1.1                          A bill for an act 
  1.2             relating to financing and operation of state and local 
  1.3             government; making technical, policy, clarifying, and 
  1.4             administrative changes to certain taxes and tax 
  1.5             related provisions, tax forfeited lands, state debt 
  1.6             collection procedures, sustainable forest incentive 
  1.7             programs, and tax data provisions; conforming tax 
  1.8             provisions to certain changes in federal law; changing 
  1.9             powers and duties of commissioner of revenue, state 
  1.10            demographer, and metropolitan council; providing for 
  1.11            population estimates; changing and imposing civil 
  1.12            penalties; amending Minnesota Statutes 2002, sections 
  1.13            16D.10; 270.02, subdivision 3; 270.65; 270.69, 
  1.14            subdivision 4; 270B.01, subdivision 8; 270B.12, 
  1.15            subdivision 9; 272.01, subdivision 2; 272.02, 
  1.16            subdivisions 1a, 7, by adding subdivisions; 273.124, 
  1.17            subdivision 8; 273.19, subdivision 1a; 274.14; 
  1.18            275.065, subdivision 1a; 275.07, subdivisions 1, 4; 
  1.19            282.016; 282.21; 282.224; 282.301; 287.04; 289A.12, 
  1.20            subdivision 3; 289A.31, subdivision 2; 289A.37, 
  1.21            subdivision 5; 289A.38, subdivision 6; 289A.56, by 
  1.22            adding a subdivision; 289A.60, subdivision 6; 290.06, 
  1.23            subdivision 22; 290.92, subdivision 1; 290.9705, 
  1.24            subdivision 1; 290C.05; 295.50, subdivision 4; 
  1.25            296A.22, by adding a subdivision; 297A.995, 
  1.26            subdivision 6; 297E.01, subdivisions 5, 7, by adding 
  1.27            subdivisions; 297E.07; 297I.01, by adding a 
  1.28            subdivision; 297I.05, subdivisions 4, 5; 325D.33, 
  1.29            subdivision 6; 469.1734, subdivision 6; 473.843, 
  1.30            subdivision 5; 473F.02, subdivisions 2, 7; 477A.011, 
  1.31            subdivision 3; Minnesota Statutes 2003 Supplement, 
  1.32            sections 4A.02; 168A.05, subdivision 1a; 270.06; 
  1.33            270B.12, subdivision 13; 272.02, subdivision 65; 
  1.34            276.112; 289A.02, subdivision 7; 289A.19, subdivision 
  1.35            4; 289A.40, subdivision 2; 290.01, subdivisions 19, 
  1.36            19a, 19b, 19c, 19d, 31; 290.06, subdivision 2c; 
  1.37            290.0674, subdivision 1; 290.091, subdivision 2; 
  1.38            290.0921, subdivision 3; 290A.03, subdivision 15; 
  1.39            290C.10; 291.005, subdivision 1; 297A.668, 
  1.40            subdivisions 1, 3, 5; 297A.669, subdivision 16; 
  1.41            297A.68, subdivisions 2, 5, 39; 297F.08, subdivision 
  1.42            12; 297F.09, subdivisions 1, 2; 469.310, subdivision 
  1.43            11; 469.330, subdivision 11; 469.337; 477A.011, 
  1.44            subdivision 36; 477A.03, subdivision 2b; Laws 2003, 
  1.45            First Special Sesion chapter 21, article 5, section 
  1.46            13; Laws 2003, First Special Session chapter 21, 
  2.1             article 6, section 9; proposing coding for new law in 
  2.2             Minnesota Statutes, chapters 270; 290C; 473; repealing 
  2.3             Minnesota Statutes 2002, sections 273.19, subdivision 
  2.4             5; 274.05; 275.15; 283.07; 297E.12, subdivision 10; 
  2.5             Laws 1975, chapter 287, section 5; Laws 2003, chapter 
  2.6             127, article 9, section 9, subdivision 4; Minnesota 
  2.7             Rules, parts 8093.2000; 8093.3000; 8130.0110, subpart 
  2.8             4; 8130.0200, subparts 5, 6; 8130.0400, subpart 9; 
  2.9             8130.1200, subparts 5, 6; 8130.2900; 8130.3100, 
  2.10            subpart 1; 8130.4000, subparts 1, 2; 8130.4200, 
  2.11            subpart 1; 8130.4400, subpart 3; 8130.5200; 8130.5600, 
  2.12            subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 5; 
  2.13            8130.8800, subpart 4. 
  2.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.15                             ARTICLE 1 
  2.16                           FEDERAL UPDATE 
  2.17     Section 1.  Minnesota Statutes 2003 Supplement, section 
  2.18  289A.02, subdivision 7, is amended to read: 
  2.19     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
  2.20  defined otherwise, "Internal Revenue Code" means the Internal 
  2.21  Revenue Code of 1986, as amended through June 15, 2003 April 10, 
  2.22  2004. 
  2.23     <b>[EFFECTIVE DATE.]</b> This section is effective for actions 
  2.24  required on or after November 11, 2003. 
  2.25     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  2.26  290.01, subdivision 19, is amended to read: 
  2.27     Subd. 19.  [NET INCOME.] The term "net income" means the 
  2.28  federal taxable income, as defined in section 63 of the Internal 
  2.29  Revenue Code of 1986, as amended through the date named in this 
  2.30  subdivision, incorporating any elections made by the taxpayer in 
  2.31  accordance with the Internal Revenue Code in determining federal 
  2.32  taxable income for federal income tax purposes, and with the 
  2.33  modifications provided in subdivisions 19a to 19f. 
  2.34     In the case of a regulated investment company or a fund 
  2.35  thereof, as defined in section 851(a) or 851(g) of the Internal 
  2.36  Revenue Code, federal taxable income means investment company 
  2.37  taxable income as defined in section 852(b)(2) of the Internal 
  2.38  Revenue Code, except that:  
  2.39     (1) the exclusion of net capital gain provided in section 
  2.40  852(b)(2)(A) of the Internal Revenue Code does not apply; 
  2.41     (2) the deduction for dividends paid under section 
  2.42  852(b)(2)(D) of the Internal Revenue Code must be applied by 
  3.1   allowing a deduction for capital gain dividends and 
  3.2   exempt-interest dividends as defined in sections 852(b)(3)(C) 
  3.3   and 852(b)(5) of the Internal Revenue Code; and 
  3.4      (3) the deduction for dividends paid must also be applied 
  3.5   in the amount of any undistributed capital gains which the 
  3.6   regulated investment company elects to have treated as provided 
  3.7   in section 852(b)(3)(D) of the Internal Revenue Code.  
  3.8      The net income of a real estate investment trust as defined 
  3.9   and limited by section 856(a), (b), and (c) of the Internal 
  3.10  Revenue Code means the real estate investment trust taxable 
  3.11  income as defined in section 857(b)(2) of the Internal Revenue 
  3.12  Code.  
  3.13     The net income of a designated settlement fund as defined 
  3.14  in section 468B(d) of the Internal Revenue Code means the gross 
  3.15  income as defined in section 468B(b) of the Internal Revenue 
  3.16  Code. 
  3.17     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
  3.18  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
  3.19  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
  3.20  Protection Act, Public Law 104-188, the provisions of Public Law 
  3.21  104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
  3.22  913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
  3.23  1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
  3.24  and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
  3.25  1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
  3.26  105-34, the provisions of section 6010 of the Internal Revenue 
  3.27  Service Restructuring and Reform Act of 1998, Public Law 
  3.28  105-206, the provisions of section 4003 of the Omnibus 
  3.29  Consolidated and Emergency Supplemental Appropriations Act, 
  3.30  1999, Public Law 105-277, and the provisions of section 318 of 
  3.31  the Consolidated Appropriation Act of 2001, Public Law 106-554, 
  3.32  shall become effective at the time they become effective for 
  3.33  federal purposes. 
  3.34     The Internal Revenue Code of 1986, as amended through 
  3.35  December 31, 1996, shall be in effect for taxable years 
  3.36  beginning after December 31, 1996. 
  4.1      The provisions of sections 202(a) and (b), 221(a), 225, 
  4.2   312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
  4.3   (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
  4.4   1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
  4.5   1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
  4.6   of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
  4.7   provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
  4.8   and 7003 of the Internal Revenue Service Restructuring and 
  4.9   Reform Act of 1998, Public Law 105-206, the provisions of 
  4.10  section 3001 of the Omnibus Consolidated and Emergency 
  4.11  Supplemental Appropriations Act, 1999, Public Law 105-277, the 
  4.12  provisions of section 3001 of the Miscellaneous Trade and 
  4.13  Technical Corrections Act of 1999, Public Law 106-36, and the 
  4.14  provisions of section 316 of the Consolidated Appropriation Act 
  4.15  of 2001, Public Law 106-554, and the provision of section 101 of 
  4.16  the Military Family Tax Relief Act of 2003, Public Law 108-121, 
  4.17  shall become effective at the time they become effective for 
  4.18  federal purposes. 
  4.19     The Internal Revenue Code of 1986, as amended through 
  4.20  December 31, 1997, shall be in effect for taxable years 
  4.21  beginning after December 31, 1997. 
  4.22     The provisions of sections 5002, 6009, 6011, and 7001 of 
  4.23  the Internal Revenue Service Restructuring and Reform Act of 
  4.24  1998, Public Law 105-206, the provisions of section 9010 of the 
  4.25  Transportation Equity Act for the 21st Century, Public Law 
  4.26  105-178, the provisions of sections 1004, 4002, and 5301 of the 
  4.27  Omnibus Consolidation and Emergency Supplemental Appropriations 
  4.28  Act, 1999, Public Law 105-277, the provision of section 303 of 
  4.29  the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
  4.30  105-369, the provisions of sections 532, 534, 536, 537, and 538 
  4.31  of the Ticket to Work and Work Incentives Improvement Act of 
  4.32  1999, Public Law 106-170, the provisions of the Installment Tax 
  4.33  Correction Act of 2000, Public Law 106-573, and the provisions 
  4.34  of section 309 of the Consolidated Appropriation Act of 2001, 
  4.35  Public Law 106-554, shall become effective at the time they 
  4.36  become effective for federal purposes. 
  5.1      The Internal Revenue Code of 1986, as amended through 
  5.2   December 31, 1998, shall be in effect for taxable years 
  5.3   beginning after December 31, 1998.  
  5.4      The provisions of the FSC Repeal and Extraterritorial 
  5.5   Income Exclusion Act of 2000, Public Law 106-519, and the 
  5.6   provision of section 412 of the Job Creation and Worker 
  5.7   Assistance Act of 2002, Public Law 107-147, shall become 
  5.8   effective at the time it became effective for federal purposes. 
  5.9      The Internal Revenue Code of 1986, as amended through 
  5.10  December 31, 1999, shall be in effect for taxable years 
  5.11  beginning after December 31, 1999.  The provisions of sections 
  5.12  306 and 401 of the Consolidated Appropriation Act of 2001, 
  5.13  Public Law 106-554, and the provision of section 632(b)(2)(A) of 
  5.14  the Economic Growth and Tax Relief Reconciliation Act of 2001, 
  5.15  Public Law 107-16, and provisions of sections 101 and 402 of the 
  5.16  Job Creation and Worker Assistance Act of 2002, Public Law 
  5.17  107-147, shall become effective at the same time it became 
  5.18  effective for federal purposes. 
  5.19     The Internal Revenue Code of 1986, as amended through 
  5.20  December 31, 2000, shall be in effect for taxable years 
  5.21  beginning after December 31, 2000.  The provisions of sections 
  5.22  659a and 671 of the Economic Growth and Tax Relief 
  5.23  Reconciliation Act of 2001, Public Law 107-16, the provisions of 
  5.24  sections 104, 105, and 111 of the Victims of Terrorism Tax 
  5.25  Relief Act of 2001, Public Law 107-134, and the provisions of 
  5.26  sections 201, 403, 413, and 606 of the Job Creation and Worker 
  5.27  Assistance Act of 2002, Public Law 107-147, and the provision of 
  5.28  section 102 of the Military Family Tax Relief Act of 2003, 
  5.29  Public Law 108-121, shall become effective at the same time it 
  5.30  became effective for federal purposes. 
  5.31     The Internal Revenue Code of 1986, as amended through March 
  5.32  15, 2002, shall be in effect for taxable years beginning after 
  5.33  December 31, 2001. 
  5.34     The provisions of sections 101 and 102 of the Victims of 
  5.35  Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
  5.36  become effective at the same time it becomes effective for 
  6.1   federal purposes. 
  6.2      The Internal Revenue Code of 1986, as amended through June 
  6.3   15, 2003, shall be in effect for taxable years beginning after 
  6.4   December 31, 2002.  The provisions of section 201 of the Jobs 
  6.5   and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if 
  6.6   it is enacted into law Public Law 108-27, and the provisions of 
  6.7   sections 103, 106, 108, 109, and 110 of the Military Family Tax 
  6.8   Relief Act of 2003, Public Law 108-121, are effective at the 
  6.9   same time it became effective for federal purposes. 
  6.10     The Internal Revenue Code of 1986, as amended through April 
  6.11  10, 2004, shall be in effect for taxable years beginning after 
  6.12  December 31, 2003. 
  6.13     Except as otherwise provided, references to the Internal 
  6.14  Revenue Code in subdivisions 19a to 19g mean the code in effect 
  6.15  for purposes of determining net income for the applicable year. 
  6.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  6.17  following final enactment. 
  6.18     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
  6.19  290.01, subdivision 19a, is amended to read: 
  6.20     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
  6.21  individuals, estates, and trusts, there shall be added to 
  6.22  federal taxable income: 
  6.23     (1)(i) interest income on obligations of any state other 
  6.24  than Minnesota or a political or governmental subdivision, 
  6.25  municipality, or governmental agency or instrumentality of any 
  6.26  state other than Minnesota exempt from federal income taxes 
  6.27  under the Internal Revenue Code or any other federal statute; 
  6.28  and 
  6.29     (ii) exempt-interest dividends as defined in section 
  6.30  852(b)(5) of the Internal Revenue Code, except the portion of 
  6.31  the exempt-interest dividends derived from interest income on 
  6.32  obligations of the state of Minnesota or its political or 
  6.33  governmental subdivisions, municipalities, governmental agencies 
  6.34  or instrumentalities, but only if the portion of the 
  6.35  exempt-interest dividends from such Minnesota sources paid to 
  6.36  all shareholders represents 95 percent or more of the 
  7.1   exempt-interest dividends that are paid by the regulated 
  7.2   investment company as defined in section 851(a) of the Internal 
  7.3   Revenue Code, or the fund of the regulated investment company as 
  7.4   defined in section 851(g) of the Internal Revenue Code, making 
  7.5   the payment; and 
  7.6      (iii) for the purposes of items (i) and (ii), interest on 
  7.7   obligations of an Indian tribal government described in section 
  7.8   7871(c) of the Internal Revenue Code shall be treated as 
  7.9   interest income on obligations of the state in which the tribe 
  7.10  is located; 
  7.11     (2) the amount of income taxes paid or accrued within the 
  7.12  taxable year under this chapter and income taxes paid to any 
  7.13  other state or to any province or territory of Canada, to the 
  7.14  extent allowed as a deduction under section 63(d) of the 
  7.15  Internal Revenue Code, but the addition may not be more than the 
  7.16  amount by which the itemized deductions as allowed under section 
  7.17  63(d) of the Internal Revenue Code exceeds the amount of the 
  7.18  standard deduction as defined in section 63(c) of the Internal 
  7.19  Revenue Code.  For the purpose of this paragraph, the 
  7.20  disallowance of itemized deductions under section 68 of the 
  7.21  Internal Revenue Code of 1986, income tax is the last itemized 
  7.22  deduction disallowed; 
  7.23     (3) the capital gain amount of a lump sum distribution to 
  7.24  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
  7.25  Reform Act of 1986, Public Law 99-514, applies; 
  7.26     (4) the amount of income taxes paid or accrued within the 
  7.27  taxable year under this chapter and income taxes paid to any 
  7.28  other state or any province or territory of Canada, to the 
  7.29  extent allowed as a deduction in determining federal adjusted 
  7.30  gross income.  For the purpose of this paragraph, income taxes 
  7.31  do not include the taxes imposed by sections 290.0922, 
  7.32  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
  7.33     (5) the amount of expense, interest, or taxes disallowed 
  7.34  pursuant to section 290.10; 
  7.35     (6) the amount of a partner's pro rata share of net income 
  7.36  which does not flow through to the partner because the 
  8.1   partnership elected to pay the tax on the income under section 
  8.2   6242(a)(2) of the Internal Revenue Code; and 
  8.3      (7) 80 percent of the depreciation deduction allowed under 
  8.4   section 168(k) of the Internal Revenue Code.  For purposes of 
  8.5   this clause, if the taxpayer has an activity that in the taxable 
  8.6   year generates a deduction for depreciation under section 168(k) 
  8.7   and the activity generates a loss for the taxable year that the 
  8.8   taxpayer is not allowed to claim for the taxable year, "the 
  8.9   depreciation allowed under section 168(k)" for the taxable year 
  8.10  is limited to excess of the depreciation claimed by the activity 
  8.11  under section 168(k) over the amount of the loss from the 
  8.12  activity that is not allowed in the taxable year.  In succeeding 
  8.13  taxable years when the losses not allowed in the taxable year 
  8.14  are allowed, the depreciation under section 168(k) is allowed.; 
  8.15     (8) the exclusion allowed under section 139A of the 
  8.16  Internal Revenue Code for federal subsidies for prescription 
  8.17  drug plans; 
  8.18     (9) the deduction allowed under section 223 of the Internal 
  8.19  Revenue Code for contributions to health savings accounts; and 
  8.20     (10) to the extent not included in federal taxable income, 
  8.21  distributions from a health savings account that do not 
  8.22  represent a return of contributions that were included in 
  8.23  Minnesota gross income in the taxable year for which the 
  8.24  contributions were made.  In determining if the distribution 
  8.25  represents a return of contributions and if the distribution is 
  8.26  included in federal taxable income, the distribution is 
  8.27  allocated as provided in subdivision 19b, clause (13). 
  8.28     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  8.29  years beginning after December 31, 2003. 
  8.30     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
  8.31  290.01, subdivision 19b, is amended to read: 
  8.32     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  8.33  individuals, estates, and trusts, there shall be subtracted from 
  8.34  federal taxable income: 
  8.35     (1) interest income on obligations of any authority, 
  8.36  commission, or instrumentality of the United States to the 
  9.1   extent includable in taxable income for federal income tax 
  9.2   purposes but exempt from state income tax under the laws of the 
  9.3   United States; 
  9.4      (2) if included in federal taxable income, the amount of 
  9.5   any overpayment of income tax to Minnesota or to any other 
  9.6   state, for any previous taxable year, whether the amount is 
  9.7   received as a refund or as a credit to another taxable year's 
  9.8   income tax liability; 
  9.9      (3) the amount paid to others, less the amount used to 
  9.10  claim the credit allowed under section 290.0674, not to exceed 
  9.11  $1,625 for each qualifying child in grades kindergarten to 6 and 
  9.12  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
  9.13  textbooks, and transportation of each qualifying child in 
  9.14  attending an elementary or secondary school situated in 
  9.15  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
  9.16  wherein a resident of this state may legally fulfill the state's 
  9.17  compulsory attendance laws, which is not operated for profit, 
  9.18  and which adheres to the provisions of the Civil Rights Act of 
  9.19  1964 and chapter 363A.  For the purposes of this clause, 
  9.20  "tuition" includes fees or tuition as defined in section 
  9.21  290.0674, subdivision 1, clause (1).  As used in this clause, 
  9.22  "textbooks" includes books and other instructional materials and 
  9.23  equipment purchased or leased for use in elementary and 
  9.24  secondary schools in teaching only those subjects legally and 
  9.25  commonly taught in public elementary and secondary schools in 
  9.26  this state.  Equipment expenses qualifying for deduction 
  9.27  includes expenses as defined and limited in section 290.0674, 
  9.28  subdivision 1, clause (3).  "Textbooks" does not include 
  9.29  instructional books and materials used in the teaching of 
  9.30  religious tenets, doctrines, or worship, the purpose of which is 
  9.31  to instill such tenets, doctrines, or worship, nor does it 
  9.32  include books or materials for, or transportation to, 
  9.33  extracurricular activities including sporting events, musical or 
  9.34  dramatic events, speech activities, driver's education, or 
  9.35  similar programs.  For purposes of the subtraction provided by 
  9.36  this clause, "qualifying child" has the meaning given in section 
 10.1   32(c)(3) of the Internal Revenue Code; 
 10.2      (4) income as provided under section 290.0802; 
 10.3      (5) to the extent included in federal adjusted gross 
 10.4   income, income realized on disposition of property exempt from 
 10.5   tax under section 290.491; 
 10.6      (6) to the extent included in federal taxable income, 
 10.7   postservice benefits for youth community service under section 
 10.8   124D.42 for volunteer service under United States Code, title 
 10.9   42, sections 12601 to 12604; 
 10.10     (7) to the extent not deducted in determining federal 
 10.11  taxable income by an individual who does not itemize deductions 
 10.12  for federal income tax purposes for the taxable year, an amount 
 10.13  equal to 50 percent of the excess of charitable contributions 
 10.14  allowable as a deduction for the taxable year under section 
 10.15  170(a) of the Internal Revenue Code over $500; 
 10.16     (8) for taxable years beginning before January 1, 2008, the 
 10.17  amount of the federal small ethanol producer credit allowed 
 10.18  under section 40(a)(3) of the Internal Revenue Code which is 
 10.19  included in gross income under section 87 of the Internal 
 10.20  Revenue Code; 
 10.21     (9) for individuals who are allowed a federal foreign tax 
 10.22  credit for taxes that do not qualify for a credit under section 
 10.23  290.06, subdivision 22, an amount equal to the carryover of 
 10.24  subnational foreign taxes for the taxable year, but not to 
 10.25  exceed the total subnational foreign taxes reported in claiming 
 10.26  the foreign tax credit.  For purposes of this clause, "federal 
 10.27  foreign tax credit" means the credit allowed under section 27 of 
 10.28  the Internal Revenue Code, and "carryover of subnational foreign 
 10.29  taxes" equals the carryover allowed under section 904(c) of the 
 10.30  Internal Revenue Code minus national level foreign taxes to the 
 10.31  extent they exceed the federal foreign tax credit; 
 10.32     (10) in each of the five tax years immediately following 
 10.33  the tax year in which an addition is required under subdivision 
 10.34  19a, clause (7), an amount equal to one-fifth of the delayed 
 10.35  depreciation.  For purposes of this clause, "delayed 
 10.36  depreciation" means the amount of the addition made by the 
 11.1   taxpayer under subdivision 19a, clause (7), minus the positive 
 11.2   value of any net operating loss under section 172 of the 
 11.3   Internal Revenue Code generated for the tax year of the 
 11.4   addition.  The resulting delayed depreciation cannot be less 
 11.5   than zero; and 
 11.6      (11) job opportunity building zone income as provided under 
 11.7   section 469.316.; 
 11.8      (12) to the extent included in federal taxable income, 
 11.9   compensation paid to a service member as defined in United 
 11.10  States Code, title 10, section 101(a)(5), for military service 
 11.11  as defined in the Service Members Civil Relief Act, Public Law 
 11.12  108-189, section 101(2), performed by a nonresident.  This 
 11.13  subtraction does not apply to "retirement income" as defined in 
 11.14  section 290.17, subdivision 2, paragraph (a), clause (3); 
 11.15     (13) to the extent included in federal taxable income, 
 11.16  distributions from a health savings account that represent a 
 11.17  return of contributions that were included in Minnesota gross 
 11.18  income in the taxable year for which the contributions were made 
 11.19  but were deducted or were not included in the computation of 
 11.20  federal adjusted gross income.  In determining if the 
 11.21  distribution represents a return of contributions under this 
 11.22  clause, the distribution shall be allocated first to return of 
 11.23  contributions until the contributions included in Minnesota 
 11.24  gross income have been exhausted.  In determining if the 
 11.25  distribution is included in federal taxable income, the 
 11.26  distribution shall be allocated first to qualified medical 
 11.27  expenses not included in the computation of federal adjusted 
 11.28  gross income under section 223 of the Internal Revenue Code; and 
 11.29     (14) to the extent not included in federal taxable income, 
 11.30  distributions from a health savings account to the extent the 
 11.31  distributions, added to other medical expenses as defined in 
 11.32  section 152 of the Internal Revenue Code, exceed the adjusted 
 11.33  gross income threshold used in determining the medical expenses 
 11.34  deduction in section 213 of the Internal Revenue Code.  In 
 11.35  determining the subtraction under this clause, distributions are 
 11.36  counted last in calculating the total amount in excess of the 
 12.1   adjusted gross income threshold.  
 12.2      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 12.3   beginning after December 31, 2003, except clause (12) is 
 12.4   effective for tax years beginning after December 31, 2002.  
 12.5      Sec. 5.  Minnesota Statutes 2003 Supplement, section 
 12.6   290.01, subdivision 19c, is amended to read: 
 12.7      Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 12.8   INCOME.] For corporations, there shall be added to federal 
 12.9   taxable income: 
 12.10     (1) the amount of any deduction taken for federal income 
 12.11  tax purposes for income, excise, or franchise taxes based on net 
 12.12  income or related minimum taxes, including but not limited to 
 12.13  the tax imposed under section 290.0922, paid by the corporation 
 12.14  to Minnesota, another state, a political subdivision of another 
 12.15  state, the District of Columbia, or any foreign country or 
 12.16  possession of the United States; 
 12.17     (2) interest not subject to federal tax upon obligations 
 12.18  of:  the United States, its possessions, its agencies, or its 
 12.19  instrumentalities; the state of Minnesota or any other state, 
 12.20  any of its political or governmental subdivisions, any of its 
 12.21  municipalities, or any of its governmental agencies or 
 12.22  instrumentalities; the District of Columbia; or Indian tribal 
 12.23  governments; 
 12.24     (3) exempt-interest dividends received as defined in 
 12.25  section 852(b)(5) of the Internal Revenue Code; 
 12.26     (4) the amount of any net operating loss deduction taken 
 12.27  for federal income tax purposes under section 172 or 832(c)(10) 
 12.28  of the Internal Revenue Code or operations loss deduction under 
 12.29  section 810 of the Internal Revenue Code; 
 12.30     (5) the amount of any special deductions taken for federal 
 12.31  income tax purposes under sections 241 to 247 of the Internal 
 12.32  Revenue Code; 
 12.33     (6) losses from the business of mining, as defined in 
 12.34  section 290.05, subdivision 1, clause (a), that are not subject 
 12.35  to Minnesota income tax; 
 12.36     (7) the amount of any capital losses deducted for federal 
 13.1   income tax purposes under sections 1211 and 1212 of the Internal 
 13.2   Revenue Code; 
 13.3      (8) the exempt foreign trade income of a foreign sales 
 13.4   corporation under sections 921(a) and 291 of the Internal 
 13.5   Revenue Code; 
 13.6      (9) the amount of percentage depletion deducted under 
 13.7   sections 611 through 614 and 291 of the Internal Revenue Code; 
 13.8      (10) for certified pollution control facilities placed in 
 13.9   service in a taxable year beginning before December 31, 1986, 
 13.10  and for which amortization deductions were elected under section 
 13.11  169 of the Internal Revenue Code of 1954, as amended through 
 13.12  December 31, 1985, the amount of the amortization deduction 
 13.13  allowed in computing federal taxable income for those 
 13.14  facilities; 
 13.15     (11) the amount of any deemed dividend from a foreign 
 13.16  operating corporation determined pursuant to section 290.17, 
 13.17  subdivision 4, paragraph (g); 
 13.18     (12) the amount of any environmental tax paid under section 
 13.19  59(a) of the Internal Revenue Code; 
 13.20     (13) the amount of a partner's pro rata share of net income 
 13.21  which does not flow through to the partner because the 
 13.22  partnership elected to pay the tax on the income under section 
 13.23  6242(a)(2) of the Internal Revenue Code; 
 13.24     (14) the amount of net income excluded under section 114 of 
 13.25  the Internal Revenue Code; 
 13.26     (15) any increase in subpart F income, as defined in 
 13.27  section 952(a) of the Internal Revenue Code, for the taxable 
 13.28  year when subpart F income is calculated without regard to the 
 13.29  provisions of section 614 of Public Law 107-147; and 
 13.30     (16) 80 percent of the depreciation deduction allowed under 
 13.31  section 168(k) of the Internal Revenue Code.  For purposes of 
 13.32  this clause, if the taxpayer has an activity that in the taxable 
 13.33  year generates a deduction for depreciation under section 168(k) 
 13.34  and the activity generates a loss for the taxable year that the 
 13.35  taxpayer is not allowed to claim for the taxable year, "the 
 13.36  depreciation allowed under section 168(k)" for the taxable year 
 14.1   is limited to excess of the depreciation claimed by the activity 
 14.2   under section 168(k) over the amount of the loss from the 
 14.3   activity that is not allowed in the taxable year.  In succeeding 
 14.4   taxable years when the losses not allowed in the taxable year 
 14.5   are allowed, the depreciation under section 168(k) is allowed; 
 14.6   and 
 14.7      (17) the exclusion allowed under section 139A of the 
 14.8   Internal Revenue Code for federal subsidies for prescription 
 14.9   drug plans. 
 14.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 14.11  years beginning after December 31, 2003. 
 14.12     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
 14.13  290.01, subdivision 31, is amended to read: 
 14.14     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 14.15  defined otherwise, "Internal Revenue Code" means the Internal 
 14.16  Revenue Code of 1986, as amended through June 15, 2003 April 10, 
 14.17  2004. 
 14.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 14.19  following final enactment except the changes incorporated by 
 14.20  federal changes are effective at the same times as the changes 
 14.21  were effective for federal purposes. 
 14.22     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
 14.23  290.06, subdivision 2c, is amended to read: 
 14.24     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 14.25  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 14.26  married individuals filing joint returns and surviving spouses 
 14.27  as defined in section 2(a) of the Internal Revenue Code must be 
 14.28  computed by applying to their taxable net income the following 
 14.29  schedule of rates: 
 14.30     (1) On the first $25,680, 5.35 percent; 
 14.31     (2) On all over $25,680, but not over $102,030, 7.05 
 14.32  percent; 
 14.33     (3) On all over $102,030, 7.85 percent. 
 14.34     Married individuals filing separate returns, estates, and 
 14.35  trusts must compute their income tax by applying the above rates 
 14.36  to their taxable income, except that the income brackets will be 
 15.1   one-half of the above amounts.  
 15.2      (b) The income taxes imposed by this chapter upon unmarried 
 15.3   individuals must be computed by applying to taxable net income 
 15.4   the following schedule of rates: 
 15.5      (1) On the first $17,570, 5.35 percent; 
 15.6      (2) On all over $17,570, but not over $57,710, 7.05 
 15.7   percent; 
 15.8      (3) On all over $57,710, 7.85 percent. 
 15.9      (c) The income taxes imposed by this chapter upon unmarried 
 15.10  individuals qualifying as a head of household as defined in 
 15.11  section 2(b) of the Internal Revenue Code must be computed by 
 15.12  applying to taxable net income the following schedule of rates: 
 15.13     (1) On the first $21,630, 5.35 percent; 
 15.14     (2) On all over $21,630, but not over $86,910, 7.05 
 15.15  percent; 
 15.16     (3) On all over $86,910, 7.85 percent. 
 15.17     (d) In lieu of a tax computed according to the rates set 
 15.18  forth in this subdivision, the tax of any individual taxpayer 
 15.19  whose taxable net income for the taxable year is less than an 
 15.20  amount determined by the commissioner must be computed in 
 15.21  accordance with tables prepared and issued by the commissioner 
 15.22  of revenue based on income brackets of not more than $100.  The 
 15.23  amount of tax for each bracket shall be computed at the rates 
 15.24  set forth in this subdivision, provided that the commissioner 
 15.25  may disregard a fractional part of a dollar unless it amounts to 
 15.26  50 cents or more, in which case it may be increased to $1. 
 15.27     (e) An individual who is not a Minnesota resident for the 
 15.28  entire year must compute the individual's Minnesota income tax 
 15.29  as provided in this subdivision.  After the application of the 
 15.30  nonrefundable credits provided in this chapter, the tax 
 15.31  liability must then be multiplied by a fraction in which:  
 15.32     (1) the numerator is the individual's Minnesota source 
 15.33  federal adjusted gross income as defined in section 62 of the 
 15.34  Internal Revenue Code and increased by the additions required 
 15.35  under section 290.01, subdivision 19a, clauses (1), (5), and 
 15.36  (6), and reduced by the subtraction subtractions under section 
 16.1   290.01, subdivision 19b, clause clauses (11) and (12), and the 
 16.2   Minnesota assignable portion of the subtraction for United 
 16.3   States government interest under section 290.01, subdivision 
 16.4   19b, clause (1), after applying the allocation and assignability 
 16.5   provisions of section 290.081, clause (a), or 290.17; and 
 16.6      (2) the denominator is the individual's federal adjusted 
 16.7   gross income as defined in section 62 of the Internal Revenue 
 16.8   Code of 1986, increased by the amounts specified in section 
 16.9   290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 
 16.10  by the amounts specified in section 290.01, subdivision 19b, 
 16.11  clauses (1) and, (11), and (12). 
 16.12     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 16.13  years beginning after December 31, 2002. 
 16.14     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 16.15  290.091, subdivision 2, is amended to read: 
 16.16     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 16.17  this section, the following terms have the meanings given: 
 16.18     (a) "Alternative minimum taxable income" means the sum of 
 16.19  the following for the taxable year: 
 16.20     (1) the taxpayer's federal alternative minimum taxable 
 16.21  income as defined in section 55(b)(2) of the Internal Revenue 
 16.22  Code; 
 16.23     (2) the taxpayer's itemized deductions allowed in computing 
 16.24  federal alternative minimum taxable income, but excluding: 
 16.25     (i) the charitable contribution deduction under section 170 
 16.26  of the Internal Revenue Code to the extent that the deduction 
 16.27  exceeds 1.0 percent of adjusted gross income, as defined in 
 16.28  section 62 of the Internal Revenue Code; 
 16.29     (ii) the medical expense deduction; 
 16.30     (iii) the casualty, theft, and disaster loss deduction; and 
 16.31     (iv) the impairment-related work expenses of a disabled 
 16.32  person; 
 16.33     (3) for depletion allowances computed under section 613A(c) 
 16.34  of the Internal Revenue Code, with respect to each property (as 
 16.35  defined in section 614 of the Internal Revenue Code), to the 
 16.36  extent not included in federal alternative minimum taxable 
 17.1   income, the excess of the deduction for depletion allowable 
 17.2   under section 611 of the Internal Revenue Code for the taxable 
 17.3   year over the adjusted basis of the property at the end of the 
 17.4   taxable year (determined without regard to the depletion 
 17.5   deduction for the taxable year); 
 17.6      (4) to the extent not included in federal alternative 
 17.7   minimum taxable income, the amount of the tax preference for 
 17.8   intangible drilling cost under section 57(a)(2) of the Internal 
 17.9   Revenue Code determined without regard to subparagraph (E); 
 17.10     (5) to the extent not included in federal alternative 
 17.11  minimum taxable income, the amount of interest income as 
 17.12  provided by section 290.01, subdivision 19a, clause (1); and 
 17.13     (6) the amount of addition required by section 290.01, 
 17.14  subdivision 19a, clause (7); and 
 17.15     (7) the amount of addition required by section 290.01, 
 17.16  subdivision 19a, clause (8); 
 17.17     less the sum of the amounts determined under the following: 
 17.18     (1) interest income as defined in section 290.01, 
 17.19  subdivision 19b, clause (1); 
 17.20     (2) an overpayment of state income tax as provided by 
 17.21  section 290.01, subdivision 19b, clause (2), to the extent 
 17.22  included in federal alternative minimum taxable income; 
 17.23     (3) the amount of investment interest paid or accrued 
 17.24  within the taxable year on indebtedness to the extent that the 
 17.25  amount does not exceed net investment income, as defined in 
 17.26  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 17.27  not include amounts deducted in computing federal adjusted gross 
 17.28  income; and 
 17.29     (4) amounts subtracted from federal taxable income as 
 17.30  provided by section 290.01, subdivision 19b, clauses (10) and 
 17.31  (11) to (12). 
 17.32     In the case of an estate or trust, alternative minimum 
 17.33  taxable income must be computed as provided in section 59(c) of 
 17.34  the Internal Revenue Code. 
 17.35     (b) "Investment interest" means investment interest as 
 17.36  defined in section 163(d)(3) of the Internal Revenue Code. 
 18.1      (c) "Tentative minimum tax" equals 6.4 percent of 
 18.2   alternative minimum taxable income after subtracting the 
 18.3   exemption amount determined under subdivision 3. 
 18.4      (d) "Regular tax" means the tax that would be imposed under 
 18.5   this chapter (without regard to this section and section 
 18.6   290.032), reduced by the sum of the nonrefundable credits 
 18.7   allowed under this chapter.  
 18.8      (e) "Net minimum tax" means the minimum tax imposed by this 
 18.9   section. 
 18.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 18.11  years beginning after December 31, 2003. 
 18.12     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 18.13  290.0921, subdivision 3, is amended to read: 
 18.14     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
 18.15  "Alternative minimum taxable income" is Minnesota net income as 
 18.16  defined in section 290.01, subdivision 19, and includes the 
 18.17  adjustments and tax preference items in sections 56, 57, 58, and 
 18.18  59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
 18.19  corporation files a separate company Minnesota tax return, the 
 18.20  minimum tax must be computed on a separate company basis.  If a 
 18.21  corporation is part of a tax group filing a unitary return, the 
 18.22  minimum tax must be computed on a unitary basis.  The following 
 18.23  adjustments must be made. 
 18.24     (1) For purposes of the depreciation adjustments under 
 18.25  section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
 18.26  the basis for depreciable property placed in service in a 
 18.27  taxable year beginning before January 1, 1990, is the adjusted 
 18.28  basis for federal income tax purposes, including any 
 18.29  modification made in a taxable year under section 290.01, 
 18.30  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 18.31  subdivision 7, paragraph (c). 
 18.32     For taxable years beginning after December 31, 2000, the 
 18.33  amount of any remaining modification made under section 290.01, 
 18.34  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 18.35  subdivision 7, paragraph (c), not previously deducted is a 
 18.36  depreciation allowance in the first taxable year after December 
 19.1   31, 2000. 
 19.2      (2) The portion of the depreciation deduction allowed for 
 19.3   federal income tax purposes under section 168(k) of the Internal 
 19.4   Revenue Code that is required as an addition under section 
 19.5   290.01, subdivision 19c, clause (16), is disallowed in 
 19.6   determining alternative minimum taxable income. 
 19.7      (3) The subtraction for depreciation allowed under section 
 19.8   290.01, subdivision 19d, clause (19), is allowed as a 
 19.9   depreciation deduction in determining alternative minimum 
 19.10  taxable income. 
 19.11     (4) The alternative tax net operating loss deduction under 
 19.12  sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
 19.13  not apply. 
 19.14     (5) The special rule for certain dividends under section 
 19.15  56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 
 19.16     (6) The special rule for dividends from section 936 
 19.17  companies under section 56(g)(4)(C)(iii) does not apply. 
 19.18     (7) The tax preference for depletion under section 57(a)(1) 
 19.19  of the Internal Revenue Code does not apply. 
 19.20     (8) The tax preference for intangible drilling costs under 
 19.21  section 57(a)(2) of the Internal Revenue Code must be calculated 
 19.22  without regard to subparagraph (E) and the subtraction under 
 19.23  section 290.01, subdivision 19d, clause (4). 
 19.24     (9) The tax preference for tax exempt interest under 
 19.25  section 57(a)(5) of the Internal Revenue Code does not apply.  
 19.26     (10) The tax preference for charitable contributions of 
 19.27  appreciated property under section 57(a)(6) of the Internal 
 19.28  Revenue Code does not apply. 
 19.29     (11) For purposes of calculating the tax preference for 
 19.30  accelerated depreciation or amortization on certain property 
 19.31  placed in service before January 1, 1987, under section 57(a)(7) 
 19.32  of the Internal Revenue Code, the deduction allowable for the 
 19.33  taxable year is the deduction allowed under section 290.01, 
 19.34  subdivision 19e. 
 19.35     For taxable years beginning after December 31, 2000, the 
 19.36  amount of any remaining modification made under section 290.01, 
 20.1   subdivision 19e, not previously deducted is a depreciation or 
 20.2   amortization allowance in the first taxable year after December 
 20.3   31, 2004. 
 20.4      (12) For purposes of calculating the adjustment for 
 20.5   adjusted current earnings in section 56(g) of the Internal 
 20.6   Revenue Code, the term "alternative minimum taxable income" as 
 20.7   it is used in section 56(g) of the Internal Revenue Code, means 
 20.8   alternative minimum taxable income as defined in this 
 20.9   subdivision, determined without regard to the adjustment for 
 20.10  adjusted current earnings in section 56(g) of the Internal 
 20.11  Revenue Code. 
 20.12     (13) For purposes of determining the amount of adjusted 
 20.13  current earnings under section 56(g)(3) of the Internal Revenue 
 20.14  Code, no adjustment shall be made under section 56(g)(4) of the 
 20.15  Internal Revenue Code with respect to (i) the amount of foreign 
 20.16  dividend gross-up subtracted as provided in section 290.01, 
 20.17  subdivision 19d, clause (1), (ii) the amount of refunds of 
 20.18  income, excise, or franchise taxes subtracted as provided in 
 20.19  section 290.01, subdivision 19d, clause (10), or (iii) the 
 20.20  amount of royalties, fees or other like income subtracted as 
 20.21  provided in section 290.01, subdivision 19d, clause (11). 
 20.22     (14) Alternative minimum taxable income excludes the income 
 20.23  from operating in a job opportunity building zone as provided 
 20.24  under section 469.317. 
 20.25     (15) Alternative minimum taxable income excludes the income 
 20.26  from operating in a biotechnology and health sciences industry 
 20.27  zone as provided under section 469.337. 
 20.28     (16) The addition required under section 290.01, 
 20.29  subdivision 19c, clause (17), is included in determining 
 20.30  alternative minimum taxable income. 
 20.31     Items of tax preference must not be reduced below zero as a 
 20.32  result of the modifications in this subdivision. 
 20.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 20.34  years beginning after December 31, 2003. 
 20.35     Sec. 10.  Minnesota Statutes 2003 Supplement, section 
 20.36  290A.03, subdivision 15, is amended to read: 
 21.1      Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 21.2   means the Internal Revenue Code of 1986, as amended through June 
 21.3   15, 2003 April 10, 2004. 
 21.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 21.5   following final enactment except the changes to household income 
 21.6   generated by federal changes to federal adjusted gross income 
 21.7   are effective at the same time federal changes are effective. 
 21.8      Sec. 11.  Minnesota Statutes 2003 Supplement, section 
 21.9   291.005, subdivision 1, is amended to read: 
 21.10     Subdivision 1.  Unless the context otherwise clearly 
 21.11  requires, the following terms used in this chapter shall have 
 21.12  the following meanings: 
 21.13     (1) "Federal gross estate" means the gross estate of a 
 21.14  decedent as valued and otherwise determined for federal estate 
 21.15  tax purposes by federal taxing authorities pursuant to the 
 21.16  provisions of the Internal Revenue Code. 
 21.17     (2) "Minnesota gross estate" means the federal gross estate 
 21.18  of a decedent after (a) excluding therefrom any property 
 21.19  included therein which has its situs outside Minnesota, and (b) 
 21.20  including therein any property omitted from the federal gross 
 21.21  estate which is includable therein, has its situs in Minnesota, 
 21.22  and was not disclosed to federal taxing authorities.  
 21.23     (3) "Personal representative" means the executor, 
 21.24  administrator or other person appointed by the court to 
 21.25  administer and dispose of the property of the decedent.  If 
 21.26  there is no executor, administrator or other person appointed, 
 21.27  qualified, and acting within this state, then any person in 
 21.28  actual or constructive possession of any property having a situs 
 21.29  in this state which is included in the federal gross estate of 
 21.30  the decedent shall be deemed to be a personal representative to 
 21.31  the extent of the property and the Minnesota estate tax due with 
 21.32  respect to the property. 
 21.33     (4) "Resident decedent" means an individual whose domicile 
 21.34  at the time of death was in Minnesota. 
 21.35     (5) "Nonresident decedent" means an individual whose 
 21.36  domicile at the time of death was not in Minnesota. 
 22.1      (6) "Situs of property" means, with respect to real 
 22.2   property, the state or country in which it is located; with 
 22.3   respect to tangible personal property, the state or country in 
 22.4   which it was normally kept or located at the time of the 
 22.5   decedent's death; and with respect to intangible personal 
 22.6   property, the state or country in which the decedent was 
 22.7   domiciled at death. 
 22.8      (7) "Commissioner" means the commissioner of revenue or any 
 22.9   person to whom the commissioner has delegated functions under 
 22.10  this chapter. 
 22.11     (8) "Internal Revenue Code" means the United States 
 22.12  Internal Revenue Code of 1986, as amended through December 31, 
 22.13  2002 April 10, 2004. 
 22.14     <b>[EFFECTIVE DATE.]</b> This section is effective for estates of 
 22.15  decedents dying after January 31, 2003. 
 22.16                             ARTICLE 2 
 22.17              DEPARTMENT OF REVENUE POLICY PROVISIONS 
 22.18     Section 1.  Minnesota Statutes 2002, section 16D.10, is 
 22.19  amended to read: 
 22.20     16D.10 [CASE REVIEWER.] 
 22.21     Subdivision 1.  [DUTIES.] The commissioner shall make a 
 22.22  case reviewer available to debtors.  The reviewer must be 
 22.23  available to answer a debtor's questions concerning the 
 22.24  collection process and to review the collection activity taken.  
 22.25  If the reviewer reasonably believes that the particular action 
 22.26  being taken is unreasonable or unfair, the reviewer may make 
 22.27  recommendations to the commissioner in regard to the collection 
 22.28  action.  
 22.29     Subd. 2.  [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On 
 22.30  application filed by a debtor with the case reviewer, in the 
 22.31  form, manner, and in the time prescribed by the commissioner, 
 22.32  and after thorough investigation, the case reviewer may issue a 
 22.33  debtor assistance order if, in the determination of the case 
 22.34  reviewer, the manner in which the state debt collection laws are 
 22.35  being administered is creating or will create an unjust and 
 22.36  inequitable result for the debtor.  Debtor assistance orders are 
 23.1   governed by the provisions relating to taxpayer assistance 
 23.2   orders under section 270.273. 
 23.3      Subd. 3.  [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.] 
 23.4   All duties and authority of the case reviewer under subdivisions 
 23.5   1 and 2 are transferred to the taxpayer rights advocate. 
 23.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 23.7   following final enactment. 
 23.8      Sec. 2.  Minnesota Statutes 2002, section 270.02, 
 23.9   subdivision 3, is amended to read: 
 23.10     Subd. 3.  [POWERS, ORGANIZATION, ASSISTANTS.] Subject to 
 23.11  the provisions of this chapter and other applicable laws the 
 23.12  commissioner shall have power to organize the department with 
 23.13  such divisions and other agencies as the commissioner deems 
 23.14  necessary and to appoint one deputy commissioner, a department 
 23.15  secretary, directors of divisions, and such other officers, 
 23.16  employees, and agents as the commissioner may deem necessary to 
 23.17  discharge the functions of the department, define the duties of 
 23.18  such officers, employees, and agents, and delegate to them any 
 23.19  of the commissioner's powers or duties, subject to the 
 23.20  commissioner's control and under such conditions as the 
 23.21  commissioner may prescribe.  Appointments to exercise delegated 
 23.22  power to sign documents which require the signature of the 
 23.23  commissioner or a delegate by law shall be by written order 
 23.24  filed with the secretary of state.  The delegations of authority 
 23.25  granted by the commissioner remain in effect until revoked by 
 23.26  the commissioner or a successor commissioner. 
 23.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 23.28  following final enactment. 
 23.29     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
 23.30  270.06, is amended to read: 
 23.31     270.06 [POWERS AND DUTIES.] 
 23.32     The commissioner of revenue shall: 
 23.33     (1) have and exercise general supervision over the 
 23.34  administration of the assessment and taxation laws of the state, 
 23.35  over assessors, town, county, and city boards of review and 
 23.36  equalization, and all other assessing officers in the 
 24.1   performance of their duties, to the end that all assessments of 
 24.2   property be made relatively just and equal in compliance with 
 24.3   the laws of the state; 
 24.4      (2) confer with, advise, and give the necessary 
 24.5   instructions and directions to local assessors and local boards 
 24.6   of review throughout the state as to their duties under the laws 
 24.7   of the state; 
 24.8      (3) direct proceedings, actions, and prosecutions to be 
 24.9   instituted to enforce the laws relating to the liability and 
 24.10  punishment of public officers and officers and agents of 
 24.11  corporations for failure or negligence to comply with the 
 24.12  provisions of the laws of this state governing returns of 
 24.13  assessment and taxation of property, and cause complaints to be 
 24.14  made against local assessors, members of boards of equalization, 
 24.15  members of boards of review, or any other assessing or taxing 
 24.16  officer, to the proper authority, for their removal from office 
 24.17  for misconduct or negligence of duty; 
 24.18     (4) require county attorneys to assist in the commencement 
 24.19  of prosecutions in actions or proceedings for removal, 
 24.20  forfeiture and punishment for violation of the laws of this 
 24.21  state in respect to the assessment and taxation of property in 
 24.22  their respective districts or counties; 
 24.23     (5) require town, city, county, and other public officers 
 24.24  to report information as to the assessment of property, 
 24.25  collection of taxes received from licenses and other sources, 
 24.26  and such other information as may be needful in the work of the 
 24.27  Department of Revenue, in such form and upon such blanks as the 
 24.28  commissioner may prescribe; 
 24.29     (6) require individuals, copartnerships, companies, 
 24.30  associations, and corporations to furnish information concerning 
 24.31  their capital, funded or other debt, current assets and 
 24.32  liabilities, earnings, operating expenses, taxes, as well as all 
 24.33  other statements now required by law for taxation purposes; 
 24.34     (7) subpoena witnesses, at a time and place reasonable 
 24.35  under the circumstances, to appear and give testimony, and to 
 24.36  produce books, records, papers and documents for inspection and 
 25.1   copying relating to any matter which the commissioner may have 
 25.2   authority to investigate or determine; 
 25.3      (8) issue a subpoena which does not identify the person or 
 25.4   persons with respect to whose liability the subpoena is issued, 
 25.5   but only if (a) the subpoena relates to the investigation of a 
 25.6   particular person or ascertainable group or class of persons, 
 25.7   (b) there is a reasonable basis for believing that such person 
 25.8   or group or class of persons may fail or may have failed to 
 25.9   comply with any law administered by the commissioner, (c) the 
 25.10  information sought to be obtained from the examination of the 
 25.11  records (and the identity of the person or persons with respect 
 25.12  to whose liability the subpoena is issued) is not readily 
 25.13  available from other sources, (d) the subpoena is clear and 
 25.14  specific as to the information sought to be obtained, and (e) 
 25.15  the information sought to be obtained is limited solely to the 
 25.16  scope of the investigation.  Provided further that the party 
 25.17  served with a subpoena which does not identify the person or 
 25.18  persons with respect to whose tax liability the subpoena is 
 25.19  issued shall have the right, within 20 days after service of the 
 25.20  subpoena, to petition the district court for the judicial 
 25.21  district in which lies the county in which that party is located 
 25.22  for a determination as to whether the commissioner of revenue 
 25.23  has complied with all the requirements in (a) to (e), and thus, 
 25.24  whether the subpoena is enforceable.  If no such petition is 
 25.25  made by the party served within the time prescribed, the 
 25.26  subpoena shall have the force and effect of a court order; 
 25.27     (9) cause the deposition of witnesses residing within or 
 25.28  without the state, or absent therefrom, to be taken, upon notice 
 25.29  to the interested party, if any, in like manner that depositions 
 25.30  of witnesses are taken in civil actions in the district court, 
 25.31  in any matter which the commissioner may have authority to 
 25.32  investigate or determine; 
 25.33     (10) investigate the tax laws of other states and countries 
 25.34  and to formulate and submit to the legislature such legislation 
 25.35  as the commissioner may deem expedient to prevent evasions of 
 25.36  assessment and taxing laws, and secure just and equal taxation 
 26.1   and improvement in the system of assessment and taxation in this 
 26.2   state; 
 26.3      (11) consult and confer with the governor upon the subject 
 26.4   of taxation, the administration of the laws in regard thereto, 
 26.5   and the progress of the work of the Department of Revenue, and 
 26.6   furnish the governor, from time to time, such assistance and 
 26.7   information as the governor may require relating to tax matters; 
 26.8      (12) transmit to the governor, on or before the third 
 26.9   Monday in December of each even-numbered year, and to each 
 26.10  member of the legislature, on or before November 15 of each 
 26.11  even-numbered year, the report of the Department of Revenue for 
 26.12  the preceding years, showing all the taxable property in the 
 26.13  state and the value of the same, in tabulated form; 
 26.14     (13) inquire into the methods of assessment and taxation 
 26.15  and ascertain whether the assessors faithfully discharge their 
 26.16  duties, particularly as to their compliance with the laws 
 26.17  requiring the assessment of all property not exempt from 
 26.18  taxation; 
 26.19     (14) administer and enforce the assessment and collection 
 26.20  of state taxes and fees, including the use of any remedy 
 26.21  available to nongovernmental creditors, and, from time to time, 
 26.22  make, publish, and distribute rules for the administration and 
 26.23  enforcement of laws administered by the commissioner and state 
 26.24  tax laws.  The rules have the force of law; 
 26.25     (15) prepare blank forms for the returns required by state 
 26.26  tax law and distribute them throughout the state, furnishing 
 26.27  them subject to charge on application; 
 26.28     (16) prescribe rules governing the qualification and 
 26.29  practice of agents, attorneys, or other persons representing 
 26.30  taxpayers before the commissioner.  The rules may require that 
 26.31  those persons, agents, and attorneys show that they are of good 
 26.32  character and in good repute, have the necessary qualifications 
 26.33  to give taxpayers valuable services, and are otherwise competent 
 26.34  to advise and assist taxpayers in the presentation of their case 
 26.35  before being recognized as representatives of taxpayers.  After 
 26.36  due notice and opportunity for hearing, the commissioner may 
 27.1   suspend and bar from further practice before the commissioner 
 27.2   any person, agent, or attorney who is shown to be incompetent or 
 27.3   disreputable, who refuses to comply with the rules, or who with 
 27.4   intent to defraud, willfully or knowingly deceives, misleads, or 
 27.5   threatens a taxpayer or prospective taxpayer, by words, 
 27.6   circular, letter, or by advertisement.  This clause does not 
 27.7   curtail the rights of individuals to appear in their own behalf 
 27.8   or partners or corporations' officers to appear in behalf of 
 27.9   their respective partnerships or corporations; 
 27.10     (17) appoint agents as the commissioner considers necessary 
 27.11  to make examinations and determinations.  The agents have the 
 27.12  rights and powers conferred on the commissioner to subpoena, 
 27.13  examine, and copy books, records, papers, or memoranda, subpoena 
 27.14  witnesses, administer oaths and affirmations, and take 
 27.15  testimony.  In addition to administrative subpoenas of the 
 27.16  commissioner and the agents, upon demand of the commissioner or 
 27.17  an agent, the court administrator of any district court shall 
 27.18  issue a subpoena for the attendance of a witness or the 
 27.19  production of books, papers, records, or memoranda before the 
 27.20  agent for inspection and copying.  Disobedience of a court 
 27.21  administrator's subpoena shall be punished by the district court 
 27.22  of the district in which the subpoena is issued, or in the case 
 27.23  of a subpoena issued by the commissioner or an agent, by the 
 27.24  district court of the district in which the party served with 
 27.25  the subpoena is located, in the same manner as contempt of the 
 27.26  district court; 
 27.27     (18) appoint and employ additional help, purchase supplies 
 27.28  or materials, or incur other expenditures in the enforcement of 
 27.29  state tax laws as considered necessary.  The salaries of all 
 27.30  agents and employees provided for in this chapter shall be fixed 
 27.31  by the appointing authority, subject to the approval of the 
 27.32  commissioner of administration; 
 27.33     (19) execute and administer any agreement with the 
 27.34  secretary of the treasury of the United States or a 
 27.35  representative of another state regarding the exchange of 
 27.36  information and administration of the tax laws; 
 28.1      (20) authorize the use of unmarked motor vehicles to 
 28.2   conduct seizures or criminal investigations pursuant to the 
 28.3   commissioner's authority; and 
 28.4      (21) exercise other powers and perform other duties 
 28.5   required of or imposed upon the commissioner of revenue by law; 
 28.6   and 
 28.7      (22) negotiate with other member states as to the amount of 
 28.8   the monetary allowance for sellers and certified service 
 28.9   providers who purchase certified software for sales tax 
 28.10  collection as described in the streamlined sales tax agreement.  
 28.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 28.12  following final enactment. 
 28.13     Sec. 4.  [270.0611] [SUFFICIENCY OF NOTICE OF DETERMINATION 
 28.14  OR ACTION OF COMMISSIONER OF REVENUE.] 
 28.15     When a method of notification of a written determination or 
 28.16  action of the commissioner is not specifically provided for by 
 28.17  law, notice of the determination or action sent postage prepaid 
 28.18  by United States mail to the taxpayer or other person affected 
 28.19  by the determination or action at the taxpayer's or person's 
 28.20  last known address is sufficient.  If the taxpayer or person 
 28.21  being notified is deceased or is under a legal disability, or if 
 28.22  a corporation being notified has terminated its existence, 
 28.23  notice to the last known address of the taxpayer, person, or 
 28.24  corporation is sufficient, unless the department has been 
 28.25  provided with a new address by a party authorized to receive 
 28.26  notices from the commissioner. 
 28.27     <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
 28.28  sent on or after the day following final enactment. 
 28.29     Sec. 5.  Minnesota Statutes 2002, section 270.69, 
 28.30  subdivision 4, is amended to read: 
 28.31     Subd. 4.  [PERIOD OF LIMITATIONS.] The lien imposed by this 
 28.32  section shall, notwithstanding any other provision of law to the 
 28.33  contrary, be enforceable from the time the lien arises and for 
 28.34  ten years from the date of filing the notice of lien, which must 
 28.35  be filed by the commissioner within five years after the date of 
 28.36  assessment of the tax or final administrative or judicial 
 29.1   determination of the assessment.  A notice of lien filed in one 
 29.2   county may be transcribed to the secretary of state or to any 
 29.3   other county within ten years after the date of its filing, but 
 29.4   the transcription shall not extend the period during which the 
 29.5   lien is enforceable.  A notice of lien may be renewed by the 
 29.6   commissioner before the expiration of the ten-year period for an 
 29.7   additional ten years.  The taxpayer must receive written notice 
 29.8   of the renewal. 
 29.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 29.10  following final enactment. 
 29.11     Sec. 6.  Minnesota Statutes 2002, section 270B.01, 
 29.12  subdivision 8, is amended to read: 
 29.13     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
 29.14  chapter only, unless expressly stated otherwise, "Minnesota tax 
 29.15  laws" means: 
 29.16     (1) the taxes, refunds, and fees administered by or paid to 
 29.17  the commissioner under chapters 115B (except taxes imposed under 
 29.18  sections 115B.21 to 115B.24), 289A (except taxes imposed under 
 29.19  sections 298.01, 298.015, and 298.24), 290, 290A, 291, 295, 
 29.20  297A, and 297H, or any similar Indian tribal tax administered by 
 29.21  the commissioner pursuant to any tax agreement between the state 
 29.22  and the Indian tribal government, and includes any laws for the 
 29.23  assessment, collection, and enforcement of those taxes, refunds, 
 29.24  and fees; and 
 29.25     (2) section 273.1315. 
 29.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 29.27  following final enactment. 
 29.28     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
 29.29  270B.12, subdivision 13, is amended to read: 
 29.30     Subd. 13.  [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The 
 29.31  commissioner may disclose to a county assessor, and to the 
 29.32  assessor's designated agents or employees, a listing of parcels 
 29.33  of property qualifying for the class 1b property tax 
 29.34  classification under section 273.13, subdivision 22, and the 
 29.35  names and addresses of qualified applicants. 
 29.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 30.1   following final enactment. 
 30.2      Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 30.3   272.02, subdivision 65, is amended to read: 
 30.4      Subd. 65.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
 30.5   PROPERTY.] (a) Improvements to real property, and personal 
 30.6   property, classified under section 273.13, subdivision 24, and 
 30.7   located within a biotechnology and health sciences industry zone 
 30.8   are exempt from ad valorem taxes levied under chapter 275, as 
 30.9   provided in this subdivision. 
 30.10     (b) For property to qualify for exemption under paragraph 
 30.11  (a), the occupant must be a qualified business, as defined in 
 30.12  section 469.330. 
 30.13     (c) The exemption applies beginning for the first 
 30.14  assessment year after designation of the biotechnology and 
 30.15  health sciences industry zone by the commissioner of employment 
 30.16  and economic development.  The exemption applies to each 
 30.17  assessment year that begins during the duration of the 
 30.18  biotechnology and health sciences industry zone and to property 
 30.19  occupied by July 1 of the assessment year by a qualified 
 30.20  business.  This exemption does not apply to: 
 30.21     (1) a levy under section 475.61 or similar levy provisions 
 30.22  under any other law to pay general obligation bonds; or 
 30.23     (2) a levy under section 126C.17, if the levy was approved 
 30.24  by the voters before the designation of the biotechnology and 
 30.25  health sciences industry zone. 
 30.26     (d) The exemption does not apply to taxes imposed by a 
 30.27  city, town, or county, unless the governing body adopts a 
 30.28  resolution granting the exemption.  A city, town, or county may 
 30.29  provide a complete property tax exemption, partial property tax 
 30.30  exemption, or no property tax exemption to qualified businesses 
 30.31  in the biotechnology and health sciences industry zone.  "City" 
 30.32  includes a statutory or home rule charter city. 
 30.33     (e) For property located in a tax increment financing 
 30.34  district, the county shall not adjust the original net tax 
 30.35  capacity of the district under section 469.177, subdivision 1, 
 30.36  paragraph (a), upon the expiration of an exemption under this 
 31.1   subdivision. 
 31.2      <b>[EFFECTIVE DATE.]</b> This section is effective beginning for 
 31.3   property taxes assessed in 2004, payable in 2005. 
 31.4      Sec. 9.  Minnesota Statutes 2002, section 289A.12, 
 31.5   subdivision 3, is amended to read: 
 31.6      Subd. 3.  [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 
 31.7   AND S CORPORATIONS.] (a) Partnerships must file a return with 
 31.8   the commissioner for each taxable year.  The return must conform 
 31.9   to the requirements of section 290.311, and must include the 
 31.10  names and addresses of the partners entitled to a distributive 
 31.11  share in their taxable net income, gain, loss, or credit, and 
 31.12  the amount of the distributive share to which each is entitled.  
 31.13  A partnership required to file a return for a partnership 
 31.14  taxable year must furnish a copy of the information required to 
 31.15  be shown on the return to a person who is a partner at any time 
 31.16  during the taxable year, on or before the day on which the 
 31.17  return for the taxable year was filed.  A partnership with more 
 31.18  than 100 partners that is required to file a federal partnership 
 31.19  return electronically under Code of Federal Regulations, title 
 31.20  26, section 301.6011-3 (2003), must also file the return due 
 31.21  under this section electronically.  If a return required to be 
 31.22  filed electronically is filed on paper, the return is still 
 31.23  valid but a penalty of $50 for each partner over 100 partners is 
 31.24  imposed for failing to file electronically.  The commissioner 
 31.25  may waive the penalty if the partnership can demonstrate that 
 31.26  filing the return electronically creates a hardship. 
 31.27     (b) The fiduciary of an estate or trust making the return 
 31.28  required to be filed under section 289A.08, subdivision 2, for a 
 31.29  taxable year must give a beneficiary who receives a distribution 
 31.30  from the estate or trust with respect to the taxable year or to 
 31.31  whom any item with respect to the taxable year is allocated, a 
 31.32  statement containing the information required to be shown on the 
 31.33  return, on or before the date on which the return was filed. 
 31.34     (c) An S corporation must file a return with the 
 31.35  commissioner for a taxable year during which an election under 
 31.36  section 290.9725 is in effect, stating specifically the names 
 32.1   and addresses of the persons owning stock in the corporation at 
 32.2   any time during the taxable year, the number of shares of stock 
 32.3   owned by a shareholder at all times during the taxable year, the 
 32.4   shareholder's pro rata share of each item of the corporation for 
 32.5   the taxable year, and other information the commissioner 
 32.6   requires.  An S corporation required to file a return under this 
 32.7   paragraph for any taxable year must furnish a copy of the 
 32.8   information shown on the return to the person who is a 
 32.9   shareholder at any time during the taxable year, on or before 
 32.10  the day on which the return for the taxable year was filed. 
 32.11     (d) The partnership or S corporation return must be signed 
 32.12  by someone designated by the partnership or S corporation. 
 32.13     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 32.14  years beginning after December 31, 2003. 
 32.15     Sec. 10.  Minnesota Statutes 2002, section 289A.31, 
 32.16  subdivision 2, is amended to read: 
 32.17     Subd. 2.  [JOINT INCOME TAX RETURNS.] (a) If a joint income 
 32.18  tax return is made by a husband and wife, the liability for the 
 32.19  tax is joint and several.  A spouse who qualifies for relief 
 32.20  from a liability attributable to an underpayment under section 
 32.21  6015(b) of the Internal Revenue Code is relieved of the state 
 32.22  income tax liability on the underpayment.  
 32.23     (b) In the case of individuals who were a husband and wife 
 32.24  prior to the dissolution of their marriage or their legal 
 32.25  separation, or prior to the death of one of the individuals, for 
 32.26  tax liabilities reported on a joint or combined return, the 
 32.27  liability of each person is limited to the proportion of the tax 
 32.28  due on the return that equals that person's proportion of the 
 32.29  total tax due if the husband and wife filed separate returns for 
 32.30  the taxable year.  This provision is effective only when the 
 32.31  commissioner receives written notice of the marriage 
 32.32  dissolution, legal separation, or death of a spouse from the 
 32.33  husband or wife.  No refund may be claimed by an ex-spouse, 
 32.34  legally separated or widowed spouse for any taxes paid more than 
 32.35  60 days before receipt by the commissioner of the written notice.
 32.36     (c) A request for calculation of separate liability 
 33.1   pursuant to paragraph (b) for taxes reported on a return must be 
 33.2   made within six years after the due date of the return.  For 
 33.3   calculation of separate liability for taxes assessed by the 
 33.4   commissioner under section 289A.35 or 289A.37, the request must 
 33.5   be made within six years after the date of assessment.  The 
 33.6   commissioner is not required to calculate separate liability if 
 33.7   the remaining unpaid liability for which recalculation is 
 33.8   requested is $100 or less. 
 33.9      <b>[EFFECTIVE DATE.]</b> This section is effective for requests 
 33.10  for relief made on or after the day following final enactment. 
 33.11     Sec. 11.  Minnesota Statutes 2002, section 289A.56, is 
 33.12  amended by adding a subdivision to read: 
 33.13     Subd. 7.  [BIOTECHNOLOGY AND BORDER CITY ZONE 
 33.14  REFUNDS.] Notwithstanding subdivision 3, for refunds payable 
 33.15  under sections 297A.68, subdivision 38, and 469.1734, 
 33.16  subdivision 6, interest is computed from 90 days after the 
 33.17  refund claim is filed with the commissioner. 
 33.18     <b>[EFFECTIVE DATE.]</b> This section is effective for refund 
 33.19  claims filed on or after July 1, 2004. 
 33.20     Sec. 12.  Minnesota Statutes 2003 Supplement, section 
 33.21  290.01, subdivision 19d, is amended to read: 
 33.22     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 33.23  TAXABLE INCOME.] For corporations, there shall be subtracted 
 33.24  from federal taxable income after the increases provided in 
 33.25  subdivision 19c:  
 33.26     (1) the amount of foreign dividend gross-up added to gross 
 33.27  income for federal income tax purposes under section 78 of the 
 33.28  Internal Revenue Code; 
 33.29     (2) the amount of salary expense not allowed for federal 
 33.30  income tax purposes due to claiming the federal jobs credit 
 33.31  under section 51 of the Internal Revenue Code; 
 33.32     (3) any dividend (not including any distribution in 
 33.33  liquidation) paid within the taxable year by a national or state 
 33.34  bank to the United States, or to any instrumentality of the 
 33.35  United States exempt from federal income taxes, on the preferred 
 33.36  stock of the bank owned by the United States or the 
 34.1   instrumentality; 
 34.2      (4) amounts disallowed for intangible drilling costs due to 
 34.3   differences between this chapter and the Internal Revenue Code 
 34.4   in taxable years beginning before January 1, 1987, as follows: 
 34.5      (i) to the extent the disallowed costs are represented by 
 34.6   physical property, an amount equal to the allowance for 
 34.7   depreciation under Minnesota Statutes 1986, section 290.09, 
 34.8   subdivision 7, subject to the modifications contained in 
 34.9   subdivision 19e; and 
 34.10     (ii) to the extent the disallowed costs are not 
 34.11  represented by physical property, an amount equal to the 
 34.12  allowance for cost depletion under Minnesota Statutes 1986, 
 34.13  section 290.09, subdivision 8; 
 34.14     (5) the deduction for capital losses pursuant to sections 
 34.15  1211 and 1212 of the Internal Revenue Code, except that: 
 34.16     (i) for capital losses incurred in taxable years beginning 
 34.17  after December 31, 1986, capital loss carrybacks shall not be 
 34.18  allowed; 
 34.19     (ii) for capital losses incurred in taxable years beginning
 34.20  after December 31, 1986, a capital loss carryover to each of the 
 34.21  15 taxable years succeeding the loss year shall be allowed; 
 34.22     (iii) for capital losses incurred in taxable years 
 34.23  beginning before January 1, 1987, a capital loss carryback to 
 34.24  each of the three taxable years preceding the loss year, subject 
 34.25  to the provisions of Minnesota Statutes 1986, section 290.16, 
 34.26  shall be allowed; and 
 34.27     (iv) for capital losses incurred in taxable years beginning
 34.28  before January 1, 1987, a capital loss carryover to each of the 
 34.29  five taxable years succeeding the loss year to the extent such 
 34.30  loss was not used in a prior taxable year and subject to the 
 34.31  provisions of Minnesota Statutes 1986, section 290.16, shall be 
 34.32  allowed; 
 34.33     (6) an amount for interest and expenses relating to income 
 34.34  not taxable for federal income tax purposes, if (i) the income 
 34.35  is taxable under this chapter and (ii) the interest and expenses 
 34.36  were disallowed as deductions under the provisions of section 
 35.1   171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 35.2   federal taxable income; 
 35.3      (7) in the case of mines, oil and gas wells, other natural 
 35.4   deposits, and timber for which percentage depletion was 
 35.5   disallowed pursuant to subdivision 19c, clause (11), a 
 35.6   reasonable allowance for depletion based on actual cost.  In the 
 35.7   case of leases the deduction must be apportioned between the 
 35.8   lessor and lessee in accordance with rules prescribed by the 
 35.9   commissioner.  In the case of property held in trust, the 
 35.10  allowable deduction must be apportioned between the income 
 35.11  beneficiaries and the trustee in accordance with the pertinent 
 35.12  provisions of the trust, or if there is no provision in the 
 35.13  instrument, on the basis of the trust's income allocable to 
 35.14  each; 
 35.15     (8) for certified pollution control facilities placed in 
 35.16  service in a taxable year beginning before December 31, 1986, 
 35.17  and for which amortization deductions were elected under section 
 35.18  169 of the Internal Revenue Code of 1954, as amended through 
 35.19  December 31, 1985, an amount equal to the allowance for 
 35.20  depreciation under Minnesota Statutes 1986, section 290.09, 
 35.21  subdivision 7; 
 35.22     (9) amounts included in federal taxable income that are due 
 35.23  to refunds of income, excise, or franchise taxes based on net 
 35.24  income or related minimum taxes paid by the corporation to 
 35.25  Minnesota, another state, a political subdivision of another 
 35.26  state, the District of Columbia, or a foreign country or 
 35.27  possession of the United States to the extent that the taxes 
 35.28  were added to federal taxable income under section 290.01, 
 35.29  subdivision 19c, clause (1), in a prior taxable year; 
 35.30     (10) 80 percent of royalties, fees, or other like income 
 35.31  accrued or received from a foreign operating corporation or a 
 35.32  foreign corporation which is part of the same unitary business 
 35.33  as the receiving corporation; 
 35.34     (11) income or gains from the business of mining as defined 
 35.35  in section 290.05, subdivision 1, clause (a), that are not 
 35.36  subject to Minnesota franchise tax; 
 36.1      (12) the amount of handicap access expenditures in the 
 36.2   taxable year which are not allowed to be deducted or capitalized 
 36.3   under section 44(d)(7) of the Internal Revenue Code; 
 36.4      (13) the amount of qualified research expenses not allowed 
 36.5   for federal income tax purposes under section 280C(c) of the 
 36.6   Internal Revenue Code, but only to the extent that the amount 
 36.7   exceeds the amount of the credit allowed under section 
 36.8   290.068 or 469.339; 
 36.9      (14) the amount of salary expenses not allowed for federal 
 36.10  income tax purposes due to claiming the Indian employment credit 
 36.11  under section 45A(a) of the Internal Revenue Code; 
 36.12     (15) the amount of any refund of environmental taxes paid 
 36.13  under section 59A of the Internal Revenue Code; 
 36.14     (16) for taxable years beginning before January 1, 2008, 
 36.15  the amount of the federal small ethanol producer credit allowed 
 36.16  under section 40(a)(3) of the Internal Revenue Code which is 
 36.17  included in gross income under section 87 of the Internal 
 36.18  Revenue Code; 
 36.19     (17) for a corporation whose foreign sales corporation, as 
 36.20  defined in section 922 of the Internal Revenue Code, constituted 
 36.21  a foreign operating corporation during any taxable year ending 
 36.22  before January 1, 1995, and a return was filed by August 15, 
 36.23  1996, claiming the deduction under section 290.21, subdivision 
 36.24  4, for income received from the foreign operating corporation, 
 36.25  an amount equal to 1.23 multiplied by the amount of income 
 36.26  excluded under section 114 of the Internal Revenue Code, 
 36.27  provided the income is not income of a foreign operating 
 36.28  company; 
 36.29     (18) any decrease in subpart F income, as defined in 
 36.30  section 952(a) of the Internal Revenue Code, for the taxable 
 36.31  year when subpart F income is calculated without regard to the 
 36.32  provisions of section 614 of Public Law 107-147; and 
 36.33     (19) in each of the five tax years immediately following 
 36.34  the tax year in which an addition is required under subdivision 
 36.35  19c, clause (16), an amount equal to one-fifth of the delayed 
 36.36  depreciation.  For purposes of this clause, "delayed 
 37.1   depreciation" means the amount of the addition made by the 
 37.2   taxpayer under subdivision 19c, clause (16).  The resulting 
 37.3   delayed depreciation cannot be less than zero. 
 37.4      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 37.5   beginning after December 31, 2003. 
 37.6      Sec. 13.  Minnesota Statutes 2002, section 290.9705, 
 37.7   subdivision 1, is amended to read: 
 37.8      Subdivision 1.  [WITHHOLDING OF PAYMENTS TO OUT-OF-STATE 
 37.9   CONTRACTORS.] (a) In this section, "person" means a person, 
 37.10  corporation, or cooperative, the state of Minnesota and its 
 37.11  political subdivisions, and a city, county, and school district 
 37.12  in Minnesota. 
 37.13     (b) A person who in the regular course of business is 
 37.14  hiring, contracting, or having a contract with a nonresident 
 37.15  person or foreign corporation, as defined in Minnesota Statutes 
 37.16  1986, section 290.01, subdivision 5, to perform construction 
 37.17  work in Minnesota, shall deduct and withhold eight percent of 
 37.18  every payment cumulative calendar year payments to the 
 37.19  contractor if the contract exceeds or can reasonably be expected 
 37.20  to exceed $100,000 which exceed $50,000. 
 37.21     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
 37.22  made after December 31, 2004. 
 37.23     Sec. 14.  Minnesota Statutes 2003 Supplement, section 
 37.24  290C.10, is amended to read: 
 37.25     290C.10 [WITHDRAWAL PROCEDURES.] 
 37.26     An approved claimant under the sustainable forest incentive 
 37.27  program for a minimum of four years may notify the commissioner 
 37.28  of the intent to terminate enrollment.  Within 90 days of 
 37.29  receipt of notice to terminate enrollment, the commissioner 
 37.30  shall inform the claimant in writing, acknowledging receipt of 
 37.31  this notice and indicating the effective date of termination 
 37.32  from the sustainable forest incentive program.  Termination of 
 37.33  enrollment in the sustainable forest incentive program occurs on 
 37.34  January 1 of the fifth calendar year that begins after receipt 
 37.35  by the commissioner of the termination notice.  After the 
 37.36  commissioner issues an effective date of termination, a claimant 
 38.1   wishing to continue the land's enrollment in the sustainable 
 38.2   forest incentive program beyond the termination date must apply 
 38.3   for enrollment as prescribed in section 290C.04.  A claimant who 
 38.4   withdraws a parcel of land from this program may not reenroll 
 38.5   the parcel for a period of three years.  Within 90 days after 
 38.6   the termination date, the commissioner shall execute and 
 38.7   acknowledge a document releasing the land from the covenant 
 38.8   required under this chapter.  The document must be mailed to the 
 38.9   claimant and is entitled to be recorded.  The commissioner may 
 38.10  allow early withdrawal from the Sustainable Forest Incentive Act 
 38.11  without penalty in cases of condemnation when the state of 
 38.12  Minnesota, any local government unit, or any other entity which 
 38.13  has the right of eminent domain acquires title or possession to 
 38.14  the land for a public purpose notwithstanding the provisions of 
 38.15  this section.  In the case of such acquisition, the commissioner 
 38.16  shall execute and acknowledge a document releasing the land 
 38.17  acquired by the state, local government unit, or other entity 
 38.18  from the covenant.  All other enrolled land must remain in the 
 38.19  program. 
 38.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 38.21  following final enactment. 
 38.22     Sec. 15.  Minnesota Statutes 2002, section 297A.995, 
 38.23  subdivision 6, is amended to read: 
 38.24     Subd. 6.  [AGREEMENT REQUIREMENTS.] The commissioner of 
 38.25  revenue shall not enter into the agreement unless the agreement 
 38.26  requires each state to abide by the following requirements: 
 38.27     (a)  [UNIFORM STATE RATE.] The agreement must set 
 38.28  restrictions to achieve more uniform state rates through the 
 38.29  following: 
 38.30     (1) limiting the number of state rates; 
 38.31     (2) eliminating maximums on the amount of state tax that is 
 38.32  due on a transaction; and 
 38.33     (3) eliminating thresholds on the application of state tax. 
 38.34     (b)  [UNIFORM STANDARDS.] The agreement must establish 
 38.35  uniform standards for the following: 
 38.36     (1) the sourcing of transactions to taxing jurisdictions; 
 39.1      (2) the administration of exempt sales; 
 39.2      (3) the allowances a seller can take for bad debts; and 
 39.3      (4) sales and use tax returns and remittances. 
 39.4      (c)  [UNIFORM DEFINITIONS.] The agreement must require 
 39.5   states to develop and adopt uniform definitions of sales and use 
 39.6   tax terms.  The definitions must enable a state to preserve its 
 39.7   ability to make policy choices not inconsistent with the uniform 
 39.8   definitions. 
 39.9      (d)  [CENTRAL REGISTRATION.] The agreement must provide a 
 39.10  central, electronic registration system that allows a seller to 
 39.11  register to collect and remit sales and use taxes for all 
 39.12  signatory states. 
 39.13     (e)  [NO NEXUS ATTRIBUTION.] The agreement must provide 
 39.14  that registration with the central registration system and the 
 39.15  collection of sales and use taxes in the signatory states will 
 39.16  not be used as a factor in determining whether the seller has 
 39.17  nexus with a state for any tax. 
 39.18     (f)  [LOCAL SALES AND USE TAXES.] The agreement must 
 39.19  provide for reduction of the burdens of complying with local 
 39.20  sales and use taxes through the following: 
 39.21     (1) restricting and eliminating variances between the state 
 39.22  and local tax bases; 
 39.23     (2) requiring states to administer any sales and use taxes 
 39.24  levied by local jurisdictions within the state so that sellers 
 39.25  collecting and remitting these taxes will not have to register 
 39.26  or file returns with, remit funds to, or be subject to 
 39.27  independent audits from local taxing jurisdictions; 
 39.28     (3) restricting the frequency of changes in the local sales 
 39.29  and use tax rates and setting effective dates for the 
 39.30  application of local jurisdictional boundary changes to local 
 39.31  sales and use taxes; and 
 39.32     (4) providing notice of changes in local sales and use tax 
 39.33  rates and of changes in the boundaries of local taxing 
 39.34  jurisdictions. 
 39.35     (g)  [MONETARY ALLOWANCES.] The agreement must outline any 
 39.36  monetary allowances that are to be provided by the states to 
 40.1   sellers or certified service providers.  The allowances must be 
 40.2   funded from the money collected by the seller or certified 
 40.3   service provider and must be subtracted by the seller or 
 40.4   certified service provider before remitting the tax collected to 
 40.5   the Department of Revenue. 
 40.6      (h)  [STATE COMPLIANCE.] The agreement must require each 
 40.7   state to certify compliance with the terms of the agreement 
 40.8   prior to joining and to maintain compliance, under the laws of 
 40.9   the member state, with all provisions of the agreement while a 
 40.10  member. 
 40.11     (i)  [CONSUMER PRIVACY.] The agreement must require each 
 40.12  state to adopt a uniform policy for certified service providers 
 40.13  that protects the privacy of consumers and maintains the 
 40.14  confidentiality of tax information. 
 40.15     (j)  [ADVISORY COUNCILS.] The agreement must provide for 
 40.16  the appointment of an advisory council of private sector 
 40.17  representatives and an advisory council of nonmember state 
 40.18  representatives to consult with in the administration of the 
 40.19  agreement. 
 40.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 40.21  following final enactment. 
 40.22     Sec. 16.  Minnesota Statutes 2002, section 469.1734, 
 40.23  subdivision 6, is amended to read: 
 40.24     Subd. 6.  [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 
 40.25  MATERIALS.] (a) The gross receipts from the sale of machinery 
 40.26  and equipment and repair parts are exempt from taxation under 
 40.27  chapter 297A, if the machinery and equipment: 
 40.28     (1) are used in connection with a trade or business; 
 40.29     (2) are placed in service in a city that is authorized to 
 40.30  designate a zone under section 469.1731, regardless of whether 
 40.31  the machinery and equipment are used in a zone; and 
 40.32     (3) have a useful life of 12 months or more. 
 40.33     (b) The gross receipts from the sale of construction 
 40.34  materials are exempt, if they are used to construct: 
 40.35     (1) a facility for use in a trade or business located in a 
 40.36  city that is authorized to designate a zone under section 
 41.1   469.1731, regardless of whether the facility is located in a 
 41.2   zone; or 
 41.3      (2) housing that is located in a zone.  
 41.4   The exemptions under this paragraph apply regardless of whether 
 41.5   the purchase is made by the owner, the user, or a contractor. 
 41.6      (c) A purchaser may claim an exemption under this 
 41.7   subdivision for tax on the purchases up to, but not exceeding: 
 41.8      (1) the amount of the tax credit certificates received from 
 41.9   the city, less 
 41.10     (2) any tax credit certificates used under the provisions 
 41.11  of subdivisions 4 and 5, and section 469.1732, subdivision 2. 
 41.12     (d) The tax on sales of items exempted under this 
 41.13  subdivision shall be imposed and collected as if the applicable 
 41.14  rate under section 297A.62 applied.  Upon application by the 
 41.15  purchaser, on forms prescribed by the commissioner, a refund 
 41.16  equal to the tax paid shall be paid to the purchaser.  The 
 41.17  application must include sufficient information to permit the 
 41.18  commissioner to verify the sales tax paid and the eligibility of 
 41.19  the claimant to receive the credit.  No more than two 
 41.20  applications for refunds may be filed under this subdivision in 
 41.21  a calendar year.  The provisions of section 289A.40 apply to the 
 41.22  refunds payable under this subdivision.  There is annually 
 41.23  appropriated to the commissioner of revenue the amount required 
 41.24  to make the refunds, which must be deducted from the amount of 
 41.25  the city's allocation under section 469.169, subdivision 12, 
 41.26  that remains available and its limitation under section 469.1735.
 41.27  The amount to be refunded shall bear interest at the rate in 
 41.28  section 270.76 from 90 days after the date the refund claim is 
 41.29  filed with the commissioner. 
 41.30     <b>[EFFECTIVE DATE.]</b> This section is effective for refund 
 41.31  claims filed on or after July 1, 2004. 
 41.32     Sec. 17.  Minnesota Statutes 2003 Supplement, section 
 41.33  469.310, subdivision 11, is amended to read: 
 41.34     Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
 41.35  means a person carrying on a trade or business at a place of 
 41.36  business located within a job opportunity building zone.  A 
 42.1   person is a qualified business only on those parcels of land for 
 42.2   which it has entered into a business subsidy agreement, as 
 42.3   required under section 469.313, with the appropriate local 
 42.4   government unit in which the parcels are located. 
 42.5      (b) A person that relocates a trade or business from 
 42.6   outside a job opportunity building zone into a zone is not a 
 42.7   qualified business, unless the business: 
 42.8      (1)(i) increases full-time employment in the first full 
 42.9   year of operation within the job opportunity building zone by at 
 42.10  least 20 percent measured relative to the operations that were 
 42.11  relocated and maintains the required level of employment for 
 42.12  each year the zone designation applies; or 
 42.13     (ii) makes a capital investment in the property located 
 42.14  within a zone equivalent to ten percent of the gross revenues of 
 42.15  operation that were relocated in the immediately preceding 
 42.16  taxable year; and 
 42.17     (2) enters a binding written agreement with the 
 42.18  commissioner that: 
 42.19     (i) pledges the business will meet the requirements of 
 42.20  clause (1); 
 42.21     (ii) provides for repayment of all tax benefits enumerated 
 42.22  under section 469.315 to the business under the procedures in 
 42.23  section 469.319, if the requirements of clause (1) are not met 
 42.24  for the taxable year or for taxes payable during the year in 
 42.25  which the requirements were not met; and 
 42.26     (iii) contains any other terms the commissioner determines 
 42.27  appropriate. 
 42.28     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 42.29  from June 9, 2003. 
 42.30     Sec. 18.  Minnesota Statutes 2003 Supplement, section 
 42.31  469.330, subdivision 11, is amended to read: 
 42.32     Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
 42.33  means a person carrying on a trade or business at a 
 42.34  biotechnology and health sciences industry facility located 
 42.35  within a biotechnology and health sciences industry zone.  A 
 42.36  person is a qualified business only on those parcels of land for 
 43.1   which it has entered into a business subsidy agreement, as 
 43.2   required under section 469.333, with the appropriate local 
 43.3   government unit in which the parcels are located. 
 43.4      (b) A person that relocates a biotechnology and health 
 43.5   sciences industry facility from outside a biotechnology and 
 43.6   health sciences industry zone into a zone is not a qualified 
 43.7   business, unless the business: 
 43.8      (1)(i) increases full-time employment in the first full 
 43.9   year of operation within the biotechnology and health sciences 
 43.10  industry zone by at least 20 percent measured relative to the 
 43.11  operations that were relocated and maintains the required level 
 43.12  of employment for each year the zone designation applies; or 
 43.13     (ii) makes a capital investment in the property located 
 43.14  within a zone equivalent to ten percent of the gross revenues of 
 43.15  operation that were relocated in the immediately preceding 
 43.16  taxable year; and 
 43.17     (2) enters a binding written agreement with the 
 43.18  commissioner that: 
 43.19     (i) pledges the business will meet the requirements of 
 43.20  clause (1); 
 43.21     (ii) provides for repayment of all tax benefits enumerated 
 43.22  under section 469.336 to the business under the procedures in 
 43.23  section 469.340, if the requirements of clause (1) are not met; 
 43.24  and 
 43.25     (iii) contains any other terms the commissioner determines 
 43.26  appropriate. 
 43.27     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 43.28  from June 9, 2003. 
 43.29     Sec. 19.  Minnesota Statutes 2003 Supplement, section 
 43.30  469.337, is amended to read: 
 43.31     469.337 [CORPORATE FRANCHISE TAX EXEMPTION.] 
 43.32     (a) A qualified business is exempt from taxation under 
 43.33  section 290.02, the alternative minimum tax under section 
 43.34  290.0921, and the minimum fee under section 290.0922, on the 
 43.35  portion of its income attributable to operations of a qualified 
 43.36  business within the biotechnology and health sciences industry 
 44.1   zone.  This exemption is determined as follows: 
 44.2      (1) for purposes of the tax imposed under section 290.02, 
 44.3   by multiplying its taxable net income by its zone percentage and 
 44.4   subtracting the result in determining taxable income; 
 44.5      (2) for purposes of the alternative minimum tax under 
 44.6   section 290.0921, by multiplying its alternative minimum taxable 
 44.7   income by its zone percentage and reducing alternative minimum 
 44.8   taxable income by this amount; and 
 44.9      (3) for purposes of the minimum fee under section 290.0922, 
 44.10  by excluding zone property and payroll in the zone from the 
 44.11  computations of the fee.  The qualified business is exempt from 
 44.12  the minimum fee if all of its property is located in the zone 
 44.13  and all of its payroll is zone payroll. 
 44.14     (b) No subtraction is allowed under this section in excess 
 44.15  of 20 percent of the sum of the corporation's biotechnology and 
 44.16  health sciences industry zone payroll and the adjusted basis of 
 44.17  the property at the time that the property is first used in the 
 44.18  biotechnology and health sciences industry zone by the 
 44.19  corporation. 
 44.20     (c) No reduction in tax is allowed in excess of the amount 
 44.21  allocated under section 469.335. 
 44.22     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 44.23  beginning after December 31, 2003. 
 44.24     Sec. 20.  Minnesota Statutes 2002, section 473F.02, 
 44.25  subdivision 2, is amended to read: 
 44.26     Subd. 2.  [AREA.] "Area" means the territory included 
 44.27  within the boundaries of Anoka, Carver, Dakota excluding the 
 44.28  city of Northfield, Hennepin, Ramsey, Scott excluding the city 
 44.29  of New Prague, and Washington Counties, excluding lands 
 44.30  constituting a major or an intermediate airport as defined under 
 44.31  section 473.625. 
 44.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 44.33  payable in 2005 and thereafter. 
 44.34     Sec. 21.  [REPEALER.] 
 44.35     Laws 1975, chapter 287, section 5, and Laws 2003, chapter 
 44.36  127, article 9, section 9, subdivision 4, are repealed. 
 45.1      <b>[EFFECTIVE DATE.]</b> This section is effective without local 
 45.2   approval for taxes payable in 2005 and thereafter. 
 45.3                              ARTICLE 3 
 45.4                       PROPERTY TAXES TECHNICAL 
 45.5      Section 1.  Minnesota Statutes 2003 Supplement, section 
 45.6   4A.02, is amended to read: 
 45.7      4A.02 [STATE DEMOGRAPHER.] 
 45.8      (a) The director shall appoint a state demographer.  The 
 45.9   demographer must be professionally competent in demography and 
 45.10  must possess demonstrated ability based upon past performance.  
 45.11     (b) The demographer shall: 
 45.12     (1) continuously gather and develop demographic data 
 45.13  relevant to the state; 
 45.14     (2) design and test methods of research and data 
 45.15  collection; 
 45.16     (3) periodically prepare population projections for the 
 45.17  state and designated regions and periodically prepare 
 45.18  projections for each county or other political subdivision of 
 45.19  the state as necessary to carry out the purposes of this 
 45.20  section; 
 45.21     (4) review, comment on, and prepare analysis of population 
 45.22  estimates and projections made by state agencies, political 
 45.23  subdivisions, other states, federal agencies, or nongovernmental 
 45.24  persons, institutions, or commissions; 
 45.25     (5) serve as the state liaison with the United States 
 45.26  Bureau of the Census, coordinate state and federal demographic 
 45.27  activities to the fullest extent possible, and aid the 
 45.28  legislature in preparing a census data plan and form for each 
 45.29  decennial census; 
 45.30     (6) compile an annual study of population estimates on the 
 45.31  basis of county, regional, or other political or geographical 
 45.32  subdivisions as necessary to carry out the purposes of this 
 45.33  section and section 4A.03; 
 45.34     (7) by January 1 of each year, issue a report to the 
 45.35  legislature containing an analysis of the demographic 
 45.36  implications of the annual population study and population 
 46.1   projections; 
 46.2      (8) prepare maps for all counties in the state, all 
 46.3   municipalities with a population of 10,000 or more, and other 
 46.4   municipalities as needed for census purposes, according to scale 
 46.5   and detail recommended by the United States Bureau of the 
 46.6   Census, with the maps of cities showing precinct boundaries; 
 46.7      (9) prepare an estimate of population and of the number of 
 46.8   households for each governmental subdivision for which the 
 46.9   Metropolitan Council does not prepare an annual estimate, and 
 46.10  convey the estimates to the governing body of each political 
 46.11  subdivision by May June 1 of each year; 
 46.12     (10) direct, under section 414.01, subdivision 14, and 
 46.13  certify population and household estimates of annexed or 
 46.14  detached areas of municipalities or towns after being notified 
 46.15  of the order or letter of approval by the director; 
 46.16     (11) prepare, for any purpose for which a population 
 46.17  estimate is required by law or needed to implement a law, a 
 46.18  population estimate of a municipality or town whose population 
 46.19  is affected by action under section 379.02 or 414.01, 
 46.20  subdivision 14; and 
 46.21     (12) prepare an estimate of average household size for each 
 46.22  statutory or home rule charter city with a population of 2,500 
 46.23  or more by May June 1 of each year. 
 46.24     (c) A governing body may challenge an estimate made under 
 46.25  paragraph (b) by filing their specific objections in writing 
 46.26  with the state demographer by June 10 24.  If the challenge does 
 46.27  not result in an acceptable estimate by June 24, the governing 
 46.28  body may have a special census conducted by the United States 
 46.29  Bureau of the Census.  The political subdivision must notify the 
 46.30  state demographer by July 1 of its intent to have the special 
 46.31  census conducted.  The political subdivision must bear all costs 
 46.32  of the special census.  Results of the special census must be 
 46.33  received by the state demographer by the next April 15 to be 
 46.34  used in that year's May June 1 estimate to the political 
 46.35  subdivision under paragraph (b).  
 46.36     (d) The state demographer shall certify the estimates of 
 47.1   population and number of households to the commissioner of 
 47.2   revenue by July 15 each year, including any estimates still 
 47.3   under objection.  No changes in population or household 
 47.4   estimates made after July 15 in an aid calculation year shall be 
 47.5   considered in determining aids under sections 477A.011 to 
 47.6   477A.014.  Clerical errors in certification or use of the 
 47.7   estimates and counts established as of July 15 in the aid 
 47.8   calculation year are subject to correction under section 
 47.9   477A.014. 
 47.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 47.11  following final enactment. 
 47.12     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
 47.13  168A.05, subdivision 1a, is amended to read: 
 47.14     Subd. 1a.  [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 
 47.15  PAYMENT.] In the case of a manufactured home as defined in 
 47.16  section 327.31, subdivision 6, the department shall not issue a 
 47.17  certificate of title unless the application under section 
 47.18  168A.04 is accompanied with a statement from the county auditor 
 47.19  or county treasurer where the manufactured home is presently 
 47.20  located, stating that all manufactured home personal property 
 47.21  taxes levied on the unit in the name of the current owner at the 
 47.22  time of transfer have been paid.  For this purpose, manufactured 
 47.23  home personal property taxes are treated as levied on January 1 
 47.24  of the payable year. 
 47.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 47.26  following final enactment. 
 47.27     Sec. 3.  Minnesota Statutes 2002, section 270B.12, 
 47.28  subdivision 9, is amended to read: 
 47.29     Subd. 9.  [COUNTY ASSESSORS; HOMESTEAD APPLICATION, 
 47.30  DETERMINATION, AND INCOME TAX STATUS.] (a) If, as a result of an 
 47.31  audit, the commissioner determines that a person is a Minnesota 
 47.32  nonresident or part-year resident for income tax purposes, the 
 47.33  commissioner may disclose the person's name, address, and Social 
 47.34  Security number to the assessor of any political subdivision in 
 47.35  the state, when there is reason to believe that the person may 
 47.36  have claimed or received homestead property tax benefits for a 
 48.1   corresponding assessment year in regard to property apparently 
 48.2   located in the assessor's jurisdiction. 
 48.3      (b) To the extent permitted by section 273.124, subdivision 
 48.4   1, paragraph (a), the Department of Revenue may verify to a 
 48.5   county assessor whether an individual who is requesting or 
 48.6   receiving a homestead classification has filed a Minnesota 
 48.7   income tax return as a resident for the most recent taxable year 
 48.8   for which the information is available. 
 48.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 48.10  following final enactment. 
 48.11     Sec. 4.  Minnesota Statutes 2002, section 272.01, 
 48.12  subdivision 2, is amended to read: 
 48.13     Subd. 2.  (a) When any real or personal property which is 
 48.14  exempt from ad valorem taxes, and taxes in lieu thereof, is 
 48.15  leased, loaned, or otherwise made available and used by a 
 48.16  private individual, association, or corporation in connection 
 48.17  with a business conducted for profit, there shall be imposed a 
 48.18  tax, for the privilege of so using or possessing such real or 
 48.19  personal property, in the same amount and to the same extent as 
 48.20  though the lessee or user was the owner of such property. 
 48.21     (b) The tax imposed by this subdivision shall not apply to: 
 48.22     (1) property leased or used as a concession in or relative 
 48.23  to the use in whole or part of a public park, market, 
 48.24  fairgrounds, port authority, economic development authority 
 48.25  established under chapter 469, municipal auditorium, municipal 
 48.26  parking facility, municipal museum, or municipal stadium; 
 48.27     (2) property of an airport owned by a city, town, county, 
 48.28  or group thereof which is:  
 48.29     (i) leased to or used by any person or entity including a 
 48.30  fixed base operator; and 
 48.31     (ii) used as a hangar for the storage or repair of aircraft 
 48.32  or to provide aviation goods, services, or facilities to the 
 48.33  airport or general public; 
 48.34  the exception from taxation provided in this clause does not 
 48.35  apply to: 
 48.36     (i) property located at an airport owned or operated by the 
 49.1   Metropolitan Airports Commission or by a city of over 50,000 
 49.2   population according to the most recent federal census or such a 
 49.3   city's airport authority; 
 49.4      (ii) hangars leased by a private individual, association, 
 49.5   or corporation in connection with a business conducted for 
 49.6   profit other than an aviation-related business; or 
 49.7      (iii) facilities leased by a private individual, 
 49.8   association, or corporation in connection with a business for 
 49.9   profit, that consists of a major jet engine repair facility 
 49.10  financed, in whole or part, with the proceeds of state bonds and 
 49.11  located in a tax increment financing district; 
 49.12     (3) property constituting or used as a public pedestrian 
 49.13  ramp or concourse in connection with a public airport; or 
 49.14     (4) property constituting or used as a passenger check-in 
 49.15  area or ticket sale counter, boarding area, or luggage claim 
 49.16  area in connection with a public airport but not the airports 
 49.17  owned or operated by the Metropolitan Airports Commission or 
 49.18  cities of over 50,000 population or an airport authority 
 49.19  therein.  Real estate owned by a municipality in connection with 
 49.20  the operation of a public airport and leased or used for 
 49.21  agricultural purposes is not exempt; 
 49.22     (5) property leased, loaned, or otherwise made available to 
 49.23  a private individual, corporation, or association under a 
 49.24  cooperative farming agreement made pursuant to section 97A.135; 
 49.25  or 
 49.26     (6) property leased, loaned, or otherwise made available to 
 49.27  a private individual, corporation, or association under section 
 49.28  272.68, subdivision 4. 
 49.29     (c) Taxes imposed by this subdivision are payable as in the 
 49.30  case of personal property taxes and shall be assessed to the 
 49.31  lessees or users of real or personal property in the same manner 
 49.32  as taxes assessed to owners of real or personal property, except 
 49.33  that such taxes shall not become a lien against the property.  
 49.34  When due, the taxes shall constitute a debt due from the lessee 
 49.35  or user to the state, township, city, county, and school 
 49.36  district for which the taxes were assessed and shall be 
 50.1   collected in the same manner as personal property taxes.  If 
 50.2   property subject to the tax imposed by this subdivision is 
 50.3   leased or used jointly by two or more persons, each lessee or 
 50.4   user shall be jointly and severally liable for payment of the 
 50.5   tax. 
 50.6      (d) The tax on real property of the state or any of its 
 50.7   political subdivisions that is leased by a private individual, 
 50.8   association, or corporation and becomes taxable under this 
 50.9   subdivision or other provision of law must be assessed and 
 50.10  collected as a personal property assessment.  The taxes do not 
 50.11  become a lien against the real property. 
 50.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 50.13  following final enactment. 
 50.14     Sec. 5.  Minnesota Statutes 2002, section 272.02, 
 50.15  subdivision 1a, is amended to read: 
 50.16     Subd. 1a.  [LIMITATIONS ON EXEMPTIONS.] The exemptions 
 50.17  granted by subdivision 1 are subject to the limits contained in 
 50.18  the other subdivisions of this section, section 272.025, or 
 50.19  273.13, subdivision 25, paragraph (c), clause (1) or (2), or 
 50.20  paragraph (d), clause (2) and all other provisions of applicable 
 50.21  law.  
 50.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 50.23  following final enactment. 
 50.24     Sec. 6.  Minnesota Statutes 2002, section 272.02, 
 50.25  subdivision 7, is amended to read: 
 50.26     Subd. 7.  [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of 
 50.27  purely public charity are exempt except parcels of property 
 50.28  containing structures and the structures described in section 
 50.29  273.13, subdivision 25, paragraph (e), other than those that 
 50.30  qualify for exemption under subdivision 26.  In determining 
 50.31  whether rental housing property qualifies for exemption under 
 50.32  this subdivision, the following are not gifts or donations to 
 50.33  the owner of the rental housing: 
 50.34     (1) rent assistance provided by the government to or on 
 50.35  behalf of tenants, and 
 50.36     (2) financing assistance or tax credits provided by the 
 51.1   government to the owner on condition that specific units or a 
 51.2   specific quantity of units be set aside for persons or families 
 51.3   with certain income characteristics. 
 51.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 51.5   payable in 2004 and thereafter. 
 51.6      Sec. 7.  Minnesota Statutes 2002, section 272.02, is 
 51.7   amended by adding a subdivision to read: 
 51.8      Subd. 68.  [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR 
 51.9   NET PROCEEDS TAX.] (a) Except for mineral interests taxed under 
 51.10  section 273.165, and except for lands taxed under section 
 51.11  298.26, real and personal property described in section 298.25 
 51.12  is exempt to the extent the tax on taconite and iron sulphides 
 51.13  under section 298.24 is described in section 298.25 as being in 
 51.14  lieu of other taxes on such property.  This exemption applies 
 51.15  for taxes payable in each year that the tax under section 298.24 
 51.16  is payable with respect to such property. 
 51.17     (b) Except for mineral interests taxed under section 
 51.18  273.165, deposits of mineral, metal, or energy resources the 
 51.19  mining of which is subject to taxation under section 298.015 are 
 51.20  exempt.  This exemption applies for taxes payable in each year 
 51.21  that the tax under section 298.015 is payable with respect to 
 51.22  such property. 
 51.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 51.24  following final enactment. 
 51.25     Sec. 8.  Minnesota Statutes 2002, section 272.02, is 
 51.26  amended by adding a subdivision to read: 
 51.27     Subd. 69.  [RELIGIOUS CORPORATIONS.] Personal and real 
 51.28  property that a religious corporation, formed under section 
 51.29  317A.909, necessarily uses for a religious purpose is exempt to 
 51.30  the extent provided in section 317A.909, subdivision 3. 
 51.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 51.32  following final enactment. 
 51.33     Sec. 9.  Minnesota Statutes 2002, section 272.02, is 
 51.34  amended by adding a subdivision to read: 
 51.35     Subd. 70.  [CHILDREN'S HOMES.] Personal and real property 
 51.36  owned by a corporation formed under section 317A.907 is exempt 
 52.1   to the extent provided in section 317A.907, subdivision 7. 
 52.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 52.3   following final enactment. 
 52.4      Sec. 10.  Minnesota Statutes 2002, section 272.02, is 
 52.5   amended by adding a subdivision to read: 
 52.6      Subd. 71.  [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL 
 52.7   HOUSING AUTHORITY PROPERTY.] Property owned by a housing and 
 52.8   redevelopment authority described in chapter 469, or by a 
 52.9   designated housing authority described in section 469.040, 
 52.10  subdivision 5, is exempt to the extent provided in chapter 469. 
 52.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 52.12  following final enactment. 
 52.13     Sec. 11.  Minnesota Statutes 2002, section 273.124, 
 52.14  subdivision 8, is amended to read: 
 52.15     Subd. 8.  [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 
 52.16  CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 
 52.17  PARTNERSHIP.] (a) Each family farm corporation, each; each joint 
 52.18  family farm venture,; and each limited liability company, and 
 52.19  each or partnership operating which operates a family farm; is 
 52.20  entitled to class 1b under section 273.13, subdivision 22, 
 52.21  paragraph (b), or class 2a assessment for one homestead occupied 
 52.22  by a shareholder, member, or partner thereof who is residing on 
 52.23  the land, and actively engaged in farming of the land owned by 
 52.24  the family farm corporation, joint family farm venture, limited 
 52.25  liability company, or partnership operating a family farm.  
 52.26  Homestead treatment applies even if legal title to the property 
 52.27  is in the name of the family farm corporation, joint family farm 
 52.28  venture, limited liability company, or partnership operating the 
 52.29  family farm, and not in the name of the person residing on it. 
 52.30     "Family farm corporation," "family farm," and "partnership 
 52.31  operating a family farm" have the meanings given in section 
 52.32  500.24, except that the number of allowable shareholders, 
 52.33  members, or partners under this subdivision shall not exceed 
 52.34  12.  "Limited liability company" has the meaning contained in 
 52.35  sections 322B.03, subdivision 28, and 500.24, subdivision 2, 
 52.36  paragraphs (l) and (m).  "Joint family farm venture" means a 
 53.1   cooperative agreement among two or more farm enterprises 
 53.2   authorized to operate a family farm under section 500.24. 
 53.3      (b) In addition to property specified in paragraph (a), any 
 53.4   other residences owned by family farm corporations, joint family 
 53.5   farm ventures, limited liability companies, or partnerships 
 53.6   operating a family farm described in paragraph (a) which are 
 53.7   located on agricultural land and occupied as homesteads by its 
 53.8   shareholders, members, or partners who are actively engaged in 
 53.9   farming on behalf of that corporation, joint farm venture, 
 53.10  limited liability company, or partnership must also be assessed 
 53.11  as class 2a property or as class 1b property under section 
 53.12  273.13. 
 53.13     (c) Agricultural property that is owned by a member, 
 53.14  partner, or shareholder of a family farm corporation or joint 
 53.15  family farm venture, limited liability company operating a 
 53.16  family farm, or by a partnership operating a family farm and 
 53.17  leased to the family farm corporation, limited liability 
 53.18  company, or partnership operating a family farm, or joint farm 
 53.19  venture, as defined in paragraph (a), is eligible for 
 53.20  classification as class 1b or class 2a under section 273.13, if 
 53.21  the owner is actually residing on the property, and is actually 
 53.22  engaged in farming the land on behalf of that corporation, joint 
 53.23  farm venture, limited liability company, or partnership.  This 
 53.24  paragraph applies without regard to any legal possession rights 
 53.25  of the family farm corporation, joint family farm venture, 
 53.26  limited liability company, or partnership operating a family 
 53.27  farm under the lease. 
 53.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 53.29  following final enactment. 
 53.30     Sec. 12.  Minnesota Statutes 2002, section 273.19, 
 53.31  subdivision 1a, is amended to read: 
 53.32     Subd. 1a.  For purposes of this section, a lease includes 
 53.33  any agreement, except a cooperative farming agreement pursuant 
 53.34  to section 97A.135, subdivision 3, or a lease executed pursuant 
 53.35  to section 272.68, subdivision 4, permitting a nonexempt person 
 53.36  or entity to use the property, regardless of whether the 
 54.1   agreement is characterized as a lease.  A lease has a "term of 
 54.2   at least one year" if the term is for a period of less than one 
 54.3   year and the lease permits the parties to renew the lease 
 54.4   without requiring that similar terms for leasing the property 
 54.5   will be offered to other applicants or bidders through a 
 54.6   competitive bidding or other form of offer to potential lessees 
 54.7   or users. 
 54.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 54.9   following final enactment. 
 54.10     Sec. 13.  Minnesota Statutes 2002, section 274.14, is 
 54.11  amended to read: 
 54.12     274.14 [LENGTH OF SESSION; RECORD.] 
 54.13     The county board of equalization or the special board of 
 54.14  equalization appointed by it shall meet during the last ten 
 54.15  meeting days in June.  For this purpose, "meeting days" are 
 54.16  defined as any day of the week excluding Saturday and Sunday.  
 54.17  The board may meet on any ten consecutive meeting days in June, 
 54.18  after the second Friday in June, if.  The actual meeting dates 
 54.19  are must be contained on the valuation notices mailed to each 
 54.20  property owner in the county under as provided in section 
 54.21  273.121.  For this purpose, "meeting days" is defined as any day 
 54.22  of the week excluding Saturday and Sunday.  No action taken by 
 54.23  the county board of review after June 30 is valid, except for 
 54.24  corrections permitted in sections 273.01 and 274.01.  The county 
 54.25  auditor shall keep an accurate record of the proceedings and 
 54.26  orders of the board.  The record must be published like other 
 54.27  proceedings of county commissioners.  A copy of the published 
 54.28  record must be sent to the commissioner of revenue, with the 
 54.29  abstract of assessment required by section 274.16.  
 54.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 54.31  following final enactment. 
 54.32     Sec. 14.  Minnesota Statutes 2002, section 275.065, 
 54.33  subdivision 1a, is amended to read: 
 54.34     Subd. 1a.  [OVERLAPPING JURISDICTIONS.] In the case of a 
 54.35  taxing authority lying in two or more counties, the home county 
 54.36  auditor shall certify the proposed levy and the proposed local 
 55.1   tax rate to the other county auditor by September 20 October 5.  
 55.2   The home county auditor must estimate the levy or rate in 
 55.3   preparing the notices required in subdivision 3, if the other 
 55.4   county has not certified the appropriate information.  If 
 55.5   requested by the home county auditor, the other county auditor 
 55.6   must furnish an estimate to the home county auditor. 
 55.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 55.8   following final enactment. 
 55.9      Sec. 15.  Minnesota Statutes 2002, section 275.07, 
 55.10  subdivision 1, is amended to read: 
 55.11     Subdivision 1.  [CERTIFICATION OF LEVY.] (a) Except as 
 55.12  provided under paragraph (b), the taxes voted by cities, 
 55.13  counties, school districts, and special districts shall be 
 55.14  certified by the proper authorities to the county auditor on or 
 55.15  before five working days after December 20 in each year.  A town 
 55.16  must certify the levy adopted by the town board to the county 
 55.17  auditor by September 15 each year.  If the town board modifies 
 55.18  the levy at a special town meeting after September 15, the town 
 55.19  board must recertify its levy to the county auditor on or before 
 55.20  five working days after December 20.  The taxes certified shall 
 55.21  not be reduced by the county auditor by the aid received under 
 55.22  section 273.1398, subdivision 2, but shall be reduced by the 
 55.23  county auditor by the aid received under section 273.1398, 
 55.24  subdivision 3.  If a city, town, county, school district, or 
 55.25  special district fails to certify its levy by that date, its 
 55.26  levy shall be the amount levied by it for the preceding year. 
 55.27     (b)(i) The taxes voted by counties under sections 103B.241, 
 55.28  103B.245, and 103B.251 shall be separately certified by the 
 55.29  county to the county auditor on or before five working days 
 55.30  after December 20 in each year.  The taxes certified shall not 
 55.31  be reduced by the county auditor by the aid received under 
 55.32  section 273.1398, subdivisions 2 and 3.  If a county fails to 
 55.33  certify its levy by that date, its levy shall be the amount 
 55.34  levied by it for the preceding year.  
 55.35     (ii) For purposes of the proposed property tax notice under 
 55.36  section 275.065 and the property tax statement under section 
 56.1   276.04, for the first year in which the county implements the 
 56.2   provisions of this paragraph, the county auditor shall reduce 
 56.3   the county's levy for the preceding year to reflect any amount 
 56.4   levied for water management purposes under clause (i) included 
 56.5   in the county's levy. 
 56.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 56.7   following final enactment. 
 56.8      Sec. 16.  Minnesota Statutes 2002, section 275.07, 
 56.9   subdivision 4, is amended to read: 
 56.10     Subd. 4.  [REPORT TO COMMISSIONER.] (a) On or before 
 56.11  October 8 of each year, the county auditor shall report to the 
 56.12  commissioner of revenue the proposed levy certified by local 
 56.13  units of government under section 275.065, subdivision 1.  If 
 56.14  any taxing authorities have notified the county auditor that 
 56.15  they are in the process of negotiating an agreement for sharing, 
 56.16  merging, or consolidating services but that when the proposed 
 56.17  levy was certified under section 275.065, subdivision 1c, the 
 56.18  agreement was not yet finalized, the county auditor shall supply 
 56.19  that information to the commissioner when filing the report 
 56.20  under this section and shall recertify the affected levies as 
 56.21  soon as practical after October 10. 
 56.22     (b) On or before January 15 of each year, the county 
 56.23  auditor shall report to the commissioner of revenue the final 
 56.24  levy certified by local units of government under subdivision 1. 
 56.25     (c) The levies must be reported in the manner prescribed by 
 56.26  the commissioner.  The reports must show a total levy and the 
 56.27  amount of each special levy. 
 56.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 56.29  following final enactment. 
 56.30     Sec. 17.  Minnesota Statutes 2003 Supplement, section 
 56.31  276.112, is amended to read: 
 56.32     276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.] 
 56.33     On or before January 25 each year, for the period ending 
 56.34  December 31 of the prior year, and on or before two business 
 56.35  days before June 29 30 each year, for the period ending on the 
 56.36  most recent settlement day determined in section 276.09, and on 
 57.1   or before December 2 each year, for the period ending November 
 57.2   20, the county treasurer must make full settlement with the 
 57.3   county auditor according to sections 276.09, 276.10, and 276.111 
 57.4   for all receipts of state property taxes levied under section 
 57.5   275.025, and must transmit those receipts to the commissioner of 
 57.6   revenue by electronic means. 
 57.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 57.8   following final enactment. 
 57.9      Sec. 18.  Minnesota Statutes 2002, section 282.016, is 
 57.10  amended to read: 
 57.11     282.016 [PROHIBITED PURCHASERS.] 
 57.12     No (a) A county auditor, county treasurer, county attorney, 
 57.13  court administrator of the district court, or county assessor 
 57.14  or, supervisor of assessments, or deputy or clerk or an employee 
 57.15  of such officer, and no a commissioner for tax-forfeited lands 
 57.16  or an assistant to such commissioner may, must not become a 
 57.17  purchaser, either personally or as an agent or attorney for 
 57.18  another person, of the properties offered for sale under the 
 57.19  provisions of this chapter, either personally, or as agent or 
 57.20  attorney for any other person, except that in the county for 
 57.21  which the person performs duties.  A person prohibited from 
 57.22  purchasing property under this section must not directly or 
 57.23  indirectly have another person purchase it on behalf of the 
 57.24  prohibited purchaser for the prohibited purchaser's benefit or 
 57.25  gain. 
 57.26     (b) Notwithstanding paragraph (a), such officer, deputy, 
 57.27  court administrator clerk, or employee or commissioner for 
 57.28  tax-forfeited lands or assistant to such commissioner may (1) 
 57.29  purchase lands owned by that official at the time the state 
 57.30  became the absolute owner thereof or (2) bid upon and purchase 
 57.31  forfeited property offered for sale under the alternate sale 
 57.32  procedure described in section 282.01, subdivision 7a. 
 57.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 57.34  following final enactment. 
 57.35     Sec. 19.  Minnesota Statutes 2002, section 282.21, is 
 57.36  amended to read: 
 58.1      282.21 [FORM OF CONVEYANCE.] 
 58.2      When any sale has been made under sections 282.14 to 
 58.3   282.22, upon payment in full of the purchase price, appropriate 
 58.4   conveyance in fee in such form as may be prescribed by the 
 58.5   attorney general shall be issued by the commissioner of finance 
 58.6   to the purchaser or the purchaser's assigns and this conveyance 
 58.7   shall have the force and effect of a patent from the state.  
 58.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 58.9   following final enactment. 
 58.10     Sec. 20.  Minnesota Statutes 2002, section 282.224, is 
 58.11  amended to read: 
 58.12     282.224 [FORM OF CONVEYANCE.] 
 58.13     When any sale has been made under sections 282.221 to 
 58.14  282.226, upon payment in full of the purchase price, appropriate 
 58.15  conveyance in fee, in such form as may be prescribed by the 
 58.16  attorney general, shall be issued by the commissioner of natural 
 58.17  resources to the purchaser or the purchaser's assignee, and the 
 58.18  conveyance shall have the force and effect of a patent from the 
 58.19  state.  
 58.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 58.21  following final enactment. 
 58.22     Sec. 21.  Minnesota Statutes 2002, section 282.301, is 
 58.23  amended to read: 
 58.24     282.301 [RECEIPTS FOR PAYMENTS.] 
 58.25     When any sale has been made under sections 282.012 and 
 58.26  282.241 to 282.324, the purchaser shall receive from the county 
 58.27  auditor at the time of repurchase a receipt, in such form as may 
 58.28  be prescribed by the attorney general.  When the purchase price 
 58.29  of a parcel of land shall be paid in full, the following facts 
 58.30  shall be certified by the county auditor to the commissioner of 
 58.31  revenue of the state of Minnesota:  the description of land, the 
 58.32  date of sale, the name of the purchaser or the purchaser's 
 58.33  assignee, and the date when the final installment of the 
 58.34  purchase price was paid.  Upon payment in full of the purchase 
 58.35  price, the purchaser or the assignee shall receive a quitclaim 
 58.36  deed from the state, to be executed by the commissioner of 
 59.1   revenue.  The deed must be sent to the county auditor who shall 
 59.2   have it recorded before it is forwarded to the purchaser.  
 59.3   Failure to make any payment herein required shall constitute 
 59.4   default and upon such default and cancellation in accord with 
 59.5   section 282.40, the right, title and interest of the purchaser 
 59.6   or the purchaser's heirs, representatives, or assigns in such 
 59.7   parcel shall terminate.  
 59.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 59.9   following final enactment. 
 59.10     Sec. 22.  [473.24] [POPULATION ESTIMATES.] 
 59.11     (a) The Metropolitan Council shall prepare an estimate of 
 59.12  population and of the number of households for each city and 
 59.13  town in the metropolitan area annually and convey the estimates 
 59.14  to the governing body of each city or town by June 1 each year.  
 59.15  In the case of a city or town that is located partly within and 
 59.16  partly without the metropolitan area, the Metropolitan Council 
 59.17  shall estimate the proportion of the total population and number 
 59.18  of households that reside within the area.  The Metropolitan 
 59.19  Council may prepare an estimate of the population and of the 
 59.20  number of households for any other political subdivision located 
 59.21  in the metropolitan area. 
 59.22     (b) A governing body may challenge an estimate made under 
 59.23  this section by filing its specific objections in writing with 
 59.24  the Metropolitan Council by June 24.  If the challenge does not 
 59.25  result in an acceptable estimate, the governing body may have a 
 59.26  special census conducted by the United States Bureau of the 
 59.27  Census.  The political subdivision must notify the Metropolitan 
 59.28  Council on or before July 1 of its intent to have the special 
 59.29  census conducted.  The political subdivision must bear all costs 
 59.30  of the special census.  Results of the special census must be 
 59.31  received by the Metropolitan Council by the next April 15 to be 
 59.32  used in that year's June 1 estimate under this section.  The 
 59.33  Metropolitan Council shall certify the estimates of population 
 59.34  and number of households to the state demographer and to the 
 59.35  commissioner of revenue by July 15 each year, including any 
 59.36  estimates still under objection.  
 60.1      (c) No changes in population or household estimates after 
 60.2   July 15 in an aid calculation year shall be considered in 
 60.3   determining aids under sections 477A.011 to 477A.014.  Clerical 
 60.4   errors in certification or use of the estimates and counts 
 60.5   established as of July 15 in the aid calculation year are 
 60.6   subject to correction under section 477A.014. 
 60.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 60.8   following final enactment. 
 60.9      Sec. 23.  Minnesota Statutes 2002, section 473F.02, 
 60.10  subdivision 7, is amended to read: 
 60.11     Subd. 7.  [POPULATION.] "Population" means the most recent 
 60.12  estimate of the population of a municipality made by the 
 60.13  Metropolitan Council under section 473.24 and filed with the 
 60.14  commissioner of revenue as of July 1 15 of the year in which a 
 60.15  municipality's distribution net tax capacity is calculated.  The 
 60.16  council shall annually estimate the population of each 
 60.17  municipality as of a date which it determines and, in the case 
 60.18  of a municipality which is located partly within and partly 
 60.19  without the area, the proportion of the total which resides 
 60.20  within the area, and shall promptly thereafter file its 
 60.21  estimates with the commissioner of revenue. 
 60.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 60.23  following final enactment. 
 60.24     Sec. 24.  Minnesota Statutes 2002, section 477A.011, 
 60.25  subdivision 3, is amended to read: 
 60.26     Subd. 3.  [POPULATION.] "Population" means the 
 60.27  population estimated or established as of July 1 15 in an aid 
 60.28  calculation year by the most recent federal census, by a special 
 60.29  census conducted under contract with the United States Bureau of 
 60.30  the Census, by a population estimate made by the Metropolitan 
 60.31  Council, or by a population estimate of the state demographer 
 60.32  made pursuant to section 4A.02, whichever is the most recent as 
 60.33  to the stated date of the count or estimate for the preceding 
 60.34  calendar year, and which has been certified to the commissioner 
 60.35  of revenue on or before July 15 of the aid calculation year.  
 60.36  The term "per capita" refers to population as defined by this 
 61.1   subdivision.  No changes in population will be recognized for 
 61.2   the purposes of sections 477A.011 to 477A.014 after July 15 of 
 61.3   the aid calculation year.  Clerical errors in the certification 
 61.4   or use of the estimates and counts established as of July 15 in 
 61.5   the aid calculation year are subject to correction within the 
 61.6   time periods allowed under section 477A.014. 
 61.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 61.8   following final enactment. 
 61.9      Sec. 25.  Minnesota Statutes 2003 Supplement, section 
 61.10  477A.011, subdivision 36, is amended to read: 
 61.11     Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
 61.12  provided in this subdivision, "city aid base" is zero. 
 61.13     (b) The city aid base for any city with a population less 
 61.14  than 500 is increased by $40,000 for aids payable in calendar 
 61.15  year 1995 and thereafter, and the maximum amount of total aid it 
 61.16  may receive under section 477A.013, subdivision 9, paragraph 
 61.17  (c), is also increased by $40,000 for aids payable in calendar 
 61.18  year 1995 only, provided that: 
 61.19     (i) the average total tax capacity rate for taxes payable 
 61.20  in 1995 exceeds 200 percent; 
 61.21     (ii) the city portion of the tax capacity rate exceeds 100 
 61.22  percent; and 
 61.23     (iii) its city aid base is less than $60 per capita. 
 61.24     (c) The city aid base for a city is increased by $20,000 in 
 61.25  1998 and thereafter and the maximum amount of total aid it may 
 61.26  receive under section 477A.013, subdivision 9, paragraph (c), is 
 61.27  also increased by $20,000 in calendar year 1998 only, provided 
 61.28  that: 
 61.29     (i) the city has a population in 1994 of 2,500 or more; 
 61.30     (ii) the city is located in a county, outside of the 
 61.31  metropolitan area, which contains a city of the first class; 
 61.32     (iii) the city's net tax capacity used in calculating its 
 61.33  1996 aid under section 477A.013 is less than $400 per capita; 
 61.34  and 
 61.35     (iv) at least four percent of the total net tax capacity, 
 61.36  for taxes payable in 1996, of property located in the city is 
 62.1   classified as railroad property. 
 62.2      (d) The city aid base for a city is increased by $200,000 
 62.3   in 1999 and thereafter and the maximum amount of total aid it 
 62.4   may receive under section 477A.013, subdivision 9, paragraph 
 62.5   (c), is also increased by $200,000 in calendar year 1999 only, 
 62.6   provided that: 
 62.7      (i) the city was incorporated as a statutory city after 
 62.8   December 1, 1993; 
 62.9      (ii) its city aid base does not exceed $5,600; and 
 62.10     (iii) the city had a population in 1996 of 5,000 or more. 
 62.11     (e) The city aid base for a city is increased by $450,000 
 62.12  in 1999 to 2008 and the maximum amount of total aid it may 
 62.13  receive under section 477A.013, subdivision 9, paragraph (c), is 
 62.14  also increased by $450,000 in calendar year 1999 only, provided 
 62.15  that: 
 62.16     (i) the city had a population in 1996 of at least 50,000; 
 62.17     (ii) its population had increased by at least 40 percent in 
 62.18  the ten-year period ending in 1996; and 
 62.19     (iii) its city's net tax capacity for aids payable in 1998 
 62.20  is less than $700 per capita. 
 62.21     (f) Beginning in 2004, the city aid base for a city is 
 62.22  equal to the sum of its city aid base in 2003 and the amount of 
 62.23  additional aid it was certified to receive under section 477A.06 
 62.24  in 2003.  For 2004 only, the maximum amount of total aid a city 
 62.25  may receive under section 477A.013, subdivision 9, paragraph 
 62.26  (c), is also increased by the amount it was certified to receive 
 62.27  under section 477A.06 in 2003. 
 62.28     (g) The city aid base for a city is increased by $150,000 
 62.29  for aids payable in 2000 and thereafter, and the maximum amount 
 62.30  of total aid it may receive under section 477A.013, subdivision 
 62.31  9, paragraph (c), is also increased by $150,000 in calendar year 
 62.32  2000 only, provided that: 
 62.33     (1) the city has a population that is greater than 1,000 
 62.34  and less than 2,500; 
 62.35     (2) its commercial and industrial percentage for aids 
 62.36  payable in 1999 is greater than 45 percent; and 
 63.1      (3) the total market value of all commercial and industrial 
 63.2   property in the city for assessment year 1999 is at least 15 
 63.3   percent less than the total market value of all commercial and 
 63.4   industrial property in the city for assessment year 1998. 
 63.5      (h) (g) The city aid base for a city is increased by 
 63.6   $200,000 in 2000 and thereafter, and the maximum amount of total 
 63.7   aid it may receive under section 477A.013, subdivision 9, 
 63.8   paragraph (c), is also increased by $200,000 in calendar year 
 63.9   2000 only, provided that: 
 63.10     (1) the city had a population in 1997 of 2,500 or more; 
 63.11     (2) the net tax capacity of the city used in calculating 
 63.12  its 1999 aid under section 477A.013 is less than $650 per 
 63.13  capita; 
 63.14     (3) the pre-1940 housing percentage of the city used in 
 63.15  calculating 1999 aid under section 477A.013 is greater than 12 
 63.16  percent; 
 63.17     (4) the 1999 local government aid of the city under section 
 63.18  477A.013 is less than 20 percent of the amount that the formula 
 63.19  aid of the city would have been if the need increase percentage 
 63.20  was 100 percent; and 
 63.21     (5) the city aid base of the city used in calculating aid 
 63.22  under section 477A.013 is less than $7 per capita. 
 63.23     (i) (h) The city aid base for a city is increased by 
 63.24  $102,000 in 2000 and thereafter, and the maximum amount of total 
 63.25  aid it may receive under section 477A.013, subdivision 9, 
 63.26  paragraph (c), is also increased by $102,000 in calendar year 
 63.27  2000 only, provided that: 
 63.28     (1) the city has a population in 1997 of 2,000 or more; 
 63.29     (2) the net tax capacity of the city used in calculating 
 63.30  its 1999 aid under section 477A.013 is less than $455 per 
 63.31  capita; 
 63.32     (3) the net levy of the city used in calculating 1999 aid 
 63.33  under section 477A.013 is greater than $195 per capita; and 
 63.34     (4) the 1999 local government aid of the city under section 
 63.35  477A.013 is less than 38 percent of the amount that the formula 
 63.36  aid of the city would have been if the need increase percentage 
 64.1   was 100 percent. 
 64.2      (j) (i) The city aid base for a city is increased by 
 64.3   $32,000 in 2001 and thereafter, and the maximum amount of total 
 64.4   aid it may receive under section 477A.013, subdivision 9, 
 64.5   paragraph (c), is also increased by $32,000 in calendar year 
 64.6   2001 only, provided that: 
 64.7      (1) the city has a population in 1998 that is greater than 
 64.8   200 but less than 500; 
 64.9      (2) the city's revenue need used in calculating aids 
 64.10  payable in 2000 was greater than $200 per capita; 
 64.11     (3) the city net tax capacity for the city used in 
 64.12  calculating aids available in 2000 was equal to or less than 
 64.13  $200 per capita; 
 64.14     (4) the city aid base of the city used in calculating aid 
 64.15  under section 477A.013 is less than $65 per capita; and 
 64.16     (5) the city's formula aid for aids payable in 2000 was 
 64.17  greater than zero. 
 64.18     (k) (j) The city aid base for a city is increased by $7,200 
 64.19  in 2001 and thereafter, and the maximum amount of total aid it 
 64.20  may receive under section 477A.013, subdivision 9, paragraph 
 64.21  (c), is also increased by $7,200 in calendar year 2001 only, 
 64.22  provided that: 
 64.23     (1) the city had a population in 1998 that is greater than 
 64.24  200 but less than 500; 
 64.25     (2) the city's commercial industrial percentage used in 
 64.26  calculating aids payable in 2000 was less than ten percent; 
 64.27     (3) more than 25 percent of the city's population was 60 
 64.28  years old or older according to the 1990 census; 
 64.29     (4) the city aid base of the city used in calculating aid 
 64.30  under section 477A.013 is less than $15 per capita; and 
 64.31     (5) the city's formula aid for aids payable in 2000 was 
 64.32  greater than zero. 
 64.33     (l) (k) The city aid base for a city is increased by 
 64.34  $45,000 in 2001 and thereafter and by an additional $50,000 in 
 64.35  calendar years 2002 to 2011, and the maximum amount of total aid 
 64.36  it may receive under section 477A.013, subdivision 9, paragraph 
 65.1   (c), is also increased by $45,000 in calendar year 2001 only, 
 65.2   and by $50,000 in calendar year 2002 only, provided that: 
 65.3      (1) the net tax capacity of the city used in calculating 
 65.4   its 2000 aid under section 477A.013 is less than $810 per 
 65.5   capita; 
 65.6      (2) the population of the city declined more than two 
 65.7   percent between 1988 and 1998; 
 65.8      (3) the net levy of the city used in calculating 2000 aid 
 65.9   under section 477A.013 is greater than $240 per capita; and 
 65.10     (4) the city received less than $36 per capita in aid under 
 65.11  section 477A.013, subdivision 9, for aids payable in 2000. 
 65.12     (m) (l) The city aid base for a city with a population of 
 65.13  10,000 or more which is located outside of the seven-county 
 65.14  metropolitan area is increased in 2002 and thereafter, and the 
 65.15  maximum amount of total aid it may receive under section 
 65.16  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
 65.17  in calendar year 2002 only, by an amount equal to the lesser of: 
 65.18     (1)(i) the total population of the city, as determined by 
 65.19  the United States Bureau of the Census, in the 2000 census, (ii) 
 65.20  minus 5,000, (iii) times 60; or 
 65.21     (2) $2,500,000. 
 65.22     (n) (m) The city aid base is increased by $50,000 in 2002 
 65.23  and thereafter, and the maximum amount of total aid it may 
 65.24  receive under section 477A.013, subdivision 9, paragraph (c), is 
 65.25  also increased by $50,000 in calendar year 2002 only, provided 
 65.26  that: 
 65.27     (1) the city is located in the seven-county metropolitan 
 65.28  area; 
 65.29     (2) its population in 2000 is between 10,000 and 20,000; 
 65.30  and 
 65.31     (3) its commercial industrial percentage, as calculated for 
 65.32  city aid payable in 2001, was greater than 25 percent. 
 65.33     (o) (n) The city aid base for a city is increased by 
 65.34  $150,000 in calendar years 2002 to 2011 and the maximum amount 
 65.35  of total aid it may receive under section 477A.013, subdivision 
 65.36  9, paragraph (c), is also increased by $150,000 in calendar year 
 66.1   2002 only, provided that: 
 66.2      (1) the city had a population of at least 3,000 but no more 
 66.3   than 4,000 in 1999; 
 66.4      (2) its home county is located within the seven-county 
 66.5   metropolitan area; 
 66.6      (3) its pre-1940 housing percentage is less than 15 
 66.7   percent; and 
 66.8      (4) its city net tax capacity per capita for taxes payable 
 66.9   in 2000 is less than $900 per capita. 
 66.10     (p) (o) The city aid base for a city is increased by 
 66.11  $200,000 beginning in calendar year 2003 and the maximum amount 
 66.12  of total aid it may receive under section 477A.013, subdivision 
 66.13  9, paragraph (c), is also increased by $200,000 in calendar year 
 66.14  2003 only, provided that the city qualified for an increase in 
 66.15  homestead and agricultural credit aid under Laws 1995, chapter 
 66.16  264, article 8, section 18. 
 66.17     (q) (p) The city aid base for a city is increased by 
 66.18  $200,000 in 2004 only and the maximum amount of total aid it may 
 66.19  receive under section 477A.013, subdivision 9, is also increased 
 66.20  by $200,000 in calendar year 2004 only, if the city is the site 
 66.21  of a nuclear dry cask storage facility. 
 66.22     (r) (q) The city aid base for a city is increased by 
 66.23  $10,000 in 2004 and thereafter and the maximum total aid it may 
 66.24  receive under section 477A.013, subdivision 9, is also increased 
 66.25  by $10,000 in calendar year 2004 only, if the city was included 
 66.26  in a federal major disaster designation issued on April 1, 1998, 
 66.27  and its pre-1940 housing stock was decreased by more than 40 
 66.28  percent between 1990 and 2000. 
 66.29     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 66.30  aids payable in 2004. 
 66.31     Sec. 26.  Minnesota Statutes 2003 Supplement, section 
 66.32  477A.03, subdivision 2b, is amended to read: 
 66.33     Subd. 2b.  [COUNTIES.] (a) For aids payable in calendar 
 66.34  year 2005 and thereafter, the total aids paid to counties under 
 66.35  section 477A.0124, subdivision 3, are limited to $100,500,000.  
 66.36  Each calendar year, $500,000 shall be retained by the 
 67.1   commissioner of revenue to make reimbursements to the 
 67.2   commissioner of finance for payments made under section 611.27.  
 67.3   For calendar year 2004, the amount shall be $500,000 is 
 67.4   appropriated from the general fund for this purpose in addition 
 67.5   to the payments authorized under section 477A.0124, subdivision 
 67.6   1.  For calendar year 2005 and subsequent years, the amount 
 67.7   shall be deducted from the appropriation under this paragraph 
 67.8   for section 477A.0124, subdivision 1.  The reimbursements shall 
 67.9   be to defray the additional costs associated with court-ordered 
 67.10  counsel under section 611.27.  Any retained amounts not used for 
 67.11  reimbursement in a year shall be included in the next 
 67.12  distribution of county need aid that is certified to the county 
 67.13  auditors for the purpose of property tax reduction for the next 
 67.14  taxes payable year. 
 67.15     (b) For aids payable in 2005 and thereafter, the total aids 
 67.16  under section 477A.0124, subdivision 4, are limited to 
 67.17  $105,000,000.  The commissioner of finance shall bill the 
 67.18  commissioner of revenue for the cost of preparation of local 
 67.19  impact notes as required by section 3.987, not to exceed 
 67.20  $207,000 in fiscal year 2004 and thereafter.  The commissioner 
 67.21  of education shall bill the commissioner of revenue for the cost 
 67.22  of preparation of local impact notes for school districts as 
 67.23  required by section 3.987, not to exceed $7,000 in fiscal year 
 67.24  2004 and thereafter.  For aids payable in 2004, $214,000 is 
 67.25  appropriated from the general fund for this purpose.  For aids 
 67.26  payable in 2005 and thereafter, the commissioner of revenue 
 67.27  shall deduct the amounts billed under this paragraph from the 
 67.28  appropriation under this paragraph section for section 
 67.29  477A.0124, subdivision 4.  The amounts deducted are appropriated 
 67.30  to the commissioner of finance and the commissioner of education 
 67.31  for the preparation of local impact notes. 
 67.32     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 67.33  payable in 2004 and thereafter. 
 67.34     Sec. 27.  Laws 2003, First Special Session chapter 21, 
 67.35  article 5, section 13, is amended to read: 
 67.36     Sec. 13.  [2004 CITY AID REDUCTIONS.] 
 68.1      The commissioner of revenue shall compute an aid reduction 
 68.2   amount for 2004 for each city as provided in this section. 
 68.3      The initial aid reduction amount for each city is the 
 68.4   amount by which the city's aid distribution under Minnesota 
 68.5   Statutes, section 477A.013, and related provisions payable in 
 68.6   2003 exceeds the city's 2004 distribution under those provisions.
 68.7      The minimum aid reduction amount for a city is the amount 
 68.8   of its reduction in 2003 under section 12.  If a city receives 
 68.9   an increase to its city aid base under Minnesota Statutes, 
 68.10  section 477A.011, subdivision 36, its minimum aid reduction is 
 68.11  reduced by an equal amount. 
 68.12     The maximum aid reduction amount for a city is an amount 
 68.13  equal to 14 percent of the city's total 2004 levy plus aid 
 68.14  revenue base, except that if the city has a city net tax 
 68.15  capacity for aids payable in 2004, as defined in Minnesota 
 68.16  Statutes, section 477A.011, subdivision 20, of $700 per capita 
 68.17  or less, the maximum aid reduction shall not exceed an amount 
 68.18  equal to 13 percent of the city's total 2004 levy plus aid 
 68.19  revenue base. 
 68.20     If the initial aid reduction amount for a city is less than 
 68.21  the minimum aid reduction amount for that city, the final aid 
 68.22  reduction amount for the city is the sum of the initial aid 
 68.23  reduction amount and the lesser of the amount of the city's 
 68.24  payable 2004 reimbursement under Minnesota Statutes, section 
 68.25  273.1384, or the difference between the minimum and initial aid 
 68.26  reduction amounts for the city, and the amount of the final aid 
 68.27  reduction in excess of the initial aid reduction is deducted 
 68.28  from the city's reimbursements pursuant to Minnesota Statutes, 
 68.29  section 273.1384. 
 68.30     If the initial aid reduction amount for a city is greater 
 68.31  than the maximum aid reduction amount for the city, the city 
 68.32  receives an additional distribution under this section equal to 
 68.33  the result of subtracting the maximum aid reduction amount from 
 68.34  the initial aid reduction amount.  This distribution shall be 
 68.35  paid in equal installments in 2004 on the dates specified in 
 68.36  Minnesota Statutes, section 477A.015.  The amount necessary for 
 69.1   these additional distributions is appropriated to the 
 69.2   commissioner of revenue from the general fund in fiscal year 
 69.3   2005. 
 69.4      The initial aid reduction is applied to the city's 
 69.5   distribution pursuant to Minnesota Statutes, section 477A.013, 
 69.6   and any aid reduction in excess of the initial aid reduction is 
 69.7   applied to the city's reimbursements pursuant to Minnesota 
 69.8   Statutes, section 273.1384. 
 69.9      To the extent that sufficient information is available on 
 69.10  each payment date in 2004, the commissioner of revenue shall pay 
 69.11  the reimbursements reduced under this section in equal 
 69.12  installments on the payment dates provided in law. 
 69.13     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 69.14  payable in 2004. 
 69.15     Sec. 28.  Laws 2003, First Special Session chapter 21, 
 69.16  article 6, section 9, is amended to read: 
 69.17     Sec. 9.  [DEFINITIONS.] 
 69.18     (a) For purposes of sections 9 to 15, the following terms 
 69.19  have the meanings given them in this section. 
 69.20     (b) The 2003 and 2004 "levy plus aid revenue base" for a 
 69.21  county is the sum of that county's certified property tax levy 
 69.22  for taxes payable in 2003, plus the sum of the amounts the 
 69.23  county was certified to receive in the designated calendar year 
 69.24  as: 
 69.25     (1) homestead and agricultural credit aid under Minnesota 
 69.26  Statutes, section 273.1398, subdivision 2, plus any additional 
 69.27  aid under section 16, minus the amount calculated under section 
 69.28  273.1398, subdivision 4a, paragraph (b), for counties in 
 69.29  judicial districts one, three, six, and ten, and 25 percent of 
 69.30  the amount calculated under section 273.1398, subdivision 4a, 
 69.31  paragraph (b), for counties in judicial districts two and four; 
 69.32     (2) the amount of county manufactured home homestead and 
 69.33  agricultural credit aid computed for the county for payment in 
 69.34  2003 under section 273.166; 
 69.35     (3) criminal justice aid under Minnesota Statutes, section 
 69.36  477A.0121; 
 70.1      (4) family preservation aid under Minnesota Statutes, 
 70.2   section 477A.0122; 
 70.3      (5) taconite aids under Minnesota Statutes, sections 298.28 
 70.4   and 298.282, including any aid which was required to be placed 
 70.5   in a special fund for expenditure in the next succeeding year; 
 70.6   and 
 70.7      (6) county program aid under section 477A.0124, exclusive 
 70.8   of the attached machinery aid component. 
 70.9      <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 70.10  payable in 2004. 
 70.11     Sec. 29.  [REPEALER.] 
 70.12     Minnesota Statutes 2002, sections 273.19, subdivision 5; 
 70.13  274.05; 275.15; and 283.07, are repealed effective the day 
 70.14  following final enactment. 
 70.15                             ARTICLE 4 
 70.16                   SALES AND USE TAXES TECHNICAL 
 70.17     Section 1.  Minnesota Statutes 2002, section 289A.38, 
 70.18  subdivision 6, is amended to read: 
 70.19     Subd. 6.  [OMISSION IN EXCESS OF 25 PERCENT.] Additional 
 70.20  taxes may be assessed within 6-1/2 years after the due date of 
 70.21  the return or the date the return was filed, whichever is later, 
 70.22  if: 
 70.23     (1) the taxpayer omits from gross income an amount properly 
 70.24  includable in it that is in excess of 25 percent of the amount 
 70.25  of gross income stated in the return; 
 70.26     (2) the taxpayer omits from a sales, use, or withholding 
 70.27  tax return an amount of taxes in excess of 25 percent of the 
 70.28  taxes reported in the return; or 
 70.29     (3) the taxpayer omits from the gross estate assets in 
 70.30  excess of 25 percent of the gross estate reported in the return. 
 70.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 70.32  following final enactment. 
 70.33     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
 70.34  289A.40, subdivision 2, is amended to read: 
 70.35     Subd. 2.  [BAD DEBT LOSS.] If a claim relates to an 
 70.36  overpayment because of a failure to deduct a loss due to a bad 
 71.1   debt or to a security becoming worthless, the claim is 
 71.2   considered timely if filed within seven years from the date 
 71.3   prescribed for the filing of the return.  A claim relating to an 
 71.4   overpayment of taxes under chapter 297A must be filed within 
 71.5   3-1/2 years from the date prescribed for filing the return, plus 
 71.6   any extensions granted for filing the return, but only if filed 
 71.7   within the extended time.  The refund or credit is limited to 
 71.8   the amount of overpayment attributable to the loss.  "Bad debt" 
 71.9   for purposes of this subdivision, has the same meaning as that 
 71.10  term is used in United States Code, title 26, section 166, 
 71.11  except that for a claim relating to an overpayment of taxes 
 71.12  under chapter 297A the following are excluded from the 
 71.13  calculation of bad debt:  financing charges or interest; sales 
 71.14  or use taxes charged on the purchase price; uncollectible 
 71.15  amounts on property that remain in the possession of the seller 
 71.16  until the full purchase price is paid; expenses incurred in 
 71.17  attempting to collect any debt; and repossessed property. 
 71.18     <b>[EFFECTIVE DATE.]</b> For claims relating to an overpayment of 
 71.19  taxes under chapter 297A, this section is effective for sales 
 71.20  and purchases made on or after January 1, 2004; for all other 
 71.21  bad debts or claims, this section is effective on or after July 
 71.22  1, 2003. 
 71.23     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
 71.24  297A.668, subdivision 1, is amended to read: 
 71.25     Subdivision 1.  [ APPLICABILITY.] The provisions of this 
 71.26  section apply regardless of the characterization of a product as 
 71.27  tangible personal property, a digital good, or a service; but do 
 71.28  not apply to telecommunications services, or the sales of motor 
 71.29  vehicles, watercraft, aircraft, modular homes, manufactured 
 71.30  homes, or mobile homes.  These provisions only apply to 
 71.31  determine a seller's obligation to pay or collect and remit a 
 71.32  sales or use tax with respect to the seller's sale of a 
 71.33  product.  These provisions do not affect the obligation of a 
 71.34  seller as purchaser to remit tax on the use of the product. 
 71.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 71.36  following final enactment. 
 72.1      Sec. 4.  Minnesota Statutes 2003 Supplement, section 
 72.2   297A.668, subdivision 3, is amended to read: 
 72.3      Subd. 3.  [LEASE OR RENTAL OF TANGIBLE PERSONAL PROPERTY.] 
 72.4   The lease or rental of tangible personal property, other than 
 72.5   property identified in subdivision 4 or 5, shall be sourced as 
 72.6   required in paragraphs (a) to (c). 
 72.7      (a) For a lease or rental that requires recurring periodic 
 72.8   payments, the first periodic payment is sourced the same as a 
 72.9   retail sale in accordance with the provisions of subdivision 6 2.
 72.10  Periodic payments made subsequent to the first payment are 
 72.11  sourced to the primary property location for each period covered 
 72.12  by the payment.  The primary property location must be as 
 72.13  indicated by an address for the property provided by the lessee 
 72.14  that is available to the lessor from its records maintained in 
 72.15  the ordinary course of business, when use of this address does 
 72.16  not constitute bad faith.  The property location must not be 
 72.17  altered by intermittent use at different locations, such as use 
 72.18  of business property that accompanies employees on business 
 72.19  trips and service calls. 
 72.20     (b) For a lease or rental that does not require recurring 
 72.21  periodic payments, the payment is sourced the same as a retail 
 72.22  sale in accordance with the provisions of subdivision 2. 
 72.23     (c) This subdivision does not affect the imposition or 
 72.24  computation of sales or use tax on leases or rentals based on a 
 72.25  lump sum or accelerated basis, or on the acquisition of property 
 72.26  for lease. 
 72.27     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 72.28  purchases made on or after January 1, 2004. 
 72.29     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
 72.30  297A.668, subdivision 5, is amended to read: 
 72.31     Subd. 5.  [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 
 72.32  including lease or rental, of transportation equipment shall be 
 72.33  sourced the same as a retail sale in accordance with the 
 72.34  provisions of subdivision 2, notwithstanding the exclusion of 
 72.35  lease or rental in subdivision 2. 
 72.36     (b) "Transportation equipment" means any of the following: 
 73.1      (1) locomotives and railcars that are utilized for the 
 73.2   carriage of persons or property in interstate commerce; and/or 
 73.3      (2) trucks and truck-tractors with a gross vehicle weight 
 73.4   rating (GVWR) of 10,001 pounds or greater, trailers, 
 73.5   semitrailers, or passenger buses that are: 
 73.6      (i) registered through the international registration plan; 
 73.7   and 
 73.8      (ii) operated under authority of a carrier authorized and 
 73.9   certified by the United States Department of Transportation or 
 73.10  another federal authority to engage in the carriage of persons 
 73.11  or property in interstate commerce; 
 73.12     (3) aircraft that are operated by air carriers authorized 
 73.13  and certificated by the United States Department of 
 73.14  Transportation or another federal or a foreign authority to 
 73.15  engage in the carriage of persons or property in interstate 
 73.16  commerce; or 
 73.17     (4) containers designed for use on and component parts 
 73.18  attached or secured on the transportation equipment described in 
 73.19  items (1) through (3).  
 73.20     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 73.21  purchases made on or after January 1, 2004. 
 73.22     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
 73.23  297A.669, subdivision 16, is amended to read: 
 73.24     Subd. 16.  [SERVICE ADDRESS.] "Service address," for 
 73.25  purposes of this section, means: 
 73.26     (1) the location of the telecommunications equipment to 
 73.27  which a customer's call is charged and from which the call 
 73.28  originates or terminates, regardless of where the call is billed 
 73.29  or paid; 
 73.30     (2) if the location in paragraph (a) (1) is not known, 
 73.31  service address means the origination point of the signal of the 
 73.32  telecommunications services first identified by either the 
 73.33  seller's telecommunications system or in information received by 
 73.34  the seller from its service provider, where the system used to 
 73.35  transport the signals is not that of the seller; or 
 73.36     (3) if the location in paragraphs (a) (1) and (b) (2) is 
 74.1   not known, the service address means the location of the 
 74.2   customer's place of primary use. 
 74.3      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 74.4   purchases made on or after January 1, 2004. 
 74.5      Sec. 7.  Minnesota Statutes 2003 Supplement, section 
 74.6   297A.68, subdivision 2, is amended to read: 
 74.7      Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
 74.8   (a) Materials stored, used, or consumed in industrial production 
 74.9   of personal property intended to be sold ultimately at retail 
 74.10  are exempt, whether or not the item so used becomes an 
 74.11  ingredient or constituent part of the property produced.  
 74.12  Materials that qualify for this exemption include, but are not 
 74.13  limited to, the following: 
 74.14     (1) chemicals, including chemicals used for cleaning food 
 74.15  processing machinery and equipment; 
 74.16     (2) materials, including chemicals, fuels, and electricity 
 74.17  purchased by persons engaged in industrial production to treat 
 74.18  waste generated as a result of the production process; 
 74.19     (3) fuels, electricity, gas, and steam used or consumed in 
 74.20  the production process, except that electricity, gas, or steam 
 74.21  used for space heating, cooling, or lighting is exempt if (i) it 
 74.22  is in excess of the average climate control or lighting for the 
 74.23  production area, and (ii) it is necessary to produce that 
 74.24  particular product; 
 74.25     (4) petroleum products and lubricants; 
 74.26     (5) packaging materials, including returnable containers 
 74.27  used in packaging food and beverage products; 
 74.28     (6) accessory tools, equipment, and other items that are 
 74.29  separate detachable units with an ordinary useful life of less 
 74.30  than 12 months used in producing a direct effect upon the 
 74.31  product; and 
 74.32     (7) the following materials, tools, and equipment used in 
 74.33  metalcasting:  crucibles, thermocouple protection sheaths and 
 74.34  tubes, stalk tubes, refractory materials, molten metal filters 
 74.35  and filter boxes, degassing lances, and base blocks. 
 74.36     (b) This exemption does not include: 
 75.1      (1) machinery, equipment, implements, tools, accessories, 
 75.2   appliances, contrivances and furniture and fixtures, except 
 75.3   those listed in paragraph (a), clause (6); and 
 75.4      (2) petroleum and special fuels used in producing or 
 75.5   generating power for propelling ready-mixed concrete trucks on 
 75.6   the public highways of this state. 
 75.7      (c) Industrial production includes, but is not limited to, 
 75.8   research, development, design or production of any tangible 
 75.9   personal property, manufacturing, processing (other than by 
 75.10  restaurants and consumers) of agricultural products (whether 
 75.11  vegetable or animal), commercial fishing, refining, smelting, 
 75.12  reducing, brewing, distilling, printing, mining, quarrying, 
 75.13  lumbering, generating electricity, the production of road 
 75.14  building materials, and the research, development, design, or 
 75.15  production of computer software.  Industrial production does not 
 75.16  include painting, cleaning, repairing or similar processing of 
 75.17  property except as part of the original manufacturing process.  
 75.18  Industrial production does not include the furnishing of 
 75.19  services listed in section 297A.61, subdivision 3, paragraph 
 75.20  (g), clause (6), items (i) to (vi) and (viii). 
 75.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 75.22  following final enactment. 
 75.23     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 75.24  297A.68, subdivision 5, is amended to read: 
 75.25     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
 75.26  exempt.  The tax must be imposed and collected as if the rate 
 75.27  under section 297A.62, subdivision 1, applied, and then refunded 
 75.28  in the manner provided in section 297A.75. 
 75.29     "Capital equipment" means machinery and equipment purchased 
 75.30  or leased, and used in this state by the purchaser or lessee 
 75.31  primarily for manufacturing, fabricating, mining, or refining 
 75.32  tangible personal property to be sold ultimately at retail if 
 75.33  the machinery and equipment are essential to the integrated 
 75.34  production process of manufacturing, fabricating, mining, or 
 75.35  refining.  Capital equipment also includes machinery and 
 75.36  equipment used primarily to electronically transmit results 
 76.1   retrieved by a customer of an on-line computerized data 
 76.2   retrieval system. 
 76.3      (b) Capital equipment includes, but is not limited to: 
 76.4      (1) machinery and equipment used to operate, control, or 
 76.5   regulate the production equipment; 
 76.6      (2) machinery and equipment used for research and 
 76.7   development, design, quality control, and testing activities; 
 76.8      (3) environmental control devices that are used to maintain 
 76.9   conditions such as temperature, humidity, light, or air pressure 
 76.10  when those conditions are essential to and are part of the 
 76.11  production process; 
 76.12     (4) materials and supplies used to construct and install 
 76.13  machinery or equipment; 
 76.14     (5) repair and replacement parts, including accessories, 
 76.15  whether purchased as spare parts, repair parts, or as upgrades 
 76.16  or modifications to machinery or equipment; 
 76.17     (6) materials used for foundations that support machinery 
 76.18  or equipment; 
 76.19     (7) materials used to construct and install special purpose 
 76.20  buildings used in the production process; 
 76.21     (8) ready-mixed concrete equipment in which the ready-mixed 
 76.22  concrete is mixed as part of the delivery process regardless if 
 76.23  mounted on a chassis and leases of ready-mixed concrete trucks; 
 76.24  and 
 76.25     (9) machinery or equipment used for research, development, 
 76.26  design, or production of computer software.  
 76.27     (c) Capital equipment does not include the following: 
 76.28     (1) motor vehicles taxed under chapter 297B; 
 76.29     (2) machinery or equipment used to receive or store raw 
 76.30  materials; 
 76.31     (3) building materials, except for materials included in 
 76.32  paragraph (b), clauses (6) and (7); 
 76.33     (4) machinery or equipment used for nonproduction purposes, 
 76.34  including, but not limited to, the following:  plant security, 
 76.35  fire prevention, first aid, and hospital stations; support 
 76.36  operations or administration; pollution control; and plant 
 77.1   cleaning, disposal of scrap and waste, plant communications, 
 77.2   space heating, cooling, lighting, or safety; 
 77.3      (5) farm machinery and aquaculture production equipment as 
 77.4   defined by section 297A.61, subdivisions 12 and 13; 
 77.5      (6) machinery or equipment purchased and installed by a 
 77.6   contractor as part of an improvement to real property; or 
 77.7      (7) machinery and equipment used by restaurants in the 
 77.8   furnishing, preparing, or serving of prepared foods as defined 
 77.9   in section 297A.61, subdivision 31; 
 77.10     (8) machinery and equipment used to furnish the services 
 77.11  listed in section 297A.61, subdivision 3, paragraph (g), clause 
 77.12  (6), items (i) to (vi) and (viii); or 
 77.13     (9) any other item that is not essential to the integrated 
 77.14  process of manufacturing, fabricating, mining, or refining. 
 77.15     (d) For purposes of this subdivision: 
 77.16     (1) "Equipment" means independent devices or tools separate 
 77.17  from machinery but essential to an integrated production 
 77.18  process, including computers and computer software, used in 
 77.19  operating, controlling, or regulating machinery and equipment; 
 77.20  and any subunit or assembly comprising a component of any 
 77.21  machinery or accessory or attachment parts of machinery, such as 
 77.22  tools, dies, jigs, patterns, and molds.  
 77.23     (2) "Fabricating" means to make, build, create, produce, or 
 77.24  assemble components or property to work in a new or different 
 77.25  manner. 
 77.26     (3) "Integrated production process" means a process or 
 77.27  series of operations through which tangible personal property is 
 77.28  manufactured, fabricated, mined, or refined.  For purposes of 
 77.29  this clause, (i) manufacturing begins with the removal of raw 
 77.30  materials from inventory and ends when the last process prior to 
 77.31  loading for shipment has been completed; (ii) fabricating begins 
 77.32  with the removal from storage or inventory of the property to be 
 77.33  assembled, processed, altered, or modified and ends with the 
 77.34  creation or production of the new or changed product; (iii) 
 77.35  mining begins with the removal of overburden from the site of 
 77.36  the ores, minerals, stone, peat deposit, or surface materials 
 78.1   and ends when the last process before stockpiling is completed; 
 78.2   and (iv) refining begins with the removal from inventory or 
 78.3   storage of a natural resource and ends with the conversion of 
 78.4   the item to its completed form. 
 78.5      (4) "Machinery" means mechanical, electronic, or electrical 
 78.6   devices, including computers and computer software, that are 
 78.7   purchased or constructed to be used for the activities set forth 
 78.8   in paragraph (a), beginning with the removal of raw materials 
 78.9   from inventory through completion of the product, including 
 78.10  packaging of the product. 
 78.11     (5) "Machinery and equipment used for pollution control" 
 78.12  means machinery and equipment used solely to eliminate, prevent, 
 78.13  or reduce pollution resulting from an activity described in 
 78.14  paragraph (a).  
 78.15     (6) "Manufacturing" means an operation or series of 
 78.16  operations where raw materials are changed in form, composition, 
 78.17  or condition by machinery and equipment and which results in the 
 78.18  production of a new article of tangible personal property.  For 
 78.19  purposes of this subdivision, "manufacturing" includes the 
 78.20  generation of electricity or steam to be sold at retail. 
 78.21     (7) "Mining" means the extraction of minerals, ores, stone, 
 78.22  or peat. 
 78.23     (8) "On-line data retrieval system" means a system whose 
 78.24  cumulation of information is equally available and accessible to 
 78.25  all its customers. 
 78.26     (9) "Primarily" means machinery and equipment used 50 
 78.27  percent or more of the time in an activity described in 
 78.28  paragraph (a). 
 78.29     (10) "Refining" means the process of converting a natural 
 78.30  resource to an intermediate or finished product, including the 
 78.31  treatment of water to be sold at retail. 
 78.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 78.33  following final enactment. 
 78.34     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 78.35  297A.68, subdivision 39, is amended to read: 
 78.36     Subd. 39.  [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 
 79.1   tangible personal property or services is exempt from tax or a 
 79.2   tax rate increase for a period of six months from the effective 
 79.3   date of the law change that results in the imposition of the tax 
 79.4   or the tax rate increase under this chapter if: 
 79.5      (1) the act imposing the tax or increasing the tax rate 
 79.6   does not have transitional effective date language for existing 
 79.7   construction contracts and construction bids; and 
 79.8      (2) the requirements of paragraph (b) are met. 
 79.9      (b) A sale is tax exempt under paragraph (a) if it meets 
 79.10  the requirements of either clause (1) or (2): 
 79.11     (1) For a construction contract: 
 79.12     (i) the goods or services sold must be used for the 
 79.13  performance of a bona fide written lump sum or fixed price 
 79.14  construction contract; 
 79.15     (ii) the contract must be entered into before the date the 
 79.16  goods or services become subject to the sales tax or the tax 
 79.17  rate was increased; 
 79.18     (iii) the contract must not provide for allocation of 
 79.19  future taxes; and 
 79.20     (iv) for each qualifying contract the contractor must give 
 79.21  the seller documentation of the contract on which an exemption 
 79.22  is to be claimed. 
 79.23     (2) For a construction bid: 
 79.24     (i) the goods or services sold must be used pursuant to an 
 79.25  obligation of a bid or bids; 
 79.26     (ii) the bid or bids must be submitted and accepted before 
 79.27  the date the goods or services became subject to the sales 
 79.28  tax or the tax rate was increased; 
 79.29     (iii) the bid or bids must not be able to be withdrawn, 
 79.30  modified, or changed without forfeiting a bond; and 
 79.31     (iv) for each qualifying bid, the contractor must give the 
 79.32  seller documentation of the bid on which an exemption is to be 
 79.33  claimed. 
 79.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 79.35  following final enactment. 
 79.36     Sec. 10.  [REPEALER.] 
 80.1      Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, 
 80.2   subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5 
 80.3   and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1 
 80.4   and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 
 80.5   8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 
 80.6   5; and 8130.8800, subpart 4, are repealed. 
 80.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 80.8   following final enactment. 
 80.9                              ARTICLE 5 
 80.10                      SPECIAL TAXES TECHNICAL 
 80.11     Section 1.  Minnesota Statutes 2002, section 287.04, is 
 80.12  amended to read: 
 80.13     287.04 [EXEMPTIONS.] 
 80.14     The tax imposed by section 287.035 does not apply to:  
 80.15     (a) A decree of marriage dissolution or an instrument made 
 80.16  pursuant to it.  
 80.17     (b) A mortgage given to correct a misdescription of the 
 80.18  mortgaged property. 
 80.19     (c) A mortgage or other instrument that adds additional 
 80.20  security for the same debt for which mortgage registry tax has 
 80.21  been paid.  
 80.22     (d) A contract for the conveyance of any interest in real 
 80.23  property, including a contract for deed. 
 80.24     (e) A mortgage secured by real property subject to the 
 80.25  minerals production tax of sections 298.24 to 298.28. 
 80.26     (f) The principal amount of a mortgage loan made under a 
 80.27  low and moderate income or other affordable housing program, if 
 80.28  the mortgagee is a federal, state, or local government agency. 
 80.29     (g) Mortgages granted by fraternal benefit societies 
 80.30  subject to section 64B.24. 
 80.31     (h) A mortgage amendment or extension, as defined in 
 80.32  section 287.01. 
 80.33     (i) An agricultural mortgage if the proceeds of the loan 
 80.34  secured by the mortgage are used to acquire or improve real 
 80.35  property classified under section 273.13, subdivision 23, 
 80.36  paragraph (a), or (b), clause (1), (2), or (3). 
 81.1      (j) A mortgage on an armory building as set forth in 
 81.2   section 193.147. 
 81.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 81.4   following final enactment. 
 81.5      Sec. 2.  Minnesota Statutes 2002, section 295.50, 
 81.6   subdivision 4, is amended to read: 
 81.7      Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
 81.8   provider" means: 
 81.9      (1) a person whose health care occupation is regulated or 
 81.10  required to be regulated by the state of Minnesota furnishing 
 81.11  any or all of the following goods or services directly to a 
 81.12  patient or consumer:  medical, surgical, optical, visual, 
 81.13  dental, hearing, nursing services, drugs, laboratory, diagnostic 
 81.14  or therapeutic services; 
 81.15     (2) a person who provides goods and services not listed in 
 81.16  clause (1) that qualify for reimbursement under the medical 
 81.17  assistance program provided under chapter 256B; 
 81.18     (3) a staff model health plan company; 
 81.19     (4) an ambulance service required to be licensed; or 
 81.20     (5) a person who sells or repairs hearing aids and related 
 81.21  equipment or prescription eyewear. 
 81.22     (b) Health care provider does not include: 
 81.23     (1) hospitals; medical supplies distributors, except as 
 81.24  specified under paragraph (a), clause (5); nursing homes 
 81.25  licensed under chapter 144A or licensed in any other 
 81.26  jurisdiction; pharmacies; surgical centers; bus and taxicab 
 81.27  transportation, or any other providers of transportation 
 81.28  services other than ambulance services required to be licensed; 
 81.29  supervised living facilities for persons with mental retardation 
 81.30  or related conditions, licensed under Minnesota Rules, parts 
 81.31  4665.0100 to 4665.9900; residential care homes licensed under 
 81.32  chapter 144B housing with services establishments required to be 
 81.33  registered under chapter 144D; board and lodging establishments 
 81.34  providing only custodial services that are licensed under 
 81.35  chapter 157 and registered under section 157.17 to provide 
 81.36  supportive services or health supervision services; adult foster 
 82.1   homes as defined in Minnesota Rules, part 9555.5105; day 
 82.2   training and habilitation services for adults with mental 
 82.3   retardation and related conditions as defined in section 252.41, 
 82.4   subdivision 3; boarding care homes, as defined in Minnesota 
 82.5   Rules, part 4655.0100; and adult day care centers as defined in 
 82.6   Minnesota Rules, part 9555.9600; 
 82.7      (2) home health agencies as defined in Minnesota Rules, 
 82.8   part 9505.0175, subpart 15; a person providing personal care 
 82.9   services and supervision of personal care services as defined in 
 82.10  Minnesota Rules, part 9505.0335; a person providing private duty 
 82.11  nursing services as defined in Minnesota Rules, part 9505.0360; 
 82.12  and home care providers required to be licensed under chapter 
 82.13  144A; 
 82.14     (3) a person who employs health care providers solely for 
 82.15  the purpose of providing patient services to its employees; and 
 82.16     (4) an educational institution that employs health care 
 82.17  providers solely for the purpose of providing patient services 
 82.18  to its students if the institution does not receive fee for 
 82.19  service payments or payments for extended coverage. 
 82.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 82.21  following final enactment. 
 82.22     Sec. 3.  Minnesota Statutes 2002, section 296A.22, is 
 82.23  amended by adding a subdivision to read: 
 82.24     Subd. 9.  [ABATEMENT OF PENALTY.] (a) The commissioner may 
 82.25  by written order abate any penalty imposed under this section, 
 82.26  if in the commissioner's opinion there is reasonable cause to do 
 82.27  so. 
 82.28     (b) A request for abatement of penalty must be filed with 
 82.29  the commissioner within 60 days of the date the notice stating 
 82.30  that a penalty has been imposed was mailed to the taxpayer's 
 82.31  last known address. 
 82.32     (c) If the commissioner issues an order denying a request 
 82.33  for abatement of penalty, the taxpayer may file an 
 82.34  administrative appeal as provided in section 296A.25 or appeal 
 82.35  to tax court as provided in section 271.06.  If the commissioner 
 82.36  does not issue an order on the abatement request within 60 days 
 83.1   from the date the request is received, the taxpayer may appeal 
 83.2   to tax court as provided in section 271.06. 
 83.3      <b>[EFFECTIVE DATE.]</b> This section is effective for penalties 
 83.4   imposed on or after the day following final enactment. 
 83.5      Sec. 4.  Minnesota Statutes 2002, section 297E.01, 
 83.6   subdivision 5, is amended to read: 
 83.7      Subd. 5.  [DISTRIBUTOR.] "Distributor" means a distributor 
 83.8   as defined in section 349.12, subdivision 11, or a person or 
 83.9   linked bingo game provider who markets, sells, or provides 
 83.10  gambling product to a person or entity for resale or use at the 
 83.11  retail level.  
 83.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 83.13  following final enactment. 
 83.14     Sec. 5.  Minnesota Statutes 2002, section 297E.01, 
 83.15  subdivision 7, is amended to read: 
 83.16     Subd. 7.  [GAMBLING PRODUCT.] "Gambling product" means 
 83.17  bingo hard cards, bingo paper, or sheets, or linked bingo paper 
 83.18  sheets; pull-tabs; tipboards; paddletickets and paddleticket 
 83.19  cards; raffle tickets; or any other ticket, card, board, 
 83.20  placard, device, or token that represents a chance, for which 
 83.21  consideration is paid, to win a prize.  
 83.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 83.23  following final enactment. 
 83.24     Sec. 6.  Minnesota Statutes 2002, section 297E.01, is 
 83.25  amended by adding a subdivision to read: 
 83.26     Subd. 9a.  [LINKED BINGO GAME.] "Linked bingo game" means a 
 83.27  bingo game played at two or more locations where licensed 
 83.28  organizations are authorized to conduct bingo, when there is a 
 83.29  common prize pool and a common selection of numbers or symbols 
 83.30  conducted at one location, and when the results of the selection 
 83.31  are transmitted to all participating locations by satellite, 
 83.32  telephone, or other means by a linked bingo game provider. 
 83.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 83.34  following final enactment. 
 83.35     Sec. 7.  Minnesota Statutes 2002, section 297E.01, is 
 83.36  amended by adding a subdivision to read: 
 84.1      Subd. 9b.  [LINKED BINGO GAME PROVIDER.] "Linked bingo game 
 84.2   provider" means any person who provides the means to link bingo 
 84.3   prizes in a linked bingo game, who provides linked bingo paper 
 84.4   sheets to the participating organizations, who provides linked 
 84.5   bingo prize management, and who provides the linked bingo game 
 84.6   system. 
 84.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 84.8   following final enactment. 
 84.9      Sec. 8.  Minnesota Statutes 2002, section 297E.07, is 
 84.10  amended to read: 
 84.11     297E.07 [INSPECTION RIGHTS.] 
 84.12     At any reasonable time, without notice and without a search 
 84.13  warrant, the commissioner may enter a place of business of a 
 84.14  manufacturer, distributor, or organization, or linked bingo game 
 84.15  provider; any site from which pull-tabs or tipboards or other 
 84.16  gambling equipment or gambling product are being manufactured, 
 84.17  stored, or sold; or any site at which lawful gambling is being 
 84.18  conducted, and inspect the premises, books, records, and other 
 84.19  documents required to be kept under this chapter to determine 
 84.20  whether or not this chapter is being fully complied with.  If 
 84.21  the commissioner is denied free access to or is hindered or 
 84.22  interfered with in making an inspection of the place of 
 84.23  business, books, or records, the permit of the distributor may 
 84.24  be revoked by the commissioner, and the license of the 
 84.25  manufacturer, the distributor, or the organization, or linked 
 84.26  bingo game provider may be revoked by the board. 
 84.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 84.28  following final enactment. 
 84.29     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 84.30  297F.08, subdivision 12, is amended to read: 
 84.31     Subd. 12.  [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 
 84.32  person may not transport or cause to be transported from this 
 84.33  state cigarettes for sale in another state without first 
 84.34  affixing to the cigarettes the stamp required by the state in 
 84.35  which the cigarettes are to be sold or paying any other excise 
 84.36  tax on the cigarettes imposed by the state in which the 
 85.1   cigarettes are to be sold. 
 85.2      (b) A person may not affix to cigarettes the stamp required 
 85.3   by another state or pay any other excise tax on the cigarettes 
 85.4   imposed by another state if the other state prohibits stamps 
 85.5   from being affixed to the cigarettes, prohibits the payment of 
 85.6   any other excise tax on the cigarettes, or prohibits the sale of 
 85.7   the cigarettes. 
 85.8      (c) Not later than 15 days after the end of each calendar 
 85.9   quarter, a person who transports or causes to be transported 
 85.10  from this state cigarettes for sale in another state shall 
 85.11  submit to the commissioner a report identifying the quantity and 
 85.12  style of each brand of the cigarettes transported or caused to 
 85.13  be transported in the preceding calendar quarter, and the name 
 85.14  and address of each recipient of the cigarettes.  This reporting 
 85.15  requirement only relates to cigarettes manufactured by companies 
 85.16  that are not original or subsequent participating manufacturers 
 85.17  in the Master Settlement Agreement with other states. 
 85.18     (d) For purposes of this section, "person" has the meaning 
 85.19  given in section 297F.01, subdivision 12.  Person does not 
 85.20  include any common or contract carrier, or public warehouse that 
 85.21  is not owned, in whole or in part, directly or indirectly by 
 85.22  such person, and does not include a manufacturer that has 
 85.23  entered into is an original or subsequent participating 
 85.24  manufacturer in the Master Settlement Agreement with other 
 85.25  states. 
 85.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 85.27  following final enactment. 
 85.28     Sec. 10.  Minnesota Statutes 2003 Supplement, section 
 85.29  297F.09, subdivision 1, is amended to read: 
 85.30     Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
 85.31  or before the 18th day of each calendar month, a distributor 
 85.32  with a place of business in this state shall file a return with 
 85.33  the commissioner showing the quantity of cigarettes manufactured 
 85.34  or brought in from outside the state or purchased during the 
 85.35  preceding calendar month and the quantity of cigarettes sold or 
 85.36  otherwise disposed of in this state and outside this state 
 86.1   during that month.  A licensed distributor outside this state 
 86.2   shall in like manner file a return showing the quantity of 
 86.3   cigarettes shipped or transported into this state during the 
 86.4   preceding calendar month.  Returns must be made in the form and 
 86.5   manner prescribed by the commissioner and must contain any other 
 86.6   information required by the commissioner.  The return must be 
 86.7   accompanied by a remittance for the full unpaid tax liability 
 86.8   shown by it.  The return for the May liability and 85 percent of 
 86.9   the estimated June liability is due on the date payment of the 
 86.10  tax is due.  For distributors subject to the accelerated tax 
 86.11  payment requirements in subdivision 10, the return for the May 
 86.12  liability is due two business days before June 30th of the year 
 86.13  and the return for the June liability is due on or before August 
 86.14  18th of the year. 
 86.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 86.16  following final enactment. 
 86.17     Sec. 11.  Minnesota Statutes 2003 Supplement, section 
 86.18  297F.09, subdivision 2, is amended to read: 
 86.19     Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
 86.20  On or before the 18th day of each calendar month, a distributor 
 86.21  with a place of business in this state shall file a return with 
 86.22  the commissioner showing the quantity and wholesale sales price 
 86.23  of each tobacco product: 
 86.24     (1) brought, or caused to be brought, into this state for 
 86.25  sale; and 
 86.26     (2) made, manufactured, or fabricated in this state for 
 86.27  sale in this state, during the preceding calendar month.  
 86.28  Every licensed distributor outside this state shall in like 
 86.29  manner file a return showing the quantity and wholesale sales 
 86.30  price of each tobacco product shipped or transported to 
 86.31  retailers in this state to be sold by those retailers, during 
 86.32  the preceding calendar month.  Returns must be made in the form 
 86.33  and manner prescribed by the commissioner and must contain any 
 86.34  other information required by the commissioner.  The return must 
 86.35  be accompanied by a remittance for the full tax liability 
 86.36  shown.  The return for the May liability and 85 percent of the 
 87.1   estimated June liability is due on the date payment of the tax 
 87.2   is due.  For distributors subject to the accelerated tax payment 
 87.3   requirements in subdivision 10, the return for the May liability 
 87.4   is due two business days before June 30th of the year and the 
 87.5   return for the June liability is due on or before August 18th of 
 87.6   the year. 
 87.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 87.8   following final enactment. 
 87.9      Sec. 12.  Minnesota Statutes 2002, section 297I.01, is 
 87.10  amended by adding a subdivision to read: 
 87.11     Subd. 13a.  [REINSURANCE.] "Reinsurance" is insurance 
 87.12  whereby an insurance company, for a consideration, agrees to 
 87.13  indemnify another insurance company against all or part of the 
 87.14  loss which the latter may sustain under the policy or policies 
 87.15  which it has issued. 
 87.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 87.17  following final enactment. 
 87.18     Sec. 13.  Minnesota Statutes 2002, section 297I.05, 
 87.19  subdivision 4, is amended to read: 
 87.20     Subd. 4.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
 87.21  TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 
 87.22  tax is imposed on mutual property and casualty companies that 
 87.23  had total assets greater than $5,000,000 at the end of the 
 87.24  calendar year but that had total assets less than $1,600,000,000 
 87.25  on December 31, 1989.  The rate of tax is equal to: 
 87.26     (1) two percent of gross premiums less return premiums on 
 87.27  all direct business received by the insurer or agents of the 
 87.28  insurer in Minnesota for life insurance, in cash or otherwise, 
 87.29  during the year; and 
 87.30     (2) 1.26 percent of gross premiums less return premiums on 
 87.31  all other direct business received by the insurer or agents of 
 87.32  the insurer in Minnesota, in cash or otherwise, during the year. 
 87.33     <b>[EFFECTIVE DATE.]</b> This section is effective for returns, 
 87.34  taxes, surcharges, and estimated payments required to be filed 
 87.35  or paid for tax years beginning on or after January 1, 2004. 
 87.36     Sec. 14.  Minnesota Statutes 2002, section 297I.05, 
 88.1   subdivision 5, is amended to read: 
 88.2      Subd. 5.  [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 
 88.3   HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 
 88.4   SERVICE NETWORKS.] (a) Health maintenance organizations, 
 88.5   community integrated service networks, and nonprofit health care 
 88.6   service plan corporations are exempt from the tax imposed under 
 88.7   this section for premiums received in calendar years 2001 to 
 88.8   2003. 
 88.9      (b) For calendar years after 2003, A tax is imposed on 
 88.10  health maintenance organizations, community integrated service 
 88.11  networks, and nonprofit health care service plan corporations.  
 88.12  The rate of tax is equal to one percent of gross premiums less 
 88.13  return premiums on all direct business received by the 
 88.14  organization, network, or corporation or its agents in 
 88.15  Minnesota, in cash or otherwise, in the calendar year. 
 88.16     (c) In approving the premium rates as required in sections 
 88.17  62L.08, subdivision 8, and 62A.65, subdivision 3, the 
 88.18  commissioners of health and commerce shall ensure that any 
 88.19  exemption from tax as described in paragraph (a) is reflected in 
 88.20  the premium rate. 
 88.21     (d) (b) The commissioner shall deposit all revenues, 
 88.22  including penalties and interest, collected under this chapter 
 88.23  from health maintenance organizations, community integrated 
 88.24  service networks, and nonprofit health service plan corporations 
 88.25  in the health care access fund.  Refunds of overpayments of tax 
 88.26  imposed by this subdivision must be paid from the health care 
 88.27  access fund.  There is annually appropriated from the health 
 88.28  care access fund to the commissioner the amount necessary to 
 88.29  make any refunds of the tax imposed under this subdivision. 
 88.30     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2004.
 88.31     Sec. 15.  [REPEALER.] 
 88.32     Minnesota Statutes 2002, section 297E.12, subdivision 10, 
 88.33  is repealed effective the day following final enactment. 
 88.34                             ARTICLE 6 
 88.35                      MISCELLANEOUS TECHNICAL 
 88.36     Section 1.  Minnesota Statutes 2002, section 270.65, is 
 89.1   amended to read: 
 89.2      270.65 [DATE OF ASSESSMENT; DEFINITION.] 
 89.3      For purposes of taxes administered by the commissioner, the 
 89.4   term "date of assessment" means the date a liability reported on 
 89.5   a return was entered into the records of the commissioner or the 
 89.6   date a return should have been filed, whichever is later; or, in 
 89.7   the case of taxes determined by the commissioner, "date of 
 89.8   assessment" means the date of the order assessing taxes or date 
 89.9   of the return made by the commissioner; or, in the case of an 
 89.10  amended return filed by the taxpayer, the assessment date is the 
 89.11  date additional liability reported on the return, if any, was 
 89.12  entered into the records of the commissioner; or, in the case of 
 89.13  a consent agreement signed by the taxpayer under section 270.67, 
 89.14  subdivision 3, the assessment date is the notice date shown on 
 89.15  the agreement; or, in the case of a check from a taxpayer that 
 89.16  is dishonored and results in an erroneous refund being given to 
 89.17  the taxpayer, remittance of the check is deemed to be an 
 89.18  assessment and the "date of assessment" is the date the check 
 89.19  was received by the commissioner. 
 89.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 89.21  following final enactment. 
 89.22     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
 89.23  289A.19, subdivision 4, is amended to read: 
 89.24     Subd. 4.  [ESTATE TAX RETURNS.] When in the commissioner's 
 89.25  judgment good cause exists, the commissioner may extend the time 
 89.26  for filing an estate tax return for not more than six months.  
 89.27  When an extension to file the federal estate tax return has been 
 89.28  granted under section 6081 of the Internal Revenue Code, the 
 89.29  time for filing the estate tax return is extended for that 
 89.30  period.  If the estate requests an extension to file an estate 
 89.31  tax return within the time provided in section 289A.18, 
 89.32  subdivision 3, the commissioner shall extend the time for filing 
 89.33  the estate tax return for six months. 
 89.34     <b>[EFFECTIVE DATE.]</b> This section is effective for estates of 
 89.35  decedents dying after December 31, 2003. 
 89.36     Sec. 3.  Minnesota Statutes 2002, section 289A.37, 
 90.1   subdivision 5, is amended to read: 
 90.2      Subd. 5.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
 90.3   sent postage prepaid by United States mail to the taxpayer at 
 90.4   the taxpayer's last known address, or sent by electronic mail to 
 90.5   the taxpayer's last known electronic mailing address as provided 
 90.6   for in section 325L.08, is sufficient even if the taxpayer is 
 90.7   deceased or is under a legal disability, or, in the case of a 
 90.8   corporation, has terminated its existence, unless the department 
 90.9   has been provided with a new address by a party authorized to 
 90.10  receive notices of assessment. 
 90.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 90.12  following final enactment. 
 90.13     Sec. 4.  Minnesota Statutes 2002, section 289A.60, 
 90.14  subdivision 6, is amended to read: 
 90.15     Subd. 6.  [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT 
 90.16  RETURN, EVASION.] If a person, with intent to evade or defeat a 
 90.17  tax or payment of tax, fails to file a return, files a false or 
 90.18  fraudulent return, or attempts in any other manner to evade or 
 90.19  defeat a tax or payment of tax, there is imposed on the person a 
 90.20  penalty equal to 50 percent of the tax, less amounts paid by the 
 90.21  person on the basis of the false or fraudulent return, if any, 
 90.22  due for the period to which the return related.  
 90.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 90.24  following final enactment. 
 90.25     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
 90.26  290.01, subdivision 19a, is amended to read: 
 90.27     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 90.28  individuals, estates, and trusts, there shall be added to 
 90.29  federal taxable income: 
 90.30     (1)(i) interest income on obligations of any state other 
 90.31  than Minnesota or a political or governmental subdivision, 
 90.32  municipality, or governmental agency or instrumentality of any 
 90.33  state other than Minnesota exempt from federal income taxes 
 90.34  under the Internal Revenue Code or any other federal statute; 
 90.35  and 
 90.36     (ii) exempt-interest dividends as defined in section 
 91.1   852(b)(5) of the Internal Revenue Code, except the portion of 
 91.2   the exempt-interest dividends derived from interest income on 
 91.3   obligations of the state of Minnesota or its political or 
 91.4   governmental subdivisions, municipalities, governmental agencies 
 91.5   or instrumentalities, but only if the portion of the 
 91.6   exempt-interest dividends from such Minnesota sources paid to 
 91.7   all shareholders represents 95 percent or more of the 
 91.8   exempt-interest dividends that are paid by the regulated 
 91.9   investment company as defined in section 851(a) of the Internal 
 91.10  Revenue Code, or the fund of the regulated investment company as 
 91.11  defined in section 851(g) of the Internal Revenue Code, making 
 91.12  the payment; and 
 91.13     (iii) for the purposes of items (i) and (ii), interest on 
 91.14  obligations of an Indian tribal government described in section 
 91.15  7871(c) of the Internal Revenue Code shall be treated as 
 91.16  interest income on obligations of the state in which the tribe 
 91.17  is located; 
 91.18     (2) the amount of income taxes paid or accrued within the 
 91.19  taxable year under this chapter and income the amount of taxes 
 91.20  based on net income paid to any other state or to any province 
 91.21  or territory of Canada, to the extent allowed as a deduction 
 91.22  under section 63(d) of the Internal Revenue Code, but the 
 91.23  addition may not be more than the amount by which the itemized 
 91.24  deductions as allowed under section 63(d) of the Internal 
 91.25  Revenue Code exceeds the amount of the standard deduction as 
 91.26  defined in section 63(c) of the Internal Revenue Code.  For the 
 91.27  purpose of this paragraph, the disallowance of itemized 
 91.28  deductions under section 68 of the Internal Revenue Code of 
 91.29  1986, income tax is the last itemized deduction disallowed; 
 91.30     (3) the capital gain amount of a lump sum distribution to 
 91.31  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 91.32  Reform Act of 1986, Public Law 99-514, applies; 
 91.33     (4) the amount of income taxes paid or accrued within the 
 91.34  taxable year under this chapter and income taxes based on net 
 91.35  income paid to any other state or any province or territory of 
 91.36  Canada, to the extent allowed as a deduction in determining 
 92.1   federal adjusted gross income.  For the purpose of this 
 92.2   paragraph, income taxes do not include the taxes imposed by 
 92.3   sections 290.0922, subdivision 1, paragraph (b), 290.9727, 
 92.4   290.9728, and 290.9729; 
 92.5      (5) the amount of expense, interest, or taxes disallowed 
 92.6   pursuant to section 290.10; 
 92.7      (6) the amount of a partner's pro rata share of net income 
 92.8   which does not flow through to the partner because the 
 92.9   partnership elected to pay the tax on the income under section 
 92.10  6242(a)(2) of the Internal Revenue Code; and 
 92.11     (7) 80 percent of the depreciation deduction allowed under 
 92.12  section 168(k) of the Internal Revenue Code.  For purposes of 
 92.13  this clause, if the taxpayer has an activity that in the taxable 
 92.14  year generates a deduction for depreciation under section 168(k) 
 92.15  and the activity generates a loss for the taxable year that the 
 92.16  taxpayer is not allowed to claim for the taxable year, "the 
 92.17  depreciation allowed under section 168(k)" for the taxable year 
 92.18  is limited to excess of the depreciation claimed by the activity 
 92.19  under section 168(k) over the amount of the loss from the 
 92.20  activity that is not allowed in the taxable year.  In succeeding 
 92.21  taxable years when the losses not allowed in the taxable year 
 92.22  are allowed, the depreciation under section 168(k) is allowed. 
 92.23     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 92.24  beginning after December 31, 2003. 
 92.25     Sec. 6.  Minnesota Statutes 2002, section 290.06, 
 92.26  subdivision 22, is amended to read: 
 92.27     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
 92.28  taxpayer who is liable for taxes based on or measured by net 
 92.29  income to another state, as provided in paragraphs (b) through 
 92.30  (f), upon income allocated or apportioned to Minnesota, is 
 92.31  entitled to a credit for the tax paid to another state if the 
 92.32  tax is actually paid in the taxable year or a subsequent taxable 
 92.33  year.  A taxpayer who is a resident of this state pursuant to 
 92.34  section 290.01, subdivision 7, clause (2) paragraph (b), and who 
 92.35  is subject to income tax as a resident in the state of the 
 92.36  individual's domicile is not allowed this credit unless the 
 93.1   state of domicile does not allow a similar credit. 
 93.2      (b) For an individual, estate, or trust, the credit is 
 93.3   determined by multiplying the tax payable under this chapter by 
 93.4   the ratio derived by dividing the income subject to tax in the 
 93.5   other state that is also subject to tax in Minnesota while a 
 93.6   resident of Minnesota by the taxpayer's federal adjusted gross 
 93.7   income, as defined in section 62 of the Internal Revenue Code, 
 93.8   modified by the addition required by section 290.01, subdivision 
 93.9   19a, clause (1), and the subtraction allowed by section 290.01, 
 93.10  subdivision 19b, clause (1), to the extent the income is 
 93.11  allocated or assigned to Minnesota under sections 290.081 and 
 93.12  290.17.  
 93.13     (c) If the taxpayer is an athletic team that apportions all 
 93.14  of its income under section 290.17, subdivision 5, the credit is 
 93.15  determined by multiplying the tax payable under this chapter by 
 93.16  the ratio derived from dividing the total net income subject to 
 93.17  tax in the other state by the taxpayer's Minnesota taxable 
 93.18  income. 
 93.19     (d) The credit determined under paragraph (b) or (c) shall 
 93.20  not exceed the amount of tax so paid to the other state on the 
 93.21  gross income earned within the other state subject to tax under 
 93.22  this chapter, nor shall the allowance of the credit reduce the 
 93.23  taxes paid under this chapter to an amount less than what would 
 93.24  be assessed if such income amount was excluded from taxable net 
 93.25  income. 
 93.26     (e) In the case of the tax assessed on a lump sum 
 93.27  distribution under section 290.032, the credit allowed under 
 93.28  paragraph (a) is the tax assessed by the other state on the lump 
 93.29  sum distribution that is also subject to tax under section 
 93.30  290.032, and shall not exceed the tax assessed under section 
 93.31  290.032.  To the extent the total lump sum distribution defined 
 93.32  in section 290.032, subdivision 1, includes lump sum 
 93.33  distributions received in prior years or is all or in part an 
 93.34  annuity contract, the reduction to the tax on the lump sum 
 93.35  distribution allowed under section 290.032, subdivision 2, 
 93.36  includes tax paid to another state that is properly apportioned 
 94.1   to that distribution. 
 94.2      (f) If a Minnesota resident reported an item of income to 
 94.3   Minnesota and is assessed tax in such other state on that same 
 94.4   income after the Minnesota statute of limitations has expired, 
 94.5   the taxpayer shall receive a credit for that year under 
 94.6   paragraph (a), notwithstanding any statute of limitations to the 
 94.7   contrary.  The claim for the credit must be submitted within one 
 94.8   year from the date the taxes were paid to the other state.  The 
 94.9   taxpayer must submit sufficient proof to show entitlement to a 
 94.10  credit. 
 94.11     (g) For the purposes of this subdivision, a resident 
 94.12  shareholder of a corporation treated as an "S" corporation under 
 94.13  section 290.9725, must be considered to have paid a tax imposed 
 94.14  on the shareholder in an amount equal to the shareholder's pro 
 94.15  rata share of any net income tax paid by the S corporation to 
 94.16  another state.  For the purposes of the preceding sentence, the 
 94.17  term "net income tax" means any tax imposed on or measured by a 
 94.18  corporation's net income. 
 94.19     (h) For the purposes of this subdivision, a resident 
 94.20  partner of an entity taxed as a partnership under the Internal 
 94.21  Revenue Code must be considered to have paid a tax imposed on 
 94.22  the partner in an amount equal to the partner's pro rata share 
 94.23  of any net income tax paid by the partnership to another state.  
 94.24  For purposes of the preceding sentence, the term "net income" 
 94.25  tax means any tax imposed on or measured by a partnership's net 
 94.26  income. 
 94.27     (i) For the purposes of this subdivision, "another state": 
 94.28     (1) includes: 
 94.29     (i) the District of Columbia; and 
 94.30     (ii) a province or territory of Canada; but 
 94.31     (2) excludes Puerto Rico and the several territories 
 94.32  organized by Congress. 
 94.33     (j) The limitations on the credit in paragraphs (b), (c), 
 94.34  and (d), are imposed on a state by state basis. 
 94.35     (k) For a tax imposed by a province or territory of Canada, 
 94.36  the tax for purposes of this subdivision is the excess of the 
 95.1   tax over the amount of the foreign tax credit allowed under 
 95.2   section 27 of the Internal Revenue Code.  In determining the 
 95.3   amount of the foreign tax credit allowed, the net income taxes 
 95.4   imposed by Canada on the income are deducted first.  Any 
 95.5   remaining amount of the allowable foreign tax credit reduces the 
 95.6   provincial or territorial tax that qualifies for the credit 
 95.7   under this subdivision. 
 95.8      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 95.9   beginning after December 31, 2003. 
 95.10     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
 95.11  290.0674, subdivision 1, is amended to read: 
 95.12     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
 95.13  a credit against the tax imposed by this chapter in an amount 
 95.14  equal to 75 percent of the amount paid for education-related 
 95.15  expenses for a qualifying child in kindergarten through grade 
 95.16  12.  For purposes of this section, "education-related expenses" 
 95.17  means: 
 95.18     (1) fees or tuition for instruction by an instructor under 
 95.19  section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 
 95.20  (5), or a member of the Minnesota Music Teachers Association, 
 95.21  and who is not a lineal ancestor or sibling of the dependent for 
 95.22  instruction outside the regular school day or school year, 
 95.23  including tutoring, driver's education offered as part of school 
 95.24  curriculum, regardless of whether it is taken from a public or 
 95.25  private entity or summer camps, in grade or age appropriate 
 95.26  curricula that supplement curricula and instruction available 
 95.27  during the regular school year, that assists a dependent to 
 95.28  improve knowledge of core curriculum areas or to expand 
 95.29  knowledge and skills under the graduation rule under section 
 95.30  120B.02, paragraph (e), clauses (1) to (7), (9), and (10) 
 95.31  required academic standards under section 120B.021, subdivision 
 95.32  1, and the elective standard under section 120B.022, subdivision 
 95.33  1, clause (3), and that do not include the teaching of religious 
 95.34  tenets, doctrines, or worship, the purpose of which is to 
 95.35  instill such tenets, doctrines, or worship; 
 95.36     (2) expenses for textbooks, including books and other 
 96.1   instructional materials and equipment purchased or leased for 
 96.2   use in elementary and secondary schools in teaching only those 
 96.3   subjects legally and commonly taught in public elementary and 
 96.4   secondary schools in this state.  "Textbooks" does not include 
 96.5   instructional books and materials used in the teaching of 
 96.6   religious tenets, doctrines, or worship, the purpose of which is 
 96.7   to instill such tenets, doctrines, or worship, nor does it 
 96.8   include books or materials for extracurricular activities 
 96.9   including sporting events, musical or dramatic events, speech 
 96.10  activities, driver's education, or similar programs; 
 96.11     (3) a maximum expense of $200 per family for personal 
 96.12  computer hardware, excluding single purpose processors, and 
 96.13  educational software that assists a dependent to improve 
 96.14  knowledge of core curriculum areas or to expand knowledge and 
 96.15  skills under the graduation rule under section 120B.02 required 
 96.16  academic standards under section 120B.021, subdivision 1, and 
 96.17  the elective standard under section 120B.022, subdivision 1, 
 96.18  clause (3), purchased for use in the taxpayer's home and not 
 96.19  used in a trade or business regardless of whether the computer 
 96.20  is required by the dependent's school; and 
 96.21     (4) the amount paid to others for transportation of a 
 96.22  qualifying child attending an elementary or secondary school 
 96.23  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
 96.24  Wisconsin, wherein a resident of this state may legally fulfill 
 96.25  the state's compulsory attendance laws, which is not operated 
 96.26  for profit, and which adheres to the provisions of the Civil 
 96.27  Rights Act of 1964 and chapter 363A. 
 96.28     For purposes of this section, "qualifying child" has the 
 96.29  meaning given in section 32(c)(3) of the Internal Revenue Code. 
 96.30     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 96.31  beginning after December 31, 2003. 
 96.32     Sec. 8.  Minnesota Statutes 2002, section 290.92, 
 96.33  subdivision 1, is amended to read: 
 96.34     Subdivision 1.  [DEFINITIONS.] (1)  [WAGES.] For purposes 
 96.35  of this section, the term "wages" means the same as that term is 
 96.36  defined in section 3401(a) and (f) of the Internal Revenue Code. 
 97.1      (2)  [PAYROLL PERIOD.] For purposes of this section the 
 97.2   term "payroll period" means a period for which a payment of 
 97.3   wages is ordinarily made to the employee by the employee's 
 97.4   employer, and the term "miscellaneous payroll period" means a 
 97.5   payroll period other than a daily, weekly, biweekly, 
 97.6   semimonthly, monthly, quarterly, semiannual, or annual payroll 
 97.7   period. 
 97.8      (3)  [EMPLOYEE.] For purposes of this section the term 
 97.9   "employee" means any resident individual performing services for 
 97.10  an employer, either within or without, or both within and 
 97.11  without the state of Minnesota, and every nonresident individual 
 97.12  performing services within the state of Minnesota, the 
 97.13  performance of which services constitute, establish, and 
 97.14  determine the relationship between the parties as that of 
 97.15  employer and employee.  As used in the preceding sentence, the 
 97.16  term "employee" includes an officer of a corporation, and an 
 97.17  officer, employee, or elected official of the United States, a 
 97.18  state, or any political subdivision thereof, or the District of 
 97.19  Columbia, or any agency or instrumentality of any one or more of 
 97.20  the foregoing. 
 97.21     (4)  [EMPLOYER.] For purposes of this section the term 
 97.22  "employer" means any person, including individuals, fiduciaries, 
 97.23  estates, trusts, partnerships, limited liability companies, and 
 97.24  corporations transacting business in or deriving any income from 
 97.25  sources within the state of Minnesota for whom an individual 
 97.26  performs or performed any service, of whatever nature, as the 
 97.27  employee of such person, except that if the person for whom the 
 97.28  individual performs or performed the services does not have 
 97.29  legal control of the payment of the wages for such services, the 
 97.30  term "employer," except for purposes of paragraph (1), means the 
 97.31  person having legal control of the payment of such wages.  As 
 97.32  used in the preceding sentence, the term "employer" includes any 
 97.33  corporation, individual, estate, trust, or organization which is 
 97.34  exempt from taxation under section 290.05 and further includes, 
 97.35  but is not limited to, officers of corporations who have legal 
 97.36  control, either individually or jointly with another or others, 
 98.1   of the payment of the wages. 
 98.2      (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 
 98.3   purposes of this section, the term "number of withholding 
 98.4   exemptions claimed" means the number of withholding exemptions 
 98.5   claimed in a withholding exemption certificate in effect under 
 98.6   subdivision 5, except that if no such certificate is in effect, 
 98.7   the number of withholding exemptions claimed shall be considered 
 98.8   to be zero. 
 98.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 98.10  following final enactment. 
 98.11     Sec. 9.  Minnesota Statutes 2002, section 290C.05, is 
 98.12  amended to read: 
 98.13     290C.05 [ANNUAL CERTIFICATION.] 
 98.14     On or before July 1 of each year, beginning with the year 
 98.15  after the claimant has received an approved application, the 
 98.16  commissioner shall send each claimant enrolled under the 
 98.17  sustainable forest incentive program a certification form.  The 
 98.18  claimant must sign the certification, attesting that the 
 98.19  requirements and conditions for continued enrollment in the 
 98.20  program are currently being met, and must return the signed 
 98.21  certification form to the commissioner by August 15 of that same 
 98.22  year.  Failure to If the claimant does not return an annual 
 98.23  certification form by the due date shall result in removal of 
 98.24  the lands from the provisions of the sustainable forest 
 98.25  incentive program, and the imposition of any applicable removal 
 98.26  penalty, the provisions in section 290C.11 apply.  The claimant 
 98.27  may appeal the removal and any associated penalty according to 
 98.28  the procedures and within the time allowed under this chapter. 
 98.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 98.30  following final enactment. 
 98.31     Sec. 10.  [290C.055] [LENGTH OF COVENANT.] 
 98.32     The covenant remains in effect for a minimum of eight 
 98.33  years.  If land is removed from the program after it has been 
 98.34  enrolled for less than four years, the covenant remains in 
 98.35  effect for eight years from the date recorded. 
 98.36     In the case of land that has been enrolled for more than 
 99.1   four years and is removed from the program for any reason, there 
 99.2   is a four-year waiting period to end the covenant.  The covenant 
 99.3   remains in effect until January 1 of the fifth calendar year 
 99.4   that begins after the date that: 
 99.5      (1) the commissioner receives notification from the 
 99.6   claimant that the claimant wishes to be removed from the program 
 99.7   under section 290C.10, or 
 99.8      (2) the date that land is removed from the program under 
 99.9   section 290C.11. 
 99.10     Notwithstanding the other provisions of this section, the 
 99.11  covenant is terminated at the same time that land is removed 
 99.12  from the program due to acquisition of title or possession for a 
 99.13  public purpose under section 290C.10. 
 99.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 99.15  following final enactment. 
 99.16     Sec. 11.  Minnesota Statutes 2002, section 325D.33, 
 99.17  subdivision 6, is amended to read: 
 99.18     Subd. 6.  [VIOLATIONS.] If the commissioner determines that 
 99.19  a distributor is violating any provision of this chapter, the 
 99.20  commissioner must give the distributor a written warning 
 99.21  explaining the violation and an explanation of what must be done 
 99.22  to comply with this chapter.  Within ten days of issuance of the 
 99.23  warning, the distributor must notify the commissioner that the 
 99.24  distributor has complied with the commissioner's recommendation 
 99.25  or request that the commissioner set the issue for a hearing 
 99.26  pursuant to chapter 14.  If a hearing is requested, the hearing 
 99.27  shall be scheduled within 20 days of the request and the 
 99.28  recommendation of the administrative law judge shall be issued 
 99.29  within five working days of the close of the hearing.  The 
 99.30  commissioner's final determination shall be issued within five 
 99.31  working days of the receipt of the administrative law judge's 
 99.32  recommendation.  If the commissioner's final determination is 
 99.33  adverse to the distributor and the distributor does not comply 
 99.34  within ten days of receipt of the commissioner's final 
 99.35  determination, the commissioner may order the distributor to 
 99.36  immediately cease the stamping of cigarettes.  As soon as 
100.1   practicable after the order, the commissioner must remove the 
100.2   meter and any unapplied cigarette stamps from the premises of 
100.3   the distributor. 
100.4      If within ten days of issuance of the written warning the 
100.5   distributor has not complied with the commissioner's 
100.6   recommendation or requested a hearing, the commissioner may 
100.7   order the distributor to immediately cease the stamping of 
100.8   cigarettes and remove the meter and unapplied stamps from the 
100.9   distributor's premises. 
100.10     If, within any 12-month period, the commissioner has issued 
100.11  three written warnings to any distributor, even if the 
100.12  distributor has complied within ten days, the commissioner shall 
100.13  notify the distributor of the commissioner's intent to revoke 
100.14  the distributor's license for a continuing course of conduct 
100.15  contrary to this chapter.  For purposes of this paragraph, a 
100.16  written warning that was ultimately resolved by removal of the 
100.17  warning by the commissioner is not deemed to be a warning.  The 
100.18  commissioner must notify the distributor of the date and time of 
100.19  a hearing pursuant to chapter 14 at least 20 days before the 
100.20  hearing is held.  The hearing must provide an opportunity for 
100.21  the distributor to show cause why the license should not be 
100.22  revoked.  If the commissioner revokes a distributor's license, 
100.23  the commissioner shall not issue a new license to that 
100.24  distributor for 180 days. 
100.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
100.26  following final enactment. 
100.27     Sec. 12.  Minnesota Statutes 2002, section 473.843, 
100.28  subdivision 5, is amended to read: 
100.29     Subd. 5.  [PENALTIES; ENFORCEMENT.] The audit, penalty, and 
100.30  enforcement provisions applicable to corporate franchise taxes 
100.31  imposed under chapter 290 apply to the fees imposed under this 
100.32  section.  The commissioner of revenue shall administer the 
100.33  provisions.  
100.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
100.35  following final enactment. 
100.36     Sec. 13.  [REPEALER.] 
101.1      Minnesota Rules, parts 8093.2000 and 8093.3000, are 
101.2   repealed. 
101.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
101.4   following final enactment.