. 90.33 (d) Class 4c property includes: 90.34 (1) except as provided in subdivision 22, paragraph (c), 90.35 real property devoted to temporary and seasonal residential 90.36 occupancy for recreation purposes, including real property 91.1 devoted to temporary and seasonal residential occupancy for 91.2 recreation purposes and not devoted to commercial purposes for 91.3 more than 250 days in the year preceding the year of 91.4 assessment. For purposes of this clause, property is devoted to 91.5 a commercial purpose on a specific day if any portion of the 91.6 property is used for residential occupancy, and a fee is charged 91.7 for residential occupancy. In order for a property to be 91.8 classified as class 4c, seasonal recreational residential for 91.9 commercial purposes, at least 40 percent of the annual gross 91.10 lodging receipts related to the property must be from business 91.11 conducted during 90 consecutive days and either (i) at least 60 91.12 percent of all paid bookings by lodging guests during the year 91.13 must be for periods of at least two consecutive nights; or (ii) 91.14 at least 20 percent of the annual gross receipts must be from 91.15 charges for rental of fish houses, boats and motors, 91.16 snowmobiles, downhill or cross-country ski equipment, or charges 91.17 for marina services, launch services, and guide services, or the 91.18 sale of bait and fishing tackle. For purposes of this 91.19 determination, a paid booking of five or more nights shall be 91.20 counted as two bookings. Class 4c also includes commercial use 91.21 real property used exclusively for recreational purposes in 91.22 conjunction with class 4c property devoted to temporary and 91.23 seasonal residential occupancy for recreational purposes, up to 91.24 a total of two acres, provided the property is not devoted to 91.25 commercial recreational use for more than 250 days in the year 91.26 preceding the year of assessment and is located within two miles 91.27 of the class 4c property with which it is used. Class 4c 91.28 property classified in this clause also includes the remainder 91.29 of class 1c resorts provided that the entire property including 91.30 that portion of the property classified as class 1c also meets 91.31 the requirements for class 4c under this clause; otherwise the 91.32 entire property is classified as class 3. Owners of real 91.33 property devoted to temporary and seasonal residential occupancy 91.34 for recreation purposes and all or a portion of which was 91.35 devoted to commercial purposes for not more than 250 days in the 91.36 year preceding the year of assessment desiring classification as 92.1 class 1c or 4c, must submit a declaration to the assessor 92.2 designating the cabins or units occupied for 250 days or less in 92.3 the year preceding the year of assessment by January 15 of the 92.4 assessment year. Those cabins or units and a proportionate 92.5 share of the land on which they are located will be designated 92.6 class 1c or 4c as otherwise provided. The remainder of the 92.7 cabins or units and a proportionate share of the land on which 92.8 they are located will be designated as class 3a. The owner of 92.9 property desiring designation as class 1c or 4c property must 92.10 provide guest registers or other records demonstrating that the 92.11 units for which class 1c or 4c designation is sought were not 92.12 occupied for more than 250 days in the year preceding the 92.13 assessment if so requested. The portion of a property operated 92.14 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 92.15 nonresidential facility operated on a commercial basis not 92.16 directly related to temporary and seasonal residential occupancy 92.17 for recreation purposes shall not qualify for class 1c or 4c; 92.18 (2) qualified property used as a golf course if: 92.19 (i) it is open to the public on a daily fee basis. It may 92.20 charge membership fees or dues, but a membership fee may not be 92.21 required in order to use the property for golfing, and its green 92.22 fees for golfing must be comparable to green fees typically 92.23 charged by municipal courses; and 92.24 (ii) it meets the requirements of section 273.112, 92.25 subdivision 3, paragraph (d). 92.26 A structure used as a clubhouse, restaurant, or place of 92.27 refreshment in conjunction with the golf course is classified as 92.28 class 3a property; 92.29 (3) real property up to a maximum of one acre of land owned 92.30 by a nonprofit community service oriented organization; provided 92.31 that the property is not used for a revenue-producing activity 92.32 for more than six days in the calendar year preceding the year 92.33 of assessment and the property is not used for residential 92.34 purposes on either a temporary or permanent basis. For purposes 92.35 of this clause, a "nonprofit community service oriented 92.36 organization" means any corporation, society, association, 93.1 foundation, or institution organized and operated exclusively 93.2 for charitable, religious, fraternal, civic, or educational 93.3 purposes, and which is exempt from federal income taxation 93.4 pursuant to section 501(c)(3), (10), or (19) of the Internal 93.5 Revenue Code of 1986, as amended through December 31, 1990. For 93.6 purposes of this clause, "revenue-producing activities" shall 93.7 include but not be limited to property or that portion of the 93.8 property that is used as an on-sale intoxicating liquor or 3.2 93.9 percent malt liquor establishment licensed under chapter 340A, a 93.10 restaurant open to the public, bowling alley, a retail store, 93.11 gambling conducted by organizations licensed under chapter 349, 93.12 an insurance business, or office or other space leased or rented 93.13 to a lessee who conducts a for-profit enterprise on the 93.14 premises. Any portion of the property which is used for 93.15 revenue-producing activities for more than six days in the 93.16 calendar year preceding the year of assessment shall be assessed 93.17 as class 3a. The use of the property for social events open 93.18 exclusively to members and their guests for periods of less than 93.19 24 hours, when an admission is not charged nor any revenues are 93.20 received by the organization shall not be considered a 93.21 revenue-producing activity; 93.22 (4) post-secondary student housing of not more than one 93.23 acre of land that is owned by a nonprofit corporation organized 93.24 under chapter 317A and is used exclusively by a student 93.25 cooperative, sorority, or fraternity for on-campus housing or 93.26 housing located within two miles of the border of a college 93.27 campus; 93.28 (5) manufactured home parks as defined in section 327.14, 93.29 subdivision 3; 93.30 (6) real property that is actively and exclusively devoted 93.31 to indoor fitness, health, social, recreational, and related 93.32 uses, is owned and operated by a not-for-profit corporation, and 93.33 is located within the metropolitan area as defined in section 93.34 473.121, subdivision 2; and 93.35 (7) a leased or privately owned noncommercial aircraft 93.36 storage hangar not exempt under section 272.01, subdivision 2, 94.1 and the land on which it is located, provided that: 94.2 (i) the land is on an airport owned or operated by a city, 94.3 town, county, metropolitan airports commission, or group 94.4 thereof; and 94.5 (ii) the land lease, or any ordinance or signed agreement 94.6 restricting the use of the leased premise, prohibits commercial 94.7 activity performed at the hangar. 94.8 If a hangar classified under this clause is sold after June 94.9 30, 2000, a bill of sale must be filed by the new owner with the 94.10 assessor of the county where the property is located within 60 94.11 days of the sale. 94.12 The market value of class 4c property has a class rate of 94.131.65 percent of market value0.75, except that (i)each parcel94.14ofseasonal residential recreational property not used for 94.15 commercial purposes has the same class rates as class 4bb 94.16 property, (ii)manufactured home parks assessed under clause (5)94.17have the same class rate as class 4b property, and (iii)94.18property described in paragraph (d), clause (4), has the same94.19class rate as the rate applicable to the first tier of class 4bb94.20nonhomestead residential real estate under paragraph (c)the 94.21 market value of commercial-use seasonal residential recreational 94.22 property has a class rate of 0.50, and (iii) the market value of 94.23 property described in clauses (2) and (6) has a class rate of 94.24 0.50. 94.25 (e) Class 4d property is qualifying low-income rental 94.26 housing certified to the assessor by the housing finance agency 94.27 under sections 273.126 and 462A.071. Class 4d includes land in 94.28 proportion to the total market value of the building that is 94.29 qualifying low-income rental housing. For all properties 94.30 qualifying as class 4d, the market value determined by the 94.31 assessor must be based on the normal approach to value using 94.32 normal unrestricted rents. 94.33 The market value of class 4d property has a class rate of 94.34one percent of market value0.40. 94.35 [EFFECTIVE DATE.] This section is effective for taxes 94.36 payable in 2002 and thereafter. 95.1 Sec. 30. Minnesota Statutes 2000, section 273.13, 95.2 subdivision 31, is amended to read: 95.3 Subd. 31. [CLASS 5.] Class 5 property includes: 95.4 (1) unmined iron ore and low-grade iron-bearing formations 95.5 as defined in section 273.14; and 95.6 (2) all other property not otherwise classified. 95.7 The market value of class 5 property has a class rate of 95.83.4 percent of market value1.0. 95.9 [EFFECTIVE DATE.] This section is effective for taxes 95.10 payable in 2002 and thereafter. 95.11 Sec. 31. Minnesota Statutes 2000, section 273.13, is 95.12 amended by adding a subdivision to read: 95.13 Subd. 34. [INFLATION ADJUSTMENT.] Beginning with the year 95.14 2002 assessment, for taxes payable in 2003, the commissioner of 95.15 revenue shall annually adjust the valuation limits specified in 95.16 subdivisions 22, 23, 24, and 25 for inflation. The commissioner 95.17 shall make the adjustments in accordance with section 290.06, 95.18 subdivision 2d, except that for the purposes of this subdivision 95.19 the percentage increase shall be determined from the year ending 95.20 on August 31, 2000, to the year ending on August 31 of the year 95.21 preceding the assessment year. The commissioner shall round the 95.22 valuation limits to the nearest $1,000. The commissioner shall 95.23 annually announce the valuation limits at the time specified in 95.24 section 290.06 for the succeeding assessment year. The 95.25 determination of the commissioner under this subdivision is not 95.26 a rule under the Administrative Procedure Act. 95.27 [EFFECTIVE DATE.] This section is effective July 1, 2001, 95.28 and thereafter. 95.29 Sec. 32. [273.1384] [MARKET VALUE HOMESTEAD CREDITS.] 95.30 Subdivision 1. [RESIDENTIAL HOMESTEAD MARKET VALUE 95.31 CREDIT.] Each county auditor shall determine a residential 95.32 homestead market value credit for each class 1a, 1b, 1c, and 2a 95.33 homestead property within the county. The credit is equal to 95.34 0.5 percent of the market value of the property. The amount of 95.35 homestead credit for a homestead may not exceed the lesser of 95.36 $330 or an amount that would reduce the tax on the parcel to an 96.1 amount equal to 0.85 percent of the parcel's market value. In 96.2 the case of an agricultural or resort homestead, only the market 96.3 value of the house, garage, and immediately surrounding one acre 96.4 of land is eligible in determining the property's residential 96.5 homestead market value credit. 96.6 Subd. 2. [AGRICULTURAL HOMESTEAD MARKET VALUE 96.7 CREDIT.] Except as provided in subdivision 1, property 96.8 classified as class 2a agricultural homestead is eligible for an 96.9 agricultural market value credit. The credit is equal to 0.25 96.10 percent of the property's market value. The credit under this 96.11 subdivision is limited to $288 for each homestead. 96.12 Subd. 3. [CREDIT REIMBURSEMENTS.] The county auditor shall 96.13 determine the tax reductions allowed under this section within 96.14 the county for each taxes payable year and shall certify that 96.15 amount to the commissioner of revenue as a part of the abstracts 96.16 of tax lists submitted by the county auditors under section 96.17 275.29. Any prior year adjustments shall also be certified on 96.18 the abstracts of tax lists. The commissioner shall review the 96.19 certifications for accuracy, and may make such changes as are 96.20 deemed necessary, or return the certification to the county 96.21 auditor for correction. 96.22 Subd. 4. [PAYMENT.] (a) The commissioner of revenue shall 96.23 reimburse each local taxing jurisdiction, other than school 96.24 districts, for the tax reductions granted under this section in 96.25 two equal installments on August 31 and December 15 of the taxes 96.26 payable year for which the reductions are granted, including in 96.27 each payment the prior year adjustments certified on the 96.28 abstracts for that taxes payable year. 96.29 (b) The commissioner of revenue shall certify the total of 96.30 the tax reductions granted under this section for each taxes 96.31 payable year within each school district to the commissioner of 96.32 the department of children, families, and learning and the 96.33 commissioner of children, families, and learning shall pay the 96.34 reimbursement amounts to each school district under the 96.35 provisions of section 273.1392. 96.36 Subd. 5. [APPROPRIATION.] An amount sufficient to make the 97.1 payments required by this section to taxing jurisdictions other 97.2 than school districts is annually appropriated from the general 97.3 fund to the commissioner of revenue. An amount sufficient to 97.4 make the payments required by this section for school districts 97.5 is annually appropriated from the general fund to the 97.6 commissioner of children, families, and learning. 97.7 [EFFECTIVE DATE.] This section is effective for taxes, 97.8 credits, and reimbursements payable in 2002 and thereafter. 97.9 Sec. 33. Minnesota Statutes 2000, section 273.1392, is 97.10 amended to read: 97.11 273.1392 [PAYMENT; SCHOOL DISTRICTS.] 97.12 The amounts of conservation tax credits under section 97.13 273.119; disaster or emergency reimbursement under section 97.14 273.123;attached machinery aid under section 273.138; homestead97.15credit under section 273.13market value homestead credits under 97.16 section 273.1384; aids and credits under section 273.1398; 97.17 wetlands reimbursement under section 275.295; enterprise zone 97.18 property credit payments under section 469.171; and metropolitan 97.19 agricultural preserve reduction under section 473H.10 for school 97.20 districts, shall be certified to the department of children, 97.21 families, and learning by the department of revenue. The 97.22 amounts so certified shall be paid according to section 127A.45, 97.23 subdivisions 9 and 13. 97.24 [EFFECTIVE DATE.] This section is effective for aids and 97.25 credits payable in 2002 and thereafter. 97.26 Sec. 34. Minnesota Statutes 2000, section 273.1393, is 97.27 amended to read: 97.28 273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 97.29 Notwithstanding any other provisions to the contrary, "net" 97.30 property taxes are determined by subtracting the credits in the 97.31 order listed from the gross tax: 97.32 (1) disaster credit as provided in section 273.123; 97.33 (2) powerline credit as provided in section 273.42; 97.34 (3) agricultural preserves credit as provided in section 97.35 473H.10; 97.36 (4) enterprise zone credit as provided in section 469.171; 98.1 (5) disparity reduction credit; 98.2 (6) conservation tax credit as provided in section 273.119; 98.3 (7)educationresidential homestead market value credit and 98.4 agricultural market value credit as provided in section273.138298.5 273.1384; 98.6 (8) taconite homestead credit as provided in section 98.7 273.135; and 98.8 (9) supplemental homestead credit as provided in section 98.9 273.1391. 98.10 The combination of all property tax credits must not exceed 98.11 the gross tax amount. 98.12 [EFFECTIVE DATE.] This section is effective for taxes 98.13 payable in 2002 and thereafter. 98.14 Sec. 35. Minnesota Statutes 2000, section 273.1398, 98.15 subdivision 1, is amended to read: 98.16 Subdivision 1. [DEFINITIONS.] (a) In this section, the 98.17 terms defined in this subdivision have the meanings given them. 98.18 (b) "Unique taxing jurisdiction" means the geographic area 98.19 subject to the same set of local tax rates. 98.20 (c) "Previous net tax capacity" means the product of the 98.21 appropriate net class rates for the year previous to the year in 98.22 which the aid is payable, and estimated market values for the 98.23 assessment two years prior to that in which aid is payable. 98.24 "Total previous net tax capacity" means the previous net tax 98.25 capacities for all property within the unique taxing 98.26 jurisdiction. The total previous net tax capacity shall be 98.27 reduced by the sum of (1) the unique taxing jurisdiction's 98.28 previous net tax capacity of commercial-industrial property as 98.29 defined in section 473F.02, subdivision 3, or 276A.01, 98.30 subdivision 3, multiplied by the ratio determined pursuant to 98.31 section 473F.08, subdivision 6, or 276A.06, subdivision 7, for 98.32 the municipality, as defined in section 473F.02, subdivision 8, 98.33 or 276A.01, subdivision 8, in which the unique taxing 98.34 jurisdiction is located, (2) the previous net tax capacity of 98.35 the captured value of tax increment financing districts as 98.36 defined in section 469.177, subdivision 2, and (3) the previous 99.1 net tax capacity of transmission lines deducted from a local 99.2 government's total net tax capacity under section 273.425. 99.3 Previous net tax capacity cannot be less than zero. 99.4 (d) "Equalized market values" are market values that have 99.5 been equalized by dividing the assessor's estimated market value 99.6 for the second year prior to that in which the aid is payable by 99.7 the assessment sales ratios determined by class in the 99.8 assessment sales ratio study conducted by the department of 99.9 revenue pursuant to section 127A.48 in the second year prior to 99.10 that in which the aid is payable. The equalized market values 99.11 shall equal the unequalized market values divided by the 99.12 assessment sales ratio. 99.13 (e) "Equalized school levies" means the amounts levied for: 99.14 (1) general education under section 126C.13, subdivision 2; 99.15 (2) supplemental revenue under section 126C.10, subdivision 99.16 10; 99.17 (3) transition revenue under section 126C.10, subdivision 99.18 20; and 99.19 (4) referendum revenue under section 126C.17. 99.20 (f) "Current local tax rate" means the quotient derived by 99.21 dividing the taxes levied within a unique taxing jurisdiction 99.22 for taxes payable in the year prior to that for which aids are 99.23 being calculated by the total previous net tax capacity of the 99.24 unique taxing jurisdiction. 99.25 (g) For purposes of calculating and allocating homestead 99.26 and agricultural credit aid authorized pursuant to subdivision 2 99.27 and the disparity reduction aid authorized in subdivision 3, 99.28 "gross taxes levied on all properties," "gross taxes," or "taxes 99.29 levied" means the total net tax capacity based taxes levied on 99.30 all properties except that levied on the captured value of tax 99.31 increment districts as defined in section 469.177, subdivision 99.32 2, and that levied on the portion of commercial industrial 99.33 properties' assessed value or gross tax capacity, as defined in 99.34 section 473F.02, subdivision 3, subject to the areawide tax as 99.35 provided in section 473F.08, subdivision 6, in a unique taxing 99.36 jurisdiction. "Gross taxes" are before any reduction for 100.1 disparity reduction aid but "taxes levied" are after any 100.2 reduction for disparity reduction aid. Gross taxes levied or 100.3 taxes levied cannot be less than zero. 100.4 "Taxes levied" excludes equalized school levies. 100.5 (h) "Household adjustment factor" means the number of 100.6 households, for the year most recently determined as ofJuly100.7 June 1 in the aid calculation year, divided by the number of 100.8 households for the year immediately preceding the year for which 100.9 the number of households has most recently been determined as of 100.10JulyJune 1. The household adjustment factor cannot be less 100.11 than one. 100.12 (i) "Growth adjustment factor" means the household 100.13 adjustment factor in the case of counties. In the case of 100.14 cities, towns, school districts, and special taxing districts, 100.15 the growth adjustment factor equals one. The growth adjustment 100.16 factor cannot be less than one. 100.17 (j) "Homestead and agricultural credit base" means the 100.18 previous year's certified homestead and agricultural credit aid 100.19 determined under subdivision 2 less any permanent aid reduction 100.20 in the previous year to homestead and agricultural credit aid. 100.21 (k) "Net tax capacity adjustment" means (1) the tax base 100.22 differential defined in subdivision 1a, multiplied by (2) the 100.23 unique taxing jurisdiction's current local tax rate. The net 100.24 tax capacity adjustment cannot be less than zero. 100.25 (l) "Fiscal disparity adjustment" means a taxing 100.26 jurisdiction's fiscal disparity distribution levy under section 100.27 473F.08, subdivision 3, clause (a), or 276A.06, subdivision 3, 100.28 clause (a), for taxes payable in the year prior to that for 100.29 which aids are being calculated, multiplied by the ratio of the 100.30 tax base differential percent referenced in subdivision 1a for 100.31 the highest class rate for class 3 property for taxes payable in 100.32 the year prior to that for which aids are being calculated to 100.33 the highest class rate for class 3 property for taxes payable in 100.34 the second prior year to that for which aids are being 100.35 calculated. In the case of school districts, the fiscal 100.36 disparity distribution levy shall exclude that part of the levy 101.1 attributable to equalized school levies. 101.2 [EFFECTIVE DATE.] This section is effective the day 101.3 following final enactment. 101.4 Sec. 36. Minnesota Statutes 2000, section 273.1398, is 101.5 amended by adding a subdivision to read: 101.6 Subd. 4b. [CREDIT AID CHANGES.] (a) For aid payable in 101.7 2002, each county shall have its aid under subdivision 2, after 101.8 adjustment under subdivision 4a, permanently reduced. The 101.9 amount of the reduction for each county is the sum of the 101.10 following amounts: 101.11 (1) for counties in the first through fourth, sixth, and 101.12 tenth judicial districts, the estimated costs submitted by the 101.13 court administrators for the calendar year 2001 budget requests 101.14 of such counties for guardians ad litem, court interpreters, 101.15 Rule 20 and civil commitment examinations and hearings, and in 101.16 forma pauperis costs, as confirmed and reported by the Minnesota 101.17 supreme court to the commissioner of revenue on or before July 101.18 1, 2001; 101.19 (2) the 1999 nonfederal expenditures for child family 101.20 foster care as reported by the county during calendar year 2000 101.21 to the department of human services under section 256E.08, 101.22 subdivision 8; and 101.23 (3) the additional amount of aid the county receives in 101.24 2002 under section 477A.03, subdivision 2, paragraph (c), clause 101.25 (ii), excluding increases due to inflation. 101.26 (b) For aid payable in 2002 and thereafter, no aid shall be 101.27 computed or paid pursuant to subdivision 2 for statutory or home 101.28 rule cities, towns, school districts, and special taxing 101.29 districts. 101.30 [EFFECTIVE DATE.] This section is effective for aid payable 101.31 in 2002 and thereafter. 101.32 Sec. 37. Minnesota Statutes 2000, section 273.1398, 101.33 subdivision 8, is amended to read: 101.34 Subd. 8. [APPROPRIATION.] (a) An amount sufficient to pay 101.35 the aids and credits provided under this section for school 101.36 districts, intermediate school districts, or any group of school 102.1 districts levying as a single taxing entity, is annually 102.2 appropriated from the general fund to the commissioner of 102.3 children, families, and learning. An amount sufficient to pay 102.4 the aids and credits provided under this section for counties, 102.5 cities, towns, and special taxing districts is annually 102.6 appropriated from the general fund to the commissioner of 102.7 revenue. A jurisdiction's aid amount may be increased or 102.8 decreased based on any prior year adjustments for homestead 102.9 credit or other property tax credit or aid programs. 102.10 (b) The commissioner of finance shall bill the commissioner 102.11 of revenue for the cost of preparation of local impact notes as 102.12 required by section 3.987 only to the extent to which those 102.13 costs exceed those costs incurred in fiscal year 1997 and for 102.14 any other new costs attributable to the local impact note 102.15 function required by section 3.987, not to exceed $100,000 in 102.16 fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and 102.17 thereafter. 102.18 The commissioner of revenue shall deduct the amount billed 102.19 under this paragraph from aid payments to be made tocities and102.20 counties under subdivision 2 on a pro rata basis. The amount 102.21 deducted under this paragraph is appropriated to the 102.22 commissioner of finance for the preparation of local impact 102.23 notes. 102.24 [EFFECTIVE DATE.] This section is effective January 1, 2002 102.25 and thereafter. 102.26 Sec. 38. Minnesota Statutes 2000, section 273.166, 102.27 subdivision 2, is amended to read: 102.28 Subd. 2. [MANUFACTURED HOME HOMESTEAD AND AGRICULTURAL 102.29 CREDIT AID.]ForIn calendar year 2002, and each calendar year 102.30 thereafter,themanufactured home homestead and agricultural 102.31 credit aidfor each taxing jurisdiction equals the taxing102.32jurisdiction'sshall be paid to each county under this section 102.33 in an amount equal to the county's manufactured home homestead 102.34 and agricultural credit aid determined under this subdivision 102.35 for the preceding aid payable year times the growth adjustment 102.36 factor for thejurisdiction plus the net tax capacity adjustment103.1for the jurisdictioncounty. Payment will not be made to 103.2 anytaxing jurisdictioncounty that has ceased to levy a 103.3 property tax. 103.4 [EFFECTIVE DATE.] This section is effective for aid paid in 103.5 2002 and thereafter. 103.6 Sec. 39. Minnesota Statutes 2000, section 273.166, 103.7 subdivision 3, is amended to read: 103.8 Subd. 3. [AID CALCULATION.] The commissioner of revenue 103.9 shall make the calculation required in subdivision 2 and 103.10 annually pay manufactured home homestead and agricultural credit 103.11 aid tothe local governmentscounties at the times provided in 103.12 section 473H.10 for local governments other than school 103.13 districts.Aid payments to the school districts must be103.14certified to the commissioner of children, families, and103.15learning and paid under section 273.1392.103.16 [EFFECTIVE DATE.] This section is effective for aid paid in 103.17 2002 and thereafter. 103.18 Sec. 40. Minnesota Statutes 2000, section 273.166, 103.19 subdivision 5, is amended to read: 103.20 Subd. 5. [APPROPRIATION.]There is annually appropriated103.21from the general fund to the commissioner of children, families,103.22and learning a sum sufficient to pay the aids provided under103.23this section for school districts, intermediate school103.24districts, or any group of school districts levying as a single103.25taxing entity.There is annually appropriated from the general 103.26 fund to the commissioner of revenue a sum sufficient to pay the 103.27 aids provided under this section to counties, cities, towns, and103.28special taxing districts. 103.29 [EFFECTIVE DATE.] This section is effective for fiscal year 103.30 2003 and thereafter. 103.31 Sec. 41. Minnesota Statutes 2000, section 273.42, is 103.32 amended by adding a subdivision to read: 103.33 Subd. 3. [STATE TAX ON TRANSMISSION AND DISTRIBUTION 103.34 LINES.] Notwithstanding section 273.425, the entire assessed 103.35 value of property taxed at the average local tax rate under 103.36 subdivision 1 is subject to the state tax rate provided in 104.1 section 275.02. Notwithstanding subdivisions 1 and 2, the 104.2 entire proceeds of the state tax levy for each such property 104.3 must be distributed to the state under the procedures provided 104.4 in chapter 276. No portion of the proceeds from the state levy 104.5 on such property is distributed within the county under 104.6 subdivision 1 or 2. 104.7 [EFFECTIVE DATE.] This section is effective for taxes 104.8 payable in 2002 and thereafter. 104.9 Sec. 42. Minnesota Statutes 2000, section 274.01, 104.10 subdivision 1, is amended to read: 104.11 Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, 104.12 GRIEVANCES.] (a) The town board of a town, or the council or 104.13 other governing body of a city, is the board ofreviewappeal 104.14 and equalization except (1) in cities whose charters provide for 104.15 a board of equalization or (2) in any city or town that has 104.16 transferred its local board of review power and duties to the 104.17 county board as provided in subdivision 3. The county assessor 104.18 shall fix a day and time when the board or the board of 104.19 equalization shall meet in the assessment districts of the 104.20 county. Notwithstanding any law or city charter to the 104.21 contrary, a city board of equalization shall be referred to as a 104.22 board of appeal and equalization. On or before February 15 of 104.23 each year the assessor shall give written notice of the time to 104.24 the city or town clerk. Notwithstanding the provisions of any 104.25 charter to the contrary, the meetings must be held between April 104.26 1 and May 31 each year. The clerk shall give published and 104.27 posted notice of the meeting at least ten days before the date 104.28 of the meeting. 104.29If in any county, at least 25 percent of the total net tax104.30capacity of a city or town is noncommercial seasonal residential104.31recreational property classified under section 273.13,104.32subdivision 25, the county must hold two countywide104.33informational meetings on Saturdays. The meetings will allow104.34noncommercial seasonal residential recreational taxpayers to104.35discuss their property valuation with the appropriate assessment104.36staff. These Saturday informational meetings must be scheduled105.1to allow the owner of the noncommercial seasonal residential105.2recreational property the opportunity to attend one of the105.3meetings prior to the scheduled board of review for their city105.4or town. The Saturday meeting dates must be contained on the105.5notice of valuation of real property under section 273.121.105.6 The board shall meet at the office of the clerk to review 105.7 the assessment and classification of property in the town or 105.8 city. No changes in valuation or classification which are 105.9 intended to correct errors in judgment by the county assessor 105.10 may be made by the county assessor after the boardof reviewhas 105.11 adjourned in those cities or towns that hold a local board of 105.12 review; however, corrections of errors that are merely clerical 105.13 in nature or changes that extend homestead treatment to property 105.14 are permitted after adjournment until the tax extension date for 105.15 that assessment year. The changes must be fully documented and 105.16 maintained in the assessor's office and must be available for 105.17 review by any person. A copy of the changes made during this 105.18 period in those cities or towns that hold a local board of 105.19 review must be sent to the county board no later than December 105.20 31 of the assessment year. 105.21 (b) The board shall determine whether the taxable property 105.22 in the town or city has been properly placed on the list and 105.23 properly valued by the assessor. If real or personal property 105.24 has been omitted, the board shall place it on the list with its 105.25 market value, and correct the assessment so that each tract or 105.26 lot of real property, and each article, parcel, or class of 105.27 personal property, is entered on the assessment list at its 105.28 market value. No assessment of the property of any person may 105.29 be raised unless the person has been duly notified of the intent 105.30 of the board to do so. On application of any person feeling 105.31 aggrieved, the board shall review the assessment or 105.32 classification, or both, and correct it as appears just. The 105.33 board may not make an individual market value adjustment or 105.34 classification change that would benefit the property in cases 105.35 where the owner or other person having control over the property 105.36 will not permit the assessor to inspect the property and the 106.1 interior of any buildings or structures. 106.2 (c) A local boardof reviewmay reduce assessments upon 106.3 petition of the taxpayer but the total reductions must not 106.4 reduce the aggregate assessment made by the county assessor by 106.5 more than one percent. If the total reductions would lower the 106.6 aggregate assessments made by the county assessor by more than 106.7 one percent, none of the adjustments may be made. The assessor 106.8 shall correct any clerical errors or double assessments 106.9 discovered by the boardof reviewwithout regard to the one 106.10 percent limitation. 106.11 (d) A majority of the members may act at the meeting, and 106.12 adjourn from day to day until they finish hearing the cases 106.13 presented. The assessor shall attend, with the assessment books 106.14 and papers, and take part in the proceedings, but must not 106.15 vote. The county assessor, or an assistant delegated by the 106.16 county assessor shall attend the meetings. The board shall list 106.17 separately, on a form appended to the assessment book, all 106.18 omitted property added to the list by the board and all items of 106.19 property increased or decreased, with the market value of each 106.20 item of property, added or changed by the board, placed opposite 106.21 the item. The county assessor shall enter all changes made by 106.22 the board in the assessment book. 106.23 (e) Except as provided in subdivision 3, if a person fails 106.24 to appear in person, by counsel, or by written communication 106.25 before the board after being duly notified of the board's intent 106.26 to raise the assessment of the property, or if a person feeling 106.27 aggrieved by an assessment or classification fails to apply for 106.28 a review of the assessment or classification, the person may not 106.29 appear before the county board of appeal and equalization for a 106.30 review of the assessment or classification. This paragraph does 106.31 not apply if an assessment was made after the local board 106.32 meeting, as provided in section 273.01, or if the person can 106.33 establish not having received notice of market value at least 106.34 five days before the local boardof reviewmeeting. 106.35 (f) The local boardof review or the board of equalization106.36 must complete its work and adjourn within 20 days from the time 107.1 of convening stated in the notice of the clerk, unless a longer 107.2 period is approved by the commissioner of revenue. No action 107.3 taken after that date is valid. All complaints about an 107.4 assessment or classification made after the meeting of the board 107.5 must be heard and determined by the county board of 107.6 equalization. A nonresident may, at any time, before the 107.7 meeting of the boardof reviewfile written objections to an 107.8 assessment or classification with the county assessor. The 107.9 objections must be presented to the boardof reviewat its 107.10 meeting by the county assessor for its consideration. 107.11 [EFFECTIVE DATE.] This section is effective January 1, 107.12 2002, and thereafter. 107.13 Sec. 43. Minnesota Statutes 2000, section 274.13, 107.14 subdivision 1, is amended to read: 107.15 Subdivision 1. [MEMBERS; MEETINGS; RULES FOR EQUALIZING 107.16 ASSESSMENTS.] The county commissioners, or a majority of them, 107.17 with the county auditor, or, if the auditor cannot be present, 107.18 the deputy county auditor, or, if there is no deputy, the court 107.19 administrator of the district court, shall form a board for the 107.20 equalization of the assessment of the property of the county, 107.21 including the property of all cities whose charters provide for 107.22 a board of equalization. This board shall be referred to as the 107.23 county board of appeal and equalization. The board shall meet 107.24 annually, on the date specified in section 274.14, at the office 107.25 of the auditor. Each member shall take an oath to fairly and 107.26 impartially perform duties as a member. The board shall examine 107.27 and compare the returns of the assessment of property of the 107.28 towns or districts, and equalize them so that each tract or lot 107.29 of real property and each article or class of personal property 107.30 is entered on the assessment list at its market value, subject 107.31 to the following rules: 107.32 (1) The board shall raise the valuation of each tract or 107.33 lot of real property which in its opinion is returned below its 107.34 market value to the sum believed to be its market value. The 107.35 board must first give notice of intention to raise the valuation 107.36 to the person in whose name it is assessed, if the person is a 108.1 resident of the county. The notice must fix a time and place 108.2 for a hearing. 108.3 (2) The board shall reduce the valuation of each tract or 108.4 lot which in its opinion is returned above its market value to 108.5 the sum believed to be its market value. 108.6 (3) The board shall raise the valuation of each class of 108.7 personal property which in its opinion is returned below its 108.8 market value to the sum believed to be its market value. It 108.9 shall raise the aggregate value of the personal property of 108.10 individuals, firms, or corporations, when it believes that the 108.11 aggregate valuation, as returned, is less than the market value 108.12 of the taxable personal property possessed by the individuals, 108.13 firms, or corporations, to the sum it believes to be the market 108.14 value. The board must first give notice to the persons of 108.15 intention to do so. The notice must set a time and place for a 108.16 hearing. 108.17 (4) The board shall reduce the valuation of each class of 108.18 personal property that is returned above its market value to the 108.19 sum it believes to be its market value. Upon complaint of a 108.20 party aggrieved, the board shall reduce the aggregate valuation 108.21 of the individual's personal property, or of any class of 108.22 personal property for which the individual is assessed, which in 108.23 its opinion has been assessed at too large a sum, to the sum it 108.24 believes was the market value of the individual's personal 108.25 property of that class. 108.26 (5) The board must not reduce the aggregate value of all 108.27 the property of its county, as submitted to the county board of 108.28 equalization, with the additions made by the auditor under this 108.29 chapter, by more than one percent of its whole valuation. The 108.30 board may raise the aggregate valuation of real property, and of 108.31 each class of personal property, of the county, or of any town 108.32 or district of the county, when it believes it is below the 108.33 market value of the property, or class of property, to the 108.34 aggregate amount it believes to be its market value. 108.35 (6) The board shall change the classification of any 108.36 property which in its opinion is not properly classified. 109.1 [EFFECTIVE DATE.] This section is effective January 1, 109.2 2002, and thereafter. 109.3 Sec. 44. Minnesota Statutes 2000, section 275.011, is 109.4 amended by adding a subdivision to read: 109.5 Subd. 4. [CONVERSION OF NET TAX CAPACITY RATE LEVY LIMIT.] 109.6 (a) Except as provided in section 126C.02, for purposes of 109.7 determining the mill rate limits applicable to a levy authority 109.8 or limitation expressed in law as a net tax capacity rate limit, 109.9 the commissioner of revenue shall prescribe the conversion 109.10 factors and methodology for use by all county auditors. 109.11 (b) If the conversion from net tax capacities to assessed 109.12 values or from net tax capacity tax rates to mill rates, as 109.13 provided in this article, causes a provision of law related to 109.14 the administration of the property tax to be unadministrable, 109.15 the commissioner of revenue may prescribe an adjustment or 109.16 conversion factor or method to preserve the purpose of that law. 109.17 (c) The prescription of a conversion or adjustment factor 109.18 or method by the commissioner of revenue under this subdivision 109.19 shall not be considered a "rule" and is not subject to the 109.20 Administrative Procedure Act. 109.21 [EFFECTIVE DATE.] This section is effective for taxes 109.22 payable in 2002 and thereafter. 109.23 Sec. 45. Minnesota Statutes 2000, section 275.02, is 109.24 amended to read: 109.25 275.02 [STATE LEVY, EXCEPTIONS; CERTIFICATION OF TAX RATE.] 109.26The(a) For taxes payable in 2002 and subsequent years, a 109.27 state tax shall be levied on all class 3, other than attached 109.28 machinery located at an electric generating station that is part 109.29 of an electric generating system, class 4c(1), class 4c(2), and 109.30 class 5(1) taxable property in the state as defined in section 109.31 273.13. For noncommercial class 4c(1) property, 50 percent of 109.32 the assessed value of the property, up to a maximum of $20,000, 109.33 is exempt from the state levy under this paragraph. Property 109.34 taxable under section 272.01, subdivision 2, paragraph (b), 109.35 clause (2), that was not subject to the general education tax 109.36 levy for taxes payable in 2001 is exempt from the state levy 110.1 under this paragraph. The rate of the tax shall be certified by 110.2 thestate auditorcommissioner of revenue to each county auditor 110.3 on or before November151 annually. 110.4 For taxes payable in 2002, the commissioner shall compute 110.5 and certify a tax rate necessary to raise $470,400,000. For 110.6 taxes payable in years after 2002, the amount to be raised is 110.7 increased each year by multiplying the amount for the prior year 110.8 by the sum of one plus the rate of increase, if any, in the 110.9 implicit price deflator for government consumption expenditures 110.10 and gross investment for state and local governments prepared by 110.11 the Bureau of Economic Analysts of the United States Department 110.12 of Commerce for the 12-month period ending March 31 of the year 110.13 prior to the year the taxes are payable. It shall take a 110.14 two-thirds vote of the legislature to increase the state tax 110.15 levy by a greater amount. 110.16 (b) The state levy under paragraph (a) is in addition to 110.17 any state levy certified by the state auditor under article XI 110.18 of the Minnesota Constitution. A levy certified by the state 110.19 auditor under article XI shall be certified by the state auditor 110.20 to each county auditor by November 1 for taxes payable in the 110.21 following year, and shall be applied against the assessed value 110.22 of all taxable property in the state. 110.23 [EFFECTIVE DATE.] This section is effective for taxes 110.24 payable in 2002 and thereafter. 110.25 Sec. 46. Minnesota Statutes 2000, section 275.065, 110.26 subdivision 3, is amended to read: 110.27 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 110.28 county auditor shall prepare and the county treasurer shall 110.29 deliver after November 10 and on or before November 24 each 110.30 year, by first class mail to each taxpayer at the address listed 110.31 on the county's current year's assessment roll, a notice of 110.32 proposed property taxes. 110.33 (b) The commissioner of revenue shall prescribe the form of 110.34 the notice. 110.35 (c) The notice must inform taxpayers that it contains the 110.36 amount of property taxes each taxing authority proposes to 111.1 collect for taxes payable the following year. In the case of a 111.2 town,or in the case of the state determined portion of the111.3school district levy,the final tax amount will be its proposed 111.4 tax. In the case of taxing authorities required to hold a 111.5 public meeting under subdivision 6, the notice must clearly 111.6 state that each taxing authority, including regional library 111.7 districts established under section 134.201, and including the 111.8 metropolitan taxing districts as defined in paragraph (i), but 111.9 excluding all other special taxing districts and towns, will 111.10 hold a public meeting to receive public testimony on the 111.11 proposed budget and proposed or final property tax levy, or, in 111.12 case of a school district, on the current budget and proposed 111.13 property tax levy. It must clearly state the time and place of 111.14 each taxing authority's meeting, a phone number for the taxing 111.15 jurisdiction where taxpayers may call if they have questions 111.16 related to the notice, and an address where comments will be 111.17 received by mail. 111.18 (d) The notice must state for each parcel: 111.19 (1) the market value of the property as determined under 111.20 section 273.11, and used for computing property taxes payable in 111.21 the following year and for taxes payable in the current year as 111.22 each appears in the records of the county assessor on November 1 111.23 of the current year; and, in the case of residential property, 111.24 whether the property is classified as homestead or 111.25 nonhomestead. The notice must clearly inform taxpayers of the 111.26 years to which the market values apply and that the values are 111.27 final values; 111.28 (2) the items listed below, shown separately by county, 111.29 city or town, statedetermined schooltaxnet of the education111.30homestead creditunder section273.1382275.02, voter approved 111.31 school levy, other local school levy, and the sum of the special 111.32 taxing districts, and as a total of all taxing authorities: 111.33 (i) the actual tax for taxes payable in the current 111.34 year; and 111.35 (ii)the tax change due to spending factors, defined as the111.36proposed tax minus the constant spending tax amount;112.1(iii) the tax change due to other factors, defined as the112.2constant spending tax amount minus the actual current year tax;112.3and112.4(iv)the proposed tax amount net of credits. 112.5 In the case of a town or the statedetermined schooltax, 112.6 the final tax shall also be its proposed tax unless the town 112.7 changes its levy at a special town meeting under section 112.8 365.52. If a school district has certified under section 112.9 126C.17, subdivision 9, that a referendum will be held in the 112.10 school district at the November general election, the county 112.11 auditor must note next to the school district's proposed amount 112.12 that a referendum is pending and that, if approved by the 112.13 voters, the tax amount may be higher than shown on the notice. 112.14 In the case of the city of Minneapolis, the levy for the 112.15 Minneapolis library board and the levy for Minneapolis park and 112.16 recreation shall be listed separately from the remaining amount 112.17 of the city's levy. In the case of a parcel where tax increment 112.18 or the fiscal disparities areawide tax under chapter 276A or 112.19 473F applies, the proposed tax levy on the captured value or the 112.20 proposed tax levy on the tax capacity subject to the areawide 112.21 tax must each be stated separately and not included in the sum 112.22 of the special taxing districts; and 112.23 (3) the increase or decrease between the total taxes 112.24 payable in the current year and the total proposed taxes, 112.25 expressed as a percentage. 112.26 For purposes of this section, the amount of the tax on 112.27 homesteads qualifying under the senior citizens' property tax 112.28 deferral program under chapter 290B is the total amount of 112.29 property tax before subtraction of the deferred property tax 112.30 amount. 112.31 (e) The notice must clearly state that the proposed or 112.32 final taxes do not include the following: 112.33 (1) special assessments; 112.34 (2) levies approved by the voters after the date the 112.35 proposed taxes are certified, including bond referenda, school 112.36 district levy referenda, and levy limit increase referenda; 113.1 (3) amounts necessary to pay cleanup or other costs due to 113.2 a natural disaster occurring after the date the proposed taxes 113.3 are certified; 113.4 (4) amounts necessary to pay tort judgments against the 113.5 taxing authority that become final after the date the proposed 113.6 taxes are certified; and 113.7 (5) the contamination tax imposed on properties which 113.8 received market value reductions for contamination. 113.9 (f) Except as provided in subdivision 7, failure of the 113.10 county auditor to prepare or the county treasurer to deliver the 113.11 notice as required in this section does not invalidate the 113.12 proposed or final tax levy or the taxes payable pursuant to the 113.13 tax levy. 113.14 (g) If the notice the taxpayer receives under this section 113.15 lists the property as nonhomestead, and satisfactory 113.16 documentation is provided to the county assessor by the 113.17 applicable deadline, and the property qualifies for the 113.18 homestead classification in that assessment year, the assessor 113.19 shall reclassify the property to homestead for taxes payable in 113.20 the following year. 113.21 (h) In the case of class 4 residential property used as a 113.22 residence for lease or rental periods of 30 days or more, the 113.23 taxpayer must either: 113.24 (1) mail or deliver a copy of the notice of proposed 113.25 property taxes to each tenant, renter, or lessee; or 113.26 (2) post a copy of the notice in a conspicuous place on the 113.27 premises of the property. 113.28 The notice must be mailed or posted by the taxpayer by 113.29 November 27 or within three days of receipt of the notice, 113.30 whichever is later. A taxpayer may notify the county treasurer 113.31 of the address of the taxpayer, agent, caretaker, or manager of 113.32 the premises to which the notice must be mailed in order to 113.33 fulfill the requirements of this paragraph. 113.34 (i) For purposes of this subdivision, subdivisions 5a and 113.35 6, "metropolitan special taxing districts" means the following 113.36 taxing districts in the seven-county metropolitan area that levy 114.1 a property tax for any of the specified purposes listed below: 114.2 (1) metropolitan council under section 473.132, 473.167, 114.3 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 114.4 (2) metropolitan airports commission under section 473.667, 114.5 473.671, or 473.672; and 114.6 (3) metropolitan mosquito control commission under section 114.7 473.711. 114.8 For purposes of this section, any levies made by the 114.9 regional rail authorities in the county of Anoka, Carver, 114.10 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 114.11 398A shall be included with the appropriate county's levy and 114.12 shall be discussed at that county's public hearing. 114.13 (j) If a statutory or home rule charter city or a town has 114.14 exercised the local levy option provided by section 473.388, 114.15 subdivision 7, it may include in the notice of its proposed 114.16 taxes the amount of its proposed taxes attributable to its 114.17 exercise of the option. In the first year of the city or town's 114.18 exercise of this option, the statement shall include an estimate 114.19 of the reduction of the metropolitan council's tax on the parcel 114.20 due to exercise of that option. The metropolitan council's levy 114.21 shall be adjusted accordingly. 114.22 [EFFECTIVE DATE.] This section is effective for notices of 114.23 proposed property taxes required in 2001 for taxes payable in 114.24 2002, and thereafter. 114.25 Sec. 47. Minnesota Statutes 2000, section 275.065, 114.26 subdivision 5a, is amended to read: 114.27 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 114.28 population of more than 2,500, county, a metropolitan special 114.29 taxing district as defined in subdivision 3, paragraph (i), a 114.30 regional library district established under section 134.201, or 114.31 school district shall advertise in a newspaper a notice of its 114.32 intent to adopt a budget and property tax levy or, in the case 114.33 of a school district, to review its current budget and proposed 114.34 property taxes payable in the following year, at a public 114.35 hearing, if a public hearing is required under subdivision 6. 114.36 The notice must be published not less than two business days nor 115.1 more than six business days before the hearing. 115.2 The advertisement must be at least one-eighth page in size 115.3 of a standard-size or a tabloid-size newspaper. The 115.4 advertisement must not be placed in the part of the newspaper 115.5 where legal notices and classified advertisements appear. The 115.6 advertisement must be published in an official newspaper of 115.7 general circulation in the taxing authority. The newspaper 115.8 selected must be one of general interest and readership in the 115.9 community, and not one of limited subject matter. The 115.10 advertisement must appear in a newspaper that is published at 115.11 least once per week. 115.12 For purposes of this section, the metropolitan special 115.13 taxing district's advertisement must only be published in the 115.14 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 115.15 (b) The advertisement for school districts, metropolitan 115.16 special taxing districts, and regional library districts must be 115.17 in the following form, except that the notice for a school 115.18 district may include references to the current budget in regard 115.19 to proposed property taxes. 115.20 "NOTICE OF 115.21 PROPOSED PROPERTY TAXES 115.22 (School District/Metropolitan 115.23 Special Taxing District/Regional 115.24 Library District) of ......... 115.25 The governing body of ........ will soon hold budget hearings 115.26 and vote on the property taxes for (metropolitan special taxing 115.27 district/regional library district services that will be 115.28 provided in (year)/school district services that will be 115.29 provided in (year) and (year)). 115.30 NOTICE OF PUBLIC HEARING: 115.31 All concerned citizens are invited to attend a public hearing 115.32 and express their opinions on the proposed (school 115.33 district/metropolitan special taxing district/regional library 115.34 district) budget and property taxes, or in the case of a school 115.35 district, its current budget and proposed property taxes, 115.36 payable in the following year. The hearing will be held on 116.1 (Month/Day/Year) at (Time) at (Location, Address)." 116.2 (c) The advertisement for cities and counties must be in 116.3 the following form. 116.4 "NOTICE OF PROPOSED 116.5 TOTAL BUDGET AND PROPERTY TAXES 116.6 The (city/county) governing body or board of commissioners will 116.7 hold a public hearing to discuss the budget and to vote on the 116.8 amount of property taxes to collect for services the 116.9 (city/county) will provide in (year). 116.10 116.11 SPENDING: The total budget amounts below compare 116.12 (city's/county's) (year) total actual budget with the amount the 116.13 (city/county) proposes to spend in (year). 116.14 116.15 (Year) Total Proposed (Year) Change from 116.16 Actual Budget Budget (Year)-(Year) 116.17 116.18 $....... $....... ...% 116.19 116.20 TAXES: The property tax amounts below compare that portion of 116.21 the current budget levied in property taxes in (city/county) for 116.22 (year) with the property taxes the (city/county) proposes to 116.23 collect in (year). 116.24 116.25 (Year) Property Proposed (Year) Change from 116.26 Taxes Property Taxes (Year)-(Year) 116.27 116.28 $....... $....... ...% 116.29 116.30 ATTEND THE PUBLIC HEARING 116.31 All (city/county) residents are invited to attend the public 116.32 hearing of the (city/county) to express your opinions on the 116.33 budget and the proposed amount of (year) property taxes. The 116.34 hearing will be held on: 116.35 (Month/Day/Year/Time) 116.36 (Location/Address) 117.1 If the discussion of the budget cannot be completed, a time and 117.2 place for continuing the discussion will be announced at the 117.3 hearing. You are also invited to send your written comments to: 117.4 (City/County) 117.5 (Location/Address)" 117.6 (d) For purposes of this subdivision, the budget amounts 117.7 listed on the advertisement mean: 117.8 (1) for cities, the total government fund expenditures, as 117.9 defined by the state auditor under section 471.6965, less any 117.10 expenditures for improvements or services that are specially 117.11 assessed or charged under chapter 429, 430, 435, or the 117.12 provisions of any other law or charter; and 117.13 (2) for counties, the total government fund expenditures, 117.14 as defined by the state auditor under section 375.169, less any 117.15 expenditures for direct payments to recipients or providers for 117.16 the human service aids listed below: 117.17 (i) Minnesota family investment program under chapters 256J 117.18 and 256K; 117.19 (ii) medical assistance under sections 256B.041, 117.20 subdivision 5, and 256B.19, subdivision 1; 117.21 (iii) general assistance medical care under section 117.22 256D.03, subdivision 6; 117.23 (iv) general assistance under section 256D.03, subdivision 117.24 2; 117.25 (v) emergency assistance under section 256J.48; 117.26 (vi) Minnesota supplemental aid under section 256D.36, 117.27 subdivision 1; 117.28 (vii) preadmission screening under section 256B.0911, and 117.29 alternative care grants under section 256B.0913; 117.30 (viii) general assistance medical care claims processing, 117.31 medical transportation and related costs under section 256D.03, 117.32 subdivision 4; 117.33 (ix) medical transportation and related costs under section 117.34 256B.0625, subdivisions 17 to 18a; 117.35 (x) group residential housing under section 256I.05, 117.36 subdivision 8, transferred from programs in clauses (iv) and 118.1 (vi); or 118.2 (xi) any successor programs to those listed in clauses (i) 118.3 to (x). 118.4 (e) A city with a population of over 500 but not more than 118.5 2,500 that is required to hold a public hearing under 118.6 subdivision 6 must advertise by posted notice as defined in 118.7 section 645.12, subdivision 1. The advertisement must be posted 118.8 at the time provided in paragraph (a). It must be in the form 118.9 required in paragraph (b). 118.10 (f) For purposes of this subdivision, the population of a 118.11 city is the most recent population as determined by the state 118.12 demographer under section 4A.02. 118.13 (g) The commissioner of revenue, subject to the approval of 118.14 the chairs of the house and senate tax committees, shall 118.15 prescribe the form and format of theadvertisement118.16 advertisements required under this subdivision. 118.17 [EFFECTIVE DATE.] This section is effective for public 118.18 advertisements required in 2001 for taxes payable in 2002, and 118.19 thereafter. 118.20 Sec. 48. Minnesota Statutes 2000, section 275.065, 118.21 subdivision 6, is amended to read: 118.22 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 118.23 (a) For purposes of this section, the following terms shall have 118.24 the meanings given: 118.25 (1) "Initial hearing" means the first and primary hearing 118.26 held to discuss the taxing authority's proposed budget and 118.27 proposed property tax levy for taxes payable in the following 118.28 year, or, for school districts, the current budget and the 118.29 proposed property tax levy for taxes payable in the following 118.30 year. 118.31 (2) "Continuation hearing" means a hearing held to complete 118.32 the initial hearing, if the initial hearing is not completed on 118.33 its scheduled date. 118.34 (3) "Subsequent hearing" means the hearing held to adopt 118.35 the taxing authority's final property tax levy, and, in the case 118.36 of taxing authorities other than school districts, the final 119.1 budget, for taxes payable in the following year. 119.2 (b) Between November 29 and December 20, the governing 119.3 bodies of a city that has a population over 500, county, 119.4 metropolitan special taxing districts as defined in subdivision 119.5 3, paragraph (i), and regional library districts shall each hold 119.6 an initial public hearing to discuss and seek public comment on 119.7 its final budget and property tax levy for taxes payable in the 119.8 following year, and the governing body of the school district 119.9 shall hold an initial public hearing to review its current 119.10 budget and proposed property tax levy for taxes payable in the 119.11 following year. The metropolitan special taxing districts shall 119.12 be required to hold only a single joint initial public hearing, 119.13 the location of which will be determined by the affected 119.14 metropolitan agencies. A city, county, metropolitan special 119.15 taxing district as defined in subdivision 3, paragraph (i), 119.16 regional library district established under section 134.201, or 119.17 school district is not required to hold a public hearing under 119.18 this subdivision unless its proposed property tax levy for taxes 119.19 payable in the following year, as certified under subdivision 1, 119.20 has increased over its final property tax levy for taxes payable 119.21 in the current year by a percentage that is greater than the 119.22 percentage increase in the implicit price deflator for 119.23 government consumption expenditures and gross investment for 119.24 state and local governments prepared by the Bureau of Economic 119.25 Analysts of the United States Department of Commerce for the 119.26 12-month period ending March 31 of the current year. 119.27 (c) The initial hearing must be held after 5:00 p.m. if 119.28 scheduled on a day other than Saturday. No initial hearing may 119.29 be held on a Sunday. 119.30 (d) At the initial hearing under this subdivision, the 119.31 percentage increase in property taxes proposed by the taxing 119.32 authority, if any, and the specific purposes for which property 119.33 tax revenues are being increased must be discussed. During the 119.34 discussion, the governing body shall hear comments regarding a 119.35 proposed increase and explain the reasons for the proposed 119.36 increase. The public shall be allowed to speak and to ask 120.1 questions. At the public hearing, the school district must also 120.2 provide and discuss information on the distribution of its 120.3 revenues by revenue source, and the distribution of its spending 120.4 by program area. 120.5 (e) If the initial hearing is not completed on its 120.6 scheduled date, the taxing authority must announce, prior to 120.7 adjournment of the hearing, the date, time, and place for the 120.8 continuation of the hearing. The continuation hearing must be 120.9 held at least five business days but no more than 14 business 120.10 days after the initial hearing. A continuation hearing may not 120.11 be held later than December 20 except as provided in paragraphs 120.12 (f) and (g). A continuation hearing must be held after 5:00 120.13 p.m. if scheduled on a day other than Saturday. No continuation 120.14 hearing may be held on a Sunday. 120.15 (f) The governing body of a county shall hold its initial 120.16 hearing on the first Thursday in December each year, and may 120.17 hold additional initial hearings on other dates before December 120.18 20 if necessary for the convenience of county residents. If the 120.19 county needs a continuation of its hearing, the continuation 120.20 hearing shall be held on the third Tuesday in December. If the 120.21 third Tuesday in December falls on December 21, the county's 120.22 continuation hearing shall be held on Monday, December 20. 120.23 (g) The metropolitan special taxing districts shall hold a 120.24 joint initial public hearing on the first Wednesday of 120.25 December. A continuation hearing, if necessary, shall be held 120.26 on the second Wednesday of December even if that second 120.27 Wednesday is after December 10. 120.28 (h) The county auditor shall provide for the coordination 120.29 of initial and continuation hearing dates for all school 120.30 districts and cities within the county to prevent conflicts 120.31 under clauses (i) and (j). 120.32 (i) By August 10, each school board and the board of the 120.33 regional library district shall certify to the county auditors 120.34 of the counties in which the school district or regional library 120.35 district is located the dates on which it elects to hold its 120.36 initial hearing and any continuation hearing. If a school board 121.1 or regional library district does not certify these dates by 121.2 August 10, the auditor will assign the initial and continuation 121.3 hearing dates. The dates elected or assigned must not conflict 121.4 with the initial and continuation hearing dates of the county or 121.5 the metropolitan special taxing districts. 121.6 (j) By August 20, the county auditor shall notify the 121.7 clerks of the cities within the county of the dates on which 121.8 school districts and regional library districts have elected to 121.9 hold their initial and continuation hearings. At the time a 121.10 city certifies its proposed levy under subdivision 1 it shall 121.11 certify the dates on which it elects to hold its initial hearing 121.12 and any continuation hearing. Until September 15, the first and 121.13 second Mondays of December are reserved for the use of the 121.14 cities. If a city does not certify its hearing dates by 121.15 September 15, the auditor shall assign the initial and 121.16 continuation hearing dates. The dates elected or assigned for 121.17 the initial hearing must not conflict with the initial hearing 121.18 dates of the county, metropolitan special taxing districts, 121.19 regional library districts, or school districts within which the 121.20 city is located. To the extent possible, the dates of the 121.21 city's continuation hearing should not conflict with the 121.22 continuation hearing dates of the county, metropolitan special 121.23 taxing districts, regional library districts, or school 121.24 districts within which the city is located. This paragraph does 121.25 not apply to cities of 500 population or less. 121.26 (k) The county initial hearing date and the city, 121.27 metropolitan special taxing district, regional library district, 121.28 and school district initial hearing dates must be designated on 121.29 the notices required under subdivision 3. The continuation 121.30 hearing dates need not be stated on the notices. 121.31 (l) At a subsequent hearing, each county, school district, 121.32 city over 500 population, and metropolitan special taxing 121.33 district may amend its proposed property tax levy and must adopt 121.34 a final property tax levy. Each county, city over 500 121.35 population, and metropolitan special taxing district may also 121.36 amend its proposed budget and must adopt a final budget at the 122.1 subsequent hearing. The final property tax levy must be adopted 122.2 prior to adopting the final budget. A school district is not 122.3 required to adopt its final budget at the subsequent hearing. 122.4 The subsequent hearing of a taxing authority must be held on a 122.5 date subsequent to the date of the taxing authority's initial 122.6 public hearing. If a continuation hearing is held, the 122.7 subsequent hearing must be held either immediately following the 122.8 continuation hearing or on a date subsequent to the continuation 122.9 hearing. The subsequent hearing may be held at a regularly 122.10 scheduled board or council meeting or at a special meeting 122.11 scheduled for the purposes of the subsequent hearing. The 122.12 subsequent hearing of a taxing authority does not have to be 122.13 coordinated by the county auditor to prevent a conflict with an 122.14 initial hearing, a continuation hearing, or a subsequent hearing 122.15 of any other taxing authority. All subsequent hearings must be 122.16 held prior to five working days after December 20 of the levy 122.17 year. The date, time, and place of the subsequent hearing must 122.18 be announced at the initial public hearing or at the 122.19 continuation hearing. 122.20 (m) The property tax levy certified under section 275.07 by 122.21 a city of any population, county, metropolitan special taxing 122.22 district, regional library district, or school district must not 122.23 exceed the proposed levy determined under subdivision 1, except 122.24 by an amount up to the sum of the following amounts: 122.25 (1) the amount of a school district levy whose voters 122.26 approved a referendum to increase taxes under section 123B.63, 122.27 subdivision 3, or 126C.17, subdivision 9, after the proposed 122.28 levy was certified; 122.29 (2) the amount of a city or county levy approved by the 122.30 voters after the proposed levy was certified; 122.31 (3) the amount of a levy to pay principal and interest on 122.32 bonds approved by the voters under section 475.58 after the 122.33 proposed levy was certified; 122.34 (4) the amount of a levy to pay costs due to a natural 122.35 disaster occurring after the proposed levy was certified, if 122.36 that amount is approved by the commissioner of revenue under 123.1 subdivision 6a; 123.2 (5) the amount of a levy to pay tort judgments against a 123.3 taxing authority that become final after the proposed levy was 123.4 certified, if the amount is approved by the commissioner of 123.5 revenue under subdivision 6a; 123.6 (6) the amount of an increase in levy limits certified to 123.7 the taxing authority by the commissioner of children, families, 123.8 and learning or the commissioner of revenue after the proposed 123.9 levy was certified; and 123.10 (7) the amount required under section 126C.55. 123.11 (n) This subdivision does not apply to towns and special 123.12 taxing districts other than regional library districts and 123.13 metropolitan special taxing districts. 123.14 (o) Notwithstanding the requirements of this section, the 123.15 employer is required to meet and negotiate over employee 123.16 compensation as provided for in chapter 179A. 123.17 [EFFECTIVE DATE.] This section is effective for hearings 123.18 required in 2001 for taxes payable in 2002 and thereafter. 123.19 Sec. 49. Minnesota Statutes 2000, section 275.08, 123.20 subdivision 1, is amended to read: 123.21 Subdivision 1. [GENERALLY.] The mill ratepercentof all 123.22 taxes, except the state tax and taxes the rate of which may be 123.23 fixed by law, shall be calculated and fixed by the county 123.24 auditor according to the limitations in this chapter hereinafter 123.25 prescribed; provided, that if any county, city, town, or school 123.26 district shall return a greater amount than its limit or than 123.27 the prescribed rates will raise, the auditor shall extend only 123.28 such amount of tax as allowed by the limit or that the limited 123.29 rate will produce. 123.30 [EFFECTIVE DATE.] This section is effective for taxes 123.31 payable in 2002 and thereafter. 123.32 Sec. 50. Minnesota Statutes 2000, section 275.08, 123.33 subdivision 1a, is amended to read: 123.34 Subd. 1a. [COMPUTATION OFTAX CAPACITYASSESSED VALUE.] 123.35 For taxes payable in19892002 and subsequent years, the county 123.36 auditor shall compute thegross tax capacityassessed value for 124.1 each parcel according to the class rates specified in section 124.2 273.13. Thegross tax capacity will beassessed value is the 124.3 appropriate class rate multiplied by the parcel's market value. 124.4For taxes payable in 1990 and subsequent years, the county124.5auditor shall compute the net tax capacity for each parcel124.6according to the class rates specified in section 273.13. The124.7net tax capacity will be the appropriate class rate multiplied124.8by the parcel's market value.124.9 [EFFECTIVE DATE.] This section is effective for taxes 124.10 payable in 2002 and thereafter. 124.11 Sec. 51. Minnesota Statutes 2000, section 275.08, 124.12 subdivision 1b, is amended to read: 124.13 Subd. 1b. [COMPUTATION OF TAX RATES.] The amounts 124.14 certified to be levied againstnet tax capacityassessed value 124.15 under section 275.07 by an individual local government unit 124.16 shall be divided by the totalnet tax capacityassessed value of 124.17 all taxable properties within the local government unit's taxing 124.18 jurisdiction, excluding the assessed value of properties taxed 124.19 under section 275.083. The resulting ratio,is expressed as a 124.20 mill rate, where one mill equals one-tenth of a percent. The 124.21 mill rate shall be the local government's local tax rate,. The 124.22 mill rate multiplied by each property'snet tax capacity shall124.23beassessed value produces each property'snet tax capacitytax 124.24 for that local government unit before reduction by any credits. 124.25Any amount certified to the county auditor to be levied124.26against market value shall be divided by the total referendum124.27market value of all taxable properties within the taxing124.28district. The resulting ratio, the taxing district's new124.29referendum tax rate, multiplied by each property's referendum124.30market value shall be each property's new referendum tax before124.31reduction by any credits. For the purposes of this subdivision,124.32"referendum market value" means the market value as defined in124.33section 126C.01, subdivision 3.124.34 [EFFECTIVE DATE.] This section is effective for taxes 124.35 payable in 2002 and thereafter. 124.36 Sec. 52. [275.084] [TRANSPORTATION UTILITY FEE.] 125.1 Subdivision 1. [DEFINITIONS.] For the purposes of this 125.2 section, the following terms in this subdivision have the 125.3 meanings given: 125.4 (1) "Municipality" means a home rule charter or statutory 125.5 city. 125.6 (2) "Governing body" means the city council of a 125.7 municipality. 125.8 (3) "Reconstruction" means paving, grading, curbs and 125.9 gutters, bridge repair, overlays, drainage, base work, subgrade 125.10 corrections, and boulevard restoration. 125.11 (4) "Facility upgrade" means traffic signals, turn lanes, 125.12 medians, street approaches, alleys, rights-of-way, sidewalks, 125.13 retaining walls, fence installation, and additional traffic 125.14 lanes. 125.15 (5) "Maintenance" means striping, seal coating, crack 125.16 sealing, sidewalk maintenance, signal maintenance, street light 125.17 maintenance, and signage. 125.18 Subd. 2. [AUTHORIZATION.] A municipality may impose the 125.19 transportation utility fee provided in this section against land 125.20 located within its boundaries except for public property used 125.21 for public purposes. 125.22 Subd. 3. [PROCEDURES FOR ADOPTION.] A municipality may 125.23 impose the transportation utility fee provided in this section 125.24 by ordinance adopted by a two-thirds vote of its governing 125.25 body. The resolution must not be voted on or adopted until 125.26 after a public hearing has been held on the question. A notice 125.27 of the time, place, and purpose of the hearing must be published 125.28 at least once in each week for two successive weeks in the 125.29 official newspaper of the municipality, or in a newspaper of 125.30 general content and circulation within the municipality, and the 125.31 last notice must be published at least seven days prior to the 125.32 hearing. The municipality, if adopted, must file the ordinance 125.33 of record with the county recorder, and the municipality must 125.34 provide a copy to the county auditor. 125.35 Subd. 4. [COLLECTION.] The ordinance adopted under this 125.36 section must provide for the billing and payment of the fee on a 126.1 monthly, quarterly, or other basis as the governing body by 126.2 resolution shall direct. Fees that, as of October 15 each 126.3 calendar year, have remained unpaid for at least 30 days must be 126.4 certified to the county auditor for collection as a special 126.5 assessment payable in the following calendar year against the 126.6 affected property. 126.7 Subd. 5. [MASTER PLAN REQUIREMENT.] A municipality may not 126.8 impose the fee provided in this section unless it has prepared 126.9 and adopted a master plan that includes information on the 126.10 proposed reconstruction, facility upgrade, and maintenance for 126.11 the following five years. A capital improvement plan, public 126.12 facility plan, or comparable information qualifies as a master 126.13 plan. The master plan must include information on the proposed 126.14 funding sources for all projects required to be included in the 126.15 plan. The master plan must be adopted by resolution of the 126.16 governing body following a hearing and publication of notice of 126.17 the hearing, as provided in subdivision 3. 126.18 Subd. 6. [USE OF PROCEEDS.] Revenues from the fee 126.19 authorized in this section may only be used for specific 126.20 projects listed in the master plan and are limited to projected 126.21 costs of the needs approved in the master plan. The 126.22 municipality may not accumulate revenues from the fee beyond the 126.23 estimated costs for reconstructions, facility upgrades, and 126.24 maintenance that are described in the master plan. 126.25 Subd. 7. [TRIP GENERATION DATA.] The fee imposed must be 126.26 calculated based on the relationship of the revenues the 126.27 municipality proposes to generate and a city determined trip 126.28 generation rate for each type of land use. 126.29 Subd. 8. [APPEALS.] A property owner may administratively 126.30 appeal the amount of the fee or the trip generation rate to the 126.31 governing body within 60 days after notice of the amount of fee 126.32 due has been mailed to the property owner. The appeal must be 126.33 in writing, signed, and dated by the property owner, and must 126.34 state the reasons why the amount of the fee or the trip 126.35 generation rate is incorrect. The decision of the governing 126.36 body may be appealed to district court in the same manner as a 127.1 civil action. If the governing body does not make a decision 127.2 within six months after the filing of an administrative appeal, 127.3 the property owner may elect to appeal to court. The appeal 127.4 procedures in this subdivision are in lieu of any appeal 127.5 procedures relating to special assessments provided for in 127.6 chapter 429. 127.7 Subd. 9. [SPECIAL ASSESSMENTS; BONDS; PROPERTY TAX 127.8 LEVIES.] The use of the transportation utility fee by a 127.9 municipality does not restrict the municipality from imposing 127.10 special assessments, issuing bond debt, or levying property 127.11 taxes to pay the costs of local street reconstruction, facility 127.12 upgrades, or maintenance. 127.13 [EFFECTIVE DATE.] This section is effective for fees 127.14 payable in 2002 and thereafter. 127.15 Sec. 53. Minnesota Statutes 2000, section 275.28, 127.16 subdivision 1, is amended to read: 127.17 Subdivision 1. [AUDITOR TO MAKE.] The county auditor shall 127.18 make out the tax lists according to the prescribed form, and to 127.19 correspond with the assessment districts. The mill ratepercent127.20 necessary to raise the required amount of the various taxes 127.21 shall be calculated on thenet tax capacityassessed value of 127.22 property as determined by the state board of equalization, but, 127.23 in calculating such rates, no rate shall be usedresulting in a127.24fraction other than a decimal fraction, orless than agross127.25 local tax rate of.01 percent or a net local tax rate of .01127.26percent1/1000 of a mill; and, in extending any tax, whenever it 127.27 amounts to the fractional part of a cent, it shall be made one 127.28 cent. The tax lists shall also be made out to correspond with 127.29 the assessment books in reference to ownership and description 127.30 of property, with columns for the valuation and for the various 127.31 items of tax included in the total amount of all taxes set down 127.32 opposite each description. The auditor shall enter both the 127.33 state tax determined under section 275.02, and the local taxes 127.34 determined under sections 275.08 and 275.083, on the tax lists. 127.35 The total ad valorem property tax for each description of 127.36 property before credits is the sum of the amounts of the various 128.1 local taxes that apply to the parcel plus the amount of any 128.2 applicable state tax under section 275.02. Opposite each 128.3 description which has been sold for taxes, and which is subject 128.4 to redemption, but not redeemed, shall be placed the words "sold 128.5 for taxes." The amount of all special taxes shall be entered in 128.6 the proper columns, but the general taxes may be shown by 128.7 entering the mill ratepercentof each tax at the head of the 128.8 proper columns, without extending the same, in which case a 128.9 schedule of the mill ratespercentof such taxes shall be made 128.10 on the first page of each tax list. If the auditor fails to 128.11 enter on any such list before its delivery to the treasurer any 128.12 tax levied, the tax may be subsequently entered. The tax lists 128.13 shall be deemed completed, and all taxes extended thereon, as of 128.14 January 1 annually. 128.15 [EFFECTIVE DATE.] This section is effective for taxes 128.16 payable in 2002 and thereafter. 128.17 Sec. 54. Minnesota Statutes 2000, section 275.61, is 128.18 amended to read: 128.19 275.61 [VOTER APPROVED LEVY;MARKETASSESSED VALUE.] 128.20 For local governmental subdivisions other than school 128.21 districts, any levy, including the issuance of debt obligations 128.22 payable in whole or in part from property taxes, required to be 128.23 approved and approved by the voters at a general or special 128.24 electionfor taxes payable in 1993 and thereafter,shall be 128.25 levied against thereferendum marketassessed value of all 128.26 taxable property within the governmental subdivision, as defined128.27in section 126C.01, subdivision 3. Any levy amount subject to 128.28 the requirements of this section shall be certified separately 128.29 to the county auditor under section 275.07. 128.30 The ballot shall state the maximum amount of the increased 128.31 levy as a percentage ofmarketassessed value and the amount 128.32 that will be raised by the new referendum tax rate in the first 128.33 year it is to be levied. 128.34 [EFFECTIVE DATE.] This section is effective for taxes 128.35 payable in 2002 and thereafter. 128.36 Sec. 55. Minnesota Statutes 2000, section 276.04, 129.1 subdivision 2, is amended to read: 129.2 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 129.3 shall provide for the printing of the tax statements. The 129.4 commissioner of revenue shall prescribe the form of the property 129.5 tax statement and its contents. The statement must contain a 129.6 tabulated statement of the dollar amount due to each taxing 129.7 authority and the amount of the statedetermined schooltax from 129.8 the parcel of real property for which a particular tax statement 129.9 is prepared. The dollar amounts attributable to the county, the 129.10 statedetermined schooltax, the voter approved school tax, the 129.11 other local school tax, the township or municipality, and the 129.12 total of the metropolitan special taxing districts as defined in 129.13 section 275.065, subdivision 3, paragraph (i), must be 129.14 separately stated. The amounts due all other special taxing 129.15 districts, if any, may be aggregated. The amount of the tax on 129.16 homesteads qualifying under the senior citizens' property tax 129.17 deferral program under chapter 290B is the total amount of 129.18 property tax before subtraction of the deferred property tax 129.19 amount. The amount of the tax on contamination value imposed 129.20 under sections 270.91 to 270.98, if any, must also be separately 129.21 stated. The dollar amounts, including the dollar amount of any 129.22 special assessments, may be rounded to the nearest even whole 129.23 dollar. For purposes of this section whole odd-numbered dollars 129.24 may be adjusted to the next higher even-numbered dollar. The 129.25 amount of market value excluded under section 273.11, 129.26 subdivision 16, if any, must also be listed on the tax 129.27 statement.The statement shall include the following sentences,129.28printed in upper case letters in boldface print: "EVEN THOUGH129.29THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX129.30REVENUES, IT SETS THE AMOUNT OF THE STATE-DETERMINED SCHOOL TAX129.31LEVY. THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY129.32PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."129.33 (b) The property tax statements for manufactured homes and 129.34 sectional structures taxed as personal property shall contain 129.35 the same information that is required on the tax statements for 129.36 real property. 130.1 (c) Real and personal property tax statements must contain 130.2 the following information in the order given in this paragraph. 130.3 The information must contain the current year tax information in 130.4 the right column with the corresponding information for the 130.5 previous year in a column on the left: 130.6 (1) the property's estimated market value under section 130.7 273.11, subdivision 1; 130.8 (2) the property's taxable market value after reductions 130.9 under section 273.11, subdivisions 1a and 16; 130.10 (3) the property's gross tax, calculated by adding the 130.11 property's total property tax to the sum of the aids enumerated 130.12 in clause (4); 130.13 (4) a total of the following aids: 130.14 (i) education aids payable under chapters 122A, 123A, 123B, 130.15 124D, 125A, 126C, and 127A; 130.16 (ii) local government aids for cities, towns, and counties 130.17 under chapter 477A; 130.18 (iii) disparity reduction aid under section 273.1398; and 130.19 (iv) homestead and agricultural credit aid under section 130.20 273.1398; 130.21 (5) for homesteadresidential and agriculturalproperties, 130.22 theeducationmarket value homesteadcreditcredits under 130.23 section273.1382273.1384; 130.24 (6) any credits received under sections 273.119; 273.123; 130.25 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 130.26 473H.10, except that the amount of credit received under section 130.27 273.135 must be separately stated and identified as "taconite 130.28 tax relief"; and 130.29 (7) the net tax payable in the manner required in paragraph 130.30 (a). 130.31 (d) If the county uses envelopes for mailing property tax 130.32 statements and if the county agrees, a taxing district may 130.33 include a notice with the property tax statement notifying 130.34 taxpayers when the taxing district will begin its budget 130.35 deliberations for the current year, and encouraging taxpayers to 130.36 attend the hearings. If the county allows notices to be 131.1 included in the envelope containing the property tax statement, 131.2 and if more than one taxing district relative to a given 131.3 property decides to include a notice with the tax statement, the 131.4 county treasurer or auditor must coordinate the process and may 131.5 combine the information on a single announcement. 131.6 The commissioner of revenue shall certify to the county 131.7 auditor the actual or estimated aids enumerated in clause (4) 131.8 that local governments will receive in the following year. The 131.9 commissioner must certify this amount by January 1 of each year. 131.10 [EFFECTIVE DATE.] This section is effective July 1, 2001 131.11 and thereafter, for statements required in 2002 and thereafter. 131.12 Sec. 56. Minnesota Statutes 2000, section 276A.06, 131.13 subdivision 3, is amended to read: 131.14 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 131.15 apportion the levy of each governmental unit in the county in 131.16 the manner prescribed by this subdivision. The auditor shall: 131.17 (a) by August 20 of 1997 and each subsequent year, 131.18 determine the areawide portion of the levy for each governmental 131.19 unit by multiplying the local tax rate of the governmental unit 131.20 for the preceding levy year times the distribution value set 131.21 forth in subdivision 2, clause (b);and131.22 (b) by September 5 of 1997 and each subsequent year, 131.23 determine the local portion of the current year's levy by 131.24 subtracting the resulting amount from clause (a) from the 131.25 governmental unit's current year's levy.; and 131.26 (c) for determinations made under paragraph (a) in the case 131.27 of school districts, in 2001 and thereafter, for taxes payable 131.28 in 2002 and thereafter, exclude the general education tax rate 131.29 from the local tax rate for the preceding levy year. 131.30 [EFFECTIVE DATE.] This section is effective the day 131.31 following final enactment. 131.32 Sec. 57. Minnesota Statutes 2000, section 282.01, 131.33 subdivision 1a, is amended to read: 131.34 Subd. 1a. [CONVEYANCE; GENERALLY.] Tax-forfeited lands may 131.35 be sold by the county board to an organized or incorporated 131.36 governmental subdivision of the state for any public purpose for 132.1 which the subdivision is authorized to acquire property or may 132.2 be released from the trust in favor of the taxing districts on 132.3 application of a state agency for an authorized use at not less 132.4 than their value as determined by the county board.The132.5commissioner of revenue may convey by deed in the name of the132.6state a tract of tax-forfeited land held in trust in favor of132.7the taxing districts to a governmental subdivision for an132.8authorized public use, if an application is submitted to the132.9commissioner which includes a statement of facts as to the use132.10to be made of the tract and the need therefor and the132.11recommendation of the county board.132.12 [EFFECTIVE DATE.] This section is effective for deeds 132.13 issued on or after July 1, 2001. 132.14 Sec. 58. Minnesota Statutes 2000, section 282.01, 132.15 subdivision 1b, is amended to read: 132.16 Subd. 1b. [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 132.17 Notwithstanding subdivision 1a, in the case of tax-forfeited 132.18 lands located in a targeted neighborhood, as defined in section 132.19 469.201, subdivision 10,outside the metropolitan area, as132.20defined inand section 473.121, subdivision 2, the commissioner 132.21 of revenuemayshall convey by deed in the name of the state any 132.22 tract of tax-forfeited land held in trust in favor of the taxing 132.23 districts, to a political subdivision that submits an 132.24 application to the commissioner of revenue and the 132.25 recommendation of the county board. 132.26 (b)Notwithstanding subdivision 1a, in the case of132.27tax-forfeited lands located in a targeted neighborhood, as132.28defined in section 469.201, subdivision 10, in a county in the132.29metropolitan area, as defined in section 473.121, subdivision 2,132.30the commissioner of revenue shall convey by deed in the name of132.31the state any tract of tax-forfeited land held in trust in favor132.32of the taxing districts, to a political subdivision that submits132.33an application to the commissioner of revenue and the county132.34board.132.35(c)The application under paragraph (a)or (b)must include 132.36 a statement of facts as to the use to be made of the tract, the 133.1 need therefor, and a resolution, adopted by the governing body 133.2 of the political subdivision, finding that the conveyance of a 133.3 tract of tax-forfeited land to the political subdivision is 133.4 necessary to provide for the redevelopment of land as productive 133.5 taxable property. Deeds of conveyance issued under paragraph 133.6 (a) are not conditioned on continued use of the property for the 133.7 use stated in the application. 133.8 [EFFECTIVE DATE.] This section is effective for deeds 133.9 issued on or after July 1, 2001. 133.10 Sec. 59. Minnesota Statutes 2000, section 282.08, is 133.11 amended to read: 133.12 282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 133.13 The net proceeds from the sale or rental of any parcel of 133.14 forfeited land, or from the sale of products from the forfeited 133.15 land, must be apportioned by the county auditor to the taxing 133.16 districts interested in the land, as follows: 133.17 (1) the portion required to pay any amounts included in the 133.18 appraised value under section 282.01, subdivision 3, as 133.19 representing increased value due to any public improvement made 133.20 after forfeiture of the parcel to the state, but not exceeding 133.21 the amount certified by the clerk of the municipality must be 133.22 apportioned to the municipal subdivision entitled to it; 133.23 (2) the portion required to pay any amount included in the 133.24 appraised value under section 282.019, subdivision 5, 133.25 representing increased value due to response actions taken after 133.26 forfeiture of the parcel to the state, but not exceeding the 133.27 amount of expenses certified by the pollution control agency or 133.28 the commissioner of agriculture, must be apportioned to the 133.29 agency or the commissioner of agriculture and deposited in the 133.30 fund from which the expenses were paid; 133.31 (3) the portion of the remainder required to discharge any 133.32 special assessment chargeable against the parcel for drainage or 133.33 other purpose whether due or deferred at the time of forfeiture, 133.34 must be apportioned to the municipal subdivision entitled to it; 133.35and133.36 (4) the portion of the remainder equal to unpaid state tax 134.1 levies against the property for the years the property was on 134.2 the tax lists prior to forfeiture, not including the associated 134.3 penalty and interest amounts; and 134.4 (5) any balance must be apportioned as follows: 134.5 (i) The county board may annually by resolution set aside 134.6 no more than 30 percent of the receipts remaining to be used for 134.7 timber development on tax-forfeited land and dedicated memorial 134.8 forests, to be expended under the supervision of the county 134.9 board. It must be expended only on projects approved by the 134.10 commissioner of natural resources. 134.11 (ii) The county board may annually by resolution set aside 134.12 no more than 20 percent of the receipts remaining to be used for 134.13 the acquisition and maintenance of county parks or recreational 134.14 areas as defined in sections 398.31 to 398.36, to be expended 134.15 under the supervision of the county board. 134.16 (iii) Any balance remaining must be apportioned as 134.17 follows: county, 40 percent; town or city, 20 percent; and 134.18 school district, 40 percent, provided, however, that in 134.19 unorganized territory that portion which would have accrued to 134.20 the township must be administered by the county board of 134.21 commissioners. 134.22 [EFFECTIVE DATE.] This section is effective July 1, 2001, 134.23 and thereafter. 134.24 Sec. 60. Minnesota Statutes 2000, section 290A.03, 134.25 subdivision 13, is amended to read: 134.26 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 134.27 payable" means the property tax exclusive of special 134.28 assessments, penalties, and interest payable on a claimant's 134.29 homestead after deductions made under sections 273.135, 134.30 273.1382, 273.1391, 273.42, subdivision 2, and any other state 134.31 paid property tax credits in any calendar year, and after any 134.32 refund claimed and allowable under section 290A.04, subdivision 134.33 2h, that is first payable in the year that the property taxes 134.34 are payable. In the case of a claimant who makes ground lease 134.35 payments, "property taxes payable" includes the amount of the 134.36 payments directly attributable to the property taxes assessed 135.1 against the parcel on which the house is located. No 135.2 apportionment or reduction of the "property taxes payable" shall 135.3 be required for the use of a portion of the claimant's homestead 135.4 for a business purpose if the claimant does not deduct any 135.5 business depreciation expenses for the use of a portion of the 135.6 homestead in the determination of federal adjusted gross 135.7 income. For homesteads which are manufactured homes as defined 135.8 in section 273.125, subdivision 8, and for homesteads which are 135.9 park trailers taxed as manufactured homes under section 168.012, 135.10 subdivision 9, "property taxes payable" shall also include 19 135.11 percent of the gross rent paid in the preceding year for the 135.12 site on which the homestead is located. When a homestead is 135.13 owned by two or more persons as joint tenants or tenants in 135.14 common, such tenants shall determine between them which tenant 135.15 may claim the property taxes payable on the homestead. If they 135.16 are unable to agree, the matter shall be referred to the 135.17 commissioner of revenue whose decision shall be final. Property 135.18 taxes are considered payable in the year prescribed by law for 135.19 payment of the taxes. 135.20 In the case of a claim relating to "property taxes 135.21 payable," the claimant must have owned and occupied the 135.22 homestead on January 2 of the year in which the tax is payable 135.23 and (i) the property must have been classified as homestead 135.24 property pursuant to section 273.124, on or before December 15 135.25 of the assessment year to which the "property taxes payable" 135.26 relate; or (ii) the claimant must provide documentation from the 135.27 local assessor that application for homestead classification has 135.28 been made on or before December 15 of the year in which the 135.29 "property taxes payable" were payable and that the assessor has 135.30 approved the application. 135.31 [EFFECTIVE DATE.] This section is effective beginning with 135.32 refunds based on property taxes payable in 2002. 135.33 Sec. 61. Minnesota Statutes 2000, section 290A.04, 135.34 subdivision 2, is amended to read: 135.35 Subd. 2. [HOMEOWNERS.] A claimant whose property taxes 135.36 payable are in excess of the percentage of the household income 136.1 stated below shall pay an amount equal to the percent of income 136.2 shown for the appropriate household income level along with the 136.3 percent to be paid by the claimant of the remaining amount of 136.4 property taxes payable. The state refund equals the amount of 136.5 property taxes payable that remain, up to the state refund 136.6 amount shown below. 136.7 Percent Percent Maximum 136.8 Household Income of Income Paid by State 136.9 Claimant Refund 136.10$0 to 1,029136.11 $0 to 1,189 1.2 percent 18 percent$440$1,190 136.121,030 to 2,059136.13 1,190 to 2,389 1.3 percent 18 percent$440$1,190 136.142,060 to 3,099136.15 2,390 to 3,589 1.4 percent 20 percent$440$1,190 136.163,100 to 4,129136.17 3,590 to 4,779 1.6 percent 20 percent$440$1,190 136.184,130 to 5,159136.19 4,780 to 5,969 1.7 percent 20 percent$440$1,190 136.205,160 to 7,229136.21 5,970 to 8,369 1.9 percent 25 percent$440$1,190 136.227,230 to 8,259136.23 8,370 to 9,559 2.1 percent 25 percent$440$1,190 136.248,260 to 9,289136.25 9,560 to 10,759 2.2 percent 25 percent$440$1,190 136.269,290 to 10,319136.27 10,760 to 11,949 2.3 percent 30 percent$440$1,190 136.2810,320 to 11,349136.29 11,950 to 13,139 2.4 percent 30 percent$440$1,190 136.3011,350 to 12,389136.31 13,140 to 14,349 2.5 percent 30 percent$440$1,190 136.3212,390 to 14,449136.33 14,350 to 16,729 2.6 percent 30 percent$440$1,190 136.3414,450 to 15,479136.35 16,730 to 17,919 2.8 percent 35 percent$440$1,190 136.3615,480 to 16,509136.37 17,920 to 19,119 3.0 percent 35 percent$440$1,190 136.3816,510 to 17,549136.39 19,120 to 20,319 3.2 percent 40 percent$440$1,190 136.4017,550 to 21,669136.41 20,320 to 25,089 3.3 percent 40 percent$440$1,190 136.4221,670 to 24,769136.43 25,090 to 28,679 3.4 percent 45 percent$440$1,190 136.4424,770 to 30,959136.45 28,680 to 41,819 3.5 percent 45 percent$440$1,190 136.4630,960 to 36,1193.5 percent45 percent$440136.4736,120 to 41,279136.48 41,820 to 47,789 3.7 percent 50 percent$440$1,190 136.4941,280 to 58,829136.50 47,790 to 63,329 4.0 percent 50 percent$440$1,190 136.51 63,330 to 64,519 4.0 percent 50 percent $1,080 136.52 64,520 to 65,719 4.0 percent 50 percent $ 960 136.53 65,720 to 66,909 4.0 percent 50 percent $ 830 136.54 66,910 to 68,109 4.0 percent 50 percent $ 720 136.5558,830 to 59,859136.56 68,110 to 69,309 4.0 percent 50 percent$310$600 136.5759,860 to 60,889136.58 69,310 to 70,499 4.0 percent 50 percent$210$360 136.5960,890 to 61,929136.60 70,500 to 71,699 4.0 percent 50 percent$100$120 136.61 The payment made to a claimant shall be the amount of the 136.62 state refund calculated under this subdivision. No payment is 137.1 allowed if the claimant's household income is$61,930$71,700 or 137.2 more. 137.3 [EFFECTIVE DATE.] This section is effective beginning with 137.4 refunds based on property taxes payable in 2002. 137.5 Sec. 62. Minnesota Statutes 2000, section 290A.04, 137.6 subdivision 2a, is amended to read: 137.7 Subd. 2a. [RENTERS.] A claimant whose rent constituting 137.8 property taxes exceeds the percentage of the household income 137.9 stated below must pay an amount equal to the percent of income 137.10 shown for the appropriate household income level along with the 137.11 percent to be paid by the claimant of the remaining amount of 137.12 rent constituting property taxes. The state refund equals the 137.13 amount of rent constituting property taxes that remain, up to 137.14 the maximum state refund amount shown below. 137.15 Percent Percent Maximum 137.16 Household Income of Income Paid by State 137.17 Claimant Refund 137.18 $0 to 3,099137.19 0 to 3,589 1.0 percent 5 percent$1,030$1,190 137.203,100 to 4,129137.21 3,590 to 4,779 1.0 percent 10 percent$1,030$1,190 137.224,130 to 5,159137.23 4,780 to 5,969 1.1 percent 10 percent$1,030$1,190 137.245,160 to 7,229137.25 5,970 to 8,369 1.2 percent 10 percent$1,030$1,190 137.267,230 to 9,289137.27 8,370 to 10,759 1.3 percent 15 percent$1,030$1,190 137.289,290 to 10,319137.29 10,760 to 11,949 1.4 percent 15 percent$1,030$1,190 137.3010,320 to 11,349137.31 11,950 to 13,139 1.4 percent 20 percent$1,030$1,190 137.3211,350 to 13,419137.33 13,140 to 15,539 1.5 percent 20 percent$1,030$1,190 137.3413,420 to 14,449137.35 15,540 to 16,729 1.6 percent 20 percent$1,030$1,190 137.3614,450 to 15,479137.37 16,730 to 17,919 1.7 percent 25 percent$1,030$1,190 137.3815,480 to 17,549137.39 17,920 to 20,319 1.8 percent 25 percent$1,030$1,190 137.4017,550 to 18,579137.41 20,320 to 21,509 1.9 percent 30 percent$1,030$1,190 137.4218,580 to 19,609137.43 21,510 to 22,699 2.0 percent 30 percent$1,030$1,190 137.4419,610 to 20,639137.45 22,700 to 23,899 2.2 percent 30 percent$1,030$1,190 137.4620,640 to 21,669137.47 23,900 to 25,089 2.4 percent 30 percent$1,030$1,190 137.4821,670 to 22,709137.49 25,090 to 26,289 2.6 percent 35 percent$1,030$1,190 137.5022,710 to 23,739137.51 26,290 to 27,489 2.7 percent 35 percent$1,030$1,190 137.5223,740 to 24,769137.53 27,490 to 28,679 2.8 percent 35 percent$1,030$1,190 137.5424,770 to 25,799137.55 28,680 to 29,869 2.9 percent 40 percent$1,030$1,190 137.5625,800 to 26,839137.57 29,870 to 31,079 3.0 percent 40 percent$1,030$1,190 138.126,840 to 27,869138.2 31,080 to 32,269 3.1 percent 40 percent$1,030$1,190 138.327,870 to 28,899138.4 32,270 to 33,459 3.2 percent 40 percent$1,030$1,190 138.528,900 to 29,929138.6 33,460 to 34,649 3.3 percent 45 percent$ 930$1,080 138.729,930 to 30,959138.8 34,650 to 35,849 3.4 percent 45 percent$ 830$ 960 138.930,960 to 31,999138.10 35,850 to 37,049 3.5 percent 45 percent$ 720$ 830 138.1132,000 to 33,029138.12 37,050 to 38,239 3.5 percent 50 percent$ 620$ 720 138.1333,030 to 34,059138.14 38,240 to 39,439 3.5 percent 50 percent$ 520$ 600 138.1534,060 to 35,089138.16 39,440 to 40,629 3.5 percent 50 percent$ 310$ 360 138.1735,090 to 36,119138.18 40,630 to 41,819 3.5 percent 50 percent$ 100$ 120 138.19 The payment made to a claimant is the amount of the state 138.20 refund calculated under this subdivision. No payment is allowed 138.21 if the claimant's household income is$36,120$41,820 or more. 138.22 [EFFECTIVE DATE.] This section is effective beginning with 138.23 refunds based on rent constituting property taxes paid in 2001. 138.24 Sec. 63. Minnesota Statutes 2000, section 290A.04, 138.25 subdivision 2h, is amended to read: 138.26 Subd. 2h. [ADDITIONAL REFUND.] (a) If the gross property 138.27 taxes payable on a homestead increase more than 12 percent over 138.28 thenetproperty taxes payable in the prior year on the same 138.29 property that is owned and occupied by the same owner on January 138.30 2 of both years, and the amount of that increase is $100 or 138.31 more, a claimant who is a homeowner shall be allowed an 138.32 additional refund equal to 60 percent of the amount of the 138.33 increase over the greater of 12 percent of the prior year's net 138.34 property taxes payable or $100. This subdivision shall not 138.35 apply to any increase in the gross property taxes payable 138.36 attributable to improvements made to the homestead after the 138.37 assessment date for the prior year's taxes. This subdivision 138.38 shall not apply to any increase in the gross property taxes 138.39 payable attributable to the termination of valuation exclusions 138.40 under section 273.11, subdivision 16. 138.41 The maximum refund allowed under this subdivision is $1,000. 138.42 (b) For purposes of this subdivision,the following terms138.43have the meanings given:138.44(1) "Net property taxes payable" means property taxes139.1payable minus refund amounts for which the claimant qualifies139.2pursuant to subdivision 2 and this subdivision.139.3(2)"gross property taxes payable" meansnetproperty taxes 139.4 payable determined without regard to the refund allowed under 139.5 this subdivision. 139.6 (c) In addition to the other proofs required by this 139.7 chapter, each claimant under this subdivision shall file with 139.8 the property tax refund return a copy of the property tax 139.9 statement for taxes payable in the preceding year or other 139.10 documents required by the commissioner. 139.11 (d) Upon request, the appropriate county official shall 139.12 make available the names and addresses of the property taxpayers 139.13 who may be eligible for the additional property tax refund under 139.14 this section. The information shall be provided on a magnetic 139.15 computer disk. The county may recover its costs by charging the 139.16 person requesting the information the reasonable cost for 139.17 preparing the data. The information may not be used for any 139.18 purpose other than for notifying the homeowner of potential 139.19 eligibility and assisting the homeowner, without charge, in 139.20 preparing a refund claim. 139.21 [EFFECTIVE DATE.] This section is effective beginning with 139.22 refunds based on gross property taxes payable in 2002. 139.23 Sec. 64. Minnesota Statutes 2000, section 290A.04, 139.24 subdivision 4, is amended to read: 139.25 Subd. 4. [INFLATION ADJUSTMENT.] Beginning for property 139.26 tax refunds payable in calendar year19962002, the commissioner 139.27 shall annually adjust the dollar amounts of the income 139.28 thresholds and the maximum refunds under subdivisions 2 and 2a 139.29 for inflation. The commissioner shall make the inflation 139.30 adjustments in accordance with section290.06, subdivision 2d1f 139.31 of the Internal Revenue Code, except that for purposes of this 139.32 subdivision the percentage increase shall be determined from the 139.33 year ending on June 30,19942000, to the year ending on June 30 139.34 of the year preceding that in which the refund is payable. The 139.35 commissioner shall use the appropriate percentage increase to 139.36 annually adjust the income thresholds and maximum refunds under 140.1 subdivisions 2 and 2a for inflation without regard to whether or 140.2 not the income tax brackets are adjusted for inflation in that 140.3 year. The commissioner shall round the thresholds and the 140.4 maximum amounts, as adjusted to the nearest $10 amount. If the 140.5 amount ends in $5, the commissioner shall round it up to the 140.6 next $10 amount. 140.7 The commissioner shall annually announce the adjusted 140.8 refund schedule at the same time provided under section 290.06. 140.9 The determination of the commissioner under this subdivision is 140.10 not a rule under the Administrative Procedure Act. 140.11 [EFFECTIVE DATE.] This section is effective the day 140.12 following final enactment. 140.13 Sec. 65. [290C.01] [PURPOSE.] 140.14 It is the policy of this state to promote sustainable 140.15 forest resource management on the state's public and private 140.16 lands. Recognizing that private forests comprise approximately 140.17 one-half of the state's forest land resources, and that healthy 140.18 and robust state forest land resources provide significant 140.19 benefits to the citizens of the state, and that ad valorem 140.20 property taxes represent a significant annual cost that can 140.21 discourage long-term forest management investments, sections 140.22 290C.01 to 290C.12, which may be referred to as the Sustainable 140.23 Forest Tax Refund Act, are enacted to encourage the state's 140.24 private forest landowners to make long-term commitments to 140.25 sustainable forest management of lands within the state. 140.26 Sec. 66. [290C.02] [DEFINITIONS.] 140.27 Subdivision 1. [APPLICATION.] When used in sections 140.28 290C.01 to 290C.12, the following words and terms have the 140.29 meanings given in this section. 140.30 Subd. 2. [APPROVED PLAN WRITERS.] "Approved plan writers" 140.31 are natural resource professionals who are employed by private 140.32 sector companies or individuals, nonprofit organizations, local 140.33 units of government, or public agencies, and who are approved by 140.34 the commissioner of natural resources. Persons determined to be 140.35 certified foresters by the Society of American Foresters shall 140.36 be deemed to meet the standards required under this 141.1 subdivision. The commissioner of natural resources shall issue 141.2 a unique identification number to each approved planner. 141.3 Subd. 3. [CLAIMANT.] "Claimant" means a person, as that 141.4 term is defined in section 290.01, subdivision 2, who owns 141.5 forest land in Minnesota and files an application authorized by 141.6 the Sustainable Forest Tax Refund Act. No more than one 141.7 claimant is entitled to relief under this act with respect to 141.8 any tract, parcel, or piece of land enrolled under this act. 141.9 When enrolled forest land is owned by two or more persons, the 141.10 owners must determine between them which person may claim the 141.11 refunds provided under sections 290C.01 to 290C.12. 141.12 Subd. 4. [COMMISSIONER.] "Commissioner" means the 141.13 commissioner of the department of revenue. 141.14 Subd. 5. [CURRENT USE VALUE TAX.] "Current use value tax" 141.15 means (i) 90 percent of the product of the most recent 141.16 countywide weighted average annual net timber growth rate per 141.17 acre for the county published by the United States Department of 141.18 Agriculture's Forest Service North Central Research Station as 141.19 of June 1 of the taxes payable year times the most recent 141.20 countywide weighted average stumpage value per acre for the 141.21 county published by the department of natural resources as of 141.22 June 1 of the taxes payable year, divided by (ii) a statewide 141.23 capitalization rate for timber resource investments in the prior 141.24 year as determined by the commissioner on or before June 1 of 141.25 the taxes payable year, times (iii) the average local tax rate 141.26 in towns in the county as computed by the commissioner from the 141.27 information certified by the county auditor on the abstract of 141.28 tax lists submitted under section 275.29 for the taxes payable 141.29 year, times (iv) the number of acres of the claimant's land in 141.30 the county classified under section 273.13, subdivision 23, 141.31 paragraph (b), clause (2), item (ii), and approved for 141.32 sustainable forest tax refunds. 141.33 Subd. 6. [FOREST LAND.] "Forest land" means land 141.34 containing a minimum of 20 contiguous acres for which the owner 141.35 has implemented a forest management plan that was prepared or 141.36 updated within the past ten years by an approved plan writer. 142.1 At least 50 percent of the contiguous acreage must meet the 142.2 definition of forest land in section 88.01, subdivision 7. For 142.3 the purposes of sections 290C.01 to 209C.12, forest land does 142.4 not include (i) land used for residential purposes, agricultural 142.5 purposes, or commercial purposes other than the growing of 142.6 timber, (ii) land enrolled in the reinvest in Minnesota program, 142.7 a state or federal conservation reserve or easement reserve 142.8 program, the Minnesota agricultural property tax law, or land 142.9 subject to agricultural land preservation controls or 142.10 restrictions as defined in section 40A.02, or under the 142.11 Metropolitan Agricultural Preserves Act, or (iii) land improved 142.12 with a structure, pavement, road, sewer, or campsite. 142.13 Subd. 7. [FOREST MANAGEMENT PLAN.] "Forest management plan" 142.14 means a written document providing a framework for a 142.15 site-specific healthy, productive, and sustainable forest 142.16 ecosystem. A forest management plan must include at least the 142.17 following: (i) owner specific long-term and short-term forest 142.18 management goals for the property including, when available, 142.19 goals for individual cover types; (ii) a map of the vegetation 142.20 on the property; (iii) a reliable field inventory of the 142.21 individual cover types, their age, and density; (iv) an analysis 142.22 of the soil type and quality; (v) an aerial photo of the land 142.23 clearly indicating the boundaries of the property and of the 142.24 forest land; (vi) the proposed future character of the cover 142.25 types on the property; and (vii) prescriptions to meet proposed 142.26 future cover type character on the property and a timetable for 142.27 implementing the prescribed activities. All management 142.28 activities prescribed in a plan must be in accordance with the 142.29 recommended forest management guidelines adopted in 1999 by the 142.30 Minnesota forest resources council. The commissioner of natural 142.31 resources shall provide a framework for updating and revising 142.32 plans. 142.33 Subd. 8. [NET PROPERTY TAX.] "Net property tax" means the 142.34 product of (i) the average market value per acre of taxable 142.35 forested lands in the county, including those described in 142.36 subdivision 6, for the taxes payable year as determined by the 143.1 county assessor, times (ii) the class rate specified in section 143.2 273.13 for class 2b timberlands, times (iii) the average local 143.3 tax rate in the towns in the county as computed by the 143.4 commissioner from the information certified by the county 143.5 auditor on the abstract of tax lists submitted under section 143.6 275.29 for the taxes payable year, times (iv) the number of 143.7 acres of land in the county owned by the claimant that have been 143.8 classified under section 273.13, subdivision 23, paragraph (b), 143.9 clause (2), item (ii), and approved for sustainable forest tax 143.10 refunds. 143.11 Sec. 67. [290C.03] [SUSTAINABLE FOREST TAX REFUNDS.] 143.12 Each claimant shall be allowed a refund for taxes payable 143.13 in the current year in an amount that is the greater of (1) 143.14 two-thirds of the net property tax computed for land owned by 143.15 the claimant that has been classified under section 273.13, 143.16 subdivision 23, paragraph (b), clause (2), item (ii), and 143.17 approved for sustainable forest tax refunds, or (2) the amount 143.18 by which the total property tax before special assessments, as 143.19 shown on the property tax statements for the parcels that 143.20 completely contain the claimant's approved land, exceeds the 143.21 current use value tax for the claimant's approved land. The 143.22 refund for a claimant may not exceed the lesser of (i) the total 143.23 property tax before special assessments on the property tax 143.24 statements for the parcels that completely contain the 143.25 claimant's approved land, or (ii) the product of $20 times the 143.26 number of acres of approved land for the claimant. 143.27 Sec. 68. [290C.04] [APPLICATIONS.] 143.28 (a) A landowner may apply to enroll land that is classified 143.29 under section 273.13, subdivision 23, paragraph (b), clause (2), 143.30 item (ii), for sustainable forest tax refunds. The owner must 143.31 complete, sign, and submit an application to the commissioner by 143.32 September 30 in order for the land to become eligible beginning 143.33 with the refunds payable in the next year. The application 143.34 shall be on a form prescribed by the commissioner and must 143.35 include the information the commissioner deems necessary. At a 143.36 minimum, the application must show the following information for 144.1 the land and the claimant: (i) the claimant's social security 144.2 number or state or federal business tax registration number and 144.3 date of birth, (ii) a copy of the property tax statement or 144.4 statements for taxes payable in the current year for the tax 144.5 parcels that completely contain the land to be enrolled, (iii) 144.6 the claimant's address, (iv) the claimant's signature, (v) the 144.7 county's parcel identification numbers for the tax parcels that 144.8 completely contain the claimant's forest land that is sought to 144.9 be enrolled, if those identification numbers are not shown on 144.10 the submitted copy of the related property tax statements, and 144.11 (vi) proof, in a form specified by the commissioner, that the 144.12 claimant has executed and acknowledged in the manner required by 144.13 law for a deed, and recorded, a covenant that the land is not 144.14 and shall not be developed with a structure, pavement, road, 144.15 sewer, or campsite, and that it will be used in a manner 144.16 consistent with the requirements and conditions of the 144.17 Sustainable Forest Tax Refund Act. The covenant shall be, and 144.18 shall state that it is, binding on the owner and the owner's 144.19 successor or assignee, and that it shall run with the land for a 144.20 period of not less than ten years. The commissioner shall 144.21 specify the form of the covenant and provide copies on request. 144.22 The covenant must include a legal description that encompasses 144.23 all the forest land that the claimant wishes to enroll under the 144.24 Sustainable Forest Tax Refund Act, or the certificate of title 144.25 number for that land if it is registered land. 144.26 (b) The commissioner shall notify the owner within 90 days 144.27 after receipt of a completed application whether the land has 144.28 been approved for enrollment. The owner of land for which the 144.29 application is denied may, within 60 days of receipt of a notice 144.30 of denial, appeal the denial to the commissioner. 144.31 Sec. 69. [290C.05] [REPORTS.] 144.32 By September 30 each year, each county assessor shall 144.33 submit a certification to the commissioner listing the parcel 144.34 identification numbers of all parcels containing land classified 144.35 under section 273.13, subdivision 23, paragraph (b), clause (2), 144.36 item (ii), and the number of acres for each such parcel that are 145.1 classified under item (ii). 145.2 Sec. 70. [290C.06] [ANNUAL CERTIFICATION.] 145.3 Annually, beginning with the year after the owner has made 145.4 an approved application, the commissioner shall send each owner 145.5 of property enrolled under the Sustainable Forest Tax Refund Act 145.6 a certification on or before July 1. The owner must sign the 145.7 certification attesting that the requirements and conditions in 145.8 sections 290C.01 to 290C.12 for continued enrollment are 145.9 currently being met and return the signed certification to the 145.10 commissioner by August 15. The owner must enclose a copy of the 145.11 property tax statements for taxes payable in the current year 145.12 for the parcels that completely contain the lands approved for 145.13 refunds when each annual certification is returned. Failure to 145.14 return an annual certification by the due date shall result in 145.15 an involuntary withdrawal of the lands from the provisions of 145.16 the Sustainable Forest Tax Refund Act and the imposition of any 145.17 applicable withdrawal penalty, subject to the owner's appeal of 145.18 such withdrawal, and of the associated penalties, according to 145.19 the procedures and within the time allowed under section 290C.11. 145.20 Sec. 71. [290C.07] [REFUND ALLOWABLE.] 145.21 A refund of property taxes on enrolled land will be made 145.22 annually to each owner in the amount determined under section 145.23 290C.03. The refunds shall be paid on or before October 1 each 145.24 year based on the certifications due August 15 of that year. 145.25 Interest at the annual rate determined under section 270.75 145.26 shall be included with any refund not paid by the later of 145.27 October 1 of the year the certification was due or 45 days after 145.28 the completed certification was returned or filed if the 145.29 commissioner accepts a certification filed after August 15 of 145.30 the taxes payable year as the resolution of an appeal. 145.31 Sec. 72. [290C.08] [WITHDRAWAL FOR TAX DELINQUENCIES.] 145.32 If the delinquent tax list of a county contains any land 145.33 classified under section 273.13, subdivision 23, paragraph (b), 145.34 clause (2), item (ii), the county auditor shall give notice to 145.35 the commissioner by mailing a copy of the list to the 145.36 commissioner within 30 days of its publication. The 146.1 commissioner shall involuntarily withdraw property from 146.2 receiving sustainable forest tax refunds if any part of the 146.3 property taxes on the land are delinquent as defined in chapter 146.4 279. Lands withdrawn under this section are not entitled to 146.5 refunds beginning with the year in which the delinquency occurs 146.6 and are subject to withdrawal penalties. The commissioner shall 146.7 mail a notice to the owner within 60 days of a withdrawal made 146.8 under this section. The owner may appeal a withdrawal based on 146.9 a delinquency under this section, and the lands shall remain 146.10 eligible for refunds if the delinquent taxes are paid, and proof 146.11 thereof is submitted along with proof of payment of the first 146.12 one-half installment of property taxes due in the current year, 146.13 on or before the due date of the owner's timely filed annual 146.14 certification for the current year. 146.15 Sec. 73. [290C.09] [VOLUNTARY WITHDRAWALS.] 146.16 (a) After land approved to receive sustainable forest tax 146.17 refunds has remained eligible for ten consecutive years, the 146.18 owner may voluntarily withdraw the land from the provisions of 146.19 this act by notifying the commissioner in writing. Within 60 146.20 days of receiving an owner's written request for a voluntary 146.21 withdrawal under the provisions of this paragraph, the 146.22 commissioner shall inform the owner by return mail of the 146.23 effective date of the withdrawal. A withdrawal under this 146.24 paragraph causes the land to be ineligible for sustainable 146.25 forest tax refunds for taxes payable in the following year and 146.26 thereafter, except that in the case of a subsequent approved 146.27 application to enroll the same lands, such subsequent 146.28 application shall be effective according to its terms and the 146.29 provisions of this act. An owner wishing to apply under the 146.30 Sustainable Forest Tax Refund Act for lands that were previously 146.31 voluntarily or involuntarily withdrawn must reapply as 146.32 prescribed in section 290C.04. Withdrawal penalties do not 146.33 apply to lands voluntarily withdrawn according to the provisions 146.34 of this paragraph. 146.35 (b) The commissioner may withdraw lands from the provisions 146.36 of this act and declare land to be ineligible for continued 147.1 further refunds at any time if the commissioner becomes aware of 147.2 a violation of a requirement or condition of this act. The 147.3 commissioner shall mail a notice to the owner within 60 days of 147.4 a determination made under this paragraph. 147.5 (c) Within 15 days after the expiration of an appeal period 147.6 in the case of any withdrawal or denial of an application, the 147.7 commissioner shall execute and acknowledge a document releasing 147.8 the land from the covenant required under section 290C.04. The 147.9 document must be mailed to the owner and is entitled to be 147.10 recorded. 147.11 Sec. 74. [290C.10] [PENALTIES.] 147.12 Except for land voluntarily withdrawn under the provisions 147.13 of section 290C.09, land approved for refunds under this act 147.14 that is withdrawn and that becomes ineligible for further 147.15 refunds for any reason is subject to the penalties provided in 147.16 this section. The penalty for a withdrawal is 500 percent of 147.17 the owner's average refund for the years of participation if the 147.18 withdrawal occurs within the first five years of participation 147.19 or the total of the refunds paid in the prior five years if the 147.20 withdrawal occurs after the first five years of participation. 147.21 If the penalty is not paid within 90 days after a notice of its 147.22 assessment has been mailed to the owner at the address last 147.23 known to the commissioner, the commissioner shall certify such 147.24 amount to the county auditor for collection as a part of the 147.25 real property taxes on the land payable in the following year. 147.26 If property for which penalties have been added to the property 147.27 tax under this section forfeits under chapter 281 and any 147.28 portion of the penalty plus interest remains unpaid, the county 147.29 auditor shall cancel the penalty plus interest amount as 147.30 provided in section 282.07. However, any proceeds from the 147.31 subsequent sale of the forfeited property must be used, first as 147.32 provided in section 290B.07, paragraph (b), and then to 147.33 reimburse the state for the penalty under this section plus 147.34 interest. In addition, the repurchase price of forfeited land 147.35 must include the amount of any penalty added under this section 147.36 that remains unpaid at the time, plus interest. 148.1 Sec. 75. [290C.11] [APPEALS.] 148.2 Within 60 days of the denial of an application, the 148.3 imposition of a penalty, or within 60 days of an involuntary 148.4 withdrawal of lands, the commissioner shall notify the landowner 148.5 by mail. Except as provided in section 290C.08, an aggrieved 148.6 owner has 60 days from receipt of the commissioner's notice to 148.7 make an appeal to the commissioner regarding the penalties or 148.8 the withdrawal. The appeal must be in writing. If the 148.9 commissioner denies the appeal, or if the commissioner has not 148.10 made a determination on the appeal within 60 days of when the 148.11 commissioner received the written appeal, the owner may appeal 148.12 the penalties or the withdrawal to the tax court under chapter 148.13 271 as if the appeal is from an order of the commissioner. 148.14 Sec. 76. [290C.12] [APPROPRIATION.] 148.15 An amount sufficient to pay the refunds provided in 148.16 sections 290C.01 to 290C.11 is annually appropriated to the 148.17 commissioner from the general fund of the state treasury. 148.18 [EFFECTIVE DATE.] This section is effective for taxes 148.19 payable in 2003 and thereafter. 148.20 Sec. 77. Minnesota Statutes 2000, section 469.1763, 148.21 subdivision 6, is amended to read: 148.22 Subd. 6. [POOLING PERMITTED FOR DEFICITS.] (a) This 148.23 subdivision applies only to districts for which the request for 148.24 certification was made before June 2,19972001. 148.25 (b) The municipality for the district may transfer 148.26 available increments from another tax increment financing 148.27 district located in the municipality, if the transfer is 148.28 necessary to eliminate a deficit in the district to which the 148.29 increments are transferred. A deficit in the district for 148.30 purposes of this subdivision means the lesser of the following 148.31 two amounts: 148.32 (1)(i) the amount due during the calendar year to pay 148.33 preexisting obligations of the district; minus 148.34 (ii) the total increments to be collected from properties 148.35 located within the district that are available for the calendar 148.36 year; plus 149.1 (iii) total increments from properties located in other 149.2 districts in the municipality that are available to be used to 149.3 meet the district's obligations under this section, excluding 149.4 this subdivision, or other provisions of law (but excluding a 149.5 special tax under section 469.1791 and the grant program under 149.6 Laws 1997, chapter 231, article 1, section 19, or this article); 149.7 or 149.8 (2) the reduction in increments collected from properties 149.9 located in the district for the calendar year as a result of the 149.10 changes in class rates inLaws 1997, chapter 231, article 1;149.11Laws 1998, chapter 389, article 2; and Laws 1999, chapter149.12243this article or the elimination of the general education tax 149.13 levy under this article. 149.14 (c) A preexisting obligation means bonds issued and sold 149.15 before June 2,19972001, and bonds issued to refund such bonds 149.16 or to reimburse expenditures made in conjunction with a signed 149.17 contractual agreement entered into before June 2,19972001, to 149.18 the extent that the bonds are secured by a pledge of increments 149.19 from the tax increment financing district. For purposes of this 149.20 subdivision, bonds exclude an obligation to reimburse or pay a 149.21 developer or owner of property located in the district for 149.22 amounts incurred or paid by the developer or owner. 149.23 (d) The municipality may require a development authority, 149.24 other than a seaway port authority, to transfer available 149.25 increments for any of its tax increment financing districts in 149.26 the municipality to make up an insufficiency in another district 149.27 in the municipality, regardless of whether the district was 149.28 established by the development authority or another development 149.29 authority. This authority applies notwithstanding any law to 149.30 the contrary, but applies only to a development authority that: 149.31 (1) was established by the municipality; or 149.32 (2) the governing body of which is appointed, in whole or 149.33 part, by the municipality or an officer of the municipality or 149.34 which consists, in whole or part, of members of the governing 149.35 body of the municipality. 149.36 (e) The authority under this subdivision to spend tax 150.1 increments outside of the area of the district from which the 150.2 tax increments were collected: 150.3 (1) may only be exercised after obtaining approval of the 150.4 use of the increments, in writing, by the commissioner of 150.5 revenue; 150.6 (2) is an exception to the restrictions under section 150.7 469.176, subdivision 4i, and the other provisions of this 150.8 section, and the percentage restrictions under subdivision 2 150.9 must be calculated after deducting increments spent under this 150.10 subdivision from the total increments for the district; and 150.11 (3) applies notwithstanding the provisions of the Tax 150.12 Increment Financing Act in effect for districts for which the 150.13 request for certification was made before June 30, 1982, or any 150.14 other law to the contrary. 150.15 [EFFECTIVE DATE.] This section is effective January 2, 150.16 2003, and thereafter. 150.17 Sec. 78. Minnesota Statutes 2000, section 469.177, 150.18 subdivision 1a, is amended to read: 150.19 Subd. 1a. [ORIGINAL LOCAL TAX RATE.] At the time of the 150.20 initial certification of the original net tax capacity for a tax 150.21 increment financing district or a subdistrict, the county 150.22 auditor shall certify the original local tax rate that applies 150.23 to the district or subdistrict. The original local tax rate is 150.24 the sum of all the local tax rates that apply to a property in 150.25 the district or subdistrict. The local tax rate to be certified 150.26 is the rate in effect for the same taxes payable year applicable 150.27 to the tax capacity values certified as the district's or 150.28 subdistrict's original tax capacity. The resulting tax capacity 150.29 rate is the original local tax rate for the life of the district 150.30 or subdistrict. The original local tax rate does not include 150.31 any rate or amount attributable to a state levy, whether the 150.32 state levy is imposed by section 275.02 or another provision of 150.33 law. 150.34 [EFFECTIVE DATE.] This section is effective the day 150.35 following final enactment for all districts and projects 150.36 regardless of when the request for certification was made. 151.1 Sec. 79. Minnesota Statutes 2000, section 469.177, 151.2 subdivision 11, is amended to read: 151.3 Subd. 11. [DEDUCTION FOR ENFORCEMENT COSTS; 151.4 APPROPRIATION.] (a) The county treasurer shall deduct an amount 151.5 equal to0.250.34 percent of any increment distributed to an 151.6 authority or municipality. The county treasurer shall pay the 151.7 amount deducted to the state treasurer for deposit in the state 151.8 general fund. 151.9 (b) The amounts deducted and paid under paragraph (a) are 151.10 appropriated to the state auditor for the cost of (1) the 151.11 financial reporting of tax increment financing information and 151.12 (2) the cost of examining and auditing of authorities' use of 151.13 tax increment financing as provided under section 469.1771, 151.14 subdivision 1. Notwithstanding section 16A.28 or any other law 151.15 to the contrary, this appropriation does not cancel and remains 151.16 available until spent. 151.17 [EFFECTIVE DATE.] This section is effective for taxes 151.18 payable in 2002 and thereafter. 151.19 Sec. 80. [469.1816] [SCHOOL DISTRICT GENERAL EDUCATION 151.20 LEVY ABATEMENTS.] 151.21 Notwithstanding the provisions of any other law, a school 151.22 district that has adopted an abatement resolution under sections 151.23 469.1812 to 469.1815 prior to June 2, 2001, pursuant to which 151.24 all or a portion of its general education levy for a particular 151.25 parcel or parcels was to be abated for taxes payable in 2002 or 151.26 later years and pledged to the payment of bonds issued prior to 151.27 June 2, 2001, may levy an amount sufficient to make its required 151.28 payment on the bonds. The levy authorized under this section 151.29 may not exceed the lesser of: (1) the amount specified for this 151.30 purpose in the resolution for the taxes payable year, or (2) the 151.31 amount of the payable 2001 general education tax levied on the 151.32 property for which the abatements were granted. The authority 151.33 in this section terminates for a district for taxes payable in 151.34 the year following the expiration of the resolution without 151.35 giving any effect to an extension or modification of the 151.36 resolution made after June 2, 2001. 152.1 [EFFECTIVE DATE.] This section is effective the day 152.2 following final enactment. 152.3 Sec. 81. Minnesota Statutes 2000, section 473.446, 152.4 subdivision 1, is amended to read: 152.5 Subdivision 1. [WITHIN TRANSIT TAXING DISTRICT.] For the 152.6 purposes of sections 473.405 to 473.449 and the metropolitan 152.7 transit system, except as otherwise provided in this subdivision 152.8 and subdivision 1b, the council shall levy each year upon all 152.9 taxable property within the metropolitan transit taxing 152.10 district, defined in subdivision 2, a transit tax consisting of: 152.11 (a) an amount which shall be used for payment of the 152.12 expenses of operating transit and paratransit service and to 152.13 provide for payment of obligations issued by the council under 152.14 section 473.436, subdivision 6; 152.15 (b) an additional amount, if any, the council determines to 152.16 be necessary to provide for the full and timely payment of its 152.17 certificates of indebtedness and other obligations outstanding 152.18 on July 1, 1985, to which property taxes under this section have 152.19 been pledged; and 152.20 (c) an additional amount necessary to provide full and 152.21 timely payment of certificates of indebtedness, bonds, including 152.22 refunding bonds or other obligations issued or to be issued 152.23 under section 473.39 by the council for purposes of acquisition 152.24 and betterment of property and other improvements of a capital 152.25 nature and to which the council has specifically pledged tax 152.26 levies under this clause. 152.27 The property tax levied by the council for general purposes 152.28 under paragraph (a) must not exceed the following amount for the 152.29 years specified: 152.30 (1) for taxes payable in 1995, the council's property tax 152.31 levy limitation for general transit purposes is equal to the 152.32 former regional transit board's property tax levy limitation for 152.33 general transit purposes under this subdivision, for taxes 152.34 payable in 1994, multiplied by an index for market valuation 152.35 changes equal to the total market valuation of all taxable 152.36 property located within the metropolitan transit taxing district 153.1 for the current taxes payable year divided by the total market 153.2 valuation of all taxable property located within the 153.3 metropolitan transit taxing district for the previous taxes 153.4 payable year;and153.5 (2) for taxes payable in 1996and subsequent yearsthrough 153.6 2001, the product of (i) the council's property tax levy 153.7 limitation for general transit purposes for the previous year 153.8 determined under this subdivision before reduction by the amount 153.9 levied by any municipality in the previous year under section 153.10 473.388, subdivision 7, multiplied by (ii) an index for market 153.11 valuation changes equal to the total market valuation of all 153.12 taxable property located within the metropolitan transit taxing 153.13 district for the current taxes payable year divided by the total 153.14 market valuation of all taxable property located within the 153.15 metropolitan transit taxing district for the previous taxes 153.16 payable year, minus the amount levied by any municipality in the 153.17 current levy year under section 473.388, subdivision 7.; 153.18 (3) for taxes payable in 2002, the council's property tax 153.19 levy limitation for general transit purposes is equal to (i) the 153.20 council's property tax levy limitation for general transit 153.21 purposes for the previous year, determined under this 153.22 subdivision before reduction by the amount levied by any 153.23 municipality for the previous year under section 473.388, 153.24 subdivision 7, multiplied by (ii) an index for market valuation 153.25 changes equal to the total market valuation of all taxable 153.26 property located within the metropolitan transit taxing district 153.27 for the current taxes payable year divided by the total market 153.28 valuation of all taxable property located within the 153.29 metropolitan transit taxing district for the previous taxes 153.30 payable year, minus (iii) the amount levied by a municipality 153.31 under section 473.388, subdivision 7, for the same taxes payable 153.32 year as the council's limitation, plus (iv) $17,400,000. The 153.33 council must distribute 13.8 percent of any amount levied 153.34 pursuant to item (iv) as additional financial assistance under 153.35 section 473.388; 153.36 (4) for taxes payable in 2003, the council's property tax 154.1 levy limitation for general transit purposes is equal to (i) the 154.2 council's property tax levy limitation for general transit 154.3 purposes for the previous year, determined under this 154.4 subdivision before reduction by the amount levied by any 154.5 municipality for the previous year under section 473.388, 154.6 subdivision 7, minus (ii) $17,400,000, multiplied by (iii) the 154.7 index for market valuation changes as described in clause (3), 154.8 minus (iv) the amount levied by a municipality under section 154.9 473.388, subdivision 7, for the same taxes payable year as the 154.10 council's limitation, plus (v) $11,500,000. The council must 154.11 distribute 13.8 percent of any amount levied pursuant to item 154.12 (iv) as additional financial assistance under section 473.388; 154.13 and 154.14 (5) for taxes payable in 2004 and thereafter, the council's 154.15 property tax levy limitation for general transit purposes is 154.16 equal to (i) the council's property tax levy limitation for 154.17 general transit purposes for the previous year, determined under 154.18 this subdivision before reduction by the amount levied by any 154.19 municipality for the previous year under section 473.388, 154.20 subdivision 7, but excluding the amount in clause (4), item 154.21 (iv), multiplied by (ii) the index for market valuation changes 154.22 as described in clause (3), minus (iii) the amount levied by a 154.23 municipality under section 473.388, subdivision 7, for the same 154.24 taxes payable year as the council's limitation, plus (iv) 154.25 $11,500,000 times an index for market valuation changes equal to 154.26 the total market valuation of all taxable property located 154.27 within the transit district for the current taxes payable year 154.28 divided by the total market valuation of all taxable property 154.29 located in the district for the taxes payable year 2002. In 154.30 2004, and each year thereafter, the council must distribute 13.8 154.31 percent of any amount levied pursuant to item (iv) as additional 154.32 financial assistance under section 473.388, subdivision 7. 154.33 The portion of the property tax levy for transit district 154.34 operating purposes attributable to a municipality that has 154.35 exercised a local levy option under section 473.388, subdivision 154.36 7, is the amount as determined under subdivision 1b. The 155.1 portion of the property tax levy for transit district operating 155.2 purposes attributable to the remaining municipalities within the 155.3 transit district is found by subtracting the portions 155.4 attributable to the municipalities that have exercised a local 155.5 levy option under section 473.388, subdivision 7. 155.6 For the taxes payable year 1995, the index for market 155.7 valuation changes shall be multiplied by an amount equal to the 155.8 sum of the regional transit board's property tax levy limitation 155.9 for the taxes payable year 1994 and $160,665. The $160,665 155.10 increase shall be a permanent adjustment to the levy limit base 155.11 used in determining the regional transit board's property tax 155.12 levy limitation for general purposes for subsequent taxes 155.13 payable years. 155.14 For the purpose of determining the council's property tax 155.15 levy limitation for general transit purposes under this 155.16 subdivision, "total market valuation" means the total market 155.17 valuation of all taxable property within the metropolitan 155.18 transit taxing district without valuation adjustments for fiscal 155.19 disparities (chapter 473F), tax increment financing (sections 155.20 469.174 to 469.179), and high voltage transmission lines 155.21 (section 273.425). 155.22 The county auditor shall reduce the tax levied pursuant to 155.23 this section and section 473.388 on all property within 155.24 statutory and home rule charter cities and towns that receive 155.25 full-peak service and limited off-peak service by an amount 155.26 equal to the tax levy that would be produced by applying a rate 155.27 of 0.510 percent of net tax capacity on the property. The 155.28 county auditor shall reduce the tax levied pursuant to this 155.29 section and section 473.388 on all property within statutory and 155.30 home rule charter cities and towns that receive limited peak 155.31 service by an amount equal to the tax levy that would be 155.32 produced by applying a rate of 0.765 percent of net tax capacity 155.33 on the property. The amounts so computed by the county auditor 155.34 shall be submitted to the commissioner of revenue as part of the 155.35 abstracts of tax lists required to be filed with the 155.36 commissioner under section 275.29. Any prior year adjustments 156.1 shall also be certified in the abstracts of tax lists. The 156.2 commissioner shall review the certifications to determine their 156.3 accuracy and may make changes in the certification as necessary 156.4 or return a certification to the county auditor for 156.5 corrections. The commissioner shall pay to the council and to 156.6 the municipalities levying under section 473.388, subdivision 7, 156.7 the amounts certified by the county auditors on the dates 156.8 provided in section 273.1398, apportioned between the council 156.9 and the municipality in the same proportion as the total transit 156.10 levy is apportioned within the municipality. There is annually 156.11 appropriated from the general fund in the state treasury to the 156.12 department of revenue the amounts necessary to make these 156.13 payments. 156.14 For the purposes of this subdivision, "full-peak and 156.15 limited off-peak service" means peak period regular route 156.16 service, plus weekday midday regular route service at intervals 156.17 longer than 60 minutes on the route with the greatest frequency; 156.18 and "limited peak period service" means peak period regular 156.19 route service only. 156.20 For the purposes of property taxes payable in the following 156.21 year, the council shall annually determine which cities and 156.22 towns qualify for the 0.510 percent or 0.765 percent tax 156.23 capacity rate reduction and shall certify this list to the 156.24 county auditor of the county wherein such cities and towns are 156.25 located on or before September 15. No changes may be made to 156.26 the annual list after September 15. 156.27 [EFFECTIVE DATE.] This section is effective for taxes 156.28 payable in 2002 and thereafter. 156.29 Sec. 82. Minnesota Statutes 2000, section 473F.08, 156.30 subdivision 3, is amended to read: 156.31 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 156.32 apportion the levy of each governmental unit in the auditor's 156.33 county in the manner prescribed by this subdivision. The 156.34 auditor shall: 156.35 (a) by August 20, determine the areawide portion of the 156.36 levy for each governmental unit by multiplying the local tax 157.1 rate of the governmental unit for the preceding levy year times 157.2 the distribution value set forth in subdivision 2, clause (b); 157.3and157.4 (b) by September 5, determine the local portion of the 157.5 current year's levy by subtracting the resulting amount from 157.6 clause (a) from the governmental unit's current year's levy.; 157.7 and 157.8 (c) for determinations made under paragraph (a), in the 157.9 case of school districts, in 2001 and thereafter, for taxes 157.10 payable in 2002 and thereafter, exclude the general education 157.11 tax rate from the local tax rate for the preceding levy year. 157.12 [EFFECTIVE DATE.] This section is effective the day 157.13 following final enactment. 157.14 Sec. 83. Minnesota Statutes 2000, section 473H.10, 157.15 subdivision 3, is amended to read: 157.16 Subd. 3. [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 157.17 After having determined the market value of all land valued 157.18 according to subdivision 2, the assessor shall compute thenet157.19tax capacityassessed value of those properties by applying the 157.20 appropriate class rates. When computing the rate of tax 157.21 pursuant to section 275.08, the county auditor shall include the 157.22net tax capacityassessed value of land as provided in this 157.23 clause. 157.24 (b) The county auditor shall compute the tax on lands 157.25 valued according to subdivision 2 and nonresidential buildings 157.26 by multiplying thenet tax capacityassessed value times the 157.27 total local tax rate for all purposes as provided in clause (a). 157.28 (c) The county auditor shall then compute the tax on lands 157.29 valued according to subdivision 2 and nonresidential buildings 157.30 by multiplying thenet tax capacityassessed value times the 157.31 total local tax rate for all purposes as provided in clause (a), 157.32 subtracting $1.50 per acre of land in the preserve. 157.33 (d) The county auditor shall then compute the maximum ad 157.34 valorem property tax on lands valued according to subdivision 2 157.35 and nonresidential buildings by multiplying thenet tax capacity157.36 assessed value times 105 percent of the previous year's 158.1 statewide average local tax rate levied on property located 158.2 within townships for all purposes. 158.3 (e) The tax due and payable by the owner of preserve land 158.4 valued according to subdivision 2 and nonresidential buildings 158.5 will be the amount determined in clause (c) or (d), whichever is 158.6 less. The state shall reimburse the taxing jurisdictions for 158.7 the amount of the difference between the net tax determined 158.8 under this clause and the gross tax in clause (b). Residential 158.9 buildings shall continue to be valued and classified according 158.10 to the provisions of sections 273.11 and 273.13, as they would 158.11 be in the absence of this section, and the tax on those 158.12 buildings shall not be subject to the limitation contained in 158.13 this clause. 158.14 The county may transfer money from the county conservation 158.15 account created in section 40A.152 to the county revenue fund to 158.16 reimburse the fund for the tax lost as a result of this 158.17 subdivision or to pay taxing jurisdictions within the county for 158.18 the tax lost. The county auditor shall certify to the 158.19 commissioner of revenue on or before June 1 the total amount of 158.20 tax lost to the county and taxing jurisdictions located within 158.21 the county as a result of this subdivision and the extent that 158.22 the tax lost exceeds funds available in the county conservation 158.23 account. Payment shall be made by the state on December2615 158.24 to each of the affected taxing jurisdictions, other than school 158.25 districts, in the same proportion that the ad valorem tax is 158.26 distributed if the county conservation account is insufficient 158.27 to make the reimbursement. There is annually appropriated from 158.28 the Minnesota conservation fund under section 40A.151 to the 158.29 commissioner of revenue an amount sufficient to make the 158.30 reimbursement provided in this subdivision. If the amount 158.31 available in the Minnesota conservation fund is insufficient, 158.32 the balance that is needed is appropriated from the general fund. 158.33 [EFFECTIVE DATE.] This section is effective for taxes and 158.34 reimbursements payable in 2002 and thereafter. 158.35 Sec. 84. Minnesota Statutes 2000, section 477A.011, 158.36 subdivision 3, is amended to read: 159.1 Subd. 3. [POPULATION.] "Population" means the population 159.2 established as ofJulyJune 1 in an aid calculation year by the 159.3 most recent federal census, by a special census conducted under 159.4 contract with the United States Bureau of the Census, by a 159.5 population estimate made by the metropolitan council, or by a 159.6 population estimate of the state demographer made pursuant to 159.7 section 4A.02, whichever is the most recent as to the stated 159.8 date of the count or estimate for the preceding calendar year. 159.9 The term "per capita" refers to population as defined by this 159.10 subdivision. 159.11 [EFFECTIVE DATE.] This section is effective the day 159.12 following final enactment. 159.13 Sec. 85. Minnesota Statutes 2000, section 477A.011, is 159.14 amended by adding a subdivision to read: 159.15 Subd. 3b. [POPULATION SPRAWL FACTOR.] For a city with a 159.16 population of 5,000 or more that is located outside of the 159.17 metropolitan area, the "population sprawl factor" is equal to 159.18 ten percent of the population of the towns located within five 159.19 miles of the city. Cities of under 5,000 population located 159.20 outside the metropolitan area are to be treated as towns under 159.21 the preceding sentence. The unorganized territory of a county 159.22 is treated as one town for the same purpose, unless population 159.23 data is available for separated contiguous areas of unorganized 159.24 territory within a county. For all other cities, the 159.25 "population sprawl factor" is zero. If a town is within five 159.26 miles of more than one city, ten percent of the town's 159.27 population is counted for the closest city only, unless the town 159.28 is adjacent to more than one city. 159.29 [EFFECTIVE DATE.] This section is effective for aid payable 159.30 in 2002 and thereafter. 159.31 Sec. 86. Minnesota Statutes 2000, section 477A.011, is 159.32 amended by adding a subdivision to read: 159.33 Subd. 3c. [DENSITY FACTOR.] For a city located within the 159.34 metropolitan area, except Minneapolis and St. Paul, the "density 159.35 factor" is equal to the square root of the quotient derived by 159.36 dividing the number of residential units per acre of residential 160.1 use property as determined by the metropolitan council within 160.2 the city by the weighted average number of residential units per 160.3 acre of residential use property as determined by the 160.4 metropolitan council for all cities located within the 160.5 metropolitan area, except for the cities of St. Paul and 160.6 Minneapolis, as certified to the commissioner by the 160.7 metropolitan council on or before June 30 of the aid 160.8 determination year. If the density factor computed for a city 160.9 is greater than 1.75, the density factor for that city is 1.75. 160.10 If the density factor computed for a city is less than 0.50, the 160.11 density factor for that city is 0.50. For all cities outside 160.12 the metropolitan area, and the cities of Minneapolis and St. 160.13 Paul, the "density factor" is zero. 160.14 [EFFECTIVE DATE.] This section is effective for aid payable 160.15 in 2002 and thereafter. 160.16 Sec. 87. Minnesota Statutes 2000, section 477A.011, is 160.17 amended by adding a subdivision to read: 160.18 Subd. 3d. [TAX CAPACITY.] "Tax capacity" means (1) the net 160.19 tax capacity or assessed value of all taxable property located 160.20 in a city or town computed using the class rates in section 160.21 273.13, and the market values for taxes payable in the year 160.22 prior to the aid distribution, plus (2) the city's or town's 160.23 fiscal disparities distribution net tax capacity or assessed 160.24 value under section 276A.06, subdivision 2, paragraph (b), or 160.25 473F.08, subdivision 2, paragraph (b), for taxes payable in the 160.26 year prior to the aid distribution. The market values utilized 160.27 in computing a city's or town's tax capacity must be reduced by 160.28 the sum of (1) the city's or town's market value of commercial 160.29 industrial property as defined in section 276A.01, subdivision 160.30 3, or 473F.02, subdivision 3, multiplied by the ratio determined 160.31 pursuant to section 276A.06, subdivision 2, paragraph (a), or 160.32 473F.08, subdivision 2, paragraph (a), and (2) the market value 160.33 of the captured value of tax increment financing districts as 160.34 defined in section 469.177, subdivision 2, and (3) the market 160.35 value of transmission lines deducted from the city's or town's 160.36 total assessed value under section 273.425. Tax capacity must 161.1 be computed using equalized market values. 161.2 [EFFECTIVE DATE.] This section is effective for aid payable 161.3 in 2002 and thereafter. 161.4 Sec. 88. Minnesota Statutes 2000, section 477A.011, 161.5 subdivision 34, is amended to read: 161.6 Subd. 34. [CITY REVENUE NEED.] (a)For a city with a161.7population equal to or greater than 2,500, "city revenue need"161.8is the sum of (1) 3.462312 times the pre-1940 housing161.9percentage; plus (2) 2.093826 times the commercial industrial161.10percentage; plus (3) 6.862552 times the population decline161.11percentage; plus (4) .00026 times the city population; plus (5)161.12152.0141."City revenue need" for the city of Minneapolis is 161.13 $508. "City revenue need" for the city of St. Paul is $431. 161.14 "City revenue need" for the city of Duluth is $425. "City 161.15 revenue need" for all cities in the metropolitan area, except 161.16 for the cities of Minneapolis and St. Paul, is $194 times the 161.17 city's density factor. "City revenue need" for all cities 161.18 outside the metropolitan area with a population of 5,000 or 161.19 more, except for the city of Duluth, is $265. "City revenue 161.20 need" for all cities outside the metropolitan area with a 161.21 population of less than 5,000 is $234. 161.22 (b)For a city with a population less than 2,500, "city161.23revenue need" is the sum of (1) 1.795919 times the pre-1940161.24housing percentage; plus (2) 1.562138 times the commercial161.25industrial percentage; plus (3) 4.177568 times the population161.26decline percentage; plus (4) 1.04013 times the transformed161.27population; minus (5) 107.475.161.28(c) The city revenue need cannot be less than zero.161.29(d)For aid payable in calendar year19982003 and 161.30 subsequent years,the city revenue need for a city, as161.31determined in paragraphs (a) to (c), isthe dollar amounts in 161.32 paragraph (a) are multiplied by theratio of the annual implicit161.33price deflator for government consumption expenditures and gross161.34investment for state and local governments as prepared by the161.35United States Department of Commerce, for the most recently161.36available year to the 1993 implicit price deflator for state and162.1local government purchasesinflation adjustment determined for 162.2 the aid payment year under section 477A.03, subdivision 3, 162.3 paragraph (b), without regard to the minimum and maximum 162.4 inflation adjustments in that paragraph. 162.5 [EFFECTIVE DATE.] This section is effective for aid payable 162.6 in 2002 and thereafter. 162.7 Sec. 89. Minnesota Statutes 2000, section 477A.011, is 162.8 amended by adding a subdivision to read: 162.9 Subd. 36a. [CITY AID BASE.] For cities located outside of 162.10 the metropolitan area "city aid base" means the sum of (1) the 162.11 amount of local government aid the city was originally certified 162.12 to receive in calendar year 2001 under section 477A.013, 162.13 subdivision 9, and (2) the amount of homestead and agricultural 162.14 aid the city was originally certified to receive in calendar 162.15 year 2001 under section 273.1398, subdivision 2, less an amount 162.16 equal to eight percent of the city tax capacity as defined in 162.17 subdivision 3d. If the amount determined under clause (2) for a 162.18 city is less than zero, the city aid base for that city is equal 162.19 to the amount determined under clause (1). 162.20 [EFFECTIVE DATE.] This section is effective for aid payable 162.21 in 2002 and thereafter. 162.22 Sec. 90. Minnesota Statutes 2000, section 477A.013, 162.23 subdivision 1, is amended to read: 162.24 Subdivision 1. [TOWNS.] In19942002 each town that had 162.25 levied for taxes payable inthe prior year1993 a local tax rate 162.26 of at least .008 shall receive a distribution equal tothe162.27amount it received in 1993 under this section before any162.28nonpermanent reductions made under section 477A.0132. In 1995162.29each town that had levied for taxes payable in 1993 a local tax162.30rate of at least .008 shall receive a distribution equal to 102162.31percent of the amount it received in 1994 under this section162.32before any increases or reductions under sections 16A.711,162.33subdivision 5, and 477A.0132(1) $9 times the town's population 162.34 plus (2)(i) $81 minus (ii) ten percent of the per capita tax 162.35 capacity of the class 1, 3, 4, and 5 properties, and ten percent 162.36 of the per capita tax capacity of the house, garage, and 163.1 immediately surrounding one acre of land for class 2a 163.2 properties, in the town for taxes payable in 2001 times (iii) 163.3 the town's population. No town shall have a value under clause 163.4 (2) of less than zero. In19962003 and subsequent years each 163.5 townthat had levied for taxes payable in 1993 a local tax rate163.6of at least .008shall receive a distribution equal to the 163.7 amount it received in the previous year under this 163.8 section before any increases or reductions under section 163.9 477A.0132, adjusted for inflation as provided under section 163.10 477A.03, subdivision 3.and adjusted by the "household 163.11 adjustment factor" defined in section 273.1398, subdivision 1. 163.12 The commissioner shall prorate the amount distributed to each 163.13 town under clause (2) as necessary so that the total amount 163.14 distributed does not exceed the appropriation for this purpose 163.15 in section 477A.03. 163.16 [EFFECTIVE DATE.] This section is effective for aid payable 163.17 in 2002 and thereafter. 163.18 Sec. 91. Minnesota Statutes 2000, section 477A.013, 163.19 subdivision 8, is amended to read: 163.20 Subd. 8. [CITY FORMULA AID.] (a) In calendar year1994 and163.21subsequent years2002, the formula aid for a city is equal to 163.22 the need increase percentage multiplied bythe difference163.23between (1) the city's revenue need multiplied by its163.24population, and (2) the city's net tax capacity multiplied by163.25the tax effort rate.(1) the city revenue need minus (2) 0.17 163.26 times the city's tax capacity divided by its population times 163.27 (3) the city population or, for cities of 5,000 population or 163.28 more located outside the metropolitan area, the city population 163.29 plus the city's population sprawl factor. 163.30 (b) In calendar year 2003 and thereafter, the formula aid 163.31 for a city is equal to the need increase percentage multiplied 163.32 by (i) the city revenue need minus (ii) a uniform mill rate 163.33 determined by the commissioner to be the equivalent to the 0.17 163.34 rate in paragraph (a) times (iii) the city's tax capacity 163.35 divided by its population times (iv) the city's population, or 163.36 in the case of a city of 5,000 population or more located 164.1 outside the metropolitan area, the city's population plus its 164.2 population sprawl factor. 164.3 (c) No city may have a formula aid amount less than zero. 164.4 The need increase percentage must be the same within each 164.5 category for all cities in the following categories: (i) 164.6 Minneapolis, St. Paul, and Duluth; (ii) cities in the 164.7 metropolitan area except for Minneapolis and St. Paul; and (iii) 164.8 all other cities. 164.9Notwithstanding the prior sentence, in 1995 only, the need164.10increase percentage for a city shall be twice the need increase164.11percentage applicable to other cities if:164.12(1) the city, in 1992 or 1993, transferred an amount from164.13governmental funds to their sewer and water fund, and164.14(2) the amount transferred exceeded their net levy for164.15taxes payable in the year in which the transfer occurred.164.16 The applicable need increase percentage or percentages must 164.17 be calculated by the department of revenue so that the total of 164.18 the aid under subdivision 9 equals the total amount available 164.19 for aid under section 477A.03. 164.20 [EFFECTIVE DATE.] This section is effective for aid payable 164.21 in 2002 and thereafter. 164.22 Sec. 92. Minnesota Statutes 2000, section 477A.013, 164.23 subdivision 9, is amended to read: 164.24 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 164.251994 and thereafter, each city shall receive an aid distribution164.26equal to the sum of (1) the city formula aid under subdivision164.278, and (2) its city aid base2002 and thereafter, each city in 164.28 the metropolitan area and the city of Duluth shall receive an 164.29 aid distribution equal to its formula aid. 164.30 (b)The percentage increase for a first class city in164.31calendar year 1995 and thereafter shall not exceed the164.32percentage increase in the sum of the aid to all cities under164.33this section in the current calendar year compared to the sum of164.34the aid to all cities in the previous year.164.35(c) The total aid for any city, except a first class city,164.36shall not exceed the sum of (1) ten percent of the city's net165.1levy for the year prior to the aid distribution plus (2) its165.2total aid in the previous year before any increases or decreases165.3under sections 16A.711, subdivision 5, and 477A.0132.165.4(d) Notwithstanding paragraph (c), in 1995 only, for cities165.5which in 1992 or 1993 transferred an amount from governmental165.6funds to their sewer and water fund in an amount greater than165.7their net levy for taxes payable in the year in which the165.8transfer occurred, the total aid shall not exceed the sum of (1)165.920 percent of the city's net levy for the year prior to the aid165.10distribution plus (2) its total aid in the previous year before165.11any increases or decreases under sections 16A.711, subdivision165.125, and 477A.0132.In calendar year 2002, each nonmetropolitan 165.13 city, except Duluth, shall receive an aid distribution equal to 165.14 (1) 90 percent of its city aid base plus (2) a percentage of its 165.15 city formula aid. The commissioner of revenue shall determine 165.16 the percentage of its city formula aid amount that each 165.17 nonmetropolitan city will receive by comparing the aggregate 165.18 amount determined for nonmetropolitan cities under clause (1) 165.19 with the appropriation available under section 477A.03 for this 165.20 paragraph. The percentage of city formula aid that each 165.21 nonmetropolitan city will receive is the percentage that will 165.22 make the total aid distribution for nonmetropolitan cities equal 165.23 to the appropriation for that purpose under section 477A.03. 165.24 For calendar years 2003 and thereafter, a nonmetropolitan city 165.25 shall receive the amount computed under this subdivision, except 165.26 that the percentage in clause (1) shall be 72 percent for aid 165.27 payable in 2003, 54 percent for aid payable in 2004, 36 percent 165.28 for aid payable in 2005, 18 percent for aid payable in 2006, and 165.29 zero for aid payable in 2007 and thereafter. 165.30 [EFFECTIVE DATE.] This section is effective for aid payable 165.31 in 2002 and thereafter. 165.32 Sec. 93. Minnesota Statutes 2000, section 477A.015, is 165.33 amended to read: 165.34 477A.015 [PAYMENT DATES.] 165.35 The commissioner of revenue shall make the payments of 165.36 local government aid to affected taxing authorities in two 166.1 installments on July 20 and December2615 annually. 166.2 The commissioner may pay all or part of the payment due on 166.3 December2615 at any time after August 15 upon the request of a 166.4 city or town that requests such payment as being necessary for 166.5 meeting its cash flow needs. 166.6 [EFFECTIVE DATE.] This section is effective for payments 166.7 made in 2002 and thereafter. 166.8 Sec. 94. Minnesota Statutes 2000, section 477A.03, 166.9 subdivision 2, is amended to read: 166.10 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 166.11 discharge the duties imposed by sections 477A.011 to 477A.014 is 166.12 annually appropriated from the general fund to the commissioner 166.13 of revenue. 166.14 (b)Aid payments to counties under section 477A.0121 are166.15limited to $20,265,000 in 1996. Aid payments to counties under166.16section 477A.0121 are limited to $27,571,625 in 1997.For aid 166.17 payable in 1998 and thereafter, the total aids paid under 166.18 section 477A.0121 are the amounts certified to be paid in the 166.19 previous year, adjusted for inflation as provided under 166.20 subdivision 3. 166.21 (c)(i) For aids payable in 1998 and thereafter, the total 166.22 aids paid to counties under section 477A.0122 are the amounts 166.23 certified to be paid in the previous year, adjusted for 166.24 inflation as provided under subdivision 3. 166.25 (ii) Aid payments to counties under section 477A.0122in166.262000are further increased by an additional $20,000,000 in 2000, 166.27 and an additional $10,000,000 in 2002. The amounts provided in 166.28 this clause are annually adjusted for inflation as provided in 166.29 clause (i). 166.30 (d) Aid paymentsto citiesin19992002 under section 166.31 477A.013,subdivisionsubdivisions 1 and 9, are limitedto166.32$380,565,489. For aids payable in 2000, the total aids paid166.33under section 477A.013, subdivision 9, are the amounts certified166.34to be paid in the previous year, adjusted for inflation as166.35provided in subdivision 3, and increased by the amount necessary166.36to effectuate Laws 1999, chapter 243, article 5, section 48,167.1paragraph (b)in the aggregate to $184,065,000 for the first 167.2 class cities of Minneapolis, St. Paul, and Duluth; $51,916,000 167.3 for the cities in the metropolitan area excluding the cities of 167.4 Minneapolis and St. Paul; $235,981,000 for all nonmetropolitan 167.5 cities except for the city of Duluth; and $18,476,000 for all 167.6 towns. For aids payable in2001 through2003, the total aids 167.7 paid under section 477A.013,subdivisionsubdivisions 1 and 9, 167.8 are the amounts certified to be paid in the previous year, 167.9 adjusted for inflation as provided under subdivision 3 and 167.10 increased by the household adjustment factor defined in section 167.11 273.1398. For aids payable in 2004, the total aids paid under 167.12 section 477A.013,subdivisionsubdivisions 1 and 9, are the 167.13 amounts certified to be paid in the previous year, adjusted for 167.14 inflation as provided under subdivision 3,andincreased by the 167.15 amount certified to be paid in 2003 under section 477A.06 and 167.16 increased by the household adjustment factor defined in section 167.17 273.1398. For aids payable in 2005 and thereafter, the total 167.18 aids paid under section 477A.013,subdivisionsubdivisions 1 and 167.19 9, are the amounts certified to be paid in the previous year, 167.20 adjusted for inflation as provided under subdivision 3 and 167.21 increased by the household adjustment factor defined in section 167.22 273.1398. The additional amount authorized under subdivision 4 167.23 is not included when calculating the appropriation limits under 167.24 this paragraph. 167.25 [EFFECTIVE DATE.] This section is effective for aids paid 167.26 in 2002 and thereafter. 167.27 Sec. 95. Minnesota Statutes 2000, section 477A.065, 167.28 subdivision 1, is amended to read: 167.29 Subdivision 1. [ELIGIBILITY.] Each taxes payable year, 167.30 each city containing class 4d property on which initial 167.31 construction was begun after January 1, 1999, shall be eligible 167.32 for aid equal to (1)1.5 timesthenet tax capacitymarket value 167.33 of the property for the assessment year corresponding to the 167.34 taxes payable year, multiplied by (2) the city government's 167.35 average local tax rate for the previous taxes payable year. 167.36 [EFFECTIVE DATE.] This section is effective for aid paid in 168.1 2002 and thereafter. 168.2 Sec. 96. [TIF GRANTS; APPROPRIATIONS.] 168.3 Subdivision 1. [TIF GRANTS.] (a) The commissioner of 168.4 revenue shall pay grants to municipalities in calendar years 168.5 2003, 2004, and 2005 for deficits in tax increment financing 168.6 districts caused by the changes in class rates and the 168.7 elimination of the state-determined general education property 168.8 tax levy under this article. Municipalities must submit 168.9 applications for the grants in a form prescribed by the 168.10 commissioner no later than August 1 for grants payable during 168.11 the calendar year. The maximum grant equals the lesser of: 168.12 (1) for taxes payable in the year before the grant is paid, 168.13 the reduction in the tax increment financing district's revenues 168.14 derived from increment resulting from the class rate changes and 168.15 the elimination of the state-determined general education 168.16 property tax levy under this article; or 168.17 (2) the amount due during the calendar year to pay (i) 168.18 bonds issued before June 2, 2001, and (ii) binding contracts 168.19 entered into before June 2, 2001, less (iii) the municipality's 168.20 total tax increments, including unspent increments from previous 168.21 years. 168.22 (b) The commissioner of revenue may require applicants for 168.23 grants under this section to provide any information the 168.24 commissioner deems appropriate. The commissioner shall 168.25 calculate the amount under paragraph (a), clause (2), based on 168.26 the reports for the tax increment financing district or 168.27 districts filed with the state auditor on or before August 1 of 168.28 the year before the year in which the grant is to be paid. 168.29 (c) This section applies only to deficits in tax increment 168.30 districts for which: 168.31 (1) the request for certification was made before June 2, 168.32 2001; and 168.33 (2) all timely reports have been filed with the state 168.34 auditor, as required by Minnesota Statutes, section 469.175. 168.35 (d) The commissioner shall pay the grants under this 168.36 section by December 15 of the year. 169.1 (e) For the purposes of this section "tax increments" and 169.2 "revenues derived from tax increments" have the meanings given 169.3 in Minnesota Statutes, section 469.174, subdivision 25, except 169.4 that the definition applies to all tax increment districts, 169.5 regardless of when the request for certification was made and 169.6 regardless of when the revenues were received, notwithstanding 169.7 the effective date of Minnesota Statutes, section 469.174, 169.8 subdivision 25. 169.9 Subd. 2. [APPROPRIATION.] $65,600,000 in fiscal year 2003, 169.10 $65,600,000 in fiscal year 2004, and $65,600,000 in fiscal year 169.11 2005 is appropriated to the commissioner of revenue from the 169.12 general fund to make grants under this section. The 169.13 appropriated amounts do not lapse at the end of a fiscal year. 169.14 Each amount is available until the later of when expended or 169.15 when this section expires. If the amount of grant entitlements 169.16 for a year exceeds the amount available for grants, the 169.17 commissioner shall reduce each grant proportionately so the 169.18 total does not exceed the amount available. 169.19 Subd. 3. [EXPIRATION.] This section expires on January 1, 169.20 2006. 169.21 [EFFECTIVE DATE.] This section is effective January 1, 169.22 2002, and thereafter. 169.23 Sec. 97. [INSTRUCTIONS TO REVISOR.] 169.24 In the next edition of Minnesota Statutes, the revisor of 169.25 statutes shall replace each occurrence of the phrase "net tax 169.26 capacity" with the phrase "assessed value," except for 169.27 occurrences in Minnesota Statutes, section 275.011. 169.28 [EFFECTIVE DATE.] This section is effective the day 169.29 following final enactment. 169.30 Sec. 98. [REPEALER.] 169.31 (a) Minnesota Statutes 2000, sections 126C.13, subdivision 169.32 1; 126C.18, subdivision 1; 273.13, subdivisions 21b and 24a; 169.33 273.1382; 275.078; and 275.08, subdivision 1e, are repealed 169.34 effective for taxes payable in 2002 and thereafter. 169.35 (b) Minnesota Statutes 2000, sections 273.138; 273.1399; 169.36 477A.011, subdivisions 30, 31, 32, 33, 36, and 37; and 477A.03, 170.1 subdivision 4, are repealed for aids payable in 2002 and 170.2 thereafter. 170.3 (c) Minnesota Statutes 2000, section 275.065, subdivision 170.4 3a, is repealed. 170.5 (d) Minnesota Statutes 2000, section 282.01, subdivisions 170.6 1c, 1d, and 1e, are repealed for deeds issued on or after July 170.7 1, 2001. 170.8 (e) Minnesota Statutes 2000, sections 270.31; 270.32; 170.9 270.33; 270.34; 270.35; 270.36; 270.37; 270.38; and 270.39, are 170.10 repealed effective for taxes payable in 2003 and thereafter. 170.11 [EFFECTIVE DATE.] This section is effective the day 170.12 following final enactment. 170.13 ARTICLE 5 170.14 SALES AND USE TAX REFORM 170.15 Section 1. Minnesota Statutes 2000, section 289A.11, 170.16 subdivision 1, is amended to read: 170.17 Subdivision 1. [RETURN REQUIRED.]Except as provided in170.18section 289A.18, subdivision 4,For themonthperiod in which 170.19 taxes imposed by chapter 297A are payable, or for which a return 170.20 is due, a return for the preceding reporting period must be 170.21 filed with the commissioner in the form and manner the 170.22 commissioner prescribes. A person making sales at retail at two 170.23 or more places of business may file a consolidated return 170.24 subject to rules prescribed by the commissioner. In computing 170.25 the dollar amount of items on the return, the amounts are 170.26 rounded off to the nearest whole dollar, disregarding amounts 170.27 less than 50 cents and increasing amounts of 50 cents to 99 170.28 cents to the next highest dollar. 170.29 Notwithstanding this subdivision, a person who is not 170.30 required to hold a sales tax permit under chapter 297A and who 170.31 makes annual purchases of less than $18,500 that are subject to 170.32 the use tax imposed by section 297A.14, may file an annual use 170.33 tax return on a form prescribed by the commissioner. If a 170.34 person who qualifies for an annual use tax reporting period is 170.35 required to obtain a sales tax permit or makes use tax purchases 170.36 in excess of $18,500 during the calendar year, the reporting 171.1 period must be considered ended at the end of the month in which 171.2 the permit is applied for or the purchase in excess of $18,500 171.3 is made and a return must be filed for the preceding reporting 171.4 period. 171.5 [EFFECTIVE DATE.] This section is effective for returns due 171.6 after January 1, 2003. 171.7 Sec. 2. Minnesota Statutes 2000, section 289A.18, 171.8 subdivision 4, as amended by Laws 2001, chapter 7, section 56, 171.9 is amended to read: 171.10 Subd. 4. [SALES AND USE TAX RETURNS.] (a) Sales and use 171.11 tax returns must be filed on or before the 20th day of the month 171.12 following the close of the preceding reporting period, except 171.13 that annual use tax returns provided for under section 289A.11, 171.14 subdivision 1, must be filed by April 15 following the close of 171.15 the calendar year, in the case of individuals. Annual use tax 171.16 returns of businesses, including sole proprietorships, and 171.17 annual sales tax returns must be filed by February 5 following 171.18 the close of the calendar year. 171.19 (b)Except for the return for the June reporting period,171.20which is due on the following August 25,Returns filed by 171.21 retailers required to remit liabilities by means of funds 171.22 transfer under section 289A.20, subdivision 4, 171.23 paragraph(c)(b), are due on or before the 25th day of the 171.24 month following the close of the preceding reporting period. 171.25 (c) If a retailer has an average sales and use tax 171.26 liability, including local sales and use taxes administered by 171.27 the commissioner, equal to or less than $500 per month in any 171.28 quarter of a calendar year, and has substantially complied with 171.29 the tax laws during the preceding four calendar quarters, the 171.30 retailer may request authorization to file and pay the taxes 171.31 quarterly in subsequent calendar quarters. The authorization 171.32 remains in effect during the period in which the retailer's 171.33 quarterly returns reflect sales and use tax liabilities of less 171.34 than $1,500 and there is continued compliance with state tax 171.35 laws. 171.36 (d) If a retailer has an average sales and use tax 172.1 liability, including local sales and use taxes administered by 172.2 the commissioner, equal to or less than $100 per month during a 172.3 calendar year, and has substantially complied with the tax laws 172.4 during that period, the retailer may request authorization to 172.5 file and pay the taxes annually in subsequent years. The 172.6 authorization remains in effect during the period in which the 172.7 retailer's annual returns reflect sales and use tax liabilities 172.8 of less than $1,200 and there is continued compliance with state 172.9 tax laws. 172.10 (e) The commissioner may also grant quarterly or annual 172.11 filing and payment authorizations to retailers if the 172.12 commissioner concludes that the retailers' future tax 172.13 liabilities will be less than the monthly totals identified in 172.14 paragraphs (c) and (d). An authorization granted under this 172.15 paragraph is subject to the same conditions as an authorization 172.16 granted under paragraphs (c) and (d). 172.17 (f) A taxpayer who is a materials supplier may report gross 172.18 receipts either on: 172.19 (1) the cash basis as the consideration is received; or 172.20 (2) the accrual basis as sales are made. 172.21 As used in this paragraph, "materials supplier" means a person 172.22 who provides materials for the improvement of real property; who 172.23 is primarily engaged in the sale of lumber and building 172.24 materials-related products to owners, contractors, 172.25 subcontractors, repairers, or consumers; who is authorized to 172.26 file a mechanics lien upon real property and improvements under 172.27 chapter 514; and who files with the commissioner an election to 172.28 file sales and use tax returns on the basis of this paragraph. 172.29 [EFFECTIVE DATE.] This section is effective for returns due 172.30 after January 1, 2003. 172.31 Sec. 3. Minnesota Statutes 2000, section 289A.20, 172.32 subdivision 4, is amended to read: 172.33 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 172.34 chapter 297A are due and payable to the commissioner monthly on 172.35 or before the 20th day of the month following the month in which 172.36 the taxable event occurred, or following another reporting 173.1 period as the commissioner prescribes or as allowed under 173.2 section 289A.18, subdivision 4, paragraph (f), except that use 173.3 taxes due on an annual use tax return as provided under section 173.4 289A.11, subdivision 1, are payable by April 15 following the 173.5 close of the calendar year. 173.6 (b)A vendor having a liability of $120,000 or more during173.7a fiscal year ending June 30 must remit the June liability for173.8the next year in the following manner:173.9(1) Two business days before June 30 of the year, the173.10vendor must remit 62 percent of the estimated June liability to173.11the commissioner.173.12(2) On or before August 14 of the year, the vendor must pay173.13any additional amount of tax not remitted in June.173.14(c)A vendor having a liability of $120,000 or more during 173.15 a fiscal year ending June 30 must remit all liabilities on 173.16 returns due for periods beginning in the subsequent calendar 173.17 year by means of a funds transfer as defined in section 173.18 336.4A-104, paragraph (a). The funds transfer payment date, as 173.19 defined in section 336.4A-401, must be on or before the 14th day 173.20 of the month following the month in which the taxable event 173.21 occurred, or on or before the 14th day of the month following 173.22 the month in which the sale is reported under section 289A.18, 173.23 subdivision 4, except for 62 percent of the estimated June173.24liability, which is due two business days before June 30. The173.25remaining amount of the June liability is due on August 14. If 173.26 the date the tax is due is not a funds transfer business day, as 173.27 defined in section 336.4A-105, paragraph (a), clause (4), the 173.28 payment date must be on or before the funds transfer business 173.29 day next following the date the tax is due. 173.30(d)(c) If the vendor required to remit by electronic funds 173.31 transfer as provided in paragraph(c)(b) is unable due to 173.32 reasonable cause to determine the actual sales and use tax due 173.33 on or before the due date for payment, the vendor may remit an 173.34 estimate of the tax owed using one of the following options: 173.35 (1) 100 percent of the tax reported on the previous month's 173.36 sales and use tax return; 174.1 (2) 100 percent of the tax reported on the sales and use 174.2 tax return for the same month in the previous calendar year; or 174.3 (3) 95 percent of the actual tax due. 174.4 Any additional amount of tax that is not remitted on or 174.5 before the due date for payment, must be remitted with the 174.6 return. If a vendor fails to remit the actual liability or does 174.7 not remit using one of the estimate options by the due date for 174.8 payment, the vendor must remit actual liability as provided in 174.9 paragraph(c)(b) in all subsequent periods.This paragraph174.10does not apply to the June sales and use tax liability.174.11 [EFFECTIVE DATE.] This section is effective for taxes due 174.12 after January 1, 2003. 174.13 Sec. 4. Minnesota Statutes 2000, section 289A.56, 174.14 subdivision 4, is amended to read: 174.15 Subd. 4. [CAPITAL EQUIPMENT REFUNDS;REFUNDS TO 174.16 PURCHASERS.]Notwithstanding subdivision 3, for refunds payable174.17under section 297A.15, subdivision 5, interest is computed from174.18the date the refund claim is filed with the commissioner.For 174.19 refunds payable under section 289A.50, subdivision 2a, interest 174.20 is computed from the 20th day of the month following the month 174.21 of the invoice date for the purchase which is the subject of the 174.22 refund, if the refund claim includes a detailed schedule of 174.23 purchases made during each of the periods in the claim. If the 174.24 refund claim submitted does not contain a schedule reflecting 174.25 purchases made in each period, interest is computed from the 174.26 date the claim was filed. 174.27 [EFFECTIVE DATE.] This section is effective for capital 174.28 equipment purchased after December 31, 2001. 174.29 Sec. 5. Minnesota Statutes 2000, section 289A.60, 174.30 subdivision 21, as amended by Laws 2001, chapter 7, section 60, 174.31 is amended to read: 174.32 Subd. 21. [PENALTY FOR FAILURE TO MAKE PAYMENT BY 174.33 ELECTRONIC FUNDS TRANSFER.] In addition to other applicable 174.34 penalties imposed by this section, after notification from the 174.35 commissioner to the taxpayer that payments are required to be 174.36 made by means of electronic funds transfer under section 175.1 289A.20, subdivision 2, paragraph (e), or 4, paragraph(c)(b), 175.2 or 289A.26, subdivision 2a, and the payments are remitted by 175.3 some other means, there is a penalty in the amount of five 175.4 percent of each payment that should have been remitted 175.5 electronically. The penalty can be abated under the abatement 175.6 procedures prescribed in section 270.07, subdivision 6, if the 175.7 failure to remit the payment electronically is due to reasonable 175.8 cause. 175.9 Sec. 6. Minnesota Statutes 2000, section 297A.61, 175.10 subdivision 3, is amended to read: 175.11 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 175.12 include, but are not limited to, each of the transactions listed 175.13 in this subdivision. 175.14 (b) Sale and purchase include any transfer of title or 175.15 possession, or both, of tangible personal property, whether 175.16 absolutely or conditionally, and the leasing of or the granting 175.17 of a license to use or consume, for a consideration, tangible 175.18 personal property, other than a manufactured home used for 175.19 residential purposes for a continuous period of 30 days or more. 175.20 (c) Sale and purchase include the production, fabrication, 175.21 printing, or processing of tangible personal property for a 175.22 consideration for consumers who furnish either directly or 175.23 indirectly the materials used in the production, fabrication, 175.24 printing, or processing. 175.25 (d) Sale and purchase include the furnishing, preparing, or 175.26 serving for a consideration of food or drinks. Notwithstanding 175.27 section 297A.67, subdivision 2, taxable food or drinks include, 175.28 but are not limited to, the following: 175.29 (1) food or drinks sold by the retailer for immediate 175.30 consumption on the retailer's premises. Food and drinks sold 175.31 within a building or grounds that require an admission charge 175.32 for entrance are presumed to be sold for consumption on the 175.33 premises; 175.34 (2) food or drinks prepared by the retailer for immediate 175.35 consumption either on or off the retailer's premises. For 175.36 purposes of this subdivision, "food or drinks prepared for 176.1 immediate consumption" means any food product upon which an act 176.2 of preparation including, but not limited to, cooking, mixing, 176.3 sandwich making, blending, heating, or pouring has been 176.4 performed by the retailer so the food product may be immediately 176.5 consumed by the purchaser; 176.6 (3) ice cream, ice milk, frozen yogurt products, or frozen 176.7 novelties sold in single or individual servings including, but 176.8 not limited to, cones, sundaes, and snow cones; 176.9 (4) soft drinks and other beverages, including all 176.10 carbonated and noncarbonated beverages or drinks sold in liquid 176.11 form, but not including beverages or drinks which contain milk 176.12 or milk products, beverages or drinks containing 15 or more 176.13 percent fruit juice, and noncarbonated and noneffervescent 176.14 bottled water sold in individual containers of one-half gallon 176.15 or more in size; 176.16 (5) gum, candy, and candy products; 176.17 (6) ice; 176.18 (7) all food sold from vending machines; 176.19 (8) all food for immediate consumption sold from concession 176.20 stands and vehicles; 176.21 (9) party trays; 176.22 (10) all meals and single servings of packaged snack food 176.23 sold in restaurants and bars; and 176.24 (11) bakery products that are: 176.25 (i) prepared by the retailer for consumption on the 176.26 retailer's premises; 176.27 (ii) sold at a place that charges admission; 176.28 (iii) sold from vending machines; or 176.29 (iv) sold in single or individual servings from concession 176.30 stands, vehicles, bars, and restaurants. 176.31 For purposes of this paragraph, "single or individual 176.32 servings" does not include products when sold in bulk containers 176.33 or bulk packaging. 176.34 For purposes of this paragraph, "premises" means the total 176.35 space and facilities, including buildings, grounds, and parking 176.36 lots that are made available or that are available for use by 177.1 the retailer or customer for the purpose of sale or consumption 177.2 of prepared food and drinks. The premises of a caterer is the 177.3 place where the catered food or drinks are served. 177.4 (e) A sale and a purchase includes the furnishing for a 177.5 consideration of sewer services, electricity, gas, water, or 177.6 steam for use or consumption within this stateor local exchange177.7telephone service, intrastate toll service, and interstate toll177.8service, if that service originates from and is charged to a177.9telephone located in this state. Telephone service includes (1)177.10paging services, and (2) private communication service, as177.11defined in United States Code, title 26, section 4252(d), except177.12for private communication service purchased by an agent acting177.13on behalf of the state lottery. Telephone service does not177.14include services purchased with a prepaid telephone calling177.15card. The furnishing for a consideration of access to telephone177.16services by a hotel to its guests is a sale.The furnishing for 177.17 a consideration of items listed in this paragraph by a municipal 177.18 corporation is a sale. 177.19 (f) A sale and a purchase includes the transfer for a 177.20 consideration of computer software. 177.21 (g) A sale and a purchase includes the furnishing for a 177.22 consideration of taxable services as defined in subdivision 16. 177.23 (h) A sale and a purchase includes the furnishing for a 177.24 consideration of tangible personal property or taxable services 177.25 by the United States or any of its agencies or 177.26 instrumentalities, or the state of Minnesota, its agencies, 177.27 instrumentalities, or political subdivisions. 177.28 [EFFECTIVE DATE.] This section is effective for sales and 177.29 purchases occurring after December 31, 2001. 177.30 Sec. 7. Minnesota Statutes 2000, section 297A.61, 177.31 subdivision 4, is amended to read: 177.32 Subd. 4. [RETAIL SALE.] (a) A "retail sale" means a sale 177.33 for any purpose other than resale in the regular course of 177.34 business. 177.35 (b) A sale of property used by the owner only by leasing it 177.36 to others or by holding it in an effort to lease it, and put to 178.1 no use by the owner other than resale after the lease or effort 178.2 to lease, is a sale of property for resale. 178.3 (c) A sale of master computer software that is purchased 178.4 and used to make copies for sale or lease is a sale of property 178.5 for resale. 178.6 (d) A sale of building materials,and supplies, and178.7equipmenttoowners,contractors, subcontractors, or builders 178.8 who provide for the erection of buildings or the alteration, 178.9 repair, or improvement of real property is aretailsalein178.10whatever quantity sold, whether the sale is for purposes of178.11resale in the form of real property or otherwisefor resale. 178.12 (e) A sale of carpeting, linoleum, or similar floor 178.13 covering to a person who provides for installation of the floor 178.14 covering is aretailsaleand not a sale for resale since a sale178.15of floor covering which includes installation is a contract for178.16the improvement of real propertyfor resale. 178.17 (f) A sale of shrubbery, plants, sod, trees, and similar 178.18 items to a person who provides for installation of the items is 178.19 aretailsaleand not a sale for resale since a sale of178.20shrubbery, plants, sod, trees, and similar items that includes178.21installation is a contract for the improvement of real178.22propertyfor resale. 178.23(g) A sale of tangible personal property that is awarded as178.24prizes is a retail sale and is not considered a sale of property178.25for resale.178.26(h)(g) A sale of tangible personalproperty utilized or178.27employed in the furnishing or providing of services under178.28subdivision 16, paragraph (b), including, but not limited to,178.29 property given as promotional items, is a retail sale and is not 178.30 considered a sale of property for resale. 178.31(i)(h) A sale of tangible personal property used in 178.32 conducting lawful gambling under chapter 349 or the state 178.33 lottery under chapter 349A, including, but not limited to, 178.34 property given as promotional items, is a retail sale and is not 178.35 considered a sale of property for resale. 178.36(j)(i) A sale of machines, equipment, or devices that are 179.1 used to furnish, provide, or dispense goods or services, 179.2 including, but not limited to, coin-operated devices, is a 179.3 retail sale and is not considered a sale of property for resale. 179.4(k)(j) In the case of a lease, a retail sale occurs when 179.5 an obligation to make a lease payment becomes due under the 179.6 terms of the agreement or the trade practices of the lessor. 179.7(l)(k) In the case of a conditional sales contract, a 179.8 retail sale occurs upon the transfer of title or possession of 179.9 the tangible personal property. 179.10 [EFFECTIVE DATE.] This section is effective for sales and 179.11 purchases occurring after December 31, 2001. 179.12 Sec. 8. Minnesota Statutes 2000, section 297A.61, 179.13 subdivision 6, is amended to read: 179.14 Subd. 6. [USE.](a)"Use" includes the exercise of a right 179.15 or power incident to the ownership of any interest in tangible 179.16 personal property, or taxable services, purchased from a 179.17 retailer, other than the sale of that property in the regular 179.18 course of business. 179.19(b) Use includes the consumption of printed materials in179.20the creation of nontaxable advertising that is distributed,179.21either directly or indirectly, within Minnesota.179.22 [EFFECTIVE DATE.] This section is effective for sales and 179.23 purchases occurring after December 31, 2001. 179.24 Sec. 9. Minnesota Statutes 2000, section 297A.61, 179.25 subdivision 7, is amended to read: 179.26 Subd. 7. [SALES PRICE.] (a) "Sales price" means the total 179.27 consideration for a retail sale, valued in money, whether paid 179.28 in money or by barter or exchange. 179.29 (b) Sales price includes: 179.30 (1) the cost of the property sold, cost of materials used, 179.31 labor or service cost, interest, or discount allowed after the 179.32 sale is consummated; 179.33 (2)the cost ofall transportationincurred prior to the179.34time of saleand delivery charges; 179.35 (3) any amount for which credit is given by the seller to 179.36 the purchaser; 180.1 (4) charges for services that are part of a sale;or180.2 (5) any other expense whatsoever; or 180.3 (6) charges for labor or service used in installing or 180.4 applying the property sold. 180.5 (c) Sales price does not include the following: 180.6 (1) an amount allowed as credit for tangible personal 180.7 property taken in trade for resale; 180.8 (2) charges of up to 15 percent in lieu of tips if the 180.9 charges are separately stated; 180.10 (3) interest, financing, or carrying charges if the charges 180.11 are separately stated; 180.12 (4)charges for labor or services used in installing or180.13applying the property sold if the charges are separately stated;180.14(5) transportation charges if the transportation occurs180.15after the retail sale of the property if the charges are180.16separately stated;180.17(6)cash discounts allowed and taken on sales or the amount 180.18 refunded either in cash or in credit for property returned by 180.19 purchasers; 180.20(7)(5) the rental motor vehicle tax imposed under section 180.21 297A.64; or 180.22(8)(6) the amount of any tax imposed by the United States 180.23 on communications services under United States Code, title 26, 180.24 section 4251(a). 180.25(d) Notwithstanding paragraph (c), "sales price," for180.26purposes of sales of ready-mixed concrete sold from a180.27ready-mixed concrete truck, includes any transportation,180.28delivery, or other service charges, and no deduction is allowed180.29for those charges, whether or not the charges are separately180.30stated.180.31 [EFFECTIVE DATE.] This section is effective for sales and 180.32 purchases occurring after December 31, 2001. 180.33 Sec. 10. Minnesota Statutes 2000, section 297A.61, 180.34 subdivision 10, is amended to read: 180.35 Subd. 10. [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 180.36 personal property" means corporeal personal property of any 181.1 kind, including property that is to become real property as a 181.2 result of incorporation, attachment, or installation following 181.3 its acquisition. 181.4 (b) Tangible personal property includes, but is not limited 181.5 to: 181.6 (1) computer software, whether contained on tape, discs, 181.7 cards, or other devices;and181.8 (2) prepaid telephone calling cards.; 181.9 (3) tools, implements, machinery, and equipment used in a 181.10 business or production activity regardless of size, weight, or 181.11 method of attachment to real property; 181.12 (4) building materials and supplies when initially 181.13 incorporated, attached, or installed into real property; and 181.14 (5) electricity. 181.15 (c) Personal property does not include: 181.16 (1)large ponderous machinery and equipment used in a181.17business or production activity which at common law would be181.18considered to be real property;181.19(2)property which is subject to an ad valorem property 181.20 tax; 181.21(3)(2) property described in section 272.02, subdivision 181.22 9, clauses(a)(b) to (d); and181.23(4) property described in section 272.03, subdivision 2,181.24clauses (3) and (5). 181.25 [EFFECTIVE DATE.] This section is effective for sales and 181.26 purchases occurring after December 31, 2001. 181.27 Sec. 11. Minnesota Statutes 2000, section 297A.61, 181.28 subdivision 12, is amended to read: 181.29 Subd. 12. [FARM MACHINERY.] (a) "Farm machinery" means new 181.30 or used machinery, equipment, implements, accessories, and 181.31 contrivances used directly and principally in the production for 181.32 sale, but not including the processing, of livestock, dairy 181.33 animals, dairy products, poultry and poultry products, fruits, 181.34 vegetables, trees and shrubs, plants, forage, grains, and bees 181.35 and apiary products. 181.36 (b) Farm machinery includes: 182.1 (1) machinery for the preparation, seeding, or cultivation 182.2 of soil for growing agricultural crops and sod, for the 182.3 harvesting and threshing of agricultural products, or for the 182.4 harvesting or mowing of sod; 182.5 (2) barn cleaners, milking systems, grain dryers, automatic 182.6 feeding systems, and similar installations, whether or not the182.7equipment is installed by the seller and becomes part of the182.8real property; 182.9 (3) irrigation equipment sold for exclusively agricultural 182.10 use, including pumps, pipe fittings, valves, sprinklers, and 182.11 other equipment necessary to the operation of an irrigation 182.12 system when sold as part of an irrigation system, whether or not182.13the equipment is installed by the seller and becomes part of the182.14real property; 182.15 (4) logging equipment, including chain saws used for 182.16 commercial logging; 182.17 (5) fencing used for the containment of farmed cervidae, as 182.18 defined in section 17.451, subdivision 2; 182.19 (6) primary and backup generator units used to generate 182.20 electricity for the purpose of operating farm machinery, as 182.21 defined in this subdivision, or providing light or space heating 182.22 necessary for the production of livestock, dairy animals, dairy 182.23 products, or poultry and poultry products; 182.24 (7) aquaculture production equipment as defined in 182.25 subdivision 13;and182.26 (8) equipment used for maple syrup harvesting.; 182.27 (9) repair and replacement parts, including tires, and 182.28 accessories attached to the farm machinery; and 182.29 (10) animal handling equipment, including squeeze chutes 182.30 and portable farrowing crates. 182.31 (c) Farm machinery does not include: 182.32 (1)repair or replacement parts;182.33(2)tools, shop equipment, grain bins, feed bunks, fencing 182.34 material except fencing material covered by paragraph (b), 182.35 clause (5), communication equipment, and other farm supplies; 182.36(3)(2) motor vehicles taxed under chapter 297B; 183.1(4)(3) all-terrain vehicles, snowmobiles, or snow blowers; 183.2 or 183.3(5)(4) lawn mowers except those used in the production of 183.4 sod for sale, or garden-type tractors or garden tillers. 183.5 [EFFECTIVE DATE.] This section is effective for sales and 183.6 purchases occurring after December 31, 2001. 183.7 Sec. 12. Minnesota Statutes 2000, section 297A.61, 183.8 subdivision 16, is amended to read: 183.9 Subd. 16. [TAXABLE SERVICES; SERVICE.] (a) "Taxable 183.10 services" means the services listed in this subdivision and 183.11 other services listed in subdivision 3. 183.12 (b)Taxable services includes the granting of the privilege183.13of admission to places of amusement, recreational areas, or183.14athletic events, and the making available of amusement devices,183.15tanning facilities, reducing salons, steam baths, turkish baths,183.16health clubs, and spas or athletic facilities.183.17(c) Taxable services includes the furnishing of lodging and183.18related services by a hotel, rooming house, resort, campground,183.19motel, or trailer camp and the granting of any similar license183.20to use real property other than the renting or leasing thereof183.21for a continuous period of 30 days or more.183.22(d) Taxable services includes the furnishing of cable183.23television services or similar television services, including,183.24but not limited to, charges for basic, premium, pay-per-view,183.25and any other similar service.183.26(e) Taxable services includes the furnishing of parking183.27services, whether on a contractual, hourly, or other periodic183.28basis, except for parking at a meter.The term "service" means 183.29 all activities engaged in for other persons for consideration 183.30 that involve predominantly the performance of a service as 183.31 distinguished from selling property. 183.32 (c) The following services are not included within the 183.33 definition of taxable services: 183.34 (1) services performed by an employee for an employer; 183.35 (2) the sale or use of services between divisions within 183.36 the same corporation; 184.1 (3) services that partners who are natural persons render 184.2 to their partnerships, unless the partner renders the services 184.3 to the partnership in the capacity of an independent contractor; 184.4 (4) services performed by a partnership or association for 184.5 another partnership or association if one of the entities owns 184.6 or controls more than 80 percent of the voting power of the 184.7 equity interest in the other entity; and 184.8 (5) services performed between members of an affiliated 184.9 group of corporations. For purposes of this section, 184.10 "affiliated group of corporations" includes those entities that 184.11 would be classified as members of an affiliated group under 184.12 United States Code, title 26, section 1504, and that are 184.13 eligible to file a consolidated tax return for federal purposes. 184.14 (d) Taxable services includes the furnishing of 184.15 communications services which include telecommunications 184.16 services, cable television services, and direct satellite 184.17 services. Telecommunications services are taxed to the extent 184.18 allowed by federal law, if those services 184.19 (1)(i) originated in this state and terminated in this 184.20 state; or (ii) originated in this state and terminated outside 184.21 this state and the service is charged to a telephone number or 184.22 customer located in this state or to the account of any 184.23 transmission instrument in this state; or (iii) originated 184.24 outside this state and terminated in this state and the service 184.25 is charged to a telephone number or customer located in this 184.26 state or to the account of any transmission instrument in this 184.27 state; or 184.28 (2) are rendered by providing a private communications 184.29 service for which the customer has one or more locations within 184.30 Minnesota connected to the service and the service is charged to 184.31 a telephone number or customer located in this state or to the 184.32 account of any transmission instrument in this state. 184.33 All charges for mobile telecommunications services, as 184.34 defined in United States Code, title 4, section 124, are deemed 184.35 to be provided by the customer's home service provider and 184.36 sourced to the customer's place of primary use and are subject 185.1 to tax based upon the customer's place of primary use in 185.2 accordance with the Mobile Telecommunications Sourcing Act, 185.3 United States Code, title 4, sections 116 to 126. 185.4(f)(e) Taxable services includes the granting of 185.5 membership in a club, association, or other organization if: 185.6 (1) the club, association, or other organization makes 185.7 available for the use of its members sports and athletic 185.8 facilities, without regard to whether a separate charge is 185.9 assessed for use of the facilities; and 185.10 (2) use of the sports and athletic facility is not made 185.11 available to the general public on the same basis as it is made 185.12 available to members. 185.13 Granting of membership means both one-time initiation fees and 185.14 periodic membership dues. Sports and athletic facilities 185.15 include golf courses; tennis, racquetball, handball, and squash 185.16 courts; basketball and volleyball facilities; running tracks; 185.17 exercise equipment; swimming pools; and other similar athletic 185.18 or sports facilities. 185.19(g) Taxable services includes the furnishing of the185.20following services as provided in this paragraph:185.21(1) laundry and dry cleaning services including cleaning,185.22pressing, repairing, altering, and storing clothes, linen185.23services and supply, cleaning and blocking hats, and carpet,185.24drapery, upholstery, and industrial cleaning. Laundry and dry185.25cleaning services do not include services provided by coin185.26operated facilities operated by the customer;185.27(2) motor vehicle washing, waxing, and cleaning services,185.28including services provided by coin operated facilities operated185.29by the customer, and rustproofing, undercoating, and towing of185.30motor vehicles;185.31(3) building and residential cleaning, maintenance, and185.32disinfecting and exterminating services;185.33(4) detective, security, burglar, fire alarm, and armored185.34car services; but not including services performed within the185.35jurisdiction they serve by off-duty licensed peace officers as185.36defined in section 626.84, subdivision 1, or services provided186.1by a nonprofit organization for monitoring and electronic186.2surveillance of persons placed on in-home detention pursuant to186.3court order or under the direction of the Minnesota department186.4of corrections;186.5(5) pet grooming services;186.6(6) lawn care, fertilizing, mowing, spraying and sprigging186.7services; garden planting and maintenance; tree, bush, and shrub186.8pruning, bracing, spraying, and surgery; indoor plant care;186.9tree, bush, shrub, and stump removal; and tree trimming for186.10public utility lines. Services performed under a construction186.11contract for the installation of shrubbery, plants, sod, trees,186.12bushes, and similar items are not taxable;186.13(7) massages, except when provided by a licensed health186.14care facility or professional or upon written referral from a186.15licensed health care facility or professional for treatment of186.16illness, injury, or disease; and186.17(8) the furnishing of lodging, board, and care services for186.18animals in kennels and other similar arrangements, but excluding186.19veterinary and horse boarding services.186.20The services listed in this paragraph are taxable under186.21section 297A.62 if the service is performed wholly within186.22Minnesota or if the service is performed partly within and186.23partly outside Minnesota and the greater proportion of the186.24service is performed in Minnesota, based on the cost of186.25performance. In applying the provisions of this chapter, the186.26terms "tangible personal property" and "sales at retail" include186.27taxable services and the provision of taxable services, unless186.28specifically provided otherwise. Services performed by an186.29employee for an employer are not taxable. Services performed by186.30a partnership or association for another partnership or186.31association are not taxable if one of the entities owns or186.32controls more than 80 percent of the voting power of the equity186.33interest in the other entity. Services performed between186.34members of an affiliated group of corporations are not taxable.186.35For purposes of this section, "affiliated group of corporations"186.36includes those entities that would be classified as members of187.1an affiliated group under United States Code, title 26, section187.21504, and that are eligible to file a consolidated tax return187.3for federal income tax purposes.187.4 (f) Taxable services includes the following services 187.5 enumerated in North American Industry Classification System, 187.6 1997, as prepared by the Office of Management and Budget, 187.7 Executive Office of the President: special trade contractors 187.8 (subsector no. 235); taxi and limousine service (industry group 187.9 no. 4853); scenic and sightseeing transportation (subsector no. 187.10 487); motor vehicle towing (industry no. 48841); couriers and 187.11 messengers (subsector no. 492); warehousing and storage 187.12 (subsector no. 493); information (sector no. 51); security 187.13 brokerage (industry no. 52312); investment advice (industry no. 187.14 52393); insurance-related activities (industry no. 524291); 187.15 lessors of miniwarehouse and self-storage units (industry no. 187.16 531130); offices of real estate agents and brokers (industry 187.17 group no. 5312); activities related to real estate (industry 187.18 group no. 5313); professional, scientific, and technical 187.19 services (subsector no. 541); administrative and support 187.20 services (subsector no. 561); septic tank and related services 187.21 (industry no. 562991); amusement, entertainment, and recreation 187.22 services (sector no. 71), except gambling services provided 187.23 under industry group no. 7132; accommodations services 187.24 (subsector no. 721), except contracts or leases to use real 187.25 property for a continuous period of 30 days or more; repair and 187.26 maintenance services (subsector no. 811); personal and laundry 187.27 services (subsector no. 812); massage services, including 187.28 reflexology, shiatsu and other forms of alternative medical 187.29 treatment, except when provided by a licensed health care 187.30 facility or licensed health care professional or upon written 187.31 referral from a licensed health care facility or professional 187.32 for treatment of illness, injury, or disease; and leases or 187.33 rentals of office space, meeting rooms, or convention and trade 187.34 show space for periods of 29 days or less. 187.35 (g) Taxable services includes the following services 187.36 enumerated in the North American Industry Classification System, 188.1 1997, as prepared by the Office of Management and Budget, 188.2 Executive Office of the President: air transportation 188.3 (subsector no. 481); rail transportation (subsector no. 482); 188.4 water transportation (subsector no. 483); truck transportation 188.5 (subsector no. 484); pipeline transportation (subsector no. 188.6 486); charter bus industry (industry group no. 4855); and other 188.7 transit and group passenger transportation (industry group no. 188.8 4859), except special needs transportation provided under 188.9 industry group no. 485991. The services listed in this 188.10 paragraph are taxed to the extent allowed by the United States 188.11 Constitution and the laws of the United States. The tax applies 188.12 only to the transportation of tangible personal property if both 188.13 the origin and destination of the tangible personal property are 188.14 within this state and to the transportation of passengers if the 188.15 passenger boards and exits the mode of transportation within 188.16 this state. 188.17 [EFFECTIVE DATE.] This section is effective for sales and 188.18 purchases occurring after December 31, 2001. 188.19 Sec. 13. Minnesota Statutes 2000, section 297A.61, is 188.20 amended by adding a subdivision to read: 188.21 Subd. 24. [TELECOMMUNICATIONS SERVICES.] (a) 188.22 "Telecommunications services" means the transmission, 188.23 conveyance, or routing of voice, data, audio, video, or any 188.24 other information or signals to a point, or between or among 188.25 points, by or through any electronic, satellite, optical, 188.26 microwave, or other medium or method now in existence or 188.27 hereafter devised, regardless of the protocol used for such 188.28 transmission, conveyance, or routing. 188.29 (b) Telecommunications services includes the furnishing for 188.30 consideration of access to telephone services by a hotel to its 188.31 guests. 188.32 (c) Telecommunications services do not include: 188.33 (1) services purchased with a prepaid telephone calling 188.34 card; 188.35 (2) private communication service purchased by an agent 188.36 acting on behalf of the state lottery; 189.1 (3) information services; and 189.2 (4) purchases of telecommunications when the purchaser uses 189.3 the purchased services as a component part of or integrates such 189.4 service into another telecommunications service that is sold by 189.5 the purchaser in the normal course of business. 189.6 (d) For purposes of this subdivision, "information 189.7 services" means the offering of the capability for generating, 189.8 acquiring, storing, transforming, processing, retrieving, 189.9 utilizing, or making available information. 189.10 [EFFECTIVE DATE.] This section is effective for sales and 189.11 purchases occurring after December 31, 2001. 189.12 Sec. 14. Minnesota Statutes 2000, section 297A.61, is 189.13 amended by adding a subdivision to read: 189.14 Subd. 25. [CABLE TELEVISION SERVICE.] "Cable television 189.15 service" means the transmission of video, audio, or other 189.16 programming service to purchasers, and the subscriber 189.17 interaction, if any, required for the selection or use of the 189.18 programming service, regardless of whether the programming is 189.19 transmitted over facilities owned or operated by the cable 189.20 service provider or over facilities owned or operated by one or 189.21 more dealers of communications services. The term includes 189.22 point-to-multipoint distribution services by which programming 189.23 is transmitted or broadcast by microwave or other equipment 189.24 directly to the subscriber's premises. The term includes basic, 189.25 extended, premium, pay-per-view, digital, and music services. 189.26 [EFFECTIVE DATE.] This section is effective for sales and 189.27 purchases occurring after December 31, 2001. 189.28 Sec. 15. Minnesota Statutes 2000, section 297A.61, is 189.29 amended by adding a subdivision to read: 189.30 Subd. 26. [PRIVATE COMMUNICATION SERVICE.] "Private 189.31 communication service" means a communication service furnished 189.32 to a subscriber which entitles the subscriber to: 189.33 (1) exclusive or priority use of any communication channel 189.34 or group of channels; 189.35 (2) the use of an intercommunication system for the 189.36 subscriber's stations, or regardless of whether the channel, 190.1 group of channels, or intercommunication system may be connected 190.2 through switching; 190.3 (3) the switching capacity, extension lines and stations, 190.4 or other associated services that are provided in connection 190.5 with, and are necessary or unique to the use of, channels or 190.6 systems described in clause (1); or 190.7 (4) any combination of tunneling, encryption, 190.8 authentication, and access control technologies and services 190.9 used to carry traffic over the Internet, a managed Internet 190.10 provider network or provider's backbone. 190.11 [EFFECTIVE DATE.] This section is effective for sales and 190.12 purchases occurring after December 31, 2001. 190.13 Sec. 16. Minnesota Statutes 2000, section 297A.61, is 190.14 amended by adding a subdivision to read: 190.15 Subd. 27. [DIRECT SATELLITE SERVICE.] "Direct satellite 190.16 service" means programming transmitted or broadcast by satellite 190.17 directly to the subscriber's premises without the use of ground 190.18 receiving or distribution equipment, except at the subscriber's 190.19 premises or in the uplink process to the satellite. 190.20 [EFFECTIVE DATE.] This section is effective for sales and 190.21 purchases occurring after December 31, 2001. 190.22 Sec. 17. Minnesota Statutes 2000, section 297A.62, 190.23 subdivision 1, is amended to read: 190.24 Subdivision 1. [GENERALLY.] Except as otherwise provided 190.25 in subdivision 2 or 3 or in this chapter, a sales tax of6.5six 190.26 percent is imposed on the gross receipts from retail sales as 190.27 defined in section 297A.61, subdivision 4, made in this state or 190.28 to a destination in this state by a person who is required to 190.29 have or voluntarily obtains a permit under section 297A.83, 190.30 subdivision 1. 190.31 [EFFECTIVE DATE.] This section is effective for sales and 190.32 purchases occurring after December 31, 2001. 190.33 Sec. 18. Minnesota Statutes 2000, section 297A.64, 190.34 subdivision 3, is amended to read: 190.35 Subd. 3. [ADMINISTRATION.] The retailer shall report and 190.36 pay the tax imposed in subdivision 1 to the commissioner of 191.1 revenue with the taxes imposed in this chapter. The tax imposed 191.2 in subdivision 1and the fee imposed in subdivision 2 areis 191.3 subject to the same interest, penalty, and other provisions 191.4 provided for sales and use taxes under chapter 289A and this 191.5 chapter. The commissioner has the same powers to assess and 191.6 collect the taxand feethatareis given the commissioner in 191.7 chapters 270 and 289A and this chapter to assess and collect 191.8 sales and use tax. 191.9 Sec. 19. Minnesota Statutes 2000, section 297A.64, 191.10 subdivision 4, is amended to read: 191.11 Subd. 4. [EXEMPTIONS.](a)The taxand the feeimposed by 191.12 this sectiondodoes not apply to a lease or rental of (1) a 191.13 vehicle to be used by the lessee to provide a licensed taxi 191.14 service; (2) a hearse or limousine used in connection with a 191.15 burial or funeral service; or (3) a van designed or adapted 191.16 primarily for transporting property rather than passengers. 191.17(b) The lessor may elect not to charge the fee imposed in191.18subdivision 2 if in the previous calendar year the lessor had no191.19more than 20 vehicles available for lease that would have been191.20subject to tax under this section, or no more than $50,000 in191.21gross receipts that would have been subject to tax under this191.22section.191.23 Sec. 20. [297A.668] [SOURCING OF SALE; SITUS IN THIS 191.24 STATE.] 191.25 Subdivision 1. [SOURCING RULES.] (a) The following 191.26 provisions apply regardless of the characterization of a product 191.27 as tangible personal property, a digital good, or a service; but 191.28 do not apply to telecommunications services, or to sales of 191.29 motor vehicles, watercraft, modular homes, manufactured homes, 191.30 mobile homes, or aircraft. These provisions only apply to 191.31 determine a seller's obligation to pay or collect and remit a 191.32 sales or use tax with respect to the seller's sale of a 191.33 product. These provisions do not affect the obligation of a 191.34 seller as purchaser to remit tax on the use of the product. 191.35 (b) When the product is received by the purchaser at a 191.36 business location of the seller, the sale is sourced to that 192.1 business location. 192.2 (c) When the product is not received by the purchaser at a 192.3 business location of the seller, the sale is sourced to the 192.4 location where receipt by the purchaser or the donee designated 192.5 by the purchaser occurs, including the location indicated by 192.6 instructions for delivery to the purchasers or the purchaser's 192.7 donee, known to the seller. 192.8 (d) When paragraphs (b) and (c) do not apply, the sale is 192.9 sourced to the location indicated by an address for the 192.10 purchaser that is available from the business records of the 192.11 seller that are maintained in the ordinary course of the 192.12 seller's business when use of this address does not constitute 192.13 bad faith. 192.14 (e) When paragraphs (b), (c), and (d) do not apply, the 192.15 sale is sourced to the location indicated by an address for the 192.16 purchaser obtained during the consummation of the sale, 192.17 including the address of a purchaser's payment instrument if no 192.18 other address is available, when use of this address does not 192.19 constitute bad faith. 192.20 (f) When paragraphs (b), (c), (d), and (e) do not apply, 192.21 including the circumstance where the seller is without 192.22 sufficient information to apply the previous paragraphs, then 192.23 the location is determined by the address from which tangible 192.24 personal property was shipped, from which the digital good was 192.25 first available for transmission by the seller, or from which 192.26 the service was provided. 192.27 Subd. 2. [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 192.28 provisions of subdivision 1, a business purchaser that is not a 192.29 holder of a direct pay permit and that knows at the time of its 192.30 purchase of a digital good or service that the digital good or 192.31 service will be concurrently available for use in more than one 192.32 taxing jurisdiction shall deliver to the seller in conjunction 192.33 with its purchase a multiple points of use exemption certificate 192.34 disclosing this fact. 192.35 (b) Upon receipt of the multiple points of use exemption 192.36 certificate, the seller is relieved of the obligation to 193.1 collect, pay, or remit the applicable tax and the purchaser is 193.2 obligated to collect, pay, or remit the applicable tax on a 193.3 direct pay basis. 193.4 (c) A purchaser delivering the multiple points of use 193.5 exemption certificate may use any reasonable, but consistent and 193.6 uniform, method of apportionment that is supported by the 193.7 purchaser's business records as they exist at the time of the 193.8 consummation of the sale. 193.9 (d) The multiple points of use exemption certificate 193.10 remains in effect for all future sales by the seller to the 193.11 purchaser until it is revoked in writing. 193.12 (e) A holder of a direct pay permit is not required to 193.13 deliver a multiple points or use exemption certificate to the 193.14 seller. A direct pay permit holder shall follow the provisions 193.15 of paragraph (c) in apportioning the tax due on a digital good 193.16 or a service that will be concurrently available for use in more 193.17 than one taxing jurisdiction. 193.18 Subd. 3. [DEFINITION OF TERMS.] For purposes of this 193.19 section, the terms "receive" and "receipt" mean taking 193.20 possession of tangible personal property, making first use of 193.21 services, or taking possession or making first use of digital 193.22 goods, whichever occurs first. The terms receive and receipt do 193.23 not include possession by a carrier for hire on behalf of the 193.24 purchaser. 193.25 [EFFECTIVE DATE.] This section is effective for sales and 193.26 purchases occurring after December 31, 2001. 193.27 Sec. 21. Minnesota Statutes 2000, section 297A.67, 193.28 subdivision 5, is amended to read: 193.29 Subd. 5. [EXEMPT MEALS AT SCHOOLS.]Meals and lunchesFood 193.30 and drinks furnished, prepared, servedat, or contracted for by 193.31 public and private schools, universities, or collegesqualifying 193.32 under the definition contained in section 120A.22, subdivision 193.33 4, are exempt. 193.34 [EFFECTIVE DATE.] This section is effective for sales and 193.35 purchases occurring after December 31, 2001. 193.36 Sec. 22. Minnesota Statutes 2000, section 297A.67, 194.1 subdivision 7, is amended to read: 194.2 Subd. 7. [MEDICINES;MEDICALEYEGLASSES; PROSTHETIC 194.3 DEVICES.] (a) Prescribed drugs and medicine, and insulin, 194.4 intended for internal or external use, in the cure, mitigation, 194.5 treatment, or prevention of illness or disease in human beings 194.6 are exempt. "Prescribed drugs and medicine" includes 194.7 over-the-counter drugs or medicine prescribed by a licensed 194.8 physician. 194.9 (b)Nonprescription medicines consisting principally194.10(determined by the weight of all ingredients) of analgesics that194.11are approved by the United States Food and Drug Administration194.12for internal use by human beings are exempt. For purposes of194.13this subdivision, "principally" means greater than 50 percent194.14analgesics by weight.194.15(c)Prescription glasses, hospital beds, fever194.16thermometers, reusable finger-pricking devices for the194.17extraction of blood, blood glucose monitoring machines, and194.18other diagnostic agents used in diagnosing, monitoring, or194.19treating diabetes, and therapeuticand prosthetic devices are 194.20 exempt."Therapeutic devices" means devices that are attached194.21or applied to the human body to cure, heal, or alleviate injury,194.22illness, or disease, either directly or by administering a194.23curative agent."Prosthetic devices" means devices that replace 194.24 injured, diseased, or missing parts of the human body, either 194.25 temporarily or permanently. 194.26 [EFFECTIVE DATE.] This section is effective for sales and 194.27 purchases occurring after December 31, 2001. 194.28 Sec. 23. Minnesota Statutes 2000, section 297A.68, 194.29 subdivision 2, is amended to read: 194.30 Subd. 2. [MATERIALS AND SERVICES USED OR CONSUMED IN 194.31 INDUSTRIAL PRODUCTION.] (a) Materialsstored, used, or194.32consumedand services used or consumed directly in industrial 194.33 production of personal property intended to be sold ultimately 194.34 at retail are exempt, whether or not the item so used becomes an 194.35 ingredient or constituent part of the property produced. 194.36 Materials that qualify for this exemption include, but are not 195.1 limited to, the following: 195.2 (1) chemicals, including chemicals used for cleaning food 195.3 processing machinery and equipment; 195.4 (2) materials, including chemicals, fuels, and electricity 195.5 purchased by persons engaged in industrial production to treat 195.6 waste generated as a result of the production process; 195.7 (3) fuels, electricity, gas, and steam used or consumed in 195.8 the production process, except that electricity, gas, or steam 195.9 used for space heating or lighting is exempt only if it is 195.10 necessary to produce that particular industrial product; 195.11 (4) petroleum products and lubricants; 195.12 (5) packaging materials, including returnable containers 195.13 used in packaging food and beverage products; 195.14 (6) accessory tools, equipment, and other items that are 195.15 separate detachable units with an ordinary useful life of less 195.16 than 12 months used in producing a direct effect upon the 195.17 product; and 195.18 (7) the following materials, tools, and equipment used in 195.19 metalcasting: crucibles, thermocouple protection sheaths and 195.20 tubes, stalk tubes, refractory materials, molten metal filters 195.21 and filter boxes, degassing lances, and base blocks. 195.22 (b) This exemption does not include: 195.23 (1) machinery, equipment, implements, tools, accessories, 195.24 appliances, contrivances and furniture and fixtures, except195.25those listed in paragraph (a), clause (6); and 195.26 (2)petroleum and special fuels used in producing or195.27generating power for propelling ready-mixed concrete trucks on195.28the public highways of this stateservices used for 195.29 nonproduction purposes, including, but not limited to, the 195.30 following: plant security; fire prevention or safety; 195.31 administrative, sales, and marketing; facility maintenance; 195.32 communications; and transportation. 195.33 (c) Industrial production includes, but is not limited to, 195.34 research, development, design or production of any tangible 195.35 personal property, manufacturing, processing(other than by195.36restaurants and consumers)of agricultural products (whether 196.1 vegetable or animal), commercial fishing, refining, smelting, 196.2 reducing, brewing, distilling, printing, mining, quarrying, 196.3 lumbering, generating electricity and the production of road 196.4 building materials. Industrial production does not include 196.5 painting, cleaning, repairing or similar processing of property 196.6 except as part of the original manufacturing process. 196.7 (d) This exemption does not apply to materials, supplies, 196.8 or services used or consumed primarily in the storage, 196.9 transportation, transmission, or distribution of electricity, 196.10 petroleum, liquefied gas, natural gas, water, or steam in, by, 196.11 or through lines, wires, cables, poles, pipelines, tanks, mains, 196.12 or other modes of transporting these products. 196.13 [EFFECTIVE DATE.] This section is effective for sales and 196.14 purchases occurring after December 31, 2001. 196.15 Sec. 24. Minnesota Statutes 2000, section 297A.68, 196.16 subdivision 3, is amended to read: 196.17 Subd. 3. [MATERIALS AND SERVICES USED IN PROVIDINGCERTAIN196.18 TAXABLE SERVICES.] (a) Materialsstored, used, or consumedand 196.19 services used or consumed directly in providingataxable 196.20service listed in section 297A.61, subdivision 16, paragraph196.21(g),services intended to be sold ultimately at retail are 196.22 exempt. 196.23 (b) This exemption includes, but is not limited to: 196.24 (1) chemicals, lubricants, packaging materials, seeds, 196.25 trees, fertilizers, and herbicides, if these items are used or 196.26 consumed in providing the taxable service; 196.27 (2) chemicals used to treat waste generated as a result of 196.28 providing the taxable service; 196.29 (3) accessory tools, equipment, and other items that are 196.30 separate detachable units used in providing the service and that 196.31 have an ordinary useful life of less than 12 months; and 196.32 (4) fuel, electricity, gas, and steam used or consumed in 196.33the production processfurnishing the service, except that 196.34 electricity, gas, or steam used for space heating or lighting is 196.35 exempt only if it isnecessaryessential toproducefurnish that 196.36 particular taxable service. 197.1 (c) This exemption does not include machinery, equipment, 197.2 implements, tools, accessories, appliances, contrivances, 197.3 furniture, and fixtures used in providing the taxable service. 197.4 (d) For purposes of this subdivision, the following 197.5 materials and services are not considered used directly in the 197.6 provision of taxable services: security; fire prevention and 197.7 safety; administrative, sales, and marketing; equipment and 197.8 facilities maintenance; communications; and transportation, 197.9 unless the transportation is integral to the provision of the 197.10 taxable service. 197.11 [EFFECTIVE DATE.] This section is effective for sales and 197.12 purchases occurring after December 31, 2001. 197.13 Sec. 25. Minnesota Statutes 2000, section 297A.68, 197.14 subdivision 5, is amended to read: 197.15 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 197.16 exempt.The tax must be imposed and collected as if the rate197.17under section 297A.62, subdivision 1, applied, and then refunded197.18in the manner provided in section 297A.75.197.19 "Capital equipment" means machinery and equipment purchased 197.20 or leased and used in this state by the purchaser or lessee 197.21 primarily for manufacturing, fabricating, mining, or refining 197.22 tangible personal property or for furnishing taxable services to 197.23 be sold ultimately at retail. 197.24 Capital equipment means machinery and equipment essential 197.25 to the integrated production process or to the furnishing of 197.26 taxable services.Capital equipment also includes machinery and197.27equipment used to electronically transmit results retrieved by a197.28customer of an online computerized data retrieval system.197.29 (b) Capital equipment includes, but is not limited to: 197.30 (1) machinery and equipment used to operate, control, or 197.31 regulate the production or service equipment; 197.32 (2) machinery and equipment used for research and 197.33 development, design, quality control, and testing activities; 197.34 (3) environmental control devices that are used to maintain 197.35 conditions such as temperature, humidity, light, or air pressure 197.36 when those conditions are essential to and are part of the 198.1 production or service process; 198.2 (4) materials and supplies used to construct and install 198.3 machinery or equipment; 198.4 (5) repair and replacement parts, including accessories, 198.5 whether purchased as spare parts, repair parts, or as upgrades 198.6 or modifications to machinery or equipment; 198.7 (6) materials used for foundations that support machinery 198.8 or equipment; 198.9 (7) materials used to construct and install special purpose 198.10 buildings used in the production or service process;and198.11 (8) ready-mixed concretetrucksequipment in which the 198.12 ready-mixed concrete is mixed as part of the delivery process.198.13 regardless if mounted on a chassis; 198.14 (9) machinery and equipment used for control of pollution 198.15 that was generated as a result of the integrated production 198.16 process or the furnishing of taxable services; and 198.17 (10) machinery and equipment used to receive and store raw 198.18 materials. 198.19 (c) Capital equipment does not include the following: 198.20 (1) motor vehicles taxed under chapter 297B; 198.21 (2) machinery or equipment used toreceive or store raw198.22materialsstore or handle finished goods; 198.23 (3) building materials, except for materials included in 198.24 paragraph (b), clauses (6) and (7); 198.25 (4) machinery or equipment used for nonproduction or 198.26 non-service-related purposes, including, but not limited to, the 198.27 following: plant security, fire prevention, first aid, and 198.28 hospital stations; support operations or 198.29 administration;pollution control;and plant cleaning, disposal 198.30 of scrap and waste, plant communications, space heating, 198.31 lighting, or safety; 198.32 (5) farm machinery and aquaculture production equipment as 198.33 defined by section 297A.61, subdivisions 12 and 13; 198.34 (6)machinery or equipment purchased and installed by a198.35contractor as part of an improvement to real propertymachinery 198.36 and equipment used primarily for the storage, transportation, 199.1 transmission, or distribution of electricity, petroleum, 199.2 liquefied gas, natural gas, water, or steam in, by, or through 199.3 lines, wires, cables, poles, pipelines, tanks, mains, or other 199.4 modes of transporting these products; or 199.5 (7) any other item that is not essential to the integrated 199.6 process of manufacturing, fabricating, mining, or refining or to 199.7 the furnishing of taxable services. 199.8 (d) For purposes of this subdivision: 199.9 (1) "Machinery" means mechanical, electronic, or electrical 199.10 devices, including computers and computer software, that are 199.11 purchased or constructed to be used for the activities set forth 199.12 in paragraph (a). 199.13 (2) "Equipment" means independent devices or tools separate 199.14 from machinery, including computers and computer software, used 199.15 in operating, controlling, or regulating machinery and 199.16 equipment; and any subunit or assembly comprising a component of 199.17 any machinery or accessory or attachment parts of machinery, 199.18 such as tools, dies, jigs, patterns, and molds. 199.19 (3) "Primarily" means machinery and equipment used 50 199.20 percent or more of the time in an activity described in 199.21 paragraph (a). 199.22 (4) "Manufacturing" means an operation or series of 199.23 operations where raw materials are changed in form, composition, 199.24 or condition by machinery and equipment and which results in the 199.25 production of a new article of tangible personal property. For 199.26 purposes of this subdivision, "manufacturing" includes the 199.27 generation of electricity or steam to be sold at retail. 199.28 (5) "Fabricating" means to make, build, create, produce, or 199.29 assemble components or property to work in a new or different 199.30 manner. 199.31 (6) "Mining" means the extraction of minerals, ores, stone, 199.32 or peat. 199.33 (7) "Refining" means the process of converting a natural 199.34 resource to a product, including the treatment of water to be 199.35 sold at retail. 199.36 (8) "Integrated production process" means a process 200.1 beginning with theremovalreceipt and storage of raw materials 200.2from inventorythrough the completion of the product, including 200.3 packaging of the product. 200.4 (9)"Online data retrieval system" means a system whose200.5cumulation of information is equally available and accessible to200.6all its customers.200.7(10)"Machinery and equipment used for pollution control" 200.8 means machinery and equipment usedsolely to eliminate, prevent,200.9or reduce pollution resulting from an activity described in200.10paragraph (a)primarily for the abatement and control of air, 200.11 water, or land pollution. 200.12 [EFFECTIVE DATE.] This section is effective for sales and 200.13 purchases occurring after December 31, 2001. 200.14 Sec. 26. Minnesota Statutes 2000, section 297A.68, 200.15 subdivision 17, is amended to read: 200.16 Subd. 17. [SHIPS USED IN INTERSTATE COMMERCE.]Repair,200.17replacement, and rebuilding parts and materials, and lubricants,200.18for ships or vessels used or to be used principally in200.19interstate or foreign commerce are exempt.Vessels used 200.20 principally in interstate or foreign commerce with a gross 200.21 registered tonnage of at least 3,000 tons are exempt. The 200.22 exemption does not apply to lubricants, fuels unless they were 200.23 exempted under section 297A.68, subdivision 19, or to parts and 200.24 accessories to be attached to the vessel. 200.25 [EFFECTIVE DATE.] This section is effective for sales and 200.26 purchases occurring after December 31, 2001. 200.27 Sec. 27. Minnesota Statutes 2000, section 297A.68, 200.28 subdivision 19, is amended to read: 200.29 Subd. 19. [PETROLEUM PRODUCTS.] The following petroleum 200.30 products are exempt: 200.31 (1) products upon which a tax has been imposed and paid 200.32 under chapter 296A, and for which no refund has been or will be 200.33 allowed because the buyer used the fuel for nonhighway use; 200.34 (2) products that are used in the improvement of 200.35 agricultural land by constructing, maintaining, and repairing 200.36 drainage ditches, tile drainage systems, grass waterways, water 201.1 impoundment, and other erosion control structures; 201.2 (3) products purchased by a transit system receiving 201.3 financial assistance under section 174.24 or 473.384; or 201.4 (4) products used in a passenger snowmobile, as defined in 201.5 section 296A.01, subdivision 39, for off-highway business use as 201.6 part of the operations of a resort as provided under section 201.7 296A.16, subdivision 2, clause (2); or201.8(5) products purchased by a state or a political201.9subdivision of a state for use in motor vehicles exempt from201.10registration under section 168.012, subdivision 1, paragraph (b). 201.11 [EFFECTIVE DATE.] This section is effective for sales and 201.12 purchases occurring after December 31, 2001. 201.13 Sec. 28. Minnesota Statutes 2000, section 297A.68, is 201.14 amended by adding a subdivision to read: 201.15 Subd. 35. [INTERSTATE MOTOR VEHICLES.] Motor vehicles used 201.16 by persons who engage in interstate for-hire transportation of 201.17 tangible personal property or passengers are exempt. For 201.18 purposes of this subdivision, "person" means 201.19 (1) one who possesses a certificate or permit or has 201.20 completed a registration process that authorizes for-hire 201.21 transportation of property or passengers from the United States 201.22 Department of Transportation, the transportation regulation 201.23 board, or the department of transportation; 201.24 (2) one who transports commodities defined as "exempt" in 201.25 for-hire transportation in interstate commerce; or 201.26 (3) one who transports tangible personal property in 201.27 interstate commerce, pursuant to contracts with persons 201.28 described in clause (1) or (2). The exemption also applies to 201.29 motor vehicles used by persons who in the course of their 201.30 business are transporting solely their own goods in interstate 201.31 commerce. The exemption does not apply to parts or accessories 201.32 to be attached to the vehicle. 201.33 [EFFECTIVE DATE.] This section is effective for sales and 201.34 purchases occurring after December 31, 2001. 201.35 Sec. 29. Minnesota Statutes 2000, section 297A.68, is 201.36 amended by adding a subdivision to read: 202.1 Subd. 36. [RAILROAD ROLLING STOCK.] Rolling stock used by 202.2 a rail carrier as defined under United States Code, title 49, 202.3 section 10102, to engage in the for-hire transportation of 202.4 persons or property is exempt. For purposes of this 202.5 subdivision, "rolling stock" means all portable or movable 202.6 equipment, apparatus, or machinery that moves on railroad 202.7 tracks, including engines, cars, tenders, coaches, and sleeping 202.8 cars. The exemption does not apply to lubricants, fuels unless 202.9 they were exempted under section 297A.68, subdivision 19, or to 202.10 parts and accessories to be attached to the rolling stock. 202.11 [EFFECTIVE DATE.] This section is effective for sales and 202.12 purchases occurring after December 31, 2001. 202.13 Sec. 30. Minnesota Statutes 2000, section 297A.69, 202.14 subdivision 2, is amended to read: 202.15 Subd. 2. [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 202.16 (a) Materialsstored, used,and services used or consumed 202.17 directly in agricultural production of personal property 202.18 intended to be sold ultimately at retail are exempt, whether or 202.19 not the item becomes an ingredient or constituent part of the 202.20 property produced. Materials that qualify for this exemption 202.21 include, but are not limited to, the following: 202.22 (1) feeds, seeds, trees, fertilizers, and herbicides, 202.23 including when purchased for use by farmers in a federal or 202.24 state farm or conservation program; 202.25 (2) materials sold to a veterinarian to be used or consumed 202.26 in the care, medication, and treatment of agricultural 202.27 production animals and horses; 202.28 (3) chemicals, including chemicals used for cleaning food 202.29 processing machinery and equipment; 202.30 (4) materials, including chemicals, fuels, and electricity 202.31 purchased by persons engaged in agricultural production to treat 202.32 waste generated as a result of the production process; 202.33 (5) fuels, electricity, gas, and steam used or consumed in 202.34 the production process, except that electricity, gas, or steam 202.35 used for space heating or lighting is exempt only if it is 202.36 necessary to produce that particular agricultural product; 203.1 (6) petroleum products and lubricants; 203.2 (7) packaging materials, including returnable containers 203.3 used in packaging food and beverage products; and 203.4 (8) accessory tools and equipment that are separate 203.5 detachable units with an ordinary useful life of less than 12 203.6 months used in producing a direct effect upon the product. 203.7 Machinery, equipment, implements, tools, accessories, 203.8 appliances, contrivances, and furniture and fixtures, except 203.9 those listed in this clause are not included within this 203.10 exemption. 203.11 (b) For purposes of this subdivision, "agricultural 203.12 production" includes, but is not limited to, horticulture, 203.13 floriculture, maple syrup harvesting, and the raising of pets, 203.14 fur-bearing animals, research animals, horses, farmed cervidae 203.15 as defined in section 17.451, subdivision 2, llamas as defined 203.16 in section 17.455, subdivision 2, and ratitae as defined in 203.17 section 17.453, subdivision 3. 203.18 Sec. 31. Minnesota Statutes 2000, section 297A.70, 203.19 subdivision 1, is amended to read: 203.20 Subdivision 1. [SCOPE.] (a) To the extent provided in this 203.21 section, the gross receipts from sales of items toor by, and 203.22 storage, distribution, use, or consumption of items by the 203.23 organizations listed in this section are specifically exempted 203.24 from the taxes imposed by this chapter. 203.25 (b)Notwithstanding any law to the contrary enacted before203.261992, only sales to governments and political subdivisions203.27listed in this section are exempt from the taxes imposed by this203.28chapter.203.29(c)"Sales" includes purchases under an installment 203.30 contract or lease purchase agreement under section 465.71. 203.31 [EFFECTIVE DATE.] This section is effective for sales and 203.32 purchases occurring after June 30, 2001. 203.33 Sec. 32. Minnesota Statutes 2000, section 297A.70, 203.34 subdivision 2, is amended to read: 203.35 Subd. 2. [SALES TO GOVERNMENT.] (a) All sales, except 203.36 those listed in paragraph (b), to the following governments and 204.1 political subdivisions, or to the listed agencies or 204.2 instrumentalities of governments and political subdivisions, are 204.3 exempt: 204.4 (1) the United States and its agencies and 204.5 instrumentalities; and 204.6 (2)school districts, the University of Minnesota, state204.7universities, community colleges, technical colleges, state204.8academies, the Perpich Minnesota center for arts education, and204.9an instrumentality of a political subdivision that is accredited204.10as an optional/special function school by the North Central204.11Association of Colleges and Schools;204.12(3) hospitals and nursing homes owned and operated by204.13political subdivisions of the state;204.14(4) other states or political subdivisions of other states,204.15if the sale would be exempt from taxation if it occurred in that204.16state; and204.17(5) sales to public libraries, public library systems,204.18multicounty, multitype library systems as defined in section204.19134.001, county law libraries under chapter 134A, state agency204.20libraries, the state library under section 480.09, and the204.21legislative reference librarya state and its agencies, 204.22 instrumentalities, and political subdivisions. 204.23 (b) This exemptiondoes not applyapplies tothe sales204.24 purchases ofthe following products and services:204.25(1)building, construction, or reconstruction materials 204.26purchasedby a contractor or a subcontractoras a part ofunder 204.27 alump-sumconstruction contractor similar type of contract204.28with a guaranteed maximum price covering both labor and204.29materialswith a government entity for use in the construction, 204.30 alteration, or repair of a building or facility;204.31(2) construction materials purchased by tax exempt entities204.32or their contractors to be used in constructingprovided that 204.33 the buildings or facilitieswhichwillnotbe used principally 204.34 by thetax exempt entities;government entity. 204.35(3) the leasing of a motor vehicle as defined in section204.36297B.01, subdivision 5, except for leases entered into by the205.1United States or its agencies or instrumentalities; or205.2(4) meals and lodging as defined under section 297A.61,205.3subdivisions 3, paragraph (d), and 16, paragraph (c), except for205.4meals and lodging purchased directly by the United States or its205.5agencies or instrumentalities.205.6(c) As used in this subdivision, "school districts" means205.7public school entities and districts of every kind and nature205.8organized under the laws of the state of Minnesota, and any205.9instrumentality of a school district, as defined in section205.10471.59.205.11 [EFFECTIVE DATE.] This section is effective for sales and 205.12 purchases occurring after June 30, 2001. 205.13 Sec. 33. Minnesota Statutes 2000, section 297A.70, 205.14 subdivision 4, is amended to read: 205.15 Subd. 4. [SALES TO NONPROFIT GROUPS.] (a) All sales, 205.16 except those listed in paragraph (b),to the following205.17"nonprofit organizations"are exempt:205.18(1) an entity organized and operated exclusively forwhen 205.19 sold to a charitable, religious, or educationalpurposes205.20 organization that (1) has a federal determination letter stating 205.21 that it qualifies as an exempt organization under section 205.22 501(c)(3) of the Internal Revenue Code, and (2) obtains a tax 205.23 identification number from the department of revenue under 205.24 section 297A.83, if the item purchased is used in the 205.25 performance of charitable, religious, or educational functions;. 205.26(2) any senior citizen group or association of groups that:205.27(i) in general limits membership to persons who are either205.28age 55 or older, or physically disabled; and205.29(ii) is organized and operated exclusively for pleasure,205.30recreation, and other nonprofit purposes, no part of the net205.31earnings of which inures to the benefit of any private205.32shareholders; and205.33(3) an entity organized and operated exclusively to205.34maintain a cemetery owned by a religious organization.205.35 (b) This exemption does not apply to the following sales: 205.36 (1) building, construction, or reconstruction materials 206.1 purchased by a contractor or a subcontractor as a part of a 206.2 lump-sum contract or similar type of contract with a guaranteed 206.3 maximum price covering both labor and materials for use in the 206.4 construction, alteration, or repair of a building or facility; 206.5 (2) construction materials purchased by tax-exempt entities 206.6 or their contractors to be used in constructing buildings or 206.7 facilities that will not be used principally by the tax-exempt 206.8 entities; and 206.9 (3) meals and lodging as defined under section 297A.61, 206.10 subdivisions 3, paragraph (d), and 16, paragraph (c); and 206.11 (4) leasing of a motor vehicle as defined in section 206.12 297B.01, subdivision 5, except as provided in paragraph (c). 206.13 (c) This exemption applies to the leasing of a motor 206.14 vehicle as defined in section 297B.01, subdivision 5, only if 206.15 the vehicle is: 206.16 (1) a truck, as defined in section 168.011, a bus, as 206.17 defined in section 168.011, or a passenger automobile, as 206.18 defined in section 168.011, if the automobile is designed and 206.19 used for carrying more than nine persons including the driver; 206.20 and 206.21 (2) intended to be used primarily to transport tangible 206.22 personal property or individuals, other than employees, to whom 206.23 the organization provides service in performing its charitable, 206.24 religious, or educational purpose. 206.25 [EFFECTIVE DATE.] This section is effective for sales and 206.26 purchases occurring after December 31, 2001. 206.27 Sec. 34. Minnesota Statutes 2000, section 297A.70, 206.28 subdivision 10, is amended to read: 206.29 Subd. 10. [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 206.30 admissions to the premises of or events sponsored by an 206.31 organization that provides an opportunity for citizens of the 206.32 state to participate in the creation, performance, or 206.33 appreciation of the arts are exempt if the organization is 206.34 either (1) a tax-exempt organization within the meaning of 206.35 Minnesota Statutes 1980, section 290.05, subdivision 1, clause 206.36 (i), or (2) a municipal board that promotes cultural and arts 207.1 activities. The exemption provided with respect to a municipal 207.2 board applies only to tickets and admissions to events sponsored 207.3 by the board. For purposes of this exemption, an event is 207.4 sponsored by an organization if (i) the organization actively 207.5 participates in planning and conducting the event, (ii) the 207.6 organization assumes the risk of any financial losses as a 207.7 result of the event, and (iii) the entire net proceeds from the 207.8 event go to the organization. 207.9 [EFFECTIVE DATE.] This section is effective for sales and 207.10 purchases occurring after December 31, 2001. 207.11 Sec. 35. Minnesota Statutes 2000, section 297A.70, 207.12 subdivision 13, is amended to read: 207.13 Subd. 13. [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 207.14 (a) The following sales by the specified organizations for 207.15 fundraising purposes are exempt, subject to the limitations 207.16 listed in paragraph (b): 207.17 (1) all sales made by an organization that exists solely 207.18 for the purpose of providing educational or social activities 207.19 for young people primarily age 18 and under; 207.20 (2) all sales made by an organization that is a senior 207.21 citizen group or association of groups if (i) in general it 207.22 limits membership to persons age 55 or older; (ii) it is 207.23 organized and operated exclusively for pleasure, recreation, and 207.24 other nonprofit purposes; and (iii) no part of its net earnings 207.25 inures to the benefit of any private shareholders; 207.26 (3) the sale or use of tickets or admissions to a golf 207.27 tournament held in Minnesota if the beneficiary of the 207.28 tournament's net proceeds qualifies as a tax-exempt organization 207.29 under section 501(c)(3) of the Internal Revenue Code; and 207.30 (4) sales of gum, candy, and candy products sold for 207.31 fundraising purposes by a nonprofit organization that provides 207.32 educational and social activities primarily for young people 18 207.33 years of age and under. 207.34 (b) The exemptions listed in paragraph (a) are limited in 207.35 the following manner: 207.36 (1) the exemption under paragraph (a), clauses (1) and (2), 208.1 applies onlyif the gross annual receipts of the organization208.2from fundraising do not exceed $10,000to the first $10,000 of 208.3 taxable sales in a calendar year and it does not apply to any 208.4 sales after the $10,000 amount has been exceeded; and 208.5 (2) the exemption under paragraph (a), clause (1), does not 208.6 apply if the sales are derived from admission charges or from 208.7 activities for which the money must be deposited with the school 208.8 district treasurer under section 123B.49, subdivision 2, or be 208.9 recorded in the same manner as other revenues or expenditures of 208.10 the school district under section 123B.49, subdivision 4. 208.11 (c) For purposes of this subdivision, a club, association, 208.12 or other organization of elementary or secondary school students 208.13 organized for the purpose of carrying on sports, educational, or 208.14 other extracurricular activities is a separate organization from 208.15 the school district or school for purposes of applying the 208.16 $10,000 limit. 208.17 [EFFECTIVE DATE.] This section is effective for sales and 208.18 purchases occurring after December 31, 2001. 208.19 Sec. 36. Minnesota Statutes 2000, section 297A.70, 208.20 subdivision 14, is amended to read: 208.21 Subd. 14. [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 208.22 GROUPS.] (a) Sales by a nonprofit organization of tangible 208.23 personal property at, and admission charges for fundraising 208.24 eventssponsored by, a nonprofit organizationare exempt if the 208.25 entire proceeds, less the necessary expenses for the event, will 208.26 be used solely and exclusively for charitable, religious, or 208.27 educational purposes. Exempt sales include the sale of food, 208.28 meals, drinks, and taxable services at the fundraising event. 208.29 (b) This exemption is limited in the following manner: 208.30 (1) it does not apply to admission charges for events 208.31 involving bingo or other gambling activities or to charges for 208.32 use of amusement devices involving bingo or other gambling 208.33 activities; 208.34 (2) all gross receipts are taxable if the profits are not 208.35 used solely and exclusively for charitable, religious, or 208.36 educational purposes; 209.1 (3) it does not apply unless the organization keeps a 209.2 separate accounting record, including receipts and disbursements 209.3 from each fundraising event that documents all deductions from 209.4 gross receipts with receipts and other records; 209.5 (4) it does not apply to any sale made by or in the name of 209.6 a nonprofit corporation as the active or passive agent of a 209.7 person that is not a nonprofit corporation; 209.8 (5) all gross receipts are taxable if fundraising events 209.9 exceed 24 days per year; and 209.10 (6) it does not apply to fundraising events conducted on 209.11 premises leased for more than five days but less than 30 days. 209.12 (c) For purposes of this subdivision, a "nonprofit 209.13 organization" means any unit of government, corporation, 209.14 society, association, foundation, or institution organized and 209.15 operated for charitable, religious, educational, civic, 209.16 fraternal, and senior citizens' or veterans' purposes, no part 209.17 of the net earnings of which inures to the benefit of a private 209.18 individual. 209.19 [EFFECTIVE DATE.] This section is effective for sales and 209.20 purchases occurring after December 31, 2001. 209.21 Sec. 37. Minnesota Statutes 2000, section 297A.71, is 209.22 amended by adding a subdivision to read: 209.23 Subd. 1a. [EXPIRATION DATES.] Except as otherwise provided 209.24 in subdivision 19, the exemptions provided in this section are 209.25 only effective for sales and purchases occurring before January 209.26 1, 2003. This section expires on January 1, 2003, except that 209.27 subdivision 19 expires on July 1, 2003. 209.28 Sec. 38. Minnesota Statutes 2000, section 297A.72, 209.29 subdivision 1, is amended to read: 209.30 Subdivision 1. [DUTY OF RETAILER.]AnA fully completed 209.31 exemption certificate conclusively relieves the retailer from 209.32 collecting and remitting the taxonlyif takenin good faith209.33 from the purchaser at the time of sale. 209.34 [EFFECTIVE DATE.] This section is effective for sales and 209.35 purchases occurring after December 31, 2001. 209.36 Sec. 39. Minnesota Statutes 2000, section 297A.75, 210.1 subdivision 1, is amended to read: 210.2 Subdivision 1. [TAX COLLECTED.] The tax on the gross 210.3 receipts from the sale of the following exempt items must be 210.4 imposed and collected as if the sale were taxable and the rate 210.5 under section 297A.62, subdivision 1, applied. The exempt items 210.6 include: 210.7 (1)capital equipment exempt under section 297A.68,210.8subdivision 5;210.9(2)building materials for an agricultural processing 210.10 facility exempt under section 297A.71, subdivision 13; 210.11(3)(2) building materials for mineral production 210.12 facilities exempt under section 297A.71, subdivision 14; 210.13(4)(3) building materials for correctional facilities 210.14 under section 297A.71, subdivision 3; 210.15(5)(4) building materials used in a residence for disabled 210.16 veterans exempt under section 297A.71, subdivision 11; and 210.17(6)(5) chair lifts, ramps, elevators, and associated 210.18 building materials exempt under section 297A.71, subdivision 12. 210.19 [EFFECTIVE DATE.] This section is effective for sales and 210.20 purchases occurring after December 31, 2001. 210.21 Sec. 40. Minnesota Statutes 2000, section 297A.75, 210.22 subdivision 2, is amended to read: 210.23 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 210.24 forms prescribed by the commissioner, a refund equal to the tax 210.25 paid on the gross receipts of the exempt items must be paid to 210.26 the applicant. Only the following persons may apply for the 210.27 refund: 210.28 (1) for subdivision 1, clauses (1) to(3)(2), the 210.29 applicant must be the purchaser; 210.30 (2) for subdivision 1, clause(4)(3), the applicant must 210.31 be the governmental subdivision; 210.32 (3) for subdivision 1, clause(5)(4), the applicant must 210.33 be the recipient of the benefits provided in United States Code, 210.34 title 38, chapter 21; and 210.35 (4) for subdivision 1, clause(6)(5), the applicant must 210.36 be the owner of the homestead property. 211.1 [EFFECTIVE DATE.] This section is effective for sales and 211.2 purchases occurring after December 31, 2001. 211.3 Sec. 41. Minnesota Statutes 2000, section 297A.75, 211.4 subdivision 3, is amended to read: 211.5 Subd. 3. [APPLICATION.](a)The application must include 211.6 sufficient information to permit the commissioner to verify the 211.7 tax paid. If the tax was paid by a contractor, subcontractor, 211.8 or builder, under subdivision 1, clause (3), (4), or (5),or211.9(6),the contractor, subcontractor, or builder must furnish to 211.10 the refund applicant a statement including the cost of the 211.11 exempt items and the taxes paid on the items unless otherwise 211.12 specifically provided by this subdivision. The provisions of 211.13 sections 289A.40 and 289A.50 apply to refunds under this section. 211.14(b) An applicant may not file more than two applications211.15per calendar year for refunds for taxes paid on capital211.16equipment exempt under section 297A.68, subdivision 5.211.17 [EFFECTIVE DATE.] This section is effective for sales and 211.18 purchases occurring after December 31, 2001. 211.19 Sec. 42. Minnesota Statutes 2000, section 297A.75, 211.20 subdivision 4, is amended to read: 211.21 Subd. 4. [INTEREST.] Interest must be paid on the refund 211.22 at the rate in section 270.76 from the date the refund claim is 211.23 filed for taxes paid under subdivision 1, clauses (1)to (3), 211.24 (2), and(5)(4), and from 60 days after the date the refund 211.25 claim is filed with the commissioner for claims filed under 211.26 subdivision 1, clauses(4) and (6)(3) and (5). 211.27 [EFFECTIVE DATE.] This section is effective for sales and 211.28 purchases occurring after December 31, 2001. 211.29 Sec. 43. Minnesota Statutes 2000, section 297A.80, is 211.30 amended to read: 211.31 297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE TAX.] 211.32 If an article of tangible personal property or an item 211.33 listed in section 297A.63 has already been taxed by another 211.34 state and any subdivision thereof for its sale, storage, use, or 211.35 other consumption in an amount less than the tax imposed by this 211.36 chapter, then as to the person who paid the tax in the other 212.1 state or any subdivision thereof, section 297A.63 applies only 212.2 at a rate measured by the difference between the rate imposed 212.3 under section 297A.62 and the rate by which the previous tax was 212.4 computed. If the tax imposed in the other state or any 212.5 subdivision thereof is equal to or greater than the tax imposed 212.6 in this state, then no tax is due from that person under section 212.7 297A.63. The credit shall be applied first against the amount 212.8 of any use tax due the state, and any unused portion of the 212.9 credit shall then be applied against any use tax due a 212.10 subdivision. 212.11 [EFFECTIVE DATE.] This section is effective for sales and 212.12 purchases occurring after December 31, 2001. 212.13 Sec. 44. Minnesota Statutes 2000, section 297A.82, 212.14 subdivision 1, is amended to read: 212.15 Subdivision 1. [REQUIREMENTS FOR REGISTRATION.] An 212.16 aircraft must not be registered or licensed in this state unless 212.17 the applicant presents proof that the sales or use tax imposed 212.18 by this chapter has been paid or that the transaction is exempt 212.19 from the sales and use tax. The exemption for an occasional 212.20 sale under section 297A.67, subdivision 23,or 297A.68,212.21subdivision 25,does not apply to the sale or purchase of an 212.22 aircraft. 212.23 [EFFECTIVE DATE.] This section is effective for sales and 212.24 purchases occurring after December 31, 2001. 212.25 Sec. 45. Minnesota Statutes 2000, section 297A.82, 212.26 subdivision 3, is amended to read: 212.27 Subd. 3. [PAYMENT OF TAXTO COMMISSIONER.] If the aircraft 212.28 is purchased from a person who is not the holder of a valid 212.29 sales and use tax permit under this chapter, the purchaser shall 212.30 pay the taxto the commissioner of revenueprior to registering 212.31 or licensing the aircraft in this state.The commissioner of212.32revenue shall issue a certificate stating that the sales and use212.33tax in respect to the transaction has been paid.212.34 [EFFECTIVE DATE.] This section is effective for sales and 212.35 purchases occurring after the day following final enactment. 212.36 Sec. 46. Minnesota Statutes 2000, section 297A.82, 213.1 subdivision 4, is amended to read: 213.2 Subd. 4. [EXEMPTIONS.] (a) The following transactions are 213.3 exempt from the tax imposed in this chapter to the extent 213.4 provided. 213.5 (b) The purchase or use of aircraft previously registered 213.6 in Minnesota by a corporation or partnership is exempt if the 213.7 transfer constitutes a transfer within the meaning of section 213.8 351 or 721 of the Internal Revenue Code. 213.9 (c) The sale to or purchase, storage, use, or consumption 213.10 by a licensed aircraft dealer of an aircraft for which a 213.11 commercial use permit has been issued pursuant to section 213.12 360.654 is exempt, if the aircraft is resold while the permit is 213.13 in effect. 213.14 (d) Airflight equipment when sold to, or purchased, stored, 213.15 used, or consumed by airline companies, as defined in section 213.16 270.071, subdivision 4, is exempt. For purposes of this 213.17 subdivision, "airflight equipment" includes airplanesand parts213.18necessary for the repair and maintenance of such airflight213.19equipment, and flight simulators, aircraft communications and 213.20 navigational equipment, flight crew equipment, and hydraulics 213.21 equipment, but does not include airplanes with a gross weight of 213.22 less than 30,000 pounds that are used on intermittent or 213.23 irregularly timed flights. The exemption does not apply to 213.24 repair parts, lubricants, fuels unless they were exempted under 213.25 section 297A.68, subdivision 19, or flight simulators. 213.26 (e) Sales of, and the storage, distribution, use, or 213.27 consumption of aircraft, as defined in section 360.511 and 213.28 approved by the Federal Aviation Administration, and which the 213.29 seller delivers to a purchaser outside Minnesota or which, 213.30 without intermediate use, is shipped or transported outside 213.31 Minnesota by the purchaser are exempt, but only if the purchaser 213.32 is not a resident of Minnesota and provided that the aircraft is 213.33 not thereafter returned to a point within Minnesota, except in 213.34 the course of interstate commerce or isolated and occasional 213.35 use, and will be registered in another state or country upon its 213.36 removal from Minnesota. This exemption applies even if the 214.1 purchaser takes possession of the aircraft in Minnesota and uses 214.2 the aircraft in the state exclusively for training purposes for 214.3 a period not to exceed ten days prior to removing the aircraft 214.4 from this state. 214.5 [EFFECTIVE DATE.] This section is effective for sales and 214.6 purchases occurring after December 31, 2001. 214.7 Sec. 47. Minnesota Statutes 2000, section 297A.82, is 214.8 amended by adding a subdivision to read: 214.9 Subd. 7. [AGREEMENT WITH COMMISSIONER OF 214.10 TRANSPORTATION.] Notwithstanding subdivisions 1 to 4, the 214.11 commissioner may enter into an agreement with the commissioner 214.12 of transportation whereby, upon approval of both commissioners, 214.13 the commissioner of transportation will collect the sales tax on 214.14 aircraft from persons required to register or license aircraft 214.15 in this state. For purposes of collecting the tax, the 214.16 commissioner of transportation shall act as agent of the 214.17 commissioner of revenue and shall be subject to all rules not 214.18 inconsistent with the provisions of this chapter, that may be 214.19 prescribed by the commissioner. 214.20 [EFFECTIVE DATE.] This section is effective the day 214.21 following final enactment. 214.22 Sec. 48. Minnesota Statutes 2000, section 297A.87, 214.23 subdivision 3, is amended to read: 214.24 Subd. 3. [OCCASIONAL SALE PROVISIONS NOT APPLICABLE.] The 214.25 isolated and occasional sale provisions under section 297A.67, 214.26 subdivision 23,or under section 297A.68, subdivision 25,do not 214.27 apply to a seller at an event under this section. 214.28 [EFFECTIVE DATE.] This section is effective for sales and 214.29 purchases occurring after December 31, 2001. 214.30 Sec. 49. Minnesota Statutes 2000, section 297A.94, as 214.31 amended by Laws 2001, chapter 185, section 33, is amended to 214.32 read: 214.33 297A.94 [DEPOSIT OF REVENUES.] 214.34 (a) Except as provided in this section, the commissioner 214.35 shall deposit the revenues, including interest and penalties, 214.36 derived from the taxes imposed by this chapter in the state 215.1 treasury and credit them to the general fund. 215.2 (b) The commissioner shall deposit taxes in the Minnesota 215.3 agricultural and economic account in the special revenue fund if: 215.4 (1) the taxes are derived from sales and use of property 215.5 and services purchased for the construction and operation of an 215.6 agricultural resource project; and 215.7 (2) the purchase was made on or after the date on which a 215.8 conditional commitment was made for a loan guaranty for the 215.9 project under section 41A.04, subdivision 3. 215.10 The commissioner of finance shall certify to the commissioner 215.11 the date on which the project received the conditional 215.12 commitment. The amount deposited in the loan guaranty account 215.13 must be reduced by any refunds and by the costs incurred by the 215.14 department of revenue to administer and enforce the assessment 215.15 and collection of the taxes. 215.16 (c) The commissioner shall deposit the revenues, including 215.17 interest and penalties, derived from the taxes imposed on sales 215.18 and purchases included in section 297A.61, subdivision 16, 215.19paragraphs (b) and (f)paragraph (e), and on amusement, 215.20 entertainment, and recreation services under section 297A.61, 215.21 subdivision 16, paragraph (f), in the state treasury, and credit 215.22 them as follows: 215.23 (1) first to the general obligation special tax bond debt 215.24 service account in each fiscal year the amount required by 215.25 section 16A.661, subdivision 3, paragraph (b); and 215.26 (2) after the requirements of clause (1) have been met, the 215.27 balance to the general fund. 215.28 (d) The commissioner shall deposit the revenues, including 215.29 interest and penalties, collected under section 297A.64, 215.30 subdivision 5, in the state treasury and credit them to the 215.31 general fund. By July 15 of each year the commissioner shall 215.32 transfer to the highway user tax distribution fund an amount 215.33 equal to the excess fees collected under section 297A.64, 215.34 subdivision 5, for the previous calendar year. 215.35 (e) For fiscal year 2001, 97 percent, and for fiscal year 215.36 2002 and thereafter, 87 percent of the revenues, including 216.1 interest and penalties, transmitted to the commissioner under 216.2 section 297A.65, must be deposited by the commissioner in the 216.3 state treasury as follows: 216.4 (1) 50 percent of the receipts must be deposited in the 216.5 heritage enhancement account in the game and fish fund, and may 216.6 be spent only on activities that improve, enhance, or protect 216.7 fish and wildlife resources, including conservation, 216.8 restoration, and enhancement of land, water, and other natural 216.9 resources of the state; 216.10 (2) 22.5 percent of the receipts must be deposited in the 216.11 natural resources fund, and may be spent only for state parks 216.12 and trails; 216.13 (3) 22.5 percent of the receipts must be deposited in the 216.14 natural resources fund, and may be spent only on metropolitan 216.15 park and trail grants; 216.16 (4) three percent of the receipts must be deposited in the 216.17 natural resources fund, and may be spent only on local trail 216.18 grants; and 216.19 (5) two percent of the receipts must be deposited in the 216.20 natural resources fund, and may be spent only for the Minnesota 216.21 zoological garden, the Como park zoo and conservatory, and the 216.22 Duluth zoo. 216.23 (f) The revenue dedicated under paragraph (e) may not be 216.24 used as a substitute for traditional sources of funding for the 216.25 purposes specified, but the dedicated revenue shall supplement 216.26 traditional sources of funding for those purposes. Land 216.27 acquired with money deposited in the game and fish fund under 216.28 paragraph (e) must be open to public hunting and fishing during 216.29 the open season, except that in aquatic management areas or on 216.30 lands where angling easements have been acquired, fishing may be 216.31 prohibited during certain times of the year and hunting may be 216.32 prohibited. At least 87 percent of the money deposited in the 216.33 game and fish fund for improvement, enhancement, or protection 216.34 of fish and wildlife resources under paragraph (e) must be 216.35 allocated for field operations. 216.36 Sec. 50. Minnesota Statutes 2000, section 297B.01, 217.1 subdivision 8, is amended to read: 217.2 Subd. 8. [PURCHASE PRICE.] "Purchase price" means the 217.3 total consideration valued in money for a sale, whether paid in 217.4 money or otherwise. The purchase price excludes the amount of a 217.5 manufacturer's rebate paid or payable to the purchaser. If a 217.6 motor vehicle is taken in trade as a credit or as part payment 217.7 on a motor vehicle taxable under this chapter, the credit or 217.8 trade-in value allowed by the person selling the motor vehicle 217.9 shall be deducted from the total selling price to establish the 217.10 purchase price of the vehicle being sold and the trade-in 217.11 allowance allowed by the seller shall constitute the purchase 217.12 price of the motor vehicle accepted as a trade-in. The purchase 217.13 price in those instances where the motor vehicle is acquired by 217.14 gift or by any other transfer for a nominal or no monetary 217.15 consideration shall also include the average value of similar 217.16 motor vehicles, established by standards and guides as 217.17 determined by the motor vehicle registrar. The purchase price 217.18 in those instances where a motor vehicle is manufactured by a 217.19 person who registers it under the laws of this state shall mean 217.20 the manufactured cost of such motor vehicle and manufactured 217.21 cost shall mean the amount expended for materials, labor and 217.22 other properly allocable costs of manufacture, except that in 217.23 the absence of actual expenditures for the manufacture of a part 217.24 or all of the motor vehicle, manufactured costs shall mean the 217.25 reasonable value of the completed motor vehicle. 217.26 The term "purchase price" shallnotinclude the portion of 217.27 the value of a motor vehicle due solely to modifications 217.28 necessary to make the motor vehicle handicapped accessible. The 217.29 term "purchase price" shall not include the transfer of a motor 217.30 vehicle by way of gift between a husband and wife or parent and 217.31 child, or to a nonprofit organization as provided under 217.32 subdivision 7, paragraph (e), nor shall it include the transfer 217.33 of a motor vehicle by a guardian to a ward when there is no 217.34 monetary consideration and the title to such vehicle was 217.35 registered in the name of the guardian, as guardian, only 217.36 because the ward was a minor. There shall not be included in 218.1 "purchase price" the amount of any tax imposed by the United 218.2 States upon or with respect to retail sales whether imposed upon 218.3 the retailer or the consumer. The term "purchase price" does 218.4 not include the portion of the value of a motor vehicle due 218.5 solely to additions or modifications necessary to make the 218.6 vehicle into a ready-mixed concrete vehicle. 218.7 The term "purchase price" shall not include the transfer of 218.8 a motor vehicle as a gift between a foster parent and foster 218.9 child. For purposes of this subdivision, a foster relationship 218.10 exists, regardless of the age of the child, if (1) a foster 218.11 parent's home is or was licensed as a foster family home under 218.12 Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 218.13 county verifies that the child was a state ward or in permanent 218.14 foster care. 218.15 [EFFECTIVE DATE.] This section is effective for vehicles 218.16 sold, purchased, or acquired after December 31, 2001. 218.17 Sec. 51. Minnesota Statutes 2000, section 297B.03, is 218.18 amended to read: 218.19 297B.03 [EXEMPTIONS.] 218.20 There is specifically exempted from the provisions of this 218.21 chapter and from computation of the amount of tax imposed by it 218.22 the following: 218.23 (1) purchase or use, including use under a lease purchase 218.24 agreement or installment sales contract made pursuant to section 218.25 465.71, of any motor vehicle by the United States and its 218.26 agencies and instrumentalities and by any person described in 218.27 and subject to the conditions provided insection 297A.25,218.28subdivision 18section 297A.70, subdivision 2; 218.29 (2) purchase or use of any motor vehicle by any person who 218.30 was a resident of another state at the time of the purchase and 218.31 who subsequently becomes a resident of Minnesota, provided the 218.32 purchase occurred more than 60 days prior to the date such 218.33 person began residing in the state of Minnesota; 218.34 (3) purchase or use of any motor vehicleby any person218.35making a valid election to be taxed under the provisions of218.36section 297A.211that is exempt from taxation under section 219.1 297A.68, subdivision 35; 219.2 (4) purchase or use of any motor vehicle previously 219.3 registered in the state of Minnesota when such transfer 219.4 constitutes a transfer within the meaning of section 118, 331, 219.5 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 219.6 1563(a) of the Internal Revenue Code of 1986, as amended through 219.7 December 31, 1999; 219.8 (5) purchase or use of any vehicle owned by a resident of 219.9 another state and leased to a Minnesota based private or for 219.10 hire carrier for regular use in the transportation of persons or 219.11 property in interstate commerce provided the vehicle is titled 219.12 in the state of the owner or secured party, and that state does 219.13 not impose a sales tax or sales tax on motor vehicles used in 219.14 interstate commerce; 219.15 (6) purchase or use of a motor vehicle by a private 219.16 nonprofit or public educational institution for use as an 219.17 instructional aid in automotive training programs operated by 219.18 the institution. "Automotive training programs" includes motor 219.19 vehicle body and mechanical repair courses but does not include 219.20 driver education programs; 219.21 (7) purchase of a motor vehicle for use as an ambulance by 219.22 an ambulance service licensed under section 144E.10; and 219.23(8) purchase of a motor vehicle by or for a public library,219.24as defined in section 134.001, subdivision 2, as a bookmobile or219.25library delivery vehicle;219.26(9) purchase of a ready-mixed concrete truck;219.27(10) purchase or use of a motor vehicle by a town for use219.28exclusively for road maintenance, including snowplows and dump219.29trucks, but not including automobiles, vans, or pickup trucks;219.30(11)(8) purchase or use of a motor vehicle by a 219.31 corporation, society, association, foundation, or institution 219.32 organized and operated exclusively for charitable, religious, or 219.33 educational purposes, but only if the vehicle is: 219.34 (i) a truck, as defined in section 168.011, a bus, as 219.35 defined in section 168.011, or a passenger automobile, as 219.36 defined in section 168.011, if the automobile is designed and 220.1 used for carrying more than nine persons including the driver; 220.2 and 220.3 (ii) intended to be used primarily to transport tangible 220.4 personal property or individuals, other than employees, to whom 220.5 the organization provides service in performing its charitable, 220.6 religious, or educational purpose. 220.7 [EFFECTIVE DATE.] This section is effective for vehicles 220.8 sold, purchased, or acquired after June 30, 2001. 220.9 Sec. 52. [WHEN SERVICES PROVIDED; TRANSITION.] 220.10 If a service that is taxable beginning January 1, 2002, is 220.11 provided prior to that date, it is not taxed, notwithstanding 220.12 that compensation for the service is paid or payable on or after 220.13 that date. If a service that is taxable beginning January 1, 220.14 2002, is provided on or after that date, the service is taxed 220.15 unless it was prepaid in full prior to October 1, 2001. If a 220.16 service that is taxable beginning January 1, 2002, is provided 220.17 over a period of time beginning prior to that date and ending 220.18 after that date, only that portion of the service provided on or 220.19 after January 1, 2002, is taxed. 220.20 Sec. 53. [APPROPRIATIONS.] 220.21 $6,839,810 is appropriated from the general fund to the 220.22 commissioner of revenue for fiscal year 2002 to administer this 220.23 act, and $4,945,125 is appropriated from the general fund to the 220.24 commissioner of revenue for fiscal year 2003 to administer this 220.25 act. The appropriations are available until June 30, 2003. 220.26 [EFFECTIVE DATE.] This section is effective July 1, 2001. 220.27 Sec. 54. [REPEALER.] 220.28 (a) Minnesota Statutes 2000, sections 289A.60, subdivision 220.29 15, is repealed. 220.30 (b) Minnesota Statutes 2000, sections 297A.67, subdivisions 220.31 4, 6, 9, 10, 11, 12, 16, 17, 18, 19, and 25; 297A.68, 220.32 subdivisions 4, 6, 7, 8, 9, 10, 11, 12, 16, 18, 21, 22, 23, 24, 220.33 25, 26, 28, 29, 30, 31, 33, and 34; 297A.69, subdivisions 3, 5, 220.34 6, and 7; 297A.82, subdivision 5; 297A.90; 297A.96; and 220.35 469.1734, subdivision 6, are repealed. 220.36 (c) Minnesota Statutes 2000, section 297A.64, subdivisions 221.1 2 and 5, are repealed. 221.2 (d) Minnesota Statutes 2000, section 297A.70, subdivisions 221.3 3, 8, and 11, are repealed. 221.4 [EFFECTIVE DATE.] This section, paragraph (a), is effective 221.5 for returns due after January 1, 2003. This section, paragraph 221.6 (b), is effective for sales and purchases occurring after 221.7 December 31, 2001. This section, paragraph (c), is effective 221.8 for rentals entered into after December 31, 2001. This section, 221.9 paragraph (d), is effective for sales and purchases occurring 221.10 after June 30, 2001. 221.11 ARTICLE 6 221.12 SPECIAL TAXES REFORM 221.13 Section 1. Minnesota Statutes 2000, section 287.035, is 221.14 amended to read: 221.15 287.035 [IMPOSITION OF TAX.] 221.16 A taxof 23 centsis imposed uponeach $100, or fraction221.17thereof, ofthe debt or portion of a debt that is secured by any 221.18 recorded mortgage of real property located in this state at the 221.19 rate of .0023. The person liable for the tax is the mortgagee. 221.20 The tax is not imposed on the lawful interest amounts that may 221.21 accrue with respect to a debt. 221.22 [EFFECTIVE DATE.] This section is effective for documents 221.23 executed, recorded, or registered after June 30, 2001. 221.24 Sec. 2. Minnesota Statutes 2000, section 287.21, 221.25 subdivision 1, is amended to read: 221.26 Subdivision 1. [DETERMINATION OF TAX.] (a) A tax is 221.27 imposed on each deed or instrument by which any real property in 221.28 this state is granted, assigned, transferred, or otherwise 221.29 conveyed. The tax applies against the net consideration. 221.30 (b) The tax is determined in the following manner: (1) 221.31 when transfers are made by instruments pursuant to mergers, 221.32 consolidations, sales, or transfers of substantially all of the 221.33 assets of the entities as defined in section 287.20, subdivision 221.34 9, pursuant to plans of reorganization, the tax is $1.65; (2) 221.35 when there is no consideration or when the consideration, 221.36 exclusive of the value of any lien or encumbrance remaining 222.1 thereon at the time of sale, is $500 or less, the tax is $1.65; 222.2 or (3) when the consideration, exclusive of the value of any 222.3 lien or encumbrance remaining at the time of sale, exceeds $500, 222.4 the tax is$1.65 plus $1.65 for each additional $500 or fraction222.5of that amount.0033 of the net consideration. 222.6 (c) The tax is due at the time a taxable deed or instrument 222.7 is presented for recording. 222.8 [EFFECTIVE DATE.] This section is effective for documents 222.9 executed, recorded, or registered after June 30, 2001. 222.10 Sec. 3. Minnesota Statutes 2000, section 297E.02, 222.11 subdivision 1, is amended to read: 222.12 Subdivision 1. [IMPOSITIONTAX ON BINGO.] A tax is imposed 222.13 on alllawful gambling other than (1) pull-tab deals or games;222.14(2) tipboard deals or games; and (3) items listed in section222.15297E.01, subdivision 8, clauses (4) and (5)bingo games, at the 222.16 rate of8.5five percent on the gross receipts as defined in 222.17 section 297E.01, subdivision 8, less prizes actually paid. The 222.18 tax imposed by this subdivision is in lieu of the tax imposed by 222.19 section 297A.02 and all local taxes and license fees except a 222.20 fee authorized under section 349.16, subdivision 8, or a tax 222.21 authorized under subdivision 5. 222.22 The tax imposed under this subdivision is payable by the 222.23 organization or party conducting, directly or indirectly, the 222.24 gambling. 222.25 [EFFECTIVE DATE.] This section is effective for tax periods 222.26 beginning on or after July 1, 2001. 222.27 Sec. 4. Minnesota Statutes 2000, section 297E.02, 222.28 subdivision 6, is amended to read: 222.29 Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes 222.30 imposed under subdivisions 1 and 4, a tax is imposed on the 222.31 combined receipts of the organization. As used in this section, 222.32 "combined receipts" is the sum of the organization's gross 222.33 receipts from lawful gambling less gross receipts directly 222.34 derived from the conduct of bingo, raffles, and paddlewheels, as 222.35 defined in section 297E.01, subdivision 8, for the fiscal year. 222.36 The combined receipts of an organization are subject to a tax 223.1 computed according to the following schedule: 223.2 If the combined receipts for the The tax is: 223.3 fiscal year are: 223.4 Not over$500,000$700,000 zero 223.5 Over$500,000$700,000, but 223.6 not over$700,000$900,000 1.7 percent of the amount 223.7 over$500,000$700,000, 223.8 but not over$700,000223.9 $900,000 223.10 Over$700,000$900,000, but 223.11 not over$900,000$1,100,000 $3,400 plus 3.4 223.12 percent of the amount 223.13 over$700,000223.14 $900,000, but not 223.15 over$900,000223.16 $1,100,000 223.17 Over$900,000$1,100,000 $10,200 plus 5.1 223.18 percent of the amount 223.19 over$900,000223.20 $1,100,000 223.21 [EFFECTIVE DATE.] This section is effective for tax periods 223.22 beginning on or after July 1, 2001. 223.23 Sec. 5. Minnesota Statutes 2000, section 297I.40, 223.24 subdivision 1, is amended to read: 223.25 Subdivision 1. [REQUIREMENT TO PAY.] On or beforeApril 1223.26 March 15, June115, September 15, and December1 of each year223.27 15 of the current year, every taxpayer subject to tax under 223.28 section 297I.05, subdivisions 1 to 6, and 12, paragraphs (a), 223.29 clauses (1) to (5), (b), and (e), must pay to the commissioner 223.30 an installment equal toone-thirdone-fourth of the insurer's 223.31 total estimated tax for the current year. 223.32 [EFFECTIVE DATE.] This section is effective for payments 223.33 required to be made after December 31, 2001. 223.34 Sec. 6. Minnesota Statutes 2000, section 297I.40, 223.35 subdivision 2, is amended to read: 223.36 Subd. 2. [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 224.1 any required installment isone-thirdone-fourth of the lesser 224.2 of 224.3 (1) 80 percent of the tax imposed for the current year, or 224.4 (2) 100 percent of the tax paid for the previous year. 224.5 [EFFECTIVE DATE.] This section is effective for payments 224.6 required to be made after December 31, 2001. 224.7 Sec. 7. Minnesota Statutes 2000, section 297I.40, 224.8 subdivision 7, is amended to read: 224.9 Subd. 7. [APRILMARCH ESTIMATED PAYMENT.] A taxpayer who 224.10 claims a refund of an overpayment on an original return may 224.11 elect to have all or any portion of the overpayment applied as a 224.12 credit to theApril 1March 15 estimated tax payment for the 224.13 year following the year of the return. The credit is considered 224.14 applied onApril 1March 15. Notwithstanding section 297I.80, 224.15 the amount credited does not bear interest. 224.16 [EFFECTIVE DATE.] This section is effective for payments 224.17 required to be made after December 31, 2001. 224.18 Sec. 8. [REPEALER.] 224.19 (a) Minnesota Statutes 2000, sections 297G.03, subdivision 224.20 4; and 297G.07, subdivision 3, are repealed. 224.21 (b) Minnesota Statutes 2000, sections 297I.05, subdivision 224.22 8; and 297I.30, subdivision 3, are repealed. 224.23 [EFFECTIVE DATE.] This section, paragraph (a), is effective 224.24 for tax periods beginning on or after July 1, 2001. This 224.25 section, paragraph (b), is effective for calendar years 224.26 beginning after December 31, 1999. 224.27 ARTICLE 7 224.28 PETROLEUM TAX REFORM 224.29 Section 1. Minnesota Statutes 2000, section 239.101, 224.30 subdivision 3, is amended to read: 224.31 Subd. 3. [PETROLEUM INSPECTION FEE.]A person who owns224.32petroleum products held in storage at a pipeline terminal, river224.33terminal, or refinery shall pay a petroleum inspection fee of 85224.34cents for every 1,000 gallons sold or withdrawn from the224.35terminal or refinery storageAn inspection fee is imposed on 224.36 petroleum products when received by the first licensed 225.1 distributor, and on petroleum products received and held for 225.2 sale or use by any person when the petroleum products have not 225.3 previously been received by a licensed distributor. The 225.4 petroleum inspection fee is 85 cents for every 1,000 gallons 225.5 received. The commissioner of revenue shall collect the fee. 225.6 The revenue from the fee must first be applied to cover the 225.7 amounts appropriated for petroleum product quality inspection 225.8 expenses, for the inspection and testing of petroleum product 225.9 measuring equipment, and for petroleum supply monitoring under 225.10 chapter 216C. 225.11 The commissioner of revenue shall credit a person for 225.12 inspection fees previously paid in error or for any material 225.13 exported or sold for export from the state upon filing of a 225.14 report as prescribed by the commissioner of revenue. The 225.15 commissioner of revenue may collect the inspection fee along 225.16 with any taxes due under chapter 296A. 225.17 [EFFECTIVE DATE.] This section is effective for petroleum 225.18 products received on or after July 1, 2001. 225.19 Sec. 2. Minnesota Statutes 2000, section 296A.15, 225.20 subdivision 1, is amended to read: 225.21 Subdivision 1. [MONTHLY GASOLINE REPORT; SHRINKAGE 225.22 ALLOWANCE.] (a) Except as provided in paragraph (e), on or 225.23 before the 23rd day of each month, every person who is required 225.24 to pay a gasoline tax shall file with the commissioner a report, 225.25 in the form and manner prescribed by the commissioner, showing 225.26 the number of gallons of petroleum products received by the 225.27 reporter during the preceding calendar month, and other 225.28 information the commissioner may require. A written report is 225.29 deemed to have been filed as required in this subdivision if 225.30 postmarked on or before the 23rd day of the month in which the 225.31 tax is payable. 225.32 (b) The number of gallons of gasoline must be reported in 225.33 United States standard liquid gallons, 231 cubic inches, except 225.34 that the commissioner may upon written application and for cause 225.35 shown permit the distributor to report the number of gallons of 225.36 gasoline as corrected to a temperature of 60-degrees 226.1 Fahrenheit. If the application is granted, all gasoline covered 226.2 in the application and allowed by the commissioner must continue 226.3 to be reported by the distributor on the adjusted basis for a 226.4 period of one year from the date of the granting of the 226.5 application. The number of gallons of petroleum products other 226.6 than gasoline must be reported as originally invoiced. Each 226.7 report must show separately the number of gallons of aviation 226.8 gasoline received by the reporter during each calendar month. 226.9 (c) Each report must also include the amount of gasoline 226.10 tax on gasoline received by the reporter during the preceding 226.11 month. In computing the tax a deduction ofthree2.5 percent of 226.12 the quantity of gasoline received by a distributor shall be made 226.13 for evaporation and loss. At the time of reporting, the 226.14 reporter shall submit satisfactory evidence that one-third of 226.15 thethree2.5 percent deduction has been credited or paid to 226.16 dealers on quantities sold to them. 226.17 (d) Each report shall contain a confession of judgment for 226.18 the amount of the tax shown due to the extent not timely paid. 226.19 (e) Under certain circumstances and with the approval of 226.20 the commissioner, taxpayers may be allowed to file reports 226.21 annually. 226.22 [EFFECTIVE DATE.] This section is effective for reports due 226.23 on or after July 1, 2001. 226.24 Sec. 3. Minnesota Statutes 2000, section 296A.16, 226.25 subdivision 1, is amended to read: 226.26 Subdivision 1. [CREDIT OR REFUND OF GASOLINE OR SPECIAL 226.27 FUEL TAX PAID.] The commissioner shall allow the distributor 226.28 credit or refund of the tax paid on gasoline and special fuel: 226.29 (1) exported or sold for export from the state, other than 226.30 in the supply tank of a motor vehicle or of an aircraft; 226.31 (2) sold to the United States government to be used 226.32 exclusively in performing its governmental functions and 226.33 activities or to any "cost plus a fixed fee" contractor employed 226.34 by the United States government on any national defense project; 226.35 (3) if the fuel is placed in a tank used exclusively for 226.36 residential heating; 227.1 (4) destroyed by accident while in the possession of the 227.2 distributor; 227.3 (5) in error; and 227.4 (6)in the case of gasoline only, sold for storage in an227.5on-farm bulk storage tank, if the tax was not collected on the227.6sale; and227.7(7)in such other cases as the commissioner may permit, 227.8 consistent with the provisions of this chapter and other laws 227.9 relating to the gasoline and special fuel excise taxes. 227.10 [EFFECTIVE DATE.] This section is effective for gasoline 227.11 purchased or refunds claimed on or after July 1, 2001. 227.12 Sec. 4. [APPROPRIATION.] 227.13 A one-time appropriation of $140,000 is appropriated for 227.14 fiscal year 2002 from the highway user tax distribution fund to 227.15 the commissioner of revenue for systems modifications associated 227.16 with petroleum tax reform. 227.17 ARTICLE 8 227.18 MINERALS TAX REFORM 227.19 Section 1. Minnesota Statutes 2000, section 298.01, 227.20 subdivision 3, is amended to read: 227.21 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 227.22 engaged in the business of mining or producing ores in this 227.23 state, except iron ore or taconite concentrates, shall pay an 227.24 occupation tax to the state of Minnesota as provided in this 227.25 subdivision. The tax is determined in the same manner as the 227.26 tax imposed by section 290.02, except that sections 290.05, 227.27 subdivision 1, clause (a), and 290.17, subdivision 4, do not 227.28 apply, and except that the tax rate is 2.45 percent of a 227.29 person's taxable income. The tax is in addition to all other 227.30 taxes. 227.31 [EFFECTIVE DATE.] This section is effective for taxes 227.32 payable May 1, 2002, and thereafter. 227.33 Sec. 2. Minnesota Statutes 2000, section 298.01, 227.34 subdivision 3a, is amended to read: 227.35 Subd. 3a. [GROSS INCOME.] (a) For purposes of determining 227.36 a person's taxable income under subdivision 3, gross income is 228.1 determined by the amount of gross proceeds from mining in this 228.2 state under section 298.016 and includes any gain or loss 228.3 recognized from the sale or disposition of assets used in the 228.4 business in this state. 228.5 (b) In applying section 290.191, subdivision 5, all 228.6 transfers of ores are deemed to be salesoutsideinside this 228.7 stateif the ores are transported out of this state after the228.8ores have been converted to a marketable quality. 228.9 [EFFECTIVE DATE.] This section is effective for taxes 228.10 payable May 1, 2002, and thereafter. 228.11 Sec. 3. Minnesota Statutes 2000, section 298.01, 228.12 subdivision 4, is amended to read: 228.13 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 228.14 CONCENTRATES.] A person engaged in the business of mining or 228.15 producing of iron ore, taconite concentrates or direct reduced 228.16 ore in this state shall pay an occupation tax to the state of 228.17 Minnesota. The tax is determined in the same manner as the tax 228.18 imposed by section 290.02, except that sections 290.05, 228.19 subdivision 1, clause (a), and 290.17, subdivision 4, do not 228.20 apply, and except that the tax rate is 2.45 percent of a 228.21 person's taxable income. The tax is in addition to all other 228.22 taxes. 228.23 [EFFECTIVE DATE.] This section is effective for taxes 228.24 payable May 1, 2002, and thereafter. 228.25 Sec. 4. Minnesota Statutes 2000, section 298.01, 228.26 subdivision 4a, is amended to read: 228.27 Subd. 4a. [GROSS INCOME.] (a) For purposes of determining 228.28 a person's taxable income under subdivision 4, gross income is 228.29 determined by the mine value of the ore mined in Minnesota and 228.30 includes any gain or loss recognized from the sale or 228.31 disposition of assets used in the business in this state. 228.32 (b) Mine value is the value, or selling price, of iron ore 228.33 or taconite concentrates, f.o.b. mine. The mine value is 228.34 calculated by multiplying the iron unit price for the period, as 228.35 determined by the commissioner, by the tons produced and the 228.36 weighted average analysis. 229.1 (c) In applying section 290.191, subdivision 5, all 229.2 transfers of iron ore and taconite concentrates are deemed to be 229.3 salesoutsideinside this stateif the iron ore or taconite229.4concentrates are transported out of this state after the raw229.5iron ore and taconite concentrates have been converted to a229.6marketable quality. 229.7 [EFFECTIVE DATE.] This section is effective for taxes 229.8 payable May 1, 2002, and thereafter. 229.9 Sec. 5. Minnesota Statutes 2000, section 298.01, 229.10 subdivision 4c, is amended to read: 229.11 Subd. 4c. [SPECIAL DEDUCTIONS; NET OPERATING LOSS.] (a) 229.12 For purposes of determining taxable income under subdivision 229.13 4,the following modifications are allowed:229.14(1)the provisions of section 290.01, subdivisions 19c, 229.15 clauses (7) and (11), and 19d, clauses (7) and (12), are not 229.16 used to determine taxable income; and. 229.17(2) for assets placed in service before January 1, 1990,229.18the deduction for depreciation will be the same amount allowed229.19under chapter 290, except that after an asset has been fully229.20depreciated for federal income tax purposes any remaining229.21depreciable basis is allowed as a deduction using the229.22straight-line method over the following number of years:229.23(i) three-year property, one year;229.24(ii) five- and seven-year property, two years;229.25(iii) ten-year property, five years; and229.26(iv) all other property, seven years.229.27No deduction is allowed if an asset is fully depreciated229.28for occupation tax purposes before January 1990.229.29(b) For purposes of determining the deduction allowed under229.30paragraph (a), clause (2), the remaining depreciable basis of229.31property placed in service before January 1, 1990, is calculated229.32as follows:229.33(1) the adjusted basis of the property on December 31,229.341989, which was used to calculate the hypothetical corporate229.35franchise tax under Minnesota Statutes 1988, section 298.40,229.36including salvage value; less230.1(2) deductions for depreciation allowed under section230.2290.01, subdivision 19e.230.3(c) The basis for determining gain or loss on sale or230.4disposition of assets placed in service before January 1, 1990,230.5is the basis determined under paragraph (b), less the deductions230.6allowed under paragraph (a), clause (2).230.7(d)(b) The amount of net operating loss incurred in a 230.8 taxable year beginning before January 1, 1990, that may be 230.9 carried over to a taxable year beginning after December 31, 230.10 1989, is the amount of net operating loss carryover determined 230.11 in the calculation of the hypothetical corporate franchise tax 230.12 under Minnesota Statutes 1988, sections 298.40 and 298.402. 230.13 [EFFECTIVE DATE.] This section is effective for taxes 230.14 payable May 1, 2002, and thereafter. 230.15 Sec. 6. Minnesota Statutes 2000, section 298.24, 230.16 subdivision 1, is amended to read: 230.17 Subdivision 1. (a) For concentrate produced in 1999, there 230.18 is imposed upon taconite and iron sulphides, and upon the mining 230.19 and quarrying thereof, and upon the production of iron ore 230.20 concentrate therefrom, and upon the concentrate so produced, a 230.21 tax of $2.141 per gross ton of merchantable iron ore concentrate 230.22 produced therefrom. 230.23 (b) For concentrates produced in 2000 and subsequent years, 230.24 the tax rate shall be equal to the preceding year's tax rate 230.25 plus an amount equal to the preceding year's tax rate multiplied 230.26 by the percentage increase in the implicit price deflator from 230.27 the fourth quarter of the second preceding year to the fourth 230.28 quarter of the preceding year, except that for concentrates 230.29 produced in 2001, the tax rate is $1.956 per gross ton of 230.30 merchantable iron ore concentrate produced therefrom. "Implicit 230.31 price deflator" means the implicit price deflator for the gross 230.32 domestic product prepared by the bureau of economic analysis of 230.33 the United States Department of Commerce. 230.34 (c) On concentrates produced in 1997 and thereafter, an 230.35 additional tax is imposed equal to three cents per gross ton of 230.36 merchantable iron ore concentrate for each one percent that the 231.1 iron content of the product exceeds 72 percent, when dried at 231.2 212 degrees Fahrenheit. 231.3 (d) The tax shall be imposed on the average of the 231.4 production for the current year and the previous two years. The 231.5 rate of the tax imposed will be the current year's tax rate. 231.6 This clause shall not apply in the case of the closing of a 231.7 taconite facility if the property taxes on the facility would be 231.8 higher if this clause and section 298.25 were not applicable. 231.9 (e) If the tax or any part of the tax imposed by this 231.10 subdivision is held to be unconstitutional, a tax of $2.141 per 231.11 gross ton of merchantable iron ore concentrate produced shall be 231.12 imposed. 231.13 (f) Consistent with the intent of this subdivision to 231.14 impose a tax based upon the weight of merchantable iron ore 231.15 concentrate, the commissioner of revenue may indirectly 231.16 determine the weight of merchantable iron ore concentrate 231.17 included in fluxed pellets by subtracting the weight of the 231.18 limestone, dolomite, or olivine derivatives or other basic flux 231.19 additives included in the pellets from the weight of the 231.20 pellets. For purposes of this paragraph, "fluxed pellets" are 231.21 pellets produced in a process in which limestone, dolomite, 231.22 olivine, or other basic flux additives are combined with 231.23 merchantable iron ore concentrate. No subtraction from the 231.24 weight of the pellets shall be allowed for binders, mineral and 231.25 chemical additives other than basic flux additives, or moisture. 231.26 (g)(1) Notwithstanding any other provision of this 231.27 subdivision, for the first two years of a plant's production of 231.28 direct reduced ore, no tax is imposed under this section. As 231.29 used in this paragraph, "direct reduced ore" is ore that results 231.30 in a product that has an iron content of at least 75 percent. 231.31 For the third year of a plant's production of direct reduced 231.32 ore, the rate to be applied to direct reduced ore is 25 percent 231.33 of the rate otherwise determined under this subdivision. For 231.34 the fourth such production year, the rate is 50 percent of the 231.35 rate otherwise determined under this subdivision; for the fifth 231.36 such production year, the rate is 75 percent of the rate 232.1 otherwise determined under this subdivision; and for all 232.2 subsequent production years, the full rate is imposed. 232.3 (2) Subject to clause (1), production of direct reduced ore 232.4 in this state is subject to the tax imposed by this section, but 232.5 if that production is not produced by a producer of taconite or 232.6 iron sulfides, the production of taconite or iron sulfides 232.7 consumed in the production of direct reduced iron in this state 232.8 is not subject to the tax imposed by this section on taconite or 232.9 iron sulfides. 232.10 [EFFECTIVE DATE.] This section is effective the day 232.11 following final enactment. 232.12 Sec. 7. Minnesota Statutes 2000, section 298.28, 232.13 subdivision 1, is amended to read: 232.14 Subdivision 1. [DISTRIBUTION.] The proceeds of the taxes 232.15 collected under section 298.24, except the tax collected under 232.16 section 298.24, subdivision 2, shall, upon certification of the 232.17 commissioner of revenue, be allocated under subdivisions 2 to 232.18 12, except as otherwise provided in subdivision 4, paragraph 232.19 (f), and subdivision 11, paragraph (d). 232.20 [EFFECTIVE DATE.] This section is effective the day 232.21 following final enactment. 232.22 Sec. 8. Minnesota Statutes 2000, section 298.28, 232.23 subdivision 4, is amended to read: 232.24 Subd. 4. [SCHOOL DISTRICTS.] (a) 22.28 cents per taxable 232.25 ton plus the increase provided in paragraph (d) must be 232.26 allocated to qualifying school districts to be distributed, 232.27 based upon the certification of the commissioner of revenue, 232.28 under paragraphs (b) and (c), except as otherwise provided in 232.29 paragraph (f). 232.30 (b) 4.46 cents per taxable ton must be distributed to the 232.31 school districts in which the lands from which taconite was 232.32 mined or quarried were located or within which the concentrate 232.33 was produced. The distribution must be based on the 232.34 apportionment formula prescribed in subdivision 2. 232.35 (c)(i) 17.82 cents per taxable ton, less any amount 232.36 distributed under paragraph (e), shall be distributed to a group 233.1 of school districts comprised of those school districts in which 233.2 the taconite was mined or quarried or the concentrate produced 233.3 or in which there is a qualifying municipality as defined by 233.4 section 273.134 in direct proportion to school district indexes 233.5 as follows: for each school district, its pupil units 233.6 determined under section 126C.05 for the prior school year shall 233.7 be multiplied by the ratio of the average adjusted net tax 233.8 capacity per pupil unit for school districts receiving aid under 233.9 this clause as calculated pursuant to chapters 122A, 126C, and 233.10 127A for the school year ending prior to distribution to the 233.11 adjusted net tax capacity per pupil unit of the district. Each 233.12 district shall receive that portion of the distribution which 233.13 its index bears to the sum of the indices for all school 233.14 districts that receive the distributions. 233.15 (ii) Notwithstanding clause (i), each school district that 233.16 receives a distribution under sections 298.018; 298.23 to 233.17 298.28, exclusive of any amount received under this clause; 233.18 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 233.19 imposing a tax on severed mineral values that is less than the 233.20 amount of its levy reduction under section 126C.48, subdivision 233.21 8, for the second year prior to the year of the distribution 233.22 shall receive a distribution equal to the difference; the amount 233.23 necessary to make this payment shall be derived from 233.24 proportionate reductions in the initial distribution to other 233.25 school districts under clause (i). 233.26 (d) Any school district described in paragraph (c) where a 233.27 levy increase pursuant to section 126C.17, subdivision 9, is 233.28 authorized by referendum, shall receive a distribution from a 233.29 fund that receives a distribution in 1998 of 21.3 cents per 233.30 ton. On July 15 of 1999, and each year thereafter, the increase 233.31 over the amount established for the prior year shall be 233.32 determined according to the increase in the implicit price 233.33 deflator as provided in section 298.24, subdivision 1. Each 233.34 district shall receive the product of: 233.35 (i) $175 times the pupil units identified in section 233.36 126C.05, subdivision 1, enrolled in the second previous year or 234.1 the 1983-1984 school year, whichever is greater, less the 234.2 product of 1.8 percent times the district's taxable net tax 234.3 capacity in the second previous year; times 234.4 (ii) the lesser of: 234.5 (A) one, or 234.6 (B) the ratio of the sum of the amount certified pursuant 234.7 to section 126C.17, subdivision 6, in the previous year, plus 234.8 the amount certified pursuant to section 126C.17, subdivision 8, 234.9 in the previous year, plus the referendum aid according to 234.10 section 126C.17, subdivision 7, for the current year, plus an 234.11 amount equal to the reduction under section 126C.17, subdivision 234.12 12, to the product of 1.8 percent times the district's taxable 234.13 net tax capacity in the second previous year. 234.14 If the total amount provided by paragraph (d) is 234.15 insufficient to make the payments herein required then the 234.16 entitlement of $175 per pupil unit shall be reduced uniformly so 234.17 as not to exceed the funds available. Any amounts received by a 234.18 qualifying school district in any fiscal year pursuant to 234.19 paragraph (d) shall not be applied to reduce general education 234.20 aid which the district receives pursuant to section 126C.13 or 234.21 the permissible levies of the district. Any amount remaining 234.22 after the payments provided in this paragraph shall be paid to 234.23 the commissioner of iron range resources and rehabilitation who 234.24 shall deposit the same in the taconite environmental protection 234.25 fund and the northeast Minnesota economic protection trust fund 234.26 as provided in subdivision 11. 234.27 Each district receiving money according to this paragraph 234.28 shall reserve $25 times the number of pupil units in the 234.29 district. It may use the money for early childhood programs or 234.30 for outcome-based learning programs that enhance the academic 234.31 quality of the district's curriculum. The outcome-based 234.32 learning programs must be approved by the commissioner of 234.33 children, families, and learning. 234.34 (e) There shall be distributed to any school district the 234.35 amount which the school district was entitled to receive under 234.36 section 298.32 in 1975. 235.1 (f) Notwithstanding language to the contrary in this 235.2 subdivision, beginning with the year 2002 distribution, the 235.3 amount necessary for distributions to school districts under 235.4 paragraphs (c) and (e) is annually appropriated, upon 235.5 certification by the commissioner of revenue, to the 235.6 commissioner of children, families, and learning from the 235.7 general fund. On or before February 25, the commissioner of 235.8 children, families, and learning shall distribute the 235.9 appropriation in the manner provided by paragraphs (c) and (e). 235.10 [EFFECTIVE DATE.] This section is effective the day 235.11 following final enactment. 235.12 Sec. 9. Minnesota Statutes 2000, section 298.28, 235.13 subdivision 5, is amended to read: 235.14 Subd. 5. [COUNTIES.] (a)16.526.05 cents per taxable ton 235.15 is allocated to counties to be distributed, based upon 235.16 certification by the commissioner of revenue, under paragraphs 235.17 (b) to (d). 235.18 (b)1320.525 cents per taxable ton shall be distributed to 235.19 the county in which the taconite is mined or quarried or in 235.20 which the concentrate is produced, less any amount which is to 235.21 be distributed pursuant to paragraph (c). The apportionment 235.22 formula prescribed in subdivision 2 is the basis for the 235.23 distribution. 235.24 (c) If an electric power plant owned by and providing the 235.25 primary source of power for a taxpayer mining and concentrating 235.26 taconite is located in a county other than the county in which 235.27 the mining and the concentrating processes are conducted, one 235.28 cent per taxable ton of the tax distributed to the counties 235.29 pursuant to paragraph (b) and imposed on and collected from such 235.30 taxpayer shall be paid to the county in which the power plant is 235.31 located. 235.32 (d)3.55.525 cents per taxable ton shall be paid to the 235.33 county from which the taconite was mined, quarried or 235.34 concentrated to be deposited in the county road and bridge 235.35 fund. If the mining, quarrying and concentrating, or separate 235.36 steps in any of those processes are carried on in more than one 236.1 county, the commissioner shall follow the apportionment formula 236.2 prescribed in subdivision 2. 236.3 [EFFECTIVE DATE.] This section is effective the day 236.4 following final enactment. 236.5 Sec. 10. Minnesota Statutes 2000, section 298.28, 236.6 subdivision 6, is amended to read: 236.7 Subd. 6. [PROPERTY TAX RELIEF.] (a) In 1999,38.8136.81 236.8 cents per taxable ton, less any amount required to be 236.9 distributed under paragraphs (b) and (c),and less any amount236.10required to be deducted under paragraph (d),must be allocated 236.11 to St. Louis county acting as the counties' fiscal agent, to be 236.12 distributed as provided in sections 273.134 to 273.136. 236.13 (b) If an electric power plant owned by and providing the 236.14 primary source of power for a taxpayer mining and concentrating 236.15 taconite is located in a county other than the county in which 236.16 the mining and the concentrating processes are conducted, .1875 236.17 cent per taxable ton of the tax imposed and collected from such 236.18 taxpayer shall be paid to the county. 236.19 (c) If an electric power plant owned by and providing the 236.20 primary source of power for a taxpayer mining and concentrating 236.21 taconite is located in a school district other than a school 236.22 district in which the mining and concentrating processes are 236.23 conducted,.7282.5898 cent per taxable ton of the tax imposed 236.24 and collected from the taxpayer shall be paid to the school 236.25 district. 236.26(d) Two cents per taxable ton must be deducted from the236.27amount allocated to the St. Louis county auditor under paragraph236.28(a).236.29 [EFFECTIVE DATE.] This section is effective the day 236.30 following final enactment. 236.31 Sec. 11. Minnesota Statutes 2000, section 298.28, 236.32 subdivision 10, is amended to read: 236.33 Subd. 10. [INCREASE.] Beginning with distributions in 236.34 2000, the amounts determined under subdivisions 6, paragraph 236.35 (a), and 9 shall be increased in the same proportion as the 236.36 increase in the implicit price deflator as provided in section 237.1 298.24, subdivision 1. 237.2The distributions per ton determined under subdivisions 5,237.3paragraphs (b) and (d), and 6, paragraph (b), for distribution237.4in 1988 and subsequent years shall be the distribution per ton237.5determined for distribution in 1987. The distribution per ton237.6under subdivision 6, paragraph (c), for distribution in 2000 and237.7subsequent years shall be 81 percent of the distribution per ton237.8determined for distribution in 1987.237.9 [EFFECTIVE DATE.] This section is effective the day 237.10 following final enactment. 237.11 Sec. 12. Minnesota Statutes 2000, section 298.28, 237.12 subdivision 11, is amended to read: 237.13 Subd. 11. [REMAINDER.] (a) The proceeds of the tax imposed 237.14 by section 298.24 which remain after the distributions and 237.15 payments in subdivisions 2 to 10a, as certified by the 237.16 commissioner of revenue, and paragraphs (b),and (c), and (d)237.17 have been made, together with interest earned on all money 237.18 distributed under this section prior to distribution, shall be 237.19 divided between the taconite environmental protection fund 237.20 created in section 298.223 and the northeast Minnesota economic 237.21 protection trust fund created in section 298.292 as follows: 237.22 Two-thirds to the taconite environmental protection fund and 237.23 one-third to the northeast Minnesota economic protection trust 237.24 fund. The proceeds shall be placed in the respective special 237.25 accounts. In this paragraph, the terms "distributions and 237.26 payments" and "all money distributed under this section" do not 237.27 mean distributions from general fund appropriations. 237.28 (b) There shall be distributed to each city, town, and 237.29 county the amount that it received under section 294.26 in 237.30 calendar year 1977; provided, however, that the amount 237.31 distributed in 1981 to the unorganized territory number 2 of 237.32 Lake county and the town of Beaver Bay based on the 237.33 between-terminal trackage of Erie Mining Company will be 237.34 distributed in 1982 and subsequent years to the unorganized 237.35 territory number 2 of Lake county and the towns of Beaver Bay 237.36 and Stony River based on the miles of track of Erie Mining 238.1 Company in each taxing district. 238.2 (c) There shall be distributed to the iron range resources 238.3 and rehabilitation board the amounts it received in 1977 under 238.4 section 298.22. The amount distributed under this paragraph 238.5 shall be expended within or for the benefit of the tax relief 238.6 area defined in section 273.134. 238.7 (d) There shall be distributed to each school district 81 238.8 percent of the amount that it received under section 294.26 in 238.9 calendar year 1977, except that, beginning with the year 2002 238.10 distribution, the amount necessary for distributions to school 238.11 districts is annually appropriated, upon certification by the 238.12 commissioner of revenue, to the commissioner of children, 238.13 families, and learning from the general fund. On or before 238.14 February 25, the commissioner of children, families, and 238.15 learning shall distribute the appropriation as provided in this 238.16 paragraph. 238.17 [EFFECTIVE DATE.] This section is effective the day 238.18 following final enactment. 238.19 ARTICLE 9 238.20 MINNESOTACARE TAX REFORM 238.21 Section 1. [16A.78] [HEALTH CARE ACCESS FUND RESERVE.] 238.22 Subdivision 1. [ESTABLISH RESERVE.] A reserve is 238.23 established within the health care access fund for uses 238.24 necessary to preserve access to basic health care services. 238.25 Subd. 2. [RESERVE FINANCING.] The funds in the reserve are 238.26 equal to 20 percent of the direct appropriation for the 238.27 MinnesotaCare program. 238.28 Subd. 3. [RESERVE USE.] The reserve is established to 238.29 protect access to basic health care services that are publicly 238.30 funded. 238.31 [EFFECTIVE DATE.] This section is effective July 1, 2001. 238.32 Sec. 2. Minnesota Statutes 2000, section 295.50, 238.33 subdivision 3, is amended to read: 238.34 Subd. 3. [GROSS REVENUES.] "Gross revenues" are total 238.35 amounts received in money or otherwise by: 238.36 (1) a hospital for patient services; 239.1 (2) a surgical center for patient services; 239.2 (3) a health care provider, other than a staff model health 239.3 carrier, for patient services; 239.4(4) a wholesale drug distributor for sale or distribution239.5of legend drugs that are delivered in Minnesota by the wholesale239.6drug distributor, by common carrier, or by mail, unless the239.7legend drugs are delivered to another wholesale drug distributor239.8who sells legend drugs exclusively at wholesale. Legend drugs239.9do not include nutritional products as defined in Minnesota239.10Rules, part 9505.0325;and 239.11(5)(4) a staff model health plan company as gross premiums 239.12 for enrollees, copayments, deductibles, coinsurance, and fees 239.13 for patient services covered under its contracts with groups and 239.14 enrollees. 239.15 [EFFECTIVE DATE.] This section is effective for gross 239.16 revenues received on or after January 1, 2002. 239.17 Sec. 3. Minnesota Statutes 2000, section 295.52, 239.18 subdivision 1, is amended to read: 239.19 Subdivision 1. [HOSPITAL TAX.] A tax is imposed on each 239.20 hospital equal totwo1.5 percent of its gross revenues. 239.21 [EFFECTIVE DATE.] This section is effective for gross 239.22 revenues received on or after January 1, 2002. 239.23 Sec. 4. Minnesota Statutes 2000, section 295.52, 239.24 subdivision 1a, is amended to read: 239.25 Subd. 1a. [SURGICAL CENTER TAX.] A tax is imposed on each 239.26 surgical center equal totwo1.5 percent of its gross revenues. 239.27 [EFFECTIVE DATE.] This section is effective for gross 239.28 revenues received on or after January 1, 2002. 239.29 Sec. 5. Minnesota Statutes 2000, section 295.52, 239.30 subdivision 2, is amended to read: 239.31 Subd. 2. [PROVIDER TAX.] A tax is imposed on each health 239.32 care provider equal totwo1.5 percent of its gross revenues. 239.33 [EFFECTIVE DATE.] This section is effective for gross 239.34 revenues received on or after January 1, 2002. 239.35 Sec. 6. Minnesota Statutes 2000, section 295.53, 239.36 subdivision 1, is amended to read: 240.1 Subdivision 1. [EXEMPTIONS.](a)The following payments 240.2 are excluded from the gross revenues subject to the hospital, 240.3 surgical center, or health care provider taxes under sections 240.4 295.50 to 295.57: 240.5 (1) payments received for services provided under the 240.6 Medicare program, including payments received from the 240.7 government, and organizations governed by sections 1833 and 1876 240.8 of title XVIII of the federal Social Security Act, United States 240.9 Code, title 42, section 1395, and enrollee deductibles, 240.10 coinsurance, and copayments, whether paid by the Medicare 240.11 enrollee or by a Medicare supplemental coverage as defined in 240.12 section 62A.011, subdivision 3, clause (10). Payments for 240.13 services not covered by Medicare are taxable; 240.14 (2) medical assistance payments including payments received 240.15 directly from the government or from a prepaid plan; 240.16 (3) payments received for home health care services; 240.17 (4) payments received from hospitals or surgical centers 240.18 for goods and services on which liability for tax is imposed 240.19 under section 295.52 or the source of funds for the payment is 240.20 exempt under clause (1), (2),(7), (8), (10), (13),(6), (7), 240.21 (9), (12), or(20)(19); 240.22 (5) payments received from health care providers for goods 240.23 and services on which liability for tax is imposed under this 240.24 chapter or the source of funds for the payment is exempt under 240.25 clause (1), (2),(7), (8), (10), (13),(6), (7), (9), (12), or 240.26(20)(19); 240.27(6) amounts paid for legend drugs, other than nutritional240.28products, to a wholesale drug distributor who is subject to tax240.29under section 295.52, subdivision 3, reduced by reimbursements240.30received for legend drugs under clauses (1), (2), (7), and (8);240.31(7)(6) payments received under the general assistance 240.32 medical care program including payments received directly from 240.33 the government or from a prepaid plan; 240.34(8)(7) payments received for providing services under the 240.35 MinnesotaCare program including payments received directly from 240.36 the government or from a prepaid plan and enrollee deductibles, 241.1 coinsurance, and copayments. For purposes of this clause, 241.2 coinsurance means the portion of payment that the enrollee is 241.3 required to pay for the covered service; 241.4(9)(8) payments received by a health care provider or the 241.5 wholly owned subsidiary of a health care provider for care 241.6 provided outside Minnesota; 241.7(10)(9) payments received from the chemical dependency 241.8 fund under chapter 254B; 241.9(11)(10) payments received in the nature of charitable 241.10 donations that are not designated for providing patient services 241.11 to a specific individual or group; 241.12(12)(11) payments received for providing patient services 241.13 incurred through a formal program of health care research 241.14 conducted in conformity with federal regulations governing 241.15 research on human subjects. Payments received from patients or 241.16 from other persons paying on behalf of the patients are subject 241.17 to tax; 241.18(13)(12) payments received from any governmental agency 241.19 for services benefiting the public, not including payments made 241.20 by the government in its capacity as an employer or insurer; 241.21(14)(13) payments received for services provided by 241.22 community residential mental health facilities licensed under 241.23 Minnesota Rules, parts 9520.0500 to 9520.0690, community support 241.24 programs and family community support programs approved under 241.25 Minnesota Rules, parts 9535.1700 to 9535.1760, and community 241.26 mental health centers as defined in section 245.62, subdivision 241.27 2; 241.28(15)(14) government payments received by a regional 241.29 treatment center; 241.30(16)(15) payments received for hospice care services; 241.31(17)(16) payments received by a health care provider for 241.32 hearing aids and related equipment or prescription eyewear 241.33 delivered outside of Minnesota; 241.34(18)(17) payments received by an educational institution 241.35 from student tuition, student activity fees, health care service 241.36 fees, government appropriations, donations, or grants. Fee for 242.1 service payments and payments for extended coverage are taxable; 242.2(19)(18) payments received for services provided by: 242.3 assisted living programs and congregate housing programs; and 242.4(20)(19) payments received under the federal Employees 242.5 Health Benefits Act, United States Code, title 5, section 242.6 8909(f), as amended by the Omnibus Reconciliation Act of 1990. 242.7(b) Payments received by wholesale drug distributors for242.8legend drugs sold directly to veterinarians or veterinary bulk242.9purchasing organizations are excluded from the gross revenues242.10subject to the wholesale drug distributor tax under sections242.11295.50 to 295.59.242.12 [EFFECTIVE DATE.] This section is effective for gross 242.13 revenues received on or after January 1, 2002. 242.14 Sec. 7. Minnesota Statutes 2000, section 295.53, 242.15 subdivision 3, is amended to read: 242.16 Subd. 3. [SEPARATE STATEMENT OF TAX.] A hospital, surgical 242.17 center, or health care provider must not state the tax 242.18 obligation under section 295.52 in a deceptive or misleading 242.19 manner. It must not separately state tax obligations on bills 242.20 provided to patients, consumers, or other payers when the amount 242.21 received for the services or goods is not subject to tax. 242.22Pharmacies that separately state the tax obligations on242.23bills provided to consumers or to other payers who purchase242.24legend drugs may state the tax obligation as the wholesale price242.25of the legend drugs multiplied by the tax percentage specified242.26in section 295.52. Pharmacies must not state the tax obligation242.27based on the retail price.242.28 Whenever the commissioner determines that a person has 242.29 engaged in any act or practice constituting a violation of this 242.30 subdivision, the commissioner may bring an action in the name of 242.31 the state in the district court of the appropriate county to 242.32 enjoin the act or practice and to enforce compliance with this 242.33 subdivision, or the commissioner may refer the matter to the 242.34 attorney general or the county attorney of the appropriate 242.35 county. Upon a proper showing, a permanent or temporary 242.36 injunction, restraining order, or other appropriate relief must 243.1 be granted. 243.2 [EFFECTIVE DATE.] This section is effective for gross 243.3 revenues received on or after January 1, 2002. 243.4 Sec. 8. Minnesota Statutes 2000, section 295.58, is 243.5 amended to read: 243.6 295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 243.7 The commissioner shall deposit all revenues, including 243.8 penalties and interest, derived from the taxes imposed by 243.9 sections 295.50 to 295.57and from the insurance premiums tax243.10imposed by section 297I.05, subdivision 5, on health maintenance243.11organizations, community integrated service networks, and243.12nonprofit health service plan corporationsin the health care 243.13 access fund. There is annually appropriated from the health 243.14 care access fund to the commissioner of revenue the amount 243.15 necessary to make refunds under this chapter. 243.16 [EFFECTIVE DATE.] This section is effective the day 243.17 following final enactment. 243.18 Sec. 9. Minnesota Statutes 2000, section 295.582, is 243.19 amended to read: 243.20 295.582 [AUTHORITY.] 243.21 (a) A hospital, surgical center, or health care provider 243.22 that is subject to a tax under section 295.52, or a pharmacy243.23that has paid additional expense transferred under this section243.24by a wholesale drug distributor,may transfer additional expense 243.25 generated by section 295.52 obligations on to all third-party 243.26 contracts for the purchase of health care services on behalf of 243.27 a patient or consumer. The additional expense transferred to 243.28 the third-party purchaser must not exceed the tax percentage 243.29 specified in section 295.52 multiplied against the gross 243.30 revenues received under the third-party contract, and the tax 243.31 percentage specified in section 295.52 multiplied against 243.32 copayments and deductibles paid by the individual patient or 243.33 consumer. The expense must not be generated on revenues derived 243.34 from payments that are excluded from the tax under section 243.35 295.53. All third-party purchasers of health care services 243.36 including, but not limited to, third-party purchasers regulated 244.1 under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, 244.2 or 79A, or under section 471.61 or 471.617, must pay the 244.3 transferred expense in addition to any payments due under 244.4 existing contracts with the hospital, surgical center,pharmacy,244.5 or health care provider, to the extent allowed under federal 244.6 law. A third-party purchaser of health care services includes, 244.7 but is not limited to, a health carrier or community integrated 244.8 service network that pays for health care services on behalf of 244.9 patients or that reimburses, indemnifies, compensates, or 244.10 otherwise insures patients for health care services. A 244.11 third-party purchaser shall comply with this section regardless 244.12 of whether the third-party purchaser is a for-profit, 244.13 not-for-profit, or nonprofit entity.A wholesale drug244.14distributor may transfer additional expense generated by section244.15295.52 obligations to entities that purchase from the244.16wholesaler, and the entities must pay the additional expense.244.17 Nothing in this section limits the ability of a hospital, 244.18 surgical center,pharmacy, wholesale drug distributor,or health 244.19 care provider to recover all or part of the section 295.52 244.20 obligation by other methods, including increasing fees or 244.21 charges. 244.22 (b) Each third-party purchaser regulated under any chapter 244.23 cited in paragraph (a) shall include with its annual renewal for 244.24 certification of authority or licensure documentation indicating 244.25 compliance with paragraph (a). 244.26 (c) Any hospital, surgical center, or health care provider 244.27 subject to a tax under section 295.52or a pharmacy that has244.28paid additional expense transferred under this section by a244.29wholesale drug distributormay file a complaint with the 244.30 commissioner responsible for regulating the third-party 244.31 purchaser if at any time the third-party purchaser fails to 244.32 comply with paragraph (a). 244.33 (d) If the commissioner responsible for regulating the 244.34 third-party purchaser finds at any time that the third-party 244.35 purchaser has not complied with paragraph (a), the commissioner 244.36 may take enforcement action against a third-party purchaser 245.1 which is subject to the commissioner's regulatory jurisdiction 245.2 and which does not allow a hospital, surgical center,pharmacy,245.3 or provider to pass-through the tax. The commissioner may by 245.4 order fine or censure the third-party purchaser or revoke or 245.5 suspend the certificate of authority or license of the 245.6 third-party purchaser to do business in this state if the 245.7 commissioner finds that the third-party purchaser has not 245.8 complied with this section. The third-party purchaser may 245.9 appeal the commissioner's order through a contested case hearing 245.10 in accordance with chapter 14. 245.11 [EFFECTIVE DATE.] This section is effective for gross 245.12 revenues received on or after January 1, 2002. 245.13 Sec. 10. Minnesota Statutes 2000, section 297F.10, 245.14 subdivision 1, is amended to read: 245.15 Subdivision 1. [TAX AND USE TAX ON CIGARETTES.] Revenue 245.16 received from cigarette taxes, as well as related penalties, 245.17 interest, license fees, and miscellaneous sources of revenue 245.18 shall be deposited by the commissioner in the state treasury and 245.19 credited as follows: 245.20 (a) first to the general obligation special tax bond debt 245.21 service account in each fiscal year the amount required to 245.22 increase the balance on hand in the account on each December 1 245.23 to an amount equal to the full amount of principal and interest 245.24 to come due on all outstanding bonds whose debt service is 245.25 payable primarily from the proceeds of the tax to and including 245.26 the second following July 1; and 245.27 (b) after the requirements of paragraph (a) have been met: 245.28 (1) the revenue produced by one mill of the tax on 245.29 cigarettes weighing not more than three pounds a thousand and 245.30 two mills of the tax on cigarettes weighing more than three 245.31 pounds a thousand must be credited to the Minnesota future 245.32 resources fund;and245.33 (2) 81 percent of the taxes on cigarettes collected under 245.34 section 297F.05 must be credited to the health care access fund 245.35 in the state treasury; and 245.36 (3) the balance of the revenues derived from taxes, 246.1 penalties, and interest (under this chapter) and from license 246.2 fees and miscellaneous sources of revenue shall be credited to 246.3 the general fund. 246.4 [EFFECTIVE DATE.] This section is effective July 1, 2003. 246.5 Sec. 11. Minnesota Statutes 2000, section 297I.15, is 246.6 amended by adding a subdivision to read: 246.7 Subd. 11. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 246.8 HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 246.9 SERVICE NETWORKS.] Health maintenance organizations, nonprofit 246.10 health service plan corporations, and community integrated 246.11 service networks are exempt from the taxes imposed under this 246.12 chapter. 246.13 [EFFECTIVE DATE.] This section is effective the day 246.14 following final enactment. 246.15 Sec. 12. [REPEALER.] 246.16 (a) Minnesota Statutes 2000, sections 295.50, subdivisions 246.17 10a, 14, and 15; 295.51, subdivision 1a; 295.52, subdivisions 3, 246.18 4, 4a, and 7; 295.54, subdivisions 2 and 3; and 297I.05, 246.19 subdivision 5, are repealed. 246.20 (b) Minnesota Statutes 2000, section 16A.76, is repealed. 246.21 [EFFECTIVE DATE.] This section, paragraph (a), is effective 246.22 for gross revenues received on or after January 1, 2002. This 246.23 section, paragraph (b), is effective July 1, 2001. 246.24 ARTICLE 10 246.25 MOTOR VEHICLE REGISTRATION TAX REFORM 246.26 Section 1. Minnesota Statutes 2000, section 168.013, 246.27 subdivision 1a, is amended to read: 246.28 Subd. 1a. [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 246.29 automobiles as defined in section 168.011, subdivision 7, and 246.30 hearses, except as otherwise provided, the tax shall be $10 plus 246.31 an additional tax equal to 1.25 percent of the base value. 246.32 (b) Subject to the classification provisions herein, "base 246.33 value" means the manufacturer's suggested retail price of the 246.34 vehicle including destination charge using list price 246.35 information published by the manufacturer or determined by the 246.36 registrar if no suggested retail price exists, and shall not 247.1 include the cost of each accessory or item of optional equipment 247.2 separately added to the vehicle and the suggested retail price. 247.3 (c) If the manufacturer's list price information contains a 247.4 single vehicle identification number followed by various 247.5 descriptions and suggested retail prices, the registrar shall 247.6 select from those listings only the lowest price for determining 247.7 base value. 247.8 (d) If unable to determine the base value because the 247.9 vehicle is specially constructed, or for any other reason, the 247.10 registrar may establish such value upon the cost price to the 247.11 purchaser or owner as evidenced by a certificate of cost but not 247.12 including Minnesota sales or use tax or any local sales or other 247.13 local tax. 247.14 (e) The registrar shall classify every vehicle in its 247.15 proper base value class as follows: 247.16 FROM TO 247.17 $ 0 $199.99 247.18 200 399.99 247.19 and thereafter a series of classes successively set in brackets 247.20 having a spread of $200 consisting of such number of classes as 247.21 will permit classification of all vehicles. 247.22 (f) The base value for purposes of this section shall be 247.23 the middle point between the extremes of its class. 247.24 (g) The registrar shall establish the base value, when new, 247.25 of every passenger automobile and hearse registered prior to the 247.26 effective date of Extra Session Laws 1971, chapter 31, using 247.27 list price information published by the manufacturer or any 247.28 nationally recognized firm or association compiling such data 247.29 for the automotive industry. If unable to ascertain the base 247.30 value of any registered vehicle in the foregoing manner, the 247.31 registrar may use any other available source or method. The tax 247.32 on all previously registered vehicles shall be computed upon the 247.33 base value thus determined taking into account the depreciation 247.34 provisions of paragraph (h). 247.35 (h) (1) Except as provided in paragraph (i), the annual 247.36 additional tax computed upon the base value as provided herein, 248.1 during the first and second years of vehicle life shall be 248.2 computed upon 100 percent of the base value; for the third and 248.3 fourth years, 90 percent of such value; for the fifth and sixth 248.4 years, 75 percent of such value; for the seventh year, 60 248.5 percent of such value; for the eighth year, 40 percent of such 248.6 value; for the ninth year, 30 percent of such value; for the 248.7 tenth year, ten percent of such value; for the 11th and each 248.8 succeeding year, the sum of $25. 248.9 In no event shall the annual additional tax be less than $25. 248.10 (2) Until superseded by clause (3), the total tax under 248.11 this subdivision shall not exceed $189 upon the initial 248.12 registration of any vehicle first subject to registration tax in 248.13 Minnesota prior to the end of the first year of vehicle life. 248.14 The total tax under this subdivision shall not exceed$189$89 248.15 forthe firstany renewal periodand shall not exceed $99 for248.16subsequent renewal periods. The total tax under this248.17subdivision onor for any vehicle filing its initial 248.18 registration in Minnesota in the second year of vehicle 248.19 lifeshall not exceed $189 and shall not exceed $99 for248.20subsequent renewal periods. The total tax under this248.21subdivision on any vehicle filing its initial registration in248.22Minnesota in the third or subsequent year of vehicle life shall248.23not exceed $99 and shall not exceed $99 in any subsequent248.24renewal periodor later. 248.25 (3) Beginning in 2005, the total tax under this subdivision 248.26 shall not exceed $75. 248.27 (i) The annual additional tax under paragraph (h) on a 248.28 motor vehicle on which the first annual tax was paid before 248.29 January 1, 1990, must not exceed the tax that was paid on that 248.30 vehicle the year before. 248.31 [EFFECTIVE DATE.] (a) The change to this section, paragraph 248.32 (h), clause (2), is effective for vehicles first subject to 248.33 registration tax in Minnesota on or after January 1, 2003. It 248.34 is also effective for vehicles registered in Minnesota prior to 248.35 January 1, 2003, beginning with the renewal of the registration 248.36 of vehicles that were assigned an expiration month pursuant to 249.1 section 168.017 of January 1, 2003, or later. It does not apply 249.2 to vehicles that were assigned an expiration month pursuant to 249.3 section 168.017 of December 2002 or earlier. 249.4 (b) The change to this section, paragraph (h), clause (3), 249.5 is effective for vehicles first subject to registration tax in 249.6 Minnesota on or after January 1, 2005. It is also effective for 249.7 vehicles registered in Minnesota prior to January 1, 2005, 249.8 beginning with the renewal of the registration of vehicles that 249.9 were assigned an expiration month pursuant to section 168.017 of 249.10 January 2005 or later. It does not apply to vehicles that were 249.11 assigned an expiration month pursuant to section 168.017 of 249.12 December 2004 or earlier. 249.13 Sec. 2. Minnesota Statutes 2000, section 297B.09, 249.14 subdivision 1, is amended to read: 249.15 Subdivision 1. [GENERAL FUND SHARE.] Money collected and 249.16 received under this chapter must be deposited as provided in 249.17 this subdivision. 249.18 (a) Thirty-two percent of the money collected and 249.19 received after June 30, 2001, but before July 1, 2002, must be 249.20 deposited in the highway user tax distribution fund, and. 249.21 Theremaining 68 percent of the moneyremainder must be 249.22 deposited in the general fund. 249.23 (b) Forty-three percent of the money collected and received 249.24 after June 30, 2002, but before July 1, 2003, must be deposited 249.25 in the highway user tax distribution fund. The remainder must 249.26 be deposited in the general fund. 249.27 (c) Fifty-one percent of the money collected and received 249.28 after June 30, 2003, but before July 1, 2004, must be deposited 249.29 in the highway user tax distribution fund. The remainder must 249.30 be deposited in the general fund. 249.31 (d) Fifty-seven percent of the money collected and received 249.32 after June 30, 2004, but before July 1, 2005, must be deposited 249.33 in the highway user tax distribution fund. The remainder must 249.34 be deposited in the general fund. 249.35 (e) Sixty-two percent of the money collected and received 249.36 after June 30, 2005, must be deposited in the highway user tax 250.1 distribution fund. The remainder must be deposited in the 250.2 general fund. 250.3 [EFFECTIVE DATE.] This section is effective for money 250.4 collected and received after June 30, 2001. 250.5 Sec. 3. Laws 2000, chapter 490, article 7, section 3, is 250.6 amended to read: 250.7 Sec. 3. [APPROPRIATION.] 250.8 For fiscal year 2001, $149,804,000 is appropriated from the 250.9 general fund to the highway user tax distribution fund.For250.10fiscal year 2002, $161,723,000 is appropriated from the general250.11fund to the highway user tax distribution fund.250.12 ARTICLE 11 250.13 TAX POLICY PROVISIONS 250.14 Section 1. Minnesota Statutes 2000, section 84.922, is 250.15 amended by adding a subdivision to read: 250.16 Subd. 11. [PROOF OF SALES TAX PAYMENT.] A person applying 250.17 for initial registration in Minnesota of an all-terrain vehicle 250.18 shall provide a purchaser's certificate showing a complete 250.19 description of the all-terrain vehicle, the seller's name and 250.20 address, the full purchase price of the all-terrain vehicle, and 250.21 the trade-in allowance, if any. The certificate also must 250.22 include information showing either that (1) the sales and use 250.23 tax under chapter 297A was paid, or (2) the purchase was exempt 250.24 from tax under chapter 297A. The certificate is not required if 250.25 the applicant provides a receipt, invoice, or other document 250.26 that shows the all-terrain vehicle was purchased from a retailer 250.27 maintaining a place of business in this state as defined in 250.28 section 297A.66, subdivision 1. 250.29 [EFFECTIVE DATE.] This section is effective for 250.30 registrations occurring on or after July 1, 2001. 250.31 Sec. 2. Minnesota Statutes 2000, section 270.60, is 250.32 amended by adding a subdivision to read: 250.33 Subd. 5. [FEES; APPROPRIATION.] (a) The commissioner may 250.34 enter into an agreement with the governing body of any federally 250.35 recognized Indian reservation in Minnesota concerning fees 250.36 administered by the commissioner that are paid by the tribe, 251.1 members of the tribe, or persons who conduct business with the 251.2 tribe, or otherwise imposed on on-reservation activities. The 251.3 agreement may provide for the refund or sharing of the fee. The 251.4 commissioner may make any payments required by the agreement 251.5 from the fees collected. 251.6 (b) Each head of an agency, board, or other governmental 251.7 entity that administers a program that is funded by fees 251.8 administered by the commissioner may sign an agreement entered 251.9 into by the commissioner under this subdivision. An agreement 251.10 is not valid until signed by the head of each agency, board, or 251.11 other governmental entity that administers a program funded by 251.12 the particular fee covered in an agreement and by the 251.13 commissioner of revenue. 251.14 (c) There is annually appropriated to the commissioner of 251.15 revenue from the funds for which the fees are collected the 251.16 amounts necessary to make payments as provided in this 251.17 subdivision. 251.18 [EFFECTIVE DATE.] This section is effective the day 251.19 following final enactment and applies to all fees administered 251.20 by the commissioner of revenue for which timely claims for 251.21 refund have been, or can be, filed. 251.22 Sec. 3. [270.691] [PUBLICATION OF NAMES OF DELINQUENT 251.23 TAXPAYERS.] 251.24 Subdivision 1. [COMMISSIONER MAY PUBLISH.] (a) 251.25 Notwithstanding any other law, the commissioner may publish a 251.26 list or lists of taxpayers who owe delinquent taxes or fees 251.27 administered by the commissioner, and who meet the requirements 251.28 of paragraph (b). 251.29 (b) For purposes of this section, a taxpayer may be 251.30 included on a list if: 251.31 (1) the taxes or fees owed remain unpaid at least 180 days 251.32 after the dates they were due; 251.33 (2) the taxpayer's total liability for the taxes and fees, 251.34 including penalties, interest, and other charges, is at least 251.35 $5,000; and 251.36 (3) a tax lien has been filed or a judgment for the 252.1 liability has been entered against the taxpayer before notice is 252.2 given under subdivision 3. 252.3 (c) In the case of listed taxpayers that are business 252.4 entities, the commissioner may also list the names of 252.5 responsible persons assessed pursuant to section 270.101 for 252.6 listed liabilities, who are not protected from publication by 252.7 subdivision 2, and for whom the requirements of paragraph (b) 252.8 are satisfied with regard to the personal assessment. 252.9 Subd. 2. [REQUIRED AND EXCLUDED TAXPAYERS.] (a) The 252.10 commissioner may publish lists of some or all of the taxpayers 252.11 described in subdivision 1. A list must include the taxpayers 252.12 with the largest unpaid liabilities of the kind used to define 252.13 the list, subject to the limitations of paragraphs (b) and (c). 252.14 (b) For the purposes of this section, a tax or fee is not 252.15 delinquent if: 252.16 (1) an administrative or court action contesting the amount 252.17 or validity of the taxpayer's liability has been filed or served 252.18 and is unresolved at the time when notice would be given under 252.19 subdivision 3; 252.20 (2) an appeal period to contest the liability has not 252.21 expired; or 252.22 (3) the liability is subject to a payment agreement and 252.23 there is no delinquency in the payments required under the 252.24 agreement. 252.25 (c) Unpaid liabilities are not subject to publication if: 252.26 (1) the commissioner is in the process of reviewing or 252.27 adjusting the liability; 252.28 (2) the taxpayer is a debtor in a bankruptcy proceeding and 252.29 the automatic stay is in effect; 252.30 (3) the commissioner has been notified that the taxpayer is 252.31 deceased; or 252.32 (4) the time period for collecting the taxes or fees has 252.33 expired. 252.34 Subd. 3. [NOTICE TO TAXPAYER.] (a) At least 30 days before 252.35 publishing the name of a delinquent taxpayer, the commissioner 252.36 shall mail a written notice to the taxpayer, detailing the 253.1 amount and nature of each liability and the intended publication 253.2 of the information listed in subdivision 4 related to the 253.3 liability. The notice must be mailed by first class and 253.4 certified mail addressed to the last known address of the 253.5 taxpayer. The notice must include information regarding the 253.6 exceptions listed in subdivision 2 and must state that the 253.7 taxpayer's information will not be published if the taxpayer 253.8 pays the delinquent obligation, enters into an agreement to pay, 253.9 or provides information establishing that subdivision 2 253.10 prohibits publication of the taxpayer's name. 253.11 (b) After at least 30 days has elapsed since the notice was 253.12 mailed and the delinquent tax or fee has not been paid and the 253.13 taxpayer has not proved to the commissioner that subdivision 2 253.14 prohibits publication, the commissioner may publish in a list of 253.15 delinquent taxpayers the information about the taxpayer that is 253.16 listed in subdivision 4. 253.17 Subd. 4. [FORM OF LIST.] The list may be published by any 253.18 medium or method. The list must contain the name, address, type 253.19 of tax or fee, and period for which payment is due for each 253.20 liability, including penalties, interest, and other charges owed 253.21 by each listed delinquent taxpayer. 253.22 Subd. 5. [REMOVAL FROM LIST.] The commissioner shall 253.23 remove the name of a taxpayer from the list of delinquent 253.24 taxpayers after the commissioner receives written notice of and 253.25 verifies any of the following facts about the liability in 253.26 question: 253.27 (1) the taxpayer has contacted the commissioner and 253.28 arranged resolution of the liability; 253.29 (2) an active bankruptcy proceeding has been initiated for 253.30 the liability; 253.31 (3) a bankruptcy proceeding concerning the liability has 253.32 resulted in discharge of the liability; or 253.33 (4) the commissioner has written off the liability. 253.34 Subd. 6. [NAMES PUBLISHED IN ERROR.] If the commissioner 253.35 publishes a name under subdivision 1 in error, the taxpayer 253.36 whose name was erroneously published has a right to request a 254.1 retraction and apology. If the taxpayer so requests, the 254.2 commissioner shall publish a retraction and apology 254.3 acknowledging that the taxpayer's name was published in error. 254.4 The retraction and apology must appear in the same medium and 254.5 the same format as the original list that contained the name 254.6 listed in error. 254.7 [EFFECTIVE DATE.] This section is effective the day 254.8 following final enactment for all liabilities owing on that date 254.9 for which the statute of limitations for collection has not 254.10 expired, and all liabilities arising after that date. 254.11 Sec. 4. Minnesota Statutes 2000, section 270.70, 254.12 subdivision 13, is amended to read: 254.13 Subd. 13. [LEVY AND SALE BY SHERIFF.] If any tax payable 254.14 to the commissioner of revenue or to the department of revenue 254.15 is not paid as provided in subdivision 2, the commissioner may,254.16within five years after the date of assessment of the254.17tax, within the time periods provided in subdivision 1 for 254.18 collection of taxes, delegate the authority granted by 254.19 subdivision 1, by means of issuing a warrant to the sheriff of 254.20 any county of the state commanding the sheriff, as agent for the 254.21 commissioner, to levy upon and sell the real and personal 254.22 property of the person liable for the payment or collection of 254.23 the tax and to levy upon the rights to property of that person 254.24 within the county, or to levy upon and seize any property within 254.25 the county on which there is a lien provided in section 270.69, 254.26 and to return the warrant to the commissioner and pay to the 254.27 commissioner the money collected by virtue thereof by a time to 254.28 be therein specified not less than 60 days from the date of the 254.29 warrant. The sheriff shall proceed thereunder to levy upon and 254.30 seize any property of the person and to levy upon the rights to 254.31 property of the person within the county (except the person's 254.32 homestead or that property which is exempt from execution 254.33 pursuant to section 550.37), or to levy upon and seize any 254.34 property within the county on which there is a lien provided in 254.35 section 270.69. For purposes of the preceding sentence, the 254.36 term "tax" shall include any penalty, interest and costs 255.1 properly payable. The sheriff shall then sell so much of the 255.2 property levied upon as is required to satisfy the taxes, 255.3 interest, and penalties, together with the sheriff's costs; but 255.4 the sales, and the time and manner of redemption therefrom, 255.5 shall, to the extent not provided in sections 270.701 to 255.6 270.709, be governed by chapter 550. The proceeds of the sales, 255.7 less the sheriff's costs, shall be turned over to the 255.8 commissioner, who shall then apply the proceeds as provided in 255.9 section 270.708. 255.10 [EFFECTIVE DATE.] This section is effective the day 255.11 following final enactment for all taxes for which issuance of a 255.12 warrant under this subdivision has not been barred as of that 255.13 date. 255.14 Sec. 5. Minnesota Statutes 2000, section 270.73, 255.15 subdivision 1, is amended to read: 255.16 Subdivision 1. [POSTING, NOTICE.] Pursuant to the 255.17 authority to disclose under section 270B.12, subdivision 4, the 255.18 commissioner shall, by the 15th of each month, submit to the 255.19 commissioner of public safety a list of all taxpayers who are 255.20 required to pay, withhold, or collect the tax imposed by section 255.21 290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or 255.22 297A.02, or local sales and use tax payable to the commissioner 255.23 of revenue, or a local option tax administered and collected by 255.24 the commissioner of revenue, and who are ten days or more 255.25 delinquent in either filing a tax return or paying the tax. 255.26 The commissioner of revenue is under no obligation to list 255.27 a taxpayer whose business is inactive. At least ten days before 255.28 notifying the commissioner of public safety, the commissioner of 255.29 revenue shall notify the taxpayer of the intended action. 255.30 The commissioner of public safety shall post the list in 255.31 the same manner as provided in section 340A.318, subdivision 3. 255.32 The list will prominently show the date of posting. If a 255.33 taxpayer previously listed files all returns and pays all taxes 255.34 then due, the commissioner shall notify the commissioner of 255.35 public safety within two business days. 255.36 [EFFECTIVE DATE.] This section is effective for lists 256.1 submitted to the commissioner of public safety on or after the 256.2 day following final enactment. 256.3 Sec. 6. Minnesota Statutes 2000, section 287.08, is 256.4 amended to read: 256.5 287.08 [TAX, HOW PAYABLE; RECEIPTS.] 256.6 (a) The tax imposed by sections 287.01 to 287.12 must be 256.7 paid to the treasurer of any county in this state in which the 256.8 real property or some part is located at or before the time of 256.9 filing the mortgage for record. The treasurer shall endorse 256.10 receipt on the mortgage and the receipt is conclusive proof that 256.11 the tax has been paid in the amount stated and authorizes any 256.12 county recorder or registrar of titles to record the mortgage. 256.13 Its form, in substance, shall be "registration tax hereon of 256.14 ..................... dollars paid." If the mortgage is exempt 256.15 from taxation the endorsement shall, in substance, be "exempt 256.16 from registration tax." In either case the receipt must be 256.17 signed by the treasurer. In case the treasurer is unable to 256.18 determine whether a claim of exemption should be allowed, the 256.19 tax must be paid as in the case of a taxable mortgage. 256.20 (b)Upon written application of the taxpayer,The county 256.21 treasurer may refund in whole or in part any mortgage registry 256.22 taxthat has been erroneously paid, or a person having paid a256.23mortgage registry tax amount may seek a refund of the tax, or256.24other appropriate relief,overpayment if a written application 256.25 by the taxpayer is submitted to the county treasurer within 256.26 three and one-half years from the date of the overpayment. If 256.27 the county has not issued a denial of the application, the 256.28 taxpayer may bring an action in tax court in the county in which 256.29 the tax was paid at any time after the expiration of six months 256.30 from the time that the application was submitted. A denial of 256.31 refund may be appealed within 60 days from the date of the 256.32 denial by bringing an action in tax court in the county in which 256.33 the tax was paid, within 60 days of the payment. The action is 256.34 commenced by the serving of a petition for relief on the county 256.35 treasurer, and by filing a copy with the court. The county 256.36 attorney shall defend the action. The county treasurer shall 257.1 notify the treasurer of each county that has or would receive a 257.2 portion of the tax as paid. 257.3 (c) If the county treasurer determines a refund should be 257.4 paid, or if a refund is ordered by the court, the county 257.5 treasurer of each county that actually received a portion of the 257.6 tax shall immediately pay a proportionate share of three percent 257.7 of the refund using any available county funds. The county 257.8 treasurer of each county that received, or would have received, 257.9 a portion of the tax shall also pay their county's proportionate 257.10 share of the remaining 97 percent of the court-ordered refund on 257.11 or before the 20th day of the following month using solely the 257.12 mortgage registry tax funds that would be paid to the 257.13 commissioner of revenue on that date under section 287.12. If 257.14 the funds on hand under this procedure are insufficient to fully 257.15 fund 97 percent of the court-ordered refund, the county 257.16 treasurer of the county in which the action was brought shall 257.17 file a claim with the commissioner of revenue under section 257.18 16A.48 for the remaining portion of 97 percent of the refund, 257.19 and shall pay over the remaining portion upon receipt of a 257.20 warrant from the state issued pursuant to the claim. 257.21 (d) When any mortgage covers real property located in more 257.22 than one county in this state the total tax must be paid to the 257.23 treasurer of the county where the mortgage is first presented 257.24 for recording, and the payment must be receipted as provided in 257.25 paragraph (a). If the principal debt or obligation secured by 257.26 such a multiple county mortgage exceeds $1,000,000, the nonstate 257.27 portion of the tax must be divided and paid over by the county 257.28 treasurer receiving it, on or before the 20th day of each month 257.29 after receipt, to the county or counties entitled in the ratio 257.30 that the market value of the real property covered by the 257.31 mortgage in each county bears to the market value of all the 257.32 real property in this state described in the mortgage. In 257.33 making the division and payment the county treasurer shall send 257.34 a statement giving the description of the real property 257.35 described in the mortgage and the market value of the part 257.36 located in each county. For this purpose, the treasurer of any 258.1 county may require the treasurer of any other county to certify 258.2 to the former the market valuation of any tract of real property 258.3 in any mortgage. 258.4 [EFFECTIVE DATE.] This section is effective for 258.5 overpayments made on or after July 1, 2001. 258.6 Sec. 7. Minnesota Statutes 2000, section 287.28, is 258.7 amended to read: 258.8 287.28 [REFUNDS OR REDEMPTION.] 258.9 (a) The county treasurer mayrefund in whole or in part any258.10tax which has been erroneously paid and may allow for orredeem 258.11such of thestamps,issued under the authority of sections 258.12 287.20 to 287.31as maythat have been spoiled, destroyed, or 258.13 rendered useless or unfit for the purpose intended or for which 258.14 the owner may have no use or which through mistake may have been 258.15 improperly or unnecessarily used.Such orderRedemption shall 258.16 be made only upon written application of the taxpayer. 258.17 (b)A person having paid a deed tax amount may seek a258.18refund of the tax, or other appropriate relief,The county 258.19 treasurer may refund any deed tax overpayment if a written 258.20 application by the taxpayer is submitted to the county treasurer 258.21 within three and one-half years from the date of the 258.22 overpayment. If the county has not issued a denial of the 258.23 application, the taxpayer may bring an action in tax court in 258.24 the county in which the tax was paid at any time after the 258.25 expiration of six months from the time that the application was 258.26 submitted. A denial of refund may be appealed within 60 days 258.27 from the date of the denial by commencing an action in tax court 258.28 in the county where the tax was paid, within 60 days of the258.29payment. The action is commenced by serving a petition for 258.30 relief on the county treasurer, and filing a copy with the 258.31 court. The county attorney shall defend the action. The county 258.32 treasurer shall notify the treasurer of each county that has, or 258.33 would receive a portion of the tax as paid. Any refund of deed 258.34 tax which the county treasurer determines should be made, and 258.35 any court ordered refund of deed tax, shall be accomplished 258.36 using the refund procedures in section 287.08. 259.1 [EFFECTIVE DATE.] This section is effective for 259.2 overpayments made on or after July 1, 2001. 259.3 Sec. 8. Minnesota Statutes 2000, section 290.06, 259.4 subdivision 23, is amended to read: 259.5 Subd. 23. [REFUND OF CONTRIBUTIONS TO POLITICAL PARTIES 259.6 AND CANDIDATES.] (a) A taxpayer may claim a refund equal to the 259.7 amount of the taxpayer's contributions made in the calendar year 259.8 to candidates and to a political party. The maximum refund for 259.9 an individual must not exceed $50 and for a married couple, 259.10 filing jointly, must not exceed $100. A refund of a 259.11 contribution is allowed only if the taxpayer files a form 259.12 required by the commissioner and attaches to the form a copy of 259.13 an official refund receipt form issued by the candidate or party 259.14 and signed by the candidate, the treasurer of the candidate's 259.15 principal campaign committee, or the chair or treasurer of the 259.16 party unit, after the contribution was received. The receipt 259.17 forms must be numbered, and the data on the receipt that are not 259.18 public must be made available to the campaign finance and public 259.19 disclosure board upon its request. A claim must be filed with 259.20 the commissioner no sooner than January 1 of the calendar year 259.21 in which the contribution was made and no later than April 15 of 259.22 the calendar year following the calendar year in which the 259.23 contribution was made. A taxpayer may file only one claim per 259.24 calendar year. Amounts paid by the commissioner after June 15 259.25 of the calendar year following the calendar year in which the 259.26 contribution was made must include interest at the rate 259.27 specified in section 270.76. 259.28 (b) No refund is allowed under this subdivision for a 259.29 contribution to a candidate unless the candidate: 259.30 (1) has signed an agreement to limit campaign expenditures 259.31 as provided in section 10A.322; 259.32 (2) is seeking an office for which voluntary spending 259.33 limits are specified in section 10A.25; and 259.34 (3) has designated a principal campaign committee. 259.35 This subdivision does not limit the campaign expenditures 259.36 of a candidate who does not sign an agreement but accepts a 260.1 contribution for which the contributor improperly claims a 260.2 refund. 260.3 (c) For purposes of this subdivision, "political party" 260.4 means a major political party as defined in section 200.02, 260.5 subdivision 7, or a minor political party qualifying for 260.6 inclusion on the income tax or property tax refund form under 260.7 section 10A.31, subdivision 3a. 260.8 A "major party" or "minor party" includes the aggregate of 260.9 that party's organization within each house of the legislature, 260.10 the state party organization, and the party organization within 260.11 congressional districts, counties, legislative districts, 260.12 municipalities, and precincts. 260.13 "Candidate" means a candidate as defined in section 10A.01, 260.14 subdivision 10, except a candidate for judicial office. 260.15 "Contribution" means a gift of money. 260.16 (d) The commissioner shall make copies of the form 260.17 available to the public and candidates upon request. 260.18 (e) The following data collected or maintained by the 260.19 commissioner under this subdivision are private: the identities 260.20 of individuals claiming a refund, the identities of candidates 260.21 to whom those individuals have made contributions, and the 260.22 amount of each contribution. 260.23 (f) The commissioner shall report to the campaign finance 260.24 and public disclosure board by each August 1 a summary showing 260.25 the total number and aggregate amount of political contribution 260.26 refunds made on behalf of each candidate and each political 260.27 party. These data are public. 260.28 (g) The amount necessary to pay claims for the refund 260.29 provided in this section is appropriated from the general fund 260.30 to the commissioner of revenue. 260.31 (h) For a taxpayer who files a claim for refund via the 260.32 Internet or other electronic means, the commissioner may accept 260.33 the number on the official receipt as documentation that a 260.34 contribution was made rather than the actual receipt as required 260.35 by paragraph (a). 260.36 [EFFECTIVE DATE.] This section is effective for refund 261.1 claims based on contributions made after December 31, 2001. 261.2 Sec. 9. Minnesota Statutes 2000, section 290.92, 261.3 subdivision 23, is amended to read: 261.4 Subd. 23. [WITHHOLDING BY EMPLOYER OF DELINQUENT TAXES.] 261.5 (1) The commissioner may, within five years after the date of 261.6 assessment of the tax, or if a lien has been filed under section 261.7 270.69, within the statutory period for enforcement of the lien, 261.8 give notice to any employer deriving income which has a taxable 261.9 situs in this state regardless of whether the income is exempt 261.10 from taxation, that an employee of that employer is delinquent 261.11 in a certain amount with respect to any state taxes, including 261.12 penalties, interest, and costs. The commissioner can proceed 261.13 under this subdivision only if the tax is uncontested or if the 261.14 time for appeal of the tax has expired. The commissioner shall 261.15 not proceed under this subdivision until the expiration of 30 261.16 days after mailing to the taxpayer, at the taxpayer's last known 261.17 address, a written notice of (a) the amount of taxes, interest, 261.18 and penalties due from the taxpayer and demand for their 261.19 payment, and (b) the commissioner's intention to require 261.20 additional withholding by the taxpayer's employer pursuant to 261.21 this subdivision. The effect of the notice shall expire180261.22daysone year after it has been mailed to the taxpayer provided 261.23 that the notice may be renewed by mailing a new notice which is 261.24 in accordance with this subdivision. The renewed notice shall 261.25 have the effect of reinstating the priority of the original 261.26 claim. The notice to the taxpayer shall be in substantially the 261.27 same form as that provided in section 571.72. The notice shall 261.28 further inform the taxpayer of the wage exemptions contained in 261.29 section 550.37, subdivision 14. If no statement of exemption is 261.30 received by the commissioner within 30 days from the mailing of 261.31 the notice, the commissioner may proceed under this 261.32 subdivision. The notice to the taxpayer's employer may be 261.33 served by mail or by delivery by an employee of the department 261.34 of revenue and shall be in substantially the same form as 261.35 provided in section 571.75. Upon receipt of notice, the 261.36 employer shall withhold from compensation due or to become due 262.1 to the employee, the total amount shown by the notice, subject 262.2 to the provisions of section 571.922. The employer shall 262.3 continue to withhold each pay period until the notice is 262.4 released by the commissioner under section 270.709. Upon 262.5 receipt of notice by the employer, the claim of the state of 262.6 Minnesota shall have priority over any subsequent garnishments 262.7 or wage assignments. The commissioner may arrange between the 262.8 employer and the employee for withholding a portion of the total 262.9 amount due the employee each pay period, until the total amount 262.10 shown by the notice plus accrued interest has been withheld. 262.11 The "compensation due" any employee is defined in 262.12 accordance with the provisions of section 571.921. The maximum 262.13 withholding allowed under this subdivision for any one pay 262.14 period shall be decreased by any amounts payable pursuant to a 262.15 garnishment action with respect to which the employer was served 262.16 prior to being served with the notice of delinquency and any 262.17 amounts covered by any irrevocable and previously effective 262.18 assignment of wages; the employer shall give notice to the 262.19 department of the amounts and the facts relating to such 262.20 assignments within ten days after the service of the notice of 262.21 delinquency on the form provided by the department of revenue as 262.22 noted in this subdivision. 262.23 (2) If the employee ceases to be employed by the employer 262.24 before the full amount set forth in a notice of delinquency plus 262.25 accrued interest has been withheld, the employer shall 262.26 immediately notify the commissioner in writing of the 262.27 termination date of the employee and the total amount withheld. 262.28 No employer may discharge any employee by reason of the fact 262.29 that the commissioner has proceeded under this subdivision. If 262.30 an employer discharges an employee in violation of this 262.31 provision, the employee shall have the same remedy as provided 262.32 in section 571.927, subdivision 2. 262.33 (3) Within ten days after the expiration of such pay 262.34 period, the employer shall remit to the commissioner, on a form 262.35 and in the manner prescribed by the commissioner, the amount 262.36 withheld during each pay period under this subdivision. 263.1 (4) Clauses (1), (2), and (3), except provisions imposing a 263.2 liability on the employer for failure to withhold or remit, 263.3 shall apply to cases in which the employer is the United States 263.4 or any instrumentality thereof or this state or any municipality 263.5 or other subordinate unit thereof. 263.6 (5) The commissioner shall refund to the employee excess 263.7 amounts withheld from the employee under this subdivision. If 263.8 any excess results from payments by the employer because of 263.9 willful failure to withhold or remit as prescribed in clause 263.10 (3), the excess attributable to the employer's payment shall be 263.11 refunded to the employer. 263.12 (6) Employers required to withhold delinquent taxes, 263.13 penalties, interest, and costs under this subdivision shall not 263.14 be required to compute any additional interest, costs or other 263.15 charges to be withheld. 263.16 (7) The collection remedy provided to the commissioner by 263.17 this subdivision shall have the same legal effect as if it were 263.18 a levy made pursuant to section 270.70. 263.19 [EFFECTIVE DATE.] This section is effective for notices of 263.20 intent mailed on or after the day following final enactment. 263.21 Sec. 10. Minnesota Statutes 2000, section 290A.03, 263.22 subdivision 12, is amended to read: 263.23 Subd. 12. [GROSS RENT.] (a) "Gross rent" means rental paid 263.24 for the right of occupancy, at arms-length, of a homestead, 263.25 exclusive of charges for any medical services furnished by the 263.26 landlord as a part of the rental agreement, whether expressly 263.27 set out in the rental agreement or not. 263.28 (b) The gross rent of a resident of a nursing home or 263.29 intermediate care facility is $350 per month. The gross rent of 263.30 a resident of an adult foster care home is $550 per month. 263.31 Beginning for rent paid in 2002, the commissioner shall annually 263.32 adjust for inflation the gross rent amounts stated in this 263.33 paragraph. The adjustment must be made in accordance with 263.34 section 1f of the Internal Revenue Code, except that for 263.35 purposes of this paragraph the percentage increase shall be 263.36 determined from the year ending on June 30, 2001, to the year 264.1 ending on June 30 of the year in which the rent is paid. The 264.2 commissioner shall round the gross rents to the nearest $10 264.3 amount. If the amount ends in $5, the commissioner shall round 264.4 it up to the next $10 amount. The determination of the 264.5 commissioner under this paragraph is not a rule under the 264.6 Administrative Procedure Act. 264.7 (c) If the landlord and tenant have not dealt with each 264.8 other at arms-length and the commissioner determines that the 264.9 gross rent charged was excessive, the commissioner may adjust 264.10 the gross rent to a reasonable amount for purposes of this 264.11 chapter. 264.12 (d) Any amount paid by a claimant residing in property 264.13 assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 264.14 for occupancy in that property shall be excluded from gross rent 264.15 for purposes of this chapter. However, property taxes imputed 264.16 to the homestead of the claimant or the dwelling unit occupied 264.17 by the claimant that qualifies for homestead treatment pursuant 264.18 to section 273.124, subdivision 3, 4, 5, or 6 shall be included 264.19 within the term "property taxes payable" as defined in 264.20 subdivision 13, notwithstanding the fact that ownership is not 264.21 in the name of the claimant. 264.22 [EFFECTIVE DATE.] This section is effective for refunds 264.23 based on rent paid after December 31, 2000. 264.24 Sec. 11. Minnesota Statutes 2000, section 290A.15, is 264.25 amended to read: 264.26 290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 264.27 The amount of any claim otherwise payable under this 264.28 chapter may be applied by the commissioner against any 264.29 delinquent tax liability ofthe claimant or spouse of the264.30claimant payable to the department of revenueany member of the 264.31 household. If there are two members of the household, the 264.32 commissioner may apply only one-half of a refund to the separate 264.33 liability of either member of the household. 264.34 [EFFECTIVE DATE.] This section is effective beginning with 264.35 refunds paid on or after July 1, 2001. 264.36 Sec. 12. Minnesota Statutes 2000, section 295.50, 265.1 subdivision 4, is amended to read: 265.2 Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care 265.3 provider" means: 265.4 (1) a person whose health care occupation is regulated or 265.5 required to be regulated by the state of Minnesota furnishing 265.6 any or all of the following goods or services directly to a 265.7 patient or consumer: medical, surgical, optical, visual, 265.8 dental, hearing, nursing services, drugs, laboratory, diagnostic 265.9 or therapeutic services; 265.10 (2) a person who provides goods and services not listed in 265.11 clause (1) that qualify for reimbursement under the medical 265.12 assistance program provided under chapter 256B; 265.13 (3) a staff model health plan company; 265.14 (4) an ambulance service required to be licensed; or 265.15 (5) a person who sells or repairs hearing aids and related 265.16 equipment or prescription eyewear. 265.17 (b) Health care provider does not include: 265.18 (1) hospitals; medical supplies distributors, except as 265.19 specified under paragraph (a), clause (5); nursing homes 265.20 licensed under chapter 144A or licensed in any other 265.21 jurisdiction; pharmacies; surgical centers; bus and taxicab 265.22 transportation, or any other providers of transportation 265.23 services other than ambulance services required to be licensed; 265.24 supervised living facilities for persons with mental retardation 265.25 or related conditions, licensed under Minnesota Rules, parts 265.26 4665.0100 to 4665.9900; residential care homes licensed under 265.27 chapter 144B; board and lodging establishments providing only 265.28 custodial services that are licensed under chapter 157 and 265.29 registered under section 157.17 to provide supportive services 265.30 or health supervision services; adult foster homes as defined in 265.31 Minnesota Rules, part 9555.5105; day training and habilitation 265.32 services for adults with mental retardation and related 265.33 conditions as defined in section 252.41, subdivision 3;and265.34 boarding care homes, as defined in Minnesota Rules, part 265.35 4655.0100; and adult day care centers as defined in Minnesota 265.36 Rules, part 9555.9600; 266.1 (2) home health agencies as defined in Minnesota Rules, 266.2 part 9505.0175, subpart 15; a person providing personal care 266.3 services and supervision of personal care services as defined in 266.4 Minnesota Rules, part 9505.0335; a person providing private duty 266.5 nursing services as defined in Minnesota Rules, part 9505.0360; 266.6 and home care providers required to be licensed under chapter 266.7 144A; 266.8 (3) a person who employs health care providers solely for 266.9 the purpose of providing patient services to its employees; and 266.10 (4) an educational institution that employs health care 266.11 providers solely for the purpose of providing patient services 266.12 to its students if the institution does not receive fee for 266.13 service payments or payments for extended coverage. 266.14 [EFFECTIVE DATE.] This section is effective for gross 266.15 revenues received on or after January 1, 2002. 266.16 Sec. 13. Minnesota Statutes 2000, section 297A.01, 266.17 subdivision 5, is amended to read: 266.18 Subd. 5. "Storage" includes any keeping or retention in 266.19 Minnesota for any purpose except sale in the regular course of 266.20 businessor subsequent use solely outside Minnesota of tangible266.21personal property. 266.22 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] (a) This section 266.23 is effective for purchases, sales, storage, use, or consumption 266.24 occurring after June 30, 1997. 266.25 (b) In the next edition of Minnesota Statutes, the revisor 266.26 shall codify the amendment to this section in Minnesota 266.27 Statutes, section 297A.61, subdivision 5. 266.28 Sec. 14. Minnesota Statutes 2000, section 297A.07, 266.29 subdivision 3, is amended to read: 266.30 Subd. 3. [NEW PERMITS AFTER REVOCATION.] The commissioner 266.31 shall not issue a new permit or reinstate a revoked permit after 266.32 revocation unless the taxpayer applies for a permit and provides 266.33 reasonable evidence of intention to comply with the sales and 266.34 use tax laws and rules. The commissioner may require the 266.35 applicant to supply security, in addition to that authorized by 266.36 section 297A.28, as is reasonably necessary to insure compliance 267.1 with the sales and use tax laws and rules. If the commissioner 267.2 issues or reinstates a permit not in conformance with the 267.3 requirements of this subdivision or applicable rules, the 267.4 commissioner may cancel the permit upon notice to the permit 267.5 holder. The notice must be served by first class and certified 267.6 mail at the permit holder's last known address. The 267.7 cancellation shall be effective immediately, subject to the 267.8 right of the permit holder to show that the permit was issued in 267.9 conformance with the requirements of this subdivision and 267.10 applicable rules. Upon such showing, the permit must be 267.11 reissued. 267.12 If a taxpayer has had a permit or permits revoked three 267.13 times in a five-year period, the commissioner shall not issue a 267.14 new permit or reinstate the revoked permit until 24 months have 267.15 elapsed after revocation and the taxpayer has satisfied the 267.16 conditions for reinstatement of a revoked permit or issuance of 267.17 a new permit imposed by this section and rules adopted hereunder. 267.18 For purposes of this subdivision, the term "taxpayer" means 267.19 an individual, if a revoked permit was issued to or in the name 267.20 of an individual, or a corporation or partnership, if a revoked 267.21 permit was issued to or in the name of a corporation or 267.22 partnership. Taxpayer also means an officer of a corporation, a 267.23 member of a partnership, or an individual who is liable for 267.24 delinquent sales taxes, either for the entity for which the new 267.25 or reinstated permit is at issue, or for another entity for 267.26 which a permit was previously revoked, or personally as a permit 267.27 holder. 267.28 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] (a) This section 267.29 is effective the day following final enactment. 267.30 (b) In the next edition of Minnesota Statutes, the revisor 267.31 shall codify the amendments to this section in Minnesota 267.32 Statutes, section 297A.86, subdivision 2. 267.33 Sec. 15. Minnesota Statutes 2000, section 297A.86, 267.34 subdivision 1, is amended to read: 267.35 Subdivision 1. [NOTICE OF REVOCATION; HEARINGS.] (a) If a 267.36 person fails to comply with this chapter or the sales and use 268.1 tax provisions of chapter 289A or the rulesadopted under either268.2chapterrelated to sales and use tax, or if any person fails to 268.3 comply with chapter 297F or the rules related to cigarette and 268.4 tobacco products, without reasonable cause, the commissioner may 268.5 give the person 30 days' notice in writing, specifying the 268.6 violations, and stating that based on the violations the 268.7 commissioner intends to revoke the person's permit. The notice 268.8 must also advise the person of the right to contest the 268.9 revocation under this subdivision. It must also explain the 268.10 general procedures for a contested case hearing under chapter 268.11 14. The notice may be served personally or by mail in the 268.12 manner prescribed for service of an order of assessment. 268.13 (b) If the person does not request a hearing within 30 days 268.14 after the date of the notice of intent, the commissioner may 268.15 serve a notice of revocation of permit upon the person, and the 268.16 permit is revoked. If a hearing is timely requested, and held, 268.17 the permit is revoked after the commissioner serves an order of 268.18 revocation of permit under section 14.62, subdivision 1. 268.19 [EFFECTIVE DATE.] This section is effective for violations 268.20 occurring on or after July 1, 2001. 268.21 Sec. 16. Minnesota Statutes 2000, section 297B.03, is 268.22 amended to read: 268.23 297B.03 [EXEMPTIONS.] 268.24 There is specifically exempted from the provisions of this 268.25 chapter and from computation of the amount of tax imposed by it 268.26 the following: 268.27 (1) purchase or use, including use under a lease purchase 268.28 agreement or installment sales contract made pursuant to section 268.29 465.71, of any motor vehicle by the United States and its 268.30 agencies and instrumentalities and by any person described in 268.31 and subject to the conditions provided in section 297A.25, 268.32 subdivision 18; 268.33 (2) purchase or use of any motor vehicle by any person who 268.34 was a resident of another state or country at the time of the 268.35 purchase and who subsequently becomes a resident of Minnesota, 268.36 provided the purchase occurred more than 60 days prior to the 269.1 date such person began residing in the state of Minnesota and 269.2 the motor vehicle was registered in the person's name in the 269.3 other state or country; 269.4 (3) purchase or use of any motor vehicle by any person 269.5 making a valid election to be taxed under the provisions of 269.6 section 297A.211; 269.7 (4) purchase or use of any motor vehicle previously 269.8 registered in the state of Minnesota when such transfer 269.9 constitutes a transfer within the meaning of section 118, 331, 269.10 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 269.11 1563(a) of the Internal Revenue Code of 1986, as amended through 269.12 December 31, 1999; 269.13 (5) purchase or use of any vehicle owned by a resident of 269.14 another state and leased to a Minnesota based private or for 269.15 hire carrier for regular use in the transportation of persons or 269.16 property in interstate commerce provided the vehicle is titled 269.17 in the state of the owner or secured party, and that state does 269.18 not impose a sales tax or sales tax on motor vehicles used in 269.19 interstate commerce; 269.20 (6) purchase or use of a motor vehicle by a private 269.21 nonprofit or public educational institution for use as an 269.22 instructional aid in automotive training programs operated by 269.23 the institution. "Automotive training programs" includes motor 269.24 vehicle body and mechanical repair courses but does not include 269.25 driver education programs; 269.26 (7) purchase of a motor vehicle for use as an ambulance by 269.27 an ambulance service licensed under section 144E.10; 269.28 (8) purchase of a motor vehicle by or for a public library, 269.29 as defined in section 134.001, subdivision 2, as a bookmobile or 269.30 library delivery vehicle; 269.31 (9) purchase of a ready-mixed concrete truck; 269.32 (10) purchase or use of a motor vehicle by a town for use 269.33 exclusively for road maintenance, including snowplows and dump 269.34 trucks, but not including automobiles, vans, or pickup trucks; 269.35 (11) purchase or use of a motor vehicle by a corporation, 269.36 society, association, foundation, or institution organized and 270.1 operated exclusively for charitable, religious, or educational 270.2 purposes, except a public school, university, or library, but 270.3 only if the vehicle is: 270.4 (i) a truck, as defined in section 168.011, a bus, as 270.5 defined in section 168.011, or a passenger automobile, as 270.6 defined in section 168.011, if the automobile is designed and 270.7 used for carrying more than nine persons including the driver; 270.8 and 270.9 (ii) intended to be used primarily to transport tangible 270.10 personal property or individuals, other than employees, to whom 270.11 the organization provides service in performing its charitable, 270.12 religious, or educational purpose. 270.13 [EFFECTIVE DATE.] This section is effective the day 270.14 following final enactment, except that the change to paragraph 270.15 (11) is effective for sales and purchases occurring after June 270.16 30, 2000. 270.17 Sec. 17. [297F.185] [REVOCATION OF SALES AND USE TAX 270.18 PERMITS.] 270.19 If a person fails to comply with this chapter, or the rules 270.20 related to cigarette and tobacco products, the commissioner may 270.21 revoke the person's sales and use tax permit as provided in 270.22 section 297A.86. 270.23 [EFFECTIVE DATE.] This section is effective for violations 270.24 occurring on or after July 1, 2001. 270.25 Sec. 18. [297H.115] [USE TAX.] 270.26 Subdivision 1. [IMPOSITION; LIABILITY OF GENERATORS AND 270.27 SELF-HAULERS.] (a) A use tax is imposed on the sales price of 270.28 mixed municipal solid waste management services received by a 270.29 residential generator at the rate imposed under section 297H.02, 270.30 unless the tax imposed under section 297H.02 was paid. The 270.31 residential generator is liable. 270.32 (b) A use tax is imposed on the sales price of mixed 270.33 municipal solid waste management services received by a 270.34 commercial generator at the rate imposed under section 297H.03, 270.35 unless the tax imposed under section 297H.03 was paid. The 270.36 commercial generator is liable. 271.1 (c) A use tax is imposed on the volume of nonmixed 271.2 municipal solid waste that is managed at the rate imposed under 271.3 section 297H.04, unless the tax imposed under section 297H.04 271.4 was paid. The generator is liable. 271.5 (d) A use tax is imposed on the sales price of mixed 271.6 municipal solid waste management services received by a 271.7 self-hauler at the rate imposed under section 297H.05, paragraph 271.8 (a), unless the tax imposed under section 297H.05, paragraph 271.9 (a), was paid. The self-hauler is liable. 271.10 (e) A use tax is imposed on the volume of nonmixed 271.11 municipal solid waste managed at the rate imposed under section 271.12 297H.05, paragraph (b), unless the tax imposed under section 271.13 297H.05, paragraph (b), was paid. The self-hauler is liable. 271.14 Subd. 2. [PAYMENT; REPORTING.] A generator or self-hauler 271.15 that is liable under subdivision 1 shall report the use tax on a 271.16 return prescribed by the commissioner of revenue, and shall 271.17 remit the tax with the return. The return and the tax must be 271.18 filed using the filing cycle and due dates provided for taxes 271.19 imposed under chapter 297A. 271.20 Subd. 3. [COMMISSIONER ASSESSMENT.] (a) The commissioner 271.21 of revenue may not assess the generator or self-hauler a use tax 271.22 on a transaction for which the waste management service provider 271.23 has paid the solid waste management tax, except as provided in 271.24 paragraph (b). 271.25 (b) If the waste management service provider who is an 271.26 accrual basis taxpayer remits a payment and thereafter offsets 271.27 the amount as a bad debt under section 297H.09, the commissioner 271.28 of revenue may assess the generator or self-hauler a use tax for 271.29 the offset amount. 271.30 [EFFECTIVE DATE.] This section is effective for services 271.31 received on or after July 1, 2001. 271.32 Sec. 19. Minnesota Statutes 2000, section 461.12, is 271.33 amended by adding a subdivision to read: 271.34 Subd. 8. [NOTICE TO COMMISSIONER.] The licensing authority 271.35 under this section shall, within 30 days of the issuance of a 271.36 license, inform the commissioner of revenue of the licensee's 272.1 name, address, trade name, and the effective and expiration 272.2 dates of the license. The commissioner of revenue must also be 272.3 informed of a license renewal, transfer, cancellation, 272.4 suspension, or revocation during the license period. 272.5 [EFFECTIVE DATE.] This section is effective for licenses 272.6 issued, renewed, transferred, canceled, suspended, or revoked on 272.7 or after January 1, 2002.