1.1 	 A bill for an act
1.2 	 relating to financing and operation of state and local government; making policy, 
1.3 	technical, administrative, enforcement, collection, refund, and other changes 
1.4 	to income, franchise, property, sales and use, health care provider, cigarette 
1.5 	and tobacco products, insurance premiums, aggregate removal, occupation, net 
1.6 	proceeds, and production taxes, and other taxes and tax-related provisions; 
1.7 	establishing a regional investment credit; establishing credits for carsharing and 
1.8 	historic preservation; providing an income tax checkoff; providing a refund for 
1.9 	transit passes; authorizing sales tax exemptions; authorizing local government 
1.10 	sales taxes; authorizing distributions of tax proceeds; changing provisions 
1.11 	relating to fiscal disparities, education financing, state debt collection procedures, 
1.12 	sustainable forest incentives programs, and business subsidy provisions; 
1.13 	conforming provisions to certain changes in federal law; changing powers and 
1.14 	duties of certain local governments and authorities and state departments or 
1.15 	agencies; providing for payments of certain aids to local units of government; 
1.16 	providing for certain school levies; providing for issuance of obligations by 
1.17 	local governments, and use of the proceeds of the debt; requiring transfer of a 
1.18 	parking facility; changing tax increment financing and abatement provisions, 
1.19 	and providing authorities to certain districts; changing provisions relating to 
1.20 	tax preparers and providing for exchange of data; providing for publication of 
1.21 	tax preparers subject to penalties; changing provisions relating to certificates 
1.22 	of title of motor vehicles and manufactured homes; changing electronic filing 
1.23 	provisions; prohibiting misrepresentation of employment; imposing requirements 
1.24 	related to JOBZ; providing for studies and reports; providing penalties; creating 
1.25 	an education reserve account; providing for allocation and transfers of funds; 
1.26 	appropriating money; amending Minnesota Statutes 2004, sections 4A.02; 15.06, 
1.27 	subdivision 6; 16D.10; 103C.331, subdivision 16; 116J.993, subdivision 3, by 
1.28 	adding a subdivision; 116J.994, subdivisions 4, 5, 9, by adding a subdivision; 
1.29 	118A.05, subdivision 5; 123B.53, subdivision 4, by adding a subdivision; 
1.30 	123B.55; 123B.71, subdivision 9; 126C.17, subdivisions 6, 7, 9, by adding 
1.31 	subdivisions; 161.1231, by adding a subdivision; 168A.05, subdivisions 1a, 
1.32 	1b; 270.11, subdivision 2; 270.16, subdivision 2; 270.30, subdivisions 1, 5, 6, 
1.33 	8, by adding subdivisions; 270.65; 270.67, subdivision 4; 270.69, subdivision 
1.34 	4; 270A.03, subdivision 5; 272.01, subdivision 2; 272.02, subdivisions 1a, 
1.35 	7, 22, 47, 56, by adding subdivisions; 272.0212, subdivisions 1, 2; 272.029, 
1.36 	subdivisions 4, 6; 273.11, subdivisions 1a, 8, by adding subdivisions; 273.112, 
1.37 	subdivision 3; 273.123, by adding a subdivision; 273.124, subdivisions 1, 3, 6, 8, 
1.38 	13, 14, 21; 273.13, subdivisions 22, 23, 25; 273.1315; 273.1384, subdivision 3; 
2.1 	273.19, subdivision 1a; 273.372; 274.014, subdivisions 2, 3; 274.14; 275.065, 
2.2 	subdivisions 1a, 3, by adding subdivisions; 275.066; 275.07, subdivisions 1, 4; 
2.3 	275.70, subdivision 5; 276.04, subdivision 2; 276.112; 276A.01, subdivision 7; 
2.4 	278.03, subdivision 1; 279.01, subdivision 1, by adding a subdivision; 282.016; 
2.5 	282.08; 282.15; 282.21; 282.224; 282.301; 287.04; 289A.02, subdivision 7; 
2.6 	289A.08, subdivisions 3, 7, 16; 289A.11, subdivision 1; 289A.18, subdivisions 1, 
2.7 	4, by adding a subdivision; 289A.19, subdivision 4; 289A.20, subdivisions 2, 4; 
2.8 	289A.31, subdivision 2; 289A.37, subdivision 5; 289A.38, subdivisions 6, 7, by 
2.9 	adding a subdivision; 289A.39, subdivision 1; 289A.40, subdivision 2, by adding 
2.10 	subdivisions; 289A.50, subdivision 1a; 289A.60, subdivisions 2a, 6, 11, 12, 13; 
2.11 	290.01, subdivisions 7, 19, 19a, 19b, 19c, 19d, 31; 290.032, subdivisions 1, 2; 
2.12 	290.05, subdivision 1; 290.06, subdivisions 2c, 22, 28, by adding subdivisions; 
2.13 	290.067, subdivisions 1, 2a; 290.0671, subdivision 1; 290.0674, subdivisions 1, 
2.14 	2; 290.0675, subdivision 1; 290.091, subdivisions 2, 3; 290.0922, subdivision 
2.15 	2; 290.10; 290.17, subdivision 4; 290.191, subdivision 1; 290.92, subdivisions 
2.16 	1, 4b; 290A.03, subdivisions 3, 15; 290A.07, by adding a subdivision; 
2.17 	290A.19; 290B.05, subdivision 3; 290C.05; 290C.10; 291.005, subdivision 
2.18 	1; 291.03, subdivision 1; 295.50, subdivision 3, by adding a subdivision; 
2.19 	295.53, subdivision 1; 295.60, subdivision 3; 296A.09, by adding a subdivision; 
2.20 	296A.22, by adding a subdivision; 297A.61, subdivisions 3, 4, by adding a 
2.21 	subdivision; 297A.64, subdivision 4; 297A.668, subdivisions 1, 5; 297A.67, 
2.22 	subdivision 2, by adding subdivisions; 297A.68, subdivisions 2, 4, 5, 19, 35, 
2.23 	39, by adding subdivisions; 297A.70, subdivision 8, by adding a subdivision; 
2.24 	297A.71, by adding subdivisions; 297A.75, subdivisions 1, 2, 3; 297A.83, 
2.25 	subdivision 1; 297A.87, subdivisions 2, 3; 297A.99, subdivisions 4, 7; 297B.03; 
2.26 	297E.01, subdivisions 5, 7, by adding subdivisions; 297E.02, subdivision 4; 
2.27 	297E.06, subdivision 2; 297E.07; 297F.01, by adding a subdivision; 297F.08, 
2.28 	subdivision 12, by adding a subdivision; 297F.09, subdivisions 1, 2, by adding a 
2.29 	subdivision; 297F.14, subdivision 4; 297G.09, by adding a subdivision; 297I.01, 
2.30 	by adding a subdivision; 297I.05, subdivisions 4, 5, by adding a subdivision; 
2.31 	298.001, by adding subdivisions; 298.01, subdivisions 3, 3a, 4; 298.015, 
2.32 	subdivisions 1, 2; 298.016, subdivision 4; 298.018; 298.223, subdivision 1; 
2.33 	298.24, subdivision 1; 298.28, subdivisions 9b, 10; 298.2961, by adding a 
2.34 	subdivision; 298.75, subdivisions 1, 2; 325D.33, subdivision 6; 343.11; 366.011; 
2.35 	366.012; 373.01, subdivision 3; 373.40, subdivision 1; 373.45, subdivision 
2.36 	7; 400.04, by adding a subdivision; 410.32; 412.301; 428A.101; 428A.21; 
2.37 	429.031, by adding a subdivision; 429.051; 469.034, subdivision 2; 469.158; 
2.38 	469.169, by adding a subdivision; 469.1735, subdivision 3; 469.174, by adding a 
2.39 	subdivision; 469.175, subdivisions 1, 4, 6; 469.176, subdivision 1c, by adding 
2.40 	subdivisions; 469.1761, by adding a subdivision; 469.1763, subdivision 2; 
2.41 	469.1792; 469.310, subdivision 11; 473.39, by adding a subdivision; 473.843, 
2.42 	subdivisions 3, 5; 473F.02, subdivision 7; 473F.08, by adding subdivisions; 
2.43 	474A.061, subdivision 2c; 474A.131, subdivision 1; 475.51, subdivision 4; 
2.44 	475.52, subdivisions 1, 3, 4; 475.521, subdivisions 1, 2, 3, 4; 475.58, subdivision 
2.45 	3b; 477A.011, subdivisions 3, 36, 38; 477A.0124, subdivision 2; 477A.11, 
2.46 	subdivision 4, by adding a subdivision; 477A.12, subdivisions 1, 2; 477A.14, 
2.47 	subdivision 1; Laws 1991, chapter 291, article 8, section 27, subdivision 4; Laws 
2.48 	1994, chapter 587, article 9, section 20, subdivision 1; Laws 1994, chapter 587, 
2.49 	article 9, section 20, subdivision 2; Laws 1996, chapter 471, article 2, section 29; 
2.50 	Laws 1998, chapter 389, article 3, section 41; Laws 1998, chapter 389, article 3, 
2.51 	section 42, subdivision 2, as amended; Laws 1998, chapter 389, article 8, section 
2.52 	43, subdivision 3; Laws 1998, chapter 389, article 8, section 43, subdivision 
2.53 	4; Laws 1998, chapter 389, article 11, section 19, subdivision 3; Laws 1999, 
2.54 	chapter 243, article 4, section 18, subdivision 1; Laws 1999, chapter 243, article 
2.55 	4, section 18, subdivision 3; Laws 1999, chapter 243, article 4, section 18, 
2.56 	subdivision 4; Laws 2001, First Special Session chapter 5, article 3, section 8; 
2.57 	Laws 2001, First Special Session chapter 5, article 12, section 67; Laws 2001, 
2.58 	First Special Session chapter 5, article 12, section 82, as amended; Laws 2002, 
3.1 	chapter 377, article 3, section 4; Laws 2002, chapter 377, article 12, section 
3.2 	16, subdivision 1; Laws 2003, chapter 127, article 5, section 27; Laws 2003, 
3.3 	chapter 127, article 5, section 28; Laws 2003, chapter 127, article 12, section 38; 
3.4 	Laws 2003, First Special Session chapter 21, article 4, section 12, subdivision 
3.5 	11; Laws 2003, First Special Session chapter 21, article 5, section 13; Laws 
3.6 	2003, First Special Session chapter 21, article 6, section 9; proposing coding 
3.7 	for new law in Minnesota Statutes, chapters 103C; 174; 270; 273; 278; 290; 
3.8 	290C; 297A; 297F; 298; 325D; 325F; 462A; 473; repealing Minnesota Statutes 
3.9 	2004, sections 273.19, subdivision 5; 274.05; 275.15; 275.61, subdivision 2; 
3.10 	283.07; 289A.26, subdivision 2a; 289A.60, subdivision 21; 295.55, subdivision 
3.11 	4; 295.60, subdivision 4; 297A.99, subdivision 13; 297E.12, subdivision 
3.12 	10; 297F.09, subdivision 7; 297G.09, subdivision 6; 297I.35, subdivision 2; 
3.13 	297I.85, subdivision 7; 298.01, subdivisions 3c, 3d, 4d, 4e; 298.017; 473.39, 
3.14 	subdivision 1f; Laws 1975, chapter 287, section 5; Laws 1994, chapter 587, 
3.15 	article 9, section 20, subdivision 4; Laws 2003, chapter 127, article 9, section 
3.16 	9, subdivision 4; Minnesota Rules, parts 8093.2000; 8093.3000; 8130.0110, 
3.17 	subpart 4; 8130.0200, subparts 5, 6; 8130.0400, subpart 9; 8130.1200, subparts 
3.18 	5, 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1, 2; 8130.4200, 
3.19 	subpart 1; 8130.4400, subpart 3; 8130.5200; 8130.5600, subpart 3; 8130.5800, 
3.20 	subpart 5; 8130.7300, subpart 5; 8130.8800, subpart 4.
3.21 	 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

3.22 	 ARTICLE 1
3.23 	 INCOME TAX

3.24 	 Section 1. Minnesota Statutes 2004, section 289A.39, subdivision 1, is amended to 
3.25 	read:
3.26 		 Subdivision 1.Extensions for service members.  (a) The limitations of time 
3.27 	provided by this chapter, chapter 290 relating to income taxes, chapter 271 relating 
3.28 	to the Tax Court for filing returns, paying taxes, claiming refunds, commencing action 
3.29 	thereon, appealing to the Tax Court from orders relating to income taxes, and the filing of 
3.30 	petitions under chapter 278 that would otherwise be due May 15, 1996 May 1, 2004, and 
3.31 	appealing to the Supreme Court from decisions of the Tax Court relating to income taxes 
3.32 	are extended, as provided in section 7508 of the Internal Revenue Code.
3.33 	 (b) If a member of the National Guard or reserves is called to active duty in the 
3.34 	armed forces, the limitations of time provided by this chapter and chapters 290 and 
3.35 	290A relating to income taxes and claims for property tax refunds are extended by the 
3.36 	following period of time:
3.37 	 (1) in the case of an individual whose active service is in the United States, six 
3.38 	months; or
3.39 	 (2) in the case of an individual whose active service includes service abroad, the 
3.40 	period of initial service plus six months.
3.41 	 Nothing in this paragraph reduces the time within which an act is required or 
3.42 	permitted under paragraph (a).
4.1 	 (c) If an individual entitled to the benefit of paragraph (a) files a return during 
4.2 	the period disregarded under paragraph (a), interest must be paid on an overpayment 
4.3 	or refundable credit from the due date of the return, notwithstanding section 289A.56, 
4.4 	subdivision 2.
4.5 	 (d) The provisions of this subdivision apply to the spouse of an individual entitled to 
4.6 	the benefits of this subdivision with respect to a joint return filed by the spouses.

4.7 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.8 	December 31, 2002, and for property taxes payable after 2003.

4.9 	 Sec. 2. Minnesota Statutes 2004, section 290.01, subdivision 7, is amended to read:
4.10 		 Subd. 7.Resident.  (a) The term "resident" means any individual domiciled in 
4.11 	Minnesota, except that an individual is not a "resident" for the period of time that the 
4.12 	individual is either:
4.13 	 (1) on active duty stationed outside of Minnesota while in the armed forces of the 
4.14 	United States or the United Nations; or 
4.15 	 (2) a "qualified individual" as defined in section 911(d)(1) of the Internal Revenue 
4.16 	Code, if the qualified individual notifies the county within three months of moving out of 
4.17 	the country that homestead status be revoked for the Minnesota residence of the qualified 
4.18 	individual, and the property is not classified as a homestead while the individual remains a 
4.19 	qualified individual.
4.20 	 (b) "Resident" also means any individual domiciled outside the state who maintains 
4.21 	a place of abode in the state and spends in the aggregate more than one-half of the tax 
4.22 	year in Minnesota, unless:
4.23 	 (1) the individual or the spouse of the individual is in the armed forces of the United 
4.24 	States; or
4.25 	 (2) the individual is covered under the reciprocity provisions in section 290.081.
4.26 	 For purposes of this subdivision, presence within the state for any part of a calendar 
4.27 	day constitutes a day spent in the state.  Individuals shall keep adequate records to 
4.28 	substantiate the days spent outside the state.
4.29 	 The term "abode" means a dwelling maintained by an individual, whether or not 
4.30 	owned by the individual and whether or not occupied by the individual, and includes a 
4.31 	dwelling place owned or leased by the individual's spouse.
4.32 	 (c) Neither the commissioner nor any court shall consider charitable contributions 
4.33 	made by an individual within or without the state in determining if the individual is 
4.34 	domiciled in Minnesota.

5.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
5.2 	December 31, 2004.

5.3 	 Sec. 3. Minnesota Statutes 2004, section 290.01, subdivision 19a, is amended to read:
5.4 		 Subd. 19a.Additions to federal taxable income.  For individuals, estates, and 
5.5 	trusts, there shall be added to federal taxable income:
5.6 	 (1)(i) interest income on obligations of any state other than Minnesota or a political 
5.7 	or governmental subdivision, municipality, or governmental agency or instrumentality 
5.8 	of any state other than Minnesota exempt from federal income taxes under the Internal 
5.9 	Revenue Code or any other federal statute; and
5.10 	 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
5.11 	Code, except the portion of the exempt-interest dividends derived from interest income 
5.12 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
5.13 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
5.14 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
5.15 	95 percent or more of the exempt-interest dividends that are paid by the regulated 
5.16 	investment company as defined in section 851(a) of the Internal Revenue Code, or the 
5.17 	fund of the regulated investment company as defined in section 851(g) of the Internal 
5.18 	Revenue Code, making the payment; and
5.19 	 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
5.20 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
5.21 	interest income on obligations of the state in which the tribe is located;
5.22 	 (2) the amount of income taxes paid or accrued within the taxable year under this 
5.23 	chapter and income taxes paid to any other state or to any province or territory of Canada, 
5.24 	to the extent allowed as a deduction under section 63(d) of the Internal Revenue Code, 
5.25 	but the addition may not be more than the amount by which the itemized deductions as 
5.26 	allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the 
5.27 	standard deduction as defined in section 63(c) of the Internal Revenue Code.  For the 
5.28 	purpose of this paragraph, the disallowance of itemized deductions under section 68 of the 
5.29 	Internal Revenue Code of 1986, income tax is the last itemized deduction disallowed;
5.30 	 (3) the capital gain amount of a lump sum distribution to which the special tax under 
5.31 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
5.32 	 (4) the amount of income taxes paid or accrued within the taxable year under this 
5.33 	chapter and income taxes paid to any other state or any province or territory of Canada, 
5.34 	to the extent allowed as a deduction in determining federal adjusted gross income.  For 
6.1 	the purpose of this paragraph, income taxes do not include the taxes imposed by sections 
6.2 	290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
6.3 	 (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10;
6.4 	 (6) the amount of a partner's pro rata share of net income which does not flow 
6.5 	through to the partner because the partnership elected to pay the tax on the income under 
6.6 	section 6242(a)(2) of the Internal Revenue Code; and 
6.7 	 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
6.8 	Internal Revenue Code.  For purposes of this clause, if the taxpayer has an activity that 
6.9 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
6.10 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
6.11 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
6.12 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
6.13 	amount of the loss from the activity that is not allowed in the taxable year.  In succeeding 
6.14 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
6.15 	under section 168(k) is allowed; and 
6.16 	 (8) the amount of expenses disallowed under section 290.10, subdivision 2.

6.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
6.18 	December 31, 2004.

6.19 	 Sec. 4. Minnesota Statutes 2004, section 290.01, subdivision 19b, is amended to read:
6.20 		 Subd. 19b.Subtractions from federal taxable income.  For individuals, estates, 
6.21 	and trusts, there shall be subtracted from federal taxable income:
6.22 	 (1) interest income on obligations of any authority, commission, or instrumentality 
6.23 	of the United States to the extent includable in taxable income for federal income tax 
6.24 	purposes but exempt from state income tax under the laws of the United States;
6.25 	 (2) if included in federal taxable income, the amount of any overpayment of income 
6.26 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
6.27 	is received as a refund or as a credit to another taxable year's income tax liability;
6.28 	 (3) the amount paid to others, less the amount used to claim the credit allowed under 
6.29 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
6.30 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
6.31 	transportation of each qualifying child in attending an elementary or secondary school 
6.32 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
6.33 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
6.34 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
6.35 	of 1964 and chapter 363A.  For the purposes of this clause, "tuition" includes fees or 
7.1 	tuition as defined in section 290.0674, subdivision 1, clause (1).  As used in this clause, 
7.2 	"textbooks" includes books and other instructional materials and equipment purchased 
7.3 	or leased for use in elementary and secondary schools in teaching only those subjects 
7.4 	legally and commonly taught in public elementary and secondary schools in this state.  
7.5 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
7.6 	section 290.0674, subdivision 1, clause (3).  "Textbooks" does not include instructional 
7.7 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
7.8 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
7.9 	or materials for, or transportation to, extracurricular activities including sporting events, 
7.10 	musical or dramatic events, speech activities, driver's education, or similar programs.  For 
7.11 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
7.12 	given in section 32(c)(3) of the Internal Revenue Code;
7.13 	 (4) income as provided under section 290.0802;
7.14 	 (5) to the extent included in federal adjusted gross income, income realized on 
7.15 	disposition of property exempt from tax under section 290.491;
7.16 	 (6) to the extent included in federal taxable income, postservice benefits for youth 
7.17 	community service under section 124D.42 for volunteer service under United States 
7.18 	Code, title 42, sections 12601 to 12604;
7.19 	 (7) to the extent not deducted in determining federal taxable income by an individual 
7.20 	who does not itemize deductions for federal income tax purposes for the taxable year, 
7.21 	an amount equal to 50 percent of the excess of charitable contributions allowable as a 
7.22 	deduction for the taxable year under section 170(a) of the Internal Revenue Code over 
7.23 	$500;
7.24 	 (8) for taxable years beginning before January 1, 2008, the amount of the federal 
7.25 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
7.26 	which is included in gross income under section 87 of the Internal Revenue Code;
7.27 	 (9) for individuals who are allowed a federal foreign tax credit for taxes that do not 
7.28 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
7.29 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
7.30 	foreign taxes reported in claiming the foreign tax credit.  For purposes of this clause, 
7.31 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
7.32 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
7.33 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
7.34 	the extent they exceed the federal foreign tax credit;
7.35 	 (10) in each of the five tax years immediately following the tax year in which an 
7.36 	addition is required under subdivision 19a, clause (7), an amount equal to one-fifth of 
8.1 	the delayed depreciation.  For purposes of this clause, "delayed depreciation" means the 
8.2 	amount of the addition made by the taxpayer under subdivision 19a, clause (7), minus the 
8.3 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
8.4 	generated for the tax year of the addition.  The resulting delayed depreciation cannot be 
8.5 	less than zero; and 
8.6 	 (11) job opportunity building zone income as provided under section 469.316;
8.7 	 (12) to the extent included in federal taxable income, an amount, not to exceed 
8.8 	$10,000, equal to an individual's unreimbursed expenses for travel, lodging, and lost 
8.9 	wages net of sick pay related to the individual's donation of one or more of the individual's 
8.10 	organs to another person for human organ transplantation.  For purposes of determining 
8.11 	the extent to which expenses are included in federal taxable income, expenses qualifying 
8.12 	under this paragraph are the first expenses considered in determining the medical expense 
8.13 	deduction allowed under section 213 of the Internal Revenue Code.  For purposes of this 
8.14 	clause, "organ" means all or part of an individual's liver, pancreas, kidney, intestine, 
8.15 	lung, or bone marrow, and "human organ transplantation" means the medical procedure 
8.16 	by which transfer of a human organ is made from the body of one person to the body of 
8.17 	another person.  An individual may claim the subtraction in this clause for each instance of 
8.18 	organ donation for transplantation, during the taxable year in which the expenses or lost 
8.19 	wages occur;
8.20 	 (13) the amount of compensation paid to members of the Minnesota National Guard 
8.21 	or other reserve components of the United States military for active service performed 
8.22 	in Minnesota, excluding compensation for services performed under the Active Guard 
8.23 	Reserve (AGR) program.  For purposes of this clause, "active service" means (i) state 
8.24 	active service as defined in section 190.05, subdivision 5a, clause (1); (ii) federally 
8.25 	funded state active service as defined in section 190.05, subdivision 5b; or (iii) federal 
8.26 	active service as defined in section 190.05, subdivision 5c, but "active service" excludes 
8.27 	services performed exclusively for purposes of basic combat training, advanced individual 
8.28 	training, annual training, and periodic inactive duty training; special training periodically 
8.29 	made available to reserve members; and service performed in accordance with section 
8.30 	190.08, subdivision 3; and 
8.31 	 (14) the amount of compensation paid to members of the armed forces of the United 
8.32 	States or United Nations for active duty performed outside Minnesota.

8.33 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
8.34 	December 31, 2004.

8.35 	 Sec. 5. Minnesota Statutes 2004, section 290.01, subdivision 19c, is amended to read:
9.1 		 Subd. 19c.Corporations; additions to federal taxable income.  For corporations, 
9.2 	there shall be added to federal taxable income:
9.3 	 (1) the amount of any deduction taken for federal income tax purposes for income, 
9.4 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
9.5 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
9.6 	another state, a political subdivision of another state, the District of Columbia, or any 
9.7 	foreign country or possession of the United States;
9.8 	 (2) interest not subject to federal tax upon obligations of:  the United States, its 
9.9 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
9.10 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
9.11 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
9.12 	tribal governments;
9.13 	 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
9.14 	Revenue Code;
9.15 	 (4) the amount of any net operating loss deduction taken for federal income tax 
9.16 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
9.17 	deduction under section 810 of the Internal Revenue Code;
9.18 	 (5) the amount of any special deductions taken for federal income tax purposes 
9.19 	under sections 241 to 247 of the Internal Revenue Code;
9.20 	 (6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
9.21 	clause (a), that are not subject to Minnesota income tax;
9.22 	 (7) the amount of any capital losses deducted for federal income tax purposes under 
9.23 	sections 1211 and 1212 of the Internal Revenue Code;
9.24 	 (8) the exempt foreign trade income of a foreign sales corporation under sections 
9.25 	921(a) and 291 of the Internal Revenue Code;
9.26 	 (9) the amount of percentage depletion deducted under sections 611 through 614 and 
9.27 	291 of the Internal Revenue Code;
9.28 	 (10) for certified pollution control facilities placed in service in a taxable year 
9.29 	beginning before December 31, 1986, and for which amortization deductions were elected 
9.30 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
9.31 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
9.32 	income for those facilities;
9.33 	 (11) the amount of any deemed dividend from a foreign operating corporation 
9.34 	determined pursuant to section 290.17, subdivision 4, paragraph (g);
9.35 	 (12) the amount of any environmental tax paid under section 59(a) of the Internal 
9.36 	Revenue Code;
10.1 	 (13) the amount of a partner's pro rata share of net income which does not flow 
10.2 	through to the partner because the partnership elected to pay the tax on the income under 
10.3 	section 6242(a)(2) of the Internal Revenue Code;
10.4 	 (14) the amount of net income excluded under section 114 of the Internal Revenue 
10.5 	Code;
10.6 	 (15) any increase in subpart F income, as defined in section 952(a) of the Internal 
10.7 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
10.8 	the provisions of section 614 of Public Law 107-147; and 
10.9 	 (16) 80 percent of the depreciation deduction allowed under section 168(k) of the 
10.10 	Internal Revenue Code.  For purposes of this clause, if the taxpayer has an activity that 
10.11 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
10.12 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
10.13 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
10.14 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
10.15 	amount of the loss from the activity that is not allowed in the taxable year.  In succeeding 
10.16 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
10.17 	under section 168(k) is allowed; and 
10.18 	 (17) the amount of expenses disallowed under section 290.10, subdivision 2.

10.19 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
10.20 	December 31, 2004.

10.21 	 Sec. 6. Minnesota Statutes 2004, section 290.05, subdivision 1, is amended to read:
10.22 		 Subdivision 1.Exempt entities.  The following corporations, individuals, estates, 
10.23 	trusts, and organizations shall be exempted from taxation under this chapter, provided 
10.24 	that every such person or corporation claiming exemption under this chapter, in whole 
10.25 	or in part, must establish to the satisfaction of the commissioner the taxable status of 
10.26 	any income or activity:
10.27 	 (a) corporations, individuals, estates, and trusts engaged in the business of mining 
10.28 	or producing iron ore and other ores the mining or production of which is subject to 
10.29 	the occupation tax imposed by section 298.01; but if any such corporation, individual, 
10.30 	estate, or trust engages in any other business or activity or has income from any property 
10.31 	not used in such business it shall be subject to this tax computed on the net income from 
10.32 	such property or such other business or activity. Royalty shall not be considered as income 
10.33 	from the business of mining or producing iron ore within the meaning of this section;
11.1 	 (b) the United States of America, the state of Minnesota or any political subdivision 
11.2 	of either agencies or instrumentalities, whether engaged in the discharge of governmental 
11.3 	or proprietary functions; and 
11.4 	 (c) any insurance company; and 
11.5 	 (d) a corporation engaged in the business of operating a personal rapid transit system, 
11.6 	as defined in section 297A.61, subdivision 37, in this state, independent of any government 
11.7 	subsidies, but if the corporation engages in any other business or activity or has income 
11.8 	from any property not used in the business of operating a personal rapid transit system, it 
11.9 	is subject to this tax computed on the net income from the property or business or activity.

11.10 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
11.11 	December 31, 2008.

11.12 	 Sec. 7. Minnesota Statutes 2004, section 290.06, subdivision 2c, is amended to read:
11.13 		 Subd. 2c.Schedules of rates for individuals, estates, and trusts.  (a) The income 
11.14 	taxes imposed by this chapter upon married individuals filing joint returns and surviving 
11.15 	spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
11.16 	applying to their taxable net income the following schedule of rates:
11.17 	 (1) On the first $25,680, 5.35 percent;
11.18 	 (2) On all over $25,680, but not over $102,030, 7.05 percent;
11.19 	 (3) On all over $102,030, 7.85 8.0 percent.
11.20 	 Married individuals filing separate returns, estates, and trusts must compute their 
11.21 	income tax by applying the above rates to their taxable income, except that the income 
11.22 	brackets will be one-half of the above amounts.
11.23 	 (b) The income taxes imposed by this chapter upon unmarried individuals must be 
11.24 	computed by applying to taxable net income the following schedule of rates:
11.25 	 (1) On the first $17,570, 5.35 percent;
11.26 	 (2) On all over $17,570, but not over $57,710, 7.05 percent;
11.27 	 (3) On all over $57,710, 7.85 8.0 percent.
11.28 	 (c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
11.29 	as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
11.30 	computed by applying to taxable net income the following schedule of rates:
11.31 	 (1) On the first $21,630, 5.35 percent;
11.32 	 (2) On all over $21,630, but not over $86,910, 7.05 percent;
11.33 	 (3) On all over $86,910, 7.85 8.0 percent.
11.34 	 (d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
11.35 	tax of any individual taxpayer whose taxable net income for the taxable year is less than 
12.1 	an amount determined by the commissioner must be computed in accordance with tables 
12.2 	prepared and issued by the commissioner of revenue based on income brackets of not 
12.3 	more than $100.  The amount of tax for each bracket shall be computed at the rates set 
12.4 	forth in this subdivision, provided that the commissioner may disregard a fractional part of 
12.5 	a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
12.6 	 (e) An individual who is not a Minnesota resident for the entire year must compute 
12.7 	the individual's Minnesota income tax as provided in this subdivision.  After the 
12.8 	application of the nonrefundable credits provided in this chapter, the tax liability must 
12.9 	then be multiplied by a fraction in which:
12.10 	 (1) the numerator is the individual's Minnesota source federal adjusted gross income 
12.11 	as defined in section 62 of the Internal Revenue Code and increased by the additions 
12.12 	required under section 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced by 
12.13 	the subtraction under section 290.01, subdivision 19b, clause (11), and the Minnesota 
12.14 	assignable portion of the subtraction for United States government interest under section 
12.15 	290.01, subdivision 19b, clause (1), after applying the allocation and assignability 
12.16 	provisions of section 290.081, clause (a), or 290.17; and
12.17 	 (2) the denominator is the individual's federal adjusted gross income as defined in 
12.18 	section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
12.19 	section 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced by the amounts 
12.20 	specified in section 290.01, subdivision 19b, clauses (1) and (11).

12.21 	EFFECTIVE DATE. This section is effective only if sections 13 and 14 of this 
12.22 	article are enacted for taxable years beginning after December 31, 2004.

12.23 	 Sec. 8. Minnesota Statutes 2004, section 290.06, subdivision 28, is amended to read:
12.24 		 Subd. 28.credit refunds for transit passes. A taxpayer  (a) An employer may take 
12.25 	a credit against the tax due under this chapter claim a refund equal to 30 percent of the 
12.26 	expense incurred by the taxpayer employer to provide transit passes, for use in Minnesota, 
12.27 	to employees of the taxpayer.
12.28 	 (b) As used in this subdivision, the following terms have the meanings given:
12.29 	 (1) "employer" means an individual or entity subject to tax under this chapter 
12.30 	or an entity that is exempt from taxation under section 290.05, but excluding entities 
12.31 	enumerated in section 290.05, subdivision 1, paragraph (b); and 
12.32 	 (2) "transit pass" has the meaning given in section 132(f)(5)(A) of the Internal 
12.33 	Revenue Code.
12.34 	 (c) If the taxpayer employer purchases the transit passes from the transit system 
12.35 	operator, and resells them to the employees, the credit refund is based on the amount of 
13.1 	the difference between the price paid for the passes by the employer and the amount 
13.2 	charged to employees.
13.3 	 (d) The commissioner shall prescribe the forms for and the manner in which the 
13.4 	refund may be claimed.  The commissioner must provide for paying refunds at least 
13.5 	quarterly.  The commissioner may set a minimum amount of qualifying expenses that must 
13.6 	be incurred before a refund may be claimed.
13.7 	 (e) An amount sufficient to pay the refunds required by this subdivision is 
13.8 	appropriated to the commissioner of revenue.

13.9 	EFFECTIVE DATE. This section is effective for transit passes purchased after 
13.10 	December 31, 2005.

13.11 	 Sec. 9. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
13.12 	to read:
13.13 		 Subd. 32.Carsharing credit. (a) For purposes of this subdivision, a "carsharing 
13.14 	organization"  means an organization that:
13.15 	 (1) is described in section 501(c) of the Internal Revenue Code;
13.16 	 (2) is comprised of members who purchase the use of a motor vehicle from the 
13.17 	organization;
13.18 	 (3) owns or leases a fleet of motor vehicles that are available to members of the 
13.19 	organization to pay for the use of a vehicle on an hourly or per trip basis; and 
13.20 	 (4) does not assign exclusive rights of use of specific vehicles to individual members 
13.21 	or allow individual members to keep a vehicle in the member's sole possession.
13.22 	 (b) A taxpayer may take a credit against the tax due under this chapter for the 
13.23 	expenses incurred by the taxpayer to purchase a membership and pay monthly dues to a 
13.24 	carsharing organization or to provide memberships and pay monthly dues to a carsharing 
13.25 	organization for employees of the taxpayer.  The amount of the credit is equal to the 
13.26 	lesser of the actual cost of the membership fee and the monthly dues, or $390.  If an 
13.27 	employer purchases the membership or pays the monthly dues to the nonprofit carsharing 
13.28 	organization and resells the membership to its employees or charges the monthly dues to 
13.29 	its employees, the credit allowed to the employer is the amount of the difference between 
13.30 	the amount paid by the employer and the amount charged to the employee.
13.31 	 (c) A taxpayer who owns a parking facility that charges customers an amount to park 
13.32 	vehicles at the facility and provides dedicated parking space at no charge to a nonprofit 
13.33 	carsharing organization to park the motor vehicles that are used by the members of the 
13.34 	organization on an hourly or per-trip basis, may take a credit against the tax due under this 
13.35 	chapter for the value of the dedicated parking space provided to the nonprofit carsharing 
14.1 	organization.  The value of the dedicated parking space is equal to the lowest amount 
14.2 	charged to customers who pay to park at the facility calculated on an hourly, daily, or other 
14.3 	long-term rate that results in the lowest total cost.

14.4 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
14.5 	December 31, 2005.

14.6 	 Sec. 10. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
14.7 	to read:
14.8 		 Subd. 33.Regional investment credit. (a) A credit is allowed against the tax 
14.9 	imposed by this chapter for investment in a qualifying regional angel investment network 
14.10 	fund.  The credit equals 25 percent of the taxpayer's investment made in the fund for the 
14.11 	taxable year, but not to exceed the lesser of:
14.12 	 (1) the liability for tax under this chapter; or 
14.13 	 (2) the amount of the certificate under paragraph (c) provided to the taxpayer by 
14.14 	the fund.  The taxpayer must claim the credit the same tax year in which the investment 
14.15 	to the fund is made.  The credit is allowed only for investments made to a fund that are 
14.16 	made after the fund has been certified by the commissioner of employment and economic 
14.17 	development under paragraph (c).
14.18 	 (b) For purposes of this subdivision, a regional angel investment network fund 
14.19 	means a pool investment fund that:
14.20 	 (1) is organized as a limited liability company and consists of members who are 
14.21 	accredited investors within the meaning of Regulation D of the Securities and Exchange 
14.22 	Commission, Code of Federal Regulations, title 17, section 230.501(a), or consists of 
14.23 	members that are not accredited investors that make equity investments or investments in 
14.24 	notes that pay interest or other fixed amounts or any combination of both;
14.25 	 (2) primarily makes equity investments in emerging and expanding small businesses 
14.26 	as defined by the Small Business Administration, or cooperative associations as defined 
14.27 	in chapter 308B, that are located in local communities in Minnesota outside of the 
14.28 	metropolitan area as defined in section 473.121, subdivision 2, and does not make 
14.29 	investments in residential real estate; and 
14.30 	 (3) has no fewer than five individual investors who are not affiliates with no single 
14.31 	investor and affiliates of that investor together owning a total of more than 25 percent 
14.32 	ownership interests outstanding in the fund.  For purposes of this subdivision, "affiliate" 
14.33 	means a spouse, child, or sibling of an investor or a corporation, partnership, or trust 
14.34 	in which an investor has a controlling equity interest or in which an investor exercises 
14.35 	management control.
15.1 	 (c) Regional angel investment network funds may apply to the commissioner 
15.2 	of employment and economic development for certification as a qualifying regional 
15.3 	angel investment network fund.  The application must be in the form and made under 
15.4 	procedures specified by the commissioner of employment and economic development. 
15.5 	The commissioner of employment and economic development may certify up to 20 
15.6 	qualifying funds and provide certificates entitling investors in the funds to credits under 
15.7 	this subdivision of up to $500,000 for each fund.  The commissioner of employment 
15.8 	and economic development must not issue a total amount of certificates for all funds of 
15.9 	more than $10,000,000.  In awarding certificates under this paragraph, the commissioner 
15.10 	of employment and economic development shall generally award them to qualified 
15.11 	applicants in the order in which the applications are received, but shall also seek to certify 
15.12 	funds that are broadly dispersed across the entire state outside of the metropolitan area, 
15.13 	as defined in section 473.121, subdivision 2.  The commissioner of employment and 
15.14 	economic development must award three certificates to a pooled investment fund that 
15.15 	invests in qualifying small businesses located in the region of the state that is the focus of 
15.16 	the fund and allocates at least 20 percent of its investments to qualified small businesses 
15.17 	that meet local community needs.  To be a qualifying small business, a business must 
15.18 	satisfy the following requirements:
15.19 	 (1) 51 percent of the ownership interests in the business, excluding any equity 
15.20 	interest of the fund, must be held by residents of the region; and 
15.21 	 (2) the business must pay wages and benefits, measured on a full-time equivalent 
15.22 	basis, to 75 percent or more of its employees equal to 175 percent of the federal poverty 
15.23 	level for a family of four.  This requirement does not apply if fewer than three pooled 
15.24 	investment funds that would otherwise qualify under this subdivision apply for a 
15.25 	certificate.
15.26 	 (d) Each fund must provide each investor a statement indicating the investor's share 
15.27 	of the credit amount certified to the fund under paragraph (c) based on the order in which 
15.28 	their investment is made in the fund.
15.29 	 (e) If the amount of the credit under this subdivision for any taxable year exceeds 
15.30 	the limitation under paragraph (a), clause (1), the excess is a credit carryover to each of 
15.31 	the 15 succeeding taxable years.  The entire amount of the excess unused credit for the 
15.32 	taxable year must be carried first to the earliest of the taxable years to which the credit 
15.33 	may be carried and then to each successive year to which the credit may be carried.  The 
15.34 	amount of the unused credit which may be added under this paragraph may not exceed the 
15.35 	taxpayer's liability for tax for the taxable year.

16.1 	EFFECTIVE DATE. This section is effective the day following final enactment, for 
16.2 	taxable years beginning after December 31, 2005.  It applies to investments made after the 
16.3 	fund has been certified by the commissioner of employment and economic development.

16.4 	 Sec. 11. Minnesota Statutes 2004, section 290.0674, subdivision 2, is amended to read:
16.5 		 Subd. 2.Limitations.  (a) For claimants with income not greater than $33,500, the 
16.6 	maximum credit allowed is $1,000 per  multiplied by the number of claimant's qualifying 
16.7 	child and $2,000 per family children in grades kindergarten through grade 12.  No credit is 
16.8 	allowed for education-related expenses for claimants with income greater than $37,500.  
16.9 	The maximum credit per child claimant is reduced by $1 for each $4 of household income 
16.10 	over $33,500, and the maximum credit per family is reduced by $2 for each $4 of 
16.11 	household income over $33,500,but in no case is the credit less than zero.
16.12 	 For purposes of this section "income" has the meaning given in section 290.067, 
16.13 	subdivision 2a.  In the case of a married claimant, a credit is not allowed unless a joint 
16.14 	income tax return is filed.
16.15 	 (b) For a nonresident or part-year resident, the credit determined under subdivision 1 
16.16 	and the maximum credit amount in paragraph (a) must be allocated using the percentage 
16.17 	calculated in section 290.06, subdivision 2c, paragraph (e).

16.18 	EFFECTIVE DATE. This section is effective for tax years beginning after 
16.19 	December 31, 2005.

16.20 	 Sec. 12. [290.0676] CREDIT FOR HISTORIC STRUCTURE 
16.21 	REHABILITATION.
16.22 		 Subdivision 1.Definitions. (a) As used in this section, the terms defined in this 
16.23 	subdivision have the meanings given.
16.24 	 (b) "Certified historic structure" means a property located in Minnesota and listed 
16.25 	individually on the National Register of Historic Places or a historic property designated 
16.26 	by either a certified local government or a heritage preservation commission created 
16.27 	under the National Historic Preservation Act of 1966 and whose designation is approved 
16.28 	by the state historic preservation officer.
16.29 	 (c) "Eligible property" means a certified historic structure or a structure in a certified 
16.30 	historic district that is offered or used for residential or business purposes.
16.31 	 (d) "Structure in a certified historic district" means a structure located in Minnesota 
16.32 	that is certified by the State Historic Preservation Office as contributing to the historic 
16.33 	significance of a certified historic district listed on the National Register of Historic Places 
16.34 	or a local district that has been certified by the United States Department of the Interior.
17.1 		 Subd. 2.Credit allowed. A taxpayer who incurs costs for the rehabilitation of 
17.2 	eligible property may take a credit against the tax imposed under this chapter in an amount 
17.3 	equal to ten percent of the total costs of rehabilitation.  Costs of rehabilitation include, 
17.4 	but are not limited to, qualified rehabilitation expenditures as defined under section 
17.5 	47(c)(2)(A) of the Internal Revenue Code, provided that the costs of rehabilitation must 
17.6 	exceed 50 percent of the total basis in the property at the time the rehabilitation activity 
17.7 	begins and the rehabilitation must meet standards consistent with the standards of the 
17.8 	Secretary of the Interior for rehabilitation as determined by the State Historic Preservation 
17.9 	Office of the Minnesota Historical Society.
17.10 		 Subd. 3.Carryback and carryforward. If the amount of the credit under 
17.11 	subdivision 2 exceeds the tax liability under this chapter for the year in which the cost is 
17.12 	incurred, the amount that exceeds the tax liability may be carried back to any of the three 
17.13 	preceding taxable years or carried forward to each of the ten taxable years succeeding the 
17.14 	taxable year in which the expense was incurred.  The entire amount of the credit must 
17.15 	be carried to the earliest taxable year to which the amount may be carried.  The unused 
17.16 	portion of the credit must be carried to the following taxable year.
17.17 		 Subd. 4.Partnerships; multiple owners; transfers. (a) Credits granted to a 
17.18 	partnership, a limited liability company taxed as a partnership, or multiple owners of 
17.19 	property shall be passed through to the partners, members, or owners, respectively, pro 
17.20 	rata or pursuant to an executed agreement among the partners, members, or owners 
17.21 	documenting an alternate distribution method.
17.22 	 (b) Taxpayers eligible for credits may transfer, sell, or assign the credits in whole 
17.23 	or part.  Any assignee may use acquired credits to offset up to 100 percent of the taxes 
17.24 	otherwise imposed by this chapter.  The assignee shall perfect such transfer by notifying 
17.25 	the Department of Revenue in writing within 30 calendar days following the effective 
17.26 	date of the transfer in such form and manner as shall be prescribed by the Department 
17.27 	of Revenue.  The proceeds of any sale or assignment of a credit shall be exempt from 
17.28 	taxation under this chapter.
17.29 		 Subd. 5.Process. To claim the credit, the taxpayer must apply to the State Historic 
17.30 	Preservation Office of the Minnesota Historical Society before a historic rehabilitation 
17.31 	project begins.  The State Historic Preservation Office shall determine the amount of 
17.32 	eligible rehabilitation costs and whether the rehabilitation meets the standards of the 
17.33 	United States Department of the Interior.  The State Historic Preservation Office shall issue 
17.34 	certificates verifying eligibility for and the amount of credit.  The taxpayer shall attach 
17.35 	the certificate to any income tax return on which the credit is claimed.  The State Historic 
17.36 	Preservation Office of the Minnesota Historical Society may collect fees for applications 
18.1 	for the historic preservation tax credit.  Fees shall be set at an amount that does not exceed 
18.2 	the costs of administering the tax credit program.
18.3 		 Subd. 6.Mortgage certificates; credit for lending institutions. (a) The taxpayer 
18.4 	may elect, in lieu of the credit otherwise allowed under this section, to receive a historic 
18.5 	rehabilitation mortgage credit certificate.
18.6 	 (b) For purposes of this subdivision, a historic rehabilitation mortgage credit is a 
18.7 	certificate that is issued to the taxpayer according to procedures prescribed by the State 
18.8 	Historic Preservation Office with respect to the certified rehabilitation and which meets 
18.9 	the requirements of this paragraph.  The face amount of the certificate must be equal to 
18.10 	the credit that would be allowable under subdivision 2 to the taxpayer with respect to 
18.11 	the rehabilitation.  The certificate may only be transferred by the taxpayer to a lending 
18.12 	institution, including a nondepository home mortgage lending institution, in connection 
18.13 	with a loan:
18.14 	 (1) that is secured by the building with respect to which the credit is issued; and 
18.15 	 (2) the proceeds of which may not be used for any purpose other than the acquisition 
18.16 	or rehabilitation of the building.
18.17 	 (c) In exchange for the certificate, the lending institution must provide to the 
18.18 	taxpayer an amount equal to the face amount of the certificate discounted by the amount 
18.19 	by which the federal income tax liability of the lending institution is increased due to its 
18.20 	use of the certificate in the manner provided in this section.  That amount must be applied, 
18.21 	as directed by the taxpayer, in whole or in part, to reduce:
18.22 	 (1) the principal amount of the loan;
18.23 	 (2) the rate of interest on the loan; or 
18.24 	 (3) the taxpayer's cost of purchasing the building, but only in the case of a qualified 
18.25 	historic home that is located in a poverty-impacted area as designated by the State Historic 
18.26 	Preservation Office.
18.27 	 The lending institution may take as a credit against the tax due under this chapter 
18.28 	an amount equal to the amount specified in the certificate.  If the amount of the discount 
18.29 	retained by the lender exceeds the amount by which the lending institution's federal 
18.30 	income tax liability is increased due to the use of a mortgage credit certificate, the excess 
18.31 	shall be refunded to the borrower with interest at the rate prescribed by the State Historic 
18.32 	Preservation Office.  The lending institution may carry forward all unused credits under 
18.33 	this subdivision until exhausted.  Nothing in this subdivision requires a lending institution 
18.34 	to accept a historic rehabilitation certificate from any person.

18.35 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
18.36 	December 31, 2004.

19.1 	 Sec. 13. Minnesota Statutes 2004, section 290.091, subdivision 2, is amended to read:
19.2 		 Subd. 2.Definitions.  For purposes of the tax imposed by this section, the following 
19.3 	terms have the meanings given:
19.4 	 (a) "Alternative minimum taxable income" means the sum of the following for 
19.5 	the taxable year:
19.6 	 (1) the taxpayer's federal alternative minimum taxable income as defined in section 
19.7 	55(b)(2) of the Internal Revenue Code;
19.8 	 (2) the taxpayer's itemized deductions allowed in computing federal alternative 
19.9 	minimum taxable income, but excluding:
19.10 	 (i) the charitable contribution deduction under section 170 of the Internal Revenue 
19.11 	Code to the extent that the deduction exceeds 1.0 percent of adjusted gross income, as 
19.12 	defined in section 62 of the Internal Revenue Code;
19.13 	 (ii) the medical expense deduction;
19.14 	 (iii) the casualty, theft, and disaster loss deduction; and 
19.15 	 (iv) the impairment-related work expenses of a disabled person; and 
19.16 	 (v) the amount of the exemption allowed the taxpayer under section 151(c) of the 
19.17 	Internal Revenue Code;
19.18 	 (3) for depletion allowances computed under section 613A(c) of the Internal 
19.19 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
19.20 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
19.21 	the excess of the deduction for depletion allowable under section 611 of the Internal 
19.22 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
19.23 	taxable year (determined without regard to the depletion deduction for the taxable year);
19.24 	 (4) to the extent not included in federal alternative minimum taxable income, the 
19.25 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
19.26 	Internal Revenue Code determined without regard to subparagraph (E);
19.27 	 (5) to the extent not included in federal alternative minimum taxable income, the 
19.28 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
19.29 	 (6) the amount of addition required by section 290.01, subdivision 19a, clause (7);
19.30 	 less the sum of the amounts determined under the following:
19.31 	 (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
19.32 	 (2) an overpayment of state income tax as provided by section 290.01, subdivision 
19.33 	19b, clause (2), to the extent included in federal alternative minimum taxable income;
19.34 	 (3) the amount of investment interest paid or accrued within the taxable year on 
19.35 	indebtedness to the extent that the amount does not exceed net investment income, as 
20.1 	defined in section 163(d)(4) of the Internal Revenue Code.  Interest does not include 
20.2 	amounts deducted in computing federal adjusted gross income; and
20.3 	 (4) amounts subtracted from federal taxable income as provided by section 290.01, 
20.4 	subdivision 19b, clauses (10) and (11) to (12).
20.5 	 In the case of an estate or trust, alternative minimum taxable income must be 
20.6 	computed as provided in section 59(c) of the Internal Revenue Code.
20.7 	 (b) "Investment interest" means investment interest as defined in section 163(d)(3) 
20.8 	of the Internal Revenue Code.
20.9 	 (c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 
20.10 	income after subtracting the exemption amount determined under subdivision 3.
20.11 	 (d) "Regular tax" means the tax that would be imposed under this chapter (without 
20.12 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
20.13 	credits allowed under this chapter.
20.14 	 (e) "Net minimum tax" means the minimum tax imposed by this section.

20.15 	EFFECTIVE DATE. This section is effective only if section 7 of this article is 
20.16 	enacted for taxable years beginning after December 31, 2004.

20.17 	 Sec. 14. Minnesota Statutes 2004, section 290.091, subdivision 3, is amended to read:
20.18 		 Subd. 3.Exemption amount. (a) For purposes of computing the alternative 
20.19 	minimum tax, the exemption amount is the exemption determined under section 55(d) 
20.20 	of the Internal Revenue Code, as amended through December 31, 1992, except that 
20.21 	alternative minimum taxable income as determined under this section must be substituted 
20.22 	in the computation of the phase out under section 55(d)(3) $66,300 for married individuals 
20.23 	filing joint returns; and $33,150 for married individuals filing separate returns, single 
20.24 	individuals, and head of household filers.
20.25 	 (b) The exemption amount determined under this subdivision is reduced by an 
20.26 	amount equal to 25 percent of the amount by which the alternative minimum income 
20.27 	exceeds $248,600 for married individuals filing joint returns; and $124,300 for married 
20.28 	individuals filing separate returns, single individuals, and head of household filers.
20.29 	 (c) For taxable years beginning after December 31, 2006, the exemption amounts 
20.30 	under paragraph (a), and the income amounts in paragraph (b), must be adjusted for 
20.31 	inflation.  The commissioner shall make the inflation adjustments in accordance with 
20.32 	section 1(f) of the Internal Revenue Code except that for the purposes of this subdivision 
20.33 	the percentage increase must be determined from the year starting September 1, 2005, 
20.34 	and ending August 31, 2006, as the base year for adjusting for inflation for the tax year 
21.1 	beginning after December 31, 2006.  The determination of the commissioner under this 
21.2 	subdivision is not a rule under the Administrative Procedure Act.

21.3 	EFFECTIVE DATE. This section is effective only if section 7 of this article is 
21.4 	enacted for taxable years beginning after December 31, 2004.

21.5 	 Sec. 15. Minnesota Statutes 2004, section 290.10, is amended to read:
21.6 	 290.10 NONDEDUCTIBLE ITEMS.
21.7 		 Subdivision 1.Expenses, interest, and taxes. Except as provided in section 290.17, 
21.8 	subdivision 4, paragraph (i), in computing the net income of a taxpayer no deduction shall 
21.9 	in any case be allowed for expenses, interest and taxes connected with or allocable against 
21.10 	the production or receipt of all income not included in the measure of the tax imposed by 
21.11 	this chapter, except that for corporations engaged in the business of mining or producing 
21.12 	iron ore, the mining of which is subject to the occupation tax imposed by section 298.01, 
21.13 	subdivision 4, this shall not prevent the deduction of expenses and other items to the extent 
21.14 	that the expenses and other items are allowable under this chapter and are not deductible, 
21.15 	capitalizable, retainable in basis, or taken into account by allowance or otherwise in 
21.16 	computing the occupation tax and do not exceed the amounts taken for federal income 
21.17 	tax purposes for that year.  Occupation taxes imposed under chapter 298, royalty taxes 
21.18 	imposed under chapter 299, or depletion expenses may not be deducted under this clause.
21.19 		 Subd. 2.Fines, penalties, damages, and expenses. (a) No deduction from taxable 
21.20 	income for a trade or business expense under section 162(a) of the Internal Revenue Code 
21.21 	shall be allowed for any fine, penalty, damages, or expenses paid to:
21.22 	 (1) the government of the United States, a state, a territory or possession of the 
21.23 	United States, the District of Columbia, or the Commonwealth of Puerto Rico;
21.24 	 (2) the government of a foreign country; or 
21.25 	 (3) a political subdivision of, or corporation or other entity serving as an agency or 
21.26 	instrumentality of, any government described in clause (1) or (2).
21.27 	 (b) For purposes of this subdivision, "fine, penalty, damages, or expenses" include, 
21.28 	but are not limited to, any amount:
21.29 	 (1) paid pursuant to a conviction or a plea of guilty or nolo contendere for any 
21.30 	crime in a criminal proceeding;
21.31 	 (2) paid as a civil penalty imposed by federal, state, or local law, including tax 
21.32 	penalties and interest;
21.33 	 (3) paid in settlement of the taxpayer's actual or potential liability for a civil or 
21.34 	criminal fine or penalty;
22.1 	 (4) forfeited as collateral posted in connection with a proceeding that could result in 
22.2 	imposition of a fine or penalty; or 
22.3 	 (5) legal fees and related expenses paid or incurred in the prosecution or civil action 
22.4 	arising from a violation of the law imposing the fine or civil penalty, court costs assessed 
22.5 	against the taxpayer, or stenographic and printing charges, compensatory damages, 
22.6 	punitive damages, or restitution.

22.7 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
22.8 	December 31, 2004.

22.9 	 Sec. 16. [290.433] GLOBAL WAR ON TERRORISM CHECKOFF.
22.10 	 Every individual who files an income tax return or property tax refund claim, and 
22.11 	every corporation that files an income tax return, may designate on their return that $1 
22.12 	or more shall be added to the tax or deducted from the refund that would otherwise be 
22.13 	payable by or to that individual or corporation and paid into an account to be established 
22.14 	for the purpose of paying bonuses to residents of this state who are veterans of the global 
22.15 	war on terrorism.  The commissioner shall, on the income tax returns and the property 
22.16 	tax refund claim form, notify filers of their right to designate that a portion of their tax 
22.17 	or refund shall be paid into the account for veterans of the global war on terrorism.  The 
22.18 	amounts designated under this section shall be annually appropriated to the commissioner 
22.19 	of the Department of Veterans Affairs to pay bonuses to veterans of the global war on 
22.20 	terrorism as determined by law.  All interest earned on money accrued shall be credited to 
22.21 	the account by the commissioner of finance.

22.22 	 EFFECTIVE DATE. This section is effective for taxable years beginning after 
22.23 	December 31, 2004, and for property tax refund claims for property taxes payable after 
22.24 	December 31, 2004.

22.25 	 Sec. 17. Minnesota Statutes 2004, section 290.92, subdivision 4b, is amended to read:
22.26 		 Subd. 4b.Withholding by partnerships.  (a) A partnership shall deduct and 
22.27 	withhold a tax as provided in paragraph (b) for nonresident individual partners based on 
22.28 	their distributive shares of partnership income for a taxable year of the partnership.
22.29 	 (b) The amount of tax withheld is determined by multiplying the partner's 
22.30 	distributive share allocable to Minnesota under section 290.17, paid or credited during 
22.31 	the taxable year by the highest rate used to determine the income tax liability for an 
22.32 	individual under section 290.06, subdivision 2c, except that the amount of tax withheld 
23.1 	may be determined by the commissioner if the partner submits a withholding exemption 
23.2 	certificate under subdivision 5.
23.3 	 (c) The commissioner may reduce or abate the tax withheld under this subdivision if 
23.4 	the partnership had reasonable cause to believe that no tax was due under this section.
23.5 	 (d) Notwithstanding paragraph (a), a partnership is not required to deduct and 
23.6 	withhold tax for a nonresident partner if:
23.7 	 (1) the partner elects to have the tax due paid as part of the partnership's composite 
23.8 	return under section 289A.08, subdivision 7;
23.9 	 (2) the partner has Minnesota assignable federal adjusted gross income from the 
23.10 	partnership of less than $1,000; or
23.11 	 (3) the partnership is liquidated or terminated, the income was generated by a 
23.12 	transaction related to the termination or liquidation, and no cash or other property was 
23.13 	distributed in the current or prior taxable year; or 
23.14 	 (4) the distributive shares of partnership income are attributable to:
23.15 	 (i) income required to be recognized because of discharge of indebtedness;
23.16 	 (ii) income recognized because of a sale, exchange, or other disposition of real estate, 
23.17 	depreciable property, or property described in section 179 of the Internal Revenue Code; or
23.18 	 (iii) income recognized on the sale, exchange, or other disposition of any property 
23.19 	that has been the subject of a basis reduction pursuant to section 108, 734, 743, 754, or 
23.20 	1017 of the Internal Revenue Code
23.21 	 to the extent that the income does not include cash received or receivable or, if there 
23.22 	is cash received or receivable, to the extent that the cash is required to be used to pay 
23.23 	indebtedness by the partnership or a secured debt on partnership property; or 
23.24 	 (5) the partnership is a publicly traded partnership, as defined in section 7704(b) of 
23.25 	the Internal Revenue Code.
23.26 	 (e) For purposes of subdivision 6a, and sections 289A.09, subdivision 2, 289A.20, 
23.27 	subdivision 2, paragraph (c), 289A.50, 289A.56, 289A.60, and 289A.63, a partnership is 
23.28 	considered an employer.
23.29 	 (f) To the extent that income is exempt from withholding under paragraph (d), clause 
23.30 	(4), the commissioner has a lien in an amount up to the amount that would be required 
23.31 	to be withheld with respect to the income of the partner attributable to the partnership 
23.32 	interest, but for the application of paragraph (d), clause (4).  The lien arises under section 
23.33 	270.69 from the date of assessment of the tax against the partner, and attaches to that 
23.34 	partner's share of the profits and any other money due or to become due to that partner 
23.35 	in respect of the partnership. Notice of the lien may be sent by mail to the partnership, 
23.36 	without the necessity for recording the lien.  The notice has the force and effect of a levy 
24.1 	under section 270.70, and is enforceable against the partnership in the manner provided 
24.2 	by that section.  Upon payment in full of the liability subsequent to the notice of lien, the 
24.3 	partnership must be notified that the lien has been satisfied.

24.4 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
24.5 	December 31, 2004.

24.6 	 Sec. 18. DETERMINATION OF ECONOMIC IMPACT.
 24.7 	 The Minnesota Historical Society shall annually determine the economic impact 
24.8 	to the state from the rehabilitation of eligible property for which credits are provided 
24.9 	under section 12 and report on the impact to the committees on taxes of the senate and 
24.10 	house of representatives.

24.11 	 Sec. 19. STUDY; CORPORATE FRANCHISE TAX.
 24.12 	 The commissioners of the Departments of Finance and Revenue shall conduct a 
24.13 	comprehensive study to identify the reasons for the decline in corporate tax receipts.  The 
24.14 	study shall include an analysis of the current and future effect of existing corporate tax 
24.15 	provisions, both independently and interactively with other provisions; how tax provisions 
24.16 	are changing business practices; and the impact of outsourcing or relocation of business 
24.17 	operations and jobs.  On or before February 1, 2006, the commissioners shall report to 
24.18 	the chairpersons of the house and senate tax committees the results of the study and shall 
24.19 	include recommendations for changes to the tax laws that would reduce tax incentives for 
24.20 	businesses to outsource or relocate business operations or jobs.

24.21 	 ARTICLE 2
24.22 	 FEDERAL UPDATE

24.23 	 Section 1. Minnesota Statutes 2004, section 289A.02, subdivision 7, is amended to 
24.24 	read:
24.25 		 Subd. 7.Internal revenue code.  Unless specifically defined otherwise, "Internal 
24.26 	Revenue Code" means the Internal Revenue Code of 1986, as amended through June 15, 
24.27 	2003 December 31, 2004.

24.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

24.29 	 Sec. 2. Minnesota Statutes 2004, section 290.01, subdivision 19, is amended to read:
24.30 		 Subd. 19.Net income.  The term "net income" means the federal taxable income, 
24.31 	as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
25.1 	date named in this subdivision, incorporating the federal effective dates of changes to the 
25.2 	Internal Revenue Code and any elections made by the taxpayer in accordance with the 
25.3 	Internal Revenue Code in determining federal taxable income for federal income tax 
25.4 	purposes, and with the modifications provided in subdivisions 19a to 19f.
25.5 	 In the case of a regulated investment company or a fund thereof, as defined in section 
25.6 	851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
25.7 	company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
25.8 	except that:
25.9 	 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
25.10 	Revenue Code does not apply;
25.11 	 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
25.12 	Revenue Code must be applied by allowing a deduction for capital gain dividends and 
25.13 	exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
25.14 	Revenue Code; and
25.15 	 (3) the deduction for dividends paid must also be applied in the amount of any 
25.16 	undistributed capital gains which the regulated investment company elects to have treated 
25.17 	as provided in section 852(b)(3)(D) of the Internal Revenue Code.
25.18 	 The net income of a real estate investment trust as defined and limited by section 
25.19 	856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
25.20 	taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
25.21 	 The net income of a designated settlement fund as defined in section 468B(d) of 
25.22 	the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
25.23 	Internal Revenue Code.
25.24 	 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 1402(a), 1403(a), 1443, 
25.25 	1450, 1501(a), 1605, 1611(a), 1612, 1616, 1617, 1704(l), and 1704(m) of the Small 
25.26 	Business Job Protection Act, Public Law 104-188, the provisions of Public Law 104-117, 
25.27 	the provisions of sections 313(a) and (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and 
25.28 	(b), 1002, 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 
25.29 	1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 1604(d)(1) of the 
25.30 	Taxpayer Relief Act of 1997, Public Law 105-34, the provisions of section 6010 of the 
25.31 	Internal Revenue Service Restructuring and Reform Act of 1998, Public Law 105-206, the 
25.32 	provisions of section 4003 of the Omnibus Consolidated and Emergency Supplemental 
25.33 	Appropriations Act, 1999, Public Law 105-277, and the provisions of section 318 of the 
25.34 	Consolidated Appropriation Act of 2001, Public Law 106-554, shall become effective at 
25.35 	the time they become effective for federal purposes.
26.1 	 The Internal Revenue Code of 1986, as amended through December 31, 1996 2004, 
26.2 	shall be in effect for taxable years beginning after December 31, 1996. The provisions of 
26.3 	Public Law 109-1, shall be effective for tax years beginning after December 31, 2003.
26.4 	 The provisions of sections 202(a) and (b), 221(a), 225, 312, 313, 913(a), 934, 962, 
26.5 	1004, 1005, 1052, 1063, 1084(a) and (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 
26.6 	1306, 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 1530, 1601(d), (e), 
26.7 	(f), and (i) and 1602(a), (b), (c), and (e) of the Taxpayer Relief Act of 1997, Public Law 
26.8 	105-34, the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, and 7003 of 
26.9 	the Internal Revenue Service Restructuring and Reform Act of 1998, Public Law 105-206, 
26.10 	the provisions of section 3001 of the Omnibus Consolidated and Emergency Supplemental 
26.11 	Appropriations Act, 1999, Public Law 105-277, the provisions of section 3001 of the 
26.12 	Miscellaneous Trade and Technical Corrections Act of 1999, Public Law 106-36, and the 
26.13 	provisions of section 316 of the Consolidated Appropriation Act of 2001, Public Law 
26.14 	106-554, shall become effective at the time they become effective for federal purposes.
26.15 	 The Internal Revenue Code of 1986, as amended through December 31, 1997, shall 
26.16 	be in effect for taxable years beginning after December 31, 1997.
26.17 	 The provisions of sections 5002, 6009, 6011, and 7001 of the Internal Revenue 
26.18 	Service Restructuring and Reform Act of 1998, Public Law 105-206, the provisions of 
26.19 	section 9010 of the Transportation Equity Act for the 21st Century, Public Law 105-178, 
26.20 	the provisions of sections 1004, 4002, and 5301 of the Omnibus Consolidation and 
26.21 	Emergency Supplemental Appropriations Act, 1999, Public Law 105-277, the provision 
26.22 	of section 303 of the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
26.23 	105-369, the provisions of sections 532, 534, 536, 537, and 538 of the Ticket to Work 
26.24 	and Work Incentives Improvement Act of 1999, Public Law 106-170, the provisions of 
26.25 	the Installment Tax Correction Act of 2000, Public Law 106-573, and the provisions of 
26.26 	section 309 of the Consolidated Appropriation Act of 2001, Public Law 106-554, shall 
26.27 	become effective at the time they become effective for federal purposes.
26.28 	 The Internal Revenue Code of 1986, as amended through December 31, 1998, shall 
26.29 	be in effect for taxable years beginning after December 31, 1998.
26.30 	 The provisions of the FSC Repeal and Extraterritorial Income Exclusion Act of 
26.31 	2000, Public Law 106-519, and the provision of section 412 of the Job Creation and 
26.32 	Worker Assistance Act of 2002, Public Law 107-147, shall become effective at the time 
26.33 	it became effective for federal purposes.
26.34 	 The Internal Revenue Code of 1986, as amended through December 31, 1999, 
26.35 	shall be in effect for taxable years beginning after December 31, 1999.  The provisions 
26.36 	of sections 306 and 401 of the Consolidated Appropriation Act of 2001, Public Law 
27.1 	106-554, and the provision of section 632(b)(2)(A) of the Economic Growth and Tax 
27.2 	Relief Reconciliation Act of 2001, Public Law 107-16, and provisions of sections 101 and 
27.3 	402 of the Job Creation and Worker Assistance Act of 2002, Public Law 107-147, shall 
27.4 	become effective at the same time it became effective for federal purposes.
27.5 	 The Internal Revenue Code of 1986, as amended through December 31, 2000, 
27.6 	shall be in effect for taxable years beginning after December 31, 2000.  The provisions 
27.7 	of sections 659a and 671 of the Economic Growth and Tax Relief Reconciliation Act of 
27.8 	2001, Public Law 107-16, the provisions of sections 104, 105, and 111 of the Victims of 
27.9 	Terrorism Tax Relief Act of 2001, Public Law 107-134, and the provisions of sections 201, 
27.10 	403, 413, and 606 of the Job Creation and Worker Assistance Act of 2002, Public Law 
27.11 	107-147, shall become effective at the same time it became effective for federal purposes.
27.12 	 The Internal Revenue Code of 1986, as amended through March 15, 2002, shall be 
27.13 	in effect for taxable years beginning after December 31, 2001.
27.14 	 The provisions of sections 101 and 102 of the Victims of Terrorism Tax Relief Act 
27.15 	of 2001, Public Law 107-134, shall become effective at the same time it becomes effective 
27.16 	for federal purposes.
27.17 	 The Internal Revenue Code of 1986, as amended through June 15, 2003, shall be in 
27.18 	effect for taxable years beginning after December 31, 2002.  The provisions of section 201 
27.19 	of the Jobs and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if it is enacted 
27.20 	into law, are effective at the same time it became effective for federal purposes.
27.21 	 Except as otherwise provided, references to the Internal Revenue Code in 
27.22 	subdivisions 19a 19 to 19g 19f mean the code in effect for purposes of determining net 
27.23 	income for the applicable year.

27.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

27.25 	 Sec. 3. Minnesota Statutes 2004, section 290.01, subdivision 19a, is amended to read:
27.26 		 Subd. 19a.Additions to federal taxable income.  For individuals, estates, and 
27.27 	trusts, there shall be added to federal taxable income:
27.28 	 (1)(i) interest income on obligations of any state other than Minnesota or a political 
27.29 	or governmental subdivision, municipality, or governmental agency or instrumentality 
27.30 	of any state other than Minnesota exempt from federal income taxes under the Internal 
27.31 	Revenue Code or any other federal statute; and
27.32 	 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
27.33 	Code, except the portion of the exempt-interest dividends derived from interest income 
27.34 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
27.35 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
28.1 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
28.2 	95 percent or more of the exempt-interest dividends that are paid by the regulated 
28.3 	investment company as defined in section 851(a) of the Internal Revenue Code, or the 
28.4 	fund of the regulated investment company as defined in section 851(g) of the Internal 
28.5 	Revenue Code, making the payment; and
28.6 	 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
28.7 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
28.8 	interest income on obligations of the state in which the tribe is located;
28.9 	 (2) the amount of income or sales and use taxes paid or accrued within the taxable 
28.10 	year under this chapter and income or sales and use taxes paid to any other state or to any 
28.11 	province or territory of Canada, to the extent allowed as a deduction under section 63(d) of 
28.12 	the Internal Revenue Code, but the addition may not be more than the amount by which the 
28.13 	itemized deductions as allowed under section 63(d) of the Internal Revenue Code exceeds 
28.14 	the amount of the standard deduction as defined in section 63(c) of the Internal Revenue 
28.15 	Code of 1986, as amended through June 15, 2003.  For the purpose of this paragraph, the 
28.16 	disallowance of itemized deductions under section 68 of the Internal Revenue Code of 
28.17 	1986, income or sales and use  tax is the last itemized deduction disallowed;
28.18 	 (3) the capital gain amount of a lump sum distribution to which the special tax under 
28.19 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
28.20 	 (4) the amount of income taxes paid or accrued within the taxable year under this 
28.21 	chapter and income taxes paid to any other state or any province or territory of Canada, 
28.22 	to the extent allowed as a deduction in determining federal adjusted gross income.  For 
28.23 	the purpose of this paragraph, income taxes do not include the taxes imposed by sections 
28.24 	290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
28.25 	 (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10;
28.26 	 (6) the amount of a partner's pro rata share of net income which does not flow 
28.27 	through to the partner because the partnership elected to pay the tax on the income under 
28.28 	section 6242(a)(2) of the Internal Revenue Code; and 
28.29 	 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
28.30 	Internal Revenue Code.  For purposes of this clause, if the taxpayer has an activity that 
28.31 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
28.32 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
28.33 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
28.34 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
28.35 	amount of the loss from the activity that is not allowed in the taxable year.  In succeeding 
29.1 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
29.2 	under section 168(k) is allowed;
29.3 	 (8) 80 percent of the amount by which the deduction allowed by section 179 of the 
29.4 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
29.5 	Revenue Code of 1986, as amended through December 31, 2003;
29.6 	 (9) to the extent deducted in computing federal taxable income, the amount of the 
29.7 	deduction allowable under section 199 of the Internal Revenue Code;
29.8 	 (10) to the extent deducted in computing federal taxable income, the amount by 
29.9 	which the standard deduction allowed under section 63(c) of the Internal Revenue Code 
29.10 	exceeds the standard deduction allowable under section 63(c) of the Internal Revenue 
29.11 	Code of 1986, as amended through December 31, 2003;
29.12 	 (11) the exclusion allowed under section 139A of the Internal Revenue Code for 
29.13 	federal subsidies for prescription drug plans; and 
29.14 	 (12) the deduction or exclusion allowed under section 223 of the Internal Revenue 
29.15 	Code for contributions to health savings accounts.

29.16 	EFFECTIVE DATE. This section is effective for tax years beginning after 
29.17 	December 31, 2004, except the changes in clause (2) are effective for tax years beginning 
29.18 	after December 31, 2003.

29.19 	 Sec. 4. Minnesota Statutes 2004, section 290.01, subdivision 19b, is amended to read:
29.20 		 Subd. 19b.Subtractions from federal taxable income.  For individuals, estates, 
29.21 	and trusts, there shall be subtracted from federal taxable income:
29.22 	 (1) interest income on obligations of any authority, commission, or instrumentality 
29.23 	of the United States to the extent includable in taxable income for federal income tax 
29.24 	purposes but exempt from state income tax under the laws of the United States;
29.25 	 (2) if included in federal taxable income, the amount of any overpayment of income 
29.26 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
29.27 	is received as a refund or as a credit to another taxable year's income tax liability;
29.28 	 (3) the amount paid to others, less the amount used to claim the credit allowed under 
29.29 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
29.30 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
29.31 	transportation of each qualifying child in attending an elementary or secondary school 
29.32 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
29.33 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
29.34 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
29.35 	of 1964 and chapter 363A.  For the purposes of this clause, "tuition" includes fees or 
30.1 	tuition as defined in section 290.0674, subdivision 1, clause (1).  As used in this clause, 
30.2 	"textbooks" includes books and other instructional materials and equipment purchased 
30.3 	or leased for use in elementary and secondary schools in teaching only those subjects 
30.4 	legally and commonly taught in public elementary and secondary schools in this state.  
30.5 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
30.6 	section 290.0674, subdivision 1, clause (3).  "Textbooks" does not include instructional 
30.7 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
30.8 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
30.9 	or materials for, or transportation to, extracurricular activities including sporting events, 
30.10 	musical or dramatic events, speech activities, driver's education, or similar programs.  For 
30.11 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
30.12 	given in section 32(c)(3) of the Internal Revenue Code;
30.13 	 (4) income as provided under section 290.0802;
30.14 	 (5) to the extent included in federal adjusted gross income, income realized on 
30.15 	disposition of property exempt from tax under section 290.491;
30.16 	 (6) to the extent included in federal taxable income, postservice benefits for youth 
30.17 	community service under section 124D.42 for volunteer service under United States 
30.18 	Code, title 42, sections 12601 to 12604;
30.19 	 (7) to the extent not deducted in determining federal taxable income by an individual 
30.20 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
30.21 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
30.22 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code 
30.23 	over $500 and under the provisions of Public Law 109-1;
30.24 	 (8) for taxable years beginning before January 1, 2008, the amount of the federal 
30.25 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
30.26 	which is included in gross income under section 87 of the Internal Revenue Code;
30.27 	 (9) for individuals who are allowed a federal foreign tax credit for taxes that do not 
30.28 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
30.29 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
30.30 	foreign taxes reported in claiming the foreign tax credit.  For purposes of this clause, 
30.31 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
30.32 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
30.33 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
30.34 	the extent they exceed the federal foreign tax credit;
30.35 	 (10) in each of the five tax years immediately following the tax year in which an 
30.36 	addition is required under subdivision 19a, clause (7), an amount equal to one-fifth of 
31.1 	the delayed depreciation.  For purposes of this clause, "delayed depreciation" means the 
31.2 	amount of the addition made by the taxpayer under subdivision 19a, clause (7), minus the 
31.3 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
31.4 	generated for the tax year of the addition.  The resulting delayed depreciation cannot be 
31.5 	less than zero; and 
31.6 	 (11) job opportunity building zone income as provided under section 469.316.;
31.7 	 (12) in each of the five tax years immediately following the tax year in which an 
31.8 	addition is required under subdivision 19a, clause (8), or 19c, clause (17), in the case of a 
31.9 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
31.10 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (17), in the 
31.11 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
31.12 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
31.13 	tax year of the addition.  If the net operating loss exceeds the addition for the tax year, a 
31.14 	subtraction is not allowed under this clause;
31.15 	 (13) to the extent included in federal taxable income, compensation paid to a service 
31.16 	member as defined in United States Code, title 10, section 101(a)(5), for military service 
31.17 	as defined in the Service Member Civil Relief Act, Public Law 108-189, section 101(2), 
31.18 	and compensation paid for state active service as defined in section 190.05, subdivision 5a, 
31.19 	clauses (1) and (3), or federally funded state active service as defined in section 190.05, 
31.20 	subdivision 5b.  This subtraction does not apply to retirement income as defined in section 
31.21 	290.17, subdivision 2, paragraph (a), clause (3); and 
31.22 	 (14) distributions from a health savings account to the extent the distributions are for 
31.23 	the return of amounts added back under subdivision 19a, clause (12), but only to the extent 
31.24 	that the amount of the distribution would have been deductible under section 213 of the 
31.25 	Internal Revenue Code for that taxable year.  For the purposes of this clause, distributions 
31.26 	are considered to be made from contributions subject to the add-back.

31.27 	EFFECTIVE DATE. This section is effective for tax years beginning after 
31.28 	December 31, 2004, except the change to clause (7) is effective for tax years beginning 
31.29 	after December 31, 2003.

31.30 	 Sec. 5. Minnesota Statutes 2004, section 290.01, subdivision 19c, is amended to read:
31.31 		 Subd. 19c.Corporations; additions to federal taxable income.  For corporations, 
31.32 	there shall be added to federal taxable income:
31.33 	 (1) the amount of any deduction taken for federal income tax purposes for income, 
31.34 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
31.35 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
32.1 	another state, a political subdivision of another state, the District of Columbia, or any 
32.2 	foreign country or possession of the United States;
32.3 	 (2) interest not subject to federal tax upon obligations of:  the United States, its 
32.4 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
32.5 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
32.6 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
32.7 	tribal governments;
32.8 	 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
32.9 	Revenue Code;
32.10 	 (4) the amount of any net operating loss deduction taken for federal income tax 
32.11 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
32.12 	deduction under section 810 of the Internal Revenue Code;
32.13 	 (5) the amount of any special deductions taken for federal income tax purposes 
32.14 	under sections 241 to 247 of the Internal Revenue Code;
32.15 	 (6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
32.16 	clause (a), that are not subject to Minnesota income tax;
32.17 	 (7) the amount of any capital losses deducted for federal income tax purposes under 
32.18 	sections 1211 and 1212 of the Internal Revenue Code;
32.19 	 (8) the exempt foreign trade income of a foreign sales corporation under sections 
32.20 	921(a) and 291 of the Internal Revenue Code;
32.21 	 (9) the amount of percentage depletion deducted under sections 611 through 614 and 
32.22 	291 of the Internal Revenue Code;
32.23 	 (10) for certified pollution control facilities placed in service in a taxable year 
32.24 	beginning before December 31, 1986, and for which amortization deductions were elected 
32.25 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
32.26 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
32.27 	income for those facilities;
32.28 	 (11) the amount of any deemed dividend from a foreign operating corporation 
32.29 	determined pursuant to section 290.17, subdivision 4, paragraph (g);
32.30 	 (12) the amount of any environmental tax paid under section 59(a) of the Internal 
32.31 	Revenue Code;
32.32 	 (13) the amount of a partner's pro rata share of net income which does not flow 
32.33 	through to the partner because the partnership elected to pay the tax on the income under 
32.34 	section 6242(a)(2) of the Internal Revenue Code;
32.35 	 (14) the amount of net income excluded under section 114 of the Internal Revenue 
32.36 	Code;
33.1 	 (15) any increase in subpart F income, as defined in section 952(a) of the Internal 
33.2 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
33.3 	the provisions of section 614 of Public Law 107-147; and 
33.4 	 (16) 80 percent of the depreciation deduction allowed under section 168(k) of the 
33.5 	Internal Revenue Code.  For purposes of this clause, if the taxpayer has an activity that 
33.6 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
33.7 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
33.8 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
33.9 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
33.10 	amount of the loss from the activity that is not allowed in the taxable year.  In succeeding 
33.11 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
33.12 	under section 168(k) is allowed;
33.13 	 (17) 80 percent of the amount by which the deduction allowed by section 179 of the 
33.14 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
33.15 	Revenue Code of 1986, as amended through December 31, 2003; and 
33.16 	 (18) to the extent deducted in computing federal taxable income, the amount of the 
33.17 	deduction allowable under section 199 of the Internal Revenue Code.

33.18 	EFFECTIVE DATE. This section is effective for tax years beginning after 
33.19 	December 31, 2004.

33.20 	 Sec. 6. Minnesota Statutes 2004, section 290.01, subdivision 19d, is amended to read:
33.21 		 Subd. 19d.Corporations; modifications decreasing federal taxable income.  For 
33.22 	corporations, there shall be subtracted from federal taxable income after the increases 
33.23 	provided in subdivision 19c:
33.24 	 (1) the amount of foreign dividend gross-up added to gross income for federal 
33.25 	income tax purposes under section 78 of the Internal Revenue Code;
33.26 	 (2) the amount of salary expense not allowed for federal income tax purposes due to 
33.27 	claiming the federal jobs credit under section 51 of the Internal Revenue Code;
33.28 	 (3) any dividend (not including any distribution in liquidation) paid within the 
33.29 	taxable year by a national or state bank to the United States, or to any instrumentality of 
33.30 	the United States exempt from federal income taxes, on the preferred stock of the bank 
33.31 	owned by the United States or the instrumentality;
33.32 	 (4) amounts disallowed for intangible drilling costs due to differences between 
33.33 	this chapter and the Internal Revenue Code in taxable years beginning before January 
33.34 	1, 1987, as follows:
34.1 	 (i) to the extent the disallowed costs are represented by physical property, an amount 
34.2 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
34.3 	subdivision 7, subject to the modifications contained in subdivision 19e; and
34.4 	 (ii) to the extent the disallowed costs are not represented by physical property, an 
34.5 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
34.6 	290.09, subdivision 8;
34.7 	 (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
34.8 	Internal Revenue Code, except that:
34.9 	 (i) for capital losses incurred in taxable years beginning after December 31, 1986, 
34.10 	capital loss carrybacks shall not be allowed;
34.11 	 (ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
34.12 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
34.13 	allowed;
34.14 	 (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
34.15 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
34.16 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
34.17 	 (iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
34.18 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
34.19 	extent such loss was not used in a prior taxable year and subject to the provisions of 
34.20 	Minnesota Statutes 1986, section 290.16, shall be allowed;
34.21 	 (6) an amount for interest and expenses relating to income not taxable for federal 
34.22 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
34.23 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
34.24 	291 of the Internal Revenue Code in computing federal taxable income;
34.25 	 (7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
34.26 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a 
34.27 	reasonable allowance for depletion based on actual cost.  In the case of leases the deduction 
34.28 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
34.29 	by the commissioner.  In the case of property held in trust, the allowable deduction must 
34.30 	be apportioned between the income beneficiaries and the trustee in accordance with the 
34.31 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
34.32 	of the trust's income allocable to each;
34.33 	 (8) for certified pollution control facilities placed in service in a taxable year 
34.34 	beginning before December 31, 1986, and for which amortization deductions were elected 
34.35 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
35.1 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
35.2 	1986, section 290.09, subdivision 7;
35.3 	 (9) amounts included in federal taxable income that are due to refunds of income, 
35.4 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
35.5 	corporation to Minnesota, another state, a political subdivision of another state, the 
35.6 	District of Columbia, or a foreign country or possession of the United States to the extent 
35.7 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
35.8 	clause (1), in a prior taxable year;
35.9 	 (10) 80 percent of royalties, fees, or other like income accrued or received from a 
35.10 	foreign operating corporation or a foreign corporation which is part of the same unitary 
35.11 	business as the receiving corporation;
35.12 	 (11) income or gains from the business of mining as defined in section 290.05, 
35.13 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
35.14 	 (12) the amount of handicap access expenditures in the taxable year which are not 
35.15 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
35.16 	 (13) the amount of qualified research expenses not allowed for federal income tax 
35.17 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
35.18 	the amount exceeds the amount of the credit allowed under section 290.068;
35.19 	 (14) the amount of salary expenses not allowed for federal income tax purposes due 
35.20 	to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
35.21 	Code;
35.22 	 (15) the amount of any refund of environmental taxes paid under section 59A of the 
35.23 	Internal Revenue Code;
35.24 	 (16) for taxable years beginning before January 1, 2008, the amount of the federal 
35.25 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
35.26 	which is included in gross income under section 87 of the Internal Revenue Code;
35.27 	 (17) for a corporation whose foreign sales corporation, as defined in section 922 
35.28 	of the Internal Revenue Code, constituted a foreign operating corporation during any 
35.29 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
35.30 	claiming the deduction under section 290.21, subdivision 4, for income received from 
35.31 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
35.32 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
35.33 	not income of a foreign operating company;
35.34 	 (18) any decrease in subpart F income, as defined in section 952(a) of the Internal 
35.35 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
35.36 	the provisions of section 614 of Public Law 107-147; and 
36.1 	 (19) in each of the five tax years immediately following the tax year in which an 
36.2 	addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of 
36.3 	the delayed depreciation.  For purposes of this clause, "delayed depreciation" means the 
36.4 	amount of the addition made by the taxpayer under subdivision 19c, clause (16).  The 
36.5 	resulting delayed depreciation cannot be less than zero; and 
36.6 	 (20) in each of the five tax years immediately following the tax year in which an 
36.7 	addition is required under subdivision 19c, clause (17), an amount equal to one-fifth of the 
36.8 	amount of the addition.

36.9 	EFFECTIVE DATE. This section is effective for tax years beginning after 
36.10 	December 31, 2004.

36.11 	 Sec. 7. Minnesota Statutes 2004, section 290.01, subdivision 31, is amended to read:
36.12 		 Subd. 31.Internal revenue code.  Unless specifically defined otherwise, "Internal 
36.13 	Revenue Code" means the Internal Revenue Code of 1986, as amended through June 15, 
36.14 	2003 December 31, 2004.

36.15 	EFFECTIVE DATE. This section is effective the day following final enactment 
36.16 	except the changes incorporated by federal changes are effective at the same times as the 
36.17 	changes were effective for federal purposes.

36.18 	 Sec. 8. Minnesota Statutes 2004, section 290.032, subdivision 1, is amended to read:
36.19 		 Subdivision 1.Imposition.  There is hereby imposed as an addition to the annual 
36.20 	income tax for a taxable year of a taxpayer in the classes described in section 290.03 a 
36.21 	tax with respect to any distribution received by such taxpayer that is treated as a lump 
36.22 	sum distribution under section 402(d) of the Internal Revenue Code 1401(c)(2) of the 
36.23 	Small Business Job Protection Act, Public Law 104-188 and that is subject to tax for such 
36.24 	taxable year under section 402(d) of the Internal Revenue Code 1401(c)(2) of the Small 
36.25 	Business Job Protection Act, Public Law 104-188.

36.26 	EFFECTIVE DATE. This section is effective for tax years beginning after 
36.27 	December 31, 1999.

36.28 	 Sec. 9. Minnesota Statutes 2004, section 290.032, subdivision 2, is amended to read:
36.29 		 Subd. 2.Computation.  The amount of tax imposed by subdivision 1 shall be 
36.30 	computed in the same way as the tax imposed under section 402(d) of the Internal Revenue 
36.31 	Code of 1986, as amended through December 31, 1995, except that the initial separate tax 
36.32 	shall be an amount equal to five times the tax which would be imposed by section 290.06, 
37.1 	subdivision 2c, if the recipient was an unmarried individual, and the taxable net income 
37.2 	was an amount equal to one-fifth of the excess of
37.3 	 (i) the total taxable amount of the lump sum distribution for the year, over
37.4 	 (ii) the minimum distribution allowance, and except that references in section 
37.5 	402(d) of the Internal Revenue Code of 1986, as amended through December 31, 1995,to 
37.6 	paragraph (1)(A) thereof shall instead be references to subdivision 1, and the excess, if 
37.7 	any, of the subtraction base amount over federal taxable income for a qualified individual 
37.8 	as provided under section 290.0802, subdivision 2.

37.9 	EFFECTIVE DATE. This section is effective for tax years beginning after 
37.10 	December 31, 1999.

37.11 	 Sec. 10. Minnesota Statutes 2004, section 290.06, subdivision 2c, is amended to read:
37.12 		 Subd. 2c.Schedules of rates for individuals, estates, and trusts.  (a) The income 
37.13 	taxes imposed by this chapter upon married individuals filing joint returns and surviving 
37.14 	spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
37.15 	applying to their taxable net income the following schedule of rates:
37.16 	 (1) On the first $25,680, 5.35 percent;
37.17 	 (2) On all over $25,680, but not over $102,030, 7.05 percent;
37.18 	 (3) On all over $102,030, 7.85 percent.
37.19 	 Married individuals filing separate returns, estates, and trusts must compute their 
37.20 	income tax by applying the above rates to their taxable income, except that the income 
37.21 	brackets will be one-half of the above amounts.
37.22 	 (b) The income taxes imposed by this chapter upon unmarried individuals must be 
37.23 	computed by applying to taxable net income the following schedule of rates:
37.24 	 (1) On the first $17,570, 5.35 percent;
37.25 	 (2) On all over $17,570, but not over $57,710, 7.05 percent;
37.26 	 (3) On all over $57,710, 7.85 percent.
37.27 	 (c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
37.28 	as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
37.29 	computed by applying to taxable net income the following schedule of rates:
37.30 	 (1) On the first $21,630, 5.35 percent;
37.31 	 (2) On all over $21,630, but not over $86,910, 7.05 percent;
37.32 	 (3) On all over $86,910, 7.85 percent.
37.33 	 (d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
37.34 	tax of any individual taxpayer whose taxable net income for the taxable year is less than 
37.35 	an amount determined by the commissioner must be computed in accordance with tables 
38.1 	prepared and issued by the commissioner of revenue based on income brackets of not 
38.2 	more than $100.  The amount of tax for each bracket shall be computed at the rates set 
38.3 	forth in this subdivision, provided that the commissioner may disregard a fractional part of 
38.4 	a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
38.5 	 (e) An individual who is not a Minnesota resident for the entire year must compute 
38.6 	the individual's Minnesota income tax as provided in this subdivision.  After the 
38.7 	application of the nonrefundable credits provided in this chapter, the tax liability must 
38.8 	then be multiplied by a fraction in which:
38.9 	 (1) the numerator is the individual's Minnesota source federal adjusted gross income 
38.10 	as defined in section 62 of the Internal Revenue Code and increased by the additions 
38.11 	required under section 290.01, subdivision 19a, clauses (1), (5), and  (6), (7), (8), and 
38.12 	(9),and reduced by the subtraction under section 290.01, subdivision 19b, clause (11), and 
38.13 	the Minnesota assignable portion of the subtraction for United States government interest 
38.14 	under section 290.01, subdivision 19b, clause (1), and the subtractions under clauses (10), 
38.15 	(11), (12), and (13),after applying the allocation and assignability provisions of section 
38.16 	290.081, clause (a), or 290.17; and
38.17 	 (2) the denominator is the individual's federal adjusted gross income as defined in 
38.18 	section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
38.19 	section 290.01, subdivision 19a, clauses (1), (5), and (6), (7), (8), and (9),and reduced by 
38.20 	the amounts specified in section 290.01, subdivision 19b, clauses (1) and , (10),(11), 
38.21 	(12), and (13).

38.22 	EFFECTIVE DATE. This section is effective for tax years beginning after 
38.23 	December 31, 2004.

38.24 	 Sec. 11. Minnesota Statutes 2004, section 290.067, subdivision 1, is amended to read:
38.25 		 Subdivision 1.Amount of credit.  (a) A taxpayer may take as a credit against the 
38.26 	tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the 
38.27 	dependent care credit for which the taxpayer is eligible pursuant to the provisions of 
38.28 	section 21 of the Internal Revenue Code subject to the limitations provided in subdivision 
38.29 	2 except that in determining whether the child qualified as a dependent, income received 
38.30 	as a Minnesota family investment program grant or allowance to or on behalf of the child 
38.31 	must not be taken into account in determining whether the child received more than half 
38.32 	of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of 
38.33 	the Internal Revenue Code do not apply.
38.34 	 (b) If a child who has not attained the age of six years at the close of the taxable year 
38.35 	is cared for at a licensed family day care home operated by the child's parent, the taxpayer 
39.1 	is deemed to have paid employment-related expenses.  If the child is 16 months old or 
39.2 	younger at the close of the taxable year, the amount of expenses deemed to have been paid 
39.3 	equals the maximum limit for one qualified individual under section 21(c) and (d) of the 
39.4 	Internal Revenue Code.  If the child is older than 16 months of age but has not attained the 
39.5 	age of six years at the close of the taxable year, the amount of expenses deemed to have 
39.6 	been paid equals the amount the licensee would charge for the care of a child of the same 
39.7 	age for the same number of hours of care.
39.8 	 (c) If a married couple:
39.9 	 (1) has a child who has not attained the age of one year at the close of the taxable 
39.10 	year;
39.11 	 (2) files a joint tax return for the taxable year; and
39.12 	 (3) does not participate in a dependent care assistance program as defined in section 
39.13 	129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid 
39.14 	for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of 
39.15 	(i) the combined earned income of the couple or (ii) the amount of the maximum limit for 
39.16 	one qualified individual under section 21(c) and (d) of the Internal Revenue Code will 
39.17 	be deemed to be the employment related expense paid for that child.  The earned income 
39.18 	limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed 
39.19 	amount.  These deemed amounts apply regardless of whether any employment-related 
39.20 	expenses have been paid.
39.21 	 (d) If the taxpayer is not required and does not file a federal individual income tax 
39.22 	return for the tax year, no credit is allowed for any amount paid to any person unless:
39.23 	 (1) the name, address, and taxpayer identification number of the person are included 
39.24 	on the return claiming the credit; or
39.25 	 (2) if the person is an organization described in section 501(c)(3) of the Internal 
39.26 	Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, 
39.27 	the name and address of the person are included on the return claiming the credit.
39.28 	 In the case of a failure to provide the information required under the preceding sentence, 
39.29 	the preceding sentence does not apply if it is shown that the taxpayer exercised due 
39.30 	diligence in attempting to provide the information required.
39.31 	 In the case of a nonresident, part-year resident, or a person who has earned income 
39.32 	not subject to tax under this chapter including earned income excluded pursuant to section 
39.33 	290.01, subdivision 19b, clause (11), the credit determined under section 21 of the Internal 
39.34 	Revenue Code must be allocated based on the ratio by which the earned income of the 
39.35 	claimant and the claimant's spouse from Minnesota sources bears to the total earned 
39.36 	income of the claimant and the claimant's spouse.
40.1 	 For residents of Minnesota, the exclusion of combat pay under section 112 of 
40.2 	the Internal Revenue Code and the subtraction for military pay under section 290.01, 
40.3 	subdivision 19b, clause (13), are not considered "earned income not subject to tax under 
40.4 	this chapter." 

40.5 	EFFECTIVE DATE. This section is effective for tax years beginning after 
40.6 	December 31, 2004.

40.7 	 Sec. 12. Minnesota Statutes 2004, section 290.067, subdivision 2a, is amended to read:
40.8 		 Subd. 2a.Income.  (a) For purposes of this section, "income" means the sum of 
40.9 	the following:
40.10 	 (1) federal adjusted gross income as defined in section 62 of the Internal Revenue 
40.11 	Code; and
40.12 	 (2) the sum of the following amounts to the extent not included in clause (1):
40.13 	 (i) all nontaxable income;
40.14 	 (ii) the amount of a passive activity loss that is not disallowed as a result of section 
40.15 	469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity 
40.16 	loss carryover allowed under section 469(b) of the Internal Revenue Code;
40.17 	 (iii) an amount equal to the total of any discharge of qualified farm indebtedness 
40.18 	of a solvent individual excluded from gross income under section 108(g) of the Internal 
40.19 	Revenue Code;
40.20 	 (iv) cash public assistance and relief;
40.21 	 (v) any pension or annuity (including railroad retirement benefits, all payments 
40.22 	received under the federal Social Security Act, supplemental security income, and veterans 
40.23 	benefits), which was not exclusively funded by the claimant or spouse, or which was 
40.24 	funded exclusively by the claimant or spouse and which funding payments were excluded 
40.25 	from federal adjusted gross income in the years when the payments were made;
40.26 	 (vi) interest received from the federal or a state government or any instrumentality 
40.27 	or political subdivision thereof;
40.28 	 (vii) workers' compensation;
40.29 	 (viii) nontaxable strike benefits;
40.30 	 (ix) the gross amounts of payments received in the nature of disability income or 
40.31 	sick pay as a result of accident, sickness, or other disability, whether funded through 
40.32 	insurance or otherwise;
40.33 	 (x) a lump sum distribution under section 402(e)(3) of the Internal Revenue Code 
40.34 	of 1986, as amended through December 31, 1995;
41.1 	 (xi) contributions made by the claimant to an individual retirement account, 
41.2 	including a qualified voluntary employee contribution; simplified employee pension plan; 
41.3 	self-employed retirement plan; cash or deferred arrangement plan under section 401(k) 
41.4 	of the Internal Revenue Code; or deferred compensation plan under section 457 of the 
41.5 	Internal Revenue Code; and 
41.6 	 (xii) nontaxable scholarship or fellowship grants;
41.7 	 (xiii) the amount of deduction allowed under section 199 of the Internal Revenue 
41.8 	Code; and 
41.9 	 (xiv) the amount of deduction allowed under section 220 or 223 of the Internal 
41.10 	Revenue Code.
41.11 	 In the case of an individual who files an income tax return on a fiscal year basis, the 
41.12 	term "federal adjusted gross income" means federal adjusted gross income reflected in the 
41.13 	fiscal year ending in the next calendar year.  Federal adjusted gross income may not be 
41.14 	reduced by the amount of a net operating loss carryback or carryforward or a capital loss 
41.15 	carryback or carryforward allowed for the year.
41.16 	 (b) "Income" does not include:
41.17 	 (1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 
41.18 	102;
41.19 	 (2) amounts of any pension or annuity that were exclusively funded by the claimant 
41.20 	or spouse if the funding payments were not excluded from federal adjusted gross income 
41.21 	in the years when the payments were made;
41.22 	 (3) surplus food or other relief in kind supplied by a governmental agency;
41.23 	 (4) relief granted under chapter 290A;
41.24 	 (5) child support payments received under a temporary or final decree of dissolution 
41.25 	or legal separation; and
41.26 	 (6) restitution payments received by eligible individuals and excludable interest as 
41.27 	defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 
41.28 	2001, Public Law 107-16.

41.29 	EFFECTIVE DATE. This section is effective for tax years beginning after 
41.30 	December 31, 2003.

41.31 	 Sec. 13. Minnesota Statutes 2004, section 290.0671, subdivision 1, is amended to read:
41.32 		 Subdivision 1.Credit allowed.  (a) An individual is allowed a credit against the tax 
41.33 	imposed by this chapter equal to a percentage of earned income.  To receive a credit, a 
41.34 	taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
42.1 	 (b) For individuals with no qualifying children, the credit equals 1.9125 percent of 
42.2 	the first $4,620 of earned income.  The credit is reduced by 1.9125 percent of earned 
42.3 	income or modified adjusted gross income, whichever is greater, in excess of $5,770, 
42.4 	but in no case is the credit less than zero.
42.5 	 (c) For individuals with one qualifying child, the credit equals 8.5 percent of the first 
42.6 	$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than 
42.7 	$13,450. The credit is reduced by 5.73 percent of earned income or modified adjusted 
42.8 	gross income, whichever is greater, in excess of $15,080, but in no case is the credit 
42.9 	less than zero.
42.10 	 (d) For individuals with two or more qualifying children, the credit equals ten 
42.11 	percent of the first $9,720 of earned income and 20 percent of earned income over 
42.12 	$14,860 but less than $16,800.  The credit is reduced by 10.3 percent of earned income 
42.13 	or modified adjusted gross income, whichever is greater, in excess of $17,890, but in no 
42.14 	case is the credit less than zero.
42.15 	 (e) For a nonresident or part-year resident, the credit must be allocated based on the 
42.16 	percentage calculated under section 290.06, subdivision 2c, paragraph (e).
42.17 	 (f) For a person who was a resident for the entire tax year and has earned income 
42.18 	not subject to tax under this chapter, including income excluded under section 290.01, 
42.19 	subdivision 19b, clause (11), the credit must be allocated based on the ratio of federal 
42.20 	adjusted gross income reduced by the earned income not subject to tax under this chapter 
42.21 	over federal adjusted gross income. For the purposes of this paragraph, the exclusion 
42.22 	of combat pay under section 112 of the Internal Revenue Code and the subtraction for 
42.23 	military pay under section 290.01, subdivision 19b, clause (13), are not considered "earned 
42.24 	income not subject to tax under this chapter." 
42.25 	 (g) For tax years beginning after December 31, 2001, and before December 31, 
42.26 	2004, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 
42.27 	paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by 
42.28 	$1,000 for married taxpayers filing joint returns.
42.29 	 (h) For tax years beginning after December 31, 2004, and before December 31, 
42.30 	2007, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 
42.31 	paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by 
42.32 	$2,000 for married taxpayers filing joint returns.
42.33 	 (i) For tax years beginning after December 31, 2007, and before December 31, 2010, 
42.34 	the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph 
42.35 	(d), after being adjusted for inflation under subdivision 7, are each increased by $3,000 for 
43.1 	married taxpayers filing joint returns. For tax years beginning after December 31, 2008, 
43.2 	the $3,000 is adjusted annually for inflation under subdivision 7.
43.3 	 (j) The commissioner shall construct tables showing the amount of the credit at 
43.4 	various income levels and make them available to taxpayers.  The tables shall follow 
43.5 	the schedule contained in this subdivision, except that the commissioner may graduate 
43.6 	the transition between income brackets.

43.7 	EFFECTIVE DATE. This section is effective for tax years beginning after 
43.8 	December 31, 2004.

43.9 	 Sec. 14. Minnesota Statutes 2004, section 290.0675, subdivision 1, is amended to read:
43.10 		 Subdivision 1.Definitions.  (a) For purposes of this section the following terms 
43.11 	have the meanings given.
43.12 	 (b) "Earned income" means the sum of the following, to the extent included in 
43.13 	Minnesota taxable income:
43.14 	 (1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
43.15 	 (2) income received from a retirement pension, profit-sharing, stock bonus, or 
43.16 	annuity plan; and
43.17 	 (3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue 
43.18 	Code.
43.19 	 (c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
43.20 	 (d) "Earned income of lesser-earning spouse" means the earned income of the 
43.21 	spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable 
43.22 	year minus the sum of (i) the amount for one exemption under section 151(d) of the 
43.23 	Internal Revenue Code and (ii) one-half the amount of the standard deduction under 
43.24 	section 63(c)(2)(A) and (4) of the Internal Revenue Code of 1986, as amended through 
43.25 	December 31, 2003.

43.26 	EFFECTIVE DATE. This section is effective for tax years beginning after 
43.27 	December 31, 2004.

43.28 	 Sec. 15. Minnesota Statutes 2004, section 290.091, subdivision 2, is amended to read:
43.29 		 Subd. 2.Definitions.  For purposes of the tax imposed by this section, the following 
43.30 	terms have the meanings given:
43.31 	 (a) "Alternative minimum taxable income" means the sum of the following for 
43.32 	the taxable year:
44.1 	 (1) the taxpayer's federal alternative minimum taxable income as defined in section 
44.2 	55(b)(2) of the Internal Revenue Code;
44.3 	 (2) the taxpayer's itemized deductions allowed in computing federal alternative 
44.4 	minimum taxable income, but excluding:
44.5 	 (i) the charitable contribution deduction under section 170 of the Internal Revenue 
44.6 	Code to the extent that the deduction exceeds 1.0 percent of adjusted gross income, as 
44.7 	defined in section 62 of the Internal Revenue Code;
44.8 	 (ii) the medical expense deduction;
44.9 	 (iii) the casualty, theft, and disaster loss deduction; and
44.10 	 (iv) the impairment-related work expenses of a disabled person;
44.11 	 (3) for depletion allowances computed under section 613A(c) of the Internal 
44.12 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
44.13 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
44.14 	the excess of the deduction for depletion allowable under section 611 of the Internal 
44.15 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
44.16 	taxable year (determined without regard to the depletion deduction for the taxable year);
44.17 	 (4) to the extent not included in federal alternative minimum taxable income, the 
44.18 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
44.19 	Internal Revenue Code determined without regard to subparagraph (E);
44.20 	 (5) to the extent not included in federal alternative minimum taxable income, the 
44.21 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
44.22 	 (6) the amount of addition required by section 290.01, subdivision 19a, clause 
44.23 	clauses (7), (8), and (9);
44.24 	 less the sum of the amounts determined under the following:
44.25 	 (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
44.26 	 (2) an overpayment of state income tax as provided by section 290.01, subdivision 
44.27 	19b, clause (2), to the extent included in federal alternative minimum taxable income;
44.28 	 (3) the amount of investment interest paid or accrued within the taxable year on 
44.29 	indebtedness to the extent that the amount does not exceed net investment income, as 
44.30 	defined in section 163(d)(4) of the Internal Revenue Code.  Interest does not include 
44.31 	amounts deducted in computing federal adjusted gross income; and
44.32 	 (4) amounts subtracted from federal taxable income as provided by section 290.01, 
44.33 	subdivision 19b, clauses (10) and , (11), (12), and (13).
44.34 	 In the case of an estate or trust, alternative minimum taxable income must be 
44.35 	computed as provided in section 59(c) of the Internal Revenue Code.
45.1 	 (b) "Investment interest" means investment interest as defined in section 163(d)(3) 
45.2 	of the Internal Revenue Code.
45.3 	 (c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 
45.4 	income after subtracting the exemption amount determined under subdivision 3.
45.5 	 (d) "Regular tax" means the tax that would be imposed under this chapter (without 
45.6 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
45.7 	credits allowed under this chapter.
45.8 	 (e) "Net minimum tax" means the minimum tax imposed by this section.

45.9 	EFFECTIVE DATE. This section is effective for tax years beginning after 
45.10 	December 31, 2004.

45.11 	 Sec. 16. Minnesota Statutes 2004, section 290A.03, subdivision 3, is amended to read:
45.12 		 Subd. 3.Income.  (1) "Income" means the sum of the following:
45.13 	 (a) federal adjusted gross income as defined in the Internal Revenue Code; and
45.14 	 (b) the sum of the following amounts to the extent not included in clause (a):
45.15 	 (i) all nontaxable income;
45.16 	 (ii) the amount of a passive activity loss that is not disallowed as a result of section 
45.17 	469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity 
45.18 	loss carryover allowed under section 469(b) of the Internal Revenue Code;
45.19 	 (iii) an amount equal to the total of any discharge of qualified farm indebtedness 
45.20 	of a solvent individual excluded from gross income under section 108(g) of the Internal 
45.21 	Revenue Code;
45.22 	 (iv) cash public assistance and relief;
45.23 	 (v) any pension or annuity (including railroad retirement benefits, all payments 
45.24 	received under the federal Social Security Act, supplemental security income, and veterans 
45.25 	benefits), which was not exclusively funded by the claimant or spouse, or which was 
45.26 	funded exclusively by the claimant or spouse and which funding payments were excluded 
45.27 	from federal adjusted gross income in the years when the payments were made;
45.28 	 (vi) interest received from the federal or a state government or any instrumentality 
45.29 	or political subdivision thereof;
45.30 	 (vii) workers' compensation;
45.31 	 (viii) nontaxable strike benefits;
45.32 	 (ix) the gross amounts of payments received in the nature of disability income or 
45.33 	sick pay as a result of accident, sickness, or other disability, whether funded through 
45.34 	insurance or otherwise;
46.1 	 (x) a lump sum distribution under section 402(e)(3) of the Internal Revenue Code 
46.2 	of 1986, as amended through December 31, 1995;
46.3 	 (xi) contributions made by the claimant to an individual retirement account, 
46.4 	including a qualified voluntary employee contribution; simplified employee pension plan; 
46.5 	self-employed retirement plan; cash or deferred arrangement plan under section 401(k) 
46.6 	of the Internal Revenue Code; or deferred compensation plan under section 457 of the 
46.7 	Internal Revenue Code; and 
46.8 	 (xii) nontaxable scholarship or fellowship grants;
46.9 	 (xiii) the amount of deduction allowed under section 199 of the Internal Revenue 
46.10 	Code; and 
46.11 	 (xiv) the amount of deduction allowed under section 220 or 223 of the Internal 
46.12 	Revenue Code.
46.13 	 In the case of an individual who files an income tax return on a fiscal year basis, the 
46.14 	term "federal adjusted gross income" shall mean federal adjusted gross income reflected 
46.15 	in the fiscal year ending in the calendar year.  Federal adjusted gross income shall not be 
46.16 	reduced by the amount of a net operating loss carryback or carryforward or a capital loss 
46.17 	carryback or carryforward allowed for the year.
46.18 	 (2) "Income" does not include:
46.19 	 (a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 
46.20 	102;
46.21 	 (b) amounts of any pension or annuity which was exclusively funded by the claimant 
46.22 	or spouse and which funding payments were not excluded from federal adjusted gross 
46.23 	income in the years when the payments were made;
46.24 	 (c) surplus food or other relief in kind supplied by a governmental agency;
46.25 	 (d) relief granted under this chapter;
46.26 	 (e) child support payments received under a temporary or final decree of dissolution 
46.27 	or legal separation; or
46.28 	 (f) restitution payments received by eligible individuals and excludable interest as 
46.29 	defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 
46.30 	2001, Public Law 107-16.
46.31 	 (3) The sum of the following amounts may be subtracted from income:
46.32 	 (a) for the claimant's first dependent, the exemption amount multiplied by 1.4;
46.33 	 (b) for the claimant's second dependent, the exemption amount multiplied by 1.3;
46.34 	 (c) for the claimant's third dependent, the exemption amount multiplied by 1.2;
46.35 	 (d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;
46.36 	 (e) for the claimant's fifth dependent, the exemption amount; and
47.1 	 (f) if the claimant or claimant's spouse was disabled or attained the age of 65 on 
47.2 	or before December 31 of the year for which the taxes were levied or rent paid, the 
47.3 	exemption amount.
47.4 	 For purposes of this subdivision, the "exemption amount" means the exemption 
47.5 	amount under section 151(d) of the Internal Revenue Code for the taxable year for which 
47.6 	the income is reported.

47.7 	EFFECTIVE DATE. This section is effective for property tax refunds based on 
47.8 	household income for 2004 and thereafter.

47.9 	 Sec. 17. Minnesota Statutes 2004, section 290A.03, subdivision 15, is amended to read:
47.10 		 Subd. 15.Internal revenue code.  "Internal Revenue Code" means the Internal 
47.11 	Revenue Code of 1986, as amended through June 15, 2003 December 31, 2004.

47.12 	EFFECTIVE DATE. This section is effective for property tax refunds based on 
47.13 	property taxes payable on or after December 31, 2004, and rent paid on or after December 
47.14 	31, 2003.

47.15 	 Sec. 18. PREEMPTION.
 47.16 	 If a bill styled as S.F. No. 1209 is enacted during the 2005 legislative session, and 
47.17 	includes federal update provisions, the provisions of that act relating to federal updates are 
47.18 	repealed.

47.19 	 ARTICLE 3
47.20 	 SALES TAX

47.21 	 Section 1. Minnesota Statutes 2004, section 289A.11, subdivision 1, is amended to read:
47.22 		 Subdivision 1.Return required.  Except as provided in section 289A.18, 
47.23 	subdivision subdivisions 4 and 4a, for the month in which taxes imposed by chapter 
47.24 	297A are payable, or for which a return is due, a return for the preceding reporting 
47.25 	period must be filed with the commissioner in the form and manner the commissioner 
47.26 	prescribes.  A person making sales at retail at two or more places of business may file a 
47.27 	consolidated return subject to rules prescribed by the commissioner.  In computing the 
47.28 	dollar amount of items on the return, the amounts are rounded off to the nearest whole 
47.29 	dollar, disregarding amounts less than 50 cents and increasing amounts of 50 cents to 99 
47.30 	cents to the next highest dollar.
47.31 	 Notwithstanding this subdivision, a person who is not required to hold a sales tax 
47.32 	permit under chapter 297A and who makes annual purchases of less than $18,500 that 
48.1 	are subject to the use tax imposed by section 297A.63, may file an annual use tax return 
48.2 	on a form prescribed by the commissioner.  If a person who qualifies for an annual use 
48.3 	tax reporting period is required to obtain a sales tax permit or makes use tax purchases 
48.4 	in excess of $18,500 during the calendar year, the reporting period must be considered 
48.5 	ended at the end of the month in which the permit is applied for or the purchase in excess 
48.6 	of $18,500 is made and a return must be filed for the preceding reporting period.

48.7 	EFFECTIVE DATE. This section is effective for purchases made on and after 
48.8 	July 1, 2005.

48.9 	 Sec. 2. Minnesota Statutes 2004, section 289A.18, subdivision 4, is amended to read:
48.10 		 Subd. 4.Sales and use tax returns.  (a) Sales and use tax returns must be filed on or 
48.11 	before the 20th day of the month following the close of the preceding reporting period, 
48.12 	except that annual use tax returns provided for under section 289A.11, subdivision 1, must 
48.13 	be filed by April 15 following the close of the calendar year subdivision 4a, in the case 
48.14 	of individuals.  Annual use tax returns of businesses, including sole proprietorships, and 
48.15 	annual sales tax returns must be filed by February 5 following the close of the calendar 
48.16 	year.
48.17 	 (b) Returns for the June reporting period filed by retailers required to remit their 
48.18 	June liability under section 289A.20, subdivision 4, paragraph (b), are due on or before 
48.19 	August 20.
48.20 	 (c) If a retailer has an average sales and use tax liability, including local sales and 
48.21 	use taxes administered by the commissioner, equal to or less than $500 per month in any 
48.22 	quarter of a calendar year, and has substantially complied with the tax laws during the 
48.23 	preceding four calendar quarters, the retailer may request authorization to file and pay the 
48.24 	taxes quarterly in subsequent calendar quarters.  The authorization remains in effect during 
48.25 	the period in which the retailer's quarterly returns reflect sales and use tax liabilities of 
48.26 	less than $1,500 and there is continued compliance with state tax laws.
48.27 	 (d) If a retailer has an average sales and use tax liability, including local sales and 
48.28 	use taxes administered by the commissioner, equal to or less than $100 per month during a 
48.29 	calendar year, and has substantially complied with the tax laws during that period, the 
48.30 	retailer may request authorization to file and pay the taxes annually in subsequent years.  
48.31 	The authorization remains in effect during the period in which the retailer's annual returns 
48.32 	reflect sales and use tax liabilities of less than $1,200 and there is continued compliance 
48.33 	with state tax laws.
48.34 	 (e) The commissioner may also grant quarterly or annual filing and payment 
48.35 	authorizations to retailers if the commissioner concludes that the retailers' future tax 
49.1 	liabilities will be less than the monthly totals identified in paragraphs (c) and (d).  An 
49.2 	authorization granted under this paragraph is subject to the same conditions as an 
49.3 	authorization granted under paragraphs (c) and (d).
49.4 	 (f) A taxpayer who is a materials supplier may report gross receipts either on:
49.5 	 (1) the cash basis as the consideration is received; or
49.6 	 (2) the accrual basis as sales are made.
49.7 	 As used in this paragraph, "materials supplier" means a person who provides materials 
49.8 	for the improvement of real property; who is primarily engaged in the sale of lumber and 
49.9 	building materials-related products to owners, contractors, subcontractors, repairers, 
49.10 	or consumers; who is authorized to file a mechanics lien upon real property and 
49.11 	improvements under chapter 514; and who files with the commissioner an election to file 
49.12 	sales and use tax returns on the basis of this paragraph.
49.13 	 (g) Notwithstanding paragraphs (a) to (f), a seller that is not a Model 1, 2, or 3 
49.14 	seller, as those terms are used in the Streamlined Sales and Use Tax Agreement, that does 
49.15 	not have a legal requirement to register in Minnesota, and that is registered under the 
49.16 	agreement, must file a return by February 5 following the close of the calendar year in 
49.17 	which the seller initially registers, and must file subsequent returns on February 5 on an 
49.18 	annual basis in succeeding years. Additionally, a return must be submitted on or before 
49.19 	the 20th day of the month following any month by which sellers have accumulated state 
49.20 	and local tax funds for the state in the amount of $1,000 or more.

49.21 	EFFECTIVE DATE. This section is effective for purchases on and after July 
49.22 	1, 2005.

49.23 	 Sec. 3. Minnesota Statutes 2004, section 289A.18, is amended by adding a subdivision 
49.24 	to read:
49.25 		 Subd. 4a.Use tax returns for individuals. Individuals who are subject to the 
49.26 	use tax imposed under section 297A.63 may file and pay use tax owed on purchases for 
49.27 	personal use under their Social Security number as follows:
49.28 	 (1) on the individual income tax return for the calendar year in which the purchases 
49.29 	are made;
49.30 	 (2) on the form for making payments of the individual income tax estimated 
49.31 	payments under section 289A.25 for the calendar quarter in which the purchases are 
49.32 	made; or 
50.1 	 (3) on the individual use tax return, in the form prescribed by the commissioner, for 
50.2 	purchases made in a calendar quarter, to be filed on or before the 20th day of the month 
50.3 	following the close of the preceding quarter.

50.4 	EFFECTIVE DATE. This section is effective for purchases made on and after July 
50.5 	1, 2005, and for income tax returns required to be filed for tax years beginning after 
50.6 	December 31, 2004.

50.7 	 Sec. 4. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
50.8 	to read:
50.9 		 Subd. 37.Personal rapid transit system. "Personal rapid transit system" means a 
50.10 	transportation system of small, computer-controlled vehicles, transporting one to three 
50.11 	passengers on elevated guideways in a transportation network operating on demand and 
50.12 	nonstop directly to any stations in the network.  The system shall provide service on a 
50.13 	regular and continuing basis and operate independent of any government subsidies.

50.14 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
50.15 	June 30, 2008.

50.16 	 Sec. 5. Minnesota Statutes 2004, section 297A.67, is amended by adding a subdivision 
50.17 	to read:
50.18 		 Subd. 32.Geothermal equipment. The loop field collection system and the heat 
50.19 	pump of a geothermal heating and cooling system is exempt.

50.20 	EFFECTIVE DATE. This section is effective for sales and purchases occurring 
50.21 	after June 30, 2005.

50.22 	 Sec. 6. Minnesota Statutes 2004, section 297A.67, is amended by adding a subdivision 
50.23 	to read:
50.24 		 Subd. 33.Biomass fuel stoves. Stoves designed to burn fuel pellets made from 
50.25 	biomass materials are exempt.

50.26 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
50.27 	June 30, 2005.

50.28 	 Sec. 7. Minnesota Statutes 2004, section 297A.68, subdivision 5, is amended to read:
51.1 		 Subd. 5.Capital equipment.  (a) Capital equipment is exempt.  The tax must be 
51.2 	imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and 
51.3 	then refunded in the manner provided in section 297A.75.
51.4 	 "Capital equipment" means machinery and equipment purchased or leased, and used 
51.5 	in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, 
51.6 	or refining tangible personal property to be sold ultimately at retail if the machinery and 
51.7 	equipment are essential to the integrated production process of manufacturing, fabricating, 
51.8 	mining, or refining.  Capital equipment also includes machinery and equipment used to 
51.9 	electronically transmit results retrieved by a customer of an on-line computerized data 
51.10 	retrieval system.
51.11 	 (b) Capital equipment includes, but is not limited to:
51.12 	 (1) machinery and equipment used to operate, control, or regulate the production 
51.13 	equipment;
51.14 	 (2) machinery and equipment used for research and development, design, quality 
51.15 	control, and testing activities;
51.16 	 (3) environmental control devices that are used to maintain conditions such as 
51.17 	temperature, humidity, light, or air pressure when those conditions are essential to and are 
51.18 	part of the production process;
51.19 	 (4) materials and supplies used to construct and install machinery or equipment;
51.20 	 (5) repair and replacement parts, including accessories, whether purchased as spare 
51.21 	parts, repair parts, or as upgrades or modifications to machinery or equipment;
51.22 	 (6) materials used for foundations that support machinery or equipment;
51.23 	 (7) materials used to construct and install special purpose buildings used in the 
51.24 	production process;
51.25 	 (8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed as 
51.26 	part of the delivery process regardless if mounted on a chassis and leases of ready-mixed 
51.27 	concrete trucks; and
51.28 	 (9) machinery or equipment used for research, development, design, or production 
51.29 	of computer software.
51.30 	 (c) Capital equipment does not include the following:
51.31 	 (1) motor vehicles taxed under chapter 297B;
51.32 	 (2) machinery or equipment used to receive or store raw materials;
51.33 	 (3) building materials, except for materials included in paragraph (b), clauses (6) 
51.34 	and (7);
51.35 	 (4) machinery or equipment used for nonproduction purposes, including, but not 
51.36 	limited to, the following:  plant security, fire prevention, first aid, and hospital stations; 
52.1 	support operations or administration; pollution control; and plant cleaning, disposal of 
52.2 	scrap and waste, plant communications, space heating, cooling, lighting, or safety;
52.3 	 (5) farm machinery and aquaculture production equipment as defined by section 
52.4 	297A.61, subdivisions 12 and 13;
52.5 	 (6) machinery or equipment purchased and installed by a contractor as part of an 
52.6 	improvement to real property; or
52.7 	 (7) any other item that is not essential to the integrated process of manufacturing, 
52.8 	fabricating, mining, or refining.
52.9 	 (d) For purposes of this subdivision:
52.10 	 (1) "Equipment" means independent devices or tools separate from machinery but 
52.11 	essential to an integrated production process, including computers and computer software, 
52.12 	used in operating, controlling, or regulating machinery and equipment; and any subunit or 
52.13 	assembly comprising a component of any machinery or accessory or attachment parts of 
52.14 	machinery, such as tools, dies, jigs, patterns, and molds.
52.15 	 (2) "Fabricating" means to make, build, create, produce, or assemble components or 
52.16 	property to work in a new or different manner.
52.17 	 (3) "Integrated production process" means a process or series of operations through 
52.18 	which tangible personal property is manufactured, fabricated, mined, or refined.  For 
52.19 	purposes of this clause, (i) manufacturing begins with the removal of raw materials 
52.20 	from inventory and ends when the last process prior to loading for shipment has been 
52.21 	completed; (ii) fabricating begins with the removal from storage or inventory of the 
52.22 	property to be assembled, processed, altered, or modified and ends with the creation 
52.23 	or production of the new or changed product; (iii) mining begins with the removal of 
52.24 	overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and 
52.25 	ends when the last process before stockpiling is completed; and (iv) refining begins with 
52.26 	the removal from inventory or storage of a natural resource and ends with the conversion 
52.27 	of the item to its completed form.
52.28 	 (4) "Machinery" means mechanical, electronic, or electrical devices, including 
52.29 	computers and computer software, that are purchased or constructed to be used for the 
52.30 	activities set forth in paragraph (a), beginning with the removal of raw materials from 
52.31 	inventory through completion of the product, including packaging of the product.
52.32 	 (5) "Machinery and equipment used for pollution control" means machinery and 
52.33 	equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity 
52.34 	described in paragraph (a).
52.35 	 (6) "Manufacturing" means an operation or series of operations where raw materials 
52.36 	are changed in form, composition, or condition by machinery and equipment and which 
53.1 	results in the production of a new article of tangible personal property.  For purposes of 
53.2 	this subdivision, "manufacturing" includes the generation of electricity or steam to be 
53.3 	sold at retail.
53.4 	 (7) "Mining" means the extraction of minerals, ores, stone, or peat.
53.5 	 (8) "On-line data retrieval system" means a system whose cumulation of information 
53.6 	is equally available and accessible to all its customers.
53.7 	 (9) "Primarily" means machinery and equipment used 50 percent or more of the time 
53.8 	in an activity described in paragraph (a).
53.9 	 (10) "Refining" means the process of converting a natural resource to an intermediate 
53.10 	or finished product, including the treatment of water to be sold at retail.
53.11 	 (11) This subdivision does not apply to telecommunications equipment as 
53.12 	provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit 
53.13 	for telecommunications services.

53.14 	EFFECTIVE DATE. This section is effective for purchases made after July 31, 
53.15 	2005, and before July 1, 2008.

53.16 	 Sec. 8. Minnesota Statutes 2004, section 297A.68, subdivision 19, is amended to read:
53.17 		 Subd. 19.Petroleum products.  The following petroleum products are exempt:
53.18 	 (1) products upon which a tax has been imposed and paid under chapter 296A, 
53.19 	and for which no refund has been or will be allowed because the buyer used the fuel 
53.20 	for nonhighway use;
53.21 	 (2) products that are used in the improvement of agricultural land by constructing, 
53.22 	maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water 
53.23 	impoundment, and other erosion control structures;
53.24 	 (3) products purchased by a transit system receiving financial assistance under 
53.25 	section 174.24, 256B.0625, subdivision 17, or 473.384;
53.26 	 (4) products purchased by an ambulance service licensed under chapter 144E;
53.27 	 (5) products used in a passenger snowmobile, as defined in section 296A.01, 
53.28 	subdivision 39, for off-highway business use as part of the operations of a resort as 
53.29 	provided under section 296A.16, subdivision 2, clause (2); or 
53.30 	 (6) products purchased by a state or a political subdivision of a state for use in motor 
53.31 	vehicles exempt from registration under section 168.012, subdivision 1, paragraph (b); or 
53.32 	 (7) products purchased for use as fuel for a commuter rail system operating under 
53.33 	sections 174.80 to 174.90.  The tax must be imposed and collected as if the rate under 
53.34 	section 297A.62, subdivision 1, applied, and then refunded in the manner provided 
53.35 	in section 297A.75.

54.1 	EFFECTIVE DATE. This section is effective for purchases made after June 30, 
54.2 	2005, and terminates when the commissioner of revenue determines that the cost of the 
54.3 	exemption under this subdivision to that point in time totals $20,000.

54.4 	 Sec. 9. Minnesota Statutes 2004, section 297A.68, is amended by adding a subdivision 
54.5 	to read:
54.6 		 Subd. 40.Movies and television; inputs to production.  The sale of tangible 
54.7 	personal property primarily used or consumed directly in the preproduction, production, 
54.8 	and postproduction of movies and television shows that are produced for domestic and 
54.9 	international commercial distribution are exempt. "Preproduction" and "production" 
54.10 	include all the activities related to the preparation of shooting and the shooting of movies 
54.11 	and television shows, including film processing.  Equipment rented for preproduction and 
54.12 	production activities are exempt.  "Postproduction" includes all activities related to editing 
54.13 	and finishing of the movie or television show.  This exemption does not apply to tangible 
54.14 	personal property or services used primarily in administration, general management, 
54.15 	or marketing.  Machinery and equipment purchased for use in producing movies and 
54.16 	television shows, fuel, electricity, gas, or steam used for space heating and lighting, 
54.17 	food, lodging, and any property or service for the personal use of any individual are not 
54.18 	exempt under this subdivision.

54.19 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
54.20 	June 30, 2005.

54.21 	 Sec. 10. Minnesota Statutes 2004, section 297A.68, is amended by adding a 
54.22 	subdivision to read:
54.23 		 Subd. 41.Personal rapid transit system. (a) Machinery, equipment, and supplies 
54.24 	purchased or leased, and used by the purchaser or lessee in this state directly in the 
54.25 	provision of a personal rapid transit system as defined in section 297A.61, subdivision 37, 
54.26 	are exempt.  Machinery, equipment, and supplies that qualify for this exemption include, 
54.27 	but are not limited to, the following:
54.28 	 (1) vehicles, guideways, and related parts used directly in the transit system;
54.29 	 (2) computers and equipment used primarily for operating, controlling, and 
54.30 	regulating the system;
54.31 	 (3) machinery, equipment, furniture, and fixtures necessary for the functioning 
54.32 	of system stations;
54.33 	 (4) machinery, equipment, implements, tools, and supplies used to maintain vehicles, 
54.34 	guideways, and stations; and 
55.1 	 (5) electricity and other fuels used in the provision of the transit service, including 
55.2 	heating, cooling, and lighting of system stations.
55.3 	 (b) This exemption does not include machinery, equipment, and supplies used for 
55.4 	support and administration operations.

55.5 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
55.6 	June 30, 2008.

55.7 	 Sec. 11. Minnesota Statutes 2004, section 297A.70, subdivision 8, is amended to read:
55.8 		 Subd. 8.Regionwide public safety radio communication system; products and 
55.9 	services.  Products and services including, but not limited to, end user equipment used 
55.10 	for construction, ownership, operation, maintenance, and enhancement of the backbone 
55.11 	system of the regionwide public safety radio communication system established under 
55.12 	sections 403.21 to 403.34, are exempt.  For purposes of this subdivision, backbone system 
55.13 	is defined in section 403.21, subdivision 9.  This subdivision is effective for purchases, 
55.14 	sales, storage, use, or consumption occurring before August 1, 2005, in the counties of 
55.15 	Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington for use in the first and 
55.16 	second phases of the system, as defined in section 403.21, subdivisions 3, 10, and 11, and 
55.17 	that portion of the third phase of the system that is located in the southeast district of the 
55.18 	State Patrol and the counties of Benton, Sherburne, Stearns, and Wright.

55.19 	EFFECTIVE DATE. This section is effective for sales after April 30, 2005, and 
55.20 	terminates when the commissioner of revenue determines that the cost of the exemption 
55.21 	under this subdivision to that point in time totals $4,800,000.

55.22 	 Sec. 12. Minnesota Statutes 2004, section 297A.70, is amended by adding a 
55.23 	subdivision to read:
55.24 		 Subd. 17.Donated meals. Meals that are normally sold at retail in the ordinary 
55.25 	business activities of the taxpayer are exempt if the meals are donated to a nonprofit group 
55.26 	as defined in subdivision 4 for fund-raising purposes.

55.27 	EFFECTIVE DATE. This section is effective for donations made after June 30, 
55.28 	2005.

55.29 	 Sec. 13. Minnesota Statutes 2004, section 297A.71, is amended by adding a 
55.30 	subdivision to read:
55.31 		 Subd. 33.Commuter rail material, supplies, and equipment. Materials and 
55.32 	supplies consumed in, and equipment incorporated in the construction, equipment, or 
56.1 	improvement of a commuter rail transportation system operated under sections 174.80 
56.2 	and 174.90 are exempt.  This exemption includes railroad cars and engines and related 
56.3 	equipment.

56.4 	EFFECTIVE DATE. This section is effective for purchases made after June 30, 
56.5 	2005, and terminates when the commissioner of revenue determines that the cost of the 
56.6 	exemption for sales to that point in time totals $8,600,000.

56.7 	 Sec. 14. Minnesota Statutes 2004, section 297A.71, is amended by adding a 
56.8 	subdivision to read:
56.9 		 Subd. 34.Waste recovery facility. Materials and supplies used or consumed in, 
56.10 	and equipment incorporated into, the construction, improvement, or expansion of a 
56.11 	waste-to-energy resource recovery facility are exempt if the facility uses biomass or mixed 
56.12 	municipal solid waste as a primary fuel to generate steam or electricity.

56.13 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
56.14 	June 30, 2005.

56.15 	 Sec. 15. Minnesota Statutes 2004, section 297A.71, is amended by adding a 
56.16 	subdivision to read:
56.17 		 Subd. 35.Personal rapid transit system. Materials and supplies used or consumed 
56.18 	in, and equipment incorporated into the construction, expansion, or improvement of a 
56.19 	personal rapid transit system as defined in section 297A.61, subdivision 37, are exempt.

56.20 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
56.21 	June 30, 2005, and terminates when the commissioner of revenue determines that the cost 
56.22 	of the exemption under this subdivision to that point in time totals $200,000.

56.23 	 Sec. 16. Minnesota Statutes 2004, section 297A.71, is amended by adding a 
56.24 	subdivision to read:
56.25 		 Subd. 36.St. mary's duluth clinic health system. Materials and supplies used or 
56.26 	consumed in and equipment incorporated into the construction of the hospital portion of 
56.27 	the St. Mary's Duluth Clinic Health System are exempt.

56.28 	EFFECTIVE DATE. This section is effective for purchases made on or after March 
56.29 	1, 2004, and on or before December 31, 2006.  For purchases made on or after March 1, 
56.30 	2004, and before the day following final enactment of this act, for which the sales tax was 
56.31 	paid, the commissioner of revenue shall refund the tax.  Except as otherwise provided in 
57.1 	this paragraph, the provisions of section 297A.75, subdivisions 2, 3, 4, and 5, apply to a 
57.2 	refund under this paragraph.  The applicant must be the owner of the St. Mary's Duluth 
57.3 	Clinic Health System.  If the tax was paid by the contractor, subcontractor, or builder, the 
57.4 	contractor, subcontractor, or builder must furnish to the owner a statement indicating the 
57.5 	cost of the exempt items and the taxes paid on the items.

57.6 	 Sec. 17. Minnesota Statutes 2004, section 297A.71, is amended by adding a 
57.7 	subdivision to read:
57.8 		 Subd. 37.Municipal utilities. Materials and supplies used or consumed in, and 
57.9 	equipment incorporated into, the construction, improvement, or expansion of electric 
57.10 	generation and related facilities used pursuant to a joint power purchase agreement to 
57.11 	meet the biomass energy mandate in section 216B.2424 are exempt if the owner or owners 
57.12 	of the facilities are a municipal electric utility or utilities or a joint venture of municipal 
57.13 	electric utilities.  The tax must be imposed and collected as if the rate under section 
57.14 	297A.62, subdivision 1, applied and then refunded under section 297A.75.

57.15 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
57.16 	January 1, 2005.

57.17 	 Sec. 18. Minnesota Statutes 2004, section 297A.71, is amended by adding a 
57.18 	subdivision to read:
57.19 		 Subd. 38.Chatfield wastewater treatment facility. Materials and supplies used 
57.20 	in and equipment incorporated into the construction, improvement, or expansion of a 
57.21 	wastewater treatment facility owned by the city of Chatfield are exempt.  This exemption 
57.22 	is effective for purchases made before December 31, 2007.

57.23 	EFFECTIVE DATE. This section is effective for sales and purchases made on or 
57.24 	after June 1, 2005.

57.25 	 Sec. 19. Minnesota Statutes 2004, section 297A.75, subdivision 1, is amended to read:
57.26 		 Subdivision 1.Tax collected.  The tax on the gross receipts from the sale of the 
57.27 	following exempt items must be imposed and collected as if the sale were taxable and the 
57.28 	rate under section 297A.62, subdivision 1, applied.  The exempt items include:
57.29 	 (1) capital equipment exempt under section 297A.68, subdivision 5;
57.30 	 (2) building materials for an agricultural processing facility exempt under section 
57.31 	297A.71, subdivision 13;
58.1 	 (3) building materials for mineral production facilities exempt under section 
58.2 	297A.71, subdivision 14;
58.3 	 (4) building materials for correctional facilities under section 297A.71, subdivision 
58.4 	3;
58.5 	 (5) building materials used in a residence for disabled veterans exempt under section 
58.6 	297A.71, subdivision 11;
58.7 	 (6) chair lifts, ramps, elevators, and associated building materials exempt under 
58.8 	section 297A.71, subdivision 12;
58.9 	 (7) building materials for the Long Lake Conservation Center exempt under section 
58.10 	297A.71, subdivision 17;
58.11 	 (8) materials, supplies, fixtures, furnishings, and equipment for a county law 
58.12 	enforcement and family service center under section 297A.71, subdivision 26; and 
58.13 	 (9) materials and supplies for qualified low-income housing under section 297A.71, 
58.14 	subdivision 23;
58.15 	 (10) fuel purchased for commuter rail systems under section 297A.68, subdivision 
58.16 	19, clause (7); and 
58.17 	 (11) materials, supplies, and equipment for municipal electric utility facilities under 
58.18 	section 297A.71, subdivision 37.

58.19 	EFFECTIVE DATE. Clause (10) is effective for purchases made after June 30, 
58.20 	2005, and clause (11) is effective for purchases made after December 31, 2004.

58.21 	 Sec. 20. Minnesota Statutes 2004, section 297A.75, subdivision 2, is amended to read:
58.22 		 Subd. 2.Refund; eligible persons.  Upon application on forms prescribed by the 
58.23 	commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 
58.24 	must be paid to the applicant.  Only the following persons may apply for the refund:
58.25 	 (1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
58.26 	 (2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental 
58.27 	subdivision;
58.28 	 (3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 
58.29 	provided in United States Code, title 38, chapter 21;
58.30 	 (4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 
58.31 	property; and 
58.32 	 (5) for subdivision 1, clause (9), the owner of the qualified low-income housing 
58.33 	project;
58.34 	 (6) for subdivision 1, clause (10), the operator of the commuter rail system; and 
59.1 	 (7) for subdivision 1, clause (11), the applicant must be a municipal electric utility or 
59.2 	a joint venture of municipal electric utilities.

59.3 	EFFECTIVE DATE. Clause (6) is effective for purchases made after June 30, 
59.4 	2005.  Clause (7) is effective for purchases made after December 31, 2004.

59.5 	 Sec. 21. Minnesota Statutes 2004, section 297A.75, subdivision 3, is amended to read:
59.6 		 Subd. 3.Application.  (a) The application must include sufficient information 
59.7 	to permit the commissioner to verify the tax paid.  If the tax was paid by a contractor, 
59.8 	subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), or (9), or 
59.9 	(11),the contractor, subcontractor, or builder must furnish to the refund applicant a 
59.10 	statement including the cost of the exempt items and the taxes paid on the items unless 
59.11 	otherwise specifically provided by this subdivision.  The provisions of sections 289A.40
59.12 	and 289A.50 apply to refunds under this section.
59.13 	 (b) An applicant may not file more than two applications per calendar year for 
59.14 	refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

59.15 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
59.16 	December 31, 2004.

59.17 	 Sec. 22. Minnesota Statutes 2004, section 297A.83, subdivision 1, is amended to read:
59.18 		 Subdivision 1.Persons applying.  (a) A retailer required to collect and remit sales 
59.19 	taxes under section 297A.66 shall file with the commissioner an application for a permit.
59.20 	 (b) A retailer making retail sales from outside this state to a destination within 
59.21 	this state who is not required to obtain a permit under paragraph (a) may nevertheless 
59.22 	voluntarily file an application for a permit.
59.23 	 (c) The commissioner may require any person or class of persons obligated to file a 
59.24 	use tax return under section 289A.11, subdivision 3, to file an application for a permit, 
59.25 	except an individual allowed to file and pay use tax under section 289A.18, subdivision 
59.26 	4a, is not required to obtain a permit.

59.27 	EFFECTIVE DATE. This section is effective for purchases on and after July 
59.28 	1, 2005.

59.29 	 Sec. 23. Minnesota Statutes 2004, section 297A.87, subdivision 2, is amended to read:
59.30 		 Subd. 2.Seller's permit or alternate statement.  (a) The operator of an event 
59.31 	under subdivision 1 shall obtain one of the following from a person who wishes to do 
59.32 	business as a seller at the event:
60.1 	 (1) evidence that the person holds a valid seller's permit under section 297A.84; or 
60.2 	 (2) a written statement that the person is not offering for sale any item that is taxable 
60.3 	under this chapter; or 
60.4 	 (3) a written statement that this is the only selling event that the person will be 
60.5 	participating in for that calendar year, that the person will be participating for three or 
60.6 	fewer days, and that the person will make $500 or less in total sales in the calendar year. 
60.7 	The written statement shall include the person's name, address, and telephone number.
60.8 	 (b) The operator shall require the evidence or statement as a prerequisite to 
60.9 	participating in the event as a seller.

60.10 	EFFECTIVE DATE. This section is effective for selling events occurring after 
60.11 	June 30, 2005.

60.12 	 Sec. 24. Minnesota Statutes 2004, section 297A.87, subdivision 3, is amended to read:
60.13 		 Subd. 3.Occasional sale provisions not applicable under limited circumstances.
 60.14 	 The isolated and occasional sale provisions provision under section 297A.67, subdivision 
60.15 	23, or applies, provided that the seller only participates for three or fewer days in one 
60.16 	event per calendar year, makes $500 or less in sales in the calendar year, and provides 
60.17 	the written statement required in subdivision 2, paragraph (a), clause (3). The isolated 
60.18 	and occasional sales provision under section 297A.68, subdivision 25, do does not apply 
60.19 	to a seller at an event under this section.

60.20 	EFFECTIVE DATE. This section is effective for selling events occurring after 
60.21 	June 30, 2005.

60.22 	 Sec. 25. Minnesota Statutes 2004, section 297B.03, is amended to read:
60.23 	 297B.03 EXEMPTIONS.
60.24 	 There is specifically exempted from the provisions of this chapter and from 
60.25 	computation of the amount of tax imposed by it the following:
60.26 	 (1) purchase or use, including use under a lease purchase agreement or installment 
60.27 	sales contract made pursuant to section 465.71, of any motor vehicle by the United States 
60.28 	and its agencies and instrumentalities and by any person described in and subject to the 
60.29 	conditions provided in section 297A.67, subdivision 11;
60.30 	 (2) purchase or use of any motor vehicle by any person who was a resident of 
60.31 	another state or country at the time of the purchase and who subsequently becomes a 
60.32 	resident of Minnesota, provided the purchase occurred more than 60 days prior to the date 
61.1 	such person began residing in the state of Minnesota and the motor vehicle was registered 
61.2 	in the person's name in the other state or country;
61.3 	 (3) purchase or use of any motor vehicle by any person making a valid election to be 
61.4 	taxed under the provisions of section 297A.90;
61.5 	 (4) purchase or use of any motor vehicle previously registered in the state of 
61.6 	Minnesota when such transfer constitutes a transfer within the meaning of section 118, 
61.7 	331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal 
61.8 	Revenue Code of 1986, as amended through December 31, 1999;
61.9 	 (5) purchase or use of any vehicle owned by a resident of another state and leased 
61.10 	to a Minnesota-based private or for-hire carrier for regular use in the transportation of 
61.11 	persons or property in interstate commerce provided the vehicle is titled in the state of 
61.12 	the owner or secured party, and that state does not impose a sales tax or sales tax on 
61.13 	motor vehicles used in interstate commerce;
61.14 	 (6) purchase or use of a motor vehicle by a private nonprofit or public educational 
61.15 	institution for use as an instructional aid in automotive training programs operated by the 
61.16 	institution.  "Automotive training programs" includes motor vehicle body and mechanical 
61.17 	repair courses but does not include driver education programs;
61.18 	 (7) purchase of a motor vehicle for use as an ambulance by an ambulance service 
61.19 	licensed under section 144E.10;
61.20 	 (8) purchase of a motor vehicle by or for a public library, as defined in section 
61.21 	134.001, subdivision 2, as a bookmobile or library delivery vehicle;
61.22 	 (9) purchase of a ready-mixed concrete truck;
61.23 	 (10) purchase or use of a motor vehicle by a town for use exclusively for road 
61.24 	maintenance, including snowplows and dump trucks, but not including automobiles, 
61.25 	vans, or pickup trucks;
61.26 	 (11) purchase or use of a motor vehicle by a corporation, society, association, 
61.27 	foundation, or institution organized and operated exclusively for charitable, religious, 
61.28 	or educational purposes, except a public school, university, or library, but only if the 
61.29 	vehicle is:
61.30 	 (i) a truck, as defined in section 168.011, a bus, as defined in section 168.011, or a 
61.31 	passenger automobile, as defined in section 168.011, if the automobile is designed and 
61.32 	used for carrying more than nine persons including the driver; and
61.33 	 (ii) intended to be used primarily to transport tangible personal property or 
61.34 	individuals, other than employees, to whom the organization provides service in 
61.35 	performing its charitable, religious, or educational purpose;
62.1 	 (12) purchase of a motor vehicle for use by a transit provider exclusively to provide 
62.2 	transit service is exempt if the transit provider is either (i) receiving financial assistance or 
62.3 	reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29, 
62.4 	473.388, or 473.405;
62.5 	 (13) purchase or use of a motor vehicle by a qualified business, as defined in section 
62.6 	469.310, located in a job opportunity building zone, if the motor vehicle is principally 
62.7 	garaged in the job opportunity building zone and is primarily used as part of or in direct 
62.8 	support of the person's operations carried on in the job opportunity building zone.  The 
62.9 	exemption under this clause applies to sales, if the purchase was made and delivery 
62.10 	received during the duration of the job opportunity building zone.  The exemption under 
62.11 	this clause also applies to any local sales and use tax;
62.12 	 (14) purchase or use after June 30, 2005, and before July 1, 2008, of a motor vehicle 
62.13 	by a state agency or political subdivision, provided that the motor vehicle has a fuel 
62.14 	efficiency greater than 45 miles per gallon in highway use, and greater than 35 miles per 
62.15 	gallon in city use, as certified by the United States Environmental Protection Agency.

62.16 	 EFFECTIVE DATE. This section is effective for sales and transfers made after 
62.17 	June 30, 2005, and before July 1, 2008.

62.18 	 Sec. 26. Laws 1991, chapter 291, article 8, section 27, subdivision 4, is amended to 
62.19 	read:
62.20 		 Subd. 4.Expiration of taxing authority and expenditure limitation. The 
62.21 	authority granted by subdivisions 1 and 2 to the city to impose a sales tax and an excise tax 
62.22 	shall expire on the earlier of (1) December 31, 2018; (2) when the principal and interest on 
62.23 	any bonds or obligations issued to finance construction of Riverfront 2000 and related 
62.24 	facilities have been paid;or (3) at an earlier time as the city shall, by ordinance, determine. 
62.25 	The total capital, administrative, and operating expenditures payable from bond proceeds 
62.26 	and revenues received from the taxes authorized by subdivisions 1 and 2, excluding 
62.27 	investment earnings on bond proceeds and revenues, shall not exceed $25,000,000 for 
62.28 	Riverfront 2000 and related facilities.

62.29 	EFFECTIVE DATE. This section is effective upon compliance by the Mankato 
62.30 	City Council with the provisions in section 43 and, if required under section 43, approval 
62.31 	of the voters at a general or special election.

62.32 	 Sec. 27. Laws 1996, chapter 471, article 2, section 29, is amended to read:

63.1 	 Sec. 29. CITY OF HERMANTOWN; SALES AND USE TAX.
 63.2 		 Subdivision 1.Sales and use tax authorized. (a)  Notwithstanding Minnesota 
63.3 	Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city 
63.4 	charter, the city of Hermantown may, by ordinance, impose an additional sales and use tax 
63.5 	of up to one percent on sales transactions , storage, and use taxable pursuant to Minnesota 
63.6 	Statutes, chapter 297A, that occur within the city.
63.7 	 (b) The proceeds of the first one-half of one percent of  tax imposed under this section 
63.8 	must be used to meet the costs of  by the city for the following projects:
63.9 	 (1) extending a sewer interceptor line;
63.10 	 (2) construction of a booster pump station, reservoirs, and related improvements 
63.11 	to the water system; and
63.12 	 (3) construction of a police and fire station.
63.13 	 (c) Revenues received from the remaining one-half of one percent of the tax 
63.14 	authorized under this section must be used by the city to pay all or part of the capital 
63.15 	and administrative costs of developing, acquiring, constructing, and initially furnishing 
63.16 	and equipping for the following projects:
63.17 	 (1) construction of a city hall to be connected to the existing public safety facility;
63.18 	 (2) construction of a new facility or purchase of an existing facility to be used as 
63.19 	a public works facility;
63.20 	 (3) construction, signalization, and rehabilitation of primary collector roads and 
63.21 	commercial frontage roads, within the city; and 
63.22 	 (4) extension of a sewer interceptor line.
63.23 	 (d) Authorized expenses include, but are not limited to, acquiring property; paying 
63.24 	construction, administrative, and operating expenses related to the development of the 
63.25 	projects listed in paragraph (c); paying debt service on bonds or other obligations, 
63.26 	including lease obligations, issued to finance construction, expansion, or improvement of 
63.27 	the projects listed in paragraph (c); and other compatible uses, including but not limited to, 
63.28 	parking, lighting, and landscaping.
63.29 		 Subd. 2.Referendum. (a) If the Hermantown city council proposes to impose the 
63.30 	sales tax authorized by this section, it shall conduct a referendum on the issue.
63.31 	 (b) If the Hermantown city council initially imposes the tax at a rate that is less than 
63.32 	one percent and proposes increasing the tax rate at a later date up to the full one percent, it 
63.33 	shall conduct a referendum on the increase.
63.34 	 (c) The question of imposing or increasing the tax must be submitted to the voters at 
63.35 	a special or general election.  The tax may not be imposed unless a majority of votes cast 
63.36 	on the question of imposing the tax are in the affirmative.  The commissioner of revenue 
64.1 	shall prepare a suggested form of question to be presented at the election.  This subdivision 
64.2 	applies notwithstanding any city charter provision to the contrary.
64.3 		 Subd. 3.Enforcement; collection; and administration of taxes. A sales tax 
64.4 	imposed under this section must be reported and paid to the commissioner of revenue 
64.5 	with the state sales taxes, and be subject to the same penalties, interest, and enforcement 
64.6 	provisions.  The proceeds of the tax, less refunds and a proportionate share of the cost of 
64.7 	collection, shall be remitted at least quarterly to the city.  The commissioner shall deduct 
64.8 	from the proceeds remitted an amount that equals the indirect statewide cost as well as the 
64.9 	direct and indirect department costs necessary to administer, audit, and collect the tax.  
64.10 	The amount deducted shall be deposited in the state general fund.
64.11 		 Subd. 3a.Bonding authority. (a) The city may issue general obligation bonds 
64.12 	under Minnesota Statutes, chapter 475, to finance the costs in subdivision 1, paragraph (c). 
64.13 	The total amount of bonds issued for the projects under subdivision 1, paragraph (c), may 
64.14 	not exceed $13,000,000 in the aggregate.  An election to approve the bonds is not required.
64.15 	 (b) The bonds are not included in computing any debt limitation applicable to the 
64.16 	city and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of and 
64.17 	interest on the bonds is not subject to any levy limitation.
64.18 	 (c) The taxes authorized under this section may be pledged to and used for the 
64.19 	payment of the bonds and any bonds issued to refund them.
64.20 		 Subd. 4.Termination. The portion of the tax authorized under this section to 
64.21 	finance the improvements described in subdivision 1, paragraph (b),terminates at the 
64.22 	later of (1) ten years after the date of initial imposition of the tax, or (2) on the first 
64.23 	day of the second month next succeeding a determination by the city council that 
64.24 	sufficient funds have been received from that portion of the tax dedicated to finance the 
64.25 	those improvements described in subdivision 1, clauses (1) to (3),and to prepay or 
64.26 	retire at maturity the principal, interest, and premium due on any bonds issued for the 
64.27 	improvements. The portion of the tax authorized to finance the improvements described in 
64.28 	subdivision 1, paragraph (c), terminates when the revenues raised are sufficient to finance 
64.29 	those improvements, up to an amount equal to $13,000,000 plus any interest, premium, 
64.30 	and other costs associated with the bonds issued under subdivision 3a.  The city council 
64.31 	may terminate this portion of the tax earlier.Any funds remaining after completion of the 
64.32 	improvements and retirement or redemption of the bonds may be placed in the general 
64.33 	fund of the city.
64.34 		 Subd. 5.Local approval; effective date. This section is effective the day after final 
64.35 	enactment, upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by 
64.36 	the city of Hermantown.

65.1 	EFFECTIVE DATE. This section is effective the day after the governing body of 
65.2 	the city of Hermantown and its chief clerical officer comply with Minnesota Statutes, 
65.3 	section 645.021, subdivisions 2 and 3.

65.4 	 Sec. 28. Laws 1998, chapter 389, article 8, section 43, subdivision 3, is amended to 
65.5 	read:
65.6 		 Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
65.7 	subdivisions 1 and 2 must be used by the city to pay for the cost of collecting and 
65.8 	administering the taxes and to pay for the following projects:
65.9 	 (1) transportation infrastructure improvements including both regional highway 
65.10 	and airport improvements;
65.11 	 (2) improvements to the civic center complex;
65.12 	 (3) a municipal water, sewer, and storm sewer project necessary to improve regional 
65.13 	ground water quality; and
65.14 	 (4) construction of a regional recreation and sports center and associated other 
65.15 	higher education facilities available for both community and student use, located at or 
65.16 	adjacent to the Rochester center.
65.17 	 The total amount of capital expenditures or bonds for these projects that may be paid from 
65.18 	the revenues raised from the taxes authorized in this section may not exceed $71,500,000 
65.19 	$111,500,000.  The total amount of capital expenditures or bonds for the project in clause 
65.20 	(4) that may be paid from the revenues raised from the taxes authorized in this section 
65.21 	may not exceed $20,000,000 $28,000,000.

65.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

65.23 	 Sec. 29. Laws 1998, chapter 389, article 8, section 43, subdivision 4, is amended to 
65.24 	read:
65.25 		 Subd. 4.Bonding authority. (a) The city may issue bonds under Minnesota 
65.26 	Statutes, chapter 475, to finance the capital expenditure and improvement projects.  An 
65.27 	election to approve the bonds under Minnesota Statutes, section 475.58, may be held in 
65.28 	combination with the election to authorize imposition of the tax under subdivision 1.  
65.29 	Whether to permit imposition of the tax and issuance of bonds may be posed to the voters 
65.30 	as a single question.  The question must state that the sales tax revenues are pledged to pay 
65.31 	the bonds, but that the bonds are general obligations and will be guaranteed by the city's 
65.32 	property taxes. No election is required for the issuance of bonds under this subdivision, 
65.33 	other than the election held by the city on June 23, 1998.
66.1 	 The city may enter into an agreement with Olmsted County under which the city 
66.2 	and the county agree to jointly undertake and finance certain roadway infrastructure 
66.3 	improvements.  The agreement may provide that the city will make available to the 
66.4 	county a portion of the sales tax revenues collected pursuant to the authority granted in 
66.5 	this section and the bonding authority provided in this subdivision.  The county may, 
66.6 	pursuant to the agreement, issue its general obligation bonds in a principal amount not 
66.7 	exceeding the amount authorized by its agreement with the city payable primarily from 
66.8 	the sales tax revenues from the city under the agreement.  The county's bonds must be 
66.9 	issued in accordance with the provisions of Minnesota Statutes, chapter 475, except that 
66.10 	no election is required for the issuance of the bonds and the bonds shall not be included in 
66.11 	the net debt of the county.
66.12 	 (b) The issuance of bonds under this subdivision is not subject to Minnesota 
66.13 	Statutes, section 275.60.
66.14 	 (c) The bonds are not included in computing any debt limitation applicable to the 
66.15 	city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of 
66.16 	and interest on the bonds is not subject to any levy limitation.
66.17 	 The aggregate principal amount of bonds, plus the aggregate of the taxes used directly 
66.18 	to pay eligible capital expenditures and improvements may not exceed $71,500,000 
66.19 	$111,500,000, plus an amount equal to the costs related to issuance of the bonds.
66.20 	 (d) The taxes may be pledged to and used for the payment of the bonds and any 
66.21 	bonds issued to refund them, only if the bonds and any refunding bonds are general 
66.22 	obligations of the city.

66.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

66.24 	 Sec. 30. Laws 1999, chapter 243, article 4, section 18, subdivision 1, is amended to 
66.25 	read:
66.26 		 Subdivision 1.Sales and use tax. (a) Notwithstanding Minnesota Statutes, section 
66.27 	297A.48, subdivision 1a,477A.016, or any other provision of law, ordinance, or city 
66.28 	charter, if approved by the city voters at the first municipal general election held after the 
66.29 	date of final enactment of this act or at a special election held November 2, 1999, the city 
66.30 	of Proctor may impose by ordinance a sales and use tax of up to one-half of one percent 
66.31 	for the purposes specified in subdivision 3, paragraph (a).  The provisions of Minnesota 
66.32 	Statutes, section 297A.48 297A.99, govern the imposition, administration, collection, and 
66.33 	enforcement of the tax authorized under this subdivision.
67.1 	 (b) The city of Proctor may impose by ordinance an additional sales and use tax of 
67.2 	up to one-half of one percent if approved by the city voters at a general election or at a 
67.3 	special election held for this purpose.  The revenues received from this additional tax must 
67.4 	be used for the purposes specified in subdivision 3, paragraph (b).

67.5 	EFFECTIVE DATE. This section is effective the day following final enactment, 
67.6 	upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
67.7 	subdivision 3.

67.8 	 Sec. 31. Laws 1999, chapter 243, article 4, section 18, subdivision 3, is amended to 
67.9 	read:
67.10 		 Subd. 3.Use of revenues. (a) Revenues received from taxes authorized by 
67.11 	subdivisions 1, paragraph (a),and 2 must be used by the city to pay the cost of collecting 
67.12 	the taxes and to pay for construction and improvement of the following city facilities:
67.13 	 (1) streets; and
67.14 	 (2) constructing and equipping the Proctor community activity center.
67.15 	 Authorized expenses include, but are not limited to, acquiring property, paying 
67.16 	construction and operating expenses related to the development of an authorized facility, 
67.17 	and paying debt service on bonds or other obligations, including lease obligations, issued 
67.18 	to finance the construction, expansion, or improvement of an authorized facility.  The 
67.19 	capital expenses for all projects authorized under this paragraph that may be paid with 
67.20 	these taxes is limited to $3,600,000, plus an amount equal to the costs related to issuance 
67.21 	of the bonds.
67.22 	 (b) Revenues received from taxes authorized by subdivision 1, paragraph (b), 
67.23 	must be used by the city to pay the cost of collecting the taxes and for construction and 
67.24 	improvements of city streets, public utilities, sidewalks, bikeways, and trails.

67.25 	EFFECTIVE DATE. This section is effective the day following final enactment, 
67.26 	upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
67.27 	subdivision 3.

67.28 	 Sec. 32. Laws 1999, chapter 243, article 4, section 18, subdivision 4, is amended to 
67.29 	read:
67.30 		 Subd. 4.Bonding authority. (a) The city may issue bonds under Minnesota 
67.31 	Statutes, chapter 475, to finance the capital expenditure and improvement projects 
67.32 	described in subdivision 3.  An election to approve the bonds under Minnesota Statutes, 
67.33 	section 475.58, is not required.
68.1 	 (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, 
68.2 	sections 275.60 and 279.61 275.61.
68.3 	 (c) The bonds are not included in computing any debt limitation applicable to the 
68.4 	city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of 
68.5 	and interest on the bonds is not subject to any levy limitation.
68.6 	 (d) For projects described in subdivision 3, paragraph (a), the aggregate principal 
68.7 	amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital 
68.8 	expenditures and improvements, may not exceed $3,600,000, plus an amount equal to 
68.9 	the costs related to issuance of the bonds, including interest on the bonds. For projects 
68.10 	described in subdivision 3, paragraph (b), the aggregate principal amount of bonds may 
68.11 	not exceed $7,200,000, plus an amount equal to the costs related to issuance of the bonds, 
68.12 	including interest on the bonds.
68.13 	 (e) The sales and use and excise taxes authorized in this section may be pledged to 
68.14 	and used for the payment of the bonds and any bonds issued to refund them only if the 
68.15 	bonds and any refunding bonds are general obligations of the city.

68.16 	EFFECTIVE DATE. This section is effective the day following final enactment, 
68.17 	upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
68.18 	subdivision 3.

68.19 	 Sec. 33. Laws 2001, First Special Session chapter 5, article 12, section 67, the effective 
68.20 	date, is amended to read:

68.21 	 EFFECTIVE DATE. This section is effective for purchases and sales made after 
68.22 	June 30, 2001, and before January 1, 2003  July 1, 2007.
68.23 	 EFFECTIVE DATE.
68.24 	This section is effective the day following final enactment.
68.25 	

68.26 	 Sec. 34. Laws 2001, First Special Session chapter 5, article 12, section 82, the effective 
68.27 	date, as amended by Laws 2002, chapter 377, article 3, section 23, is amended to read:

68.28 	 EFFECTIVE DATE. This section is effective for sales and purchases made after 
68.29 	December 31, 2005 2007, or until the State of Minnesota is found to be out of compliance 
68.30 	with the streamlined sales tax project only to the extent of the change in this act and for no 
68.31 	other reason, if that finding is made before December 31, 2007.

69.1 	 Sec. 35. Laws 2002, chapter 377, article 3, section 4, the effective date, is amended to 
69.2 	read:

69.3 	 EFFECTIVE DATE. With the exception of clause (2), item (ii),This section is 
69.4 	effective for sales and purchases made after June 30, 2002. Clause (2), item (ii), is 
69.5 	effective for sales and purchases made after June 30, 2002, and before January 1, 2006.

69.6 	 Sec. 36. Laws 2002, chapter 377, article 12, section 16, subdivision 1, is amended to 
69.7 	read:
69.8 		 Subdivision 1.Nonprofit corporation may be established.  The city of Thief River 
69.9 	Falls may incorporate or authorize the incorporation of a nonprofit corporation to operate 
69.10 	a community or regional center in the city. A nonprofit corporation incorporated under 
69.11 	this section is exempt from payment of sales and use tax on materials, equipment, and 
69.12 	supplies consumed or incorporated into the construction of the community or regional 
69.13 	center.  The exemption under this section applies to purchases by the nonprofit corporation, 
69.14 	a contractor, subcontractor, or builder.  A contractor, subcontractor, or builder that does not 
69.15 	pay sales tax on purchases for construction of the community or regional center shall not 
69.16 	charge sales or use tax to the nonprofit corporation. The nonprofit corporation may file a 
69.17 	claim for refund for any sales taxes paid on the construction costs of the community or 
69.18 	regional center, and the commissioner of revenue shall pay the refunded amount directly 
69.19 	to the nonprofit corporation.

69.20 	EFFECTIVE DATE. This section is effective retroactively for purchases made 
69.21 	on and after July 1, 2002.

69.22 	 Sec. 37. CITY OF ALBERT LEA; SALES AND USE TAX.
 69.23 		 Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
69.24 	section 477A.016, or any other provision of law, ordinance, or city charter, the city of 
69.25 	Albert Lea may, by ordinance, impose a sales and use tax of one-half of one percent for 
69.26 	the purposes specified in subdivision 2.  The provisions of Minnesota Statutes, section 
69.27 	297A.99, govern the imposition, administration, collection, and enforcement of the tax 
69.28 	authorized under this subdivision.
69.29 		 Subd. 2.Use of revenues. The proceeds of the tax imposed under this section 
69.30 	shall be used to pay for lake improvement projects as detailed in the Shell Rock River 
69.31 	watershed plan.
70.1 		 Subd. 3.Referendum. If the Albert Lea City Council proposes to impose the tax 
70.2 	authorized by this section, the question of imposing the tax must be submitted to the 
70.3 	voters at the next general election.
70.4 		 Subd. 4.Termination of taxes. The taxes imposed under this section expire at the 
70.5 	earlier of (1) ten years after the taxes are first imposed, or (2) when the city council first 
70.6 	determines that the amount of revenues raised to pay for the projects under subdivision 2, 
70.7 	shall meet or exceed the sum of $15,000,000.  Any funds remaining after completion of 
70.8 	the projects may be placed in the general fund of the city.

70.9 	EFFECTIVE DATE. This section is effective the day after compliance by the 
70.10 	governing body of the city of Albert Lea with Minnesota Statutes, section 645.021, 
70.11 	subdivision 3.

70.12 	 Sec. 38. CITY OF BAXTER; TAXES AUTHORIZED.
 70.13 		 Subdivision 1.Sales and use tax authorized.  Notwithstanding Minnesota Statutes, 
70.14 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
70.15 	the approval of the voters on November 2, 2004, and pursuant to Minnesota Statutes, 
70.16 	section 297A.99, the city of Baxter may impose by ordinance a sales and use tax of 
70.17 	one-half of one percent for the purposes specified in subdivision 3.  The provisions of 
70.18 	Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
70.19 	and enforcement of the tax authorized under this subdivision.
70.20 		 Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
70.21 	477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
70.22 	Baxter may impose by ordinance, for the purposes specified in subdivision 3, an excise tax 
70.23 	of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any 
70.24 	person engaged within the city in the business of selling motor vehicles at retail.
70.25 		 Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
70.26 	subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
70.27 	and to finance the acquisition and betterment of water and waste water facilities, a fire 
70.28 	substation, and the Paul Bunyan Bridge over Excelsior Road, as approved by the voters 
70.29 	at the referendum authorizing the tax.  Authorized costs include, but are not limited to, 
70.30 	acquiring property and paying construction, legal, and engineering costs related to the 
70.31 	projects.
70.32 		 Subd. 4.Bonds. The city of Baxter, pursuant to the approval of the voters at the 
70.33 	referendum authorizing the imposition of the taxes in this section, may issue general 
70.34 	obligation bonds of the city, in one or more series, in the aggregate principal amount not to 
70.35 	exceed $15,000,000 to finance the projects listed in subdivision 3.  The debt represented 
71.1 	by the bonds is not included in computing any debt limitations applicable to the city, and 
71.2 	the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal of 
71.3 	and interest on the bonds is not subject to any levy limitation or included in computing or 
71.4 	applying any levy limitation applicable to the city.
71.5 		 Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
71.6 	expire at the earlier of 12 years after the imposition of the tax or when the city council 
71.7 	first determines that the amount of revenues raised from the taxes to pay for the projects 
71.8 	equals or exceeds $15,000,000 plus any interest on bonds issued for the projects under 
71.9 	subdivision 4.  Any funds remaining after expiration of the taxes and retirement of the 
71.10 	bonds shall be placed in a capital project fund of the city. The taxes imposed under 
71.11 	subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.

71.12 	EFFECTIVE DATE. This section is effective the day after compliance by 
71.13 	the governing body of the city of Baxter with Minnesota Statutes, section 645.021, 
71.14 	subdivision 3.

71.15 	 Sec. 39. CITY OF BEAVER BAY; TAXES AUTHORIZED.
 71.16 		 Subdivision 1.Sales and use taxes. Notwithstanding Minnesota Statutes, section 
71.17 	477A.016, or any other provision of law or ordinance, if approved by the voters of the city 
71.18 	at the next general election held after the date of final enactment of this act, the city of 
71.19 	Beaver Bay may impose by ordinance a sales and use tax at a rate of up to one percent for 
71.20 	the purposes specified in subdivision 2.  The provisions of Minnesota Statutes, section 
71.21 	297A.99, govern the imposition, administration, collection, and enforcement of the tax 
71.22 	authorized under this subdivision.
71.23 		 Subd. 2.Use of revenues. The revenues received from taxes authorized by 
71.24 	subdivision 1 must be used to pay the bonded indebtedness on the city community building 
71.25 	and to provide funding for recreational facilities, the upgrading of the water and sewer 
71.26 	system, upgrading and replacement of fire equipment, and improvement of streets.
71.27 		 Subd. 3.Termination of taxes. The authority granted under subdivision 1 to the city 
71.28 	of Beaver Bay to impose sales and use taxes expires when the city council determines that 
71.29 	the amount of revenue received to pay the costs of the projects described in subdivision 2 
71.30 	shall meet or exceed $1,500,000.  Any funds remaining after completion of the projects 
71.31 	may be placed in the general fund of the city.  The tax imposed under subdivision 1 may 
71.32 	expire at an earlier time if the city so determines by ordinance.

72.1 	EFFECTIVE DATE. This section is effective the day after the governing body 
72.2 	of the city of Beaver Bay and its chief clerical officer timely comply with Minnesota 
72.3 	Statutes, section 645.021, subdivisions 2 and 3.

72.4 	 Sec. 40. CITY OF BEMIDJI.
 72.5 		 Subdivision 1.Sales and use tax authorized.  Notwithstanding Minnesota Statutes, 
72.6 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
72.7 	the approval of the city voters at the general election held on November 5, 2002, the city 
72.8 	of Bemidji may impose by ordinance a sales and use tax of one-half of one percent for 
72.9 	the purposes specified in subdivision 2.  The provisions of Minnesota Statutes, section 
72.10 	297A.99, govern the imposition, administration, collection, and enforcement of the tax 
72.11 	authorized under this subdivision.
72.12 		 Subd. 2.Use of revenues. Revenues received from the tax authorized by 
72.13 	subdivision 1 must be used for the cost of collecting and administering the tax and to 
72.14 	pay all or part of the capital or administrative costs of the acquisition, construction, and 
72.15 	improvement of parks and trails within the city, as provided for in the city of Bemidji's 
72.16 	parks, open space, and trail system plan, adopted by the Bemidji City Council on 
72.17 	November 21, 2001.  Authorized expenses include, but are not limited to, acquiring 
72.18 	property, paying construction expenses related to the development of these facilities 
72.19 	and improvements, and securing and paying debt service on bonds or other obligations 
72.20 	issued to finance acquisition, construction, improvement, or development of parks and 
72.21 	trails within the city of Bemidji.
72.22 		 Subd. 3.Bonds. Pursuant to the approval of the city voters at the general election 
72.23 	held on November 5, 2002, the city of Bemidji may issue, without an additional election, 
72.24 	general obligation bonds of the city in an amount not to exceed $9,826,000 to pay 
72.25 	capital and administrative expenses for the acquisition, construction, improvement, and 
72.26 	development of parks and trails as specified in subdivision 2.  The debt represented by 
72.27 	the bonds must not be included in computing any debt limitations applicable to the city, 
72.28 	and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal 
72.29 	of any interest on the bonds must not be subject to any levy limitations or be included in 
72.30 	computing or applying any levy limitation applicable to the city.
72.31 		 Subd. 4.Termination of tax. The tax imposed under subdivision 1 expires when 
72.32 	the Bemidji City Council determines that the amount described in subdivision 3 has been 
72.33 	received from the tax to finance the capital and administrative costs for acquisition, 
72.34 	construction, improvement, and development of parks and trails and to repay or retire at 
72.35 	maturity the principal, interest, and premium due on any bonds issued for the park and 
73.1 	trail improvements under subdivision 3.  Any funds remaining after completion of the park 
73.2 	and trail improvements and retirement or redemption of the bonds may be placed in the 
73.3 	general fund of the city.  The tax imposed under subdivision 1 may expire at an earlier 
73.4 	time if the city so determines by ordinance.

73.5 	EFFECTIVE DATE. This section is effective the day after compliance by 
73.6 	the governing body of the city of Bemidji with Minnesota Statutes, section 645.021, 
73.7 	subdivision 3.

73.8 	 Sec. 41. CITY OF CLOQUET; TAXES AUTHORIZED.
 73.9 		 Subdivision 1.Sales and use tax. Notwithstanding Minnesota Statutes, section 
73.10 	477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
73.11 	voters pursuant to Minnesota Statutes, section 297A.99, the city of Cloquet may impose 
73.12 	by ordinance a sales and use tax of up to one-half of one percent for the purpose specified 
73.13 	in subdivision 3.  The provisions of Minnesota Statutes, section 297A.99, govern the 
73.14 	imposition, administration, collection, and enforcement of the tax authorized under this 
73.15 	subdivision.
73.16 		 Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
73.17 	477A.016, or any other provision of law, ordinance, or city charter, the city of Cloquet 
73.18 	may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up 
73.19 	to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person 
73.20 	engaged within the city in the business of selling motor vehicles at retail.
73.21 		 Subd. 3.Use of revenues. Revenues received from taxes authorized by subdivisions 
73.22 	1 and 2 must be used by the city to pay the cost of collecting the taxes and to pay for the 
73.23 	following projects:
73.24 	 (1) construction and implementation of riverfront task force park improvements 
73.25 	including Veteran's Park;
73.26 	 (2) extension of water and sewer lines and other improvements to city infrastructure 
73.27 	necessary for construction of a city industrial park; and 
73.28 	 (3) costs associated with the closure of the Cloquet Municipal Landfill.
73.29 	 Authorized expenses include, but are not limited to, acquiring property and paying 
73.30 	construction expenses related to these improvements, and paying debt service on bonds or 
73.31 	other obligations issued to finance acquisition and construction of these improvements.
73.32 		 Subd. 4.Bonding authority. (a) The city may issue bonds under Minnesota 
73.33 	Statutes, chapter 475, to pay capital and administrative expenses for the improvements 
73.34 	described in subdivision 3 in an amount that does not exceed $7,000,000.  An election to 
73.35 	approve the bonds under Minnesota Statutes, section 475.58, is not required.
74.1 	 (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, 
74.2 	sections 275.60 and 275.61.
74.3 	 (c) The debt represented by the bonds is not included in computing any debt 
74.4 	limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
74.5 	475.61, to pay principal of and interest on the bonds is not subject to any levy limitation.
74.6 		 Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
74.7 	expire at the earlier of (1) 14 years, or (2) when the city council determines that sufficient 
74.8 	funds have been received from the taxes to finance the capital and administrative costs of 
74.9 	the improvements described in subdivision 3, plus the additional amount needed to pay 
74.10 	the costs related to issuance of bonds under subdivision 4, including interest on the bonds. 
74.11 	Any funds remaining after completion of the project and retirement or redemption of the 
74.12 	bonds may be placed in the general fund of the city.  The taxes imposed under subdivisions 
74.13 	1 and 2 may expire at an earlier time if the city so determines by ordinance.

74.14 	EFFECTIVE DATE. This section is effective the day after the governing body of 
74.15 	the city of Cloquet and its chief clerical officer timely comply with Minnesota Statutes, 
74.16 	section 645.021, subdivisions 2 and 3.

74.17 	 Sec. 42. CITY OF CLEARWATER.
 74.18 		 Subdivision 1.Sales and use tax authorized.  Notwithstanding Minnesota Statutes, 
74.19 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
74.20 	the approval of the city voters at the next general election or at a special election held 
74.21 	for this purpose, the city of Clearwater may impose by ordinance a sales and use tax of 
74.22 	one-half of one percent for the purposes specified in subdivision 2.  The provisions of 
74.23 	Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
74.24 	and enforcement of the tax authorized under this subdivision.
74.25 		 Subd. 2.Use of revenues. Revenues received from the tax authorized by subdivision 
74.26 	1 must be used for the cost of collecting and administering the tax and to pay all or part 
74.27 	of the capital or administrative costs of the development, acquisition, construction, and 
74.28 	improvement of parks, trails, parkland, open space, and land and buildings for a regional 
74.29 	community and recreation center.  Authorized expenses include, but are not limited to, 
74.30 	acquiring property, paying construction expenses related to the development of these 
74.31 	facilities and improvements, and securing and paying debt service on bonds or other 
74.32 	obligations issued to finance acquisition, construction, improvement, or development.
74.33 		 Subd. 3.Bonds. Pursuant to the approval of the city voters to impose the tax 
74.34 	authorized in subdivision 1, the city of Clearwater may issue without an additional 
74.35 	election general obligation bonds of the city in an amount not to exceed $3,000,000 to 
75.1 	pay capital and administrative expenses for the acquisition, construction, improvement, 
75.2 	and development of the projects specified in subdivision 2.  The debt represented by the 
75.3 	bonds must not be included in computing any debt limitations applicable to the city, and 
75.4 	the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal or 
75.5 	any interest on the bonds must not be subject to any levy limitations or be included in 
75.6 	computing or applying any levy limitation applicable to the city.
75.7 		 Subd. 4.Termination of tax. The tax imposed under subdivision 1 expires when 
75.8 	the Clearwater City Council determines that the amount described in subdivision 3 has 
75.9 	been received from the tax to finance the capital and administrative costs for acquisition, 
75.10 	construction, improvement, and development of the projects specified in subdivision 2 and 
75.11 	to repay or retire at maturity the principal, interest, and premium due on any bonds issued 
75.12 	for the projects under subdivision 3. Any funds remaining after completion of the projects 
75.13 	specified in subdivision 2 and retirement or redemption of the bonds may be placed in the 
75.14 	general fund of the city.  The tax imposed under subdivision 1 may expire at an earlier 
75.15 	time if the city so determines by ordinance.

75.16 	EFFECTIVE DATE. This section is effective the day after compliance by the 
75.17 	governing body of the city of Clearwater with Minnesota Statutes, section 645.021, 
75.18 	subdivision 3.

75.19 	 Sec. 43. REVERSE REFERENDUM; CHANGE IN MANKATO SALES TAX 
75.20 	EXPIRATION DATE.
 75.21 	 For the change in section 26 to be effective, the Mankato City Council must pass a 
75.22 	resolution stating that they intend to implement the change in the expiration date of the 
75.23 	local sales tax authorized under section 26.  The resolution must indicate when the sales 
75.24 	tax would expire under the law before any change, and when it will expire under the 
75.25 	authorized change in the law. The resolution must be published for two successive weeks 
75.26 	in the official newspaper of the city or, if there is no official newspaper, in a newspaper 
75.27 	of general circulation in the city, together with a notice fixing a date for a public hearing 
75.28 	on the matter.  The hearing must be held at least two weeks but no more than four weeks 
75.29 	after the first publication of the resolution. Following the public hearing, the city may 
75.30 	determine to take no further action or adopt a resolution confirming its intention to extend 
75.31 	the expiration date of the sales tax.  That resolution must also be published in the official 
75.32 	newspaper of the city or, if there is no official newspaper, in a newspaper of general 
75.33 	circulation in the city.  If within 30 days of publication of the resolution a petition signed 
75.34 	by voters equal in number to at least ten percent of the votes cast in the city in the last 
75.35 	general election requesting a vote on the resolution is filed with the county, the resolution 
76.1 	is not effective until it has been submitted to the voters at a general or special election and 
76.2 	a majority of votes cast on the question of approving the resolution are in the affirmative. 
76.3 	The commissioner of revenue shall prepare a suggested form of question to be presented 
76.4 	at the election.  The notices, hearing, and any required referendum must be held before 
76.5 	December 31, 2005.
76.6 	 Notwithstanding any other law or charter provision, the taxes imposed under Laws 
76.7 	1991, chapter 291, article 8, section 27, shall not expire before December 31, 2005. 
76.8 	However, if the city has not met the requirements in this section for adopting the change in 
76.9 	the effective date allowed in section 26, the tax shall expire after December 31, 2005, as 
76.10 	soon as is feasible under Minnesota Statutes, section 297A.99, subdivision 12.

76.11 	 EFFECTIVE DATE. This section is effective the day after compliance by the city 
76.12 	of Mankato with Minnesota Statutes, section 645.021, subdivision 3.

76.13 	 Sec. 44. CITY OF MEDFORD; SALES AND USE TAX.
 76.14 		 Subdivision 1.Sales and use tax authorized.  Notwithstanding Minnesota Statutes, 
76.15 	section 477A.016, or any other provision of law, ordinance, or city charter, the city of 
76.16 	Medford may, by ordinance, impose a sales and use tax of one-half of one percent for 
76.17 	the purposes specified in subdivision 2.  Except as otherwise specifically provided, the 
76.18 	provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration, 
76.19 	collection, and enforcement of the tax authorized under this subdivision.
76.20 		 Subd. 2.Use of revenues. The proceeds of the tax imposed under this section must 
76.21 	be used to pay up to $5,000,000 in costs related to improving the city's wastewater system 
76.22 	and wastewater treatment plant.
76.23 		 Subd. 3.Referendum. If the Medford City Council proposes to impose the tax 
76.24 	authorized by this section, the question of imposing the tax must be submitted to the 
76.25 	voters at the next general election.  The tax may not be imposed unless the majority of 
76.26 	votes cast on the question of imposing the tax are in the affirmative.  The commissioner of 
76.27 	revenue shall prepare a suggested form of the question to be presented at the election.  The 
76.28 	question must state that the sales tax revenues would be pledged to pay any bonds issued 
76.29 	under subdivision 4 and that these bonds are guaranteed by the city's property taxes.
76.30 		 Subd. 4.Bonding authority. (a) The city may issue bonds under Minnesota 
76.31 	Statutes, chapter 475, to finance the capital expenditure and improvement projects 
76.32 	authorized under subdivision 2.  The total amount of bonds issued for the projects listed in 
76.33 	subdivision 2 may not exceed $5,000,000 in aggregate.  An election to approve the bonds, 
76.34 	as required under Minnesota Statutes, section 475.58, is not required.
77.1 	 (b) The issuance of the bonds under this subdivision is not subject to Minnesota 
77.2 	Statutes, sections 275.60 and 275.61.
77.3 	 (c) The bonds are not included in computing any debt limitation applicable to the 
77.4 	city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay the principal of 
77.5 	and interest on the bonds is not subject to any levy limitation.
77.6 	 (d) The taxes authorized under this section may be pledged to and used for the 
77.7 	payment of the bonds and any bonds issued to refund them only if the bonds and any 
77.8 	refunding bonds are general obligations of the city.
77.9 		 Subd. 5.Termination of taxes. The taxes imposed under this section expire at the 
77.10 	earlier of (1) 20 years after the taxes are first imposed, or (2) when the city council first 
77.11 	determines that the amount of revenues raised to pay for the projects under subdivision 
77.12 	2 shall meet or exceed the sum of $5,000,000, plus an amount equal to the costs related 
77.13 	to the issuance of bonds under subdivision 4.  Any funds remaining after completion of 
77.14 	the projects and retirement or redemption of the bonds may be placed in the general 
77.15 	funds of the city.

77.16 	EFFECTIVE DATE. This section is effective the day after compliance with 
77.17 	the governing body of the city of Medford with Minnesota Statutes, section 645.021, 
77.18 	subdivision 3.

77.19 	 Sec. 45. CITY OF PARK RAPIDS.
 77.20 		 Subdivision 1.Sales and use tax authorized.  Notwithstanding Minnesota Statutes, 
77.21 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
77.22 	the approval of the city voters at the next general election or at a special election held for 
77.23 	this purpose, the city of Park Rapids may impose by ordinance a sales and use tax of one 
77.24 	percent for the purposes specified in subdivision 2.  The provisions of Minnesota Statutes, 
77.25 	section 297A.99, govern the imposition, administration, collection, and enforcement of 
77.26 	the tax authorized under this subdivision.
77.27 		 Subd. 2.Use of revenues. Revenues received from the tax authorized by 
77.28 	subdivision 1 must be used for the cost of collecting and administering the tax and to 
77.29 	pay all or part of the capital or administrative costs of the development, acquisition, 
77.30 	construction, and improvement of the following projects:
77.31 	 (1) two-thirds of the cost of construction and operation of a community center that 
77.32 	may include a senior citizen center, fitness center, swimming pool, meeting rooms, indoor 
77.33 	track, and racquetball, basketball, and tennis courts, provided that an amount equal to 
77.34 	one-third of the cost of construction is received from private sources;
78.1 	 (2) capital improvement projects including, but not limited to, installation of water, 
78.2 	sewer, storm sewer, street improvements, new city water tower and well, costs related to 
78.3 	improvements to marked trunk highway 34; and 
78.4 	 (3) park improvements.
78.5 	 Authorized expenses include, but are not limited to, acquiring property, paying 
78.6 	construction expenses related to the development of these facilities and improvements, 
78.7 	and securing and paying debt service on bonds or other obligations issued to finance 
78.8 	acquisition, construction, improvement, or development.
78.9 		 Subd. 3.Bonds. Pursuant to the approval of the city voters to impose the tax 
78.10 	authorized in subdivision 1, the city of Park Rapids may issue without an additional 
78.11 	election general obligation bonds of the city to pay capital and administrative expenses 
78.12 	for the acquisition, construction, improvement, and development of the projects specified 
78.13 	in subdivision 2.  The debt represented by the bonds must not be included in computing 
78.14 	any debt limitations applicable to the city, and the levy of taxes required by Minnesota 
78.15 	Statutes, section 475.61, to pay the principal or any interest on the bonds must not be 
78.16 	subject to any levy limitations or be included in computing or applying any levy limitation 
78.17 	applicable to the city.
78.18 		 Subd. 4.Termination of tax. The tax imposed under subdivision 1 expires the 
78.19 	earlier of July 1, 2023, or when the city council determines that sufficient revenues have 
78.20 	been received to retire the bonds in subdivision 3.  Any funds remaining after completion 
78.21 	of the projects specified in subdivision 2 and retirement or redemption of the bonds may 
78.22 	be placed in the general fund of the city.  The tax imposed under subdivision 1 may expire 
78.23 	at an earlier time if the city so determines by ordinance.

78.24 	EFFECTIVE DATE. This section is effective the day after compliance by the 
78.25 	governing body of the city of Park Rapids with Minnesota Statutes, section 645.021, 
78.26 	subdivision 3.

78.27 	 Sec. 46. CITY OF PROCTOR; LODGING TAX.
 78.28 	 The city of Proctor may use up to ten percent of the revenues received from 
78.29 	the lodging tax imposed by the city under Minnesota Statutes, section 469.190, for 
78.30 	preservation of the Caboose and the Baldwin Locomotive, Class M3 Mallet, Number 
78.31 	225, donated to the city by the Duluth, Missabe and Iron Range Railway Company, and 
78.32 	the F-101F aircraft, serial number 59-0407, donated to the city by the Department of 
78.33 	the Air Force.

78.34 	 EFFECTIVE DATE. This section is effective the day following final enactment.

79.1 	 Sec. 47. ST. CLOUD AREA CITIES; SALES AND USE TAX AUTHORIZED.
 79.2 		 Subdivision 1.Sales and use tax authorized. (a) Notwithstanding Minnesota 
79.3 	Statutes, sections 297A.99, subdivision 3, paragraph (d), and 477A.016, or any other 
79.4 	provision of law, ordinance, or city charter, the following cities may, by ordinance, impose 
79.5 	a sales and use tax of one half of one percent for the purposes specified in subdivision 2:
79.6 	 (1) the city of St. Cloud, pursuant to the approval of the city voters at the general 
79.7 	election held on November 2, 2004:
79.8 	 (2) the city of St. Joseph, pursuant to the approval of the city voters at the general 
79.9 	election on November 2, 2004;
79.10 	 (3) the city of Waite Park, pursuant to the approval of the city voters at the general 
79.11 	election held on November 4, 2003, and any additional approval by the voters of that 
79.12 	city at the next general election;
79.13 	 (4) the city of Sartell, pursuant to the approval of the city voters at the general 
79.14 	election held on November 2, 1999, and any additional approval at the next general 
79.15 	election; and 
79.16 	 (5) the cities of Sauk Rapids and St. Augusta, pursuant to the approval of the voters 
79.17 	of that city at the next general election.
79.18 	 (b) The provisions of Minnesota Statutes, section 297A.99, except subdivision 3, 
79.19 	paragraph (d), govern the imposition, administration, collection, and enforcement of 
79.20 	the tax authorized under this subdivision.
79.21 		 Subd. 2.Use of revenues. (a) Revenues received from the tax authorized under 
79.22 	subdivision 1 must be used for collecting and administering the taxes and to pay all or part 
79.23 	of the capital and administrative costs of the acquisition, construction, and improvement 
79.24 	of a new regional library located in the city of St. Cloud.  Authorized expenses include, 
79.25 	but are not limited to, acquiring property, paying construction expenses related to the 
79.26 	development of the library, and securing and paying debt service issued to finance 
79.27 	construction or improvement of the authorized facility.  The total amount that may be spent 
79.28 	on this project may not exceed $30,000,000 plus any debt service costs.
79.29 	 (b) If revenues collected from the taxes imposed under subdivision 1 are greater than 
79.30 	the amount needed to meet obligations under paragraph (a) in any year, the surplus may 
79.31 	be returned to the cities in a manner agreed upon by the participating cities under an 
79.32 	applicable joint powers agreement.  Cities must use revenues received under this paragraph 
79.33 	to fund projects that have been approved by the voters at the referendum authorizing 
79.34 	the tax.  Authorized expenses include, but are not limited to, acquiring property, paying 
79.35 	construction expenses related to the development of the authorized facility, and securing 
80.1 	and paying debt service issued to finance construction or improvement of the authorized 
80.2 	facility.
80.3 	 (c) Notwithstanding any provisions to the contrary contained in a referendum 
80.4 	authorizing the imposition of the tax, projects that may be funded from revenues 
80.5 	distributed under paragraph (b) are limited to the following:
80.6 	 (1) the St. Cloud Regional Airport;
80.7 	 (2) regional transportation improvements;
80.8 	 (3) community and aquatics centers;
80.9 	 (4) regional public libraries; and 
80.10 	 (5) acquisition and improvement of regional park land, trails, and open space.
80.11 	 (d) The cities of Waite Park and Sartell may use revenues from the tax imposed in 
80.12 	subdivision 1 to fund the library under paragraph (a) without additional approval by city 
80.13 	voters; however, each city must seek approval of its voters to fund any other project not 
80.14 	approved by the voters at the referendum held on November 4, 2003, and November 2, 
80.15 	1999, respectively.
80.16 		 Subd. 3.Allocation of sales and use tax revenues to cities. Revenues collected 
80.17 	from the taxes authorized by subdivision 1, after paying the cost of collecting and 
80.18 	administering the tax, shall be allocated to cities imposing the tax as follows:
80.19 	 (1) the first $900,000 of revenues collected annually, indexed annually to the 
80.20 	Consumer Price Index, to the city of St. Cloud for the construction and relocation of 
80.21 	a regional library located in the city; and 
80.22 	 (2) the revenues collected from the taxes imposed under subdivision 1 that exceed the 
80.23 	amount needed to meet the obligations under clause (1) in any year shall be returned to the 
80.24 	cities pursuant to a joint powers agreement allocating sales tax revenues among the cities.
80.25 		 Subd. 4.City bonding authorized. The city imposing a tax under subdivision 1 
80.26 	may issue general obligation bonds to pay the costs of the projects specified in subdivision 
80.27 	2, pursuant to the approval of the projects by the city voters at the election authorizing 
80.28 	the imposition of the tax.  The bonds issued for each project are limited to the amount 
80.29 	authorized to be spent on the project in the referendum.  The debt represented by the bonds 
80.30 	must not be included in computing any debt limitations applicable to the city, and the levy 
80.31 	of taxes required by Minnesota Statutes, section 475.61, to pay the principal or any interest 
80.32 	on the bonds must not be subject to any levy limitations or be included in computing or 
80.33 	applying any levy limitation applicable to the city.
80.34 		 Subd. 5.Termination of tax. The tax imposed in a city under subdivision 1 expires 
80.35 	when the city council determines that sufficient funds have been collected from the tax to 
80.36 	retire or redeem the bonds and obligations authorized under subdivision 2, but no later 
81.1 	than 17 years after the date the tax is first imposed.  Any funds remaining after completion 
81.2 	of the projects specified in subdivision 2 and retirement or redemption of the bonds may 
81.3 	be placed in the general fund of the city.  The tax imposed under subdivision 1 may expire 
81.4 	at an earlier time if the city so determines by ordinance.

81.5 	EFFECTIVE DATE. This section is effective the day after compliance by the 
81.6 	governing body of the city with Minnesota Statutes, section 645.021, subdivision 3, for 
81.7 	sales and purchases made on and after January 1, 2006.

81.8 	 Sec. 48. SALES AND USE TAX COMPLIANCE GAP.
 81.9 	 The commissioner must reduce the amount of the compliance gap in the payment 
81.10 	of sales and use tax by 25 percent before December 31, 2007; and must reduce the 
81.11 	compliance gap in the payment of sales and use tax by an additional 25 percent before 
81.12 	December 31, 2009.  The commissioner must establish an effective method to allow 
81.13 	individuals who purchase taxable products or services and have not paid the tax at the 
81.14 	time of the purchase to pay the tax.  The commissioner must advise residents of this state 
81.15 	how to pay sales and use tax.

81.16 	 EFFECTIVE DATE. This section is effective the day following final enactment.

81.17 	 Sec. 49. CITY OF WASECA; SALES AND USE TAX.
 81.18 		 Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
81.19 	section 477A.016, or any other provision of law, ordinance, or city charter, the city of 
81.20 	Waseca may, by ordinance, impose a sales and use tax of one-half of one percent for 
81.21 	the purposes specified in subdivision 2.  The provisions of Minnesota Statutes, section 
81.22 	297A.99, govern the imposition, administration, collection, and enforcement of the tax 
81.23 	authorized under this subdivision.
81.24 		 Subd. 2.Use of revenues. The proceeds of the tax imposed under this section must 
81.25 	be used to pay for up to $1,820,000 in costs related to one or more of the following capital 
81.26 	projects as described in the referendum in subdivision 3:
81.27 	 (1) water quality and lake improvements;
81.28 	 (2) community center improvements;
81.29 	 (3) an industrial incubator; and 
81.30 	 (4) downtown improvements, including a theatre and blighted property acquisition.
81.31 		 Subd. 3.Referendum. If the Waseca city council proposes to impose the tax 
81.32 	authorized by this section, the question of imposing the tax must be submitted to the 
81.33 	voters at the next general election.  The tax may not be imposed unless the majority of 
82.1 	votes cast on the question of imposing the tax are in the affirmative.  The specific projects 
82.2 	to be funded by the tax must be identified at least 90 days before the referendum is held 
82.3 	and included in the question presented at the election. The question must state that the 
82.4 	sales tax revenues would be pledged to pay any bonds issued under subdivision 4 and that 
82.5 	these bonds are guaranteed by the city's property taxes.
82.6 		 Subd. 4.Bonding authority. The city may issue bonds under Minnesota Statutes, 
82.7 	chapter 475, to finance the capital expenditure and improvement projects authorized under 
82.8 	subdivision 2 and approved under subdivision 3.  The total amount of bonds issued for the 
82.9 	projects approved in subdivision 3 may not exceed $1,820,000 in aggregate.  An election to 
82.10 	approve the bonds, as required under Minnesota Statutes, section 475.58, is not required.
82.11 		 Subd. 5.Termination of taxes. The taxes imposed under this section expire at the 
82.12 	earlier of (1) ten years after the taxes are first imposed, or (2) when the city council first 
82.13 	determines that the amount of revenues raised is sufficient to finance the capital projects 
82.14 	approved under subdivision 3 and to prepay or retire at maturity the principal, interest, 
82.15 	and premium due on any bonds issued under subdivision 4.  Any funds remaining after 
82.16 	completion of the projects may be placed in the general funds of the city.

82.17 	EFFECTIVE DATE. This section is effective the day after compliance with 
82.18 	the governing body of the city of Waseca with Minnesota Statutes, section 645.021, 
82.19 	subdivision 3.

82.20 	 Sec. 50. CITY OF WILLMAR.
 82.21 		 Subdivision 1.Sales and use tax authorized.  Notwithstanding Minnesota Statutes, 
82.22 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
82.23 	the approval of the city voters at the general election held on November 2, 2004, the city 
82.24 	of Willmar may impose by ordinance a sales and use tax of one-half of one percent for 
82.25 	the purposes specified in subdivision 2.  The provisions of Minnesota Statutes, section 
82.26 	297A.99, govern the imposition, administration, collection, and enforcement of the tax 
82.27 	authorized under this subdivision.
82.28 		 Subd. 2.Use of revenues. Revenues received from the tax authorized by 
82.29 	subdivision 1 must be used for the cost of collecting and administering the tax and to 
82.30 	pay all or part of the capital or administrative costs of the development, acquisition, 
82.31 	construction, and improvement of the following projects:
82.32 	 (1) completion and expansion of the airport/industrial park;
82.33 	 (2) hiking and biking trails;
82.34 	 (3) connection of the Blue Line and Civic Center buildings; and 
83.1 	 (4) purchase of that portion of the Willmar Regional Treatment Center campus 
83.2 	located west of Marked Trunk Highway 71.
83.3 	 Authorized expenses include, but are not limited to, acquiring property, paying 
83.4 	construction expenses related to the development of these facilities and improvements, 
83.5 	and securing and paying debt service on bonds or other obligations issued to finance 
83.6 	acquisition, construction, improvement, or development of these projects.
83.7 		 Subd. 3.Bonds. The city of Willmar may issue without an additional election 
83.8 	general obligation bonds of the city in an amount not to exceed $8,000,000 to pay 
83.9 	capital and administrative expenses for the acquisition, construction, improvement, and 
83.10 	development of the projects listed in subdivision 2.  The debt represented by the bonds 
83.11 	must not be included in computing any debt limitations applicable to the city, and the 
83.12 	levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal or any 
83.13 	interest on the bonds, and must not be subject to any levy limitations or be included in 
83.14 	computing or applying any levy limitation applicable to the city.
83.15 		 Subd. 4.Termination of tax. The tax imposed under subdivision 1 expires at the 
83.16 	later of (1) seven years after the date the tax is first imposed, or (2) when the Willmar City 
83.17 	Council determines that the amount described in subdivision 3 has been received from 
83.18 	the tax to finance the capital and administrative costs, and to repay or retire at maturity 
83.19 	the principal, interest, and premium due on any bonds issued under subdivision 3.  Any 
83.20 	funds remaining after completion of the projects listed in subdivision 2 and retirement or 
83.21 	redemption of the bonds may be placed in the general fund of the city.  The tax imposed 
83.22 	under subdivision 1 may expire at an earlier time if the city so determines by ordinance.

83.23 	EFFECTIVE DATE. This section is effective the day after compliance by the 
83.24 	governing body of the city of Willmar with Minnesota Statutes, section 645.021, 
83.25 	subdivision 3.

83.26 	 Sec. 51. CITY OF WINONA; TAXES AUTHORIZED.
 83.27 		 Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
83.28 	section 477A.016, or any other provision of law, ordinance, or city charter, if approved 
83.29 	by the voters pursuant to Minnesota Statutes, section 297A.99, the city of Winona may 
83.30 	impose by ordinance a sales and use tax of one-half of one percent for the purposes 
83.31 	specified in subdivision 3.  The provisions of Minnesota Statutes, section 297A.99, govern 
83.32 	the imposition, administration, collection, and enforcement of the tax authorized under 
83.33 	this subdivision.
83.34 		 Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
83.35 	477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
84.1 	Winona may impose by ordinance, for the purposes specified in subdivision 3, an excise 
84.2 	tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from 
84.3 	any person engaged within the city in the business of selling motor vehicles at retail.
84.4 		 Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
84.5 	subdivisions 1 and 2 must be used to pay all or part of the capital costs of transportation, 
84.6 	cultural, or library projects located within the city, including securing or paying debt 
84.7 	service on bonds issued under subdivision 4, for the transportation, cultural, or library 
84.8 	projects and to pay the cost of collecting and administering the tax.  Authorized costs 
84.9 	include, but are not limited to, acquiring property and paying construction and engineering 
84.10 	costs related to the projects.
84.11 		 Subd. 4.Bonds. The city of Winona, if approved by voters pursuant to Minnesota 
84.12 	Statutes, section 297A.99, may issue general obligation bonds of the city, in one or 
84.13 	more series, in the aggregate principal amount not to exceed $20,000,000 to pay capital 
84.14 	and administrative costs of the transportation, cultural, or library projects.  The debt 
84.15 	represented by the bonds is not included in computing any debt limitations applicable to 
84.16 	the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the 
84.17 	principal of and interest on the bonds is not subject to any levy limitation or included in 
84.18 	computing or applying any levy limitation applicable to the city.
84.19 		 Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
84.20 	expire at the later of 15 years after the imposition of the tax or when the Winona city 
84.21 	council determines that sufficient funds have been received from the taxes to prepay 
84.22 	or retire at maturity the principal, interest, and premium due on any bonds issued for 
84.23 	the projects under subdivision 4.  Any funds remaining after expiration of the taxes and 
84.24 	retirement of the bonds may be placed in a capital project fund of the city.  The taxes 
84.25 	imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines 
84.26 	by ordinance.

84.27 	EFFECTIVE DATE. This section is effective the day after compliance by 
84.28 	the governing body of the city of Winona with Minnesota Statutes, section 645.021, 
84.29 	subdivision 3.

84.30 	 Sec. 52. LODGING TAX; HUBBARD COUNTY AUTHORITY.
 84.31 	 Notwithstanding Minnesota Statutes, section 469.190, subdivisions 1 and 4, 
84.32 	Hubbard County may impose the local lodging tax authorized in that section in all towns 
84.33 	and unorganized territories within the county, and no town located in the county may 
84.34 	impose the local lodging tax.  Any local lodging tax imposed by a town in Hubbard County 
85.1 	prior to the effective date of this section expires the day that a county tax is imposed 
85.2 	under this section.
85.3 	 If the county board exercises the authority under this section, it must determine by 
85.4 	resolution that imposition of the tax is in the county's interest.  The resolution is subject 
85.5 	to the notice and reverse referendum requirements that would apply under Minnesota 
85.6 	Statutes, section 469.190, subdivision 5, if the county was imposing the tax in an 
85.7 	unorganized territory.  The provisions of Minnesota Statutes, section 469.190, subdivisions 
85.8 	2, 3, 6, and 7, apply to a tax imposed under this section.

85.9 	 EFFECTIVE DATE. This section is effective the day after the governing body of 
85.10 	Hubbard County and its chief clerical officer comply with Minnesota Statutes, section 
85.11 	645.021, subdivisions 2 and 3.

85.12 	 Sec. 53. USE TAX ENFORCEMENT.
 85.13 	 The commissioner shall establish a use tax enforcement unit within the Department 
85.14 	of Revenue to conduct direct compliance activities that will increase payment of use tax. 
85.15 	The commissioner shall inform and educate taxpayers about the requirement to pay use 
85.16 	tax.  The commissioner shall also conduct an information campaign targeted to higher 
85.17 	income individuals, attorneys, accountants, and tax preparers to advise individuals and tax 
85.18 	professionals of the obligation to report and pay use tax.

85.19 	 EFFECTIVE DATE. This section is effective July 1, 2005.

85.20 	 Sec. 54. REPEALER.
 85.21 	 Minnesota Statutes 2004, section 297A.99, subdivision 13, is repealed effective 
85.22 	July 1, 2005.

85.23 	 ARTICLE 4
85.24 	 PROPERTY TAXES

85.25 	 Section 1. Minnesota Statutes 2004, section 103C.331, subdivision 16, is amended to 
85.26 	read:
85.27 		 Subd. 16.Budget.  The district board shall annually present a budget consisting of 
85.28 	an itemized statement of district expenses for the ensuing calendar year to the boards of 
85.29 	county commissioners of the counties in which the district is located. The county boards 
85.30 	may levy an annual tax on all taxable real property in the district or annually authorize 
85.31 	district levies, as provided in section 103C.332,for the amount that the boards determine is 
85.32 	necessary to meet the requirements of the district.  The amount levied shall be collected 
86.1 	and distributed to the district as prescribed by chapter 276.  The amount may be spent by 
86.2 	the district board for a district purpose authorized by law.

86.3 	 Sec. 2. [103C.332] DISTRICT FUNDS AND LEVIES.
86.4 		 Subdivision 1.General fund. (a) A district shall create a general fund consisting of:
86.5 	 (1) an ad valorem tax levy, authorized by a county board under section 103C.331, 
86.6 	subdivision 16, that may not exceed 0.048 percent of taxable market value, or $750,000, 
86.7 	whichever is less; and 
86.8 	 (2) revenue received from the county for administration of the district under section 
86.9 	103C.331, subdivision 16.
86.10 	 (b) The money in the fund shall be used for general administrative expenses.  The 
86.11 	supervisors may make an annual levy for the general fund as provided in subdivision 6.
86.12 		 Subd. 2.Implementation and project match fund. A district shall create an 
86.13 	implementation fund to supply funds for the implementation of the projects of the district 
86.14 	or to match grants from outside sources consisting of:
86.15 	 (1) ad valorem tax levies or fees levied or to be levied for the implementation of 
86.16 	projects of the district or to match grants, authorized by the county board under section 
86.17 	103C.331, subdivision 16; and 
86.18 	 (2) revenue received from the county under section 103C.331, subdivision 16, for 
86.19 	the implementation of projects of the district or to match grants.
86.20 		 Subd. 3.Budget hearing. (a) Before adopting a budget when levies are authorized 
86.21 	by the county board under section 103C.331, subdivision 16, the supervisors shall hold 
86.22 	a public hearing on the proposed budget.
86.23 	 (b) The supervisors shall publish a notice of the hearing with a summary of the 
86.24 	proposed budget in one or more newspapers of general circulation in each county 
86.25 	consisting of part of the district.  The notice and summary shall be published once each 
86.26 	week for two successive weeks before the hearing.  The last publication shall be at least 
86.27 	two days before the hearing.
86.28 		 Subd. 4.Budget adoption. On or before September 1 of each year, the supervisors 
86.29 	shall adopt a budget for the next year and decide on the total amount necessary to be raised 
86.30 	from ad valorem tax levies to meet the district's budget.
86.31 		 Subd. 5.Certification to auditor. After adoption of the budget and no later than 
86.32 	September 1, the district shall certify to the auditor of each county within the district, the 
86.33 	county's share of an authorized tax, which shall be an amount bearing the same proportion 
86.34 	to the total levy as the net tax capacity of the area of the county within the district bears to 
87.1 	the net tax capacity of the entire district.  The maximum amount of a levy may not exceed 
87.2 	the amount provided in subdivisions 1 and 2.
87.3 		 Subd. 6.Levy. The auditor of each county in the district shall add the amount of 
87.4 	an authorized levy made by the supervisors to the other tax levies on the property of the 
87.5 	county within the district for collection by the county treasurer with other taxes.  The 
87.6 	county treasurer shall make settlement of the taxes collected with the treasurer of the 
87.7 	district in the same manner as other taxes are distributed to the other political subdivisions. 
87.8 	The levy authorized by this section is in addition to other county taxes authorized by law.

87.9 	 Sec. 3. Minnesota Statutes 2004, section 123B.53, is amended by adding a subdivision 
87.10 	to read:
87.11 		 Subd. 1a.Debt service levies; choice of tax base. A school board may by 
87.12 	resolution elect to levy the debt service for a bond issued after July 1, 2005, against the 
87.13 	referendum market value of the district, as defined under section 126C.01, subdivision 3, 
87.14 	rather than the net tax capacity of the district, except that for purposes of this subdivision, 
87.15 	noncommercial 4c(1) property under section 273.13 is valued at its market value.  A 
87.16 	resolution to levy against referendum market value must be passed at an open meeting of 
87.17 	the board, at least 60 days prior to the referendum election.

87.18 	EFFECTIVE DATE. This section is effective the day following final enactment.

87.19 	 Sec. 4. Minnesota Statutes 2004, section 123B.53, subdivision 4, is amended to read:
87.20 		 Subd. 4.Debt service equalization revenue.  (a) The debt service equalization 
87.21 	revenue of a district equals the sum of the first tier debt service equalization revenue and 
87.22 	the second tier debt service equalization revenue.
87.23 	 (b) The first tier debt service equalization revenue of a district equals the greater of 
87.24 	zero or the eligible debt service revenue minus the amount raised by a levy of 15 percent 
87.25 	times the adjusted net tax capacity of the district minus the second tier debt service 
87.26 	equalization revenue of the district.
87.27 	 (c) The second tier debt service equalization revenue of a district equals the greater 
87.28 	of zero or the eligible debt service revenue, excluding alternative facilities levies under 
87.29 	section 123B.59, subdivision 5, minus the amount raised by a levy of 25 percent times the 
87.30 	adjusted net tax capacity of the district.
87.31 	 (d) Debt service equalization revenue is determined as provided under this 
87.32 	subdivision regardless of whether the debt service is being levied against net tax capacity 
87.33 	or referendum market value.

88.1 	EFFECTIVE DATE. This section is effective July 1, 2005.

88.2 	 Sec. 5. Minnesota Statutes 2004, section 123B.55, is amended to read:
88.3 	 123B.55 DEBT SERVICE LEVY.
88.4 		 Subdivision 1.Levy amount. A district may levy the amounts necessary to make 
88.5 	payments for bonds issued and for interest on them, including the bonds and interest on 
88.6 	them, issued as authorized by Minnesota Statutes 1974, section 275.125, subdivision 3, 
88.7 	clause (7)(C); and the amounts necessary for repayment of debt service loans and capital 
88.8 	loans, minus the amount of debt service equalization revenue of the district.
88.9 		 Subd. 2.Aid apportionment. A district's debt service equalization aid shall be 
88.10 	apportioned between the net tax capacity debt service levy and the referendum market 
88.11 	value debt service levy in the same proportions as eligible debt service revenues resulting 
88.12 	from bonds issued against net tax capacity are to eligible debt service revenues resulting 
88.13 	from bonds issued against referendum market value.
88.14 		 Subd. 3.Net tax capacity debt service levy. The levy amount determined under 
88.15 	subdivision 1, plus the eligible debt service revenues resulting from bonds issued against 
88.16 	net tax capacity, minus the debt service equalization aid apportioned to the net tax capacity 
88.17 	debt service levy, must be levied against the net tax capacity of the district as determined 
88.18 	under section 273.13 and must be included with the other net tax capacity levies certified 
88.19 	to the county auditor under section 275.07.
88.20 		 Subd. 4.Referendum market value debt service levy. The eligible debt service 
88.21 	revenues resulting from bonds issued against referendum market value, minus the debt 
88.22 	service equalization aid apportioned to the referendum market value debt service levy, 
88.23 	must be levied against the referendum market value of the district as defined in section 
88.24 	126C.01, subdivision 3, and must be separately certified to the county auditor under 
88.25 	section 275.07.

88.26 	EFFECTIVE DATE. This section is effective beginning with taxes payable in 2006.

88.27 	 Sec. 6. Minnesota Statutes 2004, section 123B.71, subdivision 9, is amended to read:
88.28 		 Subd. 9.Information required.  A school board proposing to construct a facility 
88.29 	described in subdivision 8 shall submit to the commissioner a proposal containing 
88.30 	information including at least the following:
88.31 	 (1) the geographic area and population to be served, preschool through grade 12 
88.32 	student enrollments for the past five years, and student enrollment projections for the 
88.33 	next five years;
89.1 	 (2) a list of existing facilities by year constructed, their uses, and an assessment of 
89.2 	the extent to which alternate facilities are available within the school district boundaries 
89.3 	and in adjacent school districts;
89.4 	 (3) a list of the specific deficiencies of the facility that demonstrate the need for a 
89.5 	new or renovated facility to be provided, and a list of the specific benefits that the new 
89.6 	or renovated facility will provide to the students, teachers, and community users served 
89.7 	by the facility;
89.8 	 (4) the relationship of the project to any priorities established by the school district, 
89.9 	educational cooperatives that provide support services, or other public bodies in the 
89.10 	service area;
89.11 	 (5) a specification of how the project will increase community use of the facility 
89.12 	and whether and how the project will increase collaboration with other governmental or 
89.13 	nonprofit entities;
89.14 	 (6) a description of the project, including the specification of site and outdoor space 
89.15 	acreage and square footage allocations for classrooms, laboratories, and support spaces; 
89.16 	estimated expenditures for the major portions of the project; and the dates the project will 
89.17 	begin and be completed;
89.18 	 (7) a specification of the source of financing the project; the scheduled date for 
89.19 	a bond issue or school board action; a schedule of payments, including debt service 
89.20 	equalization aid; whether the debt service will be levied against net tax capacity or 
89.21 	referendum market value;and the effect of a bond issue on local property taxes by the 
89.22 	property class and valuation;
89.23 	 (8) an analysis of how the proposed new or remodeled facility will affect school 
89.24 	district operational or administrative staffing costs, and how the district's operating budget 
89.25 	will cover any increased operational or administrative staffing costs;
89.26 	 (9) a description of the consultation with local or state road and transportation 
89.27 	officials on school site access and safety issues, and the ways that the project will address 
89.28 	those issues;
89.29 	 (10) a description of how indoor air quality issues have been considered and a 
89.30 	certification that the architects and engineers designing the facility will have professional 
89.31 	liability insurance;
89.32 	 (11) as required under section 123B.72, for buildings coming into service after 
89.33 	July 1, 2002, a certification that the plans and designs for the extensively renovated or 
89.34 	new facility's heating, ventilation, and air conditioning systems will meet or exceed 
89.35 	code standards; will provide for the monitoring of outdoor airflow and total airflow of 
90.1 	ventilation systems; and will provide an indoor air quality filtration system that meets 
90.2 	ASHRAE standard 52.1;
90.3 	 (12) a specification of any desegregation requirements that cannot be met by any 
90.4 	other reasonable means; and
90.5 	 (13) a specification, if applicable, of how the facility will utilize environmentally 
90.6 	sustainable school facility design concepts.

90.7 	EFFECTIVE DATE. This section is effective July 1, 2005.

90.8 	 Sec. 7. Minnesota Statutes 2004, section 126C.17, subdivision 6, is amended to read:
90.9 		 Subd. 6.Referendum equalization levy.  (a) For fiscal year 2003 and later through 
90.10 	2007, a district's referendum equalization levy equals the sum of the first tier referendum 
90.11 	equalization levy and the second tier referendum equalization levy.
90.12 	 (b) A district's first tier referendum equalization levy equals the district's first tier 
90.13 	referendum equalization revenue times the lesser of one or the ratio of the district's 
90.14 	referendum market value per resident marginal cost pupil unit to $476,000.
90.15 	 (c) A district's second tier referendum equalization levy equals the district's second 
90.16 	tier referendum equalization revenue times the lesser of one or the ratio of the district's 
90.17 	referendum market value per resident marginal cost pupil unit to $270,000.

90.18 	 Sec. 8. Minnesota Statutes 2004, section 126C.17, is amended by adding a subdivision 
90.19 	to read:
90.20 		 Subd. 6a.Local effort level. (a) For fiscal year 2008 and later, a district's local 
90.21 	effort level equals the sum of the first tier referendum equalization level and the second 
90.22 	tier referendum local effort level.
90.23 	 (b) A district's first tier referendum local effort level equals the district's first tier 
90.24 	referendum equalization revenue times the lesser of one or the ratio of the district's 
90.25 	referendum market value per resident marginal cost pupil unit to $476,000.
90.26 	 (c) A district's second tier referendum local effort level equals the district's second 
90.27 	tier referendum equalization revenue times the lesser of one or the ratio of the district's 
90.28 	referendum market value per resident marginal cost pupil unit to $270,000.

90.29 	 Sec. 9. Minnesota Statutes 2004, section 126C.17, is amended by adding a subdivision 
90.30 	to read:
90.31 		 Subd. 6b.Local effort revenue. (a) For fiscal years 2008 and later, a school 
90.32 	district's local effort revenue is equal to its local effort level for that year.
91.1 	 (b) For referenda authorized under subdivision 9 prior to June 30, 2006, a school 
91.2 	district's local effort revenue must be levied against the district's referendum market 
91.3 	value according to subdivision 10.
91.4 	 (c) For referenda authorized or renewed under subdivision 9 after June 30, 2006, that 
91.5 	have been approved to be levied against referendum market value, the local effort revenue 
91.6 	must be levied against the district's referendum market value according to subdivision 10.
91.7 	 (d) For referenda authorized or renewed under subdivision 9 after June 30, 2006, 
91.8 	that have been approved to be imposed as a school referendum tax according to section 
91.9 	290.0621, the local effort revenue must be raised as a tax against income liability 
91.10 	according to section 290.0621.

91.11 	 Sec. 10. Minnesota Statutes 2004, section 126C.17, subdivision 7, is amended to read:
91.12 		 Subd. 7.Referendum equalization aid.  (a) For fiscal years 2005 through 2007,a 
91.13 	district's referendum equalization aid equals the difference between its referendum 
91.14 	equalization revenue and levy. For fiscal years 2008 and later, a district's referendum 
91.15 	equalization aid equals the difference between its referendum equalization revenue and 
91.16 	its local effort revenue.
91.17 	 (b) If a district's actual levy for first or second tier referendum equalization revenue 
91.18 	in fiscal years 2005 through 2007 is less than its maximum levy limit for that tier, aid shall 
91.19 	be proportionately reduced. If a district's actual local effort revenue for first or second tier 
91.20 	referendum equalization revenue in fiscal years 2008 and later is less than its maximum 
91.21 	local effort revenue limit for that tier, aid shall be proportionately reduced.
91.22 	 (c) Notwithstanding paragraph (a), the referendum equalization aid for a district, 
91.23 	where the referendum equalization aid under paragraph (a) exceeds 90 percent of the 
91.24 	referendum revenue, must not exceed 18.6 percent of the formula allowance times the 
91.25 	district's resident marginal cost pupil units. For fiscal years 2005 through 2007,a district's 
91.26 	referendum levy is increased by the amount of any reduction in referendum aid under this 
91.27 	paragraph. For fiscal years 2008 and later, a district's local effort level is increased by the 
91.28 	amount of any reduction in referendum aid under this paragraph.

91.29 	 Sec. 11. Minnesota Statutes 2004, section 126C.17, subdivision 9, is amended to read:
91.30 		 Subd. 9.Referendum revenue.  (a) The revenue authorized by section 126C.10, 
91.31 	subdivision 1, may be increased in the amount approved by the voters of the district at a 
91.32 	referendum called for the purpose.  The referendum may be called by the board or shall be 
91.33 	called by the board upon written petition of qualified voters of the district.  The referendum 
91.34 	must be conducted one or two calendar years before the increased levy authority, if 
92.1 	approved, first becomes payable.  Only one election to approve an increase may be held 
92.2 	in a calendar year. Unless the referendum is conducted by mail under paragraph (g), the 
92.3 	referendum must be held on the first Tuesday after the first Monday in November.  The 
92.4 	ballot must state the maximum amount of the increased revenue per resident marginal cost 
92.5 	pupil unit, the estimated referendum tax rate as a percentage of referendum market value 
92.6 	in the first year it is to be levied, and that the revenue must be used to finance school 
92.7 	operations.  The ballot may state a schedule, determined by the board, of increased revenue 
92.8 	per resident marginal cost pupil unit that differs from year to year over the number of 
92.9 	years for which the increased revenue is authorized. If the ballot contains a schedule 
92.10 	showing different amounts, it must also indicate the estimated referendum tax rate as a 
92.11 	percent of referendum market value for the amount specified for the first year and for the 
92.12 	maximum amount specified in the schedule.The ballot, including a ballot on the question 
92.13 	to revoke or reduce the increased revenue amount under paragraph (c), must abbreviate 
92.14 	the term "per resident marginal cost pupil unit" as "per pupil unit." The ballot may state 
92.15 	that existing referendum levy taxing authority is expiring.  In this case, if the referendum 
92.16 	authority is based on a property tax levy,the ballot may also compare the proposed levy 
92.17 	authority to the existing expiring levy authority, and express the proposed increase as the 
92.18 	amount, if any, over the expiring referendum levy authority.  The ballot must designate 
92.19 	the specific number of years, not to exceed ten, for which the referendum authorization 
92.20 	applies.  The notice required under section 275.60 may be modified to read, in cases of 
92.21 	renewing existing levies:
92.22 	 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
92.23 	FOR A PROPERTY TAX INCREASE."
92.24 	 If the referendum is on a proposed income tax under section 290.0621, the notice 
92.25 	must read:
92.26 	 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
92.27 	FOR AN INCOME TAX INCREASE." 
92.28 	 The ballot may contain a textual portion with the information required in this 
92.29 	subdivision and a question stating substantially the following:
92.30 	 "Shall the increase in the revenue proposed by (petition to) the board of ........., 
92.31 	School District No. .., be approved?"
92.32 	 If approved, an amount equal to the approved revenue per resident marginal cost 
92.33 	pupil unit times the resident marginal cost pupil units for the school year beginning in 
92.34 	the year after the levy is certified or the income tax is imposed shall be authorized for 
92.35 	certification for the number of years approved, if applicable, or until revoked or reduced 
92.36 	by the voters of the district at a subsequent referendum. A referendum may be conducted 
93.1 	on the question of converting an existing referendum property tax levy to a school 
93.2 	referendum income tax to be imposed under section 290.0621.
93.3 	 (b) The board must prepare and deliver by first class mail at least 15 days but no 
93.4 	more than 30 days before the day of the referendum to each taxpayer a notice of the 
93.5 	referendum and the proposed revenue increase.  The board need not mail more than one 
93.6 	notice to any taxpayer.  For the purpose of giving mailed notice under this subdivision 
93.7 	for a referendum based on a property tax levy, owners must be those shown to be owners 
93.8 	on the records of the county auditor or, in any county where tax statements are mailed 
93.9 	by the county treasurer, on the records of the county treasurer.  Every property owner 
93.10 	whose name does not appear on the records of the county auditor or the county treasurer is 
93.11 	deemed to have waived this mailed notice unless the owner has requested in writing that 
93.12 	the county auditor or county treasurer, as the case may be, include the name on the records 
93.13 	for this purpose.  The notice for a referendum based on a property tax levy must project 
93.14 	the anticipated amount of tax increase in annual dollars and annual percentage for typical 
93.15 	residential homesteads, agricultural homesteads, apartments, and commercial-industrial 
93.16 	property within the school district. For the purpose of giving mailed notice under this 
93.17 	subdivision, for a referendum based on an income tax under section 290.0621, taxpayers 
93.18 	must be those shown to be domiciled in the school district as indicated on the space which 
93.19 	must be provided for this information on the Minnesota individual income tax form for the 
93.20 	taxable year ending before the calendar year when the referendum is conducted.  Every 
93.21 	individual whose domicile is in the school district whose name does not appear on the 
93.22 	income tax return as having a domicile in the district is deemed to have waived this mailed 
93.23 	notice unless the individual has requested in writing that the county auditor or county 
93.24 	treasurer, as the case may be, include the individual's name on the records for this purpose. 
93.25 	The notice must project the anticipated amount of tax increase in annual dollars and 
93.26 	annual percentage for typical family incomes within the school district.
93.27 	 The notice for a referendum based on a property tax levy  may state that an 
93.28 	existing referendum levy is expiring and project the anticipated amount of increase 
93.29 	over the existing referendum levy in the first year, if any, in annual dollars and annual 
93.30 	percentage for typical residential homesteads, agricultural homesteads, apartments, and 
93.31 	commercial-industrial property within the district.
93.32 	 The notice must include the following statement:  "Passage of this referendum will 
93.33 	result in an increase in your property taxes."  However, in cases of renewing existing 
93.34 	levies, the notice may include the following statement:  "Passage of this referendum may 
93.35 	result in an increase in your property taxes."
94.1 	 The notice for a referendum based on income tax may state that an existing income 
94.2 	tax referendum authority is expiring and project the anticipated amount of increase 
94.3 	over the existing referendum levy in the first year, if any, in annual dollars and annual 
94.4 	percentage for typical family incomes within the district.
94.5 	 The notice must include the following statement:  "Passage of this referendum will 
94.6 	result in an increase in your personal income taxes."  However, in cases of renewing 
94.7 	existing income tax referendum authorities, the notice may include the following 
94.8 	statement:  "Passage of this referendum may result in an increase in your personal income 
94.9 	taxes." 
94.10 	 (c) A referendum on the question of revoking or reducing the increased revenue 
94.11 	amount authorized pursuant to paragraph (a) may be called by the board and shall be called 
94.12 	by the board upon the written petition of qualified voters of the district. A referendum to 
94.13 	revoke or reduce the revenue amount must state the amount per resident marginal cost 
94.14 	pupil unit by which the authority is to be reduced.  Revenue authority approved by the 
94.15 	voters of the district pursuant to paragraph (a) must be available to the school district at 
94.16 	least once before it is subject to a referendum on its revocation or reduction for subsequent 
94.17 	years.  Only one revocation or reduction referendum may be held to revoke or reduce 
94.18 	referendum revenue for any specific year and for years thereafter.
94.19 	 (d) A petition authorized by paragraph (a) or (c) is effective if signed by a number of 
94.20 	qualified voters in excess of 15 percent of the registered voters of the district on the day 
94.21 	the petition is filed with the board.  A referendum invoked by petition must be held on the 
94.22 	date specified in paragraph (a).
94.23 	 (e) The approval of 50 percent plus one of those voting on the question is required to 
94.24 	pass a referendum authorized by this subdivision.
94.25 	 (f) At least 15 days before the day of the referendum, the district must submit a 
94.26 	copy of the notice required under paragraph (b) to the commissioner and to the county 
94.27 	auditor of each county in which the district is located.  Within 15 days after the results 
94.28 	of the referendum have been certified by the board, or in the case of a recount, the 
94.29 	certification of the results of the recount by the canvassing board, the district must notify 
94.30 	the commissioner of the results of the referendum.

94.31 	EFFECTIVE DATE. This section is effective for referenda conducted on or after 
94.32 	July 1, 2005.

94.33 	 Sec. 12. Minnesota Statutes 2004, section 168A.05, subdivision 1b, is amended to read:
94.34 		 Subd. 1b.Manufactured home; exemption.  The provisions of subdivision 1a shall 
94.35 	not apply to (1) a manufactured home which is sold or otherwise disposed of pursuant to 
95.1 	section 504B.271 by the owner of a manufactured home park as defined in section 327.14, 
95.2 	subdivision 3, or (2) a manufactured home which is sold pursuant to section 504B.265 by 
95.3 	the owner of a manufactured home park. The department shall not require a manufactured 
95.4 	home park owner to satisfy the delinquent or current year's personal property taxes owed 
95.5 	as condition of the title transfer to the park owner.

95.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

95.7 	 Sec. 13. [174.11] COMMISSIONER TO NOTIFY COUNTY AUDITOR OF 
95.8 	PROPERTY ACQUISITIONS.
95.9 	 Upon acquisition of any taxable real property, the commissioner must notify the 
95.10 	county auditor of the county where the property is located that the property has been 
95.11 	acquired.

95.12 	 Sec. 14. Minnesota Statutes 2004, section 272.02, subdivision 22, is amended to read:
95.13 		 Subd. 22.Wind energy conversion systems.  All real and personal property of a 
95.14 	wind energy conversion system as defined in section 272.029, subdivision 2, is exempt 
95.15 	from property tax except that the land on which the property is located remains taxable. 
95.16 	If approved by the county where the property is located, the value of the land on which the 
95.17 	wind energy conversion system is located shall not be increased or decreased, but shall be 
95.18 	valued in the same manner as similar land that has not been improved with a wind energy 
95.19 	conversion system.  The land shall be classified based on the most probable use of the 
95.20 	property if it were not improved with a wind energy conversion system.

95.21 	EFFECTIVE DATE. This section is effective for assessment year 2005 and 
95.22 	thereafter, for taxes payable in 2006 and thereafter.

95.23 	 Sec. 15. Minnesota Statutes 2004, section 272.02, subdivision 47, is amended to read:
95.24 		 Subd. 47.Poultry litter biomass generation facility; personal property.
 95.25 	 Notwithstanding subdivision 9, clause (a), attached machinery and other personal property 
95.26 	which is part of an electrical generating facility that meets the requirements of this 
95.27 	subdivision is exempt.  At the time of construction, the facility must:
95.28 	 (1) be designed to utilize poultry litter as a primary fuel source; and
95.29 	 (2) be constructed for the purpose of generating power at the facility that will be sold 
95.30 	pursuant to a contract approved by the Public Utilities Commission in accordance with 
95.31 	the biomass mandate imposed under section 216B.2424.
96.1 	 Construction of the facility must be commenced after January 1, 2003, and before 
96.2 	December 31, 2003 2005.  Property eligible for this exemption does not include electric 
96.3 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
96.4 	to the property or the facility.

96.5 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
96.6 	in 2006, and thereafter.

96.7 	 Sec. 16. Minnesota Statutes 2004, section 272.02, subdivision 56, is amended to read:
96.8 		 Subd. 56.Electric generation facility; personal property.  (a) Notwithstanding 
96.9 	subdivision 9, clause (a), attached machinery and other personal property which is part 
96.10 	of a combined-cycle combustion-turbine electric generation facility that exceeds 550 
96.11 	300 megawatts of installed capacity and that meets the requirements of this subdivision 
96.12 	is exempt.  At the time of construction, the facility must:
96.13 	 (1) be designed to utilize natural gas as a primary fuel;
96.14 	 (2) not be owned by a public utility as defined in section 216B.02, subdivision 4;
96.15 	 (3) be located within five miles of an existing natural gas pipeline and within four 
96.16 	miles of an existing electrical transmission substation;
96.17 	 (4) be located outside the metropolitan area as defined under section 473.121, 
96.18 	subdivision 2; and
96.19 	 (5) be designed to provide energy and ancillary services and have received a 
96.20 	certificate of need under section 216B.243.
96.21 	 (b) Construction of the facility must be commenced after January 1, 2004, and before 
96.22 	January 1, 2007, except that property eligible for this exemption includes any expansion 
96.23 	of the facility that also meets the requirements of paragraph (a), clauses (1) to (5), without 
96.24 	regard to the date that construction of the expansion commences.  Property eligible for 
96.25 	this exemption does not include electric transmission lines and interconnections or gas 
96.26 	pipelines and interconnections appurtenant to the property or the facility.

96.27 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
96.28 	in 2006, and thereafter.

96.29 	 Sec. 17. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
96.30 	to read:
96.31 		 Subd. 68.Electric generation facility; personal property. (a) Notwithstanding 
96.32 	subdivision 9, clause (a), attached machinery and other personal property which is part of 
96.33 	a simple-cycle combustion-turbine electric generation facility that exceeds 290 megawatts 
97.1 	of installed capacity and that meets the requirements of this subdivision is exempt.  At 
97.2 	the time of construction, the facility must:
97.3 	 (1) be designed to utilize natural gas as a primary fuel;
97.4 	 (2) not be owned by a public utility as defined in section 216B.02, subdivision 4;
97.5 	 (3) be located within five miles of an existing natural gas pipeline and within five 
97.6 	miles of an existing electrical transmission substation;
97.7 	 (4) be located outside the metropolitan area as defined under section 473.121, 
97.8 	subdivision 2;
97.9 	 (5) be designed to provide peaking capacity energy and ancillary services and have 
97.10 	satisfied all of the requirements under section 216B.243; and 
97.11 	 (6) have received, by resolution, the approval from the governing body of the county, 
97.12 	city, and school district in which the proposed facility is to be located for the exemption of 
97.13 	personal property under this subdivision.
97.14 	 (b) Construction of the facility must be commenced after January 1, 2005, and 
97.15 	before January 1, 2009.  Property eligible for this exemption does not include electric 
97.16 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
97.17 	to the property or the facility.

97.18 	EFFECTIVE DATE. This section is effective for assessment year 2006, taxes 
97.19 	payable in 2007, and thereafter.

97.20 	 Sec. 18. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
97.21 	to read:
97.22 		 Subd. 69.Electric generation facility personal property. (a) Notwithstanding 
97.23 	subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and 
97.24 	other personal property which is part of an electric generation facility that exceeds 150 
97.25 	megawatts of installed capacity and meets the requirements of this subdivision is exempt. 
97.26 	At the time of construction, the facility must:
97.27 	 (1) be designed to utilize natural gas as a primary fuel;
97.28 	 (2) be owned and operated by a municipal power agency as defined in section 
97.29 	453.52, subdivision 8;
97.30 	 (3) have received the certificate of need under section 216B.243;
97.31 	 (4) be located outside the metropolitan area as defined under section 473.121, 
97.32 	subdivision 2; and 
97.33 	 (5) be designed to be a combined-cycle facility, although initially the facility will be 
97.34 	operated as a simple-cycle combustion turbine.
98.1 	 (b) To qualify under this subdivision, an agreement must be negotiated between the 
98.2 	municipal power agency and the host city, for a payment in lieu of property taxes to the 
98.3 	host city.
98.4 	 (c) Construction of the facility must be commenced after January 1, 2004, and 
98.5 	before January 1, 2006.  Property eligible for this exemption does not include electric 
98.6 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
98.7 	to the property or the facility.

98.8 	EFFECTIVE DATE. This section is effective for assessment year 2005, taxes 
98.9 	payable in 2006, and thereafter.

98.10 	 Sec. 19. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
98.11 	to read:
98.12 		 Subd. 70.Biomass electric generation facility; personal property. (a) 
98.13 	Notwithstanding subdivision 9, clause (a), attached machinery and other personal property 
98.14 	which is a part of an electric generation facility, including remote boilers that comprise 
98.15 	part of the district heating system, generating up to 30 megawatts of installed capacity and 
98.16 	that meets the requirements of this subdivision is exempt.  At the time of construction, the 
98.17 	facility must:
98.18 	 (1) be designed to utilize a minimum 90 percent waste biomass as a fuel;
98.19 	 (2) not be owned by a public utility as defined in section 216B.02, subdivision 4;
98.20 	 (3) be located within a city of the first class and have its primary location at a former 
98.21 	garbage transfer station; and 
98.22 	 (4) be designed to have capability to provide baseload energy and district heating.
98.23 	 (b) Construction of the facility must be commenced after January 1, 2004, and 
98.24 	before January 1, 2008.  Property eligible for this exemption does not include electric 
98.25 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
98.26 	to the property or the facility.

98.27 	EFFECTIVE DATE. This section is effective for assessment year 2005, taxes 
98.28 	payable in 2006, and thereafter.

98.29 	 Sec. 20. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
98.30 	to read:
98.31 		 Subd. 71.Electric generation facility; personal property. (a) Notwithstanding 
98.32 	subdivision 9, clause (a), attached machinery and other personal property that is part 
98.33 	of either a simple-cycle, combustion-turbine electric generation facility that equals or 
99.1 	exceeds 150 megawatts of installed capacity, or a combined-cycle, combustion-turbine 
99.2 	electric generation facility that equals or exceeds 225 megawatts of installed capacity, and 
99.3 	that in either case meets the requirements of this subdivision, is exempt.  At the time of 
99.4 	construction, the facility must:
99.5 	 (1) be designed to utilize natural gas as a primary fuel;
99.6 	 (2) not be owned by a public utility as defined in section 216B.02, subdivision 4;
99.7 	 (3) be located in a metropolitan county defined in section 473.121, subdivision 4, 
99.8 	that has a population greater than 190,000 and less than 225,000 in the most recent federal 
99.9 	decennial census, within one mile of an existing natural gas pipeline, and within one mile 
99.10 	of an existing electrical transmission substation; and 
99.11 	 (4) be designed to provide energy and ancillary services and have received a 
99.12 	certificate of need under section 216B.243.
99.13 	 (b) Construction of the facility must be commenced after January 1, 2005, and 
99.14 	before January 1, 2008.  Property eligible for this exemption does not include electric 
99.15 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
99.16 	to the property or the facility.

99.17 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
99.18 	in 2006, and thereafter.

99.19 	 Sec. 21. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
99.20 	to read:
99.21 		 Subd. 72.Personal rapid transit system. All property used in the operation and 
99.22 	support of a personal rapid transit system as defined in section 297A.61, subdivision 37, 
99.23 	that provides service to the public on a regular and continuing basis, is exempt, provided 
99.24 	that it is operated independent of any government subsidies.

99.25 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
99.26 	in 2006, and thereafter.

99.27 	 Sec. 22. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
99.28 	to read:
99.29 		 Subd. 73.Qualified elderly living facility. An elderly living facility is exempt from 
99.30 	taxation if it meets all of the following requirements:
99.31 	 (1) the facility is located in a city of the first class with a population of more than 
99.32 	350,000;
100.1 	 (2) the facility is owned and operated by a nonprofit corporation organized under 
100.2 	chapter 317A or by a limited liability company formed under chapter 322B, the sole 
100.3 	member of which is a nonprofit corporation organized under chapter 317A;
100.4 	 (3) the facility consists of no more than 60 living units;
100.5 	 (4) the owner of the facility is an affiliate of entities that own and operate assisted 
100.6 	living and skilled nursing facilities that:
100.7 	 (i) are located across a street from the facility;
100.8 	 (ii) are adjacent to a church that is exempt from taxation under subdivision 6;
100.9 	 (iii) include a congregate dining program; and 
100.10 	 (iv) provide assisted living or similar social and physical support;
100.11 	 (5) the residents of the facility must be:
100.12 	 (i) at least 62 years of age; or 
100.13 	 (ii) handicapped; and 
100.14 	 (6) at least 20 percent of the units in the facility are occupied by persons whose 
100.15 	annual income does not exceed 50 percent of median family income for the area or, in the 
100.16 	alternative, 40 percent of the units in the facility are occupied by persons whose annual 
100.17 	income does not exceed 60 percent of median family income for the area.
100.18 	 For purposes of this subdivision, "affiliate" means any entity directly or indirectly 
100.19 	controlling or controlled by or under direct or indirect common control with an entity. 
100.20 	For this purpose, "control" means the power to direct management and policies through 
100.21 	membership or ownership of voting securities.
100.22 	 The property is exempt under this subdivision for taxes levied in each year or partial 
100.23 	year of the term of the facility's initial permanent financing or 25 years, whichever is later.

100.24 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
100.25 	in 2006, and thereafter.

100.26 	 Sec. 23. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
100.27 	to read:
100.28 		 Subd. 74.Electric generation facility; personal property. (a) Notwithstanding 
100.29 	subdivision 9, clause (a), attached machinery and other personal property which is part of 
100.30 	a simple-cycle combustion-turbine electric generation facility that exceeds 150 megawatts 
100.31 	of installed capacity and that meets the requirements of this subdivision is exempt.  At 
100.32 	the time of construction, the facility must:
100.33 	 (1) utilize natural gas as a primary fuel;
100.34 	 (2) be owned by an electric generation and transmission cooperative;
101.1 	 (3) be located within five miles of parallel existing 12-inch and 16-inch natural gas 
101.2 	pipelines and a 69-kilovolt high-voltage electric transmission line;
101.3 	 (4) be designed to provide peaking, emergency backup, or contingency services;
101.4 	 (5) have received a certificate of need under section 216B.243 demonstrating 
101.5 	demand for its capacity; and 
101.6 	 (6) have received by resolution the approval from the governing body of the county 
101.7 	and township in which the proposed facility is to be located for the exemption of personal 
101.8 	property under this subdivision.
101.9 	 (b) Construction of the facility must be commenced after July 1, 2005, and 
101.10 	before January 1, 2009.  Property eligible for this exemption does not include electric 
101.11 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
101.12 	to the property or the facility.

101.13 	EFFECTIVE DATE. This section is effective for assessment year 2006 and 
101.14 	thereafter, for taxes payable in 2007 and thereafter.

101.15 	 Sec. 24. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
101.16 	to read:
101.17 		 Subd. 75.Electric generation facility; personal property. Notwithstanding 
101.18 	subdivision 9, clause (a), attached machinery and other personal property which is part 
101.19 	of an existing simple-cycle, combustion-turbine electric generation facility that exceeds 
101.20 	300 megawatts of installed capacity and that meets the requirements of this subdivision is 
101.21 	exempt.  At the time of the construction, the facility must:
101.22 	 (1) be designed to utilize natural gas as a primary fuel;
101.23 	 (2) be owned by a public utility as defined in section 216B.02, subdivision 4, and be 
101.24 	located at or interconnected with an existing generating plant of the utility;
101.25 	 (3) be designed to provide peaking, emergency backup, or contingency services;
101.26 	 (4) satisfy a resource need identified in an approved integrated resource plan filed 
101.27 	under section 216B.2422; and 
101.28 	 (5) have received, by resolution, the approval from the governing body of the county 
101.29 	and the city for the exemption of personal property under this subdivision.
101.30 	 Construction of the facility expansion must be commenced after January 1, 2004, 
101.31 	and before January 1, 2005.  Property eligible for this exemption does not include electric 
101.32 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
101.33 	to the property or the facility.

102.1 	EFFECTIVE DATE. This section is effective beginning with assessment year 
102.2 	2005, for taxes payable in 2006 and thereafter.

102.3 	 Sec. 25. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
102.4 	to read:
102.5 		 Subd. 76.Electric generation facility; personal property. (a) Notwithstanding 
102.6 	subdivision 9, clause (a), attached machinery and other personal property which is part of 
102.7 	a simple-cycle combustion-turbine electric generation facility that exceeds 290 megawatts 
102.8 	of installed capacity and that meets the requirements of this subdivision is exempt.  At 
102.9 	the time of construction, the facility must:
102.10 	 (1) be designed to utilize natural gas as a primary fuel;
102.11 	 (2) not be owned by a public utility as defined in section 216B.02, subdivision 4;
102.12 	 (3) be located within 15 miles of the mainline existing interstate natural gas pipeline 
102.13 	and within five miles of an existing electrical transmission substation;
102.14 	 (4) be located outside the metropolitan area as defined under section 473.121, 
102.15 	subdivision 2; and 
102.16 	 (5) be designed to provide peaking capacity energy and ancillary services and have 
102.17 	satisfied all of the requirements under section 216B.243.
102.18 	 (b) Construction of the facility must be commenced after January 1, 2005, and 
102.19 	before January 1, 2009.  Property eligible for this exemption does not include electric 
102.20 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
102.21 	to the property or the facility.

102.22 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
102.23 	in 2007, and thereafter.

102.24 	 Sec. 26. Minnesota Statutes 2004, section 272.029, subdivision 4, is amended to read:
102.25 		 Subd. 4.Reports.  (a) An owner of a wind energy conversion system subject to 
102.26 	tax under subdivision 3 shall file a report with the commissioner of revenue annually 
102.27 	on or before March 1 February 1 detailing the amount of electricity in kilowatt-hours 
102.28 	that was produced by the wind energy conversion system for the previous calendar year.  
102.29 	The commissioner shall prescribe the form of the report.  The report must contain the 
102.30 	information required by the commissioner to determine the tax due to each county under 
102.31 	this section for the current year.  If an owner of a wind energy conversion system subject 
102.32 	to taxation under this section fails to file the report by the due date, the commissioner 
102.33 	of revenue shall determine the tax based upon the nameplate capacity of the system 
102.34 	multiplied by a capacity factor of 40 percent.
103.1 	 (b) On or before March 31 February 28, the commissioner of revenue shall notify 
103.2 	the owner of the wind energy conversion systems of the tax due to each county for the 
103.3 	current year and shall certify to the county auditor of each county in which the systems are 
103.4 	located the tax due from each owner for the current year.

103.5 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
103.6 	thereafter.

103.7 	 Sec. 27. Minnesota Statutes 2004, section 272.029, subdivision 6, is amended to read:
103.8 		 Subd. 6.Distribution of revenues.  Revenues from the taxes imposed under 
103.9 	subdivision 5 must be part of the settlement between the county treasurer and the county 
103.10 	auditor under section 276.09.  The revenue must be distributed by the county auditor or 
103.11 	the county treasurer to all local taxing jurisdictions in which the wind energy conversion 
103.12 	system is located, in the same proportion that each of the taxing jurisdiction's current 
103.13 	previous year's net tax capacity based tax rate is to the current previous year's total local 
103.14 	net tax capacity based rate.

103.15 	EFFECTIVE DATE. This section is effective for taxes payable in 2005 and 
103.16 	thereafter.

103.17 	 Sec. 28. Minnesota Statutes 2004, section 273.11, subdivision 1a, is amended to read:
103.18 		 Subd. 1a.Limited market value.  In the case of all property classified as 
103.19 	agricultural homestead or nonhomestead, residential homestead or nonhomestead, timber, 
103.20 	or noncommercial seasonal residential recreational, or class 1c resort property, the assessor 
103.21 	shall compare the value with the taxable portion of the value determined in the preceding 
103.22 	assessment except that for class 1c resort property for assessment year 2005, the assessor 
103.23 	shall determine the limited market value as provided in subdivision 1b.
103.24 	 For assessment year 2002, the amount of the increase shall not exceed the greater of 
103.25 	(1) ten percent of the value in the preceding assessment, or (2) 15 percent of the difference 
103.26 	between the current assessment and the preceding assessment.
103.27 	 For assessment year 2003, the amount of the increase shall not exceed the greater of 
103.28 	(1) 12 percent of the value in the preceding assessment, or (2) 20 percent of the difference 
103.29 	between the current assessment and the preceding assessment.
103.30 	 For assessment year 2004 and thereafter, the amount of the increase shall not exceed 
103.31 	the greater of (1) 15 percent of the value in the preceding assessment, or (2) 25 percent of 
103.32 	the difference between the current assessment and the preceding assessment.
104.1 	 For assessment year 2005, the amount of the increase shall not exceed the greater of 
104.2 	(1) 15 percent of the value in the preceding assessment, or (2) 33 percent of the difference 
104.3 	between the current assessment and the preceding assessment.
104.4 	 For assessment year 2006, the amount of the increase shall not exceed the greater of 
104.5 	(1) 15 percent of the value in the preceding assessment, or (2) 50 percent of the difference 
104.6 	between the current assessment and the preceding assessment.
104.7 	 This limitation shall not apply to increases in value due to improvements.  For 
104.8 	purposes of this subdivision, the term "assessment" means the value prior to any exclusion 
104.9 	under subdivision 16.
104.10 	 The provisions of this subdivision shall be in effect through assessment year 2006 
104.11 	as provided in this subdivision.
104.12 	 For purposes of this subdivision and subdivision 1b, "class 1c resort property" 
104.13 	includes the portion of the property classified class 1a or 1b homestead, the portion of the 
104.14 	property classified 1c, plus any remaining portion of the resort that is classified 4c under 
104.15 	section 273.13, subdivision 25, paragraph (d), clause (1).
104.16 	 For purposes of the assessment/sales ratio study conducted under section 127A.48, 
104.17 	and the computation of state aids paid under chapters 122A, 123A, 123B, 124D, 125A, 
104.18 	126C, 127A, and 477A, market values and net tax capacities determined under this 
104.19 	subdivision and subdivision 16, shall be used.

104.20 	EFFECTIVE DATE. This section is effective the day following final enactment 
104.21 	for assessment year 2005, and thereafter.

104.22 	 Sec. 29. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision 
104.23 	to read:
104.24 		 Subd. 1b.Class 1c resorts; 2005 assessment only. For assessment year 2005, the 
104.25 	valuation increase on class 1c resort property shall not exceed the greater of (1) 15 percent 
104.26 	of the value of its 2003 assessment, or (2) 25 percent of the difference in value between 
104.27 	its 2005 assessment and its 2003 assessment.  The valuation increase on class 1c resort 
104.28 	property for the 2006 and subsequent assessment years shall be determined based upon 
104.29 	the schedule contained in subdivision 1a.

104.30 	EFFECTIVE DATE. This section is effective the day following final enactment.

104.31 	 Sec. 30. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision 
104.32 	to read:
105.1 		 Subd. 21.Valuation exclusion for sewage treatment system improvements.
 105.2 	Owners of property classified as class 1a, 1b, 1c, 2a, 4b, 4bb, or noncommercial 4c under 
105.3 	section 273.13 may apply for a valuation exclusion under this subdivision, provided that 
105.4 	the property is located in a county which has authorized valuation exclusions under this 
105.5 	subdivision, and provided that the following conditions are met:
105.6 	 (1) a notice of noncompliance has been issued by a licensed compliance inspector 
105.7 	with regard to the individual sewage treatment system serving the property under section 
105.8 	115.55, subdivision 5b;
105.9 	 (2) the owner of the property furnishes documentation to the satisfaction of the 
105.10 	assessor that the property's individual sewage treatment system has been replaced or 
105.11 	refurbished, including replacement of the individual system with a community or cluster 
105.12 	system, between May 1, 2005, and December 31, 2007; and 
105.13 	 (3) a certificate of compliance has been issued for the new or refurbished system 
105.14 	under section 115.55, subdivision 5.
105.15 	 Application must be made to the assessor on a form prescribed by the commissioner 
105.16 	of revenue.  Property meeting the requirements of this subdivision is eligible for a 
105.17 	valuation exclusion equal to 50 percent of the actual costs incurred, to a maximum 
105.18 	exclusion of $7,500, for a period of five years, after which the amount of the exclusion 
105.19 	will be added to the estimated market value of the property.  The valuation exclusion 
105.20 	terminates upon the sale of the property.  If a property owner applies for exclusion under 
105.21 	this subdivision between January 1 and June 30 of any year, the exclusion first applies for 
105.22 	taxes payable in the following year.  If a property owner applies for exclusion under this 
105.23 	subdivision between July 1 and December 31 of any year, the exclusion first applies for 
105.24 	taxes payable in the second following year.

105.25 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
105.26 	subsequent years.

105.27 	 Sec. 31. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision 
105.28 	to read:
105.29 		 Subd. 22.Valuation exclusion for lead hazard reduction.  Owners of property 
105.30 	classified as class 1a, 1b, 1c, 2a, 4b, or 4bb under section 273.13 may apply for a valuation 
105.31 	exclusion for lead hazard reduction, provided that the property is located in a city which 
105.32 	has authorized valuation exclusions under this subdivision.  A city which authorizes 
105.33 	valuation exclusions under this subdivision must establish guidelines for qualifying lead 
105.34 	hazard reduction projects and must designate an agency within the city to issue certificates 
106.1 	of completion of qualifying projects.  For purposes of this subdivision, "lead hazard 
106.2 	reduction" has the same meaning as in section 144.9501, subdivision 17.
106.3 	 The property owner must obtain a certificate from the city stating that the project 
106.4 	has been completed and stating the cost incurred by the owner in completing the project. 
106.5 	Only projects originating after April 30, 2005, may qualify for exclusion under this 
106.6 	subdivision.  The property owner shall apply for a valuation exclusion to the assessor on a 
106.7 	form prescribed by the commissioner of revenue.
106.8 	 A qualifying property is eligible for a valuation exclusion equal to 50 percent of 
106.9 	the actual costs incurred, to a maximum exclusion of $15,000, for a period of five years, 
106.10 	after which the amount of the exclusion will be added to the estimated market value of 
106.11 	the property.  The valuation exclusion shall terminate upon the sale of the property.  If a 
106.12 	property owner applies for exclusion under this subdivision between January 1 and June 
106.13 	30 of any year, the exclusion shall first apply for taxes payable in the following year.  If a 
106.14 	property owner applies for exclusion under this subdivision between July 1 and December 
106.15 	31 of any year, the exclusion shall first apply for taxes payable in the second following 
106.16 	year.

106.17 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
106.18 	subsequent years.

106.19 	 Sec. 32. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision 
106.20 	to read:
106.21 		 Subd. 23.Valuation of energy-efficient commercial properties. (a) The market 
106.22 	value of certain energy-efficient property classified under section 273.13, subdivision 24, 
106.23 	that is used for commercial purposes, is reduced as provided in this subdivision.
106.24 	 (b) To be eligible for a valuation reduction under this subdivision, property must be 
106.25 	certified by a qualified inspector as having been constructed in a manner that will achieve 
106.26 	a level of energy consumption that is at least 20 percent lower than the standard set in 
106.27 	the state energy code rules.  The percentage reduction in the market value of a qualifying 
106.28 	property is determined as follows:
106.29 	 percentage of energy consumption percentage of below energy code requirement 
106.30 	market value reduction 
106.31 	 20-30 5 
106.32 	 31-50 10 
106.33 	 over 50 15 
107.1 	 The reductions will remain in effect for the first ten assessment years after the property has 
107.2 	been certified as qualifying under this subdivision.
107.3 	 (c) The Department of Commerce must establish a process for determining eligibility 
107.4 	for the valuation reduction under this subdivision, including certification of persons who 
107.5 	are qualified to perform this function.
107.6 	 (d) To claim a valuation reduction under this subdivision, the owner of the 
107.7 	commercial property must obtain a certification of the level of qualification determined 
107.8 	under paragraph (b), which must be prepared by a person certified as provided in 
107.9 	paragraph (c).  The property owner must furnish this certification to the assessor by May 1 
107.10 	of the assessment year in order to qualify for the valuation reduction for taxes payable in 
107.11 	the following year.

107.12 	EFFECTIVE DATE. This section is effective for assessments in 2006, taxes 
107.13 	payable in 2007, and thereafter.

107.14 	 Sec. 33. [273.1115] AGGREGATE RESOURCE PRESERVATION PROPERTY 
107.15 	TAX LAW.
107.16 		 Subdivision 1.Requirements. Real estate is entitled to valuation under this section 
107.17 	only if all of the following requirements are met:
107.18 	 (1) the property is classified 1a, 1b, 2a, or 2b property under section 273.13, 
107.19 	subdivisions 22 and 23;
107.20 	 (2) the property is at least ten contiguous acres, when the application is filed under 
107.21 	subdivision 2;
107.22 	 (3) the owner has filed a completed application for deferment as specified in 
107.23 	subdivision 2 with the county assessor in the county in which the property is located;
107.24 	 (4) there are no delinquent taxes on the property; and 
107.25 	 (5) a covenant on the land restricts its use as provided in subdivision 2, clause (4).
107.26 		 Subd. 2.Application. Application for valuation deferment under this section 
107.27 	must be filed by May 1 of the assessment year.  Any application filed and granted 
107.28 	continues in effect for subsequent years until the property no longer qualifies, provided 
107.29 	that supplemental affidavits under subdivision 6 are timely filed.  The application must 
107.30 	be filed with the assessor of the county in which the real property is located on such 
107.31 	form as may be prescribed by the commissioner of revenue.  The application must be 
107.32 	executed and acknowledged in the manner required by law to execute and acknowledge a 
107.33 	deed and must contain at least the following information and any other information the 
107.34 	commissioner deems necessary:
107.35 	 (1) the legal description of the area;
108.1 	 (2) the name and address of owner;
108.2 	 (3) a copy of the affidavit filed under section 273.13, subdivision 23, paragraph (h), 
108.3 	in the case of property classified class 2b, clause (5); or in the case of property classified 
108.4 	1a, 1b, 2a, and 2b, clauses (1) to (3), the application must include a similar document with 
108.5 	the same information as contained in the affidavit under section 273.13, subdivision 23, 
108.6 	paragraph (h); and 
108.7 	 (4) a statement of proof from the owner that the land contains a restrictive covenant 
108.8 	limiting its use for the property's surface to that which exists on the date of the application 
108.9 	and limiting its future use to the preparation and removal of the aggregate commercial 
108.10 	deposit under its surface.
108.11 	 To qualify under this clause, the covenant must be binding on the owner or the 
108.12 	owner's successor or assignee, and run with the land, except as provided in subdivision 4 
108.13 	allowing for the cancellation of the covenant under certain conditions.
108.14 		 Subd. 3.Determination of value. Upon timely application by the owner as 
108.15 	provided in subdivision 2, notwithstanding sections 272.03, subdivision 8, and 273.11, 
108.16 	the value of any qualifying land described in subdivision 2 must be valued as if it were 
108.17 	agricultural property, using a per acre valuation equal to the current year's per acre 
108.18 	valuation of agricultural land in the county.  The assessor shall not consider any additional 
108.19 	value resulting from potential alternative and future uses of the property.  The buildings 
108.20 	located on the land shall be valued by the assessor in the normal manner.
108.21 		 Subd. 4.Cancellation of covenant. The covenant required under subdivision 
108.22 	2 may be canceled in two ways:
108.23 	 (1) by the owner beginning with the next subsequent assessment year provided 
108.24 	that the additional taxes as determined under subdivision 5 are paid by the owner at the 
108.25 	time of cancellation; and 
108.26 	 (2) by the city or town in which the property is located beginning with the next 
108.27 	subsequent assessment year, if the city council or town board:
108.28 	 (i) changes the conditional use of the property;
108.29 	 (ii) revokes the mining permit; or 
108.30 	 (iii) changes the zoning to disallow mining.
108.31 	 No additional taxes are imposed on the property under this clause.
108.32 		 Subd. 4a.County termination. Within two years of the effective date of this 
108.33 	section, a county may, following notice and public hearing, terminate application of this 
108.34 	section in the county.  The termination is effective upon adoption of a resolution of the 
108.35 	county board.  A termination applies prospectively and does not affect property enrolled 
109.1 	under this section prior to the termination date.  A county may reauthorize application of 
109.2 	this section by a resolution of the county board revoking the termination.
109.3 		 Subd. 5.Additional taxes. When real property which has been valued and assessed 
109.4 	under this section no longer qualifies, the portion of the land classified under subdivision 
109.5 	1, clause (1), is subject to additional taxes.  The additional tax amount is determined by:
109.6 	 (1) computing the difference between (i) the current year's taxes determined in 
109.7 	accordance with subdivision 5, and (ii) an amount as determined by the assessor based 
109.8 	upon the property's current year's estimated market value of like real estate at its highest 
109.9 	and best use and the appropriate local tax rate; and 
109.10 	 (2) multiplying the amount determined in clause (1) by the number of years the 
109.11 	land was in the program under this section.
109.12 	 The current year's estimated market value as determined by the assessor must not 
109.13 	exceed the market value that would result if the property was sold in an arms-length 
109.14 	transaction and must not be greater than it would have been had the actual bona fide sale 
109.15 	price of the property been used in lieu of that market value.  The additional taxes must be 
109.16 	extended against the property on the tax list for the current year, except that interest or 
109.17 	penalties must not be levied on such additional taxes if timely paid.
109.18 	 The additional tax under this subdivision must not be imposed on that portion of the 
109.19 	property which has actively been mined and has been removed from the program based 
109.20 	upon the supplemental affidavits filed under subdivision 6.
109.21 		 Subd. 6.Supplemental affidavits; mining activity on land. When any portion 
109.22 	of the property begins to be actively mined, the owner must file a supplemental affidavit 
109.23 	within 60 days from the day any aggregate is removed stating the number of acres of the 
109.24 	property that is actively being mined.  The acres actively being mined shall be (1) valued 
109.25 	and classified under section 273.13, subdivision 24, in the next subsequent assessment 
109.26 	year, and (2) removed from the aggregate resource preservation property tax program 
109.27 	under this section.  The additional taxes under subdivision 5 must not be imposed on 
109.28 	the acres that are actively being mined and have been removed from the program under 
109.29 	this section.
109.30 	 Copies of the original affidavit and all supplemental affidavits must be filed with the 
109.31 	county assessor, the local zoning administrator, and the Department of Natural Resources, 
109.32 	Division of Land and Minerals.  A supplemental affidavit must be filed each time a 
109.33 	subsequent portion of the property is actively mined, provided that the minimum acreage 
109.34 	change is five acres, even if the actual mining activity constitutes less than five acres. 
109.35 	Failure to file the affidavits timely shall result in the property losing its valuation deferment 
109.36 	under this section, and additional taxes must be imposed as calculated under subdivision 5.
110.1 		 Subd. 7.Lien. The additional tax imposed by this section is a lien upon the property 
110.2 	assessed to the same extent and for the same duration as other taxes imposed upon 
110.3 	property within this state and, when collected, must be distributed in the manner provided 
110.4 	by law for the collection and distribution of other property taxes.
110.5 		 Subd. 8.Continuation of tax treatment upon sale. When real property qualifying 
110.6 	under subdivision 1 is sold, additional taxes must not be extended against the property 
110.7 	if the property continues to qualify under subdivision 1, and the new owner files an 
110.8 	application with the assessor for continued deferment within 30 days after the sale.
110.9 		 Subd. 9.Definitions. For purposes of this section, "commercial aggregate deposit" 
110.10 	and "actively mined" have the meanings given them in section 273.13, subdivision 23, 
110.11 	paragraph (h).

110.12 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
110.13 	in 2006, and thereafter, except that for the 2005 assessment year, the application date 
110.14 	under subdivision 4 shall be September 1, 2005, and subdivision 4a is effective the day 
110.15 	following final enactment.

110.16 	 Sec. 34. [273.1116] HOMESTEAD RESORTS; VALUATION AND DEFERMENT.
110.17 		 Subdivision 1.Requirements. Real property qualifying for classification as class 
110.18 	1c under section 273.13, subdivision 22, paragraph (c), is entitled to valuation and tax 
110.19 	deferment under this section, provided that if part of a resort is not classified as class 1c, 
110.20 	only that portion of the value of the property that is classified as class 1c property qualifies 
110.21 	under this section.
110.22 		 Subd. 2.Determination of value. Upon timely application by the owner, as 
110.23 	provided in subdivision 4, the value of real property described in subdivision 1 must 
110.24 	be determined by the assessor solely with reference to its classification value as class 
110.25 	1c property, notwithstanding sections 272.03, subdivision 8, and 273.11.  The owner 
110.26 	must furnish information on the income generated by the property and other information 
110.27 	required by the assessor to determine the value of the property.  The assessor shall not 
110.28 	consider any added values resulting from other factors.
110.29 		 Subd. 3.Separate determination of market value and tax.  The assessor shall, 
110.30 	however, make a separate determination of the market value of the real estate.  The 
110.31 	assessor shall record on the property assessment records the tax based upon the appropriate 
110.32 	local tax rate applicable to the property in the taxing district.
110.33 		 Subd. 4.Application. Application for deferment of taxes and assessment under 
110.34 	this section must be filed by May 1 of the year prior to the year in which the taxes are 
110.35 	payable.  The application must be filed with the assessor of the taxing district in which 
111.1 	the real property is located on a form prescribed by the commissioner of revenue.  The 
111.2 	assessor may require proof by affidavit or otherwise that the property qualifies under 
111.3 	subdivision 1.  An application approved by the assessor continues in effect for subsequent 
111.4 	years until the property no longer qualifies under subdivision 1.
111.5 		 Subd. 5.Additional taxes. When real property valued and assessed under this 
111.6 	section no longer qualifies under subdivision 1, the portion no longer qualifying is subject 
111.7 	to additional taxes, in the amount equal to the difference between the taxes determined in 
111.8 	accordance with subdivision 2, and the amount determined under subdivision 3, provided, 
111.9 	however, that the amount determined under subdivision 3 must not be greater than it 
111.10 	would have been had the actual bona fide sale price of the real property at an arms-length 
111.11 	transaction been used in lieu of the market value determined under subdivision 3.  The 
111.12 	additional taxes must be extended against the property on the tax list for the current year, 
111.13 	except that no interest or penalties may be levied on the additional taxes if timely paid, 
111.14 	and except that the additional taxes must only be levied with respect to the last seven years 
111.15 	that the property has been valued and assessed under this section.
111.16 		 Subd. 6.Lien. The tax imposed by this section is a lien on the property assessed 
111.17 	to the same extent and for the same duration as other taxes imposed on property within 
111.18 	this state. The tax must be annually extended by the county auditor and when payable 
111.19 	must be collected and distributed in the manner provided by law for the collection and 
111.20 	distribution of other property taxes.
111.21 		 Subd. 7.Special local assessments. The payment of special local assessments 
111.22 	levied after June 30, 2005, for improvements made to any real property described in 
111.23 	subdivision 2, together with the interest thereon must, on timely application under 
111.24 	subdivision 4, be deferred as long as the property qualifies under subdivision 1.  If 
111.25 	special assessments against the property have been deferred under this subdivision, the 
111.26 	governmental unit shall file with the county recorder in the county in which the property is 
111.27 	located a certificate containing the legal description of the affected property and of the 
111.28 	amount deferred.  When the property no longer qualifies under subdivision 1, all deferred 
111.29 	special assessments plus interest are payable in equal installments spread over the time 
111.30 	remaining until the last maturity date of the bonds issued to finance the improvement 
111.31 	for which the assessments were levied.  If the bonds have matured, the deferred special 
111.32 	assessments plus interest are payable within 90 days.  The provisions of section 429.061, 
111.33 	subdivision 2, apply to the collection of these installments. Penalty must not be levied 
111.34 	on the special assessments if timely paid.
112.1 		 Subd. 8.Continuation of tax treatment upon sale. When real property qualifying 
112.2 	under subdivision 1 is sold, no additional taxes or deferred special assessments plus 
112.3 	interest may be extended against the property if:
112.4 	 (1) the property continues to qualify pursuant to subdivision 1; and 
112.5 	 (2) the new owner files an application for continued deferment within 30 days after 
112.6 	the sale.
112.7 		 Subd. 9.Applicability of special assessment provisions.  This section applies to 
112.8 	special local assessments levied after June 30, 2005, and payable in the years thereafter, 
112.9 	but shall not apply to any special assessments levied at any time by a county or district 
112.10 	court under the provisions of chapter 116A.

112.11 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable in 
112.12 	2006, and thereafter.  For applications for taxes payable in 2006 only, the application 
112.13 	deadline in subdivision 4 is extended to August 1, 2005.

112.14 	 Sec. 35. Minnesota Statutes 2004, section 273.112, subdivision 3, is amended to read:
112.15 		 Subd. 3.Requirements.  Real estate shall be entitled to valuation and tax deferment 
112.16 	under this section only if it is:
112.17 	 (a) actively and exclusively devoted to golf, skiing, lawn bowling, croquet, polo,or 
112.18 	archery or firearms range recreational use or other recreational uses carried on at the 
112.19 	establishment;
112.20 	 (b) five acres in size or more, except in the case of a lawn bowling or croquet green 
112.21 	or an archery or firearms range;
112.22 	 (c)(1) operated by private individuals or, in the case of a lawn bowling or croquet 
112.23 	green, by private individuals or corporations, and open to the public; or
112.24 	 (2) operated by firms or corporations for the benefit of employees or guests; or
112.25 	 (3) operated by private clubs having a membership of 50 or more or open to the 
112.26 	public, provided that the club does not discriminate in membership requirements or 
112.27 	selection on the basis of sex or marital status; and
112.28 	 (d) made available for use in the case of real estate devoted to golf without 
112.29 	discrimination on the basis of sex during the time when the facility is open to use by the 
112.30 	public or by members, except that use for golf may be restricted on the basis of sex no 
112.31 	more frequently than one, or part of one, weekend each calendar month for each sex and 
112.32 	no more than two, or part of two, weekdays each week for each sex.
112.33 	 If a golf club membership allows use of golf course facilities by more than one adult 
112.34 	per membership, the use must be equally available to all adults entitled to use of the golf 
112.35 	course under the membership, except that use may be restricted on the basis of sex as 
113.1 	permitted in this section.  Memberships that permit play during restricted times may be 
113.2 	allowed only if the restricted times apply to all adults using the membership. A golf club 
113.3 	may not offer a membership or golfing privileges to a spouse of a member that provides 
113.4 	greater or less access to the golf course than is provided to that person's spouse under the 
113.5 	same or a separate membership in that club, except that the terms of a membership may 
113.6 	provide that one spouse may have no right to use the golf course at any time while the 
113.7 	other spouse may have either limited or unlimited access to the golf course.
113.8 	 A golf club may have or create an individual membership category which entitles a 
113.9 	member for a reduced rate to play during restricted hours as established by the club.  The 
113.10 	club must have on record a written request by the member for such membership.
113.11 	 A golf club that has food or beverage facilities or services must allow equal access 
113.12 	to those facilities and services for both men and women members in all membership 
113.13 	categories at all times.  Nothing in this paragraph shall be construed to require service or 
113.14 	access to facilities to persons under the age of 21 years or require any act that would 
113.15 	violate law or ordinance regarding sale, consumption, or regulation of alcoholic beverages.
113.16 	 For purposes of this subdivision and subdivision 7a, discrimination means a pattern 
113.17 	or course of conduct and not linked to an isolated incident.

113.18 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
113.19 	in 2006, and thereafter.

113.20 	 Sec. 36. Minnesota Statutes 2004, section 273.123, is amended by adding a subdivision 
113.21 	to read:
113.22 		 Subd. 8.Homestead property damaged by mold. (a) The owner of homestead 
113.23 	property not qualifying for an adjustment in valuation under subdivisions 1 to 5 must 
113.24 	receive a reduction in the amount of taxes payable on the property if all of the following 
113.25 	conditions are met:
113.26 	 (1) the owner of the property makes written application to the county assessor for 
113.27 	tax treatment under this subdivision;
113.28 	 (2) the county assessor determines that the homestead dwelling is uninhabitable 
113.29 	because all or part of it has been contaminated by mold; and 
113.30 	 (3) the owner of the property makes written application to the county board.
113.31 	 (b) If all of the conditions in paragraph (a) are met, the county board must grant 
113.32 	a reduction in the amount of property tax payable on the homestead dwelling.  The 
113.33 	reduction must be made for taxes payable in the year that the assessor determines that the 
113.34 	requirements in paragraph (a), clause (2), have been met and in the following year.
114.1 	 (c) The reduction in the amount of tax payable must be calculated based upon the 
114.2 	number of months that the homestead is uninhabitable.  The amount of net tax due from 
114.3 	the taxpayer shall be multiplied by a fraction, the numerator of which is the number of 
114.4 	months the dwelling was occupied by that taxpayer, and the denominator of which is 12. 
114.5 	For purposes of this subdivision, if a homestead dwelling is occupied or used for a fraction 
114.6 	of a month, it is considered a month.  "Net tax" is defined as the amount of tax after the 
114.7 	subtraction of all of the state paid property tax credits.  If the reduction is granted after 
114.8 	all property taxes due for the year have been paid, the amount of the reduction must be 
114.9 	refunded to the taxpayer by the county treasurer as soon as practical.
114.10 	 (d) Any reductions or refunds under this section are not subject to approval by the 
114.11 	commissioner of revenue.
114.12 	 (e) A denial of a reduction or refund under this section by the county board may be 
114.13 	appealed to the tax court.  If the county board takes no action on the application within 60 
114.14 	days after its receipt, it is considered a denial.

114.15 	EFFECTIVE DATE. This section is effective for property taxes payable in 2005 
114.16 	and thereafter.

114.17 	 Sec. 37. Minnesota Statutes 2004, section 273.124, subdivision 1, is amended to read:
114.18 		 Subdivision 1.General rule.  (a) Residential real estate that is occupied and used 
114.19 	for the purposes of a homestead by its owner, who must be a Minnesota resident, is 
114.20 	a residential homestead.
114.21 	 Agricultural land, as defined in section 273.13, subdivision 23, that is occupied and 
114.22 	used as a homestead by its owner, who must be a Minnesota resident, is an agricultural 
114.23 	homestead.
114.24 	 Dates for establishment of a homestead and homestead treatment provided to 
114.25 	particular types of property are as provided in this section.
114.26 	 Property held by a trustee under a trust is eligible for homestead classification if the 
114.27 	requirements under this chapter are satisfied.
114.28 	 The assessor shall require proof, as provided in subdivision 13, of the facts upon 
114.29 	which classification as a homestead may be determined.  Notwithstanding any other law, 
114.30 	the assessor may at any time require a homestead application to be filed in order to verify 
114.31 	that any property classified as a homestead continues to be eligible for homestead status. 
114.32 	Notwithstanding any other law to the contrary, the Department of Revenue may, upon 
114.33 	request from an assessor, verify whether an individual who is requesting or receiving 
114.34 	homestead classification has filed a Minnesota income tax return as a resident for the most 
114.35 	recent taxable year for which the information is available.
115.1 	 When there is a name change or a transfer of homestead property, the assessor may 
115.2 	reclassify the property in the next assessment unless a homestead application is filed to 
115.3 	verify that the property continues to qualify for homestead classification.
115.4 	 (b) For purposes of this section, homestead property shall include property which 
115.5 	is used for purposes of the homestead but is separated from the homestead by a road, 
115.6 	street, lot, waterway, or other similar intervening property.  The term "used for purposes 
115.7 	of the homestead" shall include but not be limited to uses for gardens, garages, or other 
115.8 	outbuildings commonly associated with a homestead, but shall not include vacant land 
115.9 	held primarily for future development.  In order to receive homestead treatment for 
115.10 	the noncontiguous property, the owner must use the property for the purposes of the 
115.11 	homestead, and must apply to the assessor, both by the deadlines given in subdivision 
115.12 	9.  After initial qualification for the homestead treatment, additional applications for 
115.13 	subsequent years are not required.
115.14 	 (c) Residential real estate that is occupied and used for purposes of a homestead by a 
115.15 	relative of the owner is a homestead but only to the extent of the homestead treatment 
115.16 	that would be provided if the related owner occupied the property. For purposes of this 
115.17 	paragraph and paragraph (g), "relative" means a parent, stepparent, child, stepchild, 
115.18 	grandparent, grandchild, brother, sister, uncle, aunt, nephew, or niece. This relationship 
115.19 	may be by blood or marriage.  Property that has been classified as seasonal residential 
115.20 	recreational property at any time during which it has been owned by the current owner or 
115.21 	spouse of the current owner will not be reclassified as a homestead unless it is occupied as 
115.22 	a homestead by the owner; this prohibition also applies to property that, in the absence of 
115.23 	this paragraph, would have been classified as seasonal residential recreational property at 
115.24 	the time when the residence was constructed.  Neither the related occupant nor the owner 
115.25 	of the property may claim a property tax refund under chapter 290A for a homestead 
115.26 	occupied by a relative.  In the case of a residence located on agricultural land, only the 
115.27 	house, garage, and immediately surrounding one acre of land shall be classified as a 
115.28 	homestead under this paragraph, except as provided in paragraph (d).
115.29 	 (d) Agricultural property that is occupied and used for purposes of a homestead by 
115.30 	a relative of the owner, is a homestead, only to the extent of the homestead treatment 
115.31 	that would be provided if the related owner occupied the property, and only if all of the 
115.32 	following criteria are met:
115.33 	 (1) the relative who is occupying the agricultural property is a son, daughter, 
115.34 	grandson, granddaughter, father, or mother of the owner of the agricultural property or a 
115.35 	son, daughter, grandson, or granddaughter of the spouse of the owner of the agricultural 
115.36 	property;
116.1 	 (2) the owner of the agricultural property must be a Minnesota resident;
116.2 	 (3) the owner of the agricultural property must not receive homestead treatment on 
116.3 	any other agricultural property in Minnesota; and
116.4 	 (4) the owner of the agricultural property is limited to only one agricultural 
116.5 	homestead per family under this paragraph.
116.6 	 Neither the related occupant nor the owner of the property may claim a property 
116.7 	tax refund under chapter 290A for a homestead occupied by a relative qualifying under 
116.8 	this paragraph.  For purposes of this paragraph, "agricultural property" means the house, 
116.9 	garage, other farm buildings and structures, and agricultural land.
116.10 	 Application must be made to the assessor by the owner of the agricultural property to 
116.11 	receive homestead benefits under this paragraph.  The assessor may require the necessary 
116.12 	proof that the requirements under this paragraph have been met.
116.13 	 (e) In the case of property owned by a property owner who is married, the assessor 
116.14 	must not deny homestead treatment in whole or in part if only one of the spouses occupies 
116.15 	the property and the other spouse is absent due to:  (1) marriage dissolution proceedings, 
116.16 	(2) legal separation, (3) employment or self-employment in another location, or (4) other 
116.17 	personal circumstances causing the spouses to live separately, not including an intent to 
116.18 	obtain two homestead classifications for property tax purposes.  To qualify under clause 
116.19 	(3), the spouse's place of employment or self-employment must be at least 50 miles 
116.20 	distant from the other spouse's place of employment, and the homesteads must be at least 
116.21 	50 miles distant from each other.  Homestead treatment, in whole or in part, shall not be 
116.22 	denied to the owner's spouse who previously occupied the residence with the owner if the 
116.23 	absence of the owner is due to one of the exceptions provided in this paragraph.
116.24 	 (f) The assessor must not deny homestead treatment in whole or in part if:
116.25 	 (1) in the case of a property owner who is not married, the owner is absent due to 
116.26 	residence in a nursing home, boarding care facility, or an elderly assisted living facility 
116.27 	property as defined in section 273.13, subdivision 25a, and the property is not otherwise 
116.28 	occupied; or
116.29 	 (2) in the case of a property owner who is married, the owner or the owner's spouse 
116.30 	or both are absent due to residence in a nursing home, boarding care facility, or an elderly 
116.31 	assisted living facility property as defined in section 273.13, subdivision 25a, and the 
116.32 	property is not occupied or is occupied only by the owner's spouse.
116.33 	 (g) If an individual is purchasing property with the intent of claiming it as a 
116.34 	homestead and is required by the terms of the financing agreement to have a relative 
116.35 	shown on the deed as a co-owner, the assessor shall allow a full homestead classification.  
116.36 	This provision only applies to first-time purchasers, whether married or single, or to a 
117.1 	person who had previously been married and is purchasing as a single individual for the 
117.2 	first time.  The application for homestead benefits must be on a form prescribed by the 
117.3 	commissioner and must contain the data necessary for the assessor to determine if full 
117.4 	homestead benefits are warranted.
117.5 	 (h) If residential or agricultural real estate is occupied and used for purposes of a 
117.6 	homestead by a child of a deceased owner and the property is subject to jurisdiction of 
117.7 	probate court, the child shall receive relative homestead classification under paragraph (c) 
117.8 	or (d) to the same extent they would be entitled to it if the owner was still living, until 
117.9 	the probate is completed.  For purposes of this paragraph, "child" includes a relationship 
117.10 	by blood or by marriage.
117.11 	 (i) If a single family home, duplex, or triplex classified as either residential 
117.12 	homestead or agricultural homestead is also used to provide licensed child care, the portion 
117.13 	of the property used for licensed child care must be classified as homestead property.

117.14 	EFFECTIVE DATE. This section is effective in assessment year 2005 and 
117.15 	thereafter, for taxes payable in 2006, and thereafter.

117.16 	 Sec. 38. Minnesota Statutes 2004, section 273.124, subdivision 14, is amended to read:
117.17 		 Subd. 14.Agricultural homesteads; special provisions.  (a) Real estate of less than 
117.18 	ten acres that is the homestead of its owner must be classified as class 2a under section 
117.19 	273.13, subdivision 23, paragraph (a), if:
117.20 	 (1) the parcel on which the house is located is contiguous on at least two sides to (i) 
117.21 	agricultural land, (ii) land owned or administered by the United States Fish and Wildlife 
117.22 	Service, or (iii) land administered by the Department of Natural Resources on which in 
117.23 	lieu taxes are paid under sections 477A.11 to 477A.14;
117.24 	 (2) its owner also owns a noncontiguous parcel of agricultural land that is at least 
117.25 	20 acres;
117.26 	 (3) the noncontiguous land is located not farther than four townships or cities, or a 
117.27 	combination of townships or cities from the homestead; and
117.28 	 (4) the agricultural use value of the noncontiguous land and farm buildings is equal 
117.29 	to at least 50 percent of the market value of the house, garage, and one acre of land.
117.30 	 Homesteads initially classified as class 2a under the provisions of this paragraph shall 
117.31 	remain classified as class 2a, irrespective of subsequent changes in the use of adjoining 
117.32 	properties, as long as the homestead remains under the same ownership, the owner owns a 
117.33 	noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use 
117.34 	value qualifies under clause (4).  Homestead classification under this paragraph is limited 
117.35 	to property that qualified under this paragraph for the 1998 assessment.
118.1 	 (b)(i) Agricultural property consisting of at least 40 acres shall be classified as the 
118.2 	owner's homestead, to the same extent as other agricultural homestead property, if all 
118.3 	of the following criteria are met:
118.4 	 (1) the owner, the owner's spouse, or the son or daughter of the owner or owner's 
118.5 	spouse, or the grandson or granddaughter of the owner or the owner's spouse,is actively 
118.6 	farming the agricultural property, either on the person's own behalf as an individual or 
118.7 	on behalf of a partnership operating a family farm, family farm corporation, joint family 
118.8 	farm venture, or limited liability company of which the person is a partner, shareholder, or 
118.9 	member;
118.10 	 (2) both the owner of the agricultural property and the person who is actively 
118.11 	farming the agricultural property under clause (1), are Minnesota residents;
118.12 	 (3) neither the owner nor the spouse of the owner claims another agricultural 
118.13 	homestead in Minnesota; and
118.14 	 (4) neither the owner nor the person actively farming the property lives farther 
118.15 	than four townships or cities, or a combination of four townships or cities, from the 
118.16 	agricultural property, except that if the owner or the owner's spouse is required to live in 
118.17 	employer-provided housing, the owner or owner's spouse, whichever is actively farming 
118.18 	the agricultural property, may live more than four townships or cities, or combination of 
118.19 	four townships or cities from the agricultural property.
118.20 	 The relationship under this paragraph may be either by blood or marriage.
118.21 	 (ii) Real property held by a trustee under a trust is eligible for agricultural homestead 
118.22 	classification under this paragraph if the qualifications in clause (i) are met, except that 
118.23 	"owner" means the grantor of the trust.
118.24 	 (iii) Property containing the residence of an owner who owns qualified property 
118.25 	under clause (i) shall be classified as part of the owner's agricultural homestead, if that 
118.26 	property is also used for noncommercial storage or drying of agricultural crops.
118.27 	 (c) Noncontiguous land shall be included as part of a homestead under section 
118.28 	273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a 
118.29 	and the detached land is located in the same township or city, or not farther than four 
118.30 	townships or cities or combination thereof from the homestead.  Any taxpayer of these 
118.31 	noncontiguous lands must notify the county assessor that the noncontiguous land is part of 
118.32 	the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer 
118.33 	must also notify the assessor of the other county.
118.34 	 (d) Agricultural land used for purposes of a homestead and actively farmed by a 
118.35 	person holding a vested remainder interest in it must be classified as a homestead under 
118.36 	section 273.13, subdivision 23, paragraph (a).  If agricultural land is classified class 2a, 
119.1 	any other dwellings on the land used for purposes of a homestead by persons holding 
119.2 	vested remainder interests who are actively engaged in farming the property, and up to 
119.3 	one acre of the land surrounding each homestead and reasonably necessary for the use of 
119.4 	the dwelling as a home, must also be assessed class 2a.
119.5 	 (e) Agricultural land and buildings that were class 2a homestead property under 
119.6 	section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain 
119.7 	classified as agricultural homesteads for subsequent assessments if:
119.8 	 (1) the property owner abandoned the homestead dwelling located on the agricultural 
119.9 	homestead as a result of the April 1997 floods;
119.10 	 (2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, 
119.11 	or Wilkin;
119.12 	 (3) the agricultural land and buildings remain under the same ownership for the 
119.13 	current assessment year as existed for the 1997 assessment year and continue to be used 
119.14 	for agricultural purposes;
119.15 	 (4) the dwelling occupied by the owner is located in Minnesota and is within 30 
119.16 	miles of one of the parcels of agricultural land that is owned by the taxpayer; and
119.17 	 (5) the owner notifies the county assessor that the relocation was due to the 1997 
119.18 	floods, and the owner furnishes the assessor any information deemed necessary by the 
119.19 	assessor in verifying the change in dwelling.  Further notifications to the assessor are not 
119.20 	required if the property continues to meet all the requirements in this paragraph and any 
119.21 	dwellings on the agricultural land remain uninhabited.
119.22 	 (f) Agricultural land and buildings that were class 2a homestead property under 
119.23 	section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain 
119.24 	classified agricultural homesteads for subsequent assessments if:
119.25 	 (1) the property owner abandoned the homestead dwelling located on the agricultural 
119.26 	homestead as a result of damage caused by a March 29, 1998, tornado;
119.27 	 (2) the property is located in the county of Blue Earth, Brown, Cottonwood, 
119.28 	LeSueur, Nicollet, Nobles, or Rice;
119.29 	 (3) the agricultural land and buildings remain under the same ownership for the 
119.30 	current assessment year as existed for the 1998 assessment year;
119.31 	 (4) the dwelling occupied by the owner is located in this state and is within 50 miles 
119.32 	of one of the parcels of agricultural land that is owned by the taxpayer; and
119.33 	 (5) the owner notifies the county assessor that the relocation was due to a March 29, 
119.34 	1998, tornado, and the owner furnishes the assessor any information deemed necessary by 
119.35 	the assessor in verifying the change in homestead dwelling.  For taxes payable in 1999, the 
119.36 	owner must notify the assessor by December 1, 1998.  Further notifications to the assessor 
120.1 	are not required if the property continues to meet all the requirements in this paragraph 
120.2 	and any dwellings on the agricultural land remain uninhabited.
120.3 	 (g) Agricultural property consisting of at least 40 acres of a family farm corporation, 
120.4 	joint family farm venture, family farm limited liability company, or partnership operating 
120.5 	a family farm as described under subdivision 8 shall be classified homestead, to the same 
120.6 	extent as other agricultural homestead property, if all of the following criteria are met:
120.7 	 (1) a shareholder, member, or partner of that entity is actively farming the 
120.8 	agricultural property;
120.9 	 (2) that shareholder, member, or partner who is actively farming the agricultural 
120.10 	property is a Minnesota resident;
120.11 	 (3) neither that shareholder, member, or partner, nor the spouse of that shareholder, 
120.12 	member, or partner claims another agricultural homestead in Minnesota; and
120.13 	 (4) that shareholder, member, or partner does not live farther than four townships or 
120.14 	cities, or a combination of four townships or cities, from the agricultural property.
120.15 	 Homestead treatment applies under this paragraph for property leased to a family 
120.16 	farm corporation, joint farm venture, limited liability company, or partnership operating a 
120.17 	family farm if legal title to the property is in the name of an individual who is a member, 
120.18 	shareholder, or partner in the entity.
120.19 	 (h) To be eligible for the special agricultural homestead under this subdivision, an 
120.20 	initial full application must be submitted to the county assessor where the property is 
120.21 	located. Owners and the persons who are actively farming the property shall be required 
120.22 	to complete only a one-page abbreviated version of the application in each subsequent 
120.23 	year provided that none of the following items have changed since the initial application:
120.24 	 (1) the day-to-day operation, administration, and financial risks remain the same;
120.25 	 (2) the owners and the persons actively farming the property continue to live within 
120.26 	the four townships or city criteria and are Minnesota residents;
120.27 	 (3) the same operator of the agricultural property is listed with the Farm Service 
120.28 	Agency;
120.29 	 (4) a Schedule F or equivalent income tax form was filed for the most recent year;
120.30 	 (5) the property's acreage is unchanged; and
120.31 	 (6) none of the property's acres have been enrolled in a federal or state farm program 
120.32 	since the initial application.
120.33 	 The owners and any persons who are actively farming the property must include 
120.34 	the appropriate Social Security numbers, and sign and date the application.  If any of the 
120.35 	specified information has changed since the full application was filed, the owner must 
120.36 	notify the assessor, and must complete a new application to determine if the property 
121.1 	continues to qualify for the special agricultural homestead.  The commissioner of revenue 
121.2 	shall prepare a standard reapplication form for use by the assessors.

121.3 	EFFECTIVE DATE. This section is effective for assessment year 2004 and 
121.4 	thereafter, for taxes payable in 2005 and thereafter.

121.5 	 Sec. 39. Minnesota Statutes 2004, section 273.13, subdivision 22, is amended to read:
121.6 		 Subd. 22.Class 1.  (a) Except as provided in subdivision 23 and in paragraphs (b) 
121.7 	and (c), real estate which is residential and used for homestead purposes is class 1a.  In the 
121.8 	case of a duplex or triplex in which one of the units is used for homestead purposes, the 
121.9 	entire property is deemed to be used for homestead purposes.  The market value of class 1a 
121.10 	property must be determined based upon the value of the house, garage, and land.
121.11 	 The first $500,000 of market value of class 1a property has a net class rate of 
121.12 	one percent of its market value; and the market value of class 1a property that exceeds 
121.13 	$500,000 has a class rate of 1.25 percent of its market value.
121.14 	 (b) Class 1b property includes homestead real estate or homestead manufactured 
121.15 	homes used for the purposes of a homestead by
121.16 	 (1) any person who is blind as defined in section 256D.35, or the blind person and 
121.17 	the blind person's spouse; or
121.18 	 (2) any person, hereinafter referred to as "veteran," who:
121.19 	 (i) served in the active military or naval service of the United States; and
121.20 	 (ii) is entitled to compensation under the laws and regulations of the United States 
121.21 	for permanent and total service-connected disability due to the loss, or loss of use, by 
121.22 	reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both 
121.23 	lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or 
121.24 	a wheelchair; and
121.25 	 (iii) has acquired a special housing unit with special fixtures or movable facilities 
121.26 	made necessary by the nature of the veteran's disability, or the surviving spouse of the 
121.27 	deceased veteran for as long as the surviving spouse retains the special housing unit 
121.28 	as a homestead; or
121.29 	 (3) any person who is permanently and totally disabled.
121.30 	 Property is classified and assessed under clause (3) only if the government agency or 
121.31 	income-providing source certifies, upon the request of the homestead occupant, that the 
121.32 	homestead occupant satisfies the disability requirements of this paragraph.
121.33 	 Property is classified and assessed pursuant to clause (1) only if the commissioner of 
121.34 	revenue certifies to the assessor that the homestead occupant satisfies the requirements of 
121.35 	this paragraph.
122.1 	 Permanently and totally disabled for the purpose of this subdivision means a 
122.2 	condition which is permanent in nature and totally incapacitates the person from working 
122.3 	at an occupation which brings the person an income.  The first $32,000 market value of 
122.4 	class 1b property has a net class rate of .45 percent of its market value.  The remaining 
122.5 	market value of class 1b property has a class rate using the rates for class 1a or class 2a 
122.6 	property, whichever is appropriate, of similar market value.
122.7 	 (c) Class 1c property is commercial use real property that abuts a lakeshore line and 
122.8 	is devoted to temporary and seasonal residential occupancy for recreational purposes but 
122.9 	not devoted to commercial purposes for more than 250 days in the year preceding the 
122.10 	year of assessment, and that includes a portion used as a homestead by the owner, which 
122.11 	includes a dwelling occupied as a homestead by a shareholder of a corporation that owns 
122.12 	the resort, a partner in a partnership that owns the resort, or a member of a limited liability 
122.13 	company that owns the resort even if the title to the homestead is held by the corporation, 
122.14 	partnership, or limited liability company.  For purposes of this clause, property is devoted 
122.15 	to a commercial purpose on a specific day if any portion of the property, excluding 
122.16 	the portion used exclusively as a homestead, is used for residential occupancy and a 
122.17 	fee is charged for residential occupancy.  The first $500,000 $600,000 of market value 
122.18 	of class 1c property has a class rate of one 0.55 percent, the market value that exceeds 
122.19 	$600,000 but does not exceed $1,600,000 has a class rate of one percent,and the remaining 
122.20 	market value of class 1c the property has a class rate of one percent, with the following 
122.21 	limitation:  the area of the property must not exceed 100 feet of lakeshore footage for 
122.22 	each cabin or campsite located on the property up to a total of 800 feet and 500 feet in 
122.23 	depth, measured away from the lakeshore is classified as class 4c.  If any portion of the 
122.24 	class 1c resort property is classified as class 4c under subdivision 25, the entire property 
122.25 	must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for 
122.26 	class 1c treatment under this paragraph.
122.27 	 (d) Class 1d property includes structures that meet all of the following criteria:
122.28 	 (1) the structure is located on property that is classified as agricultural property under 
122.29 	section 273.13, subdivision 23;
122.30 	 (2) the structure is occupied exclusively by seasonal farm workers during the time 
122.31 	when they work on that farm, and the occupants are not charged rent for the privilege of 
122.32 	occupying the property, provided that use of the structure for storage of farm equipment 
122.33 	and produce does not disqualify the property from classification under this paragraph;
122.34 	 (3) the structure meets all applicable health and safety requirements for the 
122.35 	appropriate season; and
123.1 	 (4) the structure is not salable as residential property because it does not comply 
123.2 	with local ordinances relating to location in relation to streets or roads.
123.3 	 The market value of class 1d property has the same class rates as class 1a property 
123.4 	under paragraph (a).

123.5 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
123.6 	in 2006, and thereafter.

123.7 	 Sec. 40. Minnesota Statutes 2004, section 273.13, subdivision 23, is amended to read:
123.8 		 Subd. 23.Class 2.  (a) Class 2a property is agricultural land including any 
123.9 	improvements that is homesteaded.  The market value of the house and garage and 
123.10 	immediately surrounding one acre of land has the same class rates as class 1a property 
123.11 	under subdivision 22.  The value of the remaining land including improvements up to and 
123.12 	including $600,000 market value has a net class rate of 0.55 percent of market value.  
123.13 	The remaining property over $600,000 market value has a class rate of one percent of 
123.14 	market value.
123.15 	 (b) Class 2b property is (1) real estate, rural in character and used exclusively for 
123.16 	growing trees for timber, lumber, and wood and wood products; (2) real estate that is not 
123.17 	improved with a structure and is used exclusively for growing trees for timber, lumber, and 
123.18 	wood and wood products, if the owner has participated or is participating in a cost-sharing 
123.19 	program for afforestation, reforestation, or timber stand improvement on that particular 
123.20 	property, administered or coordinated by the commissioner of natural resources; (3) real 
123.21 	estate that is nonhomestead agricultural land; or (4) a landing area or public access area of 
123.22 	a privately owned public use airport; or (5) land with a commercial aggregate deposit that 
123.23 	is not actively being mined and is not otherwise classified as class 2a or 2b, clauses (1) to 
123.24 	(3).  Class 2b property has a net class rate of one percent of market value.
123.25 	 (c) Agricultural land as used in this section means contiguous acreage of ten acres or 
123.26 	more, used during the preceding year for agricultural purposes.  "Agricultural purposes" as 
123.27 	used in this section means the raising or cultivation of agricultural products.  "Agricultural 
123.28 	purposes" also includes enrollment in the Reinvest in Minnesota program under sections 
123.29 	103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public 
123.30 	Law 99-198 if the property was classified as agricultural (i) under this subdivision for 
123.31 	the assessment year 2002 or (ii) in the year prior to its enrollment.  Contiguous acreage 
123.32 	on the same parcel, or contiguous acreage on an immediately adjacent parcel under the 
123.33 	same ownership, may also qualify as agricultural land, but only if it is pasture, timber, 
123.34 	waste, unusable wild land, or land included in state or federal farm programs.  Agricultural 
123.35 	classification for property shall be determined excluding the house, garage, and 
124.1 	immediately surrounding one acre of land, and shall not be based upon the market value of 
124.2 	any residential structures on the parcel or contiguous parcels under the same ownership.
124.3 	 (d) Real estate, excluding the house, garage, and immediately surrounding one acre 
124.4 	of land, of less than ten acres which is exclusively and intensively used for raising or 
124.5 	cultivating agricultural products, shall be considered as agricultural land.
124.6 	 Land shall be classified as agricultural even if all or a portion of the agricultural use 
124.7 	of that property is the leasing to, or use by another person for agricultural purposes.
124.8 	 Classification under this subdivision is not determinative for qualifying under 
124.9 	section 273.111.
124.10 	 The property classification under this section supersedes, for property tax purposes 
124.11 	only, any locally administered agricultural policies or land use restrictions that define 
124.12 	minimum or maximum farm acreage.
124.13 	 (e) The term "agricultural products" as used in this subdivision includes production 
124.14 	for sale of:
124.15 	 (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing 
124.16 	animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, 
124.17 	bees, and apiary products by the owner;
124.18 	 (2) fish bred for sale and consumption if the fish breeding occurs on land zoned 
124.19 	for agricultural use;
124.20 	 (3) the commercial boarding of horses if the boarding is done in conjunction with 
124.21 	raising or cultivating agricultural products as defined in clause (1);
124.22 	 (4) property which is owned and operated by nonprofit organizations used for 
124.23 	equestrian activities, excluding racing;
124.24 	 (5) game birds and waterfowl bred and raised for use on a shooting preserve licensed 
124.25 	under section 97A.115;
124.26 	 (6) insects primarily bred to be used as food for animals;
124.27 	 (7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood 
124.28 	products, except that short rotation woody crops that are cultivated using agricultural 
124.29 	practices on land that had previously been assessed as agricultural land to produce timber 
124.30 	or forest products are agricultural products; and
124.31 	 (8) maple syrup taken from trees grown by a person licensed by the Minnesota 
124.32 	Department of Agriculture under chapter 28A as a food processor.
124.33 	 (f) If a parcel used for agricultural purposes is also used for commercial or industrial 
124.34 	purposes, including but not limited to:
124.35 	 (1) wholesale and retail sales;
124.36 	 (2) processing of raw agricultural products or other goods;
125.1 	 (3) warehousing or storage of processed goods; and
125.2 	 (4) office facilities for the support of the activities enumerated in clauses (1), (2), 
125.3 	and (3),
125.4 	 the assessor shall classify the part of the parcel used for agricultural purposes as class 
125.5 	1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its 
125.6 	use.  The grading, sorting, and packaging of raw agricultural products for first sale is 
125.7 	considered an agricultural purpose. A greenhouse or other building where horticultural 
125.8 	or nursery products are grown that is also used for the conduct of retail sales must be 
125.9 	classified as agricultural if it is primarily used for the growing of horticultural or nursery 
125.10 	products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of 
125.11 	those products.  Use of a greenhouse or building only for the display of already grown 
125.12 	horticultural or nursery products does not qualify as an agricultural purpose.
125.13 	 The assessor shall determine and list separately on the records the market value of 
125.14 	the homestead dwelling and the one acre of land on which that dwelling is located.  If any 
125.15 	farm buildings or structures are located on this homesteaded acre of land, their market 
125.16 	value shall not be included in this separate determination.
125.17 	 (g) To qualify for classification under paragraph (b), clause (4), a privately owned 
125.18 	public use airport must be licensed as a public airport under section 360.018.  For purposes 
125.19 	of paragraph (b), clause (4), "landing area" means that part of a privately owned public use 
125.20 	airport properly cleared, regularly maintained, and made available to the public for use by 
125.21 	aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing 
125.22 	or navigational aids.  A landing area also includes land underlying both the primary surface 
125.23 	and the approach surfaces that comply with all of the following:
125.24 	 (i) the land is properly cleared and regularly maintained for the primary purposes of 
125.25 	the landing, taking off, and taxiing of aircraft; but that portion of the land that contains 
125.26 	facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
125.27 	 (ii) the land is part of the airport property; and
125.28 	 (iii) the land is not used for commercial or residential purposes.
125.29 	 The land contained in a landing area under paragraph (b), clause (4), must be described 
125.30 	and certified by the commissioner of transportation.  The certification is effective until 
125.31 	it is modified, or until the airport or landing area no longer meets the requirements of 
125.32 	paragraph (b), clause (4).  For purposes of paragraph (b), clause (4), "public access area" 
125.33 	means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival 
125.34 	and departure building in connection with the airport.
126.1 	 (h) To qualify for classification under paragraph (b), clause (5), the property must be 
126.2 	at least ten contiguous acres in size and the owner of the property must record with the 
126.3 	county recorder of the county in which the property is located an affidavit containing:
126.4 	 (1) a legal description of the property;
126.5 	 (2) a disclosure that the property contains a commercial aggregate deposit that is 
126.6 	not actively being mined;
126.7 	 (3) documentation that the conditional use under the county or local zoning 
126.8 	ordinance of this property is for mining; and 
126.9 	 (4) documentation that a permit has been issued by the local unit of government 
126.10 	or the mining activity is allowed under local ordinance.  The disclosure must include a 
126.11 	statement from a registered professional geologist, engineer, or soil scientist delineating 
126.12 	the deposit and certifying that it is a commercial aggregate deposit.
126.13 	 For purposes of this section and section 273.1115, "commercial aggregate deposit" 
126.14 	means a deposit that will yield crushed stone or sand and gravel that is suitable for use 
126.15 	as a construction aggregate; and "actively mined" means the removal of top soil and 
126.16 	overburden in preparation for excavation or excavation of a commercial deposit.
126.17 	 (i) When any portion of the property under this subdivision or section 273.13, 
126.18 	subdivision 22, begins to be actively mined, the owner must file a supplemental affidavit 
126.19 	within 60 days from the day any aggregate is removed stating the number of acres of the 
126.20 	property that is actively being mined.  The acres actively being mined must be (1) valued 
126.21 	and classified under section 273.13, subdivision 24, in the next subsequent assessment 
126.22 	year, and (2) removed from the aggregate resource preservation property tax program 
126.23 	under section 273.1115, if the land was enrolled in that program.  Copies of the original 
126.24 	affidavit and all supplemental affidavits must be filed with the county assessor, the local 
126.25 	zoning administrator, and the Department of Natural Resources, Division of Land and 
126.26 	Minerals.  A supplemental affidavit must be filed each time a subsequent portion of the 
126.27 	property is actively mined, provided that the minimum acreage change is five acres, even 
126.28 	if the actual mining activity constitutes less than five acres.

126.29 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
126.30 	in 2006, and thereafter.

126.31 	 Sec. 41. Minnesota Statutes 2004, section 273.13, subdivision 25, is amended to read:
126.32 		 Subd. 25.Class 4.  (a) Class 4a is residential real estate containing four or more 
126.33 	units and used or held for use by the owner or by the tenants or lessees of the owner as a 
126.34 	residence for rental periods of 30 days or more.  Class 4a also includes hospitals licensed 
126.35 	under sections 144.50 to 144.56, other than hospitals exempt under section 272.02, and 
127.1 	contiguous property used for hospital purposes, without regard to whether the property has 
127.2 	been platted or subdivided.  The market value of class 4a property has a class rate of 1.8
127.3 	percent for taxes payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 percent 
127.4 	for taxes payable in 2004 and thereafter, except that class 4a property consisting of a 
127.5 	structure for which construction commenced after June 30, 2001, has a class rate of 1.25 
127.6 	percent of market value for taxes payable in 2003 and subsequent years.
127.7 	 (b) Class 4b includes:
127.8 	 (1) residential real estate containing less than four units that does not qualify as class 
127.9 	4bb, other than seasonal residential recreational property;
127.10 	 (2) manufactured homes not classified under any other provision;
127.11 	 (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead 
127.12 	farm classified under subdivision 23, paragraph (b) containing two or three units; and
127.13 	 (4) unimproved property that is classified residential as determined under subdivision 
127.14 	33.
127.15 	 The market value of class 4b property has a class rate of 1.5 percent for taxes 
127.16 	payable in 2002, and 1.25 percent for taxes payable in 2003 and thereafter.
127.17 	 (c) Class 4bb includes:
127.18 	 (1) nonhomestead residential real estate containing one unit, other than seasonal 
127.19 	residential recreational property; and
127.20 	 (2) a single family dwelling, garage, and surrounding one acre of property on a 
127.21 	nonhomestead farm classified under subdivision 23, paragraph (b).
127.22 	 Class 4bb property has the same class rates as class 1a property under subdivision 22.
127.23 	 Property that has been classified as seasonal residential recreational property at 
127.24 	any time during which it has been owned by the current owner or spouse of the current 
127.25 	owner does not qualify for class 4bb.
127.26 	 (d) Class 4c property includes:
127.27 	 (1) except as provided in subdivision 22, paragraph (c), real property devoted to 
127.28 	temporary and seasonal residential occupancy for recreation purposes, including real 
127.29 	property devoted to temporary and seasonal residential occupancy for recreation purposes 
127.30 	and not devoted to commercial purposes for more than 250 days in the year preceding 
127.31 	the year of assessment.  For purposes of this clause, property is devoted to a commercial 
127.32 	purpose on a specific day if any portion of the property is used for residential occupancy, 
127.33 	and a fee is charged for residential occupancy.  In order for a property to be classified as 
127.34 	class 4c, seasonal residential recreational for commercial purposes, at least 40 percent of 
127.35 	the annual gross lodging receipts related to the property must be from business conducted 
127.36 	during 90 consecutive days and either (i) at least 60 percent of all paid bookings by 
128.1 	lodging guests during the year must be for periods of at least two consecutive nights; or 
128.2 	(ii) at least 20 percent of the annual gross receipts must be from charges for rental of fish 
128.3 	houses, boats and motors, snowmobiles, downhill or cross-country ski equipment, or 
128.4 	charges for marina services, launch services, and guide services, or the sale of bait and 
128.5 	fishing tackle.  For purposes of this determination, a paid booking of five or more nights 
128.6 	shall be counted as two bookings.  Class 4c also includes commercial use real property 
128.7 	used exclusively for recreational purposes in conjunction with class 4c property devoted 
128.8 	to temporary and seasonal residential occupancy for recreational purposes, up to a total 
128.9 	of two acres, provided the property is not devoted to commercial recreational use for 
128.10 	more than 250 days in the year preceding the year of assessment and is located within 
128.11 	two miles of the class 4c property with which it is used.  Class 4c property classified in 
128.12 	this clause also includes the remainder of class 1c resorts provided that the entire property 
128.13 	including that portion of the property classified as class 1c also meets the requirements for 
128.14 	class 4c under this clause; otherwise the entire property is classified as class 3.  Owners 
128.15 	of real property devoted to temporary and seasonal residential occupancy for recreation 
128.16 	purposes and all or a portion of which was devoted to commercial purposes for not more 
128.17 	than 250 days in the year preceding the year of assessment desiring classification as class 
128.18 	1c or 4c, must submit a declaration to the assessor designating the cabins or units occupied 
128.19 	for 250 days or less in the year preceding the year of assessment by January 15 of the 
128.20 	assessment year.  Those cabins or units and a proportionate share of the land on which 
128.21 	they are located will be designated class 1c or 4c as otherwise provided.  The remainder of 
128.22 	the cabins or units and a proportionate share of the land on which they are located will 
128.23 	be designated as class 3a.  The owner of property desiring designation as class 1c or 4c 
128.24 	property must provide guest registers or other records demonstrating that the units for 
128.25 	which class 1c or 4c designation is sought were not occupied for more than 250 days in 
128.26 	the year preceding the assessment if so requested.  The portion of a property operated as 
128.27 	a (1) restaurant, (2) bar, (3) gift shop, and (4) other nonresidential facility operated on a 
128.28 	commercial basis not directly related to temporary and seasonal residential occupancy 
128.29 	for recreation purposes shall not qualify for class 1c or 4c;
128.30 	 (2) qualified property used as a golf course if:
128.31 	 (i) it is open to the public on a daily fee basis.  It may charge membership fees or 
128.32 	dues, but a membership fee may not be required in order to use the property for golfing, 
128.33 	and its green fees for golfing must be comparable to green fees typically charged by 
128.34 	municipal courses; and
128.35 	 (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
129.1 	 A structure used as a clubhouse, restaurant, or place of refreshment in conjunction 
129.2 	with the golf course is classified as class 3a property;
129.3 	 (3) real property up to a maximum of one acre of land owned by a nonprofit 
129.4 	community service oriented organization; provided that the property is not used for a 
129.5 	revenue-producing activity for more than six days in the calendar year preceding the year 
129.6 	of assessment and the property is not used for residential purposes on either a temporary 
129.7 	or permanent basis.  For purposes of this clause, a "nonprofit community service oriented 
129.8 	organization" means any corporation, society, association, foundation, or institution 
129.9 	organized and operated exclusively for charitable, religious, fraternal, civic, or educational 
129.10 	purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), 
129.11 	(10), or (19) of the Internal Revenue Code of 1986, as amended through December 31, 
129.12 	1990.  For purposes of this clause, "revenue-producing activities" shall include but not be 
129.13 	limited to property or that portion of the property that is used as an on-sale intoxicating 
129.14 	liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant 
129.15 	open to the public, bowling alley, a retail store, gambling conducted by organizations 
129.16 	licensed under chapter 349, an insurance business, or office or other space leased or 
129.17 	rented to a lessee who conducts a for-profit enterprise on the premises.  Any portion of 
129.18 	the property which is used for revenue-producing activities for more than six days in the 
129.19 	calendar year preceding the year of assessment shall be assessed as class 3a.  The use of 
129.20 	the property for social events open exclusively to members and their guests for periods of 
129.21 	less than 24 hours, when an admission is not charged nor any revenues are received by the 
129.22 	organization shall not be considered a revenue-producing activity;
129.23 	 (4) postsecondary student housing of not more than one acre of land that is owned by 
129.24 	a nonprofit corporation organized under chapter 317A and is used exclusively by a student 
129.25 	cooperative, sorority, or fraternity for on-campus housing or housing located within two 
129.26 	miles of the border of a college campus;
129.27 	 (5) manufactured home parks as defined in section 327.14, subdivision 3;
129.28 	 (6) real property that is actively and exclusively devoted to indoor fitness, health, 
129.29 	social, recreational, and related uses, is owned and operated by a not-for-profit corporation, 
129.30 	and is located within the metropolitan area as defined in section 473.121, subdivision 2;
129.31 	 (7) a leased or privately owned noncommercial aircraft storage hangar not exempt 
129.32 	under section 272.01, subdivision 2, and the land on which it is located, provided that:
129.33 	 (i) the land is on an airport owned or operated by a city, town, county, Metropolitan 
129.34 	Airports Commission, or group thereof; and
129.35 	 (ii) the land lease, or any ordinance or signed agreement restricting the use of the 
129.36 	leased premise, prohibits commercial activity performed at the hangar.
130.1 	 If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must 
130.2 	be filed by the new owner with the assessor of the county where the property is located 
130.3 	within 60 days of the sale; and 
130.4 	 (8) a privately owned noncommercial aircraft storage hangar not exempt under 
130.5 	section 272.01, subdivision 2, and the land on which it is located, provided that:
130.6 	 (i) the land abuts a public airport; and 
130.7 	 (ii) the owner of the aircraft storage hangar provides the assessor with a signed 
130.8 	agreement restricting the use of the premises, prohibiting commercial use or activity 
130.9 	performed at the hangar; and 
130.10 	 (9) residential real estate, a portion of which is used by the owner for homestead 
130.11 	purposes, and that is also a place of lodging, if all of the following criteria are met:
130.12 	 (i) rooms are provided for rent to transient guests that generally stay for periods 
130.13 	of 14 or fewer days;
130.14 	 (ii) meals are provided to persons who rent rooms, the cost of which is incorporated 
130.15 	in the basic room rate;
130.16 	 (iii) meals are not provided to the general public except for special events on fewer 
130.17 	than seven days in the calendar year preceding the year of the assessment; and
130.18 	 (iv) the owner is the operator of the property.
130.19 	 The market value subject to the 4c classification under this clause is limited to five rental 
130.20 	units.  Any rental units on the property in excess of five, must be valued and assessed as 
130.21 	class 3a.  The portion of the property used for purposes of a homestead by the owner must 
130.22 	be classified as class 1a property under subdivision 22.
130.23 	 Class 4c property has a class rate of 1.5 percent of market value, except that (i) each 
130.24 	parcel of seasonal residential recreational property not used for commercial purposes has 
130.25 	the same class rates as class 4bb property, (ii) manufactured home parks assessed under 
130.26 	clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal 
130.27 	residential recreational property has a class rate of one percent for the first $500,000 of 
130.28 	market value, which includes any market value receiving the 0.55 or one percent rate 
130.29 	under subdivision 22, and 1.25 percent for the remaining market value, (iv) the market 
130.30 	value of property described in clause (4) has a class rate of one percent, (v) the market 
130.31 	value of property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) 
130.32 	that portion of the market value of property in clause (8) qualifying for class 4c property 
130.33 	has a class rate of 1.25 percent.
130.34 	 (e) Class 4d property is qualifying low-income rental housing certified to the 
130.35 	assessor by the Housing Finance Agency under section 273.1321.  Class 4d includes 
131.1 	land in proportion to the total market value of the building that is qualifying low-income 
131.2 	rental housing.
131.3 	 Class 4d property has a class rate of 0.55 percent for taxes payable in 2007 and 
131.4 	thereafter.

131.5 	 Sec. 42. [273.1321] VALUATION OF LOW-INCOME RENTAL PROPERTY; 
131.6 	CAPITALIZED VALUE OF NET OPERATING INCOME.
131.7 		 Subdivision 1.Requirement. Low-income rental property classified as class 4d 
131.8 	under section 273.13, subdivision 25, is entitled to valuation under this section if at least 75 
131.9 	percent of the units in the rental housing property meet any of the following qualifications:
131.10 	 (1) the units are subject to a housing assistance payments contract under section 8 
131.11 	of the United States Housing Act of 1937, as amended;
131.12 	 (2) the units are rent-restricted and income-restricted units of a qualified low-income 
131.13 	housing project receiving tax credits under section 42(g) of the Internal Revenue Code of 
131.14 	1986, as amended;
131.15 	 (3) the units are financed by the Rural Housing Service of the United States 
131.16 	Department of Agriculture and receive payments under the rental assistance program 
131.17 	pursuant to section 521(a) of the Housing Act of 1949, as amended; or 
131.18 	 (4) the units are subject to rent and income restrictions under the terms of financial 
131.19 	assistance provided to the rental housing property by a federal, state, or local unit of 
131.20 	government as evidenced by a document recorded against the property.
131.21 	 The restrictions must require assisted units to be occupied by residents whose 
131.22 	household income at the time of initial occupancy does not exceed 60 percent of the 
131.23 	greater of area or state median income, adjusted for family size, as determined by the 
131.24 	United States Department of Housing and Urban Development. The restriction must also 
131.25 	require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of 
131.26 	area or state median income, adjusted for family size, as determined by the United States 
131.27 	Department of Housing and Urban Development.
131.28 		 Subd. 2.Determination of value. (a) The value of any rental housing property 
131.29 	meeting the qualifications of subdivision 1 shall be determined, upon timely application 
131.30 	by the owner in the manner provided in subdivision 3, on the basis of the restricted use of 
131.31 	the property, notwithstanding sections 272.03, subdivision 8, and 273.11, by capitalizing 
131.32 	the net operating income prior to the payment of debt service.
131.33 	 (b) Net operating income prior to payment of debt service must be the amounts 
131.34 	shown in a financial statement prepared by an independent certified public accountant 
131.35 	or firm.  The financial statement must show the revenues, expenses, cash flows, assets, 
132.1 	liabilities, and net assets for the property for which an application is made under this 
132.2 	section.
132.3 	 (c) The capitalization rate applied to net operating income shall be established 
132.4 	jointly by the commissioner and the Housing Finance Agency based on market data and 
132.5 	industry standards.  The commissioner and the Housing Finance Agency shall jointly 
132.6 	establish separate rates based on types of rental housing properties and their locations.
132.7 		 Subd. 3.Application. (a) Application for assessment under this section must be 
132.8 	filed by February 28 of the levy year, or at a later date the Housing Finance Agency 
132.9 	deems practicable.  The application must be filed with the Housing Finance Agency, 
132.10 	on a form prescribed by the agency, and must contain the information required by the 
132.11 	Housing Finance Agency.
132.12 	 (b) Each application must include:
132.13 	 (1) the property tax identification number;
132.14 	 (2) evidence that the property meets the requirements of subdivision 1; and 
132.15 	 (3) a true and correct copy of the financial statement related to the property.
132.16 	 (c) The applicant must pay an application fee to be set by the Housing Finance 
132.17 	Agency.  The application fee charged by the agency must approximately equal the costs 
132.18 	of processing and reviewing the applications.  The fee must be deposited in the housing 
132.19 	development fund.
132.20 		 Subd. 4.Certification. By June 1 of each levy year, the Housing Finance Agency 
132.21 	must certify to local assessors the valuation, as determined under this section, of rental 
132.22 	properties that apply and are qualified for valuation under this section.  In making the 
132.23 	certification, the Housing Finance Agency may rely on the application and supporting 
132.24 	information supplied by the property owner.

132.25 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
132.26 	in 2007, and thereafter.

132.27 	 Sec. 43. [273.1322] VACANT COMMERCIAL-INDUSTRIAL PROPERTIES.
132.28 		 Subdivision 1.Authority. A city may establish, by ordinance, a program to 
132.29 	encourage redevelopment, provide for better utilization of commercial-industrial 
132.30 	property, and eliminate blighting influences by revoking the eligibility of individual 
132.31 	commercial-industrial properties to receive the credit authorized under section 273.1398, 
132.32 	subdivision 4.  The program may revoke eligibility only if the property has been vacant, as 
132.33 	defined in subdivision 3, clauses (1) to (3), for three or more consecutive years prior to the 
132.34 	current assessment year, or under subdivision 3, clause (4), for five or more consecutive 
132.35 	years prior to the current assessment year.
133.1 		 Subd. 2.Minimum requirements. The program must provide:
133.2 	 (1) standards for determining whether a property is vacant;
133.3 	 (2) written assessment notice by the city or county to the property owner informing 
133.4 	the owner that the property's eligibility will be revoked;
133.5 	 (3) opportunity for the property owner to appeal the revocation at the board of 
133.6 	equalization;
133.7 	 (4) timely notice to the county assessor of the property's eligibility revocation, if the 
133.8 	city has a city assessor and the city assessor has revoked the property's eligibility; and 
133.9 	 (5) any other provisions the city determines are necessary or appropriate to the 
133.10 	operation of the program to achieve its purposes.
133.11 		 Subd. 3.Definition of vacant. A program established under this section may 
133.12 	provide that a property is vacant if the property is:
133.13 	 (1) condemned, dangerous, or having multiple building code violations;
133.14 	 (2) condemned and illegally occupied;
133.15 	 (3) either occupied or unoccupied, during which time the enforcement officer for the 
133.16 	municipality has issued multiple orders to correct nuisance conditions; or 
133.17 	 (4) unoccupied and not utilized for a commercial or industrial purpose.
133.18 		 Subd. 4.Notice to property owner. The municipality shall give notice to the 
133.19 	property owner requiring that any conditions in subdivision 3, clauses (1) to (3), be 
133.20 	remedied, and that the property be occupied and used for a commercial or industrial 
133.21 	purpose for at least 180 days during the next 12-month period, or else the property may 
133.22 	cease to be eligible for the credit under section 273.1398, subdivision 4.

133.23 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
133.24 	thereafter.

133.25 	 Sec. 44. Minnesota Statutes 2004, section 273.1384, subdivision 3, is amended to read:
133.26 		 Subd. 3.Credit reimbursements. (a) The county auditor shall determine the tax 
133.27 	reductions allowed under this section within the county for each taxes payable year and 
133.28 	shall certify that amount to the commissioner of revenue as a part of the abstracts of tax 
133.29 	lists submitted by the county auditors under section 275.29.
133.30 	 (b) In the case of class 1a, class lc, or class 2a homestead property which is located 
133.31 	within a city, the county auditor shall determine whether the net tax on each parcel is less 
133.32 	than the applicable percentage of its taxable market value provided in this paragraph for 
133.33 	the year.  For taxes payable in 2007 and 2008, if the net tax on the property is less than 0.7 
133.34 	percent of its taxable market value, the county auditor shall reduce the reimbursement to 
133.35 	the county and the city for the credit allowed under subdivision 1 by the amount of the 
134.1 	difference.  For taxes payable in 2009 and 2010, if the net tax on the property is less than 
134.2 	0.8 percent of its taxable market value, the county auditor shall reduce the reimbursement 
134.3 	to the county and the city for the credit allowed under subdivision 1 by the amount of the 
134.4 	difference.  For taxes payable in 2011 and 2012, if the net tax on the property is less than 
134.5 	0.9 percent of its taxable market value, the county auditor shall reduce the reimbursement 
134.6 	to the county and the city for the credit allowed under subdivision 1 by the amount of the 
134.7 	difference.  For taxes payable in 2013 and thereafter, if the net tax on the property is 
134.8 	less than one percent of its taxable market value, the county auditor shall reduce the 
134.9 	reimbursement to the county and the city for the credit allowed under subdivision 1 by the 
134.10 	amount of the difference.  The market value credit reimbursement cannot be less than zero.
134.11 	 (c) Any prior year adjustments shall also be certified on the abstracts of tax lists.  The 
134.12 	commissioner shall review the certifications for accuracy, and may make such changes 
134.13 	as are deemed necessary, or return the certification to the county auditor for correction. 
134.14 	If there is no reduction of the reimbursements under paragraph (b),the credits under this 
134.15 	section must be used to proportionately reduce the net tax capacity-based property tax 
134.16 	payable to each local taxing jurisdiction as provided in section 273.1393. If there is a 
134.17 	reduction under paragraph (b), the reimbursements paid to the city and county must be 
134.18 	reduced in proportion to the amount of their levies.

134.19 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
134.20 	in 2007, and thereafter.

134.21 	 Sec. 45. [273.323] EFFECTIVE DATE FOR RULES FOR VALUATION OF 
134.22 	ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.
134.23 	 Rules adopted by the commissioner that prescribe the method of valuing property of 
134.24 	electric and transmission pipeline utilities may not take effect before the end of the regular 
134.25 	legislative session in the calendar year following adoption of the rules.

134.26 	 EFFECTIVE DATE. This section is effective the day following final enactment.

134.27 	 Sec. 46. Minnesota Statutes 2004, section 275.065, subdivision 3, is amended to read:
134.28 		 Subd. 3.Notice of proposed property taxes.  (a) The county auditor shall prepare 
134.29 	and the county treasurer shall deliver after November 10 and on or before November 24 
134.30 	each year, by first class mail to each taxpayer at the address listed on the county's current 
134.31 	year's assessment roll, a notice of proposed property taxes.
134.32 	 (b) The commissioner of revenue shall prescribe the form of the notice.
135.1 	 (c) The notice must inform taxpayers that it contains the amount of property taxes 
135.2 	each taxing authority proposes to collect for taxes payable the following year.  In the case 
135.3 	of a town, or in the case of the state general tax, the final tax amount will be its proposed 
135.4 	tax.  In the case of taxing authorities required to hold a public meeting under subdivision 6, 
135.5 	the notice must clearly state that each taxing authority, including regional library districts 
135.6 	established under section 134.201, and including the metropolitan taxing districts as 
135.7 	defined in paragraph (i), but excluding all other special taxing districts and towns, will 
135.8 	hold a public meeting to receive public testimony on the proposed budget and proposed or 
135.9 	final property tax levy, or, in case of a school district, on the current budget and proposed 
135.10 	property tax levy.  It must clearly state the time and place of each taxing authority's 
135.11 	meeting, a telephone number for the taxing authority that taxpayers may call if they have 
135.12 	questions related to the notice, and an address where comments will be received by mail.
135.13 	 (d) The notice must state for each parcel:
135.14 	 (1) the market value of the property as determined under section 273.11, and used 
135.15 	for computing property taxes payable in the following year and for taxes payable in the 
135.16 	current year as each appears in the records of the county assessor on November 1 of the 
135.17 	current year; and, in the case of residential property, whether the property is classified as 
135.18 	homestead or nonhomestead.  The notice must clearly inform taxpayers of the years to 
135.19 	which the market values apply and that the values are final values;
135.20 	 (2) the items listed below, shown separately by county, city or town, and state general 
135.21 	tax, net of the residential and agricultural homestead credit under section 273.1384, voter 
135.22 	approved school levy, other local school levy, and the sum of the special taxing districts, 
135.23 	and as a total of all taxing authorities:
135.24 	 (i) the actual tax for taxes payable in the current year; and
135.25 	 (ii) the proposed tax amount.
135.26 	 If the county levy under clause (2) includes an amount for a lake improvement 
135.27 	district as defined under sections 103B.501 to 103B.581, the amount attributable for that 
135.28 	purpose must be separately stated from the remaining county levy amount.
135.29 	 In the case of a town or the state general tax, the final tax shall also be its proposed 
135.30 	tax unless the town changes its levy at a special town meeting under section 365.52.  If a 
135.31 	school district has certified under section 126C.17, subdivision 9, that a referendum will 
135.32 	be held in the school district at the November general election, the county auditor must 
135.33 	note next to the school district's proposed amount that a referendum is pending and that, 
135.34 	if approved by the voters, the tax amount may be higher than shown on the notice.  In 
135.35 	the case of the city of Minneapolis, the levy for the Minneapolis Library Board and the 
135.36 	levy for Minneapolis Park and Recreation shall be listed separately from the remaining 
136.1 	amount of the city's levy.  In the case of the city of St. Paul, the levy for the St. Paul 
136.2 	Library Agency must be listed separately from the remaining amount of the city's levy. 
136.3 	In the case of Ramsey County, any amount levied under section 134.07 may be listed 
136.4 	separately from the remaining amount of the county's levy.In the case of a parcel where 
136.5 	tax increment or the fiscal disparities areawide tax under chapter 276A or 473F applies, 
136.6 	the proposed tax levy on the captured value or the proposed tax levy on the tax capacity 
136.7 	subject to the areawide tax must each be stated separately and not included in the sum of 
136.8 	the special taxing districts; and
136.9 	 (3) the increase or decrease between the total taxes payable in the current year and 
136.10 	the total proposed taxes, expressed as a percentage.
136.11 	 For purposes of this section, the amount of the tax on homesteads qualifying under 
136.12 	the senior citizens' property tax deferral program under chapter 290B is the total amount 
136.13 	of property tax before subtraction of the deferred property tax amount.
136.14 	 (e) The notice must clearly state that the proposed or final taxes do not include 
136.15 	the following:
136.16 	 (1) special assessments;
136.17 	 (2) levies approved by the voters after the date the proposed taxes are certified, 
136.18 	including bond referenda and school district levy referenda;
136.19 	 (3) a levy limit increase approved by the voters by the first Tuesday after the first 
136.20 	Monday in November of the levy year as provided under section 275.73;
136.21 	 (4) amounts necessary to pay cleanup or other costs due to a natural disaster 
136.22 	occurring after the date the proposed taxes are certified;
136.23 	 (5) amounts necessary to pay tort judgments against the taxing authority that become 
136.24 	final after the date the proposed taxes are certified; and
136.25 	 (6) the contamination tax imposed on properties which received market value 
136.26 	reductions for contamination.
136.27 	 (f) Except as provided in subdivision 7, failure of the county auditor to prepare or 
136.28 	the county treasurer to deliver the notice as required in this section does not invalidate the 
136.29 	proposed or final tax levy or the taxes payable pursuant to the tax levy.
136.30 	 (g) If the notice the taxpayer receives under this section lists the property as 
136.31 	nonhomestead, and satisfactory documentation is provided to the county assessor by the 
136.32 	applicable deadline, and the property qualifies for the homestead classification in that 
136.33 	assessment year, the assessor shall reclassify the property to homestead for taxes payable 
136.34 	in the following year.
136.35 	 (h) In the case of class 4 residential property used as a residence for lease or rental 
136.36 	periods of 30 days or more, the taxpayer must either:
137.1 	 (1) mail or deliver a copy of the notice of proposed property taxes to each tenant, 
137.2 	renter, or lessee; or
137.3 	 (2) post a copy of the notice in a conspicuous place on the premises of the property.
137.4 	 The notice must be mailed or posted by the taxpayer by November 27 or within 
137.5 	three days of receipt of the notice, whichever is later.  A taxpayer may notify the county 
137.6 	treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to 
137.7 	which the notice must be mailed in order to fulfill the requirements of this paragraph.
137.8 	 (i) For purposes of this subdivision, subdivisions 5a and 6, "metropolitan special 
137.9 	taxing districts" means the following taxing districts in the seven-county metropolitan area 
137.10 	that levy a property tax for any of the specified purposes listed below:
137.11 	 (1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325, 
137.12 	473.446, 473.521, 473.547, or 473.834;
137.13 	 (2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672; 
137.14 	and
137.15 	 (3) Metropolitan Mosquito Control Commission under section 473.711.
137.16 	 For purposes of this section, any levies made by the regional rail authorities in the 
137.17 	county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
137.18 	398A shall be included with the appropriate county's levy and shall be discussed at that 
137.19 	county's public hearing.

137.20 	EFFECTIVE DATE. This section is effective for notices for property taxes levied 
137.21 	in 2005, payable in 2006, and thereafter.

137.22 	 Sec. 47. Minnesota Statutes 2004, section 275.065, is amended by adding a subdivision 
137.23 	to read:
137.24 		 Subd. 9.Aitkin county and school district hearing. Notwithstanding any other 
137.25 	law, Aitkin County and Independent School District No. 1, and the city of Aitkin, or any 
137.26 	two of them, may hold their initial public hearing jointly. The hearing must be held on 
137.27 	the second Tuesday of December each year.  The advertisement required in subdivision 
137.28 	5a may be a joint advertisement.  The hearing is otherwise subject to the requirements 
137.29 	of this section.

137.30 	EFFECTIVE DATE. This section is effective for hearings conducted in 2005 
137.31 	and subsequent years.

137.32 	 Sec. 48. Minnesota Statutes 2004, section 275.065, is amended by adding a subdivision 
137.33 	to read:
138.1 		 Subd. 10.Nobles county; joint initial public hearing. Notwithstanding any other 
138.2 	law, Nobles County, the city of Worthington, and Independent School District No. 518, 
138.3 	Worthington, or any two of them, may hold their initial public hearing jointly.  The hearing 
138.4 	must be held on the second Tuesday of December each year.  The advertisement required 
138.5 	in subdivision 5a may be a joint advertisement.  The hearing is otherwise subject to the 
138.6 	requirements of this section.

138.7 	EFFECTIVE DATE. This section is effective for hearings conducted in 2005 
138.8 	and subsequent years.

138.9 	 Sec. 49. Minnesota Statutes 2004, section 275.066, is amended to read:
138.10 	 275.066 SPECIAL TAXING DISTRICTS; DEFINITION.
138.11 	 For the purposes of property taxation and property tax state aids, the term "special 
138.12 	taxing districts" includes the following entities:
138.13 	 (1) watershed districts under chapter 103D;
138.14 	 (2) sanitary districts under sections 115.18 to 115.37;
138.15 	 (3) regional sanitary sewer districts under sections 115.61 to 115.67;
138.16 	 (4) regional public library districts under section 134.201;
138.17 	 (5) park districts under chapter 398;
138.18 	 (6) regional railroad authorities under chapter 398A;
138.19 	 (7) hospital districts under sections 447.31 to 447.38;
138.20 	 (8) St. Cloud Metropolitan Transit Commission under sections 458A.01 to 458A.15;
138.21 	 (9) Duluth Transit Authority under sections 458A.21 to 458A.37;
138.22 	 (10) regional development commissions under sections 462.381 to 462.398;
138.23 	 (11) housing and redevelopment authorities under sections 469.001 to 469.047;
138.24 	 (12) port authorities under sections 469.048 to 469.068;
138.25 	 (13) economic development authorities under sections 469.090 to 469.1081;
138.26 	 (14) Metropolitan Council under sections 473.123 to 473.549;
138.27 	 (15) Metropolitan Airports Commission under sections 473.601 to 473.680;
138.28 	 (16) Metropolitan Mosquito Control Commission under sections 473.701 to 473.716;
138.29 	 (17) Morrison County Rural Development Financing Authority under Laws 1982, 
138.30 	chapter 437, section 1;
138.31 	 (18) Croft Historical Park District under Laws 1984, chapter 502, article 13, section 
138.32 	6;
138.33 	 (19) East Lake County Medical Clinic District under Laws 1989, chapter 211, 
138.34 	sections 1 to 6;
139.1 	 (20) Floodwood Area Ambulance District under Laws 1993, chapter 375, article 
139.2 	5, section 39;
139.3 	 (21) Middle Mississippi River Watershed Management Organization under sections 
139.4 	103B.211 and 103B.241;
139.5 	 (22) emergency medical services special taxing districts under section 144F.01;
139.6 	 (23) a county levying under the authority of section 103B.241, 103B.245, or 
139.7 	103B.251;
139.8 	 (24) Southern St. Louis County Special Taxing District; Chris Jensen Nursing Home 
139.9 	under Laws 2003, First Special Session chapter 21, article 4, section 12; and 
139.10 	 (25) soil and water conservation districts under chapter 103C; and 
139.11 	 (26) any other political subdivision of the state of Minnesota, excluding counties, 
139.12 	school districts, cities, and towns, that has the power to adopt and certify a property tax 
139.13 	levy to the county auditor, as determined by the commissioner of revenue.

139.14 	 Sec. 50. Minnesota Statutes 2004, section 275.70, subdivision 5, is amended to read:
139.15 		 Subd. 5.Special levies.  "Special levies" means those portions of ad valorem taxes 
139.16 	levied by a local governmental unit for the following purposes or in the following manner:
139.17 	 (1) to pay the costs of the principal and interest on bonded indebtedness or to 
139.18 	reimburse for the amount of liquor store revenues used to pay the principal and interest 
139.19 	due on municipal liquor store bonds in the year preceding the year for which the levy 
139.20 	limit is calculated;
139.21 	 (2) to pay the costs of principal and interest on certificates of indebtedness issued for 
139.22 	any corporate purpose except for the following:
139.23 	 (i) tax anticipation or aid anticipation certificates of indebtedness;
139.24 	 (ii) certificates of indebtedness issued under sections 298.28 and 298.282;
139.25 	 (iii) certificates of indebtedness used to fund current expenses or to pay the costs of 
139.26 	extraordinary expenditures that result from a public emergency; or
139.27 	 (iv) certificates of indebtedness used to fund an insufficiency in tax receipts or 
139.28 	an insufficiency in other revenue sources;
139.29 	 (3) to provide for the bonded indebtedness portion of payments made to another 
139.30 	political subdivision of the state of Minnesota;
139.31 	 (4) to fund payments made to the Minnesota State Armory Building Commission 
139.32 	under section 193.145, subdivision 2, to retire the principal and interest on armory 
139.33 	construction bonds;
139.34 	 (5) property taxes approved by voters which are levied against the referendum 
139.35 	market value as provided under section 275.61;
140.1 	 (6) to fund matching requirements needed to qualify for federal or state grants or 
140.2 	programs to the extent that either (i) the matching requirement exceeds the matching 
140.3 	requirement in calendar year 2001, or (ii) it is a new matching requirement that did not 
140.4 	exist prior to 2002;
140.5 	 (7) to pay the expenses reasonably and necessarily incurred in preparing for or 
140.6 	repairing the effects of natural disaster including the occurrence or threat of widespread 
140.7 	or severe damage, injury, or loss of life or property resulting from natural causes, in 
140.8 	accordance with standards formulated by the Emergency Services Division of the state 
140.9 	Department of Public Safety, as allowed by the commissioner of revenue under section 
140.10 	275.74, subdivision 2;
140.11 	 (8) pay amounts required to correct an error in the levy certified to the county 
140.12 	auditor by a city or county in a levy year, but only to the extent that when added to the 
140.13 	preceding year's levy it is not in excess of an applicable statutory, special law or charter 
140.14 	limitation, or the limitation imposed on the governmental subdivision by sections 275.70
140.15 	to 275.74 in the preceding levy year;
140.16 	 (9) to pay an abatement under section 469.1815;
140.17 	 (10) to pay any costs attributable to increases in the employer contribution rates 
140.18 	under chapter 353 that are effective after June 30, 2001;
140.19 	 (11) to pay the operating or maintenance costs of a county jail as authorized in 
140.20 	section 641.01 or 641.262, or of a correctional facility as defined in section 241.021, 
140.21 	subdivision 1, paragraph (f), to the extent that the county can demonstrate to the 
140.22 	commissioner of revenue that the amount has been included in the county budget as 
140.23 	a direct result of a rule, minimum requirement, minimum standard, or directive of the 
140.24 	Department of Corrections, or to pay the operating or maintenance costs of a regional jail 
140.25 	as authorized in section 641.262.  For purposes of this clause, a district court order is 
140.26 	not a rule, minimum requirement, minimum standard, or directive of the Department of 
140.27 	Corrections.  If the county utilizes this special levy, except to pay operating or maintenance 
140.28 	costs of a new regional jail facility under sections 641.262 to 641.264 which will not 
140.29 	replace an existing jail facility, any amount levied by the county in the previous levy year 
140.30 	for the purposes specified under this clause and included in the county's previous year's 
140.31 	levy limitation computed under section 275.71, shall be deducted from the levy limit 
140.32 	base under section 275.71, subdivision 2, when determining the county's current year 
140.33 	levy limitation.  The county shall provide the necessary information to the commissioner 
140.34 	of revenue for making this determination;
140.35 	 (12) to pay for operation of a lake improvement district, as authorized under section 
140.36 	103B.555.  If the county utilizes this special levy, any amount levied by the county in the 
141.1 	previous levy year for the purposes specified under this clause and included in the county's 
141.2 	previous year's levy limitation computed under section 275.71 shall be deducted from 
141.3 	the levy limit base under section 275.71, subdivision 2, when determining the county's 
141.4 	current year levy limitation.  The county shall provide the necessary information to the 
141.5 	commissioner of revenue for making this determination;
141.6 	 (13) to repay a state or federal loan used to fund the direct or indirect required 
141.7 	spending by the local government due to a state or federal transportation project or other 
141.8 	state or federal capital project.  This authority may only be used if the project is not a 
141.9 	local government initiative;
141.10 	 (14) to pay for court administration costs as required under section 273.1398, 
141.11 	subdivision 4b, less the (i) county's share of transferred fines and fees collected by the 
141.12 	district courts in the county for calendar year 2001 and (ii) the aid amount certified to be 
141.13 	paid to the county in 2004 under section 273.1398, subdivision 4c; however, for taxes 
141.14 	levied to pay for these costs in the year in which the court financing is transferred to the 
141.15 	state, the amount under this clause is limited to the amount of aid the county is certified to 
141.16 	receive under section 273.1398, subdivision 4a; and 
141.17 	 (15) to fund a police or firefighters relief association as required under section 69.77
141.18 	to the extent that the required amount exceeds the amount levied for this purpose in 
141.19 	2001; and 
141.20 	 (16) to pay for the maintenance and support of a city or county society for the 
141.21 	prevention of cruelty to animals under section 343.11.  If the city or county uses this 
141.22 	special levy, any amount levied by the city or county in the previous levy year for the 
141.23 	purposes specified in this clause and included in the city's or county's previous year's levy 
141.24 	limit computed under section 275.71, must be deducted from the levy limit base under 
141.25 	section 275.71, subdivision 2, in determining the city's or county's current year levy limit.

141.26 	EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
141.27 	in 2006, and thereafter.

141.28 	 Sec. 51. Minnesota Statutes 2004, section 276.04, subdivision 2, is amended to read:
141.29 		 Subd. 2.Contents of tax statements.  (a) The treasurer shall provide for the printing 
141.30 	of the tax statements.  The commissioner of revenue shall prescribe the form of the 
141.31 	property tax statement and its contents.  The statement must contain a tabulated statement 
141.32 	of the dollar amount due to each taxing authority and the amount of the state tax from the 
141.33 	parcel of real property for which a particular tax statement is prepared. The dollar amounts 
141.34 	attributable to the county, the state tax, the voter approved school tax, the other local 
141.35 	school tax, the township or municipality, and the total of the metropolitan special taxing 
142.1 	districts as defined in section 275.065, subdivision 3, paragraph (i), must be separately 
142.2 	stated.  The amounts due all other special taxing districts, if any, may be aggregated.  If the 
142.3 	county levy under this paragraph includes an amount for a lake improvement district as 
142.4 	defined under sections 103B.501 to 103B.581, the amount attributable for that purpose 
142.5 	must be separately stated from the remaining county levy amount. In the case of Ramsey 
142.6 	County, if the county levy under this paragraph includes an amount for public library 
142.7 	service under section 134.07, the amount attributable for that purpose may be separately 
142.8 	stated from the remaining county levy amount. The amount of the tax on homesteads 
142.9 	qualifying under the senior citizens' property tax deferral program under chapter 290B is 
142.10 	the total amount of property tax before subtraction of the deferred property tax amount.  
142.11 	The amount of the tax on contamination value imposed under sections 270.91 to 270.98, if 
142.12 	any, must also be separately stated.  The dollar amounts, including the dollar amount of any 
142.13 	special assessments, may be rounded to the nearest even whole dollar.  For purposes of this 
142.14 	section whole odd-numbered dollars may be adjusted to the next higher even-numbered 
142.15 	dollar.  The amount of market value excluded under section 273.11, subdivision 16, if any, 
142.16 	must also be listed on the tax statement.
142.17 	 (b) The property tax statements for manufactured homes and sectional structures 
142.18 	taxed as personal property shall contain the same information that is required on the 
142.19 	tax statements for real property.
142.20 	 (c) Real and personal property tax statements must contain the following information 
142.21 	in the order given in this paragraph. The information must contain the current year tax 
142.22 	information in the right column with the corresponding information for the previous year 
142.23 	in a column on the left:
142.24 	 (1) the property's estimated market value under section 273.11, subdivision 1;
142.25 	 (2) the property's taxable market value after reductions under section 273.11, 
142.26 	subdivisions 1a and 16;
142.27 	 (3) the property's gross tax, calculated by adding the property's total property tax to 
142.28 	the sum of the aids enumerated in clause (4);
142.29 	 (4) a total of the following aids:
142.30 	 (i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C, 
142.31 	and 127A;
142.32 	 (ii) local government aids for cities, towns, and counties under chapter 477A; and
142.33 	 (iii) disparity reduction aid under section 273.1398;
142.34 	 (5) for homestead residential and agricultural properties, the credits under section 
142.35 	273.1384;
143.1 	 (6) any credits received under sections 273.119; 273.123; 273.135; 273.1391; 
143.2 	273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received 
143.3 	under section 273.135 must be separately stated and identified as "taconite tax relief"; and
143.4 	 (7) the net tax payable in the manner required in paragraph (a).
143.5 	 (d) If the county uses envelopes for mailing property tax statements and if the county 
143.6 	agrees, a taxing district may include a notice with the property tax statement notifying 
143.7 	taxpayers when the taxing district will begin its budget deliberations for the current 
143.8 	year, and encouraging taxpayers to attend the hearings.  If the county allows notices to 
143.9 	be included in the envelope containing the property tax statement, and if more than 
143.10 	one taxing district relative to a given property decides to include a notice with the tax 
143.11 	statement, the county treasurer or auditor must coordinate the process and may combine 
143.12 	the information on a single announcement.
143.13 	 The commissioner of revenue shall certify to the county auditor the actual or 
143.14 	estimated aids enumerated in clause (4) that local governments will receive in the 
143.15 	following year.  The commissioner must certify this amount by January 1 of each year.

143.16 	EFFECTIVE DATE. This section is effective for property tax statements for taxes 
143.17 	payable in 2006 and thereafter.

143.18 	 Sec. 52. [278.021] PETITIONS INVOLVING LOW-INCOME RENTAL 
143.19 	HOUSING PROPERTY.
143.20 	 Notwithstanding section 278.02, in the case of real property that meets the definition 
143.21 	of qualifying low-income housing rental property established in Minnesota Statutes 2000, 
143.22 	section 273.126, the petition may include any and all such parcels of real property in 
143.23 	which the petitioner has an estate, right, title, interest, or lien, except that all such parcels 
143.24 	included in the petition must be located in the same county. Contiguous qualifying 
143.25 	low-income rental housing property overlapping county boundaries may be included in 
143.26 	the same petition.

143.27 	 Sec. 53. Minnesota Statutes 2004, section 278.03, subdivision 1, is amended to read:
143.28 		 Subdivision 1.Real property. In the case of real property,If the proceedings 
143.29 	instituted by the filing of the petition have not been completed before the 16th day of May 
143.30 	next following the filing or, in the case of class 1c property or class 4c resort property 
143.31 	before the 16th day of June for taxes payable in 2006 and 2007 only, the petitioner shall 
143.32 	pay to the county treasurer 50 percent of the tax levied for such year against the property 
143.33 	involved, unless permission to continue prosecution of the petition without such payment 
143.34 	is obtained as herein provided. If the proceedings instituted by the filing of the petition 
144.1 	have not been completed by the next October 16, or, in the case of class 1b agricultural 
144.2 	homestead, class 2a agricultural homestead, and class 2b(2) agricultural nonhomestead 
144.3 	property, November 16, the petitioner shall pay to the county treasurer 50 percent of the 
144.4 	unpaid balance of the taxes levied for the year against the property involved if the unpaid 
144.5 	balance is $2,000 or less and 80 percent of the unpaid balance if the unpaid balance is 
144.6 	over $2,000, unless permission to continue prosecution of the petition without payment is 
144.7 	obtained as herein provided.  The petitioner, upon ten days' notice to the county attorney 
144.8 	and to the county auditor, given at least ten days prior to the 16th day of May or, in the 
144.9 	case of class 1c or class 4c resort property, the 16th day of June for taxes payable in 
144.10 	2006 and 2007 only,or the 16th day of October, or, in the case of class 1b agricultural 
144.11 	homestead, class 2a agricultural homestead, and class 2b(2) agricultural nonhomestead 
144.12 	property, the 16th day of November, may apply to the court for permission to continue 
144.13 	prosecution of the petition without payment; and, if it is made to appear
144.14 	 (1) that the proposed review is to be taken in good faith;
144.15 	 (2) that there is probable cause to believe that the property may be held exempt 
144.16 	from the tax levied or that the tax may be determined to be less than 50 percent of the 
144.17 	amount levied; and
144.18 	 (3) that it would work a hardship upon petitioner to pay the taxes due,
144.19 	 the court may permit the petitioner to continue prosecution of the petition without 
144.20 	payment, or may fix a lesser amount to be paid as a condition of continuing the prosecution 
144.21 	of the petition.
144.22 	 Failure to make payment of the amount required when due shall operate 
144.23 	automatically to dismiss the petition and all proceedings thereunder unless the payment is 
144.24 	waived by an order of the court permitting the petitioner to continue prosecution of the 
144.25 	petition without payment.  The petition shall be automatically reinstated upon payment 
144.26 	of the entire tax plus interest and penalty if the payment is made within one year of the 
144.27 	dismissal.  The county treasurer shall, upon request of the petitioner, issue duplicate 
144.28 	receipts for the tax payment, one of which shall be filed by the petitioner in the proceeding.

144.29 	 Sec. 54. Minnesota Statutes 2004, section 279.01, subdivision 1, is amended to read:
144.30 		 Subdivision 1.Due dates; penalties.  Except as provided in subdivision 3 or 4 
144.31 	this section, on May 16 or 21 days after the postmark date on the envelope containing 
144.32 	the property tax statement, whichever is later, a penalty shall accrue and thereafter be 
144.33 	charged upon all unpaid taxes on real estate on the current lists in the hands of the county 
144.34 	treasurer.  The penalty shall be at a rate of two percent on homestead property until May 
144.35 	31 and four percent on June 1.  The penalty on nonhomestead property shall be at a rate 
145.1 	of four percent until May 31 and eight percent on June 1.  This penalty shall not accrue 
145.2 	until June 1 of each year, or 21 days after the postmark date on the envelope containing 
145.3 	the property tax statements, whichever is later, on commercial use real property used for 
145.4 	seasonal residential recreational purposes and classified as class 1c or 4c, and on other 
145.5 	commercial use real property classified as class 3a, provided that over 60 percent of the 
145.6 	gross income earned by the enterprise on the class 3a property is earned during the months 
145.7 	of May, June, July, and August.  Any property owner of such class 3a property who pays 
145.8 	the first half of the tax due on the property after May 15 and before June 1, or 21 days 
145.9 	after the postmark date on the envelope containing the property tax statement, whichever 
145.10 	is later, shall attach an affidavit to the payment attesting to compliance with the income 
145.11 	provision of this subdivision.  Thereafter, for both homestead and nonhomestead property, 
145.12 	on the first day of each month beginning July 1, up to and including October 1 following, 
145.13 	an additional penalty of one percent for each month shall accrue and be charged on all 
145.14 	such unpaid taxes provided that if the due date was extended beyond May 15 as the result 
145.15 	of any delay in mailing property tax statements no additional penalty shall accrue if the 
145.16 	tax is paid by the extended due date.  If the tax is not paid by the extended due date, then 
145.17 	all penalties that would have accrued if the due date had been May 15 shall be charged.  
145.18 	When the taxes against any tract or lot exceed $50, one-half thereof may be paid prior 
145.19 	to May 16 or 21 days after the postmark date on the envelope containing the property 
145.20 	tax statement, whichever is later; and, if so paid, no penalty shall attach; the remaining 
145.21 	one-half shall be paid at any time prior to October 16 following, without penalty; but, if 
145.22 	not so paid, then a penalty of two percent shall accrue thereon for homestead property and 
145.23 	a penalty of four percent on nonhomestead property.  Thereafter, for homestead property, 
145.24 	on the first day of November an additional penalty of four percent shall accrue and on the 
145.25 	first day of December following, an additional penalty of two percent shall accrue and 
145.26 	be charged on all such unpaid taxes.  Thereafter, for nonhomestead property, on the first 
145.27 	day of November and December following, an additional penalty of four percent for each 
145.28 	month shall accrue and be charged on all such unpaid taxes.  If one-half of such taxes shall 
145.29 	not be paid prior to May 16 or 21 days after the postmark date on the envelope containing 
145.30 	the property tax statement, whichever is later, the same may be paid at any time prior to 
145.31 	October 16, with accrued penalties to the date of payment added, and thereupon no penalty 
145.32 	shall attach to the remaining one-half until October 16 following.
145.33 	 This section applies to payment of personal property taxes assessed against 
145.34 	improvements to leased property, except as provided by section 277.01, subdivision 3.
146.1 	 A county may provide by resolution that in the case of a property owner that has 
146.2 	multiple tracts or parcels with aggregate taxes exceeding $50, payments may be made in 
146.3 	installments as provided in this subdivision.
146.4 	 The county treasurer may accept payments of more or less than the exact amount of 
146.5 	a tax installment due.  If the accepted payment is less than the amount due, payments must 
146.6 	be applied first to the penalty accrued for the year the payment is made. Acceptance of 
146.7 	partial payment of tax does not constitute a waiver of the minimum payment required as a 
146.8 	condition for filing an appeal under section 278.03 or any other law, nor does it affect the 
146.9 	order of payment of delinquent taxes under section 280.39.

146.10 	 Sec. 55. Minnesota Statutes 2004, section 279.01, is amended by adding a subdivision 
146.11 	to read:
146.12 		 Subd. 5.Seasonal residential recreational property used for commercial 
146.13 	purposes. For taxes payable in 2006 and 2007 only, in the case of class 1c property and 
146.14 	class 4c seasonal residential recreational property used for commercial purposes, no 
146.15 	penalties shall accrue to the first one-half property tax payment as provided in this section 
146.16 	if paid by June 15.  On June 16, a penalty shall accrue and thereafter be charged upon all 
146.17 	unpaid taxes.  On class 1c property the penalty is at a rate of two percent until June 31, 
146.18 	and four percent on July 1.  On class 4c seasonal residential recreational property used for 
146.19 	commercial purposes, the penalty is four percent until June 31 and eight percent on July 1. 
146.20 	Thereafter, for both class 1c and class 4c seasonal residential recreational property used 
146.21 	for commercial purposes, on the first day of September and on the first day of October, 
146.22 	an additional penalty of one percent shall accrue and be charged on unpaid taxes.  The 
146.23 	remaining one-half property taxes must be paid and penalties accrue as provided in 
146.24 	subdivision 1.

146.25 	 Sec. 56. [290.0621] SCHOOL REFERENDUM TAX.
146.26 		 Subdivision 1.Imposition. In addition to all other taxes imposed by this chapter, a 
146.27 	tax is imposed on individuals who are domiciled on the last day of the taxable year within 
146.28 	the territory of a school district in which the voters approved an income tax increase at a 
146.29 	referendum conducted under section 126C.17, subdivision 9, for that purpose in 2006 or 
146.30 	a subsequent year.  This tax does not apply to referendums on bond issues. Individuals 
146.31 	domiciled in the district on the last day of the taxable year are subject to the tax.
146.32 		 Subd. 2.Rate. The commissioner of revenue shall annually determine the rate of 
146.33 	the tax imposed under this section as a percentage of the state income tax liability of 
146.34 	individuals subject to the tax by each district.  The school referendum tax rate is equal to 
147.1 	the ratio of (i) the district's local effort revenue under section 126C.17, subdivision 6b, 
147.2 	to (ii) the state income tax liability of all individuals domiciled in the district on the last 
147.3 	day of the previous taxable year.
147.4 		 Subd. 3.Revenue distribution. Revenue raised in subdivision 1 must be placed 
147.5 	in a special account in the general fund.  The amount necessary to make payments to 
147.6 	school districts under this section is annually appropriated from the general fund to the 
147.7 	commissioner of education and must be paid to school districts according to section 
147.8 	127A.45.

147.9 	 Sec. 57. Minnesota Statutes 2004, section 343.11, is amended to read:
147.10 	 343.11 ACQUISITION OF PROPERTY, APPROPRIATIONS.
147.11 	 Every county and district society for the prevention of cruelty to animals may 
147.12 	acquire, by purchase, gift, grant, or devise, and hold, use, or convey, real estate and 
147.13 	personal property, and lease, mortgage, sell, or use the same in any manner conducive to 
147.14 	its interest, to the same extent as natural persons.  The county board of any county, or the 
147.15 	council of any city, in which such societies exist, may, in its discretion, appropriate for 
147.16 	the maintenance and support of such societies in the transaction of the work for which 
147.17 	they are organized, any sums of money not otherwise appropriated, not to exceed in any 
147.18 	one year the sum of $4,800 or the sum of 50 cents $1 per capita based upon the county's 
147.19 	or city's population as of the most recent federal census, whichever is greater; provided, 
147.20 	that no part of the appropriation shall be expended for the payment of the salary of any 
147.21 	officer of the society.

147.22 	 EFFECTIVE DATE. This section is effective January 1, 2006.

147.23 	 Sec. 58. [462A.0715] SECTION 8, TAX CREDIT, AND RURAL HOUSING 
147.24 	SERVICE UNITS.
147.25 	 (a) The agency may deem units as meeting the requirements of section 273.126 and 
147.26 	this section, if the units meet the requirements provided in section 273.1321, subdivision 1.
147.27 	 (b) The agency may certify these deemed units under subdivision 1 based on a 
147.28 	simplified application procedure that verifies the unit's qualifications under paragraph (a).

147.29 	 Sec. 59. Minnesota Statutes 2004, section 473F.08, is amended by adding a subdivision 
147.30 	to read:
147.31 		 Subd. 3c.Uncompensated care reimbursement. (a) As used in this subdivision, 
147.32 	the following terms have the meanings given in this paragraph.
148.1 	 (1) "Uncompensated care" means the sum of (i) the amount that would have been 
148.2 	charged by a facility for rendering free or discounted care to persons who cannot afford to 
148.3 	pay and for which the facility did not expect payment and (ii) the amount that had been 
148.4 	charged by a facility for rendering care to persons and billed to that person or a third-party 
148.5 	payer for which the facility expected but did not receive payment. Uncompensated care 
148.6 	does not include contractual write-offs.
148.7 	 (2) A "qualifying hospital" means a hospital in the area that is:
148.8 	 (i) owned or operated by a local unit of government, or formerly owned by a 
148.9 	university or is a private nonprofit hospital that leases its building from the county in 
148.10 	which it is located; and 
148.11 	 (ii) has a licensed bed capacity greater than 400.
148.12 	 (b) A county that contains a qualifying hospital is eligible for reimbursement of that 
148.13 	portion of gross charges for uncompensated care determined by multiplying the hospital's 
148.14 	gross charges during the base year by the percentage of uncompensated care provided by 
148.15 	the hospital during the base year minus one-half of one percent of those gross charges, 
148.16 	dividing the result by two, and adjusting to cost by multiplying that result by the hospital's 
148.17 	cost-to-charge ratio during the base year.  By July 15, 2006, and each subsequent year, 
148.18 	the county shall notify its county auditor, as well as the administrative auditor, of the 
148.19 	amount of qualifying uncompensated care provided, adjusted to cost using the hospital's 
148.20 	cost-to-charge ratio, during the 12-month period ending on June 30 of the current year.
148.21 	 (c) The amount certified under paragraph (b) shall be certified annually by the 
148.22 	county auditor to the administrative auditor as an addition to the county's areawide levy 
148.23 	under subdivision 5.
148.24 	 (d) The administrative auditor shall pay one-half of the reimbursement to the county 
148.25 	auditor of the county that contains the qualifying hospital on or before June 15 and the 
148.26 	remaining one-half of the reimbursement on or before November 15.  The county auditor 
148.27 	receiving the payment shall disburse the reimbursement to the qualifying hospital within 
148.28 	15 days of receipt of the reimbursement.
148.29 	 (e) Prior to the reporting specified in paragraph (b) above, all qualifying hospitals 
148.30 	that participate in this program shall agree upon and implement a common standard for 
148.31 	reporting uncompensated care, and a common standard for determining eligibility for 
148.32 	uncompensated care for all participating hospitals.

148.33 	EFFECTIVE DATE. This section is effective for fiscal disparities contribution and 
148.34 	distribution tax capacities for taxes payable in 2007 and 2008 only.

149.1 	 Sec. 60. Minnesota Statutes 2004, section 473F.08, is amended by adding a subdivision 
149.2 	to read:
149.3 		 Subd. 3d.Hennepin county public defender cost reimbursement. (a) Hennepin 
149.4 	County is eligible for reimbursement of costs incurred by the county under section 611.26, 
149.5 	subdivision 3a, paragraph (c).  By July 15, 2006, and each subsequent year, the county 
149.6 	shall notify the county auditor and the administrative auditor, of the amount of that cost 
149.7 	incurred by the county during the 12-month period ending on June 30 of the current year.
149.8 	 (b) The reimbursement under this subdivision for costs incurred during the 12-month 
149.9 	period ending June 30, 2006, is equal to 25 percent of those costs.  The reimbursement 
149.10 	under this subdivision for costs incurred during the 12-month period ending June 30, 
149.11 	2007, is equal to 50 percent of those costs.
149.12 	 (c) The amount certified under paragraph (b) shall be certified annually by the 
149.13 	Hennepin County auditor to the administrative auditor as an addition to the county's 
149.14 	areawide levy under subdivision 5.
149.15 	 (d) The administrative auditor shall pay one-half of the reimbursement to the 
149.16 	Hennepin County auditor on or before June 15 and the remaining one-half of the 
149.17 	reimbursement on or before November 15.

149.18 	EFFECTIVE DATE. This section is effective for fiscal disparities contribution and 
149.19 	distribution tax capacities for taxes payable in 2007 and 2008 only.

149.20 	 Sec. 61. Minnesota Statutes 2004, section 477A.011, subdivision 36, is amended to 
149.21 	read:
149.22 		 Subd. 36.City aid base.  (a) Except as otherwise provided in this subdivision, 
149.23 	"city aid base" is zero.
149.24 	 (b) The city aid base for any city with a population less than 500 is increased by 
149.25 	$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount 
149.26 	of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
149.27 	increased by $40,000 for aids payable in calendar year 1995 only, provided that:
149.28 	 (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
149.29 	 (ii) the city portion of the tax capacity rate exceeds 100 percent; and
149.30 	 (iii) its city aid base is less than $60 per capita.
149.31 	 (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and 
149.32 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
149.33 	paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
149.34 	 (i) the city has a population in 1994 of 2,500 or more;
150.1 	 (ii) the city is located in a county, outside of the metropolitan area, which contains a 
150.2 	city of the first class;
150.3 	 (iii) the city's net tax capacity used in calculating its 1996 aid under section 
150.4 	477A.013 is less than $400 per capita; and
150.5 	 (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of 
150.6 	property located in the city is classified as railroad property.
150.7 	 (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and 
150.8 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
150.9 	paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
150.10 	 (i) the city was incorporated as a statutory city after December 1, 1993;
150.11 	 (ii) its city aid base does not exceed $5,600; and
150.12 	 (iii) the city had a population in 1996 of 5,000 or more.
150.13 	 (e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the 
150.14 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
150.15 	paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
150.16 	 (i) the city had a population in 1996 of at least 50,000;
150.17 	 (ii) its population had increased by at least 40 percent in the ten-year period ending 
150.18 	in 1996; and
150.19 	 (iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
150.20 	 (f) Beginning in 2004, the city aid base for a city is equal to the sum of its city aid 
150.21 	base in 2003 and the amount of additional aid it was certified to receive under section 
150.22 	477A.06 in 2003.  For 2004 only, the maximum amount of total aid a city may receive 
150.23 	under section 477A.013, subdivision 9, paragraph (c), is also increased by the amount it 
150.24 	was certified to receive under section 477A.06 in 2003.
150.25 	 (g) The city aid base for a city is increased by $150,000 for aids payable in 2000 and 
150.26 	thereafter, and the maximum amount of total aid it may receive under section 477A.013, 
150.27 	subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only, 
150.28 	provided that:
150.29 	 (1) the city has a population that is greater than 1,000 and less than 2,500;
150.30 	 (2) its commercial and industrial percentage for aids payable in 1999 is greater 
150.31 	than 45 percent; and
150.32 	 (3) the total market value of all commercial and industrial property in the city 
150.33 	for assessment year 1999 is at least 15 percent less than the total market value of all 
150.34 	commercial and industrial property in the city for assessment year 1998.
151.1 	 (h) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and 
151.2 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
151.3 	paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
151.4 	 (1) the city had a population in 1997 of 2,500 or more;
151.5 	 (2) the net tax capacity of the city used in calculating its 1999 aid under section 
151.6 	477A.013 is less than $650 per capita;
151.7 	 (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under 
151.8 	section 477A.013 is greater than 12 percent;
151.9 	 (4) the 1999 local government aid of the city under section 477A.013 is less than 
151.10 	20 percent of the amount that the formula aid of the city would have been if the need 
151.11 	increase percentage was 100 percent; and
151.12 	 (5) the city aid base of the city used in calculating aid under section 477A.013
151.13 	is less than $7 per capita.
151.14 	 (i) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and 
151.15 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
151.16 	paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
151.17 	 (1) the city has a population in 1997 of 2,000 or more;
151.18 	 (2) the net tax capacity of the city used in calculating its 1999 aid under section 
151.19 	477A.013 is less than $455 per capita;
151.20 	 (3) the net levy of the city used in calculating 1999 aid under section 477A.013 is 
151.21 	greater than $195 per capita; and
151.22 	 (4) the 1999 local government aid of the city under section 477A.013 is less than 
151.23 	38 percent of the amount that the formula aid of the city would have been if the need 
151.24 	increase percentage was 100 percent.
151.25 	 (j) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and 
151.26 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
151.27 	paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
151.28 	 (1) the city has a population in 1998 that is greater than 200 but less than 500;
151.29 	 (2) the city's revenue need used in calculating aids payable in 2000 was greater 
151.30 	than $200 per capita;
151.31 	 (3) the city net tax capacity for the city used in calculating aids available in 2000 
151.32 	was equal to or less than $200 per capita;
151.33 	 (4) the city aid base of the city used in calculating aid under section 477A.013
151.34 	is less than $65 per capita; and
151.35 	 (5) the city's formula aid for aids payable in 2000 was greater than zero.
152.1 	 (k) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and 
152.2 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
152.3 	paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
152.4 	 (1) the city had a population in 1998 that is greater than 200 but less than 500;
152.5 	 (2) the city's commercial industrial percentage used in calculating aids payable in 
152.6 	2000 was less than ten percent;
152.7 	 (3) more than 25 percent of the city's population was 60 years old or older according 
152.8 	to the 1990 census;
152.9 	 (4) the city aid base of the city used in calculating aid under section 477A.013
152.10 	is less than $15 per capita; and
152.11 	 (5) the city's formula aid for aids payable in 2000 was greater than zero.
152.12 	 (l) The city aid base for a city is increased by $45,000 in 2001 and thereafter and 
152.13 	by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of 
152.14 	total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
152.15 	increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002 
152.16 	only, provided that:
152.17 	 (1) the net tax capacity of the city used in calculating its 2000 aid under section 
152.18 	477A.013 is less than $810 per capita;
152.19 	 (2) the population of the city declined more than two percent between 1988 and 1998;
152.20 	 (3) the net levy of the city used in calculating 2000 aid under section 477A.013 is 
152.21 	greater than $240 per capita; and
152.22 	 (4) the city received less than $36 per capita in aid under section 477A.013, 
152.23 	subdivision 9, for aids payable in 2000.
152.24 	 The city aid base for a city described in this paragraph is also increased by $250,000 
152.25 	in calendar years 2006 to 2015, and the maximum amount of total aid it may receive 
152.26 	under section 477A.013, subdivision 9, paragraph (c), is also increased by $250,000 in 
152.27 	calendar year 2006 only.
152.28 	 (m) The city aid base for a city with a population of 10,000 or more which is located 
152.29 	outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the 
152.30 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
152.31 	paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to 
152.32 	the lesser of:
152.33 	 (1)(i) the total population of the city, as determined by the United States Bureau of 
152.34 	the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
152.35 	 (2) $2,500,000.
153.1 	 (n) The city aid base is increased by $50,000 in 2002 and thereafter, and the 
153.2 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
153.3 	paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
153.4 	 (1) the city is located in the seven-county metropolitan area;
153.5 	 (2) its population in 2000 is between 10,000 and 20,000; and
153.6 	 (3) its commercial industrial percentage, as calculated for city aid payable in 2001, 
153.7 	was greater than 25 percent.
153.8 	 (o) The city aid base for a city is increased by $150,000 in calendar years 2002 
153.9 	to 2011 and the maximum amount of total aid it may receive under section 477A.013, 
153.10 	subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2002 only, 
153.11 	provided that:
153.12 	 (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
153.13 	 (2) its home county is located within the seven-county metropolitan area;
153.14 	 (3) its pre-1940 housing percentage is less than 15 percent; and
153.15 	 (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 
153.16 	per capita.
153.17 	 (p) The city aid base for a city is increased by $200,000 beginning in calendar 
153.18 	year 2003 and the maximum amount of total aid it may receive under section 477A.013, 
153.19 	subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only, 
153.20 	provided that the city qualified for an increase in homestead and agricultural credit aid 
153.21 	under Laws 1995, chapter 264, article 8, section 18.
153.22 	 (q) The city aid base for a city is increased by $200,000 in 2004 only and the 
153.23 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, is 
153.24 	also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear 
153.25 	dry cask storage facility.
153.26 	 (r) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the 
153.27 	maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 
153.28 	by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster 
153.29 	designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by 
153.30 	more than 40 percent between 1990 and 2000.

153.31 	 Sec. 62. Minnesota Statutes 2004, section 477A.11, subdivision 4, is amended to read:
153.32 		 Subd. 4.Other natural resources land.  "Other natural resources land" means:
153.33 	 (1) any other land presently owned in fee title by the state and administered by the 
153.34 	commissioner, or any tax-forfeited land, other than platted lots within a city or those lands 
154.1 	described under subdivision 3, clause (2), which is owned by the state and administered by 
154.2 	the commissioner or by the county in which it is located; and 
154.3 	 (2) land leased by the state from the United States of America through the United 
154.4 	States Secretary of Agriculture pursuant to Title III of the Bankhead Jones Farm 
154.5 	Tenant Act, which land is commonly referred to as land utilization project land that is 
154.6 	administered by the commissioner.

154.7 	EFFECTIVE DATE. This section is effective for aids payable in 2006 and 
154.8 	thereafter.

154.9 	 Sec. 63. Minnesota Statutes 2004, section 477A.11, is amended by adding a 
154.10 	subdivision to read:
154.11 		 Subd. 5.Land utilization project land. "Land utilization project land" means land 
154.12 	that is leased by the state from the United States through the United States Secretary of 
154.13 	Agriculture according to Title III of the Bankhead Jones Farm Tenant Act and that is 
154.14 	administered by the commissioner.

154.15 	 Sec. 64. Minnesota Statutes 2004, section 477A.12, subdivision 1, is amended to read:
154.16 		 Subdivision 1.Types of land; payments.  (a) As an offset for expenses incurred 
154.17 	by counties and towns in support of natural resources lands, the following amounts are 
154.18 	annually appropriated to the commissioner of natural resources from the general fund for 
154.19 	transfer to the commissioner of revenue.  The commissioner of revenue shall pay the 
154.20 	transferred funds to counties as required by sections 477A.11 to 477A.145.  The amounts 
154.21 	are:
154.22 	 (1) for acquired natural resources land, $3, as adjusted for inflation under section 
154.23 	477A.145, multiplied by the total number of acres of acquired natural resources land or, 
154.24 	at the county's option three-fourths of one percent of the appraised value of all acquired 
154.25 	natural resources land in the county, whichever is greater;
154.26 	 (2) $3, as adjusted for inflation under section 477A.145, multiplied by the total 
154.27 	number of acres of land utilization project land;
154.28 	 (3) 75 cents, as adjusted for inflation under section 477A.145, multiplied by the 
154.29 	number of acres of county-administered other natural resources land; and
154.30 	 (3) (4) 37.5 cents, as adjusted for inflation under section 477A.145, multiplied by 
154.31 	the number of acres of commissioner-administered other natural resources land located in 
154.32 	each county as of July 1 of each year prior to the payment year.
154.33 	 (b) The amount determined under paragraph (a), clause (1), is payable for land 
154.34 	that is acquired from a private owner and owned by the Department of Transportation 
155.1 	for the purpose of replacing wetland losses caused by transportation projects, but only 
155.2 	if the county contains more than 500 acres of such land at the time the certification is 
155.3 	made under subdivision 2.

155.4 	EFFECTIVE DATE. This section is effective for aids payable in 2006 and 
155.5 	thereafter.

155.6 	 Sec. 65. Minnesota Statutes 2004, section 477A.12, subdivision 2, is amended to read:
155.7 		 Subd. 2.Procedure.  Lands for which payments in lieu are made pursuant to 
155.8 	section 97A.061, subdivision 3, and Laws 1973, chapter 567, shall not be eligible for 
155.9 	payments under this section.  Each county auditor shall certify to the Department of 
155.10 	Natural Resources during July of each year prior to the payment year the number of acres 
155.11 	of county-administered other natural resources land within the county.  The Department of 
155.12 	Natural resources may, in addition to the certification of acreage, require descriptive lists 
155.13 	of land so certified.  The commissioner of natural resources shall determine and certify to 
155.14 	the commissioner of revenue by March 1 of the payment year:
155.15 	 (1) the number of acres and most recent appraised value of acquired natural 
155.16 	resources land within each county;
155.17 	 (2) the number of acres of commissioner-administered natural resources land within 
155.18 	each county; and 
155.19 	 (3) the number of acres of county-administered other natural resources land within 
155.20 	each county, based on the reports filed by each county auditor with the commissioner 
155.21 	of natural resources; and 
155.22 	 (4) the number of acres of land utilization project land within each county and the 
155.23 	net proceeds from timber sales on land utilization project lands in each county.
155.24 	 The commissioner of transportation shall determine and certify to the commissioner 
155.25 	of revenue by March 1 of the payment year the number of acres of land and the appraised 
155.26 	value of the land described in subdivision 1, paragraph (b), but only if it exceeds 500 acres.
155.27 	 The commissioner of revenue shall determine the distributions provided for in this 
155.28 	section using the number of acres and appraised values certified by the commissioner of 
155.29 	natural resources and the commissioner of transportation by March 1 of the payment year.

155.30 	EFFECTIVE DATE. This section is effective for aids payable in 2006 and 
155.31 	thereafter.

155.32 	 Sec. 66. Minnesota Statutes 2004, section 477A.14, subdivision 1, is amended to read:
156.1 		 Subdivision 1.General distribution.  Except as provided in subdivision 2 or in 
156.2 	section 97A.061, subdivision 5, 40 percent of the total payment to the county shall be 
156.3 	deposited in the county general revenue fund to be used to provide property tax levy 
156.4 	reduction.  The remainder shall be distributed by the county in the following priority:
156.5 	 (a) 37.5 cents, as adjusted for inflation under section 477A.145, for each acre 
156.6 	of county-administered other natural resources land shall be deposited in a resource 
156.7 	development fund to be created within the county treasury for use in resource 
156.8 	development, forest management, game and fish habitat improvement, and recreational 
156.9 	development and maintenance of county-administered other natural resources land.  Any 
156.10 	county receiving less than $5,000 annually for the resource development fund may elect to 
156.11 	deposit that amount in the county general revenue fund;
156.12 	 (b) From the funds remaining, within 30 days of receipt of the payment to the county, 
156.13 	the county treasurer shall pay each organized township 30 cents, as adjusted for inflation 
156.14 	under section 477A.145, for each acre of acquired natural resources land, each acre of land 
156.15 	utilization project land,and each acre of land described in section 477A.12, subdivision 1, 
156.16 	paragraph (b), and 7.5 cents, as adjusted for inflation under section 477A.145, for each 
156.17 	acre of other natural resources land located within its boundaries.  Payments for natural 
156.18 	resources lands not located in an organized township shall be deposited in the county 
156.19 	general revenue fund.  Payments to counties and townships pursuant to this paragraph shall 
156.20 	be used to provide property tax levy reduction, except that of the payments for natural 
156.21 	resources lands not located in an organized township, the county may allocate the amount 
156.22 	determined to be necessary for maintenance of roads in unorganized townships.  Provided 
156.23 	that, if the total payment to the county pursuant to section 477A.12 is not sufficient to fully 
156.24 	fund the distribution provided for in this clause, the amount available shall be distributed 
156.25 	to each township and the county general revenue fund on a pro rata basis; and
156.26 	 (c) Any remaining funds shall be deposited in the county general revenue fund.  
156.27 	Provided that, if the distribution to the county general revenue fund exceeds $35,000, the 
156.28 	excess shall be used to provide property tax levy reduction.

156.29 	EFFECTIVE DATE. This section is effective for aids payable in 2006 and 
156.30 	thereafter.

156.31 	 Sec. 67. Laws 1998, chapter 389, article 3, section 41, is amended to read:
156.32 	 Sec. 41SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.
 156.33 	 Notwithstanding Minnesota Statutes, chapter 429, a city may defer the payment of 
156.34 	any special assessment levied against a property qualifying under section 38 as determined 
156.35 	by the city. Any special assessment, the payment of which has been deferred by the city, 
157.1 	must be paid in full or a payment agreement may be approved by the city if the ownership 
157.2 	of property is transferred to anyone or any entity.  Payment or a payment agreement must 
157.3 	be made within 60 days of the transfer of ownership.

157.4 	 EFFECTIVE DATE. This section is effective the day following final enactment.

157.5 	 Sec. 68. Laws 1998, chapter 389, article 3, section 42, subdivision 2, as amended by 
157.6 	Laws 2002, chapter 377, article 4, section 24, is amended to read:
157.7 		 Subd. 2.Recapture. (a) Property or any portion thereof qualifying under section 38 
157.8 	is subject to additional taxes if:
157.9 	 (1) ownership of the property is transferred to anyone other than the spouse or 
157.10 	child of the current owner;
157.11 	 (2) the current owner or the spouse or child of the current owner has not conveyed or 
157.12 	entered into a contract before July 1, 2007, to convey for ownership or public easement 
157.13 	rights, (i) a portion of the property to a one or more nonprofit foundation  foundations or 
157.14 	corporation operating corporations; and (ii) a portion of the property to one or more local 
157.15 	governments; and those entities shall separately or jointly operate the property as an art 
157.16 	park providing the services included in section 38, clauses (2) to (5), and may also use 
157.17 	some of the property for other public purposes as determined by the local governments; or
157.18 	 (3) the nonprofit foundation or corporation to which a portion of the property was 
157.19 	transferred ceases to provide the services included in section 38, clauses (2) to (5), earlier 
157.20 	than ten years following the effective date of the conveyance  conveyances or of the 
157.21 	execution of the contract contracts to convey.
157.22 	 (b) The additional taxes are imposed at the earlier of (1) the year following transfer 
157.23 	of ownership to anyone other than the spouse or child of the current owner or a nonprofit 
157.24 	foundation or corporation or local government operating the property as an art park and 
157.25 	used for other public purposes, or (2) for taxes payable in 2008, or (3) in the event the 
157.26 	nonprofit foundation or corporation to which a portion of the property was conveyed 
157.27 	ceases to provide the required services within ten years after the conveyance, for taxes 
157.28 	payable in the year following the year when it ceased to do so.
157.29 	 The county board, with the approval of the city council, shall determine the amount 
157.30 	of the additional taxes due on the portion of property which is no longer utilized as an art 
157.31 	park; provided, however, that the additional taxes are equal to must not be greater than 
157.32 	the difference between the taxes determined on that portion of the property utilized as an 
157.33 	art park under sections 39 and 40 and the amount determined under subdivision 1 for all 
157.34 	years that the property qualified under section 38. The additional taxes must be extended 
157.35 	against the property on the tax list for the current year; provided, however, that No interest 
158.1 	or penalties may be levied on the additional taxes if timely paid amount provided that it is 
158.2 	paid within 30 days of the county's notice.

158.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

158.4 	 Sec. 69. Laws 2001, First Special Session chapter 5, article 3, section 8, the effective 
158.5 	date, is amended to read:

158.6 	 EFFECTIVE DATE. This section is effective for taxes levied in 2002, payable in 
158.7 	2003, through taxes levied in 2007  2009, payable in 2008 2010.

158.8 	 Sec. 70. Laws 2003, chapter 127, article 12, section 38, is amended to read:

158.9 	 Sec. 38. MEMBERS MUST AUTHORITY TO LEVY TAXES FOR 
158.10 	AUTHORITY.
 158.11 	 (a) A member shall, at the request of the authority, levy a tax in any year for the 
158.12 	benefit of the authority.The authority is a special taxing district as defined in Minnesota 
158.13 	Statutes, section 275.066, clause (13), with the power to adopt and certify a property 
158.14 	tax levy to the county auditor.  The authority may levy a tax in any year for the benefit 
158.15 	of the authority.The tax is,for each member,is a pro rata portion of the total amount of 
158.16 	tax requested by the authority based on the taxable market value within a the member's 
158.17 	jurisdiction, but in no event may the tax in any year exceed 0.01813 percent of taxable 
158.18 	market value.  For purposes of this section, "taxable market value" has the meaning as 
158.19 	given in Minnesota Statutes, section 273.032.
158.20 	 (b) The treasurer of each member city or town shall, within 15 days after receiving 
158.21 	the property tax settlements from the county treasurer, pay to the treasurer of the authority 
158.22 	the amount collected for this purpose.  The money must be used by the authority for the 
158.23 	purposes provided by sections 35 to 41.

158.24 	 EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
158.25 	in 2006, and thereafter.

158.26 	 Sec. 71. Laws 2003, First Special Session chapter 21, article 4, section 12, subdivision 
158.27 	11, is amended to read:
158.28 		 Subd. 11.Effective date; local approval. This section is effective the day after the 
158.29 	governing body of St. Louis county and its chief clerical officer timely complete their 
158.30 	compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3, provided that 
158.31 	the certificate of approval is filed with the secretary of state before January 1, 2006.
159.1 	 If effective before September 1, 2003, the first levy is the payable 2004 levy; If 
159.2 	effective between September 1, 2003, and September 1, 2004, the first levy is the payable 
159.3 	2005 levy; If effective after August 31, 2004,before September 1, 2005, the first levy is 
159.4 	the payable 2006 levy; and if effective after August 31, 2005, the first levy is the payable 
159.5 	2007 levy.

159.6 	 Sec. 72. PROPERTY USED FOR EDUCATIONAL INSTRUCTION.
 159.7 	 Notwithstanding Minnesota Statutes, section 272.02, subdivision 38, paragraph 
159.8 	(b), the following property is exempt from taxation for assessment year 2004, for taxes 
159.9 	payable in 2005, if it meets all the following criteria:
159.10 	 (1) is used to provide direct educational instruction for grades 7 through 10;
159.11 	 (2) is located in a city of the first class that has a population greater than 250,000 and 
159.12 	less than 350,000;
159.13 	 (3) was purchased after July 1, 2004, by a nonprofit that is exempt from federal 
159.14 	income tax under section 501(c)(3) of the Internal Revenue Code; and 
159.15 	 (4) is leased and operated by two nonprofit corporations organized under Minnesota 
159.16 	Statutes, chapter 317A.

159.17 	 EFFECTIVE DATE. This section is effective the day following final enactment.

159.18 	 Sec. 73. EDUCATION RESERVE ACCOUNT; APPROPRIATION.
 159.19 	 (a) There is created in the state treasury an education reserve account as a special 
159.20 	revenue fund for deposit of appropriations and other receipts as provided by law.
159.21 	 (b) $24,961,000 is appropriated from the general fund to the education reserve 
159.22 	account in fiscal year 2006.  Beginning with taxes payable in 2008, the commissioner of 
159.23 	finance shall deposit in the education reserve account the increased amount of the state 
159.24 	general levy for that year over the state general levy base amount for taxes payable in 
159.25 	2002, under Minnesota Statutes, section 275.025.
159.26 	 (c) Each year, one-half of the annual amount will be deposited in the education 
159.27 	reserve account in the state fiscal year corresponding to the first six months of the calendar 
159.28 	year, and the other half will be deposited in the state fiscal year corresponding to the 
159.29 	last six months of the calendar year.  The amounts in the education reserve account do 
159.30 	not lapse or cancel each year, but remain until appropriated by law for E-12 education or 
159.31 	higher education funding.

159.32 	 Sec. 74. STUDY OF POLLUTION CONTROL EXEMPTION.
 160.1 	 The commissioner of revenue must study the application of the property tax 
160.2 	exemption provided under Minnesota Statutes, section 272.02, subdivision 10, to 
160.3 	personal property used for pollution control as part of an electric generation system.  The 
160.4 	commissioner must present a recommendation to the legislature by January 15, 2006, that 
160.5 	would limit the exemption to property that is directly and exclusively used for pollution 
160.6 	control purposes.

160.7 	 Sec. 75. SAUK RIVER WATERSHED DISTRICT.
 160.8 	 Notwithstanding Minnesota Statutes, section 103D.905, subdivision 3, the Sauk 
160.9 	River Watershed District may annually levy up to 0.01 percent of taxable market value for 
160.10 	its administrative fund.

160.11 	 EFFECTIVE DATE. This section is effective, without local approval, for taxes 
160.12 	levied in 2005, payable in 2006, and thereafter.

160.13 	 Sec. 76. COMMERCIAL-INDUSTRIAL LAND VALUE TAXATION; LOCAL 
160.14 	OPTION.
 160.15 	 The governing body of any municipality that has a population in excess of 70,000, 
160.16 	or any municipality located in the taconite tax relief area defined in Minnesota Statutes, 
160.17 	section 273.134, may by resolution adopt a system of valuing commercial-industrial 
160.18 	property in its jurisdiction that is based on the value of the land, not including 
160.19 	improvements.  The governing body may make the election under this section if it finds 
160.20 	that implementation of the land value system will enhance economic development in 
160.21 	the city.  An election under this section must be made by December 31, 2005.  If any 
160.22 	municipality makes the election, it must notify the commissioner of revenue of the election 
160.23 	and the legislature must enact during the 2006 legislative session the legislation necessary 
160.24 	to implement the system for taxes levied in 2006, payable in 2007, and thereafter.

160.25 	 Sec. 77. STUDY REQUIRED.
 160.26 	 By February 1, 2006, the fiscal staff of the house of representatives and senate shall 
160.27 	conduct a study of the metropolitan revenue distribution program contained in Minnesota 
160.28 	Statutes, chapter 473F, commonly known as the fiscal disparities program, and shall make 
160.29 	a report by March 1, 2006, to the chairs of the house and senate tax committees consisting 
160.30 	of the findings of the study and any recommendations resulting from the study.
160.31 	 The study shall primarily address the question of whether the program is achieving 
160.32 	the purposes for which it was created. Additionally, the study shall address the following 
160.33 	questions:
161.1 	 (1) How has the program affected property tax disparities across the Twin Cities 
161.2 	metropolitan area? 
161.3 	 (2) Is the formula for contributing tax base to the areawide pool reasonable?  Should 
161.4 	certain commercial-industrial tax base continue to be exempt from contribution to the 
161.5 	areawide pool, such as tax base in existence prior to 1979, tax base in tax increment 
161.6 	financing districts established before 1979, and tax base located at the Minneapolis-St. 
161.7 	Paul International Airport?  Should contribution amounts be adjusted for differences in 
161.8 	sales ratios between communities? 
161.9 	 (3) Is the formula for distributing tax base from the areawide pool reasonable? 
161.10 	Should the formula reflect measures of need in addition to population?  Should the 
161.11 	distribution formula be based on tax capacity rather than market value? 
161.12 	 (4) Does the program help promote orderly growth and encourage environmentally 
161.13 	sound land use? 
161.14 	 (5) Does the program reduce competition for commercial-industrial tax base between 
161.15 	communities?  Is reduced competition for commercial-industrial tax base desirable? 
161.16 	 (6) Do local governments derive sufficient tax revenues from commercial-industrial 
161.17 	property to cover the costs of providing services to the property, considering the tax base 
161.18 	that must be contributed to the areawide pool? 
161.19 	 (7) Could improvements be made in the administration of the program? 

161.20 	 EFFECTIVE DATE. This section is effective July 1, 2005.

161.21 	 Sec. 78. FEE STUDIES.
 161.22 		 Subdivision 1.State agency fees. The commissioner of each state agency that 
161.23 	imposes any fee on individuals or businesses in this state must report to the commissioner 
161.24 	of revenue by January 15, 2006, on the type and amount of fees imposed, amount and type 
161.25 	of fee increases since January 1, 2003, the revenues derived from each fee for each of the 
161.26 	most recent four fiscal years, and the use of the revenues from the fees. The commissioner 
161.27 	of revenue shall compile this information and provide a comprehensive report on all state 
161.28 	agency fees to the finance and tax committees of the senate and the appropriations and tax 
161.29 	committees of the house of representatives by February 15, 2006.
161.30 		 Subd. 2.School fees. By January 15, 2006, the Department of Education shall 
161.31 	provide the house and senate education finance divisions and tax committees with a report 
161.32 	that examines the total annual fees collected under Minnesota Public School Fee Law, 
161.33 	Minnesota Statutes, sections 123B.34 to 123B.39, in fiscal years 2002 to 2005.  The report 
161.34 	must detail all different types of fees charged to Minnesota students under the law.  The 
161.35 	report must report total fees statewide as well as by school district and charter school.
162.1 		 Subd. 3.City fees. Each home rule charter or statutory city must report to the 
162.2 	commissioner of revenue by January 15, 2006, on the type and amount of fees it imposes, 
162.3 	amount and type of fee increases since January 1, 2003, the revenues derived from each fee 
162.4 	for each of the most recent four calendar years, and the use of the revenues from the fees. 
162.5 	The commissioner of revenue shall compile this information and provide a comprehensive 
162.6 	report on all city fees to the finance and tax committees of the senate and the appropriations 
162.7 	and tax committees of the house of representatives by February 15, 2006.

162.8 	 ARTICLE 5
162.9 	 LOCAL DEVELOPMENT

162.10 	 Section 1. Minnesota Statutes 2004, section 116J.993, subdivision 3, is amended to 
162.11 	read:
162.12 		 Subd. 3.Business subsidy.  "Business subsidy" or "subsidy" means a state or local 
162.13 	government agency grant, contribution of personal property, real property, infrastructure, 
162.14 	the principal amount of a loan at rates below those commercially available to the recipient, 
162.15 	any reduction or deferral of any tax or any fee, any guarantee of any payment under any 
162.16 	loan, lease, or other obligation, or any preferential use of government facilities given 
162.17 	to a business.
162.18 	 The following forms of financial assistance are not a business subsidy:
162.19 	 (1) a business subsidy of less than $25,000;
162.20 	 (2) assistance that is generally available to all businesses or to a general class of 
162.21 	similar businesses, such as a line of business, size, location, or similar general criteria;
162.22 	 (3) public improvements to buildings or lands owned by the state or local 
162.23 	government that serve a public purpose and do not principally benefit a single business or 
162.24 	defined group of businesses at the time the improvements are made;
162.25 	 (4) redevelopment property polluted by contaminants as defined in section 116J.552, 
162.26 	subdivision 3;
162.27 	 (5) assistance provided for the sole purpose of renovating old or decaying building 
162.28 	stock or bringing it up to code and assistance provided for designated historic preservation 
162.29 	districts, provided that the assistance is equal to or less than 50 percent of the total cost;
162.30 	 (6) assistance to provide job readiness and training services if the sole purpose of 
162.31 	the assistance is to provide those services, except when such assistance is paid for by 
162.32 	expenditures of tax increments under section 469.176, subdivision 4m;
162.33 	 (7) assistance for housing;
163.1 	 (8) assistance for pollution control or abatement, including assistance for a tax 
163.2 	increment financing hazardous substance subdistrict as defined under section 469.174, 
163.3 	subdivision 23;
163.4 	 (9) assistance for energy conservation;
163.5 	 (10) tax reductions resulting from conformity with federal tax law;
163.6 	 (11) workers' compensation and unemployment insurance;
163.7 	 (12) benefits derived from regulation;
163.8 	 (13) indirect benefits derived from assistance to educational institutions;
163.9 	 (14) funds from bonds allocated under chapter 474A, bonds issued to refund 
163.10 	outstanding bonds, and bonds issued for the benefit of an organization described in section 
163.11 	501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1999;
163.12 	 (15) assistance for a collaboration between a Minnesota higher education institution 
163.13 	and a business;
163.14 	 (16) assistance for a tax increment financing soils condition district as defined under 
163.15 	section 469.174, subdivision 19;
163.16 	 (17) redevelopment when the recipient's investment in the purchase of the site 
163.17 	and in site preparation is 70 percent or more of the assessor's current year's estimated 
163.18 	market value;
163.19 	 (18) general changes in tax increment financing law and other general tax law 
163.20 	changes of a principally technical nature;
163.21 	 (19) federal assistance until the assistance has been repaid to, and reinvested by, the 
163.22 	state or local government agency;
163.23 	 (20) funds from dock and wharf bonds issued by a seaway port authority;
163.24 	 (21) business loans and loan guarantees of $75,000 or less; and
163.25 	 (22) federal loan funds provided through the United States Department of 
163.26 	Commerce, Economic Development Administration.

163.27 	 Sec. 2. Minnesota Statutes 2004, section 116J.993, is amended by adding a subdivision 
163.28 	to read:
163.29 		 Subd. 8.Residence. "Residence" means the place where an individual has 
163.30 	established a permanent home from which the individual has no present intention of 
163.31 	moving.

163.32 	 Sec. 3. Minnesota Statutes 2004, section 116J.994, subdivision 4, is amended to read:
163.33 		 Subd. 4.Wage and job goals.  The subsidy agreement, in addition to any other 
163.34 	goals, must include:  (1) goals for the number of jobs created, which may include separate 
164.1 	goals for the number of part-time or full-time jobs, or, in cases where job loss is specific 
164.2 	and demonstrable, goals for the number of jobs retained; (2) wage goals for any jobs 
164.3 	created or retained; and (3) wage goals for any jobs to be enhanced through increased 
164.4 	wages.  After a public hearing, if the creation or retention of jobs is determined not to be 
164.5 	a goal, the wage and job goals may be set at zero. The goals for the number of jobs to 
164.6 	be created or retained must result in job creation or retention by the recipient within 
164.7 	the granting jurisdiction overall.
164.8 	 In addition to other specific goal time frames, the wage and job goals must contain 
164.9 	specific goals to be attained within two years of the benefit date.

164.10 	EFFECTIVE DATE. This section is effective August 1, 2005, and applies to 
164.11 	subsidy agreements entered into on or after that date.

164.12 	 Sec. 4. Minnesota Statutes 2004, section 116J.994, subdivision 5, is amended to read:
164.13 		 Subd. 5.Public notice and hearing.  (a) Before granting a business subsidy that 
164.14 	exceeds $500,000 for a state government grantor and $100,000 for a local government 
164.15 	grantor, the grantor must provide public notice and a hearing on the subsidy.  A public 
164.16 	hearing and notice under this subdivision is not required if a hearing and notice on the 
164.17 	subsidy is otherwise required by law.
164.18 	 (b) Public notice of a proposed business subsidy under this subdivision by a state 
164.19 	government grantor, other than the Iron Range Resources and Rehabilitation Board, must 
164.20 	be published in the State Register.  Public notice of a proposed business subsidy under this 
164.21 	subdivision by a local government grantor or the Iron Range Resources and Rehabilitation 
164.22 	Board must be published in a local newspaper of general circulation.  The public notice 
164.23 	must identify the location at which information about the business subsidy, including a 
164.24 	summary of the terms of the subsidy, is available.  Published notice should be sufficiently 
164.25 	conspicuous in size and placement to distinguish the notice from the surrounding text.  
164.26 	The grantor must make the information available in printed paper copies and, if possible, 
164.27 	on the Internet.  The government agency must provide at least a ten-day notice for the 
164.28 	public hearing.
164.29 	 (c) The public notice must include the date, time, and place of the hearing.
164.30 	 (d) The public hearing by a state government grantor other than the Iron Range 
164.31 	Resources and Rehabilitation Board must be held in St. Paul.
164.32 	 (e) If more than one nonstate grantor provides a business subsidy to the same 
164.33 	recipient, the nonstate grantors may designate one nonstate grantor to hold a single 
164.34 	public hearing regarding the business subsidies provided by all nonstate grantors.  For 
165.1 	the purposes of this paragraph, "nonstate grantor" includes the iron range resources and 
165.2 	rehabilitation board.
165.3 	 (f) The public notice of any public meeting about a business subsidy agreement, 
165.4 	including those required by this subdivision and by subdivision 4, must include notice that 
165.5 	a person with residence in or the owner of taxable property in the granting jurisdiction 
165.6 	may file a written complaint with the grantor if the grantor fails to comply with sections 
165.7 	116J.993 to 116J.995, and that no action may be filed against the grantor for such failure 
165.8 	to comply unless a written complaint is filed.

165.9 	 Sec. 5. Minnesota Statutes 2004, section 116J.994, subdivision 9, is amended to read:
165.10 		 Subd. 9.Compilation and summary report.  The Department of Employment 
165.11 	and Economic Development must publish a compilation and summary of the results 
165.12 	of the reports for the previous two calendar years by December 1 of 2004 and every 
165.13 	other year thereafter.  The reports of the government agencies to the department and the 
165.14 	compilation and summary report of the department must be made available to the public. 
165.15 	The commissioner must make copies of all business subsidy reports submitted by local 
165.16 	and state granting agencies available on the department's Web site by October 1 of the 
165.17 	year in which they were submitted.
165.18 	 The commissioner must coordinate the production of reports so that useful 
165.19 	comparisons across time periods and across grantors can be made.  The commissioner may 
165.20 	add other information to the report as the commissioner deems necessary to evaluate 
165.21 	business subsidies.  Among the information in the summary and compilation report, the 
165.22 	commissioner must include:
165.23 	 (1) total amount of subsidies awarded in each development region of the state;
165.24 	 (2) distribution of business subsidy amounts by size of the business subsidy;
165.25 	 (3) distribution of business subsidy amounts by time category;
165.26 	 (4) distribution of subsidies by type and by public purpose;
165.27 	 (5) percent of all business subsidies that reached their goals;
165.28 	 (6) percent of business subsidies that did not reach their goals by two years from 
165.29 	the benefit date;
165.30 	 (7) total dollar amount of business subsidies that did not meet their goals after 
165.31 	two years from the benefit date;
165.32 	 (8) percent of subsidies that did not meet their goals and that did not receive 
165.33 	repayment;
165.34 	 (9) list of recipients that have failed to meet the terms of a subsidy agreement in the 
165.35 	past five years and have not satisfied their repayment obligations;
166.1 	 (10) number of part-time and full-time jobs within separate bands of wages; and
166.2 	 (11) benefits paid within separate bands of wages.

166.3 	 Sec. 6. Minnesota Statutes 2004, section 116J.994, is amended by adding a subdivision 
166.4 	to read:
166.5 		 Subd. 11.Enforcement. (a) A person with residence in or an owner of taxable 
166.6 	property located in the jurisdiction of the grantor may bring an action for equitable relief 
166.7 	arising out of the failure of the grantor to comply with sections 116J.993 to 116J.995. 
166.8 	The court may award a prevailing party in an action under this subdivision costs and 
166.9 	reasonable attorney fees.
166.10 	 (b) Prior to bringing an action, the party must file a written complaint with the 
166.11 	grantor stating the alleged violation and proposing a remedy.  The grantor has up to 30 
166.12 	days to reply to the complaint in writing and may take action to comply with sections 
166.13 	116J.993 to 116J.995.
166.14 	 (c) The written complaint under this subdivision for failure to comply with 
166.15 	subdivisions 1 to 5, must be filed with the grantor within 180 days after approval of the 
166.16 	subsidy agreement under subdivision 3, paragraph (d).  An action under this subdivision 
166.17 	must be commenced within 30 days following receipt of the grantor's reply, or within 
166.18 	180 days after approval of the subsidy agreement under subdivision 3, paragraph (d), 
166.19 	whichever is later.

166.20 	EFFECTIVE DATE. This section is effective August 1, 2005, and applies to 
166.21 	subsidy agreements entered into on or after that date.

166.22 	 Sec. 7. Minnesota Statutes 2004, section 161.1231, is amended by adding a subdivision 
166.23 	to read:
166.24 		 Subd. 11.Transfer of ownership. The commissioner shall, at the earliest feasible 
166.25 	date after receiving payment, transfer ownership of the parking facilities to the city 
166.26 	of Minneapolis. The payment must be equal to the amount of state funds spent by 
166.27 	the commissioner for construction of the facilities.  Upon assuming ownership of the 
166.28 	facilities, the city shall operate the facilities in accordance with the rules adopted by 
166.29 	the commissioner under subdivision 2.  Upon assumption of ownership, the city shall 
166.30 	assume the authority to collect fees for use of the facilities under subdivision 5.  The 
166.31 	commissioner shall take no action under this section that would result in federal sanctions 
166.32 	against Minnesota or require the repayment of any state funds to the federal government. 
166.33 	The commissioner shall deposit all money received under this subdivision in the trunk 
166.34 	highway fund.

167.1 	EFFECTIVE DATE. This section is effective the day after the governing body of 
167.2 	the city of Minneapolis and its chief clerical officer comply with Minnesota Statutes, 
167.3 	section 645.021, subdivisions 2 and 3.

167.4 	 Sec. 8. Minnesota Statutes 2004, section 272.0212, subdivision 1, is amended to read:
167.5 		 Subdivision 1.Exemption.  All qualified property in a zone is exempt to the extent 
167.6 	and for a period up to the duration provided by the zone designation and under sections 
167.7 	469.1731 to 469.1735.

167.8 	EFFECTIVE DATE. This section is effective for development agreements 
167.9 	approved after the day following final enactment and beginning for property taxes payable 
167.10 	in 2006.

167.11 	 Sec. 9. Minnesota Statutes 2004, section 272.0212, subdivision 2, is amended to read:
167.12 		 Subd. 2.Limits on exemption. (a) Property in a zone is not exempt under this 
167.13 	section from the following:
167.14 	 (1) special assessments;
167.15 	 (2) ad valorem property taxes specifically levied for the payment of principal and 
167.16 	interest on debt obligations; and
167.17 	 (3) all taxes levied by a school district, except school referendum levies as defined 
167.18 	in section 126C.17.
167.19 	 (b) The city may limit the property tax exemption to a shorter period than the 
167.20 	duration of the zone or to a percentage of the property taxes payable or both.

167.21 	EFFECTIVE DATE. This section is effective for development agreements 
167.22 	approved after the day following final enactment and beginning for property taxes payable 
167.23 	in 2006.

167.24 	 Sec. 10. Minnesota Statutes 2004, section 469.034, subdivision 2, is amended to read:
167.25 		 Subd. 2.General obligation revenue bonds.  (a) An authority may pledge the 
167.26 	general obligation of the general jurisdiction governmental unit as additional security for 
167.27 	bonds payable from income or revenues of the project or the authority.  The authority 
167.28 	must find that the pledged revenues will equal or exceed 110 percent of the principal and 
167.29 	interest due on the bonds for each year.  The proceeds of the bonds must be used for a 
167.30 	qualified housing development project or projects.  The obligations must be issued and 
167.31 	sold in the manner and following the procedures provided by chapter 475, except the 
167.32 	obligations are not subject to approval by the electors and the maturities may extend to not 
168.1 	more than 30 years from the estimated date of completion of the project.  The authority is 
168.2 	the municipality for purposes of chapter 475.
168.3 	 (b) The principal amount of the issue must be approved by the governing body of 
168.4 	the general jurisdiction governmental unit whose general obligation is pledged.  Public 
168.5 	hearings must be held on issuance of the obligations by both the authority and the general 
168.6 	jurisdiction governmental unit.  The hearings must be held at least 15 days, but not more 
168.7 	than 120 days, before the sale of the obligations.
168.8 	 (c) The maximum amount of general obligation bonds that may be issued and 
168.9 	outstanding under this section equals the greater of (1) one-half of one percent of 
168.10 	the taxable market value of the general jurisdiction governmental unit whose general 
168.11 	obligation which includes a tax on property is pledged, or (2) $3,000,000.  In the case 
168.12 	of county or multicounty general obligation bonds, the outstanding general obligation 
168.13 	bonds of all cities in the county or counties issued under this subdivision must be added 
168.14 	in calculating the limit under clause (1).
168.15 	 (d) "General jurisdiction governmental unit" means the city in which the housing 
168.16 	development project is located.  In the case of a county or multicounty authority, the 
168.17 	county or counties may act as the general jurisdiction governmental unit. In the case of 
168.18 	a multicounty authority, the pledge of the general obligation is a pledge of a tax on the 
168.19 	taxable property in each of the counties.
168.20 	 (e) "Qualified housing development project" means a housing development project 
168.21 	providing housing either for the elderly or for individuals and families with incomes not 
168.22 	greater than 80 percent of the median family income as estimated by the United States 
168.23 	Department of Housing and Urban Development for the standard metropolitan statistical 
168.24 	area or the nonmetropolitan county in which the project is located, and will .  The project 
168.25 	must be owned for the term of the bonds either by the authority for the term of the bonds 
168.26 	or by a limited partnership or other entity in which the authority or another entity under the 
168.27 	sole control of the authority is the sole general partner.  The partnership or other entity must 
168.28 	receive either:  (1) an allocation from the Department of Finance or an entitlement issuer 
168.29 	of tax-exempt bonding authority for the project and a preliminary determination by the 
168.30 	Minnesota Housing Finance Agency or the applicable suballocator of tax credits that the 
168.31 	project will qualify for four percent low-income housing tax credits; or (2) a reservation of 
168.32 	nine percent low-income housing tax credits from the Minnesota Housing Finance Agency 
168.33 	or a suballocator of tax credits for the project.  A qualified housing development project 
168.34 	may admit nonelderly individuals and families with higher incomes if:
168.35 	 (1) three years have passed since initial occupancy;
169.1 	 (2) the authority finds the project is experiencing unanticipated vacancies resulting in 
169.2 	insufficient revenues, because of changes in population or other unforeseen circumstances 
169.3 	that occurred after the initial finding of adequate revenues; and
169.4 	 (3) the authority finds a tax levy or payment from general assets of the general 
169.5 	jurisdiction governmental unit will be necessary to pay debt service on the bonds if higher 
169.6 	income individuals or families are not admitted.

169.7 	EFFECTIVE DATE. This section is effective for bonds issued after the day 
169.8 	following final enactment.

169.9 	 Sec. 11. Minnesota Statutes 2004, section 469.169, is amended by adding a subdivision 
169.10 	to read:
169.11 		 Subd. 17.Additional border city allocations. (a) In addition to tax reductions 
169.12 	authorized in subdivisions 7 to 16, the commissioner shall allocate $750,000 for tax 
169.13 	reductions to border city enterprise zones in cities located on the western border of the 
169.14 	state.  The commissioner shall make allocations to zones in cities on the western border on 
169.15 	a per capita basis. Allocations made under this subdivision may be used for tax reductions 
169.16 	as provided in section 469.171, or for other offsets of taxes imposed on or remitted by 
169.17 	businesses located in the enterprise zone, but only if the municipality determines that the 
169.18 	granting of the tax reduction or offset is necessary in order to retain a business within or 
169.19 	attract a business to the zone.  Any portion of the allocation provided in this paragraph 
169.20 	may alternatively be used for tax reductions under section 469.1732 or 469.1734.
169.21 	 (b) The commissioner shall allocate $750,000 for tax reductions under section 
169.22 	469.1732 or 469.1734 to cities with border city enterprise zones located on the western 
169.23 	border of the state.  The commissioner shall allocate this amount among the cities on a per 
169.24 	capita basis.  Any portion of the allocation provided in this paragraph may alternatively 
169.25 	be used for tax reductions as provided in section 469.171.

169.26 	EFFECTIVE DATE. This section is effective the day following final enactment.

169.27 	 Sec. 12. Minnesota Statutes 2004, section 469.174, is amended by adding a subdivision 
169.28 	to read:
169.29 		 Subd. 30.Urban renewal area. "Urban renewal area" means a contiguous 
169.30 	geographic area designated within a project and within which all parcels must be eligible 
169.31 	for inclusion in a redevelopment, renewal and renovation, or soils condition district or 
169.32 	are currently located within a redevelopment, renewal and renovation, or soils condition 
169.33 	district certified within ten years before or after the date of approval of the urban renewal 
170.1 	area by the city or county, whichever is later. In determining eligibility for inclusion in a 
170.2 	district, each parcel may only be considered as a part of one district.

170.3 	EFFECTIVE DATE. This section is effective for urban renewal areas established 
170.4 	on or after the date of final enactment.

170.5 	 Sec. 13. Minnesota Statutes 2004, section 469.175, subdivision 1, is amended to read:
170.6 		 Subdivision 1.Tax increment financing plan.  A tax increment financing plan 
170.7 	shall contain:
170.8 	 (1) a statement of objectives of an authority for the improvement of a project;
170.9 	 (2) a statement as to the development program for the project, including the property 
170.10 	within the project, if any, that the authority intends to acquire;
170.11 	 (3) a list of any development activities that the plan proposes to take place within 
170.12 	the project, for which contracts have been entered into at the time of the preparation of 
170.13 	the plan, including the names of the parties to the contract, the activity governed by the 
170.14 	contract, the cost stated in the contract, and the expected date of completion of that activity;
170.15 	 (4) identification or description of the type of any other specific development 
170.16 	reasonably expected to take place within the project, and the date when the development is 
170.17 	likely to occur;
170.18 	 (5) estimates of the following:
170.19 	 (i) cost of the project, including administrative expenses, except that if part of the 
170.20 	cost of the project is paid or financed with increment from the tax increment financing 
170.21 	district, the tax increment financing plan for the district must contain an estimate of the 
170.22 	amount of the cost of the project, including administrative expenses, that will be paid or 
170.23 	financed with tax increments from the district;
170.24 	 (ii) amount of bonded indebtedness to be incurred;
170.25 	 (iii) sources of revenue to finance or otherwise pay public costs;
170.26 	 (iv) the most recent net tax capacity of taxable real property within the tax increment 
170.27 	financing district and within any subdistrict;
170.28 	 (v) the estimated captured net tax capacity of the tax increment financing district 
170.29 	at completion; and
170.30 	 (vi) the duration of the tax increment financing district's and any subdistrict's 
170.31 	existence;
170.32 	 (6) statements of the authority's alternate estimates of the impact of tax increment 
170.33 	financing on the net tax capacities of all taxing jurisdictions in which the tax increment 
170.34 	financing district is located in whole or in part.  For purposes of one statement, the 
170.35 	authority shall assume that the estimated captured net tax capacity would be available to 
171.1 	the taxing jurisdictions without creation of the district, and for purposes of the second 
171.2 	statement, the authority shall assume that none of the estimated captured net tax capacity 
171.3 	would be available to the taxing jurisdictions without creation of the district or subdistrict;
171.4 	 (7) identification and description of studies and analyses used to make the 
171.5 	determination set forth in subdivision 3, clause (2); and 
171.6 	 (8) identification of all parcels to be included in the district or any subdistrict; and 
171.7 	 (9) identification of any job training costs intended to be paid by use of tax 
171.8 	increments, including the name of the employer whose employees will be trained and the 
171.9 	nature and cost of the training.  The plan is not required to identify the provider of the job 
171.10 	training.

171.11 	EFFECTIVE DATE. This section applies to districts for which the request for 
171.12 	certification was made after July 31, 1979, and is effective for tax increment financing 
171.13 	plans approved after June 30, 2005.

171.14 	 Sec. 14. Minnesota Statutes 2004, section 469.175, subdivision 4, is amended to read:
171.15 		 Subd. 4.Modification of plan.  (a) A tax increment financing plan may be modified 
171.16 	by an authority.
171.17 	 (b) The authority may make the following modifications only upon the notice and 
171.18 	after the discussion, public hearing, and findings required for approval of the original plan:
171.19 	 (1) any reduction or enlargement of geographic area of the project or tax increment 
171.20 	financing district that does not meet the requirements of paragraph (e);
171.21 	 (2) increase in amount of bonded indebtedness to be incurred;
171.22 	 (3) a determination to capitalize interest on the debt if that determination was not a 
171.23 	part of the original plan, or to increase or decrease the amount of interest on the debt to 
171.24 	be capitalized;
171.25 	 (4) increase in the portion of the captured net tax capacity to be retained by the 
171.26 	authority;
171.27 	 (5) increase in the estimate of the cost of the project, including administrative 
171.28 	expenses, that will be paid or financed with tax increment from the district; or 
171.29 	 (6) designation of additional property to be acquired by the authority; or 
171.30 	 (7) a decision to pay for job training for employees of a business located in the 
171.31 	district that was not a part of the original plan.
171.32 	 (c) If an authority changes the type of district to another type of district, this change 
171.33 	is not a modification but requires the authority to follow the procedure set forth in sections 
171.34 	469.174 to 469.179 for adoption of a new plan, including certification of the net tax 
171.35 	capacity of the district by the county auditor.
172.1 	 (d) If a redevelopment district or a renewal and renovation district is enlarged, 
172.2 	the reasons and supporting facts for the determination that the addition to the district 
172.3 	meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), 
172.4 	or subdivision 10a, must be documented.
172.5 	 (e) The requirements of paragraph (b) do not apply if (1) the only modification is 
172.6 	elimination of parcels from the project or district and (2)(A) the current net tax capacity 
172.7 	of the parcels eliminated from the district equals or exceeds the net tax capacity of 
172.8 	those parcels in the district's original net tax capacity or (B) the authority agrees that, 
172.9 	notwithstanding section 469.177, subdivision 1, the original net tax capacity will be 
172.10 	reduced by no more than the current net tax capacity of the parcels eliminated from the 
172.11 	district.  The authority must notify the county auditor of any modification that reduces or 
172.12 	enlarges the geographic area of a district or a project area.
172.13 	 (f) The geographic area of a tax increment financing district may be reduced, but 
172.14 	shall not be enlarged after five years following the date of certification of the original net 
172.15 	tax capacity by the county auditor or after August 1, 1984, for tax increment financing 
172.16 	districts authorized prior to August 1, 1979.

172.17 	EFFECTIVE DATE. This section is effective for districts for which the request 
172.18 	for certification was made after July 31, 1979, and is effective for modifications made 
172.19 	after June 30, 2005.

172.20 	 Sec. 15. Minnesota Statutes 2004, section 469.175, subdivision 6, is amended to read:
172.21 		 Subd. 6.Annual financial reporting.  (a) The state auditor shall develop a uniform 
172.22 	system of accounting and financial reporting for tax increment financing districts.  The 
172.23 	system of accounting and financial reporting shall, as nearly as possible:
172.24 	 (1) provide for full disclosure of the sources and uses of public funds in the district;
172.25 	 (2) permit comparison and reconciliation with the affected local government's 
172.26 	accounts and financial reports;
172.27 	 (3) permit auditing of the funds expended on behalf of a district, including a single 
172.28 	district that is part of a multidistrict project or that is funded in part or whole through 
172.29 	the use of a development account funded with tax increments from other districts or 
172.30 	with other public money;
172.31 	 (4) be consistent with generally accepted accounting principles.
172.32 	 (b) The authority must annually submit to the state auditor a financial report 
172.33 	in compliance with paragraph (a).  Copies of the report must also be provided to the 
172.34 	county auditor and to the governing body of the municipality, if the authority is not 
172.35 	the municipality.  To the extent necessary to permit compliance with the requirement 
173.1 	of financial reporting, the county and any other appropriate local government unit or 
173.2 	private entity must provide the necessary records or information to the authority or the 
173.3 	state auditor as provided by the system of accounting and financial reporting developed 
173.4 	pursuant to paragraph (a).  The authority must submit the annual report for a year on or 
173.5 	before August 1 of the next year.
173.6 	 (c) The annual financial report must also include the following items:
173.7 	 (1) the original net tax capacity of the district and any subdistrict under section 
173.8 	469.177, subdivision 1;
173.9 	 (2) the net tax capacity for the reporting period of the district and any subdistrict;
173.10 	 (3) the captured net tax capacity of the district;
173.11 	 (4) any fiscal disparity deduction from the captured net tax capacity under section 
173.12 	469.177, subdivision 3;
173.13 	 (5) the captured net tax capacity retained for tax increment financing under section 
173.14 	469.177, subdivision 2, paragraph (a), clause (1);
173.15 	 (6) any captured net tax capacity distributed among affected taxing districts under 
173.16 	section 469.177, subdivision 2, paragraph (a), clause (2);
173.17 	 (7) the type of district;
173.18 	 (8) the date the municipality approved the tax increment financing plan and the 
173.19 	date of approval of any modification of the tax increment financing plan, the approval of 
173.20 	which requires notice, discussion, a public hearing, and findings under subdivision 4, 
173.21 	paragraph (a);
173.22 	 (9) the date the authority first requested certification of the original net tax capacity 
173.23 	of the district and the date of the request for certification regarding any parcel added 
173.24 	to the district;
173.25 	 (10) the date the county auditor first certified the original net tax capacity of the 
173.26 	district and the date of certification of the original net tax capacity of any parcel added 
173.27 	to the district;
173.28 	 (11) the month and year in which the authority has received or anticipates it will 
173.29 	receive the first increment from the district;
173.30 	 (12) the date the district must be decertified;
173.31 	 (13) for the reporting period and prior years of the district, the actual amount 
173.32 	received from, at least, the following categories:
173.33 	 (i) tax increments paid by the captured net tax capacity retained for tax increment 
173.34 	financing under section 469.177, subdivision 2, paragraph (a), clause (1), but excluding 
173.35 	any excess taxes;
174.1 	 (ii) tax increments that are interest or other investment earnings on or from tax 
174.2 	increments;
174.3 	 (iii) tax increments that are proceeds from the sale or lease of property, tangible or 
174.4 	intangible, purchased by the authority with tax increments;
174.5 	 (iv) tax increments that are repayments of loans or other advances made by the 
174.6 	authority with tax increments;
174.7 	 (v) bond or loan proceeds;
174.8 	 (vi) special assessments;
174.9 	 (vii) grants; and
174.10 	 (viii) transfers from funds not exclusively associated with the district;
174.11 	 (14) for the reporting period and for the prior years of the district, the actual amount 
174.12 	expended for, at least, the following categories:
174.13 	 (i) acquisition of land and buildings through condemnation or purchase;
174.14 	 (ii)  site improvements or preparation costs;
174.15 	 (iii) installation of public utilities, parking facilities, streets, roads, sidewalks, or 
174.16 	other similar public improvements;
174.17 	 (iv) administrative costs, including the allocated cost of the authority;
174.18 	 (v) public park facilities, facilities for social, recreational, or conference purposes, or 
174.19 	other similar public improvements; and 
174.20 	 (vi) transfers to funds not exclusively associated with the district; and 
174.21 	 (vii) job training as permitted under section 469.176, subdivision 4m;
174.22 	 (15) for properties sold to developers, the total cost of the property to the authority 
174.23 	and the price paid by the developer;
174.24 	 (16) the amount of any payments and the value of any in-kind benefits, such as 
174.25 	physical improvements and the use of building space, that are paid or financed with tax 
174.26 	increments and are provided to another governmental unit other than the municipality 
174.27 	during the reporting period;
174.28 	 (17) the amount of any payments for activities and improvements located outside of 
174.29 	the district that are paid for or financed with tax increments;
174.30 	 (18) the amount of payments of principal and interest that are made during the 
174.31 	reporting period on any nondefeased:
174.32 	 (i) general obligation tax increment financing bonds;
174.33 	 (ii) other tax increment financing bonds; and
174.34 	 (iii) notes and pay-as-you-go contracts;
174.35 	 (19) the principal amount, at the end of the reporting period, of any nondefeased:
174.36 	 (i) general obligation tax increment financing bonds;
175.1 	 (ii) other tax increment financing bonds; and
175.2 	 (iii) notes and pay-as-you-go contracts;
175.3 	 (20) the amount of principal and interest payments that are due for the current 
175.4 	calendar year on any nondefeased:
175.5 	 (i) general obligation tax increment financing bonds;
175.6 	 (ii) other tax increment financing bonds; and
175.7 	 (iii) notes and pay-as-you-go contracts;
175.8 	 (21) if the fiscal disparities contribution under chapter 276A or 473F for the district 
175.9 	is computed under section 469.177, subdivision 3, paragraph (a), the amount of increased 
175.10 	property taxes imposed on other properties in the municipality that approved the tax 
175.11 	increment financing plan as a result of the fiscal disparities contribution;
175.12 	 (22) whether the tax increment financing plan or other governing document permits 
175.13 	increment revenues to be expended:
175.14 	 (i) to pay bonds, the proceeds of which were or may be expended on activities 
175.15 	outside of the district;
175.16 	 (ii) for deposit into a common bond fund from which money may be expended on 
175.17 	activities located outside of the district; or
175.18 	 (iii) to otherwise finance activities located outside of the tax increment financing 
175.19 	district;
175.20 	 (23) the estimate, if any, contained in the tax increment financing plan of the amount 
175.21 	of the cost of the project, including administrative expenses, that will be paid or financed 
175.22 	with tax increment; and
175.23 	 (24) any additional information the state auditor may require.
175.24 	 (d) The commissioner of revenue shall prescribe the method of calculating the 
175.25 	increased property taxes under paragraph (c), clause (21), and the form of the statement 
175.26 	disclosing this information on the annual statement under subdivision 5.
175.27 	 (e) The reporting requirements imposed by this subdivision apply to districts 
175.28 	certified before, on, and after August 1, 1979.

175.29 	EFFECTIVE DATE. This section is effective for reports filed in 2006 and 
175.30 	thereafter.

175.31 	 Sec. 16. Minnesota Statutes 2004, section 469.176, subdivision 1c, is amended to read:
175.32 		 Subd. 1c.Duration limits; pre-1979 districts.  (a) For tax increment financing 
175.33 	districts created prior to August 1, 1979, no tax increment shall be paid to the authority 
175.34 	after April 1, 2001, or the term of a nondefeased bond or obligation outstanding on April 
175.35 	1, 1990, secured by increments from the district or project area, whichever time is greater, 
176.1 	provided that in no case will a tax increment be paid to an authority after August 1, 2009, 
176.2 	from such a district.  If a district's termination date is extended beyond April 1, 2001, 
176.3 	because bonds were outstanding on April 1, 1990, with maturities extending beyond April 
176.4 	1, 2001, the following restrictions apply.  No increment collected from the district may 
176.5 	be expended after April 1, 2001, except to pay or repay:
176.6 	 (1) bonds issued before April 1, 1990;
176.7 	 (2) bonds issued to refund the principal of the outstanding bonds and pay associated 
176.8 	issuance costs;
176.9 	 (3) administrative expenses of the district required to be paid under section 469.176, 
176.10 	subdivision 4h, paragraph (a);
176.11 	 (4) transfers of increment permitted under section 469.1763, subdivision 6; and 
176.12 	 (5) any advance or payment made by the municipality or the authority after June 
176.13 	1, 2002, to pay any bonds listed in clause (1) or (2); and 
176.14 	 (6) amounts authorized under paragraph (d).
176.15 	 (b) Each year, any increments from a district subject to this subdivision must 
176.16 	be first applied to pay obligations listed under paragraph (a), clauses (1) and (2), and 
176.17 	administrative expenses under paragraph (a), clause (3).  Any remaining increments may 
176.18 	be used for transfers of increments permitted under section 469.1763, subdivision 6, and 
176.19 	to make payments under paragraph paragraphs (a), clause (5), and (d).
176.20 	 (c) When sufficient money has been received to pay in full or defease obligations 
176.21 	under paragraph (a), clauses (1), (2), and (5), and no spending is permitted by paragraph 
176.22 	(d) for the year,the tax increment project or district must be decertified.
176.23 	 (d) In addition to the expenditures authorized under paragraph (a), clauses (1) to 
176.24 	(5), a city may expend increments from a tax increment financing district subject to this 
176.25 	subdivision after April 1, 2001, if all of the following conditions are met:
176.26 	 (1) the captured tax capacity for all tax increment financing districts constituted less 
176.27 	than six percent of the city's total tax capacity for taxes payable in 2003; and 
176.28 	 (2) the population of the city exceeds 50,000.

176.29 	EFFECTIVE DATE. This section is effective for tax increment financing districts 
176.30 	for which the request for certification was made before August 1, 1979.

176.31 	 Sec. 17. Minnesota Statutes 2004, section 469.176, is amended by adding a subdivision 
176.32 	to read:
176.33 		 Subd. 4m.Use of increments for job training. Notwithstanding the limits on use 
176.34 	of increments in subdivision 4, 4b, 4c, or 4j, increments may be expended for job training 
176.35 	that is intended to result in new job growth within a tax increment financing district.  The 
177.1 	authority may expend increments directly for the cost of the job training or may reimburse 
177.2 	an employer located within the district or a municipality in which the district is located for 
177.3 	job training expenditures.  Increments may be expended only for job training programs 
177.4 	that are approved for this purpose by the local workforce council established under 
177.5 	section 116L.666 that has jurisdiction over the workforce service area that includes the 
177.6 	tax increment financing district.  For purposes of section 469.1763, increments expended 
177.7 	under this subdivision are considered to be expended on activities in the district.

177.8 	EFFECTIVE DATE. This section is effective for districts for which the request for 
177.9 	certification was made after July 31, 1979, provided that districts for which the request 
177.10 	for certification was made before the effective date of this act must modify their plans 
177.11 	to provide for this expenditure.

177.12 	 Sec. 18. Minnesota Statutes 2004, section 469.176, is amended by adding a subdivision 
177.13 	to read:
177.14 		 Subd. 8.Urban renewal area. (a) An authority may create an urban renewal area 
177.15 	only upon the notice and after the discussion, public hearing, and findings required for 
177.16 	approval of the original project.  In addition, the authority must obtain written approval 
177.17 	from the county in which the urban renewal area is to be located.  After approval by the 
177.18 	city and county, the authority shall notify the commissioner of revenue of the approved 
177.19 	urban renewal area.
177.20 	 (b) All provisions of sections 469.174 through 469.1799 apply except:
177.21 	 (1) the five-year rule under section 469.1763, subdivision 3, is extended to ten years;
177.22 	 (2) the limitation on spending increment outside of the district under section 
177.23 	469.1763, subdivision 2, does not apply, provided that increments may only be expended 
177.24 	on improvements or activities within the urban renewal area, and increments from a soils 
177.25 	condition district must be expended as provided under subdivision 4b; and 
177.26 	 (3) the local tax rate certification required under section 469.177, subdivision 1a, 
177.27 	does not apply.

177.28 	EFFECTIVE DATE. This section is effective for urban renewal areas established 
177.29 	on or after the date of final enactment.

177.30 	 Sec. 19. Minnesota Statutes 2004, section 469.1761, is amended by adding a 
177.31 	subdivision to read:
177.32 		 Subd. 3a.Mixed-income occupancy projects. (a) Notwithstanding the income 
177.33 	requirements in subdivisions 2 and 3, or section 469.174, subdivision 11, an authority may 
178.1 	create housing districts for developments that contain both owner-occupied and residential 
178.2 	rental units for mixed-income occupancy.  Such a district consists of a project, or a portion 
178.3 	of a project, intended for occupancy, in part, by persons of low and moderate income 
178.4 	as defined in chapter 462A, title II, of the National Housing Act of 1934; the National 
178.5 	Housing Act of 1959; the United States Housing Act of 1937, as amended; title V of the 
178.6 	Housing Act of 1949, as amended; any other similar present or future federal, state, or 
178.7 	municipal legislation, or the regulations promulgated under any of those acts, as further 
178.8 	specified in this section.  Twenty percent of the units in the development in the housing 
178.9 	district must be occupied by individuals whose family income is equal to or less than 
178.10 	50 percent of area median gross income, and an additional 60 percent of the units in 
178.11 	the development in the housing district must be occupied by individuals whose family 
178.12 	income is equal to or less than 115 percent of area median gross income.  Twenty percent 
178.13 	of the units in the development in the housing district are not required to be subject to 
178.14 	any income limitations.
178.15 	 (b) For purposes of this subdivision, "family income" means the median gross 
178.16 	income for the area as determined under section 42 of the Internal Revenue Code of 1986, 
178.17 	as amended.  The income requirements of this subdivision are satisfied if the sum of 
178.18 	qualified owner-occupied units and qualified residential rental units equals the required 
178.19 	total number of qualified units. Owner-occupied units must be initially purchased and 
178.20 	occupied by individuals whose family income satisfies the income requirements of this 
178.21 	subdivision.  For residential rental property, the income requirements of this subdivision 
178.22 	apply for the duration of the tax increment district.
178.23 	 (c) The development in the housing district, but not the project, does not qualify 
178.24 	under this subdivision if the fair market value of the improvements that are constructed 
178.25 	for commercial uses or for uses other than owner-occupied and rental mixed-income 
178.26 	housing consists of more than 20 percent of the total fair market value of the planned 
178.27 	improvements in the development plan or agreement.  The fair market value of the 
178.28 	improvements may be determined using the cost of construction, capitalized income, or 
178.29 	other appropriate method of estimating market value.

178.30 	EFFECTIVE DATE. This section is effective for districts for which certification 
178.31 	is requested after July 31, 2005.

178.32 	 Sec. 20. Minnesota Statutes 2004, section 469.1763, subdivision 2, is amended to read:
178.33 		 Subd. 2.Expenditures outside district.  (a) For each tax increment financing 
178.34 	district, an amount equal to at least 75 percent of the total revenue derived from tax 
178.35 	increments paid by properties in the district must be expended on activities in the district 
179.1 	or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities 
179.2 	in the district or to pay, or secure payment of, debt service on credit enhanced bonds. 
179.3 	For districts, other than redevelopment districts for which the request for certification 
179.4 	was made after June 30, 1995, the in-district percentage for purposes of the preceding 
179.5 	sentence is 80 percent.  Not more than 25 percent of the total revenue derived from tax 
179.6 	increments paid by properties in the district may be expended, through a development fund 
179.7 	or otherwise, on activities outside of the district but within the defined geographic area of 
179.8 	the project except to pay, or secure payment of, debt service on credit enhanced bonds.  
179.9 	For districts, other than redevelopment districts for which the request for certification was 
179.10 	made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is 
179.11 	20 percent.  The revenue derived from tax increments for the district that are expended on 
179.12 	costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before 
179.13 	calculating the percentages that must be expended within and without the district.
179.14 	 (b) In the case of a housing district, a housing project, as defined in section 469.174, 
179.15 	subdivision 11, is an activity in the district.
179.16 	 (c) All administrative expenses are for activities outside of the district, except that 
179.17 	if the only expenses for activities outside of the district under this subdivision are for 
179.18 	the purposes described in paragraph (d), administrative expenses will be considered as 
179.19 	expenditures for activities in the district.
179.20 	 (d) The authority may elect, in the tax increment financing plan for the district, 
179.21 	to increase by up to ten percentage points the permitted amount of expenditures for 
179.22 	activities located outside the geographic area of the district under paragraph (a).  As 
179.23 	permitted by section 469.176, subdivision 4k, the expenditures, including the permitted 
179.24 	expenditures under paragraph (a), need not be made within the geographic area of the 
179.25 	project.  Expenditures that meet the requirements of this paragraph are legally permitted 
179.26 	expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j. 
179.27 	To qualify for the increase under this paragraph, the expenditures must:
179.28 	 (1) be used exclusively to assist housing that meets the requirement for a qualified 
179.29 	low-income building, as that term is used in section 42 of the Internal Revenue Code;
179.30 	 (2) not exceed the qualified basis of the housing, as defined under section 42(c) of 
179.31 	the Internal Revenue Code, less the amount of any credit allowed under section 42 of 
179.32 	the Internal Revenue Code; and
179.33 	 (3) be used to:
179.34 	 (i) acquire and prepare the site of the housing;
179.35 	 (ii) acquire, construct, or rehabilitate the housing; or
179.36 	 (iii) make public improvements directly related to the housing.
180.1 	 (e) For a district created within a biotechnology and health sciences industry zone as 
180.2 	defined in section 469.330, subdivision 6, tax increment derived from such a district may 
180.3 	be expended outside of the district but within the zone only for expenditures required for 
180.4 	the construction of public infrastructure necessary to support the activities of the zone.

180.5 	 Sec. 21. Minnesota Statutes 2004, section 469.1792, is amended to read:
180.6 	 469.1792 SPECIAL DEFICIT AUTHORITY.
180.7 		 Subdivision 1.Scope. This section applies only to an authority with a preexisting 
180.8 	district for which:
180.9 	 (1) the increments from the district were insufficient to pay preexisting obligations 
180.10 	as a result of the class rate changes or the elimination of the state-determined general 
180.11 	education property tax levy under this act, or both; or 
180.12 	 (2)(i) the development authority has a binding contract, entered into before August 
180.13 	1, 2001, with a person requiring the authority to pay to the person an amount that may not 
180.14 	exceed the increment from the district or a specific development within the district; and
180.15 	 (ii) the authority is unable to pay the full amount under the contract from the pledged 
180.16 	increments or other increments from the district that would have been due if the class rate 
180.17 	changes or elimination of the state-determined general education property tax levy or both 
180.18 	had not been made under Laws 2001, First Special Session chapter 5;
180.19 	 (3) the authority amends its tax increment financing plan to establish an affordable 
180.20 	housing account to which increments are pledged; or 
180.21 	 (4) the authority amends its tax increment financing plan to establish a hazardous 
180.22 	substance, pollutant, or contaminant remediation account to which increments are pledged.
180.23 		 Subd. 2.Definitions. (a) For purposes of this section, the following terms have 
180.24 	the meanings given.
180.25 	 (b) "Affordable housing account" means an account in which increment is deposited 
180.26 	solely for affordable housing activities as defined in section 469.174, subdivision 11.
180.27 	 (c) "Hazardous substance, pollutant, or contaminant remediation account" means 
180.28 	an account in which increment is deposited solely for removal or remediation activities 
180.29 	described in section 469.174, subdivisions 16 to 19.
180.30 	 (d) "Preexisting district" means a tax increment financing district for which the 
180.31 	request for certification was made before August 1, 2001.
180.32 	 (c) (e) "Preexisting obligation" means a bond or binding contract that:
180.33 	 (1)(i) was issued or approved before August 1, 2001, or was issued pursuant to a 
180.34 	binding contract entered into before July 1, 2001; or
181.1 	 (ii) was issued to refinance an obligation under item (i), if the refinancing does not 
181.2 	increase the present value of the debt service; and
181.3 	 (2) is secured by increments from a preexisting district.
181.4 		 Subd. 3.Actions authorized. (a) An authority with a district qualifying under this 
181.5 	section may take either or both of the following actions for any or all of its preexisting 
181.6 	districts:
181.7 	 (1) the authority may elect that the original local tax rate under section 469.177, 
181.8 	subdivision 1a, does not apply to the district; and
181.9 	 (2) the authority may elect the fiscal disparities contribution will be computed under 
181.10 	section 469.177, subdivision 3, paragraph (a), regardless of the election that was made for 
181.11 	the district or if the district is an economic development district for which the request for 
181.12 	certification was made after June 30, 1997.
181.13 	 (b) The authority may take action under this subdivision only after the municipality 
181.14 	approves the action, by resolution, after notice and public hearing in the manner provided 
181.15 	under section 469.175, subdivision 3.  To be effective for taxes payable in the following 
181.16 	year, the resolution must be adopted and the county auditor must be notified of the 
181.17 	adoption on or before July 1.
181.18 		 Subd. 4.Expenditures from affordable housing accounts. Increment from an 
181.19 	affordable housing account may be spent by an authority anywhere within its area of 
181.20 	operation. Notwithstanding the definition of a project under section 469.174, increments 
181.21 	may be spent to assist housing that meets the requirements under section 469.1761.  The 
181.22 	limitation imposed by section 469.1763, subdivision 2, does not apply to any transfers 
181.23 	of increment to the affordable housing account to the extent that the amount transferred 
181.24 	to the account under this subdivision does not exceed ten percent of the revenue derived 
181.25 	from tax increments paid by properties in the district in the year.
181.26 		 Subd. 5.Expenditures from hazardous substance, pollutant, or contaminant 
181.27 	remediation account. Increment from a hazardous substance, pollutant, or contaminant 
181.28 	remediation account may be spent by an authority anywhere within its area of operation. 
181.29 	Notwithstanding the definition of a project under section 469.174, increments may be 
181.30 	expended to remediation and removal activities that meet the requirements of section 
181.31 	469.176, subdivision 4b or 4e.  The limitation imposed by section 469.1763, subdivision 
181.32 	2, does not apply to any transfers of increment to the hazardous substance, pollutant, or 
181.33 	contaminant remediation account to the extent that the amount transferred to the account 
181.34 	under this subdivision does not exceed ten percent of the revenue derived from tax 
181.35 	increments paid by properties in the district in the year.

182.1 	EFFECTIVE DATE. This section is effective for actions taken and resolutions 
182.2 	approved after June 30, 2005.

182.3 	 Sec. 22. Minnesota Statutes 2004, section 469.310, subdivision 11, is amended to read:
182.4 		 Subd. 11.Qualified business.  (a) "Qualified business" means a person carrying on 
182.5 	a trade or business at a place of business located within a job opportunity building zone.
182.6 	 (b) A person that relocates a trade or business from outside a job opportunity 
182.7 	building zone into a zone is not a qualified business, unless the business:
182.8 	 (1)(i) increases full-time employment in the first full year of operation within the 
182.9 	job opportunity building zone by at least 20 percent measured relative to the operations 
182.10 	that were relocated and maintains the required level of employment for each year the 
182.11 	zone designation applies; or
182.12 	 (ii) makes a capital investment in the property located within a zone equivalent to 
182.13 	ten percent of the gross revenues of operation that were relocated in the immediately 
182.14 	preceding taxable year; and
182.15 	 (2) enters a binding written agreement with the commissioner that:
182.16 	 (i) pledges the business will meet the requirements of clause (1);
182.17 	 (ii) provides for repayment of all tax benefits enumerated under section 469.315 to 
182.18 	the business under the procedures in section 469.319, if the requirements of clause (1) are 
182.19 	not met for the taxable year or for taxes payable during the year in which the requirements 
182.20 	were not met; and
182.21 	 (iii) contains any other terms the commissioner determines appropriate.
182.22 	 (c) A business is not a qualified business if at its location or locations in the zone, 
182.23 	the business is primarily engaged in making retail sales to purchasers who are physically 
182.24 	present at the business's zone location.

182.25 	EFFECTIVE DATE. This section is effective the day following final enactment 
182.26 	and applies to any business entering a business subsidy agreement for a job opportunity 
182.27 	development zone after that date.

182.28 	 Sec. 23. Laws 1994, chapter 587, article 9, section 20, subdivision 1, is amended to 
182.29 	read:
182.30 		 Subdivision 1.Establishment. The city of Brooklyn Park may establish an 
182.31 	economic development tax increment financing district in which 15 percent all of the 
182.32 	revenue generated from tax increment in any year that is not expended pursuant to a 
182.33 	pledge given or encumbrance created before January 1, 2005,is deposited in the housing 
183.1 	development account of the authority and expended according to the tax increment 
183.2 	financing plan.

183.3 	 Sec. 24. Laws 1994, chapter 587, article 9, section 20, subdivision 2, is amended to 
183.4 	read:
183.5 		 Subd. 2.Eligible activities. The authority must identify in the plan the housing 
183.6 	activities that will be assisted by the housing development account.  Housing activities 
183.7 	may include rehabilitation, acquisition, demolition, and financing of new or existing 
183.8 	single family or multifamily housing.  Housing activities listed in the plan need not be 
183.9 	located within the district or project area but must be activities that meet the requirements 
183.10 	of a qualified housing district under Minnesota Statutes, section 273.1399 or 469.1761, 
183.11 	subdivision 2, for owner-occupied housing or section 469.174, subdivision 29, clause (1), 
183.12 	for rental housing.

183.13 	 Sec. 25. Laws 1998, chapter 389, article 11, section 19, subdivision 3, is amended to 
183.14 	read:
183.15 		 Subd. 3.Duration of district. Notwithstanding the provisions of Minnesota 
183.16 	Statutes, section 469.176, subdivision 1b, no tax increment may be paid to the authority 
183.17 	or the city  after 18 years from the date of receipt by the authority of the first increment 
183.18 	generated from the final phase of redevelopment.  In no case may increments be paid 
183.19 	to the authority after 30 years from approval of the tax increment plan. "Final phase 
183.20 	of redevelopment" means that phase of redevelopment activity which completes the 
183.21 	rehabilitation of the Lake Street site.

183.22 	EFFECTIVE DATE. This section is effective upon compliance with Minnesota 
183.23 	Statutes, sections 469.1782, subdivision 2, and 645.021, subdivision 2.

183.24 	 Sec. 26. ANOKA COUNTY REGIONAL RAILROAD AUTHORITY POWERS.
 183.25 		 Subdivision 1.Economic development powers and duties. The Anoka County 
183.26 	Regional Railroad Authority may exercise any of the powers and duties of an economic 
183.27 	development authority under Minnesota Statutes, sections 469.090, 469.098, and 469.101
183.28 	to 469.106.  The Anoka County Regional Railroad Authority may exercise the powers 
183.29 	under Minnesota Statutes, sections 469.001 to 469.047, for the purpose of transit-oriented 
183.30 	development, except that the Anoka County Regional Railroad Authority must not 
183.31 	exercise the power to tax under Minnesota Statutes, section 469.033, subdivision 6.  In 
183.32 	applying Minnesota Statutes, sections 469.001 to 469.047, 469.090, 469.098, and 469.101 
184.1 	to 469.106, to the Anoka County Regional Railroad Authority, the county is considered to 
184.2 	be the city and the county board is considered to be the city council.
184.3 		 Subd. 2.Relation to local authorities. Nothing in subdivision 1 shall change 
184.4 	or impair the powers or duties of a city, town, municipal housing and redevelopment 
184.5 	authority, or municipal economic development authority.
184.6 		 Subd. 3.Local approval. If any economic development project is constructed in 
184.7 	the county pursuant to the authorization in this section, the project must be approved by 
184.8 	the governing body of each city or town within which the project will be constructed.

184.9 	EFFECTIVE DATE. This section is effective the day after the governing body 
184.10 	of the Anoka County Regional Railroad Authority and its chief clerical officer timely 
184.11 	complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

184.12 	 Sec. 27. CITY OF BEMIDJI; DURATION EXTENSION FOR TAX 
184.13 	ABATEMENT.
 184.14 	 Notwithstanding the limitation in Minnesota Statutes, section 469.1813, subdivision 
184.15 	6, the city of Bemidji may extend the duration of the tax abatement given to support 
184.16 	development within the fairgrounds district of the city for an additional four years beyond 
184.17 	the duration permitted under that section.

184.18 	 Sec. 28. CITY OF BROOKLYN CENTER; EXTENSION OF TIME TO EXPEND 
184.19 	TAX INCREMENT.
 184.20 	 For tax increment financing district number 3, established on December 19, 1994, 
184.21 	by Brooklyn Center Resolution No. 94-273, Minnesota Statutes, section 469.1763, 
184.22 	subdivision 3, applies to the district by permitting a period of 13 years for commencement 
184.23 	of activities within the district.

184.24 	 EFFECTIVE DATE. This section is effective upon approval by the governing 
184.25 	body of the city of Brooklyn Center and compliance with Minnesota Statutes, section 
184.26 	645.021, subdivision 3.

184.27 	 Sec. 29. CITY OF BROOKLYN PARK TAX INCREMENT FINANCING 
184.28 	DISTRICT EXTENSION.
 184.29 	 Notwithstanding Minnesota Statutes, section 469.176, subdivision 1b, or any other 
184.30 	law to the contrary, the duration limit that applies to the economic development tax 
184.31 	increment financing district established under Laws 1994, chapter 587, article 9, section 
184.32 	20, is extended to December 31, 2020.

185.1 	 Sec. 30. CITY OF DETROIT LAKES; REDEVELOPMENT TAX INCREMENT 
185.2 	FINANCING DISTRICT.
 185.3 		 Subdivision 1.Authorization. At the election of the governing body of the city of 
185.4 	Detroit Lakes, upon adoption of the tax increment financing plan for the district described 
185.5 	in this section, the rules provided under this section apply to each such district.
185.6 		 Subd. 2.Definition. In this section, "district" means a redevelopment district 
185.7 	established by the city of Detroit Lakes or the Detroit Lakes Development Authority 
185.8 	within the following area:
185.9 	 Beginning at the intersection of Washington Avenue and the Burlington Northern Santa Fe 
185.10 	Railroad then east to the intersection of Roosevelt Avenue then south to the intersection of 
185.11 	Highway 10/Frazee Street then west to the intersection of Frazee Street and the alley that 
185.12 	parallels Washington Avenue then north to the point of beginning.
185.13 	 More than one district may be created under this act.
185.14 		 Subd. 3.Qualification as redevelopment district; special rules. The district shall 
185.15 	be a redevelopment district under Minnesota Statutes, section 469.174, subdivision 10.  All 
185.16 	buildings that are removed to facilitate the Highway 10 Realignment Project are deemed 
185.17 	to be "structurally substandard."  The three-year limit after demolition of the buildings to 
185.18 	request tax increment financing certification provided in Minnesota Statutes, section 
185.19 	469.174, subdivision 10, paragraph (d), clause (1), does not apply.
185.20 		 Subd. 4.Expiration. The authority to approve tax increment financing plans to 
185.21 	establish a tax increment financing redevelopment district subject to this section expires 
185.22 	on December 31, 2014.
185.23 		 Subd. 5.Effective date. This section is effective upon approval of the governing 
185.24 	body of the city of Detroit Lakes and compliance with Minnesota Statutes, section 
185.25 	645.021, subdivision 3.

185.26 	 Sec. 31. CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 
185.27 	INCREMENT FINANCING DISTRICTS.
 185.28 		 Subdivision 1.Authorization. Notwithstanding the mileage limitation in Minnesota 
185.29 	Statutes, section 469.174, subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 
185.30 	are deemed to be small cities for purposes of Minnesota Statutes, sections 469.174 to 
185.31 	469.1799, as long as they do not exceed the population limit in that section.
185.32 		 Subd. 2.Local approval. This section is effective for each of the cities of Elgin, 
185.33 	Eyota, Byron, and Oronoco upon approval of that city's governing body and compliance 
185.34 	with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

186.1 	 Sec. 32. CITY OF FAIRMONT; TAX INCREMENT FINANCING DISTRICT.
 186.2 		 Subdivision 1.Authority to reduce original value. The city of Fairmont may 
186.3 	elect to reduce the original tax capacity of a previously tax-exempt parcel, consisting of 
186.4 	property formerly owned by the United States Post Office, in tax increment financing 
186.5 	district No. 20, to the value of the land.
186.6 		 Subd. 2.Effective date. This section is effective upon compliance by the city of 
186.7 	Fairmont with the requirements of Minnesota Statutes, section 645.021.

186.8 	 Sec. 33. CITY OF FERGUS FALLS; ECONOMIC DEVELOPMENT 
186.9 	PROPERTY.
 186.10 	 The provisions of Minnesota Statutes, section 272.02, subdivision 39, apply to 
186.11 	property located in the city of Fergus Falls as if the city had a population of 5,000 or less.

186.12 	 EFFECTIVE DATE. This section is effective for taxes levied in 2005, payable 
186.13 	in 2006, and thereafter.

186.14 	 Sec. 34. CITY OF RAMSEY; HOUSING TAX INCREMENT DISTRICT.
 186.15 		 Subdivision 1.Authorization. The governing body of the city of Ramsey may 
186.16 	create a housing tax increment financing district as provided in this section.  The city or its 
186.17 	economic development authority may be the "authority" for the purposes of Minnesota 
186.18 	Statutes, sections 469.174 to 469.179.
186.19 		 Subd. 2.Definitions. (a) For the purposes of this section, the terms defined in this 
186.20 	subdivision have the meanings given them.
186.21 	 (b) "Development parcel" means the property in the city of Ramsey generally 
186.22 	described as the easterly 4.1 acres of Outlot AA, Ramsey Town Center Addition.
186.23 	 (c) "Low and moderate income persons" means:
186.24 	 (1) persons or families of low and moderate income, as defined in Minnesota 
186.25 	Statutes, chapter 462A, Title II of the National Housing Act of 1934, the National Housing 
186.26 	Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing 
186.27 	Act of 1949, as amended, any other similar present or future federal, state, or municipal 
186.28 	legislation, or the regulations promulgated under any of those acts;
186.29 	 (2) disabled persons; and 
186.30 	 (3) persons over the age of 55 years.
186.31 		 Subd. 3.Special rules. (a) The district established under this section is subject to 
186.32 	the provisions of Minnesota Statutes, sections 469.174 to 469.179, except as provided 
186.33 	in this subdivision.
186.34 	 (b) The district may consist of all or a portion of the development parcel.
187.1 	 (c) The housing district shall be as described in Minnesota Statutes, section 469.174, 
187.2 	subdivision 11, provided that the definition in subdivision 2, paragraph (c), applies to all 
187.3 	references to "low and moderate income persons" in that provision.  All improvements 
187.4 	constructed within the district will be considered to be made for the benefit of low and 
187.5 	moderate income persons.
187.6 	 (d) Minnesota Statutes, section 469.176, subdivision 7, does not apply to the housing 
187.7 	district authorized in this section.
187.8 	 (e) The income limitations in Minnesota Statutes, section 469.1761, shall not apply 
187.9 	to persons meeting the requirements of clauses (2) and (3) of subdivision 2, paragraph (c).

187.10 	EFFECTIVE DATE. This section is effective the day following final enactment, 
187.11 	upon compliance with Minnesota Statutes, section 645.021.

187.12 	 Sec. 35. CITY OF RICHFIELD; TAX INCREMENT FINANCING DISTRICT.
 187.13 		 Subdivision 1.Authorization. The city of Richfield may create a tax increment 
187.14 	financing district consisting of an area lying west of Trunk Highway 77 extending:  to 16th 
187.15 	Avenue between Crosstown Highway 62 and 66th Street; to 17th Avenue between 66th 
187.16 	and 69th Streets; and to 18th Avenue between 69th and 72nd Streets.  The city or its 
187.17 	housing and redevelopment authority may be the authority for the purposes of Minnesota 
187.18 	Statutes, sections 469.174 to 469.179.
187.19 		 Subd. 2.District is redevelopment district. The redevelopment tax increment 
187.20 	district created pursuant to subdivision 1, within which housing is not a compatible use 
187.21 	due to the presence of extraordinary low frequency noise and vibration impacts, is deemed 
187.22 	to be a redevelopment district and is subject to Minnesota Statutes, sections 469.174
187.23 	to 469.179, except that:
187.24 	 (1) expenditures for activities as defined in Minnesota Statutes, section 469.1763, 
187.25 	subdivision 1, paragraph (b), anywhere in the district are deemed to be the costs of 
187.26 	correcting conditions that allow the designation of redevelopment districts pursuant to 
187.27 	Minnesota Statutes, section 469.174, subdivision 10; and 
187.28 	 (2) the five-year rule under Minnesota Statutes, section 469.1763, subdivision 3, 
187.29 	does not apply.

187.30 	EFFECTIVE DATE. This section is effective upon local approval by the city of 
187.31 	Richfield in compliance with Minnesota Statutes, section 645.021.

187.32 	 Sec. 36. CITY OF ST. MICHAEL; TAX INCREMENT FINANCING DISTRICT.
 188.1 		 Subdivision 1.Establishment of district. The city of St. Michael may establish 
188.2 	a redevelopment tax increment financing district subject to Minnesota Statutes, sections 
188.3 	469.174 to 469.179, except as provided in this section.  The district must be established 
188.4 	within an area that includes the downtown and town center areas as designated by the city 
188.5 	as well as all parcels adjacent to marked Trunk Highway 241 within the city.
188.6 		 Subd. 2.Special rules. (a) Notwithstanding the requirements of Minnesota 
188.7 	Statutes, section 469.174, subdivision 10, the district may be established and operated as 
188.8 	a redevelopment district.
188.9 	 (b) Notwithstanding the restrictions of Minnesota Statutes, sections 469.176, 
188.10 	subdivisions 4 and 4j, and 469.1763, subdivision 2, revenues derived from tax increments 
188.11 	from the district created under this section may be used to meet the cost of land 
188.12 	acquisition, removal of buildings in the right-of-way acquisition area, and other costs 
188.13 	incurred by the city of St. Michael in the expansion and improvement of marked Trunk 
188.14 	Highway 241 within the city.
188.15 	 (c) Minnesota Statutes, section 469.176, subdivision 5, does not apply to the district.

188.16 	EFFECTIVE DATE. This section is effective the day after the governing body of 
188.17 	the city of St. Michael complies with Minnesota Statutes, section 645.021, subdivision 3.

188.18 	 Sec. 37. ST. PAUL; HOUSING AND REDEVELOPMENT AUTHORITY.
 188.19 		 Subdivision 1.Housing and redevelopment subdistricts. For its tax increment 
188.20 	financing districts identified in subdivision 2, the Housing and Redevelopment Authority 
188.21 	of the city of St. Paul may establish subdistricts up to the number set forth for each tax 
188.22 	increment financing district in subdivision 2.  The subdistricts shall be treated as set forth 
188.23 	in subdivision 3, notwithstanding the provisions of any other law to the contrary.
188.24 		 Subd. 2.Division into subdistricts; authority. The tax increment financing districts 
188.25 	with the following Ramsey County identification numbers may be divided into a number 
188.26 	of subdistricts not to exceed the number set forth as follows:  No. 224/233, six subdistricts; 
188.27 	No. 225, six subdistricts; No. 228, three subdistricts; and No. 234, two subdistricts.
188.28 		 Subd. 3.Designation of parcels. All parcels in a tax increment financing district 
188.29 	listed in subdivision 2 must be assigned to a subdistrict.  Each subdistrict established 
188.30 	pursuant to this section shall consist of those parcels in the tax increment financing district 
188.31 	which are designated by the commissioners of the Housing and Redevelopment Authority 
188.32 	of the city of St. Paul by resolution, which parcels need not be contiguous.  For purposes 
188.33 	of determining tax increments and the parcels treated as paying tax increments, each 
188.34 	subdistrict shall be treated as a separate tax increment district.

189.1 	EFFECTIVE DATE. This section is effective the day after the governing body of 
189.2 	St. Paul and its chief clerical officer comply with Minnesota Statutes, section 645.021, 
189.3 	subdivisions 2 and 3.

189.4 	 Sec. 38. WABASHA TAX INCREMENT FINANCING DISTRICT.
 189.5 		 Subdivision 1.District extension. The governing body of the city of Wabasha may 
189.6 	elect to extend the duration of its redevelopment tax increment financing district number 
189.7 	3 by up to five additional years.
189.8 		 Subd. 2.Five-year rule. The requirements of Minnesota Statutes, section 469.1763, 
189.9 	subdivision 3, that activities must be undertaken within a five-year period from the date of 
189.10 	certification of a tax increment financing district must be considered to be met for the city 
189.11 	of Wabasha redevelopment tax increment district number 3, if the activities are undertaken 
189.12 	within ten years from the date of certification of the district.
189.13 		 Subd. 3.National eagle center. Notwithstanding the provisions of Minnesota 
189.14 	Statutes, section 469.176, subdivision 4l, or any other law, the city of Wabasha may spend 
189.15 	the proceeds of tax increment bonds issued prior to January 1, 2000, to pay the costs of 
189.16 	acquiring and constructing a National Eagle Center in the city.  The city of Wabasha 
189.17 	may also use tax increment from its tax increment districts to pay the debt service on 
189.18 	such bonds, or any bonds issued to refund such bonds, subject to legal restrictions on the 
189.19 	pooling of tax increment.

189.20 	EFFECTIVE DATE. Subdivision 1 is effective upon compliance with the 
189.21 	provisions of Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021. 
189.22 	Subdivisions 2 and 3 are effective upon compliance by the governing body of the city of 
189.23 	Wabasha with the provisions of Minnesota Statutes, section 645.021.

189.24 	 Sec. 39. WINONA; EXTENSION OF DURATION OF TAX INCREMENT 
189.25 	DISTRICT.
 189.26 		 Subdivision 1.Duration. Notwithstanding the provisions of Minnesota Statutes, 
189.27 	section 469.176, subdivision 1b, the duration of riverfront tax increment financing district 
189.28 	number 2, approved by the port authority of Winona on July 15, 1980, is extended to 
189.29 	December 31, 2020.  Any tax increment received after December 31, 2005, must be used 
189.30 	solely to pay capital and administrative costs of transportation improvements related to 
189.31 	the Pelzer Street project.
189.32 		 Subd. 2.Exception. The provisions of Minnesota Statutes, section 469.1782, 
189.33 	subdivision 2, do not apply to this section.

190.1 	EFFECTIVE DATE. This section is effective upon approval by the governing body 
190.2 	of the port authority of Winona and compliance with Minnesota Statutes, section 645.021.

190.3 	 Sec. 40. JOBZ EXPENDITURE LIMITATIONS; AUDITS.
 190.4 		 Subdivision 1.Determination of tax expenditures. By September 1, 2005, the 
190.5 	commissioner of revenue, with the assistance of the commissioner of employment and 
190.6 	economic development, must estimate the total amount of tax expenditures projected to 
190.7 	have been obligated for all job opportunity building zone projects that have been approved 
190.8 	before June 1, 2005.  If the commissioner of revenue determines that the estimated amount 
190.9 	of tax expenditures for fiscal years 2005-2007 exceeds $13,780,000, the commissioner of 
190.10 	revenue must inform the chairs of the house of representatives and senate tax committees.
190.11 		 Subd. 2.Audits. The Tax Increment Financing, Investment and Finance Division of 
190.12 	the Office of the State Auditor must annually audit the creation and operation of all job 
190.13 	opportunity building zones and business subsidy agreements entered into under Minnesota 
190.14 	Statutes, sections 469.310 to 469.320.

190.15 	 Sec. 41. REPEALER.
 190.16 	 Laws 1994, chapter 587, article 9, section 20, subdivision 4, is repealed.

190.17 	 ARTICLE 6
190.18 	 PUBLIC FINANCE

190.19 	 Section 1. Minnesota Statutes 2004, section 118A.05, subdivision 5, is amended to read:
190.20 		 Subd. 5.Guaranteed investment contracts.  Agreements or contracts for 
190.21 	guaranteed investment contracts may be entered into if they are issued or guaranteed 
190.22 	by United States commercial banks, domestic branches of foreign banks, United States 
190.23 	insurance companies, or their Canadian subsidiaries, or the domestic affiliates of any of the 
190.24 	foregoing.  The credit quality of the issuer's or guarantor's short- and long-term unsecured 
190.25 	debt must be rated in one of the two highest categories by a nationally recognized rating 
190.26 	agency.  Should the issuer's or guarantor's credit quality be downgraded below "A", the 
190.27 	government entity must have withdrawal rights.

190.28 	 Sec. 2. Minnesota Statutes 2004, section 275.70, subdivision 5, is amended to read:
190.29 		 Subd. 5.Special levies.  "Special levies" means those portions of ad valorem taxes 
190.30 	levied by a local governmental unit for the following purposes or in the following manner:
190.31 	 (1) to pay the costs of the principal and interest on bonded indebtedness or to 
190.32 	reimburse for the amount of liquor store revenues used to pay the principal and interest 
191.1 	due on municipal liquor store bonds in the year preceding the year for which the levy 
191.2 	limit is calculated;
191.3 	 (2) to pay the costs of principal and interest on certificates of indebtedness issued for 
191.4 	any corporate purpose except for the following:
191.5 	 (i) tax anticipation or aid anticipation certificates of indebtedness;
191.6 	 (ii) certificates of indebtedness issued under sections 298.28 and 298.282;
191.7 	 (iii) certificates of indebtedness used to fund current expenses or to pay the costs of 
191.8 	extraordinary expenditures that result from a public emergency; or
191.9 	 (iv) certificates of indebtedness used to fund an insufficiency in tax receipts or 
191.10 	an insufficiency in other revenue sources;
191.11 	 (3) to provide for the bonded indebtedness portion of payments made to another 
191.12 	political subdivision of the state of Minnesota;
191.13 	 (4) to fund payments made to the Minnesota State Armory Building Commission 
191.14 	under section 193.145, subdivision 2, to retire the principal and interest on armory 
191.15 	construction bonds;
191.16 	 (5) property taxes approved by voters which are levied against the referendum 
191.17 	market value as provided under section 275.61;
191.18 	 (6) to fund matching requirements needed to qualify for federal or state grants or 
191.19 	programs to the extent that either (i) the matching requirement exceeds the matching 
191.20 	requirement in calendar year 2001, or (ii) it is a new matching requirement that did not 
191.21 	exist prior to 2002;
191.22 	 (7) to pay the expenses reasonably and necessarily incurred in preparing for or 
191.23 	repairing the effects of natural disaster including the occurrence or threat of widespread 
191.24 	or severe damage, injury, or loss of life or property resulting from natural causes, in 
191.25 	accordance with standards formulated by the Emergency Services Division of the state 
191.26 	Department of Public Safety, as allowed by the commissioner of revenue under section 
191.27 	275.74, subdivision 2;
191.28 	 (8) pay amounts required to correct an error in the levy certified to the county 
191.29 	auditor by a city or county in a levy year, but only to the extent that when added to the 
191.30 	preceding year's levy it is not in excess of an applicable statutory, special law or charter 
191.31 	limitation, or the limitation imposed on the governmental subdivision by sections 275.70
191.32 	to 275.74 in the preceding levy year;
191.33 	 (9) to pay an abatement under section 469.1815;
191.34 	 (10) to pay any costs attributable to increases in the employer contribution rates 
191.35 	under chapter 353 that are effective after June 30, 2001;
192.1 	 (11) to pay the operating or maintenance costs of a county jail as authorized in 
192.2 	section 641.01 or 641.262, or of a correctional facility as defined in section 241.021, 
192.3 	subdivision 1, paragraph (f), to the extent that the county can demonstrate to the 
192.4 	commissioner of revenue that the amount has been included in the county budget as 
192.5 	a direct result of a rule, minimum requirement, minimum standard, or directive of the 
192.6 	Department of Corrections, or to pay the operating or maintenance costs of a regional jail 
192.7 	as authorized in section 641.262.  For purposes of this clause, a district court order is 
192.8 	not a rule, minimum requirement, minimum standard, or directive of the Department of 
192.9 	Corrections.  If the county utilizes this special levy, except to pay operating or maintenance 
192.10 	costs of a new regional jail facility under sections 641.262 to 641.264 which will not 
192.11 	replace an existing jail facility, any amount levied by the county in the previous levy year 
192.12 	for the purposes specified under this clause and included in the county's previous year's 
192.13 	levy limitation computed under section 275.71, shall be deducted from the levy limit 
192.14 	base under section 275.71, subdivision 2, when determining the county's current year 
192.15 	levy limitation.  The county shall provide the necessary information to the commissioner 
192.16 	of revenue for making this determination;
192.17 	 (12) to pay for operation of a lake improvement district, as authorized under section 
192.18 	103B.555.  If the county utilizes this special levy, any amount levied by the county in the 
192.19 	previous levy year for the purposes specified under this clause and included in the county's 
192.20 	previous year's levy limitation computed under section 275.71 shall be deducted from 
192.21 	the levy limit base under section 275.71, subdivision 2, when determining the county's 
192.22 	current year levy limitation.  The county shall provide the necessary information to the 
192.23 	commissioner of revenue for making this determination;
192.24 	 (13) to repay a state or federal loan used to fund the direct or indirect required 
192.25 	spending by the local government due to a state or federal transportation project or other 
192.26 	state or federal capital project.  This authority may only be used if the project is not a 
192.27 	local government initiative;
192.28 	 (14) to pay for court administration costs as required under section 273.1398, 
192.29 	subdivision 4b, less the (i) county's share of transferred fines and fees collected by the 
192.30 	district courts in the county for calendar year 2001 and (ii) the aid amount certified to be 
192.31 	paid to the county in 2004 under section 273.1398, subdivision 4c; however, for taxes 
192.32 	levied to pay for these costs in the year in which the court financing is transferred to the 
192.33 	state, the amount under this clause is limited to the amount of aid the county is certified to 
192.34 	receive under section 273.1398, subdivision 4a; and 
193.1 	 (15) to fund a police or firefighters relief association as required under section 69.77
193.2 	to the extent that the required amount exceeds the amount levied for this purpose in 
193.3 	2001; and 
193.4 	 (16) for purposes of a storm sewer improvement district, pursuant to section 444.20.

193.5 	 Sec. 3. Minnesota Statutes 2004, section 373.01, subdivision 3, is amended to read:
193.6 		 Subd. 3.Capital notes. (a) A county board may, by resolution and without 
193.7 	referendum, issue capital notes subject to the county debt limit to purchase capital 
193.8 	equipment useful for county purposes that has an expected useful life at least equal to the 
193.9 	term of the notes.  The notes shall be payable in not more than five ten years and shall 
193.10 	be issued on terms and in a manner the board determines.  A tax levy shall be made for 
193.11 	payment of the principal and interest on the notes, in accordance with section 475.61, 
193.12 	as in the case of bonds.
193.13 	 (b) For purposes of this subdivision, "capital equipment" means:
193.14 	 (1) public safety, ambulance, road construction or maintenance, and medical 
193.15 	equipment,;and
193.16 	 (2) computer hardware and original operating system  software, whether bundled 
193.17 	with machinery or equipment or unbundled, together with application development 
193.18 	services and training related to the use of the computer or software.  The authority to 
193.19 	issue capital notes for original operating systems  computer software and related services 
193.20 	expires on July 1, 2005  2007.

193.21 	 Sec. 4. Minnesota Statutes 2004, section 373.40, subdivision 1, is amended to read:
193.22 		 Subdivision 1.Definitions.  For purposes of this section, the following terms have 
193.23 	the meanings given.
193.24 	 (a) "Bonds" means an obligation as defined under section 475.51.
193.25 	 (b) "Capital improvement" means acquisition or betterment of public lands, 
193.26 	development rights in the form of conservation easements under chapter 84C,buildings, 
193.27 	or other improvements within the county for the purpose of a county courthouse, 
193.28 	administrative building, health or social service facility, correctional facility, jail, law 
193.29 	enforcement center, hospital, morgue, library, park, qualified indoor ice arena, and roads 
193.30 	and bridges, and the acquisition of development rights in the form of conservation 
193.31 	easements under chapter 84C.  An improvement must have an expected useful life of 
193.32 	five years or more to qualify.  "Capital improvement" does not include light rail transit 
193.33 	or any activity related to it or a recreation or sports facility building (such as, but not 
193.34 	limited to, a gymnasium, ice arena, racquet sports facility, swimming pool, exercise room 
194.1 	or health spa), unless the building is part of an outdoor park facility and is incidental to 
194.2 	the primary purpose of outdoor recreation.
194.3 	 (c) "Commissioner" means the commissioner of employment and economic 
194.4 	development.
194.5 	 (d) "Metropolitan county" means a county located in the seven-county metropolitan 
194.6 	area as defined in section 473.121 or a county with a population of 90,000 or more.
194.7 	 (e) "Population" means the population established by the most recent of the 
194.8 	following (determined as of the date the resolution authorizing the bonds was adopted):
194.9 	 (1) the federal decennial census,
194.10 	 (2) a special census conducted under contract by the United States Bureau of the 
194.11 	Census, or
194.12 	 (3) a population estimate made either by the Metropolitan Council or by the state 
194.13 	demographer under section 4A.02.
194.14 	 (f) "Qualified indoor ice arena" means a facility that meets the requirements of 
194.15 	section 373.43.
194.16 	 (g) "Tax capacity" means total taxable market value, but does not include captured 
194.17 	market value.

194.18 	 Sec. 5. Minnesota Statutes 2004, section 400.04, is amended by adding a subdivision 
194.19 	to read:
194.20 		 Subd. 4a.Performance bond waiver or alternative. Notwithstanding the 
194.21 	requirements of section 574.26 or any other public works bond requirements for a solid 
194.22 	waste facilities project established under an agreement authorized under chapter 115A 
194.23 	or chapter 400, the county may waive the requirement for performance bonds or accept 
194.24 	another form of financial guarantee in any amount acceptable to the county, if the project 
194.25 	is partially or fully funded by a county, and the county is not liable for financial acceptance 
194.26 	until performance guarantees or other standards established under the agreement have 
194.27 	been satisfied.

194.28 	 Sec. 6. Minnesota Statutes 2004, section 410.32, is amended to read:
194.29 	 410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.
194.30 	 (a) Notwithstanding any contrary provision of other law or charter, a home rule 
194.31 	charter city may, by resolution and without public referendum, issue capital notes subject 
194.32 	to the city debt limit to purchase capital equipment.
194.33 	 (b) For purposes of this section, "capital equipment" means:
195.1 	 (1) public safety equipment, ambulance and other medical equipment, road 
195.2 	construction and maintenance equipment, and other capital equipment;and
195.3 	 (2) computer hardware and original operating system  software, provided whether 
195.4 	bundled with machinery or equipment or unbundled, together with application 
195.5 	development services and training related to the use of the computer or software.
195.6 	 (c) The equipment or software has must have an expected useful life at least as long 
195.7 	as the term of the notes.  The authority to issue capital notes for original operating system 
195.8 	 computer software and related services expires on July 1, 2005  2007.
195.9 	 (d) The notes shall be payable in not more than five ten  years and be issued on 
195.10 	terms and in the manner the city determines.  The total principal amount of the capital 
195.11 	notes issued in a fiscal year shall not exceed 0.03 percent of the market value of taxable 
195.12 	property in the city for that year.
195.13 	 (e) A tax levy shall be made for the payment of the principal and interest on the 
195.14 	notes, in accordance with section 475.61, as in the case of bonds.
195.15 	 (f) Notes issued under this section shall require an affirmative vote of two-thirds of 
195.16 	the governing body of the city.
195.17 	 (g) Notwithstanding a contrary provision of other law or charter, a home rule charter 
195.18 	city may also issue capital notes subject to its debt limit in the manner and subject to the 
195.19 	limitations applicable to statutory cities pursuant to section 412.301.

195.20 	 Sec. 7. Minnesota Statutes 2004, section 412.301, is amended to read:
195.21 	 412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.
195.22 	 (a) The council may issue certificates of indebtedness or capital notes subject to the 
195.23 	city debt limits to purchase capital equipment.
195.24 	 (b) For purposes of this section, "capital equipment" means:
195.25 	 (1) public safety equipment, ambulance and other medical  equipment, road 
195.26 	construction or and maintenance equipment, and other capital equipment;and
195.27 	 (2) computer hardware and original operating system  software, provided whether 
195.28 	bundled with machinery or equipment or unbundled, together with application 
195.29 	development services and training related to the use of the computer or software.
195.30 	 (c) The equipment or software has must have an expected useful life at least as long 
195.31 	as the terms of the certificates or notes.  The authority to issue capital notes for original 
195.32 	operating system software expires on July 1, 2005 2007.
195.33 	 (d) Such certificates or notes shall be payable in not more than five ten years and 
195.34 	shall be issued on such terms and in such manner as the council may determine.
196.1 	 (e) If the amount of the certificates or notes to be issued to finance any such purchase 
196.2 	exceeds 0.25 percent of the market value of taxable property in the city, they shall not 
196.3 	be issued for at least ten days after publication in the official newspaper of a council 
196.4 	resolution determining to issue them; and if before the end of that time, a petition asking 
196.5 	for an election on the proposition signed by voters equal to ten percent of the number of 
196.6 	voters at the last regular municipal election is filed with the clerk, such certificates or notes 
196.7 	shall not be issued until the proposition of their issuance has been approved by a majority 
196.8 	of the votes cast on the question at a regular or special election.
196.9 	 (f) A tax levy shall be made for the payment of the principal and interest on such 
196.10 	certificates or notes, in accordance with section 475.61, as in the case of bonds.

196.11 	 Sec. 8. Minnesota Statutes 2004, section 428A.101, is amended to read:
196.12 	 428A.101 DEADLINE FOR SPECIAL SERVICE DISTRICT DISTRICTS 
196.13 	 UNDER GENERAL LAW.
196.14 	 The establishment of a new special service district after June 30, 2005 2009, requires 
196.15 	enactment of a special law authorizing the establishment of the area.

196.16 	 Sec. 9. Minnesota Statutes 2004, section 428A.21, is amended to read:
196.17 	 428A.21  SUNSET DEADLINE FOR HOUSING IMPROVEMENT 
196.18 	DISTRICTS UNDER GENERAL LAW.
196.19 	 No The establishment of a new housing improvement areas may be established 
196.20 	under sections 428A.11 to 428A.20area after June 30, 2005.  After June 30, 2005, a city 
196.21 	may establish a housing improvement area, provided that it receives enabling legislation 
196.22 	 2009, requires enactment of a special law authorizing the establishment of the area.

196.23 	 Sec. 10. Minnesota Statutes 2004, section 429.031, is amended by adding a subdivision 
196.24 	to read:
196.25 		 Subd. 4.Improvements; orderly annexation. An improvement may be made 
196.26 	by a municipality in an area that is the subject of an orderly annexation agreement 
196.27 	under section 414.0325 to which the municipality is a party.  The municipality may 
196.28 	subsequently reimburse itself for all or any part of the cost of such an improvement by 
196.29 	levying assessments on the property subject to the orderly annexation agreement, when 
196.30 	annexed, in the manner provided in section 429.051, but only if the orderly annexation 
196.31 	agreement includes a statement that the municipality intends to do so and notice has been 
196.32 	provided to the property owner as provided in subdivision 1.

197.1 	 Sec. 11. Minnesota Statutes 2004, section 429.051, is amended to read:
197.2 	 429.051 APPORTIONMENT OF COST.
197.3 	 The cost of any improvement, or any part thereof, may be assessed upon property 
197.4 	benefited by the improvement, based upon the benefits received, whether or not the 
197.5 	property abuts on the improvement and whether or not any part of the cost of the 
197.6 	improvement is paid from the county state-aid highway fund, the municipal state-aid street 
197.7 	fund, or the trunk highway fund.  The area assessed may be less than but may not exceed 
197.8 	the area proposed to be assessed as stated in the notice of hearing on the improvement, 
197.9 	except as provided below.  The municipality may pay such portion of the cost of the 
197.10 	improvement as the council may determine from general ad valorem tax levies or from 
197.11 	other revenues or funds of the municipality available for the purpose.  The municipality 
197.12 	may subsequently reimburse itself for all or any of the portion of the cost of a water, storm 
197.13 	sewer, or sanitary sewer an improvement so paid by levying additional assessments upon 
197.14 	any properties abutting on but not previously assessed for the improvement, on notice 
197.15 	and hearing as provided for the assessments initially made.  To the extent that such an 
197.16 	improvement benefits nonabutting properties which may be served by the improvement 
197.17 	when one or more later extensions or improvements are made but which are not initially 
197.18 	assessed therefor, the municipality may also reimburse itself by adding all or any of the 
197.19 	portion of the cost so paid to the assessments levied for any of such later extensions 
197.20 	or improvements, provided that notice that such additional amount will be assessed is 
197.21 	included in the notice of hearing on the making of such extensions or improvements.  The 
197.22 	additional assessments herein authorized may be made whether or not the properties 
197.23 	assessed were included in the area described in the notice of hearing on the making of 
197.24 	the original improvement.
197.25 	 In any city of the fourth class electing to proceed under a home rule charter as 
197.26 	provided in this chapter, which charter provides for a board of water commissioners and 
197.27 	authorizes such board to assess a water frontage tax to defray the cost of construction of 
197.28 	water mains, such board may assess the tax based upon the benefits received and without 
197.29 	regard to any charter limitation on the amount that may be assessed for each lineal foot of 
197.30 	property abutting on the water main.  The water frontage tax shall be imposed according 
197.31 	to the procedure and, except as herein provided, subject to the limitations of the charter 
197.32 	of the city.

197.33 	 Sec. 12. Minnesota Statutes 2004, section 469.034, subdivision 2, is amended to read:
197.34 		 Subd. 2.General obligation revenue bonds.  (a) An authority may pledge the 
197.35 	general obligation of the general jurisdiction governmental unit as additional security for 
198.1 	bonds payable from income or revenues of the project or the authority.  The authority 
198.2 	must find that the pledged revenues will equal or exceed 110 percent of the principal and 
198.3 	interest due on the bonds for each year.  The proceeds of the bonds must be used for a 
198.4 	qualified housing development project or projects.  The obligations must be issued and 
198.5 	sold in the manner and following the procedures provided by chapter 475, except the 
198.6 	obligations are not subject to approval by the electors,and the maturities may extend to not 
198.7 	more than 30 35 years from the estimated date of completion of the project for obligations 
198.8 	sold to finance housing for the elderly and 40 years for other obligations issued under this 
198.9 	subdivision.  The authority is the municipality for purposes of chapter 475.
198.10 	 (b) The principal amount of the issue must be approved by the governing body of 
198.11 	the general jurisdiction governmental unit whose general obligation is pledged.  Public 
198.12 	hearings must be held on issuance of the obligations by both the authority and the general 
198.13 	jurisdiction governmental unit.  The hearings must be held at least 15 days, but not more 
198.14 	than 120 days, before the sale of the obligations.
198.15 	 (c) The maximum amount of general obligation bonds that may be issued and 
198.16 	outstanding under this section equals the greater of (1) one-half of one percent of 
198.17 	the taxable market value of the general jurisdiction governmental unit whose general 
198.18 	obligation which includes a tax on property is pledged, or (2) $3,000,000.  In the case 
198.19 	of county or multicounty general obligation bonds, the outstanding general obligation 
198.20 	bonds of all cities in the county or counties issued under this subdivision must be added 
198.21 	in calculating the limit under clause (1).
198.22 	 (d) "General jurisdiction governmental unit" means the city in which the housing 
198.23 	development project is located.  In the case of a county or multicounty authority, the 
198.24 	county or counties may act as the general jurisdiction governmental unit. In the case of 
198.25 	a multicounty authority, the pledge of the general obligation is a pledge of a tax on the 
198.26 	taxable property in each of the counties.
198.27 	 (e) "Qualified housing development project" means a housing development project 
198.28 	providing housing either for the elderly or for individuals and families with incomes not 
198.29 	greater than 80 percent of the median family income as estimated by the United States 
198.30 	Department of Housing and Urban Development for the standard metropolitan statistical 
198.31 	area or the nonmetropolitan county in which the project is located, and will be owned by 
198.32 	the authority for the term of the bonds.  A qualified housing development project may 
198.33 	admit nonelderly individuals and families with higher incomes if:
198.34 	 (1) three years have passed since initial occupancy;
199.1 	 (2) the authority finds the project is experiencing unanticipated vacancies resulting in 
199.2 	insufficient revenues, because of changes in population or other unforeseen circumstances 
199.3 	that occurred after the initial finding of adequate revenues; and
199.4 	 (3) the authority finds a tax levy or payment from general assets of the general 
199.5 	jurisdiction governmental unit will be necessary to pay debt service on the bonds if higher 
199.6 	income individuals or families are not admitted.

199.7 	 Sec. 13. Minnesota Statutes 2004, section 469.158, is amended to read:
199.8 	 469.158 MANNER OF ISSUANCE OF BONDS; INTEREST RATE.
199.9 	 Bonds authorized under sections 469.152 to 469.165 must be issued in accordance 
199.10 	with the provisions of chapter 475 relating to bonds payable from income of revenue 
199.11 	producing conveniences, except that public sale is not required, the provisions of sections 
199.12 	475.62 and 475.63 do not apply, and the bonds may mature at the time or times, in the 
199.13 	amount or amounts, within 30 years, or in the case of bonds issued to finance dormitories 
199.14 	or other types of student housing, 40 years from date of issue, and may be sold at a price 
199.15 	equal to the percentage of the par value thereof, plus accrued interest, and bearing interest 
199.16 	at the rate or rates agreed by the contracting party, the purchaser, and the municipality or 
199.17 	redevelopment agency, notwithstanding any limitation of interest rate or cost or of the 
199.18 	amounts of annual maturities contained in any other law.  Bonds issued to refund bonds 
199.19 	previously issued pursuant to sections 469.152 to 469.165 may be issued in amounts 
199.20 	determined by the municipality or redevelopment agency notwithstanding the provisions 
199.21 	of section 475.67, subdivision 3.

199.22 	 Sec. 14. Minnesota Statutes 2004, section 473.39, is amended by adding a subdivision 
199.23 	to read:
199.24 		 Subd. 1k.Obligations. After July 1, 2005, in addition to the authority in 
199.25 	subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, and 1j, the council may issue certificates of 
199.26 	indebtedness, bonds, or other obligations under this section in an amount not exceeding 
199.27 	$64,000,000 for capital expenditures as prescribed in the council's regional transit master 
199.28 	plan and transit capital improvement program and for related costs, including the costs of 
199.29 	issuance and sale of the obligations.

199.30 	 Sec. 15. Minnesota Statutes 2004, section 474A.061, subdivision 2c, is amended to 
199.31 	read:
199.32 		 Subd. 2c.Public facilities pool allocation.  From the beginning of the calendar 
199.33 	year and continuing for a period of 120 days, the commissioner shall reserve $3,000,000 
200.1 	$5,000,000  of the available bonding authority from the public facilities pool for 
200.2 	applications for public facilities projects to be financed by the Western Lake Superior 
200.3 	Sanitary District. Commencing on the second Tuesday in January and continuing on 
200.4 	each Monday through the last Monday in July, the commissioner shall allocate available 
200.5 	bonding authority from the public facilities pool to applications for eligible public 
200.6 	facilities projects received on or before the Monday of the preceding week.  If there 
200.7 	are two or more applications for public facilities projects from the pool and there is 
200.8 	insufficient available bonding authority to provide allocations for all projects in any one 
200.9 	week, the available bonding authority shall be awarded by lot unless otherwise agreed to 
200.10 	by the respective issuers.

200.11 	 Sec. 16. Minnesota Statutes 2004, section 474A.131, subdivision 1, is amended to read:
200.12 		 Subdivision 1.Notice of issue.  Each issuer that issues bonds with an allocation 
200.13 	received under this chapter shall provide a notice of issue to the department on forms 
200.14 	provided by the department stating:
200.15 	 (1) the date of issuance of the bonds;
200.16 	 (2) the title of the issue;
200.17 	 (3) the principal amount of the bonds;
200.18 	 (4) the type of qualified bonds under federal tax law;
200.19 	 (5) the dollar amount of the bonds issued that were subject to the annual volume 
200.20 	cap; and
200.21 	 (6) for entitlement issuers, whether the allocation is from current year entitlement 
200.22 	authority or is from carryforward authority.
200.23 	 For obligations that are issued as a part of a series of obligations, a notice must be 
200.24 	provided for each series.  A penalty of one-half of the amount of the application deposit 
200.25 	not to exceed $5,000 shall apply to any issue of obligations for which a notice of issue 
200.26 	is not provided to the department within five business days after issuance or before the 
200.27 	last Monday 4:30 p.m. on the last business day in December, whichever occurs first.  
200.28 	Within 30 days after receipt of a notice of issue the department shall refund a portion 
200.29 	of the application deposit equal to one percent of the amount of the bonding authority 
200.30 	actually issued if a one percent application deposit was made, or equal to two percent of 
200.31 	the amount of the bonding authority actually issued if a two percent application deposit 
200.32 	was made, less any penalty amount.

200.33 	 Sec. 17. Minnesota Statutes 2004, section 475.51, subdivision 4, is amended to read:
201.1 		 Subd. 4.Net debt.  "Net debt" means the amount remaining after deducting from its 
201.2 	gross debt the amount of current revenues which are applicable within the current fiscal 
201.3 	year to the payment of any debt and the aggregate of the principal of the following:
201.4 	 (1) Obligations issued for improvements which are payable wholly or partly from the 
201.5 	proceeds of special assessments levied upon property specially benefited thereby, including 
201.6 	those which are general obligations of the municipality issuing them, if the municipality is 
201.7 	entitled to reimbursement in whole or in part from the proceeds of the special assessments.
201.8 	 (2) Warrants or orders having no definite or fixed maturity.
201.9 	 (3) Obligations payable wholly from the income from revenue producing 
201.10 	conveniences.
201.11 	 (4) Obligations issued to create or maintain a permanent improvement revolving 
201.12 	fund.
201.13 	 (5) Obligations issued for the acquisition, and betterment of public waterworks 
201.14 	systems, and public lighting, heating or power systems, and of any combination thereof or 
201.15 	for any other public convenience from which a revenue is or may be derived.
201.16 	 (6) Debt service loans and capital loans made to a school district under the provisions 
201.17 	of sections 126C.68 and 126C.69.
201.18 	 (7) Amount of all money and the face value of all securities held as a debt service 
201.19 	fund for the extinguishment of obligations other than those deductible under this 
201.20 	subdivision.
201.21 	 (8) Obligations to repay loans made under section 216C.37.
201.22 	 (9) Obligations to repay loans made from money received from litigation or 
201.23 	settlement of alleged violations of federal petroleum pricing regulations.
201.24 	 (10) Obligations issued to pay pension fund liabilities under section 475.52, 
201.25 	subdivision 6, or any charter authority.
201.26 	 (11) Obligations issued to pay judgments against the municipality under section 
201.27 	475.52, subdivision 6, or any charter authority.
201.28 	 (12) All other obligations which under the provisions of law authorizing their 
201.29 	issuance are not to be included in computing the net debt of the municipality.

201.30 	 Sec. 18. Minnesota Statutes 2004, section 475.52, subdivision 1, is amended to read:
201.31 		 Subdivision 1.Statutory cities.  Any statutory city may issue bonds or other 
201.32 	obligations for the acquisition or betterment of public buildings, means of garbage 
201.33 	disposal, hospitals, nursing homes, homes for the aged, schools, libraries, museums, art 
201.34 	galleries, parks, playgrounds, stadia, sewers, sewage disposal plants, subways, streets, 
201.35 	sidewalks, warning systems; for any utility or other public convenience from which a 
202.1 	revenue is or may be derived; for a permanent improvement revolving fund; for changing, 
202.2 	controlling or bridging streams and other waterways; for the acquisition and betterment 
202.3 	of bridges and roads within two miles of the corporate limits;for the acquisition of 
202.4 	development rights in the form of conservation easements under chapter 84C; and for 
202.5 	acquisition of equipment for snow removal, street construction and maintenance, or fire 
202.6 	fighting.  Without limitation by the foregoing the city may issue bonds to provide money 
202.7 	for any authorized corporate purpose except current expenses.

202.8 	 Sec. 19. Minnesota Statutes 2004, section 475.52, subdivision 3, is amended to read:
202.9 		 Subd. 3.Counties.  Any county may issue bonds for the acquisition or betterment 
202.10 	of courthouses, county administrative buildings, health or social service facilities, 
202.11 	correctional facilities, law enforcement centers, jails, morgues, libraries, parks, and 
202.12 	hospitals, for roads and bridges within the county or bordering thereon and for road 
202.13 	equipment and machinery and for ambulances and related equipment;for the acquisition 
202.14 	of development rights in the form of conservation easements under chapter 84C, and for 
202.15 	capital equipment for the administration and conduct of elections providing the equipment 
202.16 	is uniform countywide, except that the power of counties to issue bonds in connection 
202.17 	with a library shall not exist in Hennepin County.

202.18 	 Sec. 20. Minnesota Statutes 2004, section 475.52, subdivision 4, is amended to read:
202.19 		 Subd. 4.Towns.  Any town may issue bonds for the acquisition and betterment 
202.20 	of town halls, town roads and bridges, nursing homes and homes for the aged, and for 
202.21 	acquisition of equipment for snow removal, road construction or maintenance, and fire 
202.22 	fighting;for the acquisition of development rights in the form of conservation easements 
202.23 	under chapter 84C;and for the acquisition and betterment of any buildings to house and 
202.24 	maintain town equipment.

202.25 	 Sec. 21. Minnesota Statutes 2004, section 475.521, subdivision 1, is amended to read:
202.26 		 Subdivision 1.Definitions.  For purposes of this section, the following terms have 
202.27 	the meanings given.
202.28 	 (a) "Bonds" mean an obligation defined under section 475.51.
202.29 	 (b) "Capital improvement" means acquisition or betterment of public lands, 
202.30 	buildings or other improvements for the purpose of a city hall, town hall, library,public 
202.31 	safety facility, and public works facility.  An improvement must have an expected useful 
202.32 	life of five years or more to qualify.  Capital improvement does not include light rail transit 
203.1 	or any activity related to it, or a park, library,road, bridge, administrative building other 
203.2 	than a city or town hall, or land for any of those facilities.
203.3 	 (c) "City" "Municipality" means a home rule charter or statutory city or a town.

203.4 	 Sec. 22. Minnesota Statutes 2004, section 475.521, subdivision 2, is amended to read:
203.5 		 Subd. 2.Election requirement.  (a) Bonds issued by a city municipality to finance 
203.6 	capital improvements under an approved capital improvements plan are not subject to the 
203.7 	election requirements of section 475.58. The bonds are subject to the net debt limits under 
203.8 	section 475.53.The bonds must be approved by an affirmative vote of three-fifths of the 
203.9 	members of a five-member city council governing body.  In the case of a city council 
203.10 	governing body having more or less than five members, the bonds must be approved by a 
203.11 	vote of at least two-thirds of the city council members of the governing body.
203.12 	 (b) Before the issuance of bonds qualifying under this section, the city municipality 
203.13 	must publish a notice of its intention to issue the bonds and the date and time of the 
203.14 	hearing to obtain public comment on the matter.  The notice must be published in the 
203.15 	official newspaper of the city municipality  or in a newspaper of general circulation in the 
203.16 	city  municipality.  Additionally, the notice may be posted on the official Web site, if any, 
203.17 	of the city municipality.  The notice must be published at least 14 but not more than 28 
203.18 	days before the date of the hearing.
203.19 	 (c) A city municipality may issue the bonds only after obtaining the approval of 
203.20 	a majority of the voters voting on the question of issuing the obligations, if a petition 
203.21 	requesting a vote on the issuance is signed by voters equal to five percent of the votes cast 
203.22 	in the city municipality in the last general election and is filed with the city clerk within 
203.23 	30 days after the public hearing.  The commissioner of revenue shall prepare a suggested 
203.24 	form of the question to be presented at the election.

203.25 	 Sec. 23. Minnesota Statutes 2004, section 475.521, subdivision 3, is amended to read:
203.26 		 Subd. 3.Capital improvement plan.  (a) A city  municipality may adopt a capital 
203.27 	improvement plan.  The plan must cover at least a five-year period beginning with the 
203.28 	date of its adoption.  The plan must set forth the estimated schedule, timing, and details 
203.29 	of specific capital improvements by year, together with the estimated cost, the need for 
203.30 	the improvement, and sources of revenue to pay for the improvement. In preparing the 
203.31 	capital improvement plan, the city council  governing body must consider for each project 
203.32 	and for the overall plan:
203.33 	 (1) the condition of the city's municipality's existing infrastructure, including the 
203.34 	projected need for repair or replacement;
204.1 	 (2) the likely demand for the improvement;
204.2 	 (3) the estimated cost of the improvement;
204.3 	 (4) the available public resources;
204.4 	 (5) the level of overlapping debt in the city municipality;
204.5 	 (6) the relative benefits and costs of alternative uses of the funds;
204.6 	 (7) operating costs of the proposed improvements; and
204.7 	 (8) alternatives for providing services most efficiently through shared facilities with 
204.8 	other cities municipalities or local government units.
204.9 	 (b) The capital improvement plan and annual amendments to it must be approved 
204.10 	by the city council governing body after public hearing.

204.11 	 Sec. 24. Minnesota Statutes 2004, section 475.521, subdivision 4, is amended to read:
204.12 		 Subd. 4.Limitations on amount.  A city municipality may not issue bonds under 
204.13 	this section if the maximum amount of principal and interest to become due in any year 
204.14 	on all the outstanding bonds issued under this section, including the bonds to be issued, 
204.15 	will equal or exceed 0.05367 0.16 percent of the  taxable market value of property in the 
204.16 	county municipality. Calculation of the limit must be made using the taxable market 
204.17 	value for the taxes payable year in which the obligations are issued and sold. In the case 
204.18 	of a municipality with a population of 2,500 or more, the bonds are subject to the net 
204.19 	debt limits under section 475.53.  In the case of a shared facility in which more than 
204.20 	one municipality participates, upon compliance by each participating municipality with 
204.21 	the requirements of subdivision 2, the limitations in this subdivision and the net debt 
204.22 	represented by the bonds shall be allocated to each participating municipality in proportion 
204.23 	to its required financial contribution to the financing of the shared facility, as set forth in 
204.24 	the joint powers agreement relating to the shared facility.This section does not limit the 
204.25 	authority to issue bonds under any other special or general law.

204.26 	 Sec. 25. Minnesota Statutes 2004, section 475.58, subdivision 3b, is amended to read:
204.27 		 Subd. 3b.Street reconstruction.  (a) A municipality may, without regard to 
204.28 	the election requirement under subdivision 1, issue and sell obligations for street 
204.29 	reconstruction, if the following conditions are met:
204.30 	 (1) the streets are reconstructed under a street reconstruction plan that describes 
204.31 	the streets to be reconstructed, the estimated costs, and any planned reconstruction of 
204.32 	other streets in the municipality over the next five years, and the plan and issuance of the 
204.33 	obligations has been approved by a vote of all of the members of the governing body 
205.1 	following a public hearing for which notice has been published in the official newspaper at 
205.2 	least ten days but not more than 28 days prior to the hearing; and
205.3 	 (2) if a petition requesting a vote on the issuance is signed by voters equal to 
205.4 	five percent of the votes cast in the last municipal general election and is filed with the 
205.5 	municipal clerk within 30 days of the public hearing, the municipality may issue the bonds 
205.6 	only after obtaining the approval of a majority of the voters voting on the question of 
205.7 	the issuance of the obligations.
205.8 	 (b) Obligations issued under this subdivision are subject to the debt limit of the 
205.9 	municipality and are not excluded from net debt under section 475.51, subdivision 4.
205.10 	 (c) For purposes of this subdivision, street reconstruction includes utility replacement 
205.11 	and relocation and other activities incidental to the street reconstruction, but turn lanes 
205.12 	and other improvements having a substantial public safety function, realignments, other 
205.13 	modifications to intersect with state and county roads, and the local share of state and 
205.14 	county road projects.
205.15 	 (d) Except in the case of turn lanes, safety improvements, realignments, intersection 
205.16 	modifications, and the local share of state and county road projects, street reconstruction 
205.17 	does not include the portion of project cost allocable to widening a street or adding curbs 
205.18 	and gutters where none previously existed.

205.19 	 Sec. 26. CITY OF ST. PAUL; RIVERCENTRE COMPLEX OPERATION.
 205.20 		 Subdivision 1.Definitions. (a) For the purposes of this section, the terms defined in 
205.21 	this subdivision have the meanings given them.
205.22 	 (b) "City" means the city of St. Paul, its mayor, city council, and any other board, 
205.23 	authority, commission, or officer authorized by law, charter, or ordinance to exercise city 
205.24 	powers of the nature referred to in this section.
205.25 	 (c) "RiverCentre complex" means collectively the auditorium, convention, 
205.26 	conference and education center, arena, and parking ramp facilities presently and 
205.27 	commonly known as the Roy Wilkins Auditorium, St. Paul RiverCentre, Xcel Energy 
205.28 	Center, and RiverCentre Parking Ramp, including all property, real or personal, tangible 
205.29 	or intangible, located in the city, intended to be used as part of the RiverCentre complex or 
205.30 	additions to or extensions of it.
205.31 		 Subd. 2.Creation of nonprofit organization. As required under Minnesota 
205.32 	Statutes, section 465.717, and notwithstanding any other law, city charter provision, or 
205.33 	ordinance to the contrary, the city of St. Paul may participate in the creation of a nonprofit 
205.34 	organization for the purposes provided in this section.
206.1 		 Subd. 3.Governing board. (a) The mayor of the city, subject to approval by 
206.2 	the city council, shall appoint a majority of the members of the governing board of the 
206.3 	nonprofit organization performing all or a part of the activities necessary to carry out the 
206.4 	purposes specified in this section. The mayor may designate any officer or employee of 
206.5 	the city to serve as a member of the governing board of any nonprofit organization.
206.6 	 (b) In addition to the appointments made by the mayor under paragraph (a), the 
206.7 	mayor shall designate three members of the city council to serve on the governing board 
206.8 	of the nonprofit organization.
206.9 	 (c) Notwithstanding any provision contained in the articles of incorporation and 
206.10 	bylaws of the nonprofit organization, any member of the governing board appointed by 
206.11 	the mayor may be removed only by the mayor for cause.
206.12 	 (d) The governing board of the nonprofit organization shall select, subject to the 
206.13 	approval of the mayor, a president to serve as chief executive officer and general manager 
206.14 	of the nonprofit organization.
206.15 	 (e) The procedures in Minnesota Statutes, section 317A.255, subdivision 1, 
206.16 	paragraph (b), relating to director conflicts of interest, are not required if the contract or 
206.17 	other transaction is between the city and the nonprofit organization.
206.18 		 Subd. 4.Rivercentre management; authority to contract with nonprofit 
206.19 	organization. The city may enter into an agreement with the nonprofit organization 
206.20 	created in subdivision 2 to equip, maintain, manage, and operate all or a portion of the 
206.21 	RiverCentre complex and to manage and operate a convention bureau to market and 
206.22 	promote the city as a tourist or convention center.  Except as otherwise provided in this 
206.23 	section, the nonprofit organization may only contract and utilize and expend funds for these 
206.24 	purposes under the direction of its governing board, subject to the accounting, financial 
206.25 	reporting, and other conditions that the city may prescribe in a contract made under this 
206.26 	section between the city and the nonprofit organization. The nonprofit organization may 
206.27 	use the services of the office of the city attorney and the city's purchasing department.  All 
206.28 	activities performed to carry out these purposes are deemed to be for a public purpose.
206.29 	 Subd. 5.[BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX 
206.30 	EXEMPTIONS PRESERVED.] (a) The city must protect the rights of holders of bonds 
206.31 	issued for the RiverCentre complex, including preserving the tax-exempt status of the 
206.32 	bonds.
206.33 	 (b) The use and operation of the RiverCentre complex by the nonprofit organization 
206.34 	with which the city contracts under this act is a use, lease, or occupancy for public, 
206.35 	governmental, and municipal purposes, and the complex is exempt from taxation by the 
207.1 	state or any political subdivision of the state during such use, to the extent it would be 
207.2 	exempt if the complex was equipped, maintained, managed, and operated by the city.
207.3 	 (c) Gross receipts of tickets and admissions to events at the RiverCentre complex 
207.4 	sponsored by the nonprofit organization created in this section do not qualify for the sales 
207.5 	tax exemption under Minnesota Statutes, section 297A.70, subdivision 10.
207.6 		 Subd. 6.Applicable general laws. The following statutes apply to the nonprofit 
207.7 	organization with which the city contracts under this section the same as they apply to 
207.8 	the city, to the extent practicable:
207.9 	 (1) Minnesota Statutes, chapter 13D, the Minnesota Open Meeting Law; and 
207.10 	 (2) Minnesota Statutes, chapter 13, the Government Data Practices Act.
207.11 		 Subd. 7.Succession. The nonprofit organization with which the city contracts under 
207.12 	this section is the successor to all powers, rights, assets, privileges, and interests held and 
207.13 	enjoyed by the RiverCentre authority on the effective date of this section, and established 
207.14 	by the provisions of Laws 1967, chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 3, 
207.15 	clause (3), as amended; Laws 1982, chapter 523, article 25, sections 4 and 5, as amended; 
207.16 	Laws 1998, chapter 404, sections 81 and 82; and Minnesota Statutes, section 297A.98. 
207.17 	On the effective date of the contract between the city and the nonprofit organization 
207.18 	authorized by this section, the RiverCentre authority ceases to exist for only so long 
207.19 	as the contract is in effect, and all other laws or provisions specifically relating to the 
207.20 	RiverCentre authority and the RiverCentre complex that are not otherwise referenced in 
207.21 	this section, do not apply to the nonprofit organization.
207.22 		 Subd. 8.Liability. The nonprofit organization with which the city contracts under 
207.23 	this section is a "municipality," and the officers, directors, employees, and agents of the 
207.24 	nonprofit organization are "employees, officers, or agents," under Minnesota Statutes, 
207.25 	chapter 466, relating to tort liability.  The city must defend, save harmless, and indemnify 
207.26 	the nonprofit organization, including the nonprofit's officers, directors, employees, 
207.27 	and agents, against any claim or demand arising out of the nonprofit organization's 
207.28 	performance under the contract.

207.29 	EFFECTIVE DATE. This section is effective the day after the city council and the 
207.30 	chief clerical officer of the city of St. Paul have timely completed their compliance with 
207.31 	Minnesota Statutes, section 645.023, subdivisions 2 and 3.

207.32 	 Sec. 27. TRANSFER OF MHFA BONDING AUTHORITY TO HESO.
 207.33 	 Notwithstanding Minnesota Statutes, section 474A.03, subdivision 2a, clause (b), 
207.34 	the Minnesota Housing Finance Agency may enter into an agreement with the Higher 
207.35 	Education Services Office under which the Higher Education Services Office issues 
208.1 	qualified student loan bonds, up to $50,000,000 of which are issued pursuant to bonding 
208.2 	authority allocated to the Minnesota Housing Finance Agency in 2004 under Minnesota 
208.3 	Statutes, section 474A.03, subdivision 2a, clause (a).  This amount is in addition to 
208.4 	the bonding authority otherwise allocated to the Higher Education Services Office 
208.5 	under Minnesota Statutes, chapter 474A.  Notwithstanding Minnesota Statutes, section 
208.6 	474A.04, subdivision 1a, 474A.061, or 474A.091, subdivision 2, bonding authority 
208.7 	carried forward by the Minnesota Housing Financing Agency from its allocation for 2004 
208.8 	under Minnesota Statutes, section 474A.03, subdivision 2a, clause (b), are exempt from 
208.9 	the requirement that the bonding authority be permanently issued by December 31 of the 
208.10 	next succeeding calendar year.

208.11 	 Sec. 28. APPLICATION.
 208.12 	 Section 14 applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 
208.13 	Scott, and Washington.

208.14 	 Sec. 29. REPEALER.
 208.15 	 Minnesota Statutes 2004, section 473.39, subdivision 1f, is repealed.

208.16 	 Sec. 30. EFFECTIVE DATE.
 208.17 	 This article is effective the day following final enactment.

208.18 	 ARTICLE 7
208.19 	 MINERALS; AGGREGATE

208.20 	 Section 1. Minnesota Statutes 2004, section 272.02, is amended by adding a 
208.21 	subdivision to read:
208.22 		 Subd. 68.Property used in the business of mining subject to the net proceeds 
208.23 	tax. The following property used in the business of mining subject to the net proceeds tax 
208.24 	under section 298.015 is exempt:
208.25 	 (1) deposits of ores, metals, and minerals and the lands in which they are contained;
208.26 	 (2) all real and personal property used in mining, quarrying, producing, or refining 
208.27 	ores, minerals, or metals, including lands occupied by or used in connection with the 
208.28 	mining, quarrying, production, or refining facilities; and 
208.29 	 (3) concentrate or direct reduced ore.
208.30 	 This exemption applies for each year that a person subject to tax under section 298.015
208.31 	uses the property for mining, quarrying, producing, or refining ores, metals, or minerals.

209.1 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
209.2 	thereafter.

209.3 	 Sec. 2. Minnesota Statutes 2004, section 290.05, subdivision 1, is amended to read:
209.4 		 Subdivision 1.Exempt entities.  The following corporations, individuals, estates, 
209.5 	trusts, and organizations shall be exempted from taxation under this chapter, provided 
209.6 	that every such person or corporation claiming exemption under this chapter, in whole 
209.7 	or in part, must establish to the satisfaction of the commissioner the taxable status of 
209.8 	any income or activity:
209.9 	 (a) corporations, individuals, estates, and trusts engaged in the business of mining or 
209.10 	producing iron ore and mining, producing, or refining other ores, metals, and minerals,the 
209.11 	mining or ,production, or refining of which is subject to the occupation tax imposed by 
209.12 	section 298.01; but if any such corporation, individual, estate, or trust engages in any 
209.13 	other business or activity or has income from any property not used in such business it 
209.14 	shall be subject to this tax computed on the net income from such property or such other 
209.15 	business or activity.  Royalty shall not be considered as income from the business of 
209.16 	mining or producing iron ore within the meaning of this section;
209.17 	 (b) the United States of America, the state of Minnesota or any political subdivision 
209.18 	of either agencies or instrumentalities, whether engaged in the discharge of governmental 
209.19 	or proprietary functions; and
209.20 	 (c) any insurance company.

209.21 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
209.22 	December 31, 2004.

209.23 	 Sec. 3. Minnesota Statutes 2004, section 290.17, subdivision 4, is amended to read:
209.24 		 Subd. 4.Unitary business principle.  (a) If a trade or business conducted wholly 
209.25 	within this state or partly within and partly without this state is part of a unitary business, 
209.26 	the entire income of the unitary business is subject to apportionment pursuant to section 
209.27 	290.191.  Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary 
209.28 	business is considered to be derived from any particular source and none may be allocated 
209.29 	to a particular place except as provided by the applicable apportionment formula.  The 
209.30 	provisions of this subdivision do not apply to business income subject to subdivision 5, 
209.31 	income of an insurance company, or  income of an investment company determined under 
209.32 	section 290.36, or income of a mine or mineral processing facility subject to tax under 
209.33 	section 298.01.
210.1 	 (b) The term "unitary business" means business activities or operations which 
210.2 	result in a flow of value between them.  The term may be applied within a single legal 
210.3 	entity or between multiple entities and without regard to whether each entity is a sole 
210.4 	proprietorship, a corporation, a partnership or a trust.
210.5 	 (c) Unity is presumed whenever there is unity of ownership, operation, and use, 
210.6 	evidenced by centralized management or executive force, centralized purchasing, 
210.7 	advertising, accounting, or other controlled interaction, but the absence of these 
210.8 	centralized activities will not necessarily evidence a nonunitary business.  Unity is also 
210.9 	presumed when business activities or operations are of mutual benefit, dependent upon or 
210.10 	contributory to one another, either individually or as a group.
210.11 	 (d) Where a business operation conducted in Minnesota is owned by a business 
210.12 	entity that carries on business activity outside the state different in kind from that 
210.13 	conducted within this state, and the other business is conducted entirely outside the state, it 
210.14 	is presumed that the two business operations are unitary in nature, interrelated, connected, 
210.15 	and interdependent unless it can be shown to the contrary.
210.16 	 (e) Unity of ownership is not deemed to exist when a corporation is involved unless 
210.17 	that corporation is a member of a group of two or more business entities and more than 50 
210.18 	percent of the voting stock of each member of the group is directly or indirectly owned 
210.19 	by a common owner or by common owners, either corporate or noncorporate, or by one 
210.20 	or more of the member corporations of the group.  For this purpose, the term "voting 
210.21 	stock" shall include membership interests of mutual insurance holding companies formed 
210.22 	under section 60A.077.
210.23 	 (f) The net income and apportionment factors under section 290.191 or 290.20 of 
210.24 	foreign corporations and other foreign entities which are part of a unitary business shall 
210.25 	not be included in the net income or the apportionment factors of the unitary business.  
210.26 	A foreign corporation or other foreign entity which is required to file a return under this 
210.27 	chapter shall file on a separate return basis.  The net income and apportionment factors 
210.28 	under section 290.191 or 290.20 of foreign operating corporations shall not be included in 
210.29 	the net income or the apportionment factors of the unitary business except as provided in 
210.30 	paragraph (g).
210.31 	 (g) The adjusted net income of a foreign operating corporation shall be deemed to 
210.32 	be paid as a dividend on the last day of its taxable year to each shareholder thereof, in 
210.33 	proportion to each shareholder's ownership, with which such corporation is engaged in 
210.34 	a unitary business.  Such deemed dividend shall be treated as a dividend under section 
210.35 	290.21, subdivision 4.
211.1 	 Dividends actually paid by a foreign operating corporation to a corporate shareholder 
211.2 	which is a member of the same unitary business as the foreign operating corporation shall 
211.3 	be eliminated from the net income of the unitary business in preparing a combined report 
211.4 	for the unitary business.  The adjusted net income of a foreign operating corporation 
211.5 	shall be its net income adjusted as follows:
211.6 	 (1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto 
211.7 	Rico, or a United States possession or political subdivision of any of the foregoing shall 
211.8 	be a deduction; and
211.9 	 (2) the subtraction from federal taxable income for payments received from foreign 
211.10 	corporations or foreign operating corporations under section 290.01, subdivision 19d, 
211.11 	clause (10), shall not be allowed.
211.12 	 If a foreign operating corporation incurs a net loss, neither income nor deduction 
211.13 	from that corporation shall be included in determining the net income of the unitary 
211.14 	business.
211.15 	 (h) For purposes of determining the net income of a unitary business and the factors 
211.16 	to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there 
211.17 	must be included only the income and apportionment factors of domestic corporations or 
211.18 	other domestic entities other than foreign operating corporations that are determined to 
211.19 	be part of the unitary business pursuant to this subdivision, notwithstanding that foreign 
211.20 	corporations or other foreign entities might be included in the unitary business.
211.21 	 (i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter 
211.22 	that are connected with or allocable against dividends, deemed dividends described 
211.23 	in paragraph (g), or royalties, fees, or other like income described in section 290.01, 
211.24 	subdivision 19d, clause (10), shall not be disallowed.
211.25 	 (j) Each corporation or other entity, except a sole proprietorship, that is part of a 
211.26 	unitary business must file combined reports as the commissioner determines.  On the 
211.27 	reports, all intercompany transactions between entities included pursuant to paragraph 
211.28 	(h) must be eliminated and the entire net income of the unitary business determined in 
211.29 	accordance with this subdivision is apportioned among the entities by using each entity's 
211.30 	Minnesota factors for apportionment purposes in the numerators of the apportionment 
211.31 	formula and the total factors for apportionment purposes of all entities included pursuant 
211.32 	to paragraph (h) in the denominators of the apportionment formula.
211.33 	 (k) If a corporation has been divested from a unitary business and is included in a 
211.34 	combined report for a fractional part of the common accounting period of the combined 
211.35 	report:
212.1 	 (1) its income includable in the combined report is its income incurred for that part 
212.2 	of the year determined by proration or separate accounting; and
212.3 	 (2) its sales, property, and payroll included in the apportionment formula must 
212.4 	be prorated or accounted for separately.

212.5 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
212.6 	December 31, 2004.

212.7 	 Sec. 4. Minnesota Statutes 2004, section 290.191, subdivision 1, is amended to read:
212.8 		 Subdivision 1.General rule.  (a) Except as otherwise provided in section 290.17, 
212.9 	subdivision 5, the net income from a trade or business carried on partly within and partly 
212.10 	without this state must be apportioned to this state as provided in this section. To the extent 
212.11 	that an entity is exempt from taxation under this chapter as provided in section 290.05, the 
212.12 	apportionment factors associated with the entity's exempt activities are excluded from the 
212.13 	apportionment formula under this section.
212.14 	 (b) For purposes of this section, "state" means a state of the United States, the 
212.15 	District of Columbia, the commonwealth of Puerto Rico, or any territory or possession of 
212.16 	the United States or any foreign country.

212.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
212.18 	December 31, 2004.

212.19 	 Sec. 5. Minnesota Statutes 2004, section 297A.68, subdivision 4, is amended to read:
212.20 		 Subd. 4.Taconite, other ores, metals, or minerals; production materials.  Mill 
212.21 	liners, grinding rods, and grinding balls that are substantially consumed in the production 
212.22 	of taconite or other ores, metals, or minerals are exempt when sold to or stored, used, or 
212.23 	consumed by persons taxed under the in-lieu provisions of chapter 298.

212.24 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
212.25 	June 30, 2005.

212.26 	 Sec. 6. Minnesota Statutes 2004, section 298.001, is amended by adding a subdivision 
212.27 	to read:
212.28 		 Subd. 9.Refining. "Refining" means and is limited to refining:
212.29 	 (1) of ores, metals, or mineral products, the mining, extraction, or quarrying of 
212.30 	which were subject to tax under section 298.015; and 
212.31 	 (2) carried on by the entity, or an affiliated entity, that mined, extracted, or quarried 
212.32 	the metal or mineral products.

213.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
213.2 	December 31, 2004.

213.3 	 Sec. 7. Minnesota Statutes 2004, section 298.001, is amended by adding a subdivision 
213.4 	to read:
213.5 		 Subd. 10.Precious minerals tax relief area. The "precious minerals tax relief area" 
213.6 	means the area of the following Independent School Districts:
213.7 	 (1) No. 166, Cook County;
213.8 	 (2) No. 316, Coleraine;
213.9 	 (3) No. 318, Grand Rapids;
213.10 	 (4) No. 319, Nashwauk-Keewatin;
213.11 	 (5) No. 381, Lake Superior;
213.12 	 (6) No. 695, Chisholm;
213.13 	 (7) No. 696, Ely;
213.14 	 (8) No. 701, Hibbing;
213.15 	 (9) No. 706, Virginia;
213.16 	 (10) No. 712, Mountain Iron-Buhl;
213.17 	 (11) No. 2711, Mesabi East;
213.18 	 (12) No. 2142, St. Louis County; and 
213.19 	 (13) No. 2154, Eveleth-Gilbert.

213.20 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
213.21 	December 31, 2004.

213.22 	 Sec. 8. Minnesota Statutes 2004, section 298.01, subdivision 3, is amended to read:
213.23 		 Subd. 3.Occupation tax; other ores.  Every person engaged in the business of 
213.24 	mining, refining,or producing ores, metals, or minerals in this state, except iron ore or 
213.25 	taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided 
213.26 	in this subdivision. For purposes of this subdivision, mining includes the application of 
213.27 	hydrometallurgical processes.The tax is determined in the same manner as the tax imposed 
213.28 	by section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.0921,and 
213.29 	290.17, subdivision 4, do not apply. Except as provided in section 290.05, subdivision 1, 
213.30 	paragraph (a),the tax is in addition to all other taxes.

213.31 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
213.32 	December 31, 2004.

214.1 	 Sec. 9. Minnesota Statutes 2004, section 298.01, subdivision 3a, is amended to read:
214.2 		 Subd. 3a.Gross income.  (a) For purposes of determining a person's taxable income 
214.3 	under subdivision 3, gross income is determined by the amount of gross proceeds from 
214.4 	mining in this state under section 298.016 and includes any gain or loss recognized from 
214.5 	the sale or disposition of assets used in the business in this state.
214.6 	 (b) In applying section 290.191, subdivision 5, transfers of ores, metals, or minerals 
214.7 	that are subject to tax under this chapter are deemed to be sales outside this state if the 
214.8 	ores, metals, or minerals are transported out of this state for further processing or refining 
214.9 	by the person engaged in mining  after the ores, metals, or minerals have been converted 
214.10 	to a marketable quality.
214.11 	 (c) In applying section 290.191, subdivision 5, transfers of ores, metals, or minerals 
214.12 	that are subject to tax under this chapter are deemed to be sales within this state if the 
214.13 	ores, metals, or minerals are received by a purchaser at a point within this state, and the 
214.14 	taxpayer is taxable in this state, regardless of the f.o.b. point, or other conditions of the 
214.15 	sale, or the ultimate destination of the property.

214.16 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
214.17 	December 31, 2004.

214.18 	 Sec. 10. Minnesota Statutes 2004, section 298.01, subdivision 4, is amended to read:
214.19 		 Subd. 4.Occupation tax; iron ore; taconite concentrates.  A person engaged in 
214.20 	the business of mining or producing of iron ore, taconite concentrates or direct reduced ore 
214.21 	in this state shall pay an occupation tax to the state of Minnesota.  The tax is determined 
214.22 	in the same manner as the tax imposed by section 290.02, except that sections 290.05, 
214.23 	subdivision 1, clause (a), 290.0921,and 290.17, subdivision 4, do not apply.  The tax 
214.24 	is in addition to all other taxes.

214.25 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
214.26 	December 31, 2004.

214.27 	 Sec. 11. Minnesota Statutes 2004, section 298.015, subdivision 1, is amended to read:
214.28 		 Subdivision 1.Tax imposed.  A person engaged in the business of mining shall pay 
214.29 	to the state of Minnesota for distribution as provided in section 298.018 a net proceeds tax 
214.30 	equal to two four percent of the net proceeds from mining in Minnesota.  The tax applies to 
214.31 	all mineral and energy resources  ores, metals, and minerals mined or ,extracted, produced, 
214.32 	or refined within the state of Minnesota except for sand, silica sand, gravel, building 
214.33 	stone, crushed rock, limestone, granite, dimension granite, dimension stone, horticultural 
215.1 	peat, clay, soil, iron ore, and taconite concentrates. Except as provided in section 272.02, 
215.2 	subdivision 68,the tax is in addition to all other taxes provided for by law.

215.3 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
215.4 	thereafter.

215.5 	 Sec. 12. Minnesota Statutes 2004, section 298.015, subdivision 2, is amended to read:
215.6 		 Subd. 2.Net proceeds.  For purposes of this section, the term "net proceeds" means 
215.7 	the gross proceeds from mining, as defined in section 298.016, less the same deductions 
215.8 	allowed in section 298.017for purposes of determining taxable income under section 
215.9 	298.01, subdivision 3b.  No other credits or deductions shall apply to this tax except for 
215.10 	those provided in section 298.017.

215.11 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
215.12 	thereafter.

215.13 	 Sec. 13. Minnesota Statutes 2004, section 298.016, subdivision 4, is amended to read:
215.14 		 Subd. 4.Definitions.  For the purposes of sections 298.015 and 298.017, the 
215.15 	terms defined in this subdivision have the meaning given them unless the context clearly 
215.16 	indicates otherwise.
215.17 	 (a) "Metal or mineral products" means all those mineral and energy resources ores, 
215.18 	metals, and minerals subject to the tax provided in section 298.015.
215.19 	 (b) "Exploration" means activities designed and engaged in to ascertain the 
215.20 	existence, location, extent, or quality of any deposit of metal or mineral products prior to 
215.21 	the development of a mining site.
215.22 	 (c) "Development" means activities designed and engaged in to prepare or develop 
215.23 	a potential mining site for mining after the existence of metal or mineral products in 
215.24 	commercially marketable quantities has been disclosed including, but not limited to, 
215.25 	the clearing of forestation, the building of roads, removal of overburden, or the sinking 
215.26 	of shafts.
215.27 	 (d) "Research" means activities designed and engaged in to create new or improved 
215.28 	methods of mining, producing, processing, beneficiating, smelting, or refining metal 
215.29 	or mineral products.

215.30 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
215.31 	December 31, 2005.

216.1 	 Sec. 14. Minnesota Statutes 2004, section 298.018, is amended to read:
216.2 	 298.018 DISTRIBUTION OF PROCEEDS.
216.3 		 Subdivision 1.Within the taconite precious minerals  assistance area. The 
216.4 	proceeds of the tax paid under sections 298.015 to 298.017 on ores, metals, and minerals 
216.5 	and energy resources mined or extracted within the taconite precious minerals assistance 
216.6 	area defined in section 273.1341, shall be allocated as follows:
216.7 	 (1) five percent to the city or town within which the ores, metals, or minerals or 
216.8 	energy resources are mined or extracted;
216.9 	 (2) ten percent to the taconite municipal aid account to be distributed as provided in 
216.10 	section 298.282to qualifying municipalities, as defined in section 298.282 and located 
216.11 	in the precious minerals assistance area;
216.12 	 (3) ten percent to the school district within which the ores, metals, or minerals or 
216.13 	energy resources are mined or extracted;
216.14 	 (4) 20 30 percent to a group of school districts comprised of those school districts 
216.15 	wherein the mineral or energy resource was mined or extracted or in which there is a 
216.16 	qualifying municipality as defined by section 273.134, paragraph (b), in direct proportion 
216.17 	to school district indexes as follows:  for each school district, its pupil units determined 
216.18 	under section 126C.05 for the prior school year shall be multiplied by the ratio of the 
216.19 	average adjusted net tax capacity per pupil unit for school districts receiving aid under 
216.20 	this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year 
216.21 	ending prior to distribution to the adjusted net tax capacity per pupil unit of the district. 
216.22 	Each district shall receive that portion of the distribution which its index bears to the sum 
216.23 	of the indices for all school districts that receive the distributions the state general fund to 
216.24 	represent the portion of the tax that is in lieu of the state general tax under section 275.025;
216.25 	 (5) 20 percent to the county within which the ores, metals, or minerals or energy 
216.26 	resources are mined or extracted;
216.27 	 (6) 20 percent to St. Louis County acting as the counties' fiscal agent to be 
216.28 	distributed as provided in sections 273.134 to 273.136;
216.29 	 (7) five percent to the Iron Range Resources and Rehabilitation Board for the 
216.30 	purposes of section 298.22;
216.31 	 (8) five (7) ten percent to the Douglas J. Johnson economic protection trust fund; and
216.32 	 (9) five (8) ten percent to the taconite environmental protection fund.
216.33 	 The proceeds of the tax shall be distributed on July 15 each year.
216.34 		 Subd. 2.Outside the taconite precious minerals  assistance area. The proceeds of 
216.35 	the tax paid under sections 298.015 to 298.017 on ores, metals, or minerals and energy 
217.1 	resources mined or extracted outside of the taconite precious minerals assistance area 
217.2 	defined in section 273.1341, shall be deposited in the general fund.
217.3 		 Subd. 3.Segregation of funds. The proceeds of the tax allocated under subdivision 
217.4 	1, clauses (2), (6), (7), and (8), including any investment earnings on them, must be 
217.5 	segregated and separately accounted for in the respective funds or account to which 
217.6 	they are allocated.  These amounts must only be distributed to municipalities within the 
217.7 	precious minerals assistance area or used for projects located in the precious minerals 
217.8 	assistance area.

217.9 	EFFECTIVE DATE. This section is effective for distribution of net proceeds tax 
217.10 	revenues made after July 1, 2005.

217.11 	 Sec. 15. [298.021] ROYALTY TAX.
217.12 	 In addition to any other taxes imposed by law, a tax is imposed on a royalty, as 
217.13 	defined in section 290.923, subdivision 1, paid on ore, other than iron ore, taconite, 
217.14 	iron sulphides, or semitaconite.  The tax equals 12 percent of the amount of the royalty 
217.15 	paid.  The person paying the royalty shall withhold the tax from the payment and remit 
217.16 	the payment to the commissioner at the times and under the procedures provided under 
217.17 	section 290.923.  The commissioner shall deposit proceeds in the general fund and allocate 
217.18 	the proceeds as provided under section 298.018, subdivision 1.

217.19 	 EFFECTIVE DATE. This section is effective for royalties paid after June 30, 2005.

217.20 	 Sec. 16. Minnesota Statutes 2004, section 298.223, subdivision 1, is amended to read:
217.21 		 Subdivision 1.Creation; purposes.  A fund called the taconite environmental 
217.22 	protection fund is created for the purpose of reclaiming, restoring and enhancing those 
217.23 	areas of northeast Minnesota located within the taconite assistance area defined in section 
217.24 	273.1341, that are adversely affected by the environmentally damaging operations 
217.25 	involved in mining taconite and iron ore and producing iron ore concentrate and for the 
217.26 	purpose of promoting the economic development of northeast Minnesota.  The taconite 
217.27 	environmental protection fund shall be used for the following purposes:
217.28 	 (a) to initiate investigations into matters the Iron Range Resources and Rehabilitation 
217.29 	Board determines are in need of study and which will determine the environmental 
217.30 	problems requiring remedial action;
217.31 	 (b) reclamation, restoration, or reforestation of minelands not otherwise provided 
217.32 	for by state law;
218.1 	 (c) local economic development projects including construction of sewer and water 
218.2 	systems, and other but only if those projects are approved by the board, and public works, 
218.3 	including construction of sewer and water systems located within the taconite assistance 
218.4 	area defined in section 273.1341;
218.5 	 (d) monitoring of mineral industry related health problems among mining employees.

218.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

218.7 	 Sec. 17. Minnesota Statutes 2004, section 298.24, subdivision 1, is amended to read:
218.8 		 Subdivision 1.Effective date. This section is effective for direct reduced ore 
218.9 	produced after the date of final enactment.

218.10 	 Sec. 18. Minnesota Statutes 2004, section 298.28, subdivision 9b, is amended 
218.11 	to read:
 218.12 		 Subd. 9b.Taconite environmental fund. Five cents per ton for distributions in 
218.13 	1999, 2000, 2001, 2002, and 2003 must be paid to the taconite environmental fund for 
218.14 	use under section 298.2961, subdivision 4.

218.15 	EFFECTIVE DATE. This section is effective for distributions in 2005 and later 
218.16 	years.

218.17 	 Sec. 19. Minnesota Statutes 2004, section 298.28, subdivision 10, is amended 
218.18 	to read:
 218.19 		 Subd. 10.Increase. (a) Except as provided in paragraph (b),beginning with 
218.20 	distributions in 2000, the amount determined under subdivision 9 shall be increased in 
218.21 	the same proportion as the increase in the implicit price deflator as provided in section 
218.22 	298.24, subdivision 1.  Beginning with distributions in 2003, the amount determined under 
218.23 	subdivision 6, paragraph (a), shall be increased in the same proportion as the increase in 
218.24 	the implicit price deflator as provided in section 298.24, subdivision 1.
218.25 	 (b) For distributions in 2005 and subsequent years, an amount equal to the increased 
218.26 	tax proceeds attributable to the increase in the implicit price deflator as provided in 
218.27 	section 298.24, subdivision 1, for taxes paid in 2005, except for the amount of revenue 
218.28 	increases provided in subdivision 4, paragraph (d), is distributed to the grant and loan fund 
218.29 	established in section 298.2961, subdivision 4.

218.30 	 Sec. 20. Minnesota Statutes 2004, section 298.2961, is amended by adding a 
218.31 	subdivision to read:
 219.1 		 Subd. 4.Grant and loan fund. (a) A fund is established to receive distributions 
219.2 	under section 298.28, subdivision 9b, and to make grants or loans as provided in this 
219.3 	subdivision. Any grant or loan made under this subdivision must be approved by 
219.4 	a majority of the members of the Iron Range Resources and Rehabilitation Board, 
219.5 	established under section 298.22.
219.6 	 (b) Distributions received in calendar year 2005 are allocated to the city of Virginia 
219.7 	for improvements and repairs to the city's steam heating system.
219.8 	 (c) Distributions received in calendar year 2006 are allocated to a project of the 
219.9 	public utilities commissions of the cities of Hibbing and Virginia to convert their electrical 
219.10 	generating plants to the use of biomass products, such as wood.
219.11 	 (d) Distributions received in calendar year 2007 must be paid to the city of Tower to 
219.12 	be used for the East Two Rivers project in or near the city of Tower, including replacement 
219.13 	of the Marked Trunk Highway 169 bridge over East Two Rivers, demolition of the present 
219.14 	Marked Trunk Highway 135 bridge over East Two Rivers, and rerouting of Marked Trunk 
219.15 	Highway 135, associated trunk highway construction and reconstruction, and associated 
219.16 	marina development.
219.17 	 (e) For distributions received in 2008 and later, amounts may be allocated to joint 
219.18 	ventures with mining companies for reclamation of lands containing abandoned or worked 
219.19 	out mines to convert these lands to marketable properties for residential, recreational, 
219.20 	commercial, or other valuable uses.

219.21 	EFFECTIVE DATE. This section is effective the day following final enactment.

219.22 	 Sec. 21. Minnesota Statutes 2004, section 298.75, subdivision 1, is amended 
219.23 	to read:
 219.24 		 Subdivision 1.Definitions. Except as may otherwise be provided, the following 
219.25 	words, when used in this section, shall have the meanings herein ascribed to them.
219.26 	 (1) "Aggregate material" shall mean nonmetallic natural mineral aggregate including, 
219.27 	but not limited to sand, silica sand, gravel, crushed rock, limestone, granite, and borrow, 
219.28 	but only if the borrow is transported on a public road, street, or highway.  Aggregate 
219.29 	material shall not include dimension stone and dimension granite.  Aggregate material 
219.30 	must be measured or weighed after it has been extracted from the pit, quarry, or deposit.
219.31 	 (2) "Person" shall mean any individual, firm, partnership, corporation, organization, 
219.32 	trustee, association, or other entity.
219.33 	 (3) "Operator" shall mean any person engaged in the business of removing aggregate 
219.34 	material from the surface or subsurface of the soil, for the purpose of sale, either directly 
219.35 	or indirectly, through the use of the aggregate material in a marketable product or service; 
220.1 	except that operator does not include persons engaged in a transaction in which the 
220.2 	aggregate is moved within a project's construction limits to other locations within that 
220.3 	same project's construction limits.
220.4 	 (4) "Extraction site" shall mean a pit, quarry, or deposit containing aggregate 
220.5 	material and any contiguous property to the pit, quarry, or deposit which is used by the 
220.6 	operator for stockpiling the aggregate material.
220.7 	 (5) "Importer" shall mean any person who buys aggregate material produced from a 
220.8 	county not listed in paragraph (6) or another state and causes the aggregate material to be 
220.9 	imported into a county in this state which imposes a tax on aggregate material.
220.10 	 (6) "County" shall mean the counties of Pope, Stearns, Benton, Sherburne, Carver, 
220.11 	Scott, Dakota, Le Sueur, Kittson, Marshall, Pennington, Red Lake, Polk, Norman, 
220.12 	Mahnomen, Clay, Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, Sibley, 
220.13 	Hennepin, Washington, Chisago, and Ramsey.  County also means any other county whose 
220.14 	board has voted after a public hearing to impose the tax under this section and has notified 
220.15 	the commissioner of revenue of the imposition of the tax.
220.16 	 (7) "Borrow" shall mean granular borrow, consisting of durable particles of gravel 
220.17 	and sand, crushed quarry or mine rock, crushed gravel or stone, or any combination 
220.18 	thereof, the ratio of the portion passing the (#200) sieve divided by the portion passing the 
220.19 	(1 inch) sieve may not exceed 20 percent by mass.

220.20 	EFFECTIVE DATE. This section is effective for aggregate sold, imported, 
220.21 	transported, or used from a stockpile after June 30, 2005.

220.22 	 Sec. 22. Minnesota Statutes 2004, section 298.75, subdivision 2, is amended to read:
220.23 		 Subd. 2.Tax imposed.  A county shall impose upon every importer and operator a 
220.24 	production tax up to ten cents per cubic yard or up to seven cents per ton of aggregate 
220.25 	material removed except that the county board may decide not to impose this tax if it 
220.26 	determines that in the previous year operators removed less than 20,000 tons or 14,000 
220.27 	cubic yards of aggregate material from that county. A county or town may exempt an 
220.28 	operator from the tax if the operator has removed less than 2,500 tons or 1,750 yards from 
220.29 	the county in the year that the tax is due and no other aggregate operator has removed 
220.30 	material from the same site in the same year.The tax shall be imposed on aggregate 
220.31 	material produced in the county when the aggregate material is transported from the 
220.32 	extraction site or sold.  When aggregate material is stored in a stockpile within the state of 
220.33 	Minnesota and a public highway, road or street is not used for transporting the aggregate 
220.34 	material, the tax shall be imposed either when the aggregate material is sold, or when it 
220.35 	is transported from the stockpile site, or when it is used from the stockpile, whichever 
221.1 	occurs first.  The tax shall be imposed on an importer when the aggregate material is 
221.2 	imported into the county that imposes the tax.
221.3 	 If the aggregate material is transported directly from the extraction site to a 
221.4 	waterway, railway, or another mode of transportation other than a highway, road or street, 
221.5 	the tax imposed by this section shall be apportioned equally between the county where the 
221.6 	aggregate material is extracted and the county to which the aggregate material is originally 
221.7 	transported.  If that destination is not located in Minnesota, then the county where the 
221.8 	aggregate material was extracted shall receive all of the proceeds of the tax.

221.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

221.10 	 Sec. 23. IRON RANGE RESOURCES AND REHABILITATION 
221.11 	COMMISSIONER; BONDS AUTHORIZED.
 221.12 		 Subdivision 1.Issuance; purpose. Notwithstanding any provision of Minnesota 
221.13 	Statutes, chapter 298, to the contrary, the commissioner of Iron Range resources and 
221.14 	rehabilitation may issue revenue bonds in a principal amount of $15,000,000 in one 
221.15 	or more series, and bonds to refund those bonds.  The proceeds of the bonds must be 
221.16 	used to make grants to school districts located in the taconite tax relief area defined in 
221.17 	Minnesota Statutes, section 273.134, or the taconite assistance area defined in Minnesota 
221.18 	Statutes, section 273.1341, to be used by the school districts to pay for health, safety, and 
221.19 	maintenance improvements but only if the school district has levied the maximum amount 
221.20 	allowable under law for those purposes.
221.21 		 Subd. 2.Appropriation. There is annually appropriated from the distribution of 
221.22 	taconite production tax revenues to the taconite environmental protection fund pursuant 
221.23 	to Minnesota Statutes, section 298.28, subdivision 11, and to the Douglas J. Johnson 
221.24 	economic protection trust pursuant to Minnesota Statutes, section 298.28, subdivisions 9 
221.25 	and 11, in equal shares, an amount sufficient to pay when due the principal and interest 
221.26 	on the bonds issued pursuant to subdivision 1.  If the annual distribution to the Douglas 
221.27 	J. Johnson economic protection trust is insufficient to pay its share after fulfilling any 
221.28 	obligations of the trust under Minnesota Statutes, section 298.225 or 298.293, the 
221.29 	deficiency shall be appropriated from the taconite environmental protection fund. The 
221.30 	appropriation under this subdivision terminates upon payment or maturity of the last of the 
221.31 	bonds issued under this section.
221.32 		 Subd. 3.Credit enhancement. The bonds issued under this section shall be "debt 
221.33 	obligations" and the commissioner of Iron Range resources and rehabilitation shall be a 
221.34 	"district" for purposes of Minnesota Statutes, section 126C.55, provided that advances 
222.1 	made under subdivision 2 of Minnesota Statutes, section 126C.55, shall not be subject to 
222.2 	subdivisions 4 to 7 of Minnesota Statutes, section 126C.55.

222.3 	 Sec. 24. TRANSITION PROVISION.
 222.4 	 Each person with an alternative minimum tax credit on December 31, 2004, pursuant 
222.5 	to Minnesota Statutes 2004, section 298.01, may take that credit against occupation tax 
222.6 	under the provisions of Minnesota Statutes 2004, section 298.01, subdivision 3d or 4e.

222.7 	 EFFECTIVE DATE. This section is effective the day following final enactment.

222.8 	 Sec. 25. REPEALER.
 222.9 	 (a) Minnesota Statutes 2004, section 298.01, subdivisions 3c, 3d, 4d, and 4e, are 
222.10 	repealed effective for taxable years beginning after December 31, 2004.
222.11 	 (b) Minnesota Statutes 2004, section 298.017, is repealed effective for taxes payable 
222.12 	in 2006 and thereafter.

222.13 	 ARTICLE 8
222.14 	 MISCELLANEOUS

222.15 	 Section 1. Minnesota Statutes 2004, section 270.30, subdivision 1, is amended to read:
222.16 		 Subdivision 1.Scope. (a) This section applies to a person who offers,provides, or 
222.17 	facilitates the provision of refund anticipation loans, as part of or in connection with 
222.18 	the provision of tax preparation services.
222.19 	 (b) This section does not apply to:
222.20 	 (1) a tax preparer who provides tax preparation services for fewer than six clients 
222.21 	in a calendar year;
222.22 	 (2) the provision by a person of tax preparation services to a spouse, parent, 
222.23 	grandparent, child, or sibling; and 
222.24 	 (3) the provision of services by an employee for an employer.

222.25 	 Sec. 2. Minnesota Statutes 2004, section 270.30, subdivision 5, is amended to read:
222.26 		 Subd. 5.Itemized bill required.  A tax preparer who provides services for a fee 
222.27 	or other consideration must provide an itemized statement of the charges for services, 
222.28 	at least separately stating the charges for:
222.29 	 (1) return preparation; and 
222.30 	 (2) electronic filing; and 
222.31 	 (3) providing or facilitating a refund anticipation loan.

223.1 	 Sec. 3. Minnesota Statutes 2004, section 270.30, subdivision 6, is amended to read:
223.2 		 Subd. 6.Enforcement; penalties.  The commissioner may impose an administrative 
223.3 	penalty of not more than $1,000 per violation of subdivision 3, 4, or 5.  The commissioner 
223.4 	may terminate a tax preparer's authority to transmit returns electronically to the state, if the 
223.5 	commissioner determines the tax preparer engaged in a pattern and practice of violating 
223.6 	this section.  Imposition of a penalty under this subdivision is subject to the contested case 
223.7 	procedure under chapter 14.  The commissioner shall collect the penalty in the same 
223.8 	manner as the income tax. Penalties imposed under this subdivision are public data.

223.9 	 Sec. 4. Minnesota Statutes 2004, section 270.30, is amended by adding a subdivision 
223.10 	to read:
223.11 		 Subd. 6a.Exchange of data; state board of accountancy. The State Board of 
223.12 	Accountancy shall refer to the commissioner complaints it receives about tax preparers 
223.13 	who are not subject to the jurisdiction of the State Board of Accountancy and who are 
223.14 	alleged to have violated the provisions of subdivisions 3 to 5.

223.15 	 Sec. 5. Minnesota Statutes 2004, section 270.30, is amended by adding a subdivision 
223.16 	to read:
223.17 		 Subd. 6b.Exchange of data; lawyers board of professional responsibility. The 
223.18 	Lawyers Board of Professional Responsibility may refer to the commissioner complaints 
223.19 	it receives about tax preparers who are not subject to its jurisdiction and who are alleged 
223.20 	to have violated the provisions of subdivisions 3 to 5.

223.21 	 Sec. 6. Minnesota Statutes 2004, section 270.30, is amended by adding a subdivision 
223.22 	to read:
223.23 		 Subd. 6c.Exchange of data; commissioner. The commissioner shall refer 
223.24 	complaints about tax preparers who are alleged to have violated the provisions of 
223.25 	subdivisions 3 to 5 to:
223.26 	 (1) the State Board of Accountancy, if the tax preparer is under its jurisdiction; and 
223.27 	 (2) the Lawyers Board of Professional Responsibility, if the tax preparer is under 
223.28 	its jurisdiction.

223.29 	 Sec. 7. Minnesota Statutes 2004, section 270.30, is amended by adding a subdivision 
223.30 	to read:
223.31 		 Subd. 6d.Data private. Information exchanged on individuals under subdivisions 
223.32 	6a to 6c are private data under section 13.02, subdivision 12, until such time as a penalty 
224.1 	is imposed as provided in section 326A.08 or by the Lawyers Board of Professional 
224.2 	Responsibility.

224.3 	 Sec. 8. Minnesota Statutes 2004, section 270.30, subdivision 8, is amended to read:
224.4 		 Subd. 8.Exemptions; enforcement provisions. (a) The provisions of subdivisions 
224.5 	6 and 7 this section, except for subdivision 4,do not apply to:
224.6 	 (1) an attorney admitted to practice under section 481.01;
224.7 	 (2) a certified public accountant holding a certificate under section 326A.04 or a 
224.8 	person issued a permit to practice under section 326A.05or other person who is subject to 
224.9 	the jurisdiction of the State Board of Accountancy; and 
224.10 	 (3) a person designated as a registered accounting practitioner under Minnesota 
224.11 	Rules, part 1105.6600, or a registered accounting practitioner firm issued a permit under 
224.12 	Minnesota Rules, part 1105.7100;
224.13 	 (4) an enrolled agent who has passed the special enrollment examination 
224.14 	administered by the Internal Revenue Service; and .
224.15 	 (b) The provisions of this section do not apply to:
224.16 	 (5) (1) any fiduciary, or the regular employees of a fiduciary, while acting on behalf 
224.17 	of the fiduciary estate, the testator, trustor, grantor, or beneficiaries of them;
224.18 	 (2) a tax preparer who provides tax preparation services for fewer than six clients 
224.19 	in a calendar year;
224.20 	 (3) tax preparation services to a spouse, parent, grandparent, child, or sibling of 
224.21 	the tax preparer; and 
224.22 	 (4) the preparation by an employee of the tax return of the employee's employer.

224.23 	 Sec. 9. [270.301] PUBLICATION OF NAMES OF TAX PREPARERS SUBJECT 
224.24 	TO PENALTIES.
224.25 		 Subdivision 1.Publication of list. Notwithstanding any other law, the commissioner 
224.26 	must publish as provided in this section a list or lists of tax preparers subject to penalties.
224.27 		 Subd. 2.Required and excluded tax preparers. (a) Subject to the limitations of 
224.28 	paragraphs (b) and (c), the commissioner must publish lists of the tax preparers described 
224.29 	in subdivision 1.  The list must include:
224.30 	 (1) the tax preparers who have been assessed penalties under section 289A.60, 
224.31 	subdivision 13, or who have been convicted under section 289A.63;
224.32 	 (2) tax preparers against whom cumulative penalties of $1,000 or more have been 
224.33 	assessed under section 270.30, subdivision 6; and 
225.1 	 (3) tax preparers whose authority to transmit returns electronically has been 
225.2 	terminated under section 270.30, subdivision 6, or under section 289A.60, subdivision 13.
225.3 	 The list may include tax preparers against whom cumulative penalties of less than $1,000 
225.4 	have been assessed.
225.5 	 (b) For the purposes of this section, a penalty was not assessed if:
225.6 	 (1) an administrative or court action contesting the penalty has been filed or served 
225.7 	and is unresolved at the time when notice would be given under subdivision 3; or 
225.8 	 (2) an appeal period to contest the penalty has not expired.
225.9 	 (c) Penalties are not subject to publication if:
225.10 	 (1) the commissioner is in the process of reviewing or adjusting the penalty; or 
225.11 	 (2) the commissioner has been notified that the tax preparer is deceased.
225.12 		 Subd. 3.Notice to tax preparer. (a) At least 30 days before publishing the 
225.13 	name of a tax preparer subject to penalty, the commissioner shall mail a written notice 
225.14 	to the tax preparer, detailing the amount and nature of each penalty and the intended 
225.15 	publication of the information listed in subdivision 4 related to the penalty.  The notice 
225.16 	must be mailed by first class and certified mail addressed to the last known address of 
225.17 	the tax preparer.  The notice must include information regarding the exceptions listed in 
225.18 	subdivision 2 and must state that the tax preparer's information will not be published if the 
225.19 	tax preparer provides information establishing that subdivision 2 prohibits publication of 
225.20 	the tax preparer's name.
225.21 	 (b) After at least 30 days has elapsed since the notice was mailed and the tax 
225.22 	preparer has not proved to the commissioner that subdivision 2 prohibits publication, the 
225.23 	commissioner may publish in a list of tax preparers subject to penalty the information 
225.24 	about the tax preparer that is listed in subdivision 4.
225.25 		 Subd. 4.Form of list. The list may be published by any medium or method.  The 
225.26 	list must contain the name, associated business name or names, address or addresses, and 
225.27 	violation or violations for which a penalty was imposed of each tax preparer subject 
225.28 	to administrative penalty.
225.29 		 Subd. 5.Removal from list. The commissioner shall remove the name of a tax 
225.30 	preparer from the list of tax preparers published under this section when:
225.31 	 (1) the commissioner determines that the name was included on the list in error;
225.32 	 (2) 90 days have elapsed since the preparer has fully paid all fines imposed, served 
225.33 	any suspension, and demonstrated to the satisfaction of the commissioner that the preparer 
225.34 	has successfully completed any remedial actions required by the commissioner, the State 
225.35 	Board of Accountancy, or the Lawyers Board of Professional Responsibility; or 
225.36 	 (3) the commissioner has been notified that the tax preparer is deceased.
226.1 		 Subd. 6.Names published in error. If the commissioner publishes a name under 
226.2 	subdivision 1 in error, the tax preparer whose name was erroneously published has a right 
226.3 	to request a retraction and apology.  If the tax preparer so requests, the commissioner 
226.4 	shall publish a retraction and apology acknowledging that the tax preparer's name was 
226.5 	published in error.  The retraction and apology must appear in the same medium and the 
226.6 	same format as the original list that contained the name listed in error.
226.7 		 Subd. 7.Payment of damages. Actions against the commissioner of revenue or 
226.8 	the state of Minnesota arising out of the implementation of this program must be brought 
226.9 	under section 270.276.

226.10 	EFFECTIVE DATE. The requirement of subdivision 2, paragraph (a), clause (2), is 
226.11 	effective for crimes committed on or after August 1, 2005.  The remainder of subdivision 2 
226.12 	is effective for tax preparers engaging in conduct described in subdivision 2, paragraph 
226.13 	(a), clause (1) or (3), on or after August 1, 2005.

226.14 	 Sec. 10. Minnesota Statutes 2004, section 270A.03, subdivision 5, is amended to read:
226.15 		 Subd. 5.Debt.  "Debt" means a legal obligation of a natural person to pay a fixed 
226.16 	and certain amount of money, which equals or exceeds $25 and which is due and payable 
226.17 	to a claimant agency.  The term includes criminal fines imposed under section 609.10 or 
226.18 	609.125, fines imposed for petty misdemeanors as defined in section 609.02, subdivision 
226.19 	4a,and restitution.  The term also includes the co-payment for the appointment of a district 
226.20 	public defender imposed under section 611.17, paragraph (c).  A debt may arise under a 
226.21 	contractual or statutory obligation, a court order, or other legal obligation, but need not 
226.22 	have been reduced to judgment.
226.23 	 A debt includes any legal obligation of a current recipient of assistance which is 
226.24 	based on overpayment of an assistance grant where that payment is based on a client 
226.25 	waiver or an administrative or judicial finding of an intentional program violation; 
226.26 	or where the debt is owed to a program wherein the debtor is not a client at the time 
226.27 	notification is provided to initiate recovery under this chapter and the debtor is not a 
226.28 	current recipient of food support, transitional child care, or transitional medical assistance.
226.29 	 A debt does not include any legal obligation to pay a claimant agency for medical 
226.30 	care, including hospitalization if the income of the debtor at the time when the medical 
226.31 	care was rendered does not exceed the following amount:
226.32 	 (1) for an unmarried debtor, an income of $8,800 or less;
226.33 	 (2) for a debtor with one dependent, an income of $11,270 or less;
226.34 	 (3) for a debtor with two dependents, an income of $13,330 or less;
226.35 	 (4) for a debtor with three dependents, an income of $15,120 or less;
227.1 	 (5) for a debtor with four dependents, an income of $15,950 or less; and
227.2 	 (6) for a debtor with five or more dependents, an income of $16,630 or less.
227.3 	 The income amounts in this subdivision shall be adjusted for inflation for debts 
227.4 	incurred in calendar years 2001 and thereafter.  The dollar amount of each income level 
227.5 	that applied to debts incurred in the prior year shall be increased in the same manner 
227.6 	as provided in section 1(f) of the Internal Revenue Code of 1986, as amended through 
227.7 	December 31, 2000, except that for the purposes of this subdivision the percentage increase 
227.8 	shall be determined from the year starting September 1, 1999, and ending August 31, 2000, 
227.9 	as the base year for adjusting for inflation for debts incurred after December 31, 2000.
227.10 	 Debt also includes an agreement to pay a MinnesotaCare premium, regardless of the 
227.11 	dollar amount of the premium authorized under section 256L.15, subdivision 1a.

227.12 	 Sec. 11. Minnesota Statutes 2004, section 289A.08, subdivision 16, is amended to read:
227.13 		 Subd. 16.Tax refund or return preparers; electronic filing; paper filing fee 
227.14 	imposed.  (a) A "tax refund or return preparer," as defined in section 289A.60, subdivision 
227.15 	13, paragraph (g) (h), who prepared more than 500 100 Minnesota individual income tax 
227.16 	returns for the prior calendar year must file all Minnesota individual income tax returns 
227.17 	prepared for the current calendar year by electronic means.
227.18 	 (b) For tax returns prepared for the tax year beginning in 2001, the "500" in 
227.19 	paragraph (a) is reduced to 250.
227.20 	 (c) For tax returns prepared for tax years beginning after December 31, 2001, the 
227.21 	"500" in paragraph (a) is reduced to 100.
227.22 	 (d) Paragraph (a) does not apply to a return if the taxpayer has indicated on the return 
227.23 	that the taxpayer did not want the return filed by electronic means.
227.24 	 (e) (c) For each return that is not filed electronically by a tax refund or return 
227.25 	preparer under this subdivision, including returns filed under paragraph (d), a paper filing 
227.26 	fee of $5 is imposed upon the preparer.  The fee is collected from the preparer in the same 
227.27 	manner as income tax.  The fee does not apply to returns that the commissioner requires 
227.28 	to be filed in paper form.

227.29 	 Sec. 12. Minnesota Statutes 2004, section 289A.60, subdivision 13, is amended to read:
227.30 		 Subd. 13.Penalties for tax return preparers.  (a) If an understatement of liability 
227.31 	with respect to a return or claim for refund is due to a willful attempt in any manner to 
227.32 	understate the liability for a tax by a person who is a tax return preparer with respect to the 
227.33 	return or claim, the person shall pay to the commissioner a penalty of $500.  If a part of a 
227.34 	property tax refund claim is excessive due to a willful attempt in any manner to overstate 
228.1 	the claim for relief allowed under chapter 290A by a person who is a tax refund or return 
228.2 	preparer, the person shall pay to the commissioner a penalty of $500 with respect to the 
228.3 	claim.  These penalties may not be assessed against the employer of a tax return preparer 
228.4 	unless the employer was actively involved in the willful attempt to understate the liability 
228.5 	for a tax or to overstate the claim for refund.  These penalties are income tax liabilities and 
228.6 	may be assessed at any time as provided in section 289A.38, subdivision 5.
228.7 	 (b) A civil action in the name of the state of Minnesota may be commenced to 
228.8 	enjoin any person who is a tax return preparer doing business in this state from further 
228.9 	engaging in any conduct described in paragraph (c).  An action under this paragraph 
228.10 	must be brought by the attorney general in the district court for the judicial district of the 
228.11 	tax return preparer's residence or principal place of business, or in which the taxpayer 
228.12 	with respect to whose tax return the action is brought resides.  The court may exercise its 
228.13 	jurisdiction over the action separate and apart from any other action brought by the state 
228.14 	of Minnesota against the tax return preparer or any taxpayer.
228.15 	 (c) In an action under paragraph (b), if the court finds that a tax return preparer has:
228.16 	 (1) engaged in any conduct subject to a civil penalty under section 289A.60 or a 
228.17 	criminal penalty under section 289A.63;
228.18 	 (2) misrepresented the preparer's eligibility to practice before the Department of 
228.19 	Revenue, or otherwise misrepresented the preparer's experience or education as a tax 
228.20 	return preparer;
228.21 	 (3) guaranteed the payment of any tax refund or the allowance of any tax credit; or
228.22 	 (4) engaged in any other fraudulent or deceptive conduct that substantially interferes 
228.23 	with the proper administration of state tax law, and injunctive relief is appropriate to 
228.24 	prevent the recurrence of that conduct,
228.25 	 the court may enjoin the person from further engaging in that conduct.
228.26 	 (d) If the court finds that a tax return preparer has continually or repeatedly engaged 
228.27 	in conduct described in paragraph (c), and that an injunction prohibiting that conduct 
228.28 	would not be sufficient to prevent the person's interference with the proper administration 
228.29 	of state tax laws, the court may enjoin the person from acting as a tax return preparer.  
228.30 	The court may not enjoin the employer of a tax return preparer for conduct described in 
228.31 	paragraph (c) engaged in by one or more of the employer's employees unless the employer 
228.32 	was also actively involved in that conduct.
228.33 	 (e) The commissioner may terminate or suspend a tax preparer's authority to 
228.34 	transmit returns electronically to the state, if the commissioner determines that the tax 
228.35 	preparer has engaged in a pattern and practice of conduct in violation of this subdivision 
228.36 	or of section 289A.63.
229.1 	 (f) For purposes of this subdivision, the term "understatement of liability" means 
229.2 	an understatement of the net amount payable with respect to a tax imposed by state tax 
229.3 	law, or an overstatement of the net amount creditable or refundable with respect to a 
229.4 	tax.  The determination of whether or not there is an understatement of liability must be 
229.5 	made without regard to any administrative or judicial action involving the taxpayer.  For 
229.6 	purposes of this subdivision, the amount determined for underpayment of estimated tax 
229.7 	under either section 289A.25 or 289A.26 is not considered an understatement of liability.
229.8 	 (f) (g) For purposes of this subdivision, the term "overstatement of claim" means an 
229.9 	overstatement of the net amount refundable with respect to a claim for property tax relief 
229.10 	provided by chapter 290A.  The determination of whether or not there is an overstatement 
229.11 	of a claim must be made without regard to administrative or judicial action involving 
229.12 	the claimant.
229.13 	 (g) (h) For purposes of this section, the term "tax refund or return preparer" means 
229.14 	an individual who prepares for compensation, or who employs one or more individuals to 
229.15 	prepare for compensation, a return of tax, or a claim for refund of tax.  The preparation of 
229.16 	a substantial part of a return or claim for refund is treated as if it were the preparation of 
229.17 	the entire return or claim for refund.  An individual is not considered a tax return preparer 
229.18 	merely because the individual:
229.19 	 (1) gives typing, reproducing, or other mechanical assistance;
229.20 	 (2) prepares a return or claim for refund of the employer, or an officer or employee 
229.21 	of the employer, by whom the individual is regularly and continuously employed;
229.22 	 (3) prepares a return or claim for refund of any person as a fiduciary for that person; 
229.23 	or
229.24 	 (4) prepares a claim for refund for a taxpayer in response to a tax order issued 
229.25 	to the taxpayer.

229.26 	 Sec. 13. Minnesota Statutes 2004, section 290A.07, is amended by adding a 
229.27 	subdivision to read:
229.28 		 Subd. 5.Early payment; e-file claims. The commissioner may pay a claim up 
229.29 	to 30 days earlier than the first permitted date under subdivision 2a or 3 if the claim is 
229.30 	submitted by electronic means.

229.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

229.32 	 Sec. 14. Minnesota Statutes 2004, section 297A.61, subdivision 4, is amended to read:
229.33 		 Subd. 4.Retail sale.  (a) A "retail sale" means any sale, lease, or rental for any 
229.34 	purpose other than resale, sublease, or subrent.
230.1 	 (b) A sale of property used by the owner only by leasing it to others or by holding it 
230.2 	in an effort to lease it, and put to no use by the owner other than resale after the lease or 
230.3 	effort to lease, is a sale of property for resale.
230.4 	 (c) A sale of master computer software that is purchased and used to make copies for 
230.5 	sale or lease is a sale of property for resale.
230.6 	 (d) A sale of building materials, supplies, and equipment to owners, contractors, 
230.7 	subcontractors, or builders for the erection of buildings or the alteration, repair, or 
230.8 	improvement of real property is a retail sale in whatever quantity sold, whether the sale is 
230.9 	for purposes of resale in the form of real property or otherwise.
230.10 	 (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides 
230.11 	for installation of the floor covering is a retail sale and not a sale for resale since a sale 
230.12 	of floor covering which includes installation is a contract for the improvement of real 
230.13 	property.
230.14 	 (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides 
230.15 	for installation of the items is a retail sale and not a sale for resale since a sale of 
230.16 	shrubbery, plants, sod, trees, and similar items that includes installation is a contract for 
230.17 	the improvement of real property.
230.18 	 (g) A sale of tangible personal property that is awarded as prizes is a retail sale and 
230.19 	is not considered a sale of property for resale.
230.20 	 (h) A sale of tangible personal property utilized or employed in the furnishing or 
230.21 	providing of services under subdivision 3, paragraph (g), clause (1), including, but not 
230.22 	limited to, property given as promotional items, is a retail sale and is not considered a 
230.23 	sale of property for resale.
230.24 	 (i) A sale of tangible personal property used in conducting lawful gambling under 
230.25 	chapter 349 or the state lottery under chapter 349A, including, but not limited to, property 
230.26 	given as promotional items, is a retail sale and is not considered a sale of property for 
230.27 	resale.
230.28 	 (j) A sale of machines, equipment, or devices that are used to furnish, provide, or 
230.29 	dispense goods or services, including, but not limited to, coin-operated devices, is a retail 
230.30 	sale and is not considered a sale of property for resale.
230.31 	 (k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease 
230.32 	payment becomes due under the terms of the agreement or the trade practices of the 
230.33 	lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01, 
230.34 	subdivision 5, but excluding vehicles with a manufacturer's gross vehicle weight rating 
230.35 	greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time 
230.36 	the lease is executed.
231.1 	 (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of 
231.2 	title or possession of the tangible personal property.

231.3 	EFFECTIVE DATE. This section is effective for leases entered into after 
231.4 	September 30, 2005.

231.5 	 Sec. 15. Minnesota Statutes 2004, section 297A.67, is amended by adding a 
231.6 	subdivision to read:
231.7 		 Subd. 32.Cigarettes. Cigarettes upon which a tax has been imposed under section 
231.8 	297F.25 are exempt.

231.9 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
231.10 	July 31, 2005.

231.11 	 Sec. 16. [297A.825] MOTOR VEHICLE LEASES.
231.12 		 Subdivision 1.Motor vehicle lease price; payment. (a) In the case of a lease of a 
231.13 	motor vehicle as provided in section 297A.61, subdivision 4, paragraph (k), clause (2), the 
231.14 	tax is imposed on the total amount to be paid by the lessee under the lease agreement.  The 
231.15 	lessor shall collect the tax in full at the time the lease is executed or, if the tax is included 
231.16 	in the lease and the lease is assigned, the tax is due from the original lessor at the time the 
231.17 	lease is assigned.  The total amount to be paid by the lessee under the lease agreement 
231.18 	equals the agreed-upon value of the vehicle less manufacturer's rebates, the stated residual 
231.19 	value of the leased vehicle, and the total value allowed for a vehicle owned by the lessee 
231.20 	taken in trade by the lessor, plus the price of any taxable goods and services included in 
231.21 	the lease and the rent charge as provided by Code of Federal Regulations, title 12, section 
231.22 	213.4, excluding any rent charge related to the capitalization of the tax.
231.23 	 (b) If the total amount paid by the lessee for use of the leased vehicle includes 
231.24 	amounts that are not calculated at the time the lease is executed, the tax is imposed and 
231.25 	must be collected by the lessor at the time the amounts are paid by the lessee.  In the case 
231.26 	of a lease which by its terms may be renewed, the sales tax is due and payable on the 
231.27 	total amount to be paid during the initial term of the lease, and then for each subsequent 
231.28 	renewal period on the total amount to be paid during the renewal period.
231.29 	 (c) If a lease is canceled or rescinded on or before 90 days of its execution or if a 
231.30 	vehicle is returned to the manufacturer under section 325F.665, the lessor may file a claim 
231.31 	for a refund of the total tax paid minus the amount of tax due for the period the vehicle is 
231.32 	used by the lessee.
232.1 	 (d) If a lessee's obligation to make payments on a lease is canceled more than 90 days 
232.2 	after its execution, a credit is allowed against sales tax or motor vehicle sales tax due on a 
232.3 	subsequent lease or purchase of a motor vehicle if that lease or purchase is consummated 
232.4 	within 30 days of the date the prior lease was canceled.  The amount of the credit shall be 
232.5 	equal to (1) the sales tax paid at the inception of the lease, multiplied by (2) the ratio of the 
232.6 	number of full months remaining in the lease at the time of termination compared to the 
232.7 	term of the lease used in calculating sales tax paid at the inception of the lease.
232.8 		 Subd. 2.Lease of motor vehicles. When the lease of a motor vehicle as defined in 
232.9 	section 297A.61, subdivision 4, paragraph (k), clause (2), originates in another state, the 
232.10 	sales tax under subdivision 1 shall be calculated by the lessor on the total amount that is 
232.11 	due under the lease agreement after the vehicle is required to be registered in Minnesota. 
232.12 	If the total amount to be paid by the lessee under the lease agreement has already been 
232.13 	subjected to tax by another state, a credit for taxes paid in the other state is allowed as 
232.14 	provided in section 297A.80.

232.15 	EFFECTIVE DATE. Subdivision 1 of this section is effective for leases entered 
232.16 	into after September 30, 2005. Subdivision 2 of this section is effective for vehicles 
232.17 	registering in Minnesota after September 30, 2005.

232.18 	 Sec. 17. Minnesota Statutes 2004, section 297F.01, is amended by adding a subdivision 
232.19 	to read:
232.20 		 Subd. 10a.Out-of-state retailer. "Out-of-state retailer" means a person engaged 
232.21 	outside of this state in the business of selling, or offering to sell, cigarettes or tobacco 
232.22 	products to consumers located in this state.

232.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

232.24 	 Sec. 18. [297F.031] REGISTRATION REQUIREMENT.
232.25 	 Prior to making delivery sales or shipping cigarettes or tobacco products in 
232.26 	connection with any sales, an out-of-state retailer shall file with the Department of Revenue 
232.27 	a statement setting forth the out-of-state retailer's name, trade name, and the address of the 
232.28 	out-of-state retailer's principal place of business and any other place of business.

232.29 	 Sec. 19. Minnesota Statutes 2004, section 297F.09, is amended by adding a subdivision 
232.30 	to read:
232.31 		 Subd. 4a.Reporting requirements. No later than the 18th day of each calendar 
232.32 	month, an out-of-state retailer that has made a delivery of cigarettes or tobacco products 
233.1 	or shipped or delivered cigarettes or tobacco products into the state in a delivery sale 
233.2 	in the previous calendar month shall file with the Department of Revenue reports in 
233.3 	the form and in the manner prescribed by the commissioner of revenue that provides 
233.4 	for each delivery sale, the name and address of the purchaser and the brand or brands 
233.5 	and quantity of cigarettes or tobacco products sold.  A tobacco retailer that meets the 
233.6 	requirements of United States Code, title 15, section 375 et seq. satisfies the requirements 
233.7 	of this subdivision.

233.8 	 Sec. 20. Minnesota Statutes 2004, section 297F.14, subdivision 4, is amended to read:
233.9 		 Subd. 4.Bad debt. The commissioner may adopt rules providing a refund of the 
233.10 	tax paid under this chapter if the tax paid qualifies as a bad debt under section 166(a) 
233.11 	of the Internal Revenue Code.For any reporting period, a taxpayer may offset against 
233.12 	taxes payable under this chapter the amount of taxes previously paid under this chapter 
233.13 	that is attributable to a bad debt.  The taxes must have been included in a transaction the 
233.14 	consideration for which was a debt owed to the taxpayer and which became uncollectible, 
233.15 	but only in proportion to the portion of debt that became uncollectible.  To qualify for offset 
233.16 	under this subdivision, the debt must have qualified as a bad debt under section 166(a) 
233.17 	of the Internal Revenue Code.  The taxpayer may claim the offset within the time period 
233.18 	prescribed in section 297F.17, subdivision 6.  If the taxpayer is no longer liable for taxes 
233.19 	imposed under this chapter, the commissioner shall refund to the taxpayer the amount of 
233.20 	the taxes attributable to the bad debt.  Any recovery of the tax claimed as a refund or credit 
233.21 	must be reported to the commissioner on the tax return for the month in which the recovery 
233.22 	is made.  If the taxpayer is no longer required to file returns under this chapter, the taxpayer 
233.23 	must reimburse the commissioner for tax recovered in the month following the recovery.

233.24 	EFFECTIVE DATE. This section is effective for claims filed on or after July 
233.25 	1, 2005.

233.26 	 Sec. 21. [297F.25] CIGARETTE SALES TAX.
233.27 		 Subdivision 1.Imposition. A tax is imposed on distributors on the sale of cigarettes 
233.28 	by a cigarette distributor to a retailer or cigarette subjobber for resale in this state.  The tax 
233.29 	is equal to 6.5 percent of the weighted average retail price.  The weighted average retail 
233.30 	price must be expressed in cents per pack when rounded to the nearest one-tenth of a cent. 
233.31 	The weighted average retail price must be determined annually, with new rates published 
233.32 	by May 1, and effective for sales on or after July 1.  The weighted average retail price must 
233.33 	be established by surveying cigarette retailers statewide in a manner and time determined 
233.34 	by the commissioner.  The determination of the commissioner pursuant to this subdivision 
234.1 	is not a "rule" and is not subject to the Administrative Procedure Act contained in chapter 
234.2 	14.  As of August 1, 2005, the tax is 21 cents per pack of 20 cigarettes. For packs of 
234.3 	cigarettes with other than 20 cigarettes, the tax must be adjusted proportionally.
234.4 		 Subd. 2.Payment. Each taxpayer must remit payments of the taxes to the 
234.5 	commissioner on the same dates prescribed under section 297F.09, subdivision 1, for 
234.6 	cigarette tax returns, including the accelerated remittance of the June liability.
234.7 		 Subd. 3.Return. A taxpayer must file a return with the commissioner on the 
234.8 	same dates prescribed under section 297F.09, subdivision 1, for cigarette tax returns. 
234.9 	Notwithstanding any other provisions of this chapter, the tax due on the return is based 
234.10 	upon actual stamps purchased during the reporting period.
234.11 		 Subd. 4.Form of return. The return must contain the information and be in the 
234.12 	form prescribed by the commissioner.
234.13 		 Subd. 5.Tax as debt. The tax that is required to be paid by the distributor is a debt 
234.14 	from the retailer or cigarette subjobber to the distributor recoverable at law in the same 
234.15 	manner as other debts.  A cigarette retailer or subjobber must pay the tax imposed under 
234.16 	subdivision 1 to the distributor before the 12th day of the month following the month in 
234.17 	which the cigarettes were purchased from the distributor.
234.18 		 Subd. 6.Sales tax stamp. Payment of the tax imposed under section 297F.05 and 
234.19 	by this section must be evidenced by a dual-purpose single stamp affixed to each package.
234.20 		 Subd. 7.Administration. The stamping, audit, assessment, interest, penalty, appeal, 
234.21 	refund, and collection provisions applicable to the taxes imposed under this chapter apply 
234.22 	to taxes imposed under this section.
234.23 		 Subd. 8.Deposit of revenues. Notwithstanding the provisions of section 297F.10, 
234.24 	the commissioner shall deposit all revenues, including penalties and interest, derived from 
234.25 	the tax imposed by this section, in the general fund.

234.26 	EFFECTIVE DATE. This section is effective for all sales made on or after August 
234.27 	1, 2005.

234.28 	 Sec. 22. Minnesota Statutes 2004, section 297I.05, subdivision 4, is amended to read:
234.29 		 Subd. 4.Mutual property and casualty companies with total assets less 
234.30 	than $1,600,000,000 on december 31, 1989.  A tax is imposed on mutual insurance 
234.31 	companies that sell both  property and casualty companies insurance that had total assets 
234.32 	greater than $5,000,000 at the end of the calendar year but that had total assets less than 
234.33 	$1,600,000,000 on December 31, 1989. The rate of tax is equal to:
235.1 	 (1) two percent of gross premiums less return premiums on all direct business 
235.2 	received by the insurer or agents of the insurer in Minnesota for life insurance, in cash or 
235.3 	otherwise, during the year; and 
235.4 	 (2) 1.26 percent of gross premiums less return premiums on all other direct business 
235.5 	received by the insurer or agents of the insurer in Minnesota, in cash or otherwise, during 
235.6 	the year, except for life insurance as provided in subdivision 14.

235.7 	EFFECTIVE DATE. This section is effective for premiums received after 
235.8 	December 31, 2005.

235.9 	 Sec. 23. Minnesota Statutes 2004, section 297I.05, is amended by adding a subdivision 
235.10 	to read:
235.11 		 Subd. 14.Life insurance. A tax is imposed on life insurance.  The rate of tax equals 
235.12 	1.50 percent of gross premiums less return premiums on all direct business received by 
235.13 	the insurer or agents of the insurer in Minnesota for life insurance, in cash or otherwise, 
235.14 	during the year.

235.15 	EFFECTIVE DATE. This section is effective for premiums received after 
235.16 	December 31, 2005.

235.17 	 Sec. 24. [325D.125] EMPLOYERS NOT TO MISREPRESENT STATUS OF 
235.18 	EMPLOYEES.
235.19 		 Subdivision 1.Misrepresentation prohibited. No employer shall misrepresent the 
235.20 	nature of its employment relationship with its employees to any federal, state, or local 
235.21 	government unit, to other employers or to its employees.  An employer misrepresents 
235.22 	the nature of its employment relationship with its employees if it makes any statement 
235.23 	regarding the nature of the relationship that the employer does not in good faith believe to 
235.24 	be true or if it fails to report individuals as employees when legally required to do so.
235.25 		 Subd. 2.Employee coercion prohibited. No employer shall require or request 
235.26 	any employee to enter into any agreement, or sign any document, that results in 
235.27 	misclassification of the employee as an independent contractor or otherwise does not 
235.28 	accurately reflect the employment relationship with the employer.
235.29 		 Subd. 3.Violations. Any court finding any person guilty of violating this section 
235.30 	shall transmit a copy of the documentation of the finding of guilt to the commissioner of 
235.31 	labor and industry.  The commissioner of labor and industry shall report the finding of guilt 
235.32 	to relevant state and federal agencies, including at least the commissioner of commerce, 
236.1 	the commissioner of economic security, the commissioner of revenue, the federal Internal 
236.2 	Revenue Service, and the United States Department of Labor.

236.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

236.4 	 Sec. 25. [325F.781] REQUIREMENTS; TOBACCO PRODUCT DELIVERY 
236.5 	SALES.
236.6 		 Subdivision 1.Definitions. (a) For purposes of this section, the following terms 
236.7 	have the meanings given, unless the language or context clearly provides otherwise.
236.8 	 (b) "Consumer" means an individual who purchases, receives, or possesses tobacco 
236.9 	products for personal consumption and not for resale.
236.10 	 (c) "Delivery sale" means:
236.11 	 (1) a sale of tobacco products to a consumer in this state when:
236.12 	 (i) the purchaser submits the order for the sale by means of a telephonic or other 
236.13 	method of voice transmission, the mail or any other delivery service, or the Internet or 
236.14 	other on-line service; or 
236.15 	 (ii) the tobacco products are delivered by use of the mail or other delivery service; or 
236.16 	 (2) a sale of tobacco products that satisfies the criteria in clause (1), item (i), 
236.17 	regardless of whether the seller is located inside or outside of the state.
236.18 	 A sale of tobacco products to an individual in this state must be treated as a sale to a 
236.19 	consumer, unless the individual is licensed as a distributor or retailer of tobacco products.
236.20 	 (d) "Delivery service" means a person, including the United States Postal Service, 
236.21 	that is engaged in the commercial delivery of letters, packages, or other containers.
236.22 	 (e) "Distributor" means a person, whether located inside or outside of this state, 
236.23 	other than a retailer, who sells or distributes tobacco products in the state.  Distributor does 
236.24 	not include a tobacco products manufacturer, export warehouse proprietor, or importer 
236.25 	with a valid permit under United States Code, title 26, section 5712 (1997), if the person 
236.26 	sells or distributes tobacco products in this state only to distributors who hold valid 
236.27 	and current licenses under the laws of a state, or to an export warehouse proprietor or 
236.28 	another manufacturer. Distributor does not include a common or contract carrier that is 
236.29 	transporting tobacco products under a proper bill of lading or freight bill that states the 
236.30 	quantity, source, and destination of tobacco products, or a person who ships tobacco 
236.31 	products through this state by common or contract carrier under a bill of lading or freight 
236.32 	bill.
236.33 	 (f) "Retailer" means a person, whether located inside or outside this state, who sells 
236.34 	or distributes tobacco products to a consumer in this state.
236.35 	 (g) "Tobacco products" means:
237.1 	 (1) cigarettes, as defined in section 297F.01, subdivision 3; and 
237.2 	 (2) smokeless tobacco as defined in section 325F.76.
237.3 		 Subd. 2.Requirements for accepting order for delivery sale. (a) This subdivision 
237.4 	applies to acceptance of an order for a delivery sale of tobacco products.
237.5 	 (b) When accepting the first order for a delivery sale from a consumer, the tobacco 
237.6 	retailer shall obtain the following information from the person placing the order:
237.7 	 (1) a copy of a valid government-issued document that provides the person's name, 
237.8 	current address, photograph, and date of birth; and 
237.9 	 (2) an original written statement signed by the person documenting that the person:
237.10 	 (i) is of legal age to purchase tobacco products in the state;
237.11 	 (ii) has made a choice whether to receive mailings from a tobacco retailer;
237.12 	 (iii) understands that providing false information may be a violation of law; and 
237.13 	 (iv) understands that it is a violation of law to purchase tobacco products for 
237.14 	subsequent resale or for delivery to persons who are under the legal age to purchase 
237.15 	tobacco products.
237.16 	 (c) If an order is made as a result of advertisement over the Internet, the tobacco 
237.17 	retailer shall request the e-mail address of the purchaser and shall receive payment by 
237.18 	credit card or check prior to shipping.
237.19 	 (d) Prior to shipping the tobacco products, the tobacco retailer shall verify the 
237.20 	information provided under paragraph (b) against a commercially available database. 
237.21 	Any such database or databases may also include age and identity information from 
237.22 	other government or validated commercial sources, if that additional information is 
237.23 	regularly used by government and businesses for the purpose of identity verification and 
237.24 	authentication, and if the additional information is used only to supplement and not to 
237.25 	replace the government-issued identification data in the age and identity verification 
237.26 	process.
237.27 		 Subd. 3.Requirements for shipping a delivery sale. (a) This subdivision applies 
237.28 	to a tobacco retailer shipping tobacco products pursuant to a delivery sale.
237.29 	 (b) The tobacco retailer shall clearly mark the outside of the package of tobacco 
237.30 	products to be shipped "tobacco products - adult signature required" and to show the 
237.31 	name of the tobacco retailer.
237.32 	 (c) The tobacco retailer shall utilize a delivery service that imposes the following 
237.33 	requirements:
237.34 	 (1) an adult must sign for the delivery; and 
237.35 	 (2) the person signing for the delivery must show valid government-issued 
237.36 	identification that contains a photograph of the person signing for the delivery and 
238.1 	indicates that the person signing for the delivery is of legal age to purchase tobacco 
238.2 	products and resides at the delivery address.
238.3 	 (d) The retailer must provide delivery instructions that clearly indicate the 
238.4 	requirements of this subdivision and must declare that state law requires compliance 
238.5 	with the requirements.
238.6 	 (e) No criminal penalty may be imposed on a person for a violation of this section 
238.7 	other than a violation described in paragraph (f) or (g).  Whenever it appears to the 
238.8 	commissioner that any person has engaged in any act or practice constituting a violation 
238.9 	of this section, and the violation is not within two years of any previous violation of 
238.10 	this section, the commissioner shall issue and cause to be served upon the person an 
238.11 	order requiring the person to cease and desist from violating this section.  The order must 
238.12 	give reasonable notice of the rights of the person to request a hearing and must state the 
238.13 	reason for the entry of the order.  Unless otherwise agreed between the parties, a hearing 
238.14 	shall be held not later than seven days after the request for the hearing is received by the 
238.15 	commissioner after which and within 20 days after the receipt of the administrative law 
238.16 	judge's report and subsequent exceptions and argument, the commissioner shall issue an 
238.17 	order vacating the cease and desist order, modifying it, or making it permanent as the facts 
238.18 	require.  If no hearing is requested within 30 days of the service of the order, the order 
238.19 	becomes final and remains in effect until modified or vacated by the commissioner.  All 
238.20 	hearings shall be conducted in accordance with the provisions of chapter 14.  If the person 
238.21 	to whom a cease and desist order is issued fails to appear at the hearing after being duly 
238.22 	notified, the person shall be deemed in default, and the proceeding may be determined 
238.23 	against the person upon consideration of the cease and desist order, the allegations of 
238.24 	which may be deemed to be true.
238.25 	 (f) Any person who violates this section within two years of a violation for which a 
238.26 	cease and desist order was issued under paragraph (e), is guilty of a misdemeanor.
238.27 	 (g) Any person who commits a third or subsequent violation of this section, 
238.28 	including a violation for which a cease and desist order was issued under paragraph (c), 
238.29 	within any subsequent two-year period is guilty of a gross misdemeanor.
238.30 		 Subd. 4.Common carriers. This section may not be construed as imposing liability 
238.31 	upon any common carrier, or officers or employees of the common carrier, when acting 
238.32 	within the scope of business of the common carrier.
238.33 		 Subd. 5.Registration requirement. Prior to making delivery sales or shipping 
238.34 	tobacco products in connection with any sales, an out-of-state retailer must meet the 
238.35 	requirements of section 297F.031.
239.1 		 Subd. 6.Collection of taxes. (a) Prior to shipping any tobacco products to a 
239.2 	purchaser in this state, the out-of-state retailer shall comply with all requirements of 
239.3 	chapter 297F and shall ensure that all state excise taxes and fees that apply to such 
239.4 	tobacco products have been collected and paid to the state and that all related state excise 
239.5 	tax stamps or other indicators of state excise tax payment have been properly affixed to 
239.6 	those tobacco products.
239.7 	 (b) In addition to any penalties under chapter 297F, a distributor who fails to pay any 
239.8 	tax due according to paragraph (a) shall pay, in addition to any other penalty, a penalty 
239.9 	of 50 percent of the tax due but unpaid.
239.10 		 Subd. 7.Application of state laws. All state laws that apply to in-state tobacco 
239.11 	product retailers shall apply to Internet and mail-order sellers that sell into this state.
239.12 		 Subd. 8.Forfeiture. Any tobacco product sold or attempted to be sold in a delivery 
239.13 	sale that does not meet the requirements of this section is deemed to be contraband and 
239.14 	is subject to forfeiture in the same manner as and in accordance with the provisions of 
239.15 	section 297F.21.
239.16 		 Subd. 9.Civil penalties. A tobacco retailer or distributor who violates this section 
239.17 	or rules adopted under this section is subject to the following fines:
239.18 	 (1) for the first violation, a fine of not more than $1,000; and 
239.19 	 (2) for the second and any subsequent violation, a fine of not more than $5,000.
239.20 		 Subd. 10.Enforcement. The attorney general may bring an action to enforce 
239.21 	this section and may seek injunctive relief, including a preliminary or final injunction, 
239.22 	and fines, penalties, and equitable relief and may seek to prevent or restrain actions in 
239.23 	violation of this section by any person or any person controlling such person.  In addition, 
239.24 	a violation of this section is a violation of the Unlawful Trade Practices Act, sections 
239.25 	325D.09 to 325D.16.

239.26 	EFFECTIVE DATE. This section is effective the day following final enactment.

239.27 	 Sec. 26. Minnesota Statutes 2004, section 366.011, is amended to read:
239.28 	 366.011 CHARGES FOR EMERGENCY SERVICES; COLLECTION.
239.29 	 A town may impose a reasonable service charge for emergency services, including 
239.30 	fire, rescue, medical, and related services provided by the town or contracted for by the 
239.31 	town.  If the service charge remains unpaid 30 days after a notice of delinquency is sent 
239.32 	to the recipient of the service or the recipient's representative or estate, the town or its 
239.33 	contractor on behalf of the town may use any lawful means allowed to a private party for 
239.34 	the collection of an unsecured delinquent debt.  The town may also use the authority of 
240.1 	section 366.012 to collect unpaid service charges of this kind from delinquent recipients of 
240.2 	services who are owners of taxable real property in the town state.
240.3 	 The powers conferred by this section are in addition and supplemental to the powers 
240.4 	conferred by any other law for a town to impose a service charge or assessment for a 
240.5 	service provided by the town or contracted for by the town.

240.6 	 Sec. 27. Minnesota Statutes 2004, section 366.012, is amended to read:
240.7 	 366.012 COLLECTION OF UNPAID SERVICE CHARGES.
240.8 	 If a town is authorized to impose a service charge on the owner, lessee, or occupant 
240.9 	of property, or any of them,for a governmental service provided by the town, the town 
240.10 	board may certify to the county auditor of the county in which the recipient of the services 
240.11 	owns real property, on or before October 15 for each year, any unpaid service charges 
240.12 	which shall then be collected together with property taxes levied against the property. The 
240.13 	county auditor shall remit to the town all service charges collected by the auditor on behalf 
240.14 	of the town. A charge may be certified to the auditor only if, on or before September 15, 
240.15 	the town has given written notice to the property owner of its intention to certify the 
240.16 	charge to the auditor. The service charges shall be subject to the same penalties, interest, 
240.17 	and other conditions provided for the collection of property taxes.  This section is in 
240.18 	addition to other law authorizing the collection of unpaid costs and service charges.

240.19 	 Sec. 28. COMPACTS; RETALIATORY TAXES.
 240.20 	 The commissioner of revenue may enter into compact agreements with other states 
240.21 	for the purpose of eliminating retaliatory insurance premiums tax provisions between this 
240.22 	state and other states.  The commissioner shall report to the chairpersons of the house and 
240.23 	senate tax committees, on or before February 1, 2006, on the actions the commissioner has 
240.24 	taken to enter into compact agreements with other states.

240.25 	 Sec. 29. FLOOR STOCKS TAX.
 240.26 		 Subdivision 1.Cigarettes. A floor stocks cigarette sales tax is imposed on every 
240.27 	person engaged in the business in this state as a distributor, retailer, subjobber, vendor, 
240.28 	manufacturer, or manufacturer's representative of cigarettes, on the stamped cigarettes and 
240.29 	unaffixed stamps in the person's possession or under the person's control at 12:01 a.m. on 
240.30 	August 1, 2005.  The tax is imposed at the rate of 21 cents per pack of 20 cigarettes.  For 
240.31 	packs of cigarettes with other than 20 cigarettes, the tax shall be adjusted proportionally.
240.32 	 Each distributor, by August 10, 2005, shall file a return with the commissioner, in the 
240.33 	form the commissioner prescribes, showing the stamped cigarettes and unaffixed stamps 
241.1 	on hand at 12:01 a.m. on August 1, 2005, and the amount of tax due on the cigarettes and 
241.2 	unaffixed stamps.  The tax imposed by this section is due and payable by September 7, 
241.3 	2005, and after that date bears interest at the rate of one percent a month.
241.4 	 Each retailer, subjobber, vendor, manufacturer, or manufacturer's representative, by 
241.5 	August 10, 2005, shall file a return with the commissioner, in the form the commissioner 
241.6 	prescribes, showing the cigarettes on hand at 12:01 a.m. on August 1, 2005, and the 
241.7 	amount of tax due on the cigarettes. The tax imposed by this section is due and payable by 
241.8 	September 7, 2005, and after that date bears interest at the rate of one percent a month.
241.9 		 Subd. 2.Audit and enforcement. The tax imposed by this section is subject to 
241.10 	the audit, assessment, penalty, and collection provisions applicable to the taxes imposed 
241.11 	under Minnesota Statutes, chapter 297F.  The commissioner may require a distributor to 
241.12 	receive and maintain copies of floor stocks tax returns filed by all persons requesting 
241.13 	a credit for returned cigarettes.
241.14 		 Subd. 3.Deposit of proceeds. The revenue from the tax imposed under this 
241.15 	section shall be deposited by the commissioner in the state treasury and credited to the 
241.16 	general fund.

241.17 	EFFECTIVE DATE. This section is effective August 1, 2005.

241.18 	 ARTICLE 9
241.19 	 DEPARTMENT OF REVENUE INCOME, CORPORATE FRANCHISE, 
241.20 	AND ESTATE TAXES

241.21 	 Section 1. Minnesota Statutes 2004, section 289A.08, subdivision 3, is amended to 
241.22 	read:
241.23 		 Subd. 3.Corporations.  A corporation that is subject to the state's jurisdiction to tax 
241.24 	under section 290.014, subdivision 5, must file a return, except that a foreign operating 
241.25 	corporation as defined in section 290.01, subdivision 6b, is not required to file a return.  
241.26 	The commissioner shall adopt rules for the filing of one return on behalf of the members 
241.27 	of an affiliated group of corporations that are required to file a combined report.  All 
241.28 	members of an affiliated group that are required to file a combined report must file one 
241.29 	return on behalf of the members of the group under rules adopted by the commissioner. 
241.30 	If a corporation claims on a return that it has paid tax in excess of the amount of taxes 
241.31 	lawfully due, that corporation may include on that return information necessary for 
241.32 	payment of the tax in excess of the amount lawfully due by electronic means.

241.33 	EFFECTIVE DATE. This section is effective for returns filed after December 
241.34 	31, 2005.

242.1 	 Sec. 2. Minnesota Statutes 2004, section 289A.08, subdivision 7, is amended to read:
242.2 		 Subd. 7.Composite income tax returns for nonresident partners, shareholders, 
242.3 	and beneficiaries.  (a) The commissioner may allow a partnership with nonresident 
242.4 	partners to file a composite return and to pay the tax on behalf of nonresident partners who 
242.5 	have no other Minnesota source income.  This composite return must include the names, 
242.6 	addresses, Social Security numbers, income allocation, and tax liability for the nonresident 
242.7 	partners electing to be covered by the composite return.
242.8 	 (b) The computation of a partner's tax liability must be determined by multiplying 
242.9 	the income allocated to that partner by the highest rate used to determine the tax liability 
242.10 	for individuals under section 290.06, subdivision 2c.  Nonbusiness deductions, standard 
242.11 	deductions, or personal exemptions are not allowed.
242.12 	 (c) The partnership must submit a request to use this composite return filing method 
242.13 	for nonresident partners.  The requesting partnership must file a composite return in the 
242.14 	form prescribed by the commissioner of revenue.  The filing of a composite return is 
242.15 	considered a request to use the composite return filing method.
242.16 	 (d) The electing partner must not have any Minnesota source income other than 
242.17 	the income from the partnership and other electing partnerships.  If it is determined that 
242.18 	the electing partner has other Minnesota source income, the inclusion of the income 
242.19 	and tax liability for that partner under this provision will not constitute a return to 
242.20 	satisfy the requirements of subdivision 1.  The tax paid for the individual as part of the 
242.21 	composite return is allowed as a payment of the tax by the individual on the date on 
242.22 	which the composite return payment was made.  If the electing nonresident partner has no 
242.23 	other Minnesota source income, filing of the composite return is a return for purposes of 
242.24 	subdivision 1.
242.25 	 (e) This subdivision does not negate the requirement that an individual pay estimated 
242.26 	tax if the individual's liability would exceed the requirements set forth in section 289A.25.  
242.27 	A composite estimate may, however, be filed in a manner similar to and containing the 
242.28 	information required under paragraph (a).
242.29 	 (f) If an electing partner's share of the partnership's gross income from Minnesota 
242.30 	sources is less than the filing requirements for a nonresident under this subdivision, the tax 
242.31 	liability is zero.  However, a statement showing the partner's share of gross income must 
242.32 	be included as part of the composite return.
242.33 	 (g) The election provided in this subdivision is not only  available to any a partner 
242.34 	other than who has no other Minnesota source income and who is either (1) a full-year 
242.35 	nonresident individual who has no other Minnesota source income or (2) a trust or estate 
243.1 	that does not claim a deduction under either section 651 or 661 of the Internal Revenue 
243.2 	Code.
243.3 	 (h) A corporation defined in section 290.9725 and its nonresident shareholders may 
243.4 	make an election under this paragraph.  The provisions covering the partnership apply to 
243.5 	the corporation and the provisions applying to the partner apply to the shareholder.
243.6 	 (i) Estates and trusts distributing current income only and the nonresident individual 
243.7 	beneficiaries of the estates or trusts may make an election under this paragraph.  The 
243.8 	provisions covering the partnership apply to the estate or trust.  The provisions applying to 
243.9 	the partner apply to the beneficiary.
243.10 	 (j) For the purposes of this subdivision, "income" means the partner's share of 
243.11 	federal adjusted gross income from the partnership modified by the additions provided 
243.12 	in section 290.01, subdivision 19a, clauses (6) and (7), and the subtractions provided in 
243.13 	section 290.01, subdivision 19b, clause (11), to the extent the amount is assignable or 
243.14 	allocable to Minnesota under section 290.17.  The subtraction allowed under section 
243.15 	290.01, subdivision 19b, clause (11), is only allowed on the composite tax computation to 
243.16 	the extent the electing partner would have been allowed the subtraction.

243.17 	EFFECTIVE DATE. This section is effective for tax years beginning after 
243.18 	December 31, 2004.

243.19 	 Sec. 3. Minnesota Statutes 2004, section 289A.18, subdivision 1, is amended to read:
243.20 		 Subdivision 1.Individual income, fiduciary income, corporate franchise, and 
243.21 	entertainment taxes; partnership and s corporation returns; information returns; 
243.22 	mining company returns.  The returns required to be made under sections 289A.08 and 
243.23 	289A.12 must be filed at the following times:
243.24 	 (1) returns made on the basis of the calendar year must be filed on April 15 following 
243.25 	the close of the calendar year, except that returns of corporations must be filed on March 
243.26 	15 following the close of the calendar year;
243.27 	 (2) returns made on the basis of the fiscal year must be filed on the 15th day of the 
243.28 	fourth month following the close of the fiscal year, except that returns of corporations 
243.29 	must be filed on the 15th day of the third month following the close of the fiscal year;
243.30 	 (3) returns for a fractional part of a year must be filed on the 15th day of the fourth 
243.31 	month following the end of the month in which falls the last day of the period for which 
243.32 	the return is made, except that the returns of corporations must be filed on the 15th day 
243.33 	of the third month following the end of the month tax year of the unitary group in which 
243.34 	falls the last day of the period for which the return is made;
244.1 	 (4) in the case of a final return of a decedent for a fractional part of a year, the return 
244.2 	must be filed on the 15th day of the fourth month following the close of the 12-month 
244.3 	period that began with the first day of that fractional part of a year;
244.4 	 (5) in the case of the return of a cooperative association, returns must be filed on or 
244.5 	before the 15th day of the ninth month following the close of the taxable year;
244.6 	 (6) if a corporation has been divested from a unitary group and files a return for 
244.7 	a fractional part of a year in which it was a member of a unitary business that files a 
244.8 	combined report under section 290.34, subdivision 2, the divested corporation's return 
244.9 	must be filed on the 15th day of the third month following the close of the common 
244.10 	accounting period that includes the fractional year;
244.11 	 (7) returns of entertainment entities must be filed on April 15 following the close of 
244.12 	the calendar year;
244.13 	 (8) returns required to be filed under section 289A.08, subdivision 4, must be filed 
244.14 	on the 15th day of the fifth month following the close of the taxable year;
244.15 	 (9) returns of mining companies must be filed on May 1 following the close of the 
244.16 	calendar year; and
244.17 	 (10) returns required to be filed with the commissioner under section 289A.12, 
244.18 	subdivision 2, 4 to 10, or 14, must be filed within 30 days after being demanded by the 
244.19 	commissioner.

244.20 	EFFECTIVE DATE. This section is effective for fractional years closing after 
244.21 	December 31, 2004.

244.22 	 Sec. 4. Minnesota Statutes 2004, section 289A.38, subdivision 7, is amended to read:
244.23 		 Subd. 7.Federal tax changes.  If the amount of income, items of tax preference, 
244.24 	deductions, or credits for any year of a taxpayer as reported to the Internal Revenue 
244.25 	Service is changed or corrected by the commissioner of Internal Revenue or other officer 
244.26 	of the United States or other competent authority, or where a renegotiation of a contract or 
244.27 	subcontract with the United States results in a change in income, items of tax preference, 
244.28 	deductions, credits, or withholding tax, or, in the case of estate tax, where there are 
244.29 	adjustments to the taxable estate resulting in a change to the credit for state death taxes, 
244.30 	the taxpayer shall report the change or correction or renegotiation results in writing to the 
244.31 	commissioner.  The report must be submitted within 180 days after the final determination 
244.32 	and must be in the form of either an amended Minnesota estate, withholding tax, corporate 
244.33 	franchise tax,or income tax return conceding the accuracy of the federal determination 
244.34 	or a letter detailing how the federal determination is incorrect or does not change the 
244.35 	Minnesota tax.  An amended Minnesota income tax return must be accompanied by an 
245.1 	amended property tax refund return, if necessary.  A taxpayer filing an amended federal 
245.2 	tax return must also file a copy of the amended return with the commissioner of revenue 
245.3 	within 180 days after filing the amended return.

245.4 	EFFECTIVE DATE. This section is effective the day following final enactment.

245.5 	 Sec. 5. Minnesota Statutes 2004, section 289A.50, subdivision 1a, is amended to read:
245.6 		 Subd. 1a.Refund form.  On or before January 1, 2000, the commissioner of 
245.7 	revenue shall prepare and make available to taxpayers a form for filing claims for refund 
245.8 	of taxes paid in excess of the amount due. If the commissioner fails to prepare a form 
245.9 	under this subdivision by January 1, 2000, any claims for refund made after January 1, 
245.10 	2000, and up to ten days after the form is made available to taxpayers are deemed to be 
245.11 	made in compliance with the requirement of the form.The commissioner may request 
245.12 	corporate franchise taxpayers claiming a refund of corporate franchise taxes paid in 
245.13 	excess of the amount lawfully due to include on the claim for refund or amended return 
245.14 	information necessary for payment of the taxes paid in excess of taxes lawfully due by 
245.15 	electronic means.

245.16 	EFFECTIVE DATE. This section is effective for claims for refund filed after 
245.17 	December 31, 2005.

245.18 	 Sec. 6. Minnesota Statutes 2004, section 289A.60, subdivision 6, is amended to read:
245.19 		 Subd. 6.Penalty for false or fraudulent return, evasion.  If a person files a false 
245.20 	or fraudulent return, or claim for refund or attempts in any manner to evade or defeat a tax 
245.21 	or payment of tax, there is imposed on the person a penalty equal to the sum of (1) 50 
245.22 	percent of the tax, less amounts paid by the person on the basis of the false or fraudulent 
245.23 	return, due for the period to which the return related and (2) 50 percent of the portion of 
245.24 	any refund claimed that is attributable to fraud.

245.25 	EFFECTIVE DATE. This section is effective for returns filed after December 
245.26 	31, 2005.

245.27 	 Sec. 7. Minnesota Statutes 2004, section 289A.60, subdivision 12, is amended to read:
245.28 		 Subd. 12.Penalties relating to property tax refunds.  (a) If the commissioner 
245.29 	determines that a property tax refund claim is or was excessive and was filed with 
245.30 	fraudulent intent, the claim must be disallowed in full.  If the claim has been paid, the 
245.31 	amount disallowed may be recovered by assessment and collection.
246.1 	 (b) If it is determined that a property tax refund claim is excessive and was 
246.2 	negligently prepared, ten percent of the corrected claim must be disallowed.  If the claim 
246.3 	has been paid, the amount disallowed must be recovered by assessment and collection.
246.4 	 (c) (b) An owner who without reasonable cause fails to give a certificate of rent 
246.5 	constituting property tax to a renter, as required by section 290A.19, paragraph (a), is 
246.6 	liable to the commissioner for a penalty of $100 for each failure.
246.7 	 (d) (c) If the owner or managing agent knowingly gives rent certificates that report 
246.8 	total rent constituting property taxes in excess of the amount of actual rent constituting 
246.9 	property taxes paid on the rented part of a property, the owner or managing agent is liable 
246.10 	for a penalty equal to the greater of (1) $100 or (2) 50 percent of the excess that is reported.  
246.11 	An overstatement of rent constituting property taxes is presumed to be knowingly made if 
246.12 	it exceeds by ten percent or more the actual rent constituting property taxes.

246.13 	EFFECTIVE DATE. This section is effective for returns filed after December 
246.14 	31, 2005.

246.15 	 Sec. 8. Minnesota Statutes 2004, section 290.01, subdivision 19a, is amended to read:
246.16 		 Subd. 19a.Additions to federal taxable income.  For individuals, estates, and 
246.17 	trusts, there shall be added to federal taxable income:
246.18 	 (1)(i) interest income on obligations of any state other than Minnesota or a political 
246.19 	or governmental subdivision, municipality, or governmental agency or instrumentality 
246.20 	of any state other than Minnesota exempt from federal income taxes under the Internal 
246.21 	Revenue Code or any other federal statute; and
246.22 	 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
246.23 	Code, except the portion of the exempt-interest dividends derived from interest income 
246.24 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
246.25 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
246.26 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
246.27 	95 percent or more of the exempt-interest dividends that are paid by the regulated 
246.28 	investment company as defined in section 851(a) of the Internal Revenue Code, or the 
246.29 	fund of the regulated investment company as defined in section 851(g) of the Internal 
246.30 	Revenue Code, making the payment; and
246.31 	 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
246.32 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
246.33 	interest income on obligations of the state in which the tribe is located;
246.34 	 (2) the amount of income taxes paid or accrued within the taxable year under this 
246.35 	chapter and income the amount of taxes based on net income paid to any other state or to 
247.1 	any province or territory of Canada, to the extent allowed as a deduction under section 
247.2 	63(d) of the Internal Revenue Code, but the addition may not be more than the amount by 
247.3 	which the itemized deductions as allowed under section 63(d) of the Internal Revenue 
247.4 	Code exceeds the amount of the standard deduction as defined in section 63(c) of the 
247.5 	Internal Revenue Code.  For the purpose of this paragraph, the disallowance of itemized 
247.6 	deductions under section 68 of the Internal Revenue Code of 1986, income tax is the last 
247.7 	itemized deduction disallowed;
247.8 	 (3) the capital gain amount of a lump sum distribution to which the special tax under 
247.9 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
247.10 	 (4) the amount of income taxes paid or accrued within the taxable year under this 
247.11 	chapter and income taxes based on net income paid to any other state or any province or 
247.12 	territory of Canada, to the extent allowed as a deduction in determining federal adjusted 
247.13 	gross income.  For the purpose of this paragraph, income taxes do not include the taxes 
247.14 	imposed by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 
247.15 	290.9729;
247.16 	 (5) the amount of expense, interest, or taxes disallowed pursuant to section 
247.17 	290.10other than expenses or interest used in computing net interest income for the 
247.18 	subtraction allowed under subdivision 19b, clause (1);
247.19 	 (6) the amount of a partner's pro rata share of net income which does not flow 
247.20 	through to the partner because the partnership elected to pay the tax on the income under 
247.21 	section 6242(a)(2) of the Internal Revenue Code; and
247.22 	 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
247.23 	Internal Revenue Code.  For purposes of this clause, if the taxpayer has an activity that 
247.24 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
247.25 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
247.26 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
247.27 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
247.28 	amount of the loss from the activity that is not allowed in the taxable year.  In succeeding 
247.29 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
247.30 	under section 168(k) is allowed.

247.31 	EFFECTIVE DATE. This section is effective for tax years beginning after 
247.32 	December 31, 2004.

247.33 	 Sec. 9. Minnesota Statutes 2004, section 290.01, subdivision 19b, is amended to read:
247.34 		 Subd. 19b.Subtractions from federal taxable income.  For individuals, estates, 
247.35 	and trusts, there shall be subtracted from federal taxable income:
248.1 	 (1) net interest income on obligations of any authority, commission, or 
248.2 	instrumentality of the United States to the extent includable in taxable income for federal 
248.3 	income tax purposes but exempt from state income tax under the laws of the United States;
248.4 	 (2) if included in federal taxable income, the amount of any overpayment of income 
248.5 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
248.6 	is received as a refund or as a credit to another taxable year's income tax liability;
248.7 	 (3) the amount paid to others, less the amount used to claim the credit allowed under 
248.8 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
248.9 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
248.10 	transportation of each qualifying child in attending an elementary or secondary school 
248.11 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
248.12 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
248.13 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
248.14 	of 1964 and chapter 363A.  For the purposes of this clause, "tuition" includes fees or 
248.15 	tuition as defined in section 290.0674, subdivision 1, clause (1).  As used in this clause, 
248.16 	"textbooks" includes books and other instructional materials and equipment purchased 
248.17 	or leased for use in elementary and secondary schools in teaching only those subjects 
248.18 	legally and commonly taught in public elementary and secondary schools in this state.  
248.19 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
248.20 	section 290.0674, subdivision 1, clause (3).  "Textbooks" does not include instructional 
248.21 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
248.22 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
248.23 	or materials for, or transportation to, extracurricular activities including sporting events, 
248.24 	musical or dramatic events, speech activities, driver's education, or similar programs.  For 
248.25 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
248.26 	given in section 32(c)(3) of the Internal Revenue Code;
248.27 	 (4) income as provided under section 290.0802;
248.28 	 (5) to the extent included in federal adjusted gross income, income realized on 
248.29 	disposition of property exempt from tax under section 290.491;
248.30 	 (6) to the extent included in federal taxable income, postservice benefits for youth 
248.31 	community service under section 124D.42 for volunteer service under United States 
248.32 	Code, title 42, sections 12601 to 12604;
248.33 	 (7) to the extent not deducted in determining federal taxable income by an individual 
248.34 	who does not itemize deductions for federal income tax purposes for the taxable year, 
248.35 	an amount equal to 50 percent of the excess of charitable contributions allowable as a 
249.1 	deduction for the taxable year under section 170(a) of the Internal Revenue Code over 
249.2 	$500;
249.3 	 (8) (7) for taxable years beginning before January 1, 2008, the amount of the federal 
249.4 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
249.5 	which is included in gross income under section 87 of the Internal Revenue Code;
249.6 	 (9) (8) for individuals who are allowed a federal foreign tax credit for taxes that do 
249.7 	not qualify for a credit under section 290.06, subdivision 22, an amount equal to the 
249.8 	carryover of subnational foreign taxes for the taxable year, but not to exceed the total 
249.9 	subnational foreign taxes reported in claiming the foreign tax credit.  For purposes of 
249.10 	this clause, "federal foreign tax credit" means the credit allowed under section 27 of the 
249.11 	Internal Revenue Code, and "carryover of subnational foreign taxes" equals the carryover 
249.12 	allowed under section 904(c) of the Internal Revenue Code minus national level foreign 
249.13 	taxes to the extent they exceed the federal foreign tax credit;
249.14 	 (10) (9) in each of the five tax years immediately following the tax year in which 
249.15 	an addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 
249.16 	of a shareholder of a corporation that is an S corporation,an amount equal to one-fifth 
249.17 	of the delayed depreciation.  For purposes of this clause, "delayed depreciation" means 
249.18 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
249.19 	subdivision 19c, clause (15), in the case of a shareholder of an S corporation,minus the 
249.20 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
249.21 	generated for the tax year of the addition.  The resulting delayed depreciation cannot be 
249.22 	less than zero; and
249.23 	 (11) (10) job opportunity building zone income as provided under section 469.316.

249.24 	EFFECTIVE DATE. The amendment to clause (9) is effective retroactively for tax 
249.25 	years beginning after December 31, 2001. The rest of this section is effective for the tax 
249.26 	years beginning after December 31, 2004.

249.27 	 Sec. 10. Minnesota Statutes 2004, section 290.01, subdivision 19c, is amended to read:
249.28 		 Subd. 19c.Corporations; additions to federal taxable income.  For corporations, 
249.29 	there shall be added to federal taxable income:
249.30 	 (1) the amount of any deduction taken for federal income tax purposes for income, 
249.31 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
249.32 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
249.33 	another state, a political subdivision of another state, the District of Columbia, or any 
249.34 	foreign country or possession of the United States;
250.1 	 (2) interest not subject to federal tax upon obligations of:  the United States, its 
250.2 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
250.3 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
250.4 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
250.5 	tribal governments;
250.6 	 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
250.7 	Revenue Code;
250.8 	 (4) the amount of any net operating loss deduction taken for federal income tax 
250.9 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
250.10 	deduction under section 810 of the Internal Revenue Code;
250.11 	 (5) the amount of any special deductions taken for federal income tax purposes 
250.12 	under sections 241 to 247 of the Internal Revenue Code;
250.13 	 (6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
250.14 	clause (a), that are not subject to Minnesota income tax;
250.15 	 (7) the amount of any capital losses deducted for federal income tax purposes under 
250.16 	sections 1211 and 1212 of the Internal Revenue Code;
250.17 	 (8) the exempt foreign trade income of a foreign sales corporation under sections 
250.18 	921(a) and 291 of the Internal Revenue Code;
250.19 	 (9) the amount of percentage depletion deducted under sections 611 through 614 and 
250.20 	291 of the Internal Revenue Code;
250.21 	 (10) for certified pollution control facilities placed in service in a taxable year 
250.22 	beginning before December 31, 1986, and for which amortization deductions were elected 
250.23 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
250.24 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
250.25 	income for those facilities;
250.26 	 (11) the amount of any deemed dividend from a foreign operating corporation 
250.27 	determined pursuant to section 290.17, subdivision 4, paragraph (g);
250.28 	 (12) the amount of any environmental tax paid under section 59(a) of the Internal 
250.29 	Revenue Code;
250.30 	 (13) the amount of a partner's pro rata share of net income which does not flow 
250.31 	through to the partner because the partnership elected to pay the tax on the income under 
250.32 	section 6242(a)(2) of the Internal Revenue Code;
250.33 	 (14) (13) the amount of net income excluded under section 114 of the Internal 
250.34 	Revenue Code;
251.1 	 (15) (14) any increase in subpart F income, as defined in section 952(a) of the 
251.2 	Internal Revenue Code, for the taxable year when subpart F income is calculated without 
251.3 	regard to the provisions of section 614 of Public Law 107-147; and
251.4 	 (16) (15) 80 percent of the depreciation deduction allowed under section 168(k) 
251.5 	(1)(A) and (k)(4)(A) of the Internal Revenue Code.  For purposes of this clause, if the 
251.6 	taxpayer has an activity that in the taxable year generates a deduction for depreciation 
251.7 	under section 168(k) (1)(A) and (k)(4)(A) and the activity generates a loss for the taxable 
251.8 	year that the taxpayer is not allowed to claim for the taxable year, "the depreciation 
251.9 	allowed under section 168(k) (1)(A) and (k)(4)(A) " for the taxable year is limited to 
251.10 	excess of the depreciation claimed by the activity under section 168(k) (1)(A) and 
251.11 	(k)(4)(A) over the amount of the loss from the activity that is not allowed in the taxable 
251.12 	year.  In succeeding taxable years when the losses not allowed in the taxable year are 
251.13 	allowed, the depreciation under section 168(k) (1)(A) and (k)(4)(A) is allowed.

251.14 	EFFECTIVE DATE. This section is effective the day following final enactment.

251.15 	 Sec. 11. Minnesota Statutes 2004, section 290.06, subdivision 22, is amended to read:
251.16 		 Subd. 22.Credit for taxes paid to another state.  (a) A taxpayer who is liable for 
251.17 	taxes based on or measured by net income to another state, as provided in paragraphs (b) 
251.18 	through (f), upon income allocated or apportioned to Minnesota, is entitled to a credit for 
251.19 	the tax paid to another state if the tax is actually paid in the taxable year or a subsequent 
251.20 	taxable year.  A taxpayer who is a resident of this state pursuant to section 290.01, 
251.21 	subdivision 7, clause (2) paragraph (b), and who is subject to income tax as a resident in 
251.22 	the state of the individual's domicile is not allowed this credit unless the state of domicile 
251.23 	does not allow a similar credit.
251.24 	 (b) For an individual, estate, or trust, the credit is determined by multiplying the tax 
251.25 	payable under this chapter by the ratio derived by dividing the income subject to tax in the 
251.26 	other state that is also subject to tax in Minnesota while a resident of Minnesota by the 
251.27 	taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue 
251.28 	Code, modified by the addition required by section 290.01, subdivision 19a, clause (1), 
251.29 	and the subtraction allowed by section 290.01, subdivision 19b, clause (1), to the extent 
251.30 	the income is allocated or assigned to Minnesota under sections 290.081 and 290.17.
251.31 	 (c) If the taxpayer is an athletic team that apportions all of its income under section 
251.32 	290.17, subdivision 5, the credit is determined by multiplying the tax payable under this 
251.33 	chapter by the ratio derived from dividing the total net income subject to tax in the other 
251.34 	state by the taxpayer's Minnesota taxable income.
252.1 	 (d) The credit determined under paragraph (b) or (c) shall not exceed the amount of 
252.2 	tax so paid to the other state on the gross income earned within the other state subject to 
252.3 	tax under this chapter, nor shall the allowance of the credit reduce the taxes paid under 
252.4 	this chapter to an amount less than what would be assessed if such income amount was 
252.5 	excluded from taxable net income.
252.6 	 (e) In the case of the tax assessed on a lump sum distribution under section 290.032, 
252.7 	the credit allowed under paragraph (a) is the tax assessed by the other state on the lump 
252.8 	sum distribution that is also subject to tax under section 290.032, and shall not exceed the 
252.9 	tax assessed under section 290.032.  To the extent the total lump sum distribution defined 
252.10 	in section 290.032, subdivision 1, includes lump sum distributions received in prior years 
252.11 	or is all or in part an annuity contract, the reduction to the tax on the lump sum distribution 
252.12 	allowed under section 290.032, subdivision 2, includes tax paid to another state that is 
252.13 	properly apportioned to that distribution.
252.14 	 (f) If a Minnesota resident reported an item of income to Minnesota and is assessed 
252.15 	tax in such other state on that same income after the Minnesota statute of limitations 
252.16 	has expired, the taxpayer shall receive a credit for that year under paragraph (a), 
252.17 	notwithstanding any statute of limitations to the contrary.  The claim for the credit must 
252.18 	be submitted within one year from the date the taxes were paid to the other state.  The 
252.19 	taxpayer must submit sufficient proof to show entitlement to a credit.
252.20 	 (g) For the purposes of this subdivision, a resident shareholder of a corporation 
252.21 	treated as an "S" corporation under section 290.9725, must be considered to have paid 
252.22 	a tax imposed on the shareholder in an amount equal to the shareholder's pro rata share 
252.23 	of any net income tax paid by the S corporation to another state.  For the purposes of the 
252.24 	preceding sentence, the term "net income tax" means any tax imposed on or measured by 
252.25 	a corporation's net income.
252.26 	 (h) For the purposes of this subdivision, a resident partner of an entity taxed as 
252.27 	a partnership under the Internal Revenue Code must be considered to have paid a tax 
252.28 	imposed on the partner in an amount equal to the partner's pro rata share of any net income 
252.29 	tax paid by the partnership to another state. For purposes of the preceding sentence, 
252.30 	the term "net income" tax means any tax imposed on or measured by a partnership's 
252.31 	net income.
252.32 	 (i) For the purposes of this subdivision, "another state":
252.33 	 (1) includes:
252.34 	 (i) the District of Columbia; and
252.35 	 (ii) a province or territory of Canada; but
252.36 	 (2) excludes Puerto Rico and the several territories organized by Congress.
253.1 	 (j) The limitations on the credit in paragraphs (b), (c), and (d), are imposed on a 
253.2 	state by state basis.
253.3 	 (k) For a tax imposed by a province or territory of Canada, the tax for purposes of 
253.4 	this subdivision is the excess of the tax over the amount of the foreign tax credit allowed 
253.5 	under section 27 of the Internal Revenue Code.  In determining the amount of the foreign 
253.6 	tax credit allowed, the net income taxes imposed by Canada on the income are deducted 
253.7 	first.  Any remaining amount of the allowable foreign tax credit reduces the provincial or 
253.8 	territorial tax that qualifies for the credit under this subdivision.

253.9 	EFFECTIVE DATE. This section is effective for tax years beginning after 
253.10 	December 31, 2004.

253.11 	 Sec. 12. Minnesota Statutes 2004, section 290.0674, subdivision 1, is amended to read:
253.12 		 Subdivision 1.Credit allowed.  An individual is allowed a credit against the 
253.13 	tax imposed by this chapter in an amount equal to 75 percent of the amount paid for 
253.14 	education-related expenses for a qualifying child in kindergarten through grade 12.  For 
253.15 	purposes of this section, "education-related expenses" means:
253.16 	 (1) fees or tuition for instruction by an instructor under section 120A.22, subdivision 
253.17 	10, clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers 
253.18 	Association, and who is not a lineal ancestor or sibling of the dependent for instruction 
253.19 	outside the regular school day or school year, including tutoring, driver's education 
253.20 	offered as part of school curriculum, regardless of whether it is taken from a public or 
253.21 	private entity or summer camps, in grade or age appropriate curricula that supplement 
253.22 	curricula and instruction available during the regular school year, that assists a dependent 
253.23 	to improve knowledge of core curriculum areas or to expand knowledge and skills under 
253.24 	the graduation rule under section 120B.02, paragraph (e), clauses (1) to (7), (9), and (10) 
253.25 	 required academic standards under section 120B.021, subdivision 1, and the elective 
253.26 	standard under section 120B.022, subdivision 1, clause (2), and that do not include the 
253.27 	teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such 
253.28 	tenets, doctrines, or worship;
253.29 	 (2) expenses for textbooks, including books and other instructional materials and 
253.30 	equipment purchased or leased for use in elementary and secondary schools in teaching 
253.31 	only those subjects legally and commonly taught in public elementary and secondary 
253.32 	schools in this state.  "Textbooks" does not include instructional books and materials 
253.33 	used in the teaching of religious tenets, doctrines, or worship, the purpose of which is 
253.34 	to instill such tenets, doctrines, or worship, nor does it include books or materials for 
254.1 	extracurricular activities including sporting events, musical or dramatic events, speech 
254.2 	activities, driver's education, or similar programs;
254.3 	 (3) a maximum expense of $200 per family for personal computer hardware, 
254.4 	excluding single purpose processors, and educational software that assists a dependent to 
254.5 	improve knowledge of core curriculum areas or to expand knowledge and skills under 
254.6 	the graduation rule under section 120B.02required academic standards under section 
254.7 	120B.021, subdivision 1, and the elective standard under section 120B.022, subdivision 1, 
254.8 	clause (2),purchased for use in the taxpayer's home and not used in a trade or business 
254.9 	regardless of whether the computer is required by the dependent's school; and
254.10 	 (4) the amount paid to others for transportation of a qualifying child attending an 
254.11 	elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa, 
254.12 	or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory 
254.13 	attendance laws, which is not operated for profit, and which adheres to the provisions of 
254.14 	the Civil Rights Act of 1964 and chapter 363A.
254.15 	 For purposes of this section, "qualifying child" has the meaning given in section 
254.16 	32(c)(3) of the Internal Revenue Code.

254.17 	EFFECTIVE DATE. This section is effective for tax years beginning after 
254.18 	December 31, 2004.

254.19 	 Sec. 13. Minnesota Statutes 2004, section 290.0922, subdivision 2, is amended to read:
254.20 		 Subd. 2.Exemptions.  The following entities are exempt from the tax imposed 
254.21 	by this section:
254.22 	 (1) corporations exempt from tax under section 290.05;
254.23 	 (2) real estate investment trusts;
254.24 	 (3) regulated investment companies or a fund thereof; and
254.25 	 (4) entities having a valid election in effect under section 860D(b) of the Internal 
254.26 	Revenue Code;
254.27 	 (5) town and farmers' mutual insurance companies;
254.28 	 (6) cooperatives organized under chapter 308A or 308B that provide housing 
254.29 	exclusively to persons age 55 and over and are classified as homesteads under section 
254.30 	273.124, subdivision 3; and
254.31 	 (7) an entity, if for the taxable year all of its property is located in a job opportunity 
254.32 	building zone designated under section 469.314 and all of its payroll is a job opportunity 
254.33 	building zone payroll under section 469.310.
254.34 	 Entities not specifically exempted by this subdivision are subject to tax under this 
254.35 	section, notwithstanding section 290.05.

255.1 	EFFECTIVE DATE. This section is effective for tax years beginning after 
255.2 	December 31, 2004.

255.3 	 Sec. 14. Minnesota Statutes 2004, section 291.005, subdivision 1, is amended to read:
255.4 		 Subdivision 1.Scope.  Unless the context otherwise clearly requires, the following 
255.5 	terms used in this chapter shall have the following meanings:
255.6 	 (1) "Federal gross estate" means the gross estate of a decedent as valued and 
255.7 	otherwise determined for federal estate tax purposes by federal taxing authorities pursuant 
255.8 	to the provisions of the Internal Revenue Code.
255.9 	 (2) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 
255.10 	excluding therefrom any property included therein which has its situs outside Minnesota, 
255.11 	and (b) including therein any property omitted from the federal gross estate which is 
255.12 	includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 
255.13 	authorities.
255.14 	 (3) "Personal representative" means the executor, administrator or other person 
255.15 	appointed by the court to administer and dispose of the property of the decedent.  If there 
255.16 	is no executor, administrator or other person appointed, qualified, and acting within this 
255.17 	state, then any person in actual or constructive possession of any property having a situs in 
255.18 	this state which is included in the federal gross estate of the decedent shall be deemed 
255.19 	to be a personal representative to the extent of the property and the Minnesota estate tax 
255.20 	due with respect to the property.
255.21 	 (4) "Resident decedent" means an individual whose domicile at the time of death 
255.22 	was in Minnesota.
255.23 	 (5) "Nonresident decedent" means an individual whose domicile at the time of 
255.24 	death was not in Minnesota.
255.25 	 (6) "Situs of property" means, with respect to real property, the state or country in 
255.26 	which it is located; with respect to tangible personal property, the state or country in which 
255.27 	it was normally kept or located at the time of the decedent's death; and with respect to 
255.28 	intangible personal property, the state or country in which the decedent was domiciled 
255.29 	at death.
255.30 	 (7) "Commissioner" means the commissioner of revenue or any person to whom the 
255.31 	commissioner has delegated functions under this chapter.
255.32 	 (8) "Internal Revenue Code" means the United States Internal Revenue Code of 
255.33 	1986, as amended through December 31, 2002 2004.
256.1 	 (9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 
256.2 	defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of 
256.3 	deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.

256.4 	EFFECTIVE DATE. This section is effective for estates of decedents dying after 
256.5 	December 31, 2004.

256.6 	 Sec. 15. Minnesota Statutes 2004, section 291.03, subdivision 1, is amended to read:
256.7 		 Subdivision 1.Tax amount.  The tax imposed shall be an amount equal to the 
256.8 	proportion of the maximum credit for state death taxes computed under section 2011 of the 
256.9 	Internal Revenue Code, as amended through December 31, 2000, for state death taxes but 
256.10 	using Minnesota adjusted taxable estate instead of federal adjusted taxable estate,as the 
256.11 	Minnesota gross estate bears to the value of the federal gross estate.  The tax determined 
256.12 	under this paragraph shall not be greater than the federal estate tax amount computed 
256.13 	by applying the rates and brackets under section 2001 (c) of the Internal Revenue Code
256.14 	after the allowance of to the Minnesota adjusted gross estate and subtracting the federal 
256.15 	credits credit allowed under section 2010 of the Internal Revenue Code of 1986, as 
256.16 	amended through December 31, 2000.  For the purposes of this section, expenses which 
256.17 	are deducted for federal income tax purposes under section 642(g) of the Internal Revenue 
256.18 	Code as amended through December 31, 2002, are not allowable in computing the tax 
256.19 	under this chapter.

256.20 	EFFECTIVE DATE. This section is effective for estates of decedents dying after 
256.21 	December 31, 2004.

256.22 	 Sec. 16. REPEALER.
 256.23 	 Minnesota Rules, parts 8093.2000 and 8093.3000, are repealed effective the day 
256.24 	following final enactment.

256.25 	 ARTICLE 10
256.26 	 DEPARTMENT OF REVENUE PROPERTY TAXES

256.27 	 Section 1. Minnesota Statutes 2004, section 4A.02, is amended to read:
256.28 	 4A.02 STATE DEMOGRAPHER.
256.29 	 (a) The director shall appoint a state demographer.  The demographer must be 
256.30 	professionally competent in demography and must possess demonstrated ability based 
256.31 	upon past performance.
256.32 	 (b) The demographer shall:
257.1 	 (1) continuously gather and develop demographic data relevant to the state;
257.2 	 (2) design and test methods of research and data collection;
257.3 	 (3) periodically prepare population projections for the state and designated regions 
257.4 	and periodically prepare projections for each county or other political subdivision of the 
257.5 	state as necessary to carry out the purposes of this section;
257.6 	 (4) review, comment on, and prepare analysis of population estimates and 
257.7 	projections made by state agencies, political subdivisions, other states, federal agencies, or 
257.8 	nongovernmental persons, institutions, or commissions;
257.9 	 (5) serve as the state liaison with the United States Bureau of the Census, coordinate 
257.10 	state and federal demographic activities to the fullest extent possible, and aid the 
257.11 	legislature in preparing a census data plan and form for each decennial census;
257.12 	 (6) compile an annual study of population estimates on the basis of county, regional, 
257.13 	or other political or geographical subdivisions as necessary to carry out the purposes of 
257.14 	this section and section 4A.03;
257.15 	 (7) by January 1 of each year, issue a report to the legislature containing an analysis 
257.16 	of the demographic implications of the annual population study and population projections;
257.17 	 (8) prepare maps for all counties in the state, all municipalities with a population 
257.18 	of 10,000 or more, and other municipalities as needed for census purposes, according to 
257.19 	scale and detail recommended by the United States Bureau of the Census, with the maps 
257.20 	of cities showing precinct boundaries;
257.21 	 (9) prepare an estimate of population and of the number of households for each 
257.22 	governmental subdivision for which the Metropolitan Council does not prepare an annual 
257.23 	estimate, and an estimate of population over age 65 for each county for which the 
257.24 	Metropolitan Council does not prepare an annual estimate,and convey the estimates to the 
257.25 	governing body of each political subdivision by May June 1 of each year;
257.26 	 (10) direct, under section 414.01, subdivision 14, and certify population and 
257.27 	household estimates of annexed or detached areas of municipalities or towns after being 
257.28 	notified of the order or letter of approval by the director;
257.29 	 (11) prepare, for any purpose for which a population estimate is required by law 
257.30 	or needed to implement a law, a population estimate of a municipality or town whose 
257.31 	population is affected by action under section 379.02 or 414.01, subdivision 14; and
257.32 	 (12) prepare an estimate of average household size for each statutory or home rule 
257.33 	charter city with a population of 2,500 or more for which the Metropolitan Council does 
257.34 	not prepare an annual estimate, and convey the estimate to the governing body of each 
257.35 	affected city by May June 1 of each year.
258.1 	 (c) A governing body may challenge an estimate made under paragraph (b) by 
258.2 	filing their specific objections in writing with the state demographer by June 10 24.  If 
258.3 	the challenge does not result in an acceptable estimate by June 24, the governing body 
258.4 	may have a special census conducted by the United States Bureau of the Census.  The 
258.5 	political subdivision must notify the state demographer by July 1 of its intent to have the 
258.6 	special census conducted.  The political subdivision must bear all costs of the special 
258.7 	census.  Results of the special census must be received by the state demographer by the 
258.8 	next April 15 to be used in that year's May June 1 estimate to the political subdivision 
258.9 	under paragraph (b).
258.10 	 (d) The state demographer shall certify the estimates of population and household 
258.11 	size to the commissioner of revenue by July 15 each year, including any estimates still 
258.12 	under objection.

258.13 	 EFFECTIVE DATE. This section is effective the day following final enactment.

258.14 	 Sec. 2. Minnesota Statutes 2004, section 168A.05, subdivision 1a, is amended to read:
258.15 		 Subd. 1a.Manufactured home; statement of property tax payment.  In the case 
258.16 	of a manufactured home as defined in section 327.31, subdivision 6, the department shall 
258.17 	not issue a certificate of title unless the application under section 168A.04 is accompanied 
258.18 	with a statement from the county auditor or county treasurer where the manufactured 
258.19 	home is presently located, stating that all manufactured home personal property taxes 
258.20 	levied on the unit in the name of the current owner at the time of transfer have been 
258.21 	paid. For this purpose, manufactured home personal property taxes are treated as levied 
258.22 	on January 1 of the payable year.

258.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

258.24 	 Sec. 3. Minnesota Statutes 2004, section 270.11, subdivision 2, is amended to read:
258.25 		 Subd. 2.County assessor's reports of assessment filed with commissioner.  Each 
258.26 	county assessor shall file by April 1 with the commissioner of revenue a copy of the 
258.27 	abstract that will be acted upon by the local and county boards of review. The abstract 
258.28 	must list the real and personal property in the county itemized by assessment districts.  
258.29 	The assessor of each county in the state shall file with the commissioner, within ten 
258.30 	working days following final action of the local board of review or equalization and within 
258.31 	five days following final action of the county board of equalization, any changes made 
258.32 	by the local or county board.  The information must be filed in the manner prescribed 
259.1 	by the commissioner.  It must be accompanied by a printed or typewritten copy of the 
259.2 	proceedings of the appropriate board.
259.3 	 The final abstract of assessments after adjustments by the State Board of 
259.4 	Equalization and inclusion of any omitted property shall be submitted to the commissioner 
259.5 	of revenue on or before September 1 of each calendar year.  The final abstract must 
259.6 	separately report the captured tax capacity of tax increment financing districts under 
259.7 	section 469.177, subdivision 2, the metropolitan revenue areawide net tax capacity 
259.8 	 contribution value values determined under section sections 276A.05, subdivision 1, and 
259.9 	473F.07, subdivision 1,and the value subject to the power line credit under section 273.42.

259.10 	EFFECTIVE DATE. This section is effective the day following final enactment.

259.11 	 Sec. 4. Minnesota Statutes 2004, section 270.16, subdivision 2, is amended to read:
259.12 		 Subd. 2.Failure to appraise.  When an assessor has failed to properly appraise at 
259.13 	least one-quarter one-fifth of the parcels of property in a district or county as provided 
259.14 	in section 273.01, the commissioner of revenue shall appoint a special assessor and 
259.15 	deputy assessor as necessary and cause a reappraisal to be made of the property due 
259.16 	for reassessment in accordance with law.

259.17 	EFFECTIVE DATE. This section is effective the day following final enactment.

259.18 	 Sec. 5. Minnesota Statutes 2004, section 272.01, subdivision 2, is amended to read:
259.19 		 Subd. 2.Exempt property used by private entity for profit.  (a) When any real or 
259.20 	personal property which is exempt from ad valorem taxes, and taxes in lieu thereof, is 
259.21 	leased, loaned, or otherwise made available and used by a private individual, association, 
259.22 	or corporation in connection with a business conducted for profit, there shall be imposed a 
259.23 	tax, for the privilege of so using or possessing such real or personal property, in the same 
259.24 	amount and to the same extent as though the lessee or user was the owner of such property.
259.25 	 (b) The tax imposed by this subdivision shall not apply to:
259.26 	 (1) property leased or used as a concession in or relative to the use in whole 
259.27 	or part of a public park, market, fairgrounds, port authority, economic development 
259.28 	authority established under chapter 469, municipal auditorium, municipal parking facility, 
259.29 	municipal museum, or municipal stadium;
259.30 	 (2) property of an airport owned by a city, town, county, or group thereof which is:
259.31 	 (i) leased to or used by any person or entity including a fixed base operator; and
259.32 	 (ii) used as a hangar for the storage or repair of aircraft or to provide aviation goods, 
259.33 	services, or facilities to the airport or general public;
260.1 	 the exception from taxation provided in this clause does not apply to:
260.2 	 (i) property located at an airport owned or operated by the Metropolitan Airports 
260.3 	Commission or by a city of over 50,000 population according to the most recent federal 
260.4 	census or such a city's airport authority;
260.5 	 (ii) hangars leased by a private individual, association, or corporation in connection 
260.6 	with a business conducted for profit other than an aviation-related business; or
260.7 	 (iii) facilities leased by a private individual, association, or corporation in connection 
260.8 	with a business for profit, that consists of a major jet engine repair facility financed, in 
260.9 	whole or part, with the proceeds of state bonds and located in a tax increment financing 
260.10 	district;
260.11 	 (3) property constituting or used as a public pedestrian ramp or concourse in 
260.12 	connection with a public airport; or 
260.13 	 (4) property constituting or used as a passenger check-in area or ticket sale counter, 
260.14 	boarding area, or luggage claim area in connection with a public airport but not the 
260.15 	airports owned or operated by the Metropolitan Airports Commission or cities of over 
260.16 	50,000 population or an airport authority therein.  Real estate owned by a municipality 
260.17 	in connection with the operation of a public airport and leased or used for agricultural 
260.18 	purposes is not exempt;
260.19 	 (5) property leased, loaned, or otherwise made available to a private individual, 
260.20 	corporation, or association under a cooperative farming agreement made pursuant to 
260.21 	section 97A.135; or 
260.22 	 (6) property leased, loaned, or otherwise made available to a private individual, 
260.23 	corporation, or association under section 272.68, subdivision 4.
260.24 	 (c) Taxes imposed by this subdivision are payable as in the case of personal property 
260.25 	taxes and shall be assessed to the lessees or users of real or personal property in the same 
260.26 	manner as taxes assessed to owners of real or personal property, except that such taxes 
260.27 	shall not become a lien against the property. When due, the taxes shall constitute a debt 
260.28 	due from the lessee or user to the state, township, city, county, and school district for 
260.29 	which the taxes were assessed and shall be collected in the same manner as personal 
260.30 	property taxes.  If property subject to the tax imposed by this subdivision is leased or used 
260.31 	jointly by two or more persons, each lessee or user shall be jointly and severally liable for 
260.32 	payment of the tax.
260.33 	 (d) The tax on real property of the state or any of its political subdivisions that is 
260.34 	leased by a private individual, association, or corporation and becomes taxable under 
260.35 	this subdivision or other provision of law must be assessed and collected as a personal 
260.36 	property assessment.  The taxes do not become a lien against the real property.

261.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

261.2 	 Sec. 6. Minnesota Statutes 2004, section 272.02, subdivision 1a, is amended to read:
261.3 		 Subd. 1a.Limitations on exemptions.  The exemptions granted by subdivision 1 
261.4 	are subject to the limits contained in the other subdivisions of this section, section 272.025, 
261.5 	or 273.13, subdivision 25, paragraph (c), clause (1) or (2), or paragraph (d), clause (2) 
261.6 	and all other provisions of applicable law.

261.7 	EFFECTIVE DATE. This section is effective the day following final enactment.

261.8 	 Sec. 7. Minnesota Statutes 2004, section 272.02, subdivision 7, is amended to read:
261.9 		 Subd. 7.Institutions of public charity.  Institutions of purely public charity are 
261.10 	exempt except parcels of property containing structures and the structures described in 
261.11 	section 273.13, subdivision 25, paragraph (e), other than those that qualify for exemption 
261.12 	under subdivision 26. In determining whether rental housing property qualifies for 
261.13 	exemption under this subdivision, the following are not gifts or donations to the owner of 
261.14 	the rental housing:
261.15 	 (1) rent assistance provided by the government to or on behalf of tenants, and 
261.16 	 (2) financing assistance or tax credits provided by the government to the owner on 
261.17 	condition that specific units or a specific quantity of units be set aside for persons or 
261.18 	families with certain income characteristics.
261.19 	 The items described in clauses (1) and (2) may, however, be considered when making 
261.20 	other determinations related to an exemption under this subdivision, including, without 
261.21 	limitation, for the purpose of determining whether the recipient of housing or housing 
261.22 	services is required to pay in whole or in part for the housing.

261.23 	EFFECTIVE DATE. This section is effective for taxes payable in 2004 and 
261.24 	thereafter.

261.25 	 Sec. 8. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
261.26 	to read:
261.27 		 Subd. 68.Property subject to taconite production tax or net proceeds tax. (a) 
261.28 	Real and personal property described in section 298.25 is exempt to the extent the tax on 
261.29 	taconite and iron sulphides under section 298.24 is described in section 298.25 as being in 
261.30 	lieu of other taxes on such property.  This exemption applies for taxes payable in each year 
261.31 	that the tax under section 298.24 is payable with respect to such property.
262.1 	 (b) Deposits of mineral, metal, or energy resources the mining of which is subject to 
262.2 	taxation under section 298.015 are exempt.  This exemption applies for taxes payable in 
262.3 	each year that the tax under section 298.015 is payable with respect to such property.

262.4 	EFFECTIVE DATE. This section is effective the day following final enactment.

262.5 	 Sec. 9. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
262.6 	to read:
262.7 		 Subd. 69.Religious corporations. Personal and real property that a religious 
262.8 	corporation, formed under section 317A.909, necessarily uses for a religious purpose is 
262.9 	exempt to the extent provided in section 317A.909, subdivision 3.

262.10 	EFFECTIVE DATE. This section is effective the day following final enactment.

262.11 	 Sec. 10. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
262.12 	to read:
262.13 		 Subd. 70.Children's homes. Personal and real property owned by a corporation 
262.14 	formed under section 317A.907 is exempt to the extent provided in section 317A.907, 
262.15 	subdivision 7.

262.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

262.17 	 Sec. 11. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
262.18 	to read:
262.19 		 Subd. 71.Housing and redevelopment authority and tribal housing authority 
262.20 	property. Property owned by a housing and redevelopment authority described in chapter 
262.21 	469, or by a designated housing authority described in section 469.040, subdivision 5, is 
262.22 	exempt to the extent provided in chapter 469.

262.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

262.24 	 Sec. 12. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
262.25 	to read:
262.26 		 Subd. 72.Property of housing and redevelopment authorities. Property of 
262.27 	projects of housing and redevelopment authorities are exempt to the extent permitted by 
262.28 	sections 469.042, subdivision 1, and 469.043, subdivisions 2 and 5.

262.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

263.1 	 Sec. 13. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
263.2 	to read:
263.3 		 Subd. 73.Property of regional rail authority. Property of a regional rail authority 
263.4 	as defined in chapter 398A is exempt to the extent permitted by section 398A.05.

263.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

263.6 	 Sec. 14. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
263.7 	to read:
263.8 		 Subd. 74.Spirit mountain recreation area authority. Property owned by the 
263.9 	Spirit Mountain Recreation Area Authority is exempt from taxation to the extent provided 
263.10 	in Laws 1973, chapter 327, section 6.

263.11 	 Sec. 15. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
263.12 	to read:
263.13 		 Subd. 75.Installed capacity defined. For purposes of this section, the term 
263.14 	"installed capacity" means generator nameplate capacity.

263.15 	EFFECTIVE DATE. This section is effective the day following final enactment.

263.16 	 Sec. 16. Minnesota Statutes 2004, section 272.029, subdivision 4, is amended to read:
263.17 		 Subd. 4.Reports.  (a) An owner of a wind energy conversion system subject to tax 
263.18 	under subdivision 3 shall file a report with the commissioner of revenue annually on 
263.19 	or before March February 1 detailing the amount of electricity in kilowatt-hours that 
263.20 	was produced by the wind energy conversion system for the previous calendar year.  
263.21 	The commissioner shall prescribe the form of the report.  The report must contain the 
263.22 	information required by the commissioner to determine the tax due to each county under 
263.23 	this section for the current year.  If an owner of a wind energy conversion system subject 
263.24 	to taxation under this section fails to file the report by the due date, the commissioner 
263.25 	of revenue shall determine the tax based upon the nameplate capacity of the system 
263.26 	multiplied by a capacity factor of 40 percent.
263.27 	 (b) On or before March 31 February 28, the commissioner of revenue shall notify 
263.28 	the owner of the wind energy conversion systems of the tax due to each county for the 
263.29 	current year and shall certify to the county auditor of each county in which the systems are 
263.30 	located the tax due from each owner for the current year.

263.31 	EFFECTIVE DATE. This section is effective for reports and certifications due in 
263.32 	2006 and thereafter.

264.1 	 Sec. 17. Minnesota Statutes 2004, section 272.029, subdivision 6, is amended to read:
264.2 		 Subd. 6.Distribution of revenues.  Revenues from the taxes imposed under 
264.3 	subdivision 5 must be part of the settlement between the county treasurer and the 
264.4 	county auditor under section 276.09.  The revenue must be distributed by the county 
264.5 	auditor or the county treasurer to all local taxing jurisdictions in which the wind energy 
264.6 	conversion system is located,as follows:  beginning with distributions in 2006, 80 percent 
264.7 	to counties; 14 percent to cities and townships; and six percent to school districts; and 
264.8 	for distributions occurring in 2004 and 2005 in the same proportion that each of the local 
264.9 	 taxing jurisdiction's current year's net tax capacity based tax rate is to the current year's 
264.10 	total local net tax capacity based rate.

264.11 	EFFECTIVE DATE. This section is effective the day following final enactment.

264.12 	 Sec. 18. Minnesota Statutes 2004, section 273.11, subdivision 8, is amended to read:
264.13 		 Subd. 8.Limited equity cooperative apartments.  For the purposes of this 
264.14 	subdivision, the terms defined in this subdivision have the meanings given them.
264.15 	 A "limited equity cooperative" is a corporation organized under chapter 308A or 
264.16 	308B, which has as its primary purpose the provision of housing and related services to 
264.17 	its members which meets one of the following criteria with respect to the income of its 
264.18 	members:  (1) a minimum of 75 percent of members must have incomes at or less than 
264.19 	90 percent of area median income, (2) a minimum of 40 percent of members must have 
264.20 	incomes at or less than 60 percent of area median income, or (3) a minimum of 20 percent 
264.21 	of members must have incomes at or less than 50 percent of area median income.  For 
264.22 	purposes of this clause, "member income" shall mean the income of a member existing at 
264.23 	the time the member acquires cooperative membership, and median income shall mean 
264.24 	the St. Paul-Minneapolis metropolitan area median income as determined by the United 
264.25 	States Department of Housing and Urban Development.  It must also meet the following 
264.26 	requirements:
264.27 	 (a) The articles of incorporation set the sale price of occupancy entitling cooperative 
264.28 	shares or memberships at no more than a transfer value determined as provided in the 
264.29 	articles. That value may not exceed the sum of the following:
264.30 	 (1) the consideration paid for the membership or shares by the first occupant of the 
264.31 	unit, as shown in the records of the corporation;
264.32 	 (2) the fair market value, as shown in the records of the corporation, of any 
264.33 	improvements to the real property that were installed at the sole expense of the member 
264.34 	with the prior approval of the board of directors;
265.1 	 (3) accumulated interest, or an inflation allowance not to exceed the greater of a ten 
265.2 	percent annual noncompounded increase on the consideration paid for the membership or 
265.3 	share by the first occupant of the unit, or the amount that would have been paid on that 
265.4 	consideration if interest had been paid on it at the rate of the percentage increase in the 
265.5 	revised Consumer Price Index for All Urban Consumers for the Minneapolis-St. Paul 
265.6 	metropolitan area prepared by the United States Department of Labor, provided that the 
265.7 	amount determined pursuant to this clause may not exceed $500 for each year or fraction 
265.8 	of a year the membership or share was owned; plus
265.9 	 (4) real property capital contributions shown in the records of the corporation to 
265.10 	have been paid by the transferor member and previous holders of the same membership, 
265.11 	or of separate memberships that had entitled occupancy to the unit of the member 
265.12 	involved.  These contributions include contributions to a corporate reserve account the 
265.13 	use of which is restricted to real property improvements or acquisitions, contributions to 
265.14 	the corporation which are used for real property improvements or acquisitions, and the 
265.15 	amount of principal amortized by the corporation on its indebtedness due to the financing 
265.16 	of real property acquisition or improvement or the averaging of principal paid by the 
265.17 	corporation over the term of its real property-related indebtedness.
265.18 	 (b) The articles of incorporation require that the board of directors limit the purchase 
265.19 	price of stock or membership interests for new member-occupants or resident shareholders 
265.20 	to an amount which does not exceed the transfer value for the membership or stock as 
265.21 	defined in clause (a).
265.22 	 (c) The articles of incorporation require that the total distribution out of capital to a 
265.23 	member shall not exceed that transfer value.
265.24 	 (d) The articles of incorporation require that upon liquidation of the corporation any 
265.25 	assets remaining after retirement of corporate debts and distribution to members will 
265.26 	be conveyed to a charitable organization described in section 501(c)(3) of the Internal 
265.27 	Revenue Code of 1986, as amended through December 31, 1992, or a public agency.
265.28 	 A "limited equity cooperative apartment" is a dwelling unit owned by a limited 
265.29 	equity cooperative.
265.30 	 "Occupancy entitling cooperative share or membership" is the ownership interest 
265.31 	in a cooperative organization which entitles the holder to an exclusive right to occupy a 
265.32 	dwelling unit owned or leased by the cooperative.
265.33 	 For purposes of taxation, the assessor shall value a unit owned by a limited equity 
265.34 	cooperative at the lesser of its market value or the value determined by capitalizing the net 
265.35 	operating income of a comparable apartment operated on a rental basis at the capitalization 
265.36 	rate used in valuing comparable buildings that are not limited equity cooperatives.  If a 
266.1 	cooperative fails to operate in accordance with the provisions of clauses (a) to (d), the 
266.2 	property shall be subject to additional property taxes in the amount of the difference 
266.3 	between the taxes determined in accordance with this subdivision for the last ten years that 
266.4 	the property had been assessed pursuant to this subdivision and the amount that would 
266.5 	have been paid if the provisions of this subdivision had not applied to it.  The additional 
266.6 	taxes, plus interest at the rate specified in section 549.09, shall be extended against the 
266.7 	property on the tax list for the current year.

266.8 	EFFECTIVE DATE. This section is effective for taxes payable in 2004 and 
266.9 	thereafter.

266.10 	 Sec. 19. Minnesota Statutes 2004, section 273.124, subdivision 3, is amended to read:
266.11 		 Subd. 3.Cooperatives and charitable corporations; homestead and other 
266.12 	property.  (a) When property is owned by a corporation or association organized under 
266.13 	chapter 308A or 308B, and each person who owns a share or shares in the corporation or 
266.14 	association is entitled to occupy a building on the property, or a unit within a building 
266.15 	on the property, the corporation or association may claim homestead treatment for each 
266.16 	dwelling, or for each unit in the case of a building containing several dwelling units, or for 
266.17 	the part of the value of the building occupied by a shareholder.  Each building or unit must 
266.18 	be designated by legal description or number.  The net tax capacity of each building or 
266.19 	unit that qualifies for assessment as a homestead under this subdivision must include not 
266.20 	more than one-half acre of land, if platted, nor more than 80 acres if unplatted.  The net 
266.21 	tax capacity of the property is the sum of the net tax capacities of each of the respective 
266.22 	buildings or units comprising the property, including the net tax capacity of each unit's 
266.23 	or building's proportionate share of the land and any common buildings.  To qualify for 
266.24 	the treatment provided by this subdivision, the corporation or association must be wholly 
266.25 	owned by persons having a right to occupy a building or unit owned by the corporation 
266.26 	or association.  A charitable corporation organized under the laws of Minnesota and not 
266.27 	otherwise exempt thereunder with no outstanding stock qualifies for homestead treatment 
266.28 	with respect to member residents of the dwelling units who have purchased and hold 
266.29 	residential participation warrants entitling them to occupy the units.
266.30 	 (b) To the extent provided in paragraph (a), a cooperative or corporation organized 
266.31 	under chapter 308A may obtain separate assessment and valuation, and separate property 
266.32 	tax statements for each residential homestead, residential nonhomestead, or for each 
266.33 	seasonal residential recreational building or unit not used for commercial purposes.  The 
266.34 	appropriate class rates under section 273.13 shall be applicable as if each building or unit 
266.35 	were a separate tax parcel; provided, however, that the tax parcel which exists at the time 
267.1 	the cooperative or corporation makes application under this subdivision shall be a single 
267.2 	parcel for purposes of property taxes or the enforcement and collection thereof, other than 
267.3 	as provided in paragraph (a) or this paragraph.
267.4 	 (c) A member of a corporation or association may initially obtain the separate 
267.5 	assessment and valuation and separate property tax statements, as provided in paragraph 
267.6 	(b), by applying to the assessor by June 30 of the assessment year.
267.7 	 (d) When a building, or dwelling units within a building, no longer qualify under 
267.8 	paragraph (a) or (b), the current owner must notify the assessor within 30 days.  Failure to 
267.9 	notify the assessor within 30 days shall result in the loss of benefits under paragraph (a) or 
267.10 	(b) for taxes payable in the year that the failure is discovered.  For these purposes, "benefits 
267.11 	under paragraph (a) or (b)" means the difference in the net tax capacity of the building or 
267.12 	units which no longer qualify as computed under paragraph (a) or (b) and as computed 
267.13 	under the otherwise applicable law, times the local tax rate applicable to the building for 
267.14 	that taxes payable year.  Upon discovery of a failure to notify, the assessor shall inform the 
267.15 	auditor of the difference in net tax capacity for the building or buildings in which units no 
267.16 	longer qualify, and the auditor shall calculate the benefits under paragraph (a) or (b).  Such 
267.17 	amount, plus a penalty equal to 100 percent of that amount, shall then be demanded of the 
267.18 	building's owner.  The property owner may appeal the county's determination by serving 
267.19 	copies of a petition for review with county officials as provided in section 278.01 and 
267.20 	filing a proof of service as provided in section 278.01 with the Minnesota Tax Court within 
267.21 	60 days of the date of the notice from the county.  The appeal shall be governed by the Tax 
267.22 	Court procedures provided in chapter 271, for cases relating to the tax laws as defined in 
267.23 	section 271.01, subdivision 5; disregarding sections 273.125, subdivision 5, and 278.03, 
267.24 	but including section 278.05, subdivision 2.  If the amount of the benefits under paragraph 
267.25 	(a) or (b) and penalty are not paid within 60 days, and if no appeal has been filed, the 
267.26 	county auditor shall certify the amount of the benefit and penalty to the succeeding year's 
267.27 	tax list to be collected as part of the property taxes on the affected property.

267.28 	EFFECTIVE DATE. This section is effective for taxes payable in 2004 and 
267.29 	thereafter.

267.30 	 Sec. 20. Minnesota Statutes 2004, section 273.124, subdivision 6, is amended to read:
267.31 		 Subd. 6.Leasehold cooperatives.  When one or more dwellings or one or more 
267.32 	buildings which each contain several dwelling units is owned by a nonprofit corporation 
267.33 	subject to the provisions of chapter 317A and qualifying under section 501(c)(3) or 
267.34 	501(c)(4) of the Internal Revenue Code of 1986, as amended through December 31, 
267.35 	1990, or a limited partnership which corporation or partnership operates the property in 
268.1 	conjunction with a cooperative association, and has received public financing, homestead 
268.2 	treatment may be claimed by the cooperative association on behalf of the members of 
268.3 	the cooperative for each dwelling unit occupied by a member of the cooperative.  The 
268.4 	cooperative association must provide the assessor with the Social Security numbers of 
268.5 	those members.  To qualify for the treatment provided by this subdivision, the following 
268.6 	conditions must be met:
268.7 	 (a) the cooperative association must be organized under chapter 308A or 308B and 
268.8 	all voting members of the board of directors must be resident tenants of the cooperative 
268.9 	and must be elected by the resident tenants of the cooperative;
268.10 	 (b) the cooperative association must have a lease for occupancy of the property for a 
268.11 	term of at least 20 years, which permits the cooperative association, while not in default on 
268.12 	the lease, to participate materially in the management of the property, including material 
268.13 	participation in establishing budgets, setting rent levels, and hiring and supervising a 
268.14 	management agent;
268.15 	 (c) to the extent permitted under state or federal law, the cooperative association 
268.16 	must have a right under a written agreement with the owner to purchase the property if the 
268.17 	owner proposes to sell it; if the cooperative association does not purchase the property it is 
268.18 	offered for sale, the owner may not subsequently sell the property to another purchaser at 
268.19 	a price lower than the price at which it was offered for sale to the cooperative association 
268.20 	unless the cooperative association approves the sale;
268.21 	 (d) a minimum of 40 percent of the cooperative association's members must have 
268.22 	incomes at or less than 60 percent of area median gross income as determined by the 
268.23 	United States Secretary of Housing and Urban Development under section 142(d)(2)(B) 
268.24 	of the Internal Revenue Code of 1986, as amended through December 31, 1991.  For 
268.25 	purposes of this clause, "member income" means the income of a member existing at the 
268.26 	time the member acquires cooperative membership;
268.27 	 (e) if a limited partnership owns the property, it must include as the managing 
268.28 	general partner a nonprofit organization operating under the provisions of chapter 317A 
268.29 	and qualifying under section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, 
268.30 	as amended through December 31, 1990, and the limited partnership agreement must 
268.31 	provide that the managing general partner have sufficient powers so that it materially 
268.32 	participates in the management and control of the limited partnership;
268.33 	 (f) prior to becoming a member of a leasehold cooperative described in this 
268.34 	subdivision, a person must have received notice that (1) describes leasehold cooperative 
268.35 	property in plain language, including but not limited to the effects of classification 
268.36 	under this subdivision on rents, property taxes and tax credits or refunds, and operating 
269.1 	expenses, and (2) states that copies of the articles of incorporation and bylaws of the 
269.2 	cooperative association, the lease between the owner and the cooperative association, a 
269.3 	sample sublease between the cooperative association and a tenant, and, if the owner is a 
269.4 	partnership, a copy of the limited partnership agreement, can be obtained upon written 
269.5 	request at no charge from the owner, and the owner must send or deliver the materials 
269.6 	within seven days after receiving any request;
269.7 	 (g) if a dwelling unit of a building was occupied on the 60th day prior to the date on 
269.8 	which the unit became leasehold cooperative property described in this subdivision, the 
269.9 	notice described in paragraph (f) must have been sent by first class mail to the occupant of 
269.10 	the unit at least 60 days prior to the date on which the unit became leasehold cooperative 
269.11 	property. For purposes of the notice under this paragraph, the copies of the documents 
269.12 	referred to in paragraph (f) may be in proposed version, provided that any subsequent 
269.13 	material alteration of those documents made after the occupant has requested a copy 
269.14 	shall be disclosed to any occupant who has requested a copy of the document.  Copies of 
269.15 	the articles of incorporation and certificate of limited partnership shall be filed with the 
269.16 	secretary of state after the expiration of the 60-day period unless the change to leasehold 
269.17 	cooperative status does not proceed;
269.18 	 (h) the county attorney of the county in which the property is located must certify to 
269.19 	the assessor that the property meets the requirements of this subdivision;
269.20 	 (i) the public financing received must be from at least one of the following sources:
269.21 	 (1) tax increment financing proceeds used for the acquisition or rehabilitation of the 
269.22 	building or interest rate write-downs relating to the acquisition of the building;
269.23 	 (2) government issued bonds exempt from taxes under section 103 of the Internal 
269.24 	Revenue Code of 1986, as amended through December 31, 1991, the proceeds of which 
269.25 	are used for the acquisition or rehabilitation of the building;
269.26 	 (3) programs under section 221(d)(3), 202, or 236, of Title II of the National 
269.27 	Housing Act;
269.28 	 (4) rental housing program funds under Section 8 of the United States Housing 
269.29 	Act of 1937 or the market rate family graduated payment mortgage program funds 
269.30 	administered by the Minnesota Housing Finance Agency that are used for the acquisition 
269.31 	or rehabilitation of the building;
269.32 	 (5) low-income housing credit under section 42 of the Internal Revenue Code of 
269.33 	1986, as amended through December 31, 1991;
269.34 	 (6) public financing provided by a local government used for the acquisition or 
269.35 	rehabilitation of the building, including grants or loans from (i) federal community 
270.1 	development block grants; (ii) HOME block grants; or (iii) residential rental bonds issued 
270.2 	under chapter 474A; or
270.3 	 (7) other rental housing program funds provided by the Minnesota Housing Finance 
270.4 	Agency for the acquisition or rehabilitation of the building;
270.5 	 (j) at the time of the initial request for homestead classification or of any transfer of 
270.6 	ownership of the property, the governing body of the municipality in which the property is 
270.7 	located must hold a public hearing and make the following findings:
270.8 	 (1) that the granting of the homestead treatment of the apartment's units will 
270.9 	facilitate safe, clean, affordable housing for the cooperative members that would otherwise 
270.10 	not be available absent the homestead designation;
270.11 	 (2) that the owner has presented information satisfactory to the governing body 
270.12 	showing that the savings garnered from the homestead designation of the units will be 
270.13 	used to reduce tenant's rents or provide a level of furnishing or maintenance not possible 
270.14 	absent the designation; and
270.15 	 (3) that the requirements of paragraphs (b), (d), and (i) have been met.
270.16 	 Homestead treatment must be afforded to units occupied by members of the 
270.17 	cooperative association and the units must be assessed as provided in subdivision 3, 
270.18 	provided that any unit not so occupied shall be classified and assessed pursuant to the 
270.19 	appropriate class.  No more than three acres of land may, for assessment purposes, 
270.20 	be included with each dwelling unit that qualifies for homestead treatment under this 
270.21 	subdivision.
270.22 	 When dwelling units no longer qualify under this subdivision, the current owner 
270.23 	must notify the assessor within 60 days.  Failure to notify the assessor within 60 days shall 
270.24 	result in the loss of benefits under this subdivision for taxes payable in the year that the 
270.25 	failure is discovered.  For these purposes, "benefits under this subdivision" means the 
270.26 	difference in the net tax capacity of the units which no longer qualify as computed under 
270.27 	this subdivision and as computed under the otherwise applicable law, times the local tax 
270.28 	rate applicable to the building for that taxes payable year.  Upon discovery of a failure to 
270.29 	notify, the assessor shall inform the auditor of the difference in net tax capacity for the 
270.30 	building or buildings in which units no longer qualify, and the auditor shall calculate the 
270.31 	benefits under this subdivision.  Such amount, plus a penalty equal to 100 percent of that 
270.32 	amount, shall then be demanded of the building's owner.  The property owner may appeal 
270.33 	the county's determination by serving copies of a petition for review with county officials 
270.34 	as provided in section 278.01 and filing a proof of service as provided in section 278.01
270.35 	with the Minnesota Tax Court within 60 days of the date of the notice from the county.  
270.36 	The appeal shall be governed by the Tax Court procedures provided in chapter 271, for 
271.1 	cases relating to the tax laws as defined in section 271.01, subdivision 5; disregarding 
271.2 	sections 273.125, subdivision 5, and 278.03, but including section 278.05, subdivision 2.  
271.3 	If the amount of the benefits under this subdivision and penalty are not paid within 60 
271.4 	days, and if no appeal has been filed, the county auditor shall certify the amount of the 
271.5 	benefit and penalty to the succeeding year's tax list to be collected as part of the property 
271.6 	taxes on the affected buildings.

271.7 	EFFECTIVE DATE. This section is effective for taxes payable in 2004 and 
271.8 	thereafter.

271.9 	 Sec. 21. Minnesota Statutes 2004, section 273.124, subdivision 8, is amended to read:
271.10 		 Subd. 8.Homestead owned by or leased to family farm corporation, joint farm 
271.11 	venture, limited liability company, or partnership.  (a) Each family farm corporation, 
271.12 	each ; each joint family farm venture,; and each limited liability company, and each or 
271.13 	partnership operating which operates a family farm;is entitled to class 1b under section 
271.14 	273.13, subdivision 22, paragraph (b), or class 2a assessment for one homestead occupied 
271.15 	by a shareholder, member, or partner thereof who is residing on the land, and actively 
271.16 	engaged in farming of the land owned by the family farm corporation, joint family farm 
271.17 	venture, limited liability company, or partnership operating a family farm. Homestead 
271.18 	treatment applies even if legal title to the property is in the name of the family farm 
271.19 	corporation, joint family farm venture, limited liability company, or partnership operating 
271.20 	the family farm, and not in the name of the person residing on it.
271.21 	 "Family farm corporation," "family farm," and "partnership operating a family 
271.22 	farm" have the meanings given in section 500.24, except that the number of allowable 
271.23 	shareholders, members, or partners under this subdivision shall not exceed 12.  "Limited 
271.24 	liability company" has the meaning contained in sections 322B.03, subdivision 28, and 
271.25 	500.24, subdivision 2, paragraphs (l) and (m).  "Joint family farm venture" means a 
271.26 	cooperative agreement among two or more farm enterprises authorized to operate a family 
271.27 	farm under section 500.24.
271.28 	 (b) In addition to property specified in paragraph (a), any other residences owned 
271.29 	by family farm corporations, joint family farm ventures, limited liability companies, or 
271.30 	partnerships operating a family farm described in paragraph (a) which are located on 
271.31 	agricultural land and occupied as homesteads by its shareholders, members, or partners 
271.32 	who are actively engaged in farming on behalf of that corporation, joint farm venture, 
271.33 	limited liability company, or partnership must also be assessed as class 2a property or 
271.34 	as class 1b property under section 273.13.
272.1 	 (c) Agricultural property that is owned by a member, partner, or shareholder of a 
272.2 	family farm corporation or joint family farm venture, limited liability company operating 
272.3 	a family farm, or by a partnership operating a family farm and leased to the family farm 
272.4 	corporation, limited liability company, or partnership operating a family farm, or joint 
272.5 	farm venture, as defined in paragraph (a), is eligible for classification as class 1b or class 
272.6 	2a under section 273.13, if the owner is actually residing on the property, and is actually 
272.7 	engaged in farming the land on behalf of that corporation, joint farm venture, limited 
272.8 	liability company, or partnership.  This paragraph applies without regard to any legal 
272.9 	possession rights of the family farm corporation, joint family farm venture, limited 
272.10 	liability company, or partnership operating a family farm under the lease.

272.11 	EFFECTIVE DATE. This section is effective the day following final enactment.

272.12 	 Sec. 22. Minnesota Statutes 2004, section 273.124, subdivision 13, is amended to read:
272.13 		 Subd. 13.Homestead application.  (a) A person who meets the homestead 
272.14 	requirements under subdivision 1 must file a homestead application with the county 
272.15 	assessor to initially obtain homestead classification.
272.16 	 (b) On or before January 2, 1993, each county assessor shall mail a homestead 
272.17 	application to the owner of each parcel of property within the county which was 
272.18 	classified as homestead for the 1992 assessment year.  The format and contents of a 
272.19 	uniform homestead application shall be prescribed by the commissioner of revenue.  The 
272.20 	commissioner shall consult with the chairs of the house and senate tax committees on the 
272.21 	contents of the homestead application form.  The application must clearly inform the 
272.22 	taxpayer that this application must be signed by all owners who occupy the property or 
272.23 	by the qualifying relative and returned to the county assessor in order for the property 
272.24 	to continue receiving homestead treatment.  The envelope containing the homestead 
272.25 	application shall clearly identify its contents and alert the taxpayer of its necessary 
272.26 	immediate response.
272.27 	 (c) Every property owner applying for homestead classification must furnish to the 
272.28 	county assessor the Social Security number of each occupant who is listed as an owner 
272.29 	of the property on the deed of record, the name and address of each owner who does not 
272.30 	occupy the property, and the name and Social Security number of each owner's spouse who 
272.31 	occupies the property.  The application must be signed by each owner who occupies the 
272.32 	property and by each owner's spouse who occupies the property, or, in the case of property 
272.33 	that qualifies as a homestead under subdivision 1, paragraph (c), by the qualifying relative.
272.34 	 If a property owner occupies a homestead, the property owner's spouse may not 
272.35 	claim another property as a homestead unless the property owner and the property owner's 
273.1 	spouse file with the assessor an affidavit or other proof required by the assessor stating that 
273.2 	the property qualifies as a homestead under subdivision 1, paragraph (e).
273.3 	 Owners or spouses occupying residences owned by their spouses and previously 
273.4 	occupied with the other spouse, either of whom fail to include the other spouse's name 
273.5 	and Social Security number on the homestead application or provide the affidavits or 
273.6 	other proof requested, will be deemed to have elected to receive only partial homestead 
273.7 	treatment of their residence.  The remainder of the residence will be classified as 
273.8 	nonhomestead residential.  When an owner or spouse's name and Social Security number 
273.9 	appear on homestead applications for two separate residences and only one application is 
273.10 	signed, the owner or spouse will be deemed to have elected to homestead the residence for 
273.11 	which the application was signed.
273.12 	 The Social Security numbers or affidavits or other proofs of the property owners 
273.13 	and spouses are private data on individuals as defined by section 13.02, subdivision 12, 
273.14 	but, notwithstanding that section, the private data may be disclosed to the commissioner 
273.15 	of revenue, or, for purposes of proceeding under the Revenue Recapture Act to recover 
273.16 	personal property taxes owing, to the county treasurer.
273.17 	 (d) If residential real estate is occupied and used for purposes of a homestead by a 
273.18 	relative of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in 
273.19 	order for the property to receive homestead status, a homestead application must be filed 
273.20 	with the assessor.  The Social Security number of each relative occupying the property and 
273.21 	the Social Security number of each owner who is related to an occupant of the property 
273.22 	shall be required on the homestead application filed under this subdivision.  If a different 
273.23 	relative of the owner subsequently occupies the property, the owner of the property must 
273.24 	notify the assessor within 30 days of the change in occupancy.  The Social Security number 
273.25 	of a relative occupying the property is private data on individuals as defined by section 
273.26 	13.02, subdivision 12, but may be disclosed to the commissioner of revenue.
273.27 	 (e) The homestead application shall also notify the property owners that the 
273.28 	application filed under this section will not be mailed annually and that if the property 
273.29 	is granted homestead status for the 1993 assessment, or any assessment year thereafter, 
273.30 	that same property shall remain classified as homestead until the property is sold or 
273.31 	transferred to another person, or the owners, the spouse of the owner, or the relatives no 
273.32 	longer use the property as their homestead.  Upon the sale or transfer of the homestead 
273.33 	property, a certificate of value must be timely filed with the county auditor as provided 
273.34 	under section 272.115.  Failure to notify the assessor within 30 days that the property 
273.35 	has been sold, transferred, or that the owner, the spouse of the owner, or the relative is 
273.36 	no longer occupying the property as a homestead, shall result in (i) a requirement to 
274.1 	repay homestead benefits related to assessment dates after the ownership or occupancy 
274.2 	change, except for years for which a new and valid homestead application was effective, 
274.3 	and limited to benefits for taxes payable in the current year and the five prior years; (ii) 
274.4 	the penalty provided under this subdivision  paragraph (h) for each of the same years, if 
274.5 	applicable;and (iii) the property will lose its current homestead status for the current 
274.6 	assessment year unless a new homestead application is effective for that assessment. The 
274.7 	provisions of section 273.02 with regard to property erroneously classified as a homestead 
274.8 	do not apply.  The person to be notified of the reimbursement requirement and of the 
274.9 	penalty under the procedures in paragraph (h) is the owner who sold or transferred the 
274.10 	property or whose relative is no longer occupying the property as a homestead.
274.11 	 (f) If the homestead application is not returned within 30 days, the county will send a 
274.12 	second application to the present owners of record.  The notice of proposed property taxes 
274.13 	prepared under section 275.065, subdivision 3, shall reflect the property's classification.  
274.14 	Beginning with assessment year 1993 for all properties, if a homestead application has 
274.15 	not been filed with the county by December 15, the assessor shall classify the property 
274.16 	as nonhomestead for the current assessment year for taxes payable in the following year, 
274.17 	provided that the owner may be entitled to receive the homestead classification by proper 
274.18 	application under section 375.192.
274.19 	 (g) At the request of the commissioner, each county must give the commissioner a 
274.20 	list that includes the name and Social Security number of each property owner and the 
274.21 	property owner's spouse occupying the property, or relative of a property owner, applying 
274.22 	for homestead classification under this subdivision. The commissioner shall use the 
274.23 	information provided on the lists as appropriate under the law, including for the detection 
274.24 	of improper claims by owners, or relatives of owners, under chapter 290A.
274.25 	 (h) If the commissioner a city or county assessor finds that a property owner may be 
274.26 	claiming a fraudulent is receiving  homestead benefits that are not allowable under the law, 
274.27 	the commissioner shall notify the appropriate counties.  Within 90 days of the notification, 
274.28 	the county assessor shall investigate to determine if the homestead classification was 
274.29 	properly claimed.  If the property owner does not qualify, the county assessor shall notify 
274.30 	the county auditor who will determine the amount of homestead benefits that had been 
274.31 	improperly allowed for taxes payable in the current year and in each of the five prior years.  
274.32 	For the purpose of this section, "homestead benefits" means the tax reduction resulting 
274.33 	from the classification as a homestead under section 273.13, the taconite homestead credit 
274.34 	under section 273.135, the residential homestead and agricultural homestead credits under 
274.35 	section 273.1384, and the supplemental homestead credit under section 273.1391.
275.1 	 The county auditor shall send a notice to the person who owned the affected 
275.2 	property at the time the homestead application related to the improper homestead was 
275.3 	filed, demanding reimbursement of the homestead benefits not allowable under the law 
275.4 	for taxes payable in the current year and the five prior years.  The notice shall demand 
275.5 	reimbursement of those homestead benefits,plus a penalty equal to 100 either:
275.6 	 (i) ten percent of the homestead benefits if the owner acted with negligent or 
275.7 	intentional disregard of the applicable tax laws and rules but without intent to defraud; or 
275.8 	 (ii) 50 percent of the homestead benefits if the owner fraudulently attempted in any 
275.9 	manner to evade or defeat the proper tax.
275.10 	 If the penalty provided in this paragraph is imposed and the assessor becomes aware 
275.11 	that the property is improperly classified as a homestead for the current assessment year, 
275.12 	the assessor shall reclassify the property for that assessment, and the provisions of section 
275.13 	273.02 with regard to property erroneously classified as a homestead do not apply.
275.14 	 A penalty under this section shall be abated under section 375.192 upon a 
275.15 	determination that the improper classification was due to reasonable cause.The person 
275.16 	notified may appeal the county's determination by serving copies of a petition for review 
275.17 	with county officials as provided in section 278.01 and filing proof of service as provided 
275.18 	in section 278.01 with the Minnesota Tax Court within 60 days of the date of the notice 
275.19 	from the county.  Procedurally, the appeal is governed by the provisions in chapter 271 
275.20 	which apply to the appeal of a property tax assessment or levy, but without requiring any 
275.21 	prepayment of the amount in controversy.  If the amount of homestead benefits and penalty 
275.22 	is not paid within 60 days, and if no appeal has been filed, the county auditor shall certify 
275.23 	the amount of taxes and penalty to the county treasurer.  The county treasurer will add 
275.24 	interest to the unpaid homestead benefits and penalty amounts at the rate provided in 
275.25 	section 279.03 for real property taxes becoming delinquent in the calendar year during 
275.26 	which the amount remains unpaid.  Interest may be assessed for the period beginning 60 
275.27 	days after demand for payment was made.
275.28 	 If the person notified is the current owner of the property, the treasurer may add the 
275.29 	total amount of homestead benefits, penalty, interest, and costs to the ad valorem taxes 
275.30 	otherwise payable on the property by including the amounts on the property tax statements 
275.31 	under section 276.04, subdivision 3.  The amounts added under this paragraph to the ad 
275.32 	valorem taxes shall include interest accrued through December 31 of the year preceding 
275.33 	the taxes payable year for which the amounts are first added.  These amounts, when added 
275.34 	to the property tax statement, become subject to all the laws for the enforcement of real or 
275.35 	personal property taxes for that year, and for any subsequent year.
276.1 	 If the person notified is not the current owner of the property, the treasurer may 
276.2 	collect the amounts due under the Revenue Recapture Act in chapter 270A, or use any of 
276.3 	the powers granted in sections 277.20 and 277.21 without exclusion, to enforce payment 
276.4 	of the homestead benefits, penalty, interest, and costs, as if those amounts were delinquent 
276.5 	tax obligations of the person who owned the property at the time the application related 
276.6 	to the improperly allowed homestead was filed.  The treasurer may relieve a prior owner 
276.7 	of personal liability for the homestead benefits, penalty, interest, and costs, and instead 
276.8 	extend those amounts on the tax lists against the property as provided in this paragraph 
276.9 	to the extent that the current owner agrees in writing.  On all demands, billings, property 
276.10 	tax statements, and related correspondence, the county must list and state separately the 
276.11 	amounts of homestead benefits, penalty, interest and costs being demanded, billed or 
276.12 	assessed.
276.13 	 (i) Any amount of homestead benefits recovered by the county from the property 
276.14 	owner shall be distributed to the county, city or town, and school district where the 
276.15 	property is located in the same proportion that each taxing district's levy was to the total 
276.16 	of the three taxing districts' levy for the current year.  Any amount recovered attributable 
276.17 	to taconite homestead credit shall be transmitted to the St. Louis County auditor to be 
276.18 	deposited in the taconite property tax relief account.  Any amount recovered that is 
276.19 	attributable to supplemental homestead credit is to be transmitted to the commissioner of 
276.20 	revenue for deposit in the general fund of the state treasury.  The total amount of penalty 
276.21 	collected must be deposited in the county general fund.
276.22 	 (j) If a property owner has applied for more than one homestead and the county 
276.23 	assessors cannot determine which property should be classified as homestead, the county 
276.24 	assessors will refer the information to the commissioner.  The commissioner shall make 
276.25 	the determination and notify the counties within 60 days.
276.26 	 (k) In addition to lists of homestead properties, the commissioner may ask the 
276.27 	counties to furnish lists of all properties and the record owners.  The Social Security 
276.28 	numbers and federal identification numbers that are maintained by a county or city 
276.29 	assessor for property tax administration purposes, and that may appear on the lists retain 
276.30 	their classification as private or nonpublic data; but may be viewed, accessed, and used by 
276.31 	the county auditor or treasurer of the same county for the limited purpose of assisting the 
276.32 	commissioner in the preparation of microdata samples under section 270.0681.
276.33 	 (l) On or before April 30 each year, each county must provide the commissioner 
276.34 	with the following data for each parcel of homestead property by electronic means as 
276.35 	defined in section 289A.02, subdivision 8:
277.1 	 (i) the property identification number assigned to the parcel for purposes of taxes 
277.2 	payable in the current year;
277.3 	 (ii) the name and Social Security number of each property owner and property 
277.4 	owner's spouse, as shown on the tax rolls for the current and the prior assessment year;
277.5 	 (iii) the classification of the property under section 273.13 for taxes payable in the 
277.6 	current year and in the prior year;
277.7 	 (iv) an indication of whether the property was classified as a homestead for taxes 
277.8 	payable in the current year or for taxes payable in the prior year because of occupancy by 
277.9 	a relative of the owner or by a spouse of a relative;
277.10 	 (v) the property taxes payable as defined in section 290A.03, subdivision 13, for the 
277.11 	current year and the prior year;
277.12 	 (vi) the market value of improvements to the property first assessed for tax purposes 
277.13 	for taxes payable in the current year;
277.14 	 (vii) the assessor's estimated market value assigned to the property for taxes payable 
277.15 	in the current year and the prior year;
277.16 	 (viii) the taxable market value assigned to the property for taxes payable in the 
277.17 	current year and the prior year;
277.18 	 (ix) whether there are delinquent property taxes owing on the homestead;
277.19 	 (x) the unique taxing district in which the property is located; and 
277.20 	 (xi) such other information as the commissioner decides is necessary.
277.21 	 The commissioner shall use the information provided on the lists as appropriate 
277.22 	under the law, including for the detection of improper claims by owners, or relatives 
277.23 	of owners, under chapter 290A.

277.24 	EFFECTIVE DATE. This section is generally effective July 1, 2005, and thereafter, 
277.25 	except the changes in paragraphs (e) and (h) are effective only for notices initially sent out 
277.26 	under those paragraphs on or after July 1, 2005.

277.27 	 Sec. 23. Minnesota Statutes 2004, section 273.124, subdivision 21, is amended to read:
277.28 		 Subd. 21.Trust property; homestead.  Real property held by a trustee under a trust 
277.29 	is eligible for classification as homestead property if:
277.30 	 (1) the grantor or surviving spouse of the grantor of the trust occupies and uses the 
277.31 	property as a homestead;
277.32 	 (2) a relative or surviving relative of the grantor who meets the requirements of 
277.33 	subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1, 
277.34 	paragraph (d), in the case of agricultural property, occupies and uses the property as 
277.35 	a homestead;
278.1 	 (3) a family farm corporation, joint farm venture, limited liability company, or 
278.2 	partnership operating a family farm rents the property held by a trustee under a trust, and 
278.3 	the grantor, the spouse of the grantor, or the son or daughter of the grantor, who is also a 
278.4 	shareholder, member, or partner of the corporation, joint farm venture, limited liability 
278.5 	company, or partnership occupies and uses the property as a homestead, and  or is actively 
278.6 	farming the property on behalf of the corporation, joint farm venture, limited liability 
278.7 	company, or partnership; or
278.8 	 (4) a person who has received homestead classification for property taxes payable in 
278.9 	2000 on the basis of an unqualified legal right under the terms of the trust agreement to 
278.10 	occupy the property as that person's homestead and who continues to use the property as 
278.11 	a homestead or a person who received the homestead classification for taxes payable in 
278.12 	2005 under clause (3) who does not qualify under clause (3) for taxes payable in 2006 
278.13 	or thereafter but who continues to qualify under clause (3) as it existed for taxes payable 
278.14 	in 2005.
278.15 	 For purposes of this subdivision, "grantor" is defined as the person creating or 
278.16 	establishing a testamentary, inter Vivos, revocable or irrevocable trust by written 
278.17 	instrument or through the exercise of a power of appointment.

278.18 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
278.19 	thereafter.

278.20 	 Sec. 24. Minnesota Statutes 2004, section 273.1315, is amended to read:
278.21 	 273.1315 CERTIFICATION OF 1B PROPERTY.
278.22 	 Any property owner seeking classification and assessment of the owner's homestead 
278.23 	as class 1b property pursuant to section 273.13, subdivision 22, paragraph (b), shall file 
278.24 	with the commissioner of revenue a 1b homestead declaration, on a form prescribed by the 
278.25 	commissioner.  The declaration shall contain the following information:
278.26 	 (a) the information necessary to verify that on or before June 30 of the filing year,the 
278.27 	property owner or the owner's spouse satisfies the requirements of section 273.13, 
278.28 	subdivision 22, paragraph (b), for 1b classification; and
278.29 	 (b) any additional information prescribed by the commissioner.
278.30 	 The declaration must be filed on or before October 1 to be effective for property 
278.31 	taxes payable during the succeeding calendar year.  The declaration and any supplementary 
278.32 	information received from the property owner pursuant to this section shall be subject to 
278.33 	chapter 270B.  If approved by the commissioner, the declaration remains in effect until the 
278.34 	property no longer qualifies under section 273.13, subdivision 22, paragraph (b).  Failure 
279.1 	to notify the commissioner within 30 days that the property no longer qualifies under that 
279.2 	paragraph because of a sale, change in occupancy, or change in the status or condition 
279.3 	of an occupant shall result in the penalty provided in section 273.124, subdivision 13, 
279.4 	computed on the basis of the class 1b benefits for the property, and the property shall lose 
279.5 	its current class 1b classification.
279.6 	 The commissioner shall provide to the assessor on or before November 1 a listing 
279.7 	of the parcels of property qualifying for 1b classification.

279.8 	 EFFECTIVE DATE. This section is effective the day following final enactment.

279.9 	 Sec. 25. Minnesota Statutes 2004, section 273.19, subdivision 1a, is amended to read:
279.10 		 Subd. 1a.Lease described.  For purposes of this section, a lease includes any 
279.11 	agreement, except a cooperative farming agreement pursuant to section 97A.135, 
279.12 	subdivision 3, or a lease executed pursuant to section 272.68, subdivision 4,permitting a 
279.13 	nonexempt person or entity to use the property, regardless of whether the agreement is 
279.14 	characterized as a lease.  A lease has a "term of at least one year" if the term is for a period 
279.15 	of less than one year and the lease permits the parties to renew the lease without requiring 
279.16 	that similar terms for leasing the property will be offered to other applicants or bidders 
279.17 	through a competitive bidding or other form of offer to potential lessees or users.

279.18 	EFFECTIVE DATE. This section is effective the day following final enactment.

279.19 	 Sec. 26. Minnesota Statutes 2004, section 273.372, is amended to read:
279.20 	 273.372 PROCEEDINGS AND APPEALS; UTILITY OR RAILROAD 
279.21 	VALUATIONS.
279.22 	 An appeal by a utility or railroad company concerning the exemption, valuation, or 
279.23 	classification of property for which the commissioner of revenue has provided the city or 
279.24 	county assessor with valuations by order, or for which the commissioner has recommended 
279.25 	values to the city or county assessor, must be brought against the commissioner in Tax 
279.26 	Court or in district court of the county where the property is located, and not against 
279.27 	the county or taxing district where the property is located.Subdivision 1.[SCOPE.] This 
279.28 	section governs judicial review of a claim that public utility property or railroad operating 
279.29 	property has been partially, unfairly, or unequally assessed, or assessed at a valuation 
279.30 	greater than its real or actual value, or that the property is exempt.  However, this section 
279.31 	applies only to property described in sections 273.33, 273.35, and 273.37, and only if the 
279.32 	net tax capacity has not been changed from that provided to the city or a county by the 
279.33 	commissioner.  If the net tax capacity being appealed is not the net tax capacity established 
280.1 	by the commissioner through order or recommendation, or if the petition claims that the 
280.2 	tax levied against the parcel is illegal, in whole or in part, or if the petition claims the tax 
280.3 	has been paid, the action must be brought under chapter 278 without regard to this section 
280.4 	in each county where the property is located and proper service must be made upon the 
280.5 	local officials specified in section 278.01, subdivision 1.
280.6 		 Subd. 2.Contents and filing of petition. In all cases under this section, the 
280.7 	petition must be served on the commissioner and must be filed with the Tax Court in 
280.8 	Ramsey County.  In all cases under this section that directly challenge an order of the 
280.9 	commissioner, the petition must include all the parcels encompassed by that order which 
280.10 	the petitioner claims have been partially, unfairly, or unequally assessed, assessed at 
280.11 	a valuation greater than their real or actual value, or are exempt.  In all cases under this 
280.12 	section not directly challenging a commissioner's order, the petition must include either 
280.13 	all the utility parcels or all the railroad parcels in the state in which the petitioner claims 
280.14 	an interest and which the petitioner claims have been partially, unfairly, or unequally 
280.15 	assessed, assessed at a valuation greater than their real or actual value, or are exempt.
280.16 		 Subd. 3.Applicability of other laws. If the appeal to court is from governed by this 
280.17 	section directly challenges an order of the commissioner, it the appeal must be brought 
280.18 	under chapter 271, except that when the provisions of this section conflict with chapter 
280.19 	271, this section prevails.  If the an  appeal governed by this section is from the exemption, 
280.20 	valuation, classification, or tax that results from implementation of the a commissioner's 
280.21 	order or recommendation, it must be brought under the provisions of chapter 278, and the 
280.22 	provisions in that chapter apply,except that service shall be on the commissioner only and 
280.23 	not on the county local officials specified in section 278.01, subdivision 1, and if any other 
280.24 	provision of this section conflicts with chapter 278, this section prevails.
280.25 	 This provision applies to the property described in sections 273.33, 273.35, 273.36, 
280.26 	and 273.37, but only if the appealed values have remained unchanged from those provided 
280.27 	to the city or county by the commissioner.  If the exemption, valuation, or classification 
280.28 	being appealed has been changed by the city or county, then the action must be brought 
280.29 	under chapter 278 in the county where the property is located and proper service must be 
280.30 	made upon the county officials as specified in section 278.01, subdivision 1.
280.31 		 Subd. 4.Notice. Upon filing of any appeal by a utility company or railroad against 
280.32 	the commissioner under this section, the commissioner shall give notice by first class mail 
280.33 	to each county which would be affected by the appeal.
280.34 		 Subd. 5.Administrative appeals. Companies that submit the reports under section 
280.35 	270.82 or 273.371 by the date specified in that section, or by the date specified by the 
280.36 	commissioner in an extension, may appeal administratively to the commissioner under 
281.1 	the procedures in section 270.11, subdivision 6, prior to bringing an action in Tax Court 
281.2 	or in district court, however, instituting an administrative appeal with the commissioner 
281.3 	does not change or modify the deadline in section 271.06 for appealing an order of the 
281.4 	commissioner in Tax Court  or the deadline in section 278.01 for filing a property tax claim 
281.5 	or objection in Tax Court or district court.

281.6 	EFFECTIVE DATE. This section is effective for petitions served and filed on or 
281.7 	after September 1, 2005.

281.8 	 Sec. 27. Minnesota Statutes 2004, section 274.014, subdivision 2, is amended to read:
281.9 		 Subd. 2.Appeals and equalization course. By no later than January 1,Beginning 
281.10 	in 2006, and each year thereafter, there must be at least one member at each meeting of 
281.11 	a local board of appeal and equalization who has attended an appeals and equalization 
281.12 	course developed or approved by the commissioner within the last four years, as certified 
281.13 	by the commissioner. The course may be offered in conjunction with a meeting of the 
281.14 	Minnesota League of Cities or the Minnesota Association of Townships.  The course 
281.15 	content must include, but need not be limited to, a review of the handbook developed 
281.16 	by the commissioner under subdivision 1.

281.17 	EFFECTIVE DATE. This section is effective the day following final enactment.

281.18 	 Sec. 28. Minnesota Statutes 2004, section 274.014, subdivision 3, is amended to read:
281.19 		 Subd. 3.Proof of compliance; transfer of duties. (a)  Any city or town that does 
281.20 	not conducts local boards of appeal and equalization meetings must provide proof to the 
281.21 	county assessor by December 1, 2006, and each year thereafter, that it is in compliance 
281.22 	with the requirements of subdivision 2, and that it had .  Beginning in 2006, this notice 
281.23 	must also verify that there was a quorum of voting members at each meeting of the board 
281.24 	of appeal and equalization in the prior current year,.  A city or town that does not comply 
281.25 	with these requirements is deemed to have transferred its board of appeal and equalization 
281.26 	powers to the county under section 274.01, subdivision 3, for beginning with the following 
281.27 	year's assessment and continuing unless the powers are reinstated under paragraph (c).
281.28 	 (b) The county shall notify the taxpayers when the board of appeal and equalization 
281.29 	for a city or town has been transferred to the county under this subdivision and, prior to 
281.30 	the meeting time of the county board of equalization, the county shall make available to 
281.31 	those taxpayers a procedure for a review of the assessments, including, but not limited to, 
281.32 	open book meetings. This alternate review process shall take place in April and May.
282.1 	 (c) A local board whose powers are transferred to the county under this subdivision 
282.2 	may be reinstated by resolution of the governing body of the city or town and upon proof 
282.3 	of compliance with the requirements of subdivision 2.  The resolution and proofs must be 
282.4 	provided to the county assessor by December 1 in order to be effective for the following 
282.5 	year's assessment.

282.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

282.7 	 Sec. 29. Minnesota Statutes 2004, section 274.14, is amended to read:
282.8 	 274.14 LENGTH OF SESSION; RECORD.
282.9 	 The county board of equalization or the special board of equalization appointed 
282.10 	by it shall meet during the last ten meeting days in June.  For this purpose, "meeting 
282.11 	days" are defined as any day of the week excluding Saturday and Sunday. The board may 
282.12 	meet on any ten consecutive meeting days in June, after the second Friday in June, if 
282.13 	.The actual meeting dates are must be contained on the valuation notices mailed to each 
282.14 	property owner in the county under as provided in section 273.121. For this purpose, 
282.15 	"meeting days" is defined as any day of the week excluding Saturday and Sunday.No 
282.16 	action taken by the county board of review after June 30 is valid, except for corrections 
282.17 	permitted in sections 273.01 and 274.01.  The county auditor shall keep an accurate record 
282.18 	of the proceedings and orders of the board.  The record must be published like other 
282.19 	proceedings of county commissioners.  A copy of the published record must be sent to the 
282.20 	commissioner of revenue, with the abstract of assessment required by section 274.16.

282.21 	 EFFECTIVE DATE. This section is effective the day following final enactment.

282.22 	 Sec. 30. Minnesota Statutes 2004, section 275.065, subdivision 1a, is amended to read:
282.23 		 Subd. 1a.Overlapping jurisdictions.  In the case of a taxing authority lying 
282.24 	in two or more counties, the home county auditor shall certify the proposed levy and 
282.25 	the proposed local tax rate to the other county auditor by September 20 October 5. The 
282.26 	home county auditor must estimate the levy or rate in preparing the notices required 
282.27 	in subdivision 3, if the other county has not certified the appropriate information.  If 
282.28 	requested by the home county auditor, the other county auditor must furnish an estimate to 
282.29 	the home county auditor.

282.30 	EFFECTIVE DATE. This section is effective the day following final enactment.

282.31 	 Sec. 31. Minnesota Statutes 2004, section 275.07, subdivision 1, is amended to read:
283.1 		 Subdivision 1.Certification of levy.  (a) Except as provided under paragraph (b), the 
283.2 	taxes voted by cities, counties, school districts, and special districts shall be certified by 
283.3 	the proper authorities to the county auditor on or before five working days after December 
283.4 	20 in each year.  A town must certify the levy adopted by the town board to the county 
283.5 	auditor by September 15 each year.  If the town board modifies the levy at a special town 
283.6 	meeting after September 15, the town board must recertify its levy to the county auditor 
283.7 	on or before five working days after December 20. The taxes certified shall be reduced 
283.8 	by the county auditor by the aid received under section 273.1398, subdivision 3.If a city, 
283.9 	town, county, school district, or special district fails to certify its levy by that date, its levy 
283.10 	shall be the amount levied by it for the preceding year.
283.11 	 (b)(i) The taxes voted by counties under sections 103B.241, 103B.245, and 103B.251
283.12 	shall be separately certified by the county to the county auditor on or before five working 
283.13 	days after December 20 in each year.  The taxes certified shall not be reduced by the county 
283.14 	auditor by the aid received under section 273.1398, subdivision 3.  If a county fails to 
283.15 	certify its levy by that date, its levy shall be the amount levied by it for the preceding year.
283.16 	 (ii) For purposes of the proposed property tax notice under section 275.065 and 
283.17 	the property tax statement under section 276.04, for the first year in which the county 
283.18 	implements the provisions of this paragraph, the county auditor shall reduce the county's 
283.19 	levy for the preceding year to reflect any amount levied for water management purposes 
283.20 	under clause (i) included in the county's levy.

283.21 	EFFECTIVE DATE. This section is effective the day following final enactment.

283.22 	 Sec. 32. Minnesota Statutes 2004, section 275.07, subdivision 4, is amended to read:
283.23 		 Subd. 4.Report to commissioner.  (a) On or before October 8 of each year, the 
283.24 	county auditor shall report to the commissioner of revenue the proposed levy certified by 
283.25 	local units of government under section 275.065, subdivision 1.  If any taxing authorities 
283.26 	have notified the county auditor that they are in the process of negotiating an agreement for 
283.27 	sharing, merging, or consolidating services but that when the proposed levy was certified 
283.28 	under section 275.065, subdivision 1c, the agreement was not yet finalized, the county 
283.29 	auditor shall supply that information to the commissioner when filing the report under this 
283.30 	section and shall recertify the affected levies as soon as practical after October 10.
283.31 	 (b) On or before January 15 of each year, the county auditor shall report to the 
283.32 	commissioner of revenue the final levy certified by local units of government under 
283.33 	subdivision 1.
283.34 	 (c) The levies must be reported in the manner prescribed by the commissioner. The 
283.35 	reports must show a total levy and the amount of each special levy.

284.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

284.2 	 Sec. 33. Minnesota Statutes 2004, section 276.04, subdivision 2, is amended to read:
284.3 		 Subd. 2.Contents of tax statements.  (a) The treasurer shall provide for the printing 
284.4 	of the tax statements.  The commissioner of revenue shall prescribe the form of the 
284.5 	property tax statement and its contents.  The statement must contain a tabulated statement 
284.6 	of the dollar amount due to each taxing authority and the amount of the state tax from the 
284.7 	parcel of real property for which a particular tax statement is prepared. The dollar amounts 
284.8 	attributable to the county, the state tax, the voter approved school tax, the other local 
284.9 	school tax, the township or municipality, and the total of the metropolitan special taxing 
284.10 	districts as defined in section 275.065, subdivision 3, paragraph (i), must be separately 
284.11 	stated.  The amounts due all other special taxing districts, if any, may be aggregated.  If the 
284.12 	county levy under this paragraph includes an amount for a lake improvement district as 
284.13 	defined under sections 103B.501 to 103B.581, the amount attributable for that purpose 
284.14 	must be separately stated from the remaining county levy amount.  The amount of the tax 
284.15 	on homesteads qualifying under the senior citizens' property tax deferral program under 
284.16 	chapter 290B is the total amount of property tax before subtraction of the deferred property 
284.17 	tax amount.  The amount of the tax on contamination value imposed under sections 270.91
284.18 	to 270.98, if any, must also be separately stated.  The dollar amounts, including the dollar 
284.19 	amount of any special assessments, may be rounded to the nearest even whole dollar.  
284.20 	For purposes of this section whole odd-numbered dollars may be adjusted to the next 
284.21 	higher even-numbered dollar.  The amount of market value excluded under section 273.11, 
284.22 	subdivision 16, if any, must also be listed on the tax statement.
284.23 	 (b) The property tax statements for manufactured homes and sectional structures 
284.24 	taxed as personal property shall contain the same information that is required on the 
284.25 	tax statements for real property.
284.26 	 (c) Real and personal property tax statements must contain the following information 
284.27 	in the order given in this paragraph. The information must contain the current year tax 
284.28 	information in the right column with the corresponding information for the previous year 
284.29 	in a column on the left:
284.30 	 (1) the property's estimated market value under section 273.11, subdivision 1;
284.31 	 (2) the property's taxable market value after reductions under section 273.11, 
284.32 	subdivisions 1a and 16;
284.33 	 (3) the property's gross tax, calculated by adding the property's total property tax to 
284.34 	the sum of the aids enumerated in clause (4);
284.35 	 (4) a total of the following aids:
285.1 	 (i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C, 
285.2 	and 127A;
285.3 	 (ii) local government aids for cities, towns, and counties under chapter 477A 
285.4 	sections 477A.011 to 477A.014; and
285.5 	 (iii) disparity reduction aid under section 273.1398;
285.6 	 (5) for homestead residential and agricultural properties, the credits under section 
285.7 	273.1384;
285.8 	 (6) any credits received under sections 273.119; 273.123; 273.135; 273.1391; 
285.9 	273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received 
285.10 	under section 273.135 must be separately stated and identified as "taconite tax relief"; and
285.11 	 (7) the net tax payable in the manner required in paragraph (a).
285.12 	 (d) If the county uses envelopes for mailing property tax statements and if the county 
285.13 	agrees, a taxing district may include a notice with the property tax statement notifying 
285.14 	taxpayers when the taxing district will begin its budget deliberations for the current 
285.15 	year, and encouraging taxpayers to attend the hearings.  If the county allows notices to 
285.16 	be included in the envelope containing the property tax statement, and if more than 
285.17 	one taxing district relative to a given property decides to include a notice with the tax 
285.18 	statement, the county treasurer or auditor must coordinate the process and may combine 
285.19 	the information on a single announcement.
285.20 	 The commissioner of revenue shall certify to the county auditor the actual or 
285.21 	estimated aids enumerated in clause (4) that local governments will receive in the 
285.22 	following year.  The commissioner must certify this amount by January 1 of each year.

285.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

285.24 	 Sec. 34. Minnesota Statutes 2004, section 276.112, is amended to read:
285.25 	 276.112 STATE PROPERTY TAXES; COUNTY TREASURER.
285.26 	 On or before January 25 each year, for the period ending December 31 of the prior 
285.27 	year, and on or before June 29 28 each year, for the period ending on the most recent 
285.28 	settlement day determined in section 276.09, and on or before December 2 each year, for 
285.29 	the period ending November 20, the county treasurer must make full settlement with 
285.30 	the county auditor according to sections 276.09, 276.10, and 276.111 for all receipts of 
285.31 	state property taxes levied under section 275.025, and must transmit those receipts to the 
285.32 	commissioner of revenue by electronic means.

285.33 	 EFFECTIVE DATE. This section is effective the day following final enactment.

286.1 	 Sec. 35. Minnesota Statutes 2004, section 276A.01, subdivision 7, is amended to read:
286.2 		 Subd. 7.Population.  "Population" means the most recent estimate of the population 
286.3 	of a municipality made by the state demographer and filed with the commissioner of 
286.4 	revenue as of July 1 15 of the year in which a municipality's distribution net tax capacity 
286.5 	is calculated.  The state demographer shall annually estimate the population of each 
286.6 	municipality and, in the case of a municipality which is located partly within and partly 
286.7 	without the area, the proportion of the total which resides within the area, and shall file the 
286.8 	estimates with the commissioner of revenue.

286.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

286.10 	 Sec. 36. Minnesota Statutes 2004, section 282.016, is amended to read:
286.11 	 282.016 PROHIBITED PURCHASERS.
286.12 	 No (a) A county auditor, county treasurer, county attorney, court administrator of the 
286.13 	district court, or county assessor or ,supervisor of assessments, or deputy or clerk or an 
286.14 	employee of such officer, and no a commissioner for tax-forfeited lands or an assistant to 
286.15 	such commissioner may , must not become a purchaser, either personally or as an agent 
286.16 	or attorney for another person,of the properties offered for sale under the provisions of 
286.17 	this chapter, either personally, or as agent or attorney for any other person, except that 
286.18 	in the county for which the person performs duties.
286.19 	 (b) Notwithstanding paragraph (a),such officer, deputy, court administrator clerk, or 
286.20 	employee or commissioner for tax-forfeited lands or assistant to such commissioner may 
286.21 	(1) purchase lands owned by that official at the time the state became the absolute owner 
286.22 	thereof or (2) bid upon and purchase forfeited property offered for sale under the alternate 
286.23 	sale procedure described in section 282.01, subdivision 7a.

286.24 	 EFFECTIVE DATE. This section is effective the day following final enactment.

286.25 	 Sec. 37. Minnesota Statutes 2004, section 282.08, is amended to read:
286.26 	 282.08 APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.
286.27 	 The net proceeds from the sale or rental of any parcel of forfeited land, or from the 
286.28 	sale of products from the forfeited land, must be apportioned by the county auditor to the 
286.29 	taxing districts interested in the land, as follows:
286.30 	 (1) the amounts necessary to pay the state general tax levy against the parcel for 
286.31 	taxes payable in the year for which the tax judgment was entered, and for each subsequent 
286.32 	payable year up to and including the year of forfeiture, must be apportioned to the state;
287.1 	 (2) the portion required to pay any amounts included in the appraised value 
287.2 	under section 282.01, subdivision 3, as representing increased value due to any public 
287.3 	improvement made after forfeiture of the parcel to the state, but not exceeding the amount 
287.4 	certified by the clerk of the municipality must be apportioned to the municipal subdivision 
287.5 	entitled to it;
287.6 	 (3) (2) the portion required to pay any amount included in the appraised value under 
287.7 	section 282.019, subdivision 5, representing increased value due to response actions 
287.8 	taken after forfeiture of the parcel to the state, but not exceeding the amount of expenses 
287.9 	certified by the Pollution Control Agency or the commissioner of agriculture, must be 
287.10 	apportioned to the agency or the commissioner of agriculture and deposited in the fund 
287.11 	from which the expenses were paid;
287.12 	 (4) (3) the portion of the remainder required to discharge any special assessment 
287.13 	chargeable against the parcel for drainage or other purpose whether due or deferred at the 
287.14 	time of forfeiture, must be apportioned to the municipal subdivision entitled to it; and
287.15 	 (5) (4) any balance must be apportioned as follows:
287.16 	 (i) The county board may annually by resolution set aside no more than 30 percent 
287.17 	of the receipts remaining to be used for timber development on tax-forfeited land and 
287.18 	dedicated memorial forests, to be expended under the supervision of the county board.  It 
287.19 	must be expended only on projects approved by the commissioner of natural resources.
287.20 	 (ii) The county board may annually by resolution set aside no more than 20 percent 
287.21 	of the receipts remaining to be used for the acquisition and maintenance of county parks 
287.22 	or recreational areas as defined in sections 398.31 to 398.36, to be expended under the 
287.23 	supervision of the county board.
287.24 	 (iii) Any balance remaining must be apportioned as follows:  county, 40 percent; 
287.25 	town or city, 20 percent; and school district, 40 percent, provided, however, that in 
287.26 	unorganized territory that portion which would have accrued to the township must be 
287.27 	administered by the county board of commissioners.

287.28 	 EFFECTIVE DATE. This section is effective the day following final enactment for 
287.29 	state general tax levy amounts payable in 2004 and thereafter.

287.30 	 Sec. 38. Minnesota Statutes 2004, section 282.15, is amended to read:
287.31 	 282.15 SALES OF FORFEITED AGRICULTURAL LANDS.
287.32 	 The sale shall be conducted by the auditor of the county in which the parcels lie.  The 
287.33 	parcels shall be sold to the highest bidder but not for less than the appraised value.  The 
287.34 	sales shall be for cash or on the following terms:  The appraised value of all merchantable 
288.1 	timber on agricultural lands shall be paid for in full at the date of sale.  At least 15 percent 
288.2 	of the purchase price of the land shall be paid in cash at the time of purchase.  The balance 
288.3 	shall be paid in not more than 20 equal annual installments, with interest at a rate equal to 
288.4 	the rate in effect at the time under section 549.09 on the unpaid balance each year.  Both 
288.5 	principal and interest are due and payable on December 31 each year following that in 
288.6 	which the purchase was made.  The purchaser may pay any number of installments of 
288.7 	principal and interest on or before their due date.  When the sale is on terms other than for 
288.8 	cash in full, the purchaser shall receive from the county auditor a contract for deed, in a 
288.9 	form prescribed by the attorney general.  The county auditor shall make a report to the 
288.10 	commissioner of natural resources not more than 30 days after each public sale showing 
288.11 	the lands sold at the sales, and submit a copy of each contract of sale.
288.12 	 All lands sold pursuant to this section shall, on the second day of January following 
288.13 	the date of the sale,must be restored to the tax rolls and become subject to taxation in the 
288.14 	same manner as they were assessed and taxed before becoming the absolute property 
288.15 	of the state for the assessment year determined under section 272.02, subdivision 38, 
288.16 	paragraph (c).

288.17 	 EFFECTIVE DATE. This section is effective for sales occurring on or after July 
288.18 	1, 2005.

288.19 	 Sec. 39. Minnesota Statutes 2004, section 282.21, is amended to read:
288.20 	 282.21 FORM OF CONVEYANCE.
288.21 	 When any sale has been made under sections 282.14 to 282.22,upon payment in full 
288.22 	of the purchase price, appropriate conveyance in fee in such form as may be prescribed 
288.23 	by the attorney general shall be issued by the commissioner of finance  natural resources 
288.24 	to the purchaser or the purchaser's assigns and this conveyance shall have the force and 
288.25 	effect of a patent from the state.

288.26 	 EFFECTIVE DATE. This section is effective the day following final enactment.

288.27 	 Sec. 40. Minnesota Statutes 2004, section 282.224, is amended to read:
288.28 	 282.224 FORM OF CONVEYANCE.
288.29 	 When any sale has been made under sections 282.221 to 282.226,upon payment in 
288.30 	full of the purchase price,appropriate conveyance in fee, in such form as may be prescribed 
288.31 	by the attorney general, shall be issued by the commissioner of natural resources to the 
288.32 	purchaser or the purchaser's assignee, and the conveyance shall have the force and effect 
288.33 	of a patent from the state.

289.1 	 EFFECTIVE DATE. This section is effective the day following final enactment.

289.2 	 Sec. 41. Minnesota Statutes 2004, section 282.301, is amended to read:
289.3 	 282.301 RECEIPTS FOR PAYMENTS.
289.4 	 When any sale has been made under sections 282.012 and 282.241 to 282.324,the 
289.5 	purchaser shall receive from the county auditor at the time of repurchase a receipt, in such 
289.6 	form as may be prescribed by the attorney general.  When the purchase price of a parcel of 
289.7 	land shall be paid in full, the following facts shall be certified by the county auditor to the 
289.8 	commissioner of revenue of the state of Minnesota:  the description of land, the date of 
289.9 	sale, the name of the purchaser or the purchaser's assignee, and the date when the final 
289.10 	installment of the purchase price was paid.  Upon payment in full of the purchase price, 
289.11 	the purchaser or the assignee shall receive a quitclaim deed from the state, to be executed 
289.12 	by the commissioner of revenue.  The deed must be sent to the county auditor who shall 
289.13 	have it recorded before it is forwarded to the purchaser. Failure to make any payment 
289.14 	herein required shall constitute default and upon such default and cancellation in accord 
289.15 	with section 282.40, the right, title and interest of the purchaser or the purchaser's heirs, 
289.16 	representatives, or assigns in such parcel shall terminate.

289.17 	 EFFECTIVE DATE. This section is effective the day following final enactment.

289.18 	 Sec. 42. Minnesota Statutes 2004, section 290A.19, is amended to read:
289.19 	 290A.19 OWNER OR MANAGING AGENT TO FURNISH RENT 
289.20 	CERTIFICATE.
289.21 	 (a) The owner or managing agent of any property for which rent is paid for 
289.22 	occupancy as a homestead must furnish a certificate of rent paid to a person who is a 
289.23 	renter on December 31, in the form prescribed by the commissioner.  If the renter moves 
289.24 	before December 31, the owner or managing agent may give the certificate to the renter 
289.25 	at the time of moving, or mail the certificate to the forwarding address if an address has 
289.26 	been provided by the renter.  The certificate must be made available to the renter before 
289.27 	February 1 of the year following the year in which the rent was paid.  The owner or 
289.28 	managing agent must retain a duplicate of each certificate or an equivalent record showing 
289.29 	the same information for a period of three years.  The duplicate or other record must 
289.30 	be made available to the commissioner upon request.  For the purposes of this section, 
289.31 	"owner" includes a park owner as defined under section 327C.01, subdivision 6, and 
289.32 	"property" includes a lot as defined under section 327C.01, subdivision 3.
290.1 	 (b) The commissioner may require the owner or managing agent to file a copy of 
290.2 	the certificate of rent paid with the commissioner by April 15 of the year following the 
290.3 	year in which the rent was paid.  The copy must be submitted to the commissioner by 
290.4 	electronic means as that term is defined in section 289A.02, subdivision 8. This paragraph 
290.5 	does not apply to any owner or managing agent that is required to issue certificates to 
290.6 	renters of fewer than 100 units.

290.7 	 EFFECTIVE DATE. This section is effective for certificates of rent paid that are 
290.8 	issued for rent paid after December 31, 2005.

290.9 	 Sec. 43. Minnesota Statutes 2004, section 290B.05, subdivision 3, is amended to read:
290.10 		 Subd. 3.Calculation of deferred property tax amount.  When final property tax 
290.11 	amounts for the following year have been determined, the county auditor shall calculate 
290.12 	the "deferred property tax amount."  The deferred property tax amount is equal to the 
290.13 	lesser of (1) the maximum allowable deferral for the year; or (2) the difference between 
290.14 	(i) the total amount of property taxes and special assessments levied upon the qualifying 
290.15 	homestead by all taxing jurisdictions and (ii) the maximum property tax amount. Any 
290.16 	special assessments levied by any local unit of government must not be included in the 
290.17 	total tax used to calculate the deferred tax amount.For this purpose "special assessments" 
290.18 	includes any assessment, fee, or other charge that may by law, and which does, appear on 
290.19 	the property tax statement for the property for collection under the laws applicable to the 
290.20 	enforcement of real estate taxes.Any tax attributable to new improvements made to the 
290.21 	property after the initial application has been approved under section 290B.04, subdivision 
290.22 	2, must be excluded when determining any subsequent deferred property tax amount.  
290.23 	The county auditor shall annually, on or before April 15, certify to the commissioner of 
290.24 	revenue the property tax deferral amounts determined under this subdivision by property 
290.25 	and by owner.

290.26 	EFFECTIVE DATE. This section is effective for amounts deferred in 2006 and 
290.27 	thereafter.

290.28 	 Sec. 44. Minnesota Statutes 2004, section 373.45, subdivision 7, is amended to read:
290.29 		 Subd. 7.Aid reduction for repayment.  (a) Except as provided in paragraph (b), 
290.30 	the commissioner may reduce, by the amount paid by the state under this section on behalf 
290.31 	of the county, plus the interest due on the state payments, the following aids payable 
290.32 	to the county:
291.1 	 (1) homestead and agricultural credit aid and disparity reduction aid payable under 
291.2 	section 273.1398;
291.3 	 (2) county criminal justice aid payable under section 477A.0121; and 
291.4 	 (3) family preservation aid payable under section 477A.0122 county program aid 
291.5 	under section 477A.0124.
291.6 	 The amount of any aid reduction reverts from the appropriate account to the state general 
291.7 	fund.
291.8 	 (b) If, after review of the financial situation of the county, the authority advises the 
291.9 	commissioner that a total reduction of the aids would cause an undue hardship on the 
291.10 	county, the authority, with the approval of the commissioner, may establish a different 
291.11 	schedule for reduction of aids to repay the state.  The amount of aids to be reduced are 
291.12 	decreased by any amounts repaid to the state by the county from other revenue sources.

291.13 	EFFECTIVE DATE. This section is effective for aid payable in 2005 and thereafter.

291.14 	 Sec. 45. Minnesota Statutes 2004, section 469.1735, subdivision 3, is amended to read:
291.15 		 Subd. 3.Transfer authority for property tax.  (a) A city may elect to use all 
291.16 	or part of its allocation under subdivision 2 to reimburse the city or county or both for 
291.17 	property tax reductions under section 272.0212.  To elect this option, the city must notify 
291.18 	the commissioner of revenue by October 1 of each calendar year of the amount of the 
291.19 	property tax reductions for which it seeks reimbursements for taxes payable during the 
291.20 	following current year and the governmental units to which the amounts will be paid.  The 
291.21 	commissioner may require the city to provide information substantiating the amount of the 
291.22 	reductions granted or any other information necessary to administer this provision.  The 
291.23 	commissioner shall pay the reimbursements by December 26 of the taxes payable year.  
291.24 	Any amount transferred under this authority reduces the amount of tax credit certificates 
291.25 	available under subdivisions 1 and 2.
291.26 	 (b) The amount elected by the city under paragraph (a) is appropriated to the 
291.27 	commissioner of revenue from the general fund to reimburse the city or county for 
291.28 	tax reductions under section 272.0212.  The amount appropriated may not exceed the 
291.29 	maximum amounts allocated to a city under subdivision 2, paragraph (b), less the amount 
291.30 	of certificates issued by the city under subdivision 1, and is available until expended.

291.31 	EFFECTIVE DATE. This section is effective for reimbursements of taxes payable 
291.32 	in 2005 and thereafter.

291.33 	 Sec. 46. [473.24] POPULATION ESTIMATES.
292.1 	 (a) The Metropolitan Council shall annually prepare an estimate of population 
292.2 	for each county, city, and town in the metropolitan area and an estimate of the number 
292.3 	of households and average household size for each city in the metropolitan area with a 
292.4 	population of 2,500 or more, and an estimate of population over age 65 for each county in 
292.5 	the metropolitan area, and convey the estimates to the governing body of each county, 
292.6 	city, or town by June 1 each year.  In the case of a city or town that is located partly within 
292.7 	and partly without the metropolitan area, the Metropolitan Council shall estimate the 
292.8 	proportion of the total population and the average size of households that reside within 
292.9 	the area.  The Metropolitan Council may prepare an estimate of the population and of the 
292.10 	average household size for any other political subdivision located in the metropolitan area.
292.11 	 (b) A governing body may challenge an estimate made under this section by 
292.12 	filing its specific objections in writing with the Metropolitan Council by June 24.  If the 
292.13 	challenge does not result in an acceptable estimate, the governing body may have a special 
292.14 	census conducted by the United States Bureau of the Census.  The political subdivision 
292.15 	must notify the Metropolitan Council on or before July 1 of its intent to have the special 
292.16 	census conducted.  The political subdivision must bear all costs of the special census. 
292.17 	Results of the special census must be received by the Metropolitan Council by the next 
292.18 	April 15 to be used in that year's June 1 estimate under this section.  The Metropolitan 
292.19 	Council shall certify the estimates of population and the average household size to the 
292.20 	state demographer and to the commissioner of revenue by July 15 each year, including any 
292.21 	estimates still under objection.

292.22 	 EFFECTIVE DATE. This section is effective the day following final enactment.

292.23 	 Sec. 47. Minnesota Statutes 2004, section 473F.02, subdivision 7, is amended to read:
292.24 		 Subd. 7.Population.  "Population" means the most recent estimate of the population 
292.25 	of a municipality made by the Metropolitan Council under section 473.24and filed 
292.26 	with the commissioner of revenue as of July 1 15 of the year in which a municipality's 
292.27 	distribution net tax capacity is calculated. The council shall annually estimate the 
292.28 	population of each municipality as of a date which it determines and, in the case of a 
292.29 	municipality which is located partly within and partly without the area, the proportion 
292.30 	of the total which resides within the area, and shall promptly thereafter file its estimates 
292.31 	with the commissioner of revenue.

292.32 	EFFECTIVE DATE. This section is effective the day following final enactment.

292.33 	 Sec. 48. Minnesota Statutes 2004, section 477A.011, subdivision 3, is amended to read:
293.1 		 Subd. 3.Population.  "Population" means the population estimated or established 
293.2 	as of July 1 15 in an aid calculation year by the most recent federal census, by a special 
293.3 	census conducted under contract with the United States Bureau of the Census, by a 
293.4 	population estimate made by the Metropolitan Council pursuant to section 473.24, or by a 
293.5 	population estimate of the state demographer made pursuant to section 4A.02, whichever 
293.6 	is the most recent as to the stated date of the count or estimate for the preceding calendar 
293.7 	year, and which has been certified to the commissioner of revenue on or before July 15 
293.8 	of the aid calculation year.  The term "per capita" refers to population as defined by this 
293.9 	subdivision. A revision of an estimate or count is effective for these purposes only if it is 
293.10 	certified to the commissioner on or before July 15 of the aid calculation year.  Clerical 
293.11 	errors in the certification or use of the estimates and counts established as of July 15 in 
293.12 	the aid calculation year are subject to correction within the time periods allowed under 
293.13 	section 477A.014.

293.14 	EFFECTIVE DATE. This section is effective the day following final enactment.

293.15 	 Sec. 49. Minnesota Statutes 2004, section 477A.011, subdivision 36, is amended to 
293.16 	read:
293.17 		 Subd. 36.City aid base.  (a) Except as otherwise provided in this subdivision, 
293.18 	"city aid base" is zero.
293.19 	 (b) The city aid base for any city with a population less than 500 is increased by 
293.20 	$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount 
293.21 	of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
293.22 	increased by $40,000 for aids payable in calendar year 1995 only, provided that:
293.23 	 (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
293.24 	 (ii) the city portion of the tax capacity rate exceeds 100 percent; and
293.25 	 (iii) its city aid base is less than $60 per capita.
293.26 	 (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and 
293.27 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
293.28 	paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
293.29 	 (i) the city has a population in 1994 of 2,500 or more;
293.30 	 (ii) the city is located in a county, outside of the metropolitan area, which contains a 
293.31 	city of the first class;
293.32 	 (iii) the city's net tax capacity used in calculating its 1996 aid under section 
293.33 	477A.013 is less than $400 per capita; and
293.34 	 (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of 
293.35 	property located in the city is classified as railroad property.
294.1 	 (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and 
294.2 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
294.3 	paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
294.4 	 (i) the city was incorporated as a statutory city after December 1, 1993;
294.5 	 (ii) its city aid base does not exceed $5,600; and
294.6 	 (iii) the city had a population in 1996 of 5,000 or more.
294.7 	 (e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the 
294.8 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
294.9 	paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
294.10 	 (i) the city had a population in 1996 of at least 50,000;
294.11 	 (ii) its population had increased by at least 40 percent in the ten-year period ending 
294.12 	in 1996; and
294.13 	 (iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
294.14 	 (f) Beginning in 2004, the city aid base for a city is equal to the sum of its city aid 
294.15 	base in 2003 and the amount of additional aid it was certified to receive under section 
294.16 	477A.06 in 2003.  For 2004 only, the maximum amount of total aid a city may receive 
294.17 	under section 477A.013, subdivision 9, paragraph (c), is also increased by the amount it 
294.18 	was certified to receive under section 477A.06 in 2003.
294.19 	 (g) The city aid base for a city is increased by $150,000 for aids payable in 2000 and 
294.20 	thereafter, and the maximum amount of total aid it may receive under section 477A.013, 
294.21 	subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only, 
294.22 	provided that:
294.23 	 (1) the city has a population that is greater than 1,000 and less than 2,500;
294.24 	 (2) its commercial and industrial percentage for aids payable in 1999 is greater 
294.25 	than 45 percent; and
294.26 	 (3) the total market value of all commercial and industrial property in the city 
294.27 	for assessment year 1999 is at least 15 percent less than the total market value of all 
294.28 	commercial and industrial property in the city for assessment year 1998.
294.29 	 (h) (g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, 
294.30 	and the maximum amount of total aid it may receive under section 477A.013, subdivision 
294.31 	9, paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
294.32 	 (1) the city had a population in 1997 of 2,500 or more;
294.33 	 (2) the net tax capacity of the city used in calculating its 1999 aid under section 
294.34 	477A.013 is less than $650 per capita;
294.35 	 (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under 
294.36 	section 477A.013 is greater than 12 percent;
295.1 	 (4) the 1999 local government aid of the city under section 477A.013 is less than 
295.2 	20 percent of the amount that the formula aid of the city would have been if the need 
295.3 	increase percentage was 100 percent; and
295.4 	 (5) the city aid base of the city used in calculating aid under section 477A.013
295.5 	is less than $7 per capita.
295.6 	 (i) (h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, 
295.7 	and the maximum amount of total aid it may receive under section 477A.013, subdivision 
295.8 	9, paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
295.9 	 (1) the city has a population in 1997 of 2,000 or more;
295.10 	 (2) the net tax capacity of the city used in calculating its 1999 aid under section 
295.11 	477A.013 is less than $455 per capita;
295.12 	 (3) the net levy of the city used in calculating 1999 aid under section 477A.013 is 
295.13 	greater than $195 per capita; and
295.14 	 (4) the 1999 local government aid of the city under section 477A.013 is less than 
295.15 	38 percent of the amount that the formula aid of the city would have been if the need 
295.16 	increase percentage was 100 percent.
295.17 	 (j) (i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and 
295.18 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
295.19 	paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
295.20 	 (1) the city has a population in 1998 that is greater than 200 but less than 500;
295.21 	 (2) the city's revenue need used in calculating aids payable in 2000 was greater 
295.22 	than $200 per capita;
295.23 	 (3) the city net tax capacity for the city used in calculating aids available in 2000 
295.24 	was equal to or less than $200 per capita;
295.25 	 (4) the city aid base of the city used in calculating aid under section 477A.013
295.26 	is less than $65 per capita; and
295.27 	 (5) the city's formula aid for aids payable in 2000 was greater than zero.
295.28 	 (k) (j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and 
295.29 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
295.30 	paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
295.31 	 (1) the city had a population in 1998 that is greater than 200 but less than 500;
295.32 	 (2) the city's commercial industrial percentage used in calculating aids payable in 
295.33 	2000 was less than ten percent;
295.34 	 (3) more than 25 percent of the city's population was 60 years old or older according 
295.35 	to the 1990 census;
296.1 	 (4) the city aid base of the city used in calculating aid under section 477A.013
296.2 	is less than $15 per capita; and
296.3 	 (5) the city's formula aid for aids payable in 2000 was greater than zero.
296.4 	 (l) (k) The city aid base for a city is increased by $45,000 in 2001 and thereafter 
296.5 	and by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount 
296.6 	of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
296.7 	increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002 
296.8 	only, provided that:
296.9 	 (1) the net tax capacity of the city used in calculating its 2000 aid under section 
296.10 	477A.013 is less than $810 per capita;
296.11 	 (2) the population of the city declined more than two percent between 1988 and 1998;
296.12 	 (3) the net levy of the city used in calculating 2000 aid under section 477A.013 is 
296.13 	greater than $240 per capita; and
296.14 	 (4) the city received less than $36 per capita in aid under section 477A.013, 
296.15 	subdivision 9, for aids payable in 2000.
296.16 	 (m) (l) The city aid base for a city with a population of 10,000 or more which is 
296.17 	located outside of the seven-county metropolitan area is increased in 2002 and thereafter, 
296.18 	and the maximum amount of total aid it may receive under section 477A.013, subdivision 
296.19 	9, paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to 
296.20 	the lesser of:
296.21 	 (1)(i) the total population of the city, as determined by the United States Bureau of 
296.22 	the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
296.23 	 (2) $2,500,000.
296.24 	 (n) (m) The city aid base is increased by $50,000 in 2002 and thereafter, and the 
296.25 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
296.26 	paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
296.27 	 (1) the city is located in the seven-county metropolitan area;
296.28 	 (2) its population in 2000 is between 10,000 and 20,000; and
296.29 	 (3) its commercial industrial percentage, as calculated for city aid payable in 2001, 
296.30 	was greater than 25 percent.
296.31 	 (o) (n) The city aid base for a city is increased by $150,000 in calendar years 2002 
296.32 	to 2011 and the maximum amount of total aid it may receive under section 477A.013, 
296.33 	subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2002 only, 
296.34 	provided that:
296.35 	 (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
296.36 	 (2) its home county is located within the seven-county metropolitan area;
297.1 	 (3) its pre-1940 housing percentage is less than 15 percent; and
297.2 	 (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 
297.3 	per capita.
297.4 	 (p) (o) The city aid base for a city is increased by $200,000 beginning in calendar 
297.5 	year 2003 and the maximum amount of total aid it may receive under section 477A.013, 
297.6 	subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only, 
297.7 	provided that the city qualified for an increase in homestead and agricultural credit aid 
297.8 	under Laws 1995, chapter 264, article 8, section 18.
297.9 	 (q) (p) The city aid base for a city is increased by $200,000 in 2004 only and the 
297.10 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, is 
297.11 	also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear 
297.12 	dry cask storage facility.
297.13 	 (r) (q) The city aid base for a city is increased by $10,000 in 2004 and thereafter 
297.14 	and the maximum total aid it may receive under section 477A.013, subdivision 9, is also 
297.15 	increased by $10,000 in calendar year 2004 only, if the city was included in a federal 
297.16 	major disaster designation issued on April 1, 1998, and its pre-1940 housing stock was 
297.17 	decreased by more than 40 percent between 1990 and 2000.

297.18 	EFFECTIVE DATE. This section is effective beginning with aids payable in 2004.

297.19 	 Sec. 50. Minnesota Statutes 2004, section 477A.011, subdivision 38, is amended to 
297.20 	read:
297.21 		 Subd. 38.Household size.  "Household size" means the average number of persons 
297.22 	per household in the jurisdiction as most recently estimated and reported by the state 
297.23 	demographer and Metropolitan Council as of July 1 15 of the aid calculation year. A 
297.24 	revision to an estimate or enumeration is effective for these purposes only if it is certified 
297.25 	to the commissioner on or before July 15 of the aid calculation year. Clerical errors in the 
297.26 	certification or use of estimates and counts established as of July 15 in the aid calculation 
297.27 	year are subject to correction within the time periods allowed under section 477A.014.

297.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

297.29 	 Sec. 51. Minnesota Statutes 2004, section 477A.0124, subdivision 2, is amended to 
297.30 	read:
297.31 		 Subd. 2.Definitions.  (a) For the purposes of this section, the following terms 
297.32 	have the meanings given them.
298.1 	 (b) "County program aid" means the sum of "county need aid," "county tax base 
298.2 	equalization aid," and "county transition aid."
298.3 	 (c) "Age-adjusted population" means a county's population multiplied by the county 
298.4 	age index.
298.5 	 (d) "County age index" means the percentage of the population over age 65 within 
298.6 	the county divided by the percentage of the population over age 65 within the state, except 
298.7 	that the age index for any county may not be greater than 1.8 nor less than 0.8.
298.8 	 (e) "Population over age 65" means the population over age 65 established as of 
298.9 	July 1 15 in an aid calculation year by the most recent federal census, by a special census 
298.10 	conducted under contract with the United States Bureau of the Census, by a population 
298.11 	estimate made by the Metropolitan Council, or by a population estimate of the state 
298.12 	demographer made pursuant to section 4A.02, whichever is the most recent as to the stated 
298.13 	date of the count or estimate for the preceding calendar year and which has been certified 
298.14 	to the commissioner of revenue on or before July 15 of the aid calculation year. A revision 
298.15 	to an estimate or count is effective for these purposes only if certified to the commissioner 
298.16 	on or before July 15 of the aid calculation year.  Clerical errors in the certification or use of 
298.17 	estimates and counts established as of July 15 in the aid calculation year are subject to 
298.18 	correction within the time periods allowed under section 477A.014.
298.19 	 (f) "Part I crimes" means the three-year average annual number of Part I crimes 
298.20 	reported for each county by the Department of Public Safety for the most recent years 
298.21 	available. By July 1 of each year, the commissioner of public safety shall certify to the 
298.22 	commissioner of revenue the number of Part I crimes reported for each county for the 
298.23 	three most recent calendar years available.
298.24 	 (g) "Households receiving food stamps" means the average monthly number of 
298.25 	households receiving food stamps for the three most recent years for which data is 
298.26 	available.  By July 1 of each year, the commissioner of human services must certify to the 
298.27 	commissioner of revenue the average monthly number of households in the state and in 
298.28 	each county that receive food stamps, for the three most recent calendar years available.
298.29 	 (h) "County net tax capacity" means the net tax capacity of the county, computed 
298.30 	analogously to city net tax capacity under section 477A.011, subdivision 20.

298.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

298.32 	 Sec. 52. Laws 2003, chapter 127, article 5, section 27, the effective date, is amended to 
298.33 	read:

299.1 	 EFFECTIVE DATE. This section is effective for taxes payable in 2004 and 
299.2 	thereafter distributions occurring on or after June 10, 2003.

299.3 	 Sec. 53. Laws 2003, chapter 127, article 5, section 28, the effective date, is amended to 
299.4 	read:

299.5 	 EFFECTIVE DATE. This section is effective for taxes payable in 2004 and 
299.6 	thereafter distributions occurring on or after June 10, 2003.

299.7 	 Sec. 54. Laws 2003, First Special Session chapter 21, article 5, section 13, is amended 
299.8 	to read:

299.9 	 Sec. 13. 2004 CITY AID REDUCTIONS.
 299.10 	 The commissioner of revenue shall compute an aid reduction amount for 2004 
299.11 	for each city as provided in this section.
299.12 	 The initial aid reduction amount for each city is the amount by which the city's aid 
299.13 	distribution under Minnesota Statutes, section 477A.013, and related provisions payable 
299.14 	in 2003 exceeds the city's 2004 distribution under those provisions.
299.15 	 The minimum aid reduction amount for a city is the amount of its reduction in 
299.16 	2003 under section 12.  If a city receives an increase to its city aid base under Minnesota 
299.17 	Statutes, section 477A.011, subdivision 36, its minimum aid reduction is reduced by an 
299.18 	equal amount.
299.19 	 The maximum aid reduction amount for a city is an amount equal to 14 percent of 
299.20 	the city's total 2004 levy plus aid revenue base, except that if the city has a city net tax 
299.21 	capacity for aids payable in 2004, as defined in Minnesota Statutes, section 477A.011, 
299.22 	subdivision 20, of $700 per capita or less, the maximum aid reduction shall not exceed an 
299.23 	amount equal to 13 percent of the city's total 2004 levy plus aid revenue base.
299.24 	 If the initial aid reduction amount for a city is less than the minimum aid reduction 
299.25 	amount for that city, the final aid reduction amount for the city is the sum of the initial aid 
299.26 	reduction amount and the lesser of the amount of the city's payable 2004 reimbursement 
299.27 	under Minnesota Statutes, section 273.1384, or the difference between the minimum and 
299.28 	initial aid reduction amounts for the city, and the amount of the final aid reduction in 
299.29 	excess of the initial aid reduction is deducted from the city's reimbursements pursuant 
299.30 	to Minnesota Statutes, section 273.1384.
299.31 	 If the initial aid reduction amount for a city is greater than the maximum aid 
299.32 	reduction amount for the city, the city receives an additional distribution under this section 
299.33 	equal to the result of subtracting the maximum aid reduction amount from the initial aid 
300.1 	reduction amount.  This distribution shall be paid in equal installments in 2004 on the 
300.2 	dates specified in Minnesota Statutes, section 477A.015.  The amount necessary for these 
300.3 	additional distributions is appropriated to the commissioner of revenue from the general 
300.4 	fund in fiscal year 2005.
300.5 	 The initial aid reduction is applied to the city's distribution pursuant to Minnesota 
300.6 	Statutes, section 477A.013, and any aid reduction in excess of the initial aid reduction is 
300.7 	applied to the city's reimbursements pursuant to Minnesota Statutes, section 273.1384.
300.8 	 To the extent that sufficient information is available on each payment date in 2004, 
300.9 	the commissioner of revenue shall pay the reimbursements reduced under this section in 
300.10 	equal installments on the payment dates provided in law.

300.11 	 EFFECTIVE DATE. This section is effective for aids payable in 2004.

300.12 	 Sec. 55. Laws 2003, First Special Session chapter 21, article 6, section 9, is amended 
300.13 	to read:
300.14 	 Sec. 9DEFINITIONS.
 300.15 	 (a) For purposes of sections 9 to 15, the following terms have the meanings given 
300.16 	them in this section.
300.17 	 (b) The 2003 and 2004 "levy plus aid revenue base" for a county is the sum of that 
300.18 	county's certified property tax levy for taxes payable in 2003, plus the sum of the amounts 
300.19 	the county was certified to receive in the designated calendar year as:
300.20 	 (1) homestead and agricultural credit aid under Minnesota Statutes, section 
300.21 	273.1398, subdivision 2, plus any additional aid under section 16, minus the amount 
300.22 	calculated under section 273.1398, subdivision 4a, paragraph (b), for counties in judicial 
300.23 	districts one, three, six, and ten, and 25 percent of the amount calculated under section 
300.24 	273.1398, subdivision 4a, paragraph (b), for counties in judicial districts two and four;
300.25 	 (2) the amount of county manufactured home homestead and agricultural credit aid 
300.26 	computed for the county for payment in 2003 under section 273.166;
300.27 	 (3) criminal justice aid under Minnesota Statutes, section 477A.0121;
300.28 	 (4) family preservation aid under Minnesota Statutes, section 477A.0122;
300.29 	 (5) taconite aids under Minnesota Statutes, sections 298.28 and 298.282, including 
300.30 	any aid which was required to be placed in a special fund for expenditure in the next 
300.31 	succeeding year; and
300.32 	 (6) county program aid under section 477A.0124, exclusive of the attached 
300.33 	machinery aid component.

300.34 	 EFFECTIVE DATE. This section is effective for aids payable in 2004.

301.1 	 Sec. 56. LINCOLN AND PIPESTONE COUNTIES; TOWN LEVY 
301.2 	ADJUSTMENT FOR WIND ENERGY PRODUCTION TAX.
 301.3 	 Notwithstanding the deadlines in Minnesota Statutes, section 275.07, towns located 
301.4 	in Lincoln or Pipestone County are authorized to adjust their payable 2004 levy for all or a 
301.5 	portion of their estimated wind energy production tax amounts for 2004, as computed by 
301.6 	the commissioner of revenue from reports filed under Minnesota Statutes, section 272.029, 
301.7 	subdivision 4.  The Lincoln and Pipestone County auditors may adjust the payable 2004 
301.8 	levy certifications under Minnesota Statutes, section 275.07, subdivision 1, based upon the 
301.9 	towns that have recertified their levies under this section by March 15, 2004.

301.10 	 EFFECTIVE DATE. This section is effective for taxes payable in 2004.

301.11 	 Sec. 57. REPEALER.
 301.12 	 (a) Minnesota Statutes 2004, sections 273.19, subdivision 5; 274.05; 275.15; 275.61, 
301.13 	subdivision 2; and 283.07, are repealed effective the day following final enactment.
301.14 	 (b) Laws 1975, chapter 287, section 5, and Laws 2003, chapter 127, article 9, section 
301.15 	9, subdivision 4, are repealed effective without local approval for taxes payable in 2006 
301.16 	and thereafter.

301.17 	 ARTICLE 11
301.18 	 DEPARTMENT OF REVENUE SALES AND USE TAXES

301.19 	 Section 1. Minnesota Statutes 2004, section 289A.38, subdivision 6, is amended to 
301.20 	read:
301.21 		 Subd. 6.Omission in excess of 25 percent.  Additional taxes may be assessed 
301.22 	within 6-1/2 years after the due date of the return or the date the return was filed, 
301.23 	whichever is later, if:
301.24 	 (1) the taxpayer omits from gross income an amount properly includable in it that is 
301.25 	in excess of 25 percent of the amount of gross income stated in the return;
301.26 	 (2) the taxpayer omits from a sales, use,or withholding tax return an amount of taxes 
301.27 	in excess of 25 percent of the taxes reported in the return; or
301.28 	 (3) the taxpayer omits from the gross estate assets in excess of 25 percent of the 
301.29 	gross estate reported in the return.

301.30 	EFFECTIVE DATE. This section is effective the day following final enactment.

301.31 	 Sec. 2. Minnesota Statutes 2004, section 289A.38, is amended by adding a subdivision 
301.32 	to read:
302.1 		 Subd. 15.Purchaser filed refund claims. If a purchaser refund claim is filed 
302.2 	under section 289A.50, subdivision 2a, and the basis for the claim is that the purchaser 
302.3 	was improperly charged tax on an improvement to real property or on the purchase of 
302.4 	nontaxable services, sales or use tax may be assessed for the cost of materials used to 
302.5 	make the real property improvement or to perform the nontaxable service.  The assessment 
302.6 	may be made against the person making the improvement to real property or the sale of 
302.7 	nontaxable services, within the period prescribed in subdivision 1, or within one year after 
302.8 	the date of the refund order, whichever is later.

302.9 	EFFECTIVE DATE. This section is effective for purchaser refund claims filed 
302.10 	on or after July 1, 2005.

302.11 	 Sec. 3. Minnesota Statutes 2004, section 289A.40, subdivision 2, is amended to read:
302.12 		 Subd. 2.Bad debt loss.  If a claim relates to an overpayment because of a failure to 
302.13 	deduct a loss due to a bad debt or to a security becoming worthless, the claim is considered 
302.14 	timely if filed within seven years from the date prescribed for the filing of the return.  A 
302.15 	claim relating to an overpayment of taxes under chapter 297A must be filed within 3-1/2 
302.16 	years from the date prescribed for filing the return, plus any extensions granted for filing 
302.17 	the return, but only if filed within the extended time.  The refund or credit is limited to 
302.18 	the amount of overpayment attributable to the loss.  "Bad debt" for purposes of this 
302.19 	subdivision, has the same meaning as that term is used in United States Code, title 26, 
302.20 	section 166, except that for a claim relating to an overpayment of taxes under chapter 
302.21 	297A the following are excluded from the calculation of bad debt:  financing charges 
302.22 	or interest; sales or use taxes charged on the purchase price; uncollectible amounts on 
302.23 	property that remain in the possession of the seller until the full purchase price is paid; 
302.24 	expenses incurred in attempting to collect any debt; and repossessed property.

302.25 	EFFECTIVE DATE. For claims relating to an overpayment of taxes under chapter 
302.26 	297A, this section is effective for sales and purchases made on or after January 1, 2004; 
302.27 	for all other bad debts or claims, this section is effective on or after July 1, 2003.

302.28 	 Sec. 4. Minnesota Statutes 2004, section 289A.40, is amended by adding a subdivision 
302.29 	to read:
302.30 		 Subd. 5.Purchaser filed refund claims. A claim for refund of taxes paid on a 
302.31 	transaction not subject to tax under chapter 297A, where the purchaser may apply directly 
302.32 	to the commissioner under section 289A.50, subdivision 2a, must be filed within 3-1/2 
303.1 	years from the 20th day of the month following the month of the invoice date for the 
303.2 	purchase.

303.3 	EFFECTIVE DATE. This section is effective for claims filed on or after the day 
303.4 	following final enactment.

303.5 	 Sec. 5. Minnesota Statutes 2004, section 289A.40, is amended by adding a subdivision 
303.6 	to read:
303.7 		 Subd. 6.Capital equipment refund claims. A claim for refund for taxes paid 
303.8 	under chapter 297A on capital equipment must be filed within 3-1/2 years from the 20th 
303.9 	day of the month following the month of the invoice date for the purchase of the capital 
303.10 	equipment.  A claim for refund for taxes imposed on capital equipment under section 
303.11 	297A.63 must be filed within 3-1/2 years from the date prescribed for filing the return, 
303.12 	or one year from the date of an order assessing tax under section 289A.37, subdivision 
303.13 	1, upon payment in full of the tax, penalties, and interest shown on the order, whichever 
303.14 	period expires later.

303.15 	EFFECTIVE DATE. This section is effective for claims filed on or after the day 
303.16 	following final enactment.

303.17 	 Sec. 6. Minnesota Statutes 2004, section 297A.61, subdivision 3, is amended to read:
303.18 		 Subd. 3.Sale and purchase.  (a) "Sale" and "purchase" include, but are not limited 
303.19 	to, each of the transactions listed in this subdivision.
303.20 	 (b) Sale and purchase include:
303.21 	 (1) any transfer of title or possession, or both, of tangible personal property, whether 
303.22 	absolutely or conditionally, for a consideration in money or by exchange or barter; and
303.23 	 (2) the leasing of or the granting of a license to use or consume, for a consideration 
303.24 	in money or by exchange or barter, tangible personal property, other than a manufactured 
303.25 	home used for residential purposes for a continuous period of 30 days or more.
303.26 	 (c) Sale and purchase include the production, fabrication, printing, or processing of 
303.27 	tangible personal property for a consideration for consumers who furnish either directly or 
303.28 	indirectly the materials used in the production, fabrication, printing, or processing.
303.29 	 (d) Sale and purchase include the preparing for a consideration of food.  
303.30 	Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
303.31 	to, the following:
303.32 	 (1) prepared food sold by the retailer;
303.33 	 (2) soft drinks;
304.1 	 (3) candy; and 
304.2 	 (4) dietary supplements; and 
304.3 	 (5) all food sold through vending machines.
304.4 	 (e) A sale and a purchase includes the furnishing for a consideration of electricity, 
304.5 	gas, water, or steam for use or consumption within this state.
304.6 	 (f) A sale and a purchase includes the transfer for a consideration of prewritten 
304.7 	computer software whether delivered electronically, by load and leave, or otherwise.
304.8 	 (g) A sale and a purchase includes the furnishing for a consideration of the following 
304.9 	services:
304.10 	 (1) the privilege of admission to places of amusement, recreational areas, or athletic 
304.11 	events, and the making available of amusement devices, tanning facilities, reducing 
304.12 	salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
304.13 	 (2) lodging and related services by a hotel, rooming house, resort, campground, 
304.14 	motel, or trailer camp and the granting of any similar license to use real property in a 
304.15 	specific facility, other than the renting or leasing of it for a continuous period of 30 days 
304.16 	or more under an enforceable written agreement that may not be terminated without 
304.17 	prior notice;
304.18 	 (3) nonresidential parking services, whether on a contractual, hourly, or other 
304.19 	periodic basis, except for parking at a meter;
304.20 	 (4) the granting of membership in a club, association, or other organization if:
304.21 	 (i) the club, association, or other organization makes available for the use of its 
304.22 	members sports and athletic facilities, without regard to whether a separate charge is 
304.23 	assessed for use of the facilities; and
304.24 	 (ii) use of the sports and athletic facility is not made available to the general public 
304.25 	on the same basis as it is made available to members.
304.26 	 Granting of membership means both onetime initiation fees and periodic membership 
304.27 	dues.  Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
304.28 	squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
304.29 	swimming pools; and other similar athletic or sports facilities;
304.30 	 (5) delivery of aggregate materials and concrete block by a third party if the delivery 
304.31 	would be subject to the sales tax if provided by the seller of the aggregate material or 
304.32 	concrete block; and
304.33 	 (6) services as provided in this clause:
304.34 	 (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
304.35 	and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
305.1 	drapery, upholstery, and industrial cleaning.  Laundry and dry cleaning services do not 
305.2 	include services provided by coin operated facilities operated by the customer;
305.3 	 (ii) motor vehicle washing, waxing, and cleaning services, including services 
305.4 	provided by coin operated facilities operated by the customer, and rustproofing, 
305.5 	undercoating, and towing of motor vehicles;
305.6 	 (iii) building and residential cleaning, maintenance, and disinfecting and 
305.7 	exterminating services;
305.8 	 (iv) detective, security, burglar, fire alarm, and armored car services; but not 
305.9 	including services performed within the jurisdiction they serve by off-duty licensed peace 
305.10 	officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
305.11 	organization for monitoring and electronic surveillance of persons placed on in-home 
305.12 	detention pursuant to court order or under the direction of the Minnesota Department 
305.13 	of Corrections;
305.14 	 (v) pet grooming services;
305.15 	 (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
305.16 	and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
305.17 	plant care; tree, bush, shrub, and stump removal; and tree trimming for public utility lines.  
305.18 	Services performed under a construction contract for the installation of shrubbery, plants, 
305.19 	sod, trees, bushes, and similar items are not taxable;
305.20 	 (vii) massages, except when provided by a licensed health care facility or 
305.21 	professional or upon written referral from a licensed health care facility or professional for 
305.22 	treatment of illness, injury, or disease; and
305.23 	 (viii) the furnishing of lodging, board, and care services for animals in kennels and 
305.24 	other similar arrangements, but excluding veterinary and horse boarding services.
305.25 	 In applying the provisions of this chapter, the terms "tangible personal property" 
305.26 	and "sales at retail" include taxable services listed in clause (6), items (i) to (vi) and 
305.27 	(viii), and the provision of these taxable services, unless specifically provided otherwise.  
305.28 	Services performed by an employee for an employer are not taxable.  Services performed 
305.29 	by a partnership or association for another partnership or association are not taxable if 
305.30 	one of the entities owns or controls more than 80 percent of the voting power of the 
305.31 	equity interest in the other entity.  Services performed between members of an affiliated 
305.32 	group of corporations are not taxable. For purposes of the preceding sentence, "affiliated 
305.33 	group of corporations" includes those entities that would be classified as members of an 
305.34 	affiliated group under United States Code, title 26, section 1504, and that are eligible to 
305.35 	file a consolidated tax return for federal income tax purposes.
306.1 	 (h) A sale and a purchase includes the furnishing for a consideration of tangible 
306.2 	personal property or taxable services by the United States or any of its agencies or 
306.3 	instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
306.4 	subdivisions.
306.5 	 (i) A sale and a purchase includes the furnishing for a consideration of 
306.6 	telecommunications services, including cable television services and direct satellite 
306.7 	services. Telecommunications services are taxed to the extent allowed under federal law.
306.8 	 (j) A sale and a purchase includes the furnishing for a consideration of installation if 
306.9 	the installation charges would be subject to the sales tax if the installation were provided 
306.10 	by the seller of the item being installed.
306.11 	 (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
306.12 	to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
306.13 	the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
306.14 	65B.29, subdivision 1, clause (1).

306.15 	EFFECTIVE DATE. This section is effective the day following final enactment.

306.16 	 Sec. 7. Minnesota Statutes 2004, section 297A.61, subdivision 4, is amended to read:
306.17 		 Subd. 4.Retail sale.  (a) A "retail sale" means any sale, lease, or rental for any 
306.18 	purpose,other than resale, sublease, or subrent of items by the purchaser in the normal 
306.19 	course of business as defined in subdivision 21.
306.20 	 (b) A sale of property used by the owner only by leasing it to others or by holding it 
306.21 	in an effort to lease it, and put to no use by the owner other than resale after the lease or 
306.22 	effort to lease, is a sale of property for resale.
306.23 	 (c) A sale of master computer software that is purchased and used to make copies for 
306.24 	sale or lease is a sale of property for resale.
306.25 	 (d) A sale of building materials, supplies, and equipment to owners, contractors, 
306.26 	subcontractors, or builders for the erection of buildings or the alteration, repair, or 
306.27 	improvement of real property is a retail sale in whatever quantity sold, whether the sale is 
306.28 	for purposes of resale in the form of real property or otherwise.
306.29 	 (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides 
306.30 	for installation of the floor covering is a retail sale and not a sale for resale since a sale 
306.31 	of floor covering which includes installation is a contract for the improvement of real 
306.32 	property.
306.33 	 (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides 
306.34 	for installation of the items is a retail sale and not a sale for resale since a sale of 
307.1 	shrubbery, plants, sod, trees, and similar items that includes installation is a contract for 
307.2 	the improvement of real property.
307.3 	 (g) A sale of tangible personal property that is awarded as prizes is a retail sale and 
307.4 	is not considered a sale of property for resale.
307.5 	 (h) A sale of tangible personal property utilized or employed in the furnishing or 
307.6 	providing of services under subdivision 3, paragraph (g), clause (1), including, but not 
307.7 	limited to, property given as promotional items, is a retail sale and is not considered a 
307.8 	sale of property for resale.
307.9 	 (i) A sale of tangible personal property used in conducting lawful gambling under 
307.10 	chapter 349 or the state lottery under chapter 349A, including, but not limited to, property 
307.11 	given as promotional items, is a retail sale and is not considered a sale of property for 
307.12 	resale.
307.13 	 (j) A sale of machines, equipment, or devices that are used to furnish, provide, or 
307.14 	dispense goods or services, including, but not limited to, coin-operated devices, is a retail 
307.15 	sale and is not considered a sale of property for resale.
307.16 	 (k) In the case of a lease, a retail sale occurs when an obligation to make a lease 
307.17 	payment becomes due under the terms of the agreement or the trade practices of the lessor.
307.18 	 (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of 
307.19 	title or possession of the tangible personal property.

307.20 	EFFECTIVE DATE. This section is effective the day following final enactment.

307.21 	 Sec. 8. Minnesota Statutes 2004, section 297A.64, subdivision 4, is amended to read:
307.22 		 Subd. 4.Exemptions.  (a) The tax and the fee imposed by this section do not apply 
307.23 	to a lease or rental of (1) a vehicle to be used by the lessee to provide a licensed taxi 
307.24 	service; (2) a hearse or limousine used in connection with a burial or funeral service; or 
307.25 	(3) a van designed or adapted primarily for transporting property rather than passengers. 
307.26 	The tax and the fee imposed under this section do not apply when the lease or rental of a 
307.27 	vehicle is exempt from the tax imposed under section 297A.62, subdivision 1.
307.28 	 (b) The lessor may elect not to charge the fee imposed in subdivision 2 if in the 
307.29 	previous calendar year the lessor had no more than 20 vehicles available for lease that 
307.30 	would have been subject to tax under this section, or no more than $50,000 in gross 
307.31 	receipts that would have been subject to tax under this section.

307.32 	EFFECTIVE DATE. This section is effective the day following final enactment.

307.33 	 Sec. 9. Minnesota Statutes 2004, section 297A.668, subdivision 1, is amended to read:
308.1 		 Subdivision 1. applicability.  The provisions of this section apply regardless of the 
308.2 	characterization of a product as tangible personal property, a digital good, or a service; but 
308.3 	do not apply to telecommunications services,or the sales of motor vehicles, watercraft, 
308.4 	aircraft, modular homes, manufactured homes, or mobile homes.  These provisions only 
308.5 	apply to determine a seller's obligation to pay or collect and remit a sales or use tax with 
308.6 	respect to the seller's sale of a product.  These provisions do not affect the obligation of a 
308.7 	seller as purchaser to remit tax on the use of the product.

308.8 	EFFECTIVE DATE. This section is effective the day following final enactment.

308.9 	 Sec. 10. Minnesota Statutes 2004, section 297A.668, subdivision 5, is amended to read:
308.10 		 Subd. 5.Transportation equipment.  (a) The retail sale, including lease or rental, 
308.11 	of transportation equipment shall be sourced the same as a retail sale in accordance 
308.12 	with the provisions of subdivision 2, notwithstanding the exclusion of lease or rental in 
308.13 	subdivision 2.
308.14 	 (b) "Transportation equipment" means any of the following:
308.15 	 (1) locomotives and railcars that are utilized for the carriage of persons or property 
308.16 	in interstate commerce; and/or 
308.17 	 (2) trucks and truck-tractors with a gross vehicle weight rating (GVWR) of 10,001 
308.18 	pounds or greater, trailers, semitrailers, or passenger buses that are:
308.19 	 (i) registered through the international registration plan; and
308.20 	 (ii) operated under authority of a carrier authorized and certified by the United States 
308.21 	Department of Transportation or another federal authority to engage in the carriage of 
308.22 	persons or property in interstate commerce;
308.23 	 (3) aircraft that are operated by air carriers authorized and certificated by the United 
308.24 	States Department of Transportation or another federal or a foreign authority to engage in 
308.25 	the carriage of persons or property in interstate commerce; or 
308.26 	 (4) containers designed for use on and component parts attached or secured on the 
308.27 	transportation equipment described in items (1) through (3).

308.28 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
308.29 	or after January 1, 2004.

308.30 	 Sec. 11. Minnesota Statutes 2004, section 297A.67, subdivision 2, is amended to read:
308.31 		 Subd. 2.Food and food ingredients. Except as otherwise provided in this 
308.32 	subdivision,food and food ingredients are exempt.  For purposes of this subdivision, "food" 
308.33 	and "food ingredients" mean substances, whether in liquid, concentrated, solid, frozen, 
309.1 	dried, or dehydrated form, that are sold for ingestion or chewing by humans and are 
309.2 	consumed for their taste or nutritional value.  Food and food ingredients exempt under this 
309.3 	subdivision do not include candy, soft drinks, food sold through vending machines, dietary 
309.4 	supplements,and prepared foods.  Food and food ingredients do not include alcoholic 
309.5 	beverages, dietary supplements,and tobacco.  For purposes of this subdivision, "alcoholic 
309.6 	beverages" means beverages that are suitable for human consumption and contain one-half 
309.7 	of one percent or more of alcohol by volume.  For purposes of this subdivision, "tobacco" 
309.8 	means cigarettes, cigars, chewing or pipe tobacco, or any other item that contains tobacco.  
309.9 	For purposes of this subdivision, "dietary supplements" means any product, other than 
309.10 	tobacco, intended to supplement the diet that:
309.11 	 (1) contains one or more of the following dietary ingredients:
309.12 	 (i) a vitamin;
309.13 	 (ii) a mineral;
309.14 	 (iii) an herb or other botanical;
309.15 	 (iv) an amino acid;
309.16 	 (v) a dietary substance for use by humans to supplement the diet by increasing the 
309.17 	total dietary intake; and
309.18 	 (vi) a concentrate, metabolite, constituent, extract, or combination of any ingredient 
309.19 	described in items (i) to (v);
309.20 	 (2) is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid 
309.21 	form, or if not intended for ingestion in such form, is not represented as conventional food 
309.22 	and is not represented for use as a sole item of a meal or of the diet; and
309.23 	 (3) is required to be labeled as a dietary supplement, identifiable by the supplement 
309.24 	facts box found on the label and as required pursuant to Code of Federal Regulations, 
309.25 	title 21, section 101.36.

309.26 	EFFECTIVE DATE. This section is effective for sales made on or after the day 
309.27 	following final enactment.

309.28 	 Sec. 12. Minnesota Statutes 2004, section 297A.68, subdivision 2, is amended to read:
309.29 		 Subd. 2.Materials consumed in industrial production.  (a) Materials stored, used, 
309.30 	or consumed in industrial production of personal property intended to be sold ultimately at 
309.31 	retail are exempt, whether or not the item so used becomes an ingredient or constituent 
309.32 	part of the property produced. Materials that qualify for this exemption include, but 
309.33 	are not limited to, the following:
309.34 	 (1) chemicals, including chemicals used for cleaning food processing machinery 
309.35 	and equipment;
310.1 	 (2) materials, including chemicals, fuels, and electricity purchased by persons 
310.2 	engaged in industrial production to treat waste generated as a result of the production 
310.3 	process;
310.4 	 (3) fuels, electricity, gas, and steam used or consumed in the production process, 
310.5 	except that electricity, gas, or steam used for space heating, cooling, or lighting is exempt 
310.6 	if (i) it is in excess of the average climate control or lighting for the production area, and 
310.7 	(ii) it is necessary to produce that particular product;
310.8 	 (4) petroleum products and lubricants;
310.9 	 (5) packaging materials, including returnable containers used in packaging food 
310.10 	and beverage products;
310.11 	 (6) accessory tools, equipment, and other items that are separate detachable units 
310.12 	with an ordinary useful life of less than 12 months used in producing a direct effect upon 
310.13 	the product; and
310.14 	 (7) the following materials, tools, and equipment used in metalcasting:  crucibles, 
310.15 	thermocouple protection sheaths and tubes, stalk tubes, refractory materials, molten metal 
310.16 	filters and filter boxes, degassing lances, and base blocks.
310.17 	 (b) This exemption does not include:
310.18 	 (1) machinery, equipment, implements, tools, accessories, appliances, contrivances 
310.19 	and furniture and fixtures, except those listed in paragraph (a), clause (6); and
310.20 	 (2) petroleum and special fuels used in producing or generating power for propelling 
310.21 	ready-mixed concrete trucks on the public highways of this state.
310.22 	 (c) Industrial production includes, but is not limited to, research, development, 
310.23 	design or production of any tangible personal property, manufacturing, processing (other 
310.24 	than by restaurants and consumers) of agricultural products (whether vegetable or animal), 
310.25 	commercial fishing, refining, smelting, reducing, brewing, distilling, printing, mining, 
310.26 	quarrying, lumbering, generating electricity, the production of road building materials, 
310.27 	and the research, development, design, or production of computer software.  Industrial 
310.28 	production does not include painting, cleaning, repairing or similar processing of property 
310.29 	except as part of the original manufacturing process. Industrial production does not 
310.30 	include the furnishing of services listed in section 297A.61, subdivision 3, paragraph 
310.31 	(g), clause (6), items (i) to (vi) and (viii).

310.32 	EFFECTIVE DATE. This section is effective the day following final enactment.

310.33 	 Sec. 13. Minnesota Statutes 2004, section 297A.68, subdivision 5, is amended to read:
311.1 		 Subd. 5.Capital equipment.  (a) Capital equipment is exempt.  The tax must be 
311.2 	imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and 
311.3 	then refunded in the manner provided in section 297A.75.
311.4 	 "Capital equipment" means machinery and equipment purchased or leased, and used 
311.5 	in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, 
311.6 	or refining tangible personal property to be sold ultimately at retail if the machinery and 
311.7 	equipment are essential to the integrated production process of manufacturing, fabricating, 
311.8 	mining, or refining.  Capital equipment also includes machinery and equipment used 
311.9 	primarily to electronically transmit results retrieved by a customer of an on-line 
311.10 	computerized data retrieval system.
311.11 	 (b) Capital equipment includes, but is not limited to:
311.12 	 (1) machinery and equipment used to operate, control, or regulate the production 
311.13 	equipment;
311.14 	 (2) machinery and equipment used for research and development, design, quality 
311.15 	control, and testing activities;
311.16 	 (3) environmental control devices that are used to maintain conditions such as 
311.17 	temperature, humidity, light, or air pressure when those conditions are essential to and are 
311.18 	part of the production process;
311.19 	 (4) materials and supplies used to construct and install machinery or equipment;
311.20 	 (5) repair and replacement parts, including accessories, whether purchased as spare 
311.21 	parts, repair parts, or as upgrades or modifications to machinery or equipment;
311.22 	 (6) materials used for foundations that support machinery or equipment;
311.23 	 (7) materials used to construct and install special purpose buildings used in the 
311.24 	production process;
311.25 	 (8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed 
311.26 	as part of the delivery process regardless if mounted on a chassis, repair parts for 
311.27 	ready-mixed concrete trucks,and leases of ready-mixed concrete trucks; and
311.28 	 (9) machinery or equipment used for research, development, design, or production 
311.29 	of computer software.
311.30 	 (c) Capital equipment does not include the following:
311.31 	 (1) motor vehicles taxed under chapter 297B;
311.32 	 (2) machinery or equipment used to receive or store raw materials;
311.33 	 (3) building materials, except for materials included in paragraph (b), clauses (6) 
311.34 	and (7);
311.35 	 (4) machinery or equipment used for nonproduction purposes, including, but not 
311.36 	limited to, the following:  plant security, fire prevention, first aid, and hospital stations; 
312.1 	support operations or administration; pollution control; and plant cleaning, disposal of 
312.2 	scrap and waste, plant communications, space heating, cooling, lighting, or safety;
312.3 	 (5) farm machinery and aquaculture production equipment as defined by section 
312.4 	297A.61, subdivisions 12 and 13;
312.5 	 (6) machinery or equipment purchased and installed by a contractor as part of an 
312.6 	improvement to real property; or 
312.7 	 (7) machinery and equipment used by restaurants in the furnishing, preparing, or 
312.8 	serving of prepared foods as defined in section 297A.61, subdivision 31;
312.9 	 (8) machinery and equipment used to furnish the services listed in section 297A.61, 
312.10 	subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii); or 
312.11 	 (9) any other item that is not essential to the integrated process of manufacturing, 
312.12 	fabricating, mining, or refining.
312.13 	 (d) For purposes of this subdivision:
312.14 	 (1) "Equipment" means independent devices or tools separate from machinery but 
312.15 	essential to an integrated production process, including computers and computer software, 
312.16 	used in operating, controlling, or regulating machinery and equipment; and any subunit or 
312.17 	assembly comprising a component of any machinery or accessory or attachment parts of 
312.18 	machinery, such as tools, dies, jigs, patterns, and molds.
312.19 	 (2) "Fabricating" means to make, build, create, produce, or assemble components or 
312.20 	property to work in a new or different manner.
312.21 	 (3) "Integrated production process" means a process or series of operations through 
312.22 	which tangible personal property is manufactured, fabricated, mined, or refined.  For 
312.23 	purposes of this clause, (i) manufacturing begins with the removal of raw materials 
312.24 	from inventory and ends when the last process prior to loading for shipment has been 
312.25 	completed; (ii) fabricating begins with the removal from storage or inventory of the 
312.26 	property to be assembled, processed, altered, or modified and ends with the creation 
312.27 	or production of the new or changed product; (iii) mining begins with the removal of 
312.28 	overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and 
312.29 	ends when the last process before stockpiling is completed; and (iv) refining begins with 
312.30 	the removal from inventory or storage of a natural resource and ends with the conversion 
312.31 	of the item to its completed form.
312.32 	 (4) "Machinery" means mechanical, electronic, or electrical devices, including 
312.33 	computers and computer software, that are purchased or constructed to be used for the 
312.34 	activities set forth in paragraph (a), beginning with the removal of raw materials from 
312.35 	inventory through completion of the product, including packaging of the product.
313.1 	 (5) "Machinery and equipment used for pollution control" means machinery and 
313.2 	equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity 
313.3 	described in paragraph (a).
313.4 	 (6) "Manufacturing" means an operation or series of operations where raw materials 
313.5 	are changed in form, composition, or condition by machinery and equipment and which 
313.6 	results in the production of a new article of tangible personal property.  For purposes of 
313.7 	this subdivision, "manufacturing" includes the generation of electricity or steam to be 
313.8 	sold at retail.
313.9 	 (7) "Mining" means the extraction of minerals, ores, stone, or peat.
313.10 	 (8) "On-line data retrieval system" means a system whose cumulation of information 
313.11 	is equally available and accessible to all its customers.
313.12 	 (9) "Primarily" means machinery and equipment used 50 percent or more of the time 
313.13 	in an activity described in paragraph (a).
313.14 	 (10) "Refining" means the process of converting a natural resource to an intermediate 
313.15 	or finished product, including the treatment of water to be sold at retail.

313.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

313.17 	 Sec. 14. Minnesota Statutes 2004, section 297A.68, subdivision 35, is amended to read:
313.18 		 Subd. 35.Telecommunications equipment.  (a) Telecommunications machinery 
313.19 	and equipment purchased or leased for use directly by a telecommunications service 
313.20 	provider primarily in the provision of telecommunications services that are ultimately to 
313.21 	be sold at retail are exempt, regardless of whether purchased by the owner, a contractor, 
313.22 	or a subcontractor.
313.23 	 (b) For purposes of this subdivision, "telecommunications machinery and 
313.24 	equipment" includes, but is not limited to:
313.25 	 (1) machinery, equipment, and fixtures utilized in receiving, initiating, 
313.26 	amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring 
313.27 	telecommunications services, such as computers, transformers, amplifiers, routers, 
313.28 	bridges, repeaters, multiplexers, and other items performing comparable functions;
313.29 	 (2) machinery, equipment, and fixtures used in the transportation of 
313.30 	telecommunications services, radio transmitters and receivers, satellite equipment, 
313.31 	microwave equipment, and other transporting media, but not wire, cable, fiber, poles, 
313.32 	or conduit;
313.33 	 (3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or 
313.34 	enable the machinery in clauses (1) and (2) to accomplish its intended function, such as 
313.35 	auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning 
314.1 	equipment necessary to the operation of the telecommunications equipment; and software 
314.2 	necessary to the operation of the telecommunications equipment; and
314.3 	 (4) repair and replacement parts, including accessories, whether purchased as spare 
314.4 	parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.
314.5 	 (c) For purposes of this subdivision, "telecommunications services" means 
314.6 	telecommunications services as defined in section 297A.61, subdivision 24, paragraph 
314.7 	paragraphs (a), only  (c), and (d).

314.8 	EFFECTIVE DATE. This section is effective the day following final enactment.

314.9 	 Sec. 15. Minnesota Statutes 2004, section 297A.68, subdivision 39, is amended to read:
314.10 		 Subd. 39.Preexisting bids or contracts.  (a) The sale of tangible personal property 
314.11 	or services is exempt from tax or a tax rate increase for a period of six months from 
314.12 	the effective date of the law change that results in the imposition of the tax or the tax 
314.13 	rate increase under this chapter if:
314.14 	 (1) the act imposing the tax or increasing the tax rate  does not have transitional 
314.15 	effective date language for existing construction contracts and construction bids; and
314.16 	 (2) the requirements of paragraph (b) are met.
314.17 	 (b) A sale is tax exempt under paragraph (a) if it meets the requirements of either 
314.18 	clause (1) or (2):
314.19 	 (1) For a construction contract:
314.20 	 (i) the goods or services sold must be used for the performance of a bona fide written 
314.21 	lump sum or fixed price construction contract;
314.22 	 (ii) the contract must be entered into before the date the goods or services become 
314.23 	subject to the sales tax or the tax rate was increased;
314.24 	 (iii) the contract must not provide for allocation of future taxes; and
314.25 	 (iv) for each qualifying contract the contractor must give the seller documentation 
314.26 	of the contract on which an exemption is to be claimed.
314.27 	 (2) For a construction bid:
314.28 	 (i) the goods or services sold must be used pursuant to an obligation of a bid or bids;
314.29 	 (ii) the bid or bids must be submitted and accepted before the date the goods or 
314.30 	services became subject to the sales tax or the tax rate was increased;
314.31 	 (iii) the bid or bids must not be able to be withdrawn, modified, or changed without 
314.32 	forfeiting a bond; and
314.33 	 (iv) for each qualifying bid, the contractor must give the seller documentation of the 
314.34 	bid on which an exemption is to be claimed.

315.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

315.2 	 Sec. 16. Minnesota Statutes 2004, section 297A.99, subdivision 4, is amended to read:
315.3 		 Subd. 4.Tax base.  (a) The tax applies to sales taxable under this chapter that occur 
315.4 	within the political subdivision.
315.5 	 (b) Taxable goods or services are subject to a political subdivision's sales tax, if 
315.6 	they are performed either:
315.7 	 (1) within the political subdivision, or 
315.8 	 (2) partly within and partly without the political subdivision and more of the service 
315.9 	is performed within the political subdivision, based on the cost of performance sourced 
315.10 	to the political subdivision pursuant to section 297A.668.

315.11 	EFFECTIVE DATE. This section is effective for sales made on or after January 
315.12 	1, 2004.

315.13 	 Sec. 17. Minnesota Statutes 2004, section 297A.99, subdivision 7, is amended to read:
315.14 		 Subd. 7.Exemptions.  (a) All goods or services that are otherwise exempt from 
315.15 	taxation under this chapter are exempt from a political subdivision's tax.
315.16 	 (b) The gross receipts from the sale of tangible personal property that meets the 
315.17 	requirement requirements of section 297A.68, subdivision subdivisions 11,15, and 16 
315.18 	are exempt, except the qualification test applies based on the boundaries of the political 
315.19 	subdivision instead of the state of Minnesota.
315.20 	 (c) All mobile transportation equipment, and parts and accessories attached to or 
315.21 	to be attached to the equipment are exempt, if purchased by a holder of a motor carrier 
315.22 	direct pay permit under section 297A.90.

315.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

315.24 	 Sec. 18. REPEALER.
 315.25 	 Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, subparts 5 and 6; 
315.26 	8130.0400, subpart 9; 8130.1200, subparts 5 and 6; 8130.2900; 8130.3100, subpart 1; 
315.27 	8130.4000, subparts 1 and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 
315.28 	8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 5; and 8130.8800, 
315.29 	subpart 4, are repealed.

315.30 	 EFFECTIVE DATE. This section is effective the day following final enactment.

316.1 	 ARTICLE 12
316.2 	 DEPARTMENT OF REVENUE SPECIAL TAXES

316.3 	 Section 1. Minnesota Statutes 2004, section 287.04, is amended to read:
316.4 	 287.04 EXEMPTIONS.
316.5 	 The tax imposed by section 287.035 does not apply to:
316.6 	 (a) A decree of marriage dissolution or an instrument made pursuant to it.
316.7 	 (b) A mortgage given to correct a misdescription of the mortgaged property.
316.8 	 (c) A mortgage or other instrument that adds additional security for the same debt 
316.9 	for which mortgage registry tax has been paid.
316.10 	 (d) A contract for the conveyance of any interest in real property, including a 
316.11 	contract for deed.
316.12 	 (e) A mortgage secured by real property subject to the minerals production tax of 
316.13 	sections 298.24 to 298.28.
316.14 	 (f) The principal amount of a mortgage loan made under a low and moderate 
316.15 	income or other affordable housing program, if the mortgagee is a federal, state, or local 
316.16 	government agency.
316.17 	 (g) Mortgages granted by fraternal benefit societies subject to section 64B.24.
316.18 	 (h) A mortgage amendment or extension, as defined in section 287.01.
316.19 	 (i) An agricultural mortgage if the proceeds of the loan secured by the mortgage are 
316.20 	used to acquire or improve real property classified under section 273.13, subdivision 23, 
316.21 	paragraph (a), or (b), clause (1), (2), or (3).
316.22 	 (j) A mortgage on an armory building as set forth in section 193.147.

316.23 	 EFFECTIVE DATE. This section is effective the day following final enactment.

316.24 	 Sec. 2. Minnesota Statutes 2004, section 295.50, is amended by adding a subdivision 
316.25 	to read:
316.26 		 Subd. 1a.Blood components. "Blood components" means the parts of the blood 
316.27 	that are separated from blood by physical or mechanical means and are intended for 
316.28 	transfusion.  Blood components do not include blood derivatives.

316.29 	EFFECTIVE DATE. This section is effective for gross revenues received after 
316.30 	December 31, 2004.

316.31 	 Sec. 3. Minnesota Statutes 2004, section 295.50, subdivision 3, is amended to read:
317.1 		 Subd. 3.Gross revenues.  "Gross revenues" are total amounts received in money or 
317.2 	otherwise by:
317.3 	 (1) a hospital for patient services;
317.4 	 (2) a surgical center for patient services;
317.5 	 (3) a health care provider, other than a staff model health carrier, for patient services;
317.6 	 (4) a wholesale drug distributor for sale or distribution of legend drugs that are 
317.7 	delivered in Minnesota by the wholesale drug distributor, by common carrier, or by mail, 
317.8 	unless the legend drugs are delivered to another wholesale drug distributor who sells 
317.9 	legend drugs exclusively at wholesale.  Legend drugs do not include nutritional products 
317.10 	as defined in Minnesota Rules, part 9505.0325, and blood and blood components; and
317.11 	 (5) a staff model health plan company as gross premiums for enrollees, co-payments, 
317.12 	deductibles, coinsurance, and fees for patient services.

317.13 	EFFECTIVE DATE. This section is effective for gross revenues received after 
317.14 	December 31, 2004.

317.15 	 Sec. 4. Minnesota Statutes 2004, section 295.53, subdivision 1, is amended to read:
317.16 		 Subdivision 1.Exemptions.  (a) The following payments are excluded from the 
317.17 	gross revenues subject to the hospital, surgical center, or health care provider taxes under 
317.18 	sections 295.50 to 295.59:
317.19 	 (1) payments received for services provided under the Medicare program, including 
317.20 	payments received from the government, and organizations governed by sections 1833 
317.21 	and 1876 of title XVIII of the federal Social Security Act, United States Code, title 42, 
317.22 	section 1395, and enrollee deductibles, coinsurance, and co-payments, whether paid by the 
317.23 	Medicare enrollee or by a Medicare supplemental coverage as defined in section 62A.011, 
317.24 	subdivision 3, clause (10), or by Medicaid payments under title XIX of the federal Social 
317.25 	Security Act. Payments for services not covered by Medicare are taxable;
317.26 	 (2) payments received for home health care services;
317.27 	 (3) payments received from hospitals or surgical centers for goods and services on 
317.28 	which liability for tax is imposed under section 295.52 or the source of funds for the 
317.29 	payment is exempt under clause (1), (7), (10), or (14);
317.30 	 (4) payments received from health care providers for goods and services on which 
317.31 	liability for tax is imposed under this chapter or the source of funds for the payment is 
317.32 	exempt under clause (1), (7), (10), or (14);
317.33 	 (5) amounts paid for legend drugs, other than nutritional products and blood and 
317.34 	blood components, to a wholesale drug distributor who is subject to tax under section 
318.1 	295.52, subdivision 3, reduced by reimbursements received for legend drugs otherwise 
318.2 	exempt under this chapter;
318.3 	 (6) payments received by a health care provider or the wholly owned subsidiary of a 
318.4 	health care provider for care provided outside Minnesota;
318.5 	 (7) payments received from the chemical dependency fund under chapter 254B;
318.6 	 (8) payments received in the nature of charitable donations that are not designated 
318.7 	for providing patient services to a specific individual or group;
318.8 	 (9) payments received for providing patient services incurred through a formal 
318.9 	program of health care research conducted in conformity with federal regulations 
318.10 	governing research on human subjects.  Payments received from patients or from other 
318.11 	persons paying on behalf of the patients are subject to tax;
318.12 	 (10) payments received from any governmental agency for services benefiting the 
318.13 	public, not including payments made by the government in its capacity as an employer 
318.14 	or insurer or payments made by the government for services provided under general 
318.15 	assistance medical care, the MinnesotaCare program, or the medical assistance program 
318.16 	governed by title XIX of the federal Social Security Act, United States Code, title 42, 
318.17 	sections 1396 to 1396v;
318.18 	 (11) government payments received by the commissioner of human services for 
318.19 	state-operated services;
318.20 	 (12) payments received by a health care provider for hearing aids and related 
318.21 	equipment or prescription eyewear delivered outside of Minnesota;
318.22 	 (13) payments received by an educational institution from student tuition, student 
318.23 	activity fees, health care service fees, government appropriations, donations, or grants, and 
318.24 	for services identified in and provided under an individualized education plan as defined in 
318.25 	section 256B.0625 or Code of Federal Regulations, chapter 34, section 300.340(a).  Fee 
318.26 	for service payments and payments for extended coverage are taxable; and
318.27 	 (14) payments received under the federal Employees Health Benefits Act, United 
318.28 	States Code, title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of 
318.29 	1990. Enrollee deductibles, coinsurance, and co-payments are subject to tax.
318.30 	 (b) Payments received by wholesale drug distributors for legend drugs sold directly 
318.31 	to veterinarians or veterinary bulk purchasing organizations are excluded from the gross 
318.32 	revenues subject to the wholesale drug distributor tax under sections 295.50 to 295.59.

318.33 	EFFECTIVE DATE. The change made to paragraph (a), clause (5), of this section 
318.34 	is effective for amounts paid for blood and blood components after December 31, 2004. 
318.35 	The change made to paragraph (a), clause (14), of this section is effective for enrollee 
319.1 	deductibles, coinsurance, and co-payments received under the federal Employees Health 
319.2 	Benefits Act on or after the day following final enactment.

319.3 	 Sec. 5. Minnesota Statutes 2004, section 295.60, subdivision 3, is amended to read:
319.4 		 Subd. 3.Payment.  (a) Each furrier shall make estimated payments of the taxes for 
319.5 	the calendar year in quarterly installments to the commissioner by April 15, July 15, 
319.6 	October 15, and January 15 of the following calendar year.
319.7 	 (b) Estimated tax payments are not required if:
319.8 	 (1) the tax for the current calendar year is less than $500; or
319.9 	 (2) the tax for the previous calendar year is less than $500, if the taxpayer had a tax 
319.10 	liability and was doing business the entire year.
319.11 	 (c) Underpayment of estimated installments bear interest at the rate specified in 
319.12 	section 270.75, from the due date of the payment until paid or until the due date of the 
319.13 	annual return, whichever comes first.  An underpayment of an estimated installment is 
319.14 	the difference between the amount paid and the lesser of (1) 90 percent of one-quarter 
319.15 	of the tax for the calendar year the tax for the actual gross revenues received during the 
319.16 	quarter, or (2) one-quarter of the total tax for the previous calendar year if the taxpayer 
319.17 	had a tax liability and was doing business the entire year.

319.18 	EFFECTIVE DATE. This section is effective for gross revenues received after 
319.19 	December 31, 2005.

319.20 	 Sec. 6. Minnesota Statutes 2004, section 296A.09, is amended by adding a subdivision 
319.21 	to read:
319.22 		 Subd. 6.Exemptions. The provisions of subdivisions 1 and 2 do not apply to 
319.23 	aviation gasoline or jet fuel purchased by an ambulance service licensed under chapter 
319.24 	144E.

319.25 	EFFECTIVE DATE. This section is effective for purchases made on or after July 
319.26 	1, 2005.

319.27 	 Sec. 7. Minnesota Statutes 2004, section 296A.22, is amended by adding a subdivision 
319.28 	to read:
319.29 		 Subd. 9.Abatement of penalty. (a) The commissioner may by written order 
319.30 	abate any penalty imposed under this section, if in the commissioner's opinion there is 
319.31 	reasonable cause to do so.
320.1 	 (b) A request for abatement of penalty must be filed with the commissioner within 
320.2 	60 days of the date the notice stating that a penalty has been imposed was mailed to the 
320.3 	taxpayer's last known address.
320.4 	 (c) If the commissioner issues an order denying a request for abatement of penalty, 
320.5 	the taxpayer may file an administrative appeal as provided in section 296A.25 or appeal to 
320.6 	Tax Court as provided in section 271.06.  If the commissioner does not issue an order on 
320.7 	the abatement request within 60 days from the date the request is received, the taxpayer 
320.8 	may appeal to Tax Court as provided in section 271.06.

320.9 	EFFECTIVE DATE. This section is effective for penalties imposed on or after the 
320.10 	day following final enactment.

320.11 	 Sec. 8. Minnesota Statutes 2004, section 297E.01, subdivision 5, is amended to read:
320.12 		 Subd. 5.Distributor.  "Distributor" means a distributor as defined in section 349.12, 
320.13 	subdivision 11, or a person or linked bingo game provider who markets, sells, or provides 
320.14 	gambling product to a person or entity for resale or use at the retail level.

320.15 	EFFECTIVE DATE. This section is effective the day following final enactment.

320.16 	 Sec. 9. Minnesota Statutes 2004, section 297E.01, subdivision 7, is amended to read:
320.17 		 Subd. 7.Gambling product.  "Gambling product" means bingo hard cards, bingo 
320.18 	paper, or sheets, or linked bingo paper sheets; pull-tabs; tipboards; paddletickets and 
320.19 	paddleticket cards; raffle tickets; or any other ticket, card, board, placard, device, or token 
320.20 	that represents a chance, for which consideration is paid, to win a prize.

320.21 	EFFECTIVE DATE. This section is effective the day following final enactment.

320.22 	 Sec. 10. Minnesota Statutes 2004, section 297E.01, is amended by adding a subdivision 
320.23 	to read:
320.24 		 Subd. 9a.Linked bingo game. "Linked bingo game" means a bingo game played at 
320.25 	two or more locations where licensed organizations are authorized to conduct bingo, when 
320.26 	there is a common prize pool and a common selection of numbers or symbols conducted 
320.27 	at one location, and when the results of the selection are transmitted to all participating 
320.28 	locations by satellite, telephone, or other means by a linked bingo game provider.

320.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

321.1 	 Sec. 11. Minnesota Statutes 2004, section 297E.01, is amended by adding a subdivision 
321.2 	to read:
321.3 		 Subd. 9b.Linked bingo game provider. "Linked bingo game provider" means any 
321.4 	person who provides the means to link bingo prizes in a linked bingo game, who provides 
321.5 	linked bingo paper sheets to the participating organizations, who provides linked bingo 
321.6 	prize management, and who provides the linked bingo game system.

321.7 	EFFECTIVE DATE. This section is effective the day following final enactment.

321.8 	 Sec. 12. Minnesota Statutes 2004, section 297E.06, subdivision 2, is amended to read:
321.9 		 Subd. 2.Business records.  An organization shall maintain records supporting the 
321.10 	gambling activity reported to the commissioner.  Records include, but are not limited 
321.11 	to, the following items:
321.12 	 (1) all winning and unsold tickets, cards, or stubs for pull-tab, tipboard, paddlewheel, 
321.13 	and raffle games;
321.14 	 (2) all reports and statements, including checker's records, for each bingo occasion;
321.15 	 (3) all cash journals and ledgers, deposit slips, register tapes, and bank statements 
321.16 	supporting gambling activity receipts;
321.17 	 (4) all invoices that represent purchases of gambling product;
321.18 	 (5) all canceled checks or copies of substitute checks as defined in Public Law 
321.19 	108-100, section 3, check recorders, journals and ledgers, vouchers, invoices, bank 
321.20 	statements, and other documents supporting gambling activity expenditures; and
321.21 	 (6) all organizational meeting minutes.
321.22 	 All records required to be kept by this section must be preserved by the organization 
321.23 	for at least 3-1/2 years and may be inspected by the commissioner of revenue at any 
321.24 	reasonable time without notice or a search warrant.

321.25 	EFFECTIVE DATE. This section is effective July 1, 2005.

321.26 	 Sec. 13. Minnesota Statutes 2004, section 297E.07, is amended to read:
321.27 	 297E.07 INSPECTION RIGHTS.
321.28 	 At any reasonable time, without notice and without a search warrant, the 
321.29 	commissioner may enter a place of business of a manufacturer, distributor, or organization, 
321.30 	or linked bingo game provider; any site from which pull-tabs or tipboards or other 
321.31 	gambling equipment or gambling product are being manufactured, stored, or sold; or 
321.32 	any site at which lawful gambling is being conducted, and inspect the premises, books, 
321.33 	records, and other documents required to be kept under this chapter to determine whether 
322.1 	or not this chapter is being fully complied with.  If the commissioner is denied free access 
322.2 	to or is hindered or interfered with in making an inspection of the place of business, 
322.3 	books, or records, the permit of the distributor may be revoked by the commissioner, 
322.4 	and the license of the manufacturer, the distributor, or the organization, or linked bingo 
322.5 	game provider may be revoked by the board.

322.6 	 EFFECTIVE DATE. This section is effective the day following final enactment.

322.7 	 Sec. 14. Minnesota Statutes 2004, section 297F.08, subdivision 12, is amended to read:
322.8 		 Subd. 12.Cigarettes in interstate commerce.  (a) A person may not transport or 
322.9 	cause to be transported from this state cigarettes for sale in another state without first 
322.10 	affixing to the cigarettes the stamp required by the state in which the cigarettes are to be 
322.11 	sold or paying any other excise tax on the cigarettes imposed by the state in which the 
322.12 	cigarettes are to be sold.
322.13 	 (b) A person may not affix to cigarettes the stamp required by another state or pay 
322.14 	any other excise tax on the cigarettes imposed by another state if the other state prohibits 
322.15 	stamps from being affixed to the cigarettes, prohibits the payment of any other excise tax 
322.16 	on the cigarettes, or prohibits the sale of the cigarettes.
322.17 	 (c) Not later than 15 days after the end of each calendar quarter, a person who 
322.18 	transports or causes to be transported from this state cigarettes for sale in another state 
322.19 	shall submit to the commissioner a report identifying the quantity and style of each brand 
322.20 	of the cigarettes transported or caused to be transported in the preceding calendar quarter, 
322.21 	and the name and address of each recipient of the cigarettes. This reporting requirement 
322.22 	only applies to cigarettes manufactured by companies that are not original or subsequent 
322.23 	participating manufacturers in the Master Settlement Agreement with other states.
322.24 	 (d) For purposes of this section, "person" has the meaning given in section 297F.01, 
322.25 	subdivision 12.  Person does not include any common or contract carrier, or public 
322.26 	warehouse that is not owned, in whole or in part, directly or indirectly by such person, 
322.27 	and does not include a manufacturer that has entered into is an original or subsequent 
322.28 	participating manufacturer in the Master Settlement Agreement with other states.

322.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

322.30 	 Sec. 15. Minnesota Statutes 2004, section 297F.08, is amended by adding a subdivision 
322.31 	to read:
322.32 		 Subd. 13.Bond. The commissioner may require the furnishing of a corporate 
322.33 	surety bond or a certified check in an amount suitable to guarantee payment of the tax 
323.1 	stamps purchased by a distributor.  The bond or certified check may be required when the 
323.2 	commissioner determines that a distributor is (1) delinquent in the filing of any return 
323.3 	required under this chapter, or (2) delinquent in the payment of any uncontested tax 
323.4 	liability under this chapter.  The distributor shall furnish the bond or certified check for a 
323.5 	period of two years, after which, if the distributor has not been delinquent in the filing of 
323.6 	any returns required under this chapter, or delinquent in the paying of any tax under this 
323.7 	chapter, a bond or certified check is no longer required.  The commissioner at any time 
323.8 	may apply the bond or certified check to any unpaid taxes or fees, including interest and 
323.9 	penalties, owed to the department by the distributor.

323.10 	EFFECTIVE DATE. This section is effective the day following final enactment.

323.11 	 Sec. 16. Minnesota Statutes 2004, section 297F.09, subdivision 1, is amended to read:
323.12 		 Subdivision 1.Monthly return; cigarette distributor.  On or before the 18th day 
323.13 	of each calendar month, a distributor with a place of business in this state shall file a 
323.14 	return with the commissioner showing the quantity of cigarettes manufactured or brought 
323.15 	in from outside the state or purchased during the preceding calendar month and the 
323.16 	quantity of cigarettes sold or otherwise disposed of in this state and outside this state 
323.17 	during that month.  A licensed distributor outside this state shall in like manner file a 
323.18 	return showing the quantity of cigarettes shipped or transported into this state during the 
323.19 	preceding calendar month.  Returns must be made in the form and manner prescribed by 
323.20 	the commissioner and must contain any other information required by the commissioner.  
323.21 	The return must be accompanied by a remittance for the full unpaid tax liability shown 
323.22 	by it. The return for the May liability and 85 percent of the estimated June liability is 
323.23 	due on the date payment of the tax is due.For distributors subject to the accelerated tax 
323.24 	payment requirements in subdivision 10, the return for the May liability is due two 
323.25 	business days before June 30th of the year and the return for the June liability is due on or 
323.26 	before August 18th of the year.

323.27 	EFFECTIVE DATE. This section is effective the day following final enactment.

323.28 	 Sec. 17. Minnesota Statutes 2004, section 297F.09, subdivision 2, is amended to read:
323.29 		 Subd. 2.Monthly return; tobacco products distributor.  On or before the 18th 
323.30 	day of each calendar month, a distributor with a place of business in this state shall file 
323.31 	a return with the commissioner showing the quantity and wholesale sales price of each 
323.32 	tobacco product:
323.33 	 (1) brought, or caused to be brought, into this state for sale; and
324.1 	 (2) made, manufactured, or fabricated in this state for sale in this state, during the 
324.2 	preceding calendar month.
324.3 	 Every licensed distributor outside this state shall in like manner file a return showing the 
324.4 	quantity and wholesale sales price of each tobacco product shipped or transported to 
324.5 	retailers in this state to be sold by those retailers, during the preceding calendar month.  
324.6 	Returns must be made in the form and manner prescribed by the commissioner and 
324.7 	must contain any other information required by the commissioner.  The return must be 
324.8 	accompanied by a remittance for the full tax liability shown. The return for the May 
324.9 	liability and 85 percent of the estimated June liability is due on the date payment of the tax 
324.10 	is due.For distributors subject to the accelerated tax payment requirements in subdivision 
324.11 	10, the return for the May liability is due two business days before June 30th of the year 
324.12 	and the return for the June liability is due on or before August 18th of the year.

324.13 	EFFECTIVE DATE. This section is effective the day following final enactment.

324.14 	 Sec. 18. Minnesota Statutes 2004, section 297G.09, is amended by adding a 
324.15 	subdivision to read:
324.16 		 Subd. 10.Quarterly and annual payments and returns. (a) If a manufacturer, 
324.17 	wholesaler, brewer, or importer has an average liquor tax liability equal to or less than $500 
324.18 	per month in any quarter of a calendar year, and has substantially complied with the state 
324.19 	tax laws during the preceding four calendar quarters, the manufacturer, wholesaler, brewer, 
324.20 	or importer may request authorization to file and pay the taxes quarterly in subsequent 
324.21 	calendar quarters.  The authorization remains in effect during the period in which the 
324.22 	manufacturer's, wholesaler's, brewer's, or importer's quarterly returns reflect liquor tax 
324.23 	liabilities of less than $1,500 and there is continued compliance with state tax laws.
324.24 	 (b) If a manufacturer, wholesaler, brewer, or importer has an average liquor tax 
324.25 	liability equal to or less than $100 per month during a calendar year, and has substantially 
324.26 	complied with the state tax laws during that period, the manufacturer, wholesaler, brewer, 
324.27 	or importer may request authorization to file and pay the taxes annually in subsequent 
324.28 	years.  The authorization remains in effect during the period in which the manufacturer's, 
324.29 	wholesaler's, brewer's, or importer's annual returns reflect liquor tax liabilities of less 
324.30 	than $1,200 and there is continued compliance with state tax laws.
324.31 	 (c) The commissioner may also grant quarterly or annual filing and payment 
324.32 	authorizations to manufacturers, wholesalers, brewers, or importers if the commissioner 
324.33 	concludes that the manufacturer's, wholesaler's, brewer's, or importer's future tax 
324.34 	liabilities will be less than the monthly totals identified in paragraphs (a) and (b).  An 
325.1 	authorization granted under this paragraph is subject to the same conditions as an 
325.2 	authorization granted under paragraphs (a) and (b).
325.3 	 (d) The annual tax return and payments must be filed and paid on or before the 18th 
325.4 	day of January following the calendar year.  The quarterly returns and payments must be 
325.5 	filed and paid on or before April 18 for the quarter ending March 31, on or before July 18 
325.6 	for the quarter ending June 30, on or before October 18 for the quarter ending September 
325.7 	30, and on or before January 18 for the quarter ending December 31.

325.8 	EFFECTIVE DATE. This section is effective for tax returns and payments due on 
325.9 	or after January 1, 2006.

325.10 	 Sec. 19. Minnesota Statutes 2004, section 297I.01, is amended by adding a subdivision 
325.11 	to read:
325.12 		 Subd. 13a.Reinsurance. "Reinsurance" is insurance whereby an insurance 
325.13 	company, for a consideration, agrees to indemnify another insurance company against 
325.14 	all or part of the loss which the latter may sustain under the policy or policies which 
325.15 	it has issued.

325.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

325.17 	 Sec. 20. Minnesota Statutes 2004, section 297I.05, subdivision 5, is amended to read:
325.18 		 Subd. 5.Health maintenance organizations, nonprofit health service plan 
325.19 	corporations, and community integrated service networks.  (a) Health maintenance 
325.20 	organizations, community integrated service networks, and nonprofit health care service 
325.21 	plan corporations are exempt from the tax imposed under this section for premiums 
325.22 	received in calendar years 2001 to 2003.
325.23 	 (b) For calendar years after 2003,A tax is imposed on health maintenance 
325.24 	organizations, community integrated service networks, and nonprofit health care service 
325.25 	plan corporations. The rate of tax is equal to one percent of gross premiums less return 
325.26 	premiums on all direct business received by the organization, network, or corporation or 
325.27 	its agents in Minnesota, in cash or otherwise,in the calendar year.
325.28 	 (c) In approving the premium rates as required in sections 62L.08, subdivision 8, 
325.29 	and 62A.65, subdivision 3, the commissioners of health and commerce shall ensure that 
325.30 	any exemption from tax as described in paragraph (a) is reflected in the premium rate.
325.31 	 (d) (b) The commissioner shall deposit all revenues, including penalties and interest, 
325.32 	collected under this chapter from health maintenance organizations, community integrated 
325.33 	service networks, and nonprofit health service plan corporations in the health care access 
326.1 	fund.  Refunds of overpayments of tax imposed by this subdivision must be paid from 
326.2 	the health care access fund.  There is annually appropriated from the health care access 
326.3 	fund to the commissioner the amount necessary to make any refunds of the tax imposed 
326.4 	under this subdivision.

326.5 	EFFECTIVE DATE. This section is effective January 1, 2005.

326.6 	 Sec. 21. REPEALER.
 326.7 	 Minnesota Statutes 2004, section 297E.12, subdivision 10, is repealed effective the 
326.8 	day following final enactment.

326.9 	 ARTICLE 13
326.10 	 DEPARTMENT OF REVENUE ELECTRONIC PAYMENTS

326.11 	 Section 1. [270.772] MINIMUM DOLLAR REQUIREMENT FOR 
326.12 	ELECTRONIC PAYMENT OF TAXES AND FEES.
326.13 	 (a) Except as provided in paragraph (b), payments of every tax, fee, or surcharge 
326.14 	administered by and payable to the commissioner in a calendar year, including deposits 
326.15 	and estimated payments, must be remitted electronically if the liability of the taxpayer 
326.16 	or payer for the tax, fee, or surcharge is:
326.17 	 (1) $20,000 or more in the preceding fiscal year ending June 30, 2005; and 
326.18 	 (2) $10,000 or more in the preceding fiscal year ending June 30, 2006, and preceding 
326.19 	fiscal years thereafter.
326.20 	 (b) This section does not apply to individual income, estate, fiduciary, and airflight 
326.21 	property taxes, and it does not apply to any law requiring all payments for a specific type 
326.22 	of tax, fee, or surcharge, or from a specific group of taxpayers or payers, to be made 
326.23 	electronically regardless of dollar amount.

326.24 	 Sec. 2. Minnesota Statutes 2004, section 289A.20, subdivision 2, is amended to read:
326.25 		 Subd. 2.Withholding from wages, entertainer withholding, withholding from 
326.26 	payments to out-of-state contractors, and withholding by partnerships and small 
326.27 	business corporations.  (a) A tax required to be deducted and withheld during the 
326.28 	quarterly period must be paid on or before the last day of the month following the close of 
326.29 	the quarterly period, unless an earlier time for payment is provided.  A tax required to be 
326.30 	deducted and withheld from compensation of an entertainer and from a payment to an 
326.31 	out-of-state contractor must be paid on or before the date the return for such tax must be 
326.32 	filed under section 289A.18, subdivision 2.  Taxes required to be deducted and withheld 
327.1 	by partnerships and S corporations must be paid on or before the date the return must be 
327.2 	filed under section 289A.18, subdivision 2.
327.3 	 (b) An employer who, during the previous quarter, withheld more than $1,500 of 
327.4 	tax under section 290.92, subdivision 2a or 3, or 290.923, subdivision 2, must deposit tax 
327.5 	withheld under those sections with the commissioner within the time allowed to deposit 
327.6 	the employer's federal withheld employment taxes under Code of Federal Regulations, 
327.7 	title 26, section 31.6302-1, as amended through December 31, 2001, without regard to the 
327.8 	safe harbor or de minimis rules in subparagraph (f) or the one-day rule in subsection (c), 
327.9 	clause (3).  Taxpayers must submit a copy of their federal notice of deposit status to the 
327.10 	commissioner upon request by the commissioner.
327.11 	 (c) The commissioner may prescribe by rule other return periods or deposit 
327.12 	requirements.  In prescribing the reporting period, the commissioner may classify payors 
327.13 	according to the amount of their tax liability and may adopt an appropriate reporting 
327.14 	period for the class that the commissioner judges to be consistent with efficient tax 
327.15 	collection.  In no event will the duration of the reporting period be more than one year.
327.16 	 (d) If less than the correct amount of tax is paid to the commissioner, proper 
327.17 	adjustments with respect to both the tax and the amount to be deducted must be made, 
327.18 	without interest, in the manner and at the times the commissioner prescribes.  If the 
327.19 	underpayment cannot be adjusted, the amount of the underpayment will be assessed and 
327.20 	collected in the manner and at the times the commissioner prescribes.
327.21 	 (e) If the aggregate amount of the tax withheld during a fiscal year ending June 30 
327.22 	under section 290.92, subdivision 2a or 3, is equal to or exceeds the amounts established 
327.23 	for remitting federal withheld taxes pursuant to the regulations promulgated under section 
327.24 	6302(h) of the Internal Revenue Code, the employer must remit each required deposit for 
327.25 	wages paid in the subsequent calendar year by electronic means.
327.26 	 (f) A third-party bulk filer as defined in section 290.92, subdivision 30, paragraph 
327.27 	(a), clause (2), who remits withholding deposits must remit all deposits by electronic 
327.28 	means as provided in paragraph (e), regardless of the aggregate amount of tax withheld 
327.29 	during a fiscal year for all of the employers.

327.30 	 Sec. 3. Minnesota Statutes 2004, section 289A.20, subdivision 4, is amended to read:
327.31 		 Subd. 4.Sales and use tax.  (a) The taxes imposed by chapter 297A are due and 
327.32 	payable to the commissioner monthly on or before the 20th day of the month following the 
327.33 	month in which the taxable event occurred, or following another reporting period as the 
327.34 	commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph 
328.1 	(f) or (g), except that use taxes due on an annual use tax return as provided under section 
328.2 	289A.11, subdivision 1, are payable by April 15 following the close of the calendar year.
328.3 	 (b) A vendor having a liability of $120,000 or more during a fiscal year ending June 
328.4 	30 must remit the June liability for the next year in the following manner:
328.5 	 (1) Two business days before June 30 of the year, the vendor must remit 85 percent 
328.6 	of the estimated June liability to the commissioner.
328.7 	 (2) On or before August 20 of the year, the vendor must pay any additional amount 
328.8 	of tax not remitted in June.
328.9 	 (c) A vendor having a liability of $120,000 or more during a fiscal year ending 
328.10 	June 30 must remit all liabilities on returns due for periods beginning in the subsequent 
328.11 	calendar year by electronic means on or before the 20th day of the month following the 
328.12 	month in which the taxable event occurred, or on or before the 20th day of the month 
328.13 	following the month in which the sale is reported under section 289A.18, subdivision 4, 
328.14 	except for 85 percent of the estimated June liability, which is due two business days before 
328.15 	June 30.  The remaining amount of the June liability is due on August 20.

328.16 	 Sec. 4. Minnesota Statutes 2004, section 297E.02, subdivision 4, is amended to read:
328.17 		 Subd. 4.Pull-tab and tipboard tax.  (a) A tax is imposed on the sale of each deal 
328.18 	of pull-tabs and tipboards sold by a distributor.  The rate of the tax is 1.7 percent of the 
328.19 	ideal gross of the pull-tab or tipboard deal.  The sales tax imposed by chapter 297A on the 
328.20 	sale of the pull-tabs and tipboards by the distributor is imposed on the retail sales price 
328.21 	less the tax imposed by this subdivision.  The retail sale of pull-tabs or tipboards by the 
328.22 	organization is exempt from taxes imposed by chapter 297A and is exempt from all local 
328.23 	taxes and license fees except a fee authorized under section 349.16, subdivision 8.
328.24 	 (b) The liability for the tax imposed by this section is incurred when the pull-tabs 
328.25 	and tipboards are delivered by the distributor to the customer or to a common or contract 
328.26 	carrier for delivery to the customer, or when received by the customer's authorized 
328.27 	representative at the distributor's place of business, regardless of the distributor's method 
328.28 	of accounting or the terms of the sale.
328.29 	 The tax imposed by this subdivision is imposed on all sales of pull-tabs and 
328.30 	tipboards, except the following:
328.31 	 (1) sales to the governing body of an Indian tribal organization for use on an Indian 
328.32 	reservation;
328.33 	 (2) sales to distributors licensed under the laws of another state or of a province of 
328.34 	Canada, as long as all statutory and regulatory requirements are met in the other state or 
328.35 	province;
329.1 	 (3) sales of promotional tickets as defined in section 349.12; and
329.2 	 (4) pull-tabs and tipboards sold to an organization that sells pull-tabs and tipboards 
329.3 	under the exemption from licensing in section 349.166, subdivision 2.  A distributor shall 
329.4 	require an organization conducting exempt gambling to show proof of its exempt status 
329.5 	before making a tax-exempt sale of pull-tabs or tipboards to the organization.  A distributor 
329.6 	shall identify, on all reports submitted to the commissioner, all sales of pull-tabs and 
329.7 	tipboards that are exempt from tax under this subdivision.
329.8 	 (c) A distributor having a liability of $120,000 or more during a fiscal year ending 
329.9 	June 30 must remit all liabilities in the subsequent calendar year by electronic means.
329.10 	 (d) Any customer who purchases deals of pull-tabs or tipboards from a distributor 
329.11 	may file an annual claim for a refund or credit of taxes paid pursuant to this subdivision 
329.12 	for unsold pull-tab and tipboard tickets.  The claim must be filed with the commissioner on 
329.13 	a form prescribed by the commissioner by March 20 of the year following the calendar 
329.14 	year for which the refund is claimed.  The refund must be filed as part of the customer's 
329.15 	February monthly return.  The refund or credit is equal to 1.7 percent of the face value 
329.16 	of the unsold pull-tab or tipboard tickets, provided that the refund or credit will be 1.75 
329.17 	percent of the face value of the unsold pull-tab or tipboard tickets for claims for a refund 
329.18 	or credit of taxes filed on the February 2001 monthly return.  The refund claimed will be 
329.19 	applied as a credit against tax owing under this chapter on the February monthly return.  If 
329.20 	the refund claimed exceeds the tax owing on the February monthly return, that amount 
329.21 	will be refunded.  The amount refunded will bear interest pursuant to section 270.76 from 
329.22 	90 days after the claim is filed.

329.23 	 Sec. 5. Minnesota Statutes 2004, section 473.843, subdivision 3, is amended to read:
329.24 		 Subd. 3.Payment of fee.  On or before the 20th day of each month each operator 
329.25 	shall pay the fee due under this section for the previous month, using a form provided 
329.26 	by the commissioner of revenue.
329.27 	 An operator having a fee of $120,000 or more during a fiscal year ending June 30 
329.28 	must pay all fees in the subsequent calendar year by electronic means.

329.29 	 Sec. 6. REPEALER.
 329.30 	 Minnesota Statutes 2004, sections 289A.26, subdivision 2a; 289A.60, subdivision 
329.31 	21; 295.55, subdivision 4; 295.60, subdivision 4; 297F.09, subdivision 7; 297G.09, 
329.32 	subdivision 6; 297I.35, subdivision 2; and 297I.85, subdivision 7, are repealed.

329.33 	 Sec. 7. EFFECTIVE DATE.
 330.1 	 This article is effective for payments due in calendar year 2006, and in calendar 
330.2 	years thereafter, based upon liabilities incurred in the fiscal year ending June 30, 2005, and 
330.3 	in fiscal years thereafter.

330.4 	 ARTICLE 14
330.5 	 DEPARTMENT OF REVENUE MISCELLANEOUS

330.6 	 Section 1. Minnesota Statutes 2004, section 15.06, subdivision 6, is amended to read:
330.7 		 Subd. 6.General powers of commissioners.  Except as otherwise expressly 
330.8 	provided by law, a commissioner shall have the following powers:
330.9 	 (1) to delegate to any subordinate employee the exercise of specified statutory 
330.10 	powers or duties as the commissioner may deem advisable, subject to the commissioner's 
330.11 	control; provided, that every delegation shall be made by written order, filed with the 
330.12 	secretary of state; and further provided that only a deputy commissioner may have all 
330.13 	the powers or duties of the commissioner.  A commissioner who delegates the exercise 
330.14 	of identical powers or duties to ten or more subordinate employees, may combine the 
330.15 	delegation to these employees in one written order.  A delegation of authority granted by a 
330.16 	commissioner remains in effect until revoked by the commissioner, revoked by a successor 
330.17 	commissioner, or termination of the employees' employment.  A successor commissioner 
330.18 	may continue to grant the same delegations of authority that were granted by a previous 
330.19 	commissioner, by issuing a written order that is filed with the secretary of state and lists 
330.20 	the names of the subordinate employees that have orders of delegations of authority, the 
330.21 	date the order was signed, and the date the order was filed with the secretary of state;
330.22 	 (2) to appoint all subordinate employees and to prescribe their duties; provided, that 
330.23 	all departments and agencies shall be subject to the provisions of chapter 43A;
330.24 	 (3) with the approval of the commissioner of administration, to organize the 
330.25 	department or agency as deemed advisable in the interest of economy and efficiency; and
330.26 	 (4) to prescribe procedures for the internal management of the department or agency 
330.27 	to the extent that the procedures do not directly affect the rights of or procedure available 
330.28 	to the public.

330.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

330.30 	 Sec. 2. Minnesota Statutes 2004, section 16D.10, is amended to read:
330.31 	 16D.10 CASE REVIEWER.
330.32 		 Subdivision 1.Duties. The commissioner shall make a case reviewer available to 
330.33 	debtors.  The reviewer must be available to answer a debtor's questions concerning the 
331.1 	collection process and to review the collection activity taken. If the reviewer reasonably 
331.2 	believes that the particular action being taken is unreasonable or unfair, the reviewer may 
331.3 	make recommendations to the commissioner in regard to the collection action.
331.4 		 Subd. 2.Authority to issue debtor assistance order. On application filed by a 
331.5 	debtor with the case reviewer, in the form, manner, and in the time prescribed by the 
331.6 	commissioner, and after thorough investigation, the case reviewer may issue a debtor 
331.7 	assistance order if, in the determination of the case reviewer, the manner in which the 
331.8 	state debt collection laws are being administered is creating or will create an unjust and 
331.9 	inequitable result for the debtor.  Debtor assistance orders are governed by the provisions 
331.10 	relating to taxpayer assistance orders under section 270.273.
331.11 		 Subd. 3.Transfer of duties to taxpayer rights advocate.  All duties and authority 
331.12 	of the case reviewer under subdivisions 1 and 2 are transferred to the taxpayer rights 
331.13 	advocate.

331.14 	EFFECTIVE DATE. This section is effective the day following final enactment.

331.15 	 Sec. 3. Minnesota Statutes 2004, section 270.65, is amended to read:
331.16 	 270.65 DATE OF ASSESSMENT; DEFINITION.
331.17 	 For purposes of taxes administered by the commissioner, the term "date of 
331.18 	assessment" means the date a liability reported on a return was entered into the records of 
331.19 	the commissioner or the date a return should have been filed, whichever is later; or, in the 
331.20 	case of taxes determined by the commissioner, "date of assessment" means the date of the 
331.21 	order assessing taxes or date of the return made by the commissioner; or, in the case of an 
331.22 	amended return filed by the taxpayer, the assessment date is the date additional liability 
331.23 	reported on the return, if any, was entered into the records of the commissioner; or, in the 
331.24 	case of a consent agreement signed by the taxpayer under section 270.67, subdivision 3, 
331.25 	the assessment date is the notice date shown on the agreement;or, in the case of a check 
331.26 	from a taxpayer that is dishonored and results in an erroneous refund being given to 
331.27 	the taxpayer, remittance of the check is deemed to be an assessment and the "date of 
331.28 	assessment" is the date the check was received by the commissioner.

331.29 	 EFFECTIVE DATE. This section is effective the day following final enactment.

331.30 	 Sec. 4. Minnesota Statutes 2004, section 270.67, subdivision 4, is amended to read:
331.31 		 Subd. 4.Offer-in-compromise and installment payment program.  (a) In 
331.32 	implementing the authority provided in subdivision 2 or in sections 8.30 and 16D.15
331.33 	to accept offers of installment payments or offers-in-compromise of tax liabilities, the 
332.1 	commissioner of revenue shall prescribe guidelines for employees of the Department of 
332.2 	Revenue to determine whether an offer-in-compromise or an offer to make installment 
332.3 	payments is adequate and should be accepted to resolve a dispute.  In prescribing the 
332.4 	guidelines, the commissioner shall develop and publish schedules of national and local 
332.5 	allowances designed to provide that taxpayers entering into a compromise or payment 
332.6 	agreement have an adequate means to provide for basic living expenses.  The guidelines 
332.7 	must provide that the taxpayer's ownership interest in a motor vehicle, to the extent of 
332.8 	the value allowed in section 550.37, will not be considered as an asset; in the case of an 
332.9 	offer related to a joint tax liability of spouses, that value of two motor vehicles must be 
332.10 	excluded. The guidelines must provide that employees of the department shall determine, 
332.11 	on the basis of the facts and circumstances of each taxpayer, whether the use of the 
332.12 	schedules is appropriate and that employees must not use the schedules to the extent the 
332.13 	use would result in the taxpayer not having adequate means to provide for basic living 
332.14 	expenses.  The guidelines must provide that:
332.15 	 (1) an employee of the department shall not reject an offer-in-compromise or an 
332.16 	offer to make installment payments from a low-income taxpayer solely on the basis of the 
332.17 	amount of the offer; and
332.18 	 (2) in the case of an offer-in-compromise which relates only to issues of liability of 
332.19 	the taxpayer:
332.20 	 (i) the offer must not be rejected solely because the commissioner is unable to locate 
332.21 	the taxpayer's return or return information for verification of the liability; and
332.22 	 (ii) the taxpayer shall not be required to provide an audited, reviewed, or compiled 
332.23 	financial statement.
332.24 	 (b) The commissioner shall establish procedures:
332.25 	 (1) that require presentation of a counteroffer or a written rejection of the offer by 
332.26 	the commissioner if the amount offered by the taxpayer in an offer-in-compromise or an 
332.27 	offer to make installment payments is not accepted by the commissioner;
332.28 	 (2) for an administrative review of any written rejection of a proposed 
332.29 	offer-in-compromise or installment agreement made by a taxpayer under this section 
332.30 	before the rejection is communicated to the taxpayer;
332.31 	 (3) that allow a taxpayer to request reconsideration of any written rejection of the 
332.32 	offer or agreement to the commissioner of revenue to determine whether the rejection is 
332.33 	reasonable and appropriate under the circumstances; and
332.34 	 (4) that provide for notification to the taxpayer when an offer-in-compromise has 
332.35 	been accepted, and issuance of certificates of release of any liens imposed under section 
332.36 	270.69 related to the liability which is the subject of the compromise.
333.1 	 (c) Each compromise proposal must be accompanied by a nonrefundable payment 
333.2 	of $250.  If the compromise proposal is accepted, the payment must be applied to the 
333.3 	accepted compromise amount.  If the compromise is rejected, the payment must be applied 
333.4 	to the outstanding tax debts of the taxpayer pursuant to section 270.652.  In cases of 
333.5 	financial hardship, upon presentation of information establishing an inability to make the 
333.6 	$250 payment, the commissioner may waive this requirement.

333.7 	EFFECTIVE DATE. This section is effective for offers in compromise submitted 
333.8 	after August 31, 2005.

333.9 	 Sec. 5. Minnesota Statutes 2004, section 270.69, subdivision 4, is amended to read:
333.10 		 Subd. 4.Period of limitations.  The lien imposed by this section shall, 
333.11 	notwithstanding any other provision of law to the contrary, be enforceable from the time 
333.12 	the lien arises and for ten years from the date of filing the notice of lien, which must be 
333.13 	filed by the commissioner within five years after the date of assessment of the tax or final 
333.14 	administrative or judicial determination of the assessment.  A notice of lien filed in one 
333.15 	county may be transcribed to the secretary of state or to any other county within ten years 
333.16 	after the date of its filing, but the transcription shall not extend the period during which 
333.17 	the lien is enforceable.  A notice of lien may be renewed by the commissioner before the 
333.18 	expiration of the ten-year period for an additional ten years.  The taxpayer must receive 
333.19 	written notice of the renewal.

333.20 	EFFECTIVE DATE. This section is effective the day following final enactment.

333.21 	 Sec. 6. Minnesota Statutes 2004, section 289A.19, subdivision 4, is amended to read:
333.22 		 Subd. 4.Estate tax returns. When in the commissioner's judgment good cause 
333.23 	exists, the commissioner may extend the time for filing an estate tax return for not more 
333.24 	than six months. When an extension to file the federal estate tax return has been granted 
333.25 	under section 6081 of the Internal Revenue Code, the time for filing the estate tax return 
333.26 	is extended for that period. If the estate requests an extension to file an estate tax return 
333.27 	within the time provided in section 289A.18, subdivision 3, the commissioner shall extend 
333.28 	the time for filing the estate tax return for six months.

333.29 	EFFECTIVE DATE. This section is effective for estates of decedents dying after 
333.30 	December 31, 2004.

333.31 	 Sec. 7. Minnesota Statutes 2004, section 289A.31, subdivision 2, is amended to read:
334.1 		 Subd. 2.Joint income tax returns.  (a) If a joint income tax return is made by a 
334.2 	husband and wife, the liability for the tax is joint and several.  A spouse who qualifies for 
334.3 	relief from a liability attributable to an underpayment under section 6015(b) of the Internal 
334.4 	Revenue Code is relieved of the state income tax liability on the underpayment.
334.5 	 (b) In the case of individuals who were a husband and wife prior to the dissolution of 
334.6 	their marriage or their legal separation, or prior to the death of one of the individuals, for 
334.7 	tax liabilities reported on a joint or combined return, the liability of each person is limited 
334.8 	to the proportion of the tax due on the return that equals that person's proportion of the 
334.9 	total tax due if the husband and wife filed separate returns for the taxable year.  This 
334.10 	provision is effective only when the commissioner receives written notice of the marriage 
334.11 	dissolution, legal separation, or death of a spouse from the husband or wife.  No refund 
334.12 	may be claimed by an ex-spouse, legally separated or widowed spouse for any taxes paid 
334.13 	more than 60 days before receipt by the commissioner of the written notice.
334.14 	 (c) A request for calculation of separate liability pursuant to paragraph (b) for taxes 
334.15 	reported on a return must be made within six years after the due date of the return. 
334.16 	For calculation of separate liability for taxes assessed by the commissioner under 
334.17 	section 289A.35 or 289A.37, the request must be made within six years after the date 
334.18 	of assessment.  The commissioner is not required to calculate separate liability if the 
334.19 	remaining unpaid liability for which recalculation is requested is $100 or less.

334.20 	EFFECTIVE DATE. This section is effective for requests for relief made on or 
334.21 	after the day following final enactment.

334.22 	 Sec. 8. Minnesota Statutes 2004, section 289A.37, subdivision 5, is amended to read:
334.23 		 Subd. 5.Sufficiency of notice.  An order of assessment, sent postage prepaid 
334.24 	by United States mail to the taxpayer at the taxpayer's last known address, or sent by 
334.25 	electronic mail to the taxpayer's last known electronic mailing address as provided for in 
334.26 	section 325L.08,is sufficient even if the taxpayer is deceased or is under a legal disability, 
334.27 	or, in the case of a corporation, has terminated its existence, unless the department has 
334.28 	been provided with a new address by a party authorized to receive notices of assessment.

334.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

334.30 	 Sec. 9. Minnesota Statutes 2004, section 289A.60, subdivision 2a, is amended to read:
334.31 		 Subd. 2a.Penalties for extended delinquency.  (a) If an individual income tax is 
334.32 	not paid within 180 days after the date of filing of a return or, in the case of taxes assessed 
334.33 	by the commissioner, within 180 days after the assessment date or, if appealed, within 180 
335.1 	days after final resolution of the appeal, an extended delinquency penalty of five percent 
335.2 	of the tax remaining unpaid is added to the amount due.
335.3 	 (b) If a corporate franchise, fiduciary income, mining company, estate, partnership, S 
335.4 	corporation, or nonresident entertainer tax return is not filed within 30 days after written 
335.5 	demand for the filing of a delinquent return, an extended delinquency penalty of five 
335.6 	percent of the tax not paid prior to the demand is added to the tax,or in the case of an 
335.7 	individual income tax return, a minimum penalty of $100 or the five percent penalty 
335.8 	is imposed, whichever amount is greater.

335.9 	EFFECTIVE DATE. This section is effective for returns originally due on or 
335.10 	after August 1, 2005.

335.11 	 Sec. 10. Minnesota Statutes 2004, section 289A.60, subdivision 6, is amended to read:
335.12 		 Subd. 6.Penalty for failure to file,false or fraudulent return, evasion.  If a 
335.13 	person, with intent to evade or defeat a tax or payment of tax, fails to file a return,files 
335.14 	a false or fraudulent return, or attempts in any other manner to evade or defeat a tax or 
335.15 	payment of tax, there is imposed on the person a penalty equal to 50 percent of the tax, 
335.16 	less amounts paid by the person on the basis of the false or fraudulent return, if any, due 
335.17 	for the period to which the return related.

335.18 	EFFECTIVE DATE. This section is effective the day following final enactment.

335.19 	 Sec. 11. Minnesota Statutes 2004, section 289A.60, subdivision 11, is amended to read:
335.20 		 Subd. 11.Penalties relating to information reports, withholding.  (a) When a 
335.21 	person required under section 289A.09, subdivision 2, to give a statement to an employee 
335.22 	or payee and a duplicate statement to the commissioner, or to give a reconciliation of the 
335.23 	statements and quarterly returns to the commissioner, gives a false or fraudulent statement 
335.24 	to an employee or payee or a false or fraudulent duplicate statement or reconciliation of 
335.25 	statements and quarterly returns to the commissioner, or fails to give a statement or the 
335.26 	reconciliation in the manner, when due, and showing the information required by section 
335.27 	289A.09, subdivision 2, or rules prescribed by the commissioner under that section, that 
335.28 	person is liable for a penalty of $50 for an act or failure to act.  The total amount imposed 
335.29 	on the delinquent person for failures during a calendar year must not exceed $25,000.
335.30 	 (b) In addition to any other penalty provided by law, an employee who gives 
335.31 	a withholding exemption certificate or a residency affidavit to an employer that the 
335.32 	employee has reason to know contains a materially incorrect statement decreases the 
335.33 	amount withheld under section 290.92 and as of the time the certificate or affidavit was 
336.1 	given to the employer there was no reasonable basis for the statements in the certificate or 
336.2 	affidavit is liable to the commissioner of revenue for a penalty of $500 for each instance.
336.3 	 (c) In addition to any other penalty provided by law, an employer who fails to 
336.4 	submit a copy of a withholding exemption certificate or a residency affidavit required by 
336.5 	section 290.92, subdivision 5a, clause (1)(a), (1)(b), or (2) is liable to the commissioner of 
336.6 	revenue for a penalty of $50 for each instance.
336.7 	 (d) An employer or payor who fails to file an application for a withholding account 
336.8 	number, as required by section 290.92, subdivision 24, is liable to the commissioner for 
336.9 	a penalty of $100.

336.10 	EFFECTIVE DATE. This section is effective for certificates and affidavits given to 
336.11 	employers after December 31, 2005.

336.12 	 Sec. 12. Minnesota Statutes 2004, section 290.92, subdivision 1, is amended to read:
336.13 		 Subdivision 1.Definitions.  (1)  [WAGES.] For purposes of this section, the term 
336.14 	"wages" means the same as that term is defined in section 3401(a) and (f) of the Internal 
336.15 	Revenue Code.
336.16 	 (2)  [PAYROLL PERIOD.] For purposes of this section the term "payroll period" 
336.17 	means a period for which a payment of wages is ordinarily made to the employee by 
336.18 	the employee's employer, and the term "miscellaneous payroll period" means a payroll 
336.19 	period other than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, 
336.20 	or annual payroll period.
336.21 	 (3)  [EMPLOYEE.] For purposes of this section the term "employee" means any 
336.22 	resident individual performing services for an employer, either within or without, or both 
336.23 	within and without the state of Minnesota, and every nonresident individual performing 
336.24 	services within the state of Minnesota, the performance of which services constitute, 
336.25 	establish, and determine the relationship between the parties as that of employer and 
336.26 	employee.  As used in the preceding sentence, the term "employee" includes an officer 
336.27 	of a corporation, and an officer, employee, or elected official of the United States, a 
336.28 	state, or any political subdivision thereof, or the District of Columbia, or any agency or 
336.29 	instrumentality of any one or more of the foregoing.
336.30 	 (4)  [EMPLOYER.] For purposes of this section the term "employer" means any 
336.31 	person, including individuals, fiduciaries, estates, trusts, partnerships, limited liability 
336.32 	companies, and corporations transacting business in or deriving any income from sources 
336.33 	within the state of Minnesota for whom an individual performs or performed any service, 
336.34 	of whatever nature, as the employee of such person, except that if the person for whom the 
336.35 	individual performs or performed the services does not have legal control of the payment 
337.1 	of the wages for such services, the term "employer," except for purposes of paragraph (1), 
337.2 	means the person having legal control of the payment of such wages.  As used in the 
337.3 	preceding sentence, the term "employer" includes any corporation, individual, estate, trust, 
337.4 	or organization which is exempt from taxation under section 290.05 and further includes, 
337.5 	but is not limited to, officers of corporations who have legal  control, either individually or 
337.6 	jointly with another or others, of the payment of the wages.
337.7 	 (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For purposes of 
337.8 	this section, the term "number of withholding exemptions claimed" means the number of 
337.9 	withholding exemptions claimed in a withholding exemption certificate in effect under 
337.10 	subdivision 5, except that if no such certificate is in effect, the number of withholding 
337.11 	exemptions claimed shall be considered to be zero.

337.12 	EFFECTIVE DATE. This section is effective the day following final enactment.

337.13 	 Sec. 13. Minnesota Statutes 2004, section 290C.05, is amended to read:
337.14 	 290C.05 ANNUAL CERTIFICATION.
337.15 	 On or before July 1 of each year, beginning with the year after the claimant has 
337.16 	received an approved application, the commissioner shall send each claimant enrolled 
337.17 	under the sustainable forest incentive program a certification form.  The claimant must sign 
337.18 	the certification, attesting that the requirements and conditions for continued enrollment in 
337.19 	the program are currently being met, and must return the signed certification form to the 
337.20 	commissioner by August 15 of that same year. Failure to If the claimant does not return 
337.21 	an annual certification form by the due date shall result in removal of the lands from 
337.22 	the provisions of the sustainable forest incentive program, and the imposition of any 
337.23 	applicable removal penalty , the provisions in section 290C.11 apply. The claimant may 
337.24 	appeal the removal and any associated penalty according to the procedures and within the 
337.25 	time allowed under this chapter.

337.26 	 EFFECTIVE DATE. This section is effective the day following final enactment.

337.27 	 Sec. 14. [290C.055] LENGTH OF COVENANT.
337.28 	 The covenant remains in effect for a minimum of eight years.  If land is removed 
337.29 	from the program before it has been enrolled for four years, the covenant remains in 
337.30 	effect for eight years from the date recorded.
337.31 	 If land that has been enrolled for four years or more is removed from the program 
337.32 	for any reason, there is a waiting period before the covenant terminates.  The covenant 
337.33 	terminates on January 1 of the fifth calendar year that begins after the date that:
338.1 	 (1) the commissioner receives notification from the claimant that the claimant wishes 
338.2 	to remove the land from the program under section 290C.10; or 
338.3 	 (2) the date that the land is removed from the program under section 290C.11.
338.4 	 Notwithstanding the other provisions of this section, the covenant is terminated at 
338.5 	the same time that the land is removed from the program due to acquisition of title or 
338.6 	possession for a public purpose under section 290C.10.

338.7 	 EFFECTIVE DATE. This section is effective the day following final enactment.

338.8 	 Sec. 15. Minnesota Statutes 2004, section 290C.10, is amended to read:
338.9 	 290C.10 WITHDRAWAL PROCEDURES.
338.10 	 An approved claimant under the sustainable forest incentive program for a minimum 
338.11 	of four years may notify the commissioner of the intent to terminate enrollment.  Within 
338.12 	90 days of receipt of notice to terminate enrollment, the commissioner shall inform the 
338.13 	claimant in writing, acknowledging receipt of this notice and indicating the effective date 
338.14 	of termination from the sustainable forest incentive program.  Termination of enrollment 
338.15 	in the sustainable forest incentive program occurs on January 1 of the fifth calendar 
338.16 	year that begins after receipt by the commissioner of the termination notice.  After the 
338.17 	commissioner issues an effective date of termination, a claimant wishing to continue the 
338.18 	land's enrollment in the sustainable forest incentive program beyond the termination 
338.19 	date must apply for enrollment as prescribed in section 290C.04.  A claimant who 
338.20 	withdraws a parcel of land from this program may not reenroll the parcel for a period of 
338.21 	three years.  Within 90 days after the termination date, the commissioner shall execute 
338.22 	and acknowledge a document releasing the land from the covenant required under this 
338.23 	chapter.  The document must be mailed to the claimant and is entitled to be recorded.  
338.24 	The commissioner may allow early withdrawal from the Sustainable Forest Incentive 
338.25 	Act without penalty in cases of condemnation when the state of Minnesota, any local 
338.26 	government unit, or any other entity which has the right of eminent domain acquires 
338.27 	title or possession to the land for a public purpose notwithstanding the provisions of this 
338.28 	section. In the case of such acquisition, the commissioner shall execute and acknowledge 
338.29 	a document releasing the land acquired by the state, local government unit, or other entity 
338.30 	from the covenant.  All other enrolled land must remain in the program.

338.31 	 EFFECTIVE DATE. This section is effective the day following final enactment.

338.32 	 Sec. 16. Minnesota Statutes 2004, section 325D.33, subdivision 6, is amended to read:
339.1 		 Subd. 6.Violations.  If the commissioner determines that a distributor is violating 
339.2 	any provision of this chapter, the commissioner must give the distributor a written 
339.3 	warning explaining the violation and an explanation of what must be done to comply with 
339.4 	this chapter.  Within ten days of issuance of the warning, the distributor must notify the 
339.5 	commissioner that the distributor has complied with the commissioner's recommendation 
339.6 	or request that the commissioner set the issue for a hearing pursuant to chapter 14.  If a 
339.7 	hearing is requested, the hearing shall be scheduled within 20 days of the request and the 
339.8 	recommendation of the administrative law judge shall be issued within five working days 
339.9 	of the close of the hearing.  The commissioner's final determination shall be issued within 
339.10 	five working days of the receipt of the administrative law judge's recommendation.  If the 
339.11 	commissioner's final determination is adverse to the distributor and the distributor does 
339.12 	not comply within ten days of receipt of the commissioner's final determination, the 
339.13 	commissioner may order the distributor to immediately cease the stamping of cigarettes.  
339.14 	As soon as practicable after the order, the commissioner must remove the meter and any 
339.15 	unapplied cigarette stamps from the premises of the distributor.
339.16 	 If within ten days of issuance of the written warning the distributor has not complied 
339.17 	with the commissioner's recommendation or requested a hearing, the commissioner may 
339.18 	order the distributor to immediately cease the stamping of cigarettes and remove the meter 
339.19 	and unapplied stamps from the distributor's premises.
339.20 	 If, within any 12-month period, the commissioner has issued three written warnings 
339.21 	to any distributor, even if the distributor has complied within ten days, the commissioner 
339.22 	shall notify the distributor of the commissioner's intent to revoke the distributor's 
339.23 	license for a continuing course of conduct contrary to this chapter.  For purposes of this 
339.24 	paragraph, a written warning that was ultimately resolved by removal of the warning by 
339.25 	the commissioner is not deemed to be a warning.  The commissioner must notify the 
339.26 	distributor of the date and time of a hearing pursuant to chapter 14 at least 20 days before 
339.27 	the hearing is held.  The hearing must provide an opportunity for the distributor to show 
339.28 	cause why the license should not be revoked.  If the commissioner revokes a distributor's 
339.29 	license, the commissioner shall not issue a new license to that distributor for 180 days.

339.30 	EFFECTIVE DATE. This section is effective the day following final enactment.

339.31 	 Sec. 17. Minnesota Statutes 2004, section 473.843, subdivision 5, is amended to read:
339.32 		 Subd. 5.Penalties; enforcement.  The audit, penalty, and enforcement provisions 
339.33 	applicable to corporate franchise taxes imposed under chapter 290 apply to the fees 
339.34 	imposed under this section.  The commissioner of revenue shall administer the provisions.

340.1 	EFFECTIVE DATE. This section is effective the day following final enactment.