1.1                          A bill for an act 
  1.2             relating to the operation of state government; 
  1.3             modifying parental contributions; modifying several 
  1.4             MFIP provisions; modifying medical assistance estate 
  1.5             recovery provisions; eliminating recoveries for 
  1.6             alternative care costs; removing liens against life 
  1.7             estates and joint tenant interests; changing certain 
  1.8             income tax provisions; appropriating money; amending 
  1.9             Minnesota Statutes 2004, sections 252.27, subdivision 
  1.10            2a; 256B.15, subdivisions 1, 1a, 1d, 1e, 1f, 1h, 1i, 
  1.11            1j, 2, 3, 4; 256J.21, subdivision 2; 256J.95, 
  1.12            subdivision 9; 290.01, subdivisions 6b, 19d; 290.17, 
  1.13            subdivisions 2, 4; 514.981, subdivision 6; 524.3-805; 
  1.14            repealing Minnesota Statutes 2004, sections 256B.15, 
  1.15            subdivision 1g; 256J.37, subdivisions 3a, 3b; 514.991; 
  1.16            514.992; 514.993; 514.994; 514.995. 
  1.17  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.18                             ARTICLE 1
  1.19                           HUMAN SERVICES
  1.20     Section 1.  Minnesota Statutes 2004, section 252.27, 
  1.21  subdivision 2a, is amended to read: 
  1.22     Subd. 2a.  [CONTRIBUTION AMOUNT.] (a) The natural or 
  1.23  adoptive parents of a minor child, including a child determined 
  1.24  eligible for medical assistance without consideration of 
  1.25  parental income, must contribute to the cost of services used by 
  1.26  making monthly payments on a sliding scale based on income, 
  1.27  unless the child is married or has been married, parental rights 
  1.28  have been terminated, or the child's adoption is subsidized 
  1.29  according to section 259.67 or through title IV-E of the Social 
  1.30  Security Act. 
  1.31     (b) For households with adjusted gross income equal to or 
  2.1   greater than 100 percent of federal poverty guidelines, the 
  2.2   parental contribution shall be computed by applying the 
  2.3   following schedule of rates to the adjusted gross income of the 
  2.4   natural or adoptive parents: 
  2.5      (1) if the adjusted gross income is equal to or greater 
  2.6   than 100 percent of federal poverty guidelines and less than 175 
  2.7   percent of federal poverty guidelines, the parental contribution 
  2.8   is $4 per month; 
  2.9      (2) if the adjusted gross income is equal to or greater 
  2.10  than 175 percent of federal poverty guidelines and less than or 
  2.11  equal to 375 575 percent of federal poverty guidelines, the 
  2.12  parental contribution shall be determined using a sliding fee 
  2.13  scale established by the commissioner of human services which 
  2.14  begins at one percent of adjusted gross income at 175 percent of 
  2.15  federal poverty guidelines and increases to 7.5 percent of 
  2.16  adjusted gross income for those with adjusted gross income up to 
  2.17  375 575 percent of federal poverty guidelines; 
  2.18     (3) if the adjusted gross income is greater than 375 575 
  2.19  percent of federal poverty guidelines and less than 675 percent 
  2.20  of federal poverty guidelines, the parental contribution shall 
  2.21  be 7.5 percent of adjusted gross income; 
  2.22     (4) if the adjusted gross income is equal to or greater 
  2.23  than 675 percent of federal poverty guidelines and less than 975 
  2.24  percent of federal poverty guidelines, the parental contribution 
  2.25  shall be ten percent of adjusted gross income; and 
  2.26     (5) if the adjusted gross income is equal to or greater 
  2.27  than 975 percent of federal poverty guidelines, the parental 
  2.28  contribution shall be 12.5 percent of adjusted gross income. 
  2.29     If the child lives with the parent, the annual adjusted 
  2.30  gross income is reduced by $2,400 $5,000 prior to calculating 
  2.31  the parental contribution.  If the child resides in an 
  2.32  institution specified in section 256B.35, the parent is 
  2.33  responsible for the personal needs allowance specified under 
  2.34  that section in addition to the parental contribution determined 
  2.35  under this section.  The parental contribution is reduced by any 
  2.36  amount required to be paid directly to the child pursuant to a 
  3.1   court order, but only if actually paid. 
  3.2      (c) The household size to be used in determining the amount 
  3.3   of contribution under paragraph (b) includes natural and 
  3.4   adoptive parents and their dependents, including the child 
  3.5   receiving services.  Adjustments in the contribution amount due 
  3.6   to annual changes in the federal poverty guidelines shall be 
  3.7   implemented on the first day of July following publication of 
  3.8   the changes. 
  3.9      (d) For purposes of paragraph (b), "income" means the 
  3.10  adjusted gross income of the natural or adoptive parents 
  3.11  determined according to the previous year's federal tax form, 
  3.12  except, effective retroactive to July 1, 2003, taxable capital 
  3.13  gains to the extent the funds have been used to purchase a 
  3.14  home and funds from early withdrawn qualified retirement 
  3.15  accounts under the Internal Revenue Code shall not be counted as 
  3.16  income. 
  3.17     (e) The contribution shall be explained in writing to the 
  3.18  parents at the time eligibility for services is being 
  3.19  determined.  The contribution shall be made on a monthly basis 
  3.20  effective with the first month in which the child receives 
  3.21  services.  Annually upon redetermination or at termination of 
  3.22  eligibility, if the contribution exceeded the cost of services 
  3.23  provided, the local agency or the state shall reimburse that 
  3.24  excess amount to the parents, either by direct reimbursement if 
  3.25  the parent is no longer required to pay a contribution, or by a 
  3.26  reduction in or waiver of parental fees until the excess amount 
  3.27  is exhausted. 
  3.28     (f) The monthly contribution amount must be reviewed at 
  3.29  least every 12 months; when there is a change in household size; 
  3.30  and when there is a loss of or gain in income from one month to 
  3.31  another in excess of ten percent.  The local agency shall mail a 
  3.32  written notice 30 days in advance of the effective date of a 
  3.33  change in the contribution amount.  A decrease in the 
  3.34  contribution amount is effective in the month that the parent 
  3.35  verifies a reduction in income or change in household size. 
  3.36     (g) Parents of a minor child who do not live with each 
  4.1   other shall each pay the contribution required under paragraph 
  4.2   (a).  An amount equal to the annual, except that a court-ordered 
  4.3   child support payment actually paid on behalf of the child 
  4.4   receiving services shall be deducted from the adjusted gross 
  4.5   income contribution of the parent making the payment prior to 
  4.6   calculating the parental contribution under paragraph (b). 
  4.7      (h) The contribution under paragraph (b) shall be increased 
  4.8   by an additional five percent if the local agency determines 
  4.9   that insurance coverage is available but not obtained for the 
  4.10  child.  For purposes of this section, "available" means the 
  4.11  insurance is a benefit of employment for a family member at an 
  4.12  annual cost of no more than five percent of the family's annual 
  4.13  income.  For purposes of this section, "insurance" means health 
  4.14  and accident insurance coverage, enrollment in a nonprofit 
  4.15  health service plan, health maintenance organization, 
  4.16  self-insured plan, or preferred provider organization. 
  4.17     Parents who have more than one child receiving services 
  4.18  shall not be required to pay more than the amount for the child 
  4.19  with the highest expenditures.  There shall be no resource 
  4.20  contribution from the parents.  The parent shall not be required 
  4.21  to pay a contribution in excess of the cost of the services 
  4.22  provided to the child, not counting payments made to school 
  4.23  districts for education-related services.  Notice of an increase 
  4.24  in fee payment must be given at least 30 days before the 
  4.25  increased fee is due.  
  4.26     (i) The contribution under paragraph (b) shall be reduced 
  4.27  by $300 per fiscal year if, in the 12 months prior to July 1: 
  4.28     (1) the parent applied for insurance for the child; 
  4.29     (2) the insurer denied insurance; 
  4.30     (3) the parents submitted a complaint or appeal, in writing 
  4.31  to the insurer, submitted a complaint or appeal, in writing, to 
  4.32  the commissioner of health or the commissioner of commerce, or 
  4.33  litigated the complaint or appeal; and 
  4.34     (4) as a result of the dispute, the insurer reversed its 
  4.35  decision and granted insurance. 
  4.36     For purposes of this section, "insurance" has the meaning 
  5.1   given in paragraph (h). 
  5.2      A parent who has requested a reduction in the contribution 
  5.3   amount under this paragraph shall submit proof in the form and 
  5.4   manner prescribed by the commissioner or county agency, 
  5.5   including, but not limited to, the insurer's denial of 
  5.6   insurance, the written letter or complaint of the parents, court 
  5.7   documents, and the written response of the insurer approving 
  5.8   insurance.  The determinations of the commissioner or county 
  5.9   agency under this paragraph are not rules subject to chapter 14. 
  5.10     Sec. 2.  Minnesota Statutes 2004, section 256J.21, 
  5.11  subdivision 2, is amended to read: 
  5.12     Subd. 2.  [INCOME EXCLUSIONS.] The following must be 
  5.13  excluded in determining a family's available income: 
  5.14     (1) payments for basic care, difficulty of care, and 
  5.15  clothing allowances received for providing family foster care to 
  5.16  children or adults under Minnesota Rules, parts 9545.0010 to 
  5.17  9545.0260 and 9555.5050 to 9555.6265, and payments received and 
  5.18  used for care and maintenance of a third-party beneficiary who 
  5.19  is not a household member; 
  5.20     (2) reimbursements for employment training received through 
  5.21  the Workforce Investment Act of 1998, United States Code, title 
  5.22  20, chapter 73, section 9201; 
  5.23     (3) reimbursement for out-of-pocket expenses incurred while 
  5.24  performing volunteer services, jury duty, employment, or 
  5.25  informal carpooling arrangements directly related to employment; 
  5.26     (4) all educational assistance, except the county agency 
  5.27  must count graduate student teaching assistantships, 
  5.28  fellowships, and other similar paid work as earned income and, 
  5.29  after allowing deductions for any unmet and necessary 
  5.30  educational expenses, shall count scholarships or grants awarded 
  5.31  to graduate students that do not require teaching or research as 
  5.32  unearned income; 
  5.33     (5) loans, regardless of purpose, from public or private 
  5.34  lending institutions, governmental lending institutions, or 
  5.35  governmental agencies; 
  5.36     (6) loans from private individuals, regardless of purpose, 
  6.1   provided an applicant or participant documents that the lender 
  6.2   expects repayment; 
  6.3      (7)(i) state income tax refunds; and 
  6.4      (ii) federal income tax refunds; 
  6.5      (8)(i) federal earned income credits; 
  6.6      (ii) Minnesota working family credits; 
  6.7      (iii) state homeowners and renters credits under chapter 
  6.8   290A; and 
  6.9      (iv) federal or state tax rebates; 
  6.10     (9) funds received for reimbursement, replacement, or 
  6.11  rebate of personal or real property when these payments are made 
  6.12  by public agencies, awarded by a court, solicited through public 
  6.13  appeal, or made as a grant by a federal agency, state or local 
  6.14  government, or disaster assistance organizations, subsequent to 
  6.15  a presidential declaration of disaster; 
  6.16     (10) the portion of an insurance settlement that is used to 
  6.17  pay medical, funeral, and burial expenses, or to repair or 
  6.18  replace insured property; 
  6.19     (11) reimbursements for medical expenses that cannot be 
  6.20  paid by medical assistance; 
  6.21     (12) payments by a vocational rehabilitation program 
  6.22  administered by the state under chapter 268A, except those 
  6.23  payments that are for current living expenses; 
  6.24     (13) in-kind income, including any payments directly made 
  6.25  by a third party to a provider of goods and services; 
  6.26     (14) assistance payments to correct underpayments, but only 
  6.27  for the month in which the payment is received; 
  6.28     (15) payments for short-term emergency needs under section 
  6.29  256J.626, subdivision 2; 
  6.30     (16) funeral and cemetery payments as provided by section 
  6.31  256.935; 
  6.32     (17) nonrecurring cash gifts of $30 or less, not exceeding 
  6.33  $30 per participant in a calendar month; 
  6.34     (18) any form of energy assistance payment made through 
  6.35  Public Law 97-35, Low-Income Home Energy Assistance Act of 1981, 
  6.36  payments made directly to energy providers by other public and 
  7.1   private agencies, and any form of credit or rebate payment 
  7.2   issued by energy providers; 
  7.3      (19) Supplemental Security Income (SSI), including 
  7.4   retroactive SSI payments and other income of an SSI recipient, 
  7.5   except as described in section 256J.37, subdivision 3b; 
  7.6      (20) Minnesota supplemental aid, including retroactive 
  7.7   payments; 
  7.8      (21) proceeds from the sale of real or personal property; 
  7.9      (22) state adoption assistance payments under section 
  7.10  259.67, and up to an equal amount of county adoption assistance 
  7.11  payments; 
  7.12     (23) state-funded family subsidy program payments made 
  7.13  under section 252.32 to help families care for children with 
  7.14  mental retardation or related conditions, consumer support grant 
  7.15  funds under section 256.476, and resources and services for a 
  7.16  disabled household member under one of the home and 
  7.17  community-based waiver services programs under chapter 256B; 
  7.18     (24) interest payments and dividends from property that is 
  7.19  not excluded from and that does not exceed the asset limit; 
  7.20     (25) rent rebates; 
  7.21     (26) income earned by a minor caregiver, minor child 
  7.22  through age 6, or a minor child who is at least a half-time 
  7.23  student in an approved elementary or secondary education 
  7.24  program; 
  7.25     (27) income earned by a caregiver under age 20 who is at 
  7.26  least a half-time student in an approved elementary or secondary 
  7.27  education program; 
  7.28     (28) MFIP child care payments under section 119B.05; 
  7.29     (29) all other payments made through MFIP to support a 
  7.30  caregiver's pursuit of greater economic stability; 
  7.31     (30) income a participant receives related to shared living 
  7.32  expenses; 
  7.33     (31) reverse mortgages; 
  7.34     (32) benefits provided by the Child Nutrition Act of 1966, 
  7.35  United States Code, title 42, chapter 13A, sections 1771 to 
  7.36  1790; 
  8.1      (33) benefits provided by the women, infants, and children 
  8.2   (WIC) nutrition program, United States Code, title 42, chapter 
  8.3   13A, section 1786; 
  8.4      (34) benefits from the National School Lunch Act, United 
  8.5   States Code, title 42, chapter 13, sections 1751 to 1769e; 
  8.6      (35) relocation assistance for displaced persons under the 
  8.7   Uniform Relocation Assistance and Real Property Acquisition 
  8.8   Policies Act of 1970, United States Code, title 42, chapter 61, 
  8.9   subchapter II, section 4636, or the National Housing Act, United 
  8.10  States Code, title 12, chapter 13, sections 1701 to 1750jj; 
  8.11     (36) benefits from the Trade Act of 1974, United States 
  8.12  Code, title 19, chapter 12, part 2, sections 2271 to 2322; 
  8.13     (37) war reparations payments to Japanese Americans and 
  8.14  Aleuts under United States Code, title 50, sections 1989 to 
  8.15  1989d; 
  8.16     (38) payments to veterans or their dependents as a result 
  8.17  of legal settlements regarding Agent Orange or other chemical 
  8.18  exposure under Public Law 101-239, section 10405, paragraph 
  8.19  (a)(2)(E); 
  8.20     (39) income that is otherwise specifically excluded from 
  8.21  MFIP consideration in federal law, state law, or federal 
  8.22  regulation; 
  8.23     (40) security and utility deposit refunds; 
  8.24     (41) American Indian tribal land settlements excluded under 
  8.25  Public Laws 98-123, 98-124, and 99-377 to the Mississippi Band 
  8.26  Chippewa Indians of White Earth, Leech Lake, and Mille Lacs 
  8.27  reservations and payments to members of the White Earth Band, 
  8.28  under United States Code, title 25, chapter 9, section 331, and 
  8.29  chapter 16, section 1407; 
  8.30     (42) all income of the minor parent's parents and 
  8.31  stepparents when determining the grant for the minor parent in 
  8.32  households that include a minor parent living with parents or 
  8.33  stepparents on MFIP with other children; 
  8.34     (43) income of the minor parent's parents and stepparents 
  8.35  equal to 200 percent of the federal poverty guideline for a 
  8.36  family size not including the minor parent and the minor 
  9.1   parent's child in households that include a minor parent living 
  9.2   with parents or stepparents not on MFIP when determining the 
  9.3   grant for the minor parent.  The remainder of income is deemed 
  9.4   as specified in section 256J.37, subdivision 1b; 
  9.5      (44) payments made to children eligible for relative 
  9.6   custody assistance under section 257.85; 
  9.7      (45) vendor payments for goods and services made on behalf 
  9.8   of a client unless the client has the option of receiving the 
  9.9   payment in cash; and 
  9.10     (46) the principal portion of a contract for deed payment. 
  9.11     Sec. 3.  Minnesota Statutes 2004, section 256J.95, 
  9.12  subdivision 9, is amended to read: 
  9.13     Subd. 9.  [PROPERTY AND INCOME LIMITATIONS.] The asset 
  9.14  limits and exclusions in section 256J.20 apply to applicants and 
  9.15  recipients of DWP.  All payments, unless excluded in section 
  9.16  256J.21, must be counted as income to determine eligibility for 
  9.17  the diversionary work program.  The county shall treat income as 
  9.18  outlined in section 256J.37, except for subdivision 3a.  The 
  9.19  initial income test and the disregards in section 256J.21, 
  9.20  subdivision 3, shall be followed for determining eligibility for 
  9.21  the diversionary work program. 
  9.22     Sec. 4.  [REPEALER.] 
  9.23     Minnesota Statutes 2004, section 256J.37, subdivisions 3a 
  9.24  and 3b, are repealed effective July 1, 2005. 
  9.25                             ARTICLE 2
  9.26                      MEDICAL ASSISTANCE LIENS
  9.27     Section 1.  Minnesota Statutes 2004, section 256B.15, 
  9.28  subdivision 1, is amended to read: 
  9.29     Subdivision 1.  [POLICY, APPLICABILITY, PURPOSE, AND 
  9.30  CONSTRUCTION; DEFINITION.] (a) It is the policy of this state 
  9.31  that individuals or couples, either or both of whom participate 
  9.32  in the medical assistance program, use their own assets to pay 
  9.33  their share of the total cost of their care during or after 
  9.34  their enrollment in the program according to applicable federal 
  9.35  law and the laws of this state.  The following provisions apply: 
  9.36     (1) subdivisions 1c to 1k shall not apply to claims arising 
 10.1   under this section which are presented under section 525.313; 
 10.2      (2) the provisions of subdivisions 1c to 1k expanding the 
 10.3   interests included in an estate for purposes of recovery under 
 10.4   this section give effect to the provisions of United States 
 10.5   Code, title 42, section 1396p, governing recoveries, but do not 
 10.6   give rise to any express or implied liens in favor of any other 
 10.7   parties not named in these provisions; and 
 10.8      (3) the continuation of a recipient's life estate or joint 
 10.9   tenancy interest in real property after the recipient's death 
 10.10  for the purpose of recovering medical assistance under this 
 10.11  section modifies common law principles holding that these 
 10.12  interests terminate on the death of the holder; 
 10.13     (4) (2) all laws, rules, and regulations governing or 
 10.14  involved with a recovery of medical assistance shall must be 
 10.15  liberally construed to accomplish their intended purposes;. 
 10.16     (5) a deceased recipient's life estate and joint tenancy 
 10.17  interests continued under this section shall be owned by the 
 10.18  remaindermen or surviving joint tenants as their interests may 
 10.19  appear on the date of the recipient's death.  They shall not be 
 10.20  merged into the remainder interest or the interests of the 
 10.21  surviving joint tenants by reason of ownership.  They shall be 
 10.22  subject to the provisions of this section.  Any conveyance, 
 10.23  transfer, sale, assignment, or encumbrance by a remainderman, a 
 10.24  surviving joint tenant, or their heirs, successors, and assigns 
 10.25  shall be deemed to include all of their interest in the deceased 
 10.26  recipient's life estate or joint tenancy interest continued 
 10.27  under this section; and 
 10.28     (6) the provisions of subdivisions 1c to 1k continuing a 
 10.29  recipient's joint tenancy interests in real property after the 
 10.30  recipient's death do not apply to a homestead owned of record, 
 10.31  on the date the recipient dies, by the recipient and the 
 10.32  recipient's spouse as joint tenants with a right of 
 10.33  survivorship.  Homestead means the real property occupied by the 
 10.34  surviving joint tenant spouse as their sole residence on the 
 10.35  date the recipient dies and classified and taxed to the 
 10.36  recipient and surviving joint tenant spouse as homestead 
 11.1   property for property tax purposes in the calendar year in which 
 11.2   the recipient dies.  For purposes of this exemption, real 
 11.3   property the recipient and their surviving joint tenant spouse 
 11.4   purchase solely with the proceeds from the sale of their prior 
 11.5   homestead, own of record as joint tenants, and qualify as 
 11.6   homestead property under section 273.124 in the calendar year in 
 11.7   which the recipient dies and prior to the recipient's death 
 11.8   shall be deemed to be real property classified and taxed to the 
 11.9   recipient and their surviving joint tenant spouse as homestead 
 11.10  property in the calendar year in which the recipient dies.  The 
 11.11  surviving spouse, or any person with personal knowledge of the 
 11.12  facts, may provide an affidavit describing the homestead 
 11.13  property affected by this clause and stating facts showing 
 11.14  compliance with this clause.  The affidavit shall be prima facie 
 11.15  evidence of the facts it states. 
 11.16     (b) For purposes of this section, "medical assistance" 
 11.17  includes the medical assistance program under this chapter and 
 11.18  the general assistance medical care program under chapter 256D 
 11.19  and but does not include the alternative care program for 
 11.20  nonmedical assistance recipients under section 256B.0913. 
 11.21     <b>[EFFECTIVE DATE.]</b> The amendments in this section relating 
 11.22  to the alternative care program are effective retroactively from 
 11.23  July 1, 2003, and apply to the estates of decedents who die on 
 11.24  or after that date.  The remaining amendments in this section 
 11.25  are effective retroactively from August 1, 2003, and apply to 
 11.26  the estates of decedents who die on or after that date. 
 11.27     Sec. 2.  Minnesota Statutes 2004, section 256B.15, 
 11.28  subdivision 1a, is amended to read: 
 11.29     Subd. 1a.  [ESTATES SUBJECT TO CLAIMS.] If a person 
 11.30  receives any medical assistance hereunder, on the person's 
 11.31  death, if single, or on the death of the survivor of a married 
 11.32  couple, either or both of whom received medical assistance, or 
 11.33  as otherwise provided for in this section, the total amount paid 
 11.34  for medical assistance rendered for the person and spouse shall 
 11.35  be filed as a claim against the estate of the person or the 
 11.36  estate of the surviving spouse in the court having jurisdiction 
 12.1   to probate the estate or to issue a decree of descent according 
 12.2   to sections 525.31 to 525.313.  
 12.3      A claim shall be filed if medical assistance was rendered 
 12.4   for either or both persons under one of the following 
 12.5   circumstances: 
 12.6      (a) the person was over 55 years of age, and received 
 12.7   services under this chapter, excluding alternative care; 
 12.8      (b) the person resided in a medical institution for six 
 12.9   months or longer, received services under this chapter, 
 12.10  excluding alternative care, and, at the time of 
 12.11  institutionalization or application for medical assistance, 
 12.12  whichever is later, the person could not have reasonably been 
 12.13  expected to be discharged and returned home, as certified in 
 12.14  writing by the person's treating physician.  For purposes of 
 12.15  this section only, a "medical institution" means a skilled 
 12.16  nursing facility, intermediate care facility, intermediate care 
 12.17  facility for persons with mental retardation, nursing facility, 
 12.18  or inpatient hospital; or 
 12.19     (c) the person received general assistance medical care 
 12.20  services under chapter 256D.  
 12.21     The claim shall be considered an expense of the last 
 12.22  illness of the decedent for the purpose of section 524.3-805.  
 12.23  Any statute of limitations that purports to limit any county 
 12.24  agency or the state agency, or both, to recover for medical 
 12.25  assistance granted hereunder shall not apply to any claim made 
 12.26  hereunder for reimbursement for any medical assistance granted 
 12.27  hereunder.  Notice of the claim shall be given to all heirs and 
 12.28  devisees of the decedent whose identity can be ascertained with 
 12.29  reasonable diligence.  The notice must include procedures and 
 12.30  instructions for making an application for a hardship waiver 
 12.31  under subdivision 5; time frames for submitting an application 
 12.32  and determination; and information regarding appeal rights and 
 12.33  procedures.  Counties are entitled to one-half of the nonfederal 
 12.34  share of medical assistance collections from estates that are 
 12.35  directly attributable to county effort.  Counties are entitled 
 12.36  to ten percent of the collections for alternative care directly 
 13.1   attributable to county effort. 
 13.2      <b>[EFFECTIVE DATE.]</b> The amendments in this section relating 
 13.3   to the alternative care program are effective retroactively from 
 13.4   July 1, 2003, and apply to the estates of decedents who die on 
 13.5   or after that date.  The remaining amendments in this section 
 13.6   are effective retroactively from August 1, 2003, and apply to 
 13.7   the estates of decedents who die on or after that date. 
 13.8      Sec. 3.  Minnesota Statutes 2004, section 256B.15, 
 13.9   subdivision 1d, is amended to read: 
 13.10     Subd. 1d.  [EFFECT OF NOTICE.] From the time it takes 
 13.11  effect, the notice shall be notice to remaindermen, joint 
 13.12  tenants, or to anyone else owning or acquiring an interest in or 
 13.13  encumbrance against the property described in the notice that 
 13.14  the medical assistance recipient's life estate, joint tenancy, 
 13.15  or other interests in the real estate described in the notice: 
 13.16     (1) shall, in the case of life estate and joint tenancy 
 13.17  interests, continue to exist for purposes of this section, and 
 13.18  be subject to liens and claims as provided in this section; 
 13.19     (2) shall be subject to a lien in favor of the claimant 
 13.20  effective upon the death of the recipient and dealt with as 
 13.21  provided in this section; 
 13.22     (3) (2) may be included in the recipient's estate, as 
 13.23  defined in this section; and 
 13.24     (4) (3) may be subject to administration and all other 
 13.25  provisions of chapter 524 and may be sold, assigned, 
 13.26  transferred, or encumbered free and clear of their interest or 
 13.27  encumbrance to satisfy claims under this section. 
 13.28     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 13.29  from August 1, 2003. 
 13.30     Sec. 4.  Minnesota Statutes 2004, section 256B.15, 
 13.31  subdivision 1e, is amended to read: 
 13.32     Subd. 1e.  [FULL OR PARTIAL RELEASE OF NOTICE.] (a) The 
 13.33  claimant may fully or partially release the notice and the lien 
 13.34  arising out of the notice of record in the real estate records 
 13.35  where the notice is filed or recorded at any time.  The claimant 
 13.36  may give a full or partial release to extinguish any life 
 14.1   estates or joint tenancy interests which are or may be continued 
 14.2   under this section or whose existence or nonexistence may create 
 14.3   a cloud on the title to real property at any time whether or not 
 14.4   a notice has been filed.  The recorder or registrar of titles 
 14.5   shall accept the release for recording or filing.  If the 
 14.6   release is a partial release, it must include a legal 
 14.7   description of the property being released. 
 14.8      (b) At any time, the claimant may, at the claimant's 
 14.9   discretion, wholly or partially release, subordinate, modify, or 
 14.10  amend the recorded notice and the lien arising out of the notice.
 14.11     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 14.12  from August 1, 2003. 
 14.13     Sec. 5.  Minnesota Statutes 2004, section 256B.15, 
 14.14  subdivision 1f, is amended to read: 
 14.15     Subd. 1f.  [AGENCY LIEN.] (a) The notice shall constitute a 
 14.16  lien in favor of the Department of Human Services against the 
 14.17  recipient's interests in the real estate it describes for a 
 14.18  period of 20 years from the date of filing or the date of the 
 14.19  recipient's death, whichever is later.  Notwithstanding any law 
 14.20  or rule to the contrary, a recipient's life estate and joint 
 14.21  tenancy interests shall not end upon the recipient's death but 
 14.22  shall continue according to subdivisions 1h, 1i, and 1j.  The 
 14.23  amount of the lien shall be equal to the total amount of the 
 14.24  claims that could be presented in the recipient's estate under 
 14.25  this section. 
 14.26     (b) If no estate has been opened for the deceased 
 14.27  recipient, any holder of an interest in the property may apply 
 14.28  to the lien holder for a statement of the amount of the lien or 
 14.29  for a full or partial release of the lien.  The application 
 14.30  shall include the applicant's name, current mailing address, 
 14.31  current home and work telephone numbers, and a description of 
 14.32  their interest in the property, a legal description of the 
 14.33  recipient's interest in the property, and the deceased 
 14.34  recipient's name, date of birth, and Social Security number.  
 14.35  The lien holder shall send the applicant by certified mail, 
 14.36  return receipt requested, a written statement showing the amount 
 15.1   of the lien, whether the lien holder is willing to release the 
 15.2   lien and under what conditions, and inform them of the right to 
 15.3   a hearing under section 256.045.  The lien holder shall have the 
 15.4   discretion to compromise and settle the lien upon any terms and 
 15.5   conditions the lien holder deems appropriate. 
 15.6      (c) Any holder of an interest in property subject to the 
 15.7   lien has a right to request a hearing under section 256.045 to 
 15.8   determine the validity, extent, or amount of the lien.  The 
 15.9   request must be in writing, and must include the names, current 
 15.10  addresses, and home and business telephone numbers for all other 
 15.11  parties holding an interest in the property.  A request for a 
 15.12  hearing by any holder of an interest in the property shall be 
 15.13  deemed to be a request for a hearing by all parties owning 
 15.14  interests in the property.  Notice of the hearing shall be given 
 15.15  to the lien holder, the party filing the appeal, and all of the 
 15.16  other holders of interests in the property at the addresses 
 15.17  listed in the appeal by certified mail, return receipt 
 15.18  requested, or by ordinary mail.  Any owner of an interest in the 
 15.19  property to whom notice of the hearing is mailed shall be deemed 
 15.20  to have waived any and all claims or defenses in respect to the 
 15.21  lien unless they appear and assert any claims or defenses at the 
 15.22  hearing. 
 15.23     (d) If the claim the lien secures could be filed under 
 15.24  subdivision 1h, the lien holder may collect, compromise, settle, 
 15.25  or release the lien upon any terms and conditions it deems 
 15.26  appropriate.  If the claim the lien secures could be filed under 
 15.27  subdivision 1i or 1j, the lien may be adjusted or enforced to 
 15.28  the same extent had it been filed under subdivisions 1i and 1j, 
 15.29  and the provisions of subdivisions 1i, clause (f) (e), and lj, 
 15.30  clause (d), shall apply to voluntary payment, settlement, or 
 15.31  satisfaction of the lien. 
 15.32     (e) If no probate proceedings have been commenced for the 
 15.33  recipient as of the date the lien holder executes a release of 
 15.34  the lien on a recipient's life estate or joint tenancy interest, 
 15.35  created for purposes of this section, the release shall 
 15.36  terminate the life estate or joint tenancy interest created 
 16.1   under this section as of the date it is recorded or filed to the 
 16.2   extent of the release.  If the claimant executes a release for 
 16.3   purposes of extinguishing a life estate or a joint tenancy 
 16.4   interest created under this section to remove a cloud on title 
 16.5   to real property, the release shall have the effect of 
 16.6   extinguishing any life estate or joint tenancy interests in the 
 16.7   property it describes which may have been continued by reason of 
 16.8   this section retroactive to the date of death of the deceased 
 16.9   life tenant or joint tenant except as provided for in section 
 16.10  514.981, subdivision 6. 
 16.11     (f) If the deceased recipient's estate is probated, a claim 
 16.12  shall be filed under this section.  The amount of the lien shall 
 16.13  be limited to the amount of the claim as finally allowed.  If 
 16.14  the claim the lien secures is filed under subdivision 1h, the 
 16.15  lien may be released in full after any allowance of the claim 
 16.16  becomes final or according to any agreement to settle and 
 16.17  satisfy the claim.  The release shall release the lien but shall 
 16.18  not extinguish or terminate the interest being released.  If the 
 16.19  claim the lien secures is filed under subdivision 1i or 1j, the 
 16.20  lien shall be released after the lien under subdivision 1i or 1j 
 16.21  is filed or recorded, or settled according to any agreement to 
 16.22  settle and satisfy the claim.  The release shall not extinguish 
 16.23  or terminate the interest being released.  If the claim is 
 16.24  finally disallowed in full, the claimant shall release the 
 16.25  claimant's lien at the claimant's expense. 
 16.26     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 16.27  from August 1, 2003. 
 16.28     Sec. 6.  Minnesota Statutes 2004, section 256B.15, 
 16.29  subdivision 1h, is amended to read: 
 16.30     Subd. 1h.  [ESTATES OF SPECIFIC PERSONS RECEIVING MEDICAL 
 16.31  ASSISTANCE.] (a) For purposes of this section, paragraphs (b) to 
 16.32  (k) and (c) apply if a person received medical assistance for 
 16.33  which a claim may be filed under this section and died single, 
 16.34  or the surviving spouse of the couple and was not survived by 
 16.35  any of the persons described in subdivisions 3 and 4. 
 16.36     (b) For purposes of this section, the person's estate 
 17.1   consists of:  (1) their probate estate; (2) all of the person's 
 17.2   interests or proceeds of those interests in real property the 
 17.3   person owned as a life tenant or as a joint tenant with a right 
 17.4   of survivorship at the time of the person's death; (3) all of 
 17.5   the person's interests or proceeds of those interests in 
 17.6   securities the person owned in beneficiary form as provided 
 17.7   under sections 524.6-301 to 524.6-311 at the time of the 
 17.8   person's death, to the extent they become part of the probate 
 17.9   estate under section 524.6-307; and (4) (3) all of the person's 
 17.10  interests in joint accounts, multiple party accounts, and pay on 
 17.11  death accounts, or the proceeds of those accounts, as provided 
 17.12  under sections 524.6-201 to 524.6-214 at the time of the 
 17.13  person's death to the extent they become part of the probate 
 17.14  estate under section 524.6-207.  Notwithstanding any law or rule 
 17.15  to the contrary, a state or county agency with a claim under 
 17.16  this section shall be a creditor under section 524.6-307. 
 17.17     (c) Notwithstanding any law or rule to the contrary, the 
 17.18  person's life estate or joint tenancy interest in real property 
 17.19  not subject to a medical assistance lien under sections 514.980 
 17.20  to 514.985 on the date of the person's death shall not end upon 
 17.21  the person's death and shall continue as provided in this 
 17.22  subdivision.  The life estate in the person's estate shall be 
 17.23  that portion of the interest in the real property subject to the 
 17.24  life estate that is equal to the life estate percentage factor 
 17.25  for the life estate as listed in the Life Estate Mortality Table 
 17.26  of the health care program's manual for a person who was the age 
 17.27  of the medical assistance recipient on the date of the person's 
 17.28  death.  The joint tenancy interest in real property in the 
 17.29  estate shall be equal to the fractional interest the person 
 17.30  would have owned in the jointly held interest in the property 
 17.31  had they and the other owners held title to the property as 
 17.32  tenants in common on the date the person died. 
 17.33     (d) The court upon its own motion, or upon motion by the 
 17.34  personal representative or any interested party, may enter an 
 17.35  order directing the remaindermen or surviving joint tenants and 
 17.36  their spouses, if any, to sign all documents, take all actions, 
 18.1   and otherwise fully cooperate with the personal representative 
 18.2   and the court to liquidate the decedent's life estate or joint 
 18.3   tenancy interests in the estate and deliver the cash or the 
 18.4   proceeds of those interests to the personal representative and 
 18.5   provide for any legal and equitable sanctions as the court deems 
 18.6   appropriate to enforce and carry out the order, including an 
 18.7   award of reasonable attorney fees. 
 18.8      (e) The personal representative may make, execute, and 
 18.9   deliver any conveyances or other documents necessary to convey 
 18.10  the decedent's life estate or joint tenancy interest in the 
 18.11  estate that are necessary to liquidate and reduce to cash the 
 18.12  decedent's interest or for any other purposes. 
 18.13     (f) Subject to administration, all costs, including 
 18.14  reasonable attorney fees, directly and immediately related to 
 18.15  liquidating the decedent's life estate or joint tenancy interest 
 18.16  in the decedent's estate, shall be paid from the gross proceeds 
 18.17  of the liquidation allocable to the decedent's interest and the 
 18.18  net proceeds shall be turned over to the personal representative 
 18.19  and applied to payment of the claim presented under this section.
 18.20     (g) The personal representative shall bring a motion in the 
 18.21  district court in which the estate is being probated to compel 
 18.22  the remaindermen or surviving joint tenants to account for and 
 18.23  deliver to the personal representative all or any part of the 
 18.24  proceeds of any sale, mortgage, transfer, conveyance, or any 
 18.25  disposition of real property allocable to the decedent's life 
 18.26  estate or joint tenancy interest in the decedent's estate, and 
 18.27  do everything necessary to liquidate and reduce to cash the 
 18.28  decedent's interest and turn the proceeds of the sale or other 
 18.29  disposition over to the personal representative.  The court may 
 18.30  grant any legal or equitable relief including, but not limited 
 18.31  to, ordering a partition of real estate under chapter 558 
 18.32  necessary to make the value of the decedent's life estate or 
 18.33  joint tenancy interest available to the estate for payment of a 
 18.34  claim under this section. 
 18.35     (h) Subject to administration, the personal representative 
 18.36  shall use all of the cash or proceeds of interests to pay an 
 19.1   allowable claim under this section.  The remaindermen or 
 19.2   surviving joint tenants and their spouses, if any, may enter 
 19.3   into a written agreement with the personal representative or the 
 19.4   claimant to settle and satisfy obligations imposed at any time 
 19.5   before or after a claim is filed. 
 19.6      (i) The personal representative may, at their discretion, 
 19.7   provide any or all of the other owners, remaindermen, or 
 19.8   surviving joint tenants with an affidavit terminating the 
 19.9   decedent's estate's interest in real property the decedent owned 
 19.10  as a life tenant or as a joint tenant with others, if the 
 19.11  personal representative determines in good faith that neither 
 19.12  the decedent nor any of the decedent's predeceased spouses 
 19.13  received any medical assistance for which a claim could be filed 
 19.14  under this section, or if the personal representative has filed 
 19.15  an affidavit with the court that the estate has other assets 
 19.16  sufficient to pay a claim, as presented, or if there is a 
 19.17  written agreement under paragraph (h), or if the claim, as 
 19.18  allowed, has been paid in full or to the full extent of the 
 19.19  assets the estate has available to pay it.  The affidavit may be 
 19.20  recorded in the office of the county recorder or filed in the 
 19.21  Office of the Registrar of Titles for the county in which the 
 19.22  real property is located.  Except as provided in section 
 19.23  514.981, subdivision 6, when recorded or filed, the affidavit 
 19.24  shall terminate the decedent's interest in real estate the 
 19.25  decedent owned as a life tenant or a joint tenant with others.  
 19.26  The affidavit shall:  (1) be signed by the personal 
 19.27  representative; (2) identify the decedent and the interest being 
 19.28  terminated; (3) give recording information sufficient to 
 19.29  identify the instrument that created the interest in real 
 19.30  property being terminated; (4) legally describe the affected 
 19.31  real property; (5) state that the personal representative has 
 19.32  determined that neither the decedent nor any of the decedent's 
 19.33  predeceased spouses received any medical assistance for which a 
 19.34  claim could be filed under this section; (6) state that the 
 19.35  decedent's estate has other assets sufficient to pay the claim, 
 19.36  as presented, or that there is a written agreement between the 
 20.1   personal representative and the claimant and the other owners or 
 20.2   remaindermen or other joint tenants to satisfy the obligations 
 20.3   imposed under this subdivision; and (7) state that the affidavit 
 20.4   is being given to terminate the estate's interest under this 
 20.5   subdivision, and any other contents as may be appropriate.  
 20.6   The recorder or registrar of titles shall accept the affidavit 
 20.7   for recording or filing.  The affidavit shall be effective as 
 20.8   provided in this section and shall constitute notice even if it 
 20.9   does not include recording information sufficient to identify 
 20.10  the instrument creating the interest it terminates.  The 
 20.11  affidavit shall be conclusive evidence of the stated facts. 
 20.12     (j) The holder of a lien arising under subdivision 1c shall 
 20.13  release the lien at the holder's expense against an interest 
 20.14  terminated under paragraph (h) to the extent of the termination. 
 20.15     (k) (c) If a lien arising under subdivision 1c is not 
 20.16  released under paragraph (j), prior to closing the estate, the 
 20.17  personal representative shall deed the interest subject to the 
 20.18  lien to the remaindermen or surviving joint tenants as their 
 20.19  interests may appear.  Upon recording or filing, the deed shall 
 20.20  work a merger of the recipient's life estate or joint tenancy 
 20.21  interest, subject to the lien, into the remainder interest or 
 20.22  interest the decedent and others owned jointly heirs or devisees 
 20.23  subject to the lien.  The lien shall attach to and run with the 
 20.24  property to the extent of the decedent's interest at the time of 
 20.25  the decedent's death. 
 20.26     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 20.27  from August 1, 2003. 
 20.28     Sec. 7.  Minnesota Statutes 2004, section 256B.15, 
 20.29  subdivision 1i, is amended to read: 
 20.30     Subd. 1i.  [ESTATES OF PERSONS RECEIVING MEDICAL ASSISTANCE 
 20.31  AND SURVIVED BY OTHERS.] (a) For purposes of this subdivision, 
 20.32  the person's estate consists of the person's probate estate and 
 20.33  all of the person's interests in real property the person owned 
 20.34  as a life tenant or a joint tenant at the time of the person's 
 20.35  death is as defined in subdivision 1h, paragraph (b). 
 20.36     (b) Notwithstanding any law or rule to the contrary, this 
 21.1   subdivision applies if a person received medical assistance for 
 21.2   which a claim could be filed under this section but for the fact 
 21.3   the person was survived by a spouse or by a person listed in 
 21.4   subdivision 3, or if subdivision 4 applies to a claim arising 
 21.5   under this section. 
 21.6      (c) The person's life estate or joint tenancy interests in 
 21.7   real property not subject to a medical assistance lien under 
 21.8   sections 514.980 to 514.985 on the date of the person's death 
 21.9   shall not end upon death and shall continue as provided in this 
 21.10  subdivision.  The life estate in the estate shall be the portion 
 21.11  of the interest in the property subject to the life estate that 
 21.12  is equal to the life estate percentage factor for the life 
 21.13  estate as listed in the Life Estate Mortality Table of the 
 21.14  health care program's manual for a person who was the age of the 
 21.15  medical assistance recipient on the date of the person's death.  
 21.16  The joint tenancy interest in the estate shall be equal to the 
 21.17  fractional interest the medical assistance recipient would have 
 21.18  owned in the jointly held interest in the property had they and 
 21.19  the other owners held title to the property as tenants in common 
 21.20  on the date the medical assistance recipient died. 
 21.21     (d) The county agency shall file a claim in the estate 
 21.22  under this section on behalf of the claimant who shall be the 
 21.23  commissioner of human services, notwithstanding that the 
 21.24  decedent is survived by a spouse or a person listed in 
 21.25  subdivision 3.  The claim, as allowed, shall not be paid by the 
 21.26  estate and shall be disposed of as provided in this paragraph.  
 21.27  The personal representative or the court shall make, execute, 
 21.28  and deliver a lien in favor of the claimant on the decedent's 
 21.29  interest in real property in the estate in the amount of the 
 21.30  allowed claim on forms provided by the commissioner to the 
 21.31  county agency filing the lien.  The lien shall bear interest as 
 21.32  provided under section 524.3-806, shall attach to the property 
 21.33  it describes upon filing or recording, and shall remain a lien 
 21.34  on the real property it describes for a period of 20 years from 
 21.35  the date it is filed or recorded.  The lien shall be a 
 21.36  disposition of the claim sufficient to permit the estate to 
 22.1   close. 
 22.2      (e) (d) The state or county agency shall file or record the 
 22.3   lien in the office of the county recorder or registrar of titles 
 22.4   for each county in which any of the real property is located.  
 22.5   The recorder or registrar of titles shall accept the lien for 
 22.6   filing or recording.  All recording or filing fees shall be paid 
 22.7   by the Department of Human Services.  The recorder or registrar 
 22.8   of titles shall mail the recorded lien to the Department of 
 22.9   Human Services.  The lien need not be attested, certified, or 
 22.10  acknowledged as a condition of recording or filing.  Upon 
 22.11  recording or filing of a lien against a life estate or a joint 
 22.12  tenancy interest, the interest subject to the lien shall merge 
 22.13  into the remainder interest or the interest the recipient and 
 22.14  others owned jointly.  The lien shall attach to and run with the 
 22.15  property to the extent of the decedent's interest in the 
 22.16  property at the time of the decedent's death as determined under 
 22.17  this section.  
 22.18     (f) (e) The department shall make no adjustment or recovery 
 22.19  under the lien until after the decedent's spouse, if any, has 
 22.20  died, and only at a time when the decedent has no surviving 
 22.21  child described in subdivision 3.  The estate, any owner of an 
 22.22  interest in the property which is or may be subject to the lien, 
 22.23  or any other interested party, may voluntarily pay off, settle, 
 22.24  or otherwise satisfy the claim secured or to be secured by the 
 22.25  lien at any time before or after the lien is filed or recorded.  
 22.26  Such payoffs, settlements, and satisfactions shall be deemed to 
 22.27  be voluntary repayments of past medical assistance payments for 
 22.28  the benefit of the deceased recipient, and neither the process 
 22.29  of settling the claim, the payment of the claim, or the 
 22.30  acceptance of a payment shall constitute an adjustment or 
 22.31  recovery that is prohibited under this subdivision. 
 22.32     (g) (f) The lien under this subdivision may be enforced or 
 22.33  foreclosed in the manner provided by law for the enforcement of 
 22.34  judgment liens against real estate or by a foreclosure by action 
 22.35  under chapter 581.  When the lien is paid, satisfied, or 
 22.36  otherwise discharged, the state or county agency shall prepare 
 23.1   and file a release of lien at its own expense.  No action to 
 23.2   foreclose the lien shall be commenced unless the lien holder has 
 23.3   first given 30 days' prior written notice to pay the lien to the 
 23.4   owners and parties in possession of the property subject to the 
 23.5   lien.  The notice shall:  (1) include the name, address, and 
 23.6   telephone number of the lien holder; (2) describe the lien; (3) 
 23.7   give the amount of the lien; (4) inform the owner or party in 
 23.8   possession that payment of the lien in full must be made to the 
 23.9   lien holder within 30 days after service of the notice or the 
 23.10  lien holder may begin proceedings to foreclose the lien; and (5) 
 23.11  be served by personal service, certified mail, return receipt 
 23.12  requested, ordinary first class mail, or by publishing it once 
 23.13  in a newspaper of general circulation in the county in which any 
 23.14  part of the property is located.  Service of the notice shall be 
 23.15  complete upon mailing or publication. 
 23.16     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 23.17  from August 1, 2003. 
 23.18     Sec. 8.  Minnesota Statutes 2004, section 256B.15, 
 23.19  subdivision 1j, is amended to read: 
 23.20     Subd. 1j.  [CLAIMS IN ESTATES OF DECEDENTS SURVIVED BY 
 23.21  OTHER SURVIVORS.] For purposes of this subdivision, the 
 23.22  provisions in subdivision 1i, paragraphs (a) to (c) and (b) 
 23.23  apply. 
 23.24     (a) If payment of a claim filed under this section is 
 23.25  limited as provided in subdivision 4, and if the estate does not 
 23.26  have other assets sufficient to pay the claim in full, as 
 23.27  allowed, the personal representative or the court shall make, 
 23.28  execute, and deliver a lien on the property in the estate that 
 23.29  is exempt from the claim under subdivision 4 in favor of the 
 23.30  commissioner of human services on forms provided by the 
 23.31  commissioner to the county agency filing the claim.  If the 
 23.32  estate pays a claim filed under this section in full from other 
 23.33  assets of the estate, no lien shall be filed against the 
 23.34  property described in subdivision 4. 
 23.35     (b) The lien shall be in an amount equal to the unpaid 
 23.36  balance of the allowed claim under this section remaining after 
 24.1   the estate has applied all other available assets of the estate 
 24.2   to pay the claim.  The property exempt under subdivision 4 shall 
 24.3   not be sold, assigned, transferred, conveyed, encumbered, or 
 24.4   distributed until after the personal representative has 
 24.5   determined the estate has other assets sufficient to pay the 
 24.6   allowed claim in full, or until after the lien has been filed or 
 24.7   recorded.  The lien shall bear interest as provided under 
 24.8   section 524.3-806, shall attach to the property it describes 
 24.9   upon filing or recording, and shall remain a lien on the real 
 24.10  property it describes for a period of 20 years from the date it 
 24.11  is filed or recorded.  The lien shall be a disposition of the 
 24.12  claim sufficient to permit the estate to close. 
 24.13     (c) The state or county agency shall file or record the 
 24.14  lien in the office of the county recorder or registrar of titles 
 24.15  in each county in which any of the real property is located.  
 24.16  The department shall pay the filing fees.  The lien need not be 
 24.17  attested, certified, or acknowledged as a condition of recording 
 24.18  or filing.  The recorder or registrar of titles shall accept the 
 24.19  lien for filing or recording. 
 24.20     (d) The commissioner shall make no adjustment or recovery 
 24.21  under the lien until none of the persons listed in subdivision 4 
 24.22  are residing on the property or until the property is sold or 
 24.23  transferred.  The estate or any owner of an interest in the 
 24.24  property that is or may be subject to the lien, or any other 
 24.25  interested party, may voluntarily pay off, settle, or otherwise 
 24.26  satisfy the claim secured or to be secured by the lien at any 
 24.27  time before or after the lien is filed or recorded.  The 
 24.28  payoffs, settlements, and satisfactions shall be deemed to be 
 24.29  voluntary repayments of past medical assistance payments for the 
 24.30  benefit of the deceased recipient and neither the process of 
 24.31  settling the claim, the payment of the claim, or acceptance of a 
 24.32  payment shall constitute an adjustment or recovery that is 
 24.33  prohibited under this subdivision. 
 24.34     (e) A lien under this subdivision may be enforced or 
 24.35  foreclosed in the manner provided for by law for the enforcement 
 24.36  of judgment liens against real estate or by a foreclosure by 
 25.1   action under chapter 581.  When the lien has been paid, 
 25.2   satisfied, or otherwise discharged, the claimant shall prepare 
 25.3   and file a release of lien at the claimant's expense.  No action 
 25.4   to foreclose the lien shall be commenced unless the lien holder 
 25.5   has first given 30 days prior written notice to pay the lien to 
 25.6   the record owners of the property and the parties in possession 
 25.7   of the property subject to the lien.  The notice shall:  (1) 
 25.8   include the name, address, and telephone number of the lien 
 25.9   holder; (2) describe the lien; (3) give the amount of the lien; 
 25.10  (4) inform the owner or party in possession that payment of the 
 25.11  lien in full must be made to the lien holder within 30 days 
 25.12  after service of the notice or the lien holder may begin 
 25.13  proceedings to foreclose the lien; and (5) be served by personal 
 25.14  service, certified mail, return receipt requested, ordinary 
 25.15  first class mail, or by publishing it once in a newspaper of 
 25.16  general circulation in the county in which any part of the 
 25.17  property is located.  Service shall be complete upon mailing or 
 25.18  publication. 
 25.19     (f) Upon filing or recording of a lien against a life 
 25.20  estate or joint tenancy interest under this subdivision, the 
 25.21  interest subject to the lien shall merge into the remainder 
 25.22  interest or the interest the decedent and others owned jointly, 
 25.23  effective on the date of recording and filing.  The lien shall 
 25.24  attach to and run with the property to the extent of the 
 25.25  decedent's interest in the property at the time of the 
 25.26  decedent's death as determined under this section. 
 25.27     (g)(1) An affidavit may be provided by a personal 
 25.28  representative, at their discretion, stating the personal 
 25.29  representative has determined in good faith that a decedent 
 25.30  survived by a spouse or a person listed in subdivision 3, or by 
 25.31  a person listed in subdivision 4, or the decedent's predeceased 
 25.32  spouse did not receive any medical assistance giving rise to a 
 25.33  claim under this section, or that the real property described in 
 25.34  subdivision 4 is not needed to pay in full a claim arising under 
 25.35  this section. 
 25.36     (2) The affidavit shall:  
 26.1      (i) describe the property and the interest being 
 26.2   extinguished; 
 26.3      (ii) name the decedent and give the date of death; 
 26.4      (iii) state the facts listed in clause (1); 
 26.5      (iv) state that the affidavit is being filed to terminate 
 26.6   the life estate or joint tenancy interest created under this 
 26.7   subdivision; 
 26.8      (v) be signed by the personal representative; and 
 26.9      (vi) contain any other information that the affiant deems 
 26.10  appropriate. 
 26.11     (3) Except as provided in section 514.981, subdivision 6, 
 26.12  when the affidavit is filed or recorded, the life estate or 
 26.13  joint tenancy interest in real property that the affidavit 
 26.14  describes shall be terminated effective as of the date of filing 
 26.15  or recording.  The termination shall be final and may not be set 
 26.16  aside for any reason. 
 26.17     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 26.18  from August 1, 2003. 
 26.19     Sec. 9.  Minnesota Statutes 2004, section 256B.15, 
 26.20  subdivision 2, is amended to read: 
 26.21     Subd. 2.  [LIMITATIONS ON CLAIMS.] The claim shall include 
 26.22  only the total amount of medical assistance rendered after age 
 26.23  55 or during a period of institutionalization described in 
 26.24  subdivision 1a, clause (b), and the total amount of general 
 26.25  assistance medical care rendered, and shall not include 
 26.26  interest.  Claims that have been allowed but not paid shall bear 
 26.27  interest according to section 524.3-806, paragraph (d).  A claim 
 26.28  against the estate of a surviving spouse who did not receive 
 26.29  medical assistance, for medical assistance rendered for the 
 26.30  predeceased spouse, is limited to the value of the assets of the 
 26.31  estate that were marital property or jointly owned property at 
 26.32  any time during the marriage.  Claims for alternative care shall 
 26.33  be net of all premiums paid under section 256B.0913, subdivision 
 26.34  12, on or after July 1, 2003, and shall be limited to services 
 26.35  provided on or after July 1, 2003. 
 26.36     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 27.1   from July 1, 2003, for decedents dying on or after that date. 
 27.2      Sec. 10.  Minnesota Statutes 2004, section 256B.15, 
 27.3   subdivision 3, is amended to read: 
 27.4      Subd. 3.  [SURVIVING SPOUSE, MINOR, BLIND, OR DISABLED 
 27.5   CHILDREN.] If a decedent is survived by a spouse, or who was 
 27.6   single or who was the surviving spouse of a married couple and 
 27.7   is survived by a child who is under age 21 or blind or 
 27.8   permanently and totally disabled according to the supplemental 
 27.9   security income program criteria, a no claim shall be filed 
 27.10  against the estate according to this section. 
 27.11     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 27.12  from August 1, 2003. 
 27.13     Sec. 11.  Minnesota Statutes 2004, section 256B.15, 
 27.14  subdivision 4, is amended to read: 
 27.15     Subd. 4.  [OTHER SURVIVORS.] If the decedent who was single 
 27.16  or the surviving spouse of a married couple is survived by one 
 27.17  of the following persons, a claim exists against the estate in 
 27.18  an amount not to exceed the value of the nonhomestead property 
 27.19  included in the estate and the personal representative shall 
 27.20  make, execute, and deliver to the county agency a lien against 
 27.21  the homestead property in the estate for any unpaid balance of 
 27.22  the claim to the claimant as provided under this section: 
 27.23     (a) (1) a sibling who resided in the decedent medical 
 27.24  assistance recipient's home at least one year before the 
 27.25  decedent's institutionalization and continuously since the date 
 27.26  of institutionalization; or 
 27.27     (b) (2) a son or daughter or a grandchild who resided in 
 27.28  the decedent medical assistance recipient's home for at least 
 27.29  two years immediately before the parent's or grandparent's 
 27.30  institutionalization and continuously since the date of 
 27.31  institutionalization, and who establishes by a preponderance of 
 27.32  the evidence having provided care to the parent or grandparent 
 27.33  who received medical assistance, that the care was provided 
 27.34  before institutionalization, and that the care permitted the 
 27.35  parent or grandparent to reside at home rather than in an 
 27.36  institution. 
 28.1      <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 28.2   from August 1, 2003, and applies to decedents who die on or 
 28.3   after that date. 
 28.4      Sec. 12.  Minnesota Statutes 2004, section 514.981, 
 28.5   subdivision 6, is amended to read: 
 28.6      Subd. 6.  [TIME LIMITS; CLAIM LIMITS; LIENS ON LIFE ESTATES 
 28.7   AND JOINT TENANCIES.] (a) A medical assistance lien is a lien on 
 28.8   the real property it describes for a period of ten years from 
 28.9   the date it attaches according to section 514.981, subdivision 
 28.10  2, paragraph (a), except as otherwise provided for in sections 
 28.11  514.980 to 514.985.  The agency may renew a medical assistance 
 28.12  lien for an additional ten years from the date it would 
 28.13  otherwise expire by recording or filing a certificate of renewal 
 28.14  before the lien expires.  The certificate shall be recorded or 
 28.15  filed in the office of the county recorder or registrar of 
 28.16  titles for the county in which the lien is recorded or filed.  
 28.17  The certificate must refer to the recording or filing data for 
 28.18  the medical assistance lien it renews.  The certificate need not 
 28.19  be attested, certified, or acknowledged as a condition for 
 28.20  recording or filing.  The registrar of titles or the recorder 
 28.21  shall file, record, index, and return the certificate of renewal 
 28.22  in the same manner as provided for medical assistance liens in 
 28.23  section 514.982, subdivision 2. 
 28.24     (b) A medical assistance lien is not enforceable against 
 28.25  the real property of an estate to the extent there is a 
 28.26  determination by a court of competent jurisdiction, or by an 
 28.27  officer of the court designated for that purpose, that there are 
 28.28  insufficient assets in the estate to satisfy the agency's 
 28.29  medical assistance lien in whole or in part because of the 
 28.30  homestead exemption under section 256B.15, subdivision 4, the 
 28.31  rights of the surviving spouse or minor children under section 
 28.32  524.2-403, paragraphs (a) and (b), or claims with a priority 
 28.33  under section 524.3-805, paragraph (a), clauses (1) to (4).  For 
 28.34  purposes of this section, the rights of the decedent's adult 
 28.35  children to exempt property under section 524.2-403, paragraph 
 28.36  (b), shall not be considered costs of administration under 
 29.1   section 524.3-805, paragraph (a), clause (1). 
 29.2      (c) Notwithstanding any law or rule to the contrary, the 
 29.3   provisions in clauses (1) to (7) apply if a life estate subject 
 29.4   to a medical assistance lien ends according to its terms, or if 
 29.5   a medical assistance recipient who owns a life estate or any 
 29.6   interest in real property as a joint tenant that is subject to a 
 29.7   medical assistance lien dies. 
 29.8      (1) The medical assistance recipient's life estate or joint 
 29.9   tenancy interest in the real property shall not end upon the 
 29.10  recipient's death but shall merge into the remainder interest or 
 29.11  other interest in real property the medical assistance recipient 
 29.12  owned in joint tenancy with others.  The medical assistance lien 
 29.13  shall attach to and run with the remainder or other interest in 
 29.14  the real property to the extent of the medical assistance 
 29.15  recipient's interest in the property at the time of the 
 29.16  recipient's death as determined under this section. 
 29.17     (2) If the medical assistance recipient's interest was a 
 29.18  life estate in real property, the lien shall be a lien against 
 29.19  the portion of the remainder equal to the percentage factor for 
 29.20  the life estate of a person the medical assistance recipient's 
 29.21  age on the date the life estate ended according to its terms or 
 29.22  the date of the medical assistance recipient's death as listed 
 29.23  in the Life Estate Mortality Table in the health care program's 
 29.24  manual. 
 29.25     (3) If the medical assistance recipient owned the interest 
 29.26  in real property in joint tenancy with others, the lien shall be 
 29.27  a lien against the portion of that interest equal to the 
 29.28  fractional interest the medical assistance recipient would have 
 29.29  owned in the jointly owned interest had the medical assistance 
 29.30  recipient and the other owners held title to that interest as 
 29.31  tenants in common on the date the medical assistance recipient 
 29.32  died. 
 29.33     (4) The medical assistance lien shall remain a lien against 
 29.34  the remainder or other jointly owned interest for the length of 
 29.35  time and be renewable as provided in paragraph (a). 
 29.36     (5) Subdivision 5, paragraph (a), clause (4), paragraph 
 30.1   (b), clauses (1) and (2); and subdivision 6, paragraph (b), do 
 30.2   not apply to medical assistance liens which attach to interests 
 30.3   in real property as provided under this subdivision. 
 30.4      (6) The continuation of a medical assistance recipient's 
 30.5   life estate or joint tenancy interest in real property after the 
 30.6   medical assistance recipient's death for the purpose of 
 30.7   recovering medical assistance provided for in sections 514.980 
 30.8   to 514.985 modifies common law principles holding that these 
 30.9   interests terminate on the death of the holder. 
 30.10     (7) Notwithstanding any law or rule to the contrary, no 
 30.11  release, satisfaction, discharge, or affidavit under section 
 30.12  256B.15 shall extinguish or terminate the life estate or joint 
 30.13  tenancy interest of a medical assistance recipient subject to a 
 30.14  lien under sections 514.980 to 514.985 on the date the recipient 
 30.15  dies. 
 30.16     (8) The provisions of clauses (1) to (7) do not apply to a 
 30.17  homestead owned of record, on the date the recipient dies, by 
 30.18  the recipient and the recipient's spouse as joint tenants with a 
 30.19  right of survivorship.  Homestead means the real property 
 30.20  occupied by the surviving joint tenant spouse as their sole 
 30.21  residence on the date the recipient dies and classified and 
 30.22  taxed to the recipient and surviving joint tenant spouse as 
 30.23  homestead property for property tax purposes in the calendar 
 30.24  year in which the recipient dies.  For purposes of this 
 30.25  exemption, real property the recipient and their surviving joint 
 30.26  tenant spouse purchase solely with the proceeds from the sale of 
 30.27  their prior homestead, own of record as joint tenants, and 
 30.28  qualify as homestead property under section 273.124 in the 
 30.29  calendar year in which the recipient dies and prior to the 
 30.30  recipient's death shall be deemed to be real property classified 
 30.31  and taxed to the recipient and their surviving joint tenant 
 30.32  spouse as homestead property in the calendar year in which the 
 30.33  recipient dies.  The surviving spouse, or any person with 
 30.34  personal knowledge of the facts, may provide an affidavit 
 30.35  describing the homestead property affected by this clause and 
 30.36  stating facts showing compliance with this clause.  The 
 31.1   affidavit shall be prima facie evidence of the facts it states. 
 31.2      <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 31.3   from August 1, 2003. 
 31.4      Sec. 13.  Minnesota Statutes 2004, section 524.3-805, is 
 31.5   amended to read: 
 31.6      524.3-805 [CLASSIFICATION OF CLAIMS.] 
 31.7      (a) If the applicable assets of the estate are insufficient 
 31.8   to pay all claims in full, the personal representative shall 
 31.9   make payment in the following order: 
 31.10     (1) costs and expenses of administration; 
 31.11     (2) reasonable funeral expenses; 
 31.12     (3) debts and taxes with preference under federal law; 
 31.13     (4) reasonable and necessary medical, hospital, or nursing 
 31.14  home expenses of the last illness of the decedent, including 
 31.15  compensation of persons attending the decedent, a claim filed 
 31.16  under section 256B.15 for recovery of expenditures for 
 31.17  alternative care for nonmedical assistance recipients under 
 31.18  section 256B.0913, and including a claim filed pursuant to 
 31.19  section 256B.15; 
 31.20     (5) reasonable and necessary medical, hospital, and nursing 
 31.21  home expenses for the care of the decedent during the year 
 31.22  immediately preceding death; 
 31.23     (6) debts with preference under other laws of this state, 
 31.24  and state taxes; 
 31.25     (7) all other claims. 
 31.26     (b) No preference shall be given in the payment of any 
 31.27  claim over any other claim of the same class, and a claim due 
 31.28  and payable shall not be entitled to a preference over claims 
 31.29  not due, except that if claims for expenses of the last illness 
 31.30  involve only claims filed under section 256B.15 for recovery of 
 31.31  expenditures for alternative care for nonmedical assistance 
 31.32  recipients under section 256B.0913, section 246.53 for costs of 
 31.33  state hospital care and claims filed under section 256B.15, 
 31.34  claims filed to recover expenditures for alternative care for 
 31.35  nonmedical assistance recipients under section 256B.0913 shall 
 31.36  have preference over claims filed under both sections 246.53 and 
 32.1   other claims filed under section 256B.15, and.  Claims filed 
 32.2   under section 246.53 have preference over claims filed under 
 32.3   section 256B.15 for recovery of amounts other than those for 
 32.4   expenditures for alternative care for nonmedical assistance 
 32.5   recipients under section 256B.0913. 
 32.6      <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 32.7   from July 1, 2003, for decedents dying on or after that date. 
 32.8      Sec. 14.  [REFUNDS; NOTICES, AND IMMUNITY.] 
 32.9      (a) The commissioner of human services and any county 
 32.10  agency that, after a recipient's death, has collected any sum 
 32.11  (1) from the estate of a recipient of alternative case services, 
 32.12  or (2) attributable to a life estate or joint tenancy interest 
 32.13  in real estate that was continued after the death of the 
 32.14  recipient, shall promptly refund the amount collected to the 
 32.15  person or persons who paid the amount collected, in proportion 
 32.16  to each person's contribution to the amount. 
 32.17     (b) If the commissioner determines a person entitled to a 
 32.18  refund is dead, the commissioner shall pay the refund to the 
 32.19  person's estate if it is open, or to their heirs or devisees as 
 32.20  finally determined in any completed probate proceedings or under 
 32.21  a final decree of descent.  In all other cases, the refund shall 
 32.22  be deemed to be abandoned property and the commissioner shall 
 32.23  pay and deliver the refund to the commissioner of commerce.  The 
 32.24  commissioner of commerce shall administer and dispose of the 
 32.25  refund in accordance with Minnesota Statutes, sections 345.42 
 32.26  through 345.60.  The commissioner of human services shall not be 
 32.27  liable to anyone with respect to the refund after paying or 
 32.28  delivering the refund as provided for in this paragraph. 
 32.29     (c) Lien notices of record against life estate or joint 
 32.30  tenancy interests filed on and after August 1, 2003, shall have 
 32.31  no effect and shall not constitute record notice after the death 
 32.32  of the person named in the lien or notice unless continued after 
 32.33  that time by the terms of the instrument creating the interest, 
 32.34  shall be disregarded by examiners of title, and shall not be 
 32.35  carried forward to subsequent certificates of title. 
 32.36     (d) The commissioner of human services, county agencies, 
 33.1   elected officials, and their employees are immune from all 
 33.2   liability for actions taken or not taken in accordance with Laws 
 33.3   2003, First Special Session chapter 14, article 2, sections 47 
 33.4   to 52; article 12, sections 40 to 52 and 90; and sections 1 to 
 33.5   14 of this act. 
 33.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 33.7   following final enactment. 
 33.8      Sec. 15.  [APPROPRIATIONS.] 
 33.9      $....... is appropriated from the general fund to the 
 33.10  commissioner of human services for fiscal years 2004 and 2005 
 33.11  and $....... is appropriated from the general fund to the 
 33.12  commissioner of human services for fiscal years 2006 and 2007 
 33.13  for the purposes of sections 1 to 14.  
 33.14     Sec. 16.  [REPEALER.] 
 33.15     Minnesota Statutes 2004, sections 256B.15, subdivision 1g; 
 33.16  514.991; 514.992; 514.993; 514.994; and 514.995, are repealed 
 33.17  retroactively from July 1, 2003. 
 33.18                             ARTICLE 3
 33.19         INDIVIDUAL INCOME TAX AND CORPORATE FRANCHISE TAX
 33.20     Section 1.  Minnesota Statutes 2004, section 290.01, 
 33.21  subdivision 6b, is amended to read: 
 33.22     Subd. 6b.  [FOREIGN OPERATING CORPORATION.] The term 
 33.23  "foreign operating corporation," when applied to a corporation, 
 33.24  means a domestic corporation with the following characteristics: 
 33.25     (1) it is part of a unitary business at least one member of 
 33.26  which is taxable in this state; 
 33.27     (2) it is not a foreign sales corporation under section 922 
 33.28  of the Internal Revenue Code, as amended through December 31, 
 33.29  1999, for the taxable year; and 
 33.30     (3) either (i) the average of the percentages of its 
 33.31  property and payrolls assigned to locations inside outside the 
 33.32  United States and the District of Columbia, excluding the 
 33.33  commonwealth of Puerto Rico and possessions of the United 
 33.34  States, as determined under section 290.191 or 290.20, is 20 80 
 33.35  percent or less greater and it has at least $2,000,000 of 
 33.36  property and $1,000,000 of payroll as determined under section 
 34.1   290.191 or 290.20; or (ii) it has in effect a valid election 
 34.2   under section 936 of the Internal Revenue Code. 
 34.3      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 34.4   beginning after December 31, 2004. 
 34.5      Sec. 2.  Minnesota Statutes 2004, section 290.01, 
 34.6   subdivision 19d, is amended to read: 
 34.7      Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 34.8   TAXABLE INCOME.] For corporations, there shall be subtracted 
 34.9   from federal taxable income after the increases provided in 
 34.10  subdivision 19c:  
 34.11     (1) the amount of foreign dividend gross-up added to gross 
 34.12  income for federal income tax purposes under section 78 of the 
 34.13  Internal Revenue Code; 
 34.14     (2) the amount of salary expense not allowed for federal 
 34.15  income tax purposes due to claiming the federal jobs credit 
 34.16  under section 51 of the Internal Revenue Code; 
 34.17     (3) any dividend (not including any distribution in 
 34.18  liquidation) paid within the taxable year by a national or state 
 34.19  bank to the United States, or to any instrumentality of the 
 34.20  United States exempt from federal income taxes, on the preferred 
 34.21  stock of the bank owned by the United States or the 
 34.22  instrumentality; 
 34.23     (4) amounts disallowed for intangible drilling costs due to 
 34.24  differences between this chapter and the Internal Revenue Code 
 34.25  in taxable years beginning before January 1, 1987, as follows: 
 34.26     (i) to the extent the disallowed costs are represented by 
 34.27  physical property, an amount equal to the allowance for 
 34.28  depreciation under Minnesota Statutes 1986, section 290.09, 
 34.29  subdivision 7, subject to the modifications contained in 
 34.30  subdivision 19e; and 
 34.31     (ii) to the extent the disallowed costs are not represented 
 34.32  by physical property, an amount equal to the allowance for cost 
 34.33  depletion under Minnesota Statutes 1986, section 290.09, 
 34.34  subdivision 8; 
 34.35     (5) the deduction for capital losses pursuant to sections 
 34.36  1211 and 1212 of the Internal Revenue Code, except that: 
 35.1      (i) for capital losses incurred in taxable years beginning 
 35.2   after December 31, 1986, capital loss carrybacks shall not be 
 35.3   allowed; 
 35.4      (ii) for capital losses incurred in taxable years beginning
 35.5   after December 31, 1986, a capital loss carryover to each of the 
 35.6   15 taxable years succeeding the loss year shall be allowed; 
 35.7      (iii) for capital losses incurred in taxable years 
 35.8   beginning before January 1, 1987, a capital loss carryback to 
 35.9   each of the three taxable years preceding the loss year, subject 
 35.10  to the provisions of Minnesota Statutes 1986, section 290.16, 
 35.11  shall be allowed; and 
 35.12     (iv) for capital losses incurred in taxable years beginning
 35.13  before January 1, 1987, a capital loss carryover to each of the 
 35.14  five taxable years succeeding the loss year to the extent such 
 35.15  loss was not used in a prior taxable year and subject to the 
 35.16  provisions of Minnesota Statutes 1986, section 290.16, shall be 
 35.17  allowed; 
 35.18     (6) an amount for interest and expenses relating to income 
 35.19  not taxable for federal income tax purposes, if (i) the income 
 35.20  is taxable under this chapter and (ii) the interest and expenses 
 35.21  were disallowed as deductions under the provisions of section 
 35.22  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 35.23  federal taxable income; 
 35.24     (7) in the case of mines, oil and gas wells, other natural 
 35.25  deposits, and timber for which percentage depletion was 
 35.26  disallowed pursuant to subdivision 19c, clause (11), a 
 35.27  reasonable allowance for depletion based on actual cost.  In the 
 35.28  case of leases the deduction must be apportioned between the 
 35.29  lessor and lessee in accordance with rules prescribed by the 
 35.30  commissioner.  In the case of property held in trust, the 
 35.31  allowable deduction must be apportioned between the income 
 35.32  beneficiaries and the trustee in accordance with the pertinent 
 35.33  provisions of the trust, or if there is no provision in the 
 35.34  instrument, on the basis of the trust's income allocable to 
 35.35  each; 
 35.36     (8) for certified pollution control facilities placed in 
 36.1   service in a taxable year beginning before December 31, 1986, 
 36.2   and for which amortization deductions were elected under section 
 36.3   169 of the Internal Revenue Code of 1954, as amended through 
 36.4   December 31, 1985, an amount equal to the allowance for 
 36.5   depreciation under Minnesota Statutes 1986, section 290.09, 
 36.6   subdivision 7; 
 36.7      (9) amounts included in federal taxable income that are due 
 36.8   to refunds of income, excise, or franchise taxes based on net 
 36.9   income or related minimum taxes paid by the corporation to 
 36.10  Minnesota, another state, a political subdivision of another 
 36.11  state, the District of Columbia, or a foreign country or 
 36.12  possession of the United States to the extent that the taxes 
 36.13  were added to federal taxable income under section 290.01, 
 36.14  subdivision 19c, clause (1), in a prior taxable year; 
 36.15     (10) 80 percent of royalties, fees, or other like income 
 36.16  accrued or received from a foreign operating corporation or a 
 36.17  foreign corporation which is part of the same unitary business 
 36.18  as the receiving corporation; 
 36.19     (11) income or gains from the business of mining as defined 
 36.20  in section 290.05, subdivision 1, clause (a), that are not 
 36.21  subject to Minnesota franchise tax; 
 36.22     (12) (11) the amount of handicap access expenditures in the 
 36.23  taxable year which are not allowed to be deducted or capitalized 
 36.24  under section 44(d)(7) of the Internal Revenue Code; 
 36.25     (13) (12) the amount of qualified research expenses not 
 36.26  allowed for federal income tax purposes under section 280C(c) of 
 36.27  the Internal Revenue Code, but only to the extent that the 
 36.28  amount exceeds the amount of the credit allowed under section 
 36.29  290.068; 
 36.30     (14) (13) the amount of salary expenses not allowed for 
 36.31  federal income tax purposes due to claiming the Indian 
 36.32  employment credit under section 45A(a) of the Internal Revenue 
 36.33  Code; 
 36.34     (15) (14) the amount of any refund of environmental taxes 
 36.35  paid under section 59A of the Internal Revenue Code; 
 36.36     (16) (15) for taxable years beginning before January 1, 
 37.1   2008, the amount of the federal small ethanol producer credit 
 37.2   allowed under section 40(a)(3) of the Internal Revenue Code 
 37.3   which is included in gross income under section 87 of the 
 37.4   Internal Revenue Code; 
 37.5      (17) (16) for a corporation whose foreign sales 
 37.6   corporation, as defined in section 922 of the Internal Revenue 
 37.7   Code, constituted a foreign operating corporation during any 
 37.8   taxable year ending before January 1, 1995, and a return was 
 37.9   filed by August 15, 1996, claiming the deduction under section 
 37.10  290.21, subdivision 4, for income received from the foreign 
 37.11  operating corporation, an amount equal to 1.23 multiplied by the 
 37.12  amount of income excluded under section 114 of the Internal 
 37.13  Revenue Code, provided the income is not income of a foreign 
 37.14  operating company; 
 37.15     (18) (17) any decrease in subpart F income, as defined in 
 37.16  section 952(a) of the Internal Revenue Code, for the taxable 
 37.17  year when subpart F income is calculated without regard to the 
 37.18  provisions of section 614 of Public Law 107-147; and 
 37.19     (19) (18) in each of the five tax years immediately 
 37.20  following the tax year in which an addition is required under 
 37.21  subdivision 19c, clause (16), an amount equal to one-fifth of 
 37.22  the delayed depreciation.  For purposes of this clause, "delayed 
 37.23  depreciation" means the amount of the addition made by the 
 37.24  taxpayer under subdivision 19c, clause (16).  The resulting 
 37.25  delayed depreciation cannot be less than zero. 
 37.26     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 37.27  beginning after December 31, 2004. 
 37.28     Sec. 3.  Minnesota Statutes 2004, section 290.17, 
 37.29  subdivision 2, is amended to read: 
 37.30     Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
 37.31  BUSINESS.] The income of a taxpayer subject to the allocation 
 37.32  rules that is not derived from the conduct of a trade or 
 37.33  business must be assigned in accordance with paragraphs (a) to 
 37.34  (f):  
 37.35     (a)(1) Subject to paragraphs (a)(2), and (a)(3), and 
 37.36  (a)(4), income from wages as defined in section 3401(a) and (f) 
 38.1   of the Internal Revenue Code is assigned to this state if, and 
 38.2   to the extent that, the work of the employee is performed within 
 38.3   it; all other income from such sources is treated as income from 
 38.4   sources without this state.  
 38.5      Severance pay shall be considered income from labor or 
 38.6   personal or professional services. 
 38.7      (2) In the case of an individual who is a nonresident of 
 38.8   Minnesota and who is an athlete or entertainer, income from 
 38.9   compensation for labor or personal services performed within 
 38.10  this state shall be determined in the following manner:  
 38.11     (i) The amount of income to be assigned to Minnesota for an 
 38.12  individual who is a nonresident salaried athletic team employee 
 38.13  shall be determined by using a fraction in which the denominator 
 38.14  contains the total number of days in which the individual is 
 38.15  under a duty to perform for the employer, and the numerator is 
 38.16  the total number of those days spent in Minnesota.  For purposes 
 38.17  of this paragraph, off-season training activities, unless 
 38.18  conducted at the team's facilities as part of a team imposed 
 38.19  program, are not included in the total number of duty days.  
 38.20  Bonuses earned as a result of play during the regular season or 
 38.21  for participation in championship, play-off, or all-star games 
 38.22  must be allocated under the formula.  Signing bonuses are not 
 38.23  subject to allocation under the formula if they are not 
 38.24  conditional on playing any games for the team, are payable 
 38.25  separately from any other compensation, and are nonrefundable; 
 38.26  and 
 38.27     (ii) The amount of income to be assigned to Minnesota for 
 38.28  an individual who is a nonresident, and who is an athlete or 
 38.29  entertainer not listed in clause (i), for that person's athletic 
 38.30  or entertainment performance in Minnesota shall be determined by 
 38.31  assigning to this state all income from performances or athletic 
 38.32  contests in this state.  
 38.33     (3) For purposes of this section, amounts received by a 
 38.34  nonresident as "retirement income" as defined in section (b)(1) 
 38.35  of the State Income Taxation of Pension Income Act, Public Law 
 38.36  104-95, are not considered income derived from carrying on a 
 39.1   trade or business or from wages or other compensation for work 
 39.2   an employee performed in Minnesota, and are not taxable under 
 39.3   this chapter.  
 39.4      (4) Wages, otherwise assigned to this state under clause 
 39.5   (1) and not qualifying under clause (3), are not taxable under 
 39.6   this chapter if the following conditions are met: 
 39.7      (i) the recipient was not a resident of this state for any 
 39.8   part of the taxable year in which the wages were received; and 
 39.9      (ii) the wages are for work performed while the recipient 
 39.10  was a resident of this state. 
 39.11     (b) Income or gains from tangible property located in this 
 39.12  state that is not employed in the business of the recipient of 
 39.13  the income or gains must be assigned to this state. 
 39.14     (c) Income or gains from intangible personal property not 
 39.15  employed in the business of the recipient of the income or gains 
 39.16  must be assigned to this state if the recipient of the income or 
 39.17  gains is a resident of this state or is a resident trust or 
 39.18  estate.  
 39.19     Gain on the sale of a partnership interest is allocable to 
 39.20  this state in the ratio of the original cost of partnership 
 39.21  tangible property in this state to the original cost of 
 39.22  partnership tangible property everywhere, determined at the time 
 39.23  of the sale.  If more than 50 percent of the value of the 
 39.24  partnership's assets consists of intangibles, gain or loss from 
 39.25  the sale of the partnership interest is allocated to this state 
 39.26  in accordance with the sales factor of the partnership for its 
 39.27  first full tax period immediately preceding the tax period of 
 39.28  the partnership during which the partnership interest was sold. 
 39.29     Gain on the sale of goodwill or income from a covenant not 
 39.30  to compete that is connected with a business operating all or 
 39.31  partially in Minnesota is allocated to this state to the extent 
 39.32  that the income from the business in the year preceding the year 
 39.33  of sale was assignable to Minnesota under subdivision 3.  
 39.34     When an employer pays an employee for a covenant not to 
 39.35  compete, the income allocated to this state is in the ratio of 
 39.36  the employee's service in Minnesota in the calendar year 
 40.1   preceding leaving the employment of the employer over the total 
 40.2   services performed by the employee for the employer in that year.
 40.3      (d) Income from winnings on a bet made by an individual 
 40.4   while in Minnesota is assigned to this state.  In this 
 40.5   paragraph, "bet" has the meaning given in section 609.75, 
 40.6   subdivision 2, as limited by section 609.75, subdivision 3, 
 40.7   clauses (1), (2), and (3).  
 40.8      (e) All items of gross income not covered in paragraphs (a) 
 40.9   to (d) and not part of the taxpayer's income from a trade or 
 40.10  business shall be assigned to the taxpayer's domicile. 
 40.11     (f) For the purposes of this section, working as an 
 40.12  employee shall not be considered to be conducting a trade or 
 40.13  business. 
 40.14     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 40.15  beginning after December 31, 2004. 
 40.16     Sec. 4.  Minnesota Statutes 2004, section 290.17, 
 40.17  subdivision 4, is amended to read: 
 40.18     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
 40.19  business conducted wholly within this state or partly within and 
 40.20  partly without this state is part of a unitary business, the 
 40.21  entire income of the unitary business is subject to 
 40.22  apportionment pursuant to section 290.191.  Notwithstanding 
 40.23  subdivision 2, paragraph (c), none of the income of a unitary 
 40.24  business is considered to be derived from any particular source 
 40.25  and none may be allocated to a particular place except as 
 40.26  provided by the applicable apportionment formula.  The 
 40.27  provisions of this subdivision do not apply to business income 
 40.28  subject to subdivision 5, income of an insurance company, or 
 40.29  income of an investment company determined under section 290.36. 
 40.30     (b) The term "unitary business" means business activities 
 40.31  or operations which result in a flow of value between them.  The 
 40.32  term may be applied within a single legal entity or between 
 40.33  multiple entities and without regard to whether each entity is a 
 40.34  sole proprietorship, a corporation, a partnership or a trust.  
 40.35     (c) Unity is presumed whenever there is unity of ownership, 
 40.36  operation, and use, evidenced by centralized management or 
 41.1   executive force, centralized purchasing, advertising, 
 41.2   accounting, or other controlled interaction, but the absence of 
 41.3   these centralized activities will not necessarily evidence a 
 41.4   nonunitary business.  Unity is also presumed when business 
 41.5   activities or operations are of mutual benefit, dependent upon 
 41.6   or contributory to one another, either individually or as a 
 41.7   group. 
 41.8      (d) Where a business operation conducted in Minnesota is 
 41.9   owned by a business entity that carries on business activity 
 41.10  outside the state different in kind from that conducted within 
 41.11  this state, and the other business is conducted entirely outside 
 41.12  the state, it is presumed that the two business operations are 
 41.13  unitary in nature, interrelated, connected, and interdependent 
 41.14  unless it can be shown to the contrary.  
 41.15     (e) Unity of ownership is not deemed to exist when a 
 41.16  corporation is involved unless that corporation is a member of a 
 41.17  group of two or more business entities and more than 50 percent 
 41.18  of the voting stock of each member of the group is directly or 
 41.19  indirectly owned by a common owner or by common owners, either 
 41.20  corporate or noncorporate, or by one or more of the member 
 41.21  corporations of the group.  For this purpose, the term "voting 
 41.22  stock" shall include membership interests of mutual insurance 
 41.23  holding companies formed under section 60A.077.  
 41.24     (f) The net income and apportionment factors under section 
 41.25  290.191 or 290.20 of foreign corporations and other foreign 
 41.26  entities which are part of a unitary business shall not be 
 41.27  included in the net income or the apportionment factors of the 
 41.28  unitary business.  A foreign corporation or other foreign entity 
 41.29  which is required to file a return under this chapter shall file 
 41.30  on a separate return basis.  The net income and apportionment 
 41.31  factors under section 290.191 or 290.20 of foreign operating 
 41.32  corporations shall not be included in the net income or the 
 41.33  apportionment factors of the unitary business except as provided 
 41.34  in paragraph (g). 
 41.35     (g) The adjusted net income of a foreign operating 
 41.36  corporation shall be deemed to be paid as a dividend on the last 
 42.1   day of its taxable year to each shareholder thereof, in 
 42.2   proportion to each shareholder's ownership, with which such 
 42.3   corporation is engaged in a unitary business.  Such deemed 
 42.4   dividend shall be treated as a dividend under section 290.21, 
 42.5   subdivision 4.  The dividends-received deduction must not be 
 42.6   allowed on dividends, interest, royalties, or capital gains 
 42.7   received by the foreign operating corporation included in the 
 42.8   deemed dividend. 
 42.9      Dividends actually paid by a foreign operating corporation 
 42.10  to a corporate shareholder which is a member of the same unitary 
 42.11  business as the foreign operating corporation shall be 
 42.12  eliminated from the net income of the unitary business in 
 42.13  preparing a combined report for the unitary business.  The 
 42.14  adjusted net income of a foreign operating corporation shall be 
 42.15  its net income adjusted as follows: 
 42.16     (1) any taxes paid or accrued to a foreign country, the 
 42.17  commonwealth of Puerto Rico, or a United States possession or 
 42.18  political subdivision of any of the foregoing shall be a 
 42.19  deduction; and 
 42.20     (2) the subtraction from federal taxable income for 
 42.21  payments received from foreign corporations or foreign operating 
 42.22  corporations under section 290.01, subdivision 19d, clause (10), 
 42.23  shall not be allowed. 
 42.24     If a foreign operating corporation incurs a net loss, 
 42.25  neither income nor deduction from that corporation shall be 
 42.26  included in determining the net income of the unitary business. 
 42.27     (h) For purposes of determining the net income of a unitary 
 42.28  business and the factors to be used in the apportionment of net 
 42.29  income pursuant to section 290.191 or 290.20, there must be 
 42.30  included only the income and apportionment factors of domestic 
 42.31  corporations or other domestic entities other than foreign 
 42.32  operating corporations that are determined to be part of the 
 42.33  unitary business pursuant to this subdivision, notwithstanding 
 42.34  that foreign corporations or other foreign entities might be 
 42.35  included in the unitary business.  
 42.36     (i) Deductions for expenses, interest, or taxes otherwise 
 43.1   allowable under this chapter that are connected with or 
 43.2   allocable against dividends, deemed dividends described in 
 43.3   paragraph (g), or royalties, fees, or other like income 
 43.4   described in section 290.01, subdivision 19d, clause (10), shall 
 43.5   not be disallowed. 
 43.6      (j) Each corporation or other entity, except a sole 
 43.7   proprietorship, that is part of a unitary business must file 
 43.8   combined reports as the commissioner determines.  On the 
 43.9   reports, all intercompany transactions between entities included 
 43.10  pursuant to paragraph (h) must be eliminated and the entire net 
 43.11  income of the unitary business determined in accordance with 
 43.12  this subdivision is apportioned among the entities by using each 
 43.13  entity's Minnesota factors for apportionment purposes in the 
 43.14  numerators of the apportionment formula and the total factors 
 43.15  for apportionment purposes of all entities included pursuant to 
 43.16  paragraph (h) in the denominators of the apportionment formula. 
 43.17     (k) If a corporation has been divested from a unitary 
 43.18  business and is included in a combined report for a fractional 
 43.19  part of the common accounting period of the combined report:  
 43.20     (1) its income includable in the combined report is its 
 43.21  income incurred for that part of the year determined by 
 43.22  proration or separate accounting; and 
 43.23     (2) its sales, property, and payroll included in the 
 43.24  apportionment formula must be prorated or accounted for 
 43.25  separately. 
 43.26     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 43.27  beginning after December 31, 2004.